Page images

Amount of circulation.

$9,736,757 Amount of deposits.....

5,698,275 Reserved and contingent fund..

910,800 Specie...

3,783,984 Eastern deposits..

1,704,013 Notes of United States and other banks...

Notes and bills discounted.....

State stocks, United States stocks, and bonds
and mortgages

2,877,283 The City Bank, Columbus, and Forest City Bank are in liquidation.

THE DEBT OF EUROPEAN NATIONS. We condense from the London Economist the essential facts in relation to the indebtedness of the principal nations of the Old World, which go to show that the United States, even after the immense expenditure re quired for the preservation of its nationality, will be far behind the contemporaneous governments in the matter of a large debt. We have turned the pounds sterling into our own currency at the rate of five dollars to the pound, which is near enough for the purposes of this article. The amount, however, will not be strictly accurate,


In the article from which we quote, the debt of India, part of Great Britain virtually, is separately given, and the writer confesses that "if Austria had boasted of a surplus, and if Hungary bad been getting deeper and deeper into debt, we should have vigorously contended that the accounts of the provinces and the accounts of the empire must be considered together. The following is the debt of England itself: DECEMBER 31, 1847.

DECEMBER 31, 1861. Funded debt.... $3,862,009,255 Funded debt.... $3,922,100,035 Unfunded debt.. 89,732,500 Unfunded debt.. 77,649,000

In India.

Total...... $3,951,741,755 Total...... $3,999,749,035

The following is the debt of India : At the date of the last published returns, being Dec. 31, 1860, for English debt,

In England. April 30, for India...

$386,451,225 $148,374,950 which is an augmentation of England's debt of about $235,000,000.

This does not include any liabilities of the Indian government or railway guarantees.

The debt of England is $4,237,820,300.


Funded debt of France....


1861. $1,943,655,380

making an expenditure in ten years of over $840,000,000 more than its income. France never has a surplus. In the year 1858, which was not affected by the Crimean war or by the Italian war, and in which the revenue of France was greater than it had ever been before or since, the account stood : Expenditures .

$371,800,000 Revenue...


[blocks in formation]

Austria never bas a surplus. The governments of Europe bave generally a habit of spending a good deal more than their income, and borrowing to supply the deficit. Average revenue for four


1857-60 $144,375,000 Average expenditure...


Average annual deficit.....

$53,375,000 Total national debt, April, 1860... $1,468,000,000 To which has since been added over...

55,000,000 Last year Austria spent $44,500,000 over and above her income.


Italy is added to the list of countries whose finance is likely to press on the money market for a time. The total debt is $411,276,710. This is not much for a nation of her resources, but the excess of expenditure over revenue in the year 1861--the sum wbich she had to borrow—was but little short of $63,000,000, and this with a total revenue of but $98,000,000.


Of Russia we have not a very authentic account of her revenue and expenditures for the last few years. She has lately come into the market for a loan, and probably shares the want of money with the other nations and “the rest of mankind.” By the Authority of M. OGAREFF, in a book recently published, the debt is stated as follows, and this is probably an approximation to the truth, if not the correct figures. The total debt in 1861, was $412,050 000. The statement in this book would also make it appear that Russia, during the year 1860, paid off $26,000,000 of her debt.






Treasury Department, June 7, 1862. Sir: The act of July 17, 1861, authorized the issue of $50,000,000 in U.S. notes, payable on demand, and receivable for customs.

This authority was enlarged under the act of February 12, 1862, by the addition of $10,000,000-making $60,000,000 in all.

The acts of Feb. 25, and March 17, 1862, authorized temporary deposits in the Treasury at rates of interest not exceeding five per cent, nor for a greater aggregate sum than $50,000,000. This act of February 25, 1861, authorized the issue of $150,000,000 in United States notes, provided, however, that the demand notes issued under former acts should be retired and cancelled as rapidly as practicable, and that the aggregate of such notes and of the United States notes to be issued under this aut should at no time exceed $150,000,000. AU the notes to be issued were made a legal tender, but none except the demand notes, were made receivable for customs.

Under these laws, $60,000,000 in demand notes, receivable for customs, have been issued, and $90,000,000 in notes not so receivable. The aggregate now outstanding is, therefore, $150,000,000, being the whole amount authorized by law.

Of this aggregate about $56,500,000 in demand potes are held by banks and capitalists, and not used as circulation, being held at a premium in consequence of their receivability for customs of from { to per cent, and about $3,500,000 are held in the treasury for circulation.

The whole issue of $60,000,000 in demand notes may thus be regarded as practically withdrawn from circulation. This withdrawal leaves only the issue of $90,000,000 of United States notes not receivable for custoins, increased gradually by the substitution of the potes for the demand potes cancelled, from which conversion into bonds redeemable after five years, and payable in twenty years, called for convenience, five twenties can be expected to be made.

The limit of temporary deposits is now reached, and nothing further can be expected from that source, for so long as the limit shall be maintained, current receipts of such deposits can only be equal to the payments. It is therefore upon the conversion of United States notes into five twenties, now practically limited to the $90,000,000 of legal tender

[ocr errors]

notes and upon receipts from customs, that the treasury must depend, under existing legislation, for means to meet current expenditures.

No safe reliance can be placed on conversions, so far as experience bas afforded any grounds of estimate, for more than $150,000 daily, and the daily average revenue from customs during the past month has been about $230,000. The aggregate daily receipts from both these sources, therefore, cannot be estimated at more than $380,000, may very possibly fall short of that sum, while the average daily expenditures cannot be estimated at less than $1,000,000, and will probably, unless very considerable retrenchments are made, exceed that sum.

I therefore propose the removal of the restriction upon temporary de. posits. The plan of receiving them has worked well, and is likely to continue to work well in future. The rate of interest, limited to five per cent by law, bas been reduced to four by my direction, and it is not proposed to increase it unless some exigency shall make the increase necessary.

The amount of deposits at four per cent now exceeds $9,000,000, and will become steadily larger if the restriction be removed. Payments will, of course, be frequently required, but the pressure must be very great which will reduce the receipts below them, while, in ordinary times, the latter will constantly exceed the former. It may indeed become practicable to reduce the rate of interest even below 4 per cent, with advantage. Whatever the rate allowed, the average excess of deposits above reimbursements will constitute a loan to the government at that rate. In order to retain the average excess at this maximum, it may be well to provide by law that, of the United States notes hereafter authorized to be issued, there shall be always reserved in the treasury, or from issue, an amount of not less tban one-third the amount deposited.

Such a provision would make the treasury the best of savings banks and by its guaranty of prompt payment under all circumstances insure the highest confidence, and augment to its maximum the flow of deposits. I estimate the amount of loan likely to be made to the Government at 4 per cent or less, in this form, at not less than $20,000,000, in addition to the $50,000,000 already deposited.

I propose also that authority be given to the Secretary of the Treasury to issue : 150,000,000 in United States notes, in addition to the issue already authorized, and that these be made a legal tender for debts, except interest on loans, and receivable in payment of all loans to the United States for all government dues except duties on imports and interest.

If this authority be given, the proposed reserve of an amount, say $34,000,000, not less than one-third the temporary deposits, and the replacement of that portion of the $60,000,000 of demand notes, say $56,500,000, now practically withdrawn from circulation and held for payment of customs, will require for the present at least say $90,500,000 of the proposed additional issue, leaving as an actual present addition to the resources of the Government only $59,500,000.

This amount, however, gradually increased as it will be by the retirement of the demand notes, will be paid in for public dues, and the replacement of them by other United States notes will probably suffice for all demands, which cannot be met from conversions and from customs.

If Congress shall see fit to authorize the additional emission proposed,

it seems bighly expedient that such part as the public convenience shall require be issued in denominations less than $5.

I am aware of the general objection to the issue of notes under $5, and concede their cogency. Indeed, under ordinary circumstances they are unanswerable ; but in the existing circumstances of the country they lose most if not all their force. The country is involved in the expenditures of a contest for national existence, and it is bigbly desirable that the burdens of the people be made as tolerable as possible.

If the restriction on the issue of small denomination be removed, the wants of the country will absorb a circulation of $25,000,000, and perbaps more. The interest on this circulation, say $1,500,000 a year, will be saved to the tax-payers.

Payments to public creditors, and especially to soldiers, now require large amounts of coin to satisfy fractional demands less than $5. Great inconveniences in payment of the troops are thus occasioned. With every effort on the part of the treasury to provide the necessary amount of coin, it is found impracticable always to satisfy their demands.

When the amount required is furnished the temptation to disbursing officers to exchange it for any small bank-notes that the soldiers or the public creditors will take, is too great to be always resisted. And even when the coin reaches the creditors it is seldom held, but passes,


general, immediately into the hands of sutlers and others, and disappears at once from circulation. The inconveniences, therefore, to the government and creditors, from the absence of United States notes of small denomi. nations, are not compensated by anybody.

It may properly be further observed that, since the U. S. notes are made a legal tender and maintained nearly at par of gold by the provision for the conversion into bonds, bearing six per cent interest, payable in coin, it is not easy to see why small notes may not be issued as safely as large ones.

The notes made a legal tender circulate as money, and the government may authenticate by device and imprint small notes, as well as small coins. The limit is to be found only in public convenience, which it dictates denominations in notes similar to denominations on gold, leaving the small circulation of silver (less valuable than gold) as before.

Another consideration which deserves to be taken in the account is this, that resumption of payments in specie can be more certainly and easily effected, and with far less inconvenience and loss to the community if the currency, small as well as large, is of United States notes, than if the channels of circulation are left to be filled up by the emissions of nonspecie paying corporations, solvent and insolvent.

These considerations of economy of public advantage and of private convenience seem to me to justify fully the removal of the restriction upon the issue of small notes.

I propose, further, to make arrangement for the necessary engraving and other work for the printing and preparation for the issue of these notes in the Treasury Department at Washington. I am led to believe that a very considerable reduction of expense can be thus effected. The prospect, in my judgment, certainly warrants the trial.

With these objects I have prepared a bill wbich I propose to submit to the consideration of the committee. The condition of the treasury renders prompt action highly desirable, and I trust it is not necessary to

« PreviousContinue »