Mr. Adams to Mr. Seward.
Sir: I have to acknowledge the reception from the department of despatches numbered 1743, and from 1745 to 1749, inclusive. Likewise, an Official Register for 1865.
Within the past week the public attention has been concentrated upon the reports of the military preparations making on the continent of Europe, and the convulsion which has happened in the credit system of this country. The panic in the city consequent upon the announcement of the bankruptcy off the company called Overend, Gurney & Co., on Friday last, is described as having been greater than in any previous event of the same kind since 1827. Had it not been for the immediate interposition of the government, in suspending the restrictions of the bank act, it is not easy to tell what would have been the limits of the disaster. The crisis, though perhaps accelerated by the immediate apprehension of war, could scarcely have been a great while longer delayed. It has been for some time perceived that the very high rate of interest ruling in this market, far exceeding that demanded in France at the same moment, must have its source in some local necessities of an abnormal kind. The extraordinary expansion of the joint stock mode of conducting enterprises, which has been going on ever since the breaking out of the war in America, has now reached a point from which retreat can be made only with very heavy loss of the capital embarked. For, although the senseless panic ordinarily attending a financial catastrophe has passed away, there is remaining a grave necessity of facing realities which are as yet but indistinctly seen at the bottom of it. Thus far the Bank of England has been acting purely as a protector of parties compromised by these events only so far as the momentary withdrawal of credit disables them from making the ordinary use of indisputable resources in their hands. Outside of these limits many may yet be found who must ultimately go into liquidation. While even within them, not a few of those saved from a catastrophe will scarcely escape without serious damage from the general decline in value of certain descriptions of property that must ensue.
The effect of this state of things upon affairs in the United States is of course the important point for our consideration. As yet it is made visible only in the decline in price of the national bonds, a decline which has been caused more by the events apprehended in Germany than by anything else. The consequence will be a temporary reflux towards America, and a probable rise in the rate of exchange with Europe. The fall in the value of cotton may be also attended by some transient discredit of those parties most engaged in that branch of commerce, and perhaps a number of reclamations on bills already negotiated. Further than this I cannot learn that any serious apprehensions are entertained on this side. The credits given have not been unduly extended, and though much of the later trade has been attended with serious losses, both at New York and [Page 121] in England, they are not considered as likely to preponderate over the heavy amount of profits previously realized.
Hence I am led to infer that though the result may he unpropitious to the great purpose of re-establishing the national currency on the only sound basis at so early date as we might have hoped, it will in the end, by removing from the European, and especially the English market, the myriads of tempting and delusive visions of extravagant interest which have of late absorbed so large a share of the floating capital of all nations, present more strikingly the fact of the relative solidity of our national securities, and of the superior desirableness of them over those of the less vigorous nations of the continent, which only continue by involving themselves every year more and more in hopeless embarrassment. Thus it may happen that a medium will be established for the gradual restoration of the currency at home, by an equalization of values between the two countries, which, taken in conjunction with a complete withdrawal of the most questionable issues of legal tender among ourselves, will have the effect of replacing the country before the world on the basis to which it is entitled by its wealth, its energy, and its past character for integrity in its pecuniary affairs.
I have the honor to be, sir, your obedient servant,
Hon. William H. Seward, Secretary of State, Washington, D. C.