ficient supply had been secured, but that subsequent events made it necessary to renew these contracts at an advance of 50 per cent. in prices! How easy for some demagogue, courting popularity, to argue that to pay such obligations in specie, would be to plunder the public for the benefit of a contractor, and that the Government, when it is prepared to pay specie, ought to have the benefit of the current premium upon it, like any private citizen. In this way the dishonesty and scandal of a refusal to redeem in full the solemnly contracted obligations of the state may be so disguised and covered up, as to puzzle even well meaning and conscientious men.

The remedy is simple and obvious. The paper currency of the United States must not be allowed to depreciate. Not that gold can or ought to be kept at par. The exigencies of the country are too great, and the power of foreign ignorance and malevolence too real, to make that possible or desirable. But by a judicious curtailment of paper issues-by a tax on bank circulation-and by selling government bonds at the market price at every possible opportunity, thus making money comparatively scarce and good investments abundant, the spirit of speculation would be speedily checked, the prices of merchandise would fall, and the people, no longer stimulated and led astray by a fictitious prosperity, would quickly resume the wholesome habits of economy which they had learned a year ago, but from which they are beginning to depart.

It is easy to see that when the currency of the country is undergoing depreciation, the heaviest loss must fall upon the mass of working people. Capitalists scent the danger afar off, and exchange their money for land, or merchandise, or stocks, which represent real wealth. Merchants and traders, farmers and manufacturers, are able to advance the prices of their commodities, as fast as the medium of payment loses its value, while they pay their debts with greater facility than ever. But the laboring man has no such resource. He cannot postpone his work from day to day, to enable him to arrange combinations with thousands of fellow-workmen for an advancing scale of wages, nor will his employers admit his

claim till necessity compels them, and his necessity is apt to be greater than theirs. If his little earnings are in the savings bank, he has neither the knowledge nor the skill necessary to invest them in merchandise, nor the facilities indispensable for doing it to advantage. He is, therefore, the first and worst victim of financial repudiation, and a permanently depreciated currency is therefore preeminently a crime against the people!

It is almost too obvious to need remark, that such a depreciation tends to aggravate and perpetuate itself. As it operates continually to enrich the speculator at the expense of all regular industry, it naturally fosters extravagance in the former, while it impoverishes the rest of the people; thus doubly diminishing the surplus earnings of the community. By enhancing the cost of all merchandise, it compels the Government to pay dearer for its supplies, while it renders taxation less and less productive. Capitalists of course will not lend to a Government to be repaid at a discount hereafter, and therefore currency must continue to be issued and to depreciate, until it is repudiated altogether. Thus it happened with the American Continental currency, and the necessity of the case excused it. Thus it will probably happen with the Southern Confederate currency, and such a result would be in perfect harmony with every part of that gigantic swindle. But before such a consummation could be tolerated by the Government and people of the United States, surely the tongue of every honest citizen must cleave to the roof of his mouth, and his right hand forget its cunning!

It has been a great misfortune of the loyal states in the present war, that it has produced so little sensible diminution of their prosperity. A heavy tax bill at the outset, with the continuance of specie payments by banks and government, would have been the best possible financial position for the country. The nearer we can now approach to it by bringing our paper money as near as possible to a specie standard, (which can only be done by withdrawing a large portion of it from circulation,) the greater will be the economy practised by both government and people, and the more they will get for their money.

Our recent experience in currency may enable us to judge what effect the introduction of "free banking," based on United States stocks, would have on the finances of the community. If the issues of a central treasury, moderate at first, and always exchangeable at par for United States bonds, have had the effect at once to stop specie payments and in a few months to drive gold to a premium of 30 or 40 per cent., what would, what could be the effect of allowing thousands of petty banks to spring up like mushrooms over the country with the power of investing their whole capital in United States bonds, and exchanging those bonds for notes to be used as money! Should these notes fail to be redeemed on presentation, the bonds must again be sold to redeem them, and thus it would be in the power of any petty gang of swindlers to affect unfavorably the public funds. This, however, would be as nothing, compared with the wide-spread destruction which would result from the collapse of such a currency, expanded during a period of speculation to twice its proper dimensions, culminating in a disastrous revulsion, as much worse than any in our past history, as the system that led to it would be more unwieldy and more fatal.

Yet such is substantially the favorite financial scheme of the Secretary of the Treasury. An engine of far more political power than was the United States Bank in its proudest days, and far more dangerous financially, because entirely wanting in the centralization which is indispensable to a sound convertible currency. It is true the author of the scheme proposes to guard it by insisting upon a permanent reserve of specie, and by demanding periodical statements of assets and liabilities. But when these statements are numbered by hundreds and thousands, even supposing they are honestly rendered, who will be able to read them? And as to the specie, that may all belong to depositors and still conform to the requisitions of the law. Even if there were no depositors, and the specie were a bona fide reserve, it might be swept away in the first commercial crisis, and still leave the bank hopelessly insolvent.

There is indeed one, and only one, argument to be used in

favor of this scheme, which by the time these lines meet the reader's eye, will probably be a subject of earnest debate in Congress. While it is the unquestionable right of the general government to furnish the paper currency of the country, that right has been so long waived that the issues of local banks have superseded it, and have acquired a prescriptive claim on the public, which cannot readily be set aside. It seemsprobable that the Secretary, despairing of success in putting them down altogether, preferred to attempt the more feasible compromise of inducing local banks to issue a quasi national currency, guaranteed by deposits of national stocks, and therefore safe as regards ultimate redemption. But this forms no guarantee against the danger of overissues referred to above, producing periodical collapses in the currency and extensive financial ruin to the community. Whether these can be prevented at all under a "free banking" system, which opens the door to practically unlimited issues of paper money, seems doubtful-but possibly a provision that no bank should in any case invest more than one half of its capital in this way, and a prohibition of loans by such banks on mortgage or any securities, except commercial paper of moderate length, and above all a general release from all usury laws, at least up to some such limit as 9 or 12 per cent., might enable the experiment to succeed, until a real national currency could be substituted for it.

But we have trespassed quite enough upon the patience of our readers for the present. In bringing these somewhat desultory remarks to a close, we have no better moral to offer than what political economy has long since established: That labor is the only true source of wealth; that the best credit may be abused; that a redundant currency must depreciate; and that for nations as for individuals, "honesty is the best policy."

Since the above was in type, the report of the Secretary of the Treasury has been presented to Congress. Its conservative tone is as gratifying as it is unexpected; and we devoutly hope that he will allow no external pressure to interfere with his

resolution to check the issues of currency and to dispose of United States bonds at their market value. We cannot see that he could not have done this without further legislation, for the bids of lenders are the best evidence of market valuebut we concur with him in his proposed modifications of the law. We would also strongly recommend leaving the term of the loan to the discretion of the Secretary. The provision for optional redemption after five years, is "discounted," as the French say, by capitalists, who take it for granted that the bonds will be redeemed at the end of five years, and therefore bid much lower rates than they would for a positive ten years loan. By all means let the Government have all the money it can command on the shortest time, but should the conditions prove too unfavorable, let the longer term be resorted to. At any rate let the term, short or long, be fixed when the loan is made.

The Secretary's arguments to show that the currency has not depreciated, we must, with due deference, pronounce to be unsatisfactory. Of course the more notes are issued, the more will be required, when every fresh issue is accompanied by a rise in prices. Admitting the depreciation at present to be temporary in its character, how long will it take to make it permanent? The call for fresh notes means that the crowd of hungry speculators who have set the former issues flying over the land to enhance prices, and to build up and sustain fictitious values, want more for the same purpose. Meantime this nominal wealth is being squandered with frightful rapidity, while the Government needs every dollar the people can save to lend it. Precisely the same phenomenon occurred during the suspension of the Bank of England, and its directors argued as Mr. Chase does now, that the people needed the currency for their legitimate business. But when specie payments were resumed, though gradually and after long notice, half thecom mercial world was ruined. Yet what would the notes have been worth without such resumption? Let us be warned in time.

It is no reply to this to show that certain great staples have depreciated as well as the currency. No wonder if wheat,