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 Senate
Wednesday, March 3, 1869.

THE PUBLIC CREDIT.

Mr. Sherman.  I ask consent to make a report from a committee of conference.


The report was read, as follows:


The committee of conference on the disagreeing votes of the two Houses to the bill (H.R. No. 1744) to strengthen the public credit, and relating to contracts for the payment of coin, having met, after full and free conference have agreed to recommend, and do recommend, to their respective Houses as follows:

They recommend that the House recede from its disagreement to the first amendment of the Senate, and agree to the same with an amendment as follows: insert in lieu of the words stricken out the words: "obligations of the United States not bearing interest known as United States notes, and of all the interest-bearing."

They recommend that the House recede from its disagreement tot he second amendment of the Senate, and agree to the same with an amendment, as follows: insert in lieu of the words stricken out the words: "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 provisions at the earliest practicable period for the redemption of the United States notes in coin."

They recommend that the Senate recede from their third and fourth amendments to the bill of the House.


JOHN Sherman,
GEORGE H. Williams,
Managers on the part of the Senate.

ROBERT C. Schenck.
WILLIAM B. Allison,
Managers on the part of the House.



Mr. Bayard.  [Thomas Francis Bayard (October 29, 1828 — September 28, 1898), Delaware (D)]  I am necessarily opposed to the adoption of this report;  and though I am reluctant to detain the Senate it will take me some time to state my objections to it.  I am very loth at this period of the session, with the pressure of business, to do so, but the act is one of public importance, and as I view the second section, which is restored by this committee of conference to the form in which the House of Representatives originally passed it, it is far more dangerous than will any result to be derived from the first section be beneficial.  I must therefore necessarily oppose the bill, though to the first section I have no objection.


Mr. Trumbull.  It is impossible to hear a word that is said by the Senator from Delaware, there is so much confusion in the galleries.


The PRESIDENT pro tempore.  There must be less noise in the galleries.


Mr. BAYARD. [Aristocrat, man of Belmont, instrumental in passing the February 12th 1873, Mint act which demonetized silver]  The first section I have no specific objection to except one, and that is that it is declaratory law, and I hold that within the terms of the Federal Constitution declaratory laws by Congress, if not absolutely unconstitutional, are certainly unwise and improper.  This Congress has no more authority to declare what was the intent and meaning of a law passed by a previous Congress; or give a pledge of faith to the country without any new consideration connected with the bonds in reference to which the first section relates than a subsequent Congress would have a right to undo it.  My own opinions on the technical question are very plain.  When under their former laws the United States authorized the issue of six per cent. bonds with interest payable in coin, redeemable at their option after five years or absolutely payable at the end of twenty years, without specifying that the principal should be paid in coin, I have never doubted that the United States could not in good faith, pay a promise to pay, and on which they were to pay interest until it was paid by money, with another promise to pay which they chose to call money.  In other words, I never doubted that the United States were to pay value, if they wanted to retain their good faith, in a currency of value and not in a currency of mere credit.  There are no circumstances but one under which any Government would be justified in what is called repudiation of a debt.  There perhaps is one, founded upon the principle of bankruptcy as regards individuals.  Where an individual, be it even from his own extravagance, from want of care, from want of intellect or business capacity, becomes involved in debt the laws of your own and other countries permit him to be discharged from the obligations of his debts on surrendering his property; and the principle of that is very apparent to me — his future labors are left to himself.  In the case of a Government having authority as trustees for the people at large to contract loans the case might arise — I do not pretend to say it has arisen here — in which a Government might contract such a debt that the interest upon the debt would amount to more than the net earnings of the aggregate people during each year, and in such an event as that there would be an inability to pay consistent with the welfare or even the organization of the society, and in such an event as that Government would be compelled, just as the individual would be, to refuse to pay such an amount.  I do not say that that applies to the present case.  On the contrary, I think that with a growing country like ours, with so enterprising a population, the remedy is not declaratory legislation by Congress, but the reduction of expenditure, economy in public expenditure, reduction of useless organizations, of a portion of the Army, the abandonment of your Freedmen's Bureau, and a thousand other things not necessary to specify.  Economy in the conduct of public affairs, a revision of your entire revenue laws, internal and external, for the purpose of making them as little oppressive as possible to the people, while they raise the greatest amount of revenue, is the the mode in which the good faith of this country is to be preserved.  This Congress may pass what resolution it pleases on the subject of the payment of the debt in coin, that debt will ultimately be repudiated if what I mention is not resorted to, a proper revision of the revenue system of the country, external and internal, and a reduction of expenditures, because otherwise the burden will press so heavily on the people that they will throw it off their shoulders.

To the second section, however, I have a distinct objection that it really in my judgment is intended to prevent a return to the normal currency in this country which it professes to be intended to effect.  Nearly a year ago, when the question was still what the lawyers would call a moot question, a doubtful question, as to whether a contract made specifically payable in gold could under the legal-tender act, as it is called, be paid in paper, the Senate agreed to pass a proposition giving validity without regard to any existing law to all contracts of that kind hereafter made.  It went to the House of Representatives.  It lay there during the rest of the session.  They would not act upon it.  They would not pass it.  During the present session, within the last three weeks, the Supreme Court of the United States have made a decision that governs entirely the whole question; that is, they have decided virtually in principle that all contracts, whether made before or after the passage of that law, if made specifically payable in coin, can be enforced according to their terms and the party so contracting may be made to pay in a currency of value and not in a currency of credit.

There is, therefore, no necessity for this second section.  It makes a profession of providing that a contract hereafter made specifically payable in coin may be enforced; but it couples it with a system of inquiry into the consideration that would utterly destroy all confidence, promote litigation, and prevent contracts of that kind being made.  Where a party gives his promissory note on the purchase of property payable in coin the right is given under this section to question the consideration on this ground whether the value of the article which he purchased was adjusted on a gold basis or a paper basis.  Any one can see at once that with such a provision in the law it entirely destroys the effect of the decision of the Supreme Court in the confidence it would impart to the community in making contracts payable in coin.  It prevents in the higher branches of trade a return to the normal currency.  It subjects men to the danger of a want of good faith on the part of the individuals with whom they contract.

Let me give an instance: Suppose a man sells a horse for $600 or a house for $10,000; he gives his note payable in coin in either case.  When that note is called upon far payment he says, "No; I shall pay it in legal tenders."  If he is sued upon it this provision which professes to authorize contracts of this kind gives him liberty to go into a court of justice and dispute whether the price of that horse or the price of that house was adjusted on the gold basis or the currency basis.  It will lead to innumerable law suits.  I do not know what extent of evidence the courts might require in the case of a horse.  They might bring forward jockies to prove that the value of the horse at $800 was its paper value and not its coin value, and the jury would have to weigh the facts.  In other words, the result of the second section is simply to destroy the effect upon the country of the decision of the Supreme Court giving validity to contracts of that kind.  It is an encouragement to bad faith on the part of parties making contracts payable in coin.  It is intended to discourage payments in money, although it professes to authorize them.  It has duplicity on its very face.  Its object is to keep up in this country a currency of credit as contra-distinguished from a currency of value, for the purpose of aiding speculators to plunder the people; or it may be, for aught I know, that the object in now retaining it is some personal speculation of individuals and their influence.

But, sir, it is very probable that that which the House refused to do at the last session before the decision of the Supreme Court, or to touch now when that decision has been made, rendering any legislation on that subject unnecessary, they now seek to emasculate the decision of the court by coupling it with a provision which will give rise to ceaseless lawsuits, which will encourage perfidy on the part of individuals where contracts have been made on the gold basis, which will prevent a return at the earliest practical period to the normal currency of the country; and unless you return to it before any great length of time all the declarations you make in the first section as to the intentions of Congress to pay their debts, principal and interest, in coin will be vain.

I do not wish to detain the Senate longer in reference to this bill, but I trust if this report of the committee of conference should pass the Senate at least the Executive will not permit it to pass without his veto; and as he has the power to prevent such pernicious legislation that he will exercise that power in the present instance for the good of the country.

Mr. CONKLING.  I ask that the bill be read as it will stand if we agree to the report of the conference committee.  That the Secretary is able to do with the papers before him.  The Secretary read as follows:

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 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 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.

Sec. 2.  And be it further enacted, 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.

Mr. Sherman.  If the Secretary will send the report and the bill to me I will explain in a very few words the result of the conference.  The Senate made four amendments to this short bill.  The first amendment was designed to extend the pledge of the first section to the United States notes as well as the bonds.  In the House bill the obligations were described as "all interest-bearing obligations," but there was no pledge to pay in coin United States notes.  The Senate by striking out the words "interest-bearing" intended to extend the pledge to all obligations of the United States; but the House conferees feared that this would include obligations not intended to be embraced by this claim.  In order to avoid all ambiguity we now say that the pledge shall extend to the payment of all United States notes in coin and all interest-bearing obligations except those where other provision was made, so as to prevent including other obligations not intended to be reached by this measure; and in that respect I think the report of the conferees is decidedly an improvement because it is more specific.

The second amendment of the Senate was to strike out the proviso to the first section.  The objections made in the Senate to the proviso were these: that it tied up the power of the Government to pay the debt or do anything toward reducing the rate of interest until after the return of specie payments.  This provision is stricken out, and instead of it we have inserted a provision that we will not attempt to pay the principal of this debt until either we resume specie payments or we can sell a bond bearing a lower rate of interest than the bonds to be redeemed at par in coin.  Then we are, at liberty to proceed to payoff the outstanding bonds even if specie payments have not been resumed.

Mr. FESSENDEN.  Please read that.

Mr. SHERMAN.  Yes, sir.

But none of said interest-bearing obligations —Five-twenties— 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.

Then there is this clause:

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.

I think that this is a great improvement.  The United States postpones payment of this debt until we can pay it at par in coin, either by the sale of bonds or by the resumption of specie payments, and we also announce to the country that we will take steps as early as practicable to specie payment of the notes.

Mr. Morrill, of Vermont.  Would the last provision prevent the United States notes from being funded ?

Mr. Sherman.  Not at all.  I will state in regard to the third amendment that I did not agree to the conclusion in regard to it.  The third amendment of the Senate was made on motion of the honorable Senator from New Jersey, [Mr. Frelinghuysen] to strike out the last clause of the second section.  That clause allowed, by implication at least, the consideration of a negotiable note to be inquired into between others than the original parties.  In order to avoid that construction the Senate struck out that last clause, leaving the question of inquiring into the consideration to depend upon the general and local law in each State.  That is the way it ought to be;  but the House conferees were not willing to agree to this report unless this provision was retained.  I myself was not disposed to yield that, but a majority of the Senate conferees thought it was better to yield in order to secure the passage of the bill.  The words which are retained and which the Senate struck out are these:

And on the trial of a suit brought for the enforcement of any such contract proof of the real consideration may be given.

That would seem to imply that this proof could be given in a suit brought by a bona fide bolder on a note where there was usury between the original parties; but as this clause does not state the effect of the evidence on the real consideration we thought it better, or at least a majority of the conferees against my opinion thought it best, to leave that clause in rather than endanger the passage of the bill.

Mr. SPRAGUE. [William Sprague (Whig, R) (September 12, 1830 – September 11, 1915), Rhode Island]  Mr. President, I desire in one word, in behalf of the industries, so far as I know them, of this country to enter my solemn protest against the passage of this act, a measure calculated, in my judgment, more to repudiate the national debt than any measure that has yet been enacted, and as certain to result in that direction if the people are true to themselves.  It seems, sir, that the industries of this country, crushed to the very earth in the past three years, are not crushed sufficiently, but they must have this staggering, this most outrageous blow dealt upon them.  If there is any measure calculated to prostrate whatever there is in the present profitable occupation of this country this is it.  I affirm to this Senate and to this country, and I shall be borne out in it, that there is no industry, commencing three years ago, that is at all in a profitable condition except those who are receiving to-day the pap of Government appropriations.  Why tamper with this most sacred and most delicate instrument ?  Sir, I have not words to express the feeling of outrage that is in me at this constant manipulation of the finances, first of the Government and then of the people, for what purpose ?  You have contracted your currency nearly four hundred million dollars in three years for the purpose of enhancing its value.  What has been the result of it ?  Have you enhanced the value of the nation's credit ?  Not one cent.  You have prostrated every interest and every industry in consequence of that most suicidal and most damnable policy.  I protest, therefore, in the name of the industries of this country and in their behalf, representing them as I do, and as I know they at present exist, against the additional load that will be put on them by this most unholy and most inconsiderate legislation.

Mr. HENDRICKS. [Thomas Andrews Hendricks (September 7, 1819 November 25, 1885) future Vice-President under Cleveland]  Mr. President, I do not intend again to discuss this question, but to ask of the Senate whether this body is now prepared to change the contract between the Government and its creditors as is proposed by this report ?  In my judgment the measure has not been improved by the action of the committee of conference.  By this proposition we now undertake to waive permanently the right to redeem the five-twenty bonds during the period of twenty years allowed by the original law to the discretion of the Government, and to provide that the Government shall not redeem at all unless Treasury notes are equal with gold in value.

This, sir, is now the distinct proposition; and as far as we can in the absence of a new consideration we undertake to bind the Government to a material modification of the contract to the benefit of the creditor and to the prejudice of the people.  After the contract has been made by the law and by the language of the bonds, and before the maturity of the bonds, why shall we undertake to change the nature and extent of that contract ?  Why not leave it as it stood at the time the Government made the contract ?  There were some merits in the funding bill urged by the Senator from Ohio last year and urged by the Committee on Finance in its elaborate report of December, 1867.  There was some compensation in that measure.  In that bill it was proposed as a compensation to the tax-payers that there should be a reduction of the interest, that the six per cent. bonds should fall to four and four and a half per cent., making a large saving annually to the people in interest and a very great relief to the burdened interests of the country; but, as I thought, not sufficient to justify then a change of the contract.

But now, Mr. President, abandoning the idea of compensation, it is proposed, without consideration, as far as we now can do it to change the contract and to make obligations which may be redeemed within a specified period in the legal-tender notes of the Government gold obligations.  Where is the return ?  The present proposed policy is in strange contrast with the policy that was adopted at the time this debt was contracted.  As I read to the Senate the other evening from the report of the Committee on Finance, the policy of Congress in 1862 and 1863 was to reduce the value of the paper currency issued by the Government so as that there should be an inducement on the part of the persons holding that currency to invest it in the bonds.  Depreciation was then the policy of the Government — a depreciated currency made necessary, in the language of the committee, by the fact that the bonds would not sell under the act of February 25, 1862.  The depreciated currency was the consideration the Government received for its bonds, and that depreciation was brought about upon a purpose and a policy.  To secure a sale of bonds then the currency was purposely depreciated;  but when the Government comes to assume and to provide for its payment, then the opposite policy is to be adopted and the currency is to be by special legislation appreciated, or if it cannot be appreciated, then that the bonds shall not be paid until the Government can pay in gold.  Why this reversal of policy ?  If it was right that the Government should be paid for these bonds in a currency purposely depreciated, why is there an obligation that we shall provide for an appreciation of the currency when the Government comes to redeem the bonds ?  I desire that there shall be an appreciation of the currency;  but as I said the other evening, I look to that only through a restored prosperity in the business of the country.

[Even Thaddeus Stevens finally realized (on February 20th) that the greenbacks will be intentionally over-issued nd depreciated]

I sympathize with the sentiment of the Senator from Rhode Island, [Mr. SPRAGUE.] We want stability, that business may prosper, that productions may increase, that the current of gold may settle in again to our own shores instead of running from our shores, and when we have an appreciation of the currency brought about by such influences there is no injustice done to any persons or to any interest in the country.  But when Congress by artificial means proposes to give a value to a currency simply with a view to pay a particular class of obligations that the Government owes, then, as the Senator from Rhode Island has so earnestly expressed it, there is injustice done to many of the interests of the country.  Why not leave this contract, covering such large interests, so many hundreds of millions of dollars, where it was left when it was made ?  And if the business of the country shall bring the currency up to a par value, then all will participate in the benefits of that appreciation, not the bondholder alone, but all the men of the country engaged in industrial pursuits will be blessed by that result;  but an artificial value given by legislation for the benefit of a particular class is not just to the other classes of society.  In my judgment this is a very unjust measure.  It is unjust to the people to bind the Government as far as we now can by a voluntary resolution to a mode of payment not contemplated when the contract was made.

I do not expect that any discussion of this measure will change the views of the Senate.  To my judgment the measure is not improved by the action of the committee of conference.  If possible it is made more objectionable.  Does it add anything to the obligation of the Government that we now say that we will give if possible a par value to the legal-tender notes ?  When the legal-tender notes were used in the purchase of the bonds they were not worth so much as they are now as compared with gold; and the parties who paid for the bonds in legal tenders when they were worth forty, fifty, sixty, or seventy cents on the dollar have made a large gain in the appreciation of that currency already, a profit and a speculation almost unknown in the moneyed transactions of the world.  Why, then, shall we interfere to give an artificial and stimulated value simply for the purpose of accommodating one class of business men ?  I shall be very glad if the paper currency of the country shall come to par as compared with gold.  I shall be glad if that is brought about by the influences of business, of trade, and of commerce, for then I will know that every interest of the country has participated in the advantage.  But I feel that if it be brought about for a special purpose, for the benefit of a particular class in our society, for foreign moneyed men, it is not just.

Mr. President.  I shall not continue the discussion, for I feel that the vote the other evening was so decidedly in favor of this measure that discussion is not likely to change it;  and I do not wish by anything I may say to interfere with the passage of any of the important bills, but I have felt it to be my duty to say thus much against the proposition.

Mr. Doolittle.  Mr. President, we have less than twenty-four hours to the end of the session when this report of the committee of conference comes here.  It has not been printed.  It contains new provisions which have not been discussed, and very important provisions bearing upon the subject under consideration.  I think it exceedingly unwise, under these circumstances, to attempt to press this matter to a vote in the Senate.  As all your appropriation bills are yet unsigned, have not gone to the President for examination, and some of them are not yet passed, and the President can hardly have time to read the bills that are to go before him, there can be no reasonable expectation that a measure like this, if it passes, can be examined by the President and receive his signature.  It is, therefore, a waste of the time of the Senate, in my judgment, to undertake to press this matter to a vote upon the report of the committee of conference.

Sir, it introduces new provisions, entirely new provisions, which have not been discussed in the Senate in connection with this bill, and this report has not been printed.  No Senators, except those who have been upon the committee of conference, have had a fair opportunity to examine and understand the precise bearing of this bill as it comes to us now, and for this reason it seems to me unreasonable that it should be pressed.

I shall not open the discussion of those questions which were discussed the other evening when the bill passed the Senate.  I have no desire to repeat the argument then made or discuss the questions which were then discussed before the Senate.  But here is a new bill at this late hour which, upon the first reading as it seems to me, pledges us to the redemption of all the obligations of the United States in coin as they fall due.  There is a provision that you shall not pay them before they become due unless a bond bearing a lower rate of interest can be sold at par in coin or unless the notes of the United States shall then be convertible into coin; but the first pledge, as it strikes me, pledges the good faith of the Government at once to redeem these obligations in coin, all that are due.  Are these Treasury notes due ?

Mr. Sherman.  No bonds are due and payable until 1882.

Mr. Doolittle.  But are not Treasury notes payable on demand ?

Mr. Sherman.  There are no Treasury Dotes on demand now.

Mr. DOOLITTLE.  Are not the legal tenders payable on demand ?

Mr. Sherman.  The pledge is to pay them in coin.

Mr. DOOLITTLE.  I may be mistaken, as I have not had opportunity to examine it, but as I heard the report read, it seems to me there is a provision there very much like pledging the good faith of the Government to pay those notes in coin if they are due.  They are obligations of the Government certainly.  It pledges the payment of all obligations in coin; true, it contains a proviso that you shall not pay them before they are due, unless a bond bearing a lower rate of interest shall command par in coin or unless specie payments shall have been resumed.

Mr. President, whatever may have been the purpose or the policy intended, the fact was that when we sold the bonds we depreciated the currency in order to sell them;  and now the substance of this proposition is that we shall contract the currency and appreciate the currency when we come to pay them.  We depreciate the currency to make bonds cheap when we sell them; we appreciate the currency to make bonds dear when you come to pay them.  And in whose interest is this ?  In the interest of the bondholder; in their interest when we sold our bonds, and now again to be in their interest when we come to pay them.

Mr. President, as I said the other night, Congress is no party to these bonds, although it may be there are many members of Congress who are bondholders.  It seems to me if I had $100,000 in bonds of the United States in my pocket and were called upon to vote on this question I should feel that I was voting in my interest;  I should feel that I was voting to put money in my pocket, and I do not see how any person can look upon the effect of this measure in any other light than that it is to increase the value of the five-twenty bonds.

Mr. Pomeroy.  I agree with what the Senator says, but how is it with the greenbacks ?  The Senator has some greenbacks, if he votes for this bill now he votes to make the greenback equal to a gold dollar.

Mr. Doolittle.  I hold that Congress is to act, not as a party to this contract nor as having any interest in it, but Congress is to act in the position of a judge to decide between the bondholders and the bondpayers.  between those who pay the taxes and those who receive them;  for Congress represents both and should look to the rights of both and not legislate in the interest of one at the expense of the other.

I shall not take another moment of the time of the Senate, but I hope that the majority here who control the business will not press to a vote this measure;  when, as it seems to me, it can in no human probability result in any practical legislation;  for, as I suggested, there is not time to present this bill with the appropriation bills to the President and give the President an opportunity so much as to read it, much less to form a judgment upon it and approve it.

Mr. Morrill, of Vermont.  The Senator from Wisconsin has announced, as by authority, that this measure will not receive the signature of the President.  I desire to say that it is of no sort of consequence; I do not think it will add anything to the credit of the measure either in the Senate or with the American people whether his signature is obtained to it or not.

Mr. DOOLITTLE.  The honorable Senator in stating that I have announced by authority that this bill will not receive the signature of the President is entirely mistaken.  I have not made any such announcement by authority, nor am I authorized to make it.  What I stated was that with the appropriation bills all yet behind there will be no opportunity given to the President to examine this measure to give to it his approval.

Mr. CORBETT.  It has been said that thi smeasure is in the interest of foreign bondholders.  There were two kinds of bonds in this country, Mr. President, during the rebellion.  There were the southern bonds, bonds issued by the confederate government, and those issued by the Union.  They were both pledged to be paid in gold coin of the United States, and were introduced into the foreign markets, principally at Frankfort.  The confederate bonds were being sold under a pledge to be paid in coin.  Our agents went to Frankfort and pledged the faith of our Government that our bonds should be paid in coin.  Those who purchased took the chances.  The friends of the Union took the bonds of the United States Government.  The question is whether we shall stand by those people and pay them as we agreed to pay.  Those who took the chances of the confederate bonds bought bonds which are worth nothing.  The friends of the Union will be sustained; the friends of the rebel government will not be sustained.  That is the question.

Mr. Morton.  Mr. President, I was a member of the committee of conference, but I could not sign this report for the reason that it would commit me to a construction of the law and the contract in regard to the five-twenty bonds from which I have always dissented.  I believe that under the law the Government had as much right to pay those bonds in legal-tender notes as it has to pay any other debt, and that this declaration is substantially a change of the contract, and it is committing the Government to a payment in coin which is not required by the original contract.  Therefore I cannot and will not vote for it.

But, Mr. President, this report contains one important statement which I would be very glad to vote for if I could do so without voting for the rest of it.  It is, "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." This I regard as a very important statement upon the part of the conference committee.  It prescribes the way by which the Government shall return to specie payments, and the Government solemnly pledges its faith that it will make provision at the earliest practicable period for the redemption of the greenback currency in coin.  The Senator from Vermont a little while ago asked a question of the chairman of the committee whether this would interfere with the funding of these notes.  I say unquestionably it will.  If these notes can be funded and disposed of in that way after the passage of this bill it would be a direct violation of the solemn pledge that is here given.  What is the pledge that is given ?  It is a pledge given to the whole country that the Government will make provision at the earliest practicable moment not to fund these notes, not to return to the old policy of contraction, which has been condemned most solemnly by Congress, but that it will make provision to redeem these notes in coin.  If this pledge is treated as a nullity before it has even been passed we need not place much importance upon it hereafter.

But, sir, here is the faith of the Government pledged to take immediate steps at the earliest practicable moment to redeem these notes in coin.  That is a principle that I have had much at heart, and I shall be glad to see it incorporated in this report, although it contains other things that I cannot agree to.  If this part of the report shall be carried out in good faith it will go far to relieve the evil consequences of the rest of it; but if it is to be trampled upon from the beginning, to be treated as a nullity before it is passed, then, of course, it amounts to nothing; if is a mere delusion.  The chairman of the committee says that it would not be a violation if the holders of the notes consent to the funding.  That is not the question.  The holders of the bonds are not alone interested.  It is the policy of the country that we are talking about.  Of course, if we allow men to fund these notes in ten-forty bonds or five-twenty bonds they will do it.  We can make it their interest to do so, so that the last one of them will be funded, resulting in contraction, resulting in almost the destruction of the interests of this country. But let it be understood that this commits the Government to a different policy, not to return to specie payments by funding the notes, not to return to specie payments by contraction, but to return to specie payments by preparing to redeem these notes in coin according to the contract.  Sir, that is the starting point, and this pledge, if carried out in good faith, will do more to strengthen the credit of the Government, in the language of the original title of this bill, than all the rest of it.  That is valuable.  I regard the rest of it as pernicious and false in its principle as in the fact.  I should be glad to vote for that if I could take it by itself;  but as I cannot I must vote against the entire report, because it commits me to a construction of the law that I believe to be violent, that cannot be sustained by the ordinary rules of construction.  It is in substance making a new contract, for which there is no necessity and, in my humble judgment, there is no excuse.

Mr. Williams.  Mr. President, notwithstanding this bill has been denounced as a piece of damnable legislation I suppose I am particularly responsible for this report, for it was only by agreeing with one member of the committee as to one part and with another member as to another part of the bill that we were able to agree at all and make this report.  In my judgment it is a necessary and desirable piece of legislation; and if I have not misjudged the expression of public opinion it is a piece of legislation that is demanded by the people of this country, and they would be grievously disappointed if this Congress should adjourn without some such legislation; and I was unwilling because the other members of the committee could not agree with me as to details to defeat this great and salutary measure.

Now, it is said by the Senator from Indiana [Mr. Morton] — and his objection goes upon that ground — that it changes the contract the Government made with the bondholder at the time the bonds were issued.  I have misunderstood the honorable Senator heretofore if his position at this time is altogether correct on that subject.  I have understood the Senator to hold to the doctrine that it was the duty of the Government to resume specie payments and make the Treasury notes equal in value to gold before these bonds should be paid, because in his judgment the spirit of the contract, at any rate required the resumption of specie payments before the bonds could be rightfully paid.

Now, the simple question is as to this part of the bill, did the people of the country expect when these bonds were issued, did those who supported the Government during the rebellion and the men who gave their money to the Government and took these bonds — did they expect that they would be paid in depreciated paper ?  Was it the general expectation of the country that these bonds would be canceled by promises of the Government depreciated in value, or was it the general understanding that they would be paid in gold or its equivalent ?  Suppose you admit, for the sake of the argument, that they are payable in Treasury notes, then the other conclusion necessarily follows that these notes, when payment was to be made, were to be worth their face in gold.  That was the general opinion on the subject at the time the bonds were issued, and it is for the purpose of carrying out that understanding in good faith that this bill is enacted, and I do not understand that in any respect it changes the nature or even the form of the contract.  It is simply a pledge on the part of the Government that these bonds when they are paid shall be paid in gold or its equivalent, and that pledge is accompanied by another that the Treasury notes shall also be paid in gold; so that all the obligations of the Government, without any distinction, shall be so paid.  No preference is given to the bondholders by this bill, none given to those who hold Treasury notes of the Government; but here is a solemn pledge of this nation made at this time, to be noticed by the whole world, that the Government of the United States will redeem all its promises without distinction in the money that is recognized as such by the world.  This is the promise that is made, and this is all there is of it.

Now, sir, as to the second section, it is not precisely in the form that I should desire to have it, but it was impossible to agree unless this second section was incorporated in the report as it was adopted by the House; and as it is a piece of legislation which contains no pledge or promise whatever to any body it may if it is found to be bad in operation, be changed, by subsequent legislation.  If this provision as to gold contracts is not satisfactory to the people, if it is found to be defective in any way, the section does not estop Congress at its next session, or at any future time, from passing a law that will change it and make it conform to the necessities and circumstances of the country.

I do not wish to consume the valuable time of the Senate, but I wish simply to say, as a member of the committee making this report, that it seems to me that in its adoption we accomplish a great good, we vindicate the honor and integrity of the country, and we declare that the people, whoever they may be or wherever they may be, who talk of repudiating the public debt of these United States and bringing everlasting shame and dishonor upon the faith of this nation, find no sympathy in this Congress, but that we will stand by the faith and the honor of the nation.

Mr. COLE.  [Cornelius Cole (1822-1924), California, (R)]  Mr. President, I desire in the fewest possible words to express my disapproval of the report of the conference committee and of the principles contained in the bill as it has been amended.  My friend, the Senator from Oregon, expressed the real object of the bill — that it was for the benefit of the foreign bondholders, the bankers of Europe.

Mr. Williams.  I made no such expression, if the Senator attributes any such remark to me.

Mr. COLE.  I refer to the Senator from Oregon nearest me [Mr. Corbett.]

Mr. Corbett.  I stated that it was alleged that it was for the benefit of them.

Mr. COLE.  I understand from the Senator that such was the object, to insure them payment in coin for that which cost them greenbacks at a very low figure.  It seems I did not misunderstand the Senator at all.  One provision incorporated in the bill by the conference committee is this:

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.

I should like to ask the Senator from Oregon farthest from me [Mr. Williams] or the chairman of the Finance Committee when they expect that period will arrive after this sort of legislation ?  If we declare our debt to be all payable in coin, making it instead of a debt of $2,500,000,000, equivalent to some $3,300,000,000, as we ordinarily estimate money, when under such legislation do they expect this solemn pledge that they are now about to make will be redeemed ?  Not in our time, I fear.

Mr. Williams.  I should like to ask the honorable Senator from the State of California, the land of gold, where they make and pay all their contracts in gold, if he is in favor of paying the public debt of the United States in its depreciated promises or whether he is in favor of paying the debt in money ?

Mr. COLE.  I can answer the gentleman in a moment.  I am in favor of paying the debt of the United States according to the contract under which it was incurred, nothing more and nothing less.  If when this debt falls due, the United States are paying their debts in coin, their current and ordinary obligations, then these bonds will be paid in coin; but if they fall due before that time, let me ask the Senator from Oregon if he would obtain gold by the sale of other bonds for the purpose of paying these, and thus increase the bonded indebtedness of the country ? When, under such legislation, does he expect that the country will get out of its bonded indebtedness? It certainly will not be during this century or the next.

Mr. President, this is entitled "A bill to strengthen the public credit."  It will, in my judgment, be a step directly against the public credit, and have a tendency to destroy the public credit.  So far as the second section is concerned, which relates to contracts made payable in coin, it is intended to restrict, partially nullify, a decision of the Supreme Court lately made upon that subject.  That decision authorizes the enforcement of contracts made specifically payable in coin.  This section of the bill is intended, in my judgment, to restrict the operation of that decision of the Supreme Court, and I am equally opposed to that as to the first section.

Mr. NORTON.   [Daniel Sheldon Norton (April 12, 1829 — July 13, 1870), (R), Minnesota]  Mr. President; I presume I am as reluctant as any one to consume the valuable time of the Senate, but I think that the remaining twenty or twenty-four hours of this Congress cannot be devoted more profitably to the interests of the country than in the discussion of the report of this committee of conference.  It would be far better for the people of this country, for the men who pay the expenses and taxes of the Government, if the residue of the time of this session of Congress were spent in the discussion of this report.  It would be better that the appropriation bills yet to be considered should all fail than that a bill which commits the Congress and the Government of the United States, as this does, to the bondholders, that commits the labor of the country into the hands of the capital of the country; as this does, should become a law.

In my judgment this controversy which has been opened for a year or two years between the capital and the holders of the public debt of the country on the one side and the taxpayers of the country on the other is now coming to a point.  On the 16th day of December last [1868] the chairman of the Committee on Finance brought into the Senate a proposition in the form of a resolution which committed the Government to the payment in coin of these five-twenty bonds, or practically had that effect.  That resolution, as proposed, I will read:

That neither public policy nor the good faith of the nation will allow the redemption of the five-twenty bonds until the United States shall perform its primary duty of paying its notes in coin or making them equivalent thereto; and measures should be adopted by Congress to secure the resumption of specie payments at as early a period as practicable.

Mr. Sherman.  I desire to say to my friend from Minnesota that that is the exact substance, only in condensed form, of the present proposition.

Mr. Norton.   I am aware of the fact that that is the substance of this proposition.  On the 16th day of December last the chairman of the Committee on Finance brought that resolution into this body, and from that day to this it has never been moved, nor has this body been asked to consider it, and why ? Because it was an evasion of the doctrines that the chairman of the Committee on Finance held in regard to the payment of the five-twenties; it was an evasion of the position that was claimed during the canvass last fall as to the legitimate construction of the Chicago platform, and all of it tending to the point that the public debt should either be made permanent or should not be paid until it was paid in coin.

Now, the proposition that is reported by this committee is substantially the resolution introduced in December last, and what is it ?

That none of said interest-bearing obligations not already due shall be redeemed or paid before maturity, unless at such time United States notes shall he converted into coin at the option of the holder.

And what does that mean ?  It means that the Congress of the United States pledges the faith of the Government to the men who hold the bonds that it will not pay one of these five-twenty bonds until the greenbacks, the lawful money in which the bonds may now be paid, shall be paid in coin;  and, as the Senator from California suggested, how long will that be?  How long will it be, when the indebtedness of the Government is raised from $2,500,000,000 to $3,300,000,000, until they pay these bonds in coin ?

Sir, the effect of it is to make the debt permanent and to fix upon this country the permanency of the public debt which the holders of these bonds say is a public blessing; or the other alternative is, "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."  That is the funding proposition over again.  Either alternative brings permanency of the public debt.  It will become permanent if we increase the debt to the amount that it will be increased by undertaking to pay it in coin or if we fund it at a lower rate of interest.  The chairman of the Committee on Finance says it is at the option of the bondholders; if they do not care to fund let them hold the bonds forever, or if they choose let them accept a new bond at a lower rate of interest.

The objection that I have to this funding proposition is that the bondholders will accept it.  They will agree to take a bond running forty or fifty years at a lower rate of interest rather than to have one that is now due and may be paid at the pleasure of the Government or that runs a shorter period.  I do not say that it looks anything like repudiation if the bondholders agree to take it;  but I object in the name of the people who pay the taxes to this proposition that the bondholders will accept it, and thus for forty or fifty years or whatever time you fix the debt becomes permanent.  Sir, what does a permanent public debt mean ?  It means nothing but taxation;  it means a permanent burden upon the people of the country; that no matter what may be their resources or their ability to discharge the debt they are to be at the mercy of the holders of the bonds, and they cannot pay a dollar of it until the men who hold the bonds are willing to receive it.  Why, sir, under the funding bill that passed at the last session, if it were a law, we might be able to discharge every dollar of that debt, and yet we could not pay a cent of it for forty long years, and for that length of time the people would have to bear the burden of that debt imposed upon I them.

My objection to this proposition is that it looks to and inevitably brings about a permanency of the public debt.  What is the interest of the Government in regard to the public debt ?  It is that it should be in the control of the Government.  The Government, acting for and representing the people, should have the debt in their control, and when they were able to pay it they should be permitted to do it.  The interest of the bondholders is that it should be in their control, and that the Government should not pay any of it until they are willing to receive it, and in the mean time the people bear the burdens in the shape of taxation.

Then this proposition brings to an actual issue, as I think, the interest of the people who pay the taxes and the interest, of the men who hold the public debt and pay comparatively none of the taxes;  and because I see in it a question between the men who hold the debt and the people who pay the taxes, and because I believe that Congress should look to the interests of the people quite as much as to the interests of the bondholders, I believe the residue of this session of Congress cannot be more profitably spent than in discussing this very measure.  It would be far better for the interests of the country that all the appropriation bills should fail than that this proposition should pass.  The Senator from Oregon talked about this Congress pledging the faith of the nation and that nothing of repudiation should be heard of.  Sir, when this Congress pledges the faith of the nation to pay the five-twenties in coin they repudiate the interests of the people and impose upon them burdens that they ought not to be required to bear.

I know it is said that the men who took these bonds under the requirements of the Government for money deserve some credit; that they were as meritorious as were those who went into the armies and fought the battles of the Government during the recent war.  They may have some merit, but, sir, their merit was the merit of doing that which it was their interest to do.  As has been said, the currency of the country was depreciated in order to make it more to their interest to take these bonds, and now when they come to be paid you appreciate it and make the payment that they receive larger.  I think the whole policy of the Government on that subject was wrong.  Sir, I believe if there was any interest in this country that was especially interested in the successful prosecution of the war and the suppression of the rebellion it was the capital of the country.  If there was any class of men who ought to feel more interest in the stake than another it was the capitalists of the country.  If it had been possible the Government should have compelled the money of the country to contribute its share and its proportion of the burdens of the war, just as it compelled the laboring classes to contribute their services and their lives in its defense.  I do not see, therefore, that the merit of this class is so great in that regard.

I believe I have said all that I care to say on this subject.  My desire was to call the attention of the Senate and the country to the fact that the issue is now made between the holders of the Government debt and the people who pay the taxes.  The bondholders, looking after their own interest, want some legislation that will give permanency to the public debt;  while the interest of the people is that the debt should be kept so far as it can within the control of the Government, that they may pay it just as fast as they are able to do so.  Between these two what should Congress do ?  Between the laborers and the tax-payers of the country on the one hand and the bondholders on the other what should Congress do ?  Certainly, in view of their professions of patriotism and interest in the prosperity and welfare and faith and credit of the Government, they ought to have some regard for the men who bear the burden, at least as much as they affect to have for those who hold the obligations of the Government.

Mr. Thayer.[John Milton Thayer (January 24, 1820 – March 19, 1906), Nebraska]  Mr. President, I do not rise to discuss this report of the committee, but simply to appeal to the Senate to let us have a vote or to lay aside the subject.  We are in the waning hours of the session with two more appropriation bills undisposed of; and yet we discuss these questions hour after hour.  Do Senators suppose that they can influence the minds of other Senators now and make votes for or against their peculiar views ?  I do not think they can;  and I appeal again to the Senate to let us vote on this subject or lay it aside and dispose of the necessary legislation of the session.

Mr. SPRAGUE.  It was not, nor is it now, my intention to discuss the details of this bill.  My protest in the beginning was launched against this, that its effect was to enhance the value of capital in this country and the cost of capital to the people of this country when, as now, it is so high that there is not an industry within the reach of my vision that can afford to employ it.

Mr. BUCKALEW.  I have but a remark to make in consequence of what has been said.  I remember at the last session of Congress, at the closing hours of the session, the Senator from Ohio brought in a report from a committee of conference, very much as he does now, upon the subject of the public debt.  It was a proposition to renew the five-twenty bonds and make them permanent; to make them a thirty or forty years' loan at a reduced rate of interest, and there were some other conditions, and we were hurried to a vote without discussion.  Then the same reason prevailed which is now urged upon us for an immediate decision of this report.  We were told that there was not time to examine the subject; there was not time for debate.  That report was adopted.  So far as Congress was concerned the forms of enacting it into a law were passed through, but the bill was not signed by the President and no result was produced.

Now, sir, observe the spectacle presented.  Although the bill was passed through in that manner without debate in the closing hours of the session, under the allegation that it was important to the public interests that such a measure should be enacted here in this new session of Congress, commencing in December last, now ending in March, that measure has not been renewed, it has not received the approval of Congress at this session, and we are to adjourn without having placed upon the statute-book any such measure, without having even gone through the forms of passing it through the two Houses of Congress.  This may admonish us of the impropriety of pressing this measure now reported by the committee of conference through the Senate without consideration, without debate.

The second branch of the bill, as reported back to us in relation to coin contracts, we all understand is unnecessary.  We all understand that the Supreme Court has made a decision recently that obviates all necessity of providing by law that coin contracts shall be enforced.  It is unnecessary to invoke the law-making power now to render such contracts valid.  But, sir, not only is this part of the measure unnecessary, in my opinion it is evil and pernicious so far as it has any effect.  It makes provisions which will complicate this question of coin contracts.  It will render it more difficult to enforce those which should be enforced.  It will exclude from enforcement, if it have any effect at all, certain contracts which without its enactment would be enforced by the courts.  In other words, it will complicate this question of coin contracts, which can be acted upon, which can be carried into operation much better by the courts if left alone.

The other measure, pledging the faith of the Government to pay the public debt in a certain manner, both the bonded debt and the greenbacks, in my judgment, for the reasons which have already been stated, ought not to be approved.  As a matter of course it is impossible for gentlemen rising under the circumstances here to discuss the report of the committee of conference intelligently;  at all events, to discuss it fully.  We have not an opportunity of examining this measure.  It is not even in print.  We must take a glance at it and form our conclusions as we best can.

There is another consideration.  A member of the committee of conference has informed us that this report did not receive the concurrence of all the members of the committee of conference representing the two Houses, and that the result was arrived at by the course which he thought proper to pursue, voting with one class of members upon one question and with another class upon other questions;  so that a majority could thus be secured for several propositions without obtaining for the whole of them the assent of the same minds.  This shows the impropriety of legislating in this manner, legislating through the action of a committee of conference.  Here we must take what the committee report to us in gross.  It is impossible to discriminate between the different matters contained in this report and select those which we may approve and to reject those which we disapprove.  We must take the report entire;  and it is a report sent to us from a committee of conference which was not itself in point of fact agreed upon the several matters which it contains.  However, I will not delay the Senate by further observations on this subject.

Mr. BAYARD.  This bill reminds me of Hamlet's comment upon the professions of the player queen when she was about to poison her husband:

"The lady doth protest too much, methinks."

The object of the bill is stated to be, in the title, "to strengthen the public credit, and in relation to contracts in coin."  The first section is merely declaratory law which cannot bind any subsequent Congress in its view of the contract.  It holds out a false expectation that must depend on the good faith of the country, irrespective of any such legislation as this;  and it provides that the public debt is not to be paid until the irredeemable paper money of the country is redeemable in coin.

The second section, on the contrary, tends to retard a return to specie payments.  It tends to encourage bad faith in contracts made payable in gold between individuals, and of course the necessary effect of that must be to retard the return to specie payments.  The mode in which to return to a normal currency in this country, if you mean to do it with the least possible pressure, is by encouraging contracts of that kind in all the higher branches of trade until they gradually descend into all the business of the community.  I, for myself, consider that the second section of the bill, independent of the first altogether, which I look upon as impracticable and unwise legislation, is quite sufficient to condemn it, because it is intended to destroy the legal effect and import of the decision of your own Supreme Court, and to prevent men using the normal currency of this country for the purposes of their contracts by imposing a mode of inquiry into the character of the contract which will be utterly destructive of all confidence in the commercial community.  I trust, therefore, that the report will not be adopted, and I shall ask for the yeas and nays on its adoption.


The yeas and nays were ordered.

The Secretary proceeded to call the roll.

Mr. WILSON, (after voting in the affirmative.) I paired off with Mr. Henderson on this subject, and as I do not see him here I withdraw my vote.


The result was announced — yeas 31, nays 24; as follows:

YEAS — Messrs. Abbott, Anthony, Cameron, Cattell, Chandler, Conkling, Conness, Corbett, Cragin, Dixon, Drake, Edmunds, Ferry, Fessenden, Frelinghuysen, Harris, Howard, Morgan, Morrill of Maine, Morrill of Vermont, Nye, Patterson of New Hampshire, Ramsey, Sherman, Stewart, Sumner, Trumbull, Van Winkle, Warner, Willey, and Williams — 31.


NAYS — Messrs. Bayard, Buckalew, Cole, Davis, Doolittle, Fowler, Hendricks, Kellog, McCrecry, McDonald, Morton, Norton, Osborn, Patterson of Tennessee, Robertson, Ross, Sawyer, Spencer, Sprague, Thayer, Tipton, Vickers, Wade, and Whyte — 24.


ABSENT — Messrs. Grimes, Harlan, Henderson, Howe, Pomeroy, Pool, Rice, Saulsbury, Welch, Wilson, and Yates — 11.


So the report was concurred in.



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