Chapter X (1)

The Rev. Augustus Myrtle, rector of St. Jude's, was one of those circumstances of nature which are only to be encountered in metropolitan life. This seems a paradox. I will explain. All his qualities were born with him, not acquired, and those qualities could only shine in the aristocratic and fashionable circles of a large city. As animals by instinct avoid whatever is noxious and hurtful, so Augustus Myrtle from his infancy by instinct avoided all poor people and all persons not in the 'very first society.'

Children are naturally democrats; school is a great leveller. Augustus Myrtle recognized no such propositions. While a boy at the academy, while a youth in college, he sought the intimacy of boys and youths of rich persons of _ton_. It was not enough that a young fellow was well bred and had a good social position--he must be rich. It was not enough that he was rich--he must have position.

I do not think that Augustus Myrtle sat down carefully to calculate all this. So I say it was instinctive--born with him. A person who frequents only the society of the well bred and the wealthy must, to a degree at least, possess refined and elegant and expensive tastes, and it was so in the case of Myrtle. His tastes were refined and elegant and expensive.

His parents were themselves people of respectability, but very poor. His mother used to say that her son's decided predilections were in consequence of her unfortunate state of mind the season Augustus was born, when poverty pinched the family sharply. Mr. Myrtle was a man of collegiate education, with an excellent mind, but totally unfitted for active life. The result was, after marrying a poor girl, who was, however, of the 'aristocracy,' he became, through the influence of her friends, the librarian of the principal library in a neighboring city, with a fair salary, on which, with occasional sums received for literary productions, he managed to bring up and support his small family. At times, when some unexpected expenses had to be incurred, as I have hinted, poverty seemed to poor Mrs. Myrtle a very great hardship, and such was their situation the year Augustus was born.

He was the only son, and the hope of the parents centred on him. It was settled that he should be sent to the best schools and to a first-class college. He had, perhaps, rather more than ordinary ability, the power to display to the best advantage the talents and acquirements he did possess, together with attractive manners, which, though reserved, were pleasing. He was slight, gracefully formed, and a little above the ordinary height. He had a dark complexion, a face thin and colorless, with fine, large, black eyes.

When I say Augustus Myrtle sought only the intimacy of the rich and well bred, you must not suppose he was a toady, or practised obsequiously. Not at all. He mingled with his associates, assuming to be one of them--their equal. True, his want of money led to desperate economical contrivances behind the scenes, but on the stage he betrayed by no sign that affairs did not flow as smoothly with him as with his companions. In all this, he had in his mother great support and encouragement. Her relations were precisely of the stamp Augustus desired to cultivate, and this gave him many advantages. As usually happens, he found what he sought. By the aid of the associations he had formed with so much assiduity, to say nothing of his own personal recommendations, he married a nice girl, the only child of a widowed lady _in the right 'set' and with sixty thousand dollars_, besides a considerable expectancy on the mother's decease. Shortly after, he became rector of St. Jude's, the most exclusive 'aristocratic' religious establishment in New York.

At this present period, the Rev. Augustus Myrtle was but thirty-five, and, from his standing and influence, he considered it no presumption to look forward to the time when he should become bishop of the diocese.

His health was excellent, if we may except some _very_ slight indications of weakness of the larynx, which had been the cause of his making two excursions to Europe, each of six months' duration, which were coupled with an appropriation of twenty-five hundred dollars by his indulgent congregation to pay expenses.

* * * * *

While Mr. Myrtle and his family were still absent, Hiram had made very sensible progress in mastering the mysteries of the Episcopal form of worship, and became fully versed in certain doctrinal points, embracing all questions of what constitutes a 'church' and a proper 'succession.' His investigations were carried on under the direction of the Rev. Mr. Strang, a man of feeble mind (Mr. Myrtle was careful to have no one near him unless the contrast was to his advantage), but a worthy and conscientious person, who believed he was doing Heaven service in bringing Hiram into the fold of the true church. Hiram was again in his element as an object of religious interest. Before the rector had returned, he became very impatient to see him. It was a long while since he had been at communion, and he began to fear his hold on heaven would be weakened by so long an absence from that sacrament. Besides, he felt quite prepared and ready to be confirmed.

The Myrtles returned at last. In due time, Mrs. Bennett talked the whole matter over with Mrs. Myrtle. Hiram was represented as 'a very rich young merchant, destined to be a leading man in the city--of an ancient and honorable New England family--very desirable in the church--a cousin'--[here several sentences were uttered in a whisper, accompanied by nods and signs significant, which I shall never be able to translate]--'must secure him--ripe for it now.'

I think I forgot to say that Mrs. Myrtle and Mrs. Bennett were in the same 'set' as young ladies, and were very intimate.

The nest day Mrs. Bennett opened the subject to Mr. Myrtle, his wife having duly prepared him. The object was to introduce Hiram into the church in the most effective manner. This could only be done through the instrumentality of the reverend gentleman himself. Everything went smoothly. Mr. Myrtle was not insensible to the value of infusing new and fresh elements into his congregation.

'Of course,' he observed, 'this wealthy young man will take an entire pew.' (The annual auction of rented pews was soon to come off, and Mr. Myrtle liked marvellously to see strong competition. It spoke well for the church.)

'He will _purchase_ a pew, if a desirable one can be had,' answered Mrs. Bennett.

'Oh, that is well. How fortunate! The Winslows are going to Europe to reside, and I think will sell theirs. One of the best in the church. Pray ask Mr. Bennett to look after it.'

'Thank you. How very considerate, how very thoughtful! We will see to it at once.'

The interview ended, after some further conversation, in a manner most satisfactory.

* * * * *

It was a magnificent autumnal afternoon, the second week of October, when Hiram Meeker, by previous appointment, called at the residence of the Rev. Augustus Myrtle. The house was built on to the church, so as to correspond in architecture, and exhibited great taste in exterior as well as interior arrangement. Hiram walked up the steps and boldly rang the bell. He had improved a good deal in some respects since his passage at arms with Dr. Chellis, and while under the auspices of Mr. Bennett. He had laid aside the creamy air he used so frequently to assume, and had hardened himself, so to speak, against contingencies. I was saying he marched boldly up and rang the bell.

A footman in unexceptionable livery opened the door. Mr. Myrtle was engaged, but on Hiram's sending in his name, he was ushered into the front parlor, and requested to sit, and informed that Mr. Myrtle would see him in a few minutes. This gave Hiram time to look about him.

It so happened that it was the occasion of a preliminary gathering for the season (there had been no meeting since June) of those who belonged to the 'Society for the Relief of Reduced Ladies of former Wealth and Refinement.' This 'relief' consisted in furnishing work to the recipients of the _bounty_ at prices about one quarter less than they could procure elsewhere, and without experiencing a sense of obligation which these charitable ladies managed to call forth.

There was already in the back parlor a bevy of six or eight, principally young, fine-looking, and admirably dressed women.

Arrayed in the most expensive silks, of rich colors, admirably corresponding with the season, fitted in a mode the most faultless to the exquisite forms of these fair creatures, or made dexterously to conceal any natural defect, they rose, they sat, they walked up and down the room, greeting from time to time the new comers as they arrived.

The conversation turned meanwhile on the way the summer had been spent, and much delicate gossip was broached or hinted at, but not entered into. Next the talk was about dress. The names of the several fashionable dressmakers were quoted as authority for this, and denunciatory of that. Congratulations were exchanged: 'How charmingly you look--how sweet that is--what a lovely bonnet!'

All this Hiram Meeker drank in with open ears and eyes, for from where he was sitting, he could see everything that was going on, as well as hear every word.

One thing particularly impressed him. He felt that never before had he been in such society. The ladies of Dr. Chellis's church were intelligent, refined, and well bred, but here was TON--that unmistakable, unquestionable _ton_ which arrogates everything unto itself, claims everything, and with a certain class _is_ everything.

I need not say, to a person of Hiram's keen and appreciative sense, the picture before him was most attractive. How perfect was every point in it! What minute and fastidious attention had been devoted to every article of dress! How every article had been specially _designed_ to set off and adorn! The hat, how charming; the hair, how exquisitely coiffed; the shawl, how magnificent; the dress how rich! The gloves, of what admirable tint, and how neatly fitted; and how wonderfully were the walking boots adapted to display foot and ankle! And these did not distinguish one, but _every one_ present.

I do not wonder Hiram was carried away by the spectacle. There is something very overpowering in such a scene. Who is sufficient to resist its seductive influences?

In the midst of what might be called a trance, when Hiram's senses were wrapt in a sort of charmed Elysium, the Rev. Augustus Myrtle entered the room. He did not look toward Hiram, but passed directly into the back parlor. He walked along, not as if he were stepping on eggs, but very smoothly and noiselessly, as if treading (as he was doing) on the finest of velvet carpets.

Instantly what a flutter! How they ran up to him, ambitious to get the first salute, and to proffer the first congratulation! How gracefully the Rev. Augustus Myrtle received each! Two or three there were (there were reasons, doubtless) whose cheeks he kissed decorously, yet possibly with some degree of relish. The rest had to content themselves with shaking hands. Many and various were the compliments he received. Their 'delight to see him, how well he was looking,' and so forth.

Presently he started to leave them.

'Oh, you must not run off so soon, we shall follow you to your _sanctum_.'

'An engagement,' replied Mr. Myrtle, glancing into the other room.

A score of handsome eyes were turned in the direction where Hiram was seated, listening with attention, and watching everything. Discomfited by such an array, he colored, coughed, and nervously shifted his position. Some laughed. The rest looked politely indifferent.

'A connection of the Bennetts,' whispered Mrs. Myrtle, 'a fine young man, immensely rich. He is to come in future to our church.'

'Ah,' 'Yes,' 'Indeed,' 'Excellent.' Such were the responses.

Meanwhile Mr. Myrtle had greeted Hiram courteously, and invited him to his library. This was across the hall, in a room which formed a part of the church edifice.

As Hiram followed Mr. Myrtle out of the parlor, several of the ladies took another look at him. They could not but remark that he was finely formed, fashionably dressed, and, thanks to Signor Alberto, of a very graceful carriage.

The interview between Mr. Myrtle and Hiram was brief. The latter, thoroughly tutored by his cousin, was careful to say nothing about his previous conviction and wonderful conversion, but left Mr. Myrtle, as was very proper, to lead in the conversation. He had previously talked with Mr. Strang, which, with the recommendation of Mrs. Bennett, left no doubt in his mind as to Hiram's fitness to receive confirmation.

It was very hard for him to be informed that his early baptism must go for nothing--what time his father and mother, in their ignorance and simplicity, brought their child to present before God, and receive the beautiful rite of the sprinkling of water.

A dreadful mistake they made, since no properly consecrated hands administered on that occasion. But nevertheless, Hiram is safe. Lucky fellow, he has discovered the mistake, and repaired it in season.

'I think, Mr. Meeker, your conversations with Mr. Strang have proved very instructive to you. Here is a work I have written, which embraces the whole of my controversy with Mr. Howland on the true church (and there is not salvation in any other) and the apostolic succession. Having read and approved this,' he added with a pleasant smile, 'I will vouch for you as a good churchman.'

Hiram was delighted. He took the volume, and was about to express his thanks, when Mrs. Myrtle appeared at the door, which had been left open.

'My dear, I regret to disturb you, but'--

'I will join you at once,' said Mr. Myrtle, rising. This is Mr. Meeker, a cousin of your friend Mrs. Bennett'--as if she did not know it.

Mrs. Myrtle bowed graciously, and said, with charming condescension:

'Then it is _you_ I have heard such a good report of. You are coming to our church away from----'

'Never mind from where, my dear,' said Mr, Myrtle pleasantly, and he bowed Hiram out in a manner which positively charmed our hero.

That evening Mr. Bennett told Hiram he had purchased a pew for him--price sixteen hundred and fifty dollars.

'Sixteen hundred and fifty dollars,' exclaimed the other, in amazement.

'Yes.'

'Why, I can't stand that. The dearest pews in Dr. Chellis's church were not over six hundred. You are joking.'

'You are an idiot,' retorted Mr. Bennett, half pettishly, half playfully. 'Have you not placed yourself in my hands? Shall I not manage your interests as I please? I say I want sixteen hundred and fifty dollars. I know you can draw the money without the least inconvenience. If I thought you could not, I would advance it myself. Are you content?'

Hiram nodded a doubtful assent.

How fortunate,' continued Mr. Bennett, that the Winslows are going to Europe, and how lucky I got there the minute I did! Young Bishop came in just as I closed the purchase. I know what _he_ wanted it for, and I know what _I_ wanted it for. Hiram, a word in your ear--your pew is immediately in front of our heiress! Bravo, old fellow! Now, will you pay up?'

Hiram nodded this time with satisfaction.

The second Sunday thereafter one might observe that the Winslows' pew had been newly cushioned and carpeted, and otherwise put in order. Several prayer books and a Bible, elegantly bound, and lettered 'H. Meeker,' were placed in it. This could not escape the notice of the very elegant and fashionably dressed young lady in the next slip. Strange to say, the pew contained no occupant. But just before the service was about to commence, Hiram, purposely a little late, walked quietly in, and took possession of his property. His _pose_ was capital. His ease and _nonchalance_ were perfectly unexceptionable, evidencing _haut ton_. He had been practising for weeks.

'Who can he be?' asked the elegant and fashionably dressed young lady of herself. She was left to wonder. When he walked homeward, Hiram was informed by Mr. Bennett that the elegant and fashionably dressed young lady was Miss Arabella Thorne, without father, without mother, of age, and possessed of a clear sum of two hundred thousand dollars in her own right!

AMERICAN FINANCES AND RESOURCES.

LETTER NO. I, FROM HON. ROBERT J. WALKER.

LONDON, 10 Half Moon Street, Piccadilly, _August 5, 1863_.

The question has been often asked me, here and on the continent, _how has your Secretary of the Treasury (Mr. Chase) so marvellously sustained American credit during this rebellion, and when will your finances collapse?_ This question I have frequently answered in conversations with European statesmen and bankers, and the discussion has closed generally in decided approval of Mr. Chase's financial policy, and great confidence in the wonderful resources of the United States.

Thus encouraged, I have concluded to discuss the question in a series of letters, explaining Mr. Chase's system and stating the reasons of its remarkable success. The interest in such a topic is not confined to the United States, nor to the present period, but extends to all times and nations. Indeed, finance, as a science, belongs to the world. It is a principal branch of the doctrine of 'the wealth of nations,' discussed, during the last century, with so much ability by Adam Smith. Although many great principles were then settled, yet political economy is emphatically progressive, especially the important branches of credit, currency, taxation, and revenue.

Mr. Chase's success has been complete under the most appalling difficulties. The preceding administration, by their treasonable course, and anti-coercion heresies, had almost paralyzed the Government. They had increased the rate of interest of Federal loans from six to nearly twelve per cent. per annum. Their Vice-president (Mr. Breckenridge), their Finance Minister (Mr. Cobb), their Secretary of War (Mr. Floyd), their Secretary of the Interior (Mr. Thompson), are now in the traitor army. Even the President (Mr. Buchanan), with an evident purpose of aiding the South to dissolve the Union, had announced in his messages the absurd political paradox, that _a State has no right to secede, but that the Government has no right to prevent its secession_. It was a conspiracy of traitors, at the head of which stood the President, secretly pledged, at Ostend and Cininnati, to the South (as the price of their support), to aid them to control or destroy the republic. Thus was it that, in time of profound peace, when our United States six per cents. commanded a few weeks before a large premium, and our debt was less than $65,000,000, that Mr. Buchanan's Secretary of the Treasury (Mr. Cobb) was borrowing money at an interest of nearly twelve per cent. per annum. Most fortunately that accursed administration was drawing to a close, or the temporary overthrow of the Government would have been effected. Never did any minister of finance undertake a task apparently so hopeless as that so fully accomplished by Mr. Chase in reviving the public credit. A single fact will illustrate the extraordinary result. At the close of the fiscal year ending 1st July, 1860, our public debt was only $64,769,703, and Secretary Cobb was borrowing money at twelve per cent. per annum. On the first of July 1863, in the midst of a stupendous rebellion, our debt was $1,097,274,000, and Mr. Chase had reduced the average rate of interest to 3.89 per cent. per annum, whilst the highest rate was 7.30 for a comparatively small sum to be paid off next year. This is a financial achievement without a parallel in the history of the world. If I speak on this subject with some enthusiasm, it is in no egotistical spirit, for Mr. Chase's system differs in many respects widely from that adopted by me as Minister of Finance during the Mexican war, and which raised United States _five per cents._ to a premium. But my system was based on specie, or its real and convertible equivalent, and would not have answered the present emergency, which, by our enormous expenditure, necessarily forced a partial and temporary suspension of specie payments upon our banks and Government. Mr. Chase's system is exclusively his own, and, in many of its aspects, is without a precedent in history. When first proposed by him it had very few friends, and was forced upon a reluctant Congress by the great emergency, presenting the alternative of its adoption or financial ruin. Indeed, upon a test vote in Congress in February last, it had failed, when the premium on gold rose immediately over twenty per cent. This caused a reconsideration, when the bills were passed and the premium on gold was immediately reduced more than the previous rise, exhibiting the extraordinary difference in a few days of twenty-three per cent., in the absence of any intermediate Federal victories in the field.

Such are the facts. Let me now proceed to detail the causes of these remarkable results. The first element in the success of any Minister of Finance is the just confidence of the country in his ability, integrity, candor, courage, and patriotism. He may find it necessary, in some great emergency, like our rebellion, to diverge somewhat from the _via trita_ of the past, and enter upon paths not lighted by the lamp of experience. He must never, however, abandon great principles, which are as unchangeable as the laws developed by the physical sciences. When Mr. Chase, in his first annual Treasury Report of the 9th of December, 1861, recommended his system of United States banks, organized by Congress throughout the country, furnishing a circulation based upon private means and credit, but secured also by an adequate amount of Federal stock, held by the Government as security for its redemption, it was very unpopular, and encountered most violent opposition. The State banks, and all the great interests connected with them, were arrayed against the proposed system. When we reflect that many of these banks (especially in the great State of New York) were based on State stocks, and in many States that the banks yielded large revenues to the local Government;--when we see, by our Census Tables of 1860 (p. 193), that these banks numbered 1642, with a capital paid up of $421,890,095, loans $691,495,580, and a circulation and deposits, including specie, of $544,469,134,--we may realize in part the tremendous power arrayed against the Secretary. This opposition was so formidable, that neither in the public press nor in Congress did this recommendation of Mr. Chase receive any considerable support. Speaking of the _currency_ issued by the State banks, and of the substitute proposed by Mr. Chase, he presented the following views in his first annual Report before referred to, of December, 1861:--

'The whole of this circulation constitutes a loan without interest
from the people to the banks, costing them nothing except the
expense of issue and redemption and the interest on the specie kept
on hand for the latter purpose; and it deserves consideration
whether sound policy does not require that the advantages of this
loan be transferred in part at least, from the banks, representing
only the interests of the stockholders, to the Government,
representing the aggregate interests of the whole people.

'It has been well questioned by the most eminent statesmen whether
a currency of bank notes, issued by local institutions under State
laws, is not, in fact, prohibited by the national Constitution.
Such emissions certainly fall within the spirit, if not within the
letter, of the constitutional prohibition of the emission of bills
of credit by the States, and of the making by them of anything
except gold and silver coin a legal tender in payment of debts.
'However this may be, it is too clear to be reasonably disputed
that Congress, under its constitutional powers to lay taxes, to
regulate commerce, and to regulate the value of coin, possesses
ample authority to control the credit circulation which enters so
largely into the transactions of commerce and affects in so many
ways the value of coin.

'In the judgment of the Secretary the time has arrived when
Congress should exercise this authority. The value of the existing
bank note circulation depends on the laws of thirty-four States and
the character of some sixteen hundred private corporations. It is
usually furnished in greatest proportions by institutions of least
actual capital. Circulation, commonly, is in the inverse ratio of
solvency. Well-founded institutions, of large and solid capital,
have, in general, comparatively little circulation; while weak
corporations almost invariably seek to sustain themselves by
obtaining from the people the largest possible credit in this form.
Under such a system, or rather lack of system, great fluctuations,
and heavy losses in discounts and exchanges, are inevitable; and
not unfrequently, through failures of the issuing institutions,
considerable portions of the circulation become suddenly worthless
in the hands of the people. The recent experience of several States
in the valley of the Mississippi painfully illustrates the justice
of these observations; and enforces by the most cogent practical
arguments the duty of protecting commerce and industry against the
recurrence of such disorders.

'The Secretary thinks it possible to combine with this protection a
provision for circulation, safe to the community and convenient for
the Government.

'Two plans for effecting this object are suggested. The first
contemplates the gradual withdrawal from circulation of the notes
of private corporations and for the issue, in their stead of United
States notes, payable in coin on demand, in amounts sufficient for
the useful ends of a representative currency. The second
contemplates the preparation and delivery, to institutions and
associations, of notes prepared for circulation under national
direction, and to be secured as to prompt convertibility into coin
by the pledge of United States bonds and other needful regulations.

'The first of these plans was partially adopted at the last session
of Congress in the provision authorizing the Secretary to issue
United States notes, payable in coin, to an amount not exceeding
fifty millions of dollars. That provision may be so extended as to
reach the average circulation of the country, while a moderate tax,
gradually augmented, on bank notes, will relieve the national from
the competition of local circulation. It has been already suggested
that the substitution of a national for a State currency, upon this
plan, would be equivalent to a loan to the Government without
interest, except on the fund to be kept in coin, and without
expense, except the cost of preparation, issue, and redemption;
while the people would gain the additional advantage of a uniform
currency, and relief from a considerable burden in the form of
interest on debt. These advantages are, doubtless, considerable;
and if a scheme can be devised by which such a circulation will be
certainly and strictly confined to the real needs of the people,
and kept constantly equivalent to specie by prompt and certain
redemption in coin, it will hardly fail of legislative sanction.

'The plan, however, is not without serious inconveniences and
hazards. The temptation, especially great in times of pressure and
danger, to issue notes without adequate provision for redemption;
the ever-present liability to be called on for redemption beyond
means, however carefully provided and managed; the hazards of
panics, precipitating demands for coin, concentrated on a few
points and a single fund; the risk of a depreciated, depreciating,
and finally worthless paper money; the immeasurable evils of
dishonored public faith and national bankruptcy; all these are
possible consequence of the adoption of a system of government
circulation. It may be said, and perhaps truly, that they are less
deplorable than those of an irredeemable bank circulation. Without
entering into that comparison, the Secretary contents himself with
observing that, in his judgment, these possible disasters so far
outweigh the probable benefits of the plan that he feels himself
constrained to forbear recommending its adoption.

'The second plan suggested remains for examination. Its principal
features are, (1st) a circulation of notes bearing a common
impression and authenticated by a common authority; (2d) the
redemption of these notes by the associations and institutions to
which they may be delivered for issue; and (3d) the security of
that redemption by the pledge of the United States stocks, and an
adequate provision of specie.

'In this plan the people, in their ordinary business, would find
the advantages of uniformity in currency; of uniformity in
security; of effectual safeguard, if effectual safeguard is
possible, against depreciation; and of protection from losses in
discount and exchanges; while in the operations of the Government
the people would find the further advantage of a large demand for
Government securities, of increased facilities for obtaining the
loans required by the war, and of some alleviation of the burdens
on industry through a diminution in the rate of interest, or a
participation in the profit of circulation, without risking the
perils of a great money monopoly.

'A further and important advantage to the people may be reasonably
expected in the increased security of the Union, springing from the
common interest in its preservation, created by the distribution of
its stocks to associations throughout the country, as the basis of
their circulation.

'The Secretary entertains the opinion that if a credit circulation
in any form be desirable, it is most desirable in this. The notes
thus issued and secured would, in his judgment, form the safest
currency which this country has ever enjoyed; while their
receivability for all Government dues, except customs, would make
them, wherever payable, of equal value, as a currency, in every
part of the Union. The large amount of specie now in the United
States, reaching a total of not less than two hundred and
seventy-five millions of dollars, will easily support payments of
duties in coin, while these payments and ordinary demands will aid
in retaining this specie in the country as a solid basis both of
circulation and loans.

'The whole circulation of the country, except a limited amount of
foreign coin, would, after the lapse of two or three years, bear
the impress of the nation whether in coin or notes; while the
amount of the latter, always easily ascertainable, and, of course,
always generally known, would not be likely to be increased beyond
the real wants of business.

'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.

'The principal objections to such a circulation as a permanent
system are, 1st, the facility of excessive expansion when
expenditures exceed revenue; 2d, the danger of lavish and corrupt
expenditure, stimulated by facility of expansion; 3d, the danger of
fraud in management and supervision; 4th, the impossibility of
providing it in sufficient amounts for the wants of the people
whenever expenditures are reduced to equality with revenue or below
it.

'These objections are all serious. The last requires some
elucidation. It will be easily understood, however, if it be
considered that a government issuing a credit circulation cannot
supply, in any given period, an amount of currency greater than the
excess of its disbursements over its receipts. To that amount, it
may create a debt in small notes, and these notes may be used as
currency. This is precisely the way in which the existing currency
of United States notes is supplied. That portion of the expenditure
not met by revenue or loans has been met by the issue of these
notes. Debt in this form has been substituted for various debts in
other forms. Whenever, therefore, the country shall be restored to
a healthy normal condition, and receipts exceed expenditures, the
supply of United States notes will be arrested, and must
progressively diminish. Whatever demand may be made for their
redemption in coin must hasten this diminution; and there can be no
reissue; for reissue, under the conditions, necessarily implies
disbursement, and the revenue, upon the supposition, supplies more
than is needed for that purpose. There is, then, no mode in which a
currency in United States notes can be permanently maintained,
except by loans of them, when not required for disbursement, on
deposits of coin, or pledge of securities, or in some other way.
This would convert the treasury into a government bank, with all
its hazards and mischiefs.

'If these reasonings be sound, little room can remain for doubt
that the evils certain to arise from such a scheme of currency, if
adopted as a permanent system, greatly overbalance the temporary
though not inconsiderable advantages offered by it.

'It remains to be considered what results may be reasonably
expected from an act authorizing the organization of banking
associations, such as the Secretary proposed in his last Report.

'The central idea of the proposed measure is the establishment of
one sound, uniform circulation, of equal value throughout the
country, upon the foundation of national credit combined with
private capital.

'Such a currency, it is believed, can be secured through banking
associations organized under national legislation.

'It is proposed that these associations be entirely voluntary. Any
persons, desirous of employing real capital in sufficient amounts,
can, if the plan be adopted, unite together under proper articles,
and having contributed the requisite capital, can invest such part
of it, not less than a fixed minimum, in United States bonds, and,
having deposited these bonds with the proper officer of the United
States, can receive United States notes in such denominations as
may be desired, and employ them as money in discounts and
exchanges. The stockholders of any existing banks can, in like
manner, organize under the act, and transfer, by such degrees as
may be found convenient, the capital of the old to the use of the
new associations. The notes thus put into circulation will be
payable, until resumption, in United States notes, and, after
resumption, in specie, by the association which issues them, on
demand; and if not so paid will be redeemable at the treasury of
the United States from the proceeds of the bonds pledged in
security. In the practical working of the plan, if sanctioned by
Congress, redemption at one or more of the great commercial
centres, will probably be provided for by all the associations
which circulate the notes, and, in case any association shall fail
in such redemption, the treasurer of the United States will
probably, under discretionary authority, pay the notes, and cancel
the public debt held as security.

'It seems difficult to conceive of a note circulation which will
combine higher local and general credit than this. After a few
years no other circulation would be used, nor could the issues of
the national circulation be easily increased beyond the legitimate
demands of business. Every dollar of circulation would represent
real capital, actually invested in national stocks, and the total
amount issued could always be easily and quickly ascertained from
the books of the treasury. These circumstances, if they might not
wholly remove the temptation to excessive issues, would certainly
reduce it to the lowest point, while the form of the notes, the
uniformity of the devices, the signatures of national officers, and
the imprint of the national seal authenticating the declaration
borne on each that it is secured by bonds which represent the faith
and capital of the whole country, could not fail to make every note
as good in any part of the world as the best known and best
esteemed national securities.

'The Secretary has already mentioned the support to public credit
which may be expected from the proposed associations. The
importance of this point may excuse some additional observations.

'The organization proposed, if sanctioned by Congress, would
require, within a very few years, for deposit as security for
circulation, bonds of the United States to an amount not less than
$250,000,000. It may well be expected, indeed, since the
circulation, by uniformity in credit and value, and capacity of
quick and cheap transportation, will be likely to be used more
extensively than any hitherto issued, that the demand for bonds
will overpass this limit. Should Congress see fit to restrict the
privilege of deposit to the bonds known as five-twenties,
authorized by the act of last session, the demand would promptly
absorb all of that description already issued and make large room
for more. A steady market for the bonds would thus be established
and the negotiation of them greatly facilitated.

'But it is not in immediate results that the value of this support
would be only or chiefly seen. There are always holders who desire
to sell securities of whatever kind. If buyers are few or
uncertain, the market value must decline. But the plan proposed
would create a constant demand, equalling and often exceeding the
supply. Thus a steady uniformity in price would be maintained, and
generally at a rate somewhat above those of bonds of equal credit,
but not available to banking associations. It is not easy to
appreciate the full benefits of such conditions to a government
obliged to borrow.

'Another advantage to be derived from such associations would be
found in the convenient agencies which they would furnish for the
deposit of public moneys.

'The Secretary does not propose to interfere with the independent
treasury. It may be advantageously retained, with the assistant
treasurers already established in the most important cities, where
the customs may be collected as now, in coin or treasury notes
issued directly by the Government, but not furnished to banking
associations.

'But whatever the advantages of such arrangements in the commercial
cities in relation to customs, it seems clear that the secured
national circulation furnished to the banking associations should
be received everywhere for all other dues than customs, and that
these associations will constitute the best and safest depositaries
of the revenues derived from such receipts. The convenience and
utility to the Government of their employment in this capacity, and
often, also, as agents for payments and as distributors of stamps,
need no demonstration. The necessity for some other depositaries
than surveyors of ports, receivers, postmasters, and other
officers, of whose responsibilities and fitness, in many cases,
nothing satisfactory can be known, is acknowledged by the provision
for selection by the Secretary contained in the internal revenue
act; and it seems very clear that the public interest will be
secured far more certainly by the organization and employment of
associations organized as proposed than by any official selection.

'Another and very important advantage of the proposed plan has
already been adverted to. It will reconcile, as far as practicable,
the interest of existing institutions with those of the whole
people.

'All changes, however important, should be introduced with caution,
and proceeded in with careful regard to every affected interest.
Rash innovation is not less dangerous than stupefied inaction. The
time has come when a circulation of United States notes, in some
form, must be employed. The people demand uniformity in currency,
and claim, at least, part of the benefit of debt without interest,
made into money, hitherto enjoyed exclusively by the banks. These
demands are just and must be respected. But there need be no sudden
change; there need be no hurtful interference with existing
interests. As yet the United States note circulation hardly fills
the vacuum caused by the temporary withdrawal of coin; it does not,
perhaps, fully meet the demand for increased circulation created by
the increased number, variety, and activity of payments in money.
There is opportunity, therefore, for the wise and beneficial
regulation of its substitution for other circulation. The mode of
substitution, also, may be judiciously adapted to actual
circumstances. The plan suggested consults both purposes. It
contemplates gradual withdrawal of bank note circulation, and
proposes a United States note circulation, furnished to banking
associations, in the advantages of which they may participate in
full proportion to the care and responsibility assumed and the
services performed by them. The promptitude and zeal with which
many of the existing institutions came to the financial support of
the Government in the dark days which followed the outbreak of the
rebellion is not forgotten. They ventured largely, and boldly, and
patriotically on the side of the Union and the constitutional
supremacy of the nation over States and citizens. It does not at
all detract from the merit of the act that the losses, which they
feared but unhesitatingly risked, were transmuted into unexpected
gains. It is a solid recommendation of the suggested plan that it
offers the opportunity to these and kindred institutions to
reorganize, continue their business under the proposed act, and
with little loss and much advantage, participate in maintaining the
new and uniform national currency.

'The proposed plan is recommended, finally, by the firm anchorage
it will supply to the union of the States. Every banking
association whose bonds are deposited in the treasury of the Union;
every individual who holds a dollar of the circulation secured by
such deposit; every merchant, every manufacturer, every farmer,
every mechanic, interested in transactions dependent for success
on the credit of that circulation, will feel as an injury every
attempt to rend the national unity, with the permanence and
stability of which all their interests are so closely and vitally
connected. Had the system been possible, and had it actually
existed two years ago, can it be doubted that the national
interests and sentiments enlisted by it for the Union would have so
strengthened the motives for adhesion derived from other sources
that the wild treason of secession would have been impossible?

'The Secretary does not yield to the phantasy that taxation is a
blessing and debt a benefit; but it is the duty of public men to
extract good from evil whenever it is possible. The burdens of
taxation may be lightened and even made productive of incidental
benefits by wise, and aggravated and made intolerable by unwise,
legislation. In like manner debt, by no means desirable in itself,
may, when circumstances compel nations to incur its obligations, be
made by discreet use less burdensome, and even instrumental in the
promotion of public and private security and welfare.

'The rebellion has brought a great debt upon us. It is proposed to
use a part of it in such a way that the sense of its burden may be
lost in the experience of incidental advantages. The issue of
United States notes is such a use; but if exclusive, is hazardous
and temporary. The security by national bonds of similar notes
furnished to banking associations is such a use, and is
comparatively safe and permanent; and with this use may be
connected, for the present, and occasionally, as circumstances may
require, hereafter, the use of the ordinary United States notes in
limited amounts.

'No very early day will probably witness the reduction of the
public debt to the amount required as a basis for secured
circulation. Should no future wars arrest reduction and again
demand expenditures beyond revenue, that day will, however, at
length come. When it shall arrive the debt may be retained on low
interest at that amount, or some other security for circulation may
be devised, or, possibly, the vast supplies of our rich mines may
render all circulation unadvisable except gold and the absolute
representatives and equivalents, dollar for dollar, of gold in the
treasury or on safe deposit elsewhere. But these considerations may
be for another generation.

'The Secretary forbears extended argument on the constitutionality
of the suggested system. It is proposed as an auxiliary to the
power to borrow money; as an agency of the power to collect and
disburse taxes; and as an exercise of the power to regulate
commerce, and of the power to regulate the value of coin. Of the
two first sources of power nothing need be said. The argument
relating to them was long since exhausted, and is well known. Of
the other two there is not room, nor does it seem needful to say
much. If Congress can prescribe the structure, equipment, and
management of vessels to navigate rivers flowing between or through
different States as a regulation of commerce, Congress may
assuredly determine what currency shall be employed in the
interchange of their commodities, which is the very essence of
commerce. Statesmen who have agreed in little else have concurred
in the opinion that the power to regulate coin is, in substance and
effect, a power to regulate currency, and that the framers of the
Constitution so intended. It may well enough be admitted that while
Congress confines its regulation to weight, fineness, shape, and
device, banks and individuals may issue notes for currency in
competition with coin. But it is difficult to conceive by what
process of logic the unquestioned power to regulate coin can be
separated from the power to maintain or restore its circulation, by
excluding from currency all private or corporate substitutes which
affect its value, whenever Congress shall see fit to exercise that
power for that purpose.

'The recommendations, now submitted, of the limited issue of United
States notes as a wise expedient for the present time, and as an
occasional expedient for future times, and of the organization of
banking associations to supply circulation secured by national
bonds and convertible always into United States notes, and after
resumption of specie payments, into coin, are prompted by no favor
to excessive issues of any description of credit money.

'On the contrary, it is the Secretary's firm belief that by no
other path can the resumption of specie payments be so surely
reached and so certainly maintained. United States notes receivable
for bonds bearing a secure specie interest are next best to notes
convertible into coin. The circulation of banking associations
organized under a general act of Congress, secured by such bonds,
can be most surely and safely maintained at the point of certain
convertibility into coin. If, temporarily, these associations
redeem their issues with United States notes, resumption of specie
payments will not thereby be delayed or endangered, but hastened
and secured; for, just as soon as victory shall restore peace, the
ample revenue, already secured by wise legislation, will enable the
Government, through advantageous purchases of specie, to replace at
once large amounts, and, at no distant day, the whole, of this
circulation by coin, without detriment to any interest, but, on the
contrary, with great and manifest benefit to all interests.

'The Secretary recommends, therefore, no mere paper money scheme,
but, on the contrary, a series of measures looking to a safe and
gradual return to gold and silver as the only permanent basis,
standard, and measure of values recognized by the
Constitution--between which and an irredeemable paper currency, as
he believes, the choice is now to be made.'

Congress, however, was still unwilling to adopt the recommendations of the Secretary, until the necessity was demonstrated by the course of events. On reference to the laws, which are printed in the Appendix, it will be found, that the great features of the system of the Secretary were as follows:

1. A loan to the Government upon its bonds reimbursable in twenty years, but redeemable after five years, at the option of the nation, the interest being six per cent., payable semi-annually in _coin_, as is also the principal.

2. The issue of United States legal tender notes, receivable for all dues to the nation except customs, and fundable in this United States 5--20 six per cent. stock.

3. The authorization of the banks recommended in his Report, whose circulation would be secured not only by private capital, but by adequate deposits of United States stock with the Government.

4. To maintain, in the meantime, as near to specie as practicable, this Federal Currency,--1st, by making it receivable in all dues to the Government except for customs; 2d, by the privilege of funding it in United States stock; 3d, by enhancing the benefit of this privilege, not only by making the stock, both principal and interest, payable in specie, but by making it gradually the ultimate basis of our whole bank circulation, which, as shown by the census tables before referred to (including deposits), nearly doubles every decade.

5. By imposing such a tax on the circulation of the State banks, as, together with State or municipal taxes, would induce them to transfer their capital to the new banks proposed by the Secretary.

6. To relieve the _new banks_ from all State or municipal taxation.

7. In lieu thereof, to impose a moderate Federal tax on all bank circulation, as a bonus to be paid cheerfully by these banks for the great privilege of furnishing ultimately the whole paper currency of the country, and the other advantages secured by these bills.