such failure that it leaves the evils increasing at a double ratio and subsequent remedies must be so much the more stringent. All the causes of excess continue in full operation. Prices increase, the Government is compelled to purchase, and the purchases must be made by new issues. Each new operation aggravates the disease, and hesitation or delay is ruinous. The conditions, then, which any sufficient remedy must fulfill are, first, prompt and, secondly, effective reduction. To be effective the currency must be reduced at least to $150,000,000, already shown to be its extreme limit, and this reduction must be so prompt as to take effect before prices can undergo further increase. To meet these conditions I would respectfully propose that after the lapse of a reasonable time the issues of Treasury notes bearing date prior to the 1st of December, 1862, shall cease to be currency. This can be done with the least possible injury by following up the action of Congress at the last session and fixing a period of limitation for funding these notes. As the law now stands these notes are receivable for Government dues and the holder is entitled to fund the min 8 per cent. securities until the 22d of April next, after which date he can fund in 7 percents. I propose simply to fix a period of limitation for the exercise of this last-mentioned privilege by enacting that after the 1st of July next the privilege of funding these notes shall cease. Six months have already been allowed for investment in 8 per cent. securities according to the contract on the face of the note. Two months more will be allowed for investment in 7 percents, and if after so long a notice the holders do not choose to avail themselves of their privilege the good faith of the Government will stand clear of imputation. But it is essential to good faith that ample means should be provided by the Government to secure and pay the principal and interest of the securities in which the holders are required to invest. This can only be effected by an ample and permanent tax. Such a tax is the corner stone of the whole fabric. Without it the scheme has no foundation and can secure neither public confidence nor success. The proper extent of this tax will hereafter be considered. It is sufficient for the present to affirm that it must at least pay the interest on the entire public debt. To give completeness to the plain it would seem proper to provide measures for any future redundancy. We are happily relieved from this necessity by the patriotic proposal of several of the States to guarantee the whole or a large portion of the war debt of this Government. If all the States can be induced promptly to adopt this measures, means will thereby be furnished to absorb any excess of the new issue over the proper amount of currency. The guarantee of the States will enable this Government to reduce the interest of its bonds to 6 per cent., and if the States can be prevailed upon to extend the guarantee so as to cover the whole war debt, or at least $400,000,000 or $500,000,000 thereof, the saving in interest will be so great as to enable the Government in due time to extinguish the whole principal of its debt. Upon a debt of $500,000,000 this saving will be just $10,000,000. The ability to apply this amount to the principal instead of the interest affords suchges as to insure the favorable consideration both of Congress and of the States. An analysis of the scheme proposed will reduce it to three essential features:
First. A limitation upon the privilege of funding the notes issued prior to 1st December.
Second. A war tax.
Third. I guarantee by the States.
I. In considering the first of these features the first inquiry which suggests itself is, what will be the effect of this limitation? Will it