Mr. Bancroft to Mr. Fish.
Berlin, December 22, 1873. (Received January 12, 1874.)
Sir: The President’s message, in full, reached Berlin on Friday last.
That part of it which related to foreign affairs has met with the most perfect and universal approbation that I have ever known accorded to a public document. The conduct of the United States toward Spain and Cuba is acknowledged to be marked by strict respect for public law, by moderation, by wise forbearance, by dignity and firmness. There is division of opinion on the subject in public or in private circles.
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The finances of the United States are here a subject of the intensest interest, owing to the very large amounts which Germans have invested in our national and other securities. The use of paper-money in the United States has led to many purely speculative undertakings, which have sought a market for their securities in this country. Between fifty and sixty separate securities—I think the exact number is fifty-eight—which sought and found a market here have failed to pay their interest as it became due. This has had an unhappy effect upon the public financial opinion. Four years ago this public believed the United States were about to return without delay to a specie currency. As a consequence, [Page 438] public confidence in our stocks was constantly on the increase. When such marvellously large payments of our debt were made, it was taken for granted that those payments would be accompanied by a return of the Government, through all its obligations, to specie payments, according to the pledge of the first act of the Forty-first Congress. Nations are here divided into those which have a forced paper circulation and those which have a specie basis, and the difference in the prices of the stocks of the two is amazingly great. Our 6 per cent, stocks were rising, and there was every reason to hope that the price would soon be far above par.
The remoteness of the United States had come to be thought lightly of, and there was even a rising belief that there was a peculiar safety attending their stock resulting from the very fact that they stood apart and beyond the reach of convulsions in Europe. There still remains unshaken confidence in their determination and in their ability to pay their bonded debt, but the seemingly indefinite postponement of the epoch when they intend to remove the use of force in keeping their notes in circulation seriously affects financial opinion. This change manifests itself in various ways. Where purchases are made of stocks, those falling due first are most sought after by those who have safety in view, and there is less disposition to engage in any new loans which the United States might be disposed to invite.
You will not be surprised, therefore, when I say that the judgment of the President “that we can never have permanent prosperity until a specie basis is reached,” is responded to here with absolute unanimity, coupled further with the idea, which is, indeed, involved in the President’s words, that we never can attain the credit which we have a right to hope for in the financial market of the world until that specie basis is reached. The next point in our finances on which public opinion in Germany is perfectly unanimous is, in the language of the report of the Secretary of the Treasury which accompanies the President’s message, that “a constant increase of coin in the Treasury would, ere long, lead to the desired result.” There is not one single well-wisher to the United States in these parts that does not cordially welcome and approve that suggestion of the Secretary of the Treasury, and it is the absolutely unanimous opinion of all financial men. I hear it in all circles, from men of all political parties, but most earnestly expressed by those who are our truest friends. Severest economy and an accumulation of gold in the Treasury can alone bring us back to specie payments; and they can do it, and with less difficulty and less delay than are anticipated. As the country is constantly increasing in business, it is the further universal belief “here that the earlier the country returns to specie payments the less will the debtor class suffer.
Thus far I have given you a candid and exact statement of what is the universal financial opinion in this region. There is another suggestion of the Secretary of the Treasury, that “there should be a gradual accumulation of gold in the banks,” which meets with approbation wherever it has engaged attention, but it is not every one who has turned his attention to that branch of the subject. But all who have given attention to it are of the opinion expressed by the Secretary on that point, and not as a temporary but as a permanent measure.
I remain, &c.,