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it to the consideration of congress, whether it would be necessary at present to establish new and additional revenues.

The report, after being read, was referred to the committee of ways and means, who reported, on the 1st of February, by their chairman, Mr. Eppes, of Virginia, a bill authorizing a loan of millions, and a bill authorizing the issuing of treasury notes for the service of the year 1814.

$ 2. The loan bill was taken up on the 9th, when Mr. Eppes rose to move to fill the blank in the bill, and to state the reasens for its amount. Having made a statement of the es. timated receipts and expenditures for 1814, similar to that laid before the house by the secretary of the treasury, he proposed to meet the estimated deficiency by a loan for twentyfive millions, and treasury notes for five millions, making together thirty millions of dollars, leaving a surplus of $ 650,000 over the secretary's estimated deficiency.

The estimate for the military department being made on the full complement of 63,422 officers and men for the year, and one month having already expired, it is presumed, said Mr. Eppes, that a deduction from the expences of the military department inay be made, sufficient to cover the additional bounty recently authorized, and that 650,000 dollars will be sufficient to meet any

which

may

be authorized during the present session of congress.

Mr. Eppes now made a statement of the increase of the debt during Mr. Madison's administration, tending to show that the amount was much smaller than was generally supposed. From this statement it appears, that the principal borrowed, including the premium paid by way of annuity or discount amounted to

$ 44,336,677 51 The principal paid to

23,554,785 08

other expence

Making the actual increase

$ 20,781,892 43 It may, perhaps, said Mr. Eppes, be expected that some. thing should be said on the present occasion as to the prospect of obtaining a loan. In proportion as you increase the sum to be borrowed you will always increase the difficulty of obtaining money. The quantum in market, whether specie or stock, will always have an important bearing on the value of the article. The ability of a community to lend must de. pend on its income, or on the value of its productive industry and its circulating medium. What is that amount in the United States?

The improved land, on which the direct tax under the act of 1798 was collected, was 163,476,686 acres, and valued at that time at $ 479,293,253, rather more than three dollars per acre. It is presumed the same land may now be averaged at six dollars per acre, which will give For the valuation of improved land

982,480,000 The dwelling houses under the same act were

valued at dollars 140,683,984. They may now with safety be estimated at double that sum

280,000,000 The unimproved lands, after deducting all the

claims on them, amount to 400,000,000, at two dollars

800,000,000 The other personal property, including slaves, is estimated at

300,000,000 The capital embarked in commerce previous

to the war, allowing for exports and imports 100,000,000 The bank capital at present amounts to

75,000,000 Turnpike, canal, toll bridge, and insurance stocks, &c.

30,000,000

Total S 2,567,480,000 The income arising on this capital may be estimated as follows: Profit on improved land, two per cent. on 982,480,000

19,649,600 On personal property, including dwelling houses, 580,000,000, at 4 per cent.

23,200,000 15 per cent. on the capital employed in commerce

15,000,000 8 per cent on 75,000,000—the amount of bank capital

6,000,000 Turnpike, canal, insurance, and other stock, six per cent. on 30,000,000

1,800,000 Product of all other occupations, including

manufactures, as stated in the last census 172,000,000

Total $ 237,649,600

In the year 1798, the whole value of the annual produce of the industry of the United States was estimated, by an able and intelligent writer, on a population of 4 millions, at 374 millions sterling, or 168,000,000 of dollars*. According to the same estimate for our present population it would be 300 millions. This estimate would be 63,000,000 above what

* Vide Cooper's Political Arithmetic, 47.

I have rated it at, and induces me to repose some confidence in the estimate I have made.

The writers on political economy differ as to the proportion between the amount of the circulating medium and the productive industry. Their calculations vary from {to i one 30th, the minimum of Smith, on 237,845,600, would give something more than 7,000,000 of dollars for the necessary circulation of the United States ; his maximum, one 5th, would give something more than 47,000,000 dollars. If then 47,569,120 dollars is sufficient for the actual circulation, the whole of the circulating medium above that sum might be locked up or drawn from circulation without producing inconvenience or pressure. But money borrowed by the government is not drawn from circulation, but is instantly thrown back on the community, and becomes a part of the general circulation.

The question then is, what is the amount of circulating medium? The bank capital has been stated at 75,000,000; on this capital we may calculate with safety on a circulation in notes and discount of 100,000,000. From this sum deduct 47,569,120 dollars, the maximum of what is deemed necessary for circulation, and the sum remaining, viz. 52,430,880, constitutes the ability of the monied capitalists to loan-of this sum we propose to borrow 30,000,000.

Having shewn the ability to lend, the only question remaining is, will it be interest of those who hold the monied capital to advance it to the government? A monied capitalist will always pursue his interest. In deciding this question, the calculation will be made on peace or war. No prudent man will loan his money without taking into view both these events. In the event of peace an immediate rise in the price of stock affords a certain prospect of profit. As an investiture of money it is more safe than in banks, inasmuch as individuals may fail and the nation cannot. For a merchant whose capital, in consequence of the present situation of the country, is withdrawn from commerce, it is a better investiture than in manfactures. The money invested in manufactures cannot be withdrawn without loss on the sale of the buildings and machinery necessary for carrying them on. The stock, however, of the United States could at once be converted into money at considerable profit, and his 'capital again restored to its former channel. If therefore peace shall take place, to which I confess I look forward with some degree of confidence, the present loan combines all the advantages of safety,' profit, and a command at will of the capital invested. If, on the contrary, these expectations shall be disappointed, and the war continue, our limited commerce must leave unemployed a large surplus capital. It is true that the increasing demand for our own manufactures may afford employment for a part of this capital. To those however who have formed commercial habits, and look forward to resuming their accustomed occupations, such an employment of capital cannot be desirable. The stability of our credit, founded on a punctual compliance with our engagements, must be gratifying to every American. During 27 years, the faith of the nation has never been questioned--our credit has grown with our strength-our resources are ample-to bring them into action requires nothing but union and energy.

3. Mr. Pitkin, of Connecticut, followed Mr. Eppes, and brought forward a variety of statements from the public documents furnished by the treasury department, in order to show the great expense of the present war, and the enormous debt with which it would saddle the country.

He also entered into a comparative statement of the expenses of government during the administrations of Washington, Adams, Jefferson, and Madison, in order to show that the extravagant expenditures of the two former, but especially of Adams', about which so much had been said, were trifles light as air," compared with those of the two latter.

From these treasury statements, it appears, that the expenses of the government for 1812, 1813, and 1814 will amount, exclusive of the payments on account of the public debt, to nearly seventy-nine millions of dollars. From the same documents it appears, that the expenses of government (exclusive of the public debt) during ten years of peace in Jefferson's and Madison's administrations, exceeded the expenses for the same objects, during the twelve years administration of Washington and Adams, by upwards of six millions of dollars, even after deducting the monies paid under the Louisiana convention and British treaty. They also shewed that the expense of the military establishment during the first year of this war, was greater than the expenses of government (exclusive of the public debt) during the whole of Washington's administration; that the expense of the war, at the close of the present year, will exceed the whole expenditure of Washington's administration by upwards of sixty millions and a half of dollars, and that of Adams' by about fifty-five millions and a half; that the debt incurred in consequence of the war, at the end of 1814, would amount to upwards of sixty-seven millions, which added to the amount of the old debt would make an aggregate of upwards of a hundred and seven millions of dollars*.

The amount of the circulating medium, Mr. Pitkin contended, had been greatly overvalued in Mr. Eppes's statements. He was satisfied, he said, that the amount of bank notes in circulation did not exceed thirty millions of dollars ; the idea of bank discounts forming a part of the circulating medium, he treated as a novelty which would be found to be perfectly illusory. Many have supposed, said Mr. Pitkin, that banks could issue notes to an almost unlimited extent, and that they had generally done it to an amount far beyond their capital. This idea is, however, a very erroneous one. A certain quantity of circulating medium is necessary in every country, for its various commercial transactions, and to facilitate an interchange of the products of its industry. This quantity increases with the increased wealth and resources of the country ; but whether it consists in specie or in bank notes, it can never exceed the amount which is necessary for the objects for which it is required. The late bank of the United States, with a capital of ten millions, and with an average deposit of five millions more, and whose bills had a general currency, and were receivable for all debts due the United States, could not, for many years, keep in circulation, on an average, more than about five millions of bank notes. This was about 50 per cent. of the amount of their capital. We cannot therefore calculate, that the present state banks, taken together, can circulate bills to a greater amount than 50 per cent. of the capital actually paid in. The bills of some of the banks, from their local situation, exceed this amount, while the bills of many others, and particularly of the larger banks in the cities, fall short of it.

The present bank capital, continued Mr. Pitkin, is estimated by the chairman at 75 millions of dollars. If he means that this sum has actually been paid in, it is too large. In 1812, the secretary of the treasury stated the amount to be only 50 millions; and from the best information I can obtain, I am satisfied the amount paid in does not at present much exceed 60 millions. Supposing those banks taken together can circulate, in proportion to their capital, as many notes as the late bank of the United States, the bank notes in circulation will be only 30 millions. From information, however, furnished by some of the state banks at different periods, we shall be satisfied, that this sum, taken on an average, is probably too large. About the first day of January, 1812, the capital of three of the principal

For an abstract of the treasury statements from which Mr. Pitkin drew his calculations, see p. 36, 37 of this volume. VOL. III.

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