256 



FINANCES OF THE UNITED STATES. 



executed since, are satisfied by the payment 

 of the amount called for in depreciated notes. 

 "Perhaps," says the Secretary, "no law could 

 be passed which would be productive of better 

 results, with so little private or public incon- 

 venience, as an act legalizing specific contracts 

 to be executed in coin." In his opinion it 

 would check the outflow of specie to other 

 countries by creating a necessity for the use of 

 it at home ; it would encourage enterprises ex- 

 tending into the future, by removing all un- 

 certainty in regard to the value of the currency 

 with which they are to be carried on. It 

 would also remove a formidable embarrass- 

 ment in the foreign trade of the country, and 

 familiarize the people again with specie as the 

 standard of value, and show how groundless 

 is the apprehension so generally existing, that 

 a withdrawal of depreciated notes, or the ap- 

 preciation of these notes to par, would produce 

 a scarcity of money, by proving that specie, ex- 

 pelled from the country by an inferior circula- 

 ting medium, will return again when it is made 

 the basis of contracts, and is needed in their 

 performance. The Secretary also recommended 

 that it be declared that after January 1, 1870, 

 United States notes shall cease to be a legal 

 tender on any contract, or for any purpose 

 whatever, except Government dues, for which 

 they are at present receivable. The act 

 making this declaration should also author- 

 ize the conversion of these notes at the pleas- 

 ure of the holders into bonds of the same rate 

 of interest with other funded bonds. The 

 amount of Government notes outstanding has 

 been as follows : 



November, 1867. November, 1868. 



U. S. Notes , . . . . $357,164,844 $356,021,073 



Fractional Currency .... 30,706,633 33,413,985 



8387,871,477 $389,435,058 



The circulation of the national banks has 

 been as follows: October, 1867, $303,988,971 ; 

 October, 1868, $295,684,244. Thus the total 

 circulation of legal tenders, fractional currency, 

 and national banks, was $685,118,302, being 

 $6,742,146 less than at the same period of the 

 previous year. 



The existence of such a large amount of ir- 

 redeemable paper money in the country has 

 produced two classes of unfavorable conse- 

 quences : One, affecting the business and the 

 morals of the people, has been heretofore no- 

 ticed. The other, comprising the commercial 

 relations of the United States to other coun- 

 tries, is too important to be overlooked. This 

 is so well presented by the Secretary of the 

 Treasury in his annual report as to be very 

 appropriately inserted here. He says : 



The receipts from customs for the last three years 

 have been as follows : 



For the fiscal year ending June 30, 1866. .. .$179,046,651 

 " 1867.... 176,417,810 

 " 1868.... 164,464,599 



While it appears from these figures that the cus- 

 toms receipts since the commencement of the fiscal 

 year 1865 have "been, in a revenue point of view, en- 

 tirely satisfactory, the question naturally arises, what 



do these large receipts, under a high tariff, indicate 

 in regard to our foreign trade and to our financial re- 

 lations with foreign nations ? 



It is impossible to ascertain with precision the 

 amount of our securities held in Europe, nor is 

 there any perfectly reliable data for ascertaining, 

 even, what amount has gone there annually since 

 the first bonds were issued for the prosecution of the 

 late war. In his report of 1866 the Secretary esti- 

 mated the amount of United States securities of dif- 

 ferent kinds, including railroad and other stock, held 

 in Europe, at $600,000,000. He soon after became 

 satisfied that this estimate was too low by from one 

 hundred to one hundred and fifty millions. It would 

 be safe to put the amount so held at the present time, 

 exclusive of stocks, at $850,000,000, of which not less 

 than $600,000,000 are United States bonds ; nearly all 

 of which have left the United States within the last 

 six years. The amount is formidable, and little sat- 

 isfaction is derived from the consideration that these 

 securities have been transferred in payment of in- 

 terest and for foreign commodities, and just as 

 little from the consideration that probably not over 

 $500,000,000 in gold values have been received for 

 these $850,000,000 of debt. In this estimate of our 

 foreign indebtedness railroad and other stocks are 

 not included, as they are not a debt, but the evidence 

 merely of the ownership of property in the United 

 States. Fortunately, for some years past, individual 

 credits have been curtailed, and our foreign and 

 domestic trade, in this particular, has not been un- 

 satisfactory. In addition, then, to the stocks referred 

 to and the individual indebtedness, of the amount of 

 which no accurate estimate can be made, Europe 

 holds not less than $850,000,000 of American securi- 

 ties, on. nearly all of which interest, and on the 

 greater part of which interest in gold, is being paid. 

 JNor, under the present revenue systems and with a 

 depreciated paper currency, is the increase of our 

 foreign debt likely to be stayed. With an abundant 

 harvest and a large surplus of agricultural products 

 of all descriptions, United States bonds are still 

 creating, to no small extent, the exchange with which 

 our foreign balances are being adjusted. We are 

 even now increasing our debt to Europe at the rate 

 of $60,000,000 or $70,000,000 per annum in the form 

 of gold-bearing bonds. 



The gold and silver product of California and 

 the Territories, since 1848, has been upward of 

 $1,300,000,000. Allowing that $100,000,000 have 

 been used in manufactures and that the coin in 

 the country has been increased to an equal amount, 

 the balance of this immense sum $1,100,000,000 

 has gone to other countries in exchange for their 

 productions. Within a period of twenty years, in 

 addition to our agricultural products and to our 

 manufactures which have been exported in large 

 quantities, we have parted with $1,100,000,000 of the 

 precious metals; and are, nevertheless, confronted 

 with a foreign debt of some $850,000,000, which is 

 steadily increasing ; and all this has occurred under 

 tariffs in a good degree framed with a view of pro- 

 tecting American against foreign manufacturers. I5ut 

 this is not all. During the recent war most of our 

 vessels engaged in the foreign trade were either de- 

 stroyed by rebel cruisers or transferred to foreigners. 

 Our exports as well as our imports are now chiefly in 

 foreign bottoms. The carrying trade between the 

 United States and Europe is almost literally, in the 

 hands of Europeans. Were it not for the remnant 

 of ships still employed in the China trade, and the 

 stand we are making by the establishment of a line 

 of steamers on the Pacific, the coastwise trade, which 

 is retained by the exclusion of foreign competition, 

 would seem to be about all that can, under existing 

 legislation, be relied upon for the employment of 

 American shipping. 



There are many intelligent persons who entertain 

 the opinion that the country has been benefited by 

 the transfer of our bonds to Europe, on the ground 



