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Georgia, Tennessee, Alabama, and New Mexico had yielded $4,514,469, in gold. The silver of domestic production deposited at the Mint and branches amounted to $2,630,055, making together a grand total of $391,017,624. The total silver coinage amounted to $33,621,148. What part of this sum was an actual addition to the silver in circulation we do not now stop to determine. According to the Custom House returns, the exports of coin and bullion in these nine years exceeded the imports $271,400,133. Here we have some basis for an estimate of the increase of specie in the country in this period. The Secretary of the Treasury, in December, 1857, estimated it at one hundred and forty millions. He believed the amount in 1849 to be one hundred and twentynine millions, and in 1857 two hundred and sixty millions. The data given would afford this sum, if to the gold from our mines we add twenty millions of the total silver coinage as a probable addition to the circulation, and assume that the residue was but the recoinage of foreign silver money previously making a part of our currency. This calculation, however, assumes that our stock of coins increases or decreases annually, as the amount imported and received from our own mines exceeds or falls short of the amouift exported; and it further assumes that the gold and silver brought in by immigrants and others and not reported, and that entering overland from Mexico, would balance the amounts clandestinely exported, as well as the amount consumed in manufactures and the annual loss by abrasion.
But if the increase had been double the estimated amount, the banks would very certainly have extended their issues and credits in proportion. Their reserve of specie had increased but seventeen millions, and they had added one hundred millions to the one hundred and fourteen and three-quarter millions of their circulating paper out in 1849, and expanded their loans and discounts from three hundred and thirty-two and a third millions to six hundred and eighty-four and a half millions. In September and October they suspended specie payments, and in about three months contracted their circuTation from two hundred and fifteen to one hundred and fiftyfive millions, and reduced their loans to five hundred and eighty-three millions ; a reduction of the former of twentyeight and a half per cent., which was followed by a general fall of prices during the twelve months ensuing, averaging twenty-five per cent. The solvent banks resumed specie payments early in 1858, after creating such stringency in the
money market as so great a reduction of currency and bank credits must necessarily occasion. Among the facts which marked the revulsion and showed its extent was the diminished consumption of foreign merchandise. In the twelve months ending three months before the suspension, the foreign imports entered for consumption amounted to three hundred and thirty-seven millions ; in the twelve months immediately succeeding, they fell off to one hundred and ninety-three millions—the average consumption per capita falling from $11.81 in the former year to $6.57 in the latter, a reduction of over forty-four per cent.
Enough has been said to exbibit fully the fluctuations of our bank issues in amount, the cost of exchange between the principal business marts of the country, the frequent convulsions in mercantile affairs, and the mischief wrought by the rapid inflations and reductions of market prices, marking the whole history of our state banking system. It must not, however, be inferred from the exclusion of other agencies in this brief historical notice, that the banks are to be regarded as the sole or primal causes of our business catastrophes. It would be easy to show that, in the groups of years covered by our monetary convulsions, the varying amounts of foreign imports for domestic consumption have borne a determinate ratio to the bank circulation, increasing and decreasing together. Not in exact proportion, indeed, for in some years the bank circulation increased more than the imports, and in some, particularly at the times of the severest, collapses, the bank circulation fell lower than the imports. But this variance is explained by the exigencies of the case, and an absolute dependence and reciprocity is well proved. For certain reasons, it is probable that the excessive imports were always at the bottom of the mischief, but the bank inflations invariably answered like an echo and gave the mischief its effect by enlarging the credit system and stimulating speculative expansion of the banks till they bursted. It is for this fellowship in mischief with all speculative overtrading that they are here arraigned ; and for this offence the array of facts has been given ; for partners in crime are not the less culpable for being what lawyers call accessories after the fact, or merely secondary in point of time, but active in the conspiracy and equally effective in participation.
It will be observed that we have only attempted to exhibit somewhat in relief the critical changes which have marked the diseased movements of the system. These have occurred
with the periodical constancy and regularity of chill and fever, with the intermissions filled with nervous tremors, as mischievous as the paroxysms themselves. The “panics” and “squalls of the money market" have been incessant, and only a little less remarkable than the revulsions; just as
sickly seasons” are less alarming than the sudden visitation of the Asiatic cholera, though their victims even outnumber those of the more violent scourge.
Statisticians are accustomed to measure the relative supply of currency at different periods by its average proportion to the total population ; but population is the most uncertain of all measurements of demand for money. The amount of commercial exchanges would be a better basis, for it would at least be occupied with the subject matter of payments. But the amount of exchanges cannot be inferred with any tolerable certainty from the value of the products or commodities supplied to the market in any given period. The exchanges are sometimes very rapid and sometimes very slow. And further, if the amount of values in exchange could be ascertained, the amount of money required for payments is not thereby determinable. In the proportion that business is better organized less money required, payments being then effected more largely by setoff; of which the clearings of bank debts among themselves, showing something under five per cent. to be the usual balances, is an example. The same or similar processes are conducted by individual banks and bankers for their respective customers, dispensing with money in any form to the extent that mutual debts and credits are balanced for them.
The aggregate value of the imports and exports of Great Britain and Ireland in the year 1840, was one hundred and thirty-eight millions of pounds (£138,000,000) in 1858 they had risen to two hundred and eighty-one millions, an increase in eighteen years of one hundred and three per cent. In 1840 the total paper money of the United Kingdom was thirty-five millions of pounds ; in 1858, thirty-eight millions, an increase of only eight and three-fourths per cent.
A larger proportion of money to values exchanged is necessarily employed in the United States, but the total amount required is not in any proportion to the population, for here the mode of payment by set-off or clearing is rapidly advancing, scarcely requiring money payments to be increased at all in any normal increase of business. Considerable enhancement of the value of paper currency in time of peace always
means excess, and always and quickly heretofore has been followed by commercial disturbances.
The true measure is the actual demand for money service in the legitimate business of the country. When bank credits take the form of currency beyond this point, excess exists. This measure, however, varies with changed conditions. Since the commencement of the rebellion, with its vast increase of business activity in the loyal states, cash payments have prevailed and credits have been nearly abandoned, and we have seen at several periods a scarcity of currency, although four hundred and fifty millions of government currency, with a large amount of other securities in use as money, were added to the usual amount of state bank paper in circulation.
The best apprehension of this great reform of our monetary system, now so well advanced towards its completion, may be had by looking at it in the circumstances in which it was projected. The finances of the Federal Government fell into the hands of Secretary Chase on the 7th of April, 1861. The South was then in a state of insurrection, and the Union on the eve of dissolution. The mere apprehension of these troubles had, months before, so far affected the financial character of the Union that of a loan of ten millions, negotiated by Mr. Cobb, in October, 1860, but seven million twenty-two thousand had been paid into the treasury, the subscribers of two million nine hundred and seventy-eight thousand choosing rather to forfeit their preliminary deposits than accept the stock with the impending risk. Nearly ten millions of treasury notes had been issued in December, 1860, and January, 1861, at varying rates, from six to twelve per cent. interest per annum ; six and one-quarter millions of the amount at eleven and twelve, and three and one-quarter millions at ten, ten and one-fourth, ten and one-half, and ten and three-fourths
per cent.; and Mr. Secretary Dix sold a loan of eight millions in February, 1861, at an average discount of nine and one-half per cent.
These were but the first symptoms of the storm that broké upon the finances of the country soon after the induction of Mr. Chase. The fall of Fort Sumter, the call of the Presideut for seventy-five thousand-troops, the riot at Baltimore, the seizure of forts, arsenals, ship-yards, and sub-treasuries all over the South, the secession of state after state, and the actual commencement of civil war, followed in quick succession.
The effect upon government credit is indicated by the history of the loans offered at this time by the Secretary. For an eight million, twenty year loan at six per cent., put upon the market on the 22d of March, bids were received on the 2d of April, eleven days before the fall of Fort Sumter, ranging from ninety to ninety-five on the hundred. The Secretary refused all below ninety-four, and accepted three millions and ninety-nine thousand, at an average discount of a shade less than six per cent. On May 25th, the bids for a twenty year loan at six per cent. of eight million nine hundred and ninety-four thousand were accepted for seven million three hundred and ten thousand of the amount, at various rates of discount, averaging upon the whole 14.65 per cent.
Congress was convened in extra session on the 4th of July. It authorized loans to the amount of two hundred and fifty millions, and adopted nearly all amendments to the customs tariff recommended by the Secretary, besides passing an act laying a direct tax, which, however, yielded less than two millions in the current fiscal year.
The actual expenditure of that year, ending June 30th, 1862, is now ascertained to have been $570,841.700. The receipts from all sources were $583,885,247, of which aggregate the receipts from !oans, treasury notes, and other evidences of debt issued by the treasury, amounted to $529,692,460.
The expenditures of every loyal state were at the same time greatly enhanced, and the fiscal year opened with the disaster of Manassas on the 21st of July. A succession of military reverses during several ensuing months, but above all the sluggishness of the war, and consequent disappointment of the expectation that the rebellion would be extinguished in a single campaign, could not fail to press heavily upon the credit of the government.
The money power of England displayed its distrust or its unfriendliness in advance. The London Times declared that loans, which Mr. Chase had not asked, would be refused. Loans at home seemed just then scarcely adequate if the money market were emptied bodily into the treasury. All the causes which affect the price and the negotiability of government stocks were operating in their greatest force. The borrower was a nation rent in twain, with a rebellion on its hands in unexpected strength, and without any certain, much less early, adjustment in prospect. The system of short treasury notes had been carried to the limit of