-- An Act to strengthen the public Credit.

Paulson debt to America Be it enacted by the Senate and House of Representatives of the United States of America, in Congress assembled, That in order to remove any doubt as to the purpose of the government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the laws by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin or its equivalent of all the obligations of the United States not bearing interest, known as United States notes, and of all the interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or other currency than gold and silver.  But none of said interest-bearing obligations not already due shall be redeemed or paid before maturity unless at such time United States notes shall be convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin.  And the United States also solemnly pledges its faith to make provision at the earliest practicable period for the redemption of the United States notes in coin.

APPROVED, March 18, 1869.





Fortieth Congress
third session
December 7, 1868 to March 3, 1869




In the Senate
Saturday, February 27, 1869.

THE PUBLIC CREDIT



The PRESIDENT pro tempore.  The bill mentioned, called up on the motion of the Senator from Ohio, being House bill No. 1744, to strengthen the public credit and relating to contracts for the payment of coin, is now before the Senate as in Committee of the Whole.

The bill provides in the first section that in order to remove any doubt as to the purpose of the Government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the laws by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all the interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or other currency than gold and silver;  but before any interest-bearing obligations not already due shall mature or be paid before maturity the obligations not bearing interest, known as United States notes, shall be made convertible into coin at the option of the holder.

The second section declares that any contract hereafter made specifically payable in coin, and the consideration of which may be a loan of coin or a sale of property, or the rendering of labor or service of any kind, the price of which as carried into the contract, may have been adjusted on the basis of the coin value thereof at the time of such sale or the rendering of such service or labor, shall be legal and valid, and may be enforced according to its terms;  and on the trial of a suit brought for the enforcement of any such contract proof of the real consideration may be given.

The Committee on Finance reported the bill with an amendment to strike out in line nine of the first section the words "interest-bearing," and also to strike out the proviso at the end of the first section in the following words:

Provided, however, That before any of said interest-bearing obligations not already due shall mature or be paid before maturity the obligations not bearing interest, known as United States notes, shall be made convertible into coin at the option of the holder.

Mr. Davis. [Garrett Davis (1801 - 1872), Unionist, Democrat, Kentucky]  I move to recommit this bill to the Committee on Finance, with instructions in lieu of it to report a bill embodying the following propositions:

First, That gold and silver coin is the measure and the par established by the world and adopted by the Constitution of the United States for all property values, debts, and other pecuniary liabilities;  and the Government of the United States having, on the sale of the bonds which constitute the bulk of the national debt, received greatly less, when measured by the par of gold and silver coin, than their nominal amount, said bonds should be discharged by the payment in coin of their value by that par at the days they were respectively sold by the Government;  and the future interest upon said bonds should be reduced to four and a half per cent. per annum on their value as aforesaid, payable in coin.

Second, That all other debts and pecuniary liabilities created or incurred since the issue of legal-tender notes, and which do not express to be payable in gold or silver coin, were contemplated and intended by the parties to be met and paid in currency;  and on the general resumption of specie payments such debts and liabilities should be discharged by the payment in gold or silver coin of their value by that par when they become due and payable.

Third, That the annual expenditures of the Government should be reduced within the following general scale: for the civil service, $45,000,000 and Indians, $30,000,000; Department of War $25,000,000;  Navy Department, $20,000 000; contingencies and miscellanies, $10,000,000;  and interest on the public debt, $50,000,000;  and the whole surplus of the revenue should, be faithfully applied to the extinguishment of the public debt.

Fourth, The taxes which are now so grievous as burden upon the people of the United States should be educed at least $100,000,000 annually, of their aggregate amount;  and a day, within three years, should be named for the general resumption of specie payments.

My object, Mr. President, is to get a general system, according to my judgment, for the settlement of the difficulties of the country in relation to the public debt and the resumption of specie, payments to be reported by the Committee on Finance;  and in support of that general proposition I beg leave to offer some considerations.

Mr. President, our country and its Government and affairs are in a bad condition.  In our recent great civil war the people generally dismissed their habits of business, industry, and frugality, and gave their attention, time, and energies to the absorbing conflict.  The Constitution, laws, and restraints upon power ceased to be respected, the just and legitimate objects of the war were abandoned by the men in power, and the conflict on our part degenerated into one for the conquest, subjugation, and enslavement of the insurgents;  by them it had been commenced for their separation and independence.  The enlarged, illegitimate, vicious, and dangerous purposes of our Government created apprehension and discontent with a large mass of the enlightened and determined opponents of the secession movement;  and in the name and with the cry of preserving the Union and saving the life of the nation the party in power made war alike on the insurgents, the Constitution, its supporters, and the liberties of the people;  and they were victorious over all.  The contest was formidable from the beginning, but its giant proportions were imparted to it by the expanding and criminal ambition of the leaders of the Radical party, who formed the purpose to hold themselves in power, though it should necessitate the subversion of the Constitution, the utter failure of our mixed system of general and State governments, and the political slavery of the people.

Such a game of war and such stakes demanded a proportionate expenditure of blood and treasure, and the profusion of both was far beyond all parallel.  More than five million men took part in it, and not less than seven hundred thousand perished.  From June 30, 1861, to July 1, 1865, four years, the United States expended in this civil war $3,500,000,000, or double the amount of all the previous expenditures of the Government from its beginning;  and from the latter date to June 30 next, will have expended $1,600,000,000 more;  and still the liquidative national debt created by it and unpaid is $2,539,031,844.  The unascertained debt cannot be proximately estimated, but must largely exceed $1,000,000,000;  and the total destruction of property and the blasted fruits of industry in all its fields would amount probably to an equal aggregate, making a grand total of more than twelve thousand million dollars.  But the misery and woe which in these terrible throes of the nation rent the hearts and souls of our people, God alone can measure and comprehend.

All, all this vast and frightful sacrifice was offered up to the Moloch of personal ambition and sectional hate, and the people, North and South, were prepared and perverted to this immeasurable folly, crime, and insanity by the arts of a few wicked and daring political and church demagogues.  Indeed all factions of church or State "is the madness of the many for the benefit of the few."  If both sections in the beginning of our trouble had brought a score or two of their bad men to a public execution they would have averted from their common country those vast ills, and it would have moved on without obstruction toward that grand destiny to which the wisdom and virtues of our fathers had lighted the way.  The utter overthrow of the rebellion broke the spell which so long held the southern people;  but the pig headed masses of the North, forming the majority there, are still enthralled, and with frenzied passions and reeling reason they continue to shout and follow their leaders, and will to the final catastrophe.  The great national debt which was created as well to make one revolution as to prevent another, and beneath whose galling wieght the mass of the people of the United States are crouching to the earth, has no sanctity.

When I contemplate our disjected Constitution and its great provisions and principles in the condition of the débris of the noblest system of autonomy ever formed by man, and see the rightful governments of one third of the States swept away, and other governments, administered by strangers and negroes, forced upon them by a military despotism, and the people of those States stripped of all their rights and liberties, and then reflect that this national debt was largely made to organize and support the lawless power that enacted so much wrong, outrage, and ruin, I confess the feelings of revulsion with which I regard it.  I have always been willing to accord untold millions, all of property and life, to enforce the law, to suppress insurrection, to perpetuate the Union under the Constitution, to "preserve, protect, and defend the Constitution;"  but nothing to subjugate and enslave any portion of the people of the United States, or to weaken a single principle of the great charter of our liberties.  The utmost that can be asked in reason and decency for the national debt is, not to tolerate and recognize it, but to eliminate it to the utmost verge of justice and equity;  and one mode of so treating it I propose to present for the consideration of the Senate.

Every measure yet proposed relating to the national debt contemplates the payment of the whole amount of the bonds, which is $2,107,836,100, in gold and silver coin.  My position is that the United States have the equitable right to discharge those bonds by the payment of their value in gold and silver coin at the dates they were respectively issued, with interest upon such value;  and that the excess of interest above that measure heretofore paid upon those bonds should be applied in satisfaction of so much of the principal;  and that this difference between the nominal amount and gold value of those bonds, with the usury which has and will have been paid on them by the 1st of July, 1869, amounts to $893,058,112, leaving unpaid but $1,214,787,988;  and that the payment by Congress of their nominal amount of $2,107,836,100, would defraud the people of the United States, and pay to the bondholders more than is rightfully due upon them by the sum of $893,058,112.

The United States borrowed in greenbacks and other depreciated paper:

....................... Greenbacks, &c. Worth, in gold.
In 1862................. $60,982,450 ..... $44,030,649
In 1863 ................ 160,987,530 ..... 101,890,850
In 1864 ................ 381,292,250 ..... 189,697,636
In 1865 ................ 279,746,150 ..... 208,214,090
In 1866 ................ 124,914,400 ...... 88,591,773
In 1867 ................ 421,469,550 ..... 300,210,303
In 1868 ................ 425,443,800 ..... 312,826,323
Total................ $1,854,836,200 .... $1,248,466,625
for which were executed bonds bearing six per cent. per annum interest.

There was also borrowed in the same depreciated paper currency:

In 1864 .................... $71,110,450 ...... $35,375,383
In 1865 .................... 100,390,200 ....... 70,202,937
In 1863 .............................. 300 ............ 213
In 1867 .......................... 340,000 ........ 244,604
In 1868 ........................ 23,208,600 ..... 17,131,323
Total ..................... $195,139,550 ...... $122,954,460
for which bonds bearing five per cent. per annum interest were issued or converted.

If these transactions had been between individuals it would be the right of the borrower in law, equity, and conscience to have his bonds reduced to the amount of the gold value of the depreciated paper at the time he borrowed it;  and by resorting to the chancellor we could obtain that relief, and also the application of any excess of interest above the rate upon that value to the extinguishment of so much of the principal of his bonds.  The Government of the United States is entitled to the same measure of justice.  In support of this position I will cite some authorities.

Every shift, device, or subterfuge which the ingenuity of man can invent to take unlawful interest, either directly or indirectly, or by any shift or deceitful way, or means, is included in the provision of the statute, (against usury.)  Neither are cases of usury confined to precise loans of money;  but they extend to cases where the relation of debtor and creditor exist, and to cases where that relationship subsists by the sale of wares, merchandise, and commodities. (1 Sch. and Le., Fr. 192.)

Where upon an application for the loan of money, it is by the agreement made a condition of the loan that the borrower shall receive from the lender uncurrent bills at a higher rate than their value in cash or current funds, the loan is usurious. (Cleveland vs. Loder, 7 Paige, 557.)

A note payable in doll dollars for nominal al amount of loan in Commonwealth's bank notes is usurious, and relief will be granted to the extent of the usury, which is ascertained by the value in gold and silver of the notes loaned at the time, and computing interest at the legal rate upon that value, the difference being the usury. (4 J.J. M., 48; 2 Dana, 225 ; 1 J.J. M., 49; 1 John. Chy., 193; 2 John. Chy., 537.)

Where there is usury in the first obligation it extends to all subsequent ones which comprehend and continue the matter of the first:  and the obligor is entitled to the same relief against the assignee as against the obligee. (Campbell vs. Gill, 4 J.J. Mar. 89.)

The authorities that sustain these several propositions are multitudinous, uniform, and from every court in which the questions arose.

It is thus seen that the true amount of the interest-bearing bonds of the United States, instead of being $2,107,836,100, is $1,214,777,988, and the interest if reduced to four and a half per cent. per annum, as it should be, would amount to $54,665,459, whereas there as now paid upon it $121,022,437.  The Government in interest would be saved $66,356,978 annually.  The amount of interest that is now paid on these bonds in gold if continued nine years and eight months would make a sum exceeding $1,214,777,988, the equitable and true amount of what is now due upon these bonds;  and if the nominal amount of the bonds and this rate of interest should be continued to be paid until they fall due the holders will have received more than three times that amount.

In connection with this subject President Johnson, in his late annual message, propounds this proposition:

"Upon this statement of facts it would seem but just and equitable that the 6 per cent interest now paid by the Government should be applied to the reduction of the principal in semiannual installments, which in sixteen years and eight months would liquidate the entire national debt."

This Suggestion threw the Senate into a paroxysm of honest indignation, and drew from it the cry of "repudiation;"  but it seems to have the solid foundation of truth, justice, and equity, as it would secure to the bondholders the gold value of what was paid the Government for the bonds, with a reasonable interest.

The only point upon which a plausible question can be raised of the justice of such arrangement and the power to make it is as to the interest.  States do not allow themselves to be sued by their subjects or citizens, and they establish and modify according to their own will the rates of interest upon bonds which they execute to their people.  The interest of the national debt of England was successively five, four and a half, four, and three per cent., and has ultimately been reduced by that Government to three per cent. on the whole of it.  Nations, when they reduce interest upon their public debt, generally give it the form of a contract by proposing terms to their creditors, and the latter, having no power to size or coerce their debtors, are constrained to accept them.  There is no freedom of will on the part of the creditors.  If there were they would reduce interest on their debts neither for the Government nor individuals.  The matter is regulated absolutely by the Government and when it establishes a reasonable rate of interest there is no injustice to its debtor.  Four and a half per cent. on long bonds would be fair and just to the holders of our public debt.

There are four modes of dealing with the national debt by Congress:

1.  To pay the nominal amount of the bonds in gold and silver coin.
2.  To pay them with greenbacks.
3.  To pay their gold value with coin.
4.  To repudiate them.

The first would be to give to the bondholders an enormous amount more than they are entitled to by the plainest principles of justice and equity, and would perpetuate upon the people a most oppressive burden of taxation.  The second would expand largely and continue indefinitely a depreciated paper currency, a curse that always undermines the morals and blights the prosperity of a people.  The third would avoid this spurious paper currency, liquidate the bonds by the standard of every civilized age and country, gold and silver coin, secure to the public creditors all which they can rightfully claim, relieve the people of a large portion of their taxes, and with a wise and economical administration of the Government insure the payment of the national debt and bring the country back to a general and early resumption of specie payments, when a circulation consisting of gold and silver coin, and paper always convertible into it, would represent every pecuniary transaction of society and be the measure of all values.  This is the medicine required by the diseased condition of our monetary affairs, public and private, and unless it be administered the fourth alternate, repudiation of the national debt attended with great derangement in business and widespread distress, becomes a necessity.

I have stated all the modes proposed or practicable of disposing of the public debt;  and the one which I advocate seems to me to be clearly the most eligible.  It would be in harmony, too, with a just and easy liquidation of private debts.  Where there is an absence of expression that the debt is to be paid in gold or silver the parties to every pecuniary obligation made since a greatly depreciated paper has been the only circulation, contrasted with reference to such circulation and intended and understood that in it all debts were to be met and discharged.  The great mass of such debts were without any question paid in such currency as or soon after they were contracted, and if upon the general resumption of specie payments the parties themselves do not liquidate the residue, the chancellor, on being invoked, would hold them to be paper currency obligations, ascertain their value at maturity in gold and silver coin, and decree their extinguishment upon the payment of such value.

It would be less onerous upon both government and people to have their debts treated as paper currency debts, and to discharge them by the payment of their value in gold and silver coin, than to pay their nominal amount in that currency;  for the latter operation would make it impossible to resume specie payments until some time after it should have been accomplished, and would thus long continue the general paralysis of industry and business, while that resumption would greatly energize, expand, and increase them, and thus augment the resources of government and people.  The value in gold of paper debts could be obtained after resumption with more facility and certainty than the whole nominal amount of those debts in the paper currency could be before;  and thus the resumption of specie payments which would so greatly promote the general prosperity, would be also beneficial to all debtors;  whether government or people.

We have seen that the interest at the present rates upon the nominal amount of the interest-bearing bonds of the United States is more than one hundred and twenty-one million dollars in gold and silver coin annually, and that the just and equitable reduction of the principal and interest of those bonds which I have suggested would save to the Government $66,356,978 of that sum.  The Secretary of the Treasury estimates the receipts from customs, which are payable in gold and silver coin, for the fiscal year ending June 30, 1870, at $160,000,000, which would leave an excess, after paying the interest on the public debt, of $105,334,541 in gold.  With that amount, or anything near that amount of annual surplus of gold from the customs, the Government could come easily and speedily to the resumption of specie payments itself and aid all solvent banks and individuals to achieve the same result without material detriment to any, but with great benefit to all.

But I propose not only the saving of upward of $66,000,000 of interest annually by this liquidation of the public debt and reduction of interest upon it, but also that there shall be such retrenchment in the civil service of the Government as will reduce the expenditures from $50,000,000, the Treasury estimate, to $45,000,000; and in the War Department from $75,000,000 to $30,000,000.  Thus, in the interest on the public debt a saving of $66,336,978, in the civil service of $5,000,000, and in the War Department of $30,000,000, making an aggregate of $111,356,978, one third of the total amount of the taxes of the people of the United States.  That this estimated saving on the public debt can be easily and justly made is manifest and as to the other two heads the end is not less certain.  In the civil service there are a great many items of expenditure that might be wholly cut off without any detriment to the public interest, and many more where the amounts might be advantageously reduced.  A retrenchment of $5,000,000 in an expenditure of $50,000,000 in times of such extravagance and profligacy as the present is very moderate;  a skillful and willing knife could cut much more with healthful results to the body-politic.

As to the Military Department the practicability and necessity for retrenchment and reform is palpable.  An appropriation of $75,000,000 to the Army in the present condition of the country is enormous, and must cover future sinister purposes.  For many years before the rebellion the regular Army had not reached seventeen thousand men, rank and file, and for 1860 the appropriations to the Military Department were $15,694,790, and for 1861 were $16,020,941;  and in both years for every branch of the service.  The great resource of our country and the warlike qualities of our people so signally demonstrated to and now acknowledged by the world, with the practice of justice and moderation by the Government will give us immunity from collisions of arms with all foreign nations.  The Indian tribes within our borders and upon our frontiers are generally yielding in their long and obdurate resistance to our policy toward them;  and the prospect is certain that they will make no more serious outbreaks and in the future cause us but little expenditure of money, except in teaching them the arts of civilized life, and for that but a reasonable and moderate amount.  African slavery no longer exists, and the States which rebelled in assertion of the principle of secession have renounced it forever and accepted, and now desire to perpetuate negro suffrage.  Between those and the other States there is no longer any differences of institutions to produce future civil wars, and they acknowledge the supreme authority of the United States under the Constitution and are obedient to their laws.

There is no more cause for an army or the presence of soldiers in the southern than any other States;  and nowhere in the United States except on the Indian frontier are they required for any proper purpose but to tenant forts and posts and guard military property.  There never was less necessity than now for a regular Army in our country;  and the gigantic national debt and the load of taxation upon the people under which they are staggering cry aloud for large retrenchment in our Army expenditures, and there is no proper consideration to delay it.

The strength of the Army should be less than it was before the war.  Twenty thousand men, rank and file, would give an excess of force;  and $30,000,000 ought to cover every dollar of expenditures in the military department of the Government.  The retrenchments I suggest would leave the Treasury estimates for the next year's expenditures thus:  for the civil service, $45,000,000; pensions and Indians, $30,000,000; Department of War, $35,000,000; Navy Department, $25,000,000;  and interest on the public debt, $55,000,000;  making an aggregate of $190,000,000.  And the Secretary estimates the produce of the revenue for the same period to be $327,000,000, which shows an excess of receipts over expenditures of $137,000,000.  But the great and just reduction of the principal and interest of the national debt, the retrenchment in the civil service and War Department, the practice of a general and judicious economy in the expenditures of the Government, the release of the people from more than one hundred million dollars of their taxes, wisely and honestly adjusted, and an early resumption of specie payments by Government and people would give such great impulse to industry and production that the excess of revenue would make good the $100,000,000 of taxes withdrawn from the people, and yet leave a surplus of more than that amount.  Each year would bring its increasing aggregation to individual and national wealth, general and permanent prosperity would be established on a sound foundation, and the payment of the public debt would be put beyond all question.

Mr. President, the pecuniary situation of the nation is but the aggregation of the situation of the individuals who compose it;  and consequently the laws and conditions of the prosperity or adversity of both are essentially the same.  If an individual is industrious and frugal, makes more than he consumes, buys and sells at fair prices, pays and receives in gold and silver coin or equivalent paper, and is not in either operation defrauded and plundered by a spurious circulating medium, and owes no debt to eat up with interest and usury his surplus earnings, he is prosperous and may become rich.  The nation is not in that happy condition;  and it is the object and would be the effect of the combined operation of the several measures which I propose, within a reasonable time, to get back to it.  The action of each one would be to aid all the others toward this consummation.  The large reduction of principal interest on the public debt would allow the withdrawal of a very large amount of taxes from the people, which would be so arranged as to materially lessen the cost of subsistence and of many crude articles that enter into our manufactures and mechanic arts and proportionably to cheapen all products of the field and the shop.

The resumption of specie payments would not increase the value or the burden of debts, public or private, but it would bring all labor, merchandise, property, and values to be measured by gold, the standard of the world, established for many centuries, and before which every competing standard has heretofore and must hereafter speedily fall.  Pure gold is counted at twenty-four carats, and where there is alloy the amount of the genuine present metal is ascertained by that standard throughout the commercial world, and is so everywhere received.  The interests of labor and of every legitimate business demand that there shall be a sound and uniform currency;  and all communities from which it is banished will thereby be subjected to illicit and heavy burdens.  The industry of nations is now largely competitive and is daily becoming more so.  The people that have a sound gold circulation have as much advantage in this contest over another which has a vicious paper circulation as one man possessing a healthy, life-giving blood would have in a long personal contest over another whose diseased and slowly coursing fluid was the sure precursor of death.  The crowning achievement of the system, which I propose would be to renew the industrial and commercial life and energies of the nation by restoring to it a sound and healthy circulation.

During Mr. Davis's speech, at one o'clock,
The PRESIDENT pro tempore.  The Senator from Kentucky will suspend his remarks.  The morning hour having expired;  the unfinished business of yesterday is before the Senate, being the bill (H.R. No. 1803) making appropriations for the support of the Army for the year ending, June 30, 1870, and for other purposes.

Mr. Morrill, of Maine.  I do not desire to take the Senator from Kentucky from the floor;  and I have no objection, by common consent, to allowing the unfinished business to be laid aside in formally to enable the Senator to proceed.

The PRESIDENT pro tempore.  The Senator from Kentucky may proceed unless objection be made.  The Chair hears no objection.

Mr. Davis resumed and concluded his speech.


The Public Credit.


Mr. SHERMAN.  I now move that the Senate resume the consideration of the bill to strengthen the public credit.

The motion was agreed to and the Senate, as in Committee of the Whole, resumed the consideration of the bill (H.R. No. 1744) to strengthen the public credit, and relating to contracts for the payment of coin.

The PRESIDENT pro tempore.  The question is on the motion of the Senator from Kentucky, [Mr. Davis] to recommit the bill with instructions.

The motion was not agreed to.

The PRESIDENT pro tempore.  The question now is on the amendment reported by the Committee on Finance, which will be read.

The Chief Clerk read the amendment, which was in section one, line nine, to strike out the words "interest bearing;"  and also to strike out the following proviso at the end of the section:

Provided, however, That before any of said interest-bearing obligations not already due shall mature, or be paid before maturity, the obligations not bearing interest, known as United States notes, shall be made convertible into coin at the option of the holder.

So that the section, if amended, will read:

That in order to remove any doubt as to the purpose of the Government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretation of the laws by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all the obligations of the United States except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or other currency than gold and silver.

The amendment was agreed to.

Mr. BAYARD.  Mr. President, I have not the slightest objection to the first section of this bill;  but my motion will be to strike out the second section altogether.  The section provides that in any contract hereafter made specifically payable in coin, no matter what the consideration, wherever that condition is carried into the contract on the coin basis it shall be legal and may be enforced according to its terms;  and that on the trial of a suit brought for the enforcement of such a contract proof of the real consideration may be given.  This section is either utterly useless and superfluous or it is meant to embarrass and limit the recent decision of the Supreme Court, and really to destroy commerce.  It can have no other effect.  Although it is true that the case in the Supreme Court arose on a contract made antecedent to the legal-tender law, yet the principles of the decision cover all contracts made specifically payable in coin;  and there is not the slightest necessity for the second section of the bill.  Where a contract has been made specifically payable in coin under the decision of the Supreme Court it can be enforced according to its terms whether made before or after the passage of the legal-tender law, if I do not misapprehend the wording of that decision, and I do not think I do.  This section as it stands will give rise to controversy in a variety of shapes.  Take for instance a case where a contract is specifically payable in coin, and the consideration is household property.  A sells to B his property, say for ten, or twenty thousand dollars, and B agrees to pay in gold.  A wants to dispose of that contract to pay in gold;  he wants the money;  he discounts it or sells it, as he has a right to do.  The result is that when a suit is brought to enforce it against the party who has stipulated to pay in gold the question whether the price of the property was adjusted on the gold basis or not may become a question of law and may affect the rights of the party who prosecutes.  That is one case.

Gentlemen may tell me that the courts would decide the other way;  but in reality it opens the whole question of commercial law as regards the right of a bona fide holder of commercial paper to enforce it without regard to the consideration.  What is the language of the section ?

And on the trial of a suit brought for the enforce



[here a long discussion on Section 2 of the bill which was eventually rejected]


that lawful money, and ought to have paid it long before this time in gold and silver.

Mr. Hendricks.  I have no doubt the purpose of the Senator from Ohio is as he states, but that will not be the proper construction of this section, as I think.  It provides :

That in order to remove any doubt as to the purpose of the Government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the laws by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all the obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or other currency than gold and silver.

I have read now the whole section as it stands.  The purpose is, first, to remove any doubt, and, in the second place, to settle any conflicting questions and interpretations of the laws.  That is the purpose of the section, to remove doubts and settle conflicting interpretations of existing laws under which the debt was contracted.  For that purpose this section is enacted, and being enacted it will be a settlement of conflicting questions upon the construction of the laws;  it will be a removal of doubts, and make the laws to read that the debt shall be paid in coin.  That is the effect of this first section.  It is, as I believe, simply to put a legislative construction upon existing statutes.  It is not to provide for the payment of the debt, it is not to provide means for its payment, but simply and solely to put a construction upon existing laws.

Now, Mr. President, existing laws do not authorize such construction in regard to a portion of the debt.  There are, perhaps, $1,600,000,000 of the debt in the form of bond, that do not provide that the principal shall be paid in gold or silver, but that do provide that the interest shall be paid in gold or silver;  and it has been, and is now, a fair argument that when the bonds provide for the payment of the interest in gold and silver, and for the principal without specifying gold or silver, the principal, under such a contract, may be paid in the lawful money of the United States.  That is the fair construction;  that construction no man, as I think, has yet been able to overcome.

On the 12th of December, 1867, the Senator from Ohio, representing the Finance Committee, made an elaborate report, a very able report, on this subject.  In that report reference is made to the act of Congress under which the debt was contracted, to the various kinds of debts that had been contracted, the peculiar terms of the obligation;  and I wish to call attention very briefly to this report.  The report, speaking of the legal-tender notes, says:

"These new notes were declared to be receivable in payment of all taxes, internal duties, excises, debts, and demands of every kind due to the United States except duties on imports, and of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin, and shall be lawful money and a legal tender in payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid."

That is a quotation mainly from the act of February 25, 1862, the act which authorized the issue of legal-tender notes.  I ask Senators to observe the language:  these notes were made receivable in payment of all taxes, internal duties, excises, debts, and demands of every kind due to the United States except duties on imports;  and of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin, and shall be lawful money and a legal tender in payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid.

A legal tender and payment in discharge of all debts from the United States, to be paid by whom ?  By the debtor, by the United States.  Then, as plainly as words can express it, the United States may use the legal-tender notes issued under the act of February 25, 1862, and the subsequent acts providing for the issue of like notes in paying her obligations except only the interest on the public debt.  It is not fair to argue that this law was intended to include obligations of the United States in which she expressly agreed to pay gold, and I do not contend for that;  but where the United States has neither in the law or in the security which she has issued promised to pay in gold, does that obligation not come clearly within this statute providing that these Treasury notes may be a legal tender and payment in their discharge ?

Then, Mr. President, to my mind it is very clear that this class of public indebtedness may be discharged by the Government of the United States by her legal-tender Treasury notes, and the learned committee, making its report through the Senator from Ohio, did not contend for another construction, but seemed to concede that as the proper construction, for they go on to state that--

"On the 11th of July, 1862, before any of the five-twenty bonds were negotiated.  Congress authorized the further issue of $150,000,000 of the United States notes, with a like provision to convert them into bonds at par.

"On the 3d of March, 1863, before any considerable amount of the five-twenty bonds were negotiated, Congress authorized the further issue of $150,000,000 United States notes, and by the same act provided that the holders of United States notes issued under and by virtue of said acts shall present the same for the purpose of exchanging the same for bonds, as therein provided, on or before the 1st day of July, 1863, and thereafter the right so to exchange the same shall cease and determine."

Upon this statement of fact the committee claimed at that time that when the bonds were issued the purchasers of the bonds knew that the Government had issued this large amount of Treasury notes with the quality that they might discharge any obligation of the United States, so that the persons who purchased the bonds from the United States at the time they made the purchase knew that it was the law of the land that these bonds might be discharged in Treasury notes.  In another part of this report, the committee say:

"These notes were issued to the amount of $400,000,000 before the bonds were negotiated."

Four hundred million dollars of these Treasury notes had been issued before any persons purchased from the Government the bonds known as the five-twenty bonds, and the logic of the committee in this report is that the purchasers of the bonds then knew that these $400,000,000 Treasury notes might be used in the discharge of the obligation of the Government under these bonds.  But there is a very peculiar passage to be found in this report on the sixth page.  I will read it:

"If this question"--

The committee is discussing the question of the possibility of discharging the five-twenty bonds with legal-tender notes--

"If this question rested solely upon the act of February 25, 1862, and the bonds had been negotiated under that act alone, it would be manifestly a breach of faith to redeem the bonds with the present United States notes.  They are very different from the first legal-tender notes, which, from the limited amount authorized, and the privilege to convert them into bonds, could not have had a less market value than the bonds.  But it was found that with such restrictions upon the notes the bonds could not be negotiated, and it became necessary to depreciate the notes in order to create a market for the bonds.  The limit of notes was trebled and the right to convert them taken away.  The amount of United States notes in circulation when the bonds were negotiated was equal to the amount now outstanding, so that the question arises whether by the terms of these several acts the bonds may be redeemed with notes of the precise character paid for the bonds when negotiated by the United States."

Here is a simple statement of fact that under the act of February 25, 1862, there was authorized but a limited amount of Treasury notes to be issued, $150,000,000, convertible in a peculiar manner.  There were also to be issued bonds of the United States, and those bonds could be purchased from the Government by the payment into the Treasury of Treasury notes.  When the business thus stood the committee says that the bonds could not be sold;  that a market could not be found for them;  that for the purpose of creating a market for the bonds, steps must necessarily be taken to depreciate the paper currency of the country, and with a view to the depreciation of the paper currency of the country $300,000,000 more of Treasury notes were authorized by Congress so as to float the bonds, to use a common expression of the times.  With an issue of $150,000,000 of notes the bonds which the Government desired to sell could not find a market.  Then, to create a market and make the bonds an object in the market, the paper money must first be depreciated.  The first $150,000,000 that had come into the hands of the people almost at par, as this report says, would not allow the sale of six per cent. bonds.  They could not be sold, they would not float the bonds, and therefore they must be depreciated, and that was to be done by trebling the quantity in the market and in the channels of trade and business.  That was accomplished so that $400,000,000 or $450,000,000 of Treasury notes were issued, and then Treasury notes were sufficiently depreciated, according to the doctrine of this report, to make the bonds an object in the market.  Then the bonds could be floated upon this depreciated currency.  The Government deliberately, according to the statement of the Finance Committee -- rather I will say Congress, for the committee could only speak for Congress -- Congress deliberately and for a purpose issued this large amount of Treasury notes that it might have a depreciated currency in the country, and that the bonds might be worth in the market more than these Treasury notes, and therefore the people would buy the bonds with the notes.

Mr. WILLIAMS.  With the permission of the Senator I wish to say that when he refers to the speech of the Senator from Ohio I do not acknowledge his right to say that the Finance Committee have made the expressions contained in that speech.  I suppose the Senator from Ohio holds himself individually responsible for that speech, and there is no evidence before the Senate or the country that the Finance Committee acquiesced in his views of that question.

Mr. HENDRICKS.  I will ask the Senator from Oregon whether he submitted to the Senate a minority report ?  This is a report made by Mr. Sherman.

Mr. Morton.  A report or a speech ?

Mr. Hendricks.  It is a report.  I am not reading from any speech.  I am reading from the report made from the Finance Committee by its chairman on the 17th day of December, 1867.

Mr. EDMUNDS.  What page do you read from ?

Mr. Hendricks.  I am reading from page 6, under the inquiry, as the Senator will see--

"Are they [the five-twenty bonds] redeemable in legal-tender notes ?"

That is the subject that the Finance Committee is discussing, and when the chairman makes a report from that committee and the gentlemen who constitute the committee other than himself do not dissent from his views, I take it that it is the doctrine of the committee.  This is not a speech --- and I will ask the Senator's attention -- this is not a speech of a Senator, and although unquestionably the report was written by the distinguished Senator from Ohio, it is not his report;  it is the report of the committee, made by him.

Mr. Edmunds.  What clause does the Senator read from, which he says amounts to that ?

Mr. Hendricks.  If the Senator will look to the sixth page I will again read what I read before.

Mr. Edmunds.  I have the sixth page.

Mr. Hendricks.  The inquiry is, "Are they redeemable in legal-tender notes ?" The answer is:

" The question now arises whether these five-twenty bonds are redeemable at the expiration of five years from their date in any other money than the coin of the United States ?

"If this question rested solely upon the act of February 25,1862, and the bonds had been negotiated under that act alone, it would be manifestly a breach of faith to redeem the bonds with the present United States notes.  They are very different from the first legal-tender notes, which from the limited amount authorized and the privilege to convert them into bonds, could not have had a less market value than the bonds.  But it was found that with such restrictions on the notes the bonds could not be negotiated, and it became necessary to depreciate the notes in order to create a market for the bonds."

That is the clause that I read from, I will say to the honorable Senator from Vermont.

" The limit of the notes was trebled and the right to convert them taken away."

In two respects the notes were depreciated as stated by the committee;  first, in increasing the quantity so largely, and in the second place, by taking away a valuable quality from them.  Then there was a market furnished.---

Mr. Williams.  If the Senator will allow me, I understood him to be arguing that the Finance Committee had reported or said that these bonds were payable in currency.  I did not understand him to be referring particularly to that passage of the report, but to affirm that the Finance Committee of the Senate had reported in some way that these bonds were payable in currency;  and what I wished to say was simply that the committee as a committee, so far as I know, has never decided in favor of that proposition.  If I misunderstood the gentleman I wish to stand corrected, that is all.

Mr. Hendricks.  I was not discussing that question just then.  When the Senator interrupted me I was discussing the question which I intended to be the question, whether the holders of the bonds have an equitable claim upon us now while the difference between paper and gold is so great as it is to declare that these bonds shall be payable in gold ?  I am not going to say that the committee in this report take the ground squarely that the bonds may be redeemed in Treasury notes.

Mr. Edmunds.  If the Senator from Indiana will permit me to call his attention to the statute referred to in this report, the act of March 3, 1863, taken in connection with the report, he will see that the statute does not import any such proposition as he is now maintaining.

Mr. HENDRICKS.  I have no objection to the Senator reading from the act of 1863.  Of course it being upon the statute-book it is presumed to be a hart of the report as a law is supposed to be a part of the contract.

Mr. Edmunds.  The statute of 1863 on this subject of the act of February 25, 1862, touching the five-twenties as they are called, merely says that---

"So much of the act to authorize the issue of United States notes, and for other purposes, approved February 25,1862, and of the act to authorize an additional issue of United States notes and for other purposes, approved July 11, 1862, as restricts the negotiation of bonds to market value, is hereby repealed."

So that my friend from Indiana will perceive that he is putting an unfair construction on this report, taking it together instead of selecting one line at a time, when he undertakes to say that the legislation of 1863 operated upon the bonds of 1862 otherwise than as merely repealing the limitation in the previous act that they must be negotiated at market value, and that was all.

Mr. Sherman.  After consulting with Senators -- it is a matter in which I have no interest or feeling -- I move that at half past four o'clock the Senate take a recess until seven o'clock.  It is manifestly necessary from the state of the public business that we should finish this bill to-night, and at the same time it is manifest that if we do not take a recess by five or six o'clock we shall be without a quorum, and thus lose the whole evening.  My experience has convinced me that it is best to take a recess at a reasonable hour.  I submit the motion.

Mr. Anthony.  I quite agree with the Senator;  but has not this discussion closed ?  Can we not take the vote on this question now ?

Mr. SHERMAN.  I should not object to that.  I should like it very much.  If we can take the vote by half past four it may relieve us from an evening session.

Mr. Trumbull.  It does seem to me that unless the Senate has resolved that the public business necessary to be done shall not be done we must vote upon some of these questions.  The appropriation bills are all behind, and if we are to go on discussing from day to day and over and over again a question of this kind we can do no public business.  I do appeal to Senators to let us vote on this question.  Is there a man in the Senate who does not understand it ?  Let us vote upon it one way or the other, and dispose of it now, before the recess.

Mr. Sherman.  If we can take the vote before half past four o'clock I shall be very glad.

Mr. TRUMBULL.  Who wants to make a speech ?

Mr. Sherman.  I do not know.

The PRESIDENT pro tempore.  The motion is that at half past four o'clock the Senate take a recess until seven o'clock.

Mr. Conness.  I wish to remind the Senator from Ohio that now for several times there has been no opportunity to rescind the order for a recess when it has been deemed necessary.  The Senator occupying the floor has the privilege of putting that over.  I hope that the recess will not be taken, but that we shall go on and finish this bill without a recess.

The PRESIDENT pro tempore.  The motion cannot be put except by unanimous consent, there being another matter pending.

Mr. Hendricks.  If this question is to be debated I do not yield.  I do not understand that it is a debatable question to take a recess.  I yielded to the chairman of the Committee on Finance for the purpose of making the motion.

Mr. Sherman.  I submit the motion.  I do not wish to debate it.

The PRESIDENT pro tempore.  If there be no objection the motion will be put that at half past four o'clock the Senate take a recess until seven o'clock.

Mr. GRIMES.  And that from that time on this bill be under consideration.

Mr. EDMUNDS.  Yes, and the Army bill, both.

The motion was agreed to.

Mr. DRAKE.  With the assent of the honorable Senator from Indiana I move that after this day the Senate meet during the remainder of this session at eleven o'clock in the morning.

Mr. HENDRICKS.  I wish the Senator would allow me to finish before that is put.

The PRESIDENT pro tempore.  The Senator from Indiana is entitled to the floor.

Mr. DRAKE.  I only ask the assent of the Senator to make the motion.

Mr. HENDRICKS.  Of course I assent if you want to make the motion.

Mr. DRAKE.  I make the motion that during the remainder of the session the Senate meet at eleven o'clock.

The motion was agreed to.

Mr. Hendricks.  I did not enjoy particularly the criticism of the Senator from Illinois [Mr. Trumbull] upon Senators who choose to debate the questions that are brought in here.  It was in the midst of my remarks, and it would seem to be on his part an expression of disapproval of the fact that I am occupying some of the attention of the Senate.  I did not expect that from him;  nor do I receive it from him as that he has any authority to make any such suggestion to me.  Here, when important measures as brought up, so far as I am concerned, I must be the exclusive judge of what it is decorous and right for me to say.  If he chooses he may address himself to the Senator from Ohio and to the Finance Committee, who have brought into this body a proposition by which the bonded debt of this country shall be increased in value $600,000,000 without an increase of the ability of the people to pay it, and without, in fact, the measure being one of practical legislation at all.  If this were a bill to provide means for the payment of the debt, to lighten the taxes upon the people, or to adjust the system of taxation more justly and equitably among them, I would recognize its importance.  But, sir, when it is brought in for no purpose of the sort, not to decrease the debt, not to lighten the burdens upon the people, not to readjust the system of taxation, but simply to declare here by legislative enactment that the public debt shall all be paid in gold, let the Senator from Ohio be lectured.  It is an important measure.  It affects deeply the interests of the people.  And I claim when a bill like that is brought in the right to discuss it fully and freely and without any criticism from any gentleman of the majority in this body.  I have no control here of what bills shall be brought from the committees.  But the distinguished chairman of the Finance Committee is presumed to have a large control of the business and action of the Senate because of his official relation to the body.  He has thought it proper, that committee have thought it proper, to bring in a bill that is not practical in its provisions, but declaratory of the meaning of existing laws, a declaration of the meaning of existing laws in which I do not concur.  Therefore, sir, it is right and proper that I should discuss the bill.

When interrupted the Senator from Vermont was calling my attention to the act of March, 1863, as bearing on this.  If the Senator had listened to my remarks he would not have said that I was reading a line at a time, from this report.  He would have heard that I called attention to the act of March, 1863.  I called attention to that act because of the use that the committee itself had made of that act.  The committee in this report state that act as an important one bearing upon this question, because under that act an additional $150,000,000 of Treasury notes were allowed to be issued of less value upon their face than the first notes, and thereby the currency depreciated and made to float the bonds.  It was an act that I had called attention to, and the Senator will see that that act is referred to by the committee on page 5 of the report:

"On the 11th of July, 1862, before any five-twenty bonds were negotiated, Congress authorized the further issue of $150,000,000."

After this act took effect the five-twenty bonds were negotiated.  Why does the committee make that use of the acts of 1862 and 1863 ?  To establish this proposition I presume that when the purchasers from the Government of the five-twenty bonds paid their money into the Treasury they did it with the knowledge that this act provided that the Treasury notes might be used in payment of the bonds.  And it is after the committee has referred to these two laws that the committee goes on to say that the last two, the acts of July 11, 1862, and March 3, 1863, were in pursuance of a policy to depreciate the currency, so as to furnish a market for the bonds.

Then, Mr. President, according to the facts stated in this report, what equitable claim have the bondholders upon Congress to make this declaration at this time ?  Before these bonds were sold, before they could be sold, before the moneyed men of the country would purchase the bonds, Congress had to issue Treasury notes in such quantities as would depreciate them and make them in the market of less value than the bonds.

[
Elbridge Gerry Spaulding
to Senator E.D. Morgan
December 24, 1867.

" I notice that Senator Sherman, in his report, (pages 6 and 7,) giving countenance to the idea that the 5-20 bonds, under the act of 25th February, 1862, may be paid in the depreciated greenback currency, is laboring under a material misapprehension of the facts in regard to the representations made by the agents of the Government when the loan was negotiated, and especially as to the time when those representations were made.  Mr. Sherman says :
' It is said that the distinguished Secretary of the Treasury who negotiated the 5-20 loan, gave a construction to this act at the time the loan was offered ;  that this was announced to the people, and upon the faith of this the loan was taken.  Your committee can find no official declaration made by the Secretary on this subject, until after the loan was negotiated,'
and then refers to a letter written by Secretary Chase, May 18, 1864, as being the first official declaration on the subject that has come to his knowledge.  The Senator seems to concede that if the Secretary made official declarations, at the time the loan was negotiated, giving a construction to the act, to the effect that the principal, as well as the interest, was payable in coin, and that if both parties understood that to be the construction of the law, such declarations would form a part of the contract, and that the Government would be bound to make these declarations good, and to give effect to the contract as understood by both parties when it was made.  Now, the proofs are at hand that such official representations were made by the distinguished Secretary of the Treasury, before and at the time the loan was being negotiated, as I will now proceed to show."
(but in 1862, Mr. Spaulding used a different language)]

Mr. Edmunds.  I should like to ask the Senator a question.  What does he mean by saying that the moneyed men of the country were the purchasers of these bonds, when his own candidate for the Presidency truly stated in a speech which he made which exhausted the subject that a very large proportion of them were held by those who represented the widows and orphans of the country ?

Mr. Hendricks.  I have not discussed this question or thought of it in any partisan or political sense.  When I spoke of the moneyed men of the country I spoke of the persons who had money with which to buy the bonds.  These bonds in some instances, rare indeed, were purchased by persons of limited means, but in the great part, as I have no doubt, by persons of means who wished to make a profitable investment;  and they waited, it seems, according to this report, until the first issue was trebled and the currency depreciated, and then with the depreciated currency the bonds were purchased from the Government.

Mr. EDMUNDS.  Does the Senator mean to say that he is for sacrificing the poor in order to punish the rich ?

Mr. Hendricks.  Mr. President, I do not propose to sacrifice anybody;  and when the rich man and the poor man, if the gentleman will insist that the poor man was the purchaser of these bonds, purchased these bonds from the Government and had notice upon the statute-book that they might be redeemed and paid by the Government with legal-tender notes, it is no sacrifice of anybody when the Government complies with that contract;  so that it is not a question of sacrificing anybody.  The very Treasury notes that the purchasers of the bonds paid into the Treasury when they bought the bonds had printed upon their backs that they were a legal tender in the discharge of the very bonds that they were buying.  Every single legal-tender note that was paid into the Treasury in the purchase of a five-twenty bond had upon its back this extract from the law making it a legal discharge of the bonds at the pleasure of the Government.  So, Mr. President, it is not a question of sacrificing anybody.  It is simply a question of what is the contract.  If the contract be that bonds shall be paid in gold, then I am the last man to ask to violate that contract;  but if the contract be that they may be paid in Treasury notes, then I am opposed now, while there is this large difference between paper and gold in the country, to a law which has no practical bearing except to commit the Government to a construction of the laws contrary, in my judgment, to their true and just and proper meaning;  and I call the Senator's attention to another passage in this report:

"It is clear that if the bonds are 'payable' when due in legal tenders, they are 'redeemable' after five years from the date in same kind of money.  The word 'payable' imports a duty or obligation which must be performed at the time stipulated.  The word 'redeemable' implies a discretionary power which way be or may not be exercised.  But the same kind of money in the same mode tendered will redeem a note or pay a note."

So that the committee then took the square ground that if at the end of twenty years these bonds may be paid in legal tenders, of course it follows that at any time after the expiration of five years they may be redeemed in legal tenders.

Mr. President, I should like to know of the Committee on Finance if they propose now to pay off the five-twenty bonds ?  Are we in a condition without a further issue of Treasury notes to pay these bonds to the bondholders ?  This is not a question that is confined to the rich men or the poor men of the United States.  It is a question that affects the bondholder in Europe who has made his investment in our securities because of their value.  He had full knowledge of the terms of this law.  The foreigner when he purchased our bonds knew very well when he read the law, and he is presumed to have read the law, that they might be paid in legal tenders, or, in the language of the law, "in the lawful money of the United States."

So, sir, this question of appreciating the bonds by the bill before us does not apply alone to citizens of the United States, but wherever these bonds are held an additional value is to be given to them by this act, and for what purpose ?  For no benefit to the people;  not to lighten their burdens;  not to readjust the taxes, as I remarked, equally among all, but only for the purpose of making gold bonds out of bonds that might have been paid otherwise in legal tenders.

Mr. President, I did not suppose it was necessary that this question should be raised at this time.  I think if the right policy be pursued we may in the end come to a specie basis for our currency.  I do not look for that at any early day.  I do not expect it to be brought about by any action of Congress in regard to the currency, either in extending or restricting the circulation of the country.  I look only to the productions of the country for the restoration of our currency, for its increase, for its appreciation.

Upon this subject I differ very widely from my able colleague.  He thinks that by action of Congress we may appreciate the legal-tender currency of the country and bring it up to par with gold, I believe, in about two years.  I have no such opinion.  I think his proposition would simply produce a very great contraction of the currency.  I think in the first place it directly proposes to hoard the gold in the Treasury.  The effect of his proposition would be to make persons holding the legal-tenders hoard them also, so that the currency of the country would be to a very large extent contracted.  But I do not care to discuss that now.  I do not agree with him in his very ingenious proposition.  I am not in favor of a contraction of the currency, because that is oppressive to the business of the country.  I am not in favor of such an increase of the currency of the country as will destroy its value in the pockets of the people.  We must, as far as Congress has control of the subject, furnish to the people the best currency that can be commanded and in such quantities as the legitimate business of the country requires.

But, Mr. President, I look to that policy of the Government which will encourage production;  which will introduce into our business affairs stability and confidence and restoration of free Government and encouragement to business and to enterprise, so that here at home we may become producers of those staples that will command a foreign market, and so that the currency in gold and silver shall turn toward our own shores instead of being carried from them.  Our business now every year is carrying from us large sums of gold.  While that is the case I am not able to see how we can return to a specie basis for our currency.  Our paper money will not go abroad.  Experience shows that we cannot use either our national bank paper or our greenbacks in purchases abroad.  If our purchases abroad exceed our sales abroad that difference must be paid in gold;  and while nearly seventy millions annually of the gold of the country is being carried to Europe to pay the difference between our purchases and our sales we cannot have a specie basis to our currency;  and all paper promises, all promises by law or otherwise, however ingeniously supported by argument, will but deceive and mislead.

Mr. President, we must have productions that will command a foreign market.  New England ought to command a market at home with the advantages of high protection which she now enjoys.  I should be very glad to see the looms of New England and the mines of Pennsylvania supply the channels of trade throughout the country.  I should be very glad to see it, but I do not understand how it is that they keep putting up their prices so much when they have such extraordinary protection.  Their prices still go up so that the foreign article can be brought in here and sold.  There is some fault somewhere in that respect.  I think that the wants of the revenue of the country furnish such a protection to domestic manufactures at this time as that it is extraordinary that so large a supply comes from abroad.

But, Mr. President, my main hope is in the production of the staples that always command a market abroad.  Our wheat sometimes commands a market abroad;  our stock raised in the great Northwest, many of the productions of the Northwest;  but the important staples that command a foreign market are found south of the Ohio river -- cotton and tobacco.  It is a fact to which my attention was called upon an investigation of a kindred subject that during the three years after the close of the war, cotton and tobacco constituted one half of our exports, including, as I now recollect, the coin that was carried abroad, perhaps including the bonds that were sold abroad;  but I am not sure about that.

Now, Mr. President, if we but have stability in our policy, and our policy be wise, we can increase our productions, we can increase the productions of the staples to which I have referred, and command a foreign market.  The word "king" is offensive to gentlemen as applied to cotton.  It is not important at all whether it be called "king" in the market or not.  It is an article, produced as we produce it, of the quality that is found in the United States, that always commands a market;  and so of tobacco.  Then, let us have a policy which will increase the great productions of the Northwest and of the South and of the Southwest, and increase our sales abroad so that they shall exceed our purchases, and we shall soon have a restored currency, both in its value and in its quantity.

I am in favor of such reasonable issue of Treasury notes as the business of the country may require.  I do not expect to vote for any increase of the bank currency;  I do not think it necessary to interpose the credit of a bank between the people and the credit of the Government.  The bank notes rest for their credit in the business world upon the Government securities that are filed in the Treasury.  I would rather have the promise of the Treasury direct than the indirect promise of the Treasury coming through a bank.

Mr. President, if we can adopt this policy, can restore the balance of trade so that we shall sell as much as we buy and secure a return from other countries of the precious metals, then the difference between our paper money and our gold and silver will rapidly decrease.  That is the restoration that I look for, in the legitimate prosecution of business and trade in the country and in our foreign commerce.  When that is done the questions that are attempted to be provided for in this bill I will disappear.  We shall have then a currency of uniform value.  I do not look for it before that time;  but if these bonds are to be paid now, or if they are to be paid at any time when there is a difference between the paper currency and the coin of the country, I want them to be paid according to the contract.

After the contract has been executed;  after the purchasers of the bonds have paid a depreciated currency into the Treasury upon a promise that they should be paid in like money, I am not willing by a subsequent Congress to change the contract and to say it shall be gold and, as the difference now stands between paper and gold, to increase the value of the bonded debt from five to seven hundred million dollars.

Mr. Corbett.  Mr. President, I desire to make a few remarks upon this first section.  This question is more particularly a question as to the propriety of passing this law at this time.  Looking at this question in a point of view for the advantage of the whole country, I do not understand that Congress are enacting laws or levying taxes to pay the national debt at this time.  The debt does not mature for the next fifteen, twenty, or forty years.  It simply resolves itself into this:  by declaring that these bonds are payable in coin we advance the price of the bonds, and for all those bonds which are sent abroad we get just so much more money or gold in return.  In other words, we retain just so much gold in the country in place of the bonds that are sent out of the country.  If we can advance the price of these Government bonds five, ten, or fifteen per cent., what is the result ?  Suppose we send $500,000,000 of bonds out of the country, by an advance of exchange we gain by that if we advance it ten per cent.  $50,000,000;  if twenty per cent. we gain $100,000,000 for the amount of bonds exported.

As I said before, we do not propose to pay those bonds yet and for some years to come, or till they mature probably.  We are only preparing to pay the interest upon them which is payable in gold.  Therefore the burden is no greater upon the Government in paying the interest of these bonds than though we do not pass this bill.  I say we must expect to return to specie payments before these bonds mature.  It is the view of the Finance Committee, it is the view of Congress and the view of the people and the commercial community, that before these bonds are paid we shall return to specie payments.  Therefore this bill does not add one cent to the debt of the Government.  We can only pay the interest on these bonds in gold, and we derive that from the duties on imports, which are payable in gold.  This is simply a financial measure.  What would you do if you had bonds that were seventy-five cents on the dollar ?  If your own notes were out, worth seventy-five cents on the dollar, would you not promise to pay gold to satisfy your creditors and thereby raise the value of the notes, or would you keep them in doubt ?  We are sending these bonds abroad continually.  We are sending amounts, perhaps, varying from twenty to thirty or forty millions a year, and whatever price we can advance the bonds to over and above the present price we gain just that much to the country.

Mr. President, it seems to me that the idea, that this adds to the debt of the Government is a fallacy.  It does not in reality add one cent to the Government debt, because we do not propose to pay it at this time.  I simply wished to present the matter in the light in which, as I understand, the Finance Committee and Congress and the people view it.  It is just advancing the price of the bonds so that whatever bonds go abroad we get just so much more money or productions from abroad in return for them.

The PRESIDENT pro tempore.  The question is on the amendment offered by the Senator from Missouri, [Mr. Henderson.]

The question being taken by yeas and nays, resulted-- yeas 10, nays 34; as follows:

YEAS-- Messrs. Cole, Conkling, Corbett, Dixon, Fessenden, Henderson, Pomeroy, Ross, Stewart, and Trumbull --10.
NAYS-- Messrs. Abbott, Anthony, Cameron, Cattell, Chandler, Conness, Cragin, Davis, Doolittle, Drake, Edmunds, Ferry, Frelinghuysen, Harlan, Flowe, Kellogg, McDonald, Morgan, Morrill of Vermont, Morton, Nye, Osborn, Patterson of New Hampshire, Ramsey, Rice, Sawyer, Sherman, Sumner, Thayer, Wade, Welck, Willey, Williams, and Wilson-- 34.
ABSENT-- Messrs. Bayard, Buckalew, Fowler, Grimes, Harris, Hendricks, Howard, McCreery, Morrill of Maine, Norton, Patterson of Tennessee, Pool, Robertson, Saulsbury, Spencer, Sprague, Tipton, Van Winkle, Vickers, Warner, Whyte, and Yates --22.

The President pro tempore.  The question now recurs on the motion of the Senator from Delaware, to strike out the second section of the bill.

Mr. COLE.  Before that question is taken I desire to move an amendment to the section, to strike out the word "hereafter," in the second line, so that it may apply to all contracts, whether made prior to the existence of the law or contracts, that may be made hereafter.  I believe from the intimations I have on the subject that the decision of the Supreme Court goes to the extent of affirming contracts made payable in coin that have been made heretofore.

The President pro tempore.  The question is on the amendment of the Senator from California, to strike out the word "hereafter" in the second line of the second section.

The amendment was rejected.

The President pro tempore.  The question recurs on the motion of the Senator from Delaware, to strike out the second section, on which the yeas and nays were ordered.

The Chief Clerk proceeded to call the roll, and Mr. Abbott answered to his name.

Mr. Doolittle.  I desire to address the Senate on the subject-matter of this bill.

Mr. Sherman.  Let us take the vote on this amendment.

Mr. Doolittle.  I observe that the Senator from Delaware, who made the motion, does not appear at this moment in his seat, and it is so near the time of the recess that perhaps we had better take the recess now.

Mr. Sherman.  He said to me that he had accomplished his purpose, and was feeling unwell and went away.

Several Senators.  Let us vote on this.

Mr. Williams.  I insist on the vote.

Mr. Doolittle.  I have no objection to the vote being taken on this particular section.  I wish to address the Senate on the general subject of the bill, and may discuss the second section also.

The call of the roll was resumed and concluded, resulting-- yeas 7, nays 36; as follows: ..........

So the Senate refused to strike out the section.

Mr. McCreery.  I now move to strike out the first section of the bill.

The motion was not agreed to.

Mr. Henderson.  I move to amend the first section of the bill by striking out after the word "that," in the third line; the words "in order to remove any doubt as to the purpose of the Government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the laws by virtue of which such obligations have been contracted;"  and to strike out all of the section after the word "to," in the eighth line, in the following words:

The payment in coin, or its equivalent, of all the obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or other currency than gold and silver.

And to insert the words :

An early resumption of specie payments by the Government in order that conflicting questions touching the mode of discharging the public indebtedness may be settled, and that the same may be paid in gold.

So that the section, if amended, will read:

That it is hereby provided and declared that the faith of the United States is solemnly pledged to an early resumption of specie payments by the Government in order that conflicting questions touching the mode of discharging the public indebtedness may be settled, and that the same may be paid in gold.

Mr. DOOLITTLE.  I believe the hour for the recess has arrived.

Mr. COLE.  If the Senator will give way I will move that we now take a recess.

The PRESIDENT pro tempore.  The hour of half past four o'clock having arrived, the Senate, according to order, will take a recess until seven o'clock.



Evening Session


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