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Page 53
Recent history assures us that abuses have been practised in reference
to the bank circulation of the country, which have led to violent
revulsions and severe loss. England experienced the same results between
the years 1790 and 1840, and to such an extent that in the year 1844 her
statesmen devised a system whereby no further expansion of paper money
should occur. The amount then existing was assumed to be a minimum of
the amount required for commercial transactions, and it was ordered that
all bank issues beyond that sum shall be represented by a deposit of
gold.
If the Bank of England had been governed by considerations of public
welfare, and not by those of private interest, it would not have reduced
the rate of interest to 2-1/2 per cent. in 1844-'5, thus producing
violent speculation, and leading to the revulsion of 1849. Nor would the
bank have established low rates of interest only in the year 1857, thus
leading this powerful institution to the verge of bankruptcy, and to the
clemency of the British Cabinet in November of that year.
England has checked the paper circulation of the country, but has not
withdrawn from the bank the power to promote speculation by extravagant
loans at a low rate of discount.
The Governments of France and England have both assumed control of the
paper currency of their respective countries. This is sound policy, and
it is one of the prerogatives that must be exercised, in its full force,
by the Government of the United States and by all other governments, if
stability, permanency, consistency are to be observed or maintained for
the people. This is obviously necessary in a time of peace and
prosperity; it is perhaps more so in a time of rebellion or war, like
the present. Circumstances may arise where it will be the course of
wisdom and safety to suspend specie payment; and, in some extreme
exigencies, to forbid the export of specie.
This position was well explained by Mr. J.W. Gilbart, manager of the
London and Westminster Bank, who, in his testimony before Sir Robert
Peel, in 1843, said, 'If I were prime minister, I would immediately, on
the commencement of war, issue an order in council for the bank to stop
payment. I stated also that I spoke as a politician, not as a banker.
* * * I came to the conclusion that, under the circumstances of the war of
1797, a suspension of cash payments was not a matter of choice, _but of
necessity_.' (_Vide_ 'History of the Bank of England,' New York edition,
p. 130.)
We come now to consider what is necessary, in order to restore the
currency of the United States to a specie footing. This restoration is
demanded alike by motives of justice and sound policy. No contracts can
be well entered into, unless the currency of the country is upon a
substantial and permanent footing of redemption. It is a matter which
concerns every individual in the community; it is especially so to the
General Government in view of its extraordinary expenditures: and no
commercial prosperity can be maintained without it.
A restoration of public and private credit can be accomplished only by
an observance of those sound principles of finance that have been
announced by the wise men of our own and other countries. Mr. Alexander
Hamilton, Mr. Gallatin, Mr. Jefferson, Mr. Madison, each in his turn
advocated a national institution, by which the currency of the country
could be placed upon a reliable and permanent footing. Such an
institution should control the currency and receive surplus capital on
deposit; but need not interfere with the legitimate operations of the
State banks as borrowers and lenders of money, nor encourage in the
slightest degree, through loans, any speculative movements among the
people.
In the next place our people must resort to and maintain more economy in
their individual expenditure, and thus preserve a balance of foreign
trade in our own favor. It is shown that, during the fiscal year ending
30 June, 1860, there were imported into the United States goods, wholly
manufactured, of the value of ... $166,073,000, partially manufactured,
62,720,000.
We can dispense with two thirds of such articles during our present
national reverses, and rely upon our own domestic labor for similar
products, viz.:
Manufactures of Wool, $37,937,000
" of Silk, 32,948,000
" of Cotton, 32,558,000
" of Flax, 10,736,000
Laces and Embroideries, 4,017,000
Gunny Cloths, Mattings, 2,386,000
Clothing, 2,101,000
Iron, and Manufactures of Iron and Steel, 18,694,000
China and Earthenware, 4,387,000
Clocks, Chronometers, Watches, 2,890,000
Boots, Shoes, and Gloves, 2,230,000
Miscellaneous, 15,189,000
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166,073,000
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