CURRENCY AND FINANCE.

BY HORACE GREELEY.

The use of Gold and Silver as measures of the value of, and media of payment for, all other property, is older than History-older than Tradition. So long ago as the time of Abraham, we find that Silver had been divided or cast into "shekels" of definite value, and doubtless of specific weight also. The oldest pieces still existing are of square or oblong form, rather thinner than our modern coins of similar size: such were the Jewish “shekels,” and such are the Japanese "itzebus" and other coins of to-day. Older than the invention of letters, the most ancient pieces of silver had no inscriptions, and were distinguished from those of different values, by size only. The circular form and raised edges of the coins of modern Christendom were obviously adopted to reduce to a minimum the loss of metal by wearing or rubbing. Governments, at an early day, coined gold and silver, and gave them legal recognition as money; but they had already been made such by the common consent of the more enlightened portions of mankind; while savages who lacked them were constrained to employ shells, beads, iron, nails, and other things less convenient and less widely accepted.

Though paper money was unknown till the invention of printing, kings had often, when sorely pressed by the exigencies of war or the fruits of their own prodigality, called in the money of their subjects for re-coinage, and debased it from ten to fifty per cent.-replenishing their coffers by impover ishing all within their power. They were ready enough to borrow when in need-as they often were-and were willing to pay (or rather promise) liberal rates of interest; but few were inclined to lend them, except at short dates and on the distinct pledge of jewels and other valuables, or of specified revenues, as security for repayment. Royal debts were thus frequently incurred in preparing for some crusade or other costly expedition; but National debts, now so vast and so general, are mainly the creation of the last century.

Rome, having absorbed the then civilized world, and having, by the introduction or the toleration of Slavery, degraded labor and discouraged industrial progress, the discovery of mines and the production of the precious met als nearly ceased; while the luxurious tastes and habits of the wealthy impelled a continual importation of silks, spices, &c., from India and China, which took little but gold and silver in return. The circulating medium of exchanges and payments being thus insensibly drawn away and not replaced, the Roman Empire languished under a growing dearth of money and a steady decline of prices. As fixed property constantly depreciated in value, those who bought on credit were too often unable to pay at maturity, and so sank into hopeless insolvency. Hence, labor lacked employment, since few chose to plant, or build, or improve, when the resulting property would be worth less than its cost. Population, wealth, prosperity, all declined and dwindled under the combined influences of labor in shackles and enterprise and business devoid of money wherewith to employ and pay that which was still free. And, though the silent progress of Christianity, the fruits of successive irrup

tions and conquests by barbarians, and the pressure of general poverty and wretchedness, combined to wear out Slavery, the scarcity of money still weighed upon the energies of Europe, down to the close of the 15th century. The discovery of America by Columbus, and the consequent rapid and vast increase of money, wrought a great and sudden revolution. Prices rapidly appreciated: those who bought, or built, or in any manner improved, were almost always enabled to sell at an advance upon cost. Labor was no longer a drug in the market, but in eager demand at prices beyond precedent, yet steadily augmented. The energies of the civilized world received an unwonted stimulus, and wealth was increased and comfort diffused as they never before had been. Soon, Banking-which had already a foot-hold at Venice, Amsterdam and perhaps two or three other great commercial centers -began to be diffused, increasing enormously the power of a definite amount of money to effect transfers of property, even while each bank adhered to the original conception of a mere place of safe deposit for the precious metals and other valuables at a very moderate cost. A bit of paper representing a large sum was passed from hand to hand with a facility previously unknown, and effected many transfers of property while Croesus or Shylock would have been counting, testing and weighing, the coins which were tendered in payment for a single cargo or estate. After a time, it was discovered that the coin represented by the receipts or notes of a bank need not all be kept on deposit that its promises to pay coin on demand might safely be based in good part on the obligations of its solvent and thrifty borrowers who had covenanted to return, on specified days yet future, the sums loaned them respectively. Henceforth, the development of banking was rapid, and the general supply of currency much larger than it had been, even since the vast infusion of the Precious Metals from the New World.

The British Colonies on the American coast were late in their reception of the golden shower. Planted considerably later than the French colony north of them or the Spanish and Portuguese colonies south of them, they had no discovered mines of gold or silver; their climate was harsher, and their soil generally less facile and less fertile than that cultivated by their southern neighbors; while they were required to hew their future farms out of gigantic forests which stubbornly resisted their progress. Agriculture and fishing, their two leading pursuits, were not favorable to the rapid acquisition of wealth; while the jealous monopoly of the trade of their colonies maintained by Spain and Portugal, closed their most direct and easy road to the acquisition of gold and silver. A dearth of money was long sorely felt; and this, with the frequent resort to loans by several of the colonies in fitting out and sustaining large military expeditions against the hostile French and Indians, led to the general introduction and use of that seductive but dangerous form of paper currency which consists of the naked promises of the state to pay, whenever it shall be convenient, small specified sums; a certain practical value being given to these promises by making them, if not a legal tender for all debts whatever, at least receivable for taxes and in payments to the issuing parties. Most of the British colonies had become accustomed to

this currency before the outbreak of their Revolutionary struggle; and the fact that eight shillings in some of them, seven and sixpence in others, four and sixpence in still others, were the established, recognized equivalents of the Spanish coin known as a dollar, marks and measures the ultimate depreciation of the several issues, in the estimation of the authorities which had put them respectively in circulation.

The Revolutionary War, prior to the entrance of France upon the arena as our ally, sorely overtaxed the resources of our fathers. Though the number of men they sent into the field as soldiers bore no greater proportion to their numbers than did that of our rebels in the late civil war, their deficiency in manufactures and in accumulated wealth was so immense, that the average of not more than fifty thousand men under arms drew more heavily on their resources than the half million to one million defenders of the Union kept on foot from December, 1861, to July, 1865, did on ours. Unaccustomed to burdensome taxation, with their foreign trade and fisheries almost suspended, and with their manufactures hardly yet begun, the cost of recruiting, fitting out and .arming, the Continental armies, told fearfully on their means, and led the newly declared States, or most of them, to an early resort to the now familiar expedient of Government paper currency. The new issues were known as Continental money, and for a time served their end; but, as more and more of them were set afloat, and no means of redemption provided, they inevitably depreciated-at first, gradually and moderately, but at length with an accelerated momentum, until they finally sunk out of use and out of countenance—a hundred dollars being eagerly given for a breakfast, which twenty-five cents in specie could have purchased, and the bargain being still a hard one for the caterer. By common consent, the Continental notes came at last to be regarded and recognized as of no value whatever. Meantime, the French Alliance had given the struggling people of the United States a credit in Europe to which they were not intrinsically entitled, and loans were negotiated, both at Paris and Amsterdam, which supplied them with arms and munitions, and enabled them to feed their armies much better than during the bitterly remembered winters of Washington's encampment successively at Morristown and at Valley Forge. A handsome loan, considering the means of the lenders, was subscribed by the merchants of Philadelphia, under the lead of Robert Morris; and the several States were enabled from time to time to borrow considerable sums from their wealthier citizens, and from others, which served to eke out their scanty resources, and helped to save the cause of Independence from collapse through absolute bankruptcy. Peace being at length achieved, the average condition of our people was deplorable indeed. The little Silver and less Gold which had been in the country when the strife began, had mainly been sent abroad in payment for munitions, and for the few goods that it was attempted to import, despite the blockade of our coast by British cruisers-our exports, other than of coin, being of no account. The whole country, save a part of New England, had for years been traversed and ravaged by contending armies, often without rations. Industry had been fearfully deranged and demoralized; and,

now that the stimulus of war was withdrawn, and no other substituted, its pulse beat languidly indeed. The Continental issues being discredited and discarded, there was next to no money in circulation, and very little which would command money. Our Manufactures were still in the germ; our Agriculture was yet struggling with the primeval wilderness, and every way rude, desultory and inefficient. And, could its products have been instantly doubled, there were no markets open to receive them. Not till the great wars which, years afterward, grew out of the French Revolution, did Europe open wide her ports to our staples; while the trade of this Continent, outside of our then comparatively narrow limits, was held and treated by the colonizing powers as a close monopoly in the hands of their subjects. Hence, the payment of debts, and even of taxes, was widely deemed a moral impossibility; and the Shays's Rebellion in Western Massachusetts, with kindred though less pronounced and less formidable commotions in New Hampshire and other States, attested the general prevalence of poverty and misery. The country remained torpid, as if stricken by paralysis, until the adoption of the Federal Constitution and the formation of a more efficient government under the Presidency of Gen. Washington.

To Alexander Hamilton was now confided the charge of our National Finances; and never was a selection more fortunate. A zealous, patriot, a good soldier, an able lawyer, his services in the domain of Finance have dwarfed, by comparison, all his other achievements. By procuring the charter of a National Bank and the passage of a Tariff which avowed the Protection of Home Manufactures to be one of its cardinal objects; by recommending and carrying through Congress the Assumption by the Union of the Debts. of the several States-debts incurred in prosecuting and invigorating the War of Independence and by providing the ways and means of meeting regularly the interest and gradually extinguishing the principal of the entire National Debt thus consolidated-Col. Hamilton firmly established the solvency and credit of the Government, while arousing the Industry and Trade of the country from the torpor of despair to the activity of thrift and wellgrounded life.

The National Debt thus consolidated (the discarded Continental money not included) amounted to One Hundred and Twenty-five Millions; but, if we add to this the sums afterward accorded-not as a dole of charity, but as the payment of a sacred debt-in pensions to the ill-fed and worse-paid soldiers of the Revolution, it will be swelled to Two Hundred Millions of Dollars—a heavier burden, if we consider the comparative population and wealth of the country in 1790 and in 1865 respectively, and the relative value of money-than was or is that imposed on us by the Slaveholders' Rebellion. Yet the impoverished country now commenced forthwith the regular payment of the interest on that large amount, with the current cost of supporting the Government, and soon proceeded to reduce the principal so vigorously and persistently that-in spite of the rupture of '98 with France and the various embargoes to which our infant commerce was subjected, whether by the injustice of European rulers or the folly of our own-the principal of the Debt

had been gradually reduced to Forty-five Millions, when the outbreak in 1812 of our second War with Great Britain soon raised it again to an aggregate of Seventy-five Millions.

In this War, though its duration was brief and the efforts put forth on our side must be pronounced feeble and halting in view of our vastly increased resources, the National credit was strained to the utmost. Before it closed, our Banks, save those of New England, had suspended specie payment, and their notes were depreciated from ten to forty per cent. Yet the Treasury continued to receive those notes, not merely in payment of subscriptions to its loans, but in payment of duties on imports as well; giving to the importer at Norfolk, Charleston or Savannah, a decided advantage over the importer at Boston, Providence or Portland. And, though attention was called to this injustice by Mr. Webster in 1815, no action was taken for its correction until late in the following year.

Although the depreciated notes of Suspended Banks were freely taken in payment of subscriptions to loans, and twelve per cent. was at length the proffered rate of interest, yet some loans were still accepted and paid in the bills of Suspended Banks, at a discount of twelve per cent. In other words, the Government received but seventy-five or six dollars in real money for its promise to pay one hundred dollars, with interest meantime at twelve per cent.

The Protective policy having been deliberately affirmed, after earnest, protracted debate, in the passage of the Tariff of 1816, and the Protective principle having received a fuller application in the Tariffs of 1824 and 1828, especially in the latter, the country bounded forward on a career of prosperity, through the increase and diversification of its Industry, so that the Debt melted away more and more rapidly, until the last dollar was paid in 1836, and a surplus of thirty-six millions was accumulated in the Treasury, threefifths of which, by direction of Congress, was depoŝited pro rata with the several States in the course of 1836-7. Meantime, the attempt of South Carolina, under the lead of John C. Calhoun, to nullify the Tariff by the Ordinance of her Convention, had led to the adoption in 1833 of a Compromise Tariff, proposed by Mr. Clay to prevent the passage of one reported by Mr. Verplanck from the Committee of Ways and Means, making instant and more sweeping reductions. By the Compromise Tariff, the existing duties were reduced each year by the remission of one-tenth of the excess over twenty per cent. ad valorem, so that, on the 4th day of March, 1842, no article imported should pay a higher duty than twenty per cent.: that rate being assumed by the Free Traders as the proper revenue standard.

But here a strange anomaly was presented.

While the Tariff stigmatized

by Free Traders as prohibitory had afforded a revenue (wholly from duties on imports, except what accrued from sales of Public Lands) which amply supported the Government and paid off the National Debt, interest and principal, the Revenue Tariff failed to supply the means of barely supporting the Government in time of peace and in the entire absence of Debt! Mr. Van Buren's Administration (1837-41) was compelled to issue Treasury Notes (that is, borrow money), before the climax of reduction had been