that a great European money-lender had offered the government $100,000,000, at 80 per cent. for six per cent. bonds, and it was argued that it would have been wise to accept this offer for the sake of enlisting Rothschild and the Times in our behalf. However that may be, it was surely very desirable to enlist the wealth of our own people irrevocably in the great work of sustaining the government against rebellion.

The favorite idea, however, and the main reliance of the Secretary at this time, appears to have been a great popular loan, similar to those so successfully made in France during the Crimean war. He did not, perhaps, sufficiently consider, that while in France the people are given to saving, our own people are given to spending all and more than all their income, so that the available surplus wealth of the community is found chiefly in the hands of wealthy individuals and corporations. Accordingly the Secretary, having lost his chance with the capitalists, addressed a powerful and patriotic appeal to the banks of the three great commercial cities, disclosing to their managers at the same time, it is understood, the general outline of that masterly plan of military operations, which, if not interfered with in execution, would doubtless have justified his expectations. The banks, as is well known, responded promptly to the proposal, and assumed $150,000,000 of the government loan, which the Secretary doubtless hoped to see speedily absorbed through them by the people.

A new element of disturbance here began to manifest itself. Up to this time all loans and payments to and by the government had been made in specie. The financial position of the country had been unusually favorable. A very large crop of cotton had been exported, and much of it sold at enormous profits. An unusual demand for grain and flour in Europe had been met by copious supplies from this country, and thus large balances were created in our favor abroad, while our imports, owing to the uncertainty and apprehension which pervaded the community, were reduced to a very low point. Large quantities of gold flowed into the country, and money became abundant everywhere. But among the expedients resorted to by Congress to replenish the Treasury, was an issue of

$50,000,000 demand notes, redeemable in gold, and receivable at the treasury on a par with gold. No sooner was the volume of currency thus augmented than the inevitable laws of currency began to operate, and specie began to disappear from the bank vaults in which it had been long accumulating. The result was inevitable; the New York banks suspended specie payments, and all other banks throughout the country followed their example.

At this stage of affairs an attempt was made by a committee of bankers and merchants from the principal commercial cities to suggest arrangements by which the wants of the government might be met, without preventing an early resumption of specie payments. The scheme matured by them, after much deliberation and discussion, and proposed to the government, was as follows: that no more demand notes should be issued than the $50,000,000 already authorized by Congress; that the immediate and pressing demands of government creditors should be met by the issue of $100,000,000 of treasury notes, payable in one or two years with interest, and that further supplies when needed should be obtained by the sale of gov ernment bonds to the highest bidders. To prevent a needless drain of deposits, it was also recommended that the funds of the government should be temporarily entrusted to such banks as the Secretary of the Treasury might select, and payments made by checks upon those banks, without the intervention of the sub-treasury. In order to fortify the public credit, it was also earnestly recommended that Congress should immediately pass a joint resolution, declaring the intention of both Houses to establish an efficient system of taxation.

Of all these proposed measures the last only was adopted. Had they all been carried out, there is no reason to doubt that they would have been successful, at least for a time, in supplying the wants of the government and enabling the banks to resume specie payments without serious risk of insolvency. Whether they would have given permanent relief is a problem which cannot now be decided. It appears to have been the belief of the Secretary of the Treasury that they would not. According to his statistics the annual savings of the country be

ing only $300,000,000, while its public expenditure was nearly twice as much, temporary insolvency in some form was inevitable. It does not seem to have occurred to him, that if the lavish expenditure of our population had left a surplus of $300,000,000 in prosperous times, it was fair to presume that a close and compulsory economy might easily augment that surplus to $1,000,000,000. It is certain that for many months after the war began, the country paid its expenses and debts, domestic and foreign, with perfect ease and promptness. But as time passed on, the enormous and increasing waste of public money, the gigantic developments of the contest, and the returning spirit of extravagance in the people, as well as the systematic and persistent attacks of the English press upon our government and public credit, have turned the balance so heavily against us that probably no amount of financial skill could have maintained affairs on a specie basis, without producing great distress throughout the country.

Under these circumstances the course actually taken by the government was perhaps the least of necessary evils. The country still possessed in the credit of its banks a currency nearly equivalent to specie. But as the government could not borrow specie, even at a discount, it naturally preferred to issue its own currency, which it could not but regard as fully equal in value to that of the banks. To secure its universal reception, this currency was (very properly, as we think) made a legal tender. But as the bank currency of the loyal states. had never much exceeded $150,000,000, and as a redundant paper currency invariably produces speculation and inflation of prices, the government should have checked the issue of bank notes by taxation, to leave room for the safe circulation of its own paper. As this was not done, the very abundance of treasury notes stimulated the issue of bank notes and credits, for the latter could always be redeemed by means of the former. Paper money thus becoming excessively abundant, its owners had no alternative but to speculate with it themselves, or to lend it to other speculators. Prices of merchandise and especially of stocks began to rise, and as foreign merchandise could only be purchased with gold or its equivalent, the value

of gold and the rates of foreign exchange kept continually advancing. In short, all the phenomena of a depreciated currency have been plainly manifested.

It would be a great mistake, however, to assume with the London Times, and with certain "bullionists" at home, that the finances of the country are hopelessly embarrassed, or (the most ridiculous supposition of all) that the whole vast mass of pecuniary transactions throughout the country has been modified 20 or 30 per cent., because gold has commanded 20 or 30 per cent. premium. The truth appears to be, that while there has been some depreciation of currency, there has been a much larger advance in the value of gold, caused principally by the demand for exportation, but aggravated by speculation and needless panic. In illustration of this, let us suppose that our money consisted of barrels of flour, and that a sudden famine should occur in Europe. Of course the whole or nearly all of our "legal tender" merchandise would be sent abroad to feed the starving, and our banks and government would be compelled to postpone cash payments until after the next harvest. In like manner the ignorance of the English public, and the malignant calumnies of most of the English journals, have created a distrust, amounting to panic, of American securities, which have therefore been sent to this country in large amounts, with peremptory orders to sell them and remit the proceeds in gold or its equivalent. That a new and fresh country, like our own, with an unlimited demand for capital to make its vast natural resources available, but with its industry suddenly checked, its credit impaired, and its values depreciated by war, with a repudiated or suspended Southern debt of $200,000,000, should be able promptly to meet these extraordinary foreign demands, was out of the question.

The first effect of this state of things was to increase the market value not only of gold, but of all other merchandise which could be employed to pay our debts abroad. This effect was greatly aggravated by the redundancy of paper money. When the amount of currency in circulation is double the quantity required by the public, the holders of it will necessa rily have some difficulty in getting rid of it, and at length

this can only be effected by paying higher prices for what they buy. The difficulty, however, is only transferred, not remedied; and the seller becomes in turn a buyer of something else at an advanced price. So the vicious circle of speculation continues, until an equilibrium is established between the amount currency and the values it measures.

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In the meantime, another element of disturbance, and a very dangerous one, may have been introduced. If everybody were certain that the Government currency would be redeemed at par in gold within a reasonable time, it is difficult to suppose that a premium of nearly 40 per cent. would voluntarily be paid for gold. Undoubtedly the disposition to speculate in gold and other merchandise, at constantly advancing prices, has been greatly enhanced by a tacitly recognized apprehension that the United States Government will ultimately prove unable or unwilling to pay its debts in full. This scandalous imputation was made long since by certain English journals, and is probably concurred in by many foreign merchants here, as well as by certain disloyal or desponding Americans. Just as it was predicted that "the North would not fight," that "the West would join the South," and that "Congress would not levy taxes, and the people would not pay them," so now it is asserted that the country will repudiate its obligations!

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Yet, preposterous as it may seem, this supposition indicates a real danger. It would have been absurd to have saddled the nation with the redemption of Continental money, at a many hundred times above that for which it was originally received. So at the South, few would probably be found simple enough to expect the arch-repudiator to make good his "Confederate scrip" for the benefit of speculators and dishonest contractors. In like manner, if our able but somewhat eccentric minister of finance should persist in his course of increasing the volume of paper currency instead of diminishing it, its depreciation will become so great as to furnish a plausible argument for repudiation. It is said that a few months since, large contracts for government clothing were cancelled by the Quartermaster-General on the supposition that a suf