Government, but a dangerous menace to the National credit.

It is manifest that we must devise some plan to protect the Government
against bond issues for repeated redemptions. We must either curtail the
opportunity for speculation, made easy by the multiplied redemptions
of our demand obligations, or increase the gold reserve for their
redemption. We have $900,000,000 of currency which the Government by
solemn enactment has undertaken to keep at par with gold. Nobody is
obliged to redeem in gold but the Government. The banks are not required
to redeem in gold. The Government is obliged to keep equal with gold all
its outstanding currency and coin obligations, while its receipts are
not required to be paid in gold. They are paid in every kind of money
but gold, and the only means by which the Government can with certainty
get gold is by borrowing. It can get it in no other way when it most
needs it. The Government without any fixed gold revenue is pledged to
maintain gold redemption, which it has steadily and faithfully done,
and which, under the authority now given, it will continue to do.

The law which requires the Government, after having redeemed its United
States notes, to pay them out again as current funds, demands a constant
replenishment of the gold reserve. This is especially so in times of
business panic and when the revenues are insufficient to meet the
expenses of the Government. At such times the Government has no other
way to supply its deficit and maintain redemption but through the
increase of its bonded debt, as during the Administration of my
predecessor, when $262,315,400 of four-and-a-half per cent bonds were
issued and sold and the proceeds used to pay the expenses of the
Government in excess of the revenues and sustain the gold reserve. While
it is true that the greater part of the proceeds of these bonds were
used to supply deficient revenues, a considerable portion was required