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[274] other security. If the currency is not greatly and promptly reduced, the present scale of inflated prices will not only continue to exist, but by the very fact of the large amounts thus made requisite in the conduct of the war, those prices will reach rates still more extravagant, and the whole system will fall under its own weight, thus rendering the redemption of the debt impossible, and destroying its whole value in the hands of the holder. If, on the contrary, a funded debt, with interest secured by adequate taxation, can be substituted for the outstanding currency, its entire amount will be made available to the holder, and the government will be in a condition enabling it, beyond the reach of any probable contingency, to prosecute the war to a successful issue. It is, therefore, demanded, as well by the interest of the creditor as of the country at large, that the evidences of the public debt now outstanding, in the shape of treasury notes, be converted into bonds bearing adequate interest, with a provision for taxation sufficient to insure punctual payment, and final redemption of the whole debt.

The report of the Secretary of the Treasury presents the outlines of a system which, in conjunction with existing legislation, is intended to secure the several objects of a reduction of the circulation within fixed reasonable limits; of providing for the future wants of the government; of furnishing security for the punctual payment of interest and final extinction of the principal of the public debt; and of placing the whole business of the country on a basis as near a specie standard as is possible during the continuance of the war. I earnestly recommend it to your consideration, and that no delay be permitted to intervene before your action on this vital subject. I trust that it will be suffered to engross your attention until you shall have disposed of it in the manner best adapted to attain the important results which your country anticipate from your legislation.

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 in fact owe himself the amount of the 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. Under such circumstances, the notes remaining in the hands of each holder, after the payment of his tax, would be worth quite as much as the whole sum previously held, for it would purchase at least an equal amount of commodities. The result cannot be perfectly attained by any device of legislation, but it can be approximated by taxation. A tax on all values has, for its effect, not only to impose a due share of the burden on the note-holder, but to force those who have few or none of the notes to part with a share of their possessions to those who hold the notes in excess, in order to obtain the means of satisfying the demands of the tax-gatherer. This is the only mode by which it is practicable to make all contribute as equally as possible in the burden which all are bound to share, and it is for this reason that taxation adequate to the public exigencies, under our present circumstances, must be the basis of! any funding system or other remedy for restoring stability to our finances.

The army.

To the report of the Secretary of War you are referred for details relative to the condition of the army and the measures of legislation required for maintaining its efficiency, recruiting its numbers, and furnishing the supplies necessary for its support.

Though we have lost many of the best of our soldiers and most patriotic of our citizens — the sad and unavoidable result of the battles and toils of such a campaign as that which will render the year 1863 ever memorable in our annals — the army is believed to be, in all respects, in better condition than at any previous period of the war. Our gallant defenders, now veterans, familiar with danger, hardened by exposure, and confident in themselves and their officers, endure privations with cheerful fortitude and welcome battle with alacrity. The officers, by experience in field-service and the action of examining boards in relieving the incompetent, are now greatly more efficient than at the commencement of the war. The assertion is believed to be fully justified, that, regarded as a whole, for character, valor, efficiency, and patriotic devotion, our army has not been equalled by any like number in the history of the war.

In view of the large conscription recently ordered by the enemy, and their subsequent call for volunteers, to be followed, if effectual, by a still further draft, we are admonished that no effort must be spared to add largely to our effective force as promptly as possible. The sources of supply are to be found by restoring to the army all those who are improperly absent, putting an end to substitution, modifying the ex exemption law, restricting details, and placing in the ranks such of the able-bodied men now employed as wagoners, nurses, cooks, and other employs, as are doing service for which the negroes may be found competent.

The act of the sixteenth of April, 1862, provides: “That persons not liable for duty may be received as substitutes for those who are, under such regulations as may be prescribed by the Secretary of War.” The policy of granting this privilege has not been sustained by experience. Not only has the numerical strength of the army been seriously impaired by the frequent desertions for which substitutes have become notorious, but dissatisfaction has been excited among

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