executed since, are satisfied by the payment of the amount called for in depreciated notes. "Perhaps," says the Secretary, "no law could be passed which would be productive of better results, with so little private or public inconvenience, as an act legalizing specific contracts to be executed in coin." In his opinion it would check the outflow of specie to other countries by creating a necessity for the use of it at home; it would encourage enterprises extending into the future, by removing all uncertainty in regard to the value of the currency with which they are to be carried on. It would also remove a formidable embarrassment in the foreign trade of the country, and familiarize the people again with specie as the • standard of value, and show how groundless is the apprehension so generally existing, that a withdrawal of depreciated notes, or the appreciation of these notes to par, would produce a scarcity of money, by proving that specie, expelled from the country by an inferior circulating medium, will return again when it is made the basis of contracts, and is needed in their performance. The Secretary also recommended that it be declared that after January 1, 1870, United States notes shall cease to be a legal tender on any contract, or for any purpose whatever, except Government dues, for which they are at present receivable. The act making this declaration should also authorize the conversion of these notes at the pleasure of the holders into bonds of the same rate of interest with other funded bonds. The amount of Government notes outstanding has

been as follows:

U. S. Notes Fractional Currency

....

November, 1868.

November, 1867. $357,164,844 $356,021,073 30,706,633 33,413,985 $387,871,477 $389,435,058 The circulation of the national banks has been as follows: October, 1867, $303,988,971; October, 1868, $295,684,244. Thus the total circulation of legal tenders, fractional currency, and national banks, was $685,118,302, being $6,742,146 less than at the same period of the previous year.

The existence of such a large amount of irredeemable paper money in the country has produced two classes of unfavorable consequences: One, affecting the business and the morals of the people, has been heretofore noticed. The other, comprising the commercial relations of the United States to other countries, is too important to be overlooked. This is so well presented by the Secretary of the Treasury in his annual report as to be very appropriately inserted here. He says:

The receipts from customs for the last three years have been as follows:

do these large receipts, under a high tariff, indicate in regard to our foreign trade and to our financial relations with foreign nations?

late war.

It is impossible to ascertain with precision the amount of our securities held in Europe, nor is there any perfectly reliable data for ascertaining, even, what amount has gone there annually since the first bonds were issued for the prosecution of the mated the amount of United States securities of difIn his report of 1866 the Secretary estiferent kinds, including railroad and other stock, held in Europe, at $600,000,000. He soon after became satisfied that this estimate was too low by from one be safe to put the amount so held at the present time, hundred to one hundred and fifty millions. It would exclusive of stocks, at $850,000,000, of which not less than $600,000,000 are United States bonds, nearly all of which have left the United States within the last six years. The amount is formidable, and little satsecurities have been transferred in payment of inisfaction is derived from the consideration that these terest and for foreign commodities, and just as little from the consideration that probably not over $500,000,000 in gold values have been received for these $850,000,000 of debt. In this estimate of our foreign indebtedness railroad and other stocks are not included, as they are not a debt, but the evidence merely of the ownership of property in the United States. Fortunately, for some years past, individual credits have been curtailed, and our foreign and satisfactory. In addition, then, to the stocks referred domestic trade, in this particular, has not been unto and the individual indebtedness, of the amount of which no accurate estimate can be made, Europe holds not less than $850,000,000 of American securities, on nearly all of which interest, and on the Nor, under the present revenue systems and with a greater part of which interest in gold, is being paid. depreciated paper currency, is the increase of our foreign debt likely to be stayed. With an abundant harvest and a large surplus of agricultural products of all descriptions, United States bonds are still creating, to no small extent, the exchange with which our foreign balances are being adjusted. We are even now increasing our debt to Europe at the rate of $60,000,000 or $70,000,000 per annum in the form of gold-bearing bonds.

The gold and silver product of California and the Territories, since 1848, has been upward of been used in manufactures and that the coin in $1,300,000,000. Allowing that $100,000,000 have the country has been increased to an equal amount, the balance of this immense sum-$1,100,000,000— has gone to other countries in exchange for their addition to our agricultural products and to our productions. Within a period of twenty years, in manufactures which have been exported in large quantities, we have parted with $1,100,000,000 of the precious metals; and are, nevertheless, confronted steadily increasing; and all this has occurred under with a foreign debt of some $850,000,000, which is tariffs in a good degree framed with a view of protecting American against foreign manufacturers. But this is not all. During the recent war most of our vessels engaged in the foreign trade were either destroyed by rebel cruisers or transferred to foreigners. Our exports as well as our imports are now chiefly in foreign bottoms. The carrying trade between the United States and Europe is almost literally in the hands of Europeans. Were it not for the remnant of ships still employed in the China trade, and the stand we are making by the establishment of a line of steamers on the Pacific, the coastwise trade, which is retained by the exclusion of foreign competition, would seem to be about all that can, under existing legislation, be relied upon for the employment of American shipping.

There are many intelligent persons who entertain the opinion that the country has been benefited by the transfer of our bonds to Europe, on the ground

that capital has been received in exchange for them, which has been profitably employed in the develop ment of our national resources; and that it matters little whether the interest upon the debt is received by our own people or by the people of other countries. This opinion is the result of misapprehension of facts, and is unsound in principle. It is not to a large extent true that capital, which is being used in developing the national resources, has been received in exchange for the bonds which are held in Europe. While many articles, such as railroad iron, machinery, and raw materials, used in manufacturing the value of which to the country is acknowledged-have been so received, a large proportion of the receipts have been of a different description. Our bonds have been largely paid for in articles for which no nation can afford to run in debt-for articles which have neither stimulated industry nor increased the productive power of the country, which have in fact added nothing to the national wealth. A reference to the custom-house entries will substantiate the correctness of these statements. Two-thirds of the importations of the United States consist of articles which, in economical times, would be pronounced luxuries. The war and a redundant currency have brought about unexampled extravagance, which can only be satisfied by the most costly products of foreign countries. No exception could be taken to such importations if they were paid for in our own productions. This, unfortunately, is not the fact. They are annually swelling our foreign debt without increasing our ability to pay it. How disastrous such a course of trade, if long continued, must be, it requires no spirit of prophecy to predict.

The state of the country, like the circumstances of a debtor, becomes a subject of the first consideration in estimating the future. Many circumstances of a favorable aspect have appeared since the close of the war. The foreign immigration since July 1, 1865, had reached about the number of a million at the end of 1868. Their indirect value, estimated at half the value of a laborer at the South before the war, would be $500,000,000. To this should be added $80,000,000 as the amount of money brought into the country by immigrants, which generally averages $80 per head. The increase in the products of domestic industry has been equally favorable. The number of cotton spindles, which at the close of the war was about 5,235,727, has increased, as shown by recent returns, to 7,000,000. This is a gain of 31.78 per cent. The increase in the woollen manufacture of Ohio, Indiana, Michigan, Illinois, Wisconsin, Iowa, and Minnesota, since 1860, has been $3,831,260 in the amount of capital invested, and 700 in the sets of machinery. The increase in the annual product of pig-iron has been as follows:

coal, which may be taken as a measure of the product of all American coal, has been from 7,499,550 tons in 1862, to 12,379,490 tons in 1866; 12,650,571 in 1867; and 13,500,000 tons in 1868.

There has also been a continued increase of the agricultural products of the country, which is not less important. The crop of Indian corn is estimated to increase at an average of three and a half per cent. per annum, which would make the crop of 1868 amount to 1,100,000,000 bushels, and would net, if sold at 46 cents per bushel, over $500,000,000.

The cotton crop of the Southern States has been, since the close of the war, as follows: 1865-'66, 2,154,476 bales; 1866-'67, 1,954,988 bales; 1867-'68, 2,498,895 bales; 1868-'69, estimated at 2,700,000 bales.

The crop of tobacco increased from 183,316,953 pounds in 1865, to 325,000,000 pounds in 1866, and to 250,000,000 in 1867.

The number of miles of railroad extension since the close of the war has been nearly 8,000. The tonnage of merchandise transported is estimated to have increased from 6,000,000 in 1851, to 48,000,000 in 1867, which is a rate of increase during this period of 800 per cent. The annual value of the tonnage thus moved is increased from $486,816,505 in 1858, to $1,723,330,207 in 1867.

An evidence of the prosperity of the country appears in the reduction made in State debts incurred by the war, during the year. Thus the debt of New Hampshire was reduced 6.9 per cent.; Vermont, 16.2 per cent.; Rhode Island, 13.7 per cent.; Connecticut, 3.4 per cent.; Kentucky, 21 per cent.; Ohio, 4.5 per cent.; Michigan, 6.4 per cent.; Indiana, 23 per cent.; Illinois in 1867-'68, 30.5 per cent.; New York, 12 per cent.

Although there exists this apparent prosperity in all the branches of industry since the close of the war, and there is clearly a great increase in the resources of the country, yet the peculiar fact appears that there is hardly a single domestic article or product, agricultural or manufactured, in behalf of which the claim, either directly or indirectly, has not been made within the last two years, that the same could be produced to greater advantage or profit in some other country than the United States. An increased protection, under the form of a tariff, has been demanded for oil painting, rough building-stone, Indian corn, firewood, bibles, and ice. For the last, the protection asked for was to the extent of 15 per cent. in gold. The consequence is thus represented to be, that the United States is unable to exchange its products on terms of equality with those of any other country, except its product of precious metals.

This unusual condition of affairs is brought to the notice of the public by the special Commissioner of Revenue. It is ascribed by him as beyond a question due "to the greatly increased cost of nearly all forms of labor and

commodities, as compared with the price for the same which prevailed previous to the war." This increased cost is further considered as due to three agencies growing out of the war, viz.: irredeemable paper currency; unequal and heavy taxation; and a limited supply of skilled labor. The influence of an irredeemable paper currency to increase the cost of manufactures is thus forcibly illustrated by the commissioner, David A. Wells:

The statement is furnished to the commissioner by a manufacturer of furniture in one of the Middle States, who, previous to the war, had built up an extensive export business to the West Indies, Central and South America, of a variety of "cane-seated" and "cane-backed" furniture suited to warm latitudes. Thus on the 1st of March, 1861, gold and currency being at par, $1,000 in gold possessed a purchasing power sufficient to obtain for the South American importer 111 dozen of what are termed the trade "ordinary square-post cane-seat chairs." About the 1st of January, 1862, gold began to demand a premium, and advanced during the next three years with great rapidity. This movement was not, however, participated in at first, to any considerable extent, by either labor or commodities, and in consequence the purchasing power of gold greatly increased; so much so that on the 1st of July, 1864, the $1,000 gold, which in 1861 bought 1113 dozen chairs, then bought 143 dozen. Under these circumstances, as was to be expected, trade increased, as the foreign purchaser found the American market by far the best for his interest; but from July, 1864, a movement commenced in an exactly opposite direction, gold receding and labor and commodities advancing in very unequal ratios. Thus in January, 1865, the $1,000 gold, which four years previous had a purchasing power of 1113 dozen chairs, and on the 1st of July, 1864, of 143 dozen, then commanded but 1263 dozen; in February, 1866, a still smaller number, viz., 914 dozen, and ultimately attained its minimum in January, 1867, when the purchasing power of the sum named was only 893 dozen. From this point the purchasing power has gradually increased, and for the past year, 1868, has remained at the rate of about 102 dozen, or nine dozen less than could be bought with the same money in 1861.

The result has been that the foreign purchaser now goes to France or Germany; while the products of American industry, in the form of furniture, being no longer available to exchange for sugars, spices, or dyewoods, gold has necessarily been substituted; and, to use the words of the manufacturer describing his condition, "unless there is a speedy return to specie payments, custom will soon so fix the channels and currents of trade that any attempt on my part to divert them will be attended with great difficulty;' and what has thus been shown to be the case in respect to the export trade of the United States in furniture, may be accepted as true of almost every other manufactured product, which, as a nation, we were accustomed, before the war, to exchange for foreign commodities.

So far as regards the fluctuation of prices, investigations appear to have established the fact that up to the commencement of the year 1867 the general effect of the agencies growing out of the war had been to occasion an average advance in the price of commodities to the extent of about 90 per cent., while the corresponding average advance in wages was not in excess of 60 per cent. Later investigations, as to the year 1867, in the Eastern, Middle, and some of the Western States, respecting the increase of prices since 1860-'61, have shown that the ad

vance in the price of groceries and provisions was, on an average, a little in excess of 86 per cent.; of domestic dry-goods, including clothing, 86 per cent.; of fuel, 57 per cent.; of house-rent, 65 per cent. in the Eastern States, and 90 to 100 per cent. in New York, Newark, Philadelphia, and Pittsburg. The average increase of all the elements which constitute the food, clothing, and shelter of a family during the year 1867 and the first half of the year 1868 has been about 78 per cent. as compared with the standard prices of 1860–61.

A comparison of the increase of wages for the same period shows it to have been 50 per cent. for unskilled mechanical labor, and 60 per cent. for skilled mechanical labor. The average aggregate weekly earnings in 1867 of families of various sizes in different parts of the country, one or more members of each of which were employed in some branch of manufacturing industry, their average weekly expenditure for provisions, fuel, house-rent, etc., and the balance remaining to them over and above such expenditure, available either for accumulation and capital or for the purchase of clothing or articles of enjoyment, are presented in the following statement, prepared by the commissioner from indisputable data: