There can be but three kinds of public currency--first, gold and silver; second, the paper of State institutions; or, third, a representative of the precious metals provided by the General Government or under its authority. The subtreasury system rejected the last in any form, and as it was believed that no reliance could be placed on the issues of local institutions for the purposes of general circulation it necessarily and unavoidably adopted specie as the exclusive currency for its own use; and this must ever be the case unless one of the other kinds be used. The choice in the present state of public sentiment lies between an exclusive specie currency on the one hand and Government issues of some kind on the other. That these issues can not be made by a chartered institution is supposed to be conclusively settled. They must be made, then, directly by Government agents. For several years past they have been thus made in the form of Treasury notes, and have answered a valuable purpose. Their usefulness has been limited by their being transient and temporary; their ceasing to bear interest at given periods necessarily causes their speedy return and thus restricts their range of circulation, and being used only in the disbursements of Government they can not reach those points where they are most required. By rendering their use permanent, to the moderate extent already mentioned, by offering no inducement for their return and by exchanging them for coin and other values, they will constitute to a certain extent the general currency so much needed to maintain the internal trade of the country. And this is the exchequer plan so far as it may operate in furnishing a currency.
I can not forego the occasion to urge its importance to the credit of the Government in a financial point of view. The great necessity of resorting to every proper and becoming expedient in order to place the Treasury on a footing of the highest respectability is entirely obvious. The credit of the Government may be regarded as the very soul of the Government itself--a principle of vitality without which all its movements are languid and all its operations embarrassed. In this spirit the Executive felt itself bound by the most imperative sense of duty to submit to Congress at its last session the propriety of making a specific pledge of the land fund as the basis for the negotiation of the loans authorized to be contracted. I then thought that such an application of the public domain would without doubt have placed at the command of the Government ample funds to relieve the Treasury from the temporary embarrassments under which it labored. American credit has suffered a considerable shock in Europe from the large indebtedness of the States and the temporary inability of some of them to meet the interest on their debts. The utter and disastrous prostration of the United States Bank of Pennsylvania had contributed largely to increase the sentiment of distrust by reason of the loss and ruin sustained by the holders of its stock, a large portion of whom were foreigners and many of whom were alike ignorant of our political organization and of our actual responsibilities.