"I know that Senators here, for whose opinion I have the highest respect, who are probably more sanguine of our ability and capacity to do this than I am—many of those who have agreed with me and co- operated with me—think we are able and strong enough to fix the time for the absolute resumption of specie payments; but I have always doubted it. Indeed I have thought there was a better way to reach the great result. But if we cannot fix the time when we will redeem in coin, can we not give additional value to our United States noes, so as to gradually appreciate them to the coin standard, and thus advance toward specie payments if we cannot reach the goal? Because we cannot accomplish all that we have agreed to do in a given time, does that relieve us from the necessity of progressing in that direction? When we have before us a long journey that will take months to pass, perhaps years, shall we delay starting on that journey because we cannot reach the end of it in a year or two? Not at all. I therefore say that the time has arrived this moment when the United States ought to do something to advance its notes to the specie standard.

"Now what is that something? There are two propositions, and only two propositions, that have been made, aside from absolute coin redemption, that have had any strength whatever. One is to allow the United States notes to be received in payment of customs duties, the other is to allow United States notes to be converted into bonds. In regard to the first, I agree entirely that if the matter was open now to our choice and selection, one of the best methods we could adopt to advance our notes to par in gold would be by repealing that restriction which prevents the receiving of them for customs duties; but we are met there by the sacred pledge of the United States; we are met there by the fact that customs duties are, by the law of 1862, agreed to be collected in coin."

Mr. Bayard inquired:

"Does not the law provide that the customs duties shall be paid in coin or in notes of the United States? Is not the alternative given by the law?"

I replied:

"O, no. If the Senator will look at section 5 of the act of February 25, 1862—my friend from Vermont can turn to it in a moment—he will find that there is an express stipulation that the customs duties shall be collected in coin, and that this coin shall be set aside as a pledge—legal language is used—and shall only be applied, first, to the payment of the interest on the public debt, and, secondly, to the establishment of a sinking fund of one per cent. That was the basis of the obligation of the United States to pay in coin, and but for the fact that we collected our customs duties in coin during the war we could not have paid the interest on our public debt in coin, and therefore our bonds would have sunk out of sight. That pledge we cannot now violate; and I never have yet been able to bring my mind to the consideration of any proposition whatever which would ever shock or excite the fear of the public creditors in that respect. The safety of the public creditors consists in having a specific fund for the payment of their interest; the principal will take care of itself; and that fund has always been maintained in the darkest hours of the war. Except the propositions that have been made here and there to impair that fund by allowing a portion of the customs duties to be paid in currency, it has never been either invaded or threatened; but all such propositions have been voted down. I, therefore, while I see the policy and the expedience of allowing these notes to be used in payment of customs duties, simply say we are precluded from that remedy because we have mortgaged that fund, and we have no power to take them for any purpose except that which the mortgage stipulates.

* * * * *

"We then come to the redemption in bonds. There is the moral obligation, on the part of the United States, which has issued its notes payable in coin, but for reasons of public policy does not pay in coin, to give to its creditors its notes bearing interest in place of coin. The United States cannot plead inability to pay interest on its notes if it will not or cannot pay the principal. Why should not the United States give its obligation bearing interest just as any individual would have to do? There is a moral obligation which rests upon the United States every day of the year to every holder of these notes, because, although the United States has not said when it will redeem these notes in coin, yet it is bound to do what it can to give them additional value. Although it may not receive these notes for customs duties, why can it not receive these notes in payment of bonds? Why discriminate against these notes in the sale of bonds? The answer is, that during the war we were compelled to do it; and so we were. I very reluctantly yielded to that necessity. We were compelled to do it; but, sir, it was only expected that that would continue to the close of the war; and, practically, during the whole of the war these notes were received at par for bonds at par.

"If, therefore, we are to take any step toward specie payments, why not give to the holder of United States notes who demands it, a bond of the United States bearing a reasonable rate of interest in exchange for his notes? This should only be done after a reasonable time, so as to prevent any injury to the private contracts between debtor and creditor. When we cannot pay the coin, we are honorably and sacredly bound to pay in a bond of the United States, which in ordinary times would approximate to par in gold. In other words, this is a qualified redemption. The Senator from Indiana calls it a 'half-way measure.' It is a half-way measure in the right direction, and indeed it is practical specie payment."

The bill led to a long continuous debate which extended to the 6th of April, 1874. Several amendments were offered and adopted which enlarged the maximum of notes to $400,000,000, and greatly weakened the bill as a measure of resumption of specie payments. By reason of these amendments many of those who would have supported the bill as introduced voted against it on its passage, I among the number. The bill, however, passed the Senate by a vote of yeas 29 and nays 24. The title of the bill was changed to "A bill to fix the amount of United States notes and the circulation of national banks, and for other purposes." This change of title indicates the radical change in the provisions of the bill. Instead of a return to specie payments, it provided for an expansion of an irredeemable currency.

The bill, as it passed the Senate, was as follows:

"Be it enacted, etc.,, That the maximum amount of United States notes is hereby fixed at $400,000,000.

"Sec. 2. That forty-six millions in notes for circulation, in addition to such circulation now allowed by law, shall be issued to national banking associations now organized and which may be organized hereafter, and such increased circulation shall be distributed among the several states as provided in section 1 of the act entitled 'An act to provide for the redemption of the three per cent. temporary loan certificates and for an increase of national bank notes,' approved July 12, 1870. And each national banking association, now organized or hereafter to be organized, shall keep and maintain, as a part of its reserve required by law, one-fourth part of the coin received by it as interest on bonds of the United States deposited as security for circulating notes or government deposits; and that hereafter only one-fourth of the reserve now prescribed by law for national banking associations shall consist of balances due to an association available for the redemption of the circulating notes from associations in cities of redemption, and upon which balances no interest shall be paid."

The bill was taken up in the House of Representatives on the 14th of April, 1874, and, without any debate on its merits, was passed by the vote of 140 yeas and 102 nays.

On the 22nd of April, President Grant returned the bill to the Senate with his veto, and the Senate, upon the question, "Shall the bill pass notwithstanding the objections of the President of the United States," voted 34 yeas and 30 nays. I voted nay. The president of the Senate declared "that two-thirds of the Senators present not having voted in the affirmative the Senate refuses to pass the bill."

Thus, for that session, the struggle for resumption ended; but the debate in both Houses attracted popular discussion, and tended in the right direction. The evil effects of the stringency in monetary affairs, the want of confidence, the reduction of the national revenue, the decline of domestic productions, all these contributed to impress Congress with the imperative necessity of providing some measure of relief. Instead of inflation, of large issues of paper money by the United States and the national banks, there grew up a conviction that the better policy was to limit and reduce the volume of such money to an amount that could be maintained at par with coin.

During the canvass that followed I spoke in many parts of Ohio, confining myself chiefly to financial questions. The stringency of the money market which occurred the preceding year still continued, and great interest was manifested in the measures proposed during the preceding session, especially in the defeat of the bill to prevent the contraction of the currency. At the request of General Garfield I spoke in Warren in his Congressional district, where he met, for the first time, a decided opposition. I insert his autograph letter, the original being in his familiar hand writing:

"Hiram, Ohio, September 25, 1874. "Dear Senator:—In accordance with the arrangement which I made with you and with the central committee, we have posted you for a mass meeting at Warren, on Saturday afternoon, October 10. I hope I shall not embarrass you by suggesting that in your speech you take occasion to say a few words in reference to my standing and public service as a representative. It will do much to counteract the prejudice that a small knob of persistent assailants have created against me. I write also to inquire if you will be willing to speak at another place the same evening. If so, we are very anxious to have you do so. Please telegraph me to Garrettsville, Ohio, and oblige,

"Very truly yours, "J. A. Garfield."

CHAPTER XXV. BILL FOR THE RESUMPTION OF SPECIE PAYMENTS. Decline in Value of Paper Money—Meeting of Congress in December, 1874—Senate Committee of Eleven to Formulate a Bill to Advance United States Notes to Par in Coin—Widely Differing Views of the Members—Redemption of Fractional Currency Readily Agreed to—Other Sections Finally Adopted—Means to Prepare for and Maintain Resumption —Report of the Bill by the Committee on Finance—Its Passage by the Senate by a Vote of 32 to 14—Full Text of the Measure and an Explanation of What It Was Expected to Accomplish—Approval by the House and the President.

When Congress met in December, 1874, the amount of United States notes outstanding was $382,000,000. The fractional notes outstanding convertible into legal tenders amounted to $44,000,000, and the amount of national bank notes redeemable in lawful money was $354,000,000, in all $780,000,000. Each dollar was worth a fraction less than 89 cents in coin. While these notes were at a discount coin did not and could not circulate as money. The government exacted coin for customs duties and paid coin for interest on its bonds. If there was an excess of coin received from customs to pay interest then the excess was sold at a premium. If the receipts from customs were insufficient to pay the interest on bonds, the government had to buy the coin and pay the premium. The people who were demanding more money to relieve the stringency did not see that the best way to get more money into circulation was to adopt measures that would make United States notes and bank notes equal to coin, when all three forms of money would enter into circulation and thus give them more money and all kinds of equal value.

While our paper money was depreciated the gold and silver bullion from our mines went abroad and was converted into foreign coin, while a large portion and perhaps a majority of our people demanded more paper money, which declined in value in exact proportion to its increase. During the war vast expenditures compelled us to use paper money; the return of peace and the excess of revenue over expenditures should have been promptly followed by coin payments or notes payable in coin. We delayed this process so long that the popular mind rested content with depreciated money, but the panic of 1873, and the feverish speculation which preceded it, convinced the great body of our business men that there was no remedy for existing evils but a return to specie payments.

Another bill concerning currency and free banking was reported by Horace Maynard, of Tennessee, on the 29th of January, 1874, from the committee on banking and currency of the House of Representatives, which provided for free banking and a gradual reduction and cancellation of United States notes by the issue of notes payable in gold in two years from the passage of the bill. This was fully debated in the House of Representatives and amended and passed. In the Senate it was reported by me from the committee on finance, with a substitute which provided for free banking and that on and after the 1st of January, 1877, and holder of United States notes might present them for payment either in coin or five per cent. bonds of the United States, at the suggestion of the Secretary of the Treasury. This substitute was amended in the Senate by striking out all provisions for the redemption of United States notes, leaving the measure one for free banking alone. The House disagreed to the amendments and a committee of conference was appointed, which resulted in a measure fixing the amount of United States notes outstanding at $382,000,000, and making no provision for their redemption. It was a crude and imperfect measure. I voted for it because it provided for a redistribution of national banks among the states. I said: "Because I cannot get a majority of both Houses of Congress to agree to specie resumption I ought not therefore to refuse to vote for a bill on the subject of banking and currency." The bill was approved by the President on the 20th of June, 1874. This long struggle prepared the way for the result accomplished at the next session.

When Congress met in December, 1874, the feeling that the remedy for existing evils was the return to specie payments, was general among Republican Senators and Members. The abortive efforts of the previous session and the veto of President Grant of one of the bills referred to contributed to it. At the first Republican conference I called attention to the necessity of our uniting, if possible, on some measure that would advance United States notes to par in coin and moved that a committee of eleven Senators be created to formulate a bill for that purpose. It was agreed to, and, as the names of the Senators composing the committee have already been published, I feel justified in repeating them: The committee consisted of Senators John Sherman (chairman), William B. Allison, George S. Boutwell, Roscoe Conkling, George F. Edmunds, Thomas W. Ferry, F. T. Freylinghuysen, Timothy O. Howe, John A. Logan, Oliver P. Morton, and Aaron A. Sargent.

When the committee met it was agreed that each member should state how far he would go in the direction of specie resumption. When these statements were made it was manifest that the divergence of opinion was so great that an agreement was almost impossible. Yet, the necessity of an agreement was so absolute that a failure to agree was a disruption of the Republican party.

The first section of the act to provide for the resumption of specie payments, which related to the coinage and issue of fractional silver under the act of February 21, 1853, and the redemption of an equal amount of fractional currency outstanding should be redeemed, and was readily agreed to. This fractional currency was so worn and filthy, and it cost so much to reissue, that by general consent its destruction was agreed to, and its replacement by bright new silver coin, which followed, was heartily welcomed.

The second section was an unjust concession to the miners of gold. It repealed the coinage charge for converting standard gold bullion into coin. This charge had been maintained, not only to cover the cost of coining, but to prevent the exportation of American coins. If the coins were of less value than the bullion of which they were made, however small the difference, they would not be exported while bullion could be had for exportation. The concession was made and the charge for coinage of gold was prohibited.

The free banking provisions in the third section were not seriously contested. The contraction of the volume of United States notes as national bank notes increased, was one of the chief subjects of disagreement. It was finally agreed that this contraction should extend only to the retirement of United States notes in excess of $300,000,000.

The most serious dispute was upon the question whether United States notes presented for redemption and redeemed could be reissued. On the one side it was urged that, being redeemed, they could not be reissued without an express provision of law. The inflationists, as all those who favored United States notes as part of our permanent currency were called, refused to vote for the bill if any such provision was inserted, while those who favored coin payments were equally positive that they would vote for no bill that permitted notes once redeemed to be reissued. This appeared to be the rock upon which the party in power was to split. I had no doubt under existing law, without any further provision, but that United States notes could be reissued. It was finally agreed that no mention should be made by me for or against the reissue of notes, and that I must not commit either side in presenting the bill.

The date for general resumption of specie payments on all United States notes was fixed on the first of January, 1879, four years from the framing of this bill. The important and closing clause of the bill was referred to Mr. Edmunds and myself. It provided the means to prepare for and to maintain resumption. It placed under the control of the Secretary of the Treasury all the surplus revenue in the treasury, and gave him full power to issue, sell and dispose of, at not less than par in coin, any of the bonds described in the refunding act. We were careful to select phraseology so comprehensive that all the resources and credit of the government were pledged to redeem the notes of the United States, as fully and completely as our Revolutionary fathers pledged to each other their lives, their fortunes, and their sacred honor, in support of the declaration of American independence.

After every sentence and word of this bill had been carefully scrutinized, I was authorized by every member of the committee to submit it to the committee on finance, and to report it from that committee as the unanimous act of the Republican Senators. We naturally expected some support from Mr. Bayard and other Democratic Senators, who, no doubt, were in favor of specie payments, but they perhaps thought it best not to share the risk of the measure.

I reported the bill from the committee on finance on the 21st of December, 1874, and gave notice that on the next day I would call it up with a view to immediate action. On the 22nd, after the morning business, I moved to proceed to the consideration of the bill, and gave notice that I intended to press it to its passage, from that hour forward, at the earliest moment practicable. It was well understood that the bill was the result of a Republican conference. It was taken up by the decisive vote of 39 yeas to 18 nays.

It was not my purpose to do more than to present the provisions of the bill. My brief statement led to a desultory debate, participated in almost exclusively by Democratic Senators, the Republican Senators remaining silent. Several votes were taken, each showing a majority of more than two-thirds in favor of the bill and against all amendments. It passed the Senate without change by the vote of 32 yeas to 14 nays.

I here insert the bill as introduced and passed, with my statement in support of its provisions:

"AN ACT TO PROVIDE FOR THE RESUMPTION OF SPECIE PAYMENTS. "Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is hereby authorized and required, as rapidly as practicable, to cause to be coined, at the mints of the United States, silver coins of the denominations of ten, twenty-five, and fifty cents, of standard value, and to issue them in redemption of an equal number and amount of fractional currency of similar denominations, or, at his discretion, he may issue such silver coins through the mints, the sub-treasuries, public depositaries, and post offices of the United States; and, upon such issue, he is hereby authorized and required to redeem an equal amount of such fractional currency, until the whole amount of such fractional currency outstanding shall be redeemed.

"Sec. 2. That so much of section three thousand five hundred and twenty-four of the Revised Statutes of the United States as provides for a charge of one-fifth of one per centum for converting standard gold bullion into coin is hereby repealed; and hereafter no charge shall be made for that service.

"Sec. 3. That section five thousand one hundred and seventy-seven of the Revised Statutes, limiting the aggregate amount of circulating notes of national banking associations, be, and hereby is, repealed; and each existing banking association may increase its circulating notes in accordance with existing law, without respect to said aggregate limit; and new banking associations may be organized in accordance with existing law, without respect to said aggregate limit; and the provisions of law for the withdrawal and redistribution of national bank currency among the several states and territories are hereby repealed. And whenever, and so often, as circulating notes shall be issued to any such banking association, so increasing its capital or circulating notes, or so newly organized as aforesaid, it shall be the duty of the Secretary of the Treasury to redeem the legal tender United States notes in excess only of three hundred millions of dollars, to the amount of eighty per centum of the sum of national bank notes so issued to any banking association as aforesaid, and to continue such redemption as such circulating notes are issued until there shall be outstanding the sum of three hundred million dollars of such legal tender United States notes, and no more. And on and after the first day of January, anno Domini eighteen hundred and seventy-nine, the Secretary of the Treasury shall redeem in coin the United States legal tender notes then outstanding, on their presentation for redemption at the office of the assistant treasurer of the United States in the city of New York, in sums of not less than fifty dollars. And to enable the Secretary of the Treasury to prepare and provide for the redemption in this act authorized or required, he is authorized to use any surplus revenues from time to time in the treasury not otherwise appropriated, and to issue, sell, and dispose of, at not less than par in coin, either of the descriptions of bonds of the United States described in the act of Congress approved July fourteenth, eighteen hundred and seventy, entitled 'An act to authorize the refunding of the national debt,' with like qualities, privileges, and exemptions, to the extent necessary to carry this act into full effect, and to use the proceeds thereof for the purposes aforesaid. And all provisions of law inconsistent with the provisions of this act are hereby repealed."

I said:

"Mr. president, I do not intend to reopen the debate on financial topics of last session. That debate was carried to such great length that it was not only exhaustive, but it was exhausting, not only mentally but physically. The Senate is composed of the same persons who shared in that debate, and it is utterly idle for us, in this short session, to reopen it and to invite the discussion of the various topics presented in that debate. The Senate is now within less than three months, a little more than two months, of its adjournment, and there is a general feeling throughout the country, shared by all classes of people, that this Congress ought to give some definite notice to the people of this country as to their purpose in the important topics embraced in this bill; and I say to Senators on all sides of the House that this bill contains enough to accomplish the important object declared by the title of the bill, and this without reviving all the troublesome and difficult questions which were discussed at the last session. It contains a few simple propositions which may be separated from the mass of financial topics discussed at the last session. Its purpose is declared upon the title of the bill, 'An act to provide for the resumption of specie payments.' Every word, every line, and every provision, of this bill is in harmony with that title. It will tend to promote the resumption of specie payments. It may fall short in many particulars of the desire of some Senators; and it does go further in that direction than some Senators were willing to support at the last session. It is a bill which demands reasonable concession from every Member of the Senate. If we undertake now to seek to carry out the individual views of any Senator, we cannot accomplish the passage of any bill to promote this object, and therefore this bill has demanded of everyone who has consented to it thus far a surrender of some portions of his opinions as to measures and means to accomplish the great purpose. I will consider my duty done, so far as this bill is concerned, by simply stating its provisions and calling attention to the character of those provisions, without entering into a single topic that gave rise to the long discussion at the last session.

"The bill is intended to provide for the resumption of specie payments. The first section of the bill provides for the resumption of specie payments on the fractional currency. It is confined to that subject alone. It so happens that at this particular period of time the state of the money market, the state of the demand for silver bullion, and more especially the recent action of the German Empire, which has demonetized silver and thus cheapened that product, enables us now, without any loss of revenue, without any sacrifice, to enter the market for the purchase of bullion and resume specie payments on our fractional currency. The market price of bullion to-day will justify the government of the United States, without any sacrifice, at a price about equivalent to, or perhaps a trifle above, our fractional currency—scarcely a shadow above our fractional currency—to purchase silver bullion in the money markets of the world, mostly of our own production, perhaps entirely of our own production. This bill simply directs that the Secretary of the Treasury shall purchase this bullion and shall coin silver coin and substitute that in the place of fractional currency. This section is recommended not only by the Secretary of the Treasury and the President of the United States, but I believe will meet the general concurrence of every Member of the Senate, and we fortunately are enabled to embrace the present time to commence this operations without any loss to the government, except perhaps the cost of the coinage of this silver may have to be paid out of the treasury of the United States. That coinage may be done in the ordinary course of business without any increase of expenditures. The mints of the United States are now prepared, immediately upon the passage of this bill, to resume the coinage of silver coins of all the legal denominations. Therefore the committee has provided that the Secretary of the Treasury shall proceed to coin the silver coins, and in one of several ways to issue them in place of fractional currency.

"I need not dwell further upon this section, because I believe it will meet with the general assent of the Senate. It provides for the immediate resumption of specie payments upon the fractional currency, or at least as immediate as possible; that is, as soon as the government of the United States can, in the mints of the United States, coin the silver coin. That process may continue one, two, or three years, how long we cannot tell, depending entirely upon the force that may be employed in that direction. It takes a much longer time to coin these small coins than gold coins, and the operation will probably take more time than it would to coin any considerable amount of gold coin."

Mr. Hamilton, of Maryland, inquired:

"I would ask the Senator if there is authority to reissue that fractional currency?"

I said:

"I will come to that in a moment. The second section of this bill simply removes an inducement that now exists to export our gold bullion from the United States to Great Britain, where, by the long established laws of that country, they coin money free of charge. This section involves the surrender of about $85,000 a year of revenue; that is, the government of the United States received last year for coining gold coins, $85,000, or one-fifth of one per cent. on forty-five millions of gold coined. The only sacrifice of revenue, therefore, by the second section of the bill, is the sacrifice or surrender of $85,000, which heretofore has been levied upon those who produce gold bullion in order to convert it into coin. In the opinion of many men, among them the Secretary of the Treasury, the director of the mint, and perhaps a large number of Senators heretofore, this will tend, in a slight degree at any rate, to prevent the exportation of the gold of our own country into foreign parts, because when the government of the United States undertakes to put gold bullion in the form of gold coin without additional charge the tendency will inevitably be for the gold bullion to flow into the mints for coinage, and being put into the form of American coin, it is thought by a great many people that this will tend to prevent its exportation. To the extent it does so it prepares us for specie payments. That is the whole of the second section.

"The third section of the bill contains only two or three affirmative propositions. The first is that after the passage of this act banking shall be free. Perhaps there is no idea stronger in the minds of the American people than a feeling of hostility against a monopoly—a privilege that one man or set of men can enjoy which is denied to another man or set of men. Under the law as it now stands banking is substantially free in the southern and some of the western states; but banking is not free in the great commercial states, in the older states, where wealth has accumulated for ages. This may be a mere sentimental point, but it is well enough to meet it; and by the operation of this bill banking is made free, so that there will be no difficulty hereafter for any corporation organized as a national bank either to increase its circulation or for banks, to be organized under the provisions of existing law, to issue circulating notes to any extent within the limits and upon the terms and provisions of the banking law. This section, therefore, by making banking free, provides for an enlargement of the currency in case the business of the community demands it, and in case any bank in the United States may think it advisable or profitable to issue circulating medium in the form of bank notes, under the conditions and limitations of the banking law. Coupled with that is a provision, an undertaking, on the part of the United States, that as banks are organized or as circulating notes are issued, either by old or new banks, the government of the United States undertakes to retire eighty per cent. of that amount of United States notes. In other words, it proposes to redeem the United States notes to the extent of eighty per cent. of the amount of bank notes that may be issued; and here is the first controversial question that arises on this bill and the first that is settled.

"It may be asked if we provide for the issue of circulating notes to banks, why not provide for the retirement of an equal amount of United States notes. The answer is that under the provisions of the banking act, by the law as it now stands, a bank cannot be organized and maintained in existence unless the reserve which is in that bank, or required for that bank in the ordinary course of business, either on its deposits or circulation, is at least equal to twenty per cent. of the amount of its circulating notes, so that it was believed, according to the judgment of the best business men of the country, and I may say with the comptroller of the currency, that the retirement of eighty per cent. of the amount of bank notes is fully equivalent to keeping the amount of circulating medium in actual circulation on the same footing, so that this provision of the bill neither provides for a contraction nor expansion of the currency, but leaves the amount to be regulated by the business wants of the community, so that when notes are issued to a bank eighty per cent. of the amount in United States notes is redeemed, and this process continued until United States notes are reduced to three hundred millions."

Mr. Schurz asked:

"Will the Senator permit me to ask him a question in reference to this section? When the eighty per cent. of greenbacks are retired will they be destroyed and never used again?"

I replied:

"I will speak of that in a moment in connection with other sections. Now, Mr. president, that is all there is in regard to banking in this bill and also in regard to the retirement of the United States notes until the time for the resumption of specie payments comes, when this bill provides for actual redemption in coin of all notes presented. It has always been a question in the minds of many people as to whether it is wise to fix a day for specie payments. That matter was discussed at the last session of Congress by many Senators, and the general opinion seemed to be that if we would provide the means by which specie payments would be resumed it might not be necessary to fix the day; but, on the other hand, it is important to have our laws in regard to the currency fix a probable time, or a certain time, when everybody may know that his contracts will be measured by the coin standard. We also know, by the example of other nations which have found themselves in the condition in which we are now placed, and by some of the states when specie payments were suspended, that they have adopted a specific day for the resumption of specie payments. In England, by the bank act of 1819, they provided for the resumption of specie payments in 1823, making four years. In our own states—in New York, in Ohio, in nearly all the states—when there has been a temporary suspension of specie payments a time has been fixed when the banks were compelled to resume, and this bill simply follows the example that has been set by the states, by England, and by other nations, when they have been involved in a like condition.

"This bill also provides ample means to prepare for and to maintain resumption. I may say the whole credit and money of the United States is placed by this bill under the direction of the proper executive officers, not only to prepare for but to maintain resumption, and no man can doubt that if this bill stands the law of the land from this time until the 1st day of January, 1879, specie payments will be resumed, and that our United States notes will be converted at the will of the holder into gold and silver coin.

"These are all the provisions contained in this bill. They are simple and easily understood, and every Senator can pass his judgment upon them readily.

"Now I desire to approach a class of questions that are not embraced in this bill. Many such, and I could name fifty, are not included in this bill, and I may say this: That if there should be a successful effort, by the Senate of the United States, to ingraft any of this multitude of doubtful or contested questions upon the face of this bill it would inevitably tend to its defeat. I am free to say that if I were called upon to frame a bill to accomplish the purpose declared in the title of this bill, I would have provided some means of gradual redemption between this and the time fixed for final specie payments. All these means are open to objection.

"There have been three different plans proposed to prepare for specie payments, and only three. They are all grouped in three classes. One is what is called the contraction plan. The simplest and most direct way to specie payments is, undoubtedly, the gradual withdrawal of United States notes or the contraction of the currency. Now, we know very well the feeling with which that idea is regarded, not only in this Senate, but all through the country. It is believed to operate as a disturbing element in all the business relations of life; to add to the burden of the debtor by making scare that article in which he is bound to pay his debts; and there has been an honest, sincere opposition to this theory of contraction. Therefore, although it may be the simplest and the best way to reach specie payments, it is entirely omitted from this bill.

"The second plan, that I have favored myself often, and would favor now, if I had my own way, and had no opinion to consult but my own, is the plan of converting United States notes into a bond that would gradually appreciate our notes to par in gold. That has always been a favorite idea of mine. There is nothing of that kind in this bill, except those provisions which authorize the Secretary of the Treasury to issue bonds to retire the greenbacks as bank notes are issued; and it also authorizes the Secretary of the Treasury to issue bonds to provide for and to maintain resumption. I therefore have been compelled to surrender my ideas on this bill in order to accomplish a good object without using these means that have been held objectionable by many Senators.

"The third plan of resumption has been favored very extensively in this country, which is the plan of a graduated scale for resumption in coin or bullion; what I call the English plan. That is, that we provide now for the redemption, at a fixed rate or scale or rates, of so much gold for a specific sum of United States notes. At present rates we would give about $90 of gold for $100 of greenbacks, and then provide for a graduated scale by which we would approach specie payments constantly, and reach it at a fixed day. This may be called a gradual redemption. This, also, is objectionable to many persons, from the idea that it compels us to enter the money markets of the world to discount our own paper. It is an ideal objection, but a very strong objection; an objection that has force with a great many people. We have undertaken to redeem these notes in coin, and it is at least a question of doubtful ethics whether we ought to enter into the markets of the world and buy our own notes at a discount. Although that plan has been adopted in England and successfully carried into execution, yet there is a strong objection to it in this country, and therefore that mode is abandoned.

"Either of these plans I could readily support; but they have met and will meet with such opposition that we cannot hope to carry them or ingraft them in this bill without defeating it. We have then fallen back on these gradual steps: First, to retire the fractional currency; second, to reduce United States notes as bank notes are increased; and then to rest our plan of redemption upon the declaration, made on the faith of the United States, that at the time fixed by the bill we will resume the payment of the United States notes in coin at par. That is the whole of this bill."

On the 7th of January, 1875, the bill was considered in the House of Representatives and, after a very brief conversational debate, passed by the vote of yeas 136, nays 98.

On the 14th day of January, 1875, the President sent a message to the Senate approving the bill but also containing recommendations of further legislation upon matters that had been carefully excluded from the bill. He added at the close of the message this paragraph:

"I have ventured upon this subject with great diffidence, because it is so unusual to approve a measure—as I most heartily do this, even if no further legislation is attainable at this time—and to announce the fact by message. But I do so, because I feel that it is a subject of such vital importance to the whole country, that it should receive the attention of, and be discussed by, Congress and the people, through the press and in every way, to the end that the best and most satisfactory course may be reached of executing what I deem most beneficial legislation on a most vital question to the interests and the prosperity of the nation."

Thus, after a memorable debate, extending through two sessions of Congress, a measure of vital importance became a law, and when executed completely accomplished the great object proposed by its authors. The narrative of the steps leading to resumption under this act will be more appropriate hereafter.

CHAPTER XXVI. RESUMPTION ACT RECEIVED WITH DISFAVOR. It Is Not Well Received by Those Who Wished Immediate Resumption of Specie Payments—Letter to "The Financier" in Reply to a Charge That It Was a "Political Trick," etc.—The Ohio Canvass of 1875— Finance Resolutions in the Democratic and Republican Platforms—R. B. Hayes and Myself Talk in Favor of Resumption—My Recommendation of Him for President—A Democrat Elected as Speaker of the House— The Senate Still Republican—My Speech in Support of Specie Payments Made March 6, 1876—What the Financial Policy of the Government Should Be.

The resumption act was generally received with disfavor by those who wished the immediate resumption of specie payments. It was the subject of much criticism in the financial journals, among others "The Financier," which described it as a political trick, an evasion of a public duty, and as totally inadequate for the purpose sought to be accomplished. I took occasion to reply to this article in the following letter:

"United States Senate Chamber,} "Washington, January 10, 1875.} "Dear Sir:—As I am a subscriber to 'The Financier,' you will probably allow me to express my surprise at the course you have pursued in respect to the finance bill recently passed by Congress. Claiming as you do to be a 'monetary and business' journal, you might be expected to treat fairly a measure affecting so greatly the interests you represent; but you have not done so. You have treated it as a political trick, an evasion, a disgrace to Congress. You complained that it was passed without debate and that its inception and passage were shameful. But as you say in your last number 'that it is well to examine it hopefully, to find what good may have been done, if any, although from a bad motive,' I take the liberty to correct errors even in your 'hopeful' view of the law, so that you may be more hopeful still. You assume that the Secretary of the Treasury is not authorized to issue five per cent. gold bonds to prepare for and to maintain resumption, because the amount of five per cent. bonds authorized in the act of 1870 is nearly exhausted. This is an error. The secretary can issue either four and a half or five per cent. gold bonds to an amount sufficient to execute the law. The act of 1870 is only referred to for the 'description' of the bonds to be issued, and the only limit to their amount is the sum necessary, and the only limit to their sale is that they must not be sold at less than par in coin.

"You say that one trick of the bill is 'that there is no provision for carrying on the withdrawal of legal tenders after their maximum reaches $300,000,000.' Now this 'trick' was advocated by you one year ago; it was voted for by every specie paying Member of Congress at the last session, and nearly every writer on the subject has contended that if the legal tenders were reduced to $300,000,000, and the treasury was supported by a reasonable reserve, specie payments could be resumed and maintained. Besides, no one believes that $100,000,000 of bank notes will be issued under this act, and this provision only relieves some people from an idle fear of an improbable event. You must have noticed that when banks retire their notes, as they have done and will do rapidly, this is a reduction of the currency, while every issue of notes to new or old banks involves a retirement of a ratable amount of United States notes. What you say about playing with a movable 'reserve' is equally wrong. Neither the fractional currency nor the 'eighty- two million' redeemed can be reissued, and I stated so when the bill was pending under debate, and no lawyer could put a different construction upon the bill. As to United States notes, a part of the $300,000,000 redeemed after resumption of specie payments, we did refuse to provide whether they could be reissued or not, and we acted wisely. When the question is hereafter determined by Congress, the controversy will be whether the notes when reissued shall have the legal tender quality, or be simple treasury notes receivable for public dues.

"Last session the public press scolded at our long and fruitless debate on finances, and I agreed with the press. This session the same Senators, enlightened by the long debate and heeding the call of the press, gave to the subject the most careful and deliberate consideration, and agreed upon this bill without much debate, and yet the press is not happy. The act does not go as far as I wished, but everything in it is right in itself, and is in the right direction. Its chief merit is that it establishes a public policy which no political party or faction will be strong enough to overthrow, and which if it had not been adopted now, the Democratic party in the next Congress would have defeated. The pretense that the Democratic party, as represented in the next House, would have favored any bill for specie payments is utterly false. Therefore the measure grants to the Secretary of the Treasury powers enough to execute it, but if we can secure the aid of a Democratic House we can make it certain and effective.

"Very truly yours, "John Sherman. "Editor of 'Financier.'"

In the Ohio canvass of 1875 the resumption act became the chief subject of controversy. R. B. Hayes, after having previously served for four years as governor of the state, was against nominated for that office. William Allen, then governor, was renominated upon the Democratic ticket, in opposition to the resumption act and in favor of fiat money, upon which issue the election mainly turned.

The eighth resolution of the Democratic platform was as follows;

"That the contraction of the currency heretofore made by the Republican party, and the further contraction proposed by it, with a view to the forced resumption of specie payment, have already brought disaster to the business of the country, and threaten it with general bankruptcy and ruin. We demand that this policy be abandoned, and that the volume of currency be made and kept equal to the wants of trade, leaving the restoration of legal tenders to par with gold, to be brought about by promoting the industries of the people and not by destroying them."

The Republican convention in their second resolution declared:

"That a policy of finance be steadily pursued, which, without unnecessary shock to business or trade, will ultimately equalize the purchasing capacity of the coin and paper dollar."

Ex-Governor Hayes and I opened the state canvass in the county of Lawrence on July 31, 1875, and took strong ground in favor of the resumption act. At the beginning it appeared that the people were not quite prepared for any measure looking to resumption, but as the contest progressed and the subject was fully and boldly presented by Mr. Hayes and myself, the tide of opinion ran in our favor and Hayes was elected by a small majority. The ex-governor did not evade the issue, but in every speech supported and urged the policy of resumption as a matter of the highest interest.

In the approaching nomination for President, Governor Hayes was frequently spoken of as a candidate to succeed General Grant, and I also was mentioned in the same connection, but, feeling confident that Mr. Hayes would be a stronger candidate than myself, and fully determined not to stand in his way, on the 21st of January, 1876, I wrote a letter to a personal friends, and the Member of the Senate from the district in which I live, in which I urged the nomination of Governor Hayes as the most available candidate in the approaching presidential canvass. This letter no doubt contributed to his strength and prevented any possibility of the division of the vote of Ohio in the convention. The letter I give in full:

"Washington, D. C., January 21, 1876. "Dear Sir:—Your letters of the 2nd and 10th inst. were duly received, and I delayed answering the first sooner partly from personal reasons, but mainly that I might fully consider the questions raised by you as to the approaching presidential contest, the importance of which cannot be overstated. The election of a Democratic President means a restoration to full power in the government of the worst elements of the rebel Confederacy.

"The southern states are to be organized, by violence and intimidation, into a compact political power only needing a small fragment of the northern states to give it absolute control where, by a majority rule of the party, it will govern the country as it did in the time of Pierce and Buchanan.

"If it should elect a President and both Houses of Congress, the constitutional amendments would be disregarded, the freedmen would be nominally citizens but really slaves; innumerable claims, swollen by perjury, would be saddled upon the treasury, the power of the general government would be crippled, and the honors won by our people in subduing rebellion would be a subject of reproach rather than of pride. The only safeguard from these evils is the election of a Republican President, and the adoption of a liberal Republican policy which should be fair and even generous in the south, but firm in the maintenance of all the rights won by the war. Our election in Ohio last fall shows that even under the most adverse circumstances we can win on this basis.

"Every movement made by this Democratic House of Representatives is an appeal to every man who ever voted with the Republican party to rally to its support again, and to every man who fought in the Union army to vote with us to preserve the results of his victory.

"All we need is such a presidential ticket as will give assurance that we mean to stand by our principles, and that will administer the government honestly and economically.

"As to candidates, the drift of public opinion is rapidly reducing the list and has already settled adversely the chances of many of them. Above all, it has positively closed the question of a third term. The conviction that it is not safe to continue in one man for too long a period the vast powers of a President, is based upon the strongest reasons, and this conviction is supported by so many precedents set by the voluntary retirement at the end of a second term of so many Presidents that it would be criminal folly to disregard it. I do not believe General Grant ever seriously entertained the thought of a third term, but even if he did, the established usage against it would make his nomination an act of suicide.

"It would disrupt our party in every Republican state.

"Happily for us we do not need to look for the contingency of his nomination.

"Among the candidates now generally named, I have no such preference that I could not heartily support either of them. They are men of marked ability, who have rendered important public services, but, considering all things, I believe the nomination of Governor Hayes would give us the more strength, taking the whole country at large, than any other man. He is better known in Ohio than elsewhere, and is stronger there than elsewhere, but the qualities that have made him strong in Ohio will, as the canvass progresses, make him stronger in every state. He was a good soldier, and, though not greatly distinguished as such, he performed his full duty, and I noticed, when traveling with him in Ohio, that the soldiers who served under him loved and respected him. As a Member of Congress he was not a leading debater, or manager in party tactics, but he was always sensible, industrious, and true to his convictions and the principles and tendencies of his party, and commanded the sincere respect of his colleagues. As a governor, thrice elected, he has shown good executive abilities and gained great popularity, not only with Republicans but with our adversaries. On the currency question, which is likely to enter largely into the canvass, he is thoroughly sound, but is not committed to any particular measure, so as to be disabled from co-operating with any plan that may promise success. On the main questions, protection for all in equal rights, and the observance of the public faith, he is as trustworthy as any one named. He is fortunately free from the personal enmities and antagonisms that would weaken some of his competitors, and he is unblemished in name, character or conduct, and a native citizen of our state.

"I have thus, as you requested, given you my view of the presidential question, taken as dispassionately as if I were examining a proposition in geometry, and the result drawn from these facts, not too strongly stated, is that the Republican party in Ohio ought, in their state convention, to give Governor Hayes a united delegation instructed to support him in the national convention, not that we have any special claim to have the candidate taken from Ohio, but that in General Hayes we honestly believe the Republican party of the United States will have a candidate for President who can combine greater popular strength and a greater assurance of success than other candidates, and with equal ability to discharge the duties of President of the United States in case of election. Let this nomination be thus presented, without any wire pulling or depreciation of others and as a conviction upon established facts, and I believe Governor Hayes can be and ought to be nominated. But if our state is divided or is not in earnest in this matter it is far better for Governor Hayes and the state that his name be not presented at all. We have never sufficiently cultivated our state pride, with every reason for indulging it, and thus our proper influence has been wasted and lost. Now we have a good opportunity to gratify it, and at the same time contribute to the common good. Remember me kindly to personal friends in the Senate.

"Very truly yours, "John Sherman. "Hon. A. M. Burns."

The election of Members of Congress in 1874 resulted in the choice of a large majority of Democrats in the House of Representatives of the 44th Congress, the term of which commenced on the 4th of March, 1875. A majority of the Senate being still largely Republican, it became difficult to pass any measure of a political character during that Congress. President Grant, on the 17th of February, 1875, issued his proclamation convening the Senate at 12 o'clock on the 5th of March following, to receive and act upon such communications as might be made to it on the part of the Executive. The session continued until the 24th of March. It was largely engaged in questions affecting the State of Louisiana, which had been the scene of violent tumult and almost civil war. As these events are a part of the public history of the country I do not deem it necessary to refer to them at length. These disturbances continued during the whole of that Congress, and, in 1876, approached the condition of civil war.

The regular meeting occurred on the 6th of December, 1875, when Thomas W. Ferry, of Michigan, was elected president pro tempore of the Senate, and Michael C. Kerr, a Democratic Representative from the State of Indiana, was elected by a large majority as speaker of the House.

This political revolution was no doubt caused largely by the financial panic of 1873, and by the severe stringency in monetary affairs that followed and continued for several years. Many financial measures of the highest importance in respect to the public credit were acted upon, but were generally lost by a disagreement between the two Houses. I do not deem it necessary to refer to the political questions that greatly excited the public mind during that session. Congress was largely occupied in political debate on questions in respect to the reconstruction of the states lately in rebellion, upon which the two Houses disagreed. Among other measures which failed was the act amendatory of the acts authorizing the refunding of the national debt, which passed the Senate but was not considered by the House.

During this session of Congress all sorts of financial plans were presented in each House, but all were aimed, directly or indirectly, at the resumption act, although that act itself was adopted as a remedy for existing financial evils, and especially to deal with and prevent the recurrence of such a panic as that of 1873. I took occasion, on the presentation of the resolution of the New York Chamber of Commerce in favor of the resumption of specie payments, at the time provided by the resumption act, to discuss the policy of that measure more fully than I thought it expedient to do so when, as a bill, it was pending in the previous Congress. This speech was made in the Senate on the 6th of March, 1876. It was the result of great labor and care, and was intended by me to be, and I believe it is now, the best presentation I have ever been able to offer in support of the financial policy of the government, and especially in support of the resumption of specie payments. I said:

"Mr. president, I have taken the unusual course of arresting the reference to the committee of finance of the memorial of the Chamber of Commerce of New York, in order to discuss, in an impersonal and nonpartisan way, one of the questions presented by that memorial, and one which now fills the public mind and must necessarily soon occupy our attention. That question is, 'Ought the resumption act of 1875 be repealed?' The memorial strongly opposes such repeal, while other memorials, and notably those from the boards of trade of New York and Toledo, advocate it. These opposing views are supported in each House of Congress, and will, when our time is more occupied than now, demand our vote.

"And, sir, we are forced to consider this question when the law it is proposed to repeal is only commencing to operate, now, three years before it can have full effect—during all which time its operation will be under your eye and within your power—and while the passions of men are heated by a presidential combat, when a grave questions, affecting the interests of every citizen of the United States, will be influenced by motives entirely foreign to the merits of the proposition. And the question presented is not as to the best means of securing the resumption of a specie standard, but solely whether the only measure that promises that result shall be repealed. We know there is a wide and honest diversity of opinion as to the agency and means to secure a specie standard.

"When any practicable scheme to that end is proposed I am ready to examine it on its merits; but we are not considering the best mode of doing the thing, but whether we will recede from the promise made by the law as it stands, as well as refuse all means to execute that promise. If the law is deficient in any respect it is open to amendment. If the powers vested in the secretary are not sufficient, or you wish to limit or enlarge them, he is your servant, and you have but to speak and he obeys. It is not whether we will accumulate gold or greenbacks or convert our notes into bonds, nor whether the time to resume is too early or too late. All these are subjects of legislation. But the question now is whether we will repudiate the legislative declaration, made in the act of 1875, to redeem the promise made and printed on the face of every United States note, a promise made in the midst of war, when our nation was struggling for existence, a promise renewed in March, 1869, in the most unequivocal language, and finally made specific as to time by the act of 1875.

"And let us not deceive ourselves by supposing that those who oppose this repeal are in favor of a purely metallic currency, to the exclusion of paper currency, for all intelligent men agree that every commercial nation must have both; the one as the standard of value by which all things are measured, which daily measures your bonds and notes as it measures wheat, cotton, and land; and also a paper or credit currency, which, from its convenience of handling or transfer, must be the medium of exchanges in the great body of the business of life. Statistics show that in commercial countries a very large proportion of all transfers is by book accounts and notes, and more than nine-tenths of all the residue of payments is by checks, drafts, and such paper tools of exchange.

"Of the vast business done in New York and London not five per cent. is done with either paper money or gold or silver, but by the mere balancing of accounts or the exchange of credits. And this will be so whether your paper money is worth forty per cent. or one hundred per cent. in gold. The only question is whether, in using paper money, we will have that which is as good as it promises, as good as that of Great Britain, France, or Germany; as good as the coin issued from your mints; or whether we will content ourselves with depreciated paper money, worth ten per cent. less than it promises, every dollar of which daily tells your constituents that the United States in not rich enough to pay more than ninety per cent. on the dollar for its three hundred and seventy millions of promises to pay, or that you have not courage enough to stand by your promise to do it.

"Nor are we to decide whether our paper money shall be issued directly by the government or by banks created by the government; nor whether at a future time the legal tender quality of United States notes shall continue. I am one of those who believe that a United States note issued directly by the government, and convertible on demand into gold coin, or a government bond equal in value to gold, is the best currency we can adopt; that it is to be the currency of the future, not only in the United States, but in Great Britain as well; and that such a currency might properly continue to be a legal tender, except when coin is specifically stipulated for it.

"But these are not the questions we are to deal with. It is whether the promise of the law shall be fulfilled, that the United States shall pay such of its notes as are presented on and after the 1st day of January, 1879, in coin; and whether the national banks will, at the same time, redeem their notes either in coin or United States notes made equal to coin; or whether the United States shall revoke its promise and continue, for an indefinite period, to still longer force upon the people a depreciated currency, always below the legal standard of gold, and fluctuating daily in its depreciation as Congress may threaten or promise, or speculators may hoard, or corner, or throw out your broken promises. It is the turning point in our financial history, which will greatly affect the life of individuals and the fate of parties, but, more than all, the honor and good faith of our country.

"At the beginning of our national existence, our ancestors boldly and hopefully assumed the burden of a great national debt, formed of the debts of the old confederation and of the states that composed it; and, with a scattered population and feeble resources, honestly met and paid, in good solid coin, every obligation. After the War of 1812, which exhausted our resources, destroyed our commerce, and greatly increased our debt, a Republican administration boldly funded our debt, placed its currency upon the coin basis, promptly paid its interest, and reduced the principal; and within twenty years after that war was over, under the first Democratic President, paid in coin the last dollar, both principal and interest, of the debt. And now, eleven years after a greater war, of grander proportions, in which, not merely foreign domination threatened us, but the very existence of our nation was at stake, and after our cause has been blessed with unexampled success, with a country teeming with wealth, with our credit equal to that of any nation, we are debating whether we will redeem our promises, according to their legal tenor and effect, or whether we will refuse to do so and repeal and cancel them.

"I would invoke, in the consideration of this question, the example of those who won our independence and preserved it to us, to inspire us so to decide this question that those who come after us may point to our example of standing by the public faith now solemnly pledged, even though to do so may not run current with the temporary pressure of the hour, or may entail some sacrifice and hardship.

"What then is the law it is proposed to repeal? I will state its provisions fully in detail, but the main proposition—the essential core of the whole—is the promise, to which the public faith is pledged, that the United States will redeem in gold coin any of its notes that may be presented to the treasury on and after the 1st day of January, 1879. This is the vital object of the law. It does not undertake to settle the nature of our paper money after than, whether it shall be reissued again, whether it shall thereafter be a legal tender, nor whether it shall or shall not supersede bank notes. All this is purposely left to the future. But it does say that on and after that day the United States note promising to pay one dollar shall be equal to the gold dollar of the mint.

"The questions then arise—

"First. Ought this promise be performed? "Second. Can we perform it? "Third. Are the agencies and measures prescribed in the law sufficient for the purpose? "Fourth. If not, what additional measures should be executed?

"Let us consider these questions in their order, with all the serious deliberation that their conceded importance demands.

"And first, ought this promise be fulfilled?

"To answer this we must fully understand the legal and moral obligations contained in the notes of the United States. The purport of the note is as follows:

'THE UNITED STATES PROMISES TO PAY THE BEARER ONE DOLLAR.'

"This note is a promise to pay one dollar. The legal effect of this note has been announced by the unanimous opinion of the Supreme Court of the United States, the highest and final judicial authority in our government.

"The legal tender attribute given to the note has been the subject of conflicting decisions in that court, but the nature and purport of it is not only plain on its face, but is concurred in by every judge of that court and by every judicial tribunal before which that question has been presented.

"In the case of Bank vs. Supervisors, 7 Wallace, 31, Chief Justice Chase says:

'But, on the other hand, it is equally clear that these notes are obligations of the United States. Their name imports obligation. Every one of them expresses upon its face an engagement of the nation to pay to the bearer a certain sum. The dollar note is an engagement to pay a dollar, and the dollar intended is the coined dollar of the United States, a certain quantity in weight and fineness of gold or silver, authenticated as such by the stamp of the government. No other dollars had before been recognized by the legislation of the national government as lawful money.'

"Again, in the case of Bronson vs. Rhodes, 7 Wallace, 251, Chief Justice Chase says:

'The note dollar was the promise to pay a coined dollar.'

"In the Legal Tender Cases, 12 Wallace, 560, Justice Bradley says:

'It is not an attempt to coin money out of a valueless material, like the coinage of leather, or ivory, or cowrie shells. It is a pledge of the national credit. It is a promise by the government to pay dollars; it is not an attempt to make dollars. The standard of value is not changed. The government simply demands that its credit shall be accepted and received by public and private creditors during the pending exigency. . . .

'No one supposes that these government certificates are never to be paid, that the day of specie payments is never to return. And it matters not in what form they are issued. . . . Through whatever changes they pass, their ultimate destiny is to be paid.'

"In all these legal tender cases there is not a word in conflict with these opinions.

"Thus, then, it is settled that this note is not a dollar, but a debt due; a promise to pay a dollar in gold coin. Congress may define the weight and fineness of a dollar, and it has been done so by providing a gold coin weighing twenty-five and eight-tenths grains of standard gold nine-tenths fine. The promise is specific and exact, and its nature is fixed by the law and announced by the court. Here I might rest as to the nature of the United States note; but it is proper that I state the law under which it was issued and the subsequent laws relating to it.

"The act of February 25, 1862, gave birth to this note as well as the whole financial policy of the war. The first section of that act authorizes the Secretary of the Treasury to issue, upon the credit of the United States, United States notes to the amount of $150,000,000, payable to bearer at the treasury of the United States. The amount of these notes was subsequently increased during the war to the maximum sum of $450,000,000, but the nature and character of the notes was the same as the first ones. The enlargement of the issue did not in the least affect the obligation of the United States to pay them in coin. This obligation was recognized in every loan law passed during the war; and to secure the note from depreciation the amount was carefully limited, and every quality was given to it to maintain its value that was possible during the exigencies of the war. I might show you, from the contemporaneous debates in Congress, that at every step of the war the notes were regarded as a temporary loan, in the nature of a forced loan, but a loan cheerfully borne, and to be redeemed soon after the war was over.

"It was not until two years after the war, when the advancing value of the note created an interest to depreciate it in order to advance prices for the purpose of speculation, that there was any talk about putting off the payment of the note. The policy of a gradual contraction of the currency with a view to specie payments was, in December, 1865, concurred in by the almost unanimous vote of the House of Representatives, and the act of April 12, 1866, authorized $4,000,000 of notes a month to be retired and canceled. No one then questioned either the policy, the duty, or the obligation of the United States to redeem these notes in coin.

"Why has not this obligation been performed? How comes it that fourteen years after these notes were issued, and eleven years after the exigency was over, we are debating whether they shall be paid, and when they shall be paid? We may well pause to examine how this plain and positive obligation has so long been deferred by a nation always sensitive to the public honor.

"The fatal commencement of this long delay was in this provision of the act, approved March 3, 1863, as follows:

'And the holders of United States notes issued under, and by virtue of, said acts, shall present the same, for the purpose of exchanging the same for bonds as therein provided, on or before the 1st day of July, 1863, and thereafter the right so to exchange the same shall cease and determine.'

"Thus, under the pressure of war, and the plausible pretext of a statute of limitations, the most essential legal attribute of the note was taken away. This act, though convenient in its temporary results, was a most fatal step, and for my part in acquiescing in, and voting for it, I have felt more regret than for any act of my official life. But it must be remembered that the object of this provision was not to prevent the conversion of notes into bonds, but to induce their conversion. It was the policy and need of the government to induce its citizens to exchange the notes freely for the bonds, so that the notes might again be paid out to meet the pressing demands of the war. It was believed that if this right to convert them was limited, in time this would cause them to be more freely funded; and Mr. Chase, then Secretary of the Treasury, anxious to prevent a too large increase of the interest of the public debt, desired to place in the market a five per cent. bond instead of a six per cent. bond. The fatal error was in not changing the right to convert the note into a five per cent. bond instead of a six per cent. bond. This was, in fact, proposed in the committee on finance, but it was said that a right to convert a note into a bond at any time, was not so likely to be exercised as if it could only be exercised at the pleasure of the government. And this plausible theory to induce the conversion of notes into bonds was made the basis, after the war was over, for the refusal of the United States to allow the conversion of its notes into bonds, and has been the fruitful cause of the continued depreciation and dishonor of United States notes for the last five years, during which, our five per cent. bonds have been at par with gold, while our notes rise and fall in the gamut of depreciation from six to twenty per cent. below gold.

"Notwithstanding that the right to convert notes into bonds was taken away, yet, in fact, they were, during the war, received par for par for bonds; and after the war was over all the interest- bearing securities were converted into bonds; but the notes—the money of the people—the artificial measure of value, the most sacred obligation, because it was past due, was refused either payment or conversion, thus cutting it off from the full benefit of the advancing credit of the government, and leaving to it only the forced quality of legal tender in payment of debts.

"Shortly after the war was over, and notably during the presidential campaign of 1868, the question arose whether the bonds of the United States were payable in coin or United States notes. Both notes and bonds were then below par in coin, the notes ranging from sixty- seven to seventy-five cents in coin; and five per cent. bonds from seventy-two to eighty cents in coin. Here again the opportunity was lost to secure the easy and natural appreciation of our notes to the gold standard. Had Congress then authorized the conversion of notes into bonds, when both were depreciated, both would have advanced to par in gold; but, on the one hand, it was urged that this would cause a rapid contraction, and, on the other, that the right to convert the note into a bond was not specie payment; it was only the exchange of one promise for another. It was specie payment they very much favored, but did not have the wisdom then to secure. If the advocates for specie payment had then supported a restoration of the right to convert notes into bonds, they would have secured their object with but little opposition. But all measures to fund the notes at the pleasure of the holder were defeated, and, instead, there was ingrafted into the act to strengthen the public credit—

"First, a declaration 'that the faith of the United States is already pledged to the payment in coin, or its equivalent, of all the obligations of the United States not bearing interest, known as United States notes, and of all the interest-bearing obligations of the United States,' except such as by the law could be paid in other currency than gold and silver.

"Second, 'and the United States also solemnly pledges its faith to make provision, at the earliest practicable period, for the redemption of the United States notes in coin.'

"Here again, the obligation of the government to pay these notes in coin was recognized, its purpose declared, and the time fixed 'as early as practicable.' What was the effect of this important act of Congress? Without adding one dollar to the public debt, or the burden of the debt, both bonds and notes rose in value. Within one year, the bonds rose to par in gold, making it practicable to commence the refunding of six per cent. bonds into five per cent. bonds. The notes rose under the stimulus of this new promise, in one year, from seventy-six cents to eighty-nine cents in gold, but no steps whatever were made to redeem them.

"The amount of bank notes authorized was increased fifty-four millions. The executive department pursued the policy of redeeming debts not due, and did, from an overflowing treasury, reduce very largely the public debt, but no steps whatever were taken to advance the value of our notes. The effect of the act of 1869 was exhausted on the adjournment of Congress in March, 1870, when the United States notes were worth eighty-nine cents in gold; and thereabouts, up and down, with many fluctuations, they have remained to this day. The bondholder, secure in the promise to him, is happy in receiving his interest in gold, with his bond above par in gold. The note holder, the farmer, the artisan, the laborer, whose labor and production is measured in greenbacks, still receives your depreciated notes, worth ten per cent. less than gold you promised him 'at the earliest day practicable.' The one has a promise performed and the other a promise postponed.

"Thus we stood when the panic of 1873 came upon us; with more paper money afloat than ever circulated before in any country of the world. Even then, had we stood firmly, the hoarding tendency of the panic would have advanced our notes toward the gold standard, and, in fact, did so during the months of September and October, until the premium on gold had fallen to eight per cent. But, sir, at this critical moment, the Secretary of the Treasury, acting, no doubt, in good faith, but I think without authority of law, issued twenty-six millions more United States notes—part of the notes retired and canceled under previous acts. And now, notwithstanding all the talk about the contraction of the currency, we have not withdrawn one-half of this illegal issue. On the 1st of September, 1873, we had three hundred and fifty-six million notes outstanding. Three months afterward, we had three hundred and eighty-two million; and now we have three hundred and seventy-one million.

"Sir, it was under the light of these events, after the fullest discussion ever given in Congress, of any question—after debate before the people during the recess of Congress, and full deliberation last winter—this act was passed. There was and is now great difference of opinion as to the details, but the vital promise made to the note holder to make his note as good as gold in January, 1879, was concurred in by a large majority of both Houses, and by many who opposed the bill as too slow in its operation. This act of honor and public faith was applauded by the civilized world and concurred in by our constituents, the doubts only being as to the machinery to carry it into effect. The time was fixed by those who most feared resumption, and no one proposed a longer time. My honorable friend from Indiana [Mr. Morton] truly said (in the recent campaign in Ohio) that he participated in framing it; and he and those who agreed with him fixed the time so remote as to excite the unfounded charge that the bill was a sham, a mere contrivance to bridge an election.

"And now, sir, to recapitulate this branch of the question, it is shown that the holder of these notes has a promise of the United States, made in February, 1862, to pay him one dollar in gold coin; that the legal purport of this promise has been declared by the Supreme Court; that we have taken away from this note one of the legal attributes given it, which would long since have secured its payment in coin—that when the note was authorized and issued, it was understood as redeemable in coin when the war was over; that our promise to pay it was renewed in 1869—'at as early a day as practicable;' that by reason of our failure to provide for its payment, it is still depreciated below par more than one-tenth of its nominal value; that we renewed this promise, and made it definite as to time, by act of 1875; that it is a debt due from the United States, and in law and honor due now in coin. Yet it is proposed to recall our promise to redeem this note in coin three years hence. I say, sir, this would be national dishonor. It would destroy the confidence with which the public creditor rests upon the promises contained in your bonds. It would greatly tend to arrest the process by which the interest on your bonds is reduced. It would accustom our people to the substitution of a temporary wave of popular opinion for its written contract or promise. It would weaken in the public mind that keen sense of honor and pride which has always distinguished the English-speaking nations in dealing with public obligations.

"An old writer thus describes 'public credit:'

'Credit is a consequence, not a cause; the effect of a substance, not a substance; it is the sunshine, not the sun; the quickening something, call it what you will, that gives life to trade, gives being to the branches and moisture to the root; it is the oil of the wheel, the marrow in the bones, the blood in the veins, and the spirits in the heart of all the negoce, trade, cash, and commerce in the world.'

'It is produced, and grows insensibly from fair and upright dealing, punctual compliance, honorable performance of contracts and covenants; in short, it is the offspring of universal probity.

'It is apparent even by its nature; it is no way dependent upon persons, parliament, or any particular men or set of men, as such, in the world, but upon their conduct and just behavior. Credit never was chained to men's names, but to their actions; not to families, clans, or collections of men; no, not to nations. It is the honor, the justice, the fair dealing, and the equal conduct of men, bodies of men, nations, and people, that raise the thing called credit among them. Wheresoever this is found, credit will live and thrive, grow and increase; where this is wanting, let all the power and wit of man join together, they can neither give her being nor preserve her life.

'Arts have been tried on various occasions in the world to raise credit; art has been found able with more ease to destroy credit than to raise it. The force of art, assisted by the punctual, fair, and just dealing abovesaid, may have done much to form a credit upon the face of things, but we find still the honor would have done it without the art, but never the art without the honor. Nor will money itself, which, Solomon says, answers all things, purchase this thing called credit or restore it when lost. . . .

'Our credit in this case is a public thing. It is rightly called by some of our writers national credit. The word denominates its original. It is produced by the nation's probity, the honor and exact performing national engagements.'

"And, sir, passing from considerations of public honor, there are many reasons of public policy which forbid the repeal of the act of 1875. That act was generally regarded as the settlement of a financial policy by which at least the party in power is bound, and upon the faith of which business men have conducted their affairs and made their contracts. Debts have been contracted and paid with the expectation that at the time fixed the gold standard would measure all obligations, and a repeal of the act would now reopen all the wild and dangerous speculation schemes that feed and fatter upon depreciated paper money. The influence that secures this repeal will not stop here. If we can recall our promise to pay our notes outstanding why should we not issue more? If we can disregard our promise to pay them, why shall we regard our promise not to issue more than $400,000,000, as stipulated for by the act of 1864? If we can reopen the question of the payment of our notes, why may we not reopen the question as to the payment of our bonds? Is the act of 1869 any more sacred than the act of 1875? And if we can reopen these questions, why not reopen the laws requiring the payment of either interest or principal of the public debt? They rest upon acts of Congress which we have the power to repeal. If the public honor cannot protect our promise to the note holder, how shall it protect our promise to the bondholder? Already do we see advocated in high places, by numerous and formidable organizations, all forms of repudiation, which, if adopted, would reduce our nation to the credit of a robber chief—worse than the credit of an Algerine pirate, who at least would not plunder his own countrymen. And if the public creditor had no safety, what chance would the national banks—creations of our own and subject to our will—have in Congress? It has already been proposed to confiscate their bonds, premium and all, as a mode of paying their notes with greenbacks. What expedient so easy if we would make money cheap and abundant? Or, if so extreme a measure could be arrested, what is to prevent the permanent dethronement of gold as a measure of value, and the substitution of an interconvertible currency bond, bearing three and sixty-five hundredths per cent. interest, as a standard of value; and when it become too expensive to print the notes to pay the interest, reduce the rate. Why not? Why pay three and sixty- five hundredths per cent., when it is easier to print three? It is but an act of Congress. And when the process of repudiation goes so far that your notes will not buy bread, why then declare against all interest, and then, after passing through the valley of humiliation, return again to barter, and honor, and gold again.

"Sir, if you once commence this downward course of repudiation then there is but one ending. You may, like Mirabeau and the Girondists, seek to stem the torrent, but you will be swept away by the spirit you have evoked and the instrument you have created. You complain now of a want of confidence which makes men hoard their money. Will you, then, destroy all confidence? No, sir, no; the way to restore confidence is to inspire it by fulfilling your obligations. You cannot make men lend you; you cannot make men sell you anything —either bread, or meat, or wool, or iron, or anything that is or that can be created—except for that which they choose to take. You may depreciate the money which you offer, but it will only take more of it to buy what you want. It is true that the creditor may, by your laws, be compelled to take your money however much you depreciate it, but he cannot buy back that which he sold, or its equivalent in other necessaries of life, and thus he is cheated of part of what he sold. During the war, when money was depreciating, many a simple man gladly counted his gains as he sold his goods or crops at advancing prices, but he found out his mistake when, with his swollen pile, he tried to replace his stock in trade or laid in his supplies. Sir, this policy exhausts itself in cheating the man who buys or sells or loans on credit, who produces something to sell on credit; whether that something be food or clothing; whether it be a necessity or a luxury of life. Productive labor, honest toil, whether of the farmer or the artisan, is deeply interested in credit. It is credit that gives life and competition to trade; and credit is destroyed by every scheme that impairs, delays, or even clouds an obligation.