Year: 1866

Il


The Financial Situation.


We recently had occasion to refer TO a letter


written by Mr.. McCnlloch to some Of the "solid


men" OF Boston, in which he undertook to en-


tighten them on the subject of his financial


views by the utterance OF q few stale platitudes


and vague generalties, which lead to the infer


ence that he fails TO comprehend the position


of the country, and that he is either ignorant OF
the financial history of England or Indifferent


10 its teachings He says that we have TO over
come great financial difficulties; but he neither
defines them nor tells how he pro-
poses to overcome them, and apparently
he has formed no plan by which this result
is TO be achieved. In other words he is with
out any policy or ideas on this important sub
ject; and to be equal to the responsible task
entrusted to him he ought to have policy
and fully understand the nature of his work.
sense of the term, he is mere banker, who
looks upon the fiscal affairs of great nation
pretty much in the same way as he regarded
the State Bank Of Ind ana; and the only reme-
dy he proposes for all the evils Of our siua
tion is a restoration of specie payments
the way to reach which he is at no
pains to inquire or explain. Ever
since he succeeded to the Treasury chair he
has been busying himself about details which
would have been better If left to take care of
themselves Thus at one time he has been
regulating the gold market, at another secretly
exchanging seven-thirty notes for bonds, and
mysteriously manipulating the market by en-
ploying brokers to buy and sell the public se-
curties. This was little better than childs
play for financial minister who should
have engaged himself in devising a COM
| prehensive scheme for the consolidation
| and redemption Of the floating debt
and the funding of the heterogeneous mass Of
securities at present representing the national
debt into common STOCK iiao ooo:.ssoo.ass. We
are glad to find that one of our contemporaries
agrees with us in this view of the case, main
tanning that the return to specie payments, the
reduction Of prices, the regulation Of the cur
rency and the protection Of great producing
interests will regulate themselves If Mr..
McCuioch will attend to his proper work.


In advocating the return to specie payments
at all hazards he is, nnconsciously or otherwise,
the advocate of the fuadholders, and especially
of the national banks, whose property in Sc
curities would appreciate BY return to hard
money in about the same ratio as the property
of the country generally would be deprecated;
but while the bondholders would gain say
eight hundred millions, or one-third of their
investment the community at large would lose
five thousand millions Of dollars. Those who
own the public debt, therefore, constitute the
class most anxious for return TO specie pay
ments. 1t was the same in Great Britain after
the termination Of the Napoleonic wars in
1915. All the fundholders were bullionists,
and they were SO largely represented in Parlia-
ment that they succeeded in passing
measures favorable to specie resumption, which
for many years kept the country in a state of
distress unparalleled in its history, and which
| led several times to serious riots. threatening
revolution. Specie payments were at length
reached in 1921, but at what q sacrifice to the
mass of the people the reader of the history Of
the time may be able to conjecture. In this
country, however, the bondholders have
no such controlling power over legislation
as yet, and it would be a great national
evil if they had. Nevertheless they will
clamor for it; but we suggest that If
specie payments are to be resumed by any
forced process within the next two or three
years, that, in order 10 insure equality, the
interest on government securities be reduced
one-half simultaneously Herewith. Mr.. McCul-
loch's arguments are opposed to the interests
of every one in the country who is not fund
holder; but he is careful not to say anything
about that excrescence of our time, the national
banking system. To the national banks the
national debt is indeed national blessing


England is the only nation that affords us
a historical example Of the disastrous effects
Of q forced return to specie payments, and
| we are unjust to ourselves II we fail to take
warning and profit by it The history of paper
money in France during the Revolution, in
this country during the War Of Independence


and in the late Confederate States is one OF


utter failure; for in each case the currency be-


came worthless, although II served the pur-


poses OF those using II for the time being, and


without the assignats France would have been


in a bad plight Mr.. McCulloch will do well


to carefully read and digest the financial his


tory Of England from 1915 TO 1880. He will


find 1t a chronicle Of wrecks, Of commercial


ruin, Of general impoverishment Of the people


and retrogressve movement, Of the nation.


He will at the same time do we'll 70 forget


that bis former experience Of awild cat "


banks In the West Is not particularly valuable


In connection with the administration Of the


finances Of the United States, and that specie


paymeng are mol as necessary TO Their saliva


tion as they may have been nj one time 70 hc
State Bank of Indiana.