The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1869-01-07
DAILY PRESS.
PORTLAND.
Thursday Morning, January 7, 1868.
The Report of oommi.,iouer Well.

4. Wells, the Special Commissioner of Inter-
nal Revenue, has at last come to hand. II is
a document of extraordinary interest, and we
very much regret that its length is such as
to preclude the possibility of its publication
in full. The following extracts merely en-
brace his conclusions. After estimating that
for the fiscal year ending June 80, 1869, there
will be surplus of $4,000, he lakes up the
subject of the
RESTORATION OF NATIONAL CREDIT AND
RESUMPTION OF SPECIE PAYMENT.
The commissioner does not feel that it is
his province to present any plan in detail,
whereby a surplus like that anticipated can
be best used for facilitating return to spe-
Gle payments; but he does feel convinced that
if one-half of such surplus, or from to 1-2
per cent. on the whole debt, were applied reg
ularly, month after month and year after
year, to purchase in the open market, and to
the cancellation of the gold interest bearing
obligations of the government so long as
those obligations can be obtained at a dis
count from their par value in gold; and if at
the same time the legal-tender notes were,
under certain restrictions as to time and
quantity, made convertible at the pleasure of
the holder into interest-bearing bonds, that
the value OF both bonds and currency might
be so greatly and so rapidly enhanced as to
make resumption of specie payments a mat
ter OF much less difficulty than it now ap-
pears.
Ii it be objected that this measure involves
the contraction of the legal-tender currency,
the Commissioner would reply that he is in
favor OF such contraction. Resumption of
specie payments can be commenced at any
fimp ic Of
mencement, but of continuance; and in Or
der that there may be continuance, there
must be certain proportion or ratio first es-
tablished between the amount to be redeem
ed and the agency (coin) which is to redeem.
This ratio, considering the amount of legal
tender and national bank currency in exist
ence, could not probably with safety, at the
existing premium on gold, be assumed at less
than the total amount OF United States notes
now outstanding. At present the treasury
has no such amount of gold at command, and
for the future but two methods present them
selves for its obtainment, viz: either to hoard
and accumulate gold out OF the national sur
plus revenue, or to reduce the volume of the
currency, either by direct payment or by
funding, (which is in one sense also payment)
to point where the ability of the treasury
will be sufficient to compass the end desired.
The first is work of time, and dependent
upon many contingencies. The second can
be effected more rapidly-perhaps as rapidly
as may be desirable. But this is the problem
to be worked out sooner or later, and if the
commissioner has rightly stated its condi-
tions, much of the discussion which is con-
tinually taking place respecting the necessity
OF currency, and the desire of the people for
its continuance, is Of comparatively little mo-
ment.
The commissioner argues that as there Is
an annual balance of trade against us with
Europe of $7S,507, ,16S, exclusive of specie, il
gold be boarded an additional amount OF
bonds must be exported to pay for foreign
fabrics, equal to the value of gold hoarded.-
With this balance of trade against us we must
pay an increased foreign interest on the
bonds sent abroad in its place, which has the
same effect as the constant payment OF inter-
est on the gold. The expense and impractic-
ability of accumulating gold enough to effect
resumption render this plan doubtful.
Again, as bearing upon the proposition of
contraction as a method of arriving at re-
sumption, the commissioner believes that no
man can look back to the period when mod
crate contraction was authorized by Congress
and put his finger on one single bad result as
sumed to have flowed from such contraction
which was not due, in the first instance, to a
wholly imaginative influence; and, further
more, the commissioner asserts that no one
can review tie history of prices when con-
traction was authorized and in operation
without feeling convinced that there was
during such time, 1. e., from March, 1866 to
January, 1868, tendency to a gradual and
healthy shrinkage of values and prices; and
that the shrinkage which actually did occur
was equivalent, through an increase in the
purchasing power of the money in use, to a
practical increase and not to diminution of
the power of the currency to effect exchanges
This increase was estimated by the commits
sioner in his last report to have been equal
during the year 1867 alone, to at least $780,
100000
The Commissioner sees no economical OBJ
lection to an increase of the national bank
circulation equal to the proposed decrease Of
the United States notes, inasmuch as the
banks are required to resume specie payments
whenever the government shall do SO. The
authority Tor such increase of national bank
notes would be Immediately availed of in the
event of monetary stringency, but not ether
wise. If we assume that the aggregate pa
per circulation is not to be increased unit
specie payments are fully restored, the Com
missioner cannot conceive of any better
mode of giving fexibility to the currency
than this. 1t is alleged that an undue pro-
portion of the existing circulation issued un-
der the national banking law is held in the
Eastern States, and that the West and South
| are entitled by virtue of their population, To
| greater ratio than they now have. Ii thi:
| be true, as the Commissioner believes, the
| additional amount here contemplated nigh
| properly be assigned to those States where
| the alleged inequality is complained OF, thu
restoring the equilibrium contemplated b,
| law without taking from the Eastern State
| any privileges which they now enjoy. .-
REFUNDING OF THE NATIONAL DEBT AT 4
LOWER RATE OF INTEREST.
The national bonds and the legal tender
notes being once brought to par with gold
and the national credit thus fully restored
the gradual refunding of the debt at lowe
rate of interest becomes then, for the frs
ime,really practicable. We use the expression
'for the first time" because principle shoulc
be kept clearly in view which heretofore ba!
not always been done in the discussion O
this subject, viz, that the rate at which gcv
ernments can borrow is indicated not by the
nominal rates of interest which they may
offer, but by the price of their stocks. They
may indeed, as has been expressed by re-
cent foreign writer, six once for all in issu.
ing loan tthe interest which they will
have to pay, but the interest which the indi.
vidual fund-holder will derive is, of course
entirely determined by the price at which he
buys his stock" Whoever at this moment
buys in Europe our bonds, nominally yield.
ing six per cent. interest, for Is gold, prac
tically expresses the fact that the rate at
which it suits him to lend money to the Unit
ed States is eight ger cent. gold per annum
and there is no possible way in which the
United States. or any other government, can
help ITSELF with advantage in this matter, ex-
cept to so far elevate its credit as to render
the purchase of its securities at a higher
figure desirable, or what is the same thing,
induce loan to itself from the capitalist at
lower rate of interest. So long, therefore
as the government credit is deprecated, any
advantage to be derived from the issue OF
bonds bearing lower rate of interest will be
fully compensated by the reduction in price
which such bonds must sustain in the open
market; or, in other words, the only method
available alike to nations and individuals for
| the attainment of low rate OF interest is to
| offer perfect security. Furthermore, with the
| elevation of the national securities to par
| the issue of national bank currency, based
| upon bonds, will be equivalent, or nearly so
| to the issue of currency based upon specie
and with system of redemption, either in
specie or treasury notes, illegal tenders re.
deemable in specie,) which could be easily
provided for, the government might ther
safely remove all restrictions from free bank
ing, and allow the demand for currency to
regulate its issue.
CONTRACTS ON A GOLD BASIS.
One of the most wholesome measures, in
| the Judgment of the Commissioner, for
smoothing the way to specie resumption
| would be an act legalzing gold contracts
A much larger share of the business OF the
country than is generally supposed is now
| transacted in gold, the parties relying upon
| the rules of commercial integrity for the full
fiment of contracts when the law fails t