S.M. Brice

Financial Catechism

Chapter IV.

BANKS AND BANKING.



Q.  If the usury for money was reduced by law to 1 per cent. per annum, would it not put an end to banking and deprive the people of the benefits derived therefrom in their commercial business to an extent which would counterbalance all they now suffer by the present rate of usury ?

A.  No.  If the usury on money was reduced to 1 per cent. per annum it would reduce its purchasing power in the same ratio compared with labor.  All the products of labor would advance in price in the same proportion, giving more money to the laborer, and curtailing, to the same extent, the necessity for hiring the use of money in order to transact the entire business of the country.  It would tend to the establishment of a ready-pay system, and dispense with the necessity of paying dealers a large per cent. on the goods they sell in order to cover losses by bad debts and usury.  If it would put an end to banks of issue it would cover the civilized world with blessings.

Q.  What !  Would you destroy all banks of issue and restrict the circulating money to gold and silver alone ?

A.  Yes.  We would wind up and stop all banks of issue, now and forever ;  but we would not restrict the money of account to gold and silver.

Q.  Is it not a matter of fact that there is not enough gold and silver in the world to meet the demands of commerce ?

A.  Yes.  This is true with regard to the amount as well as the impracticability of transporting it from place to place in order to meet the demands of trade.

Q.  Then, must we not have banks and permit them to issue bills of credit based on coin, to circulate as a representative of the coin in the commerce of the country ?

A.  No.  If the bills of credit only represented the amount of gold and silver in the vaults of the banks, it would be just as insufficient in quantity to meet the demands of trade as the gold and silver.

Q.  Would it not be entirely safe to allow the banks to issue two or three dollars in bills for each dollar in gold and silver in their vaults, thereby increasing the amount of money necessary to meet the demands of trade ?

A.  All past experience proves that it would not.  In the whole history of banking there never has been a bank established on a so-called specie basis, that has not proved in the end to be a vicious swindling machine, by which the people have been robbed under cover of law.  This statement is corroborated by the reports of investigating committees, and even by the reports of the officers of banking associations, showing conclusively that there is no safety in any banking system controlled for the benefit of a few individuals, no matter what pretentious they may make to pay coin on demand.

After the winding up of the old United States Bank, in 1836, hundreds of state banks sprung up all over the country, all professing to pay coin on demand.  They obtained $40,000,000 of the money of the government on deposit and suspended coin payments in less than one year, swindling the government out of nearly the whole amount of the money deposited with them, besides many millions of loss to individuals.

In the report of the Bank Commissioners of the State of Connecticut, for a period of twelve years, running from 1837 to 1849, the average condition of the banks of that State is set forth thus :

Average capital...............................$8,688,295.55
Average liabilities...........................13,129,230.37
Average specie.................................. 418,719.70
Average loans and discounts..........11,669,457.44

This report shows that notwithstanding these banks pretended to pay coin on demand during all this period, it was absolutely impossible for them to do it, as the average amount of their loans to the people was more than twenty-four times the amount of coin they had in their vaults.

In March, 1809, a committee was appointed by the Legislature of Rhode Island, to investigate and report the condition of the banks of that State.  The first one they examined was the Farmers’ Exchange Bank of Gloucester.  They reported this bank as having $580,000.00 of its notes in circulation, and only $86.16 cents of coin in its vaults to redeem them with.  Soon after this a general suspension of the banks of the New England States occurred, and they were all found to be in about the same condition as the Bank of Gloucester ;  without any specie or any other available thing except their own notes, which were worthless.

Notwithstanding this constant and systematic swindling, the people tolerated these institutions until 1863 ;  when the government levied a tax of 10 per cent. on their circulation, which drove them out of existence.

Q.  Did not the banks come promptly to the aid of the government at the commencement of the war of the rebellion and furnish the money necessary for its prosecution through 1861 and 1862 ?

A.  No.  The proposition made by the banks to the government in 1861, was, that they (the banks) would furnish their notes as money to carry on the war provided the government would give them 6 per cent. bonds at 80 cents on the dollar.  When the government refused to make this shameful sacrifice, the banks suspended specie payment and never after resumed.  Instead of coming forward with their gold and silver, as the soldiers did with their lives, to save the nation from destruction, they locked it up in their vaults or shipped it to other nations for safe keeping, until the hour of danger had passed.  The government issued $50,000,000 treasury notes, payable in coin on demand, but did not make them full legal-tender ;  and as we have previously shown, the banks refused to receive them unless at a discount, so determined were they to embarrass the government and compel it to acceed to their terms or suffer destruction at the hands of a more honorable foe.  But Secretary Chase checkmated this fiendish movement by making the treasury notes receivable for customs dues.

Q.  As the State banks were taxed out of existence, was it not necessary that the government should authorize corporate banking associations to emit their bills of credit based on government bonds, in order to furnish the people with a safe and stable currency of uniform value in all parts of the United States ?

A.  No.  The government bonds are based upon the wealth of the nation, and are no better than a treasury mote issued on the-same basis ;  nor are they as good as the treasury note when it is made a full legal-tender, and in such denominations as are convenient for circulation.  The bond is an evidence of debt, drawing usury from the laborers of the country, and making them poorer every year.  The legal tender treasury note, without usury, is so much money circulating among the people, stimulating industry and adding so much to the productive capacity of the nation, without robbing the laborer of all the net proceeds of his honest toil, to pay usury to a favored few for the privilege of using their individual notes as a circulating medium.

Q.  Is not our present national banking system preferable to any system we have ever had for supplying the country with a circulating medium ?

A.  So far as it relates to the safety of the note-holders and uniformity of value in all parts of the United States, it is preferable to the old state-bank system.  As the government vouches for the payment of the notes, the bill-holders are as secure as if they were issued by the government direct, but depositors are no more safe by depositing in national banks than in state or individual banks.  But another question of greater importance presents itself than the safety of bill-holders and depositors.  The national banking system is based upon a national debt.  In order to establish this system permanently, it is necessary to perpetuate such a debt, which would be a greater disaster to the country than all the losses ever sustained by the people through the rottenness and swindling under the old state-bank system.  Under that system, the banks would break and the people suffer loss, but they gained wisdom by experience ;  but a banking system based on a perpetual national debt is constantly eating like a cancer, and will as surely destroy the vitality of production as the cancer is to destroy the life force of the animal organization.

Q.  Does not the use of a national debt, when circulating as money, add so much to the wealth of the nation and thereby become a perpetual blessing instead of an endless curse ;  does it not make the nation richer instead of poorer ?

A.  That depends on how the debt is used.  If the government would issue its treasury notes without usury, to the full amount of the debt, making them a full legal-tender, such notes would be based upon the whole of the wealth of the nation, and would perform all the functions of money, and would indeed add so much to the wealth of the nation by increasing the value of all the products of labor in a corresponding ratio.  By this increase in the market value of the products of labor, the labor which produces the wealth would be better paid and the increased wealth diffused through all classes of society.  In this case the debt would prove a blessing, for those who create the wealth would be permitted to participate in its benefits.  In proof of this proposition we need only refer to the period from 1864 to 1866, when the circulation of the country was about $50.00 per capita, nearly the whole amount of which was treasury notes in one or other of their forms ;  some bearing usury and some without.

At this period labor was better paid, and the individual indebtedness was less per capita than it ever was before, or ever has been since in the United States.

If the government had pursued this course the people would have been saved $1,900,000,000 of usury which they have already paid on the bonded debt, and more than half the actual debt ;  for if the notes had been kept in circulation, being constantly received and paid out at the Treasury, $1,500,000,000 would have been sufficient to defray all the expenses of the war.

In the Report of the Comptroller of the Currency for 1867, we find on page 15, the following statement :

“ Probably not less than 33.33 per cent. of the indebtedness of the United States is owing to the high prices paid by the government while its disbursements were heavy.  Of every one hundred million dollars in legal-tender paid out, over twenty-five million dollars were paid out for discount.”

Now, if the legal-tenders had not been purposely depreciated by vicious legislation, which created an unnecessary demand for gold, there would have been no discount, and every dollar paid out by the government would have been worth one hundred cents.

According to the report of the Secretary of the Treasury, our expenditures for 1862 amounted in round numbers to $475,000,000.  We paid in that year :  Interest on bonds, $13,000,000 ;  discount, $64,000,000 ;  taxes, $57,000,000 ;  making $134,000,000.  This amount deducted from the expenditures leaves $341,000,000 as the amount of legal-tender notes which should have been issued to meet the expenditures of that year.

Our expenditures for the year 1863 were $715,000,000 ;  interest, 24,000,000 ;  discount, $174,000,000 ;  taxes $112,000,000 ;  making $310,000,000.  Deduct this amount from the expenses and it leaves 405,000,000 as the amount of legal-tender notes required to meet the expenditures of that year ;  add to this amount the $341,000,000 required for 1862, and it gives us $745,000,000.

Our expenditures for 1864 were $865,000,000 ;  interest charge, $78,000,000 ;  tax, $264,000,000 ;  discount, $505,000,000 ;  making 847,000,000.  Deduct this amount from the expenditures of that year and it leaves only $18,000,000 of legal-tenders required to be issued to meet the expenses ;  add this to the $745,000,000 provided for the two former years and it gives $763,000,000 as the full amount of legal-tender money it would have required to pay all the expenses of the government up to the end of 1864.

In 1865 our expenditures were $1,297,000,000 ;  interest, $77,000,000 ;  discount, $389,000,000 ;  taxes, 338,000,000 ;  making $804,000,000.  Deduct this from expenditures leaves $493,000,000 ;  add to this the $763,000,000 which was necessary to supply the deficiency for 1862, 1863 and 1864, and it gives $1,236,000,000 as the whole amount of full legal-tender money needed to defray all the expenses of the government during the four years of the war up to July 1, 1865, without the issue of a single bond as a basis for a national banking system.

By adopting the bond policy, we owed at the close of the war 5 and 6 per cent. bonds which we had issued to the amount of $1,000,000.000.  The report of the Secretary of the Treasury shows that on the 1st of April, 1865, we had issued and put in circulation currency of different kinds, aside from the bonds, $1,996,000,000.  Deduct from this amount the actual necessary expenses during the war, $1,236,000,000, and it gives a surplus of $790,000,000 more than was necessary to pay all expenses without the bonds.

To this add bonds, $1,000,000,000 ;  amount paid on principal of debt, $900,000,000 ;  usury already paid, $2,000,000,000 ;  amount of debt unpaid, $2,000,000,000 ;  and usury which will accrue on that before it can be paid, $1,500,000,000, which makes $8,190,000,000.  To this add the amount shown by the Comptroller of the Currency, which the national banks have cost the government since their inauguration in 1863, $4,936,530.51, and it gives a grand aggregate of $8,194,345,530.51.

The same report of the Comptroller of the Currency gives the banks credit as follows :

Tax on circulation, $46,000,000 ;  on deposits, $47,700,000 ;  on capital not invested in bonds, $6,700,000 ;  total $100,400,000.  Deduct this amount from the expenditures of the government and it gives a net loss of $8,093,945,535.51 sustained by the people in consequence of our government having adopted the bond and national bank system instead of asserting its right of sovereignty and issuing full legal-tender Treasury notes as the money of the government.

The government did not stop at the direct robbery of the people by issuing interest-bearing bonds instead of legal-tender money ;  but it exempted the bonds and the interest accruing on them from taxation ;  so that a man can have a million of dollars invested in bonds and not pay a dollar of tag to defray the expenses of the government.  Nor is this all.  Any one who is fortunate enough to obtain one hundred thousand dollars can exchange it for a one hundred thousand dollar bond, take that bond to the United States Treasury and deposit it there for safe keeping, and receive from the government a gratuity of $90,000 in National Bank notes to take home and loan to the people at whatever rate of usury he can extort from them through the “ black art ” of financial chicanery and intrigue.  In the first place, the government issues its bond for $100,000, and sells it to David Saunders for $100,000 in greenbacks.  The bond bears 5 per cent. usury, which the government agrees to pay quarterly, and exempt both the bond and the usury accruing thereon from taxation of any kind.  Mr. Saunders has made a good investment ;  he receives 5 per cent. usury on his bond, which amounts to $5,000 a year, which is 2 per cent. more than is made per annum by the wealth-producing force of the country.  He now receives $90,000 in National Bank notes endorsed by the government, and returns home and speculates on it for one year ;  at the end of which time he has received $5,000 in usury on his bond ;  at the end of the second year he receives another five thousand dollars in usury ;  so that the government at the end of the second year has paid Mr. Saunders back the full amount which it received of him for his bond.  He now has his $100,000 in addition to what he has made by usury in two years on $90,000, and the privilege of letting his bond lie in the treasury eighteen years longer, and draw $5,000 usury each year until at the end of twenty years, when his charter expires he will have been paid the full amount of his bond in usury, $100,000.

Now, if he wishes to embark in other business he can return the $90,000 in national bank notes on which he has been drawing usury from the people for twenty years, and demand $100,000 in coin for his bond.  No doubt, under these circumstances, Mr. Saunders would look upon a national debt as a blessing to him, and would, like William H. English, pronounce the national banking system “the best the world ever saw;”  but the millions of laborers who toil early and late to produce the wealth that pays this money, and find that with the most rigid economy they can only supply for themselves and families the actual necessaries of life—that the comforts of social existence is put beyond their reach by the constant and avaricious demands of the insatiate maw of the usurer, can look upon it in no other light than that of an unmitigated curse, to be shunned by them as the deadly upas or the crushing coil of the boa-constrictor.

Q.  If it was possible for the government to have carried on the war and maintained its credit without issuing bonds, why was it not done ?

A.  The answer is simple.  The money power would not allow it to be done.

Q.  How could the money power hinder it ;  had not Congress full power under the constitution to provide for the defense of the country, and was not providing money a means of defense ?

A.  Congress legally had the right, but morally it had not ;  as its acts have proved.  When Congress assembled in 1861 it was apparent to all that the period of the war would be protracted beyond what had been anticipated, and the all important question presenting itself for consideration was, how shall money be furnished to defray the necessary expense of supporting an army of sufficient magnitude to carry the struggle to a successful termination ?  The money dealers of the nation had refused to furnish money unless on such terms as would inevitably result in ruin, and European capitalists, fearing that the Republic could not sustain itself through a protracted civil war, and many of them hoping the rebellion would succeed, was not willing to invest their money in the securities of the government.  As a last resort, the question of issuing legal-tender Treasury notes (or greenbacks) was presented for consideration.  The measure met with considerable opposition by the bankers in the house where the bill originated, but after more than two months deliberation, a bill was passed authorizing the issue of $150,000,000 of full legal-tender notes, and also providing for the issue of $500,000,000 of five per cent. bonds, payable in twenty years, to absorb them and other Treasury notes in circulation.

The bankers and money dealers succeeded so far in controlling Congress in their interest, that the provision for bonds bearing usury was placed in the bill to give them the opportunity of buying them with the greenbacks, thereby retiring them (the greenbacks) from circulation.  This was the first step toward laying the foundation for a national banking system.

As soon as the legal-tender bill passed the house, the telegraph flashed the news to the people, and the whole country was electrified with delight.  Letters of congratulation flowed in upon the members from their constituents ;  rejoicing in the hope of having money issued by the government and secured by all its wealth as the money of the country for the future.  There were two classes, however, that did not rejoice.  The Rebels in the revolting states, and the bankers and bullion brokers of the north, from whom, in the words of Hon. Thaddeus Stevens, “a dismal howl” came forth.

Q.  Why should the bankers and bullion brokers object to the passage of this bill, when it provided for five per cent. bonds to absorb the legal-tender notes ?

A.  They knew that if these notes once got into circulation, and the people came to understand that they were as good as coin and more convenient, they would not exchange them for bonds but keep them in circulation, and thereby prevent the perfecting of a national banking system based on a bonded debt.  It was known to them, also, that if these notes were full legal-tender they would be receivable for customs dues and usury on bonds, and deprive the bullion brokers of the premium they hoped to realize on their coin.  Immediately after this bill passed the house, the bankers and bullion brokers of the cities of New York, Boston and Philadelphia sent delegates to Washington, and when the bill came up for consideration in the Senate, the lobby, the corridors and cloak rooms around the Senate chamber was crowded with the emmisaries of the money power, like vultures watching for their prey.  By instrumentalities unknown to the public, they succeeded in persuading the Senate to amend the legal-tender clause in the bill so as to cripple the greenback by excepting “customs dues and interest on the public debt,” from its legal-tender property.  When the bill was returned to the House for concurrence in the Senate amendment, one of the most impressive scenes occurred which has ever transpired in the history of American legislation.  The friends of the full legal-tender measure were horrified at the idea of the temerity of the Senate, with all its embodied wisdom, in so emasculating the bill as to deprive it of its greatest virtue.  Thaddeus Stevens, Oliver P. Morton and many others of the ablest members of the House, made a noble struggle to prevent concurrence, but while this contest was going on the velvety, cat-like steps of the agents of the money power were moving noiselessly about the hall and lobby, and when the question of adoption or rejection of the Senate amendment was put, it was evident that the same influences which had operated on the Senate, had become potent in the house ;  and to the never dying shame of the American Congress, a majority of seven votes were cast in favor of the Senate amendment and the bill became a law.  Thus the greenback was sent out on its mission to save the nation, a wounded soldier, stabbed in the back by the assassin hand which had pressed it into service, and no succeeding Congress has possessed independence enough to withdraw the deadly weapon and heal the wound so ruthlessly made on the most faithful servant the nation ever had.

Q.  Is not the greenback as good as gold now and received at par for customs dues and interest on the public debt ?

A.  Yes.  But by the inevitable logic of events, and without the assistance of Congress.  No act has been passed removing the exception clause from the legal-tender note ;  but the Secretary of the Treasury, without authority of law, ordered that it be received for customs dues which raised it to par with gold at once.  Let him rescind that order and it would be at a discount in one week.

Q.  In what way does the order of the Secretary produce this effect on the value of the greenback ?

A.  The law provides that customs dues and interest on the public debt shall be paid in coin.  When the law is obeyed the greenback will not perform this duty.  This makes a market for coin.  The importers must have coin to pay import duties, and the government must have coin to pay usury.  The bankers and brokers have the coin and they sell it to the government and the importers at a premium ;  but when the Secretary of the Treasury orders the collectors of customs to receive the greenback for customs dues, it places it at once on a par with coin.  When the possibility of speculating on the coin ceases, the bondholders prefer to receive the greenbacks for usury on account of their greater convenience.  In proof of this fact, the President, in his message to Congress, in December, 1879, says :

“ The excess of the precious metals deposited or exchanged for United States notes over the amount of United States notes redeemed, is about $40,000,000.”

This was about one year after the Secretary issued his order that greenbacks should be received for customs dues.  This gave them a universal par value, as the President acknowledges in the same message, when he says :

“ In all parts of the country they (the greenbacks) are received and paid put as the equivalent of coin.”

This was eleven months after the law providing for the so-called resumption of specie payments took effect on the 1st of January, 1879.

Q.  If the people preferred coin to greenbacks, why did they not take them to the Treasury and exchange them for coin when they could demand it under the law ?

A.  The fact that they did not do it is the best of evidence that they did not desire it ;  besides, it was known by the report of the Secretary of the Treasury that the government had not the amount of coin necessary to redeem the outstanding notes, notwithstanding $90,000,000 of 5-per-cent. bonds had been sold to hoard gold for this purpose.  They knew that if a run was made upon the Treasury, that it would be compelled to suspend until the Secretary could negotiate more interest-bearing bonds for the requisite amount of coin, thereby increasing the usury burden of the people.  But they did not want the coin, and hence they did not call for it.

Q.  Is it not a fact that the resumption of specie payment was the cause of the greenback coming to par instead of its being made receivable for customs dues by the Secretary of the Treasury ?

A.  No.  It is not because coin can be obtained for them ;  if it was, the people would present them for redemption and get the coin.  If it is because they pay customs dues they would exchange coin for them on account of their greater convenience, which they have been doing ever since they were made so receivable, and will continue to do so as long as they are go received.  The people want legal-tender notes, but they do not want coin.

Q.  What was the object of providing by law for issuing 500,000,000 of bonds in the same act which provides for issuing only $150,000,000 in legal-tender notes ?

A.  This was a part of the plan for establishing a national banking system.  The intention of the money power was to absorb these notes into usury-bearing bonds as soon as possible ;  and supposing the necessity for an additional issue of greenbacks might occur, they provided a sufficient amount of bonds to meet such contingency.  It was their intention to have them all called in and destroyed as soon as a sufficient amount of bonds could be procured upon which to base a banking system.

Q.  Was the intention of establishing a national banking system based on the bonds of the government made public at this time ?

A.  No.  The first that was known outside of the money dealers’ ring, of such an intention, was the introduction by Senator Sherman (since Secretary of the Treasury) in February, 1863, as Chairman of the Senate Finance Committee, of a bill to substitute the notes of national banks for the legal-tender notes.  In a speech, delivered in the Senate in advocacy of this measure, Senator Sherman said :

“ We are about to choose between a permanent system, designed to establish a uniform national currency, based upon the public credit, limited in amount, and guarded by all the restrictions which the experience of man has proved necessary, and a system of paper money without limit as to amount, except for the growing necessities of war.”

This extract shows that the policy of the money power was at this early period to perpetuate the national debt—for a permanent banking system could not be established upon a national debt, unless that debt was made permanent also.  But the honorable Senator was very cautious in the use of his language.  He speaks of the banking system which he proposed to inaugurate as based upon the public credit, instead of a public debt ;  but, in the same speech, he objects to the legal-tender notes (which were established solely on the wealth of the nation) on account of the fact that they were so based ;  for he says :

“ But it is asked, why look at all to the interests of the banks ;  why not directly issue the notes of the government, and thus save the people the interest on the debt represented by the circulation ?  The only answer to this question is that history teaches us that the public faith of the nation alone is not sufficient to maintain a paper currency.  There must be a combination between the interests of individuals and the government.”

The Senator first proposes to base the banking system on the credit of the nation, and, before he concludes his speech declares that such credit is not a sufficient basis.  He either did not understand himself, or was endeavoring to so mystify the subject that the people would not understand it ;  and it is hardly presumable that the honorable Senator did not fully understand the matter in which he was so earnestly engaged.

Q.  What amount of legal-tender notes or greenbacks was authorized to be issued by the government ?

A.  $450,000,000.  The act of February 25, 1862, authorized the issue of $150,000,000 ;  the act of July 11, 1862, authorized the issue of $150,000,000, and the act of March, 3, 1863, authorized the issue of $150,000,000.  This was all that was provided for by law.

Q.  How long did the legal-tender notes circulate before they began to depreciate in value ?

A.  They never did depreciate in value.  They have been the representative of value and the money of account in all our business transactions ever since they were first issued ;  the army was fed, clothed and paid with them at their full value ;  thousands of miles of railroads were built with them ;  mines and manufactories have been run with them ;  in all the immense traffic of the country for eighteen years, the greenback has never been depreciated to the amount of one mill on the dollar.  It stands to-day where it has always stood, the representative of the faith and credit and all the wealth of the American people ;  and to say that it is depreciated, is to charge the nation with insolvency or repudiation.  The only instance in which the legal-tender notes have not stood on a par with coin is where it has been so provided by law.  They were disabled from paying customs dues and interest on the public debt by the law which created them, and was deprived by the law enacted March 3, 1863, from being received for United States bonds after July 1, 1863.  This act remained in force until September 12,1865, when an act was passed making the legal-notes again receiveable for bonds at the rate of $10,000,000, in the next six months, and $4,000,000 per month after that time.

Q.  Is it not a fact that atone time it required two dollars and eighty-five cents in legal-tender notes to purchase one dollar in gold ?

A.  It is.  But it does not follow that the legal-tender note for a dollar was worth less than one hundred cents.  It was worth that, at that very time, for every purpose for which the law had made it money.  It was worth that to pay debts ;  to buy land ;  to feed, clothe and pay soldiers, and in all commercial transactions between individuals.  For every purpose for which the law gave them the property of money, they have fulfilled it without a shadow of variation for nearly twenty years, and that is more than can be said for either gold or silver coin.  The law of Congress, requiring that customs dues and interest on the public debt should be paid in coin created an extraordinary demand for it, and consequently caused it to rise in the market for that particular purpose and no other.  The holders of coin naturally took advantage of the opportunity offered them by the law-makers and sold it for all they could get.  The legal-tender notes represented the value of every other commodity in the market, and gold appreciated, because, by vicious legislation, Congress made it possible for those who held it to make a corner on it, and sell it at their own price.

Q.  How long was it after the legal-tender notes were put in circulation before this rise in the price, of gold took place ?

A.  Immediately.  The bullion-brokers saw their opportunity, and were ready to appropriate its benefits.  By referring to the tables prepared at the Treasurer’s office, we find that on the first day of July, 1862, four months and a half after the passage of the first legal-tender act, there was in circulation legal-tender notes to the amount of $96,620,000.  On the same day, the same table shows that it required a dollar in legal-tender notes to purchase 86.6 of a dollar in gold.  On July 1, 1864, the same table shows that there was 31,178,670.84 of legal-tenders in circulation, and that the premium on gold had advanced until it required two dollars and eighty-five cents of these notes to purchase a gold dollar.

Q.  Have you not misapprehended the cause of this disparity between the legal-tender notes and gold at this period ;  was it not on account of the large amount of legal-tenders in circulation at this time, creating a fear in the minds of the people that the government would be unable to redeem them, which really placed them at a discount, instead of gold having advanced in value ?

A.  No.  The people had not lost faith in the power of the government.  They were willing to accept its legal-tender notes for service or any other marketable thing, and did not want them redeemed in anything only as they were redeemed in each transaction as they passed from hand to hand in the commerce of the country.  Gold was not used in the common business transactions and had nothing to do with the prices of productive industry.  It was all measured by the legal-tender standard.  A barrel of flower in New York in 1861, before the legal-tenders were issued, is quoted at $5,50 ;  in 1862, after they were issued, gold is quoted at $1.37 and flour at $5.47 per barrel ;  in 1863 gold is quoted at $1.72½ and flour at $5.87½;  in 1864 gold is quoted at $2.85 and flour at $6.30 ;  in 1865, gold is quoted at $1.46½ and flour at $9.72½ ;  showing conclusively that the price of the products of the country was not measured by gold, but by the legal-tenders of all classes which made the money in circulation amount to early $2,000,000,000.  Another important fact is, that in 1865, one year after gold commanded a premium of $2.85 and the amount of greenbacks in circulation was $431,178,670.84 in 1864, in 1865, when the circulation of the greenbacks had reached $432,687,966, being an increase of $1,509,295.16 over 1864, the premium on gold had dropped from $2.85 to $1.44¼, or nearly one hundred per cent.

Q.  How do you account for this sudden decline in the premium on gold when the law still required that customs dues and interest on the public debt should be paid in coin ?

A.  After the close of the war the plan of the money dealers was to absorb all the legal-tender currency of the different kinds into bonds bearing usury.  In order to do this more bonds must be issued and placed upon the market.  In order to allay the apprehension of the people with regard to the burden of usury to be placed upon them, the premium on gold was reduced, and speculation turned into the more ample field of procuring a sufficient amount of usury-bearing bonds to secure a sure and permanent foundation for a national banking system, possessed of sufficient power to control the legislation of the government and insure the adoption of a funding system which would place the debt beyond its reach, and thereby saddle it on posterity as a permanent institution.  With a reasonable hope of establishing so far-reaching and powerful a policy for absorbing the future wealth of the nation from generation to generation, the money dealers could well afford to forego the present benefit to be derived from the premium on gold in order to secure the unbounded wealth and power which they would derive from the success of their funding and banking scheme.

Q.  At what time was the national bank law enacted ?

A.  The first national banking law was passed on the 25th of February, 1863, and was introduced by Hon. John Sherman.  Mr. Sherman, in a speech delivered upon the introduction of this bill, gave his reasons for wishing to substitute the national-bank notes for the legal-tender currency.  As we have before referred to this speech, we will now consider his objections to the legal-tender currency.  His first objection is as follows :

“ National bank notes can be limited in amount, while the United States notes can only be limited in amount by the growing necessities of war.”

This statement of the honorable Senator was uncandid, unfair, and evidently intended to deceive the people.  No man understood better than he that both the United States notes and national bank notes could only exist by acts of Congress authorizing their issue, and that the amount of both was fully under the control of that body.  The subsequent action of Congress proves this statement to be strictly true ;  for it has limited the United States notes, first to $450,000,000 ;  then to $400,000,000 ;  and now to $346,681,016.  It also limited the amount of the national bank circulation to $354,000,000, but subsequently repealed the act restricting their circulation, and now the only restriction there is on national bank circulation is the amount of usury-bearing bonds which can be procured from the government to base them on.  His second objection was stated in these words :

“ Another practical objection to these United States notes is, that there is no mode of redemption.  They are safe ;  they are uniform in value ? but there is no mode pointed out by which they are to be redeemed.  No one is bound to redeem them.  They are receivable but not convertible.  They are debts of the United States, but they cannot be presented anywhere for redemption.  No one can present them except for the purpose of funding them into bonds of the United States.  They are not convertible ;  they lack that essential element of a currency.”

Q.  Why did Senator Sherman wish to have them converted ?

A.  The only answer to this question is, that it was a part of the plan, deliberately considered and settled upon by the money changers, of which the honorable Senator had become the mouth-piece and advocate, to first cripple the United States notes, then to place them below par, as compared with gold, until the confidence of the people would be so far shaken in the feasibility of using them for a circulating medium that they could buy them for a trifle and invest them at their face value for bonds of the United States bearing usury.  The idea of convertibility is based upon the false assumption that any particular substance possesses an inherent property as money, and that everything used as a circulating medium must be convertible into that.  This is the theory which the bullionists, with Mr. Sherman as their advocate, were contending for.  They claimed that gold and silver was the only money of the world, and that all paper money must be convertible into coin of one or the other of these metals.  These premises being utterly groundless, the whole superstructure built thereon is without foundation in fact.  There is as much necessity for converting gold and silver as there is for converting paper money, in order to make it administer to the wants of civilization.  Neither are worth anything unless they are converted into something that will satisfy the wants of man, and right here is developed one of the secret springs which set this enormous engine of robbery in motion.  The bullion brokers had the coin.  As coin, laying in their vaults, it was utterly worthless.  They wanted to convert it into bonds which would produce for them annually 5 or 6 per cent. usury.  Now, if the government bonds, based on the faith and credit of the nation, were a good investment at 5 or 6 per cent. usury, the United States notes issued on the same basis without usury, were certainly equally safe and had no need of conversion any more than gold and silver.  The object was to rivet the chains of the specie basis theory more firmly on the limbs of the American people, and foster and nourish its twin sister, the vampire of usury.

Q.  Is not this a harsh and unjust judgment based upon wrong premises ?  Was it not the desire and intention of the men possessed of large means to place those means at the disposal of the government, and establish a system based upon the wealth of both, by which a National Bank note could be put in circulation that would always be as good as coin and always convertable into coin at the option of the holder ;  thereby avoiding the possibility of such a catastrophe as repudiation in any of its forms ?

A.  The best answer that can be given to this question is the fact that the law creating the national banking system which Senator Sherman was then advocating, made no provision for the notes of such banks to be converted into coin.  The only provision for the redemption of the National Bank currency, is, that they shall be redeemable in lawful money of the United States, the name given by law to the United States legal-tender notes when they were issued by the government.  If the legal-tenders were not as good as the National Bank notes, why should they be made redeemable in this currency ?  If the object was to insure the soundest possible system of finance upon the plan of convertability, the inferior would certainly be made convertible into the superior money.

Q.  Is it not a fact that the law of 1875, providing for specie resumption in 1879, makes it obligatory on the National Banks to pay coin on demand at their counters, for their notes, when presented for conversion, after January 1, 1879 ?

A.  No.  The act of 1875, providing for specie resumption has no relation to the banks whatever.  It only applies to the government of the United States and its legal-tender notes, and only provides for their redemption when presented at the office of the Sub-Treasurer in the city of New York, in sums not less than fifty dollars.

The National Banks do not even hold the 5 per cent. reserve fund, provided for bylaw, in coin, but they do hold such reserves in legal-tender notes.  The National Bank notes are not convertible into coin, they are not convertible into bounds ;  but they are convertible into legal-tender notes and the legal-tender notes into bonds, and the bonds produce usury, and the National Bank notes produce usury to the bankers when they go into circulation, while the legal-tenders go into circulation by being paid out in the disbursements of the government without usury.  The third objection presented by Senator Sherman to the legal-tender notes is in the following remarkable language.

“ Another objection is, that they can only be used during the war.  The very moment that peace comes, all this circulation that now fills the channels of commercial operations will be at once banished ;  they will be converted into bonds ;  and then the contraction of prices will be as rapid as the inflation has been.  The issues of government notes can only be a temporary measure, and is only intended as a temporary measure, to provide for a national exigency.”

We have before stated that it was the object of this secret conspiracy of bankers, brokers, money dealers and their paid attorneys in the two houses of Congress, to retire all the legal-tender notes into bonds bearing usury, and fasten this debt irrevocably on the people as a basis for a national banking system.  In the legal tender act a provision was made for issuing bonds, but it was left discretionary with the people to invest their legal-tender notes in them or keep them in circulation.  But the Hon. Senator, while addressing the American Senate in behalf of the conspirators, boldly declares that it never was the intention that they should remain in circulation after the close of the war.  This statement is no doubt true so far as those conspirators were concerned, and throws the blaze of a calcium light upon the mysterious manner in which the two Houses were brought to agree to insert the exception clause in that law.  It was intended to cripple this money so that they could drive it out of circulation.

The statement in this objection that these notes were war measures, and would have to be converted into bonds the very moment peace came, was, and is, without foundation in fact.

The country was not engaged in war from 1837 to 1845, but the government issued treasury notes, which sustained it and the business of the country when the banks had all suspended and the gold and silver had been shipped out of the country to a better market in other nations.  Again, in 1857, we had no war on our hands.  But the banks all suspended, and the government issued treasury notes to the amount of $20,000,000 to assist the business of the country out of the financial crisis ;  and at a later period, in 1873, when there was no war, the government, at the earnest request of the bankers of New York, paid out $26,000,000 of the $40,000,000 legal-tender reserve held in the United States Treasury in order to save them from an entire suspension of currency payments, to say nothing about coin, which they did not pretend to pay.

Eighteen years have elapsed since this declaration of the American Senator was put forth ;  and, notwithstanding the constant war made upon it by the money power, aided and supported by those standing highest in authority in the government, and the honorable gentleman himself acting as fiscal agent and throwing the whole force of his giant intellect into the struggle for its destruction, more than $346,000,000, of the legal-tender currency still lives, and has grown stronger by age in the affections of the people, until it now, in spite of law, performs all the functions of money, and the Hon. Secretary is constrained to acknowledge in his report for 1880, that it is “ the best money we ever had.”  But the same want of candor is manifest in this report which has characterized the conduct of the advocates of the banking system.  While compelled to acknowledge its superiority, he recommends that it be robbed of its partial legal-tender property.

Q.  Why should the bankers desire that the United States notes be robbed of their legal-tender property ?

A.  It would place it in their power to refuse to receive them unless at a discount, and by placing them at a discount as compared with their own notes, they could drive them out of circulation, and thereby obtain full control of the finances of the nation.

Q.  Was not Senator Sherman correct when he stated that the United States notes were war measures, and could only be issued to meet such an exigency ?

A.  No.  He was in no sense correct ;  for, as we have previously shown, the government has exercised this power all through its history, when there was no war to create an exigency.  No doubt the Senator and the money power, which he was representing in the United States Senate, intended that this should be the result, and, believing they had the power to shape the necessary legislation, they hoped that it would be.  But this objection, instead of being valid, is one of the strongest reasons why the United States legal-tender notes should be established as the only paper money of the nation.  Gold, silver, and bank notes, never sustain a nation in its hour of peril.

As soon as the shadows of war darken the horizon of any nation, the coin slinks away into secret dens, beyond the reach of danger ;  the banks suspend payment, and the treasury note, based on the faith, credit and wealth of the nation is the only money that can be depended on to meet the demands of the government and sustain it through its most trying ordeals.

This the bankers and their advocates admit, when they state that it is a war measure, intended to meet a great emergency.  This being granted, it naturally follows, as a safe and economic measure, that the legal-tender treasury note should be adopted as the only paper currency of the country, and held entirely under the control of the government, at all times at its command, either during peace or war.

The money power secured two important points in the legal-tender act.  First, the limitation of the amount of the notes to $450,000,000.  Second, but more important, the exception clause in their legal-tender property.  With this advantage, and the further provision for $500,000,000 in bonds, bearing 6 per cent. usury, to absorb them, the foundation seemed fairly laid for establishing a national banking system based on the bonds of the government.  This act, as before stated, was passed on the 25th of February, 1862.  In order to insure the investment of these notes into bonds bearing usury, the act provided that they should be receivable for bonds the same as coin.

Notwithstanding the advantages already obtained by legislation in their favor, the agents of the money power were unremitting in their vigilance to secure all the means necessary to insure the success of their schemes.  On March 12, 1862, they procured the passage of an act providing for the issue of $50,000,000, temporary loan-certificates bearing 5 per cent. usury, which could be redeemed in legal-tender notes, on ten days’ notice.  Again, on July 17, 1862, in furtherance of this scheme, an act was passed, making postage-stamps a legal-tender for five dollars, and redeemable in legal notes in sums of three dollars and upward ;  the stamps to be sold by the government officials for legal-tender notes.

On August 5, 1862, a law was enacted providing for the issue of the second installment of legal-tender notes to the amount of $150,000,000, which were made receivable for bonds.  The law also provided for the issue of bonds, payable in the legal-tender notes.  All the preliminary arrangements had now been made for the absorption of the United States notes into bonds, bearing usury.  The money power had controlled Congress in all the legislation on the finance question during the year 1862.  Emboldened by their success and confident of their power, they came boldly forward, and through their representative, Senator Sherman, presented their bill for the organization of the national banking system, based upon the public debt, and on the 25th of February, 1863, this outrage upon the people was enacted into law by the Congress of the United States, just one year after the first legal-tender act was passed by the same body.  All these preliminary arrangements had been carefully made to provide for every contingency.  Bonds bearing usury had been provided for in more than sufficient quantity to absorb all the legal-tenders, and so arranged for investment that success appeared inevitable.  But the people could not see now they were to be benefited by exchanging those notes, which bore no usury, for bonds bearing usury, if they had to pay the usury themselves.  They therefore held on to the legal-tender notes and refused to convert them into bands.  They were satisfied with these notes for a circulating medium, and wished to retain them ;  but this would thwart the designs of the bankers.  If the government continued to issue legal-tender notes (crippled as they were) the people would retain them in circulation, and a bonded debt could not be created of sufficient magnitude to meet the requirement of a scheme of such stupendous dimensions as the one had in view by the bankers to capture the finances of the country and thereby enable them to wield its destiny in their interest for all coming time.  Something more must be done in order to accomplish this design.  Bonds bearing usury must be furnished in sufficient quantity to glut the market, so that they could be bought at a large discount as a basis to bank upon.

In order to meet this requirement another act was passed on March 3, 1863 (just six days after the passage of the act providing for a national banking system).  This act provided for the issue of $900,000,000 of bonds, bearing 6 per cent. usury, redeemable in ten years and payable in forty years, which bonds were made purchasable with legal-tender notes at their face value, the same as coin.  There was one other thing standing in the way of the success of this gigantic scheme of robbery.  There was at that time in circulation, according to the report of the Secretary of the Treasury, state bank notes to the amount of $238,677,218.  These notes must be removed from circulation before the field was clear for national banking.  This act provided the necessary means, by levying a tax of 10 per cent. upon all such institutions, as will be seen by reference to the Revised Statutes of the United States, page 670, Sec. 3412, which reads as follows :

“ Every National Banking Association, State Bank, or State Banking Association shall pay a tax of 10 per centum on the amount of notes of any person, or of any State Bank or State Banking Association, used for circulation and paid by them.”

This provision had the desired effect, and drove all the state and individual banks of issue into liquidation, for they could not exist under a tax of 10 per cent. on their circulation while the national banks would only pay 1 per cent.

The object of this law being to fully prepare the way for the money-dealers to provide themselves with bonds at the smallest possible outlay for themselves, and the greatest cost for the tax-payers of the nation, there was one more measure necessary to complete the work.

Provision was made to flood the market with bonds so as to reduce their value ;  the state banks would be taxed out of existence, and the greenback, which was the only competitor, must be disposed of at all hazards, and the parties managing this bill supposed they were equal to the emergency.  Notwithstanding the law creating the greenback provided that it should be receivable for the bonds of the government and every note carried, upon its face the express stipulation that it should be a legal-tender for all debts, both public and private, except for customs dues and interest on the public debt, and that the bonds already provided for in this act were made purchasable with legal tender-notes, in order to insure a speedy investment of them in bonds bearing usury, this law of March 3, 1863, provided that on and after July 1, 1863, legal-tender notes should not be receivable for bonds.

At the time this law took effect there was, according to the report of the Secretary of the Treasury, legal-tender notes to the amount of $207,767,114, money which the government had paid to the people and received service and material in full consideration therefor, accepting the plighted faith of the nation to be sacred ;  but the money power demanded it, and this money of the nation must be repudiated so far as the purchase of bonds was concerned, unless invested by the 1st of July, 1863, only four months after the passage of the law.  This villainous provision was intended to drive the legal-tenders to the Treasury for investment in bonds before the 1st of July, or to so discredit them as to raise the premium on gold to that extent that they could be bought in at a reduced price and held for speculation, as will be shown in the sequel.

This attempt to drive the United States notes out of circulation proved to be a failure.  The people had too much confidence in the integrity of the nation, and were too much attached to its legal-tender notes to willingly exchange them for any other money.  They still clung to them, although the gold gamblers had so advanced the price of gold in Wall street that in 1864 it required $2.85 in legal-tender notes to purchase one dollar in gold.  There can be no doubt of this law being passed under the direction of the money-power and in its interest, and that those who framed the law fully understood its power and scope and all the obstacles which would be likely to stand in the way of the accomplishment of their design.

In addition to the provisions before enumerated for converting the legal-tender notes into bonds, this act provided for the issue of $400,000,000 three years’ treasury notes bearing usury at 6 per cent. and payable in legal-tender notes.  The three years’ notes being legal-tender also and bearing usury, it was supposed that the legal-tender greenbacks could be absorbed by them and converted into bonds at maturity ;  thus accomplishing by strategy that which they, might fail to secure openly.

But, cunningly as this plan was devised, and deep and dark as was the plot for giving the national bankers an open field to ply their vocation without let or hindrance, the people showed a firm determination to hold in circulation the money of the nation which they had received from the government in good faith, instead of exchanging it for the notes of any private corporation.

The $400,000,000 three years’ notes were a part of the $900,000,000 first named, as provided for in this act.  At this time no bonds had been sold, as is shown by the report of Senator Sherman, Chairman of the Senate Committee on Finance, made on the 12th of November, 1867.  In reviewing the past history of the finances, he, in speaking of the legal-tender notes, says :

“ These notes were issued to the amount of $400,000,000, before the bonds were negotiated.”

Now, as only $300,000,000, were issued before those provided for in this act, no bonds had been negotiated at that time.  One whole year had elapsed and the people had not come forward as was anticipated and loaded themselves with bonds bearing usury in place of the money of the people, which imposed no usury burden.  Hence the haste with which this act followed the passage of the National Banking act.  It was a part of the same plan, and prepared by the same hand that prepared the National Bank bill ;  else it could not have been prepared to meet every supposed contingency in that act and passed through both Houses of Congress, signed by the President, and become a law in the short period of six days after the passage of the former act.  The object of this act was to prepare the way for buying up the greenbacks while gold commanded a large premium, and investing them in bonds at their face value, so that every dollar of the money dealers’ gold would buy two or three dollars in bonds to deposit in the United States Treasury as a basis to bank on.  That this was a part of the plan, and well understood by those who were manipulating it, is acknowledged in the same report, made by Mr. Sherman, on December 12, 1867, to which attention has been called.  On this subject he says :

“ But it was found that with such a restriction upon the notes the bonds could not be negotiated, and it became necessary to depreciate the notes in order to make a market for the bonds.”

Again, on the 27th of February, 1868, (see appendix to Congressional Globe, pages 182-184), Senator Sherman, in a speech in the United States Senate, used this language :

“ When we look at the law, which is the contract, it so happens that the identical act which provided for the legal-tenders also provides for the 5.20 bonds.  Every man who bought a bond bought it under an act which also provides for the legal-tenders.  They were contemporaneous.  However, the notes were issued before the bonds were issued.  The notes were all outstanding before a single bond was issued.”

Mr. Edmunds.—“ What was the limit of the legal-tenders ? ”

Mr. Sherman.—“ I will come to that presently.  Now, the legal-tender clause provides that ‘ Such notes herein authorized shall be receivable in payment of all taxes, internal duties, debts and demands of every kind due to the United States, except duties on imports, and of all claims and demands against the United States of any kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin ;  and shall also be lawful money and a legal-tender in payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid.

“ Does not this act, in so many words, declare that while coin should be paid for the interest of the public debt, yet the notes provided by this act shall be a lawful tender in payment of all public debts ?

* * * * * *

Finally, after long consideration—for the subject was debated over and over again—the committee on finance agreed upon the act to which I will now refer—the act of March 3, 1863.  That act repealed the limit as to the amount of circulation, and raised it to $450,000,000, and it also took away the right to convert, which the Secretary said was the other restriction that prevented the sale of bonds, and by an ingenious device, suggested by the Senator from Vermont (Mr. Collamer), it was proposed to limit the holders of the outstanding greenbacks, the right to convert them, up to the first of July then next ;  but if they did not do so by that time the right was to cease.  By this legislation, in the act of March 3, 1863, the limitations which prevented the sale of the first 5.20 bonds were repealed, and then, for the first time, this loan was taken.  Then it was that an agency was organized, and means were taken to spread these bonds all over the country, and they were sold ;  but they were not sold until these restrictions were removed, and they were sold upon a basis of $450,000,000, without the right of redemption ;  with no privilege whatever, except that of being receivable in payment of taxes.  That was the state of the law upon which the 1egal right of the holders of the five-twenties rest.  They refused to buy these bonds upon the terms of the act of February 25,1862.  They did buy them under the act of March 3,1863, and it is idle to rest their claims upon restrictions repealed before their bonds were issued.

I wish to read a little further, to show that the Secretary of the Treasury, Mr. Chase, a year afterward, in December, 1863, in his report, again stated that Congress, having relieved him from the restrictions of the act of 1862, enabled him to sell the five-twenty bonds. He says:

‘ On that day, March 3, 1863, the act to provide ways and means for the support of the government, received the approval of the President and became a law.  In addition to various provisions for loans it contained clauses repealing the restrictions affecting the negotiation of the five-twenties, and thus disengaged that important loan from the embarrassments which had previously rendered it almost unavailable.’

“ Then he goes on and says that every dollar of it was sold in a short time, presenting a remarkable case of success ;  but it was not sold, as my friend from Vermont says under the act of February 25, 1862.  On the contrary, there was an utter failure to sell the loan under that act.  It was sold under the subsequent law which repealed the restrictions of the act of 1862, and it was sold upon a basis of currency amounting to $450,000,000, and when the notes had been so depreciated by our legislation purposely for wise purposes, when the right to fund was taken away, and no right was given to these notes except to be paid to the government in the way of taxes.”

If there had been any doubt before about the complicity between the money-dealers and officers of the government in discrediting the legal-tender notes so that they could be bought cheap, this declaration of Secretary Chase, that the 5.20 bonds would not sell while the notes were restricted in amount and were receivable for bonds, as under the act of 1862, but when the demand that these restrictions should be removed was obeyed, the bonds were sold in a very short time, and the further statement of Senator Sherman that the legal-tender notes were purposely depreciated by the legislation of Congress, the case appears to be so plain that there can be no question of its correctness.

All the legislation on the subject of finance from Feb. 25, 1862 (the date of the passage of the legal-tender act), to Feb. 3, 1868, had in view, as the acts show, the design to convert all non-usury-bearing obligations of the government, used as money by the people, into usury-bearing bonds, for permanent investment by the money dealers.  On July 1, 1864, as shown by the Treasury statement, there was outstanding 5 per cent. bonds, $300,213,480, and of 6 per cent. bonds, $842,882,652.09, none of which had been purchasable with greenbacks since July 1,1863.  According to the same statement, there was then outstanding $431,178,670.84 in legal-tender notes.  Notwithstanding the determined effort to discredit them, they would not come back into the Treasury as was desired.  Something more must be done, and the Congress of the United States was equal to the occasion.  On June 30, 1864, an act was passed providing for an additional $400,000,000 6 per cent. bonds, running from five to thirty or forty years, at the discretion of the Secretary of the Treasury.  This act provided that these bonds might be sold in Europe or America for coin or “other lawful money.”  As the greenback was lawful money, these bonds were made purchasable with them, but this provision did not apply to any other bonds.  The object now was to flood the market with usury-bearing bonds, that they could buy with greenbacks at their face value, which they had procured by selling a dollar in gold for two dollars and eighty-five cents of these notes.  This act also provides for the issue of $200,000,000 7.30 treasury notes, and $150,000,000 temporary loan certificates, bearing usury.  All these were made convertible into bonds.  The programme was now fairly laid down.  Usury-bearing bonds of different kinds were now issued and outstanding to the amount of $1,359,930,763.50, and this bill provided for $450,000,000 more, making in all, at this date, $1,809,930,763.50.  These bonds were on the market, and gold must be appreciated, and it was.

The shylocks set their figures at thirty-eight and 7.10 cents in gold for a dollar in greenbacks or other government currency, and a large amount of the 5 and 6 per cent. bonds was bought with this currency, obtained by them at this shameful sacrifice of the interests of the people for the benefit of a few favored individuals who had complete control of the financial legislation, and manipulated every act in such a way as to rob the people of the products of their honest toil, and increase the volume of the stream of gold which they had succeeded in turning away from the people’s treasury into their own unholy coffers.

No scruples were entertained with regard to the means to be used, so that the robbery could be accomplished under cover of law.  The laws under which the bonds were issued provided for paying the usury in coin, semi-annually.  Coin was now at a premium of $2.85.  The opportunity must not be lost.  A law must be passed in order that this advantage could be realized to its fullest extent ;  accordingly, on March 17, 1864, an act was passed authorizing the Secretary of the Treasury to pay the usury one year in advance, without rebate.  Here was an opportunity for a nice financial transaction.  The money dealer has invested $35,100 in coin in $100,000 legal-tender notes ;  he steps into the United States Treasury and pays these notes for a bond of $100,000, bearing usury at the rate of 6 per cent. per annum.  He now draws usury from the government on nearly three times as many dollars as he has invested in gold.  But still not satisfied, he says :

“ Mr. Secretary, I believe since the passage of the late act of Congress, you are permitted to pay the usury on these bonds one year in advance, without rebate, would it be convenient for you to pay me the first installment on this bond this morning ? ”

Certainly.  And the accommodating Secretary counts him out $6,000 in gold for the first years’ usury on his bond.  He steps across the street and sells his gold to an importer for $2.85 in currency for a dollar in gold, giving, him $17,100, with which he returns to the treasury and invests it in another 6 per cent. bond of that amount.  He now has, on account of the vicious class legislation of the Congress of the United States, 6 per cent. bonds to the amount of $117,100, for an outlay of $35,100—more than three dollars for each one invested.  He might have demanded, under the law, the usury on this bond also for a year in advance, but extreme modesty compelled him to forbear encroachments on the time of the gentlemanly officials, in order to give opportunity for others of the bond-holding fraternity to avail themselves of the special privilege created for them by law to rob the treasury of the United States.

Q.  Did any of the Secretaries of the Treasury pay any usury on the bonds they sold, a year in advance of its becoming due, without reserving a rebate to the government ?

A.  They did.  But what amount was so paid has not yet been discovered.  During the Forty-fifth Congress, Hon. J.B. Weaver introduced into the House the following resolution :

Resolved, That the Secretary of the Treasury be and is hereby directed to report to this House whether he has at any time anticipated the payment of interest on the public debt ;  if so, how much has been paid in advance, and to whom.”

This resolution was referred to the Committee on Ways and Means, of which the late Hon. Fernando Wood was chairman.  Mr. Wood sent the resolution to Secretary Sherman, with a request to state when he could report.  Mr. Sherman replied that “there was no public document that would give the information required.”  But, he added, “The Department has been in the habit, for five years of paying the interest in advance without charging anything.”  When we recollect that the act permitting this outrage was passed on the 17th of March, 1864, when gold was at a premium, which made it an object to obtain the usury in advance, and this resolution of inquiry was sent to the Secretary of the Treasury in 1880, sixteen years after, when gold commanded no premium, and he states that it has been the custom for the last five years to pay the interest on bonds one year in advance without charging anything, connected with the other statement, that there was no public document in his office which would show bow much money had been so paid and to whom paid, we are driven to the conclusion that it has been the practice since the passage of the act, and that the Secretaries of the Treasury have conspired with the money dealers to rob the government through all this period and keep no record of the fact by which the amount of the robbery could be ascertained.

Whether these honorable gentlemen participated pecuniarily in the spoils so wrongfully obtained, will, perhaps, never be known ;  but it is hardly to be supposed that their sympathy for the suffering bondholders should be so strong as to prompt them to rob the people whose servants they were, without a motive which would tend to place them in the same position as those to whom they were granting this favor.