That part of Mr. Chase's financial system which is most questionable, and which affords his assailants a fulcrum for their attacks, is its interference with the State banks and with the currency which they have been supplying to the country. The issuance of Treasury notes in the form of a circulating medium, and with the qualities of a legal tender, has revolutionized the whole currency and exchanges of the country, and has given universal satisfaction to the people. But this popular judgment is by no means an unerring test of the wisdom or safety of such a measure. Its necessity, however, and its eminent success will forever stamp it as an expedient of great usefulness and value, especially as the Secretary has most judiciously arrested the system at that point where its unquestionable advantages still outweigh its acknowledged dangers and inconveniences. He informs us that these issues 'were wanted to fill the vacuum caused by the disappearance of coin, and to supply the additional demands created by the increased number and variety of payments;' and he adds: 'Congress believed that four hundred millions would suffice for these purposes, and therefore limited issues to that sum. The Secretary proposes no change of this limitation and places no reliance therefore on any increase of resources from increase of circulation. Additional loans in this mode would indeed almost certainly prove illusory; for diminished value could hardly fail to neutralize increased amount.'
In consequence of these issues, the average rate of interest on the whole public debt on the 1st of July last, was only 3.77 per centum, and on the 1st of October, 3.95 per centum.
It was to be expected that the banks, which have heretofore had an entire monopoly of the paper circulation, and of the large profits derived from its legitimate use, as well as from its disastrous and sometimes dishonest irregularities, would not very cordially receive the system which is destined to supersede their present organization entirely. The Secretary justly exults in the advantages of the sound and uniform circulation which he has afforded in all parts of the country. And as to the depreciation of the Treasury notes in comparison with gold, he reasons, with great force and truth, that the greater part of it is attributable to 'the large amount of bank notes yet in circulation,' remarking at the same time, that 'were these notes withdrawn from use, that much of the now very considerable difference between coin and United States notes would disappear.' Whether this belief of the Secretary be well founded or not, nothing can be more certain than the superiority of the Treasury notes to those of the mass of suspended banks, as they would have been after three years of the present war. It is frightful to think of the condition to which the currency would have been reduced at this time, if the Government had been guilty of the folly of conducting its immense operations in the suspended paper of irresponsible local banks. No one can doubt that the Treasury notes have been of immense service to the nation in its hour of trial; and if the limitation proposed by the Secretary shall be faithfully maintained, there need not be the slightest fear of any difficulty or discredit in the future. Upon the return of peace the whole issue will be easily absorbed and redeemed, either by the process of funding, or more gradually in the ordinary transactions of the Government.