Year: 1868




not be denied that we are paying an extra
ordinary per centage for the use Of the mon
ey borrowed, which was paper currency
greatly deprecated below the value Of
coin This fact is made apparent when
We consider 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 convert
ed into capital for national banks, upon
which those institutions issue their cifcu.
lation, realizing six per cent interest, and
that they are exempt from taxation by
the Government, and thereby enhanced
two per cent in the hands OF the holder.
We thus have an aggregate Of seventeen
per cent which may be realized upon each
dollar by the owners Of Government Sc
curities.


A system that prodace. such results il
justly regarded n faroring few at the
expense Of the many, and has led to the
further inquiry, whether bondholders, iu
view OF the large profits which they have
enJoyek, would themselves be averse 10
the settlement Of our debts upon a plan
which would yield them fair remuncra-
tion and at the same time be just to the
tax payers Of the nation. Our national
credit should be sacrcdly observed, but in
making proposition for our creditors we
should not forget what is due to the mass
es OF the people. 1t may be assumed
that the holders Of our securities have al
ready received upon their bonds larger
amount than their original investment.
measured by gold standard. Upon this
statement OF facts il would seem but lust
and equitable that the six per cent inter.
est now paid by Government should be
applied 10 the reduction Of the principal
in semi-snnual iDstallment., which. in six
teen years and eight months. would liqui.
date the entire national debt. Six per
cent IN gold would be. q. present rates.
equal TO nine per cent in currency-eauiy-
alcnt 10 the payment Of the debt one and
a half times in fraction less than seven
teen years. This, in addition 10 Other adj
vantages derived from their investment
would afford to the public creditors fair
aud liberal compensation for the use of
their capital, aud with this they should
be satisfied The lessons Of the past adj
monish the lender that il j. not well 10 be
over-anxiCus in exacting from the borrow
or rigid compliance. Provision must
be made for the payment Of the indebted
meas OF the Government In the manner
suggested. or the nation will not rapidly
recover IT. prosperity. Its interests re-
quIre that some measures should be taken
10 release the large amount Of capital in
vested IN the Government. IL is.now not
merely uDp.oductiye, but in taxation II
annually consumes Sl50.000, 600. which
would otherwise DO used by our enterpris-
ing people in aiding those of cur people
needing encouragement in their efforts 10
recover from the effects Of the rebellion
aud Iujudicious legislation and il should
be the will Of the Government to stimulate
them by the assurance Of an early release
from the burdens which impede their
live cannot take the burdens
from their shoulders we should at least
manifest a willingness TO help 10 bear
them. In referring TO the condition of
their circulating mediums | shall merely
the relations, as substantially
stated IN my last annual message. In re-
iation 10 the subject of the relations
which the currency OF any country should
bear TO the annual produce circulated by
ITS means, It Is question upon which POI
litical economists have not agreed. nor
can 1t be controlled by Legislation, but il
must be left to the laws which everywhere
regulate commerce aud trade. The cir
culating medium will flow to those points
where II is in greatest demand the law
of demand and supply is as unerriug as
that which regulates the tides of the
ocean; aud indeed currency, like the tides.
has its ebbs and flows throughout the
world At the beginning of
the rebellion the bank note circulation of
the country amounted to not much more
than 5000, 100000; now the circulation
of the National Bank Notes and those
known as legal tenders, is nearly $780,
100000. 1t is argued by some that this
amount should be increased aud thus con-
tend that decrease is absolutely essential
to the interests of the country. In virtue
of these adverse opinions it may be well
to ascertain the proportional value of our
paper issues when compared with me-
tallic or convertible currency. For this
purpose let US inquire how much gold
and silver could be purchased by the
500, 900, 900 of paper money now in cir
culation. Probably not more than half
the amount of the latter. showing that
when our paper currency is compared
with gold and silver its commercial value
is compressed into S350,000,000 This
striking fact makes it the duty of the
Government, as early as may be consistent
with the principles of sound political
economy. to take such measures as will
enable tho holders of its notes and those
of the National Banks, to convert them
without loss into specie. The equivalent
reduction of our paper circulating medi-
ums may not follow. This, however,
would depend on the law of demand and
supply, though it should be borneln mind
that by making legal tenders and bank notes
convertible into coin, or its equivalent, the
specie value in the hands of their
holders would be enhanced 10 per cent
Legislation for the accomplishment of o re-
suit so desirable is demanded by the highest
The Constitution contemplates
that the circulating medium of the country
shall be uniform in quality and value. At
the time of the formation Of that instrument,
the country had just emerged from the Rev
olutionary War, and was suffering from the
effects of worthless paper currency. The
sages of that period were anxious to protect
their posterity from the evils which they
had experienced; hence, in pro-