The Sun.
London, England, 1862-12-03 00:00:00

MR. CHASE'S FINANCIAL SYSTEM.

The memorial about to be addressed by the mer-
chants and financiers of New York to the United

States Congress on the results of the financial ad-

ministration of Mr. Secretary Chase shows not
merely that the commercial body of that city have
at length come round to the views expressed
during the past eighteen months by the English
press, but that there is a disposition to stigmatise
the proceedings of the Washington Cabinet in terms
by no means less strong than those which have been

denounced as wicked and "abusive" when they have

proceeded from this side. The Chief of the Trea-
sury is charged with proceedings calculated totally

to destroy the national credit, and with having
resorted to the most hazardous plan of finance
ever known, while he has directly reversed all the re-
cognised rules that should guide a statesman. The
effects of the system of borrowing from hand to
mouth are clearly demonstrated, and the truth is

also recognised that it is not merely uaeless, but
fraudulent, to multiply paper issues in the shape of
a local tender, unless such issues are made to bear a

proper rate of interest. Unfortunately, however,

the New York merchants do not confine themselves
to the simple statement of these facts, but go on to
shape a distinct plan of finance for the future, and
to indulge in expectations regarding its operation,
which are only a degree less delusive than those
by which Mr. Chase himself has thus far been in-
spired. In commending their scheme they start
with the announcement that America has no
large capitalists who can absorb any consider-
able amount of new securities, " the condition
of the people being different from any other,"
from the circumstance that they " have their
money invested in bonds and mortgages, real estate,
State bonds, bank, insurance, and other local
stocks," as well as in current business. For this
cc when it is wished to float more money '
than can be profitably employed in trade, it must
be made to bear an interest or it will depreciate in
current value." Interest bearing notes are there-
fore recommended to be issued to redeem the pre-
sent currency, and to meet all future wants. They
are to have 20 years to run, and are to be of the
denomination of £4, £lO, £2O, £lOO, and £2OO, and
are to carry a fixed rate of 4,1 per cent. These
bonds " will be taken and held by all classes of the
people," and the Treasury will acquire the great
advantage of being freed from the future necessity
of contracting definite loans, since they can put
forth as many of them as they please from time to
time in payment to public creditors. An issue
equal to 200 millions sterling could, it is thought, be
absorbed in the course of six months, " without
materially affecting values," and in a short time it
is "not unlikely £400,000,000 might be profitably
taken." The process is also to enable the Treasury
to resume specie payments within 90 days—that
period being apparently the favourite one for the
financial no less than the political millenium—as
it will enuable the Government to call in all the
existing inconvertible notes of less than £4. In short
this system of credit " will make as simple and per-
fect a plan of American finance as any statesman can
desire to see established." The memorialists do not
pause to prove their opening proposition that
America is different from all other countries in hav-
ing no capital save such as is invested in securities
or business, neither do they attempt to explain
what logical connexion exists between this proposi•
tion and the desirableness of creating 400 millions
sterling of " money," by putting forth paper pro-
mises to that amount. Such omissions, however,
would be immaterial if the memorialists had shown
how the creation of the " money" in question could
meet their present difficulties. These difficulties
arise from the fact that the country is consuming
more than it is producing, so that heavy balances
have to be sent abroad in specie, and the remedy
proposed is consequently exactly the same as if a
family of a dozen persons, while outrunning their
aggregate income, were to seek to make matters
straight by passing their own promissory notes,
which no one else would take, backward and for-
ward among each other, It is from the ignorance
even of the rudimentary principles of public finance
thus manifested by all classes of the American peo-
ple—Ministers, leading merchants, and ordinary
traders—that the fear is excited that there can be
no possible cure for the course now entered upon
short of a general collapse.