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 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924014053742 
 
Bankers' Code, 
 
 FOR THE USE OF 
 
 NATIONAL BANKS, 
 
 STATE BANKS, 
 
 Savings Banks and Private Bankers. 
 
 COMPILED BY 
 
 JAMES- MONROE. 
 
 JULY, 1879. 
 
 OFFICE, No. 69 DUANE STREET. 
 TWO DOLLARS, bound in Cloth ; ONE DOLLAR, Paper Cover. 
 
 ADDRESS /- C (^ 
 
 MONROE & COMPANY, Bill Brokers, 
 
 NEW YORK. 
 
PREFACE, 
 
 A READY and trustworthy means of acquiring a knowl- 
 edge of the established laws relating to Promissory- 
 Notes, Bills of Exchange, Checks, Deposits, Collections, 
 Usury, Discounts and other matters connected with the daily 
 transactions of a banker, may not only prevent extended 
 litigation, but will also enable the cautious banker to create 
 a PRACTICAL BASIS OF ACTION, under which his 
 attorney can more effectually defend his rights and pre- 
 serve HIS interest. If the banker does not conduct his 
 business affairs in conformity with the rules and regulations 
 established by the higher Courts, his attorney, let him be 
 ever so capable and energetic, cannot maintain, his rights or 
 preserve those interests which the banker may have neglected 
 or endangered either through carelessness or a want of legal 
 knowledge. The Courts have held that "there is no pro- 
 tection for the rash against the consequences of their im- 
 prudent contracts." 
 
 JAMES MONROE, Editor. 
 
BANKERS' CODE. 
 
 ACCEPTANCE. 
 
 1. An Acceptance, to be binding, must in every respect 
 meet and correspond with the offer made ; neither falling 
 within nor going beyond the terms proposed, but exactly meet- 
 ing them at all points, and closing with them as they stand. A 
 proposal to accept an offer on terms varying from those pro- 
 posed amounts to a rejection of the offer, and a substitution of 
 a counter proposition, which cannot become a contract until 
 assented to by the first proposer. The original offer loses its 
 vitality, and is no longer pending between the parties, and 
 becomes an open proposition again only when renewed by the 
 party who first made it. The party submitting a counter 
 proposition, cannot, without the consent of the first proposer, 
 withdraw or abandon the same, and then accept the original 
 offer which he has once rejected. Fox v. Turner, i Brad well's 
 111. App. Rpts. 153. 
 
 ACCOUNT STATED. 
 
 2. An Account Stated is presumptive evidence only of the 
 balance admitted to be due, and may be corrected for fraud or 
 mistake. On the settlement of accounts, the parties may, by 
 agreement, limit the time within which claim for the correction 
 of mistakes or omissions shall be made ; and in such case, 
 evidence of an omitted demand may be excluded, unless proof 
 be made of claim for its allowance within the time agreed upon 
 by the parties. Vandeveer v. Statesir, Adm'r, 39 N. J. 
 Law, 593. 
 
 3. For a period of two years A. kept an account with a 
 bank, for money loaned, checks paid, and credits for deposits 
 nnd payments ; the bank during the time making monthly 
 statements, striking the balance due each month, which was 
 carried forward and charged against A. Held, that the monthly 
 balances were not distinct settlements, but that the whole con- 
 stituted a running account, and was, in effect, but one transac- 
 tion. Pickett, et al., v. Merchants' Hat. Bank of Memphis, et 
 ct,l., 32 Ark. 346. 
 
 AGENCY. 
 
 4. The general rule is that the clerks of an agent are not 
 
O BANKERS CODE. 
 
 agents of the principal. Hope, v. Dixon, 22 Grant's Chancery, 
 Ontario, 439. 
 
 5. Payments received by one knowing the agent to be 
 unauthorized to make them, may be recovered by the principal 
 as money wrongfully had and received. Demurest, v. Inhabi- 
 tants of New Barbadoes, 40 N. J. Law, 604. 
 
 6. Where the acts of the agent will bind the principal, 
 where his representations, declarations and admissions respect- 
 ing the subject matter will bind the principal, when made at 
 the same time and constituting a part of the res gestae Coyle. v. 
 B. <5r» O. R. R. Co., II W. Va. 94. 
 
 7. An agent having special authority to adjust a particular 
 loss cannot, by virtue thereof, adjust a different loss, and what- 
 ever he may do with reference to the different loss cannot 
 affect the principal. To find the principal, it must be shown 
 by competent evidence that the agent acted within the scope 
 of his authority. Hartford Fire Ins, Co. v. Smith et al., 3 
 Colo. 422. 
 
 8. The employment of an agent by the principal to sell land 
 need not be in writing, but the agent may recover for services 
 rendered in effecting the sale, by virtue of a verbal contract. 
 Watson V. Bright-well, 60 Ga. 212. 
 
 9. Money borrowed by the agent on the credit of the prin- 
 cipal, without authority, goes into the principal's business with- 
 out the latter's knowledge, and the principal has the benefit 
 thereof, yet is not the principal liable therefor to the person of 
 whom it was borrowed, in the absence of a promise to pay. 
 Spooner v. Thompson and wife, 48 Vt. 259. 
 
 10. Authority to make a contract for another is not suffi- 
 cient to authorize its cancellation or surrender. Stillwell v. 
 Mut. Ins. Co., 72 N. Y. App. 385. 
 
 103^. One who constitutes another his agent, with full power 
 to manage his mercantile house and to do all acts appertaining 
 to his business, makes himself liable for the value of all goods 
 purchased by the agent in the line of that business. Schmidt &* 
 Zeigler v. Sandal et al. 30 La. 353. 
 
 11. Held that the general agent in Canada of a foreign 
 company must be regarded in the same light as the general 
 agent at the head office in the foreign country. Campbell v. 
 National Life Ins. Co., 24 Upper Canada Com. Pleas Rpts. 
 133- 
 
 . 12. Notice to the agent is notice to the principal, if the 
 agent comes to the knowledge of the fact while he is acting for 
 the principal in the course of the very transaction which becomes 
 the subject of the suit. Such knowledge of the agent is im- 
 puted to the principal third party who has dealt with the agent 
 in good faith. Stanly v. Chamberlin, 39 N. J., Law 565. 
 
BANKERS CODE. 7 
 
 13. A principal is always bound by the acts and neglects of 
 his agent. And the same rule which applies to a private prin- 
 cipal applies to a corporation, whether ordinary or municipal, 
 and, a fortiori, to a corporation which can only act by an 
 agent. City of Petersburg v. Appelgarth' s admr. 28 Grattan, 
 Va. 321. 
 
 14. An agent's authority, not coupled with an interest, being 
 revocable at the pleasure of the principal, one dealing with such 
 agent after notice of revocation, does so at his peril. Patton v. 
 Caen &' Ten Broeke, 3 Colo. 265. 
 
 15. The declarations of one acting as the agent of both 
 parties to a contract, if made within the scope of his authority, 
 are properly receivable in evidence in an action between the 
 parties to the contract. Schaefer et al. v. Gildea et al. 3 
 Colo. 15. 
 
 16. If the purchaser of property does not know that he is 
 dealing with an agent of the owner, and has not good reason to 
 know it, he is justified in treating the agent as the owner, and 
 payment of the purchase price to him will be a defense to an 
 action by the owner for the amount. The Eclipse Windmill Co. 
 V. Thorron, 46 Iowa, 181. 
 
 17. Where an agent, clothed with power to accept bills, has 
 accepted a bill in the name of his principal, the latter cannot 
 escape liability as acceptor on the ground that he had no inter- 
 est in the transaction in which the bill was given, and that he 
 had received no consideration, unless he proves that his agent, 
 to the knowledge of the holder of the bill, has abused his power. 
 Broadway Savings Bank of St. Louis v. Edward Vorster et al., 
 30 La. 587. 
 
 18. In an action for goods sold and delivered the defence 
 is payment to an agent, the fact that the principal has previously 
 revoked the authority of the agent is not conclusive of plaintiff's 
 right to recover, if the revocation of authority has not been com- 
 municated to the defendant, and there is other evidence in the 
 case from which the jury would be authorized in finding that 
 the defendant had reason to suppose that the authority of the 
 agent to receive payment continued. Parker v. Hinckley Lo- 
 comotive Works, 122 Mass. 484. 
 
 19. One who purchases goods at half their value, he having 
 information from which he may know that the factor with whom 
 he deals is acting without authority, and in fraud of his prin- 
 cipal, takes no title thereto, such a purchase being inconsistent 
 with good faith, and void, and the principal may recover the 
 goods from such pretended vendee. Singer Manufacturing Co. 
 V. Hudson, 4 Mo. Court of Appeals, St. Louis, 145. 
 
 20. Where one, without consideration, entrusted an .^gent 
 with a sum of money to settle a lawsuit between two others, she 
 
8 bankers' code. 
 
 has the power of revocation until the settlement is complete, 
 especially if the contract be in writing, and it is therein ex- 
 pressly agreed that the terms of the settlement are to be satis- 
 factory to her in every way, and if not, then the money to be 
 restored to her. Phillips et al. v. Howell, 60 Ga., 411. 
 
 21. Where a party, acting through an agent, loans money on 
 the security of the borrower's mortgage, and the agent, who 
 keeps the note in his possession, pays over from time to time 
 to his principal the accruing interest and parts of the principal 
 of the note received from the maker, finally pays over to the 
 principal the balance due on the note, without stating that he 
 is paying his own money, and without obtaining the consent of 
 his principal to buy, or even intimating that he desired to buy 
 the note, he will not acquire any title to the note ; and the note 
 itself, and the accompanying mortgage, will be deemed extin- 
 guished. Albert G. Brice v. John A. Watkins, et al., 30 
 La. 21. 
 
 22. Where an agency is continuous and made up of a long 
 series of transactions of the same general character, knowledge 
 acquired by the agent in one or more of the transactions is 
 notice to the agent and the principal, which will affect the latter 
 in any other transaction in which the agent, as such, is engaged 
 and in which the knowledge is material. Holden v. N. Y. and 
 Erie Bavk, 72 N. Y. App. 286. 
 
 23. An agent employed in negotiating the sale of a promis- 
 sory note, making statements regarding the purpose for which 
 the same was executed, such statements will be considered fairly 
 within the scope of his agency and will bind his principal ; the 
 general power to negotiate will, by implication, include the 
 power to give such information as would ordinarily be called 
 for. McBean v. Fox, et al., i Bradwell's 111. App. Rpts. 177. 
 
 24. An agent for the sale of goods, with an interest in the 
 proceeds, is not deprived of the power to sell by the death of 
 the principal. The terms of the agency were that the agent 
 should sell the goods and out of the proceeds pay certain lien 
 and other claims, and apply the balance, first, to the payment of 
 certain notes he held against the principal and return the over- 
 plus to the principal. Held, that the power was not extin- 
 guished by the death of the principal ; that the agent had a 
 right to sell, and apply the proceeds as agreed, and to pay his 
 own notes in full, even though the estate was rendered insolvent 
 and other creditors received only a/percentage. In this case 
 the notes were delivered by the defendant to the plaintiff, and by 
 her presented to the commissioners. Held, that their allowance 
 by the commissioners as a claim against the estate, without the 
 procurement or authority of the defendant, in no way affected 
 his rights. Merry, admr'x of Patterson v. Lynch, 68 Me. 94. 
 
 25. A formal instrument, delegating powers, is ordinarily 
 
BANKERS CODE. 9 
 
 subject to a strict interpretation, and the authority is not ex- 
 tended beyond that given in terms, or which is necessary to 
 carry into effect that which is expressly given. Craighead v. 
 Peterson, 72 N. Y. App. 279. 
 
 26. An assignee or trustee cannot speculate with assigned 
 property, save at his own risk. Neither can he engage in busi- 
 ness ventures at remote places, and of doubtful results, without 
 rendering himself personally liable for any untoward results. 
 Stetiauer v. Carney, 20 Kansas, 489. 
 
 27. W. was the owner (subject to a mortgage) of property 
 which M. wished to buy ; R. becoming aware of this, entered 
 into friendly negotiations with both, and bargained with W. to 
 take $3,500, and with M. to give $5,600 for the property ; R. 
 concealed this difference from the parties. W. conveyed to 
 M. ; on her signing the deed, R.'s attorney paid to her the 
 $3,500 (less the mortgage debt), and on the deed being de- 
 livered to M., she (M.) paid to R.'s attorney the $5,600. 
 The facts afterwards coming to the knowledge of W., she filed 
 a bill against R., claiming the balance of the $5,600 ; and it ap- 
 pearing that in the negotiations he had given W. to understand 
 that he was acting in her interest and had no personal interest 
 of his own, the plaintiff was held entitled to a decree against R. 
 for such balance with interest and costs. There may be an 
 agency, and its duties and liabilities, without express words of 
 appointment or acceptance ; and where a party in negotiating 
 between two persons, the one desiring to sell, the other to buy 
 certain land, gave the former to understand that he was acting 
 in her interest, it was held that she was entitled to the full 
 price which he obtained for the land, though it exceeded the 
 amount which he had obtained her consent to accept. In such 
 a case, there being a conflict as to what had passed in the con- 
 versations, and no other witness of them being produced, it was 
 held that, all other things being equal, the version of the de- 
 ceived party should be accepted in preference to that of the 
 other party. Wright v. Rankin, 18 Grant's Chancery, On- 
 tario, 625. 
 
 28. The owner, by delivery of an unendorsed promissory note 
 payable to another, delivered the same for collection to an agent, 
 who, without the knowledge or consent of the owner, delivered 
 the same for collection to a third person, who received knowl- 
 edge of the rights of such owner. On the trial of an action by 
 such owner against such third person to recover the money so 
 collected by the defendant, wherein the complaint alleged a 
 demand and refusal, the evidence established that the plaintiff, 
 being the owner, by delivery, of an unendorsed promissory note 
 payable to another, delivered the same to an agent for collec- 
 tion ; that such agent, without the plaintiff's knowledge or con- 
 sent, delivered the same for collection to the defendant, with- 
 
to BANKERS CODE. 
 
 out informing him as to the plaintiff's ownership thereof ; that 
 the defendant received and collected the same and used the 
 proceeds, believing it to be the property of the payee ; and that 
 another agent of the plaintiff, without informing the defendant 
 of his agency or of the plaintiff's rights, demanded of the defen- 
 dant a settlement. Held, that the plaintiff, by suing the de- 
 fendant, ratified the act of her agent in placing such note in the 
 defendant's hands. Held, also, that a demand was necessary, 
 and that a finding that none was properly made will not be dis- 
 turbed where the evidence in relation thereto is conflicting. 
 Held, also that under the averment of the complaint, that de- 
 mand had been made and refused, evidence of a conversion by 
 the defendant could not be given as an excuse for making no 
 demand. Kysery. Wells, 60 Ind. 261. 
 
 29. A., who had purchased the bankrupt stock in trade of 
 B., made an agreement with him in writing by which B. was 
 " to do business " at the same shop, as " agent for " A., author- 
 izing B. " to sell the goods now in stock and buy other goods, 
 in order to keep the stock good with the money received^ but 
 not to buy on credit without an order in writing" from A., and 
 providing that " if at any time the business is not carried on to 
 the satisfaction " of A., " the store and fixtures, together with 
 all the goods in the store and the books and accounts, shall be 
 turned over, with the keys of the store, to the said " A. B., 
 without an order in writing from A., purchased certain goods on 
 credit of the plaintiff, who was in ignorance of B.'s relation to 
 A., all of which goods went into the stock of the store, to the 
 use and benefit of A. Soon after, A. took possession of all the 
 goods in the shop, including such of those sold by the plaintiff 
 as remained in the stock, a.nd sold them as his own. Held, in 
 an action against A. to recover for the goods sold by the plain- 
 tiff to B., that the agreement made B. the agent of A. to carry 
 on the shop ; that A., by taking and selling a part of the goods, 
 had ratified the act of B. in purchasing on credit without his 
 order; and that the action would lie. Surtwell v. Frost, 122 
 Mass. 184. 
 
 30. Defendant executed a power of attorney as follows : 
 " To whom it may concern : This is to certify that I hereby 
 authorize H. Loveland, as my agent, to make drafts on me, 
 from time to time, as may be necessary for the purchase of 
 lumber for my account, and to consign the same to the care of 
 P. W. Scribner & Co., Whitehall, N. Y.— A. H. Griswold." 
 Held, we think the authority was absolute. The words, '' as 
 my agent " do not refer to the form of the contract, but to the 
 capacity in which Loveland acted. If he drew, in fact, as 
 agent, it wasnot material whether he described himself as such 
 or not ; nor was it made material by the power of attorney. So 
 the words " as may be necessary " are not words of condition. 
 
BANKERS CODE. II 
 
 but mean to the extent necessary, and the words " for the pur- 
 chase of lumber," &c., refer to the business in which the agent 
 is employed, and do not constitute a condition precedent, which 
 a party taking the paper upon the faith of the authority must 
 show has been performed. Merchants' Bank of Canada v. 
 Griswold, 72 N. Y. App. 472. 
 
 There is a distinction, I think, between a conditional author- 
 ity to draw and a limitation of authority. In the former case 
 the power cannot be exercised at all without showing the per- 
 formance of the condition ; while in the latter it may be exer- 
 cised, 'within the limits prescribed, in all the cases where the 
 authority was limited in amount, time and otherwise. [Barney 
 V. Worthington, 37 N. Y., 112.) In such cases the authority 
 is absolute to draw, within the limit prescribed. In this case 
 the power cannot be said to be general and unlimited. It is 
 restricted to the amount necessary to purchase lumber for the 
 defendant, but within that limit is absolute and unqualified. 
 The agent must determine the necessity of the amount required 
 for the business in which he is engaged, and not the person who 
 parts with his money on the faith of the authority. It was 
 proved on the trial that the money was loaned to be used in that 
 business. The agent, by procuring the discount upon the faith 
 of the power of attorney, represented that it was to be used in 
 the business of the defendant, and that the amount was neces- 
 sary. Id. 
 
 As was said in North River Bank v. Aymer (3 Hill, 267), 
 " The plaintiffs were apprised that Jacob D. Thurber had power 
 to make and endorse notes in the business of the testator, and 
 notes actually made and endorsed by the attorney and purport- 
 ing to have been so made and endorsed, in conformity with the 
 power, were presented to, and in effect discounted by the plaint- 
 iffs. This act was equivalent to an express declaration that 
 the notes were made and endorsed in the business of the testa- 
 tor," and the court held that the principal was bound by these 
 representations. The rule was authoritatively formulated by 
 this court in the Schuyler case (34 N. Y. 30), as follows : 
 "Where the authority of an agent depends upon some fact out- 
 side thv_ terms of his power, and which, from its nature, rests 
 peculiarly within his knowledge, the principal is bound by the 
 representations of the agent, although false as to the existence 
 of such fact." 
 
 The question then recurs, whether the defendant promised, 
 unconditionally, to accept the drafts. Without elaborating that 
 question, I think it must be regarded as settled in this State that 
 an absolute authority to draw is equivalent to an unconditional 
 promise to pay the draft. (37 N. Y. 112 supra. Ulster Co. Bank 
 V. McFarlan, 5 Hill, 433 ; S. C, 3 Den. 553 ; Bank of Michi- 
 
12 BANKERS CODE. 
 
 gan V. Ely, 17 Wend., 510). And this is the natural and neces- 
 sary implication. Id. 
 
 The declarations and representations of the agent at the time ■ 
 the draft was discounted are part of the res gestce, and were ad- 
 missible. (3 Hill, supra). 
 
 In Lanusse v. Baker, 3 Wheat. 146, the rule is concisely 
 stated as follows : "When a general authority is given to draw 
 bills from a certain place on account of advances there made, 
 the undertalifing is to replace the money at that place." The 
 same principle was reiterated in 6 Peters, 685, and was sanc- 
 tioned in First Nat. Bk. of Toledo v. Shaw, 61 N. Y. 293 ; see 
 also 5 CI. & Finn. i. The authority in this case was to draw 
 anywhere, and therefore it was an authority to draw in Canada, 
 and the laws of Canada must govern. Id. 
 
 31. Power of attorney, authorizing an agent to sue for a 
 specific debt, and to do all in the premises that the principal 
 could do, carries with it the power to make the suit effective by 
 attachment. De Poret v. Gusman, 30 La. 930. 
 
 ASSIGNMENTS. 
 
 32. A majority of the creditors of B., an insolvent, signed 
 an agreement with him by which he was to assign all his prop- 
 erty for the benefit of the creditors who signed the agreement. 
 The agreement was to be void unless signed by all his creditors. 
 An assignment was duly made, but was not recorded within 
 thirty days. H. and M., creditors who did not sign the agree- 
 ment, and McF., who did, obtained judgments and levied on and 
 sold the personal estate in the hands of the trustees, under the 
 assignment. There was no evidence that McF. had done any- 
 thing to estop himself from claiming against the assignment. 
 The court below awarded the fund raised by the sale to H., M. 
 and McF., according to priority. Held, not to be error. Lane's 
 Appeal, 82 Penn. st. 289. 
 
 33. A deed of assignment was made by a firm whose liabil- 
 ities were $596.41 and whose assets were $614.18, to an assignee 
 in trust for the creditors, which deed contained the following 
 special clause, viz. : " The assignee shall take possession of the 
 property transferred to him, sell and dispose Of the same with 
 all reasonable diligence, either at public or private sale, for the 
 best prices that can be obtained therefor, and convert the 
 same into money, unless the indebtedness of the firm can be paid 
 or settled otherwise by amicable arrangement between the creditors 
 of the firm," &c., "and out of the proceeds of such sale, if 
 any be made," &c. Held, that the deed of assignment was void. 
 Keevil v. Donaldson, 20 Kansas, 165. 
 
 34. An assignment for the benefit of creditors vests the title 
 forthwith in the assignee, though ignorant of the assignment. 
 The moment an assignment for the benefit of creditors is placed 
 
bankers' code. 13 
 
 by the assignor, or any one interested, in the office of the re- 
 corder of deeds of the proper county and within the prescribed 
 time, the beneficial interest of the creditors, the cestuis que 
 sustent, is completely vested, and it is totally immaterial when 
 the assignee accepts the trust or whether he ever accepts it. 
 Mark's Appeal, 85 Penn. st. 231. 
 
 ATTORNEYS. 
 
 35- A general retainer does not authorize an attorney to 
 settle or adjust claims, or to alter the terms of a contract made 
 by the client. Pickett, et al. v. Merchants' Nat. Bank, Mem- 
 phis, et al. 32 Ark. 346. 
 
 36. An attorney, in fact, can not bind his principal as 
 surety, unless he is specifically authorized to do it. * State ex 
 rel. Merchant v. Daspit, 30 La. 112. 
 
 37- A stipulation in a promissory note for the payment of a 
 certain sum as attorney's fees, if suit is commenced thereon is 
 valid, and may be enforced in an action on the note. Danforth 
 v. Charles, et al., i Bennett's Dakota Reps. 285. 
 
 BAILMENT. 
 
 38. The finder of a bank note, as against a bailee, without 
 reward, to whom he delivers it to be kept for the finder, has 
 such a possessory interest in the note as entitles him to recover 
 the same of the bailee, on his refusal to redeliver it to the finder 
 upon his request, and in the absence of any claim of the rightful 
 owner made known by him to such bailee. Such bailee is not 
 bound to use as great care and diligence in the keeping of the 
 note as he would be if he were a bailee for compensation ; and 
 if the note was stolen from his possession, he will not be liable 
 for it unless, the loss was the result of gross negligence on his 
 part. In such a case, to entitle the plaintiff to recover, he must 
 show that the note was a genuine note and of the value he 
 claimed. Tancil v. Seaton, 28 Grattan, (Va.) 601. 
 
 39- A man dressed as a police officer told the cashier, in 
 presence of a watchman of the bank, that he had been di- 
 rected by the lieutenant of the police to warn him that there 
 were "suspicious characters about ;" the cashier told the watch- 
 man to admit no one, but he made no inquiry of the lieutenant. 
 After the bank was closed, there then being another watchman 
 there, the first was called from outside by name ; he opened the 
 door ; a man dressed as a policeman and two others in ordinary 
 dress came an ; they overpowered the watchman, took securities, 
 &c., from the vault, including plaintiff's, deposited for safe 
 keeping, and kept as the bank's securities. Held, the bank 
 being a voluntary bailee, without reward, the evidence was not 
 sufficient to charge them with negligence. De Haven v, Ken- 
 sington Bank, 81 Penn. st. 95. 
 
14 BANKERS CODE. 
 
 40. A bailee, converting goods on which he has bestowed 
 labor and acquired a lien, may, in an action of trover brought 
 by the owner, set up his lien claim in reduction of damages. 
 Longstreet v. Phila. 39 N. J., Law 63. 
 
 41. A receipt, in the words following, imports no legal lia- 
 bility of the signer thereof, and no action can be maintained 
 upon it without evidence aliunde: "Received from H. N. 
 Peden one letter envelope, sealed, and said to contain two hun- 
 dred and ninety dollars." But if it be shown by other evidence 
 that the money was received as a bailment a recovery may be 
 had upon the receipt. And in such case the receipt constitutes 
 a legal liability, and is assignable, under sections 670 and 2228 
 of the code of 1871. Hunt &• Vaughan v. ShacMeford, 55 
 Miss., 94.* 
 
 BANKERS. 
 
 42. Bank Stock assessed under the provisions of the act 
 authorizing the taxation of stockholders of banks (Chap. 761, 
 Laws of 1866), it is the duty of the assessor to deduct from 
 the actual value of each share, a sum bearing the same propor- 
 tion thereto as the annexed value of the real estate of the bank 
 bears to the actual value of all the capital stock ; the words 
 "whole amount of the capital stock," as used in said act, has 
 reference to its value, not to the nominal amount of capital. 
 People ex relv. Comr's. of Taxes, 69 N. Y. 91. 
 
 43- Article 13 of the State constitution, entitled "Banks 
 and currency," applies to banks of issue, and does not prohibit 
 the legislature from creating banks of deposit and discount. 
 When an incorporation, attempted in good faith under a 
 general incorporation law, by the requisite number of corpora- 
 tors, will be deemed a corporation de facto. Pope v. Capital 
 Bank, 20 Kansas, 440. 
 
 44- When a bank has become involved and under the 
 general laws it is sought to make the directors and stockholders 
 liable for its debts, proceedings must be in the name of the 
 assignee, and in the Court of Common Pleas of the County in 
 which the bank is located. The liability of the stockholders 
 being secondary cannot be enforced until the assets of the 
 bank, which is the primary debtor, are exhausted. Mean's 
 Appeal, 85 Penn. st. 75. 
 
 45. The stockholder of a National Bank has legal capacity 
 to sue such corporation for misappropriation of the stock- 
 holder's funds, and for other causes. A corporation being a 
 legal entity, as such, distinct from its members, incorporators, 
 or stockholders, it follows that each or all of them may have 
 grievances redressed by actions at law or proceedings in 
 chancery, as any creditor not occupying that relation. Wilson 
 V. First National Bank, i Wyoming S. C. Rps., 108. 
 
BANKERS CODE. 1 5 
 
 46. Money paid to the Cashier of a bank for the use and 
 benefit of the bank, is payment to the bank itself. If such 
 Cashier misapply the funds so received, the bank, as his prin- 
 cipal, can maintain an action against him, but not the person 
 paying the money. If the latter suffer injury by reason of such 
 misapplication, his remedy lies against the bank and not against 
 its officer or servant. An agent receiving money from a third 
 person for his principal, if he acted within the scope of his 
 authority, and has the right to receive such payment, is not 
 responsible to the third person ; payment to the agent is 
 payment to the principal, who is responsible for the default of 
 the agent. Wilson v. Rogers, i Wyoming Sup. Ct. R. 51. 
 
 47- Under the general power of discounting negotiable 
 notes, granted by section 127 of the corporation law to savings 
 associations, such institutions have the power to purchase such 
 notes. Pape v. Capital Bank, 20 Kansas, 440. 
 
 48. Banks organized, prior to the Amendment of General 
 St. c. §13, under the provisions of that chapter had no power 
 to purchase or traffic in promissory notes as choses in action, 
 or as a specie of personal property. The power to carry on the 
 business of banking, by discounting bills, notes, and other 
 evidences of debt, is not within the meaning of that section, a 
 power to buy such securities, but to loan money thereon, with 
 the right to take lawful interest in advance. In First National 
 Bank of Rochester ». Pierson, decided September 21, 1877 (to 
 appear in 24 Minn.), the rule laid down in this case was held to 
 apply to National banks. Farmer's and Mechanic's Bank v. 
 Baldwin, 23 Minn. ig8. 
 
 49. Under Section 23, Chapter 34, laws of 1876, a private 
 banker is subject to taxation upon the average amount of de- 
 posits made by him in his business. Knox v. Comm'rs of Shaw- 
 nee Co., 20 Kansas, 596. 
 
 50. I., the President of a National Bank in Nebraska City, 
 obtained from K., in the city of Omaha, his (K.'s) promissory 
 note for the sum of $2,000, payable to I. or order, and payable 
 on demand, for the purpose of purchasing stock in the bank of 
 which he was president. I. procured the note to be discounted 
 by his bank, and had the proceeds thereof placed to his credit 
 therein, and he afterwards drew the same out by checks on the 
 bank. None of the officers of the bank, except the president, 
 were aware of the character of the note, or that it had been 
 given for stock, held in an action on the note, that the bank was 
 entitled to recover. Kennedy v. Otoe Co. Nat. Bank, 7 Neb. 
 59- 
 
 Like other agents, the president of a bank must act within 
 the scope of his authority, in order to bind his principal, unless 
 his acts have been ratified. Id. 
 
i6 bankers' code. 
 
 50^. The word "discount" signifies, "The act of buying a 
 bill of exchange, or promissory note, for a less sum than that 
 which upon its face is payable." Pape v. Capital Bank, zo 
 Kansas, 451. 
 
 51. A bank may maintain an action in its corporate name to 
 recover back a tax illegally assessed and collected against its 
 shares of capital stock, though such stock stands in the names 
 of different individual shareholders. The payment of the 
 illegal portion of the tax being one for which the shareholders 
 were not responsible. Kimball v. Corn Exchange Nat. Bank, i 
 Bradwell's 111. App. R'pts, 209. 
 
 52. The banker having put the money for a check on the 
 counter and the payee having taken it up, the payment is com- 
 plete though the counting is not finished. Chambers v. Miller, 
 C. vi. 125; 13 C. B. N. S. 125, (Eng. Com. Law). 
 
 53. A country banker receiving a check on another country 
 banker in another town, has until the next day to transmit it 
 for presentment. Hare v. Henty, C. 65, 10 C. E. N. S. 65, 
 (Eng. Com. Law). 
 
 54. A bank discounting a note before its maturity is not 
 chargeable with the knowledge of illegality or want of consid- 
 eration acquired by one of its directors in other than his official 
 capacity; such director not having acted with the board in 
 making the discount. A director offering a note of which he 
 is owner to thfe bank of which he is a director, for discount, is 
 regarded in the transaction as a stranger, and the bank is not 
 chargeable with the knowledge of such director of an infirmity 
 or defect in the consideration of the note. P. was a member 
 of the firm of M. & J. S. P., and also a director of the bank 
 of H. He obtained at the bank the discount of a note belonging 
 to the firm, which had been got of the maker by fraud. He 
 had notice, as a member of the firm, of the fraud, before the 
 note was offered for discount, but did not communicate his 
 knowledge to any of the officers of the bank. Held, that the 
 knowledge of P. was not, constructively, notice to the bank. 
 First Nat. Bank of Hightstown v. Christopher, 40 N. J, L. R., 
 435- 
 
 55. Persons who hold stock in pledge, the certificates of 
 which stand on the books of a National Bank in the name of the 
 pledgee, are, in contemplation of the National Banking Act, 
 stockholders, and so long as they thus hold the stock in pledge, 
 are responsible to the creditors of the bank in proportion to the 
 amount so held. But a sale of the stock under an authority 
 conferred by the terms of the pledge, is not obnoxious to the 
 charge of having befen done in fraud of creditors, although its 
 leading object and purpose may have been on the part of the 
 pledgee to avoid liability as a stockholder, under the twelfth 
 
BANKERS CODE. 1 7 
 
 section of the National Banking Act, which provides for the 
 personal liability of stockholders of national banks for the debts 
 of the corporation, in proportion to the amount of stock held 
 by them, and enacts that every person becoming a shareholder 
 by transfer, shall succeed to all the rights and liabilities of the 
 prior holder of such shares. Magruder Receiver v. Colston, at. al. 
 44 Md. 349. 
 
 SSl- The provisions of the act of 1875, i" relation to sav- 
 ings banks (§48, chap. 371, laws of 1875), providing that sav- 
 ings banks shall have a preference for moneys deposited over 
 other creditors of an insolvent bank, only applies to deposits 
 made in the ordinary course of business, and subject to the 
 drafts of the depositors, to an amount not exceeding that au- 
 thorized by §27 of said act. Loans, whether on time or paya- 
 ble on call, are not deposits within the meaning of said provi- 
 sions. A loan cannot be changed into a deposit by reason of 
 any want of authority in the managers of the savings bank to 
 make the loan, or for the reason that it may have been made 
 in violation of law. Rosenback v, M, 6^ B. Bank, 69 N. Y., 
 .358. ' 
 
 56. A National BanA has corporate power to enter into an 
 agreement with a customer to exchange for him non-registered 
 U. S. bonds for registered bonds, and it is bound by an agree- 
 ment to that effect made for a sufficient consideration by its 
 cashier Yerkes v. National Bank, 69 N. Y. 382. 
 
 57- Where it is sought to hold one who, while president of a 
 bank, loaned moneys of_ the bank to an irresponsible person, 
 liable for the same on the basis of his representations to the 
 cashier at the time of the loans that he was interested with 
 the borrower, and would see the amounts repaid, it is error to 
 permit the party to testify whether he ever regarded himself as 
 liable; his opinion respecting his legal liability had no bearing 
 on the case. First National Bank of Sturgis v. Reed, 36 Mich. 
 263. 
 
 58. A bank president who, while in general charge of the 
 business with the cashier under his authority, has permitted and 
 directed drawing of moneys from the bank without security by 
 one known or supposed to be irresponsible, and with whom he 
 was interested in the business for which the money was 
 obtained, and has requested the cashier not to say anything 
 to the directors about it, is' held personally liable to the bank 
 for the moneys thus paid out by him in violation of his 
 trust. Id. 
 
 59. The fact that the moneys thus drawn out were by the 
 cashier, by direction and on the authority of the president, 
 charged on the books of the bank to the irresponsible borrower, 
 would not necessarily determine the transaction as a loan to him 
 
i8 bankers' code. 
 
 by the bank; but the bank, in the absence of any act of ratifi- 
 cation or acquiescence on its part, would have a right, under 
 the circumstances, to repudiate it a sa transaction with the nomi- 
 nal borrower, and to insist on repayment by its president. Id. 
 
 60. And such president, if he persuaded the cashier not to 
 make known the facts to the directors, could claim nothing 
 because of the cashier's knowledge; that officer's silence might, 
 under such circumstances, make him accessory to the fraud, but 
 could not tend to excuse the principal. Id. 
 
 61. The question of the effect to be given to the long si- 
 lence of the bank directors after the charge to the nominal 
 borrower was entered upon the bank books, is one of ratifica- 
 tion, and should be submitted to the jury as such. Id. 
 
 62. An agent's admissions made after the fact, and entirely 
 unconnected with any act of agency, are not evidence of the 
 fact. Bowen v. School District, etc., 36 Mich, i 
 
 63. Proof that a person is clerk for another does not estab- 
 lish his .right to receive for his employer payment of demands 
 not shown to have any connection with the business; and evi- 
 dence simply that payment was made to such clerk of such 
 demands, is not a sufficient showing of agency to receive the 
 same, to authorize evidence of admissions by such clerk of the 
 payment thereof to him. Id. 
 
 64. The Third National Bank of Baltimore was organized 
 under the National Currency Act of 1864, ch. 106. The firm 
 of W. A. B. & Co., of which W. A. B. was the senior member, 
 was a large customer of the bank through which all the banking 
 business of the firm was transacted, and from which it received 
 accommodations as needed. On the 5 th day of February, 1866, 
 the firm was indebted to the bank about $5,000, when the 
 appellee voluntarily proposed to the president of the bank, to 
 deposit with the bank a large amount of bonds, about $37,000, 
 as collateral security for his present and further indebtedness. 
 The terms of the deposit as agreed on between M. Boyd and 
 the president, were dictated by the latter to the discount clerk — 
 and were as follows: "Third National Bank, February 5th, 
 1 866. William A. Boyd has deposited with the Third National 
 Bank of Baltimore, $20,000 in United States 5-20 bonds, and 
 $1,500 5-20 July, 1865; $s,ooo Hudson County, New Jersey; 
 $5,000 Town of Saratoga, New York, 7 per cent, bonds; $5,000 
 Stock of Third National Bank of Baltimore, as collateral 
 security for the payment of all obligations of Wm. A. Boyd and 
 Wm. A. Boyd & Co., to the Third National Bank of Baltimore, 
 at present existing, or that may be incurred hereafter, with the 
 understanding that the right to sell the above collaterals in sat- 
 isfaction of such obligations, is hereby vested in the officers of 
 the Third National Bank, (signed) A. H. Barnitz, Discount 
 
BANKERS CODE. Ip 
 
 Clerk." "The firm was not indebted to the bank subsequent 
 to July, 1872, when it paid its last indebtedness the bonds were 
 not withdrawn, but left with the defendant, under the original 
 agreement. The bank was robbed and the bonds stolen in the 
 manner described in the testimony, between Saturday evening 
 the T7th, and Monday morning the igth of August, 1872; the 
 bank was entered by burglars and certain of the bonds were 
 stolen. 
 
 By Section 8 of the Act of Congress of 1864, Ch. 106, a 
 bank organized thereunder, is authorized to exercise all such 
 incidental powers as shall be necessary to carry on the business 
 of banking, by discounting promissory notes, drafts, bills of 
 exchange and other evidences of debt; by receiving deposits, by 
 buying and selling exchange, coin and bullion; by loaning 
 money on personal security, and by obtaining, issuing and cir- 
 culating notes according to the provisions of this Act." In an 
 action by W. A. B. against the bank, to recover the value of the 
 bonds which were stolen, it was held, ist, That the contract 
 entered into by the bank was not a mere gratuitous bailment. 
 2nd, That the bank had the power to enter into the contract, 
 it being within the terms of the Act of Congress. 3d, That the 
 original contract of bailment being valid and binding, the obli- 
 gation of the bank for the safe custody of the deposit did not 
 ' cease when the plaintiff's debt had been paid. 4th, That the 
 defendant was responsible if the bonds were stolen in conse- 
 quence of its failure to exercise such care and diligence in their 
 custody or keeping" as at the time, banks of common prudence 
 in like situation and business, usually bestowed in the custody 
 and keeping of similar property belonging to themselves; that 
 the care and diligence ought to have been such as was properly 
 adapted to the preservation and protection of the property, and 
 should have been proportioned to the consequences likely to 
 arise from any improvidence on the part of the defendant. 5th, 
 That the proper measure of damages was the market value of 
 the bonds at the time they were stolen. Whether due care and 
 diligence have been exercised by a bank in the custody of bonds 
 deposited with it as collateral security, is a question of fact 
 exclusively within the province of the jury to decide. Third 
 National Bank v. Boyd, 44 Md. 47. 
 
 65. One dealing with a corporation in matters not falling 
 within the purview of its delegated powers, is not thereby 
 estopped from pleading its want of authority, to make the 
 contract sought to be enforced against him. Marion Savings 
 Bank V. Dunkin, 54 Ala. 471. 
 
 66. Where, however, the contract is within the delegated 
 powers, one who has dealt with it in its corporate character, is 
 in general estopped from setting up its want of complete organi- 
 zation, according to, the provisions of its charter, to defeat the 
 
20 bankers' code. 
 
 corporation in the enforcement of the contract he has made 
 with it. Id. 
 
 67. The accommodation drawee of a bill of exchange, 
 which was discounted by a bank, for the acceptor who procured 
 it to raise money for his own use in that way — the drawer not 
 being aware of this and not being present or participating in 
 the negotiations — is not thereby estopped from denying the 
 proper organization of the banking corporation, when sued 
 by it on the bill. Id. 
 
 68. Under the provisions of the Revised Code, (Part 2, 
 Title I, Chapter i, §§ 1644 et reg.) as amended by the act of 
 1868, " supplementary to the corporation laws of Alabama" a 
 corporation is sufficiently organized to carry on the business of 
 a bank of discount and deposit and loaning money, when the 
 certificate of the associates (properly acknowledged and recorded) 
 for the purpose of carrying on such banking business, shows 
 the name selected by the associates; the town where its busi- 
 ness is to be conducted; the amount of capital stock (within the 
 limits prescribed) and the number of shares into which it is 
 divided; the name and place of residence of the stockholders; 
 the shares held by them respectively, and the time when the 
 association is to begin and terminate. The association not 
 claiming the right to issue or circulate its own notes, no de- 
 posits of money and transfer of stock to the auditor (under 
 §§1644 and 1646 of the Revised Code) is necessary to authorize 
 it to carry on other banking business. Marion Savings Bank 
 v. Dunkin, 54 Ala. 471. 
 
 69. The dissolution of a partnership with an individual 
 banker does not relieve the retiring partner from liability for 
 subsequent deposits made, without notice of the dissolution, by 
 one who had been before a depositor. Howell v. Adams, 68 
 N. Y. 314. 
 
 70. The liability of the retiring partner is not changed by 
 the fact that the depositor did not know that he was a part- 
 ner. Id. 
 
 71. So also, the alteration of a certificate of deposit in 
 respect to the rate of interest, made after the dissolution of the 
 partnership by the partner continuing the business, but before 
 notice to the holder, does not relieve the retiring partner; such 
 holder having the right until notice, to treat the partnership as 
 continuing, the alteration will be deemed to have been au- 
 thorized. Id. 
 
 72. Proof of publication of notice of dissolution in news- 
 papers, in the place where the bank was located, unconnected 
 with any evidence that the depositor resided there, or took the 
 papers, is but slight, if any, evidence of notice; and when he 
 testifies that he never saw the notice or heard of the dissolu- 
 tion will not authorize a finding of notice. Id. 
 
BANKERS CODK. 21 
 
 73. A bank is not liable upon a certificate of deposit until 
 after demand of payment, and therefore, the statute of limita- 
 itons does not begin to run against it until demand is made. 
 Id. 
 
 74- Where a savings bank is bound by its rules to exercise 
 its best care to prevent fraud, it is not protected by a clause in 
 such rules that a payment to one producing a deposit book 
 shall be deemed good and valid, in case of a payment made by 
 it, merely upon the production of a depositor's book, to one 
 ho has wrongfully obtained possession of and produces it 
 ider circumstances such as would necessarily excite suspicion 
 id inquiry; as where the person who presents the book is of 
 different sex from the depositor. In the absence of any rules 
 sented to by its customers a savings bank is to be governed 
 T the same legal principals which apply to other moneyed 
 stitutions. Where it has prescribed rules to which a deposi- 
 r has assented, they are the agreement between them, and 
 v-ch must conform to them to preserve rights against each 
 other. The by-laws of defendant's, a savings bank, which 
 were printed in its customers' deposit book, contained the fol- 
 lowing: "The bank will use its best efforts to prevent fraud ; 
 but all payments made to persons producing the deposit books 
 shall be deemed good and valid payments." It was also 
 worded that drafts might be made personally, or by order in 
 writing of the depositor if the bank have his signature on the 
 signature book. Plaintiff was a depositor, and defendant had 
 his signature in such book. The wife of plaintiff wrongfully 
 obtained possession of his deposit book, which she presented 
 with a forged check or order, for $2,850, and this sum was paid 
 her. In an action to recover the amount the order and the 
 signature book were produced on the trial. Defendants' own 
 officers, as witnesses, stated that there was a difference between 
 the signature to the order, and that in the signature book. They 
 declined to charge that the payment was valid, but left it to the 
 jury to determine whether defendant used its best efforts to 
 prevent fraud. Held, That as this Court had not the benefit 
 which the trial Court had of the inspection of the signatures it 
 could not say but that said Court on inspection, discovered such 
 'a difference, as with the other circumstances of the case, 
 authorized an inference of negligence and made a submission 
 of the question to the jury proper. Also held, that a request to 
 charge that if the defendant exercised ordinary care and dili- 
 gence, and paid in good faith, it was excused, was properly 
 refused, as defendant had obligated itself to exercise more than 
 ordinary care, i. e., its "best efforts." Allen v. Williamsburg h 
 Savings Bank, 69 N. Y. 314. 
 
 75- A bank which has fraudulently permitted funds on 
 deposit belonging to a trust estate to be transferred to the indi- 
 
22 BANKERS CODE. 
 
 vidual account of the trustee, is properly chargeable with interest 
 from time of such transfer. Holdeii v. N. Y. and Erie Bank, 
 72 N. Y. App. 286. 
 
 76. A National Bank, the defendant, had in its house cer- 
 tain United States bonds belonging to plaintiff; its cashier in 
 the spring of 1869, for a sufficient consideration, agreed to 
 exchange the same for registered bonds. This the bank neg- 
 lected to do, and November, 1869, the bonds were stolen. In 
 an action to recover their value, held, that defendant was liable. 
 Yerkes v. Nat. Bank of Port Jervi's, 6g N. Y. 382. 
 
 77- Where half of bank note sent in payment, other half to 
 'ollow, title to note remains in sender. The payment is condi- 
 ional and inchoate, and therefore revocable. Smith v. Mun- 
 iay, C. Vii. 22; 3 E. & E. 22. (Eng. Com. Law.) 
 
 BILLS OF EXCHANGE. 
 
 78. Bill of Exchange or draft headed " New England 
 Agency of the Pennsylvania Fire Insurance Company," having 
 the words " Foster & Cole, General Agents for the New England 
 States " printed in the margin, and appearing on its face to be 
 drawn upon said insurance company in payment of a claim 
 against it, is the draft of the company, and not of Foster & 
 Cole, although it is signed by them in their own names. Chip- 
 man V. Foster, 119 Mass. 189. 
 
 79- Where a bill of exchange was drawn for the sole ac- 
 commodation of the payees, and accepted by the drawee for 
 the same purpose, and owing to the insolvency of the payees, 
 the acceptor was compelled to pay the bill, and brought an 
 action against the drawers to recover the amount paid; Held, 
 that there was no implied obligation on the part of the drawers 
 to reimburse the acceptor. Barnet v. Young, 29 Ohio 7. 
 
 That the drawers and acceptor, as between themselves, in the 
 absence of any understanding to the contrary, were not co- 
 securities for the payers, or liable to contribution. Id. 
 
 80. Holder cannot sue for original consideration when 
 there has been a failure to stamp foreign bill and a delay of a 
 year. Pooley v. Brown, C. iii. 565, ii C. B. N. S. 565, (Eng. 
 Com. Law.) 
 
 8r. A Bill of Exchange must be payable at all events, nt;! 
 dependent on any contingency, nor payable out of a particular 
 fund; and it should be for the payment of money only, and 
 not for the performance of any act or in the alternative. An 
 instrument drawn for the payment of six hundred dollars, as 
 follows: "Two hundred dollars out of the first estimate or 
 when the first floor joists are in, two hundred dollars when the 
 building is ready for the roof, and two hundred dollars when 
 
bankers' code. 23 
 
 the stoops are completed, and charge the same to my account," 
 is not a bill of exchange because payable upon a contingency, 
 and out of a particular fund. Where the payment depends upon 
 a contingency, the happening of the event will not change the 
 character of the instrument. It was not a bill of exchange 
 when made, and would not become such by matter ex fart facto. 
 Miller v. Excelsior Stone Co.., i Bradwell's 111. App. Re'pts. 273. 
 
 82. An acceptor of a bill of exchange drawn by the pur- 
 chaser of machinery, cannot by paying the bill before maturity, 
 ;hange the relations of the original parties to it and to each 
 )ther, and thus cut off the drawer from the defense of failure 
 jf consideration, from defects in the machinery so purchased. 
 The acceptor paying before maturity is not a holder for value 
 )f the paper, as against the drawer. The liability of the acceptor 
 s to pay according to the terms of the contract. His remedy, 
 IS against the drawer, then is for money had and received by 
 lim, of which the bill is the evidence. An acceptor, even 
 Aough he may have been surety for the drawer to the payee for 
 machinery purchased by the drawer, in paying before ma- 
 turity is subject to any defense which" could be made by the 
 maker, if sued by the payee. Stark v. Alford, 49 Texas, 260. 
 
 83. Draft. — The possession of the draft by G., the plaintiff's 
 assignee, was presumptive evidence of his ownership ; and this 
 presumption was not rebutted by the evidence on the trial. G. 
 was one of the firm of R., B. & Co., upon whose claim the 
 draft was given, and was therefore part owner of the draft 
 when it was given. The paper is produced in Court by the 
 assignee of G., and this prima facie establishes the plaintiff's 
 title. Kidder, Assignee v. Norrobin et al, 72 N. Y. App. 159. 
 
 84. In the absence of any express or implied agreement, a 
 party is not compelled to pay a draft drawn on him merely 
 because he has been in the habit of paying similar drafts. 
 Helm V. Meyer, Weis &= Co., 30 La. 943. 
 
 85. Where there is no value or consideration for acceptance 
 it is a good defence in action by drawer or person taking under 
 him. Vanquelin v. Bonard, C. ix. 341, C. ; 15 C. B. N. S. 341 C. 
 (Eng. Com. Law.) 
 
 86. Bill of Exchange. — Where a draft is drawn in favor of 
 the payee on a certain fund to arise from the sale of property then 
 in the drawee's hands, and the payment of the draft, by its 
 own terms, is postponed to the payment (out of the same 
 fund), of a debt due the drawee, the drawee who has not accepted 
 the draft, is only liable for whatever balance of the fund may 
 remain, after the payment of his own debt. -£. Marqueze &" 
 Co. V. Fernandez &• Co., 30 La. 195. 
 
 87. A., of St. Louis, being indebted to B., of St. Joseph' 
 requested B. to draw upon him, upon which draft he would 
 
24 BANKERS CODE. 
 
 raise the money and remit the proceeds to B. on account of his 
 indebtedness. B. accordingly drew a draft to the order of C, 
 his banker at St. Joseph, upon which C endorsed " Pay to the 
 order of C," his banker at St. Joseph, upon which C, endorsed, 
 "Pay to D. or order, for collection for my account." Upon 
 receipt of the draft at St. Louis, A. accepted it, and offered it 
 for discount to plaintiff. By consent of A. and plaintiff, the 
 endorsement was stricken off, and plaintiff then discounted the 
 draft, and A. received and remitted the amount to B. In an 
 action on the draft against B., the drawer, held, (i) that plaintiff 
 could not, by parol evidence, show a contract between A. and 
 B. by which the latter was to have the draft discounted on the 
 faith of his. name as drawer; (2) that the endorsement, being 
 restrictive, destroyed the negotiability of the draft and operated 
 as a mere power of attorney to the banker at St. Louis to re- 
 ceive the proceeds of the draft for the use of the drawer; (3) 
 that the erasure of the endorsement, without the knowledge or 
 assent of B., destroyed the validity of the draft as to him, and 
 plaintiff, having knowledge of the alteration, was bound to 
 know that such was its effect when he took the draft. Me- 
 chanics' Bank V. Valley Packing Co., 4 Mo. Ct. Appeals (St. 
 Louis,) 200. 
 
 88. When a bill drawn and endorsed in England payable 
 abroad is dishonored by acceptor's non-payment, the holder 
 can recover from endorser the amount of re-exchange and no 
 more. A custom that he is entitled to recover either the re- 
 exchange or the amount he paid for the bill is invalid. Suse 
 V. Pompe,:yiQN\l\. 538: 8 C. B. N. S. 538. (Eng. Com. Law.) 
 
 89. A promise to accept a future bill of exchange, in con- 
 sideration of money to be advanced thereon by the promisee, is 
 invalid, and an action thereon cannot be maintained against 
 the promissor. Flato v. Mulhall, et al., 4 Mo. Ct. Appeals (St. 
 Louis,) 476. 
 
 90. Where an accommodation bill is accepted at the request 
 of a third party, who agrees to share any loss, such third party 
 is not discharged by time given acceptor and drawer. Way 
 V. Hearn, CIIL 774; 11 C. B. N. S. 774. (Eng. Com. Law.) 
 
 91. Acceptor who tears the bill in two parts, with the inten- 
 tention of destroying it, is liable to the bona fide holder obtain- 
 ing it from the drawer, who fraudulently joined the pieces in 
 such a way as to look as if the halves had been transmitted by 
 mail. Ingham v. Primrose, XCVII. 82; 7 C. B. N. S. 82. 
 (Eng. Com. Law.) 
 
 BILLS OF LADING. 
 
 92. Bills of Lading for goods not actually put on board, 
 cannot be signed by the master of a ship under his authority 
 
BANKERS CODE. 
 
 25 
 
 as agent, and therefore the owner of the ship is not responsi- 
 ble to parties taking, or dealing with, or making advances on 
 the faith of such an instrument which is untruthful in this par- 
 ticular. The consignee and every other party thus acting does 
 so with notice of this limitation of the power of the master, and 
 acts at his own risk both as respects the fact of shipment and 
 the quantity of cargo purported by a bill of lading to be shipped. 
 Bills of lading are not negotiable in the same sense in which 
 bills of exchange or promissory notes are. They stand in the 
 place of the goods they represent, and delivery or endorsement 
 of them transfers the right of property in the goods, but not 
 in the contract itself, so as to enable the endorsee to maintain 
 at the common law an action on it in his own name. A rail- 
 road is not liable for advances made by a commission merchant 
 upon the faith of a bill of lading fraudulently signed by one 
 of its station agents, the goods specified never having been 
 shipped or received at the depot for transportation. Balto &' 
 ■Ohio R. R. Co. V. Wilkens, 44 Md. ri. 
 
 93. Loss by Innocent Party. — Where one of two innocent 
 parties must suffer from the wrongful or tortious acts of a third 
 party, the law casts the burden or loss upon him by whose 
 act, omission or negligence such third party was enabled 
 to commit the wrong which occasions the loss. Where 
 the agent of a railroad corporation, engaged as a com- 
 mon , carrier, has authority to receive grain for shipment 
 over its road, and issue in the name of the corporation a bill 
 of lading for the consignment, and promise in the bill of lading 
 to deny that it has received the grain mentioned therein, and 
 is liable to the indorsee and assignee for advances made in 
 good faith on the bill of lading. Wichita Savings Bank v. 
 Atchison, Topeka and Santa Fe R. R. Co., 20 Kansas, 519. 
 
 94. Bills of Lading' are transferable by indorsement. 
 Robertson v. Stuart, 68 Me. 61. 
 
 BONDS. 
 
 95. Generally the term "bond " implies an instrument under 
 seal. The official bond required of a collector of taxes must 
 be a sealed instrument. The words "witness our hands and 
 seals," when no seal is attached, will not make the instrument, 
 though otherwise in proper form, a bond. An instrument, in 
 form a. bond, but containing no seal, voluntarily executed and 
 delivered in lieu of a bond and accepted therefor is valid. 
 Its acceptance is a sufficient consideration to cover all official 
 delinquencies in not paying over money actually collected after 
 such acceptance. Boothbay v. Giles, 68 Me. 160. 
 
 96. A married woman cannot bind herself as surety on an 
 official bond. HyneS v. Dickinson, 32 Ark. 776. 
 
 97. A money bond, issued by a body politic, under authority 
 
26 bankers' code. 
 
 of law, payable to bearer, has the negotiable quality of ordinary 
 commercial paper, and if, while it is a valid instrument, it 
 reaches the hands of an innocent holder for value before ma- 
 turity, although he derives his title from a thief, he will be 
 entitled to recover the money due on it. The alteration of the 
 number of a bond, where different bonds of the same series are 
 distinguished alone by the numbers, will render the instrument 
 void in the hands of the person who made the alteration, and 
 also in the hands of those who claim under him. While the 
 alteration of a stolen bond by a thief will avoid it as to him 
 and those who claim under him, it will not impair the rights of 
 the true owner. Force v. Elizabeth, 28 N. J. Eq. 403. 
 
 98. A paper which in the body of it says " as witness my 
 hand and seal," has the word "seal" affixed to the signature 
 of the maker. It is a sealed instrument within the meaning of 
 the statute. Code of 1849, ch. 143, §2 p. 580. Lewis exors v. 
 Overly's adm'r, 28 Grattan (Va.) 627. 
 
 99. A person taking a bond for the future good conduct of 
 an agent already in his employment, must communicate to a 
 surety his knowledge of the past criminal misconduct of such 
 agent in the course of such past employment, in order to make 
 such bond binding. The mere non-communication of such 
 knowledge, irrespective of motive or design, is a fraud in law, 
 which will invalidate the obligation. Sooy Ads. State of N. J., 
 39 N. J. 135. 
 
 100. A bond of indemnity given to an accommodation en- 
 dorser conditioned upon the payment of certain notes or a 
 single renewal of them, does not cover subsequent renewals. 
 In such case, where the notes were renewed twice to it, by an 
 agreement between them to that effect, is postponed to the lien 
 of a mortgage upon real estate bound by the judgment, given by 
 the defendants in the judgment before the second renewal of 
 one of the notes and on the day of the second renewal of the 
 other. Appeal of First Nat. Bank, 82 Penn. st. 488. 
 
 101. There can be no innocent holder of paper issued by a 
 municipal corporation without power. Lindsey v. Rottaken, 32 
 Ark. 619. 
 
 102. Municipal bonds issued without authority, although 
 negotiable in form, are void in the hands of an innocent holder. 
 Hancock v. Chicot Co., 32 Ark. 575. 
 
 CHATTEL MORTGAGES. 
 
 103. A mortgage of a certain described horse, and all other 
 live stock of which the mortgagor may become owner during 
 the year, gives a valid lien upon any horse or other animal 
 which the mortgagor may acquire during the given year, by one 
 or more exchanges of the first mortgaged horse and his suc- 
 cessors. Davis v. Marx, 55 Miss. 376. 
 
BANKERS CODE. 27 
 
 104. Where a chattel mortgage fails to duly describe the 
 property, the defect is cured by the subsequent delivery of the 
 property to the mortgagee, as against parties who have not 
 acquired any rights or interest before such delivery. The de- 
 livery, in such a case, must be such an actual transfer of the 
 possession and control of the property that, if it was destroyed, 
 the loss would be that of the mortgagee. A constructive pos- 
 session will not avail. Parsons Savings Bank v. Sargent, et al., 
 20 Kansas, 576. 
 
 105. The purchaser of a house and the furniture therein 
 immediately leased the same to the vendor, who remained in 
 possession of the furniture, as lesee, the same never having 
 been out of his possession. Held, that, as against creditors of 
 the vendor, the sale of tlie furniture was void. Bishop V. 
 O'Connell, et al., 4 Mo. Ct. Appeals (St. Louis, 578.) 
 
 106. In a chattel mortgage made by M. & Co., the goods 
 were described as "two sets of blacksmithing and one set of 
 waggon maker's tools complete," &c., "together with all their 
 floating capital stock in trade, to the value of f 1,000," &c., 
 "connected with the business they carry on in the said village 
 of Watertown, as wagon and carriage builders, general black- 
 smiths, &c., under the name and firm of M. & Co. Held, an 
 insufificient description as regarded the tools. Per Gwynne J 
 The mortgage clearly could not pass after acquired goods, for 
 though after acquired goods may be affected in equity, it could 
 only be when the mortgage shows an intention to do so. Mason 
 V. Macdonald, 25 Upper Canada, Com. Pleas Rpts. 435. 
 
 107. A mortgage of personal property consisting of goods 
 in a merchant tailoring establishment is void as against credi- 
 tors, where the mortgagors by the consent of the mortagee con- 
 tinue to carry on business, manufacturing and selling the 
 goods, in the usual course. City National Bank v. Goodrich, 3 
 Colo. 139. 
 
 108. Husbanpl and wife gave a note and secured it by a 
 mortgage on her furniture. The husband, with money borrowed 
 of his father, paid the note, receiving the papers into his pos- 
 session. Immediately afterwards and before separation, by 
 arrangepaent between all parties except the wife (who was not 
 present), the note and mortgage were assigned by the mortgagee 
 to the father. Held, that the wife would hold the property 
 clear of the incumbrance by mortgage. The father would 
 have no right in the mortgage by subrogation, being under no 
 obligation to pay it, and having no interest in it when it was 
 paid. Moody V. Moody, (i'&'hli.&. \t^'^. 
 
 109. A chattel mortgage is in law a conveyance of the 
 goods and chattels mortgaged, and passes the title of the 
 mortgagor for the purposes for which it was made. The right 
 of a mortgagee, under a mortgage made by a tenant of his 
 
28 bankers' code. 
 
 goods and chattels upon the demised premises, is superior to 
 that of a bailiff subsequently seizing them under a warrant to 
 distrain for rent. But a chattel mortgage in this State is re- 
 garded as a mere security for the debt, and does not entirely 
 divert the property of the mortgagor. The interest of a mort- 
 gagor in the chattels mortgaged is such an interest as may be 
 seized and sold under ordinary process of law against him. 
 Woodside v. Adams, 40 N. J. L. R. 417. 
 
 110. Goods in possuSMion of mortgagee — exemption from 
 seizure under writ of attachment in insolvency. Held, that 
 goods and chattels in the possession of a mortgagee of them 
 cannot be seized and sold, and the proceeds paid over to a 
 sheriff acting under a writ of attachment in insolvency against 
 the mortgagor. Held, also, that the possession of the defend- 
 ant to whom such goods had been sent by the plaintiff, the 
 mortgagee, to be sold, and their proceeds paid over to him, was 
 the possession of the mortgagee; and defendant having in such 
 case assented to the seizure by the sheriff, and acting under 
 his dii"ections, sold the goods and paid over the proceeds, was 
 liable to repay them to the mortgagee. Watson v. Henderson, 
 et. al., 25 Upper Canada Com. Pleas Rpts. 562. 
 
 111. If the holder of a chattel mortgage had taken pos- 
 session of the chattels under his mortgage, before the judg- 
 ment creditor recovered his judgment, will not give validity to 
 the mortgage as against the latter, if the mortgage was not 
 filed according to the provisions of the act concerning mortga- 
 ges, and there were not immediate delivery and continued pos- 
 session of the goods, according to the provision referred to. A 
 mortgage of after-acquired property can only attach itself to 
 such property in the condition in which it coines to the mort- 
 gagor's hands. If it is already subject to mortgages or other 
 liens, the general mortgage does not displace them, though 
 they may be junior in point of time. It only attaches to such 
 interest as the mortgagor acquires. Williamson v. New Jersey 
 R. W. Co., 28 N. J. Eq., 277. 
 
 112. Chattel Mortgage. An immaterial variation be- 
 tween a chattel mortgage and the copy subsequently filed does 
 not invalidate the re-filing. A mistake in the number of" the 
 lot where the chattels were, was held to be immaterial under 
 the circumstances. The statement annexed to the affidavit 
 with a copy of the mortgage, did not give distinctly all the in- 
 formation required by the Act, but the affidavit and statement 
 together contained all that was necessary. Held sufficient, the 
 statement contained an item of $2.25 as paid for re-filing, 
 which the mortgagee had no right to charge: Held, not' to 
 vitiate the instrument. A chattel mortgage was given for 
 $1,070; it afterwards appeared that the amount was made up 
 in part of a promissory note made and given by the mortgagee 
 
BANKERS CODE. 29 
 
 to the mortgagor at the time of the execution of the mortgage 
 and not paid for some months afterwards. Held, that in the 
 absence of fraud the mortgage was valid. Walker v. Niks, i8 
 Grant's Chancery, Ontario, 210. 
 
 113. The holder of a chattel mortgage agreed to assign his 
 mortgaged interest to a third party who proposed to purchase 
 the chattels of the mortgagor but had no other interest in 
 the mortgage, and who never became the owner of the equity of 
 redemption. The agreement contained the following clause: 
 "In case of failure to pay said notes, or either of them, or the 
 interest, the said party of the first part (the mortgagee) resumes 
 the right to foreclose said mortgage, or take or sell said property, 
 the same to all intents or purposes as if said notes below 
 mentioned were the notes mentioned and specified in said 
 mortgage, and it being the intent hereof to allow said mortgage 
 to remain as security for the payment of the notes below men- 
 tioned. Held, that this agreement was collateral to the mort- 
 gage, and that the payment of one of the notes was not a 
 payrnent/r(7 tanto of the mortgage debt. The mortgagee has 
 previously insured his interests as a mortgagee for $57,000. 
 After a partial payment of $20,000 by the proposed buyer of 
 the property mortgaged there was a loss by fire of $53,000 on 
 the mortgaged property. Held, that the insured rights of the 
 mortgagee was not impaired or diminished by such partial pay- 
 ment. The proposed purchaser of the goods mortgaged agreed 
 to keep them insured for the benefit of the mortgagee. This 
 he did not do, and the mortgagee insured his interest as mort- 
 gagee in his own name. Held, that a liability of the proposed 
 purchaser for the cost of the insurance under his contract with 
 the mortgagee, did not affect the contract between the mortga- 
 gee and the insurers. Haley v. Mftrs. Fire and Marine Ins. 
 Co. 120, Mass. 292. 
 
 114. When chattel mortgage was executed it was agreed 
 between the parties that the mortgagor may go on and sell the 
 stock and use the proceeds, generally, in his business, and this 
 ageeement is carried out by permitted sales, the transaction is 
 fraudulent in law as against the creditors of the mortgagor. 
 Southard w. Benner, et. al., 72 N. Y., App. 424. 
 
 CHECKS. 
 
 115. A dishonored check need not be protested to bind the 
 maker. Henshaw v. Root; 60 Ind. 220. 
 
 116. A check on a banker is a negotiable instrument and 
 the endorser is liable to the holder. Keene v. Beard, XC. VIII. 
 372; 8 C. B. N. S. 372. (Eng. Com. Law). 
 
 117. Where, in an action against a partnership, on a dis- 
 honored check, executed in the firm name, the execution of the 
 
30 bankers' code. 
 
 check is not denied by plea under oath, and the check is intro- 
 duced in evidence without objection, the existence of the partner- 
 ship is thereby admitted. Where, in an action against a part- 
 nership, the existence of the partnership may be inferred from 
 the evidence, a finding of that fact will not be disturbed for 
 want of direct evidence thereof. Henshaw v. Root, 60 Ind. 220. 
 
 118. In an action against the maker on a dishonored check, 
 the complaint, setting out a copy thereof, alleged its execution 
 and delivery, its presentation on the day it was issued for 
 payment, its dishonor and notice thereof to the defendant ; and 
 that the defendant at the time of its issue had no funds 
 deposited for its payment. Held, on demurrer, that the com- 
 plaint is sufBcient. Mere delay in giving notice to maker of 
 the dishonor of his check does not discharge him from liability 
 thereon, but he is entitled to whatever damage he may suffer 
 by reason of such delay. Henshaw v. Root, 60 Ind. 220. 
 
 119. A check may be offered in evidence under the money 
 counts ; and if there is no other evidence in the case, it is of 
 itself sufficient to entitle the plaintiffs to recover on those 
 counts ; yet it is only prima facie evidence of money lent, 
 paid and advanced, or had and received ; and where it is 
 proved that no money had come to the hands of defendant, 
 the presumption raised by the check is rebutted, and no 
 recovery can be had on these counts. Blair Ss' Hoye v. Wilson, 
 28 Grattan (Va.), 165. 
 
 120. The rights of a check-holder and of the bank are 
 fixed when the check is presented for payment, and the bank 
 has no right to pay or satisfy out of the fund thus appro- 
 priated other checks or demands subsequently presented, or 
 demands which subsequently accrued to the bank or others ; 
 nor can the bank retain the money against the check-holder, 
 under claim of an equitable lien for a debt by the drawer of the 
 check not yet matured. Zelle et al German Savings Inst., 4 
 Mo. Appeal Reports (St. Louis), 401. 
 
 121. Where a check, given in payment of a debt, is dis- 
 honored, action need not be brought for such debt, but may be 
 maintained on the check. Henshaw v. Root, 60 Ind. 220. 
 
 122. The holder of a check, by the mere fact of its being 
 drawn in his favor, acquires no right of action in equity, as upon 
 an equitable assignment, against the person upon whom it is 
 drawn. To an action by plaintiffs against defendants for their 
 refusal to pay a check, drawn by plaintiffs and one W. on them, 
 defendants pleaded, on equitable grounds, that before the 
 drawing or presentment of the check in question the plaintiffs 
 and W. had drawn and delivered to various persons certain 
 other checks, amounting in all to the whole of their funds in 
 defendants' hands, which were presented before this check ; 
 that neither at the time of the drawing, nor presentment of the 
 
BANKERS CODE. 3 1 
 
 first-drawn checks or the check in question, had defendants 
 more than sufficient funds in their hands to pay the first-drawn 
 checks, as the plaintiff and W. well knew ; and that afterwards, 
 and before the commencement of this action, defendants paid 
 the holders of the first-drawn check the amounts thereof, and 
 thereby paid and disbursed all the plaintiffs' and W.'s moneys 
 in their hands, and afterwards settled with the plaintiff and W. 
 their banking account in full. Held, plea bad, for the previous 
 presentment and dishonor of the first-drawn checks not cre- 
 ating any lien on the funds, and it being admitted that at the time 
 of the presentment of the checks in question there were sufficient 
 funds to meet it, such funds were applicable to its payment ; 
 and moreover, it was quite consistent with the plea that at the 
 time of the presentment of the first-drawn checks defendants had 
 no funds to meet them, and that after their dishonor they were 
 placed in funds when the check in question was presented and 
 dishonored, and that the first-drawn checks were then presented 
 a second time and honored. Caldwell y. Merchants' Bank, if) 
 Upper Canada Com. Pleas. 294. 
 
 123. While the giving of a check by a debtor to a creditor 
 is generally presumed to be only a provisional or conditional 
 payment of the debt for which it was given, yet such check 
 may, by agreement of parties, be given and received in full 
 payment and absolute discharge and satisfaction of the debt; 
 and whether it was so given or received is a question of fact 
 for the jury. Blair dfHoge v. Wilson, 2 Grattan (Va.), 321. 
 
 COMPOSITION. 
 
 124. R. holding a promissory note, of which P. was the 
 maker, and L. the endorser, signed a composition deed, whereby 
 the creditors of P. released all claims against him, the deed to 
 be null and void unless signed by all his creditors, and wrote 
 after his name the words, " provided this does not release the 
 endorsers in any manner." In an action against P. by another 
 creditor, who had signed the deed, L.'s name did not appear 
 among the signers of the deed ; but it was agreed that if the 
 signing by R. did not release the endorser, then all the cred- 
 itors had signed. Held — The condition annexed by R. to his 
 signature of the deed of composition was equivalent to a 
 reservation of his rights against Lochman as endorser of the 
 note held by R., and did not prevent his execution of the deed 
 from operating as a release of all his rights against P., the 
 maker of that note, although it could not affect any right of L. 
 against P. Sohier v. Loring, 6 Cush. 537 ; Tobey v. Ellis, 114 
 Mass. 120. But the report expressly states that if this execu- 
 tion of the deed by R. did not release the endorser, all the 
 creditors of P. had signed the composition deed — which, as 
 L.'s name does not appear among the signers of that deed. 
 
32 
 
 BANKERS CODE. 
 
 necessarily implies that the relation between him and P. was 
 such that he was not a creditor of P., and would, if called 
 upon to pay the note as endorser, have any right to recover 
 against P. The deed of composition having been signed by 
 all the creditors of P. is a bar to this action against him. Judg- 
 ment on the verdict for the defendant, Richardson v. Pierce, 119 
 Mass. 165. 
 
 125. An agreement of creditors " to accept seventy-five per 
 cent, of the amount of indebtedness as set against our respect- 
 ive names; said seventy-five per cent, to be paid in two, four 
 and six months, from December 15," the contract to take effect 
 " provided all merchandise indebtedness accept the same set- 
 tlement," is an agreement on the part, of a creditor, who has 
 sold the debtor merchandise to compromise the whole claim 
 set against his name, and rests upon sufficient consideration. 
 Farrington v. Hodgdon, 119 Mass. 453. 
 
 126. Creditors signed an agreement " to accept seventy-five 
 per cent, of the amount of indebtedness as set against our re- 
 spective names ; said seventy-five percent, to be paid in two; four 
 and six months, from December 15," the contract to take effect 
 "provided all merchandise indebtedness accept the same set- 
 tlement." A., one of the creditors, held three notes of the 
 debtor, two of which he had previously sold, taken back under 
 false representations by the purchaser, and at the time he 
 .signed the above agreement was, with the knowledge of the 
 debtor, endeavoring to force the purchaser to take the notes 
 back, which was done before December 15. Held, in an action 
 by A. upon the note not sold, that A. not being in pos- 
 session, or having control of the two notes sold, the debtor 
 was not obliged as to whom to tender the settlement note^. 
 Held also, as to the note in suit, that the debtor was not 
 obliged to tender a settlement note of seventy-five per cent, on 
 that note after the transfer of the other two notes, which the 
 debtor had paid to the purchaser. Held, also, that evidence of 
 conversations, tending to show the understanding of parties as 
 to the notes sold, prior to the execution of the agreement, was 
 not admissible to vary the written contract. Id. 
 
 127. The creditors of A. and B. by a composition deed 
 agreed to accept from A. and B. " ten per cent, of the amounts 
 due us, and each of us, from said A. and said A. and B. in full 
 settlement and discharge of our debts against them ; said ten 
 per cent, to be paid within thirty days." The plaintiff, one of 
 A.'s creditors, who joined in the composition, held a note and 
 account against him, which were then due. He also held 
 another note, which would not become due, until after the 
 expiration of said thirty days, on which A.'s name appeared as 
 endorser. The defendant contends that upon paynieht of ten 
 per cent, of amounts due, he was entitled to be discharged 
 
BANKERS CODE. ^^ 
 
 from all debts, whether due or not. Held, whatever might 
 have been the effect of the deed upon debts, the liability for 
 which was fixed, the character and language of the deed does 
 not indicate that it was intended to be a relinquishment of all 
 liabilities, by reason of which the defendant might afterwards, 
 upon the occurrence of certain events, become chargeable as 
 a, debtor. While such a contingent demanded, yet it should 
 appear that they had it in view at the time of executing the 
 deed. Pierce v. Parker, 4 Met. 80, 89. Here everything 
 points to the opposite conclusion. Before it could be deter- 
 mined whether the defendant would become liable to pay this 
 note, the composition deed would by its terms have been fully 
 executed. There were two claims to which it strictly applied ; 
 and the subsequent conduct of the parties, who made no pro- 
 vision for any dividend upon this, tends to show that it was 
 not understood upon either side that this claim was released. 
 Hamblen v. Rartigan, 119 Mass. 153. 
 
 CONTRACTS. 
 
 128. A. directs B. Vo give credit on the application of C. for 
 such goods as the latter may order, and charge to him, as it is 
 immaterial whether A. had any thing further to do with order- 
 ing the specific goods, or whether C. is the agent of A. If B., 
 relying on the general direction of A. to deliver goods to C, 
 furnishes goods to C. but gives credit to A., A. is liable 
 whether C. is A.'s agent or not. Jackson, et. al. v. Dodge, 4 
 Mo. Ct. Appeals (St. Louis), 567. 
 
 129. As a general rule, an action on a contract must be 
 brought in the name of the pa,rty having the legal interest therein. 
 A third party may maintain an action in his own name upon a 
 contract made expressly for his benefit where his release would 
 be a sufficient discharge to the promissor, but not where it 
 would leave the promissor liable to an action by the other con- 
 tracting party. Kouniz v. Holthouse, 85 Penn. St. 235. 
 
 130. When the plaintiff in an action on a promissory note 
 avers, in his replication, that the note was given to bind a parol 
 contract for the conveyance of land, to be paid if defendant 
 refused to carry out the bargain, and to be void if the contract 
 was carried out, and that defendant had refused to carry out his 
 part of the contract, it is error to render judgment for defend- 
 ant on the pleadings. There is nothing illegal, immoral, or 
 unconscionable in such a contract. Schencko v. Meier, 4 Mo. 
 Ct. Appeals (St. Louis), 566. 
 
 131. A contract for the delivery of property being entire, 
 the promissee is not bound to receive a part, though the parties 
 may by consent, sever the contract. In an action upon two due 
 bills payable in specific property, one requiring demand, the 
 other not, and the parties having severed the contract by de- 
 
34 BANKERS CODE. 
 
 livery and receiving part of the property from time to time, 
 held, that the plaintiff, to maintain his action, must show a de- 
 mand and refusal as to the first due bill, and as to the residue 
 remaining undelivered on the second. Widner v. Walsh, 3 
 Colo. 548. 
 
 132. When one person represents that he owes to the debtor 
 of another a debt of equal amount, substitutes himself in place 
 of the debtor by parol agreement with the creditor, fixes a time 
 for payment, and thus induces the creditor to discharge the 
 debtor and trust exclusively to him, his undertaking to pay is not 
 collateral, but original, and performance may be enforced whether 
 he ever in fact owed anything to the debtor in whose stead he 
 agreed to be bound or not. Edenfieldv. Canady, 60 Ga. 456. 
 
 133- It is not a good defence to a promise in writing under 
 seal, to pay a sum of money, for value received, that it was 
 voluntary. The Statutes concerning evidence (Rev., p. 380, 
 sec. 16) which permit a defendant to plead and set up fraud in 
 the consideration, and (Rev., p. 387, sec. 52) to show want of 
 sufficient consideration as a defence to a sealed instrument es- 
 tablish new rules of evidence, but were'not intended to abolish 
 all distinctions between simple contracts and specialties. Aller 
 V. Aller, 40 N. J. Law Reports, 447. 
 
 134. A planter who has agreed to consign, and pay com- 
 mission on his entire crop to his factors, in consideration of 
 certain promises and stipulations in his favor made by the 
 factors, is released from his obligation to consign and pay such 
 commission on whatever balance of his crop he. may have on 
 hand, when the factors shall fail and refuse to comply with 
 their stipulations; more particularly when the failure of the 
 factors to perform their part of the contract, disables the 
 planter from performing his part of it. Nalle is' Cammack v. 
 A. L. D. Conrad, et. al., 30 La., 503. 
 
 135. Defendant signed a written agreement without reading 
 it, and did not contain the contract as in fact made, is no 
 ground for the introduction of parol evidence to vary its terms 
 etc. It is not the duty of courts to relieve parties from the 
 results of their gross negligence. Bostwick v. Duncan, Johnston 
 &" Co., 60 Ga. 383. 
 
 136. A written contract containing terms not presenting a 
 case of latent ambiguity, are not to be varied by extrinsic and 
 parol evidence, the expression " payable as convenient " cannot 
 reasonably be understood as extended to excuse the defendants 
 in any event, from making any payment at all. It can only 
 mean that some indulgence as to the length of credit was to be 
 allowed to the debtors. The service requested in the contract 
 has been performed and the price agreed upon, as the compen- 
 sation for that service is yet unpaid, though due and payable. 
 Black V. Bachelder, et. al., 120 Mass. 17 r. 
 
BANKERS CODE. 35 
 
 137' When it is attempted to be shown by parol evidence 
 that the operation of a contract was to be limited to a particular 
 time, the evidence thereof must be positive and clear. Shepler 
 V. Scott, 85 Penn. 329. 
 
 138. Written contracts are to be interpreted by the court, 
 and their ambiguities explained by surrounding facts, not by 
 the interpretation of witnesses. Home Life Ins. Co. v. Potter, 
 ft. al., 4 Mo. Ct. Appeals (St. Louis), 594. 
 
 139' Contract signed by one party only, is accepted by the 
 other party, it becomes binding upon both parties, the same as 
 if signed by both. Brandon Mfg. Co. v. Morse, 48 Vt. 322. 
 
 140. Contract in writing for the sale and delivery of a cer- 
 tain quantity of wood at a stipulated price per cord, did not, in 
 terms, fix the time of payment. Held, that the law fixed the 
 time as on demand after delivery, and that the fact that the 
 purchaser made voluntary payments to the vendor before de- 
 livery, did not vary the contract. Id. 
 
 141. An assignee of a lease without warranty cannot set up 
 a defect of title in defence to an action upon a note given in 
 consideration of the assignment. In such case the assignee 
 occupies the same position as a purchaser of real estate under 
 a deed of quit claim. Sanborn v. Cree, 3 Colo. 149. 
 
 142. In an action on a contract for the transfer to the plain- 
 tiff, by the defendant, of a certain promissory note, an instruc- 
 tion to the jury, that, if such contract was made for a valuable 
 consideration, the transfer should "be made by endorsement, 
 unless a different agreement is made by the parties," and that 
 the burden of proof is upon the defendant to establish the 
 latter agreement, is correct. Wade y. Guppinger, 60 Ind. 376. 
 
 143. Where two parties agree as to what shall be done in 
 case one party fails to perform his part of the contract, and 
 upon such failure the thing agreed upon is done, no action lies 
 for such failure, the contract being discharged by the fulfilment 
 of its terms. Reel v. Ewing, 4 Mo. Ct. Appeals (St. Louis), 569. 
 
 144. The rule which forbids the varying of written instru- 
 ments by parol proof applies only to the parties to the writing. 
 
 Whitney v. Cowan, 55 Miss. 626. 
 
 145. In the absence of a stipulation as to the time when an 
 act is contracted to be done, the law allows a reasonable time 
 for its performance. What is reasonable time depends upon the 
 nature and character of the thing to be done, the circumstances 
 of the case, and the difficulties attending its accomplishment. 
 As an abstract question, what is reasonable time may be one of 
 law; but unless the facts are admitted, its determination be- 
 comes a mixed question of law and fact. In an action to rescind 
 
36 bankers' code. 
 
 a contract, a proffer to perform, made in defence, should show 
 an ability to comply, or a reasonable prospect of being able to 
 do so. HartY. Bullion, 48 Texas, 278. 
 
 146. Where one brings an action to recover compensation 
 for procuring a sale of real estate under a special contract, it is 
 not necessary to show that he had a license to act as a real 
 estate broker. Shepler v. Scott, 85 Penn. St. 329. 
 
 147. A party may not stand by and see work in the erection 
 of a building progress to completion, and then for the first time 
 object that the work was not done in strict accordance to the 
 plan, refuse payment and charge the builder with the cost of 
 reconstruction. The builder is in such case, entitled to recover 
 what the work is reasonably worth. When work is done under 
 a contract, the terms of the contract should settle the amount to be 
 paid, unless it is shown that in consequence of variations from 
 the plan, the compensation agreed upon should be diminished, 
 and the proper measure of damages in such case is the dimi- 
 nution of the value of the building resulting from the variation. 
 Schoefer et al. v. Gildea, et al., 3 Colo. 15. 
 
 148. To introduce a new term into a written contract, the 
 evidence of the agreement of the parties to do so must be clear 
 and distinct, and that the contract was executed upon the faith 
 of such collateral agreement. Railroad Co. v. Hodgens, 85 Penn. 
 st 501. 
 
 149- When the payment of the purchase money is a condi- 
 tion precedent to the delivery of a deed of conveyance, the 
 refusal to pay the whole, or any balance due, leaves the vendor 
 at liberty to rescind the contract. Where the vendor receives 
 part of the purchase money, he must, before seeking relief in 
 a court of equity against the vendee, return, or offer to return, 
 the amount received, with interest. Where A. held title to 
 reality in trust for B., and at B.'s request conveyed to C, the 
 payment of the purchase money being a condition precedent 
 to the delivery of the deed, and the deed having been deliv- 
 ered, without compliance with that condition, held, that on 
 refusal of payment, B. had his election either to pursue his 
 remedy at law against C, and thus affirm the contract, or to 
 rescind the contract, and seek equitable relief. Hamil v. 
 Thompson et al., 3 Colo. 518. 
 
 150. A contract to answer for the debt of another must not 
 only be in writing, but based upon a sufficient consideration. 
 Langford v. Freeman, 60 Ind. 46. 
 
 151. That in consideration of supplies furnished, defendant 
 agreed that crop should belong to claimants ; that he would 
 deliver it to them by October 15 thereafter, or, in lieu thereof, 
 pay them $500 ; that, on failure so to do, he should be consid- 
 ered liable for breach of trust, and they could either take pos- 
 
BANKERS CODE. 37 
 
 session of the crop or sue for that amount, with twelve per cent, 
 interest, etc. ; that, in order to secure the fulfilment of the con- 
 tract, defendant conveyed and delivered to claimants certain 
 personalty, which was, however, to remain in his possession ; 
 that defendant waived homestead and exemption rights, was a 
 mortgage, and did not convey a title. Lee v. Clark, Rosser &• 
 Co., 60 Ga. 639. 
 
 152. Contract founded upon mutual and concurrent prom- 
 ises, afford sufficient legal consideration for the support of each 
 other. Missiquoi Bank v. Sabin, 48 Vt. 239. 
 
 153' The defendant subscribed for shares in a patent right, 
 to be held by him without payment therefor, otherwise than by 
 inducing others to subscribe for shares and give their notes 
 therefor for greatly more than the value of tlie shares ; the 
 notes afterwards came into his hands by purchase, and were by 
 him negotiated for money, and paid by the makers. Held, that 
 these facts would not entitle the makers to maintain an action 
 against him for money had and received. Lane v. Smith, 68 
 Me. 178. 
 
 I54. The maxim, that " the express mention of one thing 
 implies the exclusion of another," is ordinarily used to control, 
 limit, or restrain the otherwise implied effect of an instrument, 
 and not to " annex incidents to written contracts in matters 
 with respect to which they are silent." Morrow v. Morgan, 48 
 Texas, 304. 
 
 I55» If a creditor receives a partial payment before any 
 breach of contract, and agrees to look to another source than 
 the promissor for payment, such new agreement is binding, and 
 the original contract is abandoned or waived ; but if such 
 agreement is made only to induce performance, and prevent a 
 breach of the original contract, it is without consideration, and 
 cannot be supported. When a valid contract subsists between 
 the parties, it is competent for them, at any time before its 
 breach, to waive, annul or dissolv« the agreement, or to change 
 or modify its terms, and the mutual agreement of the parties is 
 a sufficient consideration. Burkham v. Mastin, 54 .\la. 123. 
 
 156. A Contract not under seal, wherein one person 
 makes a promise to another for the benefit of a third person, 
 such third person may maintain an action on it, though the 
 consideration did not move from him. Price v. Trusdell, 28 
 N. J. Eq. 200. 
 
 157. In a contract for the transportation of freight, it was 
 provided "that in the event of either of the parties failing to 
 comply with the terms of the contract, the party so failing was 
 to pay the other party the sum of one thousand dollars, fixed 
 and settled damages." Held, that this was not intended, nor to 
 lie construed as meaning a penal sum, but as fixed, settled and 
 
38 bankers' code. 
 
 liquidated damages, and the defendant was not permitted to 
 show that the plaintiff had not sustained actual damages to that 
 amount. Ivinson 6^ Co. v. Althorp, i Wyoming S. Ct. 
 Rpts. 71. 
 
 158. Where property was sold and delivered to a third 
 person, on the faith of the promise of defendants to accept his 
 draft on them for the purchase money, a specific performance 
 of the contract will be enforced. Sauhbury, Respers 6^ Co. v. 
 Blaudys, 60 Ga. 646. 
 
 159. Where at the execution of a writing a stipulation has 
 been entered into, a condition annexed, or a promise made by 
 word of mouth, upon the faith of which the writing has been 
 executed, parol evidence is admissible, although it may vary 
 and materially change the terms of the contract. In debt upon 
 a bond the defendant offered to prove that the bond was given 
 for unpaid purchase money of a certain lot; that to induce the 
 purchase of said lot, plaintiff verbally agreed that if defendant 
 did not like the property, plaintiff, on request (if defendant, 
 would take back the same, and pay defendant a premium and 
 cost of his improvement; that there should be no personal lia- 
 bility by defendant for the purchase-money, and that plaintiff 
 should look solely to the property for payment; that plaintiff 
 was not to part with the bond or mortgage; that when defend- 
 ant asked that the foregoing agreement should be inserted in the 
 papers being executed, plaintiff said it was unnecessary, that 
 his bond was sufficient, and that defendant has asked plaintiff 
 to take back the property as stipulated, which was refused. 
 The court below rejected these offers. Held, that they should 
 have been received. Greenawalt v. Kohne, 85 Penn. 369. 
 
 160. In order to take a parol contract for the sale of land 
 out of the operation of the Statute of frauds its terms must be- 
 shown by full, complete, satisfactory and indubitable proof. 
 The evidence must define the boundaries and indicate the 
 quantity of the land. It must fix the amount of the consider- 
 ation. It must establish the fact that possession was taken in 
 pursuance of the contract, and at or immediately after the time 
 it was made, the fact that the change of possession was notorious, 
 and the fact that it had been exclusive, continuous and 
 maintained. And it must show performance or part perfor- 
 mance by the vendee which could not be compensated in dama- 
 ages and such as would make recission inequitable and just. 
 Defendant in ejectment claimed title to land by virtue of a parol 
 sale, possession taken and maintained, improvements, &c. A 
 deed was offered in evidence, signed by plaintiff, which con- 
 tained a description of the property, and recited the considera- 
 tion, but which was never delivered to defendant. Held, re- 
 versing the court below, that the deed, taken in connection with 
 other facts, was sufficient evidence of a parol contract to take 
 
BANKERS CODE. 
 
 39 
 
 the case out of the operations of the Statute of Frauds. 
 Hart V. Carroll, 85 Penn. St. 508. 
 
 161. A court of equity will not extricate a party from the 
 consequences of his own acts voluntarily committed to carry 
 out an illegal contract relating to the entry of public lands. 
 Generally, those who violate law in their dealings with one 
 another, are left precisely in the same condition they placed 
 themselves. Ainsworth v. Miller, 20 Kansas, 220. 
 
 162. The reduction of an agreement to writing, signed by 
 the parties, is not necessary to its perfection as a contract, unless 
 it clearly appears that th^ parties intended that it should be 
 complete as a contract, until so written and signed. Montague 
 et. al. V. Weil &• Bra., 30 La. 50. 
 
 163. A promise to pay for property purchased, " out of the 
 proceeds of the first cotton ginned," is evidence conducing to 
 show the time of payment, but does not prove, or tend to 
 prove, that the seller of the property is to look for his pay 
 alone to the profits made in ginning that season. White v. 
 Chaffin, 32 Ark. 59. 
 
 164. When an instrument is prepared by the party to be 
 held liable under it, and it is ambiguous in its terms, that con- 
 struction is to be adopted which is most favorable to the 
 promissee. Atlantic Ins. Co. v. Manning, 3 Colo. 224. 
 
 165. An act which is forbidden by a statute, or the common 
 law, whether it be malum in re or merely 7?ialum prohibitum, 
 indictable, or only subject to a penalty or forfeiture, cannot be 
 the foundation of a valid contract. Lin'dsey v. Rottaken, Col- 
 lector, 32 Ark. 619. 
 
 166. When one party submits a proposal for a contract to 
 another, and the latter's acceptance of the proposal includes a 
 material modification of the proposal, no contract will result 
 until the modification has been acquiesced in by the party mak- 
 ing the proposal. Nicholas Connell v. Alexander Hill, 30 La. 251. 
 
 167. Where two contracts between the same parties are dis- 
 tinct and to be performed at different times, the non-perform- 
 ance of the one is no defence to an action on the other. 
 Turnery. Rogers, 121 Mass. 12. 
 
 168. When it clearly appears from the evidence that the 
 intent of parties was to form a written contract, neither party 
 will be bound until the contract has been reduced to writing, 
 and signed by both. No alleged verbal agreement, in such case, 
 can be invoked by either party against the other. Louisa Fred- 
 ericks, Tutrix \. Robert Fasnacht, 30 La. 117. 
 
 169. Where in a contract to deliver a certain thing, no time 
 for the delivery is fixed, the legal implication is that it shall be 
 delivered within a reasonable time from the date of the con- 
 tract. Robert H. Bartley v. Citv of New Orleans, 30 La. 264. 
 
40 bankers' code. 
 
 170. Where no fiduciary relation exists between the parties, 
 and they are of legal capacity, however disadvantageous or 
 improvident a contract between them appears, a court of equity 
 will not relieve against it, until the party seeking to avoid it 
 clearly proves that it was the result of fraud, mistake, surprise 
 or undue influence practiced upon him. M alone v. Kelly, 54. 
 Ala. 532. 
 
 171. A contract must be held to have been made when the 
 last act necessary to complete it was done, when no mutual act 
 remains to be performed to entitle cither party to enforce it. 
 Northampton M. L. S. Ins. Co. *v. Tuttle, 40 N. J. Law 
 Reports, 476. 
 
 172. Contract founded on an act which a statute prohibits 
 under a penalty is void, although the State does not expressly 
 so provide, and the subsequent repeal of the Statute, without 
 any saving clause as to penalties already incurred, will not 
 validate a contract void under the law in existence when the 
 contract was made. Woods v. Armstrong, 54 Ala. 150. 
 
 173' Contract having an unlawful or immoral cause are not 
 merely void themselves, but as a rule, cannot be the basis of 
 any valid auxiliary contract. Cummings v. Saux, 30 La, 207. 
 
 174- Where the evidence shows that the parties intended, 
 originally, that the contract of lease should be reduced to 
 writing, neither will be bound until it is signed by both. Mi- 
 guel Avendano v. I. W. Arthur 6^ Co., 30 La. 316. 
 
 175- The written agreement of a debtor who has borrowed 
 certain bonds, to return bonds of the same description, for the 
 same amount, at a certain term, is not a promissory note for 
 the .amount of the bonds. The obligations is to return the 
 specific bonds at the time fixed, or pay their value at that time. 
 Blouin V. Liquidators of Hart &= Hebert, 30 La. 714. 
 
 176. The laws which subsist at the time and place of mak- 
 ing of a contract, and where it is to be performed, enter into 
 and form a part of the contract; and that, whether such laws 
 affect its validity, construction, discharge or enforcement. 
 Roberts' Adtn'rs v. Cocke, &=€.; also Murphy v. Gaskins' Adm'rs 
 28 Grattan (Va.) 207. 
 
 177. A contract is binding when signed by the party mak- 
 ing it, though he may use an English translation of a French 
 name, as Seam for Couture, in his signature thereto. Auger v. 
 Couture, 68 Me. 427. 
 
 CONVEYANCE. 
 
 178. When land is by one deed conveyed to two or more 
 persons, who contributed to the purchase money in unequal 
 amounts, their share in the property will, in the absence of an 
 
BANKERS CODE. 4I 
 
 agreement to the contrary, be in proportion to their respective 
 contributions. Shroser v. Isaacs, 28 N. J. Eq. 320. 
 
 179. Where the grantor in a deed covenants that he was well 
 seized, etc., and had good right to convey, etc., and then added 
 that he " would warrant and defend the grantee, his heirs and 
 assigns, against all and every person lawfully claiming, or to 
 claim the whole, or any part of the premises, except against the 
 United States." Held, that both covenants must be taken and 
 construed together, and that the latter restricted and qualified 
 the first. Dunn v. Dunn, 3 Colo. 510. 
 
 180. Insolvent debtor seeking to prefer certain creditors by 
 mortgage, no ground for equitable relief. Heidingsf elder et al. 
 V. Slade 6^ Ether idge et al., 60 Ga. 396. 
 
 181. From the mere fact that upon the sale of a piece of 
 property belonging to the wife the husband received the price, 
 it does not necessarily follow that a debt of the latter to the 
 former was intended to be or was created. Hunt v. Spencer, 
 20 Kansas, 126. 
 
 182. A voluntary conveyance can be sustained, as against 
 existing creditors,^ only when under all the circumstances of the 
 case the property retained by the grantor furnishes reasonable 
 and adequate provisions for the discharge of his debts. Id. 
 
 183. A contract for the conveyance of real estate, not in 
 writing, is void by the statute of frauds. When a party to such 
 contract has complied with its conditions, and made all the 
 payments required by its terms, he is entitled to recover back 
 such payments, in case the other party refuses to perform on 
 his part. Nor will it defeat his right of recovery that he is in 
 possession of the premises agreed to be conveyed. Jellison v. 
 Jordan, 68 Me. 373. 
 
 184. Sale of all his landed estate by husband to wife, if 
 bona fide, conveys tit^e ; aliter, if to hinder or defraud creditors, 
 though subsequently perfected by formal conveyance. Thomp- 
 son V. Feagin, 60 Ga. 82. 
 
 185. A party loses no right by a-mere change in the form of 
 his securities, and the holder of a new note, given in exchange 
 for an old one, may attack a conveyance which woald be fraud- 
 ulent as to the old one. Thomson v. Herter, 55 Miss. 656. 
 
 186. A voluntary conveyance from father to son, made by 
 the grantor, with an intent to defraud his subsequent creditors, 
 is void as to such creditors, with either allegation or proof that 
 the grantee participated in that intent when he received or 
 accepted the deed. In such case the intent of the grantor 
 alone determines the validity of the conveyance. Langton v. 
 Harder, 68 Me. 20*8. 
 
 CORPORATIONS. 
 
 187. Liability of Officers and Stockholders. — The 
 
 personal liability of the officers and stockholders of a corpora- 
 
42 BANKERS CODE. 
 
 tion for a debt contracted by the corporation is inconsistent 
 with the idea of a body corporate at common law, and can 
 arise only out of some statutory provision. Salt Lake City Nat. 
 Bank V. Hendrickson, 40 N. J. Law Reports, 52. 
 
 188. A creditor of the Eastern Railway Co. held its note, 
 and, as collateral security for the same, three other notes of 
 the corporation, with coupons attached, of a kind regularly 
 quoted in the market, is entitled, under the statutes of 1876, 
 ch. 286, to prove only the amount of the original note against 
 the company. Third Nat. Bank v. Eastern Railroad Co., 122 
 Mass. 240. 
 
 189. The defendants were an incorporated company, the 
 capital of which was $30,000, in 100 shares of $300 each, 90 
 of which had been subscribed for, and paid up in full by duly 
 made calls thereon. Subsequently the defendants employed 
 the plaintiff to take charge of their business, who was 
 appointed president, at a salary of $1,200. He subscribed for 
 seven shares of the unallotted stock, debited himself with the 
 amount thereof, $2,100, in the company's books, and after- 
 wards paid it. Afterwards, desiring to obtain control of the 
 company, he arranged with four of the stockholders for the 
 transfer to him of their stock, but one of them, M., to enable 
 him to remain as a director, was to, and did subscribe for the 
 three remaining shares unallotted. Subsequently the plaintiff 
 wished to withdraw from this arrangement, and the parties 
 agreed to cancel it ; but M. was to be relieved of the three 
 shares, and M.'s name was accordingly erased, and the plain- 
 tiff's inserted, as subscriber for three shares, the substitution 
 being made either by plaintiff himself, or by the bookkeeper 
 by his direction. It was also arranged between the plaintiff and 
 the other directors that this stock should be entered in the 
 stock-book as paid up in full, but the plaintiff was to be deb- 
 ited with the $900, to be paid out of his salary as president. 
 Accordingly the plaintiff, with his knowledge and assent, was 
 so debited, and from time to time, as his salary became pay- 
 able, it was set off against it, and a balance afterwards struck 
 in the books on this basis. There was no by-law regulating 
 calls or transfers of stock, and no calls made on the plaintiff 
 for either amounts subscribed by him, and no transfer from M. 
 to plaintiff, except in the manner stated. Held, that no 
 transfer was necessary, as the plaintiff's subscription must be 
 held as an original one, nor were any call required, for the 
 plaintiff by his conduct had impliedly agreed that none need 
 be made, and both he and the company were estopped from 
 denying his ownership of the shares. The plaintiff having 
 sued defendant for his salary ; Held, that defendants were 
 entitled to set off the amount due on his stock. Held, also, 
 that they were entitled to have judgment in their favor for the 
 
BANKERS CODE. 43 
 
 excess of the set-off over the plaintiff's claim, and that for such 
 purpose no special prayer or conclusion in their plea of set-off 
 was necessary. Smart v. Bowmanville Machine and Implement 
 Co., 25 Upper Canada Com. Plea. Repts. 503. 
 
 1 90- The stockholders of a corporation have no right to 
 appropriate any part of its assets to pay salaries due them as 
 officers of the company, or due them on any Other account, 
 until all creditors, who are not stockholders, have been paid. 
 Cochran v. Ocean Dry Dock Co., 30 La. 1365. 
 
 191. No loss suffered by a stockholder, in consequence of 
 a call authorized by the charter of the corporation, made upon 
 each stockholder to pay a proportion of the price due on his 
 stock, will give rise to a claim for damages against the direct- 
 ors of the corporation. Succession of Woods, 30 La. 1002. 
 
 192. The bona fide sale of the stock of an incorporated 
 company, coupled with a power of attorney to the vendee to 
 transfer it on the books of the company, is made complete by 
 the delivery to the vendee of the certificate of stock. It is 
 not necessary to the perfection of the sale, and the consequent 
 protection of the stock from the seizure of the vendor's cred- 
 itors, that notice of the sale should be served on the corpora- 
 tion, or that an actual transfer of the stock should have been 
 made on its books. Samuel &= A. W. Smith v. Crescent City 
 Live Stock Landing and Slaughter House Co., 30 La. 1378. 
 
 193' Chartered Bank adjudicated a bankrupt, a member 
 of its last active board of directors (the board in existence 
 when the failure occurred and the act of bankruptcy was com- 
 mitted), cannot buy up claims against it at a discount, and 
 entitle himself to credit thereafter at full face value in settle- 
 ment with creditors on his personal liability as a stockholder. 
 At least this cannot be done so as to defeat the suit of a cred- 
 itor, who commenced his action before the bought-up claims 
 were actually applied in extinguishment of the stockholder's 
 personal liability, and whilst the stockholder held them, as 
 transferee, open against the bank, he not having surrendered or 
 canceled them until after the action was brought. When a 
 stockholder is sued as such, and he defends on claims against 
 the bank purchased by him, his legal disability as a director to 
 purchase at a discount may be urged by the plaintiff in reply, 
 without any allegation to that effect in the pleadings. Holland 
 V. Heyman &= Bro., 60 Ga. 174. 
 
 194. When the charter of a corporation provides that, in 
 case any subsequent increase of the capital of the concern is 
 authorized, notice of sixty days shall be given of such increase, 
 within which time the stockholders shall have the privilege 
 of taking additional shares, proportioned to the amount of 
 their stock, and that any shares, not taken at the expira- 
 tion of that time, may be disposed of by the directors for the 
 
44 BANKERS* CODE. 
 
 benefit of tne association, field, that in order to entitle a 
 stockholder to demand said additional shares, it must appear 
 that he applied for the shares, and paid over or tendered the 
 money necessary to purchase the same before the expiration of 
 the sixty days, or before the expiration of any additional delay, 
 which may have been given by the corporation to enable the 
 stockholders to exercise said privilege. Mrs. Emily L. Hart et 
 al.Y. St. Charles Street Railroad Co., 30 La. 758. 
 
 195. A Certificate of Stock accompanied by an irrevocable 
 power of attorney, either filled up or in blank, is in the hands 
 of a third party presumptive evidence of ownership in the 
 holder. And where the party in whose hands the certificate is 
 found is a holder for value, wi.hout notice of any intervening 
 equity, his title cannot be impeached. The holder of the certi- 
 ficate may fill up the letter of attorney, execute the power, and 
 thus obtain the legal title to the stock. And such a power is 
 not limited to the person to whom it was first delivered, but 
 enures to each bona fide holder into whose hands the certificate 
 and power may pass. Mere knowledge on the part of a pur- 
 chaser that an executor or administrator is dealing with the 
 assets in a fiduciary capacity, is not enough to raise suspicion 
 or to put the party on inquiry, for the reason that it is to their 
 primary duty to dispose of the assets and settle the estate. 
 A sale and transfer by them is ordinarily in the line of their 
 duty. The common duty of a trustee is not administration or 
 sale, but custody and management for his cestuis que trust. 
 Frail Y. Tilt, 28 N. J. Eq. 479. 
 
 196. By the Act of 1872, ch. 325, sec. 59, all the stock- 
 holders of a corporation are severally and individually liable to 
 the creditors of the corporation of which they are stockholders 
 to an amount equal to any unJDaid subscription held by them 
 respectively. If one stockholder is required to pay a debt due 
 by the corporation he is entitled to contribution "from all the 
 other stockholders whose subscriptions are unpaid. If any 
 stockholder who has not paid up his subscription claims to be 
 a creditor of the corporation, his unpaid stock is liable for the 
 debt, and he cannot recover from another stockholder the full 
 extent of his claim. Where a stockholder, who is a creditor of 
 the corporation, seeks to recover his debt from another stock- 
 holder who has not paid up his subscription, the plaintiff must 
 aver and prove that he has paid up his whole subscription to 
 the stock, and also that the defendant was a stockholder of the 
 corporation a/ ^/^^ time the debt was contracted, and that he has 
 not paid up his subscription. In an action against a stockholder 
 of a corporation who has not paid up his subscription to recover 
 a debt due by the corporation, wherein the plaintiff declares on 
 a judgment recovered against the corporation as his cause of 
 action, the defendant is entitled to a bill of particulars, in order 
 
bankers' code. 45 
 
 that it may be informed whether the debt due by the corporation 
 was contracted at ihe time the defendant was a stockholder. 
 The judgment is the evidence of the debt due by the corpora- 
 tion, but it does not show when the debt was contracted. The 
 date of the debt incurred is a necessary part of the evidence to 
 fix the liability of the stockholder. Weber y. Fickey, i^^M-A. i()6_ 
 
 197. Corporations. A president of a corporation is a 
 trustee, and will not be permitted to create such a relation be- 
 tween himself and the trust property as will make his own 
 interest antagonistic to that of his beneficiary. A president 
 who has voluntarily purchased a small debt against the corpor- 
 ation, will be enjoined from levying an execution for the pay- 
 ment of a balance on the same, where he has already taken 
 valuable property of the corporation in part payment thereof. 
 Brewster et al. v. Stratman et al., 4 Mo. Ct. Appeals 
 (St. Louis) 41. ' 
 
 198. Where a corporation is being defrauded by its officers, 
 and by collision the directors refuse to interfere to protect 
 stockholders, or to sue, and will not seek redress in the corpor- 
 ate name, the individual stockholder who seeks relief for him- 
 self and others should so frame his bill as to set forth these 
 facts, and should make the directors parties to the bills. 
 Griffin v. St. Louis Wine and Fruit Growers Asso. et al., 4 
 Mo. Ct. Appeals (St. Louis,) 595. 
 
 199. When it appears that the parties in charge of the 
 property and affairs of a corporation, ps liquidators of the 
 same, have been elected as such by the stockholders of the 
 corporation, and their election has not been set aside, and no 
 fear of fraudulent action on their part is alleged, no court is 
 authorized to displace them, and appoint a receiver in their 
 stead. John F. Follett, et al. v. Spencer Field, President, et al., 
 30 La. 161. 
 
 200. A legal by-law of a corporation which provides that 
 no shares of its stock shall be transferred on its books, until 
 the certificate thereof has been surrendered to its president, 
 or shown to be lost, is binding on all its stockholders, and their 
 heirs. Before the heirs of a deceased stockholder can compel 
 the corporation to transfer shares, or pay accrued dividends to 
 them^ they must comply with the requirements of the by-laws. 
 State ex rd. Martin et al. v. N. O. &• Carrollton R. R. Co., 
 30 La. 308. 
 
 201. Where the business of a church corporation is re- 
 quired by the articles of incorporation to be conducted by its 
 officers as a board of trustees, the president and secretary have 
 no ■ power to execute a note binding upon the corporation 
 without authority from such board. Caitron et al. v. The First 
 Universal Society of Manchester, 46 Iowa, 106. 
 
46 bankers' code. 
 
 202. Authority conferred by the trustees to erect a church 
 building, however, would carry with it the power to contract 
 debts necessary for that purpose, and notes executed therefor 
 would be valid. Id. 
 
 203. A corporation having been recognized in the exercise 
 of its corporate functions by legislative enactments, all inquiry 
 into its original organization is precluded. One who deals with 
 a corporation in its corporate capacity cannot afterwards ques- 
 tion collaterally the legality of the corporate existence. Cowell 
 v. Colo. Spg's Co., 3. Colo. 82. 
 
 204. A foreign corporation does not become a domestic 
 corporation by complying with the laws of this State, in pur- 
 suance of which a foreign corportion may do business here 
 without liability attaching to the officers, agents ^nd stockhold- 
 ers, upon the contracts of the company. Cook v, Nayer, 3 
 Colo. 386. 
 
 DAMAGES. " 
 
 205. Where an examiner of title to real estate gives a certi- 
 ficate of title, he does not thereby become an indemnitor, but 
 he is liable for any mistake arising from want of due care or 
 diligence, or from ignorance of his business. An action for 
 damages against him for false certificate is barred by the 
 Statute of limitations in five years from the delivery of the 
 certificate, and not from the time when it is discovered that 
 the certificate is untrue. Rankin v. Shaeffer, Admr., 4 Mo. 
 Ct. Appeals (St. Louis,) 108. 
 
 206. Negligence alone is not to be visited with punitive 
 damages ; wilful misconduct, or that entire want of care which 
 would raise the presumption of a conscious indifference to 
 consequences, is necessary to support such damages. Kansas 
 Pacific R'y Co. v. Lundin, Admr., 3 Colo. 94. 
 
 207. In an action to recover the price of goods sold, the 
 measure of damages is the difference between the value which 
 the article sold would have had in the market at the time of 
 the sale and delivery, if they had corresponded with the guar- 
 anty, and their actual value with the defects. Smith et al. v. 
 Mayer et al., 3 Colo. 207. 
 
 208. If the party who has contracted to deliver a cirtain 
 thing at a fixed price maWes a tender of it at the proper time, 
 and the party who has contracted to receive the thing refuses 
 to receive it, the former may recover from the latter whatever 
 damages are proved to have directly flowed from the latter's 
 breach of contract. BartkyY. City of New Orleans, 30 La. 264. 
 
 209. Recorder of Deeds is liable in damages for a false 
 certificate of researches. The liability of the recorder is to 
 
BANKERS CODE. 47 
 
 the party who asks and pays for the certificate, not to his 
 assignee or alienee. Houseman v. Girard Building Asso., 8i 
 Penn. 256. 
 
 DEBTOR AND CREDITOR. 
 
 210. Debts. Claims against the estates of decedents, 
 resting on mere oral testimony of declarations and admissions 
 of the decedent are very dangerous, and not to be favored by 
 the Courts. Pollock v. Ray, 85 Penn. St. 428. 
 
 211. Any agreement with one creditor for an advantage to 
 him over other creditors, made to induce him to join in the 
 composition, or required by him as a condition upon which he 
 shall become a party to it, which is not provided for in the 
 composition deed, and is not disclosed to the other creditors, 
 is utterly void, and is incapable of being enforced or confirmed 
 even as against the assenting debtor. A security given in 
 pursuance of such a bargain or a subsequent promise of pay- 
 ment, is equally void with the antecedent agreement; and money 
 paid by the debtor under such an agreement, in excess of the 
 due proportion of such creditor's debt, may be recovered back, 
 unless it be paid under such circumstances as to be regarded 
 in law as a voluntary payment. Crossley v. Moore, 40 N. J. 
 Law 27. 
 
 212. Debtors residing without this State are excluded ex vi 
 ierminiiTom. the operation of the Statute (R. S. p. 418 sec. 103) 
 which provides that " Suits shall be commenced before justices 
 in the township in which the debtor resides." Such non-resi- 
 dent debtors may be sued wherever found. Wagner et al. v. 
 Hallock et al., 3 Colo. 176. 
 
 213. When a debtor, after being discharged from the obli- 
 gations of his debts by a deed of composition with his creditors, 
 voluntarily gives a security for a debt from which he is dis- 
 charged by such composition and which is only due in conscience, 
 such security may be enforced in a court of law. Crossley v. 
 Moore, 40 N. J. L. R. 27. 
 
 DEEDS. 
 
 214. In determining the dividing lines between tracts of land, 
 courses, calls and distances, must give way to the marks on the 
 ground, and these marks control as well the description found 
 in the patent as that found in the survey. The deed of the 
 treasurer to the Commissior^ers of Warren County having been 
 lost, its delivery and contents were properly proved by the 
 books found in custody of the proper officers. Watson v. 
 Jones, 85 Penn. St. 117. 
 
48 bankers' code. 
 
 215. That a deed is ineffectual to convey title as to part of 
 the lands described is of itself no ground for setting aside the 
 deed, nor will a court of equity entertain a bill for compensa- 
 tion or damages, except as incidental to other relief, when there 
 is an adequate remedy at law. Jaeger v. Whitsett, 3 Colo. 105. 
 
 216. A condition in a deed, granting an estate in fee, that 
 intoxicating liquors shall never be manufactured, sold or other- 
 wise disposed of as a beverage in any place of public resort in 
 or upon the premises granted, or upon any part thereof, the 
 grantor reserving the right upon condition broken to declare 
 the deed void, and all right, title and interest in the premises 
 in such event to revert to the grantor, and the grantee con- 
 senting to the condition and reservation, held to be a valid 
 condition, binding upon the grantee, not repugnant to the 
 estate granted, and that upon condition broken the grantor 
 might maintain ejectment, upon proof of the breach, without 
 previous entry, demand or notice. Gowell v. Col. Sp'gs Co. 3 
 Colo. 82. 
 
 217. A deed duly recorded is constructive notice of its 
 existence and contents to all persons claiming what is thereby 
 conveyed under the same" grantor by subsequent purchase, but 
 not to other persons. Gillett et al. v. Gaffneyetal., 3 Colo. 351. 
 
 218. The delivery of a deed implies its acceptance by the 
 grantee, in the absence of fraud, artifice, or imposition. 
 Davenport v. Whisler and Shields, ^dlov^z., 2%'j . 
 
 219. By the acceptance of the deed the contract of sale is 
 executed and merged therein ; any inconsistencies between its 
 
 ' original terms and the deed are in general to be explained by 
 the latter. Id. 
 
 220. The holder under a quit-claim deed is not entitled to 
 protection, as a bona fide purchaser without notice, against out- 
 standing equities. Springer et. al. v. Bartle, 46 Iowa, 688. 
 
 221. Although a deed is inter paftes, a covenant therein 
 made with a third person may be enforced by such third person 
 by suit, if it clearly appears by the instrument that it was the 
 intention to confer such right. National Bank at Dover v. 
 Segar, 39 N. J. Law 173. 
 
 222. Ordinarily the date of a deed (admitted to have been 
 delivered), is prima facie evidence of the time of its delivery, 
 but this presumption may be rebutted by testimony. Cain v. 
 Robinson:, 20 Kansas, 456. 
 
 223. In the description in a deed courses and distances 
 must yield to fixed monuments or to any points named which 
 are capable of being certainly ascertained. Sanders v. Eldridge 
 et al., 46 Iowa, 34. 
 
 224. The recitals in^a deed as to the consideration, are not 
 
BANKERS CODE. 
 
 49 
 
 conclusive, but the time and actual consideration may be shown 
 by proof aliunde. FraUy v. Bentley et al., i Bennett's Dakota 
 Rpts. 25. 
 
 DEMAND. 
 
 225. To enable a party to recover in an action upon a due 
 bill payable in specific property, no time being mentioned, a 
 demand is necessary. Otherwise when time and place are 
 specified. A personal demand elsewhere than at the place 
 designated in a due bill for the delivery of personal property is 
 good, unless met by an offer to pay at the designated place. A 
 right of action, which has accrued by reason of a refusal upon 
 demand to deliver specific articles of property aopording to 
 contract is waived by a subsequent demand if the party upon 
 whom the demand is made indicates a readiness to deliver 
 according to contract. Widner v. Walsh, 3 Colo. 548. 
 
 226. Where one receives from a municipal corporation 
 warrants drawn upon its treasurer, presentation to that officer, 
 or the allegation in the declaration of facts which will excuse 
 presentation, is necessary before an action can be maintained on 
 the warrants. City of Central w. Wilcoxen, 3 Colo. 566. 
 
 227. A mere demand for the payment of the balance of 
 purchase-money cannot be regarded as an acquiescence in the 
 wrongful delivery of an escrow, and as depriving the vendor of 
 his right to rescind. Hamillv. Thompson etal., 3 Colo. 518. 
 
 DEPOSITS. 
 
 228. In an action against a savings bank, on an account . n- 
 nexed, to recover the amount of a deposit, the book of deposit 
 is admissible in the evidence, at least to show the amount of 
 the plaintiff's money received by the defendant, and it does not 
 appear to have been admitted for any illegal purpose, although 
 the book contained printed conditions of deposit and payment. 
 Brown v. Abington Savings Bank, 119 Mass. 69. 
 
 229. A safe deposit company contracted with a depositor to 
 "keep a constant and adequate guard over and upon the safe" 
 rented by him. A number of bonds deposited therein were 
 found to be missing: Held, that the company was bound to 
 make some explanation for the absence of the bonds. Jleld, 
 further, that the question whether the company was guilty of 
 negligence was properly left to the jury. Safe Deposit Co. v. 
 Bollock, 85 Penn. St. 391. 
 
 230. A certificate of deposit, payable on the return thereof 
 properly endorsed, is in legal effect a promissory note, payable 
 on demand; and the principle applicable to such notes should 
 be applied to these certificates. The claim that a certificate of 
 
so BANKERS CODE. 
 
 deposit and a certified check are in legal sense the same thing, 
 are governed by the same rules, and that no mere lapse of 
 time will render such check or, certificate past due or dishonored, 
 is held not well founded. Certificates of deposit are not in- 
 tended for long circulation, or for more than a temporary- 
 convenience, and to hold that any ostensibly demand paper 
 could be circulated or used as bank-bills, would be contrary 
 to the general policy of our banking laws. Tripp V. Cur- 
 lessius, 36 Mich. 494. 
 
 231. A depositor in a savings bank, who is also a debtor to 
 the bank, as a borrower of its funds, cannot, upon the insol- 
 vency of the savings bank set-off the amount of his deposit 
 against his indebtedness. Osborn v. Byrne, 43 Conn. 155. 
 
 232. Where, however, a person indebted to a savings 
 bank as a borrower, deposited an amount less than the debt, 
 intending to use the money so Seposited for a payment upon 
 the debt, it was held that the amount deposited could be set 
 off against the debt. 
 
 233. A savings bank is an agent for the depositors, receiv- 
 ing and loaning their money, and its losses are their losses, and 
 are to be borne by them equally, according to their interest. Id. 
 
 234. A bank of deposit has no power to apply a money 
 deposit in its possession, belonging to the maker of a promis- 
 sory note payable at such bank, to the satisfaction of such note, 
 without his consent. Scott v. Shirk, 60 Ind. 160. 
 
 235. When a bank receives deposits it undertakes to pay 
 the depositor's check to the holder, if it has funds of the 
 depositor sufficient to pay the check when presented; and this 
 promise or agreement between the bank and its depositor, im- 
 plied from the universal usage or custom of the business 
 world enures to the benefit of the holder of the check, and if 
 he presents it to the bank for payment, and payment is refused, 
 the bank having funds of the depositor sufficient to pay it 
 ■when presented, he may sue and recover of the bank upon the 
 check. McGrade v. German Savings- Int., 4 (St. Louis,) Mo. 
 Ct. Appeals, 330. 
 
 236. A depository may show by parol evidence that the 
 money deposited with him, and for which he had given his 
 written receipt, was composed of certain bank bills. A de- 
 pository is not Hable for any depreciation in the value of bank 
 bills deposited with him, unless it appears that the depreciation 
 has proceeded from his fault, or has occurred after he was in 
 default to restore the deposit. Uranie Berard v. Vincent 
 Boagni, 30 La. 11 25. 
 
 237. Special deposit of bonds was left by a customer with 
 the cashier of_ a national bank for safe keeping, with the 
 knowledge of its directors, and the bank gave a receipt there- 
 
bankers' code. 51 
 
 for. The bonds were subsequently stolen and the bank offered 
 no satisfactory explanation of the manner of the theft. Held, - 
 that there was sufficient evidence of gross negligence to be sub- 
 mitted to the jury. Bank v. Graham, 85 Penn. St. 91. 
 
 ENDORSERS. 
 
 238. The omission to give an endorser notice of the non- 
 payment of previous instalments, as they fell due on a promis- 
 sory note does not affect his liability for a later instalment, of 
 the non-payment of which he has been duly notiiied. Notice 
 to the indorser of a promissory note of a demand made upon 
 the maker for an instalment then due and for the interest due 
 upon the note (some of the previous instalments and interest 
 being still unpaid) and of his non-payment, is sufficient to 
 charge the endorser, and is not invalidated by adding that the 
 holder looks to him for the payment of the instalment and of 
 the interest due upon the note. In an action against the 
 indorser of a promissory note to recover an instalment due 
 thereon, it appeared that when previous instalments had become 
 due, of the non-payment of which the indorser had not been 
 duly notified, the indorsee had applied the proceeds of a mort- 
 gage, given by the maker to secure the payment of the note, to 
 such instalments. Held, that the indorsee had the right so to 
 apply them. Fitchburg Mutual Fire In, Co. v. Davis, 121 
 Mass. 121. 
 
 239. Where the maker of a promissory note furnishes to the 
 second endorser money to pay the note, a trust is created in 
 favor of the first endorser, as well as the holder, to have the 
 fund applied in payment of the note. Where two persons suc- 
 cessively endorse a promissory note for the accommodation of 
 the maker, and the maker furnishes to the second endorser at 
 the time of his endorsement, with the means to pay the note, 
 without the knowledge of the first endorser, the maker and 
 second endorser have a right to subsequently agree that the 
 means shall be applied to another purpose; but if the second 
 endorser promises the first that such means shall be applied 
 to the payment of the note, and thereby induces him to be 
 inactive, which results to his injury, such promise creates an 
 equity in favor of the first endorser which will sustain an ac- 
 tion. Price V. Trusdell, 28 N. J. Eq. 20. 
 
 240. The endorsee of a negotiable bill or note, in the absence 
 of proof of fraud, is presumed to be a bona fide holder for 
 value — this presumption is not repelled merely by proof that 
 the paper as between the immediate parties was without con- 
 sideration, and was made, indorsed or accepted by one for the 
 sole accommodation of the other. Where, therefore, in an 
 action by an endorsee before maturity against the acceptors of 
 a bill, the defence was that the acceptance was without consid- 
 
52 BANKERS CODE. 
 
 eration of the drawer, and that it was discounted by plaintiffs 
 for the drawer at a usurious rate of interest, held, that the 
 burden was upon defendants to show the amount paid by 
 plaintiffs for the bill, and in the absence of any evidence upon 
 the subject, that plaintiffs were entitled to recover. Harger v. 
 Worrall, 69 N. Y. 370. 
 
 241. Notice of dishonor to indorser, certiiicate of notary, in 
 connection with his testimony that it is genuine, and that, 
 though he has no recollection of the facts stated therein, he is 
 satisfied of their truth, because he would not have certified 
 them had he not been convinced of their truth at the time, ad- 
 missible to establish, notice, mail used as means of conveying, 
 and it is in evidence that notice did not in fact reach endorser, 
 plaintiff must show that notices were properly directed, stamped, 
 etc. Evidence that notary "served" endorsers with notice "by 
 depositing said notices in the post office, in the city of At- 
 lanta," with no statement as to direction, payment of postage 
 etc., insufficient where endorsers testify that they did not rel 
 ceive notice. Allen 6^ Co. v. Georgia National Bank, 60 Ga. 347 
 
 242. Agreements of endorsee with a stranger to give time 
 to the acceptor does not discharge the maker. Frazer v. Jor- 
 dan, XC. ii. 303; 8 E. & B. 303. (Eng. Com. Law.) 
 
 243. That where a party who is a stranger to the note en- 
 dorses the name before delivery, the law does not define the 
 character of the contract or obligation created by such endorse- 
 ment, and, therefore, parol evidence will be received to deter- 
 mine what the contract was — whether that of a guarantor or 
 maker — and that the contract may not, because of its ambiguity, 
 be defeated; and whereas, in this case, the law defines the 
 nature of the contract, and the manner in which the endorser 
 may be held by proper legal steps, the court will not receive 
 parol evidence to prove another and different contract from 
 that defined by law. Id. ; also. Levering v. Washington, 3 Minn.. 
 323; Kernv. Von Phul, 7 Minn. 426; First National Bank v. 
 National Marine Bank, 20 Minn. 63. 
 
 244. Where endorsee of a bill of exchange in sets alleges loss 
 in transmission for acceptance, and demand for other sets from 
 prior endorser not immediate as to him, and also allege-^ the 
 non-delivery by said endorsee and consequent loss, he cannot 
 recover. Such endorsee is bound to apply either to the drawer 
 or his immediate endorser. Nan constat that if he had applied to 
 them there would have been a loss. Pinard v. Klockmann, CX. 
 iii. 388; 3 B & S. 388. (Eng. Com. Law.) 
 
 245. An endorser of a promissory note, even though it be 
 an accommodation note, is not one; but is a principal debtor 
 if the note be not paid and proper steps have been taken t© 
 fix his liability. Ross v. Jones, 22 Wallace (U. S.) 576. 
 
BANKERS CODE. S3 
 
 246. To charge an endorser of a note as maker, it is neces- 
 sary to show specifically that he put his name upon the back of 
 the note before delivery to the payee. Best v. Hoppie, 3 
 Colo. 137. 
 
 247. It being necessary for the payee to endorse the note in 
 order to make it negotiable paper, he must be treated as first 
 endorser without regard to the time of his endorsement or the 
 locality of his name, on the note. A second endorser may 
 :raaintain an action against the first for money paid on the note. 
 Cogswell -v. Hay den, 5 Oregon, 22. 
 
 248. The endorser of a promissory note after it falls due, 
 with a contract, and as additional security to prevent legal pro- 
 ceedings from being taken against the payee and endorser, is 
 that of a grantor, and, even if based on a valid consideration, 
 is fatally defective, unless the writing express the consideration. 
 Crooks V. Tully, 50 Cal. 254. 
 
 249. The guarantor of a promissory note is entitled to 
 notice of non-payment. Id. 
 
 250. Endorsee sold a negotiable promissory note, and en- 
 dorsed it without recourse. Held s.t\. implied warranty that the 
 note was valid. Hannum v. Richardson, 48 Vt. 508. 
 
 251. The Endorser of a promissory note, though fixed in his 
 liability, by protest, is not entitled, as a creditor, to a share of 
 the estate of the maker under an assignment for the benefit of 
 creditors. Such an endorser is entitled only to be reimbursed 
 payments actually made by him. The holder of the note can 
 claim under the equity of the endorser, out of the assigned 
 estate, only to the amount of payments so made by the endorser. 
 Farmer's Bank v. Gilpin et al., i Del. Chancery, 409. 
 
 252. The names of the payees appeared on the back of a 
 note in the usual position of the first endorser, about three 
 inches from the left end, and that of the defendant in the 
 opposite direction, about the same distance from the right end 
 of the note, so that the latter with reference to the former may 
 be said to have been inverted. Held, that this irregular en- 
 dorsement did not relieve the defendant of liability, as he could 
 have recourse against the payees. Arnot's Adni^r v. Symonds, 
 ■55 Penn. St. 99. 
 
 253. Endorsement upon a note, to the effect that the maker 
 TOay vise the principal after maturity by the payment of interest 
 semi-annually, does not release the maker from the obligation 
 of payment. The Oskaloosa College v. Hickok, 46 Iowa, 237. 
 
 254. Upon a failure of the maker to pay the interest ac- 
 cording to the terms of the indorsement, the principal of the 
 note became due and payable. The subsequent acceptance of 
 interest would not entitle the maker to an extension of time of 
 payment, the interest thus paid being merely a partial payment 
 of the note. Id. 
 
54 BANKERS CODE. 
 
 255. A person of unsound mind who' signs as sarety a note 
 given for an antecedent debt, cannot be held liable thereon even; 
 though the person taking the note had no knowledge that the 
 surety's mind was unsound. Van Patton &" Marks v. Beals &' 
 Hammer, 46 Iowa, 62. 
 
 256. Complaint against two defendants as joint makers of 
 promissory note, payable at any bank in Savannah, one of whom 
 signed on the face and the other on the back, unnecessary, in 
 order to charge the latter, to allege protest and notice. Hardy 
 V. White, 60 Ga. 454. 
 
 257. A party endorsed a negotiable note for $500, for the 
 maker's accommodation. The maker then, by the use of 
 chemicals, rendered the amount of the note invisible, wrote in 
 a larger amount, and procured the note to be discounted at a 
 bank as a note for the larger amount. Before the note came 
 due, the fraud was discovered, and the original writing was 
 restored, and the note duly protested, and an action brought 
 against the indorser, as on a note for the original amount. 
 Held, that the endorser was not liable. Citizens Nat. Bank v. ■ 
 Richmond, 121 Mass. no. 
 
 258. Where a joint and several note, made by the three de- 
 fendants to the order of plaintiff and another party, was by 
 that party indorsed and transferred to the plaintiff. Held, that 
 the plaintiff alone could bring suit on the note, and that the 
 district court did not err in overruling a demurrer to plaintiff's 
 petition, on the ground that " there was a defect of parties 
 plaintiff. Regan v. Jones, Wyoming S. C. Reps. 210. 
 
 259. An endorser of a check given with his knowledge in 
 payment of a gambling debt, who pays the check to the holder 
 upon non-payment by the drawee and protest, cannot recover 
 therefor, from the drawer, or a prior endorser. A. having paid 
 B 's gambling debt, A. knowing it to be such debt, gives him no 
 
 right of action against B. for the amount so paid. Scollans v. 
 Flynn, 120 Mass. 271. 
 
 260. The endorsee of a negotiable note, who takes it dis- 
 charged of the equities to which it was subject in the hands of 
 the payee, acquires the same right in a mortgage given to secure 
 it, which the payee would have had, if no equities had ever 
 existed against the note. Linville v. Savage, 58 Mo. 248, Logan 
 V. Smith, 62 Mo. 455. 
 
 261. The transfer of a note received by mortgage carries 
 the mortgage with it, unless the mortgage has been separately 
 extinguished, as by a release for instance. Id. 
 
 262. The endorser of a note will not be held bound by a 
 fraudulent alteration made subsequently to his endorsement, 
 unless through negligence; the instrument has been so loosely 
 drawn as to easily admit of alteration, and in a matter not cal- 
 culated to' place a man of ordinary prudence on the alert. 
 
bankers' codk. 55 
 
 But where no blank space was left unfilledj and the rate of in- 
 terest was, after endorsement and without the knowledge of the 
 endorser, inserted by interlineation in ink of a different color 
 from that employed in the remainder of the note, it was held 
 that the instrument upon its face bore such indications as 
 should have excited suspicion and provoked inquiry; and that 
 under such circumstances the indorser was not bound. Capi- 
 tal Bank V. Armstrong, 62 Mo. 59. 
 
 263. The mere fact that the alteration of a note is not made 
 fraudulently, nor for the purpose of changing its legal effect 
 will not change the rule as to the liability of a prior endorser, id 
 
 264. The defendant in 1867 endorsed the notes of C. for 
 his accommodation to the amount of $7,000, and continued to 
 endorse for him to the same amount, for purposes of renewal or 
 payment, till 1873. In 1869 the plaintiffs, a bank, discounted 
 some of these notes to the amount of $5,000 for C., and con- 
 tinued a line of discount of the same amount and upon the 
 same endorsements till 1873. At this time C, having received 
 from the defendant his endorsement upon a note of $2,000, the 
 note being in all respects complete, fraudulently altered the 
 amount to $5,000, and procured its discount by the plaintiffs, 
 who took it without suspicion, and with the proceeds C. took 
 up his notes at the plaintiffs' bank for $5,000, upon $4,000 of 
 which the defendant was endorser, the bank discounting the 
 note for the purpose of applying the proceeds in that manner. 
 C. had formerly been in the defendants' employment, and had 
 his entire confidence; and the defendant had been in the habit 
 of endorsing paper sent to him for that purpose by C, without 
 making any entry of the transaction, and in several instances 
 had endorsed notes in which the time of payment was left 
 blank. Held, That the Court could not, from all these facts, 
 infer an agency on the part of C. under which his act in alter- 
 ing the note would be binding upon the defendant. Aetna 
 Bank V. Winchester, 43 Conn. 391. 
 
 265. That the negotiation of the altered note to the plain- 
 tiffs did not render the defendant liable on his endorsement, as 
 an act in the apparent exercise, and within the apparent scope, 
 of an agency on the part of C. Id. 
 
 266. That the principle that, where one of two innocent 
 persons must suffer by a fraud, he who furnished the means for 
 committing the fraud should bear the loss, had no application 
 to the case, as the defendant, having delivered the note to C. 
 complete, could not be regarded as having furnished him the 
 means of committing the fraud. Id. 
 
 267. That the rule that holds an endorser liable, although 
 the note is used in a different manner from that intended by 
 him, did not apply, as in such cases the contract is still the 
 genuine contract of the endorser. Id. 
 
56 bankers' code. 
 
 268. That the defendant was not estopped by the facts from 
 denying his liability upon the endorsement. Id. 
 
 269. The plaintiffs endorsed a note at the request and for 
 the accommodation of D., which had been made by another 
 person for D.'s accommodation, and which was first endorsed 
 by hini. At this time there was an understanding among all 
 the parties that D. was to get the note discounted at a certain 
 bank. He, however, was not able to accomplish this, and, with- 
 out the knowledge of the plaintiffs, deposited it with the de- 
 fendant as security for a loan of less amount, with an agreement 
 that he might redeem it on paying the amount loaned, with cer- 
 tain agreed interest. In violation of this agreement the defend- 
 ant sold the note to a bona fide holder for full value; and D. 
 and the maker being insolvent, the plaintiffs were compelled to 
 pay it in an action brought by the plaintiffs for damages caused 
 to them by the fraudulent conduct of the defendant in dispos- 
 ing of the note, in which it was found that he disposed of it to 
 prevent D. from making a set-off of a certain claim which he 
 had against him, it was held 
 
 (i). That the understanding between the plaintiffs and D., 
 that he would get the note discounted at a certain bank, could 
 not, so long as their endorsement was without condition, affect 
 his right to dispose of the note in any other manner. 
 
 (2). That the defendant, having become the lawful holder of 
 the note, had the right, so far as the plaintiffs were concerned, 
 to dispose of it upon any terms that he pleased. 
 
 (3). That although in doing so he violated his agreement with 
 D., and might therefore be liable to him in damages, yet the 
 plaintiffs, having been subjected to no liability beyond that 
 which they assumed in endorsing the note — namely, that of 
 having the full amount of the note to pay, if the maker or D. 
 did not pay it, were not injured by his act. Dawson v. Good- 
 year, 43 Conn. 548. 
 
 GUARANTY. 
 
 270. To constitute a valid guaranty, there must be a suffi- 
 cient consideration, a delivery by the guarantor, an acceptance 
 by the person to whom it is given, a subsequent delivery of 
 goods or other property under and in accordance with its 
 terms, and if it is collateral, request of payment and notice of 
 non-payment. Notice is not necessary when the undertaking 
 is absolute. Marsh v. Putney, 56 N. H. 34. 
 
 271. Where the person, for whose benefit the guaranty is 
 given, becomes insolvent, so that no advantage can arise to the 
 guarantor, notice is unnecessary. Id. 
 
 272. All promises to answer for the debt or default of a 
 third person must be in writing, whether the promise be made 
 before, at the time, or after the debt or liability is created. In 
 
bankers' code. 57 
 
 the absence of words or circumstances showing a contrary- 
 intent, the words "we will see the articles paid for," or equiva- 
 lent words, import a collateral undertaking, and are within the 
 statute of frauds. Wager etal. v. Halleck et al., 3 Colo. 176. 
 
 273- Where the language of a guaranty addressed to a 
 factor is, " I am willing to go his security for the amount of 
 twenty-five hundred dollars," it is not what is termed a contin- 
 uing guaranty. It only embraces the first $2,500 of money 
 advanced, or goods furnished to the person in whose favor the 
 guaranty is given. The factor thus guaranteed is legally bound 
 to apply to the guaranteed debt, and for the discharge of the 
 guarantor, the first payments received by him from the person 
 in whose favor the guaranty was given. Ben. Gerson v. G. 
 W. &• G. M. Hamilton, 30 La. 737. 
 
 274. A., a bank, had discontinued the note of B. for 
 $10,000. C. had deposited with A. for collection a note for 
 $15,000, secured by deed of trust. C. subsequently wrote the 
 president of A. that, having heard that B. " could use advan- 
 tageously some additional cash over and above the amount 
 already had of your bank," etc., " if your bank will lend to B. 
 $15,000, I shall hold myself responsible for that amount, and 
 will leave with you as collateral security the note and mort- 
 gage " * * * " at present in your vault." The proposal 
 contained in his letter was accepted, of which C. had due 
 notice, and B. drew his check on A. for $10,000, and took up 
 his note for $10,000. Held, that $15,000 was the amount 
 which C. guaranteed to pay, and not $15,000 in addition to 
 what B. had before received of A.; that the fact that the money 
 was had of A., to whom B. owed a note of $10,000, and that 
 he paid this note out of the $15,000 so advanced, made no 
 difference in his case ; and that the terms of the guarantee 
 were complied in his case ; and that the terms of the guarantee 
 were complied with by A. A contract of guarantee must be 
 strictly construed, yet must be so construed as to carry into 
 effect the evident intention of the parties, as it is to be gathered 
 from the instrument itself. Allen, Adm'r., v. Central Savings 
 Bank, 4 Mo. St. Appeals (St. Louis), 66. 
 
 275. The guarantor of a note is not discharged from lia- 
 bility by reason of the failure to serve him with notice of non- 
 payment, unless he can show that he suffered detriment thereby. 
 Rodabaugh v. Pitkin, dfi Iowa, 544. 
 
 276. The words " we hereby agree to guaranty the payment 
 to M. H. & Co. for any goods which may be purchased of them 
 by A. W. of Lynn, not, however, binding ourselves to become 
 responsible for a larger sum than five hundred dollars, except 
 by another special agreement. The above guaranty to remain 
 in force until its withdrawal by us." Held, that the contract 
 sued on clearly appears upon its face to have been intended to 
 
58 bankers' code. 
 
 be a continuing guaranty. The question of fact of extinguish- 
 ment or discharge has been decided by the court below in 
 favor of plaintiffs. Melendy et al. v. Capen, 120 Mass. 222. 
 Cases referred to : i Met. 24 ; 12 Gray, 447 — 119 Mass. 435. 
 
 277. The words of a guaranty will be read most strongly 
 a'gainst the guarantor. Hoey v. Jarman, 39 N. J. Law, 523. 
 
 278. The following instrument, signed by the defendant, 
 was delivered to the plaintiff: "I guarantee the sum of five 
 hundred dollars value in glass shades purchased by my son A. 
 from B. Terms of purchase to be sixty days from date of 
 invoice, and if not paid within ninety days, draft to be drawn 
 on me for the amount." Held, that it was not a con- 
 tinuing guaranty. Held also, that parol evidence of the pre- 
 vious dealings, or of the dealings contemplated, between the 
 creditor and the principal debtor, or that the grantor had pre- 
 viously agreed to give the plaintiff a guaranty for future 
 advances, and that the goods were sold, relying on such guar- 
 anty ; or that the relations of the principal parties were well 
 known to the guarantor, was not admissible to show that the 
 instrument was other than a guaranty of a single transaction. 
 Boston and Sandwich Glass Co. v. Moore, 119 Mass. 435. 
 
 279. An oral guaranty of the payment of the note of a 
 third person, the court held the defendant was doubtless once 
 liable for the goods sold and delivered to him, and upon the 
 due bill which, upon paying part of the price of the goods, he 
 gave to the plaintiffs for the balance ; but upon his procuring 
 and delivering to them the note of Robinson, as the bill of 
 exceptions states, " they at the same time gave up the said due 
 bill to him in settlement," and he orally promised to pay Rob- 
 inson's note at maturity, if Robinson did not. The claim of 
 the plaintiffs, and the finding of the court did not proceed upon 
 the defendant's liability for goods sold, but solely upon this 
 oral promise of his, thereby necessarily assuming that his pre- 
 vious liability had been settled and discharged by the giving 
 and receiving of the note of Robinson. Upon this state of 
 facts, the only direct liability was that of Robinson upon his 
 note, and the oral promise of the defendant to pay the note, if 
 R. did not, was a collateral promise to pay R.'s debt, and as 
 such within the statute of frauds. Dows v. Swett, 120 Mass. 
 322. Cases recited: 3 Met. 396; 106 Mass. 400; ro8 Mass. 
 246 ; III Mass. 501. 
 
 280. Defendant gave to C. and D. a separate written 
 agreement to assume at maturity a share of the outstanding 
 notes of R. given for his purchase money. The defendant was 
 jointly interested with Currier & Dean in the purchase of a 
 quarry. Advancements had been made, and expenses incurred by 
 the latter in the purchase and improvement of the same, and part 
 had been sold to one Richmond, and his notes taken in pay- 
 
BANKERS CODE. 59 
 
 meat. The defendant, in a settlement with Currier & Dean, 
 was charged with his share of the expenses and of the original 
 cost, and credited with the part sold. The balance was paid to 
 him by C. and D., who also gave him the written agreement to 
 pay and save him harmless from an outstanding joint note for the 
 purchase money. The defendant, on his part, at the same time 
 gave C. and D. the written agreement aforesaid with regard to 
 the notes of Richmond, given for his purchase of a part of the 
 quarry. This action is brought on the last named agreement, by 
 the assignees in bankruptcy of Currier and Dean, to recover a 
 balance unpaid on one of the Richmond notes, which became 
 due in 1868. The defendant offered to prove that he had no 
 notice of the non-payment of this note until about the time 
 of the commencemnt of this action, and that for more than two 
 years after the note fell due Richmond was in good credit, and 
 could have paid it, but C. and D. voluntarily gave him time 
 upon it. The court ruled that the evidence would not amount 
 to a defence ; and the only question is whether the promise 
 declared on is an original promise of the defendant to pay his 
 own debt, or only a guaranty of the debt of another. In the 
 opinion of the court it is the latter. The fact that the 
 defendant derives benefit from the transaction is not alone 
 enough to make it an original promise, for there must always 
 be some consideration to support a mere collateral under- 
 taking. It is sufficient if the leading object of the contract, as 
 ascertained from the terms of it, is one of suretyship. By these 
 tests it is clear that the defendant's promise in this case was 
 intended to be collateral to the original principal obligation of 
 another. The agreement was a guaranty, and not an original 
 promise. Davis v. Caverly, 120 Mass. 414, also 98 Mass. 296 ; 
 106 Mass. 400 ; and 118 Mass. 137. 
 
 281. Upon assigning a bond and mortgage, the defendant 
 made the following guaranty : "I hereby covenant * * * 
 that, in case of foreclosure and sale of the mortgaged premises 
 in said mortgage, if the proceeds of such sale shall be insuffi- 
 cient to satisfy the same, with the costs of foreclosure, I will 
 pay the amount of such deficiency to the said party of the 
 second part, or its assigns, on demand." If eld, the funda- 
 mental distinction between a guaranty of payment and one of 
 collection is, that in the first case the guarantor undertakes 
 unconditionally that the debtor will pay, and the creditor may, 
 upon default, proceed directly against the guarantor, without 
 taking any Steps to collect of the principal debtor, and the 
 omission or neglect to proceed against him is not (except under 
 special circumstances) any defence to the guarantor; while in 
 the second case the undertaking is that if the demand cannot 
 be collected by legal proceedings, the guarantor will pay, and 
 consequently legal proceedings against the principal debtor. 
 
6o bankers' code. 
 
 and a failure to collect of him by those means, are conditions 
 precedent to the liability of the guarantor ; and to these the 
 law, as established by numerous decisions, attaches the further 
 condition that due diligence be exercised by the creditor in 
 enforcing his legal remedies against the debtor. These rules 
 are well settled, and are not controverted, and the only ques- 
 tion is to which class of guaranties the one now before us 
 belongs. It, is apparent upon the face of the instrument that 
 the undertaking of the defendant was not an unconditional 
 one that the mortgagor should pay, or that the guarantor would 
 pay on default of the mortgagor, but only that the guarantor 
 would pay in case of a deficiency arising on a foreclosure and 
 sale. The foreclosure and sale were consequently conditions 
 precedent, and the general principle is that whenever a condi- 
 tion precedent is to be performed for the purpose of estab- 
 lishing the liability of a surety or guarantor, such condition 
 must be performed in good faith, and with due diligence. The 
 delay in foreclosing in the present case was fourteen months 
 after the mortgage dejit became due. During upward of ten 
 months of this time the property was a sufficient security, but 
 afterward the buildings thereon were destroyed by fire, and the 
 value reduced below the amount of the mortgage debt. It 
 cannot be questioned that this delay was sufficient to constitute 
 laches. See Craig v. Parkis (40 N. Y., 181), a delay of six 
 months in foreclosing a bond and mortgage was held to be 
 laches, which discharged a guaranty of its collection. .¥ c. 
 Murray et al. v. Noyes, 72 N. Y. App. 523. 
 
 INTEREST. 
 
 282. Interest in mutual accounts is to be cast on the annual 
 balances. Davis v. Smith, 48 Vt. 52. 
 
 283. Interest on a note payable on demand runs only from 
 demand, or suit brought, and the fact that the note was given 
 for money received at the time it was made does not change the 
 rule. Suit on a note payable on demand may be brought 
 without a previous request for payment, the suit itself being 
 equivalent to a demand. Hunter v. Wood, 54 Ala. 71. 
 
 284. Interest at the rate of only six per cent, can be recov- 
 ered where no rate of interest is agreed upon between the 
 paities. Convey v. Sheldon, i Bradwell's 111. App. Rpts. 555. 
 
 285. As to parties holding simply the relation of creditor 
 and debtor, compound interest will not be allowed. Force v. 
 Elizabeth, 28 N. J. Eq. 403. 
 
 286. On a note payable on demand, with the rate of interest 
 specified therein, interest is to be computed at such rate till the 
 rendition of verdict, or default. Colby v. Bunker, 68 Me. 524. 
 
 287. As a mere incident, intertst on interest is not allowed. 
 
bankers' code. 6r 
 
 but a promise to pay it is not illegal or without consideration ; 
 and the weight of authority is perhaps in favor of the validity 
 of the promise, at law, whether made at or subsequent to the 
 original contract. PauUivg v. Creagh, 54 Ala. 646. 
 
 288. A note bearing interest over ten per cent, per annum, 
 from due until paid, carries the stipulated interest to the date 
 of the judgment, and the judgment bears ten per cent. Budgett 
 v. Jordan, 32 Ark. 154. 
 
 289. A note which contains a stipulation for interest, at the 
 rate of ten per cent, etc., from date, bears six per cent, interest 
 (the legal rate) after maturity, and a judgment thereon should 
 bear six per cent, interest. Pettigrew v. Summers, 32 Ark. 571. 
 
 290. A note which stipulates for interest from date until 
 maturity, at the rate of ten per cent, per annum, bears the stat- 
 utory rate (six per cent.) after maturity. Woodruff v. Webb, 32 
 Ark. 612. 
 
 291. Only legal interest will be allowed when a larger 
 interest is not stipulated in writing. Buckley v. Seymour, 30 La. 
 1341- 
 
 292. On a note payable on demand, with interest at ten per 
 cent., that rate of interest is recoverable up to the date of the 
 verdict, when damages are assessed by a jury, and up to the 
 date of judgment when a default is entered in a suit on the 
 note. Paine v. Caswell, 68 Me. 80. 
 
 293. When a note contains a stipulation for interest, at the 
 rate of ten per cent, per annum until maturity, and two per 
 cent, per month after maturity, the increased interest after ma- 
 turity cannot be treated as a penalty. When judgment is 
 recovered on a note, the contract is merged in the judgment, 
 and it bears statutory rate of interest. Miller v. Kempner, 32 
 Ark. 573. 
 
 294. A loan of money was made for two months at two per 
 cent, a month, at the expiration of which time it was contem- 
 plated a new arrangement would be made. After the expiration 
 of the two months, no other arrangement having been effected, 
 the court held the lender entitled to claim interest at the rate 
 originally agreed upon, and to sell the notes held by him as 
 security, to repay himself the .mount of his claim, subject only 
 to the question whether he had sold the notes for the best price 
 that could be obtained for them ; and as to which the court 
 directed an inquiry by the Master. O'Connor v. Clarke, 18 
 Grant, Ontario Chancy. 422. 
 
 295. One to whom money is paid, and who receives it 
 believing that it is his due, is not liable for interest upon it 
 before demand made and refusal to pay, nor until he shall have 
 reason to be satisfied that he ought to repay it, and shall know 
 to whom he should pay it. Ashhurst v. Field, 28 N. J. Eq. 315. 
 
62 bankers' code. 
 
 296. Interest on a judgment or debt due is computed up to 
 the time of the first payment, and the payment so made is first 
 appHed to discharge the interest, and afterwards, if there is a 
 surplus, it is applied upon the principal, and so toties guoties, 
 taking care that the principal thus reduced shall not at any time 
 be suffered to accumulate by the accruing interest. Davis v. 
 Neligh, 7 Neb. 78. 
 
 297. When interest is recoverable merely as damages, an 
 action cannot be maintained for its recovery, after payment of 
 the principal. This, when a bequest or contract is silent as to 
 interest, so that, if it can be recovered at all, it can only be recov- 
 ered as damages, an action to recover it cannot be maintained 
 after the payment of the principal. American Bible Soc. v. 
 iVei/s,6S Me. 572. 
 
 298. In the absence of a written agreement, by the defend- 
 ant, to pay eight per cent, per annum interest, only legal interest 
 can be recovered. Bayly &" Pond v. Stacey &> Poland, 30 La. 
 1210. 
 
 299. The condition of a mortgage, dated June 28, 1871, 
 was that the principal should be paid on April ist, 1873, "with 
 interest annually on the first day of April in each year." An 
 action was commenced to foreclose the mortgage December 23, 
 1872, upon the ground of default in ,the payment of interest 
 alleged to have become due April r, 1872. Held, that by the 
 stipulation as to interest reference was had to, and it was 
 intended to provide for a payment of interest prior to the time 
 when the principal became due, and that plaintiff's claim was 
 well founded. Cook v. Clark, 68 N. Y. 178. 
 
 300. When a party agrees by note to pay a certain sum at 
 the expiration of a year, with interest on it at a rate named, 
 the rate being higher than the customary rate of the State where 
 he lives, and does not pay the note at the expiration of the 
 year, it bears interest, not at the old rate, but at the customary 
 or statute rate. Burnhisel v. Firman, 22 Wallace (U. S.) 170. 
 If, however, the parties calculate interest, and make a settle- 
 ment upon the basis of the old rate, and the debtor gives new 
 notes and a mortgage for the whole on that basis, the notes and 
 mortgage are, independently of the Bankrupt Act, and of any 
 statute making such certificates void in toto as usurious, valid 
 securities for the amount which would be due on a calculation 
 properly made. They are bad only for the excess above proper 
 interest. Id. 
 
 301. Under the provisions of the Banking Act of 1870 
 (Chap. 163, Laws of 1870), prohibiting banks from charging 
 upon any discount a rate of interest greater than seven per 
 cent., and in case a greater rate of interest has been paid, 
 authorizing a recovery by the party paying it of twice the- 
 
bankers' code. 63 
 
 amount, it is not necessary that the payment should be made in 
 money to subject the receiver to liability. Nash v. White's 
 Bank of Buffalo, 68 N. Y. 396. 
 
 302. When commercial paper is transferred to and dis- 
 counted by a bank at a greater rate of interest than seven per 
 cent., and the net proceeds, after deducting the interest charged, 
 are credited to the transferrer, this is a payment within the 
 meaning of the statute. The fact that the paper discounted is 
 business paper, so that the purchase thereof is not usurious 
 under the general statutes, does not relieve from liability under 
 said act. Id. 
 
 LIENS. 
 
 303. Judgment entered on an assessment note, under the 
 provisions of the charter of the People's Fire Insurance Com- 
 pany, is not a general judgment which may be enforced against 
 any property of the insurer, but is restricted as a lien to the 
 property insured. Halfpenny v. The People's Fire Ins. Co., 85 
 Penn. st. 48. 
 
 304. Where the note or other written obligation of a third 
 person is taken by the vendor of real estate, he thereby waives 
 his equitable lien. Stevens v. Rainwater, 4 Mo. Court of Ap- 
 peals (St. Louis), 292. 
 
 305. A judgment docketed, but not properly indexed, is a 
 lien upon land in the hands of a subsequent purchaser, without 
 notice. Old Dominion Granite Co. et al. v. Clarke et al., 28 
 Grattan (Va.), 617. 
 
 LOANS. 
 
 306. Loan by a non- trader to a trader. In 1858, W.D, 
 Sr., opened a credit of $584 in favor of his daughter, J. D. 
 with W. D. & Co., a commercial firm in Montreal, consisting of 
 the appellant and one T. D., W. D. & Co., charging W. D., Sr., 
 and crediting J. D. with the amount. In i860, W. D., as sole 
 executor of the will of D. D., credited J. D. in the books of 
 W. D. & Co. (appellant at that time being the only member of 
 the firm), with a further sum of $800, the amount of a legacy 
 bequeathed by such will. These entries in the books of W. D. 
 & Co., together with entries of interest in connection with the 
 said items, were continued from year to year. An account 
 current was rendered to J. D., exhibiting details of the indebt- 
 edness up to the 31st December, 1861. After 31st December, 
 1864, the firm of W. D. & Co. consisted of the appellant and 
 his brother, T. D. In December, 1865, another account was 
 rendered to J. D., which showed a balance due her at that time 
 of $1,912,08. The accounts rendered were unsigned, but the 
 record account current was accompanied by a letter, referring 
 to it, written and signed by the appellant. J. D. died, and in 
 
64 bankers' code. 
 
 a suit brought by G. T,. her husband and universal legatee, to 
 recover the $1,912,08, with interest, from 31st December, 1865: 
 Held, 
 
 (i). That a loan of moneys, as in this case, by a non-trader 
 to a commercial firm is not a " commercial matter," or a debt 
 of a "commercial nature"; that, therefore, the debt could be 
 prescribed, neither by the lapse of six years under Consolidated 
 Statutes of Lower Canada, ch.. 67, nor by the lapse of five years 
 under the Civil Code of Lower Canada, but only by the pro- 
 scription of thirty years. Whishaw v. Gilmour, 15 L. C, R. 
 177, approved. 
 
 (2). That, even if the debt of a commercial nature, the ren- 
 dering of the account current, accompanied by the letter refer- 
 ring to it, signed by the appellant, would take the case out of 
 the statute. 
 
 (3). That the proscription of five years against arrears of in- , 
 terest, under Art. 2250 of the Civil Code of Louver Canada, does 
 not apply to a debt the proscription of which was commenced 
 before the code came in force. 
 
 (4). That entries in a merchant's books make complete proof 
 against him. Darling v. Brown, i Canada Supreme Co. 360. 
 
 MARKET PRICE. 
 
 307. The market price of a marketable commodity may be 
 determined as well by offers to sell, made by dealers in the 
 ordinary course of business, as by actual sales; and statements 
 of dealers in answer to inquiries as to price, are competent evi- 
 dence. Harrison v. Glover, 72 N. Y. App. 451. 
 
 MARRIED WOMEN. 
 
 308. In the case of a purchase by a wife during coverture, 
 the burden is upon her to prove distinctly that she paid for , 
 the thing purchased with funds not furnished by her husband 
 Evidence that she purchased amounts to nothing, unless it is 
 accompanied by clear and full proof that she paid for it with 
 her own separate funds. In the absence of such proof, the pre- 
 sumption is, that her husband furnished the means of payment. 
 Rose &= Co. et al. v. Brown et ux. 11 W. Va. 122. 
 
 309. Under the Statute (Laws 1874, p. 185) a femme covert 
 is no longer sub protestati vivi in respect to the acquisition, en- 
 joyment, and disposition of real and personal prdperty. She 
 may do with her own property as she will, without reference to 
 any other restraints or disabilities of coverture. She may make 
 conveyance directly to her husband. The removal, in respect 
 to the wife, of a disability that is mutual, and springing from 
 the same source, removes it also as to the husband; and the 
 husband may, acting in his own right, convey to the wife. 
 Wells V. Caywood, 3 Colo. 487. 
 
bankers' code. 65 
 
 310. Separate estate is presumed, in the absence of proof to 
 the contrary, where a married woman signs a note or order for 
 goods or money. Wilcoxson v. State, 60 Ga., 182. 
 
 311. Married woman may give a inortgage upon her pro- 
 perty to secure the payment of a debt due by her husband; 
 and a mortgage executed by her for such purpose cannot be 
 said to be without consideration. Comegys v. Clarke and Cotn- 
 egys, 44 Md. 108. 
 
 312. Neither the pecuniary embarrassment, nor the actual , 
 insolvency of the husband, is any obstacle to a transfer by the 
 husband to the wife, in good faith, for the replacing of her 
 money, or property, used, or alienated by him. Lehman, Abra- 
 ham (Sf Co. V. Levy, 30 La. 745. 
 
 313. A married woman, in the absence of fraud, or of 
 knowledge thereof on the part of the beneficiaries in a trust 
 deed, given on a bona fide consideration, cannot impeach the 
 certificate of the officer taking her privy acknowledgment. 
 
 Williams v. Powers, 48 Texas 141. 
 
 MISTAKE. 
 
 314. A Mistake in facts will always be remedied by the 
 
 courts as far as can be done consistently with right and justice ; 
 but if the mistake is purely a mistake in law, they will not inter- 
 fere. Carpenter v. Jones et al., Adm'rs, 44 Md. 625. 
 
 315. A clerical error in entering a consent decree may be 
 corrected by the original draft of the decree, furnished the clerk 
 by the court, on motion at any time, under the provisions of 
 section 5 of chapter 134 of the Code. A consent decree, 
 except where such clerical error has occurred, can never be 
 modified or altered without the consent of parties, not even 
 during the term at which it was entered. M anion v. Fahy, 1 1 
 W. Va. 482. 
 
 316. When money is paid under a mutual mistake of law, 
 the mistake of law is, in and of itself, no ground for recovering 
 it back. Galveston Co. v. Gorham, 49 Texas, 279. 
 
 317. Any mistake or misunderstanding between the persons 
 conducting a judicial sale, and intended bidders or parties in 
 interest, by which interests are prejudiced without fault of the 
 injured party or parties, is sufficient cause for refusing confirm- 
 ation and ordering a re-sale. Hilleary et al. v. Thompson et al., 
 II W. Va. 113. 
 
 MONEY COLLECTED BY AN OFFICER 
 
 318. Money collected by an officer on legal process, while 
 it remains in his hands is to be regarded as in aistodia legis, and 
 not the subject of levy or attachment in any form. Thus, an 
 
66 bankers' code. 
 
 officer, who has collected money on an execution, cannot apply 
 it in satisfaction of another execution, although the latter is 
 against the party for whortl the money was collected, and bbth 
 executions are in the officer's hands for collection at the same 
 time. Hardy v. Tilton, 68 Me. 195. 
 
 MORTGAGES. 
 
 319. A tender of the amount due upon a mortgage after 
 condition broken does not discharge the mortgage. A mort- 
 gagor cannot maintain a writ of entry against a mortgagee in 
 possession. Rowell v. Mitchell, 68 Me. 21. 
 
 320. A mortgagor of real estate, or the owner of the equity 
 of redemption, has to the day of sale to make payment and 
 release the mortgaged premises from the lien and sale, and the 
 provisions of law require printed notice of the time and place 
 of sale to be given for at least thirty days before any sale can 
 be had. Blandins, Adm'r, v. Wade, 20 Kansas, 253. 
 
 321. A mortgage is not invalidated by a misdescription 
 made by a scrivener, where the premises may be identified by the 
 admission of the parties themselves, by reference thereto in 
 other deeds, and by an actual location thereof by the parties. 
 Boon v. Pierpont, 28 N. J. Eq. 6. 
 
 322. The deed of a married woman is not complete, so as 
 to convey title to land, without the certificate of privy acknowl- 
 edgment prescribed by the statute ; and its absence cannot be 
 supplied by parol evidence. Looney v. Adamson, 48 Texas, 619- 
 
 323. A mortgage containing a clause that the mortgagor 
 shall have possession, without paying rent, of the mortgaged 
 property until a fixed date, is not to be construed thereby to 
 confer the right of possession thereafter to the mortgagee. 
 Morrow V. Morgan, 48 Texas, 304. 
 
 324. A mortgage, primarily without any consideration, 
 given to, secure certain negotiable notes in the hands of any 
 future holder, becomes a valid mortgage in favor of any inno- 
 cent third person, who may acquire one of the notes before its 
 maturity, and for value. Billgery v. Ferguson, 30 La. 84. 
 
 325. A mortgagee who transfers part of the mortgage debt 
 to another, cannot compete with his transferee for the proceeds 
 of the mortgaged property, where the amount is not sufficient 
 to satisfy both. Baskdull v. Herwig if Smith, 30 La. 618. 
 
 326. An assignee of a mortgage, given to secure the pay- 
 ment of a negotiable note, is held entitled to the same pro- 
 tection that he would have as assignee of the note without the 
 mortgage. Dutton v. Ives, 5 Mich. 5 15 ; also Helmer v. Krolick, 
 36 Mich. 371. 
 
 327. A stipulation in a mortgage for the payment of rea- 
 sonable attorney's fees, in case suit is commenced thereon, is 
 
bankers' code. 67 
 
 valid, and may oe enforced in any action for the foreclosure of 
 the mortgage. Dan/orth v. Charles et al. 1 Bennett's Dakota 
 Rpts. 285. 
 
 328. A mortgage is binding between the parties to it, 
 whether acknowledged or not. Lemayv. IVi'/h'ams, ^^ Aik. 166. 
 
 329. The registry of a judgment against a party will operate 
 as a legal mortgage on all the immovables of that party situate 
 within the parish wherein the judgment is registered, whether 
 the deed to such immovables is recorded or not, and such 
 mortgage is good against everybody that the judgment debtor's 
 title to the immovables is good against. Logan v. Hebert, 30 
 La. 727. 
 
 330. A mortgage, executed by a tenant in common, of an 
 undivided interest in a specified parcel of land is invalid as 
 against his co-tenants. Marks y. Sewall, 120 Mass. 174. 
 
 331. Mortgage given to secure the payment of a pre- 
 existing debt, the mortgagee cannot claim protection against 
 older equities as a bona fide purchaser for a valuable consider- 
 ation. Alexander v. Caldwell, 55 Ala, 517. 
 
 332. The statute grants no power to an administrator to bor- 
 row money upon a mortgage of the real estate of the decedent. 
 Such an act is foreign to the policy and purposes of adminis- 
 tration, which aims to close up, not to continue an estate. 
 Such mortgage is without legal authority, and void ; and in the 
 absence of fraud, misrepresentation, or mistake, the heirs are 
 not estopped to plead its invalidity by reason of the benefit 
 resulting to them by means of the mortgage. Black v. Dres- 
 seirs Heirs, 20 Kansas, 153. 
 
 333. Where a mortgagee of chattels, in the absence of an 
 agreement in the mortgage, purchases the property at a mort- 
 gage sale, and appropriates it to his own use, he becomes 
 liable for the actual value thereof at the time of the sale, with- 
 out reference to the amount bid. Webber v. Emmerson, 3 
 Colo. 248. 
 
 334. A mortgagor of real estate has the right to the posses- 
 sion of the mortgaged property, and to sever and remove 
 timber, wood, sand, earth, coal, stone, or anything else, there- 
 from, and to sell the same, unless it unreasonably impairs the 
 mortgage security. When it impairs the mortgage security, the 
 remedy of the mortgagee is not at law, but in equity ; not 
 replevin to recover the property severed from the realty, but 
 generally injunction, to restrain the commission of waste upon 
 the reality. Vanderslice v. Knapp, 20 Kansas, 647. 
 
 335. An unrecorded mortgage valid as against heirs of 
 mortgagor. A scire facias will lie on an unrecorded mortgage. 
 A. P. Laughlin v. Ihmsen, 85 Penn. St. 364. 
 
68 bankers' code. 
 
 336. The assignee of a mortgage is not affected by a col- 
 lateral agreement between the mortgagor and mortgagee, made 
 at the time of the execution of the mortgage, of which he had 
 no notice, and in a suit upon the mortgage by the assignee said 
 agreement cannot be set up as a defence. McMasters v. Will- 
 helm, 85 Penn. St. 218. 
 
 337. When a party, who was indebted to another, executed 
 a conveyance to secure the indebtedness, and received from the 
 grantee an instrument, binding him to re-convey upon payment 
 of the debt ; held, that the transaction constituted a mortgage, 
 and that it was not competent for the grantor to insist upon a 
 foreclosure thereof, but that he must pay the amount due be- 
 fore he could ask the cancellation of the conveyance. White 
 V. Lucas, 46 Iowa, 319. 
 
 338. A purchaser from a mortgagor may recover the land 
 mortgaged, in trespass to try title, against parties holding under 
 a foreclosure sale, to which the plaintiff was not a party. Such 
 foreclosure proceedings do not affect the right of a purchaser 
 from a mortgagor prior to the suit for foreclosure, and not 
 made a party to such suit. Morrow v. Morgan, 48 Texas, 304. 
 
 339. In an action to recover upon certain promissory notes, 
 and to foreclose a real estate mortgage given to secure the pay- 
 ment of the notes, where the judgment required the defendant 
 to pay the debt and costs within one day after its rendition, 
 and on default thereof, the clerk is directed to issue a special 
 execution to sell the real estate to satisfy the judgment; held, 
 not erroneous because no more time is allowed. The debtor 
 to raise and pay the money prior to the issuance of the special 
 execution. Blandins, Adm'r,v. Wade, 20 Kansas, 251. 
 
 340. The clause in a mortgage, fixing the fees of the cred- 
 itor's attorney of five per cent, in the event of the non-pay- 
 ment of the debt at its maturity, makes the debtor, on the 
 happening of the .event, absolutely liable for that amount ; and 
 this liability cannot be affected by the fact the creditor has not 
 really paid, or obligated himself to pay, that amount of attor- 
 ney's fees. Renshaw v. Richards, 30 La. 398. 
 
 341. A man may make a valid mortgage for the payment of 
 money, without particularly describing the writing which may 
 be evidence of the debt, or without even giving any inde- 
 pendent written evidence thereof. But he is not at liberty to 
 subsitute a different condition, by parol evidence, for that 
 which he expressed in his deed. A man may mortgage to an 
 agent in order to procure credit from his principal, and the 
 agent may enforce the mortgage as the trustee of his principal. 
 Varney v. Hawes. 68 Me. 442. 
 
 342. When a mortgagee has, upon demand, rendered a true 
 account of the amount due upon the mortgage, a bill in equity 
 
bankers' code. 69 
 
 to redeem cannot be maintained, unless the plaintiff first tender 
 to the mortgagee the amount due, or is prevented from so 
 doing through the fault of the mortgagee. Dinsmore v. Savage, 
 68 Me. 191. 
 
 343- The same rule as to the necessity of registration, in 
 •order to give a priority of title, prevails between different 
 assignees of a mortgage as between grantees under ordinary 
 -deeds. A mortgagee assigned the mortgage ihus : " I 
 hereby assign to the said (assignee) the within mortgage 
 deed, the debt thereby secured, and all my right, title and 
 interest in the premises therein described." Held, that this 
 assignment, having been recorded, transfers the morigage title 
 as against a prior unrecorded deed of the same land by the 
 mortgagee, unless it is shown that the assignee had actual 
 notice of the prior deed. Wiley v. Williamson, 68 Me. 71. 
 
 344. A mortgagee of real estate, before foreclosure of his 
 lien, even when the mortgagor is insolvent, and the mortgaged 
 ■premises insufficient to pay the mortgage debt, cannot maintain 
 an action against one who has removed an engine and boiler 
 from the mortgaged premises, and sold them, to recover the 
 value of the property so taken and converted. Alexander v. 
 Shonyo, 20 Kansas, 705. 
 
 345. R. mortgaged to S. certain land, on which was a grist- 
 mill, and in which mill were certain fixtures. Afterwards R., 
 for the purpose of defrauding S., severed said mill fixtures from 
 the mill, and sold and delivered them to K., who purchased and 
 received the same for a like purpose. Held, that said mill fix- 
 tures belonged to R. until he sold them to K., and that they 
 -never became the property of S., and that neither S., nor any 
 person claiming under him, can maintain re'plevin against K. 
 for them. Vanderslice v. Knapp, 20 Kansas, 647. 
 
 346. A mortgage of land to " Pinson, Dillard & Co." is not 
 void for uncertainty, in not giving the surnames of some of the 
 members of the firm, and in omitting the christian names of all 
 of them. And even if the title only vested, by the conveyance, 
 in those whose surnames were mentioned, the mortgage would 
 enure to the benefit of all of the members of the firm, and they 
 might all join in the suit to enforce it. A mortgage given for 
 pre-existing debt is not invalid for want of valuable consid- 
 eration, as against a prior unrecorded mortgage, where the time 
 of payment of the debt is extended by a note, taken four days 
 iDefore the execution of the mortgage, formed one transaction. 
 Schumpertv. Dillard, Pinson &• Co., 55 Miss. 348. 
 
 347. When a mortgagor conveys real estate, and the con- 
 -veyahce contains a statement that the grantor will assume and 
 pay the note which the mortgage is given to secure, and the 
 grantee accepts the same, and enters into possession of the 
 
•JO BANKERS CODE. 
 
 premises, he becomes directly and personally liable to the 
 holder of the note and mortgage for the amount due. J^iiz- 
 geraldv. Barker, 4 Mo. Court of Appeals (St. Louis), 105. 
 
 348. Omitting to name the State, county, and township, in 
 the description of premises in a mortgage, will not invalidate 
 the instrument, where other adequate elements of identification 
 exist; and it is not essential that the property should be so de- 
 scribed as to identify it without the aid of extrinsic proofs, but 
 it is always competent to connect the written description 'with 
 the material subject matter by proof of the surrounding cir- 
 cumstances. Where there are descriptive signs satisfactorily 
 ascertained which designate the thing meant to be granted, the 
 addition of circumstances or accompaniments which are un- 
 true, will not defeat the grant, but they will be rejected. Slater 
 V. Breese, 36 Mich. 77. 
 
 349. A bill in equity alleged that A. purchased ari estate 
 with the plaintiff's money, and had it conveyed to his wife, who 
 took it, with notice of the same; that A. and his wife mortgaged 
 the estate to B., who assigned the mortgage to C, both of 
 whom had notice of the resulting trust to the plaintiff. A 
 decree was made that C. assign the mortgage to the plairttiff. 
 ITeld, that an assignment was unnecessary, and would impair 
 the rights of the defendants among themselves ; and that the 
 mortgage should be discharged by a deed of release to the 
 plaintiff, or by an entry upon the margin of the record of the 
 mortgage in the registry of deeds. Harwood v. Pearson, 122 
 Mass. 425. 
 
 350. The unauthorized cancellation of record of a mortgage 
 by the clerk, or register, without the knowledge or consent of 
 the mortgagee, will not affect the rights of the latter under the 
 mortgage, even as against a bona fide purchaser of the mort- 
 gaged premises, with notice of the mortgage, though he has no 
 notice that the cancellation was unauthorized, and presumed, 
 from the certificate of cancellation, that the lien of the mort- 
 gage was extinguished. A mortgage may be assigned by deliv- 
 ery merely. Harris v. Cook., 28 N. J. Eq. 345. 
 
 351. The holder of two mortgages on the same parcel of 
 land entered to foreclose the first mortgage, but did not enter 
 under the second mortgage. A bill in equity was brought 
 against him to redeem the first mortgage, and in his answer he 
 did not set up the second mortgage. A decree was entered 
 that, on payment of a certain sum, he should release and dis- 
 charge the mortgaged premises, described in the bill, from the 
 mortgage therein described, and should deliver up possession 
 of the premises. Held, on a subsequent bill in equity to ob- 
 tain the discharge of the second mortgage, that he was not 
 estopped to set up the second mortgage. Gerrish v. Black, 
 122 Mass. 76. 
 
BANKERS CODE. 7 1 
 
 352. Mortgage having been made to secure several nego- 
 tiable notes, and the notes having been passed to several dif- 
 ferent holders, arid one of the holders having obtained a gene- 
 ral judgment, and another having foreclosed the mortgage in 
 the name of the mortgagee for his use, a sale of the premises 
 under the general judgment passed the title free from the mort- 
 gage lien, the attorney representing the judgment of foreclosure 
 having placed the execution founded thereon in the hands of 
 the officer of the law making the sale, and caused the title, un- 
 incumbered, to be sold, and there being no fraud in the sale, 
 and the premises having brought full value, or an amount ap- 
 proximating thereto. The notes not covered by either judg- 
 ment cannot be enforced against the land, but are thrown, in 
 equity, upon the fund produced by the sale, for their fro rata 
 share thereof. Smith et al. v. Bowne et al., 60 Ga. 484. 
 
 353- Under the Code (§1955) a mortgage must clearly in- 
 dicate the creation of a lien, and specify the debt to secure 
 which it is given. A deed in fee simple, without condition or 
 defeasance, and a bond for titles from the grantee to the grant- 
 or, in which bond the grantee obligates himself to convey the 
 premises to the grantor on the payment of a sum of money, do 
 not separately or together indicate the creation of a mere lien; 
 but the purpose indicated is to divert the grantor of title, and 
 to vest title in the grantee until the payment of the debt. To 
 take a bond for a future conveyance, and then deny that the 
 maker thereof had any estate in the premises at the time he 
 gave the bond, no fraud or mistake being alleged, is idle and 
 inconsistent. If a judgment creditor, whose judgment is junior 
 to an absolute deed made to secure another creditor, can sub- 
 ject the land without redeeming, or offering to redeem, it is 
 because the Registry laws have not been complied with, or else 
 because the debtor having retained possession, the conveyance 
 is to be deemed fraudulent. Gibson v. Hough &= Sons, 60 Ga. 
 588. 
 
 354. A bill of sale whereby a debtor conveys personal pro- 
 perty to his creditor as security, and which provides that the 
 property shall remain in the debtor's possession, and he have 
 thirty days to redeem by paying the debt, is a mortgage. 
 Blodgett V. Blodgett, 48 Vt. 32. 
 
 A mortgagor of personal property, after condition broken, 
 has an equity of redemption that may be asserted if he brings 
 his bill to redeem within a reasonable time. Id. 
 
 355. A tender of the amount of the debt after the law day 
 has passed, unaccepted, does not divert the mortgagee of his 
 legal right to the property mortgaged ; and Chancery has juris- 
 diction to decree redemption. Id. 
 
 356. When the mortgagee disposes of the property, after 
 
72 BANKERS,' tODE. 
 
 tender made, and before final hearing, that an order for its de- 
 livery cannot be made, a decree may be entered for the amount 
 of the mortgagor's interest therein. Id. 
 
 357. While it is not lawful for banking associations, estab- 
 lished under the U. S. St. of 1864, c. 106, to purchase, hold, 
 and convey real estate, except in certain specified cases, among 
 these exceptions are included such real estate " as shall be 
 mortgaged to it in good faith by way of security for debts pre- 
 viously contracted ; such as shall be conveyed to it in satisfac- 
 tion of debts previously contracted in the course of its deal- 
 ings; such as it sha.ll purchase at sales under judgments, de- 
 crees, or mortgages held by such associations, or shall purchase 
 to secure debts due to said association." 
 
 Under the latter clause, it cannot be deemed that the only 
 authority given to such associations is to purchase only to the 
 exact amount of the debts which may be owing to them, but 
 they are entitled to purchase such real estate as may be neces- 
 sary in order to secure the debts due to them, so long as the 
 security of such debts is the real object of the purchase. By 
 oral evidence it was proved that a bankrupt applied to the de- 
 fendant for a loan of a certain sum to enable him, together 
 with his own funds, to take up the mortgage; that the defend- 
 ant lent him the sum requested ($3,000), upon his verbal 
 promise to assign the mortgage to him to secure the sum lent 
 and certain notes then due ($911) to the defendant by the 
 bankrupt. The claim that this was a loan of money upon real 
 estate security, or a purchase of real estate, is not maintained, 
 when it is found, as a fact, that the inducement to this transac- 
 tion was the agreement that the mortgage, and the real estate 
 upon which it was secured, should be held for the antecedent 
 debt due the bank. By the assignment in bankruptcy the 
 assignee has succeeded to all the rights of the assignor, 
 Emerson ; but his rights here are not superior to those of 
 Emerson. He has come into a Court of Equity to seek its aid 
 in obtaining those rights, and is, therefore, to do what Emerson 
 would have been compelled to do. In order to obtain a decree 
 for the redemption of the mortgage, he must perform the oral 
 agreement that the debt of $911, due the bank, should be paid, 
 as well as pay the balance of the $3,000, which is now due. 
 Upton, Assignee, v. National Bank of South Reading, 1 20 Mass. 
 153- 
 
 358. A. executed a mortgage of real estate, with a power of 
 sale, to B., and subsequently conveyed the equity of redemption 
 to C. The mortgage provided that after the expiration of sixty 
 days from the breach of any of the conditions named therein, 
 the mortgagee, or those claiming under him, might sell the 
 premises at public auction, " without further notice or demnnd, 
 except giving notice " by advertisement for three successive 
 
BANKERS CODE. 73 
 
 weeks in a newspaper. Upon breach of condition for non- 
 payment of interest, all the notices by advertisement were duly 
 given, but did not state for what breach of condition the sale 
 was made, and the sale took place as advertised. Before the 
 sale, B. caused to be sent to A., by mail, a copy of the paper 
 containing the advertisement, and A. knew that the interest 
 on the mortgage was in arrears, was informed that it must be 
 paid, and asked where C. was. No formal demand was made 
 upon A. It appeared that A. knew from some source that 
 there was to be a sale of the property, or some interest therein, 
 and, without making proper inquiry, carelessly, but honestly, 
 assumed and believed that it was not to be a sale under the 
 power contained in the mortgage made by him. A. made no 
 effort to escertain the facts, and did not attend the sale, at 
 which the property was sold for less than its value. After the 
 sale, A. offered to redeem the mortgage, and demanded an 
 assignment thereof; was refused, and brought a bill in equity 
 , against B. and the purchaser, to redeem. Held, that the no- 
 tices were not required to state for what treach of condition 
 the sale was made; that mere inadequacy of price was not suffi- 
 cient to invalidate the sale ; and that A. could not maintain his 
 bill. King v. Branson, 122 Mass. 122. 
 
 NEGLIGENCE. 
 
 359- An assignee of certificates of shares of stock, who 
 leaves the certificates, with the assignments recorded, in the 
 possession of the assignor, is not thereby guilty of negligence, 
 so as to be estopped to set up his title against a person who 
 claims title to the certificates through an alteration of the assign- 
 ments by the fraud and forgery of the assignor. Eaton v. 
 Telegraph Co. 68 Me. 63. 
 
 360. One accepting a deed of conveyance of land is bound 
 to exercise ordinary prudence in examining the instrument, and 
 cannot, in a suit against the grantor for alleged defects in the 
 deed, excuse himself for this neglect upon the ground of his 
 confidence in the grantor. Jaeger v. Whitsett, 3 Colo., 105. 
 
 361. The employment of a common carrier is a public em- 
 ployment, and while he may, by special agreement, excuse him- 
 self for accidental losses, he is responsible for all damages 
 occasioned by negligence or misfeasance, either of himself or 
 servants, and cannot divest himself of this liability, either by 
 special contract or notice. Merchants' D. &" T. Co. v. Cornforih, 
 3 Colo. 280. 
 
 PARTNERSHIP. 
 
 362. A person who permits himself to be held out as a 
 partner is liable as such, whether in fact a partner or not. 
 Brugman "t al. v. McGuire et al. 32 Ark. 733. 
 
74 BANKERS CODE. 
 
 363. Accounts between partners are to be adjusted on prin- 
 ciples of equity. Maddox v. Stephenson, 60 Ga. 125. 
 
 364. Where one of two partners has advanced to the part- 
 nership more- than the other, he cannot maintain assumpsit 
 against the other partner for his proportion of it, so long as the 
 partnership debts are not paid. Mickle v. Peet, 43 Conn. 65. 
 
 365. When two or more parties, engaging in a business ven- 
 ture with the understanding that there is to be a communion 
 of profit and loss, will be deemed special partners, and as such, 
 in case of loss, severally liable for their frO; rata share of such 
 loss. Stettaner Bros. v. Carney &" Stevens, 20 Kansas, 474. 
 
 366. Where the evidence shows that the two individual 
 signers of a merely joint note were, at the date of the note, 
 commercial partners, and that the consideration of the note 
 was money borrowed for and used by the partnership, each of 
 the makers will be liable on the note in solidp. Mitchell v. D. 
 Armond, 30 La. 396. 
 
 367. When one partner in a firm borrows money, represent- 
 ing that it is for the use of the firm, and gives a note of the firm 
 therefor, without the knowledge of his copartners, but appro- 
 priates the money to his own use, the firm will be liable, unless 
 the creditor knew, or had reasonable ground to believe, the 
 money was not borrowed for the use of the firm, or the circum- 
 stances were such as to put him upon inquiry, and he neglected 
 to inquire. Wagner v. Freschl, 56 N. H. 495. 
 
 368. Real estate held by a commercial firm as partnership 
 assets, upon the dissolution of the partnership, as between the 
 partners, vests in the individual members thereof, as tenants in 
 common. McGrath v. Sinclair, 55 Miss. 89. 
 
 369. Power to Dispose of its Property.' — The general 
 creditors of a firm have no lien on its assets, any more than 
 ordinary creditors have upon the property of an individual 
 debtor. And the power of a firm to dispose of its property, 
 all the members co-operating, is as unlimited as that of an indi- 
 vidual. Sehmidlopp v. Currie, 55 Miss. 597. 
 
 370. The assignment of its assets for the benefit of its cred- 
 itors, made by a defunct partnership to an individual member 
 of a new partnership succeeding to the former business of the 
 old concern, will not make the new partnership liable to the 
 defunct partnership for the value of any of its assets, and 
 therefore not amendable to a garnishment at the suit of any 
 creditor of the defunct concern. Bancker v. Harrington (y Co. 
 et al., 30 La. 136. 
 
 371. A creditor of one of the partners of a firm may attach 
 such partner's interest in a specific portion of the stock of 
 goods belonging to the firm, and is not required, in order to 
 render the attachment regular, to take the partner's interest in 
 the entire stock of goods. Fogg v. Lawry. 68 Me. 78. 
 
BANKERS CODE. 75 
 
 372. A promissory note executed in the name of a certain 
 commercial firm, in liquidation, by an agent of one of the for- 
 mer partners, after the dissolution of the firm, is not binding on 
 the former members who have not given any specific authority 
 for the execution of a note. Dodd, Brown 6^ Co. v. John 
 Bishop &= Co. etal., 30 La. 2nd Book, 1178. 
 
 373. A surviving partner is entitled to sue in his represent- 
 ative capacity for the amount due the partnership, and in his 
 own name for the amount due to himself individually. The 
 respective demands may be united in the same action, but 
 should be separately stated. Quilhn v. Arnold, 12 Nevada, 
 
 235- 
 
 374. Where a loan is made by two members of a commer- 
 cial firm, in a matter foreign to the business of the firm, and 
 in disregard of the express opposition of the third member, the 
 two members making the loan are justly chargeable with its 
 amount. David G. Cooke v. Hugh and Andrew Allison. 30 La. 
 963- 
 
 375. Where a creditor of a former commercial firm sues its 
 individual members for goods sold to the firm, and declares in 
 his petition on the itemized account of the goods, and also on 
 a promissory note of the firm, given in liquidation of the ac- 
 count by one not authorized to sign for the firm, he' will be enti- 
 tled to recover for the goods, on the unopposed proof of their 
 sale and delivery. One who acts in such a manner as to induce 
 others to believe that he is a member of a certain partnership, 
 makes himself liable to them as a partner. Dodd, Brown hf 
 Co. v. John Bishop &= Co. et al. 30 La. 11 7 8. 
 
 376. A party seeking exemption from the liability of a gen- 
 eral partner, under the Act of 1874, respecting limited partner- 
 ships, must show a strict compliance with the act. The statute 
 does not require that the capital should be paid in cash; but 
 when it is paid in property, it should be so stated, and its cash 
 value given. HoUiday et al. v. Union P. &= B. Co. 3 Colo. 342. 
 
 377. In an action brought by one member of a partnership 
 to have an accounting with his two partners, and to recover a 
 balance due him, where the referee reports that such plaintiff 
 contributed $663, 48 to the capital, and the other two partners 
 0370, and that certain profits were realized from their business, 
 and that by the terms of the partnership the parties were to 
 share equally in the profits thereof, held, that each member of 
 the firm, on dissolution of the partnership, is entitled to a return 
 of his capital, and in addition one-third of the profits. Norman 
 V. Conn. 20 Kansas 159. 
 
 378. The individual members of a commercial firm may 
 execute a valid note, and a valid mortgage securing said note 
 on their individual property, in favor of the firm, and any third 
 
76 bankers' code. 
 
 person acquiring the note from the firm, in good faith, for 
 value, and before maturity, may enforce its payment. Pike, 
 Brother &" Co v. Hart 6^ Hebert, 30 La. 868. 
 
 379. Service upon Member of;^Service upon one of 
 the firm, after dissoluLion, confers jurisdiction to render a judg- 
 ment which may be satisfied out of the partnership property, 
 or the individual property of the member served, but confeis 
 no jurisdiction of a partner not served. A judgment having 
 been obtained upon a promissory note, the note became merged 
 in the judgment, and could not afterwards be made a cause of 
 action. Hartford, Thayer 6^ Co. v. Street, 46 Iowa, 594. 
 
 380. When all the partners are in a situation, that would 
 authorize their individual creditors to sue out attachments 
 against them respectively, a creditor of the firm may procure 
 an attachment against the partnership, and have the same 
 levied upon the partnership effects. Starr v. Mayer 6^ Co., 60 
 Ga. 546. 
 
 381. R. S., c. 82, sec. 87, provides that when the legal rep- 
 resentative of a deceased person is a party, he may testify to 
 any facts, legally admissible upon the general rules of evidence, 
 happening before the death of such person. Held, that the 
 surviving partner, who gives bond under R. S., c. 69, sec. 2, 
 and is afterwards sued upon a note of the firm, is not, there- 
 fore, a representative of his deceased partner, and as such 
 entitled to testify to facts happening before his decease within 
 the provisions of c. 82. Holmes y. Brooks, 68 Me. 416. 
 
 382. Note in renewal of another made by same partner who 
 signed the last, which itself was in renewal of a note by a dif- 
 ferent firm, of which the signer had been a member, upon plea 
 of non est factum by the copartner, onus of showing authority 
 to sign is on the plaintiff. Bryan v. Tooke et al., 60 Ga. 437. 
 
 383. One partner in a mercantile business has power to 
 bind the bthers by a promissory note given in the usual course 
 of business, and the payee of a note, executed by a partner in 
 the firm name, has the right to presume that it was executed in 
 the usual course of business. Sherewoody. Snow, Foote &• Co., 
 46 Iowa, 481. 
 
 384. The fact that the partner signed his individual name 
 before' signing that of the firm, should be considered by the 
 jury in determining whether or not the payee had reason to know 
 that the consideration was procured for his own individual 
 use. Id. 
 
 385. The creditors of a corporation selected three of their 
 number, who were elected directors of the company, and 
 charged with the management of its business. Held, that they 
 could not be made liable as partners for supplies furnished them 
 and used in the conduct of the corporation business. Beeson v. 
 Lang, 85 Penn. St. 197. 
 
BANKERS CODE. 
 
 77 
 
 386. The fact that the owner and shipper of property is 
 doing business in the name of a firm in violation of the pro- 
 visions of the Act (chap. 281, Laws of 1833), "to prevent per- 
 sons transacting business under fictitious names," and that the 
 property is marked with the firm name, is, no defense to an 
 action by such owner against a railroad corporation for loss of, 
 or damage to the property while in transit. The said act, being 
 highly penal, will not be extended by implication or construc- 
 tion to cases not within the terms of the act fairly interpreted. 
 WoodY. E. R. R. Co., 72 N. Y. App. 106. 
 
 387^ An ordinary partnership cannot be held liable for the 
 individual debt of one of its members because of an agreement 
 ■ to that effect between that member and his creditor, unless it 
 be proved that the member was authorized to make the agree- 
 ment by his copartners, or that his agreement was ratified by 
 them, or that the partnership was benefited by the transaction. 
 W. £. Hamilton et al. v. Nellie Hodges, Tutrix, et al., 30 La. 
 1290. . 
 
 388. In a feigned issue to try the right to certain cattle, A. 
 offered evidence that he purchased the cattle through B., who was 
 his agent, in the name of B. ; that it was agreed that the latter 
 should butcher and sell the meat, and out of the proceeds return 
 to A. the cost and one-fourth of a cent per pound of dressed 
 meat additional, and that B. should have the balance. Upon 
 this evidence the court granted a nonsuit, on the ground that 
 it did not tend to prove an exclusive ownership in A., but 
 
 , established a partnership. Held (reversing the court below), 
 inter se, or as to third parties, and that the case should have been 
 submitted to the jury to say what was the actual relation of the 
 parties. Dale v. Peirce, 85 Penn. St. 474. 
 
 389. Partners cannot, during the existence of the partner- 
 ship, claim individual exemption in partnership property, when 
 taken under legal process for partnership debts. (Overruling 
 in this particular; Howard v. Jones 6^ Starke, 50 Ala. 67 ; 
 Dunklin y . Kimball, 50 Ala. 251 ; and Gioi'anni \. First Nat. 
 Bank, 51 Ala. 177.) Giovanni w. First Nat. Bank, 55 Ala. 305. 
 
 390. Where no other relation exists between the share- 
 holders of a steamboat than that which arises from the joint 
 ownership, they are not partners, nor is their liability to be 
 measured by the rules of law peculiar to the partnership rela- 
 tion. When one of the shareholders sells out his interest in a 
 steamboat, and the bill of sale, in accordance with the Acts of 
 Congress, is duly acknowledged, and recorded, it is valid notice 
 to all parties and subsequent creditors with whom the owners 
 may contract. Adams v. Carroll &' Co., 85 Penn. St. 209. 
 
 391. During the existence of a partnership, which is neither 
 bankrupt nor contemplating bankruptcy, one of the members 
 of the firm may, with' the consent of the other partner, or part- 
 
^-8 bankers' code. 
 
 Tiers, u-pon a. i>ona ^de consideration, with no benefit reserved, 
 assign and transfer the assets of the partnership in payment of 
 his individual debt, if no lien has attached to such assets ; and 
 such transfer is good against the firm creditors. Schmidlapp v. 
 Currie, 55 Miss. 597. 
 
 392. Where accounts are kept at a bankers by a firm, each 
 partner having a right to draw checks, and also by the indi- 
 vidual partners of the firm, it is not the duty of the bankers to 
 inquire into the propriety of any transfer of funds which may 
 be made from and to the different accounts. Upon the death 
 of one partner in the firm having an account at a bankers, the 
 surviving partner has a right to draw checks upon the partner- 
 ship account. Backhouse v. Charlton, English Chancery Divis- 
 ion, Law Rports, 1878. 
 
 393. It is only in equity that separate creditors of a partner 
 are entitled to preference over the creditors of a partnership 
 in the distribution of the separate effects of their debtor. The 
 lien of a subsequent judgment for an individual debt daes not 
 take priority over the lien of a judgment first rendered against 
 a debtor upon a partnership debt. Gillaspy v. Peck et al., 46 
 Iowa, 461. 
 
 394. In partnership suits the defense of the Statute of Lim- 
 itations is not available, unless six years have elapsed before 
 the filing of the bill since the dealings of the partners wholly 
 ceased. A partnership was formed between two civil engineers 
 and architects, the profits of which were to be divided in shares 
 of three-fifths and two-fifths. During the continuance of the 
 partnership they invested moneys of the partnership in the 
 purchase of real estate, which resulted in a loss. Held, that the 
 loss was to be borne by the partners in the same proportion as 
 they were to share the profits and loss of their other business. 
 Storm V. Cumberland, 18 Grant's Chancery, Ontario, 245. 
 
 395. When a partner fraudulently misappropriates the 
 money of his firm, and purchases, in his own name, real estate 
 and policies of life insurance with firm funds, he will in equity 
 be charged, by construction, as a trustee for the partnership. 
 When all the premiums are paid with partnership moneys, it 
 makes no difference that the fraud doer, in his lifetime, changed 
 the life policies so as to make them payable to his wife. She, 
 having paid no consideration for them, will be charged as a 
 trustee for the firm, and will be permitted to derive no benefit 
 from them. Shaler v. Trowbridge, 28 N. J. Eq. 595. 
 
 396. Acceptance by one partner for separate debt, and not 
 in partnership name — Liability of co-partners. Where the 
 plaintiffs, a bank, discounted a bill, drawn by one partner, and 
 accepted by him in the name of the firm, the manager being 
 aware that it was intended by such partner to reimburse him- 
 self for moneys which he alleged that he had advanced to the 
 
BANKERS CODE. 7g 
 
 firm, and it appeared that such acceptance was unauthorized 
 by the other partners, Held, ihat the bank could not recover 
 against them. The partnership name, when the bill was so 
 drawn and accepted, was J. S. W. & Co., and the acceptance 
 was in the name of W. M. & Co. Held,, that this also would 
 have been fatal to the plaintiffs' recovery. Royal Canadian 
 Bank V. Wilson, et aL, 24 Upper Canada Com. Pleas Repts. 
 3620. 
 
 397- Real estate purchased with partnership funds for part- 
 nership purposes, and appropriated to partnership uses, is in 
 equity presumed to be partnership property, and it is, under 
 such circumstances, immaterial whether the legal title is taken 
 in the name of a part or all of the partners. Individual real 
 property brought into the partnership by the copartners, at the 
 time of its formation or afterwards, and, by proper agreement 
 of the partners, converted into partnership property, and appro- 
 priated to its uses, becomes a portion of the capital stock of 
 the firm, and will be treated in equity as personalty, although 
 standing in the name of an individual partner. Hoyle v. Lowe, 
 12 Nevada, 286. 
 
 398. Partnership Property. — When the property of an 
 insolvent partnership is ordered to be sold, in order to pay the 
 partnership debts, the right of redemption does not exist. 
 Rhodes Y. Williams, 12 Nevada, 20. 
 
 399- When a non-resident commercial firm make an agree- 
 ment with two resident firms, in virtue of which agreement one 
 of the resident firms is to purchase certain merchandise, and 
 ship it in the name of the other, and the other resident firm, 
 with the money of the non-resident firm, is to pay for the mer- 
 chandise, and each of the resident firms agree to receive, 
 instead of fix sums in payment of their services, certain pro- 
 portions of the profits to arise from the subsequent sales of the 
 merchandise, and also agree to share in any losses resulting 
 from said sales. Held, that such an agreement will not make 
 the said firms commercial partners, even as to third persons, 
 when it appears that they did not intend to form a partnership, 
 and that they have not held themselves out to the world as 
 partners. Chaffraix &• Agar v. John B. Lafitte (y Co., 30 
 La. 631. 
 
 400. In 1865, after June ist, a partner retired, selling out 
 to his co-partner his interest (one-half) in the stock, at cost or 
 invoice prices. The retired partner died ; and in October, 
 r866, administration was granted upon his estate. A suit was 
 commenced against the administrator in August, r873, by the 
 former partner of the intestate upon a certain award, to which 
 suit the administrator pleaded, in January, 1874, among other 
 things, that at the time of the dissolution the stock was worth 
 over $r ,500, and that he, the administrator, claimed to be entitled 
 
8o bankers' code. 
 
 to one -half thereof, with interest. He neither expressly offered 
 to set off the claim, nor prayed judgment therefor. The action 
 and the plea remained pending until February, 1877, when the 
 action was voluntarily dismissed by the plaintiff therein. The 
 administrator in July thereafter filed the present bill to recover 
 for his intestate's interest in the stock. The bill was barred by 
 the Statute of Limitations, and a demurrer, containing that 
 ground among others, was properly sustained. Crane v. Barry, 
 60 Ga. 362. 
 
 PAYMENTS. 
 
 401. When a payment is made voluntarily on an unfounded' 
 demand, or in ignorance of the law or legal circumstances of 
 the case, it cannot be recovered back. Nothing occurring 
 afterwards in the determination of new controversies between 
 other parties can be carried back to affect a transaction which 
 when it took place was fair and just. Finnellw. Brew 81 Penn. 
 St. 362. 
 
 402. When the debts are of like nature, the imputation of 
 payments is made to the debt longest due. Bloom &y Co. v. 
 Kern, 30 La. 1263. 
 
 403. Payments made voluntarily by the mortgagee of claims 
 against the estate, which was not necessary for the protection of 
 his own interest in the property, will not entitle him to be sub- 
 rogated to the rights of the creditors whose liens he discharged. 
 Bayard et al., v. McGraw, i Bradwell's, 111. App. Rpts. 134. 
 
 404. Partial payments made on a debt past due (Rev. Code, 
 s. 1830) should be applied first to the extinguishment of accrued 
 interest, and only the residue applied to the principal. Coleman 
 v. Smith, 55 Ala. 369. 
 
 405. Payments claimed as credits on a debt, and not allowed 
 when judgment was rendered on it, cannot be recovered back 
 afterwards, without an express promise to repay them. Tur- 
 lington V. Slaughter, 54 Ala. 195. 
 
 406. Payment of a debt made by giving several notes, and 
 only a part of the notes are paid, the original debt is revived as 
 to the notes unpaid. Crawford v. Roberts, 50 Cal. 236. 
 
 407. The taking of the debtor's acceptances does not ope- 
 rate as payment of the debt in the absence of an agreement 
 that they should be received in payment. Au Sable River 
 Broom Co. v. Sanborn, 36 Mich. 358. 
 
 408. On a suit against six joint and several makers of a 
 note, when some had paid off their shares of principal and 
 interest due at the time paid, by agreement with the payee, the 
 said payments ought to be applied to the pro rata of principal 
 as well as interest due by the makers so paying their shares ; 
 and that the verdict against all the defendants for the balance, 
 due after said payments are so credited, is legal and valid, and 
 
BANKERS CODE. 8l 
 
 ought to be upheld, especially where the evidence as to how 
 many of the shares which have been so paid is conflicting, and 
 if some of it was believed by the jury, and the payments had 
 been credited on the note, the verdict would be too large. 
 Donaldso7i v. Cothran, Adm'r, et al., 60 Ga. 60,3. 
 
 409. As a general rule, the premium note of an insurance 
 broker, received by the insurers in payment of a policy for his 
 principal, discharges the principal from liability to the insurers 
 on account of the premium. But if the policy contain a pro- 
 vision that, in case of loss, the amount of the premium note 
 shall be deducted from the insurance, the insured must 
 submit to the deduction, although he has before paid the 
 amount of the premium to the broker. In case of the death 
 and insolvency of the broker, a court of equity will not compel 
 his administrators to sequester for the benefit of the insurers 
 any sum received by them from the insured on account of pre- 
 miums, if the company hold the broker's note therefor. Union 
 Ins. Co. V. Grant, 68 Me. 229. 
 
 410. The payment of money cannot be made dependent on 
 the performance of a condition by the party to whom it is to be 
 paid, which condition, by its terms, may not be performed until 
 after the date at which the money is to be paid. Front St. M. 
 &> O. E. H. Co. V. Butler, 50 C^l. 574. 
 
 „ -411. A legal presumption of payment of a bond, given for 
 the payment of money, does not arise from mere lapse of time, 
 where the bond has not been due for twenty years, before com- 
 mencement of suit by the recovery of the sum thereby due and 
 payable. If a shorter period, even a single day less than twenty 
 years, has elapsed, the presumption of satisfaction from mere 
 lapse of time does not arise. While the mere lapse of twenty 
 years, without explanatory circumstances, affords a presump- 
 tion of law that the debt is paid, even though it be due by 
 specialty, still payment may be inferred by the jury from 
 circumstances with the lapse of a shorter period of time than 
 twenty years. Sadler's Adm'r v. Kennedy's Adm'r x, 11 W. 
 Va. 187. 
 
 412. Plea of payment tried by a magistrate, and found for 
 defendants on the evidence, cannot be changed on appeal so as 
 to defeat such delfense, by adding usees for whom plaintiffs sue. 
 Cobb et al. v Lowry 6r» Co., 60 Ga. 637. 
 
 413. Where plaintiff held several promissory notes against 
 deceased, all but one being valid, and also held certain shares 
 of mining stock belonging to deceased. Held, that, m the ab- 
 sence of any showing to the effect that the deceased ever author- 
 ized plaintiff to appropriate the proceeds derived from the sale 
 of such stock toward the discharge of the fraudulent note, the 
 law compelled plaintiff to credit the money on the valid notes. 
 McCausland v. Ralston, 12 Nevada, 195. 
 
82 bankers' code. 
 
 414. Payments made by a debtor, without special instruc- 
 tions as to their imputation, will be imputed in accordance with 
 the tacit agreement of the parties, as disclosed by their deal- 
 ings and correspondence. A debtor, who receives without 
 objection an account current from his creditor, which imputes 
 payments made by him to the less onerous part of his debt, is 
 held to ratify by his silence the imputation of payment made 
 in the account. McLear 6^ Kendall v. Succession of Hunsicker, 
 30 La. 1225. 
 
 415. The defendant was indebted to the plaintiff — first, as 
 he was member of a firm, and afterwards individually, and gave 
 his note in payment, taking back this receipt : " Received from 
 F. S. Brewer his 90-day note for $300, to be paid at either 
 bank in Portland." There was a contention on the joint account 
 of the defendants, or on the several account of Brewer. Held, 
 that upon this issue it was not error to instruct the jury that the 
 receipt was silent and could have no legitimate bearing one way 
 or the other. Hunt v. Brewer, 68 Me. 262. 
 
 416. A. sent B. to do work for C, and A.'s book-keeper, after 
 the completion of the work, made out, in accordance with his 
 duty, the bill therefor upon one of A.'s printed bill-heads, which 
 he placed in the hands of B., who demanded and received pay- 
 ment for the work from C. Upon the bill-head was printed, in 
 fine type, " All moneys to be paid to the treasurer, and bills to 
 be receipted by him." Held, that the bill so made out by their 
 book-keeper, and by him put in the hands of Thayer, and by 
 Thayer shown to the defendant, was sufficient evidence of 
 Thayer's authority to justify the defendant in paying him the 
 amount of the bill, if the defendant acted in good faith, and 
 without having observed the words in fine print at the top of 
 the bill requiring all moneys to be paid to the plaintiff's treasur- 
 er. The case was rightly submitted to the jury. Kinsman v. 
 Kershaw, 119 Mass. 140. 
 
 PLEDGES. 
 
 417. A Bill of Sale of Goods, absolute in its terms, given 
 to protect the vendee against his liability as surety for the vendor, 
 .and to secure a debt of the vendor to the vendee, with a verbal 
 agreement that when the vendee should be relieved from his 
 liability and the debt paid, his interest in the property cease, but 
 with no condition of defeasance in writing, is not a mortgage. 
 As between the parties to the absolute, formal bill of sale, it 
 could not be shown, by proof of a parol defeasance, that the 
 conveyance was a mortgage. Pennock v. McCormick, 1 20 Mass., 
 275- 
 
 418. A factor cannot, generally, pledge the goods of his 
 principal for his own liabilities, and is bound to obey the orders 
 of his consignor as to the terms of sale. Singer Manufacturing 
 Co. V. Hudson, 4 Mo. Ct. Appeals (St. Louis), 145. 
 
bankers' codk. 83 
 
 419- The fact that the stock of a corporation is only trans- 
 ferable on the books of the company, does not prevent a stock- 
 holder from validly pledging his stock, by merely delivering to 
 his creditor the certificates of his stock. A transfer of the 
 stock on the books is not necessary to perfect the pledge. 
 Blonin v. Liquidations of Hart &" Hebert, 30 La. 714. 
 
 420. A person holding stock in a fiduciary capacity has, 
 prima facie, no right to pledge it to secure a debt growing out 
 of an independent transaction unconnected with the trust ; and 
 whoever takes it as security for such debt, does it at his own 
 peril. Frail V. Tilt, 28 N. J. Eq. 479. 
 
 421. Where a bailee of goods for safe keeping merely 
 pledges the same with intent to convert the proceeds to his own 
 use, such pledge amounts to larceny by the pledgor, and the 
 pledgee acquires no title as against the owner, though he dealt 
 bona fide with the pledgor. Gottlieb v. Hartman, 3 Colo. 53. 
 
 422. When one delivers chattels to another as indemnity for 
 suretyship, the law regards such delivery as a pledge merely. 
 Nor does it alter the case in a Court of Equity that the property 
 is transferred by absolute bill of sale, not even if the contract 
 stipulated that the pledge shall be irredeemable. Id. 
 
 423. Where the pledgee of a mortgage note, in whose hands 
 it has been placed to secure a debt due him by the pledgor, 
 sells the property mortgaged to secure the note for a sum less 
 than the amount of the note, and immediately re-sells it for a 
 larger sum than that of the note, he becomes liable to the 
 pledgor, not for the price at which the property was re-sold, 
 but merely for the amount of the note. Mrs, A. R. Richardson 
 V. Moses Mann, 2,0 La. io5o. 
 
 424. A consignee who has made advances on cotton shipped 
 to him, has a right of pledge on it and its proceeds, for the re 
 imbursement of those advances ; and until the debt due for 
 those advances is paid, he is not bound to accept or pay any 
 drafts drawn on him by the consignor against said cotton, at or 
 about the time it was shipped, in favor of a third person who 
 had discounted the drafts for the consignor, and thus enabled 
 the latter to buy the cotton shipped to the consignee. Tlios. E. 
 Helm et al. v. Meyer, Weis iy Co. 30 La. 943. 
 
 425. A pledgee who was surety on a promissory note trans- 
 ferred the property to the payee for the purpose of discharging 
 the debt. Held, that the transfer did not change the status of 
 the property, and that the pledgor had the right to redeem, even 
 after the maturity. Morgan et al. v. Dod, 3 Colo. 551. 
 
 426. A pledgee can sell only, and for the purpose of applying 
 the proceeds to the extinguishment of the debt. Such sale 
 must be at public auction, after due notice to the pledgor or 
 owner. Id. 
 
84 bankers' code. 
 
 427. Where the subject matter of a pledge is divisable, the 
 pledgee has no right to sell more than is necessary to satisfy the 
 debt ; and if he does so, is responsible to the pledgor for the 
 damage he may sustain Fitzgerald v. Blocker, -^i Ark. 742. 
 
 428. The acceptance by the pledgor of the surplus arising 
 from an illegal sale of the articles pledged, is no waiver of his 
 rights to damages resulting from the sale. Id. 
 
 429. Where the pledgor, at the time of making the pledge, 
 waives notice of sale, he cannot, after the sale of the pledged 
 property, complain of a want of notice. Id. 
 
 430. Where a pledgee of scrip sells more than is necessary 
 to satisfy his debt, and pays the surplus to the pledgor, who 
 buys other scrip to replace what has been sold, the measure of 
 damages is the difference between the price for which the excess 
 sold and that paid by the pledgor to replace it. Id. 
 
 431. Where one deposits United States "five twenty " bonds 
 for safe keeping with a banking institution, and the cashier of 
 such institution pledges them, the pledgee, acting in good faith, 
 takes a good title ; and the recovery of the bonds through the 
 fraud arid bad faith of such cashier does not divert the title out 
 of the pledgee and revert it in the depositor. Ringling v. 
 Kohn et al. 4 Mo. Appeal Reports (St. Louis), 59. 
 
 432. There can be no valid pledge, of a mortgage, or ven- 
 dor's privilege, by mere agreement of parties to that effect, un- 
 accompanied by an actual or symbolical delivery of possession. 
 Sevin b' Gourdain, in Liquidation v. Theogene Caillonet, 30 La. 
 528. 
 
 433. The assignee of a note, held as collateral security for a 
 debt due from the assignor, has no power to deal with it, except 
 to accomplish the purpose for which he holds it. He cannot 
 bind the assignor by a contract with the maker for forbearance. 
 His ability to perform such contract is dependant upon the will 
 of the assignor, who may pay his debt and take back the collat- 
 eral at any time ; and, therefore, a promise of the maker to pay 
 a larger interest, in consideration of such forbearance, is with- 
 out consideration and not binding upon him. Key v. Fielding,, 
 32 Ark. 56. 
 
 434. Such assignee is a trustee for his assignor, and all 
 profit, benefit, or advantage made by him, by his dealing with 
 the note, belongs to the assignor, and not to himself, and must 
 be applied to the satisfaction of the assignor's debt, and the 
 excess, if any, paid to the assignor. Id. 
 
 435- One to whom a promissory note is pledged as collateral 
 security for a debt, unless specially authorized, cannot sell the 
 same on default, but is bound to collect it at maturity, and 
 apply the proceeds to the debt. Joliet Iron Co. v. Scioto Fire 
 Brick Co., 82 111. 584. 
 
bankers' code. 85 
 
 436. H. & Co. advanced money upon C. O. R. R. Co. stock 
 in good faith, which stock was pledged to them under forged 
 powers of transfer. The railroad company, upon the receipt of 
 the original certificates of stock, in like good faith cancelled 
 them, and issued new ones in the name of H. & Co. Held, 
 
 (i). That as between H. & Co. and the railroad company [the 
 rights of third parties not being involved] the loss must fall 
 upon H. & Co. 
 
 (2). That the fact of the stock issued to H. & Co. having 
 been subsequently sold by them to third parties, did not affect 
 the case, it appearing that the sale was made by H. & Co. 
 with knowledge of the forgery. 
 
 (3). That the payment of the dividends on the stock to H. 
 & Co. by the agents of the R. R. Co., after the company was 
 informed of the forgery, had no significance, and could not 
 estop the company, it appearing that they were not paid by the 
 direction of the company, but through the mistake or inadvert- 
 ence of the agent, in overlooking or failing to observe the direc- 
 tions given by the officers of the company that " they were in 
 litigation, and were not to be paid till ordered by the Court." 
 
 (4). That the issuing of the certificates to H. & Co. by the 
 R. R. C, upon the faith of the forged powers of attorney sent 
 them by H. & Co., did not create an estoppel against the com- 
 pany. Declarations to create an estoppel must be made by a 
 party whose duty it is to know and state the truth, and must be 
 relied on by one who has no other means of information, or is 
 justified in relying upon such declarations. Harnbleton S^ Co. 
 v. Central O. R. R. Co. 44 Md. 551. 
 
 437. A. deposited with B. certain Canada railway bonds as 
 security for a debt. On bill filed by B. for foreclosure or sale. 
 Held, that B. was entitled to an order for sale only, Jessel M. 
 R., the plaintiff, is in a position of a mere pledgee at law of 
 •certain chattels, and I do not think that a person in that posi- 
 tion has the same right of foreclosure as a mortgagee by deposit 
 of the title deeds of land. The principle upon which the Court 
 acts in the latter case is, that in a regular legal mortgage there 
 has been an actual conveyance of the legal ownership, and then 
 the Court has interfered to prevent that from having its full 
 effect ; and when the ground of interference is gone, by the 
 non-payment of the debt, the Court simply removes the stop it 
 has itself put on. Then, when there is a deposit of title deeds, 
 the Court treats that as an agreement to execute a legal mort- 
 gage, and therefore a? carrying with it all the remedies incident 
 to such a mortgage. None of this reasoning applies to a pledge 
 of chattels ; the pledgee never had the absolute ownership at 
 law, and his equitable rights cannot exceed his legal title. 
 There will be an order for sale of the bonds by auction, but, as 
 there seems to be a good reason why the plaintiff should not be 
 
86 bankers' code. 
 
 forced to part with them, I will give him liberty to bid, he not 
 conducting the sale. Carter v. Wake, 4 Chancery Division M. 
 R. Feb. 12, 1877, c. 48. 
 
 PROTEST. 
 
 438. Neither protest, nor notice to the surety of non-pay- 
 ment by his principal, is necessary to bind a surety on a prom- 
 issory note payable in bank. Scott v. Shirk, 60 Ind. 160. 
 
 439. Where the intention of all parties to an accommo- 
 dation bill was that it should be met by the last endorser, the 
 previous endorsers cannot be sued unless they have had notice 
 of dishonor. Turner v. Samson, Queen's Bench, Court of Ap- 
 peal, 1876, English Reports, 195. 
 
 440. Notice to the person named in a will as executor of 
 the non-payment of a promissory note endorsed by his testator, 
 which became payable after the will had been offered for pro- 
 bate, and letters testamentary applied for, and before the exec- 
 utor named declined to accept the trust, is sufficient to charge 
 the estate ; but such notice of the non-payment of a note, 
 which matured after the executor had renounced the trust, 
 and a special administrator had been appointed, is not sufficient, 
 although no public notice of the latter's appointment has been 
 ordered or given. Goodnow v. Warren, 122 Mass. 79. 
 
 441. When an endorser of a promissory note dies before the 
 note matures, notice of dishonor to his. personal representatives 
 is sufficient to support a claim on the endorsement against his 
 heirs and devisees, without notice to them. Notice served by 
 the notary upon a person in charge of the administrator's usual 
 place of business, is legal service, and its validity is not iin- 
 paired by the notice not being addressed to the decedent. 
 When the notary knows of the endorser's death, and knows 
 who and where his personal representatives are, a service of 
 notice by mail, addressed to " executors," " administrators," or 
 "personal representatives," is not sufficient. They should be 
 addressed by name, and not by their office merely. Smalley v. 
 
 Wright, 40 N. J. L. R. 471. 
 
 442. One who is publicly acting as the deputy of a notary, 
 and whose oath of office has been administered by the notary 
 himself, is qualified to make demand of payment, and perform 
 the other functions of a deputy notary. Buckley v. Seymour, 30 
 La. 1341. 
 
 443. The record of the proceedings of a notary public on 
 the protest of a promissory note, unless verified by his affidavit, 
 is incompetent as evidence ; but if no objection be made when 
 it is offered in evidence, the objection cannot be raised on a 
 motion for a new trial, nor on writ of error. Etheridge v, Gal- 
 lagher, 55 Miss. 458. 
 
bankers' code. 87 
 
 444- -tn an action against an endorser of a promissory note, 
 proof that notice of protest was duly mailed and directed to 
 him at a certain place, if there be no evidence that it is his 
 place of residence or of business, or his nearest postoffice, or 
 the one where he receives his mail, is not sufficient proof of the 
 notice required. If the endorser had no known place of resi- 
 dence or of business, notice to him was not necessary ; but this 
 fact must be shown in evidence. Id. 
 
 445. Where a note fell due on the 25th of July, 1873, o" 
 which day it was duly presented for payment and protested, 
 but the notice of protest, dated on the 26th, incorrectly stated 
 that the note was this day presented and protested. Held, that 
 the notice was sufficient, as it did not appear that the endorser 
 was misled by the mistake. Cassidy v. Mansfield, 24 Upper 
 Canada Com. Pleas Rpts. 383. 
 
 446. Two promissory notes, payable at any bank in Boston, 
 were presented when due, one at the North National Bank, the 
 other at the Webster National Bank, and demanded their pay- 
 ment, and the same was refused ; the answer to the demand 
 being " No funds," and thereupon the notary mailed to the 
 defendant notices of the demand, non-payment and protest of 
 said promissory notes (which notices, it was agreed, were suffi- 
 cient in form), addressed to the defendant at Townsend, Mass., 
 where was the principal postoffice in the town in which he 
 lived. It was proved that the endorser usually received hi'' let- 
 ters at the West Townsend postoffice, and that the plaintiff 
 knew that he lived and that there was a postoffice at West 
 Townsend, and had visited and done business with the endorser 
 there. There was no evidence at the trial that these notices 
 were received by the defendant within three days of the time, 
 when they were mailed to him by the notary, or that he other- 
 wise within that time had notice of such demand, non-payment 
 and protest. Held, the holder of a promissory note is bound 
 to use reasonable diligence to give the endorser immediate 
 notice of its dishonor. It is prima facie sufficient to address 
 the endorser by mail at the town in which he resides, although 
 there are several postoffices in the town, and he receives his 
 letters at one nearer his residence and place of business than 
 the principal postoffice, unless the holder knows, or with rea- 
 sonable diligence might have known, this fact. Held, that the 
 judge, sitting without a jury, was warranted in ruling that the 
 notice was insufficient. Roberts v. Taft, 120 Mass. 169. 
 
 PROMISSORY NOTES. 
 
 447. In an action against an endorser of a promissory note, 
 the defendant testified that he said to the plaintiff's agent that 
 he doubted if the maker would pay the note ; that he would 
 like to arrange it by giving a new note, making himself prom 
 
88 bankers' code. 
 
 isor ; if he would make a new note, he would sign it ; if he 
 would send up the old note, he would waive demand and notic 
 upon the back of it; and on cross-examination he testified that he 
 did not want to have the note protested ; that he wanted to save 
 the expense of demand and notice, and though, if the note was 
 protested, he would have to pay it immediately, and that was 
 the reason why he offered to give a new note. He/d, that a 
 ruling that, as matter of law, on this evidence the defendant 
 waived demand and notice was incorrect. jBaU v. Chase, i 22 
 Mass. 262. 
 
 448. A promissory note made by one member of the firm, 
 in its name, can be enforced against the partnership by the 
 holder thereof, if he has no actual knowledge, suspicion or 
 cause of suspicion, of any fraud -upon the partnership in the 
 making of the note. Blodgetty. Weed, 119 Mass. 215. 
 
 449. Possession of a promissory note is prima facie evidence 
 that the bank is the owner thereof, and in absence of proof to 
 the contrary is conclusive ; and there is no denial of the val- 
 idity of the note, so it makes no difference to the defendant 
 who holds the note, as long as he owes it to some one. Fletcher 
 V. Fletcher, 29 Vt. 98. 
 
 450. Action. — A suit will lie against the administrator of a 
 deceased maker of a promissory note, made jointly by two, 
 during the life of the other maker. Thompson v. Johnson, 40 
 N. J. Law. 220. 
 
 451. A promissory note payable in bank, endorsed for value, 
 before maturity, in the usual course of business, to a bona fide 
 holder, is not subject in his hands to the same defences as a 
 promissory note payable in bank. Bremmerman v Jennings, 
 60 Ind. 175. 
 
 452. Upon demand and refusal of payment of a prom- 
 issory note on the last day of grace, a right of action accrues 
 at once to the holder, and the Statute of Limitations begins to 
 run from the date ; but if there is no demand, the cause pi 
 action does not accrue until the succeeding day. Holland v. 
 Clarke, 32 Ark. 697. 
 
 453- A promissory note of a turnpike company is not void 
 because made before it has filed a copy of its by-laws, as 
 required by statute with the county recorder. Forbes v. San 
 Rafael T. Co 50 Cal. 340. 
 
 454. The makers of a promissory note cannot annul a judg- 
 ment obtained against them on said note by the administrator 
 of a succession, on the ground that the note did not belong 
 to the succession, or on the ground that the administrator was 
 not qualified to act as such. Maraist v. Guilbeau, 30 La. 1087. 
 
 455. The maker of a promissory note, endorsed in blank, 
 and acquired by the holder before its maturity, cannot resist 
 
bankers' code. 89 
 
 the payment of the note on the ground that the holder is not 
 the real owner, unless he alleges and shows that he has good 
 defences or claims against the real owner. An agent, in whose 
 hands a note has been placed for collection, may sue on it in 
 his own name. George M. Klein v. Mrs. Buckner, et al., 30 
 La. 680. 
 
 456. Parol evidence of the endorsement of a promissory 
 note, without the production of the note, ' held inadmissible, 
 though not offered in order to charge the endorser. De Pusey 
 V. Du Pont etal., i Del. Chancery, 77. 
 
 457- Before the maker of a lost note, or mislaid negotiable 
 note, which was transferred before its maturity, can be made to 
 pay it, he is entitled to be indemnified against its subsequent 
 appearance. Nalle 6^ Cammack v. Conrad, -^o La. 503. 
 
 458. Negotiable securities stolen, and afterwards sold by the 
 thief, the owner thereof may follow and claim the proceeds in 
 the hands of the felonious taker, or of his assignee, with notice, 
 and this right continues and attaches to any securities or prop- 
 erty in which the proceeds are invested and identified, and the 
 rights of a /5(7»a ^(/(f purchaser do not intervene. The law will 
 raise a trust in invitum out of the transaction, in order that the 
 substituted property may ^be subjected to the purposes of 
 indemnity and recompense. Newton v. Porter, 69 N. Y. 1 33. 
 
 459- The debtor of a bank, of which A. was cashier, trans- 
 ferred a negotiable note, in payment of his indebtedness, to A. 
 by special endorsement, and thereupon the bank, to enable A. 
 to bring suit thereon, assigned its interest in the note to him. 
 Meld, that A. might maintain an action on the note in his own 
 name, notwithstanding he may be accountable to the bank for 
 the proceeds when collected. White, Bonner &• Wright v. 
 Stanley, 29 Ohio, 433. 
 
 460. Such endorsement and transfer having been made 
 before maturity of the note, the same in the hands of A. is not 
 subject to any defense of which neither he nor the bank had 
 notice at the date of the transfer. Id. 
 
 461. The signer of a promissory note, which reads that 
 "we promise in solido," etc., will be held bound as a solidary 
 debtor on such note, unless he proves that he has been legally 
 released from his obligation. Wm. H. Boullt v. Jerome Sarpy 
 etal., 30 La. 494. 
 
 462. To defeat the title of an innocent purchaser to a 
 note, on the ground of inadequacy of the price paid for it the 
 inadequacy must be such under the circumstances as to impeach 
 the good faith of the purchase. Rooker v. Hooker, 29 Ohio, i. 
 
 When the purchaser of such note receives it in part payment, 
 of property sold, his title to the note is not affected by the fact 
 that he retains the title and possession of the property sold as 
 security for the unpaid purchase money. Id. 
 
9Q BANKERS CODE. 
 
 463. A municipal corporation, has no power to invest its 
 obligations with the character and incidents of commercial, 
 paper, so as to render them unassailable by defenses to which 
 they would be subject in the hands of the immediate parties, 
 unless such power is conferred by legislative authority, either 
 express or clearly implied. Knapp v. Mayor and C. of Hoboken, 
 39 N. J. 394- 
 
 464. In the case of bills of exchange, promissory notes and 
 other commercial contracts a month is always a calendar month. 
 A note, payable six months after the 30th of May, is due just 
 six calendar months and three days thereafter, the days of grace 
 being included, bringing it to maturity consequently on the 3d 
 of December succeeding. Until that day the endorsers of such 
 paper have not broken their contract by non-payment. Bank 
 of Tennessee v. Alexander, Officer, et al., 59 Tenn. 173 (3 
 Baxter). The demand must be made on the third day of 
 grace, on the second if the third be a holiday. Id. 
 
 465. The holder of negotiable paper, taking it for good 
 consideration in the usual course of business, without knowl- 
 edge of facts impeaching its validity, holds it by a good title. 
 It is not enough to defeat his recovery to show that he took it 
 under circumstances that might tend to excite suspicion. Far- 
 relly. Lovett, 68 Me. 326. 
 
 466. In an action against the maker by an endorser of a 
 negotiable promissory note, who purchased the same for a val- 
 uable consideration before maturity, and without notice of any 
 fraud or infirmity as between the original parties, the defendant 
 is not liable where it is shown : (i) That at the time of signing 
 and delivering the note he was induced by fraudulent repre- 
 sentations as to the character of the paper to believe that he 
 was signing and delivering an instrument other than a prom- 
 issory note ; (2) That his ignorance of the true character of the 
 paper was not attributable in whole or in part to his own negli- 
 gence in the premises. De Camp v. Hamma, 29 Ohio, 467. 
 
 467. A negotiable promissory note, given for a patent right, 
 without the words " Given for a patent right " inserted therein, 
 as required by No. 68, s. 2, of the Acts of 1872, is good in the 
 hands of z. bona fide \\.o\A&x for value who takes it before ma- 
 turity, and without notice of what it was given for. Pender v. 
 Kelley, 48 Vt. 27. 
 
 468. In an action by payee of a joint and several prom- 
 issory note, payable on demand against a maker, a plea that 
 defendant had signed as accommodation maker, with the fol- 
 lowing agreement written on note, " This note is to be paid off 
 within three years from date," and that the plaintiff had made 
 no demand, and the note had not been paid within three years, 
 is a bad plea. Lawrence v. Walmsley, CIX. 797 ; 12 C. B. N. S. 
 797 (Eng. Com. Law). 
 
BANKERS CODE. gi 
 
 469. Where a negotiable promissory note was made payable 
 upon a condition, and the condition was written below the note 
 on the same piece of paper. Held, that the note and condition 
 were parts of a single entire contract, and that the fraudulent 
 removal of the condition, by tearing the paper, was such a ma- 
 terial alteration as rendered the note void in the hands of a 
 bona fide holder! Gerrish v. Glines, 56 N. H. 9. 
 
 470. An agreement by the endorsee of a promissory note 
 for a definite extension of the time of payment, in consideration 
 of an agreement by the maker to pay a greater rate of interest 
 than that provided for in the note, is binding upon them, and if 
 made without the consent of the endorser, will release him from 
 all liability thereon. Kittle v. Wilson, 7 Neb. 1 80. 
 
 471- This defense is a legal one, and should be made by the 
 endorser in the action against him on the note ; but if he neg- 
 lects to do so, and suffer judgment to go against him, he cannot 
 afterwards make it available as a ground for enjoining the en- 
 forcement of such judgment. Id. 
 
 ^yz. It is not necessary that any United States internal rev- 
 enue stamps should be affixed to a note, or a mortgage, in order 
 to make it competent evidence in our State courts. Pargoud 
 V. Richardson, 30 La. 1286. 
 
 473- -A. promissory note, drawn for a sum certain and made 
 payable to any person, "or order," "or assigns," "or bearer," is 
 negotiable ; but if it is payable to a certain person, without 
 words making it payable ' to order." " or assigns," " or bearer," 
 it is not a negotiable instrument. Hosford v. Stone, 6 Neb. 380. 
 
 474- Any words in a promissory note, from which it appears 
 that the person making it intended it to be negotiable, will give 
 it a transferable quality ; but the words " negotiable and payable 
 without defalcation or discount," do not of themselves make an 
 instrument, olherwise non-negotiable, negotiable. Id. 
 
 475- Where a note, though negotiable, is payable to order, 
 and unendorsed, and is accidentally destroyed by fire while in 
 the possession of the payee, the payee can maintain an action 
 on such lost instrument without first tendering or giving a bond 
 of indemnity. Blandin Adtn'r v. fFaoi?, 20 Kansas. 251. 
 
 476. In a case where a note, framed on a printed blank, 
 was complete at the time it left the hands of the party sought to 
 be charged, but was so printed as to give an apparent authority 
 to fill a blank space, occupying the same position relative to 
 the body of the note that an interest clause usually does, and 
 the space left finished ample ropm for inserting such clause, and 
 the space was not filled in a way to attract observation, the 
 Court strongly inclined to the opinion that the defendant would 
 be bound to an innocent hold. Iron Mountain Bank v. Mur- 
 doch, 62 Mo. 70. 
 
92 BANKERS CODE. 
 
 477. Promissory note, given by a vendee for the price of a 
 thing which the vendor assumed to sell, but vhich never had an 
 existence, arc utterly without consideration, and cannot be en- 
 forced by the vendor, or by any one who has acquired them after 
 their maturity. Cummmgs v. Saux, 30 La. 207. 
 
 478. Giving a note for an antecedent debt is not a payment 
 of it, unless the note be received under an express agreement, 
 or under circumstances from which an agreement may be fairly 
 implied to treat it as a payment, or unless payment in fact result 
 from it. May 6-' Sloan v. Gamble, 14 Fla. 467. 
 
 479. An agreement by a debtor and creditor that the cred- 
 itor will, at a future day, accept new notes and securities in lieu 
 of those held, giving additional time of payment of the indebt- 
 edness, cannot be enforced unless some valid consideration be 
 received by, or benefit or advantage has accrued thereby, to 
 the creditor. Id. 
 
 480. One who has executed a promissory note in error, 
 for a debt not due by her, may legally resist the payment of the 
 note, so long as the note is not in the hands of an innocent third 
 person, who has taken it for value before its maturity. Bridget 
 Hear don v. Daniel M or iarty et al. 30 La. 120. 
 
 481. The maker or indorser of a promissory note cannot, as 
 against an indorser of the same, in this State, for value before 
 maturity and without notice show that the note, although dated 
 in Boston, with intent that it should be a Massachusetts con- 
 tract, was actually made in New York, and on account of illegal 
 interest, was void under the Usury law of that State. A prom- 
 issory note, endorsed " L. R., receiver," binds him personally. 
 Towne v. Rice, 122 Mass. 67. 
 
 482. One who is in fact the owner of a note negotiable by 
 endorsement may maintain an action upon it, altifeough no in- 
 dorsement thereof has been made to him ; and an indorsement 
 subsequent to the commencement of the action, made by the 
 payee, will relate back to and ratify a prior sale of the note made 
 by an agent of such payee. Weeks v. Medler, 20 Kansas, 57. 
 
 483. An instrument which, in its terms and form, is a nego- 
 tiable promissory note, does not lose that character because it 
 also recites that an additional rate of interest will be paid " after 
 due ;" that the maker has deposited certain certificates as collat- 
 eral security for the payment of the note, and states the terms 
 upon which they have been deposited and upon which they may 
 be sold by the holder on the non-payment of the note. Towne 
 V. Rice, 122 Mass., 67. 
 
 484. In action on a note and mortgage, when it is admitted 
 that the plaintiff is the holder of the note, which is endorsed in 
 blank by the payee thereof, the law will presume, in the absence 
 
BANKERS CODE. 93 
 
 of any evidence to the contrary, that the plaintiff is an innocent 
 and bona fide holder for value, and that it was indorsed to him 
 before due. Acton v. Harlan, 20 Kansas. 452. 
 
 485. The title to negotiable paper cannot be defeated by 
 proof of negligence, or want of diligence in inquiring into the 
 title or the equities between the parties thereto. Nothing but 
 fraud will defeat the title thereto. The legal presumption as to 
 an endorsement on negotiable paper is, that it was for value, 
 and for a proper purpose ; and where such endorsement pur- 
 ports to be the act of a corporation, through its proper officer, 
 ine taking negotiable paper so endorsed, for value, before ma- 
 -urity, is not bound to inquire whether the endorsement was 
 made in the regular course of the business of the corporation, 
 or was for the accommodation of the ofiScer, or was without con- 
 sideration. Lafayette Savings Bank v. .5'/. Louis Stoneware Co. 
 4 Mo. Court of Appeal (St. Louis), 276. 
 
 486. When a negotiable promissory note, due sixty days 
 after date, and endorsed by the payee in blank, is put in suit 
 by a third person, the production of the note by the plaintiff, 
 at the trial, is prima facie evidence that he acquired it for 
 value before maturity, and without notice of any fact going to 
 defeat its collection. As against him, payment made to payee 
 will not be a defense, without showing that the payee had pos- 
 session of the note at the time, or was then the owner of it, or 
 for some other reason had a right to receive the money. Gen- 
 erally, payment made to an agent who has parted with posses- 
 sion of the security to his principal, is no discharge. Paris et 
 al. V. Mae, adm'r, 60 Ga. go. 
 
 487. A promissory note, due from a resident of Colorado to 
 a resident of California, is in no legitimate sense the property 
 of the debtor, and is not subject to taxation under the laws of 
 Colorado (Sess. Laws, 1870, p. 88), although the note is secured 
 by trust deed" upon real estate within the jurisdiction of the 
 taxing power. Com'rs Arapahoe Co. v. Cutter, 3 Colo. 349. 
 
 488. When the consideration for a promissory note was ex- 
 pressed in the note to be the stock of a railway corporation, and 
 the directors of the corporation subsequently made an illegal 
 and unauthorized increase in the stock of the company, it was 
 held that such illegal increase would constitute a defense to an 
 action upon the note. Following Merrill v. Gamble, 46 Iowa 
 615. Ante. Merrill v. Beaver, 46 Iowa, 646. 
 
 489. A note, or other written evidence of indebtedness, 
 payable in current funds, is not to be regarded upon its face as 
 negotiable. Haddock v. Woods, 46 Iowa. 433. ^ 
 
 490. In an action upon such paper it is competent to show 
 lay parol evidence the peculiar meaning of the term current 
 funds, and that the parties understood it to mean money. 
 While the understanding of the parties respecting the condition 
 
94 BANKERS CODE. 
 
 of the contract cannot be shown by parol, their understanding 
 of the meaning of the words used therein may be compe- 
 tent. Id. 
 
 491. This court has repeatedly recognized the rule that an 
 express agreement must be shown to establish the fact that a 
 bill or note of either the debtor or a third person was takeri by 
 the creditor in payment of a pre-existing debt. Brewster v. 
 Bours, 8 Cal. 506; Griffith v. GrogAn, 12 Cal. 320; Welch v. 
 Allington, 23 Cal. 322 ; followed in Brown v. Olmsted, 50 
 Cal. 162. 
 
 492. If the widow is executrix of the estate of the deceased 
 husband, and the estate is community property, so that she has 
 an interest in the same, and she gives her own note for a debt 
 of the deceased husband, which is outlawed, under the mis- 
 taken opinion that it is not outlawed, there is a sufficient conr 
 sideration to support the note. Mull v. Van Trees, 50 Cal. 547. 
 
 493. The party who purchases a promissory note from the 
 payee before it is due, but after the payee has executed to, the 
 payor, a release of the same, without knowledge of such lease, 
 is a bona fide holder, although he purchases for less than the 
 face of the note, and as a speculation, and although by the 
 exercise of a little diligence he might have ascertained that the 
 release had been given. Schoen v. Houghton, 50 Cal. 528. 
 
 494- If one party furnishes another one thousand dollars 
 in money, and such other gives him his note therefor, with the 
 understanding that the payor shall procure third parties to 
 assign to himself certain liens on land claimed by the payee, 
 which liens the payor shall hold for the benefit of the payee in 
 satisfaction of the note, the agreement amounts to an accord 
 and satisfaction, and is a payment of the note. Treadwell v. 
 Himmelmann, 50 Cal. 9. 
 
 495. A contemporaneous written agreement, executed by 
 the payee of a promissory note, showing a contingency upon 
 which the payment of the note is to depend, is admissible in 
 evidence, under the general issue, in an action on the note by 
 an endorser after maturity against the maker. Munro v. King, 
 3 Colo. 238. 
 
 496. In a suit on a note the affidavit of defence was that it 
 had been given as a donation to a church, on condition that the 
 lot on which it was erected should be conveyed to the church, 
 which had not been done. The suit was by the endorsee ; the 
 affidavit averred that defendant " verily believes and expects 
 to prove that the note has been passed by the payee to plaintiffs 
 to avoid making this defence, and that the plaintiffs sold the 
 same to the use of the payee without consideration as between 
 them." Held sufficient against the endorsee. Reznor v. Sup- 
 tlee. 81 Penn. St. 180. 
 
BANKERS CODE. 95 
 
 497- Where two or more notes, secured by a single mort- 
 gage, fall due at different times, they shall be paid out of the 
 mortgage fund in the order of their maturity, unless a different 
 agreement has been made between the parties, or unless some 
 paramount equity should require a different order of payment. 
 Richardson v. McKim, 20 Kan. 346-350. 
 
 498. The party, who was president and treasurer of a local 
 board of trustees of an insurance company, gave a certificate 
 that the insurance company had on deposit with him a certain 
 number of dollars, and signed it, " H., president and treasurer, 
 local board of trustees." Held, that the -certificate, in legal 
 effect, was H.'s promissory note, and in a suit at law against 
 him by the insurance company he could show in defence that 
 the contract of which it formed a part was rescinded, or 
 that the contract was of mutual stipulations, and the payee 
 had not performed on his part. Hart\. Life Ass' n, 54 Ala. 195. 
 
 499. The maker of negotiable paper, which is void in the 
 hands of the payee, may, in order to prevent its negotiation, 
 maintain a bill in equity to compel its surrender for cancella- 
 tion. Breathuit y. Rogers, Adm'r of McLendbn, 32 Ark. 758. 
 
 500. A promissory note given by the widow to a creditor 
 of the deceased husband, who does not take it in payment of 
 the debt, and neither lost nor suspended any remedy for its 
 collection, or receipted the account, is without consideration. 
 The fact that there has been no administration, and the widow 
 remains in possession of all the real and personal estate of the 
 husband — the possession not being derived from the creditor — 
 forms no consideration for such a promise. Watson v. Rey- 
 nolds &" Stuckey, 54 Ala. 191. 
 
 501. A promissory note, which is payable " on or before 
 three years from date," is not due until the three years has 
 expired ; and a purchaser for value within that time is entitled 
 to the same protection as if the note was made payable ' three 
 years from date. Mallison v. Marks, 31 Mich. 425; also 
 Helmer v. Krolick, 2fi Mich. 371. 
 
 502. If a promissory note, signed by one member of a 
 partnership in the firm name, is given in payment of debts, 
 some of which were contracted before another member came 
 into the firm, and the rest thereafter, and an action thereon by 
 the payee of the note is defended by such other member alone, 
 the plaintiff, in the absence of evidence of actual fraud on his 
 part, or of knowledge when the party defending entered the 
 partnership, is entitled to recover for such debts covered by the 
 note as were contracted after he became a member. Gould v. 
 Belcher, 119 Mass. 257. 
 
 503. The note sued on having been transferred to plaintiff 
 as collateral security for money loaned before due, it was a 
 ^(?«a_;&S? holder thereof ; consequently the verdict, finding for 
 
96 bankers' code. 
 
 the defendant, on a plea of failure of consideration, was con- 
 trary to law. Exchange Bank v. Buttur 6^ Edgeworth, 60 
 Ga. 654. 
 
 504. Three promissory notes, made by the lessee payable to 
 the lessor at different dates, were given to and accepted by 
 him in consideration of the surrender of a lease in a building, 
 which lease provided that, in case of the destruction of the 
 premises by fire, the rent should be suspended or abated. The 
 first two notes were duly paid, and before the last note was 
 due the premises were destroyed by fire. Held, that the con- 
 sideration of the notes given by the lessees was the acceptance 
 by the lessors of the surrender of the lease. After this the 
 defendants had no interest in the real estate, and their liability 
 upon the notes was not affected by the condition of the prem- 
 ises, or by the provisions of the lease, which had ceased to 
 exist. Brooks y. Cutter, 119 Mass. 132. 
 
 505. A protested draft is not an obligation within the 
 meaning of the proviso of the Act of i6th of April, 1850, 
 which declares that the assignees of an insolvent bank " shall 
 receive in payment of debts due to said bank its own notes 
 and obligations and the checks of its depositors at par." Base- 
 hore V. Rhodes, 85 Penn. St. 44. 
 
 506. In an action upon a promissory note, in which the 
 declaration alleges that the defendant made the note, and the 
 answer denies this, and alleges an alteration, proof of the de- 
 fendant's signature '\^ prima facie evidence that the whole body 
 of the note written over it is the act of the defendant, but the 
 burden of proof is on the plaintiff to show that the note 
 declared was the note of the defendant. Simpson v. Davis, 
 119 Mass. 269. 
 
 507. The addition of the name of another joint maker to 
 a note, without the knowledge or consent of the others, is such 
 a material alteration as releases them from liability thereon. 
 The last signer, however, is not released by the discharge of his" 
 co-signers, and he is liable for the amount of the note. Ham- 
 ilton v. Hooper et al., 46 Iowa, 515. 
 
 508. A promissory note being accepted by the parties, in 
 interest, in payment of a debt, the taking of such note, in pur- 
 suance of the agreement, merges the original cause of action in 
 the note, and a recovery, if had at all, must be had upon the 
 note. If such agreement was in fact made, and note given in 
 pursuance thereof, the creditor cannot rescind such contract for 
 the purpose of suing upon the original cause of action by simply 
 returning the note. Kappes et al. v. Geo. E. White, i Bradwell''-. 
 111. App. Rpts. 280. 
 
 509. Where a note provided for interest at 10 per cent, per 
 annum, and the mortgage executed to receive it stipulated for 
 " interest at the rate of 10 per cent, per annum, payable an- 
 
BANKERS CODE. 97 
 
 nually, according to the terms of the promissory note," held, 
 that the mortgage provided for something respecting which the 
 note was silent, and would, therefore, govern. Dobbins v. Parker 
 ^/«jc, 46 Iowa, 357. 
 
 510. Defendants were partners, and K., one of them, fur- 
 nished money to be used in the partnership business, and took 
 a note therefor, payable to himself, or order, and signed by him- 
 self and the other defendants. K.'s wife became the owner of 
 said note, and sent it to plaintiff by K. for collection, and K. 
 indorsed it to plaintiff for collection merely. K. made no de- 
 fence to the note. Ormsbee v. Kidder et els. 48 Vt. 361. 
 
 511. If the payor of a note conveys land to the holder, by 
 way of security for its payment, and the holder afterwards sells 
 the notes to a third person, and then conveys the land to 
 another person to secure his own debt, these facts do not con- 
 stitute a defense, if such third person sues the payor to recover 
 on the notes. Kiel v. Keay, 50 Cal. 61. 
 
 512. The omission to insert in a note given for a patent- 
 right the words " Given for a patent-right," inserted therein, as 
 required by statute, does not render the note void. If the pat- 
 ent-right is good and valid, and forms an adequate considera- 
 tion for the note, the maker cannot defend against a transferee 
 of the note on the ground of the omission of those words. The 
 object of the statute was to prevent the transfer of such notes 
 to innocent and bona fide holders. Streit v. Waugh, 48 Vt. 
 298. 
 
 513. Nor can the maker defend upon the ground that the 
 plaintiff received the note from another transferee in payment 
 for liquor sold in violation of law. Id. 
 
 514. It cannot render a purchaser of negotiable paper suspi- 
 ciotis that the payee has an interest in getting it off his hands ; 
 this fact would not necessarily be known to the purchaser, or 
 influence in any manner his action ; and in determining whether 
 a purchaser is entitled to be considered a bona fide holder, it is 
 his bona fides, and not that of the payee, that is in question. 
 Helmer v. Krolick, 36 Mich. 371. 
 
 515- A promissory note, left blank as to the amount, but 
 perfect in all other particulars, and providing for a certain rate 
 of interest " per annum," was executed by one as principal, and 
 by another as surety, and entrusted by the latter to the former 
 for delivery to the payee ; whereupon the payee's agent, with 
 knowledge of the relations of the makers as principal and surety, 
 filled up the blank, and altered the note, by direction of the 
 principal, but without the knowledge or consent of the surety, 
 so as to make it bear interest " after maturity." Held,\}a^t 
 such alteration relieved the surety from all liability thereon. 
 Franklin L. Ins. Co. v. Courtney, 60 Ind. 134. 
 
98 bankers' codk. 
 
 516. On a collateral contract to pay a certain sum per month 
 as interest on a note, if it should not be met at maturity, payee, 
 who has endorsed the riote away, cannot recover. Florence v. 
 Draysoti, LXXXVII. 584 ; LC. B. N. S. 584 (Eng. Com. Law). 
 
 517. A. being indebted to B., as a surety, in order to enable 
 B.'s agent to raise money, and to obtain further time on the 
 debt to B., made his note to the agent upon an agreement that 
 if he should have to pay the note,'the amount paid should be 
 entered as a credit on the debt to B. The agent assigned the 
 note to the plaintiff for value ; after the assignment his agency 
 ceased, and the debt to B. was paid by the principal debtor. 
 Held, that at the time of the assignment there was a subsisting 
 consideration, and the subsequent failure of consideration could 
 not affect the right of the plaintiff (the assignee of the note). 
 Woodruff v. Webb. 32 Ark. 612. 
 
 518. Where, by mistake, note at two months, dated January 
 ist, 1854, instead of January ist, 1855, and across the face was 
 written, " Due March 4th, 1855," held, that the date was 1855, 
 and the memorandum was as if correction of error. Fitch v. 
 Jones, LXXXV. 238 ; 5 E. & B. 238 (Eng. Com. Law). 
 
 519. Negotiable paper, payable at a, time certain, is dishon- 
 ored by mere non-payment at the'time, and no one is a bona fide 
 holder, without notice, who does not take such paper before 
 maturity. When the time of payment of a negotiable note is, 
 extended by agreement, a reference to which is endorsed upon 
 the back, one who takes it after its original maturity will be 
 subject to all equities between the parties. Dryer v. Mercan- 
 tile Bank, 4 Mo. Court of Appeals (St. Louis), 598. 
 
 520. If A. and B. enter into partnership, and B. is to fur- 
 nish $1,000 as his part of the capital, and B. hands the money 
 to C. to deliver to A., and A. when he receives it gives C. his 
 promissory note for it, the note is given without consideration. 
 Ayer v. Duncan, 50 Cal. 325. 
 
 521. When the maker of a non-negotiable promissory note 
 is at the maturity thereof bankrupt, the assignee and holder of 
 the note may at once sue the assignor, without waiting for final 
 distribution of the estate of the bankrupt maker, the bank- 
 ruptcy of the maker being a breach of the implied warranty of 
 the assignor. Lowenstein v. Knopf, 4 Mo. Ct. Appeals (St. 
 Louis), 594. 
 
 522. Where the maker of a promissory note, payable to a 
 certain person or bearer, on being inquired of by a third person 
 to whom the payee had offered after its dishonor to sell it, 
 answered that it was all right, and that he would pay it, and 
 thereupon the purchase was made and the price paid, the maker 
 is estopped from setting up failure or want of consideration, or 
 
bankers' code. 91 
 
 any other equity existing between himself and the payee, to ai 
 action brought upon the note by the purchaser or his privies 
 Jieedy v. Brunjier &= Co., 60 Ga. 107. 
 
 523. Where it is claimed by a party defendant that the dati 
 of the note in suit is a mistake, and the note on its face is pay 
 able six months after date, and such defendant claims that thi 
 note was in fact paid when due (which was six months befor 
 the date at which it purports to have been executed), the testi 
 mony of an endorser of such note that he endorsed such not 
 at the place of its date, in the State of Kansas, at or about th' 
 time claimed by the maker as the date of execution, and tha 
 he was absent from the State during all the time for a period 
 commencing some three months before the date appearing 01 
 the note, and extending some five months beyond such date, i 
 competent as tending to show a mistake in the date of the note 
 Clary v. Smith, 20 Kansas, 83. 
 
 524. In an action upon a negotiable promissory note, it wil 
 devolve upon the defendant to show, if he so claims, that th 
 note was fraudulently obtained, or that it was executed withou 
 ,6ufficient consideration, or that it has been paid. Ecton v 
 Harlan, 20 Kansas, 452. 
 
 525. Where a person, possessed of the ordinary facultie 
 and ability to read, signs and delivers a negotiable promissor; 
 note, without knowing it to be such, but without reading th 
 same, having an opportunity to do so, relying solely upon th 
 representation of the payee that the paper was an instrumen 
 other than a note. Held, as against a bona fide holder befor 
 maturity for value, such maker will not be permitted to den 
 the due execution of the note. Winchelly. Crider, 29 Ohio, 48c 
 
 526. A purchaser of negotiable paper is not put upoi 
 inquiry by mere knowledge that that the payee is engaged ii 
 selling intoxicating liquors, to ascertain whether the considera 
 tion of the paper was not the unlawful sale of such liquors 
 Bottomley v. Goldsntith, 36 Mich. 27 ; also Paton v. Coit, 
 Mich. 505. 
 
 527. In an action against the maker by a bona fide endorses 
 before due, and for value, of a negotiable promissory note, th 
 defendant is liable, if guilty of negligence in the executio: 
 thereof, although he did not intend to sign a note, and wa 
 induced, through fraudulent representations as to its chaTa(!;te] 
 to believe that the instrument executed was one of a differen 
 purport. Ross v. Doland, 29 Ohio, 473. \ 1 1 
 
 528. A person, who negligently signs and delivers 'to ^.nothe 
 a printed form of a negotiable promissory note, containin 
 blanks, without knowing it to be such, is estopped is/agams 
 a subsequent bona fide holder for value, andi before due, f rpr 
 denying authority in the person to whoir;, itivas delivered t 
 fill the blanks. Id. ' ' 
 
loo bankers' code. 
 
 529. A petition against several makers of a joint and sev- 
 eral note more than fifteen years past due, whereon payments 
 have been made within the time of the statute, but by whom 
 paid not appearing, does not show a statutory bar in favor of 
 any of the defendants. Where the holder of a note past due 
 receives from the principal debtor, without the knowledge of 
 the surety, a sum of money greater than the amount of interest 
 then due, and the amount so received is endorsed on the note 
 as received on account of interest, it not appearing that such 
 endorsement was made by the holder, or that he had knowledge 
 that the same was so made, it is not error to refuse to charge 
 the jury that in law such receipt and endorsement constituted 
 an agreement to ex^tend the time of payment of the note for 
 such period of time as such sum would pay interest. Vose v. 
 Woodford, 29 Ohio, 245. i 
 
 530. A. made his promissory note, expressed to be for 
 value received, whereby he promised to pay B. or bearer forty 
 dollars profits, with interest, one year from date. As to A., the 
 note was entirely without consideration, and was obtained froiin 
 him by fraud. The plaintiff subsequently became the innocenk 
 bona fide purchaser thereof before maturity. Held, that the\ 
 instrument in the hands of the plaintiff was a valid, negotiable 
 promissory note, and might be recovered ; that the word " prof- 
 its," as to the plaintiff, did not express or suggest a contin- 
 gency or uncertainty, but an absolute existing fund as the 
 consideration of the promise, and on account of which the 
 money was to be paid, and that the word, as inserted in the 
 note, was not such an apparent defect or infirmity as to put the 
 plaintiff upfcn inquiry. Matthews v. Crosby, 56 N. H^ 21. 
 
 531. In a suit brought against the administrator of a 
 deceased person to recover the amount due upon a promissory 
 note, the defendant should be allowed to allege and prove that 
 the note was made and delivered to plaintiff, without consid- 
 eration, for the sole purpose of protecting the property of the 
 deceased from his creditors, and that it was agreed between 
 plaintiff and said deceased at the time of the execution of said 
 note that it should be cancelled whenever so desired. Mc- 
 Causlandy. Ralston, 12 Nevada, 195. 
 
 532. In an action brought upon a promissory note to 
 , ^recaaVfeJ ;of one of the endorsers the amount due, the endorser 
 
 may be declared against as a guarantor, and held liable as such. 
 Sariaehf v. Jones, 20 Kansas, 497. 
 
 533- . Where a promissory note, obtained from the promisor 
 by f raiitl,^ li^s ,b^n transferred to a third party before its ma- 
 turity, ^.th^ burden of proof is upon him to show that he pur- 
 , 'chasM i^t for,' valiip in good faith ; and to determine this, all the 
 attendant circumstances of the transaction are to be considered. 
 Sullivan y.' Langley et al., 120 Mass. 437. 
 
BANKERS CODE. 101 
 
 534- Good equitable defence by one maker of a promissory 
 note that he was surety for the other, of which the holder had 
 notice at the time the note was made, and that the holder has 
 given principal debtor time, preventing recovery. Sembh, that 
 the defence would be good, if the holder knew when he gave 
 time that the defendant was surety. Pooley v. Harradine, XC. 
 431 ; 7 E. & B. 431 (Eng. Com. Law.). 
 
 535- The contract which the law implies from the endorse- 
 ment of a negotiable note, is as conclusive against parol testi- 
 mony as though it were written out in full above the endorser's 
 signature. Parol testimony is inadmissible to change a simple, 
 unqualified endorsement, whether in full or in blank, into an 
 •endorsement without recourse. Doolittle v. Ferry, 20 Kansas, 
 230. 
 
 536. Where an insolvent merchant pressed by creditors, 
 nominally sells to his penniless clerk a stock of goods which 
 the clerk and he knows are not paid for, and accepts in pay- 
 ment of the goods a debt for pretended wages he owes the 
 clerk, and the promissory notes of the clerk, the transaction 
 will be considered a fraudulent simulation. Sattler &• Co. v. 
 Leonard Marine, 30 La. 355. 
 
 537- YaxXxiS. payment made by one debtor on a note, will 
 not suspend the running of a statute of limitations in favor of 
 the other debtors thereon, although the party paying be the 
 principal debtor, and the others only sureties. Steele v. Souder, 
 20 Kansas, 39. 
 
 538. A party knowing the signature to a promissory note to 
 be forged, and intending to be bound by it, acknowledges it as 
 his own, assumes the note as his own and is bound by it just 
 as if it had been originally signed by his authority. Welling- 
 ton V. Jackson, 121 Mass. 157. 
 
 539. Note delared upon last pending action, copy annexed 
 to declaration being still in existence, and produced at the 
 trial, the trial may proceed without establishing a copy in lieu 
 of the lost original, though a plea of non est factum be filed. 
 The genuineness of the original, and the correctness of the 
 preserved copy, may be established by parol evidence. Jerni- 
 gan Ex'x v. Carter, 60 Ga. 131. 
 
 540. Where a promissory note is signed by two, one being 
 surety for the other, with the knowledge of the payee, but 
 without any agreement to that effect between the payee and 
 surety, time given the principal maker is a good defence in 
 an action by payee against the maker who was surety. 
 Greenough v. McClelland, C. V. 422 ; 2 E. & E. 422. Affirmed 
 C. V. 429 ; 2 E. & E. 429. (Eng. Com. Law). 
 
 541. The alteration of the date of a note by the holder, 
 without the consent and to the prejudice of the maker, is a for- 
 gery and renders the note void. Lemay v. Williams, 32 
 Ark. 166. 
 
102 bankers' code. 
 
 542. A rent note being made payable to bearer, the de- 
 fendant could not question the plaintiff's title thereto, unless it 
 was shown to be necesary to his defence. A motion for non- 
 suit, on the ground that the evidence disclosed that the note 
 had been deposited with third persons as collateral security^ 
 and the debt was therefore due to them was properly overruled. 
 Greer v. Woolfolk, 60 Ga. 623. 
 
 543. Proof that the consideration of a promissory note 
 upon which suit is brought was the unlawful sale of intoxica- 
 ting liquors, throws upon the plaintiff the burden of showing 
 that he bought the note in good faith and before it fell due. 
 Paton V. Coit, 5 Mich. 505. 
 
 544. Material alteration, the erasure of the word " surety " 
 after the name of the signers of a note by the payee, before 
 endorsement, is a material alteration discharging the surety, 
 even though the note be transferred for value before maturity. 
 Lamb v. Paine ei al., 46 Iowa, 550. 
 
 545. If a transfer of title in the note without assumption 
 of liability is sought or desired, equally apt and well-known 
 words are at hand. " Without recourse," relieves the indor- 
 ser. Doolittle v. Ferry, 20 Kansas, 232. 
 
 546. A promissory note of this form : " One year after 
 date we promise to pay to the order of A. B., one thousand 
 dollars, value received," and signed "George Moore, treasurer 
 of Mechanic Falls Dairying Association" is the note of 
 Moore and not of the Association; and it makes no difference 
 that the plural " we " is used instead of " I." Mellon v. Moore, 
 68 Me. 390. 
 
 547. To pass the legal title by the plaintiff in execution 
 there must be an indorsement or assignment thereof in writing. 
 Anderson £x'r v. Baker, 60 Ga. 599. 
 
 548. The legal import of a blank endorsement upon a 
 promissory note cannot be varied by parol. Martin v. Cole, 3 
 Colo. 113. 
 
 549. In a suit by a bank against the maker of a promissory 
 note, a plea of the general issue admits the corporate existence 
 of the bank and its capacity to sue. Ticonic Bank v. Bagley, 
 68 Me. 249. 
 
 550. The assignment and delivery of a promissory note pay- 
 able to order, before maturity, without indorsement, gives to the 
 assignee only the rights of the payee, though it. may have been 
 taken in good faith and for value. Allum v. Perry, 68 Me. 232. 
 
 551- An averment in a complaint on a promissory note, 
 that a certain sum " is due, a.s principal and interest on said 
 note," is equivalent to an averment that the note remains un- 
 paid. Downey V. Whittenberger, 60 InA. 188. 
 
 552. A verbal acknowledgment of, and promise to pay a 
 
BANKERS CODE. 
 
 103 
 
 promissory note, made by one of its solidary makers before its 
 prescription, will interrupt prescription as to all the makers. 
 Boullt V. Sarpy, 30 La. 494. 
 
 553- Forbearance to one maker of a promissory note does 
 not discharge another, who, with knowledge of holder, gave 
 note as accommodation. Strong v. Foster, Ixxxiv. 201; 17 
 C. B. 201. (Eng. Com. Law). 
 
 554- Ii^ order to make future services good consideration 
 for a promissory note there must have been a contract for 
 them. Hulse v. ^«/j-i?, Ixxxiv. 711; 17 C. B. 711. (Eng. 
 Com. Law). 
 
 555- The mortgage note of a wife knowingly received by a 
 creditor of the husband, in satisfaction, or security of the hus- 
 band's debt, is in the hands of such a creditor, utterly null 
 and void. Claverie v. Gerodias, 30 La. 291. 
 
 556. Note given to creditor to induce him to sign composi- 
 tion deed, consideration illegal. Clay v. Hay, C.XII. 188; 17 
 C. B. N. G. 188 (Eng. Com. Law). 
 
 557- On& who takes a promissory note as collateral security 
 for a debt then created, and on the faith thereof, with notice of 
 no equities, becomes a holder for value. Logan v. Smith, 62 
 Mo. 455. 
 
 558. B. and C. being indebted to D., B. gave a promissory 
 note to A., the agent of D., in payment thereof. When the 
 note came due it was not paid, and A. agreed to assume the 
 original debt and to transfer the note to C. on C.'s giving his 
 promissory note to A. for the amount of the debt. Held, that 
 C.'s note was given for a sufficient consideration. Turner v. 
 Rogers, 121 Mass. 12. 
 
 559- A creditor holding the mortgage note of a third person 
 as collateral security is compelled to credit the debt due him 
 with only the net sum he was legally able to collect on said note. 
 Blouin V. Liquidators of Hart &' Hebert, 30 La. 714. 
 
 560. A promissory note, given to one creditor in considera- 
 tion of an agreement in fraud of the maker's other creditors, is 
 void as between the parties. Fay v. Fay, 121 Mass. 561. 
 
 561. A promissory note is entitled to days of grace, and 
 suit cannot be brought thereon until after they have expired. 
 McCoy V. Babcock, i Bradwells 111. App. Repts. 414. 
 
 562. In a suit on a promissory note by a bona fide endorsee 
 for valuable consideration, against the maker, the simple fact 
 that the endorser was at the time of the endorsement indebted 
 to the maker, is no defence. Price v. Keeti, 40 N. J. L. R. 332. 
 
 563. A promissory note which has for its consideration the 
 discontinuance by the holder of the note of certain criminal 
 proceedings instituted by him against a party, for obtaining 
 
I04 BANKERS CODE. 
 
 money under false pretences, is void. U. Oganne v. Abraham 
 Haber, 30 La. 1384. 
 
 564. One who executes a promissory note in the name of 
 another, without authority to do so, becomes personally liable 
 for the amount of the note. £>odd, Brown &• Co. v. Bishop 6^ 
 Co. 30 La. 1178. 
 
 565. In an action on a promissory note payable to bearer, 
 by one alleging himself to be the bearer, owner and holder 
 thereof, it is unnecessary to allege delivery. Block v. Duncan, 
 60 Ind. 522. 
 
 566. In order to recover from the maker of a promissory 
 note, It is not necessary to make a demand at the place of pay- 
 ment designated in the note. Henry Renshaw v. A. Keene 
 Richards, 30 La. 398. 
 
 567. Absolute unconditional promissory note cannot be 
 changed into conditional obligation by parol evidence in ab- 
 sence of fraud, accident, or mistake. Haley Ex'r v. Evans, 60 
 Ga. 157. Also, Brumby et at. v. Barnard, Agent, 60 Ga. 292. 
 Also, Starr v. Mayer &= Co. 60 Ga. 546 ; and tVright v. Wilson, 
 60 Ga. 614. 
 
 568. Party taking a promissory note, with notice of fraud 
 before endorsement, cannot recover. Assignee of bill or note 
 without endorsement, takes, subject to all defences. Whistler 
 v. Forster, 248 ; CVIII. 14 C. B. N. S. 248 (Eng. Com. Law). 
 
 569. Promissory note, in consideration of forbearance to 
 prosecute charge of obtaining money under false pretences, is 
 illegal. Clubb v. Hutson, CXIV. 414; 18 C. B. N. S. 414 (Eng. 
 Cora. Law). 
 
 570- Oile who takes a stolen negotiable instrument bona fide 
 and for value is entitled to recover on it, though negligent in 
 availing himself of means of knowledge of bad title. Raphael 
 v. Bank of England, 84, 16 r ; 17 C. B. 1861 (Eng. Com. Law). 
 
 571' The single fact that a promissory note payable to bear- 
 er, was transferred to the plaintiff without consideration, or 
 solely to enable him to bring suit upon and collect it, constitutes 
 no defence to the action. Mc Williams v. Bridges, 7 Neb. 419. 
 
 572. S. is the owner of the negotiable note of M. for $8,000, 
 which he endorses and deposits with the bank as collateral se- 
 curity for a loan of $4,000, obtained upon the discount by the 
 bank of the note of B. S. sells the note to O. and gives O. an 
 order on the bank to deliver the note to O. On the same day 
 O. presents the order at the bank, and is told that the president 
 of the bank is absent from town. Some days thereafter O. has 
 an interview with the president of the bank, and is then in- 
 formed that the debt of S. is nearly paid, and that he would 
 deliver the note to O. but for the service of an attachment upon 
 the bank. • The debt of S. is afterwr''^-- \,?.\<\ in full. Before 
 
BANKERS CODE. 
 
 I°S 
 
 the sale by S. to O., an attachment has been served upon M. at 
 the suit of a creditor of S. ; but of this O. had no notice when 
 he purchased the note. After the sale and notice to the bank 
 by O., an attachment was served upon the bank by another 
 creditor of S. Held, the sale by S. to O. is valid, and he is en- 
 titled to the note as against the attaching creditors of S. Blair 
 &' Hoge v. Wilson. 28 Grattan (V.-^.) 165. 
 
 573. An alteration of a promissory note in any material part 
 renders it invalid as against a party not consenting thereto, even 
 in the hands of an innocent purchaser. Brown v. Straw, 6 
 Neb. 536. 
 
 574. After an instrument is completed and delivered, no 
 alteration can be made therein, except by consent ; an alteration 
 of the date, whether it hasten or delay the time of payment, is a 
 material alteration, and if made without the consent of the party 
 sought to be charged, extinguishes his liability. Id. 
 
 575. Where a party contracts to pay 18 per cent, interest 
 upon a promissory note at the time of its execution and deliv- 
 ery, the contract will be tainted with usury, although the rate 
 of interest is not expressed in the note. Keim &^ Co. v. Avery, 
 7 Neb. 54. 
 
 A surety may plead a defence to a promissory note that usu- 
 rious interest was agreed upon by the parties at the time of the 
 execution of the note. Id. 
 
 576. The defendant being the payee of a negotiable prom- 
 issory note, upon which his action is brought, his relation is 
 such that he cannot in law be held to be the maker of such 
 note, even though his indorsement was for the purpose of giv- 
 ing credit to the note. Barnard V. Gaslin,i2, Minn. 192. 
 
 577. That the endorsement by the payee of a negotiable 
 promissory note amounts in law to a contract on the part of 
 such indorser, in which he undertakes to pay the note in case 
 the maker fails to pay at maturity, and of which failure he has 
 due notice; and his liability in this regard cannot be varied or 
 qualified by a parol agreement or understanding simultaneous 
 with that of the endorsement ; and hence, parol evidence will 
 not be received to vary this well recognized legal contract. Id. 
 
 578. G. executed a promissory note to a railway company 
 to aid in the construction of a road between two points named 
 in the note. At the time of its execution it was understood 
 that the note, with others of like purport, if they reached a cer- 
 tain amount, was to be turned over to another company, which 
 was to construct the road; they did not reach the amount, and 
 the road was constructed by plaintiff, who was the assignee of 
 the payee of the note. Held, that upon compliance with the 
 other conditions of the note, it was collectible by plaintiff. It 
 being stipulated in the note that the consideration therefor was 
 
io6 bankers' code. 
 
 to be capital stock of the railway company, which was to be lim- 
 ited to a certain specific amount, an illegal increase thereof 
 would constitute a valid defence to the note. Merrill v. Gam- 
 ble, 46 Iowa, 615. 
 
 579. A material alteration in the terms or condition of a 
 note, or o ;lier commercial paper, made by the holder thereof, 
 with a fraudulent intent, will defeat recovery thereon. Robin- 
 son V. Reed et al., 46 Iowa, 219. 
 
 580. A surety contracts to pay the note, while the guarantor 
 undertakes to pay it upon condition that certain steps are taken, 
 and any writing upon the note, therefore, which seeks to render 
 a guarantor a surety is a material alteration. Id. 
 
 581. Where the alteration is established, the holder has the 
 burden to show that it was made innocently, for a proper purr 
 pose, or by a stranger, and in the absence of such proof it will 
 be presumed to have Iseen fraudulently made. Id. 
 
 582. The party guilty of the fraudulent alteration cannot 
 by removing it recover the right of action which he has lost by 
 his fraud. Id. 
 
 583. When a renewal note has been given, with an under- 
 standing that the original note shall be surrendered, if the 
 renewal note is not paid at maturity, suit may be commenced 
 thereon ; and the mere fact that the original note had not been 
 surrendered at the commencement of the action is no defence, 
 when it appears that plaintiff has always held possession 
 thereof, that its surrender has never been demanded, and when 
 it is produced on the trial and tendered to defendant The 
 fact that the defendant, at the maturity of the renewal note, 
 went to the bank, where it was deposited for collection, for 
 the purpose of paying it, and refused to pay because the orig- 
 inal note was not there to be surrendered, is no defence to the 
 action, when it is shown that the money was afterwards 
 demanded of him, and that he refused to pay on other grounds, 
 and that plaintiff was at all times ready and willing to surrender 
 the original on payment of the renewal note. Fleirs et al. v. 
 Hellery 4 Mo. Ct. Appeals (St. Louis), 596. 
 
 584. In an action by an endorsee against his endorser on 
 a promissory note, which on its face was executed and payable 
 at a bank in another State, the maker of which was alleged to 
 be a non-resident of this State, all the evidence introduced 
 was the note, the endorsement thereof and a protest. Held, on 
 motion for a new trial, that the evidence is insufficient to sus- 
 tain a verdict for the plaintiff. Held sdso, that the endorsement, 
 in the absence of evidence to the contrary, is presumed to have 
 been made at the time and place of the execution of the note, 
 and that the note and endorsement are governed by the law of 
 that place. Held also, it being presumed that the common law 
 prevails in that place, and promissory notes not being governed 
 
BANKERS CODE. I07 
 
 at common law by the law merchant, that the note in suit is 
 not so governed. Held also, that the statute of such State 
 should be pleaded and proved, as courts of this State do not 
 judicially know the law there in force. Held also, that the evi- 
 dence shows no diligence, and no excuse for a failure to use 
 due diligence in proceeding against the maker necessary to 
 bind the endorser of a note not payable in bank. Patterson 
 V. Carrell, 60 Ind. 128. 
 
 585. It is no defence to a suit against the maker of a nego- 
 tiable promissory note by a National bank, which has dis- 
 counted the note for an endorser, that since the commencement 
 of the suit the endorser has paid the bank and taken up the 
 note, and taken an assignment of the suit, and is prosecuting 
 it for his own benefit. Such bank has power to free itself from 
 litigation, and realize its money on a protested note by such an 
 arrangement. Where there is no evidence of fraud or oppress- 
 ion, or any corrupt or improper motive, the owner of endorsed 
 negotiable paper may maintain suit upon it against prior par- 
 ties in the name of any person or party, capable of giving the 
 defendant a discharge, who will consent to the use of his name 
 for that purpose. It is not essential that a suit upon such 
 paper should be brought or prosecuted in the name of one who 
 has a personal interest in the enforcement of the promise. 
 While the right of the defendant to assert such legal and equit- 
 able defences in a suit brought in the name of a nominal 
 plaintiff, as he could maintain were the suit in the name of the 
 real owner, will always be preserved, there being nothing in the 
 case to show that the endorser, or his executor, had he taken 
 up the note at its maturity, could not have maintained an 
 action upon it in his own name. Held, that he may lawfully 
 get the benefit of any attachment made by the bank by procur- 
 ing their consent to the prosecution of the suit in the name of 
 the bank. Ticonie Bank v. Bagley, 68 Me. 249. 
 
 586. Under our Statute the title to a promissory note, 
 whether payable to order or assigns or not, is transferred by 
 endorsement; but the title to a promissory note payable to 
 bearer is vested in each succesive holder by the original promise 
 of the maker to the bearer, and not by the assignment of the 
 promise, Section 2228 of the Code of 187 1 construed, which 
 provides that " all promissory notes, and other writings for the 
 payment of money or any other thing, may be assigned by 
 indorsement, whether the same be payable to order or assigns 
 or not; * * * and in all actions on any such assigned 
 promissory note, bill of exchange, or other writing for the pay- 
 ment of money or other thing, the defendant shall be allowed 
 the benefit of all want of lawful consideration, failure of con- 
 sideration, payments, discounts, and sets-off made, had, or 
 possessed against the same previous to notice of assign- 
 
Io8 BANKERS CODE. 
 
 ment, in the same manner as though the suit had been brought 
 by the obligee or payee." Held, (i) that the above statute ap- 
 plies as well to indorsements in blank as to special indorse- 
 ments; (2) that it refers to assignments made in the duecourse 
 of business, for value, and before maturity; (3) that it only 
 changes law merchant so far as to allow the the promissee to 
 make any defenses existing before notice of assignment against 
 a remote holder, by indorsement, before maturity, which he 
 could have made against the payee. Etheridge v. Gallagher, 55 
 Miss. 458. 
 
 587. E. and wife sold a lot to C, and took in payment a 
 promissory note payable to their order, which was transferred 
 by endorsement in blank to W. F. E.-, and by him transferred 
 for value, after due, to G. A bill was filed by G. to subject 
 the lot sold by E. and wife to C. to the payment of the note 
 held by him, E. and wife filed a cross-bill, alleging that the 
 consideration for which the note was transferred to W. F. E. 
 had failed, and the latter was insolvent, claiming that E. and 
 wife had a superior right to the note, and that the lot should 
 be sold for their benefit. G. demurred to the cross-bill for 
 want of equity, and his demurrer was sustained by the Court. 
 Held, that the action of the Court was correct. Etheridge v. 
 Gallagher, 55 Miss. 458. 
 
 588. Our Statute requires those in an action on a promissory 
 note or bill of exchange all the parties thereto resident in the 
 State shall be sued together. If it appears on the face of the 
 declaration that any such party is omitted in- the action, the 
 omission may be taken advantage of by demurrer; but if not, 
 it can only be taken advantage of by a plea in abatement. In an 
 action upon a promissory note or bill of exchange, it is too 
 late after trial to object, for the first time, that all the parties 
 were not sued in the same action. Id. 
 
 589. The defendants were the banker of both the plaintiffs 
 and one E. and E. having given a note payable to the plaintiff 
 at the defendants' bank, the plaintiff, about two weeks before 
 its maturity, left it with the defendants for collection, and to 
 be protested if not paid. On December 4th, the day of its 
 maturity, the ledger keeper debited E.'s account and credited 
 the plaintiff's with the amount of the note, and on the plaintiff 
 calling at the bank next morning, he received his pass-book 
 with an entry crediting him with the amount of the note. Sub- 
 sequently the manager, on the ground that the entry had been 
 made by the clerk by mistake and without authority — as E.'s 
 account was then overdrawn — caused the entry to be reversed, 
 and refused to pay plaintiff the amount of it. E. stated that 
 he always gave authority to pay each particular note, which 
 he did not do here; and the manager stated that without such 
 authority it was not the custom of the bank to pay any note. 
 
BANKERS CODE. I09 
 
 Held, that the plaintiff was entitled to recover the amount of 
 the note from the bank. That by the general law the plaintiff 
 by making the note payable at defendants' bank, authorized 
 them to pay it; and that the act of the ledger keeper in charg- 
 ing it to E.'s account and crediting it to the plaintiff in his ac- 
 count and pass-book, amounted to a payment of the note, and 
 was irrevocable. Nightingale v. City Bank, 26 Upper Canada 
 Com. Pleas, 74. 
 
 590- Promissory note, signed " U. S. Manfg. Co., George 
 H. Fox, treasurer." The plaintiff's case depended entirely on 
 the validity of the promissory note, which Fox had .assumed to 
 give in the character and capacity of treasurer of the defendant 
 company. Whether he had authority to do so was a vital ques- 
 tion. F. was called by the defendant as -a. witness, and asked 
 him, against the plaintiff's objection, whether or not he had 
 authority to make this note as treasurer of the company. Held, 
 that the question was inadmissible. All that could properly be 
 obtained from him were the facts, by which the inference of 
 authority was to be supported or repelled ; and it was for the 
 counsel to argue, and for the jury to find, under the instructions 
 of the Court, whether the facts so given proved that he had the 
 authority, which he denied. The question is fully discussed in 
 Short Mountain Coal Co. v. Hardy, 114 Mass. 197. The Court 
 held, that a declaration of an agent to a third person is inadmis- 
 sible in behalf of the principal to prove that the person was not 
 also his agent, or to support the agent's declaration. 
 
 591. The drawer of a check made payable to the order of 
 the payee, is not bound by a payment thereof by the bank, upon 
 a forged indorsement of the name of the payee ; it is bound, 
 
 , before payment, to ascertain the genuineness of the indorse- 
 ment. Welsh v. Ger. Am. Bank, 73 N. Y. Ap. 424. 
 
 A depositor owes no duty to a bank requiring him to exam- 
 ine his pass-book, or returned checks, with a view to the detec- 
 tion of forgeries in the indorsements. He has a right to assume 
 that the bank, before paying his checks, will ascertain the gen- 
 uineness of the endorsement. Id. 
 
 592. A promissory note, made by one of two members of a 
 firm, in the hands of a bona fide holder for value, although not 
 made in the partnership business, and although the other part- 
 ners did not know of the making of the note. The note is pre- 
 sumptive evidence that it is valid business paper, and was given 
 for a debt due from the makers' to the payee. First National 
 Bank V. Morgan, 73 N. Y. Ap. 593. 
 
 593. Where a joint and several promissory note is signed by 
 three persons, as makers, to the signature of the last signer, the 
 word " surety " being added, the presumption is that he is surety 
 for the other two ; this presumption, however, is not conclusive. 
 It may be shown that he was in fact surety for only one, and 
 
no BANKERS CODE. 
 
 that the other signer was also surety. Sales v. Sims, 73 N. Y. 
 Ap. 552- 
 
 594. The possessor of negotiable paper has no better, or 
 other title to the proceeds arising from the sale thereof, than to 
 the paper itself, and if he has no title to the latter, he can be 
 compelled to account to the true owner for the proceeds. Com- 
 stock V. Hier, 73 N. Y. Ap. 269. 
 
 Testimony that such person was not an agent, because if the 
 inquiry was whether he had an express authority, it was an in- 
 quiry concerning an immaterial matter ; and if it was whether 
 he had an implied authority, it was an inquiry as to an inference 
 to be drawn by the jury from the facts in the case. Providence 
 Tool Co. V. United States Mfg. Co. 120 Mass. 35. 
 
 595. On the 9th September, 1875, defendant endorsed a 
 promissory note made by S. & C, bearing that date, and pay- 
 able to him four months after date at the plaintiffs' branch at 
 Ottawa, but without any amount being filled in. On the same 
 day C. deposited it with the plaintiffs, authorizing them to fill 
 it in for the amount of S. & C.'s then due paper, as also for 
 other paper falling due before the 22d October. On the 21st 
 October the plaintiffs filled in the note for $4,835.84, which 
 included defendants' then due paper, a sum of $2,000 coming 
 due on the following day, and $2.94, the amount of the stamps 
 which were there affixed. The stamps so affixed were sufficient 
 to cover double duty, and were obliterated by writing across 
 them the date on which they were so fixed, namely, 21st Octo- 
 ber, 1875. Held, that defendant, by so endorsing the note, 
 authorized plaintiffs, as bona fide holders for value, to fill in the 
 amount, and to affix and cancel the requisite stamps in the 
 mode required by law ; and that the note then become a com- 
 pleted note, but speaking from its original date, from which the 
 four months would be counted. By 37 Vic, ch. 47, sec. 3, D., 
 it is provided that in case a bank making or becoming the 
 holder of a note not duly stamped, knowing the same, and not 
 immediately affixing and cancelling the proper stamps, within 
 the meaning of 31 Vic, ch. 9, it should not only forfeit a pen- 
 alty of $500, but be unable to recover on such note, or make 
 it available for any purpose whatever, and that it should be of 
 no effect in law or equity. Held, that the stamps here were 
 not properly cancelled ; for if affixed as agents of the makers, 
 which the including them in the amount of the note was evi- 
 dence of, then, under Sec. 4 of 31 Vic, ch. 9, D., the date of 
 the obliteration must accord with that of the note ; whereas, 
 if looked upon as subsequent holders, and as affixing double 
 duty, then, under Sec. 12, as substituted by 37 Vic, ch. 47, 
 sec. 2, the initials or name as well as the date are required. 
 Semble, that the privileges accorded by the latter part of this 
 substituted. Sec. 12, to holders, who, from error or mistake, do 
 
BANKERS CODE. 1 11 
 
 not at the proper time affix the double duty, does not apply to 
 banks &c. Le Banque Nationah v. Sparks, 27 Upper Canada 
 Com. Pleas, 320. 
 
 596. Plaintiff held a note, whereon N. was principal, and 
 defendants and others were sureties. Plaintiff and N. pro- 
 cured defendant W. to sign another note, agreeing at the time 
 that it should not be used except to take up the former note, nor 
 unless all the signers of the former note signed it. W. was 
 induced by this agreement to sign said last mentioned note, 
 which plaintiff well knew, and also knew that the note was to 
 be presented to defendant S. by N., the principal thereon, with 
 W.'s name on it, as an inducement for him to sign it, and that 
 S. was thereby induced to sign ; and plaintiff took the note, 
 knowing S. had been so induced to sign, and advanced money 
 thereon to N., instead of taking it in payment of the former 
 note, as agreed. Held, that the defendants' relations as sure- 
 ties, and said agreement, might be shown by parol, and consti- 
 tuted a defence to the note. Harrington v. Wright et al., 48 
 Vt. 427. 
 
 597. The Promissory Note declared on was dated July 
 I, 1869, for $1,000, payable on demand. The evidence at the 
 trial was that the plaintiff lent the defendant $1,000 in July, 
 in 1868 or 1869, and at the same time received from him a 
 note, which, there being no evidence when it was payable, 
 might be presumed to be payable on demand ; and that this 
 note had been lost, and could not be produced. This evidence 
 was sufficient, in the absence of evidence that any other note 
 of this amount was ever given by the defendant to the plaintiff, 
 to identify the note in suit, and to warrant the jury in return- 
 ing a verdict for the plaintiff, and the court in rendering judg- 
 ment in her favor upon her filing a sufficient bond of indem- 
 nity. The assignment of all the payee's right in the note, 
 without any endorsement, did not prevent the maintenance of 
 an action upon the note in the name of the payee. ' Tucker v. 
 Tucker, 119 Mass. 79 ; also, Clark v. Houghton, 12 Gray, 38 ; 
 Goddardv. Sawyer, 9 Allen, 78 ; McGregoryy. McGregory, 107 
 Mass. 543 ; Nichols \. Allen, 112 Mass. 23. As to assignment, 
 referred to : Foss v. Nutting, 14 Gray, 484 ; Cook v. Fellows, 
 I Johns. 143 ; Smalley v. Wight, 44 Maine, 442. 
 
 598. In an action on a promissory note against the maker, 
 the defence was that the note in suit was signed by the de- 
 fendants at the request and for the accommodation of the O. 
 R. Co., the payee, and of W. H. and P., the endorsers, who 
 were officers or stockholders of said company, and that the 
 note had been paid by the endorsers. The evidence tended to 
 show that after the note matured G., acting for the endorsers, 
 made an arrangement with the plaintiff corporation, by which 
 he was to give it their note for the same amount ; that he gave 
 
112 BANKERS CODE. 
 
 it such note, signed by W. H. and P., and the note in the si 
 was delivered to him. The principal question at the trial wi 
 whether the new note was given in payment of the note in su 
 or merely as a collateral security for it. Upon this issue t 
 court instructed the jury that, as the transaction took place 
 Connecticut, it was to be governed by the law of that Stat 
 that by that law the giving of a promissory note was not pi 
 sumed to be in payment of a preexisting debt, and therefo: 
 before they could find for the defendant, they must be satisfi 
 that, by the agreement of' the parties, the plaintiff received t 
 new note in payment of the note in suit. Held also, the plai 
 tiff, having requested an instruction, that the presumption 
 law is that the holder did not intend to accept the note in pa 
 ment, and to discharge the maker of the note in suit, an 
 unless the jury find that a distinct agreement was made 
 accept the note in payment, they cannot find that it was e 
 cepted in payment, and the instruction being given in substanc 
 though not in the words requested, that the plaintiff had : 
 ground of exception. Connecticut Trust Co. v. Melendy, i 
 Mass. 449. 
 
 599. A promissory note, the following being a copy thereo 
 "$2,268.00. Boston, February ist, 1872. For value receive 
 I promise to pay to Benjamin B. Newhall, or order, $2,268. 
 in one and a half years, or sooner, at the option of the mo 
 gagor, from this date, with interest, to be paid semi-annual 
 at the rate of seven per cent, per annum during said term, ai 
 for such further time as said principal sum, or any part there^ 
 shall remain unpaid. Secured by mortgage of real estate 
 Boston, Mass., stamped as required by U. S. Internal Reven 
 Laws, to be recorded in Suffolk Registry of Deeds. (E 
 dorsed) Waving demand and notice. Benjamin B. Newhal 
 Held, that each of the instruments in suit expresses a prom 
 to pay a certain sum of money in a year and a half from 
 date, " or sooner, at the option of the mortgagor," with intere 
 at a certain rate, " during said term." The principal sum is 
 be paid, either at the time specified, or at any earlier time tl 
 the mortgagor may elect. The interest is to be computed 01 
 until the note is paid. Both the time of payment of t 
 principal and the amount of interest are uncertain, and depe 
 upon the election of the mortgagor, who would seem, from t 
 memorandum upon the note itself, to be the maker of the no 
 But if he were a third person, it would not aid the plaint 
 In either alternative the contract, not being a promise to pa' 
 fixed sum of money at a definite time, lacks the esseni 
 quality of a negotiable promissory note, and cannot be sued 
 such. Way v. Smith, in Mass. 523; Hubbard v. Mosely, 
 Gray, 1 70 ; Story on Notes, § 22 ; Stults v. Silva, 119 Mass. i, 
 
 600. A promissory note executed by a married woman in i 
 ordinary form, and perfect in its terms, the fact, that in ordei 
 
BANKERS CODE. 
 
 "3 
 
 make it binding upon her, the addition of other terms not sug- 
 gested by the paper itself is required, /. e., an expression of an 
 mtent to charge here separate estate, does not justify the payee 
 in making such an addition after delivery of the note and 
 without her knowledge and consent; and if so made it is a 
 material alteration which vitiates the instrument. An authority, 
 however, given by the maker to the payee, to add anything to 
 the note which counsel when consulted may suggest to be 
 needful to make the note "'right, legal and proper," is sufficient 
 to authorize such an addition as will make the note legal and 
 binding upon her, and it is not material that she is not advised 
 of the precise terms of the addition. Taddiken v. Cantrdl, 
 69 N. Y. 597. 
 
 601. Apromtssorynoteraa.de for the accommodation of the 
 payee, but without restriction as to its use, an endorsee taking 
 in good faith as collateral security for an antecedent debt of 
 the payee and endorser, without other consideration, occupies the 
 position of a holder for value, and can recover thereon against 
 the maker. The precedent debt is a sufficient consideration 
 for the tranfer, and no new consideration need be shown. It 
 is only where the note has been diverted from the purpose for 
 which it was intended, by the payee, or where some other 
 equity exists in favor of the maker, that it is necessary that the 
 holder should have parted with value on the faith of the note, 
 in order to enforce the same. Grocers' Bank v. Penfield, 69 
 N. Y. 502. 
 
 602. A promissory note made payable " at any bank " in a 
 specified city, proof of presentation at any bank in such city, 
 and due protest and notice, will bind the endorser. The pro- 
 test of a note payable " at any bank in Savannah, Georgia," 
 showed that the note was presented for payment " at the 
 Southern Bank of the State of Georgia," but did not expressly 
 state that this bank was in the City of Savannah. The 
 caption showed that the protest was in the City of Savannah, 
 Georgia, and the protest cited that the notary resided in that 
 city. After showing demand and refusal of payment, &c., it 
 concludes: "Thus done and protested in the City of Savan- 
 nah aforesaid." Held, (r.) The protest sufficiently showed that 
 the bank, at which demand was made, was located in the City 
 of Savannah. (2.) Parol proof was admissible, in connection 
 with the protest, to show that a bank of the same name as that 
 mentioned in the protest, was located in the City of Savannah, 
 at the date of the note and its protest. Boit dr' M. McKenzie 
 V. Corr, 54 Ala. 112. 
 
 603. In an action on a promissory note by the payee 
 against the maker, on the issue of payment, it appeared by an 
 agreement of even date between the parties, that the maker 
 was to transfer to the payee certain shares of stock in a cor- 
 
114 BANKERS CODE. 
 
 poration as security for the payment of the note, and, in case 
 of his failure to pay, the payee was to take the stock in full 
 satisfaction; that, before the note became due, the maker exe- 
 cuted an instrument purporting to be a transfer of the stock to 
 the payee, and produced a certificate of stock, which stated 
 that the maker was owner of the stock, and that it was only 
 transferable on the books of the corporation; and that these in- 
 struments, together with the original agreement, were deposited 
 by mutual consent with a third person. Held, that the transfer 
 and certificate were admissible in evidence ; that it was compe- 
 tent for the judge, who tried the case without a jury, to find 
 that the third person held the stock; that the transfer conveyed 
 a title between the parties ; and that the maker might testify 
 that he had paid for the stock in full. Brown v. Smith, 122 
 Mass. 589. 
 
 604. A promissory note in the usual form, with* interest 
 coupon notes attached, but containing a clause that if default 
 be made in the payment of any instalment of interest when the 
 same becomes due, and such default shall continue for thirty 
 days, then the principal sum shall, at the election of the holder 
 of said note, become due and payable, such election to be made 
 at any time after said thirty days, without notice, is such an 
 obligation as is denominated in law a promissory note. Sea 
 V. Glover, I Bradwell's 111. App. Rpts. 335. 
 
 In construing the contract of guaranty thereon, it is imma- 
 terial whether the instrument is technically a promissory note 
 or not. It is an obligation, the performance of which the 
 guarantor had a right to guarantee, and the undertaking of the 
 guarantee is that the maker of the note shall meet his under- 
 taking according to the terms and spirit of the contract, and 
 on a failure so to do the contract of guaranty is broken, and 
 the liability of the guarantor arises. Id. 
 
 605. The guarantor is liable on his contract when the 
 holder of the note elects to declare the whole sum due by 
 reason of default in payment of interest, even though the 
 principal sum is not due, by the terms of the note. Bringing 
 suit is sufficient notice of the election of the holder of the 
 note to declare the whole sum due. Id. 
 
 ' 606. This action was upon a promissory note, made and 
 executed by the S. J. W. and endorsed, among others, by de- 
 fendants, H. & E., for the accommodation of said corporation, 
 and discounted by plaintiff. The defense was that after the 
 indorsers were duly charged the note was paid by the substitu- 
 tion of a renewal note, not indorsed by the defendants, and 
 the payment of the discount, and when the first renewal note 
 became due, the discounting of another note, to take up the 
 first renewal note, which second renewal note was also without 
 the indorsement of the defendants. 
 
BANKERS CODE. I15 
 
 The court found, among other things, in substance, that at, 
 about or shortly after the maturity of the note in suit, the 
 maker, by its treasurer. Bean, presented to the plaintiff another 
 note dated September 19, 1872, and in all other respects pre- 
 cisely like said first note, except the indorsement of the de- 
 fendants E. & H., and requested the plaintiffs to take the 
 same in renewal of said first note. The plaintiffs refused 
 without the indorsement of E. & H. That thereupon Bean 
 left the second note with the plaintiff, together with a sum 
 which would amount to the discount thereon, saying he would 
 procure E. & H. to call at the plaintiff's bank and endorse the 
 same as they had agreed. That thereupon, and solely in an- 
 ticipation that said endorsements would be made, the plaintiff's 
 book-keeper entered said second note on the books of the 
 plaintiff. That at or about the maturity of the second note, 
 the same not having been endorsed by E. & H., the said iron 
 works by their treasurer, presented the plaintiff another note 
 dated November 21, 1872, and in all other respects precisely 
 like said second note, and requested the plaintiff to take the 
 same in renewal of said first note. This the plaintiff refused 
 to do, unless the endorsements of said E. & H. were procured 
 thereon. Said Bean therefore took said second note and left 
 said third note with the plaintiff, together with a sum which 
 would amount to the discount thereon, saying, he would have 
 said E. & H. call at the plaintiff's bank and endorse the same, 
 alleging some excuse why they had not already done so. That 
 neither E. nor H. ever called or indorsed said note. That said 
 first note has not been paid or renewed, or the payment thereof 
 extended in any manner. That neither said second or third 
 note was discounted by the plaintiff or taken in renewal of 
 said first note. Court of Appeals, Miller, J. This case in- 
 volves a question whether there was an extension of the time 
 of payment of the note upon which this action was brought, 
 and a suspension of the right of action on the same, by the 
 substitution of a renewal note became due by the discounting 
 of another note to take up the first renewal note, which also 
 was without the endorsement of the defendants, who have ap- 
 pealed. The judge upon the trial found that the first note was 
 not paid or renewed in any manner, and that neither the second 
 nor third note was discounted by the plaintiff or taken in re- 
 newal of the first note. I think that these findings are suffi- 
 ciently supported by the testimony. The proof shows that 
 when the agent of the iron company presented the first renewal 
 note to be discounted, his proposition was declined upon the 
 distinct ground that the note had not the endorsement of H. &. E. 
 The agent then stated that they were to have been on, and said, 
 that they would call in and endorse the notes. The same 
 promise VI as substantially made upon the presentation of the 
 second renewal note, and excuse given why it had not been 
 
Il6 BANKERS CODE. 
 
 done. The payment of the discount, it appears, was made upon 
 the same condition, and the facts in connection with the retain- 
 ing of the possession of the old note tend to establish an agree- 
 ment that each of the renewal notes were received, and agreed 
 to be discounted only upon the condition stated. The entry on 
 the books of the plaintiffs shows, on its face, that the renewal 
 notes were discounted, and that both the original and the sec- 
 ond note were paid, and is a strong circumstance against the 
 conclusion that the renewal notes were received conditionally; 
 but this fact was subject to be, and as the finding of the judge 
 shows, was explained by evidence to the effect that these entries 
 were made by the book-keeper, and it is claimed in anticipation 
 that the agreement would be perfected by the indorsement of 
 the two defendants named. It must be confessed that the tes- 
 timony is not very satisfactory ; but if we allow full credit to 
 explanation given for the entries made, I do not see why it is 
 not sufficient. Such a state of facts might well existin entire 
 harmony with the theory that no extension of the time of pay- 
 ment was made, and conceding that such was the case, the find- 
 ing of the judge would be justified. The counsel for a])pellants 
 claim that the notes were and' must have 'been received upon 
 some agreement, and that this is expressed in the testimony of 
 the cashier, who, in answer to the question put. How the en- 
 tries came to be made in the book, answered : Because Bean 
 told him that the indorsers would come in, in a day or two, and 
 indorse. This answer should be considered in connection with 
 all that transpired, and, among other things, with the explana- 
 tion subsequently given to the effect that the entry was made 
 by the book-keeper, as well as the other circumstances. Cer- 
 tainly the testimony referred to was not entirely conclusive, and 
 was for the judge to pass upon in connection with the other evi- 
 dence upon the trial. Although the circumstances are quite 
 strong to show that the second and third notes were discounted 
 and the previous note taken up, yet there was an explanation of 
 these facts which, if believed, tended very much to support the 
 finding of the judge; and we nre not at liberty to disturb the 
 same. Auburn City National Bank v. Hunsiker et al. 72 N. Y. 
 App. 252. 
 
 607. A party authorized to sell property, in the absence of 
 any express limitation of his powers, is authorized to do any 
 act, or to make any declaration in regard to the property found 
 necessary to make a sale, and usually incidental thereto. This 
 action was brought to have three promissory notes, made by 
 plaintiff payable to his own order, and indorsed by him, de- 
 clared void for usury, to compel a cancellation thereof, and 
 return of certain stock pledged as collateral, and for an injunc- 
 tion, receiver, &c. The notes were delivered by plaintiff to 
 B. & Co., note brokers in the city of New York, of whom 
 plaintiffs had been in the habit of purchasing commercial paper 
 
BANKERS CODE. 
 
 117 
 
 to a large amount, and to whom he was indebted upon account, 
 to be sold at a discount of 12 per cent., and the avails to be 
 applied upon plaintiff's account. B. & Co. sold the notes to 
 defendant G. at the rates stated. Prior to the execution by 
 plaintiff of any note, and before B. & Co. had received any 
 authority to sell, G. applied to the latter to purchase notes, 
 saying he desired first-class business paper only. B. & Co. 
 said they would have paper of that kind, and mentioned the 
 plaintiff's name. Shortly after they procured a note from 
 plaintiff, with authority to sell at a discount of 12 per cent., and 
 apply the proceeds to his indebtedness to them. B. & Co. sent 
 this note to G., who purchased it at 12 per cent. Held, it can- 
 not be successfully contended that the notes in question had an 
 inception before they were passed to G. The indebtedness to 
 B. & Co. would have been a good consideration for them, and 
 had that been merged in them, and they given as evidence of its 
 existence ( Wilkie v. Roosevelt, 3 Johns. Cases. 66), they would 
 have had an inception prior to the taking of them by G. But 
 they were not -given for that indebtedness. They were made 
 for just the purpose for which they were used, to be sold at a 
 discount of 12 per centum per annum. The avails of the sale 
 were to be applied on the indebtedness, and thus only 
 was the indebtedness affected by them. That being so, it is 
 plain that they were taken by G. at a usurious discount ; and 
 that they are void, unless Ahern is estopped from setting up the 
 usury. An estoppel arises in such cases when the maker of the 
 note, before the sale of it, has declared to the buyer that it is 
 a business note, and the buyer has so acted thereupon as that 
 he will be harmed if the usury is known. Was Ahern brought 
 within that rule .' He did not in person make such declara- 
 tions. It is claimed that B. & Co. were his agents, and that 
 they made such declarations acting as his agents, and with 
 power to make them. We will first see whether they did so 
 represent, and then whether they had authority so to do ; or, if 
 not, whether their act in so doing had been adopted and satis- 
 fied by Ahern. Ahern v. Goodspeed, 72 N. Y. App. 108. 
 
 608. The trial Court found that B. & Co. made declaration 
 to G., at the time, and of a purport sufficient to bring them 
 -within that rule, and that G. acted upon those declarations. It 
 is manifest that he would be pecuniarily harmed if the usury is 
 shown, and the notes declared void therefor. The plaintiff 
 urges, however, that there was no evidence to sustain the find- 
 ing above mentioned. The testimony that the declarations 
 were made by B. & C. is sufficient to sustain the finding in its 
 substance, so far as the making is concerned. G. asked of them 
 for first-class business paper. They said they had a good svpply. 
 They opened their book and began to show their business paper. 
 He said he wanted first-class business paper, secured by collat- 
 erals. They told him they had just the- notes — some of that 
 
ii8 ' bankers' code 
 
 class of paper — that is, as I read it, first-class business paper, 
 secured by collaterals. He had before that bought paper of 
 them — impliedly business paper. It is shown that it was ac- 
 companied by collaterals. They said that they would have 
 some of that — that is, paper of that character; and then men- 
 tioned the name of Ahem. They said that they had some of 
 that kind of paper, and told him about the standing of Ahern. 
 All that had been before declared concerning it still attached 
 to it, and made a part of the continuous transaction. It was 
 taken by G., and sold by B. & C, as the note which was the 
 subject of offer by them, and of consideration by him, and of 
 his and their acts and declaration. It was taken in reliance 
 thereon. Though at the hour, or during the day, of the making 
 of a representation as to property offered for sale,- the subse- 
 quent vendee, then negotiating for it, or the like of it, does not 
 conclude a bargain for it, if he afterwards, as a continuation of 
 the negotiation, becomes a purchaser, the representations are 
 still a pan of the res gestm, and bind the maker of them (see 
 per Holt, C.J., Lyney v. Selby, 2 La. Raym., 118—20; Wilmoty. 
 Hurd, II Wend., 584). As to the other two notes, the testimony 
 of G. is explicit that B. & C. told him, at the time of sale of 
 them, that they were business paper, and the best kind of 
 business paper. From all that is testified to by G., the infer- 
 ence is easy and natural that he would not have taken the notes, 
 had he not believed that they were business paper, and that he 
 so believed, from what was said and,took place between B. & C. 
 and him. Id. 
 
 609. If B. and Co. were agents of- Ahern, with authority to 
 make such declarations, and to do such acts concerning the 
 notes, he also is estopped. B. & C. were not the agents of G. 
 He went to their place of business to buy of them what they 
 had to sell, for themselves or others. They did not own these 
 notes. If they had owned them, the notes would have had an 
 inception in their hands, and a d fferent question would have 
 arisen. So they did not sell them as their own. They sold 
 them for a principal, who could be no other than Ahern. They 
 had been his agents in brokerage, or other pecuniary transac- 
 tions, for some time. It was from such things that his indebt- 
 edness to them grew up. They charged him their commission 
 on the sale of these notes to G., and thus he paid them their 
 hire as his agents. His indebtedness was paid by the sale of 
 these notes, and he received and retained a check of B. & Co. 
 for a balance thereafter due to him from the avails of the 
 sale. Jd. 
 
 610. Here arises an interesting question in the "ase. When 
 B. & Co. made the representation to G., upon which the first 
 note was taken by him, that note was not in existence, nor had 
 Ahern authorized them to sell a note of his to G. or other per- 
 son. It is said that they were not then his agents, and that 
 
BANKERS' CODE. II9 
 
 whatever they said at that time could not affect him. It is not 
 needed that there be an express act of ratification, in order to 
 hold the principal. His subsequent assent may be inferred 
 from circumstances, which the law considered tantamount to an 
 express ratification. And the acts of the principal are to be 
 construed liberally in favor of the adoption of tlie acts of an 
 agent. {Codwise v. Hacker, i Caines R. 526, per Kent, J. p. 
 540.) It already appears that Ahern knew that the first note 
 made by him was to be sold by B. & Co. He also knew, as his 
 testimony shows, that it was to be sold in pursuance of a prior 
 negotiation at a discount of twelve per centum per amiuvi. He 
 knew that the note was not business paper. He had been a 
 large purchaser of paper of B. & C, hence knew their mode of ' 
 effecting sales of paper. It is to be inferred that he knew that 
 in the purchase of paper, at a greater rate of discount than 
 seven per centum per annum, the buyer usually exacted a repre- 
 sentation that the paper sold was business paper, so that he 
 might rely upon the fact, if indeed the paper was such, or 
 upon the estoppel if it was not. Id. 
 
 611. Ahern adopted the results of B. & Co.'s acts and 
 delarations. He received and has kept the fruits of their 
 action with G. It is a fair inference that he falls within the 
 second branch of the principal, which we have above stated, 
 by which a person ratifies the acts of one acting as his agent, 
 without authority at the time. The maxim is, omnis ratihabitio 
 
 ■ retrotrahitur et mandata priori acquiparetur. Every ratifica- 
 tion is retrospective, and is equivalent to a prior command. 
 On this ground the plaintiff Ahern is to be held estopped from 
 setting up usury in the first note. On the ground of a prior 
 authority, he is to be estopped from setting up usury in the 
 other two notes. Id. 
 
 612. Drafts did not specify any place of payment ; they 
 were drawn and discounted in Canada. Defendant pleaded 
 usury. Held, that the contract was to be governed by the laws 
 of Canada, not of this State, and as by the laws of Canada 
 usury is not a defence, the plea was not sustainable. Merchants' 
 Bank of Canada v. Griswold, 72 N. Y. Ap. 472. 
 
 613. It appears that the plaintiff's intestate, G., and the 
 defendant lent to one J., the owner of a patent right, $5,000, 
 G. contributing $1,000 and the defendant $4,000. J. gave 
 his note therefor to the defendant, payable in four months, 
 and assigned to him the patent right as collateral security ; and 
 also gave him an agreement to convey an interest in the patent 
 right for the "benefit of himself and G. It is further agreed 
 that they should be jointly interested in the loan, the collateral 
 security and the agreement to convey an interest in the patent in 
 the proportion of one to four. At the same time the defendant 
 gave the note in suit to G. as evidence of his interest in the 
 
I20 BANKERS CODE. 
 
 loan and security, with the express agreement that it should not 
 be demanded or paid until the defendant should receive pay- 
 ment of the loan to J. At maturity J. did not pay his note, 
 and with the consent of G. the patent right was sold by the 
 defendant at auction to one T. for an amount equal to the sum, 
 with interest, for which it was held as collateral security ; and, 
 at the request of G., the defendant took T.'s note for the 
 amount, with the agreement- that the defendant should hold it 
 as the joint property of himself and G., and that a compaiiy 
 should be formed to use and work the patent. This was in 
 effect carrying out and executing the agreement previously 
 made, that defendant should not be called upon to pay his note 
 till J.'s note was paid, by substituting for payment in cash an 
 interest to the same amount in the note given by T. This 
 agreement is not inconsistent with terms of the note. It was 
 made when the note was due, after the sale of the collateral 
 security, when G. had the right to enforce the payment, and 
 when the defendant could have paid it from the proceeds of 
 the sale, instead of taking the note of T. It was a mode of 
 payment agreed upon between the parties. Ward v. Winship, 
 1 2 Mass. 480. The agreement had a sufficient consideration in 
 the fact that the defendant took the note instead of cash at G.'s 
 request. A.'s, an additional agreement, was made at the same 
 time, which was part of the foregoing, as to the use the defend- 
 ant might make of the note, which he held for their joint 
 benefit. And it was agreed that if the defendant would sub- 
 scribe to the stock of the company, and pay for the same with 
 the note held for their joint benefit, the note in suit might 
 remain, and the defendant should not be called upon to pay it, 
 until the profits of so much of the stock as equitably repre- 
 sented the amount of the note should be sufficient to pay it. 
 Relying on this agreement, the defendant afterwards subscribed 
 to the s'ock, paid for the same with the note of T., instead of 
 demanding a cash payment from T., and he has never received 
 any profits whatever. G. having agreed to this method of pay- 
 ment, his administratrix cannot recover on this note, in violation 
 of his agreement. Gleason v. Saunders, 121 Mass. 436. 
 
 614. In an action on a non- negotiable promissory note 
 made by the defendant to the plaintiff for $4,000, dated the 
 7th December, 1872, it appeared that the note when made had 
 no stamps, but that afterwards, in July, 1874, the plaintiff 
 showed the note to her attorney, who informed her that it 
 should have been stamped, and told her to affix stamps for the 
 double duty. Through some misunderstanding she affixed only 
 single stamps; and afterwards, in September, 1874, she sent 
 the note to the attorney, when he, having discovered this, acting 
 as plaintiff's agent, affixed the required double stamps. Held, 
 that the plaintiff was not a "subsequent party to the note," or 
 a "holder without becoming a party," within 33 Vic, oh. 13, 
 
BANKERS CODE. 121 
 
 sec. 12, SO as to have enabled her to have affixed the double 
 duty, and rendered the note valid, although sh^ might have 
 made it valid by affixing, as agent for the maker, stamps for the 
 single day, when the note was delivered to her. Escottv. Escott, 
 22 C. P. 305. Adhered to, and Wolley v. Hunton, 33 U. C. R. 
 152, dissented from. Held, however, under 37 Vic. ch. 47, sec. 
 2, that the double stamps affixed to the note in September, 
 after the passage of the Act, by the attorney as plaintiff's agent, 
 rendered the note valid, for that the plaintiff then first acquired 
 knowledge within the Act of stamps being necessary, it being 
 found by the learned Judge that her previous omission to affix 
 them was through error and mistake, and without any intention 
 on her part to violate the law. , House v. House, 24 Upper 
 Canada Com. Pleas Rpts. 526. 
 
 615. A. and H., a firm doing business in Hamilton, had a 
 draft for $1,200, accepted by B. at Montreal for their accom- 
 dation, falling due. on the 27th of April, H., in order to 
 obtain funds Jo meet it on the 26th of April, procured a draft 
 on B. for $600, to be discounted by the plaintiffs, telling them 
 that it would be accepted, and the proceeds of it were placed to 
 the general credit of the firm. This draft was sent to B. for 
 acceptance, and H. on the same day wrote to him, inclosing the 
 firm's check for $1,200 on the Bank of Montreal, to take up 
 the $1,200 draft, and requested him to accept that for $600. 
 On the 27th B. duly paid the draft for $r,2oo. On the 2Sth A. 
 and H. had a difference, and A., hearing from H. that the firm 
 were in difficulties, and that he intended using their funds in 
 paying B. and another person, A. thereupon on the 29th drew 
 out on the check of the firm their balance in plaintiffs' bank, 
 consisting of the proceeds of the draft for $600, of which A. 
 knew nothing, and of other moneys, and handed it to their 
 solicitor for the benefit of the creditors generally. Between the 
 25th and 29th both the debtor and creditor side of the firm's 
 account had been dealt with, and the balance increased in their 
 favor. H. on the 29th, on hearing what A. had done, wrote to 
 B. that in consequence the check sent him could not be paid, 
 and B. then refused to accept the draft. On the 2d of May 
 the firm became insolvent, and an assignee was appointed, to 
 whom the solicitor handed over the moneys deposited with 
 him. The plaintiffs, however, claimed the amount of the $600 
 draft, contending tTiat it was only discounted on the faith of 
 its being accepted, and that as one of the partners had caused 
 its non-acceptance by his letter to the drawee, there was a fail- 
 ure of consideration, and that they were, therefore, entitled to 
 follow the money in the assignee's hands ; but held, that they 
 were not so entitled ; that the case was the ordinary one of the 
 discount of a draft on the belief that it would be accepted ; 
 and that the money formed part of the firm's general assets 
 and passed to the assignee. Canadian Bank of Commerce v. 
 Davidson, 25 Upper Canada Com. Pleas Rpts. 537. 
 
122 BANKERS CODE. 
 
 616. B. Bros. & Co., carrying on business at Morristown and 
 Syracuse in the State of New York, and also at Brockville in 
 Ontario, and*on the nth October, 1872, at Morristown, signed 
 a promissory note for $500 at three months, payable at a bank 
 at Syracuse to the order of C. F., a sleeping member of the 
 firm, who at that time and until after the maturity of the note 
 resided at Brockville. The note was endorsed by C. F., as also, 
 but merely for the accommodation of the firm, by one H. H. 
 and one A. B., both residents of Syracuse. The note so en- 
 dorsed was handed to J. W. B., one of the firm, who resided 
 at Brockville, and was there negotiated by him with a person 
 named Harding at a rate exceeding 7 per cent., and Harding 
 sold it to the plaintiff, who also resided in Brockville. The 
 note was left by the plaintiff with a banker at Ogdensburg, 
 N. Y., for collection, and at its maturity H. H. came over to 
 Brockville and saw tht plaintiff, who agreed to accept in re- 
 newal thereof the joint note of H. H., A. B., and the defendant 
 at six months, which was accordingly made and deposited 
 with the Ogdensburg banker, who then gave up the previous 
 note. Held, that the note of the irth October, 1872, although 
 drawn up and made payable in the State of New York, was in 
 fact made and became a binding contract on all the parties 
 thereto, on its being discounted at Brockville, and must there- 
 fore be deemed a Canada contract and governed by our laws; 
 and that therefore the law of New York, which made void any 
 note discounted at a higher rate of interest than 7 per cent., 
 or any note in substitution thereof, did not apply. The plain- 
 tiff, therefore, having sued defendant on the last named note, 
 Held, that he was entitled to recover. Cloyes v. Chapman, 27 
 Upper Canada Com. Pleas, 22. 
 
 617. When a vendor, who has executed a deed to the land, 
 assigns a note executed for the purchase money to a firm as 
 collateral security for a claim of a smaller amount, it is com- 
 petent for the surviving partner of the firm, and the adminis- 
 trator of the vendor, he having died in the mean time, to join 
 as plaintiffs in a proceeding to enforce the vendor's lien. 
 Reynolds Adm'r et al. v. West, 32 Ark. Reps. 244. 
 
 618. A. purchased a tract of land, executed his note for the 
 purchase money and received a bond for title. B., at the 
 request of A., paid the note and the vendor executed a deed to 
 A.; at the same time and as a part of the same transaction, 
 A. made his note to B. for the sum so paid and executed a 
 mortgage on the land to secure it. Held, that no new lien was 
 created, there was merely a transfer of the original lien, and a 
 change in the form of the security. Blevins v. Rogers, 32 
 Ark. R. 258. 
 
 619. The grantor of certain real estate, which was con- 
 veyed to the grantee in pursuance of a contract made with the 
 
BANKERS CODE. 
 
 123 
 
 grantor by the agent of the grantee, accepted from the agent, 
 in good faith, as genuine, a false and forged mortgage on such 
 real estate, purporting to have been executed by the grantee, 
 to se cure a promissory note of the agent for the unpaid balance 
 of the purchase money. Foreclosure of the mortgage having 
 been defeated on the ground of its forgery, though judgment 
 on such note was rendered against the agent, who was insol- 
 vent, the grantor brought an action against the grantee, to 
 enforce a lien against said real estate for such purchase-money. 
 Held, on demurrer to evidence tending to establish the fore- 
 going facts, that the plaintiff is entitled to the lien. Fouch v. 
 Wilson, 60 Ind. 64. 
 
 620. Where the purchase-money of land is made payable 
 in several instalments evidenced by promissory notes due at 
 different times, the vendor, being the holder of the notes, may 
 enforce his lien against the land when one or more of such 
 notes have become due, for the payment thereof without wait- 
 ing till all of the notes have matured. Furr v. Morgan, 55 
 Miss. 389. 
 
 SALES. 
 
 621. A pretended sale by an insolvent debtor to one of his 
 creditors, will be set aside on the petition of any other creditor. 
 Johnson v. Mayer, 30 La. 1203. 
 
 622. Where several distinct articles are bought at the same 
 time for different prices, even if of the same general descrip- 
 tion, so that a warranty of quality would apply to each, the 
 contract is not entire, but is in effect a separate contract for 
 each article sold, and a right of rescission exists as to each 
 article, if the warranty in regard to it is broken. Young 6* 
 Conant Mfg. Co. v. Waterfield, 121 Mass. 91. 
 
 623. A delivery of goods by the seller to a carrier, pursuant 
 to the directions of the buyer, is a good delivery to the latter. 
 Wilcox Silver Plate Co. v. Green, 72 N. Y., App. 17. 
 
 624. One who buys property with full knowledge that the 
 title to the same is in dispute, is not an innocent purchaser, 
 and hence he acquires no greater rights than his vendors had. 
 Joseph V. Ledoux, Adm'r v. John C. Burton, Mrs. Ledoux, 
 Intervener, 30 La. 576. 
 
 625. If an animal has at the time of sale patent defects 
 apparent upon casual inspection or any defect known to the 
 buyer, such defect would not usually be covered by a general 
 warranty. Hurton v. Plato, 3 Colo. 402. 
 
 626. Even when it is shown that the expressed considera- 
 tion of a transfer does not exist, the contract cannot on that 
 account be invalidated, if the transferee proves that there was 
 another legal, and sufficient consideration. Brown, Adm'r v. 
 Brown, 30 La. 966. 
 
124 BANKERS CODE. 
 
 627. Planter, whether before or after his crop is planted, 
 obtains from a banker an advance of money with which to 
 make it, contracting by parol to deliver at warehouse part of 
 cotton crop of equal value, no price or definite quantity being 
 specified, and dies before any cotton is delivered, sale is in- 
 complete and his title to whole crop remains undiverted. 
 Lewis V. Laftey, et al. Adm'rs, 60 Ga. 559. 
 
 628. Note for fertilizers contained stipulation that unless 
 written notice was given on July ist, failure of consideration 
 should not be pleaded ; plaintiff setting up such failure, without 
 alleging written notice stipulated for, properly stricken. Pritch- 
 ariiw. Johnson &" Calhoun, bo Ga. 288. 
 
 629. Upon an agreement for the sale of goods, and payment 
 therefor with a satisfactory promissory note, the buyer selected 
 the merchandise, had it weighed, marked with his initials, and 
 placed by itself in the store of the vendor, to be removed 
 upon payment for it, or giving an acceptable note for the 
 amount. The buyer did not comply with these terms, and the 
 vendor refused to allow the buyer to take the goods away until 
 he was paid. Several months thereafter the goods were de- 
 stroyed by fire. Held, that there was no such delivery of the 
 goods as to constitute the vendor a bailee for the purchaser. 
 Safford V. McDonough, 120 Mass. 
 
 630. If the vendee in a contract of sale refuses to receive the 
 article sold, the vendor may sell it at private sale ; and on prov- 
 ing that he thus sold it at its full market price, he may recover 
 from the vendee the difference between that price and the price 
 stipulated in the contract of sale. Succession of Dougart, 30 
 La. 264. 
 
 631. A. executed to B. a deed of his property in trust 
 (amongst other things), to convert the same into money. B., 
 under the assumed authority of this deed, mortgaged the pro- 
 perty. Held, that the mortgage was not authorized by the trust 
 for sale, and was only valid to the extent of B.'s beneficial inter- 
 est (if any) in the premises. The Edinburgh Life Lns. Co. v. 
 Allen, 18 Grant's Chancery, Ontario, 425. 
 
 632. A defendant cannot resist payment of a demand for 
 the price of goods sold and delivered to him, on the ground 
 that the sale was in fraud of the creditors of the seller. Under 
 our S|tatute of frauds, only pre-existing creditors have the right 
 to object to a sale for that reason. As to them, such sale is 
 voidable at their election, but, as to all others, is valid and obli- 
 gatory. Gary, Hudson 6^ Co. v. Jacobson, 55 Miss. 204. 
 
 633. A warehouseman sold 3,500 bushels of wheat, part of 
 a larger quantity which he had in store, and gave the purchaser 
 a warehouseman's receipt under the statute, acknowledging that 
 he had received from him that quantity of wheat, to be delivered 
 pursuant to his order, to be endorsed on the receipt. The 
 
BANKERS CODE. I 25 
 
 3,500 bushels were never separated from the cither wheat of the 
 seller. Held, by the Court of Appeal (Spragge, C. and Morrison 
 and Gwynne J. J. dissenting), that the purchaser had an insura- 
 ble interest. £ox\. The Provincial Ins. Co. 18 Grant, Ontario, 
 Chancy. 280. 
 
 634. Stipulation that fertilizer is sold under the inspection 
 and analysis of Dr. Means, Inspector at Savannah, and the De- 
 partment of Agriculture at Atlanta, does not preclude the 
 maker from setting up warranty of quality, and urging failure 
 of consideration, etc. Austin 6^ Ellis, Agents, v. Cox et al., 60 
 Ga. 520. 
 
 635. Goods were consigned to A. for sale, who made ad- 
 vances upon them to the consignor, and afterwards sold them 
 to B. under a warranty that they were of a certain quality. The 
 goods did not correspond with the warranty, and B. gave notice 
 thereof to the consignor, and, with his consent, rescinded the 
 sale, but gave no notice to A. Held, that A. could not maintain 
 an action against B. for the price of the goods. Robinson v. 
 Talbot, 121 Mass. 513. 
 
 636. Except in a case when there is an express agreement 
 in derogation of the general rule, the sale of goods, produce, or 
 merchandise by weight, tale, or measure, is not perfect, and the 
 goods are not at the risk of the buyer, until they have been 
 weighed, counted, or measured. [The purchaser of goods who 
 has paid their price, knowing them to be damaged when he paid 
 for them, is not thereby estopped from suing for a diminution 
 of price, and damages, when it appears that there was an under- 
 standing between him and the seller, at the moment of payment, 
 that his right of reclamation were reserved. A vendor who is 
 ignorant of the vices of the things sold, is liable only for the 
 difference, at the time and place of sale, iDetween the actual value 
 of the thing sold and what it would have been worth if sound, 
 and the expenses connected with the sale. William S. Peterkin 
 v. George Martin, 30 La. 894. • 
 
 637. The Court has no authority, on the application of the 
 Sheriff, made after the return-day of the execution, to set aside 
 a sale of personal property regulkriy and fairly made. A sale is 
 a contract to pass rights of property for money, which the buy- 
 ers pay, or promise to pay, to the seller for the thing bought and 
 sold ; and if the Sheriff gives possession of the property sold, 
 before obtaining the full payment therefor, and the bid was 
 settled by the purchaser in good faith, which is not denied, the 
 right of property passes. When the Sheriff, on his own author- 
 ity, distributes money levied under several executions before the 
 return-day of the writ, he does it at his own risk. His misappli- 
 cation of the proceeds cannot destroy the validity of a sale 
 otherwise good. Mackaness v. Long, 85 Penn. St. 158. 
 
 638. By the terms of a sale of goods the buyer was to send 
 
126 bankers' code. 
 
 for the goods and take them away. This case was before the 
 Court at a previous stage, 1 1 8 Mass. 143. The only additional fact 
 proved at the second trial was, that after the defendant was 
 told that the skins were lying in the doorway, they were pointed 
 out to him, and he passed out of the door where they were 
 lying, and said he would send for them. That there was suffi- 
 cient evidence of delivery has been conceded throughout this 
 controversy ; the question being whether, on the facts reported, 
 there was evidence of acceptance within the statute of frauds. 
 It is enough to say that the additional fact does not neces- 
 sarily show an acceptance, and the presiding judge could not 
 properly have ruled as requested by the plaintiff ; and, having 
 found for the defendant, he must necessarily have found that 
 there was " not such an equivocal act of acceptance as would 
 take the case out of the statute." As it was part of the con- 
 tract that the defendant should send for the skins, the fact that 
 he said he would do so, when he left the store, does not add to 
 the effect of the evidence. Knight y. Mann, 120 Mass. 219. 
 
 SET-OFF. 
 
 639. A cause of action founded upon an implied contract 
 may be the subject of a set-off. Fanson v. Linsley, 20 Kans. 235 _ 
 
 640. A plea of set-off setting up a promise good in parol, 
 by the common law, need not show a compliance with the re- 
 quisites of the statute of frauds. The statute prescribes a rule 
 of evidence, and not a rule of pleading. Lehow v. Simonton et 
 af., 3 Colo. 346. 
 
 641. A surviving partner, in an action against himself to re- 
 cover a debt which he individually incurred, can set-off a claim 
 of the firm against the plaintiff. The set-off must have been a 
 subsisting right in the defendant at the time the action was com- 
 menced. Johnson v. Kaiser, 40 N. J. 286. 
 
 642. Any set-off to a proihissory note which would have 
 been good between the original parties, may be pleaded against 
 an endorsee who acquires it after maturity. He takes it subject 
 to any right of set-off which the maker had against any prior 
 holder. Davis v. Neligh, 7 Neb. 78. 
 
 643. Set-off to the maker of a promissory note, who was 
 principal, arising after maturity of the note, does not discharge 
 the other maker who was surety. Strong v. Foster, LXXXIV. 
 201 ; 17 C. B. 201 (Eng. Com. Law). 
 
 644. When a promissory note, pleaded as a set-off, shows 
 on its face that it was given for a consideration different from 
 the plaintiff's claim, it carries with it no presumption of a set- 
 tlement of such claim. Ross v. Boswell, 60 Ind. 235. 
 
 645. A claim arising from a bonus paid on a usurious loan, is 
 
BANKERS CODE. I27 
 
 the subject of a set-off, and will be barred, if not presented as a 
 set-off, in a suit that offers an opportunity. Dey v. Jackson, 39 
 N. J. Law, 535. 
 
 646. In an action arising upon contract, any other cause 
 of action arising also upon contract, and existing at the 
 time of the commencement of the action, is a good counter- 
 claim. Foulks V. Rhodes, 12 Nevada, 225. 
 
 647. A note given by A. to B., and not yet due, cannot, in 
 equity, be set off against a note given by B. to A., upon which 
 A. has brought an action for the benefit of C, to whom he 
 assigned it, although C. knew at the time of the assignment that 
 A. was insolvent, and A. was subsequently declared a bankrupt. 
 Spaulding v. Backus, 122 Mass. 553. 
 
 648. A third party, for whose benefit a simple contract has 
 been entered into for a valuable consideration, moving from the 
 promisee, and upon which the third party might maintain an 
 action against the promisor, such third party may, when sued 
 in assumpsit by the promisor, plead by way of set-off the dam- 
 ages arising from the non-performance of the contract made for 
 his benefit, and if he omits to aver in his plea to whom the 
 promise was made, it will be taken to have been made to the 
 party from whom the consideration proceeded. Lehow v. Si- 
 monton et al., 3 Colo. 346. 
 
 649. In the exercise of its equitable jurisdiction this court 
 has power to order one judgment to be set off against another, 
 where the judgment prayed to be set off may be enforced 
 against the person recovering the judgment to be satisfied by 
 the se!t-off. The doctrine is a purely equitable one, and will 
 be administered in all cases upon such equitable terms as will 
 promote' substantial justice. Brown ads. Hendrickson, 39 N. J. 
 Law 239. 
 
 650. A counter-claim set up by the defendants in an action 
 can only be maintained when it exists in favor of all the de- 
 fendants against the plaintiffs, and each and every one of them. 
 Where a note is on its face joint or joint and several, it is 
 conceived that evidence to show that one maker is surety for 
 the other is inadmissible at law if the question arises between 
 the creditor and the surety; but evidence to that effect has been 
 received where the question arises between the principal debtor 
 and the sureties. As between the makers of a promissory note 
 and the holders, all are alike liable, all are principals; but as 
 between themselves, their rights depend upon other questions. 
 Great West. Ins. Co. v. Pierce, i Wyoming S. Ct. Rps. 45. 
 
 651. W. purchased of A. a claim against B., pending an ac- 
 tion by A. upon the claim. B. had previously purchased a 
 claim against A., and had given notice thereof to A. Suit was 
 brought thereon by B. in the name of the assignor, in which 
 W. appeared as adverse claimant of funds in the hands of B, 
 
128 bankers' code. 
 
 summoned as trustee. At the time of his purchase of the first 
 claim W. had no knowledge of the claim against A. against 
 judgment for the plaintiff in the first action. B. purchased 
 this claim after action had been brought by A. against him, so 
 that it could not have been used in set-off in that action, the 
 Statute only permitting demands not negotiable to be so used 
 when a party has become the equitable owner thereof and 
 given notice to the plaintiff before the commencement of his 
 action. Gen. St. c. 130, §S- At the time W. made his pur- 
 chase he had no knowledge that there was any such claim 
 against A. as that of F. and another. Ames v. Bates, 119 
 Mass. 397. 
 
 652. In an action against the maker, on a promissory note 
 made payable to bearer, the defendant answered, alleging that 
 he had executed the note in suit to A., in consideration of the 
 assignment to him, by A., of several promissory notes executed 
 to the latter by B. for the purchase-money of certain real 
 estate conveyed by A. to B. by warranty deed; and that B. had 
 been evicted from the possession of part of such land by a 
 purchaser of the same at a sale thereof on decree, to satisfy a 
 mortgage thereon existing at the time of such conveyance; that 
 which eviction was a breach of A.'s warranty, and by reason 
 thereof B. had defeated the collection of a portion of such 
 notes for purchase-money, held by the defendant, prior to any 
 notice to him that the note in suit had been transferred by A. 
 to the plaintiff. Held, that an instruction to the jury, stating 
 to them that the consideration of the note in suit was different 
 from that alleged, and testified to, by the defendant is erroneous. 
 JfeU, also, that the allegation of an eviction may be established 
 by showing that the grantee was either turned out of possession 
 by, or was placed in such a situation that to avoid expulsion, 
 he yielded up possession to, or purchased of, a stranger haying 
 a paramount title. Held, also, that if the defendant had re- 
 ceived from B., on such notes for purchase-money, an amount 
 equal to the sum paid therefor by him to A. with interest 
 thereon, the plaintiff should recover; but that, there being no 
 evidence on the point, an ambiguous instruction in relation 
 thereto was erroneous. Black \. Duncan, 60 Ind. 522. 
 
 STATUTE OF LIMITATIONS. 
 
 653- The parties to a contract may provide by express 
 stipulation for a shorter limitation to actions thereon than that 
 fixed by the general law. Wilkinson v. Nat. F. Ins. Co. 72 
 N. Y. App. 499. 
 
 654- Letters written by a partner recognizing the existence 
 of a judgment against the firm, after it is barredby the statute 
 of limitations, will not revive the judgment against him, when 
 he was not originally liable by reason of the dissolution of the 
 
BANKERS CODE. I 29 
 
 firm before the judgment was rendered. Harford, Thayer 6" 
 Co. V. Street, 46 Iowa, 594. 
 
 655' Where the party against whom a cause of action ex- 
 ists, by fraud or actual fraudulent concealment prevents the 
 party in whose favor it exists from obtaining knowledge of it, 
 the Statute only commences to run from the time the right of 
 action is discovered, or might by the use of diligence have 
 been discovered. Findley et al., v. Stewart et al., 46 Iowa, 655. 
 
 656. Fraud which must have been discovered if reasonable 
 diligence had been exercised, not a good reply to the statute of 
 limitation. Sutton v. Dye, 60 Ga. 449. 
 
 657. A motion to set aside a judgment is barred after the 
 lapse of seven years from its redition. Cauthorn v. Harkness, 
 60 Ga. 299. 
 
 658. The following writing, addressed to the plaintiffs and 
 signed by the defendant, was offered as evidence of an acknow- 
 ledgment of the debt sued on, to take the case out of the oper- 
 ation of the statute of limitations: "It will suit my con- 
 venience to execute my note for the balance due for rent, 
 payable January ist, 1877." The court rejected it. Held, 
 that the court below properly rejected the writing, as it is too 
 vague and indefinite to prove such acknowledgment. Trustees, 
 etc. V. Gilmer, 55 Miss. 148. 
 
 659. If, at the time when a right of action accrues, there is 
 no one in. being to assert it, the statute of limitations will not 
 commence to run until there is some one who has power to 
 sue. Metcalfy. Grover, 55 Miss. 145. 
 
 660. Where a demand is necessary to found an action upon, 
 the demand is barred unless made within the period of the 
 statute of limitations, and the right of action is extinguished 
 by the delay. Palmer v. Palmer, 36 Mich. 487. 
 
 661. Upon all demand paper not excepted by Statute 
 Comp. L. 1871, (§§ 7151), from the provisions of the statute of 
 limitations, the time runs from the beginning, without any 
 special demand^ and no one can become a bona fide purchaser 
 who does not take it within some reasonably short period; to 
 hold otherwise would enable banks to issue certificates of de- 
 posit, of any denomination, for circulation as ordinary bank 
 bills, and with like effect. Tripp v. Curtenius, 36 Mich. 494. 
 
 662. It is questioned whether an administrator of the es- 
 tate of a deceased person can by any acfcnowledgment, in 
 writing or otherwise, suspend the running of the statute of 
 limitations against the debt of his intestate. Nor can an ad- 
 ministrator, by making payments on a demand of over $50, 
 suspend the running of the statute of limitations against such 
 demand. Clawson v. McCune's Adm'r, 20 Kansas, 337. 
 
 663. An indorsement, in the handwriting of the debtor, but 
 
130 BANKERS CODE. 
 
 not signed by him, of a payment of part of a promissory note, 
 will not prevent the operation of the statute of limitations, if 
 no money or valuable consideration actually passes between the 
 parties, even if the parties, at the time of the indorsement, 
 orally agree that it shall be deemed to be a payment. Blan- 
 chardy. Blanchard, 122 Mass. 558. 
 
 664. The failure of an administrator to sue on, or coUecl':, 
 a note due his intestate until it has become barred by tht^ 
 statute of limitations, does not affect the infant distributees of 
 the estate, but they may bring suit on such note, within the 
 time limited by the Statute after they become of legal age. 
 Pittman v. McClellan, 55 Miss. 299. 
 
 665. Action for recovery of one-half of money expended 
 in purchasing material to build house in joint occupancy of two 
 persons, should be brought as soon as money is expended, and 
 if not brought within four years thereafter, is barred. Guill v. 
 Guill, 60 Ga. 446. 
 
 666. A Statute of Limitations of the loci contractus cannot 
 be pleaded in bar in a foreign jurisdiction, where both parties 
 were resident in the loci contractus during the whole statutory 
 time, so as to make the bar complete there, unless such statute 
 go to the extinction of the right itself, and not to the remedy 
 only. The rule of the common law is that the limitation of 
 actions depends on the law of the forum, and not on the law of 
 the State or county where the contract was made. A statutory 
 bar of one State cannot be pleaded in another, where the bar 
 only affects the remedy of the contract sued on. If the right 
 of action on a contract has been extinguished by a statute of 
 limitations in another State, where the parties reside, the courts 
 of this State will give effect to that statute in any suit brought 
 in this State on such contract. Perkins v. Guy, 55 Miss. 153. 
 
 667. Mistake of fact induced by attorney of opposite party, 
 in matter easy of verification, no ground to vacate agreement 
 based thereon, on bill filed eight years thereafter. De Gere v. 
 Healy is" Berry, 60 Ga. 391. 
 
 667I. Bank bills that ceased to circulate as currency prior to 
 June ist, 1865, came under the limitation act of 1869. That the 
 bank surrendered its charter in 1877, and its assets were then 
 put by a court of equity in the hands of a receiver, did not 
 disengage Ihe bills from the operation of said act. In distrib- 
 uting the assets between creditors and stockholders, the stock- 
 holders can insist on excluding the creditors as to all the 
 demands against the corporation which were barred by the 
 Statute of Limitations prior to the surrender of the charter. 
 Johnston et al. v. Talley et al., 60 Ga. 540. 
 
 668. Generally limitation laws act only upon remedies, and 
 do not extinguish rights. A surety, therefore, is not absolutely 
 discharged because a suit against him would if brought be 
 
BANKERS CODE. I3I 
 
 barred in the courts of this State by section 2917 of the Code. 
 Were he to subject himself to action in a jurisdiction, and be 
 there sued, the limitation laws of the Code would not avail him, 
 though they had fully run in his favor during his previous resi- 
 dence here. Where principal and surety are both residents of 
 Georgia at the execution of the contract, and the principal 
 afterwards removes to another State, the Statute of Limitations 
 is suspended as to him until his return. (Code, § 2929.) If, 
 before the remedy was barred as to the principal, but after it 
 was barred as to the surety, the latter made a new promise in 
 writing at the instance of the creditor, the new promise is bind- 
 ing, though he made it in ignorance of the true limitation law, 
 believing the remedy not barred as to himself, and though the 
 creditor, in like ignorance and under the same belief, told him 
 it was not barred, and thus influenced his action, there being no 
 fraud or abuse of confidence. Langston, Adm'r, v. Aderhold, 
 60 Ga. 376. 
 
 SECURITY, SURETY AND SURETIES. 
 
 669. A surety's right of action against a co-surety does not 
 accrue until he has paid in excess of his proportionate share of 
 liability. Magruder v. Admire et al., 4 Mo. Court of Appeals 
 (St. Louis), 133. 
 
 670. In an action for contribution by a surety against one 
 of several co-sureties, the measure of defendant's liability is con- 
 trolled by the number of his co-sureties who remain solv- 
 ent. /;/. 
 
 671. Contribution, security on official bond who aids prin- 
 cipal in breach, not entitled to from co-security. Scofield v. 
 Gaskill et al., 60 Ga. 277 ; also, Healey, Berry (s' Co. v. Scofield, 
 60 Ga. 450. 
 
 672. In an action upon an undertaking, the law will not 
 increase or enlarge the terms of the undertaking to the preju- 
 dice of its signers, nor create a liability against the sureties 
 which they did not intend to incur, and which is not within the 
 express conditions of the bond. Hays v. Closon, 20 Kansas, 120. 
 
 673. Judgment on replevy bond in attachment, motion to 
 set aside by principal, because of fatal defect on face of affi- 
 davit, overruled, not bar to similar motion by surety. JVcal v.. 
 Gordon, 60 Ga. 112. 
 
 674. A surety for a tenant is not released as to rents subse- 
 quently accruing, because of a release, or an extension of 
 the time of payment of rent due. Coe v. Cassidy, 72 N. Y. 
 App. 134- 
 
 675. The promise of a surety assuring the payment of the 
 price of a specific lot of goods to be sold to the principal 
 
132 BANKERS CODE, 
 
 debtor, is not a continuing guarantee, and hence does not cover 
 other goods subsequently sold to the principal. Bloom &• Co. 
 V. Kern, 30 La. 1263. 
 
 676. A valid agreement to give time on a promissory note 
 to the principal, will discharge the surety. Thompson v. Bowne, 
 39 N. J. Law, 2. 
 
 677. Discharge of the principal discharges the known surety. 
 Paddlefordv. Thacher, 48 Vt. 574. 
 
 678. A Surety or creditor has a right to have any collat- 
 erals the debtor may have pledged to either for the payment of 
 their debt, at any point in the transaction, applied to the pay- 
 ment of the debt. Price v. Tusdell, 28 N. j. Eq. 200. 
 
 679. Under the law of this State the distharge in bank- 
 ruptcy of the principal on an appeal bond, will not release the 
 surety on that bond from any obligation he incurred by signing 
 the bond. The surety who pays the debt of his principal is 
 subrogated, by mere operation of law, to all the rights of the 
 creditors. No act of subrogation by the creditor in his favor 
 is required. Serra e Hijo v. Hoffman &' Co., 30 La. 67. 
 
 680. The general rule, that a contract void as to principal, 
 is void also as to surety, does not apply where a person, sul 
 juris, guarantees the obligation of, or becomes surety for, a 
 married woman, minor or other person incapable of contract- 
 ing. Hicks V. Randolph et al., 59 Tenn. 352 (3 Baxter). 
 
 681. A surety upon a judgment by confession has the right 
 to expect that the judgment will be entered of record within 
 a reasonable time ; and he is released from liability by an agree- 
 ment between the judgment creditor and his principal that the 
 judgment shall not be recorded, in pursuance of which it is 
 not entered of record until after the lapse of an unreasonable 
 time. Hancock \. Wilson, 46 Iowa, 352. 
 
 682. Sureties in a bond given to secure performance by their 
 principal of future mercantile engagements, and in which no 
 period of limitation of liability is fixed, who have, notified the 
 obligees that they will no longer be bound for future transac- 
 tions, are held discharged from liability for transactions there- 
 after entered upon, where no change in circumstances by the 
 obligees has occurred on the faith of a longer continuance of 
 the suretyship, and they are not prejudiced by such withdrawal. 
 Jeudevine v. JRose, 36 Mich. 54. 
 
 683. In a suit by a bank against a late cashier and the sure- 
 ties on his official bond, upon the death of the cashier insolvent, 
 the cause will proceed against the sureties, though no adminis- 
 trator of the cashier may have been appointed and made a 
 party defendant. Farmers' and Mechanics Bank v. Polk et al., 
 I Del. Chancery, 167. 
 
 684. Proof of debt in bankrupt court by judgment creditor 
 discharges lien, and endorser is discharged to extent of injury 
 
BANKERS CODE. 1 33 
 
 thereby received. Evidence of older liens sufficient to exhaust 
 all of principal's property, admissible to show that no injury 
 was thereby done to endorser, and if such be the fact, he is 
 not discharged. Surety assenting to application of proceeds of 
 property of principal to junior liens, receiving part himself, not 
 discharged. Nor is endorser discharged, who was also counsel 
 for principal in obstructing collection of debts, by acts which 
 grew out of litigation conducted by such counsel. Jones v. 
 Hawkins, 60 Ga. 52. 
 
 685. In an action by the payee against the estate of a de- 
 ceased co-surety on a promissory note, the administrator set up 
 as a defence that his decedent's co-surety, within the time nec- 
 essary for service of process, after the maturity of such note, 
 had executed an assignment for the "benefit of his creditors, 
 providing therein that the assignee should complete his trust 
 within three years, to which assignment the plaintiff had as- 
 sented. Held, that such assent and assignment would have 
 been no bar to an action on such note, against such insolvent 
 surety, within three years. Held also, that such assent was not 
 necessary to the validity of such assignment. Held also, that 
 such assent not having injured the decedent, did not release his 
 estate. Paul\. Logatisport Nat. Bank, 60 Ind. 199. 
 
 686. A surety has the right to stand upon the very terms 
 of his contract ; and if such contract be altered or varied in 
 any material point without his consent, so as to constitute a new 
 agreement varying substantially from the original, he is no longer 
 bound. Any subsequent addition to or deviation from the con- 
 tract, is such an alteration as will discharge the surety. But if 
 by the terms of the original contract, additions to, or alterations 
 in the work is provided for, or left to the judgment and discre- 
 tion of the other contracting party, either without limit or 
 within certain, limits, then the variation, if within the limits 
 prescribed, is allowed by the contract itself, and the surety can- 
 not complain of a variation which he has agreed to by the 
 original contract. Wehr v. German Lutheran and Ev. Congrega- 
 tion of Baltimore, 47 Md. 177. 
 
 687. When a judgment is rendered against principal and 
 surety, in which the relations of principal and surety are properly 
 certified, the surety cannot thereafter obtain an injunction 
 to stay the levy of an execution upon his property, on the 
 ground that prior to the judgment the creditor agreed with 
 the principal, in consideration of the latter's withdrawing his 
 answer, that he would not attempt to collect the judgment from 
 the principal until he had exhausted the surety's property, nor 
 on the ground that the creditor had delayed issuing execution 
 on the judgment until the principal, who had personal property 
 sufficient to satisfy the judgment, had become insolvent. Fox 
 V. Hudson, 20 Kansas, 246. 
 
134 bankers' code. 
 
 688. When negotiable notes, payable to bearer, are deposited 
 as collateral security for a debt, the creditor is not a mere mort- 
 gagee, or lien holder, who, in case of the death of his debtor, 
 must prove up such debt in the Probate Court. He may, after 
 his debt is due, collect and apply the proceeds to his debt.^ If 
 such notes are uncollectable, and the creditor be driven to treat 
 them as mere personal property pledged to secure the debt, and 
 to invoke the aid of the courts to realize upon the security, then 
 the matter might come within the reach of the Probate laws, 
 and the creditor be compelled to prove his claim, and the secu- 
 rities be administered under the Probate laws. An answer re- 
 sisting a suit for the possession of negotiable notes in possession 
 of defendant, on the ground that they are held as collateral se- 
 curity, should show the amount of the debt secured by them. 
 Huyler v. Dahoney, 48 Texas, 234. 
 
 689. A person indebted by bond, paid a balance due upon 
 it in notes of an insolvent bank, which was not known, at the 
 time, to have stopped payment, held, not to be a discharge in 
 equity of the debt, but that the creditor might recover the bal- 
 ance due before such payment. Jefferson et al. v. Holland, i 
 Del. Chancery, 116. 
 
 690. If the maker of a promissory note, as collateral security 
 for its payment, assigns personal property to the payee, and, as 
 additional security, third persons sign the note as sureties, the 
 liability of the sureties becomes fixed at the time the collateral 
 security is exhausted. Dussolv. Bruguiere, 50 Cal. 456. 
 
 691. The liability of sureties on a promissory note is not 
 discharged by the Statute of Limitations until four years after 
 their lialDility becomes fixed. Id. 
 
 692. When several persons are sureties, and all but one pay 
 the whole sum for which all became liable, those who pay may 
 maintain a joint action for contribution against the one who 
 failed to pay his proportion, provided they jointly paid the 
 money. Id. 
 
 693. If one of several sureties dies, his executor may be 
 joined with a part of the sureties in an action against another 
 for a contribution. Id. 
 
 694. If one of two sureties dies, and his executor pays all 
 the money for which both became liable, without having the 
 claim allowed in the Probate Court, he, as executor, can recover 
 the demand for a contribution from the other surety. Id. 
 
 695. A settlement in the Probate Court, by the principal, is 
 binding upon the surety, not because he is a party to the suit, 
 but because it is an act his principal is, by law, required to per- 
 form, and is within the condition of the bond. Neither the 
 settlement nor decree determines the fact of suretyship ; or, if 
 it once existed, that it continued. Gravetl v. Malone, 54 Ala. 19. 
 
BANKERS CODE. I35 
 
 696. In an action on a promissory note, payable in bank, 
 against a principal and surely, wherein judgment by default 
 had been rendered against the principal, the surety thereafter 
 answered, alleging that, though requested by the surety to levy 
 on certain personal property belonging to the principal, the 
 plaintiff had caused the Sheriff to hold the execution without 
 levy, and that the principal had thereafter died insolvent. Held, 
 on demurrer, that, even if such answer could be made sufficient, 
 it is insufficient for want of an averment that such property was 
 subject to execution, and of a value sufficient to satisfy the 
 same ; it being an answer to but part, though pleaded to the 
 whole, of the complaint. Scott v. Shirk, 60 Ind. 160. 
 
 697. Upon principles of equity, a surety, as between him- 
 self and his principal, stands upon a different footing, in some 
 respects, from an ordinary creditor. He is entitled to full in- 
 demnity against the consequences of the default of the 
 principal, and is, therefore, entitled to call upon him for reim- 
 bursement not only of what he may have been obliged to pay 
 in discharge of the obligation for which he was surety; but 
 also of all reasonable expenses legitimately incurred in conse- 
 quence of such default, or for his own protection. These do 
 not include expenses incurred in defending himself against the 
 just claim of the creditor, nor remote and consequential 
 damages sustained by the surety, such as sacrifices of property 
 for the purpose of meeting his liability, loss of time, injury to 
 business, expenses incurred in seeking to avoid payment, etc. 
 The cases hold that, on the debt becoming due, the surety 
 may go into equity to compel the principal to pay, and the 
 creditor to receive payment ; and that he may also, in equity, 
 compel the creditor to proceed against the principal debtor 
 for the collection of his demand, upon giving security and 
 indemnifying the creditor against delay and expenses. Thomp- 
 son V. Taylor, 72 N. Y. App. 32. 
 
 698. Facts, and not mere conclusions of law, must be 
 stated in pleadings. Thus, in an action against a surety upon 
 a promissory note, where forbearance to the maker is sought 
 to be interposed; it is not sufficient to cover merely that " for 
 good and sufficient consideration " further time was given. 
 The consideration must be stated. 
 
 699. The discharge of a surety upon a promissory note, 
 on the ground of forbearance, may, in an action against the 
 surety, be given in evidence under the general issue. Winne 
 etal. V. Col. Sp'g Co., 3 Colo. 155. 
 
 700. To exonerate a surety from liability upon the ground 
 of forbearance, the extension must be for a time and upon a 
 consideration binding upon the creditor. Id. 
 
 701. Limitation laws act upon and do not extinguish 
 rights. Hence, surety is not absolutely discharged because 
 
136 bankers' code. 
 
 suit against him would be barred in Courts of this State by 
 sec. 2917 of Code. Foreign jurisdiction, if sued there, limita- 
 tion laws of this State would not avail him. New promises by 
 surety, after bar as to him, but before bar as to principal, 
 though made in ignorance of true limitation law, believing the 
 remedy not barred as to himself, binding in absence of fraud 
 and abuse of confidence on part of creditor. Langston Adm'rs 
 V. Aderhold, 60 Ga. 376. 
 
 702. N. became surety upon a note of L., and the latter 
 executed a mortgage to secure him against' loss by reason of 
 his becoming surety ; judgment having been obtained upon the 
 note against both L. and N., and the other property of L. being 
 found insufficient to satisfy the judgment, N. directed the 
 Sheriff to levy upon the property covered by his mortgage, 
 which was accordingly sold to satisfy the judgment. Held, 
 that the sale was valid and absolute and that N. could not en- 
 force his mortgage against the property. Exline v. Lowery, et 
 al.. 46 Iowa, 556. 
 
 703. Collateral Security. Certain sale notes were deposited 
 with defendants as collateral security for the payment of a 
 note, endorsed by the plaintiff for the accommodation of one 
 M., and discounted by defendants for M. The collaterals were 
 of the same value as the principal note, and were to be paid 
 into the bank and applied on the note, so that when they were 
 paid, the note also was to be paid and the plaintiff's liability 
 to cease. After the principal note became due, defendants 
 denied that they held the sale notes as collaterals and refused 
 to give the plaintiff any information as to what had been paid 
 on them; and the plaintiff then paid the note in full, and 
 demanded an assignment of the collaterals, the plaintiff's pay- 
 ment being made by a part payment in cash and his note for 
 the balance which he paid at maturity. Held, that the plaintiff 
 could not maintain trover against defendants for the collaterals; 
 for although, under 26 Vic. Ch. 45, Sec. 2, he was entitled to 
 the imtnediate possession of them, he had not until assignment 
 any property in them vested in him. Semble, that the plain- 
 tiff's remedy would be by a special action on the case against 
 defendants for not assigning the notes to him after demand 
 duly made. Held, however, that plaintiff was entitled to re- 
 cover as money had and received to his use, the amount paid 
 to defendants on the collaterals, and that the fact of his only 
 paying part of the principal note in cash and giving his note 
 for the balance did not take away his right. Semble, also, that 
 his right would not be affected even if the payment on the 
 collaterals were after his payment. Cornish v. Niagara Dis- 
 trict Bank, 24 Upper Canada Com. Pleas Rpts. 262. 
 
BANKERS CODE. I37 
 
 TENDER. 
 
 704. When the vendee of an animal, after discovering its 
 unsoundness, tenders it back to the vendor, who declines to 
 accept it, the vendee may recover the expenses of keeping over 
 such reasonable time as will be necessary to make a fair sale. 
 Huston V. Plato, 3 Colo. 402. 
 
 705. In Older to constitute a legal tender, the money must 
 either be produced and shown to the creditor, or its produc- 
 tion expressly or impliedly dispensed with. Where, therefore, 
 to prove a tender of a quarter's rent, for which the defendant 
 had distrained, the evidence showed that the tenant, after re- 
 fusing to pay some charges and costs which the landlord 
 claimed in addition to the rent, said to the landlord " Here is 
 the rent," which he had, and told the landlord he had, in his 
 right hand, in a desk — but did not produce it or show it to the 
 landlord, who said nothing and left the premises: Held, that 
 there was no evidence of a tender, or of a dispensation with 
 a tender. Per Gwynne J. — To divert a landlord of his right 
 to distrain, a strict legal tender must be shown. Matherson v. 
 Kelly, 24 Up. Canada Com. Pleas Rpts. 598. 
 
 706. The payee of an ordinary promissory note, which was 
 not payable at bank, placed the same in a sealed envelope, with 
 other papers, and deposited the same in 'a bank as a "special 
 deposit." By inadvertence the officers of the bank took the 
 note out of the package, and notified the maker of the time of 
 its maturity, not, however, claiming ownership; whereupon the 
 maker, at its maturity, tendered to the cashier the amount due, 
 which he declined to receive, stating that he was instructed 
 not to receive it, whereupon the maker afterward paid the 
 same to the holder, declining to pay the interest after maturity. 
 Held, in an action on the note, for such interest, that such ten- 
 der was invalid, and that the maker was liable for the interest. 
 Held, also, that a court of equity can not supply a defect in a 
 tender, and that it is the duty of the debtor to seek the creditor, 
 and pay the debt, at its maturity. King v. Finch, 60 Ind. 420. 
 
 TRUSTS. 
 
 707. Where a trustee is authorized to invest in either of 
 two specified modes, and by mistake invests in neither, the 
 measure of his ability is the loss arising from his not having 
 invested in the Icfs beneficial of the authorized modes. Patter- 
 son V. Lailey, 18 Grants Chancery, Ontario, 13. 
 
 708. The purchaser of property at trustee's sale, takes it 
 subject to incumbrances, and is not entitled to any abatement 
 in the price by reason of such incumbrances. Pickett et al. v. 
 Merchants' Nat. Bank of Memphis, et al., 32 Ark. 346. 
 
138 bankers' code. 
 
 709. A purchaser by quit-claim deed before tlie maturity of 
 the purchase-money notes, or of any of them, will be consid- 
 ered as holding insubordination to the superior title, dependent 
 upon the payment of the purchase-money, and not adversely 
 to it. While that relation existed between the party in pos- 
 session and the holder of the purchase-money notes, limitation 
 would not run in favor of such possession. A sale by the 
 holder of such superior title (the original vendor) to another, 
 would be a repudiation of such relation, and from which limi- 
 tation would run. Until such repudiation by one of the par- 
 ties, and made known to the others, limitation would not run 
 against the notes, or by three, five or ten years possession of 
 the land, so as to defeat the right of the original vendor to re- 
 cover the land under his superior title. Roosevelt et al. v. Davis, 
 49 Texas, 463. 
 
 710. It is the duty of a trustee for sale to use all diligence 
 to obtain the best price ; and where a trustee sold property at 
 private sale, without previous advertisement, at a price lower 
 than other persons were willing to give, and did not first com- 
 municate with these persons, though informed of offers of the 
 higher price made by them to one of the cesiuis que trust ; the 
 trustee was held responsible for the loss. In such a case the 
 absence of any fraudulent motive in the trustee is no defence, 
 nor is evidence of witnesses that the property was worth no 
 more than the trustee obtained for it. The trustee deposed 
 that he had disbelieved the statement of cestuis que trust. Held, 
 no excuse for not testing the truth of the statement by reference 
 to the parties. Graham v. Yeomans, 18 Grant's Chancery, On- 
 tario, 238. 
 
 711. A trust fund is traceable into whatever character of 
 property it may be converted, and is still impressed with the 
 trust ; and the confusion or mixing of the trust estate with the 
 trustee's own property will not prevent the separation of the 
 former from the latter. Where a guardian buys land with the 
 funds of his ward, though not under the direction, or even by 
 authority of the court, and takes the title in his own name, with 
 the addition, "trustee," he cannot as legal owner convey to a 
 subsequent purchaser a good title to -such land, " free from em- 
 barrassment and reasonable doubt," notwithstanding the guar- 
 dian may also have an individual interest in the same ; but a 
 purchaser with notice would take the title, subject to the right 
 of the ward to pursue the fund into the land and hold it. 
 Morrison v. Kinston, 55 Miss. 71. 
 
 USURY. 
 
 712. Usury is a defence personal to the parties to the con- 
 tract, or their legal representatives, and cannot be set up by an 
 assignee of the mortgagor, when seeking a redemption. Mc. 
 Guire v. Van Pelt, 55 Ala. 344. 
 
BANKERS CODE. 1 39 
 
 713- An agent's retention of a percentage as compensation 
 for obtaining a loan on mortgage, without the mortgagee's 
 knowledge, does not constitute usury. Manning v. Young, 28 
 N. J. Eq. 568. 
 
 714- Money paid usuriously may be recovered. The rule 
 is not changed by the present Usury Act. Brown v. Mcintosh. 
 39 N. J. Law 22. 
 
 715- Notes given in 1876, for excess of interest over seven 
 per cent, upon money loaned in 1873, upon a verbal contract to 
 pay 18 per centum per annum, are without a legal considera- 
 tion, and no recovery can be had thereon. Jones v. Holcombe, 
 60 Ga., 665. 
 
 716. In an action upon a note valid upon its face, and 
 calling for only legal interest, the burden of proving payment 
 and usury is upon the defendant. Lathrop v. Davenport, 20 
 Kansas, 285. 
 
 717- One who comes into a Court of Equity for relief 
 against a usurious contract, will be compelled to pay the prin- 
 cipal and legal interest ; and if the debt is secured by mort- 
 gage, it will stand for the debt and legal interest. Pickett et al. 
 V. Merchants' Nat. Bank of Memphis, 32 Ark. 346. 
 
 718. Building Societies are virtually exempted from the 
 operations of the Usury Laws. In mortgages taken by a build- 
 ing society for advances to borrowing members, it is not neces- 
 sary to express in the instrument how much of the interest 
 reserved is a bonus in respect of the sum advanced, and how 
 much for interest. The Freehold Permanent Building and Sav- 
 ing Society v. Choate, 18 Grant Ontario Chancery, 412. 
 
 719. It is not necessary for a party seeking equitable relief 
 from a usurious contract to show that he has tendered legal 
 interest in addition to the principal of his debt. Morris v 
 Miller et al. 46 Iowa, 84. 
 
 720. Usury may not only be pleaded as a defense, but also 
 may be made the basis of original and affirmative relief. Id. 
 
 721. M. purchased at judicial sale the property of H-. 
 Before the time for redemption expired, B. redeemed it, paying 
 $1,485 for the redemption, and then entered into an agreement 
 with H , whereby, upon the payment to him of $2,000, he 
 should convey the property to H. Held, that the transaction 
 between B. and H. constituted a loan, and that the loan is usu- 
 rious. Wormley v. Hamburg et al., 46 Iowa, 144. 
 
 722. The defense of usury cannot be set up against a nego- 
 tiable promissory note while in the hands of an innocent in- 
 dorsee, who purchased the same before maturity. Gross v. 
 Funk, 20 Kansas, 653. 
 
 723. Where, on a loan of money, the borrower agreed to 
 repay, at a certain time, the amount of the money loaned, with 
 
I40 BANKERS CODE. 
 
 lawful interest, and further agreed, upon default made in such 
 payment, to perfect and surrender to the lender certain shares 
 of stock pledged as collateral security for the loan, held, not to 
 be usurious. Ramsay v. Morrison, 39 N. J. Law, 591. 
 
 724. A sale of cotton at a price beyond its real value to one 
 who re-sold for a less price, will not be denounced as an usuri- 
 ous transaction, unless there was a proposition to the seller to 
 borrow, and negotiations terminating in a sale ; or a knowledge 
 of the borrower's necessities, and that he was purchasing at an 
 exorbitant price, to relieve himself by a subsequent sale at a 
 less price ; or something showing a design on the part of the 
 vendee to borrow and the vendor to loan money, under device 
 of sale, whereby, under guise of excess of price, usurious inter- 
 est was reserved. If design existed, it is immaterial in what 
 shape it is veiled. Barr v. Collier, 54 Ala. 39. 
 
 725. When a sale is made under a mortgage, whether the 
 contract was usurious, or not, is immaterial in an inquiry as to 
 the validity of the sale; usury affects only the distribution of 
 the proceeds, not the sale itself. If more than legal interest 
 has been extorted by the mortgagee, the Court, in distributing 
 the proceeds, may direct it to be withheld or refused. Carroll 
 v. Kershner, 47 Md. 262. 
 
 726. Under the Act of February 18, 1848 (S. & C. 744), all 
 payments of usurious interest are to be taken as payments on 
 account of the principal ; and where the sureties on a negotia- 
 ble promissory note, given by way of renewal for money pre- 
 viously loaned, have been compelled to sell such note to 
 an endorsee, who purchased the same bona fide before due, 
 they may, under the statute, recover from the payee the amount 
 of usury exacted by him from their principal, which they have 
 been so compelled to pay to the holder by reason of the en- 
 dorsement of the note. Kock v. Block, 29 Ohio, 565. 
 
 727. The right to borrow money within the prescribed lim- 
 its, and issue certificates therefor, bearing interest, is conferred 
 by the borough law of the State ; and the fact that the bond in 
 this case called for eight per cent, interest, did not invalidate it, 
 and it was only void for the excess over the legal rate of inter- 
 est. Parkinson v. City of Parker, 85 Penn. St. 313. 
 
 728. A confession of judgment, made for the purpose of 
 aiding in the violation of the Usury law, will be regarded, as 
 between the parties to the usurious contract, void as to the 
 amount in excess of the sum the judgment creditor may law- 
 fully recover. Mullen et al. v. Russell et al. 46 Iowa, 386. 
 
 729. A provision in a note requiring the interest to "be paid 
 quarterly, and stipulating that the interest, if not paid when 
 due, shall bear interest at the rate of 10 per cent., does not 
 render the contract usurious. Ragan v. Day et al. 46 Iowa, 239. 
 
BANKERS CODE. I4I 
 
 730- The Usury Law of 1862 is constitutional, and a con- 
 tract made in violation of it will not be enforced. State v. 
 Chapman, 5 Oregon, 432. 
 
 730|' The forfeiture of an usurious debt to the School Fund 
 carries with it the security for the payment of the debt, for the 
 reason that the security is an incident of the debt, and is tainted 
 with the usury, id. 
 
 731. The knowingly taking or receiving, by a National Bank, 
 of a greater rate of interest than is allowed by the State in which 
 the bank is located, is, under the Act of Congress, usurious, and 
 the bank incurs the forfeiture of the entire interest. The lim- 
 itation of two years, contained in the Act, applies alone to pro- 
 ceedings for the recovery of the forfeiture provided for, and not 
 to the defense of usury ; the State Courts have jurisdiction of 
 questions arising under the act. Pickett et al. v. Merchants' 
 Nat. Bank of Memphis et al., 32 Ark. 346. 
 
 732. That although the Code provides the mode and ma:n- 
 ner in which a defendant may plead usury, its provisions do not 
 in any manner deprive a party of existing remedies for relief 
 against the payment of illegal interest, even though he may have 
 failed to avail himself of the plea. Such being the law, there is 
 no reason why a party may not except to the confirmation of an 
 award on the ground of usury, even though no such defence 
 was made before the arbitrator. Woods v. Matchett, 47 Md. 390. 
 
 733- Where a loan is effected through an agent, the fact that 
 the amount received by the borrower is less than that advanced 
 by the principal, and specified in the note, does not render it 
 usurious, in the absence of proof that the agent acted for the 
 lender in retaining the sum which is deducted from the note. 
 Wyllis V. Ault et al. 45 Iowa, 46. 
 
 734. A separate note, given by the borrower to the agent 
 for his services in negotiating the loan, will not be tainted 
 with usury where the agent acts for the borrower, and not the 
 lender. Id. 
 
 735- When usurious interest is carried into a general ac- 
 count, and made part of a sum found due ,on final settlement, 
 for which a note is executed, it taints the entire contract with, 
 usury ; and it matters not that the usurious interest was charged 
 with the tacit consent of the debtor in stating monthly accounts, 
 or by a note substituted for one previously executed. Pickett 
 V. Merchants' Nat. Bank, 32 Ark. 346. 
 
 736. R. S., of 1857, c. 45, relating to usury, was uncondi- 
 tionally repealed by St. of 1870, c. 169, which expressly ex- 
 cepted by the general Repealing Act, c. 174, St. 1870. To a 
 promissory note in which is reserved, and on which was re- 
 ceived, excessive interest, given May 13, 1857, while R. S. of 
 1841, c. 69, was in force, and sued upon August 5, 1874, after 
 
142 BANKERS CODE. 
 
 the unconditional repeal of R. S. 1857, c. 45, usury is no de- 
 fence, and the maker of the note can claim no deductions for ex- 
 cessive interest reserved or paid. Holmes v. French, 68 Me. 525. 
 
 737. The plea of usury is personal, and when a third jjarty 
 assumes the payment of a usurious debt, and gives the creditor 
 an assurance of payment, he can neither dispute with the cred- 
 itor the validity or the amount of the debt. The consideration 
 passing from the debtor to the party undertaking to pay, is pre- 
 sumed to be adequate to sustain the undertaking ; but where the 
 amount of the liability is left for future ascertainment, and there 
 are rights and interests reserved that can only be protected by 
 the party who has contracted to pay the debt, or by the debtor 
 himself, the rule is different, and the defence may be interposed 
 by the third party. Pickett et al. v. Merchants Nat. Bank, 32 
 Ark. 346. 
 
 738. J. C. who lived in Ohio, executed his single bill in 
 Ohio, payable to P., and pursuant to a former arrangement with 
 S. C, the brother of J C P., took the single bill to "Virginia 
 where he and S. C. lived, and there S. C. signed the bill which 
 was a joint and several obligation, as surety for his brother. 
 The single bill did not specify where it was to be paid, and on 
 its face was to bear interest at eight per cent, per annum from 
 date. By the laws of Ohio the interest was lawful, but by the 
 law then in force in Virginia, December, 1858, a greater rate 
 of interest than six per cent, per annum rendered the contract 
 void. S. C. died, the single bill still being unpaid; suit was 
 brought in Hancock County against the administrator of S. C. 
 to recover the amount thereof ; the administrator pleaded usury; 
 the case was tried before the court, in lieu of a jury, and judg- 
 ment rendered for the amount of the single bill, with eight per 
 cent, interest. Held, that if the plea of usury could not have 
 availed the principal obligor in the single bill it would not have 
 been of any avail to the surety, as the surety could not attack 
 the validity of the contract, if the principal could not. That 
 the single bill being executed by the principal in Ohio, and the 
 surrounding circumstances showing it was to be paid there, 
 S. C. in signing it in Virginia as surety, ratified it as an Ohio 
 contract. It being an Ohio contract and valid under the usury 
 laws of that State, the surety although he signed it in Virginia, 
 could not avail himself of a plea of usury thereto. -Pugh v. 
 Cameron A dm' r, 11 W. Va. 523. 
 
 739- It is a good defence to an action by a payee against 
 the maker of a promissory note made in New York, payable 
 " on demand with interest," that the payee received it as a 
 substitute for a draft there drawn under an oral agreement, 
 with his knowledge, for more than legal interest, and that the 
 note itself was made under an oral agreement that he should 
 receive the same interest upon it as that received in a certain 
 
BANKERS CODE. I43 
 
 Other note which was usurious, and the latter note is admissible 
 in evidence to show what that rate was. Stanton v. Demervitt, 
 122 Mass. 495. 
 
 740- The only question submitted upon the hearing was, 
 whether the defence of usury is established. The mortgagor 
 evidently paid a large commission in the negotiation of the loan 
 of $6,000, and it is probable that he paid a large one on the 
 subsequent loan of $8,060; but it does not appear that Mrs. S., 
 the mortgagee, or B., her agent in making the loans, received 
 or had any benefit from those commissions. The proof that 
 she lent the whole of the $8,000. The defence of usury is not 
 established, and there will be a decree for the complainant ac- 
 cordingly. Spring, Ex. v. Reed, et al., 28 N. J. Eq. 345. 
 
 741. The answering defendants, by their answer, set up the 
 defence of usury, and they insist that the mortgage in suit is so 
 affected thereby that not only is the whole of the interest for- 
 feited, but the bill must be dismissed, because no interest has 
 ever been recoverable on the mortgage, in consequence of thie 
 usury, and therefore, there has been no default ; and if no de- 
 fault, the principal is not due, and will not be due until the 1st 
 of July, 1878. The mortgage in suit was given to secure the 
 payment of three several and distinct loans by the mortgagee 
 to the mortgagor, H. On the first of these a premium was 
 taken, but none on either of the others. The second and 
 third loans were neither of them usurious. The first was — to 
 that the forfeiture should be confined. Crippen v. Heermance, 
 9 Paige 211. No interest is recoverable in respect to the 
 amount of that mortgage, and the interest received by the 
 mortgagee on the $500 premium must, with the premium be 
 deducted. Bedle v. Wardell, 10 C. E. Gr. 349. Interest is 
 recoverable on the rest of the amount of the principal, that is, 
 on $2,500. According to the bill, no interest has been paid 
 since the ist of January, 1875, and the complainant elected 
 that the principal should at once become due, by reason of the 
 default. If, in fact, no interest whatever were recoverable on 
 the mortgage, that fact would not relieve the defendants from 
 the consequences of the default. The default would still exist, 
 notwithstanding the fact that the interest is not recoverable by 
 suit. The principal of the mortgage, less the amount of the 
 premium is due. Mahn v. Hussey, 28 N. J. Eq. 546. 
 
 742. The defence, which the petitioner asks an opportunity 
 to set up, is usury. She alleges, in her petition, that the mort- 
 gages of the complainant were made in New York upon 
 usurious contracts, and that they are therefore, under the law 
 of that State, absolutely void, and should be decreed to be so 
 in this State. In order to entitle her to the relief which she 
 seeks on this petition she must show that she has an equitable 
 and meritorious defence. Hooner v. Corning, uM subra. The 
 
;44 BANKERS CODE. 
 
 defence of usury linder existing law of this State is not unconsci- 
 entious. Conover v. Van Mater, 3 C. E. Gr. 481. Wagner v, 
 Blanchet, 12 C. E. Gr. 356. The defence which the petitioner 
 asks leave to interpose against the complainant's mortgage is 
 Eo. She cannot, therefore, have leave to set it up. Corning v. 
 Ludlum, 28 N. J. Eq. 398. 
 
 743. Wren borrowed money at usurious interest and gave 
 a bond for its payment, on which judgment was entered. He 
 was afterwards adjudged a bankrupt, and his land sold by the 
 assignee subject to the judgment. Held, that the purchaser 
 could not have the judgment reduced by the amount 6f the 
 usury. In the distribution of a fund judgment creditors may 
 attack a judgment collaterally for fraud on them, but not because 
 it is a fraud on the debtor. Payment of usury is not necessa- 
 rily fraudulent as to creditors. Whenever the usurious contract 
 is intended to defraud creditors, 6r when the circumstances of 
 the debtor are known to be such, that it can be reasonably pre- 
 sumed that this will be the natural effect, creditors have the 
 right to postpone the excess of interest. Miner's Trust Co. 
 Bank V. Roseberry, 81 Penn. St. 309. 
 
 744. Van Auken gave a note to Everett for $3,340, judg- 
 ment was entered on it; Everett assigned $2,500 of it to 
 Dunning- on affidavit of Van Auken the judgment was opened 
 and he let into a defence. On the trial he offered to prove that 
 Dunning lent him $2,500 in New York at a rate of interest 
 usurious by the laws of that State; that Van Auken procured 
 the assignment of the judgment as collateral security for the 
 loan, it having been paid by the money borrowed from Dunning. 
 Held, that this would be a defence, Dunning was entitled to 
 recover the amount lent and Jegal interest. The offer not being 
 to show that the contract was void for usury by the laws of 
 New York, the presumption was that they were the same as in 
 Pennsylvania, and the contract was to be treated as void only 
 for the excess of interest. Van Auken v. Dunning, 81 
 Penn. St. 464. 
 
 745- Where a note which is tainted with usury has been 
 transferred to another without notice, and even where the trans- 
 feree is not proven to have known of the taint, for a valuable 
 consideration without endorsement and without representation 
 as to legality, no warranty against it will be implied, and an 
 action cannot be sustained against him for loss sustained by 
 the purchaser by reason of the defect; a scienter is essential to 
 establish an implied warranty as to the validity of the note. A 
 transfer of this kind implies simply a warranty of title and that 
 the note is genuine. The Court held the question whether an 
 action will lie for the loss sustained by the plaintiff by reason 
 of the note being usurious, and the recovery of the amount 
 thereof thereby defeated, has never arisen under the precise 
 
BANKERS' CODE. I45: 
 
 circumstances presented in this cage, and demands an exami- 
 nation of the principle applicable to the contract entered into 
 upon the sale of paper of this description, and of the authori- 
 ties bearing upon the subject. The rule is well settled that' 
 generally one who transfers paper by delivery only, incurs none 
 of the liabilities which attach to an endorser, for the reason 
 that the irresistible inference is, that if he transfers it and it is 
 received without his indorsement, that such liabilities did not 
 enter into the bargain or the intention of the parties. This 
 rule, however, is not without exception, and the transferrer of 
 notes or bills by delivery warrants the genuineness of the sig- 
 natures, and that the title is what it purports to be. If the 
 paper is forged the transferee is liable upon the original con- 
 sideration which has never been extinguished by the sale. So 
 also, it is laid down by that vendor without endorsement war- 
 rants that the paper is an implied warranty that the parties to 
 the paper are under no incapacity to contract, as from infancy 
 or marriage or other disability to contract, and the assignment 
 of a bill or note for a valuable consideration raises an implied 
 warranty that the assignor has done nothing, and will do noth- 
 ing to prevent the assignee from collecting it. The reason given 
 as to forged paper is that it is nothing, and the one who has 
 transferred it has transferred nothing, and is therefore liable. 
 In Webb v. Odell, 49 N. Y. 583, a recovery for the purchase 
 price was upheld where notes were sold for less than their face, 
 upon a representation that they were business papers, when, in 
 fact, they were accommodation notes, and thus usurious and,, 
 void in the hands of the vendee. The decision is placed upon 
 the ground that the thing sold differed in substance from what 
 the purchaser was led by the vendee to believe he was buying, 
 and the difference was so substantial and essential in its character 
 as to amount to a failure of consideration. The representation 
 that the notes were business paper was an important fact, and 
 hence the decision does not exactly cover a case where the 
 party transfering had no knowledge of the true character of the 
 paper. In Ross v. Terry, 63 N. Y. 613, the defendant sold a 
 bond and mortgage to the plaintiff, which was usurious and 
 void. The defendant was personally concerned in the making 
 of them, and in the unlawful acts which vitiated them, and it 
 was held that there was an implied warranty of the validity of 
 the securities. In Luke v. Smith, 7 Abb. N. S. 106, the de- 
 fendants, who sold a usurious note to the plaintiff, were held 
 liable upon an implied warranty by defendants on the 
 sale of the note, that there was no legal defense to an 
 action upon it, but it appeared ' that the defendants were 
 privy to the consideration of the note, and the facts and 
 circumstances under which it was given and transferred. 
 In Hoe V. Sanborn, 21 N. Y. 552, Selden J., lays down the 
 rule "that whenever an article sold has some latent defect. 
 
146 bankers' code. 
 
 which is known to the seller, and not to the purchaser, the 
 former is liable for this d'efect if he fails to discover his 
 knowledge on the subject at the time of the sale. There is no 
 precedent and not a single reported case in the books in favor 
 of the doctrine that where a promissory note is infected with 
 usury, and that fact is unknown to the party who transferred 
 it, that is an implied warranty of the validity of the note. To 
 uphold such a doctrine would be an innovation upon a settled 
 principal of law and the establishing of a new and different 
 rule from that which has governed the sale and transfer of this 
 species of property for a long period of time. Z-ittauer v. Gold- 
 man, 72 N. Y. App. 506. 
 
 WARRANTY. 
 
 746. The ist section of the Act of Congress of 1870, ch. 59, 
 establishes the legal rate of interest, in the District of Columbia, 
 at six per cent. Sec. 2 permits parties to stipulate in writing 
 for any rate not exceeding 10 per cent. Sec. 3 forfeits the 
 whole interest under any parol contract providing for a greater 
 rate than six per cent, or written contract stipulating for more 
 than 10 per cent. Sec. 4 provides for the recovery of all the 
 interest paid, when more has been exacted than allowed by the 
 act, provided suit to recover the same be brought within one 
 year after such payment. 
 
 In an attachment brought, in Maryland, by K. against E., as 
 a non-resident, E., among other pleas pleaded, was that of set- 
 off ; that the plaintiff was indebted to him for money paid the 
 plaintiff on account of usurious interest ; and proved that he 
 had paid the amount of the set-off to the plaintiff, for usurious 
 interest upon loans made in the District of Columbia, where 
 both parties resided. Said payments were made more than one 
 year, but most of them within three years before the plea filed. 
 .ZTif/c/ (i.) That a prayer offered by the defendant asserting his 
 right to recover the excess above six per cent, paid by him, but 
 failing to submit to the jury to find that the loan was upon a 
 verbal contract only, was bad. (2.) That the right to recover 
 for the illegal interest, being given by the Act of Congress, must 
 be subject to the terms prescribed by that Act, as to the time 
 within which the right must be asserted. (3.) That the sums 
 paid by the defendant in the District of Columbia, more than 
 one year before the account in bar was filed, could not be abated 
 from the plaintiff's claim. Eastwood y. Kennedy, 44 Md. 563. 
 
 747- A warranty of title is implied in a contract of ex- 
 change, the same as in a contract of sale. Paiee v. Pelton, 48 
 Vt. 182. 
 
 748. When goods have been sold with a warranty of quality, 
 and those delivered, though inferior to the stipulation, are re- 
 tained by the vendee, the latter may either pay the price, and 
 
BANKERS CODE. 147 
 
 have his action for the breach of warranty, or he may recoup his 
 damages in the vendor's action for the price. Smith et al. v. 
 Mayer et al., 3 Colo. 207. 
 
 749. If the goods delivered to the buyer are inferior in qual- 
 ity to that which was warranted by the vendor, the buyer may 
 refuse to accept the goods, arfd return them ; and while in his 
 charge, or possession, he is certainly not liable for injury to the 
 goods, resulting from no want of due care on his part. Bigger 
 V. JSovard, 20 Kansas, 204. 
 
 750- A vendor impliedly warrants goods sold by him, without 
 any opportunity of inspection on the part of the buyer, to be of 
 a merchantable quality, and reasonably fit for the purpose in- 
 tended ; and if, when the goods are delivered to the buyer, 
 they are unmerchantable and unfit for use, the buyer may return 
 them, without unnecessary delay, and rescind the contract. Id. 
 
 751- Where the evidence showed, without conflict, that a 
 written warranty was given by vendor to vendee, the latter could 
 not recover for the breach of an additional parol warranty. 
 Shepherd Y. Gilroy et al., 46 Iowa, 193. 
 
INDEX. 
 
 Acceptance — To be binding, must in every respect meet and correspond with the 
 
 offer made (111.) i 
 
 Account Stated— Is presumptive evidence of the balance admitted to be due. 
 
 May be corrected for fraud or mistake (N. J.) 3 
 
 For a period of two years, with monthly statements being made by the bank 
 
 during the tira,e. . (Ark.) 3 
 
 Agency— The general rule with regard to the clerks of an agent (Canada) 4 
 
 Payments received by one knowing the agent to be unauthorized to make 
 
 them {N. J.) 5 
 
 Where the acts of the agent will bind the principal (W. Va.) 6 
 
 Having special authority to adjust a particular loss, cannot, by virtue thereof, 
 
 adjust a different loss (Col.) 7 
 
 Employment to sell land need not be in writing ; the agent may recover for 
 
 services rendered under a verbal contract (Ga.) 8 
 
 Money borrowed by the agent on the credit of the principal without his 
 
 authority, goes into the principal's business without his knowledge. (Vt.) 9 
 
 Authority to make a contract for another, is not sufficient to authorize its 
 
 cancellation or surrender (N. Y.) 10 
 
 One who constitutes another, with full power to manage his mercantile 
 
 house, and to do all acts appertaimng thereto (La.) loj^ 
 
 General agent in Canada of a foreign company, must be regarded in the 
 
 same light as the general agent at the head office (Canada) 11 
 
 When notice to the agent is notice to the principal (N. J.) 13 
 
 Principal is always bound by the acts and neglects of his agent, and the 
 
 same rule that applies to a private principal applies to a corporation . (Va.) 13 
 Authority of agent, not coupled with an interest, being revocable, at the 
 
 pleasure of the principal (Colo.) 14 
 
 Declarations of one acting as the agent of both parties to a contract. .(Colo.) 15 
 "When a purchaser of property does not know that he is dealing with an 
 
 agent of the owner, and has not good reason to know it (Iowa) 16 
 
 Clothed with power to accept bills for his principal fLa.) 17 
 
 Payment to have been made to an agent for goods sold and delivered. .(Mass.) 18 
 Purchasing, goods at half their value from an agent, whom he knows is acting 
 
 without authority (Mo.) 19 
 
 "Where, without consideration, one entrusts an agent with money to settle a 
 
 lawsuit between two others, may revoke any time before a settlement is 
 
 complete .(Ga.) 20 
 
 "When the agent loans money for his-principal on note and mortgage, -and 
 
 pays from time to time to his principal theinterest, and finally the whole 
 
 loan, without authority to buy said note (La.) ' 21 
 
 "Where an agency is continuous, and made up of a long series of transactions 
 
 of same genera! character (N. Y.) 22 
 
 Making statements with regard to a note he has for sale, as agent, concerning 
 
 the purposes for which the same was executed (111.) 23 
 
 For the sale of goods, with an interest in the proceeds, is not deprived of the 
 
 power to sell by the death of the principal (Me.) 24 
 
 An instrument delegating powers, is ordinarily subject to a strict interpre- 
 tation (N. Y.) 25 
 
 Assignee or trustee cannot speculate with assigned property (Kan.) 26 
 
 R., an agent,_sold property to M. for $5,600, reporting to W. but $3,500 as 
 
 the price it sold for (Canada) 27 
 
 An unendorsed note, left for collection with an agent, who, without the knowl- 
 edge or consent of the owner, delivered it for collection to a third 
 
 person, who collected and retained proceeds (Ind.) 28 
 
 When the purchaser of a bankrupt stock appoints the bankrupt as his agent 
 
 to sell at same place the stock so bought, and buy other goods to keep up 
 
 the assortment (Mass.) 29 
 
 Authority to make drafts on principal as may be necessary to purchase 
 
 lumber, " as my agent " (N. Y.) 30 
 
 Authority to sue for a specific debt (La.) 31 
 
 Assigmment — Was made by a firm, authorizing assignee to sell at public or 
 private sale, '* unless the indebtedness of the firm can be oiherwise 
 settled." (Kan.) 32 
 
 A majority of the creditors of B.^an insolvent, signed an agreement with 
 him, by which he was to assign all his property for the benefit of the 
 creditors who signed this agreement (Penn.) 33 
 
 An assignment for the benefit of creditors vests the title forthwith in the 
 
 assignee,, though ho is ignorant of the assignment (Penn.) 34 
 
15° INDEX. - 
 
 attorneys.. — A general retainer does not authorize an attorney to settle or adjtist 
 
 claims, or alter contracts (.Ark.) 35 
 
 In fact, cannot bind his principal as surety, unless specifically authorized. (La.) 36- 
 Stipulation in note for the payment of a certain sum as attorney's 
 
 fees (Dakota) 37 
 
 Bailment.— The finder of a bank-note as against a bailee without reward, to 
 whom he delivers it to be kept for the finder, hassuch a possessory interest 
 in the note as entitles him to recover the same of the bailee (Va.) 38 
 
 A man, dressed as a police officer, told the cashier in presence of a watch- 
 man of the bank, that he had been directed by the lieutenent of the 
 police to warn him that there were "suspicious characters about " . (Penn.) 39 
 
 Converting goods on which he has bestowed labor, and acquired a lien 
 
 thereon (N. J.) 40 
 
 Pledgery bailee of goods left with him for safe-keeping (Colo.)_4i9-420 
 
 " Received from H. M. P. one letter envelope, sealed, and said to contain 
 $290," imputes no legal liability of the signer without evidence ali- 
 unde (Miss.) 41 
 
 Bankers. — Stock assessed under the provisions of the act authorizing the taxa- 
 tion of stockholders of bonds (Chap. 761, Laws of 1866), the assessor must 
 deduct, etc (N. Y.) 42 
 
 Article 13 of the State Constitution, entitled " Banks and Currency," applies 
 to banks of issue, and does not prohibit the Legislature from, creating 
 banks of deposit and discount (Kan,) 43 
 
 Liabilities of directors and stockholders of insolvent banks (Penn.) 44 
 
 Stockholders of National banks have legal capacity to sue such corpor- 
 ation for misappropriation of the stockholders' s funds, and for other 
 causes (Wyoming) 45 
 
 Money paid to the cashier of a bank for the use and benefit of the 
 
 bank (Wyoming) 46 
 
 Savings bank's power to discount negotiable notes (Kan.) 47 
 
 Organized, prior to the amendment of general st. c. § 13, under the pro- 
 visions of that chapter had no power to purchase or traffic in promissory 
 notes as choses in action (Minn.) 48 
 
 Private bankers are subject to taxation upon the average amount of de- 
 posits (Kan.) 49 
 
 President of a National bank using accommodation paper to pay for capital 
 
 stock in his bank (Neb.) 50 
 
 Definition of the word " Discount" (Kan.) 50^ 
 
 Bank can maintain an action in its incorporate name to recover back a tax 
 illegally assessed and collected against its shares of capital stock, 
 though such stock stands in the names of difi'erent individual share- 
 holders .. (111.) 5t 
 
 When a check is considered paid, although the money is not yet counted 
 
 by the payee (Eng.) 52 
 
 Country banker receives a check on another country banker (Eng.) 53 
 
 Bahk aiscounting a note before its maturity, is not chargable with the 
 knowledge of illegality, or want of consideration acquired by one of its 
 directors in other than its official capacity, such director not having 
 acted with the board in making the discount (N. J.) 54. 
 
 Persons who hold stock in pledge, the certificates of which stand on the books 
 of a National banjc in the name of the pledgee, are, in contemplation of 
 the National Banking Act, stockholders, and so long as they thus hold 
 the stock in pledge are responsible to the creditors of the bank in pro- 
 portion to the amount so held (Md.) 55 
 
 The preference of Savings banks for moneys deposited, ovet- other creditors 
 of an insolvent bank, only applies to deposits made in the ordinary course 
 of business (N, Y.) 55)^ 
 
 National banks have corporate power to enter into an agreement with a cus- 
 tomer to exchange for him non-registered U. S. bonds for registered 
 bonds (N. Y.) 56 
 
 When president of a bank loans money of the bank to an irresponsible 
 
 person. (Mich.) 57 
 
 When president of a bank permits the drawing of money from the bank 
 without security by a party, in whose business the president is inter- 
 ested (Mich. ) 58 
 
 The fact that the money so drawn out "by the cashier, and charged on the 
 books to the irresponsible borrower, would not determine the trans- 
 action ^ (Mich.) 59 
 
 When the president persuades the cashier not to make known certain facts 
 
 to the directors (Mich.) 60 
 
 The effect to be given to the long silence of the directors (Mich.) 61 
 
 An agent's admission made after the fact, and unconnected wi'th any act of 
 
 agency (Mich.) 62 
 
 Proof that a person is clerk for another, does not establish h is right to receive 
 for his employer payment of demands not shown to have any connection 
 with the business ,,, , (Mich.) 63 
 
INDEX. 151 
 
 f Deposit of bonds with a National bank, as collateral security for current 
 loans or obligations of over-draftof the depositor to the bank, which 
 bonds were stolen after all such indebtedness had been paid, but the 
 bonds were not withdrawn by the owner (Md.) 64 
 
 One dealing with a corporation in matters not falling within the purview of 
 
 its delegated powers (Ala. J 65 
 
 When the corporation has not fully completed its corporate character. .(Ala.) 66 
 ■ The accommodation drawer of a bill of exchange, which was discounted by 
 a bank for the acceptor, who procured it to raise money for his own use 
 in that way, the drawee not being aware of this, and not being present 
 or participating in the negotiation (Ala.) 67 
 
 "When a corporation is duly authorized to do a banking business under the 
 
 laws of (Ala.) 68 
 
 Dissolution of a partnership with an individual banker, does not relieve the 
 retiring partner from liability for subsequent deposits made, without 
 notice of the dissolution (N. Y.) 69 
 
 The liability is not changed by the fact that the depositor did not know he 
 
 was a partner _ (N. Y.) 70 
 
 So also, the alteration of a certificate of deposit in respect to the rate of 
 interest, made after the dissolution, by the continuing partner, but 
 before notice to holder of such dissolution • (N. Y.) 7X 
 
 Proof of publication of notice of dissolution in newspaper in the place where 
 the bank was located, unconnected with any evidence that the depositor 
 resided there, or took the paper, is but slight, if any, evidence of 
 notice (N. Y.) 72 
 
 A bank is not liable upon a certificate of deposit until after demand of pay- 
 ment.... _ _ .,,.. (N. Y.) 73 
 
 When a savings bank is bound by its rules to exercise its best care to prevent 
 fraud, itis not protected by a clause in such rules that a payment to one 
 producing a deposit book shall be deemed good and valid (N. Y.) 74 
 
 A bank which has fraudulently permitted funds on deposit, belonging 
 to a trust estate, to be transferred to the individual account of the 
 trustee ...m ..(N. Y.) 75 
 
 A National bank agreed, through its cashier, to exchange for a consideration 
 certain U. S. bonds for registered bonds, which the bank neglected to do. 
 The bonds were stolen. ._ i (N. Y.) 76 
 
 When half of a bank-note is sent in payment, other half to follow, title to 
 
 note remains in sender (Eng.) 77 
 
 When National banks may take mortgages on real estate (Mass.) 358 
 
 Sills of Exchange — Headed "New England Agency of the Penn, Fire Ins. 
 Co.," have the words '^ Foster &. Cole, General Agents for the New 
 England States" printed in the margin, and appearing on its face to be 
 drawn upon said Co. is the draft of the Co., and not of F. & Co. .(Mass.) 78 
 
 Drawn for sole accommodation of the payee, and accepted by the drawee for 
 the same purpose, and owing to insolvency of the payees the acceptor was 
 compelled to pay the bill, and he brought suit to recover the amount 
 paid against the drawers (Ohio) 79 
 
 When draft did not specify any place of payment ^ 607 
 
 Holder cannot sue for original consideration, where there has been a failure 
 
 to stamp foreign bill and a delay of a year (Eng.) 80 
 
 Must be payable at all events, not dependent on any contingency. (III.) 81 
 
 An acceptor of a bill of exchange drawn by a purchaser of machinery can- 
 not, by paying the bill before maturity, change the relations of the 
 original parties to it (Texas') 82 
 
 Possession of a draft is presumptive evidence of ownership (N. Y.) 83 
 
 Habitual payment of a certain party's drafts drawn on him, does not make 
 him liable foi" such drafts in the absence of an implied or expressed 
 agreement _ (La.) 84 
 
 Where there is no value or consideration for acceptance, it is a good defence 
 
 in an action by drawer or person taking under him (Eng.) 85 
 
 Draft drawn in favor of payee on a certain fund to arise from the sale of prop- 
 erty then in drawee's hands .^ /••■.■■ -(L^-) ^^ 
 
 Draft drawn by A., the creditor, on B., the debtor, in another city, in which 
 debtor was to sell the draft, and remit the proceeds to the creditor in 
 payment of his bill. A. handed the draft to C, his banker at home, 
 who endorsed it to D. or order, for collection, A. and the purchaser of 
 the draft erased C.*s endorsement. See defence. : • ■• ; .(Mo.) 87 
 
 Bill drawn and endorsed in England, payable abroad, is dishonored by 
 
 acceptor's non-payment ^ _ (Eng.) 88 
 
 A promise to accept a future bill of exchange, in consideration of monev to 
 
 be advanced thereon by the promisee (Mo.) 8g 
 
 Accommodation bill accepted at the request of a third party, who agrees to 
 
 shareanyloss (En^) go 
 
 Acceptor, who tears the bill in two parts, with theintention to destroy it, 
 and which the drawer fraudulently joined the pieces, and sold it to an 
 innocent holder ; ^^^S-) 9^ 
 
 Acceptance of bill by one partner for separate debt, and not in name of the 
 
 firm .(Canada) 394 
 
152 INDEX, 
 
 / 
 Bill of Xiadin^ — For goods tto^ actually put on board, cannot be signed by the 
 master of a ship ?ls agent. Bills of lading are not negotiable in the fame 
 
 sense in which_ bills of exchange or promissory notes are (Md.) 92 
 
 Where one of two innocent parties must suffer from the wrongful or tortuous 
 
 acts of a third party (Kan.) 93 
 
 Are transferable by endorsement (Me.) 94 
 
 Sonds. — The term "bond" implies an instrument under seal. An instrument In 
 form a bond, but containing no seal, voluntarily executed and delivered in 
 lieu of a bond, and accepted therefor, is valid (Me.) 95 
 
 Married woman cannot bind herself as surety on a bond (Ark.) g6 
 
 A money bond, issued by a body politic, under authority of law, payable to 
 ^ bearer, has the negotiable quality of ordinary commercial paper, and if, 
 while it is a valid instrument, it reaches the hands of an innocent holder 
 forvalue before maturity, although his title comes from a thief. . (N. J.) 97 
 
 A paper, which in the body of it says, "as witness my hand and seal," has 
 
 the word " seal " affixed to the signature of the maker (Va.) * gS 
 
 Party taking a bond for the future good conduct of an agent already in his 
 employ, must communicate to a surety his knowledge of the past criminal 
 misconduct of such agent (N. J .) 99 
 
 Indemnity bond given to an accommodation endorser, conditioned on the 
 
 payment of certain notes (Penn.) 100 
 
 There can be no innocent holder of bonds or paper issued by a municipal 
 
 corporation without power (Ark.) ■ loi 
 
 Municipal bonds although negotiable in form may be void in the Hands of an 
 
 innocent holder (Ark.) 102 
 
 Oliattel Mortgrages. — A mortgage of a certain described horse, and all other live 
 
 stock of which the mortgagor may become owner during the y ear. (Miss.^ 103 
 
 Defective description; delivery of property to mortgagee (Kan.) 104 
 
 Mortgage of chattels after condition broken ....._ (Vt.) 356 
 
 Purchaser of a house and the furniture therein immediately leased the same 
 
 to the vendor ! ,..(Mo.) 105 
 
 An insufficient description of property mortgaged (Canada) 106 
 
 Mortgage on stock in store is void as against creditors where the mortgagor 
 
 by the consent of the mortgagee continue the business (Colo.) 107 
 
 Note of husband and wife secured by mortgage on wife's furniture, which 
 
 note was paid by husband who took possession of all the papers, which 
 
 he afterwards assigned to another (Me.) 108 
 
 A chattel mortgage, is in law, a conveyance of the goods and chattels 
 
 mortgaged (N. J.) 109 
 
 Mortgaged goods in possession of mortgagee (Canada) iio 
 
 Taking possession before judgment is obtained by other creditors (N. J.) m 
 
 JL mistake or variation in statement in mortgage will not always vitiate the 
 
 mortgage (Canada) 112 
 
 Bill of sale whereby debtor conveys personal property to his creditor as 
 
 security (Vt.) 355 
 
 The holder of a chattel mortgage agreed to assign his mortgaged interest to a 
 
 third party upon conditions subsequent (Mass.) 113 
 
 When executed it was agreed that the mortgagor might go on and sell 
 
 stock (N. J.^ 114 
 
 Where mortgage disposes of personal property after tender made (Vt.) 357 
 
 Cliecks. — A dishonored check need not be protested to bind the maker (Ind.) 115 
 
 A check on a banker is a negotiable instrument (Eng.) n6 
 
 Check of a firm dishonored, admipsion of (Ind.) 117 
 
 Notice of non-payn\ent of a check. Mere delay in giving notice to the 
 
 maker does not discharge him from liability (Ind.) 118 
 
 When a check is considered paid by payee (Eng.) 52 
 
 Check maybe offered in evidence under the money counts as/r/?«(Z_/<ifiV 
 
 evidence (Va.) 119 
 
 Rights of a check-holder and of the bank are fixed when the check is Pre- 
 sented for payment (Mo.) 120 
 
 Dishonor of a check, action thereon (Ind.) 121 
 
 The holder of, a check acquirf s no right of action in equity against the per- 
 son upon whom it is drawn (Canada.) 122 
 
 Giving a check by a debtor to a creditor is generally presumed to be only a 
 
 provisional or conditional payment (Va.) 123 
 
 When drawer is not bound by a payment of check by the bank (N, Y.) 589}^ 
 
 Composition ^eed signed by R., the holder of a note made by P. and endorsed 
 by L. attaching to his signature "provided this does not release the 
 
 endorsers in any manner " (Mass.) 124 
 
 Agreement of creditors to accept 75 per centum, ** provided all merchandize 
 
 indebtedness accept the same settlement " (Mass.) 12^ 
 
 Where one creditor held three notes, two of which he had sold previous to 
 
 signing the composition (Mass.) 126 
 
INDEX. J 53 
 
 Agreement to accept ten per centum by a creditbr who held a note then due 
 
 and an account against A., one of the insolvent firm; he also held another 
 
 , note which would not become due until after the time when the ten per 
 
 cent, should be paid ..(Mass.) 127 
 
 Contract. — A. directs B. to give credit on the application of C. for such goods 
 
 as the latter may order^ and charge to him, A ,...(Mo.) 128 
 
 Those only whose release would be a sufficient discharge under a contract 
 
 have an action thereon ,. (Penn.) 129 
 
 Note given at time of making a contract to be payable only if the terms of 
 
 the said contract should not be carried out , (Mo.) 130 
 
 A contract for the deUvery of property being entire, the promisee is not 
 
 bound to receive a part (Colo.) 131 
 
 When one person represents that he owes to the debtor of another a debt of 
 equal amount, substitutes himself in place of the debtor by parol agree- 
 ment with the creditor (Ga,) 132 
 
 A promise under seal to pay money made voluntary (N. J.) 133 
 
 A. promises to pay commission to a factor in consideration of certain promi- 
 ses which are not fulfilled (La. ) 134 
 
 Signing a written agreement without reading it (Ga.) 135 
 
 Written contracts not to be varied by e,xtrinsic and parol evidence . , . (Mass.) 136 
 Parol evidence as to the limits of time in a contract must be positive. . . .(Pa.) 137 
 
 Written contracts are to be interpreted by the Court (Mo.) 138 
 
 Contract signed by one party only, and is accepted by the other (Vt.) 139 
 
 Where the time of payment is omitted in the contract (Vt.) 140 
 
 Assignee of a lease without warranty cannot set up a defect in title in de- 
 fence to an action upon a note given in consideration of the assign- 
 ment (Colo.) 141 
 
 Contract to transfer a promissory note (Ind.) 142 
 
 Contract where two parties agree as to what shall be done in case one party 
 
 fails to perform his part (Mo.) 143 
 
 Application of the rule that forbids the varying ofwritten instruments. (Miss.) 144 
 In the absence of a stipulation as to the time when an act is contracted to 
 
 be done ' (Texas) 145 
 
 Contracts for procuring a sale of real estate, commission thereon (Penn.) 146 
 
 Party may stand by and see work in the erection of a building progress to 
 
 completion and then for the first time make objections (Colo.) 147 
 
 To introduce a new term into an executed written contract (Penn.) 148 
 
 Where the payment of the purchase money is a condition precedent to the 
 
 delivery of a deed (Colo.) 149 
 
 Contract to answer for the debt of another (Ind.) 150 
 
 That in consideration of supplies furnished (Ga.) 151 
 
 Founded upon mutual and concurrent promises (Vt.) 152 
 
 What is requisite to a right of action ._ (Me.) 153 
 
 The maxim, that** the express mention of one thing implies the exclusion of 
 
 another " ._ (Texas) 154 
 
 Where a creditor receives a partial payment before any breach of contract, 
 
 and agrees to look to another source than the promisor (Ala.) 155 
 
 A contract not under seal, wherein one person makes a promise to another 
 
 for the benefit of a third (N.J.) 156 
 
 Liquidation and damages (Wyoming) 157 
 
 Property sold on promise of defendants to accept the buyer's draft (,Ga.) 15S 
 
 Where a promise has been made upon the faith of which the contract was 
 
 signed (Penn.) 159 
 
 Parol contract for sale of land (Penn.) 160 
 
 Court of equity will not extricate a party from the conseqences of his own 
 
 acts voluntarily committed to carry out an illegal contract (Kan.) 16 1 
 
 The reduction of an agreement to writing, signed by the parties, is not 
 
 necessary to its perfection as a contract, unless (La.) 162 
 
 A promise to pay for property purchased, " out of the proceeds of the first 
 
 cotton ginned" (Ark.) 163 
 
 "When a contract has been written by the party to be held liable under it, its 
 
 terms should be construed favorable to the promisee (Colo.) 164 
 
 An act which is forbidden by a Statute (Ark.) 165 
 
 One party submits a proposal for a contract to another, and the latter's ac- 
 
 ceotance of the proposal includes a material modification (La.) 166 
 
 Two distinct contracts between same parties to be performed at diffei:ent 
 
 times _. _. , (Mass.) 167 
 
 When it appears from the evidence that the interest of parties was to form a 
 
 written contract ...(La.) 168 
 
 Where in a contract to deliver a certain thing no time for delivery is 
 
 fixed -(La.) 169 
 
 Where no fiduciary relation exists between the parties, and they are of legal 
 
 capacity (Ala.) 170 
 
 Where a contract must be held to have been made. (N. J.) 171 
 
 Contract founded on an act which a statute prohibits (Ala.) 172 
 
 Contract having an unlawful or immoral cause (La.) 173 
 
 A written agreement of a debtor who has borrowed certain bonds, to return 
 
 bonds of the same description, for the same amount (La.) 175 
 
154 INDEX. 
 
 Laws which subsist at the time and place of the making; of a contract, and 
 
 where it is to be performed .' (Va.) 176 
 
 Contract when signed by the use of an English translation of a French name 
 
 as Seam for Couture (Me.) 177 
 
 Couvoyauce. — Where land is by one deed conveyed to two or more persons. fN. J.) 17S 
 
 Where the grantor in a deed covenants that he was well'seized, etc. . .(Colo.) 179 
 
 Insolvent debtor seeking to prefer certain creditors by mortgage (Ga.) iSo 
 
 Voluntary conveyance — husband and wife — creditors of husband (Kan.) 181 
 
 May be sustained as against existing creditors (Kan.) 1S2 
 
 Contract for conveyance of real estate (Ale.) 183 
 
 Sale of all his landed estate by husband to his wife (Ga.) 184 
 
 Where a new note is taken for an old one a transfer of real estate which 
 
 would be fraudulent as to old note may be attached (Miss.) 185 
 
 A voluntary conveyance from father to son with an intent to defraud his 
 
 subsequent creditors (Me.) 186 
 
 Corporations. — Liability of officers and stockholders for a debt contracted by 
 
 the corporation (N. J.) 187 
 
 Creditor of a Railway held its note^ and as collateral security for the same, 
 three other notes of the Co., with coupons attached, of a kind regularly 
 quoted in the market (Mass.) 188 
 
 Stockholders unpaid stock calls — transfers — set-ofiF (La.) 189 
 
 When stockholders cannot appropriate any part of the Co.'s assets to pay 
 
 salaries or any other claim due them from the Co (La.) 190 
 
 No loss suffered by a stockholder, in consequence of a call authorized by the 
 
 charter of a Co. will give rise to a claim for damages (La.) igi 
 
 Certificate of stock-sale and transfer ^ (La.) 192 
 
 A chartered bank adjudicated a bankrupt, members of the board of di- 
 rectors at the time of its suspension cannot buy up claims at a discount 
 and take full pay from the book assets (Ga.) 193 
 
 Notice, under the charter of an increase of capital (La.) 194 
 
 Certificate of stock accompanied by an irrevocable power of attor- 
 ney (N. J.) 195 
 
 By act of 1872, ch. 325, sec. 59, all the stockholders of a corporation are 
 
 severally and individually liable to the creditors of the corporation. (Md.) ig6 
 
 The president of a Co. is not permitted to create such a relation between 
 himself and the trust property as will make his own interest antagonistic 
 to that of his beneficiary (Mo.) 197 
 
 Where a corporation is being defrauded by its officers, and by collusion the 
 directors refuse to interfere to protect stockholders or to sue, and will 
 seek redress in the corporate name t (Mo.) jgS 
 
 When the stockholders haveelected a receiver who stands unimpeachable. (La.) 199 
 
 A by-law that provides no shares of the stock of the Co. shall be transferred 
 
 until the certificate thereof is surrendered as shown to be lost (Lst-) 200 
 
 Church corporation, the business of which is enstrusted to a board of trustees, 
 the president and secretary cannot execute a note binding on the cor- 
 poration * . . .(Iowa) - 201 
 
 Authority conferred by said tru tees to erect a church building, however, 
 
 would carry with it such authority (Iowa) 202 
 
 Having been recognized in the exercise of its corporate functions by legisla- 
 tive enactments, all inquiry into its original organization is pre- 
 cluded (Colo.) 203 
 
 A foreign corporation does not become a domestic one by complying with the 
 
 laws of this State (Colo.) 204 
 
 Damagres. —Where an examiner of title to real estate gives a certificate of title, he 
 does not.thereby become an indemnitor, but he is liable for any mistake 
 arising from want of due care _. ._ _ (Mo.) 205 
 
 Negligence alone is not to be visited with punitive damages, willful miscon- 
 duct, or that 'entire want of care which would raise the presumption of 
 indifference (Colo.) bo6 
 
 In an action to recover the price of goods sold, measure of damages. . .(Colo.) 207 
 
 If a party who has contracted to deliver a certain thing at a fixed price 
 
 makes a tender of it at the proper time and it is refused (La.) 208 
 
 Recorder of deeds is liable in damages for a false certificate of research. (Pa.) 209 
 
 Debtor and. Creditor. — Claims against the estate of decedents, resting on mere 
 
 oral testimony (Penn.) 210 
 
 Agreement with one creditor for an advantage to him over other credi- 
 tors (N. J.) 211 
 
 Non resident debtors (Colo.) 212 
 
 Debtor who is discharged by a deed of composition (N. J.) 213 
 
 Seeds. — In determining dividing lines between tracks of land (Pa.) 214 
 
 That a deed is ineffectual to convey title as to part of the lands described is 
 
 of itself no ground for setting aside the deed (Colo.) 2x5 
 
INDEX. 155 
 
 Condition in deed, granting land in fee, that intoxicating liquors shall never 
 be manufactured, sold or otherwise disposed of as a beverage, in any 
 
 place of public resort in or upoii the premises granted (Colo.) 216 
 
 A deed duly recorded is constructive notice of its existence and contents to 
 
 all persons claiming what is thereby conveyed (Colo.) 217 
 
 Delivery and acceptance of a deed (La.) 218 
 
 By the acceptance of the deed the contract of sale is executed and 
 
 merged (La.) 219 
 
 Just claim deed — Rights of holder thereof (La.) 220 
 
 When a third party may sue on deed (^N. J.) 221 
 
 The date of a deed (admitted to have been delivered) is prima J'acie evi- 
 dence of the time of its delivery (Kan.) 222 
 
 Description in deeds (La.) 223 
 
 The recitals in a deed as to the consideration (Dakota) 224 
 
 Demand. — Where no time is mentioned in a due bill payable in specific property 
 
 a demand is necessary (Colo.) 225 
 
 Where one receives from a municipal corporation warrants drawn upon its 
 
 treasurer, a demand is necessary (Colo.) 226 
 
 A mere demand for the payment of the balance of purchase money, . .(Colo.) 227 
 
 Deposits.— In an action against a savings bank, on an account^nnexed. . , .(Mass.) 228 
 
 Re^iponsibility of a safe deposit Co (Penn.) 229 
 
 A certificate of deposit payable on the return thereof. (Mich.) 230 
 
 A depositor in a savings bank, who is also a debtor to the bank as a borrower, 
 
 when the bank becomes insolvent (Conn.) 231 
 
 Where the deposit is less than the debt (Conn.) 232 
 
 A savings bank is an agent for the depositors (Conn.) 233 
 
 A depository may show by parol evidence the money deposited was of certain 
 
 ban k bills (La.) 236 
 
 Special depo>it of bonds ,_ (Penn.) 237 
 
 Power of bank over its deposits (Ind.) 234 
 
 When a bank "receives deposits it undertakes to pay the depositor's checks 
 
 to the holder '. (Mo.) 235 
 
 XiZldorsers. — The omission to give an endorser notice of the non-payment . . (Mass.) 238 
 Where the maker of a note furnishes to the second endorser money to pay 
 
 the note (N. J . ) 239 
 
 The endorsee of a negotiable bill or note, in the absence of proof of fraud, is 
 
 presumed to be the bona fide holder for value (N. Y.) 240 
 
 Notice of protest must be properly directed, stamped, etc (Ga.) 241 
 
 Agreement by endorser with a stranger to give time to the acceptor. .(Eng.) 242 
 Where a stranger to the note endorses the same before delivery .... (Minn.) 243 
 Where endorsee of a bill of exchange in sets alleges loss in transmission, (Eng.) 244 
 An endorser of a note, even though it be an accommodation note, is a 
 
 principal debtor (U. S.)* 245 
 
 How an endorser of a note can be changed to a maker (Colo.) 246 
 
 The payee of a note must endorse it in order to make it negotiable paper, he 
 must be treated as first endorser without regard to the time of his en- 
 dorsement (Oregon) 247 
 
 Endorser of a note after it falls due is a grantor (Cal.) 248 
 
 The grantor is entitled to notice (Cal.) 249 
 
 Endorsement without recourse by the one who sells the note (Vt.) 250 
 
 Endorser of a note, though fixed in his liability by protest, is not entitled as 
 a creditor, to a share of the estate of the maker under an assign- 
 ment _ f P?^-) 251 
 
 Names of the payees appeared on the back of the note in the usual position 
 of first endorser, about 3 inches from the left end, that of the defendant 
 in the opposite direction about the same distance from the right 
 
 end (Penn) 252 
 
 Where endorser was induced to sign by fraudulent representations (Ohio) 464 
 
 Note endorsed L, R. receiver (Mass.) 479 
 
 Endorsement upon a note, that the maker may use the principal after 
 
 maturity by payment of interest ....' (Iowa) 253 
 
 Upon failure to pay the interest (Iowa) 254 
 
 A person of unsound mind who signs as surety a note given for an ante- 
 cedent debt (La.) 255 
 
 Two defendants as joint makers, one of whom signed on the face the other on 
 
 the back ... .(Ga.) 256 
 
 ' Endorsing, for the maker's accommodation , after which the maker raised the 
 
 amount of the note by erasing first sum and inserting the larger. . (Mass.) 257 
 
 When endorser may be declared a guarantor (Kan.) 530 
 
 A joint and several note made by the three defendants to order of plaintiff 
 
 and another party (Wyonning) 258 
 
 Endnr=;ement of negotiable paper .^ (Kan.) 533 
 
 An endnr'^er of a check given with his knowledge in payment of a 
 
 gamblin g debt : - (Mass.) 259 
 
 Endorser of a negotiable nnte, who takes it discharged of the equities to 
 
 which it was subject in the hands of payee (Mo.) z6o 
 
as^ 
 
 INDEX. 
 
 TransFfejrofa&ote secured by mortgage (Mn.) 2611 
 
 Endorset of a note not held bound by ia fraudulent alteration thereof made 
 
 subsequent to hifi endorsement .(Mo.j 262 
 
 Although not fraudulently altered the endorser is not liable (Mo.) 263 
 
 Endorsing for accommod'ation to a specified amount and cuiiLinuing to en- 
 dorse renewals to same amount -. (Conn.) 264 
 
 Sale of altered note. ,. ...._. , (Conn.) 265 
 
 The rule where one of two innocent parties must suffer by a fraud, he who 
 
 furnished the means for committing the fraud should suffer (Conn.) 266 
 
 The rule that holds an endorser liable although the note is used in a differ- 
 ent manner from that intended (Conn.) 267 
 
 Defendant could deny his liability as endorser (Conn.) 268 
 
 Plaintiff endorsed a note for the accommodation of payee, who obtained the 
 note as an accommodation from the maker, which note should be dis- 
 counted at a certain bank (Conn.) 269 
 
 Endorser remote from holder defending for failure of intermediate considera- 
 
 ation. Case in judgment (Miss.) 586 
 
 Guaranty,— What constitute a valid guaranty (N. H.) 270 
 
 The party for whose benefit the guaranty is made, should become insol- 
 vent (N. H.) 271 
 
 All promises to answer for the debt or default of a third person must be in 
 
 writing ." (Colo.) 27a 
 
 The language of a guaranty addressed to a factor (La.) 373 
 
 A bank discountedT the notes of B. for $to,ooo. C, had deposited with the 
 bank for collection a note for $15,000 secured by deed of trust. C. wrote 
 the bank that as B. could use some additional cash over the $io,oco 
 aforesaid that the $15,000 note might be held by the bank as security for 
 
 extra money loaned to B , (Mo.) 274 
 
 Failure to serve notice of non-payment to guarantor (Ia.) 275 
 
 The words " we hereby agree to guaranty the payment to M. H, & Co. for 
 any goods which may be purchased of them by A. of Lynn, not how- 
 ever binding ourselves for a larger sum than S500" (Mass.) 276 
 
 A guaranty will be read strongly against the guarantor (N. J.) 277 
 
 "I guarantee the sum of $500 value in glass shades purchased by my son A. 
 from B., terms of purchase to be sixty days from date of invoice, and if 
 not paid within go days, draft to be drawn ou-me for the amount. "(Mass.) 278 
 
 Oral guaranty of the payment of a note of a third person (Mass.) 279 
 
 An agreement to assume at maturity a share of the outstanding notes of R. 
 
 given for his purchase money •, . . .(Mass.) 380 
 
 Upon assigning a bond and mortgage defendant made the following 
 guaranty : I hereby covenant that in case of foreclosure and sale of the 
 mortgaged premises, if the proceeds of such sale be insufficient to satisfy 
 the same, with costs of foreclosure, I will pay the deficiency on de- 
 mand" (N. Y.) 281 
 
 Interest on mutual accounts (Vt.) 28a 
 
 On a note payable on demand ^ (Ala.) 283 
 
 Six per cent, is allowed w'hen no rate is stated (HI.) 284 
 
 When compound interest will not be allowed (N. J.) 285 
 
 Rate stated shall be allowed until verdict or default (Me.) 286 
 
 A promise to pay interest on interest is not illegal (Ala.) 287 
 
 Ten per centum, stipulated for from due until paid will be allowed until 
 
 maturity and a judgment is obtained thereon (Ark.) 288, 289, 290 
 
 Only legal interest will be allowed when a larger interest is not stipulated. (La.) 291 
 
 Mode of computing interest (Me.) 292 
 
 Ten per cent, until maturity and two per cent, per month after cannot be 
 
 treated as a penalty (Ark.) 293 
 
 Loan for two months at two per Cent, a month. Same rate allowed after 
 
 due and sale of notes ordered to jiay the whole claim (Canada) 294 
 
 Money paid to a party who receives it believing it his due, when in fact it 
 
 was not ^ (N.J.) 295 
 
 Interest on a judgment is computed up to the time of first payment and the 
 payment so made is first applied to pay accrued interest, the surplus 
 
 thereafter, if any, to the principal (Neb.) 296 
 
 Where interest is recoverable merely as damages (Me.) 297 
 
 Only legal interest can be recovered in absence of a written agreement to 
 
 pay more (La.) 298 
 
 Intel est payable yearly on amortgage diie near two years after its execution, 
 
 default in payment of interest. . .,_. .(N. Y.) 299 
 
 Parties agrees to pay a higher rate of interest than is custoi^iary in the State 
 
 where he resides (N, Y.) 300 
 
 Banking act 1870, prohibiting a higher rate of interest than 7 per cent.(N. Y.) 301 
 When commercial paper is discounted in a bank at a greater rate of interest 
 
 than seven percent (N. Y.) 302 
 
 Xiiens. — ^Judgment entered on an assessment note, under provisions of the charter 
 
 of the Peoples' Fire Ins. Co. is not a general judgment or lien (Pa.) 303 
 
 Where the note or other written obligation of a third person is taken by the 
 
 vendor of real estate (Mo.) 304 
 
 A judgment docketed, but not properly indexed (Va.) 305 
 
INDEX. 157 
 
 liOans by a non-trader to a trader (Canada) 306 
 
 Sfltarket Price of a marketable commodity may be determined as well by offers to 
 
 sell, made by dealers in the ordinary course of business (N. Y.) 307 
 
 SCarried "Women,— In the case of a purchase by a wife during coverture, the 
 burden is upon her to prove distinctly that she paid for the thing pur- 
 chased, with funds not furnished by her husband (W, Va.) 30& 
 
 Under the Laws of 1874, ^/^etnnie covert is no longer sub prolestati vtrz^ ia 
 respect to the acquisition, enjoyment and disposition of real and personal 
 property.... (Colo.) 309 
 
 Separate estate is presumed in the absence of proof to the contrary. . . .(Ga.) 310 
 
 May give a mortgage upon her property to secure the payment of a debt due 
 
 by her husband (Md.) 311 
 
 Neither embarrassment, nor the actual insolvency of the husband, is any 
 
 obstacle to transfer by the husband to the wife (La.) 312 
 
 Married woman impeaching the certificate of the officer taking her acknow- 
 ledgment (Texas) 313 
 
 SCistake in fact will always be remedied by the courts (Md.) 314 
 
 A clerical error in entering a consent decree (W. Va.) 315 
 
 When money is paid under a mutual mistake Texas) 316 
 
 Any mistake or misunderstanding between persons conducting a judicial 
 
 sale (W, Va.) 317 
 
 ICoiiey Collected by an officer on legal process as a custodia. legis (Me.) 3x8 
 
 SCortETagres. — Tender of the amount due upon a mortgage (Me.) 319 
 
 Owner of the equity of redemption, has to the day of salu to make pay- 
 ment. (Kan. 320 
 
 Mortgage is not invalidated by a misdescription made by a scrivener. (N. J.) 321 
 
 Privy acknowledgement of the wife must be made (Texas) 322 
 
 A clause giving the mortgagor possession without paying rent (Texas) 323 
 
 Primarily without any consideration given to secure certain negotiable 
 
 notes (La.) 324 
 
 A mortgagee who transfers part of the mortgage debt to another (La.) 325 
 
 An assignee of a mortgage given to secure the payment of a negotiable 
 
 note '. (Mich.) 326 
 
 Stipulation in a mortgage for the payment of reasonable attorney's fees in 
 
 case of suit (Dakota) 227 
 
 Mortgage is binding between the parties to it whether acknowledged-or 
 
 not (Ark.) 328 
 
 Registry of a judgment against a party will operate as a legal mortgage . (I^.) 329 
 
 Mortgage executed by a tenant in common (Mass.) 330 
 
 Given to secure the payment of a pre-existing debt (Ala.) 331 
 
 Administrator has no power to borrow money upon a mortgage of the real 
 
 estate of the decedent (Kan.) 332 
 
 Mortgagee of chattels in the absence of an agreement in the mortgage pur- 
 chases the property at a mortgage sale (Colo.) 333 
 
 Rights of mortgagor and of mortgagee (Kan.) 334 
 
 An unrecorded mortgage (Penn.) 335 
 
 A collateral agreement between the mortgagor and mortgagee does not 
 
 afftct the assignee of the mortgage (Penn.) 336 
 
 Absolute conveyance taking back an agreement to reconvey upon the pay- 
 ment of a certain sum (Iowa) 337 
 
 Purchaser from a mortgagor may recover the land mortgaged, in trespass to 
 try title, against parities holding under a foreclosure sale to which plain- 
 tiff was not a party (Texas) 338 
 
 Decree of foreclosure — time of payment (Kan.) 339 
 
 A'Clause in the mortgage fixing the fees of the creditors' attorney of five per 
 
 cent, in the event of the non-payment of the debt. (La.) 340 
 
 May make a valid mortgage for the payment of money without describing 
 
 the writing which may bft evidence of the debt (Me.) 34T 
 
 To redeem, after demand of payment a teoder must be made (Me.) 342 
 
 Assignment must.be recorded the same as the grants are made (Me.) 343 
 
 Remover of part of property mortgaged to another the remainder being in- 
 sufficient to pay, on sale, the mortgage debt. (Kan.) 344 
 
 Where fixtures are severed from the reality mortgaged, by the owner. (Kan.) 345 
 A mortgage to the -firm name omitting some of the surnames of the 
 
 firm (Miss.) 346 
 
 When the mortgagee agrees to pay the note secured by the mortgage and 
 
 enters into possession of the premises ....(Mo.) 347 
 
 Omitting the name of State, County and Township in the description of 
 
 premises mortgaged (Mich.) 348 
 
 When A. purchased an estate with B.'s money and had it conveyed to his 
 
 wife, who took it with notice of the same (Mass.) 349 
 
 Unauthorized cancellation of record of a mortgage by the clerk or re- 
 gister ......(N.J.) 350 
 
 Holder of two mortgages on the same parcel of land, entered to foreclose one 
 
 of them (Mass.) 351 
 
15^ INDEX. 
 
 Mortgage given to secure several negotiable notes, and the notes having 
 
 been assigned to several different holders (Ga.) 352 
 
 Mortgage must clearly indicate the creation of a lien, and specify the debt jo 
 
 secure which it was given (Ga.) 353 
 
 Bill of sale whereby a debtor conveys personal property to his creditor as 
 
 security (Vt. ) 354 
 
 Mortgage of personal property after condition broken (Vt.) 355 
 
 Where mortgagee disposes of the property after tender made and before 
 
 hearing that an order for its delivery cannot be made (Vt. ) 356 
 
 When national banks may take real estate mortgages (Mass.) 357 
 
 Mortgage with a power of sale to B., and afterwards mortgagor conveyed 
 
 the equity of redemption to C (Mass.) 358 
 
 ITegrliireil-Ce. — An assignee of certificates of stock, who leaves the certificates, 
 
 with the assignments recorded, in the possession of the assignor. . .(Me.) 359 
 
 One receiving conveyance of land is bound to exercise ordinary pru- 
 dence (Colo.) 360 
 
 Employment of a common carrier (Colo.) 361 
 
 Partnersllip. — One who permits himself to be held out as a partner (A rk.) 362 
 
 Accounts between partners (Ga.) 363 
 
 Where one of two partners has advanced to the Arm more money than the 
 
 other '. (Conn.) 364 
 
 Commission of profit and loss make special partners (Kan.). 365 
 
 Where joint signers of a note are, commercial partners (La.) 366 
 
 One partner borrowing money representing that it is for the firm for which 
 he gave the firms' note without the knowledge of his partners and used^ 
 
 the money for his own use. (N. H.) 367 
 
 Real estate held by a commercial firm as partnership assets (Miss.) 368 
 
 Power to dispose of partnership property (Miss.) 369 
 
 Assignment of partnership property for benefit of its creditors (La.) 370 
 
 Enforcement of individual debts against a firm's assets (Me.) 371 
 
 Note executed in firm name in liquidation, by an agent of one of the former 
 
 partners (La.) 372 
 
 Surviving partner may sue for the amount due his late firm (Nevada) 373 
 
 Loan made by two members of a commercial firm in a matter foreign to the 
 
 business _. ' . (La.) 374 
 
 Suit by a creditor of a former firm against the individual members of new 
 firm for Itemized account and also on a note of the firm, given in liqui- 
 dation of the account by one not authorized to sign for the firm. . ..(La.) 375 
 Exemption from the liability of a general partner under the act of 1874, 
 
 respecting limited partners-hips (Colo.) 376 
 
 Action brought by one partner to have an accounting wiih his two partners, 
 
 and to recover a balance due him * (Kan.) 377 
 
 Individual members of a commercial firm may execute a valid note on their 
 
 individual property in favor of the firm (La.) 37S 
 
 Service upon one member of the firm, after dissolution, confers jurisdiction 
 to render a judgment which may be satisfied out of the partnership 
 
 property (Iowa) 379 
 
 Where all the partners are in a situation to sue out attachments against 
 
 them respectively ._. (Ga.) 380 
 
 Surviving partner who gives bond under R. S. C. 69, sec. 2, and is afterwards 
 sued upon a note of the firm, is not, therefore, a representative of his 
 
 deceased partner and as such entitled to testify, etc (Me.) 381 
 
 Note in renewal of another made by same partner who signed the last, 
 which, itself, was in renewal of a note by a different firm of which 
 
 signer had been a member (Ga.) 382 
 
 Anthority of one partner to bind the others . . .^ (Iowa) 383 
 
 When the partner who signs the note signs his individual name before that 
 
 of the firm (Iowa) 384 
 
 Creditors of a corporation selected three of their number to act as directors 
 
 of the Co. and charged with the management of the business (Penn.) 385 
 
 Owner and shipper of property doing business under name of a firm when 
 
 there is no other connected with him (N. Y.) 386 
 
 Ordinary partnership cannot be held liable for the individual debtof'one of 
 
 its members (La.) 387 
 
 A. claimed that B. was his agent only, and not a partner, although he was 
 
 to have a portion of the proceeds of their products (Penn.) 388 
 
 Partners, during the partnership, cannot claim individual exceptions in part- 
 nership property when taken under legal process (Ala,) 389 
 
 Promissory note signed by one partner for his own benefit (N. Y.) 58^^ 
 
 Where no other relation exists between the shareholders of a steamboat 
 than that which arises from joint ownership, they are not part- 
 ners (Penn.) 390 
 
 When one of the partners of a firm may transfer the assets of the 
 
 partnership in payment of his individual debt (Miss.) 391 
 
 Partners and bankers, accounts of individual partners and of firm. . .. (Eng.) 392 
 In equity only, are the separate creditors of a partner entitled to a prefer- 
 ence over the creditors of the partnership. (la.) 39^ 
 
INDEX. 159 
 
 Statute of Limitations. Division of losses (Canada) 394 
 
 Where a partner fraudulently misappropriates the money of his firm. .(N. J.) 395 
 Acceptance of bill by one partner for separate debt, and not in name of firm. 
 
 Liability of co-partners (Canada) 396 
 
 Real estate purchased with firm funds for firm purposes (Nevada) 397 
 
 Partnership property of insolvent firm lyhen sold to pay firm debts no 
 
 right of redemption exists Nevada) 398 
 
 Non-resident commercial firm make an agreement with two resident firms to 
 
 purchase certain merchandise (.La.) 399 , 
 
 Statute of limitations as running against estate of a deceased partner who 
 
 previous to his death had retired from the firm (Ga.) 400 
 
 Payments made voluntarily on an unfounded demand or in ignorance of the 
 
 law ^ (Penn.) 401. 
 
 Where the debts are of like nature the.ijnputation of paymerfts. (La.) 402 
 
 Payment made voluntary by the mortgagee of claims against the estate, 
 
 which was not necessary for his protection (111.) 403 
 
 Partial payments made on a debt past due (Ala.) 404 
 
 Payments claimed as credits on a debt (Ala.) 405 
 
 Payment of a debt by giving several notes and only a part of them are 
 
 paid (Gal.) 406 
 
 Taking the acceptance of the debtor (Mich.) 407 
 
 Where some had paid their share in a suit against six joint and several 
 
 makers of a note (Ga.) 408 
 
 Payment by an insurance broker.. , (Me.) 409 
 
 Payment of money cannot be made dependent on the performance of a 
 
 « condition by_ the party to whom it is to be paid (Cal.) 410 
 
 Legal presumption of payment of a bond, given for the payment of money, 
 
 does not arise from mere lapse of time . . . . , ( W. Va.) 4ir 
 
 Plea of payment before a magistrate and found for defendant (Ga.) 412 
 
 When plaintiff held several notes against the deceased (Nevada) 413 
 
 Made by a debtor without special instructions as to their importation, ..(La.) 414 
 Defendant was indebted to plaintiff, first, as he was member of a firm and 
 
 afterwards individually |..(Me.) 415 
 
 A. sent to do work for C, and A.'s bookkeeper made out a bill for the work, 
 
 when finished, which was given to B. who demanded the money from 
 
 C. and received it^ etc (IVIass.) 416 
 
 Pledg'es. — A bill of sale of goods, absolute in its terms, given to protect the ven- 
 dee again:t his liability as security for the vendor (Mass.) 417 
 
 Factor cannot, generally, pledge the goods of his principal for his own 
 
 liability (Mo.) 418 
 
 Stock of a corporation which is only transferable on the books of the Co. 
 
 can be pledged validly by delivery (o the creditor of certificate (La.) 419 
 
 Stock held in a fiduciary capacity, \\^s prima facie ^ no right to pledge it to 
 
 secure a debt growing out of an independent transaction (N. J.) 420 
 
 Bailee who pledges goods, left with him for safekeeping and converts the 
 
 proceeds to his own use (Colo.) 421 
 
 The delivery of chattels to another as indemnity for suretyship (Colo.) 422 
 
 Pledgee of a mortgage of note in whose hands it has been placed to secure a 
 debt due him by the pledgor, sells the property mortgaged to secure the 
 note for a less sum than the amount of the note and immediately sells it 
 
 for a larger sum (La.) 423 
 
 A consi°;nee who has made advances on cotton shipped to him has a right 
 of pledge on it, and its proceeds; for the re-imbursement of those ad- 
 vances (La.) 424 
 
 Pledgee was security on a promissory note, transferred the property to the 
 
 payee for the discharge of the debt (Col.) 425 
 
 Pledgee can sell only, and for the purpose of applying proceeds to extin- 
 guish the debt : (Colo.) 426 
 
 Where the subject matter of a pledge is divisable (Ark.) 427 
 
 Acceptance by the pledgor of the surplus arising from an illegal sale . . (Ark.) 428 
 
 Waiver of notice of sale (Ark.) 429 
 
 Measure of damages for illegal sale (Ark.) 430 
 
 Deposit of U. S. 5-20 bonds with a bank for safe keeping and the cashier 
 
 pledges them (Mo.) 431 
 
 No valid pledge of a mortgage, or vendor's privilege can be made by mere 
 
 agreement of parties La.) 432 
 
 Authority of pledgor of note-forbearance, etc. . . (Ark.) 4^3 
 
 Where assignee is a (rii?tee for his assignor - ■ .(Ark.) 434 
 
 One to whom a promissory note is pledged as collateral security for a 
 
 debt : ... (Til.) 43."i 
 
 Loan on pledged stock, the assignment of which was forged (Md ) 436 
 
 Pledge of certain Canada Railway bonds as security for a debt (Canada) 437 
 
 Protest may not be in some cases necessary (Ind.) 438 
 
 Where last endorser is expected by all parties to pay the bill (Eng.) 439 
 
 Notice, to the person named in a will as executor, of the non-payment of a 
 
 note endorsed by his testator ,' (Mass.) 440 
 
i6o 
 
 Where endorser dies before the note comes due (N. J.) 441 
 
 Notice from a deputy Notary Public (La.) 443 
 
 Record of the proceedings of a notary public on the protest of a note. (Miss.) 443 
 
 Proof of notice of protest in an action against endorser (Miss.) 444 
 
 Note, fell due 011 25th July, on which day it was duly presented tor payment 
 
 and protested, but notice of protest was dated on the 26th (Canada) 445 
 
 Two notes paj able at any bank in Boston (Mass,) 446 
 
 Promissory ITotes. — Where the endorser offered to give a new note at the ma- 
 turity of first note (Mass.) 447 
 
 Note made in name of firm by one partner and held by an innocent 
 
 holder (Mass.) 
 
 Possession of a note is irima facie evidence that the bank is the oki 
 
 .thereof Jh. C < 
 
 Suit against administrator of a decflicd joint maker of a note (N. J.i 
 
 Note payable in bank endorsed for value before maturity (Ind.) 
 
 Upon demand and refusal of payment of a note on last day of grace .... (Ark.) 
 
 Note of a turnpike company (Cal.) 
 
 Because a note did not belong to a succession or that the administrator was 
 
 not qualified to act cannot be Used to annul a judgment on said note. (La.) 
 
 Note endorsed in blank and acquired by the holder before maturity .... (La.) 
 
 Parol evidence of the endorsement of a note '. (Del.) 
 
 Lost note, which was transferred before its maturity (La.) 
 
 Negotiable securities stolen and afterwards sold by the thief (N. Y.) 
 
 Note transferred by its debtor to a bank, in payment of his indebtedness 
 
 and the bank transferred it to A. its cashier for him to sue on it. . .(Ohio) 459 
 Note being transferred before maturity, A. is not subject to any defence of ^ 
 
 which neither he nor the bank had notice (Ohio) 460 
 
 Signer of a note which reads that '""we promise imolido" etc (La.) 461 
 
 To defeat the title of an innocent purchaser to a note, on the ground of 
 
 inadequacy of the price paid for it (Ohio) 462 
 
 Municipal corporation has no power to invest its obligations except by act 
 
 of the legislature (N. J.) 463 
 
 In case of notes, bills, etc., a month is always a calender month (Tenn.) 464 
 
 Innocent holder of a note (Me.) 465 
 
 Where endorser was induced to endorse by fraudulent representation. (Ohio.) 466 
 Note given for patent-right without the words inserted '* Given for a pat- 
 ent rights" ;(Vt.) 467 
 
 Action by payee of a joint and several note payable on demand against a 
 maker, wherein the maker pleads that he signed as accommodation 
 
 maker (Eng.) 468 
 
 Note made payabe upon a condition which was written below the note on 
 
 the same piece of paper % .(N. H.) 4G9 
 
 Agreement by the endorser of a note for a definite extension of time, the 
 
 maker agreeing to pay a greater rate of interest (Neb.) 470, 471 
 
 U. S. Stamps on a note (La.) 473 
 
 Nbte made payable to any person "or order," ** or assigns;" *'or 
 
 bearer" .(Neb.) 473 
 
 Any words in a note from which it appears that the maker intended it to be 
 
 negotiable will give it a transferable quality (Neb.) 474 
 
 Note payable to order but has not been endorsed, and which is accidentally 
 
 burned while in the possession of the payee ...(Kan.) 475 
 
 Where a note framed on a printed blank, was complete at the time it left the 
 party sought to be charged, but was so printed as to give an apparent 
 
 authority to fill a blank.. (Mo.) 476 
 
 Note given for the price of a thing which the vendor assumed to sell, but 
 
 which never had an existence (La.) 477 
 
 Giving a note for an antecedent debt ts not necessarily a payment of 
 
 it (Fla.-J 478, 479 
 
 Note executed in error, for a debt not due by the maker (La.) 480 
 
 Note though dated in Boston, was actually made in New York (Mass.) 481 
 
 Owner of a hote negdtiable by endorsement may maintain an action although 
 
 no endorsement has been made to him (Kan.) 483 
 
 That an additional rate of interest will be paid "after due" does not vitiate 
 
 the negotiability of a note. (Mass.) 483 
 
 Action on a note and mortgage where it is admitted that the plaintiff is the 
 
 holder of the note (Kan.) 484 
 
 Title to negotiable paper cannot be defeated by proof of negligence or want 
 of diligence in enquirihg into the title or the equities between the parties 
 
 thereto (Mo.) 584 
 
 Note of firm made by one partner and disposed of for his own bene- 
 fit (N. V.) S9« 
 
 Note, endorsed in blank by the payee, in the possession of a third psrty, 
 who produces it at the trial is prima facie evidence that he acquired the 
 
 same before maturity without notice (Ga.) 486 
 
 Note due from resident of Colo, to a resident of Cat. is not subject to taxa- 
 tion in Colo.... . .. (Colo.) 487 
 
 Where consideration is expressed in a note to be stock in a Railway 
 
 Co (Iowa) 488 
 
INDEX. l6l 
 
 Note or other written evidence of debt, payable in current funds. . (La.) 489, 490 
 
 Payment by a note of a pre-existing debt must be accompanied by an agree- 
 ment to accept the same as such payment Cal.) 491 
 
 Note signed by three persons as makers, one of whom write surety after his 
 
 name (N. Y.) 593 
 
 Where a widow, who is executrix of the estate of the deceased husband, and 
 the estate is community property, and she gives her note for a debt of 
 her deceased .husband, which is outlawed, supposihg it was not (Cal.) 492 
 
 Rights of possession of negotiable paper (N. Y.) 594 
 
 Party purchasing a note from the payee before it is due, but after the 
 
 payee has executed to the payor a release (Cal.) 493 
 
 What may be considered an accord and satisfaction and payment of a 
 
 note .- (Cal.) 494 
 
 Comtemporaneous written agreement executed by the payee of a note show- 
 ing a contingency upon which the payment of the note is to de- 
 pend (Colo.) 495 
 
 As defence in a suit on a note it was claimed that the note was donated to a 
 church on condition that the lot on which it v/as erected should be con- 
 veyed to the church (Penn.) 496 
 
 Two or more notes secured by a single niorigage fall due at different times, 
 
 shall be paid, etc (Kan.) 497 
 
 President of an Ins. Co. gave a certificate that the Co. had on deposit a cer- 
 tain number of dollars and signed it " H. president and treasurer, local 
 board of trustees" (Ala.) 498 
 
 Negotiable paper which is void in the hands of the payee (Ark.) 499 
 
 Note given by the widow to a creditor of the deceased husband, who does 
 
 not take it in payment of the debt (Ala.) 500 
 
 Note payable on or before three years from date, is not due until the three 
 
 years has expired (Mich.) 501 
 
 Note given by one member of a firm in its name, in payment of debts, some 
 of which were contracted before another member came into the 
 firm (Mass.) 502 
 
 Suit on a note transferred to plaintiff as collateral security for money loaned 
 
 before due (Ga.) 503 
 
 Notes made by the lessee payable to the lessor at different dates were given 
 to and accepted by him in consideration of the surrender of a lease in 
 which it was provided that in case of fire rent should be sus- 
 pended (Mass.) 504 
 
 A protested draft offered in payment of a debt due to an insolvent 
 
 bank (Penn.) 505 
 
 Where defendant alleges an alteration (Mass.) 506 
 
 The addition of the name of another joint maker to a note without the knowl- 
 edge or consent of the others (la.) 507 
 
 Acceptance of a note in payment of a debt (Ill-) 50^ 
 
 Where the note and mortgage provide for ten per cent, per annum (la.) 509 
 
 One of two partners loaned money to the firm for which he took the firm's , 
 
 note signed by both partners (Vt.) 510 
 
 Maker of a note conveys land to the holder, by way of security for its 
 payment, and the holder afterwards sells the note to a third person 
 and the land to another (Cal.) 511 
 
 Omitting to insert the words *' given for a patent-right " (Vt.) 512 
 
 Note received for liquor sold in violation of law (Vt.) 5r3 
 
 The payee of a note being anxious to get it off his hands is not considered 
 
 suspicious (Mich.) 514 
 
 Note left blank as to the amount but perfect in all other particulars, executed 
 by one as principal and another as surety and entrusted to the former 
 for delivery to payee (Ind.) 515 
 
 Collateral contract to pay a certain sum per month as intereston a note, and 
 
 the payee soon after sells the note (Eng.) S16 
 
 A., being indebted to B., as surety, in order to enable E.'s agent to raise 
 money, and to "obtain further time on debt to B. made his note to the 
 agent of B _ (Ark.) 517 
 
 By mistake a note at two months was dated Jan. ist, 1854, instead of Jan. 
 
 ist, i8s5, and across the face was written ''due March 4th, 1855". (Eng.) 518 
 
 Negotiable paper payable at a time certain is dishonored by non-payment at 
 
 the time ..(Mo.) 519 
 
 A. and B. enter into partnership, and B. is to furnish $1,000 as his part, 
 which he hands to C. to deliver to A., and A. when he receives it gives 
 C. his note therefor (Cal.) 520 
 
 Where the maker of a non-negotiable note is, at the maturity thereof, bank- 
 rupt (Mo.) 521 
 
 Where maker of a note payable to a certain person or bearer, on being 
 enquired of by a third person to whom the payee had offered, after its 
 dishonor to sell it, answered that it was all right (Ga.) 522 
 
 Where it is claimed that the date of a note in suit is a mistake, and the note 
 
 on its face is payable six months after date (Kan.^ 523 
 
 When it is claimed the note was fraudulently obtained (Kan.) 524 
 
 When a person who can read, signs and delivers a negotiable note without 
 
 knowing it to b,e such (Ohio) 525 
 
l62 INDEX. 
 
 Purchaser of paper is npt put, upon inquiry by mere knowledge that the 
 
 payee is engaged in seUing liquor ,. (Mich.) 526 
 
 Maker of note is liable to endorsee before due and for value, if guilty of neg- 
 ligence in the execution thereof (Ohio) 527 
 
 He who negligently signs, and delivers to another, a printed form of a 
 
 negotikble note containing blanks, without knbwing it (Ohio) 528 
 
 Petition against several makers of a joint and several note more than 15 
 
 years past due j, '.• (Ohio) 529 
 
 Note pleaded as a set-off shows on its face that it was for sufficient considera- 
 tion (lud.) 639 
 
 Note in which it is expressed to be for value received payable to B. or 
 bearer. _Asto maker the "note was entirely without consideration and 
 
 was obtained from him by fraud (N . H.) 530 
 
 Note given to hinder, delay and, defraud the makers' creditors (N evada) 531 
 
 When endorser may be declared a guarantor (Kan.) 532 
 
 Where a note,, obtained from the possessor by fraud, has been transferred to 
 
 a third party.. , (Mass.) 533 
 
 Good equitable defence by one maker of a note that he was surety for the 
 
 other (Eiig.) 534 
 
 Endorsement of negotiable paper (Kan.) 535 
 
 Sale of his stock of goods by an insolvent merchant to his penniless clerk, 
 
 accepting said clerk's note therefor (La,) 536 
 
 Limitation of action — partial payment (Kan.) 537 
 
 Party knowing the signature to a note to be forged, yet acknowledges it as 
 
 his own i . .(Mass.) 538 
 
 Note declared upon lost pending action (Ga.) 539 
 
 Note signed by two, one being surety for the other, with the knowledge of 
 the payee but without any agreement to that effect between payee and 
 
 surety (Eng.) 540 
 
 Alteration of the date of a note without consent and to prejudice of 
 
 maker (Ark.) 541 
 
 Defence of note payable to bearer that the note had been deposited with 
 
 third person as collateral security (Ga.) 542 
 
 Proof that the consideration of a note upon which suit is brought _was 
 
 the unlawful sale of liquor (Mich.) 
 
 Material alteration by the erasure of the word " surety " on a note (la.) 
 
 Where transfer of title in note without liability (La.) 
 
 Note signed by " George Moore, treasurer of M. F. D. Asso." (Me.) 
 
 Endorsement is necessary to pass title by plaintiff in execution (Ga.) 
 
 Legal import of a blank endorsement upon a note (Colo.) 
 
 Plea of general issue by a bank against the maker of a note (Me.) 
 
 Assignment and delivery of a note payable to order before maturity, without 
 
 endorsement ; . . (Me.) 550 
 
 Averment in a complaint on a note, that a certain sum *^ is due as principal 
 
 and interest on said note" (Ind.) 551 
 
 Verbal acknowledgment of, and promise to pay a note made by one of its 
 
 . solidary makers (La.) 552 
 
 Forbearance to one maker of a note (Eng.) 553 
 
 Future services as a consideration of note . ._ (Eng.) 554 
 
 Mortgage note of a wife knowingly received by a cx*editor of the hus- 
 band : (La.) 55S 
 
 Note given creditor to induce him to sign composition (Eng.) 556 
 
 Note given as collateral security for a debt then created, Svith notice of no 
 
 equities (Mo.) 557 
 
 B. and C. owing D. for which B. gave a note to A., the agent of D. at 
 maturity the note was not paid. A. agreed to assume' the original debt 
 
 arid to transfer note to C. on C.'s giving his own note to A (Mass.) 558 
 
 Creditor holding mortgage note of a third pefson as collateral security.(La.S 559 
 Note given to one creditor, in fraud of the maker's other creditors. . . .(Mass.) 560 
 
 Note entitled to days of grace (111.) 561 
 
 Where the endorser was indebted to maker when he endorsed (N. J ) 562 
 
 Note given in consideration of certain criminal proceedings being discon- 
 tinued ^ (La.) 563 
 
 Executing a note in the name of another without authority to do so. . . .(La.) 564 
 
 Suif on note ppyable to bearer (Ind . • 565 
 
 When demand not /necessary for payment of a note at place designated in 
 
 note (La.^ 566 
 
 Unconditional note cannot be changed into conditional one by parol evi- 
 dence (Ga.) 567 
 
 Taking: note with notice of fraud before endorsement (Eng.) 568 
 
 Note given for forbearance to prosecute (Eng.) 569 
 
 One who takes a stolen negotiable instrument iona fide and for 
 
 value (Eng.) 570 
 
 Note' payable to bearer transferred to plaintiff solely to enable him to bring 
 
 suit on it (Neb.) 571 
 
 Negotiable note endorsed and deposited with the bank as collateral security 
 by S. for a loan of half its amonnt. Sometime after S. sells note to O. 
 
 and gives him an order for it on the bans (Va.) 572 
 
 Alteration of a note in any material part (Neb.) 573 
 
INDEX. 163 
 
 Note completed and delivered, no alteration thereafter can be made except by- 
 consent .^ (Neb.) 574 
 
 Agreement to pay 18 per cent, interest on a note at the time of its execution 
 
 is usury , (Neb.) 575 
 
 Payee of a negotiable note cannot be held as a maker thereof although his 
 
 endorsement was for the purpose of giving it credit (Minn.) 576,577 
 
 Any set-oflf to note which would have been good between the original parties, 
 
 may oe pleaded against an endorsee (Neb.) 637 , 
 
 Set-ofF to the maker of a note, who was principal, arising after maturity of 
 
 the note (Eng.) 638 
 
 Note given to Railway Co. to aid in constiuctiun of a road between two 
 points named in the note, with proviso that others give their individual 
 notes to a certain amount, but which were never obtained (^^O 57^ 
 
 Material alteration of a note made by holder (la.) 579 
 
 Surety contracts to pay note, while the guarantor undertakes to pay it upon 
 
 condition, to alter the note as to make a guarantor a surety (I^-) 580 
 
 Such alteration without proof to the contrary, will be presumed fraud- 
 ulent (la.) 581 
 
 Cannot recover right of action by removing the alteration (la.) 582 
 
 Renewal given with understanding that the original note shall be surren- 
 dered (Mo.) 583 
 
 Note payable at a bank in another State (Ind.) 584 
 
 In suit against the maker it is no defence to, that since the commencement 
 of suit the endorser has paid the plaintiff and taken up the note and 
 taken an assignment of the suit (Me.) 585 
 
 Under our State the title to a note whether payable to order or assiEns or 
 
 not, is transferable by indorsement OVEiss.) 586 
 
 Endorser remote from holder defending for failure of intermediate consider- 
 
 _ ation. Case in judgment (Miss.) 587 
 
 Failure to sue all the parties to a note (Miss.) 583 
 
 Note payable at a bank of both maker and payee, credit given to payee in 
 
 pass-book, right to revote (Canada) 589 
 
 Note made by one of two parties in hands tuibona Jide holder (N. Y.) 592 
 
 Joint and several note signed by three persons (N. Y,^ 593 
 
 Possessor of negotiable, no better title to proceeds than to paper (N. Y.) 594 
 
 Note signed '^United States Mfg. Co., George H. Fox, treasurer," (see 
 
 Paragraph after No. 594). . . , (Mass.^ 590 
 
 Note endorsed in blank, etc (Canada) 595, 
 
 Suit on a note whereon N. was principal and defendants and others were 
 sureties. Plaintiff and N. induced defendant to sign another note to be 
 used in taking up the former note. After getting new note signed 
 plaintiff bought it of N. , advancing money thereon (Vt.) 596 
 
 Note payable on demand given instead of a note issued previously and al- 
 leged to have been lost (Mass.) 597 
 
 Action on a note against the maker, the defence was that the note in suit 
 was signed by the defendant at the request and for the recommendation 
 of the O. R. Co (Mass.) 598 
 
 Note as follows, ^'$2,268.00. Boston, February ist, 18.2. For value received 
 I promise to pay to B. B. N., or order, $2,268.00 in one and a half years, 
 or sooner at the option of the mortgagor, from this date, with interest to 
 be paid semi-annually at the rate of seven per cent, per annum during 
 said term, for such further time as said principal sum or any part there- 
 of shall remain unpaid;" endorsed "waving demand and notice". (Mass.) 599 
 
 Note executed by a married woman, omitting essential statement there- 
 in ; .(N.Y.) 600 
 
 Note made for accommodation of payee, but without restriction as to its 
 
 use ; (N. Y.) 601 
 
 Note made payable at any bank in a specified city (Ala.) 602 
 
 Maker, on delivery of the note was to transfer to payee certain stock as se- 
 curity for the payment of the note, and, in case of his failure to pay, the 
 payee was to take the stock in full satisfaction (Mass.) 603 
 
 Note, with interest coupons attached, but containing a clause that if interest 
 
 is not paid, etc., principal shall be due ' (IH.) 604, 605 
 
 Note containing stipulation that unless notice was given on July ist, failure 
 
 of consideration should not be pleaded (Ga.) 623 
 
 Note endorsed and when due a new note given, with promise that the en- 
 dorsers would come in and endorse but did not (N. Y.) 606 
 
 Power to sell property, in the absence of any expressed limitation, is 
 authorized to do any act or to make any declaration in regard to the 
 property found necessary to make a sale. Action broueht to have three 
 notes declared void for usury (N. Y.) 608, 6og, 610, 611 
 
 Where draft did not specify any place of payment. Plea of usury. . .(N. Y.) 612 
 
 Note given between two parters in the purchase of a patent right, 
 
 etc (Mass.) 613 
 
 Note given ^vithout stamps, only part of which were put on, some afterwards 
 
 by holder (Canada) 614 
 
 Part payment of a draft by drawing and discounting another. ..(Canada) 615 
 
 Note given by a firm in N. Y. to a silent partner in Canada, but payable in 
 N. Y., the Canada partner sold the note in Canada at a higher rate of 
 
164 INDEX. 
 
 discount than 7 per cent.; was the note subject to N. Y. usury 
 laws ; (Cana.) 616 
 
 Note given for the purchase money for land assigned by the vendor of the 
 
 land to a firm as collateral' security for a claim of a smaller amount (Ark. 617 
 
 A. purchased a tract of land, executed his note for the purchase money and 
 received a bond for title. B., at request of A. paid the note and vendor 
 executed a deed to A. who at same time made his note to B. for the sum 
 
 so paid and gave him a mortgage on the land (Ark.) 618 
 
 Acceptance of vendor of laud of a forged mortgage to secure the pay- 
 ment of a note of the agent (Ind.) 6ig 
 
 Purchase money of land is payable in several mstalments evidenced by 
 notes due at different times, holder may enforce his lien against the 
 land when one or more of such notes come due (Mi?s.) 620 
 
 Sale. — Pretended sale by an insolvent debtor to one of his creditors (La.) 621 
 
 Where several distinct articles are bought at same time for different 
 
 prices (Mass.) 622 
 
 Delivery of goods by a seller to a carrier ...(N. Y.) 623 
 
 Buying property with full knowledge that the title to the same is in dis- 
 pute (La.) 624 
 
 Defect of an animal apparent upon casual inspection (Colo.) 625 
 
 When it is shown that the expressed consideration of a transfer does not 
 
 exist (La.) 626 
 
 Advances on a growing crop (Ga.) 627 
 
 Note for fertilizers contained stipulation that unless notice was given on 
 
 July ist, failure of consideration should not be pleaded (Ga.) 628 
 
 Goods sold selected by buyer weighed, marked with initials of buyer and 
 placed by itself in store of vendor to be removed upon payment for it or 
 giving an acceptable note for the amount. Goods were destroyed by fire 
 
 in vendor's store (Mass,) 629 
 
 Where vendee in a contract of sale refuses to receive the article sold. . . .(La.) 630 
 Trustee to whom property is entrusted for sale mortgages the 
 
 same (Canada) 631 
 
 Defendant cannot resist payment of a demand for price of goods sold and 
 delivered to him, on the ground that the sale was in fraud of the credi- 
 tors of seller (Miss.) 632 
 
 A warehouseman sold part of a larger quantity which he had in store and 
 gave the purchaser a warehouse,receipt under the statute, without sepa- 
 rating the wheat. Insurance interest (Canada) 633 
 
 Warranty with sale (Ga.) 634 
 
 Goods consigned to A. for sale who made advances on them to con- 
 signor ^ (Mass.) 635 
 
 Except in cases where there is an express agreement, goods are not at the 
 risk of the buyer until they have been weighed, counted or mea- 
 sured (La.) 636 
 
 Cannot set aside a sheriff sale after the return day of the execution. .(Penn.) 637 
 
 By terms of sale of goods, the buyer was to send for them (Mass.) 638 
 
 Set-off — Implied contract _, (Kan.) 639 
 
 Plea of set-off, setting up a promise good in parole, by the common 
 
 law (Colo.) 640 
 
 Surviving partner, in an action against himself to recover a debt which he 
 
 individually incurred (N. J.) 641 
 
 Any set-off to a note which would have been good between the original 
 
 parties, may be pleaded against an endorsee (Neb.) 642 
 
 Set-off to the maker of a note, who was principal, arising after maturity of 
 
 note .' ...; ; ; (Eng.) 643 
 
 Note pleaded as a set-off shows on its face that it was given for a different 
 
 consideration (Ind .) 644 
 
 A claim arising from a bonus paid on a usurious loan (N. J.) 645 
 
 Actionarising upon contract , (Nevada) 646 
 
 Note given by A. to B. and not yet due, cannot, in equity, be set-off against 
 
 a note given by B. to A. upon which A. has brought an action. . .(Mass.) 647 
 A third party, for whose benefit a simple contract has been entered into for 
 a valuable consideration moving from the promisee, and upon which 
 
 third party might maintain an action against the promisor (Colo.) 648 
 
 When one judgment can be set-off against another (N. J.) 649 
 
 Counter-claim set up by the defendants in an action can only be maintained 
 
 where it exists in favor of all the defendants (Wyoming) 650 
 
 W. purchased of A. a claim against B., pending an action by A. upon the 
 claim. B. had previously purchased a claim against A., and had given 
 
 notice thereof to A (Mass.) 65T 
 
 Set-off— Failure of consideration. Eviction — Measure of damages (Ind.) 652 
 
 Statute of Limitations. — Parties to a contract may provide by express stipu- 
 lation for a shorter limitation to.actions (N. Y.) 653 
 
 Letters of a partner recognizing the existence of a judgment against the 
 
 firm, after it is barred by the statute (Iowa) 654 
 
 Where the party, against whom a cause of action exists, by fraud or actual 
 fraudulent concealment, prevents the party in whose favor it exists from 
 obtaining knowledge of it (Iowa) 655 
 
INDEX. 165 
 
 Fraud which must have been discovered if reasonable diligence had been 
 
 exercised (Ga.^ 656 
 
 When a motion to set aside a judgment is barred (Ga.) 657 
 
 *' It will suit my convenience to execute my note for the balance due for 
 
 rent, payable January ist, 1877." The above was offere'd in evidence as 
 
 an acknowledge of the debt (Miss.) 658 
 
 If, at the time when a right of action accrues, there is no one in being to 
 
 assert it (Miss.) 659 
 
 When a demand is necessary to found an action (Mich.) 660 
 
 Upon all demand paper not excepted by statute from the provisions of the 
 
 Statute of Limitations (Mich,) 661 
 
 Debt of intestate — The acknowledgment of administrator (Kan.) 662 
 
 Endorsement in handwriting of the debtor, but not signed by him, of a part 
 
 payment of a note, will not prevent the operation of the statute. . (Mass.) 663 
 Failure of an administrator to sue on, or collect, a note due his intestate 
 
 until it is has become barred by statute (Miss.) , 664 
 
 Action for recovery of one-half of money expended in buying material for a 
 
 house in joint occupancy (Ga.) 665 
 
 The Statute of Limitations cannot be pleaded in bar in a foreign juris- 
 diction {Miss.) 666 
 
 Mistake of fact induced hy attorney of opposite party (Ga.) 667 
 
 Bank bill that ceased to circulate as currency prior to June ist, 1855. ..(Ga ) 667^^ 
 Generally limitation laws act only upon remedies, and do not extinguish 
 
 rights (Ga.) 668 
 
 Security, Surety and._ Sureties.— Surety's right of action does not accrue 
 
 until he has paid in excess of his proportion (Mo.) 669-670 
 
 Security on official bond aids principal in breach (Ga.) 671 
 
 In action upon an undertaking, the law will not increase or enlarge the terms 
 
 of the undertaking to the prejudice of its signers (Kan.) 672 
 
 Judgment on replevy bond in attachment (Ga.) 673 
 
 For a tenant is not released as to rents subsequently accruing (N, Y.) 674 
 
 Promise of a surety assuring the payment of the price of a specific lot of 
 
 goods (La.) 675 
 
 Valid agreement to give time on a note to the principal (N. J.) 676 
 
 Discharge of principal discharges the known surety (Vt.) 677 
 
 Liability of surety on judgment by confession (Iowa) 6S1 
 
 Bond given to secure performance by their principal of future mercantile 
 
 engagements (Mich.) 6S2 
 
 Suit by a bank against a late cashier and the sureties on his official bond, (Dei.) 683 
 Surety or creditor has a right to have any collaterals the debtor may have 
 
 pledged to either for payment (N. J.) 678 
 
 Discharge in bankruptcy of the principal will not release surety (I-^-) 679 
 
 Rule that a contract void as to principal is void also as to surety, does not 
 
 apply always. .. k (Tenn.) 680 
 
 Proof of debt in bankruptcy court by judgment creditor discharges lien, and 
 
 endorser is discharged to extent of inquiry thereby (Ga.) 684 
 
 Agreement by co-surety for benefit of creditor. Assent of payee. . . . (Ind.) 685 
 
 Surety has the right to stand upon the very terms of his contract (Md.) 686 
 
 Delay of creditor (Kan.) 687 
 
 Where nogotiable notes, payable to bearer, are deposited as collateral 
 
 security for a debt (Texas) 688 
 
 Person indebted by bond paid a balance due on it in notes of an insolvent 
 
 bank, which was not known at the time (Del.) 689 
 
 When personal property is assigned to payee as security by maker of a note, 
 
 and as additional security, third persons sign the note as securities (Cal.J 690 
 When several persons are securities, and all but one pay the whole sum. (Cal.) 691 
 
 If one of several sureties dies -. (Cal.) 692 
 
 If one of two sureties dies, and his executor pays all the money for which he 
 
 became liable ...._..._. (Cal. ) 693-694 
 
 A settlement in the probate court by the principal, is binding upon the 
 
 surety (Ala.) 695 
 
 Judgment against principal. Negligence in issuing execution (Ind.) 6g6 
 
 Upon principles of equity, a surety, as between himself and his principal, 
 
 stands upon a different footing, in some respects, from an ordinary 
 
 creditor. (N. Y.) 697-69S 
 
 In an action against a surety upon a note, when forbearance to the maker is 
 
 sought to be interposed, it is'not sufficient to aver merely that '' for good 
 
 and sufficient consideration." (Colo.) 698-699 
 
 To release surety by granting forbearance, it must be given for a time and 
 
 upon a consideration (Colo.) 700 
 
 Suit against surety in a foreign note ic not subject to Statute of Limitations 
 
 in this State (Ga.) 701 
 
 L, became surety on a note for S.. and received a mortgage as security 
 
 against loss (Iowa) 702 
 
 Notes deposited with defendants as collateral security for the payment of a 
 
 note, endorsed by the plaintiffs for the accommodation of M., and dis- 
 counted by defendants (Canada) 703 
 
 Tender. — Tender made of an animal to vendor because of its unsoundness. (Colo.) 704 
 
 Evidence of or dispensation with ...(Canada) 705 
 
 Demand of payment by, and tender of one unauthorized — Equity (Ind.) 706 
 
i66 
 
 INDEX. 
 
 Trusts. — When trustee is authorized to invest in either of two specific niodes(Canada) 707 
 
 Purchaser of property at trustee's sale (Ark.) 70S 
 
 Purchaser of quit-claim deed before the maturity of the purchase-money 
 
 notes, or any of them (Texas) 709 
 
 Trustee selling trust property at less price than other persons are willing to 
 
 give (Canada) 710 
 
 When guardian buys land with the funds of his ward, and take the title in 
 
 his own name (Miss.) 71 ^ 
 
 Usury— Is a defence personal to the parties to the contract, or their legal repre- 
 sentatives '. (Ala.) 712 
 
 Agent's retention of a percentage as compensation without the mortgagee's 
 
 knowledge (N. J.) 713 
 
 Money paid usuriously may be recovered. Rule not changed by present 
 
 usury act (N. J.) 7^4 
 
 Notes given in 1876 for excess of interest in 1873 (Ga.) 7 '5 
 
 Note valid on its face, and calling for only legal interest .(Kan.) 716 
 
 Kven in a charge of usury the principal and legal interest must be paid,. (Ark.) 717 
 Building societies are virtually exempt from the operations of the usury 
 
 laws Canada) 718 
 
 Need not show that legal interest has been tendered, in an action . . . (Iowa) 719-720 
 M. bought at judicial sale the property of H. Before the time for redemp- 
 tion expired B. redeemed it, paying $1,485, and agreed to convey it to 
 
 H. upon his payment of $2,000 (Iowa) 721 
 
 Note in the hands of an innocent holder not subject to usury (Kan.) 722 
 
 A, agreed, on a loan of money, to pay the lender at a certain time, with 
 legal interest, and not paid then, he would surrender to the lender certain 
 
 shares of stock pledged as collateral thereto on this loan . ... (N. J,) 723 
 
 Sale of cotton at a price beyond its real value to one who sold it for a less 
 
 price (Ala.) 724 
 
 Sale made under a mortgage, whether the contract is usurious or not, is 
 
 immaterial (Md.) 725 
 
 All payments of usurious interest are to be taken as payments on account of 
 
 the principal (Ohio) 726 
 
 To borrow money, and issue certificates therefor bearing interest, Js con- 
 ferred by the borough law of the State, and although interest allowed is 
 in excess of legal rate, it does not invalidate the certificates. Is only 
 
 void for excess. ..(Pa.) 727 
 
 Confession of judgment, made for the purpose of aiding in violating the 
 
 usury laws (Iowa) 728 
 
 Quarterly payments. Interest upon unpaid interest (Iowa) 729 
 
 The usury law of 1862 is constitutional, and a contract made in violation of 
 
 it will not be enforced (Oregon) 730-730)^ 
 
 The_ knowingly taking or receiving, by a national bank, of a greater rate of 
 
 interest than is allowed by the State in which the bank is located . . (Ark.) 731 
 That although the Code provides the mode and manner in which a defendant 
 may plead usury, its provisions do not in any manner deprive a party of 
 
 existing remedies for relief (Md.) 732 
 
 When a loan is effected through an agent t (la.) 733-734 
 
 When usurious interest is carried into a general account (Ark,) 735 
 
 R. S. of 1857, c. 45, relating to usury, was unconditionally repealed by st. 
 
 of 1870, c. 169 * (Me.) 736 
 
 Plea of usury is personal (Ark.) 737 
 
 Bill executed in Ohio by one party, and in Virginia by another, thus making 
 a joint bill. No place of payment Indicated. On its face was to bear 
 
 8 per cent, interest (W. Va.) 738 
 
 Note made in New York on demand, with interest, and given to payee as a 
 substitute for a draft then drawn under an oral agreement, with his 
 knowledge, for more than legal interest, and on the note itself it agreed 
 
 orally to pay same interest, (Mass.) 739 
 
 Only question, was the defence of usury established (N. J.) 740 
 
 Defence of usury against a morgage (N. J.) 741 
 
 Defence set up that the mortgages were made in New York, and are sub- 
 ject to the laws of that State (N. J.) 742 
 
 Judgment entered on a bond given for money loaned at usurious rate of 
 
 interest (Penn.) 745 
 
 E. obtained judgment on a note against V., afterward E. assigned $2,500 of 
 it to D. On affidavit V. opened the judgment, and offered to prove that 
 D, loaned him (V.) $2,500 in New York at usurious rate of interest. .(Pa.) 744 
 Where a note tainted with usury has been transferred to another without 
 
 notice (N. Y.) 745 
 
 Legal rate of interest in District of Columbia (Md.) 746 
 
 Warranty of title is implied in a contract of exchange same as in a contract of 
 
 sale (Vt.) 747 
 
 Goods sold with a warranty of quality, and those delivered, though inferior, 
 
 are retained by the vendee (Colo.) 748 
 
 Vendee can refuse to receive goods because they are inferior, and is not 
 liable for injury while in his charge, if due care of them has been taken 
 
 by him (Kan.) 749 
 
 Breach — return of goods (Kan.) 750 
 
 Cannot recover on an additional parole warranty (la.) 751 
 
THE FINANCIAL SITUATION 
 
 COFSIDEEED IN A PAPER 
 
 SUBMITTED TO THE 
 
 ^otiiiiiittee 011 l^anliitig mii J^'tirrencg 
 
 OP THE 
 
 House of Representatives, 
 
 BY A 
 
 MERCHAJVT OF PHILADELPHIA. 
 
 The Resumption Act of Januaky 14, 1875, a Charter without 
 LIMIT ; THE Law Indestructible by Legislation." 
 
 WASHINGTON, D. C. : 
 J. E. Beakdsley, Printer, 479 Penna. Avenue. 
 
 1877. 
 
Me. Joseph C. Grubb, of the Philadelphia Board of Trade, 
 
 Mr. Chairman and Gentlemen : In the half-hour of your 
 time that I will occupy, I shall discuss the financial situation 
 from a business stand-point. All that I know of the ques- 
 tion has been gathered by observation as a merchant and 
 from the traditions of an occupation that was established at 
 the foundation of the general government, and has come 
 from father to son down to the present time. Chiefly, I 
 shall try to show, that the resumption act, for the repeal of 
 which a bill is now before Congress, is a charter, the fourth 
 of the kind that Congress has enacted, and that it is indestruct- 
 ible by legislation ; the right to repeal is not in the power of 
 Congress, and that while it is not imperfect, it is yet still in- 
 complete. Further, I hope to show, if I have the ability, that it 
 may by supplementary legislation secure the object for which 
 the law was framed. 
 
 The law itself, which was enacted January 14, 1875, and 
 is known as the resumption act, unmistakably declares, in 
 eifect, that the national circulation, after January 1, 1879, 
 shall consist of coin and national bank notes redeemable in 
 coin. It was a notice to the authorities to substitute, at that 
 date, this currency for the legal tender notes. The law was wise 
 in every sense in which it can be regarded. It is, without 
 doubt, a binding contract between the people, the national 
 banks, and the Government. It is a precept to the people 
 and a mandate to the banks. It is one and the same with 
 the colonial charter granted in 1781, to the Bank of North 
 America by the Continental Congress. This bank rescued 
 the colonies from the Continental money and supplied a sol- 
 vent paper circulation in its stead ; it still survives in all the 
 vigor of its primitive days, now close upon its centennial 
 year, a marvel of successful usefulness. 
 
 The act is one and the same with the law incorporating 
 the bank of 1791 that succeeded it, which gave a lead and a 
 
consistence to the debts of the war for independence, and 
 also with the baiik'ChaiFteriof 1816, which followed and re- 
 constructed the finances after the war ending in 1815 ; this 
 bank, with the two former, discharged in full the debts in- 
 curred in both wars, the Government, in addition, by their 
 fragiil management being enabled to divide a large surplus 
 with the several States. The city of my residence was the 
 seat of these institutions, and it is known that in the admin- 
 istration of their affairs covering a period of sixty years, not 
 a cent wm lost to any one. 
 
 I affirm that the resumption law is the same with these 
 several charters, that its powers ,are corporate and that in its 
 legal proportions it is in all respects the same. I claim that 
 the act repeals the legal tender clause of the law of 1862, 
 and ithat the circulating notes, commonly known as green- 
 hacks, issued under it, become portable bonds without the 
 legal tender clause, from the first day of January, 1879. 
 Maintained at par with coin of gold from that date, they 
 remain a legal tender ; but how, it may be asked, can they 
 continue to be a legal tender, when their par in coin is not 
 maintained and they .are, as they may be under protest for 
 non-payment. "Would not the coin in hand and held for 
 their redemption, then become a sum which the holders of 
 the notes would ,be entitled to as a distributive share ? It 
 seems to me the act of resumption fixing a day for their pay- 
 ment in coin lifts them to the dignity of unchallenged con- 
 stitutional money, ff I am right the taxes now levied on 
 the cajpital and deposits of the national banks by the Kevised 
 Statutes, are abolished from .the same date, January 1, 1879, 
 the right of State taxation only remaining ; also that the law 
 requiring reserves in lawi'ul money is repealed after that 
 date. 
 
 Mr. Chairman and Gentlemen, there can be no resump- 
 tion otherwise than through a bank parlor. Such an author- 
 ity at the head of the national banks and actmg as a direc- 
 toi^ is the only road, and it is the beaten track. It is not 
 
the business of a Secretary of the Treasury ; all he can do 
 is to improve inconae and regulate expenditure, so as to make 
 both ends meet. Eesumption is the special duty of those 
 who are friends of stable credit, amd who are conversant with 
 the science of money and exchange, of thoTO who- have the 
 opportunity to handle and control the results of indiiatry-, 
 and of traffic, international, national and individual, in their 
 form of commercial equsivalents. This means banking, re- 
 formed and perfected, with its precedents, its local knowledge^ 
 its traditional means, its organized connections, and it offers 
 the sole means of restoration. There- are in each of the 
 chief commercial nations to be found men of calm judgment, 
 a family of regulars, with habits in striking contrast to the 
 feverish bustle of the commercial and trading world about 
 them. The one stable, unchanging institution will there be 
 found in which they are cradled. The public capital and 
 private fortunes joined to the supreme authority, is intrusted 
 to their vigilance and their skill. They receive all values 
 and emit but one. They interpret and enforce the laws of 
 trade with incomparable faithfulness. Until we are willing 
 to accept such a central system of control there will be no 
 settlement of our business or of our financial diflSculties. 
 Finance without such an authority as a court of last resort, 
 is nothing less than lynch law. At present our in- 
 stitution is an army of volunteers, wings without a centre, 
 clamorous and undisciplined, a misty multitude of people, 
 of every variety of character and of all shades of opinion. 
 
 I have said the resumption act is onlif incomplete, and that 
 it is not imperfect. It is just possible that it went far enough 
 at the time of its adoption. Three years have passed since 
 its introduction into Congress, and one year yet remains as 
 the hmit of the law ; thus we are near the appointed time 
 when its details should be perfected. In my judgment, 
 these centre in a tariff judiciously imposed, and in the swi- 
 justment of our various legal dollars by a dollar of standard 
 value. 
 
This may not be the place, nor, perhaps, the time to dis- 
 cuss the details; yet, speaking for myself only — for I have 
 consulted no one, neither am I authorized to speak for any 
 one — I will state what, in my opinion, the terms might be. 
 If Congress would stipulate by an enabling act that the cor- 
 porate powers conferred by the resumption law, shall be an 
 uninterrupted succession for a term of thirty years, and 
 agree that the national banks in that time shall enjoy ex- 
 emption from all taxation by the general government, and 
 that State taxation shall be restrained' within certain limits 
 if Congress will, in that period, direct the accounting officers 
 of the Government to deposit daily the receipts from cus- 
 tom duties and internal revenues and from all other sources 
 into the national banks, the banks, on their part might, I 
 think, in return agree to receive in exchange for the four hun- 
 dred millions of gold loans ; which amount it is estimated the 
 national banks hold, a fifty year lawful money loan, similar to 
 the Pacific currency sixes, and within the five succeeding 
 years in addition, as the agent of the Government, fund all 
 the remaining part of the national debt, which has matured, 
 or shall become payable in that time, in a similar loan, the 
 interest to be paid at three stated periods within each year, 
 at the rate of four and a half per cent, per annum. They 
 might also agree to pay, as the disbursing agents of the 
 Government, all its current outlays, including the coupon 
 and registered interest on the national debt, at the option of 
 the holder in coin, or in paper with the premium added, so 
 long as there shall be a premium, and contribute their stock 
 of gold, now amounting to a round sum of twenty-five mil- 
 lions, to the common fund of coin, without receiving pre- 
 mium or interest for it. The fiscal service remaining to the 
 treasury would be 
 
 First, The holding of such an amount of the loan, thus 
 consolidated, as, in the opinion of Congress, would be a suf- 
 ficient guarantee fund for the faithful performance of the 
 trust of resuming and maintaining specie payments. 
 
Second, The care and issue of the national circulation. 
 
 Third. The custody of the coin at designated centres. 
 
 Resumption will be found to be a question of economy and 
 savings— the annual supply of home-grown bullion being a 
 reserve. 
 
 If such an arrangement, as a plan of adjustment, should 
 find favor, the Government, the banks and the business in- 
 terests, might properly agree upon and present the details 
 for the consideration of Congress. In this moment of su- 
 preme anxiety and apprehension, both sides can afibrd to be 
 liberal. 
 
 There are some conclusions in the theory and practice of 
 finance that are held as fixed by the men with whom mj- lot 
 is cast — the middlemen, or factors between the producer and 
 consumer, and which are the settled convictions of the class. 
 The costhest standard is looked upon as the best standard 
 and the cheapest, for the reason that the largest superstruc- 
 ture of credit can be erected upon it. 
 
 If Congress confers authority to print or to coin legal dol- 
 lars, all agree that their value should be measured by a de- 
 nominator or legal standard, or that they should be called 
 by some other name. 
 
 The tarift" question is a side issue. It is considered — and 
 all experience points in the one direction, which is that a na- 
 tional standard of value is in its nature a tarift' of itself ; at 
 the same time an intolerant protection may produce the same 
 effect as too much paper money. 
 
 It is generally believed to be far more essential that the 
 assets of the saving banks we already have, should be made 
 solvent, than that a law establishing a postal saving bank 
 should be enacted at this time. 
 
 The " talk on change " is, there are no soundings, no bot- 
 tom. The wilt, shrink and sap is eating into the very mar- 
 row of the securities, which are the chief elements of our 
 permanent success. The debtors are deluded with the hope 
 of getting out of their embarrassments by throwing their 
 
6 
 
 burthens upon others through another debauch of paper 
 money, or, what is the same thing, the kindred dodge of 
 cheap coin ; the same issue through all history. There is the 
 usual denunciatory talk, mainly in single instances, of sub- 
 sidized presses and the like, and a desire for cheap money, 
 but when that man's paper is extended he is docile and his 
 voice is stilled. The commerce of the countiy asks, with 
 Secretary Sherman, that coin shall be held for its proper' 
 commercial uses by arresting its export. 
 
 The national banking system, as far as it goes, is regarded 
 with unusual favor, and banks as being well conducted. The 
 currency of sound trade is a natural volume following suc- 
 cessful business. There will be just as nmch of it as industry 
 can create. 
 
 The clearest-headed men think yoa cannot arbitrarily or 
 safely fund a single dollar of the legal tenders, (except by 
 redeeming it in coin on the instant) until production supplies 
 its equivalent as a means of barter or export. The legal 
 tenders represent supplies furnished in the rebellion, but not 
 paid for, and they survive the transaction. They will be 
 all right in a perfected money system. Good book-keeping 
 will find the proper place for them at the proper time. 
 
 I feel I have reached the limit of my privilege and I dare 
 say of your patience, yet there is still something more to 
 say ; I shall try to make it as brief as possible. 
 
 I shall barely lift the veil that covers the occurrences after 
 the abandonment of the first national system in 1833, and 
 the period subsequent to it. The removal of the public de- 
 posits and their transfer to the State banks, the distress that 
 followed, the directions from the United Sta'tes Treasurer to 
 the State banks to loan liberally that it might be mitigated, 
 the excessive issues of printed ^money in response, the burst- 
 ing of the paper balloon and the crash of credit in 1837, the 
 chaos of values and wreck 'of ffortunesj^that icame after it. 
 There were tramps in those days, and^for a time I was one 
 of them. Then the restoration wrought byjthe tariff of 1842 ; 
 
its threatened repeal iu 1846, and the lower rates imposed by 
 the tariiF enacted in that year ; then the support derived as 
 an oftset, from the discovery of gold in 1847 in California, 
 and from the food supplied to Ireland in the famine of the 
 same year, the support these afforded to industry, and after 
 that the incline downward until 1857, then again another 
 panic. The rally of credit between that time and 1862, the 
 issue of the legal tenders, the constant additions to them of 
 various forms of irredeemable credit, the riotous living that 
 followed, the crash of 1873, and that was the finish. Infla- 
 tion would inflate no longer. I verily believe if there had 
 been a central bank proportioned to the needs of all these 
 years, our suflerings would have been limited to our own 
 improvidences. 
 
 The Hon. E. G. Spaulding, the author himself of the legal 
 tender ■act, has said, " the Bank of England is a striking ex- 
 ample of the combined power of public authority and private 
 influence in sustaining the credit of a government. We may 
 safely profit by the example. Notwithstanding it is a bank 
 of circulation, deposit and discount, it has thus far disbursed 
 the pnblic mioney without the loss of a single dollar entrust- 
 ed to it. " Had such a bank," Mr. Spaulding continues, 
 " been in full operation at the commemcement of the rebel- 
 lion, it would probably have been unnecessary to have issued 
 the Government greenbacks." 
 
 This recital of the past revives some recollections of the 
 times of forty-five years ago. It was my privilege, by asso- 
 ciation and in the avenues of trade, to some extent, to meet 
 the men of that period. They were of solid demeanor and 
 frugal lives. There was but one money then. It harvested 
 the crops, followed the flag to the extremities of the earth, 
 and it exacted from other nations the duty of propping their 
 own credit without drawing our substance from us for this 
 purpose. Especially I recollect the demeanor of the men in 
 charge of the bank, men who had been associates of Hamil- 
 ton, Gallatin, of Marshall and Jay, and who upheld, as it 
 
8 
 
 came to them m its lineal descent, the solvent standard dol- 
 lar ; and their companions Sargent, Binney, IngersoU, and 
 Randall, their legal counsel ; the latter, the respected father 
 of the present Speaker of the House of Representatives. 
 They received the imperious edicts of President Jackson as 
 a grevious personal insult, as an unmitigated slander, and so it 
 proved itself, the official records of the Treasury showing, 
 in its final settlement in 1856, that instead of the Government 
 losing it realized a clear profit from the operations of the hank 
 of more than six millions of dollars. 
 
 It was remarked of British rule, by one of the foremost 
 of English Statesmen, that he attributed the prosperity of 
 England, in a great degree, to a characteristic of its people, 
 that that country at the proper time generally retraced its 
 steps, and it has been said that a free people always has just 
 as good a Government as it deserves to have, and no better. 
 
 Tou, gentlemen, have this example to consider. All eyes 
 are turned toward Washington. Honest money is the 
 desired of the jSTation. A solvent dollar is a providential 
 and a beneficent fact, since it is of the plan in gaining over 
 to civilization the peoples of the earth and thus it is a divine 
 decree. 
 
 The political hero is he, who, when others have crumbled 
 stands firm till a new order of things has built itself around 
 him, who will show a way out and beyond where others can 
 only see written, " No Thoroughfare." 
 
 Coin values have been reached, in many cases have been 
 passed, and they are still falling through space. Our paper 
 circulation is losing its supporting power, and is no longer a 
 prop. My duty is done in asking that you will apply the 
 proper remedy before all respect is lost for the means of 
 accomplishing it. 
 
 I thank you, gentlemen, for your patience and consider- 
 ate attention. 
 
Mb. Grubb, being inteiTogated, said : 
 
 The Silver Bill will be the subject of another paper, if 
 it is agreeable, at a future time. This, however, may be 
 said now. If the resumption act is a charter and enacts 
 that coin of gold, as a single standard or its equivalent, is 
 to be the national circulation alter January 1, 1879, — and 
 it seems clearly to do this, — then it is too late to reopen 
 the compact that another standard, and of less value, may 
 be injected into it from without. The resumption law 
 plainly defines the PubUc-Debt Act of March, 1869, to 
 mean coin of gold, and settles the question. Silver is its 
 associate, and will be ioterchangeable just so long as it 
 possesses the same value, that is, the same market value. 
 The intention of the resumption act manifestly is, to so 
 blend and merge the stock in money of the people, the 
 Government, and the National Banks, that an unassailable 
 value as a standard may be drawn irom its concealment. 
 It is unfortunate for those who regard themselves as the 
 special friends of silver, at this time, that they have 
 treated it as a question of finance instead of as a matter 
 of coinage. 
 
 Washington, D. C, Becemher 14, 1877. 
 
ExTEA Session of the 46th Oongeess. 
 
 SPEECHES 
 
 OP 
 
 HOlf. JAMES A. GARFIELD, 
 
 OF OHIO, 
 
 HOUSE OF REPRESENTATIVES, 
 
 THE EXTEA SESSION, MAECH 18 TO JULY 1, 1879. 
 
 WASHINGTON, 
 
 1879. 
 
CONTENTS. 
 
 I. 
 
 Page. 
 THE APPROPRIATION BILLS: ' 
 
 1. Opening the debate on the first Army Mil — ^Revolution in Congress 3 
 
 2. Closing the debate on the first Army bill , 13 
 
 3. On the legislative appropriation bill — ^National elections should be pro- 
 
 tected by national authority ., - 17 
 
 4. On the second Army appropriation biU ..t.: 21 
 
 5. On the judicial appropriation bill 25 
 
 6. On the judicial appropriation bill — Nullification 31 
 
 II. 
 
 Defense of the Union soldiers of the seceded States 35 
 
 III. 
 
 1. Resumption and the currency — The reserves for redemption of pubUo obliga- 
 
 tions must be maintained 37 
 
 2. The new silver bill 40 
 
 IV. 
 
 The Mississippi River an object of national care 42 
 
 V. 
 The revived doctrine of State sovereignty 44 
 
 VI. 
 Greek and Democratic panics 53. 
 
I. 
 
 THE APPROPEIATION BILLS. 
 
 1. FIRST AEMT BILL. 
 
 EEVOLUTIOiSr IN CONGRESS. 
 Saturday, March 29, 1879. 
 
 The HoTise being in Committee of the Whole, and having under consideration the 
 hill (H. R. No. 1) making appropriations for the support of the Army for the Cssal 
 year ending June 30, 1880, and for other purposes — 
 
 Mr. Garfield said: 
 
 Mr. Chairman : I have no hope of being able to convey to the mem- 
 bers of this House my own conviction of the very great gravity and 
 solemnity of the crisis which this decision of the Chair and of the Com- 
 mittee of the Whole has brought upon this country. I wish I could be 
 proved a false prophet in reference to the result of this action. I wish 
 I could be overwhelmed with the proof that I am utterly mistaken in 
 my views. But no view I have ever taken has entered more deeply and 
 more seriously into my conviction than this, that the House has to-day 
 resolved to enter upon a revolution against the Constitution and Gov- 
 ernment of the United States. I do not know that this intention exists 
 in the minds of half the Eepresentatives who occupy the other side of 
 this Hall. I hope it does not. I am ready to believe it does not exist 
 to any great extent. But I affirm that the consequence of the pro- 
 gramme just adopted, if persisted in, will be nothing less than the total 
 subversion of this government. 
 
 THE QUESTION STATED. 
 
 Let me in the outset state, as carefully as I may, the precise situation. 
 At the last session, all our ordinary legislative work was done ia accord- 
 ance with the usages of the House and Senate, except as to two bills. 
 Two of the twelve great appropriation bills for the support of the gov- 
 ernment were agreed to in both Houses as to every matter of detail con- 
 cerning the appropriations proper. We were assured by the committees 
 of conference ia both bodies that there would be no difficulty in adjust- 
 ing all differences in reference to the amount of money to be appropriated 
 and the objects of its appropriation. But the House of Eepresentatives 
 proposed three measures of distinctly independent legislation ; one upon 
 the Army appropriation bill, and two upon the legislative appropriation 
 bin. The three grouped together are briefly these : First, the substantial 
 modification of certain sections of the law relating to the use of the 
 Army; second, the repeal of the jurors' test oath; and third, the repeal 
 of the laws regnlating elections of members of Congress. 
 
 These three propositions of legislation were insisted upon by the 
 House; but the Senate refused to adopt them. So far it was an ordi- 
 nary proceeding, one which occurs frequently in all legislative bodies. 
 
The Senate said to us througli their conferees, "We are ready to pass 
 the appropriation bills ; but we are unwilling to pass as riders the three 
 legislative measures you ask us to pass." Thereupon the House, through 
 its conference committee, made the following declaration — and in order 
 that I may do exact justice, I read from the speech of the distinguished 
 Senator from Kentucky [Mr. BeckJ, on the report of the conference com- 
 mittee : 
 
 The Democratic conferees on the part of the House seem cletermined that unless 
 those rights were secured to the people — 
 
 alluding to the three points I hare named — 
 
 in the biU sent to the Senate, they would refuse, under their constitutional right, to 
 make appropriations to carry on the government, if the dominant majority m the 
 Senate insisted upon the maintenance of these laws and refused to consent to their repeal. 
 
 Then, after stating that if the position they had taken compelled an 
 extra session, the new Congress would offer the repealing bills separately, 
 and forecasting what would happen when the new House should b^ 
 under no necessity of coercing the Senate, he said : 
 
 If, however, the President of the United States, in the exercise of the power vested 
 in him, should see fit to_ veto the bills thus presented to him, * * * then I have no 
 doubt those same amendments will be again made part of the appropriation bills, and 
 it will be for the President to determine whether he will block'the wheels of govern- 
 ment and refuse to accept necessary appropriations rather than allow the representa- 
 tives of the people to repeal odious laws which they regard as subversive of their 
 rights and privileges. * * * Whether that course is right or wrong, it will be adopted, 
 and I have no doubt adhered to, no matter what happens with the apjiropriation bills. 
 
 That was the proposition made by the Democracy in Congress at the 
 close of the Congress now dead. 
 
 Another distinguished Senator [Mr. Thurman] — and I may properly 
 refer to Senators of a Congress .not now in existence — reviewing the 
 situation, declared, in still more succinct terms : 
 
 We claim the right, which the House of Commons in England established after two 
 ceniuries of contest, to say that- we will not grant the money of the people unless there 
 is a redress of grievances. 
 
 These propositions were repeated with various degrees of vehemence 
 by the majority in the House. 
 
 The majority in the Senate and the minority on this floor expressed 
 the deepest anxiety to avoid an extra session and to avert the catastrophe 
 thus threatened — the stoppage of the government. They pointed out 
 the danger to the country and its business interests of an extra session 
 of Congress, and expressed their willingness to consent to any com- 
 promise consistent with their views of duty which should be offered — 
 not in the way of coercion but in the way of fair adjustment — rand asked 
 to be met in a spirit of just accommodation on the other side. Unfortu- 
 nately no spirit of adjustment was manifested in reply to their advances. 
 And now the new Congress is assembled ; and after ten days of caucus 
 deliberation, the House of Eepresentatives has resolved, substantially, 
 to reaflSrm the positions of its predecessors, except that the suggestion 
 of Senator Beck to offer the independent legislation in a separate biU 
 has been abandoned. By a construction of the rules of the House far 
 more violent than any heretofore given, a part of this independent legis- 
 lation is placed on the pending bUl for the support of the Army ; and 
 this House has determined to begin its career by the extremest form of 
 coercive legislation. 
 
 In my remarks to-day I shall confine myself almost exclusively to the 
 one phase of the controversy presented in this bill. 
 
Mr. AtkinS. Will the honorable gentleman allow me to interrupt him a moment ? 
 
 Mr. Garfield. With pleasure. 
 
 Mr. Atkins. Do I understand you to state that in the conference committee no 
 proposition was made other than the one suggested in the legislation proposed to be 
 attached to the bill by the House conferees ? 
 
 Mr. GrARFiELD. I did not undertake to state what was done in con- 
 ference except as reported by Senator Beck, for I was not a member of 
 the committee. 
 
 Mr. Atkins, i thought you did. 
 
 Mr. Garfield. Ko ; I only declared what was proposed on the floor 
 of the House and Senate. 
 
 Mt. Atkins. With the gentleman's permission I will state that the proposition the 
 House made in conference committee was substantially the proposition now before the 
 House and here offered to be attached to these bills. 
 
 Mr. Garfield. I take it for granted that what my friend on the 
 other side says is strictly true; but not even that proposition was re- 
 ported to either House. 
 
 The question, Mr. Chairman, may be asked, why make any special 
 resistance to the clauses of legislation in this bill which a good many 
 gentlemen on this side declared at the last session they cared but 
 little about, and regarded as of very little practical importance, be- 
 cause for years there had been no actual use for any part of these laws, 
 and they had no expectation there would be any 1 It may be asked, 
 why make any controversy on either side 1 So far as we are concerned, 
 Mr. Chairman, I desire to say this: we recognize the other side as 
 accomplished parliamentarians and strategists, who have adopted with 
 skill and adroitness their plan of assault. You have placed in the front, 
 one of the least objectionable of your measures ; but your whole pro- 
 gramme has been announced, and -we reply to your whole order of 
 battle. The logic of your position compels us to meet you as promptly 
 on the skirmish line as afterward when our entrenchments are assailed ; 
 and, therefore, at the outset, we plant our case upon the general ground 
 upon which we have chosen to defend it. 
 
 the voluntary powers of the government. 
 
 And here, sir, I wish to make a brief digression, in which I hope no 
 gentleman will consider my discussion as controversial or personal. I 
 had occasion, at a late hour of the last Congress, to say something on 
 what may be called the voluntary element in our institutions. I spoke 
 of the distribution of the powers of government. First, to the nation; 
 second, to the States ; and, third, the reservation of power to the people 
 themselves. 
 
 I called attention to the fact that under our form of government the 
 most precious rights that men can possess on this earth, are not dele- 
 gated to the nation nor to the States, but are reserved to the third 
 estate — the people themselves. I called attention to the interesting 
 fact that lately the chancellor of the German Empire made the declara- 
 tion that it was the chief object of the existence of the German Govern- 
 ment to defend and maintain the religion of Jesus Christ — an object in 
 reference to which our Congress is absolutely forbidden by the Consti- 
 tution to legislate at all. Congress can establish no religion; indeed, 
 can make no law respecting it, because in the view of our fathers — the 
 founders of our government — religion was too precious a right to intrust 
 ts inte: ests by delegation to any government. Its maintenance was 
 eft to the voluntary action of the people themselves. 
 
In continuation of that thought, I wish now to speak of the voluntary- 
 element inside our government— a topic that I have not heard discussed, 
 but one which appears to me of vital imjiortance in any comprehensive 
 view of our institutions. 
 
 Mr. OhairmaUj viewed from the stand-point of a foreigner, our govern- 
 ment may be said to be the feeblest on the earth. From our stand-point, 
 and with our experience, it is the mightiest. But why would a foreigner 
 call it the feeblest ? He can point out a half dozen ways in which it 
 can be destroyed without violence. Of course, all governments may be 
 overtvirued by the sword; but there are several ways in which ours 
 may be annihilated without the firing of a gun. 
 
 For example, if the people of the United States should say we will 
 elect no Representative to the House of Eepresentatives — of course this 
 is a violent supposition — but suppose they do not, is there any remedy? 
 Does our Constitution provide any remedy whatever ? In two years 
 there would be no House of Eepresentatives ; of course no support of 
 the government, and no government. Suppose, again, the States should 
 say, through their legislatures, we will ele'ct no Senators. Such absten- 
 tion alone would absolutely destroy this government ; and our system 
 provides no process of compulsion to prevent it. 
 
 Again, suppose the two Houses were assembled in their usual order, 
 and a majority of one in this body or in the Senate, should firmly band 
 themselves together and say we will vote to adjourn the moment 
 the hour of meeting arrives, and continue so to vote at every session 
 during our, two years of existence; the government would perish; 
 and there is no provision of the Constitution to prevent it. Or, again 
 if a majority of one in either body should declare that they would 
 vote down, and did vote down, every bill to support the government by 
 appropriations, can you find in the whole range of our judicial or our 
 executive authority any remedy whatever ? A Senator or a member ot 
 this House is free, and may vote " No " on every proposition. Nothing 
 but his oath and his honor restrains him. Not so with executive and 
 judicial ofl&cers. They have no power to destroy this governmant. Let 
 them travel an inch beyond the line of the law, and they fall within the 
 power of impeachment. But against the people who create Eepresent- 
 atives, against the legislatures who create Senators, against Senators 
 and Eepresentatives in these Halls, there is no power of impeachment ; 
 there is no remedy, if by abstention or by adverse votes they refuse to 
 support the government. 
 
 At a first view, it would seem strange that a body of men so wise as 
 our fathers were should have left a whole side of their fabric open to 
 these deadly assaults ; but on a closer view of the case their wisdom will 
 appear. What was their rehance 1 This : the sovereign of this nation, 
 the God-crowned and Heaven-anointed sovereign, in whom resides " the 
 State's collected will," and to whom we all owe allegiance, is the people 
 themselves. Inspired by love of country and by a deep sense of obliga- 
 tion to perform every pubUc duty, being themselves the creators of all 
 the agencies and forces to execute their own will, and choosing from 
 themselves their representatives to express that will in the forms of law, 
 it would have been like a suggestion of suicide to assume that any of 
 these great voluntary powers would be turned against the life of the 
 government. Public opinion — that great ocean of thought from whose 
 level all heights and all depths are measured — was trusted as a power 
 amply able, and always wilKng, to guard all the approaches on that side 
 of the Constitution from any assault on the life of the nation. 
 
 Up to this hour our sovereign has never failed us. There has never 
 
been such a refusal to exercise those iirimary functions of sovereignty 
 as either to endanger or cripple the government; nor have the majority 
 of the representatives of that sovereign in either House of Congress ever 
 before announced their purpose to use their voluntary powers for its 
 destruction. And now, for the first time iu our history, and I will add 
 for the first time for at least two centuries in the history of any English- 
 speaking nation, it is suggested and threatened that these voluntary 
 powers of Congress shall be used for the destruction of the government. 
 I want it distinctly understood that the proposition which I read at the 
 beginning of my remarks, and which is the programme announced to the 
 American people to-day, is this : That if this House cannot have its own 
 way in certain matters not connected with appropriations, it will so use, 
 or refrain &om using, its voluntary powers as to destroy the govern- 
 ment. 
 
 Now, Mr. Chairmaij, it has been said on the other side, that when a 
 demand for the redress of grievances is made, the authority that runs 
 the risk of stopping and destroying the government is the one that re- 
 sists the redress. Ifot so. If gentlemen wiU do me the honor to foUow 
 my thought for a moment more, I trust I will make this denial good. 
 
 FEEE CONSENT THE BASIS OF OUR LAWS. 
 
 Our theory of law is free consent. That is the granite foundation of 
 our whole superstructure. ISTothing in this republic can be law without 
 consent — the free consent of the House, the free consent of the Senate, 
 the free consent of the Executive, or, if he refuse it, the free consent of 
 two-thirds of these bodies. Will any man deny that? WUl any man 
 challenge a line of the statement that free consent is the foundation 
 of all our institutions? And yet the programme announced two weeks 
 ago was that, if the Senate refused to consent to the demand of the House, 
 the government should stop. And the proposition was then, and the 
 programme is now, that, although there is not a Senate to be coerced, 
 there is stiU a third independent branch in the legislative power of the 
 government whose consent is to be coerced at the peril of the destruction 
 of this government; that is, if the President, in the discharge of his duty, 
 shall exercise his plain Constitutional right to refuse his consent to this 
 proposed legislation, the Congress will so use its voluntary powers as to 
 destroy the government. This is the proposition which we confront; 
 and we denounce it as revolution. 
 
 It makes no difference, Mr. Chairman, what the issue is. If it were 
 the simplest and most inoffensive proposition in the world, yet if you 
 demand, as a measure of coercion, that it shall be adopted against the 
 free consent prescribed in the Constitution, every fair-minded man in 
 America is bound to resist you as much as though his own life depended 
 upon his resistance. 
 
 Let it be understood that I am not arguing the merits of any one of 
 the three amendments. I am discussing the proposed method of legis- 
 lation; and I declare that it is against the Constitution of our country. 
 It is revolutionary to the core, and is destructive of the fundamental 
 principle of American liberty, the free consent of all the powers that 
 unite to make laws. 
 
 In opening this debate I challenge all comers to show a single instance 
 in our history where this consent has been thus coerced. This is the 
 great, the paramount issue which dwarfs aU others into insignificance. 
 
THE OEIGIN OP THE LAW SOUGHT TO BE MODIFIED. 
 
 I now turn aside, for a moment, from the line of my argument to say 
 that it is not a little surprising that our friends on the other side should 
 have gone into this great contest on so weak a cause as the one embraced 
 in the pending amendment to this bill. 
 
 Yictor Hugo said, in his description of the battle of Waterloo, that the 
 struggle of the two armies was like the wrestling of two giants, when 
 a chip under the heel of one might determine the victory. It may be 
 that this amendment is the chip under your heel, or it may be that it is 
 the chip on our shoulder. As a chip, it is of small account to you or to 
 us ; but when it represents the integrity of the Constitution and is as- 
 sailed by revolution, we fight for it as for a Kohinoor of purest water. 
 [Applause.] 
 
 The distinguished and venerable gentleman from Georgia [Mr. Ste- 
 phens], spoke of this law, which is sought to be repealed^ as "odious and 
 dangerous." It has been denounced as a piece of partisan war legisla- 
 tion to enable the Army to control elections. 
 
 Do gentlemen know its history? Do they know whereof they af&rm? 
 Who made this law which is denounced as so great an offense as to jus- 
 tify the destruction of the government rather than let it remaiu on the 
 statute-book? Its fljst draft was introduced into the Senate by a promi- 
 nent Democrat from the State of Kentucky, Mr. Powell, who made an 
 able speech in its favor. It was reported against by a KepubLican com- 
 mittee of that body, whose printed report I hold in my hand. It en- 
 countered weeks of debate, was amended and passed, and then came 
 into the House. Every Democrat present in the Senate voted for it on 
 its final passage. Every Senator who voted against it was a Eepublican. 
 No Democrat A''oted against it. Who were the Democrats that voted for 
 it? Let me read some of the names: Hendricks, of Indiana; Davis, of 
 Kentucky; Johnson, of Maryland; McDougall, of California; Powell, 
 of Kentucky; Richardson, of Illinois, and Saulsbury, of Delaware. 
 
 Of Eepublican Senators thirteen voted against it^ only ten voted for it. 
 
 The bill then came to the House of Eepresentatives and was put upon 
 its passage here. How did the vote stand in this body? Every Demo- 
 crat present at the time in the House of Eepresentatives of the Thirty- 
 eighth Congress, voted for it. The total vote in its favor ia the House 
 was 113 ; and of these 58 were Democrats. And who were they ? The 
 magnates of the party. The distinguished Speaker of this House, Mr. 
 Samuel J. Eandall, voted for it. The distiuguished chairman of the 
 Committee of Ways and Means of the last House, Mr. Fernando Wood, 
 voted for it. The distinguished member from my own State who now 
 holds a seat in the other end of the Capitol, Mr. George H. Pendleton, 
 voted for it. Messrs. Cox and Ooftroth, Kernan and Morrison, who are 
 still in Congress, voted for it. Every Democrat of conspicuous name 
 and fame in that House voted for the bill, and not one against it. There 
 were but few EepubUcans who voted against it. I was one of the few. 
 Thaddeus Stevens and Judge Kelley voted against it. 
 
 What was the controversy? What was the object of the bill ? It 
 was alleged by Democrats that in those days of war there were inter- 
 ferences with the proper freedom of elections in the border States. We 
 denied the charge ; but lest there might be some infraction of the free- 
 dom of elections, many EepubUcans, unwilling that there should be even 
 the semblance of interference with that freedom, voted for it. This law 
 is an expression of their purpose that the Army should not be used at 
 aiiy election except for the purpose of keeping the peace. 
 
9 
 
 Those Eepublioans who voted against it did so on the ground that there 
 was no cause for such legislation ; that it was a slander upon the gov- 
 ernment and the Army to say that they were interfering with the proper 
 freedom of elections. I was among that number — — 
 
 Mr. Carlisle. Will the gentleman allow me to ask Wm a question ? 
 
 Mr. Gaepield. Certainly 
 
 Mr. Carlisle. I ask if tlie Democrats in the Senate and House of Eepresentatives 
 did not vote for that proposition because it came in the form of a substitute for another 
 proposition that was still more objectionable? 
 
 Mr. GrABFLBLD. The gentleman is quite mistaken. The original bill 
 was introduced by a gentleman from Kentucky, Mr. Powell; it was 
 amended in its course through the 'Senate; but the votes to which I have 
 referred were the final votes on its passage after all the amendments had 
 been made ; and, what was more, a Eepublican Senator moved to recon- 
 sider it, hoping that he might thereby kiU it. And after several days' 
 delay and debate it was a^ain passed, every Democrat again voting for 
 it. In the House there was no debate, and therefore no expression of 
 the reasons why anybody voted for it. Each man voted according to his 
 convictions, I suppose. 
 
 Mr. Stephens. Will the gentleman yield to me ? 
 
 Mr. Garfield. I yield to the venerable gentleman from Georgia for 
 a question. 
 
 Mr. Stephens. I simply ask if the country is likely to be revolutionized and the govi 
 ernment destroyed by the repealing a law that the gentleman himself voted against ? 
 [Laughter on the Democratic side.] 
 
 Mr. Garfield. I think not. That is not the element of revolution, 
 as I will show the gentleman. The proposition now is, that after four- 
 teen years have passed, and not one petition from one American citizen 
 has come to us asking that this law be repealed, while not one memorial 
 has found its way to our desks complaining of the law, so far as I have 
 heard, the Democratic Representatives declare that if they are not per-' 
 mitted to force upon another house and upon the Executive, against 
 their consent, the repeal of a law that Democrats made, this refusal will 
 be considered a sufficient ground for starving this government to death. 
 That is the proposition which we denounce as revolution. [Applause 
 on the Eepublican side.] 
 
 Mr. Fernando Wood. I desire to ask the gentleman from Ohio a question. 
 
 Mr. Garfield. Certainly. 
 
 Mr. Fbrnado Wood. Before he leaves that part of his remarks to which the gentle- 
 man from Kentucky [Mr. Carlisle] has referred, I desire to ask the gentleman whether 
 he wishes to make the impression upon the House that the bill introduced by Senator 
 Powell, of Kentucky, and which resulted finally in the law of 1^65, was the bill that 
 passed the Senate, that passed the House, and for which he says the present Speaker _ 
 of this House and myself voted ? 
 
 Mr. Garfield. I have not intimated that ther-e were no amendments. 
 On the contrary I have said that it was amended in the Senate. One 
 amendment permitted the use of the Army to repel armed enemies of the 
 United States from the poUs. 
 
 Mr. FernajSTDO Wood. So far as I am personally concerned, I deny that I ever voted 
 for a bill except as a substitute for a more pernicious and objectionable measui-e. 
 [Much laughter on the Republican side.] 
 
 Mr. Garfield. What I have said is a matter of record. And I say 
 again the gentleman voted for this law; and every Democrat in the Sen- 
 ate and in the House who voted at all, voted for this law just as it now 
 stands ; and without their votes it could not have passed. No amend- 
 ments whatever were offered in the House, and there was no other bill 
 on the subject before the House. 
 
10 
 
 Mr. Fkenando Wood. I desire to submit anotlier question to my friend. 
 
 Mr. Gakfibld. Certainly. 
 
 Mr. Fernando Wood. It is whetlier, in 1865, at the time of the passage of this law, 
 ■when the war had not really subsided, whether there was not in a portion of this 
 country a condition of things renderiug it almost impossible to exercise the elective 
 franchise unless there was some degree of military interference ? [Great laughter.] 
 And farther, whether, after the experience of fourteen years since the war has sub- 
 sided, that gentleman is yet prejjared to continue a war measure in a time of profound 
 peace in this country? 
 
 Mr. GAepield. No doubt the patriotic gentleman from New York 
 (Mr. Fernando Wood] took all these things into consideration when he 
 voted for this law; and I may have been unpatriotic in voting against 
 it at that time; but he and I must stand by our records, as they were 
 made. 
 
 THE NEW EEBELLION. 
 
 Let it be understood that I am not discussing the merits of this law. 
 I have merely turned aside from the line of my argument to show the 
 inconsistency of the other side in proposing to stop the government if 
 they cannot force the repeal of a law which they themselves made. I am 
 discussing a method of revolution against the Constitution now proposed 
 by this House, and to that issue I hold gentlemen in this debate, and 
 challenge them to reply. 
 
 And now, Mr. Chairman, I ask the forbearance of gentlemen on the 
 other side while I offer a suggestion, which I make with reluctance. 
 They wUl bear me witness that I have, in many ways, shown my desire 
 that the wo\mds of the war should be healed ; that the grass which has 
 grown green over the graves of the dead of both armies might symbol- 
 ize the returning spring of friendship and peace between citizens who 
 were lately in arms against each other. 
 
 But I am compelled, by the conduct'of the other side, to refer to a chap- 
 ter of cur recent history. The last act of Democratic domination in this 
 Capitol, eighteen years ago, was striking and dramatic, perhaps heroic. 
 Then the Democratic party said to the Republicans, " If you, elect the 
 man of your choice as President of the United States we will shoot your 
 government to death"; but the people of this country, refusing to be 
 coerced by threats or violence, voted as they pleased, and lawfully elected 
 Abraham Lincoln as President of the United States. 
 
 Then your leaders, though holding a majority in the other branch of 
 CongTess, were heroic enough to withdraw from their seats and iiing 
 down the gage of mortal battle. We called it rebellion; but we recog- 
 nized it as courageous and manly to avow your purpose, take all the 
 risks, and fight it out in the open field. Notwithstanding your utmost 
 efforts to destroy it, the government was saved. Year by year, since the 
 war ended, those who resisted you have come to believe that you have 
 finally renounced your purpose to destroy, and are willing to maintain 
 the government. In that belief you have been permitted to return to 
 power in the two Houses. 
 
 To-day, after eighteen years of defeat, the book of your domination 
 is again opened, and your first act awakens every unhappy memory, 
 and threatens to destroy the confidence which your professions of 
 patriotism inspired. You turned down a leaf of the history that re- 
 corded your last act of power in 1861, and you have now signalized 
 your return to power by beginning a second chapter at the same page, 
 not this time by a heroic act that declares war on the battle-field, but 
 you say, if all the legislative powers of the govermnent do not con- 
 sent to let you tear certain laws out of the statute-book, you wUl n®t 
 
11 
 
 shoot our governinent to death as you tried to do in the first chapter, 
 but you declare that if we do not consent against our will, if you 
 cannot coerce an independent branch of this governinent, against its 
 wiU, to allow you to tear from the statute-books some laws put there 
 by the wiU of the people, you will starve the government to death. 
 [Great applause on the Eepublican side.] 
 
 Between death on the field and death by starvation, I do not know 
 that the American people will see any great difference. The end, if 
 successfully reached, would be death in either case. Gentlemen, you 
 have it in your power to kill this government ; you have it in your 
 power, by withholding these two bills, to smite the nerve-centers of 
 our Constitution with the paralysis of death; and you have declared 
 your purpose to do this, if you cannot break down that fundamental 
 principle of free consent which, uj) to this, hour has always ruled in the 
 legislation of this government. 
 
 Mr. Davis, of North Carolina. Will the gentleman allow me to ast him a question? 
 
 Mr. Garfield. Certainly. 
 
 Mr. Davis, of North Carolina. Do I understand the gentleman to say that the 
 refusal to permit the Army at the polls will be the death of this government? [De- 
 risive cries of "Oh!" "Oh!" on the Republican side.] That is thelogic of the gentle- 
 man's argument, if it means anything. But we say that it will he the preservation 
 of this government to keep the military power from destroying liberty at the poUs. 
 
 Mr. Garfield. I have too much respect for the intellect of the gen- 
 tleman from North Carolina to believe that he thinks that is my argu- 
 ment. He does not say he thinks so. On the contrary, I am sure that 
 every clear-minded man on this floor knows that such is not my argument. 
 The position on the other side is simply this : that unless some inde- 
 pendent branch of the legislative power of this government is forced 
 against its will to vote for or to approve what it does not freely consent 
 to, you wiU use the voluntary ijower in your hands to starve the govern- 
 ment to death. 
 
 Mr. Davis, of North Carolina. Will the gentleman permit me to ask him another 
 question? Do I understand him to assume that we are forcing some branch of the 
 government to do what it does not wish to do? How do we know that, or how does 
 the gentleman know it? Does the gentleman, when he speaks of "the government," 
 mean to say that it is not the government of the majority, or does he assume that the 
 majority is on his side? 
 
 Mr. Garfield. I am perfectly protected against the suggestion of 
 the gentleman. I read in the outset declarations of leading members 
 of his party in both branches of Congress asserting this programme 
 and declaring the intention of carrying it through to the end, in spite 
 of the Senate and in spite of an Executive veto, which they anticipate. 
 The method here proposed invites, possibly compels, a veto. 
 
 COEECION OF THE PRESIDENT. 
 
 Touching this question of executive action, I remind the gentleman 
 that in 1856 the national Democratic convention, in session at Cincinnati, 
 and still later, the national Democratic convention of 1860, afiirmed the 
 right of the veto as one of the sacred rights guaranteed by our govern- 
 ment. Here is the resolution : 
 
 That we are decidedly opposed to taking from the President the qualiiied veto power 
 by which he is enabled, under restrictions and responsibilities amply sufficient to 
 guard the public interests, to suspend the passage of a bill whose merits cannot secure 
 the approval of two-thirds of the Senate and House of Representatives until the judg- 
 m-eut of the people'cau be obtained thereon. ,j. 
 
12 
 
 The doctrine is that any measure which cannot be passed over a veto 
 by a two-thirds vote has no right to become a law, and the only mode of 
 redress is an appeal to the people at the next election. That has been 
 the Democratic doctrine from the earUest days, notably so from Jack- 
 son's time until now. 
 
 In leaving this topic, let me ask what would you have said if, in 1861 , 
 the Democratic members of the Senate, being then a majority of that 
 body, instead of taking the heroic course and going out to battle, had 
 simply said, "We will put on an appropriation bill an amendment de- 
 claring the right of any State to secede from the Union at pleasure, and 
 forbidding the President or any officer of the Army or Navy of the 
 United States from interfering with any State in its work of secession?" 
 Suppose they had said to the President, " Unless you consent to the in- 
 corporation of this provision in an appropriation bill we will refuse sup- 
 plies to the government." Perhaps they could then have killed the 
 government by starvation; but even in the madness of that hour the 
 leaders of rebellion did not think it worthy their manhood to put their 
 fight on that dishonorable ground. They planted themselves on the 
 higher plane of battle and fought it out to defeat. 
 
 How, by a method which the wildest secessionist scorned to adopt, it 
 is proposed to make this new assault upon the life of the republic. 
 
 Gentlemen, we have calmly surveyed this new field of conflict; we 
 have tried to count the cost of the struggle, as we did that of 1861 before 
 we took up your gage of battle. Though no human foresight could fore- 
 cast the awftil loss of blood and treasure, yet in the name of liberty and 
 union we accepted the issue and fought it out to the end. We made the 
 appeal to our august sovereign, to the omnipotbnt public opinion of 
 America, to determine whether the Union should perish at your hands. 
 You know the result. And now lawfully, in the exercise of our right as 
 Eepresentatives, we take up the gage you have this day thrown down, 
 and appeal again to our common sovereign to determine whether you 
 shall be permitted to destroy the principle of free consent in legislation 
 under the threat of starving the government to death. 
 
 We are ready to pass these bills for the support of the government 
 at any hour when you will offer them in the ordinary way, by the methods 
 prescribed by the Constitution. If you offer those other propositions of 
 legislation as separate measures we will meet you in the fraternal spirit 
 of fair debate and will discuss their merits. Some of your measures 
 many of us will vote for in separate bUls. But you shall not coerce any 
 independent branch of this government, even by the threat of starva- 
 tion, to consent to surrender its lawful powers until the question has 
 been appealed to the sovereign and decided in your favor. On this 
 ground we plant ourselves, and here we will stand to the end. 
 
 PROTECTION OF THE NATIONAL BALLOT-BOX REFUSED. 
 
 Let it be remembered that the avowed object of this new revolution 
 is to destroy aU the defenses which the nation has placed around its. 
 ballot-box to guard the fountain of its own life. You say that the United 
 States shall not employ even its civil power to keep peace at the polls. 
 You say that the marshals shall have no power either to arrest rioters. 
 or criminals who seek to destroy the freedom and purity of the ballot- 
 box. 
 
 I remind you that you have not always shown this great zeal in keep- 
 ing the civil officers of the general government out of the States. Only 
 six years before the war, your law authorized marshals of the United 
 
13 
 
 States to enter all our hamlets and households to hunt for fugitive slaves. 
 If ot only that, it empowered the marshals to summon the posse comitatus, 
 to command all bystanders to join in the chase and aid in remanding to 
 eternal bondage the fleeing slave. And your Democratic Attorney- 
 General, in his opinion published in 1854, declared that the marshal of 
 the United States might summon to his aid the whole able-bodied force 
 of his precinct, all bystanders, including not only the citizens gener- 
 ally, " but any and all organized armed forces, whether militia of the 
 State, or officers, soldiers, sailors, and marines of the United States," to 
 join in the chase and hunt down the fugitive. Now, gentlemen, if, for 
 the purpose of making eternal slavery the lot of an American, you could 
 send your marshals, summon your posse, and use the armed force of the 
 United States, with what face or grace can you teU us that this govern- 
 ment cannot lawfully employ the same marshals with their armed posse of 
 citizens, to maintain the purity of our own elections and keep the peace 
 at our own polls. You have made the issue and we have accepted it. 
 In the name of the Constitution and on behalf of good government and 
 public justice, we make the appeal to our common sovereign. 
 
 For the present I refrain from discussing the merits of the election 
 laws. I have sought only to state the first fundamental ground of our 
 opposition to this revolutionary method of legislation by coercion. 
 [Great applause.] 
 
 Mr. Sparks. Before tlie gentleman from Ohio takes Ms seat I hope he will give to 
 the House the name of the Attorney-General of the United States to whom he re- 
 ferred. 
 
 Mr. Garfield. I refer to Caleb Cushing, the Democratic Attorney- 
 General of President Pierce. 
 
 2. CLOSE OP DEBATE ON FIEST AEMT BILL. 
 
 At the conclusion of the general dehate on the sixth section of the Army appropria- 
 tion bill, Friday, April 4, 1879, Mr. Garfield said : 
 
 Mr. Chairman: During the last four days, some fifteen or twenty 
 gentlemen have paid their special attention to the argument I made last 
 Saturday, and have announced its complete demolition. Now that the 
 general debate has closed, I wiU notice the principal points of attack by 
 which this work of destruction has been accomplished. 
 
 In the first place, every man, save one, who has rephed to me, has 
 alleged that I held it was revolutionary to place this general legislation 
 upon an appropriation bUl. One gentleman went so far as to fill a page 
 of the Eecord with citations from the Congressional Globe and the 
 Congressional Eecord to show that for many years riders had been 
 placed upon appropriatioji bills. If gentlemen find any pleasure in 
 setting up a man of straw and knocking it down again, they have en- 
 joyed themselves. 
 
 I never claimed that it was either revolutionary or unconstitutional 
 for this House to put a rider on an appropriation bill. No man on this 
 side of the House has claimed that. The most that has been said is 
 that it is considered a bad parliamentary practice ; and all parties in 
 this country have said that repeatedly. 
 
 The gentleman from Kentucky [Mr. Blackburn] evidently thought 
 be was making a telling point against me when he cited the fact that, in 
 1872, 1 insisted upon the adoption of a conference report on an approri- 
 ation biU that had a rider on it ; and he alleged that I said it was revo- 
 
;i4 
 
 lutionary for his party to resist it. Let me refresh his memory. I said 
 then and I say now that it was revolutionary for the minority party to 
 refuse to let the appropriation bill be voted on. For four days they said 
 we should not vote at all on the sundry civil appropriation bill because 
 there was a rider on it, put there not by the House but by the Senate. 
 
 I was sorry the rider was put on, and moved to non-concur in the 
 amendments when they came to the House. But when the minority on 
 this floor said that we should not act on the bUl at all, because the rider 
 was put upon it, I said and now say it was unjustifiable parliamentary 
 obstruction. We do not filibuster. We do not struggle to prevent a 
 vote on this bill. I will be loyal to the House of which! am a member, 
 and maintain now, as I did then, the right of the majority to bring an 
 appropriation bill to a vote. 
 
 You have a right — ^however unwise and indecent it may be as a matter 
 of parliamentary practice — you have a perfect right to put this rider on 
 this bUl and pass it. When you send it to the Senate, that body has a 
 perfect right to pass it. It is your constitutional right and theirs to pass 
 it ; for the free consent of each body is the basis of the law-making 
 power. 
 
 When it goes to the President of the United States, it is his constitu- 
 tional right to approve it ; and if he does, it will then be a law, whiph 
 you and I must obey. But it is equally his constitutional right to dis- 
 approve it ; and should he do so, then, gentlemen, unless two-thirds of 
 this body and two-thirds of the Senate pass it, notwithstanding the ob- 
 jections of the President, it is not only not your right to make it a law, 
 but it will be the flattest violation of the Constitution, the sheerest 
 usurpation of power to attempt to make it a law in any other way. 
 Without these conditions you cannot make it a law. 
 
 What, then, is the proposition you have offered ! You say that there 
 are certain odious laws that you want to take off the statute-book. I 
 say repeal them, if you can do so constitutionally. But you declare that 
 you will compel consent to your will by refusing the necessary support — 
 not to the President, not to any man — but to the government itself. 
 This proposition I denounce as revolution, and no man has responded to 
 the charge either by argument or denial. 
 
 No member on this side brought the question into this chamber. The 
 issue was not raised by us. Who brought it here ? The proclamation 
 of your caucus, the declaration of your conference committees. They 
 announced it in the last House as their programme. They said you 
 would combine these measures of legislation together and send them to 
 the President in a separate bill, and if he did not approve them you 
 would never vot« the supplies for the government. 
 
 You threatened the President in advance before you allowed him an 
 opportunity to say yes or no. You entered this Hall fulminating threats 
 against him in a high-sounding proclamation. You " thundered in the 
 index." It remains to be seen whether, in the body of your work, and 
 in its concluding paragraphs, your thunder will be as terrible as it was 
 in the opening chapter. By adopting the programme of the last House 
 you have made it your own ; but you have put the measures in their 
 most offensive form by tacking them all to the two great appropriation 
 bills. 
 
 Another equally groundless charge against me and my associates, is 
 that we have threatened yoiir bills with an executive veto. I repel the 
 charge as wholly untrue in fact. I said nothing that can be tortured 
 into such a threat. It would be indecent on my part j it would be inde- 
 cent for any of us even to speak of what the executive intends to da; 
 
15 
 
 for none of us have the right to know. But you, in advance, proclaimed 
 to the country and to him that if he dares to exercise his constitutional 
 right of refusing his consent, you wiU refuse to vote the supplies for the 
 government ; in other words, you will starve it to death. That is the 
 proposition we have debated. I: ^- me^\w «<j 
 
 My distinguished Mend from Virginia [Mr. Tucker], who has come 
 nearer meeting this case with argument than any other man on that 
 side, has made a point which I respect as an evidence of the gallantry 
 of his intellect. He says that under our Constitution we can vote sup- 
 plies to the Army but for two years ; that we may impose conditions upon 
 our supplies, and if these be refused the Army ceases to exist after the 
 30th of June next. In short, that the annual Army bill is the act of 
 reconstituting the Army. He is mistaken in one vital point. The Army 
 is an organization created by general laws; and so far as the creation of 
 officers and grades is concerned, it is independent of the appropriation 
 bills. The supplies, of course, come through appropriation bills. I grant 
 that that if supj)lies are refused to the Army, it must perish of inanition. 
 It becomes a skeleton ; but its anatomy was created by general law, and 
 it would remain a skeleton, your monument of starvation. The gentle- 
 man from Virginia says, " Unless you let us append a condition which 
 we regard a redress of grievances, we will let the Army be annihilated 
 on the 30th day of next June,. by withholding supplies." That is legiti- 
 mate argument ; that is a frank declaration of your policy. Let us ex- 
 amine the proposition. What is the "grievance" of which the gentle- 
 man complains? He uses the word "grievance'? in the old English 
 sense, as though the King were thrusting himself in the way of the 
 nation by making a war contrary to the nation's wish. But his "griev- 
 ance" is a law of the land — a law made by the representatives of the 
 people — by all the forms of consent known to the Constitution. It is 
 his "grievance" that he cannot get rid of this law by the ordinary and 
 Constitutional method of repeal. [Applause.] When he can get rid of 
 any law by the union of aU* consents requu-ed to make or unmake 
 a law, he gets rid of it lawfully, whether it be a grievance or a 
 blessing. But his method is first to call a law a " grievance," and then 
 try to get rid of it in defiance of the processes which the Constitution 
 prescribes for the law-making power of the nation. I denounce his 
 method as unconstitutional and revolutionary, and one that will result 
 in far greater evil than that of which he complains. 
 
 If he goes to the American people with the proposition to annihilate 
 our Army on the 30th day of June next, unless the President, contrary 
 to his conscience, contrary to his sense of duty, shall sign whatever 
 Congress may send him 
 
 [Here the hammer fell.] 
 
 Mr. Rbifbr obtained the floor, stnd yielded his time to Mr. Garfield. 
 
 Mr. Garfield. T say, if the gentleman from Virginia puts that propo- 
 sition before the American people, we will debate it in the forum of every 
 patriotic heart and will abide the result. If the party which, after 
 eighteen years' banishment from power, has come back, as the gentleman 
 from Kentucky [Mr. Blackburn] said yesterday, to its "birthright of 
 power," or "heritage," as it is recorded in the Eecord of this morning, 
 is to signalize its return by striking down the gallant and faithful Army 
 of the United States, the people of this country will not be slow to 
 understand that there are reminiscences of that Army which these gentle- 
 men would willingly forget, by burying both the Army and the memo- 
 ries of its great service to the Union in one grave. [Applause.] 
 
16 
 
 We do not seek to revive the unhappy memories of the war ; but we 
 are unwilling to see the Army perish at the hands of Congress, even if 
 its continued existence should occasionally awaken the memory of its 
 former glories. 
 
 Now, let it be understood once for all, that we do not deny, we have 
 never denied your right to make such rules for this House as you please. 
 Under those rules, as you make or construe them, you may put all your 
 legislation upon these bills as " riders." But we say that, whatever your 
 rules may be, you must make or repeal a law in accordance with the 
 Constitution, by the triple consent to which I referred ihe other day, or 
 you must do it by violence. 
 
 Now, as my friend from Connecticut [Mr. Hawley] well said, if you 
 can elect a President and a Congress in 1880, you have only to wait two 
 years, and you have the three consents. You can then, without revolu- 
 tion, tear down this statute and aU the rest. You can follow out the 
 programme which some of your members have suggested, and tear out 
 one by one the records of the last eighteen years. Some of them are 
 glorious with the unquenchable light of liberty ; some of them stand as 
 the noblest trophies of freedom. With full power in your hands, you 
 can destroy them. But we ask you to restrain your rage against them 
 until you have the lawful power to smite them down. 
 
 My friend from Virginia, whom I know to be a master and lover of 
 mathematiQS, has formulated his argument into an equation: "Eight 
 equals duty plus power." Now, I say to the gentleman that his sense 
 of duty resides in his own breast ; but power, the other factor of the 
 second member of his equation, must be found^not in his conciousness, 
 but in the Constitution of the United States. His notions of duty lead 
 him to tear down the laws which the Eepublic enacted to protect the 
 purity of national elections and to use such force as may be necessary to 
 keep the peace while the national voice is finding expression at the polls. 
 That, I say, is his notion of duty, of which he is sole arbiter ; but when 
 he comes to superadd power, in order to complete his "right" as a legis- 
 lator, I hope he wUl not evoke that power out of his conciousness, but 
 will seek for it in the great charter, the Constitution of the United States. 
 According to his own algebra, he must have both these elements be- 
 fore he can claim the " right" to overturn these laws which he denounces 
 as grievances. 
 
 Now, Mr. Chairman, let me add a word in conclusion, lest I may be 
 misunderstood. I said last session, and I have said since, that if you 
 want this whole statute concerning the use of the Army at the polls torn 
 from your books, I will help you to do it. If you will offer a naked 
 proposition to repeal those two sections of the Eevised Statutes named 
 in the sixth section of this bill, I will vote with you. But you do not 
 ask a repeal of those sections. Why"? They impose restrictions upon 
 the use of the Army, limiting its functions and punishing its officers for 
 any infraction of these limitations ; but you seek to strike out a negative 
 clause, thereby making new and affirmative legislation of the most sweep- 
 ing and dangerous character. 
 
 Your proposed modification of the law affects not the Army alone, 
 but the whole civU power of the United States. " Civil officers " are 
 included in these sections ; and if the proposed amendment be adopted, 
 you deny, to every civil officer of the United States, any power whatever 
 to summon the armed posse to help him enforce the processes of the law. 
 If you pass the section in that form, you impose restrictions upon the 
 civil authorities of the United States never before proposed in any Con- 
 gress by any legislator since this government began. I say, therefore, 
 
17 
 
 in the shape you propose this, it is much the worst of all your " riders." 
 In the beginning o:^ this contest we understood that you desired only to 
 get the Army away from the polls. As that would still leave the civil 
 officers full power to keep the peace at the polls, I thought it was the 
 least important and the least dangerous of your demands ; but as you 
 have put it here, it is the most dangerous. If you re-enact it in the shape 
 presented, it becomes a later law than the supervisors and marshals law, 
 and pro tanto repeals the latter. As it stands now in the statute-book, 
 it is the earlier statute, and is pro tanto itself repealed by the marshals 
 law of 1871, a,nd is therefore harmless so far as it relates to civil officers. 
 But if you put it in here, you deny the power of the marshals of the 
 United States to perform their duties whenever a riot may require the 
 use of an armed posse. 
 
 The gentleman from Maryland [Mr. McLane] said, the other day, there 
 was nothing in the Constitution which empowered any officer of the 
 United States to keep the peace in the States. A single sentence, Mr. 
 Chairman, before your hammer falls. I ask that gentleman to tell us 
 whether the United States has no power to keep the peace in the 
 great post-office in Baltimore City, so that the postmaster may attend 
 to his duties ; whether we have not the power to keep the peace along 
 the line of every railroad that carries our mails, or where any post- 
 rider of the "star service" carries the mail on his saddle; whether we 
 have not the right, if need be, to line the post-road with troops, and 
 to bring the guns of the ISTavy to bear to protect any custom-house or 
 light-house of the United States 1 And yet, if the gentleman's theory 
 be correct, we cannot enforce a single civil process of this government 
 by the aid of an armed posse without making it a penitentiary offense ' 
 on the part of the officer who does it. [Applause on the Eepublican 
 side.] , 
 
 3. LEGISLATIVE APPEOPEIATION BILL. 
 
 NATIONAL ELECTIONS SHOULD BE PKOTECTED BY NATIONAL ATJ- 
 
 THOBITT. 
 
 The House, being in Committee of the Whole on the state of the Union, and having 
 under consideration the legislative appropriation bill, on the 26th of April, 1879 — 
 
 Mr. G-AE.PIELD said : Mr. Chairman, I move as an amendment to the 
 pending bill to strike out lines 2006 to 2064 inclusive, commencing with 
 the proviso. 
 
 I had intended to speak somewhat elaborately upon this bill, but I 
 have preferred to give way for the sake of allowing those who had not 
 spoken an opportunity to be heard. 
 
 I would not rise now to ask the attention of the House at all but for 
 the sake of correcting a few plain misapprehensions and evasions in this 
 debate. The gentleman who has just taken his seat, [Mr. Swing] has 
 said that I have led in an attempt to raise sectional feeling in the JSTorth 
 against the patriotic people of the South. It is the old and absurd cry 
 of a sectional ZsTorth and a national South ; that is, the thirty million 
 people of the Iforth, and their Eepresentatives, of whom he is one, are 
 sectional, passionate, unkind ; and the fifteen million of " national- 
 minded and patriotic" people of the South are suffering from the narrow 
 and unjust sectionalism of the thirty million among whom my colleague 
 and I live ! 
 2 a 
 
18 
 
 The gentleman reminds me of what he was pleased to call a patriotic 
 sentiment of mine, uttered at the last session of Congress, when I said^ 
 what I am glad to have remembered, that in my judgment the man or 
 political party who sought to raise sectional issues and revive the un- 
 h'appy passions that ought to sleep in the graves of our dead on both 
 sides was not patriotic, nor would he find an echo to his sentiments in 
 the hearts of the best people of this country. I said that deliberately^ 
 with all the meaning that the words import. 
 
 The blindness that leads my colleague to call two-thirds of this nation 
 sectional, also leads him to think my denunciation of those who reawaken 
 old sectional strife can apply only to EepubUcans. Let him not forget the 
 origin of the present controversy. Who raised this unhappy issue ? Did 
 any Republican begin it 1 "Was it not brought here by the predetermined 
 caucus action of the Democractic party ? Was it not embodied in the 
 declaration of your Senators and members that if you could not force 
 certain acts of legislation upon the statute-book you would never grant 
 suppMes for the support of the government ? That was the party and 
 that was the act which raised this controversy, involving an issue never 
 raised before in this nation ; and, because we meet it and denounce it, 
 you declare that those who stand by orderly and constitutional methods 
 are sectional, and you who make the innovation are national ! 
 
 Gentlemen, I took upon myself a very grave responsibility in the 
 opening of this debate when I quoted the declarations of leading mem- 
 bers on the other side and said that the programme was revolution and, 
 if not abandoned, would result in the destruction of this government. I 
 declared that you had entered upon a scheme which if persisted in would 
 starve the government to death. I say that I took a great risk when I 
 made this charge against you as a party. I put myself in your power, 
 gentlemen. If I had misconceived your purposes and misrepresented 
 your motives, it was in your power to prove me a false accuser. It was in 
 your power to ruin me in the estimation of fair-minded, patriotic men, 
 by the utterance of one sentence. The humblest or the greatest of 
 you could have overwhelmed me with shame and confusion in one short 
 sentence. You could have said, " We wish to pass our measures of legis- ' 
 lation in reference to elections, juries, and the use of the Army; and we 
 will if we can do so constitutionally ; but if we cannot get these measures 
 in accordance with the Constitution, we will pass the appropriation bills 
 like loyal Eepresentatives; and then go home and appeal to the people." 
 
 If any man, speaking for the majority, had made that declaration, 
 uttered that sentence, he would have ruined me in the estimation of fair- 
 minded men, and set me down as a false accuser and slanderer. Forty- 
 five of you have spoken. Forty-five of you have deluged the ear of this 
 country with debate; but that sentence has not been spoken by any 
 one of you. On the contrary, by your silence, as well as by your affir- 
 mation, you have made my accusation overwhelmingly true. 
 
 And there I leave that controversy. The assaults upon my speech 
 have been, from the beginning to the end, evasions of the issue. What 
 have you said? Not less than thirty of you, in spite of my plain and 
 emphatic declarations to the contrary, have insisted that I said it was 
 revolutionary to put a rider on an appropriation bill, a thing that no 
 man on this side of the House has said. You were guilty, gentlemen, 
 and in this I include the gentleman from Pennsylvania [Mr. Kelley], of 
 what Sidney Smith once called " an indecent exposure of your intellects." 
 
 Mr. Kelley. Did I misunderstand you when I said that your speech ^rhich lay before 
 me had the title of "Eevolution in Congress," and said if the gentleman believed that 
 doctrine now he had undergone a mental revolution ? 
 
19 
 
 Mr. GrAKFiBLD. -The gentleman should not confine his reading to the ■ 
 title. If he had read my speech as well as its title, he would hav6 read 
 that in 1872, in the debate to which he referred, the Democratic party on 
 this floor said we should not consider an appropriation bill at all. I said 
 to them, "You have a right to vote against it; you have a right to filibus- 
 ter to get a chance to speak on it if need be; but when you say that the 
 majority shall not act on an appropriation bill at all, because there is a 
 rider on it, that is parliamentary revolution "; and so I say to-day, and 
 the gentleman quoted that as though it were inconsistent with my present 
 position, which is as that of 1872, that to refuse to act on the appropria- 
 tions is revolutionary. In 1872 the Democracy said the appropriation biR 
 should not be acted on at all because a rider was on it. N"ow they say 
 the appropriation bills shall not be acted upon at aU unless there are 
 "riders" on them. I resisted their position then, and I resist it now. 
 
 There is another point which I must touch to show the evasions which 
 have been resorted to in this debate. The other side seeks to go before 
 the country on pleas like this which stands as the heading of the speech 
 of the distinguished gentleman from Yii-ginia [Mr. Tucker J: "Elections 
 by the people must be free from the power and presence of the standing 
 Army." They seek to make the people believe that Democrats in Con- 
 gress are struggling to get the bayonets away from the breasts of the 
 voters, and that we are striving to keep the Army at the polls. The 
 Democratic press is everywhere stating the issue in this way, that the 
 Eepubhcans are defending an odious law, enacted amid the passions of 
 the war, to authorize the use of the Army at State elections. 
 
 Now, " mark how plain a tale shall put that down." On this side, 
 this proposition was made : If you find fault with the law of 1865 we 
 will help you repeal it altogether. On the motion of the distinguished 
 gentleman from Michigan, [Mr. Conger] every Eepublican on this floor 
 who voted at all, when the Army bill was here, voted to repeal in toto 
 the law of 1865, which you complained of to the people as putting the 
 bayonets at the breasts of the voters; and every Democrat, who sits 
 here and voted at all, voted "ISTo." You would not repeal the law, but 
 you told the people we were trying to keep it on the statute-books, and 
 you were trying to get it off. 
 
 Now, Mr. Chairman, our vote on that subject has put us beyond aU 
 cavil on this high and unassailable ground. We are willing and we 
 have voted to repeal the whole of that law, and we even went so far as 
 to put that repeal on the Army bill, and you voted against it. Now, 
 never again go to the people and say you tried to repeal the odious law 
 of 1865 and the Eepublicans would not let you. 
 
 My colleague [Mr. Ewing], who has just taken his seat, says that the 
 sections sought to be repealed by the biU now before us, authorize 
 unwarrantable and unconstitutional interference with elections in the 
 States. He says that the supervisors and marshals are intruders at the 
 election of Congressmen ; that they have no constitutional right to be 
 there, even as witnesses. Gentlemen, I never beUeved in State rights 
 to the extent you did and do ; but there is one thing concerning which 
 I have always thought that the States came very near being sovereign, 
 I suppose that aU our States claim the right to have a legislature of two 
 houses, each house with a right to make its own rules, sit ia its own 
 separate chamber, pass measures according to its own rules, and regu- 
 late the conduct of its own clerks. Yet, gentlemen, if you will read 
 from sections 14 to 19 of the Revised Statutes, you will find that the 
 following has been done : The supreme power of the United States, by 
 force of national law, has gone into the legislature of every State in 
 
20 
 
 this Union, and said to them, " There is a certain Tuesday, the second 
 Tuesday after you have organized, when you shall not fix your own 
 time of meeting ; when you shall not even adjourn over. You shall 
 meet at twelve o'clock. When you meet you shall not vote by baUot ; 
 you shall vote viva voce. Your clerk shall call the roll. You shaU vote 
 for a Senator." The law prescribes how the clerks of both houses shall 
 make the entries in their journals. If there is no election, the clerk 
 shall certify it ; and then this national authority says : " If there is no 
 election by the separate vote of the two houses the second day, I take 
 your two houses and consolidate them into one. I abolish the distinc ■ 
 tion between senator and representative, put them into one hall and 
 hold them in joint session from day to day, and they shall vote as one 
 body until a Senator is elected." 
 
 Who does all that to State legislatures 1 It is done by a law of the 
 United States passed in July, 1866; and no Democrat has denounced it 
 as unconstitutional ; no State legislature has made any opposition to 
 it; and every one of the seventy-six Senators now at the other end of 
 this Capitol, holds his seat in pursuance of the operation of that law. 
 
 Now, if we do aU that unchallenged to the legislature of a sovereign 
 State, who wiU say that we cannot go among our ow;n citizens and super- 
 vise and protect our own ballot-boxes where men are to be elected to 
 seats on this floor ? Your constitutional question is given away when 
 you admit the supervisions there, as you do in this bill; still more 
 decisively it is given away by the universal acquiescence in the law for 
 electing Senators. 
 
 The great danger which threatens this country is, that our sover- 
 eign may be dethroned or destroyed by corruption. In any monarchy of 
 the world, if the sovereign be slain or becomclunatic, it is easy to put 
 another in his place, for the sovereign is a person. But our sovereign 
 is the whole body of voters. If you 'kUl or corrupt or render lunatic our 
 sovereign, there is no successor, no regent td take his place. The source 
 of our sovereign's supreme danger, the point where his life is vulnerable, 
 is at the ballot-box, where his will is declared ; and if we cannot stand 
 by that cradle of our sovereign's heir-apparent and protect it to the 
 uttermost against all assassins and assailants, we have no government 
 and no safety for the future. [Applause.] 
 
 Mr. EwiNG. I hope the House will allow me to ask the gentleman a question and 
 him to reply. I ask the gentleman, may we therefore authorize United States super- 
 visors to inspect the officers of the house and senate of each State as to the manner of 
 election when electing a United States Senator, and appoint marshals to back up the 
 supervisors, and send out the Army to hack up the marshals ? 
 
 Mr. GrAEFiBLD. N'ot at all. The gentleman from New Jersey [Mr. 
 EobbsonJ answered that by anticipation. 
 
 Our Constitution adopted the legislatures of the States as our agents 
 to elect Senators at the times and in the manner which Congress may 
 by law direct. They were adopted as bodies organized under State laws. 
 
 For the election of Eepresentatives to this House, we may set up all 
 our own machinery if we please. We may adopt the State machinery, 
 and superadd our own national superintendence and Safeguards; and the 
 safeguards which have already been established we will mainiain and 
 defend. [Applause.] 
 
21 
 
 i. SECOND AEMY APPEOPEIATION BILL. 
 
 The Kouse being in Committee of tlie Whole on the State of the Union, on the sec- 
 ond Army appropriation bill, June 11, 1879 — 
 
 Mr. Gaefeeld said: Permit me, Mr. Chairman, to recount, ver 
 briefly, the steps which have been taken in regard to this Army appro- 
 priation bill in connection with the legislative bill. At the close of the 
 last session, those two bills wereprevented from passing, upon the alleged 
 ground that there were three grievances ia the form of laws which gen- 
 tlemen on the other side said must be redressed by repeal before they 
 would vote the appropriations necessary to carry on the government. 
 One grievance was set forth in a vague general charge, but not well 
 founded, that there was a law upon the statute-book that authorized 
 military interference with elections. The second was that the jurors' 
 test oath, made necessary by the war, was now a hardship and a griev- 
 ance. The third was that the several sections of the law relating to 
 supervisors and marshals at national elections were a grievance which 
 must be removed by reijeal. And we were told, in the most unequivocal 
 language, by the Democratic leaders in both Houses, that the $45,000,000 
 needed for the maintenance of the civil and military fanctions of the 
 government should never be appropriated until these statutes were 
 repealed. 
 
 In response to these demands, we declared our williilgness on this side 
 of the House, first, to pass a bill which the Senate, a Eepublican Senate, 
 sent to us repealing that section of the statute which prescribed a test 
 oath for jurors. We were ready then, we are ready now, to pass that 
 bill just as the Senate sent it to us at the last session. Second, we said 
 then, we have frequently repeated the oifer this session, and we say 
 now, that we have never voted for a law to make use of the Army to 
 run elections. We have said repeatedly that there never was in this 
 country and there is not now such a law; and we do not desire such a 
 law or such a practice; and that, if any act was needed to prevent the 
 running of elections by bayonets, we were ready to help prevent it. 
 These two propositions we offered at the close of the last session, in order 
 to remove any real or apparent ground of complaint on those two scores, 
 provided that on the other side, the third demand, namely, the repeal 
 of the laws relating to supervisors and marshals, should be abandoned. 
 
 These offers were rejected with arrogant contempt; and the extra 
 session was forced upon the country. A struggle of nearly three months 
 has followed. Nearly all the legislative appropriations have now passed 
 this House without conditions or change of the laws. 
 
 With this general review I shall now confine my remarks wholly to 
 the history of the Army appropriation bill. Soon after this session be- 
 gan, we were tendered an Army bill that had in it not a repeal of the 
 law of 1865, alleged to be an offense — not that ; for we tendered that, 
 and 109 Eepublicans voted to repeal it, and not one Eepublican voted 
 against the repeal while every Democrat in this House voted against 
 its repeal. Instead of a repeal, it was proposed so to modily the law of 
 1865 as to enlarge its restrictions beyond the Army and Navy and make 
 it a crime, punishable by imprisonment or fine, for any civil officer of the 
 United States to employ any armed force, soldiers or citizens, to keep 
 the peace at the national elections. In other words, we were tendered 
 a proposition which swept the whole circle of the civil powers with its 
 prohibitions, and prevented the civil authorities of the nation from pre- 
 
22 
 
 serving the peace at the elections of our national legislature or protect- 
 ing supervisors in the etecution of their duties. 
 
 That assault upon the law we resisted as one man. But while we 
 resisted, we protested that we were not and never had been advocates 
 of running elections by bayonets. 
 
 Though that biU, with its revolutionary menanoe, passed both Houses, 
 it was wrecked upon the rock of the Constitution, and went down, leav- 
 ing not a spar afloat on the face of the political waters. 
 
 A Member. It met with a veto. 
 
 Mr. Gaufibld. Yes ; it met the veto with which the Constitution 
 had wisely armed our Chief Magistrate. Then came the second chapter. 
 A short bin of six or eight lines was introduced, not merely repealing 
 the military provisions of the law of 1865, but in effect declaring that 
 the Army of the United States should not be used to enforce any of 
 the laws of the Union anywhere, at any time when an election was 
 being held. We pointed out the fact that the bill would smite with 
 paralysis the executive authority of the nation during two, three, five, 
 ten, or possibly a hundred days of every year ; that under its provisions 
 even the property of the nation could not be protected from destruction 
 at any place where any election was being held. This violent measure 
 was also passed by the solid Democratic vote of both Houses ; but, like 
 its predecessor, it ran against the rock of the Constitution and went to 
 the bottom [applause on the Eepublican side], and only bubbles mark 
 the spot where it went down. 
 
 And now we have before us another bill making appropriations for 
 the support of the Army. Before considering its other provisions, I turn 
 aside to congratulate the country and the Army that so many gentlemen 
 on both sides have finally consented to strike out the ninth section, 
 which would have proved a hardship to the meritorious officers of the 
 Army by stopping promotions for an indefinite period ; and I tender 
 my compliments and thanks to the distinguished gentleman from Yirginia 
 [Mr. Johnston] who made the motion. The country and the Army will 
 not forget it. I believe the appropriations made in this bill are sufftcient 
 for the support of our military establishment, and no laws in reference 
 to which there is any controversy are repealed by it. 
 
 This brings me to the consideration of the only provision about which 
 there is any question. It is the sixth section, and I will read it: 
 
 Sec. 6. That no money apiiroijriated in this act is appropriated or shall be paid for 
 the subsistence, equipment, transportation, or compensation of any portion of the 
 Army of the United States to be used as a police force to keep the peace at the polls 
 at any election held within any State. 
 
 My first observation is, that this section does not profess to repeal, 
 and does not repeal, any law of the United States. There is not now 
 and, so far as I know, there never was on our statute-book a law which 
 authorized the use of the Army " as a police force " at the polls ; and even 
 if this section were a repealing clause, there is nothing on which it can 
 operate as a repeal. 
 
 But whatever the section means, it is in the form of a limitation for 
 the coming year upon the objects to which the apj)ropriations are to be 
 applied, it is declared that this money is not "appropriated for the 
 subsistence, &c., of any portion of the Army to be used as a police force 
 to keep the peace at the polls." I affirm, without fear of successful 
 contradiction, that this limited and indii-ect prohibition does not apply 
 to any law or to any practice known in this country. 
 
 Mr. Hawley. Not since the Kansas troubles. 
 
23 
 
 Mr. G-AEPiELD. Certainly not since the Kansas troubles. And, 
 furthermore, I do not know of a man in this House who is in favor of 
 using the Army of the United States as an ordinary police force to run 
 elections. [Applause on the Democratic side and counter-cheers on the 
 Eepublican side.] There are, I believe, about forty thousand poUing- 
 places in the United States. If our Army roster was full — oificers, 
 soldiers and camp followers — we would not have over twenty-five 
 thousand in all. And if there were a law for using the Army as a police 
 force at the poUs, we should have about three-fourths of one soldier to 
 each polling place. 
 
 Now, if anybody proposes to deploy our Army in that way I do not 
 know where the lunatic Uves. T speak for myself, and of course for 
 everybody who thinks as I do, and for nobody else. We hold two 
 things : first, that we will not, if we can help it, let vital and righteous 
 laws be repealed or nullified as the condition of getting an appropria- 
 tion to support the government. We have resisted, and wiU resist to 
 the end, all such measures. And, in the second place, even under the 
 pressure of party feeling and party opposition, we will do no act and 
 cast no vote that will place us really or apparently in any attitude 
 inconsistent with the old and recognized principles and traditions of 
 English and American liberty, namely, that civil, not military, force is 
 the usual, the safe, the American method of keeping peace at the poUs. 
 
 That no one may misunderstand me, let me put the case thus : Sup- 
 pose some one should offer the following as a substitute for this section : 
 
 Be it enacted, ^c. , That it shall lie lawful for the President of the United States to 
 use the Army or any portion of it as a police force to keep the peace at the polls at 
 any election held within any State. 
 
 Is there a man in this House that would vote to make that a part of 
 our law"? If there be one, let him, speak. [A pause.] 
 
 Mr. FiNLET. Did not the gentleman vote for a proposition substantially that ? 
 
 Mr. Gaefielb. Never in my life, nor anything like it. 
 
 Mr. FiNLBY. The vote of the gentleman last session was precisely that in effect. 
 
 Mr. GrAEPiELD. The gentleman is utterly mistaken. Now, if no one 
 would vote to enact into law the thing which this section says is not 
 appropriated for, how can any one hold that the section prohibits any- 
 thing that ought to be done! 
 
 I say, for 'one, that in so far as this section indicates the relation 
 between the civil and military arm of the government in the conduct 
 of elections it meets my cordial concurrence; and a vote for the section 
 will put at rest the reckless and false charge that this side of the House 
 desire to run elections by bayonets. 
 
 I admit, as my friend from Indiana [Mr. Baker] has said, that the 
 section is mere surplusage. It does not repeal or change any existing 
 law; but if its framers think that by oifering it they expect to gain a 
 party advantage by getting me, or those with whom I act, to cast a vote 
 that implies that the Army ought to be used as an ordinary police at 
 elections they are greatly mistaken; for they have set a very open trap, 
 baited with a very small piece of very poor cheese. 
 
 Now, Mr. Chairman, a word further in reference to the language of 
 the section. Some gentlemen may be troubled about the scope and 
 meaning of the words "to be used as a police force." Let me recall a 
 little history. When flagrant war was raging, when eleven States 
 were banded against the Union to destroy it, and the theater of war 
 pread over five or six States that adhered to the Union, there was in 
 
24 
 
 fact military interference at the elections; it was the mOitary inters 
 ference of the armed enemies of the United States. 
 
 I once Toted at an election where there was very serious military in- 
 terference. In the autumn of 1862 under the heights of Missionary 
 Eidge, near the city of Chattanooga, when 5,000 Ohio soldiers under the 
 laws of that State were permitted to vote, I in company with my com- 
 rades voted for a governor of Ohio. 
 
 WhUe we were voting, the shells from the batteries of armed enemies 
 of the United States were bursting over our heads, and some of our 
 voters were killed while in the exercise of their right of suffrage as cit- 
 izens of Ohio. That was the only military interference with elections 
 that I ever witnessed. [Applause on the Eepublican side.] Now, it was 
 to prevent that kind of military interference that the armies of the 
 United States in time of war kept off the armed enemies of the United 
 States in the State of Kentucky and in other border States while elec- 
 tions were being held there. And in order that, in the performance ot 
 that necessary duty, they might not interfere with the freedom of elec- 
 tions and the right of citizens, the act of February, 1865, was passed 
 while our guns were yet smoking and while we were yet in line of battle. 
 Even in that act it was provided, under the severest penalties of crim- 
 inal law, that no officer, civil, military, or naval, should interfere with 
 the right of any man to vote, or should undertake to prescribe qualifi- 
 cations for a voter. 
 
 Now, I say that the act of 1865 was in the interest of civil liberty, 
 restraining our armies from doing any wrong or committing any outrage. 
 And in that act there occurs for the first time in the history of our leg- 
 islation connected with the Army the expression "to keep the peace at 
 the poEs." And even there it js used for the purpose of saying that the 
 law does not make it a crime punishable by imprisonment and fine for 
 an officer of the government to "keep the peace at the polls" or to re- 
 pel the armed enemies of the United States. Nothing in that law refers 
 to the use of the Army as an ordinary police force. The marshals and 
 their deputies are the police force of the United States. Our Army is 
 governed by the rules and articles of war, and is always used as an 
 army when it is ordered to execute the laws. 
 
 The proposition to use our Army as a police, to send the soldiers out 
 a.nd station them one by one at the polls to run the elections as a police, 
 is a fiction so absurd that I trust no man on this side of the House will 
 give the least color to the assumption that he favors it by holding that 
 this sixth section repeals, suspends, or modifies any existing statute. 
 
 Mr. WirxiAMS, of Wisconsin. Will my distinguished friend allow nie to submit to 
 iim one question, whicli he will understand I put in the utmost good faith. 
 
 Mr. G-AEPiELD. Certainly. 
 
 Mr. Williams, of Wisconsin. It is this: Are you now in favor of using ,iuy portion 
 of the Army of the United States at any time, under any circnmstances, in any emer- 
 gency, to keep the peace at the polls 1 
 
 Mr. G-ARFiELD. Not in the sense of using that Army as an ordinary 
 police force. 
 
 Mr. Williams, of Wisconsin. In any form or manner ? 
 
 Mr. Caelislb. This section does not refer to the use of the Army as an ordinary 
 police force. I do not mean as an ordinary civil police, but in any form whatever. Is 
 the gentleman in favor of using the Army in any form whatever to keep the peace at 
 the polls ? 
 
 Mr. G-ARPiELD. I am in favor of using the Army and the Navy and 
 all the militia of the United States to enforce the laws of the United 
 
25 
 
 States, any one of them and all of them,, everywhere, and at all times 
 when the civil force is inadequate, but not until then. 
 
 Mr. Williams, of Wisconsin. Inchiding the keeping of the peace at the polls. 
 [Laughter on the Democratic side.] 
 
 Mr. GrAEPiELD. If there be any law that authorizes the President to 
 use the Army as an ordinary police force for that purpose I am in favor 
 of enforcing it. 
 
 Mr. Williams, of Wisconsin. Does my friend think that we have that law, or does 
 he think that we do not have it ? 
 
 Mr. Garfield. I think we have not; that we never have had it, 
 'and that we never ought to have it. The marshals and their deputies 
 are our police. 
 
 Under our laws, at the present moment, we have the amplest power 
 to add deputy marshals and assistant marshals in any number that may 
 be needed to keep the peace at the polls, and those marshals may sum- 
 mon the posse, the armed posse of all faithful citizens who will obey 
 the orders of the marshals and keep the peace at the polls. This is the 
 traditional law of English-speaking people. 
 
 Now, if my friend from Wisconsin [Mr. WiEiams] will remember, it 
 was distinctly provided in the law of last year that the Army of the 
 IJnited States should not be used as a part of the ][>osse comitatus in any 
 case except where the law expressly provided that it should be so used. 
 Therefore, in the presence of that restrictive legislation, passed almost 
 unanimously by a Eepublican Senate — although I and my friend voted 
 against it in the House; yet it was finally concurred in without a divis- 
 ion — ^in the presence of that restrictive legislation, I say there is no law 
 in the United States to which this sixth section can attach itself, either 
 as a repealing or as a modifying clause. 
 
 Therefore I say in conclusion that whatever use may be made of this 
 section as party literature, it is evident to me that, in the judgment of 
 lawyers and courts and executive of&cers of the government, it will be 
 regarded merely and only a stump speech, changing no law and having 
 no legal effect whatever. I shall vote for the bill. 
 
 5. JUDICIAL APPROPEIATION BILL. 
 
 The House heing in Committee of the Whole House on the state of the Union on 
 the judicial appropriation hill, June 10, 1879 — 
 
 Mr. G-ARFiELD said: Mr. Chairman, those provisions of this bill which 
 itemize the expenses of the courts, are in the right direction, the direc- 
 tion of economy and a prudent regard for the safe disbursement of the 
 public funds. I welcome them in this respect as in pursuance of a policy 
 which we ought always to approve. 
 
 In so far as the bill creates unnecessary deficiencies, as has been stated 
 by the gentleman from New York [Mr. Hiscock], it is objectionable. 
 The fair and manly course for the House to pursue is to appropriate 
 what is fully adequate, and no more, to meet the expenses of the 
 current fiscal year. The opposite course has been frequently pursued 
 by political parties; but, in the long run, it has been found to be wise 
 to make an apparent reduction of expenditures knowing that the sup- 
 plies withheld must be made up by subsequent deficiency bills. There 
 is no real gain to any party in the long run; and it is a bad way to man- 
 
26 
 
 age the fiscal affairs of the government. I hope, therefore, whatever 
 amendment this bill may need in that respect will be made, and that 
 the full amount required for the actual service of the year will be added. 
 
 In reference to the two clauses which have been referred to by the 
 gentleman from New York, and which are found on pages 2 and 3 of the 
 bill (which I have a copy of only by borrowing it from a member of the 
 committee), I will make a few observations. It is not a valid objection 
 against the passage of an appropriation bill that it does not embrace 
 all the objects for which appropriations should be made. We cannot 
 justly vote aga-inst appropriations which are proper in themselves merely 
 because the amounts are not large enough. 
 
 But there is a clause at the end of the first section which is something- 
 more than a mere omission to make a necessary appropriation; I read 
 it: "N^o part of the money hereby appropriated is appropriated to pay 
 any salaries, compensations, fees, expenses, under or in w'tue of title 
 26 of the Eevised Statutes." It is fair to inquire whether those statutes 
 do not command the executive officers of the government to perform 
 some positive duty, and whether by this clause we a.re not only neg- 
 lecting to appropriate, but are virtually nullifying the law by prevent- 
 ing its enforcement. If the clause which I have read stood alone, it 
 would be less objectionable; but taken in connection with the second 
 section, which I will read presently, it amounts to a legislative prohi- 
 bition, for one year, to enforce the provisions of title 26. The sections 
 of that title are the laws which this House and the Senate have vainly 
 tried to repeal, but have found they have not the constitutional power 
 to do so. We were told, in the outset, that these laws should be repealed 
 or no appropriations would be made. But it has been demonstrated to 
 the most unobservant, that the present Congress is powerless to re- 
 peal these laws, and the attempt has been wisely abandoned. The chief 
 amounts needed for the support of the civil departments were appropri- 
 ated in the bill which we passed yesterday, with no provision for repeal- 
 ing or modifying the law ; but now the Committee on Appropriations 
 propose a bill by which, for the coming year, these laws shall be not 
 repealed, but not enforced — nulUfled. 
 
 liTow, gentlemen, that is only an indirect way of doing temporarily, 
 for one year, what you have no constitutional authority to do abso- 
 lutely and permanently. This provision ought to be stricken out. As 
 I have already intimated, the clause to which I have referred draws its 
 ■evil inspiration from the provisions of the second section, which I will 
 now read: 
 
 That tlie sums appropriated in this act for the peraons and public service embraced 
 in its provisions are in full for such persons and public service for the fiscal year end- 
 ing June 30, 1880 ; and no department or officer of the government shall, during said 
 fiscal year, make any contract or incur any liability for the future payment of money 
 until an appropriation sufficient to meet such contract or pay such liability shall have 
 first been made by law. 
 
 Now, Mr. Chairman, let us consider the effect of this section upon ex- 
 isting law. 
 
 Mr. Cox. I desire to ask the gentleman whether what he has just read is not sub- 
 stantially the law now? 
 
 Mr. G-AEFIELD. My remarks will soon answer the gentleman. In 
 1870, in order to prevent the extravagant use of the public money. Con- 
 gress passed a law restricting the expenditures for any one year to the 
 appropriations made for that year; that is, if the appropriations made 
 for the year were not sufficient, a deficiency must be asked for. Unex- 
 pended balances, remaining from previous years, could not be applied to 
 
27 
 
 meet deficiencies. Tliis was a wise provision. Then it was found that 
 there was a tendency to incur obligations by making contracts, such as 
 for the rent of buildings, the lease extending over a series of years ahead. 
 Thus obligations were incurred for which no appropriations of money 
 had been made. To check that tendency, section 3679 of the Revised 
 Statutes was enacted in these words: 
 
 No department of the gOTernment sball expend, in any one fiscal year, any sum in 
 excess of approiiriations made by Congress for that fiscal year, or involve the govern- 
 ment in any contract for the future payment of money in excess of such appropriations. 
 
 Now, in pari materia, as part of the same general prohibition, gentle- 
 men will find, in section 3732, this enactment : 
 
 No contract or purchase on behalf of the United States shall be made, unless the 
 same is authorized by law or is under an appropriation adequate to its fulfillment, ex- 
 cept — 
 
 But here is an important exception that gentlemen appear to have 
 overlooked, and it answers the question of the gentleman from New 
 York [Mr. Cox]— 
 
 Except in the War and Navy Departments, for clothing, subsistence, forage, fuel, 
 quarters, or transportation ; which, however, shall not exceed the necessities of the 
 current year. 
 
 Perhaps this section may throw a little side-light on another bill which 
 is shortly to be before us in regard to feeding, clothing, and transport- 
 ing the Army. Under the laws as they now stand, if Congress neglects 
 to pass the regular appropriation bills, or if the appropriations run out, 
 still the Army is to be fed and not starved, clothed and not left naked, 
 transported to points of danger and not left idle and useless. So also 
 with the Navy. But here is a section which, for one year, nullifies sec- 
 'tion 3732, for it makes no excex^tion. 
 
 Mr. Carlisle. Did not the act of 1870 repeal all that? 
 
 Mr. Garfield. No, sir. 
 
 ilr. Carlisle. Why not ? 
 
 Mr. Garfield. Because of the exception which I have just read with 
 reference to the Army and the Navy, which has never been construed 
 as repealed. 
 
 Mr. Carlisle. You have read the exceptions in the act of 1861 ; but the act of 1870, 
 a later statute, contained no exceptions whatever. 
 
 Mr. Garfield. I have read to the gentleman from the Eevised Stat- 
 utes now in force two exceptions which must be construed together; one 
 does not repeal the other. 
 
 Mr. Carlisle. How did that provision get there? 
 
 Mr. Garfield. It is enough for me to know that this is the law. 
 Both sections have been adopted by Congress in the revision of 1874. 
 But this is not all. Besides nullifying the exceptions of that section for 
 the coming year, there is imported into this second section of the bill a 
 new term. Before this, outside of these exceptions, a department could 
 not make a contract, a written contract, binding the government to pay 
 money for an object for which no appropriation had been made. 
 
 That was wise and judicious, for it prevented the departments from 
 entering into large schemes that bound the government in advance of 
 the action of Congress. But here is another expression not known in 
 our existing statutes : 
 
 No department or officer of the government shall ** * * make any contract or 
 incur any Udbility, 
 
28 
 
 Here is a provision which ach broader than any that can be 
 
 found in the statutes, as ev( jwyer -will concede. "Incur liabil- 
 ity." What does that mean', ^ appose the President of the United 
 States should think it important to send a minister extraordinary to 
 some foreign court, being authorized thereto by the Constitution, and 
 in an emergency should send him. Would he incur liability ? Cer- 
 tainly. Suppose he had been ordered by Congress to do it. Suppose 
 it was made mandatory under the law, but there happened to be no 
 special appropriation for it, and he should' make the appointment. 
 Would he "incur Uability" for which an appropriation had not first 
 been made ? Suppose it shotild so happen that a new judicial district 
 had been created by act of Congress, and the President should be 
 ordered by the law to appoint a judge, but there happened to be no ap- 
 propriation for the salary of the judge. The President in appointing 
 that judge according to law incurs a liability for the government to pay 
 the salary. In short, any executive act of his which by law he is com- 
 manded to perform, he is here forbidden to perform, during the coming 
 year, because in doing so he incurs a liability for which an appropriation 
 has not been specially^made in advance. 
 
 The object of this legislation is plain. During the coming year there 
 is to be an election for members of Congress in the State of California, 
 and one in the Westchester district of New York to fill a vacancy ; and 
 this legislation is leveled at these elections, so that neither the courts nor 
 the United States marshals shall appoint deputy marshals to act as 
 official witnesses or to keep the peace at those elections, in order that 
 the United States may be properly and lawfully present at the creation 
 of its own legislators. This legislation is an attempt to defeat and 
 cripple the power of the United States to be present at those two elec- 
 tions which are to be held during the coming summer. It is an attempt 
 to accomplish by indirection what cannot be done by an open and plain 
 repeal. 
 
 Now, Mr. Chairman, as we have successfully resisted , the repeal of 
 righteous laws, in spite of the threat that the appropriations would be 
 refused, none the less will we resist their nullification. The chapter of 
 forced repeal seems to have been closed. Gentlemen have abandoned 
 it. But the chapter of nullifying laws is now opened. Again we stand 
 upon the unassailable proposition that not only shall these just laws 
 remain upon the statute-book, but that they shall be executed. 
 
 If you do not appropriate the money we cannot help ourselves. We 
 are powerless to appropriate it without your aid. You are the majority; 
 but not by our consent shall you nullify a law which the Constitution does 
 not permit you to repeal. I will now hear the gentleman from Illinois. 
 
 Mr. Springer. I rose to ask thegentleman the question whether it was not within 
 the province of a majority of this House and of the Senate to withhold aj)proprlatlon8 
 for any purpose that they might desire. 
 
 Mr. Garfield. Oh, yes. 
 
 Mr. Springer. What complaint, then, have you to make against the majority of 
 this House and of the other HouSe for refusing appropriations for objects which they 
 deem subversive of the rights and liberties of the people ? 
 
 Mr. Garfield. I answer the gentleman from Illinois by a quotation 
 from the distingtiished gentleman from Yirginia [Mr. Tucker], who is 
 not now here. He defined right to be equal to power plus duty. Now 
 you have the power to withhold appropriations for executing the laws, 
 but have you the right? Your power and your duty put together consti- 
 tute your right in the best sense of the word. Of course you are your 
 own judges of duty. But we are all here, Mr. Chairman, under the 
 
29 
 
 solemn obligation of an oath. We are all sworn before the Searcher of 
 all hearts that we will well and faithfully perform the duties of Eepre- 
 sentatives nnder the Constitution. And the Constitution makes it our 
 duty to appropriate the necessary means to enforce the laws. The Con- 
 stitution provides that the judges, the President, and other officers shall 
 receive a fixed compensation at stated times, and this can only be done 
 by our being faithful to our oaths. 
 
 Will the gentleman deny that we are under a solemn obUgatiou to 
 make all the appropriations necessary to carry on the government and 
 execute the laws of the United States'? If any gentlemen here see fit 
 to neglect that high duty and violate that great obligation, they must 
 answer to their own constituents, to their consciences, and to G-od. Bat, 
 as for me, I hold that to appropriate the money required by the law is 
 my duty; and my vote shall be for the appropriations under the laws as 
 they are, and not coupled with acts which nullify or obstruct them. 
 
 There have come into our Treasury during the last year $235,000,000. 
 Every dollar of that money came from the people under the sanction of 
 laws which were passed for the express purpose of raising money for the 
 support of the government. That money is in the Treasury for that pur- 
 pose ; and we are the trustees of that fund under the law and the Con- 
 stitution. The people paid it without imposing any conditions; they 
 paid it, under the laws as they now exist, to support the government. 
 
 Now, therefore, if we, the trustees of that great fund, step in between 
 those for whom we hold the trust and the execution of the trust, and say 
 we wiU not apply this money according to the laws under which we re- 
 ceived it, but will impose conditions of our own diiferent from those 
 under which they paid it, are we not betrayers of a trust, and violators 
 of the Constitution ? 
 
 During the debate on the second section of the bill, the same day, Mr. Garb'IELD said : 
 
 Mr. Chairman, I move to amend by striking out in Hue 6, section 2, 
 the words " or incur any liabiUty." I do that because it will leave the 
 statutes on the subject plain and unambiguous. If these words are out, 
 the remainder of the provision is not unlike what is now in the law, and 
 I think there would be no ambiguity in the section; but if these words 
 be retained, no man can know precisely what he may or may not do 
 without violating the law. 
 
 I do not myself think that, strictly and properly construed, this section 
 suspends a number of sections of the Eevised Statutes which some gen- 
 tlemen may think are temporarily repealed ; but with these words here 
 they leave an uncertainty hanging over many sections of the Revised 
 Statutes as to what constitutes incurring liability. 
 
 I can conceive such a thing as this : The President may appoint a man 
 and may say to him, "Go and do this duty; the law authorizes me 
 to appoint you. You may never receive any pay. You will never re- 
 ceive any unless Congress appropriates it hereafter." Possibly the 
 President would not thereby incur any liability. I presume, when elec- 
 Hon day comes, the judges can appoint supervisors and the marshals can 
 appoint assistant marshals in the same way. There is certainly nothing 
 here which prevents them from doing their duty; and if they are told 
 at the time of their appointment that they never can have any pay from 
 the government unless Congress should thereafter appropriate it, queiy, 
 whether any liability has been incurred. I rather think not. 
 
30 
 
 Mr. -Springer. I slionld think there had heen. 
 
 Mr. Gaepield. I think not. The liability spoken of here- is certainly 
 a pecTiniary one. But if the gentleman thinks there is liability, it proves 
 the necessity of making Wie language clear, which certainly will be done 
 by striking out the words which render it doubtfal. [Cries on the Dem- 
 ocratic side of " Vote ! " " Vote ! " ] Not quite yet. 
 
 E'ow, if gentlemen have put these words it here to suit two views of 
 this case, so that they can say to one class of their friends, "We have 
 done it," and to others who do not think they ought to have done it, 
 "We have not done it", I say if they have had a double purpose in view, 
 these words are well chosen. But if they have a plain, frank, manly 
 purpose ia view, that everybody can understand, they should leave these 
 words out. I think, therefore, for the honor of the House and for the 
 clearness and deflniteness of the statutes, these words ought to come 
 out; and in the interest of good legislation I make the motion to strike 
 them out. 
 
 Mr. Cox. I understand my Mend from Ohio to say that he helieves United States 
 supervisors and others will he appointed. 
 
 Mr. Gaefdeld. I did not say they would be, but perhaps they can 
 be 
 
 Mr. Cox. That the President and the judges would appoint them under this clause 
 if passed — that they would he appointed. 
 
 Mr. Gaepibld. The gentleman will understand I am merely saying 
 if it should be done and they were told they never could have any pay 
 until Congress subsequently appropriated the money — I refer to deputy 
 marshals — I doubt whether that would constitute under this section an 
 incurred liability. 
 
 In the debate on the third section, the same day- 
 Mr. Gaefibld said : 
 I offer the following amendment : 
 
 In line 16, after the word "citizen," insert the words "of good standing": and 
 strike out all after the word "held," in line 17, down to and including the word 
 " belong," in hne 19 ; so that it will read : 
 
 "Which commissioner shall be a citizen of good standing residing in the district in 
 which such court is held." 
 
 This will strike out the words : 
 
 And a well-known member of the principal political party opposed to that to which 
 the clerk may belong. 
 
 I offer this amendment because I am unwilling, if I can prevent it, to 
 allow a statute to pass this House, which, for the first time in the history 
 of this government, injects party politics into our jury laws. The words 
 "political parties" are unknown in our Constitution. There is not a 
 word in the Constitution tbat indicates such a creation as a political 
 party. 
 
 Political parties are probably necessary in all free governments ; but 
 there has been one place in the whole circle of our judicial system into 
 which hitherto the word party has never found its place as a part of 
 the law. Our goddess of justice, so far as persons are concerned, is 
 painted blind ; but so far as the objects and essence of justice are con- 
 cerned, she sees the whole world. 
 
 Now it is proposed, most unwisely, and I think for the first time 
 in our history, (and I beg the lawyers and judges who sit before me to 
 
31 
 
 think of this,) to put into the jury-boxes a man recognized as a political 
 partisan, and then another beside him recognized as belonging to another 
 political party, to administer justice. One is to do Democratic justice^ 
 another Republican justice, another Greenback justice, and so on to the 
 end of the chapter. 
 
 If that phrase be planted in our law no man can teU the bitter, bad 
 fruits that it may produce in the future of our jurisprudence. 
 
 Let us, gentlemen, have one place where, as lawyers and citizens seek- 
 ing their rights, there shall be no such thing as politics recognized, but 
 where equal and exact justice will be meted out to all men. 
 
 Now, the gentleman from Iowa [Mr. Weaver] proposed, a little while 
 ago, what was entirely proper, that it should not be confined to two polit- 
 ical parties. There may be two, three, four, or five parties — there are 
 perhaps that many ia the country — and if you let the idea of party poli- 
 tics get into the law of juries at aU, you ought to go through the whole 
 list of parties, to be just or fair. 
 
 Let me ask how many clerks of national courts there are whose 
 politics you can reaUy ascertain without an inquest? There are a 
 great many of these clerks who have held their positions during the 
 lives of half a dozen political parties, and who have no political parti- 
 sanship ia them, and who make it a part of their daily bread to keep 
 «ut of politics. Some of these clerks were in ofBce before the Eepublican 
 party was born, and do not know to which party they belong. 'Now, in 
 order to execute this proposed law. you must find out what their polit- 
 ical opinions are; you must, ia fact, make them partisan before you can 
 appoint a commissioner or impanel a jury. 
 
 I beg gentlemen to let this amendment of mine pass, in the interest of 
 law and justice. I hope that the fact that we have been looking into 
 each other's faces and fighting a political battle, has not put the ma- 
 jority into such an attitude that they will reject everything proposed by 
 me or my associates. I should be^glad for the sake of justice to see the 
 House agree to this amendment. 
 
 In reply to Mr. McMahon, Mr. Garfield said : 
 
 Mr. Chairman, the gentleman has referred to the electoral commis- 
 sion. He will remember that there was not, in that law, a word which 
 referred to one pohtical party or the other. It was the sense of decency 
 and fair play between the two parties which, after the law was passed, 
 led them voluntarily to put men of both parties upon that commis- 
 sion. The Eepublican Senate put upon it a fair share of Democrats, 
 and the Democratic House put upon it a proper share of Republicans. 
 But the law said not a word about selecting men from opposite political 
 parties -to serve upon the commission. The law was just as this law 
 ought to be — free from the recognition of party politics. 
 
 6. JUDICIAL APPEOPRIATION BILL. 
 
 NULLIFICATION. 
 
 The House having under consideration the conference report of the two Houses on the 
 judicial appropriation hill, June 19, 1879 — 
 
 Mr. Garfield said: Mr. Speaker, we do not insist that this House is 
 obliged to vote all the money which some of us may think necessary 
 or any given purpose. If the majority offer to appropriate for a par- 
 
32 
 
 ticular purpose a part only of the money needed, we would not be jus- 
 tified in voting against the bill merely because the amount is insuffi- 
 cient, for it might be your purpose to supply the deficiency hereafter. 
 But it is certainly an objectionable mode o^ legislation so to cut down 
 the appropriation bills as to make a deficiency inevitable. This bill is 
 open to that objection; it does not appropriate enough; for it wholly 
 omits a part of the usual supplies. But that objection alone would not 
 prevent this side from voting for it. 
 
 The feature of the bill which is most objectionable, and to which we 
 do not and cannot agree, has been well stated by my colleague [Mr. 
 Monroe]. The bill goes beyond appropriations, and proposes by law 
 to lay hold of the executive department of this government and affirm- 
 atively prevent its officers from enforcing certain laws of the land. That 
 is the attempt which we resist and shall continue to resist. The object 
 tionable provision is now made definite and unmistakable in this confer- 
 ence report. The language of the clause as it first passed the House 
 was somewhat vague, but here it is plain, and we perfectly understand 
 its import. If any doubt remained, my colleague who presented the re- 
 port [Mr. McMahon] removed it, by declaring the purpose of the clause. 
 The issue is narrowed down to this : The gentleman tells us that he and 
 his associates are determined that there shall be appointed no marshals, 
 deputy marshals, or assistant marshals to execute the laws of the Union, 
 as embodied in title 26 of the Revised Statutes ; that they have devised 
 and agreed on this clause in the conference between the two Houses so 
 as to prevent the enforcement of that part of the existing law. This 
 makes a sharp issue which everybody can understand. 
 
 l^ow, assuming that the gentlemen on the other side do not like these 
 provisions of law relating to elections (and we understand that to be 
 their unanimous sentiment), they ought to propose amendments to them. 
 My colleague who presents this report says that the law has been 
 used for partisan purposes ; that marshals, deputy marshals, and assist- 
 ant marshals have been appointed merely to advocate and advance the 
 political interest of one party at the elections. If that be so, it is a just 
 criticism of the law, and an amendment ought to be offered to correct 
 such an abuse. If my colleague will offer an amendment, or allow us to 
 offer an amendment, so as to put the appointment of deputy and assist- 
 ant marshals who are to serve in connection with Congressional elections 
 on the same basis as the appointment of supervisors — that is, that they 
 shall be appointed by the courtSj and shall be chosen in equal numbers 
 from the different political parties — we will aid him, and the abuse of 
 which he complains can be corrected. But that is not in the line of the 
 gentleman's purpose nor that of his party. They do wish not to better 
 the law, but to annul it. They do not wish the law executed, so long as 
 they have not the power to make the apiiointments and execute it in 
 their own way. 
 
 Eecent events have shown them that they cannot repeal these 
 statutes. In the present situation of parties and opinions in Con- 
 gress it is impossible to repeal them. Those who wish to repeal them 
 have not the constitutional majority to do so. They can no more remove 
 them from the statute-book than they can enact a law without a majority 
 of votes. In short, they have not the constitutional majority to repeal 
 these laws, l^ot being able constitutionally to repeal them, gentlemen 
 on the other side say, " We will prevent their enforcement." And, in 
 attempting this, they attack the government in a very vital part. They 
 know that the whole country, without regard to party, needs to have 
 the courts of the United States open to all suitors. They know that 
 
33 
 
 ustice ought to be administered in every district and circuit court of the 
 United States. 
 
 They know that United Sta,tes prisoners are locked up, some under 
 sentence of our courts, others awaiting trial; and that the Constitution 
 provides that all who are hfld under charges shall have a speedy trial. 
 The great duty, the imperative obligation, to provide for the speedy and 
 prompt administration of justice rests upon members of Congress, Re- 
 publicans and Democrats alike. But the majority of this House have 
 segregated from all the other appropriations of the year this one for the 
 judicial expenses of the government, and now offer an appropriation of 
 two and a half millions of dollars, and say, not to us alone, but through 
 us to the nation and to all the officers of the nation, that this money of 
 the peoiDle, which has been paid into the National Treasury for the very 
 purpose of maiataining the courts, shall not be used for that purpose, 
 only on condition that the Democratic party shall be permitted to couple 
 with it a provision that certain laws of the land which they cannot repeal 
 shall not be enforced ; nay, more, that for the coming year these laws 
 shall be nulMed. In short, we are told that we must submit to the 
 nuUiflcation of the election laws, or the courts of the United States shall 
 be closed, the prisoners awaiting trial shall be discharged or shall be held 
 untried, against the constitutional provision in their behalf, and that no 
 provision , shall be made even to feed them. It is to be made un- 
 lawful to try them, unlawful to keep them, and it is unlawful to dis- 
 charge them. With these hard conditions you have fettered the appro- 
 priations, the use of which reaches to the very vitals of national justice. 
 You say, " Take these appropriations coupled with the nullification of 
 certain laws, or you shall not have them at all." 
 
 Gentlemen, we earnestly desire to go home. We have borne the bur- 
 den of this long, weary, and profitless session until we are anxious to go 
 to our homes and rest and give the country rest. But we cannot, even 
 under the persuasive heat of the dog-star and the pressure of this weary 
 and distasteful work, accept the dishonor which this bill offers. It is a 
 moral bribe to us to consent to the nullification of laws which you seek 
 not to improve but to destroy. We cannot, we will not, consent. 
 
 You have retained in this bill a clause which, if it becomes a law, wiU 
 place the President of the United States between two fires — the fire of 
 this law if he disobeys it, and the fire of Heaven if he violates his oath 
 by obeying it. 
 
 Mr. McMahon. Will my colleague allow me to ask him liow the President is at 
 all interfered with? 
 
 Mr. G-AEPiELD. I will answer. The President has taken an oath 
 that he will see to it that the laws be faithfully executed. You do not 
 repeal the election laws, but you make it impossible for him to execute 
 them without violating another. You seek to place him ia reach of 
 your impeachment on the one hand or, on the other, compel him to 
 neglect his duty and violate his oath. We have no legal or moral right 
 to put the Chief Executive in such an attitude. The wisdom of the Old 
 Testament proverb, "in vain is the net spread iu the sight of any bird," 
 may be fitly applied in this case. I do not see that there' is the slightest 
 probability you can catch a bird in this net. 
 
 Mr. House. Do I understand the gentleman from Ohio as threatening us with 
 another veto ? 
 
 Mr. Speaker, we have heard of war and rumors of war in another quar- 
 ter; but this House, this body, whose members come directly from the 
 3 a 
 
34 
 
 people — the only real sovereigns in this country — has not only not come 
 to blows, bnt so far as I know have not come to threats. 
 
 Mr. House. The gentleman talis about blows. 
 
 Mr. Gakfield. I say, neither blows nor threats. I am certainly ia- 
 dulging in no threats. I only say you offer a bill for the approval of the 
 Executive which if he approves puts him in a position where he will be 
 involved in a conflict between the Constitution and the law you make. 
 
 Mr. House. Wbat a very frank answer. 
 
 Mr. Garfield. It is both frank and just. I appeal to you, gentlemen, 
 whether this kind of legislation meets the approval of your best judg- 
 ment. 
 
 Now, I had some hope^ when we were told yesterday by my colleague 
 I Mr. McMahon] that the amendment which had come from the Senate 
 was left open so as to enable the conference committee to soften the 
 asperities of this bill — ^I had some hope that we should see our way 
 through the entanglement by finding a bOl which gentlemen on this side 
 could support, and that we might then adjourn, shake hands, and go 
 home. But I am compelled for the present to bid farewell to that pleas- 
 ing prospect. We stay. [Applause from the EepubHcan side.] 
 
II. 
 
 DEFENSE OF UNION SOLDIBES OP THE SECEDED STATES, 
 
 The Committee of the "Whole on the state of the Union having under consideration 
 a proposition to abolish the Southern Claims Commission, April 15, 1879 — 
 
 Mr. G-AEFiLLD said : Mr. Chairman, the general doctrine of belligereucf 
 in a territorial war is one of course understood by everybody to include 
 technically as enemies, all of the inhabitants of the hostile territory. 
 That doctrine is recognized by lawyers everywhere. But nobody, so faf 
 as I know, unless it be the gentleman from "Wisconsin, has ever denied 
 that, during our late war and since, the Supreme Court has repeat- 
 edly determined that the question of loyalty could not be raised against 
 a claimant, if a pardon had been granted him by the President or Con- 
 gress ; that by a pardon disloyalty is wiped out, so far as his legal rights 
 before the court are concerned. ■ This is an answer to all that has been 
 said on that point. 
 
 The gentleman from Wisconsin [Mr. Bragg] agrees with me that the 
 amendment of the gentleman from Tennessee [Mr. Young] ought not to 
 be adopted. He thinks, however, that the Southern Claims Commission 
 ought to be abolished, because he says it was a mistake from the first 
 to pay any loyal claims from the South. On that point I take issue with 
 him; and I wish to refer to some official statistics which I prepared at 
 the last session, in view of a statement then made and now repeated in 
 this debate. It was said by the gentleman from Louisiana [Mr. Ellis] 
 that 99 per cent, of all the people of the seceded States were disloyal, in 
 our sense of that word ; that almost every Southern man who amounted 
 to anything belonged to that category. I desire to traverse that propo- 
 sition by some facts. Leaving out of view all the border States, do gen- 
 tlemen know that there were, from the States that went into secession 
 and rebellion, military organizations amounting to fifty regiments and 
 seven companies of white men who were regularly mustered into our 
 Army and who fought bravely under our flag f I have the official record 
 in my hand. Passing to the border Southern States, which did not se- 
 cede, but whose people were divided, do gentlemen know that in the 
 State of Kentucky alone more white soldiers fought under our flag than 
 Napoleon took into the battle of Waterloo "? more than all the allied armies 
 which Welliagton commanded at that battle"? Do they not know that 
 Missouri furnished one hundred and eighteen regiments of white soldiers 
 to the Union Army ; that the Southern States furnished one hundred 
 and eighty-six thousand colored troops to the Union Army, and that of 
 these ntaety thousand were from the States which seceded, and twenty 
 thousand from the State of Kentucky f I say that from the States that 
 seceded and went into the rebellion 50,700 white soldiers fought in 
 our ranks and under our flag. And this statement does not include the 
 thousands of individual men who came into our bnes, and joined North- 
 em regiments. To say that these men were enemies and had no legal 
 rights, and that the government should not pay them or their families 
 all proper claims for supplies and other property taken from them by 
 the government they were defending, is a proposition I had hoped no 
 man on either side of this House would make ; and I am glad to know 
 that the gentlemen who fought against us in the field do not make it. 
 
 35 
 
36 
 
 Kot one of them has yet indorsed it. It remains for one of our own sol- 
 diers, the gentleman from Wisconsin [Mr. Bragg], to say that there 
 ought to be nothing paid to any man, however loyal, if he came from 
 the South. I am sure that even this House, consisting so largely of Con- 
 federate soldiers, will denounce this proposition as in the highest degree 
 inequitable and unjust. Let the Southern Claims Commission continue 
 until it has acted on the cases now before it, and then let us muster it 
 out ; for the cases not already presented are barred by the statute of 
 limitation. Let us not enlarge the claim business, but let us complete 
 it ; and most of aU, let us not so change the law as to abolish the dis- 
 tinction between loyal and disloyal claims, making the latter payable, 
 which the law has never done. 
 
III. 
 
 1. EESUMPTION AND THE CUEEEFCY. 
 
 The Committee of tlie Whole on the state of the Union having under consideration 
 an amendment to use the reserve provided hy law for the redemption of fractional 
 currency, April 10, 1879 — 
 
 Mr. Gaepield said: ' 
 
 Mr. Chairman, my colleague [Mr. McMahonJ lias gone into the whole 
 merits of this question on the point of order. I shall only follow Ms 
 example to a very smaU extent. The attempt of my colleague, in the 
 speech he has just made, to set himself, in contrast with me and many 
 others on this side, as the special champion and friend of the soldier, is 
 quite too thin a disguise to deceive anybody. He will remember, as 
 will the House, that this side tried, again and again, to pass a measure 
 authorizing the Secretary of the Treasury to extend the sales of 4 per 
 cent, bonds sufficient to cover this whole case. We brought the 
 House to a vote on that proposition at least twice at the last session, 
 and but for the resistance on the other side it would have prevailed, and 
 the soldiers would have been paid. The responsibiUty for not paying 
 them rests with those who resisted that measure, not with those who 
 proposed it. We have been selling these 4 per cent, bonds to assure 
 resumption ; and that is the law. I think it might fairly be the law 
 that the^ should be issued to provide for payment of soldiers' pensions. 
 
 There is another thing which, perhaps, my colleague did not remember. 
 Under a law of last session we issued bonds to the extent of a quarter of a 
 million of dollars to endow a private institution for the bUnd, in one of 
 the States of this Union, the endowment being $10,000 a year ; -and to 
 keep it out of the power of Congress to repeal the act the bonds thus 
 issued were made a part of the permanent debt of the United States, in 
 order to endow an institution in a State — an institution not national in 
 its character. But gentlemen are unwilling to increase the 4 per cent, 
 bonded debt of the United States to pay pensions of our soldiers already 
 provided by law. 
 
 Now, I have simply made the point of order, that is all ; and no man 
 can torture anything 1 have said on this point of order into an unwill- 
 ingness that the soldiers shaU have their pensions, or that all necessary 
 legislation shall be had to make the payment prompt and full to se- 
 cure all their rights. It is altogether too late in the day to tell the 
 soldiers that gentlemen on this side who have remembered them in a 
 thousand ways (my colleague, to say the least, has not remembered 
 them in more) are not their friends. 
 
 I made this point (and I have no concealments about it) because I look 
 upon this amendment as the entering wedge to a general purpose to 
 break down the system of reserves on which the maintenance of re- 
 sumption depends. 
 
 Mr. McMahon. My colleague will permit me to ask him how the issue of $10,000,000 
 of the $346,000,000 authorized by law is going to break down the specie reserve which 
 amounts to $236,000,000 ? 
 
 Mr. Gaefibld. That is what I am about to tell the gentleman. I 
 say, at the outset, that our whole body of legislation relating to resump- 
 tion makes together a connected chain ; and 
 
 Whichever link yon strike, 
 Tenth or ten thousandth, breaks the chain alike. <. 
 
 37 
 
38 
 
 Such legislation as this tends at least to weaken that chain. Now, 
 my colleague, whose financial knowledge would not have been doubted 
 if he had not made this speech, amazed me very much by saying that 
 the subsidiary coinage and the subsidiary currency are no part of the 
 general problem of resumption. ' Why, does he not know perfectly well 
 that the subsidiary currency in the form of these scrip notes or in coin 
 goes to make up the volume of our circulating medium just as much as 
 greenbacks, just as much as gold? The great currency question em- 
 braces everything that circulates as money; and it will not do to say 
 that the subsidiary coinage has nothing to do with the general propo- 
 sition. It has very much to do with it. Subsidiary currency in any 
 form circulates far more rapidly than dollar bills, and doUar bUls more 
 rapidly than five-dollar bills, and these more rapidly than tens. Just 
 in proportion to the smallness of the denomination of the bill is its cir- 
 culation rapid. Here was a proposition to hasten the issue of subsi- 
 diary coin. As the law first stood, the silver could only be issued on 
 the presentation of the scrip, the silver being paid in exchange there- 
 for. In order to facilitate the process, Congress provided that, as there 
 was a rush to make the exchange, people might deposit greenbacks 
 and receive silver coin in place of it, but that the greenbacks thus 
 deposited should be held to redeem according to law the scrip as it 
 might come in. This reserve, therefore, of which my colleague speaks, 
 is a reserve laid away as a provision against the demand for the scrip, 
 in place of which the silver coin has already been issued. 
 
 Mr. Waenee. Will my friend permit me to ask him a question? 
 
 Mr. Garfield. Certainly. 
 
 Mr. Waknbr. Is it not perfectly well understood that the fractional currency, 
 against which I understand it is claimed this $10,000,000 is held, is now out of exist- 
 ence, or at least that only a small part of it remains for redemption? 
 
 Mr. G-AEFIBLD. I will answer my colleague. Estimates have been 
 made on that subject. All agree that a certain portion of the scrip is 
 probably destroyed, and wiU never be presented for redemption. What 
 that proportion is nobody knows. The amount, however, of any circu- 
 lating medium which is actually destroyed, is much smaller than people 
 suppose. I will give a single instance. There is a bank in my district 
 which was in actual operation nearly fifty years, under the State laws, 
 and when the' new banking system was adopted, it undertook to wind 
 up its old business; that is, being solvent, to redeem all its old bills. 
 They have gone on redeeming and redeeming, and the last time I talked 
 with the cashier he told me that less than two per cent, of the whole 
 issue, covering a period of forty years of State banking, was still out; 
 and even then almost every week, fifteen, twenty, or thirty dollars of old 
 bills came back; showing that the destruction of outstanding circulating 
 paper money is far less than the people suppose, 
 
 Now, the highest estimate which has been made is that perhaps 
 $10,000,000 of the fractional scrip is destroyed and will never come in. 
 And here is outstanding at least $15,000,000 not yet brought in. I saw 
 the papers yesterday of a single party who took $6,000 of this scrip to 
 the Treasury. We have sometimes six, eight, or ten thousand dollars a 
 day brought in. The time will doubtless come when it will be safe to 
 reduce this reserve, leaving enough to cover what is outstanding and 
 will not come in, and let the rest go into circulation. But to say now 
 that the whole $10,000,000 shall go into circulation, leaving none to 
 proteot this issue, is to break down one of the stated reserves of the 
 government to meet its obhgations. 
 
39 
 
 Mr. McMahon. Will the gentleman from Ohio allow me to put a question to him ? 
 
 Mr. Gakfield. Certainly. 
 
 Mr. McMahon. Under the specie-resumption law — and I do not wish to argue, I 
 only want to state it — under the specie-resumption law the Secretary of the Treasury 
 was ordered to redeem fractional currency in silver coin. Now, in July, 1876, we 
 authorized him to pay out $10,000,000 of silver coin and to take in $10,000,000 of green- 
 backs. We authorized him to redeem this fractional currency outstanding in green- 
 hacks, and he has never done it. 
 
 Mr. Gaepield. How does my colleague know tltatl 
 Mr. McMahok. I say it because the debt statement shows it; I have it here, and I 
 read on page 4 of the Treasury report, currency assets, "tJnited States notes, special 
 fund for redemption of fractional currency, $10,000,000." Now it never was in con- 
 templation of the gentlemen who passed that law in 1876 that when that $10,000,000 
 was taken in it should be kept. That was a little private scheme of contraction of 
 Mr. Sherman himself. Our order to him was to pay out in redemption of fractional 
 currency. Instead of that he is redeeming constantly in silver coin and keeping the 
 $10,000,000 in. 
 
 Mr. Garfield. I will answer my colleague. I am not responsible for 
 the Secretary's execution of his duty under that law. But I should say 
 if I were the Secretary I would be bound by the law and by the reason 
 of the case to hold a sufftcient amount of that fund for the ample protec- 
 tion of all the outstanding scrip which would be hkely to come in. 
 Perhaps the Secretary has kept more than is needed ; and if he has, it 
 is perfectly proper for Congress to ascertain, after a fair examination, 
 how much of that he can spare, and then let it out. I will agree to that 
 at any time. But my colleague adopts no such method; he says simply 
 let it all go, and he proposes to make this sweeping change of law and 
 give up the whole reserve for that purpose, and therefore to that extent, 
 or at least to some extent, breaks over the line of our reserves. 
 
 Now I have said all I desire to say on that subject except a single 
 word in conclusion. My colleague pained me by a single expression in 
 his speech. Ifothing has ever occurred between him and me which 
 entitles either of us to say discourteous and indecent things about the 
 other; and when my colleague said that though I owed more allegiance 
 to the soldier than perhaps to any other class, yet that I appeared to 
 act as though I owed my chief allegiance to Wall street, he said what he 
 had no more right to say, either as a matter of fact or a matter of fair 
 inference, than I would have a right to say he owes his chief allegiance 
 to the gi;oggeries and whisky-shops of Dayton ; and as I would not say 
 that, I do not think he was entitled to say the other. 
 
 Mr. McMahon. In answer to the gentleman I eay this : I have followed with in- 
 terest the public career of the gentleman, and if in all the discussions which have ever 
 taken place in this House or this country on financial questions he can show one vote 
 or one speech that was not based upon the idea of speedy resumption, no matter at 
 what cost to the great mass of the people, even when his own party separated from 
 him upon that question in the Forty-third Congress, when he was in a minority in his 
 own party upon this question — if he can show one vote which he ever cast in favor of 
 what was regarded then by the majority of his own party in the West as the interest 
 of the people on this question, I will take my statement back. That is all that it 
 covered. 
 
 Mr. Gaefield. I will relieve my colleague upon that point. He could 
 not certainly praise me any more according to my notions of legislative 
 praise than to say what he has said. If I ever did cast a vote that was 
 not in favor of the resumption of specie payments, that was not against 
 all schemes to delay and prevent it, I cast a vote that my conscience 
 and my judgment disapproved of. [Applause.] And I venture to say 
 1 have cast as many votes as any man on this floor against WaU street 
 and the business of gold-gambling which has been destroyed by resump- 
 tion ; that gold-gambling in Wall street which locked up one hundred 
 
40 
 
 millions of the business capital of this country for fifteen years, away 
 from all profitable iavestment, and converted Wall street into a hell 
 of gamblers with the business of this country up and down. And if 
 every vote of mine in favor of honest money has not been a blow at 
 gambling in WaU street, then it has not had the effect I intended. 
 
 Mr. Bright. I desire to ask the gentleman from OMo a question. Have not the 
 operations of Wall street been simply transferred to the Treasury of the United States ? 
 
 Mr. G-ARFiELD. In answer to the gentleman from Tennessee, I will Say 
 that I hope there has been enough of the gold and silver in this country 
 that had hitherto been lodged in Wall street for gold-gambling pur- 
 poses transferred to the Treasury of the United States to break down 
 the buUs and bears of Wall street permanently, and to maintain the 
 supremacy of honest money. [Applause.] 
 
 2. THE ISTEW SILYEE BILL. ' 
 
 The House having under consideration a hill to authorize the unlimited coinage of 
 silver, and to give the profits thereof to the owners of hullion, May 17, 1879— 
 
 Mr. Garfield said : 
 
 Mr. Speaker, we have probably never legislated on any question the 
 influence of which reaches further, both territorially and in time, and 
 ■touches more interests, more vital interests, than are touched by this 
 and similar bills. IS'o man can doubt that within recent years, and 
 notably within recent months, the leading thinkers of the civilized 
 world have become alarmed at the attitude of the two precious metals 
 in relation to each other; and many leading thinkers are becoming clearly 
 of the opinion that by some wise, judicious arrangement both the pre- 
 cious metals must be kept in service for the currency of the world. 
 And this opinion has been very rapidly gaining ground within the last 
 sis months, to such an extent that England, which for more than half 
 a century has stoutly adhered to the single gold standard, is now 
 seriously meditating how she may harnsss both these metals to the 
 monetary car of the world. And yet, outside of this Capitol, 1 do not 
 this day know of a single great and recognized advocate of bi-metalUc 
 money who regards it prudent or safe for any nation largely to increase 
 the coinage standard of silver coin at the present time beyond the limits 
 fixed by existing laws. Prance and the states of the Latin Union, that 
 have long believed in bi-metallism, maintained it against all comers and 
 have done all in their power to advocate it throughout the world, dare 
 not coin a single silver coin and have not done so since 1874. The most 
 strenuous advocates of bi-metallism in those countries say it would be 
 ruinous to bi-metallism for Prance or the Latin Union to coin any more 
 silver at present. The remaining stock of German silver now for sale, 
 amounting to from forty to seventy-five millions of dollars, is a standing 
 menace to the exchanges and silver coinage of Europe. One month ago 
 the leading financial journal of London proposed that the Bank of Eng- 
 land buy one-half of the German surplus and hold it five years on' con- 
 dition that the German Government shall hold the other half off the 
 market. The time is ripe for some wise and prudent arrangement among 
 the nations to save silver from a disastrous break-down. 
 
 Yet we, who during the past two years, have coined far more silver 
 dollars than we ever before coined since the foundatioii of the govern- 
 ment — ten times as many as we coined during half a century of our 
 
41 
 
 national life — are to-day ignoring and def j^ng the enlightened, universal 
 opinion of bi-metalUsts, and saying that the United States, singlehanded 
 and alone, can enter the field and settle the mighty issue alone. We are 
 justifying the old proverb that "Fools rush in where angels fear to 
 tread. " 
 
 It is sheer madness, Mr. Speaker. I once saw a dog on a great stack 
 of hay that had been iioated out into the wild, overflowed stream of a 
 river, with its stack-pen and foundation still holding together, but ready 
 to be wrecked. For a httle while the animal appeared to be perfectly 
 happy. His hay-stack was there and the pen around it, and he seemed 
 to think the world bright, and his happiness secure, while the sun- 
 shine fell softly on his head and his hay. But by and by, he began 
 to discover that the house and the barn and their surroundings were 
 not all there as they were when he went to sleep the night before; and 
 he began to see that he could not command all the prospect and peace- 
 ftdly dominate the scene as he had done before. So with this House. 
 We assume to manage this mighty question which has befen launched 
 on the wild current that sweeps over the whole world, and we bark from 
 our legislative hay-stacks , as though we commanded the whole world. 
 [Applause.] In the name of common sense and sanity, let us take some 
 account of the flood ; let us understand that a deluge means something, 
 and try, if we can, to get our bearings before we undertake to settle the 
 affairs of aU mankind by a vote of this House. 
 
 To-day we are coining one-third of all the silver that is being coined 
 in the round world. Ohina is coining another third; and all other 
 nations are using the remaing one-third for subsidiary coin. And if we 
 want to take rank with China and part company with aU of the civilized 
 nations of the Western World, let us pass this bUl, and then "bay the 
 moon" as we float down the whirhng channel to take our place among 
 the silver monometaUists of Asia. 
 
 What this country needs above all other things, is that this Congress 
 shall pass the appropriation bills, adjourn, and go home [applause on 
 the Eepublican side], and let the forces of business and good order and 
 brotherhood, working in their natural and orderly way, bring us into 
 light and stability and peace. And we want time to adjust this great 
 International question. Now, while I am speaking, the Administration 
 is opening negotiations with aU the western nations, to see if there can- 
 not be some international arrangement whereby this question of bi-met- 
 allism may be wisely settled. We tried it by international monetary 
 conference. It was a preliminary reconnaissance, and 
 
 [Here the hammer fell.] 
 
IV. 
 
 THE MISSISSIPPI EIVEE Aif OBJECT OF NATIONAL CAEE. 
 
 The House having under consideration a hill to provide for a commission to survey 
 the Mississippi Eiver, June 21, 1879 — 
 
 Mr. GAtRFEELD Said: 
 
 Mr. Speaker, I should oppose this biU, very decidedly, if it committed 
 Tis at this time to any plan or theory of managing the Mississippi Eiver; 
 and I think the remarks of^ the gentleman from Indiana [Mr. Baker], 
 warning us against committal in any such direction, are wise. But I 
 have looked the bill over with what care I could, and it does not seem 
 to me that by its passage we commit ourselves to anything further than 
 the purpose to obtain accurate official information touching the present 
 condition and needs of this gre^t stream. I admit that we have already 
 had examinations and explorations of the Mississippi, some of them sci- 
 entific and very valuable ; but everybody will concede that one important 
 experiment has been made, in recent years, which, though against the 
 opinion of the majority of engineers, has proven apparently a great 
 success : I mean the jetty system at the mouth of that river. I say 
 " apparently," because it is possible that in the long run it may not 
 prove a success; but at the present moment it appears to be a great 
 and striking success in the management of the mouths of that river. If 
 it prove to be permanently so, aU our calculations and, indeed, all our 
 theories concerning the improvement and management of other portions 
 of that river need to be reconsidered in view of the new light that the 
 jetty system will throw upon the question. Hence a proposition to turn 
 on ttie light, to get information, and to get it from the best scientific 
 advisers that we can call to our aid, is a step in the right direction. I 
 have always favored measures which will result in giving us information 
 upon all questions about which we are called upon to legislate. What 
 shall be done with this knowledge when it comes, will be for our suc- 
 cessors to say. We do not commit ourselves or them to any scheme at 
 this time. But for myself, I believe that one of the grandest ot our ma- 
 terial national interests — one that is national in the largest material 
 sense of that word — ^is the Mississippi Eiver and its navigable tributa- 
 ries. It is the most gigantic single natural feature of our continent, far 
 transcending the glory of the ancient Mle or of any other river on the 
 earth. The statesmanship of America must grapple the problem of this 
 mighty stream. It is too vast for any State to handle; too much for 
 any authority less than that of the nation itself to manage. And I be- 
 lieve the time will come when the liberal-minded statesmanship of this 
 country will devise a wise and comprehensive system, that will harness 
 the powers of this great river to the material interests of America, so 
 that not only all the people who live on its banks and the banks of its 
 confluents, but all the citizens of the republic, whether dwellers in the 
 central valley or on the slope of either ocean, will recognize the impor- 
 tance of preserving and perfecting this great natural and material bond 
 of national union between the North and the South — a bond to be so 
 strengthened by commerce and intercourse that it can never be severed. 
 [Applause.] 
 
 One of our early Presidents went so far as even to exceed his early 
 preconceived opinions of the constitutional power of the Executive, in 
 42 
 
43 
 
 order to buy from France a mighty empire to be added to the TJuion ; 
 and he did it for this reason chiefly, that the young Eepublic could not 
 permanently endure as a nation without owning and controUing the 
 mouths of the Mississippi. Nearly the whole continent west of that 
 river was bought, to make the Union perpetual by bringing every foot 
 of the shore of the Mississippi under our flag. If I did not think it 
 almost unworthy of so great a theme, I would say that if there had been 
 no patriotic impulse higher than any consideration of material welfare 
 which moved twenty millions of Americans to resist the attempt to 
 break the Union in pieces, and impelled them to hold it together by all 
 the cost of blood and treasure that our late war required, if there had 
 been no higher national sentiment inspiring them, the immense material 
 stake which the people of the great North and West and center of this 
 country had in the free use of that river from its sources to its mouth, 
 that their commerce might go southward to the sea under the one flag, 
 unvexed by conflicting nationalities, this material stake alone would 
 have made all the people of the upper vaUey of the Mississippi resist 
 to the last the dismemberment of the Union. 
 
 This great river, which our fathers made such sacrifices to acquire, 
 and which the present generation made so much costlier sacrifices to 
 redeem from disunion and to hold within the grasp of the nation, we 
 have held, not in obedience to mere sentiment alone, not with a view 
 of keeping it as a vast and worthless waste of water, but to utilize it 
 by making it the servant of aU the people of this country. How shall we 
 utilize it, unless at some time, and in some wise way, we bridle it by the 
 skill of man and make it subservient to the interests of commerce ? 
 
 Now, Mr. Speaker and gentlemen of the House, there is another 
 reason why I am in favor of this measure. I rejoice in any occasion 
 which enables Representatives from the North and from the South to 
 unite in an unpartisan effort to promote a great national interest. 
 [Applause.] Such an occasion is good for us both. And when we can do 
 it without the sacrifice of our convictions, and can benefit millions of 
 our fellow-citizens, and thereby strengthen the bonds of the Union, we 
 ought to do it with rejoicing ; for, in so doing, we shall inspire our people 
 with larger and more generous views, and help to confirm for them and 
 for our posterity to our latest generations, the indissoluble Union and 
 the permanent grandeur of this Eepublic. I shall vote for this bill. 
 [Applause on both sides of the House.] 
 
THE EEVIVED DOOTEINE OP STATE SOVEEEIGNTY. 
 
 The House being in Committee of tlie Whole on the marshals' appropriation bill 
 Jnne 27, 1879— 
 
 Mr. Garfebld said: 
 
 Mr. Chairman, "to this favor" it has come at last. The great fleet 
 that set out on the 18th of March, with all its freightage and armament, 
 is so shattered that now aU the valuables it carried are embarked in this 
 little craft, to meet whatever fate the sea and the storm may offer. This 
 little bill contains the residuum of almost everything that has been the 
 subject of controversy at the present session. I will not discuss it in 
 detail, but wUl speak only of its central feature, and especially of the 
 opinions which the discussion of that feature has brought to the surface 
 during the present session. The majority in this Congress have adopted 
 what I consider very extreme and dangerous opinions on certain im- 
 portant constitutional questions. They have not only drifted back to 
 their old attitude on the subject of State sovereignty, but they have 
 pushed that doctrine much further than most of their predecessors ever 
 went before, except during the period immediately preceding the late 
 war. 
 
 So extreme are some of these utterances, that nothing short of actual 
 quotations from the Eecord will do their authors justice. I therefore 
 shall read several extracts from debates at the present session of Con- 
 gress, and group them in the order of the topics discussed. 
 
 Senator Wallace (Congressional Eecord, June 3, pages 3 and 5) says : 
 
 The Federal Government has no voters; it can make none, it can constitutionally 
 control none. » * « When it asserts the power to create and hold " national elec- 
 tions" or to regulate the conduct of the voter on election day, or to maintain equal 
 suffrage, it tramples under foot the very basis of the Federal system and seeks to build 
 a consolidated government from a democratic repubUo. This is the plain purpose of 
 the men now in control of the Federal Government, and to this end the teachings of 
 leading Republicans now are shaped. 
 
 * # * *f * * w 
 
 There are no national voters. Voters who vote for national Representatives are 
 qualified by State constitutions and State laws, and national citizenship is not re- 
 quired of a voter of the State by any provision of the Federal Constitution nor in 
 
 practice. 
 
 * * # # * # * 
 
 If there be such a thing, then, as a "national election," it wants the first element 
 of an election — a national voter. The Federal Government, or (if it suits our friends 
 on the other side better) the nation, has no voters. It cannot create them, it cannot 
 qualify them. 
 
 Eepresentative Clark, of Missouri (Eecord, April 26, page 60), says : 
 
 The United States has no voters. 
 
 Senator Maxey, Texas (Eecord, April 21, page 72), says : 
 
 It follows as surely as "grass grows and water runs" that, under our Constitution, 
 the entire control of elections must be under the State whose voters assemble ; whose 
 right tp vote is not drawn from the Constitution of the United States, but existed and 
 was freely exercised long before its adoption. 
 44 
 
45 
 
 Senator Williams, Kentucky (Eecord, April 25, page 8), says: 
 
 The legislatures of the States and the people of the several districts are the oonstitu 
 ency of Senators and Representatives in Congress. They receive their comjioissions 
 from the governor, and veheu they resign (which ia very seldom) they send their resig- 
 nations to the governor and not to the President. They are State officers and not 
 Federal officers. 
 
 Senator "WTiy te (Eecord, May 21, page 14) says : 
 
 There are no elections of United States officers and no voters of the United States. 
 The voters are voters of the States, they are the people of the States, and their mem- 
 bers of the House of Representatives are chosen hy the electors of the States to repre- 
 sent the people of the States, whose agents they are. 
 
 Mr. McLanb. Do I understand him to say that the Government of the United States 
 has the right to keep the peace anywhere within a State ? Do I understand him to 
 say that there is any "peace of the United States" at all recognized hy the Supreme 
 Court of the United States ? 
 
 Mr. Robeson. Certainly I do. — (Eecord, April 4, page 14.) 
 
 Mr. MoLane (Ebcoed, April 4, page 15) says : 
 
 I believe that the pro-sdsion of law which we are about to repeal is unconstitutional ; 
 that is to say, that it is unconstitutional for the United States to "keep the peace" 
 anywhere in the States, either at the polls or elsewhere ; and if it were constitutional, 
 I believe in common with gentlemen on this side of the House that it would be highly 
 inexpedient to exercise that power. 
 
 When that law used the phrase "to keep the peace" it could only mean the peace 
 
 of the States. 
 
 # # # # # )f * 
 
 It is not a possible thing to have a breach of the United States peace at the polls. 
 Senator Whyte (Eecord, May 21, page 18) says : 
 
 Sovereignty is lodged with the States, where it had its home long before the Con- 
 stitution was created. The Constitution is the creature of that sovereignty. The 
 Federal Government has no inherent sovereignty. All its sovereign powers are drawn 
 from the States. ^ 
 
 The States were inr existence long before the Union, and the latter took its birth 
 from their power. 
 
 The State governments are supreme by inherent power originally conceded to them 
 by the people as to the control of local legislation and administration. The Federal 
 Government has no part or lot in this vast mass of inherent sovereign power, and its 
 interference therewith is utterly unwarrantable. 
 
 Senator Wallace (Eecord, June 3, pp. 3 and 4) says : 
 
 ~ Thus we have every branch of the Federal Government, House, Senate, the execu- 
 tive and judiciary departments, standing upon the State governments, and all resting 
 finally upon the people of the States, qualified as voters by State constitutions and 
 State laws. 
 
 Senator Whyte (Eecord, May 21, p'. 15) says : 
 
 No, Mr. President; it never was declared that we were a nation. 
 
 In the formation and adoption of the Constitution the States were the factors. 
 
 These are tlie declarations of seven distinguished members of the 
 present Congress. The doctrines set forth in the above quotations may 
 be fairly regarded as the doctrines of the Democracy as represented in 
 this Capitol. 
 
 Let me summarize them: First, there are no national elections j sec- 
 ond, the United States has no voters ; third, the States have the exclu- 
 sive right to control all elections of members of Congress ; fourth, the 
 Senators and Eepresentatives in Congress are State officers, or, as they 
 have been called during the present session, "embassadors" or "agents" 
 of the State; fifth, the United States has no authority to keep the peace 
 anywhere within a State, and, in fact, has no peace to keep ; sixth, the 
 United States is not a nation endowed with sovereign power, but is a 
 
46 
 
 confederacy of States ; seventh, the States are sovereignties possessing 
 inherent supreme powers; they are older than the Union, and as in- 
 dependent sovereignties the State governments created the Union and 
 determined and limited the powers of the General Government. 
 
 These declarations embody the sum total of the constitutional doc- 
 trines which the Democracy has avowed during this extra session of 
 Congress. They form a body of doctrines which I do not hesitate to say 
 are more extreme than was ever before held on this subject, except per- 
 haps at the very crisis of secession and rebellion. 
 
 And they have not been put forth as abstract theories of government. 
 True to the logic of their convictions, the majority have sought to put 
 them in practice by aflirmative acts of legislation. 
 
 Let me enumerate these attempts. First, they have denounced as 
 unconstitutional all attempts of the United States to supervise, regulate, 
 or protect national elections, and have tried to repeal all laws on the 
 national statute-book enacted for that purpose. Second, following the 
 advice given by Calhoun in his political testament to his party, they 
 have tried to repeal all those portions of the venerated judiciary act of 
 1789,, the act of 1833 against nullification, the act of 1861, and the acts, 
 amendatory thereof, which provide for carrying to the Supreme Court 
 of the United States all controversies that relate to the duties and 
 authority of any officer acting under the Constitution and laws of the 
 United States. 
 
 Third. They have attempted to prevent the President from enforcing 
 the laws of the Union, by refusing necessary supplies and by forbidding 
 the use of the Army to suppress violent resistance to the laws, by which, 
 if they had succeeded, they would have left the citizens and the author- 
 ities of the States free to obey or disobey the laws of the Union as they 
 might choose. 
 
 This, I believe, Mr. Chairman, is a fair summary both of the principles 
 and the attempted practice to which the majority of this House has 
 treated the country during the extra session. 
 
 Before quitting this topic, it is worth while to notice the fact that the 
 attempt made in one of the bills now pending in this House, to curtail 
 the jurisdiction of the national courts, is iu the direct line of the teach- 
 ings of John C. Calhoun. In his "Discourse on the Constitution and 
 Government of the United States," published by authority of the Legis- 
 lature of South CaroUna in 1851, he sets forth at great length the doc- 
 trine that ours is not a national government, but a confederacy of sov-^ 
 ereign States, and then proceed^ to point out what he considers the 
 dangerous departures which the government has made from his theory 
 of the Constitution. 
 
 The first and most dangerous of these departures he declares to be 
 the adoption of the twenty-fifth section of the judiciary act of 1789, by 
 which appeals were authorized from the judgments of the supreme 
 courts of the States to the Supreme Court of the United States. He 
 declares that section of the act unconstitutional, because it makes the 
 supreme court of a " sovereign " State subordinate to the judicial power 
 of the Dnited States; and he recommends his followers never to rest 
 untU they have repealed, not only that section, but also what he calls 
 the still more dangerous law of 1833, which forbids the courts of the 
 States to sit in judgment on the acts of an officer of the United States 
 done in pursuance of national law. The present Congress has won the 
 unenviable distinction of making the first attempt, since the death of 
 Calhoun, to revive and put in practice his disorganizing and destructive 
 theory of government. 
 
47 
 
 Firmly believing that these doctrines and attempted practice of the 
 present Congress are erroneous and pernicious, I will state briefly the 
 counter-propositions : 
 
 I affirm : First, that the Constitution of the United States was not 
 created by the government, of the States, but was ordained and estab- 
 lished by the only sovereign in this country — the common superior of 
 both the States and the nation — the people themselves ; second, that 
 the United States is a nation, having a government whose powers, as 
 defined and limited by the Constitution, operate upon all the States in 
 their corporate cajiacity and upon all the people; third, that by its legis- 
 lative, executive, and judicial authority, the nation is armed with ade- 
 quate power to enforce all the provisions of the Constitution against all 
 opposition of individuals or of States, at all times and all places within 
 the Union. 
 
 These are broad propositions; and I take the few minutes remaining 
 to defend them. The constitutional history of this country, or rather 
 the history of sovereignty and government in this country, is comprised 
 in four sharply defined epochs — 
 
 First. Prior to the ith day of July, 1776, sovereignty, so far as it can 
 be affirmed of this country, was lodged in the Crown of Great Britain. 
 Every member of every colony (the colonists were not citizens but sub- 
 jects) drew his legal rights from the Crown of Great Britain. " Every 
 acre of land in this coimtry was then held mediately or immediately by 
 grants from that Crown," and " all the ci^il authority then existing or 
 exercised here, flowed from the head of the British Empire." 
 
 Second. On the 4th day of July, 1776, the people of these colonies, as- 
 serting their natural inherent right as sovereigns, withdrew the sover- 
 eignty from the Crown of Great Britain and reserved it to themselves. 
 In so far as they delegated this national authority at all, they delegated 
 it to the Continental Congress assembled at Philadelphia. That Con- 
 gress, by general consent, became the supreme government of this coun- 
 try — executive, judicial, and legislative in one. During the whole of 
 its existence it wielded the supreme power of the new nation. 
 
 Third. On the 1st day of March, 1781, the same sovereign power, the 
 people, withdrew the authority from the Continental Congress and lodged 
 it, so far as they lodged it at all, with the Confederation, which, though 
 a league of States, was declared to be a perpetual union. 
 
 Fourth. When at last our fathers found the confederation too weak 
 and inefficient for the purposes of a great nation, they abohshed it and 
 lodged the national authority, enlarged and strengthened by new powers, 
 in the Constitution of the United States, where, in spite of all assaults, 
 it still remains. All these great acts were done by the only sovereign 
 in this Eepublic, the people themselves. 
 
 That no one may charge that I pervert history to sustain my own 
 theories, I call attention to the fact that not one of the colonies declared 
 itself free and independent. Neither Virginia nor Massachusetts threw 
 off its allegiance to the British Crown as a colony. The great decla- 
 ration was made not even by all the colonies as colonies, but it was made 
 in the name and by authority of "all the good people of the colonies" 
 as one people. 
 
 Let me fortify this position by a great name that will shine forever in 
 the constellation of our Southern sky — the name of Charles Coatsworth 
 Pinckney, of South Carolina. He was a leading member of the consti- 
 tutional convention of 1787, and also a member of the convention of 
 South Carolina which ratified the Constitution. In that latter conven- 
 tion the doctrine of State sovereignty found a few champions ; and their 
 
48 
 
 attempt to prevent the adoption of the Constitution, because it estab- 
 lished a supreme national government, was rebuked by him in these 
 memorable words. I quote from his speech as recorded in Elliott's 
 Debates : 
 
 This admirable manifesto, which for importance of matter and elegance of composition 
 stands unrivaled, sufficiently confutes the honorable gentleman's doctrine of the indi- 
 vidual sovereignty and independence of the several States. In that declaration the 
 several States are not even enumerated, but after reciting, in nervous language and 
 with convincing arguments, our right to indeiJendence and the tyranny which com- 
 pelled us to assert it, the declaration is made in the following words: "We, therefore,' 
 the representatives of the United States of America, in general congress assembled, 
 appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in 
 the name, and by the authority of the good people of these colonies, solemnly publish 
 and declare that these united colonies are, and of right ought to be, free and inde- 
 pendent States." 
 
 The separate independence and individual sovereignty of the several States were 
 never thought of by the enlightened band of patriots who framed this declaration. 
 The several States are not even mentioned by name in any part of it, as if it was 
 intended to impress this maxim on America, that our freedom and independence arose 
 from our union, and that without it we could neither be free nor independent. Let 
 us, then, consider all attempts to weaken this union by maintaining that each is sepa- 
 rately and individually independent as a species of political heresy, which can never 
 benefit us, but may bring on us the most serious distresses. 
 
 For a further and equally powerful vindication of the same view I 
 refer to the Commentaries of Justice Story, vol. 1, p. 197. 
 
 In this same connection, and as a pertinent and effective response to 
 the Democratic doctrines under review, I quote from the first annual 
 message of Abraham Lincoln, than whom no man of our generation 
 studied the origin of the Union more profoundly. He said : 
 
 Our States have neither more nor less power than that reserved to them in the Union 
 by the Constitution, no one of them ever having been a State out of the Union. The 
 original ones passed into the Union even hefore they cast off their British colonial 
 dependence, and the new ones each came into the Union directly from a condition of 
 dependence, excepting Texas. And even Texas, in its temporary independence, was 
 never designated a State. The new ones only took the designation of States on com- 
 ing into the Union, while that name was first adopted for the old ones by the Declara- 
 tion of Indepe.ndenoe. Therein the "united colonies" were declared to be "free and 
 independent Siates ; " but, even then, the object plainly was not to declare their inde- 
 pendence of one another, or of the Union, but directly the contrary, as their mutual 
 pledge and their mutual action before, at the time, and afterward abundantly show. 
 
 The States have their status in the Union, and they have no other legal status. 
 If they break from this, they can only do so against law and by revolution. The 
 Union, and not themselves separately, procured their independence and their liberty. 
 By conquest or purchase, the Union gave each of them whatever of independence and 
 liberty it has. The Union is older than any of the States, and in fact it created them 
 as States. Originally some dependent colonies made the Union, and in turn the Union 
 threw off their old dependence for them and made them States, such as they are. Not 
 one of them ever had a State constitution independent of the Union. Of course it is 
 not forgotten that all the new States framed their constitutions before they entered 
 the Union; nevertheless, dependent upon and preparatory to coming into the Union. 
 
 In farther enforcement of the doctrine that the State governments 
 were not the sovereigns who created this government, I refer to the 
 great decision of the Supreme Court of the United States in the case of 
 Ohishobn vs. The State of Georgia, reported in 2 Dallas, a decision 
 replete with the most enlightened national spirit, iu which the court 
 stamps with its indignant condemnation the notion that the State of 
 Georgia was " sovereign" in any sense that made it independent of or 
 superior to the nation. 
 
 Mr. Justice Wilson said : 
 
 As a judge of this court I know, and can decide upon the knowledge, that the citi- 
 zens of Georgia, when they acted upon the large scale of the Union as a part of the 
 "people of the United States," did not surrender the supreme or sovereign power to 
 
49 
 
 that State ; but, as to tlie purposes of the Union, retained it to themselves. As to the 
 purposes of the Union, therefore, Georgia is not a sovereign State. 
 
 Whoever considers in a combined and comprehensive view the general texture of 
 the Constitution will be satisfied that the people of the United States intended to form 
 themselves into a nation for national purposes. They instituted for such purposes a 
 national government, complete in all its parts, with powers legislative, executive, and 
 judiciary, and in aU those powers extending over the whole nation. Is it congruous 
 ■Hiat, with regard to such purposes, any man or body of men, any person, natural or 
 artificial, should be permitted to claim successfully an entire exemption from the juris- 
 diction of the national government? 
 
 Mr. Chairman, the dogma of State sovereignty which has reawakened 
 to such vigorous life in this chamber^ has borne such bitter fruits and 
 entailed such suffering upon our people that it deserves more particular 
 notice. It should be noticed that the word " sovereignty" cannot be> 
 fitly applied to any government in this country. It is not found in our 
 Constitution. It is a feudal word, born of the despotism of the middle 
 ages, and was unknown even in imperial Eome. A " sovereign " is a 
 person, a prince who has subjects that owe him allegiance. There is no 
 one paramount sovereign in the United States. There is no person 
 here who holds any title or authority whatever, except the ofQcial 
 authority given him by law. Americans are not subjects, but citizens. 
 Our only sovereign is the whole people. To talk about the " inherent 
 sovereignty" of a corporation — an artificial person — is to talk nonsense ; 
 and we ought to reform our habit of speech on that subject. 
 
 But what do gentlemen meah when they tell us that a State is sovereign ? 
 What does sovereignty mean, in its accepted use, but a political corpor- 
 ation having no superior 1 Is a State of this Union such a corporation? 
 Let us test it by a few examples drawn from the Constitution. JSTo State 
 of this Union can make war or conclude a peace. Without the con- 
 sent of Congress it cannot raise or support an army or a navy. It can- 
 not make a treaty with a foreign j)ower, nor enter into any agreement or 
 compact with another State. It cannot levy imposts or duties on imports 
 or exports. It cannot coin money. It cannot regulate commerce. 
 
 It cannot authorize a single ship to go into commission -anywhere on 
 the high seas ; if it should, that ship would be seized as a pirate or con- 
 fiscated by the laws of the United States. A State cannot emit bills 
 of credit. It can enact no law which makes anything but gold and sil- 
 ver a legal tender. It has no flag except the flag of the Union. And 
 there are many other subjects on which the States are forbidden by the 
 Constitution to legislate. 
 
 How much inherent sovereignty is left in a corporation which is thus 
 shorn of all these great attributes of sovereignty 1 
 
 But this is not all. The Supreme Court of the United States may 
 declare nuU and void any law or any clause of the constitution of a State 
 which happens to be in conflict with the Constitution and laws of the 
 United States. Again, the States appear as plaintiffs and defendants 
 before the Supreme Court of the United States. They may sue each 
 other ; and, until the eleventh amendment was adopted, a citizen might 
 sue a State. These "sovereigns" may all be summoned before their 
 common superior to be judged. And yet they are endowed with su- 
 preme inherent sovereignty ? 
 
 Again, the government of a State may be absolutely abolished by 
 Congress, in case it is not republican in form. And finally, to cap the 
 climax of this absurd pretension, every right possessed by one of these 
 "sovereign" States, every inherent sovereign right except the single 
 right to equal representation in the Senate, may be taken away, without 
 its consent, by the vote of two-thirds of Congress and three-fourths 
 
50 
 
 of the States. But, in spite of all tliese disabilities, we hear them 
 paraded as independent, sovereign States, the creators of the Union and 
 the dictators of its powers. How inherently " sovereign " must be that 
 State west of the Mississippi which the nation bought and paid for with 
 the public money, and permitted to come into the Union a half cen- ' 
 tury after the Constitution was adopted! And yet we are told that the 
 States are inherently sovereign and created the national government. 
 
 Eead a long line of luminous decisions of the Supreme Court. Take 
 the life of Chief- Justice Marshall, that great judge, who found the Con- 
 stitution parser and made it a power, who found it a skeleton and clothed 
 it with flesh and blood. By his wisdom and genius he made it the potent 
 and beneficent instrument for the government of a great nation. Every- 
 where he repelled the insidious and dangerous heresy of the sovereignty 
 of the States in the sense in which it has been used in these debates. 
 
 Half a century ago, this heresy threatened the stability of the nation. 
 The eloquence of Webster and his compeers and the patriotism and 
 high courage of Andrew Jackson resisted and for a time destroyed its 
 power ; but it continued to live as the evil genius, the incarnate devil, of 
 America ; and in 1861 it was the fatal phantom that lured eleven mil- 
 lions of our people into rebellion against their government. Hundreds 
 of thousands of those who took up arms against the Union, stubbornly 
 resisted all inducements to that fatal step until they were summoned 
 by the authority of their States. 
 
 The dogioa of State sovereignty in alliance with chattel slavery finally 
 made its appeal to that court of last resort where the laws are silent 
 and where kings and nations appear in arms for judgment. In that 
 awful court of war two questions were tried. Shall slavery Mve? And 
 is a State so sovereign that it may nullify the laws and destroy the 
 Union ? Those two questions were tried on the thousand battle-fields of 
 the war; and if war ever "legislates," as a leading Democrat of Ohio 
 once wisely afftrmed, then our war legislated finally upon those subjects, 
 and determined, beyond all controversy, that slavery should never again 
 live in this Eepublic, and that there is not sovereignty enough in any 
 State to authorize its people either to destroy the Union or nullify its 
 laws. 
 
 I am unwilling to believe that any considerable number of Americans 
 will ever again push that doctrine to the same extreme ; and yet, in 
 these summer months of 1879, in the Congress of the reunited nation, 
 we find the majority drifting fast and far in the wrong direction, by re- 
 asserting much of that doctrine which the war ought to have settled 
 forever. And what is more lamentable, such declarations as those which 
 I read at the outset are finding their echoes in many portions of the 
 • country which was lately the theater of war. 'No one can read the pro- 
 eeedings at certain recent celebrations, without observing the growing 
 determination to assert, that the men who fought against the Union 
 were not engaged in treasonable conspiracy against the nation, but that 
 they did right to fight for their States, and that, in the long run, the 
 lost cause will be victorious. These indications are filling the people 
 with anxiety and indignation ; and they are beginning to inquire whether 
 the war has really settled these great questions. 
 
 I remind gentlemen on the other side that we have not ourselves 
 revived these issues. We had hoped they were settled beyond recall, 
 and that peace and friendship might be fuUy restored to our people. 
 
 But the truth requires me to say that there is one indispensable ground 
 of agreement on which alone we can stand together, and it is this : The 
 war for the Union was right, everlastingly right [applause] ; and the war 
 
51 
 
 against the Union was wrong, forever wrong. However honest and 
 sincere individiials may have been, the secession was none the less rebel- 
 lion and treason. We defend the States in the exercise of their many 
 and important rights, and we defend with equal zeal the rights of the 
 United States. The rights and authority of both were received from 
 the people — the only source of inherent power. 
 
 We insist not only that this is a nation, but that the power of the gov- 
 ernment, within its own prescribed sphere, operates directly upon the 
 States and upon all the people. We insist that our laws shall be con- 
 strued by our own courts and enforced by our Executive. Any theory 
 which is inconsistent with this doctrine we will resist to the end. 
 
 Applying these reflections to the subject of national elections em- 
 braced in this bill, I remind gentlemen that this is a national House of 
 Eepresentatives. The people of my Congressional district have a right 
 to know that a man elected in New York City is elected honestly and 
 lawfully; for he joins in making laws for forty-flve millions o^ people. 
 Every citizen of the United States has an interest and a right in every 
 election within the republic where national representatives are chosen. 
 We insist that these laws relating to our national elections shall be 
 enforced, notnuUifled; shall remain on the statute-books, and not be 
 repealed; and that the just and legal supervision of these elections 
 ought never again to be surrendered by the Government of the United 
 States. By our consent it never shaU be surrendered. [Applause.] 
 
 Now, Mr. Chairman, this bUl is about to be launched upon its stormy 
 passage. It goes not into unknown waters ; for its fellows have been 
 wrecked in the same sea. Its short, disastrous, and, I may add, ignoble 
 voyage is likely to be straight to the bottom. [Applause.] 
 
 In reply to Mr. Hurd, same day, Mr, Garfield said : 
 
 Mr. Chairman. Two points were made by my colleague from Ohio 
 [Mr. Hurd] to which I desire to call attention. To strengthen his posi- 
 tion, that the United States has no voters, he has quoted, as other gen- 
 tlemen have quoted, the case of .Minor vs. Happersett, 21 Wallace, 
 page 170. 
 
 The question before the court in that case was, whether a provision in 
 the State constitution which confines the right of voting to male citizens 
 of the United States is a violation of the fourteenth amendment of the 
 Constitution. The court decided that it was not; and, in delivering his 
 opinion the Chief Justice took occasion to say that "the United States 
 has no voters in the States, of its own creation." Now, all the gentle- 
 men on the other side who have quoted this decision, have left out the 
 words " of its own creation,^' which makes a very essential diiference. 
 The Constitution of the United States declares who shaU vote for mem- 
 bers of Congress, and it adopts the great body of voters whose qualifi- 
 cations may be or have been prescribed by the laws of the States. The 
 power of adoption is no less a great governmental power than the power 
 of creation. 
 
 But the second point to which I wish to refer, and which has been 
 made by several gentlemen, and very markedly by my colleague [Mr. 
 Hurd], is this : He says that the contemporaneous construction of that 
 clause of the Constitution which provides that Congress may at any 
 time make or alter the regulations in regard to the time, place, and man- 
 ner of holding elections, has determined that Congress can never exer- 
 cise that right so long as the States make provisions for it. So long as 
 
62 
 
 the States do not neglect or refuse to act, or are not prevented by rebel- 
 lion or war from acting, it was their exclusive right to control the 
 subject. That is what my colleague says. That is what is said in the 
 Record of June 3 by a distinguished member of the Senate. 
 
 Now, mark how plain a tale shall put that dawn. 
 
 On the 21st day of August, 1789, in the first House of Eepresenta- 
 tives that ever met, Mr. Burke, a member from South Carolina, offered 
 the following as one of the amendments to the Constitution. I wiU 
 read it : 
 
 Congress shall not alter, modify, or interfere in the times, places, or manner of hold- 
 ing elections of Senators or Representatives, except when any State shall refuse or 
 neglect, or be unable by invasion or rebellion, to make such elections. 
 
 That was the very proposition which my colleague says is the mean- 
 ing of the Constitution as it now stands. This amendment was offered 
 in a Hou*e of Eepresentatives nearly one-half of whose membership was 
 made up of men who were in the convention that ft-amed the Constitu- 
 tion. That amendment was debated ; and I hold in my hand the brief 
 record of the debate. Fisher Ames, of Massachusetts, appro^ang of the 
 clause as it now stands, said : 
 
 He thought this one of the most justifiable of all the powers of Congress. It was 
 essential to a body representing the whole community that they should have power 
 to regulate their own elections, in order to secure a representation from every part, 
 and prevent any improper regulations, calculated to answer party purposes only. It 
 is a solecism in politics to let others judge for them, and is a departure from the prin- 
 ciples upon which the Constitution was founded. « » * He thought no legislature 
 was without the power to determine the mode of its own appointment j * * » that 
 such an amendment as was now proposed would alter the Constitution ; it would vest 
 the supreme authority in places where it was never contemplated. 
 
 Mr. Madisou was willing to make every amendment that was required by the States 
 which did not tend to destroy the principles and efficacy of the Constitution ; he con- 
 ceived that the proposed amendment would have that tendency; he was therefore 
 opposed to it. 
 
 Sir. Sherman observed that the convention was very unanimous in passing this 
 clause ; that it was an important provision, and if it was resigned it would tend to 
 subvert the government. 
 
 Mr. Goodhue hoped the amendment never would obtain. * » * Now, rather 
 than this amendment should take effect, he would vote against all that had been 
 agreed to. His greatest apprehensions were that the State governments would oppose 
 and thwart the general one to such a degree as finally to overturn it. Now, to guard 
 against this evil, he wished the Federal government to possess every power necessary 
 to its existence. 
 
 After a full debate, in which the doctrine of State rights was com- 
 pletely overwhelmed so far as this subject was concerned, the vote was 
 taken, and 23 voted in favor of the amendment and 28 voted against it. 
 It did not get even a majority, much less a two-thirds vote, in the House ; 
 and it never was called up in the Senate at all. 
 
 A^ow, who were the men that voted against it ? Let me read some of 
 their lionored names; Fisher Ames, of Massachusetts; Charles Car- 
 roll, of Carrollton ; Clymer, of Pennsylvania, whose distinguished de- 
 scendant is a member of this House ; Fitzsimmons, of Pennsylvania ; 
 Muhlenberg, of Pennsylvania, who was Speaker of the first House of Rep- 
 resentatives ; Lee and Madison, of Virginia ; Trumbull and Sherman, of 
 Connecticut— all those great names are recorded against the very con- 
 struction of the Constitution which my colleague defends as the correct 
 interpretation of the existing clause ou that subject. That is all I desire 
 to say. 
 
VI. 
 
 ANCIENT AND MODERN PANICS. 
 
 After the journal was read, July 1, 1879, several gentlemeu made personal explana- 
 tions as follows: 
 
 Mr. Ellis. I rise to a question of personal privUege. 
 
 The Speaker. How mucti time does the gentleman desire °? 
 
 Mr. Ellis. Only time enough to have read by the Clerk the article 
 which I send to the desk, and to say that it is false. 
 
 Mr. Gaepield. I think we had better have this thing out, now that 
 it has been started. I hope the article will be read. 
 
 The Clerk read as follows : 
 
 THE CONGRESSIONAL MUDDLE — GOSSIP AT THE CAPITOL ABOUT AN ALLEGED BARGAIN, 
 
 It is rumored at tlie Capitol to-day, and generally believed, that if Congress ad- ' 
 joums at four o'clock on Monday without providing for the pay of United States mar- 
 shals, the President wUl forthwith issue his proclamation for an extra session of Con- 
 gress to assemble on Tuesday next. The President will veto the bill which was the 
 product of the last Democratic caucus. It is believed, and is common talk at the 
 Capitol, that in view of some arrangement made with about fourteen Southern Dem- 
 ocrats, the end will be that a bill for the pay of the marshals will be passed without 
 any riders. Western Democrats say boldly that General Garileld made a trade with 
 certain Southern Congressmen whereby in consideration of the Republicans allowing 
 the bill to provide for the Mississippi Eiver commission to be passed, those Congress- 
 men pledged their votes to help the passage of all of the appropriation biUs before 
 Congress finally adjoiu-ued. " Why," said a Western Democrat to-day, " the trade is 
 as plain as the nose on a man's face. President Hayes knows that through sharp 
 practices of General Garfield and other Eepublican leaders the Democrats are divided, 
 and that if he keeps on pressing Congress he can eventually dictate any terms he 
 wants. He proposes, therefore, to take advantage of it, and hence will not permit 
 Congress to go away until he gets all of the necessary supplies to carry on the gov- 
 ernment without restrictions of any kind." To-day there is a good deal of talk among 
 the Western men, who say that while they are certain that a few Southern men have 
 made a trade, and mean to sell their Northern allies out, that it may be the goods 
 cannot be delivered. They declare with all the vehemence of language that they will 
 filibuster against the passage of any other bOl for the support of the marshals than 
 the one which will be sent to the President and which will be vetoed. MoMahon, of 
 Ohio, has even gone so far as to serve notice on certain Southern leaders that here- 
 after he will not vote for any bill looking to improvements in the South, as a distinct- 
 ive proposition. The votes which it is claimed the Administration has secured 
 through General Garfield's diplomacy are all of the Louisiana delegation, three from 
 South Carolina, three from Georgia, and two from Alabama. 
 
 Mr. Ellis. Mr. Speaker, Hfe is too short generally to stop to kick at 
 every cur that barks about our heels. I usually take no notice of false- 
 hoods published about me in the papers ; and I would not do so on this 
 occasion, but counseling with some Mends, gentlemen of more age and 
 experience than myself, they think that some notice should be taken of 
 this article. I take no further notice of it than upon my own behalf, and 
 on behalf of my colleagues who are also assailed in the article, to pro- 
 nounce it unqualifiedly, deliberately, willfolly false in every particular. 
 
 Mr. Etens. Mr. Speaker, it was not the intention of any member of 
 the South Carolina delegation to take any notice of this article ; but, 
 inasmuch as it has been read, all we have to say is that it is unquali- 
 fiedly false; there is not a word of truth in it. 
 
 Mr. ACKLEN. I think it is in order for the gentleman from Ohio [Mr. 
 Garfield] to rise to a personal explanation. [Laughter.] 
 
54 
 
 Mr. Gakfield. Mr. Speaker, I do not rise to a personal explanation, 
 but to respond to the inquiry of the gentleman from Louisiana [Mr. 
 Acklen]. I happened to be re-reading the other day that interesting 
 old history of Xenophon ia which he describes the retreat of the ten 
 thousand Greeks. A little incident recorded in that work will illustrate 
 the subject which gentlemen are discussing. One night there suddenly 
 sprang up in the Grecian camp without apparent cause what is known 
 as an army panic. 
 
 The Speaker. Does the gentleman rise to a personal explanation ? 
 [Laughter.] 
 
 Mr. Gaepeeld. Oh, no, sir ; lam only answering a question. All at 
 once the veteran Greeks appeared to be seized with consternation, and 
 began to flee in all directions. Clearchus, an unscrupulous but adroit 
 general, appreciating the danger of the situation, with ready invention 
 ordered his trumpeter to announce throughout the camp in a loud voice 
 that Clearchus offered a thousand talents of silver as a reward to any 
 one who should discover who it was that let the ass loose among the 
 armor. [Laughter.] He invented this clever device to stay the panic. 
 The lie was successful ; and the fleeing Greeks returned with laughter 
 to their tents. 
 
 Now, I take it that some shrewd but unscrupulous Democratic 
 leader of the House, fearing that by a stroke of good sense some 
 of his party, and especially some from the South, were going to be 
 patriotic enough to put through the necessary appropriations for the 
 support of the government — ^fearingj in short, a panic in the party 
 camp — got up this fiction of a trade, in order to bring back all his sol- 
 diers to their tents. "Who represents Clearchus, and who the ass in this 
 new retreat, gentlemen must judge for themselves. But the whole 
 story is an absurd iiction, which ought to disturb no one. 
 
SUSPENSION AND RESUMPTION 
 
 SPECIE PAYMENTS 
 
 ADDRESS 
 
 Hon. JAS. A. GARFIELD, 
 
 DELIVEEED AT 
 
 ChiccLgo, Til., Jan. ^cL, 1879, 
 
 CHICAGO, ILL. 
 PUBLISHED BT THE HONEST MONEY LEAGUE OF THE NOKTHWEST. 
 
 1879. 
 
INVITATION. 
 
 Office op the Honest Money League of the Nohthwest, \ 
 Chicago, III., December 20, 1878. / 
 
 To the Hon. James A. Garfield: 
 
 Dbak Sir — Having been appointed at a recent meeting of the Executive 
 Committee of the Honest Money League of the Northwest to make arrange- 
 ments to celebrate the event of the resumption of specie payments by a 
 public meeting in the city of Chicago, we beg to invite you to address the 
 gentlemen of the Honest Money League, whom we represent, and other 
 citizens of Chicago and the Northwest, at such time after January 1, 1879, 
 as may be most agreeable to yourself. 
 
 We remain, very truly and respectfully yours, 
 
 M. L. Scttddeh, Jk., "i 
 
 Thomas A. Bones, [■ Committee. 
 
 Thomas M. Nichol, J 
 
 ACCEPTANCE. 
 
 Washington, D. C, December 23, 1878. 
 
 M. L. Scudder, Thomas A. Bones and Thomas M. Nichol, Executive Com- 
 mittee Honest Money League: 
 
 Gentlemen — I am in receipt of your favor of the 20th instant, inviting 
 me to address a meeting of the Honest Money League of the Northwest, to 
 be called for the celebration of the "resumption of specie payments." I 
 take pleasure in accepting your invitation, and will suggest the evening 
 of January 2, 1879, if agreeable to you. 
 
 Very respectfully, your obedient servant, 
 
 J. A. GARFIELD. 
 
SUSPENSION AND RESUMPTION 
 
 OF 
 
 SPECIE PAYMENTS. 
 
 Mr. Chaihman and Fellow Citizens : 
 
 The Eesumption of Specie Payments closes the most memorable epoch 
 of our history, since the birth of the Union. Eighteen hundred-sixtj'-one 
 and eighteen hundred-seventy-nine, are the opposite shores of that turbu- 
 lent sea, whose storms so seriously threatened, with shipwreck, the pros- 
 perity, the honor, and the life of the Nation. But the horrors and dan- 
 gers of the middle passage have, at last, been mastered ; and, out of the 
 night and tempest, the Eepublic has landed on the shore of this new yeai-, 
 bringing with it union and liberty, honor and peace. 
 
 We have met to-night to celebrate the close of the war. Battles are 
 never the end of war ; for the dead must be buried and the cost of the 
 conflict must be be paid. 
 
 The union men of eighteen hundred-sixty-one enlisted for the luhole 
 war. They served on the field of battle until the last rebel flag went down 
 in surrender ; they served in the field of legislation, and at the bollot box, 
 until the last slave was free and the last of the seceding states re-entered 
 the circle of the Union ; they served in the public councils until the perils 
 of our foreign relations were ended by honorable arbitration ; they have ser- 
 ved during the fierce trials of the public faith; and they will not be mustered 
 out until the equal rights of all citizens are acknowledged and secured ; 
 until the pension of the last disabled soldier of the Union is faithfully 
 paid, and the last war obligation of the government is honorably redeemed. 
 
 If the Eesumption now declared by law be maintained against all 
 assaults then, indeed, so far as our finances are concerned, the war for the 
 Union is ended ; the victory is complete. 
 
 Will our great sovereign, the people of all these States, make the decree 
 irreversible ? Will llesumption be maintained ? 
 
Believing that, in the long run, the matured and deliberate judgement 
 of this nation is honest and intelligent, I answer, "yes," it will be main- 
 tained ; and for two reasons. First, because national honesty, good govern- 
 ment, and the prosperity of all our people demand it ; and Second, because 
 we are able to maintain it. The defence of these positions will be the 
 theme of this address. 
 
 PUBLIC FAITH— THE BASIS OF PEOSPEEITY. 
 
 To the thoughtful business men assembled here to-night, whose genius 
 and industry have made this city the great commercial centre of the north- 
 west, I need not argue the proposition that the sanctity of contracts is the 
 foundation of all industrial posperity . In the complex and delicately adj usted 
 relations of moderm society, confidence in promises lawfully made is the 
 life-blood of trade and commerce. It is the vital air which labor breaths. 
 It is the light which shines on the pathway of prosperity. The betrayal of 
 one great business trust by a single private citizen may beggar a thousand 
 families, and paralyze the industry of half a city. 
 
 An act of bad faith on the part of a State or municipal corporation, 
 like poison in the blood, will transmit its curse to succeeding generations. 
 Examples of this are not wanting. An eminent citizen of Mississippi, a 
 gentleman of national reputation, recently declined an important and 
 honorable business mission to Europe, in behalf of the Southern Board of 
 Trade, on the ground that his usefulness would be seriously impaired by 
 the fact that Europeans still charge Mississippi with financial bad faith in 
 her legislation of 1851. Thus, a single act of repudiation has cast its 
 blighting shadow across a quarter of a century, still clouds the prosperity 
 of ,a great State, and cripples the influence of its worthiest citizens. 
 
 But bad faith on the part of an individual, a city, or even a State, is a 
 small evil in comparison with the calamities which follow bad faith on the 
 part of a sovereign government. The United States is still a debtor nation, 
 mainly, it is true, a debtor to our own people, but also, to a great extent, a 
 detitor to the people of other nations. We are still in the market, solicit- 
 ing loans with which to re-fund our great debt at a lower rate of interest. 
 Every dollar thus re-funded reduces the annual burden of interest; and, 
 to that extent, the government ceases to be a competitor of private citizens 
 in securing loans. Any act of bad faith, therefore, tends to prevent re- 
 funding, tends to prevent the reduction of the public burdens, and keeps 
 up the rate of interest, both public and private. 
 
 Our bonds have become the basis of private interests, involving hun- 
 dreds of millions of dollars. The vast aggregate of investments by people 
 of small means in savings banks, in fire, marine, and life insurance and 
 the estates of thousands of widows and orphans depend largely for their 
 value upon the security and steady value of government obligations; and 
 any law or policy which tends to depreciate these obligations, is communi- 
 cated through all the channels of private business, carrying loss and disaster 
 to millions of citizens. 
 
THE CURRENCY AND THE PUBLIC FAITH. 
 
 At the -risk of repeating what may be familiar to every one, let us con- 
 sider the relation of the greenback to, the public faith. Whatever new 
 theories of currency may have sprung up since 1862, it will not be denied 
 as a fact of history and law that, the greenback was a loan without interest, 
 I forced upon the people by the overmastering necessities of the war. Its 
 I issue as a legal tender for private debts was acknowledged at the time, to be 
 ' an act of doubtful constitutionality, and justified only on the plea of inex- 
 orable necessity. The measure was adopted with great hesitation, by a 
 small majority, and against the protest and warning of many able and 
 patriotic Senators and Representatives. The law was acknowledged by its 
 supporters, to be a radical departure from the traditions, the theory and 
 practice of our government. Its strongest supporters acknowledged the 
 great danger of the experiinent, and threw around it every safeguard 
 against the evils it would inflict. They embodied in the law, and stamped 
 upon the face of every greenback, this solemn promise : "The United States 
 will pay.'' They provided a method by which the notes should be funded 
 and ultimately redeemed. They did not propose to create a permanent 
 system of paper money. They declared that the measure was to be a tem- 
 porary one — the "Medicine of the Constiiution, and not its daily bread." 
 They aserted, again and again, that the money of the constitution was coin, 
 not paper. The greenback itself, was a promise to pay coin ; but the date 
 of payment was not fixed. It was a government due-bill ; and the only 
 excuse in morals or in law for not paying it on demand, was inability to 
 pay. The moment the governnent was able to pay, refusal became dis- 
 honor and reproduced its injustice in every business interest — public and 
 private. 
 
 But the unredeemed greenback produced evils far greater than those 
 which resulted from the ordinary refusal to pay a debt. Besides being a 
 debt, it was a legal tender currency, and its excessive volume expelled 
 real money from all the channels of internal trade, destroyed the old 
 measure of value, and substituted in its place a standard whose value 
 fluctuated every day and every hour during the seventeen years of sus- 
 i pension. On account of its twofold cjiaracter as debt and currencv, the 
 value of the greenback was changed by every military and political event 
 which affected the fortunes of the war. The march of a hostile army to 
 the near neighborhood of the national capitol, in 1864, reduced the market 
 value of the greenback forty per cent, in a single week. The same year a 
 futile attempt of Congress to abolish the premium on gold, by a penal law, 
 caused an equally violent fluctuation. At first the greenback was received 
 at par with coin ; but later every increase of issue reduced its market value. 
 In 1864 the volume was increased one hundred and ninety millions, and 
 the coin value of the whole mass became one hundred and seventy-flve 
 millions less than before the increase. 
 
 Through a series of innumerable and fitful fluctuations, it fell from 
 par to thirty-eight cents on the dollar, reaching its lowest point on the 
 
6 
 
 fifth of July, 1864. By a series of changes, equally irregular, it has re- 
 turned through an ascending scale of fifteen years, to par. 
 
 No arithmetic can compute the injustice and loss which these fluctua- 
 tions have inflicted upon the people and business of this country. The 
 chief mischief, resulted from two unequal and varying qualities of the 
 greenback as a currency : Its debt-paying and its purchasing power. The 
 first was arbitrarily fixed by Congress at one hundred cents on the dollar ; 
 but the second was controlled by laws which no human legislation can set 
 aside— the laws of value ; and the value of the greenback as a purchasing 
 power sufiered all the changes of the market. 
 
 In July, 1864, a citizen who had loaned his neighbor a hundred dollars 
 in coin three years before, was compelled by law to accept as a discharge of 
 the debt a handful of paper notes which he could purchase for thirty-eight 
 dollars in coin. That is, the same note which paid a debt of one hundred 
 cents, would buy in the market only thirty-eight cents worth of merchan- 
 dise, valued in real money. This difference between its debt-paying power 
 and its purchasing power, carried confusion and injustice into every de- 
 partment of business. 
 
 During the whole period of decline, 'the creditor was wronged by 
 underpayment ; and during the whole period of appreciation, the debtor 
 was wronged by being compelled to make overpayment. 
 
 During the seventeen years of suspension the payment of every debt 
 inflicted a wrong, either upon the creditor or the debtor ; and thus the 
 whole machinery of credit was converted into an engine of injustice. This 
 will always happen when the two functions of currency are of unequal 
 value. 
 
 THE MISTAKE OP 1865. 
 
 The first great opportunitj' for putting an end to these evils occurred 
 soon after the close of the war. Probably at no other time in our history 
 was the per capita average of private indebtedness so small as in 1865. 
 Private debts had been paid — in depreciated paper ; the government had 
 become the great borrower ; and had loaned nearly all the surplus capital 
 of the country. 
 
 Two millions of hardy, enterprising men had just been mustered out 
 of the lately hostile armies, and were ready again to become producers of 
 wealth. It was a matter of the utmost importance that the fruits of their 
 labor should be safe when earned, and that ventures in business should be 
 made as free as possible from violent artificial fluctuations. The volume of 
 currency then outstanding was nearly four times as great as had ever existed 
 at any one time before the war. It amounted to nearly eight hundred 
 millions of paper obligations, in various forms, endowed with the quality 
 of legal tender. Even in the midst of the war, this volume was known 
 to be far to great for financial safety. But on the return of peace, when 
 the'government ceased to be a great consumer and the payments from the 
 treasury were reduced sixty per cent, in a single year, it was almost uni- 
 
versally admitted that the volume of currency was greatly in excess of the 
 legitimate wants of business. 
 
 Under the combined influence of this expanded volume of depreciated 
 currency, and the enormous expenditures of the government, prices had 
 risen to an average of ninety per cent, above those of 1859-61. They could 
 not continue to rise without great danger to trade, and still greater danger 
 to the interests of labor. We had a surplus revenue of a hundred millions 
 per annum, and were abundantly able to retire, gradually, the excess of 
 legal-tender notes, and thus bring the business of the country safely down 
 from the dangerous height to which war and inflation had carried it. 
 
 Congress should not have compelled the new and aspiring industries 
 of peace to put to sea in a crazy craft which was all sail and no anchor. 
 The government had itself produced the condition in which business was 
 placed ; and to withdraw from its interference, to undo the mischief it had 
 caused by allowing business to be governed by the natural laws of trade 
 was the immediate and imperative duty of Congress. 
 
 This situation was clearly and ably portrayed by Secretary McCuUoch, 
 in his annual report of December 1865. He demonstrated the fact that we 
 then stood at the parting of the ways, that one path if followed with wis- 
 dom and courage, would lead down from the dangerous heights of war 
 prices to the safe level of solid values and steady business ; that the other 
 would lead through increased speculation and still greater expansion of 
 credits, to inevitable and measureless disaster. 
 
 Studied by the light of subsequent experience, the Secretary's warnings 
 now read like prophecy. At first, his policy was generally approved. In 
 December 1865, the House of Representatives, with but six dissenting votes, 
 pledged itself to early resumption by reducing the surplus volume of cur- 
 rency. Early in 1866, a bill was prepared which armed the Secretary with 
 the requisite authority. But before the debate closed, many began to shrink 
 from the responsibility of applying so heroic a remedy. Though approving 
 resumption, and admitting the necessity of reducing the volume of cur- 
 rency, they hesitated to adopt any measure which would reduced prices and 
 for the time being check the activity of trade. The dangers of inaction and 
 delay were clearly pointed out in debate. The citizens of Chicago are not 
 likely to forget the clearness and boldness with which the Hon. John Went- 
 worth, then a member of the House, predicted the evils which inaction in 
 timid and half way measures would involve. Late in the session, the bill 
 was passed by a close vote ; but the powers conferred upon the Secretary 
 were so restricted that before the remedy could be fairly applied, the era of 
 wild speculation had begun, and the current was soon too strong to be re- 
 stricted. In less than two years. Congress over-riding the President, pro- 
 hibited the further retirement of United States notes ; and all attempts to 
 resume Specie payments and return to solid values^ were, for the time, vir- 
 tually abandoned. 
 
 The high prices of all home products, measured, as they were by the 
 standard of depreciated currency,, made it impossible for our manufac- 
 turers to sell their wares in any foreign market. Our exports fell oflf 
 
beyond all precedent. Besides the breadstuflFs, which Europe could not 
 buy elsewhere, and the bullion dug from our mines, which was virtually 
 banished by our laws, hardly a product of American industry crossed the 
 ocean. At the same time ours was the most tempting market in the world 
 for the sale of foreign merchandise. We were paying the highest prices 
 known in modern times. A flood of foreign fabrics poured in upon us, 
 and the great balance against us was paid in bonds of the nation, of the 
 States, and of municipal and private corporations, bonds bearing the high- 
 est rate of coin interest. It is estimated that during the seven years which 
 preceded the panic of 1873, not less than one thousand millions of Ameri- 
 can bonds were sold abroad. Pay day was pushed out ■ of sight. The 
 present possession of this vast inflow of borrowed capital led its holders to 
 seek everywhere for investment. The surplus revenues of the National 
 Treasury were applied to extensive and extravagant public works. National, 
 State, municipal, and private credit M'as devoted to the building of railroads 
 and to magnificent enterprises which fired the imagination of our people, 
 and filled them with crazy enthusiasm. 
 
 The saddest and most curious phenomenon of that period, and one 
 which the historian will some day record, was the delusion that we were 
 then in the midst of great prosperity. Visions of wealth danced before 
 the imaginations of enterprising men, and they ventured everything in the 
 wild and exhilirating chase. They reveled in the light of a conflagration 
 which was consuming their wealth, and called it the sunshine of prosperity. 
 They lost sight of the only safe road, the old, hard, rough road, upon 
 whose finger post is written : "In the sweat of thy face shalt thou earn thy 
 bread." The delusion calls to mind the remark of Secretary Chase, that, 
 "an irredeemable legal tender note was the devil made manifest in paper." 
 
 COMMERCIAL GAMBLING. 
 
 The fluctuations between the debtpaying and the purchasing power 
 of our currency, created the new trade of gold gambling. The Gold Ex- 
 change and the Gold Clearing House, of New York, will be remembered 
 in history as the Germans remember the robber castles of the Rhine, whose 
 brigand chiefs levied black-mail upon every passer by. It was a business 
 that never added a farthing to the national wealth, but in which everjrthing 
 gained by one was lost by another. It was simply betting on what the 
 diflerence between coin and paper would be, and then employing every 
 device to win the bet by increasing the fluctuation. In New York alone, 
 for many years, a daily average of sixty millions of capital was withdrawn 
 from industry and invested in this reckless business. Its fascination 
 spread to all parts of the country. Each day some lucky gambler grew 
 suddenly rich by the ruin of another. If these losses had been confined 
 to the gamblers alone, the evils of the gold-room would have been less 
 serious. But all our people who were engaged in honest industry, all 
 producers and consumers of wealth, were made its victims. The great 
 conspiracy of 1869, which culminated in " Black Friday," involved in ruin 
 thousands of firms who were following legitimate business. As all our 
 
9 
 
 foreign trade was raeasured by the coin standard, the business of every 
 importer and exporter of merchandise was at the mercy of the "bulls" 
 and "bears" of the gold- room— whose chief effort was, by fair means or 
 foul, to create sudden changes in the price of gold. 
 
 To insure himself against this additional risk, the importer was com- 
 pelled .to increase his prices. The increase was charged over to the jobber, 
 and again to the retail dealer, until at last, its dead weight fell upon the 
 consumer of the goods. The exporter could protect himself against loss 
 only by paying lower prices for products to be sent abroad, and so the 
 whole enormous cost of seventeen years of gold gambling has been paid 
 out of the earnings of the American people. But gambling was not con- 
 fined to gold. The habit engendered by a fluctuating currency which led 
 men to sell what they did not own, and borrow what they sold was carried 
 into every department of trade. Bright, ambitious young men, lured from 
 the farm and workshop, sought their fortunes in the seductive chances of 
 the stock board, or in-the mysteries of "options," sales and "corners " in 
 wheat. The population of many agricultural districts actuallj' decreased. 
 The cities and manufacturing centres were overcrowded. Some leading 
 industries, notably railroad building and iron making, were greatly over- 
 done. As speculation increased and credits expanded, the cry was raised 
 that there was not currency enough, that the small measure of contraction, 
 effected by Secretary McCullough, had destroyed the peoples' money and 
 crippled their business. It was the drunkard's cry for more rum to steady 
 his nerves, already shattered by drink. 
 
 THE CRASH. 
 
 Nothing could resist the downward tendency ; and the wild dance went 
 on, until, at last, when no more could be borrowed, the inevitable pay-day 
 came, and with it the deluge of 1873. The vast fabric of municipal and 
 private debt, tottered and fell, involving in general ruin; the industries of 
 our people. We have no means of knowing the aggregate of that enormous 
 indebtedness; but we may judge something of its- magnitude by a simple 
 example. If the statistics can be trusted, the municipal debts of a hundred 
 and twenty-six Chief Cities of the Union increased two hundred per cent. 
 in ten years, and amounted, in 1876, to six hundred and forty-four million 
 dollars; and private debts had increased in proportion. While the 
 catastrophe might have been prevented in 1865, it was now too late to avert 
 the blow or mitigate its severity. 
 
 With such conditions, the crash was inevitable. Its details of loss and 
 suffering need not be recounted. 
 
 LOSSES OF LABOR. 
 It brought innumerable bankruptcies and losses to capitalists on every 
 hand ; but in the whole sad chapter of calamities, the laborers of our 
 country have been the greatest sufferers. If the employer grew suddenly 
 rich by speculation, during the period of expansion, his workmen did not 
 share his riches ; but, when he suffered the destruction of his business, by 
 the crash, they shared the disaster by losing the opportunity to work. 
 
10 
 
 During the period of expansion, the wages of labor were somewhat 
 increased, but the cost of living increased still more. When prices declined, 
 wages were the first to fall. . The capitalist can take advantage of the 
 market. If he has anything to buy, he is not compelled to buy it to-day, 
 he can wait for lower prices. If he has anything to sell, he is not com- 
 pelled to sell at once, but can wait on the market and sell at the best ad" 
 vantage. Not so with the laboring man. He goes into the market with 
 just one thing to sell — his day's work. He must sell it to-day, at to-day's 
 prices, or it will be wholly lost. What he needs to buy, he must buy when 
 necessity compels him. Fluctuation in the standard of values is his worst 
 en^my. It strikes him both ways, and strikes him hard. Therefore, of all 
 men in the world, the laboring man most need a steady market and an un- 
 varying standard of value. When he has earned his wages, he wants to be 
 paid in currency that will keep over night ; that will be worth as much 
 when he uses it as it was when he received it. I make this plea for the 
 laboring man, not on his account alone, but on account of our national 
 prosperity as well. 
 
 The hand of labor has built this great metropolis, has created its 
 wealth, and to-day supports its half million of people. Within the memory 
 of men who have hardly passed the meridien of life, Chicago was an 
 Indian trading post, which sheltered only a dozen white families. In less 
 than half a life time, the magical power of labor has made this city what 
 we see it to-day. In our country there is no need of a conflict between 
 capital and labor ; for capital is only another name for accumulated labor. 
 Every industrious and intelligent working-man looks forward to the day 
 when his earnings will make him a capitalist. There is no barrier of caste 
 to prevent his rising to the highest place of honor and wealth. He asks 
 no special privilege from the govei-nment ; but he does ask that the law 
 shall not rob him of employment, nor destroy his earnings by making them 
 the sport of the gold-room, the foot ball of speculation. 
 
 EECOVEEY. 
 
 If the foregoing analysis is correct, it must be seen that depreciated 
 and fluctuating currency has been the chief cause of our recent disasters ; 
 and this view accords with all experience, at home and abroad. 
 
 The same story has been reported in every language, and in every 
 nation. Recovery from such disasters has come in only one way, by econo- 
 my, reduction of credits, and a return to the basis of real money. By 
 these means, and in the midst of great suffering, our people have been 
 slowly making their way out of the ruins. The illusion of the seven 
 years which preceded the crash have been rudely dispelled, aud we have 
 been brought face to face with realities. It has been a period of adjust- 
 ment and payment. Prices have settled back to the old peace level ; the 
 wrecks have been gradually cleared away ; the revival has begun. The 
 products of our labor are again finding their way to the markets of the 
 world, During the last three years, in our foreign trade, we have sold six 
 hundred millions more than we have bought ; and the balance in our 
 
11 
 
 favor is increasJng. Less than two hundred millions of our national bonds 
 are now held in Europe, and more than two thirds of them are long bonds 
 at low interest. The favorable balance of trade has made ressnmption 
 comparitively easy. 
 
 RESUMPTION ACT OF 1875. 
 
 Four years ago Congress saw another opportunity to place the business 
 of the country again on a stable foundation. The law of 1874 fixed the 
 date when the promise of the war should be redeemed. It was a great act 
 of National faith, too long delayed, but made doubly necessary by the 
 sufferings of our people. The effort to keep this promise has been fiercely 
 resisted at every stage. Orators, in Congress and out of Congress, have 
 demonstrated, to their own satisfaction, that resumption was impossible, 
 and the demonstration has been repeated even as late as two months ago. 
 
 Corbett, the great English pamphleteer, declared, in 1816, that Resump- 
 tion in England was impossible ; and he publicly offered himself to be 
 broiled on a gridiron on the day when cash payments should be resumed. 
 For years he kept the picture of a gridiron at the head of his paper, to 
 remind his readers of his prophecy. We too, have our gridiron prophets ; 
 but all their predictions have failed. 
 
 Against determined opposition and repeated prophecies of evil. Re- 
 sumption has come ; and it has come to stay. As I said in the outset, it 
 will stay, because it ought to stay, and because we are able to maintain it. 
 In anticipation of its coming, the business of the country has gradually 
 adjusted itself to the coin standard. Every legitimate enterprise will be 
 benefited by resumption, and all classes of the community will rejoice in 
 it, except the gold-gamblers and their associates, whose craft it has des- 
 troyed; and except, also, those political prophets, whose occupation is 
 gone, by the explosion of their theories and th~failure of their predictions. 
 
 RESUMPTION A SUCCESS. 
 
 That Resumption can now be maintained, intelligent men no longer 
 doubt. 
 
 There are locked up in the vaults of the Treasury, to-day, one hundred 
 and forty millions of coin, with no other demand upon it than the main- 
 tainance of the greenback at par. All experience declares that this reserve 
 is amply sufficient to maintain Resumption. Should it prove insufficient, 
 the Secretary of the Treasury has both the authority and the ability to in- 
 crease it. 
 
 The people will have no motive to demand any great amount of coin ; 
 for paper at par is more convenient than gold or silver. The banks are 
 bound, both by law and their own interests, to aid in maintaining resump- 
 tion. The amount of National bonds now held abroad is too small to 
 enable foreign creditors to drain us of our coin. If necessary, we can sell 
 to Europe more of our four per cent, bonds than she can send home of our 
 six per cents. 
 
12 
 
 HOW KESUMPTION MAY BE DEFEATED. 
 
 But we must not assume that all danger is past. Eesumption can be 
 defeated in one of two ways : First, by great and unexpected calalnity, like 
 war, or the general failure of our crops, which should turn the balance of 
 trade against us ; or, 'Second, by the hostile legislation of Congress. The 
 probability of the former is too remote to be seriously considered; the 
 danger of the latter must be prevented by the intelligence and vigilance of 
 our people. 
 
 Though the opposition to Eesumption has shown great strength in 
 Congress, even down to a very recent date, yet, now that par has been 
 reached, I do not believe it will be longer assailed by direct legislation. 
 The instinct of self-preservation will probably lead politicians to abandon 
 such eflforts. The real danger lies in indirect assaults, which may be made 
 in several ways. If the expenditures of the government should be in- 
 creased by large appropriations for the various schemes which are urged 
 upon Congress, so as to produce a deficit in the revenues, rather than levy 
 additional taxes. Congress will be tempted to issue more greenbacks, and 
 cai-ry expansion to a point at which Resumption will break down. Rigorous 
 economy, and a persistent maintainance of revenue sufficient for neces- 
 sary current expenses, and for the sinking fund, will be our safeguard in 
 this direction. 
 
 THE BANK QUESTION. 
 
 The most dangerous, indirect assult upon Resumption is the attempt to 
 abolish the national banks and substitute additional greenbacks in place of 
 bank notes. This effort will call to its support the sentiment which, to some 
 extent, prevails against moneyed corporations. Should the attempt suc- 
 ceed, it will inevitably I'esult in suspension of specie payments. While the 
 Treasury, aided by the banlfS can now easily maintain at par the outstand- 
 ing volume of greenbacks, resumption would unquestionably break down, if 
 the volume were increased three hundred and twenty millions. We must 
 debate the bank question with our eyes open to the certainty of this result. 
 And this ought to be decisive against the measure. But besides destroying 
 resumption, it would be a most radical and dangerous revolution in our sys- 
 tem of government. During the period of war and reconstruction, many 
 good-people were alarmed at the tendency to centralize power at Washing- 
 ton ; but the proposition we are now considering would result in a central- 
 ization of power without a parallel in our history. Before the war, except 
 for the purpose of furnishing small change in the form of subsidiary and 
 token coinage, it was never so much as suggested that the government had 
 any right to become the proprietory manufacturer of money. It was the 
 acknowled6ed duty of Congress to declare the value of coins and to coin the 
 bullion of private citizens which might be brought to the mint for that 
 purpose ; but it had no authority to determine volume of currency or to 
 regulate its distribution. 
 
 The substitution of greenbacks for national bank notes is proposed on 
 the^theory that the treasury should be converted into a work shop for the 
 
13 
 
 manufacture and sale of money ; that not only its quality but its quantity 
 and distribution shall depend solely upon the will of Congress. 
 
 To force a citizen into the army, and put him in the front of battle 
 without his consent, was thought by many a violent invasion of private 
 rights ; but Congress to assume the power to raise, or depress all prices, to 
 change the value of every purchase, and of every private contract, would 
 be a usurpation of power the most despotic and dangerous ever proposed 
 to Americans. 
 
 CURRENCY TO MEET. THE WANTS OF TRADE. 
 
 We are told that the people demand a volume of currency sufficient 
 for the wants of trade. So they do. But what man or set of men is wise 
 enough to measure these wants, and declare the exact volume of currency 
 that will meet them. 
 
 Suppose a hundred wise men of New York should take the contract of 
 housing, clothing, feeding, and supplying the wants of the million people 
 who live on Manhattan Island. Remember that all nations are placed 
 under contribution to supply that city. The ships of every sea are landing 
 at her docks the products of every clime. Railway trains from every 
 quarter of the Union are pouring in their contributions. Millions of peo- 
 ple in various parts of the world are at work creating the merchandise 
 which the city needs. Hundreds of thousands of her own people are busy 
 preparing these products for her use. Is it possible to conceive that the 
 wit of man is able to devise any artificial system by which the infiinite 
 daily wants of New York shall be accurately measured and constantly and 
 promptly supplied ? Extend the scheme till it shall embrace the whole 
 Union, with its forty-five millions of people. Is any Congress wise enough 
 to measure all this vast business and to determine in advance just how 
 nxuch currency is needed to transact it ? To propose it is to ask impossi- 
 bilities ; and yet, by the operation of laws higher and more potent than 
 human legislation, all this is silently and perfectly accomplished. Millions 
 of men, acting without concert, each working for his own interest in obe- 
 dience to the great law of demand and supply, house, clothe, feed and 
 transport the people of the United States, and carry on their manifold 
 enterprises with perfect harmony and regularity. Any attempt of Con- 
 gress to adjust the volume of currency to the wants of trade by arbitrary 
 legislation is doomed to certain and disastrous failure. 
 
 The national banking sytem is that part of our financial machinery, by 
 which, the volume of paper currency may increase or diminish in obedi- 
 ence to the laws of trade. If the volume becomes excessive, their notes 
 are returned to the banks to be issued again, when increasing business 
 requires them. The abolition of the national banks means the destruction 
 of this indispensible self-adjusting principle of our currency system. 
 
 Surely, intelligent men do not suppose we can get on without a banking 
 system of some kind. The bank is the chief instrument of modern 
 exchange. It is as necessary to trade as the railroad is to transportation. 
 It brings the .borrower and lender together, and renders available for the 
 
14 
 
 Uses of industry, the loanable capital of the community. Ninety per cent, 
 of all our trade is carried on by means of the bank credits, in the form of 
 drafts, checks and commercial bills, and only ten per cent, by the actual . 
 use of money which has become the small change of commerce. The vast 
 mass of deposits and bank credits is now subjected to searching national 
 inspection. If the power to issue notes be taken from the banks they will 
 have no inducement to remain under such scrutiny. We shall go back to 
 the wretched system of State banks and private broker shops, and create 
 three hundred and twenty millions more of paper currency, which will 
 escape all taxation. 
 
 On every principle of public policy the attempt should be resisted. It 
 ought not to succeed, and I do not believe it can succeed. To make re- 
 sumption sure, we should insist that our present currency and coinage 
 laws shall remain for the present unchanged. Whether we can safely 
 allow the Government to keep $340,000,000 of currency in circulation, and 
 to that extent make the treasury a bank of issue, remains to be tested by 
 experience. For myself, I doubt its wisdom as a permanent policy. But 
 let the experiment be fairly tried. 
 
 Later on, some modification may be needed in oua- coinage law. If 
 other nations persist in their refusal to restore silver to its old place of 
 honor, as a part of the world's coinage, if the principle of bi-metallic cur- 
 rency should be practically abandoned by other nations who have long 
 maintained it, we may, by and by, encounter serious diflBculties, as our 
 coinage of silver increases.- I do not believe that our people will allow 
 either metal to drive the other out of circulation. In some wise and just 
 way they will meet and avert the danger when it comes. 
 
 EFFECTS OF EESUMPTION. 
 
 Successful Eesumption will greatly aid in bringing into the murky 
 sky of our politics, what the signal service people call "clearing weather." 
 It puts an end to a score of controversies which have long vexed the public 
 mind, and wrought mischief to business. It ends the angry contention 
 over the difference between the money of the bond-holder and the money 
 of the plow-holder. It relieves enterprising congressmen of the necessity 
 of introducing twenty-five or thirty bills a session to furnish the people 
 with cheap money, to prevent gold-gambling, and to make custom duties 
 payable in greenbacks. It will dismiss to the limbo of things forgotten, 
 such Utopian schemes as a currency based upon the magic circle of inter- 
 convertability of two different forms of irredeemable paper, and the 
 schemes of a currency "based on the public faith," and secured by "all 
 the resources of the nation " in general, but upon no particular part of 
 them. We shall still hear echoes of the old conflict, such as "the barbar- 
 ism and cowardice of gold and silver," and the virtues of "fiat money;" 
 but the theories which gave them birth will linger among us like delated 
 ghosts, and soon find rest in the political grave of dead issues. All these 
 will take their places in history alongside of the resolution of Varsittart, in 
 1811, that " British paper had not fallen but gold had risen in value," and the 
 
15 
 
 declaration of Castlereagh, in the House of Commons, that "the money 
 ' standard is a sense of value in reference to currency as compared with 
 ' commodities," and the opinion of another member, who declared that 
 ' the standard is neither gold nor silver, but something set up in the imagina- 
 ' tion to be regulated by public opinion." 
 
 When we have fully awakened from these vague dreams, public opin- 
 ion will resume its old channels, and the wisdom and experience of the 
 fathers of our constitution will again be acknowledged and followed. 
 
 We shall agree, as our fathers did, that the yard stick shall have length, 
 the pound must have weight, and the dollar must have value in itself, and 
 that neither length, nor weight, nor value can be created by the fiat of law. 
 Congress relieved of the arduous task of regulating and managing all the 
 business of our people, will address itself to the humbler but more im- 
 poi-tant work of preserving the public peace, and managing wisely the 
 revenues and expenditures of the government. Industry will no longer 
 wait for the legislature to discover easy roads to sudden wealth, but will 
 begin again to rely upon labor and frugality as the only certain road to 
 riches. Prosperity, which has long been waiting, is now ready to come. 
 If we do not rudely repulse her she will soon revisit our people, and will 
 stay until another periodical craze shall drive her away. 
 
 THE TRIAL OF THE CONSTITUTION. 
 
 During the whole period which Resumption closes, our Constitution 
 has been on trial for its life. When the greatest rebellion the world has 
 ever known assailed it, the believers in governments founded on heredi- 
 tary right, or on sheer force, told us that the bubble of Republican Govern- 
 ment was about to burst. They did not understand the resources of a 
 government based on the national will. They did not understand that in 
 our Constitution the greatest powers— rights too precious to be delegated 
 to the Congress or to the States — are reserved to the people themselves. 
 
 In the supreme moment of our peril, these voluntary powers were 
 displayed in unsurpassed majesty and strength, on a thousand battle-fields, 
 aiid they preserved the Republic from overthrow. Many feared that in the 
 great struggle to save the Union, personal liberty, freedom of opinion, and 
 respect for law, would be lost. But, outside of the actual theatre of mili- 
 tary operations, the orderly course of justice was undisturbed. The rights 
 of persons and property were almost everywhere sacredly preserved. 
 
 During the great conflict between Great Britain and the firsts Nupftleon, 
 though no hostile army landed on her territory, yet in England itself, a:s' 
 we are told by one of her eminent historians, the ordinary course of law 
 was suspended, opinion was gagged, the right of puJ>lio meeting was cui-- 
 tailed, Government indictmrnts for libel and trials for coastractive treason 
 were numerous, and other measures were adopted far mote repressive than 
 any which prevailed here during the great war on our oifyii soil and among 
 our own citizens. Professor Goldwin Smith has noCed with admiration' 
 the behavior of our people during the crisis. He says : " History can 
 
16 
 
 "scarcely supply a parallel to this perfect reliance of a Government on 
 " its moral strength and the unconstrained loyalty of its people. The sec- 
 " cond election of Lincoln took place at the acme of excitement, . when 
 " every other family had a member in the field for the Union, or in a sol- 
 " dier's grave. Yet there was not only perfect order maintained without 
 "any intervention of the police, but perfect respect for every right, not 
 " only of voting, speaking and writing, but of public demonstration.. 
 " What government in Europe could safely have allowed sympathy with a 
 " great rebellion to hang out its banner in all the streets? Never to be 
 "forgotten, either, are those predictions of military usurpation and sabre 
 ' ' rule as the sure result of civil war, uttered with exhultation by enemies, 
 " with sorrow by friends, warranted by the experience of history, but belied 
 "by the Eepublican loyalty of the generals and the imediate return of the 
 " armies to civil life." 
 
 This testimony from an eminent foreigner is as important as it is just. 
 The people passed cheerfully and joyfully from the ambition and glories of 
 war to the humbler walks of peace. And finally, notwithstanding the con- 
 fusion of public opinion, caused by great sufiering, the public faith has 
 been preserved, and the national character greatly strengthened. 
 
 Reviewing the whole period, we have a right to say that the wisdom 
 of our institutions has been vindicated, and our confidence in their sta- 
 bility has been strengthened. Legislation has been directed more and 
 more to the enlargement of private rights and the promotion of the inter- 
 ests of labor. It has been devoted not to the glory of a dynasty, but to the 
 welfare of a people. Slavery, with the aristocracy of caste which it engen- 
 dered, and the degradation of labor which it produced, has disappeared. 
 Without undue exultation, we may declare that the bells of the new 
 year 
 
 Eing out a slowly dying cause, 
 And ancient forms of party strife ; 
 Eing in the nobler modes of life, 
 With sweeter manners, purer laws. 
 
 We have learned the great lesson, applicable alike to nations and to men : 
 
 Self-knowledge, self-reverence, self-control — 
 These three alone lead life to sovereign power. 
 
46th Congress, ) HOCTSE OF EEPEESENTATIYES. ( Mis. Doo. 
 Is* Session. i ) No. 11. 
 
 UNLIMITED COrN"AGE OF SILVER AND THE TEADE-DOLLAB. 
 
 MINUTES 
 
 OF A 
 
 CONFERENCE BETWEEN THE COMMITTEE ON COINAGE, WEIGHTS 
 
 AND MEASURES OF THE HOUSE OF REPRESENTATIVES, 
 
 AND THE SECRETARY OF THE TREASURY 
 
 AND THE DIRECTOR OF THE MINT. 
 
 May 1, 1879. — Eecommitted to the Committee on Coinage, Weiglits, and Measurea 
 and ordered to be printed. 
 
 NOTES OF A CONFEEENCE BETWEEN THE COMMITTEE ON COINAGE, 
 WEIGHTS, AND MEASURES AND SECRETARY SHERMAN AND DIRECTOR 
 OF THE MINT BURCHARD. 
 
 WASHINGTON, April 26, 1879, 
 
 The Chairman. Before proceeding to the main subject of this con- 
 ference, I "Wish to ask some questions in relation to the trade-dollar. 
 Can you give us, Mr. Secretary, a correct statement or estimate of the 
 number of trade-dollars now in the United States? 
 
 Secretary Sherman. I can state that the amount of trade-dollars that 
 have been coined is $35,959,300. The amount of them exported, as 
 shown by the statistics we have, partly estimated but nearly accurate, 
 may be said to be about twenty-nine million dollars. These are about 
 the figures that were given in my annual report in December last, and 
 I believe they are as nearly accurate as possible. This would leave in 
 the country between six and seven millions of trade-dollars. 
 
 Mr. Claplin. Is there any evidence that any of those have been 
 taken up, used as bullion, or in any other way? 
 
 Secretary Sherman. We have no evidence on that point. It is 
 hardly probable, however, that they would be, because bullion has been 
 cheaper all the time than trade-dollars. 
 
 The Chairman. Is there any serious objection to taking up those 
 ■ trade-dollars and giving standard silver dollars for them and then re- 
 coining them — never issuing them again ! 
 
 Secretary Sherman. I think the objections are very serious. There 
 are three radical objections, anyone of which, I think, ought to prevent 
 the government from taking that course. First, it would be a discrim- 
 ination against our own miners in the price of silver bullion and in 
 favor of the holders of these doUars in China. At least from twenty- 
 six to twenty-eight millions of these trade-dollars are held in China as 
 bullion. The trade-dollars were coined as bullion and sold as bullion, 
 for private parties, for private profit, and the government had no con- 
 
Z UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 
 
 nection with tliem except to charge the actual cost to the owners of the 
 bullion. They had a limited legal-tender qiiality until July 22, 1876, 
 but they did not get into circulation in this country until October, 1876 ; 
 so that every trade-dollar that is now in circulation in this country was 
 put in circulation at a time when it was not a legal tender, but simply 
 represented 420 grains of standard silver. If we shoiild now make it 
 exchangeable for the standard silver dollar, and equal to the gold dol- 
 lar, it would be worth for that purpose 14 or 15 cents more than it is 
 worth as bullion, and the owners of this bullion in China, or the pur- 
 chasers of those coins for the purpose of bringing them here, would get 
 the benefit of that difference. We can buy the same amount of silver 
 buUion from our own miners to-day for four or five millions of dollars 
 less than we can get this bullion in China, if the proposed measure 
 should become a law. That is the first objection. 
 
 Mr. Warner. Would that objection, however, lie if silver was ad- 
 mitted to free or unlimited coinage in the United States 1 
 
 Secretary Sherman. Ko ; if silver coinage is made free at the rate of 
 16 of silver to 1 of gold we shall have a mono-metallic system of silver 
 coinage excluding gold from circulation. Then, as a matter of course, 
 the obiection would cease; then the trade-dollar would be worth more 
 than the standard dollar. That is, if you adopt the bullion value of sil- 
 ver as the sole standard in this country, then it makes no difference 
 what is done with the trade-dollar ; but as long as you maintain the 
 gold standard or the present standard based upon the gold coin of 25^^ 
 grains, the introduction of the trade-dollar, either as a coin or as the 
 equal of the standard dollar, will be a discrimination in favor of the 
 owners of this silver bullion in China and against our own mtaers to the 
 extent that I have stated. 
 
 Mr. Warner. That is, while silver is coined under existing law and 
 regulations? 
 
 Secretary Sherman. Certainly. The chairman did not ask me about 
 my view in regard to the question of bi-metaUic or mono-metalUc money. 
 
 The Chairman. Suppose we change our system in relation to the coin- 
 age of silver and make it unrestricted, so that the government will not 
 purchase bulUon at all; suppose that the system of purchasing buUion 
 for coin is abrogated and the unlimited coinage of silver is introduced, 
 then ought not the trade-dollar and the legal-tender standard dollar to 
 be interchangeable? 
 
 Secretary Sherman. If Congress should' finally determine to adopt the 
 silver standard 
 
 The Chairman. The double standard ? 
 
 Secretary Sherman. Yes; the free coinage of both gold and silver 
 upon the present ratios. If that is to be adopted, then the proposition 
 is not objectionable; but that brings up at once the great question 
 whether that ought to be done. 
 
 The Chairman. That is the point we have before us, and I understand 
 that in case we do that, your opinion is that then the trade-dollar and the 
 standard silver dollar ought to be interchangeable. 
 
 Secretary Sherman. Yes ; but in case you should do that, no man of 
 ordinary sagacity would surrender a trade-dollar for the standard dol- 
 lar; he would want to receive the difference between them. You would 
 not be able to get the trade-dollar exchanged for the standard dollar, be- 
 cause the trade-dollar contains 420 grains of silver, while the standard 
 dollar contains only 412J. 
 
 The Chairman. Then you would not be bothered with the recoiaing? 
 
■UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 3 
 
 Secretary Sherman. No. The trade- dollar would be, as the old Mexi- 
 can dollar was formerly, a little more valuable than our standard dollar. 
 
 Mr. Waener. It would simply go to the mint as bullion"? 
 
 Secretary Sherman. Hardly; it would not be exchanged on an equality 
 with the standard dollar. 
 
 The Chairman. What amount of standard silver dollars coined since 
 the act of last year are now in circulation ? 
 
 Secretary Sherman. According to latest returns received at the de- 
 partment there have been coined of these dollars $30,542,950. We have 
 now on hand $22,887,695; leaving $7,655,255 of those dollars in circula- 
 tion. 
 
 The Chairman. How many coin certificates have been issued under 
 the act of 1878? 
 
 Secretary Sherman. An amount of $10,437,000. Nearly all our sil- 
 ver bullion is purchased by silver certificates, but then they are at once 
 returned to the Treasury. 
 
 The Chairman. I understand you to say that there are very few of 
 them out now? 
 
 Secretary Sherman. Very few. They are at once converted. They 
 come right back. 
 
 Mr. "Warner. They come back in payment of duties. 
 
 Secretary Sherman. Largely in payment of bonds, and also for the 
 payment of duties. The whole amount outstanding now is only $176,330. 
 
 The Chairman. In connection with the sales of bonds that have been 
 made lately ! 
 
 Secretary Sherman. Tes ; lately and all along. 
 
 The Chairman. What would be the objection to issuing coin certifi- 
 cates down to denominations of fives, and threes, and twos, and ones, 
 and halves and quarters for change 1 
 
 Secretary Sherman. The objection to issuing coin certificates while 
 you have legal-tender notes outstanding is that the coin certificates, of 
 whatever denomination they may be, will not circulate while the legal- 
 tender notes are outstanding. IJntil the 1st of January the coin certifi- 
 cates had the advantage over the legal-tender notes, because they were 
 receivable for bonds, for customs duties, and for all purposes, and there- 
 fore they had a special value or use which the legal-tender notes had 
 not; but now the legal- tender notes are, in effect, a coin certificate, and 
 may be used for all purposes. There is now no occasion for coin certifi- 
 cates, which come back into the Treasury. 
 
 Mr. Vance. Then can they not be put out again ? 
 
 Secretary Sherman. They can, but we have "greenbacks," which we 
 are bound to keep in circulation, and which fill all the channels of circu- 
 lation, under existing law. It would be difficult to keep the two forms 
 of currency afloat at the same time. If either were taken away, then 
 the other would fill the channels of circulation. 
 
 Mr. "Warner. Is there any objection to those certificates if persons 
 holding bullion or coin prefer the certificates to handling the coin or 
 bullion, even though the certificates may come back, as coin would, in 
 payment of duties to the government ? 
 
 The Chairman. The question I meant to ask is this : Is there any 
 practical objection to issuing coin certificates, if persons prefer them, so 
 as to get rid of these fractional silver dollars ; in other words, is there 
 any objection to having coin certificates ready to exchange with any 
 persons who prefer them, down to the denominations of fives, ones, halves, 
 and quarters ? 
 
 Secretary Sherman. If you issue them in small sums there is the 
 
4 UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 
 
 same objection that was made always to the fractional currency, that it 
 was very perishable and very costly, and a great loss to the people on 
 account of its being so perishable. 
 
 The Chairman. Would they be more perishable, or a greater loss to 
 the government, or more costly after the plates are made, than the coin 
 itself is ? Is not the waste and abrasion of the coin itself quite as great 
 as that of the fractional currency 1 
 
 Secretary Sherman. Experience shows that it is not. The fractional 
 currency was found to last only about fifteen or eighteen months, while 
 silver coin lasts in circulation about twenty -three years, and gold coin 
 about fifty years. The actual cost of the fractional currency in the last 
 year or two before it was abandoued was shown to be about three per 
 cent, per annum, and that currency perished in about fifteen or eighteen 
 months on an average. 
 
 The Chairman. But you would have the plates, so that there would 
 be no cost in replacing it except for the paper "? 
 
 Secretary Sherman. Yes ; but on ten-cent and twenty -five cent cur- 
 rency the cost, even of a million, is considerable. 
 
 The Chairman. I would not have the denominations go below twenty- 
 five cents. You speak of gold coin wearing fifty years, and silver coin 
 a much less time ; how do you account for that ? 
 
 Secretary Sherman. That, I suppose, is because the gold coin passes 
 through fewer hands. 
 
 The Chairman. We had a statement here the other day about a 
 double-eagle which was weighed in the Treasury Department and found 
 to have lost seven grains. 
 
 Secretary Sherman. It must have undergone pretty rapid and ex- 
 tensive usage. 
 
 The Chairman. Mr. Eiggs, I understand, says that his loss is im- 
 mense on gold coin because the Treasury will not take it from Mm 
 except by weight, and his loss thereby is several per cent. 
 
 Secretary Sherman. There are statistical tables in the reports of the 
 Director of the Mint which show very accurately the amount of abrasion 
 of different coins. Gold coin, from the fact that it does not circulate so 
 fi-eely, lasts longer than any other. 
 
 The Chairman. I understand your answer to my question to amount 
 to this : that there is no practical objection to issuing these coin certifi- 
 cates except the increased cost. 
 
 Secretary Sherman. As to the fractional notes the objection is one ot 
 cost and wear and tear. Another objection is this : I think the instinct- 
 ive desire of men generally, especially laboring men, is to handle the 
 coin itself. I thinls: this desire is better gratified by the sense of touch 
 in handling coin than in handling paper. 
 
 The Chairman. My question does not go to that extent, because it 
 leaves it optional with people to have the one or the other as they pre- 
 fer. Is there any practical objection to the government being ready to 
 issue these certificates if the holders of coin or bullion shall so desu-e ? 
 
 Secretary Sherman. I do not think that the double system is wise. 
 If you adopt the one you should reject the other. The double system 
 puts us to the great expense of maintaining mints to sup])ly the coin, 
 and also the Bureau of Engraving and Printing to sujjply the paper. 
 In my judgment it is better to have either the one or the other, not both. 
 Many very intelligent people, bankers as well as others, do, I know, 
 j)refer small fractional currency to silver currency. 
 
 There is another grave objection to the issue of coin certificates, that 
 they will inevitably replace and destroy the legal-tender notes, or com- 
 
TJNLIMITED COINAGE OP SILVER AND TRADE DOLLAR. 5 
 
 pel the suspension of specie payments on such notes. In case of the 
 slightest suspicion or doubt of the ability to maintain redemption, or in 
 case brokers or bankers choose for speculative purposes to make gold 
 scarce, they may, without cost or trouble, or without handling the coin, 
 present legal-tender notes to the Treasury and demand coin, and turn 
 over the coin for certificates. Upon issuing the certificates the Treas- 
 ury must keep the full amount of coin for the payment of the certifi- 
 cates, thus reducing the coin reserve for the payment of United States 
 notes, and throwing upon the Treasury the risk and expense of keeping 
 the coin for private and perhaps hostile purposes. It was this very dan- 
 ger that induced me to decline in December last to issue any more gold 
 certificates. One protection to the Treasury is the inconvenience to 
 which the parties presenting the coins would be put in receiving and 
 hoarding them, but if the issue of certificates is made mandatory, a few 
 active brokers might convert all the coin in the Treasury into certifi- 
 cates, and leave no means with which to redeem United States notes. 
 I can see no public interest that would be j)romoted by a mandatory 
 issue of coin certificates in exchange for gold or silver bullion, and if 
 they are issued without an actual deposit of coin, to be held for their 
 redemption, they are only another form of United States notes. 
 
 The Chairman. One other question. What do you think of having 
 ingots of gold or silver, say silver, of the value of 8100, assayed, refined, 
 and stamped, for purposes of exchange, instead of coin I Do you or not 
 think that such ingots would answer the purpose of a medium of exchange 
 with other countries, to be used instead of coin in settling balances — I 
 mean ingots of pure silver or gold ? Dr. Liuderman made the sug- 
 gestion to us last year, and that is why I want to get your views on the 
 subject now. If that were done, there would be no drain from abroad 
 upon our coinage. These ingots would be resorted to instead. 
 
 Secretary Sherman. We have ingots of gold and silver now. In the 
 assay office in New York you will see great ingots of gold and silver of 
 various denominations and values, with the values stamped upon them, 
 just as you suggest. » 
 
 The Chairman. But they are not of the same denominations as the 
 coin? 
 
 Secretary Sherman. No. 
 
 The Chairman. The suggestion was to have them of the same denom- 
 inations, and to have them all alike, fine ingots of silver of f 100 each, 
 with $100 worth of silver in them, measured by our standard dollar. 
 Dr. Linderman's idea was that those ingots would be used in com- 
 merce, for the purposes I have suggested, without a resort to coin. 
 
 Secretary Sherman. That is rather a question of convenience. It is 
 to provide coin of the denomination of $100 or ten eagles. 
 
 The Chairman. The idea was, I believe, that when those ingots went 
 abroad the foreign mints would not be troubled with our alloy, because 
 the ingot would be pure silver. 
 
 Secretary Sherman. Well, that is a technical question which I do not 
 pretend to know much about — whether it is better to export silver in the 
 pure state or not. Most of the bullion in the mint and at the assay 
 office is gold or silver with a shade of alloy ; then when coined they add 
 the proper alloy to conform to the law of the country. 
 
 The Chairman. I will put the same question to Mr. Burchard^^the 
 Director of the Mint, whether he has given any attention to that point. 
 
 Mr. BuRCiHARD. I have not, particularly. The question of stamping 
 a value upon silver bars has not been raised or considered since I have 
 had charge of the Mint Bureau. 
 
b UNLIMITED COINAGE OF Sp,VEE AND TEADE DOLLAR. 
 
 The Chairman. I wish, Mr. Secretary, that you and Mr. Burchard, 
 when the notes of this conference are submitted to you, will add any- 
 thing that may occur to you in the mean time upon this point. 
 
 Mr. Btjrchakd. A person bringing silver bullion now to the Mint 
 and desiring to have it converted into fine bars is entitled to have that 
 done, and to have fine silver bars delivered to him in lieu of the bullion. 
 The value is not stamped upon such silver bars but simply the weight 
 and fineness. That is now the the course of business at the coinage 
 mints and at New York assay-oflice. 
 
 Mr. Warner. And the only limit under the law now is that nothing 
 shall be stamped less than five ounces; which would be a very small 
 bar of silver. 
 
 Mr; Vance. What is the trade-dollar worth at the Treasury now, 
 Mr. Secretary ? At what rate do you receive it in place of bullion ? 
 
 Secretary Sherman. We are not authorized to receive it at all except 
 as bullion ; the bullion value is now 85.8. The commercial value among 
 tlie brokers is 98.75. We would buy it as bullion, if it was offered, at oue 
 cent under the market rate, because we buy at one cent less than the 
 bullion value when offered in small lots, but in large lots we buy at the 
 market rate for bullion. 
 
 Mr. Vance. What is the probable amount of the fractional coin now 
 in circulation. 
 
 Secretary Sherman. The exact amount of fractional silver in circu- 
 lation cannot be given. Of the amount which has been paid out since 
 January 1, 1875, there is now outstanding $41,485,438.56, and the amount 
 now on hand at the several mints and Assistant Treasurer's Offices, is 
 $6,598,492.44. 
 
 Mr. Fisher. To pursue the inquiry of the chairman a step further : 
 What would you think of the idea of the issuance of silver certificates 
 of the denominations of one dollar and two dollars f There is a scarcity 
 of legal-tender notes of those denominations in the country. 
 
 Secretary Sherman. I think that the objections to issuing silver cer- 
 tificates or gold certificates of any denominations while United States 
 notes are in circulation are very clear. As to the scarcitj'' of United 
 States notes of small denominations, that is simply because persons who 
 come to the Treasury for money will not take them. We issue ones and 
 twos freely, but hardly anybody wants them. Any one who chooses 
 can come to the Treasiu-y with a draft for $100 or $1,000, and get every 
 dollar of it in one-doUar notes if he wishes. 
 
 Mr. Fisher. Can that be done now ? 
 
 Secretary Sherman. Certainly, and it could always be done. I know 
 that a stringency does occur in some localities, because the great trans- 
 actions with the government require large sums of money, and people 
 prefer notes of larger denominations because it is easier to carry large 
 sums of money in that form. Always, since I have been in the depart- 
 ment, I have taken great pains to distribute ones and twos, and any 
 person receiving money can get any number of them he wishes to carry 
 away at any time. 
 
 Mr. Fisher. In my section of Pennsylvania we have been suffering 
 from a scarcity of those small notes. You have spoken of people pre- 
 ferring coin to paper ; now, our people consider the silver dollar a nui- 
 sance. 
 
 Secretary Sherman. I think the silver dollar is rather too large for 
 change. I was speaking rather of the subsidiary coinage. But so far 
 as the one and two dollar notes are concerned, I am very glad to state 
 and to have it generally known, that anybody can get as many of them 
 
UNLIMITED COINAGE OF SILVER AND TEADE DOLLAR. 
 
 at the Treasury as he wants, either in payment of drafts or in exchange 
 for larger sums. 
 
 Mr. Fisher. I have heard it said that the Treasury took in the 
 smaller notes and issued only the larger ones, and I am glad to know 
 from the Secretary that we can get the smaller denominations. 
 
 Secretary Sherman. I have endeavored to promote the circulation 
 of the ones and twos in every way that I could. 
 
 Mr. Claplin. The difficulty in keeping the smal llegal-tender notes in 
 circulation is that the banks, having to keej) a reserve, gather up the legal 
 tenders and do not pay them out, but put them in the Treasury. That 
 is because they do not issue ones and twos of their own. If they issued 
 ones and twos of their own, the legal-tenders would be freely circulated, 
 but as it is, the tendency must be for them to go into the bank reserves. 
 
 The Chairman. But why don't they pay them out ? 
 
 Mr. Clajflin. Because they have to keep from 10 to 25 per cent, re- 
 serve, and they do not want to go and get gold and silver and pay out 
 the I's and 2's ; they prefer to hold the small notes for their reserve. 
 That is the difflculty. 
 
 Mr. Fisher. That is not the difflculty with us. The difficulty in our 
 section is that the I's and 2's have been worn out and have gone in for 
 redemption, and we have not received others of the same small denom- 
 inations to supply their places. 
 
 Mr. Claplin. That is, your bank-notes, I's and 2's, that were in cir- 
 culation, have gone home, and the department has sent back $5 notes, 
 or notes of some other larger denomination in place of the I's and 2's. 
 
 Mr. Fisher. Then it is only a question of time when they will all go 
 out of circulation. 
 
 Mr. Claplin. It is only a question of time in regard to the I's and 2's. 
 
 Secretary Sherman. There never was more than between live and 
 six millions of small bank-notes in circulation, while we have from forty 
 to fifty millions of small United States notes in circulation. 
 
 Mr. Claplin. But those are all held by the banks ; they are not in 
 circulation. 
 
 Secretary Sherman. We give I's and 2's for 5's, lO's, and lOO's, and pay 
 them out when called for. 
 
 Mr. Claplin. But the natural result is that they are held by the 
 banks for reserves. 
 
 Mr. Warner. Has there been, then, within the last year, or since the 
 act of May 31, 1878, any absolute contraction in the amount of 1 and 2 
 dollar legal- tender notes in circulation"? Is the amount absolutely any 
 less now than a year ago ? 
 
 Secretary Sherman. In answer to that I will give you a table, show- 
 ing the exact amount of I's and 2's out May 31, 1878, and at the present 
 date. 
 
 Date. 
 
 Denomination. 
 
 Amount. 
 
 Date. 
 
 Denomination. 
 
 Amount. 
 
 May 31,1878 
 May 31,1878 
 
 
 $21, 676, 728 80 
 21, 601, 458 20 
 
 Apr. 26, 1879 
 Apr. 26, 1879 
 
 
 $18, 953, 172 80 
 18, 871, 394 20 
 
 Twos 
 
 Twos 
 
 
 
 Mr. Willis. Mr. Secretary, in answer to the first question which was 
 put to you by the Chairman you said that there were three objections 
 to the recoinage of the trade-dollar. You stated one, and were inter- 
 rupted before you had comijleted the statement of those objections. I 
 should be very glad to have you now state the other two. 
 
 Secretary SheeiUAn. The second objection is that it would bring us 
 
8 UNLIMITED COINAGE OF SILVER AND TEADE DOLLAR. 
 
 abruptly to the single silver standard. The few millions of trade-dollars 
 now in circulation are very unpopular and cause the demand to Congress 
 to get rid of them. If you now make them lawful money, or authorize 
 them to be converted at par into lawful money, the largest part of the 
 30 millions exported will be presented for redemption in the standard 
 silver dollars. If you force the standard silver dollars into circulation, 
 I know by experience they wiU at once come back for taxes and bonds, 
 and as often as reissued will come back until we will be driven to hoard 
 them in our vaults, or they wiU drag our paper money down to the 
 market value of silver bullion and will expel gold. This will create wide 
 and sweeping changes in contracts. For tbrty years all contracts have 
 been based upon gold coin, except since the issue of legal-tender notes. 
 Now these are at par with gold coin, and thus far we have maintained our 
 silver coin at the same standard because the amount was limited and 
 the supply mainly in the Treasury. The addition of 30 millions of trade- 
 dollars to our active circulation, together with the continued coinage of 
 two millions a month of standard dollars, would soon force into use the 
 silver doUar as the sole standard of value for all paper money and for 
 aU contracts. If this is to be done it should be directly by free coinage, 
 when aU silver bullion would have an equal chance and not by discrimi- 
 nating in favor of buUion in a trade-dollar, every one of which now in cir- 
 culation in this country is a fraud upon the law. My view of this trade- 
 dollar was given last year in a letter which was published, and was 
 bettere xpressed than 1 can in this conversation. If you will allow me I 
 win hand it to the reporter. 
 
 Tebasury Department, 
 Office op the Secretary, 
 Washington, D. C, September 3, 1878. 
 
 Sir: I hasten to fulfill the promise I made you that upon my return to the depart- 
 ment I would ■write you fully concerning the issue of the trade-dollar and the present 
 depreciation in its value. 
 
 The coinage of this dollar was authorized hy the coinage act of February 12, 1873, 
 in words as follows : 
 
 "That any owner of silver bullion may deposit the same at any mint to he formed 
 into bars or into dollars of the weight of four hundred and twenty grains troy, desig- 
 nated in this act as trade-dollars, * * * and the charges for converting standard 
 silver into trade-dollars, for melting and refining, when bullion is below standard, for 
 toughening when metals are contained in it which render it unfit for coinage, for cop- 
 per used for alloy, when the bullion is above standard, for separating the gold and 
 silver when these metals exist together in the bullion, and I'or the preparation of bars, 
 shall be fixed from time to time by the Director [of the Mint], with the concurrence 
 of the Secretary of the Treasury, so as to equal, but not exceed, in their judgment, the 
 actual average cost to each mint and assay office of the material, labor, wastage, and 
 use of machinery employed in each of the cases aforementioned." 
 
 As its name indicates, the purpose of this coin was for trad^, not for circulation, 
 though by classifying it with other silver coins the law made it a legal tender to the 
 amount of five (5) dollars in any one payment. 
 
 At the time of the passage of the act the actual value of this dollar, including the 
 charge of IJ cents for coinage, was a little more than $1.04 in gold. 
 
 Under such circumstances there could be no object for the owner to put the coins 
 into circulation, and consequently they were exported mostly to China, where, from 
 lack of a circulating medium, these pieces, convenient in size, and bearing the guar- 
 antee of a great government as to their weight and fineness, obtained an extensive 
 circulation, and created a market for the silver of the Pacific States, as intended by 
 the act. 
 
 After a few months, however, an unforeseen depreciation in the value of silver bull- 
 ion occurred, and in the early part of 1876 this deiireciation reached such a point that 
 one dollar in gold would purchase more than the necessary amount of silver for a trade- 
 dollar and pay for its coinage. 
 
 Under such conditions dealers in bullion found a profit in putting trade-dollars into 
 circulation at par in the Pacific States, where the currency was upon a gold basis, but 
 the coin being a legal tender for only five (5) dollars, its circulation was necessarily 
 limited in amount as well as restricted in locality. 
 
 The people of the Pacific States, however, objected to its use at all for circulation, 
 
UKLIMITED COINAGE OP SILVER AND TRADE DOLLAR. 9 
 
 and tile attention of Congress having been called to the matter, on the 8th. of May, 
 1876, Hon. Sanuiel J. Randall, of Pennsylvania, introduced into the House a bill the 
 third section of which repealed the legal-tender quality of these coins. 
 
 On the 10th of Juno following, Hou. S. S. Cox, of New York, repo]:ted the measure 
 to the House, urging its adoption. 
 
 No objection was raised, and it became a law July 22, 1876, without modification or 
 an opposing voice or vote in either House, and is as follows : 
 
 "That the trade-dollar shall not hereafter be a legal tender; and the Secretary of 
 the Treasury is hereby authorized to limit, from time to time, the coinage thereof to 
 Buch an amoimt as he may deem sufficient to meet the export demand for the same." 
 
 Up to that time (excepting a few days), and for several months thereafter, the 
 trade-dollar cost more than a paper currency dollar, and consequently none of the 
 coins got into circulation in other than the Pacific States. 
 
 Owing to the appreciation of the paper currency, however, in the fall of 1877 the 
 trade-dollar became of less value than the paper-dollar, and in December of that year 
 a large number of them were put into circulation, at their face value, at a profit to 
 the owners of the bullion. 
 
 Apprehensive of siich misuse of the coins, on the 15th of October in that year I 
 ordered the discontinuance of their coinage at the mint at Philadelphia, and four 
 days later at the other mints. Meanwhile the Department, in reply to numerous in- 
 quiries, had unifoi-mly stated that the trade-dollar possessed only a commercial value 
 dependjng upon the price of silver bullion. 
 
 It will be seen that the coins were put into circulation months after the passage of 
 the act talsrng from them their legal-tender character, and mainly after their coinage 
 had ceased. 
 
 But in their use as money the department has never had any interest or derived any 
 profit. For the expense of their coinage the owner of the bullion reimbursed the gov- 
 ernment, and this ended the connection of the government with the transaction. At 
 no time and on no account have they ever been received, or paid out, by the Treasury, 
 and it is a cause of regret that so many of our people should have accepted them at 
 their face value, thus enabling their owners to put them into circulation at a consid- 
 erable profit. 
 
 Under date of July 25, 1878, the Director of the Mint published tables from which 
 the value of these coins can be ascertained and the terms on which they are received 
 at the mints. He does not advise any one to dispose of them at such rates. The law 
 under which the dej)artment buys bullion with whiah to coin the standard silver dol- 
 lar requires the same to be bought at the market price, and it can purchase trade-dol- 
 lars only as bullion. Possibly in time these coins will find a ready market in China 
 at nearly or quite their face value, for circulation as coin. 
 
 In this connection permit me to correct any misapprehension as to the purpose and 
 effect of the Director's circular. As early as August 24, 1876, the department informed 
 an inquirer that the trade-dollar had only a bnlUon value, and this information has 
 been repeated scores of times, and published by the press throughout the country. To 
 avoid the labor of preparing manuscript letters, the Director embodied the informa- 
 tion in a circular, adding thereto tables for the computation of such value. There 
 was no new decision involved in the circular, though possibly its publication may 
 have hastened the depreci£vtion of the coins to their true value — an event which was 
 inevitable, and could not have been much longer delayed. 
 Very respectfully, 
 
 JOHN SHERMAN, 
 
 Seoretary. 
 
 O. H. Booth, Esq., 
 
 Mansfield, Ohio. 
 
 The third objection to monetizing the trade-dollar is, that it would 
 seriously impair the public credit, and delay, if not defeat, the important 
 refunding operations that ought to occur two years hence, when 800 
 millions of United States bonds wiU become redeemable at the pleasure 
 of the government. In January last, after resumption was accom- 
 plished, it became very easy to sell our 4 per cent, bonds. We sold 
 nearly as many in the month of January as we did in two years before. 
 I can assure you that if the public mind had been convinced that the 
 trade-dollar was to be monetized, and that the government would 
 adopt the single silver standard, we could not have accomplished 
 the~ refunding of the 5-20s and 10-40s. The forbearance of Congress at 
 the last session greatly aided the Treasury Department. The shadow 
 of this fear was the only restraining motive in refunding. If by 1881 
 
10 UNLIMITED COINAGE OF SILVER AND TEADE DOLLAR. 
 
 the measures proposed shall have been adopted, it wiil not, in my opin- 
 ion, be possible to sell 4 per cent, bonds at par. But if let alone, the 
 whole 800 millions may be funded at 4 per cent, or less. Public credit 
 is exceedingly sensitive. Gold was the standard coin in contemplation 
 when all the bonds were issued. To take advantage of the unforeseen 
 fall of silver bullion to issue a silver coin worth only 85 per cent, of gold 
 coin would excite distrust and fear. To advance public credit you must 
 do all or more than was expected by your creditor when your securities 
 were issued, and you get the full benefit of this in lower rates of interest 
 and improving credit. 
 
 My general answer to your question as to the trade-dollar is that this 
 coin ought to be left precisely where it is, a piece of silver bullion con- 
 taining 420 grains of standard silver, issued for the benefit of merchants, 
 at their cost and for their benefit, for exportation ; that every one ot 
 them now in circulation is there by an evasion of the law. They were 
 issued after they ceased to be a legal tender for any amount, and their 
 circulation should be discouraged and refused by every citizen. If they 
 are now monetized it will be a discrimination of full .15 per cent, 
 against our miners of silver who have bullion to sell and in favor of the 
 Chinese and of our own merchants, who, by buying up this form of sil 
 ver bullion in China for 85 cents, can sell it to the government for a dol- 
 lar. The proposition if adopted would suddenly change our standard 
 of values from gold to silver, and would seriously impair our public 
 credit and our ability to reduce the interest of the public debt. 
 
 If, however, it is deemed politic to redeem the trade-dollar and get it 
 out of the way, the better course would be to authorize its purchase as 
 bullion, at a slight advance over other forms of bullion, to be paid for 
 with lawful money, or by the sale of bonds. This would soon retire 
 those in this country without tempting their importation from China. 
 The public would soon understand that they were not lawful money, 
 and this would stop their circulation. 
 
 Mr. Warnek. I understood you to say, Mr. Secretary, in connection 
 with the trade-dollar, that you regarded it as stamped bullion rather 
 than as United States coin. The language of the law is : " The silver 
 coins of the United States shall be a trade-dollar, a half-dollar," and so 
 on. Is there any objection to so amending that section as to strike out 
 the words "trade-dollar"? 
 
 Secretary Sherman. Fo. I think that the best way to dispose of the 
 trade-dollar is to just let it alone as so much bullion, and to coin no more. 
 I know the origin of it. It was issued simply for the convenience of 
 merchants of California, to give them a market for their silver. It was 
 stamped a trade-dollar, but neither that nor any other silver dollar was 
 put in circulation in this country until three years afterward. I think its 
 limited legal-tender quality was given it on the revision of the statutes, 
 but afterward was taken away. 
 
 Mr. Warner. This language that I have read is in the coinage biU of " 
 1873. 
 
 Secretary Sherman. Then it was grouped with other silver coins as 
 a legal tender for five dollars. The trade-dollar was coined at the ex- 
 pense of the depositor of the silver, for his benefit, and without any 
 profit to the United States. 
 
 Mr. Warner. Is there any longer any object in coining that piece at 
 all for private parties ? 
 
 Secretary Sherman. Ko, sir; and I should refuse to do it now if such 
 an application were made. 
 
 Mr. Warner. Is it not trae that the owner of the bullion really gets 
 
UNLIMITED COINAGE OF SILVER AND TEADE DOLLAR. 11 
 
 no mox'e for his bullion when it is divided into pieces of 420 grains each 
 than he would get if it were divided into pieces of 412 J grains ? Was 
 there ever any gain to the owner in having it coined ? 
 
 Secretary Sherman. Yes ; there was an advantage to him from 1873 
 np to the time when the trade-dollar fell below the market value of gold 
 coin. 
 
 Mr. Warner. But could he get any more per ounce for his silver ? A 
 bar of silver containing 100 ounces wiU make 114 trade-dollars, or 116 
 standard dollars. The owner of the bar could get no more per ounce 
 for his sUver when divided into pieces of 420 grains than when divided 
 into pieces of 412|^ grains each, could he "? 
 
 Secretary Sherman. Yes, in China he could get more. The Mexican 
 dollar was formerly the only dollar that got a foothold in China. The 
 Chinese would not take our old American dollar of 412^ grains, because 
 it was less valuable than the Mexican dollar, and therefore the trade- 
 dollar was coined, containing 420 grains, so as to make it better than the 
 Mexican dollar, and thus win its, way into circulation in China. That 
 was the object. 
 
 Mr. Db La Matyr. It was rather as mouey than as buUion. 
 
 Secretary Sherman. It was bullion put into a form more valuable or 
 more acceptable to the Chinese. 
 
 Mr. Warner. But is it not true that we got no more per ounce for 
 our silver in the end ? 
 
 Secretary Sherman. The government did not get any more. 
 
 Mr. Warner. ITeither did the bullion-dealer. 
 
 Secretary Sherman. But he got a market for his silver. They would 
 take it in this form when they would not take it in the form of our old 
 dollar. 
 
 Mr. Warner. But at the time when the trade-dollar was adopted we 
 stopped the coinage of the standard dollar. It was done in the very 
 same act. IS'ow, my point is this, that when our standard dollar would 
 not pass in China and Japan at the same value as the Mexican doUar, 
 the reason was simjDly because it contained a little less silver; but would 
 it not pass for its buUion- value, the same as all coins pass for in foreign 
 countries f 
 
 Secretary Sherman. No ; at that time the silver doUar did not pass 
 anywhere except for exportation to China or India. Several millions of 
 the old standard dollars were sent to China but they were objected to 
 by the Chinese, and therefore the merchants of California, who wanted 
 to make their silver bullion available, got Congress to order the coinage 
 of this trade-dollar which could be exported successfully. 
 
 Mr. Warner. Then you think that by dividing 100 ounces of silver 
 into pieces of 420 grains each the bullion-dealer did get more per ounce 
 for his silver than he would have got for it in pieces of 412^ grains 
 each! 
 
 Secretary Sherman. He did in China ; he did not here. He did in 
 China because they liked the form of the coin ; just as a person is will- 
 ing to pay more for one piece of palico than for another of the same 
 material because he likes the pattern. 
 
 Mr. Claflin. Did not the bullion men obtain more use for their buU- 
 ion in this form than they could in the ordinary form 'i 
 
 Secretary Sherman. They did. 
 
 Mr. Fisher. They had a commodity to sell, and by getting it coined 
 into trade-dollars they put it in a form to suit their customers. 
 
 Secretary Sherman. Yes. 
 
 Mr. Wabner. But it comes right back to this point, that if you divide 
 
12 UNLIMITED COINAGE OF SILVER AND TKADE DOLLAR. 
 
 up 100 ounces of silver into pieces of 420 grains each you get more per 
 ounce for your silver than if it were divided into pieces of 412J grains. 
 Now, would that be the case in England or France ? 
 
 Secretary Sherman. No ; but we did not send them to England or 
 France at that time. 
 
 Mr. Warner. But when we export coin don't all foreign countries 
 assay it and determine its value according to the quantity of metal that 
 it actually contains ? 
 
 Secretary Sherman. All European countries do and Japan does now; 
 but in China they took the coin of a foreign nation and circulated it. 
 They put a kind of stamp upon it, which did not impair its value at all, 
 but served to naturalize it, as we might say, and then they circulated it. 
 
 Mr. Warner. Our trade-dollar is unlike any other coin issued by any 
 country. It has a little more value than the Japanese yen, and it has 
 a little more value than the Mexican silver dollar. 
 
 Secretary Sherman. Yes, it has a little more value than the Mexican 
 silver dollar. I do not know that any other coin contains just the same 
 amount of bullion. None of the trade-dollars have been issued lately, 
 and none can be issued now. 
 
 Mr. Warner. Then I understand that you think there is no objection 
 to striking out the trade-dollar from our coinage? 
 
 Secretary Sherman. . Not the slightest. I am in favor of that course. 
 In October, 1877, 1 issued an order, under the authority which the law 
 gave me, stopping the coinage of the trade-dollar. The reason was that 
 at that time, by the gradual depreciation of silver, the gold value of 
 the trade-dollar was less than par, and there was no demand for it for 
 exportation. 
 
 Mr. Olaelin. The law gave you power to stop the coinage of the 
 trade-dollar? 
 
 Secretary Sherman. The law leaves it discretionary with the Secre- 
 tary of the Treasury. 
 
 Mr. Claelin. So that if a demand for them should spring up, you 
 could issue them again ? 
 
 Secretary Sherman. Yes ; the amount to be issued is left discretionary 
 with the department. 
 
 Mr. Claflin. And if a man now should ask you for trade- dollars, you 
 would not make them unless you had evidence that he wanted to send 
 them abroad? 
 
 Secretary Sherman. No ; the language of the law is that they are to 
 be coined for exportation only. 
 
 Mr. Warner. The present language of the statute is, " The silver 
 coins of the United States shall be a trade-dollar," &c. 
 
 Secretary Sherman. Yes ; but the act of July 22, 1876, aiTthorizes 
 the Secretary to limit the coinage of the trade-dollars to such an amount 
 as he may deem sufScient to meet the export demand for them. 
 
 Mr. Warner. I wish to call your attention now, Mr. Secretary, to sec- 
 tion 3511 of the Eevised Statutes, which is section 1 of the bill now 
 before this committee. The law as it now stands leaves out the word 
 " unit," which, I believe, up to 1873, always followed both the gold and 
 silver coins, and substitutes the words " which at the standard weight 
 of 25.8 grains shall be the unit of value." That you understand, I sup- 
 pose, as changing the standard from both metals to gold alone. 
 
 Secretary Sherman. I think that your insertion in this bill of the 
 words " or unit" is substantially the same as the language of the original 
 section. But that is a matter of criticism. 
 
UNLIMITED COINAGE OP SILVER AND TEADE DOLLAR. 13 
 
 Mr. Waenee. The language now is " which at the standard weight 
 of 25.8 grains shall be the unit of value. 
 
 Secretary Sherman. Well, I think that is substantially the same. 
 There can be but one unit. If you mean the word unit in its singular 
 sense you can have only one. 
 
 Mr. Waenbr. But a silver dollar may be a unit as well as a gold 
 dollar "2 
 
 Secretary Sherman. Yes, you might make it " units," in the plural. 
 
 Mr. Waener. But a silver dollar may be a unit as well as a gold dol- 
 lar, may it not ? Whether both the units are of the same value or not, 
 is another question. 
 
 Secretary Sherman. That is a question which I suppose I need not 
 discuss here. 
 
 The Chairman. Mr. Warner's idea is that this legislation, making 
 the gold doUar the unit of value, was the turning point in our monetary 
 system. 
 
 Mr. Warner. Before that the standard rested upon both metals, or 
 either, alternately, if they varied in value. 
 
 The Chairman. One was not made the unit of value to the exclusion 
 of the other ; but when this change was made silver was demonetized, 
 and that was the turning point in our monetary system. 
 
 Secretary Sherman. I would suggest to Mr. Warner that he had bet- 
 ter say " a unit." But what you want to get at is my opinion as to 
 whether we should have a single or a double standard. 
 
 Mr. Warner. Yes, we wiU come to that later ; but, at this point, I 
 want to ask another question. Gold dollars, I believe, are now recoined, 
 or it is the law that they shall be if they fall in weight more than one- 
 half per cent, below the standard fixed by law and the limit of tolerance. 
 
 Secretary Sherman. Yes, the law provides for recoinagein such cases. 
 
 Mr. Warner. What limit of tolerance would you advise for silver 
 coins'? I will ask the Director of the Mint the same question. 
 
 Secretary Sherman. I have no very accurate knowledge about these 
 technical questions ; and I think you can get that information better by 
 asldng the assayer or some of the technical officers of the mint, than 
 you can from us. 
 
 Mr. Warner. The States of the Latin Union make it one per cent. 
 Should that be adopted here with reference to the silver dollar if it is 
 proposed to coin silver dollars unlimitedly ? 
 
 Secretary Sherman. Our coinage is thought to be the best in the 
 world now, because our limit of tolerance is very low, and the actual 
 tolerance is very slight. At least that has been claimed for our coinage. 
 But Mr. Eobert Patterson, of Philadelphia, formerly superintendent of 
 the mint, or Mr. Snowden, the present superintendent, can give you 
 more definite information on that subject than I can. 
 
 Mr. Warner. The most important feature of this bill is, of course, in 
 section 3, proposing to change section 3520 of the Eevised Statutes, 
 which now reads as follows : " Any owner of silver bullion maj'^ deposit 
 the same at any mint, to be formed into bars or into dollars of the weight 
 of 420 grains Troy, designated in this act as trade-dollars." 
 
 Secretary Sherman. I suppose you would rather have me state my 
 view as to whether or not we should have a double or single standard? 
 
 Mr. Warner. Yes, your view in regard to restoring silver to unlim- 
 ited coinage. 
 
 Secretary Sherman. It would be a great object of national desire if 
 we could restore silver and gold to free coinage; but it is one of the 
 most difficult and delicate financial operations that you can propose. 
 
14 UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 
 
 It has been more debated tlian almost any otber question in the whole 
 range of financial discussion. My idea is that you cannot do it; that it 
 is not possible to do it, and that this law would not do it, unless you 
 make the ratio of the two metals as fixed by the law correspond as 
 nearly as may be to the market value of the two coins. 
 
 Mr. WAEJSTEE. Do you think that ijracticable? Is the market A^alue, 
 under the present coinage laws of Europe, so stable that it would be 
 possible for one country alone to do that? 
 
 Secretary Sherman. I will come to that in a moment. It is undoubt- 
 edly an important point. Now the attempt to make common or free 
 coinage of the two metals, when there is a wide divergence between the 
 legal ratio and the market ratio, has utterly failed in the past in many 
 countries and in dttterent ages. It is no use to try to do it. You can- 
 not do it. The inevitable result wiU be that the cheaper bullion will fill 
 all the channels of circulation, and that instead of a bi-metallic money 
 of two metals you will have a mono-metaUic money of the cheapest. 
 That is an axiom, which it is hardly worth while to discuss because it 
 has been proved so many times. 
 
 ISTow let me go a step farther. If the effect of this law would be to 
 bring silver and gold to the relative standard that you propose, it would 
 be a great object of desire, and nobody would be more in favor of it than 
 myself, but I am sure (expressing an opinion pretty strongly) that the 
 only eiiects of its adoption would be to bring upon us the surplus silver 
 of other nations, of Germany and of France, where there is supposed to 
 be four hundred million of dollars of silver, and also to relieve England 
 from her embarrassments about India; and that our gold would flow from 
 us until we would be practically and substantially at the single silver 
 standard upon its bullion value. 
 
 Mr. Warnbe. Upon that point I would like to ask you how, under 
 this bill, which proposes the unlimited coinage of silver, silver bullion of 
 other countries would come here any more than it does now. Will an 
 ounce of silver bullion, or a pound or a ton, exchange for any more of 
 our commodities after being coined under the provisions of this bill than 
 noAv; and if not, why would it come here then any more than it does now "? 
 
 Secretary Sherman. Because silver being the cheaper metal, all the 
 balances of trade will be met and all commodities bought from this 
 country will be paid for in that coin which is the cheaper, and the result 
 would be that gold would be as thoroughly demonetized as silver was 
 demonetized from 1834 until 1873. 
 
 Mr. Warner. Would that change the value of silver buUion as com- 
 pared with commodities in the Uuited States? 
 
 Secretary Sherman. N'o, but it would reduce the value of the silver 
 dollar as compared with our commodities. 
 
 Mr. Warner. Then why would silver come here in the form of bullion 
 from other countries any more after being coined than it does now? 
 
 Secretary Sherman. Simply because foreign nations would pay for all 
 they bought of us in the cheaper coin, and all our values would come to 
 be measured by the standard silver dollar, 412J gi-ains of silver bullion. 
 Now they are measured by 25.8 grains of gold, but if you adopt the 
 double standard it means the single standard of the cheaper metal, be- 
 cause in the nature of things you cannot maintain two standards unless 
 you have two equivalent values. Mr. Warner's object is aU right, and I 
 agree Avith him perfectly in desiring it, but I believe that any attempt to 
 attain it by depending upon the present ratio of 16 to 1 would be as 
 futile as the attempt of King Canute to check the ebb and flow of the 
 sea. It is one of those operations of nature which human government 
 
UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 15 
 
 cannot control. But if this government would adopt the standard or 
 relation between the two metals which conforms as nearly as may be — 
 you cannot come to it exactly — but as nearly as may be to the relative 
 value of the two metals, then I believe it would be a very great object 
 of desire, because then, if the surplus silver of the world came to us, we 
 would get it at its market value and not at an exaggerated value. The 
 fixed ratio resulting from this action would probably prove to be a close 
 approximation to the market ratio for a considerable period of time. 
 If you ai)proximi»te the true relation within one or two cents, it may 
 prove for perhaps a hundred years about the true ratio between silver 
 and gold. In France the ratio of 15 J to 1 adopted in 1803 was very near 
 the market rates for a long time. 
 
 If this government is now to adopt a ratio which wUl fulfill these con- 
 ditions, the present market values of the two metals will have to be 
 taken as the basis. 
 
 Mr. Claplin. Do you mean our government alone or the commercial 
 nations acting together 1 
 
 Secretary Sherman. That is a question. Just now there is evidently 
 a strong desire in several nations to adopt a new relation. Great Britain 
 is threatened with great disasters from different standards in England 
 and India. Among French statesmen there is a desirel for a readjust- 
 ment of this question, and I beUeve that if we hold firmly to our present 
 position of a limited coinage of silver, or if we adopt the present market 
 value of gold and silver as our ratio, we will bring the other nations to 
 adopt that ratio. The conference that was had last summer really pro- 
 duced a great deal of good. 
 
 Mr. Waenbk. Do you think that if we should adopt the market ratio 
 of London to-day, there is any more probability that other nations will 
 come to us at that ratio, or as great a probability, as there would be if 
 we should adopt the ratio of 15|- to 1, the ratio now existing between 
 most of the silver and gold coin of Europe? 
 
 Secretary Sherman. The trouble is that the ratio of 15 J to 1 is not the 
 true ratio between the two metals, owing to two or three causes. 
 
 Mr. Warner. Is not the change caused mainly by the recent German 
 and the American laws, and the suspension of silver coinage in Europe? 
 
 Secretary Sherman. No ; it is caused mainly by the falling off' of the 
 enormous drain of silver to India and China, by the increased production 
 of silver, and the estimated enormous yields that are to come in a few 
 years from the mines that are now being developed in our Western coun- 
 try, and also by the action of the German and the French Governments 
 in limiting the coinage of silver. The English first commenced this in 
 1815 ; then came the action of France and other nations in the forma- 
 tion of the Latin Union, and then the action of the German Govern- 
 ment, and otir own coinRge act in 1873. 
 
 Mr. Warner. But is it not true that in the early part of this century 
 the proportion of the production of silver to gold was much greater 
 than the present proportion ? 
 
 Secretary Sherman. Yes, that is true; but the aggregate of exchanges 
 as well as values have enormously changed since then. The nominal 
 prices of things now, except in cases where human devices have cheap- 
 ened commodities by facilitating their production, are two or three times 
 as great as they were in the beginning of this century. The use of gold 
 to settle balances of trade has enormously increased. 
 
 Mr. Warner. To recur to the opinion which you have expressed that 
 und6r free coinage we should be put at a disadvantage in our trade with 
 other countries, or be liable to have our commodities taken from us at 
 
16 UNLIMITED COINAGE OF SILVEEAND TKADE DOLLAR. 
 
 less value than we are getting for them now: do you really think that 
 that would be the case ? Would our people part with more commodi^ 
 ties for the same weight of silver under free coinage than they do now? 
 
 Secretary Sherman. No ; but we would be reduced to a single silver 
 standard instead of what we have now — a single gold standard — and we 
 would gain nothing. We are now competing successfully with foreign 
 nations on the gold standard, but we would then be competing at the 
 disadvantage of having an inferior metallic standard. 
 
 Mr. Claplin. And would not that single standard be changing con- ' 
 stantly in comparison with the gold standard of Europe, just as our cur- 
 rency has been ? 
 
 Secretary SHEEMAisr. Yes. 
 
 Mr. Wakneb. Is it not a fact that the value of gold now, under the 
 German law demonetizing silver and under our law of 1873 and under 
 the laws of other States in Europe suspending the coinage of silver — ^is it 
 not the fact that under these laws the value of an ounce of gold is very 
 difl'erent from what it would have been if those laws had never been 
 passed °? And if that be true, then, by those laws (including our own 
 law) has not the value of gold as a standard been changed ? 
 
 Secretary Sherman. I do not think that our law has had the slight- 
 est effect in that respect. At the time the law was passed there were no 
 silver dollars in circulation. But all the causes that I have mentioned 
 have contributed to disturb the former relation between gold and silver. 
 If you ask me whether that has not been injurious, and has not contrib- 
 uted to raise the relative price of gold, I say, frankly, yes ; but how can 
 we single-handed help it ? We can only conform the law to existing 
 facts. In adopting a new ratio we only do what has been done many 
 times — ^what our ancestors did ; we must weigh and adjust carefully the 
 present relative value of the two metals. Between the time of the fram- 
 ing of the Constitution and the passage of the act of 1792 experiments 
 of the most delicate character were carried on at different places for the 
 purpose of ascertaining the real comparative value of the two metals, 
 and when Hamilton ascertained that, he fixed the coinage ratio at pre- 
 cisely the market ratio. He said that it was important to maintain the 
 two metals in circulation, but that it could be done only by adopting the 
 market value as the legal ratio, and in this way the ratio was fixed at 
 15 to 1. On the same basis the French, a little later, fixed it at 15J to 
 1. This divergence left the silver here and gold went abroad. We tried 
 to correct this in 1834 by making the ratio 16 to 1, and then the silver 
 disappeared and gold came into circulation here. 
 
 Mr. Warner. But is it not true that what you call the market value 
 depends very largely upon the laws of the different States establishing 
 the ratios ? 
 
 Secretary Sherman. It depends somewhat upon those laws, but laws 
 must recognize facts ; natural facts are never controlled by laws. Law 
 cannot give value to a grain of sand. 
 
 Mr. Warner. But if the laws of different countries give greater use 
 to one metal and less to another, then do they not contribute directly to 
 determining the relative market value of the two ? 
 
 Secretary Sherman. If the passage of laws was the sole operating 
 cause of the present divergence of market value from the old ratio, then 
 the re-enactment of the old laws might restore the old ratio ; but it is 
 only one and the least of several causes, and therefore you must exam- 
 ine the other causes and establish your new ratio so as to get at the 
 market value irrespective of all laws. Your laws must recognize market 
 values, for they cannot control them. 
 
UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 17 
 
 Mr. Waunek. Suppose we should establisli the market ratio to-day, 
 and to-morrow or next month France should demonetize silver and offer 
 her stock on the market, and call for gold to take its place iu the cur- 
 rency of Prance, where would the American ratio be then? 
 
 Secretary Sherman. My answer to that is that I would wait in pa- 
 tience and expectancy until Prance and England ask us, as I believe 
 they will within two years from this time, to jpiu them in making a new 
 ratio ; or, if we are compelled to make a new ratio, it should be, such' a 
 one as wUl not induce other nations to send tp ns the depreciated metal 
 at above its market value as bullion. We are strong, but we are not 
 strong enough to make 16 ounces of silver eqnal to 1 ounce of gold. The 
 inevitable result of such an attempt would be that we would lose our' 
 gold and have a single standard of silver coin. If, on the contrary, we 
 adopt a ratio of about 18 to 1, other nations would not bear the loss of a 
 sale at that rate of their silver coin. The true way is to wait, using sil- 
 ver at the present ratio only to the extent that is demanded for conven- 
 ient use, and no more. 
 
 Mr. Wahnee. Under existing laws, must it not follow as a necessary 
 consequence that gold will still further appreciate as compared with 
 property and commodities generally ? Prom the very nature of things, 
 must it not be so, and, consequently, will we not be subject to a con- 
 stant appreciation of gold under our standard if we leave it as it is ? 
 
 Secretary Sherman. My impression is that commercial exchanges 
 being conducted, as they are now, very largely by paper money or pub-' 
 lie securities^ there will not be any further appreciation ; but that is a 
 matter of which you, gentlemen, can judge as well as I. Now, I wish 
 to say this : All our Treasury operations, which have been very heavy 
 during the last few months, have been conducted without the use of gold 
 or silver. At the end of the first fifteen days in April, after we had paid 
 out about $80,000,000 for called bonds, I made inquiry' to ascertain how 
 we had paid it, and whether we had used coin, and it turned out that no 
 coin whatever had been used. Sixty-five miUions of the. amount was 
 paid by exchanges of bonds for bonds, and the remaining flfteen.millions 
 by drafts which were paid through the clearing-house. 
 
 Mr. Warner. Between countries only balances are at any tiine paid 
 in money, I believe, but nevertheless you do not mean to intimate, I 
 suppose, that if half of the metallic money was destroyed prices would 
 not be affected? 
 
 Secretary .Sherman. Ko. 
 
 Mr. De LaTMatyr. Our bonds that are out we have contracted to pay 
 in coin, and our silver was coined at its present value. iSTow, do "we not 
 appreciate the bonds when we appreciate the.valueof the coin in which 
 we agreed to pay them 1 
 
 Secretary Sherman. Our bonds were sold at a time when the gold 
 unit was, as it still is, the standard of value. The silver coin has not 
 for nearly forty years been the standard, but, on account of the limited 
 amount now in circulation, has been lifted up to the* gold value, in spite 
 of its market depreciation. It would seem to me that after we have 
 brought our paper, our bonds, and our silver up to the gold basis, the 
 better way is to adhere to it rather than to take advantage of the de- 
 preciation of silver to pay in a coiu of less market value than was 
 received for our bonds. 
 
 Mr. De La MaI'tr. You think it would be dishonest and a measure 
 of repudiation to do otherwise? 
 
 Secretary Sherman. I do not like to use the word dishonest, because 
 I know a great many honest men who do not think that such a measure 
 H. Mis. 11 2 
 
18 UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 
 
 would be dishonest ; but I am quite satisfied that it would be very bad 
 public policy, and that if we should adopt it we would suffer terribly in 
 consequence, not only in public credit but in actual loss of trade and 
 money. 
 
 Mr. Warner, The Secretary has expressed the opinion here that un- 
 limited coinage of silver would operate to expel gold from the country. 
 The question I want to ask is whether, under the present law requiring 
 the coinage of not less than two miuions of silver a month, the same 
 effect wiU not be produced in a soniewhat longer time, and whether to 
 avoid this result it will not become necessary at no distant day to change 
 the present law, and whether the Secretary would not recommend a 
 change ? 
 
 Secretary Sherman. I do recommend a change of the present law. 
 I think with you that the coinage of silver, dollars at the rate of' two 
 millions a month would finally (it might take three or four or five years) 
 so load us down with depreciated silver coin that, by the necessities' of 
 the government, it will be forced into circulation and be depreciated to its 
 bullion value ; but I take it that the good sense of Congress, enlightened 
 as it will be by public discussion, will find some solution of this silver 
 question. My hope is that you wiU suspend the coinage of the sUver 
 ^dollar, which now the people refase to take, or at once return to the Treas- 
 ury when issued, and await a negotiation for a new ratio; or, if that is 
 deemed unadvisable, that it wiU increase the weight of the silver dollar 
 so as to make it fairly equal in market value to the gold dollar. Then 
 I would be witling to take the risk of the free coinage of both metals. 
 
 Mr. Olaplin. But as you purchase on bullion value now, the govern- 
 ment would not suffer except by the loss" of interest, unless there was 
 still further depreciation. 
 
 Secretary Sherman. No. 
 
 Mr. Wood. What would be the effect of passing this bill, in your 
 opinion, Mr. Secretary? 
 
 Secretary. Sherman. I think I have already answered that. I thiuk 
 the effect would be to bring us to the single sUver standard tod the ex- 
 pulsion of gold. , 
 
 Mr. Warner. The coinage of our silver dollar has really the same 
 effect upon gold, has it not, that an increase of two millions a month'iof 
 legal-tender notes would have ? 
 
 Secretary Sherman. 'So; because we cannot get the silver dollars 
 into circulation. We have tried it in everyway, but we cannot succeed. 
 
 Mi. Vanoe. Can't you pay them out for bonds ? 
 
 Secretary Sherman. There would be no object in that. They would 
 come right back. 
 
 Mr. Warner, But with unlimited coinage the government would not 
 have that question to meet at aU. 
 
 Secretary Sherman. No. 
 
 Mr. Warner. It would simply be with the public to say whether they 
 would have the silver or not. 
 
 Secretary Sherman. O, if Congress says so, we can make the pub- 
 lic take the silver. 
 
 Mr. Warner. But under unlimited coinage the government would 
 have nothing to do with putting coins into circulation 1 
 
 Secretary Sherman. No; but there would be no gold coin at all; not 
 a dollar. 
 
 Mr. Waener. But that you have stated will sooner or later be' the 
 result under the present law. 
 
 Adjourned. 
 
APPENDIX, 
 
 MONETAEY CONVENTION CONCLUDED DECEMBEE 23, 1865, BETWEEN 
 PRANCE, BELGIUM, ITALY, AND SWITZERLAND. RATIFIED AT PARIS 
 JULY 23, 1866. 
 
 [Translated by Jilrs. A. J. Warner.] 
 
 / 
 His Majesty the Emperor of Prance, His Majesty King of Belgimm 
 His Majesty King of Italy, and the Swiss Confederation, equally de" 
 sirous of establishing a more perfect harmony in their monetary legis" ' 
 lation to remedy th.e inconveniences which, proceed from- the diversity . 
 of standard in their silver money of account in the bustaess transac- 
 tions between the inhabitants of their respective States and for the 
 furtherance of a uniformity of weights, measures, and coins, have 
 determined to conclude a convention for this purpose, and have ap- 
 pointed commis^ionei's, with full powers, as foUows : 
 
 [Here follow the names of the commissioners, with their titles :] 
 
 Who, after exhibiting their respective credentials, and finding them in 
 good and due form, concurred in the following articles : 
 
 Art. 1. France, Belgium, Italy, and Switzerland are constituted a 
 State of Union in relation to the weight, fineness, model, and circulation 
 of their gold and silver coihs. 
 
 ilfothing is changed at present in the legislation respecting deba.sed 
 money in any of the four States. 
 
 Ajri^. 2. The high contracting parties agree neither to coin nor aUow 
 to be coined, with their imprint, any gold coins excepting pieces of a 
 hundred francs, of fifty francs, of twenty francs, of ten francs, and of 
 five francs, fixed as to weight, fineness, tolerance, and diameter as fol- 
 lows : 
 
 
 -Weight. 
 
 Kneness. 
 
 
 Kind of pieces. 
 
 . Correct 
 weigM. 
 
 Toleranfie of 
 weiglit. 
 
 Finenesa. 
 
 Tolerance of 
 fineness. 
 
 Diameter. 
 
 Francs. 
 ( 100 
 50 
 Gold i 20 
 
 10 
 5 
 
 efratnmes. 
 
 32, 258. 06 
 
 16, 129. 03 
 
 S, 451. 61 
 
 3, 225. 80 
 
 1, 612. 90 
 
 Thouliwndths'. 
 \ 1 
 
 2 
 3 
 
 Thousandthe. 
 \ 900 
 
 Thousimdths. 
 2 
 
 MiUvmetrea. 
 ( 35 
 28 
 s 21 
 1 19 
 I 17 
 
 They shall receive without distinction into their pubMc treasuries the 
 pieces of gold coined according to the preceding conditions in either of 
 the four States, with the right, however, to refuse those pieces where 
 weight is reduced by wear one-half per cent, below the tolerance indi- 
 cated above, or from which the imprint has disappeared. 
 
20 
 
 UNLIMITED COINAGE OF SILVER AND TEADE DOLLAR. 
 
 Art. 3. The contracting gOYernments bind themselves neither to fab- 
 Ticate, nor permit to be fabricated, any silver coins excepting pieces of 
 five francs, in weight, fineness, tolerance, and diameter set out below: 
 
 
 Weight. 
 
 Kneness. 
 
 
 Kind of piece. 
 
 Correct 
 ■weiglit. 
 
 Toleismoe of 
 "weight. 
 
 Fineness. 
 
 Tolerance of 
 fineness. 
 
 Diameter. 
 
 JPrancs. 
 Silver 5 
 
 Ora/ni'mea, 
 25 
 
 Thouscmdths. 
 3 
 
 Thousandths. 
 900 
 
 Thousandths. 
 2 
 
 MUlimetres. 
 37 
 
 QSiey shall reciprocally receive the said pieces in their pubUc banks 
 under the right to exclude those of which the weight has been reduced 
 by wear one per cent, below the tolerance indicated above, or from which 
 the imprint has disappeared. 
 
 Art. 4. The contracting parties shall hereafter fabricate only pieces 
 of silver of two francs, of one franc, of fifty centimes, and of twenty 
 centimes, under the conditions of weight, of fineness, of tolerance, and, 
 diameter determined below. 
 
 
 
 Weight. 
 
 Fineness. 
 
 
 Kind of pieces. 
 
 Correct 
 weight. 
 
 Tolerance of 
 weight. 
 
 Fineness. 
 
 Tolerance of 
 fineness. 
 
 Diameter. 
 
 Frimee. 
 (■2 
 
 Silver ll 
 
 (.0 
 
 Oentvmes. 
 00 
 00 
 50 
 20 
 
 Grammes. 
 
 10 00 
 
 5 00 
 
 2 50 
 
 1 00 
 
 Thousandths. 
 
 } « 
 7 
 10 
 
 Thousandths. 
 1 835 
 
 Thousandths. 
 3 
 
 MiUvmetreii. 
 f 27 
 1 23 
 
 1 18 
 16 
 
 Those pieces must be recoined by the governments which issue them 
 when they become reduced by wear five per cent, below the tolerance 
 indicated above, or whenever the imprint shall have disappeared. 
 
 Art. 5. The pieces of silver of two francs, of one franc, of fifty cen- 
 times, and of twenty centimes, coined under conditions differing from 
 those indicaited in the preceding article, must be retired from circulation 
 before January 1, 1869. 
 
 The time is extended until January 1, 1878, for the pieces of two francs 
 and of one franc, put in circulation in Switzerland by virtue of the law 
 of January 31, 1860. 
 
 Art. 6. The pieces of silver fabricated under the conditions of Article 
 4 shall be legal tender between private persons of the State which has 
 (joined them up to the sum of fifty francs for each payment. 
 
 The State that puts them into circulation shall receive them from citi- 
 zens without limitation of quantity. 
 
 Art. 7. The public treasuries of each of the four countries shall receive 
 the silver pieces coined by any of the other contracting States, conform- 
 ably to Article 4, up to the amount of one hundred francs for each pay- 
 ment made to the said treasuries. 
 
 The Governments of Belgium, of 'France, and of Italy shall receive 
 upon the same terms, until January 1, 1878, the Swiss pieces of two 
 francs and' of one franc emitted in virtue of the law of January 31, 1 860, 
 and which during the same period are similar in all respects to the pieceis 
 coined under the conditions of Article 4. The whole is subject to the 
 provision relative to wear given in Article 4. 
 
UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 21 
 
 Akt. 8. Each of the contracting governments pledges itself to take 
 from private parties or from the public banks of the other States the 
 money of account of silver which has been put in circulation, and to ex- 
 change it for an equal value of legal-tender money (pieces of gold or of 
 silver five-francs) with the condition that the sum presented for exchange 
 shaU not be less than one hundred francs. 
 
 This obligation shall continue two years after the expiration of the 
 present treaty. 
 
 Art. 9. The high contracting parties shall put in circulation coins of 
 silver of two francs, of one franc, of fifty centimes, and of twenty cen- 
 times, coined under the conditions given by Article 4 to the amount only 
 of six francs for each inhabitant. 
 
 The quantity shall be determined by taking the last census made in 
 each country and the presumed increase of population untU the expira- 
 tion of the present treaty. 
 
 Table for the various States. 
 
 France 239, 000, 000 francs. 
 
 Belgium : 3-2, 000, 000 francs. 
 
 Italy 141, 000, 000 francs. 
 
 Switzerland 1 17, OflO, 000 franca. 
 
 There shall be deducted from the foregoing sums, which the govem- 
 ' ments have a right to coin, the sums already in circulation: 
 
 For Prance, in virtue of the law of May 25, 1864, in pieces of fifty 
 centimes and twenty centimes, about sixteen milUons. 
 
 For Italy, in virtue of the law of August 24, 1862, in pieces of two 
 francs, one franc, fifty centimes, and twenty centimes, about one hun- 
 dred millions. 
 
 For Switzerland, in virtue of the decree of January 31, 1860, in pieces 
 of two francs and one franc, about ten million five hundred thousand 
 francs. , 
 
 Art. 10. The date of the coinage shall be inscribed upon the pieces of 
 gold and silver coined hereafter in the four States. 
 
 Art. 11. The contracting governments shall communicate annually 
 the proportion of their circulation of gold and silver, the account of re- 
 demption and recoinage of their gold and silver money, the account of 
 the redemption and recoining of their old coins, and the whole situation, 
 and all the administrative documents relating to money. 
 
 They shall give an impartial account of all the facts which concern 
 the mutual cfrculation of their gold and silver coins. 
 
 Art. 12. The right to join the present convention is reserved for any 
 other State which may accept the obligations and adopt the monetary 
 system of the Union, as far as concerns their gold and sUver coins. 
 
 Art. 13. The execution of the mutual obligations iacluded in the 
 present convention, as far as may be, is subject to the methods and regu- 
 lations established by the laws of the contracting States, which are con- 
 sidered to promote the fulfillment, and which shall cause it to be carried 
 into effect with the least possible delay. 
 
 Art. 14. The present convention shall remain in force untU January 
 1, 1880. 
 
 If one year previous to that time no notice has been given, it shall 
 remain binding by right for a further period of fifteen years, and so con- 
 tinue for periods of fifteen years, except notice be given. 
 
 Art. 16. The present convention shall be confirmed and the ratifica- 
 tion shall be exchanged at Paris within six months, or earlier, if possible. 
 
22 UNLIMITED COINAGE OP SILVER AND TRADE DOLLAR. 
 
 In proof of- which the respectivte commissioners have signed the present 
 convention and affixed their seals. 
 Done and four copies made at Paris, December 23, 1865. 
 For France : 
 
 E. DB PAEIBTJ. 
 
 PBLOUZE. 
 For Belgium : 
 
 FOETAMPS. 
 
 A. KREGLmGER. 
 I*or Italy: 
 
 ARTOM. 
 
 PRATOLOKGO., 
 i&or Switzerland: 
 
 KERliT. 
 
 FBER HERZOG. 
 
 MANIFESTO RELATIVE TO THE COINAGE OF SILVER DURING THE YEAR 
 . 1876, IN SWITZERLAND, BELGIUM, FRANCE, ITALY, AND GREECE*. 
 
 y [Translated "by James Grilmore for tlie Omoinnati CoTmnercial.] 
 
 The undersigned, delegates of the, Governments of Switzerland, of 
 France, of Italy, and of Greece, in conference assembled, in confer- 1 
 mity with Article 5 of the Monetary Manifesto of February 5, 1875,. and 
 regularly authorized for this purpose, have decided on the following 
 plans, subject to the approval of their respective governments : 
 
 Article 1. The contracting governments agree, for the year 1876, . 
 neither to coin nor allow to be coined any five-franc pieces, according to 
 conditioiis determined by Article 3 of the compact of December 23, 1865, 
 excepting for an anipunt not exceeding the sum of 120,000,000 of francs, 
 fixed by Article 1 of the supplementary compact of January 31, 1874. 
 
 Art. 2. The said sum of 120,000,000 francs is distributed as follows: 
 
 ' , !Franes. 
 
 1. For Belgium : 10,800,000 
 
 ' France 54,000,000 
 
 Italy 36,000,000 
 
 Switzerland 7,200,000 
 
 2. As to Greece, which acquiesced in the compact of December 23, 1865, 
 by a manifesto of the 26th of September, 1868, the complement fixed for 
 this government, in proportion to that of the other contractiug powers, 
 is fixed at the sum of 3,600,000 francs. 
 
 3. Beyond the complement fixed in the paragraph preceding, the Gov- 
 ernment of Greece is exceptionally authorized to cause to be coined and 
 to put into circulation, on her territory, during the year 1876, a sum of 
 8,400,000 francs in silver pieces of five francs, said sum being intended 
 to facilitate the withdrawal of the different coins at present circulating,' 
 and to substitute for the same five-franc pieces, according to the con(Sr 
 tions, determined by the compact of 1865. 
 
 Art. 3. Are deducted from the complements fixed in the fitrst para- 
 graph of the preceding article the silver coin certificates delivered up to 
 this date, according to the conditions determined by Article 6 of the 
 manifesto of February 5, 1875. 
 
 ■ Is likewise deducted from the total sum of 12,000,000 of francs assigned ■ 
 to Greece, by paragraph 2 and 3 of the preceding article, the sum of 
 2,500,000i. which the Government of Greece had been authorized to 
 cause to be coined in 187G as equivalent of the silver coin certificates 
 
UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 23 
 
 wMch the other contracting governments have been allowed to issue 
 against silver bullion. 
 
 Art. 4. A new monetary conference will be held at Paris in the month 
 of January, 1877, between the delegates of the contracting governments. 
 
 Art. 5. Until after the meeting of the conference referred to in the 
 ■preceding article, there shall be delivered no silver coin certificates for 
 the year 1877, except for a sum not exceeding the half of the complements 
 fixed by the paragraphs 1 and 2 of the Article 2 of the present man- 
 ifestol 
 
 Aet. 6. The Article 11 of the compact of the 23d December, 1865, in 
 regard to the exchange of correspondence touching monetary facts and 
 documents, is completed by the following arrangement : 
 
 The contracting governments will give to each other, mutually, advice of any facta 
 which may reach their knowledge on the suhject of adulteration and counterfeiting of 
 their gold and silver coins in the countries belonging or not belonging to the Monetary 
 Union, especially in regard to the processes employed, prosecutions brought, and the 
 suppressions arrived at. They will confer with each other on the measures to be taten 
 in common in order to prevent the adulterations and counterfeits, cause the same to 
 be suppressed in all pteoes where they have been manufactured, and hinder the repe- 
 tition of the same."" 
 
 Art. 7. The present manifesto will be in force from the moment that 
 notice thereof shaU have been made, in accordance with the special laws 
 of each one of the five governments. 
 
 In faith of which the respective delegates have signed the present 
 menifesto, and have thereto placed the seals of their respective States. 
 
 Done and five copies made at Paris, 3d February, 1876. 
 
 For Switzerland, 
 
 k:een, 
 febr-heezog. 
 
 For Belgium, 
 Far France, 
 
 For Italy, 
 For Greece, 
 
 AD LAINCTELETTE, 
 
 BK DE PITTEFES HIBGARTS. 
 
 DUMAS, 
 
 DB SOUBBTEAN", 
 
 CH. JAGEESCHMIDT. 
 
 0. BAEALIS, 
 EESSMAN. 
 
 N. S. DELTANNI. 
 
 RENEWAL OF THE LATIN UNION. 
 
 By Gbobgk Waxker. 
 [From the Bankers' Magazine for January, 1879.] 
 
 The Paris Journal des Debats, of November 18th, contains an article, 
 by Baron Jules de Eeinach, on the new treaty which has been agteed 
 upon by the representatives of Belgium, Franeej Greece, Italy; and 
 Switzerland, by which the so-called Latin Union is continued in exist- 
 ence until the Ist of January, 1886. The conference held at Paris for, 
 this purpose closed its eleventh and last session on the 5th of November. 
 The unprecedented number of its sittings indicates that its discussions 
 were more than usually interesting. M. de Eeinach describes the con- 
 ference as differing essentially from that of 1865. The latter was, in a 
 
24 TrefLrMITED POISTAGE OF SILVER AND TRADE DOLLAR. 
 
 strict sense, a, monetary conference, in whicli no questions of principle 
 were put forward or debated. I-tg sole object was to assimilate the coins 
 of several contiguous countries, so as to give them an international cir- 
 culation and a legal-tender character within the territory of the treaty- 
 making States. The conference of 1878 was of quite another chajracter; 
 it was a politico-economical conference, and the president, who is also 
 one of the presiding of&oers of the Paris Society of Political Econoniistfe, > 
 might well have imagined himself at one of the monthly meetiags of that . 
 body. . 
 
 The precise nature of these economical discussions can only be con- 
 jectured until the publication of the jjroc^s-werAattiP, which wiU probably 
 not take place tiU the action of the conference has been submitted to, the 
 legislatures of the several contracting states and confirmed by them. 
 M. L6on Say has already brought a bill into the French Chambers to 
 ratify the treaty, but the full particulars of the measure, as reported by 
 him, have not reached us. Meanwhile the article of M. de Eeinach 
 may be looked upon as semi-official, in view of the well-known intimacy, 
 existing between him and the finance miuister and the confidential 
 position which he occupies towards the financial administration of 
 France. - 
 
 , The treaty of 1865 was to expire in January, 1880, provided a year's 
 notice i;o terminate it was given by one of the signatories ; otherwise it 
 was to remain in force for fifteen years longer. Eather than remain 
 bound together for so many, years by a convention, the operation of 
 which had essentially changed since it was entered into, the contracting 
 States would have abrogated it altogether. Switzerland, therefore, 
 which more than any other country has been dissatisfied with, the treaty 
 since the sUver agitation began, acting on her own behalf, and doubtless ' 
 at' the desire of all Ixer associates, gave the notice which was necessary 
 to terminate the Union in January, 1880. 
 
 This being done, the question was whether to draw up an entirely new 
 treaty or to amend the Old one. M. Leon Say proposed the latter plan, 
 and it was adopted. One of the most important new questions, to be 
 considered was as to the steps to be taken to wind up the treaty (liquider 
 la situation) when the term of jt shall have expired; and another and 
 more immediately pressing one was how to deal with Italy and Greecejj 
 States which are under a suspension of specie payments, and to provide 
 ^.gainst the possible contingency of other States falling into tlie same 
 difficulty. The treaty of 1865 did not provide for such a state of things, 
 inasmuch as Italy did not suspend till May, 1866, and Greece, which 
 joined the Union in 1868, was then a specie-pa,ying country. As the 
 case now stands, paper money has driven coin out of Italy, and the 
 greater part, both of. its full- valued silver five-franc pieces and of its 
 divisionary token money have taken refuge in France, Belgium, and 
 Switzerland. For all beneficial purposes to her associates, Italy would 
 be better out of the union than iu it. 
 
 The exceissive accumulation of silver coin in certain parts of the union, 
 and particularly at the Bank of Prance, is an evil mainly due to the, 
 currency system of Italy. The Italian plenipotentiaries admitted' this 
 fact, and declared the determination of their government to relieve the 
 situation by a return to specie payments at the earliest day possible. 
 On the 7th of September, 1878, there were in circulation in Italy 
 paper notes of the "denominations of i, 1, and 2 francs to the amount of 
 112,000,000 of francs (|22,500,000), and the maximum emission of such 
 notes authorized was 135,000,000 ($27,000,000); The total authorized 
 issue of all denominations of paper money is fixed by royal decree of. 
 
UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 25 
 
 February 26, 1876, at 1 milliard ($200,000,000). These are denominated 
 consortial notes, and are issued by the six associated banks on the 
 deposit by the government with them of its bonds to that amount. 
 There are, besides, bank notes not so secured, but the latter are not a 
 legal tender. 
 
 The Italian Government having declared its willingness to suppress 
 its notes of smaller denominations than 6 francs, the other contracting 
 States have agTeed to assist the operation by withdrawing from circula- 
 tion, and refusing to take at their public treasuries, the silver divisionary 
 coins of Italy. The arrangements for accomplishing these ends were 
 made the subject of article 8 of the treaty, the essential provisions of 
 which will be presently stated. By the treaty of 1865, the amount of 
 divisionary coins permitted to each of the contracting nations was 6 
 francs a head of their population. By the latest census returns, this 
 allowance gives to Belgium 33,000,000 of francs ; to France and Algeria 
 240,000,000 ; to Greece 10,500,000 ; to Italy 170,000,000, and to Switzer- 
 land 18,000,000. Italy, however, owing to the loss of her small coins 
 . since the suspension of specie payments, has replaced them to such an 
 extent by small notes that the aggregate sum of her divisionary money, 
 coin and notes, now amounts to 270,000,000 of francs, or 100,000,000 in 
 excess of her allotted quota. The whole of this excess is supposed to be 
 in the other countries of the Union, France being understood to have 
 about 87,000,000 and the other States 13,000,000. It will be impossible 
 to drive these small coins back to Italy so long as the other countries 
 continue to give them currency; and, on the other hand, Italy cannot 
 suppress her small notes until she has coins to put in place of them. 
 Article 8 of the treaty, therefore, makes the folloAving pi'O visions : 
 
 It should be premised that each of the contracting States has agreed 
 to redeem its divisionary coins, when presented in sums of not less than 
 100 francs, either in gold money or in silver 5-franc pieces. This obliga- 
 tion is to continue for one year after the termination of the treaty. By 
 article 8 the other States have agreed not to receive Italian divisionary 
 coins after January 1, 1880. France is to gather up these coins and 
 deliver them to Italy, which is to pay cash to the other States for all 
 received from them up to 13,000,000 of francs. The French contingent 
 of 87,000,000 is to be paid — 17,000,000 in cash, and the balance in three 
 annual installments — in 1881, 1882, and 1883, with 3 per cent, interest 
 on the deferred payments ; all above 100,000,000 is to be paid for in cash. 
 The small notes which Italy engages to retire are not to be reissued. 
 After the resumption of specie payment in Italy, her small coins will be 
 again received by the other powers as heretofore. 
 
 Greece has coined silver drachmas under the treaty of 1865, and a con- 
 siderable number of them now circulate in France, Belgium, and Switz- 
 erland. They have increased in those countries since legal-tender paper 
 has taken the place of metallic money in Greece. The delegate of the 
 Hellenic Government explained to the Conference that during the last 
 "year a loan had been contracted with the National Bank of Greece and 
 the Ionian Bank, by which the privilege of legal tender had been con- 
 ceded to their notes so long as the loan remained unpaid. The actual 
 amount of such notes issued is 73,000,000 ($14,600,000), and the maxi- 
 mum authorized 78,000,000 ($15,000,000). The two banks have a specie 
 reserve of about 16,000,000, or more than 20 per cent. Before the sus- 
 pension of specie payments there were about 45,000,000 of notes in cir- 
 culation, the lowest denomination being of 10 francs. The Greek Gov- 
 ernment is very anxious to resume specie payments, and will attempt to 
 accomplish it by a credit operation, but it is not able to enter into any 
 H. Mis. 11 3 
 
26 UNLIMITED COINAGE OF SILVER AND TRADE DOLLAR. 
 
 engagement witli the other powers on the subject, nor to fix any date at 
 which resumption can be accoinplishecl. 
 
 The gold coins of the several States are to continue, as heretofore, of 
 the denomination of 100, 50, 20, 10, and 5 francs, but the coinage of gold 
 5-franc pieces remains provisionally suspended. This suspension is 
 owing to the too rapid abrasion of those coins. Experiments made in 
 1868 showed that gold 20-franc pieces used themselves up in about forty 
 years, 10-franc pieces in twenty years, and 5-franc pieces in eight years. 
 
 Both gold and silver 5-franc" pieces are to be admitted into the public 
 treasuries of the contracting governments without distinction. The 
 Bank of France and the National Bank of Belgium have come into this 
 arrangement by agreement, during the full term of the treaty, to receive 
 those coins at their counters. Although the legal tender of the larger 
 foreign coins seems not to be explicitly imposed on individuals, they 
 will not hesitate to ratify it in fact, as the action of their respective gov- 
 ernments and banks leaves no motives to private persons for refusing 
 them. Token coins (those of less than 5 francs) are declared a legal 
 tender in payments of not more than 50 francs. 
 
 The coinage of silver 5-franc pieces is provisionally suspended, and 
 cannot be resumed except by the unanimous consent of the contracting 
 States. This agreement is also made applicable to the year 1879 — ^the 
 last year of the old treaty. An exception has, however, been made in 
 favor of Italy, which is to be allowed to coin 20,000,000 of francs. 
 Though not so expressed in the treaty, it is understood that this contin- 
 gent is allowed to Italy to enable her to replace her old silver coins with 
 5-franc j)ieces. Even if she should elect to buy new silver of Germany 
 for the whole amount, rather than melt down the coins of the Bourbon 
 dynasties, no objection would probably be made, as the quantity of silver 
 pressing upon the market would be thereby measurably reduced. 
 
 As already stated, the new treaty is to remain in force from January 
 1, 1880, to January 1, 1886. If, one year prior to the latter date, no notice 
 shall have been given to dissolve it, it is to be continued thereafter from 
 year to year. 
 
 Although no other provisions were made in the treaty respecting legal- 
 cender paper in circulation in Italy and Greece than those under article 
 8, it was nevertheless agreed to be proper to insert in the proces ver- 
 Mux of the Conference certain declarations on that subject. Belgium, 
 accordingly, deqlared that, if in future either of the States should estab- 
 lish the cours force, or should render the consequences of it more onerous 
 to other States by increasing the issues of legal-tender paper, the Belgian 
 Government would admit that the other States might take any measures 
 proper to protect themselves. The Belgian delegate further declared 
 that a State which should be forced to suspend specie payments should 
 not be allowed to recover its liberty of action towards the other States 
 of the Union, even after the treaty had expired, until it had relieved its 
 associates from any burdens which such a state of things might have 
 imposed on them. It is to be hoped that these cautionary declarations' 
 will never need to be acted on, and the considerable period fixed for the 
 duration of the treaty will, in all probability, enable the States now under 
 suspension to bring themselves into line, so that its indefinite prolonga- 
 tion may not be imperiled. 
 
 Baron de Eeinach concludes his article, of which the foregoing is a 
 summary, with the following passage: 
 
 "If we now cast our eyes over the labors of the Conference, we cannot 
 but felicitate ourselves on the results arrived at, in view of the different 
 ways in which the monetary question is looked at bv the contracting 
 
UNLIMITED COINAGE OF SILVER AND TEADE DOLLAR. 27 
 
 States. Switzerland and Belgium do not conceal their sympatMes for 
 the single gold standard; France is bimetallic; but before pronouncing 
 upon the propriety of continuing the coinage of silver 5-franc pieces, 
 ■which is, nevertheless, reserved in the treaty, she desires to know the 
 results of the monetary laws recently enacted in America. In this state 
 of things it was necessary, as far as possible, to relieve the present situa- 
 tion, which might become embarrassing by reason of the liquidation 
 which would have to be made at the end of the next year, when the treaty 
 of 1865 would expire. To assist Italy, therefore, to estabhsh her metallic 
 circulation, was not only a proof of sympathy given to that State, but it 
 was also an act of good policy on the part of the other contracting par- 
 ties. If they had precipitated matters by hot renewing the treaty, Italy 
 alone would have profited by it. 
 
 "Thus, although there was a difference of opinion between the con- 
 tracting parties on the theoretical side of the monetary question, the 
 Latin IJxiion has been renewed and consolidated. Both governments 
 and people will, without any doubt, learn with satisfaction that the five 
 nations are to continue to be united by the bond of a common monetary 
 circuTation; and it is to be hoped that this union established between 
 them in respect to money will continue to exercise a happy influence on 
 their political and business relations." 
 
 It is not the purpose of the present article to make any lengthened 
 comments on the new Latin treaty as it bears upon the United States. 
 It cannot, however, be overlooked, that the clause which suspends the 
 coinage of silver for seven years longer, is likely to have a most import- 
 ant influence on the future monetary system of this country. For the 
 largest part of the decade which is now opening, and which is so full of 
 promise in all its material aspects, we shall be the only silver-coining 
 country of the civilized world. There can be little doubt that this will 
 make us a sUver country, almost as absolutely as India and China are 
 silver countries, unless the restrictions imposed by the silver bill of last 
 winter are rigidly adhered to — that is, a coinage limited to two millions 
 a month, with all the resulting profit reserved to the Federal Govern- 
 ment. This is not such a double standard as the silver party bargained 
 for, nor is it such a bimetallism as those who favor an international sys- 
 tem desire to secure. No party will be satisfied with it, and further 
 legislation, either forward or backward, seems to us, imperatively neces- 
 sary. If we go forward, and open the mints to free coinage, all our gold 
 will leave us, and we shall elect to become a silver country pure and 
 simple, which is just what Mr. G-oschen desires. If we go backward and 
 repeal the silver bill, making silver token-money only, with, perhaps, a 
 large field given to it by a liberal legal-tender clause, we shall force 
 England, Germany, and the Latin Union to face the situation, and to 
 share with us the perils and inconveniences which a scramble for gold 
 win certainly entail. In that scramble the United States would stand a 
 better chance to come out unscathed than any other nation. This is 
 the course recommended by M. Cernuschi, and we incline to think that 
 it promises the earliest and most substantial victory to the bimetallic 
 cause. 
 
INTERVIEW 
 
 COMMITTEE ON FINANCE 
 
 UNITED STATES SENATE 
 
 WITH TUB 
 
 SECEETAEY OF THE TREASURY, 
 
 IN KEGAKD TO THE 
 
 EEPEAL OF THE EESTJMPTION ACT. 
 
 WASHINGTON: 
 GOVERNMENT PRINTING OFFICE. 
 
 1878. 
 
INTERVIEW 
 
 OF THE 
 
 COMMITTEE ON FINANCE WITH THE HON. JOHN SHERMAN 
 SECRETARY OF THE TREASURY, 
 
 IN HKGARD TO 
 
 THE EEPBAL OP THE RESUMPTION ACT. 
 
 UisiTED States Senate, 
 Committee on Finance, 
 
 March 19, 1878. 
 
 The Chairman. Mr. Secretary, I have jotted down a few general 
 questions and some in detail, which I propose to ask you, and I suppose 
 that other members of the committee may have questions which they 
 may desire to ask at a later period, but I will ask some general questions 
 in order that you may make a statement, if you choose, with more free- 
 dom than you can by going into smaller details at the commencement. 
 
 First, ought the resumption act, in your opinion, to be repealed; and, 
 if not, why not ? 
 
 Secretary Sherman. That question, as you say, is very general, and 
 it is rather a legislative than an executive question, but I have no ob- 
 jection to answering. I think that the resumption act ought not to be 
 repealed; that it was a declaration of public policy, commenced with the 
 act of February, 1862, repeated by Congress several ti mes, notably in 1866, 
 notably again in 1869, and again by the passage of the resumption act, 
 that we would, as soon as practicable, redeem any United States notes 
 ■which were presented for redemption, in gold and silver coin ; that this 
 is the declared public policy of this country, and it ought to be adhered 
 to; and now I am fully convinced that we are able to do what we have 
 so often promised to do, and ought to do. Beside this, several States 
 have, by their legislation, indicated a purpose to conform their laws to 
 ours. 
 
 Senator Bayard. Which States besides New York ? 
 
 Secretary Sherman. Well, Massachusetts to some limited extent, but 
 I don't know how far ; and many corporations and many individuals 
 have made their contracts upon the basis of resumption in 1879. The 
 whole country seems to have settled down to the conviction that we can 
 resume, and that business has adapted itself, and contracts have been 
 made with that view. So far as any suffering from resumption, or 
 preparation for resumption is concerned, we have already suffered, and 
 now to go backwards would be only to invite suffering again. It strikes 
 me therefore that it is better to go ahead, and that to retrace the policy 
 of resumption now would separate the metals from our currency, and we 
 would have to go through the same trouble again. It would be an evi- 
 dence of national weakness. The struggle between metallic money as 
 
4 
 
 the basis of paper money aud irredeemable paper money, must be made 
 some time, and I think we had better complete it now. Therefore I say, 
 in regard to your question — although it is a legislative question for you 
 gentlemen to answer, aud not for me — I think we ought to adhere to 
 the policy of resumption and complete it. 
 
 The Chairman. Do you think resumption is practicable under the 
 present law? You have partially anticipated that question, but still I 
 ask it. 
 
 Secretary Shekman. That is a question very much of figures, and, 
 supposing that it would be the principal one I would have to answer, I 
 have brought quite a number of documents here which 1 will give you, 
 and they will speak better than I can. The best evidence that we are 
 able to resume on the 1st of January next is the progress that has 
 already been made. When the resumption act passed the premium on 
 gold was about ten and one-half per cent. Since that time it has been 
 reduced to a nominal rate. It is now a little over one. Since that time 
 we have accumulated in preparation for resumption a large sum of gold. 
 I have taken some pains to get the figures which I will give you now. 
 They are accurate, so that you may have the exact condition of the 
 Treasury. This is the statement of the Treasurer, made yesterday : 
 
 Treasury or thb United States, 
 
 Washington, March 18, 1878. 
 Sir : In accordance with your request I have the honor to state the amount of gold 
 aud silver in the Treasury on the 28th ultimo, the date of the last debt-statement, 
 which is as follows, viz : 
 
 Gold coin $117,151,455 62 
 
 Gold bullion 7,937,300 21 
 
 $125,088,755 93 
 
 Less amount to credit of dishursing-offioers aud out- 
 standing checks 6, 189,626 60 
 
 Gold-certificates actually outstanding 44,498,500 00 
 
 Called bonds and interest 6,818,677 29 
 
 Interest due and unpaid , 4,909,705 21 
 
 62,416,509 10 
 
 Available gold coin and bullion 62,672,246 83 
 
 Available silver coin, fractional 5,972,895 42 
 
 Available silver bullion 3,130,718 31 
 
 Total available gold aud silver 71,775,860 56 
 
 The amount of gold coin in the Treasury is $117,151,455.62; the 
 amount of gold bullion is $7,937,300.31, making an aggregate of gold 
 coin and gold bullion, $125,088,755.93. That is, however, subject to a 
 deduction of the following items : 
 
 First. Outstanding checks to officers, $6,189,626.60. Although- that 
 is really money in the Treasury, yet it is drawn for and not paid. 
 
 The Chaieman. Doesn't that always happen ! 
 
 Secretary Sherman. It always happens that some money is drawn 
 upon and not paid, and this item is alwayslarge. 
 
 Senator Bayaed. You spoke of gold bullion ; that is the property of 
 individuals, is it not? 
 
 Secretary Shbeman. All that is government property. 
 
 Senator Bayard. Where does the government get gold bullion? 
 
 Secretary Sheeman. We buy it, or receive it on deposit, or melt for- 
 eign coins into bullion, and coin it as needed. We receive it just like 
 gold coin, but not much of it in comparison with the coin received. 
 
 Second. Then there are gold -certificates outstanding, $44,498,500. for 
 gold deposited by banks aud individuals. 
 
Third. Called bouds and interest, $6,818,677.29. That amount is al- 
 ways large, and has reached eighteen millions. 
 
 Fourth. Interest due and unpaid, $4,909,705.21. That makes 
 $62,416,509.10 gold subject to demand, or about one-half the supply on 
 hand, leaving available gold coin and bullion, against which there is no 
 demand liability, $62,672,246.83. Then there is silver fractional coin, 
 $5,972,895.42 ; silver bullion, $3,130,718.41. I can say, though, if this 
 statement was made up to date the silver bullion would be a good deal 
 larger. We have bonght lately. The total availa-ble gold and silver 
 over and above demand liablities is $71,775,860.56. 
 
 Of the items that are counted here and deducted from gold, about 
 $20,000,000 are practically available for resumption, because the out- 
 standing drafts and the called bonds and interest due and unpaid, 
 although due, yet the amount actually in the Treasury is generally about 
 the same. It is remarkable that so much money is. left after it is due. 
 Bonds that are due and not presented, and interest that is due for years, 
 are left in government custody without being drawn. Of the amount 
 of gold certificates issued : the law authorizes 20 per cent, more certifi- 
 cates to bo issued than the amount of gold or gold bullion deposited, 
 although that power has never been exercised, at least not within my 
 recollection ; not certainly within my term. 
 
 Senator Feeet. You spoke of the $44,000,000 of gold certificates ; is 
 that about the annual outstanding average ? 
 
 Secretary Sherman. No ; it is more than the average. 
 
 Senator Ferrt. What is the average for ten years back ! 
 
 Secretary Sherman. Thirty to forty millions. 
 
 The Chairman. It is $34,000,000 or $35,000,000. 
 
 Secretary Sherman. The amount of gold now on deposit is very large. 
 For the reasons I have stated the amount of gold and silver coin and 
 bullion available for resumption in a business sense is about ninety mil- 
 lions, but the actual gold and silver bullion and coin in the Treasury- 
 over and above all demand liabilities is $71,775,860.56. 
 
 Senator Jones. Could the amount of subsidiary coin which you speak 
 of as being on hand be counted as in any way assisting resumption '? 
 
 Secretary Sherman. I think so, because it is exchanged for United 
 States notes or fractional currency, and can be paid out for current 
 debts. 
 
 Senator Jones. I thought yon could only exchange it for fractional 
 currency 1 
 
 Secretary Sherman. Probably there is enough silver coin on hand to 
 redeem all the balance of the fractional currency. 
 
 The Chairman. That is, the Secretary thinks some fractional currency 
 has been lost 1 
 
 Secretary Sherman. jS'ow, in regard to another point pertinent to 
 your question, we have, in the process of preparation for resumption, 
 reduced the volume ot United States notes. The precise figures are 
 familiar to yon. The amount was $382,000,000 at the time of the pas- 
 sage of the resumption act, and the amount now is $348,618,024. Again, 
 the amount of outstanding bank-notes has been reduced. On Decem- 
 ber 31, ]875, the amount was $346,479,756; on December 31, 1877, 
 $321,672,505, and on February 28, 1878, the amount of bank-notes out- 
 standing was $321,989,991 ; but the amount of banknotes of banks in 
 existence, not in process of liquidation, was $299,240,475, and the differ- 
 ence between these two sums being the notes of banks in process of 
 liquidation, although the notes are in circulation, yet an equal amount 
 of greenbacks are in the Treasury as a special deposit to redeem them. 
 
6 
 
 Senator Kernan. They make part of the $348,000,000 legal-tender 
 "notes'? 
 
 Secretary Sherman. Tes; as many of the legal-tender notes are held 
 in the Treasury as there are bank-notes in process of redemption. 
 
 Senator Ferry. Then really there should be but $299,000,000 of 
 national-bank notes outstanding. 
 
 Secretary Sherman. If you count the whole greenbacks as outstand- 
 ing there would be $299,000,000 national-bank notes. Then it must be 
 remembered that Uuited States notes have been in circulation since 
 1862, and bank-notes since 1864, and that large sums are lost or 
 destroyed. This diminishes to some extent the amount outstanding — 
 how much, I don't know. You can judge as well as I. 
 
 The following statement shows, by months, the issue of silver coin, 
 and the reduction of fractional currency under the act of April 19, 1876 
 (19 Statutes, 33), from April 20, 1876, to February 28, 1878, viz : 
 
 Months. 
 
 Fractional cur- 
 rency redeemed. 
 
 Total silver pay- 
 ments. 
 
 April, 1876 
 
 May,1376 
 
 June, 1876 
 
 July, 1876 
 
 August, 1876 . . . 
 S6pteml)er, 1876 
 October, 1876 .. 
 Koveinber, 1676 
 December, 187C. 
 January, 1877 . . 
 February, 1877 . 
 March, 1877.... 
 
 April, 1877 
 
 May, 1877 
 
 Jnne, 1877 
 
 July, 1677 , 
 
 August, 1877... 
 Spptember, 1877 
 October, 1&77 -. 
 KoTOmber, 1877 
 Becembor, 1877 . 
 January, 1878 .. 
 February, 1878 . 
 
 Total.... 
 
 3, 500, 
 
 2, 912, 
 
 1, 543, 
 
 1, 547, 
 
 1, 496, 
 
 1, 302, 
 
 1, 146, 
 
 1, 060, 
 
 923, 
 
 990, 
 
 993, 
 
 1, 253, 
 
 979, 
 
 803, 
 
 618, 
 
 612, 
 
 385, 
 
 434, 
 
 309, 
 
 278, 
 
 292, 
 
 281. 
 
 698 00 
 565 18 
 878 91 
 715 00 
 568 94 
 895 83 
 937 57 
 969 07 
 302 53 
 639 31 
 146 79 
 908 27 
 936 56 
 645 29 
 792 89 
 801,45 
 221 50 
 472 12 
 067 61 
 554 14 
 911 62 
 189 18 
 221 58 
 
 $648, 
 6, 740, 
 
 3, 608, 
 1, 593, 
 
 4, 015, 
 3, 079, 
 2,411, 
 t, 606, 
 1, 659, 
 1, 776, 
 1, 565, 
 1,239, 
 1,253, 
 
 979, 
 911, 
 816, 
 716, 
 955, 
 1, 043, 
 709, 
 703, 
 225, 
 
 2ao, 
 
 698 CO 
 066 11 
 333 66 
 228 80 
 295 56 
 335 S5 
 734 58 
 407 81 
 718 99 
 056 82 
 738 51 
 012 92 
 936 56 
 645 29 
 590 42 
 446 67 
 775 07 
 528 37 
 168 41 
 662 26 
 089 93 
 106 00 
 718 49 
 
 24,318,039 34 
 
 38, 479, 308 g8 
 
 Below is given the total amount of fractional notes outstanding, by 
 issues, on the 16th instant : 
 
 First issue $4,291,074 83 
 
 Second issue 3, 114, 104 86 
 
 Third issue 3,018,941 52 
 
 Fourth issue (first series) 3,008,423 44 
 
 Fourth issue (second series) 737,939 15 
 
 Fourth issue (third series) 414,407 70 
 
 Fifth issue 2,524,824 78 
 
 Total 17,109,715 62 
 
 Tbe average monthly reduction of outstanding fractional currency, 
 estimated upon the basis of the redemptions of the past four months, "is 
 $290,000. 
 
 Senator Jones. How many millions, then, of legal-tenders do you es- 
 timate as being in circulation now, outside of what you hold to redeem 
 the notes of banks in process of liquidation ? 
 
 Secretary Sherman. I should think $320,000,000 ; deducting those 
 that may have been lost or destroyed and those held for the outstand- 
 
ing bank-notes, making the aggregate of bank-notes and greenbacks 
 about $643,000,000. As a matter of coarse, that is a mere estimate. 
 
 Senator Allison. It would be about $341,000,000, according to your 
 statement; that is, exclusive of fractional currency. 
 
 Secretary Sherman. Of the first, second, and third issues the amount 
 outstanding is over $10,000,000, and comparatively none of it is pre- 
 sented for redemption. Of the first issue of fractional currency only 
 $3.54 was presented last month for redemption. Of the second issue, 
 only $3.93. Of the third issue, $4,854.62, with $3,018,941.62 outstand- 
 ing. Of the first series of the fourth issue, $26,540.62 was redeemed, 
 with $3,008,423.44 outstanding. Of the fifth issue, the amount out- 
 standing was $2,524,854.73, and the amount presented for redemption 
 was $205,912.76 ; so that practically we may say the first three issues 
 have been redeemed, although it appears on our books and statements 
 as outstanding. The balance of the fourth and fifth issues probably 
 would not exceed five or six millions ; so that the silver on hand will 
 redeem every dollar of this, in all human probability. It is coming in 
 at about $250,000 a mouth. 
 
 Senator Bayard. You believe that of the outstanding currency not 
 more than one-third will ever be presented for redemption ? 
 
 Senator Jones. I should not think it would be a matter of much mo- 
 ment. If the whole $17,000,000 should come in, silver could be got. 
 
 Secretary Sherman. There would be no trouble about that. 
 
 Senator Dawes. Do you redeem it in dollars or in fractional cur- 
 rency? 
 
 Secretary Sherman. We redeem it in silver money. We give frac- 
 tional silver, because that is the law. 
 
 To repeat the general result of our preparations for resumption, we 
 have already practically abolished the premium on gold; we have re- 
 duced the amount of United States notes and the amount of national- 
 bank notes outstanding ; we have paid off, practically, the fractional cur- 
 rency, and now we have a very remarkable circumstance in our favor. 
 The balance of trade is in our favor to the amount of $160,000,000 a 
 year, bringing silver and gold and bonds back to us. In the last three 
 years the balance of trade in our favor is $414,034,660. I bring you 
 this statement because I thought you might deem it important to 
 have actual figures about the state of our trade. The table showing 
 details I will leave with you. 
 
 Senator Allison. That is up to January 1 1 
 
 Secretary Shkrman. Yes, sir ; the calendar year. For the year 1875 
 it was $64,201,852, for the year 1876 it was $185,202,605, and for 1877 
 $164,630,209, making $414,034,666, and the last few months have been 
 as favorable as any. 
 
 Senator Jones. Do you understand that as meaning any particular 
 change in the gold drift of the world, or is not that balance of trade met 
 by the interest due by private corporations, cities, and States, and debts 
 of every description f Do you think that it means a gold balance to 
 anything like that extent? 
 
 Secretary Sherman. I think it is rather a payment of debts. The 
 excess of exports over imports must come back in some form, and 
 mostly in debts paid, private debts, corporation debts, and national 
 debts. The drift this way of government bonds has been large during 
 the last year. I have noticed this especially in the last few weeks, and 
 recently the drift has been very large. 
 
 Senator Bayard. They have taken that' means of paying off the 
 balance ? 
 
8 
 
 Secretary Sherman. Yes. 
 
 Senator Dawes. You think instead of gold they send our bonds ? 
 
 Senator Jones. What I was getting at is, could they send very much 
 gold? 
 
 Secretary Sherman. We have got both gold and silver from England, 
 but we must do it as Lincoln said, "unbeknownst to them." It must 
 come by the natural currents of trade. To attempt to bring by any 
 artificial movements large sums of gold to this country would be to 
 create alarm. All last summer and fall the accumulation was from 
 five, to eight millions of dollars each month. Some of that came from 
 our own mines and some of it from abroad, but we accumulated it with- 
 out any perceptible injury to anybody. \ 
 
 Now, in general answer to your question, I do express my opinion, 
 officially and personally, that, for the reasons I have given, we can 
 resume on the 1st of January next, under the basis of the existing law. 
 
 The Chairman. What effect has the silver bill had or is likely to 
 have upon resumption 1 
 
 Secretary Sherman. I do not want to tread on delicate ground in 
 answering that question, Mr. Chairman. I shall have to confess that 
 I have been mistaken myself. Now as to the silver bill, I have watched 
 its operation very closely. 1 think the silver bill has had some adverse 
 effects and it has had some favorable effects on the question of resump- 
 tion. Perhaps the best way for me to proceed would be to state the 
 adverse effects first. It has undoubtedly stopped refunding operations. 
 Since the agitation of the silver question, I have not been able largely 
 to sell bonds, although I have made every effort to do so. 
 
 Senator Jones. At what date was the last bond sold ? 
 
 Secretary Sherman. We are selling bonds all the time. 
 
 Senator Jones. I mean the refunding of the bonds into four per 
 cents 1 
 
 Secretary Sherman. The 16th of October was the time when the last 
 of the popular loan was paid for, and we had then a call ready to issue 
 of $10,000,000, and the associates, as they had a right to do, withdrew 
 the call. The sales from the 1st of September, 1876, to the 15th of 
 October, 1877, were about $275,000,000. We sold $200,000,000 four and 
 a half per cents, and then we sold $75,000,000 four per cent, bonds. 
 
 Senator Allison. About a year or eleven months. 
 
 Secretary Sherman. Since October last we have sold four millions, 
 and perhaps now the sales have gone up to between four and five mil- 
 lions of four per cent, bonds. 
 
 Now, another adverse effect the silver bill has had is to stop the accu- 
 mulation of coin. Since the 1st of January, we have accumulated no 
 coin except for coin-certificates, and except the balance of revenue oyer 
 expenditure ; the revenues in coin being more than enough to pay the 
 interest of the debt and coin liabilities, we accumulate some coin. 
 
 Another effect that the silver bill has had is to cause the return of 
 our bonds from Europe. Although the movement of our bonds in this 
 direction has been pretty steady for more than a year, yet it is latterly 
 largely increased; how much I am not prepared to say. 
 
 On the other hand, I will give the favorable eff'ects. In the first 
 place, the silver bill satisfied a strong public demand for bimetallic 
 money, and that demand is, no doubt, largely sectional. No donbt 
 there is a difference of opinion between the West and South and the 
 East on this subject, but the desire for remonetization of silver was al- 
 most universal. In a government like ours it is always good to obey 
 
the popular current, and that has been done, I think, by the passage of 
 the silver bill. Kesumptiou can be maintained more easily upon a 
 double standard than upon a single standard. The bulky character of 
 silver would prevent payments in it, while gold, being more portable, 
 would be more freely demanded, and I think resumption can be main- 
 tained with a less amount of silver than of gold alone. 
 
 Senator Bayard. You are speaking of resumption upon the basis of 
 silver, or of silver and gold ? 
 
 Secretary Sherman. Yes, sir; I think it can be maintaiued better 
 upon a bi-metallic, or alternative standard, than upon a single one, and 
 with less accumulation of gold. In this way remonetization of silver 
 would rather aid resumption. The bonds that have been returned from 
 Europe have been readily absorbed — remarkably so. The recent re- 
 turns in 'Sew York show the amount of bonds absorbed in this country 
 is at least a million and a quarter a day. We have sold scarcely any 
 from the Treasury since that time. This shows the confidence of the 
 people in our securities, and their rapid absorption will tend to check 
 the European scare. 
 
 Senator Voorheks. That shows, Mr. Secretary, that this cry of alarm 
 in New York was unfounded. Then this capital seeks our bonds when 
 this bimetallic basis is declared ? 
 
 Secretary Sherman. Yes; many circumstances favor this. The de- 
 mand for bonds extends to the West and to the banks. 
 
 Senator Dawes. Inasmuch as funding at a lower rate is stopped, there 
 is a greater demand for this higher rate of interest bonds that come 
 back. The banks seek these bonds, thinking they will not be called iu. 
 
 Secretary Sherman. The bonds that come back are 4 and 4^ per cents 
 largely, and their prices are well maintained. They are quoted every day 
 at par. When I the other day felt the market to see whether there was 
 any demand for 4J per cent, bonds, I had no difficulty in getting bids 
 for them above par in large quantities. 
 
 Senator Ferry. Would there be any difficulty in disposing of the 4 
 P'lr cents now! 
 
 Secretary Sherman. Yes; I am tryipgto sell them, and the sales are 
 increasing. 
 
 Senator Bayard. I understand that there could be a ready sale for 
 4J per cent, bonds. 
 
 Secretary Sherman. I have no doubt we can sell 4J per cent., and I 
 think within a month we can sell all we want of 4 per cent, bonds to 
 carry out the resumption law, for I would not accumulate more than five 
 millions a month, and that largely in silver and gold bullion. There is 
 no special necessity to force the bond market in order to maintain re- 
 sumption. We now have seventy-one to ninety millions of dollars on 
 hand, and every one can measure how much more will be necessary to 
 maintain resumption. If the sale of bonds was ever so free I would not 
 accumulate more than five millious of dollars a month of both metals, 
 and all sales beyond that shonld be applied for refunding 6 per cent. 
 bonds. 
 
 Senator Allison. Do you think that you can add largely to the stock 
 
 of coin in this country by your process of adding to your reserves 
 
 $5,OU0,000 per month 1 That is to say, will you accumulate from other 
 
 countries, or simply draw into the Treasury the accumulations already 
 
 'existing in our own country ? 
 
 Secretary Sherman. I am glad you mentioned that point. Although 
 since the 1st of January last we have accumulated no coin in the Treas- 
 ury, the amount that we had prior to that accumulated per month has 
 
10 
 
 since then gone into the banks ; the banks have already accumulated 
 more than five millions of gold since the first of January. 
 
 Senator Morrill. They have increased their reserves by the amount 
 of five millions, gold, per month ? 
 
 Secretary Sherman. Here is a statement which shows the aggregate 
 amount of specie held by the banks of the United States during the 
 several periods therein mentioned. Kow, in the United States there 
 have been no statements of national banks since December last, but they 
 have in the city of New York a weekly statement of the clearing-house. 
 This shows the amount at the beginning of every week from January 5, 
 1878. On that day the amount was $21,884,100; that has increased in 
 amount until March 16, 1878, when it reached $34,551,000, a difference 
 of about thirteen millions, which is just about five millions per month 
 increase. So that this accumulation of coin has gone on in the banks 
 since it stopped in the Treasury. 
 
 Senator Ferry. Then if you embrace the ajccumulation in the banks 
 and Treasury, it has been progressing gradually at the rate of about 
 iive millions per month ? 
 
 Secretary Sherman. Yes, sir ; more than that. In New York alone 
 the accumulation is five millions per month, but in Boston and Philadel- 
 phia it is also going on. 
 
 Senator Ferry. What, in your judgment, is the accumulation in both 
 the banks and the Treasury per month in amount? 
 
 Secretary Sherman. I should think it to be between five and ten 
 millions dollars per month. 
 
 Senator Allison. Do you think that this bank accumulation, from 
 the 1st January to the 16th March, is gathered both from this country 
 and to the same extent from other countries *? 
 
 Secretary Sherman. Undoubtedly. 
 
 Senator Jones. Have we any record of the imports of coin ? 
 
 Secretary Sherman. Certainly. And in this statement of our ex- 
 ports and imports you will find the amount stated exactly. 
 
 Senator Dawes. Is, the import of coin eliminated by itself? 
 
 Secretary Sherman. Yes, sir. 
 
 Senator Bayard. Does it show where the coin comes from? 
 
 Secretary Sherman. It can be ascertained. In giving an answer to 
 Mr. Morrill's question, as to the general effect of the silver bill, I would 
 not like to give a positive opinion. I do not think, taking it altogether, 
 that it is an obstacle in the way of resumption. It has operated in some 
 respects adversely, and in some respects favorably, but, on the whole, 1 
 do not think it should discourage us from resumption, or from carrying 
 out our general policy. 
 
 Senator Jones. Then, in its effect upon the return of the vast amount 
 of bonds you refer to, would there not be an element of strength added 
 in favor of resumption in that the interest on these bonds returned 
 would EOt be a constant drain upon the country ? 
 
 Secretary Sherman. Undoubtedly. 
 
 Senator Jones. Would the fact that they come back enable us to 
 maintain resumption much easier? 
 
 Secretary Sherman. Undoubtedly. The fact that we have paid four 
 hundred and fourteen millions of debt in foreign countries is favorable. 
 There is another point in this connection. It seems to me that it is 
 not necessary to determine this question now, because a sufficient time 
 has not elapsed to enable us to determine the effect of the silver bill, and 
 you had better let things run along and see its effect. It may be that 
 "its effect will be such that all will favor resumption and that resump- 
 
11 
 
 tioa will come witbont efibrfc. The passage of this bill can have no 
 effect until January next, and it may be that before that time all will 
 agree that it ought or ought not to be repealed. As yon have this 
 measure in the Senate you can control it by a majority vote of the Sen- 
 ate at any time. Why not let it stay here? 
 
 Senator Voorhebs. Did 1 understand you to say that you would 
 undertake to maintain resumption with ninety millions of coin reserve? 
 
 Secretary Sherman. No, sir; I would undertalie to resume upon the 
 power afforded by the i)resent law, by going on and doing what I did 
 last summer. 
 
 Senator Vookhees. How much surplus did you say you had on 
 hand ? 
 
 Secretary Sherman. I have now seventy-one millions. 
 
 Senator Vooehees. Tlien you say that you would be willing to un- 
 dertake resumption under the existing laws by the 1st of next January. 
 Now, with the aid of the silver bill and the coinage, what amount of 
 coin would you expect to have on hand, with which to undertake re- 
 sumption at that time? 
 
 Secretary Sherman. I would accumulate about five millions per month 
 of both metals from the 1st of April to the 1st of January, which would 
 be forty-five millions ; and, if the market is favorable, I think I would 
 try to make good the loss that I have suffered by not accumulating in 
 January, February, and March of the present year. I think I could in 
 this way accumulate fifty or sixty millions. 
 
 Senator Vooehees. That would give you one hundred and fifty mill- 
 ions. 
 
 Secretary Sheeman. Not so much; nor do I think it is necessary to 
 have so much. 
 
 Senator Jones. And does that look to eliminating the legal-tender 
 function on the Ist of January next? 
 
 Secretary Sherman. No, I think not, sir ; I am in favor of maintain- 
 ing the legal-tender cnrrency ; but that is in controversy. 
 
 Senator Kernan. You thought that you could practically redeem all 
 that would be presented ? 
 
 Secretary Sherman. I have no doubt of my power to reissue, up to 
 three hundred millions of legal-tenders. 
 
 Senator Jones. I have an idea that would make a good deal of dif- 
 ference. 
 
 Senator Vooehees. Have you spoken of the capacity of the present 
 coinage ? 
 
 Secretary Sheeman. No, sir. 
 
 Senator Feeey. Then, on the question of resumption, your view is 
 that, with ninety millions on hand, and the accumulation of sixty mil- 
 lions more, or even forty millions — which would be one hundred and 
 thirty millions — you would be willing to commence the resumption of 
 the present volume of the currency, both national and bank? 
 
 Secretary Sheeman. O, yes. The banks must look out for them- 
 selves. 
 
 Senator Bayaed. I would like to ask you if the condition of the 
 country will sustain this resumption with this very large accumulation 
 of gold by the banks in New York ; and if they will not have a tendency 
 to continue to increase their reserve, as they find the Treasury running 
 in the same direction ? 
 
 Secretary Sherman. The national banks will take care of themselves. 
 
 Senator Bayaed. 1 am speaking not only as to their self-preserva- 
 tion, but as to the country at large; with the Treasury contiuuinff this 
 
12 
 
 policy of resumption aud accumulatiug, as you think you can, about 
 five mi41ions per month, for the next ten months, and the ninety mil- 
 lions you already have, giving you one hundred and forty millions, and 
 the banks, since the 1st of January, of their own motion and for their 
 own safety, making an accumulation of five millions a month of coin, I 
 say will they not rather continue that, so that that reserve of cpin will 
 be increased by the banks, and at the same time the Treasury would 
 not be retarded by it? In other words, it will make the coin reserve of 
 the country still greater by January, 1879, should the banks pursue this 
 policy. 
 
 Secretary Shekman. Yes, sir ; and besides that I ought to say that 
 the banks are exceptionably strong; the reserves in the banks now are 
 very large. Their liabilities have been reduced upon deposits about 
 sixty millions within the last year. While their reserves are $220,979,426 
 in currency, the legal reserve required is only $136,694,239, so that 
 they have upward of $84,000,000 in excess of legal requirements. 
 
 Senator Jones. Suppose there should come at the period of resump- 
 tion a great dearth of gold ; would not the national banks retire their 
 currency, rather than redeem it with gold ? 
 
 Senator Moreill. I desire to ask you whether you have any antici- 
 pation that in the course of events, as they are now tending, resump- 
 tion will take place prior to 1st January, without your interfering at all ? 
 
 Secretary Sherman. I would not like to answer that. 
 
 Senator Morrill. I will now ask yon this question : How can the 
 policy of resumption be aided by Congress'? 
 
 Secretary Sherman. I am very willing to answer that, although I 
 think it is a legislative question. I think that you can aid resumption 
 very much if you will allow me to receive United States notes in pay- 
 ment of bonds, as the Senate has already expressed a willingness to do, 
 and if the House would concur with them — if I could sell 4 per cent, 
 bonds for currency, and then reissue the currency in the purchase of G 
 per cent, bonds, it would be an aid to resumption. 
 
 Senator Bayard. What would you do with the proceeds of the sale 
 of these bonds 1 
 
 Secretary Sherman. I would use them in the purchase of outstand- 
 ing bonds. All 1 would have to do would be to pay the difference be- 
 tween the greenback and gold, but that would only be paying 1 per cent, 
 premium. I have a right to call the bonds, and I could use the cur- 
 rency in their payment by giving $1.01 for the bond in currency, the 
 diflerence between currency and gold at the present time. 
 
 Senator Bayard. You can sell your 4 per cent, bonds at par in 
 currency and you can then use the currency to redeem the higher-rate 
 bonds. 
 
 Senator Jones. How would that aid resumption ! 
 
 Secretary Sherman. By repealing the discriuiinatiou that is now 
 made against the legal-tender note in payment of bonds. The bond 
 issued would be a coin bond. 
 
 Senator Jones. Let me see if I understand you. Is your idea this, 
 that if you were permitted to sell 4 per cent, bonds for currency it 
 would raise the value of currency ? 
 
 Secretary Sherman. It would. 
 
 Senator Jones. And in that respect would aid you in resumption ; it 
 would extinguish to a certain degree the premium between gold and 
 currency? 
 
 Secretary Sherman. Yes, sir. The people want these bonds^ and we 
 expect to sell them at home. If the people could buy these bonds at 
 
13 
 
 par in currency, tlie money they own, you could sell more bonds, because 
 that IJ per cent, premium deters them. 
 
 Senator Vookhees. In other words, I buy a 4 per cent, bond and 
 you agree to pay it in gold or silver, and you take in payment for it, 
 from me, currency. 
 
 Senator Morrill. But he issues a bond at 4 per cent, instead of 
 four and a half or live. 
 
 Senator Ferry. You would substantially recognize currency, then, as 
 equal to coin? 
 
 Secretary Sherman. I think it makes it so. 
 
 Senator Voorhees. Why could not the government receive its cus- 
 toms duties in currency ? 
 
 Secretary Sherman. I will answer that in a moment, if you please. 
 
 Senator Dawes. Is not the general essence of what you have just said, 
 in regard to selling bonds for currency, what you have heretofore in- 
 troduced in the Senate, and which has been before the House Commit- 
 tee of Ways and Means'? 
 
 Secretary Sherman. Yes, sir. Always, until 186G, when Mr. McGul- 
 loch adopted his policy, bonds were issued in exchange for currency, 
 and we never asked gold for them. 
 
 Senator Voorhees. Then you propose, when you get currency for 
 the bonds, to reissue the currency ? 
 
 Secretary Sherman. Yes, sir; and buy at once the other bonds, pay- 
 ing in currency the market-price in gold. 
 
 Senator Ferry. The process is to retire the higherrate-interest bonds 
 and to put out the lower-rate bond 1 
 
 Secretary Sherman. Yes, sir; thesavingin the difference of interest 
 in six months would cover the extra amount paid as difference between 
 currency and coin. I think another aid to resumption is very desira- 
 ble. If you could make it clear by legislative enactment that the Secre- 
 tary has the power to reissue United States notes after the 1st of Janu- 
 ary to the amount of $300,000,000, that would relieve the people and 
 relieve the whole country from the fear which they have that the green- 
 back currency is to be entirely destroyed. If we are to attempt on the 
 1st of January to pay off all these greenbacks as presented and to de- 
 stroy them, I have my doubks of our ability. I think the law is perfectly 
 clear now as to the power to reissue up to three hundred millions cur- 
 rency. 
 
 Senator Allison. But you think it ought to be on the contract ? 
 
 Secretary Sherman. I think it ought to be plainly expressed in the 
 law. I think the passage of some such bill as Mr. Wallace has intro- 
 duced and the Senate passed, with some amendments I would suggest 
 to it, or rather the one that Mr. Burchard introduced, and recently re- 
 ported by Mr. Eobbins of North Carolina. 
 
 Senator Dawes. Is the Burchard bill and the Bobbins bill the same? 
 
 Secretary Sherman. Mr. Eobbins's bill is the same with modiflcatins 
 made at different stages. I think the passage of that bill would aid 
 me greatly, because that would enable me to sell bonds to all classes of 
 the people. 
 
 Senator Dawes. You would get a new market for the bonds'? 
 
 Secretary Sherman. I think that some such law as that would be 
 very good. 
 
 Senator Bayard. A long bond for a small amount ! 
 
 Senator Dawes. Yes. 
 
 Secretary Sherman. Another thing I would recommend, and this is 
 in answer to Mr. Voorhees. I would on the first of October next receive 
 
14 
 
 United States notes in payment for duties, and yet provide for the inter- 
 est on bonds in coin.— in other words, I would assume on the first of 
 October next that our notes were as good as gold and silver, and would 
 receive them as such. 
 
 Senator Mobrill. Can yon do that in the face of the solemn pledge 
 on the statute-book ? 
 
 Secretary Sherman. Yes, if we mean to redeem the notes on the Ist 
 of January next; and I would show my confidence by doing it before- 
 hand. The Secretary has the legal right now to prepay, to anticipate 
 payment of the interest on the public debt, one year. If the note is the 
 practical equivalent of coin it will be received as coin for interest, and 
 we should take it as coin for duties. If we lose a fraction of one per 
 cent, it is a small matter. I think an act of courage of that kind would 
 be very beneficial. 
 
 Senator Dawes. If there was a difference between the value of green- 
 backs and coin you would be obliged to make it up. 
 
 Secretary Sherman. Certainly. I would show my faith in our prom- 
 ise. We promised to redeem these notes on the 1st of January. Now 
 we show our willingness to carry out the promise by receiving these 
 notes a little before that date. 
 
 Senator Bayard. What becomes of your law of 1862? 
 
 Secretary Sherman. It does not abrogate it. 
 
 Senator Bayard. I think that declared that the duties should be 
 made payable in coio, and they were specially pledged to this end. 
 
 Secretary Sherman, I know; but we pay the interest in coin. 
 
 Senator Bayard. I know you pay the interest, but the underlying 
 idea, to a certain class, has been to pay these duties iu Treasury notes. 
 If these were not redeemable, to do this would be a violation of that 
 solemn pledge. 
 
 Senator Allison. If we do the thing as the Secretary says 
 
 Senator Bayard. Whenever they are paid, undoubtedly; but you 
 still have your public stipulation that yoii are to pay your duties in a 
 certain measure or material commodity, or what you please to call it, 
 and you say, " No ; we will pay them by another form of indebtedness." 
 
 Senator Allison. What is that pledge? It is that these duties shall 
 be set apart for interest. Now the duties amount annually to certainly 
 twenty or thirty millions more than the annual interest. Therefore, if 
 that fund is still set apart for the payment of the interest, it certainly 
 can be used for that purpose although there is a difference of, say, 1^ per 
 cent, between the material received and the material with which the 
 interest is paid. 
 
 Secretary Sherman. I want to state to Mr. Bayard that we are re- 
 ceiving customs now in a form of paper money. Our duties, nearly all 
 of them, are paid in certificates of money; we pay out these certificates 
 and we pay but coin. 
 
 Senator Bayard. The certificates actually represent gold, otherwise 
 there would be a breach of contract. Instead of taking gold we take 
 certificates of deposit. 
 
 Secretary Sherman. We receive greenbacks in the same way as gold 
 certificates, payable after three months after the 1st of October next. 
 
 Senator Bayard. I understand that is so, and I agree with you that 
 whenever a greenback is equivalent to a certificate of deposit for gold, 
 then it is a mere convertibility of terms. 
 
 Secretary Sherman. That is precisely what I would make it. 
 
 Senator Allison. That is rather an interesting statement. I would 
 
15 
 
 like to have you elaborate that as to what the gold operations of the 
 Treasury are. 
 
 Secretary Sherman. I asked Mr. Gilfillan this question and told him 
 to put his answer in writing as to what proportion of our bonds, and our 
 interest is now paid in gold coin. I was surprised to see so little of it 
 paid in coin. Most of it is paid in certificates. 
 
 Treasury or the United States, 
 
 Washington, March 18, 1878. 
 Sir : As to what proportion of interest and principal of the national debt is paid by 
 check or in gold certificates, it may be said that all interest on $407,842,050, registered 
 principal of the 5 per cent., 4J per cent., and 4 per cent, funded loans, is now paid by 
 coin checks, and while there is no record showing how other registered and coupon 
 interest is paid, there is no doubt that, so far as the denominations of gold certificates 
 will permit — the lowest being $100 — payments of interest are made at the principal 
 offices in gold certificates. Should denominations convenient for the purpose be 
 issued, very little actual coin would be used in making the interest payments. The 
 principal and accrued interest of all bonds redeemed at maturity or under the call of 
 the Secretary are paid by coin check. The amount of payments by check of the prin- 
 cipal of bonds during the fiscal year ended June 30, 1877, was $127,124,450. 
 Very respectfully, 
 
 JAS. GILFILLAN, 
 
 Treasurer TJniled Stales. 
 Hon. John Sherman, 
 
 Secretary of the Treasury. 
 
 The Chairman. These certificates of deposit are precisely the same 
 as gold. 
 
 Senator Bayard. It represents an absolute metal at a place whence 
 it can be taken on the presentation of the check. 
 
 Senator Kernan. They can at their option go and get the gold on 
 them. 
 
 Senator Ferry. The Secretary stands upon the presumption assured 
 by these facts, that ou the first of January there is uo question that he 
 can on the volume now out resume, and as respects the greenbacks, it 
 is simply a difference of form between them and certificates of coin, and, 
 therefore, he says he would be ready on the first of October to receive 
 the greenbacks in payment of duties, because he has or will have coin 
 enough tb meet maturing interest and resume. 
 
 Secretary Sherman. I never would receive the greenback for cus- 
 toms duties until I knew it was as good as coin, and I would be will- 
 ing to run the risk of anticipating that for three months if that would 
 help the matter. 
 
 Senator Voorhees. Suppose the result of such action would be to 
 close the gap between the paper and coin or would help to do iti 
 
 Secretary Sherman. I say it would help. If you gentlemen will feel 
 your way clear to allow my receiving the United States notes in pay- 
 ment of bonds, and will make it clear that I won't be compelled to re- 
 deem all the United States notes that come in after the first of January 
 next; and if you think, under the circumstances, I would be strong 
 enough to receive these notes on the first of October, I should be willing 
 to guarantee the resumption. I think for us to go backward over all 
 of this long, weary agony and struggle toward resumption would be a 
 sign of national weakness and do the nation great harm, do our credit 
 harm, and bring injury upon us all. 
 
 Senator Bayard. Suppose that on the first of October the premium 
 between gold and paper has passed away and gold has come to par, and 
 you can use it as you would paper, and that is your agreement to re- 
 ceive that at the custom-house, where will your supply of gold be found 
 
16 
 
 in case you are called upon for actual exchange in payment of your 
 notes'? 
 
 Secretary Shekman. We have the large revenue of gold and silver. 
 We have the incoming notes,' which will then be as good as coin to pay 
 out. And if need be, we could sell our bonds. I do not think it would 
 be difl&cult to supply the quantity of coin required. 
 
 Senator Jones. Couldn't you buy gold with the notes? 
 
 Senator Ferry. Would there be any difficulty in purchasing gold 
 when there wonld be less demand for it? There being no active demand 
 for it, you would be able to purchase gold as the single purchaser much 
 easier than you do now with numerous competitors in the market? 
 
 Secretary Sherman. As a miatter of course there is some risk in 
 resuming, and we have got to take that risk. If we take it on the first 
 of January, we have got to strengthen ourselves as much as possible, 
 but the risk is greatly exaggerated. Some future Congress will have to 
 provide for exigencies that may arise from financial panics or adverse 
 trade, by authorizing a temporary suspension of specie payment or a 
 temporary issue of notes, as is done by the Bank of England. 
 
 Senator Jones. If greenbacks are made a legal tender, I don't see 
 why you require the law. If you didn't have the gold to redeem them, 
 people would simply go right on, and you couldn't pay it out. 
 
 The Chairman. What is your opinion as to the amount of gold and 
 silv^er coin outside of the Treasury, estimated to be in the hands of the 
 people of the country? 
 
 Secretary Sherman. I thought you would probably ask me that ques- 
 tion, and I have got a statement from Mr. E. B. Elliott, of the Treasury, 
 giving the amount of gold and silver on hand. It is a mere estimate. 
 Mr. Elliott estimates it now, the first of March, at $280,000,000, Doctor 
 Lindermann last October estimated it at $260,000,000, of which 
 $200,000,000 was gold, showing a small increase. 
 
 Senator Jones. Does this give the localities where that gold is to be 
 found? 
 
 Secretary Sherman. Mr. Elliott had that all figured but in another 
 statement. This is the aggregate. 
 
 The Chairman. What effect would a repeal of the resumption act 
 have upon the relations of the currency, legal tenders, and our coin, gold 
 and silver? Would not a repeal of the resumption act cause a fall of 
 paper below gold and silver ? 
 
 Secretary Sherman. I have no doubt of that. I think a repeal of 
 the resumption act would at once cause a widening between coin and 
 paper money, depending entirely upon the confidence the people at large 
 would have in the ultimate redemption of paper, but I don't want to 
 enter on this delicate ground. 
 
 The Chairman. I would like to know whether there is any general 
 feeling among business men in favor of a repeal of the resumption act 
 since the passage of the silver bill; that is, whether it is the opinion 6i 
 the business men that a repeal of the resumption act will give greater 
 confidence in the future? 
 
 Secretary Sherman. I do not think there is. There was a strong 
 feeling in favor of remonetization of the silver, founded, I think, upon 
 the mistaken idea that somebody or other had been guilty of demonet- 
 izing silver for a bad purpose, and we know very well that at the time 
 this was done the silver dollar was worth more than the gold dollar. I 
 believe the public mind is prepared now to settle down to resumption — 
 that is, in the equivalency of the coin to paper money. 
 
 Senator Bayard. You speak of resumption upon a bi metallic basis 
 
17 
 
 being easier. Do you make that proposition irrespective of the read- 
 justment of the relative values of the two metals as we have declared 
 them ? 
 
 Secretary Sherman. I think so. Our mere right to pay in silver 
 would deter a great many people from presenting notes for redemption 
 who would readily do so if they could get the lighter and more portable 
 coin in exchange. Besides, gold coin can be exported while silver coin 
 could not be exported, because its market value is less than its coin value. 
 
 Senator Bayard. I understand that it works, practically very well. 
 So long as the silver is less in value than the paper you will have no 
 trouble in redeeming your paper. When a paper dollar is worth 98 
 cents nobody is going to take it to the Treasury and got 92 cents in sil- 
 ver ; but what are you to do as your silver coin is minted ? By the 1st of 
 July next or the 1st of January next you have eighteen or twenty mil- 
 lions of silver dollars which are in circulation and payable for duties, 
 and how long do you suppose this short supply of silver and your con- 
 trol of it by your coinage will keep it equivalent to gold — when one is 
 worth ten cents less than the other? 
 
 Secretary Sheeman. Just so long as it can be used for anything that 
 gold is used for. . It will be worth in this country the par of gold until 
 it becomes so abundant and bulky that people will become tired of car- 
 rying it about ; but in onr country that can be avoided by depositing it 
 for coin certificates. 
 
 Senator Bayaed. Do you suppose it is possible to retain in this 
 country these two moneys, one of gold and one of silver, at the ratio 
 you have adjusted them of 16 to 1, when their market value is differ- 
 ent? 
 
 Secretary Sheeman. I think we can do it until the amount of silver 
 gets to be somewhere between $50,000,000 and $100,000,000. 
 
 Senator Bayaed. That would take you about one and a half or two 
 years ? 
 
 Secretary Sherman. Yes ; but that is a question of opinion. Let me 
 give you the basis of that opinion. In England they maintain over 
 $100,000,000 of silver at par with gold. 
 
 Senator Bayaed. They do it by linuting its legal tender. 
 
 Secretary Sheeman. Then in France they maintain a much larger 
 amount. 
 
 Senator Jones. How much silver is circulating at a parity with gold 
 in France ? 
 
 Secretary Sheeman. Between two and three hundred millions, per- 
 haps more than that. You know better about their statistics than I do, 
 but it is very large. 
 
 Senator Jones. Within a very small fraction of the amount of gold. 
 
 Senator Kbrnan. About how much silver sho ild there be in the 
 country to have a fair supply of coin to pay all the duties? 
 
 Secretary Sheeman. That is a doubtful question. If the coin is con- 
 vertible into coin certificates I think $'10,000,000 or $20,000,000 will do it. 
 
 Senator Keenan. If there were $20,000,000 in coin certificates in ex- 
 istence they would probably pay the duties, would they not ? 
 
 Secretary Sheeman. I think so. ' 
 
 Senator Allison. You stated that most of these transactions relat- 
 ing to gold are conducted in certificates. Why is that ? 
 
 Secretary Sheeman. Because gold is unhandy and risky to carry. 
 At the customhouses they prefer to send certificates to pay duties, be- 
 cause certificates can be easily handled. 
 2 s 
 
18 
 
 Senator Bayard. These certificates represent that amount of gold, 
 and are payable on demand to bearer ? 
 
 Secretary Sherman. Yes; they are payable on demand. 
 
 Senator Jones. I understand that the bulkiness would not have any 
 more effect on the silver than on the gold. 
 
 Senator Voorhees. There is a committee of very prominent men of 
 my State in the city, and I agreed to ask the Secretary a question. Our 
 folks are very anxious to have a mint established at Indianapolis, and 
 they wanted me to ask the Secretary about the capacity of the present 
 mints. How much can be coined now by the present capacity of the 
 mints. 
 
 Secretary Sherman. I received this morning a letter from Dr. Lin- 
 derman upon this subject, which I will be very happy to read: 
 
 The Mint of the United States at Philadelphia, Pa., 
 
 March 18, 1878. 
 
 Dear Sir : This mint is coining silver dollars at the rate of about $55,000 per woik- 
 ing day. 
 
 The dies are not working satisfactorily. Some of them sink and others crack. I 
 Have been, since my arrival here, examining the matter and trying to remedy the 
 defect. It appears to be mostly caused by inferior steel. A new obverse hub has been 
 prepared, and a new reverse hub is in course of preparation and will be finished by 
 Wednesday. The first two hubs prepared sunk somewhat, and the working dies made 
 from them were not as perfect as they should be. I have decided not to send any dies 
 for the dollar to the Western mints until they can be prepared with the new hubs. 
 The experience of the mint for many years has been that much difficulty attends the 
 striking of all large-sized coins from new devices, aud that occasionally defective steel 
 is encountered, no matter how much care is taken in the selection. I expect all these 
 difficuUies to be fully overcome by about the 1st proximo, after which -the capacity of 
 this mint will be brought up to 75,000 silver dollars per working day. 
 
 1 deem it prudent to remain here until the new hubs have both been finished (day 
 after to-mi>rrow). 
 
 The newspaper cry about the "English design" and "English engraver" is all non- 
 sense. The regular engraver of the mint is an Englishman, and the design which he 
 jirepared took two strokes of a powerful screw or medal press to bring up the devices, 
 and particularly the eagle. The present silver dollar has one very important advan- 
 tage over the trade-dollar as well as the old silver dollar, and that is that the border is 
 so arranged as to fully protect the devices from coming together whea piled one upon 
 another. In this way only can undue abrasion be prevented, and that is what I have 
 had in view in the preparation of new devices lor nearly two years past. We shall 
 fully succeed, but in the mean time must take the raps of all the wise and knowing 
 oiies in the land. 
 
 Truly, your friend, 
 
 H. E. LINDEEMAN. 
 Hon. John Sherman : 
 
 Secretary Sherman. The San Francisco mint, it.is thought, can coin 
 about $100,000 a da,y. We think it better to run these two large mints 
 to. their fullest capacity on the silver dollar and stop issuing the trade- 
 dollars. Perhaps we shall issue trade-dollars from Carson ; but at any 
 rate these two mints furnish enough, so that I do not really think a new 
 mint necessary. 
 
 Senator Allison. The Philadelphia mint, at $75,000 each working- 
 day, would issue about $1,800,000 a month, and the San Francisco 
 mint, at $100,000 a day, would issue $2,400,000 a month, aggregating 
 $4,400,000 a month. ' 
 
 Senator Yooehees. You would not be prepared to recommend the 
 establishment of the mint under the present circumstances 1 
 
 Secretary Sherman. No; it would take two years to make a mint. 
 
 Senator Allison. In the event of a change in t^e balance of trade, 
 so that our imports shall exceed our exports, beginning, say, July 1 
 and continuing to the end of the year, what probable effect would that 
 
19 
 
 Lave upon your ability to resume ; or have you any machinery by which 
 you can counteract any such influence that might happen temporarily 
 during this interval ? 
 
 Secretary Sherman. If the current of trade should be against us, it 
 is pretty difficult to answer. If we had power to raise the rate of inter- 
 est, we might check it. I do not know that the government would be 
 much affected by the balance of trade, and I think we could go on. It 
 would undoubtedly be harder upon the people. ^ 
 
 The Chairman. Suppose there should or should not be a European 
 war ; would either have any effect 1 
 
 Secretary Sherman. All such circumstances would have an effect 
 upon merchants. 
 
 Senator Ferry. There is one point ; you state that the greenbacks 
 and United States notes amount to $348,000,000, but aside from the 
 reserves there are really in circulation about $320,000,000. 
 
 Secretary Sherman. I mean we are holding greenbacks in lieu of 
 notes of suspended banks, so that really there are in circulation only 
 about $320,000,000. 
 
 Senator Ferry. Now, you state that with $140,000,000 gold reserve 
 you would be willing to hold $300,000,000 as a part of the currency, 
 and meet resumption on that basis. Now, I desire to ask if, with the 
 contraction as it is going on, it would be any obstacle to resumption 
 even if the outstanding circulation should be $320,000,000 on the first 
 of January next ? 
 
 Secretary Shei^an. I think the $20,000,000 would be provided for 
 by the increase of bank-notes. 
 
 Senator Ferry. Without any direct further contraction than under 
 the present resumption act "? 
 
 Secretary Sherman. The present resumption act would be sufi&cient. 
 I would not by myself provide for and direct contraction of the currency 
 except what is done under the act. 
 
 The Chairman. Don't you believe there will an expansion come upon 
 us naturally or by action of the Treasury Department on the 1st of Jan- 
 uary 1 Will there not be more money in actual circulation after that 
 period ? 
 
 Secretary Sherman. I think and hope so. 
 
 Senator Ferry. Would not that produce a healthier condition ? 
 
 Secretary Sherman. Yes, sir. 
 
 Senator Bayard. What would be the effect, in your opinion, of a dec- 
 laration that $300,000,000 of Treasury notes might be reissued as a 
 minimum and as a nfaximum, to be supported by a retention by law of 
 $100,000,000 of gold in the Treasury 1 
 
 Secretary Sherman. That would be very beneficial, because I think 
 the fear about that $300,000,000 would be overcome. 
 
 Senator Kernan. And your opinion is that authority to reissue the 
 legal -tender notes should be expressly given by law. 
 
 Secretary Sherman. I think that authority to reissue, unquestioned 
 and undoubted, would take away the fears of all classes of people : First, 
 those in favor of inflation, who do not want the greenback destroyed; 
 then in the Eastern States, where they think we ought to retire the 
 greenbacks and issue bank-notes instead, and believe that we are bound 
 under existing law to pay the whole of the $300,000,000. And that we 
 are not prepared to do. 
 
 Senator Allison. la other words, you think we cannot come to and 
 maintain specie payments without the power to reissue? 
 
 Secretary Sherman. I do not thiuk we can. 
 
APPENDIX. 
 
 Comparison of condUion of the Treasury March 1, 1877, anA March 1, 1878. 
 
 Balauces. 
 
 1878. 
 
 Currency 
 
 Special fund for tlie rederaptioa of fractioDal currency 
 
 Special deposit of legal tenders for redemption of certificates of 
 
 deposit 
 
 Coin 
 
 Coin certificates 
 
 Coin, less coin certificates..- 
 
 Ontstanding called bonds 
 
 Other outstanding coin liabilities 
 
 Outstanding legal tenders 
 
 Outstanding fractional currency 
 
 Outstanding silver coin 
 
 Total debt, less casb in Treasury 
 
 Reduction of debt for February 
 
 Keduction of debt since July 1 
 
 Market value of gold 
 
 Imports (12 months ending January 31) .. 
 Exports (12 months ending January 31) . . 
 
 $2, 690, 765 52 
 10, 000, 000 OO 
 
 34, 445, 
 
 90, 263, 
 
 52, 146, 
 
 38, 117, 
 
 7, 826, 
 
 9, 070, 
 
 3S4, 839, 
 
 24. 434, 
 
 28, 683, 
 
 2, 088, 781, 
 
 2, 070, 
 
 10, 658, 
 
 422, 943, 
 603, 418, 
 
 000 00 
 771 44 
 700 00 
 071 44 
 550 00 
 572 41 
 484 00 
 420 35 
 170 01 
 143 04 
 429 06 
 201 95 
 104 87 
 252 00 
 793 00 
 
 28, 555, 
 
 131, 318, 
 
 48, 456, 
 
 82, 862, 
 
 a, 475, 
 
 .5, 539, 
 
 348, 618, 
 
 17, 190, 
 
 38, 489, 
 
 2, 042, 037, 
 
 2, 250, 
 
 18, 121, 
 
 477, 712, 
 622, 167, 
 
 000 00 
 156 33 
 000 00 
 156 3S 
 650 OO 
 020 57 
 024 OO 
 6»8 14 
 490 94 
 129 08 
 237 18 
 094 18 
 101 8T 
 900 00 
 514 00 
 
 Treasukt Depaktmkkt, 
 
 Warrant Division. 
 
 Statement of outstanding coin and currency certificates at end of each quarter from Octoher 
 
 1, 1872, to January 1, 1878. 
 
 Coin certifi- 
 cates. 
 
 Currency cer- 
 tificates. 
 
 October 1, 1872 , 
 January 1, 1873 
 April 1,1873 ... 
 July 1, 1873 . . . . 
 October 1, 1873 
 January 1, 1874 
 April 1,1874 ... 
 July 1,1874 .... 
 October 1, 1874 . 
 January 1, 1875 
 April 1,1875... 
 July 1,1875 ... 
 October 1, 1875 . 
 January], 1876. 
 April 1,1876.... 
 July 1,1876 .... 
 October 1, 1876 . 
 January 1, 1877 
 April 1, 1877 ... 
 July 1,1877.... 
 October 1, 1877 . 
 January 1, 1878. 
 
 25, 792, 760 
 23, 263, 000 
 24, 141, 000 
 39, 460, 000 
 33, 935, 400 
 37, 543, 300 
 37, 04.5, 000 
 
 22, 825, 100 
 26,415,600 
 
 23, 540, 600 
 24, 191, 900 
 21, 796, 300 
 11, 643, 200 
 31, 198, 300 
 
 32, 337) 600 
 
 28, 681, 400 
 
 29, 777, 900 
 47, 280, 000 
 48, 279, 400 
 41, 572, 600 
 37, 997, 500 
 
 33, 424, 900 
 
 15, 630, 000 
 25, 370, 000 
 24, 450, 000 
 
 31, 730, OOO 
 11,250,000 
 36, 720, 000 
 51,720,000 
 58. 760, OOO 
 56, 350, 000 
 41, 200, OOO 
 43, 045, OOo 
 58, 41,5, 000 
 60, 660, OOo 
 35, 175, OOO 
 34, 230, 000 
 
 32, 840, 000 
 34, 520, 000 
 
 31, 000, OOO 
 35, 155, 000 
 54, 9"0. 000 
 43, 110. 000 
 
 32, 830, too 
 
22 
 
 Reduction of United States notes, by vionths, from 'March 1, 1875, to March \ , 1878. 
 
 March 1,1875 
 
 April 1, 1875 
 
 May 1,1875 
 
 Jane 1,1875 
 
 July 1,1875 
 
 August 1,1875... 
 September 1, 1875 
 October 1,1875... 
 Ifovember 1,1875. 
 December 1, 1875 . 
 January 1, 1876 . . 
 February 1,1876. 
 
 March], 1876 
 
 April 1,1876 
 
 May 1,1876 
 
 June 1,1876 
 
 July 1,1876.: 
 
 August 1, 1876... 
 September 1, 1876 
 October 1, 1876 .. 
 November 1, 1876 
 December 1, 1876 
 January 1, 1877.., 
 February 1,1877., 
 
 March 1,1877 
 
 Aprill, 1877 
 
 May 1,11:77 
 
 June 1,1877 
 
 July 1,1877 
 
 August 1,1877... 
 September 1, 1877 
 October 1, 1877 .., 
 November 1,1877 
 December 1, 1877 
 January 1, 1878. . 
 February 1,1878., 
 March 1,1878 
 
 Ontstanding. 
 
 $383, 
 379, 
 378, 
 377, 
 375, 
 374, 
 374, 
 373, 
 373, 
 373, 
 371, 
 371, 
 370, 
 370, 
 370, 
 370, 
 
 369, 
 368, 
 367, 
 366, 
 366, 
 364, 
 364, 
 362, 
 361, 
 360, 
 359, 
 359, 
 357, 
 356, 
 354, 
 351, 
 349, 
 349, 
 348, 
 
 000, 000 
 226, 900 
 051, 760 
 064, 000 
 771,580 
 755, 108 
 245, 708 
 941, 134 
 236, 244 
 471, 772 
 827, 230 
 273, 140 
 943, 392 
 755, 348 
 527, 876 
 123, 668 
 773, 384 
 619, 338 
 334, 604 
 494, 740 
 535, 716 
 911, 000 
 055, 084 
 984, 812 
 339, 484 
 656, 304 
 494, 404 
 413, 580 
 764, 332 
 094, 220 
 976, 164 
 914, 932 
 490, 892 
 340, 288 
 943, 776 
 110, 424 
 618, 024 
 
 Heducilon 
 each month. 
 
 773, 100 
 175, 140 
 987, 760 
 292, 420 
 016, 472 
 509, 400 
 304, 584 
 704, 880 
 764, 472 
 644, 552 
 554, 080 
 329, 748 
 188, 144 
 227, 372 
 404, 208 
 351, 384 
 153, 056 
 2rt4, G24 
 839, 864 
 959, 024 
 624, 716 
 85,=), 916 
 070, 272 
 745, 328 
 583, 380 
 161, 800 
 081, 824 
 648, 248 
 670, 112 
 118, 056 
 061,232 
 424, 040 
 150, 604 
 396, 512 
 833, 352 
 492, 400 
 
 Total reduc- 
 tion. 
 
 $33, :81, 976 
 
23 
 
 TUEASURY DEPAHTMEXT, 
 
 Office of Comptroller of the Currexcy; 
 
 Waahingion, Fehrimry 16, 1878. 
 
 [Number of banks, 8,074.] 
 
 Ahslracl of reports made to the CoviptroUer of the Currency, shoiving the condition of the na- 
 tional banks in the United States, including national gold banks, at the close of business on 
 Friday, the 26th day of December, 1877. 
 
 BES0UKCE8. 
 
 Loans and discounts 
 
 Overdrafts 
 
 U. S. bonds to secure circulation . . 
 
 U. S bonds to secure depoyits 
 
 U. S. bonds on hand , 
 
 Otherstocks, bonds, andmortgages 
 
 Due from approved reserve agents. 
 
 Due from other national banks . . . 
 
 Due from State banks and bankers 
 
 Real estate, ftirniture,andfixturcs. 
 
 Current expenses 
 
 Premiums paid . 
 
 Checks and other cash items 
 
 Exchanges for clearing-house 
 
 Bills of other n ational banks 
 
 Fractional currency 
 
 Specie, viz : 
 
 Gold coin $.'i,506,556 39 
 
 Silver coin 4, 300, 274 31 
 
 U. S. gold certiti- 
 oates 23,100,920 OO 
 
 Legal-tender notes 
 
 U. S. certificates of deposit for le- 
 gal-tender notes 
 
 Five per cent redemption fund 
 with Treasurer 
 
 Due from Treasurer other than re- 
 demption fund 
 
 $87?, 055, 
 
 3, 801, 
 
 343, 869, 
 
 13, 538, 
 
 28, 479, 
 
 32, 169, 
 
 75, 960, 
 
 44, 123, 
 
 11,479, 
 
 45, 511, 
 
 8, 958, 
 
 8, 841, 
 
 10, 265, 
 
 64, 664. 
 
 20, 312, 
 
 778, 
 
 305 95 
 438 92 
 550 00 
 000 00 
 800 00 
 491 03 
 087 27 
 924 97 
 945 65 
 9.')2 25 
 903 60 
 939 09 
 059 49 
 4!5 01 
 692 00 
 084 78 
 
 32, 907, 750 70 
 70, 568, 248 00 
 
 26, 515, 000 00 
 
 15, 028, 340 14 
 
 1, 465, 236 94 
 
 Aggregate 1,737,295,145 79 
 
 LIAJJILITIES. 
 
 Capital stock paid in $477, 128, 771 09 
 
 Surplus fund 121,618,455 32 
 
 Other undivided profits 51, 530, 910 18 
 
 •National-bank notes outstanding 299, 240, 475 00 
 
 State-bank notes outstanding 470,540 08 
 
 Dividends unpaid 1, 40f, 178 34 
 
 Individual deposits 604,512,514 52 
 
 U. S. deposits , 6,529,031 09 
 
 Deposits of U. S. dishurting of- 
 ficers... 3,780,759 43 
 
 Due to other national banks ll.%-773, 660 58 
 
 Dne to State banks and bankers. 44. 807, 958 79 
 
 Notes and biUs rediscounted 4, 654, 784 51 
 
 Bills payable 5,843, 107 OS 
 
 Aggregate 1,737,295,145 79 
 
 * The amount of circulation outstanding at the date, named, as shown by the books of this ofiice, was 
 $321,672,505 ; which amount includes the notes of insolvent banks, of those in voluntary liquidation, and 
 of those which have deposited legal-tender notes under the act of June 20, 1874, for the purpose of re- 
 tiring their circulation. 
 
 JOHN JAT KNOX, 
 Comptroller of the Currency. 
 
21 
 
 
 £ 
 
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25 
 
 TEEASUUV DErAHTMEKT, OFFICE OF COMPTUOLLER OF THE CUEKENCV, 
 
 Washingtortj March 15, 1878. 
 Additional circulation under act of January 14, 1875. 
 
 January 
 
 Febwiary 
 
 March 
 
 April 
 
 May 
 
 June 
 
 Jnly 
 
 Angnst 
 
 September 
 
 October 
 
 November 
 
 December 
 
 Total 
 
 Legal-tender notes oatstanding 
 
 $537, 580 
 
 1, 062, 440 
 
 1, 956, 580 
 
 1, 390, 200 
 
 1, 237, 500 
 
 1, 735, 525 
 
 1, 151, 140 
 
 626, 960 
 
 520, 650 
 
 768, 100 
 
 981,010 
 
 621,220 
 
 12, 788, 905 
 
 December 31. 
 371, 827, 220 
 
 $702, 370 
 
 329, 385 
 
 322, 380 
 
 2i5. 815 
 
 476, 560 
 
 485, 670 
 
 144,880 
 
 360, 100 
 
 1, 045, 510 
 
 1, 198, 780 
 
 780, 895 
 
 1, 069, 895 
 
 7, 142, 240 
 
 December 31 . 
 366, 055, 084 
 
 $1, 337, 840 
 
 931, 600 
 
 1,979,100 
 
 1,452,250 
 
 1, 3.52, 280 
 
 810, 310 
 
 837, 640 
 
 1, 397, 570 
 
 I, 326, .540 
 
 3, 030, 050 
 
 3, 938, 2.55 
 
 1, 745, 640 
 
 20, 139, 135 
 
 December 31. 
 349, 943, 776 
 
 1878. 
 
 Sl,041,f90 
 615, 500 
 
 February 28. 
 348, 618, 024 
 
 Total outstanding circulation of national-banli notes at the following dates, viz ; 
 
 
 December 31, 
 1875. 
 
 December 31, 
 1876. 
 
 December 31, 
 1677. 
 
 February 28, 
 
 1878. 
 
 
 ■ $344, 391, 896 
 
 2, 087, 860 
 
 *319,'498,2I6 
 2,097,390 
 
 $320, 240, 385 
 1, 432, 120 
 
 $320, .557, 871 
 ■'1 4.32 120 
 
 Gold banl^s 
 
 
 
 Total 
 
 346, 479, 756 
 
 321,595,606 
 
 321, 672, 505 
 
 321, 989, 991 
 
 
 Total outstanding circulation of national banks in operation as shown by their reports at the follow- 
 ing dates : 
 
 Including gold banks. 
 
 December 17, 
 
 1875. 
 
 $314, 979, 451 
 
 December 22, 
 1876. 
 
 $292, Oil, 575 
 
 December 28, 
 1877. 
 
 $299, 240, 475 
 
 Specie held hy the national lianlcs, as shown hy their reports to the Comptroller of the Ctir- 
 rency, and in New Torh City by their statements to the clearing-house. 
 
 UNITED STATES. 
 
 June 30, 1876 
 
 December 22, 1876 . 
 
 June 22,1877 
 
 December 28, 1877 . 
 
 Date. 
 
 Coin. 
 
 $6, 455, 237 42 
 8, 484, 367 89 
 9, 156, 476 06 
 9, 806, 830 70 
 
 ITnited States 
 coin-certificates. 
 
 $18, 764, 320 00 
 24, 515, 280 00 
 12, 179, 520 00 
 23, 100 920 00 
 
 Total. 
 
 $25, 219, 557 42 
 
 32, 999, 647 89 
 21, 335, 996 06 
 
 33, 907, 750 70 
 
 T>JEW YORK CITY. 
 
 June 30, 1876 
 
 December 22, 1876 . 
 
 June 22, 1877 
 
 December 28, 1877 . 
 
 $1, 214, 522 92 
 1, 434, 701 83 
 1, 423, 258 17 
 1, 955, 746 20 
 
 $16, 872, 780 00 
 21, 602, 900 00 
 10, 324, 320 00 
 
 $18, 087, 302 92 
 23,037,601 83 
 11, 747, 578 17 
 
 19, 119, 080 00 21, 074, 826 20 
 
26 
 
 NEW YORK CITY-WEEKLT STATEMENTS TO THE CLEARING-HOUSE. 
 
 "Week ending— 
 
 Amonnt. 
 
 January 5, 1878... 
 January 12, 1878. . 
 January 19, 1878.. 
 January 26, 1878.. 
 ■February 2, 1878 . 
 EebniaryQ, 1878.. 
 February 16, 1878 
 February 23, 1878 
 March 2, 1878 .... 
 March 9, 1878 .... 
 March 16, 1878 
 
 m, 834, 100 
 23, 904, 000 
 24, 974, 400 
 26, 452, 400 
 27, 085, 80O 
 28, 133, 300 
 29, 391, 900 
 
 28, 902, 200 
 
 29, 384, 000 
 
 33, 932, 900 
 
 34, 551, 000 
 
 During last year the United States accumulated coin; during tbis 
 year the banks have done so. 
 
=§. 
 
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29 
 
 Dates of nialurity and amounts of 5-20 called bonds. 
 
 AGAIXST JJ 1"EK CENTS. 
 
 1876, Dec. 1. Sa'd call $10,OCO, COO 
 
 Dec. 6. 33dcall 10,000,000 
 
 Dec. 18. 34th call 10,000,000 
 
 Dec. 21. 35th call 10,000,000 
 
 1877, Jim. 6. 36th call 10, 000, 000 
 
 Apr. 10. 37th can • 10,000,000 
 
 Apr. 24. 38th call 10, 000, 000 
 
 May 12. 39th call 10,000,000 
 
 May 28. 40th call 10, 000, 000 
 
 June 3. 41stoall 10,000,000 
 
 Jnne 10. 42d call 10,0(0,000 
 
 June 15. 43d call 10,000,000 
 
 Jnne 87. 44th call 10, 000, 000 
 
 July 5. 45th call 10,000,000 
 
 Aug. 5. 46th call .: 10,114,550 
 
 Aug. 21. 47th ca'l 10,000,000 
 
 Aug. 28. 48th call 10,000,000 
 
 Sept. 11. 49th call 15,000,000 
 
 : — $185, 114, O-TO 
 
 AGAIKST 4 PEE CIlSTS. 
 
 1877, Oct. 0. 50th call 10,000,000 
 
 Oct. 16. 51sttall 10,000,000 
 
 Oct. 19. 52d call 10,000,000 
 
 Oct. 27. 53d call 10,000,000 
 
 Nov. 3. 54th call 10,000,000 
 
 J878, Mar. 6. 55th call 10,000,000 
 
 . 60, 000, OOO 
 
 Total 245,114,550 
 
 Treasury Department, United States of Ajigrica, 
 
 Bureau of Statistics, 
 Washington, D. C, March 18, 1878. 
 
 Information asked for iy the honoraile Secretary. 
 Compare expoits and imports for three years, and show aggregate excess of exports. 
 Reply hy ike Chief of the Bureau of Statistics. 
 
 Statements showing the imports and exports into and from the United States 
 during the three fiscal years 1875, 1876, and 1877, with a classified statement of the 
 exports of domestic products ; also of the trade during the three calendar years ended 
 December :31, 1877, are appended hereto. 
 
 The latter statement shows that the balance in favor of the United States during 
 the three years indicated is as follows : 
 
 Merchandise only. 
 
 In the calendar year 1875 $64,201,852 
 
 In the calendar year 1876 185,202,605 
 
 In the calendar year 1877 164,630,20!) 
 
 Making au aggregate of gold values 414,034,666 
 
 Excess of exports over imports. 
 
 • 
 
 During ' the calendar year 
 ended December 31. 
 
 
 1876. 
 
 1877. 
 
 "\fprclifl.TifHsfi ,, . 
 
 $163. 319, 464 
 81,883,141 
 
 $140, 088, 657 
 24, 541, 552 
 
 
 
 
 185, 202, 605 
 
 164, 630 209 
 
 
 BUKFAU OF Statistic?, March 16, 1878. 
 
 E. YOUNG, Chief of Bureau. 
 
30 
 
 Ti'ade of the United States during the three years ended Deceniber 31, 1877. 
 GOLD VALUE. 
 
 
 Year ended December 31 — 
 
 
 1877. ■ 
 
 1876. 
 
 1875. 
 
 
 $644, 996, 156 
 23, 618, 923 
 
 $623,709,566 
 23, 311, 538 
 
 $567, 372, 589 
 
 Total foreign exports. 
 
 22, 878, 347 
 
 
 
 Total exports 
 
 668, 615, 079 
 503, 984, 870 
 
 647, 021, 104 
 461, 818, 499 
 
 590, 250, 936 
 
 
 526, 049, 084 
 
 
 
 
 164, 6.10, 209 
 
 185, 202, 605 
 
 64, 201, 652 
 
 
 
 SPECIE AND BULLION. • 
 
 37,459,661 
 10, 883, 006 
 
 47,973,762 
 8, 380, 713 
 
 70, 108, 852 
 
 Exports, foreign 
 
 9, 194, 662 
 
 
 
 Total exports 
 
 48, 312, 667 
 23, 771, 115 
 
 56, 354, 475 
 34, 471, 334 
 
 79, 303, 514 
 
 
 22,896,148 
 
 
 
 Excess of specie exported ,.. 
 
 24, 541, 552 
 
 21,883,141 
 
 56, 407, 366' 
 
 EDWABD YOUNG, 
 
 Chief of Bureau. 
 
 Bureau of Statistics, March 18, 1878. 
 
RESUMPTION OF SPECIE PAYMENTS. 
 
 NOTES OF A CONFEEENCE 
 
 BETWEEN THE 
 
 COMMITTEE 0.^ UMIM Md CUREENCY 
 
 HOUSE OF REPRESENTATIVES 
 
 HON. JOHN SHERMAN, SECRETARY OF THE TREASURY, 
 April 1st and 4th, 1878. 
 
 MIEMBERS OF THE C0M:M:ITTEE : 
 
 Hon, a. H. BUCKNER, chairman. 
 
 MESSES. THOMAS EWING, AUGUSTUS A. HARDENBERGH, JESSE J. TEATES, WILLIAM 
 HARTZELL, HIRAM P. BELL, B, KIRKE HART, BENJ. T. EAMBS, S. B. CHIT- 
 TENDEN, GREBNBURY L. FORT, AND WILLIAM A. PHILLIPS. 
 
 WASHINGTON: 
 
 GOVERNMENT PRINTING OFFICE. 
 
 April, 1878. 
 
Committee on Banking and Currency, 
 
 House of Eepresentatives, 
 
 Washington, April 1, 1878. 
 Present, Mr. Buckner, chairman ; 
 
 Messrs. Ewing, Hardenbergh, Hartzell, Bell, Eames, Chittenden, Fort, 
 and Phillips ; 
 
 The Hon. John Sherman, Secretai-y of the Treasury. 
 
 The chairman read to the Secretary a copy of the letter sent to him 
 oh the 28th ultimo, in which were stated the several points upon which 
 the committee wished to be informed at the conference set for to-day. 
 The first was a statement showing the actual amount of gold and silver 
 <!oin and bullion belonging to or in the custody of the Treasury Depart- 
 ment on the 28th of March, where located, and what deductions were 
 to be made from it on account of actual existing demands against it. 
 
 Secretary Sherman. I can give you a statement up to the 28th of 
 February, 1878. I am not able now. to give you the statement for the 
 month of March, bat can do it to-morrow or next day, and I will prob- 
 ably attach it to my answer. This, however, is the general result of the 
 statement. We have at the Treasury, the different subtreasuries, as^ay- 
 offices, and depositories : 
 
 TngoHcoin $118,351,709 
 
 lagold bullion 7,937,300 
 
 In subsidiary silver coin 5, 675, 494 
 
 And in silver bullion 2, 955, 577 
 
 •(See Appendix No. 3.) 
 
 I have also got the comparative debt statement, but 1 think I had 
 better not put it in now, because I will have the complete statement 
 made to day. This being the first of the month, it could not be made 
 up until to-day. (See Appendix No. 5.) 
 
 The Chairman. The next point called for by the committee is a 
 statement of gold and silver coin and bullion in the Treasury, less the 
 items deducted in your statement made before the Senate Finance Com- 
 mittee, from 1865 to 1877, inclusive. 
 
 Secretary Sherman. The Treasurer has tried to give that statement, 
 -as far as "he can, but he could not give it complete, except as to the state- 
 ment made on the 1st of February, 1877. In this statement he says 
 this: 
 
 The committee, in their inquiry No. 2, asked for a statement similar to the above, 
 for each yearfrom 1865. It has been found impracticable to comply, as to the years from 
 1865 to 1876, in the short time allowed, on account of the form in which reports from 
 assistant treasurers and mints and assay offices were made prior to 1877. In fact, to 
 make the statement as requested would necessitate correspondence with all the above 
 offices. 
 
 I told him that as this statement gives you the items a year ago, and 
 as you have also that statement for this year, that was all you would 
 probably want. The amount of gold and silver available on the 1st of 
 
4 RESUMPTION OF SPECIE PAYMENTS. 
 
 February, 1877, was $11,936,771, after making the same deductions as 
 were made in the table given to the Finance Committee, on page 4. 
 This table (Appendix No. 2) contrasting with that table will show the 
 condition of the Treasury as to gold and silver then and on the Ist of 
 February of this year. The amount a year ago was $11,938,771, and the 
 amount on the 1st of February this year was $71,775,860, making the 
 increase of gold and silver available between the Ist of February, 1878 
 and the 1st of February, 1877, $59,839,089. 
 
 This statement (handing it to the committee) will give you the amount 
 in silver coin, in silver bullion, in gold coin, &c. 
 
 There was another fact which I thought the committee would desire 
 to have in this connection. I thought that the committee would want 
 to know the distribution of this money on the 28th of March, 1878. We 
 had in gold coin and standard silver dollars $114,666,958 ; in fractional 
 silver coin $5,736,639; and in gold and silver bullion $13,664,914. The 
 amount of silver standard dollars included in this is estimated at 
 $454,711. (See Appendix No. 4.) 
 
 The Chaieman. The third inquiry is the amount of bonds sold up to 
 February 1, 1878, and not paid for. 
 
 Secretary Sherman. If that question means simply to inquire as to 
 the amount of bonds not paid for at that date, my answer is that they 
 are all paid for. There are no bonds issued unless they are paid for ; 
 but I suppose that what the committee means by this question is to as- 
 certain the amount of bonds actually sold for resumption purposes, and 
 also for refunding purpose. I have the distribution here; but in direct 
 answer to the question it will be perhaps sufficient for me to say that 
 there are no bonds which have not been paid for. We take subscrip- 
 tions, but never issue the bonds until we get the money. An arrange- 
 ment has been made with the Bank of Commerce, in New York, by 
 which we allow that bank to collect currency and coin drafts for bonds, 
 and when the coin is paid into the Treasury the bonds are sent to the 
 person. The actual amount of bonds sold under the resumption act and 
 under the refunding act is as follows : 
 
 Under the resumption act — 
 
 5 per cent, bonds of 1881 117,494,350 
 
 4i percent, bonds of 1891 15,000,000 
 
 4 percent, bonds of 1907 25,000,000 
 
 Total .57,494,350 
 
 The bonds issued on account of refunding are as follows: 
 
 5 per cent, bonds of 1881 $490,000,000 
 
 4J per cent, bonds of 1891 18!>,000,000 
 
 4 percent, bonds of 1907 55,000,000 
 
 Total 730,796,200 
 
 Which last sum added to the $57,494,350 on account of resumption 
 makes the total $788,290,550. 
 
 I ought to say that the proceeds of all the bonds that were sold under 
 the refunding act were applied to the payment of an equal amount of 
 .5 20 bonds bearing 6 per cent, interest. 
 
 The Chairman. These bonds were sold at par, were they not ? 
 
 Secretary Sherman. Yes, sir; par in coin. We paid out of the 
 Treasury one-half of 1 per cent, for commissions and expenses. 
 
 The Chairman. The fourth inquiry is as to the usual amount of an- 
 nual coin liabilities of the government, stating separately the liabilities 
 for interest, sinking-fund, foreign service, &c. 
 
RESUMPTION OF SPECIE PAYMENTS. O 
 
 Secretary Sherman. I have this for last year. It is as follows : 
 
 Coin interest paid during fiscal year 1877 ^ $93,883,431 27 
 
 Amount applied to the sinking-fund during fiscal year 1877 447, 500 00 
 
 Amount paid for diplomatic service during fiscal year 1877 755, 286 06 
 
 Amount paid for foreign naval service during fiscal year 1877 3,224,124 49 
 
 Amount of customs refunds during fiscal year 1877 5,247,800 65 
 
 Amount expended for refanding national debt, parting and refining 
 
 bullion, &c., during fiscal year 1877 901,927 30 
 
 Total 102,460,069 77 
 
 Tou are aware thatnndfer the law importers very often deposit money 
 in advance of their entries, and then, when their entries are liquidated, 
 the excess is returned to them. That system is adopted in order to 
 enable them to get their goods quickly. Also in some cases where dis- 
 putes arise as to the amount of duties, if the duties are paid in excess', 
 the excess is refunded. These refunds are in the ordinary current course 
 of business. 
 
 The Chairman. This total of $102,460.69 is the coin payments for 
 the last fiscal year ? 
 
 Secretary Sherman. Yes, sir; divided up in the way I have stated. 
 
 The Chairman. The fifth question which the committee desired you 
 to answer, is the amount of fractional currency redeemed and carried to 
 the account of the sinking fund, and what applications of coin, if any, 
 have been made on account of the sinking fund during the current fiscal 
 year. 
 
 Secretary Sherman. The answer to that is : 
 
 Theamountoffcactionalcnrrencyapplied to the sinking fundin 1876 was $7,062,142.09, 
 and in 1877, $14,043,458.05. So far in this fiscal year the redemptions of fractional cur- 
 rency amount to $3,382,621.45, making a total of $24,488,2.!l.59 applied to that fund. 
 No coin applications have been made to the sinking fund during the current fiscal 
 year, except the redemptions of bonds heretofore called, amounting to $67,700. 
 
 Some cases occurred where bonds were sent on by parties by mistake, 
 and we redeemed them ; and they were put into the sinking fund. 
 After that we adopted the habit of returning bonds that were sent by 
 mistake. 
 
 The Chairman. The next question is, what is meant by balances in 
 the sinking-fund accounts ? Of what items are those balances made 
 up? 
 
 Secretary Sherman. It is very natural for any person, lawyer or 
 business man, to be misled by the use of the word " balance" in these 
 sinking-fund accounts; A balance may not be a balance of money 
 in hand ; and, in this particular case, the word " balance " means 
 either an amount of the sinking fund which has not been made good 
 by the purchase of bonds, or an excess of the amount required by law. 
 These are called balances, and this table on page 18 of the Finance 
 Eeport shows very fully how the sinking fund is made up, and of what 
 Items it is composed. This table goes back to 1869, and shows at the 
 end of that fiscal year a balance to new account ; that is, the balance to 
 new account is a balance in this case of an amount paid — more than 
 the law required — into the sinking fund, and therefore it is put to the 
 credit of the sinking-fund for the next year. 
 
 Then, the next year, they had not bought quite as many bonds for 
 the sinking fund as the sinking-fund law required, and so there was a 
 balance of $1,254,000 which was carried to the credit of the sinking 
 fund to be made up the next year, and so on. These balances con- 
 tinued, amounting to somewhere between half a million and a million 
 and a half of dollars. Sometimes they would be on the one side and 
 
b RESUMPTION OF SPECIE PAYMENTS. 
 
 sometimes on the other, and they were carried forward until 1873 or 
 1874, when, after the panic, the revenues fell off, and they failed t& 
 make good the sinking fund. The amount of deficit in making good the 
 sinking fund in 1874 was stated at $16,305,000. Mr. Bristow, I am 
 told, declined to carry forward this balance to the next year because it 
 was apparent that, from the condition of the finances, he would not be 
 able to make good that balance in addition to the sinking fund for the 
 next year, and therefore the balance was dropped. It represents simply 
 the amount which the government failed to apply to the sinking fund. 
 Instead of carrying it forward in his accounts, the Secretary dropped 
 it. That is what I did last year, and what Mr. Morrill had done. We 
 did not undertake to carry forward the deficiency in one year to swell 
 the sinking fund for the next year. 
 
 Mr. Bell. Then this term " balance " applied to the sinking fund in- 
 dicates either the excess or the deficit in the sinking fund for the year ? 
 
 Secretary Sherman. That is all. At first the balances were carried 
 forward and were made good the next year, because they did not 
 amount to much ; but when the deficit became so great, and when it be- 
 came apparent that it could not be made good, the Secretary just dropped 
 it. Now, last year we were deficient in the sinking fund $9,235,000, 
 simply because we could not, out of the surplus revenue, make good 
 that fund. 
 
 The Chairman. On the whole, have not the deficiencies in the sink- 
 ing-fnnd account been more than made good since the passage of the 
 act? 
 
 Secretary Sherman. Yes. You will find a statement of that in Mr. 
 Morrill's report. The sinking fund was never kept as an accoant in the 
 Treasury Department until after the refunding act of 1870. A section 
 in the refunding act provided for the stating of the account of the sink- 
 ing fund, and then it was first commenced. Up to that time a statement 
 was made showing how far the sinking fund had been kept under the 
 act of February, 1862, and it was found that by the application of the 
 surplus revenue to the payment of the debt, the stipulations of the sink- 
 ing-fund act had been largely exceeded, to the amount of $200,000,000. 
 Now the sinking-fund account is regularly kept, and the exact state- 
 ment of it is shown by Mr. Morrill's reports and also by my annual re- 
 i ports. 
 
 The Chairman. Have you the report of thei examiners at the sub- 
 treasury ofllce. New York, as to the coin there? 
 
 Secretary Sherman. Yes, sir ; I have the preliminary report of Mr. 
 E. O. Graves, which is as follows: 
 
 Treasury op the United States, 
 
 Washington, March 29, 1878, 
 
 Sir : I Lave the honor to submit a preliminary report upon the examination of the 
 office of the assistant treasurer of the United States in New York, recently made nnder 
 my direction in pursuance of the instructions given in yonr letter of the 11th instant. 
 The funds found in the possession of that office at the close of business on the 12th in- 
 stant, at which time I took charge (exclusive of currency and coupons in process of 
 redemption and not charged to the cash), were as follows, the coin being verified by 
 weight and the notes, currency, and securities by actual count and examination of each 
 individual obligation : 
 
 Gold coin $100,051,280 00 
 
 Gold bars.... 3,367,713 26 
 
 Coin checks, paid on March 12, 1878, but not charged up 1, 069, 114 78 
 
 Silver coin 1,396,436 2« 
 
 Coin certificates 3,197,900 00 
 
 United States notes 32,614,479 00 
 
 National currency 428,711 00 
 
 Fractional currency and minor coin... 194,088 92 
 
RESUMPTION OF SPECIE PAYMENTS. 7 
 
 Redeemed legal-tender certificates of deposit, June 8, 1872 $3, 335, 000 00 
 
 Coin coupons 8,368 10 
 
 Coupons of District of Cplumbia bonds 110 41 
 
 Treasurer's checks for registered interest on District of Columbia bonds 273 75 
 
 Redeemed call bonds and interest 2,013 48 
 
 Treasurer's coin quarterly-interest checks : 
 
 Funded loan of 1881 48,168 03 
 
 Funded loan of 1891 ...-. 832,383 02 
 
 Funded loan of 1907 3,603 50 
 
 Receipts for advances on salaries of employes 2, 421 00 
 
 Cash for petty expenses in cashier's hands 15 00 
 
 Seven-thirty notes purchased, being balance of amount of counterfeit 
 7-30 notes purchased, and for which judgment has been obtained in 
 
 favor of the United States 8,750 31 
 
 Total 146,560,829 84 
 
 Total as shown by assistant treasurer'r report of March 12, 1878. 146, 566, 996 35 
 
 Deficit 6,166 51 
 
 Only $1,777.51 of the deficit arose in the seven and one-half years during which the 
 present incumbent has held the office of assistant treasurer, and of that amount $1,500 
 is due to a single shortage discovered in a package of notes received from a bank ia 
 payment of a draft, but which the bank refused to make good. This leaves a deficit 
 from aU other causes during the present assistant treasurer's incumbency of but 
 1277.51; a most remarkable record considering the vast amount of money which has 
 passed through his hands. The items composing the entire deficit will be explained 
 in full in my final report. 
 
 Very respectfully, vour obedient servant, 
 
 E. 0. GRAVES. 
 To Hon. John Sherman, 
 
 Secretary of the Treasury. 
 
 The items of this deficit had been reported and known at the depart- 
 ment, so that there was no actual variation between the statement as 
 made by the assistant treasurer and the actual count. Perhaps I ought 
 to say that this count occurred also here in Washington in July last, at 
 the time that Mr. Gilflllan took possession of the Treasurer's Office. 
 Every item and paper was counted before he gave his receipt for the 
 money, and everything was found to be correct, except a small item of 
 $1,831, of which we have a full account. 
 
 Mr. Chittenden. I have prepared four questions in the interest of 
 those whom I represent, to which I should like to have your answer : 
 
 First. With silver dollars and silver certificates full legal tender for 
 all debts, including the customs and the public debt, is not gold practi- 
 cally demonetized ; and how will you renew your supplies, or prevent 
 its exclusive use as merchandise in foreign commerce 'I 
 
 Second. Is there no danger that the national banks, in taking care of 
 themselves, will hoard greenbacks enough to exhaust your gold reserves 
 when the day for resumption comes ? 
 
 Third. Is it not probable that, before you have coined 100,000,000 of 
 the new silver dollars, with greater activity in foreign trade, they will 
 be exported at their bullion value to settle trade balances, and with what 
 effect upon the price of silver bullion 1 
 
 Fourth. Does not your success in resuming coin payments with our 
 so-called double standard depend absolutely upon an advance in the 
 price of silver bullion in Loudon to about 59 pence sterling per ounce ? 
 
 J have not spoken with any member of the committee in framing these 
 questions. They were framed at my own table, and 1 am influenced only 
 by my correspondence and by questions asked of me by those whom I 
 represent. 
 
 Secretary Sherman. I would a great deal rather, in this conference 
 give the committee the facts and let the committee draw its own infer 
 
8 RESUMPTION OP SPECIE PAYMENTS. 
 
 ences, than attempt to give my own opinions. But I have no objections 
 to answering arij of those qviestipris. I think that a certain amount of 
 silver dollars issued willaot have the effect which Mr. Chittenden thinks. 
 I believe we can maintain at par in gold a certain amount of silver dol- 
 lars ; precisely what amount I would not like to say, because that is a 
 question of opinion. But I have the idea that we can maintain at par 
 in gold no less than $50,000,0005 perhaps more — say from $50,000,000 
 to $100,000,000 ; but whenever those silver dollars become so abundant 
 and so burdensome that the people would not have them and would not 
 take them, and that they would not circulate, then undoubtedly they 
 would gradually sink to the value of the bullion in them. That is my 
 opinion, but I do not think it wise for either this committee or myself 
 to discuss this question much, because the silver bill is a law, and, what- 
 ever, we may think of its effects, the public mind will not be satisfied 
 until that law is fairly tried. The effect of the silver bill is not going to 
 be very rapid, nor will the fall in silver be anything like so rapid as is 
 probably feared, and long before the silver dollar can sink to the valae 
 of silver bullion, Congress. will undoubtedly correct the law if it were to 
 have that effect. If, on the other hand, it shou,ld have the effect, which 
 is anticipated, of raising the ^ass of silver up to the standard of gold, 
 then Mr. Chittenden need not be afraid. Therefore, I say that I do not 
 think 1 ought to give my opinion further on that subject. I have not 
 changed my mind about the silver bill, although the newspapers say 
 that I have. I think that (as a matter of policy) the silver bill, which 
 makes silver available to pay bonds issued by the United States either 
 before or after the refunding or resumption acts, is not good policy. I 
 have stated that over and over again publicly, and 1 do not deny it. 
 But tbe silver bill is the law. We are not infallible. It cannot operate 
 quickly in that way, and therefore we had better give it the full benefit 
 of an experiment, in the certainty that, if Congress finds that it has the 
 effect which is now anticipated. Congress can at any moment stop the 
 issue of silver dollars. I think that that is as far as I ought to answer 
 these questions. 
 
 Mr. Chittenden. It is not my object to embarrass the Secretary in 
 any way in these questions. 
 
 The CnAiEMAN. Tlie Secretary is of the opinion that " Sufficient to 
 the day is the evil thereof;" that we will take care of the present, and 
 let the future take care of itself. 
 
 Secretary Shbeman. If you allow me, I can now, in connection with 
 your question in regard to my opinion as to the practicability of resump- 
 tion, and especially in regard to an interview published in the news- 
 papers between Mr. Ewing and bankers in New York, give you my 
 ot)inion. I have read that interview with a great deal of attention, be- 
 cause I know many of the gentlemen who took part in it. 
 
 The Chairman. It is proper for me on the part of the committees to 
 say that it was not intended that that interview should be made public ; 
 but the report of it was surreptitiously obtained in some way. 
 
 Secretary Sheeman. I do not think there was the slightest objection 
 to publishing it. 
 The Chaieman., Only probably on account of confidential relations. 
 Mr. Ewing. We told those gentlemen at the conference that we had 
 our secretary for the purpose of taking down their statements, not with 
 a view to publishing them, but merely for the information of the com- 
 mittee, and the committee feels exceedingly annoyed about the pablioai- 
 tiou, because it seems like a violation of that understanding; but th& 
 
RESUMPTION OP SPECIE PAYMENTS. 9 
 
 paper was surreptitioasly obtained, aud the committee does not feel at 
 fault about it. 
 
 Mr. CniTTBNDEX. Special pains were taken at^ New York to exclude 
 newspaper reporters. 
 
 Secretary Sherman. It is pretty hard to exclude newspaper re- 
 porters; but I think it was right enough to have that conference pub- 
 lished. It presents the opinions of very intelligent gentlemen, whose 
 business it is to be familiar with the subject, and their opinions are en- 
 titled to full weight. I can only give you my general reply to them. 
 
 My reply would be about this : These gentlemen assume three prop- 
 ositions. First, that we cannot sell enough 4 per cent, bonds to pre- 
 pg,re for resumption ; second, that the national banks can throw upon 
 the government the burden of resumption of bank-notes as well as 
 of United States notes; third, that resumption requires the resump- 
 tion and cancellation, without power of reissue, of United States notes 
 below $300,000,000. To these I answer, that I believe that, with such 
 auxiliary legislation as is pending in both houses, we can sell enough 
 4 per cent, bonds to prepare for resumption ; but, if I am mistaken 
 in this, we can sell either 4J or 5 per cent, bonds, which they admit 
 will command gold, silver, and bank-notes, to maintain resumption. 
 Some of these gentlemen have proposed to'me that, if I sell them 4^ per 
 cent, bonds at par in coin, they will guarantee enough coin for resump- 
 tion ; and I have some better offers from other banks and bankers, so 
 that, on this point, it is only a question of rate of interest on bonds. 
 When it becomes clear that money cannot be had for 4 per cent., it is 
 time enough to pay 4J. The silver bill has crippled my power to sell 
 4 per cent, bonds, but a wise savings bill, that will enable me to deal 
 directly with the people, would go far to repair this. Upon the second 
 point : It may as well be understood that the national banks cannot 
 throw upon the government the burden of redeeming their notes. The 
 attempt would be suicide. They are bound to redeem their notes on 
 demand at the Treasury with United States notes or coin, and to main- 
 tain in their vaults very large reserves of United States notes. Any 
 effort of theirs to force the redemption of their reserves of United States 
 notes in coin would at once cause the government to withdraw all gov- 
 ernment deposits from them, to present all bank-notes held or received 
 by the government for redemption, and, if need be, to exchange United 
 States notes for bank-notes. 
 
 Such a struggle as these gentlemen contemplate would end in their 
 losing their power to issue circulating notes at all. Their talk about 
 forming a line to break the government is not discreet and is not dan- 
 gerous. I am more concerned about what you will do than about what 
 they will do. The United States Government already holds a larger 
 cash reserve for the redemption of its notes in proportion to demand 
 liabilities than any bank represented by these gentlemen, and it has 
 power to increase it. Our certificates of deposit — the most dangerous 
 form of liabilities — are secured, dollar for dollar, by coin or United States 
 notes actually in hand, while the banks owe over $600,000,000 to depos- 
 itors, the great body of which is represented by notes and bills dis- 
 counted. The only demand liability we owe not covered by actual cash 
 on, hand is the United States notes, and of these $70,000,000 are in our 
 ■vaults, and $70,000,000 more the banks are bound to retain in their re- 
 serves. With a coin reserve of $100,000,000 to $150,000,000, the re- 
 demption of $300,000,000 of United States notes would be easy, and 
 that reserve could not be diminished to any considerable extent by the 
 .bank's, or any combination of banks, without a continuous draft upon 
 
10 RESUMPTION OF SPECIE PAYMENTS. 
 
 the banks to make it good. We can rely upon the intelligent self-inter^ 
 est of the banks to prevent such a straggle. Nothing could provoke it 
 more quickly than threats by bank officers, and if such a struggle comes, 
 the government, with, its reserve, with ample revenue, and the power to 
 sell bonds, can easily maintain resumption, without fear of a line of 
 bank cashiers anxious to break the Treasury or to force high rates of 
 interest. 
 
 On the last point : The power to reissue is plainly given by section 
 3579, Eevised Statutes, and is not cut off any more by the notes coming 
 into the Treasury in exchange for coin than in payment of a tax. Even 
 if the Supreme Court hold them as no longer a full legal tender, they 
 are as much so as a bank-note . If the choice must be made between 
 the two, the common interest would decide in favor of the United States 
 note. I believe they both ought to circulate and both be at par with 
 coin. But nothing is so discouraging in the progress of resumption as 
 for national banks to shrink from their share of the burden, or to make 
 threats such as are stated by some of these gentlemen ; and nothing is 
 so injurious to the banking system, or will precipitate its overthrow 
 more certainly, than a popular conviction that the banks are endeavor- 
 ing to embarrass the government in maintaining resumption. 
 
 Mr. Chittenden. I did not hear anything on the ijart of those gen- 
 tlemen with whom we conversed at the sub-treasury in the form of a 
 threat, and I appeal to Mr. Swing to confirm my impression. There 
 was nothing of that kind intended, I am sure. These gentlemen simply 
 expressed the opinion that in an attempt to resume with any stock of 
 gold that you were likely to have, the gold would be transferred to th& 
 banks naturally. 
 
 Mr. EwiNG. That was it. 
 
 Mr. Chittenden. There was nothing like a threat? 
 
 Mr. EwiNG. No; on the contrary, there was a great desire manifested 
 on the part of the bankers to make resumption safe. 
 
 Secretary Sherman. I have written propositions from these gentle- 
 men, and from Mr. Coe himself, that if J will give them 4^ per cent, 
 bonds instead of 4 per cents., they will guarantee resumption, The 
 trouble is this, that when I am trying to sell bonds at 4 per cent., they 
 say I am acting both as a politician and as a financier. I suppose they 
 mean that as a politician lam desirous to have the interest low, and that 
 as a financier I am indifferent to the rate. I simply say that as soon as 
 I cannot sell 4 per cent, bonds to the people, I know I can sell 4^ per 
 cents, to the banks ; and in that way, if in no other, we can get enough 
 gold to insure and to maintain resumption. To that I pledge my opin- 
 ion and my earnest conviction. 
 
 Now, in regard to the reserve that is necessary, there is a difference 
 of opinion. I would like to have so strong a reserve that there would 
 be no question of our ability to resume, and I think (as I stated to the 
 Committee on Finance of the Senate) that if I can have a reserve of 
 one hundred and thirty millions; or, in other words, if I can increase 
 my present reserve about fifty millions, I do not see how it is possible 
 to prevent us from resuming. If it were known to-day that it was cer- 
 tain, I should have such a reserve by the first of January, and if it 
 were certain that Congress would be willing to stand by the experiment 
 of resumption, we would have resumption at once. 
 
 Mr. EwiNG. Neither of which can be made certain. 
 
 Secretary Sherman. Yes ; if I could sell the bonds and get the re- 
 serve, the thing would be made certain in 24 hours. 
 
RESUMPTION OF SPECIE PAYMENTS. 11 
 
 Mr. EwiNG. Wlieie do you suppose you could get so large a sum of 
 metal? 
 
 Secretary Sherman. We produce bulliou enough in this country. If 
 I had this year's production of gold and silver (and I could very easily 
 get it by selling bonds) I would have reserve enough. 
 
 Mr. EwiNGr. Would you get any par.t of it abroad ? 
 
 Secretary Shbkman. Yes ; some from abroad. 
 
 Mr. Phillips. In your statement to the Senate committee as pub- 
 lished, I understand you to say that there has been no increase of coin 
 in the Treasury during the most of this year. Am I correct that you 
 have not increased your coin through the months of January, February 
 or March? 
 
 Secretary Shekman. No, sir. That is, we have not increased the 
 coin belonging to the government, but the banks have increased on 
 their deposits. 
 
 Mr. Phillips. Is not the depreciated price of gold owing to the fact 
 that the banks have taken it? 
 
 Secretary Sheeman. No, sir; but simply because we went out of the 
 market for the gold. 
 
 Mr. Pho-hps. You have stated that you have not increase^ the vol- 
 ume of gold in the Treasury during this year. 
 
 Secretary Sheeman. No, sir; because we have not sold any bonds. 
 
 Mr. Phillips. Was the attempt made to sell bonds, and were you 
 unable to do so ? 
 
 Secretary Sheeman. I have tried very hard to sell them and I could 
 sell at a higher rate of interest. Let me explain that. The reason why 
 I cannot sell bonds, is because they have got the impression in Europe 
 that this silver bill is going to derange matters, and that belief brought 
 back upon us (as these gentlemen say) seventy-flve millions of bonds. 
 As a matter of course, they came into competition with the Secretary 
 in selling bonds; and as long as they had their bonds to sell, under a 
 scaring market, I could not sell bonds unless the rate of interest was 
 raised. 
 
 Mr. Phillips. Then you cannot resume safely unless you can sell 
 bonds at a higher rate of interest 1 
 
 Secretary Sherman. I do not say that. I think I can. If you pass 
 a bill to enable me to sell directly to the people I think I can sell 4 per 
 cent, bonds. 
 
 Mr. Phillips. How about 3.65 bonds ? 
 
 Secretary Sherman, I cannot sell them. 
 
 The Chairman. I do not see how that is to aid you in resumption ; 
 because in selling bonds to the people you must sell them for green- 
 backs. 
 
 Secretary Sherman. Yes, sir. 
 
 The Chairman. The effect of all that is to equalize greenbacks with 
 gold. Is that the theory ? 
 
 Secretary Sherman, Partly that, and partly because with greenbacks 
 we can buy gold or anything else. The law authorizes me to buy or to 
 sell gold, and as a matter of course I can buy gold at the market price. 
 
 The Chairman. If the people paid greenbacks for 4 per cent, bonds, 
 then yon could sell these greenbacks for gold. 
 
 Secretary Sherman. Yes, sir, 
 
 Mr. Bell, You mentioned that the interest paid in coin was about 
 ninety -two millions a year; have you any means of ascertaining what 
 proportion of that amount is paid abroad. 
 
 Secretary Sherman, It is very diflBcult to state that. The interest 
 
12 RESUMPTION OF SPECIE PAYMENTS. 
 
 is all paid to agents here, and we cannot distinguish the amount of in- 
 terest that is paid to bondholders here, from the amount that is paid 
 abroad. The best estimate that I can form is that the amount of bonds 
 held abroad is about six hundred million dollars ; but there is a differ- 
 ence of opinion about that. I think that that is pretty near the thing. 
 
 Mr. Eames. I desire to present to the committee, in the presence of 
 the Secretary of the Treasury, a consideration which, I think, is import- 
 ant in determining the question whether the government can resume or 
 not in January, 1879. There is now outstanding about three hundred 
 and forty-seven millions of greenbacks and three hundred and sixteen 
 millions of national-bank notes, amounting together to some six hun- 
 dred and sixty millions of paper currency. That is now used for the 
 purpose of the business transactions of the country. The point to 
 which I wish to direct the attention of the committee and of the Sec- 
 retary of the Treasury is, whether the three hundred millions of legal 
 tenders are not absolutely requisite for the business purposes of the 
 country, and whether, therefore, there will be any very great desire to 
 exchange them for gold. 
 
 Secretary Sherman. I do not think we have a great excess of cur- 
 rency now. These bankers say that there is not enough of currency. 
 So long as there is a waht of confidence in our ability to resume, it is 
 likely that the greenbacks will be presented for redemption to some ex- 
 tent; but if we were so strong that the public mind was satisfied of our 
 ability to resume, there would be no motive to present notes for redemp- 
 tion (especially when they may be redeemed in silver). Then, I agree 
 that these notes will not be presented. 
 
 Mr. Fort. Would not a premium of 1 per cent, run these notes in for 
 redemption, even with confidence restored? 
 
 Secretary Sherman. O, yes; but we must abolish the 1 per cent, dif- 
 ference. 
 
 Mr. Phillips. Can you state any distinction between legal-tender 
 notes and national-bank notes in regard to the obligation of redemption ? 
 
 Secretary Sherman. Certainly, sir. We have nothing to do with the 
 redemption of the national-bank notes.. The banks can take care of 
 that themselves, and they are doing it now. They have an enormous 
 reserve. 
 
 Mr. Phillips. It is stated in the papers of Saturday that you ordered 
 the retirement of $767,000 of legal tender notes for last month. 
 
 Secretary Sherman. Certainly. The law explicitly required that. 
 
 Mr. Phillips. I thought that the law left it to your discretion. 
 
 Secretary Sherman. Not at all. The Treasurer of the United States, 
 a,t the end of each month, on the report of the Comptroller of the Cur- 
 rency that such an amount of national-bank notes has been issued, 
 retires and redeems from his currency reserves 80 per cent, of green- 
 backs. I have nothing to do with it. 
 
 Mr. Fort. Do you think that good policy 1 
 
 Secretary Sherman. I do. That must be continued until the amount 
 of greenbacks is reduced to $300,000,000. 
 
 Mr. Phillips. Do you think it safe to reduce the volume of green- 
 backs to $300,000,000 1. 
 
 Secretary Sherman. I think $300,000,000 is enough. 
 
 Mr. Phillips. Can you not safely resume unless you reduce the 
 amount of greenbacks to $300,000,000? 
 
 Secretary Sherman. I cannot say that. The law provides a mode by 
 which the currency can be reduced to $300,000,000. 
 
 Mr. Hardenbbrgh. If Congress should adjourn, with the state of 
 
EESUMPTION OF SPECIE PAYMENTS. 13 
 
 the finances as they are now, and without additional legislation, and 
 with resumption fixed to take place on the Ist of January next, do you 
 not suppose that the national banks will have to buy from thirty to fifty 
 millions of gold to make themselves strong enough to meet resumption ? 
 
 Secretary Sherman. Certainly; they are doing it largely now. 
 
 Mr. FoKT. Do you still desire to cancel the forty-seven millions of legal 
 tenders now outstanding in excess of the three hundred millions. 
 
 Secretary Shbkman. I think it wise to stand by the present law. 
 
 The Ohaibman. Do you actually destroy this eighty per cent, of 
 greenbacks? 
 
 Secretary Sherman. We reduce it monthly. The amount is stated 
 in every debt-statement. It is an actual destruction of the greenbacks. 
 The idea was that $300,000,000 of greenbacks can be easily and surely 
 maintained at par in coin. 
 
 Mr. Bell. Is it your judgment that the volume of currency at 
 $300,000,000 will be adequate to the business wants of the country ? 
 
 Secretary Sherman. 'No ; in my judgment the currency will be in- 
 creased from time to time by the free action of the national banks, and 
 I believe that the amount of circulation in this country, where we are 
 accustomed to paper money, will be always largely in excess of what it 
 would be in old countries where they hoard coin. 
 
 Mr. EwiNG. And in excess of what it is now ? 
 
 Secretary Sherman. I am inclined to think that we can maintain the 
 present volume of circulation — six hundred millions — but that is a larger 
 paper circulation than was ever maintained by any other country. 
 That is a question for the banks to decide for themselves. 
 
 Mr. Phillips. Has not the volume of national-bank notes been 
 steadily reduced since the passage of the resumption act ! 
 
 Secretary Sherman. Certainly; because the banks chose to retire 
 them. They have a right to do that, and they chose to retire them ; I 
 cannot control that. The Secretary of the Treasury has no more to da 
 with the process of reducing the currency or of increasing it than any 
 of you gentlemen — not near so much, because you can stop it and I 
 cannot ; I simply execute the law. 
 
 Mr. EwiNG. In your statement to the Senate Finance Committee I 
 find the following : 
 
 Treasury of the United States, 
 
 Washington, March 18, 1878. 
 Sir : In accordance with your request, I have the honor to state the amount of gold 
 and silver in the Treasury on the 2dth ultimo, the date of the last debt-statement, 
 ■which is as follows, viz : 
 
 Gold coin $117,151,455 62 
 
 Gold bullion 7,937,300 21 
 
 $125, 088, 755 93 
 
 Less amount to credit of disbursing-officers knd out- 
 standing checks - 6, 189,626 60 
 
 Gold-certificates actually outstanding 44, 498, 500 00 
 
 Called bonds and interest 6,818,677 29 
 
 Interest due and unpaid 4,909, 705 21 
 
 62,416,509 10 
 
 Available gold coin and bullion 62,672,246 83 
 
 Available silver coin, fractional 5,972,895 42 
 
 Available silver bullion .> 3,130,718 31 
 
 Total available gold and silver 71,775,860 56 
 
 According to this statement, the amount of gold and silver coin and 
 bullion applicable to resumption, belonging to the United States on the 
 
14 RESUMPTION OF SPECIE PAYMENTS. 
 
 last day of February, 1878, was $71,775,000. You then say that you 
 have practically, for business purposes, $20,000,000 more of coin appli- 
 cable to resumption, because you have deducted from the gold in the 
 Treasury four items, making an aggregate of about $62,000,000, part of 
 which you assume that you can use. 
 
 Secretary Sherman. Tes, sir. 
 
 Mr. EwiNG. Now, I ask you which of those items so deducted are 
 practically available for resumption ? 
 
 Secretary Sherman. The amount to the credit of disbursing-officers 
 and outstanding checks varies but very little, because it rarely, if ever, 
 gets below $5,000,000, and it varies from that up (the amount in process 
 of disbursement), so that you can very fairly anticipate that fact (it is a 
 business fact), just as a merchant can anticipate the coming in of his 
 bills receivable. 
 
 Mr. EwiNG. Is not that banking? 
 
 Secretary Sherman. Every man does banking in that sense. 
 
 Mr. EwiNGf^. Would the Treasury be justified in disregarding out- 
 standing existing interest obligations by applying the coin which was 
 set apart to meet those obligations to the redemption of legal-tender 
 notes ? 
 
 Secretary Sherman. The Treasury will do just what any prudent in- 
 dividual will do ; it will anticipate the demands upon it, and always 
 have money to meet those demands. It is sufficient for me to say that 
 the law autliorizes the use in anticipation of coin-certificates. The 
 amount of coin-certificates that may be issued can be 20 per cent, in ex- 
 cess of actual coin. The Secretary of the Treasury, from the known 
 certainty that these coin-certificates will not be and cannot be presented 
 all at once, and are not likely to be diminished in amount, can issue 20 
 per cent, in excess of the actual coin on deposit. 
 
 Mr. EwiNG. Yes, the law gives you that authority. What would 20 
 per cent, of the coin-certificates amount to ? 
 
 Secretary Sherman. Nearly $9,000,000. 
 
 Mr. EwiNG. So that you might at this time issue coin-certificates to 
 the amount of $9,000,000 beyond the amount of coin now in the Treasury? 
 
 Secretary Sherman. Yes, sir. The law authorizes that. I will say, 
 however, that it has not been done. As to the next item, " Called bonds 
 and interest" — $6,818,677 — that amount is in the Treasury, and is always 
 there. There is interest due and carried on the debt- statement for 
 twienty or thirty years ; but we count it as a demand that we must pro- 
 vide for, and it is covered by this deduction. 
 
 Mr. EwiNG. How much of that amount is for called bonds and interest 
 on such bonds? 
 
 Secretary Sherman. The whole of it. We have now in the Treasury 
 over $7,000,000 due to "called bonds and interest" — that is, bonds that 
 are due and not bearing interest, but that are not presented for pay- 
 ment. Sometimes bonds come in three or four years after they are due, 
 and they are then paid. 
 
 Mr. EwiNG. Can anything approaching that amount have gone beyond 
 the ninety days when the payment of interest stops? 
 
 Secretary Sherman. Every dollar of that has gone beyond the ninety 
 days. Whether that amount will be continuously in the Treasury is 
 only to be told by a comparison of the statements of "called bonds and 
 interest." I have no doubt that some of that amount will never be 
 called for. You will find by reference to the monthly statements that 
 the amount varies from month to month, but it is an item which can be 
 counted on with almost as much certainty as any other item. 
 
EESUMPTION OF SPECIE PAYMENTS. 15 
 
 Mr. EwiNG. I notice from the Treasury report that the whole "slack'' 
 from the beginning of the government to August, 1877, is less than 
 $2,000,000 out of the $7,000,000 of aggregate, of called bonds and in- 
 terest unpaid to date. I don't think you can very safely assume that 
 the $5,000,000 of bonds under recent calls will not be presented. 
 
 Secretary Sherman. On the contrary, under the last call — which is 
 charged up and included in this last statement (a call of $10,000,000, 
 made on the 6th of December last and maturing on the 6th of March) — 
 but $7,000,000 of bonds had been presented on the day before yester- 
 day, leaving $3,000,000 not presented. . That leaves two or three mil- 
 lions of that particular call. I do not say that you can rely upon it 
 with absolute certainty. 
 
 Mr. EwiNG. This inquiry is to ascertain how much gold and silver 
 can be certainly relied upon to redeem legal-tender notes. 
 
 Secretary Sherman. Well, I think you can fairly count on at least 
 one-half of this $6,818,677 of " called bonds and interest." In all human 
 probability there will be three or four millions of that amount that will 
 not be called for. 
 
 Mr. EwiNG. Within what time 1 
 
 Secretary Sherman. There will be that balance on that account all 
 the time, because we are going on to make calls all the time. 
 
 Mr. EwiNCr. But if you are pushed to get coin enough to redeem legal- 
 tender notes you are certainly not going to continue the call of bonds ; 
 so that probably that item will disappear from your resources. 
 
 Secretary Sherman. In my judgment, we will go on and make those 
 calls. Last year we accumulated $60,000,000 of actual gold in the 
 Treasury, while at the same time we were making calls at the rate of 
 $1,000,000 a day ; and therefore your conclusion does not follow. If we 
 had this question of resumption fixed beyond doubt, and if the people 
 understood that it was to come, the bonds would be taken promptly and 
 the calls would be rapid ; because accumulation for resumption accom- 
 panies and is increased by refunding. The actual experiment shows it. 
 Whenever we have made calls we have accumulated coin, until last De- 
 cember, when, by the agitation created here in Congress, it ceased. My 
 calls were outstanding, but the bonds did not sell. 
 
 Mr, EwiNG. We are trying to ascertain the amount of coin which you 
 can certainly use in redeeming legal-tender notes ; and you say that in 
 an exigency you can use that item of $6,818,677 of " called bonds and 
 interest,'.' or a portion of it. It seems to me that if the exigency arises 
 you will be iu such a condition that you will not be calling bonds and 
 increasing your coin demand ; and, therefore, that that fund is not avail- 
 able, and that you cannot safely draw upon it to redeem legal-tender 
 notes ; or if you do so in an extremity, you may not only fail of re- 
 sumption, but also fail of paying the interest and principal of the debt. 
 
 Secretary Sherman. I say that having $62,000,000 of coin in our 
 possession subject to demand liabilities (an aggregate sum), which by 
 the experience of nine years is rarely diminished to the amount of ten 
 or fifteen per cent, (never falling below $50,000,000, and sometimes going 
 up as high as $80,000,000), we can fairly count that, in any probable 
 state of circumstances at least $18,000,000 of that amount will be in 
 the Treasury — not to be used (because I do not anticipate that our reserve 
 will ever be drawn down to that), but that we may fairly count upon it 
 as in the Treasury. 
 
 Mr. EwiNG. This accumulation has been during the period when legal- 
 tender notes were not redeemable, but you certainly cannot assume that, 
 because you have had that accumulation of coin in the Treasury hereto- 
 
16 EESUMPTION OP SPECIE PAYMENTS. 
 
 fore when there was no redemption of legal-tender notes, you will con- 
 tinue to have it after redemption begins ? 
 
 Secretary Sherman. I think we can assume if, when gold was not in 
 circulation, there was a gold balance in the Treasury sutgect to demand 
 without much variation, that, when all transactions are based on <!Oin 
 or paper redeemable in coin, this coin will remain in the Treasury. I 
 believe that one of the first effects of resumption will be to increase the 
 deposit of coin in the Treasury, because paper will be so much more 
 convenient in all the transactions of life that paper will be used and the 
 coin will be deposited with us. The subtreasury in New Tork will be, 
 like the Bank of England, the place of deposit for all the coin of the 
 country; and coin certificates or greenbacks will be used for all current 
 transactions, leaving the' coin only to be drawn to meet the demands of 
 foreign trade or the mutations and changes of supply and demand. > 
 
 The Chairman. That would depend entirely upon the balance of 
 trade? 
 .Secretary Sherman. Very much. 
 
 The Chairman. That would be the key of the situation ? 
 
 Secretary Sherman. Yes, sir. 
 
 Mr. Swing. You say, then, that at least $3,000,000 of this $0,818,677 
 for "called bonds and interest" might be used, if necessary, in the re- 
 demption of legal-tender notes ? 
 
 Secretary Sherman. Practically. I would say that at least one-third 
 of the amount, $2,000,000, might be so used. The next item of $4,909,705, 
 "interest due and unpaid," stands in about the same position ; in fact, 
 it is more stable than the other. 
 
 Mr. EwiNG. You think that $2,000,000 of that could be. used ? 
 
 Secretary Sherman. Yes, and perhaps more. Here (showing a debt 
 statement) are the items of this " interest due and unpaid;" much of it 
 is on old loans. Very often people do not collect their coupons, but leave 
 the interest to accumulate, so that this interest item is even more stable 
 than the other item. This is the " interest due and unpaid " on out- 
 standing bonds; the other is " the interest and principal of called bonds." 
 
 Mr. EwiNa. I see that this " interest due and unpaid " is made up 
 chiefly on bonds not yet due. It therefore cannot run along. 
 
 Secretary Sherman. That always follows. Suppose a man who owns 
 $10,000 of bonds neglects to cut off the coupons when they are due and 
 lets them run for two or three months without collecting the interest, he 
 is likely to do the same thing the next time. 
 
 Mr. EwiNG. But suppose it were understood that the Treasury was 
 short of gold, would it not be likely that these overdue coupons would 
 be run in for collection 1 In other words, could you safely use that fund 
 to redeein legal-tender notes if you are pushed to that point H 
 
 Secretary Sherman. I do not think 1 would have occasion to use that 
 fund, but I simply say (as I have said to the Senate committee) that 
 while we can only surely count upon the actual coin on hand over and 
 above our coin liabilities, we can yet, as business men, fairly understand 
 that all of these demands, of which I have given the items, will not be 
 presented at the same time, and that there will alvPays be a balance of 
 at least eighteen millions of them. 
 
 Mr. EwiNG. Do you count any of the coin-certificates in thatcategory ? 
 
 Secretary Sherman. Yes ; I count 20 per cent, on coin-certificates. 
 
 Mr. BwiNG. You propose to issue 20 per cent, of new certificates 
 beyond the amount of gold on hand ? 
 
 Secretary Sherman. Yes, we could. 
 
RESUMPTION OF SPECIE PAYMENTS. 17 
 
 Mr. EwiNGr. Which you may use for the redemptiou of legal-teader 
 notes ? 
 
 Secretary Sherman. I do not think I ever would, except in case of 
 necessity, but the law authorizes it. 
 
 Mr. Phillips. Have not our reveniies, both from internal revenue and 
 imports, been decreasing of late ? 
 
 Secretary Sheeman. Yes, but we have more gold revenue than we 
 have gold expenditures. 
 
 Mr. Phillips. But have not the revenues been decreasing this year 
 as compared with the past year"? 
 
 Secretary Sherman. Very largely this winter — especially in the 
 whisky tax. 
 
 Mr. Phillips. And will not the recent law in regard to whisky still 
 further decrease the revenue? 
 
 Secretary Sherman. That gets me into legislative grounds, and I 
 think you had better settle that question among yourselves. There is 
 no doubt but that we will have a surplus revenue to the extent of a 
 portion of the sinking-fund. I do not think that a deficiency can equal 
 the sinking-fund. 
 
 Mr. Phillips. The sale of bonds has been stopped? 
 
 Secretary Sherman. Yes, but we can renew their sale if we pay a 
 higher rate of interest — if we issue 4J per cent, bonds. The time was 
 (ever since 1 have been in public life) that it would have been looked 
 upon as very remarkable to sell bonds at less than 4J per cent., and we 
 are getting very strong when we refuse to sell bonds at 4J per cent. 
 Never before in the history of the government have bonds been issued 
 and sold at par at so low a rate of interest as four per cent. 
 
 Mr. Phillips. You state that we have coin interest to pay to the 
 amount of ninety millions a year. Do you think it would be safe to un- 
 dertake resumption with that burden resting upon us ? 
 
 Secretary Sherman. Clearly. If we have the power to reissue legal- 
 tender notes at par, and the power to sell bonds, if necessary, we can 
 undoubtedly keep the notes at par. Eedemption would not go far be- 
 fore legal-tender notes would become scarce. I have stated that there 
 were $70,000,000 of those legal-tender notes in our vaults, and there are 
 also $70,000,000 of them in the custody of the national banks, whose 
 interest it would be to keep them in their vaults. 
 
 Mr. Phillips. Would it not be more to their interest to have the 
 coin? 
 
 Secretary Sherman. These legal-tender notes are scattered all over 
 the country. 
 
 Mr. Phillips. The interest of the banks to get the gold might prompt 
 them to send in these greenbacks for redemption. 
 
 Secretary Sherman. If you ask me whether 347 millions of legal- 
 tender notes can be all paid with a hundred millions of coin if they are 
 all presented on the same day, I will say no ; but, with 600 millions of 
 currency, you cannot purchase all the wheat and corn in the country in 
 the same day. 
 
 Mr, Phillips. Will not the mere act of resumption create a demand 
 for gold which does not now exist ? 
 
 Secretary Sherman. On the contrary, I think it will diminish the 
 demand for gold. What would they want gold for ? 
 
 Mr. Phillips. These banks may wish to resume. 
 
 Secretary Sherman. They would rather resume in greenbacks. 
 They deposit their gold with us for safe-keeping. 
 H. Mis. 48 2 
 
18 RESUMPTION OF SPECIE PAYMENTS. 
 
 Mr. Fort. Would there not be a temptation for the banks to exchange 
 their greenbacks for gold 1 
 
 Secretary Sherman. I do not see what object they would have in 
 doing it. 
 
 Mr. Fort. They would do it merely for the premium. 
 
 Secretary Sherman. But there would not be any premium. 
 
 Mr. EwiNG. How much of this item of "interest due and unpaid," 
 $4,909,705, do you say may be counted as applicable to resunaptiou ? 
 
 Secretary Sherman. I would say about one-third of it. 
 
 Mr. EwiNG. That will be one million three hundred thousand. 
 
 Secretary Sherman. I never went into the division of this thing. 
 
 Mr. EwiNG. Then the item of" amount to credit of disbursing officers 
 and outstanding checks," $6,189,626. How much of that can be used 
 for resumption 1 
 
 Secretary Sherman. Yon may count on the whole of it if you choose ; 
 because it is really only money in the course of disbursement. We 
 always have in the hands of disbursing officers large sums of money, 
 and every disbursing officer has a balance on hand, and we can reduce 
 those balances to a large extent, or cut them oflf entirely. 
 
 Mr. EwiNG. You include "outstanding checks"; do you think you 
 could count the whole sum they represent as piart of the funds that 
 could be used ? 
 
 Secretary Sherman. No, sir. 
 
 Mr. EwiNG. How much of it? 
 
 Secretary Sherman. I cannot tell ; because I cannot tell how much 
 ef this item is for " outstanding checks " and how much to the credit of 
 tlisbursing officers. 
 
 Mr. EwiNG. Exclusive of those items you would only have on your 
 theory $12,300,000 which you could add to the $62,000,000. 
 
 Secretary Sherman. It is totally immaterial whether you count that 
 in or count it out. As I said before, my reliance would bo on the actual 
 eoin reserve — to be increased as I have stated. I do not propose to re- 
 sume on seventy-one millions of coin. 
 
 Mr. EwiNG. It strikes me that the addition of seventeen or eighteen 
 millions, drawn from these four items, is not safe in calculating the re- 
 sources for resumption. 
 
 Secretary ShermAn. 1 think that if you ask any banker iu New York 
 how much of that fund is available for resumption purposes, he will put 
 jt higher than I do. 
 
 Mr. EwiNG. As a banker? 
 
 Secretary Sherman. As long as we are issuing United States notes, 
 redeemable on demand, we are in the banking business. 
 
 Mr, EwiNG. And take the bankers' chances? 
 
 Secretary Sherman. We do it as a matter of course. We save the 
 interest and have to do as bankers do. 
 
 Mr. EWIKG. You have got here under the ite^i of " called bonds and 
 interest" only $6,818,677. Has there not been«a call of $10,000,000 
 since ? 
 
 Secretary Sherman. No; there has been no call since. The last 
 statement which you get today will include these " called bonds." The 
 last call was made on the 6th of December, 1877, and matured on the 
 Cth of March, 1878. It has been covered — about half of the amount — 
 by the sale of bonds since the call issued. 
 
 Mr. EwiNG. Does, this statement .include all of the called bonds un- 
 paid on the lirst of February, 1878? 
 
RESUMPTION OF SPECIE PAYMENTS. 19 
 
 Secretary Sheeman. Yes, sir; all the called bonds that matured at 
 that date. 
 
 Mr. FoBT. What is the cost of selling bonds, including the expenses 
 of the syndicate 1 
 
 Secretary Sheeman. One half of one per cent, is the limit under the 
 law and our contract with the syndicate. The syndicate pays all the 
 cost, including engraving, &o., out of the half of one per cent. Under 
 the popular loan we pay one-fourth of one per cent, commission and pay 
 the expenses out of the other fourth. 
 
 Mr. EwiNG. Going back to your stateujent before the Finance Com- 
 mittee, you add to the sixty-two millions of gold five millions nine hun- 
 dred and seventy-two thousand dollars of fractional silver coin ; do you 
 regard that as available for resumption ? 
 
 Secretary Sheeman. Undoubtedly. We can issue that silver coin in 
 exchange for United States notes to the full extent of the outstanding 
 fractional currency; but, in my judgment. Congress ought to pass a 
 law enlarging the limit of subsidiary silver to fifty million dollars. 
 
 Mr. EwiNG. Such an exchange would be a voluntary exchange on 
 the part of the holder of legal-tender notes. I am not speaking of what 
 you can buy with the subsidiary silver coin, but as to whether it is avail- 
 able for the redentption of legal-tender notes when presented. 
 
 Secretary Sheeman. Yes; in my judgment that five millions of dollars 
 will be all absorbed before the first of January. 
 
 Mr. EwiNG. But we are speaking of this as a redemption fund for the 
 legal-tender notes after the first of January. 
 
 Secretary Sheeman. If the five millions of subsidiary silver coin be 
 paid out in exchange for United States notes or in current expenses, 
 there will be left in the Treasury just so much the more current revenue 
 which will be in gold. 
 
 Mr. BwiNG. But after resumption day you do not regard fractional 
 silver as available for the purposes of redemption ? 
 
 Secretary Sheeman. Only to a small amount. We will still exchange 
 silver coin for United States notes. But I think the whole amount now 
 on hand will be paid out and gold will take its place. 
 
 Mr. EwiNG. The resumption law provides that the redemption of 
 legal-tender notes shall be in suras of $50 and upward, and fractional 
 silver currency is not a legal tender above $5. How, then, can it be 
 counted upon as part of the redemption fund 1 
 
 Secretary Sheeman. Simply because it can be, and will be, probably, 
 exchanged, as needed, for United States notes. 
 
 Mr. EwiNG. But after the first of January can it be used as part of 
 the redemption fund 1 
 
 Secretary Sheeman. Yes, I think so; if it is used for the redemption 
 of United States notes. 
 
 Mr. EwiNG, It is not a legal tender ? 
 
 Secretary Sherman. That makes no difference. People come to us 
 every day with United States notes for silver currency. 
 
 Mr. EwiNG. But I am speaking of using this fractional silver currency 
 for the redemption contemplated by the law. 
 
 Secretat'y Sherman. I regard redemption as simply meaning paying, 
 according to law, the United States notes in the coin which the holder 
 has a right to demand. Any holder of a United States note may now 
 come to the Treasury and ask to be paid in subsidiary silver coin. 
 After the first of January we will pay him in silver dollars or in gold 
 coin, just as he prefers. If we should redeem United States notes 
 between now and the first of January to the extent of five millions of 
 
20 RESUMPTION OF SPECIE PAYMENTS. 
 
 dollars, we have in place of it the revenue which comes into Treasury — 
 probably in gold. 
 
 Mr. EwiNG. My point is this : that fractional silver coin cannot be 
 counted as a fund with which to redeem, after the first of January, 
 United States notes, because it is not a legal tender for as much as $50, 
 and because, under the law, the presentation of legal-tender notes must 
 be in sums of $50 and upward. 
 
 Secretary Sherman. I do not think it material for us to discuss that 
 question, because that five millions of subsidiary silver coin will be used 
 in exchange for United States notes precisely as the silver dollars will be. 
 
 The Chairman. You regard it as an asset in the Treasury for all the 
 purposes of the resumption bill? 
 
 Secretary Sherman. Certainly. If you really want to drive me into 
 the position, I can simply say that we can convert subsidiary silver coin 
 into silver dollars and then we can pay it out. It is money there in the 
 Treasury available for the payment of United States notes. 
 
 Mr. EwiNG. Might you not as well put in United States notes as 
 money available for redemption ? 
 
 Secretary Sherman. No; I think not. This subsidiary currency 
 would, in the ordinary course of business, be paid out in lieu of other 
 revenue, and would be replaced by gold or silver. 
 
 Mr. EvPiNG. In the statement made on the 26th of February to this 
 committee by the Treasurer, he says : " I am informed by the Director 
 of the Mint that the amount of unpaid deposits belonging to private 
 individuals and held by the mints and assay-offtces on January 1, 1878, 
 amounted to $2,114,000." Is that a proper deduction from the coiu on 
 hand? 
 
 Secretary Shebman. No, sir; that is a mint account. 
 
 Mr. EvriNG. But the amount in the mints is credited in your table. 
 
 Secretary Sherman. Only the amount belonging to the United States. 
 There are private deposits of bullion under the law. That is a private 
 deposit for trade-dollars. It is not a liability. 
 
 Mr. EwiNG. That is, the gold and silver are not counted in the state- 
 ment of the amount in the mints ? 
 
 Secretary Sherman. No, sir ; that debit is for gold and silver de- 
 posited by private individuals for their own use. 
 
 Mr. BwiNG. In this statement you have got the available sum on 
 hand at $71,000,000, without any deduction for accruing interest? 
 
 Secretary Sherman. Yes, sir. 
 
 Mr. EwiNG. Now, the interest which is accruing on bonds is to be paid 
 by gold which has been accruing from customs, $ari passu f 
 
 Secretary Sherman. Yes, sir. 
 
 Mr. EwiNG. You count all the gold thus coming in from customs as 
 applicable to resumption, and yet here is a charge upon it of $17,277,000, 
 up to the last of February, for accruing interest? 
 
 Secretary Sherman. The answer to that is that the interest is not 
 due. If the interest is accruing, we have also revenue accruing. We 
 have goods deposited with us and bonds issued for customs duties, but 
 we do not count this as revenue, although the revenue is accruing with 
 absolute certainty of payment, and will be paid within a year. 
 
 Mr. EwiNG. It is not fixed in amount ? 
 
 Secretary Sherman. O, yes. The entries are liquidated and ascer- 
 tained, and we hold the goods in bond ; but we do not call that revenue, 
 because it is not paid; and so it is with accruing interest. Interest, as 
 it accrues, we count as such, but interest accruing will be met before 
 it becomes due by revenue accruing. 
 
EESUMPT IDN OP SPECIE PAYMENTS. 21 
 
 Mr. EwiNG. But you have already credited your whole accruing reve- 
 nue to your resumption fund ? 
 
 Secretary Sherman. Ifo; we have credited our accrued revenue. We 
 do not in either case credit the accruing or prospective revenue or the 
 accruing or prospective interest. 
 
 Mr. EwiNG. That is retrospective interest. It has accumulated to the 
 extent of over seventeen millions to the date of your statement. 
 
 Secretary Sherman. It is no more fixed than the revenue which is 
 accruing. This question of whether, in our liabilities, interest not yet 
 <lue shall be counted has been variously discussed, and many take a dif- 
 ferent view of it ; but I take it that the point is this : Can that interest 
 be demanded on the 1st of March or on the 1st of April ? Certainly not. 
 There is accruing interest from the 1st of January to the 1st of July; 
 but it is not due until the 1st of July, and cannot be counted, therefore, 
 as a demand liability until the 1st of July ; and in the mean time our 
 ample coin revenues come in, and a great deal more than cover the 
 accruing interest. 
 
 Mr. EwiNG. But as a matter of fact, if you take out that seventeen 
 millions of accruing interest and say that you put that apart as a resump- 
 tion fund, you will be short of revenue to pay your interest and to create 
 the sinking fund, as the law requires. 
 
 Secretary Sherman. If we are bound not only to get gold enough to 
 pay what is due, but bound to get gold enough also to pay what may be 
 due in six months, as a matter of course we can never resume. 
 
 Mr. EwiNa. I think it fair enough to say that whatever you have on 
 hand now which has no ascertainable charge against it may be counted 
 as a redemption fund for the greenbacks, trusting to future revenue to 
 meet the future accruing interest and liabilities. But the difQculty 
 about this statement is, that you have taken all the gold in hand now, 
 and have not counted the accruing interest, which amounts to the 
 very large sum of $17,227,000 up to the date of your statement, while 
 the law expressly sets apart the gold that has been accruing from the 
 customs to meet the interest which has been accruing during the same 
 time. 
 
 Secretary Sherman. No ; but to meet the interest which has accrued. 
 
 Mr. EwiNG. The statement, I think, makes an incorrect impression on 
 the public mind as to the amount of gold actually on hand for resump- 
 tion purposes. 
 
 Secretary Sherman. But, according to your idea, you would have us 
 accumulate seventeen millions of gold more to-day to meet an obligation 
 that is not to fall due until July. 
 
 Mr. EwiNG. No ; but my idea is that in your statement you should 
 have deducted the $17,227,000 of interest accruing up to date from the 
 amount of gold on hand, because that gold is pledged and set apart 
 by the law as a special fund to pay this interest, and is not applicable to 
 resumption. 
 
 Secretary Sherman. But we have other gold as sure to come in as the 
 1st of July will come, to meet that interest. 
 
 Mr. EwiNG. Yes; and you have other obligations to meet to the 
 amount of all the gold hereafter coming in. 
 
 Secretary Sherman. We cannot be expected to pay a debt before it 
 is due. 
 
 Mr. EwiNG. The receipts from customs for the fiscal year 1877 were 
 $130,956,000. The receipts this year will be less, as the imports have 
 fallen off. The interest on the public debt last year was $97,124,000. 
 That interest this year will be a little less. The sinking-fund this year, 
 
22 RESUMPTION OF SPECIE PAYMENTS. 
 
 according to the statement of the Treasurer, is $35,424,000, and the law 
 sets apart customs as expressly to the sinking-fund as it does to the 
 interest on the public debt. Section 3694 of the Bevised Statutes pro- 
 vides that " the coin paid for duties on imported goods shall be set apart 
 as a special fund, and shall be applied as follows: 1st. To the payment 
 in coin of the interest on the bonds and notes of the United States. 
 2d. To the purchase or payment of one per centum of the entire debt of 
 the United States, to be made within each fiscal year, which is to be set 
 apart as a sinking-fund, and the interest of which shall be in like 
 manner applied to the purchase or payment of the public debt. 3d. 
 The residue to be paid into thie Treasury." 
 
 Kow, here is a special appropriation by law of the receipts from cus- 
 toms to the extent of the sinking-fund and of the interest on the debt, 
 and these two items will this year, evidently, amount to the whole re- 
 ceipts from customs. 
 
 Secretary Sherman. I have already explained the operation p{ the 
 sinking-fund. If we should undertake to do what you say we ought to 
 do — set aside that $35,000,000 and apply it for sinking-fund purposes — 
 as a matter of course, there would be at once a deficiency in the pay- 
 ment of your own salaries, and of all the other expenses of the govern- 
 ment. Now, this sinking-fund is a well-known technical fund, and has 
 been known from the foundation of the government. It is really noth- 
 ing but a pledge by Congress that it will provide revenues enough, not 
 only to pay the expenses of the government, but to pay, in addition, the 
 sinking-fund of one per cent, upon the debt. Therefore the sinking- 
 fund has been always used simply as a representative of the balance of 
 revenues over expenditures. The current expenditures are always taken 
 from the amount of revenues, and the balance is applied to the sinking- 
 fund. If there is a deficiency in the revenue, so that tberc is no balance , 
 to be applied to the sinking-fund, of course that is the fault of Congress 
 in falling to provide revenues sufficient to cover the appropriations, and 
 the amount to be applied to the sinking-fund. That has been the 
 established custom of this and other countries. 
 
 Mr. EwiNG. I am not speaking about the custom, but the law. The 
 law says that the coin paid for duties shall be set apart as a special 
 fund, first, for the payment of coin-interest on the public debt; and, 
 second, for the purchase of one per cent, of the debt each yeai?, and for 
 payment of interest upon the accumulated sinking-fund. Now, I do not 
 see how any custom or usage of the department, or usage of other coun- 
 tries, can change the obligation of the statute. 
 
 Secretary Sherman. Let me look at the resumption act, if you have 
 it there, and I will show you that not only does it do that in express 
 terms, but it has been held to do it by every administration. (Referring 
 to the law.) This clause has always been held to apply to the sinking- 
 fund in the form of surplus revenue : "And to enable the Secretary of 
 the Treasury to prepare and provide for the redemption by this act 
 authorized and required, he is authorized to use any surplus revenue 
 from time to time in the Treasury not otherwise appropriated, and to- 
 sell, issue, and dispose of, at not less than par in coin, either of the 
 description of bonds, &c.'' This passed January 14, 1875. It has been 
 held, under this appropriation made in 1875, of the surplus revenue, that 
 the excess of revenue over expenditures could be applied under it with- 
 out regard to the sinking-fund ; and that has been the construction put 
 upon these words. 
 
 Mr. EwiNG. That is, by yourself, and Mr. Morrill, and Mr. Bristow, 
 the only three Secretaries of the Treasury who administered that law. 
 
RESUMPTION OF SPECIE PAYMENTS. 23 
 
 Secretary Sherman. Yes, sir. That appropriation of surplus revenue 
 has been iield j>ro tanto to be an amendment of the act of 1870. 
 
 Mr. EwiNtt. The words are " any surplus revenue from time to time 
 in the Treasury not otherwise appropriated." Now in addition to section 
 3694 of the Eevised Statutes which I have cited, there are,' in sections 
 3688 and 3689, under the head of permanent annual appropriations, 
 appropriations of the sums required for the sinking-fund. These pro- 
 visions of law setting apart the customs as a special fund and perma- 
 nently appropriating them to the sinking-fund, certainly are not affected 
 by this provision of the resumption law, appropriating " any money ia 
 the Treasury not otherwise appropriated." 
 
 Secretary Sherman. I think it is; the words "surplus revenue" are 
 not in it. That has been always construed to mean that sum of money 
 which has been left after paying current expenses. 
 
 Mr. EwiNG. You mean always since the passage of the resumption 
 law? 
 
 Secretary Sherman. I never saw that questioned. At all events it 
 was so held, and acted upon when Mr. Bristow failed to make good tke 
 $16,305,421 of the sinking fund. 
 
 Mr, EwiNG. It was so held by the Secretary "? 
 
 Secretary Sherman. Yes, sir; and was never questioned by Con- 
 gress. 
 
 Mr. EwiNG. The subject may not have been looked into. 
 
 Secretary Sherman. That may be. As a matter of course, if Con- 
 gress was to say that we should invest the sinking fund prior to and 
 as against all appropriations made by Congress, it would leave a defi- 
 ciency at once. 
 
 Mr. EwiNG. Congress has said it. 
 
 Secretary Sherman. I do not think that the fair construction. Still, 
 that is a question for Congress and not for the Secretary. 
 
 Mr, BwiNG. The section from the Eevised Statutes, which I have 
 read, sets apart the duties on imported goods as a special fund for those 
 two objects. A certain and permanent appropriation of the customs as 
 a special fund, cannot reasonably be held to have been repealed or 
 modified by this clause, which is usual to all laws — "out of any money 
 in the Treasury not otherwise appropriated" — that is a common phrase 
 in all statutes making appropriations. 
 
 Secretary Sherman, Look at the practical question. Would you 
 have had Secretary Bristow, who met this diflBculty in the first instance, 
 refuse to pay the ordinary drafts for the expenses of the government 
 to the extent of $16,000,000 ? 
 
 Mr, EwiNG, I would have had him execute the law, and most cer- 
 tainly and most especially I would not consent to the proposition that 
 the resumption act overrides all the laws that preceded it, nor that the 
 importance of resumption is so exigent and overwhelming, as that the 
 permanent appropriations may be disregarded by the Executive in order 
 to carry it into effect. 
 
 Secretary Sherman, All this you speak of occurred before the re- 
 sumption law was passed. This very question about the application of 
 the sinking-fund occurred June 30, 1874, and the resumption act was 
 passed in 1875, 
 
 Mr, EwiNG. You are speaking of Mr. Bristow's interpretation ? 
 
 Secretary Sherman, And Mr, Morrill's. 
 
 Mr, EwiNG, Not Mr, Morrill's, The resumption law passed befoTe 
 Mr. Morrill became Secretary. 
 
 Secretary Sherman, Yes; but, at all events, that question was de- 
 
24 RESUMPTION CF SPECIE PAYMENTS. 
 
 termined by the department and was acquiesced in certainly by Con- 
 gress, and rightly acquiesced in. I certainly take my share of the fault, 
 if there is anything wrong in it, for I was then in Congress, of acqui- 
 escing in the construction that the ordinary expenses of the govern- 
 ment must be paid before the sinking fund is attended to, and that if 
 there is any deficiency it must fall on the sinking-fund. 
 
 Mr. EwiNG. But what warrant can there be for a ruling that this gen- 
 eral power to provide for resumption by using " any money in the Treas- 
 ury not otherwise appropriated" shall override the permanent appro- 
 priation of receipts from customs as a special fund to pay interest on 
 the public debt and to keep up the sinking-fund. 
 
 Secretary Sherman. The answer to that is, that the resumption act 
 expressly authorizes the use of the surplus revenue and the proceeds of 
 bonds to carry the resumption act into effect; and you will see that the 
 resumption act has been carried into effect thus far by the sale of bonds, 
 even in the purchase of the silver bullion in the first instance. Mr. 
 Bristow sold $15,000,000 of five per cent, bonds and used the proceeds 
 of those bonds in the purchase of silver bullion, and so all that I did 
 under the resumption act was done by the sale of bonds. 
 
 Mr. EwiNG. There has been this year applied to the sinking fund 
 $3,000,000 of fractional currency ? 
 
 Secretary Sherman. Yes; and I do not know how many United 
 States notes. We have redeemed largely United States notes. Last 
 month we redeemed $700,000. All that goes into the sinking fund. 
 
 Mr. EwiNG. Why ? 
 
 Secretary Sherman. Because it is a part of the debt which is redeemed 
 under the operation of law. 
 
 Mr. EwiNG. The sinking-fund section (3694), which I have cited, con- 
 templates the purchase of bonds. 
 
 Secretary Sherman. Not necessarily. 
 
 Mr. EwiNG. I think it does. 
 
 Secretary Sherman. United States notes are a portion of the public 
 debt. 
 
 Mr. EwiNG. I think that the sinking-fund act clearly contemplates 
 the purchase of bonds only. The expression " one per cent, of the en- 
 tire debt," simply means the mode of ascertaining the amount to be 
 purchased. It further provides, " and interest on the debt so pur- 
 chased." 
 
 Secretary Sherman. That is the computation of interest on the 
 amount of debt as paid. 
 
 Mr. BwiNG. How do you compute interest on legal-tender notes ? 
 
 Secretary Sherman. Probably at the current rate at which bonds 
 are sold. I would not be able to tell you the exact rate last year, but 
 the rule, I think, has been to compute the interest at the rate at which 
 bonds were sold. Here is the computation. [Eeferring to it.J Page 
 18, Finance Eeport. I see that it is computed at 6 per cent. 
 
 Mr.- EwiNG. Was there no redemption of bonds in 1876 for the sink- 
 ing fundi 
 
 Secretary Sherman. Yes, a small amount. 
 
 Mr. EwiNG. This resumption law does not expressly provide that the 
 legal-tender notes redeemed under it (80 per cent, of the issue of bank 
 notes) shall be destroyed. They may be hereafter authorized to be re- 
 issued. 
 
 Secretary Sherman. These words in the act " until the amount out- 
 standing shall be $300,000,000 of such legal-tender notes and no more," 
 were held to mean a permanent retirement of notes in excess of that 
 
RESUMPTION OF SPECIE PAYMENTS. 25 
 
 amouut. If I ever had any doubt about that it was removed by the 
 passage of the Eevised Statutes, which re-enacts the old law about the 
 reissue of United States notes. Prom that, taken with the resumption 
 act, it seems plain that after the reduction of greenbacks to $300,000,000 
 had been reached, they may be reissued. The act provides that the 
 reduction shall go on until the amount is reduced to $300,000,000 and 
 no more. 
 
 Mr. EwiNG. I find according to the finance report of 1877, a deficiency 
 in the sinking fund for that year of $9,225,000. 
 
 Secretary Sherman. That is correct. 
 
 Mr. EwiNG. And for 1876 a deficiency of $1,143,000; for 1875 a de- 
 ficiency of $5,596,000; and for 1874 a deficiency of $16,305,000, making 
 the total deficiency $32,670,000. 
 
 Secretary Sherman. I suppose that is correct. 
 
 Mr. EwiNG. If the gold received from the revenue had been applied, 
 as this permanent appropriation requires, your stock of gold would be 
 pretty Jargely reduced. 
 
 Secretary Sherman. Yes, and if the amount of money which had been 
 applied to the sinking fund before the panic of 1873, in excess of the 
 amount required by law, had been set apart for a resumption fund, we 
 would have been at specie payments long ago, and that is what ought to 
 have been done, iu my judgment ; but there is no use in " crying over 
 spilled milk." 
 
 Mr. EwiNG. I understand that you feel at liberty under the usage to 
 neglect any application to the sinking fund at all, if the purposes of the 
 resumption law require it. 
 
 Secretary Sherman. ISTo ; I feel bound to do this, to apply the actual 
 surplus revenue to the sinking fund ; and that has been done. But 
 when there is not sufflcient surplus revenue to pay the sinking-fund 
 I would let the deficit fall on the sinking fund. That is the way we 
 have done. 
 
 Mr. EwiNG. And it has made a deficit in four years of $32,000,000. 
 
 Secretary Sherman. That is, the Government of the United States 
 has failed to keep up the sinking-fund to that amount for the last four 
 years. 
 
 Mr. EwiNft. And you do not feel required to apply any gold received 
 from customs to the purchase of bonds for the sinking-fund ? 
 
 Secretary Sherman. Except to the extent of the surplus revenue. 
 
 Mr. EwiNG. Even then you feel justified in paying the sinking fund 
 in legal-tenders instead of in bonds. 
 
 Secretary Sherman. Yes; that is the construction put upon the law. 
 We have a right to count the legal tenders and fractional currency re- 
 turned under the operations of the law as so much debt paid. We do 
 not retire any legal-tenders under any circumstances except in conse- 
 quence of the issue of the national-bank notes ; but when legal-tender 
 notes are retired in that way, we count them as so much debt paid and 
 we credit them to the sinking fund. 
 
 Mr. EwiNG. And your construction of the statute is that the debt can- 
 celed must not necessarily be a bonded debt. 
 
 Secretary Sherman. That is the construction. 
 
 Mr. EwiNG-. But that it may be a debt bearing no interest ? 
 
 Secretary Sherman. Yes, sir. 
 
 Mr. EwiNG. And the Secretary of the Treasury is at liberty to fix the 
 rate of interest on it 1 
 
 Secretary Sherman. No ; I do not wish to answer that in the afflr- 
 
26 RESUMPTION OP SPECIE PAYMENTS. 
 
 mative, because my impression was that the interest was counted at the 
 current rate. I have never had occasion yet to fix the interest. 
 
 Mr. EwiNG. In your statement to the Finance Committee of the 
 Senate, as to the preparation the national banlisTiave made for resump- 
 tion, you have given the banks' statement showing the amount of gold 
 held by them on December 28, 1877, as $5,506,556. 
 
 Secretary Sherman. That is the amount held by the New York City 
 banks alone. 
 
 Mr. EwiNG. No ; that is the amount held by all the national banks. 
 All the national banks of the United States held |5,506,000 of gold coin 
 on the 28th of December last. 
 
 Secretary Sherman. Thebanks have gold-certificates, however. They 
 own that gold in the Treasury and we do not count it as ours at all. 
 
 Mr. EwiNG. Is it counted in the $125,000,000 ? 
 
 Secretary Sherman. Yes. The amount of the specie of the banks, 
 including gold-certificates, was, on the 28th of December, 1877, 
 $32,907,750. That was the amount of coin' and gold-certificates held 
 by the national banks ; but that amount is largely, increased now. (See 
 Appendix So. 6.) 
 
 Mr. EwiNG. Outside of the Treasury there is, it appears, $5,506,550 
 of gold in the banks. Do you think the actual gold coin in the banks 
 has largely increased since then ? 
 
 Secretary Sherman. I do not know about that ; I think it has. There 
 is an increase in the commercial cities; but I do not like to speak posi- 
 tively upon that point, because in a day or two you will have the actual 
 returns from all those banks. 
 
 Mr. EwiNG. Adding the certificates held by the banks, $23,000,000, 
 to the $5,000,000 of gold coin, you get the extent of their preparation 
 for resumption. 
 
 Secretary Sherman. Yes, sir. 
 
 Mr. EwiNG-. Unless you count the fractional silver coin as a redemp- 
 tion fund, which it seems to me it is not. 
 
 Secretary Sherman. The amount of gold held by the New York banks 
 alone, including gold certificates, is $5,000,000 more to-day than the 
 whole gold and silver coin in all the banks of the dnited States in 
 December last. 
 
 Mr. BwiNG. Including gold-certificates ? 
 
 Secretary ShermAh. Yes, including certificates. The amount is 
 $37,432,000, or $5,000,000 more than the whole amount in all the banks 
 in the United States in December last. Now, as to how much gold has 
 increased in the other banks I cannot say, but we will have the returns 
 in a day or two, and perhaps in time to attach to this statement. 
 
 Mr. E-w:iNa. Probably $40,000,000 of gold coin and fcertificates to- 
 gether will represent the preparation of the national banks for resump- 
 tion. ^ ' 
 
 Secretary Sherman. It is more than that. The increase in the New 
 York national banks alone from December to March was $13,000,000. 
 All the great body of these coin-certificates is held by banks and 
 bankers. 
 
 Mr. EwiNG. Do you think the aggregate of gold coin and certificates 
 in the hands of the national banks would run up to $45,000,000? 
 
 Secretary Sherman. I should think so. 
 
 Mr, EwxNg. That $45,000,000, assumed to be held by the national 
 banks and whatever amount you have in the Treasury belonging to the 
 United States applicable to resumption, represents the whole prepara- 
 tion for the redemption ofthe $647,000,000 of paper money 1 
 
RESUMPTION OP SPECIE PAYMENTS. 27 
 
 Secretary Sheeman. So far as the national banks are concerned they 
 have euormous resources. They are only bound to redeem their notes 
 in United States notes, of which they have $70,000,000 on hand ; they 
 have also cash resources of various kinds as shown by this table, and 
 very large ones. They have surplus profits to the amount of $173,000,000 
 over and above their capital stock. They have resources which will 
 enable them to redeem in United States notes with great facility. 
 
 Mr. E'VViNG. Their surplus profits are invested largely in tjuildings. 
 
 Secretary Sherman. They have invested largely in United States 
 bonds. They have United States bonds on hand to'the amount of nearly 
 four hundred millions of dollars. " They have $343,000,000 to secure their 
 currency. Then they have bonds to secure deposits; and they have 
 other United States bonds on hand ; and they have very large cash 
 funds. As a matter of course they have also very large loans and dis- 
 counts, and thev are liable to their depositors to a very large sum. But 
 they have ample cash resources. 
 
 Mr. EwiNG. But I am speaking of the amount of gold aud silver they 
 have for resumption. 
 
 Secretary Sherman. The banks do not have to redeem any notes in 
 gold ; they redeem in United States notes. 
 
 Mr. BwiNG. After all, the problem is to float $647,000,000 of paper 
 money redeemable in coin. 
 
 Secretary Sherman. Tes. 
 
 Mr. EwiNG. Now, is not the draih upon the government practically 
 the same to the extent of the aggregate of the greenback circulation 
 ($348,000,000), as though the entire circulation were money 1 
 
 Secretary Sherman. I say no, emphatically ; and all experience in 
 other systems of banks would also say no. The truth is, the Govern- 
 ment of the United States has nothing to do with the banks an|y more 
 than it has to do with the other corporations and merchants of the 
 country. The banks are as separate and distinct corporations as they can 
 possibly be made. The United States have got to redeem $348,1)00,000 
 of legal tender notes, or to make them at par with coin. You repolject 
 what I said before, that we have seventy millions undisputed money in 
 coin. 
 
 Mr. EwiNG. I beg leave to say that I regard the statement as incor- 
 rect. 
 
 Secretary Sherman. Let me go on. We have seventy millions of 
 coin and then we have seventy millions of currency in our possession, 
 some of which at least belongs to us, and none of which is likely to be 
 called for, unless it may be a portion of the certificates of deposit, 
 amounting together to $26,000,000. Then we have these obligations on 
 the part of the banks, which are not flclitious persons but strong corpor- 
 ations. They hold at least seventy millions in our notes and forty mil- 
 lions of gold or gold certificates in their vaults as a reserve at all times. 
 Their notes are absolutely secured by United States bonds, so that if 
 you take that into consideration it is very easy for us to resume. And 
 then you must remember that the body of our notes is in circulation all 
 over this broad country, scattered everywhere from one end of the land 
 to the other. Now, is it likely that these notes are going to be rnshed 
 in for payment of them in coin 1 
 
 Mr. EwiNG. I think it is. 
 
 Secretary Sherman. I say no; yon have no confidence. 
 
 Mr. EwiNG. I have met very few who have confidence. 
 
 Secretary Sherman. I say that if you strengthen this reserve from 
 seventy millions to from one hundred and twenty millions to one hun- 
 
28 RESUMPTION OP SPECIE PAYMENTS. 
 
 dred and fifty millions, with power ia the Secretary of the Treasury to 
 sell bonds if necessary, and with power to reissue greenbacks, there is 
 no danger of breaking the government. I do not think that anybody 
 desires that. Everybody will be glad that the contest is over. Let us 
 look out for ourselves and let the banks look out for themselves. The 
 banks are not interested in running in our notes to get coin for them to 
 embarrass us. On the contrary, these legal-tender notes are their 
 money, and as long as they have them, they cannot be broken. Their 
 notes are payable in our notes, and if they keep a strong reserve of our 
 notes (and they will be interested in keeping a strong reserve), they 
 give us aid practically by giving employment to our notes. There is 
 no motive for them (unless there be a fear that we are not able to pay) 
 to rush in and demand payment of our notes in coin. Now I can see 
 very well that if we had a reserve of $130,000,000 of coin, with no de- 
 mand liabilities whatever except for those legal-tender notes, we can 
 maintain those notes at par in coin — scattered as they are over this 
 country. It seems to me that there is no difficulty about it. 
 
 Mr. EwiNGr. My question was this: Whether the general government, 
 to the extent of its whole paper circulation outstanding, must not re- 
 spond to the demands of the holders of the $647,000,000 of paper cur- 
 rency for conversion into coin ? 
 
 Secretary Sherman. The government is bound to respond, to the ex- 
 tent of the amount of United State* notes outstanding, but not one step 
 farther, 
 
 Mr. EwiNG. Of course not. 
 
 Secretary Sherman. Very well. That is only $300,000,000. It is just 
 as if Great Britaiii was behind that $300,000,000 of bank-notes — a sepa- 
 rate and distinct power. We are under no obligation to redeem the 
 national bank notes. On the contrary the banks are under obligation 
 to redeem their own notes in our notes and we hold ample security for 
 that. Anybody can present a national bank note at the Treasury, and 
 the Treasury is ready to redeem it, having a deposit of 5 per cent, which 
 the banks must keep good to redeem national bank notes. The banks 
 are obliged to redeem their own notes in our notes, and they are there- 
 fore desirous to get our notes. 
 
 Mr. EwiNG. Suppose that through lack of confidence in your ability 
 to maintain resumption, with the small accumulation of gold that you 
 can obtain, there should be a demand for fifty millions of coin in any 
 one month in New York. It makes no difference whether the demand 
 is made on the banks for legal tenders, and then the legal tenders be 
 sent to the Treasury for redemption, or whether the demand is directly 
 on the Treasury, you have got to respond to the whole of that demand, 
 and the gold has got to come out of the Treasury, because the banks 
 have practically nofte in their vaults. 
 
 Secretary Sherman. It is scarcely a supposable proposition that you 
 put to me that they could gather together in one mass an amount of legal- 
 tender notes to break the Treasury if this reserve is anything like what I 
 say. You can see as a matter of course that there are times when the 
 Bank of England could not meet a demand for 25,000,000 pounds sterling 
 in goldforbank notes. Perhaps attimes the demand for half thatamount 
 would break it. But actual experiment shows that such a thing is prac- 
 tically impossible. The idea of accumulating $75,000,000 or $100,000,000 
 of United States notes and carrying them to the Treasury in the course 
 of a month is practically impossible. The commencement of such a 
 scheme as that would make legal-tender notes so scarce that it would be 
 
RESUMPTION OP SPECIE PAYMENTS. 29 
 
 impossible to get them, and the very scarcity vould increase their value 
 so that they would be equal to coin. 
 
 Mr. EwiNGr. They could very readily present at least their coincer- 
 tiflcates for redemption. 
 
 Secretary Sheeman. Where are they ? Scattered all over the coun- 
 try. The whole amount of money, including currency certificates in the 
 city of New York, which is the great commercial deposit of the country, 
 is only twenty million dollars, and they never get more than that. 
 That is the amount of the aggregate. If they gathered every note and 
 every certificate in all the national banks of New York, they would 
 amount to twenty millions of dollars ; and is it to be supposed that they 
 would do that? Unless you maintain that we require to have as much 
 gold on hand as there is paper money outstanding before we can have 
 resumption, I do not see any difflculty about it. 
 
 Mr. EwiNG. Did I understand you to say that a demand for half of 
 twenty five million pounds sterling on the Bank of England would break 
 the bank? 
 
 Secretary Sheeman. I do not know how much the reserve of the 
 Bank of England is now, but the Bank of England, like all banks owe 
 vast amounts of demand liabilities besides their notes. It holds the 
 deposits of England. Every banking house in England almost, has an 
 account in the Bank of England ; and, therefore the danger which threat- 
 ens the Bank of England would be the calling in of the deposits, and if 
 notes to the amount of ten million pounds sterling were presented, in 
 addition to the call of depositors, there would be such a draft upon the 
 resources of the bank that the bank would have to suspend. But the 
 advantage of our government now is that we have no demand liabilities 
 not covered by actual money on hand. These national banks have six 
 hundred million dollars due to depositors on call, but they have facilities 
 to meet that liability. The strength of the United States Government 
 is so much the greater from the fact that it owes nothing but these 
 notes. 
 
 Mr. EwiNG. The gold coin and bullion of the Bank of England was, 
 in December, 1877, one hundred and twenty-seven million dollars, and 
 its entire circulation one hundred and thirty-three millions, so that it 
 could pay its notes almost dollar for dollar.. 
 
 Secretary Sheeman. Yes ; but add one hundred and twenty millions 
 more that the bank is liable to be drawn upon for its deposits. How 
 much does the bank owe its depositors ? 
 
 Mr. EwiNG. One hundred and thirty-one million dollars. 
 
 Secretary Sheeman. There is the danger. The call on the deposits 
 might break it down. 
 
 Mr. EwiNGr. Yet yon do not seem afraid of the call of over six hundred 
 millions of deposits of the national banks. * 
 
 Secretary Sheeman. I say that the national banks have ample re- 
 sources in currency and United States bonds. 
 
 Mr, EwiNG. To pay the six hundred millions of deposits and to keep 
 afloat three hundred and twenty millions of currency ? 
 
 Secretary Sheeman. They can not do it in a day, because it is not 
 possible for the depositors to draw out their deposits in a day. 
 
 Mr. EwiNG. But contrast their situation with the situation of the 
 Bank of England. The Bank of England has in circulation and deposits 
 combined two hundred and sixty-six millions of dollars, and it has one 
 hundred and twenty millions of coin against its circulation and deposits. 
 Our national banks would have nine hundred and twenty millions of 
 deposits and circulation, and have probably forty-five millions of coin to 
 
so RESUMPTION OF SPECIE PAYMENTS. 
 
 meet that; and yet you think that our national banks are in first-rate' 
 condition as compared with the Bank of England. 
 
 Secretary Sherman. Ton do not draw the distinction between our 
 national banks and the Bank of England. The Bank of England occu- 
 pies somewhat the position of our national govei'nmeut. But compare 
 our situation with the Bank of England, and we are better off to-day. 
 
 Mr. EwiNG, You mean the Government of the United States 'J 
 
 Secretary Sherman. Yes. Let me give you the reason why. We 
 Lave on hand one hundred and thirty-four millions of gold and silver; 
 we have got severity millions of paper money; which makes two hundred 
 and four millions casli on hand in our Treasury. 
 
 Mr. EwiNG. You include money belonging to other people? 
 
 Secretary Sherman. So do you in your statement of the Bank of 
 England. 
 
 Mr. Ewing. This gold belongs to the bank. 
 
 Secretary Sherman. Take the full amount of the demand liabilities 
 upon us and add them together, and then take the money which we 
 have on hand, and we are in as good a condition as the Bank of En- 
 gland. 
 
 Mr. EwiNG. You are counting in the Treasury gold and legal-tenders 
 which do not belong to the Treasury. 
 
 Secretary Sherman. Ko, that is a mistake. 
 
 Mr. EwiNa. The law expressly sets apart the gold on which certifi- 
 cates are issued as a special fund to redeem the certificates, so that it 
 is not applicable to the redemption of legal-tender notes. 
 
 Secretary Sherman. But take the demand liabilities upon the United 
 States and add them all together and then take all the money that we 
 have got in the Treasury, and, I repeat, we are in a better condition 
 than the Bank of England is. 
 
 Mr. Bell. Then your idea is that the question of sustaining resump- 
 tion would depend, to a greater or less extent, on the amount of prepa- 
 ration on the day of resumption ? 
 
 Secretary Sherman. Yes, sir; and after. I think we ought to be so 
 strong that we can meet any reasonable demand made upon us. 
 
 Mr. EwiNG. The Bank of England has on hand in gold coin and bull- 
 ion $120,000,000, and in the banking department $59,000,000 of notes. 
 
 Secretary Sherman. According to that the Bank of England has 
 got $175,000,000 with which to pay $266,000,000. The total amount of 
 demand liabilities on us is $407,000,000, and the total amount of coin 
 and currency on hand $208,000,000. Add to that such an additional 
 reserve as I propose to accumulate of $50,000,000, and it would make 
 it $258,000,000 to meet $407,000,000, which is just About the proportion, 
 according to the flgjires you give me, of $179,000,000, held by the Bank 
 of England to meet its liabilities of $266,000,000. The disparity is not 
 so great. 
 
 Mr. Ewing. That is a statement of very little value, because you in- 
 clude gold and currency, which do not belong to us, and you lump it 
 all in together ; but if you put down your state of coin preparation for 
 the obligations, which would be a coin demand after the Ist Of Januaty, 
 1879, you do not stand as favorably as the Bank of England^ 
 
 Secretary Sherman. Considering that we have no demand liabili- 
 ties except legal-tender notes, which haVe a pretty general circulation*, 
 I think that our condition on these figures is better than that of the 
 Bank of England, Its liabilities are demand liabilities. 
 
 Mr. Ewing. Will the reissue of legal-tender notes help you to maintain 
 resumption 1 
 
RESUMPTION OF SPECIE PAYMENTS. 31 
 
 Secretary Shb-eman. Yes; to have the power to reissue tbem; for if 
 the greenbacks cau be retained at par, and we can reissue them, it will 
 save us from issuing bouds. We would only reissue greenbacks in 
 exchange for coin or its equivalent. We would reissue them in pay- 
 ment of coin interest, but, as a matter of course, we could not reissue 
 them unless they were equal to coin, just as the Batik of England would 
 not issue a single note unless it was worth gold. We go on the suppo- 
 sition that the legal-tenders are on par with gold. 
 
 Mr. EwiNG. You have just now indicated a possibility of their not be- 
 ing at par with gold. 
 
 Secretary Sherman. No, sir. 
 
 Mr. EwiNG. You threw in the " if." 
 
 Secretary Sheeman. Tlie very moment you diminish the supply of 
 greenbacks you bring them up to par again. 
 
 Mr. EwiNG. And your idea of reissuing greenbacks would be only to 
 reissue them in exchange for coin ? 
 
 Secretary Sherman. Or as a substitute for coin — to reissue them 
 when they are at par with coin. 
 
 Mr. BwiNG. And you would reissue them for the purpose of increasing 
 your coin supply ? 
 
 Secretary Sherman. Yes, sir; practically. The public would be very 
 willing to take the greenbacks if they were at par with coin, and as a 
 matter of course they would be substitutes for coin. 
 
 The Chairman. Do you not think we could make them so if they 
 were made receivable for four per cent, bonds'? 
 
 Secretary Sherman. That is to be tried. I want to sell four per 
 cent, bonds if I can. Whether, on actual experiment, four per cent, in- 
 terest is enough in this country to induce the sale of bonds, Mr. Low 
 and Mr. Chittenden can judge better than I. 
 
 Adjouruedto Thursday morning, April 4, 1878, at half past ten o'clock . 
 
 Thursday, April i, 1878. 
 
 Present, Mr. Buckner, chairman, Messrs. Ewing, Hardenbergh, Hart- 
 zell. Bell, Eames, Chittenden, Fort, and Phillips; the Hon. John Sher- 
 man, Secretary of the Treasury. 
 
 Mr. EwiNG. I ask your attention to a comparison of the condition of 
 the Treasury for resumption with the condition of the Bank of England 
 in 1819 and now, with the Bank of France this year, and with the 
 banks of the United States in 1857 and 1861. 
 
 Secretary Sherman. When I said the other day that I thought the 
 condition of the Treasury on the 1st of January nexj would be as good 
 as the Bank of England, I had not then before me the actual figures or 
 tables, but only spoke from a general knowledge of the facts. Since 
 then I have given the matter a good deal of attention, and I have got 
 some carefully-prepared tables, founded upon late information, giving 
 the exact comparison of the condition of the Bank of England, the 
 Bank of France, the Bank of Germany, the Bank of Belgium, the 
 national banks, and the Treasury. These tables will show that pretty 
 accurately. 
 
 [Secretary Sherman handed the tables to the committee, and they are 
 printed in the appendix. The latest statement of the condition of these 
 banks is found in the London Economist of February 23, 1878, and the 
 older statements are found in McOulloch's Dictionary, a standard 
 authority on the subject, on page 117.] 
 
32 
 
 RESUMPTION OF SPECIE PAYMENTS. 
 
 Mr. EwiNG. I see you have given the figures of the Bank of France 
 in pounds sterling. 
 
 Secretary Shebman. Yes; they are reduced to pounds sterling. 1 
 ought to say, explanatory of the statement which I^ave submitted, that 
 there are two modes of making up the accounts of the Bank of England ; 
 one by dividing them into the bank department and the issue depart- 
 ment, while the other is the consolidated statement. 
 
 Mr, EwiNG. How does this statement give it? 
 
 Secretary Shekman. It gives the consolidated statement — what is 
 called the old form. The consolidated statement is but a combination 
 of the two departments. 
 
 Mr. BwiNa. Still the consolidated statement charges to the bank the 
 reserve on hand, does it not? 
 
 Secretary Sherman. If there is any material difference ; perhaps I 
 had better put it in both forms, because the Economist gives it in 
 both ways. I will give here the table from the Economist : 
 
 ISSUE DEPAETMENT. 
 
 Notes issued £38,698,020 
 
 Government debt £11, 015, 100 
 
 Other securities 3, 984, 900 
 
 Gold coin and bullion 23, 698, 020 
 
 38, 698, 020 
 
 BANKING DEPAKTMBNT. 
 
 38, 698, 020 
 
 Proprietors' capital £14, 553, 000 
 
 Eest ■ 3,414,161 
 
 Public depositSjincluding ex- 
 chequer, savings banks, 
 commissioners of national 
 debt, and dividend ac- 
 counts 6,524,776 
 
 Otherdeposits 21, 529, 721 
 
 Seven-day and other bills. .. 255, 619 
 
 Dated February 21, 1878. 
 
 46, 277, 277 
 
 Government securities £ 15, 203, 201 
 
 Other securities 17, 672, 338 
 
 Notes 12,368,965 
 
 Gold and silver coin 1 , 032, 773 
 
 46,277,277 
 
 THE OLD FORM. 
 
 MAY, 
 
 Chief Cashier. 
 
 The above bank-accounts would, if made out in the old form, present the following 
 results : 
 
 Assets. 
 
 Securities £33,322,539 
 
 Gold and bullion 24, 730, 793 
 
 Liabilities. 
 
 Circulation (including bank 
 
 post-bills) £26,584,674 
 
 Public deposits 6, 524, 776 
 
 Private deposits 21, 529, 731 
 
 54, 639, 171 
 
 The balance of assets above liabilities being £3,414,161, as stated in the E^bove 
 account under the head " Kest." 
 
 58,053,332 
 
 Now, in regard to the United States, I have a statement here showing 
 the apparent and probable condition of the United States Treasury on 
 April 1, 1878, and on the 1st of January next. The only difference in 
 these statements is that I add to the present condition of the Treasury 
 the proposed accumulation of fifty millions of coin and a substantial 
 payment before that of the fractional currency. I think it will be prac- 
 tically redeemed before that time. The actual results show the amount 
 of demand liabilities on April 1, 1878, against the United States as 
 
RESUMPTION OF SPECIE PAYMENTS. 33 
 
 $460,527,374, and they show the demand resources, including coin and 
 currency, at $174,324,459, making the percentage of resources to liabili- 
 ties 37. To show the probable condition of the Treasury on the first of 
 January, 1879, 1 add the fifty millions of coin and I take off the frac- 
 tional currency, and deduct estimated United States notes lost and 
 destroyed, leaving the other items about the same. That would show 
 an aggregate of probable liabilities of $435,098,400 and probable cash 
 resources of $224,324,459, making 51 per cent, of the demand liabili- 
 ties. The ratio of the Bank of England, at this time, is 45 per cent. ; 
 the ratio of the Bank of France is 65 per cent.; the ratio of the Bank 
 of Germany is 58 per cent. ; and the ratio of the Bank of Belgium is 25 
 percent., all based upon the same figures. (See Appendices 7 and 8.) 
 
 Mr. EwiNG. Does not this statement charge to the Bank of Englaud 
 the unissued notes'? 
 
 Secretary Sherman. No, sir; not at all. The notes on hand in the 
 banking department are deducted from the notes issued, so that the cir- 
 culation in the consolidated statement shows an aggregate of £26,584,674. 
 
 Mr. EwiNG. Does that include the amount of notes unissued ? 
 
 Secretary Sherman. No, sir; thetotalamountof circulation, as shown 
 by the issue department, is £38,698,020 ; but there is in the ba,nking de- 
 partment some twelve millions of pounds. This statement deducts the 
 notes on hand from the notes issued (which is proper), and gives the 
 actual notes to be provided for at £26,584,674. 
 
 Mr. EwiNG. Is there not some error about that I 
 
 Secretary Sherman. Neither you nor I want to fall into any err^^r 
 about this ; but my understaudiug is, that the whole amount of notes 
 of the Bank of England issued by the issue department is £38,698,020; 
 but the banking department has on hand £12,363,965, and in stating 
 the amount of notes outstanding, they deduct that twelve millions from 
 the thirty-eight millions, which ought to be done, because the twelve 
 millions really belong to the Bank of England. Now, in stating ours 
 we have done it differently. We have given the full aggregate without 
 deducting the notes on band, so that the account is more favorable to, 
 the Bank of England as thus stated than it is to us. If I am mistaken 
 about this, I shall be very glad indeed to have you point it out, but I 
 think I am not, because I have looked very carefully into it. 
 
 In regard to the national banks, here are some statements which 
 are interesting to me and wliich were prepared in consequence of 
 our interview the other day. I think they will be interesting to the 
 committee. The first paper contains the circulation and deposits and 
 specie of the State banks in 1857 and 1860, as compiled from state- 
 ments in the finance report of 1876, pages 204 and 205. The next paper 
 contains the circulation, deposits, and cash reserve of the national banks 
 on the 28th day of December, 1877. The latest statement of the banks 
 I cannot give you, because it is not yet made up. It was made in March 
 last, and the returns are not fully in. This statement shows a general 
 demand liability of $960,816,052, and it shows a total cash reserve of 
 $145,019,338. The ratio of legal-tender funds to the amount of circula- 
 tion is 48.4 per cent. The ratio of legal-tender funds to circulation and 
 deposits is 15.1 per cent. The next paper exhibits the circulation, de- 
 posits, and cash resources of the national banks on December 28, 1877, 
 on a different basis, counting the amount of national bonds owned by 
 the banks and deposited with the Treasurer as money. This other 
 table excludes them entirely. This gives the same figures, but counting 
 the bonds at their nominal par as money, it shows this result : Total 
 amount of liabilities $960,816,052, and total amount of cash resources 
 H. Mrs. 48 3 
 
34 RESUMPTION OP SPECIE PAYMENTS. 
 
 (including four hundred and live millions of bonds) at $550,201,055. The 
 ratio of cash resources to circulation is 183 per cent, and the ratio of cash 
 resources to circulation and deposits is 57 per cent. (See Appendix 
 No. 6.) 
 
 Mr. EwiNG. Do you think that the bonds can be counted as cash ? 
 
 Secretary Shbeman. Yes : the bonds are all worth par or above in 
 gold. I 
 
 The Chairman. The other cash held by the banks is legal-tender 
 notes ? 
 
 Secretary Sherman. Yes, and coin. 
 
 Mr. EwiNG. Do you think it safe to count these bonds as gold 1 Is it 
 possible to convert them into gold 1 
 
 Secretary Sherman. O, yes. 
 
 Mr. EwiNG. That is, the banks can sell over four hundred millions of 
 bonds and get gold for them 1 
 
 Secretary Sherman. Probably not to-day or in a moment. 
 
 Mr. BwiNG. At any time can the national banks accumulate four 
 hundred millions of gold by sale of their bonds'? 
 
 Secretary Sherman. Not in a day. 
 
 Mr. BwiNU. Or in a year 1 
 
 Secretary Sherman. O, yes. I sold last year (within the year) of 4J 
 per cent, and 4 per cent, bonds two hundred and seventy-five million 
 dollars. 
 
 Mr. EwiNG. How much gold did you get for them 1 
 
 Secretary Sherman. Sixty or seventy millions of gold and the bal- 
 ance I paid for six per cent, bonds. 
 
 Mr. EwiNG. They were practically funded in other bonds. But I 
 want to know now if you make up that table on the theory that these 
 four hundred millions of bonds can be turned into gold for the purpose 
 of resumption ? 
 
 Secretary Sherman. I make up my statement on the theory that four 
 hundred millions of bonds will niore than pay four hundred millions of 
 bank-notes at any time, such bonds as the banks hold, and that, if that 
 is not so, we are bankrupt. I just give you this statement. Here also 
 is an abstract of reports made to the Comptroller of the Currenc'y, 
 because these tables are taken from it. (See appendix No. 6.) 
 
 Mr. EwiNG. Here is a consolidated statement which I have prepared, 
 and to which I wish to call your attention. 
 
RESUMPTION OF SPECIE PAYMENTS. 
 
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36 
 
 RESUMPTION OF SPECIE PAYMENTS. 
 
 Secretary Sherman [examining the paperj. Your currency outstand- 
 ing of the Bank of England is about what I have got it, about twenty- 
 six million pounds ; but yours is made up only to December, 1877, and 
 mine is made up to February. I have no doubt that you have got this 
 correct. There is no trouble about these figures, although we may some- 
 times look at them a little differently. 
 
 Mr. EwiNG. I cannot get the deposits in the English country banks. 
 
 Secretary Shee'man. The great liability of the Bank of England is 
 the deposits. I have no doubt that this table is substantially taken 
 from the same authority, and I should like to have it go into the report 
 of the conference as yours. 
 
 Mr. EwiNG. 1 wish you to state the probable amount of gold and silver, 
 not including subsidiary coin, in the United States, outside of national 
 banks and of the Treasury, and where it is or supposed to be. 
 
 Secretary Sherman. I am like yon and like everybody else as to my 
 knowledge on tliat subject. I have to depend upon the information 
 from the Director of the Mint for it, and I can only give it to you as he 
 gives it. This table here [handing it to the committee] gives that in- 
 formation from the best lights I can get, and I am inclined to think on 
 the whole that it is about right, but I give it as the statement of the 
 Director of the Mint, for I have no knowledge outside of that which I get 
 from him and from the oflQcial documents. 
 
 [The paper, being an estimate of the amount of gold and silver bull- 
 ion and coin in the United States on April 1, 1878, is published in the 
 appendix No..9, giving the total at $199,490,753 of gold and $65,500,000 
 of silver, making an aggregate in gold and silver of $264,000,000.] 
 
 Secretary Sherman. That statement is not only concurred in by Dr. 
 Linderman, who has mainly prepared it, but it has been carefully exam- 
 ined by other oflacer.s of the Treasury Department who are familiar with 
 the matter. 
 
 Mr. EwiNG. Have you with you the report of the sinking fund ? 
 
 Secretary Sherman. In my report I refer to the sinking fund. I say: 
 
 " In the last annual report my predecessor stated that had the re- 
 sources of the Treasury during each fiscal year, commencing with 1862, 
 been sufficient to make a literal compliance with the conditions of the 
 sinking-fund law practicable, a total of $433,848,215 would have been 
 applied to that fund July 1, 1876; whereas the actual reduction of the 
 debt, including accrued interest, less cash in the Treasury at that date, 
 amounted to $658,992,226," or $220,95^,459 in excess of the amount re- 
 quired by law to be provided for that fund. The details of the fund are 
 given on pages 19-20 of my report. 
 
 Here is a table showing the excess or deficiency placed each year in 
 the sinking fund since 1869 : 
 
 Excess or defidenci/ placed each year in sinUng fund, since 1869 
 
 
 
 Excess. 
 
 Deficiency. 
 
 Difference. 
 
 lgg9 
 
 $673, 020 23 
 
 
 
 Ig70 
 
 8744, 711 80 
 357, 474 32 
 
 
 X8TI 
 
 
 
 
 2, 823, 891 46 
 1, 451, 588 95 
 
 
 jgY3 
 
 
 
 
 ie, 305, 421 96 
 5, 996, 039 62 
 1, 143, 769 82 
 9, 225, 146 63 
 
 
 
 
 
 jg76 
 
 
 
 
 
 
 
 
 
 
 4, 947, 500 64 
 
 33, 672, 564 15 
 
 
 
 
 
 t28, 72.5, 063 SI 
 
RESUMPTION OF SPECIE PAYMENTS. 
 Here is also a table showing the 
 
 37 
 
 Monthly redemptions of UgaJ-tenders and fractional currency during the current fiscal year, 
 to be applied to the sinking fund. 
 
 Legal-tenders. 
 
 Fractional cur- 
 rency. 
 
 Jnly,1677 
 
 Angust, 1877 
 
 September, 1877 .. : 
 
 October, 1877 
 
 November, 1877 
 
 December, 1877 
 
 January, 1878 
 
 Febrnary, 1878 
 
 March, 1878 
 
 Total for 1878 
 
 Amount applied to the sinking fund during the fiscal year 1876 
 Amount applied to the sinking fund during the fiscal year 1877 
 
 Total 
 
 $070, 112 
 1,118,056 
 
 1, 061, 332 
 
 2, 424, 040 
 3, 150, 604 
 1, 396, 512 
 
 833, 352 
 492, 400 
 769, 312 
 
 11, 915, 620 
 
 5, 999, 296 
 
 10, 007, 952 
 
 $618, SOI 45 
 612,221 50 
 385, 473 12 
 434, 067 61 
 309, 554 14 
 278, 911 62 
 292, 189 18 
 281,221 .58 
 340, 583 53 
 
 3, 453, 021 72 
 7, 062, 142 09 
 14, 043, 458 05 
 
 24,558,621 86 
 
 Now I want to show you also that the surplus revenue has not been 
 equal to the sinking fund since 1874; but actually there has been more 
 applied to the sinking fund than the surplus revenue dnring those years. 
 
 My report of December 3, 1877, will show the exact application of 
 the amount. The amount of the surplus revenue is stated there at 
 $30,340,577, which was applied as follows : 
 
 To the redemption of United States notes, &c $10,071,617 
 
 To the redemption of fractional cnrrenoy 14,043,458 
 
 To the redemption of 6 per cent, bonds for the sinking fund 447, 509 
 
 To inor«a8e of cash balance in the Treasury ^ 5, 778, 002 
 
 30, 340, 577 
 
 That $5,778,002 has never been applied. 
 
 Mr. BwiNG. Is that thirty millions the sum of the sinking fund? 
 
 Secretary Sherman. It is the sum of the surplus revenue, the total 
 revenue over expenditures. So that that Ave millions has not been ap- 
 plied. 
 
 Mr. EwiNG. Where do you expect to get the additional fifty millions 
 of gold by January 1, 1879 1 
 
 Secretary Sherman. You mast see that for me to state too closely 
 what 1 propose to do might prevent me from doing what I expect 
 to do, and therefore I will answer your question just as far as I think 
 you will say I ought to go. I answer, mainly from the sale of bonds. 
 Indeed, in the present condition -^of the revenue, we cannot expect 
 much help from surplus revenue, except so far as that surplus revenue 
 may be applied to the payment of greenbacks and to the redemp- 
 tion of fractional currency in aid of the sinking fund. To that extent 
 I think we can rely upon revenue enough to retire the United States 
 notes redeemed under the resumption act; so that I would say that 
 we can get the $50,000,000 of gold additional by the sale of bonds. 
 As to the kind of bonds that I would sell, and as to how I would sell 
 them,&c., I ought not to say anything on that subject atpresent, because 
 you ought to allow me as an executive officer, in the exercise of a very 
 delicate discretion, free power to act as I think right at the moment, 
 holding me responsible for my action afterward. As to what bonds I 
 will sell, or where I will sell them, or how I will sell them, as that is a 
 discretionary power left with the Secretary, I ought not to decide that 
 now, but to decide it as the case arises. 
 
38 RESUMPTION OF SPECIE PAYMENTS. 
 
 Mr. BwiNG. I understood you to say in your interview with the Sen- 
 ate committee that you would have to rely upon the natural currents of 
 trade to bring gold from abroad; that is, that there cannot be a large 
 sale of bonds for coin abroad. Is it on a foreign sale that you are rely- 
 ing? 
 
 Secretary Shekman. Not at all, but on a sale at home. Perhaps I 
 might as well say that if I can get two-thirds of this year's supply of 
 gold and silver, it will amount to a good deal more than $50,000,000, so 
 that I do not have to go abroad for gold. If we can keep our own gold 
 and silver from going abroad, it is more than I want. 
 
 The Chairman. For this $50,000,000 additional I suppose you rely 
 to some extent on the coinage of silver ? 
 
 Secretary Sherman. To some extent ; silver and gold we consider the 
 same under the law. 
 
 Mr. EwiNG. Do you expect to pay out the silver dollar coined by you 
 for current expenses, or only for coin liabilities, or to hoard it for re- 
 sumption ? 
 
 Secretary Sherman. I expect to pay it out now only iu exchange for 
 gold coin or for silver bullion. I am perfectly free to answer the ques- 
 tion fully, because on that point, after consulting with many members 
 of both houses, I have made up my mind what the law requires me to 
 do. I propose to issue all tbe silver dollars that are demanded in ex- 
 change for gold coin. That has been going on to some extent; how far 
 I cannot tell. Then I propose to use the silver in payment for silver 
 bullion, which I can do at par in gold. I then propose to buy all the 
 rest of the silver bullion which I need under the law with silver coin. 
 As a matter of course, in the current course of business, some of that 
 silver coin will go into circulation ; how much, I do not know. The 
 more, the better for us. . But most of it, I take it, will be transferred to 
 the Treasury for silver-certificates (that seems to be the idea of the bill), 
 and those silver-certificates will come into the Treasury in payment of 
 duties, and in that way, practically, the silver will belong to the govern- 
 ment again. 
 
 Until silver is so abundant that it becomes the acknowledged basis of 
 coin transactions, we cannot pay out that silver for the ordinary ex- 
 penses of the government, because we have not enough to pay all the 
 expenditures in silver ; and if the silver is maintained at par with gold, 
 and if the United States notes are below par with gold, we cannot dis- 
 criminate in favor of any class of creditors ; we would, therefore, have 
 to hold silver at par with gold until we either have enough to pay every- 
 thing with it or until the legal tender notes are practically at par with 
 gold and silver. That is a matter over which I have no more control 
 than any other citizen. The silver dollars being receivable for duties — 
 the law allowing them to be converted into certificates which are receiv- 
 able for customs — I must receive them ; and I could not prevent, if I 
 tried, the silver from coming into the Treasury, either for silver certifi- 
 cates or payment of duties. As to when I shjall commence paying them 
 out for the current expenditures of tbe government or in payment of 
 the interest or principal of the debt I cannot tell, because that would 
 depend upon the equality of the three kinds of currency — gold, silver, 
 and paper. I do not know whether I make myself understood, but that 
 is the general idea I have in my mind. As a matter of course, it being a 
 great discretionary power which you have invested in the office of Sec- 
 retary of the Treasury, while I hold the office I will be very careful to 
 exercise that power so as to carry out in good faith the law as Congress 
 
EESUMPTION OP SPECIE PAYMENTS. 39 
 
 has passed it, and that law, I think, contemplates that gold, silver, and 
 paper shall be all brought on an equivalency. 
 
 Mr. EwiNG. Please state m detail the fund in the Treasury, other 
 than gold and silver, applicable to resumption, and not covered by 
 appropriations. 
 
 Secretary SnERsrAN. It is very small. la round numbers, the $70,- 
 000,000 of currency in the Treasury, which is less than the average 
 amount so held for the last five years, is subject to the following, viz : 
 
 Special fund for redemption of fractional currency $10, 000, GOO 
 
 Redemption of notes of national banks "failed," in " liqnidation," and 
 
 "reducing circulation" 12,000,000 
 
 Five per cent, redemption fund 9,000,000 
 
 Disbursing ofBoers' balances 13, 000, 000 " 
 
 Certificates of deposit issued under act June 8, 1872 26, 000, 000 
 
 So that, you may say, some of those items are ours. First, the item 
 of $10,000,000 for the redemption of fractional currency is ours ; then 
 the item of $13,000,000, held by disbursing oflicers, is ours. Tiie two 
 redemption funds, one of national banks that have failed, and the other 
 in present redemption of national-bank notes (together $21 ,000,000), 
 belong to the banks. We have to hold it, but the amount does not 
 vary much. The certificates of deposit are less now than usual ; they 
 are only $26,000,000. I think that answers your question fully. (See 
 Appendix No. 11 as to distribution of currency in the Treasury.) 
 
 Mr. EwiNG. 2^0 ; what I desire to know is the funds in the Treasury 
 other than gold und silver applicable to resumption, and not covered by 
 appropriations. 
 
 Secretary Sheeman. I do not count auyof these as applicable to re- 
 sumption. 
 
 Mr. EwiNG. You spoke the other day about $70,000,000 in the Treas- 
 ury with which to maintain resumption. 
 
 Mr. Shbkman. Not to redeem notes. That $70,000,000 is so much 
 money that is almost constantly in our hands, and which cannot be pre- 
 sented for redemption. In that view only I spoke of it. 
 
 Mr. EwiNG. You did not speak of it, then, as a fund available for 
 use in maintaining resumption? 
 
 Secretary Sherman, O, not at all; but as so much money which 
 cannot be presented for redemption. 
 
 Mr. EwiNG.' Cannot the $26,000,000 of certificates of deposit be pre- 
 sented for redemption 1 
 
 Secretary Sherman. Yes; that much can be; but it is not likely to 
 be. We have got the money to pay for it if it is presented, but it is not 
 likely to be. > 
 
 Mr. EwiNG. That depends upon the preferences of the holders of the 
 certificates. 
 
 Secretary Sherman. Still, I can tell you that it is a great comfort to 
 have $70,000,000, where it is not likely to be disturbed. 
 
 The Chairman. You are not liable to be called for it at any day ? 
 
 Secretary Sherman. Kd, sir. 
 
 Mr. EwiNG. Then I understand that you have no right to use the 
 special fund for the redemption of fractional currency 1 
 
 Secretary Sherman. I do not think that we have any right to use any 
 of that to redeem notes with, because we must redeem notes with coin ; 
 but, having this $10,000,000 on hand, it is ours. 
 
 Mr. EwiNG. Is it subject to use ? 
 
 Secretary Sherman. It is pledged in law to redeem the fractional 
 currency which is really lost or destroyed. If I have $1,000 belonging 
 
4d EESUMPTION OP SPECIE PAYMENTS. 
 
 to a man who died without heirs I am pretty likely to fall heir to it ; 
 and that is the case with this special fund for the redemption of frac- 
 tional currency. 
 
 Mr. EwiNG. What I desire to know is, not what the Treasury might 
 be authorized by additional legislation to do for the purpose of resump- 
 tion, but the resources of the Treasury under existing laws in legal- 
 tender notes or bank notes that may be used in facilitating resumption. 
 What are the items'? 
 
 Secretary feHEBMAN. I think that practically none of this fractional- 
 currency money and none of this money on hand is available for resump- 
 tion in the sense in which you use the terni. It only lessens the burden 
 of resumption to have the notes where they are not likely to be pre- 
 sented. 
 
 Mr. EwiNG. You certainly spoke the other day of this $70,000,000 as 
 being a resource. 
 
 Secretary Sheeman. I think it is, in this way : It is a resource, because 
 it is like the notes of the Bank of /England that are in the issue depart- 
 ment. They do not 'have to be redeemed, or they are not likely to be 
 redeemed, although they may have been issued. Theydiminish — to the 
 extent that we hold these greenbacks in the Treasury — the amount of 
 greenbacks outstanding among the people. 
 
 Mr. EwiNGr. What has been the amoant of s.iles of bonds per month 
 since the last sales to the syndicate ? 
 
 Secretary Sherman. Here it is : 
 
 Siiisoriptions received for four per cent, iondi per month since the lait sales to si/ndlcate 
 
 January, 1878 $2,846,550 
 
 February, 1878 744,200 
 
 March, 1878 1,445,450 
 
 .''.,036,200 
 
 Mr. EwiNG. Then it would take four or five months of sales of bonds 
 to meet outstanding called bonds ? 
 
 Secretary Sherman. We will probably sell enough this month to meet 
 the outstanding called bonds. I think we will be a,ble to sell enough 
 to cover the deficiency in the last call. I hope within this month to 
 make an arrangement to sell, unless Congress should repeal the resump- 
 tion act. I would like Congress to determine that. If it is not repealed 
 I would undoubtedly sell, during the present mouth, a good deal more 
 bonds. I would sell all the bonds that I wanted to sell. 
 
 Mr. Ewma. Four per cent, bonds ? 
 
 Secretary Sherman. That I cannot say. I will do the best I can. I 
 would rather sell four per cent, bonds, and hope to do so ; but if I sell 
 any other bonds they wilUbe sold at a premium. I can sell them in the 
 market at above par. 
 
 Mr. EwiNG. Do you think that under existing law the legal-tender 
 notes redeemed will be subject to be paid out as other funds returned 
 to the Treasury ? 
 
 Secretary Sherman. I think that the law is very clear that the 
 amount of legal-tender notes redeemed in excess of $300,000,000 cannot 
 be paid out. That is my construction of the law. 
 
 Mr. EwiNG. I am speaking of the others, and not those redeemed by 
 the increase of bank currency. 
 
 Secretary Sherman. I do not think they can be issued. I think that 
 those which are redeemed after the 1st of January, in excess of 
 
EESCJMPTION OF SPECIE PAYMENTS. 41 
 
 $300,000,000, cannot be reissued under existing laws. I am not certain 
 about it. It is a mooted queston ; I would rather have your opinion on 
 that than my own. It is a question which I would like very well to 
 have Congress settle. The law proposes and provides for no mode of 
 redeeming United States notes, except as bank-notes are issued (when 
 eighty per cent, of United States notes must be redeemed). As the 
 law provides for no other mode of canceling and destroying United 
 States notes, it would seem to follow that all notes redeemed in any 
 other way than under that law can be reissued, because the section of 
 the Revised Statutes I mentioned provides that all notes which come into 
 the Treasury may be reissued. But then, on the other hand, there is a 
 provision in the resumption law which seems to contemplate that the 
 amount outstanding on the 1st of January shall not exceed $300,000,000. 
 
 Mr. EwiNGr. Provided the increase of bank currency is such as to 
 bring down the legal-tender notes to $300,000,000. 
 
 Secretary Sherman. There is the question. That question I have 
 never determined in my own mind. It. may be tliat all the notes now 
 outstanding, and which are not redeemed under the provisions of the 
 resumption act, can be reissued. 
 
 Mr. BwiNGr. If any can be they all can be, I think. 
 
 Secretary Sherman. That is a question I have not determined in my 
 own mind. I have no doubt of my power to reissue all below $300^000,000. 
 The law expressly provides for that ; there is no provision of law which 
 authorizes the reducing of them below $300,000,000. But the resump- 
 tion act does contemplate the reduction of United States notes to 
 $300,000,000. 
 
 Mr. EwiNG. Provided the bank currency is increased to such an ex- 
 tent as, under the provisions of that law, will reduce the greenback 
 i currency to $300,000,000. 
 
 Secretary Sherman. I frankly say that I wish and hope that that is 
 the proper construction ; for I do not want to retire greenbacks except 
 as they are retired by the issue of bank notes, because I believe that 
 that process will reduce them in time. I do not desire to hasten the 
 process. But, as a matter of course, I would be very glad indeed if 
 Congress would solve that question for me, just as I would like to have 
 Congress solve the doubt which rests on the reissue of the $300,000,000. 
 
 Mr, Phillips. You cancel legal-tender notes to the exteint of eighty 
 per cent, of the amount of national bank notes issued, but when these 
 national bank notes are retired (as they have been to a far greater extent 
 than they have been reissued) there is no means in law of reissuing legal- 
 tender notes to that extent. 
 
 Secretary Sherman. The authority to reissue extends to every dollar 
 of United States notes outstanding. Any of the United States notes 
 that come into the Treasury in the ordinary course of business, either 
 for redemption or in payment of taxes, I have the right to reissue. 
 
 Mr. Phillips. That E understand. 
 
 Secretary Sherman. Then the question is whether that provision of 
 the resumption act which contemplates the reduction of the volume of 
 United States notes to $300,000,000 is a mandate to the executive offi- 
 cer not to reissue them until they fall below that amount. That is a 
 question which I ought not to answer, because I have not made up my 
 mind upon it. 
 
 Mr. EwiNG. But as to the legal-tender notes under $300,000,000, re- 
 deemed under the resumption law, you hold that you have the right to 
 pay them out the same as any other fund in the Treasury. 
 Secretary Sherman. I do. 
 
42 RESUMPTION OF SPECIE PAYMENTS. 
 
 Mr. EwiNG. You have no more discretion respecting their reissue 
 than you have respecting the reissue of notes received from taxes? 
 
 Secretary Sheeman. No, sir; lissue them according to the exigencies 
 of the public service. Still, you know that that is a disputed proposi- 
 tion. I know a very able Senator, for whose opinion I have great re- 
 spect, who thinks differently. I think, therefore, that that is a question 
 which Congress ought to settle. 
 
 Mr. EwiNG. Did any law-ofScer of the government, or any Secretary 
 of the Treasury, give a written opinion to the effect that the authority 
 given to the Secretary of the Treasury by the resumption-law to use any 
 surplus revenue from time to time in the Treasury, not otherwise appro- 
 priated, to prepare and provide for the resumption of legal-tenders, affects 
 in any way the obligation imposed by that section of the Revised Stat- 
 utes which declares that the coin paid for customs shall be set apart as 
 a special fund, and applied, first, to the interest on the public debt, and, 
 second to the sinking fund ? 
 
 Secretary Sherman. No; I think that no law-officer of the govern- 
 ment, or no Secretary of the Treasury, has yet authoritatively decided 
 that question, as you put it now. The question which the Secretary of 
 the Treasury did decide was, that United States notes and fractional 
 notes, being a part of the public debt, may be included in the sinking- 
 fund; and practically we have paid the full amount of the surplus reve- 
 nue in that way and applied it to the sinking fund until last year. In one 
 year, in Mr. Bristow's time, there was a deficiency of $5,000,000; and 
 this last year I did not buy bonds to the extent of $5,000,000 of the sur- 
 plus fund, so that the question which you now present, although it is 
 presented to my mind very often, has not been decided, either by myself 
 or by any Secretary of the Treasury or by any law, for the question 
 has really never been presented in a way which made it necessary to de- 
 cide it. My annual report will show the exact application of the amount 
 of the surplus revenue. As, under the provisions of existing law, I was 
 actually selling bonds under the resumption act, I did not see my way 
 clear to go into the market and buy these bonds for the sinking fund, 
 just as, during the whole of the war, the sinking-fund provision was 
 held to be inoperative, While we were actually selling bonds, it was 
 absurd for us to go into the market and buy bonds. The money lies in 
 the treasury, subject to the order of Congress. If Congress directs that 
 that $5,000,000 be applied to the sinking fund, it can do so, but it will 
 only involve us in the same absurdity that the English were involved 
 in when they uadertook to carry out Sir William Pitt's sinking-fund 
 law during their war. 
 
 Mr. EwiNG. Bat you can buy 6 per cent, bonds ^ith it, and you can 
 sell 4 per cent, bonds. 
 
 Secretary Sherman. I know that. We can sell 4 per cent, bonds, 
 but what is the use of doing so I 
 
 Mr, Swing. What is the balance for the sinking fund ? 
 
 Secretary Sherman, Five million seven hundred and seventy-eight 
 thousand dollars. 
 
 Mr, EwiNG. Where is that — in the Treasury ? 
 
 Secretary Sherman. It is in the general cash balance. It is in the 
 coin accumulated, Mr, Bristow, in his report in 1875, mentions this 
 very matter, and says that, in his opinion, the law requires him to call 
 in bonds, and to invest this money; but Congress took no action upon 
 it, and the result was that that year, or the preceding year, the balance 
 over the surplus revenue, some $16,000,000, was not applied at all ; and 
 so, ever since the panic of 1873, there has been a balance not applied. 
 
RESUMPTION OF SPECIE PAYMENTS. 43 
 
 Mr. E WING. I don't think the surplus revenue has anything to do 
 with it ; what I wanted to know was whether any law-offloer of the 
 government, or any Secretary of the Treasury, had given a written 
 opinion that the sinking fund was to be composed merely of surplus 
 revenue under that section of the Revised Statutes which says that the 
 income from customs shall be applied, first to the interest on the public 
 debt, and second to the sinking fund. 
 
 Secretary Sheeman. I can only say to you that established custom, 
 as well as the theory of our government, would seem to require that 
 any sinking fund provided for the extinguishment of the debt cannot 
 be applied until after all current demands upon the Treasury are paid. 
 Otherwise, the Treasury would be bankrupt whenever there was a tem- 
 porary falling off in the revenue. For instance, the law which you read 
 to me and which I helped to frame (the law of 1862), providing for the 
 sinking fund, sets aside the receipts from customs to- pay 1 per cent, of 
 the debt. Now, although that was the law, just as mandatory as you 
 have read it (requiring the sinking fund to he maintained at 1 per cent.), 
 the sinking fund was never opened, nor could it be, during the war. 
 The pledge was never carried out until the old floating debt was mainly 
 refunded. 
 
 Mr. EwiKG. That was covered by the blanket of war necessity. 
 
 Secretary Sheeman. Not at all. That matter was presented to Con- 
 gress frequently on the ground that it was impossible to maintain a 
 sinking fund until there was an excess of revenue over expenditure, and 
 so it continued until I myself complained of it, after the war was over, 
 insisting that while that was right during the war, it should not apply 
 after peace, and we, therefore, carried through Congress a provision for 
 the sinking fund, so that the money might be applied, so much every 
 year, in pursuance of the old act of February, 1862, and so it continued 
 to be carried out until the revenues fell below the expenditures, so as to 
 make it impossible to pay the current expenses of the government, and 
 to pay the sinking fund at the same time. Thus, from the necessity of 
 the case, any Secretary of the Treasury was compelled to pay the cur- 
 rent demands on the revenue before he paid the sinking fund, just as 
 the manager of a railroad would be bound to pay his hands and furnish 
 the fuel to run his locomotives before he would pay the interest ou the 
 first bonded debt. 
 
 Mr. EwiNG. Was not the public debt being reduced all that time ? 
 
 Secretary Sheeman. Up to the panic of 1873 it was being reduced all 
 the time, and we paid more during all those years than the law required 
 on what we call the sinking fund — that is, the redemption of the debt. 
 
 Mr. Phillips. From what source did the payments come? 
 
 Secretary Sherman. From surplus revenues. And so it continued 
 until 1873." Then, all at once, there was a deficiency of $16,000,000. 
 Well, the Secretary of the Treasury, as a matter of course, would go on 
 and pay the ordinary expenses first ; and if there was any deficiency, 
 he would report that deficiency to Congress, and if there was any fault 
 about it, it was with Congress, for Congress should either provide addi- 
 tional revenues to keep up the sinking fund or else should reduce appro- 
 priations. Mr. Eichardson was Secretary of the Treasury when the first 
 trouble took place. The exact condition of the Treasury was given two 
 months after the panic, and so on by every Secretary, and as Congress 
 did not feel disposed (and 1 think rightfully — I was in Congress myself 
 at the time, and take my share of the responsibility) to levy new taxes 
 upon the people in a time of great distress, this deficiency in the sink- 
 ing fund was allowed to continue from year to year until now, and I 
 
44 RESUMPTION OP SPECIE PAYMENTS. 
 
 presume that it will be allowed to continue, although if Congress can 
 see its way clear to levy a tax upon tea and coffee^ to make good the 
 sinking fund, I would like it very much. But I do not think Congress 
 will do so. 
 
 Mr. EwiNG. I guess not. 
 
 Secretary Sherman. Because I do not think that the people would 
 sustain Congress in it. So I do not think there can be any just criti- 
 cism in throwing ou the sinking fund the actual deficiency iu revenue, 
 because any Secretary of the Treasury who would undertake to refuse 
 to pay the current expenses of the government, and who would at the 
 same time pay the whole amount of this technical sinking fund in the 
 purchase and payment of the debt, would be overhauled very quickly. 
 
 Mr. EwiKG. I understood you to say on Monday that this appropria- 
 tion in the resumption law, of any surplus revenue, authorized you to 
 use any of the funds which would otherwise go to the sinking fund. 
 
 Secretary Sherman. Yes, for the redemption of United States notes 
 and fractional currency, but not beyond that; I never claimed that. 
 
 Mr. EwiNG. For the redemption of the United States notes after the 
 1st of January. 
 
 Secretary Sherman. No, sir; we did not discuss that. The point 
 you were putting to me was that we ought not to have used this money 
 (which should go into the sinking fund) for the purpose of redeeming 
 the United States notes and fractional currency, but that we ought to 
 have applied it to the redemption of bonds; and I said in reply that the 
 plain mandate of the resumption act requiring us to pay and cancel and 
 retire the greenback notes was just as mandatory as the appropriations 
 for your salary and mine. 
 
 Mr. EwiNG. Do I understand you now that the appropriation of ''any 
 surplus funds in the Treasury not otherwise appropriated," contained in 
 the resumption law, will authorize you, after the 1st of January, 1879, 
 to use funds which would otherwise go to the sinking fund in redemp- 
 tion of United States notes? 
 
 Secretary. -Sherman. My impression is that, under the resumption 
 act, after the 1st of January, I cau use all surplus revenue to pay any 
 lawful demands on the Treasury of the United States. 
 
 Mr. EwiNG. That is, it gives you the command of the sinking fund 
 for that purpose? 
 
 Secretary Sherman. Yes. If Congress fails to make enough appro- 
 priation for paying the current expenses^ including any demand that 
 may grow out of resumption, T would have a right, to the extent of the 
 surplus revenue, to command those moneys, in order to carry out the 
 resumption act, just as I would have a right to use it under any other 
 act of Congress. 
 
 Mr. EwiNG. So that the sinking fund is not only subordinated to any 
 subsequent appropriations by Congress, but is subordinated . to this 
 appropriation in the resumption law of the surplus funds, and is really 
 the last thing which is to be looked after or provided for? 
 
 Secretary Sherman. Yes; for this reason: if I should fail to have 
 money enough to meet the demands upon me for resumption purposes 
 I am invested with the power to sell bonds; I would have the authority 
 to go into the market and sell bonds. It would be idle for me to go 
 into the market to sell bonds wiile I was actually buying bonds for the 
 sinking fund. I would regard a demand made upon the Treasury for 
 United States notes after the 1st of January next just like any other 
 demand for a liability which I was bound to pay, and I can use all the 
 means at my command, including tiie proceeds of the sale of bonds. 
 
RESUMPTION OF SPECIE PAYMENTS. 45 
 
 Mr. EwiNG. And the sinking fund 1 
 J Secretary Sheeman. O, yes. The sinking fund, in my view, is noth- 
 ing but the surplus of revenue over the expenditures. The nature of 
 j.he sinking fund has been debated to an extent in folios greater than the 
 olios you have got in this room. It was debated in the English Par- 
 liament in the famous Dr. Price controversy, which extended for thirty 
 years, and that was the generally recognized idea of a sinking fund — 
 that it was nothing but an agreement on the part of the law-making 
 power to apply surplus revenues to a certain amount to the reduction oif 
 the public debt. 
 
 Mr. EwxNGr. Has any law-officer of the government, or the Secretary 
 of the Treasury, given a written opinion to the effect either that the 
 sinking fund is subordinated to the special appropriations or to this 
 general appropriation of surplus funds made in the resumption act? 
 
 Secretary Sheeman. No; I do not think so. 1 know of none. 
 
 Mr. EwiNGr. Has any lawoflScer of the government, or any Secretary 
 of the Treasury, given a written opinion to the effect that the United 
 States notes or fractional currency redeemed may be charged to the 
 sinking fund ? 
 
 Seciretary Sheeman. No; because I think that that is so clear that 
 I would not ask for such an opinion. The United States notes and 
 .fractional currency have been regarded as a part of the public debt 
 ever since their first issue, and in every statement of the public debt it 
 has been always classified as a part of the public debt. In making up 
 the statement of the sinking fund, you will find that we always included 
 the whole aggregate of United States notes and fractional currency. 
 
 Mr. EwiNG. The law unquestionably requires that ; but the law also 
 requires that a sum equal to the interest of the sinking fund shall be 
 applied annually. 
 
 Secretary Sheeman. Yes ; that has been done. 
 
 Mr. EwiNG. And if you put into the sinking fund notes that bear no 
 interest, it is impossible to execute that provision for paying interest 
 on the sinking fund ? , 
 
 Secretary Sheeman. What is the sinking fund,? The sinking fund 
 is not the identical bonds that are canceled, destroyed, and burned. 
 The sinking fund is neither the bonds paid and destroyed, nor the notes 
 paid and destroyed. The sinking fund is like many other book accounts 
 that are kept upon our books. It is a certain amount of money, and it 
 is accumulated at the rate of 6 per cent, interest. It does not make any 
 difference from what source the sinking fund comes. 
 
 Mr. EwiNG-.' If there were 5 per cent, bonds in the sinking fund, 
 would 'you count interest on them at 6 per cent. ? 
 
 Secretary Sheeman. But there are no 5 per cent, bonds in the sinking 
 fund. I fell into the same error the other day. I told you th« other 
 day that I thought that the interest was computed as at the rate of the 
 bonds purchased ; but, on inquiry, I find that I was mistaken, and that 
 the habit has always been to redeem only the 6 per cent, bonds and to 
 compute uniformly 6 per cent, interest on the whole amount of the sink- 
 ing fund. The sinking fund heretofore has been always composed 
 either of 6 per cent, bonds, United States notes, or fractional currency 
 redeemed. 
 
 Mr. EwiNG. If you had 7.30 bonds in the sinking fund would you not 
 compute the interest at 7.30, and if you had 4 per cent, bonds would you 
 not compute the interest only at 4 per cent.? 
 
 Secretary Sheeman. No, sir. The identity of the particular security 
 is lost the moment that it is redeemed ; and the sinking fund is com- 
 
46 EEtUMPTION OF SPECIE PAYMENTS. 
 
 puted at the rate of 6 per cent., because the 6 per cent, bonds are now 
 available and can be paid off. 
 
 Mr. Phillips. In case of the falling off of revenue, do you think that 
 you would probably have to sell gold in hand to meet the current ex- 
 penses of the government? 
 
 Secretary Sherman. If so, Congress would be in a very sorry pre- 
 dicament. 
 
 Mr. Phillips. I am speaking of your power to resume. 
 
 Secretary Sherman. If Congress fails to give us money enough to 
 meet its appropriations, we are broke. That is all that there is about it. 
 
 Mr. Phillips. Youwouldavailyourself thenof thecoinia j-our hands 
 to meet the current expenditures of the government? 
 
 Secretary Sherman. Undoubtedly; but I cannot presume that our 
 government is going to do that. 
 
 Mr. Phillips. I observe that the currency balance on the 1st of April, 
 1877, was eight millions ; a little over half a million on the 1st of this 
 April. 
 
 Secretary Sherman. The balance now is greater than it was then. 
 After I came into the office I established this fund of ten millions for the 
 redemption of fractional currency. That fund had not been established 
 until after I came in. The actual balance is $10,751,851, including that 
 fund of $10,000,000. Formerly that fund had not been stated according 
 ,to law. 
 
 Mr. Phillips. But that fund had all accrued before this year? 
 
 Secretary Sherman. No, sir; it had not. It was never stated until 
 after I came into office. It was required to be done under the act, and 
 I thought that jts not being done was a failure to comply with the act. 
 I therefore directed it to be done. 
 
 Mr. Phillips. That is held in legal tenders, is it not ? 
 
 Secretary Sherman. Yes, sir. 
 
 Mr. Phillips. But you stated a little while ago-that, of your coin 
 balance in hand, there was five millions that had come from the sinking 
 fund. 
 
 Secretary Sherman, Here is the law under which that ten-million 
 fund is required to be kept. It is the first section of the joint resolution 
 for the issue of silver coin approved July 22, 1876. 
 
 It is as follows : 
 
 That the Secretary of the Treasury, under such limits and regulations as will best 
 secure a just and fair distribution of the same through the country, may issue the sil- 
 ver coin at any time in the Treasury to an amount not exceeding ten million dollars, 
 in exchange for an equal amount of legal-tender notes ; and the notes so received in 
 exchange shall be kept as a special fund separate and apart from all other money in 
 the Treasury, and be reissued only upon the retirement and destruction of a like sum 
 of fractional currency received at the Treasury in payment of dues to the United 
 States ; and said fractional currency, when so substituted, shallbe destroyed and held 
 as part of the sinking fund, as provided in the act approved April seventeen, eighteen 
 inndred and.seventy-six. 
 
 Now there is the answer, " Shall be held as a part of the sinking 
 fund." 
 
 Mr. EwiNa. The answer ma,kes against your construction, because 
 there is a special provision of law that this non-interest-bearing security, 
 when redeemed, shall go into the sinking fund. Why should that be 
 put in the law if it was the law already ? 
 
 Secretary Sherman. It had been done before that and afterward. 
 This simply carries out the same thought and the same idea. , 
 
 Mr. EwiNG. That is put in to accomplish a purpose. 
 
 Secretary Sherman. It is a negative pregnant. 
 
RESUMPTION OF SPECIE PAYMENTS. 47 
 
 Mr. EwiNG. It was an entirely unnecessary provision, if those notes so 
 destroyed would necessarily go into the sinking fund. 
 
 Now, let me ask your attention again to the table you have given 
 us of the ltems% composing the seventy millions of currency in the 
 Treasury. 
 
 That ten millions of a special fund for redemption of fractional cur- 
 rency cannot be used by the Secretary, nor the twelve millions for the 
 redemption of the national-banknotes in liquidation, nor the 5 per cent, 
 redemption fund of nine million dollars, nor the funds for which cer- 
 tificates of deposit are issued to the amount of twenty-six millions. 
 INbne of those items are in the control of the Secretary for use. 
 
 Secretary Sherman. The ten millions and the thirteen millions are 
 practically as absolutely paid off as if the amount of the United States 
 notes outstanding were reduced to the amount of twenty-three millions. 
 
 Mr. BwiNCr. But that fund of ten millions is not under your control 
 under existing law. 
 
 Secretary Sherman. It is practically redeemed ; it is in the Treasury ^ 
 it is ours. 
 
 Mr. EwiNG. I am speaking of it as a resource. That cannot be used. 
 
 Secretary Sherman. I explained that before. It cannot be used to 
 pay notes or anything of that kind, but it is none the less c^rrency^ 
 which we do not need to provide for ; that is all. 
 
 Mr. EwiNG-. And the $12,000,000 held for redemption of national-bank 
 notes in liquidation, that can't be used 1 
 
 Secretary Sherman. No; but that is dead while the bank-notes do 
 not come in. As they come in, they are redeemed. 
 
 Mr. EwiNG. Still, it cannot be used by the Secretary ? 
 
 Secretary Sherman. No, sir; nor need it be redeemed. 
 
 Mr. EwiNG. Nor the 5 per cent, redemption fund nor the certificates 
 of deposit f 
 
 Secretary Sherman. No, sir. 
 
 Mr. EwiNG. Then, of this $70,000,000, there would be only the 
 $13,000,000 to the credit of disbursing officers, which the Secretary is 
 at liberty to use f 
 
 Secretary Sherman. I would have to make the same explanation 
 which I made in the beginning — that I do not regard the $70,000,000 
 as a fund ou hand with which to redeem anything; but that it is 
 $70,000,000 in hand which is not likely to be called for in coin, and that 
 it lessens, to that extent pre(!isely, the burden of resumption. 
 
 Mr. EwiNG. I understand that perfectly ; but I want to bring out 
 this fact definitely— that of that $70,000,000 there is but $13,000,000 
 that may be used (the balance in the hands of disbursing officers), and 
 that the $57,000,000 cannot be used by the Secretary. 
 
 Secretary Sherman. No ; but ii; is so much money that is locked up 
 in the Treasury not to be redeemed. Therefore, instead of counting 
 $340,000,000 of legal-tender notes liable to redemption, you may deduct 
 the great body of this $70,000,000, just as in the statement of the Bank 
 of England, which deducts from the total amount of notes issued all the 
 notes held in the banking department. 
 
 Mr. EwiNG. I understand that; and with that explanation you admit 
 my statement— that of the $70,000,000 only $13,000,000 can be issued 
 and nsed by the Secretary of the Treasury under existing law. 
 
 Secretary Sherman. For the purposes of resumption. 
 
 Mr. EwiNG. For any purpose. 
 
 Secretary Sherman. We use it for tlie redemption of outstanding 
 
48 RESUMPTION OP SPECIE PAYMENTS. 
 
 certificates and for the redemption of bank-notes. We pay it out every 
 day. This money is the most active money that we have in the Treasury. 
 We pay it out and receive it every day. 
 
 Mr. EwiNG. But not for any other purpose than that for which it is 
 specially appropriated? 
 
 Secretary Sherman. It can only be paid for these particular purposes, 
 but it is being paid out every day, and other money coming in its place. 
 
 MrTEwiNG. Now, you make the amount of bank-notes of banks in 
 liquidation by your statement to the Senate committee $21,000,000 or 
 $22,000,000. 
 
 Secretary Sherman. I think that that includes not only notes of 
 banks in voluntary liquidation, but of broken banks. 
 
 Mr. EwiNG. I read from yourstatement before the Senate committee : 
 
 On December 31, 1875, the amount was $346,479,750 ; on December 31, 1877, 
 $321,672,505, and on February 28, 1878, the amount of bank-notes outstanding was 
 $321,989,991 ; but the amount of bank-notes of banks in existence, not in process of 
 liquidation, was $299,240,475; and the difference between these two sums being the 
 notes of banks in process of liquidation, although the notes are in circulation, yet an 
 equal amount of greenbacks are in the Treasury as a special deposit to redeem them. 
 
 That makes the difference between $321,672,505 and $299,240,475— 
 about $22,000,000. 
 
 Secretary Sherman. I can tell you the explanation of that. I was 
 correct in my statement before the Finance Committee. There are 
 $21,000,000 or $22,000,000 of notes of outstanding banks in process of 
 liquidation, of which $13,000,000 in United States notes is held in the 
 Treasury, and for the balance we hold the bonds of banks that failed 
 as security. The discrepancy, no doubt, is represented by the fact that 
 we have not sold those bonds. I am surprised that we hold as much as 
 $13,000,000 of notes, for we do not usually sell bonds until the proceeds 
 are needed to redeem the outstanding notes of those bonds. 
 
 Mr. EwiNG.' When a bank goes into liquidation it deposits greenbacks 
 to redeem its notes. 
 
 Secretary Sherman. Yes; but failed banks do not. When banks 
 fail we take possession of their bonds and we sell them only as we need 
 the proceeds to meet their notes. I have no doubt that the great body 
 of this $13,000,000 on hand is money deposited by banks which have 
 voluntarily retired. They have to deposit greenbacks before they get 
 their bonds. But in the case of banks that fail, we sell the bonds as we 
 i^eed the proceeds from time to time. That will doubtless explain the 
 discrepancy. 
 
 Mr. EwiNG. That explains why the item is not $22,000,000 instead of 
 $12,000,000. 
 
 Secretary Sherman. Yes; we can, if we desire, sell all the bonds 
 that we hold as security for those broken banks, but the usual course is 
 not to do so, but to give the stockholders the benefit of their circulation, 
 and only to sell the bonds as money is needed to redeem the bank- 
 circulation. 
 
 Mr. BwiNG. There ia a fraction under $300,000,000 of national bank 
 notes outstanding, but the five per cent, redemption fuad is only put 
 down at nine millions ; it should be fifceen millions. 
 
 Secretary Sherman. No; the explanation of that is this: As the 
 notes of banks in operation come in we redeem them, and at the end of 
 ten days, or oftener if the Treasury sees proper, these notes are returned 
 to the banks issuing them, and are replaced by the banks with green- 
 backs. This redemption of bank-notes for the time diminishes the 
 $15,000,000 or five per cent, fund to some extent, but at the end of ten 
 
RESUMPTION OF SPECIE PAYMENTS. 49 
 
 days the redeemed bank-notes are sent back to the banks and replaced 
 by other United States notes. In other words, there is a little leeway 
 given there in the ordinary course of business. 
 
 Mr. BwiNG-. That is only $500 to every bank. That would scarcely 
 make the difiference between $9,000,000 and $15,000,000. 
 
 Secretary Sherman. It will make it. Ten days' redemption makes 
 about $5,000,000. 
 Mr. EwiNG. That explains the discrepancy, therefore. 
 Secretary Sherman. Yes ; it is always so. Mr. Gilflllan has been of 
 late very strict with the banks. 
 
 Mr. EwiNG. In case of a drain of gold from the Treasury, what meas- 
 ure would you resort to to check it — I mean after resumption 1 
 
 Secretary Sherman. The Treasury ought to be so strong that the 
 thing would check itself. You can scarcely imagine, in the probabilities 
 of business, that, with uo outstanding liabilities that are not covered by 
 actual cash on hand except the $300,000,000 of legal-tender notes, the 
 drain upon the government would be so great as to exhaust the reserve 
 of $120,000,000. That proposition is all based, not upon the fact that 
 $120,000,000 would pay $300,000,000— we all know that is not so— but 
 upon the fact that it is impossible to gather together United States 
 notes and to present them in such a mass and in such a continuous stream, 
 and that the very effort to do so would raise the value of United States 
 notes. Their convenience is so great, and the necessity for them so ap- 
 parent, that such an effort would at once bring them up to par in gold. 
 I think that a drain of flvoj ten, fifteen, or twenty millions would at 
 once tend to bring up the value of greenbacks until they were at par 
 in gold, and then there would be no object at all in drawing them out. 
 
 Mr. Ewing; After resumption the greenback must remain at par in 
 gold as long as the Treasury maintains resumption ? 
 
 Secretary Sherman. Certainly ; and while they are at par in gold 
 they will not be presented to any considerable extent. 
 
 Mr. EwiNGr. Of course, if there was an established difference of 1 per 
 cent., or one-half of 1 per cent., between gold and greenbacks, the Treas- 
 ury would be broken pretty quick "? 
 
 Secretary Sherman. Yes, sir, or a quarter of 1 per cent. ; there is no 
 doubt about that. 
 
 Mr.EwiNG. Therefore, after resumption, greenbacks must necessarily 
 be at par with gold so long as the Secretary is able to maintain resump- 
 tion 1 Now, I am supposing a case of a drain of gold from the action 
 of foreign creditors, or from any other cause, and want to know what 
 means you would resort to to check it? 
 
 Secretary Sherman, I do not think that it would be necessary to 
 resort to any means; but if it were necessary to devise some means, I 
 would resort to such as have been adopted in other countries — the tem- 
 porary suspension of specie payment. That is a question for Congress. 
 The British bank act, which is so often quoted as the standard, makes 
 no provision for suspension ; there is no legal suspension of payment in 
 England, nor does our law make any provision for it. If the govern- 
 ment should meet such an adverse state of circumstances as to make 
 suspension absolutely necessary, the government would necessarily have 
 to take the responsibility of it, leaving Congress to determine whether 
 the circumstances justified it. That has always been so. 
 
 Mr, Phillips. Then do you think that the Secretary of the Treasury 
 has the power to suspend specie payment? 
 
 Secretary Sherman. No, sir; but if demands were made upon the 
 Treasury, which the Secretary could not pay unless he^was to pay them 
 H. Mis. 48 4 
 
50 RESUMPTION OP SPECIE PAYMENTS. 
 
 out of his own pocket, he would have to stop paying. That is all there 
 is about it. 
 
 Mr. EwiNG. When, short of the point of your actual inability to go 
 further, would you feel at liberty to stop ? 
 
 Secretary Sherman. That I cannot state. That will not occur in my 
 time if you give me now such a reserve as I mention, and it will not 
 occur at all, in your time or in my time, in my judgment. But we can- 
 not anticipate what the future will bring forth. We do not know but 
 that we may be involved in war, which would compel a suspension of 
 payment, and we do not know what might be the effect of war in Europe. 
 
 Mr. Phillips. I was going to ask you on that very point. Would 
 not a general war in Europe result in raising the price of gold ? 
 
 Secretary Sherman. Wise men differ very much upon that. I think 
 that a general war in Europe would give such a demand for our agricul- 
 tural products, and for everything that we produce and sell, that it 
 would probably inspire confidence, and there would be less danger. 
 
 Mr. Phillips. Might it not raise the price of gold as compared with 
 currency "? 
 
 The Chairman. Or might it not have the effect of sending our bonds 
 here? 
 
 Secretary Sherman. We are not bound to pay for our bonds unless 
 they are due. 
 
 Mr. EwiNG. But banks and others that hold gold would be tempted 
 to buy bonds, and the gold would go out. 
 
 Secretary Sherman. I do not think so. I have shown you now in 
 these figures that, with such a reserve as I have mentioned, the govern- 
 ment of the United States is stronger for resumption than the Bank of 
 England. 
 
 Mr. EwiNG. Is now? 
 
 Secretary Sherman. No ; I say will be, if you give us the reserve I 
 mention. It will then be stronger than the Bank of England. 
 
 Mr. EwiNG. You said on Monday that it is now stronger. 
 
 Secretary Sherman. I do not think that it is now, but I say that be- 
 fore the 1st of January, with an additional reserve of $50,000,000, and 
 if you will provide enough means to carry on the current expenses of 
 the government, with or without regard to the sinking fund, we will be 
 stronger than the Bank of England. If you make good the sinking 
 fund, we would be better off; but if you do not make it good, it does 
 not affect the question of resumption. With that $50,000,000 additional 
 (making our reserve $130,000,000 or $140,000,000), with the fact that 
 our notes are of universal credit and are distributed throughout this 
 great extent of country and among 40,000,000 of people, with the fact 
 that $70,000,000 of our notes are now in the treasury not likely to be 
 calif d upon, and with the fact that the banks have to take care of 
 $70,000,000 more, which they cannot run in upon us without subjecting 
 themselves to the violation of the law of their creation, with their notesi 
 absolutely secured by United States notes — if we cannot maintain 
 specie payment, then it is impossible to maintain specie payment on a 
 paper circulation. 
 
 The Chairman, That is on the theory all the time that paper aud 
 gold are equivalent ? 
 
 Secretary Sherman. Certainly. Specie payment means the equiv- 
 alency of gold and paper. It is on the theory that the 1 per cent, dif- 
 ference between gold and silver will disappear before the 1st of Janu- 
 ary that I propose to commence specie payments ; but suppose that I 
 am mistaken ; suppose that your fears are well grounded and that I am 
 
RESUMPTION OP SPECIE PAYMENTS. 51 
 
 over sanguine, as some people say I am, still, Congress will meet in 
 December, and then the question will be so apparent to every man that, 
 if the resumption act cannot be carried out, I shall come to Congress 
 and say that I have been unable to accumulate this reserve, or that an 
 adverse state of circumstances has arisen, and that I am unable to do 
 what the resumption act requires of me. 
 
 Mr. BwiNa. But in the mean time the country is on the rack and tor- 
 ture of preparation for impracticable resumption. 
 
 Secretary Sherman. There you are mistaken. The process toward 
 resumption is not a harsh process. What is harsh, and what has been 
 of great weight upon the people, has been the effect of extreme paper 
 inflation, resulting in the panic of 1873, sixteen or eighteen months be- 
 fore the passage of the resumption act. Last summer, when I accumu- 
 lated $60,000,000 of gold, and was going on refunding the debt, every 
 sign of prosperity was increasing and business was getting better. 
 
 Mr. EwiNG. In your conference with the Senate committee, you spoke 
 of "this long, weary agony and struggle toward resumption," and I 
 think that the country will agree with you that there is enough of agony 
 in it. 
 
 Secretary Sherman. Wherever there is an evil caused by inflated 
 money, the instincts of human nature lead men back to specie payment, 
 and the whole process from 1873 down to the present time is a process 
 toward resumption. 
 
 Mr. BvriNG. If the resumption law had never been passed, the country 
 would have revived from the panic of 1873 during the year 1875. 
 
 Secretary Sherman. You and I, no doubt, differ very honestly on 
 that point. 
 
 Mr. Habtzbll. What would be the effect of this resumption act upon 
 the national banks and their depositors ? 
 
 Secretary Sherman. I cannot see that it will have any injurious effect. 
 Wherein 1 
 
 Mr. Habtzell. I understand from your statement here last Monday, 
 tjiat the national banks hold $600,000,000 of deposits. Lack of confl- 
 dence might induce the depositors to go to these national banks aud 
 demand on the Ist of January, or soon after the resumption act takes 
 effect, a large amount of gold. 
 
 Secretary Sherman. No ; United States notes. 
 
 Mr. Phillips. Which would command gold. 
 
 Mr. Habtzell. And if the banks did not have them, and the sup- 
 position is that they could not 
 
 Secretary Shebman. All the national banks in the country have but 
 $70,000,000 of greenbacks. 
 
 Mr. Habtzell. The banks would have to furnish to the depositors 
 either gold or greenbacks, but they could not furnish either to half the 
 amount of their deposits ? 
 
 Secretary Shebman. No, sir. 
 
 Mr. EwiNG. The aggregate of deposits in all the banks, national, State, 
 private, and savings banks, as shown by the report of the Comptroller, is 
 $2,120,000,000. 
 
 Secretary Sherman (to Mr. Hartzell). Your question is a very proper 
 one. I can only give you my idea. All banking is based upon the idea 
 that a larger amount of paper money can be maintained in circulation 
 than the money in which it is to be redeemed. Otherwise there would 
 be no object in banking. The Bank of England and the small banks of 
 England maintain a cash reserve varying from 9 per cent, up to about 
 33 or 40 per cent. The Bank of France and the Bank of Germany, which 
 
52 RESUMPTION OF SPECIE PAYMENTS. 
 
 are really government depositories, maintain a large reserve. A reserve 
 of 40 per cent, would be considered a very large reserve. The only 
 answer to your question is that experience has shown, to the satisfaction 
 of the banks, that their deposits will not be all demanded. If they are 
 demanded they will be paid by credits. Most of these depositors are 
 debtors to the banks, as well as creditors of the banks. They are cus- 
 tomers. The balance of credits would pay off a good deal of the deposits 
 of the banks, and experience shows that a certain amount of money on 
 hand and available, with a good line of discounts to support it, is suffi- 
 cient. As to the notes of national banks, every dollar of them is secured 
 by United States bonds to an amount of at least 10 per cent, greater 
 than the amount of notes outstanding; and these bonds are of such 
 universal credit and ready sale that in the ordinary course of business 
 they can be very readily converted into any kind of money. 
 
 Mr. BwiNG. What about the $1,500,000,000 of deposits in other banks 
 than national banks ? 
 
 Secretary Sherman. They are private individual debts; the govern- 
 ment has nothiug to do with them. 
 
 Mr. EwiNG. The government has certainly to consider them in the 
 plan of resumption ? 
 
 Secretary Sherman. It has to consider them just as it has to consider 
 any other public fact. 
 
 Mr. EwiNa. More than that; they have a direct bearing on the prac- 
 ticability of government redemption, for the legal-tender note is the only 
 paper money redeemable in coin, and on the $348,000,000 of legal-tender 
 notes rest $300,000,000 of national-bank notes and $2,120,000,000 of 
 cash degaand deposits. That is all to be considered. 
 
 Secretary Sherman. It is all to be considered, but $10 will pay $100 
 of deposits in the ordinary course of business. 
 
 Mr. Hartzbll. Does the mere fact that the government will, on the 
 1st of January, be able to redeem all its It'gal-tender notes, bring us of 
 itself to specie resumption? Is that what we mean by specie resumption? 
 
 Secretary Sherman. I mean by specie resumption not the payment of 
 all these debts in coiu, but I mean the equivalency of these United States 
 notes with coin, so that the people will, take paper at par with coin, and 
 if they want the coiu they can get it. I do not suppose that $1 out of 
 $100 of greenbacks will be presented for redemption. 
 
 Mr. Hartzell. The national banks are close corporations, as I un- 
 derstand, and there is a general understanding between them on all 
 questions afit'ecting their interests, as we find by their unanimity in ap- 
 plying for a repeal of the bank-tax. 
 
 Secretary Sherman. Mr. Chittenden here can tell you that there are 
 no people who have such diverse views as the national banks. 
 
 Mr. Hartzbll. If it should appear-that the safety and security of 
 these national banks demanded it, could they not unite and get together 
 such securities and present them to the Treasury as would drain the 
 Treasury of all the gold that it has, and thus absolutely prevent, by their 
 combination, the Secretary from carrying out the provisions of the re- 
 sumption law? ^ 
 
 Secretary Sherman. I do not think, in the first place, that they would 
 attempt to make such a combination against the government, and, in 
 the second place, I think that if they did it would be very easily met. 
 It is not possible, with the amouut of legal-tender notes which they 
 hold— admitted to be about $70,000,000— that they could take the whole 
 of them and present them to the Treasury. Such a thing is not possible, 
 because the banks could_^not be brought into anything like a co-opera- 
 
RESUMPTION OF SPECIE PAYMENTS. 53 
 
 tion of that kind, nor could they keep up a continuous stream of demand 
 on the Treasury ; and then, besides, the Treasury has ample power to 
 make the banks redeem their notes. 
 
 Mr. B WING. In legal- tender notes? 
 
 Secretary Sherman. Yes, in legal-tender notes. 
 
 Mr. Swing. Or in silver and gold ? 
 
 Secretary Sherman. Yes ; that would throw the gold back on the 
 Treasury. Some of the papers thought that in my remarks the other 
 day I threatened the banks. I did not threaten them, but there is no 
 doubt about it that the Treasury would be stronger than the banks in 
 such a contest. There is no danger that the national banks are going 
 to combine to present their legal-tender notes to the Treasury. 
 
 The Chairman. It would be much more reasonable to suppose that 
 the banks would agree among themselves that their obligations and 
 operations would be in currency, and that their checks would be paid 
 in currency rather than in gold. 
 
 Mr. Hartzell. Suppose that the depositors in the national banks 
 should run in and demand payment of their deposits; would nf»t the 
 national banks be bound to go under ? 
 
 Secretary Sherman. The banks can pay their depositors in green- 
 backs, because greenbacks are legal tender, 
 
 Mr. Hartzell. How could they when there are only about $220,000,000 
 of them in circulation ? 
 
 Secretary Sherman. Then, if they cannot get them, how can they 
 present them to us for redemption 1 
 
 Mr. EwiNG. They have $70,000,000 which they can present in a week. 
 
 Secretary Sherman. How can they bring $70,000,000 ? The national 
 banks in New York, where the largest accumulation of greenbacks is, 
 have only got $11,000,000. I think it is sufficient to say that Mr. Hart- 
 zell's supposition is an impracticable one ; first, because the banks could 
 have no desire to do such a thing ; and, secondly, because it could not 
 be done. It would have to be a very slow operation, and with a reserve 
 of $130,000,000 or $140,000,000 even that extreme danger could be met. 
 
 Mr. EwiNG. In case of an apprehension that the Treasury would have 
 to suspend specie payments, and, consequently, that gold would rise, 
 would not the banks want to convert their reserves, and would they not 
 certainly convert their coin-certificates into gold ? 
 
 Secretary Sherman. It might be; but a suspension of specie pay- 
 ment, or a sudden panic, never comes at a time when people are expect- 
 ing it or protecting themselves. It always comes like an earthquake, 
 when it is wholly unexpected. 
 
 Mr. EwiNG. You intimated a probability of a suspension by the gov- 
 ernment, from the running down of the coin iu the Treasury. 
 
 Secretary Sherman. I say that such a thing might be possible. 
 
 Mr. EwiNG. The state of the Treasury is known all the time to the 
 banks and to the public, and certainly the fact that the Treasury was 
 running short of gold would create alarm, and would naturally cause 
 the banks and other holders to precipitate their seventy millions of 
 legal-tender reserves and their fifty-eight millions of gold-certificates on 
 the Treasury. 
 
 Secretary Sherman. I can only say that the Bank of England has 
 frequently run its gold down — at one time to a million of pounds. 
 
 Mr. EwiNG. Yes, sir; and the bank ran short once and then found a 
 lot of one-pound notes, and they saved it from bankruptcy when gold 
 could not. 
 
 Secretary Sherman. If you would ever run the Treasury down, so as 
 
54 EESUMPTION OF SPECIE PAYMENTS. 
 
 to redeem the $140,000,000 of the present outstanding legal-tender 
 notes, greenbacks would be so scarce that they would be taken readily 
 by everybody, just as in England, when the bank balance ran down 
 under the panic to one million pounds sterling, every one was anxious 
 to get Bank of England notes. Everybody was eager to get them and 
 to hoard them; so that I do not think this is a danger to be regarded. 
 
 Mr. EwiNG. I want to ask further about your means of stopping a 
 drain. Would you not naturally withhold the greenbacks as they come 
 into the Treasury, in case you became apprehensive at all of a drain of 
 gold? 
 
 Secretary Sherman. I think I would. If it should so happen that 
 there was a run upon the Treasury for greenbacks, I yould not issue 
 them until the run was over, 
 
 Mr. EwiNft. And until the Treasury felt as strong as usual ? 
 
 Secretary Sherman. Yes, sir ; and in that event I do not like to say 
 what I would do. I would sell 5 per cent, bonds, if necessary, in an 
 extreme case. 
 
 Mr. EwiNG. In such a contingency the banks would naturally con- 
 tract their currency also. 
 
 Secretary Sherman. In case of a panic which would threaten to 
 break the government, or to break the banks, as a matter of course the 
 instinct is one of self-preservation ; but that is so whether you have 
 coin payments or currency payments, 
 
 Mr. Ewing. I am not speaking of a panic, but of the state of the 
 Treasury from time to time. If you find your gold running out, would 
 you not hoard the greenbacks 1 
 
 Secretary Sherman. Naturally ; if I found the greenbacks coming in, 
 I would hold on to them until they are called out again in the natural 
 course of business. 
 
 Mr. Ewing. For the purpose of diminishing the drain on the Treas- 
 ury of gold ? 
 
 Secretary Sherman. I might temporarily, until that drain passed; 
 but ordinarily I would use them to redeem 6 per cent, bonds. 
 
 Mr. EwiNG. After the drain passed, what would you do ? 
 
 Secretary Sherman. I would pay them out again. 
 
 Mr. Ewing. That is, you would do very much as the Bank of England 
 does — you would stop the movement of the currency out of the Treas- 
 ury, as far as practicable ? 
 
 Secretary Sherman. Yes, sir; and, as a matter of course, Congress 
 would be in session from time to time and could be applied to. It may 
 be that Congress may, by future legislation, provide for that contin- 
 gency. 
 
 Mr. EwiNG. Have you any apprehension that the banks, before re- 
 sumption day, will present their gold-certiflcates ? 
 
 Secretary Sherman. I wish they would. 
 
 Mr. EwiNG. That would put a stop to your power to issue certificates 
 to the amount of 20 per cent, beyond the gold on hand. 
 
 Secretary Sherman. It might, but there is no prospect of that. The 
 power to issue certificates to the extent of 20 per cent, is a power which, 
 up to this time, has not been exercised, and which would not be exer- 
 cised except in an extreme case. But what motive would the banks 
 have to withdraw the money deposited with usl It is deposited with 
 ns for safe keeping, and they would only withdraw it from a fear that 
 it^was not safe. 
 
 Mr. EwiNG. Might not the fact that there is a contingency in which 
 
EESUMPTION OP SPECIE PAYMENTS. 55 
 
 you might issue coin-certiflcates in excess of the coin in the Treasury 
 lead the banks to feel that they had better get their gold 1 
 
 Secretary Sherman. I do not think so; but at any rate it is safe to 
 say that that thing has not been done, and probably would not be done, 
 except in an extreme emergency, such as would justify the Bank of Eng- 
 land in issuing notes when it would not pay gold. 
 
 Mr. BwiNG. Is there not a further reason why the banks would take 
 possession of their gold, when you reach specie payments, which is that 
 they must pay gold when the gold is asked for 1 
 
 Secretary Sherman. No. 
 
 Mr. EwiNGr. Otherwise they will receive no deposits in gold. 
 
 Secretary Sherman. The banks under the law can always redeem in 
 legal-tender notes. 
 
 Mr. EwiNG. I know that, but if they are to receive deposits in gold 
 they certainly must pay their depositors in gold where the depositors 
 want it. They must treat gold and paper as equivalent exactly, and, 
 therefore, they must have gold on hand to pay those who want gold, 
 otherwise they will not receive a dollar in gold deposits except as special 
 deposits. 
 
 Secretary Sherman. The fact is that but little gold is paid even on 
 coin payments. 
 
 Mr. EwiNa. Bat, as a matter of fact, must not the banks have the 
 gold to pay whenever it is demanded 1 
 
 Secretary Sherman. Yes, sir ; on deposits they agree to pay in gold. 
 As a matter of fact, they have some gold to pay now. They have gold 
 in all the city banks, and the reserve of gold in the New York banks is 
 very large; but there is no gold needed in Lancaster or Mansfield, Oliio, 
 where you and I live ; what do they need it for ? 
 
 Mr. EwiNG. When you get to specie payments plenty of people will 
 want to hoard it. 
 
 Secretary Sherman. No ; they will hoard silver dollars. The class 
 of people who hoard money are those to whom small sums are great 
 ones. 
 
 Mr. EwiNGr. The amount of gold in the banks now is very small, be- 
 cause there is a very small amount of obligations payable in gold ; but 
 after resumption day, when you establish that paper and gold and silver 
 are equivalents, a large body of the bank depositors may want gold, 
 and the banks must give gold to their customers who want it. Do you 
 think it necessary to get the amount of legal-tender notes down to 
 $300,000,000 before the 1st of January, 1879, in order to resume with 
 safety ? 
 
 Secretary Sherman. I would like to have it so, but even if I do not 
 succeed, I would not postpone resumption on that account. 
 
 Mr. EwiNG. In the three and a quarter years since the resumption 
 law was enacted, $35,000,000 of legal-tenders have been drawn in and 
 canceled ; is there any probability that, in the time left between now 
 and resumption day, the remaining $47,00<>,000 can be retired ? 
 
 Secretary Sherman. No ; 1 think not. 
 
 Mr, EwiNG. Do you anticipate any considerable reduction of legal- 
 tender notes by the increase of bank currency by next January ? 
 
 Secretary Sherman. Yes, sir ; last month there was a reduction of 
 $1,000,000. I think that the amount will depend very much on the degree 
 of confidence in the fature which prevails in banking circles. 
 
 Mr. EwiNG. That is as to maintaining resumption? 
 
 Secretary Sherman. Yes, sir ; that estimate of the amount will be 
 reduced, probably, $1,000,000 a month. 
 
56 RESUMPTION OF SPECIE PAYMENTS. 
 
 Mr. EwiNO. That would leave you with $340,000,000 of legal-tender 
 notes outstanding. 
 
 Secretary Shbkman. Then I think we can fairly state.that this money 
 in the Treasury (that is, the balances held by disbursing officers, the 
 $10,000,000 fund for the redemption of fractional currency, and the 
 money held for the redemption of bank-notes on failed banks) will prob- 
 ably reduce it to the neighborhood of $300,000,000, nominally. 
 
 Mr. EwiNG. Still that $16,000,000 to disbursing offtcers goes out. 
 
 Secretary Sherman. But there is always about that much on hand. 
 
 Mr. Ewing. But I understand that you want to reduce the total volume 
 of legal- tender currency to $300,000,000. 
 
 Secretary Sherman. I do. 
 
 Mr. EwiNG. It is obvious that it cannot be reduced to $300,000,000 on 
 the 1st of January, 1879. 
 
 Secretary Sherman. I say it would be better if it could be done ; but 
 if it cannot, I would not postpone resumption for that reason, because I 
 think that with this large reserve which I mention we can maintain 
 resumption on the full amount — with the advantage we have of having 
 thirty or forty millions locked up in the Treasury not likely to be used. 
 
 Mr. EwiNG. Do you think that the balance of trade can be kept in our 
 favor for the next few years ? 
 
 Secretary Sherman. That is an uncertain problem. 
 
 Mr. Ewing. Ton say, in your Senate interview, that the balance of 
 trade brings us gold and silver and bonds. Has it brought us, in the 
 past few years, gold and silver in excess of the gold and silver exported ? 
 
 Secretary Sherman. No ; you see heretofore silver has been largely 
 exported as bullion, but we received gold, last season, in pretty large 
 sums in this country — precisely how much, I am not prepared to say. 
 
 Mr. EwiNG. I have here, from the Bureau of Statistics, a statement 
 of the imports and exports of coin and bullion, from 1865 to 1877, which 
 shows a total, for the 13 years, of exports over imports of $692,000,000. 
 (See appendix Ho. 10.) 
 
 Secretary Sherman. Tes, sir; that is so. 
 
 Mr. EwiNG. That is an average of exports over imports of gold and 
 silver of $53,264,000 a year. 
 
 Secretary Sherman. That was at a time when paper money was in 
 universal use, and there was no demand here for silver or gold ; but 
 now that we are to have specie payments, that course of things will be 
 naturally expected to cease. You will find it easier to send off the pro- 
 ducts of our soil than the products of our mines, if we give the same 
 use to the precious metals that is given in other countries. 
 
 Mr. EwiNGr. For the past three years the average excess of the ex- 
 ports of gold and silver, over the imports (the balance of trade being 
 in our favor) has been $42,396,000 a year ; and that average is still 
 continuing ? 
 
 Secretary Sherman. Tes, sir. At this season of the year gold is 
 shipped abroad, and at other seasons of the year it comes back. Some- 
 times the same gold will flow backward and forward two or three times 
 in the year. After the cotton crop is marketed, and before June, when 
 the canals are open, and products can be moved on the canals, is the 
 time when gold naturally flows abroad, and it comes back in the fall. 
 
 Mr. EwiNG. Have you any reason to expect that the average exports 
 of bullion, over imports, will not be in excess for the next two or three 
 years as it has been for 17 years past ? 
 
 Secretary Sherman. I would expect more exports, because of our 
 home products of gold and silver, which may be stated, in round num- 
 
EESUMPTION OF_SPECIE PAYMENTS. 57 
 
 bers, at $85,000,000. If we can hold two-thirds of it in this country, it 
 is as much as we can expect. That would leave a balance of thirty or 
 forty millions to go abroad. And suppose it does go abroad? We 
 can stand the drain of thirty or forty millions a year, and still have a 
 large amount of gold and silver in this country. (See Appendix No. 12.) 
 
 Mr. EwiNG. Do you not anticipate that drain ? 
 
 Secretary Sherman. I would expect it. Our production of gold and 
 silver is greater than is necessary to maintain resumption in this coun- 
 try, and it will go to help other countries. 
 
 Mr. BwiNG. Will it not go abroad irrespective of our demand for it 
 here? 
 
 Secretary Sherman. It depends u]pon whichever demand is the great- 
 est. 
 
 Mr. EwiNG. And upon whoever has the most ability to keep it? 
 
 Secretary Sherman. Yes, sir. 
 
 Mr. BwiNGr. We being the debtor nation, and the people of Europe 
 holding our debts, can they not attract gold from us at present ? 
 
 Secretary Sherman. If we are a debtor nation we are also a nation 
 which the European nations like to have for a debtor. Our nation has 
 been a productive, active nation, and foreign capital seeks a favorite in- 
 vestment here. 
 
 Mr. EwiNG. Still, in case of a want of gold abroad they have it in 
 their power to get it at any time by the sale of our securities. 
 
 Secretary Sherman. Yes ; they can recall it if they want to do so, 
 but the chances are that they will be more likely to invest in our securi- 
 ties in the future than they have been in the past, because this country 
 is a stable country. It has gone through a great civil war, and it has 
 elements of strength and stability which no European country pos- 
 sesses. 
 
 Mr. EwiNG. Our ability to keep gold practically depends upon this, 
 whether our creditors abroad prefer to hold our bonds or to take our 
 gold? 
 
 Secretary Sherman. Certainly. 
 
 Mr. EwiNG. If they prefer to take our gold they can get it by send- 
 ing their bonds here and selling them. 
 
 Secretary Sherman. Yes. 
 
 Mr. EwiNG. And in the past three years, with the balance of^ trade 
 largely in our favor, the excess of exports of specie over imports has 
 been forty-two millions a year. 
 
 Secretary Sherman. That is because until last year we have never 
 shown a determination to accumulate coin. 
 
 Mr. EwiNG. Our determination to accumulate coin was as strong in 
 the month of January last as it ever has been, and yet the balance 
 against us in that month was over two million dollars. 
 
 Secretary Sherman. The cause of the bonds flowing back was the 
 fear of unfriendly legislation. The truth is, that (whether the fear was 
 well or ill founded) a very large amount of our bonds came back which 
 had to be paid in gold or silver because of pending legislation, but that 
 movement has ceased. I got a letter yesterday from the highest au- 
 thority, stating that that movement of bonds has gradually diminished^ 
 
 Mr. EwiNG. Still the export of gold last Saturday was a million and 
 a half of dollars. 
 
 Secretary Sherman. It always is larg« at this season of the year. 
 This same gentleman tells me that he does not think that the export of 
 gold this year will be greater than informer years, but that it com- 
 menced earlier, caused by the exportation of these bonds from abroad.. 
 
58 RESUMPTION OP SPECIE PAYMENTS. 
 
 Mr. EwiNa. Bat the indications are that the excess of shipment of 
 coin will be kept up as compared with the last three years. 
 
 Secretary Sherman. I hope not at anything like the same rate. 
 
 Mr. Phillips. Yon have stated that you have not been able to ac- 
 cumulate gold at all this year. 
 
 Secretary SHERMANi Yes ; because I would not come into competition 
 with the bonds which came back from abroad — caused by the agitation 
 of the silver question. 
 
 Mr. Phillips. Can you get coin from 4 per cent, bonds'? 
 
 Secretary Sherman. Not just now to any great extent, but I hope 
 that it will be better, and that I will be able to sell 4 per cent, bonds. 
 
 Mr. Chittenden. Will not the mixed condition of the national bank 
 currency be an element of strength in facilitating resumption? For 
 example, if you were to present national bank currency to a bank for 
 redemption, you must separate the notes. If you take any given amount 
 of national bank currency which you find on deposit anywhere, you will 
 be surprised to find how it represents banks from all sections of the 
 country. I take it that no bank can be called upon to redeem any but 
 its own issue. 
 
 Secretary Sherman. That is so; it is almost impossible to sort 
 national bank bills. 
 
 Mr. Chittenden. Will that be for you an element of strength or of 
 weakness? 
 
 Secretary Sherman. It will be an element of strength. The difficulty 
 of sorting national bank bills is very great. When they come to sort 
 them in the Treasury the bills have to pass through four or five skilled 
 hands. First, they are sorted into States, then into denominations, and 
 then into banks. If you were to try and make a run on any particular 
 bank in this country, as they used to do twenty or thirty years ago, it 
 would be impossible to do so from the difficulty of assorting notes of 
 different banks. 
 
 Mr. EwiNG. The balance of trade in our favor in the past three years 
 has been due not so much to our largely increased exports as to our 
 diminished imports, resulting from diminishing purchasing power. 
 
 The total exports for the three years ending June 30, 1874, were $1, 550, 939, 000 
 
 The total exports for the three years ending June 30, 1877, were.... 1,656,201,000 
 
 Excess of latter over former period 105,362,000 
 
 The total imports for three years ending June 30, 1874, were $1,836, 137,000 
 
 The total imports for three years ending June 30, 1877, were 1, 445, 069, 000 
 
 Excess of former over latter period 391,068,000 
 
 Now I wish to ask you whether with the removal of the pressure 
 from the country of the threat and preparation for resumption on 
 the 1st of January, 1879, we may not expect that the imports will in- 
 crease, and that we will go back to the old condition of importing more 
 than we export, and in that way increase this drain of gold and silver ? 
 
 Secretary Sherman. I think that the excessive imports for several 
 years before the panic were evidence of the greatest extravagance and 
 disregard of expenditure. People went into debt recklessly. That 
 state of mind is always induced by a superabundance of paper money. 
 I think that one of the best results of the panic (which was bad enough 
 in depressing industry) was in stopping this extravagant and reckless 
 importation of foreign goods. That is an element of real good which 
 has come out of the evil which we have suffered from the past. 
 
 Mr. EwiNG. But you expect to maintain the same volume of paper 
 
EESUMPTXON OF SPECIE PAYMENTS. 59 
 
 mouey, and you expect to add to that volume a considerable amount of 
 specie. That is, you expect to Increase the currency as a result of re- 
 sumption. Certainly, if this condition of extravagance arises from a 
 superabundance of money, that extravagance will be .increased very 
 largely after resumption, if your theory be correct. 
 
 Secretary Sherman. There is a great deal of difference between irre- 
 deemable paper money, which fluctuates in value day by day, and re- 
 deemable money which always has a coin standard, and is measured by 
 the values of the world. It is not a question of abundance of money 
 so much as it is a question of iiuctuations of value. A paper which is 
 irredeemable and fluctuating always induces speculation. For instance, 
 if a man sees that his neighbor has bought a piece of land on which he 
 has made a large profit, he goes into speculation himself ; and one man 
 «mbarks in a hazardous enterprise because another man has done so 
 and has succeeded. Now a redeemable paper money which is always at 
 a fixed standard is less likely to produce that kind of speculative fever- 
 ish adventure, even although it may be larger in volume. 
 
 Mr. EwiNG. So yon understand that with inflation of currency after the 
 ist of January, 1879, there will not be inflation of values'? 
 
 Secretary Sherman. No ; values will be more stable. 
 
 Mr. EwiNG. As a matter of fact, did the greenback currency vary so 
 greatly in purchasing power for the three years before the passage of 
 the act of 1873? 
 
 Secretary Sherman. O, yes. The purchasing power of the green- 
 back to-day is at least 60 per cent, more than it was bf^fore the panic. 
 
 Mr. EwiNG. Undoubtedly, because of the threatened contraction un- 
 der the operation of the resumption law. 
 
 Secretary Sherman. No ; but because of our getting back to a coin 
 standard. 
 
 Mr. EwiNG. It is because the opinion of the country is that we must 
 8tibmit to an enormous contraction of our paper money, which is the 
 currencv with which business is doue, in order to reach and maintain 
 resumption. 
 
 Secretary Sherman. You and I differ about that. I have given you 
 cny view. I tell you that I think the falling off of importations is not 
 an unfavorable sign. Every man knows now that money is money, and 
 that he has to earn it. It is an evidence of more stable and economical 
 enanagement of affairs. 
 
 Mr. EwiNG. Do you expect the business of the country to revive after 
 resumption? 
 
 Secretary Sherman. I think so. 
 
 Mr. EwiNG. Will not the imports increase largely as a necessary re- 
 sult of that revival, and will not, therefore, the balance of trade more 
 likely turn against us by the increase of imports, the present favorable 
 balance being due chiefly to the falling off of imports? 
 
 Secretary Sherman. I doubt very much whether the importations to 
 this country for many years will equal what they were for the three or 
 four years before the panic. The whole course of our industry has 
 changed within the last three or four years. We are manufacturing 
 Blow a great many things which we did not manufacture then. We are 
 embarking in a great many industries which did not exist here before 
 the panic. Prices have been reduced so that we can almost compete 
 ■with any nation, and we export now many articles which we did not 
 think of making until the last few years. When we manufacture upon 
 the basis of a coin standard, like Great Britain and Prance, we can 
 compete with those nations, because we have over them the great ad- 
 
60 RESUMPTION OF SPECIE PAYMENTS. 
 
 vantage of raw products. To be sure we have the disadvantage of 
 higher-priced labor. Our labor is more intelligent and higher-priced. , 
 
 The Chairman. And the disadvantage of higher priced money. 
 
 Secretary Sherman. Yes; but when we get down to compete with 
 them on the same money, our natural advantages would countervalue 
 the difference in wages and the difference in interest of money. We 
 are now manufacturing a great variety of articles which were never 
 manufactured in this country before. Values now — even gold values- 
 are lower than they were before the panic all over the country. The 
 same amount of money represents now a greater amount of either im- 
 ports or exports than it did then, because nothing is truer than the fact 
 than that that general revulsion which overcame us like a cloud extends 
 all over the civilized world. 
 
 Mr. EwiNG. My belief is that on any revival, any letting up of thie 
 pressure caused by the resumption law, the imports will increase relS.- 
 tively to exports, and the old balance of trade will be re-established 
 against us, and the drain of gold will return in its full force. (See Ap- 
 pendix No. 13.) 
 
 Mr. Phillips. Will not the coin-certificates become a part of the cur- 
 rency, when specie payment comes, and so fill up the void made by the 
 retirement of the legal- tenders, and probably neutralize the effect of the 
 retirement of the legal-tenders 1 
 
 Secretary Sherman. I think they will ; but these coin-certificates are 
 now represented by actual money on hand. 
 
 Mr. Phillips. They increase the responsibility of the Treasury just 
 in proportion. They will go into circulation, will they not ? 
 
 Secretary Sherman. Yes. It does not make any difference whether 
 currency is represented by coin-certificates or by actual coin. If they 
 draw out coin, that coin goes into a general circulation, and if they 
 leave it with us, then the certificates go into circulation. 
 
 Mr. Phillips. But these coin-certificates will then go into general 
 circulation as they do not go now. 
 
 Secretary Sherman. Coin-certificates do go into the general circula- 
 tion for coin purposes now. They are largely used. 
 
 Mr. Phillips. But will they not go in for general purposes as circula- 
 tion ? 
 
 Secretary Sherman. Perhaps they will. 
 
 Mr. Phillips. Tbere has been $35,000,000 of legal-tender notes re- 
 tired under the resumption act ? 
 
 Secretary Sherman. Yes. 
 
 Mr. Phillips. Of that amount I have been informed that $15,000,000 
 has been in small notes ; what rule have you to govern the Treasury in 
 that respect ? 
 
 Secretary Sherman. I am glad you mentioned that, because I would 
 like to correct a misapprehension on that point. We always give to 
 every man who makes a demand upon the Treasury any kind of bills 
 he wants. We do not seek to force one-dollar, two-dollar, five-dollar, 
 twenty-dollar, or one hundred-dollar bills. Every person who presents a 
 draft at the Treasury gets the paper money he wants. 
 
 Mr. Phillips. But the practical result is that some $15,000,000 of 
 small bills have been retired, to the detriment of small change. 
 
 Secretary Sherman. Our impression is that that is a mistake. 
 
 Mr. Phillips. It has been so stated to me. 
 
 Secretary Sherman. I can give you the fact exactly. I suppose it is 
 because the banks, to whom the great body of the paper money is paid 
 out, do not wish to handle small bills, and require large ones ; but any- 
 
RESUMPTION OF SPECIE PAYMENTS. 61 
 
 body who wants the small bills oaa have them. I will give the exact 
 amount at different dates, so that you will see how much the circulation 
 of small bills has fallen off. * 
 
 Mr. Phillips. Do you think that the proportion of small bills retired 
 bas not been much greater than the proportion of large bills retired? 
 
 Secretary Sherman. I do not know. 1 would rather give you the exact 
 figures. General Butler talked, to me yesterday about it, and I told him 
 what I say to you. We never have attempted to withdraw the ones and 
 twos from circulation. 
 
 Mr. Phillips. But have they not gone out of circulation under the 
 resumption act 1 
 
 Secretary Sherman. Not to any very great extent. They do not go 
 out simply because the banks and others who draw large amounts do 
 not take them as freely as the people wish to have them. The banks do 
 not wish to handle them. 
 
 The Chairman. It seems to me that upon your theory, on resumption, 
 it would be very important that greenbacks should be used for our four 
 per cent, bonds ? 
 
 Secretary Sherman. Yes, sir. 
 
 The Chairman. And that if they can be also received for duties at 
 the custom-house it woutd help you in resumption. 
 
 Secretary Sherman. Yes. As soon as we resume, or are ready to 
 resume, we ought to receive greenbacks for customs-duties. 
 
 The Chairman. And bring them on a par with gold also by making 
 them exchangeable for bonds. 
 
 Secretary Sherman. Yes ; or redeem such as are presented in coin. 
 
 The Chairman. Ou that theory of resumj)tion you would resume 
 already, in order to have practical resumption. 
 
 Secretary Sherman. Yes; that is resumption, and we would not 
 know about it. Within a year we have seen a decline of nine per cent, 
 between greenbacks and gold. In December, 1876, gold was 110 per 
 cent., and we have since had that decline and nobody has been hurt 
 by it. 
 
 Mr. Bell. Suppose the greenbacks were to obtain an equality in 
 value with gold, how would the repeal of the resumption act then affect 
 resumption? 
 
 Secretary Sherman. The repeal of the resumption act would prevent 
 me from maintaining resumption by the sale of bonds. That would be 
 the first thing. Then the resumption act is the only provision of law 
 which requires me to redeem United States notes in coin. 
 
 Mr. EwiNG. But you are at liberty to do so. If the resumption act 
 were repealed, you might maintain an equivalency of paper and coin 1 
 
 Secretary Sherman. No. It is perfectly clear that I have no right 
 to exchange one form of money for another. 
 
 Mr. EwiNG. But you could pay out gold and silver. 
 
 Secretary Sherman. Yes. 
 
 Mr. EwiNG. And you could thus maintain an equality of coin and 
 
 "Statement of one and two doUnr United States notes outstanding at the dates mentioned. 
 
 Date. Ones. Twoa. Totals. 
 
 June 30, 1873 28,911,309 34,210,8.56 63,122,165 
 
 Jiine30,1874 26,571,512 28,117,438 54,688,950 
 
 Jnne30,1875 '. 27,416,863 26,345,326 53,762,189 
 
 Jnue30,1866 28,007,504 27,480,479 55,487,983 
 
 Juae30, 1877 25,160,297 25,369,825 50,530,122 
 
 A-piil 1,1878 22,744,288 22,707,443 45,451,731 
 
62 RESUMPTION OF SPECIE PAYMENTS. 
 
 paper upon your theory, which is, that as soon as paper and coin ar& 
 equal nothing will be likely to occur to disturb the equilibrium 1 
 
 Secretary Sheeman. There will be more or less fluctuation, and we 
 must be prepared to meet those fluctuations, so that if greenbacks be- 
 come superabundant we can get gold for them; or if, on the other hand, 
 gold becomes a drug, as it may, it will be deposited for greenbacks. 
 
 Mr. EwiNG. But if greenbacks become superabundant, and are pre- 
 sented to the Treasury for redemption, you will have to pay them out 
 again ? 
 
 Secretary Sherman. Yes, as soon as the equivalency is restored. 
 
 Mr. EwiNG. That is, you will hold whatever greenbacks come in 
 until there is an equivalency ? 
 
 Secretary Sherman. 'Yes; that is the effect of it. 
 
 Mr. Phillips. Would it not be safer, by legislation and by taking 
 greenbacks for customs-duties, to secure and maintain an equalization, 
 of values in that way rather than by resumption to authorize the com- 
 bination of bankers to drain away the only credit resources in th& 
 Treasury? 
 
 Secretary Sherman. I think not ; unless you maintain this equiva- 
 lency you have no right, under your law, without violating your prom- 
 ise, to receive anything but coin in payment of customs-duties. 
 
 Mr. Phillips. There may be various means of bringing up greenbacks 
 by equalizing values. Would it not be safer for us to legislate so as to 
 preserve an equality in values tather than to have forced resumption ? 
 
 Secretary Sherman. No ; because legislation is not powerful enough 
 to do what can only be done by the actual redemption of the notes ou 
 presentation. No law can make two things equal to each other in 
 values. 
 
 Mr. Phillips. Can the law force you to resume if you have not the 
 coin to do it ? 
 
 Secretary Sherman. No; but we have the coin. As a matter of 
 course, if we had not the coin we could not resume, but if we have the 
 coin we can resume. 
 
 Mr. EwiNG. I understand that your idea is to exercise about the same 
 power which is exercised by the Bank of England, in regard to these 
 legal-tender notes. 
 
 Secretary Sherman. No ; because the Bank of England loans out its 
 notes for profit. That is its business. 
 
 Mr. EwiNG. The Bank of England, when a drain sets in, interrupt* 
 the movement of circulation by taking in its notes and not paying them 
 out until the drain is checked. In that respect your idea of maintaining 
 resumption is the same. 
 
 Secretary Sherman. Yes. When the notes are presented, the Secre- 
 tary of the Tieasury pays them in coin, silver or gold, at his discretion. 
 When, in bis judgment, it is wise to pay out these, notes, either on the^ 
 public debt or on the interest of the public debt, to those who are willing* 
 to take them, or any current expenses, he does it. 
 
 Mr. EwiNG. But he would not pay them out 
 
 Secretary Sherman. Unless they were equivalent to coin. 
 
 Mr. EwiNG. And he would judge of their equivalency by the drain 
 upon the Treasury ? 
 
 Secretary Sherman. He would never be likely to pay out these green- 
 backs if they were to come oack again on hiin for coin ; and he would 
 not be wise if he did it. 
 
 Mr. BwiNG. In that respect, he maintains resumption by exercising 
 the same power and control over the paper currency as the Bank of 
 England does ! 
 
RESUMPTION OF SPECIE PAYMENTS. 63 
 
 Secretary Sheeman. Yes, sir. Practically, that is done by the assist- 
 ant treasurer in New York. I know, every day, how much coin-cerfifl- 
 cates are outstanding:, and how much coin there is in the subtreasury. 
 Every day these certificates are presented for redemption and somebody 
 else deposits coin for other certificates, and thus the thing goes on, in 
 ebb and flow, sometimes to the amount of a million or two a day. I see 
 nothing of it, but I see the subtreasury reports every day. One man 
 brings gold to the subtreasury and gets certificates, and another man 
 brings the certificates and draws out the gold. 
 
 Mr. EwiNG. I think I have your idea pretty clearly that your control 
 in putting out legal-tenders or withholding them is the lever by which 
 their convertibility is to be maintained ? 
 
 Secretary Sherman. Yes; and then there is, too, the fact that the 
 Secretary is under the constant eye of Congress if he abuses his powers, 
 because a great power is less liable to be abused than a small one. The 
 eye of the public is on the Secretary in the exercise of power of this 
 kind, and it is not likely to be abused. If there is any sign of hi* 
 abusing it Congress is always present to prevent it. The Secretarj^ 
 ■would not dare to sell bonds to raise gold for resumption while he ha& 
 any notes on hand unless there is a drain for the gold. All these pow- 
 ers will be exercised under the eye of Congress. 
 : Mr. EwiNG. If there is a drain of gold you would sell bonds ? 
 
 Secretary Sheeman. The Secretary might sell bonds, and, again,, 
 when greenbacks were abundant in the Treasury he might make a call 
 for six per cent, bonds, as I have done. I exercised my discretion in the 
 matter last December, and I made a mistake in making a call for 
 $10,000,000 of bonds which had better not have been made. I under- 
 estimated the effect of pending legislation. I did it under my discre- 
 tion ; but I did not sell enough bonds to redeem that call. So, the Sec- 
 retary of the Treasury, administering under this law, if he found coin 
 or greenbacks accumulating in his hands, would make a call of six per 
 cent, bonds and would pay them off and sell four per cent, or four and 
 a half per cent, bonds — whichever was the current bond in the market — 
 and thus make good his money. That operation would go on without 
 difQculty. That is the way, at least, that I would conduct it if I were in 
 charge. * 
 
 Mr. Haetzell. I understood you to say that in order to complete 
 your preparations for resumption additional bonds to the amount of, 
 perhaps, fifty millions would have to be sold between now and the 1st 
 of January. 
 
 Secretay Sherman. Yes ; I think so. 
 
 Mr. Hartzell. Is it your expectation that, after resumption day, 
 you will have to continue the sale of bonds at different periods for the 
 purpose of maintaining the specie reserve ? 
 
 Secretary Sherman. Not at all. If I would sell any bonds at all after 
 that, I would sell them merely for the purpose.of refunding. It might 
 be that, to meet a sudden drain, I would sell bonds in order to accumu- 
 late coin ; but the very moment the drain ceased I would use the coin 
 or the greenbacks which I had received in calling in 6 per cent bonds. 
 Onder that the whole of the public debt might be reduced to 4 per cents., 
 if that should prove to be the ultimate rate of interest in this country. 
 
 Mr. Haetzell. But the interest-bearing debt of the country has to 
 be increased in order to bring about this result. 
 
 Secretary Sheeman. Yes, in the absence of surplus revenue. There 
 is no other way except by the increase of the public debt temporarily. 
 We would have the coin to represent the bonds. That is all. 
 
 The conference here ended. 
 
APPENDIX. 
 
 Appendix No. 1. 
 Statement of gold avd diver in the treasury on the 1st of Fehriiary, 1S77. 
 
 Gold coin $71,944,129 47 
 
 GoldbuUion 8,720,150 25 
 
 $80, 664, 279 72 
 
 Less amount to credit of disbursing-ofiicera, and outstand- 
 ing checks 3,074,445 45 
 
 Less gold certificates actually outstanding 50, 791, 240 00 
 
 Less called bonds and interest 10,117,672 63 
 
 Less interest due and unpaid 9, 993, 750 26 
 
 Available gold coin and bullion $6, 687, 171 38 
 
 Silver coin 2,228,898 02 
 
 Silver bullion 3,211,796 21 
 
 5, 440, 694 23 
 
 Less outstanding checks 19 1, 194 52 
 
 Available silver coin and bullion , 5, 249, 599 71 
 
 73, 977, 108 34 
 
 Available gold and silver coin and bullion ,. 11, 936,771 09 
 
 Appendix No. 2. 
 Statement of coin and bullion in the Treasury February 1, 1878.* 
 
 Held by- 
 
 Gold coin. 
 
 Gold bullion. 
 
 Silver coin. 
 
 Silver bullion. 
 
 Treasurer United States, "Washington . . . 
 Assistant treasurer United States, New 
 
 $397, 628 39 
 
 92, 024, 604 20 
 659,018 47 
 
 454, 884 35 
 
 274, 722 64 
 
 1, 854, 963 38 
 
 1, 120, 121 66 
 
 509, 154 30 
 
 230, 064 83 
 
 528, 326 04 
 
 1, 403, 416 24 
 
 978, 757 74 
 
 224, 154 54 
 
 3, 000 CO 
 
 3, 672, 671 37 
 
 
 $201, 679 74 
 
 1, 171, .368 14 
 392, 540 55 
 
 809, 674 75 
 
 273,045 33 
 
 146, 608 35 
 
 224, 170 16 
 
 166, 430 22 
 
 217, 877 33 
 
 253, 549 38 
 
 748, 546 67 
 
 41, 327 65 
 
 427, 894 76 
 
 100 00 
 
 21,148 22 
 
 500 00 
 
 200 00 
 
 500 00 
 
 
 $3, 367, 713 26 
 
 
 Assislant treasurer United States, Boston 
 Assistant treasurer United States, Phila- 
 
 
 
 
 Assistant treasurer United States, Saint 
 
 
 
 Aspiatant treasurer United States, San- 
 
 
 
 Assistant treasurer United States, New 
 
 
 
 Assistant treasurer United States, Balti- 
 
 
 
 Asslstaut treasurer United States, Cin- 
 
 
 
 Assistant treasurer TJDited States, Cbi- 
 
 
 
 Mint Philadelphia 
 
 637, 557 34 
 
 5, 039, 352 92 
 
 73, 693 61 
 
 $671,116 55 
 
 
 893,651 51 
 
 
 214, 462 31 
 
 
 
 United States aaaay-oflfice, New York 
 
 2,079,834 24 
 
 1, 048, 137 7t 
 
 
 
 
 
 
 
 
 
 
 28, 078 19 
 165 00 
 
 
 
 First National Bank, Portland, Oreg 
 
 
 
 
 
 
 
 Totals 
 
 104, 414, 331 34 
 
 11, 198, 151 37 
 
 5, 097, 181 25 
 
 2,827,368 07 
 
 * The items to be deducted are the foUoi 
 Amoant to credit of disbursing-officers an 
 Sold -certificates actually outstanding. 
 
 if ing, taken fron 
 i outstanding cb 
 
 I page 4 of Senat 
 ecks 
 
 e interview : 
 
 $6, 189, 626 6a 
 44, 498, 500 00 
 
 
 
 
 
 6, 818, 677 2* 
 4,909,705 21 
 
 62,416,5(9 10 
 
 Interest due and unpaid - 
 
 
 
 
 n.Mis. 48— -5 
 
 
 
 ^ 
 
66 RESUMPTION OF SPECIE PAYMENTS. 
 
 Appendix No. 3. 
 
 [In reply to inquiry No. 1. Letter of March 28, from Hon. A. H. Baokner.] 
 Statement of coin and bullion in Treamry at close of hasineBS February 28, 1878. 
 
 Held by— 
 
 Treasurer United States, Washington 
 
 Assistant treasurer United States, New 
 York 
 
 Assistant treasurer United States, Boston 
 
 Assistant treasurer United States, Phila- 
 delphia 
 
 Assistant treasurer United States, Saint 
 Louis 
 
 Assistant treasurer United States, San 
 PrancisGO 
 
 Assistant treasurer United States, New 
 Orleans 
 
 Assistant treasurer United States, Balti- 
 more - 
 
 Assistant treasurer United States, Cin- 
 cinnati 
 
 Assistant treasuier United States, Chi- 
 cago 5 
 
 Mint, Philadelphia 
 
 Mint, San Francisco 
 
 Mint, Carson City 
 
 Mint, Denver 
 
 United States assay -ofBce, New Tork — 
 
 United States assay-oflioe, Boise City . . - 
 
 United States assay-oiflce, Charlotte 
 
 United States assay-ofi&ce, Helena 
 
 National hanks and depositaries 
 
 In transit 
 
 Total . 
 
 Gold coin. 
 
 $675, 899 51 
 
 99, 699, 
 663, 
 
 467, 
 
 276, 
 
 2, 453, 
 
 1, 163, 
 
 519, 
 
 251, 
 
 665, 
 
 2, 829, 
 4, 045, 
 
 655, 
 3, 
 
 3, 672, 
 
 528 09 
 577 60 
 
 415 70 
 
 031 00 
 
 100 00 
 
 719 00 
 
 391 50 
 
 636 00 
 
 527 50 
 834 32 
 079 73 
 147 80 
 000 00 
 671 37 
 
 118, 351, 709 05 
 
 Gold bullion. 
 
 Us, 367, 713 26 
 
 556, 035 45 
 
 1, 837, 305 36 
 
 46, 412 00 
 
 "2' 079," 834' 24' 
 
 7, 937, 300 31 
 
 Silver coin. 
 
 Silver bullion. 
 
 ?179, 377 97 
 
 1, 407, 
 379, 
 
 992 53 
 903 05 
 
 797, 294 75 
 263, 694 98 
 149,260 81 
 217. 575 95 
 157, 218 52 
 211, 828 16 
 
 248, 
 
 887, 
 
 72, 
 
 225, 
 
 319 12 
 057 86 
 920 54 
 145 33 
 100 00 
 148 22 
 500 00 
 £00 00 
 
 spo 00 
 
 iX 45 
 000 00 
 
 5, 675, 494 24 
 
 1, 244, 000 00 
 904, 861 65 
 175, 974 98 
 
 630, 741 02 
 
 2, 955, 577 65 
 
 THEA8URY United States, 
 
 Washington, D. C, JfarcASO, 1878. 
 
 Appendix No. 4. 
 Statement of coin and bullion in the Treasury March 28, 1878. 
 
 Sate. 
 
 Offices, tfcc. 
 
 Gold coin and 
 standard sil- 
 ver dollars. 
 
 Fractional sil- 
 ver coin. 
 
 Gold and silver 
 bullion. 
 
 1878. 
 March 27 
 27 
 27 
 27 
 25 
 25 
 25 
 25 
 23 
 19 
 23 
 23 
 16 
 9 
 
 23 
 
 Treasury of United States, ■Washington . 
 
 Assistant treasury, Baltimore 
 
 Assistant treasury. New Ycfrk 
 
 Assistant treasury, Philadelphia 
 
 Assistant treasury, Boston.., 
 
 Assistant treasury, Cincinnati 
 
 Assistant treasury, Chicago 
 
 Assistant treasury. Saint Louis 
 
 Assistant treasury, New Orleans 
 
 Assistant treasury, San Francisco 
 
 National bank depositories 
 
 Mint United States, Philadelphia 
 
 Mint United States, San Francisco 
 
 Mint United States, Carson 
 
 Mint United State's, Denver , 
 
 United States assay-office. New York — 
 Other small assay-offices 
 
 8676, 
 
 511, 
 
 100, 128, 
 
 271, 
 
 975, 
 
 233, 
 
 623, 
 
 279, 
 
 1, 139, 
 
 2, 803, 
 
 2, 938, 
 
 1, 245, 
 
 1, 903, 
 
 933, 
 
 3, 
 
 282 68 
 6»8 00 
 068 09 
 109 97 
 607 50 
 659 50 
 807 00 
 373 00 
 747 00 
 900 00 
 910 93 
 2-30 75 
 652 60 
 032 05 
 000 00 
 
 Totals . 
 
 114, 666, 958 97 
 
 $958, 
 149, 
 1, 374, 
 791, 
 370, 
 207, 
 247, 
 251, 
 213, 
 150, 
 
 165 65 
 093 52 
 628 52 
 004 75 
 333 46 
 141 33 
 819 89 
 20S 84 
 706 76 
 648 66 
 
 642, 114 97 
 
 79, 260 86 
 
 279, 260 09 
 
 100 00 
 
 20,951 89 
 
 1,200 00 
 
 5, 736, 639 19 
 
 $3,367,713 26 
 
 1, 633, 609 46 
 
 4, 927, 353 92 
 
 65, 387 97 
 
 3, 670, 849 85 
 
 13, 664, 914 46 
 
 Note— Standard silver dollars included above, 454,711. 
 
RESUMPTION OF SPECIE PAYMENTS. 
 
 Appesmdix No. 5. 
 
 Comparison of condiiion of the Treasury April 1, 1877, and Jpril 1, 1878. 
 
 67 
 
 Balances. 
 
 Currency 
 
 Special fnnd for the redemption of fractional currency 
 
 Special cteposlt of legal-tenders for redemption of certificates of 
 
 deposit ..; ■. ■ 
 
 Coin 
 
 Coin-certificates 
 
 Coin, less coin-certificates 
 
 Qatstanding called bonds 
 
 Other outstanding coin liahilities 
 
 Ontstanding legal.tenders 
 
 Oatstanding fractional currency 
 
 Outstanding silver coin 
 
 Total debt, less cash in Treasury 
 
 Keductlon of debt for March 
 
 deduction of debt since July 1 
 
 Market value of gold 
 
 Imports (12 months ending February 28) . 
 Exports (12 months ending February 28) . 
 
 $8, 184, 863 58 
 
 35, 155, 
 
 SB, 818, 
 
 46, 279, 
 
 38, 538, 
 
 5, 262, 
 
 fi, 786, 
 
 362, 656, 
 
 23, 440, 
 
 29, 937, 
 
 I, 074, 674, 
 
 *14, 107, 
 
 •24, 765, 
 
 420, 199, 
 603, 631, 
 
 000 00 
 285 26 
 400 00 
 885 26 
 900 00 
 028 00 
 204 00 
 512 08 
 
 001 43 
 126 03 
 016 41 
 218 36 
 105 00 
 831 00 
 538 00 
 
 8751, 851 35 
 10,000,000,08 
 
 25, 215, 
 
 138, 357, 
 
 57, 883, 
 
 80, 474, 
 
 7, 305, 
 
 4, 643, 
 
 347, 848, 
 
 1.6, 950, 
 
 38, 662, 
 
 I, 039, 723, 
 
 2, 313, 
 
 20, 434, 
 
 475, 638, 
 637, 757, 
 
 000 00 
 608 14 
 40O 00 
 208 14 
 200 00 
 276 28 
 712 00 I 
 115 62 ■ 
 487 02 
 514 31 
 614 77 
 708 95 
 101 25 
 634 00 
 892 00 
 
 * This reduction includes $9,553,800 Geneva award bonds canceled. 
 Theasukt Department, 'Waeeant Division. 
 
 Appendix No. 6. 
 Circulation and deposits, and specie of the State banks, 1857 and 1860. 
 
 
 Circijlation. 
 
 Deposits and 
 bank bal- 
 ances. 
 
 Total. 
 
 Specie. 
 
 Ratios of specie to — 
 
 Tears. 
 
 Circulation. 
 
 Circulation 
 and deposits. 
 
 1857 
 
 $214, 778, 822 
 207, 102, 477 
 
 $230,351,352 
 253, 802, 129 
 
 $445, 130, 174 
 460, 904, 606 
 
 $58, 349, 838 
 83, 594, 537 
 
 Per cent. 
 27.2 
 40.4 
 
 Per cent. 
 
 13.1 
 
 1860 
 
 18.1 
 
 
 
 Compiled from statement in Finance Eeport, 1876, pages 204, 205. 
 Circulation, deposits, and cash reserve of the national havTis, Decenibei- 28, 1877. 
 
 LIABILITIES. 
 
 Circulation $299,240,475 
 
 Deposits -■ Sei, 575, 577 
 
 Total 960,816,052 
 
 CASH HESEEVE HELD. 
 
 Gold coin $5,506,556 
 
 Silver coin 4,300,274 
 
 United States gold-certificates 23,100,920 
 
 Total specie - 3.2,907,750 
 
 Legal-tender notes $70, 368, 248 
 
 •TJuited States certificates for legal-tenders 26, 515, 000 
 
 Total legal- tenders.' 97,083,248 
 
 Five per cent, redemption fund 15, 028, 340 
 
 Total cash reserve - _ 143,019,338 
 
 Eatio of legal -tender funds to circulation 48.4 per cent. 
 
 Katio ol'legal.tender iunds to circulation and deposits 15.1 percent 
 
68 
 
 RESUMPTION OP SPECIE PAYMENTS. 
 
 Circulation, deposits, and cash resources of the national ianlcs Decemhr 2tJ, 1877. 
 
 LIABILITIES. 
 
 Circulation ((299,240,475 
 
 DepoBits 661,575,577 
 
 Total 960,816,052 
 
 CASH KES0UECE8. 
 
 Gold coin $5, 506, 556" 
 
 Silver coin ., 4,300,274 
 
 United States gold'Ceitl&cates 23,100,920 
 
 ' Tot al specie 32, 907, 750 
 
 Legal tender-notes $70,568,248 
 
 "United States certificates for legal-tenders 26, .515, 000 
 
 Total legal-tenders 97, 083, 248 
 
 Five percent. redemption fund 15,028,340 
 
 United States lionds, par value, J285,887,350 ; currency value, $405,181,717 405, 161, 717 
 
 Total cast resources 550,201,055 
 
 Hatio of casli resources to circulation 183 -(-percent. 
 
 Eatio of cash resources to circulation and deposits .57.3 per cent 
 
 Abstract of reports made to the Comptroller of the Currency, showing the condition of the na- 
 tional banks in the United States, hicluding national gold banks, at the close of business oii 
 Friday, the 28t/t day of December, 1877. 
 
 Resources. 
 
 Liabilities. 
 
 
 $878, 055, 305 95 
 
 3, 801, 438 92 
 
 34.1, 869, 550 00 
 
 13, 538, OOO 00 
 
 28, 479, 800 00 
 
 32, 169, 491 03 
 
 75, 960, 087 27 
 
 44, 123, 924 97 
 
 11,479,945 65 
 
 45,511,932 25 
 
 8, 958, 903 60 
 
 8, 841, 939 09 
 
 10, 265, 059 49 
 
 64, 664, 415 01 
 
 20, 312, 692 00 
 
 779, 084 78 
 
 32, 907, 750 70 
 70, 508, 248 00 
 26, 515, 000 00 
 15, 028, 340 14 
 1, 405, 236 94 
 
 Capital stock paid in 
 
 $447, 128, 771 00 
 
 Overdrafta . 
 
 
 121, 618, 455 32 
 51,530,910 18 
 
 . 299, 240, 475 00 
 
 TJnited States bonds to secure deposits.. 
 
 United States bonds on hand 
 
 Other stocks, bonds, and mortgages . . . 
 Due from approved reserve agents 
 
 Other undivided profits-. 
 
 24'ational bank notes out- 
 standing* 
 
 State bank notes outstand- 
 ine 
 
 Due from State banks and bankers 
 
 470, 540 00 
 1, 404, 178 34 
 
 Keal estate, farniture, and fixtures 
 
 Dividends unpaid 
 
 Individual deposits 
 
 United States deposits- . . 
 
 Deposits of United States 
 
 disbursing officers . . 
 
 Due to other national 
 
 
 
 604,512,514 52 
 6, 529, 031 09 
 
 Exchanges for clearing-house 
 
 
 3, 780, 759 43 
 
 115,773,660 58 
 44, 807, 958 79 
 
 Specie, viz : 
 
 Gold coin 85,506.556.39 ) 
 
 Silver coin -4,300,374.31 J- 
 
 TJ. S. gold certificates. 23,100,920.00 ) 
 
 Legal-tender notes .' 
 
 TJnited States certificates of deposit for 
 
 Due to State banks and 
 bankers 
 
 Notes and bills redis- 
 counted 
 
 Five per cent, redemption fund with 
 
 4, 654, 784 51 
 
 5, 843, 107 03 
 
 Dae from Treasurer other than redemp- 
 tion fund 
 
 
 
 
 
 1,737,295,145 79 
 
 1,737,395, 145 79 
 
 
 
 " The amount of circulation outstanding at the date named, as shown by the books of this office, was 
 $121,672,505 ; which amount includes the notes of insolvent banks, of those in voluntary liquidation, and 
 of those wnich have deposited legal-tender notes under the act of June 20, 1874, for the purpose of re- 
 tiring their circulation. 
 
 Treasuky Department, 
 
 OKFICK COMl'TKOLLKK OF THE CUliUK.NCY, 
 
 Waehington, Februai^ 16, 1878. 
 
 JNO. JAY KNOX, 
 Comptroller of the Currency. 
 
RESUMPTION OF SPECIE PAYMENTS. 
 
 69 
 
 Appendix No. 7. 
 
 Statement showing the apparent and probable condition of the United Slates Treasury, in- 
 chiding the proposed accumulation of $50,000,000 coin. 
 
 Demand liaMities, April 1, 1878 : 
 
 Legal-tender notes 
 
 Coin-certificates 
 
 Interest overdue 
 
 Debt, matured and interest 
 
 Carrency-cerfcificates 
 
 Fractional currency 
 
 Demand notes 
 
 TTnclaimed Pacific Kailroad interest 
 
 Totals 
 
 Demand resources, April 1, 1878: 
 
 Coin 
 
 Currency 
 
 Totals 
 
 Percentage of resources to liabilities 
 
 Apparent. 
 
 S347, 848, 712 00 
 
 57, 883, 400 (10 
 
 4, 121, 146 77 
 
 8, 439, 391 04 
 
 25, 215, 000 00 
 
 16, 960, 115 62 
 
 62, 342 50 
 
 7, 267 03 
 
 460,527,374 96 
 
 138, 357, 608 14 
 35, 966, 851 35 
 
 174, 324, 459 49 
 
 .37 
 
 Probable. 
 
 $340, 000, 000 00 
 57, 883, 400 00 
 4, 000, 000 00 
 8, 000, 000 00 
 25, 215, 000 00 
 
 435, 098, 400 00 
 
 I 
 
 188, 357, 608 14 
 35, 966, 851 35 
 
 224, 324, 459 49 
 
 .51 
 
 Appendix No. 8. 
 
 Statement showing resources and liaMlitits of certain European bania at clatts mentioned below. 
 
 Bank. 
 
 Bank of England 
 
 Do 
 
 Do 
 
 Do 
 
 Do 
 
 Do 
 
 Do 
 
 Do 
 
 Do 
 
 Do 
 
 Do •. 
 
 Do 
 
 Do 
 
 Do 
 
 Do 
 
 Do 
 
 Bank of France 
 
 Bank of Germany 
 
 National Bank of Belgium 
 
 Date. 
 
 1818.... 
 1820.... 
 1822.... 
 1824.... 
 1826.... 
 1828.... 
 1830.... 
 1832. . . . 
 1834.... 
 1836.... 
 1838.... 
 1840.--- 
 1842.... 
 1844.... 
 1846.... 
 
 1878. 
 Feb. 20 
 Feb. 14 
 Feb. 7 
 Feb. 7 
 
 Demand liabilities. 
 
 Circulation Deposits, 
 
 26, 202, 000 
 24, 299, 000 
 
 17, 465, 000 
 20, 133, 000 
 21, 564, 000 
 21, 358, 000 
 21, 465, 000 
 
 18, 320, 000 
 19, 195, 000 
 
 18, 018, 000 
 
 19, 488, 000 
 17, 170, 000 
 
 20, 332, 000 
 
 21, 485, 000 
 2J, 390,000 
 
 26, 584, 674 
 99, 350, 000 
 30, 987, 000 
 13, 170, 000 
 
 7, 928, 000 
 4, 421, 000 
 
 6, 399, 000 
 9, 680, 000 
 
 7, 200, 000 
 
 10, 201, 000 
 
 11, 621, 000 
 10, 278, 000 
 13, 300, 000 
 
 12, 040, 000 
 
 8, 922, 000 
 6, 254, 000 
 6, 69A 000 
 
 12, 138, 000 
 16, 322, 000 
 
 28, 054, 497 
 21, 193, 000 
 10, 311, 000 
 2, 330, 000 
 
 Total. 
 
 34, 130, 000 
 
 28, 720, OOO 
 23, 864, 000 
 
 29, 812, 000 
 28, 764, 000 
 31,559,000 
 33, 086, 000 
 28, .598, 000 
 
 32, 495, 000 
 
 30, 058, 000 
 
 28, 410, 000 
 23, 424, 000 
 
 29, 022, 000 
 
 33, 623, 000 
 37, 712, 000 
 
 54, 639, 171 
 120, 543, 000 
 41, 298, 000 
 15, 500, 000 
 
 Demand re- 
 sources. 
 
 Bullion. 
 
 6, 363, 000 
 
 8, 211, 000 
 10, 098, 000 
 11,787,000 
 
 6, 754, 000 
 10, 499, 000 
 11, 150, 000 
 
 7, 514, 000 
 7, 303, 000 
 5, 250, 000 
 
 9, 540, 000 
 4, 299, 000 
 9, 729, 000 
 
 15, 315, 000 
 
 16, 388, 000 
 
 24, 730, 793 
 78, 896, 000 
 24, 759, 000 
 3, 991, 000 
 
 ». E°S 
 
 .18-f 
 
 .28-- 
 
 .42. 
 
 .39-- 
 
 .2:1- 
 
 .33 
 
 .33-- 
 
 .26-- 
 
 .22-- 
 
 .17 
 
 .33-- 
 
 .18 
 
 .33 
 
 .45 
 
 .43-- 
 
 .45- 
 .65- 
 
 .58-t- 
 .25- 
 
 s'.5 p 
 
 ■ij' 
 
 2. 13. 2. 
 2. 12. 0. 
 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 Nil. 
 
 Nil. 
 
 Appendix No. 9. 
 
 An estimate of the amount of gold and silver bullion and coin in the 
 United States April 1, 1878. 
 
 Gold. 
 
 In United States Treasury (including bullion fund of 
 
 mints and assay oface) October 31, 1877 $125, 122, 843 94 
 
 In national banks (exclusive of coin-certificates) Octo- 
 ber 1, 1877 4, 867, 909 18 
 
 In California banks 18, 000, 000 00 
 
 Private banks (Pacific coast) 2, 000, 000 00 
 
 State and county treasuries (Pacific coast) 4, 000, 000 00 
 
'^U RESUMPTION OP SPECIE PAYMENTS. 
 
 Merchants aud individuals (Pacific coast) .* $4, 000, 000 00 
 
 Unpaid deposits, United States mints 500, 000 00 
 
 Smelters and private refiners (exclusive of the Pacific 
 
 coast) 500, 000 00 
 
 Gold bullion in Oaliforuia 1, 500, 000 00 
 
 In private hands, including bullion dealers, savings- 
 banks, and private bankers east of the Eocky Mount- 
 ains , 15, 000, 000 00 
 
 In State banks 2, 000, uOO 00 
 
 177, 490, 753 12 
 
 Production from October 31 to April 1 20, 000, 000 00 
 
 Approximate excess .of imports over exports 2, 000, 000 00 
 
 199, 490, 753 12 
 Silver. 
 
 Fractional coin in States east of the Eocky Mountains, in- 
 cluding trade-dollars and Mexican coin, October 31, 1877. $42, 000, OOO 
 
 California banks .' 2, 000, 000 
 
 • Private banks (Pacific coast) , 500, 000 
 
 State and county treasuries (Pacific coast) 500, 000 
 
 Merchants and individuals (Pacific coast) 500, 000 
 
 Silver bullion (Pacific coast) 2,000,000 
 
 Silver bullion in hands of smelters and refiners east of the 
 
 Eocky Mountains 1, 000, 000 
 
 48, 500, 000 
 
 Silver bullion in mints 2, 000, 000 
 
 Production from mines to April 1 15, 000, 000 
 
 G5, 500, 000 
 
 I have not the data necessary to ascertain to which of the foregoing 
 items should be credited the gain of gold and silver since October 31, 
 1877. It may be stated, however, that the Treasury stock has been in- 
 creased, and the amount of trade and Mexican dollars which have gone 
 into circulation may be set down at not less than 4,000,000, exclusive of 
 about 1,200,000 trade dollars in the mints. 
 
 According to the above estimate the amount of gold 
 
 coin aud bullion now in the country is $199, 490, 753 12 
 
 And silver coin and bullion .....' 65, 500, 000 00 
 
 Total 264, 990, 753 12 
 
 Allowing for gold and silver used in the arts and for manufacturing 
 purposes and possible overestimation, say $15,000,000, the total amount 
 of gold and silver in the country may be set down at about two hun- 
 dred and fifty millions of dollars, of which about fifty millions are in the 
 form of fractional silver, trade dollars, and Mexican coin, and $1,200,000 
 in standard silver dollars. 
 
 THE PRESENT AVEKACrE PEODUCTION OF GOLD AND SILVER FROM 
 THE MINES OF THE UNITED STATES. 
 
 I have availed myself of every facility to procure full information in 
 relation to the product of the gold and silver mines of the United States, 
 
RESUMPTION OF SPECIE PAYMENTS. 
 
 71 
 
 for the purpose of estimating approximately the present annual jield, 
 •with the following results, based upon, the production for the first six 
 months of the year and the average monthly outturn since, so far as it 
 M-as possible to ascertain the same : 
 
 ' state or Territttry. 
 
 Sold. 
 
 Silver. 
 
 Total. 
 
 Califoruia . . . : 
 
 $15,000,000 
 
 18, 000, 000 
 
 3,200,000 
 
 1, 500, 000 
 
 350, 000 
 
 3, 000, 000 
 
 300, 000 
 
 175, 000 
 
 1, 000, OOO 
 300, 000 
 
 2, 000, 000 
 
 n, 000, 000 
 
 26, 000, 000 
 
 750, 000 
 
 250, 000 
 
 5, 075, 000 
 
 4, 500, 000 
 
 500, 000 
 
 500, 000 
 
 ICO, 000 
 
 50, 000 
 
 ?1P,000,OIO 
 
 44, 000, 000 
 
 • ?,950,0CO 
 
 1, 750, 000 
 
 5,425,000 
 
 7, 500, OOO 
 
 800, OOO 
 
 675, OOO 
 
 1, 100, 000 
 
 350, 000 
 
 Nevada 
 
 Montana ; 
 
 Idaho 
 
 Uuh... 
 
 
 Arizona , 
 
 Kew Mexico.... ■ , 
 
 Oregon.. 
 
 Dakota 
 
 2, 000, 000 
 200 000 
 
 Lake Superior ... 
 
 200, 000 
 
 Virgiuia 
 
 Uortli CaroliEa. .- . ... 
 
 50, 000 
 100, 000 
 100, 000 
 
 25,000 
 
 50, 000 
 
 
 100 000 
 
 
 
 100 000 
 
 other sources 
 
 25, 000 
 
 50, OOO 
 
 
 
 Total 
 
 45, 100, 000 
 
 38, 950, 000 
 
 84, 050, 000 
 
 It is impossible to state with any degree of accuracy how long this 
 large rate of production will be maintained. A gradual increase may 
 be expected in Montana and Arizona, and there is nothing to indicate 
 a decrease in any bullion-producing State or Territory, except in the 
 State of Nevada, and that depends upon contingencies which to a 
 great extent must be a matter of conjecture only. Several mines in 
 different localities in that State have within the last year or two been 
 opened and are producing considerable bullion, but whether they, and 
 others which in the mean time may be discovered, will yield sufficient 
 to make up the decrease, which, unless other ore-bodies on the Oom- 
 stocli shall be found, must sooner or later take place, is somewhat 
 doubtful. 
 
 The superintendent of the mint at San Francisco has furnished, at 
 my request, a statement, embraced in the appendix, of the yield of about 
 thirty different mines, the bullion from which finds a market in San 
 Francisco. 
 
 The yield of bullion from the two mines which embrace the great ore- 
 chimney discovered in 1874 in the Comstock lode has, according to th« 
 official statement of the managers, amounted, up to October 31, 1877, to 
 $78,852,918.48, of which ^36,736,347.91 was gold. These mines are now 
 producing at the jate of nearly three million dollars per month. 
 
 H. E. LINDEEMAN, 
 
 Director of the Mint. 
 
 TBE.4SUEY Department, April 3, 1878. 
 
72 
 
 RESUMPTION OF SPBCIE PAYMENTS. 
 
 APPBNDIY No. 10. 
 
 Statement of imports and exports of specie (coin and bullion) during the fiscal years ended June 
 30, 1885, to 18?7, inclusive, and the seven months ended January 31, 1878. 
 
 Fiscal years euded June 30 - 
 
 1865. 
 1866. 
 1867. 
 1868. 
 1869. 
 1870. 
 1871. 
 1872. 
 1873 
 3874. 
 1875. 
 1876. 
 1877. 
 
 July 
 
 Angnst .... 
 September . 
 
 October 
 
 November . 
 December. . 
 
 1877. 
 
 January . 
 
 1878. 
 
 Coin and bullion. 
 
 Exports. 
 
 Bomestic. roreign, 
 
 $64, 618, 124 
 
 82, 643, 374 
 54, 976, 196 
 
 83, 745, 975 
 
 42, 915, 966 
 
 43, 883, 802 
 
 84, 403, 359. 
 
 72, 798, 240 
 
 73, 905, 546 
 59, 699, 686 
 83, 857, 139 
 50, 038, 691 
 43, 134, 738 
 
 4, 197, 923 
 1, 665, 357 
 2,239,416 
 1, 693, 583 
 1, 197, 733 
 1, 539, 446 
 
 3, 230, 996 
 
 $3, 025, 102 
 3, 400, 697 
 
 5, 892, 176 
 10, 038, 127 
 14,232,4)4 
 14, 271, 864 
 14, 038, 629 
 
 7, 079, 294 
 10, 703, 028 
 
 6, 930, 719 
 8, 275, 013 
 6,467,611 
 
 13, 027, 499 
 
 285, 641 
 383, 526 
 844, 195 
 317, 379 
 367, 121 
 380, 451 
 
 522, 758 
 
 Total. 
 
 $67, 643, 236 
 86, 044, 071 
 60, 868, 372 
 93, 784, 102 
 57, 138, 380 
 58, 155, 666 
 98, 44 i, 988 
 79, 877, 534 
 84, 608, 574 
 66, 630, 405 
 92, 132, 142 
 56, 506, 303 
 56, 162, 237 
 
 4,483,564 
 2, 053, 883 
 3, 083, 611 
 2, 010, 962 
 1, 564, 854 
 1, 919, 897 
 
 Imports. 
 
 $9, 810, 073 
 10, 700, 092 
 22, 070, 475 
 14, 188, 368 
 
 19, 807, 876 
 26, 419, 179 
 21, 270, 024 
 13, 743, 689 
 21, 480, 937 
 28, 454, 906 
 
 20, 900, 717 
 15, 936, 681 
 40, 774, 414 
 
 1, 107, 814 
 1,6(2,143 
 3, 840, 382 
 1, 717, 793 
 2, 266, 083 
 1, 670, 266 
 
 1, 790, 964 
 
 Excess of— 
 
 Imports. 
 
 $756, 771 
 
 701, 329 
 
 Exports. 
 
 $57, 833, 154 
 75, 343, 979 
 38, 797, 897 
 79, 595, 734 
 37, 330, 504 
 31, 736, 487 
 77, 171, 964 
 66, 133, 845 
 63, 127, '637 
 38, 175, 499 
 71, 231, 425 
 40, 569, 631 
 15, 387, 833 
 
 ^3, 375, 750 
 ^ 411,740 
 
 293, 169 
 "'249,' 632 
 
 1, 962, 790 
 
 Total for years 1865 to 1877, inclusive $693,435,569 
 
 Average.. 53,264,000 
 
 Average for last three years 42,396,000 
 
 Averagegold and silver product of the United States, 1870 to 1876, inclusive 71,000,000 
 
 Average excess of production over net export, 1874, 1875, and 1876, $29,000,000 ; deduct 
 
 $7,000,000 used in arts; leaving 22,000,000 
 
 Bureau of Statistics, March 29, 1878. 
 Hon. Thomas Ewing, M. C. 
 
 EDWASD TOUNG, 
 
 Ohi^ of Bureau. 
 
 Appendix No. 11. 
 Distribution of currency in the Treasury of the United States, March 28, 1878. 
 
 Date. 
 
 Office, &c. 
 
 United States 
 notes. 
 
 National- 
 bank notes. 
 
 Currency. 
 
 1878. 
 
 
 $6, 433, 588 20 
 32, 107, 136 84 
 
 3, 481, 053 00 
 
 4, 730, 620 00 
 3, 608, 000 00 
 1, 322, 089 00 
 3, 629, 500 00 
 2,270,094 00 
 1, 560, 000 00 
 1, 127, 300 00 
 
 370, 010 00 
 
 $122,261 50 
 488, 066 92 
 44, 478 00 
 38, 800 00 
 206, 836 00 
 356, 000 00 
 356, 785 00 
 
 
 27 
 
 Assistant treasurer United States, New York. . . 
 Assistant treasurer United States, Baltimore . . . 
 Assistant treasurer United States, Philadelphia 
 
 Assistant treasurer United States, Boston 
 
 Assistant treasurer United States, Cincinnati- .. 
 
 Assistant treasurer United States, Chicago 
 
 Assistant treasurer United States, Saint Louis. . 
 Assistant treasurer United States, New Orleans. 
 Assistant treasurer United States, San Francisco 
 
 
 27 
 
 
 
 
 
 
 
 
 25 
 
 
 
 
 23 
 
 163, 000 00 
 470, OOO 00 
 
 
 
 
 
 
 
 
 
 {6,065,059 69 
 
 
 
 90, 538 00 
 
 
 
 Total 
 
 
 
 
 60, 729, 529 04 
 
 2, 246, 227 42 
 
 6, 065, 059 69 
 
 
 
 
RESUMPTION OF SPECIE PAYMENTS. 
 
 73 
 
 Appekdix No. 12. 
 
 [From Dr. Linderman's official report.] 
 
 Annual product of gold andsiUer from the American mines. 
 
 
 Tear. 
 
 Gold. 
 
 Silver. 
 
 Total. 
 
 1870 
 
 $50, 000, 000 
 
 43, 500, 000 
 36, 000, 000 
 36, 000, 000 
 40,000,000 
 40, 000, 000 
 
 44, 300, 000 
 
 $16, 000, 000 
 23, 000, 000 
 28, 750, 000 
 35, 750, OOO 
 3Q, 000, 000 
 32, 000, OOO 
 41, 500, 000 
 
 $06, 000, OOO 
 
 1871 
 
 66, 500, 000 
 
 1372 .-. 
 
 64, 750, 000 
 
 1873 
 
 71, 750, 000 
 
 1874 
 
 72, 000, 000 
 
 1875. .. . 
 
 72, ono, 000 
 
 1876 - 
 
 85, 700, 000 
 
 1877 (Wells, Fargo 
 
 
 100, 000, 000 
 
 
 
 
 
 Exports of specie in the fiscal years 1872, 1873, and 1874, in excess of imports for same years $107, 436, 981 
 
 Average for each year 55, 812, 000 
 
 Es;cessofexportafortheyear3l875, 1876, and 1877 ]j7, 188,797 
 
 Average for each year **-. 396. 000 
 
 Excess since July 1, 1877, to January 31, 1S78, inclusive 4.815,081 
 
II^DEX. 
 
 Page. 
 
 Coin in the Treasury on February 28, 1878 3,13 
 
 Bonds sold under resumption act and refunding act 4 
 
 Annual coin liabilities 5 
 
 Fractional currency redeemed 5 
 
 Report of coin at subtreasury, New York 6 
 
 Statement of the Bank of England 32 
 
 Statement of foreign banks and of American banks at different periods 35 
 
 Gold and silver bullion and coin in the United'States on April 1, 1878 36 
 
 Sinking-fund balances from 1869 to 1877 36 
 
 Monthly redemptions of legal-tenders and fractional currency 37 
 
 Application of the surplus revenue of 1877 37 
 
 Existing demands upon fund in the Treasury 39 
 
 Sales of bonds in January, February, and March, 1878 40 
 
 Exports and imports from 1874 to 1877 58 
 
 Outstanding $1 and $2 bills from 1873 to 1878 61 
 
 Statement of gold and silver in the Treasury on February 1, 1877 65 
 
 Statement of coin and bullion in the Treasury February 1, 1878 65 
 
 February 38, 1878 66 
 
 March 28, 1878.., 66 
 
 Condition of national banks December 28, 1877 67 
 
 Comparison of condition of the Treasury April 1, 1877, and April 1, 1878 67 
 
 Circulation, deposits, and specie of State banks, 1857 and 1860 67 
 
 Circulation, deposits, and cash resources of national banks December 28, 1877.. 68 
 
 Apparent and probable condition of Treasury April, 1878 69 
 
 Resources and liabilities of certain European banks 69 
 
 Estimate of gold and silver bullion and coin in United States April 1, 1878 69 
 
 Imports and exports of specie from 1865 to January 31, 1878 72 
 
 Distribution of currency in Treasury March 28, 1878 72 
 
 Annual American jirodnct of gold and silver : 73 
 
EXCESSIVE TAXATION OF BANK SHARES 
 
 IN THE 
 
 STATE OF NEW YORK: 
 ITS INJUSTICE AND OPPRESSION. 
 
 SPEECH 
 
 OF 
 
 Hon. ELLIOT O. OO^VDUST, 
 
 Or New Tork, 
 
 IN THE ASSEMBLY, 
 
 AIPIRIL. 11, 1877, 
 
 The Assembly of the State of New York having under consideration 
 the subject of the excessive taxation of bank shares — 
 
 Mr. Cowdin said : 
 
 Mr. Speaker — The national banks of the State appeal to the 
 Legislature for justice. They simply ask that bank shares shall 
 be assessed at no higher rate than other capital. 
 
 An impression has long prevailed on the part of those who are 
 not familiar with the operations of national banks, that they are 
 pets of the federal government, and that State and municipal 
 authorities were, therefore, justified in laying upon them excep- 
 tionably heavy burdens. There could hardly be a grosser delu- 
 sion — a graver mistake. A few facts will dispel the one and 
 rectify the other. , 
 
 Mr. Knox, the National Comptroller of the Currency, in his 
 last report, declared that the tax on national banks is much greater 
 than that upon any other capital in the country. They are sub- 
 jected to two classes of taxes — federal and state. The taxes 
 imposed by the law of 1863, which they pay to the federal gov- 
 ernment, are of three kinds, namely : One per cent annually 
 upon the average amount of notes in circulation, one-half of one 
 
per cent upon deposits, and one-half of one per cent upon their 
 capital stock, not invested in United States bonds. Moreover, 
 the law requires the banks to keep a reserve of their deposits of 
 25 per cent in cities, and 15 per cent in the county, and pro- 
 hibits them from using it in any way whatever ; yet it does not 
 relieve them from taxation on this portion of their deposits so 
 kept on hand idle. Thus, on the one hand, while forced to keep 
 themselves strong, on the other they are fined for so doing. 
 
 Besides these burdens, the national banks are also assessed by 
 State, county and local authorities ; and, as will be seen hereafter, 
 they are, as a general rule, subjected to rates of taxation far in 
 excess of those levied upon any other species of property. 
 
 Before entering into the details of the subject, allow me to 
 correct the popular error that a portion of the property of the 
 national banks is exempt from State taxation. I refer to United 
 States bonds— the basis whereon the national banks rest. These 
 bonds are subject to taxation by State authorities, like any other 
 property, though exempt from taxation when held by all other 
 parties. It is vain to urge that this is a palpable evasion of the 
 laws of Congress. The State and city collector, with his warrant 
 in his hand, will listen to no such plea in abatement of his tax. 
 
 Now, let us measure the burden of the National, State and 
 municipal taxes upon our banks, and then we shall be prepared 
 to compare it with the weight placed on other kinds of property. 
 
 Comptroller Knox's recent report shows that, by statistics 
 gathered from upward of 2,000 national banks, located in all 
 parts of the country, the federal tax on their capital in the year 
 1875 averaged from one to three per cent, the lowest rate being 
 in Rhode Island and Arkansas, and the highest in the city of 
 Albany ; while the State and local taxes run from one-tenth of 
 one per cent to three and three-tenths per cent, being 10 cents 
 on $100 in the District of Columbia, and $3.60 on $100 in the city 
 of Albany, making an aggregate of both kinds of from one and 
 six-tenths per cent to six and six-tenths; that is, from $1.60 to 
 $6.60 total tax on each $100 of banking capital. Now, where 
 do these taxes fall most heavily ? It is in the State where the 
 banking interest is immensely larger than in any other, and 
 •where the interests of commerce generally most require that 
 
banking capital should be left free to perform its functions un- 
 trammeled by unjust burdens. 
 
 In this State more than one-third of the total amount of the 
 personal property assessed is national bank stock. Does anybody 
 imagine that this is relatively on a fair valuation, or that it has 
 in it a single element of justice ? One of the reasons of this 
 excessive valuation is, that the amount of the capital of banks is 
 easily ascertained, as is also the market value of the shares ; and 
 in the chief cities they are compelled to publish such statements 
 from time to time as shall lay open to public inspection all their 
 property, their deposits, circulation, surplus, discounts — every 
 thing. It follows, therefore, that all that the local assessors have 
 to do is to look at these figures. But in respect to all other 
 descriptions of personal property, especially such as are analo- 
 gous in its character to banks, the assessors are left very much in 
 the dark. 
 
 The State assessors of New York, in their annual report of 
 1874, say that they are satisfied that not over fifteen per cent of 
 the taxable personal property of the State finds its way to the 
 assessment rolls at all, and of bonds and mortgages not over five 
 per cent. 
 
 All that the banks ask is that measures shall be taken to place 
 all personal property on the assessment rolls, that it and all other 
 property be assessed at the same rates in proportion to the real 
 value thereof; and that no discrimination shall be made against 
 banks. In other words, the banks simply ask that if their prop- 
 erty is to be assessed at its actual value, the like rule be applied 
 to the assessment of all other property in the State, real and 
 personal. 
 
 Is not this just ? Indeed, is not any other rule of taxation 
 manifestly unfair? Does it militate against the fairness of this 
 rule that, if all property in the State was assessed at its full value 
 (as our banks are), this would so reduce the rate of taxation that 
 the banks would cheerfully pay taxes on the actual value of their 
 property ? 
 
 Let us look at the national banks in this State and compare 
 their burdens with those imposed on national banks in other 
 States. We now refer only to State, municipal and local taxes. 
 
The average rate of these taxes on all the national banks in inis 
 State is within a fraction of three per cent on their capital. 
 This is higher than in any other State in the Union except South 
 Carolina and Kansas — and very much higher than in most of 
 them. 
 
 Let us compare the taxes of this kind levied on the national 
 banks in the city of New York with those levied on banks in 
 some other cities. In New York city this tax is 3 1-10 per cent 
 on the capital', while in Philadelphia — our greatest financial 
 rival — it is only 8-lOths of one per cent; in Pittsburgh, 1-2 of 
 one per cent ; in Washington, 3-lOths of one per cent ; in Bos- 
 ton, 1 9-10 per cent ; in Baltimore, 2 per cent ; in Chicago, 2 1-2 
 per cent ; in Cincinnati, 2 6-^10 per cent. 
 
 Let us now make comparisons between national banks in New 
 York city and those in several other cities in respect to their 
 entire tax, federal. State and local. For the year 1875 the total 
 of the combined rates on the capital of the banks in New York 
 city was 5 1-10 per cent, while in Philadelphia it was only 2 8-10; 
 in Baltimore, 3 3-10; in Boston, 3 3-10 ; in Washington, 1 Y-IO; 
 in St. Louis, 4 per cent; in Cincinnati, 4 6-10; in Chicago, 
 4 8-10 per cent. But worse than all is the unjust burden of 
 taxation inflicted on some of the banks in the interior of this 
 State. For example, in Syracuse they are taxed 6 56-100 per 
 cent, and in Albany 6 6-10 per cent ; and this, too, at a period 
 when money was being loaned, on call, at an average of 3 per 
 cent, and commercial paper was being readily discounted at from 
 4 to 6 per cent per annum, according to its grade. 
 
 Thus we see that the tax in the State of New York is by far 
 more oppressive than that in any other State in the Union. And 
 by whom has it been imposed ? By her own representatives 
 assembled in her own legislative halls. Yes, by them, Albany 
 has been subjected to State and local taxes of 3 6-10 per cent, 
 while the Legislature of Pennsylvania imposed State and local 
 taxes upon the banks of Pittsburg of only one-half of one per 
 cent. 
 
 The injustice heaped upon the national banks of New York is 
 shown in the inequality of the local valuation on which taxes are 
 levied. Last year the whole valuation of personal property in 
 
New York city was $218,626,178, and of this sum, $85,145,116 
 was bank stock — thus rating the bank stock in the city at nearly 
 40 per cent of the personal property. Does not every body 
 know that this is grossly unjust towards the city banks ? 
 
 Compare the banks with some other kinds of corporate prop- 
 erty in the city, and the injustice with which they are treated is 
 equally apparent. 
 
 The national banks have to pay State and municipal taxes on 
 their personal property at its full value. The capital, scrip and 
 surplus of the fire and marine insurance companies in the State 
 amount in round numbers to about $60,000,000 ; and yet they 
 pay taxes on less than $7,000,000. A single national bank — the 
 Bank of Commerce — pays one-third more State and municipal- 
 taxes than all the fire and marine insurance companies of the 
 State. But there is no end to illustrations of the unjust discrim- 
 ination against the national banks of our State. How can they 
 bear up under the burdens thus heaped upon them by the State 
 and local authorities, in addition to the federal taxes ? Though 
 the Legislature has nothing directly to do with the national bur- 
 dens, it should regard their weight when fixing the further bur- 
 dens which are laid upon the banks by its authority. 
 
 Let us bear in mind that when the national banks were organ- 
 ized in 1863, and were subjected to taxes by the general govern- 
 ment, these taxes were regarded as necessary war contributions 
 and temporary in their character. 
 
 Here, let it not be forgotten that in the dark and dreary hour, 
 when hostilities commenced in the late war, and when the credit 
 of the nation was at its lowest ebb, the associated banks of New 
 York and other cities nobly came to the aid of the government 
 by promptly taking $100,000,000 of treasury notes at par in 
 coin ; and in addition they took 6 per cent bonds to the amount 
 of $50,000,000, and paid for them also in gold; and all this 
 within a period of four months, the subscription amoiinting to 
 more than their aggregate capital. But for these $150,000,000 
 so speedily advanced by the banks in coin, at that critical 
 moment, who can tell what would have been the fate of the 
 nation ? But we well know what was the fate of the banks. 
 
6 
 
 Senator Conkling, then' a representative in congress, justly 
 said : 
 
 " The banks were never stronger than when the Secretary of 
 the Treasury appealed to them for loans. They allowed the 
 Secretary to carry off their specie, their capital from their vaults, 
 and they had to suspend." 
 
 Previous to the war the" banks had been liable to taxation only 
 by State authority, for home purposes, but when forced to become 
 national banks they were compelled to pay national taxes. Peace 
 came nearly twelve years ago, bringing in her train relief to 
 other interests from special war burdens, including the repeal of 
 the income tax, but the war taxes on the banks still remain, side 
 by side with those on whisky and tobacco. 
 
 Mr. Speaker, the national banks ask no special favors of the 
 State on account of their services to the government, or of these 
 Federal exactions ; but they do think that these facts add vigor 
 to the demand for equal and exact justice at the hands of the 
 State in the imposition of taxes by its authority. If the severe 
 burdens under which our banks are now struggling are to be 
 continued, serious results will follow. Many of our banks are 
 now greatly reducing their capital ; others will be forced to do 
 the same thing. Still others may give up their charters and in- 
 vest their capital in business on which the government lays a 
 lighter hand; while that large class of stockholders who reside 
 outside of the State of New York may find it to their interest to 
 withdraw their funds to localities where the exactions are less 
 exorbitant. 
 
 In consequence of these oppressive .taxes the bank capital in 
 the city of New York alone has been reduced, and is in process 
 of reduction, to the amount of about $22,000,000. The reduced 
 value of bank shares in the city, mainly caused by excessive 
 taxation, amounts to nearly $10,000,000. The effect upon the 
 city assessment rolls is obvious. It strikes from them $32,000,- 
 000. Can the tax payers of the city, who are not owners of bank 
 stock, but who are now struggling under the weight of a city 
 debt of $150,000,000, afford this reduction ? Are the tax payers 
 in other parts of the State ready to make up this deficieny ? 
 
Are the farmers prepared to do their share of it ? Are the man- 
 ufacturers and mechanics willing to come to the rescue ? 
 
 Mr. Speaker, for myself I have an abiding faith in the future 
 achievements of our country. In the two immense industries of 
 Iron and Cotton we have already surpassed the world ; and the 
 great exhibition has shown the enormous progress we are making 
 in every department of human industry. With peace assured 
 throughout the Union, we are entering upon a decade which 
 is likely to be the most prosperous in its history. 
 
 Business in our midst is liable to be cramped for lack of bank 
 facilities. Every industrial interest which relies upon banks for as- 
 sistance will be endangered, and the taxes which they could pay in, 
 were they prosperous, will be lost to the State. The country, in its 
 efforts soon to return to a sound currency, will require the utmost 
 aid which organized capital can supply. Is the legislature of the 
 State of New York prepared to see its chief city, hitherto the 
 undisputed commercial and financial metropolis of the nation, 
 'surrender its supremacy 1 It is at this hour in serious jeopardy. 
 New York has rivals who are jealous of her prosperity and 
 greatness, and who are eager to pluck from her brow the crown 
 of superiority she has so long worn. They boast of their lighter 
 taxes, and of their greater advantages for carrying on trade, com- 
 merce, manufactures and banking. They predict the decline of 
 the great metropolis. Shall the legislature of the empire State 
 give aid and comfort to those who watch and wail for the 
 decadence of the empire city ? 
 
 When the growth and prosperity of the city are blighted, will 
 its citizens alone feel the shock ? To show how closely the 
 interests of the people of other parts of the State are connected 
 with those of its chief city, I need but refer to the fact that of 
 the $85,000,000 of bank capital in the city, upwards of $6,000,- 
 000 are owned by persons dwelling in the interior counties. 
 Will not the State suffer to its remotest borders when its great 
 financial heart beats feebly and slowly ? 
 
 The policy of severe and unequal taxation inflicted upon the 
 banks of this State opens the door for capitalists from other 
 States and countries to transact this business in modes which 
 entirely escape taxation here. The banks of rival cities have 
 
established agencies among us; but having no property here uaicj 
 evade the tax gatherer, for their business does not come within 
 the Jaw. Foreigners are now doing the same thing on a large 
 scale. Four Canadian banks alone, with an aggregate capital of 
 $33,000,000, have agencies in the city of New York, who do a 
 large proportion of the commercial business, and having none of 
 their capital actually in the 'city they avoid taxation. 
 
 Is it wise to drive out of the State by unjust rates of taxation, 
 our own native banking capital, which is willing to pay fair and 
 even liberal rates, and to supply its place with foreign capital 
 that pays no tax at all, and is in no wise identified with the wel- 
 fare of our great commercial and industrial interests ? Take, by 
 way of illustration, the case of a few of our leading banks. The 
 National Bank of Commerce of New York, with a capital stock 
 paid in of $10,000,000, paid, in 1876, national. State and local 
 taxes amounting to $407,892.90, equal to $1,333 for every work- 
 ing day in the year. The American Exchange National Bank, 
 New York, with a capital stock paid in of $5,000,000, last year 
 paid a total tax of $227,203.99, or $742 per day. The Metro- 
 politan National Bank, New York, with a capital stock paid in 
 of $4,000,000, paid last year taxes amounting to $202,197.30, or 
 $660 per day. 
 
 The smaller banks bear even a greater burden in proportion 
 to their strength. The Fallkill National Bank of Poughkeep- 
 sie, with a capital stock paid in of $400,000, last year, paid 
 national, State, and local taxes amounting to $26,490. The First 
 National Bank of Troy, with a capital stock paid in of $300,- 
 000, last year paid national. State and city taxes amounting to 
 $16,058.56, leaving a net profit for the stockholders of only 
 $9,714.44 — thus compelling the bank to draw $14,285.56 on 
 previous earnings to pay its dividends. And I have the best 
 authority for stating that at least two-thirds of the banks in the 
 city of New York did not earn the dividends which last year 
 they were compelled by the poverty and importunity of the 
 shareholders to pay, but drew the deficiency from their reserves. 
 
 But, Mr. Speaker, I will not weary this House by multiplying 
 special examples. The question before us is plain and simple. 
 Shall our bank taxes be modified, or shall bank capital, as a con- 
 trolling element in affairs, be driven from the State ? 
 
In my judgment, sir, it is far wiser and better to tax banks 
 fairlj' and honestly, and thereby to check a further reduction of 
 bank capital, rather than by legislative oppression and injustice to 
 diminish the chief source of the revenue of the State, and thus 
 increase the taxation upon our agricultural and other business 
 interests. 
 
 In over-taxing the banking interest a serious wound is neces- 
 sarily inflicted upon all industrial pursuits, and the losses of the 
 capital whereon the State may levy taxes are multiplied in all 
 directions. 
 
 I have stated that the reduction in and depreciation of bank 
 capital in New York city alone, the past year, amount to some 
 $32,000,000. The loss of tax on that sum must necessarily be 
 made up by the State. It cannot be made up by the city, because 
 the assessed valuation of all its real and personal property, exclu- 
 sive of bank shares, the past year has been reduced $1,643,481. 
 This burden, therefore, must fall on the property in the other 
 portions of the State. 
 
 Now, Mr. Speaker, are the representatives on the floor of this 
 house mindful of this fact ? Are they quite willing to pay their 
 share of this excessive taxation, in addition to the amount they 
 have been accustomed to pay ? No, sir, this cannot be. 
 
 Banks are the nutriment whereon all kinds of business feed, 
 and from which they become vigorous and healthy. Show me 
 a country, or even a large community, where banks do not exist, 
 and I will show you a place where enterprise is stagnant. 
 Banks, by their machinery, furnish the circulating medium for 
 carrying on all branches of industry. The ordinary pursuits of 
 civilized society depend upon the monetary operations of the 
 banks to give them activity and prosperity, as the body relies 
 upon the circulation of the blood to give it vigor and health. 
 
 Banks, when properly understood, will not be regarded as the 
 favorites and instruments of capitalists and millionaires, so much 
 as the agents of the industrial classes, and the servants of those 
 enjoying credit but possessing moderate means. They not only 
 deal in money, but they provide it for all. The capital they send 
 out they first gather in small sums from many individuals, and 
 thus benefit the State by bringing the aggregate of these minor 
 contributions within the reach of the assessors, which, otherwise 
 
10 
 
 would escape taxation ; for money, whatever be the amount, in 
 the pockets of individuals, is exempt from taxation. 
 
 The banks, being institutions of discount and deposit, are to a 
 certain extent the accountants of the business community, while 
 at the same time they are needful instruments of the govern- 
 ment for conducting its great financial transactions. The defense- 
 less, necessarily resort to them for the safe investment of their 
 savings and inheritances. Of the 360 stockholders of one of the 
 national banks of Newark, New Jersey, more than 200 are 
 women. The bank of Pittsburg, Pennsylvania, has 295 female 
 shareholders. Bank shares, it is well known, are held in trust 
 for invalids and helpless children. Thfey are largely used as per- 
 manent investments by widows, orphans and executors, and also 
 by the industrial classes. Of the 208,486 shareholders in the 
 national banks throughout the country, one-half of them hold 
 stock for an amount not exceeding $1,000 each. There are 
 104,976 holding only ten shares or less ; 39,206 holding over ten 
 and not more than twenty shares ; 9,941 holding over thirty, and 
 not more than forty shares. In the State of New York the 
 average amount owned by each stockholder is about $2,000. 
 
 These figures show conclusively the high estimation in which 
 national banks are held by the mass of the people, and that they 
 are essentially popular, and not aristocratic institutions. 
 
 In Europe banking is done to a considerable extent by large 
 capitalists like the Eothschilds and the Barings. In the United 
 States it is done chiefly by gathering smaller sums into larger, 
 and these consolidations of capital enable us to engage in enter- 
 prises which otherwise could not be undertaken. 
 
 Banks enjoy no privileges which are not open to all who will 
 comply with the conditions whereon they are established, for the 
 banking system is free to all who choose to engage in it. Then 
 are they not entitled to fair and reasonable treatment from the 
 people and the law-makers of the people ? 
 
 Many banks in our chief cities — and the same is doubtless true 
 to a considerable extent in all parts of the State — cannot, under 
 the weight of the present taxation, earn legal interest on their 
 capital. During the war they made money by handling heavy 
 sums for the government, and by aiding to carry on large enter- 
 
11 
 
 prises for individuals growing out of the war. Moreover tlie 
 premium on the gold received for interest on their bonds added 
 largely to their earnings. But all this is changed. During the 
 year or two past, when the taxation of bank shares in the city 
 was only on their par value, many of the banks did not earn 
 their dividends, as I have already stated. What then can be 
 expected of them now, when the shares are taxed at their full 
 market value ? while money in large sums is readily obtained on 
 undoubted security at rates at least one-third less than the 
 amount of taxes imposed, and while good commercial paper has 
 been freely discounted for the past three years at an average irate 
 of less than five per cent. 
 
 In view of these facts, Mr. Speaker, need I add that the strug- 
 gle is one for existence. At such a crisis how is it possible for 
 banks to stand a rate of taxation running up to 5 1-10, 6, and even 
 6 6-10 per cent, whose chief vocation in even prosperous times 
 is to loan money at a rate limited by law -to seven per cent per 
 annum ? The simple question is, whether this Legislature will 
 allow the banks of the State, by means of unjust and oppressive 
 laws, to be taxed out of existence i 
 
 What, then, are some of the remedies for the evils I have de- 
 picted ? They lie partly in legislation and partly in the courts. 
 Some of the remedies must be sought in Congress and in the 
 federal courts. With these we have no concern now. We are 
 dealing only with our own State authorities. 
 
 1. There should be legislation providing that banking property 
 of whatever kind shall not be assessed at any higher rate in pro- 
 portion to its actual value, than other property in the same local- 
 ity is assessed in proportion to its actual value. 
 
 2. It should be made the duty of the local assessors, and espe- 
 cially of the State assessors, to see that this provision is carried 
 into effect, and they should be clothed with ample power to do it. 
 
 3. That in making assessments of bank property, the amount 
 of imtaxable United States securities held by the bank shall be 
 deducted from the amount of the assessment, and the tax levied 
 on the balance only. This is in accordance with the judicial 
 opinion of Mr. Chase, pronounced as Chief Justice of the 
 United States, who, when Secretary of the Treasury, was the 
 author of the National Banking Law. 
 
12 
 
 4. That banks should be allowed to deduct the legal reserve 
 which they are compelled by law to keep on hand, and which 
 they are prohibited from using. 
 
 5. That the shareholder of bank capital shall be allowed to 
 deduct, as with other personal property, from the amount of his 
 shares, the amount of his actual indebtedness. 
 
 6. That the State assessors shall devise ways and means for 
 carrying all these provisions into effect. 
 
 7. That the courts be empowered to bring assessors and assess- 
 ment rolls before them by summary process, with authority to 
 rectify inequalities in the rolls. By these just and simple expe- 
 dients our banks may be preserved. 
 
 Mr. Speaker, I cannot believe that there is any desire on the 
 part of the members of this House to destroy this great and in- 
 dispensable part of our material fabric, or by undue legislative 
 severity to drive any portion of the banking capital of New York 
 beyond the borders of the State. 
 
 The statistics of the New York Clearing House show that 
 ninety-six per cent of all the exchanges of commercial commod- 
 ities are made by the banks without the use of money of any 
 kind. They are a necessity of our times — an important part of 
 the machinery that moves the products of agriculture, that turns 
 the wheels of manufactures, and that floats the commerce of the 
 world. Nay, more, they are the vehicles of material aid for giv- 
 ing remunerative employment to the toiling masses. 
 
 I know how difficult it is to convince those who regard banks 
 merely as great reservoirs for the surplus money of the rich, that 
 the people have any special concern in the subject I have dis- 
 cussed. There is abroad a mistaken and harmful impression, or 
 prejudice, that banks are favored, powerful and selfish corpora- 
 tions, amply able to take care of themselves, and do take care of 
 themselves. 
 
 I trust there is no member of this House who is thus deluded, 
 or who does not see how the great aggregates of capital that appear 
 so strong and prosperous are made up of the contributions of the 
 frugal farmers and mechanics, of the careful workers on small 
 salaries, of widows and orphans, of professional men of small 
 
13 
 
 means, of all classes of industrious toilers. And as the money 
 that goes into these reservoirs of capital comes trickling from 
 tens of thousands of humble rivulets, so the money that goes out 
 of them is not only sent forth in large streams to fructify vast 
 areas of enterprise, but in driblets, through thousands of little 
 channels, doing good and creating good wherever it goes. 
 
 The hands and the feet might as well expect to receive the 
 benefit of a free and vigorous circulation of the blood, while the 
 heart was constricted, as for laboring men of this State to expect 
 that employment would be ample and business lively, while they 
 consented to the constriction of the very heart of the commerce 
 and industry of the State by such legislation as has already begun 
 to paralyze and has long since crippled the banks. 
 
 The people always are ready to do justice, when they know 
 what it is. They are always ready to remedy wrong when they 
 see it ; and I will not so insult the good sense of the majority of 
 the voters of the rural districts as to suppose that they cannot 
 see and understand the gross, wanton, wicked injustice that has 
 been perpetrated on the banks, when they read the plain, unan- 
 swerable evidence now presented. They will tell the legislators 
 who aid in perpetuating such suicidal folly, that they have greatly 
 underestimated the intelligence of their constituency. To that 
 constituency, and to its representatives here assembled, I appeal 
 with confidence. 
 
THIRD REPORT 
 
 Bank Taxation 
 
 REGULATIONS 
 
 AS TO THE 
 
 New Internal Revenae Law, 
 
 or MARCH 1, 1879, 
 
 EXEMPTING SAVINGS DEPOSITS FROM TAXATION. 
 
 OOERESPONDENCE WITH THE HOJST. GKEEN B. EAUM, 
 COMMISSIONER OF INTERNAL REVENUE. 
 
 Amerioan Bankers' Association, 347 Broadway. 
 A 180. 1879. 
 
AMERICAN BANKERS' ASSOCIATION, 1878-79. 
 
 President. 
 Alex. Mitchell, President Marine la Fire Ins. Bank, Milwaukee. Wis. 
 
 First Tico-President. 
 Jacob D, Vebmilye, Fretsident Merchants' National Bank, ^ew York Olty. 
 
 Vice-Presidents. 
 
 Alabama— William H. Pratt, President Bank of Mobile. JUobile. 
 
 Abkahbas. — Logan H. Hoots, President Merchants' National Bank, Little Book, 
 
 Califobnia. — Louis McLane, Presideut Nevada Bank, San Francisco. 
 
 CoLOBADo. — Jerome B. Chaffee, President First National Bank of Denver, 
 
 OoNNECTicuT. — Rowland Swift, President American National Bank, Hart/or^* 
 
 Dakota. — James C. McVay, President First JJational Bank of Yankton. 
 
 Delaware.— Edward Betts, President First National Bank, Wilmington, 
 
 DisTBiOT OF CoLtTMBiA. — Jubn A. J. Creswell, President Citizens* National Bant of Washington CUy. 
 
 FLOBiDA.-TJames M. Shoemaker, Cashier Firs'* x^atipnal Bank, Jacksonville. 
 
 Geobqxa. — William U. Patterson, Cashier Citizens'' Bank of Georgia, Atlanta. 
 
 Idaho. — James H. McCarty. President First National Bank of Boise City. 
 
 Illinois. — Chauncey B. Blair, President Merchants' National Bank, Chicago. 
 
 Indiana. — F. A. W. Davis, Cashier Indiana Banking Co. of Indianapolis. 
 
 Iowa. — F. H. Griggs, President Citizens' National Bank, Davenport. 
 
 Kansas. — John K. Mulvaue, President Topeka Bank, Topeka. 
 
 Kentucky.— John W. Proctor, Cashier Central National Bank, Danville. 
 
 LomsiANA. — A. Luria, Cashier Louisiana National Bank, IVew Orleans. 
 
 Maine. — William. E. Gould, Cashier First National Bank, Portland. 
 
 Maeyland. — Henry A. Thompson, President National Bank of Baltimore, BaMtmore, 
 
 Massachusetts. — William H. Foster, Cashier Asiatic National Bank, Salem. 
 
 Michigan. — Henry P. Baldwin, President Second National Bank, Detroit. 
 
 Minnesota. — Horace Thompson, President First National Bank, St. Paul. 
 
 Mississippi. — George M. Klein, Cashier Mississippi Valley Bank, Vicksburgh. 
 
 MissouBi. — Rufus J. Lackland, President Boatmen's Saving Bank, St. Louis. 
 
 Montana. — Samuel T. Hauser, President First National Bank of Helena. 
 
 Nevada. — George Tufly, President Carson City Savings Bank, Carson City. 
 
 Nebbaska.-— H. Kouiitze, President First National Bank of Omaha. Omaha. 
 
 New Hampshire.— John A. Spalding, Cashier First National Bank of Nashua. 
 
 New Jebsey.— Alex. H. Wallis, Presideut First National Bank of Jersey City. 
 
 New Mexico.- S. B. Elkins, President First National Bank of Santa Fe. 
 
 New Yoex. — Jacob D. Vermilye, President Merchants' National Bank, New York. 
 
 NoETH Carolina. — William E. Anderson, President Citizens' National B&nk, Saleigh, 
 
 Ohio. — Dauiel J. Fallis, President Merchants' National Bank of Cincinnati. 
 
 Oregon. — Henry W. Corbett, ex-Senator U. 8. and Vice-Pres. First Nat'l Bk., Portlamd, 
 
 PENNSYLVANIA.—Joaeph Pattersou, President Western National Bank, Philadelphia. 
 
 Rhode Island. — Edward A. Greene, President National Bank of Commerce, Providence, 
 
 South Carolina. — William C. Breese, Cashier First National Bank, Charleston. 
 
 Tennessee.— H. E. Garth, President German National Bank, Memphis. 
 
 Texas. — A. F. Hardie, President City Bank of Dallas. 
 
 Utah. — William H. Hooper, President Deseret National Bank, Salt Lake City, 
 
 Vekmont. — Henry P. Hickok, President Merchants' National Bank, Burlingtcm. 
 
 Virginia. — George M. Bain, Jr., Cashier Exchange National Bank, Norfolk, 
 
 West Virginia. — J. Nelson Vance, President Exchange Bank, Wheeling. 
 
 Wisconsin. — N..B. Van Slyke, President First National Bank, Madison. 
 
 Wyoming. — Edward Ivinson, President Wyoming National Bank, Laramie City. 
 
 Washington. — Dexter Horton, of Horton & Co., Seattle. 
 
 Executive CounciL 
 
 George S. Coe, President American Exchange National Bank of New York, Chairman. 
 James Buell, President Importers' and Traders' National Bank of New York, 
 Morton McMiohael, Jr., Cashier First National Bank of Philadelphia, Pa. 
 JJnogh Pratt, President National Farmers' and Planters' Itank of Baltimore, Md. 
 Edward Tyler, Cashier Suffolk National Bank of Boston, Mass. 
 J. W. Lockwood, Cashier National Bank of Virginia, Richmond. 
 
 ,J. D. Hayes, Vice-Presideat Merchants' and Manufacturers' National Bank, Detroit, Mich. 
 L. J. Gage, Cashier First National Bank of Chicago, 111. 
 William G. Deshler, President National Exchange Bank, Columbus, Ohio. 
 iEDWAED B. JuDSON, President First National Bank, Syracuse, N. Y. 
 ;Ex-Gov. Samuel Merrill, President Citizens National Bank, Des Moines, Iowa. 
 M. KoppEHL, President National Bank of Texas, Galveston, Texas. 
 XJHABLEB Parsons, President State Savings Association, St. Louis, Mo. 
 Ho^;l H. Camp, Cashier First National Bank, Milwaukee, Wisconsin. 
 ■William H. Rhawn, President National Bank of the Republic, Philadelphia, Pa. 
 ^scAR L. Baldwin, Cashier Mechanics' National Bank, Newark, N. J, 
 jLoGAN C. Murray, Cashier Kentucky National Bank, Louisville, Kentucky. 
 \W. H. Morrison, President First National Bank, Indianapolis, lad. 
 J. B. McMillan, Cashier Mobile Savings Bank, Mobile, Ala. 
 Augustus H. Moss, President First National Bank Sandusky, Ohio, 
 ,J. H. Millard, Cashier Omaha National Bank, Omaha, Neb. 
 
 Treasurer. 
 
 George F. Baker, President First National Bank, New York. 
 
 Secretary. 
 
 JjpiES Buell, President Importers' and Traders' National Bank, New York. 
 
 Assistant Secretary. 
 
 George Marsland, Editor, 247 Broadway, New York. 
 
3 
 
 THIRD REPORT ON BANK TAXATION. 
 
 To Banks axd Bank Oeficers. 
 
 Considerable uncertainty has prevailed as to the interpretation of the 
 law of March 1st, 1879, exempting sayings deposits, under certain condi- 
 tions, from Federal taxation. Since the passage of the law we have had an 
 active correspondence with banks and bank officers, with inquiries or appli- 
 ■€ations for information, and we have obtained from the Internal Eevenue 
 Bureau at Washington the following papers, which contain all the regula- 
 tions that the Commissioner, General Eaum is at present prepared to an- 
 -noivnee. We shall be pleased to hear further from you on the subject. 
 
 The only part of the new law which affects the banks is the 23d section, 
 ■which is as follows in the oflBcial copy sent to us : 
 
 Sec. 22. Thnt whenever and after any bank has ceased to do business by reason of in. 
 •solvency or bankruptcy, no tax shall be assessed or collected, or paid into the Treasury of 
 i;he United States, on account of such bank, which shall diminish the assets thereof necessary 
 'for the full payment of all its depositors ; and such tax shall be abated from such national banks 
 as are found by the Comptroller of tbe Currency to be insolvent; and the Commissioner of 
 Internal Revenue, when the tacts shall so appear to him, is authorized to remit so much of 
 ■said tax against insolvent State and savings banks as shall be found to affect the claims of 
 their depositors. 
 
 That in making further collections of internal revenue taxes on bank deposits, no savings 
 bank, recognized as such by the laws of its State, and having no capital stock, shall, on ac- 
 count of mercantile or business deposits heretofore received, upon which no interest has been 
 Allowed to the parties making such deposits, be denied the exemptions allowed to savings 
 •banks having no capital stock, and doing no other business than receiving deposits to be 
 loaned or invested for the sole benefit of the parties making such deposits, without profit or 
 'Compensation to the' banks, if such bank has paid the lawful tax upon the entire average 
 amount of such business or mercantile deposits. But nothing in this section shall be con- 
 strued to extend said exemptions to deposits hereafter made, or in any way to' affect the lia- 
 bility of such deposits to taxation. 
 
 That section thirty-four hundred and eight of the Revised Statutes be amended by strik- 
 ing out all after the thirtieth line, and inserting the following : 
 
 "The deposits in associations or companies known as provident institutions, savings 
 banks, savings funds, or savings institutions, doing no other business than receiving and I'Oaln- 
 ing or investing savings deposits, shall be exempt from tax on so much of such deposits as 
 they have invested in securities of the United States, and on two thousand dollars of 8avihb;s 
 deposits and nothing in excess thereof made in the name of and belonging to any one person 
 ■or firm. That all laws and parts of laws inconsistent with the provisions of this section be, 
 and the same are hereby, repealed." 
 
 The next paper we received from the Commissioner is marked 106 a, and 
 is as follows. It is the blank form for the returns of savings banks without 
 capital : 
 
Instructions for Savings Banks without Capital, 
 
 Issued by the Commissioner of Internal Revenue, in accordance with the New Law of March 1, 187&. 
 
 [Form 106 a.] 
 
 Semi- Annual Returns by Savings Banks of Deposits, &c., 
 
 Fob the Six Months ending May 31, 1879. 
 
 The semi-annual returns required under the provisions of Section 3414, U.S. Revised 
 ■Statutes, and Section 21, Act of February 8, ,1§,'ZB, will be rendered on the following pre- 
 scribed forms, viz : 
 
 First. — Those associations or companies known as provident institutions, savings banks, 
 savings funds, or savings institutions, having no capital stock, and, prior to March 1, 1879; 
 doing no other business than receiving deposits to be loaned or invested for the sole benefit of 
 the parties making such deposits, without profit or compensation to the association or com- 
 pany; also, on and after March 1, 1879, those doing no other business than receiving and loan- 
 ing or investing savings deposits^ — Form 106 a. 
 
 Second. — Those institutions of the cliaracter described in the last paragraph, except that 
 they have a capital stock ; also those which were in existence on the 18th day of June, 1 874, and 
 do business only as savings banks, and are recognized as such by the laws of their respective 
 States or by Congress, although they have a capital stock or bond for the additional security 
 of their depositors; and pay dividends thereon: Provided, That all the profits of such savings 
 banks, less the aforementioned dividends on stock, not exceeding at the rate of eight per cent. 
 per annum, are divided among the depositors, and that the capital stock is invested only in 
 the same class of securities as is used for investing the deposits, and that interest at the rate 
 of not less than four and one-half per cent, be paid in all cases to their depositors, to be made 
 good if necessary from from the capital stock — Form 106 a. 
 
 lliird. — All other returns required under the provisions of Section 8414, U. S. Revised 
 Statutes, and Section 21 of the Act of February 8, 1875 — Form 67. 
 
 The following instructions are issued for guidance in the preparation of the annexed re- 
 turns on Form 106 b: 
 
 1. The return mnst be made in duplicate, by the President or Cashier (or Secretary or 
 Treasurer, where authorized bylaw to perform the duties of Cashier), on the first day of June 
 and the first day of December. 
 
 2. The return must be sworn to before the Collector, or a Deputy Collector, of the Dis. 
 trict in which the bank is situated, or before an officer with a seal, duly authorized to ad- 
 minister oaths. 
 
 3. One ecpj of the return will be delivered to the Collector, or his Deputy, and one 
 mailed toUie Oommissioner of Internal Revenue. 
 
 4. The particulars relating to each subject of taxation must be stated for each month 
 under the headtflg for that month. 
 
 5. If there is nothing to report, the officer must indicate the fact by writing " " in the 
 proper place. 
 
 6. Where a bank or banker commences or discontinues business during the period covered by 
 the return, the date of such commencement or discontimiance must be stated in red ink across the 
 face of the return, 
 
 7. In case of discontinuance, the last return rendered will cover a taxable period ending 
 on the day on .which the business of the bank or banker Ceased. Liability continues as long 
 as any business described in Section 3407, Revised Statutes, is done. If the discontinuance 
 in the case of a bank is in consequence of its insolvency or bankruptcy, and it is claimed that 
 the collection of the lax shown to be due by the return will diminish the assets of the bank 
 
necessary for the fall payment of all its depositors, the return should be accompanied by a 
 swora statement of the President, Cashier, Receiver or Assignee, as to its assets and liabili- 
 ties, in such form or manner as will clearly show what portion of the tax, if any, could be 
 paid without diminishing the assets necessary for the full payment of the depositors. 
 
 8. In determining wliat shall be considered as taxable deposits, reference will be had to 
 Section 3408, U. S. Revised Statutes. The term "United States Securities" includes only 
 interest bearing obligations of the United States owned and held by the banlc as an invest- 
 ment. The average of monthly deposits, subject to tax, must be made up from the " daily 
 balances" of deposits by adding the daily balance of each day in the month during which 
 business is done, and dividing the aggregate by the number of days in said month during 
 ■s^-hich business is done. The "balance" of deposits of each day, which is thus first to be 
 ascertained, is the entire amount of deposits remaining to the credit of depositors at the 
 close of business for the day. But the balance" bf deposits of each day, in the case of savings 
 banks, subject to tax, is the entire amount of deposits remaining to the credit of depositors 
 at the close of business each day, less — 1st, the amount of such deposits invested in securities 
 of the United States; 2d, amounts of $2,000. or under, in the name of any one person. 
 
 9'. In estimating the taxable deposits, deductions of amounts redeposited and of amounts 
 overdrawn are not allowable. Attention is called to this matter from the fact that certain 
 banks h.ive heretofore made such deductions rendering assessments of additional tax with 
 penalty necessary. 
 
 10. In the case of savings banks, when sums amounting to over $'2,000 are deposited in 
 the name of any one person, the whole amount, including the $2,000, is taxable up to March 
 1st, 1879; but, on and after March 1, 1879, not only will deposits of ji2,0a0 and under, in the 
 name of and belonging to any one person, be exempt, but from each deposit in excess of that 
 amount, in the name of and belonging to any one person, the sum of $2,000 will be deducted 
 as exempt. 
 
 11. All banks, except such institutions (savings banks) as are entitled to return on Form 
 106 a or Form 106 b, are liable to be taxed upon the entire amount of their average deposits. 
 And those institutions which are entitled to return on Form 106 a or Form 106 b are liable 
 upon the entire amount of such deposits, less the deductions authorized by Section 3408, 
 Revised Statutes, as amended. (See instruction No. 8, above.) 
 
 EXTRACTS FROM INTERNAL: REVENUE LAWS 
 RELATING TO SAVINGS BANKS. 
 
 Definition of a Bank or Bznker. — Section 3407, U. S. Revised Statutes, provides that 
 " Every incorporated or other bank, and every person, firm, or company having a place ot 
 business where credits are opened by the deposit or collection of money or currency, subject 
 to be paid or remitted upon draft, check, or order, or where money is advanced or loaned on 
 stocks, bonds, bullion, bills of exchange, or promissory notes, or where slocks, bonds, bullion, 
 billp of exchange, or promissory notes are received for discount or for sale, shall be regarded 
 as a bank or as a banker." 
 
 Tax on Deposits. — Section 3408, Revised Statutes, provides that " There shall be levied, 
 collected, and paid * * A tax of one twenty-fourth of one per centum each month upon 
 the average amount of the deposits of money, sul»ject to payment by check or draft, or repre- 
 sented by certificates of deposit or otherwise, whether payable on demand or at some future 
 day, with any person, bank, association, company, or corporation, engaged in the business of 
 banking." 
 
 Deposits Exempt from Tax. — Section 3408, Revised Statutes, as amended by an Act ap- 
 proved March 1, 1879, provides that " Associations or companies known as provident institu- 
 tions, savings banks, savini;s funds, or savings institutions doing no other business than 
 receiving and loaning or Investing savings deposits shall be exempt from tax on so much of 
 such ' ' ' . •• 'Lies of the United States, and on TWO THOUSAND 
 
DOLLARS of savings deposits and nothing in excess thereof, made in the name of and belonging 
 to any one persiin. ' 
 
 Section 22 of the internal revenue act approved March 1, 1879, provides " That in mat" 
 ing furlhtr collections of internal revenue taxes on bank deposits, no savings bank, recognized 
 as such by the laws of Us State, and having no capital stock, shall, on acconnt of mercantile 
 or business deposits heretofore received, upon which no interest has been allowed to the par- 
 ties making such deposits, be denied the exemptions allowed to savings banks having no 
 capital 5-tock, and doing no other business than receiving deposits to be loaned or invested for 
 the sole ben^fit of the parties making such deposits, without profit or compensation to the 
 banks, if such bank has paid the lawliil tax upon the entire average amount of such business 
 or mercantile deposits; but nothing in this section shall be construed to extend said exemp- 
 tions to deposits hereafter made, or in any way to affect the hability of such deposits to 
 taxation." 
 
 Additional Tax on Notes used for Circulation, and paid out. — Section 3412, Revised 
 Statutes, provides that " Every national banting association, State bank, or State banking 
 association, shall pay a tax of ten per centum on the amount of notes of any person, or of 
 any Slate bank or State banking association, used for circulation or paid out by them." 
 
 Section 3413, Revised Statutes, provides that " Every national banking association. State 
 bank, or banker, or association, shall pay a tax of ten per centum on the amount of notes of 
 any town, city, or municipal corporation, paid out by them." 
 
 Secticn 19 of the Act of February 8, 1875, provides " That every person, firm, associa- 
 tion, other than national bank associations, and'every corporation, State bank, or State bank- 
 ing association, shall pay a tax of ten per centum on the amount of their own notes used for 
 circulation and paid out by them." 
 
 Section 20 of the same Act provides "That every such person, firm, association, corpo- 
 ration. State bank, or Stale banking association, and also every national banking association, 
 shall pay a like tax of ten per centum on the amount of notes of any person, firm, as.sociatiou 
 other than a national banking association, or of any corporation. Stale bank, or State banking 
 association, or of any town, city, or municipal corporation, used for circulation and paid out 
 by them." 
 
 Return to he made Semi-annually,- Verified bi/ Oath. — Section 3414, Revised Statutes, pro- 
 vides that '"A true and complete return of the monthly amount of * * * 
 deposits * * * as aforesaid, and of the monthly amount of notes of persons, 
 town, city, or municipal corporation, Slate banks or State banking associations, paid out as 
 aforesaid for the previous six months, shall be made and rendered in duplicate on the first 
 day of December and the first day of June, by each of such banks, associations, corporations, 
 Companies, or persons, with a declaration annexed thereto, under the oath of such person, or 
 the president or cashier of such bank, association, corporation, or company, in such form and 
 manner as may be prescribed by the Commissioner of Internal Revenue, that the same con- 
 tains a true and faithful statement of the amounts subject to tax, as aforesaid; and one copy 
 shall be transmitted to the Collector of the district in which any such bank, association, cor- 
 poration, or company is situated, or in which such person has his place of business, and one 
 copy to the Commissioner of Internal Revenue." 
 
 Section 21 of the Act of February 8, 1876, provides, as to the ten percent, tax on notes 
 used for circulation and paid out, " That the amount of such circulating notes, and of the 
 tax due thereon, shall be returned, and the tax paid at the same time, and in the same 
 manner, ar.d with like penalties for failure to return and pay the same, as provided by 
 law for the return and payment of taxes on deposits, capital, and circulation, imposed by the 
 existing provisions of internal revenue law." 
 
 Penalty for Neglect. — Section 3415, Revised Statutes, provides that, in default of the 
 returns above required, the amount of deposits, and of notes subject to a tax of ten per cent, 
 as aforesaid, shall be estimated by the Commissioner of Internal Revenue, upon the best 
 information he can obtain, " And for any refusal or neglect to make return and pajment, any 
 such bank, association, corporatiim, company or person so in default shall pay a penalty of 
 two hundred doii^rs, besides the additional penalty and forfeitures provided in other cases." 
 
 Tax to be paid Semi-annually. — Section 3409, Revised Statutes, and Section 21 of the 
 Act of February 8, 1875, provide, in effect, that the taxes above referred to shall be paid 
 semi-annually, on the first day of January and the ilrat day of July; but the same shall be 
 calculated at the rate per month as prescribed by Section 3408, so that the tax for six months 
 shall not be less than the aggl-egate would be if such taxes were collected monthly. 
 
 Section 22 of an Act entitled " An Act to amend the laws relating to internal revenue," 
 approved March 1, 1879, provides " That, whenever and after any banlj has ceased to do 
 business by reason of insolvency or bankruptcy, no tax shall be assessed or collected, or paid 
 into the Tl■ea^ury of the United States, on account of such bank, which shall diminish the 
 assets thereof necessary for the full payment of all its depositors." 
 
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 The second paper we received from the Commissioner is marked 106 Ij, 
 and is the blank form for the returns of savings banks with capital. It is 
 as foUovirs : 
 
 Instructions for Savings Banks having a Capital 
 Stock as Bond, 
 
 Issued by the Commissioner of Internal Revenue, in accordance with the New Law of March i, 1879. 
 
 {Form 106 h.) 
 
 Semi- Annual Eeturns by Savings Banks of Deposits, &o,, 
 
 Foe the Six Months' ending Mat 31, 1879. 
 
 The semi-annual returns required under the provisions of Section 3414, U. S. Revised 
 Statutes, and Section 21, Act of February 8, 1875, will be rendered on the following pre- 
 scribed forms, viz. : 
 
 Mrst. — Those associations or companys Iniown as provident institutions, savings banks, 
 savings funds, or savings institutions, having no capital stock, and, prior to March 1, 1879, 
 doing no other business than receiving deposits to be loaned or invested for the sole benefit 
 of the parties making such deposits, without profit or compensation to the association or 
 company; also, on and after March 1, 1879, those doing no other business than receiving and 
 loaning or investing savings deposits — Form 106 a. 
 
 Second. — Those institutions of the character described in the last paragraph, except that 
 they have a capital stock; also those which were in existence on the 18th day of June, 1874, 
 and do business only as savings banks, and are recognized as such by the laws of their respec- 
 tive States or by Congress, although they have a capital stock or bond for the additional 
 security of their depositors, and pay dividends thereon : Provided, That all the profits of such 
 savings banks, less the aforementioned dividends on stock, not exceeding at the rate of eight 
 per cent, per annum, are divided among the depositors, and that the capital stock is invested 
 only in the same class of securities as is used for investing the deposits, and that interest at 
 the rate of not less than four and one-half per cent, be paid in all cases to their depositors, to 
 be made good if necessary from the capital stock — Form 108 b. 
 
 Tliird. — All other returns required under the provisions of Section 3418 U. S. Revised 
 Statutes, and Section 21 of the Act of February 8, 1875 — Form 67. 
 
 The following instructions are issued for guidance in the preparation of the annexed 
 return on Form 106 b : 
 
 1. The return must be made in duplicate, by the President or Cashier (or Secretary or 
 Treasurer, where authorized by law to perform the duties of Cashier), on the first day of 
 June and the first day of December. 
 
 2. The return must be sworn to before the Collector, or a Deputy Collector, of the District 
 in which the Bank is situated, or before an officer with a seal, duly authorized to administer 
 oaths. 
 
 3. One copy of the return will be delivered ^to the Collector, or his Deputy, and one 
 mailed to the Commissioner of Internal Revenue. 
 
 4. The particulars relating to each subject of taxation must be stated for each month 
 under the heading for that month. 
 
 5. If there is nothing to report, the officer must iadicate the fact by. writing " " in the 
 proper place. 
 
 6. Where a bank or banker commences or discontinues during the period covered by the 
 return, the date of such commencement or discontinuance must be stated in red ink across the face 
 of the return. 
 
 1. In case of discontinuance, the last return rendered will cover a taxable period ending 
 
 on the day on which the business of the bank or banker ceased. Liability continues as long 
 
 as any business described in Section 3407, Revised Statutes, is done. If the discontinuance 
 
 in the case of a bank is in consequence of its insolvency or bankruptcy, and it is claimed that 
 
 [o 180.] 
 
the collection of the tax shown to be due by the return will diminish the assets of the bank 
 necessary for the full payment of all its depositors, the return should be accompanied by a 
 swora statement of tlie President, Cashier, Receiver, or Assignee, as to its assets and liabili- 
 ties, in such form or manner as will clearly show what portion of the tax, if any, could be 
 paid without diminishing the assets necessary for the full payment of the depositors. 
 
 8. Tbe items of capital and deposits must be stated separately on the appropriate lines, 
 and in no case must they be aggregated as capital and deposits. 
 
 9. In determining what shall be considered as taxable deposits, reference will be had to 
 Section 3408, tJ. S. Revised Statutes, as amended. The term " United States Securities" 
 includes only interest-bearing obligations of the United States owned and held by the bank 
 as as an investment. The average of monthly deposits, siibjeot to tax, must be made up from 
 the " daily balances " of deposits by adding the daily balances of each day in the month 
 during which business Is done, and dividing the aggregate by the number of days in each month 
 during which business is done. The " balance " of deposits of each day, which is thus first 
 to be ascertained, is the entire amount of deposits remaining to the credit of depositors at 
 the close of business for the day. But the balance of deposits of each day, in the case of 
 savings banks, subject to tax, is the entire amount of deposits remaining to the credit of 
 depositors at the close of business each day, le^^, 1st, the amount of deposits at that time held ' 
 as an investment in United States Securities ; 2d, amounts of $2,000, or under, in the name of 
 anyone person. (See instruction No. H, and the affidavit on this form, and the foot-note as 
 to liability of certain savings banks under Act of March 1, 1879.) , 
 
 10. In estimating the taxable deposits, deductions of amounts redeposited and of amounts 
 overdrawn are not allowable. Attention is called to this matter from the fact that certain 
 banks have heretofore made such deductions rendering assessments of additional tax with 
 penalty necessary. 
 
 11. In the case of savings banks, when sums amounting to over $2,000 are deposited in 
 the name of any one person, the whole amount, including the $2,000, is taxable np to March 
 1, 1879 ; but on and after March 1, 1879, not only will deposits of $2,000 and under, in the 
 name and belonging to any one person, be exempt, but from each deposit in excess of that 
 amount, in the name of and belonging to any one person, the sum of $2,000 will be deducted 
 as exempt. 
 
 12. All banks, except such institutions (savings banks) are entitled to return on Form 
 106 a or Form lOd b, are liable to be taxed upon the entire amount of their average deposits. 
 All those institutions which are entitled to return on Form 106 a or Form 106 b, are liable 
 upon the entire amount of such deposits, less the deductions authorized by Section 3408, 
 Beyised Statutes, as amended. (See instructions Nos. 9 and 11 above.) 
 
 EXTRACTS FflOM INTTERNAL REVENUE LAWS 
 RELATING TO BANKS. 
 
 Defimtion of a Bank or Bavlcer. — Section 3407, U. S. Revised Statutes, provides that 
 "Every incorporated or other bank, and every person, firm, or company having a place of 
 business where credits are opened by the deposit or collection of money or currency, subject 
 to be paid or remitled upon draft, cheek, or order, or where money is advanced or loaned on 
 stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, 
 bills of exchange, or promissory notes are received for discount or for sale, shall be regarded 
 aa a bank or as a banker. 
 
 Tax on Deposits and Capital. — Section 3408, Revised Statutes, provides that " There shall 
 be levied, collected, and paid, as hereafter provided: First. A tax of one twenty-fourth of one 
 (per centum each month upon the average amount of the deposits of money, subject to payment 
 by check or draft, or represented by certificates of deposit or otherwise, whether payable on 
 idemand or at some future day, with any person, bank, ^association, company, or corporation, 
 ^engaged in the business of banking; Second. A tax of one twenty-fourth of one per centum 
 *!ifJi month nnon the canital of anv bank, associalicm. comcanv. coruoralion. and on the cat)i- 
 
10 
 
 DepoHtu Evtmpt from Tax.—%eci\mi 5.408, Revised Statutes, as amended by Section Z2 
 of (he Act of March 1st, 1879, provides that "Associations or companies known as provident 
 institution^, savings banks, Savings funds or savings institutions, doing no other business than 
 receiving and loaning or investing savings deposits, shall be.exempt from tax on so much of 
 such deposits as they have invested in securities of the United States, and on two THOfSAwn 
 DOLLARS of savings deposits, and nothing in excess thereof, made in the name of and bclonging^ 
 to any one person." And the Act of June 18th, 1874, provides " That all deposits made in 
 institutions now" (June 18th, 1874) " existing which do business only as savings banks, and 
 are recognized as such by the laws of their respective States, or by Congress, are hereby 
 declared to be exempt from taxation the same as deposits in savings, institutions having no 
 capital although they have a capital stock or bond for the additional security of their deposr 
 itors, and pay dividends thereon ; and no taxshall be assessed upon the deposits made in such 
 institulions, or collected of them on said deposits, otherwise than as herein provided: Pro- 
 vided, That all the profits of such savings banks, less the aforementioned dividends on stock, 
 not exceeding at the rate of eight per cent, per annum, are divided among the depositors, and 
 that iSrt?^pital stock is investedonlyin the same class of securities as is used for investvngf 
 the deposits, and thaf ""iH^^SE^^^P^ate of not less than four and one-half per cent, be paid 
 in all cases to their depositors, toBe made good if necessary from the capital stock." 
 
 Additional Tax on Notes used for Circulation, and paid out. — Section S412, Revised Stat- 
 utes, provides that " Every national banking association. State bank, or State banking asso- 
 ciation, shall pay a tax of ten per centum on the amount of notes of any person, or of any 
 State bank or Stace banking association, used for circulation and paid out by them." 
 
 Sfction 3413, Revised Statutes, provides that "Every national lianking association. State 
 bank, or banker, or association, shall pay a tax of ten per centum on the amount of notes of 
 any town, city or municipal corporation, paid out by them." 
 
 Section 19 of the Act of February 8, 1878, provides "That every person, firm, associa- 
 tion, other than national bank associations, and every corporation. State bank, or State 
 banking association, shall pay a tax of ten per centum on the amount of their cwn notes used 
 for circulation and paid out by them." 
 
 Section 20 of the same Act provides "That every such person, firm, association, corpora- 
 tion, State bank, or State banking association, and also every national banking association, 
 shall pay a like tax of ten per centum on the amount of notes of any person, firm, association 
 other than a national banking association, or of any corporation. State bank, or Slate banking 
 association, or of any town, city, or municipal corporation, used for circulation and paid out; 
 by them." 
 
 Returns to be made semi-annualli/, verified by oath — Section 3414, Revised Statutes, provides 
 that "A true and complete return of the montlily amount * * of deposits, and of 
 capital, as aforesaid, and of the monthly amount of notes of persons, town, city, or municipal 
 corporation. State banks, or State banking associations paid out as aforesaid for the previous 
 six months, shall be made and rendered in duplicate on the first day of December and the first 
 day of June, by each of such banks, associations, corporations, companies, or persons, with a 
 declaration annexed thereto, under the oath of such person, or of the president or cashier of 
 such bank, association, corporation, or company, in such form and manner as may be pre- 
 scribed by the Commissioner of Internal Revenue, that the same contains a true and faithfut 
 statement of the amounts subject to tax as aforesaid; and one copy shall be transmitted to the- 
 Collector of the district in which any such bank, association, corporation, or company is situ- 
 ated, or in which such person has his place of business, and one copy to the Commissioner of 
 Internal Revenue."' 
 
 Section 21 of the Act of February 8, 1875, provides as to the ten-per-cent. tax on notes 
 used for circulation and paid out, " That the amount of such circulating notes, and of the tax 
 due thereon, shall be returned, and the tax paid at the same time, and in the same manner, 
 and with like penalties for failure to return and pay the same, as providt'd by law for the 
 return and payment of taxes on deposits, capital, and circulation, imposed by the existing 
 provisions of internal revenue law." 
 
 Penally for Neglect. — Section 8415, Revised Statutes, provides that, in default of the re- 
 turns above required, the amount of deposits. ca])ital, and of notes subject to a tax of ten per 
 cent, as afnreaaid, shall be estimated by the Commissioner of Internal Revenue, upon the 
 best information he can obtain, " And for any refusal or neglect to make return and payment, 
 any such bank, association, corporation, company, or person so in default shall pay a penalty 
 of two hundred dollars, besides the additional penalty and forfeitures provided in other 
 cases." 
 
 Tax to be paid semi-annually. — Section 3409, Revised Statutes, and Section 21 of the Act 
 of February 8, 1875, provide, in effect, that "the taxes above referred to shall be paid semi-, 
 annually, on the first day of January and the first day of July ; but the same shall be calcu- 
 lated at the rate per month as prescribed by Section 3408, so that the tax for six months shall, 
 not be less than the aggregate would be if such taxus were collected monthly." 
 
 Section 22 of an Act entitled "An Act to amend the laws relating to internal revenue," 
 approved March 1, 1879, provides "That, whenever and after any bank has ceased to da 
 business by reason of insolvency or bankruptcy, no tax shall be assessed or collected, or naid 
 into the Treasury of the United States, on accou e 
 
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 On the receipt of these papers we had seyeral interviews in Washington 
 with the Commissioner of Internal Revenue, and the following letter was 
 
 ■addressed to that officer: 
 
 The American Bankers' Association, 
 No. 247 Broadway. 
 
 New Xokk, May 6th, 1879. 
 Hon. Green B. Raum, Commhsioner of Internal Revenue, Washington, D. C. : 
 
 Dear Sir, — The subjoined questions have been put to us relative to the Internal Revenue 
 Law of 1st March, 1879, which, in section 28, confers certain privileges of exemption from 
 the bank deposit tax upon savings institutions " doing no other business than receiving and 
 loaning or investing savings deposits." 
 
 1. Have any general regulations been prepared by the Department for the guidance of 
 •the b'anbs in making their returns in addition tb' those in blank forms 106 a, 106 b ? 
 
 2. Can the privileges of exemption under the new luw be claimed by such savings banks 
 as have a capital stock which is loaned, or otherwise used in the ordinary business of the 
 ■respective institutions ? 
 
 3. Can the said privileges be claimed by such institutions as are commonly called 
 ■savings banks, though they discount commercial paper, make call loans, receive deposits 
 •subject to check at sight, and carry on generally a business like the ordinary business of 
 commercial banks ? 
 
 These questions are respectfully submitted for the consideration of the Department, and 
 we shall be much obliged by an early reply. 
 
 Yours truly, 
 (Signed) GEORGE MARSLAND, 
 
 Assistant Secretary. 
 
 A few days later we addressed a second letter to the Commissioner, in 
 order that we might obtain, as early as possible the information desired 
 by our correspondents : 
 
 The American Bankers' Association, 
 
 Nkvt York, 16tli May, 1879. 
 Hon. Green B. Radm, Commiss'oner of Internal Revenue, Washington, D. O. : 
 
 Dear Sir, — We are anxious to send to our constituents throughout the United States all the 
 information we can on the subjects referred to in our letter to you of 6th May, For obvious 
 reasons, our communication must be sent off in a few days at the latest. Anything you may 
 favor us with will be appreciated. We are anxious to save, as far as possible, to yon and 
 to our constituents, trouble of correspondence and uncertainty in regard to your new regula- 
 tions. In the mnltiplioity of your pressing avocations, we think that you may have over- 
 looked our letter of 6th inst. above referred to. We shall be pleased, to hear from you at 
 your convenience. 
 
 Yours truly, 
 
 GEORGE MARSLAND, 
 
 Assistant Secretary. 
 
 The Commissioner, in reply, sent us promptly the following full and 
 
 complete details : 
 
 Treasury Dbpaktment, 1 
 Office of Internal Eevrncte, >■ 
 Washington, May 17th, 1879. ) 
 Oeorge Marsland, Esq., 
 
 Ass't. Sec. A. B. Association, No. 247 Broadway, New York City : 
 Sir, — In your letter of 6th inst. you proposed the following questions 
 relative to the Internal Revenue Act of March 1, 1879, which, in Section 
 22, confers certain privileges of exemption from the bank deposit tas upon 
 savings institutions " doing no other business than receiving and loaning or 
 investing savings deposits," viz. : 
 
 1st. Have any regulations been prepared 
 
ance of the banks in making their returns in addition to those in blank 
 forms 106 A and 106 B ? 
 
 2d. Can the privileges of exemption under the new law be claimed by 
 such savings banks as have a capital stock which is loaned or otherwise used 
 in the ordinary business of the respective institutions ? 
 
 3d. Can the said privileges be claimed by such institutions as are com- 
 monly called savings banks, though they discount commercial paper, make- 
 call loans, receive deposits subject to check at sight, and carry on, generally, 
 a business like the ordinary business of commercial banks ? 
 
 1st. In reply to your first question, you are informed that, as to savings 
 banks, no general instructions other than those on forms 106A and 106B 
 have been issued which have construed Section 23 of the Act of March 1st,. 
 1879. 
 
 2d. In reply to your second question, you are informed that, in the 
 opinion of this oflBce, the privileges of exemption under Section 3408, K. S.,. 
 as amended by said Section 22, cannot be extended to any banks doing any 
 other banking business than receiving and loaning or investing savings- 
 deposits, and that, therefore, such privileges cannot be enjoyed by a savings 
 bank having a capital stock when such capital stock is loaned or otherwise 
 used in the ordinary business of the bank. 
 
 3d. That inasmuch as the law requires that the bank entitled to exemp- 
 tion shall not only be known as a provident institution, but also requires 
 that it shall do no other business than receiving and loaning or investing 
 savings deposits, such institutions as receive commercial deposits or deposits 
 subject to check at sight, discount commercial paper, make call loans, or 
 carry on, generally, a business like the ordinary business of commercial 
 banks, are not entitled to the privileges of exemption named therein. 
 
 Very respectfully, 
 (Signed) Grebit B. Eaum, 
 
 Commissioner. 
 
 These details are so important that we wrote to the Commissioner to ask 
 whether we were authorized to print them as part of the oflScial regulations- 
 of the Treasury Department relative to tax returns. The following is the 
 
 reply : 
 
 Treasury Depaetment, 
 Office of Internal Retenue, 
 Washington, May 20th, 1 879. 
 George Maksland, Esq., 
 
 Ais't. Seerelary of the American Bankers' Association, New York : 
 Sir, — In reply to you letter of 16th inst., I have to say that the desired permission to print 
 for circulation my reply to your inquiries of the 6th inst., as to exemptions from taxation 
 under Internal Revenue Act of March 1st, 1879, is granted. 
 
 Tery respectfully, 
 (Signed) Green B. Raum, 
 
 Commissioner. 
 
 A full report on the subject embraced in this paper will be prepared for 
 the Annual Convention. And, meanwhile, any further information that 
 we mav receive on the tax reneal movement we will endeavor to communi- 
 
 SUE, >■ 
 
 9. ) 
 
14 
 
 CONSTITUTION 
 
 or THE 
 
 AMERICAN BANKERS' ASSOCIATION. 
 
 DECLARATION. 
 
 In ordoTto promote the general welfare and usefulness of banks and banking iastitutions, 
 and to secure uniformity of action, together with the practical benefits to be derived from 
 ■ personal acquaintance, and from the discussion of subjects of importance to the banking and 
 commercial interests of the country ; and especially in order to secure the proper considerii- 
 tion of questions regarding the financial and commercial usages, customs, and laws wliii-h 
 effect the banking interests of the entire country, we have to submit the following Constitu- 
 tion and liy-Laws for " The American Bankers' ^Association." 
 
 CONSTITUTION. 
 
 ARTICLE I. 
 
 Section 1. This 'Association shall be called " The Amekicas Baneeks' Association." 
 
 ARTICLE II. 
 
 Sertion 1. Any National or State bank, or trust company, or savings bank, may become 
 a member of this Association, and also any banker upon a majority vote, upon payment of 
 ten dollars (f 10), and may send one delegate to the annual meetings of the Associuiion ;~and 
 any member may be expelled from the Association upon a vote of iwo-thirds of those present 
 at any regular meeting. 
 
 Section 1. Delegates shall be an ofBcer, or director, or trustee' of the institutions they 
 represent, or a member of a banking firm, cir an individual doing business as a bank. 
 
 Section 3. Delegates shall vote in person ; no voting by proxy shall be allowed. 
 
 Section i. All votes sliall be vivd voce, unless otherwise ordered ; ^ny delegate may 
 demand a division of the house. 
 
 ARTICLE III. 
 
 Section 1. The administration, cf the affairs of this Association shall be vested in the 
 President of this Association and one Vice-President for each Slate and Territory which may 
 be represented in this Association, and in an Executive Council, composed of twenty-one 
 of the members of this Association, who shall be elected at the annual meetings and who 
 shall serve until their successors are chosen or appointed. 
 
 Section 2. The Vice-Presidents shall have the supervision of the business of the Asso- 
 ciation in the States and Territories where they reside, and may call meetings when they 
 may deem tlie same necessary; and in case of absence or disability of the President of the 
 Association to preside, they may designate one of their number to act as President ^ro tern.; 
 and said President pro tern, shall, in case of death or other disability of the President, be 
 invested with all the power of President until a successor shall be duly elected or npjDointed. 
 
 Section 3. The Executive Council of twenty-one shall take charge of the general business 
 of the Association, receive communications, arrange for holding meetings, procure and ar- 
 range subjects for discussion in the order in which they may come before the Convention, 
 provide for speakers, and carry out the resolutions passed. They shall also act as a financial 
 committee for raising and disbursing moneys. The attendance of five members of the 
 Executive Council shall, constitute a quorum ior the transaction of business. 
 
 Section 4. The Executive Council of twenty-one may appoint and discharge the Secretary 
 and Treasurer, or other employees of the Association at their discretion. 
 
 Section 5. Special meetings of the Executive Council may be called by request of three 
 of its own members, giving two weeks' notice to the Secretary desiring him to call such 
 special meeting. The Council shall have power to fill vacancies that may occur in their own 
 body. 
 
 Section 6. The Executive Council shall provide — 1st, for keeping the records of the pro- 
 ceedings of their own meetings, as well as that of the Association's annual or special meet 
 ings; 2d, they shall submit to each annual meeting a report, covering their own ofBcial acts 
 as well as a statement of any new or unfinished business requiring attention ; 3d, they shall 
 make full statements of the financial condition of the Association; and, 4th, submit an esti- 
 mate of the amount required to carry on the affairs of the Association according to their 
 judgment of the business to be done, and recommend means for raising money to carry out 
 such plans as mav be resolved upon by the Association. ^^ 
 
 Q Bi'ction 1. The Secretary shall make and have charge of the records of the Association, 
 as well as those of the Council and of the correapondence of the Executive Council. Such 
 records shall be the property of this Association, and be held subject at all times to the ordar 
 of the Executive Council. 
 
Section 8. The Treasurer ehall receive and account for all moneys belonging to the Abbo- 
 ciatidn, and (ollect assessments, but shall pay out moneys only upon vouchers counterBigned 
 and approved by the President of the Association, or by the Secretary appointed by the 
 Executive CouDcil. 
 
 ARTIGLK IV. 
 
 S'ction 1. Annual meetings of the Association shall be held at such timea and places ae 
 s'l.'ill be determined by the Executive Council. Special meetings may be called by the 
 Council, if in their opinion circumstances require them, giving two weeks' notice of the time 
 Jiiid place of meeting, together witli the subject matter of business to come before such special 
 ini'cting. The Executive Council shall meet to arrange the order of business on the first day 
 |ircceding any general meeting of the Association. 
 
 ARTICLE V. 
 
 Sectiov 1. The expenses of the Executive Council of the Association, in carrying out the 
 business to be done by them, shall be provided for by assessment upon the members of the 
 Association ; provided, hwwever, that no assessment above ten dollars be made in any current 
 year upon each member of the Association ; and the Executive Council shall have no authority 
 to incur or contiact on behalf of this Association any liability whatever beyond the ten dol- 
 lars hereby authorized, and only that for the purposes hereby designated. 
 
 AKTIOLB VI. 
 
 Section 1. Resolutions or subjects for discussion (except those referring to points of order 
 or matters of courtesy) must be submitted to the Executive Council in vfriting at least tAirty 
 days before any general meeting of the Association, but any person desiring to submit any 
 resolulion or business in open convention can do so upon a two-thirds vote of the delegates 
 present, referring the resolution to the Executive Council or Committee on Resolutions to 
 report upon immediately. 
 
 ARTICLE VII. 
 
 Any one failing to pay within three months the assessment made for carrying on the 
 business of the Association shall be considered as having withdrawn from membership, but 
 may be reinstated upon application to the Treasurer and paying the assessment in arrears, 
 with consent of the President. 
 
 Article viii. 
 
 This Constitution may be altered or amended at any. annual meeting by a vote of two- 
 thirds of the members present, notice of the proposed amendment having been first submitted 
 to the Secretary at least thirty days before the annual meeting, to be placed by him before 
 the Executive Council, that they may arrange for bringing it before the Convention under 
 the regular order of business. 
 
 BY-LAWS 
 
 OF THE AMEKICAS BASKERS' ASSOCIATION. 
 
 1st. The following shall be the order of business at the annual or special general meet- 
 ings of the Association ; 
 
 1. Call of the Roll. 
 
 2. Reading of the reports of the Executive Council and the Treasurer. 
 8. The election of officers. 
 
 The consideration of subjects submitted in the report of the Executive Council, in the 
 order in which they are submitted, unless changed by a suspension of the rules by a two- 
 thirds vote. 
 
 2d, Any resolution or new business not upon the official programme or recommended by 
 the Executive Council (excepting those relating to points of order or matters of courtesy) 
 shall be referred to the Executive Council or Committee on Resolutions to report upon to the 
 Convention. 
 
 .Sd. No member shall speak more than ten minutes upon one question without consent of 
 the Convention. 
 
 4th. The rules of the House of Representatives of the United States shall govern the 
 deliberations of the Association, so far as they may be applicable and in harmony with the 
 Constitution and By-Laws. 
 
 6th. The annual assessment made by the Association shall be considered due at the 
 beginning of the year, which year shall commence with the regular annual meeting, it being 
 understood that absent members from such annual meetings shall not forfeit their membership 
 nor the right to become members, provided they comply with the Constitution and By-Laws, 
 and remit the amount of the assessment to the Treasurer within three months after such 
 annual meeting. 
 \ 6th. These By-Laws may be amended at any annual meeting, upon a vote of two-thirda 
 
^npmt fymi of ih %mM ^UU^. 
 
 Q. OLAEEFOE OHDEOHILL and otters, 
 Plaintiffs in Ebeoe, 
 
 ' >No. 286. 
 THE CITY OF UTIGA, 
 
 Dbfbndant in Ebeoe. 
 
 _^ •_ 
 
 AEGUMENT OF WW. M. EVARTS. 
 
 Mat it please the Court : ' ' 
 
 I cannot think that the learned counsel^ on the one side or 
 the other; who have addressed the Court in this discussion, 
 which it is permitted to me now to close, have at all over-rated 
 the importance of the suhject presented to your Honors. As a 
 pecuniary interest, it is probably as large as ever came under 
 your cognizance ; lakgEe than, in the course Of jueispru- 
 
 DENOE, HAS EVER BEEN SUBMITTED TO ANY OTHER COURT ; for, 
 
 if looked at only in the measure of an annual tax to be laid by 
 the various States iipon' the whole mass of the property of. these 
 national banks, it comes to an enormous value ; and, regarded 
 as a rule, not for a year3 but for the continual course of taxa- 
 tion, the proportions swell j;o. still larger dimensions. So, too, 
 in the extent of the application of your rule to be laid down in 
 this case, which, though eoming ftom the State of New York, 
 yet, since that State is under the Constitution and under the 
 la/ws of the United .States, must be substantially of the same 
 character and have the same effects in all the States of the 
 1 
 
Dnion, the magnitude of the interests is again presented as most 
 serious. 
 
 , But while I thus agree in the gravity of the issues from the 
 pecuniary interests at stake, I must think that some of the 
 topics, insisted upon by our learned opponents as great elements 
 in the importance of this question, were misconceived. The 
 question whether such a great mass of property should he with- 
 drawn from the funds accessible to the taxation of the States, 
 which presented itself to the learned court that decided this 
 cause in the iState of New York, so that, somewhat beyond the 
 bounds of ordinary judicial decorum, the learned Judge spoke of 
 of it as " frightful," and which, in the arguments of my learned 
 opponents, has been brought to your notice in various tones of 
 alarm and lament, is really not a topic for insisting upon the 
 importance of this question. Whatever there is to disturb the 
 equanimity of a court in that siibject has already been disposed 
 of by your Honors in the previous decisions ; which have with- 
 drawn absolutely, and under any form of property or ownership, 
 the securities of the Federal Grovernment known as the public 
 debt. This matter of the three or four hundred millions of bank 
 stock, which we are considering, is not the cause or the, occasion 
 of the subtraction of these funds from State taxation. . It is as 
 investments in the securities o:^ the Federal Grovernment, that 
 these stocks are presented to your Honors as entitled to the im- 
 munity which belongs, to thes6 securities ; and it ia under deci- 
 sions of this Court, which have made $3,000,000,000 of Federal 
 debt not subject to State taxation, that this derangement of the 
 funds, of the property, which, on one side, or the other, is to bear 
 the burdens of our double government, is effected. 
 
 For the like reason, there is as little foundation, on an accu- 
 rate attention to the subject, for the suggestion ,9f the impro- 
 priety of the want of uniformity which would be produced 
 among cijiizens and in respect to property, .if these investments, 
 these bank capitals, these bank operations, should be vrithdrawn 
 from the whole support of the State Governments under which 
 they are protected in common with the whole mass of property 
 of the same description^ that is, the mass of personal property. 
 
and for tlie statement that this gives great magnitude to the in- 
 terests presented to you ; as if it were a question whether this 
 mass of property, now before you, should escape taxation or 
 not. That i^ not the question. It has been suggested to you 
 abeady by my learned associates that, under the taxation of the 
 National G-overnment, as prescribed in the frame and as a part 
 of the biU creating these banks, they are made to pay, in the 
 support of our common burdens, a very large measure of taxa- 
 tion, amounting from two and a half to three per cent, in the 
 average upon their whole capital, and that they thus pay from 
 ten to Jwelve millions of dollars annually towards the support 
 of the Federal G-overnment. 
 
 At a time when practically we paid no taxes to the Federal 
 Government, and the States had, undisturbed, the whole area 
 of the real and personal property of the citizens of the United 
 States by which to support their own institutions, a subtraction 
 from the State Governments of a fnnd of taxation was equiva- 
 lent to a withdrawal of it from contribution to the public bur- 
 dens in any direct form. But now that we bear the burdens 
 of taxation in our property in support of both the Federal 
 Government and our State Governments, it is apparent that 
 the suggestion, that the withdrawal of property from the legit- 
 imate exercise of the power of taxation by the States is relieving 
 it from the payment of taxes, no longer has support in the fact. 
 It becomes, therefore, as respects the burdens which the citizens 
 of the United States and the citizens of the States, both being 
 the same persons, are to bear, a question merely of the prudence, 
 wisdom, and policy of the adjustment of taxes ; for just so far 
 as these banks contribute to Federal taxation, just so f£|,r they 
 . relieve all the other property of the citizens of the different 
 States from their contributions to the burden of Federal taxa- 
 tion. If it be true that they no longer are computed in the 
 mass of property that shares the burdens of State taxation, 
 nevertheless the citizens of the States, in their other property, 
 feel the contribution of these national banks to the needs of the 
 National Government, just as distinctly and just as directly as 
 they would, if they contributed to the support of the State Gov- 
 ernments. 
 
We are, therefore, relieved from both, of these elements of 
 difficulty and these disturbances in respect to the judgment of 
 the court, so loudly insisted upon. If the present rate of tax- 
 ation does not exact from thie kind of property its full share of 
 the burdens which it should be called upon to bear, then the 
 Federal G-overnment, the common master of all of these insti-. 
 tutions in all portions of the country, acting in the general in- 
 terest, but regarding also the private interest of the citizens of 
 all the States,, may increase the taxation ; so that, instead of 
 contributing ten or twelve millions of dollars as they now do, 
 by .enlarged rates they may be made to contribute twenty or 
 twenty-four millions of dollars. ■ That is wholly a question of 
 policy and wisdom in the taxing power. 
 
 Your Honors will thus see that all these considerations really 
 do not touch the burdens of the citizens, but only the question 
 what, in the complex system of flur government, which now is 
 required, both in its general control and in its separate State 
 jurisdiction, to demand taxes from the citizens, is the proper 
 and beneficial adjustment for us, in our capacity of citizens of 
 the State and citizens of the United States. * 
 
 Nor am I at all disposed to dissemble ot disguise the diffi- 
 culties of the discussion. If they seem to me less formidable 
 than the zeal and ability of my learned opponents, in the in- 
 terest of their clients, have represented in urging them upon the 
 ^Oourt, yet the respect due to the unanimous, adverse opinion of 
 the highest court of the State of New York, expressed in the 
 judgment of one of the most distinguished Judges that the State 
 has produced, who now, by voluntary retirement, has closed one 
 of the most honorable judicial careers that our history can show ; 
 the great didurh (as it is called) of Chief Justice Marshall, and- 
 the carefully weighed opinion of Mr. Webster, speaking always 
 as one having authority, would admonish me of the rashness of 
 my judgment. After all the difficulties, I apprehend that a 
 thorough examination of the case will show, that, though the 
 question comes here under the appellate jurisdiction of this 
 Court, under the. 25th section of the Judiciary Act, and though 
 the subjects of discussion here, and the decision appealed from 
 
5 
 
 and to be reviewed here, do touch the construction of the Con- 
 stitution and the laws of the United States, and the great con- 
 stitutional conflict between the powers of the Greneral Govern- 
 ment on the one hand, and the rights and jurisdiction of the 
 States on the other hand, yet aU these . questions, belonging to 
 that high region of jurisprudence, have been really disposed 
 of by the previous judgments of this Court ; and the limit of 
 the discussion, which, on the presentation of the case and your 
 Honors' scrutiny of it, will prove to be needed f(m its determina- 
 tion, will be found to fall quite short of this elevated fegion, and 
 really will turn upon questions of corporation law, as to what the 
 relations of shareholders are, in the just idea of the constitution 
 of a corporation, to the property and franchise, which, as an 
 aggregate, are undoubtedly represented by the corporation itself. 
 Since, then, it turns upon this question, what the relations of 
 shareholders are to the property and franchise of a corporation, 
 I shall consider whether or not the previous decisions of this 
 Court have disposed of the question already, by its ^adjudica- 
 tions on the capital and the franchises of corporations ; or 
 whether, not having thus been absolutely covered by the previ- 
 ous decisions, the relation of shareholders to a corporation is 
 such as to require their inelusion within the principles that this 
 Court has already laid down, in regard to the aggregate property 
 and franchise ; or, if this is not the case, whether a discrimi- 
 nation can be made, which shall find a place for it as new and 
 separate property in the hands of shareholders, to be unaffected 
 by the rules established in reference to the aggregate property. 
 
 Now, if the Court please, I have 'but a word to say in regard 
 to the particular circumstances of the case in which I especially 
 speak ; for the question to be discussed in it is the same as in 
 the other cases, and is substantially the same question, I im- 
 agine, that must come up from the different States, whenever 
 attempts shall be made to exercise the right of State taxation 
 on this subject matter. 
 
 This Bank of Utica was constituted as a National Bank 
 under the Act of 1863, and its capital was wholly invested in 
 public securities of the United States that were issued before 
 
the 1st day of June, 1864, — a date only important, since it dis- 
 tinguislies tho^e securities as being previous to tlie Banking 
 Act of 1864 ; in whicli latter Banking Act, for the first time, 
 appears the clause cited from the 41st section, which gives a li- 
 cense or permission for the taxation of shares. Whatever, then, 
 there may be in any differences in this respect, ss has been' 
 hinted at in the judgment of the Court below, this Bank occu- 
 pies the most favorable position ; for its securities were taken by 
 it, as investments, while there was the open and general 'pledge 
 of the public faith, that they, protected by the National arm, 
 were wholly free from State taxation. And the bank, organizing 
 and acquiring these securities under such circumstances, if there 
 be much for judicial consideration in what has been adverted to 
 more or less in the argument, (to wit, the question of a breach 
 of faith in the Grovemment, in allowing taxation by permission 
 of section 41 of the Act of 1864,) is within the most favorable 
 consideration in that respect. But, I confess, I cannot see that 
 the correction of the alleged breach of faith on the part of the 
 Government, if it has been shown in any degree — I do not 
 think it has been — could be made by a judicial determination 
 of this Court. Undoubtedly we do press it, and properly, as an 
 argument of much force, tending to the proper construction of 
 section 41 and the license there given, that, in the view contend- 
 ed for by our learned opponents, a breach of faith might be 
 involved ; whereas, in the construction which we suppose it 
 properly bears, no such imputation is admissible. 
 
 If the Court please, this plaintiff in error, owning fifty 
 shares in this bank, of the 'par value of $5,000, has been rated 
 thereon as a tax-payer under the laws of the State of New York ; 
 and is compelled thus far, by the judgment of the Courts of our 
 State, and, unless your Honors shall reverse their decision, will 
 be finally compelled to pay a tax, at whatever the rate of taxa- 
 tion is in the local community where this bank is placed, upon 
 the par value of those shares. All the other stockholders are 
 exposed to the same application of law ; and, under this decision, 
 the united stockholders are to pay a rate of taxation under 
 the jurisdiction of the State, upon what is equivalent, in their 
 
shares taken together, to the capital of the bant. In other 
 words, $200,000 being the capital of this bank, — a National 
 Bank — and being wholly invested in Federal securities, that 
 capital is, by the form of assessing and collecting a due propor- 
 tion of the tax on it frona each shareholder, made to produce to 
 the State of New York precisely the same amount of taxation, as 
 if the same rate had been laid upon the capital of the bank ; 
 and it is made to affect the actual beneficial value of the shares, 
 and the receipts and profits of the shareholders, precisely in the 
 same manner, and to the same effect and measure, as if the tax 
 had been laid upon the aggregate capital. T think, in the whole 
 course of this discussion, your Honors have not heard from our 
 learned opponents any contradiction of that proposition : that 
 this form and manner of taxation produces, as its fruit to the 
 State, precisely the same amount, as the same rate of taxation 
 upon the aggregate capital in'the hands of the bank ; and that 
 it produces the same effect in diminishing the value of the cap- 
 ital stock, by diminishing the profits of that capital stock, laid 
 in the form now proposed, that it would produce, if it were laid 
 upon the aggregate capital, and upon the corporation as the tax- 
 able person. 
 
 These matters of fact being thus clearly ascertained, free 
 from dispute, we need next to look accurately and attentively 
 to what are the premises concerning the taxability of the cor- 
 porations themselves, having their capital in such investments ; 
 from which we are to start upon the only inquiry left for discus- 
 sion in this Court, whether the stock, as an aggregate, and the 
 franchise, as a part of the value in the hands of the corporation, 
 and the corporation, as a person subject to taxation, being ex- 
 empt from this tax, this rate, this payment to the State of New 
 York, the shareholders are subject to all from which . the corpo- 
 ration itself is free. 
 
 I think that, on the second page of my brief, I have accu- 
 rately stated the result of the determinations of this Court, both 
 on this topic, as it relates to the investment in United States 
 securities, and to the corporation, as a national institution within 
 the protection of the Constitution, operating as an agency and 
 
means employed by tire Government ; and I say that jt is set- 
 tled by. adjudged cases in this Court, that no tax can be imposed, 
 by the }a.yfs or authority of a State^ upon the securities in which 
 the capital of this bank was invested, noff upon any person or 
 corporation, standing in the relation of owner of such securities, 
 nor by any measure of his or its property as including such secu- 
 rities. Th^, cases are familiar to your Hronors, ^nd I will only 
 read a word or two from the former bank'-tax case in the Qauji 
 of Appeals, to sbow that the principle ,is as thoroughly reccg- 
 nized by that .Court — obeying the decision of : this Court, which 
 had .corrected its former errors — as it is by this Court itself. In 
 that case, which is not reported "as yet in any volume of our re- 
 ports,; but is the case which came up to this Court, and is, re- 
 ported here in 2 Wallace, Chief Judge Denio said : 
 
 " It must be coijsidered a settled point, ttft' ^^ power of taxatioiL.r6siding 
 in the State Governments does not embrace, as a possible subject, the s'ecuri; 
 ties of the publie debt of the United States." ' ' 
 
 Upon that clear recognition that the subject, the res, the in- 
 vestment, was absolutely protected against State taxation, his 
 Honor, giving the opinion of the Court of Appeals in that case, 
 went on to hold that, whenever the tax was laid, not upon the 
 capital of the bank at ^its value to be ascertained by assessors, 
 but upon the nominal or original capital of the bank, it was 
 not a tax upon the Federal securities, although the whole of that 
 capital was invested in those securities. That error this Court 
 corrected by the decision in 2 Wallace ; and now, more than 
 ever, the Court of Appeals admits this principle, and submits 
 to that application of the principle, -but has found a means, in 
 a decision and opinion in these cases, to say that, although Fed->> 
 eral securities are not a possible subject of State taxation, yet 
 that Federal securities, under the form of ownership which their 
 relation to the shareholders of a national bank exhibits, can be 
 made to pay precisely the same tax that they would, if they 
 were a possible or real subject of State taxation. 
 
 The other immunity which we claim here, and concerning 
 which it is important to know to what the determination, up to 
 
this point, of ■ this Court has brought us, is the immunity of 
 these banks in capital, in operations, and in franchises, from 
 State taxation, not because of any form of investment of their 
 property in Federal securities, but, in the absence of that in- 
 vestment, because of their mere character of Federal institu- 
 tions. What, from this point of view, is their situation /in 
 regard to State taxation ? Upon that point I apprehend this is 
 a just postulate, not to be contested and not really contested by 
 the arguments of the learned counsel : — that it is settled by 
 adjudged cases in this Court, that this Bank, in its corporate, 
 capacity, is hot subject to State taxation by the laws or uur 
 der the authority of a State, upon its franchise, operations, or 
 capital, (aside from the question of investments in Federal secu- 
 rities,) but that it is v\rholly exempt from such taxation, by 
 reason of its relation to the Federal Grovernment, as an agency 
 or instrument of that Grovernment in the exercise of its constitu- 
 tional power. Without adveirting of recalling your Honors' at- 
 tention to the cases in. your own Court, insisted upon so fre- 
 quently and so familiar to you, I will, upon this point, only call 
 your attention to the complete recognition of this proposition 
 by the Court of Appeals. In the first Bank tax case — the one 
 which was decided on appeal by this Court in 2 Black — a case 
 reported in 23 New York Reports, Judge Denio gives this as 
 the clear judgment of that Court upon the proposition : 
 
 " But when it had onoe been settled that the bank was a constitutional 
 agency and instrument for the moneyed operations of the Government, it 
 followed necessarily, as it seems to us, that it could no more be taxed by 
 State authority, than the Treasury Department, the Mint, the Post Ofifioe, or 
 the Army or Navy ; and it was upon this ground that the Maryland Statute 
 was held to be unconstitutional." 
 
 And his Honors Judge Comstock, in giving a dissenting 
 opinion in that case, in which he obtained the concurrence of 
 this learned Court on the appeal to it, made these, observations : 
 
 "As to all subjects over which the taxing power of a State extends, 
 there are no limitations dependent on the power of its exercise. If we admit 
 the right to tax this credit in aijy mode and to any extent, we must admit it 
 in- a diiferent mode and to a greater extent. There is no limit to the prin.- 
 
10 
 
 ciple. The acknowledgment of the right in any degree involves a conflict 
 between the Federal Union and the parts of which it is composed ; but, as 
 the Union is supreme in the exercise of all its powers, including the vital 
 one of borrowing money, no authority can be constitutionally opposed to it, 
 which confines the exercise of those powers. This is a principle which 
 requires the absolute exemption of the National credit from State taxation.'' 
 
 Has the last proposition that I have mentioned been qaes- 
 tioned, that this Bank, in its capital, its operations and its JF:fan- 
 chise, was wholly exempt from State taxation ? Has that been 
 questioned in the decision of the Court below, or in the argu- 
 ^ments here ? I must say that, 'in the decision of the Court 
 below, I do not think it is questioned, although there are some 
 observations that go to support the point, that the decision with 
 regaijji to the United States Bank stood upon surer grounds, in 
 respect to the character of that institution, than the argument 
 about these National Banks, in respect to their character, could 
 stand ; but, nevertheless, I understand that learned Court, to 
 place its decision wholly upon the proposition that this tax, not 
 being constitutional if laid upon the capital of the Bank and 
 its franchise in bulk, by reason of an exemption of both as an 
 accredited agent of- the Federal Government within its consti- 
 tutional power, can, nevertheless, be assessed upon the share- 
 holders. But one of the learned counsel who last addressed the 
 Court inj favor of the defendants, Judge Parker, in his brief, 
 and orally, has somewhat questioned the fact that these Banks, 
 in their aggregate and corporate interests, are exempt from 
 State taxation. He has presented an analysis of the power of 
 the United States Bank, as we call it, and the powers and 
 duties of these banks, and has intimated that the discrimina- 
 tion is wholly unfavorable to the position of these banks ; yet, 
 if your Honors please, it can hardly come to this, that he here 
 contends that these banks are not within the exemption which 
 the principles laid down by this Court extended to the United 
 States Bank ; for to say that would be to say that these Na- 
 tional Banks were not constitutional creations ; because, as 
 Chief Justice Marshall said in the discussions in the case of 
 McOulloch vs. The State of Maryland, if the bank is not one of 
 the means and agencies of the Federal Government, which, by 
 
11 
 
 mere force of that relation, comes to be protected from State 
 taxation, then it has no lawful existence ; " for who," says he, 
 "can point out the right of the Government of the United 
 States to establish a banking corporation, tmless it be as a 
 means, an agency, and performing some of the functions of 
 Government attributed to the National authority by the Fed- 
 eral Constitution ?" * 
 
 So I think we may start with this proposition ; that these 
 banks, both in respect to the investment and in respect to their 
 corporate immunities, are absolutely protected against this very 
 rating and assessment and taxation which has been enforced 
 against the shareholders. The law of the State of New York, 
 under which, during the last year, these taxes have been laid, 
 and under which it is proposed to lay them in the future, to 
 wit, the Enabling Act, as it is called, which has been placed 
 before your Honors, assumes to levy taxes " on all the shares " 
 of the banks in the assessment of taxes " in the town or ward 
 where such banking association is located and not elsewhere, 
 whether the holder thereof reside in such town or ward or not ;" 
 and then it provides that, for the purpose of collecting such 
 taxes, it shall be the duty of every banking association, organ- 
 ized under the Act of Congress, " to retain so much of any 
 dividend or dividends, belonging to any shareholders, as shall be 
 necessary to pay any taxes hereby authorized." Under that 
 law, transferring taxation from the body corporate and its ag- 
 gregate investments to the owners of proportionate shares of its 
 corporate franchise, of its corporate investment, it has been held 
 by the Court of Appeals that, notwithstanding the principles 
 which exempt the bank and which the Court of Appeals itself 
 recognizes, the shareholders can be made to pay what comes to 
 the same in regard to the State, and comes to the same in re- 
 gard to their own pockets. This is supported by that Court 
 upon one of two grounds or perhaps upon both : first, by the 
 mere authority of the. State, without asking leave or allowance 
 from this Government; and, secondly, by the authority commu- 
 nicated or permitted by the proviso of the 41st section of the 
 National Currency Act of June 3d, 1864. 
 
12 
 
 Ib it not, then, entirely true that there is but one qtfestion 
 for discussion here, having, if you please, a twofold application, 
 one, to the question of investment in Federal securities, and one 
 to the corporate aggregate known. as the National Bank ; and 
 that question is, whether what cannot be done to the bank as a 
 whole, can be done, from the peculiar form of organization, to 
 the property held U^ the shareholders ; so that what the State 
 loses by the immunity that this Court has thrown over the in- 
 vestment in the aggregate, is recovered by the State, with the 
 full power of taxation over the same res, in a different form of 
 approach and attack ; that what this Court has decided is 
 nedlBsary, is essential, is vital to the public credit, in respect of 
 thelnjrestment, that what this Court has decided is necessary, 
 is eislntial, is vital to the corporate existence, for the public 
 purposes of the Grovernment of the United States, and so must 
 be protected by the power of interpreting the Constitution 
 lodged in this Court and the authority of its mandate to be 
 executed by the power of the nation, is, nevertheless, to be 
 wrested from Federal control to the destruction and ruin of 
 institutions, created to be preserved ; to the injury and burden 
 of the public credit, intended to be advanced ; simply by the 
 form of saying to the tax rater and the tax collector, " Lay the 
 tax, that you would have exacted from the corporation, dis- 
 tributively upon the shareholders, and we escape from the Fed- 
 eral Constitution and the Supreme Court of the United States, 
 by the form and manner of assessing and collecting ; since there 
 is, in the practice of the States, a well-known habit of levying 
 taxes indifferently upon the aggregate or upon the shareholders, 
 as convenience dictates ; always recognizing that, whichever 
 form they adopt, they tax the same thing, acquire their returns 
 from the same persons, and receive into the Treasury the same 
 results. Certainly there never was such a discomfiture, of fact 
 and substance, of constitutional power, and of the firm, strong 
 reasoning of this Court, as would result, if this ingenious com- 
 bination between the Legislature erf a State and its officers for 
 the assessment and collection of taxes -can effect this result, and 
 destroy what this Court has undertaken to -preserve. 
 
13 
 
 I will first consider, as most briefly and satisfactorily to be 
 attended to, the question whetber the State, in the taxation it 
 insists upon against these shareholders, derives any authority 
 from the 41st section of the Act of Congress of June 3, 1864, 
 and I say unquestionably that it does not ; and without any dis- 
 cussion of whether that section be, as Mr. Webster imagined 
 it would not be, unconstitutional, and without examining the 
 particujar construction of that section, whether it be such as to 
 allow these stocks, thus invested in Federal securities, to be 
 taxed or not, irrespective of that, but supposing that the sec- 
 tion communicates a license according to its terms, and that, if 
 its terms were observed, this tax would be protected and allow- 
 able under it, I say that there is no credit nor power given to the 
 State in this taxation from that section, simply for the reason 
 that it has not observed the conditions. The conditions are, 
 that, if the State taxes the shares of the national banks, it shall 
 impose upon them no other nor higher rate of taxation than it 
 imposes upon the general investment of personal property of 
 the State ; and, secondly, observing that, that it shall also tax 
 them at no other rate than it imposes specifically upon the 
 shares of. State banking institutions. It is undisputed here, 
 that, under the laws of the State of New York, no rate nor tax 
 whateveris laid upon the shares of State banking institutions. 
 The statutes of the State of New York say that the shares of 
 State banking institutions shall not be taxed to the shareholders, 
 and they are not taxed. What, then, is the taxation upon a 
 State ^banking institution in the State of New York ? It is a 
 tax upon the aggregate capital of the bank, exacted from the 
 Corporation itself. Now, wiU my learned friends tell me that, 
 although the State of New York does not lay any tax upon the 
 shareholders of State banks, and so does not observe the condi- 
 tion of the 41st section of the Act of Congress, it does lay the 
 same rate upon the capital of the bank in the hands of the cor- 
 poration, and . that that is equivalent to laying it on the share- 
 holders ? If they will only do that, they will relieve me from 
 the need of any argument ; for, if laying a tax on the capital 
 is the same as laying it on the shares for the purposes of a 
 
14 
 
 State corporation, ^then laying it on the shares is the same as 
 laying it on the capital of the National Banks, and that is all that 
 I have undertaken to prove.- But even if they thus surrender 
 the practical question to escape from a special difficulty, the 
 actual state of the system of taxation and its enforcement in 
 the State of New York would not relieve them, because, in re- 
 gard to the tax rated and collected from the corporations created 
 by State laws as the persons taxed, and taxed upon their ag- 
 gregate capital, under the decisions of this Court, controlling 
 and acted upon in the State of New York, it is required, 
 that, before the capital of the State bank presents its aggregate 
 for the rating of the tax and- its payment, there should be a 
 deduction from it of every dollar that is invested in Federal 
 securities ; so that, as a matter of fact, if, side by side with this 
 National Bank in the city of Utica, there were a State bank, 
 of the same capital of $200,000, having that capital invested 
 precisely as the capital of this National Bank is invested, in 
 Federal securities, while, under the form of taxation laid and 
 enforced by the State upon the banks which I represent, there 
 would b'e paid a full rate upon the $200,000, distributed upon 
 the shares, there would not be one dollar of tax laid or claimed 
 against the State institution, that carried on business in the 
 same street, under the authority of the State of New York. 
 Therefore, put it on matter of foym or put it on matter of sub- 
 stance, your State authority lays' no taxation on State institu- 
 tions situated precisely as this National institution is situated ; 
 and hence, when you seek authority by permission and license 
 of the Act of Congress, the limitations and the conditions must 
 of course be observed, and they wholly fail. I ask your Honors' 
 attention to a very intelligent and well-considered opinion, given 
 in our State, in which it has been held by a branch of the Su- 
 preme Court, that, conceding that the shares may be taxable for 
 aught that the authority of the United States gives under the 
 permission of the 41st section of the National Banking Act, yet, 
 for the want of the observance of its conditions, the law against 
 which we are now remonstrating and arguing is wholly invalid, 
 because the State does not lay a tax. That learned Court say : 
 
18 
 
 " The system of taxation adopted by the S.tate, rnider the provision of th 
 Eevised Statutes, is, that the laws of the State provide for the taxing tlie cap 
 ital of a State bank, and the stockholder is not to be taxed, as an indi vidua! 
 upon his shares. Therefore there is no State law, making provision in an 
 case for taxing the shareholders in State banks for their sliares. Oonsf 
 quently the shareholders of National banks, or State banks, are not liable t 
 taxation in such shaxes."^ — The People vs. TTie Town of Barton, 29 Howard 
 New Yorlc Practice Reports, 371. 
 
 This your Honors will rest upon, as satisfactory proof tha 
 the system of taxation is such as I have stated ; and the au 
 thority of that Cotirt — indeed, I think no authority is neede 
 for it — is, that, if the permission to tax by the State rests upo: 
 the 41st section, this tax cannot he sustained, for the reason tha 
 the conditions are not observed. I shall, therefore, for the res1 
 confine myself to asking what is the great and principal questio 
 of the case presented to the Court, to wit, the assumed power c 
 the State of New York to levy taxes upon this fund and capita' 
 by the form and means of taxing shareholders, when it canno 
 • do it in any other way ; — a power against the will of the Grovern 
 ment, against' the decisions of this Court, against any construe 
 tion of the Constitution of the United States that would see 
 to inhibit it. But I ask attention, for one moment, to what 
 assume will be regarded, when a case shall properly arise fc 
 it, as the- proper construction of this proviso. Your Honors wi 
 notice, that the 41st section provides for the taxation of thes 
 institutions by the National Government, and then goes o 
 to say : 
 
 " Provided, That nothing in this act shall be construed to prevent all th 
 shares in any of the said associations, held by any person or body corporati 
 from being included in the valuation of the personal property of such perso 
 or body corporate, (from being included in the valuation of the personal pro] 
 erty Of such person or corporation) in the assessment of taxes, imposed by, c 
 under State authority, at the place where such bank is located, and not elsi 
 where ; but not at a greater rate than is assessed upon any other moneye 
 capital in the hands of individual citizens of such State: Provided furtTie 
 That the tax so imposed, under the laws of any State, upon the shares of an 
 of the associations authorized by this- act, shall not exceed the rate impose 
 upon the shares in any of the banks organized under authority of the Sta1 
 where such association is located." 
 
16 
 
 I apprehend that no one can .claim, that there is AnjtiAug 
 in this act that had relation to exemptions, except sUch as 
 grew out of its creating these public institutions agencies of 
 the Grovernment. In other words, the exemption, created or in- 
 ferrible from this act, would be the exemption that belonged to 
 these banks as agencies ; and there is nothing in this act that 
 has any connection with the exemption of United States securities. 
 When, therefore, you are construing this proviso, which is intend- 
 ed to save from the operation of an inferential exemption from this 
 act, you must not .carry your proviso or saving clause beyond 
 the principal provision, which it is designed to define, not to 
 avoid. It means, then, that nothing in the nature of these in- 
 stitutions, as agencies or instruments of the authority of the 
 United States under the Constitution, shall save them from 
 taxation on their property, in the same way as other moneyed 
 capital may be taxed by States,; but it was under other laws 
 of the United States that the immunity of the investment in 
 Federal securities was claimable, and. was created. The Con- 
 gress of the United States, adopting iaind following the judgment 
 of this Court, enacted, in the statute .of February 25, 1862,-that 
 the Federal securities, whether held by individuals, corporations, 
 or associations, should be exempt from all taxation under State 
 or municipal authority. It is, then, under that and similar 
 statutes, that this form and application of immunity is derived j 
 and this saving clause does not operate on that act. It merely 
 means, " You may tax the investments in the corporate prop- 
 erty made by these corporations, as you might do, if the immu- 
 nity of Federal agency was not over them." When you come 
 to the question, whether, under cover of this saving clause 
 against a particular effect of the statute, you have opened to 
 the States taxation upon Federal securities owned by these cor- 
 porations, when you have closed it against taxation in any and 
 every other form of ownership, you are proposing to give to this 
 section a force which it never, in legislative intent, could have 
 been designed to have, and which, on any sound principle of con- 
 struction, it cannot bear. Its meaning, so far as the question 
 of these investments by these banks in the Federal Becuritiies 
 
17 
 
 goes, would be to put them, in that respect, on the same footing 
 with an individual having his moneyed capital invested in thai 
 manner ; and on the same footing in which a State corporation 
 having its capital invested in these securities, would stand. Ii 
 it to he said, that, when aU the moneyed capital in the handi 
 of individuals and State corporations, that is invested in the 
 United States securities, is protected against taxation hy th( 
 State, as soon as one of the National banks invests in Unitec 
 States securities, it has of)ened and exposed to taxation thos( 
 very securities, which are exempt by the law of 1862, by forct 
 of a proviso which says that the banking act shall not be con- 
 strued to exempt the National banks from State taxation ? 
 
 I think, therefore, that, on any construction of that sectioi 
 (even if, by conformity of the State to the rate of taxation or 
 State bank shares that it has laid on national bank shares, the 
 permission of that section could be invoked in favor of this tax), 
 these three banks would be still exempt from the payment o: 
 any tax on that portion of their capital which was invested ii 
 the United States securities, for the reason that I have stated tc 
 the Court. But if this proviso is not before the Court for adju- 
 dication because it has not been followed by the State, it will be 
 for your Honors to consider how far that point can be disposed 
 of in your judgment. 
 
 It seems really as if we were reduced to but a very narrow 
 region of reasoning, if we are so far advanced successfully. II 
 must come to this, that the State, having no power (for this law 
 gives none) to pass the act which it has actually passed, nc 
 power derived from the Federal government, assumes a right to 
 tax these investments and tax this capital in the form of shares, 
 although it cannot tax them, as has been so often urged, ic 
 the aggregate or corporate capacity. The argument can resi 
 upon nothing but this : it asserts a distinction between the cap- 
 ital stock of the corporation in the aggregate, and all the shares 
 of such capital stock as subjects of taxation ; such a distinctioE 
 between these two descriptions of property, (I say two descrip- 
 tions of the same thing,) that a tax levied upon the shares it 
 constitutional, although a tax levied upon the aggregate is 
 
18 
 
 unconstitutional. It asserts another distinction, a distinction 
 between the corporation and the shareholders or members of the 
 corporation ; for are not shareholders members of the corpora- 
 tion ? Is not the corporation composed of members ? When 
 all the members of a corporation cease to exist does not the cor- 
 poration cease ? It asserts a distinction between the corporation 
 and the shareholders or members of the corporation, as taxable 
 persons, to the effect that a tax upon, or in respect of, the same 
 property, distributed upon the corporate members, is constitu- 
 tional, though, laid upon the corporate body, it is unconstitu- 
 .tional. I have looked in vain through the briefs and listened in , 
 vain to the argume'nts of my learned friends, to find any other 
 ground for them to discriminate for the constitutionality of the 
 tax on the shareholders, admitting the unconstitutionality of 
 the tax on the corporation and its property, except in the one or 
 the other of these two forms. 
 
 I will take up first the question of investments. I say 
 that the proposition, that the investments of a corporation in 
 J'ederal securities of the whole or a part of its capital stock 
 cannot be made subject to State taxation, laid upon its capital 
 stock, and yet that the same investments may be subjected to 
 State taxation, laid upon the divisions or parts of its capital 
 stock known as shares, cannot be maintained. The first reason 
 I assign for this is, because the attempted distinction overlooks 
 the legal character apd grounds of the exemption. The exemp- 
 tion is of the res, of the subject of the securities. It has no 
 relation to any form of enjoyment or ownership of them. It 
 says that this subject of property shall not yield a tax ; and the 
 exemption is laid for the salke of the investment, and not from 
 partiality to any owner, or any form of ownership. It is that the 
 thing itself may be better, that it may be worthier, that it may 
 be more valuable, the occasions and the duties of the Federal 
 Grovernment requiring that it should be made so and kept so ; 
 and it has no more concern with any foi-m of ownership, as mat- 
 ter of policy or as matter of personal protection, than it has 
 with the remotest considerations from the topic. It is that this 
 thing shall have the virtue in it of being worthier than other 
 property, because it is exempted from State taxation. ' 
 
19 
 
 When you are talking about the different relations which the 
 shareholder and the corporation have to the corporate property, 
 and the different relations that the corporation and the share- 
 holders have to what are called shares, you are talking of what 
 is interesting and important in some views of the law ; but ypu 
 are talking of a subject that has no relation to this question, 
 whether, for the purposes of maintaining the exemption of this 
 investment from taxation, the exemption is to attend it in every 
 form of substantial ownership ; for it is only through forms of 
 substantial ownership that the worthiness of the thing is to be 
 preserved. There is no such separation possible as leaving the 
 securities as worthy as before, but disparaging their purchase, 
 because in a certain form they cannot be owned without being 
 taxable. 
 
 But it also overlooks the legal ground^ and character of tax- 
 ation. Taxation pertains to the subject, the res, and has 
 nothing to do with Ownership and cares nothing about it. It is 
 wholly immaterial to the taxing power what the form of owner- 
 ship may be ; it ' is the value that it is after. In whatever 
 owner it .finds that value, the taxing power will extract it .by 
 proceeding in rem, if you please, and not care who is the owner ; 
 or, if convenient, it collects the tax through the medium of the 
 owner, and the coercion is only to make him pay it. The taxing 
 power, in pursuing its method of taxing, is no respecter of per- 
 sons or forms or title. It is the thing it looks to ; and when land 
 is the subject of taxation, as we all know, the exaction of the 
 tax or enforcement of it is wholly unconcerned with titles, 
 incumbrances, liens, divisions of equity and at law in the enjoy- 
 ment of the owner. It taxes the' property, and sells it by an 
 absolute and paramount title, dealing with the thing itself. 
 The relation is the same towards personal property, although 
 there may not- be occasion or opportunity to apply practically 
 the same effect. I say, then, you overlook the nature of the 
 distinction, when you say that the same thing is to be extracted 
 from taxation in one form of enjoyment and not in another. 
 
 Now, suppose that a government, wishing to invite popula- 
 tion or to improve the domestic habits of its people, establishes 
 
20 
 
 an arrangement promising freedom from taxation to all dwelling 
 houses that should be built. The dwelling houses are built, the 
 law being that dwelling houses shall be exempt from taxation. 
 Can you tax the owner of a dwelling house on the rent he gets 
 from his tenant .? Is not that taxing his dwelling house ? Is 
 the promise performed, is the faith kept, when you say, " We 
 do not tax your dwelling house, we do not tax you on the fee of 
 your dwelling house, we tax you on the rent of your dwelling 
 house " ? You tax the dwelling house in one of the forms of 
 its owner's enjoyment of it as property. Can you tax the tenant 
 and say, " We tax you in proportion to the rent that you pay to 
 your landlord " ? ■ Th5,t is taxing the dwelling house ; that is 
 taxing the house ; the thing which has been procured by the 
 public interests, upon the promise that it should not bear taxa- 
 tion. Is not the taxation of the occupation of the house, 
 whether it be imposed upon the landlord or upon the tenant, a 
 tax upon the house ? Certainly it is. 
 
 And this shows us that taxation and exemption, correlative 
 terms, touch and adhere to the subject, and have no concern 
 with ownership, title, property, or enjoyment. All title, owner- 
 ship, property, enjoyment, is lesser than, a,nd is included in, the 
 matter that is the subject of property, and that swallows Up 
 title, interests, legal and beneficial relations ; and when, in the 
 sense of taxation and the sense of exemption, the subject has 
 been rescued from burdens, nobody can feel them. Has^ the 
 subject been rescued, if anybody can feel the burden in conse- 
 quence of the subject ? Has the subject been saved from con- 
 tribution, if anybody, in consequence of connection with the sub- 
 ject, has to contribute ? Certainly not. You must find some 
 other relation than that of ownership, whether it be legal or 
 equitable, that you tax, or else you tax the property itself. 
 
 This, too, exalts the forms and phrases of the law above the 
 law itself. The United States Government have thought it 
 necessary to give to their securities this credit, and thus to send 
 them out into the whole nation and to the world. They have 
 not broken their faith by any legislation. They have not broken 
 their faith by any construction of legislation. They have not 
 
21 
 
 broken their faith by any adjudication of this court up to this 
 time, whatever the Court of New York may have thought. 
 Twice corrected by this Court on these subjects, now, with legal 
 effrontery, not personal, that learned court comes here and says : 
 " You have told us over and over again that we cannot tax 
 United States securities ; cannot tax them in the measure of 
 anybody's property ; cannot tax them in the form of valuing 
 property at a nominal, and not a real,- standard ; but we have 
 found one shape in which we can tax them in spite of you ; if a 
 national bank owns them, we can make the shareholders pay the 
 tax." This, I say, stultifies the acts of Congress and nullifies 
 the decisions of this Court on that subjeet. 
 
 How do you get a tax on these securities and make a share- 
 holder in a bank pay it ? The whole capital of the bank is 
 free. That is admitted. It is free by its own nature, by its be- 
 ing invested in these securities. It is free, because it has been 
 decided that the States cannot tax this capital. This is aU. ad- 
 mitted. But it is said, " We tax the shareholders." They 
 must tax these shareholders upon this property, this value, 
 either because they do not own it, or because they do. You may 
 tax it because they do not own it, as you would tax A on prop- 
 erty of B, and tell him that, since B is not able to pay your tax, 
 you tax A on his property. That, however, is not to be imputed. 
 Then you tax the shareholders because they do own this prop- 
 erty, because they have some ownership in this investment ; and 
 yet the brief of my learned opponents admits that the owner of 
 United States securities cannot be taxed by the States for them. 
 
 Let us look at that a little more closely. Suppose that 
 A holds, as trustee, $100,000 worth of the securities of the 
 United States, and is asked to give an account of his taxable 
 property in his relation as trustee, and he states that the trust 
 fund is all invested in United States securities. That exempts 
 him from taxation. Then the tax-gatherer hunts up the cestui 
 que trust and says, " What have you ? " The answer is, " My 
 only income is from a trust fund in the hands of A, my trustee ; 
 he is the man to pay the tax." " Oh, we cannot tax that, be- 
 cause he holds United States securities ; what is your beneficial 
 
22 
 
 property?" "It is $100,000." "Then we will tax you." 
 " Well, but," the cestui que trust says, " I do not own the 
 property ; A, is, the legal owner, my trustee ; why not tax him, 
 if anybody is to be taxed ? I do not own the property ; if any- 
 body is to pay the tax, the owner, the trustee, is to pay." 
 " No," says the tax-gatherer, " we cannot tax the owner ; he is 
 exempt on account of the investment ; but we tax you, as the 
 cestui que trust, because you are the beneficial owner and not 
 the legal owner, and you shaU pay the tax." I imagine that, 
 if the State should pursue that method, this Court would cor- 
 rect it and say, "that this $100,000, in its legal estate, in its 
 equitable estate, in its legal control, in its beneficial enjoyment^ 
 is free from taxation." Yet no man can distinguish between a 
 legal ownership in United States securities, and an ownership 
 in those same securities, lodged in a form and organization by 
 which twenty people part with their legal control over them, 
 and turn themselves into the enjoyment of them as benefi- 
 cial or equitable owners. Take the case : twenty men meet 
 together, with $5,000 in Federal securities each, as private 
 property, and put them in bodily and make the capital of 
 $100,000, invested in them, of a bank organized under this 
 act, and come out what ? Organized into a bank, with their 
 Federal securities owned by the bank, of which they are the 
 owners, of which they are the members, of which they are the 
 stockholders, the legal institution holding the legal property. 
 Has that transmutation made the securities taxable that were 
 not taxable before, when the exemption adheres to the securities, 
 and not, by name, to any form of ownership ? 
 
 But, if your Honors please, the proposition that the cor- 
 porations, created and performing their public functions as 
 agencies of the Federal Grovernment, cannot be taxed by the 
 State on their capital, franchise, or operations, and yet that the 
 shareholders, in respect of their membership and ownership of 
 the corporate body, franchise, and capital, can be taxed, is self- 
 repugnant and illusory ; and, in connection with this point, let 
 me look for a moment and briefly, though a subject inviting for 
 illustration, upon the frame and scheme of- the National Bank 
 
23 
 
 system, one of the most remarkable creations in the progress 
 of this nation, one of the most essential means of carrying this 
 nation through its late tiials, and saving it from the disasters 
 and convulsions which attend a restoration of peace in the 
 financial circumstances of the nation and its citizens. What is 
 it, and what is the whole idea of it ? What is the whole ser- 
 vice of it ? What is the whole genius of it ? It is this ; it is 
 to call into the fiscal operations of the Government, in the exe- 
 cution of its powers and duties under the Constitution, the 
 capital, the resources^ the processes of private interest and busi- 
 ness, and employ them as agencies and means in the public 
 service. It is the connection of the special duty and function 
 of the General Government with the living circulation of the 
 great body of the nation, over which it is the Government. 
 Government might have loan offices, loan agencies," sub-Treas- 
 uries, and multiply them in every village, and they would be 
 a dead organization of the Government, mere functionaries ; 
 but, by this system, by a happy improvement upon everything 
 we had ventured or imagined in our financial experience, the 
 Government seized upon the living energies of the American 
 people and made them, by their voluntary organizations, agents 
 in the. public service of the country, just as distinctly, just as 
 usefully, as, in calling upon the citizens to enroll their persons 
 in the military service of the country, you have, instead of a 
 dead organization, a living body of citizen soldiers. That is what 
 the bill did, and what it wanted to do, and what it has success- 
 fully and wonderfully accomplished. That was the thing ; it 
 was the private persons, and the private interests, and the pri- 
 vate processes, and the private energy of the people, that it 
 wanted to unite in this public service. That was the substance, 
 and the rest was nothing but form. It was to combine or 
 organize the collective private capital and resources of ' the 
 nation under the well-known form of legal incorporation, as the 
 most convenient, if not thfe necessary form of accomplishing 
 public objects. Now, as I have said of an army, it is the array 
 that constitutes the army. It is the power, it is the array, that 
 you want ; and the rest of organization, of articles of war, of 
 
24 
 
 arrangement of ranks and grades, and all the machinery of con- 
 trol, is for the array, and not the array for it ; and so it is the 
 array under this organized hanking system that is useful. It is 
 the array of the private enterprise, capital, and business, that is 
 wanted ; and the corporate form, a well-known arrangement for 
 managing property, is adopted, because it is suitable for this, 
 just as it is for the purely private operations and affairs of life. 
 
 Upon this mere statement, which cannot be contravened, it 
 is apparent that the instrumentality adopted by Congress for 
 executing these powers of the Grovernment, has for its essential 
 element this associated capital and these personal exertions ; and 
 that the corporation is but the form of wielding and operating 
 the capital. Then, as I have said, it is not the artificial person 
 that is the object of Government's care, or that is the principle 
 or substance of its object. That is but a form, and, as a form 
 alone, is it to be allowed to operate and to/have its consequences; 
 If immunity from State taxation be the prerogative and the 
 necessity of these legal organizations, it is the immunity of the 
 contributed capital and of the contributors that is needed. If 
 the immunity is essential "for the Government's purpose to 
 maintain the corporation, it is essential for the Government's 
 purpose that this immunity should rest upon those who are to 
 contribute their capital and find their inducements, to volunteer 
 in this service of the Government ; -and any protection or im- 
 munity, that shall occupy itself and confine itself to the protec- 
 tion of the corporate capacity, and leave the individuals, the 
 members, unprotected, would soon exhibit the fact that it is the 
 members who make up the corporation, and not the corporation 
 which secures its own masters and members. 
 
 All the arguments which we have heard about the bank and 
 the shareholders, that the bank hold^ its property by its own 
 title, and that no shareholder has any title in it ; that all the share- 
 holders together cannot assign nor transfer nor convey any of its 
 property, but that a share in a corporation is a new form of 
 property ; and that it belongs to the shareholder, and that the 
 corporation does not own that, and the corporation cannot sell 
 that, cannot convey that — perfectly sound, as familiar as any 
 
25 
 
 other of the first elements of the law — insisted upon here to 
 carry certain consequences, have no effect whatever on those 
 consequences. As to the subject matter of this controversy, 
 they can have no effect. Various definitions have been given 
 about the relation of a shareholder to a corporation. My 
 friends seemed to prefer that loosest connection, which makes 
 the shareholder the holder of a chose in action or right of action 
 against a corporation, the same as a creditor ; and they pushed it 
 so far as to say that they think, on the whole, that a creditor 
 has a nearer and closer right to the property of a corporation than 
 a shareholder has, because he will have to be first paid when the af- 
 fairs of the corporation are closed ; and the learned Court below 
 has adopted that idea to some extent. These familiar doctrines 
 are not in dispute here. It is for the very reason that a corpo- 
 rate organization has these consequences, that a corporate organi- 
 zation has been selected by Congress, as the means of wielding this 
 public operation that is essential to the service of the Govern- 
 ment. It is for the very reason of these effects, that it has adopt- 
 ed it, to wit : that a form is provided in our law, whereby the va- 
 rious owners of property may combine to manage it in a com- 
 mon agency, having this great principle, that its identity shall be 
 preserved, although individual owners may dispose of their in- 
 terests ; and that the public will, or major voice, or administra- 
 tive delegation, shall govern the common property for the com- 
 mon good, instead of having it stand always on the individual 
 right of every man to have his own wiU carried out. That is 
 all there is to a corporation. You may talk about it forever ; it 
 is wholly a form, known in our law, whereby men may put their 
 property together and keep it in that form of ownership and 
 organization for purposes of convenience and nothing else ; and 
 nobody owns it but they, g,fter they have done that. It is 
 purely a short, elliptical expression to say that the corporation 
 owns it. It is owned by the shareholders ; it is owned by the 
 owners of the property. As against each other, they have com- 
 mitted it and themselves to a form of organization, which per- 
 mits of the disposition of the property and the maintenance of 
 the title, with the advantages that I have named. But to say 
 
26 
 
 that there are two properties, to wit, $200,000 of investment 
 that belongs to the corporation,; and another $200,000 that 
 belongs to the shareholders, is perfectly absurd. To say that 
 this united ownership in a subject of property, when the sub- 
 ject of property is free from taxation, leaves the individual 
 shareholders subject to taxation on their shares, — I mean when 
 it is exempt from taxatioil by an authority , stronger than that 
 which undertakes to divert the form of taxation, — is simply 
 saying that the paramount government is master of the ques- 
 tion of the taxation of the property, and the State government 
 is yet final master of the question, by being master of form and 
 device. This Government is no master of the question whether 
 this property shall be taxed, if the State Government is master 
 of the question of any form or contrivance, which — ^by paltering 
 about corporations- and shareholders, and shares being personal 
 property, individual property, and the corporation being aggre- ' 
 gate property^can exact a tax from the property. Therefore I 
 say, that no rule of law has ever asserted, and no refinements 
 of argument can ever maintain, that the corporation has its 
 capital invested in certain property, and the shareholders have 
 their shares represented by other and different property. Whep 
 the res cannot be taxed, I want you to find some other res than 
 the shareholders, which can be taxed. Can the property of the 
 corporation perish, and that of the shareholder survive ? The 
 rule of law is " res perit domino ;" the owner' loses property 
 when it is destroyed. The shareholders lose their property 
 when the capital of the corporation is sunk. That we all 
 know, and some of us have felt ; and we never heard of such a 
 distinction, as that the corporation had one property and we bad 
 another property ; that the corporation could not be' taxed on 
 its, but we might on ours. 
 
 Now, put this question : suppose, as may be done unless 
 there be some distinction in our States,' — and there is not in the 
 constitution of New York or in the constitution of most of the 
 States, — that the ordinary rate of taxation is 3 per cent. ; that 
 is the fate in New York city on capital ; 3 per cent, is laid on 
 the aggregate capital of a bank, and 3 per cent, upon the share- 
 
27 
 
 holders, on the par value of their shares ; in that case are two 
 values taxed, or is it one value that is taxed twice ? Does 
 that property pay the usual rate of single taxation, 3 per cent., 
 or does it pay 6 per cent. ? It pays $12,000 ; $6,000 exacted 
 from the corporation, and $6,000 from the shareholders. Is 
 that 3 per cent, on $400,000, or is it 6 per cent, on 
 $200,000 ? It is a question of one value, as a subject of taxa- 
 tion. However they may be distributed on interests, they are 
 really the different forms of owning the same thing. Suppose 
 that a Government, interested to invite capital in favor of 
 manufactures, declares that it will not tax the capital of manu- 
 facturing companies that shall be formed under it ; and, having 
 got them formed, it taxes the shareholders on their shares. It 
 says, " We cartnot tax the capital ; we promised not to tax the 
 capital ; but we tax your shares." Would that be allowable ? 
 All of this Ulustrates, that it is form and arrangement of owner7 
 ship in the same thing, that is meant to be taxed in one form 
 and cannot be taxed in another form, but still is the same 
 thing ; and that the exemption is not formal and modal, but is 
 of the thing itself. 
 
 We are prepared now for a further proposition of general 
 reasoning, which I am able to support also by the distinctest 
 and most explicit authority. If one of the States issues a char- 
 ter to a corporation, with a clause in it exempting the capital stock 
 from taxation for a limited term, and within that term lays a 
 tax upon the shareholders, will not this Court correct that legis- 
 lation as a breach of the clause of the Constitution against 
 impairing the obligation of contracts ? I submit that the pre- 
 mises of that question are the premises of this question. We 
 have a provision of the Constitution of the United States that 
 the obligation of contracts shall not be violated by the States ; 
 we have a State making an obligatory contract that it wiU not 
 tax the bank, and it afterwards taxes the shareholders. Does it 
 not thereby violate that contract ? What are the premises of 
 this question ? The premises of this question are, that the 
 Constitution of the United States protects this aggregate invest- 
 ment and the aggregate capital, franchise, and operations of these 
 
, 28 
 
 banks from State taxation, and tlie State taxes the shares ; does 
 that violate, or not, the constitutional protection ? I submit 
 that, to a legal mind, this question carries its own answer ; and 
 it is only from the peculiarity of the jurisdiction of this Court, 
 under the Constitution of the United States, in relation to 
 sovereign communities, that we are enabled to have, in the form 
 of a law suit and a legal decision, a question that would usually 
 be left to the discussions of public faith and the maintenance of 
 the honor of a State. In the third volume of Howard's Reports, 
 this whole subject is disposed of by the unanimous judgment of 
 this Court. Having handed that case to my learned opponents 
 before their arguments. Judge Parker ventured to make some 
 remark upon it by saying that it turned upon contract ; and 
 they conceded that, under this clause of the Constitution, if the 
 State had bound itself not to tax the bank, it could not tax the 
 shares. Now, with great respect to my learned friend, conceding 
 that, he might as well concede, that, if the State of New York, 
 under the Constitution, cannot tax the bank, it cannot tax the 
 shares ; and no lawyer can draw a discrimination between the 
 two cases. Now let us be sure that this case, of so grave con- 
 sequences to the discussion before lis, is as applicable as I have 
 stated it. It is the case of Gordon vs. The Appeal Tax Court, 
 3 Hoicard, 133, an appeal from the Court of Appeals of the 
 State of Maryland. I will read the sectioft of exemption of the 
 Maryland statute : 
 
 " That upon any of the aforesaid banks accepting of, and complying with, 
 the terms and conditions of this act, the faith of the State is hereby pledged 
 not to impose any farther tax or burden upon them." , 
 
 This is the phrase of the exemption ; the State is pledged 
 " not to impose any further tax or burden upon them, during 
 the continuance of their charters under this act," and that is 
 all ; there is not a word about stockholders there. The bank^ 
 accepted this law, complied with its- provisions, and some years* 
 afterwards a law was passed taxing the shareholders for their 
 shares, as component parts of their general personal property. 
 Let us see ho^ counsel stated the question. On page 139 the 
 counsel for the shareholder stated it thus : 
 
29 
 
 " The tax of 1841 clashes with the exemption. It is laid on everything 
 which constitutes the property of the hank, hecause, in a schedule, every- 
 thing, even the franchise, goes to make up the aggregate value of the stock ; 
 and the tax is laid on the cash value of the stock. By the 17th section, the as- 
 sessors are directed to value it at the market price. But the market price 
 is governed hy the value of all the different species of property held by the 
 bank, including even the firanohise, because a purchaser looks at all these 
 when about to invest. It is impossible to separate that portion of the tax 
 which falls upon the franchise, and, as the legislature has covered the whole, 
 the entire tax must fall." » 
 
 The counter proposition, at pages 141, 2, 3, is precisely wliat 
 is laid down here, that the bank could not be taxed ; but this is 
 not a taxation of the bank ; this is a taxation of the shares, as 
 component parts of the property of the individual, in common 
 witb the other taxable property of the State, against whicb it 
 bas not precluded itself by a correlative obligation not to tax tbe 
 bank. It was insisted upon there, as here, that tbe difference 
 of title made the difference of substance ; that tbe stock was 
 personal property, transferable by and belonging to its owner ; 
 and that tbe stockholders do not own the property of the bank 
 and cannot convey any title to it. In other words, we had tbe 
 same indisputable facts and law about the relations of stock- 
 holders and stock, capital and share?, that are insisted upon here 
 as regards the modal administration of the res owned ; and that 
 was urged upon tbe Court as a reason for saying that a tax on 
 tbe shareholders was not a violation of the contract not to tax 
 the bank ; but the answer of the Court was, " That is not the 
 way to keep the contract you have made ; the subject matter, 
 the purpose, the object, the promise, the result, all make your 
 promise cover the property in its beneficial, and not its formal 
 ownership, and the promise is broken when you tax the shares 
 of the bank ; " and his Honor, Judge Wayne, delivering the 
 unanimous opinion of the Court, put the subject on the same 
 grounds ; nay, its reasons and its phrases will answer for a deci- 
 sion of this cause. After that, a similar case arose before a 
 very learned court in New Jersey, which is reported, in 3 Zoir- 
 hriskie, 484. Chief Justice Green, a judicial authority well 
 known to this Court, in giving the opinion of the Supreme 
 Court. of New Jersey, said : 
 
30 
 
 " When an incorporated company is, by its charter, exempt from taxa- 
 tion, the stock of the company, in the hands of the stockholders, cannot be 
 taxed. It represents, and is, the title to the property of the company, and is 
 therefore included in the exemption of the charter." 
 
 There the exemption of the charter was in regard to the 
 railroads of New Jersey. The form of it, I think, was this : 
 Fish was tfixed upon his shares in the railroads, as a part of his 
 pergonal property in the aggregate ; it was put down at its value 
 with all the other items of his property, and he contested the 
 valuation, insisting that that portion of his property, which was 
 represented by the shares, was not taxable. The exemption of 
 the stock was found in the charter of the company, which pro- 
 vided that it should pay 10 cents to the State on each passen- 
 ger, " and that no other tax or impost shall be levied or- assessed 
 upon said company." The State did not assess the company, 
 but assessed the shareholders. ' The Supreme Court of New 
 Jersey said that could not be done, and your Honors were not 
 troubled with that case because you had disposed of the Mary- 
 land case. This also confirms, by judicial authority, what I insist 
 upon, that taxation upon the bank, and again upon the shares, 
 is nothing but double taxation. In the same opinion the New 
 Jersey court say : 
 
 " The stock of incorporated banks, although the bank pays a tax on its 
 capital, may be taxed in the hands of stockholders if authorized by the legis- 
 lature, although it is a second tax on the same property. Double taxation 
 may be unequal, oppressive, and unjust ; but it is not prohibited by any con- 
 stitutional provision, and it is in the discretion of the legislature, and courts 
 cannot declare void a statute, within the constitutional power of the legisla- 
 ture, because its operation may appear unjust and oppressive." 
 
 Of course this topic had relation to another item of taxation, 
 not coming within the protection of the promise of the charter 
 and the Constitution of the United States, The Chief Justice 
 says that we cannot strike down a tax that our Legislature has 
 put upon shares, because it has also put it on the stock ; it is 
 two taxations of the same thing ; but, as bur Legislature can 
 put a double rate upon one thing and a single rate upon another, 
 however oppressive it may be, it is not for us to interfere. 
 
31 
 
 There seems then, if your Honors please, to be very little 
 reason for regretting the absence of judicial authorities, upon 
 what must he considered the principal question of the case. 
 The solution is very simple. The relation of the .corporation 
 and of the stockholders, in respect to the property which con- 
 stitutes but one subject of ownership and of taxation, is a two- 
 fold relation to a single capital or value. The relation of legal 
 and equitable title in the same land is the best analogy. So 
 long as a tax is laid tipon property, no variety, diversity, nor 
 complexity 'of title can increase the prope^y or the tax. You 
 cannot make the subject of taxation any larger by reason of 
 these different titles that are carved out of it, or these different 
 arrangements for its management. If Congress means to protect 
 this capital under the Constitution, and this Court has held that 
 it has authority so to do, then it means to do it in a way that 
 practically saves it from the tax ; and, so long as the exemption 
 is applied to the property, it will exempt every, form and every 
 title in that property. 
 
 The statutes of our State, in an unbroken course of legisla- 
 tion, have recognized this fact ; that stock in the aggregate, and 
 the corporation as a person to be taxed, represent the same 
 property as the shares of stock and the shareholders as 
 persons to be taxed ; and they have varied, as his Honor 
 Judge Nelson well knows, in the course of years, their forms of 
 applying taxation to corporations, as seemed to them most con- 
 venient. Under the statute of 1813, and until the change by 
 the Kevised Statutes, all the interests of corporations in the 
 State of New York were taxed upon the shareholders in respect 
 of their shares, as included in the bulk of their property. From 
 the period of the Eevised Statutes, a change was made by col- 
 lecting the bulk of the tax from the bulk of the property ; and, 
 as a part of the same system of assessing and collecting the tax, 
 it was in so many words enacted, that no shares of stockholders, 
 in corporations that were taxed by the State, should themselves 
 pay any tax. When the stockholders paid the tax, under the 
 old system, there was no tax on the corporation ; when the cor- 
 poration paid the tax, under the new system, there was none on 
 
32 
 
 the stockholders, by the arrangement of the law which treated the 
 form clearly as moc^asil, for the convenience of the State, for the se- 
 curity of the collection of the tax, and for the considerations of 
 policy which prefer secondary rather than direct taxation, which 
 latter our systems have avoided aB much as possible. 
 
 There is no reason to hold, that, in the State of New York 
 or anywhere else, there are any principles of law, by which these 
 propositions that are established can possibly be disturbed. I 
 have referred in my brief to a couple of cases in the Massa- 
 chusetts Eeports, where this question is well considered and 
 presented ; that it is all one subject of taxation, and is taxable, 
 under the system of the laws, either to the persons' or to the 
 corporation, as may be found convenient. i 
 
 If the Court please, the exemption from taxation, ^enjoyed 
 by the National Banks under the Constitution and Laws of the 
 United States, is of the capital by reason of its investment in 
 Federal securities ; and again of its capital, its franchise, and its 
 operations, all that it is in character, in property, and in faculty, 
 by reason of its being an instrument- of the General Govern- 
 ment in the exercise of its constitutional powers. As the learn- 
 ed Judge Comstock says in the case in 23 New York Reports, 
 " no corporation aggregate that the world ever saw ever owned 
 anything but its capital, property, and its franchise," Nothing 
 is added, by the creation of a corporation, to the property that 
 the contributors put in by way of capital, excep' the franchise; 
 that is added, making the artificial person a creature of law; 
 but the franchise is all that has been added. Here we have 
 these bodies, that are in their capital exempt, and in their fran- 
 chise exempt. What is there about them that can be taxed ? 
 This left nothing that constitutes an element of valtie, or of 
 possession, or of property, to be taxed. If the franchise had 
 come from the State, if the franchise were taxable by the State, 
 as the creature of the State, you might find something in the 
 constitution of . the corporation, (although its capital be ex- 
 empted if invested in United States securities,) that would en- 
 dure State taxation. They caight tax the franchise inordinately, 
 or nioderately ; they made the franchise, and they may tax it ; 
 
33 
 
 and tlie iDvestment of the capital in United States securities 
 does not exempt the taxation oi the franchise from the power of 
 the State ; and that was the distinction which was made by 
 some observations of Mr. Justice Nelson in the first bank tax 
 case in 2 Black, referring to the state of the law in New York. 
 Franchise may bear a tax, he said. The Legislature changed 
 their law, but did not come up to the point of taxing the fran- 
 chise, which was taxing for the right to be, and with reference 
 to nothing else. The right to be a bank, the right to continue 
 from year to year to be a bank, may be taxed. That was all 
 that was open under the observation of this Court. They did 
 not put the tax on the franchise, but they put the tax on the 
 capital, on a valuation that did not make it necessary to find 
 what it was really worth, but took a nominal value for it ; and 
 thought they had avoided the judgment of this Court by that 
 contrivance. They had not taxed the right of the corporation 
 to be ; they had taxed its capital upon a nominal, instead of a 
 real, value. The Court said, " You may have any form of valua- 
 tion you choose ; but, whatever your form of valuation, you 
 must exempt United States securities from it." That is the 
 case in 2 Wallace. Now the contrivance here is, that of hav- 
 ing a bank, with its franchise from the Federal Government, 
 with its property protected under Federal law, with its opera- 
 tions and its capital protected as agents and instruments of the 
 Government, incapable of taxation, withdrawn from the taxable 
 property of the State ; and they pursue all these into the di- 
 vided shares, and exact the tax upon them distributively. 
 
 What is a stockholder in a corporation ? He is nothing, 
 and has nothing, in a corporation, except by his proportion in the 
 capital stock, and his participation in the franchise. It is to the 
 stockholders by name that the franchise is given, they being 
 natural persons, that they should have the franchise to be an 
 artificial person. Is not that a form in which the natural per- 
 sons are, in the purpose and apparatus of the law,' used as one ? 
 There is neither fragment nor figment for. a tax to rest upon, 
 when there is that extent of exemption. 
 
 Now, if the Court please, on the general question, as some- 
 3 
 
34 
 
 thing has heen said, so inconsiderately, about the comparative 
 magnitude or connections of the interest with the government 
 of the old United States Bank, and of this many-head«d insti- 
 tution, distributed all through the country, let me call your 
 Honors' attention to the importance of the relations of these 
 banks, even in the single subject of the ^distribution of the 
 public debt. There was issued in one year the whole bulk, in 
 three series, of the Seven-thirty currency notes, 830 millions in 
 twelve months ; and, of that issue of the Federal debt, these 
 National Banks took and distributed 736 millions, leaving to 
 the Government, in its official organizations of treasury, sub- 
 treasury and special agencies, only 66 millions out of 830 millions 
 to be so disposed of ; illustrating thus what I have ventured to 
 surest was the genius of this institution. Now, to say of these 
 two great governihents. Federal and State, standing against one 
 another, under the Constitution, with their relations adjudicated 
 by this Court, that all these relations are suddenly changed by 
 the intervention of this corporate form of a National Bank ; and 
 that the State becomes the master of the two governmentSj by 
 taking away from the Federal Government what it had reserved 
 to itself, by giving back to the State Governments what they 
 had lost under the legislation of tbe country, this is to make the 
 sorporation, the mere form, the master of the substance, and 
 controller of those political and public relations. It is like the 
 Genie of the bottle ; when the seal is up, he becomes the mas- 
 ter of the servants. This contrivance of the National Banks, 
 instituted for other and additional public purposes, and serving 
 these great public needs, immediately takes in its hands hun- 
 dreds of miliiops of Federal stocks with which to serve the Gov- 
 ernment, and in its hands, and in the hands of nobody else in 
 this country, they can be taxed through the medium of share- 
 holders! At this moment these banks hold 622 millions of dol- 
 lars of the Federal securities of the United States, — a third of 
 the debt that is out in any other shape than that of mere curren- 
 cy, perhaps more' than a third, for I have not the statistics in my 
 mind ; and yet that mass of public debt, free by impression on 
 its face from taxation by the States, free in the hands of every 
 
35 
 
 individual, of every corporation, of every association, must con- 
 tribute such taxes as the States may choose to impose, discrimi- 
 nating or destructive or otherwise, simply because one agency of 
 the Government is helping it in the advancement of its interests 
 in another public matter, to wit, the debt ! 
 
 If the Court please, it will not avail anything to meet these 
 propositions by the argument that the States, by their natural 
 authority, have dominion for taxation over every subject of 
 property a-nd every person within th6ir jurisdiction. This right 
 and this power, as necessary parts of the State sovereignty, are 
 conceded ; for it is idle to talk of taxation as being a special 
 prerogative of sovereignty. It is sovereignty. It is the sove- 
 reign that taxes. It is as universal as the sovereign, "The- 
 decree went out that all the world should be taxed," because 
 the Roman empire extended over what was then called the 
 world. Taxation takes all you have. Put taxation and con- 
 scription together, and it is the sovereignty over the person and 
 the property, to the extent of the jurisdiction of the State. But 
 taxation goes no further than sovereignty ; and whatever im- 
 pedes or quahfies or displaces the sovereignty of the States, im- 
 pedes, qualifies, displaces, taxation by the States. What power 
 there is in taxation to destroy, is shown by the recent Act of 
 Congress inimical to the continuance of the State banks, which 
 taxes their circulation, after a certain prospective period, ten 
 per cent. If a State has power to tax, there is no limit. That 
 you have decided over and over again. It can tax these shares 
 discriminately, if it chooses ; hostilely, destructively, fatally, if 
 you concede the power. You say, with jealous preservation of 
 the Constitution, " There is no such power ; " and the State says, 
 " True, but we will tax the shares or pftrts hostilely, destruc- 
 tively, fatally ; " and you are called upon to say that they can ; 
 you are called upon to surrender, as I say, to this dominant 
 fiction in law, the personality of a corporation; As by the de- 
 cisions is expressly stated, whenever the Government have called 
 the property of the citizens into the service of the United 
 States, in the performance of a public duty under the Consti- 
 tution as an instrument and an agency, that becomes an instru- 
 
36 
 
 ment of the United States, and exempted from State taxation ; 
 Tinless it be compatible with the public interests that the G-ov- 
 emment of the United States should concede it. 
 
 There are but two methods to deal with this subject. One 
 is that which the State of New York has always avowed, and, 
 I believe, honestly intended to conform to. Looking at it from 
 the side of the State, it may differ from the view that is taken 
 on the side of the Federal Government, but still the principles 
 laid down in 23 New York Reports by Chief Judge Denio are, 
 that, when there is a conflict, the adjudications of the Supreme 
 Court of the United States are final as to the supremacy of the 
 Federal power ; and that the only question for a State Court, as 
 new circumstances one after another present new cases, is to see 
 whether there is a conflict, and to yield. There is but one 
 other method ; and that is the method of South' Carolina, in the 
 decisions that are cited on the brief. The argument of Mr. 
 Grimk6 for the United States, than which none abler was ever 
 made on this question, was never answered by Mr, Legare, nor 
 was it ever answered by the Court. The decision was put 
 upon the ground, that, if there was a conflict, the State of South 
 Carolina eould not help it, but it governed what was within 
 its own dominions. That was the proposition, that the reason- 
 ing of the Supreme Court, by the mouth of the great Chief Jus- 
 tice, was vicious, unsound, dangerous. Its only viciousness was, 
 that the supremacy of the Union over the States was asserted ; 
 its only unsoundness was,. that the supremacy of the Union over 
 the States was asserted ; its only danger was, that the su- 
 premacy of the Union over the States was asserted ; and this, the 
 South Carolina, method of dealing with the conflict, as we all 
 know at last, is war. ' 
 
EXECUTIVE COMMITTEE OF NATIONAL BANKS. 
 
 EXECUTIVE COMMITTEE. 
 
 Thomas Coleman, President First National Bank, Troy, N. Y. 
 
 Joseph XT. Ortis, President Ninth National Banli, New York. 
 
 P. C. Calhoitii, President Fourth National Bank, New York. 
 
 E. B. JnnsoN, President First; National Bank, Syracuse, N. Y. 
 
 Caleb Sagek, President First National Bank, Trenton, N. J. 
 
 W. H. AiNKY, President Second National Bank, AUentown, Pa. 
 
 C. H. Clark, President First National Bank, Philadelphia. 
 
 Adam Reineman, President Third National Bank, Pittsburg, Pa. 
 
 Thomas Swann, President First National Bank, Baltimore, Md. 
 
 George Stetson, President First National Bank, Bangor, Me. 
 
 G. L. Treadwell, President Nat. Mechanics and Traders' Bank, Portsmouth, N. H. 
 
 E. D. Tiffany, President First National Bank, Hartford, Conn. 
 
 Joseph Gkinnell, President First National Bank, New Bedford, Mass. 
 
 C. B. Hall, Qashier Boston National Bank, Boston, Mass. 
 
 Edward Betts, President First National Bank, Wilmington, Del. 
 
 George Adams, Cashier First National Bank, Wheeling, Va. 
 
 G. WoRTHiNGTON, President First National Bank, Cleveland, Ohio. 
 
 B. T. Stone, President Fourth National Bank, Cincinnati. 
 
 J. S. Thomas, President First National Bank, Cadiz, Ohio. 
 
 M. L. Pierce, President First National Bank, Lai^ette, Ind. 
 
 E. Aiken, President First National Bank, Chicago, 111. 
 
 H. P. Baldwin, President Second National Bank, Detroit, Mich. 
 
 F. W. Ceonenbold, President First National Bank, St. Louis, Mo. 
 AtrsTiN Corbin, President First National Bank, Davenport, Iowa. 
 James E. Thompson, President First National Bank, St. Paul, Minn. 
 Nathan T. Spragde, Jr., Vice-President First National Bank, Brandon, Vt. 
 Charles H. Childs, Jr., Cashier Third National Bank, Providence, K. I. 
 
 SUB-COMMITTEE. 
 
 E. B. JuDSON, President. 
 Thomas Coleman, Vice-President. 
 Joseph U. Orvis, Sec'y and Treasurer. 
 C. H. Olabk, of Philadelphia. 
 
 B. T. Stone, of Cincinnati. 
 
 F. W. Cronenbold, of St. Louis. _ 
 Charles B. Hall, Boston. 
 
 New York, March 24, 1866. 
 
38 
 
 * 
 
 On tlie 12tli of February- last, this Committee forwarded the 
 " Brief and Points of Messrs. Evarts and Sedgwick," of Counsel 
 for the Committee in this very important case, involving pecu- 
 niary interests " larger than in the course of jurisprudence has 
 ever been submitted to any other court." Whatever the deci- 
 sion may be, the Committee feel sure that everything has been 
 done to put the matter before the highest tribunal of the 
 country in an appropriate manner. 
 
 The argument of Mr. Evarts was then promised, and is now 
 forwarded ; and to its careful perusial, the Committee invite all 
 interested in National Banks. 
 
 JOSEPH U. OEVIS, 
 
 Sec, and Trea's. Ex. Committee. 
 
 New York, March 24, 1866. 
 
SUPREME COURT OF THE UNITED STATES. 
 
 No. 289. — December Teem, 1865. 
 
 Adam Van Allen, in behalf of 
 himself and all other Stock- 
 holders in the First National 
 Bank of Albany, Plaintiffs in 
 Error, 
 
 vs. 
 
 Michael A. Nolan, et al., as the 
 Board of Assessors of the City 
 of Albany 
 
 In error to the Court o 
 ;■ Appeals of the State of 
 New York. 
 
 Mr. Justice Nelson delivered the opinion of the Court. 
 
 This is a writ of error to the Court of Appeals of the State 
 of New York. The case presented is this : The plaintiffs in 
 error are stockholders in the First National bank in the city of 
 Albany, and the defendants constitute a board of assessors of 
 taxes in the same city. The whole of the capital stock of the 
 bank consisted in stocks and bonds issued by the United States 
 under Tarious acts of Congress ; and it was insisted before the 
 board that the shares of the bank held by the plaintiffs as stock- 
 holders, were not subject to assessment and taxation under 
 State authority ; which position was denied by the board, and 
 the assessment made and tax enforced. The case was carried 
 to the Supreme Court of the State, and thence to the Court of 
 Appeals, which court affirmed the authority of the board of 
 assessors to levy the tax. 
 
 The case is now before us under the 25th section of the judi^ 
 
40 
 
 ciary act. The decree of the Court of Appeals must he/reversed, 
 on the ground that the enabling act of the State, passed March 
 9th, 1865, (Sess. 1, ch. 97), does not conform to the limitations 
 by the act of Congress passed June 3, 1864, organizing the 
 national banks, and providing for their taxation. (§ 41.) The 
 defect is this : one of the limitations in the act of Congress is, 
 " that the tax so imposed under the laws of any State upon the 
 shares of the associations authorized by this act, shall not exceed 
 the rate imposed upon the shares of any of the banks organized 
 under the authority of the State where such association is 
 located." The enabling act of the State contains no such limi- 
 tation. The banks of the State are taxed upon their ca^pital, 
 and although the act provides that the tax on the shares of the 
 national banks shall not exceed the par value, yet, inasmuch 
 as the capital of the state banks may consist of the bonds 
 of the United States, which are exempt from state taxa- 
 tion, it is easy to see that thi-s tax on the capital is not an 
 equivalent for a tax on the shares of the stockholders. This is 
 an unimportant question, however, as the defect may be readily 
 remedied by the State legislature. The main and important 
 question i^ivolved, and the one which has been argued at great 
 length and with eminent ability, is, whether the State possesses 
 the power to authorize the taxation of the shares of these nation- 
 al banks in the hands of Stockholders, whose capital is wholly 
 yested in stock and bonds of the United States ? The court 
 are of opinion that this power is possessed by the State, and 
 that it is due to the several cases that have been so fully and 
 satisfactorily argued before us at this term, as well as to the 
 public interest involved, the question should be finally disposed 
 of ; and we shall proceed, therefore, to state, as briefly as prac- 
 ticable, the grounds and reasons that have led to their judgment 
 in the case. 
 
 The first act providing for the organization of these national 
 banks, passed 25th February, 1863, contained no provision con- 
 cerning State taxation of these shares : but Congress reserved 
 the right, by the last section, at any time, " to amend, alter, or 
 •repeal the act." The present act of 1864 is a re-enactment of 
 
41 
 
 the prioB statute, witli some material amendments, of which the 
 section concerning State taxation is one. 
 
 In organizing these banks under this act, it is made the 
 duty of the association to deliver to the treasurer of the 
 United States, registered bonds, bearing interest, to an amount 
 not less than thirty thousand dollars, nor less than one-third of 
 the capital stock paid in ; which bonds shall be deposited with 
 the treasurer, and by him safely kept, &c. This provision fixes 
 the minimum limit of the amount of the bonds to be deposited 
 with the treasurer, but no maximum is fixed, and the whole 
 amount of the capital may be invested in them. On the deposit 
 of these bonds with the treasurer, the association is entitled to 
 receive from the comptroller of the currency circulating notes of 
 different denominations, registered and countersigned, equal in 
 amount to ninety per centum of the current market value of the 
 bonds so deposited. (§ 21.) There is a limit to the amount of 
 the circulating currency to be issued to these associations, not to 
 exceed, in the aggregate, three hundred millions of dollars. This 
 sum was to be apportioned among the several banks organized 
 under the act. (§ 22.) These notes, after being signed by the 
 president and cashier, are authorized to be issued and to circu- 
 late as money, and are to be received at par in all parts of the 
 United States, in payment of taxes, excises, public lands, and 
 all other dues to the United States, except for duties on im- 
 ports ; also, for all salaries and other debts and demands owing 
 by the United States^ except interest on the public debt, and in 
 redemption of the national currency. (§ 23.) 
 
 These associations also possess all the powers necessary for 
 carrying on the business of banking, by discounting and nego- 
 tiating promissory notes, drafts, bills of exchange, and other evi- 
 dences of debt ; by receiving deposits, buying and selling ex- 
 change, coin, and bullion ; by loaning money on personal securi- 
 ty ; by obtaining, issuing, and circulating notes according to 
 the provisions of this act, &c. The duration of the charter is 
 twenty years. 
 
 They are also made depositories of public moneys, when 
 designated by the Secretary of the Treasury, and may be em- 
 ployed as fiscal agents of the government. 
 
43 
 
 Now, these are very great powers and privileges conferred 
 by the act upon these associations, and which are founded upon 
 a new use and application of these government bonds, especially 
 the privilege of issuing notes to circulate in the community as 
 money, to the amount of ninety per centum of the bonds de- 
 posited with the treasurer, thereby nearly doubling their amount 
 for all the operations and business purposes of the bank. This 
 currency furnishes means and facilities for conducting the opera- 
 tions of the associations, which, if used wisely and skilfully, 
 cannot but result in great advantages and profits to all the 
 members of the association — the shareholders of the bank. 
 
 In the granting of chartered rights and privileges by govern- 
 ment, especially if of great value to the corporators, certain bur- 
 thens are usually, if not generally, imposed as conditions of the 
 grant. Accordingly we find them in this charter. They are 
 very few, but distinctly stated. 
 
 They are, first, a duty of one-half of one per centum each 
 half year, upon the average amount of its notes in circulation ; 
 second, a duty of one-quarter of one per centum each half year, 
 upon the average amount of its deposits ; third, a duty of one- 
 quarter of one per centum each half year, on the average amount 
 of its capital stock beyond the amount invested in United States 
 ■ bonds ; and fourth, a State tax upon the shares of the associa- 
 tion held by the stockholders, not greater than assessed on other 
 moneyed capital in the state, nor to exceed the rate on shares 
 of -stock of State banks. 
 
 These are the only burthens annexed to the enjoyment of 
 the great chartered rights and privileges that we find in this act 
 of Congress ; and no objection is made to either of them except 
 the last — the limited State taxation. 
 
 Although it has been suggested, yet it can hardly be said to 
 have been argued, that the provision in the act of Congress 
 concerning the taxation of the shares by the State, is uncon- 
 stitutional. The suggestion is, that it is a tax by the State 
 upon the bonds of the government which constitute the capital 
 of the bank, and which this coqrt has heretofore decided 
 to be illegal. But this suggestion is scarcely weU founded ; for 
 were we to admit, for the sake of the argument, this to be a tax 
 
43 
 
 of the bonds or capital stock of the bank, it is but a tax upon 
 the new uses and new privileges conferred by the charter of the 
 association — it is but a condition annexed to the enjoyment 
 of this new use and new application of the bonds ; and if Con- 
 gress possessed the power to grant these new rights and new 
 privileges, which none of the learned counsel has denied, 
 and which the whole argument assumes, then we do not see but 
 the power to annex the conditions is equally clear and indispu- 
 table. The question involved is altogether a different one from 
 that decided in the previous bank cases, and stands upon 
 different considerations. The State tax under this act of Con- 
 gress involves no question as to the pledged faith of the govern- 
 jnent. The tax is the condition for the new rights and privi- 
 leges conferred upon these associations. 
 
 But, in addition, to this view, the tax on the shares is not a 
 tax on the capital of the bank. The corporation is the legal 
 ovmer of all the property of the bank, real and personal ; and 
 within the powers conferred upon it by the charter, and for the 
 purposes for which it was created, can deal with the corporate 
 property as absolutely as a private individual can deal with his 
 own. This is familiar law, and will be found in every work that 
 may be opened on the subject of corporations. A striking ex- 
 emplification may be seen in the case of the Queen vs. Arnold, 
 (9 Adolp. & EUis N. S. P., 806.) The question related to the 
 registry of a ship owned by a corporation. Lord Denman ob- 
 served : " It appears to me that the British corporation is, 
 as such, the sole owner of the ship. The individual members of 
 the corporation are no doubt interested in one sense in the prop- 
 erty of the corporation, as they may derive individual benefits 
 from its increase, or loss from its decrease ; but in no legal sense 
 are the individual members the owners." 
 
 The interest of the shareholder entitles him to participate 
 in the net profits earned by the bank in the employment of its 
 capital, during the existence of its charter, in proportion to the 
 number of his shares ; and, upon its dissolution, or termination, 
 to his proportion of the property that may remain of the corpo- 
 ration after the payment of its debts. This is a distinct inde- 
 pendent interest or property, held by the shareholder like any 
 
44 
 
 other property that may belong to him. Now, it is this inter- 
 est which the act of Congress has left subject to taxation by 
 the States, under the limitations prescribed,: as will be seen on 
 referring to it. 
 
 That act provides as follows : 
 
 " That nothing in this act shall be construed to prevent all 
 the shares of any of the said associations, held by any person or 
 body corporate, from being included in the valuation of personal 
 property of such person or corporation in the assessment of 
 taxes imposed by and under State authority, ^at the place where 
 suph bank is located, and not elsewhere, but not at a greater 
 rate than is assessed upon other moneyed capital in the hands 
 0/ individual citizens of such State : Provided further, that 
 the tax so imposed under the laws of any State, upon the shares 
 of the associations, authorized by this act, shall not exceed the 
 rate imposed upon the shares of any of the banJcs organized 
 under the authority of the State where such association is locat- 
 ed : Provided also, that nothing in this act shall exempt the 
 real estate of associations from either State, county, or ■munici- 
 pal taxes to the same extent according to its value as other 
 real estate is taxed." — (§ 41.) 
 
 It is said that Congress possesses no power to confer upon a 
 State authority to be exercised which has been exclusively dele- 
 gated to that body by the Constitution, and, consequently, that 
 it cannot confer upon a State the sovereign right of taxation ,; 
 nor is a State competent to receive a grant of any such power 
 from Congress. We agree to this. 
 
 But, as it respects a subjeQi-matter over which Congress 
 and the States may exercise a concurrent power, but from the 
 exercise of which Congress, by reason of its paramount authori- 
 ty, may exclude the States, there is no doubt Congress may 
 withhold the exercise of that authority and leave the States free 
 to act. An example of this relation existing between the Fed- 
 eral and State governments is found in the pilot-laws of the 
 States, and the health and quarantine laws. 
 
 The power of taxation under the Constitution as a general 
 rule, and as has been repeatedly recognized in adjudged cases 
 in this Court, is a concurrent power. The qualifications of the 
 
45 
 
 rule are the exclusion of the States- from the taxation of the 
 means and instruments employed in the exercise of the func- 
 tions of the Federal government. 
 
 The remaining question is, has Congress legislated in re- 
 spect to these associations, so as to leave the shares of the 
 stockholders subject to State taxation ? 
 
 We have already referred to the main provision of the act 
 of Congress on this subject, and it will be seen it declares " that 
 nothing in this act shall be construed to prevent all the shares 
 in any of the said associations, held by any person, or body cor- 
 porate, from being incliided in the valuation of the personal 
 property of such person or corporation in the assessment of 
 taxes imposed by or under State authority, at the place where 
 such bank is located : " — and in another section of the act (§ 40) 
 it is declared " that the president and cashier of every such 
 association shall cause to be kept, at all times, a full and cor- 
 rect list of the na,mes and residences of all the shareholders in 
 the association, and the number of- shares held by each, in the 
 office where its business is transacted, and such list shall be 
 subject to the inspection of all shareholders and creditors of the 
 association, and the officers authorized to assess taxes under 
 State authority, during business hours of each day," &c. 
 
 These- two -provisions — the one declaring that nothing inthe 
 act shall be construed to prevent the shares from being includ- 
 ed in the valuation of the personal property, &c., in the assess- 
 ment of taxes imposed by State authority ; and the other provid- 
 ing for the keeping of the list of the names and residences of the 
 shoreholders, among other things, for the inspection of the of- 
 ficers authorized to assess the State taxes — not only recognize, 
 in express terms, the- sovereign right of the State to tax, but 
 prescribes regulations and duties to these associations, with a 
 view to disembarrass the officers of the State engaged in the ex- 
 ercise of this right. Nothing, it would seem, could be made 
 plainer, or more direct and comprehensive on the subject. The 
 language of the several provisions are so explicit and positive 
 as scarcely to call for judicial construction. 
 
 Then, as to the shares, and what is intended bv the use of 
 
46 
 
 the term ? The language of the act is equally explicit and 
 decisive. 
 
 The persons forming an association are required to make a 
 certificate, which shall specify, among other things, the amount 
 of its capital stock, and the number of shares into which the 
 same shall he divided, the names and places of residence of the 
 shareholders, and the number of shares held by each. — (§ 6.) 
 
 The capital stock shall be divided into shares of one hundred 
 dollars each, ,and shall be deemed personal property. The 
 shareholders of the association shall be held individually respon- 
 sible, equally and ratably, and not one for another, for all con- 
 tracts, debts, and engagements of such association to the extent 
 of the amount of their stock therein at the par value, in addi- 
 tion to the amount invested in such shares. — (§ 12.) 
 
 In the election of directors, and in deciding all questions at 
 meetings of shareholders, each shareholder shall be entitled to 
 one vote on each share of stock held by him. — (§ 11.) Fifty 
 per centum of the capital .stock of every association shall be 
 paid in before it shall commence business, and the remainder in 
 instalments of at least ten per centum per month till the 
 whole amount is paid ; and if any shareholder, or his assignee, 
 shall fail to make the payment, or any instalment on his stock, 
 the. directors may sell the stock at public auction. ^ — (§ 14, 15.) 
 No association shall make any loan or discount on the security 
 of the shares of its own capital. — (§ 35.) 
 
 We have already referred to the list of the names and resi- 
 dences of the shareholders, and the number of shares, to be kept 
 for the inspection' of the State assessors. 
 
 Now, in view of these several proyisions in which the term 
 shares, and shareholders, are mentioned, and the clear and 
 obvious meaning of the term in the connexion in which it is 
 found, namely, the whole of the interest in the shares and of the 
 shareholders ; when the statute provides, that nothing in this 
 act: shall be construed to prevent all the shares in any of the said 
 associations, &c., from being included in the valuation of the 
 personal property of any person or corporation in the assessment 
 of taxes imposed by State authority, &c., can there be a doubt, 
 but that the term " shares," as used in this connexion, means 
 
47 
 
 the same interest as when used in the other portions of the act. 
 Take, for examples, the use of the term in the certificate of the 
 numbers of shares in the articles of association :— In the divi- 
 sion of the capital stock into shares of one hundred dollars each ; 
 in the personal liability clause, which subjects the shareholder 
 to an amount, and, in addition, to the amount invested in such 
 shares; in the election of directors, and in deciding all questions 
 at meetings of the stockholders, each share is entitled to one 
 vote ; in regulations of the payments of the shares subscribed ; 
 and, finally, in the list of shares kept for the inspection of the 
 State assessors. In all these instances, it is manifest that the 
 term as used means the entire interest of the shareholder ; and 
 it would be singular, if in the use of the term in the connexion 
 of State taxation. Congress intended a totally.different meaning, 
 without any indication of such intent. 
 
 This is an answer to the argument that the term, as used 
 here, means only the interest of the shareholder as representing 
 the portion of the capital, if any,, not invested in the bonds of 
 the Government, and that the State assessors must institute an 
 enquiry into the investment of the capital of the bank, and 
 ascertain what portion is invested in these bonds, and make a 
 discrimination in the assessment of the shares. If Congress had 
 intended, any such discrimination, it would have been an easy 
 matter to h^ve said so. Certainly, so grave and important a 
 change in the use of this term, if so intended, would not. have 
 been left to judicial construction. 
 
 Upon the whole, after the maturest consideration we have 
 been able to give to this case, we are satisfied that the States 
 possess the power to tax the whole of the interest of the share- 
 holder in the shares held by him in these associations, within 
 the limit prescribed by the act authorizing their organization. 
 
 But, for the reasons stated in the fore part of the opinion, the 
 judgment must be reversed and the case remitted to the Court 
 of Appeals of the State of New York, with directions to enter 
 judgment for the .plaintiffs in error, with costs. 
 
48 
 No. 286. 
 
 G. Olakence Churchill, im- 
 pleaded with Edwakd S. 
 Beatton ef al, Plaintiffs in( 
 Ei-ror, 
 
 vs. 
 
 In error to the Court of Ap- 
 peals of the State of New 
 York. 
 
 The City of Utica 
 
 Churchill is the only party against whom judgment was ren- 
 dered in the court below, and the party who has brought a writ 
 of error to this court. 
 
 The judgment is reversed, and the case remitted to the 
 court below for proceedings there as'directed in the case of Van 
 Allen and others vs. Nolan and others. We refer to the 
 opinion in that case as governing- this one. 
 
 S.N. 
 
 No. 288. 
 
 Chaunot p. Williams, in be- 
 half ' of himself ' and all other 
 stockholders in the National 
 Albany Exchange Bank, Plain- 
 tiffs in Error, 
 
 vs. 
 
 Michael A. Nolan et al., as the 
 Board of Assessors oi the City 
 of Albany. 
 
 In error to the Court of Ap- 
 peals of the State of New 
 York. 
 
 The opinion iii the case of Van Allen and others vs. Nolan 
 and others, governs this case, and the same judgment must 
 be entered. 
 
 Judgment reversed and ca,se remitted. 
 
 S. N. 
 True copy, 
 
 D. W.^MIDDLETON, 0..S. 0. U. S. 
 
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