Special Message

To the Senate and House of Representatives:

By the act of Congress approved January 14, 1875, "to provide for the resumption of specie payments," the 1st of January, 1879, is fixed as the date when such resumption is to begin. It may not be desirable to fix an earlier date when it shall actually become obligatory upon the Government to redeem its outstanding legal-tender notes in coin on presentation, but it is certainly most desirable, and will prove most beneficial to every pecuniary interest of the country, to hasten the day when the paper circulation of the country and the gold coin shall have equal values.

At a later day, if currency and coin should retain equal values, it might become advisable to authorize or direct resumption. I believe the time has come when by a simple act of the legislative branch of the Government this most desirable result can be attained. I am strengthened in this view by the course trade has taken in the last two years and by the strength of the credit of the United States at home and abroad.

For the fiscal year ending June 30, 1876, the exports of the United States exceeded the imports by $120,213,102; but our exports include $40,569,621 of specie and bullion in excess of imports of the same commodities. For the six months of the present fiscal year from July 1, 1876, to January 1, 1877, the excess of exports over imports amounted to $107,544,869, and the import of specie and bullion exceeded the export of the precious metals by $6,192,147 in the same time. The actual excess of exports over imports for the six months, exclusive of specie and bullion, amounted to $113,737,040, showing for the time being the accumulation of specie and bullion in the country amounting to more than $6,000,000, in addition to the national product of these metals for the same period--a total increase of gold and silver for the six months not far short of $60,000,000. It is very evident that unless this great increase of the precious metals can be utilized at home in such a way as to make it in some manner remunerative to the holders it must seek a foreign market as surely as would any other product of the soil or the manufactory. Any legislation which will keep coin and bullion at home will, in my judgment, soon bring about practical resumption, and will add the coin of the country to the circulating medium, thus securing a healthy "inflation" of a sound currency, to the great advantage of every legitimate business interest.

The act to provide for the resumption of specie payments authorizes the Secretary of the Treasury to issue bonds of either of the descriptions named in the act of Congress approved July 14, 1870, entitled "An act to authorize the refunding of the national debt," for not less than par in gold. With the present value of the 4 1/2 per cent bonds in the markets of the world, they could be exchanged at par for gold, thus strengthening the Treasury to meet final resumption and to keep the excess of coin over demand, pending its permanent use as a circulating medium, at home. All that would be further required would be to reduce the volume of legal-tender notes in circulation. To accomplish this I would suggest an act authorizing the Secretary of the Treasury to issue 4 per cent bonds, with forty years to run before maturity, to be exchanged for legal-tender notes whenever presented in sums of $50 or any multiple thereof, the whole amount of such bonds, however, not to exceed $150,000,000. To increase the home demand for such bonds I would recommend that they be available for deposit in the United States Treasury for banking purposes under the various provisions of law relating to national banks.

I would suggest further that national banks be required to retain a certain percentage of the coin interest received by them from the bonds deposited with the Treasury to secure their circulation.

I would also recommend the repeal of the third section of the joint resolution "for the issue of silver coin, "approved July 22, 1876, limiting the subsidiary coin and fractional currency to $50,000,000.

I am satisfied that if Congress will enact some such law as will accomplish the end suggested they will give a relief to the country instant in its effects and for which they will receive the gratitude of the whole people.

U.S. GRANT.