Newspaper Page Text
BY STOCKTON & CO
NATIONATi FINANCES,
tetter ol lion Hubert J. Walker.
[n response to numerous solicitations
from various quarters, Hon. Robert J.
Walker has prepared the following state
ment of his views upon the condition of
our national finances:
Washington City, Nov. 30, 1867.
To the People of the United States:
The great question of maintaining the
public faith now agitates the nation, and
engages the attention of Congress. Insepa
rably connected with this question, is the
revisal of our bank and currency and reve
nue systems. Whatever concerns the pub
lic faith touches all the great interests of
the country. It deeply affects the revenue
of the Government, as well as the wages of
labor and the income and business of the
people. No American requires any apolo
gy for discussing these great questions.
My own individual connection with them
was constant and earnest, from the com
mencement to the close of the rebellion,
and I feel that my position is one involving
great responsibilities. Our national bank
ing law, after its rejection by Congress, was
finally adopted on the publication of an
elaborate essay written by me, at tbe re
quest of the Secretary of tbe Treasury.
Subsequently, at his request, when he
found it necessary to bring gold or its
equivalent here from Europe to sustain our
credit, I repaired there, remaining nearly
two years, as the financial agent of the
Government. ] published there numer
ous essays, over my signature, showing the
wealth and resources of our country, and
how untarnished was our national faith
and honor." These essays, in English,
French, and German, were sent to
all the European bankers, through
whose advice investments were made.
They represented the certainty of the
punctual payment ol* the ‘principal and in
terest of our live-twenty six per cent loans
in gold. I went to Europe under the ap
pointment of Mr. Chase, but with letters
also from Mr. Lincoln and Mr. Seward.
So bitter then was the hostility of Louis
Napoleon and the late Lord Palmerston to
this country, that whilst (he so-called Con
federate loan had nearly reached in
Europe par in gold, our United States
stocks_ could find no place on the London
or Paris Exchange, and our cause no hear
ing in the leading press ol’ either city.
Wc had many friends in the British Cabi
net, but it was then that Lord Palmer
ston and his life long friend, Louis Napo
leon, wore engaged in a conspiracy to drive
republicanism from the face of the earth.
It was then that dazzling vision of duke
doms, if not of diadems, were glittering
before the eyes of many a Confederate
leader. It was (lien that Napoleon was
spreading the imperial purple over the
Halls of the Montezuinas, and appealing
to the Latin race of America to unfurl tire
banner of the European dynastic system.
It was then that British cruisers (mis
called Confederate) were burning our
shi pa and cargoes, and driving our com
merce from the ocean. It was then that
the English Premier was preparing for
Prince Alfred a throne in British America
now dwindled into the hybrid discordant
temporary Dominion of Canada. It was
then, at the period of our deepest "gloom
and danger, that a still small voice was
heard in our favor.from Holland, where
Franklin laid negotiated our first leaij.
that imf still louder notes of
hope and sympathy fell like' music upon
my ear* from the great German Fatherland.
I visited both countries, unheralded and
unknown, in 1803. Satisfied that any
public cal! for a loan would be defeated by
the machinations of France and England,
I never announced my official capacity,
nor asked for any American loan. I pub
lished my financial essays over my own
name, merely as an American citizen, ex
hibiting the vast resources, the wonderful
progress of our country, aiid the certainty
of our' success in crashing the rebellion.
These essays were sent by thousands to all
the principal bankers of Europe. In a few
months 1. visited again nearly every city of
Holland and Germany, giving me an op
portunity to discuss thequestion personally
with these bankers, atid enforce the writ
ten arguments already made. The result
was, that in a brief period, the people of
Germany, emphatically tire great masses
of the people, took several hundred millions
of our loan at the same rates as our own
citizens. Let it be remembered that this
was a period of great apprehension as to
the result of our contest, and that the
credit of our greenbacks rested mainly on
these bonds, in which they could be fund
ed, and that the demand lor them in Ger
many, as well as here, to organize the na
tional banks, prevented our currency from
disappearing in the gathering mists of
depreciation. Our greatest peril was
financial, and although the glorious deeds
of our army and navy, and their gallant
leaders, saved us on the ocean and the land,
yet the Secretary of the Treasury was the
real generalissimo of the contest. These
German and other loans, based upon those
United States live-twenties, constituted,
to a vast extent, the price ice agreed to pay
to enable us to maintain tbe Government
and preserve the Union. And, now, shall
we hesitate about the full payment of such
loans as these ? But especially can L on
whose representations so many hundred
millions of these loans were taken, now,
.whilst the great issues are being discussed,
and soon to be decided, without a burning
sense of shame and dishonor, remain
longer sJcnt?
The question to he discussed is very
comprehensive,, and requires a review of
our whole system pt loans and banks and
currency, as well as of revenue and
taxation.
We have now a depreciated paper cur
rency called , legal-tenders, amounting,
according to the returns on the Ist oi' No
vember, to three hundred and eighty-seven
million eight hundred and seventy-one
thousand four hundred and seventy-seven
dollars ($387,871,477). Wc had also, then
in the Treasury, one hundred and eleven
million live hundred and forty thousand
(hjee hundred and seventeen dollars (slll,-
540,.d11’) in coin, and twenty-two million
four hundred and fifty eight thousand and
eighty dollars ($22,458,080) in currency,
making one hundred and thirty-three mil
lion nine hunaV.ed and ninety-eight thou
sand three hundrou and ninety-seven dol
lars ($133,998,397) in till. Deducting this
from the above, leaves two hundred and
fifty-three million eight hundred and seven
ty-three thousand and eighty dollars ($253,-
873,080). It may be assumed, then, that
.a loan of two hundred and fifty iptillions of
-dollars in gold, together with the balance
now in the Treasury, would redeem all our
legal-tenders and restore immediately a
specie currency. The question is, how, or
•where, and in what manner and at what
rate this loan can be effected. Asa general
rule I am opposed to foreign loans, and
made none such while Secretary of the
Treasury, even to carry on our war with
Mexico. But the loans then required were
very small as compared with the amount
now to be obtained. We did not suspend
specie payments, and liie condition of the
country was very different then. The
object now is to resume specie payments,
and should we now borrow $250,000,000 in
gold, at home? Even if it could be obtained,
the rates would be most extravagant, and
the loan would so exhaust the available
moneyed resources ol the country as to
cause a great and immediate contraction of
Sri-tDcckljj institutionalist.
the currency, to be followed by a terrible
revulsion. No, this must be a for
eign loan, so as to bring litc gold here
to create an expansion, not in paper,
but in specie, and —•ff&fuse new life
blood into all the Channels of indus
try. It Is contraction, without resump
tion, that is driving the country to the
verge of repudiation, and threatening
most disastrous consequences to the honor
and interests of the nation. The rules
which often force banks to contract have
no bearing upon the operations of the Gov
ernment at this time. So far as the value
of our legal-tenders is concerned, we are
much more remote from resumption than
we were when the war closed. No one
thought of repudiation then, but the idea
has become widely diffused, growing ex
clusively out of a forced, artificial and un
necessary contraction of the currency, con
nected with a most oppressive and in
tolerable system of taxation. I say the
contraction was and is forced and unneces
sary, because we could, by a foreign loan,
then have resumed specie payments; and,
with a proper change in our revenue
system, and the restoration of the Union,
now be in a condition of unbounded pros
perity. No one, before this, has ever
threatened to stain the faith and honor of
the nation, and but for this system of con
traction and taxation, the spectral shade of
repudiation would never have been evoked
from the dark abyss of infamy and crime.
Contraction is only advocated with a view
to ultimate resumption of specie payments.
But why contract, and thus depress all our
industry, when we can immediately re
sume without contraction '! If we arc not
to resume until the whole paper currency
is gradually taken in, how many years wiil
it. take to accomplish it ? What will be
the condition of the country in the mean
time, whilst the contraction is constantly
going on ? And what wiil ic be when all
our legal-tenders shall have been thus ex
hausted, together with the national bank
currency based upon them ? Why, our
condition would be growing worse and
worse every day, and at the close we would
bo left almost without any currency what
ever. Why should our people be thus op
pressed and racked and tortured by a
forced contraction of the currency, which
is tbe life-blood of all our industry ? Why
this constant drainage of all the veins and
arteries of our industrial system ? Bo we
want bleeding now, and do we want it con
tinued from month to month, and from
year to year, until we shall have exhausted
the system by this Sangrado policy ? But
there arc two kinds of contraction —the
one by the gradual exhaustion of our paper
currency, and the other by a domestic
loan , ilrai ning from the people all the
available money of the country.
I, then, am for a foreign loan, so as at
once to supply the vacuum, to replenish
our _ exhausted resources, and resume
specie payments, with all its incaluiabic
benefits to our faith, our credit, and our
industry.
Vv hat leal objection is there to a foreign
j<wn l Did Washington and the patriots o ;
70 object to it when Franklin negotiated
our first foreign loan in Holland ? Did not
Mr. Lincoln, concurring with Mr. Chase,
warmly advocate it, whoa wo obtained the
be6< rury nn icy to replenish an exhau t
treasury during the late rebellion ?
It is certain, on resumption, that this
whole loan would bo taken b\ the masses
of thcjicopje of Germany at par, or higher
iu gold, .Ifir six per com... bunds..' -Wc lW
rowed s2so,Out),dot) from the- Germans in
1 §63-4 to carry on tho war then. And I
would open the new foreign loan at Ham
burg, Berlin and Frankfort, aided by
Fount Bismarck, who is as great a friend
of America as he is ofGerniast unity. We
should not go to London or Paris, from
whose Bourse and Exchange we wore
driven in 1863-4-; but to cite people of Ger
many, who, at that period, took several
hundred millions of our bonds, all of which
would rise to par upon the success of our
new Joan and the resumption of specie
payment:-'. Not a few of the German peo
ple who took this new loan would emigrate
end join their countrymen here, felling the
ibrests and cultivating our prairies, en
larging our wealth, diminishing our taxes,
and carrying freedom and civilization over
our continent, from the rising to the set-
ting sun. 1 would print these, bonds in
German and English, as a compliment to
the Gorman people, who came to our
rescue in 1863 and 1864. They should be
payable in German coins, with their equiv
alents noted; their offer should be accom
panied with our resumption of specie pay
ments and tho statistics of our wealth and
progress, with copies of our homestead
law, and a lull description of our magnifi
cent public domain.
Let us do this, and we can obtain the
whole six per cent, loan at or above par in
Germany, and the golden current will rush
westward, replenishing tho channels of
industry with a specie currency, reviving
our drooping business, and demolishing
the gold-board and gold-gambling in the
only practicable way, namely, by an im
mediate resumption of specie payments.
But if wc do not now resume, and whilst
the repudiation question is hanging over
us undecided, we attempt a loan, at home
or abroad, it will cither bo an entire
failure or the rates wiil be so ruinous as to
exhaust the substance of tho people.
Strange that we, a country with a iarze
debt, have not fully realized the immense
importance of our national credit. vVith
such a nation, credit is wealth, credit is
capital, and so fully lias this been estab
lished in England that, whilst their three
per cent, consols are at 94 in gold, our six
percents are at 70, thus compelling us to
pay an interest very nearly three times as
great as England. And yet, at (ho rela
tive rate of progress, as shown by the
census of both countries (that cf England
being 37 per cent, in each decade, and
ours 120.45 percent.), our wealth in 1901
would largely more than quadruple that of
England. If the English credit was no
better than ours, they could never pay the
principal or interest of their public debt.
There is no reason for this difference
except tills, that, if any member of the
British Parliament should propose, by
evasion or otherwise, to repudiate the
principal or interest of their public
debt, he would be instantly expelled
from his seat in the House of Com
mons, and because their system of finance
is based upon aeknowledgedysilesof politi
cal economy. National crediL is a pari of
the national wealth, especially with a na
tion in debt, or one ever likely to be in
debt, or engaged in war, and in maintain
ing the credit of the nation, wo not only
sustain its honor, but we diminish the in
terest upon its public debt, with a corre
sponding decrease of taxation. Whilst
contraction, as we have seen, is death by a
slow and lingering process, expansion of
depreciated papier is immediate financial
suicide. If we cannot resume, by contrac
tion, when our depreciated Government
currency is less than $400,000,000, how can
we ever accomplish the object, when, as
proposed by some, it shall reach $2,000,-
000,000, accompanied by evasive and dis
graceful repudiation. The only remedy is
immediate resumption, to be accomplished
by a foreign loan. In this way we can, at
once, make our legal-tenders, and bank
currency based upon them, equivalent to
specie, and raise our bonds, ar, home and
abroad, at least to par in gold. This would
make an immediate difference (as will be
shown hereafter) in the active wealth of
the country (its circulation and negotia
ble credits), of more than one billion of
dollars. Such an enormous and immediate
increase of our active wealth, accompanied
by all its invigorating influences upon every
industrial pursuit, would cause the coun
try to rise at once from its depression, and
commence anew career of prosperity and
progress.
I have said we should authorize an im
mediate foreign loan of $250,000,000; but,
perhaps, not half ot it would be required.
We can effect the loan for the whole
amount, if needed, so as to give us the im
mediate potentiality of resumption ; but
we need only draw for it as it is wanted,
receiving the benefits of the exchange, and
allowing interest only upon the sums actu
ally paid upon our drafts at maturity. After
consultation with the bankers of Europe,
immediately preceding my return here,
I made this suggestion to Mr. Fessenden,
then Secretary- of the Treasury-, iu Decem
ber, 1864. Although opposed, generally-,
to foreign loans, I think he thought favor
ably of it, especially when peace should bo
restored; but, as lib was about to retire
from the Treasury, nothing was done at
that time. Mr. Chase, also, gave the sug
gestion of resumption his cordial approval,
it was as clear to me then, as it is now,
that unless we adopted this policy, we
must go into contractiou or expansion of a
depreciated currency, each leading to re
pudiation and ruin. Our greenbacks then
were much depreciated; yet, upon safe de
posit of our bonds, as collateral, we could
then have got the gold at the rate of six
per cent, per annum, and immediately
have resumed specie payments. I feel
confident that, upon resumption now, we
can get the whole amount in gold, at'a rate
not exceeding six per cent. The European
bankers have now studied our statistics,
anci they understand our boundless re
sources. All we want is to sustain and im
prove our national credit, to put an end to
an irredeemable and depreciated paper cur
rency, and scout indignantly repudiation
in all its forms, whether direct or evasive.
British consols, bearing tlireo per cent,
interest per annum, as we have seen, bring
8i in gold, whilst our six per cents, are at
70. Yet, as shown in the third edition of
my financial London letters of 1803-4, the
following were- the actual statistics from
the census of England and America:
Our national wealth iu
1850 was $7,135,780,228
Our national wealth iu 1860
was 16,159,016.068
England’s national wealth
in 1661 : 31,500,000,000
United Sta tes in crease from
1850 to 1860 126 15100 p ct.
England’s increase from
1851 to 1861, 37 percent.
Assuming these ratios, the wealth of the
United Kingdom would increase as fol
lows :
DO! $31,500,000,000
187! 43,155,000,000
LS.Si 59,122 350,000
1891 80,997,619,500
1901 110,966,837,715
And that of the United States as follows:
1860 $16,159,616,063
D7O 36,503,450,585
> 880 82,805,868,849
1890 187,314,353,225
1000 423,330,438,288
1901 465,663,482,116
Thus, our wealth ih thirty-three years
would beynoro than quadruple that of
England .
'Lie European bankers, and especially
the people of Germany-, now fully under
stand those results. They know, also,
the reasons of bur hitherto wonderful pro
grossour free institutions, our immense
emigration—adding nearly three thou
sand millions to our wealth’ from 1850 to
I. soii—and our magnificent public domain,
with our homestead and pre-emption sys
tenis. They know, also, our capacity for
resumption,and look with amazemout ami
distrust at our failure to do so. .
1 am opposed to any considerable pay
~r~~ rs-t, zvi’trmscni in oMingaishmenMff the
principal of ou r public debt. Not because
I regard «v public debt as a blessing. Far
otnewiso. But, when Hie debt is incur
red, the great question is by vvliat system,
and at what ’rate of payment, will the
public interest, be best promoted.
To decrease the principal of our public
debt by present annual payments of fifty
to one hundred millions of dollars, is to
increase, to that extent, the present bur
den of taxation, which is grinding out the
substance of our people, and immensely
retardingthe progress of our wealth. That
it is vastly injurious now, will not bo de
nied, nor will posterity thank us for it.
Vv o have seen that, at the rate of progress
from 1850 to 1860. our wealth in 1901 would
be $405, 66!?, -182,116. Now, suppose that we
■ iiouid, at that date, by this oppressive
process, have extinguished our whole
national debt of $2,500,000,000. According
to every prineiplo of political economy-,
such a process, so oppressive to our indus
try, and retarding so much the progress of
our wealth, would have diminished the
aggregate, in 1901, at least ten per cent. It
would bo much greater; but even at ten
per cent., the diminution in 1901 would be
$16,566,318,211. Now, deduct from this the
whole debt then extinguished, and tlie
difference would exhibit a loss of national
wealth in 1901 exceeding $44,000,000,000 as
the result of such oppressive taxation.
Now, to pay six per cent, interest annual
ly, and reduce the principal of such a debt
as ours-more than 500,000,000 in thirty--two
years, is more than England or any other
country lias ever been able to accomplish
in the same time. To do this, would re
quire an annual payment (exclusive of the
interest) of over $16,000,000 a year. But
our payments ought to commence with a
mudi smaller sum; say, beginning with
only $1,000,000, and go on increasing at the
rate of $1,000,000 a vear, making the second
$2,000,000, the third $3,000,000, and the last
$32,000,000 m 1900, and, besides meeting
tho annual interest, we should have paid
more than $500,000,000 of the principal of
the public debt in 1900. Thus, we would
pay annually, in proportion to our con
stantly increasing means, for, wo must
reflect, that, according to the census, wo
could pay $29,000,000 as oasily, in propor
tion to our wealth, in 1900, as we could
$1,000,0000 in 1860.
Those, generally, who oppose contrac
tion, or resumption, favor what they call
expansion, and many of them would pay
off our whole live-twenty loan in green
bucks. Now, this, with our present green
backs, and the convertible seven-thirties,
would make a total greenback currency of
nearly two billions of dollars, and, with
the national bank currency, redeemable
iu greenbacks, nearly- twenty-three hun
dred millions of currency, mere naked
promises of payment, l'uudablo in none of
the stocks of tno Government. Now, our
present currency, bank and legal-tenders,
is worth in gold nearly $500,000,000.
Would the expanded currency bo worth
that much ? I think its first value would
be much less, and that, it would go on con
stantly diminishing in value until it would
in no brief period, share tho fate of French
assignats and continental money. There
would be a nominal, but no really availa
ble expansion of the currency, for the in
creasedF'hmount would purchase less than
tho smaller, but far more valuable, circu
lation. Such a system would, in fact, bo
depreciation only—a vast addition to the
volume of the currency, but a diminution
of its aggregate value. Such a currency
would not be worth at the start twenty
cents on the dollar in gold. The first
result would lie to increase the expenses of
the Government and of living nearly four
fold, with no corresponding increase of
wages or of revenue. The expenses of the
Government, paid in this depreciated
paper, would swell to nearly two billions a
year, and the excess of our annual
expenditures over receipts would exceed
a billion of dollars as'ear, swelling yearly,
With the necessary demand for a further
inllation, until the whole mass would be
come worthless, and leave the Govern
ment and people without money or credit.
The inflation cf an irredeemable paper
currency necessarily leads to depreciation,
and can end only in repudiation and bank
ruptcy. How can it be otherwise ? How
cm wo contract when there are no bonds
in which the currency can be funded, or
bonds the value of which has been destroy
ed by the actionot the Government? And,
if contraction is grievous, when our cur
rency is five or six hundred millions, how
infinitely more oppressive will contraction
become, when the currency is increased to
one or two billions of dollars. But, let us
, see what the effect of this depreciation
would he on present values. Our national
bank notes and legal-tenders amount to
near $709,000,000, now worth about $500,-
AUGUSTA, (Ga.) WEDNESDAY MOMfW, DEOEMRfSK U, 1867
000,000 in gold to those who hold them.
The gold value of this money-, at twenty
cents on the dollar in gold, would be only
$140,000,000, thus annihilating at a blow
values to the qxtent of $369,000,000. This
reduction of values is in the money, tho
only money held by tho people of the United
States. This would reduce hundreds of
thousands to want and bankruptcy. It
would convulse and demoralize the whole
country, and cause tho pillars of the Gov
ernment to rod: upon their basis. But,
the annihilation of values would not be
confined to the money of tho people, but
would extend to our two billions of dollars
of bonds, worth now to the holders, sl,-
400,000,000 in gold. But by the deprecia
tion process these bonds, or their substitu
tion in currency, would not exceed twenty
cents on the dollar in gold, or $100,000,000.
Here is a loss of one billion of dollars,
which, added to the loss on currency, an
nihilates values to the extent of $1,300,000,-
000 on gold, or its equivalent. Recollect
that the values thus annihilated constitute
the active capital, the nojaey and negotiable
credits of tho people. Why, the revulsion
would be fearful, and the burning lava of
a nation’s wrath would roll over the au
thors of the dread catastrophe.
But what of tho national honor? What
of our proud position among tho nations
of the earth? And what of the cause of
self-government, when we, its bright ex
emplar ami trusted guardian, should have
covered the great cause with tbe mantle of
disgrace and shame ? The picture may be
darkly shadowed, but it is by the pencil of
truth. Indeed no mortal vision can
penetrate tiiose dismal caverns, the abodes
of want and misery, where would wander,
in agony and despair, the wretched vic
tims of a nation’s broken faith and tar
nished honor. Remember this would be a
repudiation, not of our bonds only, but of
i\\Q money of the people, the notes of the
national banks, and of thodeposits in them,,
and in the savings’ banks, all redeemable
in greenbacks, and the. greenbacks them
selves. The working manor woman, who
had stored away a few greenbacks lor
marketing, or fuel, or Hour, or groceries,
would find their money so depreciated,
that they could not supply their daily
wants. And now to tho wages of labor.
Experience and philosophy- prove, that
wages are the last to rise with a depre
ciated currency-, because tho children of
toil cannot wait, but must work at wages
lower in reality, until tho great law of
supply and demand, gradually but slowly,
restores tho equilibrium, indeed, in a
vast number of cases, where there are con
tracts for work by the month, or year, or
job, payable in currency, they could lie
liquidated in an almost worthless paper.
Tne repudiate? and inflationist would pay
labor in a greatly- depreciated currency.
Tho eontraolionist, after a long and ruin
ous delay, would pay him eventually in
gold. The resumptionist would pay him
now, henceforth and forever, in gold. If
there is any principal that is vital, it is
this, that the wages of Labor should be al
ways payable in gold, or its re and equivalent.
And now, if we inaugurate tho reign of
a depreciated paper currency, how Many
of the toiling millions of Europe will come
here to swell our wealth and power ? flow
much foreign capita! will come? Nay, let
us rather ask, how much and who will re
main to encounter the fearful risks and
losses flowing from a broken faith and
worthless currency? All confidence would
vanish; there would be a vast exodus of
wealth and labor, a general Impoverish
ment, and great decline of all values.
We have seen that the loss in the gold
values of our bonds and currency would bo
equal to $1,369,000,000; but the gains be
tween their present values, say $2;500,0dt>,-
000, in bonds and legai-tendersandnational
bank notes by a rise to par, would be SBIO,-
000,000. Add this to the first sum, and tho
difference to tho country-, between repudi
ation and roHuuiption, would fie 52,200,000 -
GOO in gold. Deduct from this tho proposed
loan iff §25000, QjkL and %o have $1,950,-'
< w >,, m~. r. v—j’r, ; y -- r -y
compared VvTTTiffwrwiaiTor) ana expansion, 1
But this is far from all the benefit that
would accrue to the people from the
resumption policy. If there is any maxim
in politics! economy proved by philosophy
and tested by- experience, it is, that an
irredeemable paper currency is a forced
loan, exacted as a tax from the people, not
iu, proportion to wealth or property, but
hearing with special seventy- on ait indus
trious pursuits, and imposing the severest
burdens on the wages of labor. Such a
currency deranges ait business by constant
fluctuations in prices,-renders all ealcula
tio'iiu unreliable, and nil pursuits un
certain. In fact, such n system is
almost us perilous as gambling, with
prices varying so much almost every
Jay and hour, changing with the thrown
of tho die in tho gold room, or inten
tensiiied. by Government sales of the pre
cious metals, and funding, aud other ne
cessary operations of the Treasury
connected witli tho currency, and vitality
affecting its value from day to day. As
well might wo change the weights and
measures from day to day, and expect the
business of the country to be prosperous
and successful, as to accomplish the same
purpose by such great and rapid and con
stant changes in the currency, which are
our measures of values. If the yard, the
gallon, or the bushel, could be changed
every day by transactions in the gold
room, or by operations of the Treasury,
the business of tbe country would in reali
ty be no more fluctuating and uncertain
than it is rendered by similar changes in
the values of money. All the benefits of
skill and experience derived from years
of devotion to business pursuits, arß lost
through fluctuations in the currency,
which no sagacity of skill can anticipate.
When wo reflect that each nation is but a
part of the great community of Slates,
united by ties of commerce, business, and
interchanges, and find thereat of the world
sustained by a specie currency, which is of
uniform, universal international value,
how can we, who are dealing with depre
ciated paper, expect to compete success
fully with those countries whose money
is gold or its actual equivalent ? No na
tion has ever tried thisexperiment without
vast sacrifices, and great failure. So long
as tho currency of the world is gold, any
nation departing from this standard
impairs its own power of success
ful competition, and gradually drives
its products from the markets of the world.
It is true that it may, to a certain extent,
so far as smuggling does not open the safe
ty-valve, keep out foreign imports lor a
time, thereby annihilating its exports, but
prices soon rise at home in a ratio corre
sponding with tho augumented duties, and
the check becoming ineffectual, is sought
to bo remedied by augumented tariffs, ft
is totally impossible for a nation like the
United States to withdraw from the busi
ness operations of the world, and it is
equally impracticable to carry on success
ful international exchanges when the
money of the country is depreciated paper.
We see this now in all business, and in all
the industrial pursuits, and next to the
wages of labor, American manufactures as
most injured by a fluctuating and depre
ciated paper currency. We see, also, that
our tonnage is constantly declining, and
that our ships and steamers are almost
driven from tho ocean. From 181 Gto 1856
our exports, domestic products, and
manufactures were more than tripled, and
they ought now, with the increase of our
wealth, to have greatly surpased those of
England, and reached nearly a thousand
millions of dollars. Where are they now ?
And to what point are they going ? Let
the Treasury reports answer this question.
For all these evils there is but one remedy
—an immediate resumption of specie pay
ments, accompanied by a vast reduction
of taxation.
England exported, last year, products
exceeding in value seven ffunched'millions
of dollars. This, with a population at least
five millions less than ours, and with far
inferior resources. Our exports for the
same period scarcely reached igtif this
sum.
In truth, the whole machinery of the
business of the country is deranged and
nothing but resumption will restore it to
proper action.
In my 'Texas letter of January, 1811, and
in my subsequent Treasury reports from
ISIS to 1849, I predicted that New York
city, under a proper system, would ranidly
advance to the command of the commerce
ot tho world. That prediction wasin course
of progressive fulfillment, until our gigan
tic war expenditures forced upon the
country the suspension of specie payments,
resulting in a depreciated currency and an
almost intolerable taxation. Where is she
now in the career of prosperity, as com
nared wid§»nao», her great and ouI Y
rival ? J«P ie *<*Bo unt of her torinai#® * ,KI
business ft Hie story. And w* JSew
York litfSiicaleuiablo advantage? °Y°f
London, » rivalry. She is. m P olnt
of iatttutfpu degrees nearer {be average
productsf t/re ear*h, according to a,, ea,
than Loiftn, and siio represent a contl 7
nent streSfeng.from ocean to o*ff an ’ J, uld
not a liltiffland scarcely larger ft uan iNG . w
■York. eJb fi<3w, on returning to- a s P eci ®
currency*):' one in all respect’ , lts r . ea
onuivale remove tho intoleratfl? en
of taxatfl , and strike the shjK’rM? ‘ foni
her comt rce and industry, A' 0 Wlll eom ‘
mence a w career, sqrpA* sIII S illi lier
former r rress. .. _
The qt tion of qomman<J in £ t l , c . com
uierce of e world, is one pro
portions Electing not merely 1 . Clt y 01
New Yo but every other A'G°B can C ,[G’ >
and the Eire people of th® Union. Iho
local jea isles against luff opposing
nature f 1 destiny, and American
and absfa ; for, the real alternative isnot
between evr York and any o: our other
cities, bt between New 3p ' !C , a London
alone. 4w.it is asoerft 1 I taa T t K “S~
laiul, b; commanding & dr °f 1 r 1 . Loudon
the cqa itiiuo of the borld, increases
British 1 saltli to the extol 11 ol at least live
hundred millions of and^ lars ov ?O r . y ear -
And tli is what, yU !°'-° 'W tailing to
make IS vv York, as'we can, the centre ol
uni vers commerce. Tlio loss is not to
New Y< i alone, but t* every American
city, an, to C-vory Staff; and Territory of
the Uni :. Tho loss to us, m tact,
amount .to a s U y that, in five years
could p: - tho wbffio national debt. Whilst
New ¥o k by latitude is ten degrees nearer
than Lo doii, ity area, to the products of
the ear t.-sjpei' London being nearly in
latitude i'lfnßd so smoA a portion compar
atively f the north of that
Tho
South fid tbf atio constantly augment-
lig tho resumption of specie
essential as a part of the
<kto restore the prosperity
must bo an immense and
action of taxation. Toac
we must reduce oxpendi
le Uuion, and disburse only
red in peace.
turps, exclusive of the in
tblic debt for the year pre
, were $59,848,474, of which,
•es for die War and Navy
ere $27,922,917, leaving our
1ire5531,925,555, Now, sup
o iuercaso fifty per cent.
not be), it would tiiako
K). Now, if we double in
ur war and navy-expendi
too great an increase, this
ein $56,000,090. This would'
e annual expenditures, ox
interest on ihe public deb!,
$ 1 94 oot To effect this reduction wo
f some specie payments, for by pay
; h“ *, >ld the Government saves at onoo
’*7 G-vJliirty per cent, of its expenditures.
,!» ‘vAcoud great reduction should be in
t , ,pmr‘ o oi extinguishing the principal
ff'tuvT/’dhHb debt. These payments, as I
itemptcd to show, should be gradu
,.L , . Ttion to our means. Begin
,l. 1 I,*''" million dollars per annum,
ymur ri tnite y ■>' i<>™ otoioili',;', pur
meat 6 thirty- wo i. \._ ui tho pt \ v _
annu ). iiy thus grau-'w -
men! in proportion to
shot* i lift an immense burm'^^VpxaLon
from' ho people, *’ ,
Ar. ttuir item, growing or,, m tho
otfa'i js an t excises, amounting to neat'
ly ■s'j | ioi.|,oi‘9 a year, would be tho disbaud
ingif nearly our whole army of tax-gath
ett£|ti(i fhc expenses incident thereto,
benial'ler. when e:>u
of taxation. In this
v'iSrv'im. G ’"UiiiHMU. 1 * ff qufipsiKU’y ex
oxclnsivd of interest on tho public debt,
report of the Secretary of the Treasury for
this year, and can, therefore, only give tho
expenditures for the year ending the Ist
of-July, 1866. Those, as given by the Sec
retfuy-, were $387,693,199. This is exclusive
of payments on account of principal and
interest of the public debt. Now those
last payments amount to §l4O 000,000 a
year. This would make our whole ex -
penditures, at a maximum, $244,000,000.
This would be a reduction of §143,693,199,
and compared with the expenditures of
the fiscal year ending tho Ist of July, 1806,
aud would enable us to reduce to that
vast extent the taxes of the people.
This revenue of §244,009,000 a year, as a
maximum, I would rerive from three
sources alone :
1. By a tariff for revenue.
2. By an excise on winos, malt and spir
it ous liquors and tobacco ; abolishing all
other internal taxation.
3. By a tax on our national banks, based
upon just and fair equivalents, remember
ing how essential they are to t he prosperi
iy ul the country, and that we must not
drive them into liquidation by unfair and
unequal taxation, and thus revive tho
wretched State bank system.
A tariff for revenue, as experience has
shown, instead of depressing, improves atl
industrial pursuits, including manufac
tures, and vastly augments the wealth of
the country. Under the tariff of 1840, as
shown by the census, our wealth in
creased from 1850 to 1880, 126 45-100 per
cent; whereas from IS 10 to 1850, the in
creaso was only 61 per cent; from 1830 to
18-10, 43 per cent; and from 1830 to 1830, 41
per cent. So also, from 1850 to 1860 our
agricultural products increased 95 percent.,
and our manufactures 87 per cent., being,
in both eases, nearly double any preceding
ratio increase. So also our exports, im
ports and revenue nearly triptled in tiie
saino period of time, and our domestic
trade rose nearly in the same ratio. This
augmented ratio is not tho result of in
crease of population, which, from 1850 to
1860, was loss than thirty-six per cent. Tho
Irish famine was supposed by my op
ponents to account for the increase Lie
First year, although the decreased price
paid abroad that year for our cotton, near
ly equalled the additional sum paid by
England for our breadstuff’s and provis
ions. But, the next year and t/is next, be
fore any gold had reached hero from Cali
fornia, our exports and revenue wont on
augmenting in a corresponding ratio,
rising in eight years from $32,000,000, un
der the; tariff' of 1842, to $61,000,000, under
the {anti of 1816. But if it were true, that
wo could thus wonderfully prosper under
a revenue tariff, after tiro gold discoveries,
why not continue tiie system ? These dis
coveries, however, produced no effect
whatever until after the fiscal year ending
on the 30th June, 1819. The truth is, how
ever, even after that date, these wonderful
results as to imports, exports and revenue
must be attributed in a very slight degree to
those gold discoveries, for the following
reasons : First, the rate of increase during
the first throe years of the operatioiTof the
tariff of 1846 down to the 30th of June, 1849
before any of this gold had reached here’
was greater than the rate of increase at any
succeeding period. The reason of this
greater ratio of increase from is if! to
JSI9 was, that when the shackles
of our commerce and industry, in
cluding tho immense indirect tax
ation, imposed by tho tariff of 1862,
were suddenly removed by the reduced
tariff of 1846, tho country sprang forward
at a bound unprecedented in the history of
the world; second, the great political
economists of Europe have published at
various periods, and especially in 1863,
authentic tables, giving tho exact facts,
from the prices current of all articles
throughout the world, during the several
years since tho gold discoveries. These
tables show, that tho additional prices
caused by these gold discoveries amount
ed to about one per cent per annum. It is
true, that a contrary opinion had prevail
ed, to a considerable extent, based not
upon facts, but upon certain conjectural
theories of prices and currency. The ideas
of those theorists (now abandoned), were
that prices would increase in a proportion
equal to the additional gold produced.
But, they ignored several important facts:
First, How very small a part specie per
forms in carrying on international ex
changes, and even domestic business.—
Second, The great fact, that in a series of
years, tho value of gold, like that of all
other articles, is mainly regulated by the
law of supply and demand. Thus, if an
increase of gold should so stimulate indus
try and new enterprises as to_make the
augmented demand equal to the increased
supply, prices would remain unchanged.
This is now the conceded law as to the
precious metals. A further conclusive
proof of tlioexistenceof this law-is furnish
ed by our own census tables of 1850 and
1860. Thus, the great increase of our
wealth, and of our products, over all other
decades, is attributed to tho gold discove
ries; but although these mighty increase
values, they would not increase quantities.
By looking at table No. 36, iu the prelimi
nary report on the eight eensu, (pages 198
to 210, including tho additional returns on
these pages,) the following will be found to
be tho results, as to agricultural products,
from ISSO to 1860.:
1850 1860
Horses, (number)... 4,336,719 7,303,972
Asses and mules 559,331 1,396,339
Milch cows, work
ing oxo n, and
other cattle 18,378,857 28,987,346
Sheep 21,723,220 24,823,371
Swine 30,354,213 36,023,472
Wheat, (bushels) 100,485,944 171,183,381
Rye (bushels) ~ 14,188,813 20,970,286
Indian corn,
(bushels) 592,071,104 830,451,707
Oats, (bushels) 146,584,179 172,554,688
Tobacco, (tbs.) 199,758,655 129,390,771
G iu ned cotton,
(bales) 2,445,793 5,198,077
Wool, (lbs.) 52,516,939 60,511,343
Peas and beans,
(bushels) 9,219,901 15,155,013
Irish potatoes,
(bushels) 65,797,890 110,571,201
Sweet do. do 38,268,148 41,000,302
Barley, (bushels) 5,167,015 15,035,119
Buckwheat, do 3,956,912 17,001,914
Wine, (gallons) 221,249 1,860,008
Butter, (lbs.) 313,445,306 460,509,854
Hay, (tons) 13,838,642 19,129,128
Clover soed,
(bushels) 468,978 929,010
Grass seed, do 416,831 900,386
Hemp, (tons) 34,871 104,490
Hops, (lbs.) 3,497,029 11,010,012
Maple sugar, (tbs.).. 31,253,430 38,863,884
Cane sugar, (hhds.) 237,133 302,205
Molasses, (gallons) 12,700,991 25,517,699
Beeswax and honey,
(pounds) 14,853,128 26,386,855
Rice, (lbs.) —small decrease.
Cheese—slight increase.
Flax—large decrease.
Flax seed—small increase.
Silk cocoons—decrease ol !,2SI 11)3.
When avo remember now that tho in
crease of our agricultural products from
1850 to 1860 was ninety-five per cent., the
table 1 have given, as to quantities and
numbers, shows an increase fully equal to
eighty-livo per cent., thus leaving about 1
per cent, per annum for the effect of gold
increasing values, thus verifying the tables
of the European economists. As to manu
factures, values only aregiven, and not the
comparative quantities; hut by table No.
182, page 120, of the compendium of tho
census of 1850, it will be Iwiiiil that, the
number of. persons employed in manu
facturing establishments that year was
011,991, while page 59 of the census of 1880
gives tho number of that year as 1,385.000.
Thus, whilst tho increased numbers of
persons employed in manufacturing in
1860 as compared with 1850 was not quite
fifty per cent., yet the vast discoveries and
improvements in machinery as applied to
-manufactures during that period, must
have, liicrua ,od the pr< duct at least twenty
live per cent, as compared with tho same
number of workmen, thus, again demon
strating, that very little more than ten per
cent, was due to tho inopgasod value of
manufactures in l.siiO compared M /if
hs ; ,o, growing out^h o
natever mav| >e t jj o exact per contage of
increase by those discoveries, it
any way, have effected the
results from 1840 to 1849, and from 1850
to 1860 tho increased values produced,
in this way could very little have excoed
ed.ten per cent. All candid men, who are
searching after truth, must attribute the
.wonderful success*)!' the tariff of 1840, as to
imports, exports and revenue, to Causes
almost wholly unconnected with the gold
discoveries. On a question like this, where
our present system of taxation is so intole
rable, and so much wisdom and patriotism
are required toavoid mostdisastrousconse
quencos, should, we not all discard previous
prepossessions and prejudices, and search
for the truth, wherever it may lead ns.
And hero, may I not ask, among the thou
sands of articles that are made and con
sinned liy man, nearly ail of which come
under ibe operations of our tariff, is it
reasonable to suppose, that if one set of
men take up all these articles separately,
as was done in framing the tariff of 1846, so
as to ascertain what duty on each article
will bring the greatest revenue, and an
other set in whole, or in part, discard the
principle—is it not clear, that those who
impose the duties with a view to revenue,
will producoa much greater result, than
those who look mainly to what is called
protection ?
But there was another reason why the
tariff of 1810 so soon tripled our revenue;
and that was the mode of collecting the
duties. Tho tallies annexed to the Treas
ury reports of 1816-7 will show,even under
the tariff of 1842, that tho ad valorem duties
produced 20 per cent, more than the spe
cific duties. And how can it bo otherwise
in the absence of fraud ? It may as well
be said that a direct tax of one cent an acre
on all lands, or live dollars on all houses,
will produce as largo a revenue as a tax in
proportion to their values. In all cases of
direct or indirect taxation, the tax, in pro
portion to value, incorporate itself propor
tionately with tho price, and must, neces
sarily, increase the revenue.
And now, as to frauds: Where there
arc but five or six duties as,under the
tariff of 1816, and hundreds of differ
ent duties under the specific system,
it is much easier to perpetrate
frauds by changing names and classifica
tion of articles, than by reducing their
value. That there were comparatively no
frauds under tho tariff of 1846, is proved by
Iho immense auguinoutation of revenue;
but still more by the favorable balance of
our foreign trade, as compared with pre
vious systems. Thus, with imports un
der the tariff of 1846, valued at tho custom
house at§350,090,000, if there had been an
under valuation of only ten per cent., as
compared with real values and consequent
sales here, it would have turned tho balance
against the country, from that causo alone
§35,000,000 in gold a year. There is anoth
er insuperable objection to the specific
system, viz: that it unnecessarily and
invariably taxes labor vastly more than
capital, and the poor, in a much greater
proportion than the rich, upon the goods
consumed. Under the system of specific
duties of so much per pound, or yard, or
gallon, Ac., the specific duty is the same.
Tho rich, who purchase the costly article
bearing only the same specific duty, pay,
in proportion to value, ioss than one half
what is paid by the poor, who purchase a
cheaper and less costly article. If avo
take all the costly articles purchased by
the rich, bearing, under the present tariff,
the same specific duty as tho inferior arti
cle bought, by tho poor, wo wilt find the
difference against them exceed §20,000,000
a year. Such is the immense additional
tax exacted from labor under the system of
specific duties. I know how fashionable
it was to denounce the entire ad valorem
system of 1846 as a novelty, but tiio ex
periment was completely successful, and
the reason why it was a novelty was, that
Europe is ruled by kings and oligarchies,
that thelaws are made by tho wealthy few,
and so framed as to exact the largest duty
from labor and tho least from capital.
Switzerland, a republic, is the only ex
ception to this rule.
But the tariff of 1816, although it re
mained much longer in operation than
any other tariff, and produced much more
beneficial results, was susceptible of great
improvements, especially in its applica
tion to the present condition of our
country—
Ist. Tho raw material of manufacturers,
as recommended in my first annual re
port, should be duty free, as is the practice
of all enlightened nations. This proposi
tion then made by me, was to some ex
tent defeated, at that time, by Mr. Calhoun.
Mis argument was this—that, so far as no
revenue was collected on the raw material
of manufactures imported here, we must
make good the loss from other articles, and
that this was an unjust and unconstitu
tional discrimination in favor of American
manufactures. My answer was—first,
that it would never be unconstitutional to
permit any one or more articles to come in
duty free; second, that Mr. Calhoun had
agreed to a large freelist in the compromise
tariff of 1832; third, that, in point of fact,
there was no real loss of revenue, but an
actual gain, resulting in this way: That,
as our imports wore measured by our ex
ports,' specie only liquidating occasional
balances, and that, as wo reduced our ex
ports, wo were necessarily diminishing
our imports, and decreasing our revenue.
To illustrate this, I said, that dyestuffs are
now free from duty, and we havo a con
siderable export of dye-goods to foreign
countries. But if we impose a tax upon
dyo-stuffs, which are admitted duty free
by all other countries, we shall either
annihilate or gradually diminish our ox
ports of dyed goods, correspondingly de
crease our imports, aud diminish the
revenue. This proved to be the case, as
shown by tho tables of our exports of dyed
goods under tho tariff of 1816, as compared
with those of 1842. After a close in
vestigation of this subject, and after
examining tho tariffs, anil the manufac
turing establishments of foroigu coun
tries in 1851-2, and 1863-4,1 am convinced
that, to admit the raw material of manu
factures in all cases, duty free, would
greatly increase our wealth, augment our
exports, imports and revenue, and dimin
ish the burdens of taxation. Let us re
memberthat, in takingthe duty offtbe raw
material, the consumers, the people of the
United States, get the manufactured ar
ticle at a lower rate. This, then, is another
step in tho reduction of taxes. Witli this
principle in view, we could take up the
live and ten per cent, schedules, and hav
ing admitted, duty free, all the articles
specitied in I hem, constituting the raw ma
terial of manufactures, wo should abolisli
those two schedules, aud put theremaining
articles into tho fifteen per cent, schedule,
thus simplifying and improving tho sys
tem and increasing the revenue.
2d. All the textile fabrics, anil all mix
tures of them, whether of wool, cotton,
flax, hemp, silk, <#e., should bo placed in
the thirty per cent; schedule. This would
wondonully simplify the system, prevent
frauds, and largely increase tho revenue,
whilst, as an incidental aid to manufac
tures, so far as tariffs can help them at all,
it would be beneficial. .
3d. All wines, all malt and spirituous
liquors, togotber with tobacco and its
manufactures, should bear a duty equal
to the excise, with an additional duty of
fifty per cent, ad valorem..
4tli. Tho duties on all other foreign lux -
uries consumed in this country should
be increased to such a rate, as would, in
every ease, bring tho largest amount of
revenue.
sth. The duly on iron and all its manu
factures should bo 40 per cent, ad valorem
for two reasons: First, because it would
only place them on an equality witli manu
factures of textile fabrics, when the raw
material of manufactures should bo duty
free. Second, because this duty will bring
more revenue than any other, and wo now
want all avo can get from the tariff. It is a
curious historical fact, that on a thorough
investigation in 1816 of tho duties which
would bring the most revenue, I arrived
finally at the conclusion that 10 per cent,,
on iron and its manufactures would bring
more re von no than any oilier duty. On
exhibiting these results at that day to a
Southern Representative in Congress, and
having convinced him of the truth of tiffs
problem, lie made, in tho House of Repre
sentatives an oiler to the iron interests of
Pennsylvania and other States to place the
duty on iron and ail its manufactures at
40 per cent, ad valorem, if they would sup
port the bill. This condition tv as neces
sary, because Mr. Calhoun had declared
that if these duties were placed at 40 per'
.cent, ad valorem, ho would opposo fijj.
-Measure. A itho whole scheme would.uj
delrilßed by Mr. Calhoun’s opposition' ; j
tliew’D interests would not unite
whiclft they refused to do, tho seQe«, ft
abandoned. But the tact still roniafns than
a duty/of 40 percent, advalorem on i L - a u and
all itsnnanufactureg-■would proddwo more
revenWu than any other rate. I rjjgrot very
much to efttfer with my native as re
gards coal. %Jt is emphatically the great
raw material of man it features, of locomo
tion, and of steam power on the water and
on the hind, and, as fuel, is an absolute
necessary of life. It will bo remembered
that when tho duties were changed in the
tariff’of 1816 to an ad valorem duty of 30 per
cent, on coal, Pennsylvania denounced the
measure, and considered it destructive of
her interests, especially as connected Avitli
the Nova Scotia coal. But it produced no
such results, and even after Nova Scotia
coal became duty free, under our reci
procity treaties, our coal producers wore
not injured. On tho contrary, the increase
of chal mined from 1850 to 1860 tvas over
169 per cent- —namely, from 7,173,750 tons
in JBSO to 19,365,765 tons in 1860. (See census
table 13, page 173.) It is the success of all
the great interests of the country, and
especially of tho great iron interest, ere-,
ating such a vast demand for coal, that is
infinitely more important than all duties
upon the foreign product, and it seems to
me that coal ought to bo duty freo.
With these and some miner changes in
the systems, developed by experience, at id
with tho prevention of smuggling, grow
ing out of reduced duties, it can be demon
strated tha.l such a tariff would produce an
annua! revenue of at least two hundred
millions of dollars a year, increasing at
least six per cent, every year, being in a
compound ratio of tho augmentation of
our wealth and population.
To obtain these results, however, wo
must first resume specie payments, restore
the Union, re-establish the prosperity of
the South and abolish the Avhole system of
internal taxation, excepted as hereinafter
stated.
1. In addition to tho taxes on the nation
al banks now imposed by law, yielding,
according to the last report, §8,000,000, I
would impose but one additional tax 1141011
them. It would bo that, whilst permitting
tlioin alt to loan money at one uniform rate
of seven per cent, per annum, as ought to
have been done originally, they should pay
over, annually, to UlO Government, one
lialf their net profits realized during the
year, over seven per cent. I think this
would l*o fair to the Government, just to
the banks, and satisfactory to the people,
and would ultimately yield a very large
revenue. As the present capital of tho na
tional banks is §425,000,000, and yields in
all its operations §8,090,000 revenue to the
nation, atid as our bank capital, as shown
by tho census, doubles every ten years,
this capital, at that rate of increase, would
be $859,000,000 in 1878, $1,700,000,000 in
1888, and $34,000,000,000 in 1898. This
would double tbe present lax every decade,
and make it $64,000,000 in 1898. But
if, under the additional tax proposed
by me, the not annual profits should
only by one per cent, exceed sevon per
cent, that tax would amount to $2,125,000
in 1808, $1 250,000 in 1878, §8,500,000, in 1888,
and $i7,0(W,000 in 1898. Thus tho banks in
1898 would pay a tax of $81,000,000 and
soon more than liquidate tho whole interest
of our debt. The tax, too, would bo collect
ed without any expense or embarrass
ment.
To accomplish all this, our national bank
system should no longer be a monopoly,
in the hands of the few, but all who will
comply with the laws of Congress ought
to be permitted to increaso their capital, or
establish new institutions. That this would
increase (he currency of the country, is
not denied, lbil, upon a resumption of
specie payments, these banks could only
be established upon a gold basis, and upon
actual capital, with the absolute security
of their notes, by deposits of United States
stocks with tho Government. Based upon
such securities as these, banks, like bauk
ers, would only increase according to the
law of supply and demand; as they should
do, and there would be no danger of any
too greater or too rapid augmentation, for
tho evil would correct itself by diminished
business. This, however, should only bo
pormitted on the resumption of specie pay
ments, with specie reserves, in place of
legal-tenders, which would all have been
paid iu gold. On tho resumption of specie
payments, national banks woidd, of
course, be established in California and all
the gold-bearing States and Territories,
because their paper-would bo equivalent
to gold, aud always rodeemablo upon de
mand. On tho restoration of tho Union
and the renewed prosperity of the South,
tiio number of banks woult\ be largely in
creased there. \Y hiist all business, in
cluding bank circulation, lias been per
milted, heretofore, to increase, asit should,
With the augmenting wealth of tho coun
try, it is a strange anomaly that bank capi
tal aud circulation alone should bo limit*
ed to a lixod and arbitrary sum, although
there is an increasing demand for more
circulation.
Our bank capital from ISSO to 1860 in
creased, according to the census, nearly
VOL 24-NO 119
one hundred per cent, The aggregate
dm. ml. th r? ," ;lUonal banks’'
s4A>,oo<),ooo ; but it would have been j
greater but for monopoly ros -k- i nV
posed by law. SuppW that 3 and
free banking system, the capital should
double every ten years, it would, as wo
have seen, bo §850,000,000 in 1878 81700
000,000 in 1888, and §3.400,000,000’in ’isos
and, wohavo soen, would soon absorb for
circulation the whole debt of tho countrv
and thus soon enable us to hold the whole
national debt at homo. But the greatest
effect of all-would be in sustaining tho
Government and perpeuating the Union
making us one nation so far as money is
OHr e bnn iJ ***? bartk wll ° »>Old
Sun Turn r’. a I!? ovor y citizen of every
State holding the money based upon them,
would be virtually and directly interested
m sustaining the Government and per
petuating the Union. Indeed, if this sys
tom had boon in full operation in 1860
secession would have been impossible, bo
cause, by that act, tho South would have
destroyed all its own banks and moneyed
resources, and because tho State banks in.
the South were tho very citadels of st'oes
supplying mainiy the loans upon
which the conflict was conducted there.
. bi tho third editionof my London letters
m loiter No. 5, page 24, and Appendix!
page3, it will be seen by tho returns of
the census that The gross product of our
agricultuie, manulaoturos, mines and
fisheries wa5§5,290,000,000 in 1860. It was
in fact greater, as there wore many omis
sions in tho census. It has boon 'demon
strated in h recent letter of mine to the
Commissioner of the General Land office
prepared at his request, that at this timo*
the amount of these products connected
non om.° rl°- St ' C °. x, ‘ ila!s k ,( -'S, exceeds §SV)OO -
000,000. 1 1 is estimated by political oei\ lh) ’,
mists, that from tho first wholesale bnr
chase, through tho various changes dW,-
to tho sale to tho actual consumer, tU
products are exchanged, on an nveraiT
lour times. This would make tho annua!
exchanges oi those products email to
$20,000,000,000. But wo have a great many
other exchanges besides the sale of pro
ducts, such as the enormous sums paid to
railroads for freight andpasarngers, and for
navigation 011 canals, rivoru, lakes and
oceans ; lor rents, and interest and insur
ance, Ac., and ass tho various and multi
plied business of life. In a nation „
now thirty-seven millions of k \
thousand miles of railroads A*’// i>1 ®’
twenty-live billions of wealtKshown'by
the census, our total cxcli-in’ aSSI y
exchanges must amount to tfe v billions
ol dollars a year. We may firm
some idea of the prodigious” un ( ,mi r
these transactions, from the fact
amount exchanged annually .through
clearing-house by tho banks of the est / of
§7 C (H V )(M)00 0(lo 0n x a,U<> -" ,,t(3d in 18 00 to over
V ’ ' Now 11 u ‘o domestic ex
changes throughout, the whole count™
amount to §30,000,000,000 a year, a Toss
one perec, it. per annum would be §3OO -
varvhm vrn,!! exi h ' l irom tho
r!** va * ue »Stato pfipor in luissino'
f ofij htate to state, and oLi, from bounty
Ohe ner U,(I average at least
..c pe. cent, on the amounts of money
xcnatjgod. Charge this .on only one-half
ine amount of our exchanges, and the an
imal tax imposed in that way upmUtho
people of the United Slates, w'-nfid roach
?150.000,000. But this v**i"iH>t the only
loss. During the sixty-lour years ot tho
operation of the State hank sys
tem, besides many partial and local sus
pensions, and failures, them were eight/
general Suspensions of specie payments?
accompanied with great revulsions in
business, and incalculable losses. These
losses did not merely alfei Wthd stock luold
p-,n '-’■-i m,i )0 sit<«c,-iHi# UiVy impaired of
destroyed tno whole bank circulation' held
by tho people. Tho depreciation would,
perhaps,vary from ton to twenty per cent,
during the suspension, but hundreds of
banks would never resume, and thoiccir
■ eolation became-'utterly worthies or
greatly depreciated in value, it is almost
impossible even to make an approximate
estimate to tho vast losses sustained, w
the American people from tho failure and
suspension of State banks. Now, by the
present national system, there can be no
failure in the circulation, and the total
losses in other ways, during their whole
period of existence, has not reached ono
fonrth of one per cent, of their capital ;
and t here may be, so I'm- as the deposits are
concerned, still further security. Indeed,
nearly the whole loss arose from the want,
oi a provision to prohibit disbursing offi
cers to deposit with national banks, ex
cept with such as should have secured all
Government deposits, by disbursing offi
cers as well as by the Treasurer; by
United Stales stocks. I should consider,
then, the desl ruction of tho nationa! bank -
ing system, as an immense calamity to the
country, to lie accompanied at this flmo
by a tremendous revulsion, and forcing
hundreds of millions of our bonds upon*
the already overburdened markets of
Kuropo and America. But it is proposed
by some to call iu the national bank cur
rency of three hundred millions.of dollars,
■substituting therefor an equal amount of
legal-tenders. YVe shall then have nearly
seven hundred millions of legal-tenders
and no national bank currency. Now in*
the first place, these three hundred mil
lions of national bank currency, rest upon
an actual capital of three hundred and forty
million vested in bonds of the Government
deposited in the United States Treasury!
They rest, besides, on all the capital and
reserves of tho bank and lixod liability of
tho shareholders; but upon what would
tho so von hundred mil lions oflegal-tendors
rest? Upon nothing but the faith of tho
Government. There would bo no bonds
in which they could be funded, nor any
period fixed for redemption, and bearing
no interest, and with no guarantee against
further expansion. The seven hundred
millionsof legal-lenders and national bank
notes are worth, now, $500,000,000 in gold.
What would these seven hundred millions
of legal-tenders bo worth when tho Gov
ernment had cut loose from the bankers,
aud put its own paper mill in exclusive
operation? They certainly would not
command fifty cents on tho dollar in gold,
and this, therefore, would bo equivalent to
an actual contraction of the currency of
thirty per coat., or $150,000,000. by releas
ing tho reserves now required to bo kept
in tho vaults of tho banks. And yet tho
Government and tho people wouldk>so by
the depreciation ot all the bonds and legal
tenders hold by them, the Government
expenditures would enormously increaso
by payments in depreciated paper, and the
interest gained on the amount released
from their legal-tender reserves by the
banks, would bo greatly less than tho tax
now actually paid by tho banks to tbo
nation. Tho expansionists would gain
nothing, for, the depreciation of tho cur
rency would make tho increased volume
worth loss than the smaller circulation was
before. Tho only way to expand safely
and beneficially to tho Government and
the people, is by a foreign Joan, to substi
tute gold for greenbacks, aud to increase
the number of national banks by repeal
ing tho monopoly and restrictive clauses.
Mow are the transfers of the Government
to bo made, and at what expense and risk,
when the national banks shall have been
abolished and thoircirculatiou withdrawn?
Who, then, are to be the fiscal agents of tbo
Government, and where, with whom, aud
how are its receipts to bo deposited, lor tho
AssistanL Tresurers deal only in gold ? Is
this issue of $700,000,000 of legal-tenders
what is desired by expansionists? If so,
how long is this paper carnival of tho
Treasury to last, aud when, or bow, are
we to resume specie payments? Why,
specie payments could then only bo re
sumed bv a loan, if it could be obtained, or
by gradual contraction, aud what then
would bo tho condition of tho country ?
Why, the national bank circulation having
disappeared, legal-tenders would have
been exhausted, and we should bo left
without any paper circulation whatever.
Or, is it intended that this shall be a per
manent system when we shall have re
sumed specie payments? If so, is the Uov
ernmont to turn banker, and how, and
where, and in what manner, and at what
places, is it to redeem from day to day its
treasury notes in specie, and how, and by
whom are they to bo re-issued? The
national bank notes aro redeemable in tho
various towns and cities throughout tho
Union, but such an arrangement could
never be made by the Government to re
deem its notes throughout the country,
without gigantic frauds aud stupendous
losses. Suppose tho Government would
keep two or three hundred millions of dol
lars in specie Acre to redeem seven hundred