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House of Representatives
Mr. Bingham. [ John Armor BINGHAM, (1815-1900) Ohio (R)] It was far from my purpose, when I came early to the House to-day to attend a meeting of the Committee on the Judiciary, to enter upon any discussion of the important question which now commands the attention of the Representatives of the people; and but for some remarks which have been made to-day by the honorable gentleman from New York [Mr. Roscoe Conkling] I would not feel disposed now to address the committee. But, sir, as a Representative of the people, I cannot keep silent when I see efforts made upon this side of the House and upon that to lay the power of the American people to control their currency, a power essential to their interests, at the feet of brokers and of city bankers, who have not a title of authority, save by the assent or forbearance of the people, to deal in their paper issues as money.
I am here to-day to assert the rightful authority of the American people, as a nationality, a sovereignty under and by virtue of their Constitution. In saying that the people of this Republic are one people, a sovereignty, I do not feel that I shall be confronted by any of the great names of the illustrious dead who have suddenly found favor with gentlemen upon the other side of the House. Living, there was no epithet in our language too severe in its condemnation or too much uncharitable in its import for the fit denunciation by certain parties of the alleged political heresies of the illustrious man, Alexander Hamilton, and that other illustrious man, Daniel Webster, who for strength of intellect stood alone among the living; and now dead, in his honored grave sleeps alone by the sounding sea. I am not myself of that class of admirers who persecute men while living, and heap tons of granite and pour empty adulation upon their ashes when dead. I prefer to respect them and their authority while they stand among the living men of to-day. These great names have been involved in this debate. For what purpose ? For the purpose of denationalizing the American people; for the purpose of stripping the American people of the attributes of sovereignty; for the purpose of laying, as I said before, at the feet and at the mercy of brokers and hawkers on 'Change the power of the people over their monetary interests in this hour of national exigency.
Sir, there is nothing in the records of these illustrious men that justifies any such base uses of their utterances, which were made not only for the instruction of the men of their own day, but for the guidance. of all that were to come after them. I venture to affirm without having recently had the opportunity to read much of what he said upon that subject that Alexander Hamilton, peerless almost among the founders of the American Constitution, never intimated in any paper of his that the Government of the United States could not, at its pleasure, issue Treasury notes either payable upon demand or payable upon time. There was much said by my respected colleague [Mr. Pendleton] with which I entirely and altogether agree; but, sir, when my colleague seemed to intimate in his argument that he found any warrant in the elaborate papers of Alexander Hamilton against this authority or power of the Congress of the United States to authorize the issue of Treasury notes either payable upon demand or payable upon time, he greatly mistook the spirit of all he has written, and which has been transmitted to us. My colleague was adroit in the handling of the papers of Hamilton, which will live as long as our language lives. He was one of those men upon whom it pleased God to confer those extraordinary gifts which command the homage and admiration of men, whether they agreed with him or not. The passage which my colleague quoted from his work was an argument in which he showed the propriety of establishing a national bank authorized to issue currency, and he gave certain reasons therefor. My colleague is a most excellent lawyer. He knew well, and so did Hamilton know well when he made that argument, that what the Government does by another it does by itself qui fecit per alium fecit per se.
Mr. Pendleton. Does my colleague allude to me in those remarks ?
Mr. Bingham. I do.
Mr. Pendleton. I will say to my colleague that it will puzzle him to find anything in the remarks I submitted to the House the other day which looks like the assertion that General Hamilton denied the power to issue Treasury notes, payable upon demand, or at a specified time.
Mr. Bingham. I am much obliged to my colleague for that, for his speech, backed as it was by the commanding authority of Alexander Hamilton, made the impression upon this House that he denied the power of the Government to issue Treasury notes. This avowal now saves me a great deal of trouble. It is what I expected from the ingenuousness of my colleague.
Mr. Pendleton. I am very much flattered by what my colleague says, but I object to his putting it upon that footing exactly. [Laughter.] I say he will find nothing in my speech to justify the assertion he has made.
Mr. Bingham. I said my colleague seemed to intimate that Hamilton had doubted the power of Congress to make a direct issue of demand or time Treasury notes. It is farthest from my purpose to misrepresent my colleague, and I now understand him to concede that the Congress of the United States has authority to issue Treasury notes. For that concession I thank him, as it saves me the trouble of saying anything further upon that point.
I now come to the other point. Did Alexander Hamilton, in any paper, intimate that the Congress of the United States could not make any thing which it authorized to be issued, as money, a legal tender for the payment of debts ? I think I am justified in saying that he never did. I understand that Hamilton admitted that limitations were by the Constitution imposed upon the power of this Government. That is very apparent in the wondrous teachings of that illustrious man, and in the utterances of that other man no less illustrious, Daniel Webster. The names of both have been invoked in this discussion. For what purpose, sir ? Manifestly to impress the House and the country with the belief that they denied the power of Congress to legislate as proposed by this bill. I think from what they said and all they said on this subject, the very contrary appears.
I may be allowed, sir, to say that I am not unfamiliar with the utterances of those great minds, to their countrymen, and which have survived them and will survive us. They both have agreed in this, and in it I agree with them, that the Government of the United States may not issue paper currency irredeemable in gold and silver or other legalized coin. That is the substance of their respective opinions. This bill does not contemplate an issue of Treasury notes irredeemable in gold and silver. If it did, I should never vote for it. They both agreed that the Government of the United States might authorize the issue, as currency, to facilitate the operations of commerce, of what is known as paper money; and although I have not come here prepared with notes of reference to what they have said, I give it as my recollection of what Mr. Webster did say, that he asserted the proposition as broadly as I assert it now, that the Government of the United States may authorize the issue of paper money as currency. Mr. Webster always insisted upon American nationality, I only quote his own words when I say that all the people of all the States, are but one people, with but one Constitution and one destiny.---[Mr. Bingham, in 1863, voted for National currency Banks; in 1867 voted for the reconstruction act; in 1869 voted for the Credit Strengthening Act.
A friend near me hands me what Mr. Webster did say. I quoted what he said from memory. I would be ashamed of myself as an American citizen if I had not taken some pains to make myself familiar with the remarkable sayings of this illustrious man, who did honor not only to his country but to the human race. This is what Mr. Webster said:
"Congress by the Constitution is invested with certain powers, and as to the objects, and within the scope of those powers, it is sovereign."
In 1837 Mr. Webster said:
"[And if nothing else had been done, would it not have been a reasonable and necessary inference from this power, that] Congress had authority to regulate, and must regulate and control, any and all paper, which either States or individuals might desire to put into circulation, purporting to represent this coin, and to take its place, in the uses of trade and commerce ?"
On this general subject he spoke as follows, in the Senate of the United States, on the 28th of September, 1837. (Annals of Twenty-Fifth Congress, first session, page 317:)
Now, Sir, by this Constitution, Congress is authorized to "coin money, to regulate the value thereof, and of foreign coins" ; and all the States are prohibited from coining money, and from making any thing but gold and silver coins a tender in payment of debts. Suppose the Constitution had stopped here, it would still have established the all-important point of a uniform money system. By this provision Congress is to furnish coin, or regulate coin, for all the States. There is to be but one money-standard for the country. And the standard of value to be established by Congress is to be a currency, and not bullion merely; because we find it is to be coin; that is, it is to be one or the other of the precious metals, bearing an authentic stamp of value, and passing therefore by tale. That is to be the standard of value. A standard of value, therefore, and a money for circulation, were thus expressly provided for. And if nothing else had been done, would it not have been a reasonable and necessary inference from this power, that Congress had authority to regulate, and must regulate and control, any and all paper, which either States or individuals might desire to put into circulation, purporting to represent this coin, and to take its place, in the uses of trade and commerce ? It is very evident that the Constitution intended something more than to provide a medium for the payment of debts to government. The object was a uniform currency for the use of the whole people, in all the transactions of life; and it was manifestly the intent of the Constitution, that the power to maintain such a currency should be given to Congress. But it would make the system incongruous and incomplete; it would be denying to Congress the means necessary to accomplish ends which were manifestly intended; it would render the whole provision in a great measure nugatory, if, when Congress had established a coin for currency and circulation, it should have no power to maintain it as an actual circulation, nor to regulate or control paper emissions designed to occupy its place, and perform the same functions that it would on the coinage power alone. On a fair, and just, and reasonable inference from it, therefore, I should be of opinion that Congress was authorized, and was bound, to protect the community against all evils which might threaten it from a deluge of currency of another kind, filling up, in point of fact, all the channels of circulation. And this opinion is not new. It has often been expressed before, and was cogently urged by Mr. [Alexander J.] Dallas, the Secretary of the Treasury, in his report in 1816.[The report Webster quotes is actually dated December 6, 1815. Annals of Congress, 14th Cong., 1st sess., pp. 1601-1645 at 1640.] He says, "Whenever the emergency occurs that demands a change of system, it seems necessarily to follow, that the authority which was alone competent to establish the national coin is alone competent to create a national substitute."
Mr. Webster held in the same argument that under the power of Congress to regulate commerce "between the States," there is a "full and complete grant, which includes authority over everything that is a part of commerce or essential to commerce." What, he asked, is more "essential" under this head than "money?" And he added that, "whether that money be coin or paper, or however it has acquired the character of money or currency, if it has become an actual agent or instrument in the performance of commercial transactions, it necessarily thereby becomes subject to the regulations and control of Congress:"
[I am against the project, therefore, in principle and in detail;] I am for no new experiments; but I am for a sound currency for the country. I mean by this, a convertible currency, so far as it consists of paper. I differ altogether, in this respect, from the gentleman from South Carolina [Calhoun]. Mere government paper, not payable otherwise than by being received for taxes, has no pretence to be called a currency. After all that can be said about it, such paper is mere paper money. It is nothing but bills of credit. It always has been, and always will be, depreciated. Sir, we want specie, and we want paper of universal credit, and which is convertible into specie at the will of the holder. That system of currency the experience of the world and our own experience have both fully approved.
So spake Mr. Webster on the 28th September, 1837. That was his matured opinion, given the year after his speech on "the specie circular," which is relied on by the other side. His last utterance must be accepted as his opinion; and, in so far as it conflicts with his opinion in 1816 against any but a metallic or specie currency, or against anything being declared money or lawful tender but gold and silver, this later opinion, as to him and all who claim under him, must control. For myself, upon his own authority, I reject what he said in 1816, and what he said of legal tender in 1836, and adopt his clearer and sounder statement of 1837: that under the power of Congress to regulate commerce among the several States, there is a full and complete grant which includes authority over everything which is a part of commerce or essential to commerce, including money of coin or paper.---[In 1816, Mr. Webster was not on retainer to Nicholas Biddle; in 1837 he was; his favourite bank, the Bank of the United States and Baring, Brothers & Co. did not produce that paper of universal credit, certainly did not produce specie, yet Mr. Webster never had anything to say about that; you, Mr. Bingham, of course reject what he said in 1816 --you purposely left out the context of the speech: just a few sentences before Mr. Webster states that he prefers the circulation of notes of State banks to the notes of the Treasury--, you reject that the Federal Government should issue its own notes based on its own credit, instead of borrowing the notes of private banks; in 1837 Mr. Webster was for hard money and objected to issuing Treasury Notes when the Government wanted to do what his paymasters and friends had been doing for decades; a short 4 years later he was once again for paper money, as long as it is a central bank's paper --as Senator Simmons observed during this debate in the Senate on February 13th, "people of certain professions can make as good an argument on one side of any question as the other"]
Now, sir, in this connection, I desire to say that that is money in any country which the sovereignty may itself declare to be money within the limits of its jurisdiction. I do not claim that any one sovereignty may declare what shall be money universally among all nations, because no sovereignty has extra-territorial jurisdiction; but I assert the proposition that that is money within the jurisdiction of every country which the sovereignty thereof declares to be money and makes money. I should be greatly obliged if some gentleman would rise in his place and cite me some commanding authority which shows the contrary of this. Do not gentlemen know that by the decrees of sovereignty, at one time and another, iron has been money, shells have been money, hides have been money, and cattle have been money ? My colleague is not unskilled in the literature of that people foremost of all the pagan nations. He will remember that Homer says, "the armor of Diomede cost only nine oxen, and that of Glaucus cost a hundred."
Mr. Wright. They had no written Constitution, and we have.
Mr. Bingham. My friend is right, and I appreciate his remark. What is money ? It is a long time since I read the remarkable essay of Hume upon this subject. I am not aware that I have seen it for many years. But I believe that his definition will answer as well as any other. "Money," he said, "is that which is authorized by the sovereign, and agreed upon among men (speaking of course through their sovereign) as the standard of value, and the medium for the exchange of commodities."
By that sovereignty which is known by the name of "the people of the United States of America," the Government of the United States has been invested with this attribute of sovereignty, which is inseparable from every sovereignty beneath the sun the power to determine what shall be money; that is to say, what shall be the standard of value; what shall be the medium of exchange for the purpose of facilitating exchange and regulating all commercial transactions of the country and among the people. If the Government of the United States had not that power, it would be poor indeed I will go a step further, and say it would be no Government at all.
Some one asks, whence is this power derived ? My friend from Pennsylvania [Mr. Wright] made a suggestion, for which I thank him. I receive nothing unkindly in the way of suggestions from anybody. I learn from everybody. I have been all my life learning, and have never yet seen a human being from whom I could not learn some thing. My friend suggested that the Grecian States had no written constitution, but that we have. I am not unmindful of the fact that we have a written Constitution. I have asserted in my place heretofore and I think it was not altogether kind in gentlemen upon the other side of the House to intimate that I occupied any other position that in determining the powers of this Government, I neither dared to look nor desired to look beyond the Constitution, its grants of power, and its limitations of power, express or implied. That is precisely where I stand. I yield to no man upon this side of the House, or upon the other side, in reverence for the Constitution, in respect for its limitations of power, or in the conviction that as Representatives of the people we should not in any particular trench upon its limitations, made for the protection either of the people or of the States.
But, sir, I return to my inquiry. I was referring to the power conferred by the Constitution upon the Congress of the United States to determine what shall be money everywhere within the jurisdiction of the United States, what shall be the standard of value in the exchange of commodities and in all commercial transactions, and what shall be a lawful tender in the discharge of debts or obligations. I have no difficulty, sir, upon this subject; and I think that gentlemen, when they come to examine the question carefully and considerately, will have no difficulty upon the subject.
In the first place, the Constitution has expressly provided that Congress shall have power to regulate commerce with all foreign nations, among the several States, and with the Indian tribes. This general provision of the Constitution has frequently undergone interpretation in our Supreme Court, and the effect of this language has been matter of deliberate consideration with every man who has ventured to issue a treatise upon the Constitution of the United States. Whoever takes the pains to look into either of these authorities the decisions of the Supreme Court or the writers upon the true construction of the Constitution will discover that they all agree in this, that this power to regulate commerce includes the exercise of all powers necessary to the existence of commerce among the several States, and extends even to its prohibition, when the public necessities require it. This, I undertake to say, is matter of agreement among all who have written upon the construction of the Constitution, and is substantially the ruling of the Supreme Court. Sir, if there were no limit in the Constitution upon this general power of Congress to regulate commerce, I would say at once that the Congress of the United States might make anything money which it pleased. But there are certain limitations in the Constitution. Money has a two-fold office. It determines the standard of value on the one hand, and it discharges obligations on the other. There is a limitation, and I am free to admit it. That brings me to the very pith and marrow of this debate.
What is that limitation ? That is the important point. I desired to-day to ask the attention of my excellent friend from Vermont [Mr. Morrill] to the question whether the Constitution of the United States has declared what shall be a legal tender. He did not find it convenient to yield to me for that inquiry. I stand here to assert that the Constitution of the United States has nowhere declared what shall be a legal tender. I stand here to assert further, that nothing has ever been made a legal tender in the United States at any time, in discharge of private obligations, or of public obligations either, of universal application in States and Territories alike, except that which was made so by act of Congress. Your Constitution, I repeat, never made gold and silver a legal tender. It never made anything a legal tender in the discharge of debts. The Constitution simply conferred the power on Congress by its general grants of power to declare by law what shall be a legal tender. Gold and silver and copper, if I recollect aright and if I am wrong I hope the venerable chairman of the Committee of Ways and Means will correct me have been all made alike legal tenders, at one time or other, by act of Congress.
Mr. Stevens. Will the gentleman allow me to say that, when silver coin was last debased seven and a half per cent., it was made a legal tender to a certain amount ?
Mr. Bingham. The chairman of the Judiciary Committee [Mr. Hickman] has very kindly suggested to me that, according to the argument which we have heard here to-day, and assuming to be true all that has been said on the other side on this subject, if the Constitution has not made gold and silver a legal tender, then gold and silver are not a legal tender, and cannot be made so by act of Congress.
I am obliged to my colleague of the Judiciary Committee for the suggestion. I repeat it, sir, that there is not a line, or word, or syllable in the Constitution which makes anything a legal tender gold, or silver, or anything else. But Congress has the power to regulate commerce, and there can be no such thing as a well-regulated commerce without a law, enacted by the sovereign, determining what shall be a lawful tender in the discharge of obligations payable in money only.
This being so, it does seem to me that the alarm and outcry that have been made here against the constitutionality of the legal tender provision of the bill reported by the Committee of Ways and Means are stripped somewhat of their formidable proportions.
But I am not disposed to leave this point here. Gentlemen have asked whether Congress can impair the obligation of contracts, and what limitations there are in the Constitution of the United States in that behalf ? I recognize, I trust, the obligations of personal integrity in all contracts between man and man as fully as any other gentleman on this floor; but I am speaking now to a question of constitutional law, of legislative power. There is a limitation on the power of the States that no State shall pass any law impairing the obligation of contracts; but I ask my learned colleague [Mr. Pendleton] to lay his finger on a like limitation in the Constitution upon the power of the Federal Congress. If I recollect aright, the Supreme Court itself has declared that this limitation did not operate on Congress. I see my learned friend of the Judiciary Committee [Mr. Thomas] attending to what I say, and I appeal to him whether I am right in my recollection of that matter. My friend assents to it. He is generally right on these questions; I may say he is always right. Gentlemen, by denouncing this proposed measure as impairing the obligation of contracts, seem to hope that thereby they will frighten the American Congress from its propriety in this hour of the nation's peril, when everything depends on the settlement of the question of the power of Congress, and its just and prompt exercise in clothing the Executive, the judiciary, and the Army with the lawful power to save the people and the people's Constitution, not in violation of law, but in accordance with law.
Mr. Chairman, I ask the attention of gentlemen who have undertaken to press into this argument this supposed limitation on the power of Congress, and its incapacity to impair the obligation of contracts, to the legislation of the Thirty-Fourth Congress; and I ask particularly the attention of my excellent friend from Vermont [Mr. Morrill] to the provisions of that law. He voted for it; so did I; and so did my friend the chairman of the Judiciary Committee. Indeed, according to my recollection, it received no serious apposition in the House. It is some five years since that law was passed. At the time of its passage I assert that by the then existing law of the United States every private debt or contract for the mere payment of money could be absolutely and forever discharged by the tender, in foreign coin, of the amount of such money contracts. Why ? Because by the then existing law foreign coin was declared to be a legal tender in the discharge of debts of every description, public and private. What did Congress do at that time ? It repealed the preëxisting law, and declared that foreign coin should not be a legal tender in the discharge of any obligation, either public or private. Was there any impairing of contracts in that ? What became of the interests of Mr. A, Mr. B, or Mr. C who, on the very day of the passage of that act owed a debt of $1,000, $2,000, or $5,000, and had, by the existing law of Congress the right to discharge it in foreign coin ? Was any constitutional limitation invaded there ? Not at all. What decision has ever been made by any Federal or State court, from that hour to this, questioning the validity of that statute ?
Mr. Morrill, of Vermont. In regard to this matter of regulating the value of foreign coin, it is to be noted that the Constitution expressly gives to Congress the power to fix the value of foreign coin. That power is given in the Constitution, in so many words. Now, I ask my friend from Ohio to point out as many words giving Congress the power to make paper money a legal tender. In relation to foreign coin, everybody who made a contract did so with his eyes open to the fact that Congress might make a change in regard to that matter. But when it comes to making paper money a legal tender, there is not a word in the Constitution about it.
Mr. Bingham. My friend from Vermont can make nothing by his motion, for in the same clause and line of the Constitution, Congress is authorized to regulate the value of domestic coin. "Congress shall have power to coin money, regulate the value thereof" of what ? Of the money it coins "and of foreign coins." It can do that at any time. But says the gentleman from Vermont [Mr. Morrill] "I ask my friend from Ohio to point out as many words giving Congress power to make paper money a legal tender."
Sir, the gentleman's question is answered by asking another of him: point out the words in the Constitution giving to Congress the power to make gold or silver coin, either foreign or domestic a legal tender. There are no such words. The gentleman seems to infer because Congress is expressly authorized "to regulate the value of foreign coin," it is therefore in words authorized to declare foreign coin a legal tender. Such a conclusion is by no means self-evident. The Constitution declares that "no State shall make anything but gold and silver coin a tender in payment of debts." No one doubts, I presume, that any State of the Union may make the legalized gold and silver coin of the United States "a tender in payment of debts;" but does it thence result that a State may either regulate or change the established value of foreign or domestic coin ? If any State could do this, the very purpose of the Constitution to secure a uniform standard of value, would be defeated. But, sir, if the power to make gold and silver coin a legal tender, necessarily involves, and is in fact a power to regulate its value, it logically results that as each State may make gold and silver coin a legal tender, each State may regulate the value thereof. The power to regulate the value of coin, and to declare what shall be a legal tender, are as separate and distinct as are any other two distinctive powers in Congress as distinct and separate, sir, as are your powers to lay and collect taxes, and your power to establish post offices and post roads.
The point I make is this: Congress has power, by the terms of the Constitution, to fix the standard value of foreign coin, and of domestic coin, and the power to declare a legal tender, and that these powers are distinct. My friend from Vermont agreed with me in the Thirty-Fourth Congress in sweeping away the existing statutes of Congress, which made foreign coin a legal tender in the discharge of debts; and by the same enactment changed and fixed anew the value of foreign coin. I want to know, if we can rightfully exercise that power in relation to the rights of debtor and creditor, touching foreign coin, by what logic my colleague [Mr. Pendleton] arrives at the conclusion that we cannot as well exercise it in relation to its domestic coin ?
Mr. Vallandigham. Will the gentleman yield to me ?
Mr. Bingham. I yield to my colleague.
Mr. Vallandigham. I desire to ask the gentleman a question upon this subject.
Mr. Bingham. I will hear my colleague.
Mr. Vallandigham. Congress is, by the Constitution, expressly empowered to regulate the value of coins. Now, I wish to ask my colleague whether the value thus regulated is not the legal value of the coin; and if therefore it is not a legal tender, although the word "tender" is not written in the Constitution ?
Mr. Bingham. I agree that what Congress declares and enacts shall be the value of coin, is the legal value of such coin; but, sir, an act declaring the legal value of coin does not make it a legal tender. I have just said the Thirty-Fourth Congress passed an act which changes and fixes anew the value of foreign coin, but which act expressly declares that such coin shall not be a legal tender.
I thank my colleague for his inquiry of me. And what I now say in reply. I desire to impress upon this committee that nothing ever was a legal tender under the Constitution of the United States in discharge of debt but by express provision of an act of Congress.
Mr. Vallandigham. Then I misunderstood my colleague in the former portion of his remarks. I understood him to argue that the Constitution did not empower Congress to make gold and silver coin a legal tender in payment of debt.
Mr. Bingham. The gentleman certainly did misunderstand what I said if he so understood me.
Mr. Vallandigham. I am glad to hear it.
Mr. Bingham. I asserted that Congress had the power under and by the Constitution to declare what should be a legal tender, but was not restricted by any express or implied provision or construction of the Constitution to gold and silver. My argument was that Congress had by express grant of the Constitution power to regulate commerce, and that, resultant from that power, it had also the power to declare what should be received in payment of debts. I said also, on the other hand, that Congress was empowered by the terms of the Constitution to fix the standard value of foreign and domestic coins, whether of gold or silver, iron or copper.
Mr. Vallandigham. What I understood the gentleman to say was this: that the Constitution did not authorize Congress to make gold and silver a legal tender, that it was silent upon that subject; but I understood him to argue that because Congress had assumed the power of making gold and silver a legal tender, it might also proceed to make a legal tender of paper.
Mr. Bingham. Not at all. I say that the Constitution nowhere declares what shall be a legal tender.
Mr. Vallandigham. I affirm that it does in effect.
Mr. Bingham. That it does ?
Mr. Vallandigham. Yes, sir.
Mr. Bingham. I would like to see the gentleman point out the clause.
Mr. Vallandigham. I will if the gentleman will give me the opportunity.
Mr. Hickman. I desire to ask the gentleman from Ohio a simple question with his permission. Taking the standard of gold and silver as it is established by law to-day, a contract is entered into for the payment of a debt in gold and silver at the present standard, that being by law a legal tender; but suppose the gold and silver should before the debt becomes due, by act of Congress, be debased thirty-three per cent., can that coin so debased be made a legal tender for the payment of that debt ?
Mr. Vallandigham. It may be made a legal tender, if Congress has the power to debase coin; but I deny that the power conferred by the Constitution on Congress to coin money and regulate the value thereof, confers the power to debase the coin of the country. There is no such power in Congress; and I think that is a sufficient answer to the gentleman's question.
Mr. Hickman. That, it strikes me, is dodging the question.
Mr. Vallandigham. Not at all.
Mr. Hickman. Congress has, from time to time, changed the alloy of gold and silver coin. Now, if it may make coin so alloyed a legal tender in payment of a debt arising out of a contract, and in the mean time, before the debt becomes due, Congress again changes the alloy, debasing the coin to the extent of one third its value, can that coin so debased be made a legal tender in payment of that debt ? Would not that, by the argument of the opponents of this bill, be as much a violation of that clause of the Constitution as to make paper a legal tender ?
Mr. Vallandigham. I answer, that if the purpose of the act of Congress be simply to change the alloy in order to harden the metal and make it more serviceable for the purposes of a currency, not to change its value, that Congress has certainly the right to do it; but because Congress has the implied right to do that under the power to coin money and regulate the value thereof, it does not follow that it may alloy the coin for the purpose of debasing it. The intent of the act makes the distinction.
Mr. Morrill, of Vermont. I desire to ask the gentleman from Pennsylvania a question.
Mr. Bingham. The gentleman knows that I am a generous fellow, [laughter,] but I cannot have all my time taken up. I hope the gentleman will make his question brief.
Mr. Morrill, of Vermont. If Congress have the power to debase the coin of the country by mixing with the gold and silver, in the shape of alloy, other metals, I desire to ask the gentleman from Pennsylvania if he derives from that fact the power of Congress to debase it in any other way.
Mr. Hickman. The question I asked the gentleman from Ohio was in answer to the argument which has been made here by the opponents of this bill, that Congress can pass no law impairing the obligations of contracts; yet if a contract is made to-day by which I am to be paid a certain amount in the present standard of gold and silver coin, and to-morrow Congress passes a law debasing that coin thirty-three per cent., I am required to take that debased coin in payment of the debt, and my contract is thus impaired to the extent of thirty-three per cent.
Mr. Morrill, of Vermont. I admit the power of Congress to debase the coin; but how would the gentleman derive from that power the power of Congress to substitute as a legal tender something else than coin ?
Mr. Thomas, of Massachusetts. I desire to ask the gentleman from Pennsylvania a question.
Mr. Bingham. I understand that my time has already well nigh expired, but I hope the committee will allow me an extension of time to the extent of that which has been taken out of my hour by other gentlemen. I will yield to the gentleman from Massachusetts.
Mr. THOMAS, of Massachusetts. When the gentleman from Pennsylvania says the obligation of a contract is impaired, I want to ask him if in law this very essential provision of the Constitution does not enter into the contract, and if the contract must not conform to it ? For instance, when a man agrees to take so much coin at a future day, he does it knowing that Congress has, by the Constitution, power to regulate and change the value of that coin.
Mr. HICKMAN. Yes, sir, and for that reason, inasmuch as the Constitution allows us, as I contend, the power to issue paper money, the man who enters into a contract does it with the Constitution before him. Now, allow me in turn to put a question to the gentleman from Massachusetts. Suppose gold and silver should be discovered in such quantities in California, or within the limits of the United States, as to make it as plentiful as iron, as to make it useless as a money standard, I wish to know whether it is not in the power of Congress to substitute some other metal which may be more desirable as a circulating medium than gold ?
Mr. THOMAS, of Massachusetts. That question does not now arise.
Mr. Hickman. If that power be conceded, then why not substitute paper, if that shall be found more useful for that purpose ?
Mr. Bingham. When I was interrupted by my colleague, I was remarking upon the simple proposition that the Constitution has nowhere declared what shall be a legal tender in discharge of obligations, public or private. I stated that there was no such thing in the Constitution. I stated the proposition that there never was in the United States a provision to this end declaring a legal tender applicable alike in State and Territory, except by virtue of a law of Congress.
I repeat the statement, sir, that the Government of the United States has more than once changed the value of its own authorized current coin, and also the value of the authorized current coin of foreign countries; and has changed the law of tender as to all contracts and debts, public and private. I ask my colleague on the Committee on the Judiciary to read a section of the law passed by Congress during the Thirty-Fourth Congress.
Mr. Hickman read, as follows:
"Sec. 3. And be it further enacted, That all former acts authorizing the currency of foreign gold or silver coins, and declaring the same a legal tender in payment for debts, are hereby repealed; but it shall be the duty of the director of the mint to cause assays to be made, from time to time, of such foreign coins as may be known to our commerce, to determine their average weight, fineness, and value, and to embrace in his annual report a statement of the results thereof."
Mr. Bingham. That act was passed February 21, 1857, during the third session of the Thirty-Fourth Congress. It is entitled "An act relating to Foreign coins, and to the coining of cents at the Mint of the United States."
Now, sir, what was the result of that, supposing there was at that time in circulation which I think a low estimate $10,000,000 of foreign coin in the United States, with which any citizen, up to the passage of that act, could discharge his obligations ? The moment that act took effect, that right of the citizen ceased, and it was in vain that he thereafter brought foreign coin, depreciated in value, and declared no longer a legal tender, and presented it to his creditor in discharge of his obligation. My friend would say that that would be "impairing the obligation of contracts." I do not so understand it. As I remember, there is no such limitation as that imposed by the Constitution upon the power of Congress. It is a limitation confined exclusively to the States, and it is worthy of notice in this connection, that the express limitations imposed by the Constitution upon the Congress of the United States are repeated in the Constitution, when intended to operate as limitations upon the power of the States. For example: "Congress shall pass no bill of attainder, or ex post facto law." This is repeated in the Constitution, thus:
"No state shall pass any bill of attainder or ex post facto law."
Again: "Congress shall grant no titles of nobility," which is repeated, that "no State shall grant any titles of nobility." It was not by inadvertence that the framers of the Constitution omitted to impose upon Congress this express restriction upon the States against impairing the obligation of contracts. On the contrary, they intended what has been assumed by my excellent friend from Massachusetts, [Mr. Thomas.] They proclaimed, in the absence of such limitations, that whoever, within the jurisdiction of the United States, enters into any mere money contract, public or private, enters into it subject to the sovereign power of the people, to determine at any time, by legislative enactment, what shall discharge it. It is of the essence of the contract. This is all I have to say on that subject, with this further remark: that the statute of 1856, which my colleague has done me the kindness to read, which declared that all preëxisting laws authorizing and providing that foreign coin should be a lawful tender in the discharge of debts, public and private, should be repealed, has never, to this day, so far as I am advised, been adjudged unconstitutional in any court, State or Federal.
I have said this much, Mr. Chairman, in justification of the general provisions of this bill. I do not like that phraseology of the bill, that these issues shall be redeemable at the pleasure of the United States. I have suggested to one or more of the members of the committee to consent to change that provision of the bill, so that they will be redeemable at a certain time and a certain place.
Mr. Hickman. With the gentleman's permission, I will interrupt him. Suppose these notes should be issued in the form now prescribed, and made redeemable at the pleasure of the Government ? I think that makes them payable presently.
Mr. Bingham. I suppose they would if it were not for the answer given to my colleague the other day. I suppose, from the collocation of the words, these notes were to be paid on demand; but a member of the Committee of Ways and Means explained to my colleague that the language of the bill was misplaced in that regard.
Mr. Hickman. That is not my point. Suppose a note should be issued by the Government payable at the pleasure of the Government, would not the legal effect of that bill be to make it payable presently ?
Mr. Bingham. It would, I think, invest the Government with a discretion to pay to-day, or to pay to-morrow, or within any other reasonable time.
Mr. Hickman. The legal effect would be as I have stated it.
Mr. Bingham. The legal effect perhaps would be that the Government is obliged to pay it now, or on demand, if it had the money. I do not intend to find any special fault with the bill of the committee, as reported; but I prefer that the notes should be made payable absolutely, at a certain day, in gold and silver. The coin of the country, whether that coin be gold, or silver, or iron, is that which is stamped with the measure of value, and which Congress is authorized to make the standard of value. When you issue your Treasury notes calling for ten dollars to be paid presently, or on a future day, you only know the import of the words ten dollars by the value fixed by law on the current legalized coin of the United States. I have said that Congress has the general power of regulating the value of current coin, and determining what shall be a legal tender without limitation. That is the reasoning of Hamilton; that is the reasoning of Webster it is that the Government of the United States should not issue a paper currency irredeemable in the lawful money of the United States; that is to say, in the coin, either domestic or foreign, legalized as money by the United States. That I have gathered from all I have seen from them on this subject.
Now, sir, I am not prepared to speak on the merits of the substitute offered by my friend from Vermont, [Mr. Morrill] for I have not seen it, for the reason that it has not been printed; and for the same reason, I am not prepared to speak of the merits of the substitute offered by the gentleman from New York. I am only here to-day as a Representative of the people of the United States, to claim for them the right to determine by law what shall be currency in the commercial operations of every State and every Territory in the Union, and what shall be a lawful lender in discharge of debts, public, and private.
Mr. Riddle. Will my colleague permit me ? In the event that these notes are made a legal tender, I wish to inquire of the gentleman whether it is not lawful for any person to provide in their contracts that those contracts shall alone be discharged by gold and silver ?
Mr. Bingham. Nobody denies it. They can contract that they shall be discharged by the delivery of one hundred horned cattle, or one hundred bushels of wheat. No one has questioned that. The right of a man to make contracts, not contrary to express law or public policy, underlies the machinery of Government, and is recognized by it. There is no doubt about that. There has been much stress in the argument touching this bill reported by the Committee of Ways and Means, on the effect that it may have on local bankers and brokers. That is the point of all others which I hoped would not be pressed upon this floor. What are local bankers; what are brokers, or any man who hawks the credit of the Government in the markets of the country, to make the best bargains for himself that he can; but dust in the balance compared to the rights and interests of the people of this country. I am not aware of any right which these jobbers have to interpose here for a single moment the question of their private gains against the interests of the whole people. I am not unmindful that many bank and many brokers have been patriotic and self-sacrificing in the cause of the country. But, sir, we are not allowed to forget what the Secretary of the Treasury has been reluctantly compelled by the course of certain bankers and brokers to communicate to the Committee of Ways and Means, and through them to the House and country. Let gentlemen who talk of disturbing local or metropolitan bankers or brokers ponder upon these words of Secretary Chase:
"The provision making United States notes a legal tender has doubtless been well considered by the committee, and their conclusion needs no support from any observation of mine. I think it my duty, however, to say that in respect to this provision my reflections have conducted me to the same conclusions they have reached. It is not unknown to them that I have felt, nor do I wish to conceal that I now feel, a great aversion to making anything but coin a legal tender in payment of debts. It has been my anxious wish to avoid the necessity of such legislation. It is, however, at present impossible, in consequence of the large expenditures entailed by the war, and the suspension of the banks, to procure sufficient coin for disbursements; and it has therefore become indispensably necessary that we should resort to the issue of United States notes. The making them a legal tender might, however, still be avoided if the willingness manifested by the people generally, by railroad companies, and by many of the banking institutions, to receive and pay them as money in all transactions, were absolutely or practically universal; but unfortunately there are some persons and some institutions which refuse to receive and pay them, and whose action tends, not merely to the unnecessary depreciation of the notes, but to establish descriminations in business against those who in this matter give a cordial support to the Government, and in favor of those who do not. Such discriminations should, if possible, be prevented; and the provision making the notes a legal tender, in a great measure at least, prevents it, by putting all citizens, in this respect, on the same level, both of rights and duties."
I take it, sir, that much of the outcry against the proposed legislation to make the notes a legal lender comes from that source, those persons and institutions which are unwilling and refuse to receive or pay out the Government notes; for if the bill passes, the occupation of such Shylocks will be gone. If you issue these bills, and make them a lawful tender by authority of the United States, to the amount of $100,000,000, and throw them upon the market, there would be nothing for these gentlemen to make by refusing to receive or pay your notes. The notes would be of equal value at every point, and the brokers would not be able to make their one, two, and three per cent., either off your soldier or anybody else, on an exchange between Cincinnati and New York. The man who happened to hold for the time being a Treasury note redeemable at his pleasure, or on short time, in gold and silver, and to the redemption of which the faith and wealth of the nation were pledged, would hold at least as safe a security for his money as he could find in any suspended bank paper, or in any individual or corporation draft. It is, sir, precisely because these persons and institutions refuse to receive or pay the notes of the United States that I am constrained to believe that Congress should by law declare these notes a legal tender, and thereby admonish these persons that they cannot control the authority of the American people to protect their own interests in this behalf.
Mr. Harrison. I wish to ask the gentleman a question upon the point of power. Is there any distinction or difference, so far as the question of power is concerned, between a provision in an act of Congress providing that Treasury notes payable on demand shall be a legal tender, and a provision that Treasury notes payable at the pleasure of the Government shall be a legal tender ?
Mr. Bingham. I do not know that there is, except this: I have already intimated that I do recognize a limitation upon the Congress of the United States to provide for the redemption, sooner or later, in the legalized coinage or current coin of the country, of whatever paper it may issue.
Mr. Chairman, I have already stated that, in as much as I have had no opportunity to examine the proposed substitutes, I have not been able to determine for myself whether either of them should be adapted. My only purpose in rising to this discussion now was to say what I might be able to say in vindication of the right of this Government, speaking for the whole people and legislating for the whole people of the United States, to protect its own right and its own interest, and to that end to declare what should be a lawful tender in discharge of debts. I do not know that I have made myself as fully understood as I desired, on account of the many interruptions. I have said it is very clear by the Constitution that the legalized coin of the United States is the standard or commercial value of any paper money you may issue, and that whatever paper money you may issue should be redeemable in the current coin of the United States. I have shown, I trust, that the uniform legislation of this country demonstrates the fact that the power of Congress to determine what shall be lawful tender is restricted by no express or implied provision of your Constitution.
Mr. Roscoe Conkling. I wish to make an inquiry of the gentleman for information. I do not know whether it falls entirely within the scope of the gentleman's argument, but I inquire for light upon the subject. It is true always, and certainly it has been true in this country since 1857, that the debtor interest immensely preponderates over the credit interest, numerically and otherwise; and I desire to inquire whether, if we pass a bill issuing paper and making it a legal tender, we do not present to a majority of all the people of this country a direct inducement to form all combinations possible for the purpose of bearing down and keeping down to the lowest depreciation that medium in which debts shall be paid ? And therefore I ask him the practical question, whether this idea of legal tender, so far from imparting value to these notes, is not offering a reward and bounty to the greatest interest in the country, numerically and otherwise, to make them of the lowest value possible ?
Mr. Bingham. If the gentleman's remarks apply to the notes proposed to be issued, it is utterly incomprehensible to me how he come to entertain any such notion. How can they depress that which is lawful tender in discharge of all obligations, public and private ? Does the gentleman suppose that the people are going to enter into a conspiracy for the purpose of overturning their own Government ? They have intrusted us with this power to declare a lawful tender, and Congress has exercised it time and again. This bill proposes to issue $150,000,000 of Treasury notes, which are to be declared by law to be legal tender for the payment of all debts, public and private, and how are the people going to depreciate them ?
Mr. Roscoe Conkling. My friend will bear with me a moment, as I see he misapprehends the point of the question. I did not ask him whether the people would form conspiracies to depreciate; nor did I ask him whether they could depreciate the value; but I asked whether we did not create an inducement with the people to do so. Of the other question, whether they will or not, I did not speak.
Mr. Bingham. I answer with all frankness that I do not see that we present any inducement to the people to undertake to undermine their own fabric of Government, to destroy their own credit, to paralyze their own arms. In short, un less the people can exercise the ordinary powers of sovereignty, and can and will stand by it and sustain it by such an overwhelming majority as to silence opposition, then the dream so fondly and so long cherished of this experiment of free representative Government must melt into thin air, and vanish like the baseless fabric of a vision. I am not here to insist upon any legislation which shall awaken bitter prejudices among the people. I estimate at their true value those strong words in which Burke with so much force and beauty declares the true basis of public credit to be the free and uncoerced confidence of the people. He says he would not introduce "compulsion into that in which freedom and existence are the same I mean credit. The moment that shame or fear or force are directly or indirectly applied to a loan, credit perishes." I agree to that fully, and in its entirety. The nation's credit cannot be maintained by force; unless the people, the majority of the people, with whom are the issues of the nation's life, voluntarily acquiesce in any and all needful legislation, it is in vain that you enact this or any other law; you are undone and the Government falls.
I do not share, sir, in any of the fears entertained or intimated that the people will revolt at this measure. I have an abiding faith in their loyalty, in their love of law, in their settled purpose to suffer and strive, to labor and sacrifice that they truly maintain their Government and transmit it unimpaired to their children. The passage of this bill alone, I am free to say, will not supply your Treasury or maintain the public credit.
Sir, I admit, in all its fullness, the utterance of Hamilton that the only way to make the public credit immortal is, upon the creation of a public debt, to provide the means of its extinguishment. I would not be for this bill, or for any other Treasury note bill, if this House were not ready and pledged in good faith to provide the means by the imposition of taxes, direct and indirect, sufficient to meet all the accumulated interest upon the existing public debt, and to pay the maturing obligations of the United States, and to provide a sinking fund for the ultimate discharge of all your entire obligations.
The gentleman from New York, [Mr. Roscoe Conkling] in his argument seemed to assume that the Committee of Ways and Means and the friends of this bill propose to sustain the Government of the United States by the issue of Treasury notes without providing for their ultimate redemption in gold and silver. I submit that the gentleman, if he did so assume, thereby did gross injustice to every gentleman upon this side of the House and upon that side of the House who voted for the joint resolution the other day, imposing upon the two Houses of Congress the obligation of raising $150,000,000 annually by taxation, direct and indirect. It will be remembered, and doubtless remembered with pride, by the members of the House and by the loyal citizens of the country everywhere, that there were but five votes recorded upon this floor against that resolution. My colleague, [Mr. Vallandigham] who opposes this bill, but now urges taxation, insisted upon the postponement of the joint resolution ordering taxation. That does not seem very consistent, but such are the practices of the times in which we live.
Mr. Vallandigham. I proposed to postpone the the resolution only for the purpose of making it the foundation of a general debate upon this subject. I did not move to postpone it on account of any opposition.
Mr. Sheffield. The interest which my constituents have in the financial scheme which has been presented to this House by the Secretary of the Treasury, and which has received more or less support from the Committee of Ways and Means, is my apology for again presenting myself and claiming the attention of the committee for a few moments in the consideration of one branch of this subject. This scheme embraces, as I understand it, two elements: first, the issue of $150,000,000 of Treasury notes, payable at the pleasure of the Government, to be made a legal tender; and second, to apply what is substantially the New York banking system, based upon Government securities, for the whole country. This scheme is urged upon the attention of the Country at the present time upon the ground of the necessities of the Government. I regret to appear before this committee, or anywhere else, to oppose any measure which will tend to aid the Government in its present embarrassment and financial difficulties. This system, it is said upon the one hand, is constitutional, and based upon sound morality, and upon wise legislative policy. On the other hand, it is said that it embraces provisions which are unconstitutional and immoral, and that the policy is bad.
Mr. Chairman, I have not considered the constitutional question very maturely. My attention has been otherwise directed. I have heard the arguments which have been urged upon this floor on the one side and on the other. I heard the suggestion made by the gentleman from New York [Mr. Spaulding] as to the rule by which we are to construe the Constitution, and it seemed to me to be entirely correct and the only safe guide in ascertaining the meaning of that instrument. Looking into the Constitution, which created a Government with limited powers, can we fairly deduce from any of its provisions the power to declare by legislative enactment that demand notes shall be a legal tender ? The power is nowhere expressly given. Is it fairly implied from the powers which are given ? The Constitution authorizes Congress to borrow money, to coin money, and to regulate its value; and by these means alone, I apprehend, it was designed by the powers of the Constitution that we should support our Army; that we should provide and maintain a Navy; in a word, that we should carry on the Government. Congress is given these express powers. Now, can we imply this additional power ? The gentleman from Ohio [Mr. Bingham] calls our attention to an argument which was made by a great statesman of New England before the Supreme Court of the United States, and he censures gentlemen upon the other side of the House for now invoking the authority of that great man who in life they may, perhaps, have valued too lightly. I call upon the gentleman from Ohio as one who, during the lifetime of that great statesman, followed him at an humble and respectful distance, to follow his great principles now when he is dead. Mr. Webster, in his argument on the specie circular, made in the Senate where he was acting with the responsibilities of a Senator, and under his oath as such, considered this very question with reference to the matter of legal tender which is now before the House, and used this expressive language:
"But if we understand by currency the legal money of the country, that which constitutes a lawful tender for debts, and is the statute measure of value, then, undoubtedly, nothing is included but gold and silver. Most unquestionably there is no legal tender, and there can be no legal tender, in this country, under the authority of this Government, or any other, but gold and silver, either the coinage of our own mints, or foreign coins, at rates regulated by Congress."
I say to gentlemen that there is the recorded opinion of Daniel Webster, and while that opinion remains unreversed by a judgment of the Supreme Court of the United States, no gentleman will be found in this country who will not concede that this power now claimed is doubtful. I understand it, sir, to be a fundamental axiom, which should govern legislators in the discharge of their duties, to beware how they exercise doubtful powers. We have sworn to support the Constitution. Let us take care that we keep within the purview of that oath. Let us be careful lest we assume powers which the people whom we represent have not intrusted us with, because all the powers they have given us are enumerated in or are fairly to be deduced from the Constitution.
But, sir, I did not rise for the purpose of discussing that question. I am opposed to the tender clause in this bill for another reason. In my judgment, it is dishonest. That is a sufficient reason to induce me to vote against it. We have contracted with these men, who are the public creditors, and have promised to pay them money, and they have given us their merchandise or given us their labor upon the faith of that promise. Who is to trifle with the nation's faith ? It seems to me that those men do it who support this bill. We have told these men that we would pay them in money. By this bill it is proposed that we shall give them paper. They ask us for bread, and we give them a stone.
Mr. Stevens. The gentleman says we propose to pay them in a currency which they did not contract for. Will the gentleman tell me what currency he proposes to pay them in, and where he will get it ?
Mr. Sheffield. That is a very pointed question, but I will answer the gentleman as far as it is in my power to answer him before I get through, and I will say to him that the law does not require us to perform impossibilities.
If all the property in the country were at once to be turned into money, the amount of money in the country would be the measure of the value of this property. If that property consisted of gold and silver only, this value would be fixed by the amount of gold and silver; but if to this amount was to be added the amount of bank bills which might be in circulation, the value would be enhanced to the extent of the amount of such bank bills circulated as money. If to gold and silver and bank bills were added the notes of individuals, the value of the property would be increased still further to the extent of the notes of individuals so put in circulation.
But all property is not to be reduced to cash at one time, but only that part of it which is in its transit from the producer to the consumer; and that which is changing its character, as the selling of one estate to invest in another.
A part of the money of the country is hoarded, and is consequently withdrawn from circulation. The residue is in use, and is facilitating the exchange of commodities, and of transacting the business between the producer and the consumer. If you narrow the circulating medium, you, to the extent you narrow it, decrease the value of commodities. Though a dollar is always one hundred cents, a dollar will not always purchase the same quantity of the product of labor, for while the crops are the same, a dollar at one time will buy a bushel of wheat, and at another time it will buy only three fourths of a bushel. The sudden contraction in the circulating medium produced by the celebrated specie circular caused the revulsion and the consequent depreciation of values which took place in 1837. As the diminishing of the circulating medium will produce a depreciation of prices, so will an expansion of that medium produce an appreciation of prices. Now, therefore, if we increase the circulating medium of the United States $150,000,000, without creating a new demand for that circulation, we must consequently very much increase the price of commodities. And, as the Government is at present, the greatest consumer, the Government will be compelled to pay a very considerable proportion of the increased prices which this issue will occasion.
But, sir, it may be said that the issuing of $150,000,000 of Treasury notes will not increase the circulating medium to that amount; but that, to a limited extent, these notes will supplant the bank notes already in circulation. I think the truth of this proposition will depend somewhat upon the passage of the banking bill. If that bill passes, and the one now under consideration also passes, this result may be attained; but it will be reached at terrible cost. Let us look at this subject a little. Suppose we take, to illustrate what I have to say, the case presented by the actual state of things in the district which my fellow-citizens have permitted me to represent here. There is in that district a banking capital of about twenty millions of dollars. This, by the aid of deposits and the circulation of bank notes, enables the banks to afford a line of discount, varying according to the state of business and of the money market, from twenty-six to thirty millions of dollars. I do not pretend to exactitude of statement as to the extent of the line of discount, but only to an approximation to the fact. The banks are authorized to issue notes for circulation to the extent of sixty per cent. on their capital stock paid in, and generally all of the stockholders of the banks are individually liable for all of the debts of the banks. The Suffolk banking system obtains in New England, and is carried out through the agency of the Suffolk Bank, or the bank of mutual redemption in Boston, the commercial capital of that section of the country. By this system the bills of every bank in New England are taken by every other bank at par. These bills are sent to the agency in Boston for redemption, where every bank has its balance struck weekly, and pays or receives that balance in specie, or its equivalent, as the balance maybe against or for the local bank. Thus much, perhaps, it is necessary that I should state, to the end that our banking system may be understood.
Now, how will that system be affected by the scheme of the Committee of Ways and Means ? Let us take a Rhode Island bank, with a capital of $200,000, for an example. Such a bank may issue bills to the amount of $120,000, and may afford a line of discount of $300,000, from which the bank will derive an income of $18,000. The ordinary expenses and losses of the bank will be about four thousand dollars; leaving $14,000, or seven per cent. on the capital stock, to be divided among the stockholders. A very considerable proportion of the loans made by these banks are made on the faith of acceptances which mature and are made payable in New York, Philadelphia, and Baltimore. Now, if Congress carries out the scheme of the Committee of Ways and Means, it is but fair to presume that our debts maturing out of New England will be paid in these Treasury notes. If we carry them to our redeeming bank in Boston, that bank will tell us that if we persist in forcing upon them these notes, they will not redeem our circulation. This will force us to withdraw our circulation from the community, and compel us to pay over our counters Treasury notes. This will deprive our banks of the benefit of the income from their circulation. Take the illustration I have already put, and deduct $6,000 from the income of $18,000 from a bank with a capital of $200,000. You will then have $12,000, from which you may deduct average expenses and losses of $4,000, leaving you but $8,000, or four per cent. per annum, to be divided among the stockholders. This would compel all of our banks to come into the new banking system, and force them to withdraw their capital now loaned to the business community from the hands of their customers, and to loan it to the Government. Withdraw from the people of a single congressional district $20,000,000 now actively employed in the business of the district the result of such an act it needs no seer to foretell; mills on short time; mils stopped; laborers thrown out of employment; bankruptcy, disaster, and distress everywhere. All the result of a forced loan. The murmurs that this will bring up from a ruined and discontented people will be long and loud. Tax us, and we will pay our taxes with pride, for we shall have the consolation of contributing thus much to the salvation of our country. But if you pass this bill, containing this tender clause, you will deprive us of the ability to pay taxes. But let us look into this bill from another stand-point.
The effect of this scheme of the Committee of Ways and Means, if the legal tender clause is retained in this bill, will be to destroy the currency of all banks of circulation in the country, and to monopolize this circulation in the Government. This, I think, must ruin the business prosperity of the country, and consequently destroy, or very seriously impair the value of the securities issued by the Government, which are based upon the prosperity of the business interests of the country. Perhaps one or two moneyed corporations in Boston, and a few such institutions in New York and Philadelphia may be enabled to speculate out of and profit by the general downfall of the business of the country which will ensue; but it is against these large moneyed monopolies who have behaved nobly and patriotically thus far, that we have to guard the public. I have said that this increase of the circulating medium will, until that circulating medium has all been issued, probably tend to inflate prices. This is true. And this inflation will be augmented by impairing the ability to produce of those who depend upon the banks for facilities to transact business. But these Treasury notes must one day be paid. Then there will be a reaction. The Government will want gold and silver to redeem its notes. The people will want gold and silver for the Government. Then will come the reaction; then the values of the product of labor will depreciate, and then the people of this country will begin to appreciate the true policy in relation to the issue of Treasury notes. Then the wheat, which is to be sold to pay taxes, and for which the Government are now paying $1.50 per bushel, will be worth but one dollar; and it is by calculating the difference that the same people will realize at what an immense discount they paid out their Treasury notes.
Again, with the legal tender clause in these notes, they will become odious to the people. This thing was tried in the States after the close of the Revolution, and it miserably failed. The rancors which it then created have descended from sire to son, and have not yet been obliterated.
This financial scheme is obnoxious to all of the objections which were urged against the United States Bank, and to the additional objections that its notes are to be made a legal tender, and to the further objection that you are to create a thousand banks instead of one, and that instead of being managed by officers responsible to the Government they are to be under the control of thousands of persons with but little responsibility to anybody.
But the legal tender clause in this bill is the most odious feature in the system. Send out your bills with a declaration upon their face that you have not confidence in their value, and who will take them ? Yet the very fact that you propose to force them upon the public against the will of the people implies that force is necessary in your judgment to induce the people to take them. Men are so constituted that they do not like to be deprived of their free agency. They are not willing to be forced to do anything, not even that which without force they would be entirely willing to do. Let one or two men in a neighborhood who have the specie wherewith to pay their debts go and sell that specie for a premium and then buy Treasury notes and pay their debts with them, while they pocket the difference between the two values and throw the loss upon their creditors, and you will by this simple act raise the sense of justice of a whole community against this system; yet who is there that has any knowledge of human affairs that does not know that this will be one of the practical results which will follow the passage of this bill. The ingenuity of men could not, in my poor judgment, have devised a scheme of finance better calculated to injure our country and all of its interests than that which has been presented in the two bills of the Committee of Ways and Means.
But what are we to do ? This is the startling question which presents itself to every one. I cannot but wish that this subject had been earlier brought to the attention of the House. But it is now before us, and we must meet it. If it had been propounded to me a few months ago, I would have said, "take the money which the Government had hired, and let it be the basis of a bank a United States Bank which, upon the basis of these loans, could have afforded a very great relief to the country, if it had not provided for all of its financial necessities." But that opportunity has passed. Strike from this bill the tender clause and I will vote for it, as objectionable as it is. Bring forward your banking scheme, with proper guards to protect the Government and people, and I will vote for that, unless some better measure is presented. Bring forward your tax bill, fairly imposing the burdens upon every interest and every section of the country, and by it providing that at least $150,000,000 shall be paid into the Treasury at an early day, and whether you provide for any set-off of claims held by the States or not, I will vote for that; but I cannot vote for any bill which makes Treasury notes a legal tender. I want to keep all my action in putting down this rebellion within the pale of the Constitution. I do not wish, ay, I do not mean wittingly to transcend any of its provisions.
Mr. Chairman, this scheme has been tried. It was tried in my own State at the close of the Revolutionary war. That war had embarrassed the people of Rhode Island as the people of no other State in the history of this country have ever been embarrassed. During that war, with only fifty thousand inhabitants, she sent to the army of the Revolution ten thousand soldiers. She exhausted almost all her pecuniary resources all except that which rested in the arms of her laborers in upholding the cause of the country. Embarrassed as she was, her Legislature was driven to the necessity of issuing State notes and of making them a legat tender. The people would not submit to it; they said that the State Legislature had no right to make them a legal tender. The question was brought before the courts, and the courts, though acting under a royal charter of Charles II, stood up in the face of the Legislature and of the people and hurled back to the Legislature, in bold defiance of their power, the act which they had passed and which thus infringed upon the rights of the citizen, as being based upon principles which were at variance with the common rights of the citizen. That ended the legal tender clause there. The people struggled long with their difficulties, and finally paid their debts without making further efforts to sacrifice their honor or their credit. It cannot be that the Congress of the United States, in view of the vast wealth of the country, will believe it to be their duty now to adopt the policy that that little State did at the close of the Revolution. We are not driven to that extremity. Sir, if we do pass this act with the legal tender clause, it is by no means certain that it may not return to us, as the act of the Legislature of the State of Rhode Island came back to them, and then what will be the condition of the finances of the country ? If this act passes and shall be declared unconstitutional, what will be the condition of the country then ?
I believe, Mr. Chairman, that the Constitution of the United States, which has, thus far in our history, been equal to every necessity, is equal to the one which is now upon us. It is only by keeping carefully within its provisions that we shall be secure. It is only thus that we can bear it through this trial, and bring it triumphantly out of the difficulties which now surround it. For one, I mean to keep within those provisions. I will stand by the Constitution even it it falls, and at the risk of being crushed by its fall.
Mr. Crisfield obtained the floor, but yielded it to Mr. Webster, who moved that the committee rise.
The motion was agreed to.
So the committee rose; and the Speaker having resumed the chair, Mr. Mallory reported that the Committee of the Whole on the state of the Union had, according to order, had the Union generally under consideration, and particularly House bill 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, and had come to no resolution thereon.
Mr. Wickliffe. I give notice I do not know whether it will have any effect that if I can get the floor to-morrow morning, I will offer a resolution to close the debate upon this bill, so that we may go to voting, and try and relieve the country.
Mr. Bingham. The Chairman of the Committee of Ways and Means [Thaddeus Stevens], who has left the House, requested me to ask that a bill which he will offer as a substitute may be printed.
There being no objection, it was so ordered.