FINANCES OF THE UNITED STATES. 



800 



untry and the gain by another produce 

 ,!!-. upon industry iinl prodnc- 

 Tims c"in is not only tin- regulator of 

 Commerce, l>ut tin- great stiinulat.H- of industry 

 ami ciit.TpriM-. 'I 'he xime may ! said of a 

 "liMc paper currency, hut is rarely if 

 : nu- nf an inconvertible currency, which 

 ', l.iral, and would nut !.. likely to 

 tonvertible if it were not excessive; and, 

 liy lieiii'j- e\iv-Mve and inconvertible, is tliictua- 

 .id uncertain in value. No matter what 

 -icted to give credit and value 

 an irredeemable currency must, unless 

 limited, al \\a\s be a depreciated currency. The 

 ary, in presenting the importance of con- 

 t he following among other re- 

 mark- : 



Tho United States notes were made a legal tender 

 niul lawful money because it was thought that this 



: IT was necessary to secure their currency. By 

 the first debates of Congress upon the 



, it will be noticed that those who advocated 

 their issue justified themselves on tho ground of ne- 



\. No one who spoke in favor of the measure 



favored it upon principle, or hesitated to express his 



apprehensions that evil consequences might result 



from it. But the Government was in peril, the 



was pressing, necessity seemed to sanc- 



departure from sound principles of finance, if 

 not from the letter of the Constitution, and an incon- 

 vertible currency became the lawful money of the 

 country. While the action of Congress in authoriz- 

 ing the issue of these notes seemed necessary at the 

 time, unil was undoubtedly approved by a largo ma- 

 jority of the peopfe, there can now, in the light of 

 experience, be no question that the apprehensions of 



.sin) advocated the measure as a necessity were 

 well founded. Hud they not been made a legal ten- 

 der, the amount in circulation would not hav been 

 excessive, and the national debt would doubtless 

 have been hundreds of millions of dollars less than 

 it is. Tho issue would have been stayed before a 

 very large amount had been put in circulation, not 

 because tho notes would have been really more de- 

 preciated by not being made lawful money, but be- 

 cause their depreciation would have boon manir >t. 

 15 v l>eing made lawful money they became tho legal- 

 measure of value a substitute for the precious 

 metals which, as a consequence, were at once de- 

 moralized and converted into articles of traffic. Made 

 by statute a legal tender, they were, of course, popu- 

 lar with thosi- who had debts to pay or property to 

 sell: eo.-.tiii'.' nothing, and yet seemingly adding to 

 the value of property^ supplying the means for spec- 

 ulation and for creating an artificial and a delusive 

 prosperity, it is an evidence of the wisdom of Con- 

 gress that the issue was stopped before the notes had 



10 ruinously depreciated, and the business of 

 the country involved m inextricable difficulties. But 

 although the issue of these notes was limited, and 



ins escaped the disasters which would have 

 overwhelmed the country without such limitation, it 

 can hardly be doubted that the resort to them was a 

 misfortune. If this means of raising money had not 

 been adopted, bonds would have undoubtedly been 

 sold at :i heavy discount, but the fact that they were 

 thus sold, without debasing the currency, would have 

 induced greater economy in the use of the proceeds, 

 while the discount on tho bonds would scarcely have 



ii-d the actual depreciation of the notes below 

 the coin standard. As long as notes could be issued 

 and bonds could be sold at a premium or at par, for 

 what the statute made money, there was a constant 

 temptation to liberal, if not unnecessary, expendi- 

 tures. Had the specie standard been maintained and 

 bonds been sold at a discount for real money, there 

 VOL. vii. 20 



would have been an economy in all the branches of 



the puhlie Hi-rvice which uiil'ort iimitely was nol wit- 

 . and the. country would have escaped the 

 evils resulting from a di.sregurd nf the great interna- 

 tional IftW, whlohno nation can violate with impu- 

 nity, the one that makes ^old and silver the only true 

 re of value. The tinan<-ial evils under which 

 the coimtrx has !>ecn Mitt'ering forborne yeare part, 

 to say nothing of the dangers which loom up in tho 

 future, _rreat degree, to be traced to the 



direct, issues by the (ioveniiiient of an inconvertible 

 currency with the lct_'al attributes of money. 



Upon tho demoralizing influences of an inconverti- 

 ble Government currency it is not necessary to on- 

 large. They are forced upon our attention by every 

 day's observation, and we cannot bo blind to them if 

 we would. The Government is virtually repudiating 

 its' own obligations by failing to redeem its notes ac- 

 cording to their tenor. These notes are payable to 

 bearer on demand in dollars, and not one of them is 

 being so paid. It is not to be expected that a people 

 will be more honest than the Government under 

 which they live, and while the Government of the 

 United States refuses to pay its notes according to 

 their tenor, or at least aa long as it fails to make 

 proper effort to do so, it practically teaches to the 

 people the doctrine of repudiation. 



On. the other hand, those who were opposed 

 to these views, urged that, as the credit, system 

 had been very much curtailed since 1861, and 

 sales were made chiefly for cash, a much larger 

 amount of currency was required than formerly 

 for the convenient transaction of business; 

 that there was, in fact, no excess of money in 

 the United States, but, on the contrary, an in- 

 crease was required to move the crops, encour- 

 age enterprise, and give activity to trade. As 

 an evidence of the correctness of this view, ref- 

 erence was made to the " tightness of the mon- 

 ey market " in tho commercial cities and the 

 scarcity of money in the agricultural districts. 



In reply, it was urged that its apparent scar- 

 city in the United States was attributable to 

 high prices, to its uncertain value, and to its 

 inactivity. Money by no means becomes abun- 

 dant by an increase, or scarce by a diminution 

 of its value. It was now in demand not so 

 much to move the crops, as to hold them ; not 

 to bring them at reasonable prices within the 

 reach of consumers, but to withhold them from 

 market until a large advance of prices could be 

 established. Let the great staples of the coun- 

 try come forward and be sold at market prices, 

 at such prices as, while the producer is fairly 

 remunerated, will increase consumption and 

 exports ; let capitalists be assured that prog- 

 ress toward a stable basis is to be uninter- 

 rupted, and money, now considered scarce, 

 will be found to be abundant. Tho business of 

 the country was estimated to be no larger than 

 in 1860, when three hundred millions of coin 

 and bank-notes were an ample circulating me- 

 dium, and when an addition of fifty millions 

 would have been excessive. There was a lack 

 of products in the best growing sections of the 

 country to exchange for money, which was tho 

 cause of tho complaint of scarcity of money in 

 those quarters. Other considerations relative to 

 the depreciation of the currency and its conse- 

 quences, which have been already noticed, 



