The steady injection of a stream of Jver valued silver into our currency combined with the obligation of the government to redeem on demand in gold the United States and the Sherman notes helped to create the crisis of 1893 and seriously embarrassed the Treasury during that crisis. The result was that the silver purchase clause of the Sherman Act was repealed at a special session of Congress called by President Cleveland in the summer of 1893 and in 1900 an act was passed providing among other things for the gradual retirement of the Sherman notes and for the establishment of a gold reserve of $150,000,000 to be used for no purpose except the redemption of the United States notes, such notes when redeemed to be retained in the Treasury until they should be withdrawn in exchange for gold coin.
The only noteworthy change in the currency system of the United States since the Act of 1900 was the result of the establishment of our Federal Reserve system in 1913. Under the operation of that system a new element has been added to our currency in the form of Federal Reserve notes issued in exchange for rediscounted commercial paper. This new ele ment has supplied the necessary element of elasticity which our currency previously lacked, since these notes automatically expand and contract in volume in response to the changing needs of commerce. • The other elements of
our currency are either stationary in volume or fluctuate in 'response to other influences than currency needs. See BANKS AND BANKING FOREIGN EXCHANGE, COMMERCIAL PAPER, FED ERAL RESERVE SYSTEM, NATIONAL BANKING SYS TEM, BIMETALLISM; COIN; COINAGE; CUR RENCY ; _GOLD; GOLD COINAGE IN THE UNITED STATES; GOLD STANDARD AND GOLD PRODUCTION; LEGAL TENDER; MONEY, PAPER; SILVER.
Dewey, D. R.,