NATIONAL FINANCES-RANDALL'S BILL. LETTER FROM HONORABLE E. G. SPAULDING. DEAR SIR: I am much obliged for the information contained in your letter, and I trust you will pardon me for the remarks I am about to make. I have watched with a good deal of interest the various plans brought forward in Congress in relation to the National Finances and Amendments to the National Banking Law. Every business man in the country is on the look out to see what is to come next. Every one engaged in legitimate pursuits wants a fixed policy and steadiness in financial affairs, and yet all are under constan. apprehensions, fearing that some scheme will be hastily passed by Congress which will derange monetary affairs, and upset all their business calculations. Many enterprises are postponed. The building of railroads, ships, warehouses, elevators, furnaces, and other manufacturing establishments are held in abeyance until it can be more clearly seen what is to be done with these schemes, and what is to be the future in regard to financial affairs. It is obvious that this suspense and apprehension operates very unfavorably upon individuals as well as upon the revenues of the government. Congress in its official capacity has thus far acted wisely. It has not passed any of the individual schemes that have been brought forward. It has been content to "let well enough alone." It has refused to increase the national currency above $300,000,000. It has not passed Mr. Randall's grand scheme of repudiating the faith of the Government with the National Banks, and turning the Treasury Department, in time of peace, into a great permanent machine for the issue of an irredeemable paper currency, when there is not the least necessity for it, and when all history proves it to be unwise as tending to retard the resumption of specie payments, and resulting in general financial disaster, bankruptcy and ruin, both to the Government and people. It has refused to pass the twenty pages of pending amendments to the National Bank Act, (House bill No. 771.) which, if passed, would make the law worse instead of better. In short, the Senate and House, as legislative bodies, have submitted to the introduction of these injudicious measures to be talked about, but as yet they have not been unwise enough to let any of them be passed into laws to further disturb existing arrangements under laws already passed, and which, up to the time of the meeting of Congress were operating very favorably, under a moderate contraction of the currency, in preserving a good degree of steadiness and uniformity in the money market, keeping business steady and prosperous, and enabling the Secretary of the Treasury to establish more certainly the public credit at home and abroad, and make a most favorable exhibit of the national debt. These are matters of great consequence to the welfare of the nation, and I sincerely hope that no hasty or indiscreet measures will be allowed to pass. The people of the country need rest, and in order to secure it I trust that Congress will hold a steady purpose, and not pass laws at one session to be repealed in the next. We are cursed with too much legislation, and I am gratified to see the present Congress holding back on all impracticable schemes. The act of Congress passed on the 12th of April last, it seems to me, is a wise and judicious measure. It authorizes the Secretary of the Treas ury to dispose of 5-20 gold bonds, and with the proceeds to retire six per cent. compound interest notes and the plain legal tender greenback cur. rency and other indebtedness of the Government, but not to retire more than $4,000,000 of greenbacks a month, or $48,000,000 a year, but without restriction as to the amount of compound sixes that may be retired during any week or month. This law is discretionary with the Secretary of the Treasury. Power is given him to contract the currency, but he will no doubt use this discretionary power prudently, and not retire either greenbacks or compounds any faster than it can be done without materially disturbing the legitimate business of the country. His object will be in the future, as it has been during the past year, to keep a steady and uniform money market. This will be a necessity on his part to enable him to successfully carry on the fiscal affairs of the Government. Under a very stringent and panicky money market the 5-20 bonds would fall below par, thereby stopping conversion of 7-30s into the 5-20 bonds, and this in view of $650,000,000 of 7.30s falling due between this and July 15, 1868, would embarrass and derange all the operations of the Treasury Department. The Secretary of the Treasury must therefore of necessity be moderate and discreet in contracting the currency under the law of the 12th of April. The Secretary will, no doubt, by a moderate and prudent course of contraction, endeavor to keep the business and industry of the nation in a prosperous condition, in some degree check wild speculation, gradually reduce prices, and bring greenbacks and national currency near the specie standard. On this point the Secretary, in his last annual report, makes the following judicious remarks: "How rapidly the United States notes may be retired, must depend upon the effect which contraction may have upon business and industry, and can be better determined as the work progresses. No determinate scale of reduction would, in the present condition of affairs, be advisable. The policy of contracting the circulation of Government notes should be definitely and unchangeably estab lished, and the process should go on just as rapidly as possible without producing a financial crisis, or seriously embarrassing those branches of industry and trade upon which our revenues are dependent." As the volume of currency is reduced it will increase in value, and as soon as the specie standard is reached the national banks will be obliged to redeem their circulating notes in specie. The Government can retire, whenever it seems best, from the field as an issuer of paper currency, and consequently will not be under the necessity of providing gold and silver to redeem it. The burden of redeeming the national currency in gold and silver will then be thrown exclusively upon the banks that issue it, and they will be required to keep the necessary reserves of coin for that purpose. It seems to me that the act of the 12th of April contains all the power for contracting the currency which is necessary to bring the business of the country back to the specie standard, as it was before the rebellion. It may take three years, five years, or even ten years to accomplish that result. When the old uniform standard of gold and silver is reached, and prices and the business of the country are again based thereon, National Banks will take the place of the State Banks in the issue, cir culation and redemption of the currency necessary to carry on the fiscal affairs of the Government and people. The Treasury Department will be relieved from a duty that was forced upon it as an imperative necessity during the war, and the Government left to perform its legitimate functions under the Constitution, the currency being thereafter regulated by the wants of trade and industrial pursuits. It was never intended by the originators of the legal tender acts that the issue of an irredeemable paper currency should ever become the permanent policy of the Government. In the opening speech I made in the House on the 28th of January, 1862, on the bill introduced by me, I said that "the bill before us is a war measure; a measure of necessity and not of choice, presented by the Committee of Ways and Means to meet the most pressing demands upon the Treasury, to sustain the army and navy until they can make a vigorous advance upon the traitors and crush out the rebellion. These are extraordinary times, and extraordinary measures must be resorted to in order to save our Government and preserve our nationality." The credit of the Government, by the legal-tender act, was brought into immediate requisition, and in the most available form to provide ways and means for sustaining the army and navy to crush the rebellion. It was in effect a forced loan from the people to the Government, in a most perilous period in our history, and was justified mainly on the ground of imperative necessity. It was a temporary measure passed in a most pressing exigency, and should not be continued any longer after peace is restored, than seems to be necessary to conduct us safely back to that standard of value which is recognized by all the nations of the world. In the speech to which I have above referred, I further said: "A suspension of specie payments is greatly to be deplored, but it is not a fatal step in an exigency like the present. The British Government and the Bank of England remained under suspension of specie payments from 1797 to 1821-2-a period of twenty five years. Gold is not as valuable. as are the productions of the farmer and mechanic, for it is not as indispensable as are food and raiment. Our army and navy must have what is more valuable to them than gold or silver-they must have food, clothing and the material of war. Treasury notes issued by the Government on the faith of the whole people will purchase these indispensable articles, and the war can be prosecuted until we can enforce obedience to the Constitution and laws, and an honorable peace be thereby secured. This being accomplished, I will be among the first to advocate a speedy return to specie payments, and all measures that are calculated to preserve the honor and dignity of the Government in time of peace, and which I regret are not practicable in the prosecution of this war." The National Banking Law, passed to continue for twenty years, was intended as a permanent system. It was intended that it should take the place of the State Banks, in furnishing a solvent national currency of uniform similitude and value for the whole country. The arguments put forth in the last annual report of yourself and the Secretary of the Treasury, in favor of sustaining the National Bank currency, seem to ine to be cogent and conclusive. I advocated the National Bank Law, not for any immediate relief it would give to the Treasury, but as a permanent system of currency and banking. In the remarks which I made in the House on the day of the passage of the bill, I said, "that I should vote for it, not that I think it will afford any considerable relief to the Treasury in the next two or three years, but because I regard it as the commencement of a permanent system for providing a national currency that will, if wisely administered, be of great benefit to the people, and a reliable support to the Government in the future." All the advocates of the Legal-Tender Act while it was pending in Congress, based their arguments upon the necessity of its passage as a temporary relief to the Treasury during the war, and not as a permanent policy of the Government. On the contrary, the National Banking Law was advocated as a permanent system of national currency and banking for the whole country. The State banks, in this and other states, especially the banks in the State of New York, gave up their State organizations with great reluctance. But in consequence of the law which taxed State circulation out of existence, the State Banks were obliged to come under the National Banking Law for self-preservation-a law which on its face was to continue for twenty years. It has taken something over three years to put in successful operation about 1,650 National Banks under one system, and which are directly under the control and regulations of the officers of the Government at Washington. A few of the banks have but recently perfected their organizations and obtained from the Department their circulating notes. Before the ink is fairly dry on the last issue of National Currency we are startled with a bill reported from the Bank Committee in the House to emasculate and destroy this system of national banking. I say destroy it, for no man at all conversant with the advantages of private banking and its freedom from taxation and other restrictions, would consider it any inducement to remain under the inquisitorial supervision imposed by the National Banking Law, if the right to issue circulating notes is taken away from them. These banks have been organized in good faith by the stockholders under the national law, because, in the first place, State Bank circulation was killed by United States taxation, and in the next place great inducements were held out to them for a national circulation to continue twenty years. What a breach of faith on the part of the Government in holding out inducements to organize under this law, killing off the State Banks first, and then turning a short corner to kill off the National Banks, children of its own creation. Are all the rights which the stockholders of the banks have acquired under this law to be thus summarily disposed of? How many banks would have organized under this law if the stockholders had supposed that their rights to issue circulating notes would be taken away from them as soon as they were organized? Not one in a hundred, for the simple reason that there would be no inducement to come under the restraints of the national law without circulation. It is said that these banks can continue to do business on their capital and deposits. This is no doubt true; but it could be much better carried on by the stockholders as private bankers, without the onerous taxation and restrictions imposed by the national law. The organization of State and private banks would be much better, larger latitude being giv en to operate, and much freer from inquisitorial examinations. If this bill now pending in the House is passed and becomes a law, it will pretty effectually use up the national banking system. It has taken about four years to build it up, and within three years it will be so far destroyed as to make it no object for stockholders that can organize into private banking companies to remain in the emasculated and restricted condition in which they will be placed. What security can men have for investing their money aud basing their business calculations under a national law? The insecurity and scandal that will attach to such hasty and inconsiderate legislation will deter all prudent men from placing too much reliance upon a law of Congress passed at one session, organizing a great system of national policy, to be emasculated or repealed before it gets fairly into operation. It looks too much like confiscating the property of incividuals under the pretence of creating a sinking fund to pay off the national debt. I hope the Senate and House will carefully consider this measure in all its bearings before they pass a law involving such important consequences in regard to its breach of faith in destroying the acquired rights of the stockholders in these banks, and the disastrous consequences likely to follow the issue of Government paper money as a permanent policy. Yours very truly, To HON. H. R. HUBBARD, E. G. SPAULDING. Comptroller of the National Currency, Washington. BUFFALO, Jan. 23, 1867. RAILROAD EARNINGS FOR DECEMBER AND THE YEAR. The gross earnings of the specified railroads for the month of December 1865 and 1866 comparatively, and the difference (increase or decrease) between two periods, are exhibited in the following statement: With exception of the Illinois Central and the Ohio & Mississippi, the above figures are official; for the two excepted roads the earnings for 1866, are only approximate, but based on semi-official information. The results for 1866 as compared with 1865 show an aggregate decrease to an unusual amount, and compared with the figures for November as follows: November.. Decrease..... 1866. Difference. Decrease.... $2:1,453 Decrease.... 1865. 545,234 |