the difference, however, is accounted for by the items of notes unfit for circulation delivered to the Comptroller of the Currency, and of amounts called for and in transit from banks to make good their account for notes redeemed.

To account for the existence of bank-notes in the fund, the law requiring a deposit of legal-tenders, it must be borne in mind that the notes are first paid for aud must be assorted by banks before being disposed of, and are held as cash while going through the process of redemption preparatory to being reimbursed by the banks.

It will be noted from the above statements that during the year ended September 30 the coin assets have increased from $67,586,705.95 to $133,585,072.24, and the currency assets from $100,437,766.44 to $110,096,039.01; the increase, however, has accrued mostly since March last.

FRACTIONAL CURRENCY AND SILVER COIN.

The substitution of silver coin for fractional currency has progressed very rapidly under the arrangements made with your sanction some months ago to furnish silver as nearly as possible without expense to the public as the facilities of this office and the mints would permit. By the present system, under your direction, fractional silver coin in multiples of one thousand dollars is sent from the mint, upon the order of the Treasurer, to any part of the country reached by established express-lines, in return for fractional currency, for a deposit of legaltender notes, or for bank-notes sent for redemption, the transportationcharges upon the bank-notes sent for redemption being paid by the department, under the provision of law, the charges upon the silver being paid from the silver profit-fund.

DISTRIBUTION OF SILVER FROM THE MINTS FREE OF EXPENSE.

Under the terms of department circular No. 26, February 15, 1877, the Treasurer was authorized to cause shipments of silver coin in sums of one thousand dollars, or any multiple thereof not exceeding ten thousand dollars, to be made from the mints at government expense, in exchange for currency, deposited with any national-bank depositary located where there was no subtreasury office.

From February 19 to March 21, 1877, $274,000 was distributed on 96 orders issued for the purpose. The denominations supplied were as follows, viz: Half-dollars, $111,600; quarter-dollars, $115,900; dimes, $46,500. On March 23, 1877, department circular No. 43 was issued by the Secretary, modifying the terms of the previous circular, so that any person might deposit currency in like sums with any assistant treasurer, designated depositary, or national-bank depositary, and obtain silver coin therefor from the mints free of expense, upon forwarding the certifi cate of deposit to the Treasurer of the United States at Washington, D. C. From March 23 to October 31, 1877, $3,622,900.80 in silver coin has been issued from the mints in payment of 2,493 transfer-orders and letters of the Treasurer. The denominations supplied were as follows, viz: Half-dollars, $1,874,202; quarter-dollars, $1,331,323; dimes, $417,375.80.

SILVER PAYMENTS.

On the 18th of April, 1876, under instructions of the Secretary of the Treasury, given in pursuance of the act of Congress approved April 17, 1876, entitled "An act to provide for a deficiency in the Printing and Engraving Bureau of the Treasury Department, and for the issue of silver coin of the United States in place of fractional currency," silver coin

Date.

was issued in redemption of fractional currency, and has continued to be so issued with the following results, viz:

1876.

Under instructions of the Secretary of the Treasury, issued in pursu ance of public resolution entitled "Joint resolution for the issue of silver coin," approved July 22, 1876, fractional silver has been issued from time to time, as the requirements of the Treasury and the public seemed to warrant and the state of the coinage at the several mints would seem to permit, as follows, viz:

Silver coin disbursed in lieu of or in exchange for currency.

The amount of silver paid out at the several offices of the Treasury and by the mints is shown by the following table:

Upon the very moderate estimate of the commission, appointed by you, that $8,083,513.50 of fractional currency has been lost in circulation, there may still be issued before the limit of fifty million dollars is reached, $10,269,061.16 in exchange for fractional, and $3,110,206.84 for currency obligations. An increased demand for silver coin, caused, perhaps, by the necessities of business at this season of the year, is springing up, while the amount of fractional currency presented for redemption has fallen off from an average of over one million dollars a month during the first four months of this calendar year to an average of less than half a million dollars a month for the last four months.

MINOR COIN.

Your attention is called to the excessive accumulation of minor coin in the Treasurer's account, amounting on September 30th to over $870,000, while at the same date last year the amount on hand amounted to less than $157,000. The receipts have been very large recently, owing partly to the dullness of business, being much in excess of the payments; though should business revive, without doubt some portion of the amount on hand will be again demanded for circulation.

The amount on hand, being received as money, much of it in exchange for legal tenders, is, of necessity, held as cash, and to such an amount that the facilities at the Philadelphia Mint for storing it are exhausted, and other rooms under the control of the Assistant Treasurer at that place have been provided for the purpose. That portion of it not needed as money cannot be disposed of, if not paid out; as old metal it might possibly be of some value, but nothing like its face-value, and unless some appropriation is made to cover the loss by such disposition of it— the difference between its face-value and its value as metal-it cannot be disposed of. There has been issued of this coin to June 30, 1876, onecent pieces, nickel and bronze, $3,704,785; two-cent, $912,020; threecent, $855,090; five cent, $5,747,840; and the profits upon this coinage, which have been covered into the Treasury, amounted to $4,833,277.87, from 1861 to 1877, inclusive. The two and three cent pieces appear to be of no particular use in circulation, there being no demand for them, especially the two-cent pieces.