New York, January 13, 1862.
My Dear Sir, —
I see that the financial question is pressing, and before I turn my face
eastward I cannot help repeating some of the suggestions which I have already
made, the soundness of which is chiefly the discussion here, where so many are
opposed to them.
1st. Taxation for interest and current ordinary expenses; on
this all agree now, but many will oppose if you once get into the “irredeemable
gulf.”
2d. Your main reliance for carrying on the government must
be upon selling your long bonds at the best prices they will bring after a
fixed policy has been announced, and of course using proper judgment as to the
time and manner of bringing them forward.
3d. Avail of short loans, exchequer bills, or emission of
small notes for currency, under the advice of experts in whichever manner or
form promises to give greatest relief temporarily; but it will be a fatal error
to rely upon it as your chief dependence. It is limited in amount and liable to
great mischief the moment it is pushed beyond a certain and very moderate
amount.
4th. Make this currency, or short paper, or demand paper, in
whatever shape you put it, as good as possible by providing for its being
received by government for all dues, by fixing a mode of its redemption, and by
making it fundable at a good rate of interest. Raise it all you can, so as to
make it good, and cause it to be received by all classes voluntarily in payment
of debts already existing, but avoid making it a legal tender unless you want
to see it depreciate. To make it a legal tender will be to give notice to
capitalists to get their capital out of the country as fast as possible, and to
foreign capitalists to keep from sending money here, and to sacrifice what
available stocks they have, government included, as early as possible before
the depreciation has got very bad.
5th. Finally, avoid pledging anything but the faith of the
government for your debt.
It will be urged to pledge your revenues, or certain
specified parts of them. If this pledge covers all your issues, past, present,
and future, it amounts to nothing. If confined to the present debt and to
certain specified loans it will be urged upon you by those who hold the present
loan and wish it secured, and who wish to see the war ended, even at the cost
of disunion or submission, whenever the loan now authorized is expended.
If our policy is to be war until we succeed, whether it cost
us five hundred millions or five thousand millions (about England's debt), let
us have no pledge of our revenue. Even if the loan was sure to be limited, it
would be unworthy the dignity of government to pawn our revenue for it, like a
Mexican or South American state, and would defeat its object if that object
really was to raise the public credit.
We are rich and strong, and it only requires strong action
and wise measures of finance at this crisis to carry us through.
Most respectfully and
truly yours,
J. M. Forbes.
I fear the interest of the banks in keeping up for a little
while the price of the long bonds (1881) may influence them to other and
temporary expedients. If you follow their advice you will soon see them
slipping out of their long bonds at the best prices they can get.
If one doubted about the true policy, the opposition to it
of the “Herald,” the organ of the seceders, should turn the scales. It goes for
irredeemable currency and for short expedients. It wants to see the war short —
and disgraceful! J. M. F.
SOURCE: Sarah Forbes Hughes, Letters and
Recollections of John Murray Forbes, Volume 1, p. 277-9
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