If we have not been quite so free as some of our neighbors in administering to Congress counsel, direction, castigation, with reference to the present critical state of our National Finances, our reticence has proceeded in part from diffidence as to our own ability to advise in the premises, in part from our confidence that Congress comprehended its duty and would fearlessly discharge it.

We have presumed it unnecessary to reiterate from day to day that stringent, productive taxation is an obvious and imperative necessity.  No system of Finance can be worth anything from which this vital element is excluded.  To issue ream after ream of promises while making no provision for their payment were as preposterous as to attempt filling a sieve with dew.  To run in debt in such a crisis is a hard necessity;  to run in debt without making provision for paying at least the interest were a ruinous absurdity.  Every loan of whatever nature must be backed by a tax sufficient to pay at least its interest, or the rate at which it can be negotiated must be practically ruinous.

As to the proposed making of Treasury Notes a legal tender, we ponder and hesitate.  It may do to give such a forced currency to a limited amount of these issues, provided such taxes are levied and provision made for funding them that their intrinsic, absolute worth shall be kept within three to five per cent of the gold they (by fiction) represent.  But let them be issued in such amount and under such conditions that they are seriously depreciated, and all commerce and business will be unhinged, while knavery and swindling will flourish under the protection of law.  Here, for example, is an executor or guardian who has an estate worth Half a Million Dollars in his hands, the property of a widow and orphans:  he may be enabled to pay this with four-fifths of the money actually in his hands, making a clear $100,000 out of those whose interests have been confined to his charge.  Call him a rogue if you will;  but what say you of the law which is his accomplice ?

We are quite aware that this is no novel expedient --that Revolutionary France fought and conquered central Europe on her boundless issues of Assignats, and that conservative England maintained her desperate struggle against Napoleon for years on a currency of irredeemable Bank Notes which ranged in value far below the gold they professed to represent.  But we are yet to be convinced that these examples have for us more of encouragement than of warning.

Our armies are soon to advance and fight and crush out the rebellion, we can stand almost any temporary derangement;  if we are to persist in getting ready to fight at some indefinite future period, it will be very hard to preserve our Finances from serious dilapidation.  Congress should make ample provision for the present urgency, and then wait to see what is to be done before providing for another fiscal year.

We trust the Secretary of the Treasury, the Finance Committee of the Senate, the Ways and Means of the House, and the loyal bankers and capitalists now gathered in Washington may confer freely and earnestly on the present crisis, with a fixed determination to come to an agreement at the earliest possible hour;  and when they do agree we trust Congress will promptly and heartily enact what they shall unite in deciding upon for the best.  In a time like this, a difference between the Government and the moneyed capitalists would be suicidal.  Let the disposition cherished and evinced on all sides be one of generous devotion, and the result cannot fail to be auspicious.

The following propositions from the Bank Committee were submitted to the Government on Saturday:

First:  A tax bill to raise, in the various modes of taxation, $125,000,000, over and above duties on imports.

Second:  Not to issue any demand Treasury notes, except those authorized at the extra session in July last.

Third:  Issue $100,000,000 six per cent Treasury notes at two years, in sums of $5 and upward, to be receivable for public dues to the Government, except duties on imports.

Fourth:  A suspension of the Sub-Treasury act, so as to allow the banks to become depositories of the Government of all loans, and to check on the banks, from time to time, as the Government may want money.

Fifth:  Issue six per cent twenty year bonds, to be negotiated by the Secretary of the Treasury, and without any limitation as to the price he may obtain for them in the market.

Sixth:  That the Secretary of the Treasury be empowered to make temporary loans to the extent of any portion of the funded stock authorized by Congress, with power to hypothecate such stock, and if such loans are not paid at maturity, to sell the stock hypothecated for the best price that can be obtained.

The Government is said to be favorable to the proposition of taxation, but thinks the rate of interest should be such as to avoid the heavy loss upon the stocks that would follow if they were sold in the market without limitation.  The remainder of the scheme is received un-favorably.  The Committee of Ways and Means is rapidly maturing a tax bill;  meanwhile, to carry on the Government for the next 90 days, the Demand Treasury Note bill must be passed.

The Bank Committees from Boston, New-York, and Philadelphia had a protracted conference on Saturday [January 11] with the Committee of Ways and Means.  The first scheme of financial relief they proposed was for the Government to throw its bonds on the market and sell them for what they would fetch.  The second was for the Government to borrow of the banks the amount it needed and to hypothecate its bonds as security for the loan, the banks to be at liberty to sell the bonds for what they would bring if the loan was not punctually paid. The [Sub-]Committee of Ways and Means, through Mr. Spaulding, objected to any and every form of “shinning” by Government through Wall or State streets to begin with;  objected to the knocking down of Government stocks to 75 or 60 cents on the dollar, the inevitable result of throwing a new and large loan on the market;  modestly claimed for Treasury notes as much virtue of par value as the notes of banks which have suspended specie payments posses, and which yet freely circulate in the trade of the North, and finished with firmly refusing to assent to any scheme which should permit a speculation by bankers in the Government securities, and particularly any scheme which should double the public debt of the country, and double the expenses of the war by damaging the credit of the Government to the extent of fifty per cent by sending it to “shin” for money through the shaving shops of New-York, Boston, and Philadelphia.  He affirmed his conviction as a banker and legislator, that it was the lawful policy as well as the manifest duty of the Government in the present exigency, to legalize as tender its fifty million issue of small Treasury notes and to add to this stock of legal tender immediately one hundred millions more.  He knew that this financial measure would carry the country through the war, and save its credit and its dignity;  at the same time he should insist upon a direct taxation, abundantly ample to pay the interest of every dollar of the public obligation, and to give this generation a clear show of a speedy liquidation of the public debt.

Washington, January 12, 1862.

The Committee of Banks from New-York, Boston, and Philadelphia again met with the Secretary of the Treasury, the Finance Committee of the Senate, and the Committee of Ways and Means of the House, at the Treasury Department, for consultation, last evening.  The Bank Committee submitted the following propositions:

First:  A tax bill to raise, in the various modes of taxation, $125,000,000, over and above duties on imports.

Second:  Not to issue any demand Treasury notes, except those authorized at the extra session in July last.

Third:  Issue $100,000,000 six per cent Treasury notes at two years, in sums of $5 and upward, to be receivable for public dues to the Government, except duties on imports.

Fourth:  A suspension of the Sub-Treasury act, so as to allow the banks to become depositories of the Government of all loans, and to check on the banks, from time to time, as the Government may want money.

Fifth:  Issue six per cent twenty year bonds, to be negotiated by the Secretary of the Treasury, and without any limitation as to the price he may obtain for them in the market.

Sixth:  That the Secretary of the Treasury be empowered to make temporary loans to the extent of any portion of the funded stock authorized by Congress, with power to hypothecate such stock, and if such loans are not paid at maturity, to sell the stock hypothecated for the best price that can be obtained.

The Government is favorable to their proposition of taxation, but thinks the rate of interest should be such as to avoid the heavy loss upon the stocks that would inevitably result if they were sold in the market without limitation.  The remaining portion of the scheme is regarded by the Government as a contrivance to get United States stocks on the market without limitation as to interest, so as to buy them in at a discount that would be ruinous to the public credit.  Treasury officers say that it is manifest that the stocks would run down to 75 cents on the dollar, and perhaps lower, and be likely to increase the debt at least one-fourth more than it ought to be upon any fair system of 6 per cent loans.

The Committee of Ways and Means is maturing its tax bills rapidly, and will report in a few days.  In the mean time, it will be necessary to pass the Demand Treasury Note bill in order to carry on the Government for the next ninety days, and until the tax bills and other loans can be made available.

Saturday, January 11, p.m.

The Stock movement continues to slow an enlarged volume, and the aggregate of the business of to-day has seldom been exceeded.  The speculative elements of the market in favor of a rise continued to exert their influence, and prices were rampant, the list showing an advance of ½ 4 per cent.  The improved feeling was exhibited at the opening of the call, Government and State stocks and railroad bonds sympathizing with the buoyant feature of the share market.  Operators have confidence that the Bank Committee, now in Washington, will, with the Committee of Ways and Means, concoct a financial scheme which will be satisfactory to Congress and to the country, and will involve a very large issue of Government paper, fundable but not redeemable, and made a legal tender for all payments.  This issue of one hundred or one hundred and fifty millions of paper money in addition to the present bank-note currency, disbursed all over the country for labor and the products of labor, must create a wide-spread activity in all departments of business, and a rapid inflation of current values of property.  Even in anticipation of this inflating process, prices of many descriptions of merchandise are advancing, and the stock market has caught the infection.  The bears have nearly all become converts, and like all new converts, are the most zealous in preparing themselves for the good times coming.

The feature of the day is the rapid decline in the premium of gold.  The street was flooded this morning with gold which had been bought up on speculation, which speculation not looking very promising, the promoters rushed to the street to sell out.  Some transactions were made early at 3@3½, but at the close the highest quotations were 2@2½ per cent, with little or no demand.  There is very little legitimate need for gold, and when Treasury Notes are made a legal tender there will be still less.  We see no reason why the Banks then should not resume, as their specie reserve would be impregnable as long as they received Treasury Notes on deposit and in payment of debts.

Some of the banks continue the un-patriotic course of embarrassing the Secretary of the Treasury by refusing to receive Treasury notes on deposit or in payment of notes.  This they do although they are debtors of the Government which they thus dishonor, and could pay that indebtedness in these notes.  They are drawing interest on a large amount of Government securities for which they have paid nothing, and which by suspension they practically refuse to pay for;  yet they will not put themselves in condition to meet a call of the Secretary by taking Treasury notes, which he is willing to receive in response to such call.  Common fair dealing as well as patriotism requires them to receive these notes and prepare themselves to pay their indebtedness to the Government.  The banks which are receiving these notes hold in the aggregate about four millions.

Money continues to increase in supply, and demand loans are easy at 5@7 per cent on good collaterals.  There is rather more doing in paper, the supply of which has been somewhat increased by speculative transactions in merchandise.  Short two-name paper has been done at 6@7 per cent, with single-name at 7@8 per cent.

The Bank specie is still increasing, and the mercantile loans are about stationary.  Individual deposits are accumulating.  The Monday [January 13] statement will show a contraction of circulation, as the banks generally do not put out their own notes when redeemed, but as far as possible use Treasury Notes.  City banks are very scarce, and there is some difficulty in getting a sufficiency of small for the purposes of trade.

Instructions had been issued at Washington to pay the interest on the public debt only in specie, and the principal past due in paper.  But as drafts are received for the redemption of past due Treasury notes, covering one amount for both principal and interest, it has been found impossible to discriminate, and payments of coin will now be confined simply to separate payments for interest where no principal is involved.

The Bank Committees of Boston, New-York, and Philadelphia are still in conference with the authorities at Washington upon the subject of the finances.  They are also arranging with Mr. Chase the details of the settlement of the second Treasury note loan, and the 6 per cent stock loan.  Among other schemes, the following is said to have emanated from the Bank Committees, but it will not, we think, be received with favor:

1.  That in lieu of the proposed issue of $150,000,000 of demand notes, and making them a legal tender, the Government shall issue $50,000,000 of demand notes, convertible into 7 per cent stock, redeemable in ten years and $150,000,000 of small notes, bearing 6 per cent interest, and payable in two years.

2.  That the Sub-Treasury law shall be repealed, and the banks shall be used as depositories of all the public money, except that received from customs.

3.  That Congress shall pass a joint resolution, declaring that it will pass a revenue bill providing for the raising of $125,000,000 per annum by taxation, &c., in addition to the receipts from customs.

4.  That the Secretary of the Treasury shall be authorized to negotiate further loans, without restriction as to terms or rate of interest, and also to obtain temporary loans hypothecating stocks in anticipation of sales.