Copy Boston January 10th 1848 My dear Sir: I beg to acknowledge your note of the 5th inst. Our Government and Country are approaching a crisis, which the former do not, I think, appreciate or understand. If we are to make up a judgement from the President's Message, or the Report of the Secretary of Treasury, we have the prospect of being in great financial difficulties before the end of the present year and probably at a much earlier period. The famine in Europe saved us from pecuniary embarrassment last year. The causes which are now operating to disturb our fiscal concerns, are the Mexican War, and the Revenue Tariff of 1844. The demand for ships as Transports for the Government, together with the vast amounts of money expended in various parts of the Country for Munitions of war gave an artificial stimulus to the business of the Country which worked very well, so long as the Treasury was full and the Revenue abundant for the wants of the Government. We are now deprived of a Market for large quantities of human food, which we enjoyed last year, without the prospect of shipping any large quantity the present year. As the ports of France will close again on the 1st of Febr, and the sliding scale on Wheat at a reduced rate will operate in England again on the 1st of March. The Cotton Crop of the United States will be much larger than that of last year, but it will yield much less money. The Revulsion and Bankruptcy in Great Britain (under their new system,) has reduced the value of all descriptions of merchandize to a point that will disturb our currency; large quantities will come here under the orders of Assignees, as well as Manufacturers, and continue for five or six months or so long as we can pay in Coin. [2] The pressure on the Money Market will continue until we have reduced the value of every item of Merchandize and property in the Country to such a point, as to prevent farther importations of the luxuries of life. The process has commenced. Gold continues to be sent to Europe. Bills in England at sight bring 11 ½ per cent. and 60 day bills 10 ½ % advance; and this state of exchange, with money for the best securities, at the rate of 15% per annum. How long this state of affairs can continue, I will not undertake to say. But this I will say, that the Government cannot carry on the Mexican War with Coin much longer, without destroying the business of the Country, and in the end breaking down its own credit - having annihilated its own resources. The operations of this war are becoming more onerous every day upon our fiscal concerns, and the day is near, when the distress will be felt throughout the whole country. People begin to see, because they feel the effects of the War; and I believe a majority of all the people in this Union are ready to sustain a bold and manly course to end it. The state of the Treasury is such as to make it essential that something should be done to enable the government to pay debts already incurred. I am opposed to the issue of irredeemable paper, and would therefore suggest the issue of not exceeding twenty millions of Treasury notes of denominations not less than $50. bearing interest of 5 2/5 or 6% fundable in Stock at 6%. payable in 10 or 15 years. I do not think the issue should exceed 20 millions. With this paper the Government must for the present time, pay its debts and receive its dues. You may be certain that the Government cannot continue to pay the expenditure of the War in Mexico in Gold [3] sent from here, or sell bills in Mexico. on our Government the proceeds of which are sent to London in Gold. There is but little difference in the operation, with the exception of credit obtained by the drafts on time made in Mexico. This War must be brought to a close; its effects are reaching the very vitals of the industry of the country. It is apparent that the present administration will not bring the war to a close; and in my opinion it is the duty of the honest and wise men of all shades of political opinion, to unite upon this common object and bring the matter to a close before the end of this Session of Congress. The Revenue will be large from the first of this month to the first of June, after which it will fall off and the Revenue for the year will be less in "48 than it was in "47. You shall have an estimate of the first three quarters Revenue in a day or two. Connected with the issue of Treasury notes and a National Debt is the issue of paying time, and the only available resource is that of Impost on Foreign Merchandize. Now, there should be adopted at once, a Tariff for Revenue, that would yield 40 millions, which can be so constructed as to produce this amount without affecting the people in any manner whatsoever, excepting to promote their prosperity. If you will analize our Foreign Imposts, you will find with the exception of Sugar, Tea & Coffee, that most of the articles imported are luxuries, and not what are deemed necessaries of life. The laboring classes are clothed entirely with our own fabrics and will continue [be], whether duties are augmented or diminished. I would propose on all articles that should pay ad valorem duties, such as Cottons, Wollens, Worsted, & [4] Hardware, in fact most of the Articles that now pay 20, 25 and 30 per.cent a duty of 35 per. cent. On wines, spirits, spices &c. &c. a specific duty, raised to a point equal to the highest duty paid under the Tariffs since 1824. I would also impose a duty on Tea and Coffee (specific) equal to 35 %. Dye stuffs and all articles used in our manufactures should be free, unless our Government wish to offer a bounty to the Manufacturers of Great Britain, as every article consumed by the fabricators [inserted: then] is admitted free of duty. If such a plan should be adopted, the Government (after the war is over) will be able to pay its ordinary expenses, the interest on the public debts, and establish a sinking fund to extinguish it. I would not consent to a duty on Tea and Coffee without the duties are raised on fine broad cloths, cottons, linens, and other luxuries, consumed entirely by the middling and wealthy classes. This is an important matter, and can be made clear by calling on the Secretary of the Treasury to furnish the details of the importations for three years, or for one year. I will say a word upon another point, which is affecting seriously our condition. The situation of Grt. Britain has been the subject of much discussion and speculation. I think there are many causes to which her embarrassments may be attributed, and among them, is that of sudden transition from her old system of revenue laws to a partial system of Free Trade. Such has been the commercial distress in England, that the productions of labor have fallen to a price, in many staple articles, lower than has been known at any former period. Even Iron has come down to a [5] price that will allow the laborer but just enough to keep soul and body together. This article will be yet lower and must disturb the Iron Interest in the United States. The same remark will apply to many staple articles, especially where the chief value of the article consists of labor. When we are under a system of low duties (particularly ad valorem) we are subject to the outpouring of the surplus products of all the pauper labor in Europe, which at once disturbs our Currency, and causes fluctuations that reach not only the people, but the Government. We have quite as much as the Country can bear, under Mr. Walker's Revenue System and when in addition, we add to it the Mexican War, I confess it [inserted: is] out of my power to foretell the consequences, unless the War is ended. I repeat that under the present Revenue system, with the War, the Government cannot sustain its credit, nor the people any measurable amount of their usual prosperity. Before the end of another half year, the War will become odious with the bulk of our people, and I hope and believe you will seize the first favorable opportunity to present the whole case to our Country in its true light. If Mr. Walker can derive any satisfaction from the reduction of the profits of the Manufacturers, he can have it in full measure now. Many of the best managed corporations have lately made up their accounts for six months, and are unable even to divide simple interest. I refer to Cotton Mills. The truth is, there has not been one dollar made for the last half year, and a reduction of wages and production [6] is now taking place. Capital must have something for its uses, and the end of all these experiments results in reducing the wages of labor. I should not now have written to you upon this subject of revenue, but I deem the issue of Treasury notes, and a loan, together with the revenue, one and the same. Strictly a currency question. Such it has always been here, and the late experience in England develops the same results. I will not offer any views of my own, on the course that should be adopted to secure peace with Mexico. You in Washington possess more knowledge and wisdom than exists anywhere else, or should possess it. And, in my opinion, a stand should be taken at once upon the question, and maintained. The Country will go with you and your friends, if the plan be a reasonable one. We must avoid extremes. The question cannot be settled by small men. They can get us into a war, but it is impossible for the little demagogues of the day to bring us out of it. Assuring you of the deep interest we all feel in the character of our Country, and the prosperity of every portion of it, and that we look to you to uphold the great principles, which were established by the adoption of the Constitution, and which you have so successfully maintained, I remain, Dear Sir, Very faithfully your friend & Obt Sevt. To Hon D. Webster Washington D.C. P.S. I have written a long letter in great haste. I wish Congress (both houses) could stand upon "Change" a single day and watch the money operations. I am quite certain I should stand free of the charge of being a panic maker.