Chapter 22

In addition to the guaranty fund required, it is proposed to provide a safety fund for the immediate redemption of the circulating notes of failed banks by imposing a small annual tax, say one-half of 1 per cent, upon the average circulation of each bank until the fund amounts to 5 per cent of the total circulation outstanding. When a bank fails its guaranty fund is to be paid into this safety fund and its notes are to be redeemed in the first instance from such safety fund thus augmented, any impairment of such fund caused thereby to be made good from the immediately available cash assets of said bank, and if these should be insufficient such impairment to be made good by _pro rata_ assessment among the other banks, their contributions constituting a first lien upon the assets of the failed bank in favor of the contributing banks. As a further security it is contemplated that the existing provision fixing the individual liability of stockholders is to be retained and the bank's indebtedness on account of its circulating notes is to be made a first lien on all its assets.

For the purpose of meeting the expense of printing notes, official supervision, cancellation, and other like charges there shall be imposed a tax of say one-half of 1 per cent per annum upon the average amount of notes in circulation.

It is further provided that there shall be no national-bank notes issued of a less denomination than $10; that each national bank, except in case of a failed bank, shall redeem or retire its notes in the first instance at its own office or at agencies to be designated by it, and that no fixed reserve need be maintained on account of deposits.

Another very important feature of this plan is the exemption of State banks from taxation by the United States in cases where it is shown to the satisfaction of the Secretary of the Treasury and Comptroller of the Currency by banks claiming such exemption that they have not had outstanding their circulating notes exceeding 75 per cent of their paid-up and unimpaired capital; that their stockholders are individually liable for the redemption of their circulating notes to the full extent of their ownership of stock; that the liability of said banks upon their circulating notes constitutes under their State law a first lien upon their assets; that such banks have kept and maintained a guaranty fund in United States legal-tender notes, including Treasury notes of 1890, equal to 30 per cent of their outstanding circulating notes, and that such banks have promptly redeemed their circulating notes when presented at their principal or branch offices.

It is quite likely that this scheme may be usefully amended in some of its details, but I am satisfied it furnishes a basis for a very great improvement in our present banking and currency system.

I conclude this communication fully appreciating that the responsibility for all legislation affecting the people of the United States rests upon their representatives in the Congress, and assuring them that, whether in accordance with recommendations I have made or not, I shall be glad to cooperate in perfecting any legislation that tends to the prosperity and welfare of our country.

GROVER CLEVELAND.

[Footnote 9: See pp. 440-441.]

[Footnote 10: See p. 439.]

[Footnote 11: See p. 477.]

[Footnote 12: See Vol. VIII, pp. 517-518.]

SPECIAL MESSAGES.

EXECUTIVE MANSION, _December 6, 1894_.

_To the Senate of the United States_:

In compliance with the resolution of the Senate of the 24th of July, 1894, directing the Secretary of State to furnish copies of all papers, correspondence, diplomatic or otherwise, on file in the State Department in connection with the arrest and imprisonment at Arequipa, Peru, of Victor H. McCord, I transmit herewith the correspondence indicated.

GROVER CLEVELAND.

EXECUTIVE MANSION, _Washington, December 10, 1894_.

_To the Congress of the United States_:

I transmit herewith a communication from the Secretary of State, inclosing the report, with accompanying papers, of the commission of the United States for the Columbian Historical Exposition in Madrid in 1892 and 1893, constituted in virtue of the act of Congress approved May 13, 1892.

GROVER CLEVELAND.

EXECUTIVE MANSION, _December 10, 1894_.

_To the Senate and House of Representatives_:

I transmit herewith the report on the Chicago strike of June and July, 1894, forwarded to me by the Strike Commission appointed July 26, 1894, under the provisions of section 6 of chapter 1063 of the laws of the United States, passed October 1, 1888.

The testimony taken by the commission and the suggestions and recommendations made to it accompany the report in the form of appendixes.

GROVER CLEVELAND.

EXECUTIVE MANSION, _Washington, December 11, 1894_.

_To the Senate of the United States_:

In response to the resolution of the Senate dated December 6, 1894, requesting that copies of correspondence in regard to the claim of Antonio Maximo Mora against the Government of Spain exchanged since my last message to the Senate on the same subject, dated June 20, 1894,[13] be communicated to it, if not incompatible with the public interests, I transmit herewith the report of the Secretary of State on the matter, with accompanying copies of correspondence.

GROVER CLEVELAND.

[Footnote 13: See p. 478.]

EXECUTIVE MANSION, _December 11, 1894_.

_To the Senate of the United States_:

I have received a copy of the following resolution of the Senate, passed on 3d instant:

_Resolved_, That the President be requested, if in his judgment it be not incompatible with the public interest, to communicate to the Senate any information he may have received in regard to alleged cruelties committed upon Armenians in Turkey, and especially whether any such cruelties have been committed upon citizens who have declared their intention to become naturalized in this country or upon persons because of their being Christians.

And further, to inform the Senate whether any expostulations have been addressed by this Government to the Government of Turkey in regard to such matters or any proposals made by or to this Government to act in concert with other Christian powers regarding the same.

In response to said resolution I beg leave to inform the Senate that I have no information concerning cruelties committed upon Armenians in Turkey or upon persons because of their being Christians, except such information as has been derived from newspapers and statements emanating from the Turkish Government denying such cruelties and two telegraphic reports from our minister at Constantinople.

One of these reports, dated November 28, 1894, is in answer to an inquiry by the State Department touching reports in the press alleging the killing of Armenians, and is as follows:

Reports in American papers of Turkish atrocities at Sassoun are sensational and exaggerated. The killing was in a conflict between armed Armenians and Turkish soldiers. The grand vizier says it was necessary to suppress insurrection, and that about fifty Turks were killed; between three and four hundred Armenian guns were picked up after the fight, and reports that about that number of Armenians were killed. I give credit to his statement.

The other dispatch referred to is dated December 2, 1894, and is as follows:

Information from British ambassador indicates far more loss of lives in Armenia, attended with atrocities, than stated in my telegram of 28th.

I have received absolutely no information concerning any cruelties committed "upon citizens who have declared their intention to become naturalized in this country," or upon any persons who had a right to claim or have claimed for any reason the protection of the United States Government.

In the absence of such authentic detailed knowledge on the subject as would justify our interference no "expostulations have been addressed by this Government to the Government of Turkey in regard to such matters."

The last inquiry contained in the resolution of the Senate touching these alleged cruelties seeks information concerning "any proposals made by or to this Government to act in concert with other Christian powers regarding the same."

The first proposal of the kind referred to was made by the Turkish Government through our minister on the 30th day of November, when the Sultan then expressed a desire that a consul of the United States be sent with a Turkish commission to investigate these alleged atrocities on Armenians. This was construed as an invitation on the part of the Turkish Government to actually take part with a Turkish commission in an investigation of these affairs and any report to be made thereon, and the proposition came before our minister's second dispatch was received and at a time when the best information in the possession of our Government was derived from his first report, indicating that the statements made in the press were sensational and exaggerated and that the atrocities alleged really did not exist. This condition very much weakened any motive for an interference based on considerations of humanity, and permitted us without embarrassment to pursue a course plainly marked out by other controlling incidents.

By a treaty entered into at Berlin in the year 1878 between Turkey and various other governments Turkey undertook to guarantee protection to the Armenians, and agreed that it would "periodically make known the steps taken to this effect to the powers, who will superintend their application."

Our Government was not a party to this treaty, and it is entirely obvious that in the face of the provisions of such treaty above recited our interference in the proposed investigation, especially without the invitation of any of the powers which had assumed by treaty obligations to secure the protection of these Armenians, might have been exceedingly embarrassing, if not entirely beyond the limits of justification or propriety.

The Turkish invitation to join the investigation set on foot by that Government was therefore, on the 2d day of December, declined. On the same day, and after this declination had been sent, our minister at Constantinople forwarded his second dispatch, tending to modify his former report as to the extent and character of Armenian slaughter. At the same time the request of the Sultan for our participation in the investigation was repeated, and Great Britain, one of the powers which joined in the treaty of Berlin, made a like request.

In view of changed conditions and upon reconsideration of the subject it was determined to send Mr. Jewett, our consul at Sivas, to the scene of the alleged outrages, not for the purpose of joining with any other government in an investigation and report, but to the end that he might be able to inform this Government as to the exact truth.

Instructions to this effect were sent to Mr. Jewett, and it is supposed he has already entered upon the duty assigned him.

I submit with this communication copies of all correspondence and dispatches in the State Department on this subject and the report to me of the Secretary of State thereon.

GROVER CLEVELAND.

EXECUTIVE MANSION, _Washington, January 3, 1895_.

_To the Senate of the United States_:

In response to the resolution of the Senate of the 4th ultimo, requesting "any reports or correspondence relating to affairs at Bluefields, in the Mosquito territory," and also information as to "whether any American citizens have been arrested or the rights of any American citizens at Bluefields have been interfered with during the past two years by the Government of Nicaragua," I transmit herewith a report from the Secretary of State, with accompanying papers.

GROVER CLEVELAND.

EXECUTIVE MANSION, _January 9, 1895_.

_To the Senate and House of Representatives_:

I submit herewith certain dispatches from our minister at Hawaii and the documents which accompanied the same.

They disclose the fact that the Hawaiian Government desires to lease to Great Britain one of the uninhabited islands belonging to Hawaii as a station for a submarine telegraph cable to be laid from Canada to Australia, with a connection between the island leased and Honolulu.

Both the Hawaiian Government and the representatives of Great Britain in this negotiation concede that the proposed lease can not be effected without the consent of the United States, for the reason that in our reciprocity treaty with the King of Hawaii he agreed that as long as said treaty remained in force he would not "lease or otherwise dispose of or create any lien upon any port, harbor, or other territory in his dominion, or grant any special privilege or right of use therein, to any other power, state, or government."

At the request of the Hawaiian Government this subject is laid before the Congress for its determination upon the question of so modifying the treaty agreement above recited as to permit the proposed lease.

It will be seen that the correspondence which is submitted between the Hawaiian and British negotiators negatives the existence on the part of Hawaii of any suspicion of British unfriendliness or the fear of British aggression.

The attention of the Congress is directed to the following statement contained in a communication addressed to the Hawaiian Government by the representatives of Great Britain:

We propose to inform the British Government of your inquiry whether they would accept the sovereignty of Nicker Island or some other uninhabited island on condition that no subsidy is required from you. As we explained, we have not felt at liberty to entertain that question ourselves, as we were definitely instructed not to ask for the sovereignty of any island, but only for a lease simply for the purpose of the cable.

Some of the dispatches from our minister, which are submitted, not only refer to the project for leasing an uninhabited island belonging to Hawaii, but contain interesting information concerning recent occurrences in that country and its political and social condition. This information is valuable because it is based upon the observation and knowledge necessarily within the scope of the diplomatic duties which are intrusted solely to the charge of this intelligent diplomatic officer representing the United States Government at Hawaii.

I hope the Congress will see fit to grant the request of the Hawaiian Government, and that our consent to the proposed lease will be promptly accorded. It seems to me we ought not by a refusal of this request to stand in the way of the advantages to be gained by isolated Hawaii through telegraphic communication with the rest of the world, especially in view of the fact that our own communication with that country would thereby be greatly improved without apparent detriment to any legitimate American interest.

GROVER CLEVELAND.

EXECUTIVE MANSION, _January 11, 1895_.

_To the Senate of the United States_:

In response to the resolution of the Senate of the 19th ultimo, requesting the record of the extradition proceedings in the case of General Ezeta, etc., I transmit herewith a letter from the Secretary of State, with accompanying papers.

GROVER CLEVELAND.

EXECUTIVE MANSION, _Washington, January 15, 1895_.

_To the Senate of the United States_:

I transmit a report from the Secretary of State, with accompanying papers, in response to the resolution of the Senate of the 3d instant, requesting "all correspondence or other papers relating to the delivery by the United States consul at Shanghai of two Japanese citizens to the Chinese authorities," and information "whether the said Japanese were put to death after being tortured, and whether there was any understanding with the Chinese Government that officers of the United States should aid, assist, and give comfort to any Japanese citizen desiring to leave China, and whether the United States consul at Hankow was reprimanded by Chinese officials for aiding Japanese citizens to leave the country, and whether all information was refused to the United States consul at Ningpo when he made inquiries as to the charges against certain Japanese citizens arrested there."

GROVER CLEVELAND.

EXECUTIVE MANSION, _January 28, 1895_.

_To the Senate and House of Representatives_:

In my last annual message I commended to the serious consideration of the Congress the condition of our national finances, and in connection with the subject indorsed a plan of currency legislation which at that time seemed to furnish protection against impending danger.[14] This plan has not been approved by the Congress. In the meantime the situation has so changed and the emergency now appears so threatening that I deem it my duty to ask at the hands of the legislative branch of the Government such prompt and effective action as will restore confidence in our financial soundness and avert business disaster and universal distress among our people.

Whatever may be the merits of the plan outlined in my annual message as a remedy for ills then existing and as a safeguard against the depletion of the gold reserve then in the Treasury, I am now convinced that its reception by the Congress and our present advanced stage of financial perplexity necessitate additional or different legislation.

With natural resources unlimited in variety and productive strength and with a people whose activity and enterprise seek only a fair opportunity to achieve national success and greatness, our progress should not be checked by a false financial policy and a heedless disregard of sound monetary laws, nor should the timidity and fear which they engender stand in the way of our prosperity.

It is hardly disputed that this predicament confronts us to-day. Therefore no one in any degree responsible for the making and execution of our laws should fail to see a patriotic duty in honestly and sincerely attempting to relieve the situation. Manifestly this effort will not succeed unless it is made untrammeled by the prejudice of partisanship and with a steadfast determination to resist the temptation to accomplish party advantage. We may well remember that if we are threatened with financial difficulties all our people in every station of life are concerned; and surely those who suffer will not receive the promotion of party interests as an excuse for permitting our present troubles to advance to a disastrous conclusion. It is also of the utmost importance that we approach the study of the problems presented as free as possible from the tyranny of preconceived opinions, to the end that in a common danger we may be able to seek with unclouded vision a safe and reasonable protection.

The real trouble which confronts us consists in a lack of confidence, widespread and constantly increasing, in the continuing ability or disposition of the Government to pay its obligations in gold. This lack of confidence grows to some extent out of the palpable and apparent embarrassment attending the efforts of the Government under existing laws to procure gold and to a greater extent out of the impossibility of either keeping it in the Treasury or canceling obligations by its expenditure after it is obtained.

The only way left open to the Government for procuring gold is by the issue and sale of its bonds. The only bonds that can be so issued were authorized nearly twenty-five years ago and are not well calculated to meet our present needs. Among other disadvantages, they are made payable in coin instead of specifically in gold, which in existing conditions detracts largely and in an increasing ratio from their desirability as investments. It is by no means certain that bonds of this description can much longer be disposed of at a price creditable to the financial character of our Government.

The most dangerous and irritating feature of the situation, however, remains to be mentioned. It is found in the means by which the Treasury is despoiled of the gold thus obtained without canceling a single Government obligation and solely for the benefit of those who find profit in shipping it abroad or whose fears induce them to hoard it at home. We have outstanding about five hundred millions of currency notes of the Government for which gold may be demanded, and, curiously enough, the law requires that when presented and, in fact, redeemed and paid in gold they shall be reissued. Thus the same notes may do duty many times in drawing gold from the Treasury; nor can the process be arrested as long as private parties, for profit or otherwise, see an advantage in repeating the operation. More than $300,000,000 in these notes have already been redeemed in gold, and notwithstanding such redemption they are all still outstanding.

Since the 17th day of January, 1894, our bonded interest-bearing debt has been increased $100,000,000 for the purpose of obtaining gold to replenish our coin reserve. Two issues were made amounting to fifty millions each, one in January and the other in November. As a result of the first issue there was realized something more than $58,000,000 in gold. Between that issue and the succeeding one in November, comprising a period of about ten months, nearly $103,000,000 in gold were drawn from the Treasury. This made the second issue necessary, and upon that more than fifty-eight millions in gold was again realized. Between the date of this second issue and the present time, covering a period of only about two months, more than $69,000,000 in gold have been drawn from the Treasury. These large sums of gold were expended without any cancellation of Government obligations or in any permanent way benefiting our people or improving our pecuniary situation.

The financial events of the past year suggest facts and conditions which should certainly arrest attention.

More than $172,000,000 in gold have been drawn out of the Treasury during the year for the purpose of shipment abroad or hoarding at home.

While nearly $103,000,000 of this amount was drawn out during the first ten months of the year, a sum aggregating more than two-thirds of that amount, being about $69,000,000, was drawn out during the following two months, thus indicating a marked acceleration of the depleting process with the lapse of time.

The obligations upon which this gold has been drawn from the Treasury are still outstanding and are available for use in repeating the exhausting operation with shorter intervals as our perplexities accumulate.

Conditions are certainly supervening tending to make the bonds which may be issued to replenish our gold less useful for that purpose.

An adequate gold reserve is in all circumstances absolutely essential to the upholding of our public credit and to the maintenance of our high national character.

Our gold reserve has again reached such a stage of diminution as to require its speedy reenforcement.

The aggravations that must inevitably follow present conditions and methods will certainly lead to misfortune and loss, not only to our national credit and prosperity and to financial enterprise, but to those of our people who seek employment as a means of livelihood and to those whose only capital is their daily labor.

It will hardly do to say that a simple increase of revenue will cure our troubles. The apprehension now existing and constantly increasing as to our financial ability does not rest upon a calculation of our revenue. The time has passed when the eyes of investors abroad and our people at home were fixed upon the revenues of the Government. Changed conditions have attracted their attention to the gold of the Government. There need be no fear that we can not pay our current expenses with such money as we have. There is now in the Treasury a comfortable surplus of more than $63,000,000, but it is not in gold, and therefore does not meet our difficulty.