Mr. Seward to Mr. Pike
Sir: Your despatch of April 27, No. 130, has been received. I thank you for the interesting information it brings me on the subject of American credit in the Netherlands. The embarrassment which you have witnessed there has been equally observable here. In fact, financial interests seem to know neither geographical nor political restraints. If we understand here the fiscal system of the Treasury Department, it is designed to substitute for divers conflicting banking institutions, deriving their authority from the States and responsible only to them, and using State and private securities as a basis of circulation, one general system of many united parts, deriving its authority exclusively from the national government, responsible to that government only, and employing the stocks of the United States as the basis of circulation. It seems to me to approach as nearly as possible to what I regard as the most effective fiscal agency the government could create—a bank of the United States, with responsible branches in the several States and Territories.
The new system still struggles in Congress with the State banks, and the dispute hinders and delays the final establishment of the treasury system. This circumstance is not favorable to the sale of government securities. The market is now affected by other adverse circumstances. We have had importations so excessive as to require a sudden and unusual addition of fifty per cent. to the imposts. Finally spring came again, and all the armies of the Union did not move as quickly as the dogwood tree flowered in the forest, and then there were reverses in Louisiana, disappointment of unreasonable anticipations in Mississippi, and surprises by raiders at Fort Pillow, on the Mississippi, and by a clumsy iron-clad at Plymouth in North Carolina. So there was discouragement, then apprehension, then despondency, and of course gold went up, and government stocks went down. As if to increase the panic, all these incidents occurred at the time when the Secretary of the Treasury had reduced the rate of interest upon permanent loans he was applying for, from six per centum to five per centum per annum. The public credit is maintaining a vigorous struggle, however, with its enemies. Congress is likely, at last, to agree upon and perfect the bank and revenue bills. The augmented tariff is checking importations. The campaign astonishes the country by its success, and promises a speedy end of the civil war; and the new loan, bearing only five per centum, is absorbed by the [Page 316] country at the rate of nearly a million a day. So I feel myself authorized to hope that we shall safely stem and soon overcome the adverse fiscal currents at home, and, having done this, shall find smoother waters to float upon abroad.
I am, sir, your obedient servant,
James S. Pike, Esq., &c., &c., &c.