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Senate of the United States
Thursday, February 13th, 1862.
H.R. 240,
to issue legal tender Treasury notes

Issue of United States Notes.

The Senate, as in Committee of the Whole, resumed the consideration of the bill (H.R. No. 240) to authorize the issue of United States notes and for the redemption or funding thereof and for funding the floating debt of the United States.

---[unconstitutional, dangerous, temporary expedient, but this time necessary]

Mr. Sumner[Charles Sumner (1811-1874) Massachusetts (R); graduated from Harvard Law School, admitted to the bar; voted for the legal-tender clause, voted for the National Currency Bank bill, voted FOR the reduction of currency act;  voted FOR (twice) the credit strengthening act; instrumental in the enacting of radical reconstruction]  Mr. President, I am sorry to ask the attention of the Senate at this late hour;  but the importance of the question under debate must be my apology.

Charles Sumner, hater of white people In what I say now I shall confine myself exclusively to a single feature of the present bill.  Others may regret that the exigencies of the country were not promptly met by taxation;  or that at the beginning a different system was not organized by the Treasury, through which the national securities might have found a readier market;  or that the national credit was not sustained at the period of the bank suspension by the resolute redemption of the Government securities in coin at any present sacrifice.  But it is now useless to discuss these questions.  The time for such discussion has passed.  The tax bill is not yet matured.  The system adopted by the Treasury cannot be changed at once, if it were desirable.  It is too late to organize the redemption of the national securities in coin on the daily application of holders.  Meanwhile the exigencies of Government have become more imperative.  Money must be had.

And we are told that the credit of Government can be saved only by an act that seems like a forfeiture of credit.  Paper promises to pay are to be made a legal tender like gold and silver, and this provision is to be ingrafted on the present bill authorizing the issue of Treasury notes to the amount of $150,000,000.

All confess that they vote for this proposition with reluctance, while to others it is positively unconstitutional.  Of course, if unconstitutional, there is an end of it;  and all discussion of its character is superfluous.  And yet candor compels me to declare that the doubts which perplex me on this occasion do not proceed from the Constitution.  If the question of constitutionality were in all respects novel, or, as lawyers phrase it, of first impression, then I might join with my friends in their doubts.  But it seems to me that the constitutional power of Congress to make Treasury notes a legal tender was settled as long ago as when it was settled that Congress might authorize the issue of Treasury notes;  for from time immemorial the two have gone together, one as the incident to the other, and, unless expressly severed, they naturally go together.

It is true that in the Constitution there are no words expressly giving to Congress the power to make Treasury notes a legal tender;  but there are no words expressly giving to Congress the power to issue Treasury notes.  If we consult the text of the Constitution, we shall find it as silent with regard to one as with regard to the other.  But, on the other hand, the States are expressly prohibited to "emit bills of credit, or make anything but gold and silver coin a tender in payment of debts."  Treasury notes are "bills of credit;"  and this prohibition is imperative on the States.  But the inference is just that this prohibition, expressly addressed to the States, was not intended to embrace Congress indirectly, as it obviously does not embrace it directly.  The presence of the prohibition, however, shows that the subject was in the minds of the framers of the Constitution.  If they failed to extend it still further, it is reasonable to conclude that they left the whole subject in all its bearings to the sound discretion of Congress, under the ample powers intrusted to it.

The stress that is so constantly put upon the prohibitions addressed to the States will justify me in introducing the opinion [of] Mr. Justice Story, in his Commentaries:

"It is manifest that all these prohibitory clauses as to coining money, emitting bill of credit, and tendering anything but gold and silver in payment of debts, are founded upon the same general considerations.  The policy is to provide a fixed and uniform rule throughout the United States, by which commercial and other dealings of the citizens, as well as the moneyed transactions of the Government might be regulated." —2 Story's Commentaries, see. 1372.

If this view be correct, then no inference adverse to the powers of the national Government can be drawn from these prohibitory clauses, for whatever may be the policy of the national Government, it will be a fixed and uniform rule throughout the United States.

From the proceedings of the Federal convention it appears that a proposition empowering Congress "to emit bills of credit" was negatived, after discussion, in which Mr. Madison said:

"Will it not be sufficient to prohibit the making them a tender ?  This will remove the temptation to emit them with unjust views."  And in a note to the debate this same great authority says that he "became satisfied that the striking out the words would not disable the Government from the use of public notes, as far as they could be safe and proper, and would only cut off the pretense for a paper currency, and particularly for making bills a tender, either for public or private debts."

Thus it appears that the suggestion was made to prohibit the making of bills a tender;  but this suggestion was not acted on, and no such prohibition was ever moved.  It is evident that the convention was not prepared for a measure so positive.  Less still was it prepared for the prohibition to emit bills.  Such is the record.  While all words expressly authorizing bills were struck out, nothing was introduced in restraint of the powers of Congress on this subject.  Indeed, Mr. Madison declares his own personal belief that the striking out of the power "to omit bills of credit" would not disable the Government from the issue of public notes, so far as they could be safe and proper, but would only cut off the pretext for a paper currency.  It would seem from this language, in so careful a writer, that he imagined the whole subject was left substantially to the sound discretion of Congress.  Indeed, the inference from his report and comment is identical with the inference from the text of the Constitution itself. (See Madison Papers, vol. 3, p. 1343.)

But in conceding that Congress might issue "public notes as far as they could be proper," in other words, "bills of credit," the whole question was practically settled;  and the usage of the Government has been in harmony with this settlement.  Treasury notes were issued during the war of 1812, also during the war with Mexico, and constantly since, so that the power to issue them cannot be drawn into doubt.  If there was any doubt originally, an unquestioned practice, sanctioned by successive Congresses, has completely removed it.  I do not stop to consider whether the power is derived primarily from the power "to borrow money," or the power "to regulate commerce," or from the unenumerated powers.  It is sufficient that the power exists.

But it is difficult to escape the conclusion that if Congress is empowered to issue Treasury notes it may affix to these notes such character as shall seem just and proper, declaring the conditions of their circulation and the dues for which they shall be received.  Grant the first power and the rest must follow.  Careful you will be in the exercise of this power, but if you choose to take the responsibility I do not see what check can be found in the Constitution.

It appears that the phrase "bills of credit" was familiarly used for bank notes as early as 1683 in England, and also as early as 1714 in New England.  But the first issue in America was in 1690, by the colony of Massachusetts, and the occasion identical with the present — was to pay soldiers returning unexpectedly from an unsuccessful expedition against Canada.  These notes were from two shillings to ten pounds, and were receivable for dues at the Treasury.  Their form was as follows:

"This indented bill of ten shillings, due from the Massachusetts colony to the possessor, shall be in value equal to money, and shall be accordingly accepted by the treasurer and receivers subordinate to him in all public payments and for any stock at any time in the treasury."  Here the date and the follow the date and the signature of the committee authorized to issue these notes.  (Massachusetts Historical Collections, second series, vol. 3, p. 260.)

Such was their depreciation that these notes could not command money or commodities at money price, although the historian Hutchinson, who has recorded these interesting facts, does not hesitate to say that they had better credit than King James's leather money in Ireland only a short time before.  Being of small amount, they were soon absorbed in the payment of taxes.  But this example did not stand alone.  The facility with which paper money is created renders it difficult to withstand the temptation unless a Government is under the restraint of correct principles of finance, which at that early day were utterly unknown.  But an excuse for Massachusetts at that time may be found in the general poverty, the lack of precious metals, and in the distance from the marts of trade.  In 1702, there was another issue of bills of credit for £15,000, which, by a subsequent act, in 1712, were made a tender for private debts.  Under the continued cry of scarcity of money, bills of credit were again issued in 1716, to the amount of £150,000, to be lent to the inhabitants for a limited period, whose lands were mortgaged as security.  These bills were not made a tender;  but they were receivable at the treasury in discharge of taxes, and also of the mortgage debts.  Other bills were afterwards issued, so that paper money was common.  The historian, who has exposed this condition of things, does not hesitate to liken this currency to pretended values stamped on leather or paper, and declared to be receivable in payment of taxes and in discharge of private debts.  The natural consequence was a fatal depreciation, so that an ounce of silver, which in 1702 was worth six shillings and eight pence, in 1749 was equivalent to fifty shillings of this paper currency.  But, at the present moment, I do not seek to exhibit the character of this currency, but simply the original association between bills of credit and the idea of a tender.

But Massachusetts was not alone.  The neighboring colony of Rhode Island, as early as 1710, followed her example;  and in 1720 made her bills a tender in payment of all debts, except certain debts specified.  Connecticut issued bills at different periods, beginning with 1709;  some of which were made a tender, and some not.  New York began in the same year, substantially following Massachusetts;  and her bills were generally made a tender.  In 1722, Pennsylvania issued bills, secured on mortgages, and made a tender.  In 1739, Delaware did likewise, making her bills a tender.  So also did Maryland, in 1733, to the amount of £90,000;  but other bills were issued by Maryland in 1769, which were not made a tender.

The example of Virginia is more conspicuous, although not so early in time.  The very term "Treasury notes," now used as the equivalent of "bills of credit," first appears in her colonial legislation, when, in 1755, they were made a tender in payment of debts.  There were successive emissions in 1769, 1771, and 1773, which were not made a tender;  and then in 1778, and at other times afterwards, which were made a tender.  That these "Treasury notes" were deemed "bills of credit" is demonstrated by the legislation of the State, especially by the act of 1780, (chapter nineteen,) which, after reciting that the exigencies of war require the employment of paper money, authorizes new "Treasury notes," and proceeds to punish with death any person who shall forge "any bill of credit or Treasury note to be issued by virtue of this act."

I find that North Carolina sent forth bills of credit as early as 1748, which were made a tender, and many subsequent emissions were authorized.  South Carolina began in 1703;  but these bills, which bore interest at twelve per cent., do not seem to have been made a tender.  Others issued by this colony at different times afterwards were made a tender.  In 1760, Georgia authorized bills of credit on interest, and secured by mortgage of the property of the receivers, which were made a tender.

The extensive employment of paper money in New England, it seems, aroused the attention of the Imperial Parliament, which, by the act of (24 George II, sec. 2, cap. 53) 1751, expressly forbade the issue of "any paper bills, or bills of credit," except for certain specific purposes, or upon certain specified emergencies.  The act constantly speaks of these two as equivalent expressions, thus seeming to show that "bills s of credit," in their true meaning, were what is familiarly called "paper money," with the incidents of such money.  But the act proceeds to limit these incidents by declaring expressly that "no paper currency, or bills of credit" issued under the act shall be a legal tender in payment of any private debts or contracts whatsoever, with a proviso that nothing therein contained should make any bills then subsisting a legal tender.  That Parliament should deem it necessary, by special enactment, to take from bills of credit the character of a legal tender, attests the customary association between these two ideas.

During the revolutionary war, under the exigencies of that time, with a country without resources find a Treasury without money, bills of credit, known as continental money, were issued by Congress.  But while these were made receivable in discharge of taxes and other public dues, they were not made a legal tender by Congress, although the States were recommended to make them such.

Mr. Collamer.  And did make them so.

Mr. Sumner.  At the adoption of the national Constitution, the people, to their wide-spread cost, had become familiar with bills of credit and their incidents, while all who were conversant with colonial history must have known the part which bills of credit had played for nearly a century, not only as a help to currency, but as a legal tender, constituting paper money.  And yet, with all this ample knowledge — present certainly to the framers of the Constitution, if not to the people — no express words on this subject were introduced into the text of the Constitution, except with regard to the States.  The conclusion from this silence, under all the circumstances, is strong, if not irresistible.

But this silence of the Constitution with regard to bills of credit has been practically supplied by Congress, which has not hesitated to assume, the existence of the power.  If the Constitution failed to speak, Congress has not failed;  and the exercise of this power cannot now be questioned without unsettling our whole financial system.  But we have seen that throughout our colonial history the legal tender was a constant, though not inseparable, incident to the bill of credit;  that, indeed, was so much a part of the bill of credit that the Imperial Parliament positively interfered to separate the two, and, while sanctioning the bill of credit, forbade the tender.  All know, if this historical review is properly apprehended — if it is not entirely out of place — it must conduct to the conclusion that, whatever may be the present question of policy, the power to make Treasury notes a legal tender has precisely the same origin in the Constitution with the power to create Treasury notes.  It is true that you may exercise one power, and decline to exercise the other;  but if you assume the power to issue bills of credit, I am at a loss to understand how you can deny the power to make them a legal tender.  The two spring from the same fountain.  You may refuse to exercise one or both;  but you cannot insist upon one under the Constitution and reject the other.

Assuming the constitutionality of this proposition, or rather declining to admit the satisfactory force of the constitutional arguments against it, I am brought to a question which has, for me, more of difficulty and doubt: I mean the policy of exercising this power at this moment.  It is not too much to say that this question concerns our national character as well as our national welfare, while intelligent and patriotic men differ earnestly with regard to it.  Decide it as we may, and we cannot escape anxiety on the subject.  Take which way we will, and we cannot escape the just sense of responsibility.  Seeking only the truth, and jealous of that good name which is one of the best possessions to a Government, I shall consider the question frankly;  nor shall I disguise any of the difficulties which it presents, whether derived from principle or from experience.  This is not the time for concealment, and I shall insist that, if this power is to be exercised, its true character shall be understood.  I shall invoke, also, the examples of history, to make us pause;  but it will be my duty, also, to show that there are other examples calculated to sustain the Government in the policy which it now so urgently recommends.

If the Treasury notes of the United States were now convertible into coin, there would be no occasion to declare them a legal tender;  for they would be everywhere, at least in our own country, as good as coin.  But the suspension of our banks was followed by the suspension of our Treasury, and its notes are now inconvertible paper, which it is proposed to sustain artificially by declaring them a legal tender.  If this proposition be adopted, the Treasury will be enabled to substitute bits of engraved paper for money.  Of course, such a proposition, on its very face, is obnoxious to objections which make upon me an impression which I cannot disguise.

If we look at the history of paper money, especially in our own country, we shall find no encouragement.  Its evils were vividly portrayed at the time by the Federalist, and have been powerfully presented in this debate by the Senator from Vermont, [Mr. Collamer].  Congress, during our Revolution, began, as early as 1775, with bills to the amount of $3,000,000, declaring on their face that the bearer was entitled to receive the sum specified in "Spanish milled dollars, or the value thereof in gold or silver," according to a certain resolution of Congress.  The bills were made receivable for taxes, and the thirteen colonies were pledged for their redemption.  Other emissions were made, and as their credit began to fail, Congress went so far as to declare that whoever should refuse to receive this paper as gold and silver should be deemed an enemy to the liberties of the United States.  As the paper continued to depreciate, Congress became more violent in its support, and even ventured to recommend it as of peculiar value.  "Let it be understood," said Congress, "that paper money is the only kind of money which cannot make to itself wings and fly away."  The sum total of these bills at last reached upwards of three hundred millions, which, in 1780, became so utterly worthless in the hands of their possessors, that they ceased to circulate, and have ever since been treated only as curiosities, without any positive value.  No serious proposition for their redemption has ever been made.

The French assignats amounting to the enormous sum total of upwards of seventeen hundred millions of dollars, issued during the fiery excitements of the great revolution, shared the fortunes of the American Continental money, and passed into the limbo of "things transitory and vain."  Perhaps there is not a country on the European continent which, during the fearful wars that followed, did not encounter the same experience.  I have heard it said that old soldiers in Denmark lighted their pipes with paper money, which had become to them only the record of a broken promise.

Power of all kinds is always liable to abuse, and experience shows that the power to issue inconvertible paper is no exception to this prevailing law.  The issue may have been moderate at first, and sustained by plausible reasons, but it has soon broken into excess.  Of course, actual value or its equivalent is the life of money, giving to it a circulating quality;  and when money begins to be suspected it loses its circulating quality.  But inconvertible paper, even when made a legal tender, has no actual value, and it circulates only because Government commands its circulation.  It has no present worth beyond the engraving.  It is clear, therefore, that all the ordinary checks to an undue issue of money are wanting in such a case.  There is nothing to prevent excess and consequent depreciation;  and this danger is verified by history.  I refer to it now that I may not seem indifferent to any of the perplexities which surround us.

In some countries a legal tender is gold and silver;  in others it is gold alone.  In England, since 1816, gold and not silver has been the legal tender for sums of forty shillings and upwards;  and since 1813 the notes of the bank have been a legal tender everywhere, except at the bank itself.  But it is to be borne in mind that both these metals have a positive value in the market equivalent to that attributed to the coin;  so that the coin is value itself.  But convertible paper is not value itself, but only the representative of value, while it is doubtful if inconvertible paper can be called the representative of anything in particular.  These considerations, of course, are not decisive of the policy now proposed, for there are yet other considerations which bear on the question.  But they may justly incline us to a prudent hesitation.

If we are not deterred by the bad examples of the of history or by acknowledged danger of excess and consequent depreciation;  if we are willing to take the chance of seeing our Treasury notes in the same list with Continental money and French assignats, and of having our returned soldiers in their old age light their pipes with the worthless paper;  if these suggestions are put aside as exaggerated or irrelevant, I ask you not to forget that one of the constant aims of good government is to secure the immediate convertibility of paper into coin.  But, instead of securing such immediate convertibility or taking any steps towards it, you will for the present renounce it.

You will pardon my frankness, sir, if I declare that the present proposition, when examined carefully, seems too much like bad faith.  I say it seems;  I would not speak too strongly.  Is there not bad faith towards creditors, who are compelled to receive what is due to then, in a depreciated currency ?  Is there not bad faith towards all abroad, who, putting trust in our integrity, national and personal, have sent their money to this country, in gold or its equivalent ?  And, surely, just in proportion as this is so, you cannot doubt that we shall suffer alike in character and in resources;  for what resource is greater to a nation or to an individual than a character for integrity ?  The present proposition must be followed soon by others — even to the extent of $1,000,000,000.  But where shall this vast amount be obtained, and at what cost, when it is seen that we have already undertaken to authorize inconvertible paper as a legal tender ?  Credit is volatile and sensitive, and will not yield to force.  Do you now propose the right way to win it ?  It will not come to you from abroad, where money usually abounds.  Will it salute you here at home ?  And is it good economy to obtain the amount you seek now by a policy which will create a disturbing impediment to all your efforts for the larger amounts which you must soon require ?  I put these questions without answering them.  It is sufficient for me that I open the difficulties now before us; and here I follow the course of the Senator from Maine, [Mr. Fessenden] the chairman of the Committee on Finance, who commenced this debate:

In courts of law experts are summoned to testify on questions of science or art, within their special knowledge.  If, on this occasion, experts in finance, or currency were summoned, I do not know that we should be much enlightened;  for, according to my observation, there are such differences among them, and, as the Senator from Maine [Mr. Fessenden] has pleasantly told us, such differences even between the same person, one day and the day after, that it is difficult to place reliance in their counsels.  Some tell us that the legal tender will be most beneficent;  others insist that it will be dishonorable and pernicious.  Which shall we follow ?

If we cross the sea, we shall find similar differences, not, of course, with regard to the present proposition, which is not yet known there, but with regard to the principles which enter into this debate.  In England, the general subject has occupied much attention.  As late as 1857, it was brought before a distinguished parliamentary committee, who have imbodied in their report the testimony of numerous witnesses whose experience and knowledge give authority to their opinions.  Among these witnesses was Nathaniel Alexander, Esq., the head of the firm of Alexander & Co., India, merchants.  (Report on Bank Act, 1857, sec. 4249.)  His attention being called to the proper means to arrest the effects of a panic on the Bank of England, he proposed, as an assistance to the bank, another currency inconvertible, and a tender for Government dues, under act of Parliament.  From its inconvertible character, such a currency, he said, would not be reached by panic, and would, therefore, contribute to the security of the bank.  This testimony seems to maintain the principle of the present proposition;  and I quote it, that you may see that the proposition is not entirely with out practical authority.

Another witness was John Twells, Esq., a London banker for upwards of fifty years, who also testified in favor of an inconvertible note under the sanction of Government, and a legal tender.  (Ibid., sec. 4366.) Here are his answers to two questions:

"What do you conceive to be the advantage of an inconvertible note of that kind over a convertible note payable to bearer, on demand ?  It would prevent a drain of bullion when it is required for foreign trade, and it would give us what is so very essential, a domestic currency, which is not influenced by any foreign transactions whatever.  If France or America wants a quantity of gold, it ought not to interfere with our domestic currency.  Our merchants and all our trade surely should not suffer because America wants gold.

"Do you think that that currency would run the risk of ever being depreciated in value, that is to say, that inconvertible five pound notes would not exchange for five sovereigns ?  I do not know, as compared with sovereigns;  that, I think, is of no consequence in the world.  We want it for our internal commerce, and we want it to pay Government their taxes."

Here are two other questions and answers:

"You have been asked about the French assignats;  is not the difference between the currency which you recommend and the assignats just this, that the Government are bound to take back what they issue ?  Precisely;  and that makes all the difference.

"And, with the French assignats, they refused to take back what they hall issued ?  Yes;  a corrupt Government may commit such an excess as they did in France, where the amount of their assignats was, if I remember right, about £300,000,000-sterling.  They could not receive back;  they could not get their taxation, on account of the revolution which was going on;  therefore the assignats fell to nothing."

Another witness was Mr. Edward Capps, who described himself as having been engaged in the surveying and building trade for thirty years, and whose attention had been directed to the influence of credit on the manner in which buildings are erected in London.  He, too, testified in favor of inconvertible paper.  Here are some of his answers:

"Would you recommend the issue of an inconvertible paper currency with a view of remedying the evils which you describe ?  I was present and heard the examination of Mr. Twells, and he was mentioning a project by which he thought that, instead of the £14,000,000 of paper which the bank issues upon securities, you might go to the extent of £20,000,000 of inconvertible paper.  I think I understood the proposition rightly as being to that effect.  Though it is not exactly the proposition which I should make, yet I cannot see any objection to that proposition myself.

"Do you believe that the paper which you recommend would be on the average of the same value as the present bank note, which is convertible into gold ?  I think that very shortly it would be of a higher value than our present standard.  If any person had to be paid £10,000 fifteen years hence, and had the option whether it should be paid in that way or in the standard of gold, I think he would exercise a wise discretion in choosing the paper.

"You are not in favor of what is called inconvertible paper, in the sense of worthless paper, are you ?  Not at all.

"How do you distinguish between your paper and the rags which have in other cases been issued ?  Unless I know the principle, I cannot say.

"Take the French assignats.  The French assignats were issued upon no principle at all, because no provision was made for their redemption.

But against these witnesses we have the testimony of a person who is perhaps the highest living authority on this question.  I refer to Lord Overstone, known before his elevation to the peerage as Mr. Jones Lloyd, the eminent banker, whose life had made him practically acquainted with this subject;  while his liberal studies and various experience have added to the solidity of his judgment.  His testimony on this occasion, extending over three different days, occupies nearly one hundred folio pages of the report.  It has been quoted ever since by writers on finance, and has been referred to by practical men as a guide.  In reply to questions proposed by the committee, he declared himself strongly opposed to the issue of Government notes not payable in specie on demand.  In his opinion they would "generate a State of utter confusion which could not be tolerated for three months."  Here are other words of his:

"It is quite clear that there would be a discount upon these notes in the first place;  they would not answer the purpose of a circulating medium;  it would throw everything into confusion at the very first stage of the process;  that would be the first difficulty." —Report, sec. 3824.

Here is his answer to another question:

"Your lordship was asked on the last day, whether it would not be possible, in a great degree, to mitigate such difficulties as I have endeavored to portray, by having two sorts of notes, one of them payable in bullion, but the other, I if I may use the expression, a sort of I.O.U. note between the Government and the public;  whether, inasmuch as the Government owes £6,000,000 or £7,000,000 every quarter, in the shape of dividends or expenses, and the country owes £6,000,000 or £7,000,000 of taxes, it would not be possible, to arrange that there should be two sorts of currency afloat — one the common banking note, payable in bullion, and applicable for all general purposes, and the other a note applicable in the more limited sense ?  Our affairs would then go on very much in the way that a man would walk with one of his legs six inches shorter than the other.  One set of notes would circulate at a depreciation compared with the other set of notes;  hence great inconvenience and confusion would arise."
* * * * * * * * * * *

"Do you believe that if any person had notes which insured to him the payment of all the Government demands upon himself, tough he had no demands upon him directly, he would not find numbers of persons who would exchange these notes for him at a premium or a discount ?  Then you would have a certain proportion of the monetary system of the country circulating at a discount.  I cannot conceive a greater state of monetary disorganization than that."

But the testimony of Lord Overstone, strong as it was, against an inconvertible currency, still admitted a possible occasion for a departure from it;  and here his testimony bears directly on the pending proposition.  Alluding to the well-known suspension of specie payments by the Bank of England in 1797, he says:

"The pressure in 1797 was undoubtedly, to a considerable extent, connected with political alarm, with the fear of foreign invasion, causing an internal demand for the exchange of notes into coin;  under such circumstances, there is no measure founded upon principle which can pretend to afford an adequate protection.  If, for instance, at this moment this country were suddenly exposed to the calamity of a very large foreign force occupying its soil, or if it were exposed to the calamity of a very formidable and serious civil insurrection, no doubt a state of panic alarm, with regard to the paper money, might arise against which no provisions of the act of 1844, nor any provisions founded upon principle, could possibly afford an adequate protection.  But from that view of the subject, again, there is an inference to be drawn of a very instructive and warning character, namely, to make this committee very cautious how they extend the issues upon securities.  The only protection against such contingencies is the existence of a large amount of coin or of bullion in the country;  and therefore, when we are looking to contingencies of that nature, we may very properly pause at the questionable recommendation increasing our issues upon securities, which is, in other words, diminishing our issues upon bullion."

If this authoritative testimony be accepted in favor of a constant specie currency, it is unquestionably important as recognizing certain grounds of exception;  as, according to the language of the witness, if the country were suddenly exposed to the calamity of a very large foreign force occupying its soil, or if it were exposed to the calamity of a very formidable and serious civil insurrection.  In this exception there is unquestionably matter for much reflection.  Strong as we may be against any questionable currency, we must not be insensible to a possible limitation, even of this just principle.  In short, we must be content with the best we can command.  And here history affords valuable illustrations in conformity with this testimony.

In 1745, the alarm occasioned by the advance of the Highlanders, under the Pretender, as far as Derby, led to a run upon the Bank of England;  and in order to gain time, the directors, while continuing to pay in specie, adopted the device of paying in shillings and sixpences.  But next to the retreat of the enemy their best relief was found in a resolution by the merchants and traders of the city, declaring their willingness to receive bank notes in payment of any sum that might be due to them, and pledging their utmost endeavors to make all their payments in those bank notes.  This proceeding, it will be perceived, came from the pressure of civil disturbance.  But the most authentic case is that of 1797, when the bank, under the pressure of political events, was prohibited, by an order in council, issued on Sunday, the 26th February, from paying their notes in cash until the sense of Parliament should be taken on the subject.  At the meeting of Parliament, after much discussion, it was agreed to continue the suspension till six months after the signature of a definitive treaty of peace, thus positively recognizing the existence of war as a reason for this departure from principle.  A recent English writer vindicates this act as follows:

"Much difference of opinion has existed with respect to the policy of the restriction in 1797;  but considering the peculiar circumstances under which it took place, its expediency seems abundantly obvious.  The run did not originate in any over-issue of bank paper, but grew entirely out of political causes.  So long as the alarms of invasion continued, it was clear that no bank paper immediately convertible into gold would remain in circulation.  And as the bank, though possessed of ample funds, was without the means of instantly retiring her notes, she might, but for the interference of Government, have been obliged to stop payments — an event which, had it occurred, might have produced consequences fatal to the public interests.  The error of the Government did not consist in coming to the assistance of the bank, but in continuing the restriction after the alarm of invasion had ceased and there was nothing to hinder the bank from safely reverting to specie payments." —Encyclopaedia Britannica, article "Money," p. 156.

Unhappily the definitive treaty of peace, on which the restoration of specie payments was declared to depend, was not consummated till 1815, so that throughout this long period there was an inconvertible currency under the sanction of Parliament, which in 1814 was at a discount of twenty four per cent.  But peace did not bring specie at once.  The routine of paper had become too strongly fixed, and it was only through the remarkable efforts of Sir Robert Peel, in 1819, that an act of Parliament was passed requiring the payment of specie at the bank in 1823.  Such is the practical testimony of British experience.

But the experience of France is similar.  I do not now refer to the old assignats;  but to a modern instance.  Beyond question, the Bank of France has been conducted with caution and skill;  but no caution and skill are adequate to counteract the influence of a sudden revolution, especially like that of 1848, when the republic was declared.  The bank was obliged to make large advances to the provisional Government.  This obligation, combined with the distrust universally prevalent, occasioned so severe a drain for gold, that, to prevent the total exhaustion of its vaults, the bank was authorized, by governmental decree of 16th March, 1848 — a little more than a fortnight subsequent to the revolution — to suspend specie payment, while its notes were at the same time made a legal tender.  But to prevent the abuse possible in such a condition of things, a maximum of issues was fixed at three hundred and fifty million francs.  Such precautions were, of course, proper;  but the fact of the authorized suspension remains as an example of history.  The prompt return to the true system is not without encouragement.

If these instances are entitled to consideration, they seem to show that, according to the experience of other countries, Government may at times be compelled to relax the rigor of its requirements with regard to convertible paper.  But they do not, of course, fix the limitations to the exercise of this extraordinary discretion.  That the discretion exists is important in the present debate.

It is a discretion kindred to that under which the habeas corpus has been suspended, so that citizens have been arrested without the forms of law;  kindred to that under which an extensive territory has been declared to be in a condition of insurrection, so that all business with its inhabitants is suspended;  kindred to that which unquestionably exists, to obtain soldiers, if necessary, by draft or conscription instead of the free offering of volunteers;  kindred to that under which private property may be taken for public uses;  and kindred, also, to that undoubted discretion which sanctions the completest exercise of the transcendent right of self-defense.

But, while recognizing the existence of the discretion, in the last resort, under the law of necessity, the question still remains if this necessity now exists.  And now, as I close, I shall not cease to be frank.  Is it necessary to incur all the unquestionable evils of inconvertible paper, forced into circulation by act of Congress — to suffer the stain upon our national faith — to bear the stigma of a seeming repudiation — to lose for the present that credit which in itself is a treasury — and to teach debtors everywhere that contracts may be varied at the will of the stronger ?  Surely there is much in these inquiries which may make us pause.  If our country were poor or feeble, without population and without resources;  if it were already drained by a long war;  if the enemy had succeeded in depriving us of the means of livelihood, then we should not even pause.  But our country is rich and powerful, with a numerous population, busy, honest, and determined, and with unparalleled resources of all kinds, agricultural, mineral, industrial, and commercial;  it is yet undrained by the way in which we are engaged;  nor has the enemy succeeded in depriving us of any of the means of livelihood.  It is hard — very hard — to think that such a country, so powerful, so rich, and so beloved, should be compelled to adopt a policy of even questionable propriety.

If I mention these things — if I make these inquiries — it is because of the unfeigned solicitude which I feel with regard to this measure, and not with the view of arguing against the exercise of a constitutional power when in the opinion of the Government in which I place trust the necessity for its exercise has arrived.  Surely we must all be against paper money — we must all insist upon maintaining the integrity of the Government — and we must all set our faces against any proposition like the present, except as a temporary expedient, rendered imperative, by the exigency of the hour.  If I vote for this proposition it will be only because I am unwilling to refuse to the Government, especially charged with this responsibility, that confidence which is hardly less important to the public interests than than the money itself.  Others may doubt if the exigency is sufficiently imperative;  but the Secretary of the Treasury, whose duty it is to understand the occasion, does not doubt.  In his opinion the war requires this sacrifice.  Uncontrollable passions have been let loose to overturn the tranquil conditions of peace.  Meanwhile your soldiers in the field must be paid and fed.  Here there can be no failure or postponement.  A remedy which at another moment you would reject is now proposed.  Whatever may be the national resources they are not now within reach, except by summary process.  Reluctantly, painfully, I consent that the process should issue.

And yet I cannot give such a vote without warning the Government against the dangers from such an experiment.  The medicine of the Constitution must not become its daily bread.  Nor can I disguise the conviction that better than any legal tender will be vigorous, earnest efforts for the suppression of the rebellion, and for the establishment of the Constitution in its true principles over the territory which the Rebellion has usurped.

The PRESIDING OFFICER, (Mr. Foster in the chair.)  Is the Senate ready for the question on the amendment offered by the Senator from Vermont, [Mr. Collamer.]

Mr. WILSON, of Massachusetts.  I ask for the yeas and nays on that amendment.

The yeas and nays were ordered;  and being taken, resulted — yeas 17, nays 22; [out of 49] as follows:

YEAS— Messrs. Anthony, Bayard, Collamer, Cowan, Fessenden, Foot, Foster, Kennedy, King, Latham, Nesmith, Pearce, Powell, Saulsbury, Simmons, Thomson, and Willey —17.

Nays [the greenbackers in the Senate]— Messrs. Zachariah Chandler (R) against for, Daniel Clark (R) for, Garrett Davis (U) for against, James Dixon (R), James Doolittle (R) for, James Harlan (R), Ira Harris (R), John Henderson (U), Jacob Howard (R) ... for, Timothy Howe (R) against abstain, Henry Lane of Indiana (R) for, James McDougall (D) for, Lot Morrill (R) for, Samuel Pomeroy (R) for, Henry Rice (D), John Sherman (R) against for, Charles Sumner (R) for for, John Ten Eyck (R), Benjamin Wade (R), Morton Wilkinson (R), Henry Wilson of Massachusetts (R) for for, and Robert Wilson of Missouri (U) —22.

So the motion to strike out the legal tender clause was not agreed to.

Mr. Simmons.  The proviso on the 3d page of the bill has been stricken out by one of the amendments of the Committee on Finance.  I propose, therefore, in lieu of it, to insert after the word "thereof" in the forty-second line of the first section, the following:

Provided, That the Secretary of the Treasury shall, upon presentation of the notes mentioned in the preceding part of this section, in sums of not less than $100, issue to the holder thereof, at his option, and instead of the bonds already described, an equal amount of Treasury notes or coupon bonds, or registered bonds, redeemable at the pleasure of the United States at any time after two years, bearing interest at the rate of eight per rent., and payable semi annually.

I have but a word to say on this Amendment.  Notwithstanding the vote just taken, which will, in my judgment, detract a little from the value of these notes, I believe it is the duty of the Senate to give them all the value possible by the way they may allow them to be made use of.  I have no doubt this proposition will strengthen their value in the market greatly.  I shall not repeat the reasons, as I have already given them once to the Senate.  I hope the amendment will prevail.

Mr. Fessenden.  I think this amendment may as well be made.

Mr. Sherman.  I will simply say that I trust no additional character of securities will be made in this way.  We have already provided for six per cent. securities, and I think seven per cent., on the motion of the Senator, and now—

Mr. Fessenden.  No, sir; I have not made the motion.  This is the same motion that I referred to.

Mr. Sherman.  I will not take up any time upon it;  but, as I trust we have now adopted an important financial expedient, as we have adopted a national currency, let us simplify it as much as possible.  If you allow the notes to be converted into bonds of the United States at six per cent., that simplifies the whole matter, and will give all the value possible to these notes.

---[Once again, Mr. Sherman, the most honest in the lot, demonstrates that the removal of convertibility of the Treasury notes —at face— into bonds was one of the two causes of the depreciation of the Greenbacks (the other being their over-issue)]

Mr. Fessenden.  There is a difference of opinion between the Senator and myself on that subject.  I agree with the Senator from Rhode Island.  I am of opinion, however, that seven per cent. would answer the purpose as well as eight;  but if he thinks it should be eight per cent., I shall not object.  It is only for two years, and I think it gives an additional strength to the bill and to the notes.

Mr. CLARK.  I simply desire to say that I voted with some reluctance against the amendment of the Senator from Vermont;  but now, having made these notes a legal tender, I think we are bound to do everything we can to keep them at par, and I shall cheerfully vote for the amendment of the Senator from Rhode Island.

Mr. Simmons.  I merely want to add a single remark.  Anybody, who is at all familiar with the money market now, must know that this fact exists: there is a great abundance of money ordinarily used in commercial purposes, now lying idle, and men will not put it into twenty years bonds; but if you give them this chance of two years, at eight per cent., they will know it is but for a short time, and whenever business revives in this country it will revive the credit of the Government, and this stock will be convertible, and they will readily take it.  I have no doubt we shall be able to get money at five per cent., in stead of six, as soon as this trouble is over.

---[Mr. Simmons declares what Spaulding and others years later denied, and Mr. Sherman as Chairman of the Committee, officially acknowledged in 1867, that the greenbacks while at par, simply would not float the bonds;  that greenbacks had to be purposely and intentionally depreciated (by over-issue and removal of convertibility into bonds) in order to float the bonds; to induce people to buy the bonds —bonds being not necessary for the financing of the war effort, but essential to establishing a permanent bonded national debt !!!]

Mr. Chandler.  Any mercantile man would know that when a bankrupt offers to settle his liabilities at fifty cents on the dollar, it is time to stand from under.  When a Government offers six per cent. bonds for twenty years, and at the same time offers eight per cent. for money, no moneyed people will accept either the eight or the six per cent.  Sir, let us either consider our six per cent. bonds good, reliable and safe, or else let us admit ourselves bankrupt, and not attempt to offer anything.  To offer on two years eight per cent., and at the same time offer a six per cent., is simply an absurdity.  No merchant would be so insane as to offer such a proposition.  A merchant who would make such a proposition would be disgraced before the mercantile world.  We go before the world as a nation;  we make our evidences of debt good;  that is, we declare them to be a legal tender;  and we say to the world, "if you prefer interest at the rate of six per cent., come and accept our bonds."  The Senator from Rhode island comes forward and says, "we will pay you eight per cent."  Sir, I repeat, either abolish your six per cent., and say that we are bankrupt, and offer any amount you please for your permanent bonds, or else, in God's name, do not say that we will pay an excess for two years.  No merchant would vote for that.  No moneyed man would vote for that.  I will not say that no man of sense would vote for it, because I know my friend from Rhode Island to be a man of sense and a financier;  but if he had been a merchant he never would have made this proposition.

Mr. Simmons.  I am sure the Senator was not in the Chamber when I stated the particular reasons why I made the proposition.  In the exchange of the banks in New York, the banks themselves have to pay seven per cent. on their balances.

Mr. Collamer.  That is the legal interest in New York.

Mr. Simmons.  I know that is the legal interest there.  This amendment merely provides a place where they can deposit their Treasury notes that now bear no interest, and get as much or more interest as they have to pay to the other banks in exchanges;  and in my opinion it will strengthen the credit of these notes.

Mr. Fessenden.  There is an additional reason.  At the present time the conversion of these notes into six per cent. stock at twenty years might not be very rapid, and might not withdraw this paper from the market, and send it back to the Treasury to be reissued.  This eight percent. short paper (and many people prefer short paper) would be very likely to have that effect, in my judgment, and that is the object of it.

---[You are loveable Mr. Fessenden, so even you acknowledge that the bonds would not have floated as long as the Treasury notes circulated at par;  and that the Treasury notes would be readily accepted, preferred, and would freely circulate without stopping in some hoarding place !!!  if it stops anywhere, it comes back to the Treasury to rest there, or to be re-used (without incurring debt, without paying tribute to the fiscal agents)  And isn't ye fariously purposed people just hate freely circulating currency that does not come to a hoarding place to gather un-earned interest !?]

Mr. Chandler.[reconstructionist, war profiteer]  I simply wish to say to the chairman of the Committee on Finance that any merchant in the United States with good securities can to-day borrow $1,000,000 at six per cent.  I can, with good securities;  and so can my friend from Maine.  Now, do you desire to place this great Government of thirty millions of people and untold resources beneath the ordinary mercantile credit ?  If you do, vote to pay eight per cent. when I can borrow money for six.

---[Another nail in Sarah Emery's fairy tale about the alleged high interest rate demanded by bankers
Sarah Emery has to say of this Chandler who just voted for the legal-tender clause, and four years later voted against reduction of currency:
"the notorious Zach Chandler, who openly asserted that 'a country is not worth a damn without bloodletting,' and who, through the agency of the civil war, was elevated from 'a man of moderate means' to a position of a millionaire;  and, if I am correctly informed, Zachariah was not the only loyal northern man whose wealth was increased to phenomenal proportions through this infernal agency."]

Mr. Fessenden.  I think it is a little too late to talk about borrowing readily as much money as we want at six per cent., when we pass a law of Congress compelling people to take our paper.

Mr. Dixon.  I think the Senator from Michigan [Mr. Chandler] forgets that a bond running two years at eight per cent. may be much better for the Government than a bond running twenty years at six per cent.  It is the length of time the bond will run that makes it valuable.

Mr. Chandler.  We limited our liability last night to five years.  The Senator from Connecticut must know that a bond running twenty years with the power to redeem it in five, is simply a five years bond: therefore his argument falls;  there is no force in it.  We offer five years bonds, and not twenty years bonds — five years if we please, and twenty years, if we do not please.

Mr. Dixon.  I was not aware of the fact that any such amendment had been made.

Mr. Clark.  I will suggest that that amendment, making them redeemable by the Government at the end of five years, was entirely withdrawn to-day;  so that they stand in the bill now as twenty years bonds.

Mr. Chandler.  It passed last night.

Mr. Clark.  It was reconsidered and withdrawn this morning.

Mr. Dixon.  I was not aware that any amendment such as the Senator had alluded to had been made.  Of course, if it had, it would to a great degree have obviated my remark, though not entirely;  but it seems that no such thing has been adopted.

Mr. Simmons.  One word more, sir.  The Secretary has now authority to borrow $50,000,000 at seven and three tenths per cent., but he cannot get the money;  and yet the Senator from Michigan is denouncing everybody that recognizes that fact.  He can convert this into seven and three tenths stock to-day;  but I thought if we gave a little more than the banks do in paying each other, it would be certain to bring us money now, and there would be no hardship in the matter.  That is the whole of it.  It does not need any argument.

Mr. Chandler called for the yeas and nays on the amendment.

The yeas and nays were not ordered.

The amendment was agreed to; there being, on a division— ayes 20, noes 16.

Mr. Fessenden.  There was a little misunderstanding about an amendment that I offered to-day, to insert in the seventh line of the second section, after the word "after," the words "five years and payable," and I withdrew it.  I should like to know if a similar amendment which was made last night to insert those same words in the forty-second line of the first section stands in the bill.

The Presiding Officer.  The Chair is informed that that stands in the bill.

Mr. Fessenden.  Then, in order to make it conform, I move to amend the second section by striking out the word "and" in the sixth line, and also the word "Government" in the seventh line, and in lieu of it inserting the words "United States," and after the word "after" inserting the same words, "five years and payable;"  so that it will read:

He is hereby authorized to issue, on the credit of the United States, coupon bonds, or registered bonds, to an amount not exceeding $500,000,000, redeemable at the pleasure of the United States after five years, and payable from date, &c.

The amendment was agreed to.

Mr. Fessenden.  I wish to make another amendment.

Mr. Chandler.  I desire now to move a reconsideration of the vote by which the amendment offered by the Senator from Rhode Island [Mr. Simmons] was adopted.  It was adopted under a misapprehension.

Mr. Fessenden.  Before the Senator does that, I hope he will allow me to get through with one or two other amendments which I wish to make.

Mr. Chandler.  Certainly.

Mr. Fessenden.  On my motion last night the words "city or town" were inserted after the word "county," at the end of the second section.  I wish to move a reconsideration of that vote merely to correct the phraseology.

The motion to reconsider was agreed to.

Mr. Fessenden.  I now withdraw that amendment, and propose to strike out the words "any State or county," and to insert the words "or under State authority;"  so that the clause will read:

And all stocks, bonds, and other securities of the United States held by individuals, corporations, or associations, within the United States, shall be exempt from taxation by or under State authority.

The amendment was agreed to.

Mr. Fessenden.  I desire to make another amendment, with a view to insert a better expression.  On examining the bill and the amendment made by the Senate to the first section, from line twenty-three to line twenty-eight I find that the words "public dues and demands" are liable to misconstruction.  I therefore move to reconsider the vote by which that amendment was adopted with a view to correct the phraseology.  I will state that that has been amended by a motion made yesterday, by the Senator from Ohio [Mr. Sherman] but that may go with it, because the same amendment will be introduced into that which I propose.  I have conferred with him on the subject.  It may be necessary to move to reconsider that also.

The PRESIDING OFFICER.  It is moved that the Senate reconsider their votes amending the first section in the manner indicated by the Senator from Maine.

The motion was agreed to.

Mr. Fessenden.  I now move to insert, after the word "authorized" in the nineteenth line of the first section, the words, "and the notes authorized by the act of July 17, 1861," the same words that were in the former amendment;  so that the clause will read:

And such notes herein authorized and the notes authorized by the act of July 17, 1861, shall be receivable in payment of all taxes, duties, imposts, excises, debts, and demands of every kind due to the United States.

The amendment was agreed to.

Mr. Fessenden.  I now move to strike out, after the word "States," in the twenty-first line, down to and including the word "description" in the twenty-fifth line of the bill as it stands, the following words:

And for all salaries, debts, and demands owing by the United States to individuals, corporations, and associations within the United States, and such notes herein authorized and the notes authorized by the act of July 17, 1861, shall be receivable in payment of all public dues and demands of every description.

And to insert in lieu thereof:

And of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin.

The amendment was agreed to.

Mr. Doolittle.  I desire to move to amend that first section by striking out, after the word "all" in the twenty-ninth line, the words "debts, public and private," and to insert the words, "public debts and all private debts hereafter contracted;"  so that the clause will read:

And shall also be lawful money and a legal tender in payment of all public debts, and all private debts hereafter contracted within the United States.

Mr. Sherman.  I ask the Senator from Wisconsin whether such a provision as that would not be the source of great confusion ?  If that were adopted, creditors would hold on to the notes they now have in their hands.  It would make a discrimination against existing debtors, and would prevent them from renewing their indebtedness.  I think that is worthy of consideration.

Mr. Cowan.  I do not know that it will revert back to the time when the debt was first contracted.  I think the mere changing of securities will not affect it at all.

Mr. Doolittle.  The constitutional question, perhaps, is precisely the same applied to the bill as it stands as to the amendment which I offer;  but, on the question of necessity, is it necessary for us, for the purpose of making our notes pass at par and be received by the banks at par in all commercial transactions, to go to the length of saying that they shall be received in payment of debts already contracted ?  My own opinion is that it is not necessary for us to go that length.  If this amendment should be adopted by the Senate and should go to the House of Representatives, and, in conference between the Houses, it should be found that the House was of the decided opinion that this was necessary, I might be constrained to change my vote and to vote to make it a tender for debts already contracted;  but my own judgment now is that it is not necessary to go to that extent.

Mr. Fessenden.  I will only say that the committee had this matter under consideration for a considerable time, and on the best information we could get, and the best conclusion we could come to, it was decided that it would make so much confusion in business in every particular, that on the whole if the legal tender was adopted by the Senate, it had better go for the whole and not make any distinction.

Mr. Cowan.  I do not see wherein great confusion could arise from adopting this amendment.  I think it relieves the clause of the mischievous effect it would otherwise have.  It gives notice to the public that if they make contracts hereafter they may be expected to be met with this legal tender;  and therefore it makes it fair.  I think it is not obnoxious to the objection made by the honorable Senator from Ohio, because no matter how frequently notes may be renewed the debt arises out of the original and first contract.  No matter how you may change the securities in all cases of that kind, it has been ruled repeatedly that the date reverts itself back to the first contract out of which it had its birth.

Mr. Clark.  I ask the Senator from Pennsylvania where the soldier would stand in that case ?  You declare by this bill that he shall take the Government money;  but he made his contract some time ago to serve the Government for thirteen dollars a month.  Are you going to allow him to take this money or refuse it ?

Mr. Cowan.  What kind of a contract is it, public or private ?

Mr. Clark.  To serve the Government during the war or three years, at so much a month.

Mr. Sherman.  Take the case of an existing contract to furnish capital or provisions.

Mr. Cowan.  Very well;  then this clause would not affect them.  They are private contracts.

Mr. Sherman.  It would create great embarrassment.

Mr. Chandler.  It is perfectly evident this amendment means that you are to pay your contractors in gold, and your soldiers, at thirteen dollars a month, in depreciated paper.  If the Senate are willing to do that, of course they will adopt the amendment.

Mr. Cowan.  I think the Senator is mistaken as to the operation of this amendment.  I am desirous of protecting the soldier and everybody, and contracts that have been heretofore made.

The amendment was rejected.

Mr. King.  My opinion is so decided against this measure, which it is evident has the favor of a large majority of the Senate, that I must vote against it;  but I deem it due to myself to offer a substitute for the first section.  I propose to strike out the first section of the bill which relates to Treasury notes and the tender, and to insert what I send to the Chair in three sections.  The second and subsequent sections of the bill providing for bonds and making other provisions, I do not propose to interfere with.

The Secretary read the amendment, to strike out the first section of the bill, and insert the following in lieu thereof:

That the Secretary of the Treasury be, and he is hereby, authorized to issue in exchange for coin, or in payments from the Treasury, Treasury notes to the amount of $150,000,000 payable to bearer at the Treasury, which shall be redeemable in coin at the pleasure of the United States, after five years from the passage of this act, until July 1, 1872, when all that are then outstanding shall be redeemed.  Such notes shall be issued in denominations of not less than five dollars, and shall bear interest at the rate of seven and three tenths per cent. per annum, payable when the note is redeemed or received in payment of Government dues, and such notes shall be receivable in payment of all Government dues.

Sec. 2.  And be it further enacted, That the holders of such notes may at any time exchange them at the Treasury of the United States for bonds of the United States having not less than twenty years to run, bearing six per cent. interest, payable semi-annually.

Sec. 3.  And be it further enacted, That a direct tax of $15,000,000 annually be, and the same is hereby, laid upon the United States, to be collected as shall be provided in accordance with the provisions of the Constitution, by an act of Congress to be passed at the present session of Congress, and the proceeds of such tax is hereby pledged to the payment in coin of such notes, principal and interest, as the same become due, and payable until all are paid.

Mr. King.  The change which this amendment proposes is to strike out the tender clause, to make the demand notes which are issued without interest five-year notes, bearing an interest of seven and three tenths per cent. per annum, receivable for all Government dues or exchangeable for long bonds at six per cent., interest payable semi-annually, at the option of the holder, and providing by tax a sufficient sum which is pledged to the redemption of these notes, and ultimately to pay them, principal and interest;  which, I think is a provision that ought to accompany any measure providing for borrowing money either by notes or bonds.

The amendment was not agreed to.

Mr. Fessenden.  If there are no further amendments to be offered, I hope the bill will be reported to the Senate.

Mr. Pearce.  I do not propose to annoy the Senate at this hour with a speech;  but as I shall feel obliged to vote against the bill, I wish to state very briefly the reasons why I shall do so.

Mr. Fessenden.  I ask the Senator whether he will not allow us to get the bill out of committee, and make his remarks on the final passage of the bill ?

Mr. Pearce.  Yes, sir; I will yield for that purpose.

The bill was reported to the Senate, as amended.

The PRESIDING OFFICER.  Is it the pleasure of the Senate that the question of concurring in the amendments made as in Committee of the Whole be taken upon each individually or upon the whole collectively ?

Several Senators.  All together.

Mr. Chandler.  I desire to except the amendment offered by the Senator from Rhode Island, allowing eight per cent. interest.

The Presiding Officer.  That will be excepted.

Mr. Sherman.  I ask for the reading of the first section as it now stands, as amended.

The Secretary read, as follows:

That the Secretary of the Treasury is hereby authorized to issue, on the credit of the United States, $100,000,000 of United states notes, not bearing interest, payable to bearer at the Treasury of the United States, and of such denominations as he may deem expedient, not less than five dollars each.  And such notes herein authorized, and the notes authorized by the act of July 17, 1861, shall be receivable in payment of all taxes, duties, imposts, excises, debts, and demands of every kind due to the United States, and of all claims and demands against the United States of every 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 interest, as aforesaid.

Mr. Fessenden.  The Secretary has read far enough.  That shows how the section stands.

---[what's it to you, Mr. Fessenden, how far the Secretary reads the bill ?!?]

The Presiding Officer.  The question will be taken on concurring in all the amendments with the exception of the one indicated by the Senator from Michigan, unless some Senator requests to have some other excepted.

The remainder of the amendments were concurred in.

The Presiding Officer.  The question now is on concurring in the amendment submitted by the Senator from Rhode Island, [Mr. Simmons] to insert, after the word "thereof," in the forty-second line of the first section, the following:

Provided, That the Secretary of the Treasury shall, upon presentation of the notes mentioned in the preceding part of this section, in sums of not less than $100, issue to the holder thereof, at his option, and instead of the bonds already described, an equal amount of Treasury notes, or coupon bonds, or registered bonds, redeemable at the pleasure of the United States at any time after two years, bearing interest at the rate of eight per cent., and payable semi-annually.

Mr. Chandler.
---[Zachariah Chandler (1813-1879); whig, Michigan (R) radical; voted against reduction of currency; voted for credit strengthening;  critical of President Abraham Lincoln for not taking stronger action immediately against the southern states attempting to secede from the Union.  Very critical of General McClellan for not aggressively pursuing victory on the battlefield.  Critical of Lincoln's Reconstruction plan.  In 1868 active in the campaign to impeach President Andrew Johnson.]
I hope that that amendment will be stricken out, and I will state my reason.  This Government has, I think $150,000,000 of seven and three tenths per cent. three years bonds now on the market.  It is for the interest of the Government and of the people to keep those bonds at par if possible.  Now, I ask Senators, lawyers —for you are all lawyers, and I am the only merchant here— do you not see that if you offer eight per cent. now for a small amount when you have $150,000,000 of seven and three tenths per cent. bonds on the market, you depreciate those seven and three tenths securities ?  Do you not see that you disgrace your Government ?  Do you not see that you reduce the credit of your securities one and all ?  I simply ask gentlemen of the Senate to reconsider their vote.  I will accept seven and three tenths per cent. I will accept any thing but a disgraceful depreciation of eight per cent. on our securities at this time.  I hope the Senator from Rhode Island will accept seven and three tenths per cent.

Mr. Dixon.  Say seven.

Mr. Chandler.  I will accept anything that will not depreciate our own paper.  Seven per cent. would suit me better, and six per cent. better than that;  and I would accept anything but eight.  For God's sake, do not give eight per cent. now to depreciate and destroy the value of the securities which you now have before the country and before the world.

Mr. Dixon.  I think the Senator from Michigan is right.  If he had stated that reason in the first place, I would have voted with him.

Mr. Fessenden.  The question is on concurrence.  Can a motion be made now to insert the amount the Senator from Michigan has suggested, seven and three tenths per cent. ?

The Presiding Officer.  Certainly.

Mr. Dixon.  If that amount is considered too large, I will move to insert seven.

Mr. Fessenden.  I suggest to the Senator from Michigan that he can move to amend the amendment as it stands by changing it to seven and three tenths per cent.

Mr. Chandler.  Very well;  I make that motion to insert that amount, seven and three tenths per cent., the same as we are now paying for $150,000,000, instead of eight per cent.

The amendment to the amendment was agreed to;  and the amendment, as amended, was concurred in.

Mr. Fessenden.  The amendment of the committee to insert a new section as section four was not agreed to last night.  The Senate not having a quorum, there was no vote taken;  and rather than raise the question, I allowed it to be struck out.  I now move to insert as section four the following:

Sec. 4.  And be it further enacted, That the Secretary of the Treasury may receive from any person or persons, or any corporation, United States notes on deposit for not less than thirty days, to sums of not less than $500, with any of the Assistant Treasurers or designated depositaries of the United States authorized by the Secretary of the Treasury to receive them, who shall issue therefor certificates of deposit, made in such form as the Secretary of the Treasury shall prescribe, and said certificates of deposit shall bear interest at the rate of five per cent. per annum;  and any amount of United Stares notes so deposited may be withdrawn from deposit at any time on the return of said certificates:  Provided, That the interest on all such deposits shall cease and determine at the pleasure of the Secretary or the Treasury:  And provided further, That the aggregate of such deposits shall at no time exceed the amount of $25,000,000.

Mr. King.  The Senator from Ohio [Mr. Sherman] objected to this amendment yesterday, and, I thought, showed us very good reasons why it ought not to be adopted.  Another reason, not mentioned by him, occurs to me upon hearing the amendment distinctly read again.  It is this: according to one provision of the amendment, but $25,000,000 of these notes can be thus deposited upon interest at five per cent., and the party depositing has the entire advantage of the note and currency while he is receiving his five per cent. upon the deposit.  He is able to withdraw it at any time, and can take his interest and convert it into a note.  He is receiving interest on that loan, which is like a loan at will, to be withdrawn when ever he chooses and then to be used as currency again.  If this privilege exists at all, it seems to me it should exist for all;  but I am against it to any.  I believe that it will give no additional security to the Treasury notes, and will create great embarrassment.  Undoubtedly there will be a great many who will seek to avail themselves of this privilege.  The banks especially, and wealthy individuals who will bare a large amount of these notes, will desire to avail themselves of this interest;  and if any emergency in the market comes along by which they can use them, they have them not in the condition of bonds on which they are getting interest, but in the condition of cash upon which they are getting interest.  They are able to withdraw them at pleasure and use them for various purposes, purchasing bonds or anything else in the market.  I think it a very unwise and unsafe provision.  It will give rise to a great deal of trouble from the contest for favor in reference to the grant of this privilege, which is conceded to only a part of those who hold these notes.  I hope it will not be adopted.

Mr. McDougall.  I propose to amend the amendment by striking out in the fourth line the word "five" and inserting "one."  The effect of this amendment will be to allow deposits to be made in sums of one hundred instead of five hundred dollars.  It was suggested, as an objection to this provision, that the sums being put at $500 would prevent small holders depositing amounts and receiving their interest, and would confine it to the large holders of notes.  I was at the Treasury Department this morning in company with the Senator from New York, [Mr. HARRIS,] and the chairman of the Judiciary Committee, [Mr. Trumbull] and this matter came up for discussion;  and the Secretary himself said it would not seriously inconvenience the offices, and he thought the amendment would be a just and a wise one.  I think we were authorized by him, and I will refer to my friend from Illinois, as well as to the Senator from New York, to say that this proposition to change the right to deposit in sums of $500 to the right to deposit in sums of $100, enabling the small holder to derive his interest as well as the holder of a sum over five hundred dollars, would meet with his approbation.

Mr. Fessenden.  I will accept the modification, if the Secretary recommends it.

The Presiding Officer.  The amendment to the amendment being accepted by the mover, it is part of the amendment, and the question is on the amendment as modified.

Mr. Fessenden.  In answer to the Senator from New York, I wish simply to say, this amendment as it stands was drawn by the Secretary of the Treasury, with his own hand.  He has repeatedly said he believed it to be an important provision to give currency to these notes, and that it was well guarded;  in the first place, being limited to $25,000,000, and, in the next place, it being in the power of the Secretary, by a proviso, to stop it at any time he pleases.  I said yesterday, and I say again, that in all these matters of detail not involving a principle which forces itself upon my mind strongly, I believe the Secretary of the Treasury knows much more about it than I do, or than any of us, however much respect I may have for financial men in the Senate, and I do not think it would be wise to refuse, on our part, what he asks.  I prefer, if he wishes it, that he should have it.

Mr. Trumbull.  Certainly all of us can understand this provision.  There is nothing complicated about it.  This purports to be a bill, as I understand it, authorizing the issue of Treasury notes, without interest;  and here is a provision for putting a portion of them on interest, or the same thing as if a part of them were issued on interest, to what I think will turn out to be, a favored portion of the community.  I do not profess to know much about financial matters.  Unlike the Senator from Michigan, I never had very much to do with money, or money much to do with me;  but I will illustrate what I suppose will be the effect of this fourth section by a reference to what occurs in the city where I live, a town of some eight or ten thousand inhabitants.  We have a bank there.  The ordinary sum of deposits in that bank, per annum, I think, is about two hundred thousand dollars.  Our business in the city of Alton, after the passage of this bill, I presume will be done chiefly upon Treasury notes.  We have no banks of any considerable circulation in Illinois at this time.  Our banking system has all broken down within the last year or two, and these notes will go into circulation.  The business men of Alton will deposit in the Alton bank, as they have always done, and upon these deposits they will receive no interest.  But the bank will redeposit them in the sub-Treasury and draw an interest of five per cent.  There is the whole of it.  They are liable to be drawn out at any time from the sub-Treasury, where they are deposited, and the banker or the broker, as the case may be, gets the benefit of the interest.  The mass of the people will get no interest.  Although it is reduced by an amendment, made at the suggestion of the Senator from California, to sums of $100, very few persons who will have the hundred dollars will avail themselves, probably, of this provision.  The expense and inconvenience of doing so will be such as to prevent it.  It does seem to me, as we are issuing Treasury notes without interest, that we ought not to make this exception in favor of $25,000,000 of them.  I have said all I desire to say about it.

Mr. Fessenden.  I ask for the yeas and nays upon the amendment.

The yeas and nays were ordered.

Mr. Chandler.  The object of the amendment is this: banks, bankers, moneyed individuals, men with surplus in every city and State throughout the United States, who have more of these notes on hand than they can use in their legitimate business can go to the Treasury of the United States and deposit these notes and draw five per cent. interest.  It virtually amounts to borrowing so much capital from moneyed men, from one end of this Union to the other, at five per cent.  I will suppose that I was a banker.  I have $10,000 of these Treasury notes and no use for them.  I must stop receiving them or close my banking office, unless I can place them somewhere where they can draw me an interest.  By this section I am enabled to go to the sub-Treasury or the agent of the United States and deposit that $10,000 and draw five per cent., and continue to receive these notes, because, after having deposited that $10,000, if my business will permit me to accumulate and deposit another $10,000, I know where I can place them.  But suppose I have no place where I can put the first $10,000, shall I continue to receive these notes ?  Of course I would not.  It would be a dead weight upon me.  I can not use them.  I have no place in which to put them;  and this you will find to be the effect throughout the length and breadth of the land.  Unless you have some safety-valve, some place where you can keep them out of the way, of course men will shut up their banking offices and their banks;  they will not receive your Treasury notes, and they will not receive anything.  They had better close their banks than to lock up their entire capital without interest.

---[These are legal-tender Treasury notes;  the banks may lend them to some borrower, isn't it what they do with legal-tender coins ?  Fearless champion of the oppressed and bondaged people, you are advocating for the bankers;  you are objecting to what Mr. Fessenden observed an hour ago, that without this interest the notes would circulate and if they wanted to rest, they would return to the Treasury.  Are you implying that without banks people could not get by ?]

Mr. Howard.  Will my colleague allow me to ask him a question ?

Mr. Chandler.  Certainly.

Mr. Howard.  What benefit is the United States to derive from this deposit ?

Mr. Fessenden.  It borrows money at five per cent.

---[beloved ! the United States has no need to borrow money, especially has no need to borrow back the money which it has just issued, interest-free !]

Mr. Chandler.  The United States receives these notes on deposit, and again reissues them;  but perhaps my colleague will ask how is the individual benefited ?  Why, sir, he receives to-day $500 or $5,000, and he deposits it and he accepts a certificate.  To-morrow he receives $500 or $5,000 from somebody else, and is prepared to pay this certificate of the funds for which he obtained the certificate yesterday;  and it keeps up a continued circulation.  The Government is benefited because it borrows money at five per cent.  It receives these notes and reissues them the next day.  The individual is benefited;  the people are benefited;  the country is benefited.  What benefit is to be derived from prohibiting their deposit in this way, when no use can be made of them ?

---[fuck off Mr. reconstructionist hero of the oppressed ! these notes are in existence solely because the government issued them (interest-free), if these notes return to the Treasury it may re-issue them;  no need to receive them on deposit, they will return in the form of taxes.  What need is there to borrow something which the Government already has ?]

Mr. Howard.  The notes are not on interest.

Mr. Chandler.  Of course not; but they are issuable and reissuable by this Government.  If they issue $150,000,000 to-day, and they owe $200,000,000, and $50,000,000 are received to-day at five per cent., they pay their $200,000,000 to morrow.  They are valuable to this Government because they are equivalent to gold and silver.  They are valuable to the banker only so far as they will bring him a revenue.  They will bring him a revenue so far as he can use them with individuals or with the Government.  If you strike that out you virtually say they are not good beyond the immediate wants of the individual or the bank or the association;  and whenever they have got all they can use of them, they may shut up their banks, shut up their moneyed institutions.  They are compelled to receive them, but they cannot use them;  that is all.

---[you are lyering, they can use them notes, those notes are legal tender, but they are interest-free, and that is what eating your whig liver]

Mr. Doolittle.  The effect of this section, so far as the $25,000,000 of these notes which may be deposited in the sub-Treasury to be taken out on call, is concerned is, as a matter of course, to prevent, to a certain extent, $25,000,000 from being funded in the stocks of the Government.  The interest on these deposits is too high;  and inasmuch as we are figuring up seven and three tenths per cent.  I think it is, and three and sixty-five hundredths per cent., reckoning the days of the year, which runs at a cent or half a cent a day, I believe I will move to reduce the interest on these deposits from five per cent. to three and sixty-five hundredths.  I make that motion.

Mr. Fessenden.  That will not do.  It is already as low as it can be.

Mr. Howe.  I have supported this measure as well as I knew how, and voted for it with all my might, because I believed it wise.  It was not because I wanted the Government to get money without interest at all, if the holders of the money desired interest for it.  Now, if any man finds himself in the possession of a sum of these notes for which he wants interest for a limited period of time, I do not see any injustice or any hardship on the part of the Government in paying it to him.  The Government has got the value of it already.  It gets it when they pay out the notes, and this five per cent. is a less rate of interest than the six per cent. they pay on the bonds.

Mr. Doolittle.  If my colleague will allow me, I do not regard it as of sufficient importance for me to press the matter, and delay the action of the Senate.  The Committee on Finance seem to be unanimously agreed upon it, and I shall not press my amendment.

The Presiding Officer.  The amendment to the amendment is withdrawn.

Mr. Harlan.  I desire to ask the chairman of the committee whether a paymaster or a quartermaster or a commissary or any other officer of the Government that may be handling its money, might not deposit that, and draw this five per cent. interest ?

Mr. Fessenden.  I think the law would settle that.  According to law, no man having funds in his hands belonging to the Government can draw interest on them at all.  If he draws interest, it belongs to his principal, and not to himself.  Any man who would do such a thing would be turned out of office at once.

Mr. Chandler.  He would simply go to the State prison at once.

Mr. Henderson.  I should like to inquire of the chairman of the Committee on Finance, if this amendment be adopted, if the interest on these certificates of deposit is not to be paid in coin ?

Mr. Fessenden.  No, sir; because the interest to be paid in coin, if I recollect aright — I endeavored to make it so — is only on bonds and notes, and not on certificates of deposit.  I confined it in that manner, and had it altered in that way.  If the Senator will refer to the language of the first section he will find it is in these words:

"And of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin."

The interest on bonds and notes is paid in coin, but not on certificates of deposit.  That was considered and guarded.

Mr. Henderson.  Still, Mr. President, the amendment, as I understand it, leaves it discretionary with the party to deposit with any of the Assistant Treasurers.  These deposits may be withdrawn very readily upon ten days' notice;  and I should like to know what arrangements, if any, have been or may be made in the bill by which the Secretary of the Treasury may ascertain that not exceeding $25,000,000 are on deposit at any given time ?

Mr. Fessenden.  The matter undoubtedly will be regulated at the Treasury Department.  It is usual to leave all such details to the Secretary himself, and not attempt to regulate them by statute.  It is the ordinary course of proceeding.  He has communication, of course, with all the sub-Treasurers of the United States — there are not many of them — and will know the amount.  All these matters, merely of detail, it is impossible to provide for in the bill.  They are left to be regulated at the Department.

Mr. Henderson.  I suggest it merely to show that there will be extreme difficulty, in my view, in limiting the amount of deposits at any given time to $25,000,000.  The amount of deposits may be $50,000,000;  it may be more;  and I should think that there would be, at least, a moral obligation on our part, on the part of the Secretary of the Treasury, to pay the interest, even though the deposits should run beyond the amount fixed in this amendment.  The deposits being liable to be withdrawn upon so short a notice, I do not see how the Secretary of the Treasury can determine or can limit the amount with precision.  I merely make that suggestion.

Mr. Fessenden.  The withdrawing it, the Senator will observe, diminishes the amount.  The only difficulty would be in ascertaining that it did not exceed that sum.

Mr. Henderson.  Yes, sir; but the same difficulty results in making deposits.  He cannot tell where the deposits have been made, or the amount of the deposits that have been made.

Mr. Fessenden.  I presume the regulation would be natural in such a case, that the amount received in any one sub-Treasury, should be reported to him.  There is no difficulty about it, in fact.

Mr. Grimes.  I should like to inquire, if the committee have given any reflection to the subject, as to the possibility of making this provision more general.  The advantages of it, if there are any, will be enjoyed probably by those people who happen to live in large cities, where the sub-Treasuries are;  but there are some moderate-sized cities that have not sub-Treasuries, and do not care about sending money, for a month, on to New York, Boston, Philadelphia, or wherever there may be a sub-Treasury, in order to deposit it and derive the advantages of this section.

Mr. Fessenden.  I suppose that would be the case;  but if it benefits the Treasury there can be no objection to it whatever on that account.  That objection is true to some extent;  but I have long been of opinion that if my neighbor was benefited and I was not thereby injured, and the country was benefited at the same time, I could have no reasonable objection to it.

The question being taken by yeas and nays, resulted— yeas 21, nays 18; as follows:

YEAS— Messrs. Anthony, Chandler, Clark, Collamer, Cowan, Davis, Dixon, Fessenden, Foot, Foster, Harris, Howe, McDougall, Morrill, Powell, Simmons, Sumner, Ten Eyck, Wade, Willey, and Wilson, of Massachusetts — 21.

Nays— Messrs. Doolittle, Grimes, Hale, Harlan, Henderson, Howard, Kennedy, Lane of Indiana, Latham, Pearce, Pomeroy, Rice, Saulbury, Sherman, Trumbull, Wilkinson, and Wilson of Missouri —18.

So the amendment was agreed to.

The Presiding Officer.  The question is on ordering the amendments to be engrossed and the bill to be read a third time.

Mr. Pearce.  It seems to me this is the proper time for me now to make a very few remarks.

Mr. Fessenden.  I will ask the Senator to make his remarks on the passage of the bill.

Mr. Pearce.  I see no reason why I should not make them now;  but I yield, as I always yield, with readiness to any suggestion of the Senator from Maine.

The amendments were ordered to be engrossed and the bill to be read a third time.  The bill was read the third time.

Mr. Pearce. [James Alfred Pearce (December 14, 1805 December 20, 1862) Maryland Whig; studied law, admitted to the bar]  I feel very reluctant, Mr. President, to say a word on this bill at this time, and I should not address the Senate upon it at all if it were not that I think it probable my vote may be misconstrued.  I shall, therefore, abbreviate what I have to say, under the circumstances which surround us at this late hour of the day.

Ours is a Government of limited and granted powers.  We can exercise no authority which Congress has not by reason of the grant of some express power, or some power necessarily implied from that which is granted.  If there be a power necessary and proper to carry into execution any of the granted powers, we possess it under the general clause of the Constitution in reference to that subject.  The power to make a legal tender is not granted expressly in the Constitution, nor, as I think, by any implication from any of the granted powers.  It is true there is a qualified power of making a legal tender to be found in the clause which authorizes its to coin money and to regulate the value thereof, because there can be no purpose in regulating the value of the money we are authorized to coin, except to make it a legal tender.  When we establish the value of gold and silver coin, which we have the express authority to do, we of course have the implied authority to declare that its value thus fixed by law shall be the measure of value in all contracts, and to make it a legal tender.  There is no other purpose for giving us the authority to regulate the value of the money which we are authorized to coin;  and, accordingly, Congress has declared silver coins to be a legal tender.  I do not know whether that provision is in the law regulating the value of the gold coins.  I suppose, however, that it must be so.  I know that when we passed the act by which we apportioned the silver and the alloy in our silver coins, we did declare that coinage to be a legal tender for sums under five dollars.  Even, however, if that were not so, it would follow necessarily it being provided in the Constitution expressly that gold and silver may be coined by authority of Congress and their value regulated by law, that they must necessarily be a legal tender.  It is so according to the custom of all civilized nations;  and so the convention that framed the Constitution assumed it to be.  But I can see no power from which we can infer authority in this Government to make paper money a legal tender.  It clearly cannot be inferred from the power to coin money;  which is to be made of metal.  I do not see how it is to be inferred, as I think one Senator derived it, from the power to borrow money, since, to make paper money cannot be necessary to the execution of the power to borrow money.  As well could we infer a general authority to lend money or to deal in brokerage.

The implied powers are those which result from the fact that they are appropriate means of executing the granted powers.  Now, the power to make paper money is not an appropriate means of exercising or executing the power to borrow money.  It cannot be inferred, I think, from the power to regulate commerce.  It is not an appropriate means to that end.  You might as well contend that Congress had the power of building a mercantile navy for the purpose of transporting all the articles of commerce which are grown or produced in our country to other parts of the world, in execution of the power to regulate commerce, as that they had the power to give an arbitrary value to a certain piece of paper for the purpose of regulating commerce.  I do not know of any other power to which it has been referred except the war power, and for that there has been no argument;  indeed there has, I think, been no argument at all offered by anyone which it is necessary to meet.

This doctrine has not the authority of any of the great names of those who have gone before us.  Not one of the framers of the Constitution, not one of its expounders, no great jurist, no great commentator who has gone before us, has given the sanction of his name to this doctrine.  They are, all who have spoken on the subject, to the contrary, every one of them, from Mr. Madison down to the present day, and including Mr. Webster and Mr. Calhoun.  The subject, I believe, indeed, has not been mooted in Congress, and hence, perhaps, it is that we have so few authorities upon it;  but we know that in the incidental debates which occurred here, Mr. Webster gave his most emphatic condemnation to the doctrine, and so did Mr. Calhoun.

We have then, I say, sir, the authority of no great name in favor of this doctrine, unless it be that of the gentlemen who have on this occasion, in this and the other House, declared their belief that Congress might constitutionally exercise this power.  I doubt very much whether the reputations of these gentlemen, justly and deservedly great as they may be, will be much enhanced by the expression of this opinion.

We are not encouraged to adopt this doctrine, or to exercise this power, by the example of the great civilized nations of the world.  All the examples of it which history presents to us come from nations in the frenzy of revolution or in the decrepitude of penury.  We have it in the exhausted financial condition of Austria, which has just been unable to prevent a portion of her possessions being torn from her by a greater Power.  We have it in the example, of poor, decrepit, effete, half-civilized Turkey, as I think some paper read at the table to-day disclosed;  and there, in a very brief period, we see that the effect which everyone anticipates from such a measure has taken place rapidly.  Everybody condemns the evil of inconvertible paper money as an evil of great magnitude, scarcely inferior to any other with which the country can be afflicted — only inferior, said one Senator, to war itself, which involves that and a great many and perhaps all other evils.  We know from our own revolutionary experience the monstrous evil which the paper currency of that its era brought upon the country.  We know its history, its repudiation, and its total loss to all those who held it.

We are told, and all admit, that such a system destroys public confidence and private confidence;  that it affects the public faith and the public credit;  that it creates such distrust between man and man as impairs the ordinary commercial operations of the country;  that it destroys the public and private virtues;  that it debauches a country;  and yet upon such an experiment we are now entering.  I venture to say that the inconvertible paper money which we now are about to authorize to be made a legal tender will not be the sole amount which Congress will emit for this purpose;  but before this session closes you will have more than two hundred millions of dollars added to the $150,000,000 which you now authorize to be issued and to be considered a legal tender.

I was somewhat struck with a remark which fell from the Senator from Wisconsin, [Mr. Doolittle] in the course of his speech, and the justice of which I could not perceive.  If I understood him aright, he said that he would be much opposed to this measure, if it were not that there was now a paper money circulation in the country of $150,000,000, issued by the banks, which the people have accepted as if legal currency;  that they are so accustomed to take it that it is in vain to talk of it except as money in circulation;  but that if that could be put a stop to, he would then be in favor of hard money altogether, and opposed to the legal tender clause of this bill.  It seems to me that it is a singular fancy of his to correct that evil by adding to the irredeemable bank paper currency of the country $150,000,000 more, as we are now about to do.  I suppose if this paper circulation of ours be an inferior circulation to that of the banks, it will displace it, according to a generally received principle, that the worse circulation always displaces the better, and therefore that which displaces any other circulation will be worse than the one displaced.  If so, it will depend on the credit given to these Treasury notes, whether these form a circulating medium or not.  If they be considered worse by the holders than the notes of the banks, they will displace the notes of the banks, and the people will take our Government paper money.

I think that this measure will not redound either to the advantage of the country or to its honor and reputation.  How do you think, sir, it will be received abroad ?  With scorn and ridicule, I venture to predict, by all the enemies of republican government;  with fear and dismay by its friends.  Your enemies across the river, at the Richmond court, will, I think, as I heard the Senator from Vermont say to some one just now, have a jubilee over the passage of this bill with this provision in it, because it brings this Government down to the level of their penury;  it is a proclamation of bankruptcy in advance, quite as strong as anything which we can declare of their condition, and it is the promise of worse things in the future.

Mr. President, the exigencies of the country are very great;  I admit my obligation to coöperate with gentlemen here in furnishing the Government with the means of carrying on all its operations;  but when a constitutional objection is presented to me, the very allegiance which I owe to the Constitution, and therefore to the Union, compels me not to violate any of its provisions, as I think I shall do if I vote for this bill.  I must, therefore, cast my vote against it.

I repeat, sir, the exigencies of the Government are great;  and they will be greater before they can be less.  We have now a debt of over three hundred millions I think;  and we are told even by my friend the chairman of the Committee on Finance that by the expiration of this fiscal year we shall have a debt of $750,000,000;  and, if the war continues another year, a debt of $1,500,000,000.  Does not the magnitude of that strike every one ?  The Senator front Rhode Island [Mr. Simmons] said the other day that this country was as well able to carry a load of debt as Great Britain was.  He spoke of its abounding in all the elements of wealth That is true if he speaks only of that which Dr. Johnson called "the potentiality of wealth beyond the dream of avarice."  With our immense country, with all its resources of wood and forest and mine undeveloped, no one can doubt that in the future there must be wealth in this country far exceeding that of Great Britain, large as it is, and though it be the treasure of centuries which has been accumulated within that realm;  but we have not that wealth now, sir.  Many of the sources of our future wealth are sealed up to us at present, and must remain so necessarily for a long series of years;  vast portions of our land are uncultivated, and they must remain so.  But when toil shall have subdued the forest, restored the fertility of lands now exhausted, digged deep into the bowels of the land for the hidden treasures of the mine, and given new forms and value to the crude products of the land, no people will rival us in the abundance, extent, and variety of our products, and in all that belongs to material prosperity.

But, sir, when we look at our present means to pay our debts by taxation, we shall find that they are by no means so abundant, comparing them with the resources of England, as the Senator from Rhode Island suggested.  The valuation, as ascertained by the census, of the assessable property in the whole of the United States was but about twelve thousand and eighty-four millions of dollars.  I know that at the census office it was thought that the valuation of the States was too low, and therefore, by conjecture, they raised this valuation up to about sixteen thousand millions of dollars, of which five thousand one hundred and eleven millions are in the seceded States and between ten and eleven thousand millions in the adhering States.  But if you take the returns furnished by the census, the valuation of all the assessable property in the United States is but about twelve thousand and eighty-four millions of dollars, and can any one believe that the valuation made two years ago are too low now ?  Has not all property fallen in value ? and would it be safe to assume that any conjectural addition to the actual returns of the census should be made to correct a supposed under-estimate of these returns ?

Then, sir, if we take that valuation as correct or approximating correctness, or even taking the other supposition, if we assume that there are $10,000,000,000 of assessable property in the adhering States, that is less than one third of the valuation of the assessable property of Great Britain.  The assessable value of the property of Great Britain in 1858 was $30,000,000,000, and at the rate of increase since their census of 1848, it must now be $32,000,000,000.  The assessable value of the property in our adhering States, according to the census returns, not raised, as I have stated, is a little less than $8,000,000,000;  so that the assessable property here is about one fourth of that of Great Britain.  Then, a debt of $1,000,000,000 here is equivalent to, or in the same proportion as, a debt of $4,000,000,000 (which is the debt of England) is to its assessable property.  Hence, if we have a debt of $1,000,000,000, we have an incumbrance as great upon us as the present debt of Great Britain is upon her.  But, then, we must recollect that we pay double or more than double the interest that she does, so that, as one Senator said to-day, we were incurring not a little responsibility when we entered upon this vast system of expenditure, but a very great responsibility — a burden of debt the interest of which is, in comparison with that of England, as two to one.

And, beside all this, we must recollect that as a great mercantile and manufacturing nation, she is better able to pay taxes than we are;  whose chief population is agricultural.  An agricultural people are, as is generally admitted, less able to pay taxes than those among whom mercantile pursuits and the manufacturing arts are predominant.  We must remember, too, how much wealth England now draws from her vast colonial possessions — Australia, Hindostan, and the numerous dependencies over which her flag floats in every quarter of the world.

Sir, notwithstanding the magnitude of this responsibility, I think it is probable that the country will endeavor to bear all the impositions which it may render necessary;  but let us not delude ourselves, nor delude the people, by the supposition that these evils are to be but few or insignificant.  If we want to give credit to the Government securities, we must not only provide, as this bill does, for the payment of the interest due on them in coin, but we must provide, by large taxation, for the raising of great sums of money for the purpose of paying the interest in coin, and of defraying in part the vast expenditures of the Government.  This cannot be done altogether, or more largely than at present by direct taxes, using these words in the sense of the Constitution.  We shall find it indispensable to resort to indirect or internal taxation to a great extent.  This is much the easiest and least burdensome mode of raising revenue;  but we cannot flatter ourselves that its pressure will not be sensibly felt.  It must load down our industry, limit the comforts of life, especially to the poor, and using large contributions from property and toil, I fear, for many long years to come;  even if the sinking fund of the Senator from Ohio [Mr. Sherman] should accomplish the wonders which are always promised for sinking funds.  These would probably be accomplished if the stipulations at their creation were always observed.  But great exigencies and financial revulsions occur too frequently in the history of nations to allow of this, and, therefore, I fear that before the expiration of this war we shall have laid upon ourselves the burden of a heavy perpetual debt.  We certainly have commenced the bad experiment of irredeemable Government paper money.  No one will be more rejoiced than myself if these apprehensions should prove to be vain.  Having made this brief statement of my opinions, I will not longer detain the Senate.

---[Years later, Mr. Sherman himself admitted that these kind of sinking funds could not work, did not work, it was not in their nature to work; they were simply designed to mislead and impress the ignorant]

Mr. Saulsbury.  It was my desire and intention to vote for this bill, provided the provision making these notes a legal tender had been stricken out.  That provision has been retained in the bill.  It is so clearly unconstitutional, in my opinion, that I cannot conscientiously vote for it.  I cannot attempt at this late hour to assign the reasons for my opinion.  The speech of the Senator from Vermont [Mr. Collamer] has not been answered, and it is not in the power of man to answer it.

Mr. Powell.  It is not my purpose to make a speech.  It would afford me pleasure to vote for any measure I thought constitutional to relieve the country from its present embarrassment;  but believing that this bill is unconstitutional, I cannot vote for it.  I had intended, if time permitted — but the hour is too late now — to give briefly my reasons for the vote I shall give;  but after the very exhaustive speech made by the Senator from Vermont [Mr. Collamer] yesterday, it would be unnecessary, particularly after the excellent speech made by the Senator from Pennsylvania [Mr. Cowan] to-day, and the brief but very pointed speech of the Senator from Maryland [Mr. Pearce], who has just taken his seat.

In my judgment, this bill is plainly and palpably violative of the Constitution of the United States, and I do not believe that issues of paper money, unless they are convertible into coin at the pleasure of the holder, ever did or ever will relieve any country permanently from any embarrassment.  I think all such issues of irredeemable paper lead the country into further and greater embarrassments, instead of relieving it;  and I very much fear that those who expect great benefits to the country from this bill will be very greatly disappointed.  I shall not detain the Senate by speaking.

The PRESIDING OFFICER.  The question is on the passage of the bill.

Mr. Howard.  I call for the yeas and nays.  The yeas and nays were ordered.

Mr. Latham.  I merely desire to say, in order that I may appear right upon the record, that I have entertained very grave doubts during this discussion as to the constitutionality of the legal tender issue, and entertaining those doubts, I cast my vote against that clause when it was under consideration.  The majority of the body having now, however, indicated their desire that it should be in the bill, I cannot, consistently with my sense of duty, withhold my vote from the bill.  I shall, therefore, vote for it.

Mr. Anthony.  I voted against the vital clause of this bill making the paper issued by the Government a legal tender, but having no project of my own to present to the Senate, I shall not take the responsibility of voting against the only measure which is proposed by the Government and which has passed the House of Representatives and received the sanction of a majority of this body.

The question being taken by yeas and nays, resulted— yeas 30, nays 7; [out of 49] as follows:

Yeas— Messrs. Henry Anthony (R), Zachariah Chandler (R), Daniel Clark (R), Garrett Davis (U), James Dixon (R), James Doolittle (R), William Fessenden (R), Solomon Foot (R), La Fayette Foster (R), James Grimes (R), John Hale (R), Ira Harris (R), James Harlan (R), John Henderson (U), Jacob Howard (R), Timothy Howe (R), Henry Lane of Indiana (R), Milton Latham (D), James McDougall (D), Lot Morrill (R), Samuel Pomeroy (R), Henry Rice (D), John Sherman (R), Charles Sumner (R), John Ten Eyck (R), Lyman Trumbull (R), Benjamin Wade (R), Morton Wilkinson (R), Henry Wilson of Massachusetts (R), and Robert Wilson of Missouri (U) —30.

NAYS— Messrs. Jacob Collamer (R), Edgar Cowan (R), Anthony Kennedy (U), Preston King (R), James Pearce (D), Lazarus W. Powell (D), and Willard Saulsbury (D) —7.

not voting-- James Bayard (D), Orville Browning (R), John Carlile (U), Andrew Johnson (D), James Lane of Kansas (R), James Nesmith (D), James Simmons (R), Benjamin Stark (D), John Thomson (D), Waitman Willey (U), David Wilmot (R), Joseph Wright (U) --12

So the bill was passed.

Alabama Vacant Vacant

Arkansas vacant vacant

Milton S. Latham (D)
James A. McDougall (D)

La Fayette S. Foster (R)
James Dixon (R)

James A. Bayard, Jr. (D)
Willard Saulsbury, Sr. (D)

Florida Vacant Vacant

Georgia Vacant Vacant

Orville H. Browning (R)
Lyman Trumbull (R)

Joseph A. Wright (U)
Henry S. Lane (R)
James Harlan (R)
James W. Grimes (R)

Samuel C. Pomeroy (R)
James H. Lane (R)

Lazarus W. Powell (D)
Garrett Davis (U)

Louisiana Vacant Vacant

William P. Fessenden (R)
Lot M. Morrill (R)

James Pearce (D)
Anthony Kennedy (U)

Charles Sumner (R)
Henry Wilson (R)

Zachariah Chandler (R)
Jacob M. Howard (R)
Henry M. Rice (D)
Morton S. Wilkinson (R)

Mississippi Vacant Vacant

John B. Henderson (U)
Robert Wilson (U)

New Hampshire
John P. Hale (R)
Daniel Clark (R)

New Jersey
John R. Thomson (D)
John C. Ten Eyck (R)

New York
Preston King (R)
Ira Harris (R)

North Carolina vacant vacant

Benjamin F. Wade (R)
John Sherman (R)
Benjamin Stark (D)
James W. Nesmith (D)

David Wilmot (R)
Edgar Cowan (R)

Rhode Island
James F. Simmons (R)
Henry B. Anthony (R)

South Carolina Vacant Vacant

Andrew Johnson (D), Vacant

Texas vacant vacant

Solomon Foot (R)
Jacob Collamer (R)

Waitman T. Willey (U)
John S. Carlile (U)

James R. Doolittle (R)
Timothy O. Howe (R)