Newspaper Page Text
o >»'
-fi 1 * ‘I
*
ft *
; rr
*^3
aS
<>
'‘‘ISmarks on the proposed issue of Trpaamy. Jfotes/
. ~ v * vJ* - BY duff green, esq., v •
**''*<* ’ J'ha Confederate States propose to contract a loan of fifty
« ^millions of dollars, of which twenty millions of dollars to be in
- the shape of Treasury ^ot§s, without interest, hut receivable in
payment of publiadues'-An^J^nvertible inlo Boncfs, bearing
«ight per cent, idferest. It is^roposed that the States and cities,
-towns and coufllie3 of the several States shall make these notes
receivable for taxes, and that the Banks and Railroad Compa
nies shall receive tliem and pay them out as currency. The
question to be considered is, Can such notes be made a curren
cy equal to specie 1
The constitution gives to Congress power “ to coin money,
and regulate the value thereof, and of foreign coin,” and de
clares, that no State “ shall make anything but gold, and silver
coin a tender in payment of debtsi’ Therefore, nothing but
gold and silver is money. Yet Bank notes, which are paid on
demand in specie, a^e accounted and used aslnoney; and euch
notes have again and again been so used, even when the Banks
issuing them, weie authorized by law to suspend specie payment.
The Bank of England was required, by act of Parliament, to
suspend in 1797, and did not resume until 1825; and the Banks
in the United States have been permitted to suspend payment
so often, and for such periods, that the confidence of the public
in Bank notes, and the value of a paper currency, must be
admitted.
Adam Smith says:
“ The cold and silver which circulates in any country, and by means of which the pro
duce of land and labor is annually circulated and distributed to the proper consumers, Is.
in the same manner as the ready money of the dealer, all dead stock. It is a very valuable
part of tho capital of the country, which produces nothing to the country. The Judicious
operations of banking, by salslUnting paper In the room of a great part of this gold and
silver, enables the country to convert a great part ot the dead stock into active and produc
tive stock, which produces something to the Country.”
Again, he says : .
“ A paper money, consrimflfe In bank noses, issued by a people of undoubted credit,
payable on demand, without aoy Qundition, and In fact always readily paid as soon as pre
sented, is in every respect equal In value to gold and ailver money.”
Ricardo 6ays:
“If there were perfect security that the power of issuing paper money would not be
abnted; that Is. if there were perfect security for its being need in such quantities as to
preserve Its value relatively to the mats of circulating commodities nearly uniform, tbe
precious metals might be entirely discarded bom circulation.”
An able British writer bas said:
such as <$hbatra»sed trade,
the money market," Ac.;
general distribution of labor,
contlonal fluctuations.''
The constitution not only gives to Congress the power to
coin%ioney and regulate its value, but alBo “to fix a standard
of weights and measures.” The purpose of giving these pow
ers to Congress was to secure, as far as practicable, a certain,
fixed, value of property, by preventing fluctuations in tbe value
of money. It was to euable the seller to know how much he is
to receive, and the purchaser to know how much he is to give.
If was to establish justice and right in the transactions between
man and man; and tfie States were forbidden to make any
thing else than gold and silver a tender in payment oi debts,
because- it was supposed that the limited quantity of these
metals.caused them to fluctuate in value less than other com
modities^ % . -a .. .
But it is apparent that irrforbiddiflg the States to make any
thing else than gold and silver* a tender in payment of debts,
it was'nejess the purpose of the constitution to strengthen and
increase the value of credit, than to give a certain and fixed
value to money.' For as there could be no debts without a
previous use of credit, the regulation which requires the pay
ment to be made in gold and silver coin, the value of-which
had been regulated by Congress, tends to give the same Value
to credit as to these coins.
The Confederate States propose to borrow money. Have
they the means of payment, and will they pay as they promise
to do? We Relieve that the people of these States have ample
means within themselves to, advance to themsdves all the funds
wbicli they may require, and that, as the debt will be due from
themselves to themselves, there can be no cause to apprehend
that they will not pay themselves. If the value of credit de
pends on the ability of the debtor to pay and the certainty of
payment, when the debt becomes due, and the people ot the
Confederate States become themselves.the creditors of them
selves, them there copld be no stronger basis of credit than that -
(>{ptlie proposed-loan.
The use of public credit is of comparatively recent "origin.
The extent to which it may be used by an enlightened people,
is illustrated by tho progress of the Public Dkbt of England.
We are indebted to Ayres’ Financial Register, ot 1857, for a
series of Tables derived from official sources. The following
table shows the aggregate amount of th^ Public Debt of the
United Kingdom, at different periods, with the amount of the
public revenue.
Public Debt at the Revolution In 1688
Debt contracted daring the reign of William lU..
“ at tbe accession of Queen Anne, In 1708.
Debt.
$3,851,315
78,653,105
81.973,510
contracted during thin reign 1 188,753,305
“ at the acceeelon of George I., in 1714 370,736,815
“ reduced during thU reign 10,365,640
“ at tbe aeeeeelon of Geotge II., In 1737 360,461,175
“ reduced during 13 yean peace, ending 1730.. 35,688,060
“ at commencement of Spanleb war InJ739 ... 334,773,115
“ Increased daring seven yean* war 156,603,445
“ at the end ef the Spanl.b war,*ln 1748 391,466,5*10
“ redneet^durtng eighteen of peace 18,607,860
“ at commencement of war in 1736 373,859,900
*• increased daring eevsnymrs of war. 360,555,030
“ at the en(Tot the war, hi 1763 783,414,330
“ reduced during thirteen yean of peace 58,698,965
“ at opening of the American war, In 1775 679,715,355
“ Increased daring eight yean of war 513,709,095
at tbe end of the American war. 1,193,434,350
“ reduced during ten yean of peace
" at co—ncncement of French war, In 171%. ■
“ contracted daring French war, eliding 1815..
" of the United Kingdom at the oon.ollda- I
* tion of Bngllehemd Irish Exchequer la 1817)
Thu entire amount of the public debt of the United King
dom ismadaupof several distinct items, under the heads of
Funded Debt!, in the shape of loans contracted, or by funding
securities, ofterminablc and life annuities, and of the unfunded
debt, consifUiug 0/ Exchequer bonds and Exchequer bills. The
following Table, compiled from Parliamentary Documents,
shows the total amount of debt funded-and unfunded, and tbe
33,756,305
1,1691668,045
3,655,444,160
4,894,113,305
Interest. Pnb. Revenue
$199,335 $10,009,435
6,355.435
6,564,760
10,303 080
16,756,840
669.035
16.087,805
1,967,060
14,830,175
5.4*y,895
90,305,070
3,831,385
16,983,685
13,390,590
39.304.305
1,830,000
97.384.305
19,915,490
46^509.635
•717.945
45,88Ol80
115,944,740
161,136,430
19,476,000
39,469,000
33,810,000
34$70,000
34,615,000
35,685,000
43,617,390
51,337,000
59,890,000
83,334,070
lit*
.70,000,000
total annual charge from 1820
to 1^55;
, inclusive.
Tre.
Total ain't Debt,
funded <fcunf'd.
Total annual
charge.
" Yi».
Total ain't Debt,
funded A nnf'd.
Total annul
charge.
1690
$1,163.656, Ofilf
$ 155.198,865
1838
$3,936,868,700
• $145,348,075
1831
4,134,396,585
159,834,500
1839
3,923,582 670
146,791,005
1833
4,164,056,475
f4SjA,190 *
1840
3.937,240,375
145356,906
1833
4,132,316,830
148,090.035
144,099 895
18(1
3,954.373,040
147,077,855
1834
4,067,608,300
• 1843
3,966,252,300
146,981,860
1835
4,030,613,335
1643
3,953,881,960
145,331.435
1836
4,041.837,950
145.437,170
1844
3,937,990,7*5
141.047,495
1837
4,095.118,710
144,857.700
1846
3,935,365,110
140,316.535
1838
8,989,897,700
144 587,8*5
1846
3,914,694,090
139,593,935
1838
8,963,713,410
144.089,615
1847
„ 3,961,741,755
140.780,090
1830
3,915.483,830
138,790,845
1818
3,959,046,490
143.338,300
1831
3,906,476,170
139.960,960
1849
3,964,635,086
140.843,355
1833
3,696,983,745
189,869,146
I860
3,936,145,810
189.301650
1833
3,897,838,915
140,767,885
1851
3,914,346^10
188,910,810
1834
3,860,964,945
138.683,435
1853
3,896,896,030
138A78,970
1835
3,307,683,830
144,837,450
1863
6,854,115,005 *•
137,803.045
1833
3,941,993,860
144,525,566
1854
$.873,986 090
. 185,466,700
141),039,790
1837
8,931,698,690
146,665,740
1855
4,017,476,975
We know that many persons, speculating on tho immense
weight of the public debt of England, have anticipated her nation
al bankruptcy; Btit it is an important fact that the people of Eng
land are themsfilves the creditors, as well as the debtors, and that
they are enabled to bear this immense burden, great as it is,
because tbe immense sums paid by themselves as taxes, are
received by themselves as dividends. This fact is so-important
as illustrating the capacity ofindustrious and intelligent peo
ple to absorb a domestic public debt, that we give a table, show
ing tbe number of persons entitled to receive dividends on tbe
public debt of tbe United Kingdom, which proves that, large
as that debt is, it lias-beeti absorbed and is held by tbe masses
—by the persons of #mall incomes—by the people, jwlio have
placed their surplus earnings in that fund, as a safe and-per
manent investment, add who Ifave thus become interested in
the stability of the government. There were, in 1856,
185,181 persons entitled to dividend! of. $35 and under.
86,491 do.
179,884
40,590
20,304
7,406
4,981
3,391
780
448
dot
do.
do.
do.
do.
do.
do.
do.
50 and exceeding $35
350 “
* •* 50
600 ••
'• 250
1,000 *•
'• 500
1,500 ••
“ 1,000
3,500 “
“ 1,600
5,000 “
“ 9,500
10,000 “
“ 6,000
exceeding 10,000
rv«fcj^208 as the number of all classes entitled to dividends.
•L'wadwrtker illustration of tbe capacity of a people to place
largd^flfcs in the shape of a funded debt, bearing a low rate of
interest, we refer to the Savings Banks of Great Britain and Ire
land. The first Savings Bank originated in 1804 with a woman
• Mrs. Priscilla Wakefield—who, in charity, agreed to receive"
pennies from the laboring poor during the summer, to be repaid
at Christmas with 5 per cent, interest. The sums deposited in
Savings Banks had so increased that Parliament required the
amounts to be placed under the control of commissioners, by
whom it was invested in the public debt; and tl ie following
statement shows the number of depositors, with the
deposits in November, 1855. There were
180,110 persons depositing not more than.
... $5 making ..
.. . $ 283,591
./8,170,700
249,876
do.
“ 44 44 •.
5 and
not exceeding ....
169,638
do.
44 44 44 ..
.. 25 “
“
;;
. 5,895,955
122,787
do.
44 44 44 ..
.. 00 “
44
“ 75...i
,. 7,845,605
75,501
do.
44 44 44 ..
.. 75 “
44
“ 100... 1
. 6,474,333
130,154
do.
64 • 44^ it <§
.. 100 “
44
“ 150...1
. 15,590,080
103,614
do.
do.
* •* “ “ "
..• 150 “
.. 200 “
..
“ 200....
“ 250....
L 17,671,815
. 11,416,850
80,239
do.
it ti “
250 “
^14
“ 350....
. 26.1S7 520
41.2S5
do.
44 It 14
.. 350 “
44
“ 600...
..17,839,015
27,076
do.
44 it it (|
.. 500 “
44
“ 573....
..15,013,340
16,508
do.
it 14 44 ##
.. 575 “
44
“ 750....
1,247.355
25,200
do.
46 14 44
.. 750 “
44
“ 1,000....
.. 1,422,450
1,489
do.
depositing more than....
.. 1,000
.. 1,653,410
1,381,638 individuals who deposited $14,243,330
14,148 charitable institutions,.which deposited ?.... -:,386,190
8,758 friendly societies, which deposited .,636,265
1,304,833 total number of depositors, who deposited $11,315,675
These depositors receive but 2.94 per cent, per annum as
interest—tlie difference between 8 per cent, and 2.94 per cent,
(a fraction more than one half of one tenth of one per cent:) be-
. ing deducted for the management of the fund. Surely if tbe
working classes of Great Britain can absorb so large a part of a
funded debt of more than four thousand millions of dollars,
bearing an interest of three per cent., and the depositors in the
. Savings Banks can pi ico to tbe use of the government more than
one hundred and sev anty millions, at less man Itiree per
interest, tbe people of tbe Confederate States can absorb a sum,
bearing interest at the rate of eight per cent., much more than
sufficient to pay the vliole expenditures of the government fora
longer period than any probable duration of the war. In that
case, all that will be required in taxes will be a sum sufficient
to pay tbe interest on so tnucL as may be funded ; for it should
be borno in mind tba t to the extent that these notes are used as
currency, they should bear no interest, and to that extent their
issue will diminish taxation. • Thus, if $200,000,000 be used as
currency, the saving of interest will be 8 per cent, or $16,000,000
per annum, which saving will be to the whole people in tbe
proportion which they would otherwise be required to pay
taxes.
A more significant feature of tbe financial strength of the
people of England in, that during the war with France, they
advanced as loans and subsidies to Hanover, Hesse Cassel, Sar
dinia, Prussia, Hesse Darmstadt, Baden, Germany, Brunswick,
Portugal, Prince of Orange, Bavaria, Russia, Sweden, Spain,
Sicily, Austria, Morocco, Danmark, Holland, and to France!!
the sum of $301,047,813.
The imagination may well "be startled at the magnitude of
these sums, and accustomed, as we have been, to consider the
Bank of England as the Regulator of the monetary system-and
credit of the world, we naturally assume that it is to the finan
cial strength and great resources of that Bank that the people
of England are indebted for the ability to sustain the weight of
such a burden ofyaxation. We are the more inclined to do this
because it is knowu that tbe Bank is the financial agent of tbe
government, and that Parliament, in 1797, passed an act requir
ing the Bank tp suspend specie payment as a means of enabling
the Bank to aid in sustaining the public credit In this connec
tion, the following Table, showing the equivalent of three per
cent, stock for the amount of debt funded, the stock created for
£100 in money, the market value of the paper Pound in gold,
and the value per cent, of the paper currency, with the average
circulation of Bank of England notes, is given.
Years
Amount of
debt funded.
Equivalei t in
three per* ent.
stock
Stock creat
ed for £100
In money.
Mark’tv’lue
ofpaper
£ in gold.
£
£
£
s. d. .
1800
31X500.000
33,185,(00
158.50
20 0.0
1S01
36,916.450
63^78.100
174.54
18 8.8
1802
25,000,000
82,990,(30
132.17
18 0.5
1803
12,000 0110
20,483,1.»
173.55
19 5.6
1804
14.500,000
20,390,* 00
185.00
19 5.6
1805
22,500,100
41,800,1100
177.20
19 56
1606
20,000.000
33,200,000
167.70
10 56
1807
15,700.000
24,798,: SO
100.20
19 5.6
1808
14.500,060
33.530,1133
162.67
19 5.6
18U9
22,532,100
86,2 IS,''40
161.89
19 5.6
1810
21,711.000
33,112. 00
152.67
11 6.8
1811
24,000,000
89.7*4 J .20
57,198.080
166.53
18 5.1
1812
31,721,325
180 00
16 8.7
1818
64,755,700
118,736.*190
181.87
15 6.4
1814
34,007,400
36,839,930
154.17
14 11.7
1815
1816
1817
1818
1819
1830
1831
54.133,589
102,787^140
191.52
16 7.8
16 7.8
19 5.6
19 5.6
19 13
19 5.8
30 0.0
£. i. a.
ioo o o-
91 13 4
99 14 S
97 8 10
97 6 10
97 6 10
97 6 10
97 6 10
97 6 10
97 6 10
86 10 6
92 3 2
79 5 3
97 6
97 0
95 11
97 8
100 O
m
16,427,
16,500,000 -
17,408,000
16,876,000
1*791,000
16,706.000
17,128,000
18.917.0CO
23,541,000
23,282.000
33,437,000
24,023,000
36,901,000
36,887,000
36,574,000
38,374,000
87,331.000
35,327,000
23,569,000
22,471,000
These tables 6how that in 1800, three years after the Bank
of England had suspended specie payment; the bank note was
at par, although the public credit was 58J per cent, below par;
and that although the value of the paper pound was, in 1814,
reduced to 14 shillings 11.7 pence, it Was again at par in 1821,
although the Bank did not resume specie payment until 1S25.
Another striking fact is, that whilst the average depreciation
of the Bank of England notes, as compared with gold, was less
than two per cent., the depreciation of the public credit, as
compared with the bank-notes was 67.60 per cent. -Yet in
1806 the whole capital of the Bank was but $58,212,000, which
was then increased to $72,765,000, of which §70,000,000 was
invested in the very securities, which were thns depreciated.
This fact bas a most important bearing on the proposed issue
of Treasury notes.
It will bo seen that a large part of tbe public debt of Great
Britain was created before 1801, when the census shows that
the population was but 10,567,893; and as the productive in
dustry of a country is tlie only legitimate source of its wealth,
and this of necessity depends upon the numbers and sources of
employment of its people, a comparison of the popnlatibn of
tho Confederate States and the relative value of the surplus
products of their industry, witlntlie population and value of tbe
surplus products of the industry of other countries is tbe test, by
which their relative resources and credit should be estimated.
In'these particulars the Confederate States. compare favorably
not only with England, but with any and all other countries,
and as the foreign demand for tho surplus of no other people is
60 great or so certain us for theirs, it follows that no other peo-.
plecan so safely create or so readily absorb a large public debt.
But there are other facts tfhich belong to and bear with equal
or greater force on the questions under consideration. Why
is it that the average rate of interest for English securitie^and
for money in London, rules lower than elsewhere, and that ^bt
auy one, m any other part of the world, wishing to place money
in London, is required to pay a premium to do it? Is it ftqt
because the Bank of England so regulates the exchanges (is tt)
make London the. financial centre of the world, and comete"
the commerce of the world to adjust its balances ih Loadon ?
The process is jthus: Tho Bank has $70,000,000 of its $72,765,-
QP0 invested in three per cent, govermqpift debt, and is aithor-
ized to issue its notes for the whole sum thus invested, and for
a sum in addition equal to tho bullion in its vaults. Thus, when,
as in September, 1852, it had more than $100,000,000 in specie,
its issue was over $170,000,000 of Bank notes, and interest was
two pet - cent. ouly. But when, as in December, 1857, it bad
but $35,000,000 in specie, the issue of Bank notes was but
$105,000 000, and interest was 10 per cent. Why ten per cen
tum ? ^Because the purpose was to throw upon the commerce
of the country the onus of recruiting the bullion for its vaults,
and therefore, instead of receiving the produots of the industry
of other countries in exchange for the products of their industry;
that is, instead of an exchange of staple products, British mer
chants and manufacturers were compelled under tbe pressure
of tho Bank screw, to demand specie; because, as the Bank is
compelled to curtail its circulation as the specie in its vaults is
diminished, the Bank is not only compelled to curtail its dis>
counts, but is compelled to demand specie, or its own notes,
which are equivalent to specie, in payment.
Thus there being an extraordinary demand for bullion to
defray the expense of the war in the Crimea and in India,
(there was remitted to India in two years by one single line of
steamers $154,591,855) and as a large part of this was in silver,
and the circulation of France was chiefly silver, the export of
the silver from France was from January, 1852, to January, 1858,
§225,400,000 more than the Imports, and the Bank of France
was compelled to purchase, betweeu the 1st July, 1855, and the
1st January, 1858, the enormous sum of $272,600,000-in gold,
♦ at a~prenrnrnror-$2,eoo,000, "to supply the place of the silver
thus transferred to India; and the custom-house returns show
that the export of gold from the United States, for seven years
preceding the 1st July, 1857, was upwards of $320,000,000. Is
it not apparent that England got from France the silver sent to
India, and that she obtained from the United States and Aus
tralia the gold to pay for it ? •
Adam Smith, Jacobs and Ricardo all agree that the gold and
silver in a prosperous state constitutes in value a very small
. proportion of its wealth, not more than one per centum. Mr.
Calhonn, in £iis speech in 1864, on the re-charter of the Bank
of the United States, said: “ What this proportion is, in our
“ country, and other trading and commercial communities, is
“ somewhat uncertain. I speak conjecturally in fixing it as 1 to
“ 25 or 30; though I presume this is not far from the truth.”
The Bank of England notes were, in 1797, made, and con
tinue to be, a legal tender in payment of debts. “ Money” has
been defined to be “a token issued by government, and made a
tender in payment of debts,” and a Bank of England Note is,
therefore, money in England.
As the money (to Tise the language of Adam Smith) “which
“circulates in any country, and by means of which the produce
“of its land and labor is dtati-iLnir.yi fn
is so smau u pat c vr aggregate value of its property, it follows
that if any part of that which is requisite to make that distribu
tion be arbitrarily withdrawn, snch diminution must necessarily
affect the exchangeable values of the aggregate property, not in
the proportion which the sum so withdrawn hears'to the-sum
in previous circulation, nor in the pToportion which The sum so
withdrawn lore to the previous aggregate value of the whole
property of the country, but in a proportion intermediate be
tween the two, according to the circumstances under which the
withdrawal is made. -For, if the contraction be sudden, the
effect will be a panic, creating a ruinous depreciation of the
values of property. This feature of tbe financial policy of tbe
Bank of England has borne with a‘ crushing and most ruinous
effect upon the monetary system of the United States; for theirs
being the weaker part of tbe British system, it was necessarily
subject to all tbe contingencies by" which the money market of
London wa£ affected, with tlie certainty that tbe explosions
must of necessity take place in the United States. For, inas
much as that Bank’s issues are regulated by the bullion in-its
vaults, if, from any canse, there be an unusual demand for specie,
as there was in 1825 to enable the Bank to resume and continue
specie payments, or in 1836 to pay tbe West India planters tbe
$100,000,000 due for their emancipated slaves and to ptil-chase
bread, or as in 1857 to defray the expenses of the.war in India,
then, the pressure for specie on the Bank will compel the Bank
to curtail its discounts; and merchants and manufacturers be
ing compelled to pay their indebtedness, instead of selling their
goods and manufactures in that market, wHf send them through
a London Banker to New York to be sold at auction, the pro
ceeds to-be remitted in specie. It is thus that the regulations
of the Bank of England act on prices; anc( it was because tbe
merchants of England, under the pressure of the Bank screw,
were compelled to demand specie, instead of shipping Amer
ican produce in exchange for their merchandize in 1822, and in
JJB37 and again in 1857, that the banks of the United States
were compelled to suspend specie payments ; and it was the
fruitless efforts of the banks of tbe United States to sustain them
selves against the pressure.thus created, that overwhelmed the
United States in ruin and bankruptcy. The continual fluctua
tions, the expansions and contractions of the currency and of the
credit of the United States, and the overwhelming losses and
disasters consequent upon them, are due, not to the overtrading
or imprudent speculations of the people of the United States, but
are each and all traceable to tbe defects in the monetary system
of England, which, whilst making the largest possible use of
credit, compels the Bank of England periodically to arrest the
progress of her industry by reducing her credits and her cur
rency to an apparent specie basis. We say apparent: for fre
quent and disastrous as these recurring spasmodic 'efforts have
been, they only prove that the end proposed is impossible.
To us, it seems that if the issue of Treasury notes of the Con
federate Stales, of denominations suited for currency, and con
vertible into bonds bearing a rate of interest, which will make
them equal to gold and silver, and they are received by the Con
federate States, by the several States, and by the several coun
ties, cities and towns for taxes, and are also received and paid
ont by our banks and Railroad Companies as currency, then
they will be received by all our people as money for all the pro
duce of our soil and labor, and we cam by their use place our.
produce in the market on terms that will enable us to regulate
the exchange of the world. Such a currency will so diminish
the home demand for gold and silver, that the quantity requir
ed for the payment of debts and purchase of property will be
no more than the small sums required for change; and this
currency, although it will .not take wings and fly to London at
tbe call of the Bank of England, will command tire commodi
ties which constitute our exports, and which were the basis of
the immense bank ereffits and deposits iti the banks of *New
York, and which, if we desire it, will create so large a balance
in our favor as to compel the flow of a counter current of the
precious metals into the vaults of our banks, giving Jo our mon
etary system a strength and stability, which will enable us to
use the public credit, in the shape of Treasury notes, for a sum
so largo as to reduce the duties on imposts below the hopes of
the most sanguine advocate of free trade.*
What sum of Treasury Notes may be thus used as currency,
and what the rale of interest on the bqpds should be, are mat
ters of detyil to be fixed by experience; but if tbe sum be
$100,000,000, and the interest on the bonds be 8 per 100, the
saving will be $8,000,000 per annum, loss the cost of issuance
- and administration. If it be $200,000,000, and we see no reason
why it may not be more, tkpn the saving to the public will be
$16,000,000 per annum, less as before.
But this saving will be only a small part of the benefits to
flow from such a system. The convertibility into a funded debt
bearing a proper rate of interest, will always keep tbe notes at
par, a°d the fact that this currency is not liable to take wiDgs
and fly away to England or elsewhere, will regulate the quan
tity so as to secure to us a cheap and stable currency, which
will give constant aud profitable employment to our people. It
will bnild our Railroads, cultivate our lands, and, more than all,
it will not only prevent depreciation but will give a constant
gradual progressive increase in the values of our property. By
showing that we have within ourselves all the credit and re
sources to" defend and protect our rights, it will, it is to be hoped,
bring us a speedy and satisfactory peace. For if tbe North find
that°ve not only have the men to fight our battles, but tho
credit to pay the expense of the war, they will be more inclined
to peace..
It bas been objected that the public may fear an over-issue
and consequent depreciation. Tho answer is, that the holder of
Treasury notes may at pleasure convert them into bonds, bear
ing a rate of interest givifcg a value equal to gold and silver.
They will not,-therefore, bo like the paper money of the Revo
lution, which was issued at*nominal rates, and were not redeem
ed because they were so issued; but they will partake of the
character of the funded debt of the United States, which bear
ing interest, was a favorite investment and paid oft at a pre
mium. This feature will regulate the qtiauwiy of Treasury notes
in pircnlation, and the value of the funded debt. For if tbe
quantity of Treasury notes is so great as to depreciate their
value, theh^eywoqjid be fftnded,ayffl if the price of the funded
debt^flfejfin^Ti afcAve vm\ so uirto diminish the quantity of
Treaangy ■n^resafn *Trclijjoioqf af they*should ]fe redeemable at
pleasure, th^GoyeYlfmyitJj^ a:/ijf’c retted isspfi of notes con.
vertible iy#§/bonds/at a 1 ’diipinis.fed rate orinterest, should
cancel a sufficientf^um of the fuqdod debt <o fupplj^he re
quisite circulation^ and thus reduce the bonds to par. Thus the
botids and tlTe notes may be made to regulate the value of each
other so as that the value of each shall at all times be at pai
with gold and silver.
Again. As we have before said, the Banks of the United
States havg*been so often permitted to suspend specie payment,
and the valbe of the notes of the suspended Banks as a curren
cy has been so fully established, that it is only necessary to
compare the Treasury notes with the Bank noffcg- Jo prove that
they will be* a reliable currency. Congress has power “ to
borrow*money on the credit of the Confederate, States.” The
Treasury notes will be!a loan, and Congress has power “ to lay
and collect taxes, duties, imposts and excises for revenue, ne
cessary to pay the debts, provide for the common defence and
cany on the government of tbe Confederate States.” The pow
er of taxation includes tho right to pay the debts, and as the
Bank notes represent the property of the Banks only, and the
Treasury notes represent all the property of all the people of
all the Confederate States, including as well the property of
Banks, as the other property of every description, it follows
that the basis of tbe Treasury notes is as much stronger than
tlie basis of the Bank notes as the relative wealth of all the peo
ple of all the Confederate*States, including, tho wealth of the
£auks themselves, is to the wealth of the Banks. But we have
a guarantee that there#rill not be an over issue of the Treasury
notes in* the fact that so much as are funded will be a debt on
the people, whj, through their representatives, can regulate the
issues so as to limit the sums to be funded.
The writer had the honor to be the intimate and confiden
tial personal-and political friend of Mr. Calhoun, and-for many
years, to vindicato his opinions, principles, conduct and mo
tives from the aspersions of his personal aud political enemies,
and especially from the aspersions of those whose political prin
ciples, (if they are worthy to be dignified asjirinciples) meas
ures and policy be then foresaw and foretold, would, if trium
phant in the government, necessarily dissolve the Union. The
subject of finance and currency was frequently discussed be
tween them, and Mr. Calhoun again and again said that an issue
of public credit, under wise regulations, forbidding an over
issue, was the cheapest and best form of currency. Were he
now living, his whole influence would be exerted to protect the
Confederate States from the defects of the monetary system of
England and the United States to which we have referred.
In confirmation of tbe same views, we would refer to the
able work on the “ Ways and Means of Payment,” by Stephen
Colwell, of Philadelphia, in which he gives a chapter on the
use of public credit as currency. The facts and illustrations
which he gives in explanation of the use of credits are so im
portant, that we quote much at large. Upon this subject, he
says:
“ Whatever may be said in defence of the position that paper currency is based upon
the precious metals, it is very certain that, both in this country and iu England, paper cur
rency is the chief medium of payment. In the first eight months of 1857, the clearings or
payment* at the New York Clearing Honse fluctuated between $655,000,000 and $179,000,000
for,each month. In addition to which, huge payments ocowred, not indicated at the Clear
ing Honse. All payments made in any Bank by a check on that Bank are completed there,
•and do not go to the Clearing House. The Banks only resort to the Clearing Bouse for the
adjustment of the checks they receive and the claims they hold on other Banks. The
monthly payments of New York were little less than $900,000,000 from January to August,
1857. During that time the average amount of specie in {he Banks'was under $12,000,000;
the deposits averaged $5,000,000, and the circulation $8,000,000. It is apparent, then, that
$103,000,000 of Bank notes and deposits effected, by aid of the books of the Banks, payment
ot not less than $30,000,000 daily, whilst the $12,000,000 of specie in the Banks scarcely
moved at all.
“ The actuartigency of the precious metals in these current daily payments is altogether
too smaU to tie either appreciated or noticed. It Is only employed for the payment of occa
sional balances in the foreign and domestic trade. We have already adverted to the tact
that when the panic of 1857 set ln v it cost the city of New York a contraction of bank facili
ties to the amount of $66,000,600 to retain 3xa.ooo.ooo rfs-u. im August, 1837. the Joans of
the New York Banks amounted to $133,000,000 and the deposits to $94,000,000; in the mid
dle of October, the loans had lallep to $97,000,000, and the deposits to $52,000,000. Thus
the Banks were obliged to withdraw from the public $60,000,000 of paper currency, to keep
$l2,0u0,000 of gold in their vaults. This was withholding daily $1,000,000 of the customary
bank facilities for sixty-six days. So long as the Banks conld, by this extraordinary contrac
tion, keep their average of specie tq nearly the amountof $12,900,000, they continued it
About the middle of October eveu this terrible expedient failed. The patience of the pub
lic gave way; the people stepped into the Backs and took out $4,000,000 of specie, aud the
Banks stopped, t ut the consequences and operation of this contraction are not shown by
the fact of the withdrawal of $66,000,000 of currency in as maijj- days. The amount of cur
rency at any particular time never exhibits the amount of payments which that currency
can Affect in a single day, its power or efficiency must be estimated by the sum ot the pay
ments, which can be accomplished within a given time. Tl*g real contraction or diminution
of payments would be shown by a comparison of the actnal transactions of the Banks fors
day or week as the different periods compared. As it has not been customary to report the
whole movement of the funds in the banks, we mnst resort to the Clearu^- Honse for the
best approximation. The average clearings in New York exceed $769,000,000 eadfmonlh
from January- to August, 1S57; in September they were $481,000,000; in October they were
reduced to $308,000,000, much less than half the monthly average firom-January to August.
Here ia an actual falling off; in the monthly payments of the Clearing House alone, of $350,-
000,000, or more than $12,000,099 daily ;-that ia, the efforts of the Banks to keep less than
$12,000,000 of specie involved a diminution of the payments of the city of $12,000,0.0 daily.
The whole sum of the payments made in the Clearing House, in the months of September,
October, November and December, 1857, were less, by $1,438,009,000, than theamount paid
the preceding four mOfths. The severity of this contraction was further shown by the
advance of interest from 8 to 10 per cent, in July to 24 and 36 per cent, in October.”
The same writer estimates the payments in the United States
in 1857 at $90,000,000,000, and assumes that $85,000,000,000
were paid throqgh the agency of the Banka and bv aet off; and
says:
“ The credit system has thns accomplished the great result of separating the actual sale
and delivery of commodities—the actual transactions of commerce—irom the payments.
The progress of civilization and private integrity have made this possible; its immense
advantage is such as not only to secure Its conUnnance, hut to make It a very strong safe
guard ot commercial honesty Almost the entire commerce, fqjplgn and domestic, of the
whole civilized world is now carried on from day to day and year to year with much lew,
we believe, than on^ per cent, of the actual values exchanged in coin bullion. The
whole of tit o prioss, sales, bargains, books of account, notes and bills of exchange are ex
pressed in money of account; and the whole processes of adjustment by bankers, brokers
and clearing houses are all stated and expressed in money of account.
“ The credit system, then, intervenes with its various devices of books of account,
promissory notes, bills of exchange,dbank notes, bank deposits, clearing honses, Ac., to
enable the parties who have bought and sold, who are all creditors and all debtors, to liqui
date their debts and credits,and thus exti gulsh them so fhr as they are equal; that is,
where a merchant has to receive during -the year $200,OOu and to pay $190,000, the credit
system adjusts the whole earn ot $096,000, by paying the $10,000 difference in money, aud
extinguishing the $380,0004y set off or liquidation. The goods, which go ont of the mans-
factory or warehouse, pay for those which come in. The difference only requires money.
To effect the exchange with advantage, laborers, horses, warehouses, wagons, drays, canal
boats, railways and ships are employed; to effect the payments gold and silver for the bal
ances, ills or exchange, promissory notes, bank notes, banks, bankers, tihd all the device*
of books, checks and clearing or balancing accounts arc requisite.
‘ Thqecouomy of these means of making payments is scarce less than that enjoyed by
commerce in the means of transportation above mentioned. To make the daily payments
of the clearing houses in gold would require some three or four hundred tellers; in silver
an army oflsomo thousands, witu a vast number of drays, carts and laborers for its removal.
The cost of keeping on hand such a quantity of the precious metals would be enormous
for the interest alone, besides all the extra expense of tellers, clerks and assistants, lo
Eave this, the machinery of credit is pnt in motion, and payments are eff^teda* we have
described. Wltat a nation imports It pays for by wnat It exports; what a district receives
for its consumption it pays forby what it tarnishes for the consumption St others, and what
an Individual merchant purchases in the way of bis business ho pays ^by what he sells
in the way of his business. When coined money is used in these tra^dions, they can
only he curried on to the extent that such money can be obtained for the purpose, and with
that speed at which money can be made to circulate; but when credit in its various forms is
used, then this business finds no limit but the limit of human industry in producing, and
human power in transportation and distribution and human integrity in the subsequent
processes of payment.”
If wo. analize the condition of the Banks of New York in
1857, we find that, beyond the snmof $12,000,000, all was cred
it. The sum of specie and Bank notes was but $20,000,000,
and yet their deposits were $95,000,000! It is apparent tbflf
these ninety five millions of deposits were the proceeds of tbe
bills receivable, discounted by the banks for account of their
customers, which being passed to the credit of the debtors ot
the banks became deposits, and were represented in the opera
tions of trade by’certified checks, which checks were used in the
purchase and ‘movement of commodities and were received b)
the banks in payment of debts due to them, and as the debits
and credits balanced each other, the payment of thirty million 5
daily was arranged through the clearing house by aiPexchange
of these certified checks.- For it is apparent that if sixty banta
held thirty millions of bills receivable, which were represented by
thirty millions of certified checks which checks had on the day be
fore been paid out in the purchase or movement of commodities,
the sums due each bank were equal to the sums due by snch baw®,
and therefore the sums which each bank was entitled to receive
were equal to the sums, which such banks were required to p a J>
and it was found that each bank would, in the course of its busi
ness receive a sum of the certified checks of other Banks su
cient. to pay all of its own certified checks or nearly so; and tba-