THE TREASURY REPORT AND
MR. SECRETARY CHASE.
The military condition at the present time is highly encouraging; but our armies have not always been successful in the field, and many of our campaigns have ended either in disaster or without decisive results. The navy, though it has achieved much in some quarters, has not altogether answered to the reasonable expectations of the country or to the vast sums which have been expended to make it powerful and efficient. Our foreign relations, during the war, have sometimes assumed a threatening aspect, and, it must be confessed, have not always been managed with the skill and firmness due to our prominent position among the nations of the world. But there is at least one department of the Government whose general operations during all these vicissitudes have been the subject of just pride to the American people. In the midst of great difficulties, sufficient to appal and disconcert any ordinary mind, our stupendous fiscal affairs have been conducted with unrivalled firmness, ability, and success. All our military and naval operations, and indeed our whole national strength at home and abroad, have necessarily been in a large degree contingent upon the public credit, and this has remained solid and unmoved except to gain strength, in spite of all the disasters of the war on the land and on the water. The recent annual report of Mr. Chase, though chiefly confined to a simple statement of facts and figures, is like the account of some great victorious campaign, submitted by the unassuming officer who conducted it. The achievements of the Treasury are in fact the greatest of all our victories; they underlie and sustain the prowess of our armies, while they signalize the confidence and the patriotism of our whole people. Without them the peril of the Union would have been infinitely enhanced, and perhaps it would have been wholly impossible to conquer the rebellion. There was a narrow and difficult path to tread in order to avoid national bankruptcy; it was necessary within three years to raise fifteen hundred millions of dollars, and a single false step might have doubled or trebled the amount even of that enormous demand. How often has intelligent patriotism trembled to think that the failure of our finances would involve the probable futility of our sacred war for the Union, with all its tremendous sacrifices of life and property!
Nobly have the people sustained their Government; with a wise instinct of confidence, they have freely risked their money, as their lives, in support of their own holy cause. This confidence at home has given us unbounded strength abroad. Nor do the facts in the least diminish the credit fairly due to the Secretary, whose great merit is to have organized a system so well calculated to attract the confidence of the people and to inspire them with a sense of perfect security in trusting their fortunes to the keeping of the nation for its help and support in the hour of supreme peril. It is the highest evidence of wise statesmanship to be able thus to arouse a nation to the cheerful performance even of its obvious duty: this has been accomplished by Mr. Chase, under the embarrassment of repeated failures on the part of those who had in special charge to defend and promote our noble cause. The entire merit of this grand success can only be adequately estimated by considering how slight a mistake of judgment or want of faithful courage in conducting these momentous affairs would have thrown our finances into inextricable confusion. Our own experience immediately before the war, when there was no adequate conception of the extent of the trouble about to come upon us, shows how easily the public credit may be shaken or destroyed by incompetent or dishonest agents. In spite of envious detraction and interested opposition, these great and successful labors of the Secretary will remain an imperishable monument of his ability to conduct the most intricate affairs of government, in times of the most appalling danger and difficulty. He has undergone the severest tests to which a statesman was ever subjected; his genius and his great moral firmness have brought him out triumphant.
There are a few prominent points in the lucid report of the Secretary which constitute the great landmarks of his system. Adequate taxation was of necessity its basis; and, from the very beginning, Mr. Chase insisted upon a rigid resort to every available means of raising a revenue sufficient to strengthen the hands of the Government, and sustain its credit through all the vast operations which it was compelled to undertake. And now by reference to the actual figures, and by an analysis of the facts embodied in them, the Secretary shows that since the first year of the war, the taxes collected have paid all the ordinary peace expenditures together with the interest on the whole public debt, and beyond this have yielded a surplus which, had the war ended, might have been applied to the reduction of the debt. This sound and indispensable principle, beset with so many temptations and difficulties in time of civil commotion, is the very soul of the public credit; and the fearlessness with which the Secretary meets the contingency of prolonged war and the necessity of additional taxes, evinces his determination to strengthen and sustain the principle, rather than to abandon it under any possible circumstances. The enormous loans already so advantageously obtained, to say nothing of those additional ones which will probably be indispensable, could not have been negotiated on any reasonable terms without a firm adherence to this policy.
That part of Mr. Chase's financial system which is most questionable, and which affords his assailants a fulcrum for their attacks, is its interference with the State banks and with the currency which they have been supplying to the country. The issuance of Treasury notes in the form of a circulating medium, and with the qualities of a legal tender, has revolutionized the whole currency and exchanges of the country, and has given universal satisfaction to the people. But this popular judgment is by no means an unerring test of the wisdom or safety of such a measure. Its necessity, however, and its eminent success will forever stamp it as an expedient of great usefulness and value, especially as the Secretary has most judiciously arrested the system at that point where its unquestionable advantages still outweigh its acknowledged dangers and inconveniences. He informs us that these issues 'were wanted to fill the vacuum caused by the disappearance of coin, and to supply the additional demands created by the increased number and variety of payments;' and he adds: 'Congress believed that four hundred millions would suffice for these purposes, and therefore limited issues to that sum. The Secretary proposes no change of this limitation and places no reliance therefore on any increase of resources from increase of circulation. Additional loans in this mode would indeed almost certainly prove illusory; for diminished value could hardly fail to neutralize increased amount.'
In consequence of these issues, the average rate of interest on the whole public debt on the 1st of July last, was only 3.77 per centum, and on the 1st of October, 3.95 per centum.
It was to be expected that the banks, which have heretofore had an entire monopoly of the paper circulation, and of the large profits derived from its legitimate use, as well as from its disastrous and sometimes dishonest irregularities, would not very cordially receive the system which is destined to supersede their present organization entirely. The Secretary justly exults in the advantages of the sound and uniform circulation which he has afforded in all parts of the country. And as to the depreciation of the Treasury notes in comparison with gold, he reasons, with great force and truth, that the greater part of it is attributable to 'the large amount of bank notes yet in circulation,' remarking at the same time, that 'were these notes withdrawn from use, that much of the now very considerable difference between coin and United States notes would disappear.' Whether this belief of the Secretary be well founded or not, nothing can be more certain than the superiority of the Treasury notes to those of the mass of suspended banks, as they would have been after three years of the present war. It is frightful to think of the condition to which the currency would have been reduced at this time, if the Government had been guilty of the folly of conducting its immense operations in the suspended paper of irresponsible local banks. No one can doubt that the Treasury notes have been of immense service to the nation in its hour of trial; and if the limitation proposed by the Secretary shall be faithfully maintained, there need not be the slightest fear of any difficulty or discredit in the future. Upon the return of peace the whole issue will be easily absorbed and redeemed, either by the process of funding, or more gradually in the ordinary transactions of the Government.
On a kindred subject, that of the high prices at present prevailing, let Mr. Chase speak for himself. This statement is so direct and pertinent that nothing could well be added. He says:
'It is an error to suppose that the increase of prices is attributable wholly or in very large measure to this circulation. Had it been possible to borrow coin enough, and fast enough, for the disbursements of the war, almost if not altogether the same effects on prices would have been wrought. Such disbursements made in coin would have enriched fortunate contractors, stimulated lavish expenditures, and so inflated prices in the same way and nearly to the same extent as when made in notes. Prices, too, would have risen from other causes. The withdrawal from mechanical and agricultural occupations of hundreds of thousands of our best, strongest, and most active workers, in obedience to their country's summons to the field, would, under any system of currency, have increased the price of labor, and, by consequence, the price of the products of labor,' &c.
It is impossible to deny the force of this statement; and upon the whole we must acknowledge that most of the evils which have been attributed to the financial policy of the Government were inherent in the very nature of the situation, and would have developed themselves, more or less, under any system which could have been adopted. It is very obvious that they might have been greatly aggravated by slight changes; but it is not easy to see how they could have been more skilfully met and parried than by the measures which have actually yielded such brilliant results.