FINANCIAL WORKING OF THE GOVERNMENT UNDER THE HARD MONEY SYSTEM.
The war of words was over: the test of experiment had come: and the
long contest between the hard money and the paper money advocates
ceased to rage. The issue of the war with Mexico was as disastrous
to the paper money party, as it was to the Mexicans themselves. The
capital was taken in each case, and the vanquished submitted in
quiet in each case. The virtue of a gold and silver currency had
shown itself in its good effects upon every branch of business--upon
the entire pursuits of human industry, and above all, in assuring to
the working man a solid compensation, instead of a delusive cheat
for his day's labor. Its triumph was complete: but that triumph was
limited to a home experiment in time of peace. War, and especially
war to be carried on abroad, is the great test of currency; and
the Mexican war was to subject the restored golden currency of
the United States to that supreme test: and here the paper money
party--the national bank sound-currency party--felt sure of the
victory. The first national bank had been established upon the war
argument presented by General Hamilton to President Washington:
the second national bank was born of the war of 1812: and the war
with Mexico was confidently looked to as the trial which was to
show inadequacy of the hard money currency to its exigencies, and
the necessity of establishing a national paper currency. Those who
had asserted the inadequacy of all the gold and silver in the world
to do the business of the United States, were quite sure of the
insufficiency of the precious metals to carry on a foreign war in
addition to all domestic transactions. The war came: its demands
upon the solid currency were not felt in its diminution at home.
Government bills were above par! and every loan taken at a premium!
and only obtained upon a hard competition! How different from any
thing which had ever been seen in our country, or in almost any
country before. The last loan authorized (winter of '47-'48) of
sixteen millions, brought a premium of about five hundred thousand
dollars; and one-half of the bidders were disappointed and chagrined
because they could get no part of it. Compare this financial result
to that of the war of 1812, during which the federal government was
a mendicant for loans, and paid or suffered a loss of forty-six
millions of dollars to obtain them, and the virtue of the gold
currency will stand vindicated upon the test of war, and foreign
war, as well as upon the test of home transactions. The war was
conducted upon the hard money basis, and found the basis to be as
ample as solid. Payments were regular and real: and, at the return
of peace, every public security was above par, the national coffers
full of gold; and the government having the money on hand, and
anxious to pay its loans before they were due, could only obtain
that privilege by paying a premium upon it, sometimes as high as
twenty per centum--thus actually giving one dollar upon every five
for the five before it was due. And this, more or less, on all the
loans, according to the length of time they had yet to run. And this
is the crown and seal upon the triumph of the gold currency.