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 Speech of Hon. 
 Conf Pam #635 
 
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 . /J SPEECH OF 
 
 HON. W. S. OLDHAM, 
 
 OP TEXAS, 
 
 ON THE SUBJECT OF THE FINANCES. 
 
 SENATE, December 23, 1863. 
 
 Mr. OLDHAM submitted the following resolution : 
 
 Resolved, That the Committee on Finance be instructed to inquire into the 
 experiiency of so amending the act of Congress entitled " An Act to lay taxes 
 for the common defence and carry on the Government of the Confederate 
 States," approved April 24, 1863, as to provide for laying and collecting taxes, 
 for the year 1S64, to the amount of millions of dollars, to be laid upon 
 
 the subjects of taxation, as follows, to wit : 
 
 1. Upon all Treasury notes, designated by the Secretary of the Treasury as 
 "general currency,"' outstanding on ike first day of January, 1S6'1, fifty per 
 cent. 
 
 2. Upon all olher Treasury notes and call certificates, twenty-five per cent. 
 
 3. Upon all eight per cent. Confederate bonds, twenty per cent.; upon seven 
 percent, bonds, fifteen per cent.; upon six per cent, bonds, ten per cent.; and 
 upon all other bonds, five ]ierrent. 
 
 4. And upon all other subjects of taxation specified in said act, as will be 
 sufficient to raise the aforesaid sum of millions, grading the same in 
 proporti(n} to the ability of the classes taxed to pay their assessment. 
 
 And as a means of sustaining any new issue of Treasury notes, which may 
 be made hereafter, the propriety of inserting the following stipulation in sa.d 
 notes: " That the same shall be receivable in payment of taxes and other 
 public dues, at their current value, and the same shall be funded by the 
 holder in the six per cent, bonds of the Government, after publication of no' 
 tice by the Secretary of the Treasury." 
 
 Mr. OLDHAM said : 
 
 Mr. President — It is with great diffidence that I vent ure to propose a 
 scheme for the relief of our finansial embarrassments; nor would 1 a<j sj, 
 but that I rocognize my full share of the responsibility resting upon Con- 
 gress for the adoption of proper remedies for existing evils. Another rea- 
 son also actuates me. I disagree essentially and fundamentally with every 
 scheme, which has come under my observation, except that presented by 
 the Senator from Tennessee (Mr. Henry), and especially do I disagree with 
 that proposed by the Secretary of the Treasury. I have, therefore, felt is 
 due to myself to offer the resolution, which I have done. Having offerel 
 it, I would let it go to the Committee on Finance, without remark, but for 
 the radical difference between it and all other plans, except the one in- 
 dicated. 
 
That radical difference consists in this, that all the schemes proposed are 
 based upon one of two fundamental principles : funding the redundant cir- 
 culation in interest-bearing bonds, with the object to improve the value of 
 the currency ; or taxation, with the object to sustain the public credit, and 
 incidentally to improve the currency. The funding principle presupposes 
 the main evil to be the depreciated currency ; the taxing principle presup- 
 poses an impaired public credit as the main evil, as evidenced by the de- 
 preciation of Treasury notes as a currency. 
 
 The plans offered by the Senator from Tennessee and myself, are founded 
 upon the principle of taxation — all others upon that of funding. 
 
 In my opinion, the evil existing is an impaired public credit, occasioned 
 by a redundant issue of Treasury notes, as evidenced in the cost of supplies 
 to the government, when purchased with that form of credit, and by the 
 value placed upon those notes by the people as a circulating medium. I do 
 not believe that a want of confidence in our success in the war in which we 
 are engaged, or in the ability of the government eventually to redeem its 
 obligations, has contributed, but in a very slight degree, to impair the pub- 
 lic credit, but that it has resulted from other causes. If we had no war» 
 and the same amount of Treasury notes had been issued, the same causes 
 existing to affect their value, the depreciation wouldj in my opinion, have 
 been very nearly as much as it is at present. But under existing circum- 
 stances the evil affects the credit of the government, and a remedy should 
 be applied which will not contribute to impair, but to strengthen and sus- 
 tain it. 
 
 I shall endeavor to show, that the public credit has not been impaired by 
 a want of confidence of success, or of ability to redeem its obligations, but 
 by a redundant issue of Treasury notes, as already stated. 
 
 The value of a currency, like every other marketable commodity, is 
 regulated and governed by the law of supply and demand. 
 
 The depreciation of our Treasury notes has resulted, mainly, from a vio- 
 lation of that law : a redundant supply, and a reduced demand, other 
 causes concurring to make the depreciation still greater. 
 
 While we have been flooding the country with a redundant issue of Trea- 
 sury notes, demanded by our military operations, without adopting any ap- 
 propriate and efficient measures to redeem and extinguish, or to absorb and 
 retire the surplus above the business wants of the country, we lost sight of 
 the fact, that the condition of the country had reduced the demand for 
 money far below the ordinary business standard. 
 
 I will enumerate some of the causes that produced that result : 1st. The 
 suspension of the laws for the collection of debts, by the Legislatures of the 
 several States, thereby relieving debtors from all necessity for effort to pay 
 the very large private debt owing in the Confederacy. 2d. The blockade of 
 our ports by the enemy, resulting in the stoppage of our foreign commerce, 
 and the internal trade dependent upon it. 3rd. The annihilation, by the 
 war, of the immense trade existing before that time, between the States of 
 the South and those of the North. And 4th. The confiscation of all debts 
 due by our citizens to alien enemies, with the postponement of payment, 
 
tintil after the close of the war. The destruction of our foreign, and the 
 internal trade dependent upon it, with the suspension of the pajment cf 
 all debts, have reduced the demand for money far below the amount which 
 would be required, if those causes did not exist. 
 
 It is assumed by the Secretary of the Treasury, that the business of the 
 Confederacy requires a circulating medium of the value of two hundred 
 millions of dollars. But I apprehend that this assumption has reference to 
 an active and healthy business condition ; the courts open the payment of 
 debts enforced, with an active foreign and domestic commerce existing. If 
 80, then a much smaller sum would suflBce under existing circumstances, 
 with all trade, foreign and domestic, annihilated, and all pre-existing in- 
 debtedness as it were sponged out. I think it may be safely assumed, that 
 a circulation of fifty millions of dollars would supply the demand required 
 for all legitimate business transactions. Taking gold as the standard, the 
 correctness of this assumption is proven by the relative value between it 
 and Treasury notes. The average relative value between them, throughout 
 the Confederacy, is about fourteen to one — at some places more, at others 
 less, local causes and circumstances controlling. It is shewn by the report 
 of the Secretary of the Treasury, that there is outstanding seven hundred 
 millions of dollars of Treasury notes, which bear the same relation to fifty 
 millions : fourteen to one. 
 
 It is an axiom of political economy, that after the circulating medium 
 has reached the amount demanded by the business of a country, an in- 
 crease of quantity will not produce a corresponding increase of value — that 
 only a certain quantity of currency can be kept at par, and that every dol- 
 lar of excess only contributes to swell the volume, without increasing, but 
 rather decreasing, the aggregate value, until it becomesso inflated that 
 confidence in its redemption is lost, when the bubble bursts, and the whole 
 becomes valueless waste paper. 
 
 Thus, while the causes I have enumerated have reduced the demand for 
 money from two hundred millions to fifty millions of dollars, we have en- 
 larged the supply to seven hundred millions. The consequences which 
 have followed are the certain results of the violation of an immutable law 
 of finance. 
 
 "While these primary causes have been operating to produce this great 
 disparity between the supply and demand of currency, and its consequent 
 depreciation, other lateral causes have conspired to the same result. Amongst 
 those I may enumerate the contraband trade carried on by persons in the 
 Confederacy with the enemy, and the smuggling of goods from the United 
 States into our country — the character of trade carried on by blockade run- 
 ners, and the trade through Texas, across the Rio Grande, controlled by 
 military regulations. 
 
 Neither of these trades can be carried on without a medium of exchange, 
 which Treasury notes do not constitute. The most of the shipments of pro- 
 luce are on government account, or used in purchasing government sup- 
 plies by individuals. At any rate, but a very small amount is used in 
 purchasing the goods imported and sold to the people. The goods brought 
 
 P628R4 
 
into the country are sold to the people for Confederate notes, which are ex- 
 changed for gold, State Btocks, or green-backs, and -sometimes cotton or to- 
 bacco. Confederate notes constitute a local currency, and cannot be made, 
 the medium of exchange fcr a foreign commerce. Whenever a local cur- 
 rency is forced in contact with a foreign market, either in the purchase of 
 goods, gold, or exchange, it must inevitably suffer, as ours has done — de- 
 preciation. Goods purchased in a foreign market must be paid for in funds 
 at par, or at least 'Current, at the place of purchase, or in bills drawn 
 against shipments of produce exported, which is substantially the same 
 thing ; therefore, whenever there is an over-supply of a local currency, and 
 it is forced into the purchase of exchange based upon limited exportation, 
 or in drawing specie from the secret vaults to which it has retired, fui'ther 
 depreciation must follow, and the currency continue to sink like lead in the 
 water. And then the premiums paid fix the relative value between gold 
 and the looal currency not'only in that case, but eventually in all others. 
 
 In consequence of the depreciation of the currency, and the opportunity 
 afforded and profits accruing from blockade rnnriing and trading with the 
 enemy, a most vicious and excited spirit of speculation has been engen" 
 dered, and has spread, like a contagious disease, to almost all classes — to 
 merchants, farmers, mechanics, landlords, ofiicers and soldiers in the army, 
 and, I fear, to some members of Congress, 
 
 Hundreds, if not thousands of persons, have been, and are still engaged 
 in running the blockade, or in carrying on a contraband trade with the 
 enemy across every part of the line between them and us, at New York, 
 Philadelphia, Baltimore, Louisville, St. Louis, Nashville, Memphis, 
 New Orleans, and other places. In consequence of the price of ex- 
 change to carry on this trade, the goods imported are sold for our cur- 
 rency, for twenty, forty, and sometimes sixty times their value in gold. 
 This exorbitant price for imported goods has produced a corresponding 
 rise in the price, not only of luxuries, but of all the necessaries of life. 
 The farmer demands-ten or twenty prices for beef, pork, bacon, corn, flour, 
 and every other commodity of like character, because the merchant exacts 
 from him similar prices for domestics, calicoes, hats, boots, shoes, &c. The 
 landlord in town charges like rates for rent, because of the charges of the 
 merchants and farmers; mechanics do the same, and boarding is at corres- 
 ponding rates, because of the extortions of all of the preceding upon the 
 hotel and boarding-house keepers. And lastly, the Government becomes 
 the victim of all, and cannot purchase upon credit, with its notes or bonds, 
 the necessary supplies to sustain our armies in the field, except at the meet 
 fabulous rates. The malignity and spread of the contagion are well calcu- 
 lated to fill the unselfish patriot with wonder and astonishment, especially 
 when he sees men either concealing, to prevent the government from ob- 
 taining, or refusing to sell for less than ten prices, the necessary supplies 
 to feed and clothe the army, composed of their sons, their brothers, and 
 their neighbors, fighting for the independence of their country, and in de- 
 fence of the lives, liberty and property of its people. A strange infatua- 
 tion seems to possess the great mass of the people, for while they exact the 
 
highest prices •with all the tenacity of the extortioner, they squander their 
 money with the reckless prodigality of the spendthrift. 
 
 While all these causes have been operating to depreciate and destroy the 
 credit of the Government, I regret to say that I understand the Government 
 itself has, upon several occasions, openly entered the gold and exchange 
 markets, and hawked its own credit to bidders composed of brokers, shavers 
 and stock-jobbers. 
 
 Another cause which, in my opinion, has contributed its part in the de- 
 preciation of the currency, is one which was originally recommendpd by ' 
 the Secretary of the Treasury, and adopted by Congress, as a means to pre 
 vent that result — I mefn the system of funding the notes, without adequate 
 provision being made for the payment of the interest on the bonds. Great 
 importance has been attached to that pystem as a means of absorption, and 
 therefore of support of our currency, by preventing a redundancy. I never 
 could see the virtues of that measure, which were ascribed to it by its ad- 
 vocates. I never could see the inducement to fund an uncurrent note in an 
 uucurrent bond, and hence, at the last session of Congress, I said that the 
 eSbrt to prevent a redundant circulation, by funding in bonds, without 
 adequate provision for the payment of the interest on the bonds, as a moans 
 of keeping them at, or nearly at par value, would be as futile as an attempt 
 to sail a boat by means of a bellows in the stern, forgetting that the laws 
 of action and reaction are equal ; or an attempt to exhaust, by nleans of a 
 siphon, all the water of one vessel into another upon an equal level, in 
 disregard of the plainest laws of natural philosophy. 
 
 I claim that results have proven the correctness of my opinions. The 
 expansion of the currency has not been prevented by funding, but it haa 
 continued to swell almost to the point of explosion. The speculator, the 
 banker, broker and shaver, believing that the public debt will be uUimate- 
 ly paid in full in gold and silver, are interested in obtaining the largest pos- 
 sible amount of it for the very smallest possible consideration. Hence they 
 can make more, by first depreciating the currency as low as possible, then 
 buying it up, and funding it, than they can make by funding so as to prevent 
 depreciation. The more the currency becomes depreciated, the less a bond 
 will cost, and hence a premium has been held out as a standing offer to 
 them to depreciate the currency. 
 
 The bankers, brokers, shavers and speculators fix the value of currency, 
 which is always accepted by the great mass of the people without investi- 
 gation. They can fix its value, for a time, far above or below that which 
 the demand and supply, the legitimate regulators, would fix it at. For the 
 reasons already given, it being to their interest to obtain the largest possi- 
 ble amount of the public debt for the smallest possible consideration, with 
 the expectation of eventually realizing in gold its full value, by funding 
 and taxation upon the people, that consideration has operated upon them to 
 depress and keep down the value of the currency. I sincerely believe that 
 they have, from motives of interest, contributed more to the depreciation of 
 the value of Treasury notes, than the whole amount funded has tended to 
 appreciate their value. They never will fund voluntarily, so as to reduce 
 
 PB28S4 
 
the currency to the proper volume, until they believe that the government 
 indebtedness has reached the utmost limit cf the ability of the people to 
 pay it. 
 
 Wo have nearly reached that point, and now these vampires, who have 
 been sucking out the very life-blood of the country, are thrusting before 
 Congress a thousand schemes of finance, the distinguishing feature of every 
 one being a system of funding in interest-bearing bonds, with a plan of 
 taxation, which will give to those bonds a par value in gold, the taxation 
 so assessed as to exempt them and their ill-gotten gains from any part of 
 the contributions. 
 
 With these men and their schemes I have no syajpathy. There are but 
 few, if any of them, in my State. Our capitalists (and we have large capi- 
 talists there), believe that legitimate and profitable trade — speculation, if 
 you so please to call it — can be carried on upon principles not inconsistent 
 with the high dictates of honor and patriotism. This is verified by the 
 fact, that Confederate notes are worth fifty per cent, more there than 
 east of the Mississippi river, while we have a larger amount of that cur- 
 rency, in proportion to populatioa and wealth, than there is on this side; 
 and while we also have a vicious, I may say an infamous, cotton trade 
 across the Rio Grande, thrown into the hands of Jews, Yankees, and men 
 from this side of the river, by illegal military orders and restrictions. 
 
 I have attempted, Mr. President, to point out the causes that have led 
 to our deranged financial condition. The existence of the most of them 
 will be readily admitted, and I apprehend the like existence of the remain- 
 der, with the effects I have ascribed to them, cannot be successfully contro- 
 verted. How is the evil to be remedied, and its future recurrence success- 
 fully provided against? The answer to the question, in general terms, is 
 easily given : remove the causes, and guard against them for the future — 
 reduce the supply of currency and increase the demand for money on the 
 people, so as to make the demand and supply correspond, — all of which 
 should be done for the support of the credit of the government, as the main 
 object, affecting the currency as an incidental subject. The measures to 
 be adopted, which shall accomplish these desirable results, present very 
 difficult and interesting questions. 
 
 The Secretary of the Treasury has presented us with a financial scheme, 
 which he thinks will afford the proper-remedy. Emanating as it does from 
 the head of the Treasury, for that reason as well as for the large experi- 
 ence and high character for financial skill of the gentleman himself, the 
 measure proposed is entitled-to our most favorable consideration, and should 
 receive our most patient examination. No scheme, however, should be 
 adopted because of the source from which it may have come, or of the en- 
 dorsements it may have received. Every plan should stand or fall upon its 
 intrinsic merits. 
 
 The scheme of the Secretary of the Treasury contains the following sub- 
 stantial provisions. 
 
 1. A loan of one thousand millions of dollars in six per cent, bonds, the 
 principal payable in twenty years, the interest semi-annually, to be extend- 
 
ed from time to time, hereafter, so as to ■consolidate the whole public debt. 
 
 2. A sale by the Secretary of the Treasury, at par, of as many of said 
 bonds as will be sufficient to take up the outstanding circulation and to 
 pay the appropriations made by Congress. 
 
 3. A tax of five per cent- upon all property and credits (other than the 
 •new issue of notes proposed) which may be held on the first day of April 
 next, to be paid on the first day of July, one half in Treasury notes, or one 
 half in coin, or in the coupons of the bonds issued for this loan. 
 
 4. Within sis months a new and improved issue of two hundred mil- 
 lions of dollars in Treasury notes, in substitution for that amount of old 
 issues to be cancelled, with a pledge of the faith of the government not to 
 increase said issues. 
 
 5. The funding of the entire outstanding circulation of Treasury notes, 
 on or before the first day of April next, in the bonds of the said consolida- 
 ted loan, after which time the notes not so funded to cease to be current 
 or receivable at the Treasury for dues. 
 
 Thaie are the substantive features of the scheme, all others being mat- 
 ters of detail. 
 
 To this plea the following insuperable objections present themselves to 
 my mind : 
 
 1. It proposes to act upon the currency directly, and appreciate it by 
 curtailing the redundancy by compulsory funding in the six per cent, bonds 
 of the government. It starts out upon the fundamental error that, the 
 subject to be directly aifected is the currency, and incidentally operating 
 upon the credit of the government; whereas, the measures to be adopted 
 should be aimed at the restoration of the credit of the government directly 
 and incidentally to the improvement of the currency. Congress has no 
 power whatever over a paper currency per s^ It " may coin money and 
 regulate the value thereof" — but it is well understood, that this power has 
 reference to money coined of gold and silver. It has no power over the 
 private business transactions between me and my neighbor — or to make a 
 paper currency and compel us to receive it — or legislate with the view to 
 regulate the value of that currency between us — and this is the same whe- 
 ther the currency consists of bank notes, shin plastert, beef hides, peltries, 
 coon skins or its own notes. Every thing that beoomes or is used as a 
 currency, except gold and silver, becomes so, by the mutual consent of in- 
 dividuals. 
 
 The power to issue Treasury notes can be supported only by the authori- 
 ty of Congress " to borrow money." When this power is exercised, the 
 form of the evidence of the debt created, is left discretionary — it may be 
 in the shape of a receipt, a bond, or Treasury note. Nor is it requisite to 
 the exercise of this power, that money shall be actually and absolutely 
 borrowed. Congress may borrow money of A. to buy supplies for the 
 army from B., and give to A. Treasury notes as evidences of indebtedness 
 for the money so borrowed. But if B. is willing to take from the govern- 
 ment the Treasury notes for the supplies furnished, it is a substantial com- 
 pliance "with the constitutional provision, to deliver the notes directly to 
 
him. Between the holder and the .government the Treasury notes are not 
 money — but evidence of indebtedness — premises to pay in consideration of 
 money burrovred or of supplies purchased, amounting to the same thing. 
 By consent between individuals, they may become a currency, and their 
 delivery and acceptance amount to an absolute payment, but they do not 
 become so by virtue of any power of Congress. The power of Congress is 
 over the credit of the government, and should be exercised with direct 
 reference to that object, incidentally operating upon the currency, in the 
 same manner as an individual, who by re-establishing his impaired credit, 
 enhances the value of his outstanding obligations. 
 
 2. The scheme proposed, instead of restoring and sustaining the credit 
 of the government, would weaken and impair, and eventually destroy it. 
 
 The public debt, exclusive of the foreign loan, is now, in round numbers, 
 about eleven hundred millions of dollars. The taxes for the present year 
 may be assumed at one hundred and twenty millions, which will reduce 
 the debt to about nine hundred and eighty millions. Of this sum, without 
 being definite, I may state, that about one half is in an interest bearing 
 shape, and the other half bearing no interest. It is now proposed to fund 
 the whole of this debt in six per cent, bonds, which will bear an annual in- 
 terest of fifty-eight millions, eight hundred thousand dollars. The debt 
 must continue to grow until the end of the war, when it will, most probably, 
 amount to fifteen hundred millions — the interest upon which will amount 
 to ninety millions of dollars. It is not proposed to pay one dollar of the 
 principal of this already enormous debt — nor prevent its rapid future 
 growth, except by a system of taxation, which, I believe, is beyond both 
 the ability and willingness of the people to pay. Under the weight of such 
 an existing and accumulating debt, bearing such a ruinous rate of interest, 
 confidence in the ability of tke government to discharge its obligations, must 
 and will become impaired, and its credit eventually give way and fail en- 
 tirely. Especially will that be the case should the people fail, through 
 inability or unwillingness, to meet the taxes imposed upon them. 
 
 The credit of a nation and that of an individual are governed by the 
 same immutable laws, are upheld or destroyed by similar causes. What 
 would be thought of a man who, having engaged in trade with an unim- 
 paired credit, after a period, finding his credit so shattered that he has 
 to promise ten prices for everything he buys, should gravely propose to his 
 creditors, as a means of re-establishing that credit, to surrender their non- 
 interest bearing claims, and accept his notes, bearing a rate of interest, 
 ■which will require all his efi^orts, and perhaps surpass his ability to pay, 
 without reference to the principal ? No prudent man would trust him the 
 more readily in consequence of such a financial operation, but would re- 
 gard his rapid insolvency as inevitable — and so, I verily believe will be the 
 consequences of this funding scheme, if adopted by Congress. It may 
 produce a temporary effect, by the reduction of the currency — but as time 
 rolls on, as the war progresses, as our debt continues to grow, the credit of 
 the government will yield by degrees, until finally it will sive way with a 
 crash, scattering bankruptcy, ruiuand desolation through the land. 
 
To fund a non-interest bearing debt, in the shape of a currency, because 
 of its depreciation, is the very worst of financiering. The government 
 should take advantage of the depreciation, levy the heaviest taxes, and 
 thus compensate itself for losses sustained, because of the enhanced cost of 
 supplies caused by the depreciation. 
 
 A stern determination to pay our debt, evinced by the levy and collec- 
 tion of four hundred millions of our depreciated currency, in the shape of 
 taxes, will be vastly more efficient, in re-establishing the public credit, and 
 restoring the currency to a healthy state^ than the funding of one thousand 
 millions in six per cent- bonds. Any scheme proposing those enil-!, which 
 does not comprehend as its leading feature the extinguishment of the 
 debt to as great an extent as possible, and the prevention of its overgrowth 
 in an interest bearing shape, must result in failure. 
 
 3. The system of taxation proposed, the mode of assessment, and the 
 circumstances under which the taxes are to be collected, are to my mind 
 very objectionable. 
 
 It is proposed to levy an ad valorem tax upon all property and credits 
 (other than the new issue of notes) which may be held on the first of April 
 next, to be paid on the first of July next, one half in Treasury notes, and 
 one half in coin, or in the coupons of the bonds issued for the loan. But 
 " in case the coupons should advance in the market to a premium exceed- 
 ing twenty-five per cent, any tax-payer shall be permitted to pay his tax in 
 Treasury notes of the new issue, with twenty-five per cent, added. It may 
 be observed in this connection, that it is not proposed to repeal the tax law 
 of the last session of Congress, but to collect the taxes provided for by that 
 law also. It is estimated that a five per cent, ad valorem tax will yield one 
 hundred and twenty millions of dollars, that the taxes under the act of the 
 last session will yield a like sum, making two hundred and forty millions 
 in money, to which is to be added the value of the tax in kind — which 
 I will not venture to estimate. 
 
 As an argument in favor of the proposed ad valorem tax, the Secretary 
 assumes, as a fact, that land and negroes are not taxed under the existing 
 law. I am aware that this erroneous impression prevails to a considera- 
 ble extent among the people, but I did not expect to hear the fact asserted 
 by the officer who, above all others, should possess correct information 
 upon the subject. It will be seen, by reference to the 8th section of the 
 tax act, after specifying the tax upon certain incomes, it proceeds to specify 
 the tax upon " the income derived from all other sources," and in that con- 
 nection it is declared that " in estimating income, there shall be included 
 the value of the estimated annual rental of all dwellings, houses, buildings 
 or building lots in towns or villages, occupied by the owners, or owned and 
 not occupied or hired, and the value of the estimated annual hire of all 
 slaves not engaged on plantations or farms, and not employed in some 
 business or occupation, the profits of which are taxed as income under 
 this act." Therefore, every citizen who derives an actual income from the 
 rental of real estate or the hire of negroes, if the income exceeds five hun- 
 dred dollars per annum, is chargeable with the tax provided by the law. 
 
10 
 
 And a like tax is levied upon the estimated value of the incomes of per- 
 sons derived from the " annual rental value of all dwellings, houses, build- 
 ings or building lots in cities, towns or villages, occupied by the owner, 
 or owned and not occupied or hired, and the annual hire of all slaves not 
 engaged on plantations or farms, and not employed in some business or oc- 
 cupation, the profits of which are taxed as income," although no income 
 may be derived from such rental or hire. 
 
 Negroes engaged on plantations, and 4he plantations themselves, come 
 under the provisions of the law levying the tax in kind. A negro em- 
 ployed on a plantation may produce ten bales of cotton and five hundred 
 bushels of corn in many parts of the country, the tax upon which would 
 be one bale of cotton and fifty bushels of corn, which, according to present 
 rates, would be worth at least four hundred dollars. It would be vain to 
 argue with the owner of that slave, that his land and negroes are not taxed. 
 All lands and slaves, except unproductive, are taxed, not directly, but in- 
 directly, which makes no very substantial difference to the man who pays 
 the taxes. 
 
 Upon this erroneous assumption of a legal fact, the Secretary proceeds 
 to make, in my opinion, a very unsound constitutional argument, which I 
 will not attempt to answer. 
 
 Mr. President, no system of taxation has ever been devised, which is 
 perfectly uniform and just, in the imposition of its burthens upon all the 
 people. I am not at this time prepared to deny that, in a state of peace and 
 business prosperity, every citizen devoted to his individual and private 
 pursuits and interests, an ad valorem tax would approach as near to uni- 
 formity and justice as any other; but I do contend that in the present 
 condition of our country, such a tax would be the most unequal and un- 
 just that could possibly be levied. 
 
 Thousands upon thousands of our most wealthy and patriotic citizens 
 are in the armj, in command and in the ranks, devoting their time and 
 services to the defence of our country and the liberties of our people, and 
 ■who are voluntarily payfng the taxes of health, blood and life itself, leav- 
 ing their property at home, not only in an unproductive condition, but 
 wasting and going to ruin for want of attention. Another large class have 
 been driven from home into exile by our merciless foes, with but a remnant 
 of their property saved, and which is at present more of expense than 
 profit to them — while yet another class is at home nobly performing the 
 part of unselfish patriots, neglecting their own interests, devoting their all 
 of property, energy, and industry to the maintenance and support of our 
 army in the field and the cause of our country. And, besides these, we 
 have still another class who have been, and are engaged in speculation and 
 extortion, preying upon the very vitals of their country — undermining its 
 credit and endangering its liberties, and who have increased their fortunes, 
 some a hundred and some a thousandfold. Would it be right or just to 
 levy an ad valorem tax equally upon all the property of those classes of 
 persons, and especially when the most unworthy class are to be the beuefi" 
 ciaries ? 
 
11 
 
 Can the people pay the taxes under the circumstances proposed ? It is to be 
 borne in mind that the entire outstanding circulation of Treasury notes are 
 to be called in and funded in bonds by the first day of April next, " after 
 which they shall cease to be current or receivable at the Treasury for 
 dues," and within sis months a new issue of two hundred millions of dol- 
 lars of new notes is to be made. The five per cent, ad valorem tax is to be 
 assessed on all property and credits held on the first of April next, and to 
 be paid on the first of July next. So the money taxes under the act of 
 April last, and the five per cent, ad valorem tax, amounting to the sum of 
 two hundred and forty millions of dollars, will have to be paid out of two 
 hundred millions of circulation, the coupons of the bonds of the consoli- 
 dated loan, and the specie which is hid away in the country. It would be 
 equivalent to collecting the whole amount in specie. I do not fear to ven- 
 ture the assertion, that five hundred millions of dollars could more easily 
 be collected by a mere enlargement of the act of April last than could one 
 hundred and fifty millions under the circumstances proposed. The taxes 
 are to be levied and collected in total disregard of the laws of supply and 
 demand. It is proposed to reduce the supply down to the ordinary busi- 
 ness standard, and then enlarge the demand far beyond the capacity of 
 the circulation to meet it. It would result in nothing but panic, pressure 
 and bankruptcy — evils as much to be dreaded and avoided as those with 
 which we are afilicted or threatened. 
 
 The scheme proposes to exempt, upon certain conditions, about one-fifth 
 of the entire value of the property and credits of the country, which 
 should, above all others, be taxed, and that in favor of a class of property 
 holders who, above all others, have the least claim to indulgence. The 
 bonds issued upon all deposits made in January next, are to be exempt 
 from the tax ; those in February from one-half, and in March one-fourth. 
 This sclieme is intended to increase the value of the notes so deposited, 
 and metamorphose into bonds to fourteen times what it is tiW. The 
 Treasury notes, or at least the far larger proportion, are held by specula- 
 tors who obtained them for an inadequate consideration ranging from one- 
 half to one-twentieth of their nominal value. No doubt but all the large 
 holders will take advantage of the conditions offered to them. 
 
 The sum and substance of the whole scheme is, that it is designed to 
 convert our entire public debt, funded and unfunded, into six per cent, 
 bonds, with such a system of taxation as will make them worth their value 
 in gold to those who hold them, and who have obtained them as already 
 stated, for from one-half to one-twentieth of their nominal value. Verily, 
 our Secretary has found that for which the Alchemists in their day sought 
 for in vain, the philosopher's stone, which was supposed to possess the 
 quality of converting into gold every substance coming in contact with it. 
 He has certainly discovered the art of converting our depreciated currency 
 into gold in the hands of those who now hold it. With all due respect for 
 that officer, (and I have for him a very high regard,) I am constrained to 
 say, that his scheme has more the appearance of having emanated from a 
 board of bankers or stock brokers, than from the study of a philosophical 
 
12 
 
 and enlightened statesman. The bankers, the hroters, the speculators and 
 the extortioners, the present holders of our depreciated credits, have been 
 flooding the country and thrusting into the face of Congress their financial 
 schemes. One feature pervades them all. The currency must become gold 
 in their hands by a particular system of funding, follovred by taxation. 
 There was a time when an efficient system of funding should have been 
 adopted and enforced to prevent depreciation, to the injury of the public 
 credit. Now, when the evil is upon us, it is proposed to resort to it to re- 
 store the currency in the hands of the speculator at the expense of the 
 credit of the government, and to the detriment of the people. 
 
 This funding system has operated like the hot water draughts adminis- 
 tered by Doctor Sangrado to his patients, which produced weakness, pros- 
 tration, and finally death. The worse the patient became, the more hot 
 water was administered to him. We have funded and funded until we are 
 near a state of collapse. The treatment must be changed or the patient 
 will die. The attending physicians, it is true, have not called me into con- 
 sultation ; yet, as I am one of the nurses, having witnessed the operation of 
 the medicine, and closely marked the symptoms, I have ventured to 
 make some suggestions, however worthless they may be regarded or little 
 heeded. 
 
 I have said, Mr. President, and I again repeat it, that any scheme which 
 proposes to re-establish the public credit upon a solid basis, and to restore 
 our currency to a healthy condition which does not comprehend, as its 
 leading feature, the extinguishment of our debt to as great an extent as 
 possible, preventing its accumulation and overgrowth as an interest bear- 
 ing debt, must result in failure and disaster. I have heard it said, as an 
 excuse for not providing for the payment of any part of our debt, that no 
 revolutionary debt was ever paid during the war. I answer that the same 
 may be said of almost all war debts — and that but very few war debts have 
 ever been paid at any time. National debts are of modern invention, and 
 have grown up within the last two centuries. Before that time, and in 
 most cases since, wars were, and have been, supported by funds previously 
 accumulated, or by pillage and plunder, and debts contracted were never 
 paid. 
 
 If our war is one of revolution, no people ever before conducted such a 
 •war as we are conducting this, under the auspices of a regular and consti- 
 tutional government. I, however, do not propose to pay our debt during 
 the war, but to take advantage of the condition of things which surround 
 us, pay as much of it as possible, preventing its accumulation to a magni- 
 tude beyond the ability or willingness of the people to pay. For such a 
 purpose, we are better situated than any people who ever went to war. 
 With an enterprising, brave and patriotic population, with a rich and pro- 
 ductive soil, we have, within ourselves, if energetically and properly de- 
 veloped, all the elements of self-defence and self-support. We have also an 
 accumulated wealth, as also the productions for an enlarged and profitable 
 commerce. But our ports are closed by the blockade of the enemy, our 
 foreign and internal commerce destroyed, except the vicious and demorali- 
 
13 
 
 zing trade carried on by blockade runners, and criminal traders with the 
 enemy. Our coasts are closed and the payment of debts suspended, and 
 there is virtually no demand "for money. If we are wise, we can convert 
 these things, which we are inclined to regard as great evils, into absolute 
 blessings. By a judicious system of taxation we can create a new demand 
 for money, co-esteusive with our over supply of currency. In the absence 
 of almost all other sources of application, and the condition of the currency 
 the people can pay a vastly larger amount of taxes than they could under 
 diflFerent circumstances, to be applied to the extinguishment of a portion of 
 the public debt, and the prevention of its aggregate overgrowth, thus re- 
 storing the public credit and the value of the currency. There is no difE. 
 culty in paying the fery highest taxes when there is a super-abundance of 
 money, and the people have no other use for it. Does not prudence, then, 
 dictate the levy of such an amount of taxes as will extinguish a large por- 
 tion of our debt, re-establish the public credit and restore to the people a 
 sound currency? 
 
 In order to raise the largest possible sum, without detriment to the coun- 
 try, the contributions hliuuld be levied upon each individual according to 
 his ability to pay, under existing circumstances, and with regard to the 
 benefits he would realize from their impositions. 
 
 The President, in his message, very correctly and justly says, " it may 
 be added that, in consid(M-ing this subject, the people ought steadily to keep 
 in view that the government, in contracting debt, is but their a-^ent; that 
 its debt is their debt", as tho currency is held exclusively by ourselves, it is 
 obvious that, it each person held Treasury notes in exact proportion to the 
 value of his whole means, each would owe himself the amoi^t of notes 
 held by him, and, were it possible to distribute the currency among the 
 people in this exact proportion, a tax levied on the currency alone, to an 
 amount sufficient to reduce it to proper limits, would aflford the best of all 
 remedies.'' 
 
 But, inasmuch as the currency is not so distributed, and we cannot adopt 
 " the best of all remedies," a scheme, based upon tlie same principle, or 
 as nearly the same as possible, would, in my judgment, be the next best 
 remedy. I venture the assertion that, upon admitted principles of politi- 
 cal economy, a tax can be levied and collected from the present holders of 
 Tieasury notes alone, " to an amount sufficient to reduce the currency to 
 proper limits," and net cost the note-holder and tax-payer one cent. 
 
 Take two kundred million* as the amount, or "proper limit" to the cur- 
 rency, up to this point it would be at par, but every dollar of increase 
 beyond would only swell iLu volume,*without increasing the aggregate 
 value. The currency of a country cannot be made to exceed a fixed vi^lue, 
 and when the quantity is incr^jased beyond the limit of par y\\ve, the fact 
 is immediately indicated by a corresponding rise in property and means of 
 living ; in other words, by the depreciation of the currency. Whatever 
 amount there may be in < irculation, the whole cannot be made to exceed 
 the value of the amount of the limit of par value. Therefore, if two hun- 
 dred millions is the par value limit, the six hundred millions which we 
 have in circulation is worth jnst that amount of value and no more — that 
 is, the six hundred millions would buy no more than two hundred millions 
 would buy. Now, if J am correct in this position, then, if the holders of 
 all our Treasury notes were to make a contribution of two-thirds of the 
 amount held by them respectively, it would reduce the circulation to two 
 hundred millions, which would still be worth as much as the six hundred 
 millions are now worth. The holders would be compensated for their con- 
 
14 
 
 tributions by the enhanced value of the remainder — the result would be 
 the same if the contributions should be enforced by taxation. In either 
 case, the holder would not be able to realize the magnificent profits which 
 would accrue to him under the funding scheme. 
 
 I have already shown that it is a mistake to suppose that two hundred 
 millions is the amount of currency demanded by the business wants of the 
 country, but that circumstances have reduced the demand to about fifty 
 millions, more or less, which is at present the true limit of par value. If I am 
 correct in that, the six hundred millions of treasui'y notes now in circulation 
 are worth but about fifty millions of dollars, par value. It cannot be much 
 above or below that amount. A system of taxation can be devised, as I 
 believe, which will levy its contributions upon each individual citizen 
 according to his ability to pay, under existing circumstances, and with a 
 due regard to the benefits he would realize from their imposition, which 
 would produce over four hundred millions of dollars, without producing 
 pressure, and which would restore the currency to par value and re-estab- 
 lish the public credit. 
 
 The scheme proposed by the resolution which I have had the honor to 
 introduce, would, i verily believe, if adopted and faithfully executed, pro- 
 duce those results. This scheme proposes : 
 
 1. A tax of fifty per cent, upon all the outstanding Treasury notes on 
 the first of January next, known as general currency. This item would 
 produce §5284,316,399 — without reducing the value of the money held by 
 the tax payer a particle ; the remainder, as I have shown, would be worth 
 as much as the whole. Instead of being injured, the holder of Confederate 
 notes would be largely compensated, by the enlarged demand created by 
 imposition of the proposed taxes upon other persons. 
 
 2. The tax on the other currency, such as interest bearing notes, &c., 
 would be affected in the same mode. Of this class of currency, there ia 
 $162,814,720, upon which a tax of twenty-five per cent, would yield 
 $40,703,68k\ The taxes arising upon tlie funded debt, and treasury notes 
 deposited to be funded, would amount to $61,891,360. From the holders 
 of the public debt alone, who would not be injured, but greatly bene- 
 fitted, the taxes would amount to fiSBG, 911,439. A tax should be laid 
 upon every other interest, graded as circumstances shall warrant. This, 
 without having a basis for an estimate, I suppose would produce at least 
 eio-bty millions more, which would give for the next year the enormous 
 anm of $466,711,439. And yet this amount could be paid, without pro- 
 ducing any great pressure. Large as it appears, it is really but about 
 $33,000,000. 
 
 The holders of treasury notes, as I have shown, would lose nothing by 
 surrendering up half their nutes, for the balance would be of the same real 
 value as the whole were — but the imposition of one hundred and eighty 
 milfions of taxes upon other interests, would so enlarge the demand, or 
 extend the limit of par value, as to make what remains worth at least six 
 times as much as the whole was worth before. The bond holders and 
 holders of interest bearing currency, would be compensated in the same 
 manner by the appreciation in value of their securities. All other classes 
 would be compensated by the reduced price of all the means of living. 
 The burthen would scarcely be felt, except in the great advantages that 
 would be realized by all classes of the people and the Government. 
 
 The advantage to the Government would be vast. Supposing the taxes 
 of the present year will amount to one hundred and twenty millions, these, 
 added to those proposed, will discharge over six hundred millions^ of 
 the public debt— over one half— reduce the currency in circulation 
 to about one hundred millions— and completely re-establish the credit of 
 the Government. 
 
15 
 
 There are but two fundamental principles upon which the subject under 
 consideration can be effected — funding and taxation. All our financial 
 schemes must be based upon one or the other of these principles. 
 
 Let us now compare, or rather contrast the scheme of the Secretai-y of 
 the Treasury and my own. His is based upon the funding principle ; mine 
 upon the principle of taxation. His proposes to restore the currency'*by 
 funding it in sis per cent, bonds. Mine would re-establish the public 
 credit by paying the pubJic debt. His would create a. debt of eleven 
 hundred millions, bearing an annual interest of sixty-sis millions. Mine 
 would reduce the public debt below six hundred millions. 
 
 The same striking difference exists in regard to details. He would fund 
 the depreciated currency in order to improve it. I would stop funding in 
 order to raise the largest amount possible of taxes, taking advantage of the 
 depreciation. After exhausting the supply by funding, he would create a 
 demand for two hundred and forty millions of dollars in par funds — which 
 would produce pressure, panic and bankruptcy, with both the people and 
 the Government. I would take advantage of the redundant circulation, and 
 levy between four and five hundred millions of taxes, worth really less 
 than $35,000,000, which could be paid without being felt otherwise"^ than 
 in a restored public credit and currency, in the enhanced value of public 
 securities, and the reduced prices of all the necessaries of life. He would 
 levy an ad valorem tax upon the property of the whole country, with dis- 
 criminations in favor of the banker, the speculator and extortioner, giving 
 no credit to the agriculturist whose property is already charged with the 
 tax in kind. I would levy a discriminating tax upon money, incomes, 
 salaries, &c., in accordance with the Act of I860, imposing the burdens 
 upon those best able to bear them, most of whom would be benefitted by 
 their imposition. 
 
 If Senators will bestow the same patient investigation upon the scheme 
 of the Secretary of the Treasury, and the same care in analyzing it that I 
 have, I am confident they will discover all the obnoxious features and 
 objections to it that I have enumerated, and will not hesitate in coming to 
 the conclusion, that its adoption would be ruinous to the country. 
 
 I propose to insert a stipulation in Treasury notes, of " the new and im- 
 proved issue," as a means of keeping them at par. The speculator should 
 be deprived of all temptation to depreciate the public credit, and it should be 
 made his interest to sustain the currency. This is the secret of that astonishing 
 fact for which so many have tried to account for in vain : the ability of the 
 United States Government to sustain its currency. The money capital there 
 is controlled and governed by one great central head, the bankers and 
 brokers of Wall street. The capitalists there are the owners ; Government 
 and State stocks, manufacturing, shipping and railroad stocks, and real 
 estate in the large cities — all are dependent for value upou their success in 
 the war against us. It is to the interest of the capitalists to sustain the 
 Government, and hence they work in harmony with it. The depreciation 
 of their currency is from actual want of confidence ; and the depreciation 
 would be much greater, if the want of confidence was not counterbalanced 
 by the interest of capital. As I have shown, the depreciation of ours has 
 not resulted from a want of confidence, but mainly from the causes which 
 I have assigned. We have no greater money centre, nor are our finances 
 and currency controlled by a central head. Our capitalists have specu- 
 lated in our currency with a view to depreciate it. Its depreciation is 
 regarded by our enemies as evidence of tire declining confidence of our 
 people in our success, in the great struggle in which we are engaged. The 
 restoration ofthe public credit, by wise and judicious measures, will be 
 •worth as much to us as a victory in the field. The elevation of our credit, 
 evidenced by an improved currency, will be the signal for the decline 
 
x> 
 
 16 
 
 of thglrs. And when theirs shall decline much below what it is at 
 present, notwithstanding the capital bands with which it is compressed, an 
 explosion will take place, as startling and destructive as the sudden erup- 
 tion of a volcano. 
 
 After the restoration of our currency, all causes tending to its depreci- 
 ation should be removed. By inserting the stipulation in the note, that it 
 shall be receivable in payment of taxes and other public dues, at its cur- 
 rent value, the speculator is deprived of interest to tempt him to depreciate 
 the currency. It will, on the contrary, be to his interest to sustain it, for 
 instead of making he loses by its depreciation. 
 
 This matter has been tested, and its efficiency was verified by the experi- 
 ment. In 1842, Texas Treasury notes were as much depreciated as ours 
 are now. A new issue was made containing the foregoing stipulation. 
 The bills depreciated slightly within the first few months after their issue, 
 yet they rallied, came up to par, and subsequently maintained that value. 
 
 The value of the second stipulation is self-evident. It gives to the 
 Secretary of the Treasury a perfect control over the amount of the circu- 
 lation of Treasury notes. It gives him ample power to keep the amount of 
 circulation within proper limits, by funding to prevent depreciation. _ 
 
 Mr. President, we must not come to a wrong conclusion upon this sub- 
 ject; the consequences would be terrible. Our constituents are looking 
 ■with anxious interest to the action of Congress, not only upon this, but 
 upon other measures of vast import which demand our attention. A greater 
 or more fearful responsibility never devolved upon any body of men than 
 now rests upon us. We have in our keeping the lives, liberty and property 
 of millions of freemen. The patriot of every land is looking with trem- 
 bling anxiety upon this the greatest struggle in the world's history, for the 
 vindication of man's right to self-government. We must come up to the 
 magnitude of the crisis. 
 
 If we fail in this our great struggle, it will not be for want of bravery 
 on the part of our armies, whose courage has been exhibited on more than 
 a hundred bloody fields, but from other causes. Let it not be from the folly 
 of our counsels. 
 
 After we shall have done all that the interest of our country demands ot 
 us here, let us then go home to our constituents, and rekindle the fires ot 
 patriotism that burned so brightly in their bosoms in 1861, but which have 
 been nearly quenched — by what causes I will not say. Let us revive our 
 energies and renew our efforts with the determination to suffer every thing 
 rather than failure. As to final success, there should be no doubt, for our 
 cause is right, our people are brave, and God is just. 
 
 It is true that my heart has sometimes been made to sink by the harshness 
 of some of our legislation, by the domineering conduct of military authority, 
 destructive of the enthusiastic patriotism of our people, and .especially by 
 our failures to gather the fruits of victories, in following up and crushing the 
 defeated and discomfited foe. 01 Mr. Ppesident, had the signal victory of 
 Chickamauga been followed — had our army been reinforced to the extent that 
 we had the right to suppose that of the enemy would be, this day joy and exul- 
 tation would fill our land— gloom and despair would enshroud our foee. 
 The enemy was reinforced — our army was detached and weakened — and a 
 shameful defeat followed. 
 
 Nevertheless, I have never had one despondent doubt of our final triumph. 
 I may be regarded as over sanguine ; if so, it is because of my tempera- 
 ment, strengthened by my hdfcits of life. From my earliest years I have 
 had difficulties to encounter, with no aids to overcome them but self-reliance 
 and perseverance. I have, therefore, been taught to believe- that a deter- 
 mined will, energy and perseverance, will accomplish anything not inhibited 
 by the fiat of Omnipotence, 
 
pH8.5