Year: 1867

aud IN view of the relations that the ia
tionai banks sustain to the Government
| ignoring in this connection the question O
good faith, the Secretary has no difficult
/ in coming to the conclusion that the
/ should be sustained. They are SO inter
woven with all branches Of husineSs, an
are So directly connected with the credit O
the Government, that they could not b
! destroyed without precipitating upon tn
country financial trouble which it IS nov
IL 10 condition to meet. At some NOR
rropitious period, when the Union shall
have been fully restored, and all the State
shall have attained that substantial pros
perity which their great resources and th
energy of the people must sooner or late
secure for them, it may perhfps be wis
for Congress to consider whether the ma
tional banking system may not be dispen
sed with. The present is not favorable
time to consider this question. The con
dition Of our political and financial affairs
is too critical to Justify any action tha
would compel the national banks, or any
considerable number of them, to call il
their loans, and put their bonds upon The
market for the purpose of providing means
of retiring their circulation.


BANKS RETIRING NOTES.


Arguments in favor of compelling the
banks to retire their notes and yield tht
field to the notes of the Government are
based upon the question that If three hun
dred millions United States notes were
substituted for three hundred millions oi
national bank notes now in circulation the
Government would save some eighteen
millions dollars interes'. which is now {;
gratuity to the banks. IF an account were
opened with the banks, and they were
charged with interest Oh three hundred
millions of dollars, and tie losses sustained
through those that have failed and credit
ed with interest on the United States notes
held by them as q permanent reserve, with
taxes paid by them to the Government and
States, and with a commission covering
only what has been saved in transferring
and disbursing the public money, it would
be a>certained that the banks were not
debtors to the United States.


1t is not necessary, however, for the Sec
retaTy to dwell on this point, as his main
objection to the substitution would not be
removed ii /" saving Of interest would be
effected by it. Regarding, as he does the
Issue Of the United States notes in the first
instance as having been misfortune, and
their continuance as 4 circulating medium,
unless the volume shall be steadily reduced,
as traughv with mischief, the Secretary car
conceive no circumstances that would JUS
tfy a further issue. These deprecated
but ,egui tender notes, notwithstanding the
reduction that has taken place, still stand
III the WuE o. 4 return 10 specie payments.
\ substitution of them for bank notes
would be regarded by him and the country
as a declaration that resumption
had Oeen indt initely postponed. If
those now outstanding shall be retired at
the rate Of four millions per month, the
amount III actual circulation will sOou be
reduced 50 that they may not seriously re
taId the restoration of Il true measure value
Ii, on the contrary, under any pretence,
Or tor aiF purpose whatever, their value
should be Increased, especially if they
should DE made the sole paper circulation
Vi the country, Il false measure OF value will
be continued, speculation viii be stimula-
ted, ludnstry viii decline, and great risk
be incurred. That financial health will be
only obtained 10y Il revulsion, the effect Of
which upon the material interests and cred
1t OF Luo country no one can estimate -
Such a revueiUn the Secretary is most anx-
ious to prevent, and he therefore cannot
approve Of the proposition for substituting
notes Of the United States for National
Bank, bur recommends that the policy Of
contraction be continued.


1t Is frequently urged by those who ad-
mt that the currency is redundant that
the country Is not now III a condition to
bear further contraction that its growth
will soon render contraction unnecessary
that business ii left to itself, will rapidly
increase to such an extent aa to require
three hundred and eighty millions OF
United States notes and fractional cur
rcncy and three hundred millions OF bank
notes, now outstanding, for it, proper and
neelful accommodates. Nothing can be
more fallaciou8 than this unfortunately
popular idea. An irredeemable currency
l. Il financial disease which retards growth
instead Of encouraging it which stimu-
iates speculation but dirninishcs labor. A
healthy growth is to be secured by q re-
moval of disease, and not by postponine
the proper treatment of it in the eXpecta-
ton that the vigorous constitution of the
patient Will eventually overcome it.


The next subject to he considered III
connection with the permanent resumption
Of specie payments in the maintenance OF
public faith, which involves the necessity
Of wise and stable revenue laws, imparti
ally and vigorously enforced ; economy in
the public expenditures, and recognition
of the obligation Of Government to pay its
bonds in accordance with the understand
ing under which they were issued.


TAXATION.


To tax wisely, SO as to raise large reve
nues without expressing industry, is one
Of the most difficult duties ever deyolveC
upon the law making power. Taxation
can never be otherwise than burdensome
and it becomes especially SO when subjec
to frequent changes. It is, therefore, o
great importance that the revenue law;
should be stable.


THE TARIFF.


IL order that the present tariff should bt
a revenue tariff, important modification
will be necessary, which cannot be intelli
geutiy made until business ceases to bt
subject to arrangement by irredeemablt
currency. The Secretary does not, there
fore. recommend a complete revision o
the tariff at the present session but there
are some features OF it and some matter
connected with it which require early at
tentiOn.


The experience of the Department dis
closes many disadvantages attendant upo1
the collection Of duties on imports whe1
the rates are high and estimated on an dc
UulOT2tD2 basis.


STRICT OBSERVANCE OF CONTRACTS NECESSARY
Public faith does not depend alone upol
"a TO laXvC