Year: 1872

II =


rency composed in part of United
States and in part of National Bank
notes, is strengthened by the aid which
may thus be furnished in resuming
and maintaining specie payments. In
the view am now to take, exclude
the idea that the Government wiz ever
abandon the issue of National Bank
Dotes, and undertake the issue of Uni
ted States notes in their place. The
result of such policy may be foreseen.
The people, deprived of the facilities
for business afforded by banks, would
seek relief through State institutions,
and without much delay Congress
would concede to them the right to
issue notes for circulation. This con-
cession would be followed by a surren-
der of the general Government of all
control over the paper circulation o.
the country.


The true policy will be in continuing
the National banking system, without,
however, yielding an increase OF its
issue in proportion to the volume ol
paper in circulation. There are two
effectual and certain ways of placing
the country iD a condition when specie
and paper viii possess the same COM


mercial value by diminishing the
amount of paper in circulation. The
difference between the commercial


value of paper and coin will diminish,
and by pursuing this policy the differ
ence disappear altogether. All legis-
lation limited in operation to paper is
sues of the banks or the Government,
whether bearing interest or not, and


which in effect shall tend to diminish
the market value of coin, will be found


upon analysis to contain plan for con-
tracing the value of paper currency,
and, all legislation so limited which
does not contain such plan will prove
ineffectaal. Accepting this proposition
and believing that the country is not


prepared to sustain a policy of contrac-
tion, it only remains for me to consider


the means by which the value of ouI
currency may be improved. The basis


Of a policy of improvement must be
found in steady refusal to add to the


paper in circulation until it is of the
same value substantially as coin. This


being accepted as the settled purpose


of the country, there can be no perma-


nent increase of difference between pa
per and coin, and an opportunity to be
given for the influence Unnatural
causes, tending upon the whole. to. a
better financial condition. We may
count, first, an increase of population
and the distribution over new Fields 1oi
business and labor; secondl ly;s in the
South especially the number of persons
having property and using and holding
money will increase. Next, we may
anticipate more general use o. money
IN Texas and the Pacific States, by


which practically for the rest of the
country the volume of the paperwiH be
diminished and the quantity of coin
increased-facts tending to produce an
inequality of value. The influences oi
these natural causes will be counteract-
ed in some degree bya increasing facil-
ity for the transfer of money from one
point to another, and by the greater
use of bank checks and certificates of
deposit. Rapid transit of merchandise,
in bringing the period of its consump-
tfon nearer to the time of its producz
tion, is an agency of similar sort.
Giving to these views their full weight,
l am prepared to say that the expert
ence of the last three years comedies
with the best judment can form, and
warrants the opinion that, under the
influence OF existing natural causes, cur
financial condition will gradually i'm
prove. During the last fiscal year there
were several circumstances of an un-
usual character tending to counteract
the natural course of affairs. I. Our ex-
ports of cotton fell of. thirty-seven
millions of dollars, and there ssre ex-
cessive imports of wool, tea, coffee and
sugar. The stock of wool in ware
houses on the 30th of June was suHi-
cient for six months consumption, of
sugar for four and a half months, of
coffee for five months, and of tea for
twelve months. In the ordinary course
of tgade the importation of these arti-
cles will be small during the current
year, with a CONSEQUENT favorab BILE effect
upon the balance between this and
other countries. The anticipation Of
the wants of the country, in connection
with decrease of our exports, which
the balance of trade, created
an active demand for coin and an adj
vance in the price. Notwithstanding
this adverse influeHce,a geld had aver
aged substantially the same premium
from January 1st toNoveInber 1st of the
preseht year and the corresponding
period of 1871. Not doubling that nat
ural causes will in time produce the re-
suit sought, it is advisable to bring the
power of the Government in aid of the
as far as practicable.


The revival of our foreign commerce
is one of instrumentality, and perhaps
the most efficient OF ALL. If the annual
of American vessels were
eighty millions instead of thirty, the
difference in the amount of-exchange
available abroad would meet large
partof the adverse balance on ordinary
years. The experience of Europe tends
to show that theiability ofa country to
specie payment is due largely
to the condition of the foreign trade.
Every measure which increases orinl-
proves the channels of transportation
between the seaboard and the cotton
and grain growing regions of the coun-'
try, or lessons the cost OF freights, adds
to our capacity to compete
successfully in the markets of the world.


Finally these measures which en-
courage American manufactures, espe-i
cially of iron, wool and cotton, and,
the importation of like pro-
ducts. affect favorably the balance of
trade and. help us towards the; end We
seek. This statement in these parts is
a general statement of policy that In
my opinion will aid the country in
reaching a condition where it will be
to resume and maintain
specie payment. Anticipating that
day, anticipate also that the burden
of resumption will rest upon the Gov
ernment. There are now more than
300 banks in the country and / can
not imagine condition of things So
favorable for a period of years as to en-
able them at all times to redeem their
notes in specie only. 2.'i e h'-'e


Without proceeding to a discussion
of the subject in detail, 1 think that all
will have been gained that is of value
when the treasury shall be prepared to