going to the root of the trouble, which was, after
all, the need of adequate provision for the currency supply. In that
message, he sketched a plan devised by Secretary Carlisle, allowing
national banks to issue notes up to seventy-five per cent of their
actual capital and providing also, under certain conditions, for the
issue of circulating notes by state banks without taxation. This plan,
he said, "furnishes a basis for a very great improvement in our present
banking and currency system." But in his subsequent messages, he kept
urging that "the day of sensible and sound financial methods will not
dawn upon us until our Government abandons the banking business." To
effect this aim, he urged that all treasury notes should be "withdrawn
from circulation and canceled," and he declared that he was "of opinion
that we have placed too much stress upon the danger of contracting
the currency." Such proposals addressed to a people agonized by actual
scarcity of currency were utterly impracticable, nor from any point of
view can they be pronounced to have been sound in the circumstances then
existing. Until the banking system was reformed, there was real danger
of contracting the currency by a withdrawal of treasury notes. President
Cleveland was making a mistake to which reformers are prone; he was
taking the second step before he had taken the first. The realization
on the part of others that his efforts were misdirected not only made
it impossible for him to obtain any financial legislation but actually
fortified the position of the free silver advocates by allowing them the
advantage of being the only political party with any positive plans
for the redress of popular grievances. Experts became convinced that
statesmen at Washington were as incompetent to deal with the banking
problems as they had been in dealing with reconstruction problems and
that, in like manner, the regulation of banking had better be abandoned
to the States. A leading organ of the business world pointed out that
some of the state systems of note issue had been better than the system
of issuing notes through national banks which had been substituted in
1862; and it urged that the gains would exceed all disadvantages if
state banks were again allowed to act as sources of currency supply by
a repeal of the government tax of ten per cent on their circulation.
But nothing came of this suggestion, which was, indeed, a counsel
of despair. It took many years of