party must answer first, and then it must be answered by each individual hereafter. The sympathies of the Democratic party, as shown by the platform, are on the side of the struggling masses who have ever been the foundation of the Democratic party. There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through to those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.

You come to us and tell us that the great cities are in favor of the gold standard; we reply that the great cities rest upon our broad and fertile prairies. Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms, and the grass will grow in the streets of every city in the country.

My friends, we declare that this nation is able to legislate for its own people on every question, without waiting for the aid or consent of any other nation on earth; and upon that issue we expect to carry every State in the Union. I shall not slander the inhabitants of the fair State of Massachusetts nor the inhabitants of the State of New York by saying that, when they are confronted with the proposition, they will declare that this nation is not able to attend to its own business. It is the issue of 1776 over again. Our ancestors, when but three millions in number, had the courage to declare their political independence of every other nation; shall we, their descendants, when we have grown to seventy millions, declare that we are less independent than our forefathers? No, my friends, that will never be the verdict of our people. Therefore, we care not upon what lines the battle is fought. If they say bimetallism is good, but that we cannot have it until other nations help us, we reply that, instead of having a gold standard because England has, we will restore bimetallism, and then let England have bimetallism because the United States has it. If they dare to come out in the open field and defend the gold standard as a good thing, we will fight them to the uttermost. Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests, and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.

138. DISTRIBUTION OF VOTE IN 18961

BY CHARLES J. BULLOCK

The first group includes the eleven states of the greater average density of population, and it will be seen that all of these were carried by the gold party, usually by an emphatic majority:

The second group includes eighteen states of a medium density of population, and these show a fairly even division of sentiment, eight casting a majority vote in favor of the gold standard, and ten showing a majority in favor of silver or paper:

Adapted from The Monetary History of the United States, pp. 117-19. (The

Macmillan Co., 1900.)

The third group comprises sixteen states with the least density. of population, and it will be noticed that only four of these cast a majority vote in favor of the gold standard:

The Act of March 13, 1900, "to define and fix the standard of value, to maintain the parity of all forms of money issued or coined by the United States, and for other purposes," opens a new stage in the monetary history of the United States.

The first section provides that the gold dollar shall be "the standard unit of value," and makes it the duty of the Secretary of the Treasury to maintain all forms of money "at a parity" with this standard. This, to be sure, is no more than a declaration, whose efficacy depends on the nature of the legislation provided for upholding the standard. Much more important, as a legislative command framed in precise terms, is the provision with which the second section opens: that United States notes and Treasury notes, when presented for redemption, shall be redeemed in gold. Under the terms of previous legislation the Secretary of the Treasury had the right to redeem at his discretion, in either kind of coin. Hereafter no Secretary will have discretion on this point. The legal-tender paper is redeemable in gold and in gold only.

I Adapted from "The Currency Act of 1900," Quarterly Journal of Economics, XIV (1899-1900), pp. 394–410.

By section 4 there are established in the office of the Treasurer two divisions, to be known as the division of issue and the division of redemption; and to these are transferred "all records and accounts relating to the issue and redemption of United States notes, gold certificates, silver certificates, and currency certificates." So much is merely a bookkeeping change, serving to set forth more clearly the various resources and obligations of the Treasury. But it is further provided that among these accounts shall figure the "reserve fund" for the redemption of the legal-tender paper, which, like the other funds represented in the several accounts, is to be "held as a trust fund." That reserve fund is created and specifically defined in section 2, where the declaration of trust again appears in the provision that the fund "shall be used for such redemption purposes only." The Secretary of the Treasury is to constitute it by setting aside 150 millions of gold coin and bullion, not, indeed, setting it aside physically, but charging so much of the gold he has on hand to the reserve fund. Here we have something like an issue department. We might expect that thereafter the situation would be simple, the new department, or account, serving to hold fast any notes redeemed, and reissuing them, if at all, only against a later redeposit of gold. But this simple and straightforward mechanism is not adopted. Instead, we have a series of elaborate regulations, which once again interlace the new account with the other Treasury operations. The further provisions of this section of the act (section 2) call for constant transfers to and fro between the new reserve fund and the general fund, anxiously avoid any accumulation or putting aside of redeemed notes, virtually compel their reinjection into the currency, and, finally, look to real replenishment of the gold supply from the sale of bonds only as a last and extreme resort.

There are two chief means of restoring the reserve whenever notes are redeemed: (1) The Secretary must exchange the notes for any gold coin in the "general fund." This general fund is simply the cash which happens to be on hand in the course of the Treasury's ordinary fiscal operations. If the cash is in excess of the current needs, and if the surplus on hand exists in the form of gold coin (as at the present juncture it happens to be), a resource for strengthening the reserve fund is here available. But the resort to this device clearly causes the surplus in the general fund to take the form of notes rather than gold; and, since a permanent and continuing surplus is more than improbable, we may be sure that sooner or later the transferred notes

will be paid out. Under what we may suppose to be normal conditions, when revenues simply balance expenditures, the operation must cause the redeemed notes to be returned to circulation with but a short interval of temporary housing in the general fund. (2) The second use which the Secretary of the Treasury must make of redeemed notes even more obviously and unfailingly returns them to circulation: "by accepting deposits of gold coin at the Treasury or at any subtreasury in exchange for the notes so redeemed." Such deposits have been habitually made for years, where paper is desired for convenience of use by persons having gold on their hands; and a continuance of this practice is looked to as a means of replenishing the reserve fund.

These devices described in the preceding paragraphs are compulsory on the Secretary of the Treasury until 50 millions of the original 150 millions of gold are gone from the reserve fund. So long as gold can be scraped up elsewhere, by transfer from the general fund or by exchange with the outside world, the redeemed notes are to be held in the reserve fund only for a moment. When these devices are no longer available, the notes begin to be impounded. The reserve fund may never exceed 150 millions in all, and, as will be pointed out in a moment, the notes in it may not exceed 50 millions; but within these limits it may consist partly of gold and partly of redeemed notes.

The stage of energetic replenishment of the reserve fund is not reached until the gold in it shall fall below 100 millions. The Secretary of the Treasury must sell bonds, and thereby procure gold. But the gold thus got is not to be turned automatically into the reserve fund. It "shall first be covered into the general fund of the Treasury, and then exchanged for an equal amount of notes redeemed." The effect of this requirement must be to cause the reserve fund, which previously would have consisted of 100 millions of gold and 50 millions of paper, to be suddenly made up again of 150 millions of gold, the paper being transferred as suddenly to the general fund, and there held again as cash. Thereafter these notes may be used in exchange for gold (once more!) or to purchase bonds or "for any lawful purpose." The only restriction is that "they shall not be used to meet deficiencies in the current revenues." This proviso is expected to prevent the reappearance of the "endless chain." So long as there is a "deficiency in the current revenues," any notes transferred from the reserve fund into the general fund in exchange for bond-bought gold are to be impounded in the general fund, and there held as "cash in the Treasury."