House of Representatives
February 20, 1863.
Debates of the National currency Bank bill (S. 486)
to provide national currency secured by a pledge of United States stock



National Currency.


The House then resumed the consideration of the unfinished business of yesterday, being the consideration of bill of the Senate No. 486, to provide a national currency, secured by pledge of United States stocks, and to provide for the circulation and redemption thereof.


Mr. Baker [Steven Baker, (1819-1875) Republican, NY;  importer;  voted for legal-tender clause, voted against National bank bill].  Mr. Speaker, I offer no apology for desiring to address the House at this time on a measure of so much importance as that which now engages our attention.  The comments on this measure have been many and various, and so far as my observation extends, much that has been written and much that has been spoken has been uttered to commend a utopian scheme which this bill will not and cannot put in operation.  In order that the views of the advocates of this scheme may be fairly presented I read from the late report of the Secretary of the Treasury, the following:

"The central idea of the proposed measure is the establishment of one sound, uniform circulation, of equal value throughout the country, upon the foundation of national credit combined with private capital."

That, in brief, is the proposed scheme.  This bill is very imperfect, in my judgment, and will fail to realize the objects anticipated.  It is not claimed that this is a measure to give what is so much desired, immediate relief to our finances, for none have the boldness or the hardihood to declare that it will be of any service to the Treasury within the space of two years.

It has been said by my colleague [Mr. Spaulding] that this is a proposition to nationalize the banking system of the State of New York.  It is so in part, but it does not contain the most essential feature of that system, whereby the currency issued by its numerous banks is made of nearly equal and uniform value in all parts of the State.  This bill proposes that the currency issued by the new associations, and which is designed to be of "uniform circulation and equal value throughout the country," shall only be redeemed at the place of issue.  It is obvious that, away from the immediate locality of the association which issued it, this currency would be practically irredeemable and inconvertible.  There being no provision for the redemption of the currency at any other point than the counter of the bank issuing it was the radical defect of the banking system of the State of Illinois.

The banking law of the State of New York contains this provision, which, so far as the public are concerned, is the most essential of its features.  It provides that every note issued by any institution under the free banking law of the State, shall be redeemed at one central point within that State, and that has caused the currency issued under that law to be of uniform value throughout the State.  Prior to the adoption of that system, although the circulation of the banks of our State was secured by a safety fund system, yet at the moneyed center the notes of those institutions were at a discount of from one eighth to two per cent., according to nearness or remoteness from the place of redemption.  Such would be the case with the notes which we propose to issue under this system in each individual State, but the discount upon them would be far greater in other States and at distant points from their place of issue.  To remedy this evil and make this currency of uniform value throughout the United States, it is absolutely necessary that these associations should be compelled to redeem their notes at their counters, at the commercial center of each State in which they are, located, and also at New York, the commercial and Moneyed center of the Union.  With such a provision embodied in the bill, a uniform currency might be secured, but it cannot be otherwise obtained.

There is no part of the free banking system of the State of New York that offers such a safeguard to the public, and tends so much to keep those institutions within their proper limits and secures their proper and safe management, as the feature of compelling them to redeem their circulation in the manner I have indicated.  From examination it appears that inasmuch as this bill does not contain adequate provisions for the "establishment of a uniform currency" it is manifestly defective, and does not fulfill the plea for its enactment.  Nor does it provide that the currency issued by the national associations shall be redeemed at any future time in coin, or as long as legal tender has an existence. 

When the happy day arrives when coin shall be our only lawful money, each association will be compelled to keep on hand twenty-five percent. of the amount of its "circulation and deposits" in coin.  Is it possible for any banking institution, hampered in its circulation and business, and taxed as it will be by this act, to earn fair dividends with that amount of its capital in coin lying dormant in its vaults ?

Again, it is proposed to issue circulating notes secured by United States bonds, which are to be redeemed by what the authors of this measure now denounce and stigmatize as "inconvertible" and "irredeemable notes."  Shame on the fathers of the legal tender project for thus denouncing their own offspring !  It is true that these notes which we have issued and which have been made a legal tender are depreciated;  but what, in large measure, over and above its redundancy, is the cause of that depreciation ?  The very act which called that currency into existence "dishonored," "disgraced," and "depreciated" it.  It placed a stain and stigma on it by inserting in the act a clause that it should not be received in payment of all public dues to the Government.

This was done to carry out ultra ideas of prohibition;  the payment of interest in coin being insisted upon that there might be some plausible excuse for exacting payment of duties on imports in coin.  That I humbly conceive has been one of the vital defects of our financial policy, causing our own issues to depreciate enormously, and to the extent of that depreciation to augment the cost of the illimitable amount of material required by the Government.

I believe that if Congress were wise enough to repeal the law requiring the payment of duties in coin our legal tender notes would speedily improve in value, and thus save in its vast purchases countless millions to the Treasury.  If it is necessary to pay interest on the public debt in coin;  it would be far better and cheaper to purchase the coin for that object than to persist in exacting coin in payment of foreign duties.  I see no reason why the capitalist, for interest on his bonds, should receive a better payment than the soldier who is risking his life to protect the property of the capitalist and preserve the Government.

---[which way have you voted when the question of "interest to be paid in coin" came up in the House? and the majority(82) of the House voted in favour of paying the interest on 5/20 bonds in coin;  on February 6, 1862, you voted against the substitute which did not have exception clause and legal-tender clause in it]

The authors of this banking scheme and the advocates thereof charge the deplorable depreciation of our paper currency to those poor maligned institutions, the State banks.  Since the suspension they have increased their circulation, from $130,000,000 to $167,000,000;  and yet, with gross impropriety, the agents of the Government charge the woeful depreciation of the currency, not on the $400,000,000 of "irredeemable" notes issued by the Treasury Department, but upon the insignificant $37,000,000 issued by the aforesaid banks.

---[Dear Sir, you would have done great service to posterity if you had named the authors.  Did you have in mind Portland Chase, Gerry Spaulding, Samuel Hooper, John Sherman ?]

It is affirmed that this measure will offer such large inducements to capitalists that they will greedily, two years hence, purchase the bonds of the United States, place them in the hands of the Comptroller, and receive therefor notes to be used as currency and a means of banking.  If any one will carefully scan the provisions of this act, and observe to what expense, by taxation and otherwise, the associations will be subjected, how little circulation they will be permitted to use, and how much of their capital will necessarily be kept idle by the twenty-five per cent. lawful money reserve, they will find the terms in nowise conducive to large or even ordinary profits.

---[It took another 50 years, but the FedResAct solved that (built-in) problem of limitation]

As the sub-Treasury law will virtually be repealed by this act, and that odious system of favoritism, the pet bank system, be re-established, the proffered advantage likely to accrue from the public deposits may induce a few associations to organize under it;  but while the funds in the Treasury are so scant as at present, and the demands on it so pressing, no plethoric profits can reasonably be anticipated from that source.

Let me call your attention to another feature of this bill, which I think needlessly depreciates the securities of the United States.  It provides that only ninety per cent. of the face of the bonds, when at par value in the market, shall be issued in currency.  Why make this discrimination ?  Why say that the circulating notes are more valuable by eleven per cent. than the very securities on which they are based ?  This is surely depreciating our own bonds.  Look at it a moment.  The bonds of the United States are deposited with the Comptroller, and he gives to the depositors ninety per cent. of their value in circulating notes, which by this law are redeemable in legal tender notes, and they, at the present moment, are at a discount of forty per cent. on coin.  It seems to me it is not wise or sound in principle to make this discrimination.  If you believe that every cent of the Government debt, whether it has existence in legal tender notes, certificates of indebtedness, or in the better form of bonds, will be paid -- boldly, manfully, and in every form, assert it.  The public faith must be kept inviolable.

I pause to remark that this bill permits the associations organized under it to charge the rate of interest for discounts on all loans that are the existing legal rates in the States where they may be located.  Perhaps it is not feasible to change that, but it would be a great public boon to the western States if they could get money on loans at a low rate of interest, as no agricultural community can afford to pay more than six or seven per cent. for money.  And it would be of national advantage if the rate of interest could be made uniform throughout the United States.  I will also add that this whole system is based on the idea of a permanent public debt, an idea which is totally opposed to the traditional policy of the country.  I hope yet to see the day when our public debt shall be, if not entirely extinguished, in rapid progress of extinguishment;  and then, if this system shall be put in operation and survive so long, it must fall to the ground.

It may not be deemed wise by strict economists that a scheme should be concocted to induce capitalists to embark in these associations for the purpose of circulating $300,000,000 of currency, and that to accomplish it $12,000,000 in coin should be paid them by the Government on the bonds substituted for that amount of its own notes.  Why not save that money to the Treasury, and kepp the legal tender notes in circulation ?  I humbly conceive that these legal tender notes, derided and depreciated as they are, and selling at such a large discount, are more valuable than even the notes which may be issued by the Comptroller of the Currency to banking associations.

If our lands, our farms, our houses, our personal property are worth anything, those notes are worth their full intrinsic designation, as our all is pledged for their ultimate redemption.  This system demands a total annihilation of the present banking institutions of the country.  It is of no force, no effect, no value, unless those institutions are driven out of existence.  I say to my colleague from the Erie district that the assertion that there is no coercive feature in this bill is delusive.  He well knows that in another measure now pending there is a disputed proposition to tax bank circulation out of existence;  and it depends on you, Mr. Speaker, and on you alone, in the appointment of a conference committee, whether that feature of the finance bill is or is not adopted.  What is the intention of the Secretary of the Treasury ?  I do him no injustice when I assert that it is to force out of existence institutions that are now in thriving operation throughout the country, that have largely "aided the Government with private capital," and that are successfully and satisfactorily carrying on the operations and business of the people.  Is it wise to force into liquidation State banks that possess $75,000,000 in coin, as a preparation for the speedy resumption of specie payments when this cruel civil war is fortunately terminated ?  Is it discreet to drive that immense sum of coin into holes and corners, and all for the sake of creating associations that shall keep legal tender notes in their vaults ?  What amazing folly !

---[My dear sir, Clement Vallandigham told you in 1861 and in 1862, that that was exactly the plan: to drive out of existence old State banks, bring in new banks, bring in permanent debt.... It is not a folly, it is a plan being carried out, step by step]

Mr. Speaker, no one can depict the deplorable distress and ruin that will overwhelm and afflict the people if this measure be carried into operation, and if the present banking institutions are hastily and by overpowering taxation driven out of existence.  Those institutions are woven into our social life.  They are part of our very existence.  The daily bread of orphans and widows depends upon them;  and they aid and assist in alI our mechanical, manufacturing, and agricultural pursuits.  They are the very blood and life of our trade and commerce.

Can one for a moment doubt that the same overbearing, determined will which is striving to force this measure through an obedient Congress will not now or hereafter bring about that disastrous result ?

Sir, notwithstanding what may have been said on either side, here or elsewhere, there is [at] present content and prosperity in the loyal States of the Union.  There is content and there is prosperity, because the ordinary business and affairs of our varied communities have not been interrupted, and because we have not witnessed the horrors of war or felt its devastating and direful effects, save in the melancholy waste of human life.  Far from the scene of action, we have dwelt in security and in entire confidence on the prowess of the brave and noble soldiers that have gone forth in our defense.

"The gay laugh, the solemn brood of care plod on,
And each one, as before, chases his favorite phantom."

The brilliant gentleman from Indiana [Mr. Voorhees] kindly warned this side of the House to heed the recent verdict of the ballot-box.  I have heard that verdict, and although not a victim, think I thoroughly understand its full import.  It was simply a verdict in favor of the unlicensed sale of liquors and a free distillation of hops and grain.  In short, it was a verdict against a portion of the internal revenue bill.  In my State, and doubtless the same condition of things existed elsewhere, the liquor dealers' association, acting with the Democratic party, won the recent elections.  I do not like to be uncharitable, but I am constrained to believe that many of the Democratic members elected to the next Congress are pledged to vote for the repeal of the license laws and reduction of the excise duties, to requite services rendered.  That measure of taxation which the authors of the rebellion made necessary --the internal revenue bill-- and not the policy of the Executive, the measures of Congress, or the conduct of the war, was the prime cause of the defeat of that party which here and elsewhere has nobly and gloriously sustained the Administration.

We need in many quarters a better currency, and I would like to see all the States of the Union adopt the free banking system of the State of New York in its present completeness and perfection.  It has been amended to meet and remedy the practical defects that were not foreseen when it first went into operation, and it now commands the entire approbation of all the people of the State.  They desire no alteration of the system.  Other States, in adopting the system which works so admirably, might use the bonds of the United States as a basis and security for their circulation.  This would create a large demand for the securities of the General Government.  If it were desirable to have bank bills of uniform appearance, that could very easily be arranged by the State institutions.  Let me again allude to the provision of the free banking law requiring all banks to redeem their circulation at a central or fixed point.  By selecting the chief commercial city of a State for that purpose, the country merchant and trader is enabled to dispose of the currency taken in business or trade, or purchase therewith bills of exchange on distant points to pay an indebtedness without loss or inconvenience.  To complete the system suggested, and without danger to our business or the public weal, a national association, with a branch in each principal city of the Union, on the same principles, might be established with a moderate capital of twenty or thirty million dollars.

---[:-) lovely;  you are describing the Federal Reserve System, 50 years before its time....]

The circulation of that association should be obtained from the Treasury Department on a deposit of United States bonds, and that currency should be redeemed at each of its branches.  This would give a uniform currency so far as needed, and facilitate the payment of debts at all points.  The national association and its branches might be properly used as depositories of the public money, and thus promptly aid in the collection and payment of all public dues.  I do not think it sound policy to divorce the funds of the Government from those of the people.  Such a system as I have briefly and imperfectly sketched, would facilitate and regulate exchanges, safely keep and disburse the public moneys, furnish the people with a sound and uniform currency, give confidence and stability to mercantile and financial affairs, and at the same time, by its diffusion of power, be in full harmony with the spirit and genius of our political institutions.

Mr. Speaker, this hill proposes to confer on each Secretary of the Treasury, now and hereafter, by the manner and extent of its patronage, most extraordinary political power --a power great and wide-spread.  It proposes also to confer on him vast discretionary power as to trade and commerce.  The seventeenth section of the act provides that one half of the said $300,000,000 of circulation shall be apportioned according to representative population, and the other half shall be apportioned by the Secretary of the Treasury among associations formed in the several States, with only the saving clause, "having due regard to the existing banking capital, resources, and business" of such States.  Under the provisions of this section the great city of New York, with a present banking capital of $70,000,000, would receive less than four millions of bank circulation, and then depend entirely on the good will and pleasure of the Secretary of the Treasury as to whether their resources and business requirements were duly regarded.  This is a monstrous proposition.

Now, sir, let me direct attention to the magnitude of the trust and extent of power which this act contrives to place in the hands of one individual, who, at the time, for one or many generations, shall be Comptroller of the Currency.  It proposes to give him the custody and control of the securities for all the banking capital of the country, and consequently of all its business of every form and character in all its varied and minute ramifications throughout the length and breadth of the land.

"A breath may make and a breath unmake us all."

Public confidence is held by a very slender and delicate thread, which the slightest motion may agitate, and that the weight of an atom may disturb.  Within a very short period, fresh in the memory of all, occurred the panic of 1857.  No country had at that period within itself greater resources, more material wealth, or more vital elements of prosperity.  It had been a season of unparalleled abundance.  The latter and the former rains had fallen on the seed sown by the husbandman;  the genial rays of the sun had warmed that seed into life, and it had increased some fifty and some an hundred-fold, and our garners were full.  The land smiled with plenty, and our country was blessed with universal peace.  And yet what followed ?  A wild panic, caused by the failure of one trust company.  And that failure was caused by the misapplication by one man of the funds of that institution.

The needless alarm and fatal apprehension that ensued in regard to all corporations was senseless and its manifestation absurd.  The panic could not be checked, but ran a wild career, and the losses caused by it amounted to not less than two hundred million dollars.

With the recollection of such a disaster, and with the painful recollection of such grave defalcations as have marred our national carrier, it is not prudent to adopt the suggestions of this measure in regard to the custody of $345,000,000 of bonds, as ultimately contemplated by the act.  Should not some other provision be made for the safe custody of those bonds ?  With a Comptroller or Secretary unworthy of the trust the slender reed on which this system is based would break and involve all in one common ruin.  Sir, I am sternly opposed to placing the whole business and all the financial interests of the country in such jeopardy or at such a hazard.

But enough, Mr. Speaker.  I believe this measure is wholly unnecessary to carry on the Government and aid in the prosecution of the war.  It can give no immediate relief to our finances, and is very imperfect as a measure to accomplish the object of its advocates.  It cannot alleviate any of the burdens of the war.  And it is calculated to interfere with satisfactory banking regulations in most of the States.  I cannot, therefore, give it my support.  During my term I have only twice trespassed on the time and attention of the House, and then only to state my views in regard to the management of our national finances.  Those views have not been changed by time or circumstance.  I still think that the management of our finances, by resorting only to temporary expedients, has been grossly and radically wrong.  I believe from the very outbreak of the rebellion that our permanent securities could have been sold to a large amount, and that the necessity of such an enormous and profligate issue of Treasury notes could have been obviated.  I favored the issue of interest-bearing notes to keep them out of circulation;  and I should have been extremely gratified by the organization of a permanent sinking fund for the ultimate redemption of our large and accumulating public debt.

Sir, I have a deep and abiding confidence in the speedy success of our arms, and that success will overcome all financial distress and all financial disarrangements;  and that victories by sea and land will restore the credit of the Government to a high standard, so that its Treasury may be amply re-plenished.

I believe, too, that with the success of the holy and righteous cause in which we are engaged of preserving the integrity of the Union and of restoring every part of this wide-spread land in complete obedience to the Constitution and laws of the country, we shall rapidly recuperate from that prostration which now overwhelms a large portion of the country, and quiet that discord which distracts the Halls of Cougress.  I am firmly convinced, moreover, that under an improved system of labor, the South will become as productive and prosperous as other portions of our country, and that with redoubled energy, increased resources, and added wealth, we shall soon recover from all the disasters of this accursed rebellion and go on in a career of unmatched glory and renown.



Mr. Noble [Warren Perry Noble, (1820-1903), D. Ohio; studied law, admitted to the bar;  knight templar, odd fellow;  voted against legal-tender clause, legal-tender bill, national bank bill]Mr. Speaker, it is not because I expect by anything I can say to change a single vote upon this bill that I now claim the attention of the House.  On the contrary, I am satisfied, from the great and untiring efforts that are being made by the Secretary of the Treasury in its favor, that the passage of this bill is a foregone conclusion;  not because it, or any other thing like it, is demanded by the people, but simply because it is a pet measure of the present head of that Department;  and believing as I do that, like all great paper money schemes, it is fraught with many evils that must sooner or later fall upon the country, I desire to put myself upon the record in opposition to it, with some of the reasons which have suggested themselves to my mind against its adoption.

In the first place, I do not believe it was ever intended by the framers of our Constitution to grant any such power to Congress by that instrument.  Let us examine, and see how liberal and even strained must be the construction of its provisions in order to even claim that such was their intention.  The eighth section of the first article provides that:

1.  “The Congress shall have power to lay and collect taxes, duties, imposts, and excises, to pay the debts, &c.

2.  “To borrow money on the credit of the United States.

3.  “To regulate commerce with foreign nations and among the several States, and with the Indian tribes.

4.  “To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States.

5.  “To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.

6.  “To provide for the punishment of counterfeiting the securities and current coin of the United States."

This is the order in which the above clauses of the Constitution appear;  and if there is any power given to Congress to create a national banking system it is to be found in some of the abovecluses.  The Secretary of the Treasury, in advocating the adoption of the system, has found it difficult to decide just where the power is to be found.  He says he forbears any extended argument on its constitutionality; that it is proposed as an auxiliary to the power to borrow money, as an agency of the power to collect and disburse taxes, and as an exercise of the power to regulate commerce, and of the power to regulate the value of coin.  Thus it will be seen that he bases his claim of power upon four different and distinct clauses of the Constitution, separately and distinctly divided from each other, and also divided and separated by the insertion of one clause between them, which must be admitted to be entirely foreign to the subject.  The Secretary further says:

"Of the first two sources of power nothing need be said.  The argument relating to them has long been exhausted and is well known.  Of the other two there is not room, nor does it seem needful to say much.  If Congress can prescribe the structure, equipment, and management of vessels to navigate rivers, flowing between or through different States, as a regulation of commerce, Congress may assuredly determine what currency shall be employed in the interchange of their commodities, which is the very essence of commerce.”

There may be much weighty argument in this reasoning in favor of the Constitutional power, but I think it rather hard to be seen.  How the system is to be or become auxiliary to the business of borrowing money on the credit of the Government, or the business of collecting taxes, it would, indeed, seem difficult to determine, and the Secretary has not seen proper to tell us.  The Government may obtain money on loan from its own citizens, from banks, or from other Governments;  and to the party who has money to loan the only questions are interest and security.  Is the security satisfactory ?  And is it his interest to make the loan ?  Anything, then, that will enable the Government to give better or more satisfactory security and to pay better interest may be auxiliary to the business of borrowing money.  On the subject of collecting and disbursing taxes it is difficult to see how this system can possibly have any beneficial connection whatever with the subject.  There never has been any difficulty in disbursing money when the Government had it to disburse, even in its palmiest days of prosperity;  and now, when it is deeply involved and every creditor will be anxious to receive his dues, there will be far less prospect of any difficulty in this respect.  Collections are facilitated only by anything that will render the collector more prompt or the debtor more able and willing to pay;  any other agency than this would seem to be superfluous.  If it were possible by this agency to collect the taxes imposed by the late excise laws at less expense than is now incurred, their there might be some claim, but nothing of that kind is pretended.

The next two grounds on which the Secretary bases his claim of constitutionality seem to stand in about the same relation to the subject, namely, that it is an exercise of the power to regulate commerce and to regulate the value of coin.  To regulate means to adjust or govern by certain uniform rules or restrictions;  it does not mean to destroy or to create, but merely to govern by certain rules of law.  To regulate commerce was never intended by the framers of the Constitution to carry with it or include the power to establish a paper-moneyed banking system merely because the currency created by such system might thereafter be used in paying for the commodities that might be interchanged by such commerce.  It seems to me that such a claim would be a little too far fetched to be worthy of any very serious consideration.

To coin money and regulate the value thereof --of what ?  Of the coin thus made.  Is it not strange that any one should contend at this day that a paper currency could in any way affect the real value of coin ?  Yet this is one of the principal claims on which the constitutionality of this bill is based.  Coin is, and ever must be, the standard of all real value the world over;  and what our Constitution meant by giving the power to coin money was merely to fix by law the size, shape, quality of metal, weight, value, and devices that should characterize the different coins that might be authorized by the Government of the United States.  This is a power that is possessed and exercised by all civilized nations;  and when confined to its legitimate purpose is certainly a very necessary and salutary power, as without it there would most likely be no uniformity or fixed and certain value to the coin or currency of the country.  Without it the different kinds of coin might be so numerous and so various in kinds and values as to reader exchanges very troublesome and vexatious.  But with its proper exercise, as, for instance, in the case of our own Government, by fixing the size, weight, quality of metal, and devices of the Federal dollar, both in gold and silver, and then by adjusting and measuring the value of all other coins by this, we have a system which renders exchanges easy and convenient.

These provisions of the Constitution, together with that other provision in section ten of the first article, by which it is provided "that no State shall coin money, emit bills of credit, or make anything but gold and silver coin a tender in payment of debts," satisfy me that it was never the intention of the framers of the Constitution to authorize anything to be made a legal tender in payment of debts, excepting only, what I am pleased to denominate the good old constitutional currency of gold and silver.  It would be strange, indeed, if it was the intention of the framers of the Constitution, that the Federal Government should have the power to issue or authorize to be issued and put in circulation any other currency which might be made a legal tender in payment of debts by it, and yet that it should restrict the States from allowing the same money which it might thus provide or authorize to be received as a legal tender.  No one can be convinced for a moment that it was the intention that the Federal Government should have power to create a currency which the States should not have the right to give as much credit to as might be given to it by the Federal Government.  The proposition is preposterous, and will not bear the test of reason.  If this had been the intention of the framers of the Constitution, instead of providing that nothing but gold and silver should be made a legal tender in payment of debts, they would have provided that nothing but gold and silver coin and such other currency as might be authorized by law of Congress should be received in payment of debts.  So much for the constitutionality of the question.

Mr. Speaker, impelled by a sincere desire to do what I can to avert the calamities that must inevitably follow a further expansion of the paper money system in any shape, I trust I shall he pardoned for trespassing a little further upon the time of the House.

If we can have any confidence whatever in the uniform reports we have from the rebel government at Richmond and its financial policy, now carrying it swiftly into hopeless bankruptcy --our own home Government, here at the Federal city, seems to be running a tilt with that rebel concern, and almost keeps pace with it in all the destructive schemes which are sure to bring hopeless ruin upon the financial prospects of the country.  I think no one will deny that this banking scheme is, at least, of questionable constitutionality;  and if any one will tell me now how it can aid and assist the Government in the absorption of national loans to a greater extent than the present existing banking institutions, which are proposed to be stricken down and supplanted by it, I will freely acknowledge that he has done more than I have yet heard from any of the advocates of this measure, either in this House or at the other end of this Capitol, or, I will add, even from the head of the Department recommending the measure.

Mr. Speaker, I care not whether we are to have another issue of hundreds of millions of legal tender notes issued by the Government itself, or whether we are to have legal tender issues of banking institutions, secured by Government stocks, the result will be the same, and it may be found written in the history of every nation which has ever resorted to such wild and impracticable schemes.

It is often supposed by those who do not take the pains to investigate or think closely, that when a nation is under the necessity of using or employing a great amount of the labor, the services, and the property of its citizens, as is now the case with our Government in carrying on this war, that before it can do so it must first take means to increase the circulating currency of the country to an amount equal to its increased expenditure.  No more absurd or erroneous position could possibly be assumed.  The Government, it is true, would have to expend more money, because the services of all its vast Army, which was before employed in other pursuits and paid for from other sources and by other employers, being now devoted to the service of the Government, must receive that support at the hands of the Government which it before received from those other employers and those other employments.  It takes no more money to pay these men while thus employed by the Government than it did before, while employed by other employers;  there are no more of them now than there were before;  it takes no more to support and sustain them and their families now than it did before.  The only difference is that they are now in the employ of the Government, and before they were in the employment of some other employers, or pursuing some other independent business, and were then paid by those other employers or that other independent business, but now they must be paid by the Government.

---[the hole in your argument, sir:-- the business activity of providing food, clothing, tools &c. for 20,000,000 people remained the same;  some body(s) had to take the place at work of 2,000,000 men who were drafted into the army;  the wages of this army, and the business activity to supply the tools of war to this army, is in addition to the business activity that was going on the day before the war.  Is it possible to increase velocity of the circulation of currency, to be able to facilitate this increased business activity ?  Was there enough idle fund in the North which could be borrowed by the Government for its vastly increased budget and put into circulation to facilitate the additional business activity ?]

The same thing may be said of all the supplies necessary to be used by the Government.  Before the war these were sold to other purchasers;  now they are sold to the Government, and the sellers, instead of receiving pay, perhaps, from the very men now employed in the armies of the Government, as heretofore, now receive it from the Government.

---[In addition to what the nation consumed before the war, the nation now consumes ammunition, ships of war, cannons, rifles, swords, uniforms, tents, explosives, horses]

The nation, as a community, consumes no more now than before, excepting only the waste of war, which, of course, is very great.  Why, then, should there be an expansion or increase of the amount of the currency, followed, as it always must and will be, as sure as the day follows the night, by a corresponding increase in prices, general disturbance and interruption of all the financial affairs of the country, and finally by a contraction and general disaster to all the business of the country ?

If it were true, as some, suppose, that in order that the Government should be able to make these great expenditures it must first have an amount of currency equal to the whole amount to be expended, it would require all the money of both America and Europe to carry on this war.  This Government has already expended, since the war commenced, more than double the whole amount of all the circulation the whole nation and all its people possess, including all its gold and silver, bank bills, and Treasury notes;  and the present prospect is that this is not the half of what will be expended before the war closes.  There never was a greater delusion than to suppose that because the Government expends large sums it must have money or currency to an equal amount.  What the Government must have to carry on the war is means, capital, munitions of war, and supplies;  and these it can only obtain by draft upon its citizens and their property.  The capital and wealth of the nation is but a very small part of it in the shape of currency.  Two hundred and fifty or two hundred and seventy-five million dollars, at most, would include every dollar of the gold and silver of the whole nation, while, the last census shows the amount of individual wealth of the nation to be over sixteen thousand million dollars.  The Government must be a self-sustaining institution.  When its expenses are large it can only sustain itself by drawing more from its subjects in the shape of taxes, either direct or indirect.  There is no other mode;  this is its legitimate and only resort, unless it be to its credit, by contracting debts which must eventually be paid in the same way, by tax upon the citizen.

When the war commenced the currency of the country was all founded upon a specie basis;  nothing but gold and silver could be made a legal tender in payment of debts.  The banking institutions of the several States received credit, in proportion to the public confidence in their ability to pay specie on demand for all their issues.  As long as this continued to be the scheme of our financial system, there could be no great danger of sudden and disastrous eruptions in the currency of the country.  But as soon as the Treasury not e legal tender scheme was adopted, and a sudden increase or expansion of the amount of circulation accrued, what followed was inevitable --sudden and astonishing increase in the prices of goods;  or it might be more properly styled sudden and astonishing depreciation of all the paper currency of the country, legal tender and all.  It to-day requires $1.70 of this paper, backed by the Government with all its wealth, to buy a single dollar of gold.  And, in common parlance, it is said gold has gone up;  the truth is, paper has gone down, and is still going down.

Mr. Speaker, what is the effect this system is now having upon the country and its business ?  A single illustration may serve to throw some light upon the subject, and may not be improper.  When our soldiers entered the field their wages were made by law thirteen dollars per month, under the then financial system.  The supplies for their families might then be bought for about the following prices, namely: muslins, prints, checks, cotton cloths, and drillings, at from eight to twelve and a half cents per yard;  now these same articles will cost them more than twice as high.  Almost the some thing may be said in reference to boots, shoes, coffee, sugar, molasses, and almost everything in the shape of necessary supplies for their families.  The average increase in price of all these things will not be less than the average depreciation in the value of paper money.  That is, they will now pay no less than $1.70 for what would then have cost them one dollar.  Yet it is often boastingIy said that "the greenbacks came to help the soldier."  He may well say, save me from such blessings;  a few more such would render him bankrupt, and bring his wife and children, who are dependent upon his pay for support, to the brink of starvation.  To make his monthly pay equal now to what it was when he entered the service, and prior to the adoption of the paper system, we should be compelled to add seventy per cent., or more, to his pay, which would make his monthly wages, instead of thirteen dollars, about twenty-two dollars and ten cents.  And yet, in my humble judgment, the Government itself has lost more than it has gained by adopting this system.

The Secretary, in his report to Congress, argues that this great rise in the prices of goods and gold over paper, is not the result of any increase or redundancy of the currency;  to prove which, he compares the condition of things on the 1st of November, A.D. 1861, with the condition of affairs on the 1st of November, A.D. 1862.  Footing up the specie and paper circulation of the country at the first date, he makes the amount then in the United States a little over three hundred and fifty-five millions.  At the second date he declares that coin had become practically demonetized and had been withdrawn from circulation.  Therefore deducting the two hundred and ten millions of coin from the account, and adding together the increased bank issues and Treasury notes, he makes their amount a little over three hundred and seventy-seven millions.  And assuming that coin had been practically withdrawn from circulation, he leaves that entirely out of the account;  and as the paper currency alone only amounts to some twenty-odd millions more than the whole sum of both paper and coin one year before, he argues that there is no redundancy.  He also states that when the aggregate amount of paper issues, both corporate and governmental, on October 15, 1862, amounted to $360,000,000, gold was selling at a premium of thirty-seven and five eighths per cent.;  whereas, afterwards, on the 29th November, when the circalation had been increased more than twenty millions, the premium on gold was only thirty per cent.

Now let us see whether this logic will bear examination.  In the first place, the mere fact that gold bears a premium over paper does not render it demonetized;  it is used as money the same as before, but, of course, does not circulate as freely as paper, because it is superior to paper and bears a premium over it;  yet whenever this premium is paid it does circulate and will circulate, and that, too, as regularly as any other currency, and in addition to this it is almost always used as money on deposit.  It would be regarded as a very novel proposition by old and experienced bankers that because there should, in the course of business, be introduced into circulation an inferior currency, which could only be used at a discount, that the superior currency, on which there is no discount, is thereby demonetized, and no longer occupies the character of money.  Yet this is a fair statement of the logic of the Secretary.  Premium and discount are correlative terms.  The simple truth is that all currency of the highest grade is at par, while all below it is at a discount;  this is the true and correct manner of stating the case.

Then again, suppose it to be true, as stated by the Secretary, that the circulation had increased $20,000,000 on the 29th of November over the amount on the 15th day of October previous, it is not likely that it had been in circulation long enough to have any perceptible effect.  It always requires time to produce any marked effect by reason of expansion, and especially when the amount is so small comparatively as in the instance named.  Had the whole amount of the circulation of the country remained fixed and stationary for a long period, say one year, and then this amount of increase had been added and remained for any considerable time, say six months, without any perceptible effect, I should concede that there was real argument in the proposition, and that the deduction was most likely correct;  but in the case given, in the present fluctuating condition of the currency, I do not think that anything can be claimed from it whatever.

But it is said that the people demand this measure.  This is a great, mistake.  Its demand comes from the Treasury Department, and not from the people.  But the important question for us to consider is, what benefits are to be derived from it.  The provision requiring all the securities to consist of United States bonds would probably absorb an amount of bonds to the extent of the amount of circulation limited, say $300,000,000.  This will be but a small pittance of what the public debt will be at the end of this war;  and it would seem to be but a very inadequate compensation for the great changes that will be forced upon the community by the proposed change.

But, Mr. Speaker, it is not my purpose to enlarge to any great extent upon this subject.  There is, however, another consideration to which I wish to direct attention;  that is, to the great dangers of fraud that must attend any system that does not have surrounding it on all hands the guards of private interest, as well as all the guards of public law.  Our Government has lately authorized the issue of over three hundred millions in legal tender Treasury notes;  and now we have another proposition pending here to authorize the issue of several hundred millions more.  By one provision of this last-named finance bill, yet pending in Congress, it is provided that the Secretary of the Treasury may provide for the engraving, preparation, and issue of the Treasury notes referred to in that provision in the Treasury Department building;  and by the bill now under consideration the Secretary is also authorized to cause the plates to be engraved, and to have printed therefrom, and numbered, such quantity of circulating notes, in blank, as may be required to supply the different banking associations organized under this act.

Mr. Speaker, I object to converting our Treasury building into a printing establishment, or making our Secretary a printer to grind out paper money, mainly because of the dangers that must attend the system.  I think it must be conceded to be a questionable experiment for our Government to adopt at this critical period of our national affairs, and more particularly when it is evident that paper circulation is to form the principal feature in the moneyed operations of this country during the present rebellion.  The act of July 11, 1862, gave to the Secretary a similar power to have the notes and bonds engraved and printed in the Treasury Department building;  and it will be remembered that this subject caused considerable debate at that time on this new, unnecessary, and questionable policy.  The Secretary, however, finding it totally inexpedient to have the work done as authorized, wisely gave it out to responsible contractors, in compliance with the custom heretofore adopted by all previous Administrations.  The notes and bonds authorized by that act have been furnished to the Government, and thus the authority for creating an engraving and printing department in the Treasury building, expired with the act of July 11, 1862;  yet I am informed that active and extensive preparations are now being made in the Treasury building for engraving and printing, which no doubt necessitate heavy out­lays for presses, machinery, and employés;  if this be true, it is in my opinion a clear violation of legal authority, as there is no act or appropriation for any such purpose.  The only information I have obtained is found in the remarks of the gentleman from Vermont [M. Morrill] on the finance bill before alluded to.  That gentleman said:

"The engraving and preparation of these fractional notes in the Treasury Department is, perhaps, a debatable question, but it is mainly one of security of the Government against fraud, as when the notes are printed they are complete, and whether issued legally or not there can be no means of identification.  On the whole, it was supposed the Treasury Department might be made a safer custodian of the work than any remote employé, however respectable."

From these remarks it will be observed that the gentleman admits that this policy and experiment is of a doubtful nature, and that the Department may possibly be made a safer custodian than those heretofore employed;  but be omits to inform us, cither by argument or evidence, it what particular that traditional security is to consist.  Taking, therefore, the argument of security, I find on examination of the various acts passed since 1812 for furnishing Treasury notes that there has been issued up to the present time by our Government about six hundred and fifty million dollars in Treasury notes and certificates, exclusive of coupon bonds, all of which have been supplied to the Government by private contractors, and as yet we have to learn that there has been one dollar of loss to the Government;  while during the same period we find that by the act of July 22, 1846, $50,000 was appropriated to redeem Treasury notes returned to be canceled, which were purloined from the Treasury Department and put in circulation without authority of law;  while during the present Administration $2,500,000 of certificates of indebtedness were stolen from the office of the Treasurer.

These facts certainly do not prove that those in charge of the Treasury Department can or have given to the people a greater security than the contractors who have heretofore been employed to perform these public trusts for the past forty years.  I doubt not the integrity and honesty of the present Secretary;  but we do not know who is to be his successor, and that they would not make use of such power for political or other purposes.  Such things have occurred in the past, as in the case of the famous financier, Baron Brock, minister of finance of Austria, who committed suicide when his heavy forgeries were discovered;  and in our own country there are names that have figured prominently in our public affairs to our national disgrace.  But the greatest danger is among that class of employés who are subordinate to the Secretary, and necessarily must have control of these various departments in the manufacture of the notes, who, possessing no responsibility, and often of questionable character for strict integrity, have it in their power to purloin and over-issue to any amount, thus causing the most serious disasters to the public and to the circulation of our national currency;  in fact, this plausible view of the question, based upon past experience, satisfies me that the establishment of a national engraving and printing department in the Treasury building is so totally unnecessary, and is fraught with such dangerous consequences without any adequate guarantee to the public, that, in my opinion, it should not be thought of for a moment;  and I trust that this power will not be granted by Congress, as it opens the door for gigantic frauds over which the people have comparatively no control.

In regard to the economy which I have heard put forth as an argument in favor of this proposed money-making establishment, I can merely refer to the established fact that it costs our Government a great deal more to manufacture anything and everything for its own wants than to be supplied by private contracts;  and I have good reason to believe that parties deeply interested in this enterprise are confident of realizing their dearest wishes by having the Government purse to support them, which does not present a very plausible evidence of economy, but is evidence that it would result more for the benefit of a few individuals than for the public good.

Mr. Speaker, it looks to me as if this was only another of the many schemes brought forward during the present Administration which have so abundantly opened the door to fraud and plunder upon our bleeding Treasury, already amounting to many million dollars.

I notice that some of our Treasury notes have been embellished by the highly intellectual countenance of our present Secretary.  To this I have no particular objection, save only that it is following the example long since set by some of the persons now high in office in the rebel government at Richmond.  The portrait of Howell Cobb, a former Secretary, embellished the Treasury notes issued in 1857;  and that of Jefferson Davis embellishes some of the land warrants that have been issued by our Government.  I would, therefore, merely suggest, in view of these circumstances, that a portrait of some of our departed revolutionary patriots would comport better with the taste of many, and would be far more appropriate to adorn our national currency.  Washington, when living, refused to suffer his portrait to adorn our metallic national currency, as in his opinion, it did not comport with our republican form of government.

Mr. Speaker, I close with expressing the hope that the present unnatural rebellion may soon be subdued, that peace will soon again reign throughout our distracted land, and with it we shall speedily return again to the only true, and, as I believe, constitutional measure of value, gold and silver.