254 



FINANCES OF THE UNITED STATES. 



cannot, in his opinion, be accurately determined 

 until the credit of the Government shall be 

 so improved, at home and abroad, that holders 

 of bonds are disposed to retain them, even 

 when the public mind is excited upon financial 

 subjects. Since the close of the war the wants 

 of the States of the South have increased, and 

 consequently a large amount of currency has 

 been withdrawn from other sections to supply 

 the demand there created. This demand is 

 likely to increase during the next two years. 

 It is likely that not less than thirty millions 

 will be required to meet the substitution of 

 paper for coin by the people on the Pacific 

 coast. It is thought by the Secretary that the 

 coin will thereby be increased on the Atlantic 

 coast, and the difference between paper and 

 coin be diminished. 



In this condition of the debt, the revenue 

 and the currency issued, the most important 

 public consideration arose respecting the views 

 and purposes of the Government in its future 

 financial policy. The restoration of a sound 

 currency, and the prompt payment of principal 

 and interest of the debt, with a due regard to 

 the welfare and prosperity of the country, were 

 duties which could be neither avoided nor post- 

 poned. How should they be discharged, was 

 the question of the day. The Secretary did 

 not propose an immediate return to specie 

 payments. In his opinion the ability of the 

 country to resume these payments did not de- 

 pend on any special legislation, but on the 

 condition of its industries and its financial re- 

 lations to other countries. The argument of 

 the Treasury on this important point is em- 

 braced in these words : 



" The fundamental condition for the payment 

 of over-due or irredeemable paper is, undoubt- 

 edly, that the debtor shall have wherewith to 

 pay. The necessity that the products of in- 

 dustry for export should approach an equality 

 in value with those imported, in order to pre- 

 vent a demand for specie, is equally true." But 

 there are influences operating an increase or 

 a diminution of the products of industry which 

 seem to be overlooked by the Secretary. Paper 

 money itself exerts a deleterious influence on 

 importations, while excessive taxation is de- 

 pressing to labor, and, by diminishing ability to 

 consume, reduces the demand for production. 



The Secretary, however, considers that one 

 of the most efficient means of strengthening 

 the country in its financial relations with other 

 countries is the development of the commer- 

 cial marine ; that is, the increase of the means 

 for the transportation of merchandise on water. 

 Having done this, and thereby become able to 

 carry exports and imports which are now 

 taken in foreign ships, the country would earn 

 the freight which is now paid to these foreign 

 carriers, and which amounts to forty-seven 

 millions annually. A portion. of this amount 

 would be payable to American citizens in for- 

 eign countries, and add so much to the ability 

 to pay for the goods imported from those 



countries. This item thus obtained would un- 

 doubtedly add something to the ability of the 

 country. But the development of the com- 

 mercial marine of the country is a work of 

 years, and requires an entire modification of 

 some of the revenue laws of Congress. So 

 conscious is the Secretary of the little imme- 

 diate aid to be derived from this source, that 

 he declares such a delay in the resumption of 

 specie payments is not anticipated to be neces- 

 sary. But he expressly indicates his opinion, 

 that it will not be wise to resume specie 

 payments while so large a part of the interest- 

 bearing debt of the country is represented by 

 five-twenty bonds, and held by European 

 merchants, bankers, and manufacturers. He 

 thinks that from seven to nine hundred mill- 

 ions of these bonds are now held in Europe, 

 and to a considerable extent by persons who 

 retain them for speculative purposes, with the 

 design to put them upon the market whenever 

 the advance shall furnish a sufficient induce- 

 ment, or when political or financial disturb- 

 ances may create a demand for other purposes. 

 The view of the Government is, that resump- 

 tion in itself is a simple matter, but the impor- 

 tant point to be gained is, a resumption under 

 such circumstances that the position can be 

 maintained, not only in times of tranquillity, but 

 also in periods of excitement and peril. 



Entertaining these views of the circum- 

 stances which exist, it becomes a matter of 

 interest to learn the measures by which the 

 Secretary proposes to obviate them. To his 

 view the path into the future opens very plain- 

 ly. He sees that every measure of the Govern- 

 ment bearing upon the subject should tend to 

 appreciate the value of the paper currency, 

 and, as some decrease in the volume of paper 

 may be ultimately necessary, the Secretary 

 should be clothed with authority to reduce 

 the circulation of United States notes about 

 two millions of dollars per month. The effect 

 of this will be to bring the country gradually 

 ($356,113,258 outstanding) into a condition 

 when resumption may be made easy. 



With regard to the debt of the country, it 

 presents the following features, which are to 

 be taken into the account in any plan for its 

 adjustment. On December 1, 1869, the prin- 

 cipal of the public debt of the United States, 

 not deducting bonds and cash on hand, amount- 

 ed to $2,605,286,789.82. Of this amount, the 

 sum of $356,113,258.50 was represented by 

 United States notes not bearing interest. A 

 large part of this is needed for circulation, but 

 the amount can be reduced, from the ordinary 

 revenue of the country. The fractional "cur- 

 rency in circulation was $38,885,564.68. There 

 were outstanding, also, certificates for gold 

 deposited in the Treasury to the amount of 

 $36,862,940. These certificates are redeem- 

 able on presentation. These three items 

 amount in the aggregate to $431,861,763.18, 

 and in making provision for the public debt 

 they are not necessarily to be considered. 



