Ideas for a Science of Good Government
Addresses, Letters and Articles
on a Strictly National Currency, Tariff
and Civil Service
COIN AND PAPER CURRENCY.
After giving my own efforts in favor of a strictly national currency and against monopolies, I cannot help adding some of the efforts of statesmen, divines, journalists and financiers, who warn the people of the dangers, that threaten our country.
Letter from Mr. Calhoun to a committee, who had invited him to a public dinner, in South Carolina :
FORT HILL, September 6, 1838.
GENTLEMEN : I have been honored by your note of 27th of August, inviting me to participate in a dinner to be given to your Senators and the members of your delegation in Congress, who have concurred with them on the great and agitating question of the day.
The great distance and my engagements compel me reluctantly to decline your kind and flattering invitation.
It is difficult to over-estimate the importance of the great measure, which now engrosses the public attention ; and those, who hold it up, as a question of small magnitude, while they denounce it and all, who support it, in the most unmeasured and bitter terms, act neither sincerely nor honestly. In whatever light it may be viewed, it is a question of the first magnitude ; even more so in its political and moral bearings, than its fiscal and commercialthe light in which it has been principally regarded. I feel that I hazard nothing in asserting, that the banking system, through its connection with the Government, is affecting, and if not arrested, will affect one of the greatest revolutions in the political and moral condition of the world, of which history has left any record ; and, let me add, one of the most pernicious. If permitted to progress, it will elevate the money power above all othersabove thrones and principalities, laws and constitutions. It has already acquired in our country an almost unlimited control over the fortunes of individuals and the business of the community. By granting or withholding favors ; by expanding or contracting the currency, fortunes are made or lost, and the whole business of the community, through every channel or industry is made to prosper or decay. Neither good nor bad seasons, neither the smiles nor the frowns of Providence, exercise a more controlling influence for good or evil, over the fortunes of individuals or the community. It is in vain, that the bounty of heaven shall bless the land with seasons of plenty and health, a sudden contraction, or a suspension of payment spreads ruin and desolation around, and plunges into poverty thousands, who, but a moment before, believed themselves to be independent, and in affluent circumstances.
No one, who has observed the operations of the last twenty years, can doubt the truth of this picture, and that the power, as great as it now is, has not reached the maximum of its increase. Now I would ask, is there a man so blind, as not to see the debasing consequences, which must follow, morally and politically, by thus elevating the money above all other powers in this State, and giving it such overwhelming control ? Can it be done, without debasing the noble and independent spirit, which created our free institutions, and without which it is impossible to maintain them ? Can it be done without spreading over the land one all-absorbing spirit of gain, which shall extinguish all the more elevated feelings of our nature, and raise him, who may dispense the favors of banks, in public estimation, over the philosopher, the statesman, the divine, the patriot, the warrior, or those engaged in the active and productive pursuits of society ? Can this be done without inverting the order of the moral world, and bringing down in the end, on the people, who may have the folly and the weakness to permit it, unheard of calamities ?
To guard against these, it is clear, that something must be done to prevent mere private corporations from exercising such unlimited control over the currency of the country, and, through it, the fortunes of individuals and the community. To effect this I can imagine no measure more simple, effectual and practicable, than the entire and final divorce of the unholy and unconstitutional connection between Government and Bankthe great measure of deliverance and liberty, as happily expressed by the able and patriotic statesman (General Gordon), who will have the lasting honor of having first proposed it in Congress. This once adopted, the whole system may be gradually and safely reformed, as experience and reflection may point out, and the country saved from unnumbered woes.
Permit me in conclusion to offer the following sentiment :
The great and leading measure of the ageIt rests upon the imperishable foundation of truth, and though it may be defeated at first, its final triumph, if supported with energy and perseverance, is certain.
With great respect, I am, etc.
Calvin Graves, Esq., and others of the Committee.
Mr. Chase in a report said :
It has been well questioned by the most eminent statesmen, whether a currency of bank notes, issued by local institutions under State laws, is not, in fact, prohibited by the National Constitution. Such emissions certainly fall within the spirit, if not within the letter, of the constitutional prohibition of the emission of bills of credit by the States, and of the making by them of anything, except gold and silver coin, a legal tender in payment of debts.
However this may be, it is too clear to be reasonably disputed, that Congress, under its constitutional powers to lay taxes, to regulate commerce and the value of coin, possesses ample authority to control the credit circulation, which enters so largely into the transactions of commerce and affects in so many ways the value of coin. In the judgment of the Secretary, the time has arrived, when Congress should exercise this authority.
And years later, the Hon. E.G. Spaulding, although a National Bank President, branded in his Financial History of the War, (page 188) the bank issue as an inflation of the currencyand therefore, not only useless, but mischievous.
John Earl Williams, President of the Metropolitan National Bank of New York, a banker second to no other in experience, success or position, says :
I would suggest that Congress assume, at once, the inherent, sovereign prerogative of a Government of the people, by the people and for the people, and exercise it by furnishing all the inhabitants of the United States with a uniform national currency.
Surely the people, and the people only, have a natural right to all the advantages, emolument or income, that may inure from the issue of either one thousand dollar bonds, with interest, or ten dollar notes without, based on the faith and credit of the nation.
This principle, simple, clear and undeniable, ought to be recognized as fundamental, and the only safe and proper basis, on which may securely rest all the circulating medium of the country ; for the sole benefit of all the people, and not, as now, for the profit of a class of stockholders.
As some of my early theoretic lessons in finance come from Albert Gallatin, who was Secretary of the Treasury under Jefferson and Madison, I quote a report of a meeting of The New York Board of Currency from the Courier and Enquirer. As Gallatin died, 1849, this report was written over thirty years ago :
NEW YORK BOARD OF CURRENCY.
PETER COOPER, Esq., First Vice-President, occupied the Chair, in the absence of the President, Mr. GALLATIN, who is in Europe.
A Communication was read relative to the objects of the Board, from an aged merchant of great experience, retired in the Isle of Wight. He referred to the injurious influences exerted upon the productive industry of Great Britain by increasing taxation and the excesses of the credit system in that country, and advised earnest attention in the United States to the establishment and maintenance of a sound currency, the best means of securing steady progress in the development of all the resources of the country. The letter concluded : I most sincerely wish you all possible success in your endeavors to establish the Banking system upon a safe and solid foundation. It is the most important and patriotic mission you could undertake. America is more happily circumstanced in many respects perhaps than any other nation. Not being burdened and embarrassed with a heavy debt, you are left free to pursue the course, that true wisdom shall point out, and it would be no easy task for any one to estimate all the national advantages which now lie within your reach.
The Recording Secretary submitted mathematical diagrams, prepared by Mr. John V. Yatman, who is engaged in perfecting a series of illustrations of American commerce, currency, and prices since 1790, in which the statistics of each of the seventy years are presented in a condensed form.
Mr. YATMAN explained the mathematical principles governing him in the efforts he is making to demonstrate the practical operation of the laws of currency and prices. The result is a complete vindication of the views promulgated by this Board.
Hon. GEORGE OPDYKE spoke of the rapid progress which sound views of currency were making throughout the country. He had long since demonstrated to his own satisfaction, with mathematical certainty, the truth of the principles of currency advocated by this Board. Their truth is advocated by experienced bankers and merchants, and it is a great error to suppose that a sound system of banking is on the average, less productive of profit than an erroneous system. The latter revolves around a vortex of bankruptcy into which it is constantly liable to be plunged upon the recurrence of adverse movements in trade and commerce. The former is uniformly and permanently remunerative, and of great advantage to the community. It is a gratifying fact, identified with the currency question, that the interests of the people and of the Banks go hand-in-hand in favor of a sound system. There is no clashing of interests in the path of duty which has been marked out by true principles, in this case.
He spoke with approbation of the work which Mr. Yatman had undertaken. He considered it important because it would establish, by positive demonstration, upon the basis of actual experience, those truths in monetary science upon which so much difference of opinion had existed.
HON. JOHN COCHRANE, Member of Congress, and Chairman of the Committee on Commerce of the House of Representatives, being called upon, referred to the interest he felt in the discussions of the Board. He had found that there is a great difference between the theories of money and the practical influence exerted by money upon all the economical interests of a community, and in this Board he found that questions of money were discussed in the light of practical experience. Once illuminate the public mind, expose the errors of those systems which seek to confer the attributes of money upon a fiction, and error falls dead, the appliances of the opponents of truths perish. This Board is in the correct line of truth, and as true principles of currency are applied, so the correct line of national development will be discovered. We are in the focus of a vast future civilization. A deviation now from Christian truth will be an eternal loss to that future. Guided by truth, with our boundless commercial resources and growing population, when money, the instrument of commerce, goes forth in its purity, how vast will be the results ! If failure should again overwhelm us, the vitality of truth would reveal the line of duty amid every wreck and disaster. Without the financial wisdom that is guided by experience, our commerce will continue exposed to disasters. Hence, he concluded, the work of currency reform is part of the Christian progress of the world.
PETER COOPER, Esq., referred to the opinions which had been expressed by the immortal Washington. Not the amount of currency, but the real worth exhibited in the rapidity of circulation, is what constitutes a sound circulating medium. A fictitious currency was termed by Washington the shadow without the substance.
Mr. Yatmans mathematical illustrations were referred to a Committee, consisting of Messrs. William A. Booth, Joseph Lawrence, Wilson G. Hunt, Benjamin H. Field, George Opdyke, and John Eadie.
The board adjourned for two weeks.
The substitution of greenbacks for national bank notes is admitted to be the pivot, on which the money question turns. This point is strongly urged in the valuable writings of W.H. Winder, who says, in the following synopsis of his Resumption Factors :First, an ability to meet all specie demands ; second, that said demand is limited to the foreign debt ; third, that gold, equal to our wants, cannot be accumulated with said debt outstanding ; fourth, that the extinction of said debt would secure a genuine specie system, making our paper irresistibly on par with gold ; fifth, that this specific can alone be gained by developing our resources, keeping the people employed, making the exports double the imports and substituting greenbacks for national bank notes.
Statistics show, that the national and State Government debts and expenses are, per capita, $150 per annum, or $3 per week, or 50c. per day. It is also seen, that national banks in thirty years will suck from the productive industries $400,000,000 more than the entire public debt, or $2,450,000,000, every dollar of which would be saved by the exclusive use of the peoples greenback. Manifestly greenbacks by the people and for the people, would alone make labor in demand, ending strikes and hard times, scattering peace and plenty over the land.
The venerable Peter Cooper, in his letter to President Hayes of the 6th of August, wisely states :Government, by a judicious tariff, can do much toward promoting industries and encouraging capital for manufacturing, since we cannot as a nation buy anything cheap, that leaves our own good raw materials unused and our own labor unemployed.
Right shall rule and conquer error,
Ballots vanquish every wrong,
Money kings be struck with terror,
Freedom be the nations song.
August 13, 1877.
FROM EWINGS SPEECH ON RESUMPTION, 1877.
No greater injury could be inflicted on a people by its Government, than the reduction of the volume of currency, to which the business and values of the country were adjusted. To decrease the value of money was to strike at the interests of the whole body of the people. No man could engage profitably in merchandise, while the values, which he was handling, were failing, etc. . . .
I do not appeal to that money power, which seeks its fortune over the wrecked happiness and accumulations of its fellow-mena power, to which our unhappy civil war gave birthwhich has grown so enormous through unjust financial legislation ; which now bestrides our narrow world like a colossus, which subsidizes the press, which captures statesmen and parties, and makes them its subservient tools ; which hounds down and villifies every public man, who dares to raise his voice against it. That power, in the flush and arrogance of its enormous and ill-gotten gains, has a heart of stone, not to be touched by human sympathy and compassion. I appeal to the masses, to their faithful Representatives (I thank God) of both political parties on this floor. The true aim of government is the greatest good to the greatest number, and whoever by legislation or otherwise changes the value of a contract, is as accursed as he, who removes his neighbors landmarks. For twelve years past the financial legislation of this country has been dictated, one would think, in Lombard Street or Wall Street, and the people have been plundered by every fresh enactment. They have suffered the fate of the giant Gulliver, when tied down by the Lilliputians. Thank God they are about to riseto burst the bonds, which their petty foes have fastened upon them, while sleeping, and to walk abroad again in their own majesty, etc. . . .
SENATOR VOORHEES ON THE FISCAL POLICY OF THE GOVERNMENT,
DECEMBER 16, 1881.
MR. PRESIDENT : It is now nearly nine years since silver money was destroyed in this country by the repeal of the law of 1792, authorizing its coinage. This famous act of fraud upon a long and well-settled financial policy and of wrong and injustice to the business and labor of the American people, was consummated on the 12th day of February, 1873. And then for five years and sixteen days it remained upon the statute-books to curse the land. It took the people that length of time to discover, overtake and wipe out this act of unwarranted and clandestine legislation. But, when the evil work came to be fully comprehended throughout the country, the popular voice was neither slow nor timid in making itself heard. It did not salute the ears of legislators with the soft music of a sighing zephyr, dallying with summer flowers ; it came here rather with the fierce and commanding majesty of the hurricane in its wrath ; it came from every seat of honest enterprise and industry ; from the farmer, the manufacturer, the mechanic, the merchant, the trader, the wage laborer, from every class of business people, and it came breathing forth the indignation of a constituency, who found themselves betrayed and juggled in a matter of domestic policy, vital to their prosperity and happiness.
On the 28th day of February, 1878, the voice of the American people was obeyed in these halls, and silver money, the money of Washington, the unit of value, devised by Jefferson, the money of great minds in every age of civilized man, the money of the Constitution, the money of every period and of every political party of this Republic, until a recent day, was restored by law to coinage and to circulation. Let that day be remembered forever in the American calendar as one, on which a great victory was obtained, the first in many years, by the industrious, productive masses over the usury-gathering, idle, unproductive few. This triumph of popular justice was not the less precious to honest and generous minds, because of the scenes and circumstances, which attended it. The act for the restoration of silver money was passed through both branches of Congress in the face of prophecies of evil to the country, etc. . . .
When their pretended concern for the welfare of the country, and their real concern for their own enormous profits, were exposed and disregarded here, they bent their faces confidently toward the Executive Department of the Government, that last refuge, as it seems, for special privileges to favored classes. They were not mistaken ; they did not make their appeal to that Department in vain, etc. . . .
In defiance of the public will, in contempt of the policy of the Government for more than four-score years, and in open disregard of the wants of trade and business, the administration of Mr. Hayes sent to us his puny protest against the dreadful consequences of silver money. His veto, however, was swept aside by the Congress of the United States, as people brush cobwebs out of their way. The bill, restoring the silver dollar to its place in the coinage laws of the Government, was enacted into a law, over all combined opposition, by the tremendous vote of 196 to 73 in the House, and 46 to 19 in the Senate.
And now, sir, what response has the business of the country, during nearly four years past, made to the evil and vehement prognostications against the use of silver money ? Has it brought ruin, has it brought calamity, has it brought distress to the people ? Who has the hardihood to say so ? On the contrary, behold a contrast in the condition of the country. The five years, during which silver did not exist as legal currency, were years of the most appalling financial disaster ever known in American history. I am speaking now of what all men know, and stating that, which no man will deny ? From 1873 to 1878 there was a period of mourning over lost property, lost homes and lost labor, in every active business community in the United States, etc. . . .
The passage of the Silver Bill was accompanied by the groans and lamentations of the associated national banks, expressed in many a sombre memorial, petition, remonstrance and expostulation, laid before Congress, etc. . . .
The Act of Congress, by which silver was dishonored, was a prominent feature in a most unrighteous and criminal endeavor to so contract, cut down and diminish the amount of money in use among the people, that the hoarded millions of the banker and the capitalist would have more power in the affairs of men, than all the other powers of this Government combined. The dream of certain minds, in this country, has been for many years past to create in fact, if not in name, an order of aristocracy, a privileged class, with their rank and importance founded, not upon intellect, culture, refinement, grace or goodness, but upon their success in the practice of avarice, the meanest and most sordid passion of the human heart ever spoken of in the heavens above or the earth below. In furtherance of this purpose the possession of money, especially in considerable sums, being a badge of the new nobility, the common people were to have as little of it as possible, and for that little to be dependent entirely on the lords of capital, etc. . . .
The Secretary in trying to make the impression, that silver money is a drug and a failure, and that the people do not want it. Who can justify this assault upon the existence of a hundred millions of currency, possessed of the same purchasing power as gold ? I denounce it, and challenge the friends of such a policy, if it has any here, to come to its rescue. Let those, who will or dare, stand forth as its champions. This issue, thus forced without reason or justice upon the country, will be met by the country, and its authors will be sternly rebuked.
Such a movement, however, against financial stability and security, must necessarily have a powerful inspiration in some deeply interested quarter. We are not left in doubt at all as to the source of that inspiration. In connection with the proposed retirement of silver, and in order to quiet the fear in the public mind of a destructive financial contraction, the Secretary, as the mouthpiece of the banks, is good enough to say in his report :
There need be no apprehension of a too limited paper circulation. The national banks are ready to issue their notes in such quantities as the laws of trade demand, and as security therefor the Government will hold an equivalent in its own bonds, etc.
We are told, that the national banks are ready to issue their notes in place of the silver currency, marked for destruction, and to do so in such quantity as the laws of trade demand, the banks themselves, of course, being the judges of the laws of trade and of their demands. The country is to depend, in other words, on the interest or the generosity of the banks for its supply of money, etc. . . .
The question, here presented by the Secretary of the Treasury, is whether to such minds shall be surrendered the entire control of supply and circulation of the currency. Who is ready to support such a proposition ? Has national bank money been furnished at so little expense to the people, that they want it to take the place of all other kinds ? I do not wonder, that the banks want a total monopoly of the currency ; but it is astounding to me, that taxpayers should be willing for them to have any control at all of that vital question. The desire of the banks to destroy silver and greenbacks is very easily understood, etc. . . .
It is difficult, in moderate terms, to characterize such a recommendation. It is a wanton and, to my mind, a criminal assault upon the financial stability and the business prosperity of the whole country, etc. . . .
But the Secretary of the Treasury does not stop with the recommendation I have cited, for the destruction of good money in the form of silver certificates ; he modestly asks for the repeal of the act of February 28, 1878, providing for the coinage of silver, and requests, that the whole subject be left by Congress to his discretion to coin much or little or none at all, as he may think best. His language is as follows :
It is therefore recommended, that the provision for the coinage of a fixed amount each month be repealed, and the Secretary be authorized to coin only so much, as will be necessary to supply the demand.
It is very obvious, that the object of this recommendation, on the part of the Secretary of the Treasury, is to drive silver entirely out of circulation. This will be seen from the fact, that he attempts in his report to show, that there is no demand for silver, and aims to make a false impression, that it has been difficult to put silver money in circulation. I quote as follows from his report :
As required by the act of February 28, 1878, the Department has caused to be coined into standard silver dollars each month at least $2,000,000 in value of bullion of that metal. Constant efforts have been made to give circulation to this coin, the expense of transferring it to all points, where it was called for, having been paid by the Government. Only about thirty-four millions are now in circulation, leaving more than sixty-six millions in the vaults, and there is no apparent reason why its circulation should rapidly increase.
Sir, what must be thought of the candor or the intelligence of this public officer in speaking of sixty-six millions of silver in the vaults with no apparent reason for an increase of its circulation, when in point of fact every dollar of it is now in circulation in the form of a paper currency resting upon a specie basis ? etc. . . .
The profits of national banking, under our present system have been, and continue to be, something almost fabulous, and it is natural, that those engaged in it, should desire to expand their operations over the entire currency of the country. This is the solution of their ceaseless agitation of more power over the finances. But a short time ago they were demanding, through the Executive and the then Secretary of the Treasury, now the Senator from Ohio (Mr. Sherman), that the legal tender debt paying quality of over three hundred and forty-six millions of greenbacks, then at par with gold, should be withdrawn, and that this money, costing the people nothing for its circulation, should be left to perish by the wayside. This was to be done in order, that the banks might issue their notes in its place in such quantity as the laws of trade demand, according to the broad discretion, now conceded by the Secretary. Let us look, however, for a moment in this connection at the cost to the people of bank note currency, and see whether a circulating medium so expensive should supplant all others. The bank note circulation has averaged in round numbers about $280,000,000 during the last eighteen years. Government bonds, owned by the bankers and drawing interest from the labor of the people, were pledged to the amount of over $320,000,000 for the security of this circulation.
The interest, paid by the people and received by the banks on these bonds, may be stated at an average of not less than $17,000,000 a year ; this, for eighteen years, amounting to over $300,000,000 for the blessings of bank found money. By adding to this interest account the profits of the banks on their circulation and their deposits, it will be that they have received enough gains from the pockets of the people, since their creation, to pay off two-thirds at least of the national debt. And these vast sums have been paid to the banks simply for the privilege of receiving through their hands a little more than one-third of our currency, of no better quality than the other currencies, for whose circulation there was no tax on anybody. Is this such a showing as to entice Congress to abandon the whole financial question to the banks ? etc. . . .
Against the present paroxysm of greed on the part of corporate and consolidated banking capital, demanding through one of the departments of the Government the disgrace and the overthrow of silver money, I invoke the judgment and co-operation of all the busy multitudes of industrious men and women throughout all this broad, progressive land, etc. . . .