S.M. Brice

Financial Catechism

Chapter VII.

THE REPEAL OF THE INCOME TAX AND THE DEMONETIZATION OF SILVER.



The next legislation in favor of the money power and against the people, in 1871, was the repeal of the law providing for the collection of a tax upon incomes.

Question.  How did that law apply and why was it repealed ?

Answer.  The object of the law was to raise money to support the government and pay the usury on the public debt, as expressed in the title.

In order to meet this demand a heavy tax was levied upon all imported articles sold in our own markets, such as iron and steel in all their forms and articles manufactured from them ;  lead, copper, zinc, tin, spices, groceries and dry goods, drugs, medicines, queensware, hides, leather and all articles manufactured from it ;  in short, all articles manufactured in foreign countries which were in general use by all classes of our citizens.  This is termed import duty, which, by the law of 1862, could only be paid in coin.

Our internal revenue has been raised by taxing all articles of our own manufacture, such as tobacco, whisky, brandy, wine, trades, occupations, business callings and professions ;  checks on banks, State and National ;  all deposits in banks of whatever character ;  all bills of exchange, receipts, notes, and mortgages ;  all conveyances of real estate or personal property were taxed to support the government.  A tax was also levied on all incomes over $500 in 1865 for the same purpose, which law was amended in 1867, increasing the amount of income exempt from taxation to $1,000.  The bonds of the United States was the only property or thing of value that escaped taxation to support the government.  They were left untaxed.

Q.  What amount of government bonds was outstanding in 1867? A.  A little over $2,000,000,000. Q.  Why were they not taxed like other property ?

A.  It was claimed on the part of the money dealers that it was desirable to sell these bonds in foreign markets, and if they were taxable it would depreciate their value to the same extent, so that what the government collected in tax it would pay in additional discount, and would be injurious rather than beneficial ;  but it is certain that it would have been better to have sold those bonds to our own people at six per cent., with the privilege of taxing them, than to sell them in Europe at four per cent., without the power to tax them, for then both the money and the bonds would have been held by our own people, as the national debt of France is, and the holders of the bonds would have borne their proportional part in providing funds for their liquidation.  Prior to 1870 the income on those bonds was subject to taxation the same as income from other sources, but capitalists had been for several years clamoring for its repeal.  As early as 1867 Jay Cook, the agent of the government at that time for the sale of United States bonds, declared that it should “be scornfully abandoned, and that right speedily.”

Hon. William D. Kelley, of Pennsylvania, in the interest of manufacturing monopolists in the United States, made use of this language on the floor of the House of Representatives :

“ Mr. Chairman, within an hour of the opening of the present session I introduced the following resolution, which was adopted without dissent :  ‘ That the Committee of Ways and Means be instructed to inquire into the expediency of immediately repealing the provisions of the internal revenue law, whereby a tax of five per cent. is imposed on the mechanical and manufacturing interests of the country.’ ”

The subsidized press of the country denounced the law as unjust and unconstitutional—that it was inquisitorial, and led to perjury, because it required parties to state, under oath, the true amount of their incomes.

Q.  Why should this requirement of the law result in perjury any more than the law requiring the party to give a truthful list, under oath, of his property to the assessor, under the ordinary rules of assessing property ?

A.  There really can be but one answer to this question.  The greed for wealth has so distorted the minds of such, that they would willfully commit perjury rather than bear their equitable share in supporting the government that protects them and theirs.  There were three distinct parties who were contending for the repeal of this law, all actuated by one spirit—the desire to monopolize the wealth and business of the country by preventing the payment of the National debt and fastening it on the productive industries of the country for all coming time.  The first of these was the association of bankers and money dealers, who produced no wealth, but were constantly absorbing that which others produced.  The second was the railroad corporations, who were levying enormous tributes from the people for transportation, regardless of the cost of construction and expense of running the roads, which had been more than paid for by subsidies from the government and the people.  The third was the manufacturing associations, who, by the protection placed upon their goods, had been enabled to break down competition and individual enterprize, and monopolize the business and draw enormous profits from it, compared with that obtainable from any other branch of productive industry.

Jay Cook recognized these powers, and as agent of the government, appointed by Secretary Chase, he appealed to them in the following language.  To the capitalists, he said :

“ We lay down the proposition that our national debt, made permanent and rightly managed, will be a national blessing.”

“ The funded debt of the United States is the addition of 83,000,000,000 to the previously realized wealth of the nation.  It is three thousand millions added to the available active capital.  To pay this debt would be to extinguish this capital and loose this wealth.  To extinguish this capital and loose this wealth would mean inconceivably great national misfortune.”

Then, he says to the manufacturers :

“ The maintainance of our national debt is protection.  The destruction of it by payment is bondage again to the manufacturers of Europe.”

Fallacious as this proposition was, it enlisted the manufacturers in its favor, for it promised them protection by the necessity it would produce for raising revenue to pay usury on the debt.  Lastly, to the national bankers, he says :

“ That is not a hazardous opinion which declares that in less than twenty years our national bank circulation will be $1,000,000,000.  The currency that sixty-one millions of people, unequalled in industry and untrammeled in enterprise, will require, has got to have the basis of a national debt.  There is no other foundation for it to stand on that will impart to it at once safety and nationality.”

How well these propositions were received, and how much Congress was under the dictation of the money power, may be seen by the following resolution, offered by Representative Kelley, on the first Monday after the commencement of the session of 1867 :

Resolved—“ That the war debt of the country should be extinguished by the generation that contracted it, is not sustained by sound principles of national economy, and does not meet the approval of this House.”

The foundation was thus laid for the accomplishment of the work, but the extreme pressure produced by the contraction of the currency prevented further action at that time.  The act of 1868, preventing the further withdrawal and destruction of the legal-tenders, inspired confidence and hope among the people, until, by 1870, business had somewhat revived, and people had become less watchful of their interests.  It was during this period of apathy that Congress joined hands with the money power and repealed the income tax law, which was the most just and equitable tax law that was ever entered upon the statute books of any nation.

Q.  What amount of property was exempted from national taxation by the repeal of this law ?

A.  There was railroad property to the amount of five thousand millions of dollars, which returned to its owners a net annual revenue of one hundred and eighty millions ;  capital to the amount of two thousand millions invested in manufactures, which yielded an annual income to the owners of 40 per cent. on the investment, and other capital invested in bonds and other speculations, which yielded to the holders who were less than three hundred thousand an annual income of $800,000,000.  The amount of capital of the rich relieved from taxation by the repeal of the income tax and the amendment of the revenue laws ;  yielded an annual revenue to the government of about $200,000,000.

Had the law not been disturbed, this amount of revenue, added to what we have raised beside, would have liquidated the whole amount of the national debt in 1880.  This was the great calamity which the money power was determined to prevent, and the reason for the passage of the act of 1870, repealing the law providing for an income tax.  While this tax was collected it compensated, in a measure, for leaving the bonds untaxed, for the income arising from them annually was subject to taxation.  But when the act of 1870 was passed, it repealed the law so far as it applied to incomes, legacies and successions, and further provided that the new bonds provided for in the funding act, should neither, principal nor usury, be subject to taxation, either national, state or municipal.

While this matter was under discussion in Congress, in 1868, Mr. Burchard, of Illinois, delivered a speech in the House of Representatives, in which he presented and had read an extract from the New York Monetary World headed “New York Millionaires.”  It says :

“ No street in the world, except probably London, represents, in the short space of two miles and a half, anything like the enormous aggregate of wealth represented by Fifth avenue (New York) residents ;  between Washington Square and Central Park.  We give, haphazard, a few names :

Mr. Rhinelander........................$ 3,000,000
Marshall O. Roberts......................5,000,000
Moses Taylor.................................5,000,000
August Belmont............................8,000,000
Robert L. and A. Stewart...............5,000,000
Mrs. Paren Stevens........................2,000,000
Amos R. Eno..................................5,000,600
John Jacob and William Astor....60,000,000
Mrs. A. Stewart...........................50,000,000
Pierre Lorilliard............................3,000,000
James Kernochan........................2,000,000
William H. Vanderbilt.................75,000,000
Mrs. Calvert Jones........ ..............2,000,000
Mrs. Mary Jones..........................2,000,000
James Gordon Bennett....... ........4,000,000
Fred Stevens..............................10,000,000
Louis Lorilliard.............................1,000,000
        Total .....................................$242,000,000

Here are seventeen families on one street in one city of the United States who held two hundred and forty-two millions of dollars in 1868, and the number has largely increased since that time.  All of these, under the operation of the law as it stands since the repeal of the income tax, pay not one dollar toward the support of the government from all their vast incomes, and yet this is called a government of the people, by the people, and for the people.

Q.  If these persons, by their energy and perseverance, have been able to accumulate large fortunes, use those advantages lawfully for the purpose of increasing their wealth, are they to be blamed for it ;  is it not human nature ?

A.  The fault is not with those persons who simply proceed under the law to accumulate wealth ;  the fault on their part is, that they form combinations and conspiracies, and use their wealth for the purpose of procuring legislation which relieves them of all burden and lays it upon the shoulders of those who are least able to bear it.  Technically they are not to blame for using any privilege given them by the law, but when they use their wealth for the purpose of corrupting legislation, they become unworthy of the name of Americans, which should be a symbol of government which protects equally the rights of the rich and the poor.

The income tax by the American people is not an untried experiment.  It is the law in almost all civilized nations except the United States, and is recognized by the citizens as a just, equitable, and beneficent law.

We have said that less than three hundred thousand of the citizens of the United States, under the operation of the law since the repeal of the income tax, held property which yielded them an income of $800,000,000 per annum, upon which they paid not a dollar of tax to support the government.  We will now refer to it in detail.  According to the statistical tables of the revenue department in 1866, when the amount exempted was $500.00, there were four hundred and sixty thousand one hundred and seventy persons who had incomes on which they paid revenue to the government, to the amount of $966,358,599.  In 1867 the exemption was raised to $1,000.00, and the number was decreased to 266,135.  This change, though of 194,045 from the list, reducing its number nearly one half, did not reduce the amount of income in the same proportion ;  for the 266,135 persons showed an income of $819,968,333, a reduction of less than one-sixth.  It is remarkable to note how nearly the ratio between the number of persons and the amount of income run for the succeeding years.

In 1868, there were reported 276,661 as paying income tax, and the income reported was $806,006,475 ;  in 1869, the number of persons was 272,843, and the amount of income was $819,907,392 ;  in 1870, there were 275,661 persons whose incomes were $806,006,476.  These incomes were almost exclusively in the hands of the same persons, whose net earnings, for a period of five years, aggregated $4,128,665,195.  Under what rule of equity and justice this vast amount of capital should be exempted from bearing any part of the burdens of the government is a problem which cannot be solved to the satisfaction of an intelligent people.  The question will force itself upon the thinking mind, why should this be so ?  And when it has penetrated the deepest caverns of thought, and reverberated through the rock-ribbed mountains of intellectuality, and laid itself uncovered before the god-given tribunal of honest judgment, every lip is sealed, and echo answers, why should this be so ?

Looking at it through the light of the history of the case, and leaving equity and justice confined in the dungeon where this act placed them, the inquiry is easily answered.  It was a part of the plan by which the national banking system was to be perpetuated.  The shylocks demanded it, and a venal Congress performed the dirty work to the everlasting disgrace of republican institutions.

Q.  Is it not a fact that this law was very unpopular, and was violated to a great extent by evasion, which made it operate unequally and oppressively on some, while others escaped entirely from its operation ?

A.  The law was not unpopular with the mass of the people.  It was only unpopular with those who were unwilling to contribute a fair proportion of their net incomes to rid the nation of debt and liberate the arms of productive industry from their galling fetters.

The raw was evaded to a great extent, and many millions of dollars was lost to the government on account of unfaithful and dishonest officials conspiring with large operators to defraud the government, and a corrupt Congress screening them from payment.

A few prosecutions under Secretary Bristow were successful, but the guilty parties were soon released by the clemency of President Grant, who, at the commencement of the prosecutions ordered his Secretary to “let no guilty man escape.”  Through the honesty, integrity and perseverance of private individuals in support of the law, investigations had been made at their own expense, which showed that the government had been defrauded by the evasion of the law, in the seven years from 1865 to 1871, to the amount of more that $100,000,000.

This money was due the government for taxes on whisky, tobacco, railroads, incomes, banks, insurance companies, successions and legacies, and had been, until 1872, through dishonest conspiracy, criminal neglect, or other incompetency of revenue officers, overlooked, fraudulently withheld, or not reported.

Much of this money could have been collected if the government had enforced it.  But the revenue officers of 1872 were not furnished with the necessary means or authority to make the investigations necessary for its accomplishment.  They could not obtain the information from those who had prosecuted the investigations with their own means.

The matter was placed before the Secretary of the Treasury for his consideration, and being convinced that these parties were in possession of such evidence as would insure the collection of a large sum of these delinquent taxes, he prevailed upon Congress to enact a law authorizing him to contract with them for the collection of so much as could be collected.

In answer to this request an act was passed on May 8, 1872, authorizing the Secretary to contract with those persons who were in possession of the evidence, the contract providing that, as they collected the money, they should pay it all into the Treasury, and the Secretary would refund to them one half of the amount so collected and paid in, they being at all the expense of collection.  In a few months $500,000 were collected.  The plan was working admirably, and arrangements had been made to secure about $50,000,000 in the next two years, and, principally, without suit.  But, as matters progressed, it was discovered that it was only the rich who were guilty, of these acts of fraud.  Corporations, bondholders, capitalists and politicians were the ones who had been robbing the government by withholding the money required of them by law.  Many of these had great influence in Congress, and stood high in the political parties.  It would not do to have them exposed.  These robbers and their friends appealed to Congress for relief—asked that the law be repealed and the collections suspended.  They succeeded, as they have always have done, when they come down upon the two Houses in force.  The law was repealed in June, 1874, and the contract for the collection annulled, and the government robbed of at least $50,000,000 that was justly due it, and which it could have had without one dollar of expense.

The repeal of this law gave reason for the belief that the government would not attempt to prosecute for a violation of the revenue laws, and stimulated others to acts of violation, until they became so numerous, and on such a stupendous scale, that the government was pressed into prosecution, the results of which, under Secretary Bristow’s administration, revealed a system of fraud, corruption and perjury of the most unblushing character and the most gigantic proportions—reaching out its arms, like the devil fish, and grasping in its slimy embrace persons of high rank and standing in both political parties.

While the order was given by the party in power to prosecute every offender, and spare not, those who were found guilty were speedily relieved by executive clemency from the penalties imposed upon them by the courts of justice.  While U.S. Grant, the Republican President of the United States, made haste to release from punishment the violators of the revenue laws, Samuel J. Tilden, who was charged with refusing to obey them, was selected as the standard-bearer of the Democratic party for President, in 1876 ;  and William M. Springer, of Illinois, who refused to obey the law, was retained in his place as a Democratic member, of Congress from that state, defending a suit which was decided against him, in the Supreme Court of the United States, in the winter of 1881, and the Republican party made a desperate effort to reinstate General Grant as President again in 1880.

Judged by their acts, both the Republican and Democratic, parties stand pledged against the re-enactment of an income-tax law by which the burdens of the government may be equitably born by all its citizens, and revenue justly collected to assist in paying our national debt.

Having been fortified and strengthened by all the legislation they had asked, the money dealers remained apparently quiet until 1873.  But during this period important changes had taken place.  Since the so-called Credit-Strengthening act of 1869, Germany, Sweden, Norway and Denmark had demonetized silver, and thereby reduced the value of silver bullion in the London market, while our late discoveries of rich mines in Colorado.  Montana and Idaho was adding to our stock of this metal, until our coinage of the standard silver dollar had risen from almost zero in 1869 to $588,308 in 1870, $659,929 in 1871, $1,112,961 in 1872, and in three months of 1873, $977,150.

This was a startling development, and aroused the shylocks to renewed action.  They had procured the change in the payment of their bonds from currency to coin, but it was coin of the United States at its standard value at the time of the passage of the law, and the silver dollar of 412½ grains, nine-tenths fine, was one of these coins, and under the law and the contract stipulated on the face of the bonds, they might be paid, and justly too, in those silver dollars.  A large amount of the bonds had passed into the hands of European holders.  Their agents in Wall street flashed the news by cable to their principals, informing them of the dilemma.  Europe at once became deeply interested in the study of American financial policy, and in order to become fully posted the large operators in foreign securities raised a bonus of $500,000 and sent Mr. Ernest Seyd, the great English financial economist, over to the United States to investigate and study the situation and report to them.  Mr. Seyd came and investigated.  He found the situation unmistakably such that the bonds were payable in silver, which would fill both the letter and the spirit of the contract.  What should be done ?  Silver must be demonetized.

Q.  For what reason did they want to demonetize silver, when it would assist us to pay the bonds which they held ?

A.  For the reason that they did not want the bonds paid.  It was not the money which they had invested in the bonds that they wanted—it was the usury.  If they could demonetize silver it would rob us of one-half of our coin, and as our bonds had now been made payable in coin, it reduced our ability to pay just one-half, and would double the purchasing power of the remainder for everything except bonds and salaries.  This class who deal in money and bonds always clamor for dear money and cheap labor, and insist on a nation funding its debts instead of paying them.

Q.  Why are they in favor of refunding our national debt ?

A.  Because money invested in bonds is exempt from taxation, and therefore returns a better revenue to its owner than can be realized in any of the productive industries ;  beside, the investment is perfectly safe, and requires no labor to make it produce.  As the late Hon. Fernando Wood said, on the floor of the House of Representatives :  “ It is necessary in order to provide a safe deposit for idle capital.”  It provides the means whereby the rich and idle can be protected, fed, and clothed, and “fare sumptuously every day” at the expense of the poor who labor incessantly for the simplest necessaries of life.

Q.  In what way would the demonetization of silver operate to interfere with the ability of the government to liquidate the national debt ?

A.  It would leave gold the only money with which the bonds could be paid according to contract, and, as the ability of the people to pay revenue depends on the amount of money in circulation, the reduction of the circulation by the withdrawal of silver would reduce the revenue of the government in the same proportion, and hence make it impossible to pay the bonds as they mature.

Q.  What was the amount of the national debt in 1873, when silver was demonetized ?

A.  It is shown by the report of the Secretary of the Treasury to be $2,234,482,993.20.

Q.  How much of that was payable in gold and silver ?

A.  All.  After the passage of the law of 1870, providing for refunding the $1,500,000,000 currency bonds into bonds payable in coin, except $60,000,000, issued to the Pacific Railroad Company, which was, and still remains, payable in greenbacks, or “lawful money of the United States.”

Q.  How much cash was it the Treasury at that time ?

A.  We are informed by the Secretary of the Treasury, in his report, that the cash in the Treasury amounted, at that time, to $129,020,932.45

Q.  What did the revenue of the government amount to then ?

A.  The Secretary informed us that it amounted, in 1873, to $333,738,204.67.

Q.  What was the amount of the expenditures for the same year ?

A.  The same report informs us that they amounted to $290,345,245.33.

Q.  How much was the annual interest charge on the national debt in 1873 ?

A.  The Secretary’s report for that year shows that it was $98,049,804.00.

Q.  Was any steps taken by the government to provide the coin to pay the bonds as they matured ?

A.  No.  On the 24th of March, 1875, Congress passed an act providing for what it called specie resumption, to take place on the first day of January, 1879, and authorized the Secretary of the Treasury to sell bonds, in order to obtain gold for that purpose, $90,000,000 of which was sold.

Q.  What rate of usury did the bonds sold for resumption purposes bear ?

A.  $65,000,000 of them dear 4½ per cent. and mature in 1891, and $25,000,000 bear 4 per cent. and mature 1907.  The annual usury on the two issues amounts to $3,925,000, and if these bonds shall be paid at maturity the usury will amount to $60,950,000.  This added to the principal, will make $150,950,000.  The tax-payers of the country will have paid for ninety millions of gold to lay idle in the Treasury, producing no revenue whatever.

Q.  Was the government able to resume the payment of its obligations in gold and silver, in fact, on the first day of January, 1879, as provided for by the law of 1875 ?

A.  No.  The government had outstanding, in legal-tender notes, $375,771,580.00 ;  demand notes, $62,287.50 ;  one and two years’ notes of 1863, $90,485.00 ;  compound interest notes, $274,920.00 ;  fractional currency, $16,447,768.77 ;  national bank currency, for which the government is responsible, 324,514,289.00 ;  making, $817,161,330.27.  The amount of cash in the Treasury, was $249,080,167.10, leaving a deficit of $568,081,163.17, exclusive of the seven hundred and eighty millions of bonds that was to mature in 1880 and 1881.

Q.  What were the specifications of the law providing for resumption ?

A.  The specifications of the act of January 24, 1873, which provides for (so-called) resumption, reads as follows :

“ And on and after the first day of January, A.D. 1879, 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 $50.”

Q.  Did not this act provide for the resumption of specie payment by all the National Banks ?

A.  No !  The National Banks are not compelled to pay out a dollar in gold and silver for their notes.  They are redeemable in legal-tender notes ;  so that the (so-called) specie resumption does not apply to them at all.  It applies to the legal-tender notes when presented at the office of the Assistant Treasurer in the City of New York in sums of fifty dollars and over, and to no other place or any other currency.

Q.  If this act was what it purported to be—an act providing for the resumption of specie payment in the United States—why was the National Banks exempted from its operation ?

A.  It never was intended that they should be specie-paying banks.  The law under which they were created provided for the redemption of their notes in legal-tender notes of the United States, and nothing else.  The sole aim and object of the law was to retire all the legal-tender money from circulation and supply its place with national bank notes, which the government was pledged to redeem.  When its legal-tender notes were all retired and destroyed it would be compelled to redeem the national bank notes in coin, repudiate its contract, or issue a new series of legal-tender notes to redeem them with ;  and this the bankers would not permit.  This law removed all restrictions on the amount of national bank notes to be issued, and provided that for every thousand dollars of additional issues by the banks the Secretary of the Treasury should retire from circulation eight hundred dollars of legal-tender notes, until only three hundred millions remained in circulation.  Then, after January 1, 1879, the remainder should be redeemed in coin in the city of New York, at the office of the Assistant Treasurer of the United States.  This was intended to put not only all the paper currency into the hands of the bankers, but all the coin also.  As the money passed through the banks after the 1st of January, 1879 ;  the bankers could hold the legal-tender notes and replace them with their own currency, and return them to the Treasury, and draw the coin for them as fast as it accumulated in the Treasury, thereby substituting their own currency for the legal-tender notes and depleting the Treasury of its coin at the same time.  Having accomplished this, the national bankers would then have been the “sole dictators of the commercial and business affairs of the country.”

Q.  How much of the legal-tender money was retired from circulation under the operation of this law ?

A.  The report of the Secretary of the Treasury shows that in 1875 there was in circulation legal-tender notes to the amount of $375,771,580, and on the 1st of July, 1879, there was in circulation $346,681,016, showing a reduction of $29,090,564.

Q.  Why was the withdrawal of the legal-tenders discontinued before they were all redeemed, as the law provided ?

A.  The terrible stringency in the money market produced so much bankruptcy and ruin throughout the country that the people became thoroughly aroused, and demanded legislation preventing the further retirement of the legal-tenders and the restoration of the silver dollar to its former place in the currency, that the Representatives in the two houses of Congress dare not resist them.  In obedience to their imperative demands the Forty-fifth Congress, in 1878, enacted laws prohibiting the further withdrawal of the legal-tender notes from circulation, and for the remonetization of the silver dollar and its restoration to its full legal-tender property.

Q.  Had the people been consulted, or did they ask Congress to pass the law demonetizing silver ?

A.  No.  The matter had not been canvassed in any political campaign.  The question had not been submitted to them for their approval or rejection.  So silently and stealthily was this odious measure passed through Congress, and so quietly was it managed, that it was from two to three years before the people knew that such a law had been passed.  Many Senators and Representatives declare that they were not aware of the fact that the bill demonetized silver when they voted for its passage.  The Secretary of the Treasury, Mr. Richardson, did not so understand it, for in the fall of 1873, eight months after the passage of the law, he  recommended immediate resumption of specie payments in silver.  President Grant (though he signed the bill) did not understand that it demonetized the silver dollar ;  or, if he did so understand it, he convicts himself of an act of gross cupidity in order to deceive the people, who had trusted and honored him with the highest gift of the nation, which ought to forever damn him in the eyes of every honest American.

On the 3d day of October, 1873, he wrote a letter to Mr. Cowdry, in which he uses the following suggestive language :

“ I wonder that silver is not already coming into the market to supply the deficiency in the circulating medium.  Experience has proved that it takes about $40,000,000 of fractional currency to make the small change necessary for the transaction of the business of the country.  Silver will gradually take the place of this currency ;  and, further, will become the standard of-values, which will be hoarded in a small way.  I estimate that this will consume from 200.000,000 to $300,000,000 of this species of our circulating medium.  I confess to a desire to see a limited hoarding of money.  But I want to see a hoarding of something that is a standard of value the world over.  Silver is this.  Our mines are now producing almost unlimited amounts of silver, and it is becoming a question, ‘What shall we do with it ?’  I suggest here a solution which will answer for some years, to put it in circulation, keeping it there until it is fixed, and then we will find other markets.”

These declarations of the President compel every honest thinker to adopt one of two conclusions.  He was either deceived himself, or he intended by this letter to deceive the people.  Charity for the frailties of human nature would plead that he was honest in his intentions, but did not understand the nature of the law to which he placed his signature.  But a critical examination of his letter shows strong marks of an intention to deceive.  He says silver is a “standard of value the world over;”  but he only speaks of our fractional currency, which was not a standard of value, even in the United States, for any sum over five dollars.  It was this he wished to see hoarded by the people to the amount of two or three hundred million dollars.  He does not mention the standard silver dollar of 412½ grains, which was one of the coins of the United States until February 12, 1873, which was a legal-tender for the payment of the coin bonds issued in 1870.  As he makes no mention of this coin, or the application of any part of our vast silver product to the payment of the national debt, we are driven to the conclusion that he did know the full force and scope of the bill when he signed it, and that his letter to Mr. Cowdry was intended for a blind to deceive the people and cover the perfidy of the act.  Add to this his letter written from Smyrnia to Judge Long, of St. Louis, on the 24th of February, 1878, in which he says :

If I was where I was one year ago, and for seven previous years, I would put a detrimental veto upon the repudiation bill—called the silver bill.  I fear it has passed, but hope, if so, all business men in the country will work to defeat its operation by refusing to make contracts except to be paid in gold coin.

In this letter he fairly commits himself as being combined with the money power to rob the people of the benefits of the vast amount of silver produced by our mines, but so zealous was he in their behalf that he would advise the open and flagrant nullification of the law in order to thwart the will of the people, emphatically expressed through their representatives.  Giving this evidence its proper weight, there appears to be no other conclusion to be drawn than that General U.S. Grant, upon whom the people had conferred the highest honors in their gift, proved recreant to his trust, and a traitor to the interests of the wealth-producers of the Nation.

Q.  How could it be possible for a bill of such vast importance to pass both houses of the National Legislature and receive the signature of the President, without its whole scope and operation being fully understood ;  and especially the dropping out of the bill the only silver unit the government had ever issued from its mints ?

A.  It ought not to have been done, and it was nothing short of base, criminal neglect on the part of those who did not understand it.  It was their duty as representatives of the people, to examine the character of every bill presented for their consideration before acting upon it, and the President is bound by his oath to examine every bill presented for his signature before approving it and making it a law of the land.  But this was not done, and the bill became a law, with intent to defraud on the part of those who were initiated into the plot, and culpable neglect on the part of those who were not.  The fact exists, but the precise manner of its accomplishment is not so readily explained.

The history of the case is like this :  There had been for several years a bill before the House entitled, “An act revising and amending the laws relative to mints, assay office and coinage laws of the United States.”  This bill had been discussed in both Houses, and amendments attached to it, but the two Houses had failed to agree, and it had been laid over.  After Mr. Seyd had been at Washington for a considerable time, this bill was called up and placed in the hands of the Committee on Coinage, Weights and Measures of the House of  Representatives, of which Hon. William D. Kelley, of Pennsylvania, was chairman.  Mr. Kelley says that “on account of urgent business of the Committee of Ways and Means, of which be was a member, he appointed Mr. Hooper, of Massachusetts, to take charge of the bill.”

A new draft of this bill was made, containing more than sixty sections, and leaving out any provision for the coinage of the standard silver dollar of 412½ grains.

This bill was ingeniously drawn.  Section 47, the first one relating to silver coinage provides :

“ That the silver coins of the United States shall be a trade dollar, a half dollar or fifty cent piece, a quarter dollar or twenty-five cent piece, a dime or ten cent piece ;  and the weight of the trade dollar shall be 420 grains troy, the weight of the half dollar shall be twelve grammes and one half gramme, the quarter dollar and the dime shall be respectively one-half and one-fifth of the weight of said half dollar ;  and said coins shall be a legal tender at their nominal value for any amount not exceeding five dollars in any one payment.”

This section does not prohibit the coinage of the silver dollar of 412½ grains, nor does it make any provision for its coinage.

Section 48 does not refer to it, but section 50 provides :

“ That no coins, either of gold, silver or minor coinage, shall hereafter be issued from the mint, other than those of the denominations, standards and weights herein set forth.”

It was by this means this bill provided for the demonetization of the silver dollar of 412½ grains without naming it, and to this, in part, may be attributed the success of the measure.

On the 27th of May, 1873, Congress having agreed to adjourn on the 29th, and within less than forty-eight hours of adjournment, and in the hurry and confusion always preceding adjournment, and during which time it is in order to suspend the rules, Mr. Hooper called up the bill reported by the Committee on Coinage, Weights and Measures, and offered a substitute.  He said :

“ I desire to call up House bill No. 1,427.  I do so for the purpose of offering an amendment to the bill in the nature of a substitute, one which has been carefully prepared, and which I have submitted to the different gentlemen who have taken a special interest in the bill.  I move that the rules be suspended and the substitute put upon its passage.”

Objection was made to the suspension of the rules, to which Mr. Hooper replied that it was not necessary that the bill should be read, that it had been carefully examined by those desiring to examine its provisions.

The House refused to allow the bill to pass in that way ;  but he again called it up and moved to suspend the rules and pass the substitute.  This aroused the apprehension of some of the members that this substitute made some important change in the existing coinage law.

Mr. Holman propounded the following question to Mr. Hooper :

Mr. HOLMAN. “ Before the question is taken on suspending the rules and passing the bill, I hope the gentleman from Massachusetts will explain the leading features of the changes made by this bill in the existing law, especially in reference to the coinage.  It would seem that all the small coins of the country is intended to be recoined.”

Mr. Hooper replied as follows :

Mr. HOOPER. “ This bill makes no change in the existing law in that regard.  It does not require the recoinage of the small coins.”—Congressional Record, 1873, page 1,605.

This was a distinct and emphatic answer.  First, that the bill made no change in the existing coinage law, and second, that the small coins were not to be recoined.

This so far satisfied Mr. Holman and the House, that the bill was permitted to pass under the suspension of the rules without further scrutiny or discussion ;  but from all that can be gathered from the statements of members, there was not a dozen in the House, outside of those who were seeking to pass it surreptitiously for the benefit of the bankers and bondholders, who knew at the time, that they were voting to demonetize the silver dollar of 412½ grains, which had been the unit of value in the United States for more than eighty years.

Hon. James A. Garfield, then a leading Republican member of the house, and since elected President by that party, in a discussion with Hon. George H. Pendleton in the fall of 1877, said :  “ Perhaps I ought to be ashamed to say so, but it is the truth to say that I, at that time (passage of the law demonetizing silver), being chairman of the committee on appropriations, and having my hands over full during all that time with work, I never read the bill.  I took it upon the faith of a prominent Democrat and a prominent Republican, and I do not know that I voted at all.  There was no call of the yeas and nays, and nobody opposed the bill that I know of.  It was put through as dozens of bills are, as my friend and I know, in Congress, on the faith of the report of the chairman of the committee ;  therefore, I tell you, because it is the truth, that I have no knowledge about it.”

After passing the House in this clandestine manner, wrapped up in the cloak of falsehood, and screened from scrutiny by criminal neglect, it went to the Senate, and when it came up for consideration in that body, its career was equally marked with a disregard of truthfulness and candor on the part of its advocates.

Hon. John Sherman, whose shadow has been first seen in every step of progress made in the movements of the money power, was Chairman of the Committee on Finance, and made the announcement that the bill, substantially, had passed the Senate of the Forty-first Congress ;  that it was not worth while to read it.

In the Congressional Globe (page 293, part I.,) will be found the following words, spoken by that gentleman, when he called up the bill :

Mr. Sherman.—“ I am directed by the Committee on Finance, to whom was referred the bill (H.R., No. 2,934) revising and amending the laws relative to the mints and assay offices and coinage of the United States, to report it back with two or three amendments.  This bill has, in substance, passed both Houses, except that the Senate bill enlarged and increased the salaries of officers of the mint.  It was passed by the Senate of the last session of the last Congress, went to the House, now somewhat modified, has passed the House at this Congress, so that the bill has practically passed both Houses of Congress.  The Senate Committee on Finance propose the modification of only a single section ;  but as this is not the same Congress that passed the bill in the Senate, I suppose it will have to go through the form of a full reading, unless the Senate is willing to take it on the statement of the committee, the Senate having already debated it at length and passed it.  It would have to be read in full unless the Senate, by unanimous consent, allow it to pass without a formal reading.”

Unanimous consent was not granted, and the bill was laid over, and came up again for debate, as will be seen by reference to the Congressional Globe (page 672, part I.), but no mention is made of demonetizing silver.  The ubiquitous Mr. Sherman appears again as its advocate.  The Globe reports him as saying :

“ I rise for the purpose of moving that the Senate proceed to the consideration of the Mint bill.  I will state that probably this bill will not consume any more time than the time consumed in reading it.  It passed the Senate two years ago, after full debate.  It was taken up again in the House during the present Congress, and passed there.  It is a matter of vital interest to the government, and I am informed by officers of the government that it is important that it should pass promptly.  The amendments reported by the Committee on Finance present the points of difference between the two Houses, and they can go to a committee of conference without having a controversy here in the Senate about them.”

It will be recollected that Mr. Hooper stated in the House that his substitute, which passed the House, made no change in the coinage law.  Mr. Sherman says :

“ It is substantially the bill which passed the Senate and the House of Representatives, at previous sessions, with two or three amendments.”

The bill which had been voted upon in both Houses, in the previous sessions, had been so amended by Mr. Hooper’s substitute as to make the section providing for silver coinage read as follows :

“ That the silver coins of the United States shall be a dollar, a half dollar, or 50-cent piece, a quarter dollar, or 25-cent piece, a dime, or 10-cent piece, and the weight of the dollar shall be 384 ;  the half-dollar, the quarter dollar, and dime shall be, respectively one half, one quarter and one tenth of the weight of said dollar, which coins shall be a legal-tender, at their nominal value, for any amount not exceeding five dollars in any one payment.”

This section was stricken out by the Senate committee and the following inserted :

“ That the silver coins of the United States shall be a trade dollar, a half-dollar, or fifty-cent piece, a quarter-dollar, or twenty-five-cent piece, a dime, or ten-cent piece ;  and the weight of the trade dollar shall be 420 grains troy, the weight of the half-dollar shall be 12½ grams, the quarter-dollar and the dime shall be, respectively, one-half and one-fifth of the weight of said half-dollar ;  and said coins shall be a legal-tender at their nominal value in any sum not exceeding five dollars in any one payment.”

It will be observed that, while neither of these propositions said one word about demonetizing the silver dollar of 412½ grains, they both provided for the coinage of a dollar of a different weight, which should not be a legal-tender for any sum over five dollars ;  and yet, honorable Senators and Representatives stood in their places in the halls of Congress and declared that this bill made no change in the existing coinage laws of the United States.

There was at this time a committee of the House of Representatives engaged in revising and codifying the United States Statutes, of which Mr. Poland was chairman.  When that committee made its report the question was again asked, if the committee, in its work, had made any change in existing law in their revision.  Hon. B.F. Butler, a member of the committee, answered in the following words :

“ I desire to premise here that your committee felt it their bounded duty not to allow, so far as they could ascertain, any changes of the law.  This embodies the law as it is.  The temptation of course, was very great, where a law seemed to be imperfect, to perfect it by the alteration of words or phrases, or to make some change.  But that temptation has, so far as I know and believe, been resisted.  We have not attempted to change the law, in a single word or letter, so as to make a different reading or a different sense.  All that has been done is to strike out the obsolete parts and to condense and consolidate and bring together pari materia ;  so that you have here, except so far as it is human to err, the laws of the United States under which we now live.  And it will be necessary, if the bill passes Congress, that it shall pass without any one undertaking to amend the law as it stands in the revision ;  because, once beginning to amend the revision by altering the law from what it is will lead into an interminable sea, in which we shall never find soundings, and which will never find a shore.  But if there be any omission of any provision of the law, the theory of this revision is that that shall be supplied, and to that the committee desire to call the attention of the House.”

Upon the same occasion Mr. Poland, the Chairman of the Committee of the House, who had the bill in charge, gave the following emphatic assurance that the committee had made no change in the existing law.  He says :

“ As my friend from Massachusetts has said, the committee have endeavored to have this revision a perfect reflex of the existing national statutes.  We felt aware that if anything was introduced by way of change into those statutes it would be impossible that the thing should ever be carried through the House.  In the multitude of matters that come before Congress for consideration, if we undertake to perfect and amend the whole body of the national statutes, there is an end of any expectation that the thing could ever be carried through either house of Congress, and therefore the committee have endeavored to eliminate from this everything that savors of change in the slightest degree in the existing statutes.”

This bill was also passed with these assurances that it made no change in existing law, when the statutes given to that committee for revision contained the distinct declaration that the silver dollar of 412½ grains should be one of the silver coins of the United States, and that it should be a full legal-tender for any amount.

Q.  What could have actuated those Senators and Representatives to misrepresent these bills to the two Houses and procure their passage, while the members were ignorant of the facts ?

A.  The moving cause which actuated those members of the two Houses who were initiated into the secret will probably never be positively known.  But when we remember the vast amount of money there was involved in the success of the plan, and that the capitalists of Europe had sent over half a million of dollars to assist in securing the measure, in addition to the interest of the American bondholders, the conclusion is irresistible that the agents of the money power had discovered where they could place their funds to the best advantage, and they had so placed them as to secure the result.

Considering the gigantic interests involved in the struggle with the money power on the one hand, intrenched behind unlimited wealth, ever grasping for more power and more money ;  austere, arrogant and unfeeling ;  unscrupulous as to the means used for the accomplishment of their ends ;  ever vigilant and indefatigable in the pursuit of the one object—money ;  and, on the other hand, a toiling, tax-ridden people who were struggling from year to year for a simple subsistence above what it required to defray the expenses of the government, who had been already robbed of two-thirds of their circulating medium, whose only hope was in the honesty and integrity of the ballot-box for protection against further robbery.  A conspiracy of such representatives against the weak and helpless, who had confided their most sacred interests to their care, was one of a most dark and damning character—and to add, if possible, a deeper stain of infamy on the blackened record, by standing in their places in the halls of the Congress of the United States, and adding falsehood to treachery, was the crowning act of political perfidy, and the price they paid for that mysterious and invisible influence which had robbed them of their manhood, and held them pinioned, bound hand and foot—slaves to the money power.