Mr. Pike to Mr. Seward
Sir: The quieting tenor of the Senate action on the Mexican question has restored the equilibrium on the stock exchange, and our securities rebounded yesterday to just the same extent they fell last week. The general tendency of prices is, however, downward, and has been so for some time past. The slow progress of the war accounts, in the main, for this decline; but besides the general reason, there is another. The pushing of numerous new paper banks into existence during such a convulsion as rages in America, is regarded with great distrust by Dutch financiers, and it is believed will complicate still further our already overburdened and embarrassed finances. Instead of more banking machines, these conservative people insist that we have too many already. They say we have a plethora of paper money, and that this is our difficulty and danger. They ask, “Why add to the list of paper money banks, which cannot resume specie payments when the storm is over? The country will be deluged by the issues of the new banks, and their influence on the question of resumption will be pernicious and tend to prolong the period of disaster.” They admit that if the machinery was necessary to enable the government to place their loans, or to furnish a circulating medium, they could understand why the new banks should be created. But as they are evidently needed for neither purpose, the object of calling into existence such a potent element of expansion and speculation is beyond their comprehension.
There is only one point of view in which this policy is regarded with complacency. It is that the general deluge of paper likely to inundate the channels of circulation through their operations will, by discrediting all banks, throw the country all the sooner back upon a specie currency. They do not overlook the fact that the abundance of the precious metals now fast filling the world may render this transaction comparatively easy, and thus be unattended by the convulsions which such radical changes have hitherto produced.
But any way the opinion reigns that the new banks will only make a bad matter worse, and that when the end comes they will be able to lighten nobody’s load, but will be just as deep in the mud as everybody else will be in the mire. Whereas, if the creation of a national bank, or a chain of banks, based mainly on government securities, were deferred until the government circulation had to be funded with a view to a resumption of specie payments, they might be made efficient agents for this purpose.
It is thus that distrust is increased by considerations lying outside the general course of affairs. I think you will agree with me that much weight [Page 314] attaches to the view of these practical financiers, to which I fear I do but imperfect justice in this rapid outline.
I have the honor to be, with great respect, your most obedient servant,
Hon. William H. Seward, Secretary of State, Washington, D. C.