304 



FINANCES OF THE UNITED STATES. 



The following is a summary statement of the 

 public debt on November 1, 1867 : 



Debt bearing coin interest. 



Five per cent, bonds $198,845.350 00 



Six per cent, bonds of 1S67 and 1868 14.690,941 80 



Six per cent, bonds, 1881 283,676,600 00 



Six per cent. 5-20 bonds 1,267,898.100 00 



Havy pension fund 13,000,000 00 



$1,778,110,991 80 

 Debt bearing curreney interest. 



Six per cent, bonds $18,042,000 00 



Three-year compound-interest notes 62,558,940 00 



Three-year 7-30 notes 834,607,700 00 



Three per cent, certificates 11,560,000 00 



$426,768,640 00 

 Matured debt not presented for payment $18,237,538 83 



Debt bearing no interest. 



United States notes $357,164,844 00 



Fractional currency 30,706,633 39 



Gold certificates of deposit 14,514,200 00 



$402,385,677 39 



Total debt $2,625,502.848 02 



Coin in Treasury. $111,540,317 85 



Currency in Treasury 22,458,080 67 



133,998,398 02 



Debt less cash in the Treasury $2,491,504,450 00 



The outstanding notes of the United States, 

 including the fractional currency, as above 

 stated, have been reduced $71,633,834.12 since 

 the close of the war, which has been so much 

 progress in a contraction of the currency, and 

 toward the resumption of specie payments. 

 Still that there is an excess of currency, the 

 Secretary concludes, because coin commands a 

 premium of some forty per cent, over legal- 

 tender notes ; a high tariff has proved power- 

 less to prevent excessive importations ; capital- 

 ists hesitate in regard to the uses to which they 

 shall put their surplus means ; business is specu- 

 lative and uncertain ; expenses of living are 

 driving thousands into crime, and making dis- 

 honesty excusable, while honorable men of 

 limited means are indignantly and justly com- 

 plaining that they cannot live on incomes that 

 formerly gave them a handsome support. A 

 difference of views existed in the public mind 

 relative to an excess of currency, and Congress 

 by a considerable majority had limited the 

 power of the Secretary to contract it. On. 

 April 12, 1866, an act was passed authorizing 

 the Secretary to receive treasury notes and 

 other obligations of the Government, whether 

 bearing interest or not, in exc'hange for bonds, 

 with a proviso, that of United States notes not 

 more than ten millions of dollars should be 

 cancelled within six months from the passage 

 of the act, and thereafter not more than four 

 millions of dollars in any one month. This 

 proviso, while it fixed a limit to the amount of 

 notes which should be retired per month, so 

 far from indicating an abandonment of the 

 policy of contraction which had been main- 

 tained since the war, confirmed and established 

 it. 



So favorable had been the general tendency 

 of the measures adopted by the Secretary, that 



in his report to Congress in December, 1866, 

 he had expressed the opinion that specie pay- 

 ments ought to be resumed as early as July 1, 

 1868. But these anticipations were not fully 

 realized. The grain crops of 1866 were barely 

 sufficient for home consumption. The expenses 

 of the War Department, by reason of Indian 

 hostilities and the establishment of military 

 governments in the Southern States, greatly ex- 

 ceeded the estimates. The Government was 

 also defrauded of a large part of the revenue 

 upon distilled liquors, and the condition 'of the 

 South continued disturbed and unsatisfactory. 

 An apprehension was also created, by some 

 public speakers on finance and taxation, that 

 the public faith might not be maintained. All 

 theas facts indicated a postponement of the 

 time when specie payments might be resumed. 

 Much, however, had been done to effect that ob- 

 ject, and in the opinion of the Secretary, as 

 expressed in his last annual report, no insuper- 

 able difficulty in the way of an early and per- 

 manent resumption existed. "But with favor- 

 able crops in 1868," he says, " and. with no 

 legislation unfavorable to contraction, resump- 

 tion ought not to be delayed beyond January 1, 

 or, at the farthest, July 1, 1869." To make 

 this restoration of the specie standard perma- 

 nent, the Secretary regarded it as of the high- 

 est importance, that the funding or payment 

 of the balance of interest-bearing notes and a 

 continued contraction of the paper currency 

 should be made ; also that the public faith with 

 regard to the public debt should be maintained ; 

 and that the Southern States should be re- 

 stored to their proper relations to the Federal 

 Government. 



To aid in consolidating the debt, Congress, 

 ^on March 2, 1867, authorized and directed the 

 'Secretary to issue three per cent, loan certifi- 

 cates to the amount of fifty millions of dollars 

 for the purpose of redeeming and retiring com- 

 pound-interest notes. Of the certificates, $11,- 

 560,000 had been issued during the year for the 

 redemption of notes becoming due in October 

 and December. The remainder of these notes, 

 then outstanding, he expected to take up with 

 certificates, or pay at maturity. Indeed, all 

 the interest-bearing notes, at the close of the 

 year outstanding, were, by their terms of con- 

 tract, to be paid or converted within eleven 

 months. 



As has already been stated, a difference of 

 opinion existed in the public mind respecting a 

 contraction of the currency, and this embraced 

 the further question as to which of the two 

 kinds of the currency the United States notes, 

 or the notes of the national banks should bear 

 the contraction. In favor of a contraction 

 generally, it was urged that an increase of 

 money beyond what was needed for a circula- 

 ting medium, not only inflated prices, but di- 

 minished labor, and coin flows from the coun- 

 try in which the excess exists, to some other 

 where labor is more active, and prices are 

 lower ; to flow back again when the loss by 



