40th Congress, 2d Session
The Currency -- Debt -- Repayment

Speech of Hon. Samuel Fenton Cary, of Ohio
in the House of Representatives
Tuesday, January 7, 1868.

The House resolved itself into the Committee of the Whole on the state of the Union, (Mr. Dawes in the chair,) and resumed the consideration of the—


The CHAIRMAN.  The gentleman from Massachusetts [Mr. Butler] is entitled to the floor.

Mr. BUTLER.  I will yield my time to the gentleman from Ohio, [Mr. Cary.]

Mr. Cary:
---[Samuel Fenton Cary (February 18, 1814 - September 29, 1900) no surprise that he was a one-term Representative;  in 1876 he was Peter Cooper's Greenback Party vice-presidential candidate;  they received 83,726 votes]
      Mr. Chairman, whatever diversity of sentiment exists in this House in regard to the public debt, the proper form and manner of its payment, we are united in the opinion that this debt must be paid to the uttermost farthing.  Come what may, the nation’s honor must in no way be compromised or impeached.  We must not do or permit anything to be done which will impair confidence in the integrity of our national character.  Public faith is the basis of all private faith, and national repudiation would result in universal demoralization.  It is most unwise for any part of the community, and especially that portion understood to possess the Government bonds, to charge the intention of repudiation upon those who differ from them as to the legal, equitable, and just mode of payment.  The "mad dog cry" of repudiation should not deter any from carefully considering and discussing this subject.  Persons with whom the term is so familiar should know that it requires no act or declaration of Congress to bring about such a catastrophe;  that the whole matter would be resolved by the discovery that the resources of the country would not pay the interest, much less the principal, of the public debt in addition to the expenses of the Government, and the further discovery that the people would not impose upon themselves intolerable burdens to that end.  The national debt is great and its burden very heavy, and the man who, by an unjust and forced construction of the law against the interests of the people, seeks to make the debt greater and the burden heavier is the pioneer of repudiation.  They who claim that the principal of the $2,000,000,000 of the five-twenty bonds, payable in lawful money, are redeemable only in coin are doing more to debauch the morals of the country and blunt the sensibility to national honor than all other influences combined.  Justice is the only sure foundation of public faith;  and when the sense of justice is outraged the sense of obligation toward all by whom that outrage is attempted is weakened, if not destroyed.  This is a principle of universal application, and we caution the bond-holders to beware lest the overburdened tax-payers shall have their sense of obligation so weakened by unreasonable exactions that they will entirely repudiate the debt which they now acknowledge to be just.  Let any candid man take a six per cent. five-twenty bond and a five per cent. ten-forty bond, examine them and the laws authorizing their issue, and say, if he can, whether the principal of both is payable in the same manner.  It is not possible for him to avoid admitting that there is a difference.  What is the difference ?  The law authorizing the five per cents. expressly provides for the payment of the principal and interest in coin, while the law authorizing the six per cents. (five-twenties) declares that the interest shall be paid in coin.  If the principal as well as the interest of the latter was payable in coin, why not either so have declared or say nothing about how the interest should be paid !  When he turns to the law providing for the issue of legal-tender notes (and the fact is published on the back of every note issued) he finds that they are receivable as money for all debts, public and private, except interest on the public debt;  that is to say, for all debts, public as well as private, except that which Congress had declared specifically should be paid in gold;  and no such declaration has been made about any debt of the United States, except the interest on the bonded debt and the principal and interest of the five per cent. (ten-forty) bonds.

When these laws have been carefully examined let the honest searcher after truth get an old advertisement by the agents of the Treasury of the Government loans, in which he will find that capitalists are urged to invest in the five per cents., (ten-forties,) because both principal and interest were payable in gold;  and then let him forever after hold his peace and no longer gabble over the dicta of any man momentarily raised over the heads of the people on the pedestal of office.  Let him not exchange his common sense for the declarations of distinguished gentlemen about the "general understanding" that the principal as well as the interest of the five-twenties was to be paid in coin when it is manifest that the law never could have been so understood by anyone who had any understanding to exercise.  And let him not act in such bad faith to the holders of the five per cents., who were willing to loan their money to the Government at one per cent. less rate of interest for the very reason that the principal as well as the interest was payable in gold.  I say in such bad faith, for these holders of the six per cents. ought to know that in setting up this claim they are placing in jeopardy with their own property the five per cents., about whose payment in gold there is no dispute.  Yes, Mr. Chairman, they are the repudiators, and not those who seek to lighten the burdens of the people by paying the debt in legal tenders or in any other method consistent with the law creating such debt.  I am aware that Mr. Chase, then Secretary of the Treasury, did say that it was fair to conclude that these bonds would be paid in coin, as it had always been the practice of the Government thus to pay its funded debt.  The very fact that he was consulted about the construction of the law and the practice of the Government is an admission that the law and the bonds themselves did not provide for coin payment.

And it must further be borne in mind that this letter from Secretary Chase was in reply to an inquiry from Frankfort in 1864, and long after every one of the bonds in question had been negotiated.  This should forever put to silence all the clamor about the liability of the Government for the representations of the Secretary of the Treasury, as these opinions were not an inducement to capitalists to purchase bonds.  They had already made their investments, and were only considering the magnitude of their speculation.

It was true, as the Secretary said, that it had been the uniform practice of the Government to pay its funded debt in coin, for the best of all reasons, that until the passage of the legal-tender act we never had anything but coin for the payment of any debt, public or private.  Doubtless those who invested in these five-twenty bonds supposed that specie payment would be resumed before the bonds were redeemable, and that if there should still be legal-tender notes in circulation they would be of equal commercial value with gold.  This belief, and not the law and the bond, was the ground of their expectation of coin payment.  This expectation has not been realized, and now the able representatives of these bondholders talk eloquently about bad faith, depreciated currency, irredeemable paper money, and repudiation of our solemn obligations.  Greenbacks are yet lawful money, and through the agency of gold gamblers coin yet commands a premium.

Will the people, the tax-payers, the men of bone and muscle and enterprise, who must, by their toil, pay this great national debt, consent to a very large practical increase of it to relieve the disappointment of bond-holders or to make good the opinions of Government agents who were not authorized by law to construe the acts of Congress ?  The humblest citizen has the same right as the bond-holder, or even the Secretary of the Treasury, to put his construction on the laws of Congress, and he is far better situated to pass a patriotic judgment.  I am sorry that the opinions generally entertained in 1862 about the speedy termination of the war and its comparatively trifling cost proved so erroneous, yet, as representatives of the people, we must be just before we are generous.  Able and distinguished lawyers in both branches of Congress have elaborated the law of principal and agent and the liability of the principal for the acts of his agent.  "Facit per alium facit per se," (he who acts through another acts for himself.)  They come to the legal conclusion that the Government is bound by the dicta of the Secretary of the Treasury and Jay Cooke & Co.  As I understand the law of principal and agent the latter can only bind the former while acting in the legitimate sphere of his authority.  With all the dangerous powers with which Congress has invested the Secretary of the Treasury I deny that he has been clothed with judicial power to pass upon the laws enacted here;  and we are no more bound by his decisions out of the scope of his authority than by those of a justice of the peace in Walrussia.  It is a very poor plea, and one that will be overruled by the people, that capitalists, who of all men are least likely to be imposed upon, were misled by agents and brokers in the service of the Government, and especially by one who, by his different statements, proved him to be a mere Peter Funk working for his own selfish purposes.

I had been led to believe, Mr. Chairman, (and have often expressed publicly my acknowledgments,) that the capitalists who came forward in the hour of our extremity and took the bonds of the Government were influenced by patriotic motives;  that they were ready to offer their accumulated treasures upon the altar of their country with a feeling akin to that which moved the poor widows of the land to bring their sons, their jewels, to fill up the decimated ranks of the Army.

But we are now told that capitalists would not touch a Government bond until they had the assurance of the Secretary of the Treasury and Jay Cooke, his agent, that if they would lend their greenbacks, then worth fifty cents on a dollar, (in gold,) they should receive bonds which would pay twelve per cent. interest on their coin investment and twice their then gold value when redeemed.  This speaks well for their financial shrewdness, but dissipates all our preconceived notions of their patriotism.  While our poor soldiers were straggling and suffering to save the nation’s life that freedom might be established and extended these money kings were emptying their purses that they might replenish them twofold.  They recognized the truth of the Bible maxim "there is that giveth and yet increaseth."  Let me hasten to do justice to all those who disclaim the demand for gold payment of their bonds, for to the credit of poor human nature be it remembered there are bond-holders who agree with us as to the unrighteousness of the claim.

But an honorable gentleman, who pleads the bond-holders’ cause with zeal and great ability, maintains that only the $150,000,000 of legal tenders can be applied in any event to the redemption of the $500,000,000 of bonds provided for in the same act;  that it would certainly be bad faith to the holders of these bonds to require them to receive a greater amount of Treasury notes than was specified in the law, and that the remaining $350,000,000 must be paid in gold.

The gentleman will admit that those legal tenders were available for the payment of all other forms of indebtedness, whether State, municipal, or individual, no matter when incurred or in what made payable by the terms of the contract.  A State, city, county, or railroad bond created ten or twenty years ago, when coin was the only legal tender known, can now be fully paid with greenbacks.  A promissory note given before the passage of the legal-tender act, although made payable in gold by its terms, can be liquidated with these notes however far below the price of gold.  Our courts have thus uniformly decided.

I believe that most of the States have availed themselves of these legal tenders to reduce or pay off their old funded debt.  An honorable Senator from my own State has characterized this proposition as "a Utopian, demagogical, mean, dirty, nasty scheme;  an act of repudiation which would dishonor the American nation more than the success of the rebellion itself."  Let me call the attention of the committee to a fact or two in our financial history which ought to mitigate the severity of the censure upon us, or at least influence distinguished Senators and Representatives to rebuke us with great humility.  In 1861, when the Government needed money, patriotic citizens came forward with their gold and loaned it to the Government, taking its obligations, which were made receivable for customs duties and made payable in two years after date with six per cent. interest.  Before the maturity of these obligations the legal-tender act was passed and although they were bought at par wit h gold the holders were compelled to receive greenbacks in payment, worth only forty cents on the dollar in gold, and these obligations were refused in payment of customs duties.

A patriotic neighbor of mine (a Democrat, too,) had by his honest industry accumulated $8,000 in gold which he thus loaned to the Government.  At the maturity of his Government paper if he had received payment in gold he could have purchased $20,000 of these five twenties for his $8,000.  But he was required to receive greenbacks, his whole payment amounting only to $3,200 in coin.  This is a specimen of the financial morality which was justified by those who characterize us as repudiators for proposing to pay bonds purchased with legal tenders in the same coin.  If this is bad faith in what language shall we describe their action ?  With such examples before us what marvel is it that men less exalted should have their sense of honor blunted ?  They paid gold obligations in depreciated currency, while we only propose to pay currency obligations in greatly appreciated currency.  I appeal for justification of my course to my constituents.

If the present Congress shall authorize (and I hope it will) the issue of $515,000,000 of Treasury certificates, receivable at par for taxes and Government dues, and made a lawful tender, and issue them for the express purpose of redeeming that amount of bonds, now redeemable, or any others in the future, not payable in gold, it will certainly be no greater breach of faith, or to any greater extent impair the obligation of contracts than what has already been done.  I commend and defend the action of a former Congress in declaring "greenbacks" money, and in making them a legal tender for the payment of all debts, public and private.  The policy, justice, and necessity of the measure were then conceded.  Congress has the same right to issue a thousand, fifteen hundred, or two thousand million legal tenders as it had to issue four hundred million.  To say it has no such right now is to deny it then.  But our bond-holding friends tell us we were then at war, and it was justifiable as a war measure !  Granted;  but what made it then justifiable ?  The exigency of the times, the imperative necessities of the Government.  Is not the Government, therefore, justified in seeking the same remedy when its exigencies and necessities demand ?  Nay, is it not an imperative duty to apply a thoroughly-tested and most efficacious prescription ?

There is no bond-holder so obtuse as not to understand that if there was any value in the paper he exchanged for his bonds it was given it by act of Congress, and that Congress can now just as rightfully and lawfully authorize whatever amount of additional legal tenders it believes the good of the country requires.  Believing, as I do, that the emergencies of the hour demand a repetition of this action I am ready to defend the justice, equity, and policy of a new issue of legal tenders.

Instead of the present form of promises to pay money I would make them Treasury certificates, receivable in payment of all sums due to the United States except customs duties, and a legal tender in payment of debts except when by special contract payment is due in coin.  I would go further, and declare that from thenceforth they should be deemed and held to be the lawful money of the United States until every currency bond had been paid or funded in other bonds at a lower rate of interest and subject to taxation as other property.  "Legal tenders" are the only paper money in which I have the slightest confidence.  They are bills of credit issued on the faith of the nation.  Banking has been very properly and tersely defined to be "borrowing money without interest and without security and lending money at a high rate of interest and on undoubted security."  Legal tenders, like bank notes, are a loan from the people without interest;  but it is a loan to the people.  They have the whole people with the entire property of the nation as security.

Some gentlemen would have us believe that the general stagnation of business, the derangement of commerce, and the high price of the necessaries of life, placing them beyond the purchasing power of the masses, were all attributable to a redundancy of currency.  By their mode of reasoning the way out of this labyrinth of difficulties is to get back as soon as possible to a specie standard, and to reach that point by reducing the volume of the circulating medium.

With becoming modesty we would suggest that the nation is suffering from a contraction of the circulation, from enormous taxation, an internal revenue system which is a nursery for all kinds of roguery and a nightmare upon all industrial pursuits.  This revenue system is so adjusted that laborers, the wealth-producing classes of society, are compelled to pay an unjust proportion of taxes, while Government bond-holders and all who live upon interest and rents are to a great extent relieved from this burden.

Retired capitalists, by their representatives, would have the people believe that a further increase of the currency would be disastrous.  It does not require a very thorough knowledge of finance to understand that the interest of the moneyed aristocracy lies in the direction of contraction -- not a contraction of their bonds, but of the people’s means of paying them.  If the volume of currency is reduced their securities appreciate, while with their incomes they can purchase a much larger amount of labor and its products.  On the other hand, while the price of labor and production is diminished one half, the taxes remain the same as before, and as a necessary consequence the burdens upon the sons of toil are doubled.  The result is a system of vassalage for the producers of of wealth scarcely less intolerable than slavery itself.  If, with the diminished wages of labor, the debt could be reduced in proportion, no injustice would be done the tax-payer.  If our interest-bearing debt was $2,000,000,000, and the difference between legal tenders and gold was forty per cent., and with the reduction of the currency forty per cent. you diminish the debt to $1,200,000,000, (or forty per cent.,) no injustice would be done.  The proposition is, however, in effect to make the debt $2,800,000,000, and diminish in the same proportion the people’s ability to pay it.  You double the creditor’s claim while you diminish the debtor’s means of payment one half, increasing the value of the rich man’s dollar and making the poor man’s labor less valuable.

This enormous debt was incurred upon a paper coinage standard, and it must and will be paid in the same coin in which it was contracted;  and this conforms in all respects to the terms of the original contract.  This principle being recognized and affirmed by us, and the revenue laws being revised and so adjusted that capital and labor shall pay each its fair proportion of taxes, and you will hear no murmurings or complainings by a loyal people of the weight of the load they bear.  Great as have been the sacrifices, the gains are greater than the losses, and the regeneration of the Republic is worth all it has cost in treasure and in blood.

When the interest-bearing debt has been reduced, the people relieved of unequal taxation, and the whole country brought into a normal condition, we may with propriety and fairness propose a reduction in the volume of the currency.  The opposite course would be the reenactment of the law of Pharaoh requiring the children of Israel to make "the full tale of brick without straw."

We have been retiring the greenbacks with the money received from taxation instead of reducing the interest-bearing indebtedness, with the delusive expectation that this policy would bring us to a gold standard.  We say delusive, for the historical fact is that with all the contraction gold has steadily advanced in the temples of the money-changers -- the gold gambling dens of Wall street.  But it will be said that "the contraction of four millions per month could have no sensible effect either upon the gold market or the general business of the country."  Has that been the extent of the contraction ?  If I can read and understand figures, there has been a much larger reduction of the circulating medium, and one large enough to account in some measure for the general prostration of business and the paralysis of the industrial interests of the country.

By the last report of the Secretary of the Treasury we learn that on the 31st day of August, A.D. 1865, the outstanding currency of the United States (except the fractional) was $684,138,359.  This, of course, embraced the five per cent. and compound-interest notes which were in circulation as currency or were held by the banks as reserves for the redemption of their notes -- in the latter case performing the office of currency.  On the 30th day of June, 1866, the amount outstanding was $559,903,508, or a reduction of legal tenders in ten months of $134,235,451.  On the 1st day of November, 1867, the currency amounted to $429,039,844, or a reduction in sixteen months of $130,863,664.  Thus, while the area of circulation has been greatly enlarged, the diversified industries of the country multiplied, and great enterprises undertaken, (such as building a highway of commerce to the Pacific ocean) -- all requiring an increase of the circulating medium -- the currency of the people has been contracted in two years and two months from $684,138,059 to $429,039,844, or a reduction of $255,099,165, or within a fraction of ten millions per month !

It must be borne in mind in this connection that the interest-bearing debt has not been lessened by this reduction.  A considerable part of this withdrawn currency has been converted into six per cent. gold interest-bearing bonds.  In the meantime, the army of tax gatherers, revenue agents, and Government spies has been largely increased.  The object of this increase was to prevent frauds and secure the payment of taxes, while the result has been the multiplication of frauds, the debauching of the public morals, and converting honest men into rogues by overpowering temptation.  The amount of compensation of a large number of these detectives and revenue agents depends upon the number and extent of the frauds they can devise.  They become confederates with the thieves which they are appointed to detect.  It is no wonder that with all the contraction gold, which has become a mere matter of merchandise, should advance.  The Treasury is well supplied with hard money now from import duties, but how long will this be the case if the present policy is pursued ?  When you have no more bonds to send to Europe upon which to raise gold, and when the accumulation of these interest-bearing obligations shall be so great in Europe as to exhaust our gold product, I would like to know how you will pay the gold interest on your debt, much less the principal in coin.  We must raise something to sell besides bonds or we will find ourselves hopelessly bankrupt.  We must diversify and stimulate the productive industries of the country and make it more to the interest of the people to farm "Uncle Sam’s" broad acres than his bonds.

That there are small inducements to cultivate the soil let me give you an actual illustration from real life.  A farmer in the West in 1861 owned two farms of three hundred and twenty acres each of about equal value.  He sold one of them for $9,600 in gold.  He soon after converted his coin into legal tenders, and these into bonds, purchasing to the amount of $20,000.  He has received his gold interest semi-annually, converted it into greenbacks at an average of forty per cent., and loaned them to his neighbors on mortgage security at ten per cent. per annum.  If he continues the process to the end of five years when the bonds are redeemable, he will have as follows:

Principal ............. $20,000
Profits on investment ........ 10,565
Proceeds of farm .............. 30,565
Deduct cost of bonds ............ 9,600
Net gain in five years ........ $20,965

equal to two hundred and eighteen per cent., or an average yearly increase of forty-four per cent.  He has rented his other farm for $3.50 per acre.  After paying State and municipal taxes his farm has yielded him $900 per year.  Suppose he received his rent semi-annually and invested it as before at ten per cent., he would realize at the end of five years $5,494.  He offers to sell the farm for $12,800 in greenbacks.  This, added to the earnings, makes a total of $18,294.  He valued the farm at $10,000.  Deducting this from present value, with proceeds added, leaves as net gain in five years $8,294, equal to eighty-three per cent., or an average yearly increase of sixteen and one half per cent.  The farming of his bonds has paid him two and a half times as much as farming his lands.  He was formerly regarded as a plain, practical man, but now he is a "patriotic capitalist," who came forward and generously aided the Government in its extremity by investing in her bonds;  and this is the testimony of an honest bond-holder.  This actual case illustrates the whole subject, and shows how unjust is the claim of the bondholder that he should be paid in gold for the bonds which cost him only fifty cents on a dollar.  And this unreasonable and unjust claim finds able advocates in this House, who talk eloquently about bad faith, depreciated currency, and irredeemable paper money.

We disclaim in the most solemn form any wish or desire to do injustice to the holder of a United States bond, whether on this or the other side of the ocean.  It is no act of unfairness or of arbitrary power to require him to receive what every other creditor of the Government must receive in payment of his claims.  We are told that with the proceeds of these bonds our soldiers were fed, clothed, and paid.  Yes, Mr. Chairman, the soldier received his thirteen dollars per month in this paper which was declared to be money by the law-making power, although it was worth only fifty cents on the dollar, coin being the standard.  Now, the proposition of the bond-holders’ representative is to pay him (the bond-holder) the other fifty cents and require the returned soldier to work upon the farm, in the shop or manufactory, to make the payment.  You required the soldier to sign the receipt-rolls for thirteen dollars when you paid him only $6.50, and now you propose to pay the patriotic capitalist thirteen dollars, who generously furnished $6.50 to the soldier and tax the industries of the country to meet the demand.

To make their argument irrefutable, honorable gentlemen quote from learned writers in every age their definitions of money;  that the only money known to the civilized world is gold and silver;  that exchequer bills, legal tenders, and greenbacks are in no sense money, but only promises to pay money.  When did learned Senators consult Locke and Harris and Huskinson and a host of other writers on the nature and uses of money ?  Was it before they declared greenbacks money, and receivable as money in payment of all debts, public and private ?  Was it contemporaneous with the decisions of our courts that State, county, city, and railroad bonds, and even private contracts, payable by their terms in gold, were discharged by a payment in legal-tender notes ?  Or was this discovery made after our soldiers had received it as money and after capitalists had invested them in bonds for the payment of money ?  It matters little what European philosophers declared to be money.

Our Constitution gives to Congress the exclusive power to coin money and regulate the value thereof, and expressly denies to any State the right to coin money, emit bills of credit, or make anything but gold and silver coin a tender for the payment of debts.  These are attributes of sovereignty and belong exclusively to the representatives of the whole people.  At one time and in one country silver coin was the only money;  at another time and in another country gold, and again gold and silver.  Locke (from whom a distinguished Senator quotes with so much apparent satisfaction) declared that gold and silver were the true and only metals to be used for this purpose because of their "intrinsic value."  The fact is, these metals have no intrinsic value compared with iron or copper, and but for their general appropriation to this use would only be used for manufacturing ornaments.  They were selected because of their supposed scarcity, and less liable, therefore, to fluctuate in quantity.

The value of money has no relation to or dependence upon the material of which it is made.  If it has the properties or powers of representing, measuring, and exchanging value it is money, and these properties or powers are not inherent in any substance, but are conferred upon any chosen material by the sovereign power.

In an hour of great national peril, when there was not coin enough, or if enough to meet the momentous emergencies of the hour it could not be procured, the Congress of the United States, with the concurrence of the Executive, imparted to pieces of paper, by certain specific stamps, vignettes, signatures, and figures, all the powers of money, and made them a legal tender for the payment of debts, even those contracted to be paid in coin.  I have no reflections to make on the wisdom of their action.  I leave that to the Secretary of the Treasury.  The greenback, as it has been denominated, was an invaluable expedient, backing our boys in blue and covering their backs at the same time.  It served our purpose well and will serve us still if permitted.  It helped us through one danger and will bear us triumphantly through another unless the cupidity of bankers, bondholders and shoddy contractors shall triumph over the industrial and tax-paying classes of our people.  We know its strength, power, virtue, and its universal acceptability.  We know that our country is yet very far from being out of the wilderness and in the open plain.  She has yet to encounter the swamps and quagmires of an immense debt, a rotten revenue system, and an exhausted and over-burdened people.

We find gentlemen anxious to get rid of that which has served us so well.  We are told that the mightiest of all evils will result from our policy.  It fastens on the country an irredeemable paper currency.  It postpones the day of specie payments, the day of "hard money" -- hard money the idol of the Democratic heart.  It is a strange spectacle to see men who have always contended against reducing the country to a hard money standard now advocating it with so much vigor.  Why this sudden conversion to old Democratic theories ?  Why all this haste to get back to specie payments ?  It is to prevent the Government from paying back to the bond-holders the same kind of money (only greatly appreciated in value) which they paid for their bonds, which causes such an intense desire to have greenbacks put out of the way;  and these are they who are urging contraction and the immediate resumption of specie payment.  They would even be willing to increase the national bank currency, if desired, to the full volume of the legal tenders, because this currency is not a legal tender and if greenbacks were called in and canceled there would be no lawful money but gold and silver, and their bond investments would be redeemable only in coin.  This is the policy which is now paralyzing the energies of the country, and which will bring good to none except the numerically small but pecuniarily powerful interest that is exerting all its power to accomplish its selfish purposes.

Whatever may be Secretary McCulloch’s designs against the Republican Congress which he denominated "a bogus body of constitutional tinkers," it is quite certain that he could have suggested nothing to more effectually use up the Republican party than these financial measures he has advocated and to which Congress has given a too willing ear.  I hope and trust that Congress will not longer heed the counsels of its enemies, but inaugurate a policy more consistent with justice and sound principles.

But we are asked, why bring up this question now ?  Why not wait until our bonds are payable, and then there will be no question, as legal-tender notes and gold will be of the same commercial value.  "Sufficient unto the day is the evil thereof."  To this I answer that the unequal method of taxation is crushing the industrial interests of the country to pay the current expenses of the Government and the coin interest on so large a debt.  And as there are now bonds amounting to $515,000,000 redeemable, and others will be at no distant day, they should be converted into a non-interest-bearing debt, and to the utmost possible extent relieve the people of the onerous taxation under which they are now groaning.

Again, Mr. Chairman, there is not a sufficient supply of currency to transact the legitimate business of the country, to say nothing of the imperative demands of tax-gatherers.  Our minister of finance gravely assures us that our circulation is quite too large, and that if health and vigor are to be imparted there must be still greater contraction.  Some of the old bankers are like the old style physicians, who bled and blistered for every form of disease, and drew off the vital fluid that the body might be invigorated.  In my poor judgment phlebotomy has been carried too far already by our financial doctors.  I would not only stop bleeding, but I would remove the national bank blisters from our body politic.

I venture the opinion that there is a great deficiency in the volume of currency.  In no country in the world is the supply so small when compared with the commerce and the various enterprises requiring money.  England, according to the most judicious estimates, has twenty-five dollars per head for her inhabitants, France has thirty, while we have about thirteen dollars.  Estimating greenbacks at $370,000,000, and national bank notes at $300,000,000, our total volume is $670,000,000.  Of this sum it may be fairly presumed there is always in the Treasury or in the banks, and not therefore available as a circulation, $170,000.000, which leaves only $500,000,000 with which to conduct the commerce of forty million people scattered over a continent.  And where is this small amount of circulation ?  Little New England has more than one fourth of it ! With about one twelfth of the population she has one third of the national bank monopoly.  Ohio, Indiana, and Illinois, with a population more than twice as great as New England have but little more than one third her money circulation;  and the vast empire south of the Potomac and Ohio and west of the Mississippi, containing two fifths of our entire population has been allowed one ninth interest in the gigantic bank scheme.  The city of Boston, having about one half the population of Cincinnati has ten times her money facilities, the former having $40,000,000 of national bank capital and the latter $4,000,000.  Even Philadelphia, the second city in the Union in population, wealth, commerce, manufactures, and enterprise, four times as large as Boston, has less than half the interest of the latter in the great monopoly.  Have Boston and New England too much money ?  I have heard of no such complaint.  If not, how must it be with thirty States and Territories with a population four times as great with less than one third her circulation ?

The great State of Tennessee, impoverished by war, her railroads dilapidated, her farms laid waste, without stock, without implements of husbandry, every industrial interest prostrated, having before the war $15,000,000 of bank capital, has now just $1,000,000.  Tennessee needs money and she cannot get it, even in New England, unless at an interest of two or three per cent. a month, with first-class mortgage security.  This nation needs her assistance in paying the interest and principal of our debt.  Would it not be a wise policy to lend to the State of Tennessee $10,000,000 of greenbacks, taking therefor her four or five per cent. bonds, and made payable in ten or twenty years ?  The nation would be the gainer at the end of that period even if the bonds were never paid.  So of the other States desolated by war, as they shall respectively be represented in these Halls.  By helping them we help ourselves, and prove to them that we forget their follies, forgive their crimes, and are ready, willing, and anxious to repair waste places, rebuild broken-down altars, and bind the States in a stronger union than ever before.

Mr. Chairman, the President in his late message well and truthfully says "we want a stable and secure circulating medium.  A disordered currency is one of the greatest political evils."  Is a greenback circulation necessarily unstable and insecure ?  It may be and it is as stable a circulating medium as gold, and is as secure as a mortgage upon the entire property of the nation can make it.  Treasury notes are not a "disordered currency."  They do not belong to the class denominated by the gentleman from Illinois as "wild-cat" or "stump-tail."  They are not bank issues, that miserable contrivance for cheating the laboring classes;  that ingenious invention "to fertilize the rich man’s field by the sweat of the poor man’s brow."  Treasury certificates are veritable, lawful money, and involve the Government in no chance of failure.  They pay all debts, public and private, until the interest or convenience of the people call for their withdrawal.  Jay Cooke, with the aid of his sharp financier, the Pennsylvania Dutchman, will find it difficult to satisfy the people that national bank notes are better or safer than greenbacks.  National bank notes are good because indorsed by the Government.  They are good because they are backed up by Uncle Sam’s bonds;  and these are good because redeemable in "lawful money."  Do gentlemen suppose that if the Government could pay a gold dollar to-day for every dollar of our greenback circulation, and it was all withdrawn, that we would be upon a specie basis ?  Where are the $300,000,000 of bank notes upon which the Government is indorser ?  Have these institutions coin with which to redeem their notes ?  If not, the Government must pay them or be dishonored.  The bank and bond questions are inseparably connected;  for whoever will take the trouble to read the sixty-five sections of the act creating national banks will find, after abstracting all that relates to bonds, but little left.  That act happily closes in these words:  "Congress may amend, alter, or repeal this act."  This is the best part of the whole law.

The first step in the right direction will be to pass a law to call in and cancel the entire bank circulation and simultaneously issue an equal quantity of Treasury certificates or legal tenders.  The people having this circulation would be enabled to pay off $300,000,000 of debt and save $18,000,000 of gold interest.  We will thus shorten the road to specie payments by reducing the interest-bearing debt.

But we are told that the national banks being required to keep a reserve for the redemption of their notes withdraws from circulation ten, fifteen, or twenty per cent. of the legal tenders.  I see no good reason why this reserve should not be kept in the pockets of the people, to be used or not as their necessities require.  They will be quite as safe custodians of their reserves as the banks.  By retiring the $300,000,000 of national bank notes and issuing, in addition to that amount, $215,000,000 of legal-tender notes, the $515,000,000 of five-twenty bonds now redeemable could be paid.  This would only add $215,000,000 to our present circulation, and this would be $40,000,000 less currency than when the ruinous policy of contraction commenced.  This would not only give us a better currency, (as much better as substance is better than shadow,) but would save the people from taxation to the amount of $43,000,000, supposing gold to be forty per cent. premium.  I would as speedily as possible rid the country of this bank monopoly.  With such a network of moneyed institutions throughout the country their political power by combination would be irresistible.  To suppose they would not combine to secure their own selfish ends is to regard them more than human.

The people’s circulation can be made sufficiently ample to supply all the demands of trade.  If we must have banks, (a necessity I do not acknowledge,) leave the field open to all.  Let every association that can pledge its $50,000 in Government bonds open a bank, and let the Government charge for the currency furnished three per cent. per annum, to be deducted from the gold interest on the bonds left as security.

Some are afraid of "watering the currency," as they are pleased to call a further issue of greenbacks, and thus render it valueless by dilution.  Money will not depreciate greatly if well secured, and the people can better stand a "watering" of their currency than of their gold-bearing bonds, as is now the policy of the Secretary of the Treasury.  And besides, as we have shown, the volume of currency will not be as large as it has been.

In the two great elements necessary for a circulating medium, uniformity and stability, legal-tender notes have the advantage of gold.  Gold is exported;  legal tenders are not.  Coin is constantly fluctuating and unstable.  Any political disturbance or a war on the other side of the Atlantic which made gold indispensable would immediately affect its volume here, and every farmer, mechanic, merchant, and manufacturer to the remotest corner of the Republic would feel the pressure.  And this would especially be the case now that $1,000,000,000 of our bonds are in Europe.  With legal tenders as our national currency no such calamity could befall us.  We learn from the last message of the President that since 1849 the coin product of the United States amounted to $1,174,000,000, and that the exports of the precious metals during the same period was $741,000,000.  These figures do not give a very flattering exhibit of the stability or fixedness of a gold currency.  Nor does it by any means follow that an increase of legal-tender notes will advance the price of gold, which is in fact a mere matter of merchandise, like cotton, railroad stocks, and whisky.  Gold has not advanced or receded as the currency has been contracted or expanded.  On the 1st of September, 1865, it was at a premium of forty-four per cent., when our paper circulation was $684,138,000, while on the 1st of November, 1867, it was forty-three per cent., when the paper circulation was $255,000,000 less than on September 1, 1865.  The natural ebbing and flowing of the price of gold is in proportion to its demand for export to settle foreign balances of trade.  If we would remove the cotton tax, aid the South in securing a large crop for export, and send abroad our breadstuffs to settle these balances, and if perchance we could find a balance in our favor, then gold would be imported and its price would approximate more nearly to legal tenders.

The way to get back to a specie basis, then, is not by contracting our currency, but by importing less goods from abroad and sending larger installments of our production.  We must encourage labor, increase production, diversify our home industries, develop our agricultural and mineral resources, and then, in spite of the money-changers and gold-gamblers of Wall street, and with $1,000,000,000 of greenbacks, coin would approximate in value to our national circulating medium.

I differ entirely with the report of the Secretary of the Treasury, in which he declares "there is a plethora of paper money and that progress has been made in the right direction during the past year."  There is a great scarcity of money of every sort, as all men engaged in active business will bear me witness, unless it may be with the exception of national bankers and those who live upon interest or rents.  The progress made during the last year in contracting the currency and increasing the coin interest-bearing debt is in exactly the wrong direction.

In addition to the policy proposed of withdrawing and canceling the national bank circulation and supplying simultaneously the vacuum with Treasury certificates, and increasing the amount sufficiently to redeem the $515,000,000 of bonds now redeemable, I would provide that the Treasury certificates should be convertible in sums of $100 or more into bonds at a just rate of interest, say now five per cent., subject to taxation as other property, and reconvertible into Treasury certificates at the pleasure of the holder.  And so of all currency bonds redeemable in the future, I would offer the same alternative, and so adjust the rate of interest from time to time that capital and labor should each have its share of profit.  This would give that flexibility to the circulation, increasing and decreasing according to the requirements of legitimate business and the demands of commerce and trade.  In times when money was not required and became redundant it would be invested in bonds, and the Government would then be the borrower of the surplus.  On the contrary, when money was needed the bonds would be reconverted.  This system is adopted by some of the best Governments of Europe.  The principal objection to this scheme would be that it would keep down the rates of interest, and thus prevent the capitalist from exacting usury.  On the other hand, a low rate of interest for money will reduce the price of rents and give full and profitable employment to labor.  While high rates of interest on money prevail tenements for workingmen and manufactories and workshops will not be erected.

I beg gentlemen in their financial schemes to consider the interests of those who earn their daily bread in the sweat of their brows as well as the possessors of wealth.  The rights of capital and labor should be so harmonized that each would be protected and that each should have its appropriate share of profits.

That my position may not be misapprehended I would say again distinctly that I would pay every bond in coin that was created before the passage of the legal-tender act and all created since where the law and the bond provide for coin payment.  All others should be paid in lawful money as fast as redeemable.  The policy here advocated, Mr. Chairman, will not impair the value or stability of the currency.  It is destructive of no honest industry, subversive of no individual rights, unless the national banks may be considered one of the industrial interests of the country, with a prescriptive right to transfer the money of the people to their own pockets through a monopoly in the circulating medium.  It is not even subversive of that right, for the law of their creation expressly declared their liability to extinction at any moment the public interest demanded.  It is not destructive unless the light thumps following the putting down the breaks on the train rushing to destruction is called destructive in disturbing the quiet of those unconscious of danger;  neither is it revolutionary unless the desire of letting well enough alone, of keeping things as they have been, is called by that name;  nor is it visionary unless the determination to live on in the same old quarters until we get out of debt can be said to be a vision.  On the contrary, it is conservative, preëminently so, to stand still when we know where to go.  It will give immediate relief to the country in removing the dread uncertainty that hangs over every branch of business.

There is everywhere a feeling of impending calamity that is preventing new enterprises and paralyzing those already begun.  Business men now hang with feverish interest upon the reports of the Secretary of the Treasury to know the extent of the last contraction and learn the nature of his next caprice -- whether he is going to tighten or loosen the screws.  Is not this a splendid position for this great country ?  Its business, its interests, and the very value of its property to go up or down as the caprices of Hugh McCulloch may dictate or the mysterious power of the national bankers may order.  This policy will give a feeling of stability where all is now unstable, certainty instead of doubt, and security instead of fear and apprehension.  It will restore confidence, the most vital element in trade -- confidence in the present and confidence in the future.  It will forever silence every doubt as to the full and complete performance of every contract of the Government with its creditors, and thereby establish the public credit both at home and abroad upon a foundation it has not yet had.  Does any man really suppose that the people of England, France, or Germany expect that our bonded debt will be paid in gold ?  If his national self-esteem and pride of country prompts him to think so let him explain the brief messages that come to him every day from London:  "Consols, 95;  United States five-twenties, 70," varying a little from time to time, consols from 93 to 98, United States five-twenties from 66 to 73.  What means this electric shock that each day strikes our shores from the Old World ?  Translate "Consols, 95;  United States five-twenties, 70," into plain English expressed in terms of our own money.  The English capitalist pays $950 for an English security of $1,000 that will pay him $30 a year interest, and will only pay $700 for a United States bond that pays him $60, which, after allowing ten per cent. for exchange, gives him $54 a year sterling gold in London.  Make a calculation of this difference -- thirty is to fifty-four as nine hundred and fifty is to the sum the European is willing to pay for a security that he has confidence in that will pay him fifty-four dollars a year gold in London.  How much is it ?  Seventeen hundred and ten dollars !  Yes, $1,710 for a security that will pay him the same interest as a United States five-twenty bond for which he is only willing to pay $700 !  Is not that a heavy report upon the confidence Europe has in our financiering ?  If a merchant’s paper was sold at that wide difference with his neighbor’s you would say if he was not broke he soon would be, and you would consider his paper dear at any price.  You would have no confidence in him until you were not only assured that he had property but had put it in charge of some one who would not wastefully squander it.  A nation is but individual aggregation, and the same law governs the one as the other.

Europe has had abundant evidence of our power and our great resources.  She has seen us put down a rebellion such as was never before known in the world’s history.  She has seen us liberate four million slaves.  She has been made aware of the war’s destruction and waste of property amounting to five or six thousand millions;  and, more startling still to a European mind, she has seen the beloved head of the Republic assassinated.  And, notwithstanding all this, she has seen peace restored and the Government move straight forward, the people submitting to tax themselves sums greater than ever before heard of in the annals of history.  With all this evidence of our strength we yet find the gloomy verdict rendered each day that they have not half the confidence in the good faith of our Government that they have in Great Britain.  The fact is they know more about us than we think they do.  They read our papers;  they watch attentively our Congress and the action of our Administration and the operations of our revenue laws, and the picture presented is anything but cheerful and one not well calculated to inspire confidence.  They can see that a system of internal revenue, in which the article that was expected to yield the largest portion does not pay into the Treasury one dollar where it should pay ten, the balance going into the pockets of swindlers and corruptionists.  They see Congress meet without establishing any comprehensive financial policy;  without even daring to resolve the doubt that interested parties have raised as to the two thousand million five-twenties being paid in lawful money;  and, vacillating between diverse opinions, finally adjourn and leave the important subject mainly to the discretion of the Secretary of the Treasury.  And they have seen the capricious action of that Secretary -- now selling gold in enormous quantities at 130, and a few weeks later hoarding it at 150.  And, lastly, they have heard the mutterings of discontent at all this misrule coming up from the great body of the people and observed these murmurs of an overtaxed and an unequally-taxed people not treated with the respect due.  Seeing all this, their estimate of the five-twenty bonds is not to be wondered at.  The only wonder is that it is no worse.

When we shall in good faith inaugurate a policy which will equalize the burdens of taxation, give to labor full and profitable employment, increase production, diminish our interest-bearing debt, lower the rate of interest on what shall remain, revise our tariff and internal revenue laws, then we shall secure a foreign credit commensurate with our boundless resources and our advanced position among the nations of the earth.  By such a course we will be able very soon to relieve the mechanical, manufacturing, and industrial interest generally from a revenue tax, and depend wholly for revenue upon a tax on incomes and articles of luxury such as tobacco, beer, and whisky.  It would afford unspeakable relief to the country to be delivered from the swarm of Government officials and that hungry horde of spies and detectives who have established a system of espionage over every household.

Mr. Chairman, I have already detained the committee too long;  but you will permit me to add that the workingmen, the tax-payers, the great wealth-producing classes of the people, are looking with great anxiety to learn what course their Representatives will pursue on this present vital and all-absorbing question.  Upon the wise and judicious action of the dominant majority on this question will depend its continuance in power.  We must reconstruct our finances or surrender our places to those who will.  The sovereigns of this land whose servants we are will not say to us "well done" unless we inaugurate measures for their relief.

Before the conclusion of the foregoing remarks the hour allotted to Mr. Cary expired and the hammer fell.

Mr. BALDWIN obtained the floor.

Mr. BLAINE.  I ask that the time of the gentleman from Ohio [Mr. Cary] be extended half an hour to enable him to conclude his speech.

Mr. Baldwin.  I desire to address the House, but I do not wish to proceed to-night.  I have no objection to the gentleman from Ohio going on provided it does not come out of my time.

Mr. CARY.  I do not want more than fifteen or twenty minutes.

No objection was made, and the time was extended.