THE

MERCHANTS' MAGAZINE

AND

COMMERCIAL REVIEW.

JULY, 1864.

THE EX-SECRETARY OF THE TREASURY AND HIS SUCCESSOR.

THE finances of a great nation, in times of crisis, are often fatal to the minister that undertakes to guide them. That Mr. CHASE would, sooner or later, break down under the system he put in action, was very apparent to every reflective mind; but the immediate and sudden termination of his career was hardly looked for. Nevertheless, events seem, latterly, to have crowded so fast upon each other, the course of depreciation being so rapid, forcing the Secretary to the most desperate expedients to stem the downward torrent, that it became very evident he would speedily be swept away by it; and he, therefore, resigned on the 30th of June. The President immediately nominated DAVID TOD, Ex-Governor of Ohio, as his successor. Mr. ToD was known mostly as a politician, but had, in his career, identified himself so decidedly as a hard money advocate, that he won the sobriquet of "Pot Metal ToD." Although that gentleman promptly refused the office his antecedents, in that respect, were taken as indicative of Mr. LINCOLN'S views upon money questions. The Hon. WILLIAM PITT FESSENDEN, Who bas represented Maine two terms, as United States Senator, and who has served as chairman of the Finance Committee, was then nominated, and immediately confirmed as Secretary. This gentleman is a lawyer, and one whose financial theories and experience have been gained only in the Finance Committee; but he has personal qualities, which enable him to command more public confidence in that situation than would, perhaps, any other mere politician. If the country is fated to be governed by lawyers, in all its departments, perhaps Mr. FESSENDEN is as good a choice as may be made.

He has, however, a terrible task before him, to assume what may be called the debris of the splendid patrimony of the country, which, with carte blanche, was put into Mr. CHASE's hands, but has, with his manipulation, been so wasted as to have the nation now, we might almost say, in a state of bankruptcy. To restore a currency which has once been so depreciated, and, at the same time, extract taxes and the means of carrying on the government, seems to the practical financier almost a hopeless task; since the restoring of the currency in

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volves falling prices. These cannot decline without causing losses, bankruptcy, diminished value of property, and suspended production, a state of affairs that destroys the power to collect taxes, and makes borrowing difficult, if not impossible. Yet this is the task from which Mr. CHASE shrunk, after causing the necessity for it, and which Mr. FESSENDEN has now to undertake.

When Mr. CHASE first assumed the position of Treasurer the personal property of the Northern States was, per census, $2,500,000,000, the debt nominal, and the currency specie; at the last published statement the debt is given at $1,720,000,000; but it is well known that the real amount is many hundred millions in excess of that sum; in fact the debt, we believe, is nearly equal to the personal property in 1860; while the personal property itself has greatly diminished in quantity during the war. Of this debt about $800,000,000 is in various forms of paper money, which had depreciated to 40 cents on the dollar on the day of Mr. CHASE's resignation; so, also, two loans put on the market by Mr. CHASE, had failed. The expenses for the coming year, estimated some months since, are about $1,000,000,000. Now with the currency 40 cents per dollar, with the loans unproductive, and with all prices at a high level of inflation, and daily rising, Mr. FESSENDEN is called upon to provide for the coming year. The task is not a light one. Its great difficulty consists in the fact of the present high and increasing prices for commodities, and that all the taxes of the government are taxes upon consumption or indirect taxes. There are no taxes upon property. This alternative then presents itself:-If the present level of currency is maintained the expenses of the government will be swollen by the high prices to an extent equal to the product of the new taxes. To illustrate -the Quartermaster's Department bought last year 283,940,284 lbs of corn, or 4,800,000 bushels, at 90 cents, making $4,320,000. The same quantity now will cost $7,100,000. Thus $2,500,000 of the increased taxes is sunk in that one article. The pay of the troops is higher; the same number of men and subsistence will cost 50 per cent more this year; consequently the new taxes count nothing as a resource, unless the present prices are reduced.

On the other hand, if prices fall, the stringency and distress thereby caused tend to make the collection of taxes difficult and loans impossible. The revulsion set on foot by Mr. CHASE to cause a reduction in gold, has reduced the customs revenue to a point far below the wants of his interest account, and the prospect is not propitious for the future payments. Such, then, is the condition in which Mr. CHASE leaves our finances; and these facts should be well understood now, lest hereafter Mr. FESSENDEN be blamed for disasters, to avert which was beyond the power of man.

The initiative error of Mr. CHASE seems to have been a distrust of the people. He, apparently, in taking possession of the Treasury, understood that a large amount of money must be raised for the support of the war, but he was afraid that the patriotism of the country would not remain proof under the burden of taxes; that if he imposed such taxes as were indispensable to the maintenance of the war on a sound basis, the people might shrink from its prosecution. He therefore determined that the war should go on, and that by means of paper issues it should be made apparently profitable, always

promising that it should speedily end, and, perhaps, hoping that peace would come before bankruptcy.

In his report, Dec., 1862, page 22, he wrote :-" If, then, the war should be continued, contrary to hope and expectation, to midsummer, 1864, and the public debt shall reach the utmost limit now anticipated, of seventeen hundred millions of dollars, the excess of revenue will reduce the debt, in the first year of debt, more than three per cent."

Midsummer has come, and with it a debt of about two thousand millions, and the revenue he promised does not exist. These hopeful predictions, however, were a part of the expedients which Mr. CHASE ad opted, and which have, in the absence of all plan or system, helped to produce such a constant succession of alarms and surprises. When, for instance, the public has been alarmed by the effects of paper money, it has been promised curtailment, but has been surprised by new issues. The distrust of all has, however, been aroused, perhaps, more than by anything else, through the attempt to overturn the whole national system of finance, by the introduction of a new system of National Banks of a very pernicious character. With the establishment of these, all dependant upon the Secretary, grew up a system of agencies, also taking their tone from Mr. CHASE, who, in his turn, reflected only the pernicious councils of inte ested parties. He was thus gradually estranged from the banking interest of the country, and then from the influential and practical private bankers, whose sagacity and skill were the most valuable aids the Treasury could have had.

Embarked upon the sea of paper money, and terrified by its effects, Mr. CHASE revived all the expedients of a past age; the sales of gold, the gold prohibition, besides many other devices, and numberless expedients that had no effect but to increase depreciation. Last year, when the Ohio elections were pending, Mr. CHASE could not avoid parading his seeming success before the people in stump speeches. He was then at his apogee. He plumed himself upon his discovery of a paper money that would not depreciate by increase of quantity. To be sure it did depreciate, but he said that was faction. He claimed for it permanency and uniformity. The former is, alas, too true, and the latter is seen in the rate of discount. He said he had paid all debts, and had $25,000,000 in the Treasury; that he could pay the army Nov. 1, and had, therefore, time to electioneer. In recounting the course of his success, he stated that after he had borrowed all the gold he could get, he was struck with the remarkable fact that gold did not come back to him as fast as he had paid it away-an experience that must come home, we apprehend, to everybody who has expended borrowed money, and whose ability to borrow more is at an end. When he discovered that he could not borrow the notes of others, he concluded to pay out his own. This, however, he found was only another form of borrowing, and that there was the same indisposition to take his notes without interest as those with interest. He then conceived a new idea, and compelled them to take them by making them a legal-tender. On these paper wings he has floated higher and higher, while the whole community was being exhilerated and intoxicated by reason of his paper draught. At the same time gold has been demanded. for duties. He has caused the importers, in the last year, to buy $100,000,000 in gold to give him for duties, and the tell-tale price they were compelled to pay accurately measured the distance of his paper

flight from a substantial foundation. He then began to sell gold himself, while he sought to prohibit all dealing in it. But the crisis had arrived when Mr. CHASE was at the height of his paper flight, and while flaunting in the pride of his success, the process of his undoing was at work.

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ICARUS was very near the sun, but there was nothing to prevent the melting of the wax in his wings, and bringing him under a cloud of his own feathers."

We trust and believe our new minister of finance will show more wisdom, and though the task before him is a difficult one, yet, with confidence once restored, much may be done that seems now almost impossible.

THE NEW EMPIRE OF MEXICO.

A. K. SHEPHARD.

THE "Conquest of Mexico by France" in the June number of the Merchants' Magazine is an article both interesting and valuable as a history of the occupation of that country by the French, and yet its general drift is towards the popular falacy which construes the occupation into an act of hostility towards the United States.

This country has always occupied a dog-in-the-manger position towards the Spanish American republics. While loudly protesting against any interference in their affairs, and professing to be the natural protectors of these weak and unfortunate States, we have suffered them to dash themselves to pieces on the rocks of civil discord.

Satisfied with proclaiming to the world our belief in the Monroe doetrine, we have never shown any consistency between our professions and our practice.

In the year 1858, when General Houston proposed in Congress the establishment of an American protectorate over Mexico, how much sympathy did his plan attract? And yet at that very time the Mexican people would have hailed such a protectorate with joy. The writer was then traveling in Mexico, and, so far as his observations extended, the intelligent portion of the community were unanimous in desiring American intervention. Wearied with civil wars, they were ready to accept as a blessing any interference in their affairs which, leaving them their own government, would still protect the country with the strong arm of law.

Again in St. Domingo, previous to the Spanish usurpation, the people were anvious to annex their fertile island to the United States. Everything was done on their part to bring about annexation, and how did the United States receive their overtures? With indifference, and this, by nature the richest of the West India islands, was suffered to fall into the grasp of Spain.

Incapacity has ever marked our conduct of Spanish American affairs, and now that we are reaping the fruits of our folly we lay the blame upon others. Is it that American genius is not suited to diplomacy! In a list of forty ministers and consuls-general why should one-eighth be foreigners?

In a somewhat extended acquaintance with Spanish American cities, the writer never saw but one United States consul who spoke the language of the country in which he resided. A similar lack of linguistic accomplishments generally falls to the lot of American ministers. It may be a matter of no importance, and yet to a casual observer it does seem that closer relations might be maintained by representatives who, thoroughly acquainted with the people to whom they are accredited and alive to their wants, should seek to turn their knowledge to the advantage of their own country. This is more particularly true of the South and Central American republics, in which proper effort would establish the United States as a leader and protector.

Mexico, New Granada, Chili and Peru were the seats of the highest civilization of the aborigines of this continent, and it is among the elevated table-lands of the Cordilleras and the Andes that the white race must yet attain its highest perfection in the new world.

In those equable and tempered climes are developed neither the sloth and indolence of a purely tropical climate, nor the apathy and plodding dullness of the north, where life itself is wrested from nature by hand-tohand conflict, and the exertion to maintain it often takes from existence its greatest charms. In every northern country whole classes of community barely live.

The vicissitudes of climate, long, rigorous winters, the scant, unyielding soil all call for ceaseless labor. But on the fertile plains of Mexico, life is supported with scarce any exertion, and in a perpetual spring-time to live is in itself happiness. Perhaps it is in the mission of machinery to overcome the difference between the climates, and free man in the North from his many toils. Future centuries will develope that fact; as yet in natural capabilities for civilization the North is far behind.

It will perhaps be asked, if these southern countries are the natural home for civilization why do we find them as they are?

The answer is, that the proper race has not yet come into possession. Had the pilgrims landed where Cortez did, who can imagine the glories which Mexico would have attained? It is her mongrel race which has retarded her development, nor can we look for improvement till a different element is introduced.

Mexico for more than thirty years has been an abomination to civilized nations. No one who has resided there, a witness of ever-occurring deeds of violence and tyranny worse than ever disgraced a despotism, will grieve that the Mexican "republic" should have succumbed to any gov ernment which can guarantee stability and quiet. We might have assisted Mexico to a better state. We did not. France saw the advantages to be derived from so rich a country. Her claims upon it were unjust, but no government founded upon justice has existed in Mexico for years. The only question to decide is, whether the empire will prove beneficial to the country and not inimical to ourselves. Quixotish ideas with regard to freedom and republicanism should not be allowed to have weight. No one would recommend a republican government for the barbarous tribes of Africa. Even we (self-satisfied as we are), are a century behind

our institutions.

Mexico has been tried and found wanting, and no one who has carefully observed the country from the Coatzacoalcos to the Rio Grande,— who has become familiar with the people, from the cultivated Spaniards