| 
 
 ' ; 
 
 . THE 
 
 NATIONAL 
 
 DEBT, TAXATION, CURRENCY, 
 
 AND 
 
 BANKING SYSTEM 
 
 OF THE 
 
 U 1ST L TED S T A.T E 8 . 
 
 WITH SOME REMARKS 
 
 ilqjort of tljc Secretari) of tljr Srrasuru 
 
 dversity of 
 Southern Rt 
 Library Fa 
 
 BY JAMES GALL A TIN. 
 
 NEW "YORK : 
 
 HU*FORD <t KETCH AM, STATIONERS AND PRINTERS, 
 Nos. 57 and 59 William Street. 
 
 1864.
 
 THE 
 
 NATIONAL 
 
 
 
 DEBT, TAXATION, CURRENCY, 
 
 AND 
 
 BANKING SYSTEM 
 
 OF THE 
 
 UNITED STA.TBS. 
 
 WITH SOME REMARKS 
 
 ON THE 
 
 fff tjjt ^tmtarj af tlje fetsarj 
 
 BY JAMES GALLATIN. 
 
 NEW YORK: 
 
 HOSFORD & KETCHAM, STATIONERS AND PRINTERS, 
 
 Noi. 57 and 59 William Strtet. 
 
 1864.
 
 REMARKS 
 
 ON THB 
 
 of ijft Starefatjj of % tasarg, 
 
 FOR THE YEAR 186.3, 
 By James Gallatin. 
 
 I. Magnitude of the National Disbursements. 
 
 THE annual report of the Secretary of the Treasury, dated 
 December 10th, 1863, embraces statements of debt and dis- 
 bursement far surpassing in magnitude the financial trans- 
 actions of any nation, for the same period, in modern times. 
 Only in the traditions of the ante-historic era do we find a 
 parallel to the stupendous volume of national expenditure 
 now witnessed at Washington. The nearest approach to it 
 during the present era is recorded by Mr. Allison, in his 
 " History of Europe," who states that the expenditures of 
 the British nation, during 1815, the last year of their great 
 struggle with the first Napoleon, reached the sum of 
 111,000,000 sterling, about 38,000,000 of which was raised 
 by loans, and 11,035,232 of it was paid in subsidies to other 
 nations. In our own case the disbursements of the fiscal 
 year, 1863, were $714,709,995, of which $590,266,682 was 
 provided for by the issue of paper money or loans. The 
 estimates for 1864 amount to $751,815,088, of which 
 $544,978,548 is to be provided for by loans. Assuming 
 
 2003551
 
 the pound sterling of Great Britain to be equivalent to five 
 dollars of United States currency, the disbursements of the 
 British nation, with the sources of revenue, and those of the 
 United States, would stand thus : 
 
 UNITED STATES BRITISH 
 
 1863 1864 1815 
 
 Expenditure $714,709,995 $751,815,088 $550,000,000 
 
 Revenue from Loans 590,266,682 544,978,548 190,000,000 
 " Taxes, &c. 124,443,313 206,836,540 360,000,000 
 
 Sums nearly as large as these have probably appeared in 
 the statements of the rebel authorities at Richmond for 
 1863 ; but if they have not, and if by any chance the chiefs 
 of the rebellion should ever publish a statement for the year 
 1864, our figures will probably be far surpassed in amount, 
 since flour is selling at two hundred dollars per barrel at 
 Richmond, and their financial affairs, like their unhallowed 
 schemes of political ambition, are tumbling rapidly into 
 hopeless ruin : that madness which precedes destruction con- 
 tinues to hurry them on to an ignominious fate. Paper 
 money has proved to be the winding-sheet of the once 
 formidable American rebellion of the nineteenth century. 
 If we are wise we shall profit by the folly of the insurgent 
 chieftains in their 7'elianee upon paper money. Our great 
 and glorious country needs no such quackery in finance to 
 sustain this holy struggle for the preservation of the Union. 
 It is true that our vast outlay causes much solicitude in the 
 public mind as to the means of providing for it, in conse- 
 quence of the natural tendency of so great an expenditure 
 of money to create an insatiable greed of gain, with power- 
 ful partizan organizations seeking to perpetuate this lavish 
 distribution among their leaders, regardless of the welfare of 
 the people or the honor of the nation. But there is yet no 
 serious apprehension of immediate embarrassment in pro- 
 viding for the debt incurred, or to be incurred, so long as the 
 amount can be kept at or below two thousand millions, which
 
 would be only fifty dollars to each person of the probable 
 population of the Union at the next census. 
 
 II. Necessity for Economy. 
 
 To economise our treasure by the election to office of 
 honest, intelligent, skillful and patriotic statesmen is our 
 duty at all times, but in a time like the present this duty 
 becomes of paramount importance, and it cannot be too 
 often impressed upon the minds of the people, whose toil 
 and industry will be heavily taxed for a generation or more 
 to come, to provide the money to pay the interest and the 
 principal of our growing debt. We have now to assume new 
 burthens. As a free people, our principles of self-govern- 
 ment are about to experience a new test and a severe one 
 in the assumption, management and liquidation of a great 
 national debt, one of the most fruitful sources of corruption 
 in a body politic, whatever may be the form of government. 
 Next to the economy of human life, in conducting the war 
 it should be the aim of government and people to secure 
 economy of wealth by the application of the most judicious 
 systems of taxation, expenditure, funding, banking and cur- 
 rency ; for it is more emphatically true of our own than of 
 any former age, that success in war, as well as the mainten- 
 ance of national existence, depends very much upon the 
 financial resources of the people. 
 
 III. Onr Sources of Wealth. 
 
 Happily for us, this crisis in our national career came upon 
 us, providentially, in the midst of a progressive development 
 of material wealth, such as no people could have hoped to 
 enjoy. Blessed with the natural resources of a continent 
 extending through the temperate and into the torrid zone, 
 and fronting on the two great oceans of the globe ; having 
 an active population, well skilled in all the industrial pursuits 
 distinguishing modern civilization ; receiving constant acces- 
 sions of enterprising people from Europe the agricultural 
 and mineral wealth of the country yielding easily their vast
 
 stores to the willing hands of honest labor it was only 
 requisite that, with firm reliance upon the favor of heaven, 
 we should possess that unflagging patriotism which could 
 brave all dangers and suffering in defence of our cherished 
 nationality. A million and more of brave men have volun- 
 teered to prove with their life-blood that we do possess this 
 patriotism. Victory is now perched upon our banners, and 
 in a few months more we may hope to see the end of the 
 most wicked rebellion known among mankind. 
 
 But no amount of resources, however enormous, can be 
 made available for the support of a nation's existence, if 
 waste and extravagance and incompetency be permitted to 
 direct the affairs of state ; for a public man, without skill in 
 his department, robs the people and commits treason to the 
 nation as effectually as if he were in the ranks of the enemy, 
 by occupying a position in which ignorance of duty becomes 
 a crime against the life of his country. 
 
 IV. Necessity for Skill in the Government Unusual Powers En- 
 trusted to the Treasury Department. 
 
 It has now become a personal matter with every man how 
 the government shall be administered, for we shall no longer 
 witness, during this generation at least, that comparative 
 exemption from taxes which has hitherto been the boast of 
 our coimtry. Labor will undoubtedly continue to enjoy 
 among us that preeminent distinction and those higher 
 rewards which have always characterized this country, as 
 compared with those in which the working people have had 
 to maintain an enormous hereditary aristocracy in addition 
 to heavy government taxation. It is not the honest laborer 
 who will be called upon to make up the largest share of our 
 taxation for the national debt, if we are true to ourselves, 
 but rather those who, squandering wealth upon extravagant 
 luxuries, have, by skillful devices fastened themselves on the 
 productive industry of the people through the medium of a 
 false monetary system. In the great revulsion of 1836-7, 
 when the population was only about half of what it is at
 
 present, not less than six hundred millions of dollars in 
 values was destroyed, at the expense of the labor of the 
 country, through false monetary systems ; and if attempts be 
 made to bring back such systems upon the country, at a time 
 when the burthens of a heavy national debt press upon the 
 people, may we not hope that the self-interest, as well as the 
 patriotism of the people, will force those who would specu- 
 late upon their energies to resort to more substantially pro- 
 ductive as well as more honorable occupations? 
 
 Of all departments of the government, that of the Trea- 
 sury becomes henceforth the most important to the produc- 
 tion, accumulation and distribution of wealth by and among 
 all classes throughout the country ; for with the power now 
 in the hands of the Secretary of the Treasury, he can make 
 wages high or low ; he can raise prices or depress them ; and 
 he can advance or put down values of property, in his 
 discretion, by the course which he has it in his power to 
 adopt in funding his loans, issuing his currencies, disposing 
 of his deposits and making his disbursements. So over- 
 whelming is the power which Congress has placed in the 
 hands of the Secretary of the Treasury, that it is only the 
 great personal integrity of the citizen who may fill that 
 situation which can save the country from most serious ap- 
 prehensions as to the future course of our financial affairs. 
 In the early history of our government, the power of the 
 Treasury Department, although much less than it is now, 
 was considered too important to be made independent of the 
 President, and hence the former custom and usage of Con- 
 gress, when authorizing loans, to confer the authority upon 
 the President of the United States, and to require his ap- 
 proval of all the powers entrusted to the Treasury Depart- 
 ment. The first act, changing this course of policy, was that 
 of July 17th, 1861, and in all recent acts of Congress the 
 power of making loans has been taken from the President 
 and given to the Secretary of the Treasu?'y alone. In his 
 present report the Secretary has referred to further powers 
 an unlimited power to receive deposits, and the power, under
 
 8 
 
 the name of "RESERVE," to issue legal tender currency to 
 meet such deposits which would make him even more 
 thoroughly the arbiter of the wages of labor and the prices 
 of property of all descriptions than he is at present, if that 
 were possible. The nature and extent of this deposit system, 
 and reserve of issues to work it, will be explained more fully 
 under another head. It is mentioned here only to illustrate 
 the great and unusual powers already, or proposed to be, 
 conferred upon the Secretary, and which, in the hands of a 
 citizen less distinguished for his private virtues, would be 
 considered more than exceptional. 
 
 V. The Secretary's theories their dangers he is probably deceiv- 
 ing himself with honest intentions. 
 
 Admitting the undoubted integrity of the Secretary of 
 the Treasury, it may yet be possible that he is deceiving 
 himself with false theories of money, currency, banking, 
 taxation, and funding; and this seems the more probable 
 from the unusual mistakes into which, as he partly states in 
 his report, he lias already been led. He mentions the case 
 of internal revenue, which has fallen so far below the esti- 
 mates he was led to entertain last year. Another, which 
 he does not allude to, was the extent to which he could 
 issue fractional currency, and which fell so enormously below 
 his expectations. Again, as to his circulating notes, he still 
 insists that they have not been issued in excess of the wants 
 of the country, and still urges the further issue of three 
 hundred millions of paper money, by the proposed banking 
 system like that existing in the state of New York, advo- 
 cating these as measures which will tend to facilitate the re- 
 resumption of specie payments ! It seems almost useless to 
 remark that these theories of the Secretary are wholly at 
 variance with the teachings of experience, and as wide of 
 the views of intelligent business men as the estimates (over 
 eighty-five millions) given to him of his probable receipts 
 for internal revenue, fell short of the amount (not quite 
 thirty-eight millions) he has received ! He has seen gold
 
 rise steadily in price with hia increased issues. He has 
 witnessed the rise in prices of other property. Yet he avows 
 the most earnest solicitude to keep the currency at par with 
 gold ! Unfortunately for most theories, their practical 
 application seldom meets the expectations of their advocates, 
 and the difference between the Secretary's theory of cur- 
 rency, and the fact, is exactly the current premium on gold, 
 or about, fifty per cent ! It is related of the celebrated John 
 Law, whose paper money theories overwhelmed the French 
 people in frightful calamities, during the last century, that 
 he was himself so thoroughly deceived by his own theories 
 that when he fled from the exasperated populace of Paris, 
 escaping the missiles which smashed the windows of the 
 carriage he had quitted, he was not able to save from his 
 princely estates more than enough to pay his traveling 
 expenses, and became in his exile an object of charity. 
 
 Mr. Chase, while advocating a further issue of three 
 hundred millions of bank notes by his proposed new banks, 
 says of the bank notes now in circulation : 
 
 "Were these [Bank] notes withdrawn from use, it is 
 believed that much of the now very considerable difference 
 between coin and United States notes would disappear." 
 
 This is clearly mistaking a secondary cause for a primary 
 one; and on no subject is the human mind so prone to 
 mistake secondary for primary causes than on this subject 
 of circulating medium. The bank notes in circulation at 
 the time of the breaking out of the rebellion in 1860-61, 
 were about one hundred and fifty millions in the loyal 
 States, and in May last, (1863), they had not exceeded this 
 sum more than twenty millions of dollars ; so that the cir- 
 culating medium, from the bank issues, remained almost 
 uniform. Here is our total paper money, by the latest returns, 
 with what the Secretary proposes to make it :
 
 10 
 
 Legal tender notes in circulation, $400,000,000 
 Bank Note circulation in May, 1863, 168,400,000 
 
 $568,400,000 
 Proposed new bank issues, 300,000,000 
 
 ,400,000 
 
 The bank notes out previous to the rebellion, and still 
 continued in circulation, are payable on demand in lawful 
 money of the United States. JSTo part can remain out be- 
 yond the demand of the people for them, and they would be 
 paid in specie, on demand, if the United States did not 
 furnish legal tender paper to pay them with. It is thus 
 plainly a violent stretch of conjecture to suppose that exces- 
 sive circulation is more likely to arise from the issues of 
 paper money constantly payable on demand, than from 
 those, the payment of which is postponed to an indefinite 
 period. The circulation of bank notes must necessarily be 
 proportioned to the quantity of United States notes requisite 
 to cash those which may be presented for payment. But 
 'the legal tender paper of the United States has no such 
 limitation ; it is the ultimate element, unto which the whole 
 paper circulation of the country resolves itself, whether 
 issued by existing banks or by the new national banks now 
 being established. United States legal tender paper is the 
 great source of all the paper money circulating throughout 
 the country; and by the increase or diminuation of legal 
 tender paper, the increase or decrease of the circulating 
 notes of every bank in the country is governed, by the 
 irresistable laws of trade. The rise in prices occasioned by 
 the circulation of bank notes can only operate as a secondary 
 cause. That rise which is caused from an excess of United 
 States legal tender notes is a radical and primary cause 
 which as it alone has produced or can produce any impor- 
 tant effects on the general circulation of the country can 
 alone create a rise in prices. These principles are so plain
 
 11 
 
 that even the Secretary has admitted them, and contradicted 
 himself, since he expressly states that the influence of the 
 legal tender paper upon prices of commodities is " almost, if 
 not altogether," the same as a circulating medium composed 
 of the precious metals. He gays : "It is an error to suppose 
 that the increase of prices is attributable wholly or in very 
 large measure to this circulation [United States legal tender 
 notes]. Had it been possible to borrow coin enough, and 
 fast enough, for the disbursements of the war, almost if not 
 altogether the same effects on prices would have been 
 wrought." 
 
 If, therefore, "the same effects on prices would have been 
 wrought " by the disbursement of coin, which every person 
 admits would have produced a rise in prices, how is it "an 
 error to suppose that the increase of prices is attributable 
 wholly or in very large measure " to the legal tender notes, 
 which were employed to take the place of coin ? 
 
 Such are the mazes of contradiction in which theories of 
 paper money constantly entangle their devotees. In his 
 theory of banking, and in his plans for enforcing "uniform- 
 ity" in the paper circulation throughout the country, he is 
 equally unfortunate ; but before entering upon these topics, 
 it seems proper to glance at the suggestion which he has 
 made, as to the comparative influence of paper money and 
 coin upon prices, in connection .with the present volume of 
 legal tender notes, which he seems determined to keep in 
 circulation, rather than fund them, he having as it is 
 understood during the past months issued a considerable 
 amount from the reserve, that had been kept in hand to 
 meet the deposits which the people had lodged in the Sub- 
 treasuries. 

 
 13 
 
 VI. Enormous increase of paper money, and rise in prices. The 
 Secretary's plans for increasing it still more by new bank 
 issues, and treasury deposits, with unlimited power of 
 issuing legal tender paper. 
 
 The increase of the circulating medium of the country, 
 within two years, to the enormous extent of four hundred 
 millions (or four hundred and twenty millions), of legal 
 tender paper, could only have been effected by the abandon- 
 ment of the principle of cash payments at the Treasury, 
 which ever since the establishment of the "Sub-treasury 
 system" has been considered the corner stone of American 
 credit. Such an increase could never have existed, but for 
 the rash attempt of the Secretary to extend that "system" 
 to the proceeds of the loans obtained by him, in 1861, from 
 the banks of the three cities, taking from them, in order to 
 effect that object, as stated by himself, in a late public 
 speech in Ohio, one hundred and seventy -five millions in 
 coin, which large sum was recklessly scattered to the four 
 quarters of the globe. The necessary consequence of such 
 an increase of the circulating medium, resulting from the 
 suspension of cash payments at the Treasury, is that general 
 rise in prices which all feel and deplore. 
 
 If instead of so much additional paper money, this country 
 had acquired by supernatural means the same additional 
 currency in coin, within the same period, this influx it is 
 true could not have failed to produce a very great rise in 
 prices of property and wages of labor, although experience 
 teaches that it could not have been as great as that which 
 has been occasioned by the legal tender paper; for if a 
 miracle had produced so much gold and silver, it would 
 have required another miracle to have kept it among us, 
 since the general rise in prices would have brought into the 
 country all descriptions of articles of general consumption, 
 in exchange for our surplus gold and silver, the latter going 
 to foreign countries by the natural rise in bills of exchange 
 on those countries, gold and silver being the currency of the
 
 13 
 
 world, while our legal tender United States notes circulate 
 only among ourselves, having no intrinsic value in other 
 countries. These notes cannot be exported, and the inevita- 
 ble consequence of issuing them in excess, is a rise in the 
 price of gold and silver, or the depreciation of the notes, 
 which is the same thing, the premium on gold being equiva- 
 lent to a corresponding discount on the paper. It is a 
 principle universally recognized, that the augmentation of 
 paper performing the functions of money, in any country, 
 has a tendency to depreciate that paper, and this principle 
 is as uniform in its operation as the law of gravitation. It 
 cannot be denied, for the observation of every man confirms 
 it, that the increase in the prices of almost all articles, which 
 has been steadily going on for more than a year, and is now 
 arriving at so great a height, is caused chiefly by the addition 
 to the circulating medium made by the Secretary, with his 
 issues of legal tender paper, uncontrolled by the obligation 
 of paying them in specie, on demand. After the war of 
 1812, the greatest depreciation of the currency at New York, 
 in October, 1815, was sixteen per cent, discount ; and at 
 Baltimore, in 1816, twenty-three per cent, discount, but the 
 discount at the present time on our government legal tender 
 notes, gold being at fifty per cent premium, is thirty-three 
 per cent. 
 
 Nothing can be more commendable than the professions 
 of the Secretary in favor of keeping the currency near par 
 with specie ; but unfortunately these professions are not new, 
 having been repeated at intervals during the past two years, 
 while his practice is to steadily augment his issues, urging 
 on, at the same time, the organization of new banks to in- 
 crease still further the paper money in circulation, and now 
 advocating in his present report the opening of the Treasury 
 to unlimited deposits, with the right of paying such deposits 
 from his reserve, with legal tender, without limit. No 
 necessity for these unlimited issues seems to exist in the state 
 of the money market, for the absorption of the loans is so 
 great that if he chose to negotiate them at a slight discount
 
 14 
 
 he could supply the wants of the Treasury more rapidly than 
 they accrue. 
 
 VII. The new banking system Its defects and dangers Amend- 
 ments suggested. 
 
 It has already been stated that the new banking system is 
 similar to what is called the free banking system of the 
 State of New York, so far as regards the principal of 
 securing the notes by deposit of public stocks, which was 
 taken from the system adopted in the case of the Bank of 
 England, holding a certain amount of public debt. In many 
 other respects, however, the system proposed at Washington 
 has been altered for the worse. The circulating notes are 
 redeemable only where issued. Security being lodged for 
 the notes, the banks can have little or no security to furnish 
 the government for deposits lodged with them. Under the 
 old "pet bank" system, as stated by Mr. Guthrie, Secretary 
 of the Treasury, in his report of December 1st, 1856, there 
 were balances due "from the late deposit banks;" or, to 
 "secure said balances," to the sum of $1,609,072 32, of which 
 he remarked : "most, if not all, of it is lost by lapse of time 
 and insolvency." Is it judicious to reinaugnrate a pet bank 
 system, offering inducements for such defalcations, at a time 
 when the country is severely taxed for the heavy expen- 
 ditures of the war ? However, it is avowed by the Comp- 
 troller of the Currency, in behalf of the Treasury Depart- 
 ment, that the aim of the government is to wind up existing 
 banks and supersede them by the proposed new ones. If 
 Congress shall continue to sanction the scheme, it is indis- 
 pensible, for the safety of the country, that the law should 
 be amended ; for in the winding up of existing banks and 
 the sale of their stocks of specie, which have inspired con- 
 fidence at home and abroad in the financial strength of the 
 government, we shall be launched upon tempestuous seas if 
 the law remains as it is. The amendments and measures 
 which seem to be required are :
 
 15 
 
 1. To require each bank to procure and hold a certain 
 per centage of coin or bullion upon the amount of its 
 demand liabilities, as a part of the twenty-five per cent, 
 reserve provided for now in the law. 
 
 2. To have the bills redeemed at some one central point, 
 on demand, in lawful money of the United States. "A 
 uniform national currency," issued and redeemable at differ- 
 ent places, is a chimera. To be "uniform" it is indispensable 
 that it should be redeemed at some central points say New 
 York, Boston, and Philadelphia. 
 
 3. That no bank commence business until the declared 
 capital be paid up in full, with the right to increase such 
 capital from time to time. 
 
 4. That the forfeiture of the interest charged shall be the 
 penalty for usury, except in the case of banks located at 
 sea ports, which shall be permitted to collect the rate of 
 interest agreed upon for discounting business paper having 
 not more than ninety days to run. 
 
 5. The stocks pledged for the redemption of circulating 
 notes to be registered at Washington, and prohibiting by 
 law the transfer thereof until such notes be redeemed. When 
 thus registered, the certificates of stock, stamped on their 
 face as not transferable except for redemption of the notes, 
 could safely be returned to the custody of the bank, and 
 thus avoid the lodgment of hundreds of millions of stocks in 
 the hands of a single individual at Washington-. Recent 
 frauds or defalcations in the Treasury prove this to be 
 judicious. 
 
 6. Congress to pass a joint resolution of both Houses, 
 appealing to the State Legislatures to pass enabling acts for 
 the state banks to organize under the United States banking 
 system. 
 
 7. State Banks organizing under the law, to be permitted 
 to retain their own names. An unusual stretch of power has 
 been exercised by the Secretary of the Treasury, for which 
 there seems to be no authority in the law, requiring every 
 bank to be known by "a number." This arbitrary rule is so
 
 10 
 
 destructive to that individuality which gives rise to, and is a 
 reward of, enterprise and skill, that it recalls the edicts of 
 "uniformity" and "conformity" of benighted countries and 
 times. Among savage or barbarous tribes, family names are 
 unknown, and in semi-barbarous countries all that love of 
 individuality which characterizes the progress of advancing 
 civilization, is studiously repressed. It is to be hoped the 
 Secretary will, upon reflection, retrace this step toward bar- 
 barism, recall his numerical edict, and permit each bank to 
 be known by something more expressive than a mere num- 
 ber. Names are much more easily impressed upon the 
 mind than numbers, and as the credit of the proposed banks 
 may be endangered by attempts at fraudulent banking, it 
 would seem desirable to add, or permit the use of, distinctive 
 names, as much confusion must necessarily arise from even 
 a single failure among the new banks having only one name. 
 Uniformity of name already causes much confusion, in cities 
 where more than one national bank has been organized, at 
 the counters of banks, at the post office, among messengers, 
 express carriers, &c. The confounding of names by the 
 public makes "confusion worse confounded" in financial 
 dealings with such banks. In New York, for example, 
 No. 1 is in the extreme southern portion of the city, while 
 No. 2 is some miles in a northerly direction, and people 
 mistaking one for the other are compelled to lose much time 
 in correcting their mistakes, while the officers and employees 
 of the banks themselves require all the patience and good 
 nature of the most "good-natured-man" to get over the 
 annoyances incident to being "known by their numbers." 
 Were the Secretary himself, or the Comptroller of the 
 Currency, or both, stationed at the desk of such a bank for a 
 single business day, we should probably have within twenty- 
 four hours thereafter, an "appeal to Congress" for an act 
 abolishing the designation of the new national banks by 
 "simple numerals," and requiring each to take "a proper 
 name." 
 8. The Treasury Department to exact security of each
 
 17 
 
 bank for the public deposits lodged with it. Why should 
 not a bank give that security which is required of the Assist- 
 ant Treasurers ? It is contrary to every principle of sound 
 government to sanction a system of finance that places the 
 public money in the hands of parties not responsible to the 
 government, without security ; and if it be wise to exact 
 security for the notes circulating in the hands of the people, 
 it is no less so to require security for the money of the people 
 lodged in the hands of the banking associations. 
 
 These measures, promptly adopted by Congress, would 
 render the proposed banking system more palatable than it 
 now is to the people, who see in it a wild inflation and a 
 disastrous monetary revulsion, to come upon them all at no 
 very distant period. The first measure suggested is of vital 
 importance to the national credit, for if all banks organizing 
 under the law are to do so, without holding any coin what- 
 ever, wliich is the case so far and if State Banks, now 
 holding specie, wind up and sell out their coin, preparatory 
 to reorganizing under the law, without any specie it is 
 obvious that the coin will be bought up by commercial 
 establishments for shipment to other countries (except what 
 may be hoarded and that required for duties, to be paid out 
 for interest on the public debt), leaving the whole banking 
 system of the country in the anomalous condition of banking 
 wholly upon paper. In the case of the State banks, which 
 now hold specie, they cannot reorganize under the law with- 
 out forfeiting their charters and selling their coin. Hence, 
 the suggestion (No. 6) that both Houses of Congress, by joint 
 resolution, appeal to the Legislatures of the States to pass 
 enabling acts sanctioning the organization of the State banks 
 under the national law, without compelling them to wind up 
 their affairs and go into liquidation. In the case of banks 
 already organized under the law, would it be sufficient to re- 
 quire them to retain for a certain number of years, or until 
 it had reached a certain per centage of their demand liabili-
 
 18 
 
 ties, the coin paid to them by the government for interest on 
 the public debt held by such banks ? 
 
 VIII. The Secretary's Proposition for an Unlimited Deposit 
 System, to be Worked by Discretionary Issues of Legal 
 Tender Origin of the Legal Tender Scheme Vast 
 Expansion Proposed by Writers in this Country and in 
 England Fate of the Rebel Currency More of the De- 
 ceptions practiced upon the Secretary. 
 
 When Congress limited the right of the Secretary to re- 
 ceive deposits on interest to the extent of one hundred mil- 
 lions, it was stipulated that there should be held in reserve, 
 to meet these deposits when called for, a certain amount of 
 legal tender notes. This reserve, when used in payment of 
 the deposits, becomes, to the extent issued, an addition to the 
 volume of legal tender notes circulating in the hands of the 
 people. How that reserve has been disposed "of, and the 
 practical working of this deposit system hitherto, are matters 
 which need not here be explained. The Secretary now pro- 
 poses to extend this deposit system, in these words : 
 
 "The Secretary perceives no solid reason for retaining the 
 restriction on loans, in this form, to one hundred millions 
 of dollars. It may, as he thinks, be usefully removed. 
 As the advantages of these deposits become better and more 
 generally understood, the loan in this form will doubtless, in 
 the absence of restriction, be largely increased, and the 
 possibility for demands for reimbursements, beyond means 
 to meet them, can be fully provided for by an increase of 
 the existing proportion between deposits and reserve. 
 Such an arrangement, the Secretary inclines to think, would 
 operate beneficially by increasing the amount of currency 
 when unusual stringency may require increase, and re- 
 ducing its amount when returning ease shall allow reduc- 
 tion." (Page 16). He proposes, on page 18, "the repeal 
 of the existing limitation of the deposit loan to one hundred 
 millions of dollars, and the substitution of a provision for a 
 reserve equal in amount to half the deposit." But he
 
 19 
 
 appears to have wholly overlooked the situation in which 
 he would be placed, should the public call for their deposits 
 to an amount exceeding his proposed reserve ; in such a 
 case, he could not stop payment and confess bankruptcy. 
 He would be compelled to make legal tender issues equal to 
 the public demand for the deposits ; and hence it is evident 
 that this proposal to create a deposit system without limit is 
 in fact a proposal to issue more legal tender paper without 
 limit ! 
 
 And, yet, the Secretary appears to be wholly unconscious 
 of the consequences of the measure he proposes, for on page 
 17, he says: "The limit prescribed by law to the issue of 
 United States notes has been reached, and the Secretary 
 thinks it clearly inexpedient to increase the amount." No 
 doubt he speaks the honest convictions of his heart. But 
 others do not think with him. One writer, as late as September, 
 1863, in a pamphlet issued in Philadelphia, advocates un- 
 limited issues. The most extraordinary and persistent efforts 
 have been made to induce the Secretary to go on with the 
 issues of vast volumes of paper money, in one form or 
 other, under the most specious disguises, ever since he 
 entered upon the duties of his office ; and our only hope of 
 being saved from such a ruinous course seems now to be the 
 warning so opportunely given in the collapse of the seven 
 hundred millions of paper money issued by the miserable 
 leaders of the insurrection at Richmond. It is difficult to 
 trace those theories of paper money which have been so 
 persistently urged upon Mr. Chase, and to so great an 
 extent embraced by him, to their most recent sources. 
 They first appeared in France, under the direction of John 
 Law, culminating in disaster and ruin to the French people 
 in the early part of the last century. To Mr. McCulloch, 
 the celebrated English writer on commerce and currency, is 
 supposed to belong the credit or discredit of having revived 
 them in our own time, by expressing an opinion that the 
 unjust influences of a paper currency might be partially if 
 not wholly removed if it were issued by or under authority
 
 20 
 
 of government, and made a legal tender. This opinion 
 appears to have been the cause of a powerful agitation 
 that has sprung up in England and Scotland, extending to 
 this country, if it did not originate here, in favor of unlimited 
 issues of legal tender paper. ME. ALFRED LUTWYCHE, of 
 Birmingham, England, writing in December, 1856, proposed 
 'that the British Government should issue legal tender paper 
 money in exchange for government consols, paying out the 
 consols in exchange for the paper money, without any 
 limitation. He also advocated at that time the unlimited 
 deposit system now proposed by Mr. Chase, giving precisely 
 the same reason for its adoption. But Mr. Lutwyche, in a 
 recent publication, admits that others had thought of the 
 same measures, and urged them, before he proposed them. 
 He says : 
 
 "The author was not aware at the time he published the 
 suggestion that any similar proposition was before the public, 
 but it was pointed out to him by the late G. F. Muntz, that 
 a plan very like it was proposed in a work, entitled " Cur- 
 rency Self-Regulating, " published in 1 855, by Mr. 
 McPhinri of Glasgow, and shortly after Mr. James Harvey 
 of Liverpool, furnished the writer of this with a copy of a 
 pamphlet, published in 1849, by the "Liverpool Currency 
 Reform Association," in which is proposed a plan exactly 
 the same as the one now re-submitted." 
 
 But there is reason to believe that Mr. Erskine Hazard of 
 Philadelphia, preceded the English writers, for in a pamph- 
 let dated 26th September, 1863, he says he proposed, in 1839, 
 that the United States Government should issue legal tender 
 paper money, and communicated his views by letter to Mr. 
 Chase, December 17th, 1861, as well as to Hon. Thaddeus 
 Stevens, chairman of the Finance Committee of the House 
 of Representatives. He says : " I do not know that either 
 of these letters was received, as I have had no communication 
 to that effect from either of the gentlemen to whom they 
 were addressed. The only reason I have to suppose they 
 were received is, that the phrase " when presented in multi-
 
 21 
 
 pies of fifty dollars" which was used in my letter, occurs 
 in the law which was soon after brought before Congress" 
 
 The extraordinary similarity between the plans of Mr. 
 Hazard, and those of the English writers, and of Mr. Chase, 
 is best illustrated in the following quotations from the 
 writings of each : 
 
 Mr. Hazard says: "The funded debt absorbs whatever 
 
 [legal tender notes] would form an excess of circulation 
 
 The surest and safest reliance is the legal tender system 
 extended so as to occupy the whole circulation of the coun- 
 try The [legsil tender] Treasury Notes are to be 
 
 redeemed by bonds, and bonds are to be purchased by the 
 issue of [legal tender] Treasury Notes." 
 
 Mr. Alfred Lutwyche of Birmingham, England, adopts 
 the following defence of this system, proposed by him in 
 1856, from a paper issued by the "Liverpool [England] 
 Currency Reform Association": 
 
 "It may be objected that, under this system, the whole 
 amount of the national [English] funds might be converted 
 into money, and the country be over supplied. The Associa- 
 tion have no such fears, as the demand for money is neces- 
 sarily limited by the ability of employing it profitably, 
 the supply of it may be left to adjust itself to the require- 
 ments of trade." 
 
 In Mr. Chase's Report, December 10th, 1863, he defends 
 this unlimited deposit system in these words: 
 
 " Such an arrangement, the Secretary inclines to think, 
 would operate beneficially by increasing the amount of 
 currency when unusual stringency shall require increase, 
 and reducing its amount when returning ease shall allow 
 reduction." 
 
 The deceptive character of these theories has been so often 
 demonstrated, without convincing their advocates, that we 
 shall owe our escape from their full application by Congress, 
 at the present juncture, most probably to that great illustra- 
 tion of their folly, which is now being enacted in the insur. 
 surgent States, where seven hundred million of dollars of
 
 22 
 
 currency, that was convertible into eight per cent, bonds, has 
 sunk so low that, at last accounts from some of the cities yet 
 held by the rebel chiefs, one dollar in real money would buy 
 twenty dollars of it! Yet that money was convertible! 
 convertible into eight per cent, 'bonds ! Why then has it 
 gone the way of all such currencies? Is it because the 
 Southern people, giving up all expectation of success, are 
 ready for an unconditional surrender, and desire to prove to 
 the world, by the very worthlessness of their money, that 
 they had no heart in the rebellion, drafting their whole able- 
 bodied male population only to be slaughtered by the armies 
 of the Union? Or is it from the law of depreciation, in- 
 herent in paper money issues? "What is it has saved our 
 financial system from heavier depreciation than we have yet 
 experienced, but the limitation of the volume of the issues, 
 the payment of the interest on our bonds in gold, the retain- 
 ing of large stocks of gold in the country, and the collection 
 of duties in gold ? And yet, as if to destroy the last vestige 
 of our safety, the gentleman (Mr. Hazard, of Philadelphia) 
 who seems to have originated the United States legal tender 
 measures, proposes in his pamphlet, already referred to, to 
 dispense with gold altogether as a currency, to cease to exact 
 it for duties, and to cease to pay it for interest on the bonds 
 of the nation. He says, on page 3 : 
 
 " It was a great mistake in Congress to make the interest 
 on the United States loans payable in that medium (gold), 
 for it was done on the popular fallacy, that gold was a letter 
 payment than legal tender notes." On the same page, he 
 suggests how " the use of gold, in payment of interest and 
 duties, could still be avoided to a great extent." 
 
 One of the men of the Revolution, writing at Philadel- 
 phia in 1Y86, remarked : 
 
 " It was horrid to see, and hurtful to recollect, how loose 
 the principles of justice were let by means of the paper 
 
 emissions during the war As to the romantic, 
 
 if not hypocritical tale, that a virtuous people need no gold 
 and silver, and that paper will do as well, requires no other
 
 contradiction than the experience we have seen. Though 
 some well-meaning people may be inclined to view it in this 
 light, it is certain that the sharper always talks this language. 
 There are a set of men who go about making purchases upon 
 credit, and buying estates they have not where withall to pay 
 for ; and having done this, their next step is to fill the news- 
 papers with paragraphs of the scarcity of money and the 
 necessity of a paper emission, then to have it made a legal 
 tender, under the pretence of supporting its credit ; and 
 when out, to depreciate it as fast as they can, get a deal of it 
 for a little price, and cheat their creditors : and this is the 
 concise history of paper money schemes." 
 
 The Secretary says : " Certainly there ought to be no dif- 
 ference in favor of coin, when it is remembered that United 
 States bonds, bearing six, or even five per cent, coin interest, 
 are intrinsically worth unless the theory of national bad 
 faith, or national insolvency is to be admitted more than 
 their amount in coin, and yet such bonds can now be had for 
 their amount in United States notes." 
 
 "What does the Secretary mean? He asserts that the 
 United States bonds are "intrinsically worth" more than their 
 amount in coin, yet they can be had for their amount in 
 United States notes, being thirty-three and a third per cent, 
 (gold being at fifty premium) below their price in coin. 
 Why are the bonds so low ? Because of the excessive issues 
 of legal tender paper. As to intrinsic worth, the bonds 
 cannot be sold for coin, except at a great depreciation nor 
 is any description of property sold for coin and when 
 people in Europe can send their gold here and get fifty per 
 cent, more than its nominal price, in United States bonds, 
 our own people must continue to bear the loss of thirty-three 
 and a third per cent. Every article sells according to the 
 market price, or the supply and demand, not altogether ac- 
 cording to its supposed intrinsic worth. A large quantity of 
 anything, yet to come on the market, naturally tends to keep 
 down the price, irrespective of any apprehension or fear of 
 the final insolvency of parties issuing bonds or obligations.
 
 24 
 
 At one period the bonds of the State of New York, owing 
 to the quantity put on the market, and not to any fear of the 
 State solvency, sold at more than twenty per cent, discount ; 
 and in the case of numerous failures of his new banks, and the 
 offer of a large amount of United States stocks in the market 
 at any one time to redeem the circulating notes of the banks 
 failing, the same rapid fall in the price of United States 
 stocks would naturally take place. 
 
 The ideal term used by Mr. Chase, intrinsic worth, as dis- 
 tinguished from real (money) value, has haunted the brains 
 of all speculators on money from the time of Law down- 
 wards. Now, this term, intrinsic worth, is an abstract idea, 
 as applied to the value or worth of United States bonds, 
 which abstract idea becomes the Secretary's standard of 
 value. Dugald Stewart has demonstrated in his work on the 
 "Elements of the Philosophy of the Human Mind" (Chapter 
 on Abstraction), that there can be no such thing, except 
 in the imagination, as an abstract idea. This is certainly 
 true, as applicable to all money values, therefore an ideal 
 standard of value (intrinsic) is a thing inconceivable ; an 
 actual commodity of known value is required as a stan- 
 dard, distinct from the conception of something valued ; 
 it is this actual commodity (gold and silver) to which, 
 in all cases, must be referred the degrees of value of all 
 transferable property ; government bonds are regarded in 
 the market as mere articles of barter as goods or chat- 
 tels and are bought and sold as such. The price of every 
 article, or its value in exchange, is determined by the 
 proportion which the supply bears to the demand ; if the 
 supply is enlarged while the demand continues the same, 
 the price of the article (United States bonds) must diminish, 
 the depreciation arising, not from the credit of the govern- 
 ment having become less, but from the quantity of govern- 
 ment bonds having become too great.
 
 IX. Deceptive Character of Paper Money The Comptroller vs. 
 The Secretary Ruinous Consequences Morally, Socially and 
 Politically of Paper Money Experience of Former Times. 
 
 Although the Secretary seems inclined to think there is 
 enough of paper money afloat, yet the unlimited deposit 
 system which he advocates, and his great desire to get out 
 the three hundred millions of new bank paper, are evidences 
 of the deceptive nature of his own expressed views of paper 
 money. The flood-gates once opened, where is the deluge 
 to stop ? Already we hear it proposed to repeal the limita- 
 tion of the new bank issues ! to make them also unlimited! 
 Had Mr. Chase read the Report made to him, November 
 28th, 1863, by his Comptroller of the Currency, he would 
 have found the following language on pages 8 and 9 : 
 
 "An increase in the circulating medium inflates prices. 
 High prices require an increased (or increase of) circulation, 
 and so they act and react upon each other, and there ap- 
 pears to be no redundancy of currency, no matter how vast 
 the volume may be, until a collapse takes place, and what 
 was supposed to be real prosperity is shown to be without a 
 substantial foundation." 
 
 But the Secretary says, of his proposed unlimited deposit 
 system, page 16, of his own Report: 
 
 " Such an arrangement, the Secretary inclines to think, 
 would operate beneficially, by increasing the amount of cur- 
 rency when unusual stringency shall require increase, and 
 reducing its amount when returning ease shall allow re- 
 duction." 
 
 It is difficult to understand the Secretary's views of 
 "unusual stringency," and "returning ease," at a time when 
 the circulation of the loyal states has been increased, from 
 one hundred and fifty millions, by the addition of four hun- 
 dred millions of legal tender notes, and he is fostering the 
 further issue of three hundred millions of new bank paper ! 
 with gold at fifty per cent premium ! 
 
 In 1786, when this country had very recently passed
 
 28 
 
 through the ordeal of a great issue of paper money, an able 
 writer said : 
 
 " The evils of paper money have no end. Its uncertain 
 and fluctuating value is constantly awakening or creating 
 new schemes of deceit. Every principle of justice is put to 
 the rack, and the bond of society is dissolved : the suppres- 
 sion therefore of paper money might very properly have 
 been put in the Act for preventing vice and immorality. 
 Paper money is like dram drinking, it relieves for the mo- 
 ment by a deceitful sensation, but gradually diminishes the 
 natural heat, and leaves the body worse than it found it. 
 Were not this the case, and could money be made of paper 
 at pleasure, every Sovereign in Europe would be as rich as 
 he pleased. But the truth is, that it is a bubble, and the 
 attempt vanity. Nature has provided the proper materials 
 for money, gold and silver, and any attempt of ours to rival 
 her is ridiculous." 
 
 "Money when considered as the fruit of many years' 
 industry, as the reward of labor, sweat and toil ; as the 
 widow's dowry and the children's portion, and as the means 
 of procuring the necessaries and alleviating the afflictions of 
 life, and making old age scene of rest, has something in it 
 sacred, that is not to be sported with, or trusted to the airy 
 bubble of paper currency." 
 
 "As to the assumed authority of any Assembly in making 
 paper money, or paper of any kind, a legal tender, or in 
 other words a compulsive payment, it is a most pre-sumpt- 
 uous attempt at arbitrary power. There can be no such 
 power in a republican government. The people have no 
 freedom, and property no security where this practice can 
 be acted ; and the committee who shall bring in a report for 
 this purpose, or the member who moves for it, and he who 
 seconds it, merit impeachment." 
 
 The revolutionary tendencies of a debased currency of 
 coined money, and of paper money, are established by the 
 history of all nations. In our own history, there have been 
 tremendous struggles of the people to get rid of the authors
 
 27 
 
 and advocates of paper money theories, whether of bank 
 paper or government paper. The same thing has been wit- 
 nessed in several of the nations of Europe. The revolution- 
 ary era of France had its dawn in the vast paper money 
 schemes of Law. The debasing of the coined money, which 
 is the same as issuing paper money, is stated to have been 
 "one of the principal means of finally overthrowing the 
 power of the Stewart family in Ireland," of which LelancPs 
 history gives the following account, so closely resembling the 
 operations with paper money in our own time: "Brass and 
 copper of the basest kind, old cannon, broken bells, house- 
 hold utensils were assiduously collected; and from every 
 pound weight of such vile materials, valued at four pence, 
 pieces were coined and circulated to the amount of five 
 pounds nominal value. By the first proclamation they were 
 made current in all payments to and from the king, and the 
 subjecti of the realm, except in duties on the importation of 
 foreign goods, money left in trust, or due by mortgage, bills 
 or bonds ; and James promised that when the money should 
 be decried, he would receive it in all payments or make full 
 satisfaction in gold and silver. The nominal value was 
 afterwards raised by subsequent proclamations, the original 
 restrictions removed, and this base money was ordered to be 
 received in all kinds of payments. As brass and copper 
 grew scarce it was made of still viler materials, of tin 
 and pewter, and old debts of one thousand pounds were 
 discharged by pieces of vile metal, amounting to thirty 
 shillings in intrinsic value." 
 
 One of the evils of paper money, it has been remarked, 18, 
 that it turns nearly all classes of the people into speculators 
 and gamblers. In 1780, when the repeal of legal tender 
 laws was up in the Assembly of Pennsylvania, Col. Bayard, 
 the Speaker, being called upon to give the casting vote, 
 said: "I give my vote for the repeal from a consciousness of 
 justice ; the tender laws operate to establish iniquity by law." 
 But in 1863, a writer in Pennsylvania argues that "on the 
 exclusive legal tender system, the great difficulty will be to
 
 98 
 
 keep up a national debt, not to pay it off." Evidently, lie 
 does not read the newspapers, else he would have known 
 the fate of the rebel paper money. 
 
 In recapitulating his measures, the Secretary of the 
 Treasury says : 
 
 "In these several ways may even such great evils as are 
 brought upon us by rebellion be transmuted, by a wise 
 alchemy, into various forms of utility. The Secretary has 
 endeavored to use this alchemy, with what success the 
 country will judge when time and trial shall have applied to 
 his work their unfailing tests." 
 
 Unfortunately, of his excessive issues of paper money, 
 which were so uncalled for, and which could have been 
 avoided had he put his stocks on the market, the following, 
 from an old writer, will enable him to anticipate the judg- 
 ment of his country : 
 
 "I remember a German farmer expressing as much in a 
 few words as the whole subject requires, 'Money is money 
 and paper is paper.' All the invention of man cannot make 
 it otherwise. The aichemyst may cease his labors, and the 
 hunter after the philosopher's stone g^ to rest, if paper can 
 be metamorphosed into gold and silver, or made to answer 
 the same purpose in all cases." 
 
 The Secretary has referred to the rise in railroad bonds 
 from increased income, and in cotton from deficient supply. 
 He overlooks the gambling in stocks of all kinds, prices 
 rising one hundred or two hundred per cent., without any 
 increased income; the numbers of people drawn from 
 industrial pursuits, to become speculators in stocks, gold, 
 produce, &c. reminding one of that historical caricature, 
 produced at Paris in the time of Law, having in the centre 
 a portrait of Lord Quincampoix* with a motto, "ant Caesar, 
 aut nihil" A crown of peacock's feathers and thistles, 
 presented by folly, bore the inscription. "I am the sport of 
 
 The great speculative transactions in funds and property at that period 
 took place in a public street, the Rvt Quincampoix.
 
 29 
 
 the wise and the foolish." Beneath the portrait was a 
 smoking cauldron, which an attendant devil kept boiling 
 with new supplies of paper; an "Operator" stood near, 
 throwing handsfull of gold and silver into the cauldron, 
 which melted and sunk to the bottom, and nothing returned 
 but new scraps of paper; despair stood by, ready to seize the 
 unfortunate wretch, as soon as he had completed his insane 
 operation. 
 
 Our large cities are witnessing the same phases of insanity, 
 from our excessive issues of paper money ; but we have the 
 satisfaction to know that Mr. Chase may, if he pleases, by a 
 timely exercise of patriotism and wisdom, by calling in and 
 reducing his paper money issues means being at his com- 
 mand, for effecting that object reinstate himself in the 
 affections of the people and become more illustrious in the 
 best sense of that word, than any alchemyst known to 
 history. His memory will thus escape that ambiguity 
 which hangs around the character of the alchemyst of the 
 middle ages, thus hinted at by Horsley : 
 
 "Time was when I know not what mystical meanings 
 were drawn by a certain cabalistic alchemy from the sim- 
 plest expressions of holy writ." 
 
 X. Financial Measures of the Secretary Causes of the Failure of 
 Some and the Success of Others Aid of the Banks, and Suc- 
 cess of their United Efforts Attempt to Make War on th 
 Old Banks Failure of the Attempt False Friends of th 
 Administration National Banking System Originated by 
 the Sound Financial Policy of the City Banks How the 
 New System may be Made Successful. 
 
 Among the assumptions of the Secretary, not the least re- 
 markable is that which prefaces the review of his successful 
 measures, attributing to the Loan Act and National Bank 
 Act, that revival of public credit which, by his own pre- 
 ceding confessions, was mainly owing to the success of the 
 army and navy in suppressing the rebellion. He confesses 
 that the want of this latter success had depressed the public
 
 30 
 
 credit, and as no new national banks had been organized at 
 the time the public credit revived, it is evidently a great 
 error to attribute that revival to the creation of banks which 
 had no existence at the time the event occurred. It was the 
 want of military success, the mismanagement of the War 
 and other Departments, with the proposed deluge of legal 
 tender paper money, which depressed public credit so fear- 
 fully 'in 1861-62. Shameful incompetency, with all the self- 
 conceit of ignorance, distinguished the early efforts of many 
 of the officers of the government, immediately upon the ac- 
 cession of the administration, in 1861. In the finances there 
 was total paralysis, until the New York banks and merchants 
 took hold of the negotiation of the loans, which they did as 
 soon as the administration came into power, uniting the 
 banks and capitalists of Boston and Philadelphia with those 
 of New York in harmonious support of the government, 
 until the Secretary, having secured one hundred and seventy 
 millions of coin, not having the skill to organize a banking 
 system in the Sub-Treasuries upon a reserve so vast equal- 
 ling that of the greatest banking institution in the world 
 by his policy broke the banks, suspended cash payments at 
 the Treasury, and then proposed to supersede the existing 
 banks with new ones, organized under his own immediate 
 supervision, and subject to the Treasury Department. 
 
 And I will here say, in justice to the officers of the banks 
 of New York, Philadelphia and Boston, that the union of 
 these banks, and the inception and completion of the ar- 
 rangements for making the loans to government, all originated 
 with the bank officers. Mr. Chase was in no way the author 
 of the movement. All he had to do was to come to New 
 York and meet the representatives of the banks, and sign the 
 requisite papers completing the loans. All that he did 
 was to insist upon drawing their specie from them for the 
 proceeds of the loans, which the most experienced bank 
 officers told him must result in disaster and in the suspension 
 of specie payments. This measure, so disastrous to all con- 
 cerned, and the new banking scheme, altered from the New
 
 81 
 
 York system, appear to be the only financial measures 
 originated by the Secretary, which stand forth in bold relief 
 before the country. 
 
 In his internal revenue system he has failed as disastrously 
 as he has in his currency theories. He was urged by mer- 
 chants of New York, Boston, &c., to adopt an internal 
 revenue tax upon sales of merchandise, calculated to give 
 him one hundred and fifty millions a year, but instead of 
 that we have a complicated system, employing an army of 
 revenue officers, with one of the most expensive systems of 
 assessorships, collection districts, &c., &c., that ever oppressed 
 a tax-ridden people. That ridiculous and absurd "job" of 
 engraving revenue stamps of the various sums for each and 
 every kind of document, at a heavy expense to the 
 country, prohibiting the use of any but the stamp designated 
 for the document upon which it was made to be applied, is 
 a fair illustration of that shameful ignorance governing our 
 national affairs at the outset of our troubles. But the failure 
 of his internal revenue is unquestionably owing more to the 
 imperfect execution of the law than the failure of the re- 
 sources of the people to respond to its requirements. Why 
 is not the law enforced ? 
 
 As to what he says of " vigor in the prosecution of the 
 war," and " economy in every branch of expenditure," whose 
 fault is it that they have not been secured ? Is he not one 
 of the government, responsible for "vigor" as well as 
 " economy ?" It is not possible for one member of a cabinet 
 to escape the responsibility belonging to an administration 
 of which he continues a member. If affairs go wrong, he 
 should resign, if he desires to escape censure for the mis- 
 management of his colleagues. He says : " Nor is rashness 
 in war vigor." To whom this alludes it is difficult to con- 
 jecture. 
 
 As to the " direct contributions" required from the people, 
 they can only be secured by taxation, and if the customs are 
 likely to fail in yielding enough to pay the interest on the 
 debt, the internal taxes can, by legislation, be made payable 
 in gold or its equivalent.
 
 32 
 
 The great increase of debt which he deplores was easily 
 avoided, to a considerable extent, had he chosen to refrain 
 from paper issues, so that prices would have been kept down. 
 Instead of twenty-two hundred millions, on the 30th of June, 
 1865, as it probably will be, he might have kept it at fifteen 
 hundred millions by that date had he refrained from his ex- 
 cessive issues of paper and put his loans on the market. 
 But having broken the banks, there was not skill enough in 
 his department to make the specie of the country available 
 for a sound currency ; and now, much of our safety in the 
 future depends upon the state of the crops and of the con- 
 tinuance of peace in Europe, for we are almost at the mercy 
 of the banks of England and France with our inflated paper 
 system, the premium on gold liable to be urged up to high 
 rates by the application of an increase in the rates of interest 
 in England and France, or favorable crops in Europe drain- 
 ing us of coin. The export of our coin continues in large 
 volume, under that boasted " uniform currency" which the 
 Secretary lauds so highly, with gold at fifty per cent, pre- 
 mium, and " green backs" quoted at thirty-three discount at 
 San Francisco. In fact, we have had no "uniform currency" 
 since his policy compelled the suspension of the banks. 
 
 The pressing urgent necessity of "taxation" is well proved 
 by what took place in 1861, when a Committee of Bank 
 Officers, then assembled at Washington, urged Congress to 
 pass a joint resolution in favor of adequate taxation. That 
 resolution revived public confidence instantly. 
 
 The "sacred obligation that not one man should be wasted 
 and not one dollar misapplied," is not generally felt as it 
 should be, it is to be feared, especially among those who 
 have the making of laws governing expenditures. But the 
 Secretary does well to remind his readers of it. There are 
 other "obligations," however, which seem to sit lightly upon 
 our public men, and among these is one which Tie might 
 have discharged by at least an acknowledgment of the servi- 
 ces rendered to him and the goverment by the Banks of the
 
 three cities, when, unable to move hand or foot, the govern- 
 ment was exclaiming with the ancient Eoman, 
 
 "Help me Cassius, or I sink!" 
 
 % 
 
 he came to New York, was received so patriotically and so 
 liberally supported. That dark hour of the country's history 
 had only one parallel. That was in 1780, in the spring- 
 memorable for the accumulated misfortunes which threaten- 
 ed to overwhelm the young republic, or to strangle it in its 
 infancy. Charleston, the key to the Carolinas, had fallen into 
 the hands of the British. There was no money, very little 
 credit, and much apprehension as to the future, especially 
 in the army, where only the fortitude of Washington, his 
 pure patriotism, and unsullied character, with the holiness 
 of their country's cause, restrained the men from throwing 
 down their arms in despair ! It was the gloomy midnight 
 hour of our revolutionary struggle. Washington wrote to 
 the Legislature of Pennsylvania, which happened to convene 
 at an unusual time the month of May at Philadelphia, 
 the Congress not being in session. Washington's letter in- 
 formed the Assembly, in substance, that notwithstanding 
 the confidence he felt in the attachment of the army to the 
 cause of the country, the distress which existed throughout 
 the ranks for the want of every thing which men could be 
 destitute of, had become so overwhelming, and the appear- 
 ances of mutiny and discontent were so strongly marked on 
 the countenance of the army that he dreaded the event of 
 every hour. This letter was followed by despairing silence 
 in the House. J$o one spoke for some time. At length one 
 member rose. " If," said he, " the account in that letter is a 
 true state of things, and we are in the situation there repre- 
 sented, it appears to me in vain to contend the matter any 
 longer. We may as well give up at first as last." 
 
 Another member, with more courage, observed : " Well, 
 well, do'nt let the House despair, if things are not so well as 
 we wish, we must endeavor to make them better." The 
 House adjourned without doing any thing farther. What 
 
 3
 
 34: 
 
 conld they do? Members had come to the session with 
 petitions from the people, asking to be released from pay- 
 ment of taxes. No money in the treasury, the paper money 
 depreciated so low as to be almost worthless. In fact, the 
 public credit was wholly unequal to the awful crisis. The 
 taking of Charleston let loose a large British force to return 
 and join that at New York. Washington's army needed ten 
 thousand more men at least, besides the actual necessaries 
 of life. Happily, capitalists were found in Philadelphia 
 equal to the emergency. Blair McClenaghan, an energetic 
 merchant, took a subscription list, called to his aid the 
 celebrated Robert Morris, each subscribing " two hundred 
 pounds in hard money," the paper money had nearly gone 
 under, and they raised in all "four hundred pounds hard 
 money, and one hundred and one thousand three hundred 
 and sixty pounds continental," for bounties to promote re- 
 cruiting. A general meeting of citizens was called. A 
 bank was formed. By means of this bank the army was sup- 
 plied through the campaign, was recruited and enabled to 
 keep its ground. Robert Morris was appointed superinten- 
 dent of the finances and perfected the organization of the 
 bank as a national institution the celebrated Bank of 
 North America. Congress, when it met, did not have to 
 receive and pass into law the request of a Secretary of the 
 Treasury to supersede that Bank with new ones, upon a 
 "pet system" of his own. No, on the contrary, acting on 
 principles of patriotism and the public good, they cherished 
 an institution which had rendered such signal services to 
 Washington and his army. Pennsylvania had found men to 
 organize that bank, who were an honor to the state, and 
 whose services the representatives of the whole Union were 
 proud to acknowledge. That was in 1780. How like the 
 history of those gloomy days of 1861, when members of the 
 government at Washington, stood with their trunks packed, 
 uncertain at what moment the rebel horde might take the 
 capital and send them on their travels, they knew not whith- 
 er. Without money, or credit without an army or navy
 
 35 
 
 treason on every hand not knowing whom to trust the 
 merchants and bankers of the interior paralyzed one great 
 western banker, since elevated to high position in the treas- 
 ury department, gathering in the gold into his coffers and re- 
 fusing to exercise his ability to aid the government. Then, 
 in that trying hour, the merchants and bankers of Kew York 
 came forward, with their aid and council, joined by those of 
 Boston and Philadelphia, and dispelled the gloom! The 
 country was saved! And the Secretary of the Treasury was 
 rescued, individually and officially, as no Finance Minister 
 was ever rescued before. But the service appears to have 
 not been worth an acknowledgment. !^ay, the destruction 
 of the very institutions which aided him and rescued the 
 country from rebellion and anarchy, has been, ever since, 
 apparently, his settled policy; for he even now in his present 
 report, asks that they be absolutely prohibited from having 
 any right to issue circulating notes, as provided in the 
 national banking law, in exchange for stocks deposited at 
 Washington, proving that he contemplates adding (new) bank 
 currency to (old) bank currency, and augmenting the inflation 
 of paper money. He also declares that the relinquishment of 
 their names has been made by himself a condition of their 
 reorganizing under his national law, while his Comptroller 
 of the currency confesses that it is proposed to drive out or 
 supersede all existing banks by the new ones. 
 
 Why this war upon the old banks ? The people do not 
 respond to it. It is absolutely restricted to the halls of the 
 Treasury Department. Every effort to discredit the existing 
 banks all attempts to excite prejudice against them by 
 charging them with sympathy with the rebels intimations 
 of partizan hostility to the administration all these so per- 
 sistently brought forward by the paper money speculators, 
 who swarm around the Treasury Department like vermin 
 on the banks of the Kile, have failed to make any impression 
 upon the public miud. In fact the effort to get up a parti- 
 zan feeling against the old banks is a failure. It is worse 
 than a failure, it has proved to be a mistake ! It was too
 
 86 
 
 transparent, too childish, to be successful ! If there was any 
 cause for the withdrawal of their circulation, in order to give 
 the government the whole field, they were and are prepared 
 to second the proposition. No bank or bank officer has 
 petitioned Congress against it. And as to the proposed 
 national law, it is opposed mainly because of its affording 
 opportunities for fraudulent banking because its tendency, 
 unless amended as proposed, must be to supersede the 
 sound systems of banking that were growing up in the 
 principal cities, particularly in New York, with that un- 
 steady, precarious and dangerous system which had so long 
 oppressed and plundered our people, especially in the new 
 states. It was this successful sound banking in the cities 
 that has rendered the proposed national plan at all possible. 
 Every state bank in the loyal states would to-morrow, mainly 
 from motives of patriotism, reorganize under the proposed 
 national law, if the state government would permit it to do so 
 by an enabling act, and if the national law were amended as 
 proposed, and so as to secure the proper individuality of the 
 banks by name. There is no desire among any persons con- 
 nected with existing banks, to deprive the government of one 
 dollar of circulation which may be obtained for relief of the 
 country by such bank reorganizing under the national law. 
 It is true that opinions differ as to the practical benefits to 
 result from the new law. But it may safely be asserted as 
 the opinion of all the most experienced business men in all 
 parts of the country, that the establishment of banks of mere 
 circulation, is an injury, not a benefit, to the country ; and 
 that whatever advantage, from selling stock to form the 
 basis of such circulation, may result to the government 
 from organizing and establishing such banks, is more than 
 lost by the debasing of the currency and the reduction of our 
 ability to meet taxation, arising from the increased use of 
 paper money issued by such a bank. 
 
 It is most assuredly a great advantage, if by adopting any 
 measure the stocks of the government may be made thereby 
 to rise in value. But if such measure be founded in a circu-
 
 37 
 
 lating medium radically vitiated, tending to raise the 
 nominal, not the real, value of the funds, it is no longer en- 
 titled to approbation. The Secretary boasts of creating a 
 home market for our stocks by his measures, but really he 
 has, by his issues depreciating the currency, made a premium 
 of fifty per cent, on the money of the foreigner being gold 
 sent here from Europe for investment in our securities ; and 
 whenever we resume specie payments this loss to our own 
 people will become more fully apparent to them than it is 
 now, the present premium on gold making the interest ob- 
 tained for loans appear larger than it will when that premium 
 ceases. 
 
 It has already been explained how the new national system 
 of banking may be made safe and^successful, and if the so- 
 called friends of the administration in the State Legislatures 
 are real, not false friends, they now have it in their power to 
 prove it by passing enabling acts to allow the old banks to 
 reorganise under the new system. Nay, more, if the ad- 
 ministration, particularly the gentlemen in the Treasury De- 
 partment, are really disposed to prove that they do not seek 
 to add to the paper money circulation of the country by the 
 creation of the new banks ; if all they want is to have the 
 national government secure the sale of a sufficient amount 
 of stock to form the basis of, or security for, the whole paper 
 money circulation of the country, they now have the oppor- 
 tunity to establish the fact beyond all cavil by favoring en- 
 abling acts in the State Legislatures, and such kindred 
 legislation by Congress, as before explained, as will secure a 
 safe and practicable national system of banking. 
 
 The true source of aid to the government is to be found in 
 the accumulation of wealth by the people in the savings of 
 labor in economy by individuals, by families, communities, 
 and in the investment of such savings in the national loans. 
 There can be, there is no other source of national wealth. 
 Any system of "alchemy" which seeks other modes of 
 procuring wealth, is as delusive as the schemes of the 
 ancient alchemysts, sorcerers and astrologers, and is
 
 to be classed with the tricks of the magicians. Benjamin 
 Franklin expressed the whole secret of individual and 
 national wealth in the homely phrase "save and have!" 
 But people cannot save without a currency representing, at 
 par with, or convertable into, the precious metals. That is 
 impossible. All history proves this. The nation that relies 
 upon a depreciated currency becomes debtor to every other 
 nation and sinks into poverty and despicable weakness. 
 True, a paper money may be so restricted as to be as valua- 
 ble as gold, for it is in one sense the quantity not the charac- 
 ter of a paper money which governs its value as compared 
 with the precious metals and the currencies of other coun- 
 tries. Mr. Chase has depreciated our currency by the 
 excessive quantity he has issued, of legal tender paper 
 money, upon the mistaken theory that by making money 
 excessively abundant, the people would be forced to invest 
 it in the government bonds of long date. Unfortunately for 
 this theory, the very excess of the issues tended to weaken 
 public confidence in the financial measures of the depart- 
 ment, and also made it more profitable to use the money to 
 speculate with, during the rise in prices created by each 
 sucessive issue. Hence the tardiness with which the public 
 entered into the plans of the Secretary for taking up his 
 long loans; and the negotiation only became successful at 
 last from the overwhelming victories of the army, presaging 
 a speedy termination to the rebellion. As early as May, 
 1861, he was earnestly solicited to have a "systematic and 
 thorough appeal" made throughout the Union States, by 
 Postmasters, newspapers, &c., in favor of subscriptions to 
 the national loans, and with a view to avoid the excessive 
 issues of paper money ; but he saw fit to confer upon certain 
 favored individuals this important duty, rewarding them 
 with lucrative commissions, which, however small on each 
 hundred dollars sold, must have already amounted to 
 immense sums, in consequence of the many millions to 
 which the loan has been sold. 
 Notwithstanding the vein of self-laudation in the Report,
 
 39 
 
 leading one to infer that he has been enabled to supply all 
 the financial resources needed by government under the 
 legislation sought \yy him and passed by Congress, he was 
 again compelled to apply to the banks of the three cities, as 
 late as September, 1863 the very banks which his "national 
 banking system," as explained by his Comptroller of the 
 Currency, is intended to crush out of existence. Again those 
 banks responded heartily to his call, and once more saved 
 him from bankruptcy or ruinous delays in making the pay- 
 ments of his department. Yet, in the Eeport which he pre- 
 sented to Congress, at the opening of the session in Decem- 
 ber, lie again brought forward the project of " discrimina- 
 tion" against these banks, and in "favor of the national 
 associations," as if he had determined to drive the former 
 out of existence, or so load them with taxation, in addition 
 to the taxes already levied from them, that they must either 
 wind up or go into the new system, alleging that the notes 
 of the new banks are " capable, at no distant period, of 
 being made equal to, and convertible into coin," but with- 
 holding the fact, that the notes of the State banks were re- 
 deemed in coin until he, instead of drawing upon them for 
 his disbursements, and employing them as agents to make 
 his disbursements, as the law provided, drained them of their 
 specie. Had he, before he drew the coin from the banks, 
 drawn upon them direct for the proceeds of the loans taken 
 by them, and not transferred the coin of the banks to the 
 Sub-Treasury, the coin would have remained in the banks as 
 heretofore to constitute the foundation of the credit system of 
 the whole country, individual as well as national. It seems 
 almost needless to remark, that the drafts of the Treasury on 
 the banks, as all business men know, were susceptible ot 
 being transferred from hand to hand, like other instruments 
 of credit : they would have been a transferable and trans- 
 missible medium, circulating as a representative of value, 
 available for all payments of the government, whether of 
 large or small amounts. By this plain method he would 
 have saved the employment of the precious metals, and a
 
 40 
 
 Very cheap instrument of payment would have been substi- 
 tuted for a very expensive one. These drafts, being repre- 
 sentatives of coin, would have served all the purposes of coin 
 in the ramifications of our internal trade and commerce, and 
 the final payment of them, as experience in banking proves, 
 could have been adjusted at the Bank Clearing Houses with- 
 out the removal of the coin from the banks. Nay, more, 
 they would have been converted into cash on presentation at 
 the banks, and on the faith of this convertibility they would 
 have passed as cash. The public had full confidence in the 
 banks, and would not have made a run upon them for gold, 
 knowing that the paper of the banks and the drafts upon 
 them were secured by ample funds. There would also have 
 been another immense advantage gained by this method of 
 using drafts for government payments instead of specie, in 
 the difference between a quick and a slow circulation, which 
 Mr. Chase does not seem to have thought of. "The quantity 
 of money necessary for performing a certain number of ex- 
 changes in a certain time may be considered nearly as in the 
 inverse ratio of its velocity of circulation ; whatever, there- 
 fore, tends to accelerate the general rate contributes to econo- 
 mise the necessary quantity :" so that if from any cause the 
 rate of circulation be impeded, as it is in the case of em- 
 ploying and transporting the precious metals, a much larger 
 quantity of money is required. If we take the single case 
 of a city, as London or New York, it would be utterly im- 
 possible to transact the monetary affairs of either, at their 
 present volume, if coin were exclusively used. There would 
 not be room enough in the public streets for the wagons, 
 carts and drays that would be employed in carrying the coin 
 through the city, to and between the banks, railway stations, 
 steamboat landings, and the offices and counting houses of 
 the merchants, bankers and traders. Yet it was upon this 
 system of carting and hauling specie for his payments that 
 the Secretary commenced to manage his department, and 
 continued for several months to manage it, at the breaking 
 out of the rebellion. Hence the draining of the banks, to
 
 the extent of one hundred and seventy millions of coin by 
 the Secretary. It is impossible, therefore, that the new sys- 
 tem of banking can be successful, unless it is so managed, 
 and so directed by the legislation of Congress, as to bring us 
 back nearer to the specie standard, and this is only to be 
 done by contracting the paper issues, the revulsion that 
 must ensue will not be so severe, if the Secretary so guides 
 it as to make it gradual, as is generally apprehended ; for we 
 have already witnessed a fall in gold from seventy-two per 
 cent, premium to twenty-one per cent, within a few months 
 less than a year without serious injury to the general public, 
 the principal sufferers being those immediately interested in 
 speculations in that metal. 
 
 XI. The Financial Revulsion to come from excessive issues of 
 Paper Money. Can it be averted or its severity mitigated? 
 Suggestions for mitigating it. 
 
 That an over issue, or an excessive issue, of paper money 
 produces a financial revulsion, sooner or later, is a well 
 established law of finance. So far as the excessive issues 
 of the paper money of government may cause such a revul- 
 sion, the apology of imperative necessity is the only real 
 defence that Mr. Chase has to offer, and it is his best de- 
 fence, because it is patent to every man that the issues have 
 been excessive and the arguments of the Secretary to the 
 contrary are contradicted by the facts. The Department 
 had not sufficient skill in finance to organize the Sub-treas- 
 ary to meet the crisis. So far as the paper money of the 
 banks is concerned, that has remained nearly uniform, but 
 it would be a great benefit to the country if by any lawful 
 means the creation of more banks of issue could be pre- 
 vented. Banks of issue are not required. There is really 
 no necessity for having another one established. There are 
 already too many ; for the influence to be exerted by 
 creating more bank note currency must be an extension of 
 the inflation of paper money, and the consequent increase of 
 ruin and disaster and the increase of pauperism and
 
 42 
 
 crime which will accompany or flow from the terrible 
 revulsion that must ensue. To avert this revulsion, or to 
 mitigate its severity, would seem to be greatly within the 
 power of the Secretary. The first mode is to use his influ- 
 ence, and [procure the assistance of Congress and the state 
 legislatures, in favor of organizing all the state banks, with 
 their present names and existing assets, under the general 
 law, with specie reserves, and under the regulations already 
 suggested. These banks could then transform themselves 
 into National Institutions, withdrawing their present circu- 
 lation and replacing it with that secured by United States 
 stocks. By this course we may avoid a repetition of that 
 deplorable rivalry which was witnessed in the case of the 
 last United States Bank, of Pennsylvania, and the "Pet 
 Banks," which culminated in the disastrous revulsion of 1837. 
 In the course which we are now taking, by organizing 
 new national banks to add to the circulating medium, we 
 are only impoverishing ourselves, exactly as every country 
 that relies upon paper money in excess, impoverishes itself to 
 the enriching of the countries having a currency regulated 
 by the precious metals. We have seen this already in the 
 case of England and France, which are steadily draining us 
 of the precious metals, and thus undermining the foundation 
 of our whole financial superstructure. People say: "no one 
 can eat gold let it go we can get along very well without 
 it we can do with paper." True, we cannot eat gold, but 
 the people we send our gold to, principally for luxuries, are 
 able with that gold to supply themselves with wealth, or the 
 elements of wealth; and as to our getting on very well 
 without gold, we have seen the consequences of such asser- 
 tions in the ruin of the rebel finances at Eichmond. Again, 
 we have very recently found ourselves disappointed in the 
 volume of our exports, the late plentiful harvests in Europe 
 having reduced the exchangeable value of our grain, and if 
 another similar harvest should be enjoyed by Europe next 
 season, coincident with a falling off in our own from the 
 withdrawal of so many of our people from productive indus-
 
 43 
 
 try, what is to be the consequence of the drain of the pre- 
 cious metals lasting so long ? To stop this drain as soon as 
 possible should be the earnest aim of the government. It 
 can be stopped to some extent by getting forward the pro- 
 ductions of the reclaimed states, especially the cotton and 
 sugar. If we can secure this year only one million bales of 
 cotton, leaving out of count the sugar of Louisiana, that 
 quantity at present prices would equal in value the four 
 millions of bales we have been accustomed to export in 
 former years, from the crop of a single year. Hence the 
 great importance of. moving vigorously with our military 
 and naval force in the occupation of as large a part of the 
 cotton growing region as possible. 
 
 Another source of internal development is the encourage- 
 ment of immigration : our recovery from the revulsion of 
 1837, was greatly owing to this element of industrial power ; 
 and so far as government can legitimately extend its aid, it 
 should do so, to encourage the emigration thither of the 
 surplus labor of other countries. 
 
 But. it is upon the course of the Secretary that we must 
 rely in a great degree for averting or mitigating the financial 
 revulsion for which his excessive issues of paper money are 
 preparing the way. By contracting or holding back his paper 
 issues, as he receives them in payment for long bonds, he can 
 divert the whole savings of the country from all other classes 
 of permanent investments into the national loan, while, with 
 his interest-bearing notes which ought not to have been 
 made a legal tender he may absorb a considerable portion 
 of the floating capital, if not the whole of it. In this way 
 the people may be prevented from that resort to the credit 
 system so fruitful of revulsion ; and it would be, in the pre- 
 sent state of the country, a great favor to the people to pre- 
 vent abuses of the credit system. Every man should now 
 try to get out of debt, and keep out of it. By doing so he 
 confers upon the nation the power of using all the available 
 credits for the war. 
 
 As to the interest-bearing legal tender notes, it is extremely
 
 44 
 
 desirable that they should be introduced upon the market in 
 small quantities, and at the longest possible intervals ; for I 
 apprehend that the making of them a legal tender, with their 
 introduction in large volume at any one time, will produce 
 the same effects that would follow the addition of a similar 
 quantity of notes not bearing interest. For some months 
 after their issue they will undoubtedly be used as money. 
 This would have been avoided had they not been made a 
 legal tender, and I trust that Congress will consider the pro- 
 priety of abolishing this characteristic as regards the amount 
 not yet issued ; for, in case of a great demand for money, 
 they are liable to be circulated at their face value, regardless 
 of the interest upon them. In France, when the assignats 
 were discredited, resort was had to the issue of mandats, 
 bearing interest, in the hope that these latter would be with- 
 held from circulation for the sake of the interest, but that 
 hope failed, and the public used the mandats as a circulating 
 money, thus hastening the final catastrophe which overtook 
 the finances of the nation. 
 
 If it be deemed advisable not to exact the internal revenues 
 in coin, now that the interest payable in coin upon the public 
 debt approaches the sum total receivable in coin for duties 
 on imports, it may be expedient to provide for paying the 
 interest in legal tender paper upon loans hereafter authorized, 
 although it would be more conducive to a high state of public 
 credit to exact all the revenues in coin, or its equivalent, and 
 pay the interest on all kinds of public securities with coin. 
 We shall lose prestige, as a nation, by every departure from 
 the true policy of paying our interest in the currency of the 
 world the precious metals. If the resumption of specie 
 payments upon all obligations of the government be deemed 
 impracticable, except at a very remote period, by limiting 
 the amount of interest payable in coin to an amount nearly 
 corresponding with the customs' duties, issuing other debt 
 bearing interest in paper, resumption at an early day might 
 be facilitated, although it is somewhat doubtful if it would. 
 
 Much has been said about preventing our securities from
 
 45 
 
 going into the hands of foreigners, and it is strange, if all 
 that has been said were intended to be taken as it seems to 
 have been meant, that Congress has not been requested to 
 pass an act to prevent foreigners buying any of our national 
 securities. Xow, the case of a new country, requiring 
 capital, is very different from that of an old country, having 
 a surplus of capital. If we did not require capital to de- 
 velop our vast resources, then it might be an evil to have 
 foreigners send their capital here ; but as we get capital from 
 them, and they draw only the interest from us, and as we 
 have the use of the capital while it remains with us, the ad- 
 vantage must be in our favor, so long as capital can be 
 profitably employed among us. Those who scout the idea 
 of permitting foreigners to invest in our national loans, seem 
 to forget which side of the Atlantic they are on, as the cir- 
 cumstances which would justify their conclusions would re- 
 quire us to be on the other side of the Atlantic, putting 
 money in American securities, and not on this side of the 
 Atlantic, receiving the money of the older nations which 
 have excessive accumulations of capital. To complain that 
 foreigners will draw interest from us on capital loaned us, 
 " is like a miller complaining, in a season of drought, that so 
 much water runs into his mill-dam that some of it runs over." 
 Besides, is it not true, that where people's treasure is, there 
 will they feel a desire for the prosperity of the people ? and 
 thus, by uniting the people of other countries to us with our 
 debt, we gain their good wishes. 
 
 XII. Importance of a Sound Currency, Equal To, or Based Upon, 
 the Precious Metals Illustrations, Examples, &c. The 
 Glorious Prospects of Our American Future Conclusion. 
 
 It was a prevalent superstition in the dark ages, that 
 money was the great desideratum in all aspirations after 
 national or individual wealth. Hence the customs of hoard- 
 ing, debasing the metallic currency, and directing national 
 policy so as to accumulate money. Diffusion of knowledge 
 among the people has dispelled that ignorance. It is now
 
 46 
 
 found that the nations which absorb and hoard most of the 
 money of the world are, and always must, remain the poor- 
 est ; and that those nations are the richest which keep their 
 stocks of money sufficiently limited to prevent their markets 
 being the best of all the world to sell in, and the worst of all 
 the world to buy in. No device of man has been able to 
 perfect any kind of money, to accomplish the best objects 
 of society, except that composed of the precious metals, or 
 equal to, or representing these, or convertible into them on 
 demand. These metals constitute a standard of value inde- 
 pendent of the will or caprice of any man. The measure 
 of their value is the quantity which the Creator has made in 
 the earth, accessible to human labor. The stamp on a piece 
 of coin does not add to its value, but only to its convenience 
 for use. Take away the stamp and the value remains. Not 
 so with paper it is too plentiful it can be had for a trifle. 
 It has no value in itself. 
 
 Fraud and oppression have generally characterized paper 
 money. Scheming knaves have used it to cheat the public 
 or defraud their creditors; and even honest people, compelled 
 to submit to its use, are made the instruments of adding to 
 its iniquitous power, by their efforts to get rid of it, in ex- 
 change for tangible property, so as to avoid being the last to 
 hold it when the crash comes. At the present moment we 
 see our people, under the influence of an expansion of legal 
 tender paper, speculating wildly in property of all kinds, 
 each one trusting that he will be luckier than his neighbor, 
 and not get caught with fictitious values in a falling market, 
 when the revulsion sets in. We thus see the phenomena of 
 the gambling saloon in all our marts of trade and finance. 
 It is a lottery of property, on a vast scale ; as Thomas Jef- 
 ferson said : " paper money makes a lottery of all private 
 property." 
 
 Although banks have frequently improperly expanded 
 their issues, and thus depreciated the currency, yet there is 
 a wide distinction between paper money that is payable in 
 coin on demand and that which is not so payable. In the
 
 47 
 
 case of bank paper, the banks are compelled, unless govern- 
 ment frees them from the obligation, to procure and keep 
 gold and silver to pay their notes with, and if these are not 
 in the country, the banks send to other countries and bring 
 them here. But in the case of a government paper made a 
 legal tender, not redeemable in coin, the gold and silver 
 money are driven out of the country by it. Paper, not re- 
 deemable in coin, is therefore the dearest or most costly kind 
 of money that a nation can use, because it drives away the 
 real money, which is so much wealth lost to the country, 
 since the people must bring it back again, or procure an 
 equal amount of it in exchange for an equal amount of wealth, 
 before the currency can be restored to its sound and safe 
 condition. It is evident, therefore, that no government, 
 which consults the true welfare of the people, will persist 
 long in forcing them to use an irredeemable currency. It is 
 the boast of our republican system of government, that it 
 unites authority with usefulness ; in brief, that it is made for 
 the people. Under monarchial and despotic forms, govern- 
 ments too often act upon the principle that the people are 
 made for the ruler or his dynasty. Hence the abuses of au- 
 thority under the latter, and the sedulous regard for the 
 welfare of the people under the former. 
 
 Dr. Bollman, depicting the state of affairs in the south of 
 Germany, half a century ago, when the depreciated paper cur- 
 rencies fluctuated twenty or thirty per cent, in twenty-four 
 hours, remarked : "As soon as it ( the currency) begins to fluc- 
 tuate we find the prices of all commodities unsettled. Con- 
 tracts on time can no longer be entered upon with any degree 
 of safety. The doubtful state of things paralyses the usual 
 business. As depreciation makes progress, conscientious- 
 ness and delicacy of conduct, whenever property is con- 
 cerned, vanish. Good faith in trades exists no longer. The 
 moral principle, to which steadiness and order are alone 
 congenial, gives way. Men in office conceive that they have 
 a right to indemnify themselves by indirect means for the 
 loss they suffer in consequence of the diminished value of
 
 48 
 
 their appointments. Men in business seize every advantage 
 they can to repair past losses, against which they could not 
 guard, or to make provision against those with which they 
 conceive themselves threatened. The practices of cheating 
 and overreaching spread. Establishments requiring large 
 investments, and of which the returns are late and gradual, 
 languish, and are at last discontinued. All important 
 operations of distant emoluments are neglected. The whole 
 nation seems at last to exist only from day to day. All is 
 gambling. A mean traffic, and paltry speculations in the 
 depreciated currency, are the prevailing pursuit. Character 
 gives no longer credit. Honesty is useless. A total per- 
 version of all rule obtains. While fair men suffer, bad men 
 thrive. Brokers and usurers fatten on the diseased body 
 politic. Magistrates become now habitually corrupt ; 
 justice venal, and protection uncertain." To this state of 
 things traced in still bolder features in France and in 
 England, as well as parts of Germany we are now verging, 
 with this difference, that all commodities among us have 
 become subjects of wild speculation, while the currency 
 itself, being a legal tender, remains apparently of one uniform 
 value, although it is really the thing that fluctuates in 
 value and causes all other things to follow in its path. 
 
 "We are now congratulating ourselves upon the great ap- 
 parent prosperity of the country, and organizing new banks, 
 precisely as the English did in their struggles with the 
 French, when, in seventeen years, between 1T93 and 1810, 
 they increased their banks from two hundred and thirty in 
 the former year to seven hundred and ninety-six in the latter, 
 the paper money increasing from about thirteen millions in 
 1795 to nearly twenty-nine millions in 1814. The failures 
 which took place in 1816, and again in 1825, proved how 
 disastrous had been the inflation. Shall we go on in the 
 same path, creating new banks and inflating our currency ? 
 
 An abundance of paper money is erroneously, by some 
 parties, supposed to reduce the rate of interest, and the Sec- 
 retary in his Keport, speaks of the average rate he is paying
 
 49 
 
 on the public debt, " without regard to the varying margin 
 between coin and notes," as less than four per cent, in Oc- 
 tober last. In point of fact, however, gold being at fifty 
 premium, he is paying nine per cent, on his six per cent, bonds ; 
 and his one year certificates, being at two per cent, under 
 par, yield at the market rate eight per cent, per annum ; and 
 in estimating his increasing debt, he overlooks the high 
 prices incident to the excessive issues of legal tender paper, 
 as one of the main causes of the large increase of the national 
 debt. Indeed, he seems to view the distribution of these 
 notes as an element of " national unity and national strength," 
 because, as he states, " every holder of a note or bond, from 
 a five cent, fractional note to a five thousand dollar bond, 
 has a direct interest in the security of national institutions, 
 and in the stability of national administration." Kow, to 
 assert that the patriotism of the people required the excessive 
 issues of legal tender notes in order to give them this " di- 
 rect interest" in the country's welfare, betrays a distrust of 
 that patriotism, which the Secretary, on mature reflection, 
 will, no doubt, readily disavow ; for no where, in all the his- 
 tory of our race, have people evinced so much patriotism in 
 pouring out their life-blood as well as their treasures, in sup- 
 port of their nationality, as have our people of the loyal 
 States in this struggle with an infamous rebellion. 
 
 In that part of the report of the Secretary, relating to the 
 legal tender notes, he says: "For the first time in our 
 history has a real approach to a uniform currency been 
 made ;" and that it "is every where acceptable." We onca 
 had a uniform currency of gold and silver, as there now 
 exists in California, where the Secretary's currency which 
 he terms "uniform," is quoted at thirty-three per cent, below 
 par. It is unquestionably true that the depreciation of the 
 legal tender paper is nearly uniform, as far as notes of the 
 same denomination are concerned. But it is very evident 
 that the lofty estimate which he makes of the practical 
 benefits of the legal tender currency, issued in such excess 
 that it fluctuates in value every hour of the day, as compared 
 4
 
 50 
 
 with gold and silver coin, is one of those visions by which 
 nien have been so often misled in the enthusiastic pursuit 
 of a favorite theory. It is the very essence of money to 
 possess intrinsic value, and on this account the precious 
 metals have been adopted by the common consent of man- 
 kind, as a general medium of exchange, or universal equiv- 
 alent. It is not requisite to have so much coin in a country 
 as to make all payments in these metals, althoilgh this seems 
 to be a view of the Secretary, who pleads the urgency of 
 having "money" to make his payments with, so completely 
 is he unacquainted with the business of banking, in which 
 checks, drafts, bills of exchange and book accounts are 
 made to perform the functions of money ; and had he been 
 familiar with these details of the practical "transactions of 
 finance, he had in the one hundred and twenty millions of 
 coin which he drew from the banks, a basis for the whole 
 currency of the country ; the foreign exchanges at that time 
 were all in favor of this country, and gold was coming to 
 us from other nations.* The use of coin is to redeem the 
 notes brought in for payment, and thus preserve the circula- 
 tion equal to coin, so that the holder of a note should always 
 have the option of exchanging it for coin at pleasure. To 
 satisfy this option, experience shows that it requires only a 
 moderate portion of coin, compared with the whole currency ; 
 for the holder of a note payable in coin is generally satisfied 
 if he can obtain for his note a quantity of commodities 
 equal in value to the quantity of the precious metals specified 
 in it. 
 
 The Secretary also expresses his gratification at the de- 
 cision made by the Court of Appeals of New York in favor 
 of the constitutionality of the legal tender act. Let us con- 
 sider the situation to which we may be reduced, should the 
 Courts of the United States confirm that decision. All 
 
 * In the speech of Mr. Chase, at Indianapolis, published in the National 
 Intelligencer of October 20, 1863, he said: "I borrowed all the gold there 
 was in the country. In this way I obtained about one hundred and seventy- 
 five millions of dollars in gold."
 
 property and contracts would at once be governed by the 
 increase or diminution of the Secretary's issues ; there would 
 no longer be any other measure of the prices of property, 
 the monetary standard of value would become the will of 
 the Secretary, and his individual decisions, as to whether he 
 should call ift or let out his issues, would become the standard 
 of the value or the measure of the wages of the labor and 
 the property of every man, woman and child in the country. 
 There would not be any substance, measure or weight of any 
 kind to which the paper money could be referred as to its 
 value. There would be no commodity of intrinsic worth for 
 the correction of the quantity of paper issued, or for the 
 maintenance of its value. The paper dollar, in legal tender, 
 might one day be worth sixty cents and the next day only 
 fifty, or go down, under excessive issues, should Congress 
 repeal the limitations, so as to deprive the working man of 
 half the reward of his daily toil and individuals of half their 
 property ; for the moment we abandon the precious metals 
 as the constant standard of reference, there is no limit to th# 
 degree of depreciation to which paper circulation may in 
 time be expected to descend. Therefore, if the principle 
 which Locke book on government, page 236 states be just, 
 " that the preservation of property is the great end for which 
 man enters into society" if men in society have a right to 
 their property, and the laws of the community confer upon 
 them that right nobody has a right to take any part of it 
 from them without their consent ; and if this be the prin- 
 ciple which ought to regulate intercourse between man and 
 man, how much more ought*that principle to be observed by 
 the Legislature itself, to whom has been committed one of 
 the most sacred of all trusts, and whose breach of any sound 
 and salutary principle will be the more criminal, in propor- 
 tion as such breach will be more extensively mischievous. 
 A distinguished writer has expressed himself with peculiar 
 emphasis on this point. He says : " It is evident that every 
 rise (from the excess of paper circulation) in the money price 
 of commodities is, in other words, a fall in the commodity
 
 52 
 
 price or exchangeable value of money. It is likewise estab- 
 lished by experience, and before actual experience might 
 have been inferred from the nature of the thing, that every 
 depreciation of the value of the circulating medium is ac- 
 companied with much inconvenience and distress 
 
 The value of monied capital is diminished, ana the livelihood 
 is injured, of all those persons whose income is limited to a 
 
 fixed sum of money The grossest injustice 
 
 likewise must, unavoidably ensue with regard to the per- 
 formance of all contracts previously agreed on." 
 
 Josiah Quincy wrote to Genl. Washington, November 27, 
 1780 : " To restore the credit of paper by making it a lawful 
 tender, by regulating acts, or by taxes, are political 
 maneuvres that have already proved abortive, and for this 
 obvious reason, that, in the same proportion as ideal money 
 is forced into currency, it must, from the nature of every 
 thing fraudulent, be forced out of credit. I have said ' from 
 the nature of every thing fraudulent? because I am firmly 
 of the opinion, and think it entirely defensible, that there 
 never was a paper pound, a paper dollar, or a paper promise 
 of any kind that ever yet obtained a general currency but 
 by force or fraud ; generally by both." 
 
 Theories of law, which would sustain the constitutionality 
 of these issues of legal tender notes put out in unnecessary 
 volume, and causing a suspension of specie payments ap- 
 pear to be of most dangerous tendency. Even when gold 
 was down to twenty-one per cent, premium, the Secretary 
 refused or neglected to put his loans on the market, call in 
 his issues of green backs, and maintain the legal tender cur- 
 rency so near the value of coin. And it is a standard of 
 value or currency thus regulated which, our courts are re- 
 quested to sanction ! 
 
 Even that publicity of the quantity of his issues, which is 
 usual in other countries, and which he insists upon exacting 
 from the banks page 21 has been withheld. The four- 
 teenth section of the Act of Congress, approved December 
 23, 1857, makes it the duty of the Secretary of the Treasury
 
 53 
 
 to cause a statement to be published monthly of the amount 
 of treasury notes issued and paid or redeemed, showing the 
 amount outstanding each month. This section has been re- 
 enacted in every bill to provide Ways and Means, and as 
 recently as the 3d of March last. Why has the Secretary of 
 the Treasury not complied with it ? ISTo one can deny the 
 utility of such a statement. It would be a guide to the 
 various fluctuations in the rise and fall of the precious metals 
 to every person engaged in active pursuits, and enable our 
 own people to shape their business so as to avoid losses, 
 which, in the absence of such intelligence, they are com- 
 pelled to suffer, generally to the profit of foreign bankers, 
 whose sources of information at the seat of government are 
 too often better, in the absence of publicity, than those ac- 
 cessible to our own people. It has always been a feature of 
 despotic governments to withhold information from the pub- 
 lic, but as favorites can obtain such information indirectly, 
 the only effect of such a course is to place the whole com- 
 munity at the mercy of the favorites of government. 
 
 The steady advance in the price of gold is wholly in con- 
 sequence of the inflation of the currency; for bullion, like 
 all other commodities, becomes dear in proportion as the cir- 
 culating medium like an extravagant issue of paper money 
 which supplants it is rendered abundant and cheap. An 
 excessive issue of paper money acts upon prices of bullion, 
 and all other commodities, precisely as if the coined money 
 were reduced in value, which was the fraudulent course pur- 
 sued by the governments in the dark ages ; when pressed for 
 money, they called in all the coin they could procure, and, 
 in the peculiar phraseology of those times, they proclaimed 
 " a rise in the standard," making a smaller quantity of pure 
 metal in each piece. Some of the current coins in Europe 
 have thus been reduced to a fifth or sixth of the quantity of 
 pure metal which they once contained. 
 
 It is supposed that an excessive inflation of paper money 
 not only reduces the rate of interest but also keeps up the 
 prices of government securities. In the case of England,
 
 before the bank suspended cash payments, in 1793, the 
 government three per cent, stock sold at ninety-five, and in 
 1797, after the suspension, having depreciated more than 
 fifty per cent., it sold at forty-six, in the depreciated currency, 
 while the loans negotiated during the suspension of cash 
 payments were at very heavy discounts. In our own case 
 we see government stocks (five-twenty bonds), at " par," al- 
 though the high premium on gold secures the equivalent of 
 nine per cent, per annum interest upon them ; and gold 
 being at fifty premium, the five-twenties really bring the 
 government only sixty-six in coin, or its equivalent. 
 
 In New York the rate of interest, having fluctuated v<*ry 
 much, has recently advanced to as high a point as it usually 
 attains under a specie currency; and in the case of all infla- 
 tions of paper money, the demand for money during the in- 
 crease of prices, tends to keep up the rate of interest to the 
 highest point. Hence the constant demand for more issues 
 of paper which prevails at such periods, the advocates of 
 further issues contending that the high rate of interest is 
 positive proof of the necessity for creating more and more 
 paper money. 
 
 In addition to what has already been said of the impor- 
 tance and utility of a specie currency, it may be observed 
 that as a protection to home industry as a permanent 
 measure of value for the wages of labor it is preeminently 
 desirable. It has unfortunately been too often the case, that 
 all our efforts, as a people, to organize profitable systems of 
 home industry have been defeated by paper currencies, 
 which, have made us, by their inflations, incapable of supply- 
 ing ourselves with many descriptions of manufactured goods 
 for which we needed no other protection than that found in 
 a sound and uniform currency. The losses through bank- 
 ruptcy and unfortunate speculations, created or fostered by 
 our paper currencies, have been frightful ; and if it should 
 prove, as the Secretary seems to desire, that the rebellion 
 of 1861 shall be the means of securing to the American 
 people a sound and permanent currency, I do not hesitate to
 
 55 
 
 say that it will have been cheaply purchased by a national 
 debt of even two thousand millions of dollars; but the 
 deplorable loss of life, incident to the struggle is a terrible 
 calamity for which the wicked authors of the rebellion will 
 be held infamous throughout all time. Those of our people 
 who have sacrificed their lives in defence of the country and 
 the union, have bequeathed to their posterity a legacy above 
 all price, and I trust that in addition to pensions to their 
 surviving families, or dependents, "a merit roll of freedom" 
 will be established at an early day, on which their names 
 may be inscribed, and their memory perpetuated, not only 
 in the records of the government at Washington, but in the 
 records of the states, cities, towns and wards from which 
 they volunteered. 
 
 I remember with what patriotic gratification a very near 
 relative cherished the recollection of his having served in 
 the war of the Kevolution ; and had he transmitted no other 
 memento than this to his posterity, it alone would have 
 been sufficient to constitute a legacy of patriotic renown 
 more valuable than tfce greatest estates, or the richest 
 treasures of gold and silver. So it will be with every man, 
 and the relatives or descendants of every man, who has 
 taken part in the present struggle for our national life : that 
 service will be enough to immortalize him ; for out of the 
 toils and trials of this great calamity, there is to my mind 
 no reasonable doubt that our country will emerge, regen- 
 erated and disenthralled, to enter upon a new career of 
 prosperity and greatness, under the blessing of Providence, 
 far surpassing anything known in our past history, glorious 
 as that has been. Unhappily for us, the administration of 
 our government was, in many departments, in hands wholly 
 inexperienced, but I believe patriotic ; and the wicked con- 
 spirators against our nationality calculated, doubtless, that 
 this very inexperience would prove advantageous to their 
 schemes, as it has to some extent, but what the administration 
 has lacked in skill, has been more than made up by the 
 patriotism of the people and the personal integrity of the
 
 56 
 
 President himself. We happily soon got rid of the early 
 mismanagement of the "War Department, and it may 
 be hoped that the Treasury Department and the finan- 
 ces will yet be brought back to what the teachings of skill 
 and the dictates of patriotism require. It cannot be dis- 
 guised, however, that the administration has been unduly 
 sensitive to criticism, and in dealing with citizens who 
 differed with them as to the best mode of conducting the 
 government, there have been manifested, too often, intoler- 
 ant sentiments, particularly in classing dissentients from 
 government policy as sympathizers with the infamous rebels. 
 Party spirit and party prejudices have been fomented by 
 the distribution of patronage, men of undoubted patriotism 
 having been proscribed for difference of political opinion. 
 It was unhappily true that the majority of the rebel leaders 
 had been the companions and associates of the opposition 
 party in the lo}^al States. But, in 1861, at the breaking out 
 of the rebellion, party ties were disregarded by all promi- 
 nent citizens of the loyal States. We were all united in 
 April, 1861, when the conspirators, seized Fort Sumter. 
 The divisions that have since sprung up, may in great 
 measure be traced to the attempt to administer the Govern- 
 ment upon partizan principles, the turning out of office 
 of brothers or fathers of men serving in the army, the re- 
 moval of faithful officers, to make room for partizans, and 
 appeals to the cupidity of mankind in the distribution of 
 official patronage, to secure partizan support to individuals 
 high in the management of national affairs. Among the 
 wonderful incidents of the time, none is more extraordinary 
 than the number of foreign missions, executive offices, &c., 
 lavished upon the reporters of the press, " those gamins and 
 o-ood fellows of literature ; fellows of inexhaustible resources, 
 who carry their wits literally at their fingers' end, and who 
 sketch out a much better speech, between an orator's shoul- 
 der blades, than he is making in front." But all such efforts 
 to bias the judgment of the future historian will fail; the 
 character, capacity and official acts of those who now direct
 
 57 
 
 the affairs of state, will be impartially judged by posterity; 
 for party prej udices will soon pass away. Augustus Csesar 
 thought fit for his interest to be bountiful and grateful to 
 Virgil and Horace, but their verses have not saved him from 
 those just reproaches which have come down to posterity. 
 It is also remarkable how active a part was taken, how 
 many offices 'were held, during the French Revolution, by a 
 host of clamorous writers, of vast importance in their day, 
 whose influence and notoriety, and those of their patrons, 
 were soon buried, without the possibility of resuscitation. 
 
 Our suffering country will, I fondly hope and trust, sur- 
 vive the calamities, the errors, the passions and the party 
 prejudices of this momentous period. To save it, however, 
 will require all the patriotism, religion, self-denial and zeal 
 with which our patriotic fathers carried it so successfully 
 through the ordeal of the revolutionary period. Heroes, 
 sages and statesmen, who knew only their country's good, 
 made that period illustrious and memorable. This period of 
 trial has established the gratifying fact, that the race has not 
 degenerated. Let us then cherish the true men who have 
 come forth to prove themselves worthy of being our leaders. 
 Let us raise higher the standards of public favor, and stay 
 the tide of partizan animosities and greed of gain which 
 threatens to overwhelm us in corruption and ruin. There 
 are higher and nobler aims than personal aggrandizement 
 and the amassing of wealth during this hour of national 
 calamity, and it is the duty of the patriot, whether states- 
 man, editor or clergyman, to direct the people to them. The 
 crisis demands fearlessness in every man whose tongue or 
 pen can expose the dangers of those material considerations 
 which now so largely engross the attention of official circles, 
 and which tend so much to demoralize public sentiment. 
 Party rancor should be subdued, and the fate of the slave- 
 holding interest, which had sought so long, through partizan 
 organizations, to control the government at last commiting 
 political suicide, in its vain attempts at continued domina-
 
 58 
 
 tioii should warn all parties, seeking their own material 
 advancement at the sacrifice of their country's welfare, that 
 a people who can endure the trials of the present, will not 
 suffer a recurrence of these trials from the same cause. ' By 
 rising to higher and nobler aspirations than those which are 
 prompted by greed of gain, our public men will find them- 
 selves endowed with a larger share of public confidence, and 
 the country will be saved from those encroachments upon 
 popular liberty and free institutions which are dictated by 
 the groveling instincts of personal gain ; for the highest and 
 noblest form of human selfishness is that which seeks its own 
 renown in promoting the best interests of the people, regard- 
 less of partizan, sectional, or selfish motives. 
 
 YORK, January 8th, 1864. 
 
 WASHINGTON'S OPINION OF PAPER MONEY. 
 
 Genl. Washington wrote to Lund Washington : " West 
 Point, August 17, 1779. Sir Some time ago you ap- 
 plied to me to know if you should receive payment of 
 
 Genl. M 's bonds, and of the bond due from the 
 
 deceased Mr. M 's estate to me ; and you were, 
 
 after animadverting a little upon the subject, authorized 
 to do so. Of course I presume the money has been re- 
 ceived. I have since considered the matter in every point 
 of view in which my judgment enables me to place it, 
 and arn resolved to receive no more old debts (such, I mean, 
 as were contracted and ought toliave been paid before the 
 war) at the present nominal value of the money, unless com- 
 pelled to do it, or it is the practice of others to do it. Nei- 
 ther justice, reason, nor policy requires it. The law, un- 
 doubtedly, was well designed. It was intended to 'stamp a
 
 59 
 
 value upon, and to give a free circulation to, the paper bills 
 of credit; but it never was, nor could have been, intended 
 to make a man take a shilling or sixpence in the pound for 
 a just debt, which his debtor is well able to pay, and thereby 
 involve himself in ruin. I am as willing now as I ever was 
 to take paper money for every kind of debt, and at its pre- 
 sent depreciated value, for those debts which have been con- 
 tracted since the money became so ; but I will not in future 
 receive the nominal sum for such old debts as come under 
 the above description, except as before specified. 
 
 "The fear of injuring, by any example of mine, the credit 
 of our paper currency, if I attempted to discriminate between 
 the real and nominal value of paper money, has already sunk 
 for me a large sum, if the bonds before mentioned are paid 
 off; the advantage taken in doing which no man of honor or 
 common honesty can reconcile to his own feelings or con- 
 science ; not as respects me, do I mean, but transactions of 
 this kind generally. The thing which induces me to men- 
 tion the matter to you at present is, the circumstance you 
 have related respecting the wages of Roberts, which you 
 say, according to his demands, will amount to upwards of 
 two thousand pounds, and come to as much, for the service 
 of a common miller for one year only, as I shall get for six 
 
 hundred acres of land sold to M in the best of times, 
 
 and the most valuable part of Virginia, that ought to have 
 been paid for before the money began to depreciate ; nay, 
 years before the war. This is such a manifest abuse of rea- 
 son and justice, that no arguments can reconcile it to common 
 sense or common honesty. Instead of appealing to me, who 
 have not the means of information or knowledge of common 
 usage and practice of matters of this kind in the State, or 
 the laws that govern there, I wish you would consult men of 
 honor, honesty and firm attachment to the cause, and govern 
 yourself by their advice or by their conduct. If it be 
 customary with others to receive money in this way that is, 
 sixpence or one shilling in the pound for old debts ; if it is 
 thought to be promotive of the great cause we are embarked
 
 60 
 
 in for individuals to do so, thereby mining themselves while 
 others are reaping the benefit of such distress ; if the law 
 imposes this, and it is thought right to submit, I will not say 
 aught against it, nor oppose another word to it. No man 
 has gone, and no man will go, further to serve the public 
 than myself. If sacrificing my whole estate would effect any 
 valuable purpose, I would not hesitate one moment in doing 
 it. But my submitting in matters of this kind, unless the 
 same is done by others, is no more than a drop in the bucket- 
 In fact, it is not serving the public, but enriching individuals 
 and countenancing dishonesty ; for sure I am that no honest 
 man would attempt to pay twenty shillings with one, or per- 
 haps half of one. In a word, I had rather make a present 
 of the bonds than receive payment of them in so shameful 
 a wa} T . I am, &c. 
 
 Genl. Washington wrote to President Reed, August 22, 
 1779 : " Perhaps I do not understand what they mean by 
 using the sponge. If it be to sink the money in the hands 
 of the holders of it, and at their loss, it cannot, in my opinion, 
 Btand justified upon any principles of common policy, com- 
 mon sense, or common honesty." 
 
 Genl. Washington wrote to Thomas Jefferson, August 1, 
 1786 : " Genl. McDougall, who was a brave soldier and a 
 distinguished patriot, is also dead. He belonged to the 
 Legislature of his State. The last act of his life was (after 
 being carried on purpose to the Senate) to give his voice 
 against the emission of a paper currency." 
 
 Gen. Washington wrote to Thomas Stone, February 16, 
 1787 : " I contend that it is by the substance, not with the 
 shadow, of a thing we are to be benefited. The wisdom of 
 man, in my humble opinion, cannot at this time devise a
 
 61 
 
 plan by which the credit of paper money would be long sup- 
 ported ; consequently, depreciation keeps pace with the 
 quantity of the emission, and articles for which it is ex- 
 changed rise in a greater ratio than the sinking value of 
 money. "Wherein then is the farmer, the planter, the artizan 
 benefited ? The debtor may be, because, as I have observed, 
 he gives the shadow in lien of the substance, and in propor- 
 tion to his gain the creditor or the body politic suffers. 
 Whether it be a legal tender or not, it will, as has been ob- 
 served very truly, leave no alternative. It must be that or 
 nothing. An evil equally great is, the door it immediately 
 opens for speculation, by which the least designing, and per- 
 haps the most valuable part of the community are preyed 
 upon by the more knowing and crafty speculators."
 
 University of California 
 
 SOUTHERN REGIONAL LIBRARY FACILITY 
 
 405 Hilgard Avenue, Los Angeles, CA 90024-1388 
 
 Return this material to the library 
 
 from which it was borrowed. 
 
 Qi uCTi 8 1999 
 SEP
 
 UC SOUTHERN REGIONAL LIBRARY FACILITY 
 
 A 000019087 6
 
 ty of Californi 
 :ern Regional 
 ary Facility