OO 
 
GIFT OF 
 
SHALL WE HAVE PEACE? 
 
 PEACE FINANCIAL, AND PEACE POLITICAL? 
 
 *-* 
 
 LETTERS 
 
 TO THE 
 
 PRESIDENT ELECT OF THE TIMED STATES: 
 
 BY 
 
 H. C. OAEET. 
 
 PHILADELPHIA: 
 COLLINS, PRINTER, 705 JAYNE STREET. 
 
 1860. 
 
'4 * 
 
 
 H 
 
SHALL WE HAVE PEACE? 
 
 DEAR SIR: 
 
 LET us have peace ! In these brief words you express the unani- 
 mous wish of the lo}^! portion of the nation, North and South, 
 and of whatsoever shade of color. It is the one great and pre- 
 ponderant desire of all that portion of our population which, at the 
 close of a tedious and destructive war, has now succeeded in placing 
 in the presidential chair the man to whom they had been most of 
 all indebted for suppression of the armed rebellion. That there 
 should be peace, and that it should be permanent, is to the true in- 
 terest of all, whether loyalists or rebels, and it is in the interest of 
 all that I now propound the great question, Shall we have peace 
 not a temporary one to be maintained by aid of military force, 
 but such a peace as shall tend, day by day and year by year, so to 
 bind together and consolidate the different portions of the Union 
 as to render absolutely impossible a recurrence of scenes of war 
 and waste like to those through which we so recently have passed ? 
 Can we have such a peace ? For answer to this I have to say that 
 such an one has recently, and on the largest scale, been established 
 in Central Europe, and that all now needed among ourselves is that 
 we study carefully what has there been done, and then imitate the 
 great example which has there been set us. 
 
 Five and thirty years since, Germany presented to view a collec- 
 tion of loose fragments, most of which were mere tools in the hands 
 of neighboring powers, France or England at one hour, Russia or 
 Austria at another. A state of civil war had for centuries been 
 the chronic condition of the country, and, as a necessary conse- 
 quence, poverty, and such poverty as in our loyal States is entirely 
 unknown, had, with but few exceptions, been the condition of all 
 classes of her people. 
 
 Brief as is the period which has since elapsed, an empire has been 
 there created embracing a population little short of 40.000,000, 
 among whom education is universal ; with a system of communica- 
 tions that, with the exception of those provided for the very dense 
 populations and limited territories of England and Belgium, is not 
 excelled by that of any other country ; with an internal commerce 
 as perfectly organized as any in the world, and growing from day 
 to day with extraordinary rapiditj" ; with a market on the land for 
 nearly all its products, and, as a necessary consequence, with an 
 agricultural population that grows daily in both intelligence and 
 power; with a mercantile marine that now numbers more than 
 10,000 vessels; with a public treasury so well provided that not 
 only has it made the recent war without need for negotiating loans, 
 but that it has at once made large additions to the provision for 
 1 
 
 383254 
 
public education ; and with private treasuries so well supplied as to 
 enable its people not only with their own means to build their own 
 furnaces and factories and construct their own roads, but also to 
 furnish hundreds of millions to the improvident people of America, 
 to be by them applied to the making of roads in a country the 
 abundance of whose natural resources should long since have placed 
 it in the position of money lender, rather than that now occupied 
 of general money borrower. 
 
 To what now, has this all been due? To the quiet and simple 
 operation of the protective features of the system of the Zoll-Yerein, 
 the most important measure of the century, and among the most 
 important ever adopted in Europe. Under it labor has been every- 
 where economized. Under it, the producers and consumers of a 
 whole nation have been brought into communication with each 
 other, and thus has been created a great society which is destined 
 ultimately, in all probability, to produce etfects throughout the 
 Eastern continent fully equal to any that may, by even the most 
 sanguine, be hoped for in this "Western one. 
 
 2. Five and thirty years since, Germany and the American Union 
 exhibited states of things directly antagonistic, the one to the other. 
 The first was divided and disturbed, its internal commerce in every 
 way embarrass^!, its people and its various governments very poor, 
 and with little^iope in the future except that which resulted from 
 the fact that negotiations were then on foot for the formation of a 
 Customs Union, which, shortly after, was accomplished. In the 
 other, on the contrary, everything was different, the internal com- 
 merce having been more active than had ever before been known, 
 the public treasury filled to overflowing, the national debt on the 
 eve of extinction, and capital so much abounding as to make 
 demand, for the opening of mines, the building of houses and mills, 
 and the construction of roads, for all the labor power of a people 
 that then numbered thirteen millions. 
 
 The cause of these remarkable differences was to be found in the 
 facts, that, up to that time, Germany had wholly failed to adopt 
 such- measures of co-ordination as were needed for establishing 
 circulation among its 30,000,000 of population ; whereas, our 
 Union had, five years before, and for the first time, adopted 
 measures having for their object development of all the powers, 
 physical, mental, or moral, of its people, all the wealth of its soil, 
 and all the wonderful mineral deposits by which that soil was 
 known to be underlaid. The one had failed to bring together the 
 producer and consumer of food and wool, and had remained de- 
 pendent upon traders in distant markets. The other had just then 
 willed that such dependence should, at no distant time, come to an 
 end ; that producers and consumers should be brought together ; 
 and there had thence already resulted an activity of circulation and 
 an improvement in physical and moral condition, the like of which 
 had never before been known to be accomplished in so brief a 
 period. 
 
 But little later (1835), the two countries are once again found 
 totally opposed, Germany having adopted the American system 
 and thus provided for freedom of internal commerce, America 
 
simultaneously adopting that which to Germany had proved so 
 utterly disastrous, and which had been there rejected. Thenceforth 
 the former moved steadily forward in the direction of creating a 
 great domestic commerce, doing this by means of a railroad system 
 which should so bind together her whole people as to forbid the 
 idea of future separation. The result already exhibits itself in the 
 quiet creation of the most powerful empire of Europe. The latter 
 meanwhile has constructed great roads by means of which it has 
 exported its soil, in the forms of tobacco, corn, and cotton, to 
 distant markets, and has thus diminished its power to maintain in- 
 ternal commerce the result obtained exhibiting itself in a great 
 rebellion that has cost the country, North and South, half a million 
 of lives, the crippling of hundreds of thousands of men, and an ex- 
 penditure of more thousands of millions than, properly applied, 
 would have doubled the incomes of its whole people, while making 
 such demand for human force, mental, moral, and physical, as would, 
 in a brief period, have secured the establishment of universal free- 
 dom, with benefit to all, white and black, landowner and laborer. 
 Such have been the widely different results of two systems of public 
 policy, the one of which looks to introducing into society that proper, 
 orderly arrangement which is found in every well conducted private 
 establishment, and by means of which each and every person em- 
 ployed is enabled to find the place for which nature had intended 
 him ; the other, meanwhile, in accordance with the doctrine oflaisser 
 faire, requiring that government should abdicate the performance 
 of its proper duties, wholly overlooking the fact that all the com- 
 munities by which such teachings are carried into practical effect 
 now exhibit themselves before the world in a state of utter ruin. 
 
 3. Studying now our American railroad system, we find the great 
 trunk lines to be, so far as regards the North and the South, purely 
 sectional, all of them running east and west and the whole constitut- 
 ing a collection of spokes in a great wheel whose hub, wholly con- 
 trolled by men like Laird and other workers in aid of the great 
 rebellion, is found in Liverpool. As a consequence of this it had 
 been that our dependence on such men had become more complete 
 as those great lines had increased in number, and with every such 
 increase our financial crises had become more frequent and more 
 severe. Prior to the war a single turn of the British screw had 
 sufficed for ruining thousands of those who had invested their means 
 in the opening of mines, the building of furnaces or factories, and 
 for thus crushing out the most important portions of our domestic 
 commerce. With each such crisis there came increased necessity for 
 scattering our people over the land, and for limiting ourselves to that 
 single species of employment which is the essential characteristic of 
 semi-barbarism the raising of raw produce for the supply of distant 
 markets. From year to year the tide of white emigration rose, fol- 
 lowing always the lines of road and canal of the extreme North, and 
 carefully avoiding the Central States. Simultaneously, south of 
 Mason and Dixon's line, a black emigration depleted the Centre, 
 Virginia and Kentucky, Maryland and Delaware, furnishing the 
 bone and the muscle required for consumption in the fields of 
 Mississippi and of Texas. As a consequence of this, the extreme 
 
public education ; and with private treasuries so well supplied as to 
 enable its people not only with their own means to build their own 
 furnaces and factories and construct their own roads, but also to 
 furnish hundreds of millions to the improvident people of America, 
 to be by them applied to the making of roads in a country the 
 abundance of whose natural resources should long since have placed 
 it in the position of money lender, rather than that now occupied 
 of general money borrower. 
 
 To what now, has this all been due? To the quiet and simple 
 operation of the protective features of the system of the Zoll-Yerein, 
 the most important measure of the century, and among the most 
 important ever adopted in Europe. Under it labor has been every- 
 where economized. Under it, the producers and consumers of a 
 whole nation have been brought into communication with each 
 other, and thus has been created a great society which is destined 
 ultimately, in all probability, to produce etfects throughout the 
 Eastern continent fully equal to any that may, by even the most 
 sanguine, be hoped for in this Western one. 
 
 2. Five and thirty years since, Germany and the American Union 
 exhibited states of things directly antagonistic, the one to the other. 
 The first was divided and disturbed, its internal commerce in every 
 way embarrassed, its people and its various governments very poor, 
 and with little^iope in the future except that which resulted from 
 the fact that negotiations were then on foot for the formation of a 
 Customs Union, which, shortly after, was accomplished. In the 
 other, on the contrary, everything was different, the internal com- 
 merce having been more active than had ever before been known, 
 the public treasury filled to overflowing, the national debt on the 
 eve of extinction, and capital so much abounding as to make 
 demand, for the opening of mines, the building of houses and mills, 
 and the construction of roads, for all the labor power of a people 
 that then numbered thirteen millions. 
 
 The cause of these remarkable differences w r as to be found in the 
 facts, that, up to that time, Germany had wholly failed to adopt 
 such- measures of co-ordination as were needed for establishing 
 circulation among its 30,000,000 of population ; whereas, our 
 Union had, five years before, and for the first time, adopted 
 measures having for their object development of all the powers, 
 physical, mental, or moral, of its people, all the wealth of its soil, 
 and all the wonderful mineral deposits by which that soil was 
 known to be underlaid. The one had failed to bring together the 
 producer and consumer of food and wool, and had remained de- 
 pendent upon traders in distant markets. The other had just then 
 willed that such dependence should, at no distant time, come to an 
 end ; that producers and consumers should be brought together ; 
 and there had thence already resulted an activity of circulation and 
 an improvement in physical and moral condition, the like of which 
 had never before been known to be accomplished in so brief a 
 period. 
 
 But little later (1835), the two countries are once again found 
 totally opposed, Germany having adopted the American system 
 and thus provided for freedom of internal commerce, America 
 
simultaneously adopting that which to Germany had proved so 
 utterly disastrous, and which had been there rejected. Thenceforth 
 the former moved steadily forward in the direction of creating a 
 great domestic commerce, doing this by means of a railroad system 
 which should so bind together her whole people as to forbid the 
 idea of future separation. The result already exhibits itself in the 
 quiet creation of the most powerful empire of Europe. The latter 
 meanwhile has constructed great roads by means of which it has 
 exported its soil, in the forms of tobacco, corn, and cotton, to 
 distant markets, and has thus diminished its power to maintain in- 
 ternal commerce the result obtained exhibiting itself in a great 
 rebellion that has cost the country, North and South, half a million 
 of lives, the crippling of hundreds of thousands of men, and an ex- 
 penditure of more thousands of millions than, properly applied, 
 would have doubled the incomes of its whole people, while making 
 such demand for human force, mental, moral, and physical, as would, 
 in a brief period, have secured the establishment of universal free- 
 dom, with benefit to all, white and black, landowner and laborer. 
 Such have been the widely different results of two systems of public 
 policy, the one of which looks to introducing into society that proper, 
 orderly arrangement which is found in every well conducted private 
 establishment, and by means of which each and every person em- 
 ployed is enabled to find the place for which nature had intended 
 him ; the other, meanwhile, in accordance with the doctrine oflaisser 
 faire, requiring that government should abdicate the performance 
 of its proper duties, wholly overlooking the fact that all the com- 
 munities by which such teachings are carried into practical effect 
 now exhibit themselves before the world in a state of utter ruin. 
 
 3. Studying now our American railroad system, we find the great 
 trunk lines to be, so far as regards the North and the South, purely 
 sectional, all of them running east and w r est and the whole constitut- 
 ing a collection of spokes in a great wheel whose hub, wholly con- 
 trolled by men like Laird and other workers in aid of the great 
 rebellion, is found in Liverpool. As a consequence of this it had 
 been that our dependence on such men had become more complete 
 as those great lines had increased in number, and with every such 
 increase our financial crises had become more frequent and more 
 severe. Prior to the war a single turn of the British screw had 
 sufficed for ruining thousands of those who had invested their means 
 in the opening of mines, the building of furnaces or factories, and 
 for thus crushing out the most important portions of our domestic 
 commerce. With each such crisis there came increased necessity for 
 scattering our people over the land, and for limiting ourselves to that 
 single species of employment which is the essential characteristic of 
 semi-barbarism the raising of raw produce for the supply of distant 
 markets. From year to year the tide of white emigration rose, fol- 
 lowing always the lines of road and canal of the extreme North, and 
 carefully avoiding the Central States. Simultaneously, south of 
 Mason and Dixon's line, a black emigration depleted the Centre, 
 Virginia and Kentucky, Maryland and Delaware, furnishing the 
 bone and the muscle required for consumption in the fields of 
 Mississippi and of Texas. As a consequence of this, the extreme 
 
mines, in building furnaces or factories, by means of which the con- 
 sumers and producers of the South might be brought together. 
 Can they have such aid? Apparently they cannot, millions upon 
 millions being lavished upon Eastern and Western roads which, 
 useful as they may eventually prove to be, tend now to intensifica- 
 tion rather than to obliteration of the sectional feelings under 
 which we have already so greatly suffered. Such roads need com- 
 paratively little help from government, Eastern capitalists being 
 always ready for any measures tending to bring trade to the great 
 cities, European or American, of the Atlantic coast. Northern and 
 Southern roads roads tending toward development of the extra- 
 ordinary mineral wealth of the Central States roads tending to 
 enable the cotton of the South to reach mills and factories in the 
 West do need it, and for the reason that those capitalists are not 
 yet so far enlightened as at all to appreciate the idea that the larger 
 the domestic commerce the greater must be the power to purchase 
 those finer commodities for which the Centre, the West, and the 
 South are accustomed to look to Philadelphia and Baltimore, New 
 York and Boston. 
 
 An expenditure for such purposes, involving an annual demand 
 upon the Treasury for less than half a dozen millions, would add 
 five times that amount to the annual public revenue, while giving 
 to the domestic commerce a development that would add countless 
 millions to the money value of labor and land, and by promoting 
 immigration from abroad would do more for elevation of the 
 down-trodden people of the eastern continent than has been done 
 by all its sovereigns from the days of Charlemagne. 
 
 That we may have permanent peace, and that the desire of all 
 loyal men may thus be realized, it is needed that our people be 
 brought to understand that between the various portions of the 
 Union there is a perfect harmony of real and permanent interests, 
 all profiting by measures looking to establishment of perfect politi- 
 cal and industrial independence, and all suffering from those which 
 tend to prolong a dependence upon those foreign communities that 
 hailed with so much joy the action of the men who initiated the 
 great rebellion. 
 
 Throughout the world the tendency towards peace, freedom, and 
 independence has grown as consumers and producers have been 
 brought more nearly together, as the societary circulation has be- 
 come more rapid, and as land and labor have become more pro- 
 ductive. That peace may be here maintained that all may really 
 enjoy equality of rights that the Union may be perpetuated and, 
 that the country may enjoy a real independence we must have a 
 system that shall tend towards enabling our whole people to make 
 their exchanges with each other freed from the interference of foreign 
 ships, or foreign merchants. 
 
 In another letter I propose to show the bearing of the measures 
 above proposed upon the condition of the recently enfranchised 
 people of the south, and through them on the Union at large, mean- 
 while remaining, with great regard and respect, 
 
 Yours , truly, 
 
 GEN. U. S. GRANT. HENRY C. CAREY. 
 
 PHILADELPHIA, November 5, 1868. 
 
LETTER SECOND. 
 DEAR SIR: 
 
 Little more than sixty years since the German people were in 
 a condition so nearly akin to slavery that the chief difference 
 between them and the colored people of our Southern States con- 
 sisted in the fact, that while these latter could, the former could not, 
 be sold at the horse block like other chattels. On the other hand, 
 while the American slave had a positive money value that made it 
 desirable to grant protection to children in their infancy, and to 
 men and women in their age, the Germans had no such value 
 except when, as with the Hessian sovereign of our Revolution, 
 their masters could find opportunities for selling them by regiments 
 as food for powder. Badly fed, badly clothed, wretchedly poor, 
 and with no poor-laws by aid of which they might be enabled to 
 demand assistance in case of illness, few, very few indeed, could 
 command even the trifling means required for enabling them to seek 
 abroad the subsistence denied to their families and themselves at 
 home. Some few did then occasionally cross the Atlantic, but most 
 generally as "redemptioners," liable to sale in open market for as 
 many years of service as were then required for payment of their 
 passages. 
 
 Such was the state of things throughout Germany when the 
 disastrous campaign of Jena (180G), closely succeeding that of 
 Ulm (1805), followed as it was by the almost entire subjugation by 
 France of the German people, first awakened Prussian statesmen 
 to an appreciation of the fact that if Prussia would ever resume 
 her place in the family of nations she must look to the elevation 
 of her whole people, and bring to a close her dependence on an 
 effete landed aristocracy whose utter worthlessness had so recently 
 been entirely proved. Prompt and energetic, the great man (Baron 
 Stein) who then stood in the lead of Prussia, found himself before 
 the close of another year prepared to announce arrangements by 
 means of which the land was to become divided between those who 
 theretofore had held it as property, and those by whom it had been 
 cultivated, these latter passing at once from the condition of mere 
 tenants at will to that of free proprietors. Thenceforth the Prus- 
 sian peasant stood before the world as a freeman, and the effect of 
 this was fully shown when, but a few years later, the Sovereign 
 found it necessary to call to his aid the whole body of his people 
 for expulsion of the French, and for liberation of that which then 
 had become for them really a Fatherland. 
 
 The years which followed that expulsion were, however, years of 
 British free trade, sad and sorrowful years, in the course of which 
 there was little demand for German labor except so far as it was 
 needed for that work of barbarism, the raising of raw produce for 
 consumption in distant markets ; years in which wool, rags, and 
 
8 
 
 wheat went abroad to be exchanged for other wool, rags, and 
 wheat, converted by foreign labor into cloth, paper, and iron ; years 
 in which there was furnished daily evidence that poverty of the 
 people and weakness of the government grew with every increase 
 of distance between the producers and consumers of a nation. 
 Nominally, the Prussian people had become free, but practically 
 they were so entirely under the control of foreign traders that they 
 profited little of that freedom. 
 
 Sad experience having soon and thoroughly satisfied Prussian 
 statesmen of the absolute necessity for bringing consumers to the 
 side of producers, and thus relieving fanners from the burdensome 
 and oppressive tax of transportation, the year 1818 witnessed the 
 establishment of a tariff that was thoroughly protective, and that 
 looked to the establishment of a great domestic commerce. Not 
 content, however, with the slight step which had thus -been made, 
 they in the years that followed -spared no efforts for bringing 
 about an union of the various States of Germany on the footing 
 of an entire freedom of internal intercourse similar to that which 
 had so long existed in our American Union. Fiercely opposed 
 in this by British agents, public and private, no less than seven- 
 teen years were required for its accomplishment; but the year 
 1835 at length witnessed the formation of that complete Customs 
 Union which still exists, and to which the world at large stands in- 
 debted for the creation of a great empire which now stands first in 
 Europe for the development, moral and material, f its people, and 
 for the influence it exercises over the movements of the Eastern 
 Continent. 
 
 Stein gave to the Prussian people that freedom which has every- 
 where been seen to result from division of the land, but to make it 
 permanent, to extend it throughout German} r , and to prevent the 
 retrograde movement which must inevitably have resulted from per- 
 sistence in a policy which separated producers from consumers, and 
 which looked to constant exportation of the soil in the form of rude 
 products, it was needed that another great man, List, should make 
 his appearance on the stage. At the cost of both property and life 
 he did the work, and if we now seek kis monument, we shall find it 
 in the remarkable empire that has so recently appeared upon the 
 European stage, described in my former letter. 
 
 Following the example set by Prussia, Russia, by dividing her 
 land among those who previously had owned or cultivated it, has 
 made one great step towards the establishment of freedom for her 
 whole people. Thus far, however, the Emperor seems to have 
 failed to see that there can be no real freedom for men who are 
 compelled to waste their labor and to exhaust their soil by sending 
 its products in their rudest forms to foreign markets. The day 
 must, however, come when his eyes will be open to that great fact, 
 and then, but not till then, will it be that the benevolent desires 
 of those who had labored in the cause of Russian emancipation will 
 stand a chance of being fully realized. 
 
 2. Failing altogether to profit by the great examples that had 
 thus been set us, we have proclaimed emancipation while leaving all 
 the 1 ,nd in possession of its opponents ; and have given the right of 
 
suffrage to men who, as the recent election has proved to be the 
 case, must exercise it in a way to please their late masters, or forfeit 
 power to obtain bread for their wives and children. So far as regards 
 public lands, the Homestead Law happily places all on an equal 
 footing, but outside of this the union man, white or black, seems 
 likely to enjoy no rights whatsoever. 
 
 As a slave the black man had a large money value, and it was 
 greatl} r to the interest of planters to provide carefully for the women 
 and the children, much of the year's profit arising from increase of 
 stock. Now, having lost all such value, and having ceased to be 
 mere chattels, the men are shot down by hundreds, while women 
 and children perish for want of medical assistance. How small is 
 the chance in this respect for black republicans may be seen from the 
 following description of affairs as they exist in relation to whites in 
 Edgecombe county, North Carolina, at the present moment : 
 
 " Cases are frequently reported to me of physicians refusing to attend the sick, 
 because their relatives were republicans, or expressed their intention to vote for 
 Grant and Colfax. One man came into my office and told me that his little boy 
 died on Monday for want of medical aid. No physician in the part of the 
 country where he lived would attend the boy, because he was a radical ; one 
 storekeeper kept him from eight o'clock in the morning until two o'clock in the 
 afternoon, and would not sell him anything, because he persistently said he 
 would vote for Grant. One man asked me to send for a northern physician, 
 because the faculty of this country would not attend his wife, and she was at 
 the point of death. Did I tell you about the affair in Wilson county a few 
 weeks ago? The authorities, all Rebels, and equal to Ku-Klux, arrested a 
 colored man named Grimes, on the charge of burning a barn, but Grimes proved 
 himself to any reasonable and unprejudiced mind perfectly innocent. But he is 
 the leader of the Union League, and they wanted to rake him up, as he had 
 made a severe speech against them and in favor of the radicals the day before. 
 A delegation of colored men came for me twenty miles. I went. I asked for a 
 hearing for Grimes in my presence. It was not granted. I offered to bail him. 
 This offer was rejected. A Rebel drew his revolver on me in the court-house 
 behind my back. Some one more prudent stopped his shooting. I left telling 
 them I would have Grimes out, and the next morning they released him to pre- 
 vent my having the gratification of doing it, so I was told. Grimes wouldn't 
 promise them to vote for Seymour and Blair, but the next day he raised a com- 
 pany and went to the Raleigh Convention." 
 
 Nominally free, the condition of the blacks, in such a state of 
 affairs, must be far worse than it had ever been before. 
 
 3. Nominally free, but realty enslaved, the Irish people, long be- 
 fore the year (1846) of the great famine, were described by Thack- 
 eray as "starving by millions;" and by another high authority as 
 having before them only the choice between " land at any rent on 
 one hand, or starvation on the other." Famine and emigration 
 having since largely reduced their number, and measures of confisca- 
 tion having transferred a large portion of the soil from Irish to 
 British hands, they now tell us of an increased prosperity of the 
 Irish people ; but on studying the real facts of the case we learn, that 
 " at no period has their hold upon the land been so feeble and pre- 
 carious as now;" that "the control of landlords over their tenants 
 is practically absolute;" that "they can and do make by-laws on 
 their estates which place the tenant for all practical purposes in a 
 state of serfdom;" that "by those rules marriage has been known to 
 be forbidden without license of the agent ;" that " tenancy from year 
 
10 
 
 to year is redu-cod by the contrivance of an annual notice to quit to 
 actual tenancy at will;" and that "in some estates a receipt for 
 rents is never given without a printed notice to quit on the back of 
 it."* 
 
 The negro slave of our Southern States, more fortunate than the 
 Irish one, had an actual money value, and of so great amount as to 
 make it highly profitable for his owner to feed, clothe, and house him, 
 to provide medical attendance, to care for his children, and gene- 
 rally to do nearly as well for him as he would for for his horses or his 
 cattle. So absolutely valueless, on the ctntrary, has been the Irish 
 slave that population has been declared to be "a nuisance," to be 
 abated by means of any and every measure of oppression that could 
 be devised ; and when starvation had been followed by pestilence, 
 this latter has been hailed as having, in the providence of God, been 
 sent as a means of relieving the land from the burden of supporting 
 so many useless mouths. 
 
 4. Such being Irish freedom, we may now advantageously study 
 the condition of the agricultural population of England with a view 
 to see what there has been and now is the effect of a monopoly of 
 the land such as we have permitted to remain in our Southern 
 States. Doing this, we find that whereas but recently we were told 
 that it was to the south of England we were to look for the greatest 
 agricultural degradation, when we turn our eyes to the Eastern 
 counties we meet with the state of things here described : 
 
 " 'The gang system,' as recently exhibited in Parliament, in brief is this : In 
 the Fen districts, covering nearly a million of acres of the richest land in Eng- 
 land, Huntingdonshire, Cambridgeshire, Nottinghamshire, Norfolk, Suffolk, and 
 in parts of the counties of Northampton, Bedford, and Rutland, about seven 
 thousand children, from five years of age and upwards, besides persons of both 
 sexes of from fifteen to eighteen years of age are employed in gangs numbering 
 from fifteen to twenty laborers in each gang, under a master, and in a condition dif- 
 fering from slavery only because it is infinitely worse. 
 
 " The gang master is almost invariably a dissolute man, who cannot get 
 steady employment as a laborer with any decent farmer. In most instances he 
 actually purchases the labor of the children from poor parents ; he sells this 
 labor to farmers, pays the gang what he pleases, and puts the profit in his 
 pocket. For seven or eight months in the year these gangs are driven, often 
 seven or eight miles a day, to farms where they work at planting, weeding, 
 picking, stone-gathering, and like labor, from half-past five in the morning to 
 seven or eight o'clock in the evening. The gang-master is paid by the day or 
 by the acre ; and he pays the little children from fourpence to sixpence per day, 
 while the older lads and girls receive from nine to fifteen pence. The master, 
 for driving his hands to the field and for keeping them up to their work, which 
 Le does with a stick, makes an estimated profit of a pound sterling, or there- 
 abouts, a week. 
 
 "There is testimony to show that hundreds of the younger children are car- 
 ried home in the arms of the older lads every night. From working breast- 
 high in wet grain many of the children are crippled for life by rheumatism, 
 while others contract the seeds of ague, pleurisy, and consumption. Cases are 
 given where little girls, four years old, have been driven through these long, 
 terrible days of work. The most pathetic pictures presented by J/r. Wilberforce 
 of colonial slave-driving forty years ago, make ihe British V/est Indies seem almost 
 an Arcadia in comparison with the Fen districts in England to-day. 
 
 "This exhibition, shocking as it is, is by no means the most frightful phase 
 of the gang system. The gairgs are under no moral restraint whatever. Often- 
 
 * Morison. Irish Grievances shortly stated, pp. 33, 35. London, 1SG8. 
 
11 
 
 times at night both sexes are huddled together in barns, where, among the older 
 boys and girls, the most shameful events naturally follow. Clergymen and other 
 respectable witnesses testified to the Commission of Inquiry that the gang 
 laborers are ' beneath morals.' They have no consciousness of chastity, and do 
 not know the meaning of the word. Medical directors of infirmaries state that 
 pan* girls, as young as thirteen years, have been brought to them to be con- 
 i fined. Their language and conduct are so depraved that dozens of parish 
 clergymen, surgeons, and respectable laboring people, declared to the commission 
 that the introduction of any gang labor in any village extinguishes morality." 
 Evening Post. 
 
 Turning now to the west of England we find a state of things 
 entirely in harmony with this, as may be seen by all of those who 
 care to study the memoir of Canon Girdlestone, read before the 
 British Association in August last. 
 
 The Edinburgh Review, just now published, questions the accuracy 
 of some of the Canon's details, but admits that British agricultural 
 laborers have before them no future but that of the slavery of the 
 poor house a slavery worse than that of our southern negroes in 
 the past. 
 
 5. So long as the great Scottish proprietors could sell to the 
 government the blood and bones of their subjects, creating regi- 
 ments to be officered by sons and nephews, brothers and cousins of 
 their own, everything was done to encourage increase of Highland 
 population. That branch of the slave trade having, however, ceased 
 to exist, and the slave having no longer a money value, people 
 whose forefathers had for centuries occupied millions of acres have, 
 by thousands and tens of thousands, been expelled from their little 
 holdings, under circumstances of atrocity wholly without a parallel. 
 The latest exhibit of these well-known atrocities, is given in the 
 last (October) No. of the Westminster Review. The most prominent 
 actors therein are found in the liberal families of Stafford and of 
 Sutherland. Their most distinguished advocate is found in the 
 liberal Duke of Argyle, so well known as author of the Reign of 
 Law, which has passed through so many and so large editions. 
 
 6. The British and Irish people above referred to are really en- 
 slaved, although the law refuses to permit their being sold as 
 chattels, and although the world is accustomed to speak of them as 
 free. In what then does real freedom consist ? Let us see ! 
 
 Friday, on Crusoe's island, found no competition for the purchase 
 of his services, and was, therefore, glad to sell himself on terms 
 dictated by the man who could, if he would, both clothe and feed 
 him, thus becoming the latter's slave. Had the island contained 
 other Crusoes, their competition would have enabled him to make 
 his selection among them all, exercising thus that power of self- 
 government by which the freeman is distinguished from the wretched 
 slaves above described. 
 
 Will you buy? Will 3-011 sell? The man who has a commo- 
 dity, and must sell, is forced to ask the first of these questions; 
 obtaining, for that reason, twenty or thirty per cent, less than what 
 might be regarded as the fair market price. His neighbor, not 
 forced to sell, waits for the second, thereby obtaining more, per- 
 haps, than the ordinary price. Such being the case with commodi- 
 
12 
 
 ties that can be kept on hand waiting for a purchaser, to how much 
 greater extent must it not be so in reference to that labor power 
 which results from the consumption of food, and which cannot be 
 held over for even a single instant. The trader takes the market- 
 price for his oranges, great as may be his loss ; he stores his iron, 
 waiting for a better market. The farmer sells his peaches on the 
 instant, low as may be the price ; but he holds his wheat and pota- 
 toes, waiting for an advance. The laborer's commodity being yet 
 more perishable than oranges or peaches, the necessity for its instant 
 sale is still more urgent. 
 
 The farmer and the merchant having stored their sugar, or their 
 wheat, can obtain advances, to be returned when their commodities 
 are sold. The laborer can obtain no advance upon his present hour, 
 his commodity perishing on the instant of production. It must be 
 at once either sold or wasted. 
 
 Further, the merchant may continue to eat, drink, and wear 
 clothing, his stock meanwhile perishing on his hands. The farmer 
 may eat his potatoes, after failing to sell his peaches. The laborer 
 must sell his potential energies, be they what they may, or perish 
 for want of food. In regard to no commodity, therefore, is the effect 
 resulting from the presence or absence of competition so great, as in 
 relation to human force. Two men competing for its purchase, its 
 owner becomes a freeman. Two others, competing for its sale, 
 become enslaved. The whole question of freedom or slavery for 
 man is, therefore, embraced in that of competition." 
 
 The more varied the employments, the greater is the tendency 
 towards having the miner, the weaver, the spinner, the mason, 
 and the carpenter, take their places by the side of the farmer; 
 the greater becomes the competition for purchase of labor; the 
 more does the land tend to become divided ; the greater is the 
 money value of labor and land ; the more perfect is the farmer's in- 
 dependence; the higher is the state of manners and morals; and the 
 more perfect becomes the freedom of the whole people of whatsoever 
 sex or age. In no part of the world is there at this moment so 
 much competition as in New England for the purchase of labor, 
 and in none, consequently, are its people so absolutely free. In 
 none claiming in any manner to rank as civilized, has the contrary 
 tendency so much existed as in Ireland. In none, therefore, has 
 there been so universal a competition for the sale of labor ; the 
 consequences exhibiting themselves in the fact, that the occupant of 
 land is now more than ever before a mere slave, holding his existence 
 at the pleasure of the man who claims to own the land. 
 
 7. Thus far our measures of emancipation have resulted in giving 
 to the negro slave just the same amount of freedom that has so long 
 been enjoyed by the Irish slave, to wit, that he may, if he will, marry 
 and beget children ; that those children may not forcibly be taken 
 from him ; and that, although he may with impunity be shot or 
 otherwise maltreated, he cannot be exchanged by his master against 
 any given quantity of money. Wholly dependent for employment 
 upon the men who own the land his situation is almost precisely 
 that of the great mass of the Irish people, as here described by 
 one of the most distinguished of English authors ; 
 
13 
 
 " In a country in which every one who can find a landlord to accept him can 
 be a farmer, and scarcely any one can be a laborer ; where the three only alterna- 
 tives are the occupation of land, beggary, or famine ; where there is nothing to 
 repress competition and everything to inflame it the treaty between landlord 
 and tenant is not a calm bargain, in which the tenant, having offered what he 
 thinks the land worth to him, cares little whether his offer be accepted ; it is a 
 struggle like the struggle to buy bread in a besieged town, or to buy water in 
 an African caravan. It is a struggle in which the landlord is tempted by an 
 extravagant rent ; the agent, by fees or by bribes ; the person in possession, by 
 a premium to take him to another country ; and rivals are scared away by threats 
 or punished by torture, mutilation, or murder. The successful competitor knows 
 that he has engaged to pay a rent which will swallow the surplus, beyond the 
 poorest maintenance for his family, that with his trifling stock he can force the 
 land to produce. He knows that if he fails to pay he must expect ejectment, 
 and that ejectment is beggary." Senior. Journals, Conversations, and Essays 
 relating to Ireland, London, 1868. 
 
 To four millions of people similarly situated we have given the 
 right to vote in accordance with the orders of their masters, at the 
 same time giving to those masters the right of representation in 
 Congress for each and every one of them, thereby making a most 
 important addition to the power that to the present time has been 
 so much misused. 
 
 What is the use now to be made of the tremendous power thus 
 accumulated in their hands is shown by the recent proceedings in 
 Georgia and Louisiana. A year hence it will be the same elsewhere, 
 and the day is not far distant when, if the national authorities do 
 not interfere, the whole body of the States south of Mason and 
 Dixon's line, with the possible exception of Tennessee, will be found 
 engaged in a new, but peaceful, rebellion that must this time prove 
 entirely successful, controlling Congress and placing in the presi- 
 dential chair some man whose claim to that high office results from 
 participation in the accursed rebellion so lately crushed. 
 
 Clearly seeing that such is likely to be the case, loyal Southern 
 men are crying aloud for immigration, the rebel portion of the 
 population meantime everywhere notifying Northern men that if 
 they would save their lives they must flee the land, and thus pre- 
 paring for a new rebellion in which they will be most heartily sup- 
 ported by all the rebel sympathizers of Northern States. Just now 
 I have heard of the final expulsion, even from Eastern Tennessee, 
 of a body of Scotchmen who had been sent there with a view to 
 the introduction of the culture of long-wooled sheep. 
 
 8. The remedy for all this is to be found in creating competition 
 with the landholders for purchase of negro labor, and thus giving 
 to the slave that freedom which results from power to choose be- 
 tween employers in the field, in the mines, and in the workshop. 
 
 Why is it, however, that such competition had not long since 
 existed ? For the reason that our legislators have wholly failed to 
 ee that throughout the world freedom had come, not as the result 
 of mere proclamations, but as a consequence of that diversification" 
 in the demand for human service which enables each and every in- 
 dividual to find the employment for which he had been intended, 
 for which he was most completely fitted. Look where they mignT 
 .they would have seen that slavery existed as a consequence of ex- 
 clusive dependence on labors of the field. Correction of this, bring- 
 
14 
 
 ing with it freedom for all would have resulted from permanent 
 maintenance of the protective tariff of 1842, as under it both the 
 centre and the south would have been filled with furnaces and fac- 
 tories, thereby trebling the money value of land while greatly ele- 
 vating the man who worked it. Great properties would gradually 
 have become divided; the little proprietor the man "whose 
 touch," says Arthur Young, ''turns sand into gold" would long 
 before this have made his appearance on the stage ; the harmony 
 of all real and permanent interests would have been hourly becom- 
 ing more fully recognized ; immigration would have attained pro- 
 portions much greater than any it yet has seen ; and the wealth and 
 power of the Union would be thrice greater than now they are. 
 
 So rapid under the tariff of 1842 was the growth of Southern 
 manufactures that in 1848 the editor of the Charleston Mercury, 
 Mr. Barnwell Rhett, was led to predict that before the lapse of 
 another decade the South would have ceased to export raw cotton. 
 Unfortunately, however, for his prediction the South had just before 
 placed the knife to its own throat by giving us the revenue tariff 
 of 1846 in place of the protective one of 1842. From that hour 
 Southern manufactures declined, with corresponding increase in the 
 growth of that barbarous feeling which found its culmination in the 
 atrocities of the late rebellion. 
 
 For the suppression of that rebellion we needed a million of men 
 in arms. For prevention of the one that is now proposed, we need, 
 and that at once, great armies of men and women carrying with 
 them spades and ploughs, spindles and looms, sewing-machines and 
 steam-engines, geographies and Testaments, and all other of the 
 machinery by aid of which the people of the North have been be- 
 coming more prosperous and more free. For enabling such armies 
 to move, and for giving them security while employed in carrying 
 into full effect the great work of emancipation, we need that the 
 government should, at the earliest moment, take measures for cre- 
 ating, and for placing in loyal hands, great lines of road by means 
 of which the North and the South, the Northeast and the South- 
 west, the Northwest and the Southeast, should have between them 
 communications as safe and rapid as those already existing between 
 the shores of the Atlantic and the waters of the Mississippi. 
 
 To do this thoroughly and thus to bring the people now occupy- 
 ing the borders of the Hudson, the Delaware, and the Ohio, into 
 direct and rapid communication with those of the Savannah and the 
 Rio Grande, would involve an annual cost, as interest on the amount 
 expended, less than would be required for maintenance of half a 
 dozen regiments of men in arms ; and yet, while preventing all 
 future necessity for raising such regiments, it would so add to the 
 productive power of the nation that the growth of wealth would 
 soon be seen to be twice greater than at any former period. 
 
 With that growth would come division of the land, always a con- 
 sequence of improvement in the means of communication and ex- 
 change. Freedmen, now wholly dependent upon planters for food 
 and clothing, would find in road makers and furnace men competi- 
 tors with their recent masters for purchase of their services, and 
 would soon be seen accumulating little capitals by aid of which 
 
15 
 
 the}" might be enabled to enter upon and improve the little tracts 
 secured to them by the Homestead Laws, and through many of 
 which these roads* would run. The already rich would be made 
 richer by means of the increased value given to their properties, the 
 now down-trodden negro race meanwhile becoming from hour to 
 hour more free and independent. Harmony and peace would take 
 the place of existing discord, and the various parts of the Union 
 would become as thoroughly united as already are those of the great 
 German Empire so recently created. 
 
 Let it now be understood that men and women who give them- 
 selves to the work of Southern development both can and will 
 be sustained by all the powers of the government, and the negro 
 will become really free, while the nation will become as really inde- 
 pendent. Let this not be done, and the negro will be re-enslaved ; 
 the Union will be split up into fragments, as so recently has been 
 the case with the great empire which now stands in the lead of 
 Europe ; and the men who have so nobly carried us through the 
 late rebellion will have to regret that their labors have resulted in 
 leaving the country in a condition far worse than that which had 
 existed when Fort Sumter had been first assailed. 
 
 Earnestly hoping that a result very different from this may yet be 
 reached, I remain, Yours, very respectfully and truly, 
 
 GEN. U. S. GRANT. HENRY C. CAREY. 
 
 PHILADELPHIA, November 9th, 1S68. 
 
 LETTER THIRD. 
 
 DEAR SIR: 
 
 AN eminent foreigner, speaking of our countrymen, characterized 
 them as " the people who soonest forget yesterday," and that nothing 
 could be more accurate is shown by the facts which I propose now 
 to give, as follows : 
 
 The revenue tariff period which followed the close, in 1815, of the 
 great European war, was one of great distress both private and 
 public. Severe financial crises bankrupted banks, merchants, and 
 manufacturers; greatly contracted the market for labor and all its 
 products ; so far diminished the money value of property as to 
 x slace the aebtor eve^where in the power of his creditor ; caused 
 the transfer of a very large portion of it under the sheriffs hammer ; 
 and so far impaired the power of the people to contribute to the 
 revenue that, trivial as were the public expenditures of that period, 
 loans were required for enabling the Treasury to meet the de- 
 mands upon it. Under the protective tariff of 1828 all was changed, 
 and with a rapidity so great that but few years cf its action were 
 required for bringing the country up to a state .. prosperity the 
 like of which had never before been known, here or elsewhere; for 
 annihilating the public debt ; and for causing our people wholly 
 
16 
 
 to forget the state of almost ruin from which they so recently had 
 been redeemed. 
 
 Returning once again, as a consequence of this forgetfulness, to 
 the revenue tariff system, the troubles and distresses of the previous 
 period were reproduced, the whole eight years of its existence pre- 
 senting a series of contractions and expansions, ending in a state 
 of weakness so extreme that bankruptcy was almost universal ; that 
 labor was everywhere seeking in vain for employment ; that the 
 public credit was so entirely destroyed that the closing year of 
 that unfortunate period exhibited the disgraceful fact of Commis- 
 sioners, appointed by the Treasury, wandering throughout Europe 
 and knocking at the door of all its principal banking houses with- 
 out obtaining the loan of even a single dollar. Public and private 
 distress now compelling a return to the protective system we find 
 almost at once a reproduction of the prosperous days of the period 
 from 1829 to 1835, public and private credit having been restored, 
 and the demand for labor and its products having become greater 
 than at Any former period. 
 
 Once again, however, do we find our people forgetting that to the 
 protective system had been due the marvellous changes that were 
 then being witnessed, and again returning to that revenue tariff sys- 
 tem, to which they had been indebted for the scenes of ruin which 
 had .marked the periods from 1817 to 1828, and from 1835 to 1842. 
 California gold now, however, came in aid of free trade theories, 
 and for a brief period our people really believed that protection was 
 a dead issue and could never be again revived. With 1854, how- 
 ever, that delusion passed away, the years that followed, like those 
 of the previous revenue tariff periods, having been marked by 
 enormous expansions and contractions, financial crises, private ruin, 
 and such destruction of the national credit that with the close of 
 Mr. Buchanan's administration we find the treasury unable to ob- 
 tain the trivial amount which was then required, except on pay- 
 ment of most enormous rates of interest. 
 
 Once again do we find the ^untry driven to protection, and the 
 public credit by its means so well established as to enable the 
 treasury with little difficulty to obtain the means of carrying on 
 a war whose annual cost was more than the total public expendi- 
 tures of half a century, including the war with Great Britain of 
 1812. Thrice thus, with the tariffs of 1828, 1842, and 1860, has 
 protection redeemed the country from almost ruin. Thrice thus, 
 under the revenue tariffs of 1817, 1835, and 1846, has it been sunk 
 so low that none could be found " so poor as do it reverence." 
 Such having been our experience through half a century it might 
 have been supposed that the question would be regarded now as 
 settled, yet do we find among us men in office and out of office, 
 secretaries and senators, owners of ships and railroads, farmers and 
 laborers, denouncing the system under which at every period of its 
 existence, and most especially in that of the recent war, they had 
 so largely prospered thereby proving how accurate has been the 
 description of them above referred to, as " the people who soonest 
 forget yesterday." 
 
 Such being the case, it seems to me that it might be veil to show 
 
17 
 
 what was the actual state of affairs throughout the country in the 
 revenue tariff } r ears immediately preceding the war, and thereby 
 enable railroad owners to study what had been the effect upon their 
 interests that had resulted from the cry of cheap iron ; ship owners 
 to see that the decay of their interests had been the necessary result 
 of a system under which internal commerce had been destroyed ; 
 laborers to see why it had been that labor had then been so super- 
 abundant and so badly paid; farmers to see why it had been that 
 their farms had then been so deeply mortgaged ; secretaries to see 
 why it had been that the public credit had then been so nearly 
 annihilated ; and all to see why it had been that the pro-slavery 
 power had so largely grown as to have warranted the south in ven- 
 turing on the late rebellion. To that end, I shall now present two 
 letters written in 1858, and addressed to our then president, Mr. 
 Buchanan, respectfully asking you to remark the predictions that 
 further continuance in the same direction must result in financial 
 and political ruin, and in our being driven from the ocean, all of 
 which we now see to have been so fully realized.* 
 
 "Civilized communities those communities, Mr. President, 
 which have obtained that freedom of domestic intercourse which, 
 as yot have seen, we so sorely need follow the advice of Adam 
 Smith, in exporting their wool, and their corn, in the form of cloth, 
 at little cost for transportation. Thus, France, in 1856, exported 
 silks and cloths, clothing, paper, and articles of furniture, to the 
 extent of $300,000,000 ; and yet the total weight was short of FIFTY 
 THOUSAND TONS requiring for its transport but forty ships of mode- 
 rate size, and the services of perhaps 2000 persons. 
 
 " Barbarous, and semi-barbarous countries, on the contrary, ex- 
 port their commodities in their rudest state, at heavy cost for trans- 
 portation. India sends the constituents of cloth cotton, rice, and 
 indigo to exchange, in distant markets, for the cloth itself. Brazil 
 sends raw sugar across the ocean, to exchange for that which has 
 been refined. We send wheat and Indian corn, pork and flour, cot- 
 ton and rice, fish, lumber, and naval stores, to be exchanged for 
 knives and forks, silks and cottons, paper and China-ware. The 
 total value of these commodities exported in 1856 high as were 
 then the prices was only $230.000,000 ; and yet, the American and 
 foreign ships engaged in the work of transport were of the capacity 
 
 Of SIX MILLIONS, EIGHT HUNDRED AND TWENTY-TWO THOUSAND TONS, 
 
 requiring for their management no less than 269,000 persons.f 
 
 " In the movement of all this property, Mr. President, there is 
 great expense for transportation. Who pays it ? Ask the farmer of 
 Iowa, and he will tell you, that he sells for 15 cents and that, too, 
 payable in the most worthless kind of paper a bushel of corn that, 
 when received in Manchester, commands a dollar ; and that he, in 
 
 * These letters form part of a series entitled " Letters to the President of the 
 United States on the Foreign and Domestic Policy of the Union and its Effects as 
 exhibited in the Condition of the People and the State." Phila., 1858. 
 
 f This is the total tonnage that arrived from foreign countries, in that year. 
 A small portion was required for the exportation of manufactured commodi- 
 ties, but it was so small as scarcely to require notice. 
 
18 
 
 this manner, gives to the support of railroads and canals, ships and 
 sailors, brokers and traders, no less than eighty-Jive per cent, of the 
 intrinsic value of his products. Ask him once again, and he will 
 tell you that while his bushel of corn will command, iy. Manchester, 
 18 or 20 yards of cotton cloth, he is obliged to content himself with 
 little more than a single yard eighty-Jive per cent, of the clothing 
 power of his corn having been taken, on the road, as his contribution 
 towards the tax imposed upon the country, for the maintenance of 
 the machinery of that " free trade" which, as you, Mr. President, 
 have so clearly seen, is the sort of freedom we do not, at present, 
 need.* 
 
 " The country that exports the commodity of smallest bulk, is 
 almost wholly freed from the exhausting tax of transportation. At 
 Havre ships being little needed for the outward voyage, while 
 ships abound the outward freights must be always very low. 
 
 " The community that exports the commodities of greatest bulk, 
 must pay nearly all the cost of transportation. A score of ships 
 being required to carry from our ports the lumber, wheat, or naval 
 stores, the tobacco, or the cotton, required to pay for a single 
 cargo of cloth, the outward freights must always be at, or near, 
 that point wh.ich is required to pay for the double voyage ; ail every 
 planter knows, to his cost, how much the price of his cotton is 
 dependent upon the rate of freight. 
 
 " In the first of these, Mr. President, employments become from 
 day to day more thoroughly diversified ; the various human facul- 
 ties become more and more developed ; the power of combination 
 tends steadily to increase ; agriculture becomes more and more a 
 science; the land becomes more productive; the societary move- 
 ment becomes more stable and regular ; and the power to purchase 
 machinery of every kind, whether ships, mills, or the precious metals, 
 tends steadily to augment. 
 
 " In the last, the reverse of this is found, the pursuits of men 
 becoming less diversified ; the demand for human faculty becoming 
 more and more limited to that for mere brute force, or for the craft 
 by which the savage is so much distinguished ; the power of asso- 
 ciation tending to decline ; agriculture becoming less and less a 
 science, and the land becoming more and more exhausted ; the 
 societary movement acquiring, more and more, the fitfulness and 
 irregularity of movement you have so well described as existing 
 among ourselves ; and the power to obtain machinery of any kind 
 tending steadily to diminish. 
 
 " The first of these, Mr. President, may be found in the countries 
 of Central and Northern Europe those which follow in the lead of 
 Colbert and of France. All of these are gradually emancipating 
 themselves from the most oppressive of all taxes, the tax of trans- 
 portation. All of them, therefore, are moving in the direction of 
 growing wealth and power, with correspondent advance in civiliza- 
 tion and in freedom. 
 
 " The last may be found in Ireland, India, Jamaica, Portugal, 
 
 * "Thirty-one independent States enjoying a thousand advantages and carry 
 ing on a irratual free trade with each other. That is the ' free trade' that we 
 really want." BUCHANAN. 
 
19 
 
 Turkey, and these United States the countries which follow in 
 the lead of England. All of these, are becoming more and more 
 subjected to the tax of transportation. All of them, therefore, are 
 declining in wealth and power, in civilization, and in freedom. 
 
 " In the first, the land yields more and more with each successive 
 
 year with constant increase in the power of a bushel of wheat, 
 
 or a pound of wool, to purchase money. In the last, the land 
 yields less from year to year, with constant tendency to decline in 
 the price of food and cotton. The first import the precious metals. 
 The last, export them. The first, find daily increase of power to 
 maintain a specie circulation, as the basis of the higher and better 
 currency supplied by banks. The last, are gradually losing the 
 power to command a circulation of any kind, and tending more 
 and more towards that barbaric system of commerce which con- 
 sists in exchanging labor against food, or wool and corn against 
 cloth. 
 
 44 We may be told, however, Mr. President, that in return for 
 the eighty-five per cent, of his products that, as we see, is paid by 
 the farmer of Iowa, and by the Texan planter, we are obtaining a 
 magnificent system of railroads that our mercantile marine is 
 rapidly increasing that, by its means, we are to secure the com- 
 mand of the commerce of the world, &c. &c. How far all this is 
 so, we may now inquire. To me, it certainly appears, that if this 
 be really the road to wealth and power it would be well to require 
 the exportation of wheat instead of flour, paddy in place of rice, 
 cotton in the seed, corn in the ear, and lumber in the shape of logs, 
 rather than in that of furniture. 
 
 " Looking, first, to our internal commerce, we find a mass of 
 roads, most of which have been constructed by help of bonds bear- 
 ing interest at the rate of 6, 8, or 10 per cent. bonds that have 
 been disposed of, in the market, at 60, 70, or 80 per cent, of their 
 nominal value, and could not now, probably, be re-sold at more 
 than half the price at which they orginally had been bought. Half 
 made, and little likely ever to be completed, these roads are worked 
 at great expense, while requiring constant and great repairs. As a 
 consequence of this it is, that the original proprietors have almost 
 wholly disappeared, the stock being of little worth. The total 
 amount applied to the creation of railroads having been about 
 $1,000,000,000, and the average present money value scarcely exceed- 
 ing 40, if even 30, per cent., it follows that $600,000,000 have been 
 sunk, and with them all power to make new roads. Never, at any 
 period of our history, have we been, in this respect, so utterly help- 
 less as at present. Nevertheless, the policy of the central government 
 looks steadily to the dispersion of our people, to the occupation 
 of new territories, to the creation of new States, and to the produc- 
 tion of a necessity for further roads. That, Mr. President, is the 
 road to physical and moral decline, and political death, as will soon 
 be proved, unless we change our course. 
 
 " The railroad interest being in a state of utter ruin, we may now 
 turn to the shipping: one, with a view to see how far we are likely, 
 by its aid, to obtain that command of the commerce of the world 
 so surely promised to us by the author of the tariff of '46. 
 
Should that prove to be moving in the same direction, the fact will 
 certainly afford new and stronger proof of the perfect accuracy of 
 your own views, Mr. President, as to the sort of freedom we so 
 much require. 
 
 u ln a state of barbarism, person and property being insecure, 
 the rate of insurance is high. Passing thence towards civilization, 
 security increases, and the rate of insurance declines, as we see it 
 to be so rapidly doing, in reference to fire, in all the advancing 
 countries of Europe. Our course, in reference to shipping, being 
 in the opposite direction security diminishing, when it should 
 increase the rate of insurance steadily advances, as here is 
 shown : 
 
 Rates of Insurance upon American Ships. 
 
 1846. 1858. 
 
 To Cuba IJ P er cen ^ 1| to 2 per cent. 
 
 "Liverpool H " l| to 2 " 
 
 " India and China . . . . If " 2^ 
 
 To and from Liverpool, on packet- 
 ships, annual rates . . .5 " 8 
 
 " To what causes, Mr. President, are we to attribute this extraor- 
 dinary change ? May it not be found in the fact, that the more we 
 abandon domestic commerce, and the larger the amount of taxa- 
 tion imposed upon our farmers for the maintenance of transport- 
 ers, the greater becomes the recklessness of those who gain their 
 living out of that taxation? Look back to the last free trade 
 period that from 1837 to 1841 and you will find phenomena cor- 
 responding precisely with those which are now exhibited, although 
 not so great in magnitude. At present, the utter recklessness the 
 total absence of conscientious feeling here exhibited, is such as 
 to astonish the thinking men of Europe. Railroad accidents have 
 become so numerous as scarcely to attract even the momentary 
 attention of the reader, and the loss of life becomes greater from 
 year to year. Steamers -are exposed to the storms of the lakes 
 that are scarcely fit to navigate our rivers Ships that are unfit for 
 carrying insurable merchandise, are employed in the carriage of un- 
 fortunate passengers, they being the only commodity for whose 
 safe delivery the ship-owner cannot be made responsible. Week 
 after week the records of our own and foreign courts furnish new 
 evidence of decline in the feeling of responsibility which, thirty 
 years since, characterized the owners of American ships, and the 
 men therein employed. 
 
 " Look where we may, Mr. President, on the sea or on the land, 
 evidences of demoralization must meet our view. ' Stores and 
 dwellings' and here I give the words of a New York journal 
 ' are constructed of such wretched materials as scarcely to be able 
 to sustain their own weight, and with apologies for walls which 
 tumble to the ground, after being exposed to a rain of a few hours' 
 duration, or to a wind which possesses sufficient force to set the 
 dust of the highways in motion. Entire blocks of edifices are put 
 up, with the joists of all so connected with each other, as to form a 
 complete train for the speedy communication of fire from one to 
 another. Joists are built into flues, so that the ends are exposed 
 
21 
 
 to becoming first heated, and then ignited by a flying spark. Hows 
 of dwellings and warehouses are frequently covered with a single 
 roof, which has not, in its whole extent of combustible material, a 
 parapet wall, or other contrivance, to prevent the spread of the 
 flames in the event of a conflagration.' 
 
 " The feeling of responsibility, Mr. President, grows with the 
 growth of real civilization. It declines with the growth of that 
 mock civilization, but real barbarism, which has its origin in the 
 growing necessity for ships, wagons, and other machinery of trans- 
 portation. The policy of the central government tends steadily 
 towards its augmentation, and hence it is that American shipping 
 so steadily declines in character, and in the proportions which it 
 bears to that of the foreigners with whom we are required to 
 place ourselves in competition. 
 
 " Two years since, we were told, that our shipping already ex- 
 ceeded 5,000,000 tons; that we had become the great maritime 
 power of the world ; and, of course, that this great fact was to be 
 received as evidence of growing wealth and power. Last } r ear, 
 however, exhibited it as standing at only 4,871,000 tons, and future 
 years are likely to show a large decrease ships having become 
 most unprofitable. More than four-fifths of the products of Western 
 farms and Southwestern plantations, are, as we have seen, taken 
 for the support of railroads and ships ; and yet, the roads are bank- 
 rupt, while the ships have done little more, for some years past, 
 than ruin the men who owned them. Such being the case, it seems 
 little likely, that it is by means of sailing ships we are to acquire 
 that control of the commerce of the world, so confident!} 7 " promised 
 when, in 1846, we were led to abandon the policy which looked to 
 the creation of a domestic commerce as the true foundation of a 
 great foreign one. What are the prospects in regard to that higher 
 description of navigation which invokes the aid of steam, will be 
 shown in another letter." 
 
 That letter will be given in my next, and, meanwhile, I remain 
 with great respect, 
 
 Yours very truly, 
 GEN. U. S. GRANT. HENRY C. CAREY. 
 
 PHILADELPHIA, December 10, 1868. 
 
 LETTER FOURTH. 
 
 DEAR SIR: 
 
 Steam is rapidly superseding sails, and the day is fast approach- 
 ing when the latter will almost entirely have disappeared from the 
 ocean ; yet are we at this moment nowhere in the race. The time 
 has been when we built ships for carriage of the produce of other 
 lauds, but the day has now arrived when we arc almost wholly de- 
 pendent on British and German steamers for commerce with the 
 world, and for carnage of our own. Why this is so can, I think, 
 
22 
 
 be readily understood by all who care to study the state of things 
 that existed ten years since, the date at which the following letter 
 
 being the second of those referred to in my last was addressed 
 
 to President Buchanan: 
 
 "Every improvement in the construction of a ship tends to 
 lessen the proportion borne by her tonnage, to the weight of the 
 commodities to be moved. Every improvement in the quality of 
 the commodities moved, tends to augment the proportions borne 
 by the money value transported, to the tonnage of the ships re- 
 quired for its transportion. Here, Mr. President, is a simple princi- 
 ple by aid of which we may, perhaps, be enabled to arrive at some 
 conclusion in reference to the tendency of our present policy pro- 
 gress towards civilization having, everywhere, manifested itself in 
 a diminution in the proportions borne by the machinery of trans- 
 portation, to the value of the things transported. 
 
 "In the first year which followed adoption of the Compro- 
 mise revenue tariff, that of 1834-5, we sent abroad, cotton and 
 tobacco, food and lumber, to the amount of $92,000,000 ; and in 
 that 3 r ear, the shipping, domestic and foreign, that cleared for for- 
 eign ports, amounted to 2,030,000 tons. Six years later, in 1840- 
 41, when the strictly revenue provision of that tariff had but begun 
 to operate, we exported, of the same rude products, $98,000,000 
 the quantity of shipping clearing from our ports having, in the 
 same period, risen to 2.353,000 tons. Two years since, after ten 
 years experience of the revenue tariffs of 1846 and 1857, the total 
 value of those exports was $230,000,000, while the quant^ of ship- 
 ping leaving for foreign ports amounted to little less than seven 
 millions of tons the increase in the former, in twenty-years, having 
 been but 150 per cent., while that of the latter had been but little 
 short of 350 per cent. 
 
 "If there is, Mr. President, any single proposition in social 
 science that cannot be disputed it is that wealth, civilization, and 
 power, increase in the ratio of the diminution of the machinery re- 
 quired for performing the work of transportation. On the turnpike, 
 a single horse performs the work that before had been done by two ; 
 and, on the railroad, a single car transports as great a weight as, 
 at first, had been done by hundreds of horses and men, carts and 
 wagons. With every movement in that direction, land acquires 
 money value, and man becomes more free. With each and every 
 one in the opposite direction, the value of land declines, and man 
 becomes more and more enslaved. 
 
 "The first and heaviest tax, Mr. President, to be paid by land 
 and labor is that of transportation ; and it is the only one, to which 
 the claims of the State itself are forced to yield precedence. In- 
 creasing in geometrical proportion as the distance from market 
 increases arithmetically, therefore it is, that agreeably to tables 
 recently published, corn that would produce at market $24.75 per 
 ton, is worth nothing at a distance of only a hundred and sixty 
 miles, when the communication is by means of the ordinary wagon 
 road the cost of transportation being equal to the selling price. 
 By railroad, under ordinary circumstances, that cost is but $2.40 
 leaving to the farmer $22.35, as the amount of tax saved to him by 
 
23 
 
 the construction of the road; and if we now take the product of an 
 acre of land as averaging but a ton, the saving is equal to interest, 
 at G per cent., on $370 an acre. Assuming the product of an acre 
 of wheat to be twenty bushels, the saving is equal to the interest on 
 $200 ; but, if we take the more bulky products ha}-, potatoes, and 
 turnips, it will be found to amount to thrice that sum. Hence it is, 
 that an acre of land, near London, sells for thousands of dollars, 
 while one of equal quality may be purchased in Iowa, or Wiscon- 
 sin, for little more than "a single dollar. The owner of the first 
 enjoys the vast advantage of the endless circulation of its pro- 
 ducts taking from it several crops in the year and returning 
 to it at once, a quantity of manure equal to all he had abstracted ; 
 and thus improving his land from year to year. He is making a 
 machine; whereas, his western competitor, forced to lose the 
 manure, is destroying one. Having no transportation to pay, the 
 former can raise those things of which the earth yields largely as 
 potatoes, carrots, or turnips ; or those whose delicate character 
 forbids that they should be carried to distant markets ; and thus 
 does he obtain a large reward for that continuous application of his 
 faculties, and of his land, which results from the power of combina- 
 tion with his fellow-men. 
 
 " In the case of the latter, all is widely different. Having heav}^ 
 transportation to pay, he cannot raise potatoes, turnips, or hay, 
 because of them the earth yields by tons ; as a consequence of 
 which, they would be almost, even when not wholly, absorbed on 
 the road to market. He may raise wheat, of which the earth yields 
 by bushels ; or cotton, of which it yields by pounds ; but if he 
 raise even Indian corn, he must manufacture it into pork before the 
 cost of transportation can be so far diminished as to enable him to 
 obtain a proper reward for labor. Rotation of crops being there- 
 fore a thing unknown to him, there can be no continuity of action 
 in either himself or his land. His corn occupies the latter but a 
 part of the year, while the necessity for renovating the soil, by 
 means of fallows, causes a large portion of his farm to remain 
 altogether idle although the cost of maintaining roads and fences 
 is precisely the same as if every acre were fully occupied. 
 
 u His time, too, being required only for certain portions of the 
 year, much of it is altogether lost, as is that of his wagon and 
 horses, the consumption of which latter is just as great as if they 
 were alwa3 7 s at work. He and they are in the condition of steam- 
 engines constantly fed with fuel, while the engineer as regularly 
 wastes the steam that is produced, a proceeding involving heavy 
 loss of capital. Further stoppages of employment, both for his 
 land and for himself, resulting from changes in the weather, are 
 consequent upon this limitation in the variety of things that may 
 be cultivated. His crop, perhaps, requires rain that does not come, 
 and his corn, or cotton, perishes of drought. Once grown, it requires 
 light and heat, but in their place come clouds and rain ; and it and 
 he are nearly ruined. The farmer near London, or Paris, is in the 
 condition of an underwriter who has a thousand risks, some of which 
 are maturing every day ; whereas, the distant one is in that of a 
 man who has risked his whole fortune on a single ship. Having 
 
24 
 
 made the voyage she arrives at the entrance of her destined port, 
 when striking on a rock, she is lost, and her owner is ruined. Pre- 
 cisely such is the condition of the farmer who, having all at risk 
 on his single crop, sees it destroyed by blight, or mildew, almost at 
 the moment when he had expected to make his harvest. With iso- 
 lated men, all pursuits are extra-hazardous. As they are enabled 
 to approach each other and combine their efforts, the risks diminish, 
 until they almost altogether disappear. Combination of action thus 
 makes of society a general insurance office by help of which, each 
 and all of its members are enabled to secure themselves against 
 almost every imaginable risk. 
 
 " Great, however, Mr. President, as are these differences, they 
 sink almost into insignificance compared with that which exists 
 in reference to maintenance of the powers of the land. The farmer 
 distant from market is alwa} r s selling the soil, which constitutes 
 his capital; whereas, the one near London not only returns toJiis 
 land the refuse of its products, but adds thereto the manure re- 
 sulting from consumption of the vast amount of wheat brought 
 from Russia and America of cotton brought from Carolina and 
 India of sugar, coffee, rice, and other commodities yielded by the 
 tropics of lumber and of wool, the products of Canada and 
 Australia not only maintaining the powers of his land, but in- 
 creasing them from year to year. 
 
 "The more perfect the power of combination, the greater is the 
 yield of the land ; the higher are the prices of the rude products 
 of the soil ; the smaller is the bulk of the commodities to be trans- 
 ported ; and the larger are the proportions borne by their value to 
 the machinery required for their transportation. That, Mr. Presi- 
 dent, is the road towards civilization; but it is, also, the very oppo- 
 site of the road that we ourselves are travelling, the quantity of 
 machinery required. for the work of transportation increasing with 
 a rapidity far greater than that which marks the growth of money 
 values. This latter being the certain road towards barbarism, we 
 need look but little further for the causes of the decline in morals, 
 wealth, and power, now so rapidly in progress throughout the 
 Union. 
 
 "Power to command the use of improved machinery grows with 
 the growth in money value of the things requiring to be transported, 
 the farmer, whose proximity to the mill enables him to send his grain 
 to market in the form of flour being far more able to contribute to 
 the improvement of roads, than his fellow-farmer who is forced to 
 send it in that of wheat. It diminishes as the things to be trans- 
 ported decline in value, and hence the weakness of countries like 
 Portugal, Turkey, and India, that are becoming more and more de- 
 pendent on distant markets. It diminishes with us, and hence it is 
 that our dependence on foreign countries, even for efficient mea.ns 
 of transportation, so rapidly increases. 
 
 " More than twent} r years have now elapsed since the arrival of 
 the Great Western steamer, and the establishment of the fact that 
 we might avail ourselves of the power of steam for passage of the 
 broad Atlantic. For nearty all that time we have been struggling 
 to obtain steam communication, by means of American ships, with 
 
25 
 
 Europe, the government aiding in the effort to the extent of many 
 millions. What, however, has been the result of all our efforts? 
 Ship after ship has been lost, until confidence in American, steamers 
 has almost disappeared, and with it the lines of steamers. The 
 Collins line, as it still is called, now dispatches a single ship per 
 month, and that, too, chiefly owned in Europe. The Havre line 
 dispatches a monthly ship. The Bremen line has wholly disap- 
 peared. Mr. Vanderbilt has yet three ships engaged in the Euro- 
 pean trade, but the recent accident to one of them can scarcely fail 
 to be felt injuriously by all, annihilating the little confidence that 
 previously had existed. The day is fast approaching, Mr. Presi- 
 dent, when no single steamer carrying the American flo.g will float 
 upon the ocean, except government ships, and the very few private 
 ones engaged in the coasting trade, in which foreign competition is 
 wholly interdicted. Such being the facts, and such the prospects, 
 is it probable that we shall long maintain that superiority on 
 the ocean which so certainly existed at the time when the general 
 government entered upon the career of centralization ? It would 
 seem not. Beaten in agriculture, and beaten in manufactures, we 
 are likely to be even yet more thoroughly distanced in regard to 
 ships; and for the reason that our policy tends steadily towards 
 lessening the value of the commodities seeking to be transported. 
 
 "The French policy looking, as it does, to the emancipation of 
 land and labor from the tax of transportation is directly the 
 reverse of ours. We tax ourselves for maintenance of the mil- 
 lions of tons of shipping required for transport of merchandise to 
 be given to France, in exchange for millions upon millions of tons 
 of food and other commodities, so reduced in bulk that their 
 weight, in tons, is counted by thousands. Freed b}^ that reduction 
 from all the cost of transportation, France is enabled to invoke the 
 aid of steam, and to such extent, too, that the arrivals of her own 
 steamers, in her own ports, amounted in 1856 to no less than 8000 
 tons per week, and more than four hundred thousand in the year. 
 
 "France, Mr. President, is carrying out your own most excel- 
 lent views in regard to commercial policy laying a broad founda- 
 tion of domestic commerce, as a means of obtaining the largest 
 power of intercourse with the outer world. We, on the contrary, 
 are destroying the domestic commerce, in the vain hope of thereby 
 building up a great foreign one. Why have w r e no steamers run- 
 ning to Rio, to Buenos Ayres, to Montevideo, to Valparaiso, to 
 Lima, or Australia? Because we have little to sell, except those 
 rude products which the people of Brazil or Chili cannot use, and 
 do not need to buy. Before they can do so those commodities must 
 pass through the looms of Manchester or Mulhausen, and hence ifc 
 is that nearly all our intercourse with the world is burthened with 
 costs of transportation so enormous that our farmers are generally 
 poor, although themselves owners of the land. In search of 
 trade we fit out expeditions against Japan, involve ourselves in 
 disputes with Paraguay and Buenos Ayres, explore African and 
 South American rivers, and maintain an enormous diplomatic 
 establishment throughout this continent; and yet have scarcely 
 anything to sell, except to the people of France and England. 
 
26 
 
 " What we need, Mr. President, is that real free trade which con- 
 sists in maintaining direct intercourse with the world at large; 
 but that we cannot have so long as we shall continue to export 
 our commodities in their rudest state. The farmer who has but 
 one mill at which to grind his grain has no freedom of trade. The 
 miller and the baker have it, they being free to sell to whom they 
 please. Our farmers and planters have none of it, being compelled 
 to send their products to the distant mills before they and their 
 neighbors can make exchanges, even among themselves. They 
 need, as you so well have seen, that real free trade which would 
 enable the planter of Mississippi to exchange with the farmer of 
 Illinois, receiving cloth, lead, and iron in exchange for sugar and 
 cotton. That, as you so well have said, is the free trade we 
 want. That we may have it, we must diversify the employments 
 of our people; we must enable them to combine their efforts; we 
 must relieve our farmers from a tax of transportation greater than 
 is required for maintaining, ten times over, all the armies of Eu- 
 rope ; We must enable ourselves to pay our debts to the land, and 
 thus obtain a real agriculture, in place of the system of spoliation 
 that now exists ; we must establish a balance of trade in our favor, 
 enabling us to retain the precious metals and to maintain the real 
 specie currency that you so much desire to see established. Those 
 things done, we shall be able to command the use of machinery of 
 exchange of the highest order fleets of steamers taking the place 
 of sailing ships, and the use of money becoming obtainable without 
 the payment of a higher interest than is paid in any other country 
 of the world claiming to be held as civilized. Such, Mr. President, 
 is the real road to wealth and power ; but, as you have seen, all 
 our movements are in the reverse direction." 
 
 Forty years since the now great Germanic Empire owned less 
 than a thousand ships. Two years since the number had already 
 more than tenfold increased, and the day seems near at hand when 
 it will again be greatly increased by the inclusion of Holland 
 within the limits of that wonderfully growing Empire. Occupying 
 now the first place on the land of Europe, it is being rapidly pre- 
 pared for occupying one almost as distinguished on the ocean; and 
 for thus perfecting a change of position wholly without parallel in 
 the annals of the world, to have been accomplished in so . brief a 
 period. 
 
 To what, then, has all this been due ? To the simple fact that 
 enlightened German men have looked to the creation of a great 
 domestic commerce as foundation on which to build a great foreign 
 one, exchanging with the world at large cloth and paper instead of, 
 as formerly, sending wheat, rags, and wool to the limited market 
 of England. Then, the whole cost of transportation was borne by 
 poor and wretched German farmers. Now, it is borne by those 
 American and Australian farmers to whom Germany sends cloth 
 and paper to be exchanged for wool and cotton. 
 
 Germany can now have that real free trade which results from 
 finishing commodities and sending them, so finished, to all the 
 ports of the civilized and barbaric world. We, on the contrary, 
 
27 
 
 have had that British free trade which has required that our farmers 
 and planters should make nearly all their exchanges with the outer 
 world in the single and diminutive market of England. They have 
 sought the establishment of industrial independence, while we have 
 sought a perpetuation of that industrial dependence in the face of 
 which there can be no freedom for either man or nation. 
 
 Let me now pray you, my dear sir, to study the Reports on Com- 
 merce and Navigation, and to mark the fact that, while cotton stands 
 alone in quantity, oil stands almost alone in the fact that we send 
 it abroad fit for use. Turn next to the oil column, and see 
 that with regard to it, and it almost alone, we have that real free 
 trade which results from power to make direct exchanges, sending 
 it to every part of the civilized world. Turn next to the cotton 
 column, and see that it gives us little or no commerce except with 
 England, France, and Germany, a score or two of ships being fully 
 able to transport all that goes to other countries. 
 
 Germany has been building a true pyramid, of which a real agri- 
 culture was to be the basis and a foreign trade the apex. We have 
 been building an inverted one, subjecting our farmers and planters 
 to a tax of transportation so oppressive that the top-heavy edifice 
 at length toppled over and came near burying all under the ruins. 
 
 So long as we shall insist upon limiting ourselves to the export 
 of raw produce the proper work of a semi-barbarous population 
 our exchanges must continue to be mainly made with those 
 European countries which have already possessed themselves of 
 steam navigation; and so long must we continue in our present 
 state of helpless dependence. Whenever we shall have deter- 
 mined to export cloth instead of cotton, iron in place of corn, and 
 machinery in the place of tobacco ; whenever we shall have made 
 ourselves industrially independent ; then, and not until then, shall 
 we regain that place on the ocean which we had occupied in the 
 days when the now powerful Germany was a collection of scraps 
 and fragments of territory, controlled in turn by France and Eng- 
 land, Austria, or Russia. 
 
 To the development of her internal resources was England in- 
 debted for that control of the ocean which warranted her in saying 
 that " not a sail but by permission spreads." So long as she held 
 it there was there but little peace. Desiring now to enable our 
 people peacefully and freely to communicate with the whole outer 
 world, we shall find that the road by which we are to move in that 
 direction leads through the establishment of such perfect protec- 
 tion as will enable us fully to develop the wonderful mineral re- 
 sources by which, more than by anything else, our Union is dis- 
 tinguished from all other countries of the world. How that 
 protection is to affect our growth in numbers I propose to show in 
 another letter, meanwhile remaining, very respectfully, yours, 
 
 HENRY C. CAREY. 
 
 GEN. U. S. GRANT. 
 
 PHILADELPHIA, Dec. 10, 1868. 
 
28 
 
 LETTER FIFTH. 
 
 DEAR SIR: 
 
 That peace may prevail throughout the States recently in rebel- 
 lion, and that harmony may be established among the various por- 
 tions of the Union, it is indispensable that throughout the South 
 and Southwest employments be diversified ; that the habit of asso- 
 ciation and combination for useful purposes be enabled to arise ; 
 that mines be opened and furnaces built ; that the wonderful natu- 
 ral resources of the country lying between the Potomac and the 
 Rio Grande be developed ; that the market be brought home to the 
 farmers and planters of that great region of country ; that between 
 the various portions of the Union there be provided means of cheap 
 and rapid intercourse ; and, finally, that we establish among our- 
 selves that great internal commerce to which Germany, as has been 
 shown, stands now indebted for the commanding position she so 
 speedily, by aid of the protective policy, has taken among the 
 nations of the world. 
 
 That to such development it is we are to look for peace is from 
 hour to hour becoming more clearly obvious to the people of the 
 Southern States, and hence it is that each successive day brings 
 with it new evidence of their anxious desire for promotion of immi- 
 gration. West and Northwest, however, we find competition 
 therein with the South and Southwest, millions upon millions of 
 acres, capable of contributing on the largest scale to the comfort 
 and happiness of our people, lying there wholly idle, even in states 
 that have already long been represented in the councils of the 
 Union. To meet all these demands we need to import that only 
 commodity which Europe stands prepared to give to us without de- 
 manding gold in payment those only machines that increase in 
 number and power the more they are usefully employed MEN, 
 WOMEN, AND CHILDREN. What, however, are the circumstances under 
 which such machines, more valuable than any engines, are most led 
 to find a market among us for their service ? Let us see ! 
 
 Prior to the establishment of the first really protective tariff, 
 that of 1828, immigration had been altogether insignificant, that of 
 the whole decade ending in 1829 having given us little more than 
 100,000 persons. So soon, however, as that tariff had commenced 
 to take effect immigration began to rise, and so strong and rapid 
 was its growth that four years later it had already reached the 
 extraordinary figure of 65,000, that large number of persons having 
 been attracted by the great demand for labor which protection had 
 created. Protection having been then abandoned, we find immi- 
 gration to have become unstead3 r anc ^ irregular, the mean num- 
 ber for the decade ending in 1844 having been but 10,000. No 
 sooner, however, had the tariff of 1842 become fairly active than 
 we find the effect of protection exhibiting itself in the rapid rise of 
 
29 
 
 immigration from 74,000 in 1844, to no less than 234,000 in 1847 
 thus furnishing proof conclusive of rapid increase in the demand 
 for, and compensation of, all human service. Under the revenue 
 tariff of 1840-41 two men had everywhere been seeking employ- 
 ment at the hands of one employer. Under that of 1842 all 
 had changed, employers- having everywere been compelled to seek 
 for labor, and liberally to pay for the service needed to be rendered. 
 The discovery of California gold deposits furnished a new va- 
 riety of employment with large, but temporary, increase in the 
 power to pay for labor, and under that stimulus immigration con- 
 tinued to increase until, in 1854, it passed beyond 400, 000. Thence- 
 forward, however, under the unhappy influence of the revenue 
 tariffs of 1846 and 1857, it rapidly declined until in 1860-61 it had 
 fallen to 112,000, or little more than its amount twenty years before. 
 British free trade now gave us rebellion with further decline of im- 
 migration, which stood in 1861-2 at less than 70,000. Secession, how- 
 ever, gave, and most happily gave, to the loyal States the power of 
 self-protection, and now we find the effect of the protective tariff of 
 1861 in the following figures exhibiting the number of persons who 
 in the succeeding years were hither led to seek a market for their 
 labor, to wit : 
 
 1862-3 139,170 
 
 1863-4 193,754 
 
 18G4-5 180,679 
 
 1SG5-6 330,725 
 
 1866-7 311,994 
 
 Extraordinary as is the growth here exhibited, it is far from pre- 
 senting the entire truth, the number of persons who have trans- 
 ferred themselves from the unprotected British colonies to our pro- 
 tected States having been so large that were it added to the figures 
 shown above, the total for the last three years would probably ex- 
 ceed a million. 
 
 The production of that million of people had cost the States of 
 Europe at least A THOUSAND MILLIONS OP DOLLARS, yet did they 
 furnish them in free gift to our Union. Had they given as much in 
 engines, or other machinery, it would have been regarded as a won- 
 derful addition to the wealth of the country ; and yet, engines wear 
 out with use, whereas men and women double and quadruple them- 
 selves, the quantity of such machinery increasing more rapidly in 
 almost the exact proportion in which their services are made avail- 
 able to the purposes of the nation. 
 
 2. By aid of the protective tariff of 1842 immigration, as we see, 
 more than trebled itself in the short period from 1844 to 1847, 
 having been carried up from 74,000 to 234,000. Had that tariff 
 been maintained, and had we continued to mine our own coal, 
 smelt our own ores, and to make our own lead, copper, and iron, 
 it would, with the aid of California gold discoveries, have been 
 carried beyond half a million, and it would have since stood 
 there, at the least, giving with the natural increase a population 
 ten millions greater than ice have at present. Forgetting, how- 
 ever,, as they have alwa}'s done, the troubles from which they had 
 so recently been redeemed, our people had twice again repudiated 
 
30 
 
 protection, and had thus reduced immigration, in the whole period 
 of Mr. Buchanan's administration, to an average of 134,000, or 
 little more than half a million in all. The revenue tariff policy of 
 Mr. Walker and his friends then gave us a rebellion that has cost 
 us, white and black, so great a destruction of life that more than 
 all the immigration of Mr. Lincoln's period of presidential life was 
 required to make amends for it. 
 
 Of all the legislative acts on record there is scarcely one that 
 has worked an amount of injury so large as that which has result- 
 ed from the repeal of the tariff of 1842, forced upon the country by 
 Mr. Walker and his friends. But for them our population would 
 be now, at the least, one-fourth greater than it is at present, and 
 our wealth more than twice as great ! But for them, we should 
 long since have achieved a perfect industrial, financial, and political 
 independence ! But for them iron would be so cheap that we 
 should be consuming millions of tons, while exporting it to 
 half the world!* But for them we should have had no civil 
 war! But for them the slave would have been gradually be- 
 coming free, while his master would have been becoming rich ! 
 But for them harmony would now prevail throughout the Union, and 
 the stars and stripes at this moment be floating over the largest 
 mercantile marine the world had ever seen ! But for them the de- 
 mand on Europe for men, women, and children, to take part in the 
 great work of developing our wonderful resources, would be now so 
 great that capital would be everywhere seeking labor, while labor 
 would be everywhere dictating to capital the terms on which it 
 could be allowed to have its aid. That protection and freedom 
 travel hand in hand together is proved by all the facts of our 
 histoiy, and the man who strikes at the former cannot claim to be 
 otherwise than an enemy to the latter. 
 
 3. In accordance with the habit of the time, my dear sir, I have 
 spoken of protective tariffs on one hand, and revenue tariffs on the 
 other ; and yet, when you shall have studied the facts which will 
 now be given, you will, as I think, find yourself convinced that the 
 real revenue tariff is a protective one, the free trade tariff, so called, 
 being the one that so far depletes the treasury as naturalty to bring 
 about the state of weakness and of bankruptcy which now exists in 
 each and all of the communities of the world that have found them- 
 selves unable or unwilling to defend themselves against the British 
 free trade system. 
 
 In the four years by which the passage of the semi-protective 
 tariff of 1824 had been preceded the customs revenue averaged but 
 $16,000,000, and trivial as were the expenditures of that period, 
 they so far exceeded the revenue as to make it necessary to borrow 
 $10,000,000 in 1824 and 1825. In the four years 1826-29, with 
 only semi-protection, the customs revenue rose to $32,000,000, and 
 the necessity for borrowing wholly passed away. Under the realty 
 protective tariff of 1828 it rose to $26,000,000, and the public debt 
 was then extinguished. The revenue tariff, so called, of 1840-42 
 
 * Of railroad iron alone our import iu the present year will exceed 270,000 
 tons, and yet we have here such beds of coal and ore as are found in no other 
 part of the civilized world. 
 
31 
 
 gave but $15,000, 000, and the treasury became literally bankrupt 
 money and credit having wholly disappeared. The protective tarift 
 of 1842 gave $26,000,000 a year, and we found then no difficulty in 
 raising all the money required for making the war with Mexico 
 which terminated in the acquisition of California. Under the rev- 
 enue tariff of 1857, with fifty per cent, more of population than had 
 existed in the period of the tariff of 1842, we obtained but $47,000,- 
 000, notwithstanding the wonderful addition to our resources 
 resulting from discovery of California gold and Nevada silver. 
 
 Comparing now the protective tariff of 1828 with the revenue 
 one of 1857, we find that notwithstanding the introduction of the 
 railroad and the discovery of California treasures, the custom 
 revenues had little more than doubled, while the population had 
 more than a hundred and fifty per cent, increased. Comparing, 
 again, the product of the free trade tariff of 1857 with the pro- 
 tective one of the last three years, we find that, although the popu- 
 lation had grown but 25 per cent., the customs revenue had more 
 than trebled. Such being the facts, the truth of the following pro- 
 positions would seem to be now entirely established : 
 
 First, That the more perfect the protection to domestic industry 
 and the larger our strides toward industrial and political independ- 
 ence, the greater is the power of our people to contribute to the 
 customs revenue: 
 
 Second, That the more domestic commerce is left unprotected, 
 and the greater our industrial dependence, the smaller must be the 
 customs revenue, and the greater the tendency toward bankruptcy 
 of the people and the States. 
 
 Third, That the true road to freedom for man, to wealth, power and 
 independence for the nation, lies through the pursuit of a policy 
 which looks to the establishment of a great domestic commerce as 
 the basis of a commerce with the outside world far greater than 
 any we yet have known. 
 
 In face of all these facts, however, we are told, my dear sir, 
 and by men claiming to be regarded as friends of freedom, that 
 " from protection to serfdom there is but a single step, and that 
 but one other is required to carry us on from serfdom to slavery. 
 These three," as we are further assured, "are but links in the chain 
 by means of which controlling spirits are enabled to confiscate, for 
 their own proper benefit, the time, the forces, the labor, the capital, 
 the liberty, and the rights of the great masses of their thus subju- 
 gated countrymen." Such being the views that, in a great variety 
 of forms, are put forth daily by those who believe that, despite 
 our recent unhappy experience, we should once again resume that 
 course of action to which we stand indebted for all the losses of 
 property and life inflicted by the late rebellion, it seems to me 
 that it might be right and proper for you to ask of them to furnish 
 answers to questions like the following, to wit : 
 
 Why is it that, if protection be really adverse to freedom and to 
 the general prosperity of our people, immigration always grows 
 with such rapidity when protection is most complete ? 
 
 Why is it that, if British free trade is really favorable to freedom, 
 
32 
 
 men who previously had come among us with intent to stay, have 
 always then so largely re-emigrated to Europe? 
 
 Why it has been that in the last few years hundreds of thousands 
 of Canadians have abandoned their free trade country, and have 
 preferred to settle in these benighted and protected States ? 
 
 Why it is that of the emigrants who arrive at Quebec and 
 Montreal, and who have the choice between free trade on the one 
 hand and protection on the other, nearly all prefer to take the 
 latter, selecting homes in our Western States ? 
 
 Why it is that Nova Scotia and New Brunswick are almost in a 
 state of rebellion, because of their feeling of the absolute necessity 
 for a closer connection with these protected States ? 
 
 Why is it that nearly the whole population of Ireland would de- 
 sire to fly from British freedom of trade and seek for homes in 
 this now partially protected country ? 
 
 Why is it that British emigration to Australia diminishes, and 
 that to us increases, almost precisely as our protective policy is 
 made more and more complete ?* 
 
 Why is it that Australia, after a most severe political contest, 
 has just now elected a protectionist parliament? 
 
 Why is it that when we build furnaces and open mines railroads 
 are always profitable to their owners, and capital is easily obtained 
 for the construction of new lines of road ? 
 
 Why is it that when mines and furnaces are abandoned, railroad 
 property so far declines that it becomes impossible to obtain the 
 means for building further roads ? 
 
 Why is it that financial crises, resulting in the ruin of'trade, are 
 the never failing accompaniments of the British free trade policy ? 
 
 Why is it that such crises never occur in periods of protection ? 
 
 Why is it that the deposits in our saving funds increase in times . 
 of protection, and diminish in those of British free trade ? 
 
 Why is it that sheriff's sales are so numerous in British free 
 trade times, and so few in number in those of protection ? 
 
 Why is it the revenue tariff periods always end in almost total 
 failure of public revenues and almost total bankruptcy of the 
 treasury ? 
 
 Why is it that protective tariffs are so favorable to increase of 
 public revenue, and to reduction of the public debt ? 
 
 Why is it that a protective tariff now produces annually nearly 
 as much revenue as was obtained by aid of a merely revenue one 
 in the whole period of Mr. Buchanan's administration ? 
 
 Why is it that the Republican party the party of liberty, of 
 
 To Australia. To the United States. 
 
 * 1861 23,728 49,764 
 
 1862 41,843f 58,706 
 
 1863 53,054f 146,815 
 
 1864 40.942J 147,042 
 
 1865 37,2S2f 147,258 
 
 1866 24,097 161,000 
 
 1867 14,463 159,274 
 
 f In these years emigration was unnaturally stimulated by temporary increase of demand 
 for Australian wool, consequent on failure in the supply of American cotton. 
 
33 
 
 equal rights, of intelligence, find of sound morals is so generally 
 favorable to the protective policy ? 
 
 Why is it that British free trade doctrines are so universally 
 popular among men who believe in the divine origin of slavery 
 among sympathizers in the late rebellion among foreign agents 
 among ignorant foreigners and among the dangerous classes 
 throughout the Union ? 
 
 Why is it that, now that the South diversifies its industry by 
 raising its own food, it obtains as much for 2,000,000 bales of cotton 
 as before it had received for 4,000,000 ? 
 
 Why is it that when the refining of our oil, and fitting it for con- 
 sumption, gives us now almost our only real free trade, the same 
 results would not be obtained, and, on a much larger scale, by 
 finishing our cotton and fitting it also for consumption ? 
 
 Why is it that Belgium, the most prosperous little country in 
 Europe, so earnestly adheres to protection ? 
 
 Why is it that Russia, after a ten years' trial of British free trade, 
 exhibits herself as a constant borrower throughout western Europe? 
 
 Why is it that Sweden is now in a state of so great suffering, 
 after nearly a decade of British free trade ? 
 
 Why is it that France, in making her last treaty with England, 
 established a tariff more intelligently protective than our own ? 
 
 Why is it that the maker of that treaty, Mons. Chevalier, had 
 been led to tell his countrymen that 
 
 " Every nation owes it to itself to seek the establishment of diversification 
 in the pursuits of its people, as Germany and England have already done in 
 regard to cottons and woollens, and as France herself has done in reference to 
 so many and so widely-different kinds of manufacturing industry. Within 
 these limits," as he further says, " it is not an abuse of power on the part of 
 the Government ; on the contrary, it is the accomplishment of a positive duty so 
 to act at each epoch in the progress of a nation, as to favor the taking possession 
 of all the branches of industry whose acquisition is authorized by the nature of 
 things. Governments are, in effect, the personification of nations, and it is re- 
 quired that they should exercise their influence in the direction indicated by the 
 general interest, properly studied, and fully appreciated.' 1 ' 1 
 
 Why is it that Germany, the country that has most persist- 
 ently carried into effect the policy thus recommended, now stands 
 in the lead of Europe, although so recently a mere collection of 
 loose fragments, ready to be moved about in whatsoever direction 
 might be most agreeable to France or England at one moment, 
 Russia or Austria at another ? 
 
 Why is it that British policy, that policy whose imitation is 
 urged upon us by all the advocates of that revenue tariff system 
 which has so invariably resulted in destruction of the revenue, has 
 so entirely crushed out of existence the whole race of those small 
 British proprietors, " whose touch" according to Arthur Young, 
 " turned sand into gold ?" 
 
 Why is it that the British agricultural laborer has, by means of 
 that policy, been reduced to a condition so nearly akin to slavery 
 as to have before him no future but the poor house ? 
 
 Why is it that all the countries of the earth which find them- 
 selves compelled to submit to the, so called, free trade policy now 
 
34 
 
 urged upon the world by British traders, are this day in little better 
 than a state of ruin ? 
 
 You have said, my dear sir, Let us have peace ! Peace comes 
 everywhere with general demand for labor ; with good wages ; with 
 large demand for products of the farm, the furnace, the factory, 
 and the plantation ; and all these come with protection. Let us 
 have protection, and let that protection be so definitively adopted 
 as to give to all a perfect confidence in its continued maintenance, 
 and all your wishes for the establishment and perpetuation of 
 peace will be fully realized. 
 
 Greatly hoping that such may prove to be the case, I remain, 
 very truly and respectfully, yours, HENRY C. CAREY. 
 
 GEN. U. S. GRANT. 
 PHILADELPHIA, Dec. 17, 1868. 
 
 LETTER SIXTH. 
 DEAR SIR : 
 
 More than anything else whatsoever the country needs financial 
 peace. Shall we have it ? On the answer to this question depends, 
 as I think, the decision as to whether or not the public faith is to 
 be maintained whether or not the Union is to be perpetuated. 
 
 Forgetful always, even of the events of j^esterday, our people are 
 particularly so in reference to financial questions, and therefore is 
 it that we are now required to witness so many absurd attempts at 
 bringing the country back, so far as regards machinery of circula- 
 tion, to the point at which it had stood at the opening of the great 
 rebellion. Scheme follows scheme, their authors wholly overlook- 
 ing the facts, that the long period from 1815 to 1860, with excep- 
 tion alone of the brief and happy periods of protection under the 
 tariffs of 1828 and 1842, had presented a constant series of finan- 
 cial crises, bringing ruin everywhere to unfortunate debtors, while 
 enabling wealthy creditors largely to augment their already enor- 
 mous fortunes ; that in that period there had been no less than four 
 general bank suspensions; that throughout the Centre and the 
 West, the South and the Southwest, the average rate of interest had 
 been higher than in any other country of the world, claiming to rank 
 as civilized ; that the money value of property everywhere had been 
 almost wholly dependent on the condition of the English money 
 market ; that railroad proprietors, manufacturers, miners, and fur- 
 nace men had, on repeated occasions, seen their property almost 
 wholly swept away ; that in each successive revenue tariff period a 
 large portion of the lands and houses of the country had changed 
 owners under the sheriff's hammer; and, finally, that rebellion 
 was but the natural consequence of a system by means of which 
 the Bank of England had been enabled, by a single turn of the 
 screw, to withdraw from the country nearly the whole of the little 
 specie basis on which our circulation has rested, thereby paralyzing 
 the societary movement, and depriving both government and people 
 
35 
 
 of the means required for their support. What was the real state 
 of things at the opening of the rebellion will now be shown, as 
 follows : 
 
 Had it been possible on the 4th of March, 1861, to take a bird's- 
 eye view of the whole Union, the phenomena presenting themselves 
 for examination would have been as follows : 
 
 Millions of men and women would have been seen who were 
 wholly or partially unemployed, because of inability to find persons 
 able and willing to pay for service. 
 
 Hundreds of thousands of workmen, farmers, and shopkeepers 
 would have been seen holding articles of various kinds for which 
 no purchasers could be found. 
 
 Tens of thousands of country traders would have been seen por- 
 ing over their books seeking, but vainly seeking, to discover in what 
 direction they might look for obtaining the means with which to 
 discharge their city debts. 
 
 Thousands of city traders would have been seen endeavoring to 
 discover how they might obtain the means with which to pay their 
 notes. 
 
 Thousands of mills, factories, furnaces, and workshops large and 
 small, would have been seen standing idle while surrounded by per- 
 sons who desired to be employed ; and 
 
 Tens of thousands of bank, factory, and railroad proprietors would 
 have been seen despairing of obtaining dividends by means of which 
 they might be enabled to go to market. 
 
 High above all these would have been seen a National Treasury 
 wholly empty, and to all appearance little likely ever again to be 
 filled. 
 
 Why was all this ? The laborer needing food, and the farmer 
 clothing, why did they not exchange? Because of the absence of 
 power on the part of the former to give to the latter anything with 
 which he could purchase either hats or coats. 
 
 The village shopkeeper desired to pay his city debts. Why did 
 he not ? Because the neighboring mill was standing idle, while men 
 and women indebted to him were wholly unemployed. 
 
 The city trader could not meet his notes, because his village cor- 
 respondents could not comply with their engagements. The doctor 
 could not collect his bills. The landlord could not collect his rents ; 
 and all, from laborer to landlord, found themselves compelled to re- 
 frain from the purchase of those commodities to whose consumption 
 the National Treasury had been used to look for the supplies upon 
 which it thus far had depended. 
 
 With all, the difficulty resulted from the one great fact alread}^ 
 indicated in regard to the laborer. If he could have found any one 
 willing to give him something that the farmer would accept from 
 him in exchange for food that the farmer could then pass to his 
 neighbor shopkeeper in exchange for cloth that that neighbor 
 could then pass to the city trader in satisfaction of his debt and 
 that this latter could then pass to the bank, to his counsel, his phy- 
 sician, or his landlord the socictary circulation would at once have 
 been re-established, and the public health restored. 
 
 That one thing, however, was scarcely anywhere to be found. Its 
 
36 
 
 generic name was money, but the various species were known as 
 gold, silver, copper, and circulating notes. Some few persons pos- 
 sessed them in larger or smaller quantities ; but, the total amount 
 being very small when compared with that which was required, their 
 owners would not part with the use of them except on terms so 
 onerous as to be ruinous to the borrowers. As a consequence of 
 this, the city trader paid ten, twelve, and fifteen per cent, per an- 
 num for the use of what he needed, charging twice that to the vil- 
 lage shopkeeper, in the price of his goods. The latter, of course, 
 found it necessary to do the same by his neighbors, charging nearly 
 cent, per cent. ; and thus was the whole burthen resulting from de- 
 ficiency in the supply of a medium of exchange thrown upon the 
 class which least could bear it, the working people of the country 
 farmers, mechanics, and laborers. As a consequence of this they 
 shrank in their proportions as the societary circulation became more 
 and more impeded, while with those who controlled the money 
 supply the effect exhibited itself in the erection of those great 
 palaces which now stand almost side by side with tenement houses, 
 whose occupants, men, women, and children, count by hundreds. 
 The rich thus grew richer as the poor grew poorer. 
 
 Why was all this ? Why did they not use the gold of which 
 California had already sent us so many hundreds of millions? Be- 
 cause we had most carefully followed in the train of British free 
 trade teachers who had assured our people that the safe, true, and 
 certain road toward wealth and power was to be found in the di- 
 rection of sending wheat, flour, corn, pork, and wool to England 
 in their rudest form, and then buying them back again, at quadruple 
 prices, paying the difference in the products of California!! mines ! 
 Because we had in this manner, for a long period of years, been 
 selling whole skins for sixpence and buying back tails for a shill- 
 ing !* Because we had thus compelled our people to remain idle 
 while consuming food and clothing, the gold meanwhile being sent 
 to purchase other food and clothing for the workmen of London 
 and Paris, Lyons, Manchester, and Birmingham ! 
 
 Why, however, when circulating notes could so easily be made, 
 did not the banks supply them, when all around them would so 
 gladly have allowed interest for their use ? Because those notes 
 were redeemable in a commodity of which, although California 
 gave us much, we could no longer retain even the slightest portion, 
 the quantity required abroad for payment of heavy interest, and 
 for purchase of foreign food in the forms of cloth and iron, 
 having now become fully equal to the annual supply, and being at 
 times even in excess of it. That demand, too, was liable at any 
 moment to be increased by the sale in our market of certificates of 
 debt then held abroad to the extent of hundreds of millions, the 
 proceeds being claimed in gold, and thus causing ruin to the banks. 
 To be out of debt is to be out of danger, but to be in debt abroad 
 to the extent of hundreds of millions is to be always in danger of 
 both public and private bankruptcy. The control of our whole 
 
 * In the days of the Stuarts England exported raw materials and imported 
 finished products, and the people of the Rhine countries ridiculed them as fools 
 who sold whole skins for sixpences and bought back the tails for shillings. 
 
37 
 
 domestic commerce was therefore entirely in the hands of foreigners 
 who were from hour to hour becoming richer by means of compelling 
 us to remain so dependent upon them that they could always fix the 
 prices at ichich they would buy the skins, and those at which they 
 vniild be ir tiling to sell the tails. As a necessary consequence of 
 this, the nation was not only paralyzed, but in danger of almost 
 immediate death. 
 
 Such having been the state of things on the day of Mr. Lincoln's 
 inauguration, let us now look at the remedy that was then required. 
 Let us, for a moment, suppose the existence of an individual with 
 wealth so great that all who knew him might have entire confidence 
 in the performance of what he promised. Let us then suppose 
 that he should have said to the laborers of the country, " Go into 
 the mills, and I will see that your wages are paid ;" to the millers, 
 " Employ these people, and I will see that your cloth is sold ;" to 
 the farmers, " Give your food to the laborer and your wool to the 
 millers, and I will see that your bills are at once discharged;" to 
 the shopkeepers, " Give your coffee and your sugar to the farmer, 
 and I will see that payment shall forthwith be made ;" to the 
 city traders, " Fill the orders of the village shopkeeper, and send 
 your bills to me for payment ;" to the landlords, " Lease your 
 houses and look to me for the rents ;" to all, " I have opened a 
 clearing house for the whole country, and have done so with a view 
 to enable every man to find on the instant a cash demand for his 
 labor and its products, and my whole fortune has been pledged for 
 the performance of my engagements;" and then let us examine 
 into the effects. At once the societary circulation would have been 
 restored. Labor would have come into demand, thus doubling at 
 once the productive power of the country. Food would have been 
 demanded, and the farmer would have been enabled to improve his 
 machinery of cultivation. Cloth would have been sold, and the 
 spinner would have added to the number of his spindles. Coal and 
 iron would have found increased demand, and mines and furnaces 
 would have grown in numbers and in size. Houses becoming more 
 productive, new ones would have been built. The paralysis would 
 have passed away, life, activity, and energy having taken its place, 
 all these wonderful effects having resulted from the simple pledge 
 of one sufficient man that he would see the contracts carried out. 
 He had pledged his credit and nothing more. 
 
 What is here supposed is almost precisely what was done by Mr. 
 Lincoln and his administration, the only difference having been, 
 that while in the one case the farmers and laborers had been re- 
 quired to report themselves to the single individual, the Government 
 had, in the other, by actual purchase of labor and its products, 
 and the grant of its pledges in a variety of shapes and forms, en- 
 abled each and every man in the country to arrange his business in 
 the manner that to himself had seemed most advantageous. To 
 the laborer it had said, We need }^our services, and in return will 
 give you that which will enable your family to purchase food and 
 clothing. To the farmer it had said, W 7 e need food, and will give 
 you that by means of which you can pay the shopkeeper. To the 
 manufacturer it had said, We need cloth, and will give you that 
 
38 
 
 which will enable you to settle with the workman and the farmer. 
 To the naval constructor it had said, We need your ships, and will 
 give you that which will enable you to purchase timber, iron, and 
 engines. In this manner it was that domestic commerce has been 
 stimulated into life, the result exhibiting itself in the facts, that 
 while we increased to an extent never known before, the number of 
 our houses and ships, our mills, mines, and furnaces, our supplies 
 of food, cloth, and iron ; and while we diversified our industry 
 lo an extent that was absolutely marvellous ; we were enabled to 
 tend or pay to the Government thousands of millions of dollars,- 
 where before, under the system which made us wholly dependent 
 on the mercy of the wealthy capitalists of England, it had 
 been found difficult to furnish even tens of millions. The whole 
 history of the world presents no case of a financial success so 
 perfect. 
 
 In the physical body health is always the accompaniment of rapid 
 circulation, disease that of a languid one. Now,- for the first time 
 since the settlement of these colonies, had our people had experience 
 of the first. Every man who had desired to work, had found a pur- 
 chaser for his labor. Every man who had had labor's products to 
 sell, had found a ready market. Every man who had had a house 
 to rent, had found a tenant. And why? Because the government 
 had done for the whole nation what companies do for localities when 
 they give them railroads in place of wagon roads. It had so facili- 
 tated exchange between consumers and producers, that both parties 
 had been enabled to pay on the instant for all they had had need to 
 purchase. 
 
 Important, however, as is all this, it is but a part of the great 
 work that had been accomplished. With every stage of progress 
 there had been a diminution in the general rate of interest, with 
 constant tendency towards equality in the rate paid by farmers 
 of the east and the west, by the owner of the little workshop and 
 by him who owned the gigantic mill. For the first time in our his- 
 tory the real workingmen the laborer, the mechanic, and the little 
 village shopkeeper had been enabled to command the use of the 
 machinery of circulation at a moderate rate of interest. For the 
 first time had nearly all been enabled to make their purchases cash 
 in hand, and to select from among all the dealers those who would 
 supply them cheapest. For the first time had this class known 
 anything approaching to real independence; and therefore had it 
 been that, notwithstanding the demands of the war, capital had so 
 rapidly accumulated. The gain to the working people of the Union 
 thus effected, had been more than the whole money cost of the war, 
 and therefore they had cheerfully paid their taxes, while so many had 
 been enabled to purchase the securities offered by the government. 
 
 Further than all this, we had for the first time acquired something 
 approaching to a national independence. In all time past, the price 
 of money having been wholly dependent on the price in England, 
 the most important intelligence from beyond the Atlantic was that 
 which was to be found in the price of British securities on the Ex- 
 change of London. With each arrival, therefore, our railroad shares 
 went up or down because the Bank of England had seen fit to pur- 
 
39 
 
 chase a few Exchequer bills, or had found it necessary to part with 
 some of those it previously had held. In all this there had been a 
 change so complete that the price of British Consols had ceased 
 entirely to enter into American calculations. The stride, in this 
 ct alone, that had been made in the direction of independence, 
 was worth to the country more than the whole money cost of the 
 great war in which we are now engaged. 
 
 Throughout the war the government allied itself with the great 
 body of the people, those who had money to borrow, interest to pay, 
 labor and labors 1 products to sell, comprising nineteen-twentieths of 
 our total population ; and hence it was that the war resulted in suc- 
 f'ss so entirely complete. Since then there has been a constant 
 effort at separating the government from that great class, and 
 bringing it into close alliance with that very trivial one, so far as 
 numbers go, which profits by high rates of interest and low prices 
 of labor and labors' products; and hence it is, that there has re- 
 cently been so much danger of seeing control of the country pass 
 into the hands of those who, North and South, had participated in 
 the rebellion. To that end the greenback, everywhere claimed as 
 the people's money, has by those in high places been denounced, 
 small as is the quantity, when compared with the real need for 
 it. To that end there has been an un remitted effort at leading 
 farmers, laborers, and mechanics, to the belief that it had been 
 a "forced loan," by means of which they had been daily robbed ; 
 that it had been, and still remains, "a dishonored and dishonorable 
 currency," by the use of which they themselves were " becoming 
 demoralized;" that as a consequence of its use they were "in danger 
 of losing that sense of honor which is necessary for the well-being of 
 society ;" that to its continued use they had been indebted since the 
 war for "instability of prices, unsteadiness in trade," and a variety 
 of other ills, whose general effect is, as we are assured by no less an 
 authority than that of our Finance Minister, that of "filling the 
 coffers of the rich," while making the country absolutely " intoler- 
 able to persons of limited incomes." 
 
 The person to whom we are just now indebted for this last and worst 
 description of the evils under which we labor, may, my dear sir, 
 certainly be classed among those who most entirely discharge from 
 their memories all recollection of yesterday's events. Had it been 
 otherwise with him he would have seen that, with exception of the 
 years of the protective tariffs of 1828 and 1842, the whole of the 
 period from 1815 to 1860 had exhibited a succession of changes 
 infinitely greater and more injurious to both people and government 
 than any that had been known since the greenback had been issued; 
 since the nation first assumed performance of the duty of fur- 
 nishing a basis for our monetary transactions not liable to be with- 
 drawn at any and every moment of change in the policy of the Bank 
 of England, as had been the case in all those periods at which we 
 had pretended to maintain the use of the precious metals, while 
 pursuing a revenue tariff policy which compelled an export of the 
 whole gold produce of California. 
 
 Less forgetful than the Secretary, those who have labor to sell 
 and money to buy, the vast majority of our ueople, cling to the ex- 
 
40 
 
 isting state of things, and anxiously desire to witness a restoration 
 of that financial peace which had prevailed at the moment when the 
 former, in his memorable Fort Wayne speech, fulminated his de- 
 claration of financial war. From that hour he has been in close 
 alliance with the money lending class, receivers of interest, and 
 livers on incomes, with them asserting that circulating notes were 
 greatly in excess of the public needs ; that the national honor de- 
 manded a substitution of gold for notes; and that suppression of 
 the latter would be followed by such increased supplies of the former 
 as would at once fill the vacuum thus created; thereby doing 
 all in his power toward destroying that faith in the future to 
 which we had been indebted for success in war, and to which we 
 must be indebted for power to resume should resumption ever again 
 be brought about. 
 
 How absurd are such assertions, and how little they are calcu- 
 lated to bear examination, will, as I think, become obvious, my dear 
 sir, when you have reflected on the following facts : 
 
 With a population scarcely larger than our own, grouped toge- 
 ther on a surface less than that of half a dozen of our States and 
 therefore having far less need than ourselves of any material medium 
 of exchange, France has a circulating medium one-half greater than 
 is allowed to us. 
 
 With a still more compressed population, and one far more ac- 
 customed to effecting exchanges without the use of any species of 
 money whatsoever, Great Britain and Ireland use more than twenty 
 dollars per head. 
 
 With less than forty millions of people, scattered over almost a 
 continent, and therefore standing thrice as much in need of some 
 material medium of circulation, we are allowed far less than is 
 given in either France or Britain. When, however, we look to those 
 portions in which population is dense, and money by comparison 
 little needed, we find them using more than either France or Eng- 
 land, the actual circulation of New England being more than thirty 
 dollars per head. 
 
 Looking next South and West, we find in many of the States and 
 territories hardly even a single one, and with scarcely the smallest 
 chance that more than one will ever be allowed them. To assert, 
 under such circumstances, that there is any excess of circulation, is 
 so utterly absurd as to make it almost doubtful if the gentleman 
 who writes treasury and currency reports, and those others who 
 make resumption speeches, can really believe the strange assertions 
 they have been used to make. To seek, by means of action in the 
 direction such men now indicate, a resumption of specie payments, 
 must result in failure so complete as to postpone any real resump- 
 tion for half a century to come. 
 
 What the country really needs is an increase, and not a decrease, 
 in the machinery of circulation. That, however, as we are assured, 
 will readily be obtained if the circulating notes can only be sup- 
 pressed. Create a need for the precious metals, and the}^ will be 
 sure to come. Why, however, is it, that it is precisely where circu- 
 latory notes most abound, in New England, Old England, France, 
 and Belgium, that gold and silver are most attracted ? Why is it, 
 
41 
 
 that in the almost total absence of circulating notes, the precious 
 metals have so entirely disappeared from Georgia and Alabama, 
 North and South Carolina ? Why is it, pending the existence of 
 the state of affairs here below described, the precious metals fly 
 from Utah and its immediate neighborhood ? 
 
 " Yon have tight money markets sometimes in the East. I have read of how 
 semi-savage nations 'barter.' I saw it cited, as a curious fact, in the news- 
 papers, that in Georgia eggs are used as small change ; but in Utah I see around 
 me a people, a prosperous people, doing the business of life almost without any 
 money at all. In Salt Lake City itself, right in the line of travel, there is some 
 money ; but in the country settlements, which radiate thence into every valley 
 and by every watercourse for a hundred miles, it is literally true that they have 
 no circulating medium. Wheat is the usual legal tender of the country. 
 Horses, harness, vehicles, cattle, and hay, are cash ; eggs, butter, pistols, knives, 
 stockings, and whisky, are change ; pumpkins, potatoes, sorghum, molasses, and 
 calves, are ' shinplasters,' which are taken at a discount, and with which the 
 saints delight to pay their debts (if it is ever a delight to pay debts). Business 
 in this community, with this currency, is a very curious and amusing pastime. 
 A peddler, for instance, could take out his goods in a carpet-bag, but would need 
 a ' bull' train to freight back his money. I knew a man who refused an offer 
 to work in the country at fifty dollars a month because he would need a ' forty- 
 hundred wagon and four yoke of oxen' to haul his week's wages to the whisky- 
 shop, theatre, &c. , on Saturday evening. When a man once lays out his money in 
 any kind of property, it is next to impossible to reconvert it into money. There 
 is many a man here, who, when he first came into the valley, had no intention 
 of remaining but a short time, but soon got so involved that he could never get 
 away without making heavy pecuniary sacrifices. Property is a Proteus, which 
 you must continue to grip firmly, notwithstanding his slippery changes, until 
 you have him in his true shape. Now you have him as a fine horse and sad- 
 dle ; presto, he is only sixty gallons of sorghum molasses ; now he changes into 
 two cows and a calf, and before you have time to think he is transformed into 
 fifteen cords of wood up in the mountain canon ; next he becomes a yoke of 
 oxen ; then a ' shutler' wagon ; ha ! is he about to slip from you at last in the 
 form of bad debts?" 
 
 The following passage from a letter just received from Iowa, 
 shows how completely the financial policy of our Financial Minis- 
 ter tends to place the many who have to borrow at the mercy of 
 the few who are able to lend : 
 
 " When the banks have money to loan it can be borrowed for 10 per cent, 
 interest per annum ; but sometimes, and very often, they are short and refuse 
 to loan except to their daily customers. Then the occasional borrower is 
 thrown upon the tender mercies of money men, many of whom indeed are 
 bankers, and is forced to pay 30 and sometimes 40 per cent. This is, of 
 course, done in an underhand way, so that the law cannot reach the extor- 
 tioner, but it could not be done at all if we had circulation enough." 
 
 The picture here presented is that of the whole country south and 
 west of Pennsylvania, yet are we daily treated with prescriptions 
 for financial cure based upon the idea of making more and more 
 scarce that machinery of circulation for use of which poor men are 
 already paying 30 or 40 per cent, per annum ! 
 
 Careful study of the facts here given might, perhaps, satisfy our 
 Finance Minister, that the more thoroughly the channels of circu- 
 lation are supplied with the cheaper commodity, as is now the case 
 in all Xew England, the greater is the power to purchase the pre- 
 cious metals and the less the need for them. What is now most 
 required is an increase of the former and a diminution of the latter, 
 
42 
 
 every step in that direction tending towards reduction of that 
 premium on goM, of which complaint is made. 
 
 That such reduction may be brought about, there must be a 
 restoration of that confidence which the Secretary has so studiously 
 labored to destroy. Such restoration may be looked for when our 
 reformers shall have determined to study a very little of that past, 
 which they have so evidently forgotten. Studying it, they will be 
 led to see that, with the single exception of the protective periods 
 above referred to, at no time in our history has the price of gold, 
 as measured in corn or cotton, cloth or houses, farms or furnaces, 
 remained so steady as in the four 3 r ears through which we have just 
 now passed. 
 
 Within those years we have closed a war which was costing three 
 millions a day, and have entered upon a state of peace the cost 
 of which is less than half a million ; and yet, sudden as was the 
 change, the bankruptcies and sheriff's sales have not- been a fifth as 
 great in number as those produced in nominally specie-paying, and 
 really British free-trade, times, in a single year. Never in the whole 
 history of the world has so great a change been so little felt ; and 
 the reason why it has been so is, that the substratum of our whole 
 monetary system consisted of a commodity for which there was no 
 demand in foreign markets. 
 
 That we should at all times hold ID mind that resumption must 
 eventually be reached, is not at all to be questioned. That it may 
 be so reached as to give us increased prosperity, it must be sought 
 in a direction very different from any yet indicated by our many 
 monetary reformers, whether editors, senators, or finance ministers. 
 
 What that direction is I propose to state in a future letter, and 
 meanwhile remain, with great regard and respect, yours truly, 
 
 HENRY C. CAREY. 
 
 Philadelphia, December 21, 1868. 
 
 LETTER SEVENTH. 
 
 DEAR SIR : 
 
 The cheapest, most effective, and most important of all the ma- 
 chinery by means of which property is enabled to pass from hand 
 to hand, and thus to become current, is found in the credit and the 
 check by whose aid thousands of millions pass in Wall Street with 
 less use of any material medium of circulation than among the 
 Rocky Mountains would be required for arrangement of transac- 
 tions counting by hundreds, or by thousands. 
 
 Next to them comes the circulating note, the most generally useful, 
 the most harmless, and the most calumniated of all the labor saving 
 machinery ever invented by man. 
 
 Last of all the most cumbrous, most expensive, and least effect- 
 ive of all the machinery of circulation in use among people claim- 
 ing to be civilized come the precious metals themselves, and for 
 
43 
 
 that reason, probably, the most admired by such financiers as our 
 actual President and his Finance Minister, the two uniting in 
 denouncing the circulating note as the inferior currency by means 
 of which the superior one, consisting of the metals themselves, is, 
 as they assure us, driven out of use. 
 
 When, however, the honorable Secretary comes to compare the 
 working of the credit and the note, he assures us that so far is the in- 
 ferior note from expelling the superior credit, that it is this latter 
 which is continually thrusting the former out of use, in the manner 
 that here is shown : 
 
 " In all the cities and towns throughout the country checks upon credits in 
 banks and bills of exchange have largely taken the place of bank notes. Not 
 a fiftieth part of the business of the large cities is transacted by the actual use 
 of money, and what is true in regard to the business of the chief of cities is 
 measurably true in regard to that of towns and villages throughout the country. 
 Everywhere bank credits and bills of exchange perform the office of currency 
 tt a much greater extent than in former years. Except in dealings with the 
 government, for retail trade, for the payment of labor and taxes, for travelling 
 expenses, the purchase of products at first hand, and for the bankers' reserve, 
 money is hardly a necessity. The increased use of bank checks and bills of 
 exchange counterbalances the increased demand for money resulting from the 
 curtailment of mercantile credits." Report of the Secretary of the Treasury on 
 the State of the Finances for the year 1867. 
 
 This is all perfectly true. The superior currency of the check 
 and the credit tends to lessen demand for the inferior note, just as 
 the locomotive lessens demand for the wagon the note in its turn 
 displacing the precious metals just as the wagon displaces the 
 mule and the pack-saddle. Any attempt, therefore, at driving the 
 note from use, with a view to compel increased use of the metals, is 
 as much in opposition to the progress of civilization as would be 
 a law forbidding use of the telegraph with a view to compel in- 
 creased use of the facilities of intercourse furnished by the post 
 office and the railroad train. 
 
 The great labor-saving machine is the credit. The next is the cir- 
 culating note. Last come the metals, by means of which men are 
 enabled to pass from the slow and costly operation of barter to the 
 more rapid one of purchase and sale. Why then do not all men 
 prefer the cheap credit even to the slightly expensive note ? For 
 the reason that credit itself can have no existence among a poor 
 and widely scattered population. It abounds in England and New 
 England, but has no existence in the regions of the Rocky Mount- 
 ains and Rio Grande. Why, then, do these latter not even adopt 
 the note ? For the reason that they are not yet so far advanced in 
 civilization as to have among themselves either individuals or cor- 
 porations capable of making notes such as would readily be received 
 in exchange for property of any description whatsoever. The need 
 for such notes, proportioned to the exchanges required to be made, is 
 a thousand times greater than it is in Wall Street ; and it exists every- 
 where in the precise ratio of the absence of the check, the draft, 
 the clearing house, and all other of the various contrivances for 
 dispensing with the services of either the precious metals or the 
 circulating note. 
 
44 
 
 Between these two descriptions of superior currency there are 
 these important differences, to wit : 
 
 That the note represents actual property of the parties by whom 
 it is issued, that property having been deposited in the Treasury as 
 scurity for its redemption ; whereas the credit represents property 
 temporarily deposited in the banks, and liable to be claimed at any 
 instant : 
 
 That, while the note cannot be so used as in any manner to change 
 its relation to the total currency, the credit may be, and habitually 
 is, so used as to duplicate its relation thereto A, the actual owner, 
 and B, the temporary user thereof, both exercising equal power of 
 purchase and equal power to create a currency of checks or drafts 
 that superior one with the growth of which there should be di- 
 minished need for circulating notes : 
 
 That, as the inferior of these two currencies the note yields no 
 interest to its holder, all desire to circumscribe within the narrow- 
 est limits the quantity to be kept on hand : 
 
 That, as the superior one the credit yields interest to its 
 makers, banks and bankers seek as far as possible to increase it by 
 lending out all the moneys standing to the credit of their customers : 
 
 That, as the people at large find their interest promoted by limit- 
 ing the use of circulating notes the quantity in actual use changes, 
 under ordinary circumstances, so slowly as scarcely to be perceived; 
 whereas, the quantity of credits, dependent as it is upon the arbi- 
 trary will of banks and bankers, changes from hour to hour, and 
 with a rapidity that sets at defiance all calculation : 
 
 That, consequently, it is the power to create the superior currency, 
 that based on mere credits, which demands to be regulated by law ; 
 and not that inferior one which is based on property, and which finds 
 its proper regulation in the need for its use by the masses of the 
 people. 
 
 These things premised, we may now study the course of things 
 under the State bank system, taking as its type the returns of 
 1860, as follows, the figures representing millions : 
 
 Capital and Excess 
 
 Capital. Circulation, circulation. Investments, investm'ts. 
 
 Total amount . . 422 207 629 807 178 
 
 New York and New England 235 73 308 443 135 
 
 All other States and Territories 187 134 321 364 43 
 
 The first thing that strikes us on an examination of this table is 
 the entire harmony of the facts here presented with the theory of 
 the Secretary, and with the general impressions on the subject, the 
 proportion of circulating notes to capital and business having been 
 very small in those States in which a credit currency most abound- 
 ed, and very large in those in which such credits were least abund- 
 ant. With a bank capital of but $235,000,000, New York and New 
 England had the use of $135,000,000 of credits created by banks 
 for their own use and profit, being nearly twice more than the 
 amount of their circulation. With a capital only one-fifth less, the 
 remaining people of the Union appear to have enjoyed the advan- 
 tages of the superior currency to the extent of but $43,000,000, and 
 
45 
 
 their banks to have been dependent upon the profits of circulation 
 to an amount equal to three-fourths of their whole capital, being 
 about twice that of the trading States above enumerated. 
 
 The total currency created by banks for their own profit appears 
 to have been as follows : 
 
 Now York and New England, with a population of f , 000,000, 
 and a wealth, as returned by the census, of $3,707,000,000, had 
 credits based upon moneys temporarily in banks to the extent 
 
 of $135,000,000 
 
 Circulation 13,000,000 
 
 Total $208,000,000 
 
 The remaining States, with a population exceeding twenty-four 
 millions, and a wealth of $11,558,000,000, or more than thrice 
 greater, had a bank-created currency thus composed, to wit : 
 
 Credits $43,000,000 
 
 Circulation 134,000,000 
 
 $177,000,000 
 
 In the one case banks might have lived and prospered, even had 
 they been wholly deprived of the profits of circulation. In the 
 other, outside of a few cities, no bank deprived of those profits 
 could have existed. 
 
 Fully enjoying the advantages of both the people of the one 
 could generally have the use of money at about the legal rate of 
 interest. Limited almost entirely to the circulation, and that itself 
 in many cases limited by absurd restrictions, those of the other 
 were accustomed to pay twice, thrice, and even four times that 
 rate. With the one prompt payment was a thing of general oc- 
 currence. With the other, debt was almost universal, not because 
 of want of property, but because throughout a large portion of the 
 country there existed neither credits, circulating notes, nor any 
 other general medium of exchange whatsoever. 
 
 Such having been the state of things seven years since, under 
 the State bank S3 r stem, we may now examine the working of the, 
 so-styled, national system, with a view to see if it has tended to 
 correction or to exaggeration of the difficulties that then existed. 
 
 2. Under the State bank system, as has been shown, the distri- 
 bution of credits and circulation among ths States was very nearly 
 in accordance with the Secretary's present teachings. How far it 
 is so now, under this, so-called, national one, organized by the Sec- 
 retary himself, it is proposed here to show. 
 
 By the report of the Comptroller, just now published, the follow- 
 ing was the state of things in October, 1867, two years having then 
 elapsed since the date of the Secretary's declaration of war upon 
 circulating notes issued at Fort Wayne, by which the public were 
 advised that " paper money" was too abundant, that speculation 
 must cease, and that " contraction" must be the order of the day, 
 the figures, as before, representing millions : 
 
46 
 
 Banking Capital and Invest- Excess in- 
 
 capital. Circulation, circulation, ments. vestments. 
 
 Total 420 297 717 1103 386 
 
 New York and New England 260 173 433 677 234 
 
 All other States and Territories 160 124 284 326 152 
 
 The total circulation had, in seven years, increased 90,000,000, 
 but instead of finding that increase in those parts of the country 
 in which credit least abounded and circulating notes were most 
 needed, we find the whole of it, and even 10,000,000 more, to have 
 been distributed by the then Comptroller, and now Secretary, to 
 those very States in which credits were most abundant and a paper 
 circulation least required. 
 
 Comparing now the bank-created currency of the two periods, we 
 obtain the following figures : 
 
 I860. 1867. Increase. 
 New York and New England, present population 7,000,000 
 
 Credit currency 135 234 
 
 Circulation 73 173 
 
 Total . 208 407 199 
 
 Other States and Territories, population 30,000,000 
 
 Credits 43 152 
 
 Circulation 134 124 
 
 Total 177 276 99 
 
 In the first, population could have but very slightly grown. In 
 the other it had increased to the extent of many millions, and yet, 
 while nearly two hundred millions had been added to the one, less 
 than one hundred had been secured by the latter. Such has been 
 the working of a system that is styled national, but that is not only 
 sectional as regards the North and the South, but also as regards 
 the Centre and the West as against the North and the East. 
 
 In the intervening period the necessities of our people for a 
 general medium of circulation had grown south and west of New 
 York thrice more rapidly than in the country north and east of the 
 Delaware. In many of the older States, poorly supplied before, 
 the check and draft currency had wholly disappeared. Throughout 
 the West new territories had been settled, and new States had been 
 created, in which credit had as yet obtained no foothold what- 
 soever. Nevertheless, in the vast region south and west of New 
 York, with four-fifths of the total population of the Union and 
 two-thirds of its wealth, the quantity of circulation granted by the 
 financier who has so much complained of the " plethora of paper 
 money" has been, as here is shown, $10,000,000 less than it had 
 been when Kansas was but beginning to be settled, and when many 
 of the present States and territories had scarcely yet found a place 
 on any map whatsoever. 
 
 Bad as is this exhibit, and much as such a state of things must 
 tend to prevent the approach of financial peace, that presented by 
 an examination of the operations of our chief commercial cities is 
 infinitely worse, as 1 propose to show in another letter, meanwhile 
 remaining, very truly and respectfully, yours, 
 
 GEN. U. S. GRANT. HENRY C. CAREY. 
 
 PHILADELPHIA, Dec. 25, 1868. 
 
47 
 
 LETTER EIGHTH. 
 
 DEAR SIR : 
 
 Circulating notes, as the Secretary assures us, are least needed 
 win-re credit currency most abounds. Cities, then, are the places 
 at which banks least need to avail themselves of the privilege of 
 furnishing circulation. That such was the practice under the State 
 bank system is well known to all. How it is now, under the one 
 organized by the Secretary himself, and how his system compares 
 with that he had found established, is shown by the following 
 figures, representing, as before, millions : 
 
 OCTOBER, 1860. 
 
 Capital and Excess of 
 
 Capital. Circulation, circulation. Loans. loans. 
 
 New York ... 69 10 79 123 44 
 
 Boston ... 35 7 42 64 22 
 
 Philadelphia 12 3 15 27 12 
 
 116 20 136 214 78 
 
 OCTOBER, 1867. 
 
 New York ... 75 35 110 241 131 
 
 Boston .... 42 24 66 101 35 
 
 Philadelphia 16 11 27 59 
 
 133 70 203 401 198 
 
 Of $90,000,000 addition to the currency in that form of which 
 the Secretary is now so generally accustomed to speak as " paper 
 money," no less than $50,000,000 are here shown to have been 
 given, and given, too, by himself as Comptroller of the Currency, 
 to those three communities in which, by his present showing, circu- 
 lating notes had been least required; $10,000,000 having at the 
 same time been withdrawn from the country south and west of New 
 York, embracing States and Territories almost forty in number, 
 with a population numbering little less than 30,000,000, and grow- 
 ing by millions annually, the needs of these for some general medium 
 of circulation being, man for man, thrice greater than those of the 
 people of the cities whose past and present have been above de- 
 scribed. The Secretary's theories, as given in the passage of his 
 report heretofore quoted, are excellent. Can he now explain why 
 it is that his practice has been so diiferent ? 
 
 The bank-created currency of those cities at the same periods 
 may thus be stated : 
 
 I860. 1867. 
 
 Credits based on loans of moneys at the credit of individuals 80 '198 
 Circulation 20 70 
 
 100 268 
 
 1 Tliis is probably much less than the truth, there being checks and " cash 
 items" that to some extent must have borne interest. Opposed to them there 
 are surplus funds which are additions to capital. The one would probably 
 balance the other. 
 
48 
 
 The Secretary denounces speculation, and professes to be earnest 
 in his desire to put it down. Nevertheless, here, in the very centres 
 of speculation, three great trading cities, we have, under a system 
 organized by himself, an increase of currency amounting to $168,- 
 000,000, or within little more than $60,000,000 of the total quantity 
 that, excluding Philadelphia, is allowed to all the States and Terri- 
 tories of the Union south and west of New York, with four times 
 the population and with twice the wealth of New York and New 
 England. Not content, even, with this, the great opponent of specu- 
 lation and of " paper money" has been unwearied in his efforts still 
 further to deplete the centre, the west, and the south, and to per- 
 fect the centralization already so far established, by compelling all 
 their banks to provide in one alone of them funds for redemption 
 of their circulation, after having already provided for the same by 
 deposits in his own hands at Washington. A better provision for 
 maintenance and extension of the speculative spirit, so often and 
 so bitterly denounced by himself, and for preventing resumption 
 either now or at any future time, could scarcely have been devised. 
 
 The 50,000,000 additional circulation thus injected into the great 
 centres do more, my dear sir, to cause "inflation," than would be 
 done by 500,000,000 of the one, two, and five dollar notes required 
 " for the retail trade, for travelling expenses, and for the purchase 
 of products at first hands," those purposes for which the money is 
 really, in the Secretary's view, to be regarded as a " necessity." 
 By whom, however, were they so injected ? By the Secretary him- 
 self, in his capacity of Comptroller of the Currency ! He, there- 
 fore, it is, who is to be regarded as the great "inflationist;" yet 
 does it please his friends to style as such all those who fail to see 
 that resumption of specie payments can by any possibility be 
 attained by means of measures tending to total destruction of the 
 societary circulation. 
 
 " Capitals," said Mirabeau, " are necessities, but if the head is 
 allowed to grow too large, the body becomes apoplectic, and wastes 
 away." That, precisely, is what is here occurring, the whole ten- 
 denc^y of the present monopoly system being in the direction of 
 causing accumulation of blood in and about the societary heart, to 
 the utter destruction of circulation throughout the body and limbs. 
 Hence it is that, property in New York city has attained such enor- 
 mous prices, and that we are now daily called upon to read of the 
 " unparalleled advance" that, according to the Tribune, chief advo- 
 cate of prompt resumption as it is, has taken place in the adjoining 
 States, New Jersey and Connecticut. Passing outward, however, 
 south and west, we find a totally different state of things, miners, 
 and laborers being thrown altogether idle, and the depression there 
 being quite as little to be "paralleled" as is the advance in the 
 States so liberally patronized by our consistent Finance Minister. 
 
 To find his system working in full perfection we need, however, 
 to look further south to Georgia, Carolina, and Alabama. Doing 
 this, we find the special advocate of the Secretary's most unphilo- 
 sophical and most exhaustive system, speaking to its readers in the 
 words that follow : 
 
40 
 
 " A correspondent, writing from Ilinesville, Liberty County, Georgia, says : ' A 
 Bale has taken place at this county seat that so well marked the extreme depres- 
 sion in the money market tbat I send you the particulars : Colonel Quarter- 
 man, of this county, deceased, and his executor, Judge Featter, was compelled 
 to close the estate. The property was advertised, as required by law, and on 
 last court day it was sold. A handsome residence at Walthourville, with ten 
 acres attached, out-houses, and all the necessary appendages of a first-class 
 planter's residence, was sold for $60. The purchaser was the agent of the Freed- 
 men's Bureau. His plantation, four hundred and fifty acres of prime land, 
 brought $150; sold to a Mr. Fraser. Sixty-six acres of other land, near Wal- 
 thourville, brought three dollars ; purchaser Mr. W. D. Bacon. These were all 
 bona fide sales. It was court day, and a large concourse of people were present. 
 The most of them were large property owners, but really had not five dollars in 
 their pockets, and in consequence would not bid, as the sales were for cash.' 
 lu Montgomery, Alabama, lots on Market Street, near the Capitol, well located, 
 50 feet by 110 feet, averaged about $250 each. The Welsh residence on Perry 
 Street, two-story dwelling-houses, including four lots, sold for $3500 ; Dr. Robert 
 M. Williams was the purchaser. The same property in better times would not 
 have brought less than $10,000. The Loftin Place,. near Montgomery, contain- 
 ing 1000 acres, was recently rented at auction for forty cents an acre. The 
 same lands rented the present year for three dollars an acre. About thirty real 
 estate transfers were recorded in Nashville last week ; prices were low. In 
 Portsmouth, Virginia, a house and lot, formerly of the Reed estate, situated on 
 the south side of County Street, near the intersection with Washington, was 
 recently sold to Mr. Ames for $750. A building lot at the intersection of South 
 and Bart Streets, brought only $125. A portion of Woodland, the late Judge 
 John Webb Tyler's estate in Prince William County, Virginia, has been pur- 
 chased by Mr. Delaware Davis, of New Jersey, at $20 an acre." 
 
 The more the blood is driven to the heart the more do the limbs 
 become enfeebled, and the greater becomes the liability to para- 
 lysis, to be followed by death. The Secretary has been, and still is, 
 driving all the blood of the Union into the States and cities of the 
 north and east, and with every step in that direction the circulation 
 becomes more and more torpid and the paralysis more complete. 
 
 2. Of the agricultural departments of France a very large pro- 
 portion are steadily declining in population, the main reason there- 
 for, as given in a highly interesting paper recently published,* 
 being to be found in " a total absence of that power to supply 
 themselves with circulating notes which elsewhere results from the 
 presence of banks or other establishments of credit, or that of in- 
 dividuals whose signatures to such notes command the public con- 
 fidence." 
 
 Agriculture, for this reason, fails in those districts to obtain the 
 aid of capital, except on conditions so onerous as to be ruinous to 
 the borrower. Just so has it always been throughout more than 
 half the Union ; the fanners of the Mississippi Valley, and the 
 planters of the South and Southwest having been, even before the 
 war, compelled to pay for the use of circulating notes twice, thrice, 
 and often even five times the rate of interest paid by their brother 
 agriculturists of New England and New York. 
 
 So did it continue to be until the needs of war compelled the 
 Treasury to do that which it should long before have done, furnish 
 a national machinery of circulation, by means of which the farmer 
 might be enabled to buy and sell for cash, and to pay in cash his mason 
 
 * Journal des Economistes, Septembre, 18C7 
 
50 
 
 and his carpenter; thereby, and for the first time in our history, 
 enabling these latter in their turn to acquire that feeling of real in- 
 dependence which results from exercise of power to choose among 
 contending shopkeepers that one which would most cheaply supply 
 the cloth, the coffee, or the sugar required by their families and 
 themselves. At once the whole position of affairs was changed ; 
 the needy farmer and laborer, begging for credit, disappearing from 
 the stage, and the anxious trader, begging for their custom, taking 
 their place. It was a revolution more prompt, more complete, and 
 more beneficial than any other recorded in financial history ; its 
 effect having been that of supplying the inferior, the most useful, 
 and the least dangerous currency the note to those portions of the 
 country which, while abounding in labor and in natural wealth, 
 were as yet too poor to command the services of that superior one 
 the credit by which, in the course of time and in accordance 
 with the Secretary's present teachings, it was to be replaced. 
 
 Of all the machinery of commerce there is none which renders so 
 large amount of service as that which facilitates exchanges from 
 hand to hand. The more it abounds the more rapid is the circula- 
 tion, and, as in the physical body, the greater are the health, the 
 strength, and the force. It is, however, the one that is always last 
 obtained, and most difficult to be retained. In furnishing it gratuit- 
 ously to the centre, south, and west, the Treasury rendered a larger 
 amount of service to our whole people than it would have done 
 had it given the gratuitous use of railroads whose cost would have 
 been thrice as great as its own amount. That service was found in 
 the increased demand for labor, to the great advantage of those 
 who had it in its various forms for sale the farmers, mechanics, 
 and laborers of the Union. To some extent, however, it damaged 
 those who made no profitable use of their own physical or mental 
 faculties annuitants, mortgagees, and other persons in the receipt 
 of fixed incomes. 
 
 That, however, is the necessary result of beneficial changes of 
 every kind, all such improvements manifesting themselves in an 
 elevation of the labor of the present at the cost of accumulations 
 of the past the rate of interest always falling as labor becomes 
 more productive. Instead, however, of so regarding it, those who 
 suffered have, of course, insisted that it had been nothing but " a 
 forced loan ;" that, for that reason, it should, at the earliest possible 
 moment, be repaid; and that the whole people should for their 
 benefit, be deprived of all the vast advantage which, under pressure 
 of the war, had been so promptly gained. By whom, however, had 
 the loan been made? Had it not been by the whole body of the 
 people? Assuredly it had, and that same body had been the re- 
 cipient of its products. 
 
 It had been simply the one great corporation of the Union com- 
 bining with its members for obtaining, free of charge, the use of 
 machinery of inestimable value in default of which the societary 
 circulation had previously been so much and so frequently arrested 
 as to cause waste of labor to an annual amount twice greater than 
 the circulation that had thus been furnished. It was that corpora- 
 tion combining with its members for their relief from the oppressive 
 
51 
 
 taxation of usurious capitalists, money-lenders on the one hand, and 
 trailers on tin 1 other. Of those who made the loan none complain. 
 None suiR-r; there being not even a single one who cannot, on the 
 inMant. be reimbursed, obtaining from his neighbor property of 
 value fully equal to that which he had given for his share of this, 
 so-called k ' k loan." AVI) at they do complain of is that, while willing 
 to extend their loans, and to do so without charge of interest there- 
 for, they are not permitted so to do ; and here they complain with 
 reason. 
 
 The Secretary insists, however, that this is only " paper money," 
 of which there exists, in his opinion, so great a " plethora," that, at 
 any sacrifice, this loan must be repaid. Seeking this " plethora," 
 we look to the South and find plantations being almost given away, 
 because of the almost entire absence of currency of any description 
 whatsoever. Turning next to the Mississippi Valley we find cur- 
 rency so scarce that manufacturers and traders pay for its use twice 
 and thrice the usual rate of interest ; farmers, meanwhile, finding 
 difficulty in obtaining it on any terms whatsoever. 
 
 Coming now to the centre, we find it to be so little superabundant 
 as to compel the employment of bank certificates a sort of bastard 
 " paper money" that otherwise would not be used. Passing thence 
 to the North and East, the centre of speculation, and therefore, 
 perhaps, in both the past and the present, so largely favored by a 
 finance minister who professes himself opposed to " speculation," 
 we find an abundance, and perhaps even the " plethora" of which 
 he has so much and so frequently complained. Taking, however, 
 the whole Union, we find that of this "dishonored and dishonorable 
 paper money" the quantity in actual circulation cannot be esti- 
 mated at more than five hundred millions of dollars, or little more 
 than a dozen dollars per head. With less than half the need of it, 
 per head, France has a circulation more than one-half greater ; and 
 yet, with even this large supply, her agricultural districts are even 
 now actually perishing for want of some representative of money 
 to be employed in the effectuation of exchanges. Of all the coun- 
 tries of Europe there is none in which there exists in such complete 
 abundance that superior currency which, as the Secretary assures 
 us, and as we know to be the fact, tends to supplant the circulating 
 note, as is the case in Britain. Yet even there do we find the cir- 
 culating medium, per head, to be far greater in quantity than among 
 ourselves. Nevertheless, with such facts before him, and in direct 
 opposition to his own most recent teachings, the Secretary assures 
 us that it is to the excess of " paper money" we are to look when 
 desiring to find the " obstacle" which stands in the way of " a return 
 to a stable currency!" 
 
 Scotland, as stated in the article above referred to, has for each 
 5)00 of her population a place at which money operations may be 
 transacted. Nevertheless, there is no country of Europe in which 
 circulating notes are so generally used. This, according to the 
 Secretary, should make of it a good place to sell in and a bad one 
 in which to buy; there yet is none in Europe better in which both 
 to sell and to buy. 
 
 Jersey, one of the little Channel islands, with a population of 
 
52 
 
 *55,000 gathered together in a space less than half that embraced 
 within our city limits, has no less than seventy-three places at which 
 monetary affairs may be transacted ; and yet, with all this vast 
 machinery for supplying the superior currency, her people use of 
 notes, none of which are of less than $5 value, more than $400,000, 
 or almost $8 per head. Add to this the gold and silver that must 
 necessarily be used, and we obtain a larger proportion than is now 
 in use by a people of little less than 40,000,000, scattered over 
 half a continent, among by far the larger portion of whom there 
 exist none of those appliances by means of which, in more advanced 
 communities, the use of money, whether the precious metals or the 
 circulating note, is so much economized. Excluding New York and 
 New England, and allowing for the general absence here of those 
 means, the circulation of Jersey is ten times greater per head than 
 that of nearly forty of our States and Territories ; and yet, not only 
 does this little island enjoy the highest degree of prosperity, but 
 there is not a spot in Europe in which excess of currency stands 
 less in the way of both buying and selling with advantage. The 
 facts and the Secretary's theory do not, therefore, harmonize with 
 each other. So much the worse, he will probably reply, for the un- 
 fortunate facts. 
 
 Such as they are, my dear sir, they are now placed before you, and 
 none can as I think hesitate to admit the general accuracy with 
 which they have been presented. Should your leisure permit their 
 careful examination, you will, as I confidently believe, arrive at the 
 same conclusion with myself, to wit : That it is to the existence of 
 a great monopoly, created under the present banking law, we are 
 indebted for the existence of most of those obstacles which stand 
 in the way of a restoration of financial peace ; and, that if we would 
 remedy the evils under which we suffer, we must commence with 
 removal of the cause to which their existence is due. 
 
 How it may be removed with permanent benefit to all, I propose 
 to show in another letter, and meanwhile remain, 
 
 Very respectfully, yours, 
 
 GEN. U. S. GRANT. HENRY C. CAREY. 
 
 PHILADELPHIA, December 31, 1868. 
 
 LETTER NINTH. 
 
 DEAR SIR : 
 
 Seven years since there still existed among the States in refer- 
 ence to one of the most important of all questions the establish- 
 ment of institutions of credit a perfect equality of rights. Then, 
 Illinois and Tennessee stood exactty on a par with New Hampshire 
 and Yermont, and the little capitalists of Iowa found among the 
 statutes of the Union none whose tendency was that of placing 
 them in a position inferior to those of Maine in reference to any 
 arrangements they might wish to make for facilitating among them- 
 selves exchanges of labor and labor's products. Among those 
 
53 
 
 statutes there could be found none whose direct effects had been, 
 and must ever continue to be, that of placing the men of Missouri 
 in the position of " hewers of wood and drawers of water" to the 
 more favored people of New York and Massachusetts. If they 
 still continued to barter corn for cloth, hogs for sugar, it was not 
 because of interference of the Federal Government forbidding the 
 adoption of measures tending towards enabling them to adopt the 
 more civilized process of purchase and sale. If they continued to 
 pay 20, 30, or 40 per cent, for the use of circulating notes furnished 
 by Eastern banks, they had before them at least the hope that with 
 time they might be enabled to establish institutions that would 
 furnish such at more reasonable rates of interest. With the war, 
 however, there came in this respect a total change, Congress 
 having soon after its commencement enacted that before any asso- 
 ciation of capitalists, large or small, could be permitted to com- 
 mence supplying their neighbors with machinery by means of which 
 to make their various exchanges, they should lend to the govern- 
 ment an amount one-ninth greater than that of the circulating 
 notes to be supplied ; and that the bonds they were thus required to 
 buy should be placed in the Treasury, to be there held as security 
 for pa} T ment of the notes. 
 
 That done, and the notes received, it was then further required 
 that they should purchase a certain proportion of Treasury 
 notes payable on demand, to be held by them as further security 
 for payment on presentation of any portion of their own circu- 
 lation. Further, in the event of failure of payment, their stock- 
 holders were made to a certain extent individually liable for any 
 ultimate deficiency of assets, whether as regarded holders of notes, 
 or owners of credits on their books. 
 
 Having thus defined the terms on which the several portions of 
 the country might be allowed to obtain machinery of circulation, and 
 having provided such restrictions as rendered it m,ost difficult so to 
 do except in rich and populous districts, it might have been supposed 
 that then it would have been everywhere left to the people themselves 
 to decide to what extent they would have institutions of credit 
 empowered to supply circulating notes. Not so, however, the law 
 providing that whensoever such circulation should have been issued 
 to the extent of $300,000,000, all power for further issue should 
 cease, and thus establishing a monopoty in the hands of those who 
 first had taken possession of the little that had been allowed. 
 
 Compliance with these conditions was easy in those communities 
 within which credit institutions already largely abounded, and in 
 which, by the Secretary's own showing, circulating notes least were 
 needed, to wit: New York and New England. Most difficult, 
 however, must it prove in all of those in which such notes most 
 were needed, to wit: the Centre, the West, and the South, those in 
 which the superior currency of checks and drafts least existed. 
 Most of all was ft easy in those large cities in which, as the Secre- 
 tary informs us, " not a fiftieth part of the business is transacted 
 by the actual use of money ;" and in which., as he further says, 
 " except in dealings with the government, for the retail trade, for 
 the payment of labor and taxes, for travelling expenses, the pur- 
 
54 
 
 chase of products at first hands, and for the banker's reserve, 
 money is hardly a necessity." Such being the case, it was his duty, 
 as Comptroller of the Currency, so to act as to secure to the States 
 and Territories least provided with the superior currency the largest 
 possible share of the limited quantity of the inferior one that had 
 been thus allowed. Directly the reverse of this, however, we find 
 him to have added $100,000,000 to the previously existing circula- 
 tion of those States in which credits most existed, and $50,000,000 
 to that of the three cities in which circulating notes were least of 
 all required; while actually diminishing by $10,000,000 the allow- 
 ance to the whole country south and west of New England and 
 New York. 
 
 By this course of action there was established a monopoly of 
 money power without a parallel in the world ; that monopoly, too, 
 created by the Secretary himself in those very centres of specula- 
 tion in which each additional million does more to produce " infla- 
 tion" than could or would be done by a dozen millions scattered 
 throughout the pockets of farmers and laborers of the east, the 
 west, the south, or the southwest. 
 
 The counterbalance to this monopoly was found in the greenback 
 in machinery of circulation that had been created by the people 
 themselves for the purpose of enabling each and all of them readily 
 to exchange their services and products. The one tended toward 
 giving capitalists of the cities power to compel the interior more 
 and more to depend on them for performance of all their exchanges, 
 and thus to give them more complete control over the farmer and 
 the laborer. The other, on the contrary, tended toward enabling 
 farmers and laborers to exchange among themselves freed from the 
 control of city capitalists ; and for that reason it has been that 
 these latter, the journals in their pay, and the Treasury department, 
 have been so unwearied in their efforts to drive it from the stage. 
 
 For accomplishment of that object they have done their ut- 
 most towards destroying the confidence of our people in each 
 other, and in the country's future. From day to day has "con- 
 traction" been insisted on, accompanied by the assurance that 
 prices must be made to fall ; that property bought to-day must be 
 almost valueless to-morrow; that mines opened, furnaces or houses 
 built, this year, must prove in the next to be worth far less than 
 cost. Raids have been made upon banks. Interest-bearing secu- 
 rities have been withdrawn from them for the express purpose of 
 compelling them to heap up greenbacks in their vaults. Factories 
 and mills have been closed that might and would have con- 
 sumed hundreds of thousands of tons of coal and bales of cotton. 
 Mines have been abandoned, and manufacturers have been ruined. 
 Paralysis has been brought about through the whole extent of the 
 Union, and all these things have been done to the ends that the 
 people might be deprived of a circulating medium created by them- 
 selves and for themselves ; that the monopoly of the extreme North 
 and East might be perfected ; and that the " speculator" might in 
 this manner be driven from existence. To what extent this latter 
 object has been attained, we may now inquire. 
 
 From the report of the Comptroller of the Currency we learn that 
 
55 
 
 on the first of January, 18G1, the loans on private security by the 
 banks of New England and New York were $404,000,000, and that 
 in October following not only had there been no contraction, but 
 there had been an actual increase of their amount. 
 
 At the first of those dates they held $297,000,000 of interest- 
 bearing public securities. At the last, their amount had fallen 
 $14,000,000, the whole effect of a nine months' vindictive warfare 
 having been that of compelling them to disgorge public securities 
 yielding them an annual interest of probably $800,000. Placing 
 against this the higher interest that lenders had, by means of the 
 Secretary's aggressive policy, been enabled to secure, the balance 
 in favor of the banks would probably count by millions, for all of 
 which they had been indebted to the policy announced in the cele- 
 brated but unfortunate Fort Wayne decree. The policy that car- 
 ried us through the war favored those who had labor to sell and 
 money to borrow. That of the Secretary, and of the money lend- 
 ers of New York and New England, favors those who have 
 money to lend and labor to buy ; and hence it is that the societary 
 circulation becomes daily more and more impeded, and that the 
 Miry daily loses power. 
 
 Throughout the North and East there was certainly a plethora 
 of currency needing to be corrected. Has the Secretary, with all 
 his eiforts, succeeded in making this correction ? On the contrary, 
 lie has not only proved himself utterly powerless in that direction, 
 but has, by largely withdrawing that machinery on which, almost 
 alone, were dependent the people of more than half the Union, 
 made the centres of speculation relatively far more powerful than 
 they had ever been before. 
 
 His policy has been wholly inoperative in all those centres of 
 speculation in which "not a fiftieth part of the business is trans- 
 ited by the actual use of money," the "plethora" still existing 
 just where the Secretary had himself created it; monetary starva- 
 tion being, meanwhile, the lot of two-thirds of the whole population 
 of the Union, and their position, relatively to the highly specula- 
 tive North and East, undergoing daily deterioration. 
 
 To what extent this course of action has tended towards facili- 
 tating resumption may be now examined. 
 
 2. The first step in that direction, whensoever it shall be made, 
 will be the one that shall tend to replace in the Treasury the 
 power that had been parted with at the moment when the existing 
 monopoly had been created. As yet, every attempt in that direc- 
 tion has proved an entire failure, Congress having created a 
 monster which, thus far, has proved far more powerful than its 
 creator. Until it shall be dethroned until it can be deprived of 
 its present control over both people and State there can be no 
 financial peace, and it is with that alone that resumption can ever 
 be brought about. 
 
 To the end that such peace may be established, we must com- 
 mence by doing justice, re-establishing, under the National Bank- 
 ing Law. that equality of rights of which the Centre, the South, 
 and the West so unjustly have been deprived, and thus placing the 
 man of Missouri once again on a footing with his fellow-citizen of 
 
56 
 
 Yermont. To do this must, however, as we are assured, tend 
 to produce inflation, to raise prices, and thus to retard resumption. 
 The answer to this is, that it is always expedient to do right ; that 
 we may not do evil that good may come of it; that universal 
 experience teaches us that honesty is the best policy; and, that the 
 road towards financial peace cannot lie in the direction of enabling 
 the rich of the North and East to grow daily richer at the sacrifice 
 of the rights of the poorer men, white and black, of Missouri and 
 Minnesota, Georgia and Mississippi. 
 
 By whom, however, is it that such assertions are made ? Is it 
 not by the people of New England, who have, with their very 
 limited population, secured to themselves a third of the whole 
 money power of the Union ? Is it not by men of New York, that 
 other State which has secured to itself a fourth of the whole circu- 
 lation allotted to more than forty States and Territories, extending 
 over almost an entire continent? Is it not by those cities of the 
 North Atlantic Coast, which have, by means of the present banking 
 law, secured to themselves so nearly all the power to furnish circu- 
 lation which, before the war, had been exercised by interior banks? 
 Is it not, everywhere, by the men who desire to see a rise in the 
 price of that great commodity, money, of which they have the com- 
 mand, and a decline in the prices of those they need to purchase 
 to wit, labor and labor's products ? To all these questions there 
 can be no answer other than this : that we are in the midst of a 
 financial war whose object is the maintenance of a monopoly hostile 
 to the best interests of the people ; a monopoly pending whose 
 existence there can be no resumption ; and, that the first step to- 
 ward peace is to be found in such a re-establishment of governmental 
 power as would result from dissolution of the present alliance 
 with that portion of the community which desires that money may 
 be dear and labor cheap. Throughout the war the Treasury was 
 in close alliance with those who desired that money might be cheap 
 and labor dear, and if it desires now to bring about resumption it 
 must commence by renewal of that understanding with the men 
 who have labor to sell and money to buy which was brought to an 
 untimely end at the moment when the Secretary, three years since, 
 fulminated from Fort Wayne his declaration of war upon the credit 
 of both the people and the State. 
 
 3. That the physical body may be sound in health, there must 
 be steady and rapid circulation throughout the whole sj-stem, 
 from the heart to the extremities, and thence back again to 
 the heart. So, too, it is with the social body, societary health 
 being entirely inconsistent with excessive circulation in the region 
 of the heart, the extremities meanwhile becoming from time to time 
 more entirely palsied, as is now the case throughout the Union. 
 That this may be corrected, and that there may be^established or 
 re-established throughout the Centre, the South and'the West, that 
 rapidity of circulation without which there can be neither financial 
 nor political health, we need an abolition of monopoly privileges. 
 That we may then gradually calm the unnatural excitement exist- 
 ing in States and cities which now profit of that monopoly we need 
 the adoption of measures tending to regulate the exercise of that 
 
61 
 
 power over the currency which results from excess of loans and crea- 
 tion of credits on their books at one moment, and violent diminution 
 of loans and suppression of credits at another, the two combining 
 for the production of excitement at one moment and paralysis at 
 another, and for prevention of anything like permanent financial 
 peace. To that end we need a law declaring 
 
 First, that no bank shall hereafter so extend its investments as 
 to hold in any form other than those of gold, silver, U. S. notes, 
 or notes of national banks, more than twice its capital : 
 
 Second, that in the case of already existing banks whose invest- 
 ments are outside of the limits above described, any extension 
 thereof beyond the amount at which they stood on the first of the 
 present month shall be followed by instant forfeiture of its charter. 
 
 Having thus established a check upon further extension, the 
 next step should be in the direction of bringing the operations of 
 existing banks within proper limits. To that end, we need a pro- 
 vision imposing on all investment outside of the limits above 
 described a tax for the present year of one per cent. In the 
 second year let it be made 1 J per cent. ; in the third, 2 ; and in the 
 fourth, 3. Thenceforth let the tax grow at the rate of a half per 
 cent, per annum until, by degrees, all banks shall have so enlarged 
 their capitals, or so reduced their loans, as to free themselves from 
 its further payment. 
 
 Holding interest-paying securities to no more than double its 
 capital, a bank would be always in a condition of perfect safety, 
 and could give to its stockholders dividends of at least 10 per cent. 
 Such stock would be preferable to almost any other securities in 
 the market, and there would be no difficulty in so enlarging the 
 foundation as to give to the whole structure the form of a true 
 pyramid, instead of that inverted one which now presents itself to 
 the eye of all observers. 
 
 Under the State bank system city banks furnished little or no 
 circulation. Why? Because their deposits enabled them to do 
 all the business required for making liberal dividends among their 
 shareholders. The country banks then monopolized the circula- 
 tion. Why ? Because with deposits small in amount and with- 
 out the profits of circulation they could not live. Let us have 
 such a law as is above described and the city banks will at once 
 find themselves forced to relinquish to their country competitors 
 the whole business of furnishing circulating notes ; and thus a second 
 great step in the direction of ultimate resumption will have at once 
 been made. 
 
 It may be said, however, that banks are now so heavily taxed by 
 both State and Federal Governments as to make it difficult under 
 such restrictions to continue the business in which they are now 
 engaged, and that it is so is probably the case. That it may so 
 cease to be, let the Treasury at once relinquish the few millions of 
 revenue which result from bank taxation, at the same time pro- 
 viding against increase on the part of the States. In the whole 
 list of taxes there are none so injurious, none which should be so 
 carefully avoided, as those which tend to prevent the formation of 
 institutions of credit ; yet are State and National Governments * 
 
58 
 
 vying with each other in the effort so to squeeze them as almost to 
 drive them from existence 1 Were all bank taxes abolished ; were 
 the monopoly extinguished ; and were governments to encourage 
 rather than prevent the formation of such institutions ; we should 
 then be on the road towards raising the greenback to a level with 
 the gold and silver coin. For every dollar so relinquished twenty 
 would.be added to the productive power of the nation as a conse- 
 quence of "the growth of faith in the future which would result from 
 making that one step in the direction of financial peace. 
 
 4. The third step would be found in requiring banks to retain, 
 in lieu of the greenbacks now required, all the gold received from 
 the Treasury as interest on bonds therein deposited. Had this 
 course been pursued for three years past they would this day hold 
 sixty millions of gold, while the people would have in daily use an 
 equal amount of circulating notes that now are hoarded. Let it 
 be now adopted, the banking monopoly being simultaneously 
 abolished, and the day will then be close at hand when the amount 
 of interest payable to banks will reach $30,000,000 per annum ; 
 when the world at large will see that the day is fast approaching 
 on which the greenback is to stand upon a par with gold and silver ; 
 and, that if their circulation be still continued it will be because 
 our people will then have arrived' at the conclusion that the way to 
 insure steadiness of monetary action is to be found in the direction 
 of maintaining the use of a national medium of circulation not liable 
 to be withdrawn on every occasion of disturbance in the relations of 
 the always belligerent powers of Europe. 
 
 5. The national banking law abounds in serious defects, all of 
 which must be remedied before we can have perfect financial peace. 
 Most important of all, however, are those above referred to, by 
 the one of which there was created a Procrustean Bed measured 
 for a body that has already, though yet in infancy, far outgrown 
 it ; while by the other there was placed in the hands of a limited 
 number of persons, chiefly city bankers, a power so excessive that 
 it has enabled them to set at defiance all the power of the govern- 
 ment, and will, without action such as is above described, enable 
 them so to do forever in the future. 
 
 By removal of the first we shall free ourselves from the absurd 
 position in which we at this moment stand, that of having proposed 
 to establish through the South a system under which money wages 
 were to be paid, at the same time refusing to either South or West 
 that power for creating the machinery in which such payments 
 must be made, which is so freely exercised throughout the North 
 and East. 
 
 By means of the second we shall not onty greatly limit the power 
 to produce financial disturbance, but also do very much towards 
 limiting that extravagance of expenditure to which we stand now 
 indebted for an adverse balance of trade in face of which resump- 
 tion can never seriously be thought of, and can, certainly, never be 
 brought about. 
 
 The three together furnish the only terms upon which financial 
 peace can ever permanently be secured. 
 
 That we may have political peace, and that the Union may be 
 
59 
 
 maintained, we must begin by recognizing the existence of perfect 
 equality among the States in reference to the power of their people 
 to determine for themselves what shall be the character of the 
 machinery used in making exchanges from hand to hand, and to 
 what extent it shall be used. 
 
 In another letter I shall ask your attention, my dear sir, to some 
 facts connected with the national debt, and meantime remain, 
 with great respect and regard, 
 
 Yours truly, 
 
 GEN. U. S. GRANT. HENRY C. CAREY. 
 
 LETTER TEXTH. 
 
 DEAR SIR: 
 
 THE surrender at Appomattox, though giving us, so far as regarded operations 
 in the field, the peace that so anxiously had been desired, brought with it reason 
 for apprehending the reverse of peace in the commercial and financial world. 
 For several years the country had presented to view a scene of life and activity 
 the like of which had never anywhere before been witnessed. All who had had 
 labor or labor's products to sell had found a ready market, and among men, 
 too, who could at once pay over the price upon which they had agreed. For 
 the first time farmers and laborers throughout the whole country could 
 go cash in hand seeking their supplies among those who could sell at the 
 lowest rate. Demand had gone ahead of supply, the economy of labor thus 
 produced exhibiting itself in the fact that, notwithstanding the absence of a 
 million of men in the field, the nation had found itself enabled to contribute to 
 the wants of government in a manner so remarkable as to have amazed the out- 
 side world, while almost as much astonishing ourselves. Never before had it so 
 well been proved that in the social as in the physical body health, strength, 
 and life are the inseparable accompaniments of rapid circulation. 
 
 Now, however, there was threatened a serious change in the power of produc- 
 tion as well as in the machinery of circulation. For years we had had in the 
 field hundreds of thousands of men busily engaged in the work of consumption 
 while adding nothing to production. Thenceforth their services were to be 
 given to increasing the supplies of food, clothing, and machinery placed at the 
 command of our people, and there was danger lest, in the absence of governmental 
 purchases, the machinery of circulation might prove wholly insufficient for 
 making the exchanges work as smoothly as they till then had done. More labor 
 would be seeking employment, and more commodities would be in market to be 
 exchanged against labor, and any stoppage of such exchanges must not only 
 affect the power of the whole people to provide satisfactorily for their owu 
 wants, but also greatly impair their power for aiding the various govern- 
 ments, local and general, amid the difficulties in which, for the moment, they 
 were involved. The interests of all required, therefore, that rapid circulation 
 should continue to be maintained. 
 
 Throughout the war individuals, cities, counties, States, had volunteered 
 their aid in a manner wholly without precedent in the annals of the world. 
 To so great an extent had this been done that it is certainly fair to estimate the 
 voluntary donations at $600,000,000, the half of which, or $300,000,01-0, still 
 remained a charge upon our people, involving payment of interest to the annual 
 extent of little, if any, less than $20,000,000. 
 
 The interest on this local debt was probably a full seventh of that pay- 
 able on the national debt. This would seem to have been but a small pro- 
 portion, yet was it really an enormous one when we reflect that the local govern- 
 
,..._: ., ........ rT ,_ v ,.,_., ., .,_ . ... , x .. .- , 
 
 ::.A: :-: -- ' . ; . ' - -. - : ..-. _-.- - . x - : . ::r 
 
 of this row exhibits" itself in 
 
 ft followed, of coarse, that every diminution in the prices of 
 r, er its protects, tended to make the burthen more severe, while just as 
 
 id labor 
 o* its wedncis to porchjae. In the natural course of 
 
 the jimyr was great that those who bad so freely owe* of 
 
 Of the two, these latter 
 
 - :_- .:.:.:--. : /- : - ' - -- 
 
 - -- CT~- : :>.- - -_. -.-.-.> - : . - :.-: : .- r 
 
 of remuneration. To them it was of 
 
 c: Ihs 
 
 &s possible be 
 i to 
 
 in the Usion *: lirce. by which the 
 
 i lie ftsstc*.*r //i/e. Directly the rerene of this.we 
 
 exhibited a series of 
 
 by bnselfaad having for their efcet that of making 
 to the world bow largo 
 that may bodono by a man placed, as the pieacot 
 
 -. -. - - :. - - -r : - i ..-.- ; -*_ _ __ ... :' : : .. 
 : -. . .:-- -_-*: ii:" _. H ..-:.-.- Li: : - : -n - .:-! 
 e befsre jounafirts known to be in his contdenee gare to the world 
 that the prioo of gold was at enoe to be ledwed, and tl 
 
 For the i 
 
 with 
 
 to take $DO, 000,000 at an extravagant rate of 
 to claim gold bonds at the end of three years' 
 
 -n: mm Ssl :^r;r^i T-.-.i s i-.lira::oa 
 ': r ; -i.>-:--.. . : r - --: - - - 
 
 coVement while sarin? neariy $30.000,000 
 i was now to bs the order of the day ; prices were to 
 
 :--- '':'- lit: :ll 
 to 
 
 withdrawn; and all 
 thines were to be done that the Finance Minister might hare placed at 
 petal faoOgOMyOOO a year to bo applied to payment of principal and 
 :: ----- i- - -.-- .-----:--::_; . -, './ ' - : : - -. --::- 
 
 !d to pre in its 
 
 Very brief <ipcii<m of its cmjcts was, however, 
 it to limit its approval within $MWO,000 per month; 
 
TL; in the xiopt:^ of thi* 
 be dear to all who than 
 Union together, the a 
 
 15, if eren lev tnan ZV per 
 credit aal * " 
 
 --,"- 7 
 warn, i 
 
 States, where zueh 
 
 less free r supplied, it 
 Booth, West, *- 
 
 any of the f^ures I hare 
 
 : .- '->'. -. ---. '-- - - 
 
 - 
 that i-A.-- t hau be tootinnrd, tke j can hare tie 
 
 M: : : : - -- 
 
 cent.; bat when the 
 
 Tidnal 
 
 at which he i* accustomed to hare Li= 
 
 not, less than thrice the rate of 1 
 
 clearly 
 
 reference to earlr extinction of the ir : are 
 
 which the rich are to be made richer n the . 
 
 Addisfl novta 
 capital from the real 
 nearly the whoie medium of 
 tion of the poor for the I 
 in the history of anr 
 
 3. The Secretary s theory in 
 is in direct conflict with hi* practice ; the: 
 the need for cireolarinc nob 
 
 the latter, on the 
 
 of that superior currency 
 
 where tends to svposede the note. Sotssynswffl neor he h,isit with 
 
 r-:,.-z;e:: :L- ;_"..: --._-:-! LT- ;^.- fc - :r. :_, i:-:r:- :i__ i:..i ir 
 iz .:;-:!- r -".:. :, -.1. :1 - :.'--_: j :- :_^ :::-:- : r-::: -:::_-:-..; 
 
 I 
 
 ing thereto. 
 
 Ihewhowferhia 
 
 of 
 
 oC 
 
 ,and towhl-ei 
 
 c: MV p^clie Honritini mm now, in :Lr fz:^-. :> k vtt 
 i:?: -::.- v ;-:.-- -:: : .:.: -z- : :L- .:-:-.:- :: : .- 
 /.. f ---- ir-. 1-: -> ; - . . r - -- T ,_: _; T :_- i_; Tr :_- 
 t^r rrr-'.j il^: woo..! Ihon :-r 
 
62 
 
 In October, 1865, the total debt was $2,808,549,000, of which $1,162,000,000 
 were payable in gold. The total interest was $133,000,000, of which $67,000,000 
 were gold, and $66,006,000 currency. Admitting now that the character of the 
 debt had remained unchanged, and taking the price of gold at 140, the quantity 
 of lawful money to-day required for payment of interest on that amount of debt 
 would not exceed $150,000,000. 
 
 In October last the debt stood at but $2,505,000,000, the gold portion of which 
 had grown to $2,083,000,000. Three hundred millions less in quantity it 
 DOW requires for interest nearly $130,000,000, being but $3,000,000 less than 
 had been needed before reduction of the principal had been commenced. Of 
 this the gold portion is $123,000,000, being, at 140, the equivalent of $173,000,- 
 000 lawful money. Adding now to this the currency portion, say $7,000,000, 
 we obtain as the total amount of lawful money this year required for satisfac- 
 tion of claims for interest no less a sum than '$180,000,000, being $30,000,000 
 more than had been needed when the debt, as stated by the Secretary himself, 
 had been $300,000,000 greater. Adding further the interest on these $300,000,- 
 000, we obtain $198,000,000 as the amount now payable by individuals or the 
 State on the same amount of debt which had existed at the date of the de- 
 cree which announced "contraction" as being the order of the day; and by 
 means of which confidence, public and private, has been destroyed, and the 
 societary movement so thoroughly paralyzed that the payment of even half of 
 this enormous amount would be far more burthensome than would have been 
 that of the whole on the day on which the Secretary entered on his most des- 
 tructive career. In all other countries the public credit improves with dimi- 
 nution of the need for loans. Here, under our admirable system of finance, it 
 seems, on the contrary, to deteriorate as the debt is more and more diminished. 
 
 The remarkable fact is thus presented, that precisely as the paralysis becomes 
 more general precisely as labor and all its products fall in price precisely as 
 lawful money becomes more valuable in the hands of those who hold it pre- 
 cisely as it becomes less and less attainable by those who need to get it pre- 
 cisely as taxation becomes more and more burthensome precisely as these 
 phenomena become more general throughout the land the quantity of lawful 
 'money required for satisfaction of the claims of bondholders increases ; the 
 poor being thus made poorer while the rich are being made richer, and banks, 
 bankers, and treasury agents building palaces, while mills and mines are being 
 closed, and working men and women deprived of power to obtain either the 
 food or the clothing required by their families and themselves. 
 
 On an average the prices of labor and its products are at least a third less 
 than had been the case at the date on which the Secretary announced to Con- 
 gress and the people his determination to enforce " contraction." The $i80,- 
 000,000 lawful money of to-day would therefore purchase almost as much as 
 could have then been bought with $300,000,000. As but half this latter sum, 
 or $150,000,000, was then required, it is clear that the burthen of taxation for 
 payment of interest has, except among the bondholders themselves, by means 
 of the Secretary's policy been nearly doubled. Hence it is that the cry has be- 
 come so general for discharge of the principal in lawful money! Hence it is 
 that the word repudiation is now so freely used ! That it shall soon become 
 universal all that is needed is that the Secretary be allowed by Congress to pro- 
 ceed in the substitution of gold bonds for greenbacks, and for all other securities 
 that make no demand for gold, whether for principal or interest. 
 
 Were it not for his profession of desire to maintain the public faith there would 
 be good reason for believing that, determined upon bringing about repudiation, 
 he had arrived at the conclusion that the shortest road thereto lay in the direc- 
 tion of making the debt from day to day more burdensome. Certain it is that 
 had such been his wish, he could have chosen no better course of operation 
 than that so consistently pursued almost from the hour that he was so unfor- 
 tunately placed in the direction of the national finances. 
 
 How this tends to produce the present demand for gold and bonds for export- 
 ation will be shown in another and concluding letter, and meanwhile I remain, 
 Yours very respectfully, 
 
 HENRY C. CAREY. 
 GEN. U. S. GRANT. 
 PHILADELPHIA, January 13, 1868. 
 
63 
 
 LETTER ELEVENTH. 
 
 DEAR SIR: 
 
 1. Tli us far the Secretary's measures Lave all looked in the direction of 
 diminishing the machinery of circulation, diminishing the productive powers 
 of the nation, and destroying both individual and national credit ; and 
 therefore is it that now, after nearly four years of peace, the Treasury 
 is paying interest at a rate more than twice greater than that paid by Eng- 
 land or by France a rate nowhere paralleled among nations with any 
 real claims to rank as civilized. As a consequence of this our institutions of 
 credit invest their means in Treasury bonds where before the war they would 
 have been applied to meeting the demands of commerce. As a further conse- 
 quence, thousands of individuals have withdrawn themselves from the active 
 pursuits of life, finding it more profitable, and freer from risk, to accept in the 
 form of interest returns almost as large as were before obtained by those engaged 
 in manufactures or in trade. Maintenance of the bank monopoly enables 
 stockholders to obtain dividends varying between 12 and 25 per cent. ; and 
 thus, look where we may, we find the whole Treasury power to have been, and 
 now to be, exerted in the direction of enriching the already rich, while deplet- 
 ing those who need to labor, those to whom it had been almost entirely in- 
 debted for the means by aid of which there had been successful prosecution of 
 the war. With every step in this direction luxury increases and importations 
 from abroad tend more and more to make demand for all the gold we mine and 
 all the bonds we fabricate. With each there is a growth of absenteeism making 
 demand, for expenditure in foreign countries, of more of the proceeds of the few 
 commodities we have for export. Such is the result at which we thus far have 
 arrived, a single presidential period employed by the Treasury in producing 
 financial convulsions having done more towards the production of a great 
 moneyed aristocracy, having interests wholly opposed to those of the people at 
 large, than could have been the case had all that time been employed in civil 
 war. 
 
 So long as almost millions of men had been employed in consuming food, 
 clothing, and other commodities, while producing nothing, farmers, mechanics, 
 miners, and workingmen of all descriptions, could have the use of credits, cir- 
 culating notes, and all other of the machinery of circulation, at moderate rates 
 of interest. With return of those millions to production there should have 
 been increase of individual and national credit, enabling those who laboured 
 to obtain the use of circulating notes at constantly diminishing cost ; and 
 yet, so far is this from being the case that the average rate thereof is now 
 rapidly obtaining the height at which it had stood before the war, with con- 
 stantly increasing necessity for return to the practice of buying and selling on 
 credit which had then so universally existed. Why is this ? Let us see ! 
 
 At the date of the creation of the existing bank monopoly eleven States were 
 out of the Union, while others were in a state so disturbed that their people 
 were wholly unable to avail themselves of its provisions, and thus to establish 
 among themselves institutions of credit such as, under State laws, had pre- 
 viously existed. Since then peace has been restored ; new States and Terri- 
 tories have been organized, and old States have been readmitted; Pacific rail- 
 roads have carried population through a country of immense extent that 
 before had been unoccupied ; and thus the field throughout which there now 
 exists demand for institutions of credit, and for machinery of circulation, has 
 become at the least thrice, and probably four times, greater than it then had 
 been. To a large extent this change had occurred before the Secretary's de- 
 claration of financial war issued from. Fort Wayne in 1865 that declaration to 
 which we stand indebted for nearly all the financial trouble that has since 
 existed. 
 
 Common sense and common honesty at that moment demanded of the Fed- 
 5 
 
64 
 
 eral Government removal of all restrictions by means of which the people 
 of the States and Territories south and west of the Hudson had been 
 to so great an extent deprived of power to create for themselves institutions 
 of credit and machinery of circulation, and so almost entirely made dependent 
 for this latter on the extreme North and East. Had their demands heen 
 acceded to, had justice heen done, and had the monopoly then been ter- 
 minated, there would have arisen throughout all that vast territory a de- 
 mand for Treasury honds to be deposited in the Treasury itself as security 
 for circulation, to the extent of at least $300,000,000, thereby so far diminish- 
 ing the necessity for sending them abroad as would have made a dffi-rcnce 
 of little less than that entire sum in the price received for those that needed 
 to be exported. The man who must go to market must pay the cost of getting 
 there, whether his commodity be corn, cotton, or bonds, and there is no com- 
 modity that so much as these latter is affected by any increase in the 
 quantity forced upon the market. Every step of our finance minister tended 
 to produce such increase, and hence it is that the position in which, so far 
 as regards rates of interest, we at this moment stand so nearly approaches that 
 of the least civilized portion of the European world. 
 
 While thus by destroying the domestic market doing all in his power to in- 
 crease the export of bonds, nothing has been omitted that could tend to di- 
 minish their money value in the eyes of foreigners. The greater the work to 
 be accomplished, the less, as it seemed, must be the time allotted for having it 
 done. Hundreds of millions of bonds were forced upon the market having but 
 three years to run. Hundreds of other millions, bearing no interest and pay- 
 able only at the pleasure of the government, were forthwith to be extinguished. 
 Hundreds of millions of three year bonds were then to be replaced by others 
 redeemable at the pleasure of the government at the end of five years' grace. 
 With each and every step in these directions taxes became more and more 
 onerous and discontent more universal, and so must they continue to do until 
 at last we shall see the people arrive, despite all honest resolutions, at final re- 
 pudiation of the debt. 
 
 2. Of all maxims the greatest is that brief one which teaches that to move 
 gently is to move Bafo\yfesiina lente. Had the Secretary properly appreciated 
 its value he would have desired, as far as possible, to relieve the present gene- 
 ration from burthens created by the war promoting the circulation of labor 
 and its products while postponing to a distant period payment of the debt 
 itself, and offering the best security in his power so as to enable him most 
 largely to reduce the rate of interest for both the people and the State. Had 
 he so appreciated it he would have seen the great States of Europe obtain- 
 ing money at low rates of interest by means of creating securities running for 
 the longest periods, and not liable to be disturbed, and must have then been led 
 to imitate their example. Had he so appreciated it, he would have said 
 to Congress, that a security not liable to be paid off without consent of the 
 holders, bearing interest at the rate of five per cent., and subject to a tax of teu 
 per cent., could be sold far more readily than another bearing the same interest, 
 free from tax, but liable to be paid off at the end of even thirty years. 
 
 The question of payment, whether in gold or paper, would by this process 
 have been at once placed out of view, no holder of a bond being required to 
 surrender it except on terms agreeable to himself. 
 
 The question of taxation of bonds, now so freely used in political warfare, 
 would likewise have been settled. 
 
 On such terms the amount required for aunnal interest might have been 
 reduced to $110,000,000, one-tenth of which would have gone to a sinking-fund 
 by aid of which the whole debt would, before the close of half a century, 
 have been extinguished. 
 
 Such, and better even than this, might have been the arrangement with pub- 
 lic creditors had the Secretary sought to do even justice to them and to tax- 
 payers as in duty he was bound to do. Directly the reverse of this, the whole 
 period of c his administration has been characterized by a determination to bene- 
 fit those who had money to lend, interest and commissions to receive, at the 
 cost of those who had taxes and interest to pay, and labor to sell. With every 
 step in this direction there has been such an increase in the power of public 
 creditors that it is this day thrice greater than it was four years since when 
 
G5 
 
 the Treasury was surrounded with hungry claimants for settlement of their 
 accounts. Then, less that two-fifths of tin- pulilk; debt could make demand for 
 gold. Now, with exception of the calumniated greenback, nearly the whole 
 lias been so changed in form that the Treasury can. make no claim for reduc- 
 tion of interest until it shall be prepared to offer payment in gold to all dis- 
 sentients. Between bank monopolists on one hand, and bondholders on the 
 other, it is, therefore, in a state of helplessness so pitiable as fully to account 
 for the utter absence of faith in our financial future whii h now prevails, and 
 which causes the present exorbitant demands for interest. Banks cannot be 
 compelled to resume until the Treasvry shall be pr pared to furnish gold for 
 every greenback that may be presented for redemption. Bondholders cannot 
 toe compelled to accept low interest until the Treasury shall be enabled to 
 offer gold in payment for the bonds already matured. In this state of things 
 we are assured that if we will only resume, and thereby double the already large 
 do/Kind for gold, we shall be enabled to sell our bonds at lowi r rates of interest ! 
 
 The first step towards resumption is to be found in relieving the Treasury 
 from the double thraldom which LOW exists. It must be enabled to dictate law 
 to both banks and bondholders, doing equal and exact justice to all, creditors 
 and debtors, borrowers of money and lenders of it. To that end, the bank 
 monopoly should be abolished, thereby creating a domestic demand for bonds. 
 Next, we need to see the creation of a security bearing lower interest, and of 
 such character as would enable the Treasury to say to existing bondholders that 
 they now must choose between accepting it, or payment. 
 
 Such a security would be found in a six per cent, bond subject to a tax of 10 
 per cent., and having forty or forty-five years to run, by the end of which time, 
 the proceeds of the tax would have paid the d(bt. Bonds deposited by banks and 
 bankers with the Treasury might be further taxed one per cent. ; and this 
 would soon yield a further sum of five or six millions that might be so ap- 
 plied. Bonds thus provided for could be sold at par for gold, and the Treasury 
 would thus be enabled to relieve itself at once from that control of public 
 creditors which now exists, while at the same time freeing itself from all need 
 for collecting taxes beyond the moderate sum that, as we have Reason to hope, 
 will be required for meeting current demands upon it. Thenceforward there 
 would be peace in the financial world. 
 
 To the one who might object to this as doing too much for the public credit- 
 ors the answer would be, that the loss to our whole people resulting from the 
 paralysis produced by the present hopeless Treasury dependence counts annu- 
 ally by hundreds of millions ; that all arrangements thus far suggested have 
 proved failures, and for the reason that they have involved violations of the 
 public faith ; and finally, that every dollar thus withdrawn from the Trea- 
 sury in excess of the amount demanded by even the most favorable of them 
 would be more than tenfold made up in the increased power of production 
 resulting from the feeling of confidence that would be produced. 
 
 At the present moment the average public indebtedness, of our whole popu- 
 lation, exceeds $60 per head. Twenty years hence, to all appearance, it will 
 not, even if uudiminished, exceed $30 the power per head, to pay it having 
 meantime more than doubled. To hesitate, under such circumstances, about 
 making with the public creditors such fair and liberal terms as at once to 
 command their confidence and respect would be an act of folly so great that 
 it would bo difficult to find words in which to characterize it. The more 
 thoroughly honest a man shows himself the smaller is always the cost at which 
 he can command the service of the capital he needs to use. 
 
 3. The Sun and the Wind had once, as ^Isop tells us, a dispute as to which 
 of theui could soonest compel the traveller to lay aside his cloak, and unable 
 otherwise to decide the question they finally concluded to bring it to a practical 
 determination. Mr. Wind taking precedence, he blew and blew, but the 
 louder his roar the closer became the grasp of the traveller upon his outside gar- 
 ment. Despairing finally of accomplishing his object, he now gave place to 
 Mr. Sun, under the influence of whose beams the hold upon the cloak was 
 gradually relinquished, and at length abandoned altogether. 
 
 Studying now our operations for the past three years we find Mr. Wind to 
 have been steadily at work, treasury threats of contraction having kept nearly 
 even pace with popular threats of repudiation; editorial threats of forced re- 
 
66 
 
 sumption having gone hand in hand with an absenteeism which makes demand 
 for all the gold we mine and all that we import ; increase of the public burthens 
 travelling side by side with diminution of power for carrying the load im- 
 posed ; and the general result being that of causing every man who lias any- 
 thing to lose a desire to draw his cloak more closely round him, and to retire 
 into some nook or corner of the commercial world in which he may safely stand 
 until convinced that Mr. Wind and his companions, Clouds and Darkness, 
 had finally abandoned the field, yielding place to the great source of light and 
 heat, the Sun, to whom he might then look to see 
 
 That justice be done to the people of all the States and Territories, placing 
 them, so far as institutions of credit are concerned, and so far as law can accom- 
 plish that object, on a footing precisely the same as that now occupied by those 
 of the Eastern States : 
 
 That justice be done to the commerce of the Union by bringing all such in- 
 stitutions under regulations tending to produce that regularity of action which 
 so long has characterized the movements of those of the Eastern States: 
 
 That justice be done to such institutions wherever situated, by relieving them 
 from taxes, and from absurd restrictions now existing, the direct effect of which 
 is that of compelling them to overtrade and to incur risks the results of which 
 are likely to result in ruin to their stockholders : 
 
 That justice be done to the working men who carried the country through 
 the war, by abolishing as rapidly as possible the taxation under which so many 
 of them now so severely suffer : 
 
 That justice be done to the public creditors, thereby securing the command 
 of capital at the lowest rate of interest ; and finally, 
 
 That justice be done to the nation by proving to the world that in time of 
 peace it is ready to carry into full effect the arrangements that during the war 
 so well were understood. 
 
 With little exception the things thus proposed to be done are precisely the 
 reverse of those which have been done since the peace,- and to which we are in- 
 debted for the fact that the needs of the government for gold have been more 
 than doubled, and, strangely enough, as preliminary to resumption. Let them 
 be done, and it will soon be found that the needs, public or private, for gold 
 will gradually decline until at length the greenback and the gold piece will 
 stand on a level with each other, doing this as a consequence of an infusion of 
 the superior currency of notes similar to that which now exists in Massa- 
 chusetts, the State which always pays gold, because none of her citizens need it. 
 
 The course thus proposed would speedily extinguish the debt, doing this 
 by means of a saving of interest consequent upon giving security of the 
 highest order, as is always done by the great European States. Giving us 
 peace it would inspire a confidence that would so stimulate production that 
 taxation might soon cease to exist except in cases where its burthens are scarcely 
 felt. Reducing the general rate of interest it would place our people more 
 nearly on a level, in this respect, with those of Europe, and thus would largely 
 contribute towards giving us that industrial independence without which there 
 can be no political independence. 
 
 Sincerely hoping that such may prove to be the case, and begging you to ex- 
 cuse my repeated trespasses on your attention, I remain, with great regard and 
 respect, Yours very truly. 
 
 HENRY C. CAREY. 
 GEN. U. S. GRANT. 
 PHILADELPHIA, January 13, 1869. 
 
 P. S. January 19. The Senate Finance Committee has just now reported a bill 
 nominally providing for resumption, but really for sacrificing all who have in- 
 terest to pay, or labor to sell, at the shrine of those who have money to lend or 
 labor to buy. Its true title would be " An act providing for doubling the rate 
 of interest throughout the country ; for making the rich richer and the poor 
 poorer; for bankrupting the people and the State ; for postponing indefinitely 
 a return to use of the precious metals ; and for effectually securing repudiation 
 of the national debt." 
 
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