Reduction of Currency, Increase of Debt

--- An Act to amend an Act entitled "An Act to provide Ways and Means to support the Government," approved March third, eighteen hundred and sixty-five.

Paulson debt to America Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the act entitled "An act to provide ways and means to support the Government" approved March third, eighteen hundred and sixty-five, shall be extended and construed to authorize the Secretary of the Treasury, at his discretion, to receive any Treasury notes or other obligations issued under any act of Congress, whether bearing interest or not, in exchange for any description of bonds authorized by the act to which this is an amendment;  and also to dispose of any description of bonds authorized by said act, either in the United States or elsewhere, to such an amount, in such manner, and at such rates as he may think advisable, for lawful money of the United States, or for any Treasury notes, certificates of indebtedness, or certificates of deposit, or other representatives of value, which have been or which may be issued under any act of Congress, the proceeds thereof to be used only for retiring Treasury notes or other obligations issued under any act of Congress;  but nothing herein contained shall be construed to authorize any increase of the public debt:  Provided, That of United States notes not more than ten millions of dollars may be retired and cancelled within six months from the passage of this act, and thereafter not more than four millions of dollars in any one month:  And provided further, That the act to which this is an amendment shall continue in full force in all its provisions, except as modified by this act.

Sec. 2.  And be it further enacted, That the Secretary of the Treasury shall report to Congress at the commencement of the next session the amount of exchanges made or money borrowed under this act, and of whom, and on what terms;  and also the amount and character of indebtedness retired under this act, and the act to which this is an amendment, with a detailed statement of the expense of making such loans and exchanges.

APPROVED, April 12, 1866.

Thirty-Ninth Congress
First Session
December 4, 1865 to July 28, 1866.

House of Representatives
Friday, March 16, 1866.

Evening session
The House at half past seven o'clock p.m. resumed its session

Loan Bill.

Mr. HARDING, of Illinois, called for the regular order.

The House accordingly proceeded to the consideration of the special order, House bill No. 207, to amend an act entitled "An act, to provide ways and means to support the Government," approved March 3, 1865.

Mr. Garfield and Mr. Lynch addressed the House. [Their speeches will be published in the Appendix.]

Mr. BAKER.  Mr. Speaker, I had intended to content myself with a silent vote against this bill, and now I am only prompted to the brief remarks I shall make by my very strong impression that the proposed measure will be mischievous instead of beneficial to the country.  I admit there are several subjects with which I am more familiar than I am with questions of finance;  but then I have observed that there are some threads of truth so long that they run through all subjects, showing the kinship of all things;  and these threads of truth, or general principles as I might better say, are open to the common observation of mankind.  Diffidently, therefore, yet not wholly without a sense of sure footing, I will venture a few brief and general observations on the question before the House.

In the first place I will say that, in my opinion, there are elements in the question before us which are not amenable to mathematical estimation, nor soluble by any exact reckonings of past experience;  large general facts, lying broadly on the face of things as they now are and are becoming.  These elements, addressing themselves as they do more to the intuitive judgment than to empirical experience, ought by all means to be duly considered.  Let us glance at some of them.

1.  As to the quantity of circulating medium which we really need for the healthy business uses of the country, I will venture to affirm that that quantity ought to bear a just proportion not only to the amount of our business and the number of our people, but also to the magnitude of our territory and the average sparseness of our population.  I stop not to explain.  The general reason is that a circulating medium moving in long circuits and with the same speed will not touch the same point so often as if the circuit be shorter.  The telegraph and exchange lessen but do not by any means obliterate this element.  Hence inferences from compact populations like those of France and Great Britain will not accurately apply to a similar industrial population spread over the immense area of this Republic, extending from the eastern to the western sea, and from the northern line to the Keys of Florida.  We need relatively more money.

2. There are eight or ten millions of our people left by the exhaustion of the rebellion with very little money -- I allude, of course, to the southern States.  The people of these States, white and black, have not nearly the requisite amount of money.  When this great vacuum shall be supplied, as I hope it speedily may be, the tendency will be to relieve any plethora existing in the North.

3. The emancipated career upon which the Republic now enters, the larger liberty and the consequent greater vitality of every branch of industry, will lead to the ready and healthy appropriation of much more money than we needed heretofore.

4. I understand it to be a fact, considering all markets and looking over the country comprehensively, that prices during the year now past have gradually lowered.

5. I understand it to be a fact that gold, during the year now past, has gradually come down, or, in other words, that greenbacks have gradually risen in value.

6. I understand it to be a fact that there is no money in the West that cannot be readily loaned at ten per cent., showing, or at least tending to show, that the supply is not superabundant.

These are some of the general elements of the question before us;  and every gentleman will appreciate their bearing without one word of comment.

But, sir, if contraction is necessary, do so either by commencing with the national banks or by applying a portion of our surplus revenue to retiring the greenbacks.  I cannot and will not, as at present advised, consent to the taking up of the greenbacks and the substitution of interest-paying bonds in their stead, thus adding largely to our interest-bearing debt and consequently adding to the taxation levied on the labor of the country.  Sir, the labor of this country, in the last analysis and when you get to the bottom of the matter, is charged with the payment of our great national debt.  The capitalist hands over to the tax-gatherer money that was first made and placed in his coffers by the hard hand of labor.  I repeat it, the labor of the country carries the burden of the national debt;  and I will not on this occasion add to that burden by increasing the tax-paying debt of the people while taking from them a better money to make room for a worse one.  Sir, I very determinedly vote against the bill.

[Yes, why not take out of circulation that $250,000,000 issued by private banks, if there is too much money in circulation ?]

Mr. Morrill.  I do not propose to occupy much of the time of the House at this late period.  I will directly move the previous question.  I yield now five minutes to the gentleman from Ohio.

Mr. LAWRENCE, of Ohio.  Mr. Speaker, at this late hour I do not propose to discuss in detail the bill now before the House.  During the few minutes allotted to me I will only state the points of objection which I have to this measure.

It proposes to carry out an avowed policy of converting "the lawful money of the United States" --the "greenbacks"-- into national bonds.

The effect of this will be---

1.  To convert a debt on which the Government pays no interest into a debt bearing interest at an unnecessary annual expense to the nation of $27,000,000 for interest.

2.  It will reduce the price of labor and of all property by diminishing the amount of our circulating medium.  This will increase the burden of the tax-payers by requiring a larger amount of property and labor to pay the taxes of the country than will be required if no such reduction takes place.  In other words, it will increase the burdens and diminish the resources of the people;  it will diminish all but the public debt.

3.  It will be productive of the injustice of requiring the people to pay with labor and property at low prices a national debt contracted in part for supplies at high prices.  I am opposed to the bill because I am opposed to these results, and because---

1. The bill is unnecessary as shown by the laws in force and by a statement of the public debt, no material part of which will become due until in December, 1867, and July, 1868.  It will be time enough to legislate on the subject a year hence, when circumstances may have so changed as to render a different kind of legislation necessary, and when the whole subject of finances, taxation, &c., will be better understood in their relations to the business and interests of the country.

I submit to the House the following:

Statement of the public debt of the United States on the 1st of February, 1866.

Debt bearing coin interest:
Six per cent. bonds, December 31, 1867, and July 1, 1866 ..... $18,323,591.80
Five per cent. bonds, January l, 1874 ..... 20,000,000.00
Five per cent. bonds, January 1, 1871 ....... 7,022,000.00
Six per cent. bonds, December 31, 1880, and June 30, 1881 .... 282,648,250.00
Six per cent. 5-20 bonds, May 1, 1867, or May 1, 1882 .... 514,780,500.00
Six per cent, 5-20 bonds, November 1, 1870, or November 1, 1884 ..... 100,000,000.00
Six per cent. 5-20 bonds, November 1, 1870, or November 1, 1882 ..... 50,590,300.00
Five per cent. 10-40 bonds March 1, 1874 or March 1, 1904 ..... 172,769,100.00
Six per cent. bonds, Oregon war, July 1, 1881 ....... 1,016,000.00

Debt bearing currency interest:
Six per cent. bonds, Central Pacific R.R. Co., November 1, 1895 ...... $992,000.00
Six per cent. bonds, C.P.R.R. Co., January 16, 1895 .... 2,362,000.00
Four, five, and six per cent. temporary loan, ten days' notice after thirty days ....... 114,755,840.06
Certificates of indebtedness, one year from date ..... 60,637,000.00
One and two year five per cent. notes, one and two years from date ..... 8,536,900.00
[Legal tender] three year compound-interest notes, three years from date ..... 180,012,141.00
Three year 7-30 Treasury notes, three years from date ..... 830,000,000.00
.................. 1,197,295,881.06

Matured debt not presented for payment:
Texas indemnity bonds ...... $665,000.00
Three year 7-30 Treasury notes ....... 233,500.00
Bonds ...... 81,268.63
Treasury notes .... 118,361.64
Temporary loan, coin ...... 1,200.00

Debt bearing no interest:
[Legal tender] United States notes (constituting our currency called "greenbacks") .... $423,902,223.00
Fractional currency ...... 26,553,244.52
Gold certificates of deposit ..... 8,391,080.00
Total debt ...... 2,824,381,500.70

Amount in Treasury:
Coin ....... $51,443,161.84
Currency ..... 56,050,186.23
........................ 107,493,348.07

Amount of debt, less cash in Treasury ..... $2,716,893,152.63

The foregoing is a correct statement of the public debt, as appears from the books and Treasurer's returns in the Department, on the 1st of February, 1866.

Hugh McCulloch,
Secretary of the Treasury.

The following letter was written by the Comptroller of the Currency in reply to an inquiry asking his opinion of the loan bill:

Treasury Department,
Office of the Comptroller of the Currency
February 24, 1866.

My Dear Sir:—  Your letter of to-day is received, and in reply I have to say that I am decidedly opposed to the loan bill for the following reasons:

By the act of June 30, 1864 United States notes can be converted into compound-interest notes;  and by the act of March 3, 1865, certificates of indebtedness, compound-interest notes, five per cent. legal-tender notes, and seven-thirty Treasury notes can be converted into five-twenty bonds;  and that portion of the temporary loan that it is desirable should be paid, can be paid from money now in the Treasury, which I suppose must be at this time, including deposits in national banks, at least one hundred and fifty million dollars, and the amount that it would be expedient to pay would not be more than the amount of the increase of the deposit for the last few weeks, and which the Government has not had any occasion to use.  We have, therefore, full powers to fund every dollar of the floating debt without any further legislation on the subject, and no occasion for making any loan for any purpose whatever.  All can be done by simply exchanging one security for another, and can be quietly done without essentially disturbing the money market or the business of the country, the Secretary of the Treasury being the judge as to how far and how rapid the movements in reference to conversion should proceed.

I think there is no doubt about the willingness of the holders of the floating debt to convert into five-twenty bonds to the extent that is desirable, if the credit of our securities is sustained, but if authority is given to put bonds upon the market to an almost unlimited amount, and to sell at any price, as provided in the bill, would, in my view, cause such uncertainty in the public mind as to render it impossible to keep up the price of the Government securities.  I do not think a loan of $50,000,000 could be negotiated without sinking the price of five-twenty bonds below par, as the public would not know how soon another $50,000,000, $500,000,000 or $1,000,000,000 might be put upon the market.

As to the provision in reference to a foreign loan, it would, in my view, if carried into effect, be almost suicidal.  If bonds are sold abroad the price would be based, of course, upon the present currency rate of exchange, consequently the Government would receive about sixty dollars in gold for each $100 in bonds, payable in gold, with semi-annual interest also payable in gold;  in addition to exchange, commissions, &c.  And in addition, if the Government should sell its bonds abroad to the extent to affect the price of gold, say twenty per cent., it would lessen to just that extent the net proceeds of the bonds, and instead of sixty realize only forty dollars for each $100 of bonds.

Yours, truly,

Instead of legislation authorizing a reduction of the United States legal-tender notes we need a limitation on existing laws to prevent any reduction of the currency beyond that which will result from funding the legal-tender compound-interest notes, which will be a sufficient and more than sufficient reduction during the coming year.

By existing law the Secretary of the Treasury can fund the compound-interest notes over one hundred and eighty million dollars.

This is a part of the currency of the country.  If all this should be suddenly funded the spindles of New England, the furnaces and forges of Pennsylvania, and all the great industrial pursuits of the great West and of the whole country would receive a shock from which they could not recover without wide-spread bankruptcy and ruin.

But this bill proposes to give authority to withdraw from circulation not only all this currency but untold millions more.  Let the compound-interest notes be funded first and gradually, and then if it shall be found practicable a further reduction can be gradually made.  Time and circumstances will determine our policy as to this.

2.  It is a mistake to suppose that there is a great redundancy of currency in circulation.  This is proved by a comparison of the amount of money in circulation in this and other countries, and an examination of our resources and business.

"France has a circulating medium, mostly specie, of about one thousand million dollars.  England has some six or seven hundred million dollars."

Yet the population of England and France each is not materially different in numbers from that of the United States.

3.  A reduction of the currency will be followed by high rates of interest among the people, and, as a consequence, a depreciation of the value of national bonds, and of property generally.  The rate of interest has never been so low as during the war and now with an adequate currency.

4.  This bill proposes to intrust unnecessary and dangerous powers to the Secretary of the Treasury.  I do not doubt or disparage his integrity, sagacity, or financial skill, but all these combined do not render it necessary to surrender powers which the people, in the exercise of their judgment, have a right to control.

The financial interests and condition of a nation should not depend on the judgment of any one man.

The effect of this uncertainty is already shown in the following statement from the New York Mercantile Journal of February 8:

"This bill, which is likely to be adopted by Congress, is sufficiently vague to excite some uneasiness in Wall street, where it is regarded as investing the Secretary of the Treasury with a supplenary power that will place the market entirely at his disposal.  It is objected, and with considerable reason, that the usual laws of trade which may be understood and anticipated by ordinary sagacity, will be constantly liable to the disturbing influences of the Treasury Department which it is often impossible to foresee.  There is much force in this view, which has undoubtedly caused a feeling of apprehension among capitalists.  But it should be remembered that the Secretary of the Treasury must, in no slight degree, be governed or controlled by well-known commercial laws, and as the wants of the Government are generally sufficiently understood, the action of the Treasury Department may be foreseen or anticipated.  There is something in this view, as the Secretary's policy of contraction, though not yet formally commenced, is already being discounted in Wall street.  The greatest caution is now observed;  credits are being restricted;  new obligations and enterprises of almost every kind are scarcely touched.  This course will greatly modify the force of the inevitable shock when the contraction of the currency really commences, but its effects already begin to tell seriously upon legitimate business operations."

5.  The bill proposes in a time of peace what was unnecessary in war, to send our national bonds abroad to be held by the capitalists of Europe, thereby annually draining the country of its gold to cripple our resources and render us subject to a foreign money power.

6.  A return to specie payment is desirable just when and only when public and private interests will be promoted by it.  This will not be rendered practicable by increasing the rates of interest and by crippling the industrial pursuits of the people, but will be secured by fostering and encouraging them by an adequate currency and by a proper internal revenue system, so framed as not to embarrass, but rather encourage, productive labor, and by an equitable system of duties on foreign imports.

I am greatly obliged to the distinguished chairman of the Committee of Ways and Means [Mr. Morrill] for his kindness in according to me the privilege of thus briefly stating some of the objections which seem to me to be well taken against this bill in the shape in which it now stands.

Mr. Stevens.  I offer the following modification of my amendment, to come in as an additional section:

All laws or parts of laws which authorize the Secretary of the Treasury to fund or withdraw from circulation any United States legal-tender notes not bearing interest be and the same are hereby repealed.

Mr. SPALDING.  I ask the gentleman from Vermont to allow me a very few minutes.

Mr. Morrill.  I will do so.

Mr. SPALDING.  I am not skilled in the science of finance;  hence I have felt much embarrassment in coming to a conclusion in regard to the vote I shall give on the question now pending.  On ordinary occasions I should follow the lead of the distinguished member from Pennsylvania, [Mr. Stevens] who has this day made an elaborate argument in opposition to this measure.  But, sir, when I turn to that gentleman I cannot forget that in the last Congress he led me into an ignis fatuus chase after the traffickers in gold, and I assisted him in the passage of a bill which remained in force about three days, I believe, during which time gold went up faster than at any time previous, so that we were forced to retrace our steps and repeal the bill, when gold began to come down again.

Now, that short experience admonishes me not to be too confident in following the financial recommendations of the member from Pennsylvania, [Mr. STEVENS,] and I have concluded, therefore, to make my own limited experience available for this emergency.  I have concluded to give my vote in favor of the passage of this bill.

I cannot mistake two prominent facts.  At the breaking out of the late rebellion the circulating medium of the United States was somewhere about $200,000,000;  now, sir, it is more than three times as much.  At the lowest estimate it is $750,000,000.

Now, sir, do we not all realize the fact that the price of living has materially increased during the last four or five years ?  Is it not a fact that a man who has now a fixed income, say of $2,500 a year, finds it difficult to make both ends meet, whereas when we had a specie paying currency a man with that income was enabled to live in a somewhat genteel style.

I feel as if it is an established fact that our currency, at this time, is redundant.  Why it is so has been very well explained by gentlemen who have spoken on the subject.  Our object is, or ought to be, to come back as speedily as possible to a specie basis, having due regard to the business relations of the country.  I undertake to say that at this time we are laboring somewhat under a strain upon our Constitution when we hold that four hundred and fifty million paper dollars shall be treated as legal tenders in payment of debts.  If it had not been for the perils of the rebellion from which we have recently emerged, what man in this House, having any pretension to the name of a constitutional lawyer, would have admitted that under our Constitution this paper currency could have been made a legal tender in place of gold and silver ?

But, sir, in this, as in many other things, we were very liberal in construing the Constitution in consequence of the pressure of the rebellion, and for no other reason in the world.

I say that we must speedily correct this evil, and do away with this paper legal tender, if we would preserve the principles of our Constitution as handed down to us by the fathers.  And I say further, that this redundant currency has engendered in the land a spirit of mad speculation that has not only deranged business in all its relations, but is demoralizing society itself.

Now, sir, this policy of the Secretary of the Treasury is no novel idea thrown before the country.  It was first indicated in his speech made in Indiana last summer.  That speech I think was received with general approbation throughout the country.  It was indicated more pointedly by his report to this Congress, and then the House of Representatives early in the session responded in accordance with the views and wishes of the people and said the Secretary should receive our support.  Support him in what ?  In the very policy indicated by the very bill now under consideration.

Mr. Speaker, I believe that high prices in the country, the expenses of living to the masses of the people, are greatly enhanced, fourfold, in consequence of this redundant currency, which gentlemen are now seeking to keep up, and many of the gentlemen with whom I have conversed to-day differ with me so diametrically in this whole matter, that methinks they would gladly add some thousand millions to the circulation if they had the power at this moment.  They could do that with as much propriety as to claim that $450,000,000 has no effect upon the prices of living in this country.

I am satisfied that the policy of the Secretary of the Treasury, if supported by Congress, will apply a speedy corrective to the evils I thus cursorily enumerate.

Believing this, and feeling that we must repose confidence somewhere, and, if so, that no more trustworthy man can be found than the present able head of the Treasury, I am disposed to give up the doubts which have, to some extent, held me back, and to vote for the bill.  In the issue of new bonds I shall be glad if a rate of interest can be allowed that will enable us to concede to the State and municipal authorities the right of taxation;  but of that I leave the Committee of Ways and Means to judge.

I will vote for the bill.

Mr. Morrill.  I do not know but I better call the previous question before I make the remarks I desire to make.

The SPEAKER.  The gentleman from Vermont [Mr. Morrill] has thirty-five minutes of his hour remaining.  He can call the previous question, and if it is seconded, he can then make his remarks.

Mr. MORRILL.  Then I call the previous question on the bill and pending amendments.

The previous question was seconded.

Mr. Pike.  I submitted an amendment this morning, or had one ready which I desire to have a chance to offer.

The SPEAKER.  The Chair stated to the gentleman from Maine that his amendment could not be received in the form in which he proposed it.  The amendment of the gentleman from Vermont, [Mr. Morrill] was to strike out a certain part of the bill.  The amendment of the gentleman from Maine was to add certain words to the bill, and was not in order.

Mr. PIKE.  I hope the House will not second the previous question.

The SPEAKER.  The previous question has been already seconded.  The question is now, Shall the main question be put ? upon which the gentleman from Maine can call a division if he desires it.

Mr. PIKE.  I move to reconsider the vote by which the previous question was seconded.

The motion to reconsider was not agreed to.
The main question was then ordered.

Mr. Morrill.  [Justin Smith Morrill (April 14, 1810 - December 28, 1898) Vermont (R)]  Mr. Speaker, perhaps there has been and there may not be any more important measure before this Congress than the one now under consideration.  When the Secretary of the Treasury, at the commencement of this session, announced his purpose not only to prepare at once for paying off the public debt, but to retire in due time the immense amount of legal tenders afloat, it made the country proud of our financial condition, electrified our friends abroad, and astonished our enemies.  It awakened Europe to the American idea of doing things -- that is to say, of doing great things in the shortest time -- not to wait for the slow action of centuries before the nation can be relieved of public debt and the miseries of an exclusively paper currency.

[are you fakked in the head ?  Culloch had no such intention, and did not say (much less do) any such thing;  what he (and ye) proposed to do (and did do) was to exchange non-interest-bearing promises to pay for interest-bearing bonds !  you hardly stood up and lying already ?!  There was $250,000,000 legal tender in circulation issued by private banks, that did not bother him;  or you !  150 years later the debt is still here !]

The gentleman from Pennsylvania [Mr. Stevens] in the course of the debate this afternoon undertook to inform the House that it was the purpose of the Secretary of the Treasury to retire, as I understood him to say, $200,000,000 of the legal-tender currency annually.  That statement was calculated to very much mislead the House.  I propose to read exactly what the plan of the Secretary of the Treasury was on the 1st of December and what it is to-day.  I read from his annual report:

"If the business of the country rested upon a stable basis, or if credits could be kept from being still further increased, there would be less occasion for solicitude on this subject.  But such is not the fact.  Business is not in a healthy condition;  it is speculative, feverish, uncertain.  Every day that contraction is deferred increases the difficulty of preventing a financial collapse.  Prices and credits will not remain as they are.  The tide will either recede or advance;  and it will not recede without the exercise of the controlling power of Congress."

The Secretary then states the following propositions as the substance of his policy:

"1.  That Congress declare that the compound-interest notes shall cease to be a legal tender from the day of their maturity.

2.  That the Secretary be authorized, in his discretion, to sell bonds of the United States, bearing interest at a rate not exceeding six per cent., and redeemable and payable at such periods as may be conducive to the interests of the country, for the purpose of retiring not only compound-interest notes, but the United States notes."

And this policy so earnestly recommended by the Secretary is embodied in our bill now before the House.

The Secretary goes on to say:

"It is the opinion of the Secretary, as has been already stated, that the process of contraction cannot be injuriously rapid, and that it will not be necessary to retire more than one hundred, or at most two hundred millions of United States notes, in addition to the compound notes, before the desired result will be attained.  But neither the amount of reduction, nor the time that will be required to bring up the currency to the specie standard, can now be estimated with any degree of accuracy."

That last portion of the statement was wholly omitted by the gentleman from Pennsylvania, and the idea which he would attempt to fasten upon the House was entirely without foundation.  The Secretary had not any such purpose, as charged.  The Secretary goes on to say:

"The first thing to be done is to establish the policy of contraction."

And that is the purpose of the present bill.  It is to establish a policy and say to the world that resumption of specie payments shall not be indefinitely postponed.  Nobody expects that the Secretary of the Treasury is going to retire immediately any considerable amount of the legal-tender currency.  It cannot and will not be done for years.  But it is necessary that he should have the power in order to facilitate the transaction of the remaining part of the business.  The interest-bearing obligations must be first taken care of.  And I warn gentlemen that if this House shall take the responsibility of reversing what may be considered to have been hitherto the national policy, the policy enunciated by the Secretary of the Treasury, and which received the indorsement, as my colleague on the Committee of Ways and Means [Mr. Wentworth] stated in his speech, of all but six members of this House in the early part of this session -- if the House shall do that, it will, in my opinion, be utterly impossible for the Secretary of the Treasury to maintain the price of gold even where it now is, and consequently the prices of all the articles of merchandise and all productions which enter into the cost of living will be increased.  Consumers have some rights, the right at least to hope in the future.  And I warn gentlemen further, that as a matter of policy we cannot afford to make the issue of continuing these high and extravagant prices in the way of living any longer than may be absolutely necessary.  And I say to them further, that as a matter of political policy we cannot afford it.  We cannot afford to throw the financial questions of the day into the vortex of politics.  I was happy to hear the gentleman from Pennsylvania announce the idea that there was to be no polities in questions of this kind;  that each man should vote for himself.  That certainly is my idea as to the policy of Congress, and the true policy of the party to which I am proud to belong.

[Culloch did retire $400,000,000 of Government notes by the end of 1866, did he not ?  he did convert all together $1,200,000,000 Treasury Notes into gold-interest long bonds, did he not ?  and in 1868 Congress had to pass an Act to stop him from further reducing the currency ?!]

Mr. Speaker, the finances of the country are not yet beyond peril.  The time when we may look with the most apprehension in relation to our financial affairs is yet to come.  The process of generating an inflated paper currency gives some pleasure, but to be safely delivered of it is generally attended by grief.  If gentlemen will look back to the times of our financial disasters they will see that they have always occurred in times of the greatest inflation of the currency.  Take the financial disaster of 1837;  we had then increased our bank currency to an enormous extent.  In 1830 the currency of the country was but $61,000,000;  in 1837 it had been increased to $149,000,000, and then occurred that tremendous convulsion that was felt from the center to the circumference of our land.  It fell, to $58,000,000 in 1843.  In 1857 it had again increased to $214,000,000 and then occurred, as gentlemen will remember, another great convulsion.  Now, gentlemen may say that we have not got a redundant currency.  I should like to have time to investigate that fact, and to trample it under foot as I feel, humble as I am, fully competent to do.

[Conveniently fail to mention that in 1837 and in 1857 it was private bank currency which exploded, not interest-free government notes;  and in both years it were Treasury Notes that saved the day.  Soon the place of the retired Treasury Notes will be taken by bank paper, based on nothing but Government bonds as fractional reserve]

The amount of currency that this country requires in the ordinary normal condition of affairs has usually been not more than from five to seven or eight dollars per capita.  That is as much as has been required to do the business of the country when it was in a healthy state.  From 1839 to 1853, inclusive, a period of fifteen years, Dr. Elder states that the average circulation of bank currency did not vary more than twenty-six cents per capita standing very uniformly at about $5.20.

Now, what is the amount of the currency ?  Gentlemen undertake to say that the gold of the country has gone abroad, and we are to take from the amount amount of the circulating medium of the country the amount of gold that was formerly in use.  That is not true.  I have a statement here showing precisely how that matter stands;  showing that during the last four years we have not exported more than twelve million dollars over the amount we exported in the four previous years, and not over the amount of our annual production:

Specie and bullion exported.
1858 .... $52,633,147
1859 ..... 63,887,411
1860 ..... 66,546,239
1861 ..... 28,164,835
1862 ..... 36,887,640
1863 ..... 63,392,036
1864 ..... 69,390,485
1865 ..... 54,448,184

........ $12,686,713

I suppose there is not a man in this House who does not know that the production of gold and silver in this country has largely increased during the last four years in spite of the war.

Now, what is the amount of circulation, saying nothing about the gold and silver coin, of which it is proven there is as much in the country to-day as at any previous time ?  It is conceded by the gentleman from Maine [Mr. PIKE] that of State bank currency there is now $60,000,000;  of national bank currency $260,000,000;  of legal tenders and fractional notes $450,000,000.  And then, in addition to that, we have compound-interest notes amounting to $174,000,000, making a total of $944,000,000, amounting to thirty dollars per capita.  Will any man undertake to say that that is not too much for the business of the country ?  To require so much it would be necessary to show that the business of the country had more than quadrupled.

[then why not take the $320,000,000 bank currency out of circulation ? .... no need to answer]

I should argue that we did not need as much currency now as we generally do;  for the reason that more personal debts have been liquidated within the last four years than within any four years in the history of our country.  I believe that the "great West," as the gentleman from Illinois [Mr. Washburne] delights in calling his part of the country, is at least $200,000,000 less in debt to-day than it was four years ago.  And that is the condition, more or less, throughout the country.  There is less need of bank accommodation on account of personal indebtedness than usual.  In point of fact the Government itself is the largest and most profitable customer of the banks.  When the Government retires, the means of the banks will be ample to supply the legitimate wants of the people.

[why should the Government retire ?  why not the banks retire ?  the banks you just stated the people have no need for ?!

Another statement was made by the gentleman from Massachusetts [Mr. Boutwell] which I desire to controvert:  that was that there was less personal property in this country now than before the war.  I will admit at once that there are fewer horses and mules, and possibly some less merchandise, or there was less six months ago, though stocks have recently accumulated.  But I say that while the Government is poorer, the people of the loyal States, at least, are richer and possess more personal wealth to-day than previous to the war.

[well, we just have to do something about that, won't we ?  come back in three peace years and see how well they are doing, thanks to your reduction and strengthening and specie]

Mr. Speaker, the Government securities are as much property to individuals as stocks in railroads or stocks in banks.  But if the statement of the gentleman from Massachusetts were to be accepted that there is to-day less of personal property in the country than prior to the war, it would show only that less currency would be needed to carry on the business of the country, as there would be less merchandise and less produce to be sold or exchanged.

But, Mr. Speaker, the Secretary of the Treasury is a master of his special subject.  I believe it will be conceded here, and I may almost say throughout the world, that he is an able financier.  No man ventures to impeach his integrity.  Now, if he should have this power conferred upon him, as we propose, (and when gentlemen say that we do not know how long he may be our Secretary, I answer that the best way for us to secure to him a long tenure of office is for us not to distrust him in his financial capacity, not to make it impossible that he should succeed, not to take the business out of his hands and thus drive a high-spirited man out of office,) if he should have this power conferred upon him, no one expects that he will at once, if at all, fund any considerable quantity of the legal-tender notes.  Why ?  Because in order to facilitate the greater transactions of exchanging our present indebtedness, our seven-thirties, our compound-interest notes, our temporary loans, he must make it an object for every man to accept United States bonds;  and unless he can make the bonds better than any other obligations of the Government, including legal tenders, it will be impossible for him to make the exchange.  Therefore there need not be the slightest apprehension that the legal-tender notes will not be the last obligations to be funded.  It may be that occasionally he will receive in payment these legal-tender notes;  but if he does, he will be very likely at once to pay them out again.

To show, Mr. Speaker, that there is a redundant currency it is only necessary to look at the large amount of private deposits in our banks in addition to the immense amount of compound-interest notes which they keep (it being more profitable to hold than non-interest-bearing legal tenders) as a part of their reserve in order to redeem their own issues.  They have, I believe, on deposit from four to five hundred million dollars belonging to the people.  In addition to that the Government itself has $60,000,000 of currency on hand.  If these sums were to be unlocked and go into circulation in any form, in whole or in part, as is likely to be the case if the project of the gentleman from Pennsylvania should succeed, that is to say, if we should leave the Secretary of the Treasury with simply the power he now has, the result will be that the currency will be practically increased to some extent.  Otherwise the deposits would be most likely to be absorbed by being exchanged for United States bonds.

[yes, sir, that is just intolerable that the people have money in the bank or stored up, as opposed to owing to the bank !  You and your genius financier Secretary will fix this;  by 1873 no one will have money in the bank, and if he does, he won't able to get it out because the banks suspended even paper payment]

Mr. Speaker, let me say one word more.  There has never been any country that could export grain, manufactures, or anything else, with an inflated currency, except in extraordinary emergencies.  It did occur at the time of the famine in Ireland, it did occur at the time of the Crimean war, but those were exceptional instances.  The manufacturers of this country -- I am sorry to disagree on this point with some gentlemen here and elsewhere -- the manufacturers of the country, as well as all the rest of the country, have an interest in having this question settled, so that they can make their contracts at least for six months ahead.  If the policy of the Secretary of the Treasury can be steadily pursued we shall avoid frequent changes in the money market, the bane of all business transactions, and every one will know how to make his arrangements accordingly.  It cannot be for the interest of any class of our people to keep our currency below the value of other nations with whom we trade.

[lying again ?  a cheap currency is good for exports;  not that we should depend on exports in stead of the home market]

The gentleman from Pennsylvania [Mr. Stevens] has characterized this as an "enormous bill," because, as he claims, it will confer extravagant power upon the Secretary of the Treasury.  Why, sir, he has now all the power so much dreaded by the gentleman from Pennsylvania, and if he were a demon, minister of evil, no doubt he could exercise that power to the injury of the country.  But does anybody believe that he would willingly, with malice aforethought, bring about a commercial revulsion in this country, prostrate our business, bankrupt the Treasury, sink the credit of the Government, and destroy his own reputation ?  I must say, that, in my judgment, these are idle fears and unworthy to be lodged in the brain of any man.

[!!!! helo !  that is exactly what Culloch did !]

Now, Mr. Speaker, if gentlemen will look at the laws we have passed, they will see that even in relation to the terms on which these loans shall be negotiated, this bill proposes to confer no greater powers than the Secretary of the Treasury already possesses.  Some gentlemen desire that we shall insert in the bill a provision that these bonds shall be disposed of at not less than par.  Why, sir, if such a provision should be inserted, and if the brokers of New York should make a combination, as they might at any time, to reduce the price of these bonds even one tenth of one per cent. below par, the Secretary of the Treasury would be bound hand and foot;  he would be utterly incapable of moving, and could not fund a dollar.  Again, if he desired to employ, as agent to dispose of this loan, Jay Cooke, who has heretofore managed so successfully the sale of our bonds and notes, and should desire to pay him a quarter of one per cent, or three eights, or any other percentage that might be agreed upon, he would he precluded from doing so.  Conversion, exchange or sale, would stop.

By an examination of our former acts of this kind, it will be found that they contained similar provisions on this subject.  In the law of 1861 the language, was, "on the most favorable terms."  In 1863 we said, "upon such terms as he may deem most advisable."  In the act of March, 1864, and the act of January, 1865, the same language was used.  In the act of March, 1865, the words were, "at such rates and under such conditions as he may think advisable."

Again, sir, objection is made to the provision of this bill because it proposes to authorize the Secretary of the Treasury to negotiate loans in any foreign country.  The bill, as it will be left if the amendment I propose be adopted, will still leave power to negotiate these bonds "in the United States or elsewhere."  Of course he does not intend, after the emphatic condemnation of the policy in his report, to negotiate any bonds abroad, but the power may be useful in order that he may obtain the best possible terms here at home.

As it is getting late, I do not propose to occupy any more of the time of the House.  I do appeal to the House to let this bill stand as we have it, except so far as the amendment which I have proposed under the instructions of the Committee of Ways and Means.  I hope there is enough of good sense and patriotism in this House to sustain the bill.  If we do, I cannot think we shall have any reason to regret it.  I do fear we may have much for regret if the House undertakes to manage the finances of the country.  For one, I prefer the responsibility shall be with the executive department.

The question recurred on Mr. Sloan's motion to insert the following in place of what Mr. Morrill moved to strike out:

That all bonds or other obligations of the United States hereafter issued shall be made payable, principal and interest, in lawful money of the United States, and all acts or parts of acts which authorize the Secretary of the Treasury to retire permanently from circulation United States notes not bearing interest are hereby repealed.

Mr. Harding, of Illinois.  I demand the yeas and nays.  If I cannot speak I want to vote.

The yeas and nays were not ordered.

The amendment was disagreed to.

The question then recurred on Mr. Morrill's motion to strike out the following:

Provided, That the bonds which may be disposed of elsewhere than in the United States may be made payable, both principal and interest, in the coin or currency of the country in which they are made payable, but shall not bear a rate of interest exceeding five per cent. per annum.

The motion was agreed to.

The question then recurred on Mr. Stevens's substitute for the bill, as follows:

That the act entitled "An act to provide ways and means to support the Government," approved March 3, 1865, shall be extended and construed to authorize the Secretary of the Treasury to dispose of any description of bonds authorized by said act to such an amount, in such manner, and at such rates not less than par, as he may think advisable, for lawful money of the United States, or for any Treasury notes, certificates of indebtedness, or certificates of deposits or other representatives of value, which have been or which may be issued, under any act of Congress;  and the proceeds thereof shall be used only for retiring Treasury notes or other obligations bearing interest, issued under any act of Congress;  but nothing herein contained shall be construed to authorize any increase of the public debt.

Sec. 2.  And all laws and parts of laws which authorize the Secretary of the Treasury to fund or withdraw from circulation any United States legal-tender notes not bearing interest be, and the same are hereby, repealed.

Mr. Conkling.  Is that divisible ?

The SPEAKER.  The Chair thinks not, as it has been offered for the whole bill.

Mr. Stevens.  I withdraw the second section of my substitute.

Mr. Wentworth.  I object.  While I would do anything to oblige my friend, I want our soldiers paid in money at par.

Mr. Stevens.  I move that the bill be laid upon the table;  and demand the yeas and nays.

The yeas and nays were ordered.

The question was taken; and it was decided in the negative-- yeas 37, nays 98, not voting 48;  as follows: ......

So the House refused to lay the bill upon the table.

During the vote,
Mr. Rice, of Massachussetts, stated that his colleague, Mr. Alley, was paired with Mr. HARRIS.

Mr. Laflin stated Mr. Clarke, of Kansas, was absent on account of illness.

Mr. Thayer said he was paired with Mr. Glossbrenner, who was unavoidably absent.

Mr. Van Horn, of New York, stated that Mr. Van Aernam was detained from the House by illness.

Mr. Le Blond stated that Mr. ELDRIDGE was still detained at home by sickness.

Mr. Randall, of Pennsylvania, made a similar statement in reference to his colleague, Mr. Johnson.

The vote was then announced as above recorded.

The question then recurred on agreeing to the substitute of Mr. Stevens.

Mr. Eggleston.  On that I demand the yeas and nays.

Mr. LAWRENCE, of Ohio.  I desire to move to reconsider the vote by which the main question was ordered with a view of striking out the second section.

The Speaker.  That cannot he done until the previous question is exhausted.

The yeas and nays were ordered.

The question was then taken on agreeing to the substitute offered by Mr. Stevens;  and it was decided in the negative-- yeas 61, nays 75, not voting 47;  as follows: ......

So the substitute was disagreed to.

Mr. Lawrence, of Ohio.  I now desire to make the motion to reconsider the vote ordering the main question.

The SPEAKER.  It is not in order.

Mr. LAWRENCE, of Ohio.  Then I desire to make a statement.

Mr. Randall, of Pennsylvania.  I object.

The question recurred on ordering the bill to be engrossed.

Mr. Stevens.  I demand the yeas and nays on the engrossment.

The yeas and nays were not ordered.

Mr. Stevens.  I demand tellers.

Tellers were not ordered.

The bill was then ordered to be engrossed and read a third time.

Mr. Wilson, of Iowa.  I demand the reading of the engrossed bill.

The Speaker.  The Chair is informed that the bill is not yet engrossed.

Mr. Morrill.  I move to adjourn, for the purpose of giving time to have the bill engrossed.

Mr. Garfield.  I ask the gentleman to withdraw it, so as to move to take a recess of ten minutes.

Mr. Morrill.  I withdraw the motion to adjourn.

Mr. Garfield.  I move that the House take a recess of ten minutes.

The SPEAKER.  The Chair doubts whether, under the operation of the previous question, a recess can be ordered without unanimous consent.

Mr. Morrill.  I then renew the motion to adjourn and call the yeas and nays on the question.  But if the gentleman will withdraw the objection I will withdraw my motion.

The yeas and nays were ordered.

Mr. WILSON, of Iowa.  Is it in order now to move to reconsider the vote by which the main question was ordered ?

The SPEAKER.  It is not.

Mr. Wilson, of Iowa.  In order to get at that I will withdraw the demand for the reading of the engrossed bill.

Mr. Morrill.  I withdraw the motion to adjourn.

Mr. Stevens.  I demand the reading of the engrossed bill.

Mr. Garfield.  I renew the motion to adjourn, and demand the yeas and nays upon it.

The yeas and nays were ordered.

The question being taken on the motion to adjourn, it was decided in the negative-- yeas 48, nays 80, not voting 55, as follows: ......

So the motion to adjourn.  was disagreed to.

During the roll-call,

Mr. Winfield stated that his colleague, Mr. Radford, was unavoidably absent.

The bill being now engrossed, it was read the third time.

Mr. Morrill moved to reconsider the vote by which the bill was ordered to be engrossed and read a third time;  and also moved that the motion to reconsider be laid upon the table.

The latter motion was agreed to.

Mr. Morrill.  I demand the previous question on the passage of the bill.

The previous question was seconded, and the main question ordered.

Mr. WILSON, of Iowa.  I demand the yeas and nays on the passage of the bill.

The yeas and nays were ordered.

The question was taken, and it was decided in the negative-- yeas 64, nays 70, not voting 49, as follows:

YEAS-- Messrs. Allison, Ancona, Baldwin, Banks, Baxter, Bidwell, Blaine, Boyer, Brandegee, Brooks, Chanler, Coffroth, Conkling, Darling, Dawes, Dawson, Delano, Deming, Denison, Grider, Aaron Harding, Hogan, Hooper, John H. Hubbard, James Humphrey, James M. Humphrey, Jones, Kasson, Kerr, Ketcham, Laflin, Latham, George V. Lawrence, Le Blond, Marshall, Marston, Marvin, McRuer, Morrill, Nicholson, Noell, Perham, Phelps, Samuel J. Randall, William H. Randall, Raymond, Ritter, Rogers, Ross, Sawyer, Scofield, Spalding, Taber, Taylor, Thornton, Burt Van Horn, Robert T. Van Horn, Ward, Warner, Elihu B. Washburne, William B. Washburn, Wentworth, Whaley, Winfield, and Woodbridge --65.

NAYS-- Messrs. Anderson, Baker, Barker, Beaman, Bingham, Blow, Boutwell, Bromwell, Broomall, Buckland, Bundy, Reader W. Clarke, Cobb, Cook, Cullom, Dixon, Donnelly, Eggleston, Eliot, Farquhar, Ferry, Garfield, Grinnell, Abner C. Harding, Hart, Hayes, Higby, Hill, Holmes, Asahel W. Hubbard, Chester D. Hubbard, Demas Hubbard, Edwin N. Hubbell, James R. Hubbell, Hulburd, Ingersoll, Julian, Kelso, Kuykendall, William Lawrence, Loan, Lynch, McClurg, Mercur, Miller, Moorhead, Morris, Moulton, Myers, O'Neill, Orth, Paine, Pike, Plants, Price, Alexander H. Rice, John H. Rice, Shellabarger, Sloan, Starr, Stevens, Stilwell, Francis Thomas, Trowbridge, Upson, Welker, Williams, James F. Wilson, Stephen F. Wilson, and Windom --70.

NOT VOTING-- Messrs. Alley, Ames, Delos R. Ashley, James M. Ashley, Benjamin, Bergen, Sidney Clarke, Culver, Davis, Defrees, Driggs, Dumont, Eckley, Eldridge, Farnsworth, Finck, Glossbrenner, Goodyear, Griswold, Hale, Harris, Henderson, Hooper, Hotchkiss, Jenckes, Johnson, Kelley, Longyear, McCullough, McIndoe, McKee, Newell, Niblack, Patterson, Pomeroy, Radford, Rollins, Rousseau, Schenck, Shanklin, Sitgreaves, Smith, Strouse, Thayer, John L. Thomas, Trimble, Van Acrnam, Henry D. Washburn, and Wright --49.

So the bill was rejected.

During the roll-call,
Mr. ANCONA said:  My colleague, Mr. Johnson, is still detained from the House by indisposition.

The result of the vote having been announced as above recorded,
Mr. Garfield said: I changed my vote and voted in the negative for the purpose of moving a reconsideration.  I now move to reconsider the vote by which the bill was rejected.

Mr. Beaman.  I move to lay the motion to reconsider upon the table.

Mr. Washburne, of Illinois.  I move that when the House adjourns it adjourn to meet on Monday next.

Mr. STEVENS.  I hope the gentleman will not insist on that motion.  I think we had better have a session for debate.

Mr. WASHBURNE, of Illinois.  I withdraw the motion.

Mr. STEVENS.  I ask that by unanimous consent the session of to-morrow be set apart for the consideration, as in Committee of the Whole on the State of the Union, of the President's annual message, and for debate only.

No objection was made.

And then, on motion of Mr. MORRILL, (at fifteen minutes past eleven o'clock p.m.) the House adjourned.

March 19