FIXAXCES OF THE UNITED STATES. 



467 



States notes constitutes practically a loan from the 

 people to their Government without interest. The 

 average rate on the whole loan is thus reduced to 4*/ 

 per cent. 



These statements were very extraordinary 

 under the circumstances since, although the 

 amount to be paid out by the department as 

 interest was small, yet the people paid the 

 most ruinous rates of interest. The first loans 

 contracted by the Secretary were in 6 per cent, 

 stocks at 85, or 7 per cent nearly. The next 

 loans were in 7^ per cent, bonds, and the in- 

 terest began to run long before he drew the 

 money, giving an advantage equal to 10 per 

 cent, to the lenders. The next loan was at 7 

 per cent, on the same terms, viz.: to pay in- 

 terest before he received the money. Loans 

 were then no longer possible, but creditors 

 were compelled to take 7 r 3 ff per cent, bonds for 

 their claims, and they sold as low as 96, losing 

 4 per cent, and the buyer getting 8 per cent, 

 for his money. One year's 6 per cent, certifi- 

 cates were then paid out and sold as low as 95, 

 giving 11 per cent, for the investment in a year. 

 The legal tender currency was then paid out at 

 par and depreciated gradually until it reached 

 at one time nearly 40 per cent. This deprecia- 

 tion represented the tax to which the public is 

 subjected through the use of that paper. The 

 Government itself paid in the enhanced rate of 

 exchange a large sum. The payments abroad 

 for diplomatic salaries and the use of the Xavy 

 are nearly $10.000,000 per annum. To make 

 these remittances the Government was at one 

 time compelled to pay 152 per cent., or 42 per 

 cent, above par, which on the remittances 

 amounted to $4.200,000 actually paid out in 

 consequence of the paper depreciation. In like 

 manner the price of all supplies and munitions 

 is enhanced by the depreciation. If of the 

 whole expenditure of the army $120,000,000 is 

 for pay of the troops, being $13 per month for 

 800,000 men, there remain $630,000,000 for 

 supplies, transportation, &c., the rates of which 

 are enhanced with the price of gold, and at the 

 present rate, 30 per cent., the extra cost to the 

 Government by the use of paper is $180,000,000 

 per annum, a sum nearly equal to the amount 

 of notes outstanding. So fearful an expense is 

 hardly matter of congratulation that the Secre- 

 tary borrows " without interest." The pay of 

 the soldiers is diminished in the same propor- 

 tion, since through the rise in prices, $13 will 

 this year purchase no more than would $10 

 last year ; hence a motion was made in Con- 

 gress to raise the pay of the troops to $15 per 

 month. The fact was apparent that in the 18 

 months ending July, 1864, the Government 

 would require $1,000,000,000 in addition to 

 $300,000,000 of existing loans that would fall 

 due, and not taking into account reclamations, 

 damages, and disasters that must arise, and 

 allowing for the extra allowances that must 

 necessarily follow the use of paper money. The 

 $100,000,000 of 3 years' bonds would fall due, 

 as much one year's certificates, or a like sum hi 



deposits, and a sum not less than $1,500,000,000 

 would be required. 



The amount of capital which can be perma- 

 nently loaned to the Government consists only 

 in a portion of the surplus profits earned each 

 year by the pursuits of industry, and which 

 each man can spare out of the operations of his 

 business. It is only within the last twenty 

 years that surplus capital has very rapidly ac- 

 cumulated, but it has been in active demand 

 for investment in the many enterprises that 

 have been undertaken of a permanent charac- 

 ter. Of these railroads are the most conspicu- 

 ous, and they have absorbed nearly $1,000,- 

 000,000 since 1850. The real amount of sur- 

 plus capital that accumulates each year is diffi- 

 cult to determine, but the late census affords 

 some data on which to approximate a result. 

 It is there stated that the annual productions 

 of industry are in value $1,900,000.000 per an- 

 num, or, in round numbers, $2,000,000.000. 

 This sum expresses the labor and capital ex- 

 pended in producing all those articles which 

 enter into commerce and the maintenance of 

 the people. If this value is produced, nearly as 

 much is expended or consumed in the opera- 

 tion in some years quite as much ; as in years 

 of bad harvest there is probably no more capi- 

 tal in existence at the end of the year than 

 when it commenced. Taking one year with 

 another, however, the actual income may be 

 10 per cent, or $200,000,000 ; of this a large 

 portion goes to extending business, improving 

 land, constructing houses, &c., and there may 

 remain $100,000,000 which may be invested 

 permanently by the owners to draw interest. 

 These investments have greatly increased of 

 late years, .and may be approximated as follows: 



State, city, and county stocks $250.000.000 



Railroad capital 800,000^000 



bonds 700,000,000 



Bank capital 421.5-50,000 



Insurance, mines, &c., <fec 250,000,000 



Savings bank deposits 200,000,000 



Bonds and mortgages 150,000,000 



Total invested capital $-2.271,530,000 



Capital per census employed in industry. . 1,000,000,000 



Total $3,271.550.000 



The vast undeveloped resources of this coun- 

 try, with the supply of labor by immigration, 

 and the immense wealth in new lands, cause 

 the demand for capital constantly to outrun 

 supply. Hence all active men are borrowers of 

 capital ; but if a number of persons engaged in 

 business enterprises were to realize this capital, 

 and invest it in the Government stocks, the 

 productive industry of the country would to 

 the extent of such transactions be stopped, and 

 the source of national wealth be dried up. This 

 is a course of proceeding, which all prudent 

 statesmen carefully avoid. It is to be remark- 

 ed that the accumulation of capital in this 

 country has heretofore been rapid, for the rea- 

 son, among others, that the taxes have been 

 very light. There have been no vast sums 

 expended upon military idlers. This is now 

 changed, and under the existing laws it is es- 



