304 



FINANCES OF THE UNITED STATES. 



are in the hands of citizens of other countries, 

 and may be returned at any time for sale in 

 the United States, and thus seriously embarrass 

 the efforts to return to specie payments. To 

 avoid this embarrassment is the point to be 

 considered. The last general remedy proposed 

 by the Secretary is to restore to their former 

 position in the Union, the ten Southern States. 



If these remedial measures should be ap- 

 proved by Congress and enforced by appropri- 

 ate legislation, the Secretary expressed his con- 

 viction that specie payments could be resumed 

 by the time the interest-bearing notes were 

 retired, which would be less than two years. 

 These suggestions of the Secretary looked to 

 an increase of labor, and consequently of pro- 

 duction to a fulfilment of obligations by the 

 government and by the banks to a reduction, 

 of the public debt at the same time that taxes 

 were equalized and lessened to lower prices, 

 and apparently harder, but really more pros- 

 perous times, and to a restoration of specie 

 payments without the financial troubles usually 

 preceding a resumption. 



Yarious views were presented in different 

 quarters respecting the measures necessary for 

 the future financial welfare of the country. 

 Some urged the extinction of the national 

 banks, and the substitution in their place of a 

 government currency. Others urged, with the 

 Secretary, a contraction of the currency. 

 Among these was the Chairman of "Ways and 

 Means (Mr. Morrill), in the lower house of 

 Congress, who, in the beginning of 1867, thus 

 closed a speech urging a resumption of specie 

 payments : 



From the facts to which I have already called the 

 attention of the House, it would appear to be demon- 

 strated that the simultaneous discovery of new au- 

 riferous deposits in various parts of the world, of 

 marvellous extent and richness, has rapidly and for- 

 ever depressed the standard value of gold, whether as 

 a currency or as a commodity, throughout all civilized 

 nations, and that the United States standard of the 

 precious metals used as currency has been depre- 

 ciated from time to time, either by alloy or dimin- 

 ished weight, until it compares unfavorably with that 

 of other nations ; that while we have already entirely 

 extinguished or propose to extinguish the circulation 

 of State banks, we have supplied its place and much 

 more by the erection of a family of national banks, 

 whose issues alone are $100,000,000 greater than the 

 circulation displaced issues everywhere practically 

 irredeemable and inconvertible, and only claiming 

 to be convertible at some time or other into 

 other paper currency of still larger proportions, 

 which government will in some way and at some 

 time redeem, if it does not choose instead to go 

 more deeply into the monopoly of fancy-colored pa- 

 per money ; that deposits, bills of exchange, and 

 checks of individuals really possess in commercial 

 transactions all the functions of bank-note currency, 

 and in modern times are used at least nine times 

 more extensively, and therefore, in proportion to the 

 business of the world, far less money is actually 

 required than formerly ; that the rapidity of the 

 circulation of money, or whatever circulates _ as 

 money, greatly magnifies any currency which 

 may be used in the United States; that the 

 immensity of our paper-money circulation tends to 

 the spread of unthrifty habits, and induces extrava- 

 gance on the part of Congress and the executive de- 



partments as well as the people; that a postpone- 

 ment of the time of resumption will find our people 

 less prepared more deeply in debt, the banks with 

 a heavier line of discounts, and the credit system 

 more expanded everywhere than now, for a wise, 

 steady, and prudent adherence to the idea of an 

 early resumption, and without this cardinal idea 

 always in front, we are in danger) in the face of a 

 diminishing revenue, of no resumption at all. A 

 violent or abrupt contraction of the present volume 

 of paper currency might not be advisable, and with 

 the ever-present interest of the Treasury urging the 

 maintenance of an easy money-market, there is no 

 danger of its occurrence ; but a moderate and per- 

 sistent contraction of the flood within its old em- 

 bankment is advisable, in order to restore health 

 and vigor to languishing industries, and in order to 

 build up our greatness as a nation upon that impreg- 

 nable foundation for which the material, not more 

 precious than solid, has been placed by Providence 

 within our reach, and in greater abundance than is 

 to be found in all other countries besides. We have 

 just emerged from a most expensive war, and ought 

 to exhibit that spirit which success justly inspires, 

 grappling with the financial difficulties remaining as 

 part of our inheritance with the courage that conquers, 

 and thus secure the vital interests of our own people 

 while we challenge the respect of foreign nations. 



From all the facts which have been stated, 

 comprising, as they do, a history of the financial 

 condition of the Government and people, it will 

 be seen that the Federal Government requires 

 large sums of money for the years immediately 

 ensuing ; that its systems of revenue being based 

 upon the industry of the people, its receipts are 

 increased or diminished according to the pros- 

 perity of the people ; that at the close of the 

 year serious depression existed in many branches 

 of industry and threatened to invade all others, 

 and cause to the Government a serious loss of 

 revenue ; that this depression was partly a re- 

 sult of the inflated paper-currency of the coun- 

 try ; and that the Government, under the re- 

 duced scale of business on a specie basis, could 

 not obtain the revenue necessary to its expendi- 

 tures. In other words, a contraction of the cur- 

 rency would cramp and cripple the Government, 

 but bring healthy prosperity to the people; 

 whereas an expansion of the currency would 

 give the Government temporarily a surplus, but 

 ultimately depress the people. The Secretary 

 hopes to find a medium way between these ex- 

 tremes ; others believe the immense richness of 

 the country will float both Government and peo- 

 ple into a sea of healthy prosperity. 



The following is a statement of the public 

 debt June 30, and October 31, 1866, exclusive 

 of cash in the Treasury : 



DENOMINATIONS. June 30, 1S66. Oct. 31, 1866. 



Bonds, 10-40's. 5 per cent, 



due in 1904. . $171,239,100 00 $171,069,350 00 



Bonds, Pacific K. E.. 6 per 



ct., due in 1895 and 1896, 6.042,000 00 9,852,000 00 

 Bonds, 5-20's, 6 per ct., due 



in 1882, 1884, and 1885.. 722,205,500 00 823,944,000 00 

 Bonds, 6 per cent., due in 



1868. 8,908,841 80 8,290,941 80 



Bonds, 6 per cent., duo in 



1867 9,415,250 00 7,742,800 00 



Compound-interest notes; 



due in 1867 and 1S68 .... 159,012,140 00 148,512,140 00 

 7.30 Treasury notes, due in 



1867 and 1863. 806,251,550 00 724,014,300 00 



Total.. . 



$983.587,281 80 $888,560,181 80 



