The Finances of the United States

ONE of the most striking features in our great conflict was the financial power of the Northern States. Relying chiefly on their own innate strength, they were enabled for five successive years to put into the field armies increasing and expanding gradually to a million of men, admirably equipped with the most effective weapons ; they were able also to fill their arsenals with rifles, artillery, and military stores; to command horses for their cavalry and transportation; to provide fleets of steamships, and blockade a coast of three thousand miles ; and to place under the guns of Fort Fisher forty iron-clads impervious to shot, while they destroyed the ramparts, mines, and armaments of that bulwark of the Confederacy. The conflict began with empty coffers and a failing credit, but the treasury was soon replenished, and the credit of the nation restored so that it raised more than three thousand millions by loans, and, during the last year of the war, more than a thousand millions, half by loans and half by taxes, in a single season,—the greatest achievement in finance which history records. Nor was the country exhausted. The loyal States could have continued the struggle for years. So far were they from debility, that, in the three years which have succeeded, they have reduced their funded debt three hundred and fifty millions, their floating debt at least one hundred and fifty millions more, and their interest fifty millions in addition, and paved the way for a further diminution. Such is still our affluence, that, after repealing half the imposts of the war, the nation finds revenues sufficient to meet the interest of the debt, the bounties for the volunteers, and the pensions for the wounded and the orphans and widows of the honored dead.

Providence favored our country. It sent up the oil springs from their rocky cells to sustain our commerce and revenue ; it gave us the placers of the Pacific, rich in gold and silver ; prolific wheat-fields and pastures west of the Mississippi, and new exports in place of cotton ; and brought fortune to our manufactures in the diminished supply of cotton. Issuing our loans at par during the war and floating them on our expanding currency, we could reduce our interest, and change the option of renewal which we gave the creditor to options in favor of the nation.

Having shown our ability to raise one thousand millions in a single year, having preserved the unity and prestige of the nation, we have reduced our interest and expenses the present year to less than one third of the expenditure during the war, and may reduce it to a fourth of that amount in the coming year, while our growing population and wealth will lighten still further the charges of the war. Indeed, we may well hope that taxes on our vices, — as imposts on liquors and tobacco,—will alone meet the interest on our debt, and extinguish the principal before the close of the century.

In the long contest of England with Napoleon, she resorted, as we did, to a paper money, and nearly doubled her consols by issues at fifty to sixty-five per cent in a depreciated currency. We took the opposite course, issuing our loans at par in the shape of compound-interest notes,— seven-thirties, five-twenties, and certificates of indebtedness, — reserving the privilege of paying at an early day; and we may return to gold with a reduction of twenty per cent on the amount of our debt. Although we have realized more money than England, having diminished our debt since the war by taxes imposed during its continuance, we may now, in place of fortytwo hundred millions, exhibit but twenty-five hundred millions of debt, one seventh of which bears no interest.

The South has suffered severely, but it already finds in the price of its cotton a return larger than it realized from both cotton and rice before the war; while the North, strong in its wool, wheat, corn, petroleum, minerals, railways, and factories, feels the effects of the war chiefly in the diminution of its shipping and in an irredeemable currency,—incidental effects of a protracted contest. In this posture of affairs the nation, after restoring the Southern States and giving equal rights to all its people, is about to enter upon the election of its rulers.

There naturally has been, and still is, a solicitude to lighten our taxes and to equalize our burdens; and doubtless, in some of the States, a few penurious men have sought to escape their justshare of the taxes by investments in the public bonds. This solicitude and these evasions supply a little capital to the recreants who forsook our flag during the war, but now readily volunteer to fill the offices of the State, and exclude those who risked life and fortune for their country. They propose to the country, while it still wears the laurels it has won in war and finance, to rob the men who trusted it in its hour of trial, to withhold the interest it has promised them, or to pay in paper which it has reduced to a discount of twentyfour per cent, and which it can depreciate at its pleasure. It may well be presumed that the men who propose these steps have no confidence that either the House or the Senate will sanction such disreputable measures ; they are doubtless designed to win the votes of the ignorant and degraded, and to carry them or their friends into office; but as they have been adopted by a party, and find some countenance among Radical leaders, it is well to glance at the arguments by which their baseness is defended : —

“ In law what plea so tainted and corrupt
But, being seasoned with a gracious voice,
Obscures the show of evil. In religion
What damned error but some sober brow
Will bless it, and approve it with a text.”

The men who favor such disgraceful measures urge that our bonds were issued in a depreciated currency ; that, while they promise to pay the interest in gold, they are silent as to the way in which the principal shall be met; that other nations borrow at reduced rates of interest and impose taxes on their coupons. Let us examine the strength of these positions. If the currency was depreciated, by whom was it depreciated? Was it the act of the debtor or of the creditor which depressed it ? and who should suffer, the debtor, compelled by impending danger to make a discount on his notes, or the friend who took the risk of his paper ? Can the man who has saved his life and fortune by the aid of his friend properly say to him ?—I am greatly obliged to you for your aid, but I propose to deduct twenty-five per cent from my debt; it is true I am rich enough to pay ten times that amount, that no one else would trust me when you did, and that I fixed the rate of interest myself; still, you made your advances, not in gold, but in my own depreciated paper. — Is it a fact that gold or its equivalent was not given for most of the bonds of the United States ? Of the whole amount of our national loans, there is reason to believe that two thousand millions were taken by the following classes, viz.: —

By Mortgagees, $600,000,000

“ Banks, 600,000,000

“ Savings Banks, 200,000,000

“ Officers and Soldiers, 200,000,000

“ Ship-owners, 100,000,000

“ Owners of horses, mules, and stores, early in the war 300,000,000

$ 2,000,000,000

If this be so, two thirds of the loans were taken by men who gave either gold or gold values for their securities. At the commencement of the war a large portion of our community was deeply indebted, and large amounts were lying in mortgages then overdue at six and seven per cent. As business contracted, and greenbacks came into use, the currency began to be affected, there was a wish to pay the mortgages with legal-tenders. The party who declined a tender risked his debt. To preserve his capital and income he invested the proceeds of his mortgages in government obligations.

In 1860 there were in the United States at least six million heads of families in a population of thirty-two millions. If we assume that they owed on the average two hundred dollars, or that every tenth man owed two thousand, the aggregate would exceed twelve hundred millions ; and, if half these mortgages were paid during the war, the amount would be six hundred millions. This is, of course, but an approximation ; it is, however, supported by the fact that the trustees of one estate in New York, holding in 1861 ten or fifteen mortgages, were required to receive more than half their loans, and invested the legal-tenders they received in national obligations.

There is good ground for the conclusion that six hundred millions lent in gold on mortgages was paid in greenbacks, and the proceeds invested in government securities.

As respects the banks : At the commencement of the war, their capital exceeded four hundred millions, and their loans, made in gold or its equivalent, were more than twice that amount. At least three fourths of these loans, when the national banks were organized, were called in, and reinvested at par in government securities. In this case the equivalent of gold was given for the national bonds to the extent of six hundred millions. Again, the Savings Banks, whose investments in two States,— New York and Massachusetts,—alone exceed two hundred millions, called in their loans, and invested at least that sum in national securities.

An equal amount was taken by officers and soldiers from the coffers of the nation in compound-interest notes, or was invested by them in other securities ; they gave, often with their lives, a full equivalent. At least a hundred millions more were taken by the ship-owners, who were obliged, early in the war, to sell their ships abroad and invest the proceeds in bonds, because the nation gave them no adequate protection. From these the nation had its equivalent. And finally, in the early stages of the war, before paper had been seriously depreciated, tents, harnesses, provisions, mules, horses, and other necessaries were furnished, to at least the amount of three hundred millions, — or more than one twelfth of our whole expenditure, — and the proceeds invested in bonds.

There is good reason to presume that two thousand millions of our whole debt, a sum equal to the whole amount now funded, was issued for a full equivalent, while the residue, chiefly to contractors, was issued in compound notes or certificates of indebtedness, since in great part paid, while much of the remainder is outstanding in greenbacks, or has gone into the hands of our friends abroad. Most of our debt is held by banks or small capitalists, little by corporations or manufacturers enriched by the war. They took certificates of indebtedness, and, requiring their capital for their business, sold their securities. Mercantile credit was paralyzed by the war, and those who bought their certificates or compound notes have been already paid. The small capitalists, who have generally paid full prices, who have been compelled to live upon their interest and pay the high prices of the war, would be defrauded and impoverished, were they required to reduce the values they have paid to the depreciated rates of the government paper. How can these classes be made whole or requited, unless they are paid in a specie currency ? and are they to suffer because manufacturers and contractors have realized profits in their transactions with government ? Upon what ground are they to be classed as speculators in a depreciated currency ?

But, were it true that the loans were made in a depreciated paper, was not the depreciation due to over-issues and to the war, and did not the lender take the risk of the war ? were not the issues of greenbacks limited ? and had we not a right to presume that a currency nowhere expressly sanctioned by the Constitution, and of questionable character, a mere temporary expedient, would cease with the struggle in which it originated ?

Great Britain, when she returned to specie, not only carried her consols from fifty to par or gold, but has paid them at par in sovereigns ; and this, too, with half the population, and less than one half the resources, the United States possess at the present moment. Pendleton and his associates, Hampton, Hill, Forrest, and Belmont, who have made a platform of cypress and cottonwood for the Democratic party, say there is no express promise to pay the principal of the five-twenties in gold, although the interest was thus payable.

The reason for this distinction was obvious ; the interest was payable at once, while the principal would not be paid until the close of the war. The creditor was anxious that his interest should be paid in gold, not in greenbacks, the currency of the war. The Secretary of State had repeatedly promised that the war should be finished in less than six months. The agents of the loans and the Secretary of the Treasury assured them that the government would pay in gold, that the greenbacks were a temporary expedient.

Relying on these assurances and on the unvarying usage of the government for the last eighty years to pay in gold, people took the bonds; and the nation is now estopped from saying that it has a right to pay in paper which it can depreciate to such extent as a political faction may determine. It is urged that other nations pay less interest, and impose taxes on their coupons; but how does Holland obtain money at three and England at three and a quarter per cent? It is not by taxing interest; they have never resorted to such injustice, or allowed the debtor to reduce interest without the consent of his creditor. England exempts even from her light income tax of one and two thirds per cent the coupons of every man who resides out of Great Britain. And what is the condition of Austria and Italy, which have taxed their coupons, and justify the act upon the plea of necessity ? While one taxes her fiveper-cent bonds fifteen per cent, and the other imposes ten per cent on hers, the bonds of Italy sell at fifty-five, and those of Austria at sixty-five per cent in the London Exchange, — a just punishment for such tergiversations. Do we wish to put our nation, which has preserved its honor untarnished for eighty years, through five wars, in the same financial category with that Austrian Empire which Webster so vividly portrayed ? Will it be worldly wisdom for us, who have two thousand millions of debt to renew, to reduce it in value to fifty-five or even sixty-five per cent? How much shall we gain, by paying in paper worth seventy-four in gold, if we bring down our loans from one hundred and ten to fifty-five per cent ? And if, like Massachusetts, during the most trying period of the war, we can by a strict regard to honor, by a rigid adherence to punctuality in the payment of interest and principal in gold, obtain money at three and three fourths in gold, is this not preferable to taxing six per cent coupons unjustly and disgracefully down to five and forty onehundredths? Does not simple honesty pay better than fraud or hypocrisy ? Is it not painful to see a distinguished Senator resorting to compulsion, and proffering to the creditor, in discharge of his five-twenties, a bond at four or five per cent, payable in specie ? Is it not humiliating to see the United States, in the flush of their youth and of a prosperity that surpasses that of any nation of the past or present age, placed for a moment in the attitude of an insolvent debtor in their dealing with the friends and supporters who stood by them, in the day of their trial ? What else, however, should we expect from those who conspired to effect our ruin?

The condition of dismembered Austria, with an accumulating debt, is doubtless similar to that of impoverished Italy ; and let us draw a parallel, for a moment, between the condition of Italy and that of the United States. In Italy, with twenty-eight millions of people, the imports are one hundred and ninety-five millions ; the exports, one hundred and forty millions. In the United States, the exports, reduced to gold values, exceed the imports, and are triple those of Italy. In Italy, the average interest is seven and three fourths per cent. In the United States, the five per cents are at one hundred and seven dollars. In Italy, the revenue has been one hundred and sixty millions ; the expense, two hundred millions ; while the deficit in time of peace has been as large as one hundred millions. In Italy, the average income of two and a half millions of families is from fifty to one hundred dollars. In the United States the average income of eight million families exceeds one thousand dollars in gold.

For four years past our Minister of Finance has been a statesman. He has educed order from the confusion of the war, husbanded our means, studied our sources of income, and aided in removing those temporary burdens which, however necessary in the hour of peril, on the return of peace bore heavily on the commerce of the nation. He has paved the way for a return to specie. He has faithfully fulfilled the obligations of the nation. He has urged the withdrawal of our depreciated paper, and an early return to gold. Under his administration our debt has been reduced a fifth, our interest a third, our taxes nearly or quite a half; and, under his guidance, the nation will soon reduce its tariff, and meet its interest with diminished taxes on liquors and tobacco. With a religious adherence to our engagements, our interest is fast falling to four and one half per cent and to an aggregate of one hundred millions. In this posture of affairs, the Pendletonians come forward with a new programme, as unsound as their other theory, that the debt is to be taxed, and both principal and interest to be paid in depreciated paper. The Pendletonian policy is developed in the Sunday Courier of Boston, a Democratic paper, as well as on the Democratic platform. The first step is to be the suppression of the Freedmen’s Bureau; but this has already performed its mission of mercy in guiding the colored race, suddenly raised from servitude to freedom, through a state of transition, and terminates with the current year, before the Pendleton party, if successful, can be placed in power. The second measure shadowed forth is the extinction of the right of suffrage on the part of the negro, and his exclusion from the militia.

It may well be asked whether it will be politic for the nation to disarm and disfranchise a race thoroughly loyal, because they have been prevented by their masters from acquiring education or property, and to allow them no voice in the choice of their rulers, or in the defence of their homes, when we have within ten years seen the rulers of Louisiana reduce to slavery the free French and Spanish Creoles, whose rights were guaranteed under our treaties with France ; when we have seen South Carolina send to prison the colored freemen of both Old England and New England, because an African sun had given a dark shade to their complexion ; when we have seen all access to the courts denied to the black prisoner; when our highest court of judicature has determined that a black was not a man, but a chattel. Such questions will be discussed elsewhere. Let us confine this discussion to measures of finance.

According to the Courier, Mr. Pendleton proposes to issue three hundred millions more of depreciated paper, and with this to extinguish the bank-notes, and cancel an equal amount of bonds, pledged for the bank-notes. He promises thus to save twenty millions yearly. Let us analyze this measure, and point out the fallacies on which it rests. In the first place, a large portion of these bonds are at five per cent, and the aggregate interest is but sixteen and a half millions ; here is a deficit of more than three millions annually in the amount of saving. Again, these bonds are not due, and they command, on the average, ten per cent premium; and here we find a further deficiency of thirty millions, or at least a million and a half of interest yearly. Thus the apparent saving is reduced to fifteen millions yearly ; and, if we remove all unnecessary taxes, as Congress proposes, in the interest of commerce, we extinguish Mr. Pendleton’s surplus of forty-eight millions more, which he would convert, with his twenty millions, into a hundred million of currency by selling gold at forty per cent premium. But his sixtyeight millions — did they exist — would, at forty per cent, produce but ninetyfive millions ; and here we have a further deficit of five millions annually. By this process, the whole hundred millions a year, with which he proposes in fourteen years to extinguish the debt, subsides to filteen millions a year in gold, or twenty millions a year for the present in currency. Let us pursue his fallacies a little further. He assumes that, for fourteen years to come, we are to have an irredeemable currency, and to sell our gold at forty per cent premium, when intelligent merchants and skilful financiers believe that within two years we may return to specie. Is the Pendleton era to be the golden age of Democracy, of which Old Bullion used to write and speak ? Is irredeemable paper the same currency for the creditor and the people set forth in the new platform ? We have funded our floating debt, except the greenbacks, within a year, and might fund them in compound notes at three per cent. We are throwing our whole interest on liquors and tobacco, and our pensions on stamps and licenses. What impediment, then, remains to be surmounted on the way to specie ? Before specie payments, the fourteen years’ term of national insolvency — the dream of Mr. Pendleton — will vanish, and leave him with but fifteen millions of possible annual saving. But if the bank circulation is redeemed as Mr. Pendleton proposes, what becomes of the tax of one per cent on bank circulation, or three million dollars, which the nation has for some years collected ? or the additional tax of one per cent more, which the House has voted, making an aggregate of six million dollars ? If we deduct these, the saving, which was in fourteen years to pay our debt, falls to nine million dollars a year. But this is not all; if the bonds are cancelled, we lose also the five per cent which the fifteen millions pay to the income tax, and thus reduce the imaginary saving to eight and a quarter millions. And how insignificant does this saving, accomplished by harsh and unjust measures, appear, when we contrast it with the saving, which the punctual payment of our interest in gold will effect, by reducing the annual interest on eighteen hundred millions from six to four and a half per cent, — a legitimate annual saving of twenty-seven millions in place of eight and a quarter millions. The difference alone would, before the dose of the century, nearly extinguish our indebtedness.

But the Pendleton theory is based on another fallacy, — the fallacy of continuing onerous taxes, like those on incomes, railways, premiums of insurance, and excessive duties,—serious checks to our comfort and commerce, — during fourteen years to come, for the mere purpose of paying the principal of our debt. Why pay this debt with such unequal taxes, when the reduced taxes on liquors and tobacco alone will, in the last three decades of the present century, pay both interest and principal. But then it is proposed, on the Pendleton platform, to tax the debt ten per cent. How are such taxes to be imposed ? By the express terms of the loan acts, the States are forbidden to tax the public debt, and the Supreme Court has sustained the prohibition.

The States cannot tax ; and how is the nation, after making an express contract with its creditors, — who may reside in some foreign country, —to pay a specific rate of interest, at liberty as a debtor to reduce it, by tax or legislation, to either five, four, three, two, or one per cent, or to extinguish it altogether? If it is at liberty to do the one, it is free to do the other. Who shall prescribe the limits ? When it contracted, did it receive the power either to reduce the standard of value or the rate of interest ? If local courts have no power to restrain, — and this is by no means conceded, — would it be justified in the court of nations, or before Heaven, or in the eyes of its own subjects, in such repudiation ? Let us personify the United States by a prosperous merchant, carried through adverse times by friends, both at home and abroad, who have poured their treasures into his lap, and taken his notes of uncertain value at his own offers. Let us imagine him restored to prosperity, in affluent circumstances, and, while placed himself beyond the reach of the sheriff, forgetful of honor and of future contingencies, insisting, like a fraudulent debtor, that his friends shall reduce the interest he volunteered to pay, and lose a fourth of their principal. This is the Pendleton theory, the cypress or cottonwood plank, of the new platform. The cry of “ Tax the national debt; pay the bonds in paper!” may, like a passing breeze, fill the sails of a few time-serving politicians, and may delude the ignorant, and float incompetency into office ; but this can never be the policy of a great nation, which, for eighty years, has preserved its honor and its prestige, and, from the days of Hamilton to the present hour, has been faithful to its creditors. The country cannot afford to lose its financial credit; it is an element of power, — its great corps de réserve in the future. We may expect insidious attacks on our credit from those who have felt the weight of this power; but the true patriot would resign our rifles and iron-clads sooner than our national credit.

Payment of the Debt.

There is no occasion at present to pay the debt bearing interest. For twenty years to come we have the option to pay most of it at our pleasure, at rates averaging five and three fourths per cent; while Austria and Italy, on whose level our Pendleton politicians would place us, pay seven and three fourths per cent, — not levied on a rich population like ours, but on a people impoverished by ages of oppression.

The silent operation of our imposts on liquors and tobacco will, without effort on our part, soon meet our interest, and provide a sinking fund for the principal. Stamps, licenses, and bank circulation will pay for pensions and the instruction of the negro ; and customs under a reduced tariff will meet, as before the war, the current expenses of the nation. We require our growing capital, not for the extinction of our debt, but for the development of our industry and for diversity of employment.

The war has injured certain branches of industry which require renovation. It has swept away horses and mules for cavalry, artillery, and wagons ; it has diminished our animal force, while it has increased our mechanism. It has taken for rations many of our Western cattle, replacing them by twelve millions of sheep, and converting grass land into wheat-fields. Consequently, horses are dear, and beef and dairy products command unwonted prices, while our wheat product is exuberant. It has checked the construction of ships, steamers, factories, houses, piers, and public improvements. Agriculture and commerce demand more facilities, and Young America requires new homes and workshops. While the war has given an impulse to mining, and lowered the price of coal — if we reduce paper to gold — to the prices current before the war; while it has nearly doubled the manufacture of wool, and given us mills and machinery sufficient to spin and to weave as much wool as England converts into cloth, it has given a check to cotton. While it has opened the ore-beds of Lake Superior, that now yield seven hundred thousand tons of rich magnetic ore, and has carried the yearly manufacture of pig-iron from one to two millions of tons, and extended our railways to forty - four thousand miles, and convinced us that we may pursue successfully the manufacture of linen, worsteds, silks, alpacas, and fabrics of jute and mohair, it has shown us the necessity of many more public improvements to carry food and raw material to our factories or to points of shipment.

The great object of the statesman now should be, not to trifle with the debt, but to remove burdens, to extend our agriculture, cherish and diversify our manufactures, revive commerce and ship-building by a return to specie, and the extinction of those war duties which were imposed to counterbalance the taxes we have removed from manufactures.

This is the province of the true statesman, — this is what the true interest of the nation imperatively demands. First, let us have no national taxes that can be dispensed with, no taxes on locomotion or on insurance, and no invasions of our privacy to tax the incomes of trades and professions, with which our industry creates taxable capital. Second, let us, instead of increasing our war tariff, at once remove all prohibitory and excessive duties.

Before the war, our tariff averaged less than fifteen per cent on all our importations. It has been raised to an average of more than forty-five per cent. How has this been effected? First, by new taxes on tea and coffee, and by increased imposts on other groceries, which now yield nearly sixty millions, — nearly as much as our whole return from customs before the insurrection. These doubtless carried the average of our duties to nearly thirty per cent; and most of those which have been judiciously fixed by our Revenue Commissioner, Mr. Wells, it will doubtless be politic to retain, although it might be well to reduce the duties on tea and spices to specific rates, not exceeding sixty per cent, for both tea and spices are coming in free from Canada.

Duties on fruits and raw materials, and counteracting duties on manufactures to aid the home produce, have carried the average of our tariff from thirty to more than forty-five per cent, and most of this excess should be repealed. Let us refer for illustration to the duties on fruit, salt, wool, woollens, coal, and iron. We have many ships, and should have more, in the trade with the Mediterranean. Liverpool alone, in the last twenty years, abandoning a fleet of schooners, has put eighty thousand tons of screw steamers into the Mediterranean trade, and her imports and exports in this commerce now exceed a million of tons yearly. We send from Boston and New York many barks and brigs through the Straits, laden with fish, flour, alcohol, oil, lard, provisions, cotton goods, dye-woods, sugar, and coffee, and returning with fruit, salt, wool, dye-stuffs, saltpetre, and materials for our manufactures. The fruit and the salt are sent westward as far as the Missouri, and are of great value both to health and agriculture.

Is it politic to tax either of these articles, on which we now place duties ranging from twenty-five to two hundred per cent? The return freight on fruit and salt lightens the charges on exports of our own products, and our imports enable us to export. It salt in Sicily or Spain is made by solar heat at ten cents per hundred pounds, is it our true policy to tax it two hundred per cent, to enable a few owners of saltsprings to convert a weak lime into an inferior salt, for preserving beef and pork, by the waste of our forests and coal-beds ? Do not our railways thus also lose an important item of return freight? and is it not the policy of our nation, instead of forcing these springs into an unnatural production, to keep them as reserves for time of war, and to stimulate our farms, railways, ships, exports and imports, by a natural and enriching commerce ?

As respects coal, iron, wool, and woollens, we have tried the experiment of excessive duties, and what is the result ? We have over-stimulated coal by a duty of a hundred per cent on the foreign article, and thus made our coal-mines unprofitable. We are doing the same with iron. The ore of Michigan is crowding that of Pennsylvania. The wages of her iron-workers have been carried above those of judges and governors, and the manufacturers and shipwrights of the East, who require iron at the lowest price for their boilers and engines to compete with those of Europe, and can best supply their wants from the iron which returns in the vessels carrying out our wheat, flour, and provisions, are deterred, by the high price of iron, from building ships and factories. Last year, we unwisely placed a duty on wool and a compensating duty on woollens. What is the result? We have lost and are losing our export trade in flour, fish, lumber, and provisions to Africa, Australia, and the valley of the La Plata, while the tailors of Canada, New Brunswick, and Nova Scotia supply the wardrobes of a large part of New York and New England; the high prices of cheese and butter are thinning the flocks of Vermont and Ohio, while neither Texas nor California, where the sheep roam through the year in rich pastures, demand protection. Indeed, the idea of protecting agricultures by duties, in a country which gives its land to settlers, contrasts strangely with the policy of England, France, and Belgium, which have repealed all duties on wool, although they maintain twice as many sheep as we do, and this, too, on land worth four hundred dollars per acre. Let us repeal all duties on salt, fruit, and raw material, and impose no duties on manufactures exceeding thirtyfive per cent, and make those specific.

Third, let us return to specie and welcome again a gold currency, assimilated to that of France as recommended by that distinguished statesman, the Hon. S. B. Ruggles, — to whom we owe the enlargement of the Erie Canal, — and let us have the French system of weights and measures. The war is over, and it is time to discard an irredeemable currency debased and degraded by our over-issues. Why should we wear longer the badge of insolvency, and be at the mercy of the Jews of the gold-board to-day and of the sales of the Treasury to-morrow ? We pay for the risk of a decline in gold in all our purchases. The accountant, the clerk, the clergyman, and often the laborer, suffer from the depreciation. Why are rents and goods so dear? and why do we abandon our mission on the ocean ? It is because we dare not build the houses, stores, factories, and ships that are required, for fear of a fall in value when the currency rises to par. Our traditions are all in favor of an early return to specie ; for when in former days the banks suspended. Boston and New York, by an early resumption recovered their prosperity, while Baltimore, Philadelphia, and Cincinnati were seriously injured by a continued suspension. The return to specie within a reasonable period can be effected by contraction, and that contraction would be almost imperceptible were Congress to impose a tax of two per cent on bank circulation, and for a year to come, as the internal taxes are paid, convert each greenback into a compound-interest note at three per cent, payable in three years, in cash or five per cent securities, and convertible into four per cent bonds at thirty years, free from all taxation. Such compound notes like those issued during the war, for which we may thank the Hon. Amasa Walker, would be self-funding, and almost imperceptibly carry us back to a specie standard, while the tax on bank circulation and deposits would meet the three per cent interest.

Subsidies and Remission of Duty.

We must recover our navigation, the loss of which is one of the painful incidents of the war, and of the unfriendly policy of England. Had England discharged the duties which international law imposes on neutral nations, had she stopped the cruisers built in her ports or arrested them when they took refuge in her colonies, our shipping, which once equalled that of the whole British Empire, would not to-day be reduced to one half of the tonnage of Great Britian. We cannot resign our strength upon the ocean. Without it we could not have preserved the unity of the nation: it was one of the chief elements of our power ; but now, while Great Britain has seven and a quarter million tons of shipping, we have less than three and a half millions, though it is true that we have sold many of our ships, most of which sail under the British flag. We must remember that iron and coal are cheap in Great Britain and dear with us, that Great Britain holds a million tons of fast steamers, each of which is equivalent to four or five ships in its freight-carrying power; and, if we do not intend to wean our masters, mates, and sailors from the sea, we must begin at once the construction of new steamers. How is this to be done ? How has it been done by England and France ? It has been accomplished by subsidies, by a very trifling annual expenditure for the carriage of the mails, to which we contribute largely, and which has not in the case of either nation, thus far, much exceeded the receipts from foreign letters, and in the case of England has been met by the profits of the penny postage. Great Britain thus maintains more than two hundred and fifty fine steamships, averaging two thousand tons, has seventeen lines running to America, making thirteen hundred and twenty-two passages yearly, and holds them always officered, manned, and equipped, and ready for conversion into steam frigates. During the war of the Crimea and her difficulties with this country, and her recent war with Abyssinia, she actually used a large part of them as despatch-frigates and steamtransports for troops and military stores, and other naval offices. They constitute the vanguard, the most efficient fleet of the British navy. We must, and soon, have such steamships. Great Britain pays from one dollar to two and a half dollars, and France three dollars, per mile for her mail service. By paying less than France has found it necessary to pay, and giving the effective protection Great Britain gives to her shipping in freedom from taxes by a remission of five to ten dollars per ton in gold on each new ship, to cover the extra cost due to duties, we may compete with European steamers. On the ocean there can be no protection ; we must enter the contest on equal terms, and then we may safely rely on the genius, education, and courage and inventive power of our mariners for success. The West is most deeply interested in this question. To construct, maintain, and navigate a tonnage equal to that of the British Empire would require a maritime population of four millions, who would consume the surplus products of at least six millions devoted to agriculture. But if we resign the ocean to Europe, would not most of the four millions be absorbed by agriculture? and where would the ten millions find a market for their surplus ?

Agriculture, manufactures, and public safety demand the restoration of our shipping.

Relations with Great Britain.

The restoration of amity with Great Britain is of the utmost importance to both nations. It is not merely the amount of our claim and interest, now seven millions sterling, a large portion of which is held by English Insurance Companies, that is involved, but great interests of both nations suffer from the questions between them, and the British Provinces suffer more than either nation. While Great Britain asserts her claim to San Juan, denies compensation for all our losses, even for the ships of our whalemen, burned in time of peace by her cruisers in the Arctic Sea, and declines to punish any of her pirates, who return to her ports after their ravages on the deep ; while she seeks to awe the United States by military roads and new batteries at Halifax and Victoria ; while she arrests our naturalized citizens, and claims their allegiance after she has banished them from her soil and we have adopted them, — hostile tariffs, consular fees, and interdicts must succeed to moderate duties and treaties of reciprocity. Great Britain requires the wheat of California and Minnesota, the corn, beef, and pork of Illinois, the petroleum, bark, and clover-seed of Pennsylvania, at least thirty thousand tons of the cheese of New York and New England, and the market which eight millions of prosperous families afford. We require her metals, chemicals, and other products. We need the fisherman’s salt, wood, and timber, the herrings, alewives, salmon, eggs, cattle, wool, barley, white wheat, and potatoes of Canada ; and Canada needs our corn, tobacco, pork, carriages, coal, and manufactures. The townships which lie between the St. Lawrence and New England can best supply our factory towns with hay, oats, barley, cattle, horses, and potatoes in exchange for the products of New England. England has ever held her colonies with tenacity, but her American Provinces have now grown to man’s estate ; she has abandoned her coloninal system, and draws her pine and spruce chiefly from Norway; she gives her colonists no priority in her markets. They have few interests in common with her ; for the last decade their trade has been chiefly with us, and not with each other. Nova Scotia is commercial; New Brunswick is devoted to ship-building and lumber; Canada and Prince Edward Island are agricultural. While they might easily enter as States into our republic, they are not homogeneous, and Nova Scotia and New Brunswick would be powerless in Canada. At the present moment Great Britain, incurs an annual expense of four or five millions sterling to protect them from the Fenians, and derives from their trade no equivalent for the outlay. As members of our Union they would partake of a coasting-trade we cannot concede to British subjects, and enjoy the free trade of a continent. If our debt is larger than theirs, our wealth, population, and resources are proportionate to our interest. The possession of the Provinces weakens Great Britain: it would add to the strength and commerce of our Union. It would bring to us an amount of shipping which would compensate for two thirds of our losses by the war. In the century which expires in 1869 our population will have increased from two and a half millions to forty millions, or sixteen fold. In another century, at this rate of increase, our population will exceed that of China and require the entire continent. We now hold Maine and Alaska, which overlap the territory of Great Britain, and we already require the forests and arable lands of British America.

Nearly the whole of British America from Lake Superior to the Pacific is now held by the Hudson Bay Company as a hunting-field, and yields it a revenue of two hundred and seventy-five thousand dollars only, or five per cent less than the cost of Alaska. What a field is there found for Secretary Seward ! Were British America annexed, we should require no barriers or custom-houses from Quebec to Sitka, and should save in the revenue we now lose by smuggling and custom-house expenses the interest of twice the cost of Alaska. Is not the acquisition of British America and the admission of the Provinces as States of our Union the true solution of our questions with Great Britain ? Were the Provinces members of our Union, we should at once relinquish the Intercolonial Railway through the wilds of New Brunswick, and complete the European and American line from Halifax and Louisburg to Bangor, and thus reduce to six days the run from the Cove of Cork to Boston, and reach Japan in four weeks from London. We should at once deepen the canals of the St. Lawrence, make a ship-canal around Niagara, carry the navigable waters of the St. Lawrence into Lake Champlain, and join hand in hand with the people of the Provinces in opening the railway from Lake Superior to the Red River of the North and the forks of the Missouri. Thus should we open to commerce the great wheat-fields of the Assiniboin, Saskatchewan, and Peace Rivers, where the elk and buffalo of the plains now resort to calve and winter.

A ton of sugar is now carried from Boston to Chicago, via Ogdensburg, for six dollars, and may be taken for the same rate to the head of Lake Superior; with a direct railway finished to the Red River, wheat may at this rate be taken from the valley of the Saskatchewan to Boston or New York for twenty-five cents a bushel. The prolific West requires new avenues to the seaboard ; and the cheapest route is by propellers to the foot of Lake Ontario, and thence by rail to the sea-shore.

Export of Wheat.

Under the census of 1860, our annual yield of Indian corn was returned as eight hundred and thirty-six millions of bushels ; while wheat was comparatively deficient, — actually less by one third than the yield of France, as it was but one hundred and seventy-two millions of bushels in 1859, the year preceding the census. It gave us, however, seventeen millions of bushels in grain and flour for exportation in 1860. Since 1859, the high price of flour has stimulated production; new farms have been opened, and new railways built in Iowa, Wisconsin, and Minnesota, and the culture of wheat has become more profitable than the gold-mines in California ; and this year, with a propitious season, our crop of wheat is rated at nearly three hundred millions of bushels, which should give a surplus of one hundred millions of bushels for exportation. Nor have we yet reached the maximum of production. The land and climate of Minnesota, on the route of the North Pacific, the valleys of the Red River of the North, the Assiniboin and Saskatchewan Rivers are adapted to winter wheat, and give larger and surer crops than Ohio or Illinois. A short railway of two hundred and fifty miles from the head of Lake Superior to the Red River, which may be built for half the money paid out in dividends at Boston on the first of July, would open to commerce those valleys, and permit the delivery of their wheat at a freight of thirty cents a bushel in Boston. In the rich valleys and on the fertile hillsides of California, wheat yields, without fertilizers, more than fifty bushels to the acre ; and a single man, with the aid of improved mechanism,— reapers, drums, and threshers, — raises five thousand bushels. There ten farmers, or one farmer with nine assistants, can load a ship of a thousand tons with wheat costing the farmer but twenty-five cents per bushel; and, at one time last spring, there were one hundred and fifty ships on their way from San Francisco to the Atlantic ports, laden with seven million bushels of wheat; the only check to production being a deficiency of ships, and the circuit by Cape Horn, which allows a ship to make but one voyage to the year. Were a canal cut through the Isthmus, each ship could make two voyages in a year, and, with the screw, each ship could make five voyages, in place of two, each season to New York. So large is the area fit for wheat-fields in California and Oregon, that, after reserving ample space for vineyards and sheep-walks, which nearly equal the culture of wheat in importance, twenty thousand men, — actually less than the emigration of a single year,— could produce there annually a hundred millions of bushels, on three thousand square miles, near navigable waters, and load two thousand ships, of one thousand tons, with wheat. One fourth of these ships might be built annually on the coasts of California, Oregon, the Straits of Fuca and Alaska ; for there the towering pines and cedars stand waiting for the shipwrights on the very sea-shore, and the first freight of wheat would suffice to pay one third of the cost of construction.

A nation like ours, with a front on each ocean, and such resources, should, by due concessions and subsidies, set the shipwright in motion, and should connect the two oceans. As far back as the seventeenth century Scotland founded the Colony of Darien, and raised five hundred thousand pounds to open a shipcanal. The route was traced by Patterson, the founder of the Bank of England, and here, he wrote, was “ the Gate of the Universe ” ; but the colony and the enterprise were ruined by the jealousy of both Spain and England. Here, as Admiral Davis reports to Congress, is the true route for a ship-canal of but twenty miles, between deep and spaous harbors, where neither tunnels nor lockage are required, and where but a single ridge, whose ravines rise to an elevation of one hundred and fifty feet, intervenes between ocean and ocean. It can in all probability be made for less than one third the cost of the shipcanal which France and Egypt are opening across the Isthmus of Suez, a hundred miles long, a hundred yards wide, and ten in depth ; and the whole cost might be defrayed by the light tax on oil, which the House voted a few days since, or by the assessment proposed on bank circulation as a compensation for exclusive privileges.

The Pacific Railway is a reproductive investment. It makes dividends to its originators even before it is finished, and will carry hosts of travellers, specie, silks, teas, spices, dry goods, boots and shoes, and local freight. The Panama Railway earns regularly twenty per cent. The canal will pay at least as well as the railways. The nation will derive more benefit from its expenditures on such enterprises than from any pitiful attempt to compel its creditors to take paper in place of gold, or to force a reduction of interest. It is preposterous for the nation, after its triumph, in its hour of prosperity, to assume the attitude of the insolvent,— as preposterous as it would be for Belmont, Stewart, or Astor, after having made a little discount on paper during a revulsion which had ended, to call their creditors together, if they have any, and propose a compromise.