No. 141.
Mr. Bancroft to Mr. Fish.
Berlin, July 12, 1873. (Received July 31.)
Sir: Of the enactments of the last session of the Imperial Diet, one law capitalized the whole amount to be paid as pensions to officers and soldiers or their families on account of the late war, and the sum thus [Page 295] set apart has been, or is to be, invested in permanent securities. Among those which are selected are the new live per cents of the United States.
Another law rests on the principle of admitting iron free from duty from and after 1877. The party of free trade is very strong in Germany, but was not able to carry the immediate abolition of all duties on iron. Our manufacturers of reapers and other implements of agriculture will in due time profit by this repeal.
The experience of the Austro-Hungarian Empire on the one side, and the German Empire on the other, shows the boundless mischief attendant on a continuing paper currency, contrasted with the solid and efficient industry resting on a currency of gold and redeemable paper. The Diet, finding that some of the smaller States in the empire clung tenaciously to their right of issuing government notes, and being resolved to guard against every danger that could be apprehended from paper currency, amended the bill for introducing the new coinage by a clause calling in all governmental notes before the 1st of January, 1876. The largest amount of government issues which was thought of from that time was no more than 40,000,000 of thalers, or about a thaler per head for all the population. A similar reduction of our greenbacks would leave us $40,000,000. Further, the banks, after the 1st of January, 1876, are to issue no notes of a less amount than a hundred marks—that is to say, twenty-four American gold dollars. These measures show the prudence of the German people; learning wisdom from the misfortunes of their neighbors, and adopting a system which will save them from the disasters of a fluctuating currency, and the danger of that worst enemy to industry, a paper currency. Their writers on political economy build on the authority of American statesmen of all political parties before our late civil conflict. The ablest pamphleteer on the bank question in Germany has taken for his motto the words of Daniel Webster: “Paper circulation is the most effectual of inventions to fertilize the rich man’s field by the sweat of the poor man’s brow.” A hope is sometimes expressed that the settlement of the banking question in Germany may exercise a salutary influence on our own country. The most ardent supporter of our speedy return to specie payments can find no more authoritative argument than the contrast between these contiguous empires. Paper money fostered speculation in Austria till the country has been struck by a calamity which threw companies whose stock in the aggregate amounted to many hundreds of million of dollars into absolute bankruptcy or a crippled condition, while the same crisis passed over Germany with little other effect than a momentary strain of private credit. In Vienna, the government was led into the fatal measure of seeking to relieve present distress by larger issues of irredeemable paper. In Germany, the issues of public paper are greatly diminished, and the circulation of the specie-paying banks prospectively curtailed. In the former case, new uncertainties, and false, passionate speculation, destructive of the prosperity of manufactures, come from the increase of inconvertible paper. In the former, the stern and honest measures of the government receive from the people a hearty welcome, and inspire confidence in a continuance of remunerative results in all the spheres of industry.
I remain, &c.,