He pointed to harmony between the different parts of the Union and to the settlement of the relations of labor in the Southern States, as essential conditions to the best management of the National obligations.
The leading feature of Mr.McCulloch's financial policy was the immediate and persistent contraction of the currency.

His argument in support of the policy, as given in his annual report, was not accepted by the country or by Congress without serious reservation; but his belief in the theory was strong and determined, and so far as the laws permitted he went on reducing the volume of paper in circulation until on the 12th of April, 1866, the sum of legal-tenders was brought down to $421,907,103.

Financiers of the Eastern cities favored the policy of contraction, although the logical plea was urged against them that the country would grow up to the volume of currency if not harried and disturbed by new legislation.

Manufacturers and the holders of their products, and many who had incurred pecuniary obligations in the expanded currency, took alarm at the rapidity with which the Treasury notes were withdrawn.

The argument was urged that the heavy taxes could not be met if the withdrawal were so rapid, and that industry and trade would in consequence be paralyzed by the enforced fall in prices.
These opinions and apprehensions were developed in the debate which led to the passage of the Act of April 12, 1866.