Government in the manner suggested, our nation will rapidly recover its
wonted prosperity. Its interests require that some measure should be
taken to release the large amount of capital invested in the securities
of the Government. It is not now merely unproductive, but in taxation
annually consumes $150,000,000, which would otherwise be used by our
enterprising people in adding to the wealth of the nation. Our
commerce, which at one time successfully rivaled that of the great
maritime powers, has rapidly diminished, and our industrial interests
are in a depressed and languishing condition. The development of our
inexhaustible resources is checked, and the fertile fields of the South
are becoming waste for want of means to till them. With the release of
capital, new life would be infused into the paralyzed energies of our
people and activity and vigor imparted to every branch of industry. Our
people need encouragement in their efforts to recover from the effects
of the rebellion and of injudicious legislation, and it should be the
aim of the Government to stimulate them by the prospect of an early
release from the burdens which impede their prosperity. If we can not
take the burdens from their shoulders, we should at least manifest a
willingness to help to bear them.
In referring to the condition of the circulating medium, I shall merely
reiterate substantially that portion of my last annual message which
relates to that subject.
The proportion which the currency of any country should bear to the
whole value of the annual produce circulated by its means is a question
upon which political economists have not agreed. Nor can it be
controlled by legislation, but must be left to the irrevocable laws
which everywhere regulate commerce and trade. The circulating medium
will ever irresistibly flow to those points where it is in greatest
demand. The law of demand and supply is as unerring as that which
regulates the tides of the ocean; and, indeed, currency, like the
tides, has its ebbs and flows throughout the commercial world.
At the beginning of the rebellion the bank-note circulation of the
country amounted to not much more than $200,000,000; now the
circulation of national-bank notes and those known as "legal-tenders"
is nearly seven hundred millions. While it is urged by some that this
amount should be increased, others contend that a decided reduction is
absolutely essential to the best interests of the country. In view of
these diverse opinions, it may be well to ascertain the real value of
our paper issues when compared with a metallic or convertible currency.
For this purpose let us inquire how much gold and silver could be
purchased by the seven hundred millions of paper money now in
circulation. Probably not more than half the amount of the latter;
showing that when our paper currency is compared with gold and silver
its commercial value is compressed into three hundred and fifty
millions. This striking fact makes it the obvious duty of the
Government, as early as may be consistent with the principles of sound
political economy, to take such measures as will enable the holders of
its notes and those of the national banks to convert them, without
loss, into specie or its equivalent. A reduction of our paper
circulating medium need not necessarily follow. This, however, would
depend upon the law of demand and supply, though it should be borne in
mind that by making legal-tender and bank notes convertible into coin
or its equivalent their present specie value in the hands of their
holders would be enhanced 100 per cent.
Legislation for the accomplishment of a result so desirable is demanded
by the highest public considerations. The Constitution contemplates
that the circulating medium of the country shall be uniform in quality
and value. At the time of the formation of that instrument the country
had just emerged from the War of the Revolution, and was suffering from
the effects of a redundant and worthless paper currency. The sages of
that period were anxious to protect their posterity from the evils
which they themselves had experienced. Hence in providing a circulating
medium they conferred upon Congress the power to coin money and
regulate the value thereof, at the same time prohibiting the States
from making anything but gold and silver a tender in payment of debts.
The anomalous condition of our currency is in striking contrast with
that which was originally designed. Our circulation now embraces,
first, notes of the national banks, which are made receivable for all
dues to the Government, excluding imposts, and by all its creditors,
excepting in payment of interest upon its bonds and the securities
themselves; second, legal tender, issued by the United States, and
which the law requires shall be received as well in payment of all
debts between citizens as of all Government dues, excepting imposts;
and, third, gold and silver coin. By the operation of our present
system of finance however, the metallic currency, when collected, is
reserved only for one class of Government creditors, who, holding its
bonds, semiannually receive their interest in coin from the National
Treasury. There is no reason which will be accepted as satisfactory by
the people why those who defend us on the land and protect us on the
sea; the pensioner upon the gratitude of the nation, bearing the scars
and wounds received while in its service; the public servants in the
various departments of the Government; the farmer who supplies the
soldiers of the Army and the sailors of the Navy; the artisan who toils
in the nation's workshops, or the mechanics and laborers who build its
edifices and construct its forts and vessels of war, should, in payment
of their just and hard-earned dues, receive depreciated paper, while
another class of their countrymen, no more deserving are paid in coin
of gold and silver. Equal and exact justice requires that all the
creditors of the Government should be paid in a currency possessing a
uniform value. This can only be accomplished by the restoration of the
currency to the standard established by the Constitution, and by this
means we would remove a discrimination which may, if it has not already
done so, create a prejudice that may become deep-rooted and widespread
and imperil the national credit.
The feasibility of making our currency correspond with the
constitutional standard may be seen by reference to a few facts derived
from our commercial statistics.
The aggregate product of precious metals in the United States from 1849
to 1867 amounted to $1,174,000,000, while for the same period the net
exports of specie were $741,000,000. This shows an excess of product
over net exports of $433,000,000. There are in the Treasury
$103,407,985 in coin; in circulation in the States on the Pacific Coast
about $40,000,000, and a few millions in the national and other
banks--in all less than $160,000,000. Taking into consideration the
specie in the country prior to 1849 and that produced since 1867, and
we have more than $300,000,000 not accounted for by exportation or by
returns of the Treasury, and therefore most probably remaining in the
country.
These are important facts, and show how completely the inferior
currency will supersede the better, forcing it from circulation among
the masses and causing it to be exported as a mere article of trade, to
add to the money capital of foreign lands. They show the necessity of
retiring our paper money, that the return of gold and silver to the
avenues of trade may be invited and a demand created which will cause
the retention at home of at least so much of the productions of our
rich and inexhaustible gold-bearing fields as may be sufficient for
purposes of circulation. It is unreasonable to expect a return to a
sound currency so long as the Government and banks, by continuing to
issue irredeemable notes, fill the channels of circulation with
depreciated paper. Notwithstanding a coinage by our mints since 1849 of
$874,000,000, the people are now strangers to the currency which was
designed for their use and benefit, and specimens of the precious
metals bearing the national device are seldom seen, except when
produced to gratify the interest excited by their novelty. If
depreciated paper is to be continued as the permanent currency of the
country, and all our coin is to become a mere article of traffic and
speculation to the enhancement in price of all that is indispensable to
the comfort of the people, it would be wise economy to abolish our
mints, thus saving the nation the care and expense incident to such
establishments, and let our precious metals be exported in bullion. The
time has come, however, when the Government and national banks should
be required to take the most efficient steps and make all necessary
arrangements for a resumption of specie payments. Let specie payments
once be earnestly inaugurated by the Government and banks, and the
value of the paper circulation would directly approximate a specie
standard.
Specie payments having been resumed by the Government and banks, all
notes or bills of paper issued by either of a less denomination than
$20 should by law be excluded from circulation, so that the people may
have the benefit and convenience of a gold and silver currency which in
all their business transactions will be uniform in value at home and
abroad. Every man of property or industry, every man who desires to
preserve what he honestly possesses or to obtain what he can honestly
earn, has a direct interest in maintaining a safe circulating
medium--such a medium as shall be real and substantial, not liable to
vibrate with opinions, not subject to be blown up or blown down by the
breath of speculation, but to be made stable and secure. A disordered
currency is one of the greatest political evils. It undermines the
virtues necessary for the support of the social system and encourages
propensities destructive of its happiness; it wars against industry,
frugality, and economy, and it fosters the evil spirits of extravagance
and speculation. It has been asserted by one of our profound and most
gifted statesmen that--Of all the contrivances for cheating the
laboring classes of mankind, none has been more effectual than that
which deludes them with paper money. This is the most effectual of
inventions to fertilize the rich man's fields by the sweat of the poor
man's brow. Ordinary tyranny, oppression, excessive taxation--these
bear lightly on the happiness of the mass of the community compared
with a fraudulent currency and the robberies committed by depreciated
paper. Our own history has recorded for our instruction enough, and
more than enough, of the demoralizing tendency, the injustice, and the
intolerable oppression on the virtuous and well-disposed of a degraded
paper currency authorized by law or in any way countenanced by
government. It is one of the most successful devices, in times of peace
or war, of expansions or revulsions, to accomplish the transfer of all
the precious metals from the great mass of the people into the hands of
the few, where they are hoarded in secret places or deposited under
bolts and bars, while the people are left to endure all the
inconvenience, sacrifice, and demoralization resulting from the use of
depreciated and worthless paper.
The Secretary of the Interior in his report gives valuable information
in reference to the interests confided to the supervision of his
Department, and reviews the operations of the Land Office, Pension
Office, Patent Office, and Indian Bureau.
During the fiscal year ending June 30. 1868, 6,655,700 acres of public
land were disposed of. The entire cash receipts of the General Land
Office for the same period were $1,632,745, being greater by $284,883
than the amount realized from the same sources during the previous
year. The entries under the homestead law cover 2,328,923 acres, nearly
one-fourth of which was taken under the act of June 21, 1866, which
applies only to the States of Alabama, Mississippi, Louisiana,
Arkansas, and Florida.
On the 30th of June, 1868, 169,643 names were borne on the pension
rolls, and during the year ending on that day the total amount paid for
pensions, including the expenses of disbursement, was $24,010,982,
being $5,391,025 greater than that expended for like purposes during
the preceding year.
During the year ending the 30th of September last the expenses of the
Patent Office exceeded the receipts by $171, and, including reissues
and designs, 14,153 patents were issued.
Treaties with various Indian tribes have been concluded, and will be
submitted to the Senate for its constitutional action. I cordially
sanction the stipulations which provide for reserving lands for the
various tribes, where they may be encouraged to abandon their nomadic
habits and engage in agricultural and industrial pursuits. This policy,
inaugurated many years since, has met with signal success whenever it
has been pursued in good faith and with becoming liberality by the
United States. The necessity for extending it as far as practicable in
our relations with the aboriginal population is greater now than at any
preceding period. Whilst we furnish subsistence and instruction to the
Indians and guarantee the undisturbed enjoyment of their treaty rights,
we should habitually insist upon the faithful observance of their
agreement to remain within their respective reservations. This is the
only mode by which collisions with other tribes and with the whites can
be avoided and the safety of our frontier settlements secured.
The companies constructing the railway from Omaha to Sacramento have
been most energetically engaged in prosecuting the work, and it is
believed that the line will be completed before the expiration of the
next fiscal year. The 6 per cent bonds issued to these companies
amounted on the 5th instant to $44,337,000, and additional work had
been performed to the extent of $3,200,000.
The Secretary of the Interior in August last invited my attention to
the report of a Government director of the Union Pacific Railroad
Company who had been specially instructed to examine the location,
construction, and equipment of their road. I submitted for the opinion
of the Attorney-General certain questions in regard to the authority of
the Executive which arose upon this report and those which had from
time to time been presented by the commissioners appointed to inspect
each successive section of the work. After carefully considering the
law of the case, he affirmed the right of the Executive to order, if
necessary, a thorough revision of the entire road. Commissioners were
thereupon appointed to examine this and other lines, and have recently
submitted a statement of their investigations, of which the report of
the Secretary of the Interior furnishes specific information.
The report of the Secretary of War contains information of interest and
importance respecting the several bureaus of the War Department and the
operations of the Army. The strength of our military force on the 30th
of September last was 48,000 men, and it is computed that by the 1st of
January next this number will be decreased to 43,000. It is the opinion
of the Secretary of War that within the next year a considerable
diminution of the infantry force may be made without detriment to the
interests of the country; and in view of the great expense attending
the military peace establishment and the absolute necessity of
retrenchment wherever it can be applied, it is hoped that Congress will
sanction the reduction which his report recommends. While in 1860
sixteen thousand three hundred men cost the nation $16,472,000, the sum
of $65,682,000 is estimated as necessary for the support of the Army
during the fiscal year ending June 30, 1870. The estimates of the War
Department for the last two fiscal years were, for 1867, $33,814,461,
and for 1868 $25,205,669. The actual expenditures during the same
periods were, respectively, $95,224,415 and $123,246,648. The estimate
submitted in December last for the fiscal year ending June 30, 1869,
was $77,124,707; the expenditures for the first quarter, ending the
30th of September last, were $27,219,117, and the Secretary of the
Treasury gives $66,000,000 as the amount which will probably be
required during the remaining three quarters, if there should be no
reduction of the Army--making its aggregate cost for the year
considerably in excess of ninety-three millions. The difference between
the estimates and expenditures for the three fiscal years which have
been named is thus shown to be $175,545,343 for this single branch of
the public service.
The report of the Secretary of the Navy exhibits the operations of that
Department and of the Navy during the year. A considerable reduction of
the force has been effected. There are 42 vessels, carrying 411 guns,
in the six squadrons which are established in different parts of the
world. Three of these vessels are returning to the United States and 4
are used as storeships, leaving the actual cruising force 35 vessels,
carrying 356 guns. The total number of vessels in the Navy is 206,
mounting 1,743 guns. Eighty-one vessels of every description are in
use, armed with 696 guns. The number of enlisted men in the service,
including apprentices, has been reduced to 8,500. An increase of
navy-yard facilities is recommended as a measure which will in the
event of war be promotive of economy and security. A more thorough and
systematic survey of the North Pacific Ocean is advised in view of our
recent acquisitions, our expanding commerce, and the increasing
intercourse between the Pacific States and Asia. The naval pension
fund, which consists of a moiety of the avails of prizes captured
during the war, amounts to $14,000,000. Exception is taken to the act
of 23d July last, which reduces the interest on the fund loaned to the
Government by the Secretary, as trustee, to 3 per cent instead of 6 per
cent, which was originally stipulated when the investment was made. An
amendment of the pension laws is suggested to remedy omissions and
defects in existing enactments. The expenditures of the Department
during the last fiscal year were $20,120,394, and the estimates for the
coming year amount to $20,993,414.
The Postmaster-General's report furnishes a full and clear exhibit of
the operations and condition of the postal service. The ordinary postal
revenue for the fiscal year ending June 30, 1868. was $16,292,600, and
the total expenditures, embracing all the service for which special
appropriations have been made by Congress, amounted to $22,730,592,
showing an excess of expenditures of $6,437,991. Deducting from the
expenditures the sum of $1,896,525, the amount of appropriations for
ocean-steamship and other special service, the excess of expenditures
was $4,541,466. By using an unexpended balance in the Treasury of
$3,800,000 the actual sum for which a special appropriation is required
to meet the deficiency is $741,466. The causes which produced this
large excess of expenditure over revenue were the restoration of
service in the late insurgent States and the putting into operation of
new service established by acts of Congress, which amounted within the
last two years and a half to about 48,700 miles--equal to more than
one-third of the whole amount of the service at the close of the war.
New postal conventions with Great Britain, North Germany, Belgium, the
Netherlands, Switzerland, and Italy, respectively, have been carried
into effect. Under their provisions important improvements have
resulted in reduced rates of international postage and enlarged mail
facilities with European countries. The cost of the United States
transatlantic ocean mail service since January 1, 1868, has been
largely lessened under the operation of these new conventions, a
reduction of over one-half having been effected under the new
arrangements for ocean mail steamship service which went into effect on
that date. The attention of Congress is invited to the practical
suggestions and recommendations made in his report by the
Postmaster-General.
No important question has occurred during the last year in our
accustomed cordial and friendly intercourse with Costa Rica, Guatemala,
Honduras, San Salvador, France, Austria, Belgium, Switzerland,
Portugal, the Netherlands, Denmark, Sweden and Norway, Rome, Greece,
Turkey, Persia, Egypt, Liberia, Morocco, Tripoli, Tunis, Muscat, Siam,
Borneo, and Madagascar.
Cordial relations have also been maintained with the Argentine and the
Oriental Republics. The expressed wish of Congress that our national
good offices might be tendered to those Republics, and also to Brazil
and Paraguay, for bringing to an end the calamitous war which has so
long been raging in the valley of the La Plata, has been assiduously
complied with and kindly acknowledged by all the belligerents. That
important negotiation, however, has thus far been without result.
Charles A. Washburn, late United States minister to Paraguay, having
resigned, and being desirous to return to the United States, the
rear-admiral commanding the South Atlantic Squadron was early directed
to send a ship of war to Asuncion, the capital of Paraguay, to receive
Mr. Washburn and his family and remove them from a situation which was
represented to be endangered by faction and foreign war. The Brazilian
commander of the allied invading forces refused permission to the Wasp
to pass through the blockading forces, and that vessel returned to its
accustomed anchorage. Remonstrance having been made against this
refusal, it was promptly overruled, and the Wasp therefore resumed her
errand, received Mr. Washburn and his family, and conveyed them to a
safe and convenient seaport. In the meantime an excited controversy had
arisen between the President of Paraguay and the late United States
minister, which, it is understood, grew out of his proceedings in
giving asylum in the United States legation to alleged enemies of that
Republic. The question of the right to give asylum is one always
difficult and often productive of great embarrassment. In states well
organized and established, foreign powers refuse either to concede or
exercise that right, except as to persons actually belonging to the
diplomatic service. On the other hand, all such powers insist upon
exercising the right of asylum in states where the law of nations is
not fully acknowledged, respected, and obeyed.
The President of Paraguay is understood to have opposed to Mr.
Washburn's proceedings the injurious and very improbable charge of
personal complicity in insurrection and treason. The correspondence,
however, has not yet reached the United States.
Mr. Washburn, in connection with this controversy, represents that two
United States citizens attached to the legation were arbitrarily seized
at his side, when leaving the capital of Paraguay, committed to prison,
and there subjected to torture for the purpose of procuring confessions
of their own criminality and testimony to support the President's
allegation against the United States minister. Mr. McMahon, the newly
appointed minister to Paraguay, having reached the La Plata, has been
instructed to proceed without delay to Asuncion, there to investigate
the whole subject. The rear-admiral commanding the United States South
Atlantic Squadron has been directed to attend the new minister with a
proper naval force to sustain such just demands as the occasion may
require, and to vindicate the rights of the United States citizens
referred to and of any others who may be exposed to danger in the
theater of war. With these exceptions, friendly relations have been
maintained between the United States and Brazil and Paraguay.