The Sun.
London, England, 1867-06-17 00:00:00

THE FINANCIAL SITUATION.

Secretary M'Culloch has sought occasion, in
correspondence with some Boston gentlemdn, to
bring before the public these new and interesting
facts and opinions on American finance. You
must not expect, however, that our monthly state-
ments for the rest of the present and the early part
of the next fiscal year will be as satisfactory as they
have been for many months past. Thedonations or
bounties to soldiers, preparations for a threatening
Indian war, even if the war itself should be avoided,
and very liberal appropriations of a miscellaneous
character, will cause unusually heavy drafts to be
made upon the treasury; while, ou theother hand, the
general failure of the wheat crop and the partial
failure of the corn crop last year, slow progress
in the restoration of the Southern States to their
proper relations with the Federal Government, the
dullness of trade throughout the country—partly
the result of a decrease of production, and partly of
the natural reaction which always follows periods
of excitement and speculation, together with re-
duced taxes, will very considerably affect our re-
venues. This combination of adverse circumstances
may retard a return to specie payments, and with
large issues of bonds to be made to the Pacific Rail-
road and its branches or divisions, will prevent for a
brief season a reduction of the public debt, and may
even render a temporary increase of it unavoidable,
but it will not weaken my faith in our ability to
move on again in the right direction at an early day.
On the contrary, I believe that this check to our
progress will lead to improvements in our re-
venue laws and to an increase of efficiency in their
execution, hasten the representation in Congress
of the Southern States, and secure greater economy
in all branches of the public service.
Some surprise may exist that I have not for some
months past reduced the circulation of United States
notes according to the authority conferred upon me
by Congress, and an inference may be drawn from
it that my opinion upon the subject of contraction
has undergone a change. Permit me to say, there-
fore, that I am as much persuaded as ever of the
importance of 'an early return to specie payments,
and of a reduction of the currency, as a means of
checking extravagance and speculation, and of in-
creasing production, without which all efforts to
restore permanently the specie standard will be
ineffectual. What the country needs, in order that
specie payments may be resumed and maintained,
and real prosperity secured, is an increase of indus-
try and a restoration of our former habits of
economy.

As a people, among ourselves, we must earn
more and spend less. In our trade with foreign
nations we must sell more or buy less. Any diffe-
rent prescription for existing financial evils is in my
judgment, quackery. 'That contraction will tend to
bring about this desirable' condition of things, I
never doubted, but I have nevertheless suspended
the reduction of the circulation of United States

notes, and for the following reasons, either of which
would perhaps have justified my course, and all
of which have had more or less influence in deter-
mining it.

First. The views of the majority of the mem-
bers of Congress, as indicated by a number of votes
last winter, were adverse to immediate contrac-
tion, and I have not liberty to place myself in prac-
tical opposition to the law-making branch of the
Government, without whose support I must be
powerless.
Second. There have existed for some mouths
past anxious forebodings of financial troubles, and
while they continued, I have been apprehensive
that a contraction of the currency, the object and
effect of it being misunderstood or misinterpreted,
might. produce a panic in the commercial cities,
which, extending over the country and beyond
the speculative interests, would injuriously affect
legitimate business and the revenue dependent upon
it.
Third. Large amounts of interest-bearing notes
are to be paid or converted within the present and
and next fiscal year, to which it seemed prudent
for me first to direct my attention, leaving the
question of a curtailment of the circulating notes
to be determined, from month to month, by the
condition of the country and of the Treasury.
Fourth. Anticipating that the failure of the crops
and the other circumstances Alluded to would
seriously affect business, I have considered it im-
portant that the public mind should not be diverted
by the criticisms and complaints of those who are
opposed to contraction from the real cause of trouble,
that a sound policy should not be put in peril by
being made the " scapegoat" for evils resulting from
different causes.

You will not infer from what I have written that
lam not hopeful in regard to our financial future.
It has been my constant aim so to manage the
national finances as to aid in bringing the coun-
try to a healthy financial condition, without
being subjected to the severe disasters which
many judicious persons have supposed a large
debt and the derangement of business, and the
diminution of industry occasioned by the war
and a redundant currency, would render inevitable.
My faith that this can be accomplished is unshaken.
The causes which are now operating against us are
exceptional and temporary. The prospect of a good
crop of winter wheat was never better.

More spring wheat has been sown and more corn
has or will be planted this season, than ever before.
The people are beginning to comprehend again this
important truth, which seems to have been disre-
garded for some years past, that prosperity is the
result of labour, and that industry and economy
are indispensable to national as well as to individual
wealth. I shall be grievously disappointed if an-
other year does not witness a large increase of in-
dustry, of enterprise and of revenue, decided pro-
gress towards a resumption of specie payments, and
a steady reduction of the public debt.