PUBLIC DOCUMENTS. 



667 



Secretary of the Treasury to issue, at any time, to na- 

 tional banks of issue, any amount of their own notes 

 below a fixed percentage of their issue, say forty per 

 cent., upon the banks depositing with the Treasurer 

 of the United States an amount of Government 

 bonds equal to the amount of notes demanded, the 

 banks to forfeit to the Government, say four per cent. 

 of the interest accruing on the bonds so pledged dur- 

 ing the time they remain with the Treasurer, as se- 

 curity for the increased circulation, the bouds so 

 pledged to be redeemable by the banks at their 

 pleasure, either in whole or in part, by returning 

 their own bills for cancellation to an amount equal to 

 the face of the bonds withdrawn. I would further 

 suggest for your consideration the propriety of au- 

 thorizing national banks to diminish their standing 

 issue at pleasure by returning for cancellation their 

 own bills and withdrawing so many United States 

 bonds as are pledged for the bills returned. 



In view of the great actual contraction that has 

 taken place in the currency, and the comparative con- 

 traction continuously going on, due to the increase 

 of population, increase of manufactories, and all the 

 industries. I do not believe there is too much of it now 

 for the dullest period of the year. Indeed, if clear- 

 ing-houses should be established, thus forcing re- 

 demption, it is a question for your consideration 

 whether banking should not be made free, retaining 

 all the safeguards now required to secure bill-holders. 

 In any modification of the present laws regulating 

 national banks, as a further step toward preparing 

 for resumption of specie payments I invite your at- 

 tention to a consideration of the propriety of exact- 

 ing from them the retention, as a part of their re- 

 serve, either the whole or a part of the gold interest 

 accruing upon the bonds pledged as security for their 

 issue. I have not reflected enough on the bearing 

 this might have in producing a scarcity of coin with 

 which to pay duties on imports to give it my positive 

 recommendation. But your attention is invited to 

 the subject. 



During the last four years the currency has been 

 contracted, directly, by the withdrawal of three per 

 cent, certificates, compound-interest notes, and " sev- 

 en-thirty " bonds outstanding on the 4th of March, 

 1849, all of which took the place of legal tenders in 

 the bank reserves to the extent of $63,000,000. 



During the same period there has been a much 

 larger comparative contraction of the currency. The 

 population of the country has largely increased. More 

 than twenty- five thousand miles of railroad have 

 been built, requiring the active use of capital to op- 

 erate them. Millions of acres of land have been 

 opened to cultivation, requiring capital to move the 

 products. Manufactories have multiplied beyond all 

 precedent in the same period of time, requiring capi- 

 tal weekly for the payment of wages and for the 

 purchase of material ; and probably the largest of 

 all comparative contraction arises from the organizing 

 of free labor in the South. Now every laborer there 

 receives his wages, and for want of savings-banks, 

 the greater part of such wages is carried in the pocket 

 or hoarded until required for use. 



These suggestions are thrown out for your con- 

 sideration, without any recommendation that they 

 shall be adopted literally, but hoping that the best 

 method may be arrived at to secure such an elasticity 

 of the currency as will keep employed all the indus- 

 tries of the country, and prevent such an inflation as 

 will put off indefinitely the resumption of specie pay- 

 ments, an object so devoutly to be wished tor by all, 

 and by none more earnestly than the class of people 

 most directly interested those who "earn their 

 bread by the sweat of their brow." The decisions 

 of Congress on this subject will have the hearty 

 support of the Executive. 



In previous messages I have called attention to the 

 decline in American ship-building, and recommended 

 such legislation as would secure to us our proportion 

 of the carrying-trade. Stimulated by high rates 

 and abundance of freight, the progress for the last 



year in ship-building has been very satisfactory. 

 There has been an increase of about tliree per cent. 

 in the amount transported in American vessels over 

 the amount of last year. With the reduced cost of 

 material which has taken place, it may reasonably be 

 hoped that this progress will be maintained, and 

 even increased. However, as we pay about $80,000,- 



000 per annum to foreign vessels for the transpor- 

 tation to a market of our surplus products, thus 

 increasing the balance of trade against us to this 

 amount, the subject in one worthy of your serious 

 consideration. 



" Cheap transportation " is a subject that has at- 

 tracted the attention of both producers and consum-i 

 ers for the past few years, and has contributed to, \ 

 if it has not been the direct cause of, the recent 

 panic and stringency. 



As Congress, at its last session, appointed a spe- 

 cial committee to investigate this whole subject dur- 

 ing the vacation, and report at this session, I have 

 nothing to recommend until their report is read. 



There is one work, however, of a national charac- 

 ter, in which the greater portion of the East and the 

 West, the North and the South, are equally interest- 

 ed, to which I will invite your attention. 



The State of New York has a canal connecting 

 Lake Erie with tide-water on the Hudson River. 

 The State of Illinois has a similar work connecting 

 Lake Michigan with navigable water on the Illinois 

 River, thus making water-communication inland, 

 between the East and the West and South. These ! 

 great artificial water-courses are the property of the > 

 States through which they pass, and pay toll to those \ 

 States. Would it not bo wise statesmanship to ' 

 pledge these States that if they will open these i 

 canals for the passage of large vessels, the General ' 

 Government will look after and keep in navigable 

 condition the great public highways with which 

 they connect, to wit, tue overslaugh on the Hudson, 

 the Saint Clair Flats, and the Illinois and Mississippi \ 

 Rivers? This would be a national work: one of , 

 great value to the producers of the West ana South, 

 in giving them cheap transportation for their prod- 

 uce to toe seaboard and a market; and to con- 

 sumers in the East in giving them cheaper food, par- 

 ticularly of those articles of food which do not find 

 a foreign market, and the prices of which, therefore, 

 are not regulated by foreign demands. The advan- 

 tages of such a work are too obvious for argument. 



1 submit the subject to you, therefore, without fur- 

 ther comment. 



In attempting to regain our lost commerce and 

 carrying-trade, I have Heretofore called attention to 

 the states south of us offering a field where much 

 mijrht be accomplished. To further this object I 

 suggest that a small appropriation be made, accom- 

 panied with authority for the Secretary of the Navy 

 to fit out a naval vessel to ascend the Amazon River 

 to the mouth of the Madeira; thence to explore that 

 river and its tributaries into Bolivia, and to report 

 to Congress at its next session, or as soon as practi- 

 cable, the accessibility of the country by water, its 

 resources, and the population so reached. Such an 

 exploration would cost but little ; it can do no harm, 

 and may result in establishing a trade of value to 

 both nations. 



In further connection with the Treasury Depart- 

 ment I would recommend a revision and codification 

 of the tariff laws, and the opening of more mints for 

 coining money, with authority to coin for such na- 

 tions as may apply. 



WAB DEPARTMENT. 



The attention of Congress is invited to the recom- 

 mendations contained in the report of the Secretary 

 of War herewith accompanying. 



The apparent great cost of supporting the Army 

 is fully explained by this report, and I hope will re- 

 ceive your attention. 



While inviting your general attention to all tho 

 recommendations made by tho Secretary of War, 



