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Page 80
'He expresses an opinion in favor of this plan with the greater
confidence, because it has the advantage of recommendation from
experience. It is not an untried theory. In the State of New York,
and in one or more of the other States, it has been subjected, in
its most essential parts, to the test of experiment, and has been
found practicable and useful. The probabilities of success will not
be diminished but increased by its adoption under national sanction
and for the whole country.
'It only remains to add that the plan is recommended by one other
consideration, which, in the judgment of the Secretary, is entitled
to much influence. It avoids almost, if not altogether, the evils
of a great and sudden change in the currency by offering
inducements to solvent existing institutions to withdraw the
circulation issued under State authority, and substitute that
provided by the authority of the Union. Thus, through the voluntary
action of the existing institutions, aided by wise legislation, the
great transition from a currency heterogeneous, unequal, and
unsafe, to one uniform, equal, and safe, may be speedily and almost
imperceptibly accomplished.
'If the Secretary has omitted the discussion of the question of the
constitutional power of Congress to put this plan into operation,
it is because no argument is necessary to establish the proposition
that the power to regulate commerce and the value of coin includes
the power to regulate the currency of the country, or the
collateral proposition that the power to effect the end includes
the power to adopt the necessary and expedient means.
'The Secretary entertains the hope that the plan now submitted, if
adopted with the limitations and safeguards which the experience
and wisdom of senators and representatives will, doubtless,
suggest, may impart such value and stability to Government
securities that it will not be difficult to obtain the additional
loans required for the service of the current and the succeeding
year at fair and reasonable rates; especially if the public credit
be supported by sufficient and certain provision for the payment of
interest and ultimate redemption of the principal.'
Congress adjourned after a session of eight months, and failed to adopt
Mr. Chase's recommendation. Indeed, it had then but few advocates in
Congress or the country. Events rolled on, and our debt, as anticipated
by Mr. Chase, became of vast dimensions. In his Report of December,
1861, the public debt on the 30th June, 1862 (the close of the fiscal
year), was estimated by the Secretary at $517,372,800; and it was
$514,211,371, or more than $3,000,000 less than the estimate. In his
Report of December 4, 1862, our debt, on the 30th June, 1863, was
estimated by Mr. Chase at $1,122,297,403, and it was $1,097,274,000,
being $25,023,403 less than the estimate. The _average_ rate of interest
on this debt was 3.89, being $41,927,980, of which $30,141,080 was
payable in gold, and $11,786,900 payable in Federal currency. It will
thus be seen that the whole truth, as to our heavy debt, was always
distinctly stated in advance by Mr. Chase, and that the debt has not now
quite reached his estimate. Long before the date of the second annual
Report of the Secretary, the banks had suspended specie payments, and
the Secretary renewed his former recommendation on that subject in these
words:--
'While the Secretary thus repeats the preference he has heretofore
expressed for a United States note circulation, even when issued
direct by the Government, and dependent on the action of the
Government for regulation and final redemption, over the note
circulation of the numerous and variously organized and variously
responsible banks now existing in the country; and while he now
sets forth, more fully than heretofore, the grounds of that
preference, he still adheres to the opinion expressed in his last
Report, that a circulation furnished by the Government, but issued
by banking associations, organized under a general act of Congress,
is to be preferred to either. Such a circulation, uniform in
general characteristics, and amply secured as to prompt
convertibility by national bonds deposited in the treasury, by the
associations receiving it, would unite, in his judgment, more
elements of soundness and utility than can be combined in any
other.
'A circulation composed exclusively of notes issued directly by the
Government, or of such notes and coin, is recommended mainly by two
considerations:--the first derived from the facility with which it
may be provided in emergencies, and the second, from its cheapness.
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