SHOULD EACH HAVE GOOD MONEY.

207

of gold coin pledged for its redemption. To do this, however, the Independent Treasury should be divided into two entirely distinct and separate departments; the department controlling the Customs not having anything to do with the department controlling the banks. The deposits of the respective branches should be under separate and independent custodians. This system, once fairly instituted, and put into practical operation, would save the gold of our mines in the country, till the volume of currency was completely saturated with specie and gold bills. The Independent Treasury would then be of tenfold the advantage to the people which it is to the Government. And since it has done such wonders for the Government, why not extend its scope, and make it the means of thoroughly purifying the entire circulation of the nation? We have not the excuse for issuing a diluted currency which we had twenty years since. Our mines are amply equal to our most extended wants for circulation, and if we do not secure to ourselves the best currency on earth it will result from our own lache or dishonesty.

No. XV.

THE DUTY OF CALIFORNIA IN RELATION TO THE LEGAL TENDER ACT.

To maintain the public credit, it is indispensable that the undertakings of the State upon all matters of finance, shall be promptly and faithfully met, as they fall due from time to time. Economy, retrenchment, and reform, should be introduced wherever the same are practicable.

To keep the debt from increasing is as necessary for the good credit of the State, as the prompt payment of interest and the current expenses of the Government. The debt of California is measured by dollars; and real dol

208

THE POLICY OF CALIFORNIA.

lars are made of gold and silver. The staple of our State is gold, and our whole State policy should be to keep the exchangeable value of this gold, when measured by other wealth, as high as possible. The entire cash circulation of the State is less than four millions of dollars, while our mines yield that amount monthly. The constitutional rights of California to demand of the National Legislature that nothing be done to demonetize gold, or lessen its value, and to institute such national legislation as will render it impossible for States, or State institutions, to demonetize gold or lessen its value, are points of relation between the State and Federal Government which have never been discussed by any officer of the State, or member of either branch of Congress. The most vital interest of the State seems to have been ignored at home and at Washington. The yearly produce of gold in California may be safely assumed at fifty millions of dollars. And, since we export this amount of gold yearly, our imports will be more or less valuable, or the amount of goods which we can safely import will be greater or smaller, in proportion as the price of gold rules high or low in the Eastern markets. Money is not only a universal measure of value in all civilized countries, but a universal agent. Whoever possesses money can command, and is virtually the possessor of, any article of necessity or luxury of equal value to that money. Gold and silver being the only money which are recognized by the American Constitution, and the measure of all wealth and values, it follows that any act of a State Government, or of the Federal Government to debase gold, or to demonetize it, is a direct thrust at the vital interests of this State. If gold be reduced in value, it will take more of it to perform the same work. Such reduction would increase our State debt, increase our interest on the debt, without any increase of means to discharge such debt. Even the old States and the Federal Government, hope to return to cash payments upon their indebtedness. But, every one who examines the subject will see that the difficulties of such return to cash payments must increase in direct proportion as they assume debt, and in direct proportion as they depreciate gold. For the past thirteen years California has suffered in silence the infliction which

LOSSES TO THE STATE.

209

a false currency, used at the East, has imposed upon her commerce. She has imported her goods from the old States, purchased and manufactured under a system of paper money, and invoiced to her under this system of false currency; and those invoices have been recognized as honest and legitimate dealings, and balanced dollar for dollar in gold. Her commerce is restricted to the old States by the American Custom-house. True, she can deal with other nations, but only by the payment of high rates of duties.

Since the year eighteen hundred and forty-eight, California has forwarded to the old States, and the world at large, the immense sum of eight hundred and fifty million dollars. Had the old States used a gold currency, the currency of the Constitution, one-half of her exports of gold would have paid for all the imports of the State, and left enough money in the State to build three Pacific railroads. Here is a useful theme for the contemplation of those who suppose that California is under obligations to the Federal Government. Had Congress regulated the currency of the Union upon the basis of gold, which it was the prerogative and duty of that body to do, in such case, one-half of the gold which California has sent forward would have paid for her imports. Inflated prices from paper money has, for the past thirteen years, (or, until the war broke out, which has demonstrated the difference between gold and paper) robbed gold of a large fraction of its value. It is contended by some that the Government owns the mines; and hence, that the losses on gold by the laches of the Federal Government to do its duty on the regulation of currency, so that paper issues and bank credits shall not lessen the value of gold, are not a subject matter which the State may press upon Congress, either for reclamation for the past, or reform for the future. The Government owns the mines, it is true; but its proprietorship is of the same nature as the owners of the treasure which was lost on the Central America several years since. It would cost the owners of the lost treasure ten dollars to recover one; hence the Courts would award the entire salvage and ownership to any individual or company who should recover the treaIn like manner, if the Federal Government were to

sure.

S*

210

THE COST OF MINING.

institute the business of mining in California upon its own account, it would cost the nation ten dollars for every dollar of treasure that it would develop and secure. The title of the gold mines is in the Government; but the title to the gold, extracted by the toil and money of the miners, is as truly the property of the miner as his coat, his boots, or his bread. It is his by the labor he has expended upon it; by the immense cost of flumes, water ditches, aqueducts, bridges, tunnels, drifts, shafts, steam engines, quartz mills, and all the needful appliances and appointments of the miner, expended by him and at his own risk. It is his by the tacit consent of the Federal Government, which has allowed the mines to be operated without charge, and the miners to make such laws to govern their operations as experience has demonstrated to be necessary. It is his also by the wisest policy which the Government could possibly have adopted: the policy of a strict noninterference with the mines; a policy which has developed them much faster, and secured a much greater annual yield of gold to the country than could have been attained in any other manner. The means of the people are the wealth of the Government; and while the people possess means, the Government can avail itself of those means by taxes, excises, or loans. Any restrictions by Congress upon the mines would lessen the yield of them, and thus lessen the money of the country; for all the yield of the mines goes from us to the East. Such restriction would also be a thrust at one of the vital interests of this State, and should be opposed by our delegation in Congress. The neglect of the Federal Government to do its duty, to excise and suppress the State bank circulation, has interfered most materially with the value of gold through the Union; and the miner has thus virtually paid an immense tax to the old banking system of the East, by loss in the exchangeable value of his gold. For, to the holder of gold it is a matter of little difference whether you take from him one-half the quantity he possesses, or reduce the value of what he possesses one-half. Such was the action of the bank currency upon the value of gold before the war commenced.

But, what right has California to dictate to thirty-two States the currency they shall use? Must thirty-two States

CONSTITUTIONAL RIGHTS.

21I

bend their institutions and forms of business to one or two States on the Pacific Coast? To this it may be answered, they are not required to bend to one or two States; but, as a member of the Federal Union, California has a right to say, you must bend to the American Constitution, or resist it. If you resist it, you are acting to produce the same result, though in a different channel, as the most rabid Secessionist. The Union and Constitution must stand or fall together. California has the same right to ask protection of the Federal Government, in the matter of currency and the action of State bank issues and credits on the value of coin, as she has to demand protection from foreign foes or invasion of her territory by a public enemy.

At present, the war demonstrates the difference in value of gold and Eastern currency. In the City of New York there has been paid as high as one hundred and thirty-eight dollars of currency for one hundred dollars of gold coin.* And wide as is this difference between the real value of gold and paper, there is good reason to suppose that the maximum of difference has not yet been reached.

An eminent political economist makes the following remarks, which are peculiarly applicable to this State under the present condition of our fiscal relations to the Federal Government: "Let us suppose that the whole circulating money of some particular country amounted, at a particular time, to one million sterling, that sum being then sufficient for circulating the whole annual produce of their land and labor. Let us suppose, too, that some time thereafter, different banks and bankers issued promissory notes, payable to the bearer, to the extent of one million, reserving in their different coffers two hundred thousand pounds for answering occasional demands. There would remain, therefore, in circulation eight hundred thousand pounds in gold and silver, and a million of bank notes, or eighteen hundred thousand pounds of paper and money together. But the annual produce of the land and the labor of the country had before required only one million

* November, 1862.