, 1868-12-18

and four and half per cent, while by man
Others three per cent. has been held to be a
amply sufficient return for the investnlen
I The general impression as to the expedienc
, Of the existing rate Of interest has led to en-
quiry 10 the public mind respecting the con
si3eration which Government actually re
eeiVed fer its bonds, and the conclusion i
becoming prevalent that the amount whicI
, il obtained was 10 reality three hundred o.
four hundred per cent less tLao the obliga
tlons which it issued in return. Ii canno
be denied that we are paying an extraordi
nary percentage for the use of the none,
borrowed. which was paper currency greatl,
deprecated below the value Of coin Thi,
fact is made apparent when we consider thai
the bondholders receive from the treasury
upon each dollar they own in Government
securities, six per cent in gold, which is
quite equal to nine per cent. in currency
that bonds are then converted into capital
for national banks, npon which those institu>
tions issue their circulation, bearing six per
cent. interest and that they are exempt from
taxation BY the Government and thereby en-
hanced two per cent. in the hands of the
holders. We thus have an aggregate of
seventeen per cent. which may be realized
upon each dollar by the owners of Govern
ment securities. system that produces
such results is Justly regarded as favoriue a
few at the expense of the many, and has led
to the further enquiry whether bondholders
in view of the large profits which they have
enjoyed, would themselves be averse to set
tlement of our debts upon plan which would
yield them a fair remuneration, and at the
same time be just to the tax payers of the
nation. Our national credit should be IS.
credly observed, but in making propositions
for our creditors, We should not forget what
is due 10 the masses of the people 1t may
| be assumed that the holders of our securities
have already received upon their bonds a
larger amount than their original investment,
measured by gold standard. Upon this state.
ment of facts, it would seem but Just and
equitable that the six per cent. interest now
paid by the government, should be applied
to the reduction of the principal in semi>
annual instalments, which, in sixteen years
and eight months, would liguidate the entire
national dect. Six per cent. in gold would
be at the present rates, equal 10 nine per
cent in currency; equivalent to the payment
of the debt one and half times in fraction
less than seventeen years. This, in connec-
ton with other advantages, derived from
creditors fair and liberal compensation G,-
the use of their capital, and with this they
should be satisfied. The lessoSs Of the past
admonish the lender that it is not well to be
over anxious in exacting from the borrower
rigid compliance. Provisions must be made
for the payment of the Indebtedness of the
government in the manner su ggested, or the
Nation will not rapidly recover its prosperity.
Its interests require that some measures
should be AIKEN to release the large amount
of capital in the Government. 1t is now not
merely unproductive, but in taxation annu'
ally consumes one hundred and fifty million
dollars, which would otherwise be used BY
our enterprising people in aiding our people
needing encouragement in their efforts to
recover from the effects of the rebellion and
injudcous legislation, and it should be the
will of the Government to stimulate them by
the assurance of an early release from the
burdens which impede their prosperity. II
we cannot take the burdens from their shoul-
ders, we should at least manifest willing
ness to help to bear.
In referring to the condition of their cir
cuIating mediums, shall merely relterate
the relations as substantially stated in my
last annual message in relation to the subject.
The proportion which the currency of any
country should bear to the whole value Of
the annual produce circulated by its means
is question upon which political economists
have not agreed, nor can it be controlled by
legislation, but it must be left to the laws
which everywhere regulate commerce and
trade. The circulating medium will flow to
those points where it is in greatest demand.
The law of demand and supply is as unerring
as that which regulates the tides Of the ocean,
and indeed currency like the tides, has its
ebbs and flows, throughout the commercial
world.
At the beginning of the rebellion the bank
| note circulation of the country amounted to not
mucb more than $500, 900 900. Now the circu.
Iation of the National Bank notes and those as
legal tenders is nearly 500, ,OOO OOd 1t is argued
nv some that this amount should be increased.
Others contend that decrease is absolutely es-
| sential to the interests of the country. 10 view
of these adverse opinions it may be well to as
certain the proportional value OF our proper
isssue when compared with a metallic or convert
ible currency For this purpose let US enquire
how much gold and silver could be purchased
by the S7OO, ,OOO, 900 of paper money now in cir
'culation. Probably not more than nan tne
smount of the latter, showing that when paper
currency is compared with gold and silver It's
commercial value is compressed into $500 'oeo'-
600. This striking fact makes IL tne ouy oi .ue
Governmept as early as may be consistent with
The Drinciples of sound political economy TO take
sncb measures as will enable the holders OF us
notes and those Of the national banks 70 convert
them without loss into specie. The reduction OF
onr pauer circulating medium may not ioilo"'
This however, would depend on the law OF oe-
mand and supply, though it should be borne IN
mind that by making legal tenders ana oAnk
notes convertible Into coin its equisAiens' s1e
preseat specie value in the hands Of I1eI nD
would be enhanced 100 per cent. LegsiAtiIn
for the accomplishment of result 50 ue'''"'
- demanded by the highest consideration
The Constitution contemplates tnAt tne -
latinr medium Of the country shall be nenoi"
/ In oualitv and value AT the time oil the iorm1.
,ioa of his instrument the country haa Jos'
emerged from the revolution ana was ea. sune...s
f-o., The effects of q worthless paper currenc:. !.
The sa0es of that period were anxious 10 p.o'ee'
ws1a NH