Holmes County Republican. [volume] (Millersburg, Holmes County, Ohio) 1856-1865, 1862-02-06
CURRENCY AND TAXATION.

pledged, by a nearly unanimous vote, to
tax the people, directly aud indirectly, to
the amount of $3.50, 100000 annually
Nothing has yet been determined with re-
gard to the nature of the new taxes TO De
imposed, or with regard to the methods
BY which Mr.. Chase proposes to refill his
exhausted Treasury. Both topics, howev-
ar. are being actively ventilated in the pa
ners and in Congress, and it is fair to pre-
sumo that, when action is taken on them,
it will be taken understandingly. wvT
There are certain points which are ad
unitted on all sides. II is confessed that
the Treasury is empty, and the floating
debt about sso,oo0,000. No one doubts
but the war is costing US S500,00O,000
year. It is also well known, at least in
financial circles, that the Government can
not borrow any money at present, either
at home or abroad. Large sums, such as
are required for the prosecution of great
wars, can only be borrowed through the
interpositionsof heavy banks and banking
houses, andour banks and bankers have al
ready done their utmost. Very nearly
the entire bank capital of New York, Phil
adelphia, and Boston is at the present mo-
ment in Government securities, which the
people evince no willingness to take off
the hands of the banks. AS to borrow
ing abroad, that is not 10 be thought Of.
After the Trent affair, our people would
not suffer any Finance Minister from this
country TO go begging to London; and
even if the attempt were made, there are
abundant indications that Foreign Govern
ments would, from a desire TO see this
country divided, prevent the negotiation of
any United States Loan. 1t being clear,
therefore, that we are spending $5oo,o0o.-
900 year; that the Treasury is empty;
and that no more money can be borrowed;
the question is-by what other process
can the Government obtain money for the
prosecution of the war?
Thus far two practical schemes and on
ly two, have been laid before the public.
A vast number of visionary methods have
been proposed by currency doctors;" but
none but the two to which we allude de-
serve attention. /.
The first has been laid before the House
by Mr.. Spaulding, of the Committee of
Ways and Means. 1t proposes to allow
Mr.. Chase to pay his debts 10 Treasury
Notes which shall bear no interest, shall
be legal tender, and shall be convertible
into United States Skies. The advantage
of this scheme is that it at once relieves
the Treasury, and supplies the Govern
ment with all the money it needs. The
objection to it is the "fatal facility" which
it affords for excessive issues ofpaper mon
ey, and the prospect Of the new Treasury
Notes depreciating. Ll1
The other scheme, which is the off
spring of certain bank Presidents, proposes
to allow Mr.. Chase to pay his debts in
Treasury Notes bearing 3.65 per cent an
nual interest, and not legal tender, but
convertible into 7.30 notes, which latter
are convertible into per cents. The ad
vantage Of this scheme is that il does not
increase the volume of currency afoat,
and hence in some degree avoids the dan
gers of general initiation. The objection
to it is that the 3.65 notes, not being bank
able, could not find a market or a resting
place, and would lnfallibly depreciate 10
an enormous extent, dragging down with
them all other Government securities, and
the whole fabric of public and corporate
credit. 1t would seem that this scheme
would render certain and speedy all the
evils which, under Mr.. Spaulding's plan,
might possibly occur, under adverse cir
cunstanees, at remote period.
Both these projects rest of, course, on a
basis of taxation. Without adequate tax
alton, neither Treasury notes bearing inter
est nor Treasury Notes without inter
est will help the Government. With tax
alton to the extent of Sl5O,000,000 an
nually, large amount of Government pa
per can be floated, as it would be receiva-
bic for taxes; and it would be received ev-
cry where without scruple, if it was appar-
ent that the revenue from direct taxation
was adequate to defray all interest charges
upon the bonds into which it was con-
vertible, an to extinguish the principal at a
given period by means of sinking fund.
It is instructive, in this connection, to
refer to the experience of our nations en-
gagged in great wars. When Great Britain
went to war in 1898 to restore the Bour-
bons to the throne of France, her rulers
believed, as Mr.. Lincoln did last spring,
that the contest would be brief. Mere |
temporary arrangements for loans were
therefore made Gusi as Mr.. Chase made
with the Associated Banks In JULY, and
for four years the war was carried on with
borrowed money, and without increase of
taxation. In 1897 Mr.. Pitt perceived as
Mr.. Chase does now, that this resource
was exhausted, aad that resource must be
had to taxation. The war taxes were in-
creased from an average of less than 500,
100000, annually to $1,000, 100000 in
179s, S226,000,0o0 in 1901, 100000,
in 1908, and $352,OOO,0oo in 1s15.-
Simultaneous with this, in 1897, the Bank
was directed to suspend specie payments,
and paper was male, and remained for
twenty-three years, legal tender and the
currency of the kingdom. Under this
system Great Britain was enabled to ex-
pend in this long war sum of S5,556,-
100000 without exhausting her strength.
She came out of the war richer than she
went into it, with her population increas-
ed from ten TO sixteen millions, and with
her position secured as the most wealthy |
nation in the world.
If we should follow this example, Con-
gress should first proceed to select the hest
L. ind Il