PUBLIC DOCUMENTS. 



643 



urges that the longer it is deferred the more difficult 

 must become its accomplishment. We should follow 

 the wise precedents established in 1789 and 1816, and, 

 without further delay, make provision for the pay- 

 ment of ^ur obligations, at as early a period as may 

 be practicable. The fruits of their labors should be 

 enjoyed by our citizens, rather than used to build up 

 and sustain moneyed monopolies in our own and 

 other lands. Our foreign debt is already computed by 

 the Secretary of the Treasury^at $850,000,000 ; citizens 

 of foreign countries receive interest upon a large por- 

 tion of our securities, and American tax-payers are 

 made to contribute large sums for their support. The 

 idea that such a debt shall become permanent should 

 be at all times discarded, as involving taxation too 

 heavy to be borne, and payment once in every six- 

 teen years, at the present rate of interest, of an 

 amount equal to the original sum. This vast debt, 

 if permitted to become permanent and increasing, 

 must eventually be gathered into the hands of a few, 

 and enable them to exert a dangerous and controlling 

 power in the affairs of the. Government. The bor- 

 rowers would become servants to the lenders the 

 lenders the masters of the people. We now pride 

 ourselves upon having given freedom to 4,000,000 of 

 the colored race; it will then be our shame that 

 40,000,000 of people, by their own toleration of usur- 

 pation and profligacy, have suffered themselves to 

 become enslaved, and merely exchanged slave-own- 

 ers for new task-masters in the shape of bondholders 

 and tax-gatherers. Besides, permanent debts pertain 

 to monarchical governments, and, tending to monop- 

 olies, perpetuities, and class legislation, are totally 

 irreconcilable with free institutions. Introduced into 

 our republican system, they would gradually but 

 surely sap its foundations, eventually subvert our 

 governmental fabric, and erect upon its ruins a 

 moneyed aristocracy. It is our sacred duty to trans- 

 mit unimpaired to our posterity the blessings of 

 liberty which were bequeathed to us by the founders 

 of the Republic, and by our example teach those who 

 are to follow us, carefully to avoid the dangers which 

 threaten a free and independent people. 



Various plans have been proposed for the payment 

 of the public debt. However they may have varied 

 as to the time and mode in which it should be re- 

 deemed, there seems to be a general concurrence as 

 to the propriety and justness of a reduction in the 

 present rate of interest. The Secretary of the Treas- 

 ury in his report recommends five per cent. ; Con- 

 gress, in a bill passed prior to adjournment, on 

 the 27th of July last, agreed upon four and four and 

 a half per cent, j while by many three per cent, has 

 been held to be an amply sufficient return for the in- 

 vestment. The general impression as to the exorbi- 

 tancy of the existing rate of interest has led to an in- 

 quiry in the public mind respecting the consideration 

 which the Government has actually received for its 

 bonds, and the conclusion is becoming prevalent that 

 the amount which is obtained was in real money 

 three or four hundred per cent, less than the obliga- 

 tions which it issued in return. It cannot be denied 

 that we are paying an extravagant percentage for the 

 use of the money borrowed, which was paper cur- 

 rency, greatly depreciated below the value of coin. 

 This fact is made apparent when we consider that 

 bondholders receive from the Treasury, upon each 

 dollar they own in Government securities, six per 

 cent, in gold, which is nearly or quite equal to nine 

 per cent, in currency ; that the bonds are then con- 

 verted into capital for the national banks, upon which 

 these institutions issue their circulation, bearing six 

 per cent, interest ; and that they are exempt from 

 taxation by the Government and the States, and 

 thereby enhanced two per cent, in the hands of the 

 holders. We thus have an aggregate of seventeen 

 per cent, which may be received upon each dollar by 

 the owners of Government securities. A system that 

 produces such results is justly regarded as favoring a 

 few at the expense of the many, and has led to the fur- 



ther inquiry whether our bondholders, in view of the 

 large profits which they have enjoyed, would them- 

 selves be averse to a settlement of our indebtedness 

 upon a plan which would yield them a fair remunera- 

 tion, and at the same time be just to the tax-papers 

 of the nation. Our national credit should bo sacredly 

 observed : but in making provision for our creditors 

 we should not forget what is due to the masses of the 

 people. It may be assumed that the holders of our 

 securities have already received upon their bonds a 

 larger amount than their original investment, meas- 

 ured by a gold standard. Upon this statement of 

 facts it would seem but just and equitable that the 

 six per cent, interest now paid by the Government 

 should be applied to the reduction of the principal in 

 semi-annual instalments, which, in sixteen years and 

 eight months, would liquidate the entire national 

 debt. Six per cent, in gold would, at present rates, 

 be equal to nine per cent in currency, and equivalent 

 to the payment of the debt one and a half times in a 

 fraction less than seventeen years. This, in connec- 

 tion with all the other advantages derived from their 

 investment, would afford to the public creditors a 

 fair and liberal compensation for the use of their 

 capital ; and with this they should be satisfied. The 

 lessons of the past admonish the lender that it is not 

 well to be over-anxious in exacting from the borrower 

 rigid compliance with the letter ol the bond. 



If provision be made for the payment of the in- 

 debtedness of the Government in the manner sug- 

 gested, our nation will rapidly recover its wonted 

 prosperity. Its interests require that some measure 

 should be taken to release the large amount of capital 

 invested in the securities of the Government. It is 

 not now merely unproductive, but in taxation annually 

 consumes one hundred and fifty millions of dollars, 

 which would otherwise be used by our enterprising 

 people in adding to the wealth of the nation. Our 

 commerce, which at one time successfully rivalled 

 that of the great maritime powers, has rapidly di- 

 minished, and our industrial interests are in a de- 

 pressed and languishing condition. The develop- 

 ment of our inexhaustible resources is checked, and 

 the fertile fields of the South are becoming waste for 

 want of means to till them. With the release of 

 capital new life would be infused into the paralyzed 

 energies of our people, and activity and vigor im- 

 parted to every branch of industry. Our people need 

 encouragement in their efforts to recover from the 

 effects of the rebellion and of injudicious legislation ; 

 and it should be the aim of the Government to stimu- 

 late them by the prospect of an early release from the 

 burdens which impede their prosperity. If we can- 

 not take the burdens from their shoulders, we should, 

 at least, manifest a willingness to help to bear them. 



In referring to the condition of the circulating me- 

 dium, I shall merely reiterate, substantially, that por- 

 tion of my last annual message which relates to that 

 subject. 



The proportion which the currency of any country 

 should bear to the whole value of the annual produce 

 circulated by its means is a question upon which po- 

 litical economists have not agreed. Nor can it be 

 controlled by legislation, but must be left to the ir- 

 revocable laws which everywhere regulate commerce 

 and trade. The circulating medium will ever irre- 

 sistibly flow to those points where it is in greatest 

 demand. The law of demand and supply is as uner- 

 ring as that which regulates the tides of the ocean ; 

 and, indeed, currency, like the tides, has its ebbs and 

 flows throughout the commercial world. 



At the beginning of the rebellion the bank-note 

 circulation of the country amounted to not much more 

 than two hundred millions of dollars ; now the circu- 

 lation of national-bank notes, and those known as 

 "legal tenders," is nearly seven hundred millions. 

 While it is urged by some that this amount should be 

 increased, others contend that a decided reduction is 

 absolutely essential to the best interests of the coun- 

 try. In view of these diverse opinions, it may be 



