Williamson Simpson Oldham
(1813-1868)
Williamson Simpson Oldham, Confederate legislator, was
born in Franklin County, Tennessee, on July 19, 1813, the son of Elias and Mary
(Burton) Oldham. As the son of a poor farmer, Oldham was largely self-educated,
but at the age of eighteen he opened a school in the Tennessee hills. He
subsequently read law and was admitted to the bar in Tennessee in 1836. Soon
afterward he moved to Fayetteville, Arkansas, where he prospered in the
practice of law and in politics. On December 12, 1837, he married Mary Vance
McKissick, the daughter of the wealthy James McKissick; the couple had five
children. Mary died, and on December 26, 1850, Oldham married Mrs. Anne S.
Kirk. After her death he married Agnes Harper, on November 19, 1857. In 1838 he
was elected to the General Assembly, the Arkansas House of Representatives,
from Washington County, and in 1842 he became speaker. In 1844 he was appointed
associate justice of the Arkansas Supreme Court, where he served until 1848. He
ran unsuccessfully for the United States House of Representatives in 1846 and
was defeated in senatorial race against R. W. Johnson in 1848. Suffering from a
mild case of tuberculosis and hoping to repair his political fortunes, Oldham
moved to Austin, Texas, in 1849. In 1852 he was president of the Austin
Railroad Association. From 1854 until 1857 he served as an editor of the Austin
State Gazette. He ran for the Texas House of Representatives in 1853 and for
Congress in 1859, without success. He moved to Brenham in 1859 and in 1861 was
elected to the Secession Convention. That body sent him to Arkansas to
encourage that state's secession and appointed him a member of the Provisional
Congress of the Confederate States of America. The following November the Texas
Senate elected him to the regular Confederate Senate, a position he held until
the collapse of the Confederacy. Oldham chaired the Committee on Post Offices
in both regular congresses and the Committee on Commerce in the Second. He
served on the Indian Affairs, Naval Affairs, Finance, Judiciary, and Joint
committees. As a firm believer in states' rights, he was fearful of what he
called the "battering ram of executive influence" and the claim of
"military necessity" as prejudicial to democratic principles. He
opposed the building of a navy, the conscription of civilians, and centralized
control of the economy, all features of a too-powerful central government. When
state sovereignty was not a question, however, Oldham supported the Jefferson
Davis administration by favoring high taxes and heroic methods of countering
the rampant Confederate inflation. He was also a advocate of the arming of
slaves for Confederate military service. Like other members of the Texas delegation,
he argued forcibly for stronger defensive measures for the Texas frontier and protested
many of the apparently arbitrary actions of the Confederate
Cotton Bureau. With the end of the war, Oldham became an expatriate. He lived
for a time in Mexico and then moved to Canada, where he learned photography and
began a book about the Confederacy. Part of this manuscript, which he
apparently never finished, was serialized after his death in De Bow's
Monthly Review (1869-70) under the title "Last Days of the
Confederacy." A longer version is in Oldham's papers at the Barker Texas History
Center, University of Texas at Austin, where his manuscript Memoirs of a
Confederate Senator is also housed. Oldham returned to Texas in 1866 to make
his home in Houston. He died of typhoid fever on May 8, 1868, and was buried in
the Episcopal Cemetery, Houston. In 1938 his remains were moved to Brookside Memorial
Park. Oldham County in the Panhandle is named in his honor.
Alma Dexta King, "The
Political Career of Williamson Simpson Oldham," Southwestern Historical
Quarterly 33 (October 1929). James A. McMillan, The Works of James D. B.
De Bow (Hattiesburg, Mississippi: Book Farm, 1940). William C. Nunn, ed., Ten
Texans in Gray (Hillsboro, Texas: Hill Junior College Press, 1968). Jon L.
Wakelyn, Biographical Dictionary of the Confederacy (Westport,
Connecticut: Greenwood, 1977). Ezra J. Warner and W. Buck Yearns, Biographical
Register of the Confederate Congress (Baton Rouge: Louisiana State
University Press, 1975). Willis Duke Weatherford and Don L. Moore, Analytical
Index of De Bow's Review (1952).
SPEECH OF
HON. W. S. OLDHAM, OF TEXAS,
ON THE SUBJECT OF THE FINANCES
Senate, December 23, 1863
This work is the property of the University of North Carolina at
Chapel Hill. It may be used freely by individuals for research,
teaching and personal use as long as this statement of availability is included in the text.
Mr. OLDHAM submitted the following resolution:
Resolved,
That the Committee on Finance be instructed to inquire into the expediency 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 1864, 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 the first day of January, 1864,
fifty per cent.
2. Upon all other Treasury notes and call certificates, twenty-five per cent.
3. Upon all eight per cent. Confederate bonds, twenty per cent.; upon seven per cent.
bonds, fifteen per cent.; upon six per cent. bonds, ten per cent.; and upon all
other bonds, five per cent.
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 proportion 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 said 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 notice by the
Secretary of the Treasury."
MR. OLDHAM said:
MR. PRESIDENT--It is with great diffidence that I venture to propose a scheme for
the relief of our financial embarrassments; nor would I do so, but that I
recognize my full share of the responsibility resting upon Congress for the
adoption of proper remedies for existing evils. Another reason 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 it due to myself to offer the resolution,
which I have done. Having offered 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 indicated.
Page 2
That radical difference consists in this, that all the schemes proposed are based
upon one of two fundamental principles: funding the redundant circulation 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 presupposes an impaired public
credit as the main evil, as evidenced by the depreciation 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 public 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 would, in my opinion, have been very nearly as much as it is
at present. But under existing circumstances the evil affects the credit of the
government, and a remedy should be applied which will not contribute to impair,
but to strengthen and sustain 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 violation 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 Treasury notes,
demanded by our military operations, without adopting any appropriate 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,
Page 3
until after the close of the war. The destruction of
our foreign, and the internal trade dependent upon it, with the suspension of
the payment of 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 so, then a much smaller sum
would suffice under existing circumstances, with all trade, foreign and
domestic, annihilated, and all pre-existing indebtedness 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 its 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 shown 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 increase 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 dollar of excess only contributes
to swell the volume, without increasing, but rather decreasing, the aggregate
value, until it becomes so 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 enlarged 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 these 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 runners, 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 produce are on government
account, or used in purchasing government supplies 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
Page 4
into the country are sold to the people for Confederate
notes, which are exchanged for gold, State stocks, or green-backs, and
sometimes cotton or tobacco. Confederate notes constitute a local currency, and
cannot be made the medium of exchange for a foreign commerce. Whenever a local
currency 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--
depreciation. 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, further
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
local 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 running and trading with the enemy, a most
vicious and excited spirit of speculation has been engendered, and has spread,
like a contagious disease, to almost all classes--to merchants, farmers,
mechanics, landlords, officers 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 exchange to carry on this trade, the goods imported are sold
for our currency, 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 corresponding
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 most fabulous rates.
The malignity and spread of the contagion are well calculated to fill the
unselfish patriot with wonder and astonishment, especially when he sees men
either concealing, to prevent the government from obtaining, 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 defence of the lives, liberty and
property of its people. A strange infatuation seems to possess the great mass
of the people, for while they exact the
Page 5
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 depreciation of the
currency, is one which was originally recommended by the Secretary of the
Treasury, and adopted by Congress, as a means to prevent that result--I mean
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 system 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 advocates. I never could see the inducement to
fund an uncurrent note in an uncurrent bond, and hence, at the last session of
Congress, I said that the effort to prevent a redundant circulation, by funding
in bonds, without adequate provision for the payment of the interest on the
bonds, as a means 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 means 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 has continued to swell
almost to the point of explosion. The speculator, the banker, broker and
shaver, believing that the public debt will be ultimately paid in full in gold
and silver, are interested in obtaining the largest possible 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 investigation. 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 possible 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
Page 6
the currency to the proper volume, until they believe
that the government indebtedness has reached the utmost limit of the ability of
the people to pay it.
We 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 sympathy. There are but few, if any of
them, in my State. Our capitalists (and we have large capitalists 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 currency, in
proportion to population 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 remainder, with the effects
I have ascribed to them, cannot be successfully controverted. How is the evil
to be remedied, and its future recurrence successfully 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 experience 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 endorsements 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 substantial
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 extended
Page 7
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 six months a new and improved issue of two hundred millions 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 consolidated loan, after
which time the notes not so funded to cease to be current or receivable at the
Treasury for dues.
These
are the substantive features of the scheme, all others being matters 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
affected 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 se. 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 whether the currency consists of bank
notes, shin plasters, beef hides, peltries, coon skins or its own notes. Every
thing that becomes or is used as a currency, except gold and silver, becomes
so, by the mutual consent of individuals.
The
power to issue Treasury notes can be supported only by the authority 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 government the Treasury notes for the supplies
furnished, it is a substantial compliance with the constitutional provision, to
deliver the notes directly to
Page 8
him. Between the holder and the government the Treasury
notes are not money--but evidence of indebtedness--promises to pay in
consideration of money borrowed 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 interest 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 the government to discharge its
obligations, must and will become impaired, and its credit eventually give way
and fail entirely. 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 unimpaired 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 efforts, 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 regard 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
give way with a crash, scattering bankruptcy, ruin and desolation through the
land.
Page 9
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 collection 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 ends, 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 exceeding 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 considerable 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 connection 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 hundred dollars per annum, is chargeable
with the tax provided by the law.
Page 10
And a
like tax is levied upon the estimated value of the incomes of persons derived
from the "annual rental value of all dwellings, houses, buildings 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 occupation, the
profits of which are taxed as income," although no income may be derived
from such rental or hire.
Negroes
engaged on plantations, and the plantations themselves, come under the
provisions of the law levying the tax in kind. A negro employed 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 indirectly, 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 uniformity 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 unjust that could possibly be
levied.
Thousands
upon thousands of our most wealthy and patriotic citizens are in the army, 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 paying the
taxes of health, blood and life itself, leaving 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 thousand fold. 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 beneficiaries?
Page 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 six months a new issue of two hundred millions of dollars 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 consolidated 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 venture 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 business 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 afflicted 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 scheme is intended to increase the
value of the notes so deposited, and metamorphose into bonds to fourteen times
what it is now. The Treasury notes, or at least the far larger proportion, are
held by speculators 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
Page 12
and enlightened statesman. The bankers, the brokers,
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, followed 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 restore 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 administered by Doctor
Sangrado to his patients, which produced weakness, prostration, 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 consultation; 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 bearing 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 constitutional 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 magnitude 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 productive soil, we have, within ourselves, if energetically
and properly developed, 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 demoralizing
Page 13
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-extensive 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
different circumstances, to be applied to the extinguishment of a portion of
the public debt, and the prevention of its aggregate overgrowth, thus restoring
the public credit and the value of the currency. There is no difficulty in
paying the very 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 portion 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 country, the
contributions should 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 considering this subject, the people ought steadily to keep in
view that the government, in contracting debt, is but their agent; that its
debt is their debt: as the currency is held exclusively by ourselves, it is
obvious that, if each person held Treasury notes in exact proportion to the
value of his whole means, each would owe himself the amount 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 afford 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 the 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 political economy, a
tax can be levied and collected from the present holders of Treasury notes
alone, "to an amount sufficient to reduce the currency to proper limits,"
and not cost the note-holder and tax-payer one cent.
Take
two hundred millions as the amount, or "proper limit" to the
currency, up to this point it would be at par, but every dollar of increase
beyond would only swell the volume, without increasing the aggregate value. The
currency of a country cannot be made to exceed a fixed value, and when the
quantity is increased beyond the limit of par value, 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
circulation, the whole cannot be made to exceed the value of the amount of the
limit of par value. Therefore, if two hundred millions is the par value limit,
the six hundred millions which we have in circulation is worth just 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 I 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 contributions
Page 14
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 treasury 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-establish 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, produce 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
$284,316,399--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 is $162,814,720,
upon which a tax of twenty-five per cent. would yield $40,703,680. The taxes
arising upon the 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 benefited, the taxes would amount to $386,911,439. 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 eighty millions more, which would give for the next year the enormous
sum of $466,711,439. And yet this amount could be paid, without producing 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 notes, for the balance would be of the same real value as the
whole were--but the imposition of one hundred and eighty millions 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.
Page 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 Secretary 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 six per cent.
bonds. Mine would re-establish the public credit by paying the public debt. His
would create a debt of eleven hundred millions, bearing an annual interest of
sixty-six 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 discriminations 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 1863,
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 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
improved 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 upon 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 speculated in our currency with a view to depreciate
it. Its depreciation is regarded by our enemies as evidence of the declining
confidence of our people in our success, in the great struggle in which we are
engaged. The restoration of the 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
Page 16
of theirs. 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 eruption of a volcano.
After
the restoration of our currency, all causes tending to its depreciation 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 current 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 experiment. 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 circulation 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 subject; 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 trembling 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 of us here, let
us then go home to our constituents, and rekindle the fires of 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, O! MR. PRESIDENT, 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 exultation would fill our
land--gloom and despair would enshroud our foes. 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 temperament, strengthened by my
habits 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 determined will, energy and
perseverance, will accomplish anything not inhibited by the fiat of
Omnipotence.
Copyright 2000 by the Academic Affairs Library, The
University of North Carolina at Chapel Hill, all rights reserved.
