Year: 1865

MEASURES RECOMMENDED.


I'VE have omitted from this report only


the minor and immaterial parts, which


would have .too greatly crowded our col


umns to-day. Those parts which are of gen.


eral and particular interest are given


TREASURY DEPARTMENT, !


WAsHiNGroN, December. 4, 1863 !





The present legal tender acts were war


measures, and while the repeal Of those pro-
visions which made the United States notes


lawful money is not now recommended, the


Secretary is of the opinion that they ought


not remain in force one day longer than shall
be necessary to enable the people to prepare
for return TO the constitutional currency.
1t is not supposed that it was the intention
OF Congress, by these acts, to introduce a
standard Of value, in times of peace, lower
than the coin standard, much less TO per-
petuate the discredit which must attach TO a
great nation which dishOnors its own obliga-
tions by unnecessarily keeping in circula-
ton an irredeemable paper currency. lthas
not, in past times, been regarded as the
province of Congress to furnish the people
directly with money in any form. Their au-
thority Is ''to coin money and fix the value
thereof" and inasmuch as a mixed curren-
cy, consisting of paper and specie, has been
found to be a commercial necessity, it would
seem also to be their duty to provide, as has
been done by the National Currency act, that
this paper currency should be secured beyond
any reasonably contingency. To go beyond
this, however, and issue government obliga-


tions. making them by statute legal tender
for all debts, public and private, is not be-
lieved to be, under ordinary circumstances,
within the scope of their duties or cOnstitu-
tional powers.


GREENBACKs TO BE WITHDRAWN.
The reasons which are sometimes urged in
favor of United States notes as permanent


currency are, the saving of interest and their
perfect safety and uniform value


The objections to such policy are, that
the paper circulation of the country should
be flexible, increasing and decreasing accord


ing to the requirements of legitimate bust
ness, while, if furnished by the government,
it would be quite likely to be governed by
the necessities Of the Treasury or the inter
est of parties, rather than the demands of
commerce and trade. Besides permanent
government currency would be greatly in
the way of public economy, and would give
power to the party in possession of the gov
| crnment; power which there might be
strong temptations to use for other purposes
| than the public bookkeeping the question
| of the currency constantly before the people
! as political question: than which few things
would be more injurious to business.
But the great and insuperable objection, as
already stated, to the direct issue of notes by
the government, as apolicy, is the fact that
the government of the United States is one
Of limited and defined powers, and that the
| authority to issue notes as money is neither
expressly given TO Congress by the Constitu-
tion, nor fairly TO be inferred, except as a
measure of necessity in great national ext
| gency. No consideration of mere pecu-
MARY character should induce an exercise
| by Congress Of powers not clearly contem-
| plated by the instrument upon which our
| political fabric was established. + : =
While, therefore, the Secretary is of the
| opinion that the Immediate repeal of the le-
\ gal tender provisions of the acts referred to
would be unwise, as being likely to affect in
| juriously the legitimate business Of the
| country, upon the prosperity of which de-
| pend the welfare of the people and the reve-
nues which are necessary for the mainten-
| ance Of the national credit and unjust to the
holders of the notes, he is Of the opinion that
not only these provisions but the acts also
should be regarded as only temporary, and
that the work Of retiring the notes which
have been issued under them should be
commenced without delay, and carefully
and persistently continued until all are
retired.


In speaking of the legal tender acts, refer
l.. il % IL I'll,
authorized the issue of United States notes
The interest bearing notes, which are legal
tender ior their face value, were intended to
be a security rather than n circulating me-
dium, and it would be neither injurious to
the public nor an act Of bad faith to the
holders, for Congress to declare that, after
their maturity they shall cease to be a legal
tender, while such declaration would aid
the government in its efforts to retire them,
and is therefore recommended.


CONTRACTION NECESSARY.
The rapiditv with which the government
notes can be Withdrawn will depend upon
the ability of the Secretary to dispose of Sc
curities. The Influences of funding upon
the money market will sufficiently prevent
their too rapid withdrawal. The Secretary,
however. believes that decided movement
towards a contraction of the currency is not
only public necessity, but that it will
speedily dissipate the apprehension which
very generally exists, that the effect of such
policy must necessarily be to make money
scarce and to diminish the prosperity Of the
country.


Ii is n well established fact which has not
escaped the attention of all intelligent OBJ
servers, that the demand for money increases
(by reason of an advance of prices with the
supply, and that this demand Is not untre-
quently most pressing when the volume OF
the currency is the largest, and imitation has
reached the eliminating point. Money being
an unprofitaple article to hold, very little Is
withheld from active use, and in proportion
to it, increase prices advance; on the other
hand, reduction of 1t reduces prices, and
as prices are reduced the demand for it falls
off; so that, paradoxical as it may seem,
diminution of the currency may in fact in
crease the supply of it.


Nor need there be any apprehension that
reduction of the currency-unless it be
violent one-will injuriously affect real pros
peritv. Labor is the great source of nation
al wealth, and industry invariably declines
| on an inflated currency. The value of
| money depends upon the manner in which
it is used. If it stimulates productive in
dustry it is a benefit. II, on the other hand,
| it diminishes industry, and to the extent to
| which it diminishes it, it is an evil. Even
in the form of the precious metals, it may
not prove to be wealth to nation. The
| idea that country is necessarily rich in pro-
| portion to the amount of gold or silver it
possesses, is 4 common and natural, but an
erroneous one, while the opinion that real
prosperity is advanced by an increase of
paper money beyond what is absolutely
needed as a medium for exchanges of real
values. is so totally fallacious, that few sane
| men entertain it whose judgment is not
clouded by the peculiar financial atmosphere
which an initiation is SO apt TO produce.
An irredeemable paper currency may be
necessitv. but it can scarcely fail, if long con-
| timed. TO be a calamity TO any people. Gold
and silver are the only proper measures Of
! value.


Here the Secretary shows the evil re-
suits of an inflated edirredeemable currency.l


The present initiation following the sus-
pension OF 1851, is the result of heavy ex-
| penditures by the government in the pros
| ecution of the war and the introduction Of
new measure of value in the form Of United
States and Treasury notes as lawful money.
The country, as a whole, the ravages OF the