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that deficiency.



millions ($511,646,259 96). There remains a balance of disbursements of nearly two hundred and seventyseven millions ($276,912,517 66) to be provided for. Considering how this is to be done, the first suggestion Plans for meeting is an issue of the required amount in United States notes; but this, on the whole, he rejects. He does not, however, concur in the opinion entertained by some that the currency of the country, now composed of United States notes and notes of corpora tions, is greatly in excess of legitimate demands for its employment. Much less does he admit that any actual excess is due to the issues of United States notes already in circulation.

́value of gold.

It is true that gold commands a premium in notes; Variations in the in other words, that to purchase a given amount of gold a greater amount of notes is required. But it is also true that on the suspension of specie payments and the substitution for coin of United States notes, convertible into six per cent. specie bonds, as the legal standard of value, gold became an article of merchandise, subject to the ordinary fluctuations of supply and demand, and to the extraordinary fluctua tions of mere speculation. The ignorant fears of foreign investers in national and state bonds, and other American securities, and the timid alarms of numerous nervous individuals in our own country, prompted large sacrifices upon evidences of public or corporate indebtedness in our markets, and large purchases of coin for remittance abroad or hoarding at home. Taking advantage of these and other circumstances tending to an advance of gold, speculators employed all the arts of the market to stimulate that tendency and carry it to the highest point. This point was reached on the 15th of October. Gold sold in the market at a premium of 37 per cent.

The secretary then gives reasons sustaining his opinion



that this rise was not due wholly nor even in greatest part to the increase of the currency; that especially it was not attributable to increase of United States notes; but that any redundancy of circulation, and any depreci ation of currency, is really due to the increase of bank circulation and deposits.

Under these circumstances, the path is very clear. It leads to the support of a national circulalishing a national tion, and to the reduction of the bank-note

Necessity of estab

Its financial effect.

circulation. circulation, the central idea being the estab lishment of one sound, uniform circulation of equal value throughout the country, upon the foundation of national credit, combined with private capital. It seems difficult to conceive of a note circulation which will combine higher local and general credit than this. Every dollar will represent real capital actually invested in national stocks. It will establish a steady market for the national bonds, and facilitate the negotiation of them greatly. It will reconcile, as far as practicable, the interests of existing banking institutions with those of the whole people. It will supply a firm anchorage to the union of the states. Every banking association whose bonds are deposited in the treasury of the Union, every individual who holds a dollar of the circulation secured by such deposit, every merchant, every manufacturer, every farmer, every mechanic interested in transactions dependent for success on the credit of that circulation, will feel as an injury every attempt to rend the national unity, with the permanence and stability of which all their interests are so closely and vitally connected. Had the system been possible, and had it actually existed two years ago, can it be doubted that the national interests and sentiments enlisted by it for the Union would have so strengthened the motives for adhesion derived from other sources that

Its political effect.




the wild treason of secession would have been impossible?

Intrinsic wealth of the republic.

With the resources at the disposal of the republic, no one need be alarmed lest the United States may become unable to pay the interest on its own debt, or to reduce the principal to whatever point the public interest may indicate. There still remain immense resources which have not yet been called into contribution. The gold-bearing region of the United States stretches through nearly eighteen degrees of latitude, from British Columbia on the north to Mexico on the south, and through more than twenty degrees of longitude, from the eastern declivities of the Rocky Mountains to the Pa cific Ocean. It includes two states, California and Oregon, four entire territories, Utah, Nevada, New Mexico, and Washington, and parts of three other territories, Colorado, Nebraska, and Dakotah. It forms an area of more than a million of square miles, the whole of which, with comparatively insignificant exceptions, is the property of the nation. It is rich not only in gold, but in silver, copper, iron, lead, and many other valuable minerals. Its product of gold and silver during the current year will not probably fall very much, if at all short of one hundred millions of dollars, and it must continue gradually, yet rapidly to increase.

The deficiency of

may be supplied by loans.

It has been already stated that the amount to be provided beyond resources available under exthe current year isting laws is, for the current fiscal year, $276,912,517 66, and for the ensuing year, $627,388,183 56. To provide these amounts loans must be negotiated. Without any issues of United States notes beyond the amount now authorized, it seems certain that loans for the whole amount required for the current year may be negotiated at fair rates; and it may be confident ly hoped that before its close the resources of the coun



try will be so well understood, and the restoration of its territorial integrity so well assured, that capitalists will not hesitate to supply whatever may be needed for the subsequent year. In conclusion, therefore, the secretary thus briefly sums up his recommendations-that whatever amounts may be needed beyond the sums

Resumé of Mr. Chase's recommendations.

supplied by revenue and through other indicated modes, be obtained by loans, without increasing the issue of United States notes beyond the amount fixed by law, unless a clear public exigency shall demand it. He recommends also the organization of banking associa tions for the improvement of the public credit, and for the supply to the people of a safe and uniform currency. And he recommends no change in the law providing for the negotiation of bonds, except the necessary increase of amount, and the repeal of the absolute restriction to market value and of the clauses authorizing convertibility at will.

Financial contrast of the Republic


The great ability and power with which the money resources of the nation were wielded are and the Confeder- sufficiently manifested by the tone and character of the foregoing measures. They stand in very strong contrast with the course that was taken in the Confederacy, which from the beginning descended rapidly down to the inevitable gulf of bankruptcy. But Mr. Chase's success in carrying the affairs of the nation forward was, in an eminent degree, due to the resolute manner in which he was seconded by the banking institutions of the country. He has himself rendered to them a well-merited acknowledgment: "The promptitude and zeal with which many of the existing (banking) institutions came to the financial support of the government in the dark days which followed the outbreak of the rebel




lion is not forgotten. They ventured largely, and boldly, and patriotically on the side of the Union and the constitutional supremacy of the nation over states and citizens. It does not at all detract from the merit of the act that the losses which they feared, but unhesitatingly risked, were transmuted into unexpected gains."

That is a very strong government which every citizen, from the humblest laborer to the richest capitalist, is willing to risk his whole means to sustain.

From the opinions thus lucidly expressed by this great finance minister we may gather-though

The tendency of


wealth to concen- the war was as yet not half over-the inev itable tendency of wealth, like power, to concentration. The diffused financial resources of the nation were fast finding a focal point.

From the resources of the Republic I now turn to its means of defense at the close of 1862. And, first, of the


Mr. Cameron was the first Secretary of War in Mr. Lincoln's administration. He held that of

State of the army. fice until the beginning of 1862, when he was succeeded by Mr. Stanton.

In his report, made December 1st, 1861, Mr. Cameron represented the total strength of the army at 660,971 men. He says:

War report of 1861.

"In organizing this great army I was effectively aided by the loyal governors of the different states. . . . .. So thoroughly aroused was the national heart, that I have no doubt this force would have been swollen to a million had not the department felt compelled to restrict it. . . . It is said of Napoleon by Jomini that, in the campaign of 1815, that great general had, on the 1st of April, a regular army of 200,000 men. On the 1st of June he had increased this force to 414,000. The like proportion,

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