468 



FINANCES OF THE UNITED STATES. 



timated that the taxes will reach $250,000,000 

 per annum a sum more than equal to the 

 whole supposed annual surplus profits of the 

 national industry heretofore. This at once 

 checks accumulation. In addition to this 1,000,- 

 000 men, before producers, have been taken 

 from productive industry, and have become 

 consumers and destroyers. The eifects of these 

 two circumstances are making themselves felt 

 in the diminished profits of investments, or, in 

 other words, falling values. It is apparent that 

 the huge sums demanded by the Secretary can- 

 not be obtained on loans without stopping the 

 industry of the country, on one hand, or de- 

 stroying values on the other. To obtain 

 means by the issue of paper money has a still 

 more disastrous effect, since it takes from every 

 man a portion of his earnings and values. 

 The munitions and supplies that the Govern- 

 ment obtains in return for paper issues are at 

 continually higher prices. In other words, 

 more paper must be given for the same quan- 

 tities at each succeeding purchase, and this in 

 the double ratio of greater supplies of paper 

 and diminished production of the commodities. 

 Very speedily the purchasing power of the 

 paper ceases, and although by virtue of its 

 power of legal tender holders of maturing ob- 

 ligations may be ruined, it will no longer com- 

 mand any of the necessaries of life. 



The number of those who can spare cap- 

 ital out of their regular business to place at 

 interest is small. The estates of minors and 

 others increase to some extent, and those 

 funds seek investments. If the whole 2,100 

 millions, exclusive of savings deposited, draw 

 5 per cent, interest, the result is 100 millions 

 of interest paid annually by industry. The 

 capital invested in productive industry may 

 pay 10 per cent, or 100 millions more. These 

 two items absorbed nearly all the capital 

 there is in the country, since no one allows 

 any considerable sum to lie idle or unpro- 

 ductive. The Government now steps forward 

 and for war purposes demands in two years, 

 ending January. 1864, $1,500,000,000, or more 

 than one half of all the capital invested in 

 industry and in securities. This is a serious 



demand, and it is at once evident that it can- 

 not be complied with except by drawing the 

 amount out of other occupations. If its credit 

 remains unshaken, and the public consider its 

 promise as good as the best security, then it 

 must offer such terms to lenders as will induce 

 them to change their investments. To invest 

 largely in Government they must sell New 

 York or Ohio, or bank stock, or railroad bonds, 

 or such as they hold, in order to make the pur- 

 chase. But it is obvious that extensive sales 

 cannot be made for want of buyers. If the 

 holders of the above named 2,000 millions of 

 securities all wanted to sell, it is clear there 

 would be no buyers. If a large proportion 

 wished to sell they could find buyers only at 

 low prices, and the general level of prices would 

 be proportioned to the extent of the conver- 

 sions. Hence it is evident that the Government 

 could obtain its loan only at such rates as would 

 outbid all the borrowers. If all the surplus 

 capital is now equal to 2,000 millions, repre- 

 sented by the amount of stocks at par, then 

 to add 1,700 millions to the quantity of stock, 

 would cause the whole mass of stock to fall to 

 55 per cent, to represent the same capital, 

 2,000 millions. This is under the supposition 

 that the Federal credit would remain equal to 

 the other stocks. It is, however, not equal to 

 them, but is now much below that of the indi- 

 vidual Northern States. 



The state of affairs now produced the great- 

 est anxieties in the public. It became evident 

 that to pursue this paper system was to invite 

 bankruptcy and repudiation, and numerous 

 representations were forwarded to "Washington 

 to remonstrate against the further issue of 

 paper. On the other hand there were those 

 who equally dreaded the collapse in value which 

 must result from the placing of large loans upon 

 the market. The Government stocks were 

 nearly at par for paper, but were far below par 

 as measured with specie, which would become 

 the measure of value on abandoning paper. 

 The following table represents the effect 

 of the currency measures of the Government 

 during the year upon stocks, the metals, and 

 trade : 



The first column represents the value of 

 goods imported into the port of New York, the 

 second column the value of merchandise export- 



ed, the third column the amount of gold export- 

 ed from New York, and the fourth the quan- 

 tity of silver carried to Canada monthly by one 



