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and village in the land in swarms like there completed his legal studies. Havthe flies of Egypt into the palaces of ing long previously resolved to make Pharaoh, for his assignment, considera- his home in the West, he left Boston in tion, and decision, and finally to those April, 1833, and in June following ar: great and unprecedented questions of rived in Fort Wayne, Indiana, then politics, political economy, and finance, a frontier trading-post, described by wherein he is often expected to agree

mere dot of civilization in with the less informed, to ignore ob- the heart of a magnificent wilderness." stacles which he knows to be insur- About that time, however, it began to mountable, to dash after results without grow rapidly, and is now the second the means of attaining them, and to city in the State. drop the unattractive but essential sub- In the Fall of 1835 he was invited, stance for the more alluring shadow. though a young man with little experi

No Secretary of the Treasury has ence in business, to organize and take enjoyed larger opportunities than Mr. the management of a Branch of the McCulloch for a thorough and practical State Bank of Indiana, at Fort Wayne. education in finance before entering He accepted the offer without intending upon his office. He is of Scottish fa- to abandon his profession, but in a few mily, as his name indicates, and his months became so interested in bankpersonal habits and financial views are ing, that he determined to make it his of the Scottish-American pattern. He permanent business.

In 1836 he was aims to succeed through patient labor, elected a Director of the State Bank, economy, cautious, prudent calculation, and he continued to be the Cashier and and strict honesty, rather than by bril- manager of the Branch, and a Director liant strokes of genius.

of the Bank, until the expiration of the His grandfather, Adam McCulloch, charter, in 1857. The great success of emigrated from Dornoch, Scotland, and that admirably conducted banking insettled in Arundel, Maine (now Kenne- stitution was very largely the result of bunk Port), about the year 1765. He his financial conservatism and ability. was a fine scholar, and, like so many of In 1856 a new bank, known as the the Scotch, was thrifty, hospitable, Bank of the State of Indiana, was charclannish, and of most excellent humor. tered, with twenty branches, and an As a merchant he acquired a handsome authorized capital of six millions of fortune. His father was likewise a dollars. Mr. McCulloch was, by the merchant, and, at the commencement of unanimous vote of the Directors, elected the war of 1812, was one of the largest President. Under his skilful manageand most enterprising ship-owners in ment, aided by the best financiers in New England. The war, with the re- the State, this Bank took high rank strictions it involved, swept away his among the large banking institutions fortune in its general havoc of com- of the country. It maintained specie mercial interests. About the time his payments during the trying periods of father's embarrassments commenced, Mr. 1857 and 1861, and until its branches McCulloch was born, and he received were merged in the National Banking only the advantages of an academical System, it was one of the strongest (if education, and of a little more than a not the very strongest) and most wisely single year at Bowdoin College. Leav- conducted Banks in the United States. ing college in his sophomore year, then The bill providing for a National seventeen years old, he engaged in Currency through the agency of Nationteaching, and continued to teach until al Banks, became a law in February, 1829, when by close economy he bad 1863. In April of that year Mr. McCulsaved enough to enable him to read loch was requested by Mr. Chase, the law. He commenced the study of law Secretary of the Treasury, to become in Kennebunk, his native town, whence the Comptroller of the Currency, and he removed, in 1832, to Boston, and to undertake the very difficult task of organizing a National Currency Bureau, announced his policy to be, 1st. To and bringing the banking institutions raise by loans the money necessary to of the States under the national bank- pay the soldiers of the great Union ing law. The request was promptly army, and all other demands upon the complied with, although the acceptance Treasury; 2d. To fund all obligations of the office involved a large sacrifice as they should mature into gold-bearof income and of comfort on the part ing bonds; 3d. To contract the currency of Mr. McCulloch, The ability with steadily, on the theory that its depreciawhich this task was accomplished was tion was due in great part to the excesrecognized and appreciated by the sive quantity in circulation, until its bankers and business men throughout yalue should advance to par with gold, the country, and, in connection with thereby restoring the government and his previous experience as a banker, the country to specie payments, and had great weight with the press and turning the people from speculation and people in influencing them to urge gambling, with all their unhealthful upon President Lincoln his appoint- immoral tendencies, back to legitimate ment as Secretary of the Treasury. industry and business, with the blessings

This office came to him almost by which attend them ; 4th. To keep the necessity, as the consequence of his public revenues sufficiently in excess of banking experience and his familiarity the expenses to enable him to devote with finance. Mr. Fessenden, talented $200,000,000 per annum toward paying as he is, had accepted with reluctance, the principal and interest of the nationand held with hesitation and diffidence, al debt, thereby securing the payment the reins of the Treasury. Mr. Chase, in of the debt in less than a third of a whose great abilities enthusiastic con- century. Whatever adverse criticism fidence was felt by a very large party, the carrying out of these views subsehad been transferred to a higher but quently provoked, they received, when less difficult and arduous position. Mr. uttered, the general assent of the people, Cisco, who had been in charge of the as well as the special concurrence of Sub-Treasury at New York, and whose Congress. Though the masses of the practical acquaintance with banking people are not versed in finance, yet it and finance was second only to that of is one of the characteristics of a repubMr. McCulloch, was the leading name lican government that, even in finance, mentioned in Eastern circles for the no policy can be maintained which position. Mr. McCulloch, as Comptrol- the masses of the people cannot comler of the Currency, already presided prehend and approve. Mr. McCulover a leading bureau of the Treasury, loch has been held to account because and was most familiar with the work- some $800,000,000 of 7.30s and $600,ings of the entire department during 000,000 of other securities due in '66, the two last years of the war. His '67, and ’68, and bearing interest at 7,8 antecedents, experience, and character, per cent. in currency, have been funded combined to present him as the most into Five-Twenty bonds bearing interest able and available successor of Mr. Fes- at 6 per cent. in coin. It is argued that senden. The Western press and people, as coin has maintained from the year led by the Chicago Tribune and the '65 to the present time an average preLegislatures of Indiana, Illinois, and mium of 40 per cent. over currency, the other Western States, by resolution six per cent. coin interest has been spontaneously concurred in praying for equivalent to at least 8;* interest in his appointment. President Lincoln, as currency, and this increase of 11's per was his wont, bowed to the popular cent. interest in currency has thus far demand, with which his own judgment increased our annual interest by at least fully agreed.

$10,000,000. By lessening the utility On Mr. McCulloch's accession to the of currency in paying the national inoffice of Secretary, in March, 1865, he terest and increasing the necessity for

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gold, it has depreciated the former and interest-bearing notes, i. e., a less conenhanced the latter, thus increasing that venient form of currency for one far premium on gold which is a practical more convenient. They point, in supobstacle to specie payments. It is true port of the dependence of currency for that when we return to specie payments its value on the bonds, to the fact that our interest will have been diminished the bonds and currency, whether at par by the funding of the 7.30s, but thus with gold as in 1860, at 40 per cent. as far it has been increased. To all such in 1864, or at 78 per cent, as now, have criticisms it may fairly be replied, that always fallen and risen pari passuthe the 7.30s ran for so short a time, that bonds being worth only as much more had they not been funded their holders than currency as was caused by their would long ere this have been demand- interest-bearing quality. While these ing their payment. And as the Govern- views have great plausibility, if not ment was clearly unable then to pay, force, their advocates will hardly claim either in gold or currency, nearly one that a bond for a large sum, due with half of the national debt, it was neces- interest at a distant day, has all the feasary to fund them into bonds, and none tures of currency which belong to notes more favorable were authorized or pos- for small sums, payable on demand sible than the 5.20s. Moreover, the Act without interest. As the ready exof Congress made them convertible, at changeability of the security increasės, the pleasure of the holders, into 5.20s; its liability to be used and classed as a and though the Secretary executed the currency increases. Evidently, the conlaw, he cannot be held responsible for version of the whole national debt into a policy laid down for him by the currency would vastly increase its de higher authority of Congress. The Sec- preciation, and probably would reduce retary's policy of contraction of the cur- its value to a merely nominal figure, like rency was at first endorsed by Congress, that attained in 1863 and 1864 by Conand was regarded for a time as the very federate notes. It is undeniable that test of soundness in finance.

It was

the existence of a given amount of the subjected to only a partial trial, and the national debt in the form of non-interestcurrent of opinion soon set so strongly bearing notes, tends far more to depreagainst it, as a means of restoring specie ciate public credit, enhance the premium payments, that it was overruled by on gold, and delay a return to specie Congress, and the Secretary, though payment, than would any amount of adhering to his original views, obeyed debt invested in long interest-bearing the voice of the people's representatives. bonds. So far, therefore, the violent The opponents of contraction have been assaults on the theory of contraction more successful in thwarting the policy have bred distrust, but have failed to than in agreeing upon the grounds for vindicate the absolute denial of its its defeat. Its more ultra opponents efficacy. urge that the theory of contraction is Other opponents of contraction allege defective at the outset, in that it as- that, after business has adapted itself to sumes that the value of the currency a certain volume of currency, no matter depends on its volume merely, whereas what that volume may be, it is as great its value, they argue, depends on that an evil to contract as it was to expand of the entire bulk of the national debt. it; that business requires chiefly perma

Paper currency has been defined by nence, and that specie payments should some economists as transferable debt, be resumed by authorizing all contracts since all transferable debt may be used to be made in gold or depreciated paper, as a means of payment

and therefore as as parties prefer, and all courts of law a currency. Hence, in the view of such, to recognize the difference of value. the only true contraction is the payment This, it is thought, would lead to the of the debt, and any other only substi- gradual substitution of the gold standtutes interest-bearing bonds for non- ard for the paper, reducing the sums

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named in outstanding debts payable in of England is $25 per capita, and that currency, to the sums in gold which said of France $30 per capita, though about debts are actually worth. This would half of the former and seven eighths produce resumption, without swelling of the latter are specie. He attribthe burden of debts contracted in cur- utes our eras of expansion and specula· rency, worth only 40 or 78 cents per tion to the excessive discounts and de

dollar in gold, by compelling the debtor posits of the banks, contending that to pay them in currency worth 100. these are the most fruitful sources of Undoubtedly, the popular objection to expansion, and that they, rather than resumption now lies in the hostility of bank-notes or Government-notes, conthe debtor-class to having 40 per cent. stitute a currency which needs check, added to the burden of their debts, by regulation, and limitation. On the contracting to that extent the currency other hand, Mr. McCulloch, in his Rein which they are to be paid. The diffi- port for 1865, elaborately argues that culty lies, not in resumption by the Gov- the expansions in bank deposits and ernment, but by the people. It would be discounts, which led to the crises of of no use to make their paper currency

1837 and 1857, were preceded by correworth 40 per cent. more than their sponding expansions in the bank-note private debts, for they could not afford circulation, and that the inflation of to use it as a means of payment any notes occasioned the inflation of deposits more than they can now afford to use and discounts, the underlying cause of gold. In the event of a contraction both being our overtrading with Euthat would carry greenbacks to par rope, and the enormous credits, and with gold, their private debts would delay in settling the balances to which therefore go unpaid, and would soon this overtrading gave rise. constitute an inferior currency, over The policy suggested by Mr. McCulwhich the greenbacks would bear a pre- loch, in 1865, for paying the debt in mium. In short, contraction would “de- thirty-two years, was exceeded during monetrize” greenbacks, as it has gold, the years '66 and '67, in wbich one tenth and leave the people without a currency of the entire debt was paid off. Indeed, corresponding in value to their money if we include the unliquidated portion of account and exchange, except in so of the debt incurred at the close of the far as they should make one for them- war for back pay, bounties, pensions, selves, by substituting private notes for transportation, etc., with the amount for those of Government. Without agree which bonds were issued, our entire debt ing with all these premises, Mr. Mc- outstanding on June 1st, 1865, was more Culloch strongly favors the policy of than $3,300,000,000, and our entire payauthorizing gold contracts, and of taking ment on account of it exceeds $830,000,such legislative measures as will cause. 000, or more than a fourth of the princicontracts, now payable in currency, to pal. The strain on the taxpayers, howbe changed upon terms equally just ever, was deemed excessive, and during between debtor and creditor, to con- the present year the revenue is intended tracts payable in gold at the reduced to barely equal expenditures. Under this figures. He thinks this would promote relaxation the country will probably so returns to specie payments by a mode far recover its financial health and tone which, if the law were properly guarded, as to resume the payment of its debt could not be made oppressive to the within a year or two at most, and the debtor-class, while it would be entirely average rate of payment will vary but acceptable to creditors. Still other op- little from the Secretary's estimate. In ponents of contraction--at the head of his Report for 1865, the startling fact is whom stands that eminent American advanced that the usual products of our economist, Henry C. Carey--asserts that industry exceed 25 per cent. upon the our entire note-currency amounts to only total values of the real and personal $20 per capita, while the entire currency estate of the country, and that his pro

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posed rate of paying the principal would legal-tender acts were war-measures, and while absorb less than 5 per cent. of our annual the repeal of those provisions which made the productions the first year, and barely recommended, the Secretary is of the opinion

United States notes lawful money is not now one tenth of one per cent, in the thirty- that they ought not to remain in force one day second or final year. While these facts longer than shall be necessary to enable the show that the payment of the principal people to prepare for a return to the constitushould be deemed not only practicable - tional currency. but easy, they also raise the question whether it is true economy to take from favor of United States notes as a permanent

The reasons which are sometimes urged in the taxpayers capital which, in their

currency are, the saving of interest and their hands, is earning 25 per cent., in order perfect safety and uniform value. to cancel a debt which we can carry for

The objection to such a policy is, that the pa six per cent. Mr. McCulloch, however, per circulation of the country should be flexible

, with the financial conservatism natural

increasing and decreasing according to the

requirements of legitimate business, wbile, if to his character, stands as much opposed furnished by the Government, it would be quite to all schemes for perpetuating as to likely to be governed by the necessities of the tbose for repudiating the debt. He no Treasury or the interests of parties, rather than more regards a national debt as a na

the demands of commerce and trade. Besides,

a permanent Government currency would be tional blessing, than a private debt as

greatly in the way of public economy, and an individual boon. It must ultimately would give to the party in possession of the be paid. But until it can be paid, let it Government a power which it might be under be made as useful as possible. Our bank- strong temptations to use for other purposes ing system must be founded on debts or

than the public good-keeping the question of bonds of some kind as security for its political question, than which few things would

the currency constantly before the people as a bank-note circulation. The security of

be more injurious to business. the national bonds bas been found so But the great and insuperable objection, as perfect, that the notes of the few na- already stated, to the direct issue of notes by tional banks which failed, have borne a

the Government, as a policy, is the fact, that premium instead of being at a discount, limited and defined powers, and that the

the Government of the United States is one of and the note of a national bank in Ore- authority to issue notes as money is neither gon passes without discount in Maine. expressly given to Congress by the ConstituMr. McCulloch's agency in founding the tion, nor fairly to be inferred, except as national banking system has been sec

measure of necessity in a great national exi

gency. No consideration of a mere pecuniary ond only to that of Mr. Chase. All his

character should induce an exercise by ConReports contain sound and elaborate

gress of powers not clearly contemplated by defences of the system, as the only the instrument upon which our political fabric source from whence we can derive a was established. currency that shall expand and contract As soon as we shall have returned to with the wants of the community, and specie payments, Mr. McCulloch believes shall be of uniform value throughout the national system should be made one the country.

of free banking; but he would regard no In his Report of December, 1865, he additional deposit of securities as effectthus states his views of the legal-tender ual to prevent inflation if banks were notes :

authorized to issue unlimited quantities

of depreciated paper. He has been perThe right of Congress, at all times, to borrow sistènt in advocating a rigid maintemoney and to issue obligations for loans in such

nance of the public faith against the form as may be convenient, is unquestionable ; but their authority to issue obligations for a

proposed schemes of paying the Fivecirculating medium as money, and to make Twenty bonds in greenbacks, and has these obligations a legal tender, can only be opposed the efforts to subject the bonds found in the unwritten law which sanctions

to local taxation, as calculated to prewhatever the representatives of the people, vent a general distribution of them whose duty it is to maintain the Government against its enemies, may consider in a greut among the States and counties in which emergency necessary to be done. The present taxes have so little equality, and to

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