As respects contraction, the instructive report lately addressed to the Secretary of the Treasury by Mr. Carey, the veteran advocate of manufactures, shows that the compound-interest notes are withdrawn; that a large portion of the greenbacks is held as a reserve fund by the banks, another large portion is locked up in the sub-treasury, and the actual circulation of the Union but $460,000,000,—really less than that of France or Great Britain, although our population exceeds that of either of those countries. And Mr. Carey, in his instructive letter, offers proof that our circulation, although in excess of the gold, silver, and bills circulating before the war, is not disproportionate to our commercial transactions. When the Secretary of the Treasury is ready, no serious contraction will probably be required, and no ruin will follow, if our merchants move with caution, and prepare for a return to the only safe standard of values. Let the manufacturer accumulate no stocks, but continue to make goods to order, to sell in advance. Let him cover his sales by the purchase of the materials as the wise and sagacious have done ever since the surrender of Lee, and we shall be ready for the notice that, after an interval of three or four months, the United States will meet their notes and contracts with specie.
Commerce will gradually adapt itself to this notice, as it has done to the decline of gold from 285 to 130 in less than a year. But it is urged that we have a thousand millions of debt to fund within three years, and therefore cannot resume. Did we not fund nearly a thousand millions at par in 1865, and most of this after gold fell to 30 per cent premium? Then the amount was drawn from hoards and commerce; but now our income exceeds expenditures, and we are reducing the debt ten or twenty millions a month; we require no funds for war or unproductive investments, and when we pay one hundred millions, we return it to those who will seek new loans for investment, and doubtless lend on more favorable terms.
At Paris, Brussels, and Frankfort, the average rate of interest last year was less than five per cent. Give Mr. McCulloch power to go there, to issue bonds for one twentieth part of our debt payable there in the currency of the country; and with such a fund at his disposal, he can at once reduce interest and bring back specie, or rather retain it; for we need not seek it abroad. When the Committee of Ways and Means intimate that they will give him this power, gold and exchange fall; if a doubt is expressed, both advance; and the simple question before the public is, whether we shall cripple the Minister of Finance and give the power to Wall Street;—whether our finances are to be governed by the Jews of the gold board and the speculators of the stock exchange, or by the Secretary of the Treasury. If we ended the war by placing one man on the field to direct every movement,—after we had tried in vain to conduct it by committees of Congress and rival generals,—will not one statesman, with plenary power, be equally effective on the field of finance?
The man who carried a Western State through the revulsion of 1857, and maintained specie payments when Boston and New York succumbed,—who has so well and so successfully wielded the limited power we have given him,—well deserves the confidence of the country. Let him have power at once to go to the fountain-head for the small balance we may require from the Old World; let him have the authority to raise funds to meet the floating debt and temporary loan, and to replace the seven-thirties and compound-interest notes as they mature, and we may confidently anticipate both an early resumption of specie payments and reduced rates of interest, and consequent diminution of debt. With a return to specie payments, our current expenses must fall from thirty to forty per cent, and we can well afford to resign any premium on gold we now enjoy.
TAXES ON PRODUCTION.
The Revenue Commission enlighten us on this point. In their very able and luminous Report they say:—
"The diffuseness of the present revenue system of the United States is doubtless one of its greatest imperfections, and under it the exemption of any article from taxation is the exception rather than the rule. To assert this, however, is no reflection on the judgment or skill of its authors. The system was framed under circumstances of such pressing necessity as to afford but little opportunity for any careful and accurate investigation of the sources of revenue; but it has most certainly accomplished the end designed, namely, the raising of revenue; and the country to-day is undoubtedly receiving by taxation far more revenue than is necessary for its legitimate expenditures. As a success, therefore, our present revenue system is a most honorable testimonial, not only to the wisdom of its authors, but to the patriotism of the people, who not only endured, but welcomed, the burdens it imposed upon them.
"A system of taxation, however, so diffuse as the present one, necessarily entails a system of duplication of taxes, which in turn leads to an undue enhancement of prices; a decrease both of production and consumption, and consequently of wealth; a restriction of exportations and of foreign commerce; and a large increase in the machinery and expense of the revenue collection.
"In respect to the injurious influence of this duplication of taxes upon the industry of the country, the Commission cannot speak too strongly. Its effect has already been most injurious. It threatens the very existence (even with the protection of inflated prices and a high tariff) of many branches of industry; and with a return of the trade and currency of the country to anything approximating its normal condition, it must, by checking development, prove highly disastrous.
"The influence of the duplication of taxes in sustaining prices is also, in the opinion of the Commission, far greater than those not conversant with the subject generally estimate; and were the price of gold and of the national currency made at once to approximate, and the present revenue system to continue unchanged, it would be impossible for the prices of most products of manufacturing industry to return to anything like their former level."