Subtreasury

“ To lock up the surplus in the Treasury and withhold it from circulation would lead to such a contraction of the currency as to cripple trade and seriously affect the prosperity of the country. Under these circumstances the Secretary of the Treasury and myself heartily concurred in the propriety of using all the surplus currency in the Treasury in the purchase of Government bonds, thus reducing the interest-bearing indebtedness of the country, and of submitting to Congress the question of the disposition to be made of the bonds so purchased. ”

“ Who else objects to either feature of the sub-treasury—the hard-money feature, or the deposit of our own moneys with our own officers? Make the inquiry—pursue it through its details—examine the community by classes, and see who objects. The hard-money feature is in full force. It took full effect at once in the South and West, because there were no bank-notes in those quarters of the Union of the receivable description: it took full effect in New York and New England, because, having preserved specie payments, specie was just as plenty in that quarter as paper money ”

“ Every Sub-Treasury acts practically as a Government bank, just as the old United States National Bank in Philadelphia did, and takes in all the money it can get, but pays out none, except on Government vouchers. So it does not perform all the functions of a bank, and we should have a more elastic currency if the Sub-Treasury system were abolished, which it doubtless will be in time. Theoretically, we have no United States National Bank, yet practically we have one in every Sub-Treasury. ”

“ Now is the time to ask the proprietors themselves and ascertain whether in starting a bank they ever had the intention of letting it work to the detriment of their country? The public Treasury is the heart of the State—did they ever wish, do they to-day wish to strike it with a dagger? ”

“ The new tariff act, called revenue—was changed within a year. The sub-treasury system, believed to have been put to death, came to life again. Gold and silver, intended to have been ignored as a national currency, had become that currency—both for the national coffers, and the people's pockets. Of all the measures of that extraordinary session, opening with so much hope, nothing now remains to recall the idea of its existence, but, first—The Home Squadron! keeping idle watch on our safe coasts, at the cost of a million per annum. ”

“ Not only the Treasury of the government, nay, every citizen's pocket would be within easy reach of their rapacity. But, dismissing the supposition of organized roguery, the mischief may as well be done by error and ignorance. And there impossibility itself appears possible. Of the wisdom with which so tremendous a power may be exercised, we had last winter a striking illustration. The majority in Congress insisted that to relieve the disturbed condition of business, it was absolutely necessary to expand the currency. ”

“ The prosperity of twenty years is annihilated at one stroke! The sources of revenue are dried up. The Treasury, indeed, may be now full—but it must continually diminish—and, without its usual supply, it must soon be empty. We have still some credit. But how long, sir, can that be maintained, when it is known that we have no longer the means, allowing us to possess the disposition, to fulfil our pecuniary engagements? When you cannot collect a cent upon imposts, and dare not lay a direct tax, how far you will be able to obtain money on loan, is, to say the least of it, very questionable. ”

“ Not the rich, but the laboring people and persons of small means, who put their surplus earnings there for safe keeping. It is estimated that the same class has, in national and private banks and in trust companies, another $200,000,000 and that nearly $130,000,000 is owing them in other kinds of debts. There is, then, a sum of about $1,200,000,000 owing to the laboring people and men of small means, constituting their savings. To that amount that class are creditors. And you pretend that for their benefit you will expand the currency. ”

“ In the sphere of financial policy, it was the Treasury’s own responsibility to plan the appropriate precautions—a programme of taxation without any misjudged mercy in it, and a programme of borrowing to bring in the genuine savings of the people. ”

“ While the Sub-Treasury system lasts Congress should authorize the Secretary to deposit customs, as well as internal revenue receipts, in the national bank depositaries, in time of stringency, when the Government’s receipts exceed its disbursements, and it has more than a sufficient working balance. ”

“ Financial measures, of various kinds, for borrowing money to supply the wants of the treasury, beyond the receipts from taxation and the sales of the public lands, have been adopted by the government since the United States became an independent nation. Subscriptions for a loan of twelve millions of dollars were, on the 4th of August, 1790, directed to be opened at the treasury, to be made payable in certificates issued for the debt according to their specie value. ”

“ Others may regret that the exigencies of the country were not promptly met by taxation,—or that at the beginning a different system was not organized by the Treasury, through which the national securities might have found a readier market,—or that the national credit was not sustained, at the period of bank suspension, by the resolute redemption of the Government securities in coin at any present sacrifice. ”

“ The paper money, according to the universal law, that an inferior currency always crowds out the superior one, will circulate alone. Suppose, then, it appears that the paper circulation alone is in excess of the real requirements of the business of the country, what then? Then something like the amount of that excess will go to the Treasury for redemption, and the coin paid out in that redemption being over and above the volume of the circulation required by the business of the country, will again either be hoarded or go into our foreign commerce and flow out. ”

“ VI. The cost of exchange, insurance, and conveyance of specie abroad, as well as the commission for the payment of the coupons will be borne by the Government. The Directors of the Treasury will come to a previous arrangement with the Ministers of Finance with regard to all these operations, but the Minister will decide whether the despatch of these sums is to be effected in specie or by letters of exchange.
Art. VII. The Treasury will not be allowed to employ any funds, disposable or not, in operations of credit, commerce, industry, &c.
Govenment not to diminish yield of hypothecated taxes. ”

“ And, after all, there are scarcely any two of the friends of the administration 427 who can agree upon the same sub-treasury scheme. Each has a plan of his own. One man requires that all banks shall be discarded, and nothing but gold and silver shall be received for revenue. ”

“ In intimate connection with the question of revenue, is that which makes provision for a suitable fiscal agent, capable of adding increased facilities in the collection and disbursement of the public revenues, rendering more secure their custody, and consulting a true economy in the great multiplied and delicate operations of the Treasury department. Upon such an agent depends in an eminent degree, the establishment of a currency of uniform value, which is of so great importance to all the essential interests of society ”

“ And what is it that successfully discourages us from direct steps toward specie payments?
In the first place, it is the mistrust of the people in our ability to resume, and to maintain resumption. In the next place, the monthly publication of the Treasury discloses precisely our weakness as well as our strength; and the great element of our weakness is the volume of our past-due and demand obligations. In ordinary times,—that is, when the people have confidence in the ability of the banks to redeem their demand obligations in coin,—a reserve of twenty to twenty-five per cent. ”

“ The revenue involves not only the supply of the treasury with money, but the question of protection to manufactures. On these connected subjects, therefore, Gentlemen, as I have promised to keep nothing back, I will state my opinions plainly, but very shortly.
I am in favor of such a revenue as shall be equal to all the just and reasonable wants of the government; and I am decidedly opposed to all collection or accumulation of revenue beyond this point. An extravagant government expenditure, and unnecessary accumulation in the treasury, are both, of all things, to be most studiously avoided. ”

“ As the fund necessary for the subsistence of the one, is necessary for the subsistence of the other, it follows that they are of the same nature, and must subsist by the same means; and that neither debt stock nor bank stock can be fed, except by taxation, direct or indirect, simple or complicated. ”

“ The presence of a large cash surplus in the Treasury has for many years been the subject of much unfavorable criticism, and has furnished an argument to those who have desired to place the tariff upon a purely revenue basis. ”

“ The Treasury had a balance of seven or eight millions in specie; the national credit was intact; taxes were not yet reduced; the Bank was still in active existence; various incidental resources were within reach; the first year of war would require neither increase of debt nor of taxation, and for subsequent years loans, founded on increased customs duties, would suffice. ”

“ Such a condition has heretofore in times of surplus revenue led the Government to restore currency to the people by the purchase of its unmatured bonds at a large premium and by a large increase of its deposits in national banks, and we easily remember that the abuse of Treasury accumulation has furnished a most persuasive argument in favor of legislation radically reducing our tariff taxation. ”

“ Under the system of sales, matured as it has been by experience, and adapted to the exigencies of the times, the lands will continue as they have become, an abundant source of revenue; and when the pledge of them to the public creditor shall have been redeemed by the entire discharge of the national debt, the swelling tide of wealth with which they replenish the common Treasury may be made to reflow in unfailing streams of improvement from the Atlantic to the Pacific Ocean. ”

“ Either the surplus must lie idle in the Treasury or the Government will be forced to buy at market rates its bonds not then redeemable, and which under such circumstances can not fail to command an enormous premium, or the swollen revenues will be devoted to extravagant expenditure, which, as experience has taught, is ever the bane of an overflowing treasury. ”

“ No other adequate cause has ever been assigned for the revival of government credit, the renewed activity of trade, and the facility with which the government borrowed, in two or three years, at reasonable rates of interest, mainly from its own citizens, double the amount of money there was in the county, including coin, bank notes, and the notes issued under the legal tender acts. ”

“ Yet our experience has proved that a revenue consisting so largely of imposts and tonnage ebbs and flows to an extraordinary extent, with all the fluctuations incident to the general commerce of the world. It is within our recollection that even in the compass of the same last 10 years the receipts of the Treasury were not adequate to the expenditures of the year, and that in two successive years it was found necessary to resort to loans to meet the engagements of the nation. ”

“ There need be no fear that we can not pay our current expenses with such money as we have. There is now in the Treasury a comfortable surplus of more than $63,000,000, but it is not in gold, and therefore does not meet our difficulty. ”

“ Being issued on the security of government, they supplied the place of coin, and were found a great convenience, acting as state counters, which passed as money, because the people knew that the government would receive them at full value. The Lords of the Treasury were authorized to contract with moneyed men to supply cash; and though these bills were at one time at a discount, their credit rose daily, until they reached 1 per cent. premium. They at first bore no interest; but when they were reissued, £7 12s. per cent. per annum was paid, and they became a favorite investment. ”

“ The deficit will be a bottomless pit. If stocks fall to ninety-nine, when by law sixteen millions a month must be redeemed, and if money is taken from the savings banks, the Treasury will be in a hopeless difficulty. ”

“ While a Treasury surplus is not the greatest evil, it is a serious evil. Our revenue should be ample to meet the ordinary annual demands upon our Treasury, with a sufficient margin for those extraordinary but scarcely less imperative demands which arise now and then. Expenditure should always be made with economy and only upon public necessity. ”

“ The gold which comes to them in the course of banking operations will be added thereto; and almost imperceptibly the country banks will arrive at the condition of the city banks, whose reserves in coin and legal-tender notes are now far beyond the requirements of law. In the mean time, and without derangement of business, the Treasury may strengthen its reserve,—while, on the other hand, the quiet reduction of its liabilities advances the percentage of the reserve to the whole amount of liabilities in almost a compound ratio. ”