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A EESOUECE OF WAR— THE CREDIT OF THE GOVERNMENT 
 MADE IMMEDIATELY AVAILABLE. 
 
 HISTORY 
 
 LEGAL TENDER PAPER MONEY 
 
 ISSUED SUIiING THB 
 
 GREAT REBELLION. 
 
 loan tolfl^oitt Snttrtst ntCd a §ationd mintnt^. 
 
 PnEFARED BT 
 
 Son. E. G. SPA ULDIJYG, Chairman, 
 
 THE SUB-COMMITTEE OF WAYS AND MEANS, AT THE TIME 
 THE ACT WAS PASSED. 
 
 In such a nation aa this, there iB one and only one besoukce for loans suHicient to carry 
 hroagh the expenses ol a sbeat was, namely, fundable Treasui? Notes fitted for circulation 
 as money, and based npon adequate taxation. 
 
 " That in the interval between war and war, all the outstanding paper should be called in 
 coin permitted to jlow in a^ain, and hold the field of circulation, nntil another war should re 
 quire its yielding place again to the National Medium."— JsprEKSOK. 
 
 BUFFALO. 
 
 ExPKESs Pbintin<^ Company, 14 East Swan Street, 
 
 I860. 
 
it-T^~0~B-fin- 
 
 J//^/ 
 
 '.<-'nrmH¥ 
 
 UNIVERSITY^ 
 LIBRARY 
 
INDEX TO THE NEW INTRODUCTIOll-1815. 
 
 PAGE 
 
 Secretary Chase's first mistake in rejecting the bank check in 1861, - - 1 
 Antagonism of the Sub-Treasury act and its suspension — Mr. Chase 
 
 refuses to recognize its suspension, - - - 2 
 
 [See also historical letters of Geo. S. Coo and -J. E. Williams, Appendix, 
 
 pages 89 to 99.] 
 The Banks and Sub-Treasury suspend specie payments— Mr. Chase in 
 
 breaking the banks, at the same time broke the Sub-Treasury, and 
 
 both were discredited together, - - 3 — 4 
 
 Legal tender act introduced by Mr. Spaulding, Dec. 30, 1861, 4 
 
 The primary object of Ihe act was iofund the debt, 5 
 
 It was a " temporary war measure-,'" 5 
 
 Title of the act was to " fund the greenbacks and floating debt " into 6 
 
 per cent, gold bonds — First legal tender notes issued March 10, 
 
 1863, with endorsement on the back to fund in 6 per cent, gold 
 
 bonds, - - - 7 
 
 Second $150,00,000 legal tenders authorized, - - 8 
 
 Second great mistake of Secretary Chase — A.bn)gation of the right to 
 
 fund the greenbacks in 6 per cent, gold bonds, 8 — 9 
 
 $900,000,000 loan act, 9—10 
 
 Secretary Chase resigns — Gold, 3.85, 10 
 
 Mr. Chase to Mr. Spaulding,' July 15, 1869, 11 
 
 W. P. Fessenden, Secretary of Treasury, July 5, 1864, 11 
 
 Hugh McCulloch, Secretary of Treasury, March 4, 1865, 11 
 
 Secretary McCulloch not supported by Congress, • 11 
 
 $830,000,000 of 7-30 Treasury notes issued to pay the army, and which 
 
 were funded in three years into 6 per cent, gold bonds, 11 — 13 
 
 Geo. S. Boutwell, Secretary of Treasury, March 11, 1869, - , 13 
 
 Third mistake of Treasury Department, 13 
 
 New engraved plates and new issue of greenbacks, four years after the 
 
 close of the war, - 18 
 
 Wm. A. Richardson, Secretary of Treasury, March 17, 1873— $26. 000,- 
 
 000 inflation of the currency, 14 
 
IV 
 
 Several decisions of the U. S Supreme Court on the legal tender act- 
 Only justified as a temporary war measure, to be dispensed witli as 
 soon as possible after the close of the war, - 15 — 16 
 
 Justice Strong's letter on our early return to a " normal condition,^' 16 
 
 Atty.-Gen. Hoar's letter on our early return to a "normal condition,^' 17 
 
 A tender of the new emission of greenbacks not valid (unconstitutional), 17 
 
 President Grant's veto of inflation bill, 17 
 
 Assorting Bureau for redemption of national currency, 18 
 
 President Gram's plan for resuming specie payments, 19 
 
 Senator Sherman's law for resuming specie payments, January 1, 1879, 30 
 When the gold standard is rtached, the surplus of paper currency will 
 
 be retired, 23 
 New York to resume Jan. 1, 1879, Treasury sales of gold to pay current 
 expenses, because the revenue is insufficient, is discreditable to the 
 
 government, - ' 24 
 
 Secretary Bristow not sufficiently supported by Congresp, 25 
 
 Conclusion, 26 
 
 Hon. W. H. Seward's letter, - 27 
 
 Hon. Horace Maynard, 27 
 
 Charles Sumner, E. Corning, S. Hooper, 28 
 
 Senator Sherman, Secretary Stanton, and H. Hamlin, 29 
 
 Benson J. Lossing, "W. W. Corcoran, - 30 
 
 Senator Morrill and Samuel Hooper, - 31 
 
 Horace Greeley, New York Tribune, 32 
 
SECOND EDITION". 
 
 INTRODUCTION. 
 
 THE LEGAL TENDER ACT.— FUNDING ITS ORIGINAL OBJECT — 
 HOW IT HAS BEEN ABUSED AND PERVERTED- 
 RESUMPTION OF SPECIE PAYMENTS — 
 SUB-TREASURY ACT, &c. 
 
 In the publication of a further edition of the " Financial His- 
 tory of the War," prepared by me in the winter of 1869, I may 
 be indulged in a few words in vindication of the Legal Tender 
 act as originally passed, and some criticisms on the general man- 
 agement of the Finances, especially the mistakes of the Treasury 
 department in its administration of that act, and of other laws 
 authorizing the issue of bonds and treasury notes. 
 
 As chairman of the sub-committee of ways and means, having 
 charge of this subject, I became very much identified with this 
 legislation, as well as with the bank bill passed during the second 
 year of the war. 
 
 The first material mistake in the management of the finances, - 
 occurred when Secretary Chase discarded the use of the bank 
 check, and the clearing house, in the fall of 1861. The Secretary 
 of War might, with the same propriety, have rejected the rail- 
 road, the locomotive, and the telegraph. The modern invention 
 of the bank check and the clearing house for the transaction of 
 large financial operations with facility, are quite as useful as are 
 railroads and telegraphs in carrying on military operations with 
 success. The Secretary of War did not fail to make use of the 
 railroads and the telegraph, but the Secretary of the Treasury, by 
 sticking to the sub-treasury, and rejecting the bank check and 
 clearing house, committed a great blunder at the commencement 
 of the war. This mistake occurred under the following circum- 
 stances : 
 
 Two important loan acts were passed at the extra session- of 
 Congress in July and August,*1861. The first act was approved 
 July I7th, and the second August 5th. By section six of the last 
 
mentioned act, the sub-treasniy act passed in 1846, was so far sxis- 
 pended as to allow the Secretary of the Treasury 
 
 " To deposit any of the moneys obtained on any of the loans now authorized 
 by law,- to the credit of the Treasurer of the United States, in such solvent 
 specie paying banks as he may select ; and the said moneys, so deposited, 
 may he withdrawn from such deposit, for deposit with the regular author- 
 ized depositories, or for tlie payment of public dues, or paid in the redemption 
 of the notes authorized to be issued under this act, or the act to which 
 tills is supplementary, pnyahle <m di'mand, as may seem expedient to, or be 
 directed by the Secretaiy of the Treasury." 
 
 The primary object, which Mr. Appleton and myself had in 
 view, in preparing this section, was to relax the rigid require- 
 ments of the sub treasury act, in regard to the receipt and dis- 
 bursement of coin, and instead of paying solely from coin dejjosits 
 in the treasury, to allow all the money obtained on these loans to 
 be deposited in solvent banks; the United States Treasurer to 
 draw his checks directly on such deposit banks in payment of war 
 expenses, which checks would be paid in state bank notes then 
 redeemable on demand in gold, or in the ordinary course of busi- 
 ness, to a large extent, they would pass through the New York 
 clearing house, and the clearing houses of other cities, and be 
 settled and cancelled by offset, without drawing large amounts of 
 specie. This mode of payment would have enabled the Secretary 
 more easily to effect such loans, and make his large disburse- 
 ments, without materially disturbing the coin reserves held by 
 the banks, which were then well protected by these reserves in 
 their vaults. 
 
 This mode of making the disbursements for the large war expenses 
 was regarded by me at that early period of the war as of vital 
 consequence to the stability of the finances of both government 
 and people; hence the preparation and adoption of the sixth sec- 
 tion of the act of August 5, 1861, giving the Secretary of the 
 Treasury discretionary power to suspend the sub -treasury law in 
 respect to thest loans. 
 
 After the battle of Bull Run, which occurred on the twenty- 
 first of July, of that year, the necessities of the government in 
 clothing, arming and feeding troops — in providing munitions of 
 war and building a navy — became so urgent that the banks in 
 New York, Boston and Philadelphia most .patriotically came for- 
 ward and made arrangements in several negotiations with Secre- 
 tary Chase, to loan to the government $150,000,000 under the pro- 
 
visions of the two loan acts passed at the extra session. Of this 
 sum $105,000,000 was apportioned to the associated banks in the 
 city of New York payable by instalments. The banks were then 
 in good condition, transacting their business on a specie basis, and 
 paid coin for all balances at the clearing house, and redeemed 
 their circulating notes in coin, and the loan to the government 
 was made with the expectation that the money would be deposited 
 in the banks, and be checked out under the direction of the Secre- 
 tary, in pursuance of the sixth section above referred to. The 
 Secretary of the Treasury refused to use the discretionary power 
 conferred upon him by that section, and would not check on the 
 banks for the expenses of the war, so that current bank notes could 
 be paid or balances settled through the clearing house, but in- 
 sisted that the banks should pay the money loaned into the sub- 
 treasury in gold or gold treasury notes, and from thence it was 
 distributed for war purposes and scattered in different parts of 
 the country. By far the greater part of this loan was paid in 
 gold coin, taken from the reserves of the banks commencing on 
 the nineteenth of August, 1861. This unnecessary mode of re- 
 quiring the payment of the loans, so weakened the banks, that it 
 brought on a general suspension of specie payments, during the 
 last days of December, 1861. Notwithstanding the banks com- 
 menced making advances to the government about the nineteenth 
 of August, 1861, yet none of the securities to be issued by the 
 government for the loans were turned over to them until the four- 
 teenth of January, 1862. 
 
 The banks having been committed to making the loans, and 
 having made partial advances on account of the same, were 
 obliged to complete the loan notwithstanding the Secretary of 
 the Treasury deemed it incompatible with his views of duty, and 
 the traditions of the sub-treasury law, to use such banks as dis- 
 bursing agents of the government, even under the extraordinary 
 exigency under which the loans were made. The call upon the 
 banks for payment into the government depository of the remain- 
 ing instalments of the loan, either in coin or gold treasury notes, 
 was persistently urged by the Secretary until the final closing of 
 the transaction on the third of February, 1862. This was the first 
 material mistake of the Secretary of the Treasury, and was the 
 first step in the wrong direction, which, combined with other im- 
 portant events, led to the necessity of passing the legal tender 
 
act. The Secretary in brcnking tlio banks, at tlio same timo broke 
 the sub-treasury, and both were iliscredited together, lender the 
 policy pursued, the state bank bills which were local in character 
 and credit, became nncurrcnt money, and tlic available gold in 
 the country was wholly inadequate to meet the gigiintio expenses 
 of the war. 
 
 "A meeting of bank officers was held at the American E.Nicliange Ba\ik in 
 tlie city of New York, December 28, 18G1. One of the bank Pri'sidints in 
 a well considered speech delivered on that occasion, ciiticising the course of 
 Sccreiary Chase in regard to those loans, said that 
 
 " ' He (Secretary Chase) was urged to draw directly on the banks. Coin 
 being the basis of credits it was only in that way the increased financial 
 operations of the government could bo conducted ; for it is impossible to 
 maintain the superstructure of credit when the basis is withdrawn, for in 
 destroying the basis the superstructure is also swept away. lie refused to 
 draw directly upon the banks for the proceeds of the loan taken by each. 
 We are informed that the act of Congress was pas.^sed expressly for the pur- 
 pose of authorizing him to do .so, but ho gave it a diflercnt interpretation 
 which may be the correct one, althongh I do not think so.' " 
 
 The failure of the Secretary to recognize the suspension of the 
 sub-treasury law, fully demonstrates the truthfulness of the re- 
 mark made by Disraeli, that " upon a perfect knowledge and right 
 appreciation of details the settlement of great questions mainly 
 depends." The Secretary was intent u))on having the gold for 
 disbursement, without fully comprehending the effect this largo 
 drain was to have upon the banks and the geMier.'il finances of the 
 country. 
 
 LEGAL TENDER ACT. 
 
 The suspension of specie payments by the banks and the treas- 
 ury of the United States occurred on the twenty-eighth of De- 
 cember, 1861, .and two d.iys later, on the thirtieth of the same 
 month, I i)repared and introduced the legal tender act, into the 
 House of Representatives. The history of this measure in its 
 passage through both houses is fully set forth in the text. The 
 speeches and votes of members on both sides of the question are 
 given in detail in this book, commencing at page six. The meas- 
 ure was prominently discussed before the pcoi)le and in Congress 
 lor more than six weeks. It jiassed both houses and received the 
 approval of President Lincoln Pebruaiy ST;, 1802. 
 
 It is a fundamental principle, which I think I fully comiirc- 
 hended when I introduced this act into Congress, that not ono 
 dollar of paper money ought ever to be issued by the govern- 
 
ment, or by any bank, without at the same time, making ample 
 provision for its prompt redemption, on demand. The best re- 
 demption, and the best attainable standard of value, is gold coin, 
 and the only admissible standard in time of peace. It was an 
 utter impossibility for our government at that time to redeem the 
 legal tender notes in gold, because it could not be had on any 
 terms; it was not in the country in sufficient amount to meet the 
 great emei;gency; but the government could redeem (fund) the 
 legal tender notes in six per cent, twenty years gold bonds. And 
 here I may say, most emphatically, that if these six per cent, 
 bonds could then have been negotiated for any funds available, 
 and in adequate amount, for war expenses, not one dollar of legal 
 tender notes would have been issued. This could not be done, 
 and the act was framed with the express agreement that the legal 
 tender notes issued under it should be redeemed in the six per 
 cent, gold bonds. The second section of the act authorized the 
 issue of $500,000,000 bonds for that purpose. 
 
 The leading object of the legal tender act, was to create a cur- 
 rency national in character, which could be used for liquidating 
 war expenses, and, to prevent any plethora or redundency of such 
 currency, provide at the same time for funding it in the six per 
 cent, bonds. The leading object was to fund the debt. This pro- 
 vision for funding, also, in a great measure, relieved the act of 
 the apparent injustice of compelling people, by the legal tender 
 clause, to receive this currency on ordinary debts and invested 
 securities when they could immediately upon its receipt, convert 
 it into six per cent, gold bonds at par. 
 
 In the opening speech which I made so&n after I presented the 
 bill to the House, (see History, page 29) I said 
 
 "The bill before us is a war measure, a measure of necessity, and cot of 
 choice, presented by the committee of Ways and Means to meet the most 
 pressing demands upon the treasury to sustain the army and navy until they 
 can make a vigurous ailvance upon the traitors and crush out the rebellion. 
 These are extraordinary times and extraordinary measures must be resorted 
 to, in order to save our Government and preserve our nationality." 
 
 / 
 
 After a full presentation of the scope and object of the bill, 
 and an argument in favor of its constitutionality, as a war meas- 
 ure, and as a means of carrying into full effect the war power, 
 granted in the constitution, substantially as has since been de- 
 
6 
 
 cided by the U. S. Supreme Court, I closed my firsf presentation 
 of the bill to the House as follows: 
 
 "It is plainly within the scope of the constitution that the government 
 should maintain itself; that the army should be supported; that the navy 
 should be maintained. The ways and means of doing this are left to Con- 
 gress to provide. Congress may do this entirely by taxation. It may pro- 
 vide by law to levy and collect taxes enough every year to pay the whole 
 expenses of the war, during each current year, and so 'pay as we go.' It 
 may issue six per ce:it. bonds and sell them on the market for what they will 
 bring — even if they will not sell for over fifty cents on the dollar — to raise 
 money to carry on the war. It may issue treasury notes payable on demand, 
 and make them a legal tender in payment of debts. Either one or all of 
 these modes of paying the expenses of the government is left to the discre- 
 tion of Congress. Either mode is constitutional; and it is left to ilie sound 
 discretion of Congress to decide which mode it will adopt, or whether it will 
 adopt a part of each, as being the best in the present crisis. My own im- 
 pression is, that it will be best for us to adopt, in part, all of these modes 
 fi)r providing the means: 
 
 " 1. Raise by taxation, the current year, over and above the amount re- 
 ceived from duties on imports, the sum of $150,000,000. 
 
 "2. Issue $100,000,000 of demand treasury notes in addition to the 
 150,000,000 authorized in July, making them legal tender in payment of 
 debts, and exchangeable at anytime for six per cent, twenty years' bonds; 
 with a further issue of. demand notes, if Congress shall hereafter deem it 
 necessary. 
 
 "3. Provide for tlie issue of all the twenty years' six per cent, bonds that 
 may be necessary to fund the demand treasury notes, and other fundable 
 treasury notes, that may be issued (say $500,000,000 six per cent, twenty 
 years' coupon bonds), and pledge |30,000,000 of the annual taxes to pay the 
 interest halt-yearly thereon, and pledge $35,000,000 more as a sinking fund to 
 redeem the principal in twenty years. 
 
 "4. This tax of $150,000,000 would afford an ample basis on which to 
 rest the credit of the government for this large issue of treasury notes and 
 bonds, and would insure th. punctual payment of the interest to the capital- 
 ists who might hold tliem. 
 
 " The demand notes put in circulation would meet the present exigencies ol 
 the government in the discharge of its existing liabilities to the army, navy 
 and contractors, and for supplies, materials and munitions of war. These 
 notes would find their way into all the channels of trade among the people; 
 and as they accumulate in tile hands of capitalists they would exchange them for 
 the six per cent, twenty years' bonds. 
 
 " These circulating notes in the hands of the people would enable them to 
 pay the taxes imposed, and would facilitate all business operations between 
 farmers, mechanics, cammercial business men and banks, and be equally as 
 good as, and in many cases better, than the present irredeemable circulation is- 
 sued by the banks. 
 
" The $500,000,000 six percent, twenty years' bonds in the hands of the 
 Seoretary of the Treasury ready to be issued would afford ample opportunity 
 tor funding the treasury noiesa,s fast as the capitalists might desire to exchange 
 treasury notes, not btarlng Interest, for coupon bonds of the United States, 
 bearing six per ceent. interest, and amply secured by a tax upon the people 
 and all their property. 
 
 " In this way the government will be able to get along with its immediate 
 and pressing necessities without being obliged to force its bonds pn the mar- 
 ket at ruinous rates of discount; the people, under heavy taxation, would be 
 shielded against high rates of Interest; and the capitalists will be afforded a 
 fair compensation for tJw use of thtir money during the pending struggle of the 
 country fornationaX existence." • * 
 
 From this brief statement of the inception of the legal tender 
 act, it will be seen that it was a temporary war measure; that this 
 greenback curiency was receiveable for internal taxes and all 
 other dues, except customs duties and interest on the funded 
 debt; that a sinking fund was provided of one per cent, each 
 year of the entire debt of the United States after July 1, 1862, 
 and the whole of this temporary currency and all the floating 
 debt of the United States was, by the second section of the act, 
 fundable (redeemable) in six per cent, gold bonds. The title of 
 the act was very expressive. " An act to authorize the issue of 
 United States note,& and for the redemption or funding thereof, and 
 for funding the floating debt of the United States." The govern- 
 ment could not redeem in gold, but could redeem in bonds issued 
 on its credit. These legal tender notes were in substance and 
 effect, certificates of debt given for war expenses redeemable on 
 demand in these bonds. Thus, the fundamental principal, that no 
 paper currrenoy should ever be issued, without providing at the 
 same time, for its prompt redemption, was provided for in the 
 best mode in which, under the unparalled emergency, the govern- 
 ment was able to provide for it. 
 
 The first legal tender notes issued under the act bore date March 
 10, 1862, and had printed on the back of them these words: 
 
 "This note is a legal tender for all debts public and private, except duties 
 on imports and interest on the public debt, and is exchangeable for U. 8. six 
 per cent, donds redeemable at tJie pleasure of the United States, after five years." 
 
 These notes in the form of greenback currency were immedi- 
 ately issued by Secretary Chase and disbursed for war expenses, 
 and the treasury of the United States was very soon relieved of 
 the pressing demands that were made upon it. The army and 
 
navy were paid, and supplies and materials of war obtained on 
 these paper promises in sufficient quantity to prosecute the war 
 with vigor. 
 
 The first edition of legal tender notes were by the gigantic war 
 expenses very soon exhausted. On the seventh of June, 1862, 
 Secretary Chase sent an official communication to the Committee 
 of Ways and Means asking for a further issue of $150,000,000 of 
 legal tender notes, and that a part of this emission should be in 
 one dollar notes, the previous emission having all been issued in 
 notes of five dollars and upwards. (Legal tender History, page 
 154.) In this communication Mr. Chase urged in favor of small 
 bills, and said "it may further be properly observed that since the 
 United States notes are made a legal tender and tnaintainedMt near 
 the par of gold by the provision for their conversion into bonds 
 bearing six per cent, interest payable in coin, it is not easy to see 
 why small notes may not be issued as wisely as large ones." 
 
 This quotation is made for the purpose of showing how im- 
 portant it was deemed at that time, that all the greenback cur- 
 rency should be redeemable in gold bonds. 
 
 1 made the opening speech on the bill in favor of this further issue 
 of the legal tender notes. In the course of my remarks I said: ' 
 
 " The soldiers and Sidlors give their services, risk their lives and endure all 
 the hardsliips, sickness and privaiions of the oiimpaign, and cheerfully take 
 these notes in payment. Supplies, subsistence and material of war of every 
 kind is eagerly furnished, and these greenbacks taken in exchange for the 
 same. This kind of loan is so popular with the people, and being wiihout 
 interest, is so advantageous to the government, it is desirable that it should 
 be extended so far as it can be done safely, and without unduly stimulating 
 speculations to such an extent as to cause an unfavorable reaction to the le- 
 gitimate business of the country. But when bonds can he negotiated at par 1 
 thinh it will he safer to ham bonds neg'otiated than to issue legal tender riotes." 
 
 The act for this additional issue of greenback currency was 
 passed and approved by President JLincoln, July 11, 1862. It pro- 
 vided that the notes should be redeemed on demand in the six 
 per cent, gold bonds. 
 
 SECOND MISTAKE. 
 
 The great mistake — greater than all other mistakes in the man- 
 agement of the war— was the abrogation of the right to fund 
 the greenback currency in gold bonds, as provided for in the two 
 preceeding acts. 
 
 All the other mistakes, civil and military, which occurred during 
 
the war were of slight consequence when compared with the mis- 
 chievous and grave consequences^ resulting from this one mistake. 
 Taking away from the holder of this paper money the right to 
 have it redeemed on demand in gold bonds, besides being 
 manifestly unjust to the holders, let the government and the 
 whole country — banks and people — down into the slough of 
 an irredeemable paper currency, where we have remained for 
 over eleven years. From 1864 to 1875 it has been a de-id weight 
 on the business and industry of the country, without elasticity, 
 and without any provision whatever being made for its redemp- 
 tion or payment. Its redundency and consequent depreciation 
 has operated very injuriously to the legitimate business of the 
 country. It was an instrument of expenditure representing the 
 waste of war, and not possessing the essential elements of a com- 
 mercial currency. A majority of the people, however, have been 
 deluded into the belief that those broken promises, representing 
 the was'te of war, were money, and a proper standard of value as 
 a basis for doing business, and have plunged headlong into all 
 sorts of speculations, unprofitable enterprises, extravagance in living 
 general abuse of credit, idleness, and consequent demoralization. 
 
 If the right to fund the greenbacks into the six per cent, gold 
 bonds had not been abrogated, no financier or practical business 
 man, whose opinion is worth quoting, can doubt that we would 
 have gone to specie payment within two or three years after the 
 close of the war, in spite of ourselves.' The individijal indebted- 
 ness at the close of the war in 1865 was small. Every one was 
 comparatively. free from debt. The six per cent, gold bonds were 
 sought for as an investment. They soon appreciated to par in gold, 
 and if the right to fund had been continued, the greenback currency 
 would have appreciated to par in gold along with bonds. The 
 legal tender act would have served its purpose as a war measure, 
 and we would have returned to the specie standard without ma- 
 terial detriment to the legitimate business of the country. In 
 this way we would have avoided a large part of the extravagance 
 and demoralization that has been so reckless since the close of 
 the war. 
 
 The circumstances leading to this mistake are fully set forth in 
 the Financial History of the War, pages 188 to 198, but I will 
 briefly recapitulate the facts. The $900,000,000 loan act was 
 passed and approved by the President March 3, 1863. At the 
 
10 
 
 urgent request of Secretary Chase a clause was inserted in the 
 act, taking away the dbsolute right of the holders of greenbacks 
 to fund them into six per cent, gold bonds after July 1, 1863, and 
 leaving it discretionary with the Secretary to allow them to be 
 funded or not, as he might deem best for the public interest. 
 Under this discretionary power the Secretary allowed them to be 
 funded up to .January 21, 1864. The legal tender act had worked 
 well and all of the $600,000,000 six per cent, bonds authorized by 
 the first act had been taken up at par. The Secretary then de- 
 cided that he would not allow any more funding in the six per 
 cent, bonds, but would allow the holders of the greenbacks to 
 fund them in a five per cent. bond. This mistake of the Secretary 
 arrested the funding of the greenbacks into bonds, and materially 
 depreciated and lowered the standard of this currency. 
 
 This attempt of the Secretary to float five per cent, bonds made 
 it necessary, in order to meet the enormous, war expenses, to issue 
 and keep out large amounts of currency in the form of green- 
 backs, interest bearing notes, certificates of indebtedness, frac- 
 tional currency and national bank notes, besides the irredeemable 
 currency issued by state banks. Gold and commodities continued 
 to advance in price. On the fifteenth of January, 1864, gold was 
 $1.55, on the fifteenth of April, $1.78, on the fifteenth of June, 
 $1.97, and on the twenty-ninth of June, $2.35 to $2.50, which 
 showed that the legal tender notes were then only worth forty 
 cents on the dollar in gold. The next day, the thirtieth of June, 
 1864, Mr. Chase resigned the office of Secretary of the Treasury. 
 At this time the inflating paper issues outstanding were over 
 $1,100,000,000, and in a few days thereafter gold reached its 
 highest quotation, $2.85, or more accurately speaking greenbacks 
 depreciated until they were only worth in gold thirty-five cents on 
 the promised dollar, at the Board of Brokers, in the city of New 
 York. (History, page 198.) 
 
 Secretary Chase and myself differed materially in regard to the 
 points herein stated in managing the finances. When the Finan- 
 cial History of the War was published, I sent him a copy, and re- 
 ceived from him the following reply : 
 
 " WASHrNGTON, July 15, 1869. 
 
 "Mydeabsir: Tliis morning I have received your book on the Finan- 
 cial History of the War, promised in your letter, which came several days 
 ago. I have had time to give only a very hasty glance at the contents. You 
 adhere, I perceive, to your old views on the points wlisre we differed; and I can- 
 
11 
 
 not say I have ahanged mine. But I shall read your connected account of 
 what transpired both while and since I was Secretary of the Treasury, with 
 attention and interest, and will write you by-and-by more in detail. Mean- 
 time, I remain with that sincere regai'd and respect, which your abilities 
 most honorably devoted to the welfare' of our country inspired in me. 
 
 " Faithfully yours, " 8. P. CHASE. 
 
 "Hon. E. 6. Spaulding." 
 
 No further communication was ever received from Mr. Chase 
 on the subject. He commenced his administration of the Treas- 
 ury in_1861, as a believer in hard money, and a firm advocate of 
 the Sub-Treasury law, and without much practical knowledge of 
 the credit machinery by which the great financial transactions of 
 the country are carried on. He left the office with twice as much 
 inflating paper outstanding as ought ever to have been issued, and 
 with the promised dollar printed on the face of the greenback 
 worth only from 35 to 40 cents in gold. 
 
 Hon. Wm. Pitt Fessenden was appointed Secretary of the 
 Treasury in place of Mr. Chase, and entered upon the duties of 
 the office July 5, 1864, and continued in the office performing the 
 duties very acceptably about eight months, and until the second 
 inauguration of President Lincoln, March 4, 1865, when Mr. 
 McCulloch was appointed in his place. 
 
 Secretary McCulloch was one of best practical financiers in the 
 country, and managed the Treasury Department with marked pru- 
 dence and ability. His annual, reports were based upon correct 
 principles, and were very clear and able expositions of the finan- 
 cial situation. If Congress had continued to give him proper 
 support, instead of repealing the law for retiring greenbacks, it is 
 my firm belief that he would have conducted us back to the spe- 
 cie standard during the four years of his administration of the 
 Treasury Department, and without materially affecting, in an un- 
 favorable manner, the legitimate business of the country. The 
 controlling majority in Congress was weak and vacillating in its 
 course, and utterly failed to make any provision for redeeming 
 the greenback currency. 
 
 After the surrender of the rebel armies to Gen. Grant and Gen. 
 Sherman the volunteer army was mustered out of the service, and 
 had to be paid in full. Secretary McCulloch obtained the means 
 to pay them chiefly by the issue of 7.30 treasury notes. The 
 amount required for that purpose was very large, and the amount 
 of these notes outstanding in October, 1865, was $830,000,000, 
 
12 
 
 which wei-e, by law, expressly fundable within three years into 
 six per cent, gold bonds. The right to fund them was not abro- 
 gated, and within three years they were all taken off the market 
 and funded in those bonds. This shows conclusively how treasury 
 notes may be retired from circulation by an efficient system of 
 funding. The greenbacks would have been funded in the same 
 way if the original contract for funding them had not been 
 abrogated. 
 
 Upon the inauguration of President Grant on the fourth of 
 March, 1869, Hon. George S. Bout well was made Secretary of the 
 Treasury, and entered upon the duties of the office March 11. 
 The President, in his inaugural address, expressed himself favora- 
 ble to a return to specie payments at the earliest practicable mo- 
 ment, and in his annual message, he said in reference to an irre- 
 deemable currency, " It is an evil which I hope will receive your 
 most earnest attention. It is a duty, and one of the highest 
 duties of the government to secure to the cijtizen a medium of 
 exchange of fixed and unvarying value. This implies a return to 
 a specie basis, and no substitute for it can be devised. It should 
 be commenced now. * * * j earnestly recommend to 
 you such legislation as will insure a gradual return to specie pay- 
 ments, and put an immediate stop to fluctuations in the value of 
 the currency.'' The first act of Congress approved by President 
 Grant after his inauguration, contained an express promise in 
 these words: "The United States solemnly pledges its faith to 
 m,ake provision, at the earliest practicable period, for the redemj)- 
 tion of the United States notes in coin." 
 
 This promise oir the part of Congress to make provision for the 
 redemption of the greenback currency in gold, has been about <'is 
 badly broken as was the promise made in the first legal tender 
 act February 25, 1862, to redeem it in six per cent, gold bonds. 
 
 It is true that by the acts of Congress the revenues derived 
 from custom duties and internal taxes were ample, in 1869, to pay 
 the annual expenses of the government and interest on the public 
 debt, and leave a surplus, and consequently an accumulation of 
 gold in the treasury which would, in due time, have been an am- 
 ple fund "to redeem the United States notes in coin" in accord- 
 ance with the above promise. 
 
 Here commenced the third mistake on the part of the Treasury 
 Department in the management of the finances. Secretary Bout- 
 
13 
 
 well did not regard this surplus as at all necessary to the. support 
 of the ci-edit of the greenbacks, or as a reserve by which they 
 could ultimately be redeemed in coin. He therefore proceeded to 
 pay off and take up the bonded debt not yet due for ten to fifteen 
 years, leaving the past due greenbacks (badly broken promises) 
 still in the slough of irredeemable currency, without any provision 
 whatever for their payment. In this way he reduced the public 
 debt including three per cent., notes about $368,000,000 during the 
 four years of his administration, but did not redeem any of the 
 greenbacks, or keep any reserve for that purpose. 
 
 lie also went further and committed an act which I have always 
 regarded as a violation of the spirit and intent of the original 
 legal tender act, in procuring new engraved plates to be made 
 and the printing and paying out of a new emis&ion of legal ten- 
 der notes in time of peace, four years after the cloSe of the war, 
 when the public interests did not require, at that time, any such 
 forced loan to be made. The clause in the original legal tender 
 act in regard to the re-issue of the greenback currency is as fol- 
 lows: " Such United States notes shall' be received the same as coin 
 at their par value in payment of any loans that may hereafter be 
 sold or negotiated by the Secretary of the Treasury, and may be 
 reissued from time to time as the exigences of the public interests 
 shall require." (History legal tender act, p. 149.) The only 
 ground on which, by any possibility, the legal tender notes could 
 be constitutionally issued was that it afforded a means by which 
 the war powers of the government could be carried into full effect 
 in the prosecution of the war. But four years after the close of 
 the war, it was not constitutional to reissue them, and it was very 
 clear that no legitimate "public interest" required- that this new 
 emission should be reissued. On the contrary, it was manifestly 
 for the "public interest " that as fast as these notes were returned 
 to the treasury they should be held there, or cancelled, until the 
 balance outstanding were on a par with gold. The forcing into 
 circulation of a new emission of broken promises so long after 
 the close of the war was not only a violation of the constitution, 
 but was manifestly contrary to the s^jirit and intent of the legal 
 tender act as originally passed. Secretary Boutwell's policy of 
 using his surplus revenues to pay off a funded debt not due, in- 
 stead of redeeming the broken and past due promises, was based 
 on the fallacious idea put forth by him on many occasions that 
 
14 
 
 the countiy would "grow up" to the situation, and that the 
 greenback currency would ultimately all appreciate to par with 
 gold by the increased population, and the enlarged demands of the 
 business of the country without making provision for redeeming it. 
 
 lion. William A. Richardson succeeded Mr. Boutwell as Secre- 
 tary of the Treasury, on the seventeenth day of March, 1873. 
 He was assistant Secretary under Mr. Boutwell, and upon assum- 
 ing the duties of Secretary continued the same mistaken policy in 
 regard to the finances which had been carried out by his prede- 
 cessor. Both of them went so far as to claim that the greenbacks 
 withdrawn from circulation during Mr. McCulloch's administra- 
 tion of the treasury, were still a reserve, and that they had a right 
 to reissue them in case of an emergency. During the great finan- 
 cial panic which occurred in the fall of 1873, and with a view to 
 stop it. Secretary Richardson did actually reissue and pay out in 
 the purchase of bonds, not due, the sum of $26,000,000 of green- 
 backs, which Mr. MoCulloch in a recent letter says, " was as pow- 
 erless to stop the panic as bread pills would be to check the 
 progress of the cholera or yellow fever." 
 
 The general policy of both Mr. Boutwell and Mr. Richardson 
 was, to pay a debt not due, and leave neglected and unpaid the 
 broken promises of the government, which had remained unpaid 
 for several years. During their administration of the treasury 
 the amount of greenbacks outstanding was increased from 
 $350,000,000 to $382,000,000. Subsequently Congress, by act of 
 June 20, 1874, fixed that sum as the maximum amount of the 
 greenback currency, " and that no part thereof should be used as 
 a reserve," which effectually cut ofE the pretense that the pre- 
 viously redeemed greenbacks were a reserve to be used by the ■ 
 Secretary of the Treasury at his discretion. Thus leaving the 
 greenback currency $26,000,000 more in 1874 than it was in 1869, 
 when Mr. Boutwell became Secretary of the Treasury, 
 
 The Supreme Court of the United States, in the case of Lane 
 County vs. The State of Oregon, decided, that the greenback cur- 
 rency was not a legal tender in the payment of taxes levied by 
 that State. 7 Wallace R., Yl. Also in the case of Bronsen vs. 
 Rhodes, 7 Wallace, 229, that where the contract in express terms is 
 payable in gold coin of the United States it cannot be satisfied by 
 a tender of the greenback currency. These, two cases are re- 
 garded as good law, and have not been overruled. 
 
15 
 
 In the case of Hepburn vs. Griswold, 8, Wallace, 604, the Court 
 (opinion of Chief Justice Chase), decided that a contract made 
 payable in dollars before the passage of the legal tender act, could 
 not be satisfied by a tender of greenbacks; that such act, so far 
 as it applied to debts contracted before its passage, is unconstitu- 
 tional. 
 
 Hon. J. W. Wallace, the ofiicial reporter of the United States 
 Supreme Court, in a letter written by him March 9, 1770, says 
 of this decision, "that notes of the United States when'tendeied 
 in payment of a contract made previously to the passage of the 
 legal tender act of February, 1862, was no lawful tender, was con- 
 curred in h J five judges, not by three as assumed in the paragraph 
 quoted. These five judges were the Chief Justice, and- Justices 
 Nelson, Grier, Clifford and Field. Judge Grier had left the bench 
 before the opinions were delivered, but he was on it when the case 
 was argued in conference; and when the judgment of affirmance 
 of the Court of Appeals of Kentucky which had decided the ten- 
 der bad, was irrevocably and perfectly agreed upon." 
 
 Subsequent to the decision in the above case of Hepburn vs. 
 Griswold, the Supreme Court was filled up by the appointment of 
 new judges, and consisted of nine judges — Chief Justice Chase 
 and Associate Justices Nelson, Clifford, Swayne, Miller, Davis, 
 Field, Strong and Bradley. This- court thus constituted decided 
 to hear a full argument oh all the points raised in the cases of 
 Knox vs. Lee, and Barker vs. Davis. The argument was heard at 
 the December Term, 1870. 
 
 The court, after mature deliberation, decided, five to four, that 
 a tender of Unit'ed States notes on debts contracted previous to 
 the passage of the legal tender act, February 25, 1862, was a 
 valid tender in payment of such debts, thereby overruling the 
 previous decision of the court in the case of Hepburn vs. Gris- 
 wold. 
 
 Mr. Justice Strong delivered the opinion of the majority of 
 the court, and Mr. Justice Bradley read an opinion on the same 
 side. On the other side of the question. very elaborate opinions 
 were read by Chief Justice Chase an(l Justices Clifford and Field, 
 all of which are published in 12 Wallace Reports, 457. 
 
 Hon. Reverdy Johnson, in a recent communication reviewing 
 ■ this case, comes to- the conclusion that Justice Strong did not in- 
 tend to go so far as to decide that such an act would be constitu- 
 
16 
 
 tional if passed in time of peace. In that part of the opinion 
 which appears at page 540 (lis Wallace), Justice Strong says the 
 inquiry is whether such laws " were, whe7i enacted, appropriate 
 instrumentalities for carrying into effect or executing any of the 
 known powers of Congress, or of any department of the govern- 
 ment. Plainly to this inquiry, a consideration to the time lohen 
 they were enacted, and of the circumstances in which the govBT-n- 
 ment then stood is important." He then states, in glowing but 
 not exaggerated terms, what was the overwhelming necessity for 
 the passage of the legal tender act in February, 1862, and adds 
 "it is not to be denied that acts may be adapted to the exercise 
 of lawful power, and appropriate to it in seasons of exigency 
 which would be inappropriate at other times." Judge Bradley, 
 the other new member, expressed the same idea of necessity even 
 more emphatically. Said he: "It follows as another corollary 
 from the views which I have expressed, that the power to make 
 treasury notes a legal tender, whilst a mere incidental one to that 
 of issuing the notes themselves, and t© one of the forms of bor- 
 rowing money, is nevertheless a j)Ower not to be resorted to except 
 on extraordinary and pressing occasions, such as war or other pub- 
 lic exigencies of great gravity and importance ; and should be no 
 longer continued than all the circumstances 'of the case demand.'' 
 This very plainly indicates that the majority of the court would 
 not have decided the legal tender act constitutional if it had 
 been passed while the government was on a peace footing. 
 
 LETTER PROM JUSTICE BTROJTG OF THE U. S. SDPEEMB 
 COURT, IN FAVOR OF RETURN'IN'G TO OUR NORMAL CONDI- 
 TION. * 
 
 " Phil.\delphia, March 8, 1870. 
 
 " Hon. E. G. SPATrLDiNa: My Dear Sir: I received a short time since 
 through your politeness, a copy of your ' Financial History of the War.' I 
 have nothitherto acltnowleclged the receipt, and returned the thanks 1 owe, 
 bec.ause I -w ished first to read the book, and my engagements have "been such of 
 late, that I could not find the necessary time. I have now read it, and iiave 
 been both instructed and interested. The financial history of the country 
 during the war is quite as remarkable as the war itself, and I am glad you 
 have spread it before the public so intelligently. There were doubtless some 
 mistakes, but it is wonderful that there were no more, and no greater. Now 
 if we can soon return to our normal condition, the scars of the war will soon be 
 obliterated, and we shall ham remaining only the blessings achiemd. 
 
 "I should be glad to discuss with you some subjects brought forward in 
 your book, but I have not now the time, I can only say that your book 
 
17, 
 
 as a whole, is, in my opinion very valuable, and that you deseive tlie grati- 
 tude of the country not only for your history, but foi; the part you acted 
 during the war in sustaining the power of the government. 
 
 I am, yours truly, 
 
 W. STRONG. 
 
 If a tender of the new emission of greenbacks put out by Secre- 
 tary Boutwell in 1869-70, should be made on an existing contract, 
 it is doubtful whether such tender would be valid, because, four 
 or five years after the close of .the war, there did not exist any 
 public necessitj for such a forced loan. The revenues were then 
 ample to pay all expenses and leave a surplus, which, under a mis- 
 taken policy was used to Kwfund the public debt, leaving the over 
 due debt unpaid. 
 
 LETTER FROM ATTORNEY-GENERA.L HOA.R ON THE FINANCES. 
 
 Washington, Oct. 15, 1869. 
 Hon. E. G. SPAULDiffG: 
 
 My Dear Sir: — I have the lionor to acknowledge the receipt of your' 
 letter of the 6th inst., and with it a copy of your Financial History of the 
 War, for which I desire to return my thanks. 
 
 The constant pressure upon my time has prevented me from giving the 
 book more than a cursory inspection, but it seems to be a valuable acquisi- 
 tion to our tinancial history, and throws considerable light upon the impor- 
 tant question of a return to specie payments. I am one of those who believed 
 that it was for the interest as well as the duty of the nation to return at once 
 to the true and solid standard of value as soon as active hostilities had ceased ; 
 that we should have treated the currency as we did our armies — regarding the 
 
 VOLUNTEERS AND, THE GREENBACKS ALIKE AS NECESSITIES OP WAR, TO BE 
 DISPBUSBD WITH AS FAST AS POSSIBLE ON THE RETURN OF PEACE. I think 
 
 we made a great mistake in not doing so ; that the shortest method was the 
 shortest and best; that the only way to reach the object is by a steady and 
 persistent contraction of the currency — a painful process whenever it 
 coines, no doubt, but harder and worse for us the longer it is delayed. 
 
 I hope that Congress will address itself with courage and constancy to the 
 solution of the problem as soon as it meets ; and will feel assured that the 
 American people have intelligence enough to support those who do it. My 
 views on the subject are of little importance to anybody, but, as an American 
 citizen, I should be sorry and ashamed to find my country unable and unwill- 
 ing, in a time of peace and prosperity, to provide for its over-due paper. 
 
 Very respectfully, 
 
 E. R. HOAR. 
 
 PRESIDENT GRANT'S VETO. 
 
 In 1874, Congress passed an inflation act authorising a 
 large increase of the greenback currency and containing other 
 
IS 
 
 mischievous provisions. This act was submitted to President 
 Grant, and extraordinary efforts made by the inflationists in and 
 out of Congress, to have him approve it. He refused to do so, 
 and on the 22d of April vetoed the act in a message to the 
 Senate condemning this measure of inflation in unqualified terms. 
 He says "the theory, in my belief, is a departure from the true 
 principles of finance, national interest, national obligation to 
 creditors, congressional promises, party pledges by both political 
 parties, and of the personal views and promises made by me in 
 every annual message sent to Congress and in each inaugural 
 address." This veto is regarded as one of the most important and 
 useful acts of President Grant's administration. It had an 
 important influence in checking the clamor for more irredeemable 
 currency. 
 
 Secretary Richardson, after holding the office about fourteen 
 months and a half, resigned, and on the 4th of June, 1874, Hon. 
 ' Benjamin H. Bristow was appointed Secretary of the Treasury, 
 and entered upon the duties of the ofiice. 
 
 ASSORTING HOUSE. 
 In pursuance of the provisions of the act of Congress passed 
 June 20, 18V4, an Assorting Bureau has been established in the 
 Treasury Department for the redemption of National Bank cur- 
 rency. This assorting and redeeming process serves a very useful 
 purpose in taking out of circulation all the worn, dirty, mutilated 
 and defaced notes, and replacing them with clean ones. All this 
 is done in a satisfactory manner, and by an equitable "assessment, 
 the Banks pay all the expenses of this Assorting Bureau ; but in 
 so far as it seeks to be an efiieient redemption of the National 
 Bank notes, it utterly fails to give that vitality and elasticity 
 which ought to attach to a commercial currency. The greenbacks 
 and National Bank notes circulate on a par with each other, and 
 each kind of notes possess about the same purchasing power. 
 Both kinds are worth about 85 cents on the promised dollar. The 
 consequence is that there has not been, and there cannot be, any 
 efiieient redemption of bank notes in the present condition of the 
 currency, because there is neither object nor motive to prompt it. 
 This, so called, redemption simply resolves itself into the swapping 
 one kind of irredeemable paper for another kind of no higher 
 value. But, inasmuch as it renovates the paper circulation 
 
19 
 
 whether we call it redemption, or a process by which clean notes 
 are furnished, is not material. This redemption bureau will, 
 however, become very important as soon as there is a general 
 resumption of specie payments. 
 
 PRESIDENT GRANT'S PLAN. 
 
 On the 24th of June, 1874, President Grant published his fur- 
 ther views in regard to resuming specie payments : 
 
 " First — I would like to see the legal-tender clause, so-called, 
 repealed, the repeal to take effect at some future time, say July 
 1, 1875. This would cause all contracts made after that date, for 
 wages, sales, &c., to be estimated in coin. It would correct our 
 notion of values. The specie dollar would be the only dollar 
 known as the measure of equivalents. When debts afterwards 
 contracted were paid in currency, instead of calling the paper 
 dollar and quoting gold at 20 per cent, premium, we should think 
 and speak of paper at so much discount. This alone would aid 
 greatly in bringing th,e two currencies nearer together at par. 
 
 Second — I would like to see a provision that at a fixed day, say 
 July 1, 1876, the currency issued by the United States should be 
 redeemed in coin on presentation to any Assistant Treasurer, and 
 that all the currency so redeemed should be cancelled and never 
 reissued. To effect this it would be necessary to authorize the 
 issue of bonds, payable in gold, bearing such interest as would 
 command par in gold, to be put out by the Treasury only in such 
 sums as should from time to time be needed for the purpose -of 
 redemption. Such legislation would insure a return to sound 
 financial principles within two years, and would in my judgment, 
 work less hardship to the debtor interest than is likely to come 
 from putting off the day of final reckoning. It must be borne in 
 mind, too, that the creditor interest had its day of disadvantage 
 also, when our present financial system was brought in' by the 
 supreme needs of the nation at the time. * * * * 
 
 ECONOMY AND TAXATION. 
 "Again, I, would provide an excess of revenue over current 
 expenditures. I would do this by rigid economy and by taxation, 
 where taxation can best be borne. Increased revenue would work 
 a reduction of debt and interest, and would provide coin to meet 
 demands on the Treasury for the redemption of its notes, thereby 
 diminishing the amount of bonds needed for that purpose. AU 
 
20 
 
 taxes after redemption begins should be paid in coin or United 
 States notes. This would force redemption on the national banks. 
 With measures like these, or measures which would work out such 
 results, I see no danger in authorizing free banking without limit." 
 
 CONGRESSIONAL PLAN OF RESUMING SPECIE PAYMENTS. 
 
 Senator Sherman, who was the most efficient member in procur- 
 ing the original legal tender act to be passed through the Senate 
 in 1862, introduced into the Senate at the last session of Congress, 
 "An act to provide for the resumption of specie payments." This 
 bill after being very fully discussed and criticised in the Senate 
 and House, was passed and approved by the President, January 
 14, 1875. 
 
 The first section requires the Secretary of the Treasury, as 
 rapidly as practicable, to cause to be coined at the mints of 
 the United States, silver coins of the usual denominations, above 
 five cents, and redeem all the fractional currency of similar 
 denominations outstanding, amounting to about $40,000,000. 
 
 The third section removes the monopoly feature of the Bank 
 act, and allows free banking in all parts of the United States. 
 Whenever bank notes are issued for circulation under this new 
 law, eighty per cent, of greenbacks are to be redeemed by the 
 Secretary of the Treasury, for all the new bank notes issued, and 
 he is to continue such redemption pari 2>asu with new issue 
 of bank notes, until there shall be outstanding $300,000,000 of 
 greenbacks, and no more. And on and after January 1, 1879, the 
 Secretary of the Treasury shall redeem the greenbacks in coin, 
 and to enable him to "prepare and provide for the redemption 
 authorized or required in this act, he is authorized to use any sur- 
 plus revenues from time to time in the Treasury not otherwise 
 appropriated, and to issue, sell and dispose of, at not less than par, 
 in coin, either of the description of bonds of the United States, 
 described in the act of Congress approved July 14, 1870, entitled 
 ' An act authorizing the refunding of the national debt,' with like 
 qualities, privileges, and exemptions, to the extent necessary to 
 carry this act into effect, and to use the proceeds thereof for the 
 purpose aforfesaid, and all the provisions of the law inconsistent 
 with this act are hereby repealed." 
 
 This act for the resumption of specie payments is quite man- 
 datory in its terms, and if Congress is not weak and vacilating 
 
21 
 
 enongli to repeal or modify the law, and the yearly revenues are 
 kept up to a proper amount, it will prove to be much more effec- 
 tive to bring about resumption than is generally supposed. The 
 first section of the act " authorizes and requires" the Secretary of 
 the Treasury to have enough silver coins struck at the mints to 
 redeem all the fractional currency now outstanding, and Secretary 
 Bristow, in obedience to the requirements of the act, is now coin- 
 ing the silver at the mints, as fast as possible, with a view to call- 
 ing in all the fractional currency and have it replaced by the 
 small silver coins like those in common use before the war. This 
 will not be contraction, for the reason that the silver will take the 
 place of paper. 
 
 The third section of the act is equally mandatory in requiring 
 the Secretary to redeem all the greenback currency, in gold coin, 
 on and after January 1, 1879. Preliminary to this important 
 step, it is provided as before stated, that under the free banking 
 feature of the law, for every $100 of bank notes issued, $80 of 
 greenbacks shall be withdrawn from circulation. In this way it 
 is believed that there will be quite a large reduction of greenbacks 
 before January 1, 1879, and possibly it may be reduced to $300,- 
 000,000, which is the maximum amount fixed by the act for the 
 legal tender circulation. This amount, and whatever amount 
 above that sum is outstanding on the first of January, 1879, is to be 
 redeemed in gold on demand, when presented in sums of $50, and 
 upwards. The object of the act is, by continued redemption in 
 gold coin, to circulate $300,000,000 greenbacks- on a par with 
 gold. Can this be done under the provision of the act ? If it can 
 be done it will cause a general resumption of specie payments fay 
 the banks and people in all their bjisiness transactions. All busi- 
 ness will then be done on a gold basis, and laborers and operatives 
 will be paid in gold and silver, or its equivalent, and not in an 
 irredeemable and depreciated paper currency. 
 
 What are the means provided by the act to enable the Secretary 
 to resume specie payments at the time specified ? All the neces- 
 sary 5 per cent, gold bonds which can be disposed of at par for 
 coin, are authorized by the act, and placed at the disposal of the 
 Secretary. These bonds are now at par and above, and if they 
 continue so to January 1, 1879, the Secretary will, if the revenues 
 are kept up, have ample provision made for redeeming the green- 
 backs in gold coin at that time. If gold coin is paid out for 
 
22 
 
 greenbacks, the gold will take the place of greenbacks in the bank- 
 ing and business operations of the country, so that there will be 
 only such contraction as is necessary to the stability of legitimate 
 business. If a suitable gold reserve is retained in the Treasury 
 against the greenbacks in circulation, there will be no loss of 
 interest, because neither the gold nor the greenbacks bear any 
 interest. 
 
 What is most to be feared is, that Congress will repeal the act, 
 or so modify it as to prevent resumption at the time specified. 
 With the known and expressed views of President Grant he would 
 no doubt, veto any bill of that kind which may be passed during 
 his term of office. The law will probably continue in force until 
 1877, and it is possible that further provision may be made to aid 
 in causing resumption to take place January 1, 1879. But if only 
 the pi-esent law remains on the statute book to that time, it will 
 be found to be more efficient than is generally supposed, in bring- 
 ing about the desired result, especially if the 5 per cent, gold 
 bonds continue to sell at par for gold. 
 
 It is the general impression that the act ought to have author- 
 ized more extended preparation for resumption, and I am free to 
 say that I have shared this feeling. If, however Congress gives 
 proper support to the measure, by keeping up the revenues, it is 
 by no means certain that the Secretary by a-judioious administra- 
 tion of the act, will not be able to resume specie payments by 
 January 1, 1879. The Treasury must be well supplied with gold, 
 and an ample yearly revenue provided, in order to resume and 
 maintain such resumption. If the reserve of gold is made ample, 
 resumption will be easy. The greenbacks not having been issued 
 upon commercial values, but for the waste of war, will require 
 extraordinary support in order to maintain specie payments. At 
 present there is too great a disparity between the reserve of gold 
 in the Treasury and the amount of greenbacks to be redeemed. 
 Whether resumption takes place in three, five or ten years, a 
 larger reserve of gold will be necessary, or the greenbacks must 
 be reduced. It is perfectly plain to every practical business man, 
 ^ that the greenback currency cannot be redeemed in coin until 
 the Government is able to let coin flow into business channels and 
 again circulate as money, the same as it did previous to the war. 
 Coined money must resume its place in the business of the coun- 
 try simultaneously with the withdrawal of the greenbacks, so that 
 
' 23 
 
 there shall be no material disturbance to legitimate business, when 
 resumption takes place. This can be accomplished if there is a 
 continued surplus of gold received into the Treasury and retained 
 there as a reserve against the greenback currency.* Every one 
 hundred dollars set apart as a reserve against an equal amount of 
 greenbacks, would be a practical payment of them, and as neither 
 bears interest there would be no loss of interest. Every gold 
 broker knows perfectly well that there can be no successful 
 resumption until there is a much larger reserve of coin, and he 
 accordingly asks $1.16 cents in greenbacks for a dollar in gold, 
 but let him know that the Government holds an adequate reserve 
 fund against the greenback currency, and the National^ Banks a 
 like fund, the appreciation of greenbacks would be such that his 
 occupation as a gold broker would be nearly gone, even if the 
 gold did not pass out of the Treasury. This large reserve would 
 be tangible evidence to him that the Government was master of 
 the situation. 
 
 THE GOLD STA.NDA.RD. 
 
 When the business of the country is carried on upon a gold 
 basis, and resumption is continued as an accomplished fact, all the 
 greenbacks and National Bank notes which cannot be kept joer- 
 manently on a par with gold, will necessarily have been retired 
 from circulation, and either cancelled oTf held in the sub-treasury, 
 or vaults of the banks. This surplus of paper oiirrenoy, which is 
 no doubt largely in excess of the requirements of legitimate busi- 
 ness, ought to be cancelled and permanently kept out of circula- 
 tion, so as not to hazard a continuance of specie payments. 
 
 A constitutional standard of value having been thus established, 
 the Government, desiring to return to its legitimate function of 
 coining money and regulating its value, will ultimately wish to 
 rid itself of the trouble and risk incident to the issuing a paper 
 currency and redeeming it in gold, and will finally repeal the 
 legal tender act. This will leave the business of free banking 
 where it belongs, open to all its citizens, to be carried on upon a 
 gold basis, under proper legislative provisions. It would prob- 
 ably be better for all concerned if the legal tender act should be 
 repealed at an earlier day, and at the same time provide for retir- 
 ing the greenbacks by the issue of five or six per cent, compound 
 interest notes, fundable in two and three years into a five per 
 cent, ten years gold bonds. But the present resumption act has 
 
24 
 
 not been passed with that object in view, and for the present it 
 will be best to support the law as it now stands, and if possible, 
 add to its efficiency by further legislative provisions. The banks 
 should be required to retain half the gold interest received on the 
 bonds deposited as security for their circulating notes as apart of 
 their reserve, preparatory to resumption, January 1, 1879. 
 
 NEW TORK'TO RESUME JANU.VRY 1, 1879. 
 
 The State of New York at the last session of the legislature, 
 passed a law, Chaj). 7-3, which was approved by Gov. Tilden, March 
 22, 1875, "To establish specie payments on all contracts or obliga- 
 tions payable in this state after January 1, 1879." This law was 
 passed in pursuance of the principles laid dqwn in the case of 
 Lane County vs. the State of Oregon, 7 Wallace R. 71, that the 
 greenbacks are not a lawful teoder in payment of taxes im-posed 
 by state legislation The text of this N. Y. law is as follows : 
 
 "Section 1. All taxes levied and confirmed in this State on and 
 a,fter January first, eighteen hundred and seventy-nine, shall be' 
 collected in gold. United States gold certificates or National bank 
 notes which are redeemable in gold on demand. 
 
 2. Every contract or obligation made or implied after January 
 first, eighteen hundred and seventy-nine, and payable in dollars, 
 but not in a spiecified kind of dollars, shall be payable in United 
 States coin of the. standard of weight and fineness €Stablished by 
 the laws of the United States at the time the contract or obliga- 
 tion shall have been made or implied." 
 
 This completes the statement of the measures now in force for 
 resuming specie payments, which is the most important question 
 now before the country. 
 
 TREA.SURY SALES OF GOLD. 
 
 The Treasury sales of gold at 16 per cent, premium, and the 
 receipt of greenbacks in payment, and the immediate Veissue of 
 such depreciated greenbacks, at par, t© pay the civil expenses of 
 the Government, ten years after the close of the war, is an anom- 
 aly in any solvent government, and plainly shows the weakness 
 and incompetency of Congress in not providing ample revenues 
 to carry on the government in time of peace without resorting to 
 any such discreditable means. The gold revenue is suiBcient to 
 keep up the sinking fund and pay the gold interest, but the cur- 
 rency revenues seem to be inadequate for ordinary expenses. 
 
25 
 
 It is generally understood that Secretary Bristow continues his 
 monthly sales of gold, (which ought to be husbanded for resump- 
 tion in 1879,) to raise the money to pay the current expenses of 
 the Government, because Congress has failed to provide sufJ- 
 cient means to carry on the Government in any other way. It 
 is also generally understood that Secretary Bristow would not 
 resort to this monthly "make-shift" of keeping these broken legal 
 tender promises in circulation, if Congress provided the means 
 of administrating the government in the old fashioned, honest 
 way. Every reissue of these broken promises, backed by the 
 legal tender provision, is a forced loan in time of peace, and is 
 plainly in violation of the constitution. 
 
 These sales of gold at this time, when the act for the resump- 
 tion of specie payments in 18*19, is in full force, is not a good indi- 
 cation for resumption at that time. More revenue will be neces- 
 sary, and it remains to be seen whether it will be provided to aid 
 in carrying this very important measure into effect. 
 
 Secretary Bristow is believed to be sound on the main question. 
 In his first annual report in December, 1874, he very cleaily sets 
 forth the evils of an irredeemable paper currency as follows : 
 
 " The history of the irredeemable paper currency repeats itself 
 whenever and wherever it is used. It increases present prices, 
 deludes the laborer with the idea that he is getting higher wages 
 and brings a fictitious prosperity from which follow inflation of 
 business and credit and excess of enterprise in ever increasing 
 ratio, until it is discovered that trade and commerce have become 
 fatally diseased, when confidence is destroyed, and then comes the 
 shock to credit, followed by disaster and depression, and a demand 
 for relief by further issues. The universal use of, and reliance 
 upon, such a currency tends to blunt the moral sense and impair 
 the natural self-dependence of the people, and trains them to the 
 belief that the Government must directly assist their individual 
 fortunes and business, help them in their personal affairs, and en- 
 able them to discharge their debts by partial payment. This 
 inconvertible paper currency begets the delusion that the remedy 
 for private pecuniary distress is in legislative measures, and makes 
 the people unmindful of the fact thatthe true remedy is in greater 
 production and less spending, and that real prosperity comes only 
 from individual effort and thrift. When exchanges are again 
 
26 
 
 made in coin, or in a currency convertible into it at the wiil of the 
 holder, this truth will be understood and acted upon." 
 
 Secretary Bristow is now making preparation to retire the frac- 
 tional currency and replace it with silver coin, but, without any 
 surplus revenue, he will not be able to accumulate gold in the 
 Treasury, and must rely, at present, on the sale of the five per 
 cent, bonds, authorized by the third section of the resumption act. 
 It remains to be seen whether Congress will have the wisdom and 
 courage to pass any further laws for inureasing the revenue, or 
 authorizing any further preparations for resuming specie pay- 
 ments on the first of January, 1879. This is the great question 
 now before the people. I have a strong desire to witness a gen- 
 eral and permanent resumj)tion of specie payments. If I live to 
 see it accomplished, I will write a concluding chapter on the "His- 
 tory of the legal tender paper money, issued during the Great 
 Rebellion." Meantime I desire to repeat that if the legal right to 
 fund the greenbacks in tffe six per cent, gold bonds, in accordance 
 with the original legal tender act, had not been abrogated, we 
 would have reached specie payments as early as 1868, seven years 
 ago, and without very seriously injuring the legitimate business 
 of the country. 
 
 The wit of man, during the last hundred years, has not been 
 able to contrive any method by which a paper currency can be 
 circulated on a par with gold, unless it can be conveniently con- 
 verted into gold coin on demand. It is not enough that "the 
 whole property of the country" is held liable to ultimately pay 
 the greenbacks. Such securityj though ample, is too general and 
 intangible for the purpose. This "whole property" can only be 
 reached and applied through the slow process of taxation. On 
 this general theory the greenbacks have been greatly depreciated 
 for over eleven years, and the government will continue in this 
 discreditable condition, until some speciflo provisioji is again made 
 for its redemption. 
 
 It was issued as a redeemable currency — it is now irredeemable, 
 with no certain standard of value, and not possessing the requi- 
 sites of a commercial currency. Congress ought to make ample 
 preparation for its redemption in 1879 — Will it do its duty ? 
 
 E. G. SPAULDING. 
 Buffalo, Oct. 1, 1875. 
 
TESTIMONIALS IN FAVOR OF THE LEGAL TENDER ACT AS A 
 "WAR MEASURE." 
 
 FKOM HON. WILLliM H. SEWAKD, 
 
 Late Secretary of State. 
 
 AtEBUUN, April 26, 1869. 
 Ml/ Dear Mr. Bpaulding : 
 
 I thank you for a copy of your book. It is written ■without passion or 
 prejudice, and makes it entirely clear that in adopting a legal tender cur- 
 rency, the governmfint adopted a means not merely wise, but indispensible 
 and eflFt'ctiYe. I always wonder at the resistance which the policy encountered. 
 - With kind respect and esteem. 
 
 Faithfully your friend, 
 
 WILLIAM H. SEWARD. 
 
 The Hon. Horace Maynard, of Tennessee, was one of the few men of the 
 South who remained in Congress during the war, and always supported the 
 Union cause. Having been for many years a member of the Committee of 
 Ways and Means, he is one of the most influential men in the House. He 
 was a member of that Committee during the winter of 1861-3, when the Legal 
 Tender Act, the Bank Bill, and other financial measures, were matured, and 
 he still retains that position. The following letter from Mr. Maynard, on 
 that question, will be read with interest. 
 
 Knoxvillb, Tennessee, Nov. 3, 1869. 
 Hon. E. O. Spaulding : 
 
 Dear Sie: — Thanks for the book, as well as the copy sent me. It is well- 
 timed and much needed. So successful were the financial arrangements dur- 
 ing the war that people incline to believe them as automatic, accomplished, 
 with no special credit to anybody. 
 
 Of all who were concerned, you were the one to have prepared the book — 
 entitled as you are, pre-eminently, to the credit nf the great measures which 
 carried the nation so triumphantly through the financial struggles. While I 
 did not feel at liberty to participate very actively in the passage of acts which 
 must affect other portions of the country far more seriously than that which 
 it was iny fortune to represent, it gratifies me to remember that both in the 
 Committee of Ways and Means and in the House they received my unfailing 
 support. 
 
 As a result we have now the best currency ever known iu the nation. Let 
 it 7WW he made ebmiertiMe into coin at the 'pleasure of the holder, and nothing 
 would be left to he discussed. Why this has not been done, why it is not done, 
 why it should not be done, I confess, after all I have read and heard, I am 
 not able to see. 
 
 One of these days some bold man will take the step, and then everybody 
 will wonder why it had not been taken years before. Would that you were 
 again at your place in the House. 
 
 I am, very truly yours, HORACE MAYNARD. 
 
28 
 
 FBOM THE HOST. CHAKLES SUMNEB. 
 
 On the Finances. 
 
 Boston, Augusts, 1869. 
 Mt Dear Sir: — You have done a good service in preparing your book; nor 
 is there anybody to whom this duty belonged more than yourself. In all our 
 financial trials, while the war was most menacing, you held a, position of 
 great trust, giving you opportunity and knowledge. The first you used at 
 the time most patriotically, and the second you use now for the instruction 
 of the country. 
 
 I am, not content with the long postponement of specie paymtnts ; I believe 
 THAT THE TIME HAS COMB FOR THIS BLESSING, and I begin to be impatient 
 when I see how easily people find excuses for not accepting it. 
 Believe me, dear sir. 
 
 Very truly yours, 
 Hon. E. Or. SPATjLDiNa. CHARLES SUMNER. 
 
 FliOM ERA8TUS CORNING. 
 
 Also a member of the Committee of Ways and Means at the time the act was 
 
 passed. 
 
 Newport, August 30, 1869. 
 Hun. E. O. Spaulding, Buffalo : 
 
 Dear Sir:— Your favor of the 14th ult. was forwarded from Albany to 
 this place. Also a copy of your "Financial History of the War." I have 
 read it with much interest, and can say that I consider it a fair and impartial 
 history of the doings of the Committee of Ways and Means and of Congress 
 while I was a member, and since as far as I understand their action. I am 
 pleased that you have seen fit to place their doings on record. I thank you 
 for the copy sent me. Yours very truly, 
 
 ERASTUS CORNING. 
 
 HOUSE OF REPEESENTATIVISS. 
 
 Committee of Ways and Means. 
 
 Washington, D. C, Feby. 2i5, 1866. 
 Dear Sib:— I have yours of the 33d inst, and have mailed to you to-day 
 a copy of Mr. Sumner's speech on reconstruction, also the Olobe which con- 
 tains my own, on the Finance Bill. It seems to me that you have a ri^ht to 
 be well satisfied with the part you took in initiating the financial measures 
 which have carried the country so successfully through the war. We are 
 somewhat excited here, but I have faith that everything will come right in a 
 little time if we are discreet in our action in Congress. 
 
 Yours with great respect, 
 Hon. E. G. Spaulding. g. HOOPER. 
 
 FROM senator SHERMAN. 
 
 Mansfield, Ohio, June 14, 1869. 
 Mt Dear Sir:— I have received and partially read, with great interest 
 your Financial History of the War. It recalls many interesting events 
 
29 
 
 almost forgotten, and is therefore like an old friend. I am much obliged to 
 you for it, and will give it a careful reading and a place in my selected set of 
 books. Very truly yours, 
 
 Hon. E. G. Spaulding. JOI-IN SHEBMAN. 
 
 FHOM B. M. STANTON. 
 
 Late Secretary of War, a short time before his death. 
 
 Washington, November 38, 1869. 
 My Db.ar Sir: — I hasten to render my thanks for a copy of your "History 
 of the Legal Tender Act," and the accompanying note, received this morn- 
 ing. 
 
 No one could more fully appreciate than I did, and still do, the vital im- 
 portance of the financial measures adopted for maintaining the government 
 during the war. On all occasions, in private conversation and in public 
 assemblages, I have endeavered to do them justice and cause them to be esti- 
 mated as I estimated them. WitJwut them I do not nee how our armies could 
 have deen raised, equipped, clothed; fi'd, transported and kept. in the field until the 
 enemy were subdued. But my attention was too closely absorbed by military 
 affairs for me to discriminate between the several views discussed, or to 
 observe to whose sagacity and energy the country was most indebted. A 
 hasty glance through your History has enabled me to see that you have 
 afforded means for correct Judgment upon the interesting points involved. 
 With sincere regard, I am, 
 
 Truly your friend and obedient servant, 
 Hon. E. G. Spaulding. EDWIN M. STANTON. 
 
 PBOM HANNIBAL HAMLIN. 
 
 Late Vice-President, and President of the Senate at the time the Act was 
 
 Bangok, November 5, 1869, 
 My Deab Sir: — Please accept my cordial thanks for your "Financial His- 
 tory of the War Legal Tender" which you sent me. I have given it a, hasty 
 examination, but enough , to see that it Is a full and true history of the sub- 
 ject of which you treat, presenting the facts connected therewith in their 
 chronological order. A work to set the public judgment right at this time, 
 and for reference it will be truly valuable. 
 
 I am surprised to know that no one of the historians of the times has fur- 
 nished the facts and evidence which you have so fully and clearly repre- 
 sented. Yours truly, 
 Hon. E. G. Spaulding, Buffalo, N. Y. H. HAMLIN. 
 
 FKOM HON. W. W. CORQOHAN. 
 
 The Banker who negotiated the United States Loans during the war with 
 Mexico in 1846-47. 
 
 Washington, September 13, 1869. 
 My Dear Sib: — Many thanks for your kind letter of the 9th, with a copy 
 of your "Financial History of the War." I have only had time to glance 
 over the index. It will be very valuable and interesting volume and I shall 
 
30 
 
 have pleasure ia perusing it. No one can doubt tliat the making the issues of 
 the United States a legal tender was the great element of success. Without it the 
 war amid riot ham deen carried on six months longer. Again thanking you for 
 thinking of an old friend, 
 
 I am veiy sincerely yours, 
 
 W. W. CORCORAN. 
 E. G. Spatjlding, Esq., Buffalo, N. Y. 
 
 FROM BENSON J. LOSSING, 
 
 Who published a valuable Illustrated History of the Military Operations dur- 
 ing the Great Rebellion — in three volumes. 
 
 The RroGB, Dovbk, N. Y., Dec, 37, 1869. 
 Hon. E. O. Spaulding : 
 
 Mt Dear Sik; — I cordially thank you for giving me the opportunity to 
 peruse your valuable History of the Loga'l Tender Paper Currency issued dur- 
 ing the late Rebellion — a measure which more than any other, contributed to 
 the salvation of the Republic from great disaster. Without money suddenly 
 and amply created, there could have been no army. 
 
 That measure was a novelty — a paradox in the history of nations — a forced 
 loan, with the cordial consent of the lenders ! The sterling common sense of 
 the loyal people saw it was a necessity, and accepted it with cheerful acqui- 
 escence; and every man of common sense now sees that the everlasting good 
 which the measure wrought, outweighs a thousand fold the temporary evils 
 which it has occasioned. 
 
 It appeared to me at the time (and has never appeared otherwise) that the 
 originating and perfecting of that measure was one of the wisest acts of true- 
 statesmanship that were displayed during the civil war, and will ever be 
 regarded as a precedent of great value to the people of republics. The 
 clamor against the measure, during the war and since, was and is simply the 
 voice of selfish partizanship, and the cry of "unconstitutionality" was only 
 the cry of disloyal politicians against the efforts for the salvation of the repub- 
 lic. Wisely did Madison declare that public necessity takes precedence of 
 all Constitutions; and Mr. Lincoln as wisely said that the Union is older than 
 the Constitution, and took measures outside the letter of the Constitution to 
 save it. 
 
 The philosophic historian and statesman of another century, with vision 
 unob.scured by the smoke of conflict, will point to the Legal Tender Paper 
 Money Act as one of the chief instrumentalities which preserved for them- 
 selves and their children the blessings of free institutions ; and among the 
 names of the statesmen to whose wisdom and energy the nation is chiefly 
 indebted for the measure, yours, sir will ever appear most prominent. 
 I am, dear sir, with gratitutle for your public services. 
 
 Your friend 'and fellow citizen, 
 
 BENSON J. LOSSING. 
 
31 
 
 HO!<r. J. 8. MOTIEILL, 
 
 One of tlie most effective men on the Committee of Ways and Means when 
 the Legal Tender Act was passed. 
 . Stafford, Vt., June 0, 1869. 
 
 Mt Deak' Sir: — Your favor of the 5th inst. came to hand yesterday, and 
 your booli on the Financial History of the War, has just arrived. Of course 
 I have not yet had time to read it, but I have no doubt of its having received 
 all the care necessary to make it valuable, and I know of no one who could 
 more acceptably perform the service. You and I differed as to the 
 policy of issuing the Legal Tender notes. Forecasting somewhat the 
 train of difficulties in the way — such as increasing the ultimate debt — disor- 
 ganizing trade and the finaj retirement. I then thought it possible to avoid 
 their issue. Now I do not discuss the question because there are so many 
 unpatriotic and discordant utterances on the subject, and I may be in error, 
 but I have never had a doubt in my own mind that we could have furnished 
 ample means to the Government and saved hundreds of millions of our public 
 debt by reducing the discount on credit to the minimum final through some 
 such course as that I advocated at the time. Your course then was patriotic 
 and has been since, and some of the errors since committed I know have not had 
 the sanction of your judgment. Others have gone further than you proposed, 
 and there are yet others who even now do not propose to halt. But I am 
 hopeful that we shall in due time emerge from our present unhappy condi- 
 tion and get our finances in a condition so that if another war was necessary, 
 and I trust that day may be far off, we could bear our part without extreme 
 trial. Please accept my thanks for the copy of your work. 
 Very truly yours, 
 
 Hon. E. G. SPAULI>I^G, Buffalo, N. Y. JUSTIN S. MORRILL. 
 
 HON. SAMTJEL HOOFER, 
 
 A. member of the Committee of Ways and Means. 
 
 Boston, September 5, 1869. 
 My Deak Sib: — Please accept my thanks for your book on the finances 
 during the war, which has been received. I have not had time to read it, but 
 have looked through it curiously, and s.aw that you had not departed from 
 the<principles which influenced us when we were striving so hard to get the 
 financial bills through the Congress. I shall give the book a thorough read- 
 ing before Congress meets. Specie payments seem as far off as ever. Mr. 
 BoutweU seems to believe the reduction of the debt, with the increase ofbusineas will 
 bring ahout resumption in due iim^e. He retnarked to me a few days since that 
 with the present tariff and internal revenue laws, the whole debt could be paid in 
 twelve years. I am curious to see what financial policy he will announce in 
 bis annual report to Congress. I have great distrust of the action of Congress 
 unless the Qovernment advocate measures to restore the value of the cur- 
 rency. A positive policy on the part of the Government strengthens public 
 opinion, and that operates powerfully on the action of Congress. * * 
 
 Yours with regard, 
 Hon. E. G. Spaulding. S. HOOPER. 
 
32 
 
 HOBACB GRBEBET, 
 
 111 tlie New York Tribune, July 7, 1869. 
 " We render hearty thanks to the Hon. E. G-. Spaulding, of Buffalo for his 
 'History of the Legal-Tender Paper Money issued during the great Kebelllon.' 
 It is the clearest and tersest account yet given of the origin of the Legal-Ten- 
 der act, the views of those members of Congress who aided and of those who 
 resisted its passage, the various modifications it lAiderwent, closing with the 
 text of the bill as finally passed ; the construction simultaneously given 
 to it with regard to the medium wherein the Five-Twenty bonds were pay- 
 able, etc., etc. The origin, tenor and and scope of the National currency act, 
 and of the various acts by which our systems of finance and currency have 
 since been modified, are also elucidated by extracts from speeches in 
 Congress, by coteniporary letters, etc., etc. Mr. Spaulding was an active 
 member both of the Committee of Ways and Means, and of its sub-Commiltee 
 having charge of this subject, and is thus enabled to throw much light on the 
 general subject. We advise any man who wants to cheat himself into the 
 belief that the funded debt of the United States may lawfully be p lid in 
 greenbacks not to read this handy volume, unless he is anxious lo know 
 that he is a rascal and that everyone sees it." 
 
 The following additional letters will appear in tlie appendix to this edition: 
 
 Hon. Hugh McColloch, late Secretaryof Treasury. 
 
 " Charles Francis Adams, Massachusetts. 
 
 " Geo. H. Pendleton, Ohio. 
 
 " C. L.Valandigham, Ohio. 
 President Woolsey, Yale College. 
 Prof Perry, of Williams College. 
 Judge Noah Davis of New York. 
 Judge Fithian of New York. 
 
 Spaulding to J. S. Gibbons— Why the Banks Suspended in 1861. 
 J. S. Gibbons' reply. [Sub-Treasury Law.] 
 John E. Williams, Metropolitan Bank, New York, 
 Geo. S. Coe, American Exchange Bank, New York. 
 John P. Elton, Waterbury Bank, Connecticut. 
 The old United States Bank and National Banks. 
 President Grant's veto message, April 22d, 1874. 
 Hon. Samuel F. Miller, Justice of the United States Supreme Court. 
 
 " Samuel Nelson, late Justice of the United States Supreme Court. 
 
 " K. C. Grier, late Justice of the United States Supreme Court. 
 
 " Judge Swayne, Justice of the United States Supreme Court. 
 
 " David A. Wells, Political Economist. 
 
 " Joel T. Headly the Historian. 
 
 " E. E. Fenton, who voted for the Legal-Tender Act. 
 
 " Carl Schurz, late Senator for Missouri. 
 
 " H. L. Dawes, Senator from Massachusetts. 
 
 " A. M. Clapp, Public Printing, Washington. 
 
 " A. A. Low, of New Ybrk. 
 
 " J. P. Bradley, of the United States Supreme Court 
 Prof. James P. White, Buffalo. 
 
 Major-General Sherman and Gen. B F. Butler, Massachusetts. 
 Hon. H. H. VanDyke, late Assistant Treasurer, N. Y. 
 
 " David Wilder, State Treasurer, Boston. 
 
 " J. F. D. Lanier, hanker, New York. 
 
 " J. J. Knox, Camptroller of the currency. 
 
 " S. S. Cox, House of Representative. 
 
 " J. A Garfield, House of Representative 
 
 " A. H. Rice, Boston, House of Representative. 
 
 " John T. Heard, Boston. 
 
 " F. A. Conkling, New York. 
 
 " Amasa Walker, Political Economist. 
 
 " Geo. Walker, Springfield, Mass. 
 
 " Senator O. P. Morton. 
 
 " Senator T. O. Howe. 
 
 " Henry E. Da-v'ies, New York. 
 
 " J. 0. Putnam, Buffalo. 
 
 " Martin J. Crawford, Georgia. 
 
INDEX. 
 
 Introduction, - - - . - - - S 
 
 No National Currency at commencement of War, - 5 
 
 War carried on upon credit and taxation, - - r- - 5 
 
 Legal Tender act a War measure; - - - n— 29 
 
 Loan of $150,000,000 by the Associated Banks, 7 
 
 Who composed the Committee qi Ways and Mpans, - - 7 
 
 Sub-Committee, Messrs. Spaulding, Hooper and Corning, 8 
 
 Secretary Chase's financial plan, a bank and taxation, - - 8—1). 
 
 Mr. Chase does not recommend legal tender, - IQ 
 
 Bank bill prepared by Mr. Spaulding, - - 11—18 
 
 Brastus Coming's letter on the Bank bill, 12 
 
 Origin of the Legal Tender act, - - - - 13 
 
 Legal Tender bill Introduced by Mr. Spaulding, 14 
 
 Ways and Means divided on the bill, - - - 15 
 
 Opinion of Attorney General Bates, - - 1§ 
 
 Ways and Means agree to report the bill, 16 
 
 Bill reported by Mr. Spaulding, . - - - ig 
 
 Mr. Spaulding's letter to Isaac Sherman, New York, - - 17 
 
 Isaac Sherman's letter, - - - - 18 
 
 The Press in New York opposed to the act, - - - 19 
 
 Meeting of Bank Delegates in Washington to oppose the bill, 19 
 
 Meeting of Delegates and Committees at Treasury Department, t& 
 
 Their plan to raise money to carry on the War, - - 2Q. 
 
 Secretary Chase modifies their plan, - . - - - - 2|. 
 
 Opposition to the Bank plan, ------ --22 
 
 Letters of M. H. Grinell, L. F. Allen and Mr. Sanson, - 23 
 Letters of J. W. Simonton, T. Denny & Co., J. E. Williams, - 21—25 
 
 Section for $500,000,900 of 5-20 bonds, - - 26 
 
 Letterof Secretary Chase, January 22, 1862, - - 37 
 
 National Intelligencer, Col. Seaton, etc., . - - 28 
 
 Mr. Spaulding's opening Speech on the bill, - - 28. 
 
 Value of the Real and Personal property, $16,159,616,068, - 41 
 
 Mr. Vallandlgham offers a substitute, - - - 43 
 
 Mr. Pendleton's Speech on the bill, - - - . - . 43 
 
Jv 
 
 Mr. Oorriiiig's resolution asking opinion of Secretary Chase, - - 45 
 
 Secretary Chase's opinion of the propriety and necessity of the bill, 45 
 
 Ml-. Chase's letter to Mr. Spauldlng, Jan. 30th, - - - 46 
 J.ettersof John A. Stevens, George Opdyke and R. Morris, - - 47 
 Letters of Stephen Colwell, M..S. Hawley, J. H. Van Antwerp, -. 48-^49 
 
 Letters of Robert Dennison, C. H. Russell, Mr. Lord, Mr. Prosser, 40—50 
 
 Letters of George B. Butler, T. W. Olcott and others, - - - 51—52 
 
 Mr. Vallandigham's Speech, - - - - - - - - 52 
 
 Mr. Hooper's Speech, - - 54—55 
 
 Mr. Roscoe Conkling, Mr. Morrill, Stevens and Spaulding, - 57—58 
 
 Mr. Conkling a^ to Secretary Chase's position/ - - 58—59 
 
 Secretary Chase's letter in favor of biU, . - - 59 
 
 Mr. Morrill's Speech against legal tender, - - • - - - - 60 
 
 Mr. Roscoe Conkling's Speech against legal tender, - - - - 64 
 
 Mr. Bingham, of Ohio, in favor of the bill, - - - - 66 
 
 Mr. Sheffield, Crisfield and Pike, ----- - 68—69. 
 
 Mr. Alley, of Massachusetts, in favor of the bill, - - - - 71 
 
 Letter of Secretary Chase urging immediate action, - - 71 
 
 Mr. Spaulding's motion to close debate opposed, - - 72 
 
 Mr. Horton and Mr. Wright oppose the bill, 73 
 
 Order to close debate passed, - - 74 
 
 Proceedings on the day the bill passed the House, 75 
 
 Mr. Kellogg's Speech, - - 75 
 
 Mr. Thomas and Mr. Edward's Speeches, - - 77 
 
 Mr. Riddle and Blake's Speeches, - - 78 
 
 Mr. Campbell's Speech, 79 
 
 Mr. Spaulding and Stevens' Speeches closing debate, - 80—81 
 
 Five minute Speeches continued, -. - - 85 
 
 Mr. P. A. Conlding, Shellabarger, Hickman, 85—87 
 
 Mr. Lovejoy and Walton, - - - - 88 — 91 
 
 Motion to strike out legal tender clause lost, - 91—92 
 
 Confusion and excitement on taking vote, - 92 
 
 The substitute of Mr. Morrill, Conkling and others lost, - 92,93,94 
 
 Bill passed ; yeas 93, nays 54, - - - - - 95 — 96 
 
 Copy of bill as passed the House February 6, 1862, 'f t^ % 66—67 
 
 George Dawson's letter to Albany Journal, - - " - 98 
 
 Proceedings in Senate on the bill, - - - - - 99—100 
 
 $J0,000,000 demand notes for temporary relief, - - - - 99 
 
 Senate Finance Committee propose amendments, - - - lOO 
 
 . Mr. Fessenden's opening Speech, - - - - loO 
 
 Speeches by Judge CoUamer and Mr. Howe, - - - 106—107 
 
 Speeches by Chandler, Wilson and Sherman, - - 109, 110, 111 
 
 Speeches by Cowan, DooUttle, Simmons, Bayard, - - - 114, H6, ne 
 
 Speeches by Willey, Howard, McDougall, - - - - 117, 118, 119 
 
 Speech by Mr. Sumner, . - _ . - . - 121 
 
 Motion to strike out legal tender clause lost, - 12] 122 
 
 Speeches of King, Pearce, Salesbury, Powell, - - 122-123. 
 
 Bill passed the Senate 30 to 7, 124 
 
 Letter of J. W. Simontott on the origin of legal tender act, - - 124 
 
Objection in House to Senate amendments, - .... 125—126 
 
 Mr< Spaulding's Speech opposing them, ---..-- 127 
 Speeches by Pomeroy, Calvert, Mori-ill, Dunn, English, - - 133—138 
 Speeches by Pike, Diven, Windom, Pendleton, - . , . 189-140 
 Speeches by Hooper and Stevens close debate on amendments, - 140—141 
 Teas and nays to pay soldiers and sailors in coin, - - - - - 144 
 
 Teas and nays to pay interest in coin, .------ 145 
 
 Teas and nays to sell bonds at market value, - - - - - - 146 
 
 Teas and nays to lay bill on table, ..... - 147 
 
 Conference Committee-r-bill passed, ....... 148 
 
 Copy of legal tender act, February 25, '62, ----- - 149 
 
 Samuel Wilkeson's letter to N. T. Tribune, 152 
 
 Temporary deposits in Sub-Treasury, -....-- 152 
 Certificates of indebtedness, ..------.153 
 
 $60,000,000 more legal tender declared, 154 
 
 Secretary Chase asks for $150,000,000 more, 154 
 
 Secretary Chase asks for small bills less than $5, .... 155 
 
 Action of Committee of Ways and Means on this, .... - 156 
 
 Mr. Spaulding's Speech upon it, -------- 157 
 
 Mr. Colfax's Speech and Mr. Stevens', ------- 161 
 
 Teas and nays on passage of this bill, ------ 162 
 
 Passed the Senate ; yeas 22, nays 13, -..--- 163 
 
 Copy of second legal tender act, - - - - - - 1 163 
 
 Postage Stamps and Fractional Currency, - - - - - 165 
 
 Shinplasters prohibited, 2d Section of the act, - - - 165 
 
 Bank bill again recommended by Secretary Chase, - - - - 167 
 
 $900,000,000 loan bill reported from Committee, - - - - 167 
 
 Spaulding's opening Speech upon it, ...-.- 167—168 
 Particulars of the National Debt, Jan. 2, 1863, - - -v - - 170 
 
 / Constitutionality of a National Bank, - 172 
 
 ? Constitutionality of State Banks, 172 
 
 Interest-bearing Treasury Notes, .--.---- 178 
 
 Our only hope is in military success, ------- 179 
 
 $100,000,000 legal tender to pay the army, - - - -180—181 
 
 Mr. Gurly's Speech on market value of bonds, ----- 181 
 
 -^ Secretary Chase's special letter on Bank bill, 182 
 
 Special resolution passed to pay Soldiers, 182 
 
 President Lincoln's Special Message on the resolution, - - - - 183 
 
 Morrill, Ward and Amasa Walker's Speeches on the $900,000,000 
 
 Loan Act, ----------- 184 
 
 Substitutes of Hooper and Stevens lost, ...... i85 
 
 $900,000,000 Loan BiU. passed both Houses, 185 
 
 Sjmopsis of the bill as passed, --------186 
 
 ) Bank bill passed; yeas and nays, ------ -186—187 
 
 Vjro National Currency issued until 1864, 187—188 
 
 The right to Convert notes into bonds at par abrogated, - . - 188 
 
 Jay Cook negotiates $500,000,000 of 5-20 bonds, 189 
 
 Mistake of the secretary in not continuing funding, - - - -189 
 Mr. Spaulditig^B two letters to Morris Ketchum on the subject, - 190 
 
VI 
 
 Morris Ketchum's reply, March 21, 1864, ..---- 195 
 
 Second letter of Mr. Spaulding to Morris Ketchum, - , » -f 195 
 Mr. Chase resigns— W. P. Fessenden appointed Secretary Treasmy, - 19* 
 Geo. Harrington Secretary of Treasury, ad interim, ^ - . - 198 
 Gold $2.50 at the Board of Brokers, - ------ 198 
 
 Great inflation of the currency, ------- 198^199 
 
 Gold $2.85J^— Gold bill in force only 15 days, 199 
 
 Legal tender U. S- notes limited to $400,000,000j - - - - 199 
 
 All bonds, notes and other obligations exempt from taxation, - - 208 
 How Secretary McCuUoch paid the Army at close of the War, - - 208 
 $830,000,000 of7-30 Treasury notes issued, ----- - 200 
 
 Statement of Public Debt at the close of the War, - - - - 201 
 
 National Bank circulation, $185,000,000, ------- 201 
 
 Tariff and Internal Revenue laws, ------- 201 
 
 Contraction of the currency, - - - . - 202 
 
 Secretary McCuUoch on contraction, ------ 202 
 
 Mr. Alley's Resolution in favor of contraction, - - - 203 
 
 Yeas and nays on Mr. Alley's resolution in the House, - 202 
 
 Contraction of the currency suspended, - - - - - - 203 
 
 Public Faith — Debt to be paid in coin, ------ S03 
 
 Teas and nays on this biU, - ----- - 204 
 
 U. S. Grant approves the bill, -.-,----205 
 
 Decision of State Courts on the constitutionality of legal tender, - - 205 
 Coin contracts decided valid by U. S. Supreme Court, - - . 206 
 Conchision — summing up, - - 208—213 
 
 APPENDIX. 
 
 Mr. Spaulding's Speech on tlie National Currency Bank bill, February 
 
 19, 1863, -• - - 1—9 
 
 Letter of Mr. Spaulding to J. N. Orvis, Esq., - - - 9—13 
 Letter of Mr. Spaulding to Hon. H. B. Hubbard, Comptroller of 
 
 Currency, - ----- -. 13 — 17 
 
 Letter of Mr. Spaulding to Secretary McCuUoch, - 18 
 
 Secretary McCuUoch's reply, - - 18 
 
 National Debt — No repudiation, - - - 19—21 
 
 No State taxation of U. S. Bonds, - - * - - - 22 
 
 Mr. Spaulding's letter to Senator Morgan, - - - 22 — 24 
 
 Letter of Fisk & Hatch to the Assistant Secretary of the Treasury, - 24 
 
 Assistant Secretary's reply, -- - 24 
 
 Mr. Spaulding's remarks, - - - - 24 — 27 
 
 Secretary McCuUoch's letter to L. P. Morton & Co., - 27 
 
 Mr. Spaulding's remarks, - - - - - 27 
 
 F. E. Spinner's letter to Mr. Spaulding, - - - - - 28 
 
 National Currency — Legal Tender, . . . . 28^-33 
 
 Mr. Spaulding's letter to Secretary McCuUoch, 34 35 
 
 President Lincoln's Veto, . 36 
 
 Mr. Spaulding's Speech, May 3d, 1862, - 37 40 
 
vu 
 
 Mr. Spaulding to Mr. Adams— legal tender vindicated, ^ 41 
 
 Vote of the Senate on the 4th $100,000,090 greenbaeks, 42 
 
 1 Mr. Spaulding to Cincinnati Gazette— First mistake of Mr.' Chase, 43 
 
 \ Old TJ. S. Banks and National Banks (Sab-Treasury),' 45 
 
 Hon. Hugh McCulloch's letter, 1869, - - 48 
 
 Hon. Charles Francis Adams against legal tender, 49 
 
 Hon. Joel T. Headley's letter, 1 869, - ' 50 
 
 Mr. Spaulding to J. S. Gibbons on Sub-Treasury, - 51 
 
 J. S. Gibbons' reply, - - 54 
 
 J. E. Williams, Metropolitan Bank, New Yoik, 55 
 
 John P. Elton, Walerbury Baufc, Conn., 55 
 
 H. H. Van Dyck, Asst. Treasurer, New York, 57 
 
 H. F. Vail, Bank of Commerce, New York, 57 
 
 Judges Nelson and Grier, U. S. Supreme Court, 58 
 
 Judges Miller and Bradley, do 59 
 
 Judge Noah Davis, New Y oj k, 60 
 
 Judge Fithian, New York, 60 
 
 Judge Henry E. Davies, 27 N. Y. Reports, 62 
 
 President Woohey, Yale College, - 62 
 
 Prof. Perry, Williams College, 63 
 
 Prof. J. P. White, M. D., Buffalo, 63 
 
 John T. Heard, Esq., Boston, 64 
 
 C. L. Vallandigham, Ohio, - - 64 
 Geo. H. Pendleton, Ohio, - 65 
 Martin J. Crawford, Georgia, 65 
 President Grant's veto of mflation bill, 65 
 Senator Timothy O. Howe, Wisconsin, 68 
 Senator O. P. Morton, Indiana, - - 69 
 Senator R. E. Penton, New York, 69 
 Senator Carl Schurz's letter and speech, 69 — 70 
 E. W. Leavenworth's letter, 1869, 72 
 
 D. A. Wells and Amasa Walker, 73—73 
 Hon. A. H. Rice and J. A. Garfleld, ' 74 
 Maj. Gen. Sherman and Gen. Butler, - 74 
 Hon. Edward Haight, only Democrat that voted for legal tender, 75 
 Hon. J. O. Putnam, J. P. D. Lanier and A. M. Clapp, - - 75—76 
 Hon. H. L. Dawes, U. S. Senator, - . - 77 
 French fin&nces — Gold reserves - ' - 77 
 David Wilder, Boston, 79 
 H. Bowlby Wilson, New York, - 80 
 Isaac Sherman, Esq., New York, - 81 
 Hon. John J. Knox, Comptroller of Currency, 82 
 Hon. W. P. Fessenden, John Coburn, A. R. Eno, - - 83 
 
 ( Hon. F. A. Conkling's review from 1861 to 1875— Mistakes of Secretary 
 ' Chase, etc., - - - - 83—86 
 
 Hon. S. S. Cox against inflation and repudiation, - 87 
 
via 
 
 A. A. Low, Esq. , merchant, New York, 87 
 
 Gen. J. D. Cox, Secretary of the Interior, 88 
 
 Hon. J. S Morrill, Senate Finance Committee, 88 
 
 Hon. John J. Cisco, confirming facts stated 88 
 
 -Geo. S. Coe, President of the American Exchange Bank — Early war 
 finances — Mistakes of Secretary Chase — Sub-Treasury — Specie 
 payments (able and historical), - 89—96 
 
 John E. Williams, President of Metropolitan Bank, New York — Impor- 
 tant historical letter to Sec'y Chase— First loans of $150,000,000 in 
 1861 — Mr. Chase rejects the advice of experienced bankers, 96 — 99 
 
 Geo. Wm. Curtiss, Editor Harper's Weekly, 99 
 
 E. H. Stoughton, counsellor. New York, 99 
 
 Hon. Montgomery Blair, Postmaster General, . - 99 
 
 Senator Christiancy, gold and paper, 100 
 
 Senator Morgan, . - 100 
 
 Col. J. W. Forney, Washington Clironicle, - ■ 101 
 
 A. M. Clapp, Public Printer, 103 
 
 Gen. J. E. Hawley's speech, 103 
 
H I S T O R Y 
 
 OP THE 
 
 LEGAL TENDER ACT. 
 
 The United States, at the hreaking out of the rebellion, had no 
 national bank cnrrency, and no gold or available means in the 
 Treasurj', or Sub-Treasurj', to carry on the war for the Union, and 
 consequently the means to prosecnte the war had to be obtained 
 upon the credit of the government, and by taxation. The fundable 
 legal tender currency was the most available form of credit which 
 the government could use in crushing the rebellion. It was at once 
 a loan to the government without interest, and a national currency, 
 which was so much needed for disbursement in- small sums during 
 the pressing exigencies of the war. It was indispensablj^ neces- 
 sary, and a most powerful instrumentality in saving the govern- 
 ment and maintaining the national unitj-. 
 
 Experience has proved that, notwithstanding it was a forced 
 loan, the end justiiied the means, and that no parties were materi- 
 ally injured b}' being compelled to receive this currency, so long 
 as the J' could fund it at any time in six ]ier cent, twenty years 
 bonds. Although it was a war measure — a measure of necessity 
 and not of choice, and coidd only be justified on that ground, 
 it has, for manyj'ears, exerted a most decisive influence over the 
 property and material interests of every individual in the United 
 States. It has affected debtor and creditor, producer and eon.- 
 sumer, and the price of labor and of eveiy article consumed in 
 every household. It still exerts a mighty influence socially, 
 commercially and politically, over the people of this greiat nation, 
 and all the ramified and extensive business in which they are 
 
engaged. Whether foi* good or evil, it has been and still is a 
 most powerful element in all business affairs of the people, as well 
 as the government, and the war debt of $2,500,000,000 incurred in 
 maintaining the national union is more or less affected by the 
 large volume of this currency still outstanding. 
 
 Having been requested to prepare a history of a measure of 
 such transcendent importance as the legal tender act, and having 
 in my possession a considerable number of documents, letters, and 
 other materials relating to the subject, I have consented to put them 
 into form, in order that the facts may be preserved for present 
 and future reference, and which may be of some use in enabling 
 the future historian to write a chapter on the iinancial history of 
 the war. These facts will be presented in the form of a narrative 
 of the circumstances and events, of the most grave and extraor- 
 dinar}^ character, occurring in rapid succession, which led flnalty 
 to the issue of legal tender Treasurj' notes, and which were 
 endowed with the attributes of money, so far forth as the Govern- 
 ment had power under the Constitution and the pressure of the 
 crisis to impart to a paper currenc}^ that high and most important 
 attribute of sovereigntJ^ 
 
 I was a somewhat prominent though humble actor in originating 
 and maturing the measure, but I do not claim anj' particular merit 
 or demerit for what I did in preparing and aiding to secure the 
 passage of the bill. I was placed in a position where, if I 
 performed mj^ official duty, I must act, and must act with vigor 
 and promptitude. The perilous condition of the country did not 
 admit of hesitancy or delay. I endeavored, in the peculiar and 
 responsible position in which I was placed, to do what I conceived 
 to be my dutj', and that is all I claim to have done. My asso- 
 ciates performed their duty with equal fidelity and usefulness. 
 
 As chairman of the Sub-committee of Wa5's and Means, it 
 became my duty, in connection with mj^ associates, to devise an 
 adequate plan for obtaining tlie necessary means for prosecuting 
 the war to a successful issue. The rebellion, after the battle of 
 Bull Run, had assumed most gigantic iDroportions. An Army and 
 Navy of over half a million of men had been hastily brought into 
 the service of the United States. The Capitol itself was guarded 
 by a vast Army, under the command of General McClellan, 
 Which encircled it in all directions. The Armj^ and Navy thus 
 in the service had to be paid, fed, clothed and provided with 
 aliips, gunboats, monitors and all the necessary material of 
 
war to make them effective in crashing the rebellion. This 
 required vast available means ; where were thpse nieans to 
 be obtained ? It was plain that they must come from the loyal 
 people themselves, and that, from whatever source these means 
 were to come, they must be obtained, as before stated, upon the 
 credit of the government, then assailed and weakened bj^ armed 
 rebellion. 
 
 The banks in New York, Boston and Philadelphia had, during 
 the summer and fall of 1861, loaned to the government very nearlj' 
 the sum of $150,000,000 in gold, which had so exhausted their 
 resources that it was very difficult for many of them to pay the 
 last instalments due on the last loan of $50,000,000. These 
 banks, at the commencement of the war, possessed a large part of 
 the available gold in the country, but in paj'ing over to the 
 Treasurer the gold on these loans, and in the disbursement of the 
 same to sustain the Army and Navy, it became so scattered that it 
 could not, to any considerable extent, be re-loaned to the govern- 
 ment, nor could it any longer be made available as a reserve for 
 the banks. The banks were consequently in great danger of 
 suspending specie payments at the time Congress assembled at its 
 regular session in December, of that j'ear. Congress met on the 
 2d December, 1861. The House, having been organized at the 
 Extra Session in July by the election of the Hon. Galusha A. 
 Grow, Speaker, proceeded at once to business. 
 
 On the 5th, the vacancies in the Standing Committees were 
 filled up. Hon. Samuel Hooper, of Mass. , a new member, was 
 appointed on the Committee of Ways and Means in place of. Saiaa-^ 
 uel Appleton, deceased ; and Hon. Horace Maynard ,iii place of 
 lion. John A. McClernand, who had been appointed a Briga- 
 dier General in the volunteer army. The Committee of Waj's 
 and Means then consisted of 
 
 Thadeus Stevkns, of Pa. 
 
 •Justin S. Morkill, of Yt. 
 
 JoQN S. Phelps, of Mo. 
 
 Ei.BRiDGE G. Spauldino, of N. Y. 
 
 Valentine B. Hobton, of Ohio. 
 
 pjRAsTus Corning, of N. Y. 
 
 Samuel Hooper, of Mass. 
 
 Horace Maynard, of Tenn. 
 
 John L.' N. Stratton, of N. Y. ~ 
 Owing to the pressure of businesp in the Treasury Department, 
 
8 
 
 Secretary Chase did not get his Annual Report ready to submit to 
 the House until the 10th, and it was not printed and laid on the 
 table of the Committee of Waj's and Means until near the middle 
 of December. 
 
 Soon after the report of the Secretary of the Treasurj' was 
 received, finding a large volume of business in the Committee 
 room to be disj)Osed of, the Committee agreed to the appointment 
 of two Sub-committees, namel}', 
 
 One Committee on the National Currency bank bill, making of 
 loans, issue of Treasury notes, bonds, and the mode of raising 
 the means to carry on the war, consisting of 
 
 Mr. SPArLDiNG, 
 
 Mr. Hooper, 
 
 Mr. CoRNixd. 
 
 The other Committee was appointed on the Tariff, Internal 
 Eevenue, and taxation generall}', consisting of three or four 
 members, Mr. Morrill of Vermont, being chairman. The appro- 
 priation bills were then in course of preparation, Mr. Stevens 
 devoting a good deal of time in perfecting and passing them 
 through the House, as chairman of the General Committee. Mr. 
 Phelps was at this time absent in Missouri, and remained absent 
 for several weeks, looking after public affairs in that State, which 
 were then in a verj' disturbed condition. 
 
 The Committee of "Ways and Means having thus divided the 
 subjects before it, and having referred the papers and documents to 
 these Sub-committees, the Committee was prepared for efficient 
 work. 
 
 The Sub-committee, of which Mr. Spaulding was chairman, 
 examined with care the report of the Secretar3- of the Treasury, 
 to ascertain what measures he proj)Osed for providing the ways 
 and means to support the government and carry on the war. Here 
 follows an extract from that part of the Secj-etary's report which 
 was referred to this Sub-committee, viz: 
 
 " To enable the government to obtain the necessary means for prosecu- 
 ting the war to a successful issue, without unnecessary cost, is a problem 
 which must engage the most careful attention of the Legislature. Tlie 
 Secretary has given tp this problem the best consideration in his power, 
 and now begs leave to submit to Congress the result of his reflections. 
 
 The circulation of the banks of the United States on the 1st day of 
 January, 1861, was computed to be $202,000,767. Of this circulation, 
 $150,000,000, in round numbers, was in the States now loy.il, including 
 Western Virginia, and $50,000,000 in the rebellious States. The whole of 
 this circulation constitutes a loan witliout interest from the people to the 
 
9 
 
 banks, costing them nothing except the expense of issue and redemption 
 and the interest on the specie Isept on hand for the latter purpose ; and it 
 deserves consideration whether sound policy does not require that the 
 advantages of this loan be transferred, in part at least, from the banks, 
 representing only the interests of the stockholders, to the Government, 
 representing the aggregate interests of the whole people. 
 
 It has been well questioned by the most eminent statesmen wliether a 
 currency of bank notes, issued by local institutions under State laws, is 
 not, in fact, prohibited by the National Constitution. Sucli emissions 
 certainly fall within the spirit, if not within the letter, of the Constitution- 
 al prohibition of the emission of "bills of credit" by the States, and of 
 the making bythem of anything except gold and silver coin a legal tender 
 in payment of debts. 
 
 However this may be, it is too dear to he reasonably disputed that Congress, 
 imder its Coiisiituiional powers to lay taxes, to regvhie commerce, and to regvktie 
 the value of coin, possesses ample aniJiorily to control the aredit circulalitm which 
 eniers so largely into the transactions of commerce, and affects in so many ways 
 the vahte of coin. In the judgment of the Secretary, the time has arrived when 
 Congress should exercise this authority. The value of the existing bank-note 
 circulation depends on tlie laws of thirty-four States, and the character of 
 some sixteen hundred private corporations. It is usually furnished in 
 greatest proportions by institutions of least actual capital, circulation , com- 
 monly, is in the inverse ratio of solvency. Well-founded institutions, of 
 large and solid capital, have, in general, comparatively little circulation ; 
 while weak corporations almost invariably seek to sustain themselves by 
 obtaining from the people the largest possible credit in this form. Under 
 such a system, or ratlier lack of system, great inlluctions, and heavy losses 
 in discounts and exchanges are inevitable, and not unfrequently, through 
 failures of the issuing institutions, considerable portions of the circulation 
 become suddenly worthless in the hands of tlie people. The recent 
 experience of several States in tlie valley of the Mississippi, painfully 
 illustrates the justice of these observations; and enforces, by the most 
 cogent practical arguments, the duty of pi'otecting commei'ce and industry 
 against the recurrence of such disastei'S. 
 
 The Secretary thinks it possible to combine with this protection a 
 provision for circulation, safe to the communitj' and convenient for tlie 
 government. 
 
 Two plans for effecting this object are suggested. The first contem- 
 plates the gradual withdrawal from circulation of the notes of private 
 corporations, and for the issue, in their stead, of United States notes, 
 payable in coin on demand, in amounts sufficient for the useful ends of a 
 representative currency. The second contemplates the preparation and 
 delivery, to institutions and associations, of notes prepared for circulation 
 under national direction, and to be secured as to prompt convertibility 
 into coin by the pledge of United States bonds and other needful regula- 
 tions. 
 
 1. l%e first of these' plans was partially adopted at the last session of 
 Congress, in the provision authorizing the Secretary to issue United States 
 notes, payable in coin, to an amount not excee'ding $50,000,000. That 
 provision may be so extended as to reach the average circulation of the 
 country, while a moderate tax, gradually augmented, on bank notes, will 
 relieve the national from the competition of local circulation. It has been 
 already suggested that the substitution of a National for a State currency, 
 
10 
 
 Upon this plan, would be equivalent to a loan to the Government without 
 interest, except on the fund to be kept in coin, and without expense, 
 except the cost of preparation, issue and redemption; wliile the people 
 would gain the additional advantage of a uniform currency, and relief 
 from a considerable burden in the form of interest on debt. These advan- 
 tages are, doubtless, considerable ; and if a scheme can be devised by which 
 such a circulation will be certainly and strictly confined t© the real needs 
 of the people, and kept constantly equivalent to specie by prompt and 
 certain i-edemption in coin, it will haidly fail of legislative sanction. 
 
 The plan, however, is not Without serious inconveniences and hazards. 
 The temptation, especially gi-eat in times of pressure and danger, to issue 
 notes without adequate provision for redemption ; the ever'-present liabil- 
 ity to be called on for redemption beyond means, however carefully pro- 
 vided and managed; tlie hazard of panics, ]neoipitating demands for coin, 
 concentrated on a few points and a single fund ; the risk of a depreciated, 
 and depreciating, and finally worthless paper money; the immeasurable 
 evils of dishonored public faith and national bankruptcy; all these are 
 possible consequences of the adoption of a system of Government circula- 
 tion. It may be said, and perhaps truly, that they are less deplorable 
 than those of an irredeemable hank circulation. Wiihoui enlei-ing into thai 
 comjjarison, the Secretary contents himself with observing thai, m his judgment, 
 those possible disasters so far miiweigh the pi-obable benefits of the ]')lan, thai he 
 feels himself constrained to forbear recommending its adcyplion. 
 
 2. The second plan suggested remains for examination. Its principal 
 features are : first, a circulation of notes bearing a common impression, 
 and authenticated by a common authority; second, the redemption of 
 these notes by the associations and institutions to which they may he 
 delivered for issue; and, third, the security of that redemption by the 
 pledge of United States stocks, and an adequate provision of sijecie. 
 
 In this plan the people, in their ordinary business, would find the advan- 
 tages of uniformity in currency ; of uniformity in security ; of effectual 
 safe-guard, if effectual safe-guard is possible, against depreciation; and 
 of protection from losses in discounts and exchanges; while in the opera- 
 tions of the Government, the people would find the further advantages of 
 a large demand for Government securities, of increased facilities for ob- 
 taining the loans required by the war, and of some alleviation of the bur- 
 dens on industry through a diminution in the rate of interest, or a partici- 
 pation in the profit of circulation, without risking the perils of a great 
 money monopoly, 
 
 A further and important advantage to the people may be reasonably 
 expected in the increased security of the Union, springing from the com- 
 mon interest in its preservation, created by the distribution of its stocks 
 to associations throughout the country, as the basis of their circulation. 
 
 The Searetary erdertains the o^yinion thai if a credit circulation in any form be 
 desirable, it is most desirable in this. The notes thus issued and secured 
 would, in his judgment, form the safest currency which this couutl-y has 
 ever enjoyed ; while their receivability for all Government dues, except 
 customs, would make them, wherever payable, of equal value as a cur- 
 rency in every part of the Union. The large amount of specie now in the 
 United States, reaching a total of not less than $275,000,000, will easily 
 support payments of duties in coin, while these payments and ordinary 
 demands will aid in retaining this specie in the country as a solid basis 
 both of circulation and loans. ' 
 
11 
 
 The whole circulation of the country, except a limited amount of foreign 
 coin, would, after the lapse of two or three years, bear the impress of the 
 nation, whether in coin or notes ; while the amount of the latter, always 
 easily ascertainable, and, of course, always generally known, would not 
 be likely to be increased beyond the real wants of business. 
 
 He expresses an opinion in favor of this plan with the greatest confidence, be- 
 cause it has the advantage of recommendcitwri from experience. It is not an 
 untried theo^-y. In the State of New York, and in one or more of the other 
 States, it has been subjected, in its most essential parts, to the test of 
 experiment, and has been found practicable and useful. The probabilities 
 of success will not be diminished, but increased by its adoption under 
 national sanction, and for the whole country. 
 
 It only remains to add that the plan is recommended by one other con- 
 sideration, which, in the judgment of the Secretary, is entitled to much 
 influence. It avoids almost, if not altogether, the evils of a great and sud- 
 den change in the currency, by offering inducements to solvent existing 
 institutions to withdraw the circulation issued under State authority and 
 substitute that provided by the authority of the Union. Thus, through 
 the voluntary action of the existing institutions, aided by wise legislation, 
 the great transition from a currency heterogeneous, unequal, and unsafe, 
 to one uniform, equal, and safe, may be speedily and almost imperceptibly 
 accomplished. 
 
 If the Secretary 1ms omitted-the discussion of the question of the ConsiUutional 
 poioer of Congress to pvi this plan into operation, it is because no argument is 
 necessary to establish the proposition thai the power to regulate commerce and the 
 value of coin includes the power to regulate the <urrenoy of the. coimtry, or the 
 collateral piroposition that the power to affect the end includes the power to dchpii 
 the necessary axd expedient means. 
 
 The Secretary entertains the hope that the plan now submitted, if 
 adopted with the limitations and safe-guards ■which the experience and 
 wisdom of Senators and Kepresentatives will, doubtless, suggest, may 
 imp>art such value and stability to Governmeiit securities that it will not be dijfieull 
 to obtain the additional loans required for the service of the current and the suc- 
 ceeding year at fair and reasonable rates; especially if the public credit be 
 supported by sufficient and certain provision for the payvient of interest, and 
 ultimate redemption of the principal." 
 
 Finding from the above extracts from tlie report of Secretary 
 
 Chase that he forbore to recommend the issue of United States 
 
 Treasury notes to circulate as money, and that he did recommend 
 
 the National Currency bank bill, Mr. Spaulding, as chairman of the 
 
 Sub-committee, addressed a note to the Secretary requesting him 
 
 to furnish the draft of a bank bill for a national currency based 
 
 on a pledge of public stocks, as recommended in his report, and 
 
 received the following reply : 
 
 Treasury Department, 
 Dec. 18th, 1861. 
 
 Sir : — I have the honor to acknowledge the note of the Committee of 
 Ways and Means of this date, covering the note of yourself as chairman 
 of the Sub-committee, requesting him to furnish the draft of a bill for a 
 
12. 
 
 national currency based on the pledge of public stocks. Thel Secretary of 
 
 the Treasury, who is now in New York, will give to your request his 
 
 prompt attention on his return. 
 
 With great respect, 
 
 GEO. HARRINGTON, 
 
 Acting Secretary of the Treasury. 
 
 To Hon. E. G. Spatjlding, 
 
 Ch. of Sub-Corn, of Ways and Means, H. R. 
 
 On the return o.f the Secretary from New York, it was ascertain- 
 ed that no National Currency bank bill had been prepared. The 
 Secretary then requested Mr. Spaulding to prepare a bill at as 
 early a day as possible. Mr. Spaulding, as chairman of the Sub- 
 committee, immediately set to work at his rooms at the National 
 Hotel in preparing the first draft of the bill, which was there 
 copied by Mr. George Bassett, clerk of the Committee of Ways 
 and Means. This was during the Christmas holidays; Congress 
 adjourning over two or three days at a time, without doing much 
 business, no quorum being present. 
 
 On the 24th inst. Mr. Spaulding wrote a letter to Mr. Corning, 
 then at Albany, informing him that he was making a draft of the 
 National Currency bank bill, and requesting that he would for- 
 ward a copy of the New York Free Banking Law, passed in 1838, 
 and amendments thereto, for the use of the Committee. Mr. 
 Corning promptly complied with this request, and returned the 
 following reply: 
 
 Albany, Dec. 26, 1861. 
 
 My Dear Sir — I am this morning in receipt of your favor of the 24th 
 inst. I send you by this day's mail a copy of our Bank Laws, with 
 amendments passed since 1856. I'his matter, as recommended by Secretary 
 Chase, will not, in my judgment, meet the approval of our State, hence I think 
 much care should be had in drawing up the bill. 
 Yours, very truly, 
 
 ERASTUS CORNING. 
 Hon. E. G. Spaulding, Washington. 
 
 When the frame work of the bill was nearly completed, it was 
 submitted to Mr. Hooper, the only other member of the Sub- 
 committee then in Washington, Mr. Corning having gone to 
 Albany. Mr. Hooper rendered valuable assistance in pei-fecting 
 the bill. He incorporated into it some provisions which experi- 
 ence in his own State had shown to be valuable. The bill was 
 finally completed soon after Christmas. A few days thereafter the 
 National Currency bank bill, thus hastily prepared, was sent by 
 Mr. Spaulding to the public printer, and two hundred copies 
 printed for the use of the Committee of Ways and Means and 
 
13 
 
 the Secretary of the Treasury, with a view of having it more 
 maturely considered in the General Committee, amended and 
 corrected, and finally to he reported to the House. Copies of 
 this printed bill are still in the possession of Mr. Spaulding, 
 the chairman of the Snb-committee, which formed the basis of the 
 bank bill which was finally adopted more than a year afterwards. 
 Mr. Spaulding, while preparing the national currency bank bill, 
 upon mature reflection came to the conclusion, that it could not be 
 passed and made available quick enough to meet the crisis then 
 pressing upon the Government for money to sustain the Army and 
 Navy. lie thei-efore drafted a legal tender Treasury note section 
 to be added to the bank bill, hoping, at first, that it might be made 
 available by issuing legal tender notes direct from the Treasury, 
 while the bank bill was put in operation throughout the country. 
 In order to bring the subject of issuing legal tender fundable notes 
 before the country, the section thus pi-epared by Mr. Spaulding 
 was furnished to the New York Tribune, and published in the 
 issue of the 31st December, 186], and is as follows: 
 
 "That for temporary purposes, and until the circulating notes authorized 
 by this act shall be issued and put in circulation by corporations and 
 associations to the aggregate amount of $100,000,000, the Secretary of the 
 Treasury be, and he is hereby authorized to issue $50,000,000 of Treasury 
 notes on the faith of the United States, payable on demand, without speci- 
 fying any place of payment, and of such denominations as he may deem 
 expedient, not less than $5 each, which shall be receivable for all debts and 
 demands due to the United States, and for all ssilaries, dues,, debts and 
 demands, owing by the United States to individuals, corporations and as- 
 sociations within the United States ; and such Treasury notes shall also be 
 a legal tender in payment of all debts, public or private, within the 
 United States, and shall be exchanged at any time at their par value, the 
 same as coin, at the Treasury of the United States, and the offices of Assist- 
 ant Treasurers in New Tork, Boston, Philadelphia, St. Louis and Cincin- 
 nati, for any of the coupon or registered bonds which the Secretary of the 
 Treasury is now, or may hereafter be authorized to issue ; and such Treas- 
 ury notes may be re-issued from time to time, as the exigencies of the pub- 
 lic service may require. Such Treasury notes shall be signed by the 
 Treasurer of tlie United States, or by some officer of the Treasury Depart- 
 ment designated by the Secretary of the Treasury, and shall be counter- 
 signed by the Register of the Treasury, or by some officer of the Treasury 
 Department designated by the Secretary of the Treasury for the Register. 
 And all the provisions of an act entitled "An act to authorize the issue 
 of Treasury notes, approved the 23d day of December, 1857," so far as the 
 same can be applied to the provisions of this section, and not inconsistent 
 therewith, are hereby revived and re-enacted." 
 
 Upon more mature consideration and further examination, Mr. 
 Spaulding came to the conclusion that the bank bill, containing 
 
14 
 
 sixty sections, could not, with the State banks opposed to it, be 
 passed through both Houses of Congress for several months, and 
 that so long a delay would be fatal to the Union cause. The 
 banks in New York, Boston and Philadelphia, had just suspended 
 specie payments, which compelled a general suspension of coin 
 payments by the Government, and all the other banks throughout 
 the country. No more gold could be loaned to the Government, 
 except in small and wholly inadequate amounts, because it was 
 not to be had. State bank bills could still be obtained, but the 
 banks having suspended specie paj^ments, this currency was depre- 
 ciated, and had only a local character and credit — not being much 
 known out of the States where the banks were located. Hesitancy 
 and delay, with the expenses of the war running on at an average 
 of $2,000,000 per day, would have been fatal. Mr. Spaulding, 
 therefore, changed the legal tender section, intended originally 
 to accompany the bank bill, into a separate bill, with alterations 
 and additions, and on his own motion introduced it into the 
 House by unanimous consent on the 30th of December, 1861. 
 It was read twice, and referred to the Committee of Waj^s and 
 Means, and ordered printed (House Bill, No. 182), and is as 
 follows : 
 
 Mr. Spaulding, on leave, introduced the following bill : 
 
 A BILL 
 
 To authorize thMjesue of treasury notes payable on demand. 
 
 Be it enacted hy the Sekatte and House of Representatives of the Umted States 
 of America in Congress assembled, That, for temporary purposes, the Secre- 
 tary of the Treasury he, ^nd he is hqreby authorized to issue fifty millions 
 of dollars of treasury notes, ^Ti the faith of the United States, payable on 
 demand, without specifying any place of payment, and of such denomina- 
 tions as he may deem expedient, not less than five dollars each, which 
 shall he receivable for all debts and demands due to the United States, 
 and for all salaries, dues, debts, and demands owing hy the United States 
 to individuals, corporations, and associations within the United States; 
 and such treasury notes shall also he a legal tender in payment of all 
 debts, public and private, within the United States, and shall be exchange- 
 able at any time at their par value, the same as coin, at the Treasury of 
 the United States, and^the offices of the assistant treasurers in New York, 
 Boston, Philadelphia, St. Louis, and Cincinnati, for any of the coupon or 
 registered bonds which the Secretary of the Treasury is now or may 
 hereafter be authorized to issue, and such treasury notes may be re-issued 
 from time to time as the exigencies of the public service may require. 
 Such treasury notes shall be signed by the Treasurer of the United States, 
 or by some officer of the Treasury Department designated by the Secre- 
 tary of the Treasury, and, shall be countersigned by the Register of the 
 Treasury, or some officer of the Treasury Department designated by the 
 
15 
 
 Secretary of the Treasury for the register ; and all the provisions of the 
 act entitled "An act to authorize the issue of treasury notes," approved 
 the twenty-third day of December, one thousand eight hundred and 
 flfty-seven, so far as the same can he applied to the provisions of this act, 
 and not inconsistent therewith,' are hereby revived and re-enacted. 
 
 As soon as the bill was printed, it was taken np in the Com- 
 mittee of Ways and Means, and duly considered. Mr. Hooper 
 took active ground in favor of the bill. Mr. Stevens at first had 
 some doubts about its constitutionality, but very soon decided to 
 support the measure. Mr. Morrill, Mr. Horton, and Mr. Corn- 
 ing actively opposed the bill in the Committee and in the House. 
 Mr. Maynard and Mr. Stratton took no active part in the discus- 
 sions while the bill was iinder consideration in the Committee. 
 It is believed, however, that Mr. Maynard was favorable to the 
 bill from the start, while Mr. Stratton was very much in doubt 
 what course he would take in relation to it, either in Committee, 
 or in giving his vote in the House. Mr. Phelps was absent, and 
 took no part while the bill was imder discussion in the Committee. 
 
 Mr. Spaulding finding that the Committee were about equally 
 divided, and that some members of the Committee had doubts 
 as to the constitutional power of Congress to make treasury notes 
 a legal tender, called upon the Attorney General, Hon. Edward 
 Bates, for his opinion. He declined to give an official opinion, 
 but consented to write an un-official note in favor of its con- 
 stitutionality. The following is a copy of the opinion thus 
 obtained : 
 
 Monday Evening, Jan. 6, 1862. 
 Hon. E. G. Spaidding, M. 0., 
 
 At the National Hotel : 
 
 DEA.R Sir — Since you did me the honor of a call this afternoon, and 
 propounded to me a question arising out of the pending bill "To author- 
 ize the issue of treasury notes payable on demand," I have given to the 
 subject such attention as the very brief interval afforded, and proceed at 
 once to answer. 
 
 In the iirst place, permit me to say, that my views of the place I hold 
 forbid me to give your question a formal and official answer, but in proof 
 of the high respect which I entertain for you and your honorable Com- 
 mittee, I, as a private man, and a professed constitutional legist, in all 
 frankness will give you my opinion upon the point proposed, and this, 
 with all brevity and without argument, for the time does not allow 
 elaborate consideration. 
 
 The bill, after providing for the issue of treasury notes, contains i. e. 
 this clause, "and which treasury notes shall be a legal tender in payment 
 of all debts, public and private, within the United States," and you desire 
 my opinion whether this clause is, or is not, constitutional. 
 
 Certainly the Constitution contains no direct verbal prohibition, and I 
 
10 
 
 think it contains no inferential or argumentative proliibition tliat can be 
 fairly drawn from its expressed terms. The first article of the Constitu- 
 tion, section eight, grants to Congress specifically a great mass of powers. 
 Section nine contains divers limitations upon Congress, upon the United 
 States, and upon individuals; and section ten contains restrictions upon 
 the several States. This last section is the only one that treats on tender. 
 " No ^tate shall make, anything hut gold and silver coin a tender in pay- 
 ment of debts." This applies to a State only, and not to the nation; and 
 thus it has always heen understood with regard to the next preceding 
 clause in the same section— no State Shall "emit hills of credit." The 
 prohibition to emit hills of credit is quite as strong as the prohibition to 
 make anything but gold and silver coin a legal tender; yet nobody 
 doubts— Congress does not doubt its power to issue bills of credit. Treas- 
 ury notes are bills of credit, and I think the one is just as much prohibited 
 as the other— neither is forbidden to Congress. 
 • The time is too short for argument, and so I remain, with all respect, 
 
 Your obedient servant, 
 
 EDWAED BATES. 
 
 Mr. Spaulding read this letter to the Committee of Waj's and 
 Means. The discussion on the bill had continued for several 
 days, and when the vote was finally taken, it appeared that the 
 Committee were at first equally divided — Mr. Spaulding, Mr. 
 Hooper, Mr. Stevens, and Mr. Majmard voting in the afl3rmative, 
 and Mr. Morrill, Mr. Horton, Mr. Corning, and Mr. Stratton in 
 the negative. Mr. Stratton finally consented to vote for the bill, 
 so as to allow it to be reported to the House. The bill was thus 
 passed through the Committee of Ways and Means. 
 
 On the Tth of January, 1862, Mr. Spaulding reported the bill 
 from the Committte to the House. It was read twice, committed 
 to the Committee of the whole House on the state of the Union, 
 and ordered to be printed. (House Bill No. 187.) 
 
 Mr. Spaulding, from the Committee of Ways and Means, reported the 
 
 following bill : 
 
 A BILL 
 
 To authorize the issue of demand Treasury notes. 
 
 Be ii enoGled hy the Senate and Souse of Eepreseniatives of the United States 
 of America in Congress assembled, That, for temporary purposes, the Secre- 
 tary of the Treasury be, and he is iierehy authorized to issue, on the 
 credit of the United States, one hundred millions of dollars of Treasury 
 notes, not bearing interest, payable generally, without specifying any 
 place or time of payment, and of such denominations as he may deem 
 expedient, not less than five dollars each ; and such notes, and all other 
 Treasury notes payable on demand, not bearing interest, that have been 
 heretofore authorized to be issued, shall be receivable for all debts and 
 demands due to the United States, and for all salaries, dues, debts, and 
 demands owing by the United States to individuals, corporations, and 
 associations within the United States; and shall also be lawful money, 
 and a legal tender in payment of all debts, public and private, within the 
 
United States, and shall be exchangeable in sums not less than one hun- 
 dred dollars, at any time, at their par value, at the Treasury of the United 
 States, and at the offices of the Assistant Treasurers in New York, 
 Philadelphia, St. Jjouis, and at the depository in Cincinnati, for any of 
 the six per centum twenty years coupon bonds or registered bonds which 
 the Secretary of the Treasury is now, or may hereafter be authorized to 
 issue; and such Treasury notes shall be received the same as coin, at their 
 par value, in payment for any bonds that may be hereafter negotiated by 
 the Secretary of the Treasury ; and such Treasury notes may be re-issued 
 from time to time as the exigencies of the public service may require. 
 There shall be printed on the back of the Treasury notes, which may be 
 issued under the provisions of this act, the following words : " The within 
 note is a legal tender ia payment of all debts, public and private, and is 
 exchangeable for the coupon or registered bonds of the United States bear- 
 ing six per centum interest." Such Treasury note shall be signed by the 
 Treasurer of the United States, or by some officer of the Treasury 
 Department designated by the Secretary of the Treasury, and shall be 
 countersigned by the Eegister of the Treasury, or some officer of the 
 Treasury Department designated by the Secretary of the Treasury for the 
 Register; and all the provisions of the act entitled "An act to authorize 
 the issue of Treasury notes," approved the twenty-third day of December, 
 one tliousand eight hundred and fifty-seven, so far as the same can be 
 applied to the provisions of this act, and not inconsistent therewith, are 
 hereby revived and re-enacted; and the sum of one hundred and fifty 
 thousand dollars is hereby appropriated, out of any money in the Treasury 
 not otherwise appropriated, to enable the Secretary of the Treasury to 
 carry this act into effect. 
 
 Soon after Mr. Spaulding introduced his bill proposing the 
 issue of legal tender notes to circulate as money, he received 
 many letters criticising the measure in rather severe terms. 
 Among others, Mr. Isaac Sherman, of New York, an old friend, 
 addressed a letter to him of this character, bearing date January 
 4th, 1862, and at the same time suggesting very Jieavy taxation in 
 various forms, as the best plan for raising the money to carry on 
 the war. 
 
 To this letter Mr. Spaulding made the following reply : 
 
 House of Eepeesentatives, ) 
 WASHINGTON, Jan. 8, 1862. 5 
 Isaac Sherman,- Esq., New York: 
 
 Deak Sir— In reply to yours of the 4th inst., I would say that the 
 Treasury note bill for $100,000,000 agreed upon in Committee yesterday 
 is a measure of necessity and not one of choice. 
 
 You criticise matters verji- freely, and very likely you may be right in 
 what you say. 
 
 We will be out of means to pay the daily expenses in about thirty days, 
 and the Committee do not see any other way to get along till we can get 
 the tax bills ready, except to issue temporarily Treasury notes. Perhaps 
 you can suggest some other mode of carrying on the Government for the 
 next one hundred days. You do not pretend that any considerable 
 amount of taxes can be collected for the next three months, even under 
 
18 
 
 your plan. It is much easier to find favM than it is to suggest praclicaUe 
 means or measures. 
 
 We must have at least $100,000,000 during the next three months, or the 
 Government must stop payment. With the navy and an arniy of 700,000 
 men in the field, yre cannot say that we will not pay. 
 
 I will thank you to suggest a better practicable mode of getting 
 $100,000,000 of paying means during the next three months. I would be 
 glad to adopt it, and the Committee would be glad to adopt it. Let us 
 have yow specific plan for this purpose— one that wiU produce the money 
 —and we will be very much obliged to you. In haste. 
 Tours truly, 
 
 B. G. SPAULDING. 
 
 P. S. — I am as impatient as you can be for an early and suoceisful advance 
 of the army, so important at this time to sustain the credit of the Govern- 
 ment. Will it be done? You are just as well informed on that subject 
 as any of us. I say to you privately that I could find fault more loudly 
 than you do, but I will not do that without being able to suggest a prac- 
 ticable remedy; and I might say many things to you, personally, that I 
 might not put on paper. 
 
 Confidentially yours, E. G. S. 
 
 MK. ISAAC SIIEKMAn's LETTER. 
 
 Kew York, Jan. 22, 1869. 
 Hon. E. O. Sjxiuldinfj : 
 
 I have received your letter of tlie 20th, and inclosed I send a letter 
 which you addressed me January 8th, 1862, and this letter fully explains 
 your motives in advocating the legal tender act. I will add that I became 
 fully satisfied that the immediate wants of the Government rendered it 
 absolutely necessary that legal tender notes should be issued. It is pos- 
 sible that a good tax bill, passed and enforced in 1861, might have averted 
 the necessity of the legal tender act ; but in 1862 it w^s impossible to pay 
 the expenses without an issue of Government paper as currency. I was 
 shocked at first at the idea of issuing paper, but I have always since said 
 that you finally convinced me of the absohiie necessity at the time of the 
 paper issue. I consider your letter historical, and after copying, I wish 
 you would return it to me. 
 
 Tours truly, ISAAC SHEKMAN. 
 
 BANK DELEGATES IN WASHINGTON MEETING AT THE TREASURY 
 
 DEPARTMENT. 
 
 After the legal tender Ijill was reported from the Committee 
 of Ways and Means by Mr. Spaulding, and iDublislied in the 
 newspapers of the principal cities, opposition to it manifested 
 itself in various ways. At first the New Yorli city press were 
 generally opposed to the legal tender clause. The Tm-iiea and 
 Herald early came into the support of the measure. The Trihutm 
 and Oomrmrdcd Advertiser appeared to be in some doubt, but in 
 their editorial columns opposed it. The Evening Post, World, 
 and Journal of Commerce were decidedly hostile, and opposed the 
 measure throughout. Delegates from some of the banks in New 
 
w 
 
 York, Boston and Philadelphia, appeared in Washington to 
 oppose the bill. The reporters of the New York press, at the 
 time, preserved a tolerably accurate account of their doings, 
 which may be summed up substantially as follows : 
 
 They organized by appointing Mr. Singleton A. Mercer, of 
 Philadelphia, as chairman, and invited the Finance Committee 
 of the Senate, and the Committee of Ways and Means of the 
 House, to meet them at the office of the Secretary of the 
 Treasury, on Saturday afternoon, January 11th, 1862. The 
 invitation was accepted, and the Convention assembled accord- 
 ingly at the Treasury Department. 
 
 Delegates from Neio York Banks. 
 
 Mr. CoE, American Exchange Bank. 
 Mr. Veejiilye, Merchant's Bank. 
 Mr. Martin, Ocean Bank. 
 Mr. Gallatin, National Bank. 
 
 Delegates from Philadelphia Banks. 
 
 Mr. R0GER8, Tradesman's Bank. 
 
 Mr. Mebcer, Farmer's and Mechanics' Bank. 
 
 Mr. Patterson, Western Bank. 
 
 Delegates from Boston Banks. 
 
 Mr. Havex, Merchant's Bank. 
 Mr. Walley, Eevere Bank. 
 Mr. Bates, Bank of Commerce. 
 
 Treasury DepaHment. 
 
 Salmon P. Chase, Secretary of the Treasury. 
 
 Finance Committee of the Senate. 
 
 Mr. Fessenden, of Maine. 
 Mr. Simmons, of Rhode Island. 
 Mr. Sherman, of Ohio. 
 Mr. Howe, of Wisconsin. 
 Mr. Pearce, of Maryland. 
 Mr. Bright, of Indiana. 
 Mr. McDouGAL, of California. 
 
 House Committee of Ways and Means. 
 
 Mr. Stevens, of Pennsylvania. 
 
20 
 
 Mr. MoEBiLL, of Vermont. 
 Mr. Phelps, of Missouri. 
 Mr. Spatjldijn^g, of New York. 
 Mr. Corning, of New York. 
 Mr. HoRTON, of Oliio. 
 Mr. Stkatton, of New Jersey. 
 Mr. Hooper, of Massachusetts. 
 Mr. Maynard, of Tennessee. 
 
 Some of the members of the above Committees of the Senate 
 and House were not present, but there was a very full representa- 
 tion from each Committee. There were some other gentlemen 
 present from Boai'ds of Trade of different cities. 
 
 Mr. James Gallatin, of New York, made the principal speech 
 against legal tender, and on behalf of himself and the Bank 
 Committees from New York, Boston, and Philadelphia, and 
 members from Boards of Trade associated with them, submitted 
 the following plan for raising money to carrj' on the war, viz: 
 
 1. A tax bill to raise, in the diiferent modes of taxation, $125,000,000, 
 over and above duties on imports. 
 
 2. Not to issue any demand Treasury notes, except those authorized at 
 the extra session in July last. 
 
 3. Issue $100,000,000 Treasury notes at two years, in sums of iive dol- 
 lars and upwards, to he receivable for public dues to the Government, 
 except duties on imports. 
 
 ■I. A suspension of the sub-Treasury act, so as to allow the banks to 
 become depositories of the Government of all loans, and to check on the 
 banks from time to time as the Government may want money. 
 
 5. Issue six per cent, twenty year bonds, to be negotiated by the 
 Secretary of the Treasury, and wiihoici any limiialion as to the price he may 
 obtain jor them in the market. 
 
 6. That the Secretary of the Treasury be empowered to make tem- 
 porary loans to tlie extent of any portion of the funded stock authorized 
 by Congress, loilh power to hypothecate such stock, and if such loans are not 
 paid ai maturity, to sell the stock hypiolhecated for the best price that can be 
 obtained. 
 
 These propositions having been read, the Secretary and Finance 
 Committees of the Senate and House expressed themselves favor- 
 able to the first proposition to raise by taxation $125,000,000 a 
 year, over and above duties on imports. It will be observed that 
 this plan did not include the national currency bank bill recom- 
 mended by the Secretary of the Treasury in his Annual Report, 
 and was not, tliereforc, in this respect, satisfactory to him. 
 
 The meeting was somewhat conversational in character but 
 there ajjpeared to be a general dissent liy the Secretary and Conr 
 
21 
 
 tnittees from all the other propositions. Mr. Hoopei- expressed 
 very decidedly his dissent to them, and was in favor of the legal 
 tender act as the best mode of providing the means. The only 
 remarks I can find reported as being made by any member of the 
 Committees of the Senate and House are in the New York Tribune, 
 January 13, 1862, in substance as follows: 
 
 "•The Sub-committee of Ways and Means, through Mr. SpauUling, 
 objected to any and every form of ' shinning ' by Government through 
 Wall or State streets to begin with ; objected to the knocking down of 
 Government stocks to seventy-iive or sixty cents on the dollar, the inevit- 
 able result of throwing a new and large loan on tlie market, without Umii- 
 alion as to pi-ice; claimed for Treasury notes as much virtue of par value 
 as the notes of banks which have suspended specie payments, but which 
 yet circulate in the trade of the North ; and finished with firmly refusing 
 to assent to any scheme which should permit a speculation by brokers, 
 bankers, and others, in the Government securities, and particularly any 
 sclietoe which should double the public debt of the country, and double 
 the expenses of the war, by damaging the credit of tlie Government to 
 the extent of sending it to ' shin ' through the shaving shops of New York, 
 Boston, and Phlladelpliia. He affirmed ills conviction as a banlter and 
 legislator, that it was the lawful policy, as well as the manifest duty of 
 the Government in the present exigency, to legalize as tender its fifty 
 mUlion issue of demand Treasury notes! authorized at the extra session 
 in July last, and to add to tliis stock of legal tender, immediately, one 
 hundred millions more. He thought that this financial measure would 
 carry the country througli the war, and save its credit and its dignity ; 
 at the same time we should insist upon taxation abundantly ample to pay 
 the expenses of the Government on a peace footing, and interest of every 
 dollar of the public obligation, and to give tliis generation a clear show 
 of a speedy liquidation of the public debt." 
 
 This Conference did not result in devising any plan or arrange- 
 ment which received the assent of either the Finance Committee 
 of the Senate or the Committee of Waj's and Means of the 
 House, and the Conference adjourned. 
 
 The bank delegates and others had further consultations with 
 Secretary Chase, continuing through two or three days, and 
 which finally resulted in an arrangement with the Secretary alone, 
 which was furnished to the agent of the Associated Press and 
 published on the 15th of January, 1862, as follows: 
 
 " The results of the various conferences Iield in Washington-^ by rei^re- 
 Sentatives from Boards of Trade, Chambers of Commerce, and Bauldng 
 institutions, among themselves, and with the Secretary of the Treasury, 
 may be summed up as follows : \ 
 
 1. The general views of the Secretary of the Treasury are assented to. 
 
 2. The banlcs will r,eceive and pay out the United States notes (author- 
 ized by act of July last) freely, and sustain in all proper ways the credit 
 of the Government. 
 
22 
 
 3. The Secretary of the Treasury will, within the next two weeks, in 
 addition to the current daily payments of $1,500,000 in United States 
 notes, pay the further sum of at least $20,000,000 in 7-30 bonds to such 
 public creditors as desire to receive them, and thus relieve the existing 
 pressure upon the community. 
 
 4. The issue of United States demand notes not to be increased beyond 
 the"$o0,000,000 authorized by the act of last July, but it is desired that 
 Congress should extend the provisions of the existing loan acts, passed at 
 the extra session in July, so as to enable the Secretary to issue in exchange 
 for United States demand notes, or in payment to creditors, notes payable 
 in one year, bearing 3.65 per cent, interest, and convertible into 7-30 three 
 years bonds, or to borrow under the existing provisions to the amount of 
 $250,000,000 or $300,000,000. 
 
 5. It is thought desirable that Congress should enact the national 
 currency bank bill, embi-acing the general provisions recommended by 
 the Secretary in his Annual Report. 
 
 6. It is expected that this action and legislation will render the making 
 of the United States demand notes a legal tender or their increase 
 beyond the $50,000,000 authorized in July last unnecessary." 
 
 The Committees of the Senate and House never gave anj"- assent 
 to this agreement made by Secretary Chase with the delegations 
 above mentioned, for the reason that it was not deemed by them 
 adequate to the crisis. A majority of the Committee of "Ways 
 and Means adhered to the legal tender bill, then pending in the 
 House, as being a more available plan, and on a much larger 
 scale. They believed it was necessary to authorize immediately 
 an additional issue of $100,000,000 of United States fundable 
 notes, to circulate as money, and be made a legal tender; and 
 that 1500,000,000 six per cent, twenty years bonds should be 
 authorized, so as to enable the holders of the notes, when issued, 
 to fund them at any time in these bonds. 
 
 As soon as the plan of the delegates from New York, Boston, 
 and Philadelphia became fully known to the country, it was very 
 generally disapproved. The press spoke out plainly against the 
 Secretary being authorized to put United States bonds " on the 
 market without any limitation as to the price he might obtain for 
 them in the market," as proposed by Mr. Gallatin. Members of 
 Congress generally opposed it and numerous letters were received 
 by Mr. Spaulding from bankers, and other prominent citizens, in 
 opposition to any siKh scheme, but at the same time expressing 
 themselves in|favor of the legal tender bill and urging its imme- 
 diate passage. 
 
 The following is a sami^le of the letters "received about this 
 time by Mr. Spaulding ; 
 
23 
 
 LETTER OF HON. MOSES H. GEINELL TO ME. SPAULDING. 
 
 New York, January 30, 1862. 
 
 Mr Dear Sir— I thank you for your able speech, and can only say that 
 
 nine out of twelve persons in this city agree with you. As for G , 
 
 and a few egotistical gentlemen that act with him, they should be driven 
 out of Washington, as they only embarrass the Government; and it seems 
 to me that their policy, if adopted, would soon ruin the Government credit, 
 and break down the country. 
 
 Go a direct tax for one liundred and fifty or two hundred millions, and 
 then issue one hundred and fifty millions Treasury notes legal tender, and 
 we wiU go on without any trouble, and the Government credit will be 
 saved from disgrace. Tliere are not eiglit bank presidents that side with 
 
 Q . He is an odd fish — lias very little infiuence here. Some action 
 
 must be had soon, or our country will be in a deplorable financial condition. 
 
 Yours trulv, 
 
 M. H. GEINELL. 
 Hon. E. G. Spaulding. 
 
 LETTER FROM HON. LEWIS F. ALLEN. 
 
 Black Eock, January 31, 1SG2, 
 Hon. E. (i. Spaulding: 
 
 Mt Dear Sir — I have just read, with great pleasure, your very able 
 speech on the Treasury note bill you have introduced into Congress. The 
 principle and plan are both right, and what the country demands ; and I 
 ^ trust both Houses wiU put it rigU along through, regardless ■ of what the 
 New York note shavers and usurers may say, for they, and the like, in 
 our large Atlantic cities, are the only ones who will oppose it, and that 
 for the reason that they can not make their ten, twenty or fifty per cent., 
 by buying in and selling out the stxicks which they want passed by the 
 Government, in place of the sound, available Consiitviional currency which 
 you propose. I see by my Irihune to-day, that there is good prospect that 
 your bin will pass without material modification, if any. I hope so, and 
 that speedily. 
 
 Truly yours, L. E. ALLEN". 
 
 LETTER FROM J. M. SANSON, BANKER, OP BUFFALO. 
 
 New York, January 13, 1862. 
 Hon. E. G. Spaulding, Washington; 
 
 Dear Sir — Your bill on Finance is recelyed. I understand the pidse of 
 the people. Now, then, put on a war tax of $200,000,000, issue $150,0000,- 
 000 demand notes, and ten, fifteen and twenty year bonds, seven per cent, 
 "coupon bonds," redeetaable at the pleasure of the Government within 
 that time, and then go ahead. Put our Generals into the saddle, and all 
 this fussing and fooling will come to an end in ninety days. One grand 
 rush from all points of our armies will cow down the rebels. Send home 
 the Bank Committee : their proposition is awful. Let a few leading minds, 
 in connection with Chase, nerve up, and let the demand notes assume the 
 place of specie in eniery particular. A tender for deposits in State banks, 
 a tender for State bank notes, and receivable for all Government dues. 
 We must have One terrible bloody battle, and must not shrink from the 
 
 • fespOnSibility. Let members of Congress cease abusing our Generals. 
 
 iPnt the right men in the right place. Have no proclamations issufed by 
 
24 
 
 the Generals unless passed upon by Lincoln and McClelian jointly. Sard 
 work, less pleasure-seeking, good financiering and energy, will wind up 
 this war shortly, and nothing else will do it. 
 
 I remain yours truly, J. M. GANSOST. 
 
 LETTER PEOM JAMKS W. SIMONTOJf, KSQ. , OF N. Y. TIMES. 
 
 Washington, January 13, 1S62. 
 Hon. E. &. Spaulding : 
 
 Deak Sir — I failed to make myself clearly understood in our conver- 
 sation last evening, or rather I failed to tell the whok story in suggesting 
 payment of interest on demand notes. 
 
 What do you think of providing for the payment of interest on demand 
 notes (at a less rate than that on loan bonds) from their date, the interest 
 on such demand notes to be allowed and paid ordy when they are presented 
 to he converted into bonds ? 
 
 Would not the tendency of such an arrangement be to keep the current 
 of demand notes steadily moving towards the loan office, and prevent any 
 possible depreciation of either class of paper? 
 
 Of course, you could devise a means (if you desire) of preventing the 
 payment of back interest on debts already accumulated. In haste. 
 Truly vours, 
 
 JAMES W. SIMONTON. 
 
 letter from THOMAS DENNY i CO., BANKERS AKO BROKERS, 
 WALL STREET, NEW YORK. 
 
 Kew York, January 13, 1S62. 
 Hon. E. 6. Spaulding, House of Representatives, Washington, D. C. : 
 
 Dear Sir — Although not personally acquainted with you, we take the 
 liberty of giving you, in few words, our views as to the most desirable 
 measures to be adopted for the finances of the country at the present 
 time. It will not do at all to crowd on the market at the present time 
 Government stock fast enough to raise the amount of money needed to 
 meet our wants. The price would run down so fast that people would 
 become alarmed, and afraid to take it, except at a ruinous sacrifice, if at 
 all. The best plan is that which, we understood, you propose to adopt. 
 Issue $100,000,000 to $150,000,000 demand notes, and pay them out as the 
 wants of the Government require ; make them a legal tender- in all trans- 
 actions of business in our country ; make them convertible at the pleasure 
 of the holders into a 6 per ceflt. stock, or even into 7-30 three year notes, 
 unless there is some serious objection on account of the previous negotia- 
 tions of the 7-30 notes ; pass a tax bill which will produce $100,000,000 to 
 $150,000,000. The above plan will furnish abundant means to the Govern- 
 ment, and will meet the approbation of the people. It will furnish an 
 excellent circulation to the whole country, facilitate all business transac- 
 tions among the people, make the money market easy, and raise the 
 prices of Government stocks so that loans can be negotiated on favorable 
 terms when more money if wanted, especially if, in the meantime, the 
 rebellion is pretty well crushed down. 
 
 If the above plan is adopted, public sentiment will make it necessary 
 for the banks to receive and pay out the demand notes, and the whole' 
 effect will be very salutary on our national affairs. The tax bill will 
 
25 
 
 create a general demand for the Treasury notes and keep them at or near 
 par. We write in great haste, as practical business men, and are, very 
 respectfully 
 
 Your obedient servants, 
 
 THOAMS DENNY & CO, 
 
 letter fkom john e. williams, esq. 
 
 Meteopolitan Bank, } 
 New York, January 20, 1862. ^ 
 Dear Sir— I have your favor of 18th inst. I leave my bank affairs to 
 write you at once, and congratulate you on the prospect of being able to 
 effect a remedy for the fiscal malady. With a leader in the Treasury 
 Department all these discordent financial schemes would disappear. A 
 man of ability, of business talent and experiencCj even although he be 
 not endowed with the creative genius of a Hamilton, or the statistical 
 knowledge and general attainments of Albert Gallatin, would devise a 
 plan sufficiently comprehensive, sensible, and wise, to satisfy the public 
 that he knew whereof he wrote and spoke, and had no object in view but 
 to restore confidence and replenish the Treasury. There is one point in 
 reference to the demand legal tender notes to which I wish to call atten- 
 tion. It may seem small, but I think it important — that is, in reference 
 to the color of the paper on which such notes are printed. I would have 
 it different from that used for any other notes ; and I would again suggest 
 that that color be yellow. I would also have them payable one year after 
 the close of the war. There is no risk of embarrassment from this clause, 
 as we could sell our national bonds to-morrow if the war were closed 
 to-day. I would also simplify the matter by having the amount one 
 hundred and fifty millions, so as to absorb the present outstanding 
 demand notes into the legal demand or yellow notes, which could easily 
 be done, and yet leave you on this loan one hundred millions net. I think 
 it would make these demand notes more valuable to insert this redemption 
 feature one year after peace, for peace must come. As if William B. 
 Astor should give his note for $100,000, payable one year after his death. 
 He must die, and he has millions, consequently on a future day certain 
 (though not yet fixed), his note would be paid in full. 
 
 Please consider, then, before you finally decide, the amount, the color, 
 and the time of payment of the legal tender notes. One other points 
 Allow me to refer to the re-convertible feature of the six per cent, twenty 
 years bonds. That is, I confess, a pet idea of "Vnine, but I find it favorably 
 regarded by others, though new. You will readily perceive that when 
 this comes to be understood by the public the United States Government 
 is going to pick up all the floating funds throughout the whole couQtry, 
 which the owners do not require to use in less than three, four, five or six 
 months, whatever time you fix. Every business man seems to think this 
 would be the means by which the Government would borrow, in the 
 aggregate, a large amount. For who would not lend the United States 
 his spare funds when he knew he could get a legal tender for it, with 
 interest whenever he called for it ? This would increase the value of the 
 twenty years six per cent, bonds. Let the legal tender notes be con- 
 vertible at any time into any unsold securities of the United States, 
 
26 
 
 in the hands of the Secretary of the Treasury, whether now authorized 
 or hereafter to he issued. But only let the six per cent, bonds be re- 
 convertible into legal tender Treasury notes. 
 Give my regards to Mr. Hooper. 
 
 Yours very truly, 
 
 J. E. WILLIAMS. 
 
 Hon. E. G. Spaulding, "Washington, D. C. 
 
 On the following Monday, January 20th, Mr. Spaulding, from 
 the Sub-committee of Ways and Means, reported to the General 
 Committee an additional section, and a new title to the legal 
 tender note bill, which were adopted by the Committee of Ways 
 and Means. The new section is as follows : 
 
 Section 2. "To enable the Secretary of the Treasury to fund the 
 treasury notes and floating debt of the United States, he is hereby further 
 authorized to issue on the credit of the United States coupon bonds, or 
 registered bonds, to an amount not exceeding $500,000,000, in sums of 
 $100, $200, $500, $1,000, $5,000, $10,000 and $20,000, and in such proportions 
 of each as the exigencies of the public service may require, hearing inter- 
 est at the rate of six per cent per annum, redeemable after twenty years 
 at the pleasure of tlie United States, which bonds the Secretary of the 
 Treasury is Iierebj' authorized to deliver at tlieir par value to any creditor 
 or creditors having demands due against the United States, in payment 
 thereof, and to deliver the same to officers, employees and individuals in 
 payment for services rendered, for supplies, subsistence and materials 
 furnished to the United States ; and he may also exchange such bonds at 
 any time for lawful money of the United States, or for any of the treasury 
 notes that have been or may hereafter be issued under any former act of 
 Congress, or that may he issued under the provisions of this act." 
 
 The new title to the bill adopted at this meeting of the Com- 
 mittee was as follows : 
 
 '• An act to authoiize the issue of LTnited States ISTotes and for the re- 
 demption or funding thereof, and for funding the floating debt of the 
 United States." 
 
 Soon after this additional section and new title were adopted by 
 the Committee of Ways and Means, Mr. Spaulding submitted the 
 bill and additional section to Secretary Chase and the Assistant 
 Secretary, Mr. Harrington. At this interview the form of the bill 
 and the manner of engraving, signing and issuing the legal tender 
 notes was fully discussed, as well as the form and manner of ex- 
 changing them for the six per cent, bonds. The Secretary sug- 
 gested that it would be necessary to limit the place for exchanging 
 the notes for bonds to the Treasury at Washington instead of the 
 Sub-treasuries at other cities, and that it would be necessary to 
 have one or more penal sections to guard against counterfeiting. 
 The original bill and additional section were finally left with the 
 
27 
 
 Secretary to put into such form as he desired, incorporating the 
 amendments which he had proposed, in order to enable him to 
 execute the provisions of the bill with facility as soon as it should 
 become a law. 
 
 On the 22d of January, 1862, Secretary Chase returned to Mr. 
 Spaulding the bill as modified and amended by him, accompanied 
 by the following letter : 
 
 Treasury Department, Jan. 22, 1862. 
 
 My Dear Sir — I have carefully examined the bill and additional sec- 
 tion which you left with me, and availing myself of the aid of the Assist- 
 ant Secretary, have amended the bill, retaining the whole substance of 
 yours, but introducing such modiflcatlons as the settled modes of business 
 in the department and considerations of convenience and economy seem 
 to suggest. 
 
 For example — the exchange of notes for bonds is confined to the course 
 of business of the department, by limiting the power of Assistant Treas- 
 ury and Depositories to the receipt of notes and issuing certificates, en- 
 titling the holder to bonds by which serious risks are avoided ; and the 
 denominations of bonds is left to the discretion of the Secretary, by which 
 a considerable saving will probably be effected ; as the demand for some 
 denominations is so limited (for $20,000 for instance) that it may hardljr 
 he worth while to engrave a plate. These examples show the nature of 
 the modifications. 
 
 The appropriation for expenses is put at three hundred thousand dollars. 
 Should the act be fully executed by the issue of bonds to the amount of 
 five hundred millions of dollars, this sum will not probably sufiice. It 
 has been usual in providing for the issue of bonds merely without notes, 
 to allow a much larger proportion for expenses. I will send you, if 
 desired, a statement which will make this clear. 
 
 Regretting exceedingly that it is found necessary to resort to the meas- 
 ure of making fundable notes of the United States a legal tender, but 
 heartily desiring to co-operate with the Committee in all measures to meet 
 existing necessities in the mode most useful and least hurtful to general 
 interest, I remain, with gi-eat respect. 
 
 Very sincerely yours, S. P. CHASE. 
 
 Hon. E. G. Spaulding. 
 
 The bill as amended by the Secretary was again submitted to 
 the Committee of Ways and Means, and adopted; and thereupon, 
 on the 22d of Jauuary, 1862, Mr. Spaulding again reported the 
 bill to the House (Bill No. 240) in the nature of a substitute for 
 Bill No. 187. It was read twice, and made the special order for 
 .the 28th inst. , at one o'clock. 
 
 Each day's delay made it more and more apparent that the 
 bill must pass in order to meet the overwhelming demands made 
 upon the Treasury to sustain the army and navy. The end 
 seemed to justify the means contemplated by the bill. 
 
 On the 23d inst. Secretary Chase directed his private Secretary, 
 
28 
 
 H. G. Plants, Esq., to request Mr. Spaulding to furnish a copy 
 of the amended legal tender note bill to the National Intelligencer 
 for publication. 
 
 Up to this time Col. Seaton, the editor of that paper, had not 
 been favorable to the bill, and it was deemed important that 
 the old National Intelligencer should support the measure. 
 
 The following is a copy of the note received by Mr. Spaulding 
 from Mr. Plants : 
 
 Tebasuky Depaetment, Jan. 23, 1S62. 
 
 SiE — I am directed by the Secretary to ask yon if you will be so good 
 as to send a copy of the Treasury note bill to the Naiional Intelligencer, in 
 order that it may be printed to-morrow. 
 
 Very respectfully, H. G. PLANTS. 
 
 Hon. E. G. Spaulding. 
 
 House of Bepeesentatives, Jan. 24, 1862, 
 Dear Sir — The note of Mr. Plants reached me this morning, and I 
 have handed the U. S. demand note bill to Col. Seaton in person, to be 
 published in the next Issue of the National InteUigencer. It is important 
 that there should be full co-operation on the part of Col. Seaton, the Cab- 
 inet, and all our friends on the financial measures pending in Congress, to 
 overcome the opposition already developed and ensure success. My inter- 
 view with Col. Seaton leads me to suppose that he will hereafter act in 
 concert with us. 
 
 Yours truly, E. G. SPAULDING. 
 
 Hon. S. P. Chase, Secretary of Treasury. 
 
 On the 28th inst. , the bill being the special order in the House, 
 Mr. Spaulding opened the debate upon it in the following 
 
 SPEECH. 
 
 The House being in Committee of the Whole (Mr. Kellogg, of Illinois, 
 in the chair) on the Demand Treasury note bill — 
 
 Mr. SPAULDING spoke as follows: 
 
 Mr. Chairman: This is an important measure, and I may be indulged 
 for a few moments in explaining its objects, the situation of our finances, 
 and the grounds upon which we rest this measure, and expect it to be 
 adopted. In the first place, I will refer to the loan bills passed at the 
 extra session of Congress, in July, in order to show how we obtained the 
 means to carry on the Government from that time to the present, and to 
 show how the Secretary of the Treasury has performed his duty. These 
 bills were passed, the first on the 17th of July, and the other on the .5th of 
 August. They gave the Secretary of the Treasury power to pledge the 
 credit of the United States to the extent of $250,000,000. Reflections 
 have been made by some gentlemen on the manner in which the Secretary 
 of the Treasury had perfonned his duty in borrowing that money, and 
 with some disposition to criticise his actions. As a general reply, I will 
 say that the Secretary has acted in strict conformity with the law, and 
 borrowed money at the rates authorized by Congi-ess. 
 
29 
 
 And, sir, I am disposed, upon this floor and elsewhere, to sustain the 
 Secretary and all Departments of the Government where they have 
 discharged their duties in accordance with the laws which have heen 
 passed by us. 
 
 The Secretary of the Treasury first borrowed $100,000,000, giving Treas- 
 ury notes bearing seven and three-tenths per cent, interest, and he next 
 issued United States bonds at six per cent, interest to the extent of 
 $50,000,000, at the equivalent of par for seven per cent, bonds, and raised 
 about $44,650,000; upon such loan, a discount of over $5,300,000 was 
 sustained. These were the best terms that could be obtained, and were 
 regarded at the time as very favorable to the Government. 
 
 But if he has borrowed the money at a high rate, it was authorized by 
 the act of July. I am disposed to sustain the Secretary in what he has 
 done. He has acted in good faith, and he should be sustained by us all. 
 
 I may be permitted to say, in explanation of some of the estimates 
 which I shall introduce presently, differing, as they do, from the estimates 
 of the Secretary of the Treasury in his annual report, that since his annual 
 report, he has changed his own views as to what the expenses of the war 
 will be np to July next, and what they will also be up to July, 1863, and 
 that he substantially agrees with me now as to what those expenses 
 will be. 
 
 In the discussion of this important measure, I desire, Mr. Chairman, to 
 present the entire plan, with a view to enlist the co-operation not only of 
 all Departments of the Government, but also the co-operation of all the 
 members of the House, without regard to party distinctions. Hearty 
 co-operation is desirable to the success of the important financial measures 
 that will be presented. 
 
 Our finances deserve our most serious attention. The ways and means 
 of carrying on the war should enlist the grave consideration of every 
 gentleman on this floor who desires the preservation of this Government. 
 We were never in greater peril than at this moment. It will require all 
 our best energies to successfully meet the crisis through which we are 
 passing. I am oppressed by the magnitude of the work before us. But, 
 sir, I will not, I dare not — I trust we shall not any of us — shrink from the 
 responsibility of performing every duty devolved upon us in this great 
 crisis of our national affairs. 
 
 The bill before us is a war measure, a measure of necessity, and not of 
 choice, presented by the Committee of Ways and Means to meet the niost 
 pressing demands upon the Treasury to sustain the army and navy, until 
 they can make a vigorous advance upon the traitors; and crush out the 
 rebellion. These are extraordinary times, and extraordinary measures 
 must be resorted to in order to save our Government, and preserve our 
 nationality. 
 
 This bill, in addition to the fifty million of demand notes authorized by 
 the act of July last, authorizes the Secretary of the Treasury to issue, on 
 the credit of the United States, one hundred millions of dollars of Treas- 
 ury notes, not bearing interest, payable to the bearer at the Treasury, or 
 at the office of the Assistant Treasurer in the city of New York, at the 
 pleasure of the United States, and of such denominations as he may deem 
 expedient, and not less than five dollars each; and such notes and all 
 other United States notes payable on demand, not bearing interest, here- 
 tofore authorized, are made receivable for all debts and demands due to 
 the United States, and for all salaries , debts, and demands owing by the 
 
30 
 
 United States to individuals, corporations, and associations within the 
 United States, and are also declared lawful money and a legal tender in 
 payment of all debts, public and private, within the United States, making 
 altogether $150,000,000 legal tender demand notes. 
 
 Provision is also made for the convenient exchange of such notes for 
 six per cent, bonds of the United States redeemable in twenty years. 
 
 Further to enable the Secretai-y of the Treasury to fund the Treasury 
 notes and floating debt of the United States, he is authorized to issue, on 
 the credit of the United States, coupon bonds or registered bonds to an 
 amount not exceeding five hundred millions dollars, and redeemable at 
 the pleasure of the Government after twenty years from date, and bearing 
 interest at the rate of six per cent, per annum, payable semi-annually; 
 and the bonds thus authorized are to be of such denomination, not less 
 than fifty dollars, as may be determined upon by the Secretary of the 
 Treasury, or in sums not less than $2,500; for which, if requested, the 
 Secretary of the Treasury, if he deem it expedient, may issue similar 
 bonds, the principal and interest of which may be expressed in the curren- 
 cy of any foreign country, and payable there. The Secretary is author- 
 ized to issue said bonds at their par value to any creditor or creditors of 
 the United States who may elect to receive them in satisfaction of their 
 demands ; provided that aU such claims or demands shall have been first 
 audited and settled by the accounting officers of the Treasury ; and the 
 Secretary of the Treasury may also exchange such bonds at any time for 
 lawful money of the United States, or for any of the Treasury notes that 
 have been or may hereafter be issued under any former act of Congress, 
 or that may be issued under the provisions of this act. 
 
 The bill is simple and perspicuous in its terms, and easy of execution. 
 It is a Government measure, and the officers of Government are required 
 to execute its provisions. 
 
 By the time the Secretary of the Treasury can get these notes engraved, 
 printed, and signed, ready for use, all other available means at his com- 
 mand, and in the Treasury, will be exhausted. This measure is therefore 
 presented under the highest prerogatives of Government. The army and 
 navy now in the service must be paid. They must be supplied with food, 
 clothing, arms, ammunition, and all other material of war, to render them 
 effective in maintaining the Government and putting down the rebellion. 
 Having exhausted other means of sustaining the Government, this meaS' 
 ure is brought forward as the best -that can be devised in the present 
 exigency to relieve the necessities of the Treasury; and I trust it will 
 pass without delay. 
 
 At the extra session in July last, Congress authorized the Secretary of 
 the Treasuiy to borrow $250,000,060, for which he was authorized to issue 
 coupon bonds, or registered bonds, or Treasury notes, in such proportions 
 of each as he might deem advisable. The bonds were to be issued for 
 twenty years, at a rate not exceeding seven per cent, interest per annum, 
 payable half-yearly; and the Treasury notes were to be issued in denomi- 
 nations of not less than $50 each, at three years, with interest at 7 3-10 per 
 annum, payable half-yearly, and exchangeable at any time for twenty 
 years six per cent, bonds. Or, at the option of the Secretary, he was per- 
 mitted to issue $50,000,000 of the above loan in Treasury notes, on demand, 
 in denominations of not less than five dollars each, without interest, and 
 made receivable in payment of salaries or other dues owing by the United 
 States ; or, in his discretion, he was authorized to issue Treasury notes at 
 
31 
 
 one year, bearing interest at 3 65-100 per cent, per annum, exeliaugeable 
 at any time in sums of $100, or upwards, for the three years Treasury 
 notes bearing 7 3-10 per cent, interest; but in the aggregate not to exceed 
 $250,000,000. A further provision was made, however, to wit : that the 
 Secretary of the Treasury might negotiate any part of the loan for six per 
 cent, twenty years' bonds, at a rate not less than the equivalent of par, for 
 bonds bearing seven per cent, interest per annum, half-yewrly, payable in twenty 
 years. 
 
 Under theseproTlsiona. tlie Secretary of the Treasm-y has borrowed on the 7 3-10 
 per cent. Iteasnry notes, payable In three years _ $100,000,000 
 
 On twenty years six per cent, bonds, reduced to the equivalent at par of seven 
 per cent.j)er annum, half-yearly, say at89K. ($44,661,230 97 actually received 
 into the Treasury), for which six per cent, bonds were issued 50,000,000 
 
 Issued and put in circulation as currency (and to be put into circulation within a 
 few days) all the demand Treasury notes authorized in July, not bearing in- 
 terest 50,090,000 
 
 Borrowed on the loan bill of July $200,000,000 
 
 Paid out to contractors and others t 30-100 Treasury notes within the last few 
 days, say 3,516,500 
 
 $203,516,500 
 
 The total amount of tlie public debt up to the present time, and for 
 
 which U. S. stocli and Treasury notes have been issued, is as follows : 
 
 Dp to July 1, 1861 $ 90,867,828 6S 
 
 There was paid to creditors, or exchanged for coin at par, at different dates 
 in July and August, six per cent, two years' notes to the amount of. 14,019,034 66 
 
 There was borrowed, at par, in the same months, upon sixty days' six per 
 cent, notes, the sum of. 12,877750 00 
 
 There was borrowed, at par, on the 19th of August, three years' seven and 
 three-tenths per cent bonds, issued for most part to the subscribers to the 
 national loan 50,000,000 00 
 
 There was borrowed on the 1st of October upon like securities 60,000,000 00 
 
 There was borrowed, at par, of seven per cent, on the 10th of November, 
 upon twenty years' six per cent, bonds reduced to the equivalent of sevens, 
 including interest 50,000,000 00 
 
 There have been issued and circulated of Treasm'y notes payable on demand 39,000,000 00 
 
 Making an aggregate debt in various forms, to January 15, 1882 306,764,613 34 
 
 I estimate that the amount required up to Julyl, 1862, will be 343,235,386 66 
 
 Total debt estimated to July 1, 1862 .- 650,000,000 00 
 
 I estimate for the fiscal year up to July 1, 1863, if the war continues to ihat 
 time 550,000,000 00 
 
 Total indebtedness, liquidated and nnliquidated, to July 1,1863 $1,200,000,000 00 
 
 This estimate exceeds that of the Secretary of the Treasury by 
 $300,000,000 to July 1, 18G3. This, however, includes all indebtedness 
 against the Government, whether funded or not, and all accounts in 
 process of being audited, and such ^s are passing through the hands of 
 the accounting officers. 
 
 There is now over $100,000,000 of accrued indebtedness, in different 
 forms, that should be paid at an early day. 
 
 With this large accrued indebtedness, and with the prospect that (unless 
 this biU is adopted) the Government will put on the market, to the high- 
 est bidder, still further issue of bonds, to the amount of $250,000,000 to 
 $300,000,000, to pay current expenses to July next, it is not expected that 
 even the present price Of United States stoclis can be maintained if forced 
 on the market at this time. We have the alternative, either to go into 
 the market and sell our bonds for what they will Command, Or to pass this 
 bill, or find some Better mode, if one Can be devised, to raise means to 
 carry on the war. The Secretary has the means of defraying the daily 
 expenses required to be disbursed frOm the Treasury for only a few days 
 longer. He has on hand about one-fifth of the loan made in .November 
 last, a small portion of the demand Treasury notes authorized by the act 
 
32 
 
 of July— say $10,000,000 not yet issued— and such of the remaining 
 7 3-10 and 3 65-100 Treasury notes authorized by that act as can be used 
 in paying contractors, for supplies, and for salaries, and other Grovernment 
 dues to such persons as are willing to receive them. "With the enormous 
 expenditures of the Government, to pay the extraordinary expenses of 
 the war, it requires no extended calculation to show that the Treasury 
 must be supplied from some source, or the Government must stop 
 payment in a very few days. 
 
 Tou cannot borrow of capitalists any more money on twenty years seven 
 per cent, bonds, nor on your 7 3-10 Treasury notes at the rates fixed by 
 the act of July last. If you offer to the people and put on the market 
 $300,000,000 more, to the highest bidder, in the present aspect of affairs, 
 they would not be taken, except at ruinous rates of discount. That policy 
 would depreciate the bonds already taken by the banks and the people 
 who are most loyal to the Government, and wlio came forward as your 
 best friends, and furnished the means so much needed during the last few 
 months to organize your army and navy ; and, besides, depreciation would 
 greatly increase the debt, by requiring a much larger amount of bonds to 
 be issued than would be needed if your loans were taken at par. A loan 
 put upon the market in the present depressed state of United States stocks, 
 to be followed by other larger loans, is not regarded as a favorable mode 
 of providing the means for maintaining the Government at the present 
 time. If it had been adopted at first it might possibly have been the best 
 mode ; but it is now too late to essay that plan, and I believe it would be 
 ruinous to adopt it. I fear the 20 years six per cent, bonds would, under 
 the pressure, fall to 75, 70, 60, and even 50 cents. This would be a ruinous 
 mode of raising the means to carry on the Government. 
 
 What, then, is to be done ? The Secretary of the Treasury in his annual 
 report does not recommend the issue of demand Treasury notes, although 
 he points out many advantages that would result to the Government from 
 the issue. He suggests two plans : first, the issue of demand Treasury 
 notes ; and second, a Kational currency, secured by a pledge of United 
 States stocks, to be issued by banks and associations, with proper regula- 
 tions for their redemption by the banks themselves. On the propriety of 
 the issue of Treasury notes by the Government, to be put in circulation as 
 money, the Secretary says : 
 
 "The first of these plans was partially adopted at the last session of 
 Congress, in the provision authorising the Secretary to issue United 
 States notes, payable in coin, to an amount not exceeding fifty millions 
 of dollars. That provision may be so extended as to reach the average 
 circulation of the country, while a moderate tax, gradually augmented, 
 on bank notes, will relieve the national from the competition of local 
 circulation. It has been already suggested that the substitution of a 
 National for a State currency, upon this plan, would be equivalent to a 
 loan to the Government without interest, except on the fund to be kept 
 in coin, and without expense, except the cost of preparation, issue, and 
 redemption; while the people would gain the additional advantage of a 
 uniform currency, and relief from a considerable burden in the form of 
 interest on debt.'' 
 
 These remarks of the Secretary were made before the suspension of 
 specie payments. The situation of the country is now very different from 
 What it was two months ago. The circumstances have chano-ed; and the 
 Secretary and Congress, will find it necessary, in the present exiVencv 
 
33 
 
 to conform their action to what can be clone, and not to what they would 
 like to do, were it otherwise practicable. 
 
 The second plan of the Secretary, and the one which he recommends for 
 adoption, namely, a national currency, to be issued by banks, and secured 
 by a pledge of United States stocks, the sub-Committee of Ways and 
 Means have examined with considerable care. A bill has been prepared 
 and printed for the use of the Committee, which may, after some modifica- 
 tion, be reported to the House for its action. The Committee have come to 
 the conclusion that, however meritorious this system may be in providing 
 a way for funding the stocks of the United States, and however perfect the 
 system may be made by Congress, it cannot, if adopted, be made availa- 
 ble soon enough to meet the immediately-impending necessities of the 
 Government. 
 
 This new system of banking would necessarily go into operation slowly. 
 The existing circulation of bank notes in the loyal States is supposed to 
 be about $140,000,000. This new currency, when issued, would come into 
 competition with the existing circulation of the banks ah-eady established 
 in the several States ; and in the present embarrassed condition of mone- 
 tary affairs, several months must necessarily elapse before any considera- 
 ble amount of United States stocks would be absorbed by banks imder 
 this proposed new law. As an ultimate mode of funding some part of 
 the large amount of Government stock which has already been issued, and 
 which must from time to time be issued, it may be very valuable ; and the 
 national currency upon it would no doubt obtain a wide circulation, and 
 greatly facilitate the payment of taxes and other dues to the Government. 
 But with a navy and army of 600,000 in the field, requiring, with the 
 other expenses of the Government, an average daily expenditure of more 
 than $1,600,000, this new system of banking will not afford relief to the 
 Treasury in time to enable the Secretary to meet the pressing demands 
 that are made upon him. 
 
 The duties received at the diiFerent custom-houses, and the taxes levied 
 at the extra session, or that may now be levied, will be wholly inadequate 
 to meet the requirements of the Treasury in the present emergency during 
 the next six months. 
 
 If you cannot borrow the money on the credit of the United States, 
 except at ruinous rates of discount, and cannot make the new banking 
 system available in time, and cannot realize the amount required from 
 your tariff and tax bills, in what mode can the means be obtained, and the 
 Government be carried on ? It is believed that the only way in which it 
 can be done is by issuing Treasury notes payable on demand, and making 
 them a legal tender in payment of all debts, pnblic and private, and by 
 adequate taxation, to be imposed by new bills. This will bring into full 
 exercise all the higher powers of' Government under the Constitution. 
 The Constitution confers on Congress the power (art. 1, sec. 8 :) 
 
 " To lay and collect taxes, duties, imposts, and excises, to pay the debts 
 and provide for the common defence and general welfare of the United 
 States. 
 
 To borrow money on the credit of the United States. 
 
 To regulate commerce with foreign nations, among the several States, 
 and with the Indian tribes. 
 
 To coin money, regulate the value thereof, and of foreign coins. 
 
 To raise and support armies. 
 
 To provide and maintain a navy. 
 
34 
 
 To make all laws which shall be necessary/ and proper for carrying into 
 execution the foregoing powers, and all other powers vested by the Con- 
 stitution in the Government of the United States, or in any Department 
 or officer thereof." 
 
 These are among the high powers of Government which must now be 
 brought into full, ample play. The table which I have before me, pro- 
 cured from the Census bureau, shows that the true value of the property, 
 real and personal, within the United States, is sixteen billions, one hundred 
 and fifty-nine millions, six hundred and sixteen thousand and sw^y-eight dollars, 
 ($16,159,616,068,) and the assessed value to be $12,006,756,585. (See 
 Appendix.) ' 
 
 The power in the Constitution to "lay and collect taxes, duties, imposts, 
 and excises," is general and unlimited. Congress has the power to levy 
 and collect any amount of taxes that may be necessary to preserve its 
 existence and pay all its debts. Government has a claim, a mortgage in 
 fact, on all this property, to that extent. Will Congress do its dutj"- in 
 passing bills to collect these taxes ? This is the vital question. Will Con- 
 gress have the firmness and the courage to impose the necessary taxation 
 to sustain the credit of the Government? Direct taxation, excises, and 
 internal duties, are new features within the United States. They will be 
 heavy burdens on the people, but essential to sustain the circulation of 
 demand Treasury notes. The tax-gatherer will be an unwelcome visitor 
 to most people, but his face mvist soon be familiar. 
 
 Some menibers of Congress may hesitate to vote for the tax bills, fearing 
 that they may not be in favor with their constituency at home. Under 
 these circumstances, will members of Congress meet the question boldly 
 and firmly? Here is the whole property of the country at the will of 
 Congress. Tou have the power to tax it to an unlimited extent, if 
 necessary to sustain the Government. 
 
 This is the capital, $16,000,000,000,000 in amount, on which your Treasu- 
 ry notes and bonds rest. This claim of Government, in the hands of Con- 
 gress, is direct and specific on the banks throughout the United States, 
 including the gold and silver in their vaults ; on commerce ; on all kinds 
 of production and business ; on railroads, steamboats, and their passen- 
 gers: on gas companies; on manufacturing companies of all kinds; in 
 short, all real and personal estate of every kind is held subject to the 
 payment of the Treasury notes and bonds issued by the Government. 
 Congress is clothed with this mighty power to sustain the nation at this 
 time. Will you hesitate to do your duty ? This is what the people, the 
 capitalist, the merchant, and all who confide in your demand notes, want 
 to know. If they take these notes; they want to know positively whether 
 you will enforce the claim of the Government upon the property of the 
 country, to the full extent necessary to redeem the Treasury notes, and 
 pay punctuallythe int'grest on the bonds which they take of you to sustain 
 the government. Unless you are prepared to satisfy the country on this 
 point,lt is in vain to issue bonds or notes,and expect them to pass currently 
 among the people. Unless this is done they will depreciate, and they 
 ought to depreciate; but with ample taxation, cheerfully voted by 
 Congress, they will be the very best security in the country, because the 
 whole property of the country is held for their redemption. Congress has 
 a plain duty to perform. It has ample power. This power should now be 
 enforced. Will Congress perform this duty ? 
 
35 
 
 I cannot doubt that it will. The emergency is great, and the exercise of 
 this power is now an imperative necessity, in order to sustain the credit of 
 the United States and justify the Government in issuing so large an 
 amount of Treasury notes, to circulate as money and be made a legal ten- 
 der in the payment of debts. Congress (as well as the Committee of 
 Ways and Means) is of opinion that we must raise by direct taxes, excises, 
 internal duties, and duties on imports, during the current year, at least 
 $150,000,000. That was shown by the recent resolution passed by the 
 Senate and House. This will pay the current ordinary expenses of the 
 Government, and the interest on all. the extraordinary war debt, and 
 create a sinldng fund for retiring annually a portion of the Treasury notes. 
 
 In carrying on the existing war, and putting down the rebellion, it is 
 necessary to bring into exercise all the sovereign power of the Govern- 
 ment to sustain itself. The war power must be exercised to its fullest ex- 
 tent. The money power of the Government must be brought into reguisi- 
 tion. The power to tax must be availed of. All the energies of the nation 
 must be aroused and brought into action. The power of the Government 
 and the means of the people must all be devoted to this great work. The 
 Government must be preserved, and this nation of thirty-four States must 
 be perpetuated. The life of the nation is in peril ; and all we have and all 
 we hope for must be devoted to maintain its existence, until peace and 
 quiet are restored in every part of our common country. 
 
 This bill is a necessa/ry means of carrying into execution the . powers 
 granted in the Constitution "to raise and support armies," and "to pro- 
 vide and mawiain a navy." , 
 
 In the present arisis of our national affairs, it is necessary that the army 
 should be "supported," and the navy "maintained." This necessity will 
 not be questioned by any loyal member on this floor. 
 
 The Constitution provides that " all the laws necessary and proper- for car- 
 rying into execution the foregoing powers" may be passed by Congress. 
 
 If the end be legitimate, and within the scope of the Constitution, all the 
 means that are appropriate, which are plainly adapted to that end, and 
 which are not prohibited, may be constitutionally employed to carry it in- 
 to effect. 
 
 If a certain means to the exercise of any of the powers expressly given 
 by the Constitution to the Government of the Union be an appropriate 
 measure, not prohibited by the Constitution, the degree of. its necessity is 
 a question of legislative discretion ; not of judicial cognizance. 
 
 The Government of the United States is not prohibited by the Constitu- 
 tion from issuing Treasury notes on demand, and making them a legal ten- 
 der in payment of all debts within its jurisdiction. The Constitution 
 (Art. 1, Sec. 10) prohibits the Staies from making any thing but gold and 
 silver coin a legal tender in payment of debts ; but this does not at all re- 
 strict the SQvereign power of the United States. Congress has the power 
 to coin money "regulate the vakbe thereof, and of. foreign coin." Gold 
 and silver by long practice — a practice that has continued for centuries 
 among all nations — has become the legal money of the world in all com- 
 mercial transactions. Its real intrinsic value is not as great as that fixed 
 vipon it by Governments. All Governments fix the value of gold and sil- 
 ver, and without the Governmeni; stamp, gold and silver would be a sim- 
 ple commodity, like other things having intrinsic value. Some Govern- 
 ments fix the value of coin higher, and some lower, just as each, for itself 
 chooses to determine. Any other metal or thing that should be stamped, 
 
36 
 
 and its value regulated by all the Governments of the world, would pass 
 equally well in all commercial transactions as gold and silvei-, although 
 not Intrinsically as valuAhle. Exchequer bills or Treasury notes whose 
 value is fixed by Government, and stamped as money, would pass as 
 money in the payment of debts within the jurisdiction of the Govern- 
 ment fixing such value. 
 
 In regulating the value of "coin," either foreign or domestic, Congress 
 may provide that gold and silver shall be of no greater value in the payment 
 Qf debts within the United States than the Treasury notes issued on the 
 credit of this Government, which stamps such coin and fixes its value. 
 These high powers of Government have been frequently exercised by 
 Great Britain during her continental wars, in making the Bank of Eng- 
 land notes receivable for public dues, and virtually a legal tender in pay- 
 ment of debts, by suspending the statutory clause requiring specie pay- 
 ments within the United Kingdom ; and other Governments of Europe 
 have exercised the same high prerogatives whenever necessary to preserve 
 their existence. But we are not left to this argument alone for constitu- 
 tional power to issue these demand notes and make them a legal tender in 
 payment of debts, as I will endeavor hereafter to show. 
 
 The Constitution provides that Congress shaU have power to pass " all 
 laws necessary and proper" for carrying into execution all the powers 
 granted to the Government of the United States, or any department or 
 officer thereof. 
 
 The word necessary, as used , is not limited by the additional word " pro- 
 per," but enlarged thereby. 
 
 " If the word necessary were used in the strict, rigorous sense, it would 
 be an extraordinary departure from the usual course of the human mind, 
 as exhibited in solemn instruments, to add another word, the only possible 
 effect of which is to qualify that strict and rigorous meaning, and to pre- 
 sent clearly the idea of a choice of means in the course of legislation. If 
 no means are to be resorted to but sueh as are indispensably necessary, 
 there can be neither sense nor utility in adding the word 'proper;'' for the 
 indispensable necessity would shut out from view all consideration of the 
 propriety of the means." — 3 Siory^s Commenia/ries, sec. 122. 
 
 Alexander HamiMon, in discussing these high powers of the Constitution, 
 says : 
 
 " The authorities essential to the care of the common defence are these: 
 to raise armies ; to build and equip fleets ; to prescribe rules for the go- 
 vernment of both ; to direct their operations ; to provide for their support. 
 These powers ought to exist, without limitation ; because it is impos- 
 sible to foresee or define the extent and variety of national exigencies, 
 and the correspondent extent ajid variety of the means necessary to satis- 
 fy them. The circumstances which endanger the safety of nations are in- 
 finite ; and for this reason no constitutional shackles can wisely be imposed 
 on the power to which the care of it is committed" * » * * "Xhis 
 power ought to be under the direction of the same councils which are ap- 
 pointed to preside over <Ae cotoototi de/e«ce." » * * » "It must be 
 admitted as a necessary consequence, that there can be no limitation of 
 that authority which is to provide for the defence and protection of the 
 community in any matter essential to its efficacy ; that is, in any matter 
 essential to the formation, direction, or supiport of the national toeces." 
 
 This statement, adds Hamilton — 
 
 "Rests upon two anxioms, simple as they are universal : the means ought 
 
87 
 
 to be proportioned to the end; the persons from whose agency the attain- 
 ment of the end is expected ought to possess the means by which it is to be 
 attained."— FecZerate, No. 23, pp. 95, 96. 
 
 Congress may judge of the necessity in the present exigency. It may 
 decide whether it will authorize the Secretary of the Treasury to issue 
 demand Treasury notes, and make them a legal tender in payment of 
 debts, or whether it will put its six or seven per cent, bonds on the mar- 
 ket, at ruinous rates of discount, and raise the money, at any sacrifice the 
 money-lender may require, to meet the pressing demands upon the Trea- 
 sury. In the one case the Government will be able to pay its debts at fair 
 rates of interest ; in the other, it must go into the streets shinning for the 
 means, like an indi^^idual in failing circumstances, and sure of being used 
 up in the end by the avarice of those who may exact unreasonable terms. 
 The Government needs and should have, in her present peril, the aid and 
 protection of aU patriotic citizens. 
 
 But, sir, knowing the power of money, and the disposition there is 
 among men to use it for the acquisition of greater gain, I am unwilling 
 that this Government, with all its immense power and resources, should 
 be left in the hands of any class of men, bankers or money-lenders, how- 
 ever respectable and patriotic they may be. The Government is much 
 stronger than any of them. Its capital is much greater. It has control of 
 all the bankers' money, and all the brokers' money, and all the property 
 of the thirty millions of people under its jurisdiction. Why, then, should 
 it go into Wall street. State street. Chestnut street, or any other street, 
 begging for money ? Their money is not as secure as Government money. 
 All the gold they possess would not carry on the Government for ninety 
 days. They issue only promises to pay, which, if Congress does its duty, 
 are not half as secure as United States Treasury notes based on adequate 
 taxation upon all the property of the country. 
 
 Why, then, go into the streets at all to borrow money ? I am opposed, 
 in our present extremity, to all shifts of this kind. I prefer to assert the 
 power and dignity of the Government, by the issue of its own notes, 
 pledging the faith, the honor, and property of the whole loyal people of 
 the country to maintain their circulation and provide for their redemp- 
 tion. 
 
 On the question of constitntional power we are not left without the 
 recorded opinions of the ablest jurists in the country. — 1 KmVs Com., 
 351— 2;— McOuUoch v. Ihe State of Maryland, 4 Wheat, B., 413—20. 
 
 Chief Justice Marshall, Daniel Webster, and Judge Kent lay down the 
 doctrine as follows : 
 
 " The Government of the United States is one of enumerated powers, 
 and it can exercise only the powers granted to it ; but though limited in 
 its powers, it is supreme within its sphere of action. It is the Government 
 of the people of the United States, and emanated from them. Its powers 
 were delegated by all, and it represents all, and acts for all. 
 
 " There is nothing in the Constitution which excludes incidental or m- 
 ^Hed powers. The Articles of Confederation gave nothing" to the United 
 States but what was expressly granted ; but the new Constitution dropped 
 the word ea^essly, and left the question whether a particular power was 
 granted to depend on a fair construction of the whole instrument. No 
 constitution can contain an accurate detail of all the sub-divisions of its 
 powers, and all the means by which they might be carried into execution. 
 
38 
 
 It would render it too prolix. Its nature requires that only the great out- 
 lines should be marked and its important objects designated, and all the 
 minor ingredients left to be deduced from the nature of those objects. 
 The sword and the purse, all the external relations, and no inconsiderable 
 portion of the industry of the nation, were entrusted to the General Gov- 
 ernment; and a Government entrusted with such ample powers, on the 
 due execution of which the happiness and prosperity of the people vitally 
 depended, must also be entrusted with artiple means for their execution. Un- 
 less the words imperiously require it, we ought not to adopt a construc- 
 tion which would impute to the framers of the Constitution, when grant- 
 ing great powers for the public good, the intention of impeding their 
 exercise, by withholding a choice of means. The powers given to the 
 Government imply the ordinary means of execution ; and the Govern- 
 ment, in all sound reason and fair interpretations, must have the choice of 
 the means which it deems the most convenient and appropriate to the ex- 
 ecution of the power. The Constitution has not left the right to Congress 
 to employ the necessary means for the execution of its powers to general 
 reasoning. Article 1, section 8, of the C.onstitution, expressly confers on 
 Congress the power ' to make all laws that may be necessary and proper 
 to carry into execution the foregoing powers.' Congress may employ 
 such means and pass such laws as it may deem necessary to carry into ex- 
 ecution great powers granted by the Constitution ; and necessary means, 
 in the sense of the Constitution, does not import an absolute physical ne- 
 cessity, so strong that one thing cannot exist without the other. It stands 
 for any means calculated to produce the end. The word necessary admits 
 of all degrees of comparison. A thing may be necessary, or very neces- 
 sary, or absolutely, or indispensably necessary. The word is used in vari- 
 ous senses ; and in its construction, the subject, the context, the intention, 
 are all to be taken into view. The powers of the Government were given 
 for the welfare of the nation. They were intended to endure for ages to 
 come, and to be adapted to the various crisis in human affairs. To pre- 
 scribe the specific means by which Government should in all future time 
 execute its power, and to ooniine the choice of means to such narrow 
 limits as should not leave it in the power of Congress to adopt any which 
 might be appropriate and conducive to the end, would be most unwise and 
 pernicious, because it would be an attempt to provide, by immutable 
 rules, for exigencies which, if foreseen at all, must have been foreseen 
 dimly, and would deprive the Legislature of the capacity to avail itself of 
 experience, or to exercise its reason, and accommodate its legislation to 
 circumstances. If the end be legitimate, and within the scope of the Con- 
 stitution, all means which are appropriate, and plainly adapted to this 
 end, and which are not prohibited by the Constitution, are lawful." 
 
 It is plainly within the scope of the Constitution that the Government 
 should maintain itself; that the army should be supported; that the navy 
 should be maintained. The ways and means of doing this are left to Con- 
 gress to provide. Congress may do this entirely by taxation. It may 
 provide by law to levy and collect taxes enough every year to pay the 
 whole expenses of the war during each current year, and so "pay as we 
 go." It may issue six per cent, bonds and sell them on the market for 
 what they will bring— even if they will not sell for over fifty cents on the 
 dollar— to raise money to carry on the war. It may issue Treasury notes 
 payable on demand, and make them a legal tender in payment of debts. 
 Either one or all of these modes of paying the expenses of the Govern- 
 
39 
 
 » 
 ment is left to the discretion of Congress. Either mode is constitutional : 
 and it is left to the soimd discretion of Congress to decide which mode it 
 will adopt, or whether it will adopt a part of each, as being the best in the 
 present crisis. 
 
 My own impression is, that it will be best for us to adopt, in part, all of 
 these modes for providing the means. 
 
 1. Raise by taxation the current year, over and above the amount re- 
 ceived from duties on imports, the sum of $150,000,000. 
 
 2. Issue $100,000,000 of demand Treasury notes in addition to the 
 $50,000,000 authorized in July, making them a legal tender in payment of 
 debts, and exchangeable at any time for 6 per cent, twenty years' bonds ; 
 with a further issue of demand notes if Congress shall hereafter deem it 
 necessary. 
 
 3. Provide for the issue of all the twenty years' 6 per cent, bonds that 
 may be necessary to fund the demand Treasury notes, and other fundable 
 Treasury notes that may be issued, (say $500,000,000 six per cent, twenty 
 years' coupon bonds,) and pledge $30,000,000 of the annual taxes to pay 
 the interest half-yearly thereon, and pledge $25,600,000 more, as a sinking 
 fund to redeem the principal in twenty years. 
 
 1. This tax of $150,000,000 would afford an ample basis on which to rest 
 the credit of the Government for this large issue of Treasury notes and 
 bonds, and would insure the punctual payment of the interest to the capi- 
 talists who might hold them. 
 
 2. The demand notes put in circulation would meet the present exigen- 
 cies of the Government, in the discharge of its existing liabilities to the 
 army, navy, and contractors, and for supplies, materials, and munitions of 
 war. These notes would find their way into all the channels of trade 
 among the people; and as they accumulate in the hands of capitalists, 
 they would exchange them for the six per cent, twenty years' bonds. 
 
 These circulating notes in the hands of the people would enable them to 
 pay the taxes imposed, and would facilitate all business operations be- 
 tween farmers, mechanics, commercial business men, and banks, and be 
 equally as good as, and in most cases better, than the present irredeem- 
 able circulation issued by the banks. 
 
 3. The $500,000,000 six per cent, twenty years' bonds in the hands of 
 the Secretary of the Treasury, ready to be issued, would afford ample op- 
 portunity for funding the Treasury notes as fast as capitalists might desire 
 to exchange Treasury notes not bearing interest for coupon bonds of the 
 United States bearing six per cent, interest, and amply secured by a tax 
 upon the people and all their property. 
 
 In this way the Government Will be able to get along with its immedi- 
 ate and pressing necessities without being obliged to force its bonds on 
 the'market at ruinous rates of discount ; the people, under heavy taxationj 
 iviU be shielded against high rates of interest ; and the capitalists will be 
 afforded a fair compensation for the use of their money during the pending 
 struggle of the country for national existence. 
 
 A suspension of specie payment is greatly to be deplored, but it is not 
 a fatal step in an exigency like the present. The British Government and 
 the Bank of England remained under suspension from 1797 to 1821— '2— ^a 
 period of twenty-five years. During this time England succeasfully re^ 
 sisted the imperial power of the Emperor Napoleon, and preserved het' 
 own imperilled existence. During all this time the pe&ple of Great Brit* 
 aln advanced in wealth, population, and resources. Gold is not as valu" 
 
40 
 • 
 able as the productions of the farmer and mechanic, for it is not as indis- 
 pensable as are food and raiment. Our army and navy must have what is 
 far more valuable to them than gold and silver. They must have food, 
 clothing, and the material of war. Treasury notes issued by the Govern- 
 ment, on the faith of the whole people, will purchase these indispensable 
 articles, and the war can be prosecuted until we can enforce obedience to 
 the Constitution and laws, and an honorable peace be thereby secured. 
 This being accomplished, I wiU be among the first to advocate a speedy 
 return to specie payments, and all measures that are calculated to preserve 
 the honor and dignity of the Gtovemment in time of peace, and which I 
 regret are not practicable in the prosecution of this war. 
 
 I do not despair; on the contrary, I have an abiding faith in the patriot- 
 ism, firmness, and resources of the people to maintain this Government. 
 I feel that we are in great peril ; but when the people and our rulers be- 
 come sufiiciently aroused to fully appreciate the magnitude and probable 
 duration of the rebellion — a rebellion that has grown iato most gigantic 
 proportions — then shall we be able to put forth the energy and the means 
 necessary to crush it. 
 
 An early and successful advance of our armies is of the utmost import- 
 ance. We need such an advance to sustain the financial credit of the 
 Government. We need it to prevent foreign intervention ; we need it to 
 rouse the flagging energies of the people ; and above all, we need it to 
 vindicate the courage and invincibility of our brave soldiers, who are so 
 anxious to be led on to victory. 
 
41 
 
 API'ENDIX. 
 
 Table A. 
 
 Irue Value of Real and Personal Estate, according to the seventh Censtts, 
 1850, aud the eighth Census, 1860, respectively. 
 
 
 1850. 
 
 1860. 
 
 
 Incr'ase 
 
 States. 
 
 Real and Per- 
 
 Real and Per- 
 
 Increase. 
 
 per ct. 
 
 
 sonal Estate. 
 
 sonal Estate. 
 
 
 for 10 
 years. 
 
 Alabama 
 
 $ 228,204,332 
 
 $ 495,237,078 
 
 $267,032,746 
 
 117 01 
 
 Arkansas 
 
 39,841,025 
 
 219.256,473 
 
 179,415,448 
 
 450 32 
 
 California* --.- 
 
 22,161,872 
 
 207,874,613 
 
 185,712,741 
 
 837 98 
 
 Connecticut 
 
 155,707,980 
 
 444,274,114 
 
 288,566,134 
 
 185 32 
 
 Delaware 
 
 21,062.556 
 
 46,242,181 
 
 25.179,625 
 
 119 54 
 
 Florida.. 
 
 22,862,270 
 
 73,101,500 
 
 50,239,230 
 
 219 74 
 
 Georgia 
 
 335,425,714 
 
 645,895,237 
 
 310,469.523 
 
 92 56 
 
 Illinois. .... 
 
 156,265,006 
 202,650,264 
 
 871,860,282 
 528,835,371 
 
 715,595,276 
 
 457 93 
 
 Indiana 
 
 326,185,107 
 
 160 95 
 
 
 23,714,638 
 
 247,338,265 
 
 31,327,895 
 
 666,043,112 
 
 223,623,627 
 364,414,656 
 
 942 97 
 
 
 
 Kentucky 
 
 301,628,456 
 
 120 81 
 
 Louisiana 
 
 233,998,764 
 
 602,118,568 
 
 368,119,804 
 
 157 30 
 
 Maine 
 
 122,777,571 
 219,217,364 
 
 190,211,600 
 
 67,434,029 
 
 54 92 
 
 Maryland 
 
 376,919,944 
 
 157,702.580 
 
 71 93 
 
 Massachusetts. . 
 
 573,342,286 
 
 815,237,433 
 
 241,895,147 
 
 42 19 
 
 Michigan 
 
 59,787,255 
 
 257,163,983 
 
 197,376,728 
 
 330 13 
 
 Minnesota 
 
 not ret'd in full. 
 
 52,294,413 
 
 
 
 Mississippi 
 
 228,951,130 
 
 607,324,911 
 
 378,373,781 
 
 165 26 
 
 Missouri 
 
 137,247,707 
 
 501,214,398 
 
 363,966,691 
 
 265 18 
 
 NewHampshire 
 
 103,652,835 
 
 156,310,860 
 
 52,658,025 
 
 50 80 
 
 New Jersey t... 
 
 200,000,000 
 
 467,918,324 
 
 267,918,324 
 
 133 95 
 
 New Torlt 
 
 1,080,309,216 
 
 1,843,338,517 
 
 763,029,301 
 
 70 63 
 
 North Carolina 
 
 226,800,472 
 
 358,739,399 
 
 131,938,927 
 
 58 17 
 
 Ohio 
 
 504,726,120 
 
 1,193,898,422 
 
 689,172,302 
 
 136 54 
 
 Oregon 
 
 5,063,474 
 
 28,930,637 
 
 23,867,163 
 
 471 35 
 
 Pennsylvania . . 
 
 722,486,120 
 
 1,416,.501,818 
 
 694,015,698 
 
 96 05 
 
 Ehode Island.. 
 
 80,508,794 
 
 135.337,588 
 
 54,828,794 
 
 68 10 
 
 South Carolina- 
 
 288,257,694 
 
 548,138,754 
 
 259,881,060 
 
 90 15 
 
 Tennessee 
 
 201,246,686 
 
 493,903,892 
 
 292,657,206 
 
 145 42 
 
 Texas 
 
 52,740,473 
 
 365,200,614 
 
 312,460,141 
 
 592 44 
 
 Vermont 
 
 92,205,049 
 
 122,477,170 
 
 30,272,121 
 
 32 83 
 
 Virginia 
 
 430,701,082 
 
 793,249,681 
 
 362,548,599 
 
 84 ]7 
 
 Wisconsin 
 
 42,056,595 
 
 273,671,668 
 
 231,615,073 
 
 550 72 
 
 D. of Columbia 
 
 14,018,874 
 
 41,084,945 
 
 27,066,071 
 
 193 (J6 
 
 "N'p'hraslcfl 
 
 
 9,131,056 
 
 
 
 New Mexico.. - 
 
 5,174,471 
 
 20,813,768 
 
 15,639,298 
 
 302 U 
 
 Utah.'' 
 
 986,083 
 
 5,596,118 
 
 4,610,035 
 
 467 EO 
 
 W^ashinffton. 
 
 
 5,601,466 
 
 
 
 
 
 
 
 7,135,780,228 
 
 16,159,616,068 
 
 8,925,481,011 
 
 126 45 
 
 * Only 13 counties in California have been returned. 
 
 •t In New Jersey, as the real estate was only returned, the above is partly estimated. 
 
42 
 
 Table B. 
 
 lahle showing the Federal Population, and the Aisessed Value of Seal and 
 Personal Property of the Several States of the Union. — Oenstts 1860. 
 
 States. 
 
 Alabama 
 
 Arkansas 
 
 California 
 
 Connecticut 
 
 Delaware 
 
 Florida 
 
 Geor^a 
 
 Illinois 
 
 Indiana 
 
 Iowa 
 
 Kansas 
 
 Kentucky 
 
 Louisiana 
 
 Maine - . - 
 
 Maryland 
 
 Massachusetts- -- 
 
 Michigan 
 
 Minnesota 
 
 Mississippi 
 
 Missouri 
 
 Ifew Hampshire - 
 
 New Jersey 
 
 IffewTork 
 
 K'orth Carolina- - 
 
 Ohio - 
 
 Oregon 
 
 Pennsylvania . - - 
 
 Rhode Island 
 
 South Carolina - - 
 
 Tennessee 
 
 Texas - . 
 
 Vermont - 
 
 Virginia 
 
 Wisconsin 
 
 Federal 
 Population. 
 
 790,243 
 
 390,985 
 
 880,016 
 
 460,151 
 
 111,498 
 
 115,737 
 
 872,436 
 
 1,711,753 
 
 1,350,941 
 
 674,948 
 
 107,110 
 
 1,065,517 
 
 576,086 
 
 628.276 
 
 652,158 
 
 1,231,065 
 
 749,112 
 
 172,022 
 
 616,717 
 
 1,136,331 
 
 326,072 
 
 672,031 
 
 3,880,727 
 
 860,234 
 
 2,339,599 
 
 52,464 
 
 2,906,370 
 
 174,621 
 
 542,795 
 
 999,533 
 
 530,159 
 
 315,116 
 
 1,399,731 
 
 775,873 
 
 Value of Real 
 
 Estate. 
 
 29,568,427 
 
 $155,034,089 
 
 63,254,740 
 
 66,906,631 
 
 191,478,842 
 
 26,273,803 
 
 21,722,810 
 
 179,801,441 
 
 287,219,940 
 
 291,829,992 
 
 149,433,423 
 
 16,088,602 
 
 277,925,054 
 
 280,704,988 
 
 86,717,716 
 
 65,341,438 
 
 475,413,165 
 
 123,605,084 
 
 25,391,771 
 
 157,836,737 
 
 153,450,577 
 
 59,638,346 
 
 151,161,942 
 
 1,069,658,080 
 
 116,366,573 
 
 687,518,121 
 
 6,279,602 
 
 561,192,980 
 
 83,778,204 
 
 129,772,684 
 
 219,991,180 
 
 112,476,013 
 
 65,639,973 
 
 417,952,228 
 
 148,238,766 
 
 Val. of Perso- 
 nal Property. 
 
 12,006,756,585 
 
 $277,164,673 
 116,956,590 
 
 72,748,036 
 149,778,134 
 
 13,493,439 
 
 47,206,875 
 438,430,946 
 101,987,432 
 119,212,432 
 
 55,733,560 
 
 6,429,630 
 
 250,387,639 
 
 155,082,277 
 
 67,662,672 
 231,793,800 
 301,744,651 
 
 39,927,921 
 
 6,727,002 
 
 ' 351,636,175 
 
 113,485,274 
 
 64,171,743 
 145,520,550 
 320,806,558 
 175,931,029 
 272,348,980 
 
 12,745,313 
 158,060,355 
 
 41,326,101 
 359,546,444 
 162,504,020 
 156,316,322 
 
 19,118,646 
 
 239,069,108 
 
 37,706,723 
 
 5,081,661,050 
 
43 
 
 At tlie conclusion of Mr. Spaulding's speech, Mr. Vallandig- 
 HAM oTDtained the floor and offered a suhstitute for the bill, which 
 was read. , (Congressional Globe, p.p. 526.) 
 
 Mr. Stevens said :— "I will follow an example set me, and give notice 
 of an amendment which I shall offer to the hill. It is to make the semi- 
 annual interest payable in coin. I shall make it when we reach the pro- 
 per time and place." 
 
 Mr. Vallandigham.— " That is included in the amendment I pro- 
 pose. Mr. Stevens — "Yes! but my amendment is to the original biU." 
 Mr. Vallandigham — " I do not desire to speak upon the bill at this stage 
 of the debate, and therefore I will cheerfully yield to my colleague (Mr. 
 Pendleton), who proposes to discuss the constitutional question of legal 
 tender." Mr. Pendleton obtained the floor. 
 
 MR. Pendleton's speech. 
 
 Mk. Pendleton, on the 29th inst. made an elaborate speech in 
 opposition to the constitutionality as well as the expediency of 
 the legal tender clause. He commenced by saying, 
 
 " Me. Chairman, I was glad to hear the announcement made hy the 
 gentleman from Vermont, (Mr. Morrill), a member of the Committee of 
 "Ways and Means, by my colleague (Mr. "Vallandigham), by the gentleman 
 from New York, (Mr. Boscoe Conkling), and by the gentleman from 
 Pennsylvania, (Mr. Stevens), that they each intended to propose to the 
 House to make changes in this bill, either by way of amendment or sub- 
 stitute." 
 
 Mr. Pendleton — "These notes are to be made lawful money and a 
 legal tender in discharge of aU'pecuniary obligations, either by the Govern- 
 ment or individuals, a character which has never been given to any note 
 of the "United States, or any note of the Bank of the "United States by any 
 law ever passed. Not only, sir, was such a law never passed, but such a 
 law was never voted on, never proposed, never introduced, never recom- 
 mended by any department of the Government ; the measure was never 
 seriously entertained in debate in either branch of Congress." Me. 
 Conkling interrupting, enquired "whether the present Secretary is in 
 favor of making paper a legal tender?" Mr. Spatjlding— " In reply to 
 the question of my colleague, I will say that the Secretary of the Trea- 
 sury has been called upon for his opinion in regard to this bill. We were 
 assured that his reply would be sent to us yesterday, but we did not re- 
 ceive it. "We expect his answer every hour." Mr. Conkling — "I am 
 not certain that I understand what my colleague said. Does he expect a 
 letter from the Secretary of the Treasury which will contain his views on 
 the financial question, and also on the legal qvtestion ?" Mr. Spauldiiig — 
 "Upon the bill specifically." Mr. Conkling— "Containing the legal ten- 
 der clause?" Mr. Spaulding— " Yes, sir." Mk. Pendleton— "I cannot 
 answer the question so far as the opinions of the present Secretary of the 
 Treasury are concerned. I affirm again the statement I have made, that 
 a proposition of this kind has never been recommended to either House 
 of Congress by any Department of the Government from its organization 
 The report of the Secretary of the Treasury, made at the opening of the 
 Session, contains no such recommendation." 
 
4i 
 
 Mr. Peitdleton contended that the bill, if passed, would impair 
 the obligation of past as well as of future contracts, and that it 
 would make it illegal to make a contract for dealing in gpld or 
 silver coin, for the reason that thfise leg^l tender notes might be 
 tendered in payment of coin contracts. He insisted that there 
 was no express power granted in the Constitution to make United 
 States notes lawful money and a legal tender in payment of debts, 
 and that the power "to regulate commerce" gave no such power. 
 He then said: 
 
 "The gentleman from New York (Mr. Spaulding;, in his argument y,es- 
 terday, deduced this power from the general powers of the Government. 
 He told us that Congress had power to lay and collect taxes ; to raise and 
 support armies, to provide and maintain a navy, and that all power neces- 
 sary to effectuate these purposes was expressly given by the general grant 
 of the Constitution. If I should admit his statement in the very language 
 in which he has made it, am I not entitled to ask whether he has shown 
 us any legitimate connection between making these notes a legal tender 
 and the power to raise an army ? Might I not ask whether the repudia- 
 tion of the obligations of the Government to pay its interest is a legiti- 
 mate means for providing and sustaining a navy? Whether impairing the 
 obligations of contracts between private individuals throughout the coun- 
 try, will in any degree assist the Government in its great duty in laying 
 and collecting taxes ? "We had no demonstration of the necessity or pro- 
 priety of these means to accomplish those ends. 
 
 The gentleman spoke quite at large in reference to the sovereign power 
 of the Government. He told us that this power was not prohibited in the 
 Constitution. He told us that in times of great emergency every thing 
 may be done except that which is prohibited ; and he read an argument 
 from the Attorney General wMch concludes as it began, with the proposi- 
 tion that such a power is not prohibited to Congress. Sir, I repudiate 
 this whole idea. I think it has no solid foundation in the Constitution. 
 
 When I come to examine the powers of Congress according to the 
 principles of interpretation to which I adhere, I look to the grants of the 
 Constitution. I find no grant of this power in direct terms, or, as I think, 
 by fair implication. It is not an accidental omission : it is not an omission 
 through inadvertency. It was intentionally left out of the Constitution, 
 because it was designed that the power should not reside in the Federal 
 Government." 
 
 Mr. Pendleton continued his argument at great length against 
 the Constitutional power of the government to issue legal tender 
 notes to circulate as money. He quoted from Story, Madison, 
 Hamilton, Calhoun, and made long extracts from Mr. "Webster's 
 speeches which were made while the government was on a peace 
 footing, denying the power of the Government to issue currency 
 and make it a legal, tender. He insisted that no State, and that 
 even Congress itself could not make anything but gold and silver 
 coin a legal tender in payment of debts. That the language of 
 
45 
 
 the Constitution, and the weight of authority, it seemed to him, 
 settled the question that Congress had not the power to do that 
 which it is proposed shall he done by the provisions of this bill. 
 He concluded as follows : 
 
 " Let gentlemen heed this lesson of wisdom. Let them, if need be, tax 
 the energies and wealth of the country sufficiently to restore the credit of 
 the Government. Let them borrow whatever money in addiitloft may be 
 necessary— borrow to the full extent that may be necessary— and let us 
 adhere rigidly, firmly, consistently, persistently, and to the end, to the 
 principle of refusing to surrender that currency which the Constitution 
 has given us, and in the maintenance of which this Government, has 
 never, as yet, for one moment wavered." 
 
 The letter of Secretary Chase of the 22d inst. was regarded by 
 a majority of the Committee of Ways and Means and many 
 Members of the House, as non-committal on the legal tender 
 clause of the bill, and many believed that when pressed to a 
 decision, he would declare against its constitutionalit5\ In order 
 to obtain the opinion of the Secretary more fully, Me. Coening 
 bflfered a resolution in the Committee of Ways and Means, which 
 "was adopted, referring the bill (No. 240) to the Secretary, and 
 requesting him to communicate to the Committee at as early a 
 day as possible, his opinion as to the propriety and necessity of 
 its immediate passage by Congress. After considera:ble delay the 
 Secretary sent to the Committee of Ways and Means the follow- 
 ing reply: 
 
 EXTRACT FROM A LETTER OP THE SECRETARY OP THE TREASURY TO THE COM- 
 MITTEE op WAYS AND MEANS, 
 
 Teeasukt Department, Jan. 29, 1862. 
 
 SiE r I have the honor to acknowledge the receipt of a resolution of the 
 Committee of Ways and Means, referring to me House bill No. 240, and 
 requesting my opinion as to the propriety and necessity of its immediate 
 passage by Congress. 
 
 The condition of the Treasury certainly needs immediate action on the 
 subject of affording provision for the expenditures of the Government, 
 both expedient and necessary. The general provisions of the bill submit- 
 ted to m«, seems to me well adapted to the end proposed. There are, 
 however, some points which may, perhaps, be usefully amended. 
 
 The provision making United States notes a legal tender has doubtless 
 been well considered by the committee, and their conclusion needs no sup^ 
 port from any observation of mine. I thinls: it my duty, however, to say, 
 that in respect to this provision my reflections have conducted me to the 
 same conclusions they have reached. It is not unknown to them that I have 
 felt, nor do I wish to conceal that I now feel, a great aversion to making 
 anything but coin a legal tender in payment of debts. It has been my 
 anxious wish to avoid the necessity of such legislation. It is, however, 
 at present impossible, in consequence of the large expenditures entailed 
 
46 
 
 by the war, and the suspension of the banks, to procure sufficient coin for 
 disbursements ; and it has, therefore, become indispensably necessary that 
 we should resort to the issue of United States notes. The making them a 
 legal tender might, however, stiU be avoided, if the willingness manifested 
 by the people generally, by railroad companies, and by many of the bank- 
 ing institutions, to receive and pay them as money in all transactions, 
 were absolutely or practically universal; but, unfortunately, there are 
 some persons and sonae institutions which refuse to receive and pay them, 
 and whose action tends not merely to the unnecessary depreciation of the 
 notes, but to estnblish discriminations in business against those who, in 
 this matter, give a cordial support to the Government, and in favor of 
 those who do not. Snch discriminations should] if possible, be prevented ; 
 and the provision making the notes a legal tender, in a great measure at 
 least, prevents it, by putting all citizens, in this respect, on the same level, 
 both of rights and duties. 
 
 The committee, doubtless, feel the necessity of accompanying this meas- 
 ure by legislation necessary to secure the highest credit as well as the 
 largest currency of these notes. This security can be found, in my judg- 
 ment, by proper pro^^sions for funding them in interest-bearing bonds ; 
 by well-guarded legislation authorizing banking associations with circula- 
 tion based on the bonds in which the notes are funded ; an,d by a judicious 
 system of adequate taxation, which will not only create a demand for the 
 notes, but— by securing the prompt payment of interest— raise and sus- 
 tain the credit of the bonds. Such legislation, it may be hoped, will, 
 divest the legal tender clause of the bill of injurious tendencies, and se- 
 cure the earliest possible return to a sound currency of coin and promptly 
 convertible notes. 
 
 I beg leave to add, that vigorous military operations and the unsparing 
 retrenchment of all necessary expenses, will also contribute essentially to 
 this desirable end. 
 
 I have the honor to be, with very great respect, yours truly, 
 
 S. P. CHASE. 
 Hon. Thaddeus Stevens, Chairman. 
 
 LETTEK FROM HON. S. P. CHASE, SECEETAEY OP THE TEEASURT. 
 
 Tebasuey Depaetment, Jan. 30, 1862. 
 
 My Deae Sie— It was impossible to get toy answer ready before yester- 
 day afternoon, when it was sent to the Chairman of the Committee ; the 
 messenger boy instructed to deliver it to Mr. Stevens or yourself. • The 
 House having adjourned, he left it, he says, for you at the National Hotel 
 instead of at Mr. Steven's lodgings. 
 
 Had I been aware that the part read to you would have been acceptable 
 as an extract, (to insert in your speech,) I would have sent it sarlier in 
 advance of completing the answer. 
 
 I read your speech carefully last night. It seems to me to need no 
 change. Xou do not attach, I see, so much importance as I do to the 
 Banking Act as a measure of relief; nor so much as I am confident you 
 will upon reflection. I confess too, that I was a little disappointed in be- 
 ing merely let off without censure when I thought myself entitled to 
 some credit. My two first loans were negotiated considerably above the 
 market rate, and the last at a rate almost equal at the time, and below, 
 while the market almost immediately afterwards fell. 
 
 Your friend, S. P. CHASE. 
 
 Hon. E. G. SPAtJLDlNG, House of Representatives. 
 
47 
 
 LETTER OP JOHN A. STEVENS, PRESIDENT OF BANK OF COMMERCE. 
 
 New York, Jan. 29, 1862. 
 Mt Dear Sir— I beg to offer you my thanks for your able exposition of 
 the financial affairs of the Q-overnment. It is clear that there are but the 
 alternatives you state to obtain any substantial relief— the one, to flood 
 the market with the long stocks, submit to the very great depression in 
 the price, and abide the consequences : a great augmentation of the public 
 debt, and ruin to many of the warmest supporters of the Government ; 
 the other, for the present to issue demand notes, making them a legal tender 
 in order to enable you to use them. No other plans have been, or in my opin- 
 ion can be devised, I have long entertained and freely expressed these 
 views, here and in Washington. Even if an attempt, more or less suc- 
 cessful, had been made at the first to sell the long stock, yet, with the 
 profligate expenditure since made to such fearful amounts, " to this com- 
 plexion had we come at last." It is idle to look back, but had there been 
 economy in the great departments of expenditure from the beginning, in- 
 spiring full public confidence in their able and honest management, it 
 may be questioned if the necessary funds could not have been provided 
 without making irredeemable paper money. The war would have been 
 shorter, the patriotism of the whole people fully sustained, and foreign 
 nations shown that this Government could not be divided. 
 
 I am, dear sir, respectfully and truly yours, 
 
 JOHN A.' STEVENS. 
 Hon. E. G. Spaulding, Washington. 
 
 letter FROM HON. GEORGE OPDYKE, MAYOR OP NEW YORK. 
 
 Mayor's Office, New York, Feb. 3, 1862, 
 My Dear Sir — Accept my kind thanks for your note of yesterday, and 
 also my apology for not having sooner expressed the gratification I felt 
 on reading your very able and statesmanlike speech on the national 
 finances. That speech has received, as it deserved, the hearty approval of 
 every one who fuUy appreciates the imminent danger we are in of a col- 
 lapse of the public credit. If the present financial embarrassments of the 
 Government should be aggravated by military disasters, or threatened 
 foreign intervention, it might precipitate a panic that would so depress 
 the public securities, that it would be difiBcult to obtain supplies for the 
 army, and thus arrest the further prosecution of the war. The only safe 
 way of avoiding this danger is to promptly pass the bill you have intro- 
 duced and advocated so ably. I shall not fail to give you whatever aid I 
 can. I have tried in several instances to bring Mr. Bryant and Mr. Greeley 
 over to our faith, but'thus far without success. 
 
 I remain, dear sir, very truly yours, 
 
 GEORGE OPDYKE. 
 COMMONWEALTH BANK. 
 
 PHiLADELi?HiA, Feb. 14, 1862. 
 My Dear SiE— 1 have read your speech on the finances of the nation 
 With the liveliest interest. It is at once clear, forcible, argumentative, 
 and conclusive, worthy alike of a financier, a statesman, and a patriot. 
 Very truly yours, R. MORRIS. 
 
 Hon. E. G. Spaulding. 
 
48 
 
 LETTER FROM STEPHEN COLWELL, ESQ. 
 
 Philadelphia, Jan. 30, 1862. 
 Hon. E. G. Spaulding, House of Representatives, Washington. 
 
 Dear Sir— I have just read your very able and statesmanlike exposi- 
 tion of our public iinanoes and our financial policy during the war, with 
 a satisfaction I cannot refrain frOm expressing to you by letter. 
 
 You have grasped the subject strongly and comprehensively, as well as 
 practically. I can not doubt that your views will prevail. I trust you 
 will now extend the same kind of effort to accomplish some harmonious 
 action between the Associated Banks and the Government. I believe that 
 these, and other leading banks can, by the aid of the Treasury and by con- 
 cert in emergencies, keep the United States notes or currency at par; that 
 is at par less only the special premium on gold, which will not be greater 
 than now if the Treasury currency is well managed. The regular circu- 
 lation of paper currency will absorb in no very long period the whole 
 $200,000,000, and keep that amount moving. But as currency in the chan- 
 nels of business necessarily at times gorges in particular places, and de- 
 preciates at once if the holders are not relieved, such occasions should not 
 only be watched by the fiscal agents of the Government, but the proper 
 remedy should be applied. It would cost the Treasury no sum worth 
 mentioning, if the banks would enter into the plan heartily, to keep their 
 currency in such credit that it would perform with complete success every 
 function of a sound currency. According to my view, the banks are deep- 
 ly interested in keeping up the credit of those notes. The continued de- 
 mand for them created by the loans, by the payment of debts at banks, 
 and the payment of taxes, will create a rapid circulation and an absorbing 
 power, which will enable the Government to re-issue the whole amount 
 several times a year. But there can be no doubt that an average of one 
 hundred millions will remain so prominently in the channels of business 
 as seldom to revisit the Treasury, If the banks will lend their aid eflfect- 
 ively to support their circulation it is not likely that any further issue 
 will be needed, if they don't, they must depreciate, and further issue wiU 
 be inevitable, if the war continues. Even the banks should be willing to 
 acknowledge, that whatever their opinion about the propriety of issuing 
 this currency, the whole financial policy of the war and commercial in- 
 terests of the country, will depend very much on its management. They 
 should accept the necessity and make the best of it ; and they can make a 
 very good thing for themselves by making the best of it. There can be 
 no doubt that the city banks can enlarge their discounts by the use of the 
 United States notes beyond what they could safely do upon their own 
 circulation. But I regard their hearty co-operation in sustaining this 
 issue which you have so well justified, as so important, that 1 think it 
 would be well worth while for the Treasury to pay them for the sort of 
 services they can render. I contributed an editorial on this subject to the 
 Morth American, which I send you. If your Speech is to appear in pamph- 
 let form please send me one. I send you also an article in the Banking 
 Magazine for January. 1862, on the subject of banks and the Treasury. Be 
 good enough to present my respects to Mr. Horton, of your committee, 
 who is an Old acqviaintance of mine. 
 
 With great respect, very truly yours, 
 
 STEPHEN COLWELL. 
 
49 
 
 EXTRACT FEOM A LETTEE OP M. S. HAWLBT, ESQ. 
 
 Buffalo, Jan. 21, 1862. 
 Deab Sie — I suppose of course a large issue of demand notes for circu- 
 lation will be authorized, receivable for all dues and made a legal tender; 
 and sulHcient taxation to sustain the credit of all such issues and of the 
 Government bonds. I see no other method so economical and effective. 
 
 Very respectfully yours, 
 
 M. S. HAWLET. 
 
 EXTRACT FROM A LETTER OF J. H. VAN ANTWERP, ESQ., OF THE STATE BANK, 
 
 ALBANY. 
 
 Albany, Feb, 8, 1862. 
 Deae Sih— Accept my thanks for a copy of your speech on the national 
 finances. The demand notes, in addition to the legal tender, need only to 
 be fortified by a sinliing fund yearly of $10,000,000, derived from taxation, 
 to every $100,000,000 of notes issued, to make them pass equal to coin. 
 
 Tours truly, 
 
 J. H. VAN ANTWERP. 
 
 LETTER FROM HON. ROBERT DENNI8T0N, LATE COMPTROLLER OF NEW YORK. 
 
 Salisbury Mills, Orange Co., N. T., Jan. 30, 1862. 
 Hon. E. Gr. Spaulding. 
 
 Dear Sie — I have read your financial speech (as reported in the IH- 
 bwie) twice over with great interest. The necessity for such measures is 
 greatly to be regretted, but I do not see with the light I have, how they 
 are to be avoided. In our national exigency, determined boldness, both 
 in civil and military affairs, will be worth a mint of money to us. 
 
 Please send me your speech for preservation, when printed in pamphlet 
 form. 
 
 With great respect, your obedient servant, 
 
 EGBERT DENNISTON. 
 
 LETTER OF C. H. RUSSELL, VICE PRESIDENT OP THE BANK OF COMMERCE. 
 
 New York, Jan. 29, 1862. 
 My Deae Sir — I have just read your speech as published to-day in the 
 limes, it appears to me a very fair and clear exposition of the present 
 financial condition of the Government, its necessities, its resources, and 
 the emergency which now deman(Js the immediate passage of the bill re- 
 ported by the Committee of Ways and Meajis. The exigency of the 
 Goyernmeiit to which I referred recently before that Committee, to justify 
 the legal ten^,er of the notes, I think is now reached, and we have no 
 choice of any other measure as good as you propose. But protect the 
 issue of t;his currency by limitation of its amount, by large taxation, and 
 be sure to require by amendment that the payment of interest by the Gov- 
 ernment shall be certainly paid in coin on all its public debts. 
 
 In haste, yours truly, 
 
 C. H. RUSSELL. 
 
 P. S.— In some quarters are suggestions not to receive these notes from 
 customers. This is wrong. Such a proceeding, or to make any exception 
 against them as lawful rmmey of the United States, would affix a taint and 
 affect the public confidence in them. 
 
50 
 
 ELEAZER LORD, LATE PRESIDENT OF THE NEW YORK AND BRIE RAILROAD. 
 
 PlEKMONT, Jan. 29, 1862. 
 Hon. E. G. Spaulding, M. C. 
 
 Deak Sir— I beg to congratulate you on your lucid, forcible, and com- 
 prehensive opening of the debate on the legal tender Treasury note biU. 
 It is unanswerable, and I trust will issue in an early triumph. I only 
 wish the sum proposed was larger, so as to extinguish all hopes of national 
 bonds being forced on the market and sacrificed. I think there wiU be a 
 struggle in certain quarters to withdraw them from circulation and turn 
 them into bonds on interest. The people would do that gradually with- 
 out reducing the circulation too much, were there plenty more expected; 
 and with a discretion for a larger sum the inimical parties could do no 
 harm. 
 
 Should your speech be printed in pamphlet form, which I hope it wiU, 
 please favor me with one or more. 
 
 KespectfuUy, &o., ELEAZER LORD. 
 
 LETTER OF HON. E. S. PROSSER. 
 
 Buffalo, Feb. 7; 1862. 
 Hon. E. Gr. Spaulding, Washington, D. C. 
 
 Dear Sir — I thank you for a printed copy of your speech on the finances 
 of the country, received this morning ; I had read it in the paper before 
 with great interest and entire approval, but desire this copy for preserva- 
 tion. Whilst all loyal citizens must regret the necessity which compels 
 the Government to suspend specie payments and make its own demand 
 notes a lawful tender instead, I am quite unable, after very considerable 
 thought, to suggest any other measure of relief, which I think would 
 answer the purpose so promptly, or so well ; hence, I hope the bill as re- 
 ported by the committee will speedily become a law, and this is I think 
 quite the general wish here. As the Spring approaches, anxiety increases 
 for a vigorous prosecution of the war to a conclusion ; for sometime or 
 other, not very remote, necessity will compel at least a large decrease in our 
 land and naval forces; $500,000,000 annually, can and wiU be paid cheer- 
 fully awhile, but I need not say to you that it oaunot be very long; so it 
 behooves the Government to act with all practicable energy to end the re- 
 bellion by any means in its power, in the very shortest time it can be done. 
 I hope we shall come out of the conflict speedily and triumphantly ; and 
 that aU the States may be again united under the present Constitution ; 
 still most of the slave states, except upon the border, seem almost hope- 
 lessly estranged, and will not, I fear, ever again, with their present people, 
 yield obedience to the fundamental law of the land and the acts of Con- 
 gress, unless they hnow the penalty for treason henceforth is to be rigidly 
 enforced, and that the power of the Government is quite equal to capture 
 the leaders of the rebellion by hundreds and thousands, and are determined 
 to do it, and to execute them as fast as captured, unless they throw down their 
 arms and disband, and return to loyalty. Can it be possible the Rebel 
 leaders would long hold out against such a proclamation, after "they saw 
 that it was the intention of the Government to fulfil it to the letter, and 
 they were virtually surrounded by a superior force. 
 
 Tours truly, E. S. PROSSER. 
 
61 
 
 LETTER OP GEO. B. BUTLER, OP THE HOUSE OF A. T. STEWART & CO., NEW YORK. 
 
 New York, Jan. 30, 1862. 
 Mt Dear Sir— I send you the 4th of a series of articles written to show 
 that the bills of the Government should be a legal tender. I belong to 
 the creditor class, but my interest in the Government absorbs all others. 
 In my view the war cannot be conducted except on this plan. I would 
 pay the interest in gold and silver and lay heavy taxes. There should be 
 $100,000,000 of demand notes of $1000, bearing 5 per cent, interest. 
 
 Tours, very truly, GEO. B. BUTLER. 
 
 LETTER FROM T. W. OLCOTT, ESQ., MECHANICS' AND FARMERS' BANK. 
 
 Albany, Jan. 31, 1862. 
 Hon. E. G. Spatjlding. 
 
 Dear Sir— I have read your well constructed argument on national 
 iinances, and the issue of Treasury notes made a legal tender. I do not 
 suppose that a loan can be made, and I regard this issue of Ireammj notes 
 the only adequate measv/refor sustaining the credit of the Vrea,swry a/nd the well 
 being if not the very existence of the Government. Money mitst be had or the war 
 cannot be succeisfuMy prosecuted. 
 
 This measure wiR secure means, no other wiU except at ruinous sacrifices. It 
 is not a debaiable question. Ihe struggle is for life. The knife is at our throat. 
 We must strike with the most available weapon, and leave theory for a more con- 
 venient season. Of course you will pass a tax law. The people will hail 
 it, and it will inspire confidence in our public securities. I had hoped that 
 you would authorize funding at 4 or 5 years in an 8 per cent, stock, and 
 20 years in a 6 or 6J^ per cent, stock. The short 8 per cent, stock would 
 tempt to a large amount of funding, and when that short period expires, 
 it is to be hoped that the Government can borrow at 5 per cent, 
 
 We want to encourage funding so as to prevent a redunda/fit currency, 
 and to prepare the way for possible if not probable further issues. 
 I have the honor to be. Your Obedient Servant, 
 
 THOMAS W. OLCOTT. 
 
 OFFICE OF THE COLUMBIAN INSURANCE COMPANY, 
 
 New York, Jan, 31, 1862. 
 Hon. E. G. Spaulding, Washington, D. C. 
 
 Dear Sir — I have read' your able exposition of the condition of the 
 national finances , and the bill which you reported to authorize the issue 
 of $150,000,000 of demand notes, and I beg leave to express the opinion, 
 that there is no other means by which the Government can escape the ut- 
 ter ruin of their credit, than the immediate passage of the bill, and a bill 
 to raise an amount of revenue which shall render the prompt payment of 
 interest on aU their loans beyond contingency. Should the passage of this 
 bill be delayed until the banks have paid their last installment to the 
 Government, and the banks should refuse to receive the demand notes, 
 and pay them out, they would of course depreciate to an extent sufiicient 
 to damage the credit of the Government essentially. If the experience of 
 a life, not now short, is of any value, I say unhesitatingly, that this is the 
 most critical period in our history within my knowledge. Those in power 
 must take the responsiiiiUty and do the needful instantly, or the consequences 
 may be, and I think will be terrific. As to paying in gold during the war, 
 it is utterly and totally impracticable, and the idea of doing so should at 
 once be discarded. After the present emergency is provided for, I trust 
 
52 
 
 the bill for banking on the Government stock will be pasjed. The plan 
 will be approved by nearly all the intelligent community when once 
 adopted, and is now by a large majority of the men of wealth and influ- 
 ence, so far as I am informed. With apologies for trespassing upon your 
 valuable time, 
 
 I am, your obedient servant, 
 
 THOMAS LORD. 
 
 P0STP0NE3IENT OF THE SPECIAL ORDER. 
 
 On Thursday, the 30th inst. , Mb. Stevens moved to postpone 
 the special order — the Treasury note bill — until to-morrow, for 
 the purpose of going into the Committee of the Whole on the 
 Arm J' bill. The motion was agreed to. And on Friday, the 31st 
 inst. , he again moved to postpone the Treasury note bill until 
 Monday, the 3rd of February, which was agreed to by the House. 
 
 On Monday, the 3rd of February, Mr. Vallandigham offered a 
 modification of his substitute for the bill, for the purpose of hav- 
 ing it printed for examination. This substitute will be found 
 printed at length in the Congressional Globe, page 614. 
 
 Me. Eoscoe Conkling — ^With the permission of the gentleman 
 from Ohio, I desire to submit for the same purpose, the following, 
 which I propose to offer, at the proper time, as a Substitute for 
 the .whole bill. Congressional Globe, page 615. 
 
 ME. VALLANDIGHAm's SPEECH. 
 
 Me. Vallandigham being entitled to the floor, addressed the 
 Committee of the whole House for one hour, in favor of his sub- 
 stitute, and in opposition to the legal tender clause in the original 
 bill. His speech will be found reported at length in the appendix 
 to the Congressional Globe, pages 42, 43, 44 and 45. 
 
 He commenced by saying : 
 
 "It has been my habit, Mr. Chairman, to premeditate, whenever pre- 
 meditation was possible, whatever I have had to say in this House ; for no 
 man has a right, in my judgment, to obtrude his immature thoughts and 
 opinions upon a deliberative assembly. »»*#*»• 
 
 " I propose to-day to discuss the subjects involved in this bill to the best 
 of my ability, and with becoming candor and freedom, and I may add 
 earnestness too ; for I have the profoundest conviction of their incalcul- 
 able importance to the interests, present and future, of the United States, 
 and of the people of this whole continent. Nor am I to be deterred from 
 a faithful discharge of my duty by the consciousness that my voice may 
 not be hearkened to here, or in the country, because of the continued, per- 
 sistent, but most causeless and malignant assaults and misrepresentations, 
 to which for months past, I have been subjected. Sir, I am not here to 
 reply to them to-day. Neither am I to be driven from the line of duty by 
 them. "Strike— but hear." Whatever a silenced or mendacious press, 
 
53 
 
 outside of this House may clioose to withhold, or to say, no man who is 
 fit to he a member of this House, will allow his speech or his votes, or his 
 public conduct here, to be controlled by his personal hates or prejudices. 
 Sir, I recant nothing, and would expunge nothing from the record of the 
 past, so far as I am concerned. But my path of duty now, as a Eepresen- 
 tative, is as clear as the sun at broad-noon. The Ship of State is. upon 
 THE Rocks. I was not the helmsman who drove her there ; not had I 
 part or lot in directing her course. But now, when the sole question is, 
 how shall she be rescued ? I will not any longer, or at least just now en- 
 quire who has done the mischief. 
 
 * * * * I do not agree, Mr. Chairman, with the gentleman 
 who has opened this debate, (Mr. Spaulding, ) that this bill is a war mea- 
 sure. Certainly, sir, it has been forced upon us by the war, but if peace 
 were restored to-morrow, these $100,000,000 would be just as essential to 
 the " public credit as they are to-day." 
 
 Mr. Vallandigham continued his argument at great length. He 
 insisted that the legal tender clause was unconstitutional, that it 
 was a forced loan, and that it would be disastrous and unjust. He 
 said no scheme of loan or taxation, or national bank, or currency, 
 or other similar contrivance, could be devised, and put into opera- 
 tion in time to avert ruin and disaster. The Government has no 
 money, no gold and silver coin, which is the only money in the 
 world. He advocated Treasury notes, without any promise to 
 pay money, and without the legal tender clause, which should 
 pass as currency from hand to hand, between the Government 
 and its creditors and debtors, and be supported by a nearly equal 
 amount of taxes — such taxes to be received by the Government in 
 these notes. 
 
 He urged that the experiment of forcing a paper currency upon 
 the country, was a dangerous experiment, that it would lead to 
 other enormous issues, gold and silver would be banished from 
 circulation, an immense inflation would take place, "cheap in 
 materials, easy of issue, worked by steam, signed by machinery, 
 there would be no end to the legion of paper devils which shall 
 pour forth from the loins of the Secretary." That inevitably there 
 would follow bloated currency, high prices, extravagant specula- 
 tion, enormous sudden fortunes, immense factitious wealth, and 
 general insanity. 
 
 He objected to their being called " United States notes" instead 
 of " Treasury notes," as they had always heretofore been called, 
 and deprecated the idea that they were likely to be a permanent 
 currency, or at least until the Secretary's grand fiscal machine, 
 " hia magnificent National Paper Mill, founded upon the very 
 stock provided for in this bill can be put into operation. " He 
 
64 
 
 insisted that these notes were not money, that they would not 
 circulate as currency, would not be taken as legal tenders, and in 
 discharge of judgments, and contracts, and state debts, or private 
 debts, " though you should send them forth bearing ten times the 
 image and superscription — the fair face and form of Abraham 
 Lincoln, now president and C-^sak of the American Republic." 
 He urged the substitute presented by him as follows : 
 
 " The fundamentalidea of this substitute is to support and float these 
 $150,000,000, by nearly an equal amount of taxation and revenue, payable 
 of course in these notes. The Government owe the people and the peo- 
 ple owe the Government, each $150,000,000, and these notes are primarily 
 to be used as a common medium of payment between them. * * * * 
 I do not propose or pretend that these notes are to be convertible into 
 gold and silver. They are not payable on demand ; they are not payable 
 to bearer, nor payable at all. They are not to he paid, but to circulate as 
 currency receivable in Government dues, and finally to be funded in 
 twenty year's stocks. They are not promises to pay, and are not there- 
 fore paper money. They do not represent gold and silver, of which the 
 Government has none. *»«»*»** xhe 
 United States are to cease in part, for a time, to be a specie paying hard 
 money Government, I deplore it profoundly. But imperious necessity 
 demands it. There is no alternative, no matter what evils may follow. 
 
 But I utterly deny, sir, the right of the Tederal Government to pro- 
 vide a paper currency, intended primarily to circulate as money, and meet 
 the demands of business and commercial transactions, and to the exclu- 
 sion of all other paper. It is not the intent or object of the substitute to 
 furnish such a currency for the country. *»*»»* 
 
 Such, Mr. Chairman, is the substitute which I have submitted. It dif- 
 fers essentially from the bill. The one relies on force, the other upon 
 credit ; the one looks to the direct and despotic coercion of law and arms, 
 and the other to the indirect and ordinary coercion of taxes. » « * 
 
 To my political friends let me now appeal for support, not only for this 
 substitute, but of the taxation which must follow it, as essential to the 
 maintainance of the good faith and credit of the Government." 
 
 At the conclusion of Mr. Vallandigham's speech, Mr. Hooper, 
 of Mass. , obtained the floor. 
 
 MR. HOOPER'S SPEECH. 
 
 Mr. Hooper — "The unusual exigencies of this country require that we 
 should look for other and deeper sources of revenue than any to which we 
 have heretofore been accustomed. "We are contending for the maintain- 
 ance of the Government, for the preservation of the Union, and for the 
 enforcement of the laws, on which depend tlie existence, as well as the 
 security of property. 
 
 To insure our success in this contest, great and unusual exertions have 
 already been made. An enormous army, a powerful navy, with vast 
 stores of artillery and ammunition, have been created. In providing tor 
 the sustenance, comfort, and equipment of the Army and Navy, the Gov- 
 ernment have been obliged to incur expenses far exceeding in magnitude 
 
S6 
 
 any which have been hitherto known in our history. To continue them 
 in their present state of efficiency, large additional sums must be expend- 
 ed; and it now becomes the duty of Congress to devise' methods by which 
 these sums can be obtained with the least hardship to the people, and the 
 least risk to the credit of the Government. In considering the means by 
 which this is to be effected, it must be remembered that it is hardly pos- 
 sible for the Government to raise money for any purpose without occa- 
 sioning some inconvenience to individuals. To oppose necessary mea- 
 sures, therefore, simply upon the ground that it will injuriously aflfect this 
 class or that class of the people, is unreasonable. Parties interested may 
 endeavor to show that the same objects can be effected with less hardship 
 than by the methods proposed, or may endeavor to obviate any objection- 
 able features, so far as may be consistent with the attainment of the de- 
 sired end; but they should always remember that the end aimed at must 
 be attained; that its attainment will require individual sacrifices in some 
 form, and that it is the part of wisdom, of patriotism, and of discretion, 
 to submit to such necessary sacrifices cheerfully when called upon, and 
 not by their opposition attempt to excite popular clamour, and weaken . 
 the public confidence in the Government, to which they are indebted for 
 the safety of their persons, and the security of their possessions. Every 
 step which tends to weaken the public credit has the effect of rendering 
 pi'ivate property more insecure, because it obstructs the Government in 
 procuring its necessary funds in the ordinary way, and may oblige it to 
 resort to the arbitrary modes of forced loans and heavier rates of taxation. 
 At this moment, therefore, when for the time every hope of aid from for- 
 eign capital is idle, when the country is compelled to look to her own re- 
 sources for the means with which to maintain her integrity and subdue 
 the rebellion, not only does every dictate of patriotism, and every enob- 
 ling sentiment of humanity, call upon the capitalists of the country to 
 rally in defence of the Government, but the meaner instincts of self-pre- 
 servation admonishes them to submit to slight sacrifices now, that they 
 may secure and preserve their property. 
 
 Three measures have been considered in the Committee, which are, to 
 some extent, connected together, and form a comprehensive system by 
 which, it is believed, the Government will be enabled to procure the sums 
 necessary to the successful prosecution of the war ; while, at the same 
 time, the burden upon the capital of the country will be light, and the 
 ' public will be benefited in some important particulars. 
 
 The first of these measures is the one now before the House, by which 
 the Secretary of the Treasury is authorized to issue United States notes, 
 not to exceed $150,000,000 in amount (including those authorized by pre- 
 vious laws), of denominations not less than five dollars. They are not to 
 bear interest, but are to be issued and received as money, convertible, at the 
 option of the holder, into six per cent, stock of the United States, the 
 principal and interest being payable either here or abroad, and these notes 
 are to be a legal tender. 
 
 The second measure consists of a tax bill, which shall, with the tariff on 
 Imports, insure an annual revenue of at least $150,000,000. 
 
 The third is a national banking law, which will require the deposit of 
 United States stock as security for the bank notes now circulated as cur- 
 rency. 
 
 In order more fully to understand and more easily to meet any objec- 
 tions which may be urged against the first of these measures, being the 
 
56 
 
 one now occupying the attention of the House, it will be desirable to no- 
 tice the other two, which are designed to be more permanent in their 
 character., and upon the expected results of which the present measure is 
 in some degree based." 
 
 Mr. Hooper here explained the various modes of the proposed 
 taxation, by which the credit of the government was to be sup- 
 ported, and also went into a full explanation of the National Cur- 
 rency Bank bill which had been prepared, and the manner in 
 which the government bonds would be absorbed by the banks, as 
 soon as the bill should go into operation. He then proceeded as 
 follows : 
 
 "The levying of the contemplated tax, theproper inauguration of the 
 new banking scheme, and the successful negotiation of a new loan, are 
 matters that will require time. In the meanwhile, the Treasury is com- 
 paratively empty, and the demands upon the government are numerous 
 and pressing. To enable the government to support itself during this in- 
 terval of time, and to facilitate the negotiation of their loans, the com- 
 mittee have decided to recommend the issue of government notes. 
 
 There is a necessity for money, and the object of the authority to issue 
 $150,000,000 TJ. S. notes, not bearing interest and made legal tender, is to 
 pay the creditors of the United States, and enable them to discharge their 
 debts. **#»** The propositions of com- 
 
 mittees from Boards of Trade and banks, which recently visited Washing- 
 ton, submitted to the Secretary of the Treasury and declined by him, dif- 
 fered from the theory of this bill so far, as to require that instead of the 
 issue of the United States notes the hanks should be relied upon to furnish 
 the amount needed. The effect of this would be that the government 
 bonds must first be disposed of, and the money received for them paid to 
 the contractors ; in other words, that the government should go into the 
 money market and negotiate their bonds, without restriction as to the 
 rate or terms, at a time when the government is discredited by the delay 
 and the diflSculties that have occurred in paying contractors and others ; 
 taking the notes of suspended banks in payment of these bonds, and with 
 these bank notes, thus obtained, pay off the contractors. The obvious ef- 
 fect of such an arrangement would be to put the reins of our national ' 
 finances in the hands of the banks, leaving to them the direction of our 
 path, with little opportunity for the government to exercise any influence 
 on the subject. Exactly upon what terms the government bonds could 
 be negotiated now, under such circumstances, no one can say ; but last 
 Summer, when the banks made their negotiation with the Secretary of 
 the Treasury for $100,000,000, they at first refused to do anything, because 
 the Secretary was restricted by law to taking par for seven per cent, 
 bonds payable in twenty years, and for seven and three-tenths Treasury 
 notes payable in three years. They finally decided, though with great re- 
 luctance— influenced by patriotic regard for the public interest as well as 
 wisely consulting their own--to take $100,000,000 of the latter; though at 
 that time, as now, money was not worth for commercial purposes more 
 than five per cent. It is proposed in this bill to limit the Secretary to par 
 for six per cent, bonds, the principal and interest to be payable in specie 
 or its equivalent. It is believed that there can be nothing more secure 
 
57 
 
 than these bonds, which thus become, as it were, a standard of value in 
 reference to the currency. 
 
 In the war of 1812 the Government paid for its supplies with funds ob- 
 tained from the banks in the same manner as proposed in the plan recent- 
 ly submitted to the Secretary by those committees. The bonds of the 
 United States were then negotiated in some instances at twenty per cent, 
 less than their par value, and paid for jn bank currency of different de- 
 grees of depreciation, according to locality, but averaging from twenty to 
 twenty-flve per cent, discount, as compared with coin. To render the 
 government financially more independent, it is necessary to make the 
 United States notes a legal tender. It is possible that they would become 
 a practical tender, like bank notes, without providing for them to be a le- 
 gal tender. If this were a foreign war there would be no doubt of it ; but 
 in this present emergency, when those who are openly or secretly dis- 
 loyal to the government are found everywhere to suggest obstacles that 
 may embarrass the government, nothing should be omitted that will add 
 to their efficiency. I am, therefore, in favor of making the notes a legal 
 tender, believing the Secretary of the Treasury, who alone has the power 
 to issue them, can and will use the power with his well known discretion, 
 and that it will assist him in his endeavor to keep the notes at par with 
 coin. We shall probably be told that England, in her great struggle, 
 while specie payments were suspended, never made paper money a legal 
 tender. But in this respect her example should serve us as a warning 
 rather than a guide, because instead of it she did what was much worse, 
 by suspending the laws to enforce the payment of debts in cases where 
 the paper money had been refused as a tender. 
 
 It is important in this great struggle to show the superiority of the 
 principles of freedom, of education, of the elevation of mankind, upon 
 which society at the North is based, over those of slavery, which doom 
 men to hopeless ignorance in order to insure abject obedience. To do 
 this our resources of every kind are abundant, both in men and in means ; 
 and it is only necessary to draw them out in order to be successful. 
 
 To fall, would not be because the nation was so poorly endowed as to 
 be without the means of success, but because it refused to make use of 
 them. Such a result, if it were possible, would not weaken the truth of 
 the great principles for which we are contending; but would simply 
 demonstrate that we, of this generation, were faithless in guarding those 
 principles; faithless to ourselves; faithless to our country; faithless to 
 good government throughout the world ; and, since such infidelity is a 
 violation of unquestionable duty, faithless to God." 
 
 Mb. Boscoe Conkling obtained the floor. 
 
 Mr. Mokkill, of Vermont — " I ask the gentleman from New York to 
 yield the floor. Two members of the majority of the Committee of Ways 
 and Means have spoken on this question, and if the gentleman will permit 
 me now to express the views of the minority of the Gommitiee against the pend- 
 ing ,biM, I will be obliged to him." 
 
 Mk. Boscoe Conkling—" I yield to the gentleman from Vei-mont." 
 
 Mb. Stevens— " I feel it my duty to state that the Treasury Depart- 
 ment is urgent for the passage of this bill, and I trust, therefore, that 
 the vote on it will not be put off longer than Thursday next." 
 
58 
 
 Mr. Spaulding—" I desire to call the attention of the House to a let- 
 ter which I have just received from the Secretary of the Treasury. It is a 
 note to me urging the immediate passage of this hill without further de- 
 lay. For the purpose of letting the House understand the necessities of 
 the Treasury, I ask the Clerk to read an extract from that letter." 
 
 The Clerk read as follows : 
 
 " Immediate action is of great importance. The Treasury is nearly 
 empty, I have been obliged to draw for the last installment of the No- 
 vember loan. So soon as it is paid, I fear the banks generally wiU refuse 
 to receive the United States notes, unless made a legal tender. Tou will 
 see the necessity of urging the bill through without more delay." * * 
 
 Mr. Thomas, of Massachusetts— "Has the gentleman any further com- 
 munication that has been received from the Secretary of the Treasury 
 with reference to this bill ? If there has been any received I hope he will 
 be kind enough to have it read to the House." 
 
 Mk. Spaulding — " A communication has been addressed by the Sec- 
 retary of the Treasury to the Committee of Ways and Means, and I have 
 no objection to its being read." 
 
 Mr. Eoscoe Conkling— " I would like to know whether the gentle- 
 man intends to have the whole of the communication read, or only ex- 
 tracts?" 
 
 Mr. Spaulding— "I ask the Clerk to read what I send to him. The 
 balance of the communication is in relation merely to formal amend- 
 ments. What the Clerk will read is all of the communication that refers 
 to the principle of the bill." 
 
 Mr. Vallandigham— "Has the Committee of Ways and Means re- 
 ceived the letter it was expecting from the Secretary of the Treasury ?" 
 
 Mr. Spaulding— " This is the one." 
 
 (The Clerk here rear! the letter of the SecretA,iy of the Treas- 
 ury, dated January 29, 1862, as published on page 45.) 
 
 Mr. Roscoe Conkling — "I now call for the reading of the rest of that 
 letter." 
 
 Mr. Spaulding — "There is not the least objection to its being read. 
 It is, however, in the committee room. I will state what the remainder of 
 the letter is. The Secretary of the Treasury suggests some amendments 
 to the bill. He proposes two new sections to the bill, one relating to 
 counterfeiting and the other in regard to the manner in which the notes 
 shall be executed. He proposes instead of having them signed by clerks 
 that there shall be a seal or die engraved upon them, which will indicate 
 the authority under which they are issued." 
 
 Mr. Roscoe Conkling — " Are those the only amendments?" 
 
 Mr. Spaulding— "There are two or three smaller amendments not af- 
 fecting the principle of the bill, however, in any way. We propose in the 
 committee to act on those amendments to-morrow morning. If the letter 
 were here I would not have the slightest objection to its being read." 
 
 Mr. Lovejot — "I want to ask the gentleman of the Committee of 
 Ways and Means whether they intend to propose to have action on this 
 bill before action is taken on the tax bill?" 
 
59 
 
 Mk. Spatjlding — " 7" have been anxious to' have the tax Ml brought in to he 
 first considered; hut the gentleman from Venmivt (Mr. Morrill), who is chair- 
 man of the sub-committee on the lariff and lax bills, informs us that the sub- 
 committee having that matter in chajrge wiM not be able to report to the Com- 
 mittee of Ways and Means for several days yet. The necessities of the Ireas- 
 vry, therefore, will compel us to act on this biU, however rehictanUy, before the 
 Tax biU can be introduced." 
 
 Me. Roscoe Conkling— " I hope that the remainmg portion of the 
 letter of the Secretary of tlie Treasury will be printed in the Globe." 
 
 Me. Spatjlding— " I have no objection to that." 
 
 Mk. Eoscoe Conkling— " The gentleman has read the whole letter, and 
 I ask him to state whether the Secretary is for or against this biU with the le- 
 gal tender provision in it." 
 
 Mk. Spaulding — "He is for it. I have another letter from him in 
 which he states that he is anxious to have it passed in that form." 
 
 Mk. Roscoe Cokkling— " Let us have that read." 
 
 Me. Spatjlding—" It is a letter to myself." 
 
 Me. Matnard — " I ask my colleague on the Committee of Ways and 
 Means whether the portion of the Secretary's letter which has been read 
 is not all of it that appertains to the principle of the bill ; and whether the 
 balance does not relate merely to matters of detail." 
 
 Mr. Spatjlding — " Yes, sir. I will read a paragraph of the letter writ- 
 ten by the Secretary to myself this afternoon : 
 
 " I came with reluctance to the conclusion that the legal tender clause 
 is a necessity ; but I came to it decidedly, and support it earnestly. I do 
 not hesitate since I have made up my mind. » » * * * The 
 conclusion I have arrived at has convinced me that it is important to the 
 success of the measure." 
 
 And then, on motion of Mr. Wriglit, the House (at half-past 
 four o'clock P. M.) adjourned. 
 
 The following is a copy of the letter of Secretary Chase referred 
 to in the foregoing proceedings of the House, and from which 
 extracts were read: 
 
 LETTEK FKOM HON. S. P. CHASE. 
 
 Monday, 3d February, 1862. 
 
 Mr Deak Sie :— Mr. Seward said to me on yesterday that you observed 
 to him, that my hesitation in coming up to the legal tender proposition 
 embarrassed you, and I am very sorry to observe it, for my anxious wish 
 is to support you in all respects. 
 
 It is true that I came with reluctance to the conclusion that the legal 
 tender clause is a necessity, but I came to it decidedly, and I support it 
 earnestly. I do not hesitate when I have made up my mind, however 
 much regret I may feel over the necessity of the conclusion to which I 
 come. 
 
 I have just sent a note to Mr. Stevens, with two sections (penal) instead 
 of one. Tou will, I think, see the necessity of them. The one I have 
 
60 
 
 already sent I fear is not quite strong enough. What has the Committee 
 done about the amendments suggested? I thought them important. 
 
 Immediate action is of great importance. The Treasury is nearly empty. 1 
 have .been obliged to draw for the last instalment of the November ham,': so 
 soon as it is paid, I fear the banks generally wiM refuse to receive the Uniied 
 Stales notes. You loill see the necessity of urging the bill through wilhovt more 
 delay. Very sincerely yours, 
 
 Hon. E. G. Spaulding. S. P. CHASE. 
 
 On the 4th of February, the House gave consent to Mr. Morrill 
 to have printed a substitute having the sanction of one-half the 
 Committee of Ways and Means, which he proposed to offer at the 
 proper time in place of the original bill. Mr. Stratton, one of 
 the Committee, changed his mind, and now favors the substi- 
 tute instead of the bill first rej)orted, leaving the Committee of 
 Ways and Means equally divided. 
 
 MR. morkill's speech. 
 
 Me. Mokrill, of Vermont — "Mr. Chairman: Engaged as I have 
 been upon other matters of at least equal importance, I have not had the 
 time to prepare an elaborate speech; but the subject of issuing $150,000,- 
 000 of paper currency and making it a legal tender by the Government at 
 a single bound — the precursor, as I fear, of a prolific brood of promises, 
 no one of which is to be redeemed in the constitutional staiudard of the 
 country — could not but arrest my attention, and having strong convictions 
 of the impolicy of the measure, I should feel that I utterly failed to dis- 
 charge my duty if I did not attempt to find a stronger prop for our 
 country to bear upon than this bill — a measure not blessed by one sound 
 precedent and damned by all. 
 
 I know the gentlemen who have had the latter in charge have bestowed 
 upon it much time and perplexing thought, and from their thorough 
 knowledge of the subject and large acquaintance with the monetary circles 
 of the country, their opinions will have great weight in this Committee— 
 deservedly so— and I shall only claim a candid hearing in behalf of the 
 substitute of the minority of the Committee of Ways and Means, well 
 knowing that we are all inflamed by the same zeal for the triumphant suc- 
 cess of our arms, the same solicitude for the honor and welfare of the peo- 
 ple, who mean to live and die under the flag of our Union, and that we 
 can have but one wish, which is, that the best plan shall be adopted. 
 
 We are urged by the gentleman from New York (Mr. Spaulding) to pass 
 this bill as "a war measure" — "a measure of necessity," and to enforce 
 this idea he gives you the figures of our probable requirements, if the 
 war should be prolonged until July 1, 1863. Su-, I have no expectation 
 of being required to support a war for that length of time. The ice that 
 chokes the Mississippi is not more sure to melt and disappear with the 
 approaching vernal season, than are the rebellious armies upon its banks 
 when our western army shall break from its moorings and rush with 
 the current to the Gulf, and baptise as it goes, in blood, the people to a 
 fresher allegiance. At the same time, the men of the East will only ask 
 
61 
 
 for an opportunity to cross bayonets with the chivalr}''— to leave epithets 
 and try what virtue there is in steel ! That hour is approaching, and I 
 have no fear of the result. 
 
 'Fly swiftly round, ye wheels of time I ' 
 We can close this war hy the 30th day of July next as well as in thirty 
 years. Let us second general McClellan for a ' short and sharp' conflict. 
 By so doing we shall economise both blood and Treasury notes. 
 
 If this paper money is 'a war measure,' it is not waged against the 
 enemy, but one that may well mal^e him grin with delight. I would as 
 soon provide Chinese wooden guns for the army as paper money alone for 
 the army. *#»»««»»***» 
 
 If, by the provisions of this bill, we cut ourselves off from all other re- 
 sources, it is to be considered how much could be realized from this, in 
 my judgment, the weakest resource within our grasp, which Is the power 
 of a banli issue, without any capital, and not even specie enough to ten- 
 der the odd change. It is an experiment to inject, by a governmental 
 force pump, into the arteries of commerce a new currency, when the ar- 
 teries are already filled. The whole bank circulation of the United States 
 in 1860 was $207,102,477; that of fhe rebel States was $50,647,028, leaving 
 for the loyal States $156,566,449. But at this time, in consequence of the 
 diminution of all business, except that nourished by the war, the bank 
 circulation is over $20,000,000 less, or about $136,000,000. I admit that we 
 can drive a considerable share of this home upon the banks, and substi- 
 tute that of the notes of the United States in its place. » * * * 
 
 It is thus apparent that $20,000,000 is about all that would be absorbed 
 by this countiy, or kept afloat in the present condition of monetary affairs 
 without the intervention of Congressional omnipotence in making them a 
 legal tender. If so made, they would, to the extent they are tendered for 
 public dues, be a forced loan ; and to the extent of the difference between 
 their current value and that of standard coin, it would be a breach of pub- 
 lic faith. It is true that the measure might be hailed with delight by 
 bankrupts ; and if the biU passes, my friend from New York (Mr. Conk- 
 ling) no longer need press his banlirupt law, for they would have no occa- 
 sion to go into Chancery in order to scale and settle off with their credit- 
 ors, as "legal tenders" would soon be offered at rates entirely within 
 their means. ******»»* The Govern- 
 ment can flood the country with 150,000,000 paper dollars, but from that 
 moment you would vastly increase the cost of carrying on the war; prices 
 would go up, and the addition we should pile upon our national debt 
 would prove that it might have been even wiser to have burnt our paper 
 dollars before they were issued. The inflation of the currency would be 
 inevitable. In ordinary times few comprehend the Archimedean leverage 
 of a few millions added to or subtracted from the currency of a nation 
 actively engaged in the affairs of the world. ****** 
 
 No oiae here contemplates but that at some future time the banks and 
 the Government shall resume specie payments— the banks depending en- 
 tirely upon whether the Government does so or not — and if so, I invite 
 them to calculate the cost of the descent from that basis, the cost of the 
 return, the expiratory pains to be suffered, and then determine whether 
 we shall carry on this war on a specie basis, or on a ceaseless flood of 
 paper, bartered at discordant prices in every city, town and hamlet of the 
 country, bearing in mind, however cheaply obtained, every dollar is to be 
 
62 
 
 and will be ultimately repaid in gold and silver coin raised by taxation. 
 
 That I am not wrong in supposing if we launch this measure that we 
 have nothing else to put afloat, is quite apparent in the able speech of 
 my friend from New York (Mr. Spaulding), who plainly occupied his 
 ground reluctantly ; for besides the 150,000,000 of notes he now proposes 
 to authorize, he more than hints at the possibility of " a further issue of 
 demand notes, if Congress shall hereafter deem it necessary." I main- 
 tain that the bill, as reported by the Committee of Ways and Means, 
 should not pass, because it will infinitely damage the national credit ; be- 
 cause it will cut off all other chance of supplies ; because it will reduce 
 our standard of legal tender, already sufficiently debased ; because it will 
 inflate the cui-rency and increase manyfold the cost of the war; because 
 it would slide into the place proper for taxation ; because, as a resource, 
 it must ultimately fail, and tend to a premature peace ; because it Is a 
 question of doubtful constitutionality; because it is an export facto law, im- 
 moral, and a breach of the public faith ; because it will at once banish all 
 specie from circulation ; because it will dampen the ardor of our men at 
 home, as well as soldiers in the field ; because it will degrade us in the 
 estimation of other nations ; because it will cripple American labor, and 
 throw at least larger wealth into the hands of the rich ; and because there 
 is no necessity calling for such a desperate remedy. I agree with the gen- 
 tleman from New Xork (Mr. Spaulding) in one thing most cordially ; our 
 finances stand in need of the tonic of decided military success. Without 
 that our stocks will continue to be quoted7?flM!. And yet I am no chronic 
 grumbler. Standing at zero, our army rose as if by a magical wand and 
 illumined the whole heavens by its magnificent sweep. Do not let it be 
 said we rose like the rocket and fell like the stick. 
 
 Mr. Chairman— It will be seen from the substitute, as proposed on the 
 part of one-hcdf of the Committee of Ways and Means, that I do not object to 
 the issue of United States notes to a limited extent, to circulate as curren- 
 cy. It is both convenient and proper. But I wish to have this issue 
 marked by metes and bounds, saying at the outset, ' thus far shalt thou 
 go and no further.' Then, let them be based on as solid a foundation as 
 the everlasting hills that they shall he the fuU equivalent of standa/rd coin. 
 This can be done by fixing the amount ample, but reasonable, that no 
 more than the fixed amount shall at any time be put in circulation, and by 
 providing taxation sufficient at all times to retire them or to maintain their 
 full value. But, with all the earnestness I possess, I do protest against 
 making anything a legal tender but gold and silver, as calculated to un- 
 dermine aU confidence in the Republic, whose reputation should be dearer 
 to statesmen, as weU as to soldiers, than life itself. * * * ■ « 
 We propose no new issue of Treasury notes, hvi leave the fifty millions already 
 authorized ta be issued and re-issued as may be found necessary or convenient. 
 This mW, secure us against an inflated cwrrency. 
 
 Then it is proposed to issue $100,000,000 in United States notes, bearing 
 interest at the rate of three and sixty-five hundredths per cent., payable 
 at the pleasure of the United States, and allowing them with accumulated 
 interest to be received for all debts and demands (taxes included) due to 
 the United States, except duties on imports, and exchangeable at the will 
 of the holder, whenever presented in sums not less than fifty dollars, for 
 United States seven and three-tenths per cent, coupon or registered stock. 
 They are also to be received at par, with accumulated interest, for any 
 bonds the Government may hereafter issue. These are to be paid out for 
 
63 
 
 all salaries, debts and demands due to individuals and corporations, at 
 their option vnthin the United States. In substance this is very lilce English 
 Exchequer notes issued in anticipation of revenue. It is most probable 
 these notes would maintain their credit at or near par; and if there should 
 be any difference between these and gold, it would be an honest diiference, 
 visible to all men. As they accumulate they will be funded and retired, 
 or re-issued, as the exigencies of the Government may require. They 
 equip the Treasury as well as any legal tender paper could do, while bear- 
 ing interest they would not pass into the general volume of the currency, 
 and they afford the only possible channel of obtaining any considerable 
 sums to be consolidated into stocks. They cannot exceed the amount of 
 internal duties that will be levied, which will create a sure and constant 
 demand for these notes, and sustain their credit in every State and Terri- 
 tory in the country. 
 
 We do not propose to receive these notes for duties on imports, for the 
 reason that it is desirable to leave the tariff stable amid all fluctuations, 
 and also that we may secure the coin we promise to pay out as interest on 
 the bonds. 
 
 It is then proposed, in order to perfect this plan in all its parts, to is- 
 sue $200,000,000 in coupon or registered bonds, payable in ten years, with 
 interest semi-annually in coin, at the rate of seven and three-tenths per 
 cent, per annum. This is comparatively a high rate of interest, and it 
 may be necessary that it should be so, in order to get the stock taken up 
 by capitalists ; but the time the bonds are to run is limited to ten years, 
 because it would be much against the interest of the United States to en- 
 gage to pay a high rate of interest for a long period of time. We think 
 there can be no doubt that these bonds will ■ all be taken, commencing as 
 soon as the tax bill shall be passed. Unless tlie credit of the United 
 States shall be utterly shattered, which is not for a moment to be appre- 
 hended, these bonds must be considered a most desirable investment, both 
 in large and small sums. 
 
 It is proposed to issue $300,800,000 in coupon or registered bonds, pay- 
 able in twenty-five years, with interest at six per cent., payable semi-an- 
 nually in coin. Usually, government bonds running for the longest time 
 command the highest price, and for permanent investment are most eager- 
 ly sought after, at home and abroad. As we emerge from our present em- 
 barrassments, the other forms of debts due by the United States will na- 
 turally be funded in such stock. 
 
 We promise coin for all interest on bonds, as it is indispensable that 
 all engagements assuming this solemn form should in no instance repu- 
 diate the standard of the Constitution. 
 
 We strike out all words in relation to any foreign loan, as during this 
 war we expect to light our own battles, furnish our own means, without 
 any foreign aid or assistance ; and if we can be permitted to do that we 
 shall ask no favors. 
 
 The substitute avoids all the material, and, we might Say, fatal objec- 
 tions to the original biU ; is entirely practical and feasible in its character, 
 and will not only relieve the Treasury from its present necessities, but do 
 something toward making provision for the future wants. It is a ques- 
 tion that will mark for weal or for woe an important page of our history ; 
 and I invoke the courage and judgment of the Committee to meet the 
 question with that cool deliberation its high moment demands." 
 
64 
 
 EOSCOE CONKLINGS SPEECH. 
 
 " Mr. Chairman— The member of the Committee of Ways and Means 
 (Mr. Spaulding), by whom this bill was reported, was well warranted in 
 all he said of its great magnitude, and of the thoughtful, serious, coura- 
 geous attention due to its consideration. It concerns the life of the nation 
 —the means whereby it lives. The credit of the goyernment, like the 
 credit of an individual, consists of the ability and integrity to pay all 
 debts and perform all promises with scrupulous exactness and punctual- 
 ity. This ability and integrity, this untarnished public faith and un- 
 questioned pecuniary solvency is that without which no Government can 
 long survive. Public credit alone cannot confer national immortalityor 
 national longevity, but the loss of public credit will be Inevitably and 
 swiftly followed by national decrepitude and national death. This is true 
 in peace, when wars and rumors of wars are hushed throughout the 
 earth; it is true in uneventful times, in periods barren of action and pro- 
 lific of repose ; but what shall be said of its urgent, warning truth, as ap- 
 plicable to us in this dark hour of trial and of danger? Immediate and 
 adequate fina/noial facHities constititte, beyond all question, the overtopping, 
 overmastering subjects with which we have the power to deal. 
 
 OenAemen have longed for victories to re-invigorate the languishing energies 
 of finance. Victory, no doubt, would exert a potent influence ; but, sir, 
 the Treasury will control and decide the war, not the war the Treasury. 
 Indeed, the question of money and credit is all there is before us ; it is 
 practically the only unsettled question of the war. Armies and navies 
 may perish, and a public credit, well preserved, can replace them ; but if 
 the public credit perishes, the army and navy can only increase the disas- 
 ter and deepen the dishonor. * *» ***«# 
 
 I deny that any necessity is upon us to take the case out of settled rules. 
 We need money— large sums of money — and the whole resources and 
 property of the nation are liable to pay tribute to raise it. We owe debts 
 — ^large debts — and the whole property of the country is holden to pay 
 them. Does anybody suppose that the security is not ample, or the re- 
 sources not abundant ? My colleague from the Erie District (Mr. Spauld-- 
 ing) told us that the taxable property of the nation amounts to sixteen 
 thousand millions of dollars ; and he produced a statement from the Cen- 
 sus Bureau to prove it. In reality it is vastly more than that, because he 
 gave us a self-fixed valuation — the valuation fixed by proprietors them- 
 selves, having an interest in reducing and covering up the amount. 
 
 According to my colleague, at the end of this fiscal year our debt will 
 be only $650,000,000. One would think here was margin enough for Wall 
 street. State street, or Chestnut street. Sir, it is margin enough, properly 
 husbanded from first to last, to enable us to raise all the money we want 
 at five per cent., and history proves it. 
 
 Now, sir, what does this plea of necessity mean— this plea upon which 
 we are invited to leave the trodden paths of safety, and seek new methods 
 of 'winning false moneys from the crucible called debt?' What is the 
 necessity which prevents adherence to the old and approved methods of 
 raising money ? The arguments must be two-fold : First, that the peo- 
 ple will be better ready at some other time than the present to pay what, 
 In the end, they must pay, with Interest; and second, that necessary and 
 legitimate taxation will be unpopular, and bring denunciation upon those 
 who vote It. Sir, I take issue upon both propositions. I say the country 
 
65 
 
 is rich and ready. Money is abundant— very abundant. There is in the 
 loyal States $250,000,000 of gold— the gentleman from Massachusetts (Mr. 
 Alley) said the other day $300,000,000— more than ever before, and if we 
 deserve it, we can have it. The whole country is full of wealth. The 
 enormous expenditures of this home war have been made among our- 
 selves, and the money has remained here and not gone into the channel 
 which foreign war prescribes for currency. The harvest has been abun- 
 dant; materials and productions, raw and wrought, have been in great 
 demand; and neai-ly every loyal State teems with the elements of ma- 
 terial prosperity. From a very extravagant, we have lately become a 
 very economical people, and thus the percentage, as well as the aggre- 
 gate of savings of earnings, is unusually great. We are able to pay now, 
 and we never can pay better than now. ****** 
 
 There is one thing, however, about the proposed banking scheme, and 
 about the bill before us, intended probably to attract Votes, which seems 
 of very questionable policy and very doubtful ethics. I mean hostility to 
 the existing banks of the country. And inasmuch as I own not a far- 
 thing in the stock of any bank, and have not the slightest connection 
 with one, perhaps a word in behalf of banks in loyal States will be borne 
 with irom me. 
 
 The present troubles, or rather their own patriotic action, have broken 
 the banks ; for every commercial man in this House knows that the banks 
 were never stronger than when the Secretary of the Treasury appealed to 
 them for loans. They allowed the Government to carry off their specie, their 
 capiiatfrom their vaulis, and if that did not break them, they at all events 
 might have adopted a policy which would have saved them. But they 
 had to suspend, and the design of this bill would seem to be to prevent 
 their resumption of specie payment. At all events, it is obviously the 
 policy in some quai-ters to preach a crusade against the present banks, and 
 array prejudices and votes on that issue. *#»*** 
 
 I propose to assign my reasons briefly for voting against the attempt by 
 legislation to make paper a legal tender. The proposition is a new one. 
 No precedent can be urged in its favor; no suggestion of the existence of 
 such a power can be found in the legislative history of the country ; and 
 I submit to my colleague, as a lawyer, the proposition that this amounts 
 to affirmative autliority of the highest kind against it. Had such a power 
 lurked in the Constitution, as construed by those who ordained and ad- 
 ministered it, we should find it so recorded. The occasion for resorting 
 to it, or at least referring to it, has, we know, repeatedly arisen; and 
 had such a power existed, it would have been recognized and acted on. 
 It is hardly too much to say, therefore, that the uniform and universal 
 judgment of statesmen, jurists and lawyers has denied the constitutional 
 right of Congress to make paper a legal tender for debts to any extent 
 whatever. But more is claimed here than the right to create a legal tender 
 heretofore unknown. The provision is not confined to transactions in future, 
 but is retroactive in its scope. It reaches back and strikes at every exist- 
 ing pecuniary obligation. This was well put by the gentleman from Ohio 
 (Mr. Pendleton), and I concur with him that substituting anything for gold 
 and silver in payment of debts, and still more of precedent debts, is of 
 very doubtful constitutionality. *«*»»*** 
 ' But, sir, passing, as I see I must, from the constitutional objections 
 to the bill, it seems to me that its moral imperfections are equally seri- 
 
66 
 
 ous. It will, of course, proclaim throughout the country a saturnalia of 
 fraud— a carnival for rogues. Every agent, attorney, treasurer, trustee, 
 guardian, executor, administrator, consignee, commission merchant, and 
 every debtor of a fiduciary character who has received for others money, 
 hard money, worth a hundred cents in the dollar, will forever release 
 himself from liability by buying up for that knavish purpose, at its de- 
 preciated value, the spurious currency which we shall have put afloat. 
 Everybody will do it except those who are more honest than the Ameri- 
 can Congress advises them to be. Think of savings banks entrusted with 
 enormous aggregates of the pittances of the poor, the hungry, and the 
 homeless, the stranger, the needlewoman, the widow and the orphan, 
 and we are arranging for a robbery of ten, if not of fifty, per cent, of 
 the entire amount, and that by a contrivance so new as never to have 
 been discovered under the administration of Monroe Edwards or James 
 Buchanan. 
 
 To reverse the picture : after the act shall have gone into effect, honest 
 men undertake transactions based upon the spurious tender at its then 
 value. By and by comes a repeal, and they are driven to ruin in multi- 
 tudes by the inevitable loss incident to a return to metallic currency. 
 
 The whole scheme pre-supposes that the notes to be emitted will be 
 lepers in the commercial world from the hour they are brought in to, it; 
 that they will be shunned and condemned by the laws of trade and 
 value. If this is not to be their fate, what is the sense, as was said in 
 the Federal Constitutional Convention, in attempting to legislate their 
 value up. Now, sir, I do not believe that you can legislate up the value 
 of a thing any more than you can make generals heroes by legislation. 
 #*#*##>** ****** 
 
 Mr. Chairman — I believe all the money needed can be provided in 
 season by means of unquestionable legality and safety. The substitute 
 I have offered will, I believe, without essential alteration, effect that re- 
 sult." 
 
 Mr. Conkling estimated the national debt up to July 1, *1862, 
 at $806,000,000, and concluded as follows: 
 
 " There has been no such occasion presented to a nation, no such de- 
 mand made upon a nation during the lifetime of the human race. The his- 
 tory of America, the history of free government, the history of constitu- 
 tional liberty begins or ends now. We have our career and our tradi- 
 tions as a nation ; they are safe ; but our history is yet to be made. Our 
 destiny is without an ally in the world, with nations banded against us, 
 to hold fast a continent in the midst of the greatest, guiltiest revolution 
 the world has ever seen." 
 
 Mr. Bingham, of Ohio, obtained the floor. 
 
 Mr. Stevens offered a substitute for the original bill, which 
 he asked to have printed. After Mr. Bingham had concluded, 
 his speech, the substitute, thus offered by Mr. Stevens was or- 
 dered to be printed. 
 
67 
 
 MR. Bingham's speech. 
 
 Mk. Bingham — "It was far from my purpose, when I came early 
 to the House to-day to attend a meeting of the Committee on tlie Judici- 
 ary, to enter upon any discussion of the important question which now 
 commands the attention of the Representatives of the people; and but for 
 some remarks which have been made to-day by the honorable gentleman 
 from New York (Mi-. Roscoe Conkling), I would not feel disposed now to 
 address the Committee. But, sir, as a Eepresentative of the people, I can- 
 not keep silent when I see efforts made upon this side of the House and 
 upon that to lay the power of the American people to control their cur- 
 rency — a power essential to their interests — at the feet of brokers and of 
 city bankers, who have not a title of authority, save by the assent or for- 
 bearance of the people, to deal in their paper issued as money. 
 
 I am here to-day to assert the rightful authority of the American peo- 
 ple, as a nationality, sovereignty, under and by virtue of their Constitu- 
 tion. In saying that the people of this Republic are one people, a sover- 
 eignty, I do not feel that I shall be confj-onted by any of the great names 
 of the illustrious dead Avho have suddenly found favor with gentlemen 
 upon the other side of the House. Living, there was no epithet in our 
 language too severe in its condemnation, or too much uncharitable in its 
 import, for the fit denunciation by certain parties of the alleged political 
 heresies of the illustrious man, Alexander Hamilton, and that other illus- 
 trious man, Daniel Webster, who for strength of intellect stood alone 
 among the living; and now dead, in his honored grave, sleeps alone by 
 the sounding sea. I am not myself of that class of admirers who perse- 
 cute men while living and heap tuns of granite and pour empty adulation 
 upon their ashes when dead. I prefer to respect them and their authority 
 while they stand among the living men of to-day. These great names 
 have been invoked in this debate. For what purpose ? For the purpose 
 of denationalizing the people ; for the purpose of stripping the American 
 people of the attributes of sovereignty ; for the purpose of laying, as I 
 said before, at the feet and at the mercy of brokers and hawkers on 
 'Change the power of the people over their monetary interests in this hour 
 of national exigency. 
 
 Sir, there is nothing in the records of those illustrious men that justifies 
 any such base use of their utterances, which were made not only for the 
 Instruction of the men of their own day, but for the guidance of all that 
 were to come after them. I venture to aiflrm— without having recently 
 had the opportunity to read much of what he said upon that subject — that 
 Alexander Hamilton, peerless almost among the founders of the Consti- 
 tution, never intimaited in any paper of his that the Government of the 
 United States could not, at its pleasure, issue Treasury notes, either 
 payable upon demand or payable upon time. There was much said by my 
 respected colleague (Mr. Pendleton) with which I entirely and altogether 
 agree ; but, sir, when my colleague seemed to intimate in his argument 
 that he found any warrant in the elaborate papers of Alexander Hamilton 
 against this authority or power of the Congress of the United States to 
 authorize the issue of Treasury notes, either payable upon time or upon 
 demand, he greatly mistook the spirit of all he has written, and which has 
 been transmitted to us. My colleague was adroit in the handling of the 
 papers of Hamilton, which will live as long as our language lives. He 
 was one of those men upon whom it pleased God to confer those extraor- 
 
clinary gifts which command the homage and admiration of men, whether 
 they agreed with him or not. The passage which my colleague quoted 
 from his work was an argument in which he showed the propriety of 
 establishing a national hauls, authorized to issue currency, and he gave 
 certain reasons therefor. My colleague is a most excellent lawyer. He 
 knows well, and so did Hamilton know well when he made that argu- 
 ment, that what the Government does by another it does by itself." 
 
 Mk. Bingham argued at great length that Congress had the power un- 
 der the Constitution to authorize the issue of Treasury notes, payable on 
 demand or payable on time, redeemable in gold and silver, or other le- 
 galized coin, and make them a legal tender; and that the present bill did 
 not contemplate any other issue. He insisted that Congress, by the Con- 
 stitution, was invested with certain powers, and as to the objects, and 
 within the scope of those powers, it was sovereign. That the Constitution 
 contained no words giving to Congress the power to make gold or silver 
 coin, eitlier foreign or domestic, a legal tender. It has the power to coin 
 money, and regulate the value thereof and of foreign coins, but the Con- 
 stitution does not contain any words declaring that these coins shall be a 
 legal tender. The point I make is this : Congress has power by the Con- 
 stitution to fix the standard value of foreign coin and of domestic coin, 
 and the power to declare a legal tender, and that these powers are dis- 
 tinct. It may declare what shall be a legal tender, either foreign coin or do- 
 mestic coin, or paper representing coin. It is done by act of Congress. 
 Nothing ever was a legal tender under the Constitution in discharge of 
 debt but by express provision of an act of Congress. That the power 
 " to regulate commerce" confers on Congress the power to declare what 
 should be received in payment of debt. It is not restricted to gold and 
 silver, but the Government may issue Treasury notes, redeemable in gold 
 and silver, and declare them a legal tender in payment of debts. He de- 
 nied that this bill would "impair the obligation of contracts." There is 
 no such limitation as that imposed by the Constitution upon the power of 
 Congress. It is a limitation upon the States, and not upon the United 
 States. It was not by Inadvertence that the framers of the Constitution 
 omitted to impose upon Congress this express restriction upon the States 
 against impairing the obligation of contracts. The^r proclaimed in the 
 absence of such limitations that whoever, within the jurisdiction of the 
 United States, enters into any mere money contract, either public or 
 private, enters into it subject to the sovereign power of the people, to 
 determine at any time, by legislative enactment, what shall discharge 
 it. It is of tlie essence of the contract. 
 
 He did not share in any of the fears entertained or intimated that the 
 people will revolt at this measure. He had an abiding faith in their 
 loyalty, in their love of law, in their settled purpose to suffer and strive, 
 to labor and sacrifice, that they may maintain their Government and 
 transmit it unimpaired to their children." 
 
 Me. Sheffield, of Ehode Island, followed Mr. Bingham in a 
 lengthy speech in opposition to the legal tender clause in the 
 bill. He insisted that it was unconstitutional, and an odious 
 feature. The fact that you propose to force these notes upon the 
 public against the will of the people implies that force is neces- 
 sary, in your judgment, to induce people to take them. He said 
 
69 
 
 that if the legal tender clause was stricken out he would vote for 
 the Mil, notwithstanding it was objectionable in other respects. 
 (Mr. Sheffield's speech will be found reported in the Congressional 
 Globe, page 640-1.) 
 
 On Wednesday, February 5th, several speeches were made for 
 and against the bill, all of which are fully reported in the Con- 
 gressional Globe, but the limits of this narrative will not admit of 
 their being published here. Only a brief sketch can be given at 
 this time. 
 
 Me. Cheisfield, of Maryland, spoke for one hour in opposition 
 to the legal tender clause in the bill. 
 
 '* He admitted that the accustomed currency was wholly inadequate to 
 meet the exigencies of the war. The Government has for many years 
 used gold and sUver, and it is deeply to be regretted that it is obliged to 
 depart from this desirable standard. But we are left no option. The sup- 
 ply of the precious metals is inadequate to our wants. If all the gold and 
 silver in the country was placed at the control of the Government, it 
 would be received and paid out twice in one year. It is, therefore, im- 
 possible for the Government to pay in coin. The business of the country 
 and the business of the Government require some substitute for coin. We 
 must therefore create a new or vastly enlarge the existing currency. We 
 must therefore create a public debt, establish a currency, and impose new 
 taxes. This necessity being admitted, the only question is how can these 
 objects be accomplished with the least prejudice to the people, and the 
 greatest convenience to the Government? This is a grave question — the 
 gravest which these times present. It is the question which lies at the foimda- 
 tion of all other questions; and on its solution depends success in every other 
 enterprise." 
 
 He argued at great length that the legal tender clause was un- 
 constitutional, and that it would not be just to the creditor class 
 of the community. He moved to strike out this clause in the 
 bill, and also the clause which compelled persons in the employ 
 of the government to receive the notes for ' ' salaries, debts and 
 demands owing by the United States," so as to make them only 
 ' ' receivable for all debts and demands dioe the United States. ' 
 He urged heavy taxation, and was generally favorable to the bill, 
 if the amendments' were made which he proposed, but could not 
 vote for the bill with the legal tender clause retained. (Appen- 
 dix to Congressional Globe, page 47-48.) 
 
 Mk. PiKEj of Maine, spoke for one hour in favor of the bill. 
 
 "He argued that the plan was expedient as well as constitutional. Upon 
 the clause in the bill providing that the notes shall be a legal tender there 
 has been much discussion here and elsewhere. Its importance to the 
 measure cannot be overestimated. He regarded it as the life of the plam 
 
w 
 
 Strike it oid and we are but duplicating notes atready at a discOuni. it is i'eal-' 
 ly the specie clause, and no hard money man — and he claimed to be one — 
 should vote for the issue of these notes without it. It is well known that 
 Mr. Clay rested his support of the second bank upOn the clause granting 
 Congress "the power to make all laws which shall be necessary and 
 proper for carrying into effect the powers," expressly granted by the 
 eighteenth section of the first article. The great patriot of the West, in 
 time of profound peace, was disposed to consider the financial question of 
 such magnitude as to plan a law calling into being a fiscal agent among 
 those which were " necessary and proper." With how much more force 
 can we, situated as it were, among the dying agonies of the republic of our 
 fathers, acting as many wise men believe, as the last Congress which, un- 
 der the Constitution, shall represent the whole country, claim that all 
 power which, under any circumstances, could be exercised by the Repre- 
 sentatives of the people, should be used now." 
 
 Me. Alley, of Massachusetts, made a well-considered speech 
 of one hour in favor of the bill. 
 
 "The measure before the House received the approbationof his judgment. 
 He could see clearly that under its provisions the rights of all will be pro- 
 tected, the prosperity of the whole people promoted, the credit of the 
 Government revived and its power and dignity maintained. Beneficent 
 as this measure is, as one of relief, nothing could induce him to give it his 
 sanction but uncontrolable necessity. While he had always believed it to 
 be the duty of Congress to regulate and control the currency by such leg- 
 islation as would make it of uniform value throughout the country, he 
 had never regarded it as politic or wise for the Government to make is- 
 sues of paper at any time, except for temporary emergencies. Disguise 
 it as you may, everj'body knows that knows anything of the laws of 
 trade, that to carry this people through this crisis, collect $150,000,000 tax, 
 maintain these vast expenditures, and conduct the legitimate and neces- 
 sary business of the country, you must increase the volume of the curren- 
 cy to such an amount as to make it imjiossible, under the present banking 
 system, to give it confidence upon the ground of its immediate converti- 
 bility into specie. The question then for Congress to decide, is whether 
 the Government shall share with the banks — and keep them in check — this 
 circulation, or purchase their irredeemable bills at ruinous rates. If you 
 do not adopt this measure you will see the country flooded with irredeem- 
 able bank currency, a great deal of which will be found, as after the war 
 of 1812, utterly worthless. At that time Government securities were ex- 
 changed at eighty cents on the dollar for worthless bank promises, not 
 wortli the paper upon which they were written." 
 
 Me. Alley concluded his . remarks as follows : 
 
 " Why, I ask, are government securities worth in the market to-day 
 but ninety cents on the dollar in exchange for irredeemable bank paper? 
 Is it because they have confidence in bank paper, or because it will com- 
 mand specie ? Not at all ; but because the bank paper will liquidate the 
 obligations of debtors. It is for you to determine whether government 
 obligations shall be as good as irredeemable bank notes ; and whether you 
 will allow these irredeemable issues to be preferred and take precedence of 
 
n 
 
 S, national Cuireiicjr issued by a Govei-nment that n^vet Repudiated a dol-' 
 lar of its indebtedness ; and a nation whose fabulous growth, immense in- 
 terests and exhaustless resources, have excited the wonder and admiration 
 of an astonished world. I confess that when I reflect upon our condition, 
 and the misery and suffering which such a policy inflicts upon the busi- 
 ness interests of the country, I can have no toleration for such suicidal ac- 
 tion. Congress has the power to inaugurate to-day a system of financial 
 policy, both for Government and people, which will establish our prosper- 
 ity upon a firm foundation, and give strength and stability to all our insti- 
 tutions; and I conjure you, by all the memories of the past and every hope 
 in the future, not to disappoint in this moment of peril the just expecta- 
 tions of the American people-" 
 
 While Mr. Alley was making his speech, Mr. Spaulding re- 
 ceived from Secretary Chase a private note, urging the import- 
 ance of haying the vote taken on the bill that day. It was known 
 that Mr. Horton, a prominent member of the Committee of Ways 
 and Means, desired to speak in opposition to the bill, and that 
 several other members desired to express their views of the meas- 
 ure before the vote was taken. 
 
 The Treasury was nearly empty. Money, or other available 
 means must be had right off. The pressing demands made upon 
 the Treasury could not be put off much longer without ruin to 
 the credit of the Government. The Secretary had authority un- 
 der the Loan Act, passed at the extra session in July, still remain- 
 ing, to issue $46,000,000 of Treasury notes bearing 3-65 per cent, 
 interest, or, at his option, to issue 7-30 notes ; but was unable to 
 put out either class of this paper without a discount. The 7-30 
 notes could not be paid out from the Treasury except at a dis- 
 count of two per cent., and he could not pay out the 3-65 notes 
 at all, because they would not pass as currency, except at a still 
 greater discount — the rate of interest was so low that they were 
 not desirable as an investment, and not being a legal tender they 
 could not be made available at par as a currency. 
 
 The following is a copy of the note received from Secretary 
 
 Chase at this time : 
 
 "Such men as Nathaniel Thayer, of Boston; Alexander Duncan, of 
 Duncan, Sherm.an & Co. ; Shepard Knapp and John D. Wolf, and numer- 
 ous able and leading financial men, have told me within two days that you 
 were perfectly right, and they are deeply anxious that the legal tender 
 clause should stand in the hill. They say the country is lost without it." 
 
 Tkeasuet Depaetment, February 5, 1862. 
 My De'ae Sie — I make the above extract from a letter received from 
 the Collector of New York this morning. It is very important the bill 
 , should go through to-day, and through the Senate this week. The public 
 
 exigencies do not admit of delay. 
 
 Tours truly, 
 Hon. E- G. Spaulding. S. P. CHASE. 
 
72 
 
 After receiving this note from the Secretary, Mr. Spaulding 
 thought it desirable that a time should be fixed for closing the de- 
 bate on the bill. He thought it desirable that Mr. Horton and 
 Mr. Stevens, members of the Committee of Ways and Means, 
 should speak, and such others as were prepared, and that the vote 
 should be taken the next day. 
 
 The following proceedings took place in the House. 
 
 Me. Wright obtained the floor. 
 
 Me. Spaulding— "I move that the Committee rise with a view of clos- 
 ing this debate." 
 
 Mr. Campbell— "I liope this motion will be agreed to, and that this 
 bill will be pressed to a vote to-day." 
 
 Mr. Spaulding — "I desire to say, in connection witli this motion, that 
 I have within the last two or three hours received a note from the Secre- 
 tary of the Treasury informing me that it is absolutely necessary that we 
 should press this measure to a vote without further delay. Therefore I 
 move that the Committee rise, with a view of closing debate." 
 
 Mr. IIorton — " I wish to say that tlie Committee of Ways and Means 
 do not malte this motion, and I hope it will be voted down." ("Good!" 
 "Good!") 
 
 The Chairman — " The Chair would state that this question is not de- 
 batable." 
 
 Mr. English — '"I move to lay the motion upon the table." 
 
 The Chairman — " That motion is not in order in committee." 
 
 The question being upon the motion that the Committee rise. 
 
 Me. Eoscob Conkling demanded tellers. 
 
 Tellers were ordered, and Messrs. Blair, of Missouri, and 
 Thomas, of Massachusetts, were appointed. 
 
 The Committee divided, and the tellers reported — j'eas, 52; 
 nays, 62. 
 
 So the motion was not agreed to. 
 
 Mr. Spaulding — ''With the permission of the gentleman from Penn- 
 sylvania, I wish to make one word of explanation in reference to tlie mo- 
 tion I made. The object of the motion was simply that we should limit 
 this debate, with a view that we might take a vote upon the bill to-mor- 
 row, say at one o'clock. I expected to go immediately back into commit- 
 tee to allow the gentleman from Pennsylvania to make his speech, and 
 then to allow Mr. Horton to speak, and then Mr. Stevens to close the de- 
 bate. After that the vote would be taken." 
 
 Mr. Thomas, of Massachusetts — "Then you arrange the manner in 
 which speeches shall be made on this floor." 
 
 Mr. Lovejot— " I would like to know whether the gentleman from 
 Kew York has any right to farm out the floor?" 
 
 Mr. Spaulding — "I make this explanation with a view to show the 
 House that I have no disposition to out off any member of the Committee 
 or to force a vote unduly. The motion was made under the necessity 
 which, the Secretary of the Treasury ' assures us, exists for passing this 
 
T3 
 
 bill. I did not make it with a view to cut off those who are entitled to 
 speak, by courtesy or otherwise. I think this explanation will satisfy the 
 House that there was no effort upon my part to force a vote improperly. 
 I did not expect to have a vote until to-morrow at one or two o'clock. 
 After the debate is closed, we proceed to voting upon amendments which 
 are pending, and which may be offered, and then five-minute speeches 
 will be in order, as upon other bills. Those speeches can be continued 
 until amendments are exhausted." 
 
 Mb. Weight, of Pennsylvania, spoke for half an hour in op- 
 position to the legal tender clause of the bill. 
 
 " He was willing to do almost anything that he considered constitution- 
 al to aid in putting down the rebellion, but he did not feel justified in go- 
 ing so far as to vote any such measure as the legal tender bill. He con- 
 curred in the views of Mr. Pendleton that it was unconstitutional, that 
 nothing but gold and silver could be made a legal tender in payment of 
 debts. The people have means enough in their possession, and he was 
 willing to go for taxation to the uttermost limit, but the time had not yet 
 arrived when we should resort to such an extreme measure as to make 
 these notes a legal tender." *»«»*»#»» 
 
 Mk. Hoeton, of Ohio, a prominent member of the Committee 
 of Ways and Means, made a lengthy speech in opposition to the 
 legal tender clause in the bill. 
 
 " He thought we were taking a dangerous departure from the financial 
 system of the country. If this bill passes, as he hoped it would not, this 
 will be a point from which we shall date a new financial system for the 
 United States. " Old things will have been done away ; all things will 
 have become new." He thought the Loan bill and the Tax bill should 
 have been passed through this House side by side. The Committee of 
 Ways and Means were convinced of the importance of this, and were 
 desirous that it should be done. (Mr. Horton was one of the sub-com- 
 mittee on the Tax bill.) It is from no neglect of the Committee of Ways 
 and Means, or of the sub-committee which has had the preparation of the 
 Tax bill in charge, that the Tax bill and Loan bill have not been brought 
 forward side by side. The sub-committee on the Tax bill have worked 
 night and day ; and although they do not get rnuch credit for being indus- 
 trious, still substantial progress had been made. 
 
 There were two measures before the House, and he proposed to discuss 
 them. One was the proposition of the gentleman from New York (Mr. 
 Spaulding) and the other that of the gentleman from Vermont (Mr. Mor- 
 rill). He insisted that the three-sixty-flve hundredths per cent, notes, 
 proposed in Mr. Morrill's plan, possessed " all the characteristics for circu- 
 lation which the Treasury notes of Mr. Spaulding's bill will have (save 
 the legal tender clause), and have the important advantage of earning in- 
 terest, and being fundable in a more desirable stock for the holder, be- 
 cause bearing a higher rate of interest, and more advantageous to the 
 Government, because having only half the. time to run, the Government 
 can redeem them at an earlier day." The Committee of Ways and Means 
 are equally divided in regard to the two bills. He was for the substitute 
 of Mr. Morrill, and decidedly opposed to the legal tender scheme. He 
 thought we had not yet reached the point whea the Government, exercis- 
 
74 
 
 ing its high prerogatives, as Mr. Spauldiiig called them, can take for its 
 use the property of the citizen without pay. Necessity for this measure 
 has been asserted, but not proved. The Secretary of the Treasury thinks 
 it is necessary, but he thought he was mistaken." 
 
 Mr. Horton argued at great length against the injustice and in- 
 expediency of making the notes a legal tender, and concluded as 
 follows : 
 
 "Mr. Chairman— I thank the Committee for listening to me so long. 
 Tou know that I am unaccustomed to speaking in the House, and my 
 remarks of course have been very desultorj^ But I wish to impress upon 
 the Committee that these opinions of mine are not merely opinions super- 
 induced by a hopeful temperament. I have, according to the best of my 
 knowledge, examined this whole question in all its bearings, and I am 
 willing to take the responsibility of voting against this legal tender clause 
 of the bill for the reasons that I have given, and for divers and sundry 
 reasons which I have not given. I ask the Committee to pause before 
 they take a step which, once taken, will be irrevocable. When you have 
 once broken a pitcher it never becomes whole again ; and this fair fabric 
 of our untarnished faith and unbounded wealth and credit ought not to be 
 destroyed, simply because our leaders — men that we have faith in — have 
 become alarmed, and have told us that there is a necessity for it. When 
 there is danger, Mr. Chairman, then is the time to be cool and look about 
 you, and to see that you take no false step. Now is that time, and if you 
 take this step, it is a step downwards, and you will find that to regain 
 the high eminence from which we shall have descended is a labor very dif- 
 ficult to accomplish." 
 
 Me. Kellogg, of Illinois, obtained the floor. 
 
 Me. Spaulding — "I ask the gentleman to give way to me for a few 
 moments, and then I will move that the Committee rise," 
 
 Mr. Kellogg, of Illinois — "I yield for that purpose." 
 
 Mr. Spaulding — "I wish to make one statement in reference to the 
 condition of the Treasury, which I presume all will be anxious to know 
 befoi-e we adjourn. The Secretary of the Treasury has yet unexpended 
 of the loan of last July $46,000,000. He has a light to issue this sum in 
 three and sixty-five hundredths per cent, notes, or in seven and three- 
 tenths per cent notes ; but he is unable to put out either of these classes 
 of paper without a discount. He cannot pay out the seven and three- 
 tenths per cent, notes without a discount of two per cent., and he cannot 
 pay out the three and sixty-five one hundredths per cent notes because 
 they will not be taken as currency. Ihis bill of Mr. Morrill proposes sim- 
 ply to repeat the awLhoriiy to issue the same kind of notes, which cannot be is- 
 sued advantageously hy the Secretary of the 'Irea^ury at ihis time. I move 
 that the Committee do now rise." 
 
 The motion was agreed to. ***** * 
 
 Mk. Spaulding—" I move that all debate on House bill No. 240 be 
 closed in one hour after its consideration shall have been resumed in the 
 Committee of the Whole on the state of the Union." 
 
75 
 
 Mk. Thomas, of Massachifsetts— " I suggest to the gentleman to modi- 
 fy his motion, so as to make it read two hours." 
 
 Mr. Spadlding— " The exigencies of the country are such that I can- 
 not consent to do so unless the House so order it." 
 
 Mr. VALLAN0IGHAM— " I move to amend the motion by striking out 
 ' one hour' and inserting ' two hours.' " 
 
 The amendment was adopted, and the motion as amended was 
 agreed to. 
 
 PASSAGE OP THE BILL IN THE HOUSE. 
 
 Thursday, February 6, 1862, was an exciting and important 
 day in the House. The final vote on the legal tender note bill 
 was to be taken, and in anticipation of the vote there was a very 
 full house. In pursuance of the order passed last night, general 
 debate was to be closed in two hours after the bill should be taken 
 up in Committee of the Whole. The House on meeting and dis- 
 posing of a little preliminary business, immediately resolved it- 
 self into Committee of the Whole, and resumed the considera- 
 tion of the bill. The Chairman announced that general debate 
 on the bill would close at ten minutes past two o'clock P. M. 
 While debate was continued, Mr. Frank and Mr. Colfax, who 
 were friendly to the bill, passed around the House with a list, 
 making a canvass of how the different members would vote on 
 the legal tender clause. Upon footing up the list, it was ascer- 
 tained, that there was a lai'ge majority in favor of making the 
 notes a legal tender. 
 
 Mr. Kellogg, of Illinois, being entitled to the floor, spoke for 
 
 over half an hour in favor of the bill, not as a peace measure, 
 
 but as a ivar measure. He said : 
 
 " I intend to detain the Committee hut a little while. I should not have 
 sought the floor for the pm-pose of offering any remarks, hut for the con- 
 sideration that, in my judgment, this hill was heing considered and dis- 
 cussed as it might with propriety have been discussed and considered in 
 time of peace, and when there was no pressing necessity for the action of 
 Congress in placing the Government in possession of all the means and 
 powers that can be safely gathered and exercised under the Constitution. 
 If this question came up in ordinary times, I am frank to confess, thai I 
 might, perhaps, have had some doubt of its constilviioncdity sufficient to induce 
 me to oppose it. I mean by that only to say that in Ume of peace, when the 
 integrity of the Government is not threatened, I would be more careful and 
 caviious ; and if I dovhted the constilviiondliiy of the measure 1 would not vote 
 for it. But, sir, in this owr extremUy. while roe are struggling to perpetuate 
 our Govemmeni, T am wiMing to go to the very verge of the Constitution. ' I 
 will go as far as I feel that the Constitution will permit me, to gather up 
 the pow^er and means to carry on the Government to that great consum- 
 
76 
 
 mation which the fathers contemplated when they established it. But 
 while I might have some doubt in time of peace, when the monetary af- 
 fairs of the country might safely be left to work out their own level and 
 settlement, of the policy of this measure, I have none now. What may 
 be policy in the one case may be vastly different in the other. 
 
 I treat this, Mr. Chairman, as emphatically and clea/rly a war measure. 
 It may appear strange that a money bill should be considered a war 
 measure, and yet it is ; for il is necessary in order to raise means to carry 
 on the Government in a war direction — a direction in which all our meas- 
 ures are or should be teuding. Sir, we should not disguise the fact of our 
 complications. We should not deceive ourselves. The worst deception 
 that men ever practice is that practiced on themselves. We should not al- 
 low ourselves to be deluded, now that we have a mighty rebellion — nay, 
 revolution — before us, and that the Powers of the Old World, who have 
 looked with a jealous eye on the mighty progress of the Western Contin- 
 ent, are seeliing occasion to cripple our onward and upward career. Talk 
 not of their sympathy for us. Our Government antagonizes theirs. The 
 principles are different. We must gird up our loins ; we must take all the 
 power we have ; we must throw every energy, all the means of our Gov- 
 ernment, in the direction of the war po«er, for the purpose of self-preser- 
 vation and perpetuation. 
 
 Mr. Chairman, we must look this matter in the face, not only of this 
 continent, but in the face of surrounding nations. We must come to the 
 conclusion that although the world shall rise against us, this Republic 
 must and shall be preserved. All the energy of the country, all the blood 
 and treasure of the country, if need be, must be summoned in from every 
 part of the land to accomplish that object. Sir, we must give to this Gov- 
 ernment arms of iron and muscles of steel. We must think as with fire 
 and strike as with spears. It is necessary, sir, it must be ; and if we now 
 meet this emergency as trne men should meet it, we shall succeed. Hhe 
 money of the country must come to its aid, the powers of the Government must 
 come to the aid of the Administration, as well as the strong hands and wa/rm 
 hearts of our people. 
 
 Mr. Chairman, I am pained when I sit in my place in the House and 
 hear members talk about the sacredness of capital ; that the interests of money 
 must not be touched. Tes, sir, they will vote six hundred thousand of the flower 
 of the American youth for the Army, to be sacrificed, wilhvut a blu&h; but 
 the great interests of capital, of currency, must not be touched. We have 
 summoned the youth ; they have come. I would summon the capital; and 
 if it does not come voluntarily, before this Republic shall go down, or one 
 star be lost, I would take every cent from the treasury of the States, 
 from the treasury of capitalists, from the treasury of individuals, and press 
 it into the use of the Government. 
 
 What is capital worth without a Governme-nt ? Gentlemen must under- 
 stand me, when I indulge in this strain and speak in this strain and speak 
 of this talk and quibble about capital, that I do not charge it upon the real 
 capitalists of the coumiry, for they do not hold back. The true capitalists of the 
 covmtry are patriotic ; they have furnished their means liberally; but there 
 is a class of huckstering capitalists, there is a class of bankers proper, 
 there is a class of brokers, who would make merchandise of the hopes and 
 fears of the Republic. »»■»** »***, 
 
 It is said there is no power to malce these notes a legal tender, and that 
 
77 
 
 that is not a legitimate way of expressing tlieir value. If gentlemen are 
 sure upon that subject, they would do well to run back a little further 
 and ascertain whether there is any power under the Constitution vested 
 in Congress to issue the notes at all. And I confess the argument of the 
 gentleman from Ohio (Mr. Pendleton) ran back legitimately to that prop- 
 osition. At least it carried my mind back to that proposition so fairly and 
 certainly, that if I found no power to issue these notes, I would have voted 
 against this" bill. To that my mind has turned with every argument that 
 has been inade. I may have been obtuse, but I confess that I have come 
 to the conclusion that we have the constitutional power to issue these 
 notes ; and having that constitutional power we have, as an incident to thai 
 power, the power also to make them of value by making them a legal ten- 
 der. The gentleman has voted more than once for the issue of Treasury 
 notes to pay debts owing by the Government, which were payable in 
 coin. If we have power to issue Treasury notes, we have the power to 
 fix the value of the issue. It is an incident to the power of issuance, liet 
 them be issued , as money, to take the place of money. Let there be no 
 deception ; let the creditors of the Government know whether we are to 
 palm off a spurious depreciated currency under the guise of money. If 
 we have the right to issue it, and impress with the denomination of five 
 dollars, why not stamp upon its face that it is five dollars everywhere ?'^ 
 
 Mk. Thomas, of Massachusetts, made a speech against the le- 
 gal tender clause in the bill. 
 
 " He regarded this clause as unconstitutional, unjust, and inexpedient. 
 The question had never been settled by judicial authority, but the weight 
 of reasoning by Webster, Madison, and others, was strongly against the 
 validity of this clause in the bill. He argued that nothing but coined 
 money could be made a legal tender in payments of debts ; that a matured 
 debt could not be paid by another promise. He regarded this clause in 
 the bill in the nature of a forced loan, in itself a confession of weakness. 
 The friends of this feature of the bill admit the reluctance with which they 
 assent to it. The only ground of defence is its necessity, that no alterna- 
 tive is left to us. He deeply respected their motives, but could not himself 
 see the necessity." 
 
 Mk. Edvtakds, of New Hampshire, made a speech in favor of 
 
 the bill. 
 
 " We find ourselves confronted by an exhausted Treasury, and without 
 the means of meeting its existing, or its constantly accruing liabilities. 
 The amount of fioating liability now due is $100,000,000. The figures pre- 
 sented in the opening speech of this debate are immense — almost appalling. 
 Funded and floating it is now $400,000,000 ; on the first of July next it will 
 be $650,000,000, and if the war continues $1,200,000,000 in one year from 
 that time. He was in favor of taxation to pay ordinary expenses and in- 
 terest, and ultimately a sinking fund, but he was in favor of the issue of 
 Treasury notes for the purpose of meeting immediate expenditures, and all 
 parties seemed to concede that Treasury notes in some form must be is- 
 sued. The bill reported by the Committee of Ways and Means, and the 
 substitute offered by Mr. Morrill, may be regarded as the only propositions 
 now before the House. It is understood that the other propositions will 
 be withdrawn, and that the dissenters from the bill will concentrate on 
 
this substitute. They agree in the main features of the plan, and differ 
 only in details. He thought the notes proposed by Mr. Morrill's plan 
 would not pass current among the people or the banks, but would neces- 
 sarily depreciate. The army and navy might be compelled to , receive 
 them at par, because the Government had nothing else to give them, but 
 they could not afterwards pass them without a large discount, which 
 would be unjust to the men fighting our battles. He thought that would 
 be a lack of faith of the most flagrant description — more objectionable by 
 far than the legal tender clause. He also objected to the high rates of in- 
 terest proposed for the bonds to be issued in funding the notes. 
 
 The substitute provides for a dqn'eciaiedcwrrency and a high raie of interest 
 He thought the currency proposed by the substitute would demoralize the 
 country as much, or more, than the legal tender notes, and wonld not pos- 
 sess as many advantages to the Government. 
 
 The legal tender notes would give instant means to the Treasury, so much 
 needed at this time, without looking to iptermediate negotiation to furnish 
 them. The original bill was the one in all material respects to be preferred 
 to the substitute, one of which it is distinctly understood will be adopted." 
 
 Mr. Eiddle, of Ohio, made a speech against the propriety and 
 expediency of issuing the legal tender notes. 
 
 " He doubted the constitutionality of the measure. He thought there 
 was no real money, except the metals coined in pursuance of law and a 
 fixed standard. Can money be made of paper ? Clearly not, by calling it 
 money or by stamping it as money by the Government. It would not 
 stand the commercial test. Paper has no appreciable intrinsic value, and 
 its exchangeable value is of the lowest possible grade. The only high de- 
 gree of value it can ever attain is that which may be imparted to it by that 
 which is written or printed upon it. It is apparent that the whole quan- 
 tity of the circulating medium must be materially increased, for obviously 
 that which was only equal to the demands of commerce and the ordinary 
 wants of the Government, is wholly inadequate now to the same demands 
 and the extraordinary wants of the Government. He was opposed to the 
 legal tender clause, and would vote to strike it out ; if that fails, I will 
 choose between the bill and its defeat." (He voted for the bill on its final 
 passage. ) 
 
 Mb. Blake, of Ohio, spoke in favor of the bill. 
 
 "At no time in the history of our country was the peril to our free insti- 
 tutions greater than now. The bill is brought forward as a war measure, 
 to meet the pressing demands now on the Treasury. He argued that it 
 was constitutional to issue Treasury notes and make them a legal tender. 
 He insisted that it was a necessary and proper means of carrying into ef- 
 fect the war powers— to raise and support armies and to provide and main- 
 tain a navy. We are now in the midst of a great National exigency, and 
 one, too, that we must provide for; and one that in the application of the 
 means there must of necessity be great latitude of discretion, and denied 
 that legal tender paper money was prohibited." (He read from the debates 
 on the formation of the Constitution, Vol. .'5, page 435.) 
 
 Mr. Mason— "He was unwilling to lie the hands of the Legislature. He 
 observed that the late war conld not ha^e been carried on had such a pro- 
 hibition existed." 
 
79 
 
 Me. Butler—" That paper was a legal tender in no country in Europe." 
 Me. Mason — "Was still averse to tying the hands of the Legislature al- 
 together. If there was no example in Europe, as just remarked, it might 
 be observed, on the other side, that there was none in which the Govern- 
 ment was restrained on this head." 
 
 Me. Blake continued his argument, insisting "that the Convention 
 which framed the Constitution did not attempt any prohibition, but left it 
 to Congress to make Treasury notes a legal tender whenever the exigency 
 should arise to make it necessary. It was denied in express terms to the 
 States, and permitted in implied terms to Congress. It being constitutional, 
 is it necessary to make Treasury notes a legal tender ? By these notes we 
 are enabled to pay our soldiers, and it is the only means we have to pay 
 them. Does not every gentleman know that if these notes were paid to 
 our soldiers without making them a legal tender, they wiM immediately be 
 sold at a loss to the soldiers of from four to twemiy 'per cent. ? Ihis is not conjec- 
 ture: this very thing was done here only last month; soldiers were shaved by the 
 money-shavers of this District from four to twenty per eext. on the demand Treas- 
 vry notes they had received from the Oovemment. We are not legislating for the 
 money-shavers, who oppose this bill, but for the people, the soldiers, and laboring 
 classes." 
 
 Mk. Campbell, of Penns34vaiiia, spoke in favor of the bill. 
 
 " He said, it is proper that each member of this House should, however 
 briefly, express his views on the pending bill — one of the most, if not the ■ 
 most, important bills of this season. To support our armies in the field 
 and navies on the seas is a plain, patriotic and necessary duty; to do this 
 with prudence, economy and foresight, is the highest evidence of states- 
 manship. That we have vast Jfational resources, all admit; that the pub- 
 lic debt has for its security the whole property of the nation, is equally 
 plain. The powers of the Government are ample — they extend to life and 
 property. He would fall short of his duty in this tremendous issue, in 
 which free government is on its final trial, who would not, if necessary, 
 vote the last man and the last dollar to defend and perpetuate the priceless inheri- 
 tance of our fathers. 
 
 I humbly conceive my duty to be a plain one. The path I have marked 
 out for myself I will follow, let it lead where it may. Whatever measure 
 is now or hereafter may become necessary to adopt in order to maintain the 
 Union and perpetuate free Government, that will I support. Speak not to 
 me of "objections" and "scruples" and "dangers," of "Constitutional 
 objections" and "conservative influences." Sophistry is ever plausible, 
 and opposition to a just and necessary measure generally wears the mask 
 of a " Constitutional objection." The highest duty of every member is to 
 maintain the Union — to sustain the Constitution against this causeless and 
 wicked rebellion ; and in doing this, let us bear in mind that the Constitu- 
 tion was made for the people— to secure to them and their posterity the 
 blessings of free government. Therefore, with me the primary inquiry is, 
 is this measure necessary to suppress the rebellion ? If it is, here am I 
 ready to sustain it. It will be found the Constitution gives ample power 
 to sustain this view. 
 
 The bill now before the Committee is necessary to sustain the credit of 
 the country, and to carry on the war. It is with reluctance that I have 
 come to this conclusion. I do not like the necessity which exists for the 
 legal tender clause ; still less do I like to place the issues of the Govern- 
 
80 
 
 ment in the hands of the brokers and money-lenders of the country. De- 
 preciated no>v, let the legal tender clause faU, and mark the result to-mor- 
 row. The Treasury notes will fall from four per cent, to fifteen and twen- 
 ty-five below par, and the Government will have to pay that per centage 
 additional for every article they purchase. Tour soldiers will be shaved 
 that amount on their blood-bougU wages, and the country, flooded with a 
 vast amount of depreciated paper, will grow restless and discontented 
 under so fatal a mistake. If we make the Government issues a legal ten- 
 der, the demand for specie will be so limited that they will maintain their 
 value." 
 
 CLOSING THE DEBATE ON THE BILL. 
 
 By order of the House general debate was now closed. The 
 standing rules of the House, however, provide that the member 
 introducing the measure shall have the right, after general debate 
 is closed, to speak one hour in reply to adverse speeches, in finally 
 closing the debate. Mr. Spaulding, having introduced the bill, was 
 entitled to the floor to close the debate. Mr. Stevens, who had not 
 yet spoken, was desirous of expressing his views on the measure, 
 and Mr. Spaulding was willing to give him most of the hour to 
 which he was entitled, and intended to yield the floor to him for 
 that purpose. 
 
 Me. Spaulding, in closing, summed up, on 'his part, as follows : 
 
 ' ' I have listened with a great deal of attention to the arguments and pro- 
 positions which have been submitted by the various gentlemen who have 
 addressed the House, but I shall not now make the concluding speech. I 
 shall leave it to the able Chairman of the Committee of Ways and Means 
 to close the debate. If I may be indulged, however, for a few moments, I 
 desire to say, summing up, first : that all agree that taxation, in various 
 forms, must be imposed to the amount of at least $150,000,000 on which to 
 rest the credit of these notes and bonds, a sum sufficient to pay the ordi- 
 nary expenses of Government on a peace footing, the interest on all the 
 war debt, and a sinking fund to liquidate annually a portion of the princi- 
 pal. Second : we all agree that hereafter the war must be carried on prin- 
 cipally upon the ci-edit of the Government, and that papef in the form oj 
 notes and bonds must be issued to an equally large amount, whichever plan is 
 adopted. After deducting the sura raised by internal revenue, by direct 
 taxation, and duties on imports, the amount of paper to he issued can only he 
 limited hy the actual expenses of the Government. The respective plans of 
 Messrs. Vallandigham, Conkling, and Morrill, require the same amount 
 of paper to be issued as the legal tender bill proposed by the Committee of 
 Ways and Means, and supported by the Secretary of the Treasury. Third : 
 the main difference between the several plans is, that the legal tender bill 
 stamps demand notes as money, with the highest sanction of the Government 
 to circulate as a National currency, the same as bank notes, in all the chan- 
 nels of trade and business among all the people of the United States ; 
 whilst all the other plans proposed contemplate the issue of an inferior 
 currency that will not, in my opinion, circulate as money either among 
 the banks or the people, but will, on the contrary, be depreciated and 
 
81 
 
 sold at a large discount by all officers, soldiers, and others that are com- 
 pelled to receive it from the Government in payment for services and 
 supplies furnished. For myself, I prefer to issue the demand notes, based 
 on adequate taxation, and with the highest legal sanction that can be given 
 to them by the Government, placing the soldiers and capitalists all on the 
 same footing in regard to these notes." 
 
 Mr. Spaulding then yielded the floor to Mr. Stevens. 
 Mr. LoYEjOT objected to the gentleman yielding the floor. 
 
 The Chaikman — " If objection is made, the gentleman from Pennsyl- 
 vania cannot occupy the floor. The gentleman from New Yorls cannot 
 yield the floor to him, except by unanimous consent." 
 
 Mr. MoEEiLL — "I trust no objection will be made; only the same time 
 will be consumed." 
 
 Mr. Love JOY— "Well, I will withdraw the objection." 
 
 ME. Stevens' addeess. 
 
 " Mk. Chaieman — This bill is a measure of necessity, not of choice. 
 No one would willingly issue paper currency not redeemable on demand, 
 and make it a legal tender. It is never desirable to depart from the 
 circulating medium which, by the common consent of civilized nations, 
 forms the standard value. But it is not a fearful measure, and when 
 rendered necessary by exigencies it ought to produce no alarm. 
 
 The late administration left us a debt of about $100,000,000, and 
 bequeathed to us also an expensive and formidable rebellion. This com- 
 pelled Congress, at the extra session, to authorize a loan of $250,000,000; 
 $100,000,000 of these were taken at 7 3-10 per cent., and $50,000,000 six 
 per cent, bonds at a discount of over $5,000,000; $50,000,000 were used in 
 demand notes, payable in coin, leaving $50,000,000 undisposed of. Before 
 the Banks had paid jnuch of fhe last loan they broke down under it and sus- 
 pended specie payment. They have continued to pay that loa/n, not in coin, hut 
 in demand notes of the Government; that has kept them at par, but this last 
 of the loan was paid yesterday, and on the same day the banks refused to receive 
 them. 2 hey must now sink to a depreciated cwrrency. The remaining $50,- 
 000,000 the Secretary of the Treasury has been unable to negotiate. A 
 small portion of it, say $10,000,000, has been issued at 7 3-10 per cent, in 
 payment of debts. 
 
 He estimated the present floating debt at $180j000,000; daily expenses, 
 $2,000,000; to carry us to next meeting of Congress, $600,000,000 more. 
 That if sufficient six per cent, bonds were forced on the market to pay 
 our expenses up to December, or $700,000,000, as the money should be 
 wanted, he thought they would sell as low as sixty per cent., as in the 
 last English war; and even then it would be impossible to And payment 
 in coin. A large part of it must be accepted in depreciated notes of sus- 
 pended banks, for no one expects the resumption of specie payments until 
 the close of the war. 
 
 Without the legal tender clause the notes could not be kept at par. 
 Brokers, bankers, and others would depreciate them. The National Bank 
 scheme recommended by the Secretary might, in ordinary times, be very 
 useful, but while the banks are under suspension it was not easy to see 
 how it would relieve the Government. They would have the circulation 
 without interest, and at the same time would draw interest on the bonds, 
 
82 
 
 and afford no immediate relief. He thought the Government should have 
 the benefit of the circulation of legal tender notes', and did not see how 
 we could get along in any other way. 
 
 He argued in favor of the constitutionality of the legal tender clause, 
 and that it was a necessary and proper measure at this time. In short, 
 whenever any law is necessary and proper to carry into execution ^ any 
 delegated power, such law is valid. That necessity need not be absolute, 
 inevitable, and overwhelming — if it be useful, expedient, profitable, the 
 necessity is within the constitutional meaning. Whether such necessity 
 exists is solely for the decision of Congress. Their judgment is absolute 
 and conclusive. If Congress should decide this measure to be necessary 
 to a granted power, no department of the Government can rejudge it. 
 The Supreme Court might thinli the judgment of Congress erroneous, but 
 they could not review it. Kow, it is for Congress to determine whether 
 this bill is necessary " to raise and support armies and navies, to borrow 
 money, and provide for the general welfare." They are all granted 
 powers. It is for those who thinic that it is not "necessary, useful and 
 proper," to propose some better means, and vote against this; if a major- 
 ity think otherwise, its constitutionality is established. 
 
 If constitutional, is it expedient ? It is objected by the gentleman from 
 Ohio, that the legal tender clause would depreciate the notes. All admit 
 the necessity of the issue ; but some object to their being made money. 
 It is not easy to perceive how notes issued without being made immedi- 
 ately payable in specie, can be made any worse by making them a legal 
 tender. And yet that is the whole argument, so far as expediency is con- 
 cerned. Other gentlemen argued that this would impair contracts, by 
 making a debt payable in other money than that which existed at the 
 time of the contract, and would so be unconstitutional. Where do gentle- 
 men find any prohibition on Congress against passing laws impairing 
 contracts ? There is none, though it would be unjust to do it. But this 
 impairs no contract. All contracts are made not only with a view to present 
 laws, but siAject to the future legislation of the country. We have more them once 
 Jianged the value of coin. Neither our gold nor our silver coin is as val- 
 uable as it was fifty years ago. Congress in 1853, I believe, regulated 
 the weight and value of silver. They debased it over seven per cent., 
 and made it a legal tender. Who ever pretended that that was uncon- 
 stitutional? The gentlemen from Vermont (Mr. Morrill), and Ohio CMr. 
 Pendleton), think it an ex port facto law. It is not wonderful that my dis- 
 tinguished colleague, not being a professional lawyer, should not be aware 
 that the ex port facto laws proliibited by the Constitution refer only to 
 crimes and misdemeanors, and not to civil contracts. The gentleman 
 from Ohio no doubt knew, but forgot ic. 
 
 Gentlemen are clamorous in favor of those who have debts due them, 
 lest the debtor should the more easily pay his debt. I do not much sym- 
 pathize with such importunate money-lenders. But mdows and orphans 
 a/re interested and in tears, lest their estates should be badly invested. I pity no 
 one who ha,s his money invested in United /States bonds, payable in gold in twenty 
 yeo/rs, with interest semi-annuaUy. But while these men have agonized 
 bowels over the rich man's case, they have no pity for the poor widow, 
 the suffering soldier, the wounded martyr to his country's good, who 
 must receive these notes without legal tender or nothing, and who must 
 give half of it to the Shylocks to get the necessaries of life. Sir, I wish 
 
83 
 
 no injury to any, nor with our bill could any happen ; but if any must 
 lose, let it not be the .soldier, the mechanic, the laborer or the farmer. 
 
 Let me relate the various projects. Ours proposes United States notes, 
 secwed at the end of twenty years to be paid in coin, and the interest raised by 
 taxation semi-atmually ; su6h notes to he money, and of imiform value through- 
 out the Union. Ko better investment, in my judgment, can be had ; no 
 better currency can be invented. The amendment of the gentleman from 
 Ohio (Mr. Vallandigham) proposes the same issue of notes, but objects to 
 a legal tender ; but does not provide for their redemption on demand in 
 coin. He fears our notes would depreciate. Let him who is sharp 
 enough to see it instruct me how notes that every man must take are 
 worth less than the same notes that no man need take, and few would, 
 being irredeemable on demand. But he doubts its constitutionality. He 
 who admits our power to emit bills of credit, nowhere expressly authorized by the 
 Constitution, is a sharp and unreasonahle doubter when he denies the power to 
 make them a legal tender. 
 
 The proposition from the gentleman from New York (Mr. Koscoe 
 Conkling) authorizes the issuing of seven per cent, bonds, payable in 
 thirty-one years, to be sold ($250,000,000 of it) or exchanged for the cur- 
 rency of the banks of Boston, Ifew York and Philadelphia. 
 
 Sir, this proposition seems to me to lack every element of wise legisla- 
 tion. Make a loan payable in irredeemable currency, and pay that in, its 
 depreciated condition to our contractors, soldiers and creditors generally! 
 The banks would issue unlimited amounts of what would become trash, 
 and buy good hard-money bonds of the nation. Was there ever such a 
 temptation to swindle ? 
 
 He further proposes to issue $200,000,000 United States notes, redeem- 
 able in coin in one year. Does not the gentleman know that such notes 
 must be dishonored, and the plighted faith of the Government broken ? 
 No one believes that we could then pay them, and it would run down at 
 once. If we are to vise suspended notes to pay our expenses, why not 
 use our own ? Are they not as safe as bank notes ? During the suspen- 
 sion, the Government would have the benefit of the whole circulation, 
 without interest, until they were funded — that is, the interest of all we 
 could keep out would accrue to the Government. If the $150,000,000 
 were constantly afloat, it would be a loan to the Government, without 
 interest, to that amount, $9,000,000 a year. But if we used the suspended 
 paper of the banks our bonds would bear interest from the instant we got 
 their notes — a good t]iing for suspended banks. Besides, the Government 
 would have the benefit of all the lost and destroyed notes — a considerable 
 item. 
 
 Last comes the substitute of the minority of the Committee (introduced 
 by Mr. Morrill). I look upon it as a curiosity- It proposes to issue 
 United States notes, not a legal tender, bearing an interest of three and 
 sixty-five hundredths per cent., and fundable into seven and three-tenths 
 per cent, bonds, but not payable on demand, but at the pleasure of the 
 United States. This gives one and three-tenths per cent, higher interest 
 than our loan, and not being redeemable on demand, would share the 
 fate of all non-specie-paying notes not a legal tender. But the ingenious 
 minority have invented a kind of currency never before known — a drotda- 
 tion bearing interest. Bonds or notes intended for investments bear inter- 
 est, but no one expects they will be used as currency; whether in the 
 shape of bonds or notes, they will be used only as investments, or as 
 
84: 
 
 pledges on which to procure loans. Suppose a tailor, shoemaker, or other 
 mechanic, or laborer, were to take one of these bills, and in a week he 
 should wish to use it in market or store, or elsewhere, he must sit down 
 and calculate the interest on the days he has had it to find its value. This 
 would be rather inconvenient on a frosty day. This currency would ma,ke 
 it necessary for every man to carry an arithmetic or interest table with 
 which to guage the value of the circulating medium. Gentlemen must 
 see how ridiculous, if not impracticable, this scheme is. 
 
 Here, then, in a few words, lies your choice. Throw bonds at six or 
 seven per cent, on the market between this and December, enough to 
 raise at least $600,000,000— about this sum is already appropriated, $557,- 
 000,000— or issue United States notes, not redeemable in coin, but fundable 
 in speoie-paying bonds at twenty years ; such notes either to be made a legal 
 tender, or to take their chance of circulation by the voluntary act of the 
 people. 
 
 I maintain that the highest sum you could sell your bonds at would be 
 seventy-five per cent., payable in currency itself at a discount. That 
 would produce a loss which no nation or individual doing a large business 
 could stand a year. 
 
 I contend that I have shown that such issue, without being made money, 
 must immediately depreciate, and would go on from bad to worse. I flat- 
 ter myself that I have demonstrated, both from reason and undoubted 
 authority, that such notes, made a legal tender and not issued in excess of 
 the demand, will remain at par and pass in all transactions, great and 
 small, at the full value of their face ; that we shall have one currency for 
 all sections of the country and for every class of people, the poor as well 
 as the rich. 
 
 Some gentlemen are as much frightened as if this were an unwonted 
 apparition, for the first time prowling forth to swallow the rich creditor 
 and smouse the poor debtor. No nation, it is said, has ever tried anything 
 like it. 
 
 Let us look at the greatest and wisest commercial nation in the world. 
 In 1797 England was struggling for existence against armed Europe. She 
 needed money, as we do now. She found it impossible to borrow. Gold 
 was likely to leave the country. She passed a law prohibiting the Bank of 
 England from paying coin for her notes until six months after the final 
 ratification of peace. That law remained in force till 1823. It is said she 
 did not make those notes a legal tender. She provided that whoever 
 refused to take them for a debt should have no remedy for its collection: 
 and that a plea of such tender should be a bar to the action. This, I think, 
 is the most stringent legal tender; yet those notes never depreciated to 
 any great extent/' 
 
 Mr. Vallandigham— " Did they not depreciate twenty per cent. ?" 
 
 Mr. Stevens— "No, sir; at no time after they were made a legal tender 
 did they depreciate twenty per cent." 
 
 Mr. Vallandigham — "I have the authority of Mr. Canning, " which 
 I think is quite as good as that of Mr. McCuUoch. They were receivable 
 all the time for Government dues." / 
 
 Mr. Stevens — "Yes, sir; but they still run down until they were made 
 a legal tender, and after that they never depreciated a single dollar. Had 
 they been made an absolute tender, they would not have depreciated a 
 farthing. But now, in times of peace, the notes of the Bank of England are 
 
85 
 
 a legtd tender in all the vast biismess of that nation, and i/n evety place, except at 
 the counter of the hamk. What else are Bank of England notes than bills of 
 credit of the Government? Her whole capital consists of Government 
 securities, and her issues are based on that alone. Prussia holds the 
 currency in paper issueable by Government alone, and is always at par. 
 What becomes of the fine-spun theories of the opponents of this bill ? I 
 think they have distressed themselves very unnecessarily ; and yet, gen- 
 tlemen have shown all the contortions, if not the inspirations, of the Sibyl, 
 lest Government should make these notes a uniform currency, rather than 
 leave them to be regulated by sharks and brokers. / look upon the imme- 
 diaie passage of the bill as essential to the very existence of the Government. 
 Reject it, and the financial credit, not only of the Government, but of all 
 the great interests of the country, will be prostrated." 
 
 Me. Chairman — "Let me say ia conclusion, that unless this bill is to 
 pass with the legal tender clause in it, it is not desirable to its friends, or 
 to the Administration, that it should pass at all, and those who think as I 
 do will have to vote against it, if it should be thus mutilated and emascu- 
 lated. If it is to be defeated, I should be glad if we had the power which 
 they have in the British Parliament — to resign our places on the Com- 
 mittee of Ways and Means, and leave it to those who oppose this bill 
 to mature some other measure. So far as I am concerned, I shall be 
 modest enough not to attempt any other scheme. The Committee of 
 Ways and Means have labored in the pi-eparation of this measure 
 anxiously, and to the best of their poor abilities. We are not infallible. 
 We do not come near it. I am but poorly qualified for anything of this 
 kind. But we have given it our most anxious consideration, and have 
 consulted those whom we believed to be the best qualified to advise us. 
 We have sought to harmonize conflicting views in the substitute which 
 the majority of the Committee have prepared, and we hope it will pass. 
 We believe that the credit of the country will be sustained by it, that 
 under it all classes will be paid in money which all classes can use, and 
 that it will confer no advantage on the capitalist over the poor laboring 
 man. If this bill shaU pass, I shall hail it as the most auspicious measure 
 of this Congress ; if it should fail, the result will be more deplorable than 
 any disaster which could befall us." 
 
 At the conclusion of Mr. Stevens' speech the Chair announced 
 that general debate was closed. Amendments were now in order, 
 and under the rules of the House, five-minute speeches could. he 
 made in favor of, or in opposition to, each amendment proposed. 
 Under this rule, several short speeches were made by members 
 who had not an opportunity to speak during the general debate. 
 
 Mr. F. A. CoNiCLiNG, who opposed the legal tender clause in 
 the bUl, read an extract from an eminent citizen of New York, as 
 follows : 
 
 "The advocates of a paper substitute may find an argument in the 
 necessities of the crisis, but are certainly not guided by the light ol' 
 experience, if they recur to the fact that in 1814 a Boston bank note was 
 capable of buying twice its nominal value in Trectsuiy noies (not a legal tender). 
 
 I had some little experience of the working of 'paper vs. gold,' in 
 Denmark, in 1813, when their currency, which was printed on blue paper. 
 
depreciated to such an extent that the King, to remedy the evil, issued a 
 new currency, printed on whUe paper, accompanied hy an edict that one 
 fix dollar of the new emission should be regarded in all transactions as 
 worth six of the old, and taken as a legal tender, which required an 
 amount of faith equal to that which was exacted by Lord Peter of Martin 
 and Jack : that they should believe ' a loaf of brown bread to be a shoulder 
 of mutton,' or suffer for their incredulity. -j 
 
 This arbitrary edict led to the ruin of many creditors, especially mort- 
 gagees, who were thus compelled to receive 'rags and lampblack' in 
 satisfaction of debts contracted in gold and silver. 
 
 At that time I had bargained with the King's painter, in Copenhagen, 
 to take my portrait (a half length, still in my possession), for three hundred 
 and sic dollars, the frame included. Such was the rapid decline in the 
 paper currency of the Government, that when it was completed I pur- 
 chased with nine Spanisli milled dollars the three hundred and six dollars 
 to pay for the portrait and frame; and such was the faith and loyalty of 
 the painter, that he believed, or was bound by law to believe, that the one 
 currency was just as good as the other! Being in London during the 
 same year, I was guilty of the felonious act of selling my gold guineas for 
 twenty-seven shillings in paper, while honest, patriotic and credulous 
 John Bull insisted that in theory their value was the same ; and Eight 
 Honorable the Chancellor of the Exchequer could cause the transportation 
 to Botany Bay of any man who praelically proved the contrary." 
 
 Mr. HtJTCHiNGS — "I would like to inquire as to the oeaipation of the 
 gentleman who wrote that letter?''' 
 
 [Here the hammer fell.] 
 
 Mr. Crisfield — "In order to accommodate what seems to be the wish 
 of the Committee, or some members of it, I propose to modify my amend- 
 ment by confining the motion to strike out to the Avords, "and shall also 
 be lawful money and a legal tender in payment of all debts, public and 
 private, within the United States." 
 
 Mr. Shellabaegee— " Mr. Chairman, I rise to oppose the pending 
 amendment. I did desire to submit to the Committee some views touch- 
 ing this measure when we were in general debate, but omitted to do so in 
 deference to the more matured views which other members of the Com- 
 mittee desired to submit. I propose to occupy the few minutes I have, 
 in making some statements in relation to the charges of bad faith and 
 injustice which have been so persistently, earnestly, and, doubtlessly, 
 sincerely made by the opponents of the bill. 
 
 Now, sir, I think it must be plain, beyond all cavil, that if these notes, 
 proposed to be issued under this bill, are made of the value imposed upon 
 them by law, so that they will be to the citizen the true and real repre- 
 sentatives of that amount of the intrinsic wealth of the country, which is 
 stamped by law upon them as their nominal value, then there can be no practical 
 injjm/, injustice, or bad faith in the law which makes them pay a debt precisely 
 equal to that real value or wealth of the country, which that note, so made a tehir- 
 der, represents. It is, of course, not my purpose now either to discuss or 
 state those views by which others see In this measure— as distinguished 
 from those they advocate— only disaster, in the shape of ' destruction of 
 all standards of value;' in the 'inflation of the business and the priceaof 
 the country ;' in disordering the ' operations of trade and commerce ;' and 
 in the ultimate 'bankruptcy' of the Government and of the people. L 
 
87 
 
 have no doubt this cry is made sincerely by many, and perhaps it is 
 believed by all who make it. I do not discuss the sources and reasonable- 
 ness of this cry of alarm, but only wish tp present a parallel to it, and 
 say that this cry is, to my mind, as unreasonable as that other to which I 
 allude. I find that parallel in the history of the growth of the debt of 
 England; and in the light of that history, I declare that this cry of 
 'bankruptcy ' and national disaster and ruin is utterly unreasonable, and 
 just now most pernicious. 
 
 Sir, the history of the growth of that debt, which one of the great 
 Commoners of England calls 'the greatest prodigy that ever perplexed 
 the sagacity and confounded the pride of statesmen and philosophers,' 
 furnishes as conclusive refutations of the theories and predictions of our 
 alarmists of this House, as it did in the past of other Parliaments. 
 
 Sir, at the end of the war of England with Louis XIV, in 1713, the 
 debt of England was, in round numbers, $250,000,000. But, sir, at that 
 period, not pot-house politicians merely, but profound thinkers, declared 
 the Government permanently crippled. But while these were engaged in 
 proving the nation ruined, the nation was growing richer and richer. 
 Soon came that war which was ended by the peace of Aix la Chapelle ; 
 and the national debt had come to bo $400,000,000 in 1748. Now, again, 
 historians, statesmen and economists concurred in declaring that the case 
 of England was certainly now desperate ; but now again the nation per- 
 sisted, although demonstrated by the books to be a bankrupt, in becoming 
 far richer than in any period of her history. Soon tlio nation became 
 again involved in the continental wars of the reign of George II, and at 
 the end of Chatham's administration, at the period, of 1760, the national 
 debt came to be $700,000,000. Then, again, it is declared that both men 
 of theory and of business united in declaring that now, at all events, the 
 fatal day had certainly arrived. Adam Smith, the father of politico-eco- 
 nomical science, thought the limit had been reached, and an increase of 
 the debt would be fatal. David Hume, the profoundest man of his age, 
 declared it would have been better that England had been conquered and 
 crushed by Prussia and Austria, than by debts for which all the revenues 
 of the Kingdom north of Trent and west of Reading were mortgaged. 
 He said the madness of England exceeded that of the crusaders. Richard 
 Coeur de Lion and St. Louis had not gone in the face of arithmetic. 
 England had. You could not prove that the road to Paradise was not 
 through the Holy Land; but you could prove that the road to national 
 ruin was through a national debt. But still, in defiance of Hume and 
 Smith, and even Burke, the nation would live and grow richer, and pay 
 the interest on its public debt. 
 
 Then came George Grenville's policy to tax the colonies of America to 
 help pay the interest on this debt, and brought on our war of the Revolu- 
 tion. In that England lost the colonies, and found an addition to her 
 public debt of $500,000,000 — making the aggregate, at the time of the 
 treaty of peace, $1,200,000,000. Again England was pronounced hopeless ; 
 but again she continued to be more prosperous than ever before. 
 
 Then came the wars growing out of the French Revolution ; and the 
 debt of England ran up to $4,000,000,000. Again the cry of despair and of 
 bankruptcy was louder than ever; but also again the cry was false as 
 ever; and the interest on the debt of England not only continued to be 
 paid to the day at the bank, but such was her prosperity that at the close 
 
of these French wars, her people expended for railroads in the island, in a 
 few years, more than $1,200,000,000! 
 
 Such is a sketch of the history of the debt of England, and such the 
 refutation furnished by the logic of history to the logic of abstract reas- 
 oning, however profound. 
 
 A great historian and a great commoner of England declares that all 
 these cries of bankruptcy and ruin were based on a double fallacy. They 
 who raised these cries imagined (hat there was an exact analogy between the case 
 of an individual who is in debt to another, and the case of a society which is in 
 debt to itself; and they also forget that other things grew as well as the debt. 
 
 Sir, I do not make this allusion to the debt of England to show that 'a 
 national debt is a national blessing,' nor to indicate that this nation ought 
 permanently to depart from its old and traditional policies of avoiding 
 public debt and direct taxation. I do not think we either ought to or 
 will. But, sir, this parallel between the alarms of tliis day and this coun- 
 try, and those of the past in another country, is only introduced to indicate 
 the strange infirmities of vision in all these prophets of evil, and to 
 indicate how unjust and cruel it is to weaken, by these refuted cries of 
 ruin and bankruptcy, the faith of the people in the Government, which 
 now, in its day of peril, so preeminently rests upon the faith of her 
 children. 
 
 Sir, all these obligations of this Government go out to the people borne 
 up by all the faith and all the property of the people ; and they have all 
 the value which that faith untarnished, and that property unestimable, 
 can give them. It is not because they lack intrinsic value that they need 
 the quality of 'lawful tender,' but it is to secure to the Government in 
 their issue their true value, and to retain for them that true value as you 
 pass them — as all agree you must — to your noble soldiery in the field, and 
 to all classes of the people not engaged, as the most persistent outside opposi- 
 tion to this hill is, in endeavoring to destroy the value of these, so that out of the 
 blood of their sinking country they may be enabled to coin the gains of their 
 infamy.''' 
 
 MR. Hickman's speech. 
 Mr. Hickman, of Pennsylvania, spoke in favor of the bill : 
 
 "The only question, Mr. Chairman, which I have ever had with refer- 
 ence to this bill, has not been a question as to the powers of Congress, 
 but as to the policy of the enactment. I would, myself, have preferred 
 that this bill had followed the tax bill. I would have preferred that, 
 before the credit of the Government had been tried to that extent, the 
 basis of that credit should have been exhibited to the country. Before I 
 take my neighbor's note, I should require him to show me on what his 
 credit rests ; of what his capital consists. I have, therefore, had great 
 doubt as to the propriety of voting for this bill as it stands at this time. 
 But being assured by the Chairman of the Committee of Ways and Means 
 that the Treasurf, and, perhaps, the Administration, regard this as a 
 governmental necessity, I am disposed to waive the question of propriety 
 or expediency, and to vote for it as a necessity, having no doubt about 
 the right. That clause of the Constitution which gives to the Govern- 
 ment the right to coin money, and to regulate the value thereof, is, to my 
 mind, conclusive of the great question that has been raised in this House, 
 'To coin money.' It does not indicate of what the material shall consist, 
 which is to be regarded as money. It might be gold, or silver, or copper. 
 
89 
 
 or brass, or iron, at the pleasure of the Government. In other words, it 
 is not demanded that the thing itself, which shall be coined as money, 
 shall have any intrinsic value. The coining of money is merely impress- 
 ing upon that which iS designated to be the circulating medium the mark 
 of the sovereign, indicating the will of the sovereign that it shall be 
 received in the exigencies of trade and commerce at the stated value. 
 And that mark of the sovereign, indicating the will of the sovereign, may 
 just as well be impressed upon paper as upon gold or silver. Nothing else 
 can be made out of the Constitution in this regard. 
 
 According to the arguments which have been addressed against this 
 • bill, the Constitution should have been made to read: 'Congress, or the 
 Government, shall have power to coin gold and silver money according 
 to their intrinsic value.' "VVhy, sir, the Government is not restricted as 
 to the material out of which it may make money; is not restricted as to 
 the metal that shall be adopted as money ; it has perfect power to adopt 
 iron as well as any other metalic basis ; and if any other metal, why not 
 paper ? Why not impress upon paper the mark of the sovereign, indi- 
 cating the will of the sovereign as to the value at which it shall be 
 received, and make it a circulatiag medium, there being nothing in the ' 
 Constitution to restrict us in this necessary exercise of sovereign power, 
 without which no Government can cany on its'operations;. without w^hioli 
 no Government could exist ? 
 
 I have no doubt, whatever, in regard to the right of Congress to pass 
 this bill, and I am therefore willing to vote for it upon the ground that it 
 is a necessity at this time. 
 
 MK. LOVEJOY's speech. 
 
 Mr. LovEjOY, of Illinois, opposed the bill : 
 
 "Me. Chairman — I have endeavored for a day or two to obtain the 
 floor, for the purpose of expressing my views a little more at length than 
 I can in the five minutes to which I am now limited ; but, by an arrange- 
 ment between the Chair and the Committee of Ways and Means, my 
 purpose has been averted. 
 
 I will now simply say in regard to the question of constitutionality, that 
 there has not been a respectable argument advanced in defense of the 
 constitutionality of this bill ; and, inasmuch as great talent and eminent 
 ability have been brought to bear upon it, I take it that no respectable 
 argument can be made in vindication of the constitutionality of this bill. 
 ■ I would admit the plea of necessity, if T believed it ; and I think it is more 
 manly to confess, as JeiTerson did, than it is to attempt to torture the 
 constitution into the support of a measure which everybody must see to 
 be imconstitutional. 
 
 Now, Mr. Chairman, in regard to the general idea of the bill, it is a 
 mere fallacy. The whole argument used in favor of the issue of these 
 legal tender notes is based upon precisely the same foundation as the old 
 theological dogma, crede ut edes, et edes — believe that you eat the real flesh 
 of Christ in the wafer, and you do eat it. Believe that this piece of paper 
 is a five dollar gold piece, and it is a five dollar gold piece; believe it is 
 worth five dollars, and it is worth five dollars. 
 
 Now, sir, I am prepared to state that it is not in the power of this Con- 
 gress, nor in the power of any legislative body, to accomplish an impossi- 
 bility in making something out of nothing. 
 
 The piece of paper you stamp as five dollars is not five dollars, and it 
 
90 
 
 never will be unless it is convertible into a five dollar gold piece ; and to 
 profgss that it is, is simply a delusion and a fallacy. You may say even 
 by legislative enactment that sixty or eighty or even ninety-nine cents are 
 a hundred, but the rigid, inexorable digits will stand fixed and immovable 
 hy your legislative legerdemain. 
 
 Mr. Chairman, we are urged by the Chairman of the Committee of Ways 
 arid Means to pass this bill, because ruin is before the Government if we 
 do not pass it. It reminds me very forcibly of Cowper's Keedless Alarm. 
 I cannot undertake to give it in rhyme, but I will give the substance of it. 
 You will remember that, hearing the defep braying of the hounds, and the 
 sound of the hunter's horn, the sheep coursed round and round the field, 
 until the frightened flock came to the brink of a precipice, and to get away 
 from the hounds and huntsman the paier gregis advised them thus : 
 " I hold it, therefore, wisest and most fit 
 That life to save, we leap into the pit." 
 
 The matron of the flock, more discreet than the spouse, replies : • 
 " How 1 leap into the pit our life to save ? 
 To save our life, leap all into the grave?" 
 
 Sir, tliere is no precipice, there is no chasm, there is no possible yawn- 
 ing, bottomless gulf before this nation so terrible, so appalling, so ruinous, 
 as this same bill that is before us, and that it is proposed to pass under the 
 pressure of these influences brought to bear upon it. 
 
 You issue $100,000,000 of those notes. The gentleman tells us they are 
 already due. We have got to pay the paper out almost before we can 
 make it. It has taken us six months to manufacture $50,000,000, and we • 
 cannot manufacture it as fast as we shall spend it at that rate ; so that 
 when we have issued $100,000,000 we must issue another $100,000,000, and 
 then another $100,000,000. And thus we plunge from lower depth to still 
 lower, till we are buried in an ocean of inconvertible paper. At every 
 step your paper will depreciate more and more, until the expenses of the 
 war will swell to such an appalling sum that redemption will be impos- 
 sible, and repudiation inevitable. Facilis deocensus averni, etc., which 
 means it is easy to slide down hill, but very hard work to draw the sled 
 back over smooth ice. But the question is pressed : what will you do ? 
 What do you propose ? I propose this : 
 
 First— Adequate taxation, if need be, to the extent of $200,000,000. 
 
 Second — Adopt legislation that shall compel all banking institutions to do 
 Tmsiness on a specie basis. Every piece of paper that claimed to be money, 
 but was not, I would chase back to the man or corporation that forged it, 
 and visit upon them the penalties of the law. 2 would not allow a bank note 
 to circulate that was not constantly, conveniently and certainly convertible into 
 specie. 
 
 Third— I would issue interest-paying bonds of the United States, and 
 go into the market and borrow money and pay the obligations of the 
 Government. This would be honest, business-like, and in the end 
 economical. This could be done. Other channels of investment are 
 blocked up, and capital would seek the bonds of investment. 
 
 This is, in substance, what I propose. This would bring us through the 
 war poor indeed, for half the nation has to support the other half, but 
 with the health and vigor of the athlete, and not with the bloated flesh of 
 the beer guzzler. Did I not know that the passage of this bill was a fore- 
 gone conclusion, I would move to re-commit, with instructions to that 
 effect." 
 
91 
 
 SPEECH OF MR. -WALTON. 
 
 Mr. "Walton, of Maine, advocated the bill. 
 
 "Necessity compels us to pay our creditors in treasury notes. Our 
 credit is exliausted ; or perhaps it will be more accurate to say that the 
 means of those who are willing to lend to the Government have become 
 exhausted. To lay and collect taxes will require considerable time; 
 besides, it cannot reasonably be expected that revenue enough can ever 
 be derived from taxation to meet all the expenses of the Government 
 while the war lasts. Practically, therefore, our Government is reduced to 
 the necessity of paying not only its other creditors, but our brave soldiers, 
 in its own notes. Thus compelling our creditors (our brave soldiers 
 included) to take their pay in treasury notes ; is it not just, is it anything 
 more than common honesty, to allow them to pay their debts in the same 
 way. If these treasury notes are made a legal tender, they will circulate 
 as readily as specie in the payment of debts, and will only cease thus to 
 circulate, if ever, when they have reached the hands of those who have 
 no debts to pay. And if, as the enemies of the legal tender clause 
 predict, they ever fall in value below par, will not the loss fall upon those 
 who have money, and no debts to pay ? And can it fall on a class who 
 wiU feel it less? And as it is this class of persons that constitute our 
 money-lenders, it will be rather a favor than an injury to them ; for these 
 notes are convertible into United States bonds, with semi-annual interest 
 coupons attached, and therefore accomplishes for them just what they 
 desire — a safe loan of their money. I say a safe loan, for the issue of these 
 notes is to be followed by vigorous taxation; and in equity the lender 
 will have a lien on the whole property of the United States as security for 
 every dollar of his debt, and a pledge of the public faith that this security 
 shall be made available. 
 
 The legal tender clause of the bill, therefore, while it secures to our 
 soldiers and the poorer class of our citizens, who have debts to pay, great 
 advantages, does no real injury to capitalists, and ought to be retained. 
 
 The constitutional objections have not been overlooked. I think the 
 Federal Government has the same power to make these notes a legal 
 tender that it has to make anything else a legal tender. It can malce noth- 
 ing a legal tender lyy virtue of any express power. It has but an implied power 
 in any case. And if it is admitted, as it always has been, that the Govern- 
 ment possesses the power to declare what shall be a legal tender in any 
 case, it has it without limitation. It can make one thing a legal tender as 
 well as another ; and whether these notes shall have that character or not, 
 is a question of expediency only, and not one of power. 
 
 It is objected by some that to make these notes a legal tender will 
 impair the obligation of contracts, and is therefore unconstitutional. But 
 this is not true. In every contract payable in money, and no particular 
 kind of money is named, it is implied, and is a part of the contract, that it 
 may be discharged in what shall be the legal currency at the time of pay- 
 ment. A change or enlargement of the legal currency of the country, 
 and a payment in such new currency, is no violation of the new contract, 
 but is in pursuance of one of its implied conditions. 
 
 Having the power, and believing, on the whole, that the legal tender 
 clause is a beneficial one, I am in favor of retaining it in the bill." 
 
 The question recurred on Mr. Crisfield's amendment, to strike 
 
92 
 
 out the legal tender clause in the original bill. The vote was 
 taken in Committee of the Whole by teller^- 
 
 On taking the vote the tellers reported — ayes 53, noes 93, so 
 the amendment was rejected. , 
 
 Several other amendments were made in Committee of the 
 Whole, but inasmuch as they were all cut off, modified or adopted 
 by subsequent proceedings, after the bill was reported to the 
 House, it is not necessary to report them here. The bill, as 
 adopted, is copied at the end of this day's proceedings. 
 
 Having gone through the bill in Committee of the Whole, 
 there was a good deal of preliminary skirmishing on the part of 
 different members, who had proposed substitutes and amendments 
 as to the order of taking the vote. Some members feared that 
 they would not be able to get a square vote in the House on their 
 respective propositions. Several members were on the floor at 
 the same time. Motions, objections and counter-motions were 
 made in quick succession, and in various forms, which continued 
 for some time, causing confusion and preventing any action of a 
 practical character, and preventing any vote being taken on either 
 proposition. It finally resulted in an arrangement being made 
 that the bill should be reported to the House, and a square vote 
 be had on the two main propositions pending before the Com- 
 mittee. Mr. Vallandigham and Mr. Conkling withdrew their 
 substitutes, so that all of the opiDonents of the legal tender clause 
 could concentrate on the substitute agreed to by Mr. Morrill, Mr. 
 Horton, Mr. Corning and Mr. Stratton, one-half of the Committee 
 of Ways and Means; and that the vote should be first taken on 
 that substitute, which was modified to meet the conflicting views 
 of the various gentlemen on that side, in order to make it as 
 acceptable as possible to all the opponents of the original bill. 
 This substitute finally offered by Mr. Horton, will be found 
 {C(m,g. Globe, p. ,) and is as follows: 
 
 The substitute which was read was, to strike out of the bill all 
 after the word "that," in the first section, and insert the follow- 
 ing: 
 
 "For temporary purposes, the Secretary of the Treasury be, and he is 
 hereby, authorized to issue on the credit of the United States $100,000,000 
 of Treasury notes, bearing interest at the rate of three and sixty-five hun- 
 dredths per cent, per annum, payable in two years after date, to bearer, at 
 the Treasury of the United States, or at the 'oflSce of the Assistant Treas- 
 urer, in the city of New York, or at the ofKce of the designated depository 
 in the city of Cincinnati, and of such denominations as he may deem 
 
9a 
 
 expedient, not less than live dollars each; and such notes shall be 
 receivable for all public dues, except duties on imports, and for all sala- 
 ries, debts and demands owing by the United States to individuals, cor- 
 porations and associations, within the United States, at the option of such 
 Individuals, corporations and associations ; and any holder of said United 
 States notes, depositing any sum not less than fifty dollars, or some multi- 
 ple of fifty, with the Treasurer of the United States, or either of the 
 Assistant Treasurers, or either of the designated depositories at Cincin- 
 nati or Baltimore, shall receive in exchange therefor duplicate certificates 
 of deposit for the amount, with any accumulated interest thereon, one of 
 which may be transmitted to the Secretary of the Treasury, who shall 
 thereupon issue to the holder an equal amount in bonds of the United 
 States, coupon or registered, as may be desired, bearing interest at the 
 rate of seven and three-tenths per cent, per annum, payable semi-annually 
 in coin, and redeemable at the pleasure of the Government after ten years 
 from date ; and such Treasury notes shall be received the same as coin, at 
 their par value, with accumulated interest, in payment for any bonds 
 that may be hereafter negotiated by the Secretary of the Treasury ; and 
 the Secretary of the Treasury may, from time to time, as the exigencies 
 of the public sei-vice may reguire, issue any amount of such Treasury 
 notes equal to the amount redeemed. There shall be printed on the back 
 of the Treasury notes, which may be issued under the provisions of this 
 act, the following words : ' The within note is receivable in payment of 
 all public dues, except duties on imports, and is exchangeable for bonds 
 of the United States, bearing seven and three-tenths per cent, per annum, 
 payable in coin, semi-annually. 
 
 Sec. 2. And he it further enacted, That to enable the Secretary of the 
 Treasury to fund the Treasury notes and floating debt of the United States, 
 he is hereby authorized to issue, on the credit of the United States, coupon 
 bonds, or registered bonds, to an amount not exceeding $500,000,000, — 
 $200,000,000 bearing interest at the rate of seven and three-tenths per cent, 
 per annum, payable semi-annually in coin, and redeemable at the pleasure 
 of the Government, after ten years from date, and $300,000,000, redeemable 
 at the pleasure of the Government, after twenty-four years from date, and 
 bearing interest at the rate of six per cent, per annum, payable semi- 
 annually in coin. And the bonds herein authorized shall be of such 
 denominations, not less than fifty dollars, as may be determined upon by 
 the Secretary of the Treasury; and the Secretary of the Treasury may 
 also exchange, at par, such bonds at any time for lawful money of the 
 United States, or for any of the Treasury notes that have been, or may 
 hereafter be, issued under any former Act of Congress, or that may be 
 issued, under the provisions of this Act. 
 
 § 3. AticL he U further enacted. That the Treasury notes and the coupon 
 or registered bonds authorized by this Act, shall be in such form as the 
 Secretary of the Treasury may direct, and shall bear the written or 
 engraved signature of the Treasurer of the United States and the Register 
 of the Treasury; and also, as evidence of lawful issue, the imprint of 
 a copy of the seal of the Treasury Department, which imprint shall be 
 made under the direction of the Secretary, after the said notes or bonds 
 shall be received from the engravers, and before they are issued ; or the 
 said notes and bonds shall be signed by the Treasurer of the United States, 
 Or for the Treasurer, by such persons as majr be specially appointed by 
 the Secretary Of the Treasury for that purpose, and shall be countersigned 
 
94: 
 
 by the Register of the Treasury, or for the Register, by such persona 
 as the Secretary of the Treasury may specially appoint for that purpose ; 
 and all the provisions of the Act entitled, ' An Act to authorize, the issue 
 of Treasury notes,' approved the 23d day of December, 1857, so far as they 
 can be applied to this act, and not inconsistent therewith, are hereby 
 revived and re-enacted ; and the sum of $300,000 is hereby appropriated 
 out of any money in the Treasury not otherwise appropriated, to enable 
 the Secretary of the Treasury to carry this act into eflfect. 
 
 J 4. And he it further enacted, That any person or persons, or any cor- 
 poration, holding Treasury notes, may, at any time, deposit them, in 
 sums of not less than $500, with any of the Assistant Treasurers or desig- 
 nated depositaries of the United States, authorized by the Secretary of the 
 Treasury to receive them, who shall issue therefor, transferable certificates 
 of deposit, made in such form as the Secretary of the Treasury shall 
 prescribe, and said certificates of deposit shall bear interest after thirty 
 days, at the rate of five and two-fifths of one per cent, per annum ; and 
 any Treasury notes so deposited may be withdrawn from deposit at any 
 time, on the return of said certificates, but no interest shall be allowed 
 except after thirty days. And all such deposits shall cease and deter- 
 mine at the pleasure of the Secretary of the Treasury, and after ten days' 
 notice shall have been given to the depositor. 
 
 S 5. And be it further enacted, That if any person or persons, shall 
 falsely make, forge, counterfeit or alter, or cause or procure to be falsely 
 made, forged, counterfeited or altered, or shall willingly aid or assist in 
 falsely making, forging, counterfeiting, or altering any note, bond or 
 certificate, issued under the authority of this act, or heretofore issued 
 under acts to authorize the issue of Treasury notes or bonds, or shall pass 
 utter, publish, or sell, or attempt to pass, utter, publish, or sell, or bring 
 into the United States, from any foreign place, with intent to pass, utter, 
 publish or sell, as true, oi^shall have, or keep in possession, or conceal, with 
 intent to utter, publish or sell, as true, any such false, forged, counterfeited 
 or altered note, bond or certificate, with intent to defraud anybody, corpo- 
 rate or politic, or any other person or persons whatsoever ; every person 
 so offending, shall be deemed guilty of felony, and shall, on conviction 
 thereof, be punished by a fine not exceeding $5,000, and by imprisonment 
 and confinement to hard labor, not exceeding fifteen years." 
 
 Upon the bill being reported from the Committee of the Whole 
 to the House, the vote was first taken on this substitute. 
 
 The yeas and nays were ordered. 
 
 The question was taken, and it was decided in the negative — 
 yeas 55, nays 95, as follows : 
 
 Yeas — Messrs. Ancona, Baxter, Biddle, George H. Brown, 
 William G. Brown, Cobb, Frederick A. Conlding, Roscoe Conk- 
 ling, Conway, Corning, Cox, Cravens, Crisfleld, Crittenden, 
 Diven, Eliot, English, Goodwin, Grider, Harding, Holman, Hor- 
 ton, Johnson, Law, Lazear, Lovejoy, May, Menzies, Justin S. 
 Morrill, Morris, Nixon, Noble, Norton, Nugen, Odell, Pendleton, 
 Perry, Pomeroy, Porter, Edward H. Rollins, Sedgwick, SheflSeld, 
 Shiel, William G. Steele, Stratton, Benjamin F. Thomas, Francis 
 
95 
 
 Thomas, Train, Vallandigham, Wadsworth, E. P. Walton, Ward, 
 Webster, Chilton A. White and Wright— 55. 
 
 Nays — Messrs. Aldrich, Alley, Arnold, Ashley, Babbitt, Gold- 
 smith F. Bailey, Joseph Bailey, Baker, Beaman, Bingham, Francis 
 P. Blajr, Jacob B. Blair, Samuel S. Blair, Blake, Bufflnton, Burn- 
 ham, Campbell, Chamberlain, Clark, Colfax, Cutler, Davis, Dela- 
 no, Delaplaine, Duell, Dunlap, Dunn, Edgerton, Edwards, Ely, 
 Fenton, Fessenden, Fisher, Franchott, Frank, Gooch, Granger, 
 Gurley, Haight, Hale, Hanchett, Harrison, Hickman, Hooper, 
 Hutchins, Julian, Kelley, Francis W. Kellogg, William Kellogg, 
 Killinger, Knapp, Lansing, Leary, Loomis, McKean, McKnight, 
 McPherson, Marston, Maynard, Mitchell, Moorhead, Anson P. 
 Morrill, Olin, Patton, Timothy G. Phelps, Pike, Price, Alexander 
 H. Rice, John H. Eice, Eichardson, James S. EoUins, Sargent, 
 Shanks, Shellabarger, Sherman, Sloan, Spaulding, John B. Steele, 
 Stevens, Trimble, Tro-wbridge, Upton, Van Horn, Van Valkcn- 
 burg, Van Wyck, Verree, Wall, Wallace, Charles W. Walton, 
 Whaley, Albert S. White, Wyckliffe, Wilson, Windom and Wor- 
 cester — 95. 
 
 So the substitute was not agreed to. 
 
 The question then recurred on the modification of the original 
 bill, offered by Mr. Stevens as a substitute, which was not read, 
 but which Mr. Stevens had just before explained as follows : 
 
 Mr. Stevens — " I wish to state in regard to my amendment, that it is a 
 modification of the original hill. Those who are In favor of the original 
 have agreed upon this in lieu of it. We thought it better to adopt the 
 suggestion contained in the amendment of the gentleman from Ohio of 
 $150,000,000, retiring the $50,000,000 of demand notes (authorized last 
 July), and of making $150,000,000 the maximum to which they shall go. 
 That is about all the change there is, except that we have left out the foreign 
 loan clause, which is in the original ; and we have agreed to adopt an 
 amendment by which the holders of these notes may convert them either 
 into a twenty years' bond at six per cent., or five years' bonds at seven 
 per cent.', at their option." 
 
 This modification of the original bill had the concurrence of 
 the other half of the Committee of Ways and Means — Messrs. 
 Stevens, Spaulding, Hooper and Maynard, and was adopted by 
 the House without a division. 
 
 The bill, as amended, was ordered to be engrossed and read a 
 third time. The yeas and nays were ordered on the final passage 
 of the bill. The question was taken, and it was decided in the 
 affirmative — ^yeas 93, nays 59, as follows: 
 
 Yeas--Messrs. Aldrich, Alley, Arnold, Ashley, Babbitt, Gold- 
 
96 
 
 smith P. Bailey, Josepb Bailey, Baker, Beaman, Bingham, Fran- 
 cis P. Blair, Jacob Blair, Samuel S. Blair, Blake, Bufflnton, Burn- 
 ham, Campbell, Chamberlain, Clark, Colfax, Cutler, Davis, Delano, 
 Delaplaine, Duell, Dunn, Edgerton, Edwards, Ely, Fenton, Fes- 
 senden, Fisher, Franchot, Frank, Gooch, Granger, Gurley, 
 Haight, Hale, Hanchett, Harrison, Hickman, Hooper, Hutchins, 
 Julian, Kelley, Francis W. Kellogg, "WiUiam Kellogg, Killinger, 
 Lansing, Leary, Loomis, McKean, McKnight, MePherson, Mars- 
 ton, Ma3mard, Mitchell, Moorhead, Anson P. Morrill, Nugen, 
 Olin, Patton, Timothy G. Phelps, Pike, Price, Alexander H. 
 Rice, John H. Rice, Riddle, James S. Rollins, Sargent, Shanks, 
 Shellabarger, Sherman, Sloan, Sjjaulding, John B. Steele, Stevens, 
 Trimble, ■ Trowbridge, Upton, Van Horn, Van Valkenburgh, Van 
 Wyck, Verree, Wall, Wallace, Charles W. Walton, Whaley, 
 Albert S. White, Wilson, Windom and Worcester — 93. 
 
 Nays— Messrs. Ancona, Baxter, Biddle, George H. Brown, 
 Cobb, Frederick A. Conkling, Roscoe Conkling, Conway, Corn- 
 ing, Cox, Cravens, Crisfield, Diven, Dunlap, Eliot, English, 
 Goodwin, Grider, Harding, Holman, Horton, Johnson, Knapp, 
 Law, Lazear, Lovejoy, Mallory, May, Menzies, Justin S. Morrill, 
 Morris, Nixon, Noble, Norton, Odell, Pendleton, Perry, Pomeroy, 
 Porter, Richardson, Robinson, Edward H. Rollins, Sedgwick, 
 Sheffield, Shiel, William G. Steele, Stratton, Benjamin F. Thomas, 
 Francis Thomas, Train, Vallandigham, Voorhees, Wadsworth, E. 
 P. Walton, Ward, Weljster, Chilton A. White, Wickliffe and 
 Wright— 59. 
 
 Thus the legal tender act, after a protracted debate, and a most 
 determined opposition, by prominent and influential Rej)ublicans, 
 as well as Democrats, was passed through the House by a large 
 majority. 
 
 The following is a copy of the bill as it first passed the House, 
 on the 6th of February, 1862: 
 
 " An Act to authorize the issue of United Stales notes, and for the redemption or 
 funding thereof, and for fvmding the floating debt of the United States. 
 
 Section 1. Be it enacted by the Senate and House of Representatives 
 of the United States of America, in Congress assembled: That to meet the 
 necessities of the Treasury of the United States, and to provide a currency- 
 receivable for the public dues, the Secretary of the Treasury is hereby 
 authorized to Issue, on the credit of the United States, $150,000,000 of 
 United States notes, not bearing interest, payable to bearer at the 
 Treasury of the United States, at Washington or New York, and of such 
 denominations as he may deem expedient, not less than Ave dollars each. 
 Provided, however, that $50,000,000 of said notes shall be in lieu of the 
 
97 
 
 demand Treasury notes authorized to be Issued by the Act of July 17, 
 1861 ; which said demand notes shall be taken up as rapidly as practicable, 
 and the notes herein provided for substituted for them : And provided, 
 further, that the amount of the two kinds of notes together, shall, at no 
 time, exceed the sum of $150,000,000. And such notes, herein authorized, 
 shall be receivable in payment of all taxes, duties, imports, excise, debts 
 and demands of every kind due to the United States, and for all salaries, 
 debts and demands owing by the United States to individuals, corpora- 
 tions and associations within the United States, and shall also be lawful 
 money and a legal tender, in payment of all debts, public and private, 
 within the United States. And any holders of said United States notes, 
 depositing any sum not less than $50, or some multiple of $50, with the 
 Treasurer of the United States, or either of the Assistant Treasurers, shall 
 receive in exchange therefor duplicate certificates of deposit, one of which 
 may be transmitted to the Secretary of the Treasury, who shall thereupon 
 issue to the holder an equal amount of bonds of the United States, coupon 
 or registered, as may by said holder be desired, bearing interest at the 
 rate of six per centum per annum, payable semi-annually, at the Treasury 
 or Sub-Treasury of the United States, and redeemable at the pleasure of 
 the United States, after twenty years from the date thereof. Provided, 
 that the Secretary of the Treasury shall, upon presentation of said certifi- 
 cates of deposit, issue to the holder thereof, at his option, and instead of 
 the bonds already described, an equal amount of bonds of the United 
 States, coupon or registered, as may by said holder be desired, bearing 
 interest at the rate of seven per cent, per annum, payable semi-annually, 
 and redeemable at the pleasure of the United States, after five years from 
 the date thereof. And such United States notes shall be received the 
 same as coin, at their par value, in payments for any loans that may be 
 hereafter sold or negotiated by the Secretary of the Treasury, and may be 
 re-issued from time to time, as the exigencies of the public interests shall 
 require. There shall be printed on the back of the United States notes, 
 which may be issued under the provisions of this act, the following 
 words : ' The within is a legal tender in payment of all debts, public and 
 private, and is exchangeable for bonds of the United States, bearing six 
 per centum interest at twenty years, or in seven per cent, bonds at five 
 years.' 
 
 § 2. And be it further enacted, That to enable the Secretary of the 
 Treasury to fund the Treasury notes and floating debt of the United 
 States, he is hereby authorized to issue, on the credit of the United States, 
 coupon bonds, or registered bonds, to an amount not exceeding $500,000,- 
 000, and redeemable at the pleasure of the Government, after twenty 
 years from date, and bearing interest at the rate of six per centum per 
 annum, payable semi-annually ; and the bonds herein authorized shall be 
 of such denominations, not less than fifty dollars, as may be determined 
 upon by the Secretary of the Treasury ; and the Secretary of the Treasury 
 may dispose of such bonds at any time for lawful money of the United 
 States, or for any of the Treasury notes that have been, or may hereafter 
 be, issued under any former act of Congress, or for United States notes 
 that may be issued under the provisions of this act ; and all stocks, bonds, 
 and other securities of the United States, held by individuals, corpora- 
 tions, or associations, within the United States, shall be exempt from 
 taxation by any State or county. 
 
 § 3. And be it further enacted, That the United States notes and the 
 
98 
 
 coupon or registered bonds, authorized by this act, shall be in such forms 
 as the Secretary of the Treasury may direct, and shall bear the written or 
 engraved signatures of the Treasurer of the United States, and the Regis- 
 try of the Treasury, and also as evidence of lawful issue, the imprint of a 
 copy of the seal of the Treasury Department, which imprint shall be 
 made under the direction of the Secretary, after the said notes or bonds 
 shall be received from the engravers, and before they are issued ; or the 
 said notes and bonds shall be signed by the Treasurer of the United 
 States, or for the Treasurer by such persons as may be especially appointed 
 by the Secretary of the Treasury for that purpose, and shall be counter- 
 signed by the Register of the Treasury, or for the Register by such persons 
 as the Secretary of the Treasury may especially appoint for that purpose ; 
 and all the provisions of the act entitled "An act to authorize the issue of 
 Treasury notes," approved the 23d day of December, 1857, so far as they 
 can be applied to this act, and not inconsistent therewith, are hereby 
 revived and re-enacted ; and the sum of $300,000 is hereby appropriated, 
 out of any money in the Treasury not otherwise appropriated, to enable 
 the Secretary of the Treasury to carry this act into effect." 
 
 Two pencd sections (§ 4 and § 5) were adopted as part of this 
 
 bill, to guard against counterfeiting, but it is not important to 
 
 insert them here, as they do not affect the principles of the bill. 
 
 LETTER FROM GEOKGE DAWSON, ESQ., TO THE ALBANY EVENING 
 
 JOURNAL. 
 
 " Washington, February 6, 1862. 
 
 " This has been an exciting day in the House. A fierce battle has been 
 waged against the 'legal tender' Treasury notes. But, as I think, the 
 right has prevailed, and by a vote of 95 to 59 — a much stronger force than 
 was counted upon, the real argument was reduced to a very small com- 
 pass. All admitted the necessity of a resort to paper currency ; and the 
 question was whether that paper should be made as nearly par value as 
 possible, or subjected to the fluctuations and depreciations of an ordinary 
 irredeemable cuiTency. If made a legal tender, these notes could never 
 sink below the best bank paper. If not so made, they would very soon 
 cease to be available as a circulating medium. 
 
 Besides, if Treasury notes were to be used to pay the Government 
 creditors, why should not their creditors be required to take them ? Why 
 should the soldier be required to take what the sutler might refuse ? To 
 be sure, the now legal tender bill left it optional with the soldier, whether 
 he should take the notes or not; but if he availed himself of the 'option,' 
 what had the Government to give him ? Practically, it would be Treasury 
 notes or nothing, as, during a general Bank suspension, it is irredeemable 
 bank bills ' or no pay.' 
 
 It was not strange that members of the same political family, differed 
 on a question of really doubtful expediency. And but for the necessities 
 of Government, I doubt whether the ' legal tender ' principle would have 
 received a dozen votes in the House. It is a new financial principle, and 
 its workings may result in some, if not all the evils predicted from it. 
 Kevertheless, as Treasury Kotes had to be resorted to, the common sense 
 of the House, as well as the common sense of the people, detei-mined that 
 they should be made as near the practical value of gold as possible. Mr. 
 Spaulding, of Erie, has had to assume the laboring oar in this financial 
 
99 
 
 expedient. He had but a bare majority of liis Committee witli him at the 
 outset; and, when tiic Secretary of the Treasury hesitated, as he did for 
 several days, the Committee became equally divided. And yet, the 
 measure carried a large majority of the House with it— a fact as gratifying 
 to Mr. S. as it is complimentary to his financial acumen. 
 
 The country breathes freer! The legal tender bill has passed the 
 House, and national bankruptcy is averted. The grateful thanks of all 
 loyal men are due to Mr. Spaulding and the representatives who supported 
 the measure, for this timely effort in behalf of the public credit. Tiie 
 relief comes not a moment too soon. Xow let the Senate do its duty 
 promptly, and we shall be clear ' of the brealvcrs.' " 
 
 PKOCEEDINGS IN THE SENATE ON THE BILL. 
 
 The legal tender bill was sent to the Senate on the 7th inst. , 
 and was, on motion of Mr. Fessenden, read twice by its title, and 
 referred to the Finance Committee. 
 
 The Treasury was nearly empty, and the Secretary was unable 
 to negotiate any more of the loan authorized by the act passed at 
 the extra session in July, at the rates fixed by tlae law. The act 
 limited him to par in disposing of any of the bonds or notes 
 authorized by that act. The six per cent, twenty year bonds 
 were then selling at about 88, and the T 3-10 notes were below 
 par. In this emergency. Secretary Chase sent to Mr. Fessenden 
 a letter, urging the immediate passage of a bill giving temporary 
 relief, while the legal tender biU was being perfected in the 
 Senate. Mr. Fessenden obtained unanimous consent to consider 
 the subject forthwith. The following proceedings were had: 
 
 Mr. Fessenden — "I have just received a letter from the Treasury 
 Department, which I will read : 
 
 " Treasuey Department, Feb. 7, 1862. 
 "Sir: The condition of the Treasury req^uires immediate legislative 
 provision. What you said this morning leads me to think that the bill 
 which passed the House yesterday, will hardly be acted upon by the 
 Senate this week. Until that bill shall receive the final action of Con- 
 gress, it seems advisable to extend the provisions of the former acts, so as 
 to allow the issue of at least $10,000,000 in United States notes, in addition 
 to the $50,000,000 heretofore authorized. I transmit a bill framed with that 
 object, which will, I trust, meet your approval and that of Congress. 
 Immediate action on it is exceedingly desirable. 
 
 Tours, truly, S. P. CHASE." 
 
 "Hon. William P. Fessenden, 
 
 Chairman Committee Finance, Senate." 
 
 The bill is a very short one, and I will read it : 
 "^ BiM to awthorize an addiiional issue of United Slates Notes. 
 
 Be it enacted, etc., That the Secretary of the Treasury, in addition to the 
 $50,000,000 of notes, payable on demand, of denominations not less than 
 five dollars, heretofore authorized by the acts of July 17, and August 5, 
 
100 
 
 1861, be, and he is hereby, authorized to issue lilie notes, and for like 
 purposes, to the amount of $10,000,000, which said notes shall be deemed 
 part of the loan of $250,000,000 authorized by said acts." 
 
 "I will state that this has just been received by me. It has not been 
 submitted to the Finance Committee, but the emergency is known to all. 
 I'he bill is simple and easily understood, and I presume there will be no 
 objection to passing it now. At all events, I ask the imanimous consent 
 of the Senate to enable me to introduce the bill without notice, and to 
 have it considered now." 
 
 By unanimous consent, leave was granted to introduce the bill, 
 (S. No. 190,) to authorize an additional issue of United States 
 notes; and it was read three times and passed. This bill was 
 sent to the House on the lOtli inst. , and on being read was imme- 
 diately passed, without opposition. 
 
 On the 10th inst. Mr. Fessenden reported the bill (House Bill 
 No. 240) from the Finance Committee, with amendments. The 
 important amendments thus reported were : 
 
 First — That the legal tender notes should be receivable for all claims 
 and demands against the United States of every kind whatsoever, "except 
 for interest on bonds and notes, which sTiaM be paid in coin.'''' 
 
 Second — That the Secretary might dispose of United States bonds ''(X< 
 the market value thereof, for coin or Treasury notes.'''' 
 
 Third — A new section, No. 4, authorizing deposits in the sub-Treasuries 
 at five per cent., for not less than thirty days, to the amount of $25,000,- 
 000, for which certificates of deposit might be issued. 
 
 Fourth — An additional section, No. 5, "that all duties on imported 
 goods and proceeds of the sale of public lands," etc., should be set apart 
 to pay coin interest on the debt of the United States ; and one per cent, 
 for a sinking fund, etc. 
 
 On the 12th inst. Mr. Fessenden, Chairman of the Finance 
 Committee, opened the debate on the bill in a lengthy speech. 
 {Cong. Globe, p. '762.) 
 
 SPEECH OF ME. FESSENDEN. 
 
 "I propose, Mr. President, before any question is taken on any one of 
 the amendments, to make some remarks upon this bill. They may be 
 very dull and dry, for it is rather a dry subject, but still it becomes my 
 duty, as the organ of the Committee on Finance, to explain the provisions 
 of this bUl. 
 
 The honorable Secretary of the Treasury, at the beginning of the ses- 
 sion, recommended two measures — taxalion and a hank. Both of these 
 subjects require, at this stage of the country, and under existing circum- 
 stances, peculiar and long consideration. The opinion of the country has 
 tended towards what is called indirect taxation, taxation upon different 
 American and other products, and different kinds of property. Sir, that 
 requires great time. I have examined it sufficiently to be aware that it 
 is not the labors of a day, or a week, or a month. It is substantially new 
 in this country, and it requires much time, much study, and much inform- 
 
101 
 
 ation to acquire all the knowleclge of the various products which would 
 be likely to produce a revenue, and upon which a tax might, with pro- 
 priety, be laid. So, too, with reference to the scheme suggested by the 
 honorable Secretary of the Treasury with regard to a bank. And yet, 
 notwithstanding all that, a bill of that description has been reported. 
 With regard to the particular bill now before the Senate, we all know 
 that it was resorted to as a temporary ]neasure, not in the beginning, but 
 in consequence of the necessities of the Treasury, arising from a greater 
 expenditure than the Secretary could have imagined, and arising from the 
 nesessary delay with reference to other measures. Can it be said that a 
 measure like the one now pending before the Senate and the country is a 
 measure of a day or an hour ? Why, sir, what does it propose ? It pro- 
 poses something utterly unknown in this Government from its foundation ; 
 a resort to a measure of doubtful constitutionality, to say the least of it, 
 which has always been denounced as ruinous to the credit of any Govern- 
 ment which has recourse to it ; a measure, too, about which opinions in 
 the community are divided as perhaps they neve? have been divided upon 
 any other subject; a measure which, whea it has been tried by other 
 countries, as it often has been, has always proved a disastrous failure. 
 Sir, it would hardly be expected that a measure of this description, 
 brought into the House of Representatives and the Senate for the first 
 time in the history of the country, involving questions of such infinite 
 importance, not only with reference to to-day, but with reference to the 
 future, to all time, because it is setting a precedent which may be fol- 
 lowed, should be taken up and passed at once, as we pass appropriation 
 bills. It needed long, careful and vigorous discussion. It has had it in the 
 other 'branch of Congress. I have read that discussion from beginning to 
 end. It has been able and clear upon both sides of the question. The subject 
 deserved that discussion ; and the House of Representatives would have 
 been faulty if it had suffered a measure of this kind to be passed without 
 its having undergone a discussion which should not only enlighten the 
 House, but enlighten the country upon all the aspects of it. Shall Con- 
 gress be considered in fault because they have not before acted, or did not 
 act heartily, upon a measure of that description ? I think not, sir. The 
 time has been well spent, and although I regret as much as any man can 
 regret that we have not been able to act more promptly, I see no fault to 
 be imputed anywhere ; not in the other House of Congress, and certainly 
 not in this ; for it has reached this body as soon as it could possibly reach 
 it, when you consider the nature of the questions that were to be discussed 
 by the Committee to whom it was referred. 
 
 I have already said that we have never attempted to resort to such a 
 measure before. We have had a war with England since our Government 
 was formed; and if I am rightly informed, at that day, the stocks of the 
 Government went down to sixty per cent, and pay was taken for them in 
 such currency as could be received, itself depreciated ; and yet it did not 
 occur as a serious question to the men of that day to put forth, under the 
 Constitution, irredeemable paper made a legal tender for the payment of 
 debts. To be sure, the country then was poor; it is now rich, compara- 
 tively. The country had not then the resources that we have; and 
 perhaps it would have had the more excuse for adopting such a course. I 
 do not urge this as an argument against it at the present time, but only as 
 showing the nature of the measure itself, to which it is now proposed 
 to have recourse, in order to place /the Government in a better position ; 
 
102 
 
 especially, sir, when you observe that everybody who has spoken on this 
 question, I believe without an exception — there may have been one or 
 two — ^but all the opinions that I have heard expressed, agree in this : that 
 only with extreme reluctance, only with fear and trembling as to the 
 consequences, can we have recourse to a measure like this, of making our 
 
 paper a legal tender in the payment of debts. 
 
 *###*# * >f * jftt**f#« 
 
 The Committee on Finance have reported several very important 
 amendments. The first amendment, which the Senate will notice is made 
 in the first section, is that the interest on the public debt shall be paid in 
 coin. The Senate will observe that without this, under the provisions of 
 the House bill, a creditor of the Government, holding Government paper, 
 notes, or bonds, would be compelled to take his interest in notes or bonds, 
 as the case might be, when the time for the payment of the interest came 
 round. He would have no choice. The tender of a note for the interest 
 that might be due on his bonds, however large or small, would be equiva- 
 lent in its eflfect to the tender of coin. According to our amendment, the 
 Government will be obliged to provide itself with coin for the payment of 
 the interest. The object of this provision is not only to do justice in this 
 regard, but also to make it raise and support the credit of the Government 
 obligations ; and it will be perceived how very important it is to that end. 
 The Secretary, by the provision which I have referred to, is obliged to 
 provide himself with coin for that purpose, and he is obliged to do it at 
 whatever sacrifice may be necessary, in order to accomplish that purpose. 
 This certainly will have one eflect; it proves the good faith of the Govern- 
 ment; that it means to do all it can; that it means to spare no effort 
 at whatever cost, to give to those who take the Government paper, what 
 they wish to receive, something besides Government paper, and thus run- 
 ning round in a circle of paper, for the interest upon their debts. 
 
 But, sir, it was not enough, perhaps, to show the good faith of the Gov- 
 ernment in this particular. The Committee have recommended that we 
 go further, and that we provide a specific fund, in order to accomplish 
 that purpose, and set it aside for that object. It was proposed in the 
 Committee — and it struck me favorably at first— to se^ aside, specifically, 
 the public duties, by providing that the duties on imports should be paid 
 in coin ; but on consideration, it was deemed by the Committee that that 
 would be hardly fair. The result would be to make a distinction between 
 different classes of the community, and to impose a very heavy burden 
 upon those who are engaged in trade, and who would be called upon to 
 pay duties. If we provide a paper currency, the natural and inevitable 
 effect of it is, that coin increases in price. The consequence would be, 
 unquestionably, that those obliged to pay duties on imports might be 
 compelled to make a severe sacrifice, in order to raise the coin to pay the 
 duties ; and. In the next place, the general effect would be to, in effect, 
 inciease the duties provided by our tariff. Necessarily, if coin appre- 
 ciates, if it becomes worth more than the ordinary currency, and duties 
 are to be paid in coin, the effect of such a provision would be to increase 
 the duties, which are already very high, and in some oases almost prohib- 
 itory. The Committee, therefore, thought that, under the circumstances, 
 that would not be wise; although it will be perceived that, not having 
 done so, the converse of the proposition may be true : that the effect, if we 
 inflate the currency by paper, and allow the duties to be paid in paper, is 
 necessarily to diminish the duties on imports, and thus, perhaps, to lead 
 to a greater importation. 
 
103 
 
 Having rejected this, it becomes necessary to make some otlier pro- 
 vision; and accordingly provision was made, and will be found in the 
 fifth section, by setting aside the amount of duties received, the amount 
 received from the sales of the public lands, and the amount that may be 
 received from the confiscation of the property of the rebels, to form a 
 fund. The Senate will consider whether all these provisions are necessary 
 and wise, to create a fund which shall be devoted, in the first place, to 
 pay the interest upon the coin and on the notes ; and, in the second place, 
 to create a sinking fund, which, in the end, might be able to pay the 
 whole debt, and would in a certain course of time. 
 
 This, undoubtedly, will be a very sufficient security ; but, sir, the Com- 
 mittee have gone further. In order that the Secretary may be sure, and 
 that the public creditors may feel safe with reference to it, they give to the 
 Secretary the power to sell the hands of the Oovernmerti at any time that it 
 may he necessary, at the ma/rJcet price, in order to raise coin. That can 
 always he done. The sacrifice may he great, or it may not; it depends upon 
 circumstances ; but at any rate that wiU bring coin. These two provis- 
 ions, taken together, have the efifect necessary to create an entire 
 confidence in the minds of the purchasers of the public obligations, that 
 the interest will be surely paid at the time it is due, and paid in coin ; and 
 having done that, the result is obvious to the Committee that our securities 
 must necessarOy be placed upon a more stable foundation, and be of very 
 much greater value in the market, because what the holder of public 
 securities wants, is to be sure that his interest will be paid, especially if it 
 is on long time. But, sir, the power to sell the obligations of the Govern- 
 ment at the market price is not confined to the interest. The Senate will 
 observe that it is made general ; that instead of being confined and obliged 
 to sell the obligations of the Government at par, the Secretary of the 
 Treasury is authorized to sell them at any time at the marhet price; and 
 instead of being confined to sell them for coin, merely for the purpose of 
 raising money to pay the interest on the public debt, he is permitted to 
 sell any amount at any time that it may be necessary, for what he can get. 
 This is a bold, strong measure, and it may strike the Senate with some 
 suriDrise, or, at any rate, it may lead them to deliberate upon the subject. 
 »*■¥** *##»*##*#^* 
 
 But the Committee thought, in giving this enlarged power to the Secre- 
 tary at this time, that it was bound — ^if this legal tender was to be resorted 
 to, especially if the bill of the House as it stood should be adopted by the 
 Senate, and should become a law— that an assurance should be given to 
 the country that it was not to be resorted to as a policy ; that it was what 
 it professed to be, hut a temporary measure. The opinions of the Secretary 
 of the Treasury are perfectly well known. He has declared that, in his 
 judgment, it is, and ought to be, but a temporary measure, not to be 
 resorted to as a policy, but simply on this single occasion, because the 
 country is driven to the necessity of resorting to it. I have not heard 
 anybody express a contrary opinion, or, at least, any man who has spoken 
 on the subject in Congress. The Chairman of the Committee of Ways 
 and Means, in advocating the measure, declared that it was not contem- 
 plated, and he did not believe it would be necessary to issue more than 
 the $150,000,000 of Treasury notes made a legal tender, provided by this 
 bill. All the gentlemen who have written on the subject, except some 
 wild speculators in currency, have declared that as a policy it would be 
 ruinous to any people ; and it has been defended, as I have stated, simply 
 
104 
 
 and solely upon the ground that U is to he a single measure, standing by 
 itself, and not to he Treated. 
 
 Section four of the bill, as reported by the Committee, contains a pro- 
 vision to which I will call the attention of the Senate. It provides for 
 certain deposit certificates. 
 
 This provision was very much desired by the banks in all the cities. It 
 was thought that it would afford them facilities that would give greater 
 currency to the notes, that it would enable them to deal with them better; 
 and therefore we have offered a provision, that for a period of not less than 
 thirty days, any person or institution may deposit their Treasury notes, 
 in sums of not less than $500, at the Sub-Treasury, and receive an interest 
 of five per cent. 
 
 Mr. President, I wish now to say something upon the main question of 
 the bill, which I have avoided touching, except incidentally ; and that is 
 the clause making these notes a legal tender; for, after all, that is the great 
 question now submitted to the Senate. The Senate wiU observe that the 
 Committee make no recommendation on that subject, except such as may 
 be inferred from the fact that they report it back, retaining the clause, and 
 so far an inference might be drawn that the Committee were in favor 
 of it. Under the circumstances of the case in the Committee, (of which, 
 perhaps, I may speak with propriety as the Committee as a whole, had 
 no opinion upon the subject, their opinions being so divided,) I deem 
 myself at liberty, as I should, perhaps, be under any circumstances, if 
 need be, and if my opinions lead me that way, to say what I have to say 
 in opposition to that clause. I do not propose to do this except incident- 
 ally. I propose rather to state the argument as I understand it, on both 
 sides, in relation to the matter as briefly as I can, without attempting to 
 go into the argument of the subject myself. 
 
 The ground upon which this clause making these notes a legal tender is 
 put, I have already stated. It is put upon the ground of absolute, over- 
 ivhelming necessity; that the Government has now arrived at that point 
 when it must have funds, and those funds are not to be obtained from 
 ordinary sources, or from any of the expedients to which we have hereto- 
 fore had resource, and therefore, this new, anomalous, and remarkable 
 provision must be resorted to in order to enable the Government to pay 
 off the debt that it now owes, and afford circulation which will be availa- 
 ble for other purposes. Tlie question then is, does the necessity exist? 
 That is a question which I propose, in some degree to discuss, because 
 I admit fully and decidedly that the Government, or the country, rather, 
 is to be sustained in its present undertaking, and that we are bound to 
 obtain the means to effect that object. If the necessity exists, I have no 
 hesitation upon the subject, and shall have none. If there is nothing left 
 for us to do but that, and that will effect the object, I am perfectly willing 
 to do that. The question, however, is whether it is necessary, whether 
 we have arrived at that stage, and whether something can or cannot be 
 done in order to accomplish the object. 
 
 Sir, I do not hesitate to say here, that I would advocate the use of the strong 
 arm of the Government to any extent in order to accomplish the purpose in 
 which we are engaged. I would take the money of any citizen against his wUl to 
 sustain the Oovemment, if nothing else was left, and hid him wait until the Gov- 
 ernment could pay him. It is a contribution which every man is boicnd to make 
 under the circumstances. We can take all the property of any citizen. That 
 is what is called a forced contribution. Thank God, we have not arrived 
 
105 
 
 at that ; but I am not certain that it would not be a more manly course to 
 meet the matter straight in the face, and if we are to compel a man to part 
 with his property, to do it without offering him what may appear to be 
 security, and yet I am not certain that that would not be the more manly 
 and praiseworthy course to pursue. Then, sir, as to this question of 
 necessity, I wish to ask the gentlemen to consider upon what public 
 credit is founded ? According to my reading and my view of the case, 
 it has but one foundation, and that is, the confidence of the people in 
 the ability and integrity of the Government, and its power and its will 
 to pay. Public credit has no other foundation that I am aware of than 
 that. If that is so, then the question arises, what is the ability and what 
 is the integrity of this Government, and what is its will to pay ? Are they 
 such as of themselves, under proper legislation,will enable the Government 
 to raise means in the ordinary way?" 
 
 Mr, Fessenden went on to show that the country was ricli in 
 means, land fertile, people industrious, agricultural and manufac- 
 tured products in 'great abundance, and that under any circum- 
 stances we must be entitled to credit for our ability to pay, and 
 that no person placing himself in the position of a money-lender 
 could hesitate to say that we were entitled to all the credit of a 
 great, productive, strong and healthful people. He said our 
 credit had been somewhat injured by the conduct of the war, and 
 yet he thought unreasonably. He saw no reason for loss of credit 
 by the conduct of the war. 
 
 He then proceeded : 
 
 " The question, after all, returns: is this measure absolutely indispen- 
 sable to procure means ? If so, as I said before, necessity knows no law. 
 What are the objections to it ? I will state them as briefly as I can. The 
 first is a negative objection. A measure of this kind certainly cannot 
 increase confidence in the ability or the integrity of the country. It can 
 make us no better than we ai-e to-day, so far as this foundation of all 
 public credit is concerned. 
 
 Next, in my judgment, it is a confession of bankruptcy. We begin and 
 go out to the country with the declaration that we are unable to pay or 
 borrow, at the present time, and such a confession is not calculated to 
 increase our credit. 
 
 Again, say what you will, nobody can deny that it is bad faith. If it 
 be necessary for the salvation of the Government, all considerations of 
 this kind must yield; but, to make the best of it, it is bad faith, and 
 encourages bad morality, both in public and private. Going to the extent 
 that it does, to say that notes thus issued shall be receivable in payment 
 of all private obligations, however contracted, is in its very essence a 
 wrong, for it compels one man to take from his neighbor, in payment of 
 a debt, that which he would not othervvise receive or be obliged to receive, 
 and what is probably not full payment. 
 
 Again, it encourages bad morals, because, if the currency falls, (as it is 
 supposed it must, else why defend it by a legal enactment ?) what is the 
 result ? It is, that every man who desires to pay off his debts at a dis- 
 count, no matter what the circumstances are, is able to avail himself of it 
 
106 
 
 against the will of his neighbor, who honestly contracted to receive . 
 something better. 
 
 Again, sir, necessarily as a result, in my judgment, it must inflict a stain 
 upon the national honor. We owe debts abroad yet. Money has been 
 loaned to this country, and to the people of this country, in good faith. 
 Stocks of our private corporations, stocljs of our States and of our cities, 
 are held and owned abroad. We declare that for the interest on all this 
 debt, and the principal, if due, these notes, made a legal tender by act of 
 Congress, at whatever discount tliey shall stand, shall be receivable. 
 Payment must be enforced, if at all, in the courts of this country, and 
 the courts of this country ai'e bound to recognize the law that we pass. 
 That result, then, is Inevitable. 
 
 Again, sir, it necessarily changes the values of all property. It is very 
 well known that all over the world gold and silver are recognized as 
 monfty, as currency ; they are the measures of value. We change it here. 
 What is the result ? Inflation, subsequent depression, all the evils which 
 follow from an inflated currency. They* cannot be avoided; they are 
 inevitable ; the consequence is admitted. Although the notes, to be sure, 
 pass precisely at par, gold appreciates and property appreciates. 
 
 Again, sir, a stronger objection than all that I have to this proposition— 
 I am stating the objectioids which everybody must entertain, because I 
 suppose these facts are palpable — is, that the loss is to fall most heavily 
 upon the poor, by reason of the inflation." 
 
 Mr. Fessenden continued his argument at great length, urging 
 taxation, good faith and economy, as the best means of maintain- 
 ing the credit of the Government. Said he would not argue the 
 constitutional question, proposing to leave his own mind unin- 
 structed on this question, and if need be, leave that question to 
 be settled by the courts. That this was a great crisis truly, but 
 he believed we would be as well able to meet the difficulties with- 
 out the legal tender clause as with it. And concluded as follows : 
 
 "We always meet, and must always expect to meet, in a Government 
 like ours especially, difficulties such as attend us now — perhaps not so 
 great, but greater or less — in the course of time. No nation ever escaped 
 them, and no nation can hope to escape them. I would not have perfect 
 quiet always, in a republic especially. It would be a bad sign if it were 
 so. It is contrary to the very nature of our Government that it should 
 exist. You never find quiet except under a tyranny. Only in the dead 
 sea of despotism is there a perfect calm. It cannot be looked for in the 
 wide ocean of liberty. Storms arise inevitably, and the waves roll and 
 dash turbulently, but bright skies again cheer us, the agitated waters sub- 
 side, and their broad bosom is traversed by thousands of tall ships laden 
 richly with hope for the nations of the world." 
 
 JUDGE COLLAMER's SPEECH. 
 
 Mr. CoLLAJiER, of Vermont, made an elaborate speech against 
 the legal tender clause in the bill : 
 
 "He argued that it was unconstitutional, and that even if it was a 
 necessity, he could not vote for the measure. To him, the oath he had 
 
107 
 
 taken to support the Constitution, was recorded in Heaven as well as 
 upon earth, and there is no necessity that, in his estimation, would justify 
 him in the breach oi it. He admitted that when the Government borrows 
 money, it must give some evidence of the debt, whether by the name 
 of Treasury note or some other name, is immaterial, but denied the power 
 of Congress to make them a tender in payment of debts. He quoted 
 largely from Story on the Constitution, to show the illegality as well 
 as inexpediency of this measure. He said it would be aiding and assisting 
 men who owed debts, to pay those debts with a depreciated paper, at the 
 cost and expense of the creditor. His honest opinion was that the Consti- 
 tution never intended to invest Congress with any such power. He 
 referred to the debates in the convention that formed the Constitution, to 
 show that the men of that period always entertained the opinion that the 
 'United States could have nothing else a tender but coin.' While they 
 lived there never was such a thing thought of as attempting to make the 
 evidences of the debt of the Government a legal tender, let their form be 
 what they might. He argued that there was an express power ' to bor- 
 row money on the credit of the United States.' 
 
 That where there is an express power to do a thing, there can be no 
 implied power to do the same thing. There were two modes of replenish- 
 ing the Treasury. One was by taxation, and the other to borrow money. 
 To borrow money there must be a lender and a borrower, and both should 
 act voluntarily, and not compel the lender to part with his money without 
 an inducement. The operation of tl))is bill was not anything like as hon- 
 orable or honest as a forced loan. Such paper always depreciates, and 
 generally fails altogether, and is never paid." 
 
 He urged taxation, and the issue of Treasury notes receivable 
 
 for public dues, and closed as follows : 
 
 "Tou have nothing to do but to exercise the powers you possess in com- 
 manding the resources that you can command, and you can have money 
 and credit enough. I think some little courage becomes us, too, in per- 
 forming our duty. I have no doubt that this country is able to sustain 
 itself in this strife, pecuniarily as well as physically. I, for one, desire to 
 do that; but I do not want to do it by saying that now, because the 
 necessity requires money, I will go and steal it, or authorize anybody 
 else to steal it. I will not say to a man : ' Here is my note for so much, 
 and if I do not pay it, you must steal the amount from the first man you 
 come to, and give him this note in payment.' I will do nothing of that 
 kind. I have faith in the Government. I no way despair of the success 
 of this Government. It cannot fail. Its power, its resources, its members 
 are such that it is not possible it should fail. If we are not competent to 
 exercise the proper moral courage to do our duties and come up to what 
 is wanted, I hope we shall give place to men who are." 
 
 ME. HOWE's speech. 
 
 Mr. Howe, of Wisconsin, made a lengthy speech in favor of 
 the bill, which will be found in the Appendix to the Cong. Globe, 
 p. 51-2-3. 
 
 "Mr. Pbesident— Hitherto the effort of the Government has been to 
 boiTOW the immense sums demanded for the war in coin. It is clear to 
 my mind that this effort should be abandoned. We are excluded from 
 borrowing in foreign markets for the present. It suits both the financial 
 
I'OS 
 
 and political purposes of other nations, at this time, to discredit our 
 ability. Not until we have demonstrated that, in the devotion of our own 
 people, the Government has resources equal to its utmost needs, can we 
 command the confidence of the gold-mongers of Europe? To borrow of 
 those communities, in their present temper, would subject us to such dis- 
 counts now as would neither comport with our interests or our honor, 
 and would subject us hereafter to heavy annual expOrtations of specie for 
 the payment of interest. 
 
 To continue borrowing of our own banks, and borrowing coin, is impos- 
 sible. They have not the coin to lend. In their efforts to lend to the Govern- 
 ment they have already been forced to suspend the payment of specie upon 
 their own notes. The entire sum of specie in all the banks in the United 
 States, in May last, was only $99,751,627; of that sum $27,125,000 was in 
 the vaults of banks within the seceded States, and not just now available 
 for the purposes of this Government. Thus the specie capital, which the 
 banks of the loyal States could place at the disposal of the Government, 
 was but Mle more than seventy-two millions of dollars. That sum wiU not 
 defray the expenses of the Oovernment for fifty days. The Government may 
 be able to borrow of the banks, but the Government cannot borrow specie 
 of the banks. If it borrows anything from them it must borrow, not 
 their money, but their promises to pay money. Nothing is more certain 
 than that, whatever our wishes may be, it is impossible to command the 
 revenues for this war in coin. We must I'ely mainly upon a paper cir- 
 cidation; and there is another thing equally certain, which is, that that 
 paper, whoever issues it, mu£t he irredeemable. All paper cuixencies have 
 been, and ever will be, irredeemable. It is a pleasant fiction to call them 
 redeemable ; it is an agreeable fancy to think them so. I would not dispel 
 that fancy, I would not expose that fiction, only that the great emergency 
 which is upon us seems to me to render it more than usually proper that 
 the nation should begin to speak truth to itself; to have done with shams, 
 and to deal with realities. 
 
 To talk of borrowing of your banks the money to support your army 
 and your navy, is as idle as for England to talk of borrowing from her 
 national bank the money to pay her national debt. There is but one fund 
 adequate to supply the national finances, and that is, the property of the 
 nation. There is but one guarantee upon which the national credit can 
 securely rest, and that is the national faith. In the discharge of that duty 
 Congress is clothed with unrestricted power to raise and support armies, 
 to provide and maintain navies. Congress is also clothed with power 'to 
 make all laws which shall be necessary and proper for carrying into exe- 
 cution the foregoing powers, and all other powers vested by this Constitu- 
 tion in the Government of the United States.' 
 
 To preserve for these eleven misguided States a republican form of 
 government, we have raised such armies and provided such navies as this 
 continent never before saw— such as the world has rarely seen. I deem 
 those armies and navies ' necessary and proper ' for the occasion. To sup- 
 port those armies and maintain those navies I deem the measure before, the 
 Senate 'necessary and proper.' 
 
 Those who deny the constitutional authority to pass this bill must deny 
 its necessity or its propriety. Those who deny its necessity or its pro- 
 priety ought to show us some plan for avoiding it, some measure adequate 
 to the emergency, and moi'c proper than the one proposed by this bill. 
 
109 
 
 Two months have elapsed since the policy of this bill has been discussed, 
 and no one of its opponents has yet produced a substitute. The total 
 neglect to offer a substitute is prima facie evidence of tlie necessity for 
 this. But it is not the only evidence of that necessity. It is evident 
 that no substitute can be provided, except it be taxation or direct loans. 
 
 I have already said that taxation is inadequate to the supply demanded 
 for this terrible occasion. No nation of modern times has been able to 
 provide from taxes alone, the immense sums we are called upon to 
 expend. I will presently show that direct loans are quite as impractica- 
 ble as taxation. 
 
 The Senator from Ohio [Mr. Sherman,] proposes to amend this bill, so 
 as to authorize the Secretary of the Treasury to sell the public stocks for 
 whatever he may be offered for them; to go into the marlcet with the 
 national credit, and to sell it for whatever the crippled capital of the 
 country chooses to offer for it, to fling the financial character of the 
 Republic, as a bone, to be quarreled and growled over by the bulls and 
 bears of the stocls; market. To that amendment I am opposed. If you 
 notify the capital of the country that you are prepared to pay for money, 
 whatever it is pleased to exact, it will be hoarded to wait the extremity 
 of your distress. No man likes to sell for less than he buys. No man 
 likes to buy for more tlian his neighbors. And if we advertise to the 
 world that, like any other spendthrift, we are prepared to pay for money 
 according to our necessities for it, no man will purchase our bonds at 
 ninety cents for fear we shall presently sell at seventy-five ; and if we 
 offer them at seventy-five per cent., we give the best of assurances that 
 we will soon sell at fifty. 
 
 Sir, if one of your soldiers shrinks from duty, and deserts his country's 
 cause for fear of losing his life, he is called a coward, and he is ignomin- 
 iously dismissed from his company, or shot in its presence. By what 
 fitting term, then, shall we designate him who deserts his country in its 
 greatest need, for fear of losing his money ? By what penalties should he 
 be visited ? 
 
 Money 'and men alone do not constitute the wealth of a nation. The 
 genius, the generosity, the courage, the intellect, and the patriotism of 
 the people are all national resources. In an emergency like this, the 
 Government should not draw upon one fund alone, but every fund should 
 respond alike. Surely avarice and cowardice should not alone be exempt 
 from the common burdens." 
 
 Mr. Fessenden moved to amend the bill so that the six per 
 cent. Iponds should be ^'redeemable in five years, and payable tiventy 
 years from date." 
 
 MR. chandler's speech. 
 
 Mr. Chandler, of Michigan, spoke on the amendmennt to 
 
 make the bonds redeemable in five years. " 
 
 Mr. Chandler-^" I am in favor of the amendment of the Senator from 
 Maine, for the reason that I believe we need not borrow money at long 
 dates at a high rate of interest. Still, I object to the Senator's hypothesis 
 that this war may last one or two years. There has not been a day since 
 
no 
 
 the 1st day of November, when we could not have closed the war in sixty 
 days, with our forces then in the field, and from this day forth we can 
 close the war in sixty days, by an advance of our armies ; and I believe 
 that the time has now arrived when we will advance our armies, and 
 when the war will be brought to a close within sixty dm/sfrom this date. I am 
 therefore, in favor of restricting the bonds, and giving the Secretary of 
 the Treasury the right to redeem them within five years, and I would 
 even make the time shorter than that, and say "within three years." 
 The time has arrived when this rebellion is within our grasp. The time 
 has arrived when the order, "forward," will close this rebellion. The 
 obstacles are small. The objects are great. "We can remove the only 
 obstacle that stands in our way, and we can close this rebellion before the 
 1st day of May next, and I believe, I believe solemnly, that we shall do it. 
 We have but one obstacle, and that obstacle is so small that we can 
 remove it to-morrow, if Congress, if the Senate say so. It is a very small 
 obstacle, yet it has stood in our way for four months. 
 
 I hope that the amendment of the Senator from Maine will prevail ; and 
 I would prefer to reduce the time which he has fixed, from five years to 
 three years. I would not pay seven per cent., nor even six per cent., 
 more than three years. Our five per cent, bonds will be worth more than 
 par in three years from this date. I linow that the money market is the 
 touchstone of the national credit; but I know, at the same time, that the 
 United States five per cent, would be worth more than par to-day, if the 
 country and Congress knew our present position. One obstacle stands in 
 ow way, and that is a very small one. 
 
 I hope the amendment will prevail, and that we shall reduce the time at 
 least to five years. I should prefer its reduction to three years. This war 
 is nearly ended. A single order, "forward," to-morrow, and we have the 
 man to give the order in the Secretary of War, and the war is ended." 
 
 The amendment was agreed to. 
 
 On the 13th inst. Mr. CoUamer moved to strike out the legal 
 tender clause in the bill, and on this motion Mr. Wilson obtained 
 the floor. 
 
 Mr. Wilson, of Massachusetts, spoke as follows : 
 
 "Mr. Pkesident— This proposition is a very simple and plain one, and 
 certainly very easy of comprehension; but, it seems to me, the fate of the 
 measure itself is involved in the decision. If the amendment proposed 
 by the Senator from Vermont is accepted, I shall vote against the whole 
 biU under any and all circumstances, for I conceive that it would be 
 unjust to issue a currency of $150,00,000 of Government paper, and impose 
 it upon all persons in the employ of the Government, upon our soldiers in 
 the field, and upon those who have made contracts to supply the armies 
 of the Republic, and to do nothing to protect the credit of that currency 
 when in their hands, imposed upon them by our necessities. I should 
 consider such a measure as that unjust, wickedly unjust; and I could not, 
 and I would not, under any circumstances, be guilty of giving a vote of 
 that character. If that amendment should be adopted, I hope every Sen- 
 ator in favor of the legal tender clause will vote against the bill and defeat 
 it if possible. I think we owe it to the character of the Senate, and the 
 character of the country. 
 
Ill 
 
 Passing by the question of constitutional powers, and coming to it 
 simply as a practical question, it is a contest between brokers, and jobbers, 
 and money-changers on the one side, and the people of the United States 
 on the other. I venture to express the opinion that ninety-nine of every 
 hundred of the loyal people of the United States are for this legal tender 
 clause. I do not believe that there are one thousand persons in the State 
 I represent who are not in favor of it. The entire business community, 
 with hardly a solitary exception, men who have trusted out of the country 
 in commercial transactions their tens and hundreds of millions, are for 
 the bill with this legal tender clause. Yes, sir, the people in sentiment 
 approach unanimity upon the question. What is true of Massachusetts 
 is, in my judgment, true to a considerable extent of New England, and 
 true to some extent of the Central States and the West. I believe that no 
 measure that can be passed by the Congress of the United States, unless 
 it be a bill to raise revenue to support the credit of the Government, will 
 be received with so much joy as the passage of this bill with the legal 
 tender clause. On that question I entertain no shadow of doubt. If you 
 pass this bill with the legal tender, the legal tender cannot injuriously 
 affect the credit of this currency you propose to circulate. No hai-m can 
 certainly come of it. It seems to me, sir, the argument made by the Sen- 
 ator from Vermont, and the Senator from Maine, is an argument against 
 issuing these notes as a currency at all. The legitimate inferences from 
 their arguments are against this proposition for $150,000,000 of demand 
 Treasury notes. I have received several letters from my own State in 
 favor of the bill — persons representing millions, in favor of the legal tender 
 clause. The intelligence I obtain from all portions of the country is to 
 the same eflfect. I shall, therefore, vote against striking out that clause. 
 If it is retained, I shall vote for the bill ; if it is stricken out, 1 shall give 
 my vote against putting upon the people, upon the soldiers of the country, 
 $150,000,000 of demand notes, and doing nothing to protect those upon 
 whom we impose this Government paper." 
 
 MR. Sherman's speech. 
 
 Mr. Sherman, of Ohio, made an elaborate speech in favor of 
 the bill, and in opposition to the motion of Mr. Collamer to 
 strike out the legal tender clause. 
 
 "The motion of the Senator from Vermont now for the first time pre- 
 sents to the Senate the only question upon which the members of the 
 Committee of Finap.ce had any material difference of opinion, and that 
 is, whether the notes provided for in this bill shall be made a legal tender 
 in payment of public and private debts ? Upon this point I will commence 
 the argument where the Senator from Maine left it. 
 
 In the first place, I will say, every organ of financial opinion — if that is 
 a correct expression — in this country agrees that there is such a necessity, 
 in ease We authorize the issue of demand notes. You commence witli 
 the Secretary of the Treasury, who has given this subject tlie most ample 
 consideration. He declares not only in his ofiicial communications hei-e, 
 but in his private intercourses with the members of the Committee, that 
 this clause is indispensably necessary to the security and negotiability of 
 these demand notes. We all know from his antecedents, from his peculiar 
 opinions, that he would be probably the last man among the leading poli- 
 ticians of ovir country to yield to the necessity of substituting paper 
 
112 
 
 money for coin. He has examined this question in all its length and 
 breadth. He is in a position where he feels the necessity. He is a states- 
 man of admitted ability, and distinguished in his high position. He 
 informs ns that without this clause, to attempt to circulate as money the 
 proposed amount of demand notes of the United States, will prove a fatal 
 experiment. 
 
 In addition to his opinion, we have the concun-ing opinion of the Cham- 
 ber of Commerce of the city of New York. With almost entire unanimity 
 they have passed a resolution on the subject, after full debate and consid- 
 eration. That resolution has been read by your Secretary. Ton have 
 also the opinion of the Committee of Public Safety of the city of New 
 York, composed of distinguished gentlemen, nearly all of whom are good 
 financiers, who agree fully in the same opinion. I may say the same in 
 regard to the Chambers of Commerce of the city of Boston, of the city of 
 Philadelphia, and of almost every recognized organ of financial opinion in 
 this country. They have said to us in the most solemn form, that this 
 measure was indispensably necessary to maintain the credit of the Gov- 
 ernment, and to keep these notes anywhere near par. In addition, we 
 have the deliberate judgment and vote of the House of E-epresentatives. 
 After a full debate, in which the constitutionalitsr, expediency and neces- 
 sity of this measure were discussed, in whicli all the objections that have 
 been made here, and many more, were urged, the House of Representa- 
 tives, by a large vote, declared that it was necessary to issue demand 
 notes, and that this clause was indispensable to their negotiation and 
 credit." 
 
 He coutiuued his argument at length : 
 
 "A hard necessity presses the Government. $100,000,000 is now due 
 the army, and $250,000,000 more up to July first. The Banks of New 
 York, Boston and Philadelphia, have exhausted their capitals in making 
 loans to the Government. They have already tied up their capital in your 
 bonds. Among others, the cashier of the Banlc of Commerce, (Mr. Vail, ) 
 the largest bank corporation in the United States, and one that has done 
 much to sustain the Government, appeared before the Finance Committee, 
 and stated explicitly, that tlie Bank of Commerce, as well as other banks 
 of New York, could no further aid the Government, unless your proposed 
 currency was stamped by, and invested with the attributes of lawful 
 money, which they could pay to others as well as receive themselves. 
 
 Bonds cannot be sold except at a great sacrifice, because there is no 
 money to buy them. As soon as the banks suspended, gold and silver 
 ceased to circulate as money. You cannot sell your bonds for gold and silver, 
 which is the only money thai can now he received under the Sub-TreasUry hw. 
 This currency made a legal tender was necessary to aid in making further 
 loans. He argued that the bill was constitutional. The Senator from 
 Vermont has read extracts from the debates in the national convention, 
 and from Story's Commentaries, tending to show that Congress cannot 
 authorize the issue of bills of credit. But I submit to him that this ques- 
 tion has been settled by the practice of the Government. "VVe issued such 
 bills during the war of 1812, during the war with Mexico, and at the recent 
 session of Congress. We receive them now for our services ; we pay them 
 to our soldiers and our creditors. These notes are payable to bearer; they 
 pass from hand to hand as currency ; they bear no interest. If the argu- 
 ment of that Senator is true, then all these notes are unauthorized. The 
 Senator admits that when we owe a debt and cannot pay it, we can issue 
 
113 
 
 a note. But where does he find the power to issue a note in the Constitu- 
 tion ? Where does he iind the power to prescribe the terms of the note, 
 to malie it transferable, receivable for public dues ? He draws all these 
 powers as incidents to the power to borrow money. According to his 
 argument, when we pay a soldier a ten dollar demand bill, we borrow ten 
 dollars from the soldier; when I apply to the Secretary of the Senate for a 
 month's pay, I loan the United States $250. This certainly is not the 
 view we take of it when we receive the money. On the other hand, we 
 recognize the fact that the Government cannot pay us in gold. We 
 receive notes as money. The Government ought to give, and has the 
 power to give, to that money, all the sanction, authority, value, necessary 
 and proper, to enable it to borrow money. The power to fix the standard 
 of money, to regulate the medium of exchanges, must necessarily go with, 
 and be incident to, the power to regulate commerce, to borrow money, to 
 coin money, to maintain armies and navies. All these high powers are 
 expressly prohibited to the States, and also the incidental power to emit 
 bills of credit, and to make anything but gold and silver a legal tender. 
 But Congress is expressly invested imlh all these high powers, and to remove all 
 doiibt, is expressly authorized to use all necessary and proper means to carry these 
 pcnvers into effect. 
 
 If you strike out the tender clause you do so with a knowledge that 
 these notes will fall dead upon the money market of the world. When 
 you issue demand notes, and announce to the world your purpose not to 
 pay any more gold and silver, you then tender to those who have fur- 
 nished you provisions a,nd services this paper money. What can they do ? 
 They cannot pay their debts with it ; they cannot support their families 
 with it, without a depreciation. The whole then depends on the promise 
 of the Government to pay at some time not fixed on the note. Justice to 
 our creditors demands that it should be a legal tender ; it will then circu- 
 late all over this country, it will be the life blood of the whole business of 
 the country, and it will enable capitalists to buy your bonds. The only 
 objection to the measure is that too much may be issued. He did not 
 believe the issue of $150,000,000 would do any harm. It is only a mere 
 temporary expedient, and ought not to be repeated." 
 
 He closed as follows: 
 
 "I have thus, Mr. President, endeavored to reply to the constitutional 
 argument of the Senator from Vermont. Our arguments must be sub- 
 mitted finally to the arbitration of the courts of the United States. 
 When I feel so strongly the necessity of this measure, I am constrained 
 to assume the power, and refer our authority to exercise it to the courts. 
 I have shown, in reply to the argument of the Senator from Maine, that 
 we must no longer hesitate as to the necessity of this measure. That 
 necessity does exist, and now presses upon us. I rest my vote upon the 
 proposition that this is a necessary and proper measure to furnish a cur- 
 rency — a medium of exchange — to enable the Government to borrow 
 money, to maintain an army and support a navy. Believing this, I find 
 ample authority to authorize my vote. We have been taught by recent 
 fearful experience that delay and doubt in this time of revolutionary 
 activity are stagnation and death. I have sworn to raise and support 
 your armies; to provide for and maintain your navy; to borrow money ; 
 to uphold your Government against all enemies, at home and abroad. 
 That oath is sacred. As a member of this body, I am aimed with high 
 
114 
 
 powers for a holy plumose, and I am authorized — nay, required— to vote 
 for all laws necessary and proper for executing these high powers, and to 
 accomplish that purpose. This is not the time when I would limit these 
 powers. Bather than yield to revolutionary force, I would use revolu- 
 tionary force. Here it is not necessary, for the framers of the Constitution 
 did not assume to foresee all the means that might be necessary to main- 
 tain the delegated powers of the national Government. Regarding this 
 great measure as a necessary and proper one, and within our power to 
 enact, I see plain before me the path of duty, and one that is easy to 
 tread." 
 
 MB. cowan's speech. 
 
 Mr. Cowan, of Pennsylvania, made a lengthy speech in favor 
 
 of the amendment to strike out the legal tender clause in the 
 
 bill, on the ground that Congress had no power to make anything 
 
 but gold and silver a tender in payment of private debts. 
 
 "He argued at length that Congress had no power to 'emit bills of 
 credit, make anything but gold and silver coin a tender in payment of 
 debts, or pass any law impairing the obligation of contracts.' They are 
 powers which belong neither to the United States nor to the States, and 
 they ougM to belong to no Government anywhere. He had supposed that 
 this question could never enter the American Senate ; that the day had 
 gone by when it was open to discussion, if it ever was open since the 
 Constitution was formed. Surely, if anything in the world is settled- 
 settled by the fathers, by cotemporary histqry, painful experience, and 
 the total absence of all precedent for the exercise of these powers — it is 
 that they were not delegated, nor intended to be delegated. The exer- 
 cise of such a power would be subversive of all our notions of Govern- 
 ment, and the ends for which it is established, which are, the protection 
 and preservation of society. The life and soul of society is the faith man 
 has in his fellow-man ; that he will speak truth, deal justly, and perform 
 his engagements and maintain his credit. Will it strengthen this credit? 
 It proposes that in all money contracts notes shall be taken as money, the 
 same as gold and silver; all men who have money due them will be 
 obliged to receive these notes as money at par ; they are made a legal ten- 
 der on all debts. The power claimed for the Government subverts the 
 Government itself, and makes it destroy that which it was intended to 
 protect and preserve. It is abhorrent of reason, justice and all notions of 
 right. He thought that the legal tender clause would not give the notes 
 credit, but would be injurious to them. It would disturb the relations 
 between debtor and creditor, and impair all the contracts of the people, 
 more or less, all over the country." 
 
 He concluded as follows : 
 
 " I am willing to yield to the better judgment of the administration in 
 all matters of policy or expediency, but I am still my own conscience 
 keeper, and in all questions of power under the Constitution I must judge 
 for myself, and act accordingly. That Constitution is the charter of our 
 liberties, and the covenant for the Union which we are all so anxious to 
 preserve and defend. I will stand upon it to the last, despite every neces- 
 sity, however imperious; and if the time comes when we must all go down 
 together, I say let it come ; but let us go down as honest men, with our 
 faith unviolated ; and in that spirit, I hope the amendment to the bill may 
 prevail." 
 
115 
 
 ME. DOOLITTLe'S speech. 
 
 Mr. DooLiTTLE, of "Wisconsin, regretted that this bill must be 
 acted upon before the tax bill was matured. 
 
 " If we had a sufflcient tax law to sustain the credit of the Government, 
 he would vote to strike out the legal tender clause. He was assured that 
 this bill must pass immediately, or the Government could not go on. As 
 an original proposition, he did not believe in paper money, but it had 
 become engrafted on our system. He thought the framers of the Consti- 
 tution intended nothing but hard money, coined gold and silver. Had 
 their intentions been carried out ; had we always held fast to the Consti- 
 tutional cvirrency ; had not paper money, under both State and Federal 
 authority, become the actual currency of our people ; had we to-day no 
 other currency but gold and silver, I would not tolerate the idea of passing 
 this bill for a single moment. But, such is not our condition ; we are in 
 the midst of a gigantic war ; we can not go back ; we must go forward ; 
 we must go through; we must start from where we are, and not from 
 where we would be ; we must behold the real necessities of our position 
 as it is, and not as we would have it, and look those necessities squarely 
 in the face. 
 
 The truth is, wliile in theory the only money of our people is gold and 
 silver, the fact is otherwise. It is almost exclusively of paper. Aye, sir, 
 at this moment it is the irredeemable paper of suspended bank corpora- 
 tions. Most unfortunately, paper money does now exist, and has existed 
 so many years in this country, i'ssued under the sanction of State authori- 
 ties in violation, as I admit, of the spirit and intentions of those who 
 framed the Constitution, that a man must be blind, indeed, who would 
 not now, in time of war, in a measure of practical legislation, recognize 
 the stubborn fact that these banking corporations, created by the States, 
 so long acquiesced in by this Government, have become great and power- 
 ful institutions, and have practically displaced the currency of the 
 Constitution, by substituting in its stead their own paper money. At all 
 times it is much the greater part of our circulating medium, and when, in 
 times of panic and disaster, comes suspension of specie payments, it 
 becomes our onlj' currency. Such is our condition now. What shall we 
 do now? We must have deeds, not words; facts, not theories. We 
 cannot sell our bonds abroad. ' The paper money issued by banking cor- 
 porations is all, or nearly all, the money our own people have. Shall we 
 sell our bonds for the paper money of suspended banks? No, sir; no 
 man will advocate that. 
 
 The only alternative is to issue these Treasury notes, which will go into 
 the circulation of the country as a part of its currency. If, as I have said, 
 the question now were whether we should begin to build up a paper cur- 
 rency in this country, or hold fast to the currency of the Constitution, 
 I would oppose this measure. But we cut our moorings from the solid 
 ground long, long ago. We have been embarked upon a sea of paper 
 money'for years. We have suflfered periodically financial crashes and 
 revulsions, tossed upon its uncertain waves, blown up and down by the 
 breath of speculation. We are stiU at sea, and in the beginning of a 
 terrific financial storm, and the question is whether we shall seize the 
 laidder and direct the ship, or suffer it to go without direction, to founder 
 and make shipwreck of all public and private securities and values, to 
 become the prey and spoils of wreckers along the shore. The simple 
 
116 
 
 question which presses upon us in this extremity is, whether we shall rule 
 this currency, created by these corporations, in violation, in my opinion, 
 of the original intention of the Constitution of the United States, or 
 whether they shall rule us. 
 
 For their good, for the security of all, as well as for its own safety, this 
 Government must assert its Constitutional authority over the currency of 
 the country, in some practicable way, and it seems to me that the mode 
 proposed in this bill is the simplest and most direct in the present exigen- 
 cies, as a temporary measure, until the great measure of finance, the tax 
 bill, can be perfected and set in operation." 
 
 MK. Simmons' speech. 
 
 Ml'. Simmons, of Rhode Island, opposed the legal tender clause 
 
 in this bill. 
 
 "He did not see its necessity, nor the Constitutional power for passing 
 it. He thought the Constitutional objection about as difficult a matter to 
 get over as anything could well be. He thought that if the legal tender 
 clause was striolien out, the notes would not be bills of credit, but mere 
 evidences of debt. In contemplation of the Constitution, the old fash- 
 ioned bills of credit were promises to pay, with a State law enforcing 
 their passage against the will of those who were to taiie them. These 
 were the national bills of credit, whicli were made a tender by State laws 
 under the old Confederation. He thought it better to maite our securities 
 desirable by increasing the rate of interest, as high even as eight per cent. 
 He intended to move an amendment at the proper time, to increase the 
 interest to eight per cent, on notes and bonds payable in two years." 
 
 MK. BAYAKD's speech. 
 
 Mr. Bayard, of Delaware, opposed the legal tender clause, 
 because it is unconstitutional, impolitic and inexpedient. 
 
 "He concurred in the argument of the Senator from Vermont, who has 
 moved to strike out tlie legal tender clause in the bill. The first article of 
 the Constitution, in its first section, provides that 'all legislative powers 
 herein granted shall be vested in a Congress of the United States ' — not an 
 indefinite delegation of all powers of legislation, as is the case in our State 
 Constitutions, where the legislative power of the community is vested in 
 a Senate and House of Representatives ; but here in tliis Constitution of 
 specially delegated powers, 'all legislative powers herein granted shall 
 be vested in a Congress,' and none other. When you come to the other 
 clause, which specifies these powers, you find but a solitary provision 
 which has any relation to the power to make money. The power to bor- 
 row is a distinct thing; but the power to make money, is 'to coin money, 
 regulate the value thereof, and of foreign coin, and fix the standard of 
 weights and measures.' I have supposed that the power being designated 
 in that form, and Congress having a right to exercise only the power 
 granted, under no species of interpretation could you hold that a power 
 to coin money implied, or could be extended to a power, to make your 
 own paper, your promise to pay money, for the purpose of discharging 
 debts between individuals, or as against yourself. 
 
 In my judgment, therefore, apart from the constitutional objection, 
 which alone would be sufBcient to control my vote, upon the ground that 
 
117 
 
 you have no power to insert this clause in any law, t canliot vote for a l)ill 
 which embodies it. It is impolitic and inexpedient, as well as unconsti- 
 tutional. It is a mere temporary expedient. It may give present inflation 
 and present relief for the hour, and a very brief hour indeed, but it will 
 be followed by a weakening of the resources of the Government, a depre- 
 ciation of its credit, and it will produce nothing but disaster and ruin to 
 the country." 
 
 SPEECH OF MK. WILLET. 
 
 Mr. WiLLEY, of Virginia, spoke as follows : 
 
 "I do not rise, Mr. President, certainly not at the present time, for the 
 purpose of making a speech, but I wish to place upon record the reason 
 why I shall give the vote which I feel compelled to give on the present 
 occasion. If this were a question merely of expediency, I would most 
 readily defer my judgment to that of other gentlemen better capable of 
 forming a correct estimate. But, sir, consulting my own opinion, I should 
 say that the legal tetider clause of this bill will have the contrary effect 
 upon the currency and credit of the Treasury notes from that which some 
 gentlemen seem to suppose. I believe it will depreciate their credit, and 
 I fear it will depreciate the character of our Government and our country 
 in the estimation of all honest and well-meaning nations abroad. But, 
 sir, believing, as I sincerely do, that this clause is unconstitutional, I can 
 not vote to retain it in the bill. I have felt the appeal of my honorable 
 friend from Ohio — the plea of necessity. Sir, that is a dangerous plea, 
 and it found its origin in a dangerous quarter. It is said that the plea of 
 necessity is the plea of tyrants. I nevertheless recognize the fact that 
 there are occasions in the history of a nation when the old maxim sahis 
 populi suprema lex, may apply ; but it is my opinion that the exigencies 
 of the country do not, at this time, warrant the application of that maxim ; 
 and I should be sorry if, in prosecuting this holy war to put down an 
 infamous rebellion, to restore and maintain the Constitution, we are our- 
 selves, in the very act of doing so, guilty of a most palpable violation of 
 that instrument." 
 
 SPEECH OF ME. HOWARD. 
 
 Mr. Howard, of Michigan, said: 
 
 "I do not rise, Mr. President, at this late period of the discussion, to 
 detain the Senate longer than a minute or two. When this measure was 
 first proposed, and after I had given it merely a perusal, I came, or 
 thought I came, to the same conclusion at which the gentleman from Vir- 
 ginia seems to have arrived, and was rather disposed to think that 
 there was no authority in the Constitution to warrant such an enactment 
 as this, which constitutes the Treasury notes a legal tender in the payment 
 of private debts. The thing was so anomalous, so unusual to me, that I 
 could scarcely entertain the idea, and I confess that my mind struggled 
 strongly against it. But after a little reflection, and giving the question 
 of constitutional power such examination as I have been able to give it, 
 I have arrived at the conclusion that Congress has the constitutional 
 power, particularly under the clause authorizing them to borrow money, 
 to declare this species of paper a legal tender in the payment of debts 
 between individuals. 
 
 It is undoubtedly a hard necessity to which we are driven; but the 
 
118 
 
 necessity of the case I submit, has nothing to do with the naked question 
 of authority, under the Constitution. If I were convinced that we had no 
 authority, under the Constitution, to enact such a clause as this, I should 
 not feel at liberty to vote in favor of it, and should certainly vote to strike 
 it out ; but such is not my conviction. I believe that we have the author- 
 ity ; and still, while I say this, I must say at the same time, that I think 
 several gentlemen who are friends of this bill, have placed too high an 
 estimate upon this particular clause in the bill. I doubt very much 
 whether it will add greatly to the currency and credit of the paper itself. 
 They think it will, and I am certainly disposed to give it a trial. 
 
 We have, under the Constitution, the power to borrow money. This no 
 one disputes. If we have the power to borrow money, we have the right; 
 and it is our duty to place in the hand of the lender, an evidence of the 
 fact that we have so borrowed it, and further, that we intend to pay what 
 we have borrowed. These two things are manifestly, in their very nature, 
 inseparable ; and the only real question, it seems to me, which addresses 
 itself to the Senate is this: whether we have any power, after having 
 issued this description of paper to the public creditors, in payment of their 
 debts, to protect the credit of the United States, expressed upon the face 
 of the paper, while it is in the hands of innocent and honest holders ? I 
 think we have. I think this is one of the most obvious means of extend- 
 ing protection to the public credit thus expressed upon the paper. If we 
 have it not ; if we cannot subject, so to speak, the entire property of the 
 nation, to something like an assistance to the public credit, then this 
 power to borrow money at once ceases to be a power of any value, and it 
 is a mere mockery upon the face of the Constitution. If ■we cannot 
 declare that this paper shall, in commercial transactions, be of equal 
 validity to transactions based upon gold and silver, then I say that the 
 power to borrow money ceases, in and of itself, to be of any benefit to the 
 Government or to the nation ; and it is because I believe that we have this 
 power, thus to protect the public credit, expressed and pledged on the 
 face of a Treasury note, that I shall vote to retain this clause in the bill. 
 1 think we have the constitutional power, and I am willing to use it on 
 this occasion." 
 
 MR. mcdougall's speech. 
 
 Mr. McDouGALL, of California, advocated the bill as a lawful 
 and proper measure to be adopted at this time. 
 
 "He thought this a just and reasonable war measure. Necessity, it is 
 said, is above all law ; it is better said, 'necessity makes its own laws.' 
 Our Treasury is now exhausted. Money is the first necessity of war- 
 vigorous successful war. Delay is not to be contemplated — not to be per- 
 mitted. Prompt present action is a necessity. To give efficiency, the 
 legal tender clause should be retained — the bill ought not to be amended 
 by striking it out. He argued that the bill was constitutional ; that we 
 had the right to issue these notes as money, to be used as a cuiTcncy for 
 the country in the present exigency. He was not able to maintain against 
 it any good constitutional objection, and did not see in it any special 
 injustice. We are at war; this is a war measure; we must take war 
 responsibilities. This measui-e can ruin no one, destroy no one, and we 
 are advised upon the highest authority that it is needed for the maintain- 
 ance of the Kepublic. I believe the law constitutional, just and necessary. 
 I hope to see it passed, and when passed, I shall hope on." 
 
119 
 
 MK. Sumner's speech. 
 
 Mr. Sumner, of Massachusetts, made a lengthy speech in favor 
 of the constitutionality and expediency of the legal tender clause, 
 and said he would confine his remarks to this feature of the pres- 
 ent bill. 
 
 "In the present exigency, money must be had; and we are told that 
 the credit of the Government can be saved only by an act that seems like 
 a forfeiture of credit. Paper promises to pay are to be made a legal ten- 
 der like gold and silver, and this provision is to be ingrafted on the present 
 bill authorizing the issue of Treasury notes to the amount of tl50,000,000. 
 It seemed to him that the power of Congress to make Treasury notes a 
 legal tender was settled as long ago as when it was settled that Congress 
 might authorize the issue of Treasury notes ; for from time immemorial 
 the two have gone together; one is the incident to the other, and, unless 
 expressly severed, they naturally go together. 
 
 It is true, that in the Constitution there are no words expressly giving 
 to Congress the power to make Treasury notes a legal tender ; but there 
 are no words expressly giving to Congress the power to issue Treasury 
 notes. If we consult the text of the Constitution, we shall find it as 
 silent with regard to one as with regard to the other. But, on the other 
 hand, the States are expressly prohibited to 'emit bills of credit, to make 
 anything but gold and silver coin a tender in payment of debts. Treasury 
 notes are 'bills of credit,' and this prohibition is imperative on the States. 
 But the inference is just that this prohibition, expressly addressed to the 
 States, was not intended to embrace Congress indirectly, as it obviously 
 does not embrace it directly. The presence of the prohibition, however, 
 shows that the subject was in the minds of. the framers of the Constitu- 
 tion. If they failed to extend it still further, it is reasonable to conclude 
 that they left the whole subject in all its bearings to the sound discretion 
 of Congress, under the ample powers intrusted to it. 
 
 The stress that is so constantly put upon the prohibitions addressed to 
 the States will justify me iu introducing the opinion of Mr. Justice Story 
 in his Commentaries : ' It is manifest that all these prohibitory clauses as 
 to coining money, emitting bills of credit, and tendering anything but 
 gold and silver in payment of debts, are founded upon the same general 
 considerations. The policy is to provide a fixed and uniform rule throughout 
 the United States, by which commercial and other dealings of the citizens, 
 as well as the moneyed transactions of the Government, might be 
 adjusted."— (2 Story's Com., Sec. 1372.) 
 
 If this view be correct, then no inference adverse to the powers of the 
 national Government can be drawn from these prohibitory clauses ; for 
 whatever may be the policy of the national Government, it vvill be a fixed 
 and uniform rule throughout the United States. 
 
 From the proceedings of the 'Federal Convention it appears that a propo- 
 sition empowering Congress 'to emit bills of credit' was negatived, after 
 discussion, in which Mr. Madison said: 'Will it not be sulflcient to pro- 
 hibit the making them a tender? This will remove the temptation to 
 emit them with unjust views.' And in a note to the debate, this same 
 great authority says that he 'became satisfied that the strildug out the 
 words would not disable the Government from the use of public notes, as 
 far as they could be safe and proper, and would only cut off the pretense 
 
120 
 
 for a paper currency, and particularly for making bills a tender, either for 
 public or private debts.' Then it appears that the suggestion was made 
 to prohibit the malsing of bills a tender; but this suggestion was not acted 
 on, and no such prohibition was ever moved. It is evident that the Con- 
 vention was not prepared for a measure so positive. Less still was it 
 prepared for the prohibition to emit bills. Such is the record. While all 
 words expressly authorizing bills were struck out, nothing was introduced 
 in restraint of the powers of Gongress on this subject. Indeed, Mr. Madi- 
 son declares his own personal belief, that the striking out of the power 
 'to emit bills of credit,' would not disable the Government from the issue 
 of public notes, so far as they could be safe and proper, but would only ad 
 off the pretext for a paper currency. It woidd seem from this language, in 
 so careful a writer, that he imagined the whole subject was left substan- 
 tially to the sound discretion of Congress. Indeed, the inference from his 
 report and comment, is identical with the inference from the text of the 
 Constitution itself. (See Madison's Papers, vol. 3, p. 1343.) 
 
 But in conceding that Congress might issue ' public notes, as far as they 
 could be proper,' in other words, 'bills of credit,' the whole question was 
 practically settled ; and the usage of the Government has been in harmony 
 with this settlement. Treasury notes were issued during the war of 1812, 
 also during the war with Mexico, and constantly since, so that the power 
 to issue them cannot be drawn into doubt. If there was any doubt origi- 
 nally, an unquestioned practice, sanctioned by successive Congresses, has 
 completely removed it. I do not stop to consider whether the power 
 is derived primarily from the power ' to borrow money,' or the power 'to 
 regulate commerce,' or from the unenumerated powers. It is sufficient 
 tliat tlie i50wer exists. But it is difficult to escape the conclusion, that if 
 Congress is empowered to issue Treasury not^s, it may affix to these notes 
 such character as shall seem just and proper, declaring the conditions of 
 their circulation and the dues for which thejr shall be received. Grant the 
 first power and the rest must follow. Careful you will be in the exercise 
 of this power, but if you choose to talis the responsibility, I do not see 
 what check can be found in the Constitution. 
 
 It appears that the phrase 'bills of credit,' was familiarly used for bank 
 notes as early as 1683, in England, and also as early as 1714, in New Eng- 
 land. But the first issue in America was in 1090, by the Colony of 
 Massachusetts, and the occasion, identical with the present, was to pay 
 soldiers returning unexpectedly from an unsuccessful expedition against 
 Canada. 
 
 Mr. Sumner went into a brief history of the issue of bills of credit- 
 paper money — in the States of Massachusetts, Ehode Island, Connecticut, 
 Virginia and North Carolina, which led to the passage of an act by 
 the Imperial Parliament, (24 George II, Sec. 2, Chap. 53,) 1751, which 
 expressly forbade the issue of any paper bills, or bills of credit, except for 
 certain specific purposes, or upon certain specified emergencies; and 
 declaring that such paper money should not be a legal tender for private 
 debts. Continental paper money was issued during the Eevolutionary 
 war, not made a legal tender by Congress, although the States were rec- 
 ommended to make them such. He argued at great length the power of 
 Congress to issue Treasury notes and make them a legal tender; and that 
 it was purposely left by the framers of the Constitution to the sound dis- 
 cretion of Congress, in great emergencies, to decide whether it was 
 necessary to exercise the power or not." 
 
 He closed as follows : 
 
121 
 
 " But, while recognizing the existence of the discretion, in the last 
 resort, under the law of necessity, the question still remains if this neces- 
 sity now exists ? And now, as I close, I shall not cease to be frank. Is 
 it necessary to incur all the unquestionable evils of inconvertible paper, 
 forced into circulation by act of Congress — to suffer the stain upon our 
 national faith — to bear the stigma of a seeming repudiation — to lose for 
 the present that credit which, in Itself, is a treasury— and to teach debtors 
 everywhere that contracts may be varied at the will of the stronger? 
 Surely, there is much in these inquiries which may make us pause. If 
 our country were poor or feeble, without population and without 
 resources; if it were already drained by a long war; if the enemy had 
 succeeded in depriving us of the means of livelihood, then we should not 
 even pause. But our country is rich and powerful, with a numerous pop- 
 ulation, busy, honest, and determined, and with unparalleled resources of 
 all kinds, agricultural, mineral, industrial and commercial; it is yet 
 undrained by the war in which we are engaged ; nor has the enemy suc- 
 ceeded in depriving us of any of the means of livelihood. It is hard — 
 very hard — to think that such a country, so powerful, so rich, and so 
 beloved, should be compelled to adopt a policy of even questionable pro- 
 priety. If I mention these things — if I make these inquiries — it is because 
 of the unfeigned solicitude which I feel with regard to this measure, and 
 not with the view of arguing against the exercise of a constitutional 
 power, when, in the opinion of the Government, in which I place trust, 
 the necessity for its exercise has arrived. Surely, we must all be against 
 paper money — we must all insist upon maintaining the integrity of the 
 Government — and we must all set our faces against any proposition like the 
 present, except as a temporary expedient, rendered imperative by the exigency 
 of the hour. If I vote for this proposition it will be only because I am 
 unwilling to refuse to the Government, especially charged with this 
 responsibility, that confidence which is hardly less important to the public 
 interests than the money itself. Others may doubt if the exigency is 
 sufficiently imperative ; but the Secretary of the Treasury, whose duty it 
 is to undei'stand the occasion, does not doubt. In his opinion the war 
 requires this sacrifice. Uncontrolable passions have been let loose to 
 overturn tranquil conditions of peace. Meanwhile your soldiers in the 
 field must be paid and fed. Here, then, can be no failure or postpone- 
 ment. A remedy which, at another moment you would reject, is now 
 proposed. Whatever may be the national resources, they are not now 
 within reach, except by summary process. Reluctantly, painfully, I con- 
 sent that the process should issue. And yet I cannot give such a vote 
 without warning the Government against the dangers from such an 
 experiment. The medicine of the Constitution must not become its daily 
 bread. Nor can I disguise the conviction that better than any legal 
 tender will be vigorous, earnest efforts for the suppression of the rebellion, 
 and for the establishment of the Constitution in its true principles over 
 the territory which the rebellion has usurped." 
 
 The question was then taken by yeas and nays on the motion 
 of Mr. Collamer to strike out the legal tender clause in the bill, 
 and resulted as follows : 
 
 yeas — Messrs. Anthony, Bayard, Collamer, Cowan, Fessenden, 
 Foot, Foster, Kennedy, King, Latham, Nesmith, Pearce, Powell, 
 Salisbury, Simmons, Thompson and Willey — 17. 
 
122 
 
 Nays — Messrs. Chandler, Clark, Davis, Dixon, Doolittle, Har- 
 lan, Harris, Henderson, Howard, Howe, Lane (of Indiana), 
 McDougall, Morrill, Pomeroy, Rice, Sherman, Sumner, Ten Eyck, 
 Wade, Wilkinson, Wilson (of Mass.) and Wilson (of Mo.)— 22. 
 
 So the motion to strike out the legal tender clause was not 
 agreed to. 
 
 On Mr. Simmons' motion to pay eight per cent, interest on two 
 years' notes or bonds, the amendment was agreed to — ayes 20, 
 noes 16. 
 
 The other amendments proposed by the Finance Committee 
 were agreed to substantially as reported by the Committee. 
 
 Mr. Doolittle moved to limit the legal tender clause to debts 
 hereafter contracted, but the amendment was not -adopted. 
 
 ME. king's speech. 
 
 Mr. King, of New York, spoke as follows : 
 
 "My opinion is so decided against this measure, which, it is evident, has 
 the favor of a large majority of the Senate, that I must vote against it ; but 
 I deem it due to myself to offer a substitute for the first section. I pro- 
 pose to strike out the first section of the bill, which relates to Treasury 
 notes and the tender, and to insert what I send to the chair in three sec- 
 tions. The second and subsequent sections of the bill, providing for bonds 
 and making other provisions, I do not propose to interfere with. 
 
 The change which this amendment proposes, is to strike out the tender 
 clause, to make the demand notes, which are issued without interest, five 
 year notes, bearing an interest of seven and three-tenths per cent, per 
 annum, receivable for all Government dues, or exchangeable for long 
 bonds at six per cent., interest payable semi-annually, at the option of the 
 holder, and providing by tax a sufficient sum, which is pledged to the 
 redemption of these notes, and ultimately to pay them, principal and 
 interest ; which I thinli is a provision that ouglit to accompany any meas- 
 ure providing forborrowing money, either by notes or bonds." 
 
 The amendment was not agreed to. 
 
 Mr. Pe/Veoe, of Maryland, opposed the legal tender clause in 
 
 the bill. 
 
 "Ours is a Government of limited and granted powers. We can exer- 
 cise no authority which Congress has not, by reason of the grant of some 
 express power, or some power necessarily implied from tliat which is 
 granted. If there be a power necessary and proper to cai-ry into execu- 
 tion any of the granted powers, we possess it under the general clause of 
 the Constitution in reference to that subject. Tlie power to make a legal 
 tender is not granted expressly in the Constitution, nor, as I think, by 
 any implication from any of the granted powers. It is true there is a 
 qualified power of making a legal tender to be found in the clause which 
 
123 
 
 authorizes us to coin money, and to regulate tlie value thereof, because 
 there can be no purpose in regulating the value of the money we are 
 authorized to coin, except to make it a legal tender. When we establish 
 the value of gold and silver coin, which we have the express authority to 
 do, we of course have the implied authority to declare that its value thus 
 fixed by law, shall be the measure of value in all contracts, and to make 
 it a legal tender. There is no other purpose for giving us the authority 
 to regulate the value of the money which we are authorized to coin ; and, 
 accordingly, Congress has declared silver coins to be a legal tender. I do 
 not know whether that provision is in the law regulating the value of the 
 gold coins. I suppose, however, that it must be so. I know that when we 
 passed the act by which we apportioned the silver and the alloy in our 
 silver coins, we did declare that coinage to be a legal tender for sums 
 under five dollars. Even, however, if that were not so, it would follow 
 necessarily, it being provided in the Constitution expressly that gold and 
 silver may be coined by authority of Congress, and their value regulated 
 by law, that they must necessarily be a legal tender. It is so according 
 to the custom of all civilized nations, and so the convention that framed 
 the Constitvition assumed it to be. But I can see no power from which 
 we can infer authority in this Government to make paper money a legal 
 tender. It clearly cannot be inferred from the power to coin money, 
 which is to be made of metal. I do not see how it is to be inferred, as I 
 think one Senator derived it, from the power to borrow money, since, to 
 make paper money cannot be necessary to the execution of the power to 
 borrow money. As well could we infer a general authority to lend money 
 or to deal in brokerage. 
 
 Mr. President, the exigencies of the country are very great ; I admit my 
 obligation to co-operate with gentlemen here in furnishing the Govern- 
 ment with the means of carrying on all its operations; but when a 
 constitutional objection is presented to me, the very allegiance which I 
 owe to the Constitution, and therefore to the Union, compels me not to 
 violate any one of its provisions, as I think I shall do if I vote for this bill. 
 I must, therefore, cast my vote against it." 
 
 Mr. Saulsbukt, of Delaware — "It was my desii-e and intention to vote 
 for this bill, provided the provision making these notes a legal tender had 
 been stricken out. That provision has been retained in the bill. It is so 
 clearly unconstitutional, in my opinion, that I cannot conscientiously vote 
 for it. I cannot attempt at this late hour to assign the reasons for my 
 opinion. The speech of the Senator of Vermont has not been answered, 
 and it is not in the power of man to answer it." 
 
 Mr. Powell, of Kentucky — "It is not my purpose to make a speech. 
 It would affordme pleasure to vote for any measure I thought constitu- 
 tional to relieve the country from its present embarrassment ; but believing 
 that this bUl is unconstitutional, I cannot vote for it. I had intended, if 
 time permitted — but the hour is too late now — to give briefly, my reasons 
 for the vote I shall give ; but after the very exhaustive speech made by 
 the Senator from Vermont yesterday, it would be unnecessary, particu- 
 larly after the excellent speech made by the Senator from Pennsylvania 
 to-day, and the brief but very pointed speech of the Senator from Mary- 
 land, who has just taken his seat. 
 
 In my judgment this bill is plainly and palpably violative of the 
 Constitution of the United States, and I do not believe that issues of paper 
 money, unless they are convertible into coin at the pleasure of the holder^ 
 
124 
 
 ever did, or ever will, relieve any country permanently from any embar- 
 rassment. I think all such issues of irredeemable paper lead the country 
 'into further and greater embarrassments, instead of relieving it; and I 
 very much fear that those who expect great benefits to the country from 
 this bill will be greatly disappointed. I shall not detain the Senate by 
 speaking." 
 
 PASSAGE OP THE BILL. 
 
 The PBESIDIN& Ofpicee — "The question is on the passage of the bill." 
 Mr. HowAKD — "I call for the yeas and nays." 
 
 The yeas and nays were ordered, 
 
 Mr. Latham, of California — "I merely desire to say, in order that I 
 may appear right upon the record, that I have entertained very grave 
 doubts during this discussion as to the constitutionality of the legal 
 tender issue, and entertaining those doubts, I cast my vote against that 
 clause when it was under consideration. The majority of this body hav- 
 ing now, however, indicated their desire that it should be in the bill, I 
 cannot, consistently with my sense of duty, withhold my vote from the 
 bill. I shall therefore vote for it." 
 
 Mr. Anthony, of Rhode Island — "I voted against the vital clause of 
 this bill making the paper issued by the Government a legal tender, but 
 having no project of my own to present to the Senate, I shall not take the 
 responsibility of voting against the only measure which is proposed by 
 the Government, and which has passed the House of Representatives, and 
 received the sanction of a majority of this body." 
 
 The question being taken by yeas and naj's, resulted — ^j'eas 30, 
 nays 7 ; as follows : 
 
 Yeas— Messrs. Anthony, Chandler, Clark, Davis, Dixon, 
 Doolittle, Fessenden, Foot, Foster, Grimes, Hale, Harlan, Har- 
 ris, Henderson, Howard, Howe, Lane (of Indiana), Latham, 
 McDougall, Morrill, Pomeroy, Rice, Sherman, Sumner, Ten Eyek, 
 Trumbull, Wade, Wilkinson, Wilson (of Massachusetts) and Wil- 
 son (of Missouri) — 30. 
 
 Nays — Messrs. CoUamer, Cowan, Kennedy, King, Pearce, 
 Powell and Saulsbury — T. 
 
 So the bill was passed. 
 
 adthohship of the legal tender bill. 
 
 Letter of James W. Simonton to JV. T. Times. 
 
 "Washington, D. C, Feb. 13, 1862. 
 
 "The passage, by the Senate, of the Treasury Ifote bill, including the 
 legal tender clause, is a subject of very general congratulation among the 
 friends of the Administration. Among the opponents of the legal tender 
 provision were some of the ablest and firmest friends of the Administra- 
 tion, whose sincere desire for the most effective support of the Government 
 cannot for a moment be justly questioned. They honestly believed the 
 policy injudicious, and made strenuous fight in support of their theory. 
 
125 
 
 Sift the overwhehning necessity existing for the measure is a stronger wrgwnent 
 than anything offered against the hiU, and received the decisive vote of 30 to 7. 
 Having made their record, the opposition yielded with excellent grace, 
 and the Democratic opponents in both Houses confess to a sense of relief 
 when the bill, legal tender and all, had passed. There are few members 
 who would care to assume the responsibility which would have rested 
 upon them in the event of the defeat of the measure, and the risk of the 
 consequences to themselves of the financial panic that would speedily 
 follow the admitted bankruptcy of the Government. 
 
 Now that the bill has passed, it is but just that due credit should be 
 awarded to the author of the legal tender scheme, the Hon. E. G. Spauld- 
 ingjjMember of Congress from the Buffalo (N". Y.) District. It was Mr. 
 Spaulding who originated the proposition to force a fixed paper currency 
 upon the country by making Treasury notes a legal tender. His practical 
 knowledge and experience as a banker and financier, early disclosed to his 
 own mind the fact, which since then has become so patent to overwhelm- 
 ing majorities in each House of Congress and the country, to wit: that no 
 other scheme could possibly provide for the wants of the Government in 
 time to save it from absolute financial ruin. He gave the subject unremit- 
 ting study and attention, devoting to it the entire holiday season, and 
 maturing, finally, a measure which has received the endorsement of the 
 Administration and of Congress, and withstood the combined assaults of 
 selfish and honest opponents alike. He has reason to be proud of the 
 triumph he has achieved, and the country will not soon forget his 
 services." 
 
 OBJECTION TO SENATE AMENDMENTS. 
 
 The main principles of the bill seemed to be well settled by the 
 preceding full and able discussion, and its passage by large ma- 
 jorities through both Houses; and the Secretarjr of the Treasury 
 in administering the Finances during the war, would find it easy 
 to execute the two simple provisions of the bill, viz ; 
 
 1. Issue these Treasury notes fitted for circulation as money, and by 
 the legal tender provision made a forced loan from the people to the Gov- 
 ernment, without interest, which could only be justified by the imperative 
 necessities of the Treasury, and by the fair and equitable provision, 
 
 2. That these notes might at any time, at the option of the holder, be 
 funded in six per cent, twenty j^ear bonds, interest payable semi-annually. 
 
 The Secretary could issue notes and pay theta out for supplies 
 and material of war, and to the Army aind Navy, making money 
 plenty, and filling all the channels of circulation, which would, as 
 soon as it became redundant, enable him to float the six per cent, 
 bonds, and funding would take place, thereby preventing too great 
 an excess of this circulating medium. The Senate amendments 
 seemed in some measure to complicate these simple provisions. 
 Several of the amendments of the Senate were very important in 
 regard to details and special provisions of the bill, but the most 
 of them were verbal and unimportant. The four amendments of 
 
126 
 
 the Senate, to ■ffHcli a large numlDer of the members of the House 
 made the most objection, were in substance as follows : 
 
 1. Requiring payment of 'interest semi-annually in coin on bonds and 
 7-30 notes.' 
 
 2. Conferring on the Secretary power to sell six per cent, bonds, ' at 
 the market value thereof for coin,' which would reduce the price. 
 
 3. And the provision making the bonds ' redeemable in five years, and 
 payable in twenty years from date,' at the option of the Government, 
 making them less valuable. 
 
 4. Temporary deposits in the Sub-Treasury at 6 per cent., which would 
 retard funding in long bonds. 
 
 All former loan laws passed, by Congress, from the organization 
 of the Government to this time, contained only a provision to 
 pay ' dollars. ' The word dollars had a well known legal meaning 
 under our coinage and legal tender laws, and it was diflScult to 
 see any good reason for changing the phraseology, and thereby 
 make a departure from established usages at this time, especially 
 if six per cent, bonds (which were then selling at about 88,) 
 should, as a necessary consequence of such provision, be sold at 
 the market price to raise the coin to pay this interest. At this stage 
 of the bill there was no provision in it, or in tlie Senate amendments, to 
 collect the duties on foreign imports in coin, so that as the bill tlien stood, 
 there was no other mode of obtaining the coin except by a forced sale of 
 bonds. This coin provision was deemed by many members to be 
 an unnecessary discrimination in favor of the bond-holders over 
 other creditors of the G-overnment equally meritorious. It was 
 difficult to see the propriety of paying coin interest to the bond- 
 holders while the soldiers and others were paid in notes; and 
 besides, the terms used made the coin payment of interest 
 applicable to the 7-30 Treasury notes and bonds issued to the 
 banks during the previous summer. 
 
 BILL EETUENED TO THE HOUSE. 
 
 The bill and Senate's Amendments were returned to the House 
 on the 14th inst, and on motion of Mr. Stevens, were referred to 
 the Committee of "Ways and Means. This Committee had a long 
 discussion upon the Senate's Amendments, and were about equally 
 divided on the most material and important of them. Some were 
 disagreed to, others were concurred in, and some unimportant 
 amendments tb the Senate amendments were recommended. On 
 the 18th, Mr. Stevens, from the Committee of Ways and Means, 
 reported back the bill and amendments to the House and said: 
 
127 
 
 "I have no purpose of considering the bill at this time. I desire that 
 it shall be referred to the Committee of the "Whole, and be made the 
 special order for to-morrow at one o'clock. I hope gentlemen of the 
 House wiU read the amendments. They are very important, and, in my 
 judgment, very pernicious, but I hope the House will examine them." 
 
 The motion was agreeed to. 
 
 On Wednesday, the 19th inst., the amendments of the Senate 
 to the bill being the special order, Mr. Spaulding opened the 
 debate in opposition to some of them, as follows : 
 
 ME. SPAULDING's SPEECH. 
 
 Mr. Chaieman— I desire especially to oppose the amendments of the 
 Senate which require the interest on bonds and notes to be paid m coin 
 semi-annually, and which authorizes the Secretary of the Treasury to 
 sell six per cent, bonds at the market price for coin to pay the interest. 
 
 The Treasury note bill, as reported first from the Committee of Ways 
 and Means as a necessary war measure, was simple and perspicuous in its 
 tprms, and easily understood. It was so plain that everybody could 
 .understand that it authorized the issue of $150,000,000 of legal tender 
 demand notes, to circulate as a national currency among the people in all 
 parts of the United States, and that they might, at any time, be funded 
 in six per cent, twenty years' bonds. The passage of this measure in 
 this House was hailed with satisfaction by the great mass of people all 
 over the country. It received the hearty indorsement of such bodies as 
 the Chambers of Commerce of New York, Cincinnati, St. Louis, Chicago, 
 Buffalo, Milwaukee, and other places. I have never known any measure 
 receive a more hearty approval from the people. 
 
 Kearly every amendment to the bill since it was matured has rendered 
 it mpre complex and difficult of execution. I regret to say that some of 
 the amendments of the Senate render the bill incongruous, and tend to 
 defeat its great object, namely : to prevent all forcing of the Government 
 to sell its bonds in the market to the highest bidder for coin. It might be 
 very pleasant for the holders of the seven and three-tenths Treasury 
 notes and six per cent, bonds, to receive their interest in coin semi- 
 annually, but very disastrous to the Government to be compelled to sell 
 its bonds, at ruinous rates of discount, every six months to pay them gold 
 and silver, while it would pay only Treasury notes to the soldier, sailor, 
 and all other creditors of the Government. 
 
 I am opposed to all those amendments of the Senate which make unjust 
 discriminations between the creditors of the Government. A soldier or 
 sailor who performs service in the army or navy is a creditor of the Gov- 
 ernment. The man who sells food, clothing, and the material of war, for 
 the use of the army and navy is a creditor of the Government. The capi- 
 talist who holds your seven and three-tenths Treasury notes, or your six 
 per cent, coupon bonds is a creditor of the Government. AH are creditors 
 of the Government on an equal footing, and all are equally entitled to their 
 pay in gold and silver. 
 
 I am opposed to all those amendments of the Senate which discriminate 
 in favor of the holders of bonds and notes by compelling the Government 
 to go into the streets every six months to sell bonds at the 'market price,' 
 to purchase gold and silver in order to pay the interest * in coin ' to the 
 
128 
 
 capitalists who now hold United States stocks and Treasury notes here- 
 tofore issued, or that may hold bonds and notes hereafter to be issued; 
 while all other persons in the United States (including the Army and 
 Navy and all who supply them food and clothing,) are compelled to 
 receive legal tender Treasury notes in payment of demands due them from 
 the Government. 
 
 Why make this discrimination ? Who asks to have one class of creditors 
 placed on a better footing than another class? Do the people of ITew^ 
 England, the Middle States, or the people of the West and Northwest, or 
 anywhere else in the rural districts, ask to have any such discrimination 
 made in their favor ? Does the soldier, the farmer, the mechanic, or the 
 merchant ask to have any such discrimination made in his favor? No, 
 sir ; no such unjust preference is asked for by this class of men. They ask 
 for the legal tender note bill pure and simple. They ask for a national 
 currency which shall be of eq^ual value in all parts of the country. They 
 want a currency that shall pass from hand to hand among all the people 
 in every State, county, city, town and village in the United States. They 
 want a currency secured by adequate taxation upon the whole property 
 of the country, which will pay the soldier, the farmer, the mechanic, and 
 the banker alike for all debt due. They ask that the Government shall 
 stand upon its own responsibility, its own rights, and exert its vast 
 powers, preserve its own credit, and carry us safely through this gigantic 
 rebellion, in the shortest time, and with the least possible sacrifice. They 
 intend to foot all the hills, and .idti/inately pay the whole amount, principal and 
 interest, in gold and silver. 
 
 Who, then, are they that ask to have a preference given to them over 
 other creditors of the Government ? Sir, it is a very respectable class of 
 gentlemen, but a class of men who are very sharp in all money transac- 
 tions. They are not generally among the producing classes — not among 
 those who, by their labor and skill, make the wealth of the country; but a 
 class of men that have accumulated wealth— men who are wUling to lend 
 money to the Government if you will make the security beyond all ques- 
 tion, give them a high rate of interest, and make it payable in coin. Tes, 
 sir, the men who are asking these extravagant terms, who want to be pre- 
 ferred creditors, are perfectly willing to lend money to the Government 
 in her present embarrassment, if you will only make them perfectly secure, 
 give them extra interest, and put your bonds on the market at the ' market 
 price,' to purchase gold and silver to -pay them interest every six months. 
 Tes, sir, entirely willing to loan money on these terms I Safe, no hazard, 
 secure, and the interest payable 'in coin!' Who would not be willing to 
 loan money on such terms ? Sir, the legal tender Treasury note bill was 
 intended to avoid all such financiering and protect the Government and 
 people, who pay the taxes, from all such hard bargains. It was intended 
 as a shield in the hands of the patriotic people of the country against all 
 forced sales of bonds, and all extravagant rates of interest. 
 
 The legal tender note bill is a great measure of equality. It proposes a 
 currency for the people which is based upon the good faith of the people 
 and all their taxable property. All are obliged to receive and pass it as 
 money, and all are obliged to suhmU to heavy taxation to provide for its ultimale 
 redemption in gold or silver. Every attempt on the part of any class of citi- 
 zens to create distinctions and secure a legal preference, mars the sim- 
 plicity and success of the whole plan. The very discrimination proposed 
 carries on its face notice to everybody that although the notes are declared 
 
129 
 
 to be 'lawful money and a legal tender in payment of debts,' yet that 
 there Is something of higher value, that must be sought after at a sacrifice 
 to the Government, to pay a peculiar class of creditors to whom it owes 
 money— a kind of absurdity and self-stultifloation which does not appear 
 well on the face of the bill. It is an unjust discrimination which does not 
 appear well now, and will not look well in history. Tou will, if the Senate's 
 amendment is adopted, depreciate, hy your own acts, your mun londs and notes, 
 and effectually destroy the symmetry and harmonious working of the whole plan. 
 
 lam in favor of having the Government pay in coin, if it can do so without too 
 great a sacrifice ; 'but I am unable to see any good reason for departing, in this 
 case, from the usual practice of the Government in expressing the mode of paying 
 the interest. AU bonds and Treasury notes heretofore issued are payable gener- 
 ally without specifying that either the principal or the interest shall be paid in 
 coin, and yet the legal effect is the same. I do not see why we should now;, in 
 the present embarrassed condition of the Goverment, give any preference 
 to one creditor over anotlier, or change the form of oxir bonds and 
 Treasury notes by inserting the words 'payable in coin.' The capitalist 
 who holds your bonds or seven and three-tenths Treasury notes is not 
 entitled to any preference over the soldier or the man who furnishes sup- 
 jilies to your Army. We should pay both in specie, if possible ; but I am 
 unwilling to tie up the hands of the Government by compelling it to pay 
 'In coin,' the interest on all the bonds and notes heretofore issued, or that 
 may hereafter be issued. The bonds and notes heretofore issued contain 
 no such expi-ess provision ; it is not ' so nominated in the bond ;' and I am 
 unwilling to have it inserted at this time, either as to tliose now outstand- 
 ing or as to those that are hereafter to be issued. Besides, if you com- 
 mence in this way, by stipulating expressly to pay in coin on the bonds 
 to be issued, it becomes a contract which cannot, without a breach of 
 faith, be changed by a rexseal of the law. You unnecessarily commit the 
 Government to a stipulation which may be very inconvenient, if not 
 impossible, to fulfill, if the public debt runs up to $2,000,000,000, the 
 interest upon which, at six per cent, per annum, would be $120,000,000 
 annually, requiring $60,000,000 of coin every six months to pay interest on 
 your funded debt. I think we should pause before committing ourselves 
 to any such proposition, for no man here is wise enough to tell how long 
 this war will contiuu.e, or how many complications with foreign nations 
 wiU grow out of it, or how great will be the war debt. By all means let us 
 pay the interest in gold to tliose who desire it, if it is practicable to do so; but let 
 us keep the power in the Government itself, and exercise it wisely for the 
 best interest of the whole people. 
 
 The people in the country who hold seven and three-tenths Treasury 
 notes are patriotic enough, while the war lasts, to receive their interest in 
 any money that will pass currently at the banks and among the people. 
 Money with them is only valuable for its uses. Legal tender Treasury 
 notes can be used for all business purposes, without compelling the Gov- 
 ernment to sell its bonds at fifteen or twenty per cent, discount to procure 
 coin when it is entirely unnecessary. *»#**«« 
 
 At the extra session in July we passed two very important bills — one to 
 borrow $250,000,000, for which bonds and notes were to be issued, and the 
 other to call into the service five hundred thousand volunteers, and pay 
 the soldiers thirteen dollars per month, and the officers a higher rate of 
 fixed compensation, Both bills were war measures, both were necessary, 
 and action has been had under both. Under the first bill the associated 
 
130 
 
 banks of New York, Boston and Philadelphia took the sum of $100,000,- 
 000 of seven and three-tenths three years Treasury notes at par, and 
 $50,000,000 twenty years six per cent, bonds at a discount of ten and two 
 thirds per cent, from their face— say net $44,661,230.97, being a loss of 
 $5,338,769.03 on this transaction. This is a higher rate of interest than 
 our Government, with all its immense power and resources, ought to pay ; 
 but the loan has been made, and I only refer to it now for the purpose of 
 showing what has been done under these two acts of Congress. 
 
 Under the army bill, live hundred thousand volunteers have been called 
 into the service, and are now in the iield. Under both of these bills a 
 debt has been created against the Government. The associated banks of 
 IsTew Tork, Boston and Philadelphia are creditors of the Government to 
 the extent of $150,000,000. The five hundred thousand volunteer army 
 are also creditors of the Government to a large amount. We owe them 
 both, and both are creditors under laws passed by us at the extra session. 
 Are not both classes of these creditors on the same footing ? Are the 
 bankers entitled to any preference over the volunteer army? Is the 
 banker's money any more sacred than the services of the soldier in battle, 
 on guard, or in the tented field ? I cannot see that the banker or the 
 holder of Treasury notes is entitled to any preference over the soldier, 
 under these two laws of Congress, and yet, if you concur in these hard- 
 money amendments of the Senate, you will compel the soldier to take 
 legal tender Treasury notes in payment for his thirteen dollars per month 
 which you agreed to pay him, while you pay the banker his high rate of 
 interest, semi-annually, in gold and silver coin. Is this right? Will this 
 be meting out just and equal laws to the loyal citizens of this Govern- 
 ment ? What will your army say to an arrangement of this kind ? Sir, I 
 can consent to no such discrimination, no such amendment, no such 
 injustice. »»*« » * ««»»«» 
 
 It is to be hoped that this will be a short war. It is very desirable that 
 it should be pressed on with the utmost vigor, and be brought to a speedy 
 and successful termination. God grant that this may be the issue. I 
 have no expectation, however, that the authority of the United States 
 Government wiU be respected and enforced in all the Southern States for 
 many years. I think the rebels are desperate and determined, and will 
 never submit to the Constitution and laws until compelled to do so by 
 armed force. They may be beaten and compelled to fall back, but until 
 Union governments are successfully established in all the Southern States 
 the laws of the United States will not be respected, and can only be 
 enforced by the army and navy in actual occupation of the rebellious 
 States. This will require a large and expensive army for many years, the 
 total expenses of which cannot now be estimated. It will require Federal 
 troops in every rebellious State to collect your direct taxes and internal 
 duties; and until you can peaceably collect taxes in all the rebellious 
 States the rebellion is not ended. «»#»#*» 
 
 In every aspect in which you view this hard-money provision, its prac- 
 tical workings will be disastrous. It would be all very well if the amount 
 was small and applied to carrying on the Government on a peace footing, 
 when you know what amount will be required ; but in carrying on the 
 Government at this time, when the magnitude of the expenditures are so 
 overwhelming, all theories applicable to peace must give way to the inexo- 
 rable necessities that are forced upon us in the prosecution of this war. 
 Look at your long line of oflfensive operations, extending from Kansas to 
 
131 
 
 this capital, and thence to Fortress Monroe, Hatteras, Beaufort, Key West, 
 Pensacola, and Ship Island— a distance of more than four thousand miles. 
 This very long lino of military opeilitions cannot be maintained except at 
 an enormous expense for transportation, supplies, and material of war. 
 One million six hundred thousand dollars does not cover the daily expen- 
 ditures. Peace theories of finance must give way to what is practicable to 
 be done in the present exigency. The Government is at this moment in 
 the situation of a merchant who has overtraded, who owes more than he 
 has the present means of paying. He may be compelled to stop payment 
 in specie, when he has ample assets to cover all his liabilities. A mere 
 suspension of specie payments does not imply bankruptcy or insolvency. 
 
 Our country and Government at all hazards must be preserved. To 
 accomplish thi;:^, our ijlan of finance must be simple and practical. As has 
 been shown, we have various descriijtions of property in abundance. We 
 have not the money to meet the sudden demands that are thrown upon us. 
 Is it not better to pledge our honor, our lands, houses, personal estate, 
 incomes, and wealth of all kinds to create this money, on the faith of the 
 nation, than to run the risk of utter ruin to all interests for the sake of 
 holding on to theories which may be excellent in time of peace, but which 
 are wholly impracticable in the ijrosecution of this war. x * •, 
 
 It is very clear that in the prosecution of this war to maintain this 
 Union, the ways and means of carrying it on can only be limited by the 
 actual expenditures. 
 
 We must, while the war lasts, incur all the debt necessai-y to crush out 
 the rebellion, and maintain the authority of the United States Government 
 over all the thirty-four States. We cannot, therefore, now limit the 
 amount of the debt to be incurred, nor can it be accurately estimated. 
 Kotes and bonds must be issued in some form for all the debt incurred, 
 excepting what we may realize annually from taxes, excises, and duties 
 on imports. In issuing these notes and bonds I think it will be much 
 better for the Government, and for the people, to have one uniform 
 system. It would be better for all concerned to have a fixed policy, not 
 to be changed, so that all business men may conform to it at once. That 
 policy should, in my judgement, be the issue of legal tender demand 
 Treasury notes not bearing interest, to be paid out for what is necessary 
 to support the army and navy, and fundable at any time ia twenty years 
 bonds, bearing interest at six per cent., payable semi-annually. This is 
 as high a rate of interest as the Government ought to pay, especially as our 
 people are to be heavily burdened by taxation to pay, ultimately, the 
 interest and principle in gold and silver of all this debt. Let our policy be 
 distinctly fixed and settled, and we shall hear no further importunities for 
 higher rates of interest, or for any preference of one class of creditors over 
 any other class equally meritorious. 
 
 I regret that my sense of duty compels me to differ so widely from the 
 Senate. I have great respect for that body, and would gladly yield to 
 their views, if I did not regard it so fatal to the public Interest. So soon 
 as our funded debt reaches $700,000,000, which will be in a very few 
 months, I believe it will be impossible to procure the coin to pay the 
 interest semi-annually without the most serious consequences to our 
 credit. The amount of discount on our bonds to procure specie would be 
 very large. In every view, the Senate amendment seems to me unneces- 
 sary, injurious, partial and unjust. I trust the House will non-concur in 
 the amendments." 
 
132 
 
 At the time the above remarks were made by Mr. SiDaulding, 
 tJie duties on imports were, as the bill then stood, payable in legal 
 tender notes, but this was afterwards changed in the Committee 
 of Conference, making those duties payable in coin, so that the 
 interest might be paid in coin, without being obliged to force the 
 bonds on the market to obtain coin for that purpose. This was 
 probably the best compromise that could be made, as will more 
 fully appear in finally adjusting the disagreeing votes between the 
 Senate and House. 
 
 SPEECPI OF SIE. POMEEOY. 
 
 Mr. POMEROY, of New York, spoke one hour in favor of paying 
 the interest in coin on bonds and Treasury notes. He said : 
 
 "The action already had upon the hill has, so far as the sense of Con- 
 gress is concerned, settled, if not the constitutionality and expediency of 
 issuing, to a limited amount. Treasury notes, made a legal tender in pay- 
 ment of debts, at least the existence of a necessitv, imder which such 
 constitutional power will he assumed and its exercise declared expedient. 
 I do not propose, therefore, to enter at all upon the discussion of those 
 questions, nor would it be pertinent to the onlj'^ amendment I propose to 
 discuss, to wit: that providing for payment of interest on the national 
 debt in coin. They were fully discussed when the bill was first before the 
 committee, to the neglect, as I then thought and now think, of the point 
 presented by the pending amendment, upon which alone I desire to 
 submit a few remarks. 
 
 The question is not now whether $150,000,000 of Treasury notes shall be 
 issued and made a legal tender in payment of public and private indebt- 
 edness. That proposition has been decided in the affirmative; but if my 
 faith in the necessity and expediency of such issue was stronger even than 
 that of the able and disthagnislied Kepresentative, [Mr. Spaulding,] who 
 has originated this measure, and carried it triumphantly over the Admin- 
 istration and through Congress, still, deeming this amendment, as pro- 
 posed by the Senate and now under consideration, vital to the success of 
 the scheme, and the only regulation by which financial explosion under it 
 can be prevented, I could not, as an original proposition, and cannot now, 
 without such amendment, support this bill. My opinion may be unfounded 
 and erroneous. I hope it is, if this amendment is to fail. I have no pride 
 of opinion upon this matter, but I have convictions, clear, decided and 
 conscientious, which I cannot trample upon without violating my own 
 sense of self-respect and of public dnti*. The opposition which this 
 amendment meets from the framers of the bill sufficiently demonstrates to 
 us and to the country that it is not merely formal in its character, hut is 
 of primary importance and entitled to the highest consideration. I shall 
 be very brief, and will endeavor to be plain in my views respecting it. 
 
 It is conceded by the friends of the House bill, that the policy of issuing 
 Treasury notes under it with the characteristics of money is to be tempo- 
 rary, and that it is a divergence from the correct principles of political 
 economy, to be justified only by necessity, and yet the primary and 
 principal fault I find with it is, that instead of being a temporary measure, 
 it really,ihy its failure to make adequate provision to raise money by loan. 
 
133 
 
 inaugurates and necessitates the perpetuation of a reliance upon a forced 
 paper currency alone to meet the demands of the war, the amount of the 
 issue of which, if sufficient for that purpose, must depreciate it to a mere 
 nominal value, and result in ultimate repudiation. It may he expedient as 
 a remedy for an existing political disorder, hut it is death if relied upon for per- 
 manent existence. 
 
 The credit of the Government has been recently brought to the test of 
 practical experiment in a much more favorable time than the present, 
 when the banks were plethoric with gold beyond all former experience 
 and promptly meeting all engagements in coin, when suspension had not 
 been thought of, and the patriotism of the people was fully aroused in the 
 enlistment of those armies that are to-day more than meeting our proudest 
 anticipations; and yet, under those most favorable auspices, the rate of 
 interest, as established, was seven and three-tenths per cent, for three 
 year coupon bonds, and seven per cent, for those running twenty years, 
 each payable semi-annually in coin, and with the added advantage to the 
 banks, who were the purchasers, of holding the proceeds on deposit with- 
 out interest until drawn out in the usual course of expenditure; and 
 $50,000,000 of the long bonds, authorized at the extra session, have not 
 been, and could not be, sold even at the rate above named. » » » 
 
 The science of Government is one purely experimental. A code of laws 
 designed for men as they ought to be, would be a terrible code applied to 
 men as they are. We experience no difflculy in recognizing in legislation 
 the natural laws of matter, and we should have no more in recognizing 
 the natural laws of mind, association, trade, commerce and business. 
 
 If we are to borrow money, we must recognize these laws ; and I may 
 well call them higher laws, for while legislation cannot change them, they 
 are continually changing legislation. One of these is that the precious 
 metals are the representative of value. The gold dollar of our currency is the 
 unit of value. Conversion into this representative is the only criterion of value. 
 Those who invest money or loan will make it a condition precedent that 
 the interest shall be in money, and not in promises to pay money. Legisla- 
 tion has not changed, and cannot change, paper currency into coin or its 
 equivalent, except through convertibility. Without this requisite it is a 
 mere naked promise. We cannot make Treasury notes money until we 
 can change by act of Congress a promise into a performance, and Almighty 
 power alone can do that. We propose to compel the Government and 
 citizens to receive this paper as money in payment for debt ; but we do 
 not propose to attempt to compel anybody to take it by way of loan, nor 
 to compel anybody to loan it, not even to Government. Then people must 
 be induced to loan it ; and how can you: expect them to do it at rates less 
 favorable than you have already established in more prosperous times, 
 to wit : a rate of seven and three-tenths per cent., payable in coin. 
 
 Xow, this paper is or is not equal to gold. My colleague may talce 
 whichever horn of the dilemma he pleases. If it is not, it is folly to 
 suppose that people are voluntarily going to place themselves in a position 
 where, for a term of years, they compel themselves to receive it as interest, 
 and assume all the risk of depreciation. If it is equal, then there can be 
 no unjust discrimination in paying interest in gold. I prefer to look at 
 the question just as it is, and admit the fact that it is not and cannot be 
 made equal, because it lacks the essential quality of converiibilily. To the 
 extent to which it is not equal, we work a hardship in forcing it into cir- 
 culation; but we have already decided that a necessity exists which 
 
134 
 
 compels us to accept this hardship rather than to inflict upon the people 
 or submit the Government to a greater. And we helieve farther, that the 
 evils thus produced will, in the aggregate, if not in each individual case, 
 he more than compensated hy the relief they will afford from financial 
 stringencj^, and as a medium of exchanges, especially with the Govern- 
 ment itself. 
 
 While, however, we exercise the power to compel the people to receive 
 it as gold in payment of debts, we, unfortunately, have not the power to 
 compel them to loan it back to us on time, and receive more of the same 
 kind as interest. There is just the practical point where our new politi- 
 cal physiology fails. As 'Artemus Ward' would say, ' its /orie is not in 
 borrowing, but in paying,' and we have got to make it work both ways. 
 It is all nonsense to say that while we pay out Treasury notes from neces- 
 sity in some cases, we will forbear to borrow money, without which our 
 credit must go down entirely, because it will necessitate the payment of 
 interest in coin, and thus conflict with our theory ; that because we pay 
 ourselves and our soldiers and everybody else with whom we are under 
 contract, in paper, we will stop ijaying even them rather than to continue 
 the ability to do so by borrowing money and stipulating in advance to 
 pay the interest in a different commodity. The inconsistency consists in 
 not considering that we must first get the principal before we put on airs 
 about the manner in which we will pay the interest, in which transaction 
 the lender as well as the borrower is usually consulted. The Committee 
 of Ways and Means are talking about paying, whereas the problem is 
 how to borrow. 
 
 Nor does the agreement to pay interest in coin tend in the least to 
 depreciate the value of the notes. The very necessity for this agreement 
 arises from the fact of the pre-existing dilTerences in value between coin 
 and paper. It does not create the inequality. It recognizes an existing 
 fact, and applying legislation practically to that fact, enhances the value 
 of the paper, by allowing its conversion into a permanent loan, the ijrin- 
 cipal and interest of which are to be paid in money ; and instead of depre- 
 ciating the paper, checks depreciation by reason of this very convertibility, 
 and presents the only possible mode, that I can conceive of, by which 
 serious depreciation can be prevented and the funding iirocess kept in 
 operation. In fact, this very difierence between the intrinsic values of 
 notes and coin, thus recognized and embodied in our legislation, tends to 
 produce the very object desired — tlie funding of the public debt. If cap- 
 ital will seek Treasury notes at par, for the purpose of investment in 
 bonds, with the interest payable in notes, how much more readily will it 
 seek these same notes, at a slight depreciation, for the purpose of such 
 investment, with the interest to be ijaid in gold; and the very demand 
 for this purpose, while it prevents serious depreciation, is induced by the 
 very depreciation inherent in the cliaractcr of the paper which it contin- 
 ually checks. It produces a self-adjusting funding access, based upon 
 things as they exist in the commercial world, by which the disparity 
 between the value of the two currencies ceases to be an element of dis- 
 cord, and becomes, during the temporary period in which the funding 
 process is going on, an element of good. In this manner, and through 
 the happy instrumentality which may in this way be exerted by these 
 notes, imperceptibly, and through the o)-dinary channels of financial 
 operations, the whole process of funding the pulilic debt will be accom- 
 plished. *««*■»*»»•"»» 
 
135 
 
 One thing further is evident. If tlie debt ctin be funded under the pro- 
 visions of tlic House bill, it certainly can under the Senate amendments. 
 The Treasury has prided itself on its ability to obtain money at the rate 
 proposed by the latter in more prosperous times. If it was satisfactory 
 then, it should be still more satisfactoiy now. In this work we cannot 
 afford to fail. The part of wisdom is, then, to accept the greater safety. 
 When paper shall have taken the place of coin, and the latter, true to its 
 instincts, shall have taken wings and flown away — it cannot be whistled 
 back. It is Idle to argue that two representatives of value of equal nomi- 
 nal amount, but intrinsically unequal, will stay together and consent to 
 become convertible. The more valuable always abandons the field. 
 
 One fact more must not be overlooked in considering this matter — that 
 the security remains the same in all cases, namely : the faith of the Gov- 
 ernment. No inducement is offered by the House to fund these notes in 
 the nature of the new security. The credit of the Oovemment is alike 
 bound for the payment of both classes of indebtedness ultimately in gold. Each 
 derives its entire value from that. The only advantage that can be then 
 offered in funding is the mere convenience in the form of the security, 
 and the payment of interest in a commodity similar to that which the 
 principal represents. »f**«^«**» 
 
 Now, I do not know by what class of soldiers my colleague [Mr. 
 Spaulding,] may be represented in the field, but I do know the character 
 of the two thousand soldiers from my own county, and of the four thous- 
 and soldiers in the field from my congressional district, and I know that 
 their present condition as soldiers is purely ephemeral. Their normal 
 condition is that of citizens, and as such I represent them here ; and they 
 will appreciate at what it is worth the appeal of my colleague in their 
 behalf as a class, as soldiers, in distinction from their character as Ameri- 
 can citizens. ,*«***»**#*» 
 
 I believe I have never failed to sustain, whether it be to my credit or 
 otherwise, any i-ecommendatioia backed by a majority of the Committee of 
 Ways and Means of tliis House. As amended by the Senate in this 
 respect, I will cheerfully support this bill. In its original form I could 
 not, though it has been unpleasant to diverge from so large a proportion 
 of my political associates. It were easier to have followed in the wake of 
 inclination, and covered myself from criticism with the mantle of necessity. 
 I have preferred to walk the plank of duty, trusting to time and jaractical 
 results for the vindication of its policy." 
 
 SPEECH OF MR. C'ALVEET. 
 
 Mr. Calvert, of Maryland, advocated the payment of interest 
 
 in coin. He said: 
 
 "Let me tell the gentleman from New York, [Mr. Spaulding,] that it is 
 useless to talk about the injustice of paying brokers in one currency and 
 other people another. When you want to borrow money you must go to 
 the brokers to borrow it. Farmers and others may be induced by the 
 brokers to invest their money in your bonds ; but they will not do it with- 
 out the advice of the brokers or agents with whom they are in the habit of 
 counseling, and therefore it is the broker at last who holds in his hands 
 your credit, and it is useless for gentlemen of this House to talk about a 
 proposition to put down the brokers who are constantly dealing in these 
 notes. He contended that the amendment of the Senate would benefit the 
 
136 
 
 credit of the Government more than anything else that could be done. 
 People would not loan money to be payable in paper, because, although 
 you make paper a legal tender by legislation, it will not be so in fact— the 
 question has yet to be tried before the State Court, as well as before the 
 United States Court. The only way in which you can possibly have any 
 notes funded is by paying the interest in coin. Then if the notes fall 
 below par they will be immediately funded." 
 
 SPEECH OF MR. MOERILL. 
 
 Mr. MORBILL, of Vermont— "Our whole difficulty in this matter, it 
 appears to me, arises from our departure from sound principles in the' 
 first place. It appears that the House and the Senate have both decided 
 that they will Issue paper and make it a legal tender. I deeply deplore 
 the fact as a blot on our national history that cannot be effaced ; but as I 
 do not now see it probable that any otlier result will be reached, my only 
 purpose and desire is to perfect and pass the best possible bill to be 
 obtained. 
 
 I believe the Senate amendments are, on the whole, a great improve- 
 ment upon the bill as it passed the House. I could wish that we might, 
 even at this hour, slaughter both the original bill and the Senate's amend- 
 ments, and then mature such financial measures as would preserve a 
 sound specie-paying basis ; but having no hope of that now, I trust we 
 may adopt the Senate amendments, which will, in some degree at least, 
 mitigate the evils to be apprehended from the bill as it left this House. 
 
 Now, the gentleman from New York (Mr. Spaulding) talks as though 
 it would be an abandonment of the honor and good faith of the Govern- 
 ment to pay the soldiers in any different species of money from that 
 which we pay our public creditors. I recollect to have read that Frederick 
 the Great, upon a certain occasion, directed his minister, when he was 
 about to seize upon some province of one of his neighbors, to draw up a 
 proclamation justifjing the measure to the world; and his minister drew 
 it up, commencing, 'In the name of God.' Said Frederick, 'strike out all 
 about God, and say that I did it.' Now, I recommend to the gentleman 
 from Kew York, when he is talking about this subject of compelling the 
 public and private creditors to take ijaper money for all debts heretofore 
 or hereafter contracted, to omit all mention of 'honor and good faith.' 
 
 But what is the fact in reference to this matter of paying off the soldiers 
 in any different money ? Why, the fact is that we are going to pay them 
 in paper, according to this bill. Kow, if these soldiers were debtors, and 
 owed a grocer at home or here, and could make a tender of this paper, it 
 might then indeed be of some service ; but how are you to compel the 
 grocer, or any man who has anything to sell upon which these soldiers or 
 their families subsist, to take this paper at anything more than its market 
 value ? Of course, if coin is worth more than paper, they have to pay to 
 that extent more than they would pay if they had coin ; and I am in favor 
 of keeping our promises equal to coin. In my judgment, if we pay the 
 interest on the public debt in specie, it will have a tendency to keep up 
 the credit of the country, and there will be less depreciation upon these 
 notes than there otherwise would be. 
 
 But, Mr. Chairman, the great object is to fund some portion of the public 
 debt. Now, it is perfectly ajDparent, not only from the statement of the 
 gentleman from New York (Mr. Spaulding), but from the knowledge all 
 
137 
 
 have of the subject, that our wants are large, and that we will be copi- 
 pelledto Issue our bonds or notes, or paper of some kind, to a large amount 
 hereafter. Now it is proposed to issue twice, thrice or quadruple the 
 amount of this legal tender paper before this session of Congress closes ? 
 Within sixty days we must have at least twice the amount of notes which 
 is proposed now ; and unless they can be funded into debts due at some 
 future time, from necessity, as we shall again be told, we shall have to 
 repeat the dose we are now ofTcring to the public. Anybody may see that 
 while it might be possible for this country to endure $150,000,000 of addi- 
 tional currency, even if it did unhinge all commercial transactions, that it 
 would be utterly impossible that we could absorb twice or thrice that 
 amount without a vast expansion of the whole monetary system of the 
 country— turning even sober and industrious citizens into the wildest of 
 speculators. * * * * ***«»■»*« 
 But, Mr. Chairman, I believe that if we could stand up here in the vigor 
 of a nation not yet taxed a single dollar for the cost of this war, and 
 mature a proper policy by which we can negotiate a loan standing on the 
 credit of the country, standing on the proposed taxation of the country, 
 standing on our hitherto untarnished honor, that there could be no need 
 whatever of a resort to such a desperate scheme as the one now under con- 
 sideration. I hope, therefore, that we shall adopt the amendment of the 
 Senate. I wish that we might go much further, but that at least is better 
 than a measure whose symmetry is only measured by its exclusively paper 
 character." 
 
 SPEECH OF ME. DUNN. 
 
 Mr. Dunn, of Indiana, spoke as follows: 
 
 "Mr. Chairman — when this bill was under consideration in the House, 
 (in Committee of the Whole, ) a direct vote was taken upon the proposition 
 to pay the interest on the bonds in coin, and the Committee sustained that 
 proposition by a very decided vote. I do not quite understand by what 
 legerdemain the bill went to the Senate in a different form. I voted then 
 that the interest should be paid in coin, and I shall vote so now, notwith- 
 standing the arguments employed here to induce us to vote differently. 
 
 The principal argument urged against the Senate amendment is that it 
 provides for paying our creditors in different ways, and an appeal is made 
 to the patriotism of the House to know if we are willing to pay different 
 kinds of money for our interest from that with which we pay our soldiers. 
 Now, I shall vote for tliis proposition with the direct view and object of 
 making the paper we offer to the soldier as good as possible. I believe 
 that it is impossible to pay them in coin, or I would vote for that. It is 
 necessary to make our notes as good as possible, and if there is any equiv- 
 alent for coin, let us approach tliat point as nearly as possible. If we 
 cannot remove the cloud of debt, let us, at least, give it a golden lining. 
 One mode of sustaining the credit of the notes is to have them converted 
 into bonds; and in order to make those bonds acceptable to those who 
 have money to lend, we must make the interest payable in coin. We 
 must try to induce capitalists to lend us money ; for we have no mode of 
 compelling them to do so. The gentleman from Vermont, [Mr. Morrill,] 
 who has just taken his seat, said that the West expected some advantages 
 from making Treasury notes a legal tender. The members from the West, 
 generally, who voted for making the notes a legal tender, did so because 
 we believed it to be a governmental necessity. We wanted a bridge to 
 
138 
 
 carry us over the morass. We niake it of trestle-work, a temporary work, 
 to serve only until the ground hardens. We do not believe this war is to be of 
 long continuance. We do not believe the necessity of the legal tender clause luUl 
 long exist. I think that those who were desi^ondent ten days ago have 
 now great reason to rejoice. The rapid succession of Union victories has 
 fllled every loyal heart Avith joy, and I do not doubt but that ^ve shall soon 
 be relieved from our pecuniary ditBculties." 
 
 MR. English's speech. 
 
 Mr. English, of Connecticut, spoke in favor of paying the 
 interest in coin. 
 
 He concurred witli Mr. Pendleton on the constitutional question, 
 and considered it settled by his argument tliat it was not consti- 
 tutional to make these notes a legal tender. lie also argued at 
 considerable lengtli that the measure was not necessary at this 
 time. He was in favor of ample taxation, and that the States 
 should be allowed to collect the taxes and pay over the money to 
 the United States. He wanted no Government tax collectors. 
 
 On the pending amendments lie said : 
 
 "lu order to make these bonds valuable to those who have money to 
 Invest, we must adopt the amendment of the Senate providing that the 
 interest shall be paid in gold and silver. When it is ascertained that the 
 interest is to be paid in gold and silver, then the bonds will be sought for 
 investment. If you issue Treasury notes, and if these Treasury notes go 
 into the market and dejireciate — as I think they will not — what will be the 
 effect? The elfeet will be that, just in proxiortion as the Treasury notes 
 depreciate, in the same jDroportion will the interest payable on bonds bo 
 diminished. Tliese Treasury notes answer very well as a means of circu- 
 lation, iirovided the amount of the issue shall not exceed that provided for 
 in this bill. My opinion is that these Treasury notes may answer a very 
 good purpose; but the moment "theii' volume is swollen beyond that, so 
 soon will the}' depreciate. 
 
 I trust that the amendment of the Senate will be concurred in by this 
 House. In my judgment, it is the very best thing that \vc can do under 
 the circumstances. I voted for the issuing of these Treasury notes, but 
 against the 'legal tender' clause. Otherwise, I was in favor of the meas- 
 ure; but the judgment of the House Avas against me on that point. I 
 tliink that now the best tiling the House can do is to concur in the Senate 
 amendment; and I trust that it will be concurred in.'" 
 
 SPEECH OF MR. PIKE. 
 
 Mr. Pike, of Maine, spoke as follows: 
 
 "Ml-. Cliairman— with all due deference to gentlemen who dilTer with 
 me on this subject, it does seem to me that this matter of paying interest 
 In coin is a controversy about goat's wool. The interest will be paid in 
 coin in any event. The recent victories of our armies liaA'c changed the 
 whole matter. (Just heard of the capture of Fort Donelson and the move- 
 ment on ISrashville.) We liavc now to return to a normal condition of 
 currency. *»»»»»'.*»*»-** 
 
139 
 
 "I not only assent most cheerfully to the proposition to pay the interest 
 in coin, but I also assent to the cognate proposition to sell these honds at 
 the highest price we can get for them. We are returning now to a solid 
 basis. I hail the cause of tlie raturn as well as the return itself. Let us 
 sell our bonds to pay the creditors whom we are vmder contract to pay. 
 We never can have a better time for doing so than now, when an efTerves- 
 cence of delight is felt all over the country, because of the victories 
 achieved by our armies. It is felt everywhere now that we not only have 
 a Government, but a country on which to base this issue. Therefore, I 
 say, let us now sell these bonds. Let us realize as much money from them 
 as we can. Let us provide to pay the interest in coin, and let us pay the 
 public creditors." 
 
 SPEECH OF ME. DIVEN. 
 
 Mr. DivEN, of New York, spoke as follows : 
 
 " It strikes me, Mr. Chairman, that the fallacy of all tlie arguments in 
 favor of this amendment consists in the fact that the amendment fails to 
 meet the evil. It is not proposed to go bade and remedy the great 
 national wrong, national dishonor, and inconsistency of the step that has 
 been talcen by declaring that these notes shall be a legal tender. If this 
 House Is determined to adhere to that, if— as the gentleman from Vermont 
 has said — the child is dead, if the national credit is gone, if we are ready 
 to assume the humiliating attitude that national credit and honor are 
 dead, then the argument of the gentleman from New York (Mr. Spaul- 
 ding) is sound. 
 
 The same plea of necessity which is resorted to in support of the legal 
 tender clause, will require us to resort to every effort to do away wUh all dis- 
 tinction letween this paper money and coin. The requiring the payment of 
 interest in coin mil have a tendency to make such distinction. It will have that 
 eilect, and all that we can do will not help it. Let me make one appeal 
 to members. It is not yet too late to retrieve the error. We have not yet 
 declared that we wiU compel men to take those promises to pay, and to 
 treat them as substance. The way to recede from that dangerous propo- 
 sition is before us. 
 
 The times are auspicious. One good reason urged in favor of that policy 
 was that the people were discouraged from the want of success in our 
 army. We have now the encouragement of success. Only let the 
 moneyed men of the country believe that the Government is to succeed 
 in putting down this rebellion, and we will not have to plead for credit. 
 It is not gold and silver that we want. It is not things that are to be 
 taken for gold and silver that we want. It is credit ; it is confidence on 
 the part of men who have money to lend, and who can lend it to the Gov- 
 ernment with the assurance that it will be returned to them. That is all 
 that is wanted. And now, in view of the briUiant prospect before us of a 
 speedy termination of the rebellion, and in view of the immense resources 
 of the Government, in Heaven's name, let us leave no national dishonor, 
 to forever remain a stain upon the country. We will do that, if we do this 
 great wrong. I appeal to the House, in the name of honor and justice, to 
 retrace the step it has taken, and to save the Union from the loss that will 
 afflict it by the passage of this law." 
 
 Mr. "WiNDOM, of Minnesota, objected to the proceeds of tim public 
 bonds being pledged to pay interest or principal on tlie bonds, as 
 
proposed by the Senate, for the reason that it would tend to 
 defeat the Homestead Law. This provision was afterwards struck 
 out in the Conference Committee. 
 
 On the 6th amendment of the Senate, providing that these 
 Treasury notes should be received for all claims and demands 
 against the United States of every kind whatsoever, 'except for 
 interest on bonds and notes, which shall he paid in coin,' Mr. Pendleton 
 moved an amendment to the effect 'that the officers, soldiers, 
 seamen and mariners engaged in the military service of the 
 United States,' should also be paid in coin. Being opposed to 
 the whole legal tender principle, he offered it to meet the objec- 
 tion of the gentleman from New York, [Mr. Spaulding,] in refer- 
 ence to our unjust discrimination against soldiers and others. 
 He said: 
 
 "I am not in favor of that discrimination, but am in favor of paying the 
 ofBcers and soldiers In the military, and naval service of the Government 
 in the legal coin of the country." 
 
 The amendment was not agreed to. 
 
 The amendments of the Senate having been acted upon in Com- 
 mittee of the Whole, Mr. Stevens moved that the Committee rise 
 and report the bill and amendments to the House, which was 
 agreed to. The bill and amendments were accordingly reported 
 to the House. 
 
 On the 20th, the House resumed the consideration of the Senate 
 amendments. 
 
 Mr. Stevens was entitled to one hour in closing the debate. 
 He gave a part of this time to Mr. Hooper, of Massachusetts. 
 
 MR. hooper's speech. 
 Mr. Hooi'EE, of Massachusetts, spoke as follows : 
 
 "Mr. Speaker — with the present large expenditures of the Govern- 
 ment, and while the banks throughout the country are acting under a 
 suspension of specie payments, it is an absurdity to insist on the strict 
 enforcement of the existing laws, which require all Government receipts 
 and payments to be made in coin. It is absurd, in my opinion, because it 
 is impossible ; and it is also absurd because it is useless. What private 
 corporations or individuals in tliis country receive and pay coin in the 
 conduct of their business? There are none. Nearly all the ordinary 
 receipts and payments throughout the country are made in bank notes, 
 bank checks, or credit in some other form; and coin is only required 
 occasionally for a very small per cent, of those receipts and payments, 
 which in amount, extend, in the course of a single year, to thousands of 
 millions of dollars. 
 
 The object of this Treasury note bill is to furnish a substantial and , 
 
141 
 
 uniform currency that will aid the Government, and enable it to receive 
 its dues and make its payments, like all others, with credits. This bill 
 declares that, for all dues to the Government and for all payments by the 
 Government, these notes shall be received 'the same as coin.' One way 
 to make them ' the same as coin ' would be to make them at all times con- 
 I vertible into coin. Another is to use them, so far as possible, for all the 
 purposes for which coin is used ; and in this latter mode their value will 
 be the same as coin, unless the amount that is issued exceeds the amount 
 needed for such uses. 
 
 At the end of twelve months from this time the receipts of the Govern- 
 ment and the payments by the Government, amounting to many hundred 
 millions of dollars, will be found to be nearly equal ; that is, the Govern- 
 ment during that time will have received about the same amount that it 
 will have paid ; and if these ' Government notes ' are, in part, paid out by 
 the Government, as it is proposed they shall be, in anticipation of the 
 receipts for taxes and loans, they must all come back again in the course 
 of the year, when those taxes and loans are paid for. The people may find 
 a portion of these notes more convenient for other uses, and may, there- 
 fore, prefer to make their payments to the Government partly in coin. 
 Unless, therefore, the Government is to be broken down, by the refusal to 
 furnish the means in the form of taxes and loans to carry it on, these notes 
 cannot depreciate to any extent, because they will be needed, and proba- 
 bly a large amount of coin in addition, to pay into the Treasury for the 
 loans and taxes; they wUl be received by the Government the same as 
 coin, and therefore must be for this purpose, and all others, the equivalent 
 of coin, unless they are imprudently issued in excess of the requirements 
 for such purposes. 
 
 I am opposed to this amendment of the Senate which requires the inter- 
 est on Government notes and bonds to be absolutely paid in coin, becaiise 
 its effect wiM he to depredate these notes as compared with coin, hy declaring them 
 in advance to he so depreciated. It creates a necessity for the Government to 
 obtain a large amount of coin by purchase, if it is not received in payment 
 of taxes and loans, which hold out an inducement to speculate on the 
 necessity of the Government, by collecting and hoarding the coin against 
 the time that will be required by the Government to pay its interest; 
 and because it is an unnecessary inconvenience to require the whole 
 amount of the interest to be paid in coin, when only the small amount is 
 necessary that is to be remitted to foreign holders of bonds, which could 
 easily be obtained at small cost, if the effect of the issue of the Govern- 
 ment notes should be what the friends of this bill expect. » « • 
 
 If the opponents of this bill have proved anything, they have proved too 
 much in reference to the question now before the House, which is to make 
 a distinction in favor of the holders of Government securities, and pay 
 what may be due to them in coined money, while all other creditors of 
 the Government shall be paid in what they have denounced to the countrj'- 
 from the high places they occupy here, as the meanest paper trash." 
 
 CLOSINa DEBATE ME. STEVENS' SPEECH. 
 
 Mr. Stevens, of Pennsylvania, spoke as follows : 
 
 "Mr. Speakee— I have a very few words to say. I approacli the sub- 
 ject with more depression of spirits than I ever before approached any 
 question. No personal motive or feeling influences me. I hope not, at 
 least. I have a melancholy foreboding that we are about to consummate 
 
142 
 
 a cuimingly devised scheme, which will carry great injury and great loss 
 to all classes of the people throughout this Union, except one. With my 
 colleague, I believe that no act of legislation of this Government was ever 
 hailed with as much delight throughout the whole length and hreadth of 
 this Union, hy every class of people, without any exception, as the bill 
 which we passed and sent to the Senate. Congratulations from all classes 
 —merchants, traders, manufacturers, mechanics and laborers— poured in 
 upon us from all quarters. The Boards of Trade from Boston, New Tork, 
 Philadelphia, Cincinnati, Louisviile, St. Louis, Chicago and Milwaukee, 
 approved its provisions, and urged its passage as it was. 
 
 I have a dispatch from the Chamber of Commerce of Cincinnati, sent to 
 the Secretary of the Treasury, and by him to me, urging the speedy pas- 
 sage of the bill as it passed the House. It is true there was a doleful sound 
 came up from the caverns of bullion brokers, and from the saloons of the assodaied 
 hanks. Their cashiers and agents were soon on the ground, and persuaded 
 the Senate, with but little deliberation, to mangle and destroy what it had 
 cost the House months to digest, consider and pass. They fell upon the 
 bill in hot haste, and so disfigured and deformed it, that its very father 
 would not know it. [Laughter.] Instead of being a beneficent and invig- 
 orating measure ; it is now positively mischievous. It has all the bad 
 qualities which its enemies charged on the original bill, and none of its 
 benefits. It now creates money, and by its very t^ms declares it a depreciated 
 currency. It makes two classes of money — one for the banks and brokers, and 
 another for the people. It discriminates between the rights of different 
 classes of creditors, allowing the rich capitalist to demand gold, and com- 
 pelling the ordinary lender of money on individual security to receive 
 notes which the Government had purposely discredited. 
 
 Let VIS examine the princiiDal amendments separately, and see their 
 effect. The first important one (being the fifth,) makes the notes issued 
 under the laws of July 17, a legal tender, equally with those authorized by 
 this bill. There can be but little wisdom in putting these two classes on an 
 equality. The notes of July bear seven and three-tenths per cent, interest, 
 and are payable in three years. This gives them a sufficient advantage 
 over notes bearing no interest and payable virtually in twenty years 
 bonds, with six per cent, interest. Why give them this additional advan- 
 tage? Simx)ly because the $100,000,000 issued are all held by the 
 associated banks, and this is their amended bill. They would displace 
 $100,000,000 of this money in the circulation, and render it impossible to 
 use any considerable amount of these United States notes as a currency. 
 These notes have served their purpose. Why allow them to block up the 
 market against further relief to the Government ? 
 
 The banks took $50,000,000 of six per cent, bonds, and shaved the Gov- 
 ernment $5,500,000 on them, and now ask to shave tlie Government fifteen 
 or twenty per cent, half yearly , to pay themselves the interest on these 
 very bonds. They paid for the $50,000,000 in demand notes, not specie, 
 and noAV demand the specie for them. Xet gentlemen talk about our 
 making other loans in these times. They are crazy or sleeping, one or the 
 other, I do not know which. 
 
 When this question was discussed before, the distinguished gentleman 
 from Kentucky (."Mr. Crittenden) asked me whether it was the intention 
 or expectation of the House to go on and issue more than one hundred and 
 fifty millions of dollars of legal tender notes — a pertinent question, which 
 I saw the whole force of at the time. I told him that it was my expecta- 
 
143 
 
 tion that no more would be issued by the ^Government ; that they would 
 be received and funded in the twenty year bonds." 
 
 Mr. LovEJOY— "I ask the gentleman from Pennsylvania whether $150,- 
 000,000 of gold could not be put into circulation as well as $150,000,000 of 
 Treasury notes ? " 
 
 Mr. Stevens— "If this $150,000,000 would come out of the banker's and 
 miser's hoards ; but they have suspended specie payment, and would not 
 give out a dollar. They say pay us a discount, and then when these notes 
 are made a legal tender we will be again in the clutches of these harpies. 
 I do not want to use hard names. I suppose these men act from instinct. 
 If I were now to answer the question of the gentleman from Kentucky, I 
 would not give that answer. I do not expect one dollar of the $150, 000, 000 
 of legal tender notes ever to be invested in the twenty years bonds. I 
 infer from the amendment that before we adjourn $150,000,000 will be 
 asked for, w^hich will never be funded in those bonds, and so on, as they 
 are needed, as no hands will he funded until our circulation mil become fright- 
 fully inflated. * * «-»*»*»*■**'* 
 But now comes the main clause. All classes of people shall take these 
 legal tender notes at par for every article of trade or contract, unless they 
 have money enough to buy United States bonds, and then they shall be 
 paid in gold. Who is that favored class ? The banks and brokers, and 
 nobody else. They have already $250,000,000 of State debt, and their com- 
 missioners would soon take all the rest that might be issued. 
 
 Bui hoiu is this gold to he raised? i The duties and public lands are to he paid 
 for in Uniied States notes, and they or honds are to he put up at auction to get 
 coin for these very hrokers, who would furnish the coin to pay themselves, by get- 
 ting twenty per cent, discount on the notes thus hought. * * » * 
 
 I have proposed an amendment to the Senate amendment upon the prin- 
 ciple of legitimate parliamentary rules, that you may make as palatable as 
 you can an amendment which you do not like, before the vote is taken 
 upon it. My amendment is offered for the purpose of curing a little the 
 evils and hardships of the original amendment of the Senate. And though 
 it may be adopted, I shall vote against the whole as amended. My 
 amendment is to except from the operation of the legal tender clause the 
 officers and soldiers of the army and rwmy, and those who supply them with pro- 
 visions, and thus put them upon the same footing with the Government 
 creditors who hold their bonds. I hope they will not be thought less mer- 
 itorious than the money-changers. I trust it wiU be adopted as an 
 amendment to the Senate amendment, so that if this pernicious system is 
 to be adopted, if the beauty of the original bill is to be entirely impaired, 
 those who are fighting our battles, and the widows and children of those 
 who are lying in their graves in every part of the country, killed in 
 defense of the Government, may be placed upon no worse footing than 
 those who hold the bonds of the Government and the coin of the country." 
 
 At the conclusion of Mr. Stevens' speech the House proceeded 
 to vote on the Senate amendments, some of which were concurred 
 in, and others were disagreed to. 
 
 The first important division of the House was on the sixth 
 
 amendment of the Senate, as follows : 
 
 " Immediately after the clause last quoted, strike out the words 'and 
 for all salaries, debts and demands owing by the United States to Individ- 
 
144 
 
 uals, corporations and associations within the United States,' and insert, 
 ' and of claims and demands against tWe United States, of any Icind what- 
 soever, except for interest upon 'bonds and notes, which shall be paid m coin.'' " 
 
 To this amendment Mr. Stevens moved an amendment to insert 
 after the word "notes," the following: 
 
 "And payments to be made to officers, soldiers and sailors in the army and 
 navy of the United States, andfo^ aU supplies purchased for the said Govern- 
 ment.''^ 
 
 Mr. White, of Indiana — "I appeal to the gentleman from Pennsylvania 
 to withdraw that amendment. It was only intended to illustrate an 
 ahsurdity, and I hope he will witlidraw it." 
 
 Mr. Stevens— "No sir; I cannot withdraw it." 
 
 Mr. Bingham — "I demand the yeas and nays on the amendment to the 
 amendment." 
 
 The yeas and nays were ordered. 
 
 Mr. Baker — "I should like to ask the Chairman of the Committee of 
 Ways and Means^a question." 
 
 The Speaker— "Ko dehate is in order at this time." 
 
 The question was taken, and it was decided in the negative — 
 yeas 67, nays 12; as follows: 
 
 Yeas — Messrs. Aldrich, Ancona, Babbitt, Joseph Bailey, Baker, 
 Biddle, Bingham, Francis P. Blair, Jacob B. Blair, Samuel S. 
 Blair, George H. Browne, Buffinton, Campbell, Chamberlin, Clark, 
 Cobb, Davis, Diven, Edwards, Ely, Fenton, Fessenden, Fisher, 
 Franchot, Frank, Gooch, Granger, Hale, Hanchett, Harrison, 
 Holman, Hooper, Johnson, Julian, William Kellogg, Killinger, 
 Lehman, McPherson, Marston, Maynard, Mitchell, Anson P. 
 Morrill, Noell, Odell, Olin, Perry, John H. Rice, James S. Eol- 
 lins. Shanks. Sherman, Shiel, Sloan, Spaulding, William G. Steele, 
 Stevens, Van Horn, Van Valkenburg, Verree, Voorhees, Wall, 
 Wallace, Ward, Albert S. White, Wilson, Windom, Woodruff and 
 Worcester — 67. 
 
 Nays— Messrs. Alley, Arnold, Ashley, Baxter, Blake, William 
 G. Brown, Burnham, Calvert, Clements, Frederick A. Conkling, 
 Eoscoe Conkling, Conway, Cox, Cravens, Crittenden, Dawes, 
 Dviell, Dunlap, Dunn, Eliot, English, Goodwin, Grider, Gurley, 
 Haight, Hall, Harding, Hickman, Horton, Kelley, Knapp, Law, 
 Leary, Loomis, Lovejoy, McKnight, Mallory, May, Menzies, 
 Moorhead, Justin S. Morrill, Nixon, Noble, Norton, Nugen, Pat- 
 ton, Timothy G. Phelps, Pike, Pomeroy, Alexander H. Rice, 
 Riddle, Robinson, Sargent, Sedgwick, Sheffield, Smith, John B. 
 
145 
 
 • 
 
 Steele, Stratton, Benjamin F. Thomas,); Francis Thomas, Train, 
 Trimble,;^Trowbridge, Vallandigham, Charles "W. Walton, E. P. 
 Walton, Washburne, Webster, Wheeler, Wickliffe and Wright— 
 
 n. 
 
 So the amendment of Mr. Stevens to pay the army and navy 
 in specie, the^same as the bondholders interest in coin, was not 
 agreed to. 
 
 The question being upon agreeing to the sixth amendment of 
 the Senate, to pay interest in coin on bonds and notes, in which 
 the Committee of the Whole on the state of the Union recom- 
 mended concurrence. 
 
 Mr. Roscoe Conkling demanded the yeas and nays. 
 
 The yeas and nays were ordered. 
 
 The question was taken ; and it was decided in the aflflrmative — 
 yeas 88, nays 56; as follows: 
 
 Yeas — Messrs. Ancona, Arnold, Ashley, Baxter, Beaman, Bid- 
 die, Jacob B. Blair, Geoi-ge H. Browne, William G. Brown, Burn- 
 ham, Calvert, Clements, Cobb, Frederick A. Conkling, Eoscoe 
 Conkling, Corning, Covode, Cox, Cravens, Crittenden, Diven, 
 Dunlap, Dunn, Eliot, English, Goodwin, Grider, Gurley, Haight, 
 Hall, Harding, Holman, Horton, Johnson, Kelley, Knapp, Law, 
 Leary, Lehman, Loomis, Lovejoy, McKnight, Mallory, May, 
 Menzies, Justin S. Morrill, Nixon, Noble, Norton, Nugen, Odell, 
 Patton, Pendleton, Perry, Timothy G. Phelps, Pike, Pomeroy, 
 Price, Alexander H. Rice, Riddle, Robinson, Edward H. Rollins, 
 James S. Rollins, Sargent, Sedgwick, Sheffield, Sherman, Shiel, 
 Smith, John B. Steele, William G. Steele, Stratton, Benjamin F. 
 Thomas, Francisi Thomas, Train, Trimble, Vallandigham, Vib- 
 bard, Voorhees, Charles W. Walton, E. P. Walton, Ward, Wash- 
 burn, Webster, Wheeler, Wickliife, Woodruff and Wright — 88. 
 
 Nays — Messrs. Aldrich, Alley, Babbitt, Joseph Bailey, Baker, 
 Bingham, Francis P. Blair, Samuel S. Blair, Blake, Bufflnton, 
 Campbell, Chamberlin, Clark, Davis, Dawes, Duell, Edwards, 
 Ely, Fenton, Fessenden, Fisher, Franchot, Frank, Granger, Hale, 
 Hanchett, Harrison, Hickman, Hooper, Julian, William Kellogg, 
 Killinger, Lansing, McPherson, Marston, JMaynard, Moorhead, 
 Anson P. Morrill, Noell, Olin, John H. Rice, Shanks, Sloan, 
 Spaulding, .^Stevens, Trowbridge, Van Horn, Van Valkenburgh, 
 Verree, Wall, Wallace, Whaley, Albert S. White, Wilson, Win- 
 dom and Worcester — 56. 
 
• 
 So the amendment of the Senate to pay the interest on bonds and 
 
 notes in coin was adopted. 
 Fifteenth amendment. 
 In line thirteen, second section, after the word 'time,' insert, 
 
 'at the market value thereof;' so that the clause will read: 
 
 "And the Secretary of the Treasury may dispose of such bonds at any 
 time, at the market value thereof.''^ 
 
 The Committee of the Whole on the state of the Union recom- 
 mended non-concurrence. 
 
 Mr. Horton asked for a division. 
 
 Mr. Washburne demanded tellers. 
 
 Tellers were appointed. 
 
 Mr. Chamberlin called for the yeas and nays. 
 
 The yeas and nays were ordered. 
 
 The question was taken; and it was decided. in the affirmative — 
 yeas 72, nays 66; as follows: 
 
 Yeas — Messrs. Ancona, Goldsmith F. Bailey, Baxter, Beaman, 
 Biddle, George H. Browne, William G. Brown, Calvert, Clark, 
 Cobb, Frederick A. Conkling, Roscoe Conkling, Conway, Covode, 
 Cravens, Crittenden, Cutler, DunlajD, Dunn, Eliot, English, Good- 
 win, Grider, Hall, Harding, Holman, Horton, Johnson, Kelley, 
 Knapp, Law, Leary, Lovejoy, McKnight, Menzies, Justin S. Mor- 
 rill, Nixon, Noble, Norton, Nugen, Odell, Patton, Pendleton, 
 Perry, Pike, Pomeroy, Porter, Alexander H. Eice, Riddle, Rob- 
 inson, Edward H. Rollins, James S. Rollins, Sargent, Sedgwick, 
 ShefBeld, Shiel, Smith, William G. Steele, Stratton, Benjamin F. 
 Thomas, Francis Thomas, Train, Trimble, Verree, Vibbard, Voor- 
 hees, Charles W. Walton, E. P. Walton, Washburne, Wheeler, 
 Woodruff and Wright — 72. 
 
 Nays — Messrs. Aldrich, Alley, Ashley, Babbitt, Joseph Bailey, 
 Baker, Bingham, Francis P. Blair, Jacob B. Blair, Samuel S. 
 Blair, Blake, Bufflnton, Campibell, Chamberlin, Clements, Cox, 
 Davis, Dawes, Diven, Edgarton, Edwards, Ely, Fenton, Fessen- 
 den, Fisher, Franchot, Frank, Granger, Haight, Hale, Hanchett, 
 Harrison, Hickman, Hooper, Hutchins, Julian, Killinger, Lansing, 
 Lehman, Loomis, McPherson, Marston, Maynard, Moorhead, 
 Anson P. Morrill, Noell, Olin, Potter, John H. Rice, Shanks, 
 Sherman, Sloan, Spaulding, John B. Steele, Stevens, Trowbridge, 
 Vallandigham, Van Horn, Van Valkenburgh, Wall, Wallace, 
 Albert S. White, Wickliffe, Wilson, Windom and Worcester^-66. 
 
 So the amendment was concurred in. 
 
147 
 
 Mr. HOOPEE—" I consider the adoption of the fifteenth amendment of 
 the Senate, which authorizes the Treasurer to sell the bonds at the market 
 price, as an invitation to the public to depreciate their value, and so 
 entirely contrary to the principle of the bill, that I move to lay the bit), 
 with the amendments, on the table." 
 
 Mr. Washbukxe— "The bill is not before the House." 
 
 The Speaker—" A motion to lay a single amendment on the tabic car- 
 ries the bill with it." 
 
 ' Mr. Hooper — "I move to lay this amendment on tlic table ; and demand 
 the yeas and nays on that motion." 
 
 The yeas and nays were ordered. 
 
 The question was taken; and it was decided in the negative — 
 yeas 21, nays 110; as follows: 
 
 Yeas — Messrs. Baker, Samuel S. Blair, Diven, Eliot, Fisher, 
 Granger, Hickman, Hooper, Anson P. Morrill, Justin S. Morrill, 
 Norton, Olin, Pendleton, Sedgwick, Sheffield, Shiel, Sloan, 
 Stevens, Benjamin F. Thomas, Train and Vallandigham — 21. 
 
 Nays — Messrs. Aldrich, Alley, Ancona, Ashley, Babbitt, Gold- 
 smith F. Bailey, Joseph Bailey, Baxter, Beaman, Bingham, Jacob 
 B. Blair, Blake, William G. Brown, Buffinton, Calvert, Campbell, 
 Chamberlin, Clark, Clements, Cobb, Frederick A. Conkling, Roe- 
 coe Conkling, Conway, Cox, Cravens, Cutler, Davis, Dawes, Dun- 
 lap, Dunn, Edwards, Ely, English, Fenton, Fessenden, Franchot, 
 Frank, Goodwin, Grider, Gurley, Haiglit, Hale, Hanchett, Har- 
 ding, Harrison, Holman, Hutchins, Johnson, Julian, Kelley, 
 Killinger, Knapp, Law, Leary, Lehman, Loomis, Lovejoy, Mc- 
 Knight, 3IcPherson, Mallory, Marston, Maynard, Menzies, Moor- 
 head, Nixon, Noble, Noell, Nugen, Patton, Perry, Pike, Pomeroy, 
 Porter, Potter, Price, John H. Rice, Richardson, Riddle, Sargent, 
 Shanks, Shellabarger, Sherman, Smith, Spaulding, John B. Steele, 
 William G. Steele, Stratton, Francis Thomas, Trimble, Trow- 
 bridge, Van Horn, Van Valkenburgh, Verre, Vibbard, Voorhees, 
 AVallace, Charles W. Walton, E. P. Walton, Ward, Washburne, 
 AVebster, AVheeler, Whaley, Albert S. White, Wiekliffe, AVilson, 
 Windom, AVoodruff, AVorcester and Wright — 110. 
 
 So the House refused to lay the amendment on the table. 
 
 The amendment providing for a sinking fund, being the fifth 
 Section of the Senate amendments, was, now concurred in — ^yeas 
 51, nays 52. The remainder of the amendments being merely 
 verbal, were read, voted on in gross, and all concurred in. 
 
 On the same day, 20th inst. , the amendments were returned to 
 the Senate witli a concurrence of the House in a part of the 
 
amendments, a non-concurrence in others, and with some amend- 
 ments to the Senate's amendments. 
 
 Mr. Fessbnden moved that immediate action be had on the 
 amendments. The motion was agreed to, and after some prelim- 
 inary remarks by Mr. King and Mr. Sherman, and without any 
 separate action on the several amendments, Mr. Fessenden said : 
 
 "I will move, as I understand the House has adjourned until to-mor- 
 row, that the Senate insist on its amendments, disagreed to by the House, 
 and disagree to the amendments of the House to the amendments of the 
 Senate, and ask for a Committee of Conference on the disagreeing votes of 
 the two Houses." , 
 
 The motion was agreed to, and the Chair appointed Mr. Fessen- 
 den, Mr. Sherman and Mr. Carlisle, as such Committee. 
 
 On the 21st., the action of the Senate was reported to the 
 House, and on motion of Mr. Stevens, a Committee of Conference 
 was appointed on the part of the House, as requested by the 
 Senate, consisting of Mr. Stevens, Mr. Horton and Mr. Sedgwick. 
 
 The Conference Committee had long consultation, extending 
 through two or three days. They finally compromised some of 
 the most material of the disagreeing votes between the two 
 Houses. 
 
 The most material change made was to require the duties on 
 inyports to be paid in coin, and held as a fund to pay the interest in 
 coin on the funded debt, thereby doing away with the necessity of 
 forcing the bonds on the market to procure coin for that purpose. 
 Several other alterations and amendments were agreed to in the 
 Committee of Conference. 
 
 On the 24th, Mr. Stevens reported to the House the action of 
 the Conference Committee, which was agreed to — ^yeas 97 ; nays 22. 
 
 On the 25th, Mr. Fessenden made the same report in the Senate 
 which was agreed to by the Seuate without a division; and on the 
 same day President Lincoln approved the bill, and thus the Legal 
 Tender act, after a most able and determined opposition, became 
 a law. 
 
 It is not deemed important to set forth in detail the several 
 amendments and compromises made in the Committee of Confer- 
 ence. A copy of the bill as it passed the House on the 6th inst, 
 will be found on page 96, and the following is a copy of the bill 
 as it finally passed both Houses, and became a law. By compar- 
 ing them, the amendments made after the bill first passed the 
 House will fully appear : 
 
149 
 
 ''An Act to authorize the issue of United Slates notes, and for the redemption 
 or funding thereof, and for funding the floating debt of the United &ates." 
 
 Be it enacted hy the Senate and House of Representaiives of the United 
 States in Congress assembled, That the Secretary of the Treasury is hereby 
 authorized to issue on the credit of the United States one hundred and 
 fifty millions of dollars of United States notes, not bearing interest, pay- 
 able to bearer, at the Treasury of the United States, and of such denomi- 
 nations as he may deem expedient, not less than five dollars each. 
 
 Provided, however, that fifty millions of said notes shall be in lieu of the 
 demand Treasury notes authorized to be issued by the act of July 17th, 
 1861, which said demand notes shall be taken up as rapidly as practicable, 
 and the notes herein provided for substituted for them ; and 
 
 Provided further, That the amount of the two kinds of notes together 
 shall at no time exceed the sum of one hundred and fifty millions of dol- 
 lars;, and such notes herein authorized shall be receivable in payment ot 
 all taxes, internal duties, excises, debts and demands of every kind 
 due to the United States, except duties on imports, and of all claims 
 and demands against the United States of every kind whatsoever, 
 except for interest upon bonds and notes, which shall be paid in coin; 
 and shall also be lawful money and a legal tender in payment of 
 all debts, public and private, within the United States, except duties on 
 imports and interest as aforesaid; and any holder of said United States 
 notes depositing any sum not less than fifty dollars, or some multiple of 
 fifty dollars, with the Treasurer of the United States, or either of the 
 Assistant Treasurers, shall receive in exchange therefor duplicate certifi- 
 cates of deposit, one of which may be transmitted to the Secretary of the 
 Treasury, vcho shall thereupon issue to the holder an equal amount of 
 bonds of the United States, coupon or registered, as may by said holder 
 be desired, bearing interest at the rate of six per centum per annum, pay- 
 able semi-annually, and redeemable at the pleasure of the United States 
 after five years, and payable twenty years from the date thereof; and 
 such United States notes shall be received the same as coin, at their par 
 value, in payment for any loans that may be hereafter sold or negotiated 
 by the Secretary of the Treasury, and may be re-issued from time to time 
 as the exigencies of the public interests shall require. 
 
 5 2. And he ii further enacted, That to enable the Secretary of the 
 Treasury to fund the Treasury notes and floating debt of the United 
 States, he is hereby authorized to issue on the credit of the United States 
 coupon bonds or registered bonds, to an amount not exceeding five hun- 
 dred million dollars, and redeemable at the pleasure of the United States 
 after five years, and payable twenty years from date, and bearing interest 
 at the rate of six per centum per annum, payable semi-annually ; and the 
 bonds herein authorized shall be of such denomination, not less than fifty 
 dollars, as may be determined upon by the Secretary of the Treasury ; 
 and the Secretary of the Treasury may dispose of such bonds at any time 
 at the market value thereof, for lawful monej'-, the coin of the United 
 States, or for any of the Treasury notes that have been, or may hereafter 
 be, issued under any former act of Congress, or for the United States 
 notes that may be issued under the provisions of this act ; and all stocks, 
 bonds, and other securities of the United States held by individuals, cor- 
 porations or associations within the United States, shall be exempt from 
 taxation by or under State authority. 
 
150 
 
 § 3. And be it further enacted, That the United States notes and the 
 coupon or registered bonds authorized by this act shall be in such form as 
 the Secretary of the Treasury may direct, and shall bear the written or 
 engraved signatures of the Treasurer of the United States and the Register 
 of the Treasury, and also, as evidence of lawful issue, the imprint of a copy 
 of the seal of the Treasury Department, which imprint shall be made 
 under the direction of the Secretary, after the said notes or bonds shall be 
 received from the engravers, and before they are issued; or the said notes 
 and bonds shall be signed by the Treasurer of the United States, or for the 
 Treasurer, by such persons as may be specially appointed by the Secre- 
 tary of the Treasury for that purpose, and shall be countersigned by the 
 Register of the Treasury, or for the Register, by such persons as the Sec- 
 i-etary of the Treasury may appoint for that purpose ; and all the provis- 
 ions of the act entitled 'An act to authorize the issue of Treasury notes,' 
 approved the twenty-third day of December, eighteen hundred and fifty- 
 seven, so far as they can be applied to this act, and not inconsistent 
 therewith, are hereby revived and re-enacted ; and the sum of three hun- 
 dred thousand dollars is hereby appropriated, out of any money in the 
 Treasury not otherwise appropriated, to enable the Secretary of the Treas- 
 ury to carry this act into effect. 
 
 5 4. And he it farther enacted, That the Secretary of tlie Treasury may 
 receive from any person or persons, or any corporation. United States 
 notes on deposit for not less than thirty days, in sums of not less than one 
 hundred dollars, with any of the assistant treasurers or designated 
 depositaries of the United States authorized by the Secretary of the Treas- 
 ury to receive them, who shall issue therefor certificates of deposit, made 
 in such form as the Secretary of the Treasury shall prescribe, and said 
 certificates of deposit shall bear interest at the rate of five per centum per 
 annum ; and any amount of United States notes so deposited may be with- 
 drawn from deposit at any time after ten days' notice on the return of said 
 certificates ; 'Provided, that the interest on all such deposits shall cease 
 and determine at the pleasure of the Secretary of the Treasury ; and Pro- 
 vided further, that the aggregate of such deposits shall at no time exceed 
 the amount of twenty-five million dollars. 
 
 } 5. And he it further enacted. That all duties on imported goods which 
 shall be paid in coin, or in notes payable on demand, heretofore 
 authorized, to be received and by law receivable in payment of public 
 dues, and the coin so paid shall be set apart as a special fund, and applied 
 as follows :— 
 
 First— To the payment in coin of the interest on the bonds and notes of 
 the United States. 
 
 Second— To the purchase or payment of one per centum of the entire 
 debt of the United States, to be made within each fiscal year after the first 
 day of July, 1802; which is to be set apart as a sinking fund; and the 
 interest of which shall in like manner be applied to the purchase or pay- 
 ment of the public debt, as the Secretary of the Treasury shall from time 
 to time direct. 
 
 Third— The residue thereof to be paid into the Treasury of the United 
 States. 
 
 j 6. And be it further enacted. That if any person or persons shall falsely 
 make, forge, counterfeit, or alter or cause or procure to be falsely made, 
 forged, counterfeited or altered, or shall willingly aid or assist in falsely 
 making, forging, counterfeiting or altering any note, bond, coupon, or 
 
151 
 
 other security issued under the authority of this act, or heretofore issued 
 under acts to authorize tlie issue of Treasury notes or bonds ; or shall pass, 
 utter, publish or sell, or attempt to pass, utter, publish or sell, or bring- 
 into the United States from any foreign place, with the intent to pass, 
 litter, publish or sell, or shall have or keep in possession, or conceal, with 
 Intent to utter, publish or sell, any such false, forged, counterfeited, or 
 altered notp, bond, coupon, or other securitj'-, with intent to defraud any 
 body, corporate or politic, or any other person or persons whatsoever, 
 every person so offending shall be deemed guilty of felonj^, and shall, on 
 conviction thereof, be punished by fine not exceeding $5,000, and by 
 imprisonment and confinement to hard labor not exceeding 15 years, 
 according to the aggravation of the offence. 
 
 5 7. And he it further enacted, That if any. person, having the custody ot 
 any plate or plates, from which any notes, bonds, coupons, or other securi- 
 ties mentioned in this act, or any part thereof, shall have been printed, or 
 which shall have been prepared for the purpose of printing any such notes, 
 bonds, coupons, or other securities, or any part thereof, shall use such 
 plate or plates, or knowingly permit the same to be used for the purpose 
 of printing any notes, bonds, coupons, or other securities, or any part 
 thereof, except such, as shall be printed for the use of the United States, by 
 order of the proper oflicer thei-eof ; or if any person shall engrave, or cause 
 or procure to be engraved, or shall aid in engraving any plate or plates in 
 the likeness or similitude of any plate or plates designed for the printing 
 of such notes, bonds, coupons, or other securities, or any part thereof; or 
 shall vend or sell any such plate or plates, or shall bring into the United 
 States, from any foreign place, any such plate or plates, with any other 
 Intent, or for any purpose, in either case, than that such plate or plates 
 shall be used for printing of such notes, bonds, coupons, or other securi- 
 ties, or some part or parts thereof, for the use of the United States; or shall 
 have in liis custody or possession any metallic plate, engraved after the 
 similitude of any plate from which any such notes, bonds, coupons, or 
 other securities, or any part or parts thereof, shall have been printed, with 
 intent to use such plate or plates, or cause or suft'er the same to be used, 
 in forging or counterfeiting an3'- such notes, bonds, coupons, or other 
 securities, or any part or parts thereof, issued as aforesaid ; or shall have in 
 his custody or possession, any blank note or notes, bond or bonds, coupon 
 or coupons, or other security or securities, engraved and printed after the 
 similitude of any notes, bonds, coupons, or other securities, issued as 
 aforesaid, with intent to sell or otherwise use the same ; or if any person 
 shall print, photograph, or in any other manner execute or cause to be 
 printed, photographed, or in any manner executed, or shall aid in printing, 
 photographing or executing any engraving, photograph or other print, or 
 impression, in the likeness or similitude of any such notes, bonds, coupons, 
 or other securities, or any part or parts thereof, except for the use of the 
 United States and by order of the proper officer thereof, or shall vend or 
 sell any such engraving, photograph, print, or other impression, except to 
 the United States, or 'shall bring into the United States from any foreign 
 place any such engraving, photograph; print, or other impression for the 
 purpose of vending or selling the same, except by the direction of some 
 proper officer of the United States ; or shall have in his custody or posses- 
 sion any paper adapted to the making of such notes, bonds, coupons, or 
 other securities, and similar to the paper upon which any such notes, 
 bonds, coupons, or other securities shall have been used, with intent to 
 
152 
 
 use such paper, or cause or suffer the same to be used in forging or coun- 
 terfeiting any of tlie notes, bonds, coupons, or other securities, issued as 
 aforesaid, every such person so offending shall be deemed guilty of a 
 felony, and shall, on conviction thereof, be punished bj- fine not exceeding 
 five thousand dollars, and by imprisonment and confinement to hard labor 
 not exceeding fifteen years, according to the aggravation of the offence. 
 Approved February 25, 1862. A. LTNCOLN." 
 
 Passage of the Treasury note bill. 
 
 SAMUEL WILKESON TO THE N. X- TRIBUNE. 
 
 Washington, Tuesday, Feb. 25, 1862. 
 
 The Conference Committee of the Treasury note bill having concurred, 
 and Mr. Washburne having defeated another endeavor to adjourn the House 
 yesterday as early as two o'clock, the prospect of an invigoration of the 
 war by a supply of money, and the payment of soldiers and contractors, 
 was good. The bill as agreed upon by the conferees authoi-izes the issue 
 of $150,000,000 of Treasury notes, uniform in similitude, and a legal ten- 
 der in the payment of all debts, public and private. It withdraws the 
 fifty millions of the July issue as soon as it conveniently can be done, 
 makes the new notes fundable at any time in six per cent, twenty years 
 bonds, redeemable at the pleasure of the United States after five years ; 
 makes the interest on the bonds and notes payable in coin, and (a new 
 feature) makes the duties on imports also payable in coin, and devotes 
 them to the payment of the interest on the notes and bonds, and the crea- 
 tion of a sinking" fund by setting apart one per cent, of the amount. The 
 provisions insisted on by the Senate authorizing the Secretary of the 
 Treasury to sell six per cent, bonds for what they -vyill fetch, in order to 
 raise coin for interest, is retained in the bill. All the funded debt is 
 exempted from taxation. Authority is given to temporarily deposit 
 demand notes to the extent of twenty-five millions, on an interest of six 
 per cent, after thirty days. The bill has gone through both Houses, and, 
 it is supposed, will receive the President's signature to-night. An influ- 
 ence from ISTew York sent the bill back again to the Senate this morning, 
 for an amendment that should permit sixty millions of Treasury notes to 
 be used for the payment of custom duties, the fifty millions authorized in 
 July, and the temporary relief ten millions authorized this month. This 
 was adopted and accepted by the House, and it is to be hoped that the 
 President will now have a chance to sign the bill, and the abused public 
 creditors get their pay. 
 
 It is but just to say, that to the patient labor of the Hon. E. G. Spauld- 
 ing the country is greatly indebted for the early maturity of this finance 
 measure, and for what vigor has been displayed in its passage through 
 Congress." 
 
 TEMPOEARY DEPOSITS IN SUB-TREASURY. 
 
 It will be noticed that by the 4th section of the Legal Tender 
 act the Secretary of the Treasury was authorized to receive 
 deposits in the sub-Treasury to the amount of $25,000,000, in sums 
 of not less than $100, at five per cent, interest, -with the privilege 
 to the depositors of drawing it out again at anj^ time, on ten daj'S 
 notice, after thirty days. This was but another form of borrow- 
 
158 
 
 ing money by the Government at a low rate of interest. Its 
 operation at the sub-Treasury was somewhat like that of a 
 Saving's Bank, and the privilege was largely availed of by banks, 
 insurance companies and individuals. It became a very popular 
 mode of temporary investment for coriwrations and individuals, 
 and although it operated against funding in the 5-20 bonds, yet it 
 became an advantageous mode for the Government to borrow 
 large sums of money. It became so popular that on the I7th of 
 March, 1862, the aufhority to receive these deposits was increased 
 to $50,000,000. 
 
 On the 11th of July following the power was enlarged to $100,- 
 000,000; and by the act of January 30, 1864, the authority was 
 still further enlarged to $150,000,000, and the Secretary was 
 authorized to pay as high as six per cent, on these deposits. 
 Certificates were issued to the persons making the depcsits, which 
 were circulated to some extent at the Clearing Houses, and among 
 individuals, which was one mode of increasing the credit circula- 
 tion of the country, and thereby aiding the general inflation which 
 commenced with the passage of the legal tender act. These 
 deposits reached at one time the sum of 1120,176,196. 
 
 CEKTinCATES OP INDEBTEDNESS. 
 
 The issue of Certificates of Indebtedness at one year, was 
 another expedient resorted to for borrowing money, and was 
 another mode of increasing the credit circulation of the Govern- 
 ment. ^ By the act of March 1, 1862, the Secretary of the Treasury 
 was authorized to issue to creditors, who were willing to receive 
 them, ' in satisfaction of audited and settled demands against the 
 United Stales,' certificates of indebtedness (in effect promissory 
 notes,) in sums of not less than 11,000 each, payable in one year 
 at six per celit. interest. And bj' the act of the I7th of March, 
 1862, this power was enlarged, so as to embrace checks drawn in 
 favor of creditors by ' disbursing officers upon sums placed to 
 their credit on the books of the Treasurer.' The power thus con- 
 ferred on the Secretaiy to issue certificates of indebtedness for 
 these purposes was broad and unlimited. The certificates issued 
 under these two acts were in the similitude of bank notes fitted 
 for circulation as money, and did circulate to a considerable 
 extent as currency until there was such an accumulation of inter- 
 est upon them as to make it an object for capitalists to hold them 
 as an investment. The Secretary commenced issuing these certifi- 
 cates simultaneously with the issue of Legal Tender (greenback) 
 
154 
 
 notes, and continued to issue them in large amounts during tlie 
 progress of the war, which was advantageous to the Government, 
 but at the same time was another fruitful source of inflation, and 
 operated directly against any considerable funding in the long 
 5-20 bonds. The amount of indebtedness in this form on the first 
 of November, 1864, was $238,593,000, being an amount greater 
 than the market would bear; they were consequently depreciated 
 and considerably below par. 
 
 JIOBE LEGAL TENDER AUTHORIZED. 
 
 In less than a month after the passage of- the first legal tender 
 act another act was passed at the request of Secretary Chase, 
 approved March lY, 1862, by which the demand notes authorized 
 by the act passed at the extra session in Julj^, 1861, and the sup- 
 plementary act of February 12, 1862, amounting to $00,000,000, 
 were declared to be lawful money and a legal tender, in like man- 
 ner, and for the same purposes, and to the same extent as the 
 notes authorized by the first legal tender act. These notes, when 
 first issued, were receivable b}' the Government for duties on 
 imports, but that was not enough to prevent them from depre- 
 ciating, and some of the banks in the princijDal cities refused to 
 receive them from their customers as monej'. The object to 
 make them a legal tender was to make them pass currently as 
 money at the Clearing Houses, and in all business transactions, 
 without loss to the holders. 
 
 SECRETARY CHASE ASKS FOR $150,000,000 MORE LEGAL TENDER 
 
 NOTES. 
 
 Secretary Chase sent to the Committee of Ways and Means on 
 the 7th of June, 1862, an oflicial communication, accompanied by 
 a bill proposed by him, asking, among other things, for an addi- 
 tional issue of $150,000,000 of legal tender notes; and that of 
 this sum $35,000,000 should be of a denomination less than five 
 dollars. This communication is published as Miscellaneous Doc- 
 ument, No. 81, and sets forth at length the reasons whj^, in the 
 opinion of the Secretary, this additional issue should be author- 
 ized by Congress. He states that the dail}' receipts from customs 
 were about $230,000, and that the average daily conversions of 
 legal tender notes into 5-20 bonds did not exceed $150,000, while 
 the daily expenditures could not be estimated at less than 
 $1,000,000, and would probably exceed that sum; and that he had 
 already exhausted the issue of legal tender notes authorized by 
 the act of February 25th, 1862. 
 
156 
 
 "He proposed that authority be given to the Secretary of the Treasury 
 to issue $150,000,000 in United States notes, in addition to the issue already 
 avithorized ; and that tliese be made a legal tender for debts, except inter- 
 est on loans, and receivable in payment of all loans to the United States, 
 and for all Government dues, except duties on imports and interest. 
 
 If Congress shall see fit to authorize the additional emission proposed, 
 it seems highly expedient that such part as the public convenience shall 
 require be issued in denominations less than five dollars. I am aware of 
 the general objections to the issue of notes under five doUars, and concede their 
 cogency. Indeed, under ordinary circumstances tliey arc unanswerable. 
 But in the existing circumstances of tlie country, they lose most, if not 
 all, their force. 
 
 The country is involved in the expenditures of a contest for national 
 existence, and it is highly desirable that the burdens of the people be 
 made as tolerable as possible. If tlie restriction on the issue of small 
 denominations be removed, the wants of the country will absorb a circu- 
 lation of $25,000,000, and perhaps more. The interest on tliis circulation, 
 say $1,500,000 a year, will be saved to the tax payers. 
 
 Payments to public creditors, and especially to soldiers, now require 
 large amounts of coin to satisfy fractional demands less than five doUars. 
 Great inconveniences in payment of the troops are thus occasioned. 
 With, every effort on the part of the Treasury to provide the necessary 
 amount of coin, it is found impracticable always to satisfy the demand. 
 When the amount required is furnished, the temptation to disbursing 
 officers to exchange it for any small bank notes that the soldiers or the 
 public creditors will take, is too great to be always resisted. And even 
 when the coin reaches the creditors it is seldom held, hid passes, in general, imme- 
 diately into the hands of sutlers and others, and disappea/rs at once from circula- 
 tion. The inconveniencies, therefore, to the Government and creditors, 
 from the absence of United States notes of small denominations, are not 
 compensated by benefits to anybody. 
 
 It may properly be further observed that since the United States notes 
 ai'e made a legal tender, and maintained nearly at the par of gold, by the pro- 
 vision for their conversion into bonds bearing six per cent, interest, 
 payable in coin, it is not easy to see why small notes may not be issued as 
 wisely as large ones. The notes made a legal tender circulate as money ; 
 and the Government may authenticate, by device and imprint, small notes 
 as well as small coins. The limit is to be found only in public conven- 
 ience, which indicates denominations in gold, leaving the smaller circula- 
 tion of silver (less valuable than gold, ) as before. 
 
 Another consideration which deserves to be taken into the account is 
 this : that resumption of payments in specie can be more certainly and 
 easily effected, and with far less of inconvenience and loss to the commu- 
 nity, if the currency, small as well as large, is of United States notes, than 
 if the channels of circulation are left to be filled up by the emissions of 
 non-specie paying corporations, solvent and insolvent. 
 ' These considerations of economy, of public advantage, and of private 
 convenience, seem to me to justify fuUy the removal of the restriction 
 upon the issue of small notes. 
 
 I propose, further, to make arrangements for the necessary engraving 
 and other work for the printing and preparation for issue of these notes in the 
 Treasury Department at Washington. I am led to believe that a very con- 
 
156 
 
 siderable reduction of expense can be thus effected. The prospect, in my 
 judgment, certainly warrants the trial. 
 
 "With these objects I have prepared a bill, which I herewith submit to 
 the consideration of the committee. The condition of the Treasury renders 
 prompt action highly desirable ; and I trust it is not necessary to assure the 
 Committee or Congress that, should the powers asked for be granted, they 
 will be exercised only with the most careful reference to the requirements 
 of the public interests. Whatever the authority granted may be, no issue 
 of notes will be made except to replace notes withdrawn and canceled, 
 and to meet the current expenditures authorized by Congress, which can- 
 not be met from the receipts of revenue, from the increase of deposits, and 
 from the proceeds of the conversion into five-twenties. 
 
 With great respect, S. P. CHASE, 
 
 Secretary of the Treasury." 
 "Hon. Thaddeus Stevens, 
 
 Chairman Committee of Ways and Means." 
 
 The bill thus recommended by Secretary Chase was taken up in 
 the Committee of Ways and Means and duly considered. After 
 considerable discussion Mr. Stevens was authorized to report it to 
 the House, but without the power to issue notes less than five dol- 
 lars. On the nth of June, Mr. Stevens reported the bill and the 
 foregoing letter of the Secretary to the House. They were 
 referred to the Committee of the Whole and ordered to be printed. 
 On the 13th inst., the bill was made the special order for Tues- 
 day, the lYth., and to continue the special order until disposed of. 
 
 MR. spaulding's speech. 
 
 On the 17th of June, the second bill for an additional issue of 
 $150,000,000 legal tender notes, Mr. Spaulding opened the debate 
 in a lengthy speech. The House being in Committee of the 
 Whole (Mr. Phelps, of Missouri, in the chair) on the biU recom- 
 mended by the Secretary of the Treasury, for authority to issue 
 the additional sum of United States notes, Mr. Spaulding said: 
 
 "Mr. Chairman — This is an important measure, and I desire to submit 
 a few remarks in the opening of the debate upon the subject. 
 
 The requirements of the Treasury will probably not be less than $250,- 
 000,000 to meet the current expenses to the 1st of January next. How is 
 this»large sum to be obtained ? I believe it can only be obtained in the 
 mode which has been successfully adopted during the last six months. 
 The financial plan initiated six months ago as a necessary war measure 
 has worked well. It has exceeded the most sanguine expectations of its 
 strongest advocates. The Secretary of the Treasuiy recommends a con- 
 tinuance of the plan which has so successfully carried the country through 
 the perils of the past six months. I shall cordially co-operate with the 
 Secretary, hoping that it may be equally successful in the future. It is 
 our duty now to provide all the means which shall be necessary to pay all 
 the current expenses to the 1st day of January. The bill now under con- 
 sideration is deemed necessary for that purpose, and the Secretary assures 
 
157 
 
 us that the condition of the Treasury renders prompt action highly 
 desirable. 
 
 Buring the pending war, neither the President, the Secretary of the 
 Treasury, nor Congress, can fix a limit to the expenditures of the Gov- 
 ernment, and cannot, therefore, fix a limit to the obligations to be issued 
 on its credit. All that the Secretary can say, all that Congress can 
 declare, is, that the President, as Commander-in-Chief, by his subordinate 
 officers, must contract all the debts which shall be necessary to maintain 
 the army and navy, and all other expenses incident to a vigorous prosecu- 
 tion of the war. The largest latitude is given to the President, Secretary 
 of War, and Secretary of the Navy, in carrying on the war. They have 
 full discretionary power to contract all the debts which they may deem 
 necessary to amply supply the army and navy. All parties loyal to the 
 Government are united in urging a vigorous prosecution of the war ; all 
 parties, therefore, ought to be willing to furnish all the means necessary 
 for this purpose. We must, at any rate, pay all the debts contracted by 
 the Executive in the progress of the war. If we knew how much this 
 would amount to we could easily figure up the amount of the bonds and 
 notes which Congress must authorize the Secretary to issue. No man, 
 not even the President, the Secretary of War, the Secretary of the Navy, 
 the Secretary of the Treasury, or the Chairman of the Committee of Ways 
 and Means, or all of them together, can give even an approximate esti- 
 mate as to the whole cost of this war, because they do not know the 
 number of years it will continue, nor what will be the final solution of 
 the grave questions involved. We are working out a great problem, the 
 result of which no man can know. Slavery was the cause of this war ; 
 and until the solution of the slavery question is arrived at, and the cause 
 of the rebellion removed, we have no hope of permanent peace and tran- 
 quility. This will take a long time ; but how long no man is wise enough 
 to determine. The war debt we all know is already large, and that it is 
 growing fearfully larger every day. Many capitalists and bankers have 
 already Invested all their surplus means in United States stocks. 
 
 During the debate on the Treasury note bill in January and February 
 last, I submitted, with some degree of diffidence as to its accuracy, an 
 estimate of what I thought the whole debt (floating as well as funded 
 debt) of the United States would be on the 1st of July next, and also 
 what the funded and floating debt would be on the 1st of July, 1863, if 
 the war should be prosecuted to that time on the same scale that it is now 
 carried on. I have not seen since, and do not now see, any reason to 
 change the estimates I then made. I then said it was impossible to esti- 
 mate, definitely, what the war would cost, and therefore it was impossible 
 to fix any limit to the amount of paper (obligations of the Government 
 either in the form of notes, bonds or certificates of deposit) that must be 
 issued during its prosecution. The experience of the last few months has 
 t demonstrated the truth of these remarks. We must first apply all the 
 money we can collect from duties on imports, excises, internal duties, 
 direct taxes, and confiscations of the property of rebels, which may 
 amount, during the current year, (of money actually realized) to $125,- 
 000,000, perhaps more, and possibly less. All the expenses of the war, 
 over and above the amount realized from these sources, must be provided 
 for by borrowing in some form upon the credit of the Government. 
 Paper credit in some form must be issued during the next fiscal year to a 
 very large amount. However much we may depreciate it, this will be an 
 imperative necessity which we cannot avoid. However much this may 
 
158 
 
 be a departure from sound business and financial principles applicable to 
 times of peace, we cannot, we must not, shrink from the responsibility 
 which is forced upon us in the prosecution of this war. We must boldly 
 meet every exigency in flnanci,al as well as in military and naval opera- 
 tions. Notes and bonds must be authorized by Congress, and must be 
 negotiated by the Secretary of the Treasury, amply sufficient to sustain 
 the army and navy, or the war must stop. If we have not the money, we 
 have what is equally or more important : the country is full of provisions, 
 clothing, and the material of war. Treasury notes and bonds, issued on 
 the credit of the Government, will procure all these supplies to maintain 
 your army and navy. The war, therefore, can go on, and will go on vig- 
 orously if wc carry out the views submitted to us by the Secretary of the 
 Treasury. 
 
 In what form or mode has the credit of the Government been thus far 
 used in the prosecution of this war ? Five different forms of credit have 
 been resorted to. Loans to the Government, for which obligations have 
 been issued, are as follows : 
 
 1. United States notes, without interest, made a legal tender, and cir- 
 culated as money among the people in all parts of the United States. 
 This is the people's loan to the Government, and the most popular mode 
 of borrowing ever adopted by any Government. It has given the country 
 a sound national currency, in which the people have had entire confidence. 
 Every man, woman and child having a five dollar legal tender greenbaclc 
 note in possession, has directly or indirectly loaned to the Government 
 that amount, and becoming thereby interested in the perpetuity of the 
 Government, is a strong advocate for a vigorous prosecution of the war. 
 A fair test of the loyalty of all such holders of notes may be seen in their 
 manifestation of confidence that they are perfectly good. The soldiers 
 and sailors give their services, risls their lives, and endure all the hard- 
 ships, sickness, and privations of the campaign, and cheerfully take these 
 notes in payment. Supplies, subsistence, and material of war of every 
 kind is eagerly furnished, and these greenbacks taken in exchange for the 
 same. This kind of loan is so popular with the people, and being without 
 interest, is so advantageous to the Government, it is desirable that it 
 should be extended as far as it can be done safely, and without unduly 
 stimulating speculations to such an extent as to cause an unfavorable 
 reaction to the legitimate business of the country. But when lands can 
 be negotiated at par, I think it will he safer to have hands negotiated than to 
 issue legal tender nates. 
 
 2. The second kind of loan has been the issue of bonds running from 
 five to twenty years at six per cent, interest per annum, which is an 
 advantageous mode for the Government to borrow money, because the 
 debt is then funded; and it is also favorable to commerce, because it 
 causes no disturbance in the money market or business ot the country, 
 provided the money is not taken from the capital of men engaged in 
 active business, but is obtained from capitalists who desire permanent 
 investments, and who only want to use tlie interest half-yearly. This 
 mode of borrowing must necessarily be limited to the amount of accu- 
 mulated capital in the country, held by those who are willing to invest it 
 in this way. It is a permanent and safe investment in the hands of those 
 persons who want to use only the interest on their accumulated capital. 
 
 3. A third kind of loan which has thus far worked very well in prac- 
 tice, are deposits in the Treasury of the United States, for which certificates 
 
159 
 
 are issued, bearing four and five per cent, interest, and which deposits 
 may be withdrawn from the Treasury on giving ten days' notice after 
 thirty days. The Government has borrowed over fifty million dollars at 
 this low rate of interest, and the bill now before us proposes to give the 
 Secretary power to extend the amount to $100,000,000. To guard against 
 any sudden call that may be made for these deposits, the Secretary pro- 
 poses to keep on hand, in Treasury notes, ready to be issued, one-third 
 of the amount of the current deposits which may at any time be in the 
 Treasury. With this safeguard, this liind of loan will be very advan- 
 tageous to the Government as well as to the depositors. 
 
 4. Certificates of indebtedness at one year, '.bearing six per cent, inter- 
 est per annum, given in payment of supplies, transportation, and material 
 furnished in the prosecution of the war. This is an advantageous form of 
 credit given to the Government, because it is for a definite time and at the 
 customary rate of six per cent, interest. This form of indebtedness has 
 already reached about fifty million dollars, and may be still further 
 increased under the law already in existence. 
 
 5. Treasury notes at tliree years, bearing seven and three-tenths per 
 cent, interest per annum, payable half-yearly, and convertible into twenty- 
 years six per cent, bonds. This is the most objectionable form of borrow- 
 ing of any that has been adopted, for the reason that the rate of interest is 
 too high — a much higher rate than this great Government, with all its 
 immense power and resources, ought to pay. I think this form of borrow- 
 ing money should only be resorted to when we cannot obtain the money 
 to caiTy on the war in any other way. 
 
 The liquidated and funded debt of the United States, as reported by the 
 Secretary of the Treasury to Congress, May 29, 1862, was as follows: 
 
 Rate of Interest. Amtnmt. 
 
 Loan, 1842 6 $2,883,364 
 
 Loan, 1847 - -G 9,415,250 
 
 Loan, 1848 8,908,342 
 
 Loan, 1858 5 20,000,000 
 
 Loan, 1860 5 7^022,000 
 
 Loan, 1850 5 3,461,000 
 
 Loan, 1861— February 8 - 18,415,000 
 
 Loan, 1801— July 17 - 6 50,000,000 
 
 Loan, 1861— July 17 7.3 120,523,450 
 
 Loan, 1861— Oregon 6 878,650 
 
 Loan, 1862 6 2,699,400 
 
 Treasury Certificates 6 47,199,000 
 
 Treasury notes, ordered G 3,382,162 
 
 United States notes 145,880,000 
 
 Temporary deposits; 5 44,865,524 
 
 Temporary deposits 4 5,913,042 
 
 Total, (average interest 4.35) $491,446,184 
 
 Reducing the above total to the round sum, in English money, of ifilOO," 
 000,000 sterling, we have this contrast of the magnitude of the public debts 
 respectively of Great Britain and the United States, and the annual cost of 
 their support; public debt of Great Britain, £800,000,000, at an annual 
 charge of £28,262,000; public debt of the United States, £100,000,000, at an 
 annual charge of £4,350,000. 
 There is still another kind of indebtedness— the floating debt created in 
 
160 
 
 various forms every day by officers of the Government. This accrued 
 indebtedness, existing in difl'erent forms, must, with our extended line of 
 military and naval operations, be very large. It exists in the shape of 
 accounts, services, transportation, bounties, and all other modes in which 
 debts are made against the Government in enlisting, calling out the 
 militia, and in supplying the army and navy with the necessary material 
 of war. On this kind of indebtedness the Government gets a credit of 
 from one to four months. The whole accrued indebtedness of the United 
 States, funded and unfunded, on the 1st day of July next, it is believed, 
 will not exceed $650,000,000. 
 
 I never have been, and I trust I never shall be, unnecessarily an advo- 
 cate for the creation of an unsound or an inflated currency ; but, sir, I 
 have long ago resolved, since this savage war has been forced upon us, to 
 do whatever was necessary, and which I might lawfully do, to crush out 
 the traitors and annihilate their armies. This cannot be done without the 
 ' sinews of war.' Tour army and navy must be supplied with all the ter- 
 rible armament necessary to crush the enemy. Tour sick, wounded and 
 famishing soldiers must be supplied with hospitals, medical attendance, 
 and all necessaries and conveniences to make them comfortable. This is 
 a plain duty which we cannot any of us fail to perform. If, in the per- 
 formance of this duty, it becomes necessary to authorize a further issue of 
 United States notes, I shall not hesitate to give my vote for it. I am not 
 in favor of increasing the issue of them beyond the imperative necessities of the 
 Oovernment to sustain the army and navy. I much prefer to have our six perr 
 cent, 'bonds issued on permanent loans. I would like to see the Secretary of the 
 Treasury borrow at pa/r aU the money he can on the six per cent, bonds heretofore 
 authorized to be issued. 
 
 When money can be obtained at par on six per cent, bonds, I would prefer to 
 have that done to the issuing a very la/rge amount of legal tender notes. Too 
 large an issue of demand notes, to circulate as money, will no doubt lead 
 to an expansion which will inflate prices, stimulate undue speculation, 
 and ultimately produce a reaction that will derange the whole business of 
 the country. This is to be avoided if possible. I cannot, therefore, advo- 
 cate any greater issue of demand notes than the absolute necessities of the 
 Government require to carry on the war with vigor. I am disposed to 
 give the Secretary power to issue the additional $150,000,000 United States 
 notes asked for by him ; but, at the same time, 1 fed the importance of hav- 
 ing this power exercised discreetly, cmd I trust thai he wiU not issue, or pay them 
 out at aM, when money can be obtained at pair on owr six per cent, bonds. I do 
 not understand that the Secretary intends to have them all issued and put 
 Into circulation at any one time; on the contrary, I believe he has no such 
 intention. He wants the power to issue and use them if necessary, but 
 not otherwise. When he can obtain a sufficient amount of money at par, 
 on six per cent, bonds, or by temporary deposits in the Treasury, there 
 will be no necessity for their issue, and the Secreicm/ assures v,s in his letter 
 that no further issue of notes wiU be made when that can be done; and, besides, 
 the bill provides for his retaining in his own hands legal tender notes 
 equal to one-third of the temporary deposits that may be in the Treasury. 
 Our army and navy and all debts of the Government should be punctually 
 paid. No sacrifice on our part should be too great to raise all the means 
 necessary for this purpose. The Secretary should, therefore, be clothed 
 with ample power to meet any exigency that may arise. 
 
 The money for the large liabilities of the Government that have actually 
 
161 
 
 been met and canceled since the passage of the first legal tender note bill, 
 could not have been raised by a forced sale of six per cent, bonds without 
 a heavy sacriflce. When that biU passed this House our six per cent, iwervly- 
 years bonds were ten per cent, below par. Now they are from one to two per cent, 
 above the price of gold. If, at the time of the passage of the first note bill, 
 large amounts of bonds had been forced upon the market, as would have 
 been necessary but for the passage of that bill, it would have depressed 
 the six per cent, bonds still lower. There was not then money enough in 
 the country seeking permanent investment, to absorb aU the bonds 
 required by the Government to meet the immediate and pressing demands 
 upon the Treasury. This state of things may again occur. I hope not. 
 I trust that there will be no necessity for any considerable issue of new 
 notes ; but to guard against possible contingencies, I am willing to confer 
 large powers upon the Secretary, believing that he will exercise the power 
 wisely, patriotically, and for the best interests of the country. I shall not, 
 therefore, hesitate to clothe him with this great power, and shall, under 
 the exigencies of the crisis, vote for this additional issue of legal tender 
 notes. 
 
 As to the propriety of authorizing the Secretary to issue a portion of 
 this amount in sums less than five dollars, I should, under ordinary cir- 
 cumstances, oppose giving such authority. As a general rule, the issue of 
 small notes should not be adopted for a national currency ; but I am dis- 
 posed, in the present exigency, to vote for this provision, in accordance 
 with the suggestions of the Secretary of the Treasury, and for the reasons 
 urged by him in his communication, sent to us on the 7th inst. 
 
 I have thus briefiy stated the condition and wants of the Treasury. 
 Two hundred and fifty million dollars will be required, as I stated before, 
 to carry us to the 1st of January next. That is more than the coin in all 
 the banks of the United States, and nearly equal to all the coin of the" 
 United States in the hands of individuals and banks ; the whole amount of 
 gold and silver held by the banks and individuals being only about 1265,- 
 000,000. The ground upon which the Secretary of the Treasury, and upon 
 which the Committee of Ways and Means rest this issue of notes, is the 
 necessity of the case. Tlie Secretary urges immediate action in view of 
 the condition of the Treasury. I therefore trust the House will take up 
 this bUl in the regular way, debate it to the extent which may seem desir- 
 able and necessary, and pass it at as early a day as possible." 
 
 MR. COLFAX's SPEECH. 
 
 Ml'. Colfax suggested that the . bonds, into which the notes are con- 
 vertible, ought to be ahsoluiely twenty years bonds, instead of allowing the 
 Government the right to redeem them after five years. The bonds of '81 
 having absolutely twenty years to run, were selling yesterday in New 
 York at six per cent, above par for greenbacks, while the 5-20 bonds 
 would not bring such a premium. If they would command any such 
 premium, these notes, convertible into such bonds, would be brought in 
 for conversion with great rapidity, and there would not be a margin of 
 six per cent, between gold and legal tender notes. He thought it best to 
 legislate in such a manner as to approximate these notes to gold. 
 
 Mr. Stevens— "I agree perfectly with the remarks made by the gentle- 
 man from Indiana. I opposed the substitution of five years bonds for 
 twenty years bonds when the question was before the House, but the 
 House differed with me. The Senate amended the bill, and when it came 
 
162 
 
 back from the Senate, the House agreed with the Senate after discussion 
 here. He said that a majority of the Committee of Ways and Means were 
 not in favor of the recommendation of the Secretary to issue notes less 
 than five dollars,'but he understood that some member of the Committee 
 would offer an amendment in accordance with the recommendation of 
 the Secretary of the Treasury." 
 
 Mr. Spaulding afterwards offered an amendment that no part 
 of these legal tender notes should be ' ' for fractional parts of a 
 dollar, and that not more than $50,000,000 should be of a less 
 denomination than five dollars," which was adopted. 
 
 The bill continued to be discussed by different members of the 
 House from day to day until the 24th of June, when it passed the 
 House in substantially the same form as recommended by tie 
 Secretary of the Treasmy, by yeas 76, nays 47, as follows: 
 
 Yeas — Messrs. Aldrich, Alley, Arnold, Babbitt, Bailey, Bea- 
 man, Bingham, Francis P. Blair, Jacob B. Blair, Samuel S. Blair, 
 Blake, William G. Brown, Campbell, Casey, Chamberlin, Clark, 
 Colfax, Cutler, Davis, Delaplaine, Duell, Dunn, Edgerton, Ed- 
 wards, Ely, Fenton, Fessenden, Franchot, Granger, Gurley, 
 Haiglit, Hale, Hall, Hanchett, Harrison, Hooper, Hutchins, Kel- 
 ley, Frjlncis "W. Kellogg, Lansing, Loomis, Lovejoy, Law, Mo- 
 Knight, Maynard, Mitchell, Moorhead, Nixon, Noell, Nugen, 
 _01in, Timothy G. Phelps, Pomeroy, Potter, Price, John H. Eice, 
 Elddle, Sargent, Shanks, Shellabarger, Sherman, Sloan, Spaulding, 
 Stevens, Trimble, Trowbridge, Van Horn, Van Valkenburgh, 
 Verree, Wall, Wallace, Washburne, Wheeler, Whaley, Wilson, 
 Windom and Worcester — 76. 
 
 Nays — Messrs. William J. Allen, Baker, Biddle, George H. 
 Browne, BufHnton, Calvert, Clements, Cobb, Roscoe Conkling, 
 'Corning, Cravens, Crisfleld, Dawes, Delano, Dunlap, Eliot, English, 
 Fouke, Goodwin, Grider, Harding, Johnson, Law, Menzies, Jus- 
 tin S. Morrill, Norton, Pendleton, Perry, John S. Phelps, Porter, 
 Alexander H. Rice, Eichardson, Sheffield, Shiel, Stiles, Benjamin 
 F. Thomas, Francis Thomas, Vallandigham, Vibbard, Wadsworth, 
 Walton, Ward, Webster, Chilton A. White, Wickliffe, Wood and 
 Woodruff— 47. 
 
 So thebill was passed. 
 
 BILL IN THE SENATE. 
 
 On the 25th of June the bill was received in the Senate and 
 referred to the Finance Committee. On the 28th this Committee 
 reported the bill with amendments. On the 2d of July it was 
 
163 
 
 fully discussed, and after being amended, passed the Senate by 
 yeas, 22, nays 13, as follows: 
 
 yeas — Messrs. Anthony, Browning, Chandler, Clark, Dixon, 
 Foot, Hale, Harris, Henderson, Howard, Howe, Lane (of Indiana), 
 Lane (of Kansas), Morrill, Pomeroy, Simmons, Sumner, Ten Eyck, 
 Wade, Wilkinson, Willey and Wilson (of Missouri) — 22. 
 
 Nays — Messrs. Carlisle, Collamer, Cowan, Davis, Foster, Har- 
 lan, King, Powell, Saulsbury, Sherman, Stark, Trumbull and 
 -Wright— 13. 
 
 The amendments of the Senate were not agreed to by the 
 House, and the disagreeing votes between the two Houses, were 
 finally settled by a Conference Committee, consisting of Mr. Fes- 
 senden, Mr. Sherman and Mr. Wright on the jDart of the Senate, 
 and Mr. Stevens, Mr. Spaulding and Mr. Phelps on the part of 
 the House. The report of the Conference Committee was Anally 
 agreed to on the 8th of July, and on the 11th President Lincoln 
 approved the bill, which is as follows : 
 
 CHAPTEK CXLII. 
 
 " An Act to authorize an additional issue of United Slates Notes, and for 
 other purposes. 
 Be it enacted by the Senate and Souse of Sepresentaiives of the United Slates 
 of America, in Congress assembled. That the Secretary of the Treasury is 
 hereby authorized to issue, in addition to the amounts heretofore author- 
 ized, on the credit of the United States, one hundred and fifty milliona of 
 dollars of United States notes, not hearing interest, payable to beaxer at 
 the Treasury of the United States, and of such denominations as he may 
 deem expedient ; Provided, That no note shall be issued for the fractional 
 part of a dollar, and not more than thirty-five millions shall be of lower 
 denominations than five dollars ; and such notes shall be receivable in pay- 
 ment of all loans made to the United States, and of all taxes, internal 
 duties, excises, debts and demands of every kind due to the United States, 
 except duties on imports and interest, and of all claims and demands 
 against the United States, except for interest upon bonds, notes, and cer- 
 tificates of debt or deposit ; and shall also be lawful money and a legal 
 tender in payment of all debts, public and private, within the United 
 States, except duties on imports and interest, as aforesaid ; and any holder 
 of said United States notes, depositing any sum not less than fifty dollars, 
 or some multiple of fifty dollars, with the Treasurer of the United States, 
 or either of the assistant treasurers, shall receive in exchange therefor, 
 duplicate certificates of deposit, one of which may be transmitted to the 
 Secretary of the Treasury, who shall thereupon issue to the holder an 
 equal amount of the bonds of the United States, coupon or registered, as 
 may by said holder be desired, bearing interest at the rate of six per cent, 
 per annum, payable semi-annually, and redeemable at the pleasure of the 
 United States after five years, and payable twenty years from the date 
 thereof; Frovided, however, That any notes issued under this act may be 
 paid in coin, instead of being received in exchange for certificates of 
 
164 
 
 deposit as above specified, at the discretion of the Secretary of the Treas- 
 ury. And the Secretary of the Treasury may exchange for such notes, on 
 Buch terms as he shall think most beneficial to the public interest, any 
 bonds of the United States bearing six per centum interest, and redeema- 
 ble after five, and payable in twenty years, which have been or may be 
 lawfully issued under the provisions of any existing act ; may re-issue the 
 notes so received in exchange ; may receive and cancel any notes hereto- 
 fore lawfully issued under any act of Congress, and in lieu thereof issue 
 an equal amount in notes such as are authorized by this act; and may pur- 
 chase, at rates not exceeding that of the current market, and cost of 
 purchase not exceeding one-eighth of one per centum, any bonds or cer- 
 tificates of debt of the United States as he may deem advisable. 
 
 Section 2. And be U further enacted. That the Secretary of the Treasury 
 be, and is hereby, authorized, in case he shall think it expedient to pro- 
 cure said notes, or any part thereof, to be engraved and printed by con- 
 tract, to cause the said notes, or any part thereof, to be engraved, printed 
 and executed, in such form as he shall prescribe, at the Treasury Depart- 
 ment in Washington, and under his direction ; and he is hereby empow- 
 ered to purchase and provide all the machinery and materials, and to 
 employ such persons and appoint such oflBcers as may be necessary for 
 this purpose. 
 
 § 3. And be it further enacted, That the limitation upon temporary 
 deposits of United States notes with any assistant treasurer, or deisignated 
 depositary authorized by the Secretary of the Treasury to receive such 
 deposits, to fifty millions of dollars be, and is hereby repealed ; and the 
 Secretary of the Treasury is authorized to receive such deposits, under 
 such regulations as he may prescribe, to such amount as he may deem 
 expedient, not exceeding one hundred millions of dollars, for not less 
 than thirty days, in sums not less than one hundred dollars, at a rate of 
 interest not exceeding five per centum per annum; and any amount so 
 deposited may be withdrawn from deposit, at any time after ten days 
 notice, on the return of the certificate of deposit. And of the amount of 
 United States notes authorized by this act, not less than fifty millions of 
 dollars shall be reserved for the purpose of securing prompt payment 
 of such deposits when demanded, and shall be issued and used only when, 
 in the judgment of the Secretary of the Treasury, the same, or any part 
 thereof may be needed for that purpose. And certificates of deposit and 
 of indebtedness issued under this or former acts, may be received on the 
 same terms as United States notes, in payment for bonds redeemable after 
 five, and payable in twenty years. 
 
 § 4. And he it further enacted, That the Secretary of the.Treasury may 
 at any time, until otherwise ordered by Congress, and under the restric- 
 tions imposed by the 'Act to authorize a national loan, and for other 
 purposes, ' borrow on the credit of the United States, such part of the sum 
 of two hundred and fifty millions mentioned in said act as may not have 
 been borrowed, under the provisions of the same, within twelve months 
 from the passage thereof. 
 
 J 5. And be it further enacted, That any part of the appi-opi'iation of ten 
 thousand dollars for the detection and bringing to trial of persons engaged 
 in counterfeiting the coin of the United States, made by the act entitled 
 'An Act making appropriations for the legislative, executive and judicial 
 expenses of the Government, for the year ending the thirteenth of June, 
 eighteen hundred and sixty-one,' approved June twenty-three, eighteen 
 
165 
 
 hundred and sixty, may be applied in detecting and bringing to trial and 
 punishment, persons engaged in counterfeiting Treasury notes, bonds, or 
 other securites of the United States, as well as the coin of the United 
 States. And to carry into effect the preceding sections of this act the 
 sum of three hundred thousand dollars is hereby appropriated, out of any 
 money in the Treasury not otherwise appropriated. 
 
 § 6. And he it further enacted, That all the provisions of the act entitled 
 ' An Act to authorize the issue of United States notes, and for the redemp- 
 tion or funding thereof, and for funding the floating debt of the United 
 States,' approved February twenty-five, eighteen hundred and sixty-two, 
 so far as the same can or may be applied to the provisions of this act, and 
 not inconsistent therewith, shall apply to the notes hereby authorized to 
 be issued. 
 
 Approved, July 11, 1862. A. LINCOLN." 
 
 POSTAGE STAMPS AND FRACTIONAL CUKBENCY. 
 
 Another expedient resorted to for providing means to carry on 
 the war, was the issue of postage stamps and fractional currency. 
 After the suspension of specie payments by the banks and the 
 passage of the first legal tender act, gold and silver were in a 
 great measure banished from circulation. There was a great 
 scarcity of small change in ordinary business transactions. Cor- 
 porations, individuals and firms commenced issuing sMnplasters to 
 supply the deficiency. It soon became apparent that unless some 
 action was taken to prevent it, the country would be flooded with 
 a heterogeneous fractional currency of very little value, and very 
 vexatious in business transactions. 
 
 To remedy these evils, and in order that the Government might 
 avail itself of the advantages of this circulation. Congress, at the 
 request of Secretary Chase, passed the following bill : 
 
 CHAPTER CXCVI. 
 
 "An Act to authorize payment in Stamps, and to prohibit drmdalion of notes of 
 
 less denomination than one dollar. 
 
 Section 1. Be it enacted hy the Senate and Souse of Bepresentatives of the 
 United States of America in Congress assembled, That the Secretary of the 
 Treasury be, and he is hereby directed to furnish to the Assistant Treas- 
 urers, and such designated depositaries of the United States as may be by 
 him selected, in such sums as he may deem expedient, the postage and 
 other stamps of the United States, to be exchanged by them, on applica- 
 tion for United States notes : and from and after the flrst day of August 
 next such stamps shall be receivable in payment of all dues to the United 
 States less than five dollars, and shall be received in exchange for Uuited 
 States notes when presented to any Assistant Treasurer or any designated 
 depositary, selected as aforesaid, in sums not less than five dollars. 
 
 } 2. And be it further enacted, That from and after the first day of 
 August, eighteen hundred and sixty-two, no private corporation, banldng 
 association, firm or individual, shall make, issue, circulate, or pay any 
 
166 
 
 note, check, memorandum, token, or other obligation for any less sum 
 than one dollar, intended to circulate as money or to be received or used 
 in lieu of lawful money of the United States ; and every person so oflfend-' 
 ing shall, on conviction thereof in any district or circuit court of the ' 
 United States, be punished by fine not exceeding five hundred dollars, or 
 by imprisonment not exceeding six months, or by both, at the option of 
 the Court. 
 Approved July 17, 1S62." 
 
 The use of stamps for small change did not work well in prac- 
 tice, and Secretary Chase recommended that fractional currency 
 should be authorized in the place of postage and revenue stamps. 
 This recommendation was carried into effect by the 4th section of 
 the act of March 3d, 1863, by which the Secretary was authorized 
 to issue fractional currency to any amount not exceeding $50,- 
 000,000, redeemable in United States notes in sums not less than 
 three dollars, and receivable for postage and revenue stamps, and 
 also in payment of any dues to the United States less than five 
 dollars, except duties on imports. This fractional currency was 
 not made a legal tender for private debts, but upon the whole it 
 has served a useful purpose ; and the second section of the act of 
 July 17, 1862, prohibiting all other. shinplasters, has kept the coun- 
 try free from a flood of small "paper trash," which at one time 
 was very annoying to the business community. The Government 
 has had the benefit of an average circulation of this form of credit 
 to the amount of about $30,000,000, which is still outstanding, 
 and which should at an early day be replaced by the silver coins 
 which were in common use before the war. Would it not be well' 
 to destroy this currency as fast as it becomes mutilated and is 
 returned to the Treasury Department? If no more should be 
 printed or issued ,it would not be long before the present issue 
 would wear out and be replaced by small coins. 
 
 SECOND ANNUAL EEPOET OF SECEETAET CHASE, DEC. 4, 1862. 
 
 Secretary Chase again earnestly recommended the National 
 Currency Bank Bill, and urged its passage by additional argu- 
 ments, which he presented more in detail than in his first report. 
 
 "He still adhered to the opinion expressed in his last report that a circu- 
 lation furnished by the Government, but issued by banking associations 
 organized under a general act of Congress, is to be preferred to either 
 United States legal tender notes or notes of State Banking Coi-porations. 
 Such a circulation, uniform in general characteristics, and amply secured 
 as to prompt convertibility by national bonds deposited in the Treasury 
 by the associations receiving it, would unite, in his judgment,^ more 
 elements of soundness and utility than can be combined in any other. 
 
167 
 
 Little direct aid is, however, to be expected from this plan during the 
 present, nor very much, perhaps, during the next year. He briefly argued 
 the conkitutvAaMy of this plan as an auxiliary to the power to borrow 
 money ; as an agency of the power to collect and disburse taxes ; and as 
 an exercise of the power to regulate commerce, and of the power to regu- 
 late the value of coin." 
 
 He recommended a further limited issue of legal tender notes 
 as a wise expedient for the present time, and as an occasional 
 expedient in future times, an^ the immediate passage of the bank 
 bill for raising the additional means to carry on the war. 
 
 $900,000,000 LOAN ACT. 
 
 We now come to the consideration of the $900,000,000 Loan 
 Act, which, in connection with loan acts already passed, conferred 
 more discretionary pmver on the Secretary of the Treasury than 
 was ever granted by law to any other Finance Minister in the 
 world; and which ultimately led to a dangerous expansion of 
 credit circulation in various forms, and in connection with the 
 bank bill, which passed about the same time, to an enormous 
 inflation of prices, caused by the over-issuing of paper money 
 which came very near proving fatal to the finances of the Gov- 
 ernment and the legitimate business of the country. 
 
 The bill having been carefully considered in the Committee of 
 Ways and Means, was, on the 8th of January, 1863, reported from 
 the Committee to the House by Mr. Stevens. It was entitled, 
 ' ' A bill to provide Ways and Means for the support of the Gov- 
 ernment;" which was read twice, ordered to be printed, referred 
 to the Committee of the Whole, and made the special order for 
 Monday, the 12th inst. (House bill No. 659.) The bill as 
 reported did not contain some provisions which Secretary Chase 
 was very anxious to have passed^one was to repeal the provision 
 restricting him in the sale of bonds to the 'market value' — 
 another was to abrogate that most equitable and just provision 
 contained in the original legal tender act, allowing the holders of 
 legal tender notes to convert them at any time into 5-20 six j)er 
 cent, bonds, interest payable semi-annually in coin. The Com- 
 mittee did not deem it just to abrogate this provision, while Sec- 
 retary Chase believed its repeal would enable him to make better 
 terms in selling bonds. ' 
 
 MK. spatjlding's opening speech on the bill. 
 
 On the 12th, the bill being' the special order, was taken tip in 
 Committee of the Whole, and, an amendment having been 
 
168 
 
 offered by Mr. Stevens, Mr. Spaulding opened the debate upon 
 it in the following speech : 
 
 "Mr. Chairman— This subject is a very dry one, hut it is intensely 
 interesting at the present time. I propose to discuss the hill reported by 
 the Committee of Ways and Means, with the amendment of the gentle- 
 man from Pennsylvania, so far as I shall be able during the hour allotted 
 to me under the rules of the House. 
 
 The immediate requirements of the Treasury are not less than $100,000,- 
 000. Before you can pass this bill through both Houses, have it approved 
 by the President, and get bonds and notes engraved, printed and issued, 
 at least $50,000,000 more will be required. The pressing demands upon the 
 Treasury letween this and the first of next month, for the pay of soldiers and 
 other creditors, may he put down at $150,000,000. The gold and silver in 
 the banlcs in New York, Boston and Philadelphia, on the first of this 
 month, probably did not exceed $49,000,000; to which you may add the 
 gold and silver in all other banks in all the loyal States, as wiU appear in 
 official reports to the first ot January, 1863, and the whole sum will not 
 exceed $87,000,000. All this coin is necessary for the banks to take care 
 of their own liabilities ; but even if the Secretary could, on the credit of 
 the Government, by a sale of bonds at any sacrifice, or by the aid of the 
 military power, visit every bank in the country, and by force compel all 
 this coin to be paid into the Treasury, it would not pay fifty cents on the 
 dollar on the demands due from the Government, and which ought to be 
 paid in the next twenty days. It is therefore perfectly plain that even 
 the smaU sum of $150,000,000, now due, cannot he paid in gold. It would 
 be a gratification to me, and, I doubt not, to every other loyal citizen, if 
 it were otherwise. It is ow fault of the Secretary or of Congress that gold 
 cannot now be paid to the soldiers and other creditors. It is simply an impos- 
 sibility, by any plan, to get enough for that purpose. There was never a more 
 pertinent application of the old maxim than when applied to our present 
 condition, ' when we cannot do as we would, we must do as we can.' 
 
 I have had a strong desire to provide money upon a specie basis, for the 
 support of the army and navy, during the pending struggle to preserve 
 the Constitution and the National Union. I would much prefer to pay 
 gold and silver to all the creditors of the Government. During the first 
 six months of the war, I was in hopes that our expenditures might be 
 kept within limits that would admit of such a financial policy. I believe 
 that this was the earnest wish of the Secretary of the Treasury, and of 
 every member of the Committee of Ways and Means. But with an army 
 in the field of from seven hundred thousand to one million of men, to be 
 fed, clothed and paid, and all the material of war provided to make them 
 eflicient for active duty, it was very soon ascertained that the coin in the 
 country, amounting only to about $250,000,000, if every dollar held by 
 the banks and the people could have been availed of, was far too small to 
 meet these large expenditures. We could not shut our eyes to the vast- 
 ness of the volume of debt that was open before us. It was very soon 
 made apparent that our national debt would, at an early day, reach 
 $2,000,000,000, equal to half the debt of Great Britain; and that it would 
 be utterly impossible to make loans on a specie basis fast enough to meet 
 such enormous expenditures. 
 
 At the last session, and after there had been a general suspension of 
 specie payments by the banks and the Government, Congress authorized 
 
169 
 
 the issue of $150,000,000 of legal tender notes ; and by another law, passed 
 a few months later in the session, an additional issue of $150,000,000 was 
 also anthorized, but the Secretary was required to hold in reserve $50,000,- 
 000 to meet any calls that might be made for temporary deposits in the 
 sub-Treasury. We all hoped that this would be all the legal tender notes 
 that would be necessary. Congress also authorized the Secretary to bor- 
 row $500,000,000, payable in twenty years, and redeemable at the pleasure 
 of the Government after Ave years, bearing interest at the rate of six per 
 centum per annum, payable half-yearly in coin, and gave him avihority to 
 sell them at any time ' at the marhet price,'' to raise rrioney to carry on the war ; 
 and further authorized the holder of any legal tender 7u>tes to convert them at 
 any time, at par, into these six per cent, bonds. 
 
 The Secretary has paid out nearly $250,000,000 legal tender notes, being 
 all that he was authorized to issue ; and notwithstanding he has had author- 
 ity for the last ten months to seU $500,000,000 of five-twenty six pei' cent, bonds, 
 at the market price, he has only disposed of aboitt $25,000,000, and has stUl 
 authority to sell $475,000,000 at the market price, and take his pay for them in 
 legal tender notes. 
 
 One of the reasons why more of these bonds have not been disposed of 
 is, that there has been no redundancy of currency, and it has been diffi- 
 cult for the Secretary to get legal tender notes on a sale of the bonds and 
 seven-three-tenths notes that he has already negotiated. 
 
 The War and Navy Departments have almost unlimited power to con- 
 tract debts for the supply of the army and navy. The volume of supplies 
 and supply trains for j'our army are enormously large ; and extending 
 over such a widely extended field of military operations as that in which 
 our several army corps are engaged, no one can fail to see that it is next 
 to impossible to estimate accurately the amount to be appropriated for a 
 year in advance. But it is painfully certain, that with the present army 
 in the field, there is no way of limiting the amount of expenditures when 
 they are actively operating to put down so gigantic and desperate a 
 rebellion. 
 
 We know that the liquidated and funded debt is already large, and that 
 there is a large accrued indebtedness, which ought to be paid at an early 
 day, but without any adequate means in the Treasury to pay it. There is 
 a large amount due to the soldiers that must be paid at the earliest moment pos- 
 sible. The soldiers now on the field of battle, or encamped in front of the enemy, 
 enduring all the perils and hardships of wa/r, m,any of whom have not received 
 their pay for months, ougH not to be put off any longer. They can hardly be 
 expected to perform their duties with alacrity, unless they are promptly 
 paid, especially when they know, as many of them do, that their families 
 at home are suffering for the want of the means of life. It is am. impera- 
 tive necessity that the means for paying the army and navy should not be 
 ddayed any longer. If the Secretary cannot raise the money to pay the 
 creditors of the Government by a loan on five-twenty six per cent, bonds 
 at the market price, other authority must be given him to raise the 
 money, and Congress ought to confer that authority upon him as soon as 
 possible. 
 
 The time has arrived when our finances must engage the earnest and 
 united attention of all loyal Representatives. We were in great perillast 
 year, but our dangers are now two-fold what they were then. It was 
 very difficult last year to provide the money to meet the large appropria- 
 tions made for the support of the army and navy. It will be still more 
 
170 
 
 difficult to meet the enlarged requirements of the current and the next 
 fiscal year. The army bill alone appropriates over $731,000,000, which, 
 added to the estimates of all the other expenditures for the fiscal year 
 ending June 30, 1864, amount to the enormous sum of $1,095,431,183.56, to 
 which must he added the amount still required for appropriations and 
 deficiency for the year ending June 30, 1863, and which, according to the 
 report of the Secretary of the Treasury, amounted on the 1st of Decemher 
 last to the sum of $551,221,131.59, making the whole aggregate required 
 to meet appropriations during the next eighteen months $1,646,634,315.15, 
 
 NATIONAL DEBT. 
 Particulars of the public debt outstanding January 2, 1864: 
 
 Loan of 1842 in course of payment $2,883,364 11 
 
 " 1847 9,415,250 00 
 
 1848 - 8,908,341 80 
 
 " 1858 20,000,000 00 
 
 1860 -- 7,022,000 00 
 
 1861, act of February 8, 1860 18,415,000 OO 
 
 " 1861, act of July 18, 1861 50,002,000 00 
 
 " 1862, five-twenty six per cent 25,050,850 00 
 
 Texas indemnity 3,461,000 00 
 
 Oregon war debt 1,026,600 00 
 
 Texas debt 112,092 60 
 
 Old funded and unfunded debt 114,115 48 
 
 Treasury notes under acts prior to 1857 104,561 64 
 
 " " subsequent 2,750,350 00 
 
 Treasury notes seven-thirty per cent, interest 139,998,000 00 
 
 Temporary deposits at four per cent 38,458,008 50 
 
 '< " fivepercent 41,777,628 16 
 
 United States notes, legal tender and receivable for customs 14,913,315 25 
 
 United States notes, legal tender 223,108,000 00 
 
 Postal currency less than one dollar 6,844,936 00 
 
 Certificates of indebtedness, six per cent 110,321,241 65 
 
 Requisitions on the Treasury for soldiers' pay and other 
 
 creditors, due but not paid 59,117,597 46 
 
 Total funded and unfunded debt to January 2, 1863, accord- 
 ing to the boolis in the Treasury Department 783,804,252 64 
 
 To which may be added the estimates of appropriations 
 made and asked for to July 1, 1864, (including $100,000,- 
 000 that may be undrawn at the end of the year, and 
 which will be due though not paid), amounting to, say. 1,216,197, 745 35 
 
 Public debt estimated to July 1, 1864, if the war continues 
 
 on the same scale to that time $2,000,000,000 00 
 
 How is this large sum to be obtained ? 
 
 The Secretary of the Treasury, in his annual report, indicates two 
 modes of obtaining it, as follows : 
 
 1. A national bank bill. 
 
 2. By loans in some of the forms heretofore authorized. 
 
 I propose to examine these modes of obtaining the money in the order 
 above stated. 
 
 1. A national bank law. It is proposed by this bill to authorize the 
 formation of banking corporations in all parts of the country, with the 
 
171 
 
 usual powers of State banks. They are to have the power to issue bank 
 notes to circulate as money, and to be secured by United States stocks, 
 deposited in the Treasury Department as security for the redemption of 
 the currency thus issued. This bill in all its essential features is like the 
 free banking law ot the State of New Tork. It proposes to nationalize all 
 the bank currency of the country by the adoption of such a coercive policy 
 toward existing banks as will compel them to throw up their present 
 State charters, and organize anew under this hill. A tax of two per cent, 
 per annum is proposed on all State bank circulation, in addition to the 
 State, county and city taxes which State banks are compelled to pay under 
 State laws, and in addition to the internal revenue tax of three per cent, 
 on their profits, making an aggregate tax upon State banks of about five 
 per cent. By this hostile policy toward existing banks, it is proposed to 
 compel them to surrender their present chartered rights, to make a marlcet 
 for United States stocks, to be deposited In the Treasury Department as a 
 basis for national bank circulation under this new system, to the amount 
 of $250,000,000. 
 
 It is anticipated that in the course of a few years, and certainly as soon 
 as the system goes fully into operation, United States bonds will be depos- 
 ited to this amount. There is no provision requiring new banks, organ- 
 ized under this bill, to redeem their circulating notes in coin. They are 
 to remain under suspension of specie payments, the same as existing 
 banks, until there is a general resumption on the part of the GovernmerS 
 and the banks, long after the close of the war. The central idea of the 
 measure, as stated in the Secretary's report, 'is the establishment of one 
 sound uniform currency, of equal value throughout the country, upon the 
 foundation of national credit, combined with private capital,' and making 
 this the settled financial policy of the country. This is the scheme pro- 
 posed. The first question presented is : will this materially aid the Gov- 
 ernment in the present exigency? I think it will not, and the Secretary 
 frankly admits that 'little direct aid is to be expected from this plan 
 during the present, and not very much, perhaps, during the next year.' 
 We have already issued, and put into circulation, legal tender notes direct 
 from the Treasury, and without the machinery or expense of a national 
 bank, to about the sum of $250,000,000. These Treasury notes are based, 
 for their security and ultimate redemption, upon the good faith of the 
 people and all their property. For what currency we need in the pending 
 struggle for national existence, will it be wise to attack the State banks ? 
 Will it be wise to raise up powerful enemies in the States to oppose any of 
 the measures of the Government ? The State bank system is older than 
 the Constitution. It has become deeply rooted. Immense interests are 
 involved in the banks organized all over the country under the protection 
 and guarantee of State sovereignty. Individuals have. In good faith, paid 
 in their money to establish these banks. Vast interests are involved in 
 various ways. They are intimately interwoven with the commerce and 
 business of the country. In the State of New Tork alone over $19,000,- 
 000 of stocks and bonds, many of which have been purchased from the 
 State at a large premium, constitute the security for the redemption of 
 their circulating notes. The State of New Tork has now the best banking 
 system in the world. These banks are under much more careful supervis- 
 ion, of a' superintendent in their midst, than they would be under an 
 officer residing as far off as Washington. The State banks have been 
 liberal in making loans to the Government in this hour of the nation's 
 
greatest need, and their stockholders, directors, and managers are mostly- 
 loyal and patriotic. Still fiirther aid will be solicited and expected from 
 the existing banks. Will it be wise to make demands upon them that ar? 
 not made upon all other property ? Any invidious discrimination against 
 them, in the way of taxation, it seems to me, would be unjust. * * 
 
 I am not opposed to a national bank, nor am I disposed to interfere with 
 State banks. Both systems of banking may be legitimate within their 
 sphere of action. I am willing that the country should have both. I am 
 Willing that they should go on pari passu and in competition with each 
 other ; but I am unwilling to make war at this tinie on the State banks, 
 because I do not believe that the benefits to be derived from such a course 
 will sufiiciently compensate for the evils that will follow any attempt to 
 destroy the present State bank system. 
 
 I now propose to examine the constitutionality of these two systems of 
 banking. If it can be shown that a national bank is constitutional, it can 
 be more clearly established that State banks are also constitutional. 
 Jackson, Jefferson, and other statesmen always insisted that the Constitu- 
 tion did not empower Congress to charter a national bank ; and the former 
 was especially favorable to State banks. (For Mr. Jefferson's opinions 
 see his letter to Hon. John W. Eppes, chairman of the Finance Committee, 
 bearing date November 6, 1813, wherein he opposes the charter of a 
 United States bank.) 
 
 * CONSTITUTIONALITY OF A NATIONAL BANK. 
 
 I have no doubt that the general principle of the national bank bill pro- 
 posed by the Secretary of the Treasury is constitutional. It is true that 
 there is no express grant of power in the Constitution to incorporate a 
 United States bank. The power to create a bank is incidental to the pow- 
 ers expressly granted. The national bank proposed may be considered 
 an appropriate means to carry into effect many of the enumerated powers 
 of the Government. By its provisions it has a direct relation to the 
 national debt, to the power of collecting taxes, internal duties and excises ; 
 to that of borrowing money, to that of regulating commerce between the 
 States, and to that of raising money to maintain the army and navy. It 
 would, no doubt, be a useful instrument in administering the fiscal and 
 financial operations of the Government, and it would moreover, in time, 
 be a useful support to the credit of the Government, by providing a market 
 for a considerable amount of the bonds issued in the prosecution of the 
 war. (See Hamilton's celebrated argument submitted to President Wash- 
 ington, in favor of the constitutionality of the United States Bank, in 
 1791 ; McCuUock vs. The State of Maryland, 4 Wheat. R. 422-3, Chief Jus- 
 tice Marshall's opinion.) 
 
 STATE BANKS AEE ALSO CONSTITUTIONAL. 
 
 In the case of Briscoe vs. The Bank of the Commonwealth of Kentucky, 
 (11 Peter's B., 317,) Judge McLean laid down the doctrine that a State 
 cannot emit bills of credit, or, in other words, it cannot issue that descrip- 
 tion of paper, to answer the purposes of money, which was denominated 
 before the adoption of the Constitution, "bills of credit." But a State 
 may grant acts of incorporation for the attainment of those objects which 
 are essential to the interests of society. This power is incident to sover- 
 eignty; and there is no limitation in the Federal Constitution on its 
 exercise by the States in respect to the incorporation of banks. 
 
 At the time the Constitution was adopted, the Bank of North America 
 
173 
 
 and the Massachusetts bank and some others were in operation. It can- 
 not, therefore, be supposed that the notes of these banks were intended to 
 be inhibited by the Constitution, or that they were considered bills of 
 credit, within the meaning of that instrument. In fact, in many of their 
 most distinguishing characteristics, they were essentially different froni 
 bills of credit, in any of the various forms in which they were issued. 
 
 If, then, the powers not delegated to the Federal Goverflment nor 
 reserved to the States are retained by the States or the people, and, by a 
 fair construction of the term bills of credit, as used in the Constitution, 
 they do not include ordinary bank notes, does it not follow that the power 
 to incorporate banks to issue these notes may be exercised by a State ? 
 
 A uniform course of action, involving the right to the exercise of an 
 important power by the State government for three-fourths of a century, 
 and this almost without question, is no unsatisfactory evidence that the 
 power is rightfully exercised to charter batiks to issue bank notes to cir- 
 culate as money. The Supreme Court of the United States decided in this 
 case that the act incorporating the Bank of the Commonwealth of Ken- 
 tucky was a constitutional exercise of power by the State of Kentucky ; 
 and the notes issued by the bank were not bills of credit, within the 
 meaning of the Constitution of the United States, but were ordinary bank 
 bills, issued and circulated as currency. 
 
 It was argued in this case that if the Bank of the Commonwealth of 
 Kentucky should be declared unconstitutional by the court, all State 
 banks founded on private capital would be unconstitutional. Justice 
 Story, who gave a dissenting opinion in that case, denied this position, 
 and declared that the States may create banks as well as other corporations 
 upon private capital, and, so far as the prohibition in the Federal Consti- 
 tution is concerned, may rightfully authorize them to issue bank bills or 
 notes as currency. The Constitution does not prohibit the emission of all 
 bills of credit, but only the emission of bills of credit hy a Slate; and when 
 1 say by a State, I mean by or in behalf of a State in whatever form issued. 
 It does not prohibit private persons, or private partnerships, or private 
 corporations, (strictly so called,) from issuing bills of credit. 
 
 In the case of Darrington vs. The State Bank of Alabama, (13 Howard 
 Reports, 12,) the Supreme Court of the United States decided that the bills 
 of a banking corporation, which has corporate property, are not bills of 
 credit within the meaning of the Constitution, although the State which 
 created the bank is the only stockholder, and pledges its faith for the'^ ulti- 
 mate redemption of the bills. 
 
 It must not be understood from anything I have said, that I am in favor 
 of an expansion of the circulation of existing banks. On the contrary, I 
 am opposed to it. The existing banks should be kept under close super- 
 vision; and for all increase in their circulation, since they suspended 
 specie payments, I am entirely willing that some policy should be 
 adopted by the States or General Government to prevent them from 
 inflating the currency. I am willing that a tax of two per cent, should 
 be levied on all their increase of circulation since the first of January, 
 1862. This would be a tax on their abuse of chartered privileges, and not 
 a blow aimed at the total destruction of all banks alike, g6od and bad. 
 What I oppose is an attempt on the part of Congress to destroy the vested 
 rights of citizens, which they hold under the guarantee of State sover- 
 eignty, and which are to be protected as sacredly as any other chartered 
 rights or property held under State laws. Let all property be taxed as 
 
174 
 
 nearly equal as possible, leaving no just cause for complaint from any- 
 class of citizens. 
 
 Having shown that the proposed national bank bill is not only unjust 
 in some of its provisions, but that it will not yield any considerable 
 amount of money to meet the appropriations for the current and next 
 fiscal year, the other question to be considered is : 
 
 2. Can the money be obtained by loans ? It will be recollected that 
 the amount to be provided for, over and above the sums to be realized 
 from duties on imports and internal revenue, exceeds the sum of $1,000,- 
 000,000. This is a large sum to be borrowed in the ensuing eighteen 
 months. As I have before stated, over $2,500,000 will be required every 
 day, Sundays included, between this and the first day of July next. The 
 receipts from postal currency, customs and taxes during that time will 
 not probably exceed the sum of $600,000 per day, leaving $1,900,000 to be 
 obtained daily in some form by loan. Congress, by its legislation at the 
 last session, has, to a considerable extent, changed the standard of value 
 for all business operations within the United States. 
 
 The standard of value fixed by Congress is legal tender Treasury notes, 
 convertible at any time into United States specie-paying bonds, bearing 
 interest at the rate of six per centum per annum, payable half-yearly in 
 coin, based upon adequate taxation upon the entire property of the coun- 
 try. Legal tender notes constitute the national currency now established 
 by law. All exchanges of property, all contracts, and all loans, are based 
 upon the value of legal tender notes and United States six per cent, 
 bonds. The law of Congress declares that these notes shall be lawful 
 money, and a legal tender in payment of all debts, public and private. 
 
 The Secretary states in his Annual Report that previous to the first of 
 November, 1862, 'the coin had been practically demonetized and with- 
 drawn from use as currency, or as a basis for currency.' * » « " 
 'That on the suspension of specie payments, and the substitution for coin 
 of United States notes, convertible into six per cent, specie-paying bonds, 
 as the legal standard of value, gold became an article of merchandise, 
 subject to the ordinary fluctuations of supply and demand, and to the 
 extraordinary fluctuations of mere speculation.' 
 
 Gold does not circulate at all as currency, and there is no probability 
 that it will circulate as money for several years to come — certainly not 
 during the progress of this gigantic war to put down the rebellion. This 
 is to be regretted, but it cannot be avoided. We have the monster rebel- 
 lion by the ears, like the backwoodsman who held the ferocious wolf— if 
 we let go, he will destroy us ; we must therefore hold on till we subdue 
 him. No compromise can be made. The rebels will not negotiate on 
 any basis except that of separation and an acknowledgment of their inde- 
 pendence. The war, therefore, must go on. While the war lasts the 
 magnitude of the expenses will be so great that there is not coin enough 
 in the country to carry it on with gold and silver. It cannot be obtained. 
 We must try to mitigate, as far as we can, the evils growing out of the 
 necessity of making legal tender notes the standard of value. 
 
 You cannot dispose of your iweniy years six per cent. I)onds for gold without 
 submiUing to a loss of over thirty ce^iis on every doUa/r; in other words, for every 
 dollar of bonds issued you can only get seventy cents m gold. £Jven if you shoidd 
 he wiUing to submit to this sacrifice, it is not at all probable that you could nego- 
 tiate $25,000,000 of bonds for gold before you would be obliged to submit to a sac- 
 rifice of fifty cents on every doUar sold. Not because your bonds are not good, 
 
175 
 
 dollar for dollar, as gold, but because the whole amount of ^'olfl in the 
 country that could be had for circulation does not probably exceed $250,- 
 000,000. Not a sufficient sum to carry on the immense operations of the 
 people and the Government at this time, even if it could all be brought 
 out and put into circulation — a thing wholly impracticable at this time. 
 No one at all acquainted with monetary affairs believes that we can malte 
 sale of any considerable amount of our six per cent, bonds at over fifty 
 cents on the dollar for gold — a sacrifice too great for this House to 
 seriously consider, if any other mode can be devised which is practicable. 
 It is believed to be practically impossible to negotiate your bonds for gold 
 without too great a sacrifice. If you cannot negotiate loans for gold, will 
 it be wise to change the independent Treasury law so as to allow loans to 
 be negotiated for notes of suspended banks ? There was a general suspen- 
 sion of specie payments by the banks and the Government on the 31st of 
 December, 1861. In February following. Congress passed the law for the 
 issue of legal tender notes, and authorized the Secretary to make loans, 
 and receive these notes in payment; but the Government has not deemed 
 it best to take suspended bank notes in payment for loans or any other 
 dues to the Government. I do not think it wise to adopt that policy at 
 this time. The question then arises, can you sell bonds enough every day 
 and get your pay for them in legal tender notes already issued ? It is per- 
 fectly apparent to all who are acquainted with the money market that this 
 cannot be done. Currency has been scarce all the time for the last eight 
 months, an is now very difficult to be obtained in sufficient quantity to 
 meet the business wants of the country. In many places through the 
 interior of the States, bankers and business men have been obliged to pay 
 as high as one-quarter and one-half per cent, premium to get currency 
 (bank biUs and greenbacks) to carry on ordinary business operations. 
 
 It is well known that all the New England and New York country 
 banks redeem their bills now at the Suffolk Bank, Boston, and the Metro- 
 politan Bank, New Tork, precisely as they did before the suspension of 
 specie payments. This system checks any tendency to over issue, and is 
 a touchstone by which to test daily the demand for bank bills. If they 
 are not needed for legitimate business, they flow in rapidly to the redeem- 
 ing banks, but if they are wanted they stay out. This test is unerring. 
 The daily redemptions, for months past, have not been half what they 
 were when the volume of bank circulation was less by a third than it is at 
 this time. What cavises this scarcity of currency ? In the first place, as 
 before stated, gold and silver no longer circulate as currency within the 
 United States. Gold is only required to settle foreign balances, pay 
 custom duties and interest on the public debt. It is bought and sold for . 
 these purposes as a commodity, but it does not circulate as money in 
 ordinary business operations. Its place is supplied by bank bills and legal 
 tender notes. In the next place, the large increase of business suddenly created 
 hy 'such a gigantic war as we are now prosecuting, has largely increased the 
 demand for a larger volume of currency^ than was ever required before. 
 
 There has been a large demand for currency in the western States to 
 purchase and bring forward the immense crops that have been produced 
 during the last two years. The winding up of a large number of badly 
 organized and badly managed banks in those States left a large vacuum to 
 be filled by bills of solvent banks and legal tender notes. The Govern- 
 ment has been buying largely, in all parts of the country, food, clothing, 
 and all munitions of war, beside the large sums required for pay and 
 
176 
 
 , bounty money of the volunteer soldiers that have gone forth from all the 
 States. No doubt considerable amounts of this money still remain in the 
 hands of the soldiers themselves and their families, practically withdrawn 
 from circulation for the time being. Fifty, one hundred, and as high, 
 even, as two hundred dollars, were paid for volunteers to fill up the two 
 last calls made by the President. Fifty dollars paid to each soldier, to 
 the number of six hundred thousand, would require $30,000,000 to say 
 nothing of the amounts required for the army previously sent into the 
 field. It is perfectly plain where the currency has gone during the past 
 six months. The operaiions of the army and navy alone have required in all 
 forms, not less than $200,000,000 in bank bilk and legal tender notes. It is no 
 wonder that currency has been scarce in ali the ordinary channels of trade and 
 business. It is still very scarce and difficult to be obtained for ordinary 
 business purposes in New York and all the western States. I am assured 
 by bankers and the best financiers in New Tork, that if the Secretary 
 should put on the market a proposal for a loan of $50,000,000 it could not 
 be taken, for the reason that the legal tender notes could not be obtained 
 in sufficient quantity to pay for a loan of that amount. It is doubtful 
 whether a loan of $15,000,000 could be taken at this time for the want of 
 currency to pay for it. 
 
 It is also very difficult for the collectors of internal revenue to make col- 
 lections on account of the scarcity of legal tender notes. Legal tender 
 notes are not plenty among the people who are required to pay your taxes ; 
 they are continually asking for more. Why, then, should we be alarmed 
 at a further issue of legal tender notes ? So long as they are wanted by 
 the business of the country, demanded by the soldiers for their pay, 
 begged for by all the needy creditors of the Government, surely Congress 
 ought not to hesitate in an exigency like the present. 
 
 It is no time now to depress business operations, or hold back the pay 
 due to honest creditors of the Government. It is much better to stimulate, 
 make money plenty, make it easy for people to pay their taxes, and easy 
 for Government to make loans. This is the only way in which we can go 
 on in the present imperiled condition of the country. 
 
 During the last war with Great Britain, Jefferson, in letters written 
 during that period, repeatedly urged upon the Government the propriety 
 of issuing Treasury notes of convenient denominations to circulate as 
 money. In his letters to John W. Eppes, chairman of the Finance Com- 
 mittee, under dates of June 24 and September 11, 1813, he urged upon 
 Congress the importance of issuing Treasury notes whenever loans could 
 not be made upon satisfactory terms. In one of his letters, bearing date 
 October 15, 1814, he says : ' I never did believe you could have gone beyond 
 a first and second loan— not from want of confidence in the public faith, 
 which is perfectly sound, but from a want of disposable fu^ds in individ- 
 uals. The circulating fund is the only one we can command with cer- 
 tainty. It is sufficient for all our wants ; and the impossibility of defending 
 the country without its aid as a borrowing fund renders it indispensable 
 that the nation should take and keep it in their own hands.' He admitted 
 that the issue of Treasury notes would banish gold and silver from circu- 
 lation, and in another letter adds: 'In such a nation thei-e is one and only 
 one resource for loans, sufficient to carry them through the expenses of 
 a war; and that will always be sufficient, and in the power of an honest 
 Government, punctual in the preservation of its faith. The fund I mean 
 is the mass of cireuMing coin. Every one knows that, although not liter- 
 
177 
 
 ally, it is true that every paper dollar emitted banishes a silver one from 
 circulation. A nation, therefore, making its purchases and payments with 
 bills fitted for circulation, thrusts an equal sum of coin out of circulation. 
 This is equivalent to borrowing that sum ; and yet, the vendor receiving 
 payment in a medium as effectual as coin for his purchases or payments, 
 has no claim to interest. And so the nation may continue to issue its bills 
 as far as its wants require, and the limits of the circulation will admit.' 
 
 So it will be seen that Jefferson, so far from regarding it as an evil that 
 coin should be banished from circulation during war, regarded it as a 
 great advantage ; because the Government would then be able to circu- 
 late its own notes, without interest, in place of the coin of individuals. 
 Treasury notes issued by the Government, he regarded as a loan from the 
 people, without interest, and the only available resource in time of war. 
 
 He urged ample taxation as a basis for Government paper issue, and 
 adds : ' That during the interval between war and war, all the outstanding 
 paper should be called in, coin be permitted to flow in again, and hold the 
 field of circulation until another war should require its yielding place again 
 to the national medium.' An essential feature of the financial plan adopted 
 last year was the passage of the tariff and internal revenue laws. It was 
 > of great consequence that our public debt should rest upon a solid founda- 
 tion. The property of the country, liable to taxation, amounted in 1860 
 to over $16,000,000,000, and Congress having ample power to tax it to the 
 full amount necessary to pay all Government debts, it was agreed by all 
 parties that it was necessary to impose taxes upon this property, and the 
 profits of business based thereon, in various forms, for an amount sufficient 
 to pay the ordinary expenses of the Government on a peace footing, and 
 all the interest on the extraordinary war debt. The ordinary expenses of 
 the Government in time of peace do not exceed $75,000,000, and the inter- 
 est on the war debt will not probably exceed during the next year the 
 sum of $45,000,000, while it is believed that the revenues derived from the 
 tariff and internal revenue will not be less than $200,000,000, leaving $80,- 
 000,000 as a sinking fund to keep down the war debt. It is believed that 
 the revenue realized on the present tariff and tax law will pay ordinary 
 current expenses of the Government, and interest on the war debt when 
 it reaches $2,000,000,000, which is only half the present debt of Great 
 Hritain. * * * rf*#if##*#** 
 
 Upon a full examination of the whole subject, and with a deep solicitude 
 for the success of the measures that may be finally adopted by Congress, 
 I see no way in which the ways and means can be obtained to carry on 
 the Government for the next eighteen months, except by a continuance 
 of the measures adopted at the last session, and which have so successfully 
 carried us through the perils of the last year, with such additions and 
 modifications as experience has shown to be necessary. 
 
 An additional section has been proposed to the financial plan adopted 
 last year. There is a large amount of available means in the country, 
 which, if it can be drawn into the national Treasury, will be of most 
 essential service at this time. It has been the subject of much considera- 
 tion as to the best form in which it could be offered to the people to induce 
 them to let the Government have the money for which they have no 
 present use, and be allowed a fair compensation for its use during the 
 time it is borrowed by the Government. Interest bearing Treasury notes 
 are believed to be the best form in which it can be offered to the public. 
 
178 
 
 INTEEEST-BEAEING TEEASUET NOTES 
 
 Under the operation of this new section, these interest-bearing Treasury- 
 notes and the legal tender notes would he convertible and reconvertible 
 into each other at the will of the holder; and as both can be paid out to 
 the creditors of the Government, they will soon find their way into all the 
 channels of business in all parts of the country. The interest-bearing 
 notes will be laid aside, out of circulation, better than gold as an invest- 
 ment, because yielding a fair rate of interest ; while the legal tender notes 
 will contimie to circulate as money. The object of this section is to reach 
 the money invested in temporary loans, in all the cities, villages and towns 
 throughout the country, and apply it. to sustain the Government at this 
 time. A large amount of money is now held by individuals and corpora- 
 tions, bearing a small rate of interest, or no interest at all, which 
 is on deposit in banks or in private safes and drawers, waiting a 
 good ojaportunity for permanent investment in the purchase of stocks, 
 mortgages, or other property. Forehanded farmers, mechanics, man- 
 ufacturers, merchants, and even retired capitalists would like some 
 convenient mode of investing their surplus means at fair rates of inter- 
 est, and with a certainty that when a good opportunity is presented 
 to make some business transaction they can have legal tender notes 
 returned to them to use as money. Notes issued at six per cent, 
 interest, and in denominations of $20, $50, $100, $200, $500, $1,000, $2,000 
 and $5,000 would be in a convenient form for all classes ; and at this rate 
 of interest there is no doubt that large amounts would be drawn into the 
 Treasury. Savings banks, trust companies, and other places of deposit, 
 now overburdened with money, would, no doubt, have drawn from them 
 considerable amounts for investment in these interest-bearing notes. 
 Guardians, executors, and trustees would largely invest their money in 
 these Government securities. Insurance companies might invest in them, 
 get six per cent, interest, and be sure, in cases of loss, to get legal tender 
 notes with which to pay their outstanding policies. Even savings banks 
 and trust companies might invest a part of their funds in these notes, and 
 be able to respond when their depositors should call for their money. 
 The operations under this section would be like deposits in banks, and it 
 is very probable that $300,000,000 might be reached in a reasonable time. 
 It would be, in fact, a national savings bank, so arranged that its benefits 
 can be extended to all, while, at the same time, the Govei-nment would 
 be able to realize a large amount of money to aid in the prosecution of 
 the war. Some would draw out their funds from time to time, as occa- 
 sions should arise fol- business operations, while others again would invest 
 in new notes issued under the avithority to re-issue them ; and the average 
 amount in the Treasury would be about the same from week to week. 
 The average deposits in the banks in the city of New York are about the 
 same. Tlieir weekly published statements show that there is no great 
 variation in the amount for weeks and months. * » i » 
 
 I was in favor of giving to them the highest legal sanction and the most 
 desirable character possible, within the power of the Government, not 
 above six per cent, interest, in order to prevent their depreciation. It 
 would have cost so little to have given them this most desirable character 
 of immediate convertibility, that I strongly urged its adoption, and upon 
 the same principle that I urged the legal tender clause last year. The 
 more desirable the notes are as an investment, the longer they would stay' 
 out, and the higher would be their price in the'market. I trust, however,' 
 
179 
 
 that, in their present shape, they will be sought after, and be a valuable 
 aid to the people in the payment of internal revenue, and materially assist 
 the Secretary in the arduous duties of furnishing the means for a vigorous 
 prosecution of the war. 
 
 In nearly aU the plans that have been siibmiUed to the committee for providing 
 means to corny on the Government for the next eighteen months, it has heen pro^ 
 posed to issue more legal tender notes, if the exigencies of the service shall render 
 a further issue necessary. The Secretary of the Treasury, in submitting the 
 bill proposed by him for a loan of $900,000,000, says : ' The committee will 
 observe that the provision in respect to loans is very general. Under it 
 the Secretary will have the power to borrow money in any of the ordinai-y 
 forms, or, if exigencies require, to make additional issues of United States 
 notes.' I have an aversion to any considerable further issue of legal ten* 
 der notes, and can only consent to it as an imperative necessity. I think 
 too large an issue will tend to inflate prices; but I do not see how it can 
 be avoided. I do not see how the soldiers are to be paid, or how the Gov- 
 ernment can be carried on, in any other way. I shall therefore vote for 
 this provision, in connection with the other provisions of the bill, as a 
 necessary measure to enable the Government to prosecute the war. 
 
 OUR ONLY HOPE OF KESTORING THE UNION IS IN MILITARY 6DCCESS. 
 
 Sir, since the first gun was fired on Fort Sumter, my conviction has 
 been deep and abiding that this was to be a long, expensive, bloody, 
 and desperate conflict ; and that it would be very difficult to determine in 
 advance what results would flow from such a deadly encounter. I have 
 never for a moment doubted that the leading conspirators meant to estab- 
 lish and maintain a separate government,, and a total separation from the 
 free States. This has been their deliberate purpose from the beginning. 
 Nearly two years of concerted action, embittered by the most deadly con- 
 flict with the armed power of this Government, has consolidated their 
 strength. They have organized a form of civil government, under a 
 constitution, with Jefierson Davis as President for six years, who is sur- 
 rounded by a cabinet, congress, judiciary, and all other ofiicers necessary 
 to keep it in full operation. This rebel government has organized and 
 maintained a powerful army, which has been able thus far to successfully 
 repulse every attempt that has been made on our part to take their capitol, 
 distant only one hundred and twenty-flve miles from the Hall in which 
 we are now sitting. 
 
 Sir, I n§ver believed, and do not now believe, that the cabal at Rich- 
 mond, the only responsible power to which overtures of peace can be 
 made, will listen to any offers of compromise, however liberal, which will 
 induce them to throw up their present de facto government, come back 
 into the Union, and submit to the constitutional Govei-nment over which 
 Abraham Lincoln presides, or any other President that can be elected by 
 the loyal people of the United States. Jefferson Davis and all the high 
 officers about him are men of high political aspirations. Inordinate ambi- 
 tion, and a desire to rule, were the chief motives that prompted them to 
 rebel against the Constitution and Government they had sworn to support. 
 Those who suppose that Mr. Davis and his co-conspiratprs will voluntarily 
 negotiate to surrender the power they now hold, have but little apprecia- 
 tion of the motives that stimulate them to so desperate and determined 
 action. These desperate men are in earnest, and will fight to the death. 
 They are men of ability, fighting for power, for empire, and will neither 
 compromise nor surrender unless they are compelled to do so at the poiat 
 
180 
 
 of the bayonet, pressed forward by an overwhelming and crushing force. 
 They must be whipped, badly whipped, before they will compromise or 
 surrender. Any expectation to the contrary is not only fallacious, but 
 mischievous in its consequences, because it divides and weakens the people 
 in the loyal States, and prolongs the war. 
 
 Sir, I have no expectation that this rebellion will be crushed in many 
 years unless there is a more united and a more determined effort on the 
 part of the people in the northern States. The great fact to be ascertained 
 by all doubting men is wiU Jefferson Davis compromise on any terms 
 short of a separation ? Will he voluntarily surrender the power he now 
 holds ? Will he receive any proposal for peace except on the terms of 
 dividing the old Union, and a recognition of his government over the 
 southern half. For myself, I have no desire to compromise, and no pro- 
 posals to make to Mr. Davis or any of his cabinet ; but those who do wish 
 to make peace with the rebel government ought to submit their proposi- 
 tions at once, so that all compromisers may know what to do. If no com- 
 promise can be made with the rebel government, short of dissolving the 
 Union, it should be known at the earliest moment possible, so that all 
 doubters and cavilers may decide immediately what they will do. The 
 daily expenses of the war are enormous. The public debt is running up 
 at a fearful rate. This .war ought not to be procrastinated a day longer 
 by divisions at home. This state of things cannot be continued for any 
 considerable length of time, without entailing a public debt so large that 
 it will burden present and future generations. The best blood of the 
 nation flows freely. I/arge numbers are killed in battle, but more die 
 from exposure and disease than in any other way. 
 
 Sir, all this blood and treasure is given freely to crush the rebellion and 
 maintain the Union. Why have we not been more successful? It is 
 because we need more earnestness, greater determination manifested, 
 better discipline in the army, and a closer unity of action. Unless these 
 essential requisites can be had, and that speedily, I have very little hope 
 of crushing the rebellion. The way to secure a permanent peace is, first 
 of all, to annihilate the rebel forces. The army between Washington and 
 Richmond must be beaten. The power of the rebel government is in 
 their army. If they can maintain their military strength, their govern- 
 ment will be perpetuated. If we cannot achieve decisive victories over 
 the rebel forces, the Union is lost. The Union is priceless ; it ought to be 
 maintained, and it will be maintained if all citizens rise above party and 
 perform their whole duty to the country. The people, our commanding 
 generals. Congress, and the Executive, ought all, without regard to party 
 distinctions, to rouse up to the magnitude and perils of the crisis, and by 
 unity of action put forth an earnest and determined effort to crush the rebel 
 armies. No compromise can be made or ought to be made. Our only 
 hope is in military success. This is the only way in which we can main- 
 tain our finances, and restore the national Union. 
 
 $100,000,000 LEGAL TENDEE NOTES EEQUIRED TO PAY THE AKMY 
 
 AND NAVT. 
 
 There was a large amount due to the army and navy, and com- 
 plaints were being made in consequence of the delay in making 
 payments. The subject was discussed by the Military Commit- 
 tees of the Senate and House. A resolution passed the House as 
 follows : 
 
181 
 
 ""Wheeeas, Grevious delays happen in the payment of money due 
 soldiers; therefore, in order to ascertain if any, and what, legislation 
 may be necessary to remedy such delays, 
 
 Resolved, That the Secretary of the Treasury be requested to furnish to 
 this House the reasons why requisitions of paymasters in the army are 
 not promptly filled." 
 
 The Secretary made answer as follows : 
 
 " STo one can feel a deeper regret than the Secretary that a single Amer- 
 ican soldier lacks a single dollar of his pay, and no effort of his has been 
 wanting to prevent such a condition. It is not in his power, however, to 
 arrest the accumulation of demands upon the Treasury beyond the pos- 
 sibility of provision for them under existing legislation.'''' « * * » 
 "The Secretary, solicitous to regulate his action by the spirit as well as 
 the letter of the legislation of Congress, did not consider himself at 
 liberty to make sales of the 5-20 bonds below the market value ; and sales 
 except below were impracticable." 
 
 SPEECH OF MR. GUELETT. 
 
 Mr. G-URLEY, of Ohio, spoke of the great importance of our 
 
 financial measures. 
 
 " The Government which can raise the largest amount of money must, 
 in the end, triumph ; that a large army was essential to success, but the 
 most essential thing was money or money means. He did not agree with 
 the Secretary in several things contained in his reports; the banking 
 scheme, which the Searetary admits would not afford any immediate relief, 
 should be rejected ; we need a sensible, practicable plan that will furnish 
 immediate means to pay the army and navy. He insisted that Congress, 
 by the act. of February 25, 1862, authorized the Secretary to sell $500,000,- 
 000 six per cent. 5-20 bonds at 'the market value thereof,' which he had 
 not done, as intended by Congress, and the consequence was that the soldiers 
 and sailors were not paid, as they ought to have been before this time. 
 Of course we do not call in question the motives of the Secretary, or deny 
 his good intentions, but when the Secretary says, in his reply to the reso- 
 lution of the House, that he had no authority, he was evidently mistaken 
 in his construction of the law. The words ' market value ' do not mean 
 par value, nor at any specified time or sum. The market value was the 
 price they would bring when offered in the market. There has been no busi- 
 ness day or week since the law was passed, when any of the many agents 
 of the Secretary in New York could not have placed one million, or 
 several millions, in the market, and sold them somewhere near par, to 
 raise money to pay the army and navy." 
 
 A joint resolution was proposed that provision ought to be 
 made immediately by the Treasury Department to pay the sums 
 due the soldiers and sailors, and that a preference should be 
 given to this class of creditors. Secretary Chase was consulted 
 on the subject, and in a letter dated January 7, 1863, addressed 
 to the Finance Committee, he stated that the amount then due 
 to the army and navy was about 160,000,000, and that provision 
 ought to be made for immediate payment. He thought the tern- 
 
182 
 
 porary measure proposed might answer for present purposes, and 
 concluded his letter as follows : 
 
 "It should be regarded, however, only as an expedient for an emergency. 
 ^0 measure, in my judgment, wiR meet the necessities of the occasion, and prove 
 adequate to the provision of the great sums required for the suppression of the 
 rebellion, which does not include a firm support to public credit through the estab- 
 lishment of a uniform national circulation, seewed hy bonds of the United 
 States. The joint resolution and amendment are herewith returned. 
 
 With great respect, vours, etc., 
 
 S. P. CHASE, 
 Secretary of the Treasury. 
 Hon. William P. Fessenden, 
 
 Chairman Com. on Finance, U. S. Senate.'' 
 
 After some disagreement between the Finance Committee of 
 the .Senate and the Committee of Ways and Means of the House 
 as to the right of the Senate to initiate a bill of this kind, a joint 
 resolution was passed^ bj^ the House and concurred in bj'^ the Sen- 
 ate, by yeas 38, nays 2; as follows: 
 
 Teas — Messrs. Anthonj-, Arnold, Browning, Chandler, Clark, 
 CoUamer, Davis, Dixon, Doolittle, Fessenden, Foot, Foster, 
 Hale, Harding, Harlan, Harris, Henderson, Howard, Howe, King, 
 Lane (of Indiana), Lane (of Kansas), Latham, McDougaU, Mor- 
 rill, Nesmith, Eice, Sherman, Sumner, Ten Eyck, Trumbull, 
 Wade, Wilkinson, Willey, Wilmot, Wilson (of Massachusetts), 
 Wilson (of Missouri) and Wright — 38. 
 
 Nays — Messrs. Powell and Saulsbury — 2. 
 
 So the joint resolution was passed, and is as follows : 
 
 [Public Resolution— No. 4.] 
 "Joivi Resolution to provid'e for the immediate payment of the army and 
 navy of the United States. 
 
 Whereas, It is deemed expedient to make immediate provision for the 
 payment of the army and navy ; tlierefore 
 
 ^e it. resolved by the Senate and House of Representatives of the United 
 States of America, in Congress asseiribled. That the Secretary of the Treas- 
 ury be, and he is hereby authorized, if required hy the exigencies of the 
 public service, to issue on the credit of the United States the sum of one 
 hundred millions of dollars of United States notes, in such form as he 
 may deem expedient, not bearing interest, payable to bearer on demand, 
 and of such denominations, not less than one dollar, as he may prescribe, 
 which notes so issued shall be lawful money and a legal tender, like the 
 similar notes heretofore authoiized, in payment of all debts, public and 
 private, within the United States, except for duties on imports and inter- 
 est on the public debt ; and the notes so issued shall be part of the amount 
 provided for in any bill now pending for the issue of Treasury notes, or 
 that may be passed hereafter by this Congress. 
 
 Approved January 17, 1863." 
 
183 
 
 MESSAGE* OF PEESIDENT LINCOLN. 
 
 The_Speaker laid before the House the following message, in 
 writing, from the President of the United States : 
 
 " To the Senate and House of Bepresentatives : 
 
 I have signed the joint resolution to provide for the immediate payment 
 of the army and navy of the United States, passed by the House of Repre- 
 sentatives on tlie 14tli, and by the Senate on the 15th inst. 
 
 Tlie joint resolution is a simple authority, amounting, however, under 
 existing circumstances, to a direction to* the Secretary of the Treasury to 
 make an additional issue of $100,000,000 in United States notes, if so much 
 money is needed, for the payment of the army and navy. 
 
 My approval is given in order that every possible facility may be 
 afforded for the prompt discharge of all arrears of pay due to our soldiers 
 and otir sailors. 
 
 While giving this approval, however, I think it my duty to express my 
 sincere regret that it has been found necessary to authorize so large an 
 additional issue of United States notes, when this circulation and that of 
 the suspended banks together have become already so redundant as to 
 increase prices beyond real values, thereby augmenting the cost of living 
 to the injury of labor, and the cost of supplies to the injury of the whole 
 country. 
 
 It seems very plain that continued issues of United States notes, without 
 any check to the issues of suspended banks, and without adequate provis- 
 ion for the raising of money by loans, and for funding the issues so as to 
 keep them within due limits, must soon produce disastrous consequences. 
 And this matter appears to me so important that I feel bound to avail 
 myself of this occasion to ask the special attention of Congress to it. 
 
 That Congress has power to regulate the currency of the country can hardly 
 admit of a doubt; and that a judicious measure to prevent the deterioration 
 of this currency by a reasonable taxation of bank circulation, or otherwise, 
 is needed, seems equally clear. Independently of this general considera- 
 tion, it would be unjust to the people at large to exempt banks, enjoying 
 the special privilege of circulation, from their just proportion of the public 
 burdens. 
 
 In order to raise money by loans most easily and cheaply, it is clearly 
 necessary to give every possible support to the public credit. To that 
 end a uniform currency, in which taxes, subscriptions and loans, and all 
 other ordinary public dues, as well as all private dues may be paid, is 
 almost, if not quite, indispensable. Such a currency can be furnished by 
 banking associations, organized under a general act of Congress, as sug- 
 gested in my message at the beginning of the present session. Tlie 
 security of this circulation, by the pledge of United States bonds, as 
 therein suggested, would still further facilitate loans by increasing the 
 present and causing a future demand for such bonds. 
 
 In view of the actual financial embarrassments of the Government, and 
 of the greater embarrassments sure to come, if the necessary means of 
 relief be not afforded, I feel that I should not perform my duty by a simple 
 announcement of my approval of the joint resolution, which proposes 
 relief only by increasing circulation, without expressing my earnest desire 
 that measures, such in substance as those I have just referred to, may 
 receive the early sanction of Congress. By such measures, in my opinion, 
 will payment be most certainly setiuredj not Only to the army and navy, 
 
184 
 
 but to all honest creditors of the^Government, and satisfactory provision 
 made for future demands on the Treasury. 
 January 17, 1863. ABBAHAM LINCOLN." 
 
 SPEECH OF ME. MORRILL. 
 
 " Mr. Morrill, of "Vermont, said we had often heen called upon during 
 this Congress to furnish means to carry on the war. The figures now are 
 larger than ever before, being $900,000,000, and if the war should be pro- 
 longed to July 1, 1864, it is believed not to be too much. He was con- 
 strained now to give his vote for this measure, although such as in the 
 outset he did not support, and never should have countenanced as an 
 original proposition, because he knew of no other so efficient for imme- 
 diate relief to the Treasury, and so safe to adopt. He should hold his 
 opposition to legal tender in abeyance, so far as to allow money for the 
 army and navy to be raised in this way, if it could be raised in no other. 
 He was willing to restrain excessive issues of State Bank circulation by a 
 proper tax, but did not think it best at this time to engage in a struggle 
 for its extinction. 
 
 He was opposed to the national bank biU which he said was urged with 
 great zeal and ability by the Secretary of the Treasury, and gave his 
 reasons at length why, in his opinion, it ought not to pass. The new 
 plan, fully executed, would obtain very little if any more aid from the 
 banks than is already secured, and the Treasury at last, would find itself 
 in actual possession of no more than a new dollar for an old one. The 
 Secretary admits in his annual report thai 'little direct aid is, however, to be 
 expected from this plan during the present, nor very much, perhaps, during the 
 next year.'' " 
 
 MR. ward's speech. 
 
 Mr. Ward, of New York, made an elaborate speech on the 
 Finances and the currency. 
 
 "The condition of our financial affairs and the regulation of the circula- 
 ting medium are regarded with much anxiety by the people of this coun- 
 try, from motives of their own personal interest, and yet more from 
 patriotic devotion to the cause of unity in our great struggle for national 
 existence. He was desirous of supporting the Government of his country 
 in a vigorous prosecution of the war, but was opposed to the legal tender 
 principle and voted against it. My earnest desire is, and always has been, 
 to furnish the Government with every resource and power necessary to 
 the suppression of the rebellion. Prom my solicitude for the re-establish- 
 ment of the Republic, I desire to avert any increase of such paper money, 
 as is now in use, knowing how injuriously it affects public confidence, 
 enlarges expenditures by raising prices, lulls- the public mind into false 
 security, and lessens the vigilance which prevents frauds. He expressed 
 himself in favor of a commission composed of the most wise and dis- 
 tinguished bankers and commercial men in co-operation with the Secretary 
 to inquire into the best method of arranging our financial affairs." 
 
 SPEECH OF MR. WALKER. 
 
 Mr. Amasa Walker, of Massachusetts, made a well considered 
 speech in favor of the general provisions of the Mil. 
 "He maintained that the vast expenditures involved in the prosecution 
 
185 
 
 of the war could not be raised except upon the credit of the Government. 
 No ordinary means of raising revenue were suflcient to meet a great 
 emergency like the present. The bill before us proposes measures of 
 finance, currency and taxation. 1. An issue of bonds. 2. An issue of 
 interest-bearing circulating notes, receivable for all Government dues, 
 except customs. 3. An issue of legal tender notes, known in common 
 parlance as greenbacks. 4. The issue of fractional parts of a dollar, to 
 take the place of postal currency now in use. 5. Provides for deposits of 
 bullion in the public Treasury ad libitum. 6. To tax the banks of circula- 
 tion. 7. A proposition that the public funds may be deposited in these 
 same banks, at the discretion of the Secretary of the Treasury. 
 
 He did not approve of paying interest in coin on the bonds, it has 
 already exerted a pernicious influence on the public funds. He was in 
 favor of the greenback circulation, and in favor of a six per cent, tax on 
 State bank circulation, in order to drive it out, so as to give place to the 
 national circulation. He urged adequate taxation to sustain the public 
 credit, and thought that these measures had become a stern military 
 necessity, and indispensable to a successful prosecution of the war. 
 
 On the 16th inst. Mr. Hooper offered a substitute for the bill, 
 which was ordered to be printed. This substitute will be found 
 printed at length in the Cmig. Gflohe, p. 382. 
 
 After a long discussion, in which different members of the 
 House participated, a vote was taken on the 23d inst. by tellers, 
 in Committee of the "Whole, on Mr. Hooper's substitute — ayes 
 32, noes 67; so the substitute was lost. Several minor amend- 
 ments were however made to the original bill, and on the 26th 
 inst. a vote was taken in the House on the substitute offered by 
 Mr. Stevens, and it was decided in the negative — ^yeas 37, nays 
 91. The bill as amended was then passed without a division, 
 and sent to the Senate for concurrence. 
 
 On the 13th of February the bill, after being amended, passed 
 the Senate by the following vote : 
 
 Yeas — Messrs. Anthony, Arnold, Chandler, Clark, Collamer, 
 Cowan, Davis, Dixon, Doolittle, Fessenden, Foot, Foster, Grimes, 
 Harlan, Harris, Henderson, Hicks, Howard, Howe, King, Lane 
 (of Indiana), Lane (of Kansas), Morrill, Nesmith, Pomeroy, Rice, 
 Sherman, Sumner, Ten Eyck, Wade, "Wilkinson and "Wilson (of 
 Massachusetts) — 32. 
 
 Nays — Messrs. Carlisle, Powell, Richardson and "Wall — 4. 
 
 So the bill was passed. 
 
 Three several Conference Committees were appointed on the 
 disagreeing votes between the two Houses. A compromise was 
 finally made on the section taxing State bank circulation, All 
 the amendments were finally agreed to, and the bill passed. 
 
186 
 
 SYNOPSIS OP $900,000,000 LOAN ACT. 
 
 ^'TM act to provide Ways and Means for the Bupport of the Govern^ 
 ment. Approved March 3, 1863." 
 
 1. The first section authorized a loan of $300,000,050 for the 
 then current year, and $600,000,000 for the then next fiscal year, 
 and to issue bonds therefor at not less than ten nor more than 
 forty years, at not exceeding six per cent, interest, in coin, not 
 exceeding in all $900,000,000. 
 
 2. By section second of the same act the Secretary, in lieu of 
 an eq\ial amount of said bonds, was authorized to issue $400,000,- 
 000 of Treasury notes, bearing interest not exceeding six per 
 cent., payable in lawful money, which notes, payable at periods 
 expressed on their face, might he made a legal tender at their face 
 value. 
 
 3. By the third section $150,000,000 in amount of United 
 States notes, made a legal tender, might be issued. The restric- 
 tion in the sale of bonds to 'market value'' was repealed. ^ And the 
 holders of United States notes issued under former acts, shall present the 
 same for the purpose of exchanging them for bonds as tlierein provided, 
 on or before the first of JvXy, 1863, and thereafter the right to exchange 
 the same sJiaU cease and determine. ' 
 
 7. This section imposed a tax 'of one per cent, each half year, 
 on a graduated scale of State bank circidation, according to the 
 capital stock of each bank. 
 
 BANK BILL PASSED. 
 
 On the 2d February, 1863, the National Currency Bank bill, as 
 prepared by Mr. Spaulding, in December, 1861, after being altered 
 and amended in several important particulars, was reported from 
 the Finance Committee to the Senate by John Sherman of Ohio. 
 The debate upon it was opened on the 9th, and continued from 
 day to day until the 12th, when it was passed by the following 
 vote — ^yeas 23, nays 21, as follows: 
 
 Yeas — Messrs. Anthony, Arnold, Chandler, Clark, Doolittle, 
 Fessenden, P'oster, Harding, Harlan, Harris, Howard, Howe, 
 Lane (of Kansas), Morrill, Nesmith, Pomeroy, Sherman, Sumner, 
 Ten Eyck, Wade, "Wilkinson, Wilmot, and Wilson (of Massa- 
 chusetts) — 23. 
 
 Nays — Messrs. Carlisle, Collamer, Cowan, Davis, Dixon, Foot, 
 Grimes, Henderson, Hicks, Kennedy, King, Latham, McDougal, 
 
187 
 
 Powell, Rice, Richardson, Saulsbury, Trumbull, Turpie, "Wall and 
 Wilson (of Missouri) — 21. ' 
 
 So the bill was passed. 
 
 The bill as it passed the Senate was sent to the House on the 
 13th. On motion of Mr. Hooper it was ordered to be printed, 
 but was not referred to the Committee of Ways and Means. It 
 remained on the Speaker's table until the 19th, when it was taken 
 up for consideration in the House. A motion to refer it to the 
 Committee of the Whole having been defeated, Mr. Spaulding 
 opened the debate in a lengthy speech in favor of the bill, which 
 will be found in the Appendix. The debate continued until the 
 20th, when the bill was passed without amendment by the follow- 
 ing vote — yeas 78, nays 64, as follows: 
 
 Yeas — Messrs. Aldrich, Alley, Ashley, Babbitt, Beaman, Bing- 
 ham, Jacob B. Blair, Blake, Bufflnton, Calvert, Campbell, Casey, 
 Chamberlain, Clements, Colfax, Conway, Covode, Cutler, Davis, 
 Delano, Dunn, Edgerton, Eliot, Ely, Fenton, Samuel C. Fessen- 
 den, Thomas A. D. Fessenden, Fisher, Frank, Goodwin, Granger, 
 Hahn, Haight, Hickman, Hooper, Hutehins, Julian, Kelley, Fran- 
 cis W. Kellogg, William Kellogg, Lansing, Leary, Lovejoy, Law, 
 Mclndoe, McKean, McPherson, Marston, Maynard, Moorhead, 
 Anson P. Morrill, Noell, Olin, Patton, Timothy G. Phelps, Potter, 
 Alexander H. Rice, John H. Rice, Sargent, Sedgwick, Segar, 
 Shanks, Shellabarger, Sherman, Sloan, Spaulding, Stevens, Trim- 
 ble, Trowbridge, Van Horn, Van Wyck, Verree, Wall, Wallace, 
 Washburne, Albert S. White, Windom and Worcester — Y8. 
 
 Nays — Messrs. William Allen, Ancona, Baily, Baker, Baxter, 
 Biddle, Cobb, Frederick A. Conkling, Roscoe Conkling, Cox, 
 Cravens, Crittenden, Dawes, Edwards, English, Gooch, Grider, 
 Gurley, Hall, Harding, Harrison, Holman, Horton, Johnson, 
 Kerrigan, Knapp, Law, Lazear, Loomis, Mallory, May, Menzies, 
 Justin S. Morrill, Morris, Nixon, Noble, Norton, Nugen, Odell, 
 Pendleton, Perry, Pike, Pomeroy, Porter, Price, Robinson, James 
 S. Rollins, Sheffield, Shiel, John B. Steele, William G. Steele, 
 Stiles, Stratton, Benjamin F. Thomas, Francis Thomas, Vallan- 
 digham, Wadsworth, Wheeler, Whaley, Chilton A. White, Wick- 
 liffe, Wilson, Woodruff and Wright— 64. 
 
 So the bill was passed and approved by President Lincoln, 
 March 25, 1863. 
 
 No National Bank currency was issued until about the first of 
 January, 1864. After that time it was gradually issued. On the 
 
188 
 
 first of July, 1864, the sum of $25,825,695 had been issued; and 
 on the 22d of April, 1865, shortly after the surrender of General 
 Lee, the whole amount of National Bank circulation issued to that 
 time, was only $146,927,975. It will therefore be seen that com- 
 paratively little direct aid was realized from this currency until 
 after the close of the war. AU the channels of circulation were well 
 JiUed up with the greenback notes, compound interest notes, and certifi- 
 cates of indebtedness, to the amount of over $700,000,000, before the 
 National Bank a^A got fairly into operation. This Bank issue was in 
 fact an additional inflation of the currency. 
 
 THE RIGHT TO CONVERT NOTES INTO BONDS ABROGATED. 
 
 The first legal tender notes were issued bearing date March 10, 
 1862, and on the back of them was printed these words: 
 
 "This note is a legal tender for all debts, public and private, except 
 duties on imports and interest on the public debt, and is exchamgedble for 
 U. S. six per cent, bonds, redeemable at the pleasure of the UnHed States after 
 five years." ' 
 
 The right to exchange these notes at par for six per cent, bonds 
 was distinctly authorized by the second section of the legal ten- 
 der act, and was in the nature of a contract made by the Govern- 
 ment with the holders of the notes. It was inserted as a just 
 and equitable provision for the benefit of those persons who 
 should be compelled, by the legal tender clause, to take the notes, 
 by giving them, at any time, the privilege of converting them 
 into a six per cent. bond. It was, in effect, a forced loan, but 
 the right of immediately returning them to the Government for 
 gold bonds, divested the forced character of the transaction of 
 any material hardship. It also had a tendency to prevent any 
 great inflation, for the reason'that as soon as this currency became 
 redundant in the hands of the people, and not bearing interest, 
 they would invest it in the six per cent, bonds to prevent any loss 
 of interest. 
 
 This right to exchange the notes for bonds- was, at the request 
 of Secretary Chase, taken away by the third section of the above 
 act after July 1, 1863. It is true that the Secretary had still the 
 discretionary power to receive the notes at par for bonds, but it 
 never seemed to be quite right to change the law while any of 
 the legal tender notes were outstanding with the above endorse- 
 ment upon them. 
 
 After passing the $900,000,000 loan act and the national cur- 
 rency bank bill, authorizing $300,000,000 of national currency, 
 
189 
 
 Congress adjourned on the 4th of March, 1863, leaving the Secre- 
 tary of the Treasury clothed with most extraordinary discretion- 
 ary power to carry on the financial affairs of the Government, 
 
 In April and May it became apparent that the paper currency ^ 
 was sufficiently expanded to enable the Secretary to float the 5-20 
 bonds authorized, to the amount of $500,000,000, by the first 
 legal tender act, which, up to that time, had been taken only to 
 a very limited amount. 
 
 Jat Cooke, an enterprising banker at Philadelphia, was em- 
 ployed as General Agent by Secretary Chase to negotiate these 
 bonds. He advertised very extensively, and employed sub- 
 agents in all the principal cities and towns in all the loyal States. 
 The editors of newspapers and others were enlisted to bring the 
 advantages and importance of this loan before the people, in order 
 to make it a great popular loan, to be taken by them in large and 
 small sums in all the loyal States. Mr. Cooke succeeded admir- 
 ably in this undertaking. The loan became very popular, and 
 was taken extensively by farmers, mechanics and laboring peojple 
 in all the towns, villages and cities all over the country. By the 
 first of July, 1863, the amount of $168,880,260 of these bonds 
 were taken; and by the first of October' following $278,511,500 
 had been taken up; and by the 21st of January following the 
 whole sum of $500,000,000 had been taken at par, and the rush 
 was so great near the closing out of the loan, that nearly $11,- 
 000,000 extra had been subscribed and paid for before notice 
 could be given to sub-agents that the amount authorized by that 
 act had been taken up. Congress, however, soon after authorized 
 this extra sum to be issued. 
 
 This successful funding of 5-20 six per cent, bonds showed 
 conclusively that it was not necessary to inflate the cuirency any 
 further in order to raise the means to successfully prosecute the 
 war. The six per cent, bonds would furnish sufficient inducement 
 for people to take them at the rate of from $1,500,000 to $2,000,- 
 000 a day, which was about the amount required to pay the daily 
 expenses of the Government. It looked as if the limit of paper 
 money expansion had been reached ; that the greenback currency 
 would not further depreciate below the standard of gold: and 
 that the price of commodities would not continue to advance. 
 
 MISTAKE OF THE TEEASURT DEPARTMENT. 
 
 The policy of funding into six per cent, bonds, which had been 
 successful during the last eight months, was changed to fl,ve per 
 
190 
 
 cent. 10-40 bonds, which proved unsuccessful, and funding to any 
 considerable extent was arrested for several months. The people 
 were not satisfied with this change made by the Secretary in the 
 rate of interest. The loan became unpopular, and only $73,337,-- 
 750 was taken between the 21st of January, 1864, and the 1st of 
 July following, more than five months, and this sum was taken 
 mostly by bankers, because the five per cent, bonds could be used 
 in the organization of national banks. The Secretary had the 
 discretionary Tpo-vrer, under the $900,000,000 loan act, to continue 
 the funding at six per cent. , but he desired to lower the rate of 
 interest, and believed that he could successfully negotiate the five 
 per cent, bonds, which proved to be a mistake. 
 
 Congress passed an act supplementary to the $900,000,000 loan 
 act, giving still further discretionary power to the Secretary. This 
 act was approved March 3, 1864, and is the law under which the 
 10-40 five per cent, bonds above mentioned were issued. It 
 authorized the Secretary to issue bonds not exceeding $200,000,- 
 000, bearing date March 1, 1864, or any subsequent date, redeem- 
 able at the pleasure of the Government after any period not less 
 than five years, and payable at any period not more than forty 
 years from date in coin, bearing interest not exceeding six per cent. 
 per annum, payable on bonds not over $100, annually, and on all 
 other bonds semi-annually, in coin. 
 
 IMPOLICY AT THIS TIME OF THE 10-40 BONDS TWO LETTERS BY 
 
 B. G. SPAULDISTG ON THIS SUBJECT. 
 
 " Buffalo, March 19, 1864. 
 To Morris Ketchum, Esq., Banker, New York: 
 
 Dear Sir — When I met you hi New York ia December last, you 
 expressed the apprehension that the rate of interest on government securi- 
 ties would be reduced to live per cent. ; that there would be a further 
 Inflation of the currency; and, consequently, that gold would advance, 
 and the price of labor and commodities would be greatly Increased. The 
 apprehensions wiiich you then expressed are now being realized, and the 
 government and people are alike feeling its evil eflfects. By reducing the 
 rate of interest from six to live per cent, on bonds and notes issued to 
 redeem greenbaclc currency printed and paid out by th/e government, one 
 per cent, interest is apparently saved to the government on its notes and 
 bonds, but all the flour, beef, pork, and other supplies for the army and 
 navy have advanced ten to fifteen per cent., thereby making it necessary 
 for the government to pay ten to fifteen per cent, more for all supplies 
 purchased, while it saves only one per cent, on its notes and bonds. 
 
 Five per cent, bo 'Is, running from five to twenty years, can, no doubt, 
 be floated on the mailcet nominally at par, if the currency is sufllciently 
 diluted and the volume increased large enough for that purpose ; and so 
 may four per cent, bonds be carried on the surface, if the currency is 
 
191 
 
 printed and paid out in such a large volume as to still further dilute the 
 government paper already afloat. But if this should be, successfully car- 
 ried out, and four per cent, bonds be negotiated at par in consequence of a 
 further expansion of the currency, gold would advance to 90 or 100 per 
 cent., and all commodities for the army and navy would advance in the 
 same proportion. What would be saved in the rate of interest would be 
 lost fourfold on the enhanced price of all supplies purchased to carry 
 on the war. 
 
 Five per cent, interest, payable in currency, which has been the rate 
 since the twenty-first of January last, for redeeming legal tender notes, is 
 a most exhilarating atmosphere to be reveled in by speculators and job- 
 bers, but very unsatisfactorj^ to men of steady purposes, who are engaged 
 in manufactures, commerce, and other legitimate pursuits. With such a 
 money market, all articles consumed by laborers advance in price, rents 
 increase, skilled laborers and common laborers combine and strike for 
 higher wages, in order to be able to pay for the enhanced prices of living 
 caused by the excess of paper issue. 
 
 In order to illustrate what I desire to say further on this subject, you 
 will, I trust, allow me to make a brief review of the laws of Congress 
 bearing upon the increased price of labor and commodities, and the 
 advance in the price of gold. Gold and silver, as you well know, are the 
 standard of value in conducting the commerce of all the civilized nations 
 of the world. The commerce of the United States is still carried on with 
 all foreign nations with gold as the standard or measure of value. 
 
 The laws of Congress, passed in 1792, fixed the gold standard in the 
 United States, for the ten dollar eagle, at two hundred and forty-seven 
 grains and four-eighths of a grain of pure gold, or two hundred and sev- 
 enty-five grains of standard gold, and half that quantity for the half eagle. 
 The law of Congress, passed in 1837, changed the gold standard established 
 in 1792, by providing that the standard of both gold and silver should be 
 such, that of one thousand parts by weight, nine hundred parts should be 
 pure metal and one hundred of alloy ; that the alloy of silver coins should 
 be of copper, and the alloy of gold coins should be of copper and silver. 
 That the weight of the gold eagle should be two hundred and fifty-eight 
 grains, that of the half eagle one hundred and twenty-nine grains, and 
 that the eagle should be a legal tender for ten dollars, and the half eagle 
 for five dollars. This was the standard value up to the time wlien the legal 
 tender note bill was passed. 
 
 The last loan of $50,000,000, made by the government before the suspen- 
 sion of specie payments, was on the issue of six per cent, twenty year 
 bonds at 89J^, being a discount of 10^ per cent., and a loss to the Treasury 
 of about-$5,338,769. The agreement for this loan was made with the asso- 
 ciated banks of New York, Boston and Philadelphia, in the fall of 1861. 
 It was made on a specie basis, and in the efibrts made by the banks to pay 
 the gold on- this loan into the Sub-Treasury, it brought on such a strin- 
 gency in the money market as to cause a general suspension of specie 
 payments on the 31st of December, 1861, which made it exceedingly diffi- 
 cult for the banks to pay the last instalments to complete the loan. No 
 further loans could be negotiated except at a still greater discount; indeed, 
 it was deemed nearly or quite impossible to make any further loans on a 
 specie basis, unless at the most ruinous rates of discount. There was then 
 due to the army and navy, and for supplies, not less than $100,000,000, and 
 at least $200,000,000 more would be required within ,six months. The 
 
192 
 
 necessity for immediate action was most pressing and urgent. We were 
 grappling with a most gigantic rebellion. We were in a most extraordi- 
 nary crisis, and extraordinary measures had to be resorted to, in order to 
 save the government and preserve our nationality. In this great emer- 
 gency the original legal tender note bill, introduced by me as a necessary 
 war measure, and which, after being amended and passed, was approved 
 by the President February 25th, 1862, changed the standard of value, not 
 with the world at large, bvit within the United States, by authorizing the 
 Secretary of the Treasury to issue $150,000,000 of United States notes to 
 circulate as currency, making them lawful money and a legal tender for 
 all debts, public and private, and providing for their redemption at all 
 times at the Treasury Department in five-twenty six per cent, bonds, 
 interest payable semi-annually in coin ; and further authorizing the issue 
 of $500,000,000 of these bonds for that purpose. This was not the issue of 
 an irredeemable paper currency. There was a fixed standard and measure 
 of value for the redemption of all these legal tender notes as they should 
 be issued and re-issued from time to time. That standard was five-twenty 
 six per cent, bonds, principal and interest payable in gold, whatever might 
 be their value. Every person who should receive these notes voluntarily, 
 or by compulsion, knew exactly what he could do with them. He knew 
 that the laws of Congress provided that he should have gold bearing bonds 
 for all the notes taken by him. The redemption in this case was not gold 
 on demand as formerly, but six per cent, interest in gold every six months, 
 and the principal payable in gold within twenty years. This was the 
 standard of value fixed by the legal tender note bill. It was in effect a 
 forced loan from the people to the government, but at a fair rate of interest 
 for both the lender and the borrower. 
 
 This was a radical change in the standard or measure of value within 
 the United States, but it was a fixed standard established hy law, and every 
 business man could act upon it, and shape all his contracts and business 
 transactions accordingly. 
 
 The act of July 11th, 1862, authorized a further issue of $150,000,000 of 
 legal tender notes, and requiring their redemption by the government at 
 all times, on demand, in the 5.20 six per cent, bonds ; still leaving the 
 standard of value of legal tender notes by providing for their conversion 
 at any time into six per cent. United States bonds, principal and interest 
 payable in gold. Although this was in effect a forced loan from the 
 people, it was so fair and equitable in its terms, the peril of the country so 
 great, and the object to be attained in crushing the rebellion so important, 
 that no loyal citizen could object to it. There was no very great danger 
 that the currency would become excessively inflated so long as every 
 person holding greenbacks, not bearing interest, could exchange them 
 at his own will into gold-bearing bonds at six per cent, interest per 
 annum. 
 
 In the remarks which I made in the House on the 17th of June, 1862, in 
 favor of this additional issue of legal tender notes, I said that ' I never 
 have been, and I trust I never shall be, unnecessarily an advocate for the 
 creation of an unsound or an inflated currency; but, sir, I have long ago 
 resolved, since this savage war has been forced upon us, to do whatever 
 was necessary, and which I might lawfully do, to crush out the traitors 
 and annihilate their armies. This cannot be done without the ' sinews of 
 war.' Your army and navy must be supplied with all the terrible arma- 
 ment necessary to crush the enemy. Tour sick, wounded and famishing 
 soldiers must all be supplied with hospitals, medical attendance, and all 
 
193 
 
 necessaries and conveniences to make them comfortable. This is a plain 
 duty which we cannot any of us fail to perform. If, in the performance of 
 this duty, it becomes necessary to authorize a further issue of United 
 States notes, I shall not hesitate to give my vote for it. I am not in favor 
 of increasing the issue of them beyond the imperative necessities of the 
 government to sustain the army and navy. I much prefer to have our six 
 per cent, bonds issued on permanent loans. I would like to see the Secre- 
 tary of the Treasury borrow at par all the money he can on the six per 
 cent, bonds heretofore authorized to be issued. 
 
 When money can be obtained at par on six per cent, bonds, I would 
 prefer to have that done to the issuing a very large amount of legal tender 
 notes. Too large an issue of demand notes, to circulate as money, will no 
 doubt lead to an expansion which will inflate prices, stimulate undue 
 speculations, and ultimately produce a reaction that will derange the 
 whole business of the country. This is to be avoided if possible. I cannot 
 therefore, advocate any greater issue of demand notes than the absolute 
 necessities of the government requires to carry on the war with vigor. I 
 am disposed to give the Secretary power to issue the additional $150,000,- 
 000 United States notes asked for by him; but, at the same time, I feel the 
 importance of having this power exercised discreetly, and I trust that he 
 will not issue, or pay them out at all, when money can be obtained at par 
 on our six per cent, bonds. I do not understand tbat the Secretary intends 
 to have them all issued and put into circulation at any one time ; on the 
 contrary, I believe he has no such intention. He wants the power to issue 
 and use them if necessary, but not otherwise. When he can obtain a suffi- 
 cient amount of money at par, on six per cent, bonds, or by temporary 
 deposits in the Treasury, there will be no necessity for their issue, and the 
 Secretary assures us in his letter that no further issues of notes will be 
 made when that can be done ; and, besides, the bill provides for this retain- 
 ing in his own hands legal tender notes equal to one-third of the tempo- 
 rary deposits that may be in the Treasury.' 
 
 The government was carried on smoothly and the war prosecuted 
 vigorously under this system up to January 21, 1864, when the 5-20 six 
 per cent, bonds authorized by the act of 25th of February, 1862, were 
 exhausted. In the mean time, the standard of value for the redemption 
 of greenbacks had been changed, which is the principal coMse of the present 
 advance in the price of gold and other commodities and services, as I will now 
 proceed to show. 
 
 The act of the 3d of March, 1863, to provide ways and means for the 
 support of the government, commonly called the $900,000,000 loan bill, so 
 modified the legal tender note bill as to leave it in the discretion of the 
 Secretary of the Treasury to fix the time and manner of issuing the bonds 
 or notes, and the rate of interest they should bear under the act. It gives 
 him the power to issue them at six per cent., five per cent., or even at a 
 lower rate of interest if he deems advisable ; but under the modification of 
 the act, there is no longer any standard of value fixed by law. It rests with 
 the Secretary to say, from time to time, what the rate of interest shall be. 
 He also has the power to issue and re-issue legal tender notes on demand 
 and on time in sufficient volume to float five per cent., and even four per 
 cent, bonds and notes, if he shall deem it advisable to do so. "So man can 
 regulate his contracts or business affairs with any certainty. No person, 
 when he takes legal tender greenback currency, can fix in his own mind 
 what is its real value. It is no longer convertible at the will of the holder 
 
194 
 
 into United States six per cent, bonds, nor is there any provision in the 
 law which compels the government to redeem them in any kind of bonds, 
 or in any other way — except for dues to the government. It has, how- 
 ever, been the practice of the Treasury Department during the past two 
 months to redeem legal tender greenbacks, not bearing interest, by 
 exchanging for them one and two years Treasury notes bearing five per 
 cent, interest, both principal and interest payable in currency. 
 
 I did not, at the last session of Congress, think it wise to change the 
 standard of value fixed in the legal tender note bill. 1 thought it better 
 to issue and pay out to the army and navy, and other creditors of the 
 Government, an amount of greenbacks suflScient to float, easily, the five- 
 twenty six per cent, bonds, but no more. I believed seven and 3-10 per 
 cent, interest too high a rate ; but I deemed it fair and just that on forced 
 loans of this kind that the Government should pay six per cent., and that 
 the war should be prosecuted until the rebellion should be crushed, on 
 the basis of six per cent, interest on all the funded debt to accomplish 
 that result. I thought it better for the Government and the people that 
 there should be that stability attached to business transactions which can 
 only be fully realized by a public law establishing the measure of value. 
 In the remarks which I made in the House on the 12th of January, 1863, 
 I said, ' that Congress, by its legislation at the last session, has, to a con- 
 siderable extent, changed the standard of value for all business operations 
 with the United States. The standard of value fixed by Congress is legal 
 tender Treasury notes, convertible at any time into United States specie- 
 paying bonds, bearing interest at the rate of six per centum per annum, 
 payable half-yearly in coin, based upon adequate taxation upon the entire 
 property of the country. Legal tender notes constitute the national cur- 
 rency now established by law. All exchanges of property, all contracts, and 
 all loans, are based upon the value of legal tender notes and United States six 
 per cent, bonds.'' 
 
 At a later period in the session the $900,000,000 act was passed. I was 
 not in favor of the change made by that act in the standard of value, or 
 rather I was not in favor of the discretionary power given to the Secretary 
 of the Treasury to change it, as provided in the act; not because I bad 
 not fuU confidence in the Secretary', but because I thought it better that 
 so important a matter, relating as it does to the stability of the whole 
 business operations of the country, should be fixed in the law itself, so 
 that all men could shape their business accordingly. This would have 
 relieved the Secretary from a vast responsibility, and the inflations, fluc- 
 tuations and changes now so apparent would have been less likely to have 
 happened. I reluctantly assented to the change. It was against my 
 better judgment, and I am now satisfied that it was a mistake. 
 
 The daily conversions, during the past year, of legal tender notes into 
 the 5-20 six per cent, bonds, at the rate of from one to two millions a day, 
 furnished the means for paying the daily expenditures of the Govern- 
 ment; the conversions went on so smoothly, so steadily and so satisfac- 
 torily to all parties, without causing any great inflation of the currency, 
 or increase in the price of labor or commodities, that I was in hopes it 
 would be continued by the Secretary, under the discretionary power given 
 him to continue it, under the $900,000,000 loan bill. This would have 
 kept things steady, kept down the price of gold, and would probably have 
 prevented any necessity for paying out the reserve $50,000,0000 of green- 
 backs which have been issued since the meeting of Congress, and over 
 
196 
 
 $150,000,000 five per cent, one and two years legal tender notes, also issued 
 and circulated to a considerable extent as currency, making about $200,- 
 000,000 that liave been printed and paid out since the meeting of Congress 
 in December last, which, added to the $400,000,000 of greenbacks pre- 
 viously issued, amounts altogether to $600,000,000 of greenbacks and 
 legal tender Treasury notes, and which is probably a volume of currency 
 large enough to float the proposed new issue of five per cent, ten-forty 
 bonds ; but it is not my wish or desire to say a word that will in any way 
 retard or embarrass the operations of the government in a vigorous prose- 
 cution of the war to put down this gigantic and wicked rebellion, and 
 effectually remove the cause that brought on such a bloody war. The last 
 man and the last dollar are pledged for this purpose, and, if necessa/ry, to 
 inflate the currency to such an extent that 10-40 five per cent, bonds may 
 be floated at par, I am ready to yield my assent to such a measure, and 
 will lend my feeble efforts to sustain the admipistration in carrying it out. 
 The rebellion must be crushed at all hazards, and at every sacrifice. 
 
 The principal object I have in writing to you at this time, is to solicit 
 the co-operation of our friends in New York in submitting to Congress 
 the propriety of establishing, hy law, the standard value of legal tender notes, 
 by fixing the rate of interest at which they may at any time be converted 
 into the funded debt of the United States, principal and interest payable 
 in gold. If it is to be five per cent, bonds, gold and prices will be consid- 
 erably higher than they will be if such notes are convertible into six per 
 cent, bonds. I think it wiU be cheaper in the end, and specie payments 
 can be resumed at an earlier day, for the Government to continue the con- 
 version of legal tender notes into six per cent, bonds, because gold will 
 be lower and prices less ; but whatever the rate of interest is to be, I trust 
 it will be fixed in the law itself, so that all business men may be able to 
 shape their contracts and business in accordance with the public law 
 establishing such standard of value. 
 
 I intended to say a few words on one or two other points, but this letter 
 is already longer than I intended, and I must defer to some other more 
 convenient time what more I may desire to say on the national finances. 
 I remain yours, very truly, 
 
 E. G. SPAULDING. 
 
 New Toek, March 21. 
 
 My Dear Sir— I am in receipt of your favor of the 19th inst., tipon the 
 subject of national finances. 
 
 It expresses fully and clearly my own views— so admirably, in fact, 
 that I beg your permission to publish it, as I think it of great importance 
 that the attention of business men should be drawn to the subject— than 
 which nothing is of greater or more immediate consequence to then- inter- 
 ests. Truly yours, 
 
 MORRIS KETCHUM. 
 
 Hon. E. G. Spatjlding. 
 
 Buffalo, April 11, 1864. 
 Morris Ketchum, Esq., Bcmker, N. Y. : 
 
 Dear Sir— Referring to my letter to you of the 19th of March last, I 
 desire to make some additional remarks on the National Finances. It is a 
 subject upon which I feel a deep interest, for you well know that if we fail 
 
196 
 
 here there is danger that we may not succeed in accomplishing what is 
 the most ardent wish of all patriotic citizens — that of crushing the rebel- 
 lion, and a restoration of the national unity. The national debt will 
 increase at a fearful rate, under any policy that can be devised, and pru- 
 dent, patriotic citizens are looking anxiously at the result of measures 
 that are adopted. Desiring, as I do, the crushing of the rebellion in the 
 shortest time, and with the least possible expenditure of blood and treas- 
 ure, I venture to make a few suggestions further on the future policy of 
 executing the $900,000,000 loan act. 
 
 It seems to me that the policy of the Treasury Department for the last 
 three months has been that of wflaiion, and over-issues of a paper circulating 
 medium. It has, by such a policy, unintentionally stimulated and encour- 
 aged speculations in gold, stocks and other things, rather than to encourage 
 industry, the production of commodities, and other legitimate business. 
 Under this policy, gold has advanced 20 per cent., and the price of labor 
 and commodities continues to increase to such an extent as to render it 
 very embarrassing for business men to carry on their ordinary pursuits. 
 I know very well that these evils cannot be fully guarded against during 
 the prosecution of such a gigantic war, and the large amount of paper 
 necessarily issued by the Government ; but it is the duty of the Govern- 
 ment that these evils should be mitigated and rendered as light as 
 possible. 
 
 The Department has partially executed the $900,000,000 loan act; the 
 first section of which authorized the Secretary to borrow the whole amount 
 of nine hundred millions of dollars on the ten-forty bonds, bearing six per 
 cent, (or, in his discretion, five or four per cent.) interest payable semi- 
 annually in coin ; or, by other sections of the bill, he had the discretionary 
 power to print and pay out to creditors of the Government an additional 
 amount of $150,000,000 of greenbacks, and $400,000,000 leg^l tender Treas- 
 ury notes, which, in the form issued by him, circulate to a considerable 
 extent as currency ; and a further contingent authority to issue a still fur- 
 ther sum of $150,000,000 of greenbacks; but the whole aggregate of all 
 kinds of bonds and notes to be issued under the bill was not to exceed 
 $900,000,000. 
 
 In administering and carrying into effect the provisions of this act, it is 
 plain that, by borrowing on the issue of ten-forty six per cent, bonds 
 under the first section of the act, the tendency would be to repress and 
 keep down inflation, prevent speculation in stocks, gold and other com- 
 modities, and, at the same time, by holding a steady money market, 
 encourage all kinds of productive industry and other legitimate pursuits. 
 
 On the other hand, by resorting to the other sections of the bill and 
 issuing greenbacks and legal tender treasury notes in large volume, the 
 currency is still further expanded and cheapened to such an extent that 
 all legitimate business is greatly embarrassed by the increase in the price 
 of labor, the cost of living, transportation, and the cost of the raw mate- 
 rials used in building, manufacturing, and other industrial operations. 
 
 In the partial execution of this law, the Treasury Department has 
 printed and paid out $150,000,000 greenbacks as currency, and over $175,- 
 000,000 of one and two years legal tender Treasury notes, which also 
 circulate to a considerable extent as currency, making $325,000,000 of 
 inflating paper issued under this act, thus far; while the department has 
 only borrowed on a permanent loan, under the first section of the bill and 
 the supplementary act, less than $15,000,000 on five instead of six per cent, 
 ten-forty bonds. The whole policy thus far under this law has been one 
 
19T 
 
 of inflation on temporary loans, rather than fwiding on long government 
 bonds at a fair rate of interest. 
 
 It has been supposed that by this policy of inflation a five per cent, ten- 
 forty bond might be floated nominally at par. Funding the present 
 excessive floating debt at five per cent, interest is better than not to be 
 funded at all, and I hope that the bonds now offered at five per cent, may 
 be taken up rapidly, and that the evils of the present inflation may be 
 removed; but I fear the conversions will not be rapid enough at this rate 
 of interest. The bonds do not seem to be readily taken, as yet, by the 
 people. It required the printing and paying out of $400,000,000 of green- 
 backs before the flve-twenty six per cent, bonds could be floated easily at 
 par, and it will probably require the circulating paper issues of the Gov- 
 ernment, now amounting to about $625,000,000, to be increased to $650,- 
 000,000 or $700,000,000, before the people will be induced to take five per 
 cent, bonds in order to get rid of the surplus circulation that may 
 accumulate in their hands, that cannot be more profitably invested in 
 other modes. 
 
 I agree with all that has been said by the Press and in Congress in favor 
 of annual taxation to the amount of $300,000,000. At the extra session of 
 Congress in July, 1861, I advocated immediate taxation to the extent of 
 paying the annual expenses of the government on a peace footing, and the 
 interest on all the war debt, and I have advocated that policy ever since. 
 I hope Congress will not adjourn without providing for raising at least the 
 sum of $300,000,000 each year by taxation. Assuming that Congress will 
 provide for raising that sum by taxation for the next fiscal year, still the 
 whole expenses of the year will not be less than $1,000,000,000, which will 
 leave the additional sum of $700,000,000 to be borrowed in some form to 
 pay the expenses of the army and navy. This brings us to the practical 
 question : How is this large sum to be obtained ? Shall it be on tempo- 
 rary issues of paper calculated to still further inflate the currency already 
 afloat, thereby adding to the embarrassments already bad enough; or 
 shall it be on a permanent loan, based on the issue of long bonds, principal 
 and interest payable in gold, and at such a fair rate of interest that the 
 bonds will be readily taken, in such large amounts as not only to make 
 any further temporary issues under the $900,000,000 act unnecessary, but 
 also materially diminish the present excess of paper currency? This 
 would check speculation, and bring down the price of gold and all other 
 commodities to a more safe and stable standard. 
 
 It is of great consequence for all business men to know what is to be the 
 future policy of the Treasury Department. Whether it will still further 
 inflate the currency by temporary expedients, or whether it will contract 
 the floating debt by funding in long bonds. Shall it be inflation and high 
 prices, or contraction and lower prices ? This question is of vital interest, 
 affecting the large purchases of the Government in the prosecution of the 
 war, as well as the legitimate business of the people. 
 
 If the Treasury Department will print and put at the disposal of the 
 people ten-forty bonds, paying six per cent, interest semi-annually in 
 coin, for the balance of the $900,000,000 loan, it will be so rapidly taken, 
 judging from the manner in which conversions were made into the 5-20 
 bonds, that all its other printing presses employed in printing temporary 
 circulating paper may be safely stopped until this loan is exhausted, and 
 with the most beneficial results to the Government and the people. 
 I remain, yours, truly, 
 
 E. G. SPAULDBSTG. 
 
198 
 
 SECRETAKT CHASE RESIGNS, AND WM. P. FBSSENDEN APPOINTED 
 SECEETAKY OF THE TEEASTJKT. 
 
 The attempt of the Secretary of the Treasury to float five per 
 cent. 10-40 Ijonds made it necessary, in order to pay the current 
 expenses of the Government, to issue and keep out large amounts 
 of currency in the form of greenlbacks, legal tender notes, inter- 
 est-bearing Treasury notes, certificates of indebtedness, postal 
 and fractional currency, and national bank notes, besides the cur- 
 rency issued by State banks. Gold and commodities continued 
 to advance in price. On the 16th of Jaijuary, '64, gold was 1. 63, on 
 the 15th of April 1,'!'8, on the 16th of June 1.97, and on the 29th 
 of June 2.35 to 2.50, which showed that the legal tender notes 
 were worth only forty cents on a dollar in gold. 
 
 On the 30th of June, 1864, Secretary Chase resigned the office 
 of Secretary of the Treasury. President Lincoln announced the 
 fact to the Senate by nominating David Todd, of Ohio, to fill the 
 vacancy, which was the first announcement of the -resignation of 
 Gov. Chase. Gov. Todd declined the appointment. Mr. George 
 Harrington, Assistant Secretary, was appointed Secreta,ry of the 
 Treasury ad interim. William P. Fessenden, U. S. Senator from 
 Maine, with some reluctance, finally consented to take the place. 
 
 He was nominated and confirmed, and entered upon the duties 
 of the office on the 6th of July. 
 
 He subsequently published a statement of the audited public 
 debt as it existed on the books of the Treasury Department on 
 the 30th day of June, which was the close of the fiscal year, and 
 the day that Secretary Chase resigned, showing the total amount 
 of debt to be $1,740,690,489.49. The 10-40 five per cent, bonds 
 amounted only to $73,337,750. 
 
 This statement showed that the currency items and others 
 operating to inflate prices were as follows : 
 
 U. S. notes, greenbacks $431,178,670 84 
 
 Postal, fractional currency 22,894,877 25 
 
 Interest-bearing legal tender Treasury notes 168,571,450 00 
 
 Certificates of indebtedness 160,720,000 00 
 
 National bank notes 25, 825, 695 00 
 
 Add State bank circulation, not less than 135,000,000 00 
 
 $944,190,693 09 
 Seven-thirty Treasury notes $109,356,150 00 
 
 Temporary deposits for which certificates 
 
 were issued , $ 72, 330, 191 44— $181, 686,341 44 
 
 June 30, 1864, total inflating paper issued $1,125,877,034 53 
 
I 199 
 
 This great inflation, with the military situation doubtful and 
 unsatisfactory, caused gold to advance until July 11, 1864, when 
 it reached its highest quotation, 2.85|-, or, more accurately speak- 
 ing, the United States notes continued to decline until they were 
 only worth in gold 35 cents on the dollar at the Board of Brokers 
 in the city, of New York. 
 
 It was thought at the time that the gold hill passed by Congress, 
 and approved June 17, 1864, prohibiting time contracts for the 
 sale of gold and foreign exchange, operated to advance the price 
 of gold, instead of depressing it. It was 'intended by Congress, 
 in passing the act, to prevent the gold speculators from operating 
 for an advance, but it had the contrary effect, and only aggi'avated 
 the difficulty. The price of gold would advance in spite of the 
 legal enactments, and the act only continued in force fifteen days, 
 (the 2d of July) when it was .repealed. 
 
 Secretary Fessenden says "that on assuming the office on the 
 5th of July he found his condition peculiarly embarrassing. The 
 cash balance in the Treasury was, on the first of July, $18,842,. 
 558. 'J'l, and the unpaid requisitions, chiefly for the army, were 
 $71,814,000, and the daily expenditures $2,250,000." The loan 
 of $33,000,000, advertised by Secretary Chase on the 25th of 
 June, was withdrawn on the 2d of July. Secretary Fessenden 
 raised the means to carry on the Government to March 4, 1865, 
 by the issue of greenbacks, 7-30 Treasury notes, interest-bearing 
 Treasury notes, certificates of indebtedness, loans of money 
 obtained on six per cent. 5-20 bonds, and the receipts from taxes. 
 In his Annual Eeport he says : 
 
 "The experience of the past few months cannot have failed to convince 
 the most careless observer that, whatever may be the effect of a redun- 
 dant circulation upon the price of coin, other causes have exercised a 
 greater and more deleterious influence. In the course of a few days the 
 price of this article rose from $1.50 to $2.85 in paper for $1.00 in specie, 
 and subsequently fell, in as short a period, to $1.87, and then again rose, 
 as rapidly, to $2.50; and all without any assignable cause, traceable to an 
 increase or decrease in the circulation of paper money, or an expansion 
 or contraction of credit, or other similar influence on the market, tending 
 to occasion a fluctuation so violent. It is quite apparent that the solution 
 of the problem may be found in the unpatriotic and criminal efforts of 
 speculators, and probably of secret enemies, to raise the price of coiu, 
 regardless of the injury inflicted upon the country— or, desiring to 
 inflict it." 
 
 UNITED STATES NOTES LIMITED TO $400,000,000. 
 
 By the second section of the act of June 30, 1864, it was pro- 
 vided that "the total amount of United States notes issued, or to 
 
200 
 
 be issued, shall not exceed $400,000,000, and such additional sum 
 not exceeding $50,000,000, as may Ibe temporarily required for 
 the redemption of temporary loans. '' 
 
 This act contained a further provision that "all honds. Treas- 
 ury notes, and other obligations of the United States, shall he 
 exempt from taxation, by or under State or municipal authority ;" 
 and the last section of this act declares that "the words 'obligation 
 or other security of the United States,' used in this act, shall be 
 held to include and mean all bonds, coupons, national currency, 
 United States notes, Treasury notes, fractional notes, checks for 
 money of authenticated oflScers of the United States, certificates 
 of indebtedness, certificates of deposits, stamps, and other rep- 
 resentatives of value of whatever denomination, which have been 
 or may be issued under any act of Congress." 
 
 This act also authorized the issue of $200,000,000 of interest- 
 bearing Treasury notes, payable at any time not exceeding three 
 years from date, and made a legal tender at their face value to 
 the same extent as United States notes, except in redemption 
 of notes issued by banks. And the power to issue interest-bear- 
 ing Treasury notes, of this character, was still further enlarged by 
 the act of January 28, 1865. 77ms was tJie last act of Congress 
 giving power to tlie Secretary of the Treasunj to issue any kind of legal 
 tender notes. 
 
 HOW SECEETAEY McCULLOOH PAID THE ARMY AT THE CLOSE 
 OP THE WAE. 
 
 Upon the inauguration of President Lincoln for a second term, 
 Hugh McCuUoch was appointed Secretary of the Treasury in 
 place of Mr. Fessenden, who wished to be relieved from the duties 
 of the office, and who returned again to the Senate. Secretary 
 McCuUoch did not increase the issue of United States notes, but 
 continued the issue of bonds, 7-30 Treasury notes, and compound 
 interest-bearing Treasury notes made a legal tender at their face 
 value. After the surrender of the rebel armies to General Grant 
 and General Sherman, the volunteer army was mustered out of 
 the service, and had to be paid in full. Secretary McCuUoch 
 obtained the means to pay them chiefly by the issue of 7-30 Treas- 
 ury notes, which were negotiated under the general agency of Jay 
 Cooke, at par. The amount required for this purpose was very 
 large, and the amount of 1-30 Treasury notes outstanding in 
 October, 1865, after paying the army was $830,000,000, which 
 were convertible in three years into 5-20 six per centi bonds. The 
 
201 
 
 • 
 
 public debt during that month run up to about the highest figures 
 it ever reached. The following is a statement of the debt, with- 
 out deducting funds in the Treasury, as it stood on the books of 
 the Treasury Department on the 31st of October, 1865. 
 
 STATEMENT OF THE PUBLIC DEBT. 
 
 Bonds, 10-40's, five per cent, due in 1904 $172,770,100 00 
 
 Bonds, Pacific Railroad, 6 per cent., due in 1895 1,258,000 00 
 
 Bonds, 5-20's, 6 per cent., due in 1882, 1884 and 1885 659,259,600 00 
 
 Bonds, 6 per cent., due In 1881..... 265,347,400 00, 
 
 Bonds, 5 per cent., due in 1880 18,415,000 00 
 
 Bonds, 5 per cent., due in 1874 20,000,000 00 
 
 Bonds, 5 per cent., due in 1871 - 7,022,000 00 
 
 $1,144,072,100 00 
 
 Bonds, 6 per cent. , due in 1868 , $ 8, 908, 341 80 
 
 Bonds, 6 per cent., due in 1867 9,415,250 00 
 
 Compound interest notes, due in 1867-'68 173,012,141 00 
 
 7-30 Treasury notes, due in 1867 and 1868 830,000,000 00— 1,021,335,732 80 
 
 Bonds, Texas indemnity, part due 760,000 00 
 
 Bonds, Treasury notes, etc., part due... 613,920 09— 1,373,920 09 
 
 Temporary loans, ten days' notice 99,107,745 46 
 
 Certificates of indebtedness, due in 1866. 55,905,000 00 
 
 Treasury notes, 5 per cent., Dec. 1, 1865. 32,536,901 00— 187,549,646 46 
 
 United States notes 428,160,569 00 
 
 Fractional currency 26,057,469 20— 454,218,038 20 
 
 Total debt October 31, 1865 .• $2,808,549,437 55 
 
 National bank notes issued $185,000,000 00 
 
 State banl£ notes issued 65,000,000 00 
 
 Total bank circulation $250,000,000 00 
 
 TAEIFF AND INTERNAL EEVENUE LAWS. 
 
 The act of July 1, 1862, called the Internal Eevenue Law, 
 was passed, providing for a levy of duties on various domestic 
 manufactures, upon trades and occupations, and also providing a 
 system of stamp, license, income, and other duties. And the act 
 of July 14th, of the same year, largely increased the duties on 
 imports. These laws were from time to time amended and 
 enlarged, until large sums were realized from this mode of taxa- 
 tion, and formed a very substantial basis on which to rest the 
 credit of the Government for the large issue of notes, bonds and 
 other obligations. Enough money was realized from these sources 
 to pay the ordinary expenses of the Government, all the interest 
 on the war debt, and liquidate a considerable portion of the prin- 
 cipal. The total debt, October 31, 1865, was over $2,800,000,000, 
 and it does not at the present time much exceed 12,500,000,000, 
 exclusive of Pacific Railroad bonds. 
 
202 
 
 CONTRACTION OF THE CURRENCY. 
 
 Secretary McCulloch, in his first annual report, 4th of Decem- 
 ber, 1865, expressed the opinion " that the legal tender acts were 
 war measures, passed in a great emergency; that they should be 
 regarded only as temporary; that they ought not to remain in 
 force a day longer than would be necessary to enable the people 
 to prepare for a return to the gold standard ; and that the work of 
 retiring the notes which have been issued, should be commenced 
 without delay, and carefully and persistently continued until all 
 are retired." The House of Representatives on the 18th Decem- 
 ber, 1865, concurred in these views, expressed in the annual 
 report of Mr. McCuUoch, by the adoption of the following resolu- 
 tion offered by Mr. Alley, of Massachusetts : 
 
 Resolved, That this House cordially concurs in the views of the Secretary 
 of the Treasury in relation to the necessity of a contraction of the cur- 
 rency, with a view to as early a resumption of specie payments as the 
 business interests of the country will permit; and we hereby pledge 
 co-operative action to this end as speedily as possible. 
 
 The above resolution was passed by the following vote — yeas 
 144, nays 6, as follows: 
 
 Messrs. Alley, Allison, Ames, Ancona, Anderson, James M. 
 Ashley, Baldwin, Banks, Barker, Baxter, Beaman, Bergen, Bid- 
 well, Bingham, Blow, Boutwell, Boyer, Brandegee, Brooks, 
 Broomall, Bundy, Reader W. Clarke, Sidney Clarke, Conkling, 
 Cook, Cullom, Darling, Dawes, Dawson, Defrees, Delano, Dem- 
 ing, Dennison, Dixon, Driggs, Eldridge, Eliot, Farquhar, Ferry, 
 Finck, Garfield, Grider, Griswold, Hale, Aaron Harding, Abner 
 C. Harding, Hart, Hayes, Henderson, Higby, Hill, Hogan, 
 Holmes, Hooper, Hotchkiss, Asahel W. Hubbard, Chester D. 
 Hubbard, Demas Hubbard, John H. Hubbard, Edwin N. Hubbell, 
 James R. Hubbell, Hulbard, James Humphrey, IngersoU, Jencks, 
 Johnson, Julian, Kasson, Kelley, Kelso, Kerr, Ketcham, Kuyken- 
 dall, Laflin, Latham, George V. Lawrence, William Lawrence, 
 Longyear, Marshall, Marston, Marvin, McClurg, Mclndoe, 
 McKee, McRuer, Mercur, Miller, Moorhead, Morrill, Moulton, 
 Myers, Niblack, Nicholson, Noell, O'Neill, Orth, Paine, Patter- 
 son, Perham, Phelps, Pike, Plants, Price, Radford, Samuel J. 
 Randall, William H. Randall, Raymond, Alexander H. Rice, John 
 H. Rice, Ritter, Rollins, Ross, Rousseau, Sawyer, Scofield, Shank- 
 lin, Shellabarger, Sitgreaves, Sloan, Spaulding, Starr, Stillwell, 
 Strouse, Taber, Taylor, Thornton, Trimble, Trowbridge, Upson, 
 Van Aernam, Burt Van Horn, Robert T. Van Horn, Voorhees, 
 
203 
 
 Ward, Warner, Elihu B. Washburn, William B. Washburn, 
 Welker, Wentworth, Whaley, Williams, James F. Wilson, Stephen 
 F. Wilson and Wright— 144. 
 
 Nays — Messrs. Baker, Cobb, Eckley, Harris, Smith, and 
 Thayer — 6. 
 
 In order to carry into efl'ect the above resolution, Congress, by 
 the act of March 12, 1866, authorized the Secretary of the Treas- 
 uiy to exchange bonds for notes, but ' ' that of United States notes 
 not more than 110,000,000 should be retired and canceled within 
 six months from the passage of the act, and thereafter not more 
 than $4,000,000 should be retired in any one month." 
 
 Under the provisions of this act the Secretary commenced 
 retiring and canceling legal tender notes, but contraction very soon 
 began to affect speculators and the debtor class of the community, 
 who raised a cry against the course pursued by the Secretary. As 
 contraction gradually went on, money became more in demand, 
 and it soon became unpopular with a large class of the community. 
 Members of Congress very soon changed their opinions on the 
 subject, and in January, 1868, a law was passed, declaring "that 
 from and after its passage, the authority of the Secretary of the 
 Treasury to make any reduction of the currency by retiring or 
 canceling United States notes, shall be and is hereby suspended." 
 
 Before this law was passed Secretary McCuUoch had reduced 
 the circulation of United States notes down to about $356,000,000, 
 which at this time (April, 1869), is the amount outstanding, and 
 for which the Government is still liable, besides fractional cur- 
 rency amounting to over $36,000,000. 
 
 THE PUBLIC FAITH. 
 
 Since the close of the war there has been considerable discussion 
 in regard to the meaning of the words used in the legal tender 
 act. 
 
 It has been insisted by a large class of citizens that the 5-20 
 bonds might, after five years, be redeemed in legal tender notes, 
 instead of gold and silver. Others insisted that the bonds are 
 payable in "dollars," which means gold and silver coin, and that 
 an attempt to pay in legal tender notes would not be payment but 
 merely changing the form of the debt. That a matured debt can- 
 not be discharged by another promise; that it is contrary to 
 reason that a bond should be paid in an inferior obligation; and 
 that it would be unjust to force inconvertible paper, without inter- 
 est, in payment of an intei'est-bearing obligation, especially as the 
 
204 
 
 right was given in the original act to fund legal tender notes at 
 any time in the bonds which were authorized by the same act. 
 Taking up bonds not due with greenback notes, would simply be 
 to ttmfund a debt already funded, which would be contrary to the 
 whole spirit and intent of the legal tender act. 
 
 To remove all doubt upon the subject, and with a view to 
 improve the public credit, Mr. Shenck, Chairman of the Commit- 
 tee of Ways and Means, reported a bill, which, after a lengthy 
 discussion, was amended, and finally passed both Houses of 
 Congress. 
 
 The following is the vote by which it passed the House. Yeas 
 97, nays 47. 
 
 Yeas — Messrs. Allison, Ambler, Ames, Armstrong, Arnell, 
 Asper, Axtell, Bailey, Banks, Beaman, Benjamin, Bennett, Bing- 
 ham, Blair, Boles, Boyd, Buflinton, Burdett, Cessna, Churchill, 
 Cobb, Cook, Conger, Cowles, CuUom, Dawes, Donley, Duval, 
 Dyer, Famsworth, Ferriss, Ferry, Finckelnburg, Fisher, Fitch, 
 (Grilfallan, Hale, Hawley, Heaton, Hoar, Hooper, Hotchkiss, 
 Jenckes, Jones (N. C), Judd, Julian, Kelsey, Ketcham, Knapp, 
 Laflin, Lash, Lawrence (Ohio), Lynch, Maynard, McCrary, Mc- 
 Grew, Meircur, Moore (111.), Moore (N. J.), Morrill (Me.), Neg- 
 ley, O'Neill, Packard, Paine, Palmer, Phelps, Poland, Pomeroy, 
 Prosser, Boots, Sanford, Sergeant, Sawyer, Schenck, Scofield, 
 Sheldon, Smith (Ohio), Smith (Vt.), Smythe (Iowa), Stokes, 
 Stoughton, Strickland, Tanner, Tillman, Twichell, Upson, Van 
 Horn, "Ward, Washburn (Wis.), Washburn (Mass.), Welker, 
 Wheeler, Whittemore, Wilkinson, Willard, Williams, Winans — 97. 
 
 Nays — Archer, Beatty, Beck,~ Briggs, Bird, Burr, Butler 
 (Mass.), Butler (Tenn.), Cobb, Cobum, Crebs, Dewees, Dickin- 
 son, Eldridge, Getz, GoUaday, Hawkins, Holman, Hopkins, John- 
 son, Jones (Ky.), Kerr, Knott, Marshall, Mayhem, McCormick, 
 McNeely, Moffett, Mungen, Niblack, Orth, Reading, Reeves, 
 Rice, Shanks, Smith (Oregon), Stevenson, Stiles, Stone, Strader, 
 Sweeney, TaflTe, Trimble, Tyner, Van Trump, Wilson (Ohio), 
 Winchester, Woodward — 48. 
 
 The bill was approved by President Grant on the 18th of 
 March, 1869, and was the first act approved by him after his 
 inauguration, and is as follows : 
 
 "An Aist to strengthen the pUblia cfedit of the United States. 
 
 Be ii enacted, etc., That in order to remove any doubt as to the purpose 
 of the Government to discharge all its obligations to the public creditors. 
 
205 
 
 and to settle conflicting questiops and interpretations of tlie law, by virtue 
 of ■which such obligations have been contracted, it is hereby provided and 
 declared that the faith of the United States is solemnly pledged to the 
 payment in coin, or its equivalent, of all the obligations of the United 
 States not bearing interest, known as United States notes, and of all the 
 interest-bearing obligations, except in cases where the 'law authorizing 
 the issue of any such obligations has expressly provided that the same 
 may be paid in lawful money, or in other currency than gold and silver ; 
 but none of the said interest-bearing obligations, not already due, shall 
 be redeemed or paid before maturity, unless at such times as United States 
 notes shall be convertible into coin at the option of the holder, or unless 
 at such time bonds of the United States, bearing a lower rate of interest 
 than the bonds to be redeemed, can be sold at par in coin. And the United 
 States also solemrdy pledges il^ faith to make provision at the earliest practicable 
 period for the redemption of the United Slates notes in coin. 
 
 Approved March 18, 1869. U. S. GRANT." 
 
 DECISIONS OP THE COUKTS ON THE CONSTITUTIONALITY OF THE ACT. 
 
 In most of the States where the constitutionality of the legal 
 tender act has been raised, the State Courts have decided that the 
 law was constitutional and valid. The decisions in such cases 
 were generally made upon the ground that the United States had 
 express power to wage war, to raise and support armies and 
 navies ; to borrow money on the credit of the United States ; and 
 pass all laws necessary and proper to carry into execution these 
 great powers. In borrowing money to carry on the war, it was 
 necessary and proper for the Government to give its notes for the 
 amount borrowed; that Congress had the right to affix to such 
 notes the attributes, and prescribe the terms which would give 
 most value and the greatest facility to their negotiation, in order 
 to obtain the necessary means of sustaining the arnly and navy 
 in the prosecution of the war; that it was a form of credit justified 
 by the icxigency of the crisis, and necessary to the execution of 
 the war powers expressly granted in the Constitution. And that 
 upon the authority of Chief-Justice Marshall, "Congress must 
 possess the choice of means, and must be empowered to use any 
 means which are in fact conducive to the exercise of the powers 
 granted by the Constitution." 
 
 The Court of Appeals, the highest Court in the State of New 
 York, decided in the case of Myer vs. Rosevelt, 27 N. Y. Rep., 
 400, "that the power to borrow money on the credit of the United 
 States, carries with it the power to attach the quality of a legal 
 tender to the notes issued, when, in the judgment of Congress, it 
 is necessary to make them effectual for the purpose of bor^ 
 rowing.'* 
 
 Judge Davies, in his opinion, says : 
 
206 
 
 "We take notice of the fact, that to mauitain armies and provide a navy 
 for the prosecution of the war, more money is needed annually than all 
 the specie within the United States, and that a resort by the Government 
 to the use of its own credit, was not only a matter of necessity, but the result 
 has demonstrated that it was a measure of prudence and wisdom." 
 
 The issue of Treasury notes under the Constitution commenced 
 during the last war with Great Britain. On the 30th of June, 
 1812, the first act was passed. Further issues were authorized by 
 the acts of Congress of February 25, 1813; March 4, and Decem- 
 ber 26, 1814; October 12, 1837; January 31, and August 31, 1842; 
 July 22, 1846, and January 28, 1857. In Thorndike vs. The 
 United States, (2 Mason, 1, 18,) Judge Story said: 
 
 "By the statutes of the United States, under which the Treasury notes 
 have been from time to time issued, it is enacted that such notes shall be 
 receivable in payment to the United States, for duties, taxes and sales of 
 public lands, to the fuU amount of the principal and interest accruing due 
 on such notes. It follows, of course, that they are a legal tender in pay- 
 ment of debts of this nature due to the United States, and by the very 
 tenure of the acts, public officers are bound to receive them." 
 
 The legality of the issue of Treasury notes has been sanctioned 
 by all the departments of the Government since 1812, but the 
 United States Supreme Court has not yet decided that Treasury 
 notes can be made "lawful money and a legal tender in payment 
 of all debts public and private," but on the contrary it has decided 
 that contracts expressly payable in coin, must be paid in coin. 
 
 COIN CONTRACTS DECLAEED VALID. 
 
 The Court of Appeals in the State of New York, in the case of 
 Bronson vs. Ehodes, went so far as to decide that a contract made 
 before the passage of the legal tender act, payable expressly "in 
 gold and silver coin, lawful money of the United^States," might 
 be paid and satisfied by a tender of United States notes, issued 
 under the act of February 25, 1862. 
 
 But the U. S. Supreme Court at Washington reversed this 
 decision. Chief Justice Chase announced the opinion of the 
 Court on the 15th of February, 1869, as follows: 
 
 " This is an appeal from a judgment of the Court of Appeals of the 
 State of New York, holding that a tender of Treasury notes for the satis- 
 faction of a mortgage made in 1851, by its terms to be satisfied in gold and 
 silver coin, was sufficient. The tender was made in January, 1865, when 
 a dollar in coin was equal to two dollars and twenty-five cents in legal 
 tender notes, and, the tender being refused, action was commenced to 
 compel the cancellation of the mortgage. The Supreme Court of the 
 State subsequently adjudged the mortgage paid, and required it to be sat- 
 isfied of record, holding the tender to have been sufficient. The Court of 
 
207 
 
 Appeals affirm that judgment, and the affirmance is here for review. The 
 Chief Justice delivered the opinion of the Court, holding that it is the 
 duty of courts of justice to enforce contracts according to the intent of 
 the parties to them; and in this "case it is held that it is clear that the 
 intent of the parties was that payment should ,be made in coin. There 
 were two descriptions of money in use at the time the tender in this case 
 was made, both authorized by law, and both made legal tender. The 
 general denomination of both descriptions was dollars, but they were 
 essentially unlike in nature. The coined dollar was a piece of gold or 
 silver of a certain degree of purity and weight. The note dollar was a 
 promise to pay a coined dollar, but not on demand, nor at any fixed time, 
 nor was it convertible into a coined dollar. It wa.s impossible, in the 
 nature of things, that these two dollars should be equivalents of each 
 other, nor did the currency act purport to make them so. There were 
 then two descriptions of money issued by the same Government, and con- 
 tracts to pay either were equally sanctioned by law. No question can be 
 made as to this fact ; doubt concerning it can only spring from that con- 
 fusion of ideas which always attends the introduction of varying and 
 uncertain measures of value into circulation as money. In the absence 
 of any specific conti-ol for the payment of coin, legal tender notes may be 
 a sufficient tender, but it is clear to the Court that express contracts for 
 the payment of coined dollars can only be satisfied by the payment of 
 coined dollars. They are not debts which may be satisfied by the tender 
 of Treasury notes. As to the judgments to be entered on contracts for 
 the payment of coin, it is said the difficulty arises in the supposition that 
 damages can be assessed in only one description of money ; but where 
 there are two kinds of currency provided by law, it is necessary, in order 
 to avoid ambiguity and prevent a failure of justice, to render judgment 
 for coined money where the contract provides for payment in coined 
 money. Where no specified description of money is made, judgments 
 maybe entered generally without such specification. Judgment below 
 reversed. 
 
 Mr. Justice Miller dissented, holding that, although it was the intention 
 of the parties that gold should be paid, it was only so because gold was 
 then the currency of the Government, the lawful money of the United 
 States, mentioned in the contract. There was nothing in the contract to 
 make it differ from any other ordinary contract payable in dollars. When 
 Treasury notes became lawful money of the United States, their tender 
 was sufficient to discharge the contract, and within its terms and within 
 the understanding and intention of the parties. This decision in no way 
 aflfects the legal tender cases argued by Mr. Potter and the Attorney Gen- 
 eral at the present term of the Court, although argued at the time of the 
 argument of those cases." 
 
 The constitutional question has been argued and is still pend- 
 ing before the Supreme Court of the United States : ' ' was Con- 
 gress authorized, under the extraordinary exigencies of the war, 
 to make iJnited States notes fitted for circulation as currency, 
 ' lawful money and a legal tender in payment of all debts, public 
 and private ?' " The business men of the country are anxiously 
 waiting for the highest tribunal under the G-overnment to answer 
 this question. 
 
208 
 
 CONCLUSION, 
 
 Having completed the Historical narrative of the origin, prog- 
 ress and development of the system of Finance adopted during 
 the rebellion, and which furnished the means of prosecuting to a 
 successful issue the greatest civil war known in the history of the 
 human race, some reflections on the subject ma}' not be unin- 
 teresting. 
 
 At the breaking out of hostilities, the financial affairs of the 
 banks and people were in a remarkably good condition, except, 
 perhaps, in some of the Northwestern States, where the banks 
 were badly organized. 
 
 i In the Atlantic cities the banks were never in a better condi- 
 tion. The balances were settled through the Clearing House, in 
 New York and other cities, with great regularity. There was 
 paper currency and gold and silver enough to do the legitimate 
 business of the country. Bank notes were regularly convertible 
 at the will of the holder into specie, and to a large extent these 
 notes were redeemed in New York, Boston and other Atlantic 
 cities. The financial machinery and credit institutions of the 
 country were in a prosperous condition, and there was no lack of 
 means for legitimate wants. 
 
 It was not long after the war began before it became aj)parent 
 to the best financial men of the country, that a financial system 
 adequate to the wants of the nation in time of peace, was wholly 
 inadequate to meet the requirements of a great war; that the war 
 was a new and great business of itself, demanding new and addi- 
 tional facilities, greater even than existed before the war. That 
 the facilities for carrying on the business of the country as they 
 existed before the war, were still necessary to carry on that busi- 
 ness, and could not safely be withdrawn from it; and that a new 
 currency, national in character, and to some extent a new finan- 
 cial system, must be a-eated to meet the new and enlarged demands 
 of the war which had been forced upon the country. This was an 
 exigency not foreseen, and the Government was obliged to exer- 
 cise all the power it possessed in passing the war ineasures detailed 
 in the foregoing narrative. 
 
 The plan of Finance adopted in 1861-2 was successful, and 
 proved adequate to these enlarged requirements. The ,Govern- 
 ment was maintained and the Union preserved. By this plan all 
 the men and material of war necessary to crush the rebellion were 
 obtained without difficulty. Many mistakes were iliade in the 
 
209 
 
 conduct of the war, but the financial plan, including taxation, was 
 an ample resource sufficient at all times to meet the vast require- 
 ments of the War and Navy Departments. The credit of the 
 Government was brought into immediate action in the most avail- 
 able form. Some mistakes were also made by the Secretary of 
 the Treasury in administering the Loan acts, and too large an 
 inflation occurred in 1864, which might have been prevented by 
 continued funding in 5-20 six per cent, bonds, yet in the main the 
 financial management during the war was a decided success, 
 because it carried the coimtry through the terrible ordeal, and 
 brought the ship of state safely into port. It is true that this 
 plan was not at all in accordance with peace notions of finance, 
 but by it all officers, soldiers, sailors and marines were paid in 
 full, and all demands for supplies and material of war were 
 promptly discharged. It was a complete success as a means of 
 carrying into effect the war powers of the Government. These 
 facts abundantly prove the efficiency and wisdom of the plan 
 adopted in bringing the war to a successful termination. Although 
 successful it was a heavy drain upon the resources of the country, 
 and at times very embarrassing to business men, and they had to 
 submit to many sacrifices.. The withdrawal of such a large num- 
 ber of youthful laboring men into a vast army of unproductive 
 labor, and the mistake made in the over-issue of paper currency, 
 so inflated prices as to materially increase the expenses of the 
 war. It also embarrassed the people engaged in legitimate pur- 
 suits; laborers struck for higher wages, and the price of com- 
 modities greatly increased, causing considerable difficulty in 
 keeping up the productive energies of the country, especially in 
 establishments where large gangs of men are employed. 
 
 Nor can it be denied that the management of the fiscal affairs 
 of the Government, both legislative and executive, during 
 the war, was a material departure from sound political economy, 
 applicable to ordinary times of peace; The demand for money 
 means forced upon the country by such a gigantic rebellion, was 
 wholly unprecedented — nothing ever recorded in history equaled 
 this demand — and reached to such overwhelming ampunts, so 
 vastly beyond any former financial requirements, that the careful 
 observer cannot but look back with wonder and amazement that 
 the Government was at all able to pass successfully through such 
 an extraordinary crisis. The authorization of a loan of $900,- 
 000,000, in one act, and an increase of the public debt in one 
 
210 
 
 year of over $940,000,000, over and above custom duties and 
 internal taxes, are matters of history. The amount of the issue 
 of paper currency and temporary obligations in various forms 
 was almost appalling. Considerably over one million of men 
 were at one period of the war withdrawn from productive labor. 
 The strain upon the credit of the Government, with eleven States 
 practically out of the Union, was very great. It would seem that 
 no other country could have borne up under such a sudden exi^an- 
 sion of the credit circulation, and the changing of so many men 
 from producers to destroyers of life and property. This great 
 inflation of the paper medium had, however, some compensating 
 advantages. It stimulated into wonderful activity all the pro- 
 ductive energies of common labor, skilled labor, and machinery 
 of all kinds. War material was produced with amazing rapidity, 
 and in abundant quantity, for equipping, supporting and moving 
 all the great armies in the field and navies afloat. The people 
 never flagged, hesitated, or faltered in producing and furnishing 
 all these vast war materials, and receiving in exchange for it the 
 promises issued to them by the Government. They seemed to be 
 getting rich by the operation, and although it was to some extent 
 unreal, yet this stimulus, aided by patriotic determination to 
 maintain the Union, was great enough to induce the people to 
 furnish every thing necessary to supply the army and navy to 
 crush the rebellion, at the mouth of the cannon and point of the 
 bayonet. No compromise was made. Superior force, backed by 
 powerful and abundant resources, accomplished this great achieve- 
 ment. The army and navy were powerful and victorious, because 
 thej' were sustained by all the vast resources of the country, 
 brought to their aid voluntarily, and by the superior power of the 
 Government which commanded these resources. These bold and 
 decisive financial measures gave power and dignity to the Govern- 
 ment, and although it operated upon the unwilling as a forced 
 loan, the crisis demanded, it; it was the price of the national 
 Union; the national faith is pledged, and every dollar of this debt 
 must be paid, principal and interest, in gold and silver. 
 
 The value of the Union and the Government preserved in full 
 vigor under the Constitution, cannot be estimated in dollars and 
 cents. It is above all price. A vast continent, embracing terri- 
 tory and people, is now held under the control of a mighty central 
 and consolidated Government, based upon the will of an enter- 
 prising, intelligent and powerful people. The mind of man is 
 
211 
 
 incapable of estimating the future progress and destiny of the 
 American people under such a Government wisely administered. 
 But in a financial and economical aspect, these vast sums expen- 
 ded present an entirely different view. Viewed simply as an 
 economical question, the immense war debt represents only lives 
 and property consumed. All the unproductive labor, vast material 
 of war, provisions and supplies of all kinds are used up, wasted 
 and blotted out of existence. This immense debt rolled up during 
 four years of bloody war, stands out in bold demand upon the 
 nation for liquidation from the future earnings and income of the 
 people. Future labor and economy must furnish the means for 
 its payment. This debt is the price of the Union and Constitu- 
 tional Government, but their value cannot be estimated in dollars. 
 The Government value is intangible and not present as a means of 
 payment, but the war debt is already tangible ; the bills are footed 
 up, and the total amount is over 12,500,000,000. 
 
 This sum must be paid, principal and interest, not by the issue 
 of new promises to pay it, but by the production of actual value, 
 measured by gold and silver, the world's commercial standard, as 
 well as the standard regulated by law. 
 
 To illustrate more fully, ^hen individuals in commercial 
 transactions give their notes, bonds or other promises to pay 
 money, they usually receive in exchange either real or personal 
 property, or labor, which is made valuable in some form to pay 
 the obligation given for it. Not so with the war debt; the prop- 
 erty received and services performed for: the United/States notes 
 and obligations, outstanding, has not, in a financial sense, been 
 employed in such a useful way as to furnish present value to pay 
 them with, but on the contrary it was consumed by the war. 
 Hence the difference between a debt created for commercial pur- 
 poses and a war debt. The one is generally for property or labor 
 made useful and productive, while the other is for unproductive 
 labor or property consumed, wasted or destroyed not for any 
 pecuniarily useful purpose. 
 
 Immediately after the war began we commenced our departure 
 from the gold standard, for -the reason that every dollar expended 
 for the waste of war was expended for a pecuniarily unproductive 
 purpose. Every dollar expended took out of existence a dollar of 
 value for which the Government gave its promise to pay. Every 
 dollar of property , thus destroyed led us farther and farther away 
 from the specie standard, and has to be produced again by labor 
 
212 
 
 before the value is restored. Ill One year, from July 1, 1864, to 
 July 1, 1855, 
 
 The Expenditures of the War Department Were $1,031,323,360 79 
 
 For Navy Department - 122,567,776 12 
 
 Total waste of War in one year $1,163,891,136 91 
 
 The history of the human race sh6#s no such consumption and 
 waste in any war during a single year. One billion, one hundred 
 and fifty-three million, eight hundred and ninety-one thousand, one 
 hundred and thirfy-six ddllars and ninety-one cents expended in one 
 year! At the close of this year, July 1, 1865, and the close Of 
 active hostilities, one doUkr in gold was worth, in greenbacks, 
 1.41, at the Broker's IJoard in New York. All the bonds and 
 greenback promises to pay dollars, now outstanding, do not rep- 
 resent tangible property or means owned by the Government, but 
 property in the possession of the people under its jurisdiction, and 
 from which all this waste must be reproduced again, and the value 
 restored, in order to bring us to the specie standard and enable 
 us to pay the debt. In short, the debt must be paid from the 
 earnings and income of the people, in some form of taxation to be 
 enforced by the Government. 
 
 It was fortunate that the debt, durihg the war and since, was 
 distributed to a large extent among all classes of people. In fact, 
 this was the only way in which the resources necessary to sustain 
 the war could be obtained. The legal tender notes were paid out 
 and distributed to the army and navy and for supplies and mate- 
 rial of wal-. Certificates 6f indebtedness and interest-bearing 
 Treasury notes, were also paid out to contractors and others. 
 The loans were negotiated by direct appeals to the people to sub- 
 scribe iin large and small amounts. The great body of the people 
 in the loyal states took up the loans, and became directly interes- 
 ted in sustaining the Government, and the great diffusion of the 
 notes, bonds and certificates all over the country, was the only 
 way in which the enormous debt so suddenly created could be 
 carried through to the close of the war. The greenback notes 
 were very popular among the- people. It was a currency in daily 
 use, uniform in value, and passed freely in every state. It was 
 the people's loan to the Government, without interest, and was at 
 the same time advantageous to them, because it was money in all 
 business transactions. It immediately became the people's war. 
 All became pecuniarily intrusted in its success, and they furnished 
 the means to carry it on. The -cnishing of the rebellion was the 
 
213 
 
 people's triumph; and the people will in due time pay the debt, 
 and thereby preserve the honor and good faith of the nation. 
 
 Notwithstanding the great destruction of values consequent 
 upon the prosecution of the war, the nation was, at its close, still 
 possessed of great pawer and resources, and the material interests 
 of the Northern and "Western States were still advancing. They 
 continue to advance ; and now that peace and order are restored, 
 and the whole country North and South have a common interest 
 and a common destiny, will continue to advance. There is a 
 rapid increase of population; new fields of enterprise are contin- 
 ually opening, adding new strength and ability to the people to 
 work back to the specie standard, and ultimately pay, without 
 embarrassment, everj^ dollar of the debt incurred in main-taining 
 the national Union. 
 
 To make this more plain the following estimate of the increase 
 of the population of the United States is submitted. 
 
 According to the rate of increase ip past years, our population 
 
 will advance in the following proportion : 
 
 Inl870 42,000,000, In 1880 56,500,000, 
 
 In 1890 76,500,000, In 190O 103,600,000, 
 
 In 1910 138,900,000. 
 
 The vast means for prosecuting the war to" a successful issue 
 were furnished by a population not over 20,000,000. The popula- 
 tion subject to the jurisdiction of the national Government and 
 giving it support in 1870, will be double what it was in 1862. 
 The resources of the country will increase with as great rapidity 
 as its population. New and improved systems of communication 
 are expanding in all directions; the Atlantic and Pacific slopes 
 will very soon be bound together by iron bands ' ' across the con- 
 tinent;" the mechanic arts, improved machinery, with agricultural, 
 mineral and commercial facilities fully developed, will carry the 
 nation so rapidly forward in power and resources, that nothing 
 need prevent the Government, if wisely and economically admin- 
 istered, from retiring the lega,l tender notes within a reasonable 
 time, and as early as the year 1900, pay the last dollar of the debt 
 incurred in crushing the greatest rebellion known in the world's 
 history, and without retarding the growth and prosperity of the 
 great EepubliCi 
 
A.PPENIDIX 
 
 MR. spaulding's speech on the national currency bank bill, 
 
 FEBRUARY 19, 1863. 
 
 "Mr. Speaker— This is a very important liill, and I may be indulged 
 in a few remarlfs upon its scopes and objects. I liave already stated in 
 the debate on the finance bill that I had no doubt of the constitutionalit}"^ 
 of the national bank bill proposed by the Secretary of the Treasury, nor 
 had I any doubt that State banks were also constitutional ; that both sys- 
 tems of banking might be useful within their sphere of action, and that I 
 was willing that the country should have both kinds of banking ; that 
 inasmuch as the National •Government Had hitherto failed to establish a 
 permanent system of national banking, State banks had, as a necessary 
 means of commerce and the operations of State governments, become 
 firmly established, and that the Supreme Court of the United States, by 
 repeated decisions, held that they were constitutional and legitimate State 
 institutions. 
 
 The coercive features in the pending bill against State banks having 
 been stricken out, I intend to give it my vote ; not because I think it will 
 afford any considerable relief to the Treasury in the next two or three 
 years, or that it will in any manner lessen the issue of paper money, but 
 because I regard it as the commencement of a permanent system for pro- 
 viding a national currency that will, if wisely administered, be of great 
 benefit to the people, and a reliable support to the Government in the 
 future. 
 
 The President, in his annual message, and the Secretary of the Treas- 
 ury, in his annual report, recommend the passage of a free banking law, 
 authorizing the issue of a national currency which shall be of uniform 
 value in all parts of the country, and to be secured by a pledge of United 
 States stocks, deposited in the Treasury of the United States. The bill, in 
 all its essential features, is like the free banking law of the State of Kew 
 York, which has been in successful operation in that State since 1838. 
 Legal tender notes issued direct from the Treasury, without the agency 
 of a bank, constitute a national currency uniform in value, in all parts of 
 the United States, and bearing no interest, is an advantageous loan to the 
 Government by the people who receive and circulate this kind of cur- 
 rency. These legal tender notes are based solely on the faith of the 
 Government and all the taxable property under the jurisdiction of the 
 United States. If Congress performs its duty by imposing taxes on this 
 property, and the Executive enforces the collection thereof, all these notes 
 will be ultimately redeemed and retired from circulation. 
 
These notes are declared by law to be money, and they circulate as 
 money in all parts of the United States. The free banking law is pro- 
 posed by the Executive for the purpose of combining private capital with 
 the credit of the Government in the issue of bank bills, similar in all 
 respects to legal tender notes. The only difference between them will be 
 that the legal tender notes have only the United States Government to 
 provide for their redemption, while the bank bills, when issued, will have, 
 in addition to the liability of the Government, the direct promise of the 
 banking associations issuing them that they will redeem them on present- 
 ation at the bank, not in specie, certainly, during the suspension of specie 
 payments, but in legal tender notes, and after a general resumption of 
 specie payments by the banks and the Government, then to be redeemed 
 in coin. Legal tender notes issued direct from the Treasury constitute a 
 loan to the Government without interest. Bank notes, under this bill, 
 would be loaned to the Government and the people at six and seven per 
 cent, interest. We give to. the banking associations the interest on the 
 national currency issued by them, ^s an inducement to them to form these 
 associations and become liable for its redemption. Instead of the Gov- 
 ernment issuing this national currency direct to the soldiers and other 
 creditors without interest, it sells its own six per cent, bonds to the bank- 
 ing associations, and takes its pay in legal tender notes; the banking 
 associations take the six per cent, boijds from the Secretary of the Treas- 
 ury and deposit them with the Treasurer, and thereupon the Comptroller 
 of the Currency furnishes to such banking associations the national cur- 
 rency, the Treasurer holding the bonds as security for their redemption. 
 
 This national circula,tion is, then, money owned by such associations, 
 lilce any other bank bills. They may be loaned to the people or the Gov- 
 ernment, like any other money belonging to a bank; and when loaned, 
 the banking associations get six or seven per cent, interest for its use. 
 The associations also draw the interest on the bonds previously hypoth- 
 ecated with the Treasurer. By this operation the associations gain, first, 
 six per cent, interest on its loans ; and second, six per cent, interest on the 
 bonds hypothecated with the Treasurer. In this way the banking asso- 
 ciations get ten or twelve per cent, gross interest per annum, and the 
 Government pays six of it on the. bonds sold to the associations, and 
 which are hypothecated with the Treasurer. The Government gives this 
 bonus and the privileges of banking to capitalists, to induce them to com- 
 bine their credit with the credit of the Government in issuing this 
 national currency, and providing for its redemption, during suspension, 
 in legal tender notes, and after resumption of specie payments, in coin. 
 The Secretary of the Treasury, in his annual report, recommends ' the 
 organization of banking associations to supply circulation secured by 
 national bonds, and convertible always into United States notes, and after 
 resumption of specie payments into coin.' 
 
 The additional advantages held out by the bill to induce rich men, men 
 of accumulated capital, to join the Government in maintaining this 
 national currency, are : 
 
 1. The national characteij given to the bills to circulate at par in all 
 parts of the United States. 
 
 2. It is made receivable at par for all internal taxes and all other dues 
 to the Government, except customs, and payable to the army and navy, 
 and all other creditors of the Government. 
 
 3; The banking associations are to be exempt from all State and United 
 
states taxation, arid only pay two per cent, per annum for engraving, 
 paper, and printing their circulating notes, arid which is to include all the 
 other expenses of the Currency Bureau at Washington. 
 
 On a full review Of this proposed plan of a national currency, it will be 
 seen that it is based on public and private faith ; that it proposes to com- 
 bine the interest of the nation with the rich individuals belonging to it. 
 Men of surplus capital only can profitably engage in the business of bank- 
 ing. If speculators and adventurers, without positive capital, attempt to 
 bank under this bill they will fail. Money-lenders, and not money-bor- 
 rowers, can successively organize and manage banking associations under 
 the provisions of this act. 
 
 How far it will be found practicable to extend the organization of asso- 
 ciations on the credit of the public arid of individuals, can only be ascer- 
 tained by the experiment. A banking asspciation of $100,000,000 capital, 
 all paid in by wealthy individuals, and Hrmly established in the city of 
 INew York, and acting as the fiscal agent of the Treasury Department, 
 would be a most valuable support to the credit of the Government. It 
 might be made the depository for all the public moneys in that city. 
 It might receive tlic public moneys derived fi'om loans, from customs and 
 internal taxes, and disburse all these moneys to the creditors of the Gov- 
 ernment. This would give tlie moneyed men who are stockholders of the 
 bank an immediate pecuniary interest in upholding the credit of the Gov- 
 ernment. Similar organizations in Boston, Philadelphia, Kew Orleans, 
 and other principal cities of the Union might be made with less amount of 
 capital, and, in like manner, become fiscal agents of the Governriient in 
 those cities. The Bank of England is a striking example of the combined 
 power of public authority and private influence in sustaining the credit of 
 the Government. We may safely profit by this example. This bank has 
 been the chief agent in sustaining the British Government in the long and 
 exhausting wars in which she has been engaged. The Bank of England 
 is the fiscal agent of the British Government, and notwithstanding it is a 
 bank of discount, deposit and circulation, it has thus far received and dis- 
 bursed the public moneys without the loss of a dollar of the money 
 entrusted to it. 
 
 It is also well known that our Government never lost any of the money 
 deposited in the first or second Bank of the United Statfes. They were 
 both fiscal agents of the Government. All the public money was received 
 and disbursed by them with fidelity and usefulness to both parties. 
 Sbund and well-managod banks terid to increase public and private credit, 
 and extend as well as to facilitate commerce with States and individuals. 
 They stimulate industry, commodities are miiltiplied, agriculture, mining, 
 and manufactures fiourish; these constitute the true wealth, greatness, 
 and prosperity of the country. 
 
 I have no doubt that the frariiers of the Constitution contemplated a 
 national currericy adequate to the wants of the general Government, and 
 that for all national purposes it has the power to control and regulate the 
 currency. In all Government transactions it has tile right not only to 
 provide by law for issuing the kind of currency that shall be received for 
 taxes, custom duties, and all other dues to the United States, but also the ' 
 kind of money that shall be paid to the army and navy, and all other 
 creditors of the Government. If there had been established years ago a 
 sound national bank of $200,000,000 capital, which had been in full opera- 
 tion as the fiscal and financial agent of the Government at the time of the 
 
breaking out of the present rebellion, what a mighty support it would 
 have been in sustaining the Government at the present time! The inde- 
 pendent Treasury law unnecessarily isolated the Government from all the 
 capitalists and the accumulated capital of the country. 
 
 At the very outset of this rebellion there was no money in the Sub- 
 Treasury, and, notwithstanding the hostility heretofore and now manifes- 
 ted toward State banks, the Government was obliged to resort at once to 
 the State banks in New York, Boston and Philadelphia, for money to 
 prosecute the war. The States had fostered and built up strong State 
 institutions, while the general Government had been vacillating and weak- 
 ened by conflicting views and opinions as to the constitutionality and 
 policy of a national bank. It is now most apparent that the policy advo- 
 cated by Alexander Hamilton, of a strong central Government, was the 
 true policy. A strong consolidated Government would most likely have 
 been able to avert this rebellion ; but if not able to prevent it entirely, it 
 would have been much better prepared to have met and put down the 
 traitorous advocates of secession and State rights, who have forced upon 
 us this unnatural and bloody war. A sound national bank, upheld and 
 supported by the combined credit of the Government and rich men 
 residing in all the States of the Union, would have been a strong bond of 
 Union before the rebellion broke out, and a still stronger sui)port to the 
 Government iu maintaining the army and navy to put it down. 
 
 Sir, the United States Government has thus far established no perma- 
 nent system of national currency except that of gold and silver. Ever 
 since the adoption of the Constitution there has been a conflict of opinion 
 among the ablest statesmen of the country upon the question of a national 
 currency. Jefierson opposed the creation of aU banks, both State and 
 national. Alexander Hamilton proposed a national bank during the 
 struggle for American independence in 1780, but his suggestions were not 
 then adopted. During Washington's administration, in 1791, the first 
 Bank of the United States was incorporated, mainly under the influence 
 of Mr. Hamilton, which continued in operation until 1811, when its char- 
 ter expired. No national bank was in existence during the second war 
 with Great Britain. That war was carried on by loans and by the issue 
 of Treasury notes. In 1816, the second Bank of the United States was 
 chartered, and continued in existence until 1836, when its charter again 
 expired. All will remember the decided opposition of General Jackson to 
 its re-charter, and the fierce struggle that ensued between the friends and 
 opponents of a United States bank. The friends of the bank were finally 
 beaten when Jackson was re-elected President in the fall of 1832. The 
 friends of a United States bank again rallied in 1840-41, but were again 
 defeated by the veto of John Tyler. In 1846 the independent Treasury 
 law was finally adopted, by which it was established that the operations 
 of the Government should thereafter be carried on wholly in gold and 
 silver coin, and that this money of the Government should be kept sepa- 
 rate from all banks and banking transactions. Thus the law continued up 
 to the session of the present Congress. 
 
 Ho settled policy has as yet been established by which the Government 
 has assumed permanent control over the national currency. State banks 
 still go on issuing circulating notes, selling exchange, discounting prom- 
 issory notes and bills, and receiving deposits, and the Sub-Treasury law 
 is still unrepealed. A national currency, adequate to the operations of the 
 Government in peace and war, has yet to be established. It seems that the 
 
present is a propitious time to enact tliis great measure as a permanent 
 system, and that the duty of the Government in providing a national cur- 
 rency shall no longer he neglected. 
 
 Sir, the Government of the United States ought not to depend on State 
 institutions for the execution of its great powers. In the administration 
 of the high prerogatives conferred by the Constitution, this Government 
 need not depend at all upon State officers. State institutions, or State laws. 
 Its own powers and its own means, if brought into active exercise, are 
 fully adequate to the ends for which the Government was established. In 
 the long interval of peace many of the powers granted in the Constitution 
 have not been fully exercised, nor was it necessary during peace to put 
 them fully into execution. But now, when engaged in a gigantic war, 
 when the very existence of the Government is in such imminent peril, it 
 is of the highest importance that it should exert all those great powers to 
 maintain itself, preserve its own dignity, and enforce its own prerogatives. 
 Congress and the Executive cannot fail now to do all in their power to 
 save the Government and restore the national Union. 
 
 Sir, this Government has power to issue a national currency entirely 
 independent of State authority ; power to support armies independent of 
 Governors of States or State laws ; power to provide and maintain a navy 
 in like manner; and power to regulate commerce with foreign nations, 
 .among the several States, and with the Indian tribes. These great powers 
 may, by means of proper legislation, be made to operate directly upon the 
 people independently of State boundaries or State sovereignty. Under the 
 power ' to raise and support armies ' we may provide for calling the able- 
 bodied men of the nation directly into the army of the United States, and 
 without the aid of Governors of States ; and in like manner the. navy may 
 be increased. As a necessary means for ' supporting ' such an army and 
 'maintaining' such a navy, we may provide for the issue of a national 
 currency, through the agency of banks, or by the issue of legal tender 
 notes direct from the Treasury. Either mode wUl require about the same 
 amount of currency to be issued to pay the army and navy ; either mode 
 wUl be constitutional; and it is in the sound discretion of Congress to 
 decide which is the best mode of providing the means for carrying on the 
 Government in the present exigency. 
 
 Sir, all the powers conferred on the general Government are self-acting, 
 self-sustaining, and wholly independent of State authority; and when 
 enforced by men of will, strong nerves, enlightened self-reliance, energy, 
 and ability sufficient to put them into active exercise, are fully adequate 
 to the putting down of this gigantic rebellion and maintaining the Consti- 
 tution and laws over all the thirty-four States and the Territories included 
 in the national Union. The duty of putting these constitutional powers 
 into active exercise devolves upon Congress and the Executive. Congress 
 cannot fail to perform every duty devolved upon it in the present great 
 emergency. 
 
 In the absence of a national bank the State banks have been liberal in 
 making loans to the Government since the war begun. It has been ascer- 
 tained from reliable data that on the 19th day of January, 1863, the banks 
 in the State of Kew York alone held United States securities to the amount 
 of $153,637,174; being $45,000,000 more than the entire capital of all the 
 banks in the State, their capitals being only $108,606,062. This shows the 
 ability and willingness of the banks in New York to support the Govern- 
 ment in her present peril. There is in the present imperiled condition of 
 
6 
 
 the Union more distrust of tlie stability of the general Government than 
 there is of the State Governments. Some doubt exists, owing to divisions 
 at the North, as to our final success in crushing the rebellion. Could you 
 make it certain that the Union will be preserved, and the national .iuris- 
 diction maintained over all the thirty-four States and the $16,000,000,000 
 of taxable property therein, which is liable for our public debt, excluding 
 therefrom the debt of the rebel government, said to be $900,000,000, the six 
 per cent, bonds of the United States would not be five per cent, below par, 
 while the six per cent, bonds of the State of New Tork are worth a pre- 
 mium of twenty-eight per cent. Capitalists are naturally timid, and will 
 hesitate about entering into new projects until they can see the way clear. 
 They desire to know that the Union is to be maintained and the Govern- 
 ment perpetuated. Being fully assured of this, your bonds will be imme- 
 diately above par, and there will be less difficulty in organizing banking 
 associations and carrying this act into effect. 
 
 Sir, banking is eminently a practical business. To be successful, it must 
 be based on accumulated capital, and conducted by practical men, who 
 are intimately acquainted with the commerce and business of the country. 
 Finance and financial questions must all be finally brought to a practical 
 standard. However fine spun the theories of visionary men may be, they 
 cannot now be relied on to provide money in the present exigency to pay 
 the army and navy and other needy creditors of the Government. Our 
 plan of finance must be simple, efficient and practical. It consists of two 
 parts, debts and taxation, namely : 
 
 1. Contracting debts for the supply of the army and navy, issuing legal 
 tender notes, and borrowing money in some form on the faith of the Gov- 
 ernment. 
 
 2. Taxation on the entire property, commerce, and business of the 
 country, amply sufficient to pay the principal and interest of all the debts 
 which have been or may be contracted on the faith of the Government. 
 
 Sir, no theories can be imagined, nor shifts made that will be allowed to 
 evade the tariff on imports and internal taxes on property and business 
 adequate to the payment of the entire debt contracted, both principal and 
 interest. The property and business of the country are amply sufficient 
 for this purpose ; but it wiU require a strong, stable Government, wisely 
 administered, to adjust and enforce the collection of so large an amount 
 of taxes as will be required to pay the extraordinary war debt that must 
 be contracted to crush the rebellion and restore peace and tranquility over 
 the whole Union. I have no doubt that the patience and energies of the 
 people are to be taxed to the utmost before the Union is restored and we 
 be assured of future loyalty in all the southern States. You are not yet 
 able to collect taxes in the disloyal States without the aid of a powerful 
 army. Before you can be assured of loyalty in the rebellious States, Union 
 State Governments must be established and maintained in each of them. 
 To do this will require a large army for many years. Until you can col- 
 lect your taxes in all the rebel States without the aid of military force the 
 rebellion is not subdued. 
 
 Many of our friends express sanguine expectations of immediate relief 
 from the passage of this national bank bill, and I should be much gratified 
 to know hereafter that their expectations have been fully realized. But, 
 sir, in my judgment, the Secretary of the Treasury must not place too 
 much reliance upon this plan. It will not give much relief to the Treasury 
 for one, two, or three years. It will not to any considerable extent. 
 
supersede the necessity for the issue of Treasury notes. It ■will go into 
 operation slowly. The Government having heretofore failed to provide a 
 national currency, "the State banks in the older States have been organized, 
 become deeply rooted, and firmly established. It wiU take a long time to 
 supplant these banks. Every coercive or violent attempt to do so will do 
 more harm than good. This new system will come in competition not 
 only with existing institutions, but. will encounter the prejudices of a large 
 class of people who are hostile to banks, and especially hostile to a United 
 States bank. It will be towards the close of the war, when the Govern- 
 ment is firmly established and its authority respected in all the States, 
 that it will be most valuable in providing a way for funding the public 
 debt and establishing a permanent system of national currency. It is 
 chiefly on this ground that I am induced to support the bill at this time. 
 It is more for the benefits to be realized in the future than during the 
 pending war that I am induced to give it my support. 
 
 Debt and taxation are the inevitable necessities of war. Hence the 
 importance of a reunion of all parties in a vigorous prosecution of the war, 
 in order to crush the rebellion in the shortest time and with the least pos- 
 sible expenditure of blood and treasure. This is the only way to stop the 
 burdens and calamities of the presenti war. Fight vigorously and in 
 earnest while the war lasts. Every consideration of duty and patriotism 
 require aU the loyal people to come at their country's call, to fight the 
 rebels forthwith, by all the means within the range of civilized warfare, to 
 save us from a protracted war, save the further effusion of blood, and stop 
 the vast expenditures which must, unless speedily terminated, burden 
 present and future generations. 
 
 We need more economy in the management of the war. It is manifest 
 there-is not that close supervision and scrutiny over the expenditures that 
 are necessary. Every man in the service should be required to perform 
 with fidelity the duties devolved upon him. All supernumerary oflScers 
 and men should be dispensed with. All disbursing 6fflcers should be held 
 to a rigid economy and strict accountability. As we approach the termi- 
 nation of this war the expenses must be greatly reduced, and preparation 
 made for a resumption of specie payments. Our public debt will then 
 appear in all its vast proportions, for it must all be paid ultimately in gold 
 and silver. This makes it necessary for us to cut off all unnecessai-y 
 
 . expenses of every kind. 
 
 Every day that the war is prolonged the debt is largely increased. The 
 daily increasing debt of $2,500,000 must all be raised by taxation in some 
 form, or the debt will not be paid. The Government is spending at a 
 
 ' fearful rate the accumulations of former years of prosperity. Every doUar 
 of debt contracted becomes a first mortgage upon the entire property and 
 productive industry of the country. It affects the farmer, laborer, 
 mechanic, manufacturer, merchant, banker, commission merchant, pro- 
 fessional man, and retired capitalist. Every pound of tea, coffee and 
 sugar used is taxed to pay the expenses of the war, and the persons using 
 these articles of daily consumption pay the tax in the increased price. 
 Every person that uses wine, brandy, whisky, beer, cigars, or tobacco, 
 pays a portion of the war tax. All necessary articles of dress, such as 
 shoes, boots, hats, and wearing apparel, are taxed in like manner, and all 
 superfluous and unnecessary articles, such as silks, laces, diamonds and 
 
 , jewelry, are heavily taxed, and I would be glad to see the tax still further 
 increased on them, in order to prevent, if possible, their use at this time; 
 
8 
 
 Every person that rides upon the railroads, reads a newspaper, draws a 
 check, or sends a telegraphic message, is taxed for war purposes. But I 
 need not further enumerate the different modes in which every body is 
 taxed every day to pay the expenses of the war. 
 
 Sir, this war debt is a mortgage alike on all the productive industry and 
 property of Republicans, Democrats, old line Whigs, conservatives, and 
 abolitionists. All these classes of persons are taxed alike to pay the war 
 debt. Every Democrat or Eepublican who chews tobacco, drinks beer or 
 bad whiskey in the sixth ward of New York pays his proportion of the 
 war debt, the same as the conservative who drinks his choice wine on the 
 Fifth Avenue. This war tax is already beginning to be noticed by the 
 people; but as the war is procrastinated, and the debt increased, the 
 burden will be more deeply felt. While we are running along at forty 
 miles an hour, under the pressure of irredeemable paper, necessarily issued 
 and circulated to prosecute the war, the present taxation is easily paid, 
 and there is a seeming prosperity; but I can assure gentlemen that a 
 reckoning day will surely come. Look at the immense army in the field, 
 their commissariat, supply vessels, supply trains, ambulance corps, sutlers, 
 teamsters, hangers-on, idlers and assistants of all kinds, extending over a 
 line of military operations of more than four thousand miles, and you will 
 be impressed with two important facts : 
 
 1. The enormous expenditures necessary to their present support, and 
 the future bounties and pensions that must be paid. 
 
 2. The number of men that are withdrawn from industrial pursuits, 
 and the consequent loss of isroductive industry which ought to be added 
 to the wealth of the country. 
 
 All this immense army add nothing by their labor to the wealth of the 
 country, and the expense of supporting such an army devolves lipou 
 those who do labor and those who have already acquired property. 
 What a mighty drain this war is upon the productive energies and 
 resources of the country. It is, indeed, an exhausting as well as bloody 
 war. Whether it be successful or unsuccessful, vast consequences are 
 involved. If terminated successfully within three years, the Union main- 
 tained and the Government perpetuated under the Constitution, the 
 results to flow from such a triumph would amply compensate for all this 
 expenditure of blood and treasure. If it terminates unsuccessfully, the 
 Union divided and the rebel government maintained, the war debt must 
 still be paid; but no man here is wise enough to predict what results will 
 follow such a calamity. 
 
 I am asked almost daily, will the Union be maintained and the national 
 Government perpetuated all over the States and Tei-ritories ? I cannot 
 doubt that it will. No efforts of mine certainly shall be wanting to 
 accomplish so desirable a result. I cannot, however, shut my eyes to the 
 formidable character of the rebellion, nor to the difiioulties in the way of 
 accomplishing such a result. The inherent difficulties of conquering and 
 subduing so large and intelligent a people, extending over such a wide 
 extent of territory as is contained in the revolted States, are very great. 
 It is very difficult to move and supply large armies. An advance in the 
 enemy's country for any considerable distance always involves the difli- 
 culties of keeping the rear line open to the base of supplies. This has 
 been demonstrated in the advances that have been made in attempting to 
 take Richmond. Even the armed occupation of a part of any one of the 
 revolted States does not make the people in the State loyal to the General 
 
9 
 
 Government. The hatred of the people in the rebellious States is deep- 
 seated and abiding. They have a separate de facto confederate govern- 
 ment, and separate State governments. As States they revolted from the 
 United States Government, and with their State governments remaining 
 intact and in full force. They still maintain their separate State organi- 
 zations, with power to enforce their State laws. This insurrection was 
 commenced very differently from most other insurrections. It was not 
 commenced by disorganized bodies of the people, but by the constituted 
 authority of States in their capacity of independent sovereignties. These 
 State authorities had power to suppress immediately the Union senti- 
 ments of the people within their jurisdiction, and to enact as well as to 
 enforce any new laws that might be necessary to accomplish their wicked 
 purposes. Hence the formidable character of the rebellion at the outset. 
 It will take a long time to supplant the present State organizations in the 
 revolted States, and to institute new Union State governments in their 
 stead. It can only be accomplished by armed force. It will require a 
 large standing loyal army in the actual occupation of each State. Until 
 Union State governments are organized and permanently maintained in 
 all the Southern States, yovi cannot hope for a lasting peace. 
 
 Sir, it is proper for us to look these difficulties square in the face. All 
 the people in the Northern States ought to look at the formidable charac- 
 ter of this rebellion, and act up to the demands of the hour. It will 
 require the active energies of a united North to maintain the integrity of 
 the Union. It is unwise, ay, criminal for us, while incurring a debt of 
 $2,500,000 every day, to deceive ourselves aS to the real situation. The 
 business men, at a distance, are going on making money, speculating, 
 buying and selling, almost imconscious of the dangers that surround us. 
 Party organizations are maintained, party platforms set up, and a partisan 
 struggle constantly made for power, wholly inconsistent with the mighty 
 issues involved in the present war. This applies to all parties and all 
 party organizations. The people in the loyal States, without regard to 
 party distinctions, have a common interest and a common destiny; all are 
 intensely interested in the deadly conflict, all become liable for the debts 
 contracted in the prosecution of the war, and all must be taxed to pay both 
 principal and interest. 
 
 But, sir, the higher inspirations of duty and patriotism impel us to sus- 
 tain the President in a vigorous prosecution of the war— a war that has 
 been forced upon us by ambitious men, whose chief object is power. 
 Considerations infinitely above mere party or pecuniary gains or losses 
 should compel us to united action. Tour country, my country, is in dan- 
 ger of being divided and destroyed. Oaths have been broken, the Consti- 
 tution defied, and the laws trampled under feet of rebels. 'United we 
 stand, divided we fall.' I appeal to gentlemen of all parties to uphold and 
 sustain the constituted authorities in vindicating the majesty of the Con- 
 stitution and laws over all the States and Territories, from the great lakes 
 to the Gulf of Mexico, and from the Atlantic to the Pacific oceans. This 
 is our country. Let it have one national Government — one destiny." 
 
 EBDEMPTION OF NATIONAL CUEKENCY — ASSORTING HOUSE. 
 
 "Buffalo, September 30th, 1865. 
 Dear Sir— I am in receipt of your favor of the 28th inst., asking me to 
 communicate my views of the plan proposed by the New York banks for 
 the redemption of national currency. 
 
10 
 
 In reply, I would say that I am clearly of the opinion that a prompt 
 redemption of the national currency is necessary to insure success and 
 permanency to the system. No system of banking is safe that does not 
 enforce rigidly the obligation of each bank to redeem its circulating notes 
 on demand. During the suspension of specie payments they are required 
 to be redeemed in legal tender demand notes, and on the resumption of 
 specie payments they must be redeemed in coin. This is one of the 
 requirements of the National Banking Law, which should be strictly 
 enforced, and every sound and well managed bank will no doubt be able 
 and willing to conform to this law, and every weak and badly managed 
 bank should be compelled to live up to its requirements. But in stating 
 these general propositions, which no sound banker will controvert, it does 
 not follow that a combination called an Assorting House is the best mode 
 of compelling them to fulfill its obligation to redeem. 
 ^ An Assorting House would require large rooms, a great number of 
 clerks ; they would handle a large amount of currency, the expenses would 
 be heavy, and in these times of knavery and fraud, the risk would be very 
 great. And to what end would this assorting process be carried on? 
 Simply to separate the money of each bank into packages to be sealed up 
 and sent home by an express company for redemption. Is this necessary ? 
 Is it necessary to incur all this expense and risk to secure a prompt 
 redemption of the national currency. Let us consider the subject a little 
 more in detail, and see if a prompt redemption of it cannot be attained 
 under the law as it now stands, or by a proper amendment of it if found 
 defective. 
 
 In the first place, it is not necessary to assprt and send home this cur- 
 rency for redemption so long as it is required by the people to carry on 
 the business operations of; the country. Every time a hundred dollar bill 
 passes from one person to another it is a practical redemption ,of it by the 
 person who takes it. Every time a merchant at Chicago pays- to a fariner 
 $500 in national currency for a car load of wheat, the farmer by the opera- 
 tion redeems such national currency, not in greenbacks, nor in gold, but 
 in a commodity better than either, namely wheat, a staple article useful 
 to all. So every merchant in New York that sells a bale of cotton goods 
 and receives his pay for it in currency, redeems such currency, not in the 
 way that banks redeem it, but in cotton goods, which is far better because 
 it performs the true functions of money by facilitating the legitimate sale 
 of commodities. So every time that a merchant or manufacturer pays his 
 internal revenue tax to the United States Collector in national currency, 
 the Government redeems such currency by receiving and discharging such 
 tax. So every mechanic or laborer that receives national currency for his 
 services, redeems such currency by the labor performed. So it will be 
 seen that just so long as the national currency is practically redeemed 
 every day in its passage from hand to hand in the payment of commodities 
 and services and in the ramified operations of trade and business both with 
 the Government and the people whose operations it greatly facilitates, 
 there is not the slightest necessity for resorting to the expensive and risky 
 \ operation of assorting and sending it home for redemption. 
 
 With a proper amendment to the National Bank law, I am clearly of the 
 opinion that it would be unwise to establish an Assorting House, and even 
 without such amendment, I do not think it good policy to establish it. In 
 the first place the Assorting House will be as I have stated, attended with 
 great risk and expenste. And in the next place it is opposed to sound 
 
11 
 
 policy and will have a mischievous effect upon the legitimate circulation 
 of the national currency. The leading object of the national bank law was 
 to furnish a currency of uniform value and similitude to be used by the 
 Government and people as an instrument to facilitate the exchange of com- 
 modities and services, and the collection of internal taxes, in all parts of 
 the United States. It is amply secured by gold bearing bonds deposited 
 with the Treasurer of the United States at Washington. Only ninty per 
 cent, of currency is issued on the amount of bonds hypothecated, thus 
 leaving a margin of ten per cent, for depreciation. The Government 
 stamps it with the imprint of the Treasury and guarantees the ultimate 
 payment of every dollar put in circulation by any bank, whether such bank 
 is solvent or insolvent. It is made a legal tender for all taxes and other 
 debts due to the Government except customs, and for all debts due from 
 the Government except interest on the funded debt. All national banks 
 are obliged by law to receive it for all debts due them, and each national 
 bank depositary is further obliged to receive it on all Government deposits 
 made in the bank by any public oflScer. These provisions in the bank law 
 give great advantages and credit to the national circulation over that of 
 State banks. These provisions of the law provide to a considerable extent 
 for a, practical redemption of this currency in the every day operations of the 
 Government and people, not only in New York, Boston and Philadelphia, 
 but also in Charleston, New Orleans, St. Louis, Cincinnati, Chicago and 
 Buffalo, and in every other city and village throughout the length and 
 breadth of the whole country. With the facility thus given to the national 
 currency to circulate at pcur in every part of the United States, and the 
 guarantee of the Government that every dollar of it shall be paid, it passes 
 freely among all classes of people and corporations without any one stop- 
 ping to enquire whether a particular bank is badly managed or not. The 
 national currency with the pledged security and guarantee of the Govern- 
 ment, is good in any event, and is not likely to become a dead weight in 
 any of the banks in the principal cities. If a weak or badly managed bank 
 (like the First National Bank of Attica, for instance) should fail, its cred- 
 itors may be large losers by the failure, but every dollar of the circulation 
 will be paid, and the notes continue to circulate equally as well after as 
 before its failure. No one ever stopped taking the circulating notes of the 
 First National Bank of Attica, notwithstanding its failure more than six 
 months ago. It is not the biU holder that will lose by the failure of a 
 national bank, but its depositors and other creditors, hence the security of 
 national currency over all other currency. Thus far the national banking 
 system in respect to its circulation has gone on smoothly. All this cur- 
 rency in miscellaneous packages consisting of the issues of banks in 
 Maine, Minnesota and Tennessee, pass equally well without being assor- 
 ted, in all parts of the United States. This system of furnishing a circula- 
 ting medium thus far works as well, or better than was anticipated by its 
 most sanguine advocates. It is fulfilling admirably the great desideratuin 
 of a true national currency, so long needed to carry on successfully the 
 business of the enterprising people of this great country. 
 
 I should regret very much to see a combination of bankers in any of 
 the principle cities organize an Assorting House to disorganize the har- 
 monious working of this system by assorting this cuiTcncy, sealing it up 
 in separate packages, and sending it home to each bank issuing it for 
 redemption, unless there should be an imperative necessity for so doing. 
 The tendency of such an operation would be to materially disturb the 
 financial operations of the country. Once begin the operation of assort- 
 
12 
 
 ing currency by a large organized Assorting House in the city of New 
 York, with a large number of clerks under good salaries, and you begin 
 a system that will ultimately draw into its support every bank in the 
 whole country. What will be the opei-ation of such a combination ? In 
 the first place it may not be illegal, but is not specially authorized by the 
 national law. In the next place it begins by the city banks sending all 
 national currency received by them to the assorting house, whether neces- 
 sary or not, to be assorted, sealed up in packages, and sent home to each 
 bank, either through its redeeming agency or directly by express to the 
 bank that issued them. Each bank, on receiving this currency so sent 
 home, is obliged to provide for it either in legal tender greenbacks, which 
 are no safer than national currency, or by drafts which are at par in New 
 York, but generally by providing a fund in advance at a bank in one of 
 the principal cities. As the currency continues to be assorted and sent 
 home, it creates the necessity for each bank out of New York to provide 
 more par funds to be placed to their credit ready for redeeming their 
 notes as they shall be again assorted and sent home for that purpose. 
 These banks not being able to make exchange or par funds in other 
 modes, will very soon begin to gather up the circulating notes of other 
 banks, and especially notes issued by other banlis in their own locality, 
 and send them to New York for their own credit. These notes, on reach- 
 ing New York, will again go immediately to the assorting house, and be 
 again counted, sealed up, and sent back by express to the country. As 
 this process of sending money packages to and from New York goes on 
 through the machinery of the assorting house, the volume will continue 
 to increase until every bank in the country will' be obliged to contribute 
 directly or indirectly to the support of a combination unknown to the 
 law. It seems to me that the good to be attained by any such combina- 
 tions will be greatly overbalanced by the mischiefs it will create to the 
 present harmonious working of the system. It would no doubt be a 
 profitable business for the cxpi-ess companies to cany these money pack- 
 ages to New York and back again to the country, but I am greatly 
 puzzled to know how it will be any advantage to the people, the Govern- 
 ment, or the banks, either in New York or elsewhere, to carry such a 
 scheme into practical operation. If this combination is adopted, the 
 national currency issued by the banks in New York city which now circu- 
 late freely everywhere, will be unnecessarily returned upon them for 
 redemption under the operations of their own assorting house. This will 
 be one of the legitimate results of the system of assorting which cannot be 
 avoided. 
 
 I watched with considerable care the worldng of the system instituted 
 by the Suffolk Bank of Boston and the Metropolitan Bank of New York, 
 compelling the old State banks to redeem their circulating notes by a sim- 
 ilar process. This was no doubt a check against the excessive issues of 
 banks at that time, especially to banks in New England, which were not 
 very strongly restricted by law as to the amount of these issues, but I very 
 much doubt whether even this plan to coerce the redemption of even an 
 inferior currency did not do more hurt in deranging the free and legiti- 
 mate circulation thereof than it did good in preventing excessive issues. 
 It certainly afforded a fine business for the express companies in carrying 
 money packages to and from New York ; and it is certain also that the 
 activity with which these packages were hurried back and forth, greatly 
 accelerated the panic that occurred in August, September, and the first 
 
13 
 
 half of October, 1857; until finally the banks in NewjYork, by common 
 consent, ceased sending it home, and took this secured currency of the 
 State of Xew York and made it a basis for Clearing House Certificates, 
 which had an important influence in stopping the panic and restoring 
 confidence. 
 
 Upon a full examination of the subject, I arrive at the conclusion that so 
 long as the national currency is required for legitimate business purposes, 
 it wiU not largely accumulate in the banks of either of the three cities of 
 K ew Tork, Boston or Philadelphia, nor will it be sent home for redemp- 
 tion. Thus far it does not appear that there has been a plethora or glut of 
 national currency in either of those cities. But suppose that in the course 
 of a few months there should accumulate a few millions dollars of national- 
 currency in those banks more than could be readily disposed of in the 
 operations of the Government and the people, in what manner should it 
 be disposed of? 
 
 In such a contingency, when it does occur, I think the issuing banks 
 should be called upon to redeem their circulating notes, and it seems to 
 me to be right that each bank should be required by law to redeem in 
 the principal city where such surplus currency accumulates, as well as at 
 their own counter. 
 
 New York city is the great commercial emporium, and is clearly indica- 
 ted by the course of business, foreign and domestic, as the proper place 
 for each bank located out of that city, to have an agent for the redemption 
 of its circulating notes. 
 
 An amendment to the national banking law can probably be made at 
 the next session of Congress, which shall require all the banks to have an 
 agent for the redemption of their circulating notes in the city of New 
 York, instead of being allowed to select as they now do, any one of the 
 seventeen cities named in the present law. This being accomplished, any 
 bank or individual in New York, or elsewhere, in any city or town in the 
 United States, could send the circulating notes of any bank to the agency 
 selected by it for redemption without the expense and risk of an assorting 
 house, which I think is the true mode of providing for the redemption of 
 the national currency. This would be in accordance with the law, and 
 would, I think, give better satisfaction and better promote the welfare of 
 all concerned. 
 
 This is my answer to your request. 
 
 Yours truly, E. G SPAULDING. 
 
 J. U. Orvis, Esq., 
 
 Pres't 9th National Bank, New York." 
 
 ME. EANDALl's bill TO DESTROY NATIONAL BANKS. 
 
 Buffalo, January 22, 1867. 
 Hon. H. R. Jlulburd, Comptroller of Currency, Washington; 
 
 Dear Sir— I am much obliged for the information contained in your 
 letter, and I trust you will pardon me for the remarks I am about to 
 make. 
 
 I have watched with a good deal of interest the various plans brought 
 forward in Congress, in relation to the National Finances and Amend- 
 ments to the National Banking Law. Every man in the country is on 
 the lookout to see what is to come next. Every one engaged in legitimate 
 pursuits wants a fixed policy and steadiness in financial affairs, and yet 
 
14 
 
 all are under constant apprehensions, fearing that some scheme will be 
 hastily passed by Congress which wiU derange monetary affairs, and upset 
 all their business calculations. Many enterprises are postponed. The 
 building of railroads, ships, warehouses, elevators, furnaces, and other 
 manufacturing establishments, are held in abeyaice until it can be more 
 clearly seen what is to-be-done with these schemes, and what is to be the 
 future in regard to financial affairs. 
 
 It is obvious that this suspense and apprehension operates verj' unfavor- 
 ably upon individuals, as well as upon the revenues of the Government. 
 Congress in its oflBcial capacity has thus far acted wisely. It has not 
 passed any of the individual schemes that have been brought forward. 
 It has been content to ' let well enough alone.' It has refused to increase 
 the national currency above $300,000,000. It has not passed Mr. Randall's 
 grand scheme of repudiating the faith of the Government with the 
 National Banks, and turning the Treasury Department, in time of peace, 
 into a permanent machine, for the issue of an irredeemable paper cur- 
 rency when there is not the least necessity for it, and when all history 
 proves it to be unwise, as tending to retard the resumption of specie pay- 
 ments, and resulting in general financial disaster, bankruptcy and ruin, 
 both to the Government and people. It has refused to pass the twenty 
 pages of pending amendments to the National Bank act, (House Bill Xo. 
 771,) which, if passed, would make the law worse instead of better. In 
 short, the Senate and House, as legislative bodies, have submitted to the 
 introduction of these injudicious measures to be talked about, but as yet 
 they have not been unwise enough to let any of them be passed into laws 
 to further disturb existing arrangements under laws already passed, and 
 which, up to th6 time of the meeting of Congress, were operating very 
 favorably, under a moderate contraction of the currency, in preserving a 
 good degree of steadiness and uniformity in the money market, keepuig 
 business steady and prosperous, and enabling the Secretary of the Treas- 
 ury to establish more certainly the public credit at home and abroad, and 
 make a most favorable exhibit of the national debt. These are matters 
 of great consequence to the welfare of the nation, and I sincerely hope 
 that no hasty or indiscreet measures will be allowed to pass. The people 
 of the country need rest, and in order to secure it I trust that Congress 
 will hold a steady purpose, and not pass laws at one session to be repealed 
 in the next. We are cursed with too much legislation, and I am gratified 
 to see the present Congress holding back on all impracticable schemes. 
 
 The act of Congress passed on the 12th of April last, it seems to me is a 
 wise and judicious measure. It authorizes the Secretary of the Treasury 
 to dispose of 5-20 gold bonds, and with the proceeds to retire six per cent, 
 compound interest notes, and the plain legal tender greenback currency 
 and other indebtedness of the Government, but not to retire more than 
 $4,000,000 of greenbacks a month, or $48,000,000 a year, but without 
 restriction as to the amount of compound sixes that may be retired during 
 any week or month. This law is discretionary with the Secretary of the 
 Treasury. Powelr is given him to contract the currency, but he will no 
 doubt use his discretionary power prudently, aud not retire either n-reen- 
 backs or compounds, any faster than it can be done without materially 
 disturbing the legitimate business of the country. His object will be in 
 the future, as it has been during the past year, to keep a steady and uni- 
 form money market. This will be a necessity on his part to enable him 
 to successfully carry on the fiscal affairs of the Government. Under a 
 
15 
 
 very stringent and paniky money market,- the 5i-20 bonds would fall below 
 par, thereby stopping conversion of 7-30 into the 5-20 bonds, and this, in 
 view of $650,000,000 of 7-30s falling diie between this and July 15, 1858, 
 would embarrass and derange all the operations of the Treasury Depart- 
 ment. The Secretary of the Treasury must therefore, of necessity, be 
 moderate and discreet in contracting the currency under the law of the 
 12th of April. 
 
 The Secretary will no doubt, by a moderate and prudent course of coht 
 traction, endeavor to keep 'the business and industry of the nation in a 
 prosperous condition, in some degree check wild speculation, gradually 
 reduce prices, and bring greenbacks and national currency nearer the 
 specie standard. On this point the Secretary, in his last annual report, 
 makes the following judicious remarks : ' How rapidly the United States 
 notes may be retired must depend upon the effect which contraction may 
 have upon business and industry, and can be better determined as the 
 work progresses. No determinate scale of reduction would, in the pres- 
 ent condition of affairs, be advisable. The poliay of contracting the 
 circulation of Government notes should be definitely and unchangeably 
 established, and the process should go on just as rapidly as possible with- 
 out producing a financial crisis, or seriously embarrassing those branches 
 of industry and trade, upon which our revenues are dependent.' As 
 the volume of currency is reduced, it will increase in value, and as soon 
 as the specie standard is reached, the national banks will be obliged to 
 redeem their circulating notes in specie. The Government can retire 
 whenever it seems best, from the field, as an issuer of paper currency, 
 and consequently will not be under the necessity of providing gold and 
 silver to redeem it. The burthen of redeeming the national currency in 
 gold and silver will then be thrown exclusively upon the banks that issue 
 it, and they will be required to keep the necessary reserves of coin for 
 that purpose. 
 
 It seems to me that the act of the 12th of April contains all the power 
 for contracting the currency which is necessary to bring the business of 
 the country back to the specie standard, as it was before the rebellion. 
 It may take three years, five years, or even ten years, to accomplish that 
 result. When the old uniform standard of gold and silver is reached, and 
 prices and the business of the country are again based thereon, national 
 banks will take the place of State banks in the issue, circulation and 
 redemption of the currency necessary to carry on the fiscal affairs of the 
 Government and people. The Treasury Department will be relieved from 
 a duty that was forced upon it as an Imperative necessity during the war, 
 and the Government left to perform its legitimate functions under the 
 Constitution, the currency being thereafter regulated by the wants o'if 
 trade and industrial pursuits. 
 
 It was never intended by the originators of the legal tender acts that 
 the issue of an irredeemable paper currency should ever become the per- 
 manent policy of the Government. In the opening speech I made in the 
 House on the 28th of January, 1862, on the bill introduced by me, I said 
 that 'the bill before us is a war measure; a measure of necessity and not 
 of choice, presented by the Committee of Ways and Means, to meet tiie 
 most pressing demands upon the Treasury, to sustain the army and navy, 
 until they can make a vigorous advance upon the traitors and crush out 
 the rebellion. These are extraordinary times, and extraordinary meas- 
 ures must be resorted to, in order to save our Government and preserve 
 our nationallt3^' 
 
16 
 
 The credit of the Government, by the legal tender act, was brought into 
 immediate requisition, and in the most available form to provide ways 
 and means for sustaining the army and navy to crush the rebellion. It 
 was in effect a forced loan from the people to the Government, in a most 
 perilous period in our history, and was justified mainly on the ground of 
 imperative necessity. It was a temporary measure passed in a most 
 pressing exigency, and should not be continued any longer after peace is 
 restored than seems to be necessary to conduct us safely back to that 
 standard of value, which is recognized by all the nations of the world. 
 
 In the speech to which I have above referred, I further said, 'a suspen- 
 sion of specie payments is greatly to be deplored, but it is not a fatal step 
 in an exigency like the present.' 
 
 ' The British Government and the bank of England remained under sus- 
 pension of specie payments from 1797 to 1821-2, a period of twenty-five 
 years ; — gold is not as valuable as are the productions of the farmer and 
 mechanic, for it is not as indispensable as are food and raiment. Our 
 army and navy must have what is more valuable to them than gold or 
 silver, they must have food, clothing and the material of war. Treasury 
 notes issued by the Government on the faith of the whole people, will 
 purchase these indispensable articles, and the war can be prosecuted until 
 we can enforce obedience to the Constitution and laws and an honorable 
 peace be thereby secured. This being accomplished, I will be among the 
 first to advocate a speedy return to specie payments, and all measures that 
 are calculated to preserve the honor and dignity of the Government in 
 time of peace, and which I regret are not practicable in the prosecution of 
 this war.' 
 
 The national banking law, passed to continue for twenty years, was 
 intended as a permanent system. It was intended that it should take the 
 place of the State banks, in furnishing a solvent national currency ot 
 uniform similitude and value for the whole country. The arguments put 
 forth in the last annual reports of yourself and the Secretary of the Treas- 
 ury in favor of sustaining the national bank currency seem to me to be 
 cogent and conclusive. I advocated the national bank law, not for any 
 immediate relief it would give to the Treasury, but as a permanent system 
 of currency and banking. In the remarks which I made in the House on 
 the day of the passage of the bill, I said 'that I should vote for it, not that 
 I think it will afford any considerable relief to the Treasury in the next 
 two or three years, but because I regard it as the commencement of a per- 
 manent system for providing a national currency that will, if wisely 
 administered, be of great benefit to the people, and a reliable support to 
 the Government in the future.' 
 
 AH the advocates of the legal tender act while it was pending in Con- 
 gress, based their arguments upon the necessity of its passage as a tempo- 
 rary relief to the Treasury during the war, and not as a permanent policy 
 of the Government. On the contrary, the national banking law was 
 advocated as a permanent system of national currency and banking for 
 the whole country. The State banks in this and other States, especially 
 the banks in the State of New Tork, gave up their State organizations 
 with great reluctance. But in consequence of the law which taxed State 
 circulation out of existence, the State banks were obliged to come under 
 the national banking law for self-preservation, a law which on its face was 
 to continue for twenty years. 
 
 It has taken something over three years to put in successful operation 
 
17 
 
 about 1,650 national banks under one system, and which are directly under 
 the control and regulation of the officers of the Government at Washing- 
 ton. A few of the banljs have but recently perfected their organizations 
 and obtained from the Department their circulating notes. Before the ink 
 is fairly dry on the last issue of national currency we are startled with a 
 bill reported from the bank committee in the House to emasculate and 
 destroy this system of national banking. I say destroy it, for no man at 
 all conversant with the advantages of private banking and its freedom 
 from taxation and other restrictions, would consider it any inducement to 
 remain under the inquisitorial supervision imposed by the national banli- 
 ing law, if the right to issue circulating notes is taken away from them. 
 These banks have been organized in good faith by the stoclcholders under 
 the national law, because in the first place State bank circulation was 
 lulled by United States taxation, and in the next place great inducements 
 were held out to them for a national circulation to continue twenty years. 
 What a breach of faith on the part of the Government in holding out 
 inducements to organize under this law, killing oiT the State banks first, 
 and then turning a short corner to kill off the national banks, children of 
 its own creation. Are all the rights which the stockholders of the banks 
 have acquired under this law to be thus summarily disposed of? How 
 many banks would have organized under this law if the stockholders had 
 supposed that their rights to issue circulating notes would be taken away 
 from them as soon as they were organized ? Not one in a hundred, for the 
 simple reason that there would be no inducement to come under the 
 restraints of the national law without circulation. 
 
 It is said that these banks can continue to do business on their capital 
 and deposits, this is no doubt true, but it could be much better carried on 
 by the stockholders as private bankers without the onerous taxation and 
 restrictions imposed by the national law. The organization of State and 
 private banks would be much better, larger latitude being given to oper- 
 ate, and much freer from inquisitorial examinations. 
 
 If this bill now pending in the House is passed and becomes a law, it 
 will pretty effectually Use up the national banking system. It has taken 
 about four years to build it up, and within three years it will be so far 
 destroyed as to make it no object for stockholders that can organize into 
 private banking companies to remain in the emasculated and restricted 
 condition in which they will be placed. 
 
 What security can men have for investing their money and basing their 
 business calculations under a national law ? The insecurity and scandal 
 that will attach to such hasty and inconsiderate legislation will deter all 
 prudent men from placing too much reliance upon a law of Congress, 
 passed at one session, organizing a great system of national policy, to be 
 emasculated or repealed before it gets fairly into operation. It looks too 
 much like confiscating the property of individuals under the pretence of 
 creating a sinking fund to pay off the national debt. 
 
 I hope the Senate and House will carefully consider this measure in all 
 its bearings before they pass a law involving such important consequences 
 in regard to its breach of faith in destroying the acquired rights of the 
 stockholders in these banks, and the disastrous consequences likely to 
 follow the issue of Government paper money as a permanent policy. 
 Tours very truly, 
 
 E. G. SPAULDING. 
 
18 
 
 me. spaulding to secretary mcculloch. 
 
 Farmer's and Mechanics' National Bank, ) 
 
 No. 3 Spaulding's Exchange, > 
 
 Buffalo, December 4, 18G0. ) 
 
 Dear Sir — You will do me a favor by sending to me by mail a pamphlet 
 copy of your report and accompanying documents. I have only seen a 
 synopsis of it, but it seems to me that you understand the situation, and 
 have stated it with force and ability. I congratulate you on the favorable 
 exhibit of the public debt, which is in a great measure due to your dis- 
 creet and prudent management of the national finances. You have no 
 doubt now, to a large extent, control of the finances of the country, and 
 I think that you will, of necessity, contract moderately, so as to preserve 
 a tolerably easy money market, in order to be able to fund the compound 
 6's and the 7-30's into long' gold-bearing bonds, between this and the 15th 
 Of July, 1868. There may be occasional spasms and tightness for money 
 with the speculators, but generally I shall look for plenty of money for 
 legitimate business for at least a year to come. If the speculators should 
 get some check it would be a good thing for the country, and all men 
 engaged in industrial pursuits would not complain. 
 
 I hope you will be able to reach the specie standard with at least $250,- 
 000,OflO of plain legal tender United States notes still outstanding. The 
 amount of gold and silver coin now available in this country is so small 
 that it constitutes a very adequate basis on which to rest the largely 
 increasing volume of business to be transacted, and unless we can have 
 legal tender in some form, other than gold or silver coin, I think we will 
 hereafter be very much subjected to panics and revulsions, to the injury 
 of legitimate business, and, consequentlj', diminished revenues. If we 
 can maintain $250,000,000 of the paper tender at the specie standard, in 
 addition to the supply of gold and silver, I think the business of the coun- 
 try would, in the future, be more steady and uniform. 
 Yours truh'-, 
 
 E. G. SPAULDING. 
 
 Hon. Hugh McCulloch, 
 
 Secretary of the Treasury. 
 
 SECRETARY McCIjLLOCh's REPLY. 
 
 Treasury Department, ? 
 Washington, December 7, 1866. 5 
 
 Dear Sir— Your favor of the 4th inst. is received. You will receive a 
 copy of my report through the Comptroller of the Currency. It was very 
 hastily written, but is, I think, sound in doctrine. 
 
 What we need is an increase of labor. If we could have the productive 
 industry of the country in full exercise, we could return to specie pay- 
 ments without any very large curtailment of United States notes. My 
 object has been to keep the market steady, and to work hack to specie 
 payments without a financial collapse. I shall act In the future as I have 
 in the past, with great caution, and attempt no imijracticable thing. 
 I am very truly yours, 
 
 H. Mcculloch. 
 
 Hon. E. Gr. Spaulding, 
 
 Farmer's and Mechanics' Bank, BulTalo, jST. Y. 
 
19 
 
 NATIONAL DEBT — NO EEPI3DIATI0N. 
 
 Will the public debt of the United States ever be repudiated? The 
 answer to this question depends upon the eflSciency and fidelity of the 
 national Government. The Government has ample power under the Con- 
 stitution and ample means at its disposal to pay every dollar of the public 
 debt. Believing that the Government will continue faithful and efficient, 
 I answer no ! the public debt will not be repudiated. A large majority of 
 the people also say no, but nevertheless there is a small minority that have 
 answered this question in tlie attirmative, and continue to repeat the asser- 
 tion that the public debt will never be paid. This reckless assertion has 
 some influence in depressing the national securities and keeping up the 
 price of gold. This grumbling class of people say that the "old Continen- 
 tal money" issued during the war for independence, became worthless 
 and was never paid. This is no doubt true — the Continental money did 
 greatly depreciate and was never fully paid, but it was issued under the 
 feeble authority of the old Continental Congress, when there was no 
 adequate executive authority to enforce the collection of taxes for the pay- 
 ment of the public debt. This depreciated currency was issued both 
 before and after the adoption of the articles of Confederation of the old 
 thirteen states, and before the formation of the present eflficieiit Govern- 
 ment under the new Constitution. 
 
 Under the articles which composed the old compact, there was no power 
 vested in the Continental Congress to collect taxes. The power to enforce 
 the collection of taxes was left to the legislatures of the several States. 
 Upon a quota furnished and a requisition made by Congress, the several 
 States were required to levy and collect taxes to support the Federal Com- 
 pact. This plan was a fallacious system of quotas and requisitions, incon- 
 sistent with every idea of vigor or efficiency which pertains to every well 
 organized Constitution of civil Government. It is not at all surprising 
 that the Continental money which depended upon thirteen other Govern- 
 ments to levy and collect taxes to raise money for its payment, should 
 depreciate and become of little or no value. The power contained in the 
 old Continental CompacC was nominal, without a president or other exec- 
 utive to enforce its requisitions. It was ineffectual to raise money by 
 taxation, and consequently the old Continental money fell into disrepute 
 and was never fully paid. 
 
 Under the present Constitution all is changed. Instead of the old feeble 
 compact existing at the close of the seven years war for independence, we 
 have now a strong, well organized civil Government, under a Constitution 
 witli amjile executive legislation and judicial powers, fully adequate to 
 the objects for which it was formed. This Government is now invested 
 with power to protect and defend the Constitution, enforce the laws and 
 preserve its own existence ; power to provide for the common defence and 
 promote the general welfare ; and for these purposes has power to raise 
 and support armies, to provide and maintain a navy, and provide for call- 
 ing forth the militia to execute the laws of the Union, suppress insurrec- 
 tions and repel invasions. To raise the money for these purposes, the 
 Government is invested with further power to borrow money on the 
 credit of the United States, and to repay the money thus borrowed, to 
 levy and collect uniform taxes, duties, imports, and excises throughout 
 the United States. These are some of the great powers intrusted to the 
 general Government for the preservation of its own existence. 
 
 When this most wicked and gigantic rebellion broke out, in an open and 
 
20 
 
 avowed determination to break up the Union, it became necessary to bring 
 into active exercise all these high powers of the Government. Armies and 
 navies had to be raised and supported. All the material of war necessary 
 for their efficiency had to be provided. Money had to be borrowed, and 
 in vast amounts. The old Continental money possessed none of the 
 elements of vitality and credit that is imparted to the legal tender demand 
 notes and bonds issued under the present Constitution, with this great 
 power vested in the President to enforce the laws. 
 
 The debt thus incurred in the prosecution of the war to put down the 
 rebellion and restore the national authority over all the States,' will be 
 about $3,000,000,000. This large sum has been borrowed on the credit of 
 -the United States, to maintain the Government and perpetuate the Union, 
 and the beneficial results flowing from the triumph of the national cause 
 are amply sufficient to compensate for all the money expended in accom- 
 plishing this great achievement. The secureties issued as evidence of this 
 large indebtedness, consist of bonds, notes and certificates, which are 
 widely distributed among all classes of people. 
 
 All the forms of law have been complied with to bind the Government 
 and give validity to these different forms of indebtedness. The good faitli 
 of the nation is pledged in the most solemn manner to the payment of 
 every dollar of this debt, both principal and interest. 
 
 Tlie Government of the United States is not now dependent at all on 
 the State Governments for the execution of its great powers. All the 
 powers conferred on the General Government by the present Constitution 
 are self-acting, self-sustaining, and wholly independent of State author- 
 ity. The Constitution and laws of the United States operate directly 
 upon the people, without any regard to State boundaries. We have now 
 a Congress to pass all the tarift' and tax laws necessary to raise all the 
 money required to pay the current annual expenses of the Government, 
 pay the interest on the public debt, and raise a surplus sufficient to i-etire 
 annually a portion of the principal. 
 
 The grand results of the last four years have most abundantly shown 
 the power and efficiency of the present National Government under the 
 existing Constitution. 
 
 It is clearly demonstrated that we have a strong, stable and efficient 
 Government, fully competent to levy and enforce the collection of cus- 
 tom duties and internal revenue adequate to support the Government. 
 
 The true value of the property, teal and personal, within the United 
 States, according to the census of 1860, was $16,000,000,000, and it has, 
 notwithstanding the exhausting nature of the war, greatly increased 
 since that time. All this property is liable to be taxed to the full extent 
 necessary, to support the Government and pay every dollar of the debt 
 incurred in the prosecution of the war. The Government has a claim 
 under the Constitution, a mortgage in fact, which is the first lien on all 
 this real and personal property to that extent. All the debts of States, 
 counties, cities, corporations and individuals are second and subordinate 
 to this first claim of the National Government. 
 
 Our credit rests on this property and the good faith and fidelity of the 
 Government to collect these taxes. 
 
 Since the creation and distribution of this large debt among all classes 
 of people, and a large part of it made the basis for the organization of over 
 sixteen hundred banks, the whole fabric of credit, public and private, 
 niust, to a great extent, rest on the efficiency and determination with 
 
21 
 
 which these taxes are to be levied, and collected. Public and private 
 credit are so interwoven with all the commercial transactions of the coun- 
 try, that if the public credit fails, individual credit must also fail. The 
 value of legal tender notes, national currency, flve-twenty bonds, ten- 
 forties and seven-thirties, aU depend upon the revenues derived from 
 custom duties and internal taxes. Our own people and the people of 
 Europe must be fully assured, not only of the ability, but of the willing- 
 ness and determination of the Government to pay promptly every one of 
 the obligations of the Government as they become due, and that the finan- 
 cial credit of the Government will be maintained on the stable and sure 
 basis of ample taxation. There is no other sure basis for it to rest upon. 
 
 There can be no doubt that the suggestions of the Secretary of the Treas- 
 ury to gradually retire a portion of the currency, are wise and judicious. 
 If it cannot be done by funding without bringing down the price of flve- 
 twenty six per cent, bonds below par, so as thereby to embarass the 
 operations of the Treasury in providing for the large temporary debt as It 
 becomes due, then I think it should be accomplished by Congress provi- 
 ding for an increase of revenue. The credit of the Government can be 
 maintained, and it ought to be maintained at all hazards, and prices should 
 be reduced. All who have read the late admirable reports of the Secretary 
 of the Treasury, the Comptroller of the Currency, and the nearly unani- 
 mous resolution of the House of Eepresentatives, must be satisfied that the 
 Government is united and strong in its determination to enforce the fuU 
 power it possesses to carry us safely through all our financial diflSculties, 
 and bring the business of the country back to a more safe and secure 
 standard. So long as Congress and the Executive departments of the 
 Government continue, as they now do, to discharge their duties with 
 efflciency and fidelity, the repudiation of the public debt will be an 
 impossibility. 
 
 I have lately seen and read in the public newspapers much that is of a 
 fault-finding character, and much theorizing on the subject of our national 
 . finances, but after all that has been said or written on the subject, it comes 
 down to a plain matter-of-fact business, which seems to be well under- 
 stood by the Secretary of the Treasury, viz : 
 
 1. That frugality and economy should be practiced in all the depart- 
 ments of the public service. 
 
 2. Find out all the taxable property and business of the country, and 
 the best modes of collecting revenue therefrom. 
 
 3. Levy and collect a tax upon it amply sufiicient to raise a sum that 
 will pay the yearly expenses of the Government, pay the interest on all 
 the public debt, and leave a surplus of at least $50,000,000 annually 
 towards retiring a part of the public debt, and the credit of the Govern- 
 ment will be firmly maintained. Ko repudiation of the public debt will 
 ever take place so long as this policy is pursued with vigor on the part of 
 the national Government. 
 
 The great mass of the people are honest and patriotic, and believe that 
 the public debt was incurred for just and patriotic purposes. They will 
 stand by their rulers in maintaining the public faith. They will pay the 
 taxes freely, and will never consent that the fair fame of their free Gov^ 
 ernment shall ever be tarnished by a repudiation of one dollar of the debt 
 incurred in such a righteous and noble cause. 
 
 E. G. SPAULDING. 
 
22 
 
 NO STATE TAXATION OF UNITED STATES BONDS. 
 
 The Supreme Court of the United States, at Washington, has decided 
 that United States Government Bonds and Treasury Notes cannot be 
 taxed by States, Counties or Cities. The power to borrow money by the 
 Government of the United States is supreme, and cannot be interfered 
 with by any State law. All the Government securities have been issued 
 under a positive law, which makes it a part of the contract that they 
 should not be taxed for local purposes, and the contract cannot be changed. 
 The first section of the act of Congress, parsed June 30, 1864, provides that 
 'all bonds. Treasury notes and other obligations of the United States shall 
 be exempt from taxation by or under State or Municipal authority.' 
 
 The Constitution of the United States provides that ' This Constitution 
 and the Laws of the United States, which shall be made in pursuance 
 thereof, shaU be the supreme law of the land, and the judges in every State 
 shall be bound thereby ; anything in the Constitution or laws of any State 
 to the contrary, notwithstanding.' 
 
 The Supreme Court of the United States has decided that all the State 
 laws passed to tax United States securities are unconstitutional and void. 
 
 These loans are the best security in the market. Ko searches of title 
 are necessary. The Constitution of the United States and the act of Con- 
 gress make the public debt the first lien on the real and personal property 
 of the country. The Government bonds and notes are the first claim to be 
 paid, city bonds, railroad bonds and bonds and mortgages, are only a 
 second lien, to be paid after the Government securities are paid. 
 
 E. G. SPAULDING. 
 
 PUBLIC DEBT GOOD FAITH HON. E. G. SPAULDING's LETTER TO 
 
 SENATOR MORGAN SENATOR SHEEMAn's FUNDING BILL. 
 
 Buffalo, Dec. 24, 1867. 
 Hon. E- D. Morgan, U. 8, Senaior, Washington. 
 
 Dear Sir — I am in i-eceipt of the recent report of the Finance Coijimittee. 
 brought in by Senator Sherman, and Senate Bill No. 207, 'for funding the 
 national debt, and for the conversion of the notes of the United States,' 
 accompanied by your letter of the 19th instant, asking my opinion on the 
 proposed measure, or any of its parts, and desiring me to communicate 
 my suggestions at an early day. 
 
 I am deeply impressed with the importance of a return to the specie 
 standard at the earliest moment consistent with the operations of the 
 Government and people. I concur fully in that part of the report of your 
 committee which seeks ' to secure to the holders of United States notes, as 
 soon as possible, their value in gold.' This, in my opinion, should engage 
 the earnest efforts of Congress and the Executive ; and I am much grati- 
 fied to see your committee so earnest and decided in urging a return to 
 the specie standard at the earliest practicable moment. A resumption Of 
 specie payments by the Government, the banks and people, is the first 
 great thing to be accomplished. This would dispose of nearly all the com- 
 plicated and disturbing issues that have been raised by politicians and 
 others, as to the time when, and the kind of money in which, the public 
 debt shall be paid. It would demonstrate more clearly than any thing 
 else, our resources and ability to pay the public debt, and our determina- 
 tion to preserve unimpaired the good faith of the nation, and establish all 
 business operations on a firm and enduring basis. 
 
23 
 
 I notice that Senator Sherman, in his report, (pages 6 and 7,) giving^ 
 countenance to the idea that the 5-20 bonds, under the act of 25th Februar3\ 
 1862, may be paid in the depreciated greenback currency, is laboring under 
 a material misapprehension of the facts in regard to the representations 
 made by the agents of the Government when the loan was negotiated, and 
 especially as to the time when those representations were made. Mr. 
 Sherman says: 'It" is said that the distinguished Secretary of the Treasury 
 who negotiated the 5-20 loan, gave a construction to this act at the time 
 the loan was offered; that this was announced to the people, and upon the 
 faith of this the loan was taken. Your committee can find no otfloial dec- 
 laration made by the Secretary on this subject, until after the loan was 
 negotiated,' and then refers to a letter written by Secretary Chase, May 
 18, 1864, as being the iirst official declaration on the subject that has come 
 to his knowledge. The Senator seems to concede that if the Secretary 
 made oiBcial declarations, at the time the loan was negotiated, giving a 
 construction to the act, to the effect that the principal, as well as the 
 interest, was payable in coin, and that if both parties understood that to 
 be the construction of the law, such declarations would form a part of the 
 contract, and that the Government would be bound to make these declara- 
 tions good, and to give effect to the contract as understood by both parties 
 when it was made. Now, the proofs are at hand that such ofHcial repre- 
 sentations were made by the distinguished Secretary of the Treasury, 
 before and at the time the loan was being negotiated, as I will now pro- 
 ceed to show. 
 
 Secretary Chase, who negotiated that loan, decided as early as Decem- 
 ber, 1862, that a fair construction of all the loan acts under which the 
 funded debt was contracted, required us to pay actual money— gold and 
 silver — on all the funded debt of the Government; that a pretended pay- 
 ment in another promise of the United States was no payment, but merely 
 changing the form of the debt. In other words, that a payment of the 
 bonds in greenbacks, would be merely substituting the debt of the Gov- 
 ernment in the form of legal tender notes bearing no interest, for bonds 
 bearing six per cent, interest, — which would be manifestly unjust. This 
 question came up on the kind of money that should be provided for paying 
 that part of the funded debt, created prior to the rebellion, which fell due 
 January 1st, 1863, and this decision was then made and published. The 
 Committee of Ways and Means, in December, 1862, a short time before its 
 maturity, desired to know whether any further legislation would be nec- 
 essary to ensure the payment of coin on that part of the funded debt 
 falling due within a few days. In order to ascertain in a fortdal manner 
 what construction the Secretary of the Treasury would put upon the law, 
 a Sub-Committee from the Committee of Ways and Means was apjpointed, 
 consisting of Mr. Hooper, Mr. Morrill and myself, to confer with the Sec- 
 retary on the subject. This Sub-Committee called upon the Secretary at 
 the Treasury Department, and after a full and free conference, the Secre- 
 tary decided that a fair construction of the law, as well as good faith, 
 required him to pay all the funded debt in coin, and that he did not deem 
 it necessary to have any further law passed to enable him to do so. 
 
 Under these circumstances, the Committee of Ways and Means did not 
 deem it necessary to report a bill authorizing or requiring the funded debt 
 to be paid in coin, and consequently no further law was passed ; and on 
 the first of January, 1863, the funded debt falling due at that time was 
 paid in coin. From the time this decision was made by Secretary Chase, 
 
24 
 
 down to the present time, the same language has been held hy each Secre- 
 tary of the Treasury, namely, that the funded debt of the Government 
 was payable in coin, both principal and interest, and that the Governm'ent 
 would not seek to avail itself of the five years option to redeem the 5-20 
 bonds until it was prepared to pay coin for the principal as well as the 
 interest. But this is not the only proof. 
 
 Messrs. Pisk & Hatch, bankers in New York city, were prominent 
 sub-agents of the Government in negotiating the 5-20 bonds under the act 
 of February 25, 1862. Many persons who were desirous of subscribing to 
 this loan, wanted to know authoritatively, whether the principal of the 
 bonds was payable in coin as well as the interest. In order to have the 
 proof in hand to satisfy people on this point, Fisk & Hatch, at the very 
 time they were negotiating large amounts of this loan, addressed a letter 
 to the Secretary of the Treasury on the 3d of August, 1863, and received 
 from him an oflBcial reply, signed by the Assistant Secretary of the Treas- 
 ury, which was immediately published in the New York Times, as follows : 
 
 THE POPULAE loan- 
 To the Editor of the New York Times .-—We are receiving numerous intjui- 
 ries as to whether the United States 5-20 bonds are redeemable in gold. 
 We have received a letter from the Treasury Department most satisfac- 
 torily answering this question, (as it was once before answered by Mr. 
 Chase,) a copy of which we hand you herewith. The popular character 
 of this loan, and its wide distribution among the people, renders the sub- 
 ject one of universal public interest and importance, and we presume the 
 publication of this letter will be acceptable to your readers. 
 (Signed,) FISK & HATCH, Bankers. 
 
 Treasury Department, Washington, D. C, ) 
 August 5th, 1863. S 
 
 Gentlemen — Tour letter of the 3d instant, relative to the redemption of 
 6 per cent. 5-20 bonds of the loan of February 25, 1862, has been received. 
 The following is the decision of the Secretary of the Treasury in regard to 
 the redemption of the public debt: 'All coupon and registered bonds 
 forming a part of the permanent loan of the United States, will be redeemed 
 in gold. The 5-20 sixes, being redeemable at any time within twenty years 
 after the lapse of five years, belong to the permanent loan, and so also do 
 the twenty years sixes of July 17, 1861, into which the three years 7-30s 
 are convertible. All obligations and notes forming a part of the tempo- 
 rary loan will be paid at maturity in United States notes, unless before 
 such maturity payment in specie sha;Il have been generally resumed. The 
 7-30 three year bonds or notes form part of the temporary loan, with the 
 privilege of conversion into 20 years sixes, in sums not less than $500. 
 They wiU therefore be paid, if the holders prefer payment to conversion, 
 in United States notes. 
 
 GEORGE HAERIKGTON, 
 Acting Secretary of tiie Treasury. 
 To Messrs. Fisk & Hatch, Bankers, New York. 
 
 This official letter from the Treasury Department, in addition to its 
 being published in all the newspapers, was published in hand-bill form, 
 (one of the original hand-bills being now in my possession,) and sent 
 broadcast among the people, to induce them to come forward and take up 
 these bonds — which were then on tlie market under the direction of the 
 
,25 
 
 Secretary of the Treasury, and offered by him at par. I was at this time 
 actively engaged in negotiating this loan. I advertised and circulated this 
 letter extensively myself, and gave copies of it to subscribers at the time 
 of making their subscription to this loan. I regarded these representa- 
 tions, made by authority of the Treasury Department, and upon the faith 
 of which people were induced to subscribe for the loan, as forming a part 
 of the contract, and that the Government is now bound to make these rep- 
 resentations good; and that, whenever they seek to redeem these bonds, 
 the principal as well as the interest should be paid in coin. I should 
 regard it as a gross breach of faith on the part of the Government to 
 attempt to evade these declarations, or equivocate in fulfilling this con- 
 tract, or any part of it. 
 
 But aside from these representations made by the Secretary, I would 
 suggest that the plain meaning of the act of '62, when read in connection 
 with its title, leads to the same conclusion, and that Secretary Chase, in 
 giving the construction to the law which he did in negotiating the loan, 
 gave a correct, practical, common sense decision. The argument of the 
 present Secretary, in his last annual report, (pages 24, 25 and 26,) is able 
 and conclusive on this point. The interpretation given to the act by both 
 these distinguished Secretaries is in exact accordance with my intention 
 at the time I drew and introduced the bill in the House, in January, 1862, 
 and as I believe it was fully understood by Congress when it passed. The 
 title of the act is expressive of the intention and purpose for which it was 
 passed, namely, ' an act to authorize the issue of United States notes, and 
 for the redemption or funding thereof, and for funding the floating debt 
 of the United States.' 
 
 It was intended by this measure, in the imminent peril in which we 
 were then placed by rebellion, to make a forced loan from capitalists, by 
 compelling them to take legal tender United States notes, which should 
 be paid out to the army and navy, and for supplies and material of war, 
 but at the same time give them a fair rate of interest for the use of their 
 money, by allowing them to fund these legal tender notes as they should 
 accumulate in their hands and not bearing interest, into a twenty years 
 bond bearing six per cent, interest. In the opening speech which I made 
 in the House on the 28th of January, 1862, I said : ' The demand notes put 
 in circulation would meet the present exigencies of the Government in 
 the discharge of its existing liabilities to the army and navy, and contrac- 
 tors for supplies, materials and munitions of war. These notes would find 
 their way into all the channels of trade among the people, and as they 
 accumulate in the hands of capitalists, they would exchange them for six 
 per cent. 20 years bonds. These circulating notes in the hands of the 
 people, would enable them to pay taxes imposed, and would facilitate all 
 business operations between farmers, mechanics, commercial business 
 men and banks, and be equally as good as, and in most cases better than, 
 the present irredeemable currency issued by the State banks. The $500,- 
 000,000 six per cent, twenty years bonds in the hands of the Secretary of 
 the Treasury, ready to be issued, would afford ample opportunity for 
 funding the Treasury notes as fast as capitalists might desire to exchange 
 notes not bearing interest for coupon bonds of the United States bearing 
 six per cent, interest, and amply secured by a tax on the people and all 
 their property. In this way the Government will be able to get along 
 with its immediate and pressing necessities, without being obliged to 
 force its bonds on the market at ruinous rates of discount; the people 
 
26 
 
 under heavy taxation will be shielded against high rates of interest, and 
 the capitalists will be afforded a fair compensation for the use of their 
 money during the pending struggle of the country for national existence. 
 
 'A suspension of specie payments is greatly to be deplored, but it is not 
 a fatal step in an exigency like the present. The British Government apd 
 the Bank of England remained under suspension of specie payments 
 from 1797 to 1821-2, a period of twenty-five years. Gold is not as valuable 
 as are the productions of the farmer and mechanic, for it is not as indis- 
 pensable as food and raiment. Our army and navy must have what is 
 more valuable to them than gold or silver— they must have food, clothing 
 and the material of war. Treasury notes, issued by the Government on 
 the faith of the whole people, will purchase these indispensable articles, 
 and the war can be prosecuted until we can enforce obedience to the Con- 
 stitution and laws, and an honorable peace be thereby secured. This 
 being accomplished, I will be among the first to advocate a speedy return 
 to specie payments, and all measures that are calculated to preserve the 
 honor and dignity of the Government in time of peace, and which I regret 
 are not practica,ble in the prosecution of this war.' 
 
 These are, in part, the remarks I made in the House on the loan bill 
 introduced by me, and which became a law February 25th, 1862. The 
 operation of the bill, in the issue of the legal tendei: notes, the paying 
 them out to the army and navy, their final funding into a twenty years 
 six per cent, bonds, have been substantially what I stated would be its 
 operation at the time I introduced it into the House. Tlie object of the 
 bill was to provide the means by which the floating and temporary debt, 
 then bearing heavily upon the Treasury, might, by the operation of the 
 act, be funded into a long bond without a heavy sacrifice in making the 
 negotiation. Some gentlemen are now trying to reverse the obvious 
 intent of the act, and wnfund all this bonded debt, by again putting it 
 into a floating and temporary form. I regard all these late shifts and 
 quibbles to unsettle what is already honorably fixed and determined by 
 the Treasury Department under and in pursuance of law, as unworthy of 
 this great nation, unstatesmanlike in those who advocate it, and, if per- 
 sisted in, will, I think, inevitably destroy the credit of the Government, 
 and postpone indefinitely a resumption of specie payments. 
 
 Why take the back track under these funding loan bills ? Why open 
 the question at all at this time ? The floating debt and temporary loans 
 are aXready funded, or so nearly funded that there cannot be any reason- 
 able doubt that, by the 15th of July next, when the last series of 7-30 
 notes fall due, the whole will be funded into boftds, none of which are 
 payable until 1882, being fifteen years yet before they become due. The 
 Government is not legally or morally bound to pay one dollar of the prin- 
 cipal of these bonds until they become due. Then why trouble ourselves 
 abovit funding that which is already funded, especially when it has to be 
 done by repudiating the acts and declarations of the Secretary of the 
 Treasury in the discharge of his official duties ? Why raise the question 
 now as to the kind of money with which we are to pay bonds already 
 outstanding, and which are not becoming due until 1882 'i 
 
 The $830,000,000 of three years 7-30 notes were all negotiated under 
 representations made by the Treasury Department, similar to those made 
 in respect to the 5-20 loan of '62, with an express stipulation tliat the 
 holders of these notes should have the privilege of converting them at 
 maturity into 5-20 bonds. The bonds of '62, as well as the bonds issued 
 in redemption of the three series of 7'30 notes, all stand upon the same 
 
27 
 
 footing, and the Government is no doul^t Ijound to pay the principal as 
 well as interest in coin, whenever it seeks to retire these bonds under the 
 five years option, reserved in the face of the bonds. That such is the 
 view taken by the present Secretary of the Treasury, fully appears by his 
 letter to L. P. Morton & Co., bankers in New Tork, in which he says : 
 
 Tkeasdrt Depaktment, Nov. 16, 1866. 
 Gentlemen — Tour favor of the 13th instant is received. I regard, as did 
 also my predecessors, all bonds of the United States as payable in coin. 
 The bonds that have matured since the suspension of specie payments 
 have been so paid, and I have no doubt that the same will be true of all 
 others. This being, as I understand it to be, the established policy of the 
 Government, the 5-20 bonds of 1862 will either be called in at the Expira- 
 tion of five years from their date, and paid in coin, or be permitted to run 
 until the Government is prepared to pay them in coin. 
 I am, very truly yours, 
 
 HUGH Mcculloch, 
 
 Secretary. 
 Messrs. L. P. Morton & Co., New York. 
 
 Under the influence of this official declaration, most of the bonds have 
 been taken on the exchange of the 7-30 notes, in pursuance of the stipula- 
 tion on the back of the notes, and long before these bonds become due, 
 specie payments will no doubt be resumed, and we shall then have but 
 one standard of value, and only one kind of money, namely, coin, or its 
 equivalent, in which to pay these bonds. Our population and resources 
 wiU be nearly double then to what they are now. We shall be abundantly 
 able to pay at that time in that currency which is recognized by all civil- 
 ized nations as the true standard and measure of value, and thereby the 
 honor and good faith of the nation will be fully maintained. 
 
 I would suggest thatit is not wise to prematurely agitate the question, 
 and am not able as yet to see any good reason for doing so. On the con- 
 trary, I think aU agitation now, on this branch of the financial question, 
 is mischievous, and calculated unnecessarily to impair our credit at home 
 and abroad. 
 
 I would suggest further, that the provision in the bill which limits the 
 legal tender currency to $400^000,000, is a good one, provided there is any 
 sane man in Congress who proposes, in a time of peace, to dilute and still 
 further depreciate the currency, by increasing it above that sum ; but I 
 think the maximum of the greenback currency must not exceed $250,- 
 000,000 or $300,000,000 when we reach the specie standard, if we would 
 successfully maintain specie payments. And it seems to me that it would 
 greatly facilitate a resumption of specie payments if the national banks 
 were required to hold a part of their reserves in coin, and that some safe 
 plan should be devised by which the sub-treasuries in the principal cities, 
 especially in New Tork, could make daily settlements with the banks 
 through the clearing-house, and requiring only balances to be paid, sub- 
 stantially in the same manner as the banks in the principal cities make 
 their daily settlements with each other. In this way no large movement 
 in coin to or from the sub-Treasury would be necessary, and the daily 
 payments could be made with comparative ease. But this letter is already 
 too long, much longer than I intended when I commenced it, and I will 
 not enlarge further on this subject at this time. I may desire to make 
 some further suggestions, an,d if so, will write you again. 
 I remain, very truly, your friend, 
 
 E. G. SPAULDING. 
 
28 
 
 FROM HON. r. E. SPINNEE 
 
 Washington, Nov. 9. 
 Hon. E. O. Spavlding, Buffalo, N. Y.: 
 
 My Dear Sir— Your note of the 6th inst. has been received. If some 
 one who helieves ia high-toned swindling will write in favor of open 
 repudiation, I will agree to give the subject the consideration of a careful 
 reading, but I have not the patience to read anything advocating the 
 snealving expedient of paying the national debt in depreciated currency. 
 
 The Secretary of the Treasury is sound on this subject ; and in his forth- 
 coming Annual Report will address an argument to the Congress and the 
 country, that I am sure will please you and those who are neither Isnaves 
 nor fools. 
 
 The finance question is to become the leading one in the organization 
 of parties, and I had hoped that such men as Butler and Stevens would 
 have remained with the great body of their friends. Having an abiding 
 faith in the honesty of the people, I believe the question will be settled 
 honestly, and that honest Americans will be spared the shame of having 
 their nation stigmatized as a band of cheats and swindlers. 
 Very truly, your friend, 
 
 F. E. SPINNER. 
 
 NATIONAL CDEKENCY LEGAL TENDEE. 
 
 The avowed policy of the Government is to retire the legal tender green- 
 back currency, issued during the war, and bring the business of the 
 country bade to a gold standard, and a resumjition of specie payments. 
 This policy is avowed by the President in his annual message, and by the 
 Secretary of the Treasury in his Fort Wayne speech, and in his annual 
 report. As this policy will sooner or later be carried out, it is important 
 we should look ahead and be prepared for the change. It will take time 
 to accomplish so great a result, and it must be done with great prudence 
 and discretion, or it will produce a shook to the legitimate business of the 
 country, which will paralyze our business operations and thereby dimin- 
 ish the revenues that will be so much needed to maintain the public credit. 
 Whatever measures will aid in promoting the healthy and legitimate bus- 
 iness of the country during the process of contraction will be of essential 
 service both to the Government and the people. 
 
 It is not so very important just at this time, that there should be any 
 material change made in the functions of the national currency, but as the 
 Government legal tender notes are withdrawn from circulation, and the 
 contraction policy fairly begun, I think it will be of great importance to 
 the country, in giving stability to its financial operations, that the national 
 currency should be, like the Bank of England notes, made a legal tender, 
 except for debts owing by the banks. I feel confident that it would lessen 
 the liability to a panic, as contraction goes on, and be useful and benefi- 
 cial to the Government and people, in maintaining the financial credit 
 and business of the country. 
 
 The national currency is limited to a proper amount, so that there will 
 be no chance for an over issue, and as the banks issuing it are required on 
 the resumption of specie payments, to redeem it in coin, I can see no harm 
 that would arise from making it a legal tender, but on the contrary, much 
 good to follow the enactment of such a law. Let us consider this subject 
 a little more in detail. 
 
 What the Government and people want and must have in this great and 
 
29 
 
 enterprising country, is a currency of universal credit and uniform value. 
 Suet a currency is a vital necessity to the well being of the business of the 
 country. It should possess all the attributes of money, adequate in 
 amount, and receivable alike in all payments, public and private. Men 
 engaged in large commercial transactions have no especial worship for 
 gold and silver, either as money or for ornament ; but I would not discard 
 those metals in fixing the standard of value of paper money, and the rela- 
 tive value of commodities and services. In devising and regulating a 
 system of national currency, I would have coin and paper money as nearly 
 on an equality as it is possible by having the paper convertible into coin 
 on demand. 
 
 I know it is insisted by some persons that the only money is coined 
 metal, and that paper money as its substitute, is only credit. This may 
 be true in a certain sense, but at the same time both coined money and 
 paper money are the creation of law, and it is equally true that credit 
 underlies the whole financial operations of the Government and people, 
 and if that credit is broken down, the Government and people will become 
 bankrupt, business paralyzed and revenues largely diminished. Coined 
 money like paper money is made in pursuance of statute law, and has 
 impressed upon it the Government stamp, indicating its weight and purity. 
 This stamp does not, however, give the metal its value, the value is in the 
 metal independent of the stamp, but gold of individuals so coined into 
 eagles under the laws of the United States, does determine the rate in 
 arithmetical terms at which the metal thus coined shall be a legal tender, 
 and the standard of value in all exchanges and payments, and this makes 
 it by law money. Paper money is made by a somewhat different process, 
 but when both are stamped with the functions of money they are both the 
 creation of law. It is true that gold and silver are esteemed a valuable 
 commodity without being coined, and are within a small fraction, rated 
 as high in the form of -bullion, as in the form of coin. The coined money 
 rests on its own inherent or estimated value, while the paper money is 
 based upon a well-founded credit. A payment in coin or bullion closes 
 the transaction, because the bargained for equivalent is rendered at once, 
 leaving no credit to be upheld or promise to be performed in the future. 
 United States demand Treasury notes, are also by law made lawful money 
 and a legal tender as a substitute for coin, and their value is based upon 
 the credit of the Government, and all the taxable property under its juris- 
 diction. If they were not issued in excess they would not be below the 
 gold standard, and would constitute as good, and even a better currency 
 than coin, because less expensive and more convenient, and because they 
 are based on a well founded credit, no less than an adequate tax on all the 
 real and personal property of the country. The principal difference 
 between coin and paper money may be stated thus: the exchange and 
 delivery of one hundred bushels of wheat for one hundred dollars, in 
 value of gold bars or coined gold, the transaction is closed on the spot, by 
 each party delivering to the other, what is regarded by them as an equiv- 
 alent; according to the estimation of both parties, it is an exchange of 
 equivalent values. In such a transaction, no credit is given on either side ; 
 but if instead of gold, the purchaser of the 'wheat should deliver to the 
 seller in exchange for it, one hundred dollars in paper money, the equiva- 
 lent for the wheat, although perfectly secured, would not be rendered on 
 the spot, but a credit would intervene in taking the paper money, which 
 contained only a promise to deliver one hundred dollars in gold at another 
 
30 
 
 time. In one sense it is true that the seller of the wheat takes even gold 
 on a credit, trusting that it will continue at all times as valuable as it now 
 is, notwithstanding it possesses very few useful qualities, and is not intrin- 
 sically as valuable as iron. Franklin says, 'that the value of gold and 
 silver rests chiefly in the estimation they happen to be in, among the gen- 
 erality of nations, and the credit given to the opinion that that estimation 
 will continue ; otherwise a pound of gold would not be a real equivalent 
 for a bushel of wheat.' It is the universal estimation in which gold and 
 silver are held, that gives them their present value, and not the labor 
 expended upon them, or any particularly useful qualities contained in the 
 metal itself. Any other well founded credit is as much an equivalent as 
 gold and silver, and in some cases more so, or it would not be preferred by 
 commercial people in different countries. For this reason a well secured 
 convertible paper money, in a normal state of the business of the country, 
 is fully equal to gold and silver, because less expensive, and more conven- 
 ient. But where commercial transactions are small, and among barbarous 
 nations where credit is unsafe, gold and silver, on account of their compar- 
 atively steady value, and the universal estimation in which they are held 
 by all mankind, no doubt constitute the best money. These precious 
 metals, so called, being limited in amount, and used extensively in the 
 arts and luxuries of life, are desired the world over, not only by civilized, 
 but by barbarous nations, and having great estimated value in small bulk, 
 are easily transported from continent to -continent. This universal esti- 
 mation gives them pretty steady value as money, and an equally steady 
 value in the arts, and for ornament. They therefore constitute at present, 
 the best standard by which to measure the relative value of all other com- 
 modities. They are, therefore, the standard of value in all countries, and 
 it will be very difficult, if not impossible, for the nations of the world to 
 agree upon any other standard of value. They have not become so by 
 reason of a congress of nations, nor by any concert of action among them, 
 but by the quiet action of commerce among the people for many centuries, 
 and in all countries and climes. Gold and silver therefore, are the univer- 
 sal standard of value, made so by the acquiescence of all mankind, and 
 consequently all foreign balances are settled in gold and silver. But 
 owing to the scarcity of the precious metals, and the great expense attend- 
 ing their use as money, and the risk of transporting them from place to 
 place, credit has been resorted to in some form by all civilized countries, 
 under well established Governments, as a substitute for gold and silver, 
 and especially for domestic purposes ; for instance, the Bank of England 
 nbtes, for the British Empire. 
 
 Bills of exchange, promissory notes, credits on bank ledgers, checks, 
 bank bills, and clearing house certificates are among the forms of credit 
 fchiefly used in commerce at the present time. In consequence of this 
 Scarcity of gold and silver money adequate to the wants of commerce, 
 these forms of credit have been extensively used by the people of all com- 
 mercial countries, because business in this form could be done more 
 cheaply, with much greater facility, and in vastly greater amounts, than 
 it could be done by contracting it to the actual use of gold and silver in 
 each transaction; and although there is no actual use of coin in the 
 exchange of commodities and services, nevertheless all these credit trans- 
 actions have a relation to gold and silver, as the standard or measure of 
 value, and ought to have an equally close relation to the amount of comr 
 modities and services to be exchanged ; and to be safe, should never exceed 
 
81 
 
 the wants of legitimatebusiness. It is generally conceded that these dif- 
 ferent forms of credit, when not carried to excess, are of the greatest 
 usefulness to every well regulated society. So apparent are their advan- 
 tages, that they are deemed indispensable, and that without them, the 
 present large volume of commercial transactions could not be carried on; 
 Most of these forms of credit have grown into use by the necessities of 
 Commerce for centuries past, and are governed by universal commercial 
 law, modified in some particulars by local statutes, but generally the law 
 merchant regulates and governs all of them, except in the case of bank 
 bills and Grovernment paper money, which are wholly the creation of local 
 laws, and are regulated and governed by the statute laws under which 
 they are created. This brings me to the consideration of a paper currency 
 authorized and regulated by statute laws. 
 
 NATIONAL CtJEEENCY — LEGAL TKNDEK. 
 
 In discussing the subject of a national currency, and the functions that 
 should be imparted to it by law, I assume that Congress deems it necessary 
 and proper to have a paper national currency, not only to carry on the 
 fiscal operations of the Government, but also to facilitate the business 
 operations of the people ; and that such a currency is created because It is 
 the duty of the general Government to provide a domestic circulating, 
 medium of uniform value, to be used and circulated as money in all parts 
 of the United States. Now, if it is desirable and proper to have a national 
 paper currency at all, as I think it is, it seems to me to be obvious that it 
 should be the best that the Government is capable of making. If it is 
 necessary to create a paper currency, as a substitute for, or as a represen- 
 tative of, gold and silver, why not give it all the attributes of money, so 
 far forth as it can be made so by law ? ■ Why should not Congress confer 
 upon it in all respects, the highest qualities possible to make it suitable, 
 useful and acceptable in all the ramified operations of the Government and 
 people over the whole country? This currency is a creation of the Gov- 
 ernment. Its object is to make money for circulation; to make it of 
 uniform value all over the United States in effecting exchanges and pay- 
 ments, and as nearly equal to gold and silver as it is possible to make it. 
 
 This great nation surely ought not to create a currency inferior to the 
 best paper money In the world. It should have all the attributes of money 
 to pay debts and facilitate exchanges. It should be backed by the whole 
 power of the Government to make it what it purports to be, a national 
 currency, and the representative of gold and silver, and convertible into 
 gold coin on demand. Nothing should be withheld by Congress which 
 would in any degree add to the stability or usefulness of such a currency. 
 It is created as an instrument of usefulness to benefit the Government arid 
 people, and if made at all, it should be, like a locomotive, or any other 
 instrument, the best that can be made. I took this ground on the passage 
 of the legal tender act introduced by me in 1862. I then said that if we 
 issued a Government paper money at all, it ought to have imparted to it 
 the highest legal sanction that could be given to it by the Government,' to 
 make it fulfill the purpose for which it was made. There are very few 
 business men who now question the wisdom of that enactment. Though 
 in the administration of the laws authorizing it, more was unnecessarily 
 issued, and less funded, than was intended by the oiiginators of the 
 measure. 
 
 The British Government is the great pioneer in providing a paper 
 
32' 
 
 national currency. The Bank of England, a creation of tliat Government, 
 has existed one hundred and seventy-two years. She has had great expe- 
 rience in the issue, circulation and redemption of the circulating notes of - 
 that bank; and the British Empire has increased in material wealth and 
 power with astonishing rapidity since the bank was established. Previous 
 to 1834, the circulating notes of the Bank of England were not made a 
 legal tender, but after an experience of over 140 years, she passed an act 
 making them a legal tender for all debts, except those owing by the bank 
 itself; and for the avowed reason that it would not remove any of the 
 guards against over-issues, and that it would increase the stability of the 
 bank, guard against panics, and consequently improve the whole monetary 
 system of that empire. Since that act of Parliament was passed, she 
 requires the notes of the bank to be perfectly secured by gold and Govern- 
 ment stocks ; requires the bank to redeem in coin on demand at its own 
 counter, and then makes them a general legal tender except at the bank. 
 
 The Bank of England notes admirably perform the functions of money. 
 They are current money in all parts of the empire. They are probably 
 the most perfect paper currency in the world, because they are not only 
 perfectly secured and redeemable in gold on demand at the bank, but 
 they have imparted to them by law the functions of money in the pay- 
 ment of debts and eflfecting exchanges, in the cities and villages remote 
 from London, as well as in the metropolis itself. They are backed by the 
 whole power of the British Government, and circulate with as much 
 vitality at the circumference as at the centre of the empire. The bank 
 and its circulating notes are as stable and seoiire as the €fovernment itself. 
 
 Why should we not profit by the experience and example of the British 
 Government in respect to its national currency ? We have provided by 
 Congressional enactment for the organization of a system of national 
 banks, and the issue of a national currency. This was deemed a necessary 
 measure for the support of the Government in providing a circulating 
 medium to facilitate the easy exchange of commodities, thereby stimu- 
 lating enterprise, industry and production ; adding to the ability of the 
 people to pay revenue, and furnishing a currency in which the internal 
 taxes may be paid. The leading idea was to combine the capital of indi- 
 viduals with the credit of the Government, to provide a national currency, 
 and throw the burthens of redeeming such currency upon the banks that 
 issue it, the Government only guaranteeing its ultimate payment. 
 
 The national currency act is generally right as far as it goes. It limits 
 the amount to $30O,CO0,O00; requires the circulating notes to be well 
 secured by gold-bearing Government bonds, deposited with the Treasurer 
 of the United States ; requires each bank to redeem its circulating notes 
 in lawful money on demand, and to keep an adequate reserve for that 
 purpose ; makes them a legal tender for all taxes and other debts due to 
 the Government, except customs, and for all debts owing hy the Govern- 
 ment, except principal and interest of the funded debt ; it also makes 
 them receivable by each national bank for all ordinary debts due to them, 
 and each bank, designated as a depository, is also required to receive it 
 on deposit from all public ofiBcers. These are important provisions in the 
 Jaw for nationaliziny this currency, and it consequently obtains a wide 
 circulation. I would not change or alter any one of these provisions for 
 de-centralizing the currency, but I think it does not go quite far enough in 
 that direction. It will be perceived that all persons in the employ of the 
 Government are compelled to receive it in payment for salaries and for 
 
33 
 
 materials and other services performed for tlie Government. It is now in 
 effect made a legal tender from the Government to all this class of per- 
 sons, including the salary of the President, Cabinet, Members of Congress 
 and the army and navy. If the President and other officers of the Gov- 
 ernment are obliged to receive it in payment for their salaries, why should 
 not ev/erybody else be required to take it from tliem for all ordinary debts 
 they may incur ? I can see no valid reason why they should be a legal 
 tender to persons employed by the Government, unless such persons can 
 also compel other parties to receive it from them. I think that sound 
 policy requires the act to be still further extended. I would go one step 
 farther and make the national currency, like the Bank of England notes, 
 a general legal tender, so long as the bank issuing it, redeem in lawful, 
 money, except that the currency issued by any bank separately should 
 not be a legal tender for any debts such bank might itself owe. 
 
 I would not relax any of the duties or obligations now imposed on the 
 banks. I would compel them to redeem their circulation in legal tender 
 United States notes on demand, until the resumptions of specie payments, 
 and after that in specie, and oblige them to keep a sufficient reserve for 
 that purpose. The reason for sucli additional legislation would not be so 
 much for the benefit of the banks, as it would be to benefit the public, by 
 providing a domestic currency, made legal tender the same as gold, 
 belonging to individuals is made a tender, and which could be used to the 
 greatest common advantage among all classes of people in all n(irts of the 
 country. I would make it a legal tender because it would lessen the 
 demand for coin, and have a tendency to prevent unnecessary runs on the 
 banks to obtain it. It is argued by many persons, with much plausibility, 
 that a well secured paper currency would be better in many respects, if 
 not made redeemable in coin, for the reason that coin is scarce as com- 
 pared with the volume of business to be done; that it is easily exported, 
 and that when brought to the test of requiring the paper money issued to 
 be redeemed in coin it has always failed, and always will fail, because 
 there is never available coin enough for that purpose. I admit that the 
 frequent suspension of specie payments, whenever there is a panic or 
 revulsion, furnishes an argument in favor of those who present this view 
 of the subject, but as no proper standard can be had at present, without 
 making paper currency equal to coin, I think it must be convertible into 
 coin on demand. Every attribute, however, that can be given to improve 
 its quality will lessen the necessity for its redemption in coin, and conse- 
 quently the more steady and uniform will be the business of the country. 
 
 With this object in view, I can see no valid reason why the highest 
 legal sanction should not be imparted to this currency by the Govern- 
 ment, which holds the pledged security and guarantees its payments, not 
 only to give it stability, and guard against panics and suspensions of 
 specie payments, but to make it useful to the people as money, in the 
 remote districts as well as at the centre of business, and make it fulfil in 
 the highest possible degree the object for which it was created, a national 
 
 eurrencv. 
 
 E. G. SPAULDING. 
 
 February 28, 1866. 
 
84 
 
 LEGAL TENDER IN TIME OP PEACE. 
 
 Buffalo, December 9, 1868. 
 Son. Hugh MeOuSoch, Secretary of the Treamry: 
 
 Dear Sir— "Will you be kind enough to send me a pamphlet copy of your 
 Annual Report ; I have seen a synopsis of it in the' newspapers, and desire 
 to study it in a more readable form. I have always read your able and 
 well-matured reports with pleasure and profit. I judge, from the extracts 
 of the report which I have seen, that you continue firm in the opinion 
 that we should get rid of the evils of a depreciated currency by returning 
 to the specie standard at the earliest practicable moment; this is the first 
 great and important duty of the Government, and I sincerely hope that 
 efBcient measures will be adopted to that end at the present session of 
 Congress. 
 
 Tou justly observe that the legal tender act was adopted as a war meaa^ 
 ure — a measure of necessity to sustain the army and navy while crushing 
 the rebellion. In the summer and fall of 1861, all the great powers 
 expressly granted in the Constitution had been brought into active exer^ 
 cise in bringing into the field an army of half a million of men, which 
 had to be fed, clothed and provided with all the material of war necessary 
 to make them efi"ective, requiring an average daily expenditure of $2,000,- 
 000. This required very large amounts of money, and we had to have it 
 right off— delay would have been fatal. The banks in Kew York, Boston 
 and Philadelphia had exhausted themselves in loaning to the Government 
 $150,000,000 in gold during the summer and fall of 1861. A large part of 
 the available gold in the country had thus been paid over to the Govern- 
 ment, and expended during that time, and so scattered that it was not 
 available as a reserve for the banks, or in a situation to be re-loaned to the 
 Government. The Government and banks suspended specie payments on 
 the last of December, 1861. No more gold could be loaned because it was 
 not to be had, except in small and wholly inadequate amounts. State 
 bank bills could be obtained, but the banks having suspended specie pay- 
 ments this currency was depreciated, and was only local in character 
 and credit. 
 
 In this great emergency, with this large army to be supported and the 
 navy to be maintained, and which were organized under the unlimited 
 war powers expressly granted in the Constitution, there arose an over- 
 whelming necessity for resorting to the incidental and implied powers, 
 and especially to that provision in the Constitution which empowers Con- 
 gress ' to make all laws which shall be necessary and proper for carrying 
 into execution the foreign powers and all other powers vested by this 
 Constitution in the Government of the United States, or any department 
 or oflScer thereof.' In the imminent peril in which we were then placed 
 by a gigantic rebellion, Congress decided that the legal tender act was 
 a measure necessary and proper to carry into eSect those powers expressly 
 granted in the Constitution, to maintain the army and support the navy. 
 Secretary Chase relied at this time mainly upon the passage of the national 
 currency act to furnish the means, but it appeared to me that it would be 
 wholly inadequate, and besides it could not be made available quick 
 enough. I therefore Introduced the legal tender bill early in January, 
 1862, immediately after the suspension of specie payments. In this great 
 crisis I advocated the bill as a war measure, a measure of temporary 
 relief to the Treasury, and on the ground that it was an imperative neces- 
 
35 
 
 Bity to preserve the life of tb^ nation. I conceded that it was a forced 
 loan, and could only be justified on grounds of necessity. 
 
 As a war measure passed during war, continuing during the war, and as 
 ,long as the exigency lasted, I believe it was necessary and proper to sue- 
 eessfuUy carry on the war, and was therefore constitutional. I am equally 
 clear, that as a peace measure it is unconstitutional. No one would now 
 think of passing a legal tender act making the promises of the Govern- 
 ment, (a mere form of credit,) a legal tender in payment of 'all debts, 
 public and private.' Such a law, passed while the Government is on a 
 peace footing, could not be sustained for one moment. 
 
 I think now that it is unfortunate that we did not have incorporated 
 into the original legal tender act, at the time of its passage, a provision 
 that the legal tender clause should cease to be operative in one year after 
 the close of the war. In that case all parties would have shaped their 
 business accordingly, and the law would have served its purpose as a war 
 measure, and would not have been continued (as I think unnecessarily,) 
 so long after the close of the war. 
 
 I see that the constitutionality of the law has finally come up for decision 
 before the Supreme Court of the United States, at Washington. If the 
 Court had been called upon to decide the question during the war, or at its 
 close, they would most likely ^have decided that the law was valid, inas- 
 much as Congress had decided that it was a necessary and proper means 
 to he used in crushing the rebellion ; but the law has been continued in 
 force so long after the close of the war without any real necessity for it, 
 that I should not be much surprised if the Court should now declare' it 
 uuconsti tutional. 
 
 Three great measures were adopted by the Government, which, in my 
 judgment, were necessary to crush the rebellion and maintain the national 
 unity, viz. : 
 
 1. The legal tender act, by which the credit of the Government was 
 brought into immediate action in the most available form. 
 
 2. Emancipation, by which 4,000,000 slaves became intensely interested 
 in the Union cause. 
 
 3. The draft, by which the army was speedily re-inforced at the turning 
 point of the rebellion. 
 
 These three measures, backed by the people, and enforced by the army 
 and navy, finally gave us a national triumph. 
 
 If Congress will not act promptly in devising some plan for bringing 
 the legal tender greenback currency on a par with gold, rather than con- 
 tinue the demoralization incident to a postponement of specie payments, 
 it will perhaps be as well for the country in a long run, if the Court, on 
 due deliberation, should decide the legal tender clause to be unconstitu- 
 tional. This would involve serious consequences for a while, and business 
 arrangements would be materially affected, but we would very soon 
 accommodate ourselves to the situation, and we would then emerge from 
 the evils of an irredeemable cvirrency, and all business operations would 
 be established on a firm and enduring basis. 
 
 This letter is much longer than I intended when I sat down to write, 
 • and I trust you will pardon me for writing so much. 
 I remain, yours truly, 
 
 E. G. SPAULDING. 
 
S6 
 
 PRESIDENT Lincoln's veto. 
 
 FresidenVs Message in favor of a National Currency, but vetoing irredeemable 
 bank notes in the District of Oolunibia, June 23, 1862. 
 
 To the Senate of the United States: 
 
 The bill which has passed the House of Representatives and the Senate, 
 entitled, 'An act to repeal that part of an act of Congress which prohibits 
 the circulation of bank notes of a less denpminatipn than five dollars in the 
 District of Columbia,' has received my attentive Consideration, and I now 
 return it to the Senate, in which it originated, with the following objec- 
 tions : 
 
 1. The bill proposes to repeal the existing legislation prohibiting the 
 circulation of bank notes of a less denomination than five dollars within 
 the District of Columbia, without permitting the issuing of such bills by 
 banks not now legally authorized to issue them. In my judgment it will 
 be found impracticable, in the present condition of the currency, to make 
 such a discrimination. The banks have generally suspended specie pay- 
 ments, and a legal sanction given to the circulation of the irredeemable 
 notes of one class of them will almost certainly be so extended in practical 
 operation as to include those of all classes, whether authorized or unau- 
 thorized. If this view be correct, the currency of the District, should this 
 act become a law, will certainly and greatly deteriorate, to the serious 
 injury of honest trade and honest labor. 
 , 2. This bill seems to contemplate no end which cannot be otherwise 
 more certainly and beneficially attained. During the existing war, it is 
 peculiarly the duty of the national Government to secure to the people a 
 sound circulating medium. This duty has been, under existing circum- 
 stances, satisfactorily performed, in part at least, by authorizing the issue 
 of United States notes receivable for all Government dues except customs, 
 and made a legal tender for all debts, public and private, except interest 
 on the public debt. The object of the bill submitted to me, namely, that 
 of providing a small note currency during the present suspension, can be 
 fully accomplished by authorizing the issue, as part of any new emission 
 of United States notes, made necessary by the circumstances of the coun- 
 try, of notes of a similar character, but of less denomination than five 
 dollars. Such an issue would answer all the beneficial purposes of the bill ; 
 would save a considerable amount to the Treasury in interest; would 
 greatly facilitate payments to soldiers and other creditors of small sums, 
 and would furnish to the people a currency as safe as their own Gov- 
 ernment. 
 
 Entertaining these objections to the bill, I feel myself constrained to 
 withhold from it my approval, and return it for the further consideration 
 and action of Congress. 
 
 ' ABEAHAM LINCOLN. 
 
SPEECH OF HON. E. G. SPAULDING, OF NEW YORK, 
 
 DELIVEBED IN THE HOUSE OF KEPRESENTATIA'ES, 
 
 Friday, May 3d, 1862. 
 
 The House having under consideration the bills to confiscate the prop- 
 erty and free from servitiide the' slaves of rebels, Mr. Spaiilding said : ■ 
 
 Mn Speaker — lit seems to be right and proper, while we are taxing 
 our own loyal people to pay the. enormous expenses of this war, that we 
 should endeavor to make the ring-leaders of the rebellion, who have 
 fomented and brought on this terrible state of things, pay as large a por- 
 tion of these expenses as is possible. To this end it is fit and proper that 
 Congress should exert all the power it possesses in confiscating the prop- 
 
 ■ erty of rebels, and having it sold under an order of the court, and the 
 proceeds thereof, paid into the Treasury of the United States ; and also 
 that such rebels should be deprived of the labor and services of their 
 slaves, from which they derive their chief support. These propositions 
 are now pending in this House, and we shall be called to vote upon them 
 on Monday next. These are important measures, and I desire to say a 
 few word^ before giving my vote. After the able arguments that have 
 been made in the Senate and House by those who have been especially 
 charged with the subject of confiscating the property of rebels and the 
 emancipation of their slaves, I do not deem it necessary for me to make 
 any extended remarks. 
 
 Sir, the time has come when we must meet the actual condition of 
 things, and dispose of these and other momentous questions presented for 
 our consideration in a practical way, and with a firm determination to 
 suppress this rebellion and establish law and order in every part of the 
 United States. Success, regardless of the cost, is the all-important thing 
 to be attained. This rebellion must be crushed out, and all the means 
 which God has given us must, sooner or later, be brought into requisition 
 to accomplish that result. The soonerwe earnestly put forth every effort, 
 and apply all the means at our command, the sooner will the rebellion be 
 suppressed,' and the less of life and treasure will be expended. 
 
 "What is the actual condition of things ? All the horrors of war are 
 up^ii "us. War on a gigantic scale— savage, unrelenting war is waged 
 against us by the rebels. Kot only do they kill our brave sons and 
 bWthers'oh the field of battle, but they murder them stealthily, stab 
 a'rid'scMp them; v^heii "^^oiinded, and disfigure and mangle them after they 
 aTe dead. 'Thd rebels in' arms against lis are enemies de f<tcl6, possessed of 
 all the bitte'rhesi^ ahd detertnitfation of the most tihfelentihg foreign ene- 
 mies. We are obliged to accept this condition of things. ' It has been 
 •fdiced'iiljxai lis bjr'theii' own acts.' The life of the nation is attacked, and 
 
 ' ii'ihost d«e*aanfea 6fii9rt made t6 (overthrow the Gorerntaent of'ifte 
 
38 
 
 United States in all of the confederate States. They are our enemies. I 
 am disposed, while they are so in rebellion, to treat them as enemies, and 
 to give them only the rights of war, and apply to them all the disabilities 
 and penalties of war. 
 
 As alien enemies, throwing off all allegiance to the Government, tramp- 
 ling the Constitution and laws of the United States under their feet, how 
 can they claim any protection from us? As enemies 'de facto, they can 
 claim no rights except the rights of war. Any gentleman on this floor 
 holding up the Constitution as a shield to protect these rebels it seems to 
 me has not duly considered the subject. Is it possible that men who 
 utterly repudiate the Constitution, confederate together, declare war, 
 issue letters of marque and reprisal, and are in open war against us, can 
 claim any rights under the Constitution ? The laws of war are against it. 
 Common sense and common justice would revolt at any such claim, even 
 if the public law was not so emphatically against it. 
 
 If we were to proceed and indict the traitors in arms against the Gov- 
 ernment for treason, (as we have an undoubted right to do,) under the 
 provisions of the Constitution, then they might, in such case, claim to 
 have their criminality decided by the court, under the strict rules of the 
 common law and the Constitution and statute laws of the United States. 
 In such a case, the argument of the gentleman from Massachusetts [Mr. 
 Thomas,] might have some application. But when the traitors are 
 engaged in actual war, then you apply to them the laws of war. Having 
 themselves repudiated the Constitution, and having expelled the United 
 States courts from all the rebel States, so that you cannot indict and try 
 them under the ordinary fprms of judicial proceedings, they cannot com- 
 plain if you apply to them the laws which are clearly applicable to the 
 position which they have voluntarily, but most criminally, chosen for 
 themselves. Having declared war against the United States, they must 
 submit to all the rules of civilized warfare, and if their property is confis- 
 cated and their slaves emancipated, they have no right to complain. 
 
 What is the war power conferred on the President and Congress? By 
 the Constitution, the President is made 'Commander-in-Chief of the 
 army and navy of the United States, and of the militia of the several States 
 when called into the actual service of the United States.' The Constitu- 
 tion confers on Congress the power, first, ' to raise and support armies ;' 
 second, ' to provide and maintain a navy ;' third, ' to make rules for the 
 government of the land and naval forces;' fourth, 'to provide for calling 
 forth the militia to execute the laws of the Union, suppress insurrections, 
 and repel invasions ;' fifth, ' to grant letters of marque and reprisal ;' sixth, 
 'to make rules concerning captures on land and water;' seventh, 'to 
 declare war;' eighth, 'to make all laws which shall be necessary and 
 proper for carrying into execution the foregoing powers.' In pursuance 
 of these war powers conferred on Congress by tlie Constitution, laws have 
 been passed to carry them into execution. The public laws of nations 
 declare the rights and penalties of war. More than one hundred articles 
 of war have been adopted by Congress for the government of our army. 
 At the extra session in July last. Congress passed various laws which 
 were then deemed 'necessary' to crush out the rebellion. Congress 
 passed those laws, and the President executes them, in accordance with 
 the rights of war. 
 
 Among the rights of war is the power to confiscate the enemy's property 
 and liberate their slaves. One of the express powers conferred on Con- 
 gress by the Constitution, is to call out the miUtia 'to suppress insun-eo- 
 
39 
 
 tions,' which means that you have unlimited power to effectually suppress 
 the present or any other insurrection. All the means necessary may be 
 employed to suppress it. N'othing within the range of civilized warfare 
 is withheld from you in this crisis. Congress may, in the language of the 
 Constitution, pass ' aU laws which may be necessary and proper ' to sup- 
 press the 'insurrection.' If the laws now on the statute-booli are not 
 sufficient, it is our duty to pass other and more stringent laws, confer 
 more power on the President, give him ample power to make our success 
 complete and certain. Let the rebellion be terminated in the shortest 
 time, and with the least possible sacrifice of life and treasure. The Con- 
 tinuance of the war is extremely hard and exhausting to our volunteer 
 soldiers, and the enormous expenses will impose heavy burdens upon the 
 people. Every consideration of patriotism and duty requires us to put 
 into active exercise at once all the means within our reach to bring the 
 war to a speedy and successful termination. 
 
 What are the rights of war, and what are the ordinary means which 
 may be brought against these rebels to wealcen their power and crush out 
 the rebellion ? As enemies de facto it is conceded you may blockade their 
 ports, preventing aU exports and all imports or supplies from abroad ; you 
 may cut off all internal supplies by depriving them of the use of rail- 
 roads, canals, lakes, rivers, and aU other means of transportation ; you 
 may cut off all communication by mail, telegraph, express, or otherwise ; 
 you may capture their vessels, their supply trains, sink their ships, destroy 
 their military stores, and meet them face to face in battle, and kill, cap- 
 ture and disperse their hostile forces. All these ordinary means have 
 been tried during the last year, and still the ring-leaders who fomented 
 this rebellion are more desperate than ever. "War, gigantic, imrelenting 
 war, still goes on. The rebels are more determinedly our enemies than 
 ever before, and a call is made by the President for more troops to fight 
 them. In this state of things what is to be done ? Are there no other 
 means that can be used to strengthen ourselves and weaken the power of 
 the rebels, and thereby insure their defeat? This is the great question 
 we are now considering. All the authorities sustain the doctrine that 
 you may, under the war power, confiscate the property of enemies, and 
 may liberate their slaves. 
 
 On the power of liberating slaves, John Quincy Adams lays down the 
 doctrine that. In time of war, civU or foreign, ' not only the President of 
 the United States, but the commander of an army, has the power to order 
 the universal emancipation of the slaves.' It is evident, however, that he 
 regarded it as a power subject to the action of Congress. With a call to 
 suppress insurrection, he says, ' comes fuU and plenary power to the Sen- 
 ate and House over the whole subject. It is a war power.' 
 
 The extreme measures of confiscating the private property of rebels, 
 and the liberation of their slaves, have not yet been tried to any consider- 
 able extent during the war. Is it a war measure necessary to success at 
 this time ? If it is necessary, will Congress and the President have the 
 courage and the firmness to exercise this power boldly? Will this Gov- 
 ernment strike these rebels where it wiU do them the most harm ? Will 
 you take from them their property and liberate their slaves ? WiU you 
 deprive them of the niost effective means of carrying on the war? Take 
 away their individual property, and deprive them of the labor and ser- 
 vices of their slaves, and you strike a blow at the heart of the rebellion. 
 Ton would then strike directly at the root of the evil. Give a death-blow 
 to slavery, and you would soon be able to terminate the war. 
 
,40 
 
 We have already taken some positive steps in advance on the slavery 
 qilestioh during the piresent seBsion; ' ^Id.'^ery has been abolished in the 
 District Of Columbia. The capital of the natioii is forever freed from the 
 taiiit pf involtuitary servitude.' "Wd have ^passed a'iieW article' of war, 
 Which prohibits commanders' of divisions' from r'etnriiirig slaves that vol- 
 tmtaiily come ■within their lines. ' We have extended the Ordinance Of 
 1787> prohibiting slavery in all the I'erritories^of the United States. And 
 we have passed a resolution offering peouhiary kid to States that shall 
 eiiter'upolj a gradual ieniancipation bf the slaves within their limits. 
 ' These ena:cttnentS are in accordance with public sentiment and the pro- 
 gressive spirit of the age. Shall we advance stiU further in the work of 
 emancipation ? This depehds somewhat upon the necessity of such" a 
 ' measure and the probable duration of the war. How long is the war to 
 continue? No man here is wise enough to determine how long it will 
 ■"Continue, nor how much blood and treasure will be expended in its pros- 
 ecution. The Bichmond Uhqidref (otS.cial Organ of the confederate 
 administration) uses the foUowiig language, evidently by authority : 
 
 ' But ■vre are gratified to sa; that the time has come when, for the future at least, we all shall 
 ^)e agreed. All volnntary falling back haa ended, and the fighting has commenced. What the 
 enemy gains henceforth he gains hy the hayonet. "What we can win &om him we ■will have. 
 We will hreak his colnmns, and pm'sne him into his own conntry, if God shall prosper onr 
 arms. Strike I strike often, strike hard, strike at every opportunity— is henceforth the mie. 
 Vigilance, activity, enterprise, daring, are, we trast, to be its interpreter.' 
 
 The longer the war continues, the more desperate will it become, and 
 the more certain will it be that slavery is doomed. The advice of the 
 Richmond -EVigmrer to the rebels, to "strike! strike often, strike hard, 
 strike at every opportunity," shows the desperate character of their cause. 
 Are we to be struck often, and struck hard at every opportunity, -with- 
 out giving hard blows in return ? I trust not. War means to strike often 
 and strike hard on both sides. "An eye for an eye, and a tooth for a 
 tooth." War teaches us to use all the means within our power to 
 strengthen ourselves and to weaken our enemy. Let us weaken him in 
 every possible way within the rules of civilized warfare. We should 
 strike him personally, strip him of his property, and strike the shackles 
 from every slave that by his labor and services gives him support. These 
 are the rights of war, and I am prepared to see them fully enforced. 
 
 We have been forced by rebels into this unnatural and unnecessary war. 
 We have already expended over six hundred millions of dollars in its pros- 
 ecution ; besides, what is of far greater consequence, many thousands of 
 our brave soldiers have been slain on the field of battle, and have died by 
 disease brought on by the perils and hardships of the campaign. Is all 
 this blood and treasure to be expended without accomplishing anything 
 beneficial to the nation, to civilization, and the rights of man? I trust 
 not. We now want and must have a final settlement of this whole diffi- 
 culty. Slavery was the cause of this gigantic and wicked rebellion. 
 
 , Slavery should receive its doom, thereby removing the cause of future 
 difficulty. Rebels have fomented and brought on the war, and their 
 property should pay a large share of the expenses Incurred; These ques- 
 
 ' tions must now be met. They cannot be postponed. The laws of Ood 
 and man require us to Vote onthe Bide of justice arid hu'manity. ' I shall, 
 under the circumstances, vote to confiscate the property Of lerading tebelSj 
 and to liberate tbcdir slaves. " ' ' ■■ " ■ ■ ' ■'' " ■ —' ■' - 
 
APPENDIX TO SECOND EDITION. 
 
 WAR LEGAL-TENDER VINDICATED. 
 
 Spahlding's Exchakge, Buffalo, April 20, 1870. 
 Mr. Henry Brooks Adams, 
 
 Dear Sib, — I have just finisliecl reading your article in the April number 
 of the North American Seview, in which you review somewhat at length the 
 history of the Legal-Tender Act recently prepared by. me, criticising the 
 measure very freely and the course pursued by those who took a prominent 
 part in its passage through Congress. The measure has always been open to 
 public sciutiny, and I have no complaint to make of any fair criticism 
 which you or any other gentleman see fit to make. It was passed in a great 
 emergency as a "war measure," and not with a view to have it continued 
 Indefinitely as a permanent policy of the Government in time of peace. As a 
 war measure it proved a success, and has therefore vindicated itself. 
 
 Seeing, however, that you criticise individual action, I desire to correct 
 one mistake which you have fallen into, and when corrected it will leave your 
 criticism without much force and certainly less pointed in regard to my- 
 self. In your article you assert that I claim to have carried the measure 
 "over the administration and through Congress," and this assertion is quot- 
 ed and repeated by you several times in the cnui'se of your article ; whereas 
 the words quoted are not taken from any remarks of mine, but are contained 
 in the speech of Hon. Theodore M. Pomeroy, one of my colleagues from 
 New York, delivered in the House of Representatives, February 19,1863, 
 while the amendments of the Senate were under consideration. On looking 
 at page 133 of the history of the measure, you will find Mr. Pomeroy's 
 remarks, in which he asserts that I originated this measure and carried it tri- 
 umphantly "over the administration and through the Congress," but no- 
 where can you find any such words of mine. On the contrary, I only gave a 
 narrative of the facts in chronological order, and on page 6 of the book you 
 will find that I expressly state that '' I do not claim any particular merit or 
 demerit for what I did in preparing and aiding to secure the passage of the bill. 
 I was placed in a position where, if I performed my duty, I must act, and 
 act with vigor and promptitude. The perilous condition of the country did 
 not admit of hesitancy or delay. I endeavored, in the peculiar and responsi- 
 ble position in which I was placed, to do what I conceived to be my duty, 
 and that is all that I claim to have done. My associates performed their 
 duty with equal fidelity and usefulness." These were the words I used 
 instead of the words which you quoted from Mr. Pomeroy's speech and attri- 
 bute to me. In giving the history of the measure it was my aim to state facts, 
 leaving it for others to decide upon the merits and demerits of those who aided 
 
42 
 
 in the passage of the act, as well as those who opposed it, without any- 
 unkind or harsh expressions on my part, and without attributing tlie action 
 of the parties of either side of the question to stupidity or ignorance, which 
 seems to be the drift of your article, assuming on your part, superior Itnow- 
 ledge and wisdom. 
 
 1 am glad to notice among the disparaging epithets you use against true 
 men like Thadeus Stevens, John k. Bingham, John Sherman, Henry Wil- 
 son, and other zealous patriots in the union cause, that you speak kindly of 
 my late friend, Wra. Pitt Fessenden, who as chairman of the Finance Commit- 
 tee, reported it to the Senate, and iu his opening speech upon the great im- 
 portance of the measure said, "it needed long, careful and vigorous discus- 
 sion. It has had.it in the other branch of Congress. I have read that dis- 
 cussion from beginning to end;" and, notwithstanding you think the debate 
 was weak and full 'of absurdities, Mr. Fessenden further says: "It has been 
 able and clear on both sides of the question." He voted to strike out the 
 Legal Tender clause in the bill, and failing in that, he, on the final passage 
 of the bill, voted for it, including that clause. 
 
 I am pleased, also, that in your article you speak so favorably of the 
 "superior discernment" of the late Judge CoUamer, for moving to strike out 
 the legal tender clause on the ground that it was unconstitutional. 
 
 In his speech on that occasion he said in substance, " That the oath he had 
 taken to support the constitution was recorded in heaven as well as on earth, 
 and that even if it was amecesmiy he could not vote for the bill." Prqston 
 King took the same ground, and yet both of these gentlemen in less than a 
 year voted for |100,000,000 legal tender notes in addition to the |300,000,000 
 which had been previously issued. They were true men; and when the 
 exigency arose for paying three or four months back pay of the soldiers who 
 were periling their, lives in the field in a gigantic struggle with the rebel 
 armies during the cold month of January, 1863, both these senators recorded 
 their votes tor the additional issue of |100, 000,000 to enable the Secretary to 
 redeem the promises of the government to the union army, so that the men 
 could send money home to their half starved families, while they were fight- 
 ing rebellion in front. (See history of legal tender, page 183.) Mr. Fessen- 
 den, Judge Collamer and Preston King, three patriots now dead, thus 
 recorded their votes, holding their constitutional scruples la abeyance. 
 
 The vote on this additional issue of greenbacks stood as follows : 
 
 Yeas — Messrs. Anthony, Arnold, Browning, Chandler, Clark, CoUamer, 
 Davis, Dixon, Doolittle, Fessenden, Foot, Foster, Hale, Harding, Harlan, 
 Harris, Henderson, Howard, Howe, King, Lane, (of Indiana;) Lane, (of Kan- 
 sas,) Latham, McDougall, Morrill, Nesmith, Rice, Sherman, Sumner, Ten 
 Eyck, Turnbull, Wade, Wilkinson, Willey, Wilmot, Wilson, (of Mass.,) Wil- 
 son, (of Missouri,) and Wright — 38 in the afl3rmative. 
 
 Nays — Messrs. Powell and Salisbury. — 3 in the negative. 
 
 Approved January 17, 1863. 
 
 When Mr. Lincoln signed the bill to authorize this issue, he expressed his 
 reluctance thus : 
 
43 
 
 "While giving this approval, liowever, I tliiak it my duty to express my 
 sincere regret that it has been found necessary to authorize so large an addi- 
 tional issue of United States notes, when this circulation and that of the sus- 
 pended banks together, have become so redundant as to increase prices 
 beyond real values, thereby augmenting the cost of living, to the injury of 
 •» labor and the cost of supplies, to the injury of the whole country.'' 
 
 This patriotic record on earth, in a desperate struggle for liberty and union 
 will, I trust, on the day of final account stand justified'in the sight of God, as 
 it is now by all true men, and that "a tear from the recording angel in 
 heaven's chancery" will blot out all their other conflicting records. In a 
 crisis presented like the dark hour of Januarj', 1863, I shall ever honor all 
 those noble men of both Houses of Congress for the votes thus given in favor 
 of paying the soldiers and their starving families. This record has passed 
 into history, and will ever remain an enduring memorial of their fidelity to 
 the national cause. 
 
 You claim in your flippant article, that the legal tender act was not 
 necessary, even as a war measure, and that it was passed under a "fraudu- 
 lent" misrepresentation of the facts. In the view thus taken by you, I 
 think you are mistaken. lam gratified, however, to notice you say "it is 
 but just to add that Mr. Spaulding did strongly and invariably insist upon 
 the difference between legal tender notes which were fundable, and the latter 
 issue which were not so." I regard this as a vital part of the measure, and 
 still think that the right of funding into 6 per cent, bonds ought to never 
 have been abrogated. It was necessary to prevent redundancy, and conse- 
 quently to prevent depreciation of the notes. 
 
 I have no desire to multiply words on this subject at this time. My main 
 object in- this letter is to correct your erroneous statement in regard to myself, 
 and at the same time speak kindly of my associates who sustained the union 
 cause in its hour of extreme peril. Notwithstanding your individual criti- 
 cism of those who spoke in favor of the legal tender even to the construction 
 and rhetoric of some of the speeches, it is probable they will not deem it 
 necessary, as I do not, to make any defense. Deeds, not words, are their 
 best defense. 
 
 If you find that you are in error in your statements in regard to myself I 
 would like to have you make the correction, and advise me. 
 Very respectfully, 
 
 Your obedient servant, 
 
 E. G. SPAULDING. 
 
 HISTORY OF OUR WAR FINANCES. 
 Letter from the Host. E. G. Spadldistg. 
 
 Buffalo, May 16, 1870. 
 To tlie Editor of Hie CincirmaU Gazette: 
 
 I have just finished reading your articles in the Gazette of the 12th and 13lh 
 
 lust., on the "first material mistake" made by the Secretary of the Treasury, 
 
 in the first six months of the war. You show very clearly and forcibly the 
 
44 
 
 antagonism of the sub-treasury to modern commercial transactions, and 
 the utter impossibility of carrying on a war upon a specie basis, wbile it is in 
 operation, discarding, as it does, the bank check and the system of settling 
 hirge transactions by offset through the Clearing Houses now in operation 
 in all the great centres of commerce, and which forced the banks to prema- 
 turely suspend specie payments the last of December, 1861. 
 
 I agree with you that the time has come for gathering up into convenient 
 form, the facts in respect to the flnancial management during the war, in 
 order to improve the lessons drawn from the past nine years of experience. 
 
 Another material mistake in the management of the finances followed the 
 first, but it was not in the adoption of the legal tender act, nor in the issue 
 of fundable greenbacks, but in the unnecessary large overissue of •arafundable 
 greenbacks and five and six per cent, interest bearing treasury notes. 
 
 The whole scope and object of the first legal tender act was to quickly 
 create a national currency then imperatively necessary for disbursement to 
 the army and navy (because there was then no national currency in existence 
 that could be had), and at the same time jDrovide for funding it, as soon as it 
 became excessive, into 6 per cent, gold bonds in order to prevent any great 
 inflation of currency or prices; and I am free to say that I never advocated 
 the issue of any greenbacks that were not so fundable. Not one dollar of 
 greenbacks ought to have been issued beyond the amount necessary to float 
 the six-per cent, five-twenty bonds. The funding in these bonds was a prac- 
 tical redemption of them, and there was no great excess while they were so 
 redeemed. It was nut a redemption equal to being redeemed in gold, but its 
 redemption in six per cent, gold bonds was a good practical redemption, the 
 best in that great crisis the Government could offer, and it formed a pretty 
 good standard of value on which to rest all the internal transactions of the 
 business during the war; and certainly no one could be very materially injured 
 by being compelled to receive greenbacks in payment of debts, so long as they 
 could be immediately returned to the Government in exchange for gold 
 bonds. Gold became demonetized, and the standard of value fixed by that 
 act was greenback currency convertible at the will of the holder into six per 
 cent, gold bonds. No large amount of funding took place until May, 1863, 
 because there was no excess of greenbacks. At that time the greenbacks 
 had filled up the channels of circulation,^ became somewhat redundant, and 
 funding, which had been tardy, now became more active. This returning of 
 greenbacks to the Treasury for bonds, furnished the means for carrying on 
 the war, and the further issue of greenbacks became unnecessary. Jay Cooke, 
 during the nine months following April, 1863, successfully funded the 
 balance of the first $500,000,000 5-20 bonds, which proved conclusively that It 
 was not necessary to inflate the purrency another dollar, either by the issue of 
 greenbacks, interest bearing treasury notes, or any other form of inflating 
 paper, in order to provide sufficient means for carrying on the war. The 
 greenbacks were printed and paid out for government disbursements, and 
 when funded were returned to the Treasury ready to be reissued and again 
 funded, and so on from week to week and month to month. The act as at 
 first adopted was self regulating. When there was an excess of greenbacks, 
 
45 
 
 not bciring interest, tliey would naturally flow into tbe six per ce;.t. bonds 
 in order to save interest. It was a great blunder to aljrogate this healthy 
 redemption of the greenbacks. It unsettled the vital principle of the act, 
 and destroyed the standard of value fixed by it. Serious mischief followed. 
 A very large increase of greenbacks and interest-bearing Treasury notes were 
 issued by the Secretary. Inflation of prices, wild speculation, uncertainly 
 and demoralization was the consequence throughout the remainder of the 
 war, and which still continues, so that even up to the present time there is no 
 standard of value for the greenback, and no provision made for redeeming it 
 either in bonds or gold, and specie payments seem to be indefinitely post- 
 poned. The present Secretary prints nnw plates and reissues this currency 
 without any fixed standard of value, thereby perpetuating the uncertainty 
 which attaches to all legitimate business. If the right of funding the green- 
 backs in accordance with the original leg»l tender act had not been abrogated, 
 the standard of value would never have been so reduced, the demoralization 
 would have been very much less, people would have shaped their business in 
 accordance with the law, and very likely specie payments would have bten 
 restored after the war, and certainly, at no time would the value of green- 
 backs have been below the price of the six per cent 5-20 bonds. 
 
 The right given to the holders of greenbacks to fund into six per cent, 
 bonds was by the original legal tender act in the nature of a contract ; its 
 abrogation was unjust to the holders of the notes, and I always regarded it 
 as the second and most material mistake in the management of the finances 
 during the war. The facts necessary to a full understanding of this question 
 you will find stated in the history of the legal tender act, from page 167 to 
 201, and I hope you will ellucidate the subject as clearly as you have the first 
 material mistake above mentioned. 
 
 1. The first material mistake on the part of the Secretary of the Treasury 
 was in compelling the associated banks of New Yorli, Boston and Philadel- 
 phia to pay the gold loan of $150,000,000 Into the sub-treasury, instead of 
 checking directly on the banks for it, thereby forcing the banks into a pre- 
 mature suspension of specie payments in December, 1861. 
 
 3. The second great mistake, and the one that will be the longest felt, was 
 
 in abrogating the provision in the first legal tender act, which gave the right 
 
 to the holders of the greenbacks to fund them at any time into six per cent. 
 
 5-20 gold bonds. It will take a long time yet to recover fi'om the evil effects 
 
 of this mistake. 
 
 I am, very truly j'ours, 
 
 E. a 8PAULUING. 
 
 {Fi'om the American Bond Deleclor.) 
 
 THE OLD UNITED STATES BANK AND Nzi.TIONAL BANKS. 
 
 By the Hon. E. G. Spaulding, of Buffalo, N. Y. 
 
 "Among the other beneficial results left us by the Great Rebellion, was 1he 
 system of national currency and banking— a very important govornmc'nla! 
 and commercial agent, as well as bond of national union ; but which, in co;i- 
 
46 
 
 sequence'of a conflict of opinion among tlie ablest statesmen of the country, 
 was not attainable in time of peace. 
 
 "Tlie first Uuiterl States Banli was established in 1791, under the influence 
 of that peerless statesman, Alexander Hamilton. It was approved by "Wash- 
 ington, performed important service to the country, and continued in exist- 
 ence until 1811, the year previous to the last war with Great Britain, when 
 its charter expired, and consequently great embarrassments were experienced 
 in prosecuting that war, because the government was left without any 
 adequate national currency to carry it on. 
 
 "The second United States Bank was chartered in 1816, and continued with 
 like beneficial results as the first until 1836, when its charter expired. Both 
 these banks were fiscal agents of the Government. They received and dis- 
 bursed all the public money entrusted to them withovit expense, and without 
 the loss to the Government of a single dollar. These banks were likewise 
 of great advantage to the business community. Some of the ablest efforts of 
 Webster and Clay were in favor of its continuance, and notwithstanding the 
 decision of the Supreme Court, headed by Chief Justice Marshall, in favor 
 of its constitutionality. President Jackson, by reason of his oflBcial position, 
 efl'ectuallj' resisted a re-charter, removed the Government deposits to certain 
 State Banks, which proved very disastrous, heavy losses were sustained by 
 the Government, overtrading ensued, and there was a general suspension of 
 specie payments in 1837. 
 
 "The friends of a Uniled States Bank aguin passed a bill through Congress 
 for another bank in 1841, whirh was defeated by the veto of John T3 ler. 
 The sub-treasury system was finally adopted in 1864, which isolated the Gov- 
 ernment from all banks and paper money, leaving it without any monied 
 institution, like the bank of England, or other national agency to resort to for 
 aid in case of war. Consequently at the breaking out of the Rebellion there 
 w:i3 no system of currency adequate to the requirements of a great war. 
 
 " The sub-treasury and state banks were tried, and very soon found to be 
 wholly inadequate. Secretary Chase recommended the present national 
 banking system, which he urged upon Congress in his fi)-st and second annual 
 reports, as well as in special communications. The first draft of this bank 
 bill was prepared by Mr. Spaulding, chainuan of the Sub-Committee of Ways 
 and Means, having this subject in charge, in December, 1861, but it did not 
 pass and become a law until February 25, 1863, and although some national 
 bank currency was issued in 1*^64, the system did not get fully into operation 
 until 1865. It was of considerable benefit in supporting the public credit 
 towards the close of the war, and all the banks over the country rendered 
 essential service in negotiating the loans, but the Government issue of the 
 legal tender notes with, and without interest, was the vital measure and main 
 support of the Army and Navy, during the war for the union. 
 
 " The experience of the last eighty years under our present form of govern- 
 ment, has clearly shown that the power to coin money from the precious 
 metals, and regulate its value, and the power to issue bank notes should be 
 exercised by the same authority and be equally under governmental super- 
 vision. The power to coin money is, by the constitution, vested in the 
 
47 
 
 United States G-overnment, and forbidden to the separate states. In regulat- 
 ing the value of coined money, it is essential that the government should also 
 regulate and control the paper money issued by banks, because a convertible 
 paper money is only an extension of coined money, and when both kinds of 
 money circulate in the same jurisdiction, they constitute the measure of value 
 for all business operations. It is plain, therefore, that both kinds of money 
 should be under the same authority and control in order to regulate the 
 value of both. State bank issues are local in character and credit, and possess 
 none of the attributes of a national currency. 
 
 "The function of regulating the currency of a great nation possessed of 
 large internal as well as foreign commerce, and subject to the calamities of 
 war, can only be successfully performed by the general Government. The 
 exteution of^ railroads, water ways, and internal commerce all over the 
 country without regard to state boundaries, and the vast requirements of the 
 late war, have more clearly demonstrated than ever before, the necessity of 
 
 a convertible paper currency, co-extensive with the boundaries of the United 
 States. 
 
 " The important resulting benefits growing out of the great rebellion are 
 many and various, but none of them will be of more lasting benefit to the 
 government and people, than the inauguration of the System of National 
 Currency and Banking, now in full operation, and which, with proper 
 amendments, will be adequate to the wants of the nation in time of peace as 
 well as in the time of war. Banking is a business requiring accumulated 
 capital and loanable funds. The issue of circulating notes is another import- 
 ant feature, the leading idea of which is the establishment of one sound 
 uniform currency of like similitude and value, co-extensive with the bound- 
 aries of the United States, based upon national credit combined with private 
 accumulated capital, and under the general control and supervision of the 
 Treasury Department at Washington. 
 
 "By the National Currency act the Government guarantees the currency 
 and limits the amount to $300,000,000, (since 1874 there is no limit); requires 
 it to be secured by gold bearing bonds deposited with the Treasurer of the 
 United States with a margin of ten per cent.; requires each bank to redeem 
 its own notes in lawful money on demand, and to keep an adequate reserve 
 for that purpose; makes them a legal tender for all taxes and other dues to 
 the government except customs, and for all salaries and other dues owing by 
 the government within the United States, except the principal and interest of 
 the funded debt. It also makes them receivable by each National Bank for 
 all ordinary debts due them, and each bank designated as a depository, is also 
 required to receive it on deposit from all public officers. These provisions in 
 the law operate to nationalize and de centralize this currency ; the United 
 States Government tax of ten percent, on all State Bank bills effectually kills 
 the issues of all State institutions, and consequently the national currency 
 with all these advantages has a wide circulation all over the United States, 
 and .connected as it is with the greenback legal tender notes, they together 
 are the measure of value in carrying on the mterwa? commerce of the country, 
 notwithstanding their depreciation. Their present depreciation is a fault 
 
48 
 
 which can only be remedied by a general resumption of specie payments, in 
 which the government must take the lead by placing the greenback currency 
 on a par with gold. 
 
 "Two things remain to be done in order to make it the best banking system 
 ever devised : 
 
 "1. Redemption of this currency on demand in gold and silver; at the same 
 time divest the law of every feature of monopoly by making it free and open 
 to all. ' 
 
 " 2. Organize one or more banks at commercial centres, with large capitals 
 but limited circulation, under the supervision and control of the Treasury 
 Department, to receive and disburse the public money, without expense, 
 soiriewhat like the Bank of England, and a repeal of the Sub-Treasury act, 
 which in its operation is antagonistic to legitimate business, does more harm 
 to the finances than it does good, and which may be discontinued without 
 detriment to the public service, and thereby save the expense of keeping it 
 in operation. 
 
 " This would make the Kational Banking System adequate to the wants of 
 the nation in peace and war, and combine a large share of the capital of the 
 country in support of the government, and thereby become a strong bond of 
 national unicm." 
 
 HON. HUGH MCCULLOCH, 
 
 Late Secretary of the Treasury. 
 
 PsmcB Gborgb's Co. , Md , ) 
 October 23, 1869. f 
 
 My Deak Sir: — I have been absent from home for some weeks past, on a 
 visit to Minnesota. This wjU explain to you how it has happened that the 
 receipt of your favor of the 15th ult. has remained so long unacknowledged. 
 I have read the "Financial History of the War," which you were kind enough 
 to send me, and am greatly pleased with it. Such a work was much needed, 
 and it has been prepared by you with care and ability. No one had more to 
 do with the financial legislation of the United States in the trying years of 
 1861 and 1863 than yourself, and no one was more familiar with the views of 
 those members of Congress who approved of the issue of the legal tender 
 notes. Had you and the other distmguished gentlemen who co-operated 
 with you in the preparation of " financial measures for the support of the 
 Government " in the years referred to, supposed that the notes, the issue of 
 which you so vigorously and successfully advocated, would be used as a cir- 
 culating medium after the exigency which, in you judgment, justified their 
 issue liad ceased to exist, I hazard nothing in saying that other measures 
 would have been resorted to to raise the means for the prosecution of the 
 war. Nothing shows how far the country has departed from cardinal prin- 
 ciples in -finance and morals more clearly than the fact that the measure which 
 was advocated by its friends solely as a war measure under the pressure of a 
 great necessity, is now sustained by Congress and the people as a financial 
 policy. You know as well, If not better, than other men, under what circum- 
 stances and for what purposes the legal tender notes were issued, and it is in 
 
49 
 
 the liisftiest degree creditable to you that as you had the nerve to advocate their 
 issue when the measure was unpopular, you also have now the nerve to advise 
 that they be retired, in opposition to a decided and overwhelming public sen- 
 timent in favor of their being continued in circulation as a part of the financial 
 policy of the Government. Very truly yours, 
 
 HUGH Mcculloch. 
 
 Hon. E. G. Spaulding, Buflalo, N. Y. 
 
 HON. CHAELBS FRANCIS ADAMS, 
 
 Late Minister to England, — On Legal Tender. 
 
 QuiNCY, October 13, 1869. 
 E. G. Spaulding, Buffalo, JST. T. 
 
 My Dear Sir: — It is now some weeks since I received your note and the 
 book which you were so kind as to send me. In the midst of interruptions of 
 one kind and another, I have been able to make only slow progress in read- 
 ing it. 
 
 I think I can very fully appreciate the difficulties in which you were placed 
 in regard to the course to be taken, and I have no disposition to censure any 
 one who acted on a firm and honest conviction that he was doing'his best to 
 save the country. I have no doubt that you did so, and I do not pretend to 
 aflirm that you may not have been right, in your judgment, of the nature of 
 the crisis. 
 
 The whole article in favor of Legal Tender seems to me to resolve itself 
 into the single word necessity. The same argument that justified the Russians 
 for setting fire to their own homes in Moscow to drive out Napoleon. If it 
 be notoriously the tyrant's plea it may not the less sometimes be a justifica- 
 tion in the cause of liberty and right. 
 
 Unfortunately for myself I am slow to be convinced that the cause was so 
 desperate as absolutely to need a desperate remedy. The great objection 
 which I have to the enactment of Legal Tender, is that the country through it 
 has for the first time taught a lesson of fraud. Much noise has been made 
 about paying the debt of the country in greenbacks. I do not see wherein it is 
 more than an application of the same rule — to wit: that a government can by 
 mere force of its strength, mate a creditor take less than the amount honestly 
 due to him. 
 
 The worst of it is that the moral sense of a people is permanently blunted 
 by the resort to such an expedient. I do not see when or how we shall 
 return to sound ideas; for all the great army of debtors created since the war, 
 by allowing seventy cents to count for a dollar, are not likely to be very soon 
 ready to pay a dollar and thirty cents or its equivalent in property in satis- 
 faction of the creditors. Charles XII. of Sweden, in his day of "necessity," 
 issued a set of copper coins on which was stamped the word "dollar," and 
 paid his army just as if it really was what it professed to be. Was not this a 
 cheat ? Yet where is the difference except in the degree between the two 
 proceedings ? The Government will not even consent to take this paper, 
 which it forces upon its creditors, in payment for a part of its own claims on 
 
50 
 
 debtors, and yet it pretends to claim character for equal and honest dealing 
 in money transactions. I do not hesitate to say that if a private hanker or 
 merchant were to think of introducing such an expedient, supposing it to be 
 possible, he would instantly lose all his reputation of an honorable man. 
 
 What is distinctly perceptible in the transactions between man and man, 
 does not change its nature when applied to great bodies, mei-ely because they 
 are too strong to be resisted. So long as a legal tender note remains in circu- 
 lation at less than its professed value, It is a solemn lie. The public, to be 
 sure, accommodates itself to the fraud by raising the price of its commodi- 
 ties and selling for a dollar what is really worth seventy cents. But every- 
 body cannot do this. Myriads of those with fixed incomes based upon the 
 old standard fall a sacrifice, in their privations suffered every day of the year. 
 Who is there then can make the loss good to them ? 
 
 If I saw any symptom of return to sound morals within any reasonable 
 
 time I shoukj qualify my language. But the experience of the past teaches us 
 
 that this road once taken terminates only in utter disregard of the whole 
 
 obligation. If that be the end in our case, it would have been cheaper to have 
 
 tried to go on without it. 
 
 Yours truly, etc., 
 
 C. F. ADAMS. 
 
 HON. J. T. HBADLEY, THE HISTORIAN. 
 
 Nbwbubgh, Sept. 15, 1869. 
 
 Dbae, Sir: — Your kind favor came to my address while I was buried in 
 the Adirondack Mountains, whither I had gone on account of my son's 
 health, else I should have acknowledged it sooner. I have read your book 
 with much interest. It is just what we needed to fill a hiatus in the history 
 of the civil war, and you were the proper person to write it. I watched your 
 course in Congress on the financial question with much interest. Your views 
 always seemed to me more practical than those of most others. You seemed 
 to act as if it was not the time to discuss theories, but do the best we could 
 under the circumstances. In short, as we were situated, the only course was 
 a choice between two evils. 
 
 I value your work highly as a book of reference, which I sadly needed. 
 With many thanks for it, I remain. Very sincerely yours, 
 
 J. T. HEADLEY. 
 (From the New York Times). 
 
 SPECIE PAYMENTS. 
 
 WHY THE BANKS SUSPENDED IN 1861 — EFFECT ON THE SUB-TBEASUKY LAW — 
 LETTER FROM HON. B. G. SPAULDING. 
 
 The following important letter on the suspension of specie payments in 
 1861, and what led to it, was recently written by Hon. E. G. Spaulding, Presi- 
 dent of the Association of National Banks, and author of the History of the 
 Legal Tender act, to J. S. Gibbons, Esq., of this city, who recently produced 
 a work on the New York banks : 
 
61 
 
 Buffalo, Maroli 39, 1870. 
 /. 8. Gibbons, Esq., 
 
 Dbab Sib: — Yours of the 34th inst. has been received, and in reply to your 
 inquiry, I would inform you that the sixth section of the loan act of August 
 5, 1861, partially suspending the independent treasury law of 1846, was at 
 first drafted by me, but was considerably modified and limited in its opera- 
 tion by amendments suggested by Secretary Chase before it passed the two 
 Houses, and became a law. I was in favor of making the suspension of the 
 sub-treasury act general in regard to all loans, so that the Treasurer might 
 draw checks directly on the banks for the amount loaned, in order that the 
 usual bank expedients might be resorted to in liquidating such checks without 
 disturbing the gold reserves held by_ the banks, then in a remarkably strong 
 and healthy condition. 
 
 This subject was discussed in the Committee of Ways and Means at that 
 time. I expressed the opinion that the loan of $250,000,000, which was 
 authorized at the extra session in July and August, 1861, could not be made, 
 and the gold actually paid over into the sub-treasury, without so weakening 
 the banks that they would be obliged to suspend specie payments. William 
 Appleton, then a member of the committee, and a practical banker, from 
 Boston, concurred with me fully in that opinion. Mr. Corning, of Albany, 
 another member of the committee, also a banker and practical business man, 
 predicted that if the gold reserves of the banks were drawn upon for such large 
 loans, there would be a general suspension of specie payments in less than six 
 months, and his prediction was verified. There were, however, conflicting 
 opinions in the Committee on the subject, and Secretary Chase seemed to be 
 very desirous of carrying on the war by the actual disbursement of gold and 
 silver, or treasury notes convertible into gold on demand, and without sus- 
 pending the sub-treasury law. Finally, Mr. Appleton and myself were ap- 
 pointed a sub-committee to prepare a section suspending the suls-treasury law 
 in respect to all moneys obtained on loans, and to confer with Mr. Fessenden, 
 Chairman of the Finance Committee in the Senate, as to the probability of 
 its passage in that body. Upon a full and free consultation with J^r. Fessen- 
 den, he consented to support a section of that kind, and thought it would 
 pass the Senate. Mr. Appleton was in feeble health, and the duty of pre- 
 paring the section devolved upon me. I prepared a section in which he 
 concurred, and which, in general terms, suspended the sub-treasury law in 
 regard to all moneys realized upon loans, allowing it to be deposited in solvent 
 specie-paying banks (state banks, of course, because there were then no na- 
 tional banks), and authorizing the Treasurer to check, from time to time, 
 directly on the banks for the amount. From a careful reading of the books 
 you have published, I am impressed with the belief that you know the clear- 
 ing-house, locomotive and telegraph are among the most useful of modern 
 inventions, and that the sub-treasury law is better adapted to the sixteenth 
 than the nineteenth century. Tou are familiar with the New Tork Clearing- 
 house, and know that seventy-five millions of dollars of checks and drafts 
 may be daily liquidated and fully cancelled by paying in gold a resulting 
 balance of not exceeding from two millions to three millions of dollars, and 
 
62 
 
 that the whole operation qoulcl be concluded in three or four hours, and that 
 a similar balance at the London Clearing-house would be paid mainly by the 
 other banks and bankers giving their checks on the Bank of England, and 
 without using any gold at all. This, you are aware, economizes time as 
 well as the volume of currency necessary to do this large business, and that 
 it could as easily be applied to government operations as to private business. 
 In this way I believe that the great bulk of the supplies and material of war 
 for the army and navy could be paid for by the usual bank expedients, and 
 by offset through the Clearing-house of New York and other cities, without 
 materially disturbing the gold reserves of the banks, except in the payment 
 of balances. 
 
 The sub-treasury law at that time seemed to be popular with the Secretary 
 of the Treasury, and with some members of the Committee of Ways and 
 Means, as well as the Finance Committee of the Senate; and the section 
 finally passed in the modified form in which it now appears in the law of 
 the 5th of August, 1861, and is as follows: 
 
 § 6. And be it further enacted. That the provisions of an act entitled "An 
 act to provide for the better organization of the Treasury, and for the collec- 
 tion, safe-keeping, transfer and disbursements of the public revenue," passed 
 August 6, 1846, be and the same are hereby suspended, so far as to allow the 
 Secretary of the Treasury to deposit any of the moneys obtained on any of 
 the loans now authorized by law to the credit of the Treasurer of the United 
 States, in such solvent specie-paying banks as he may select, and the said 
 moneys so deposited may be withdrawn from such deposit for deposit with 
 the regular authorized depositaries or for the payment of public dues, or paid 
 in redemption of the notes avithorized to be issued under this act, or the act 
 to which this is supplementary, payable on demand as may seem expedient 
 to or be directed by the Secretary of the Treasury. 
 
 No question can be raised as to the good intentions of Secretary Chase in 
 administering the loan laws, but it is obvious now that he did not at that time 
 fully comprehend the labor-saving, money-saving and general utility which 
 results in the settlement of checks and drafts through the banks, and the ad- 
 mirable system of offset through the clearing-house. The wonderful facility 
 then in operation in New York, Boston and Philadelphia, for transferring 
 and liquidating debts without disturbing the gold reserves held by the baulks, 
 was wholly ignored by the Secretary. This operated almost as unfavorably 
 as if the Secretaiy of War had rejected the locomotive in transporting the 
 army. The rejection of the bank check and clearing-Tiouse made it necessary 
 to increase the volume of currency in various forms in about the same pro- 
 portion as the rejection of the locomotive would have made it necessary to 
 increase the number of horses to supply and transport the army. 
 
 The banks in the three cities above named most patriotically agreed to loan 
 to the Government about $150,000,000, which could have been easily passed 
 to the credit of the Treasurer on their books. The Secretary had the 
 power, under the above section, to have directed the Treasurer of the 
 United States to check directly upon the banks for this lirge sum, and the 
 
53 
 
 largest amount of the cKecks so drawn woiild have been settled by offset 
 through the clearing-house without requiring but a small balance to be paid 
 in gold. Instead of doing so, the Secretary required the money to be counted 
 and paid over into the sub-treasury on all these loans. This very soon dis- 
 turbed the gold reserves of the banks, and it becfimo painfully certain to the 
 managers of the banks in New York and other cities, as early as December, 
 1861, that the policy which the Secretary adhered to must inevitably lead to a 
 general suspension of specie payments. 
 
 A. meeting of bank officers was held at the American Exchange Bank in 
 the city of New York, December 3S, 1861. One of the bank presidents, in a 
 well-considered speech delivered on that occasion, criticising the course of 
 Secretary Chase in regard to these loans, said that 
 
 "He (Secretary Chase) was urged to draw directly on the banks. Coin 
 being the liasis of ci'edits, it was only in that way the increased financial opera- 
 tions of the Government could be conducted, for it was impossible to main- 
 tain the superstructure of credit when the basis is withdrawn, for in destroying 
 the basis the superstructure is also swept away. He refused to dTaw directly 
 upon the banks for the proceeds of the loan taken by each. We are informed 
 that the act of Congress was passed expressly for the purpose of authorizing 
 him to do so, but he gave it a different interpretation, which may be the cor- 
 rect one, although I do not think so." 
 
 .The failure of the Secretary to recognize the suspension of the sub-treasury 
 law, and his rejection of the bank-check and clearing-house, was the first 
 material mistake made in the management of the finances during the war. 
 The Secretary was intent upon having the gold for disbursement, without 
 fully comprehending the effect this larg^^drain would have upon the banks 
 and the general finances of the country. 
 
 The banks immediately thereafter suspended specie payments, and there is 
 but one opinion among practical bankers, thai such suspension was hastened 
 by the injudicious action of the Secretary of the Treasury. 
 
 The attempt of the Secretary to carry on Jhe finances during the war upon 
 a specie basis, without the aid of the bank-check and clearing-house, having 
 broken down, I immediately introduced in the House the first legal tender 
 act, which, after an able and full discussion in both Houses of Congress, 
 finally became a law on the twenty-fifth of February, 1863. I sent you yes- 
 terday a book recently prepared by me, containing a history of this most im- 
 portant measure. 
 This is my answer to your inquiry: 
 
 I desire to add that I have refiected much during the last nine years upon 
 the sub-treasury law and its effect upon Government loans, as well as upon 
 the general business of the people. It is my deliberate conclusion that a great 
 war can never be successfully carried on without a suspension of specie pay. 
 ments while the sub-treasury law is in operation. I believe further that the 
 financial affairs of the Government, as well as the general business of the 
 whole people, could be much better conducted without the sub-treasury law 
 and with much less expense, 
 
 A system of finances for this great country which will be adequate to the 
 wants of the Government and people, in peace and war, has yet to be organ- 
 ized. Very truly yours, E. G. 8PA.ULDING. 
 
54 
 
 ItEPLY OF J. S. GIBBONS, ESQ. 
 
 Nuw York, April 6, 1470. 
 Hon. E. 0- Spanlding, 
 
 Dear Sib: — I liave to thank you most cordially f6r your note of March 
 28th and the book therein ordered, and for your interesting letter at length 
 of the 39th in answer to my enquiiy concerning the legal tender' act. With 
 all your views I fully concur. If Mr. Chase had ever heen a banker or a 
 merchant, he might have joined theory and practice and had the aid of both, 
 but as it was he only had the former; and that was a theory of his own brain, 
 which through his inordinate self-conceit has cost the country, in all proba- 
 bility, a thousand millions of debt, beyond what would have been contracted 
 on lower prices. I do not believe a more ignorant man, of practical business 
 affairs can be found in public life. If be had only been a general reader of 
 history, to say nothing of political economy, he would not have blundered so 
 dreadfully, nor at last, have failed so utterly as a Financial Minister. There 
 were people to praise him at the outset, but they were ignorant like himself, 
 of all fiscal history ; and even they have now generally joined in with the 
 popular condemnation of his management. 
 
 I find the data of the Independent Treasury history so mixed and volumin- 
 ous, and greatly in very small type, that I am much discouraged in my attempt 
 to reduce it to an intelligent narrative. But I shall persevere. It is a patent 
 absurdity that the hoarding of the most valuable part of our currency, is a 
 strength to the currency ! What you say is perfectly true — that an abstrac- 
 tion of coin from use, necessitates a corresponding enlargement of the other 
 media of exchange. 
 
 I am heretical enough not to believe in the National Bank Scheme. It is 
 an insidious plan of currency that is never practically redeemed, and never 
 will be. But we have learned from it, and tested the advantages of a 
 "national circulation," and that is a good deal. It will serve its day and go 
 by the board. 
 
 Then, we may adopt the scientific idea of a National Bank, of which the 
 Bank of England is the most conspicuous example. Our finances must be 
 Federalized, as our states have been, and we should then soon govern the 
 exchanges of the world. The present system is a national bank with all its 
 capacity of mischief, and little of its good. Again thanking you for your 
 letters and the book. 
 
 Very truly, 
 
 J. S. GIBBONS. 
 
 The following letter, addressed to Mr. Spaulding by J. E. Williams, Esq., 
 President of the Metropolitan Bank, New York, is one that ought to com- 
 mand attention. Mr. Williams has no superior among the bankers of the 
 country in financial ability and experience. His views, with respect to the 
 financial situation of affairs, coinciding with" those made public by Mr. 
 Spaulding, are expressed with great clearness and force : 
 
55 
 
 New York, April 6, 1864 
 
 Metropolitan Bank, ) 
 
 Hon. E. O. Spaulding, 
 
 My Dear Sir ; — Many thanks for your letter, whicli I have read in the 
 Buffalo Express. It is quite time, I think, that the friends of the adminis- 
 tration, who care more for that, and for our general government, than for 
 the crude notions of finance prevailing at Washington, should speak out, and 
 fearlessly criticise the measures they disapprove. 
 
 The five per cent, loan is a failure — at least so regarded here, by every 
 business man I have heard speak of it — and ought to be withdrawn at once 
 from the market. That which has been taken should be exchanged for six 
 per cent, bonds at the option of the owners, and a loan bearing six per cent, 
 interest, payable in gold, offered to the public without delay. 
 
 I understand that between seventy and eighty millions of demands on the 
 Treasury bave accumulated in Washington, and now await payment. This 
 ought not to be. The money market is easy — the loan at six per cent, would 
 now readily be taken, and this favorable state of financial affairs should be 
 seized on to secure money for the Government. 
 
 And why not pay six instead of five per cent, interest ? 
 
 Do not the people jDay the taxes from which this interest is paid ? Is not 
 money in this country worth fully six per cent ? Can the Government 
 reasonably expect to carry on an expensive war and hire money by the hun- 
 dreds of millions at less than six per cent.? Is it fair to tax the people to 
 their utmost capacity to pay and then expect them to furnish funds at less 
 than the market price? Is not such a course an unjust tax on the good sense 
 and patriotism of 4;he people of this country ? 
 
 This constant increase in the volume of the paper currency is having a veiy 
 discouraging effect on all the prudent, thinking people. Prices have felt the 
 last addition of one or two hundred millions much more than the previous 
 four hundred millions ; for the reason, that the first issue was needed for the 
 business of the country, while it would seem, from the effect produced on the 
 market values, that the last issues were not required by any business demand 
 whatever, but are merely a make-shift of Mr. Chase to meet present demands 
 on the Treasury. Yours truly, 
 
 J. E. WILLIAMS. 
 
 JOinSr p. ELTON, ESQ. 
 
 President of the Waterbury Bank, Connecticut, an experienced financier and 
 
 business man. 
 
 Watbeburt, April 1, 1864. 
 Bon. E. G. Spaulding, 
 
 DbarSir:— I have just received the Buffalo Morning Express of the 20th 
 March, in which is your admirable letter to Morris Ketchum, Esq., of New 
 York, on the fina,nces of the country. I had previously seen extracts from it 
 in the Tribune, and its remarks upon it. On reading the letter in full I dis- 
 cover the same standard views ever expressed by you, and to which I have 
 
56 
 
 always given my hearty assent. A.s I liave before stated to you, it has ever 
 appeared to me perfectly plain and simple, this matter of our flnnnces. 
 When it was fully settled that we could not carry on this war on a gold basis, 
 and that some form of paper money must be substituted, while the war was 
 continued, it has seemed to me that there was but one proper course for 
 the Government to pursue, and that to issue legal tender notes and pay every 
 claim against the Government as fast as presented, and to create (or issue) a 
 government bond bearing six percent, interest in gold, in which these legal 
 tenders could at all times, at the pleasure of the holder, be converted. In my 
 opinion there should not have been but one kind of bonds issued, and that a 
 20-year bond, at least until one thf)usand million had been issued ; after that 
 point had been reached, I would not have particularly objected to the issue 
 of 5-20 6 per cent, bonds, redeemable after five years, but as you state in your 
 letter to Mr. Ketchum, there should never have been but one standard of 
 interest for government bonds. 
 
 (Temporary loans such as 2-year 5 per cents, or any other temporary lojn, 
 would have no effect on the general principle). 6 per cent, is a fair standard 
 for the Government and the people, and to that all standard values should 
 bear a proper relation. 
 
 In my opinion the country could never be flooded with a depreciated cur 
 rency so long as the door was open to convert surplus money into 6 per cent, 
 gold bearing bonds. I have a simple metaphor which I sometimes apply 
 to this matter. I compare it to a flowing stream, on which a dam is built, 
 and when the water rises to its height it easily and gracefully flows over and 
 nothing more is seen of it. Now when the country has more floating paper 
 money than it wanted, it will surely flow into a place of r6st, {or bonds). It 
 will be impossible to keep afloat an amount great enough to materially inflate 
 prices. 
 
 Since it has been given out that we were to have a bond bearing 5 per cent, 
 put upon the market, I have discovered more uneasiness as to the future of 
 our financial afiairs than ever before since the war commenced. It is so 
 apparent that it is to be forced upon the people against their will, that it pro- 
 duces distrust. If it could be done without diluting or watering the cur- 
 rency, it might be a debatable policy. But as it cannot it does not even admit 
 of that. What Mr. Chase can mean by his present policy I cannot divine. If 
 this loan has to be negotiated abroad it might not effect us here, but no great 
 amount of it can be, nor do I deem it advisable it should be. 
 
 We can absorb all the Government needs at home, and without the least 
 inconvenience, if they will keep within easy reach of the people a 6 per cent, 
 gold bearing bond, and I should prefer that not one dollar should go abroad. 
 
 Let heavy taxation follow a free issue of legal tender, and a wide door 
 open for conversion into 6 per cent, gold bearing bonds, the Government may 
 without fear ride out the financial storm in perfect composure. 
 Truly your friend,. 
 
 JOHN P. ELTON. 
 
57 
 
 HON. II. H. VAN DYCK. 
 
 Albany, April 4, 1864. 
 E. 0. SpauV 
 
 Dear Sir; — Accept my tlianks for the several papers forwarded. Your 
 k'tier ''hits the nail on the head" beyond a doubt, and 1 agree fully in your 
 expressed views, as to the evil consequences of Mr. Chase's action in unsettl- 
 ing the rate of interest on conversions The whole country will see ere 
 many months, that your opinion, and congressional action, was most sound 
 throughout. The Committee of Ways and Means, now entirely under the con- 
 trol of Mr. Hooper, on financial subjects. ***** * 
 
 It looks as if the 10-20 loan was to be a failure. Had Chase kept right on 
 with the 6's he would have absorbed all the spare capital, (or rather credit,) of 
 the country, and been in a sleek condition, instead of coming out "spring 
 poor," as a barnyard horse. Yours truly, 
 
 H. H. VAN DYCK. 
 
 HENEY F. VAIL. 
 
 National Bank of Commerce in New York. 
 
 February 24, 1869. 
 E. G. Spaulding, Esq., Buffalo, 
 
 Dear Sir: — I duly received your favor of 16th inst., with the advanced 
 sheets as stated, of your intended publication on the Legal Tender act, which 
 will, I think, prove a work of interest to financial men. 
 
 You are doubtless aware that the officers, and a majority if not all of the 
 Directors of the Bank of Commerce, did not coincide with the views of Mr. 
 Gallatin and associates, who visited Washington in January, 1863. We had 
 no hand in appointing them as delegates on behalf of the banks, but on tlie 
 contrary, Messrs. Chas. H. Russell and Deming Duer, directors of the bank, 
 and myself as its cashier, were in Washington early in January, 1862, as a 
 committee from the Bank of Commerce on the subject of the national finances, 
 when several gentlemen, delegates from certain banks in New York, Boston 
 and Philadelphia, appeared in Washington in opposition to the financial 
 measures then proposed and under consideration by Congress. 
 
 The Committee of the Bank of Commerce not concurring in the views of 
 these gentlemen, did not unite in the meeting called on Saturday, January 11, 
 1863, at the office of the Secretary of the Treasury, to confer with the Com- 
 mittee of Ways and Means and the Finance Committee of the Senate. M''. 
 Russell, (and I think one or two other directors of the bank then in Washing- 
 ton), did, however, by invtation of the Secretary of the Treasury, attend the 
 meeting, but totally dissenting from the propositions then made, took no 
 part in the proceedings of the gentlemen present. Mr. Russell was before the 
 Committee of Ways and Means, and frequently with the members of that 
 Committee and of the Senate Committee, who were considering the matter of 
 issuing legal tenders, and stated fully his own and the views of the Commit, 
 tee of the Bank of Commerce on that sul)ject, which were adverse to such 
 issues if other means could be realized by the Q-overnment, and to be adopted 
 only in the exigency of failure otherwise, as appears to have been stated to 
 
68 
 
 you by Mr. Russell's letter of January 29, and in the views he then expressed 
 I believe the president and all, or nearly all of the directors as well as the 
 committee, concurred. 
 
 By the way, Mr. Russell was a director, but not the Vice-President of the 
 Bank of Commerce — which please correct in your publication. 
 
 I was, as you state, in Washington while the bill was pending in the Senate, 
 and at the request of Mr. Secretary Chase, I appeared before the Senate 
 Finance Committee with him and fully explained to them the workings of 
 the bank settlements through the Clearing House, and the impossibility of 
 forcing a circulating medium of the demand notes issued by the Treasury, 
 unless they were made a legal tender, and in answer to the enquiries ex- 
 pressed my thorough conviction that the emergency had arisen requiring 
 the issue of legal tenders. 
 
 You are correct in your supposition regarding my instrumentality in pro- 
 curing the interest on bonds, <fcc., being made payable in coin. 
 
 I have shown your letter and the pages to Mr. Russell and to Mr. Kennedy, 
 and will show them to the other gentlemen named. 
 Tours very truly, 
 
 HENRY F. VA.IL. 
 
 LATE SAMUEL NELSON. 
 
 United States Supreme Court. 
 
 CooPBRSTOwir, August 14, 1869. 
 
 My Dear Sir: — I received this morning your History of the Legal Tender 
 act, and as far as I had time to look into it, found what I knew could not 
 be othei'wise, to be very accurate. 
 
 We shall dispose of this question, I presume, in due course of our coming 
 session of the court, which begins 1st of October. I have always regretted 
 that the greenbacks were made a Legal Tender, and I think the Chief Justice 
 now is of opinion that the omission would not have had much effect one way 
 or the other, in its operation upon the bills. Not at lenst as much as he 
 thought at the time the bill was passed. That the necessities of the govern- 
 ment and business interests of the country would hive given them all the 
 credit, important or material. 
 
 I am very much obliged to you for this authentic record of one of the most 
 important measures growing out of the war, and difficult to deal with since. 
 Very truly yours, 
 
 S. NELSON. 
 
 Hon. E. 0. SpAULDiNa. 
 
 latb judge geibr. 
 
 PlIILADBLAHIA, AugUSt 26, 1869. 
 
 Dear Sir : — On my return home I am pleased to find a copy of your history 
 of the "Legal Tender Paper Money." It is a valuable historical document, 
 and I am thankful for your kindness to rae — in remembering me in the distri- 
 bution of it, and concur with you fully in the views you take on the subject. 
 
59 
 
 Why ouv court lia? for two years postponed their consideration of the ques- 
 tion, is unknown to me, and I don't feel any responsibility for its postpone- 
 ment. Excuse my pencil. I write with difficulty. 
 
 Very respectfully and truly, yours &c. , 
 
 R. C. GRIER. 
 
 Hon. E. Gr. SPATTLDrNG. 
 
 HON. SAMUEL F. MILLEK, 
 
 United States Supreme Court. 
 
 Keokuk, August 17, 1869. 
 Hon. E. G. Spaulding, 
 
 Dbae Sir: — I received both your letter and the "Financial History of the 
 War," for which I am very much obliged to you. 
 
 I read the book with much interest, because it gives the first clear view, as 
 a whole, of the financial measures of the Government during the war, that I 
 have had; but mainly because it gives an accurate and full account of the 
 relation of the Chief Justice, while he was Secretary of the Treasury, to those 
 measures; and especially to the legal tender clause, about which there was 
 some uncertainty and much curiosity. 
 
 A careful examination of all that is to be found in your book on that 
 subject, leaves the impression on my mind that he had never had any doubt 
 as to the constitutionality of that measure, but doubted its policy or expedi- 
 ency. This doubt seems to have been entirely removed, and his conviction 
 of the necessity of that provision to enable him to carry on the department of 
 the government under his charge, made him at last an advocate of it. 
 
 If judicial propriety admitted of it, I could not give you any reliable opin- 
 ion of the probable action of the Supreme Court. Of course I know the 
 views of some of its members, but there are enough whose views I do not 
 know (some of them are propably undetermined in their own minds), to 
 make the matter as uncertain to me as to you. I have a very strong impres- 
 sion that the opinion of the majority of the court, if rendered while consti- 
 tuted as it now is, will be such as the Chief Justice shall think it ought to be, 
 when delivered. But with all my intimacy with him, and some knowledge 
 of his character and habits of thought, I have no idea what that will be. * * 
 I am, very truly, your friend, 
 
 SAMUEL F. MILLER. 
 
 JUDGE BKADLET, 
 
 United States Supreme Court. 
 
 Washington, April 19, 1870. 
 
 D ts AU Sir : — Hon. D. S. B ennett has handed me your book on the " Financial 
 
 History of the War." Accept my thanks for the same. It subserves a very 
 
 great convenience in bringing into a small and accessible compass matter that 
 
 would require days of search iu the Congressional Olobe and public journals 
 
 to find. Yours very truly, 
 
 JOS. P. BRADLEY. 
 Hon. E. G. Spauxdikg. 
 
60 
 
 judge noah davis. 
 
 114 Br^adwat, ) 
 
 New York, Nov. 13, 1869. )' 
 
 Eon. E. Q. Spauldiriff, 
 
 My Dear Sir: — If I havi- neglected to acknowle ige your kindness in send- 
 ing me a copy of your excellent book, it has been that I might write after a 
 careful perusal should enable me to speak understandingly of its value. I 
 have given it an attentive perusal, and while I thank you heartily for your 
 courtesy in sending it, I thank you still more cordially for your labor in col- 
 lecting and publishing it. To those who tal;e an interest in the sul)ject of 
 the currency, the book is invaluable. I am glad also to see that, while you 
 put forth no claims to personal credit, yet you have established by the force 
 of documentary evidence, in the most irrefragible form, your own just claims 
 to the merit of standing foremost amongst the statesmen who carried on their 
 shoulders the soldiers who won the victories over the rebellion. 
 
 Much is due to the army and to the heroes who led it; but nothing less is 
 due to the heroic statesmen whose sagacity and genius gave to the war "the 
 sinews, without which the army would have striven in vain." 
 I am truly respectfully yours, 
 
 NOAH DAVIS. ■ 
 
 judge f. j. fithian. 
 
 110 Broadway, } 
 New Yoek, Dec. 7, 1869, f 
 Son.H. o.r '- 
 
 Dear Sir: — I have received your kind note, together with your (too brief) 
 little volume on the " Financial History of the War." I have read it with 
 much interest. It is a valuable ccmtribution to the legislative history of the 
 country at a most important and critical period. The idea of issuing U. S. 
 treasury notes for currency, and making them legal tenders in payment of 
 debts, was in my opinion the result of wise and sagacious statesmanship 
 and a thorough knowledge of the eJiaracier and resources of the American 
 people. The latter was undoubtedly the keystone of the financial arch, and 
 without it the whole structure must have crumbled in pieces before the close 
 of the war. Here was a people who from their earliest history had been 
 taught to look upon a public debt as public calamity, scarcely surpassed 
 by any other. In times before they had been restive under a debt of a hun- 
 dred millions; and now the necessity was upon them of going, no doubt, not 
 only by the hundred, but by the tJiousand millions. And unless some scheme 
 could be devised whereby gold and silver could be dispensed with as a meas- 
 ure of value or a circulating medium for cancelling of indebtedness, and 
 -something else substituted in its place capable of being enlarged to a magni- 
 tude equal to any emergency, the finances must have failed. This substitute 
 the legal tender notes gave us. They it was that stimulated and encouraged 
 the business interests of the country, kept up prices, and afforded ample facilities 
 'for the prosecution of all the best industries consequent upon a state of war. 
 Yet it was a bold measure from which, as you well know, many of the wisest 
 
61 
 
 and best of your associiitts shrank. Secretary Ohiise never gave his adhesion 
 uiitil he was compelled by the clamor of hungry soldiers to devise some 
 way to get money. Especially was this the case with the leading men in the 
 Republican party of Democratic anfecedents^men whose political opinions 
 had Dfen formed in the school of Jackson, Van BUren, Wright and Benton. 
 To these men the support of a measure making government paper a legal 
 tender, seemed like giving the lie to the whole political , record. I remember 
 very well that while you were preparing the bill I had several conversations 
 with you on the subject. You feared for the fate of the measure in the 
 Senate. Believing the measure to be of pressing necessity, I desired to use 
 whatever influence I might possess (if any) in its favor, and accordingly I 
 sought an interview with the late Pi'estou King, senator from this state, nn 
 the subject. I found him, as I expected, opposed to the bill; but also (what 
 I did not expect) very earnestly and bitterly opposed to it. It seemed to him 
 utterly at war with all his pronounced opinions on financial subjects. And 
 although as pure and devoted a patriot as ever e.xisted, he seemed to be appar- 
 ently doubting whether the Union was worth saving by such money. He 
 would listen to no argument about it, and such as I ventured to try made no 
 impression. He declared he would not consent to it as long as any other con- 
 ceivable means remained untried, and if I recollect- right, he did oppose the 
 bill to the last. However, the measure was successful, and it is no more 
 than simple justice to say what I personally know to be true, that for its 
 origin, maturing and becoming a law, the country is indebted to you more 
 than any one man. Your persistent and unwearied labors, your complete 
 and thorough mastery of the subject, the respect and defference with which 
 you were regarded by your fellow members, securing to you at all times a 
 friendly and attentive hearing. All these it was that turned the scale in 
 favor of the bill. 
 
 I have never had any doubt as to the constitutionality of the bill. Ample 
 authority is found for it, not only in the grant of all necessary means to carry 
 into effect the express powers, but in three at least of the expressly enumer- 
 ated powers of Corlgress. I should be sorry to see any compromise decision 
 of the court, to the eifect that such a measure was constitutional in war and 
 not in peace. If the power is there for any purpose or time, then Congress 
 must be the exclusive judge as to the necessity or propriety of its excuse. 
 But this letter is extending beyond due limits. Permit me to say in conclu- 
 sion that I am of the opinion that your speech on the presentation of the bill 
 was one among the very ablest forensic efforts ever delivered in that house. 
 I thought so then, and now, on a careful re-perusal of it, after what was then 
 prophesy has become history, I am confirmed in that opinion. The great 
 events and measures of that Congress, in which you bore so prominent a part, 
 are sufficient of themselves to secure you a position in history which few of 
 your countrymen have the good fortune to attain. 
 
 Thanking you for your kind expressions towards me personally, and with 
 best regards to yourself and family, 
 
 I am, very truly your f i-iend, 
 
 F. J. FITHIAN. 
 
62 
 
 JUDGE HBNHY E. DA VIES. 
 
 New York, Sept. 17, 1839. 
 Mt Dear Sir: — I thank you for your courtesy in seuding me a copy of 
 your "Financial History" and your kiad remembrance of me. I liave only 
 thus far been able to read your opening speech, and whicli, in view of the 
 events which have transpired since its delivery, was wonderfully prophetic 
 and eminently sound and able. I think you have demonstrated beyond all 
 cavil that the only resource available to the Government at that time, to enable 
 it to support iis armies and maintain its navy, was the issue of treasury notes. 
 I think you have also shown what was always clear to my mind, that these 
 notes would have failed utterly to have accomplished the desired purpose if 
 they had not been made a legal tender. This brings us to the constitutional 
 power to declare what shall be a legal tender. It is the conceded attribute of 
 every government to declare what shall be legal tender — in other words, what 
 shall be the money. This power was exercised by the colonies and the states 
 prior to the adoption of the constitution of 1789. If the states could not de- 
 clare what they pleased as legal tenders, then what sense in the prohibition 
 upon them, that they should not make anything but gold and silver a legal 
 tender. So also the prohibition upon the states not to emit bills of credit. It 
 has never been but that Congress could do this, it follows logically that it 
 could also declare wh'it should be a legal tender. This view is amplified ia 
 my opinion in 37 New York, and very neatly and succinctly stated by Attor- 
 ney-General Bates, in his letter to you, which I first saw in your book. I 
 hive no doubt of the constitutional power of Congress to pass the legal tender 
 act, and I think the United States Supreme Court will so hold when the ques- 
 tion is presented to them. The expediency or necessity of such a law is quite 
 another question. I have only looked at it as a question of power, and your 
 speech and subsequent events have fully satisfied me of the necessity and 
 wisdom of your action. It saved our Union, and we must now see how we 
 can the most speedily get back to a specie basis. After I have looked through 
 your most interesting and valuable book, I will write you again, at the peril 
 of being too prolix. Judge Davis would like a copy, and is there any place 
 here where I could (-rocure two or three more. 
 Very cordially yours, 
 
 HENKY E. DAVIES. 
 
 PRESIDENT WOOLSEY, 
 
 Y'ale College. 
 
 New Haven, November 39, 1869. 
 Eon. E. G. Spawldinff, 
 
 Dear Sir:— I received your "History of the Legal Tender Paper Money 
 
 issued during the great Rebellion," in due course of mail, and beg yon to 
 
 accept my thanks for the gift. As a teacher of political economy I shall find 
 
 it particularly valuable, and although I have had no time to do more than 
 
 look at the arrangement of topics, I can see that it would have saved me a 
 
 good deal of labor if I had had it in my hands before. 
 
63 
 
 It would be an idle thing for me to make any observationa on tbe subject. 
 I do not see bow the Government could have stood under its burdens if it had 
 taken a course materially different from that which was taken. And in 
 regard to the return to specie payments, I do not see how a decision of the 
 Supreme Court against the constitutionality of the act in private bargains can 
 of itself bring about such a return. 
 
 Very respectfully yours, 
 
 THEOBORE WOOLSEY. 
 
 PKOF. PBRRT. 
 
 Williams Collbsb, August 27, 1869. 
 Hon. E. G. Spaulding, 
 
 My Dkab Sir: — I am very much obliged to you for a copy of your book. It 
 
 will be of essential service to me, and to all others who, like me, wish to learn 
 
 from an authentic source the exact financial lessons which our war is fitted 
 
 to teach. I have begun to read the book in course, am pleased with it as far 
 
 as I have read, but thought I would not delay acknowledging it tUl I had 
 
 finished. When I am through with it, I will perhaps communicate with you 
 
 again. I may be in Buffalo in the course of the autumn, and if so I shall do 
 
 mj^self the pleasure of calling on you. 
 
 With great respect, yours, 
 
 A. L. PERRY. 
 
 PROF. JAMES P. WHITE, M. D. 
 
 Buffalo, March 10, 1870. 
 Hon. E.G. Spaulding, 
 
 Dear Sir:— Accept my thanks for a copy of the "Financial History of the 
 War." The college term having closed, I availed myself of the first leisure 
 moments since its reception, and have perused it with care and interest. It 
 is a very valuable contribution to the history of the war. This little volume 
 furnishes a connected account of the financial difficulties encountered in sub- 
 duing the rebellion, and the manner in which they were overcome. Always 
 aware of the importance of the measures originated and carried to comple- 
 tion mainly by your unremitted exertions, I am more than ever convinced 
 that without the "Legal Tender" our armies could not have been 
 maintained in the field, and all our eflbrls to preserve the union by force must 
 have resulted in discomfiture. How helpless would have been our patriotic 
 President and resolute Lieut.-General and his brave soldiers, without the 
 necessaiy "sinews of war." History will, I am sure, place those services 
 which preserved the credit of the government during its peril in the same 
 exalted rank with the more brilliant achievements in the field which com. 
 nland our admiration and gratitude. 
 
 Again thanking you for the volume which you have been kind enough to 
 compile, and which was. certainly a great desideratum. 
 
 I remain ever truly, your obedient friend and servant, 
 
 JAMES P. WHITE. 
 
64 
 
 JOHN T. HBAllD, ESQ. 
 
 Boston, October 2, 1869. 
 
 Deak Srii: — Yourkind letter of the 18th ult., I had the pleasure to receive 
 in New York on the 31st. On that day also c ime to hand your valuable work, 
 the "History of the Legal Tender Act," for which please accept my thanks. 
 I have examined it with groat interest, and regard it as an authorative state- 
 ment of the financial legislation during the. war. Owing to your intimate 
 and prominent connection with that legislation, no one, it seems to me, was 
 better qualified to treat fully and justly the subject, as the book incontestably 
 proves. 
 
 The late gold speculation will have a good result if it quicken the 
 public mind to the importance of an early return to specie payments. Had 
 not Congress interfered with the policy of contraction of the late Secretary, 
 we sliould have by this time been well on our way to a gold standard. Had 
 the new administration kept its gold and not sold any of it, would not such 
 policy have reduced the premium ? Would not such a course have brought 
 us easily and naturally, (in the line of trade) even now, far on the road to 
 specie payments ? 
 
 With kind regards to Mrs. Spaulding and youi-self, 
 I am respectfully yours, 
 
 JOHN T. HEARD. 
 
 Hon. E. G. Spaulding, Buffalo. 
 
 C. h. VALLANDIGHAJI. 
 
 Dayton, Oliio, July 17, 1860. 
 Soit. E. G. Spaulding, Buffalo, N. T. , 
 
 Mt Dear Sir:— Accept my thanks for the copy kindly sent me, of your 
 "Financial History of the War." It is an important and valuable work for 
 the historian and the student, of the wonderful times lo which it relates — dis- 
 cussing, as it does, the problem of furnishing "the sinews" for the greatest 
 civil war of modern days. How much military glory think you, in any 
 war, would be acquired (m land or sea, by gentlemen of the army and navy 
 at the front, if the "ways and means" were not first invented by statesmen in 
 the rear ? Here, in part at least, cedant arma togae. 
 
 I still think it was neilher constitutional, necessary nor wise to declare the 
 
 notes a "legal tender." But of this I am content that courts and history shall 
 
 judge now. 
 
 Yours truly, etc., 
 
 C. L. VALLANDIGHAM. 
 
 GEO. H. PENDLETON, 
 
 CiNCrNNATi, Ohio, July 15, 1869. 
 Hon. E. O. Spaulding, Buffalo, 
 
 My Dear Sir; — I have the honor to aeknowledge the receipt of your letter 
 of the 12th insi, and of the volume entitled "Financial History of the War." 
 
65 
 
 For both I beg to return my tlinnks. I have not yet been able to read the vol- 
 ume, but I have no doubt it will fill a vacuum which every student of our late 
 history, and even many actors in it, has most sensibly felt. Your position 
 at the time gave you special facilities for knowing all which lay beneath the 
 surface of the pages of the Olohe or the newspapers. 
 
 Very truly and respectfully, 
 
 GEO. H. PENDLBTON. 
 
 HON. MK. CRAWFORD. 
 
 Columbus, Ga., Sept. 16, 1889. 
 
 My Dear Sir: — A.llovv me to thank you for the "Financial History of the 
 War," as well as for your kind letter accompanying the same, wbich I have 
 this day received. Pressing professional engigements will prevent me from 
 examining the book at present; but it is a most capital idea to have in such 
 C(mcise forni'the history of the financial legislation of Congress during the 
 war. Otherwise, volumes upon volumes, and report upon report, would have 
 to be searched to find w'lat you have here in 300 pages. 
 
 I sincerely hope, however, that "the sinews of war" may not be needed 
 
 again very soon, and that we may be permitted to repair the waste places in 
 
 our impoverished land. Hoping that we may at some time meet again and 
 
 renew our kind personal relations, I beg to ]'emain, 
 
 Very truly yours, 
 
 MARTIN J. CRAWFORD. 
 Hon. E. 6. Spaulding. 
 
 ( 
 
 PRESIDENT GRA.NT'3 VETO OF THE INFLATION BILL. 
 
 Executive Mansion, 
 Washington, April 22, 1874. 
 
 To the Senate of the United States : 
 
 Herewith I return Senate bill No. 617, entitled " An act to fix the amount 
 of United States notes and the circulation of national bank notes, and for 
 other purposes," without my approval. In doing so I must express my regret 
 at not being able to give my assent to the measure which has received the 
 sanction of a majority of the legislators chosen by the people to make laws for 
 their guidance, and I have studiously sought to find sufficient arguments to 
 justifiy such an assent, but unsuccessfully. Practically, it is a question 
 whether the measure under discussion would give an additional dodar to the 
 irredeemable paper currency of the country or not; and whether, by acquir- 
 ing three-fourths of the reserves to be retained by the banks, and prohibiting 
 interest to be received on the balance, it might not prove a contraction. But 
 the fact cannot be concealed that theoretically the bill increases the paper 
 circulation one hundred million of dollai's, less only the amount of the reserves 
 restrained from circulation by the provisions of the second section. 
 
 The measure has been supported on the theory that it would give an in- 
 creased circulation. It is a fair inference, therefore, that if in practice the 
 measure should fail to create the abundance of circulation expected, the 
 friends of the measure, particularly those out of Congress, would clamor for 
 
66 
 
 suoli inflation as would give the expected relief. The theory, in my belief, is 
 a departure from the true principles of finance, the national interest, national 
 obligation to creditors, congressional promises, party pledges on the part of 
 both political parties, and of the personal views and promises made by me in 
 e/ery annual message sent to Congress, and in each inaugural address. 
 
 In my annual message to Congress in December, 1869, the following pas- 
 sage appears : 
 
 " Among the evils growing out of the rebellion and not yet referred to, is that 
 of an irredeemable currency. It is an evil which I hope will receive your most 
 earnest attention. It is the duty, and one the highest duties of the govern- 
 ment, to secure to its citizens a medium of exchange of a fixed, unvarying 
 value. This implies a return to a specie basis, and no substitute for it can be 
 devised. It should be commenced now and reached at the earliest practicable 
 moment consistent with a fair regard to the interest of the debtor class. Im- 
 mediate resumption, if practiciible, would not be desirable. It would compel 
 the debier class to pay beyond their contracts the premium on gold at the 
 date of their purchase, and would bring bankruptcy and ruin to thousands. 
 The fluctuations, however, in the paper value of the measure of all values — 
 gold — is detrimental to the interest of trade. It makes the man of business 
 an involuntary gambler, for in all sales where future payment is to be made 
 both parties speculate as to what will be the value of the currency to be paid 
 and received. I earnestly recommend to you, then, such legislation as will 
 insure the gradual return to specie payments, and put an immediate stop to 
 the fluctuations in the value of the currency." 
 
 I still adhere to the views then expressed. A.s early as December 4, 1865, 
 the House of Representatives passed resolutions, by a vote of 144 yeas to 6 
 nays, concurring in the views of the Secretary of the Treasury in relation to 
 the necessity of contracting the currency with a view tp as early a resumption 
 of'specie payments as the business interests of the country will permit, and 
 pledging co-operative action to this end as speedily as possible. 
 
 The first act passed by the Forty-first Congress, on the eighteenth day of 
 March, 1869, was as follows: 
 
 " An act to strengthen tlie public credit of tM United States : 
 
 " Be it enacted, etc.. That in order to remove any doubt as to the purpose of 
 the government to discharge all its obligations to public creditors, and to set- 
 tle confiicting questions and interpretations of law, by virtue of )vhich such 
 obligations have been contracted, it is hereby provided and declared that the 
 faith of the United States is solemnly pledged to the payment in coin, or its 
 equivalent, of all obligations of the Dnited States, and of all interest-bearing 
 obligations, except in cases where the law authorizing the issue of any such 
 obligations has expressly provided that the same may be paid in lawful 
 money, or in other currency than gold or silver; but-none of said interest- 
 bearing obligations not already due shall be redeemed or paid before maturity, 
 unless at such times as the United States notes shall be convertible into coin 
 at the option of the holder, or unless at such time the- bonds of the United 
 States bearing a lower rate of interest than the bonds to be redeemed can be 
 sold at par in coin. The United States also solemnly pledges its faith to 
 make provision, at the earliest practicable period, for the redemption of United 
 States notes in coin. 
 
 This act still remains as a continuing pledge of the faith of the United 
 States to make provision, at the earliest practicable moment, for the redemp- 
 tion of United States in coin. The declaration contained in the act of June 
 20, 1864, created an obligation that the total amount of United States notes 
 issued or to be issued should never exceed four hundred millions of dollars. 
 The amount of actual circulation was actually reduced to three hundred and 
 
67 
 
 fifty-six millions of dollars, at which point Congress passed the act of Feb- 
 ruary 4, 1868, suspending the further reduction of the currency. Forty-four 
 millions have even been regarded as a reserve, to be used only in case of 
 an emergency such as has occurred on several occasions, and must occur when 
 from any cause the revenues suddenly fall below the expenditures, and such 
 reserve is necessary, because fractional currency amounting to flifty millions is 
 redeemable in legal tender on call. It may be said that such a return of 
 fractional currency is impossible, but let steps be taken for a return to a specie 
 basis and it will be found that silver wiU take the place of fractional cur- 
 rency as rapidly as it can be supplied. 
 
 When the premium on gold reaches a sufficiently low point, with the 
 amount of United States notes to be issued permanently within proper limits' 
 and the treasury is so strengthened as to be able to redeem them in coin on 
 demand, it will then be safe to inaugurate a system of free banking, with such 
 provisions as to make the compulsory redemption of the circulating notes of 
 banks in coin, or United States notes themselves redeemable and made equiv- 
 alent to coin, as a measure preparatory to free banking, or for placing the 
 government in a position to redeem its notes in coin at the earliest practica- 
 ble morLent. The revenues of the country should be increased so as to pay 
 the current expenses, provide for a sinking fund required by law, and also a 
 surplus to be retained in the treasury in gold. 
 
 I am not a believer in any artificial method of making paper money equal 
 to coin, when coin is not owned or held ready to redeem the promises to pay, 
 for paper money is nothing more than promises to pay, and is valuable ex- 
 actly' in proportion to the amount of coin it can be converted into. When 
 coin is not used as the circulating medium, or the currency of the country is 
 not covertible into it at par, it becomes an article of commerce as much as 
 any other produce. The surplus will seek a foreign market, as will any other 
 surplus. The balance of trade has nothing to do with the question. The duties 
 on imports being required in gold, and about enough to satisfy that demand 
 remains in the country. To increase this supply I see no way open but by 
 the government hoarding, through the means above given, and possibly by 
 requiring national banks to aid. 
 
 It is claimed, by the advocates of the measure herewith relumed, that there 
 is an unequal distribution of the banking capital of the country. I was dis- 
 posed to give great weight to this view of the question at first, but on reflec- 
 tion it will be remembered that there still remains $4,000,000 of authorized 
 bank-note circulation assigned the states having less than quota not yet taken. 
 In addition to this the states having less than their quota of bank circulation 
 have the option of $35,000,000 more to be taken from those states having 
 more than their proportion. When this is all taken up, or when specie pay- 
 ments are fully restored or are in rapid process of restoration, it will be time 
 to consider the question of more currency. 
 
 U. S. GRANT. 
 
63 
 
 HON. T. O. HOWE. 
 
 Geebn Bay, Sept. 13, 1869. 
 
 ]\Iy Deaii Sir: — I give you many thnnks for seneling me a copy of your 
 "Financial History of tlie War.'' But I give you more tlianlis for publisbing 
 the work itself. 
 
 Last winter I became painfully aware of the want of such a work. I at- 
 tempted to prepare a speech upon our financial condition. Upon looking 
 around I could find no account of the financial measures resorted to during 
 the war save in the statutes and the Globe. 
 
 Mining in those mountains was so tedious that my speech was not prepared 
 until all debate to which it was pertinent had been closed. 
 
 The book came to hand this morning. Of course I have only looked to 
 see its oonteuts, and have not read those conte'nts. That I shall do hereafter, 
 and I am sure I shall read not only with interest but with gratitude. 
 
 I remember the leading ideas argued in my speech upon the legal tender 
 act, to which you refer in terms of compliment. If I were to make the speech 
 under like circumstances, but with the light of all the experience we have 
 since had, I do not know wherein 1 should wish to change it. 
 
 I thought we should resort to a paper circulation because we could not 
 command coin — that the Government should make the paper because it could 
 make safer paper than the banks — that it should make the capitalist take 
 them because we made the soldier take them — that this circulation should be 
 in the form of promises to pay, because within the usual form, but not to pay 
 on demand because we know we could not pay on demand — that we never 
 should make a dollar of paper when we could borrow a dollar at a lair rate 
 of Interest — we should stand ready to take in exchange for notes that did 
 draw interest. The great mistake of our time, I think, was when we refused 
 to make our notes convertible into bonds. 
 
 Very truly yours, 
 
 T. 0. HOWE. 
 
 Hon. E. G. SPAULiinsTG. 
 
 HON. O. p. MORTON. 
 
 iNDiANAPOLrs, Aug. 28, 18C9. 
 Hon. jB. ff. Spaulding, 
 
 Deak Sm: — I received your letter containing your speech and accompanied 
 by your book, for which please accept my thanks. I regard them as very 
 valuable, and your book will be very useful in enabling politicians to make 
 an accurate study of the financial question. The ultimate redemption or pi-o- 
 posal to redeem the greenbacks is the true way to resumption, and for that 
 purpose a larger revenue of gold is necessary. This was the burden of my 
 speech and of my bill last winter. 
 
 "While I regard Scheuk's " bill to strengthen the public credit," as a misfor- 
 tune, yet the clause which pledges the faith of the Government to make pro- 
 vision at the earliest practicable period for the redemption of the greenbacks 
 in coin, was an amendment which I proposed in the Conference Committee' 
 
69 
 
 on the Inll wbich Johnson pockt'tid. The bill finally passed was a copy of 
 that. Preparation to resume specie payment is in my opinion the first great 
 duty of the Government. 
 
 I flissent from you reluctantly on one point — reference to the repeal of 
 the clause authorizing the conversion of greenbacks into Five-Twenties. 
 That repeal was inclispensible to the sale of the bonds. Capitalists would not 
 buy bonds at par, which could not by any possibility get above par. As 
 long as the people could take their greenbacks and convert them into bonds 
 at par, the bonds would not get above par in the market. The two things 
 were of unequal value inherently, and could not both be kept afloat at the 
 same time if convertible. 
 
 If the bonds appreciated, the greenbacks would be converted and pass out 
 of circulation, and as a circulation was necessary more would have to be 
 issued, and the effect would be to drag down the bonds, because these in turn 
 would be convertible, and so on. The provision of convertibility I always 
 regarded as impracticable. If the conversion was not made it was because 
 the bonds were depreciated and would not sell at par. If they were con- 
 verted the purpose of a circulation was defeated unless they were constantly 
 renewed. 
 
 I would write more at length if I had time. 
 
 I am very truly yours, 
 
 O. P. MORTON. 
 
 HON. Tf. B. FENTON. 
 
 Committee of Finance, U. S. Senate, ) 
 Washington, May 7, 1870. j 
 
 My Dear Sib: — I owe you an apology for my delay in acknowledging the 
 receipt of your " Financial History of the War." The truth is, I have been so 
 much occupied that I have not until the last few days, examined it. My 
 official connections with the Congress during the time embraced in your 
 work, enables me to speak of its accuracy and value. A.nd as relating to ex- 
 traordinary and necessary legislation to sustain the Government during the 
 years of its great trial, it will be hereafter, as well as now, a convenient and 
 well received authority. Very truly yours, 
 
 E. E. FENTON. 
 Hon. E. Gr. Spaulding. 
 
 HON. CABL SCHURZ, 
 
 Late Senator. 
 
 St. Louis, Mo., Sept, 35, 1869. 
 
 Dbak Sir; — I have received the copy of the "Financial History of the 
 
 War," which you had the kindness to forward to me. The work is a very 
 
 meritorious one, and you have obliged me very much by sending it to me. 
 
 Very truly yours, 
 
 C. SCHUnZ. 
 Hon. E. G. Spaulding. 
 
70 
 
 POINTS MADE BY SENATOR SCHDEZ, IN HIS SPEECH IN JANUAEY, 1874. 
 
 "1. The government of the United States is in law and honor bound to 
 pay the debt incurred by the issue of its promises to pay, as soon as by its 
 own action it can render itself able to pay. 
 
 " 3. When, under circumstances like ours, an irredeemable paper currency 
 is constantly depreciated, at a discount as to coin, that depreciation proves 
 that its volume is in excess of the real wants of the general business of the 
 country. This being the case with our paper currency, the present crisis 
 cannot have been caused by any insuflBciency of that currency as to the real 
 requirements of business. 
 
 "3. While a sudden fright or panic, showing itself in runs upon banks, 
 Ac, may under certain circumstances be momentarily checked by an addi- 
 tional issue of currency — a stage of affairs which lies several months behind 
 us — a crisis caused by the unproductive consumption of capital and overspec- 
 ulaliou, cannot be remedied by an ^addition to an already redundant paper 
 currency. 
 
 "4. The proposition that the Government may, without the most pressing 
 necessities, springing from extreme public danger, issue any additional 
 amounts of irredeemable paper currency at its arbitrary discretion, merely to 
 exercise a certain influence upon the business of the country, tends to create 
 a system which will place all the private fortunes of the city at the mercy of 
 the Government. 
 
 "6. A currency, which to the vice of inconvertibility adds the vice of 
 redundancy, has always had, and must naturally have, the effect of stimulat- 
 ing over-speculation, and gambling; of diverting the energies of the people 
 from honest, 'productive labor; of leading to the unproductive consump- 
 tion of capital and the creation of fictitious values ; of naturally ex- 
 panding the system of credit ; of demoralizing business as well as social life ; 
 and thus of seriously aggravating the causes which produce the general 
 break-down at once. 
 
 "6. The further expansion of such a currency, during or after a crisis, can 
 only revive and stimulate anew the influences which have already demoral- 
 ized business and brought forth crops of disaster. 
 
 "7. An addition to such currency does not only not add to the wealth of 
 t)ie country, but does not increase the efficiency of the currency itself as a 
 means of exchange, for the reason that it drives up prices, and by stimulating 
 speculation causes its being drawn away from the legitimate business of the 
 country to the centres of speculation. It will not make, permanently, money 
 easy, but rather raise than reduce the current rates of interest. 
 
 "8. For the same reason every addition to such currency will not satisfy, but 
 excite the demand for more and more, and thus push the country forward on 
 the road to bankruptcy and repudiation. 
 
 "9. No legitimate economic interest of the country will, therefore, be per- 
 manently benefitted by such expansion, but all will be injured. 
 
 "10. Least of all is the agricultural interest benefitted by our irredeemable 
 and redund mt currency. It is, on the contrary, most grieviously injured by 
 
71 
 
 it, because the farmer must pay extravagant prices for all lie has to buy, 
 while the prices of the principal products he has to sell are regulated by a 
 fojeign market untouched by our home inflation, and controlled by the com- 
 petition of the world. 
 
 "11. These evils will be increased by every further expansion and conse- 
 quent depreciation of the currency, and the idea that the agricultural interest 
 and those sections of the country — the west and the south — whose prosperity 
 depends on a profitable cultivation of the soil, can be readily benefitted by 
 further expansion, is therefore fallacious iu the highest degree. 
 
 "13. On the other hand, the agricultural interest will be vastly benefitted 
 by an early return to specie payments, because resumption will greatly reduce- 
 tlie price of the commodities the farmer has to buy, while it will not in a pro- 
 portion, reduce the price of the principal products he has to sell, thus adding 
 greatly to the purchasing power of his income. 
 
 " 13. The idea that the return to specie payments can be facilitated by that 
 sort of prosperity which would be brought forth by further inflation involves 
 a mischievous fallacy. Further inflation would only revive and stimulate all 
 the evil influences of a redundant irredeemable currency upon all economic 
 movements, again excite over-speculation, promote excessive importations, 
 thus turning an4 keeping trade balance against us; again expand the credit 
 system to the bursting point, and lead to new and more disastrous revulsions. 
 
 " 14. Such expansion would render impossible the fulfilment of the condi- 
 tions which must precede the resumption of specie payments ; retrenchment 
 and economy in public and private affairs, contraction of the credit fystem 
 and of private indebtedness, prudent management of business, &c. 
 
 " 15. The idea that the return to sjjecie payments can in the safest way be 
 brought about by doing nothing and waiting until the development of the 
 resources of the country and the growth of business have brought our paper 
 money and gold to a par in commercial value is equally fallacious, for the 
 reason that the period of relief thus vaguely pointed out lies in an undefined 
 and undefinable future; that in the meantime all the demoralizing and dan- 
 gerous influences of our irredeemable and I'edundant currency remain at work 
 with undiminished vigor and activity; that there will be continued danger of 
 furtjier inflation being forced upon us by agencies beyond our control, as the 
 government at the present moment is already expanding the currency; that 
 thus the day of promise is put off further and further, and that the very dif- 
 ficulties and disasters which the advocates of the do-nothing policy fear will 
 spring from .legislative action in the dii'ection of specie payments will natur- 
 ally occur, and have in fact occurred, under the do-nolhing policy itself, as 
 recent events have clearly demonstrated. 
 
 "16. The resumption of specie payments cannot surely be brought on but 
 by legislative action ; and no more propitious moment can be found for the 
 inauguration of a resumption policy than the present, for the reason that 
 much of the work of preparation which must precede resumption has already 
 been done by the crisis. Private indebtedness has been greatly reduced; 
 credit in business transactions has been largely contracted; the prices of com- 
 
72 
 
 mo. lities have alruady declined to a low point; business men have generally 
 but light stoclis on hand, and for months have been circumspect in their op- 
 erations. The possibility of loss thrnugh the appreciation of the current 
 money or the decline of prices will therefore be now as little as we ever can 
 expect it to be." 
 
 HON. B. W. LBAVBNWORTH 
 
 Syracuse, Oct. 31, 1869. 
 Hon. E. 6. Spaulding, 
 
 My Dear Sir: — On my return from New York, last evening, I found your 
 letter of the 26th, and also your work on our finances as affected by our legis- 
 lation in the early years of the rebellion. I have, of course, as yet only given 
 it a very hasty examination, but it is sufficient to perceive that you have 
 made a most valuable contribution to the history of the country during that 
 most eventful period. And what greatly enhances its value is the fact that, 
 while its importance cannot be overlooked or gravely over-estimated, it has 
 been almost ignored by all the various historians of the great rebellion. Your 
 position in Congress, and the part you took in the great financial questions of 
 the day, your familiarity with the whole subject, and your tastes, all pecu- 
 liarly fitted you for this important work, and you seem to have exhausted 
 the subject. I hope, in justice to yourself and also for the general good, 
 that you will see that a copy of the work is put in most of the important 
 libraries of the country, for the future benefit of the historians of that period- 
 There are great lessons to be learned from our experience, and the "almighty 
 dollar " is the great power, without which campaigns are never successful. 
 Thanking you for your kind remembrance, I remain. 
 
 Most truly yours, 
 
 E. W. LEAVENWORTH. 
 
 hon. d. a. wblls. 
 
 Treasury Drpartmbnt, ) 
 Washington, Sept. 35, 1809. \ 
 Hon. E. O. Spaulding, 
 
 My Dbak Sir:— When in Boston last week I saw for the first time a copy 
 of your " Financial History of the War," and was intending to order it impie- 
 diately on my return home, when your letter and the book In question ar- 
 rived. I have not had time to more than glance at its contents; I know, 
 however, that it supplies an important element of our recent history, and that 
 the work has been well done. Please receive my thanks for your kind re- 
 membrance. I have-thus far read everjthing that you have published that I 
 have seen, and agree with you fully upon all matters, with a single exception, 
 and, that is this: 
 
 I do not believe that with the present volume of currency, and the conse- 
 quent maintenance of abnormal prices, that resumption of specie payments 
 is practicable by any method. I do not believe that any legal enactment 
 compelling the Treasury or the banks to retain and accumulate gold will 
 produce a sufficient sum to meet redemption, or that gold could be kept here 
 
73 
 
 for any length of time after redemption had been commenced, on any basis of 
 accumulation. If you, in conjunction with your ideas of accumulating gold, 
 will advocate a measure of contraction, I am with you, heart and hand. 
 
 Have you read a recent work by Bonamy Price, professor of political 
 economy at Oxford, Eng., entitled " Principles of Currency ? " If not, allow 
 me to recommend it to you as worthy of perusal, although I do not fully 
 agree with all the propositions contained in it. 
 
 I do not know how valuable a report I can get up for this year. I some- 
 times feel almost discouraged, as the results of investigation are so para- 
 doxicrt and unsatisfactory. It sometimes seems to me that the more I 
 investigate and discuss these matters the less I know; but, at the same 
 time, I have an abiding confidence that we shall in the end manage to strug- 
 gle through all our difficulties, but perhaps at the cost of a sad experience. 
 Trusting that I may have, at no distant day, the pleasure of a personal inter- 
 view, I remain, yours very truly, 
 
 DAVID A. WELLS. 
 
 HOST. AMASA. WALKER. 
 
 NOBTH Bkookpield, Sept. 1, 1869. 
 Eon. E. O. Spaulding, 
 
 Dear Sir : — Yours of the 26fh is just at hand, and I have also the pleasure 
 to acknowledge the receipt of your " History of the Legal Tender Paper 
 Money issued during the great Rebellion." I have glanced at it sufficiently 
 to see that it is a valuable contribution to our financial literature — a work 
 that will be found veiy convenient and useful for reference in the future. I 
 am much obliged to you for it, and shall peruse it at my leisure. I arrived 
 at home, from my summer's tour to the Gulf of St. Lawrence, last evening, 
 so that at present I am much occupied. 
 
 I am glad you took so strong ground in your letter to Mr. McCulIoch in 
 favor of restoring the currency to par with gold. It is, by far, the most 
 serious matter now before the nation. What the action of Congress, at its 
 next session, will be, no one can predict. There will be a strong effort to 
 further inflate, and if that cannot be done, then to hold on to the present 
 amount of currency. I think, with you, that the intervention of the Supreme 
 Court may be the only way in which the country can be relieved; and, unde- 
 sirable as that mode of relief is, it will be far better than to float on under 
 our depreciated monetaiy system. 
 
 I shall ever be ready to afford any assistance in my power toward securing 
 a gradual but efficient contraction of the circulating medium. I don't know 
 whether you saw my plan, proposed last winter, of witlidrawing the green- 
 backs by issuing compound interest notes instead; if so, I .should like to know 
 how it s'rikes you. I am, yours truly, 
 
 AMASA WALKER. 
 
74 
 
 HON. ALBXANDEE H. KICK. 
 
 ^ Boston, Oct. 27, 1869 
 
 Hon. K Q. Spauldmg, Buffalo, N. T. 
 
 My Dbae Sir: — I am very glad to possess the volume received from you 
 this morning, and thank you for sending it to me. I have not yet had time 
 to more than glance at its contents, but I know that no one is more comiDetent 
 than you are to treat the subject intelligently and exhaustively. 
 I am, dear sir, yours very truly, 
 
 ALEX. H. RICE. 
 
 majoe-gbkeral shbrman. 
 
 "War Department, } 
 Washington, Oct. 12, 1869. j 
 
 Dear Sir: — With many thanks for your kindness in sending it, I be;; to 
 acknowledge the receipt of a copy of your lately-issued " History of the Legal 
 Tenders." I have not been able to more than glance through it here, but 
 have sent it down to my house, where I can read it more leisurely. 
 
 In answer to your request for my views upon the work, I can only say 
 now, that the magnitude of the subject, and its importance to the future, cer- 
 tainly warranted, if it did not actually demand, its publication ; and it is 
 equally certain, from your known connection with the measure from its 
 inception to its final adoption, that you were tlie one to collect, prepare and 
 send fonh its history. Yejy truly your.«, 
 
 W. T. SHERMAN, 
 
 Geu'l and Sec'y of War. 
 Hon. E. G. Spa^ldino, Buffalo, N. Y. 
 
 GENERAL BUTLEK. 
 
 Bat Yibw, neai' ( 
 Gloucester, Aug, 17, 1869. f 
 
 ■Dbae Sir: — I have the honor to acknowledge the receipt of your "Finan- 
 cial History of the War," which I intend to examine with the care its meiits 
 .require, I think it will fill a need in the financial history of the country. 
 There can be no more abstruse problem than our present financial relations, 
 and anylhiug which shall show the origin of our present system, so as to 
 elucidate the principles upon which it operates, will be a benefit to the 
 countiy. With many thanks for your courtesy, 
 I am, yours truly, 
 
 BEN J. F. BUTLER. 
 
 Hon. E. Q. Spaulding, Buffalo, N. Y. 
 
 HON. JAMIIS A. GARBIBLD. 
 
 Washington, D. C., June 5th, 1869. 
 Hon. E. O. Spaulding^ Buffalo, N. T. 
 
 Dear Sib: — Yours of the first, together with your " Financial History of 
 the War," came duly to hand. Please accept my thanks for your kind con- 
 
75 
 
 sideration. I know of no man so well fitted as yourself to write that history, 
 and I am delighted that you have performed what I am sure, with your sound 
 views on the subject, will prove a service to the whole country in the work 
 you have accomplished. 
 
 Very truly yours, 
 
 J. A. GA.RFIELD. 
 
 HON. EDWARD HAIGHT, 
 
 The only Democrat in the House who voted for the Legal Tender Act. 
 
 Bank of the Commonwealth, ) 
 New YokKj Oct. 29, 1859. f . 
 Eon. E. Q. Spaulding, Buffalo, N. T. 
 
 Deak Sik: — Some time has elapsed, and more than I intended there should, 
 between the receipt of your book and its* acknowledgment; allow me first to 
 thiiuk you for it, and then to say that having examined it carefully, I regard 
 it as a most valuable manual of the financial events of the War — events that 
 have culminated in a gladdening peace, and that are yet to exert an influence 
 upon the monetary affairs of our own country — ^and perchance of the world 
 — most useful and ^lutary or most mischievous and pernicious, according as 
 wisdom or folly may most prevail in our councils. 
 
 Highly as those of us who participated in the financial events of the war, 
 must regard your book to the future his.orian, who will be called lo weave 
 them into a narrative of the deepest interest to future generations ; it will be 
 more than doubly valuable. Sincerely congratulating you therefore, and re- 
 newedly thanking you for my copy, I remain with the highest respect. 
 
 Yours very truly, 
 
 EDWARD HAIGHT. 
 
 HON. J. O. PUTNAM. 
 
 Buffalo, June 36, 1869. 
 
 Mt Dear Sik : — I thank you for your volume vindicating the "Trathof 
 History." It is not a new idea to me, that to you is attributable, in a veiy 
 large measure, the adoption of thp "Legal Tender System" of our War 
 Finance. You have rendered a valuable service, and your book will always 
 be an authority on the subject of which its treats, and which it seems to me 
 to exhaust. 
 
 It is a rare distinction to be so identified as are you with that policy, with- 
 out, which the late struggle of the government had been a failure. 
 
 I most heartily congratulate you. With renewed thanks for your courte?3% 
 I am, as ever, very truly, your old friend, 
 
 JAMES O. PUTNAM. 
 Hon. E. G. Spaulding. 
 
76 
 
 HON. A. M. CLAPP, 
 
 Public Printer Washington. 
 
 Office of thb Congressional Pkinteb, ) 
 Washington, Oct. 18, 1860. ) 
 
 My Dear Sik: — I am in receipt of a copy of your " History of the Legal 
 Tender paper money issued during the Great Rebellion," for which please 
 accept my sincere ackn(Twledgments. 
 
 The great financial achievement which this work so clearly and ably pre- 
 sents to the public mind, is the most wonderful known to the history of 
 nations, and I but do you simple justice when I say, that, to your financial 
 wisdom and skill the country is in a large degree indebted for its accomplish- 
 'ment. It detracts nothing from the honor due to the brave officers and sol- 
 diers who rallied in defence of the Union and Constitution when in peril, and 
 through whose courage and patriotism our national salvation was perfected, 
 to say that like credit is due to the Statesmen who grappled with the grea 
 financial problem on the floor of Congress, and solved it in law, so success- 
 fully that the Ways and Means for prosecuting the war, subduing the rebel- 
 lion, restoring peace, and extending the blessings of freedom to all the people 
 of this nation, were obtained without recourse to other agencies than the na- 
 tional faith. 
 
 Your able exposition of this question in the woi-k before me — a qneption 
 upon which hung the national life — entitles you to the gratitude of the Amer- 
 ican people. 
 
 I am, sir, with much respect. 
 
 Your ob't servant, 
 Hon. E. G. Spaulding. A. M. CLAPP. 
 
 J. D. F. LANIER, 
 
 Banker. 
 
 New Y^okk, May 6, 1873. 
 M. ff. Spaulding, Esq. 
 
 Dear Sir:— Yours of the 34th April is received, as also the book for Mr. 
 Harmon, for which please accept my thanks.' The Book shall have my care- 
 ful attention. , 
 
 The fai;t is I do not see how we could have got through with the late war, 
 but for the Legal Tender Law. 
 
 We had no money, no credit at home or abroad. The Tender Law was 
 absolutely necessary to our continued existence. No one has suffered by it, 
 but all have gained. The Treasury note law would have been a dead letter 
 but for the legal tender act. 
 
 Yours, truly, 
 
 J. F. D. LANIER. 
 
77 
 
 HON. H. L. DAWES, 
 
 Senator from Massachusetts. 
 
 PiTTSFIELD, Mass.j^ov. 6, 1869. 
 Eon. E. O. Spcmlding, 
 
 Mr Db.\r 8ie : — I am very mucli gratified that you should retaember me 
 with a copy of your book, " The Financial History of the War," It does, 
 indeed, supply a very important omission in all other histories of the war, 
 and will become at once a book of reference. It is also a monument to your 
 own statesmanship in the darkest hour of our trial, of which you may well 
 be proud, and to which you have a right to call the attention of your coun- 
 trymen. I am, truly yours, 
 
 H. L. DAWES. 
 
 GOOD MANAGEMENT OF FRENCH FINANCES. 
 
 The following facts relating to the currency of France are coilipiled from 
 documents accessible to all the world : , 
 
 1. The aggregate circulation of notes of the Bank of France, including 
 
 " notes payable to order," was on 
 
 September 11, 1873 3,890,344-,376 francs. 
 
 September 9,1875 2,361,819,383 francs. 
 
 Decrease 538,434,993 francs. 
 
 3. Counting five francs as equal to one dollar, this is a contraction of 
 $105,684,999 in twenty-four months. 
 
 3. The notes of the Bank of *France are the only paper money which 
 circulates in'France. They are a legal tender, are paid and received as the 
 equivalent of specie, and for a year or more have been as good as gold. 
 
 4. The maximum note circulation of the Bank of France was reached on 
 October 31, 1873, when it was 3,071,000,000 franca, or $614,300,000. The 
 total on September 9, 1875, as above given, is equal $473,400,000, being a 
 contraction of $141,800,000 in less than two years. 
 
 5. This contraction is not accidental, like the trifling reduction which has 
 taken place during the current year in our legal tender and bank note issues. 
 In the language of the inflationists, it is "forced." 
 
 6. During the war and the payment of the indemnity, the French Govern- 
 ment borrowed of the bank an Immense sum in notes, for which it paid only 
 one per cent, per annum interest, that rate being barely a sufficient compen- 
 sation to the bank for manufacturing and handling the notes. 
 
 7. For the past two years the French Government has been steadily paying 
 its debt to the bank, preferring to fund its one per cent, loan into five per 
 cent rentes rather than encounter the risks, of an inflated paper circulation; 
 
 8. The total amount of this one per cent, war debt due from the govern- 
 ment to the bank was, on 
 
 September 11, 1873 1,374,053,500 francs. 
 
 September 9, 1875 649,630,000 francs. 
 
 I^eduction 734,433,500 francs. 
 
 Equal to . $144,886,500 
 
78 
 
 9. By a recent treaty with the bank, the government engages to pay off the 
 entire amount of this war debt by the end of the year 1879. 
 
 10. The bank is pledged to resume the full payment of all its liabilities in 
 coin on Jan. 1 , 1878, by which time the government engages to reduce its 
 war debt to $60,000,000. 
 
 11. In the interval the policy of the bank is not ' ' to make the volume of the 
 Currency equal to the wants of trade," but on the contrary, it has steadily con- 
 tracted its advances to the mercantile community by maintaining a higher rate 
 of discount than that ruling in the open market. As a consequence of this 
 policy the discounts of the bank have diminished as follows. They were on 
 
 September 11, 1873 948,569,253 francs. 
 
 September 9, 1875 505,834,586 francs. 
 
 Decrease 443,734,667 francs^ 
 
 Equal to $88,546,933 
 
 12. At the present time the rate of discount at the Bank of France is four 
 percent., wliile that at the Bank of England is only two, and the current 
 rates in J'aris outside of the bank are from 2}£ to 3%. 
 
 13. In consequence of this double operation, i e., the repayments of the 
 
 government and of the private debtors, the circulation has diminished, as we 
 
 have shown above, and the specie in possession of the bank has increased as 
 
 follows: It was on 
 
 September 11, 1873 708,869,993 francs. 
 
 September 9, 1875 1,618,943,228 francs. 
 
 Increase 910,073,336 francs. 
 
 Equal to $182,014,647 
 
 The above summary embraces, we believe, all the important facts in rela- 
 tion to the changes which have been made in the paper circulation of France. 
 Bold and energetic as the action of the bank has been, no injurious effects 
 on trade are visible. Genei'al business for two years past appears, in fact, to 
 have been much better in France than it has been in either England, Ger- 
 many, or the United States. No candid man can extract from the conduct 
 of the French Government and bank a particle of countenance for any of the 
 quack money schemes which have been broached among us. They have fi.Ked 
 a day for resumption, as we have done, but not without making provision 
 for decreasing their paper and Increasing their specie. They have not aimed 
 at a cheap currency, with the maximum of paper and the minimum of coin. 
 They have not confounded gold and government bonds together, and deluded 
 themselves with the idea that there is no essential difference between the 
 two. The end to which the Bank of Prance is aiming is to make its notes 
 at all times and under all circumstances convertible into specie, and to accom- 
 plish that object tbey know that they cannot safely issue all the notes that the 
 business community will absorb in times of confidence, nor do they trust to 
 any other resources in time of difficulty than an ample stock of the precious 
 metals in their vaults. This, as we understand the matter, is the lesson 
 taught by Englisli, German, Dutch and French banking— always to have on 
 hand a full supply of the exportable precious metals in order to maintain the 
 credit of the non-:!xport ible promises to piy those metals. 
 
HON. DAVID WILDEIt, 
 
 State Treasurer of Massachusetts. 
 
 State House, ) 
 Boston, Sept. 16, 1864. f 
 Eon. E. Q. Spdulding, President F. & M. Nai. Bank, Buffalo, N. T. 
 
 Dear Sih: — Tour note of the 11th inst. was duly received, and the interest- 
 ing volume prepared by you has since come to hand and been looljed over, so 
 far as I have l)een al)le to command the necessary time. I hardly need say 1hat 
 I am greatly obliged for both, though I thinli I am in duty bound to assure 
 yon that, to those of us who care to watch the financial machinery of the 
 country, nothing could be more opportune or interesting than your account 
 of the steps by which we are able to make the industry of our people avail- 
 able, and carry on the war so much better than could be done by our foes, 
 who lacked the sinews which you and your associates supplied. Your book 
 should have a wide circulation, and, after being read, many persons will 
 realize, as now they do not, how much -you had to contend with, and how 
 fatal to our national life would less energy on your part have proved. 
 
 I have been more or less intimate with the finances of Massachusetts 
 since 1840, as clerk in the Treasury and State Auditor, to which ofHce I 
 was appointed when it was created in 1849, and I can understand the work 
 you did .for us. I should have been glad if our idolatrous worship of gold 
 as a currency (not as money) had been less, and that it could have been seen 
 that all we had to dO was to create a debt or lay a tax, and that the most 
 direct and, under the circumstances, perhaps the most equitable course, was 
 to make the debt. 
 
 Free banking, with prompt, par, central convertibility of notes and checks, 
 is what the country needs of all things ; having first, of course, an immediate 
 return to the specie standard, or change from the debased or seventy-five cent 
 dollar to one worth one hundred, providing that all contracts now existing 
 and payable in the degraded currency shall be paid In that when due, 
 or in an equivalent of the other, so that there shall be no real change in 
 the relation between parties, as there was when we abandoned specie and 
 substituted paper, with the idea that legislation could affix or determine its 
 value. 
 
 If interest had been provided for on the legal tenders, and the notes taken 
 and paid as currency /or all purposes, and convertible always into long bonds 
 with gold interest, there would huve been no real harm done. At any rate, 
 legislation could not have swindled the then creditors by depriving them in 
 many cases of one-half the real value of their claims. Legal tenders without 
 interest were bad, while with interest they would have been doubly good. 
 Truly and respectfully youi's, 
 
 DAVID WILDER. 
 
80 
 
 george 8. cob, esq. 
 
 Amekicait Exchange Kat'l Bank, ) 
 New York, Sept. 38, 1875. j 
 
 E. Q. Spaulding, Esq., 
 
 Dear Sib; — Tour favor of the 25tli inst. is at hand, with pamphlet eAclosed, 
 which I have only time at the moment hastily to read. I will give it a more 
 careful perusal, and send you, as desired, such comment upon the subject as 
 my familiarity with the early financial events of the war may suggest. I fully 
 agree with you that the two great errors of Secretary Chase were, first, his 
 refusal to use the instruments and expedients that the experience of commercial 
 nations has made necessary for banks in distributing the money which our 
 associated banks loaned the government. Second, that he assented to the 
 suggestion of the brokers, whom he afterwards employed to sell the govern- 
 ment bonds, by divorcing the currency debt from the funded debt, so that the 
 former could no longer be converted into the latter, and was therefore left to 
 indefinite deterioration. This was a clever device to facilitate tlie sale of 
 bonds, but a fatal one to the currency. I do not believe it possible to restore 
 specie payments otherwise than by re-enacting this funding power and can- 
 celling every note thus exchanged. But the public feeling of obligation has 
 become so weakened that a rate of interest will be insisted upon too low to 
 accomplish the object. Yours truly, 
 
 GEO. S. COE. 
 
 h. bowlbt willson, esq. 
 
 Dr: 
 New York, Oct. 1, 1875. 
 
 90 Drexel Building, ) 
 
 Son. E. 0. Spaulding, Buffalo, K T. 
 
 Dear Sir: — I am in receipt of advanced sheets containing the introduction 
 to the second edition of your valuable work on " The Financial History of 
 the War," for which attention please accept my best thanks. The second 
 edition, and especially the introduction to it, appears before the public very 
 appropriately at this time, when the currency question is rapidly assuming 
 national importance. 
 
 I have read the introduction twice over, and have to say " it is all gold and 
 no dross.'' It makes entirely clear who was responsible for the financial 
 policy of the government which led to an over issue of irredeemable paper 
 money, which produced the fathomless abyss in which the country is now 
 floundering. In 1869, I pointed out in the columns of the New York Herald 
 this erroneous policy ; but I was then, and so remained, until I received your 
 new introduction, quite in the dark as to the originators of that policy and 
 the exact modus operandi by which it was worked out to its fatal results on 
 our whole financial and commercial system. This introduction, I repeat, 
 comes moat acceptably at this time, and adds materially to the interest of 
 your "Financial History." 
 
 On the principles of paper money or currency proper, we entirely agree, as 
 indeed all students of political economy must — those principles being estab- 
 
81 
 
 lisTied by scientific and analytical reasoning. If there is any room for differ- 
 ence, it may possibly be found in devising the safest and best motbod for the 
 issue and regulation of snob money. It now more than ever seems to ma to 
 be desirable that we should adopt the English and French systems of with- 
 drawing the power from the banking corporations ' to issue currency notes, 
 and lodge the same in the hands of a department of the government, so con- 
 stituted that, like the supreme bench, the whole monetary system of the 
 country may be, so far as possible, removed from tlie vortex of party politics. 
 Professor Price, in his Oxford lectures, characterizes the issue department of 
 the Bank of Englaud as " a government department carried on on the premi- 
 ses of the bank." I would not place any bank in that responsible position. 
 
 The question, in my judgment, should now be permanently settled by a 
 constitional amendment, leaving no option to Congress but to pass laws in 
 conformity with its provisions ; and one should be, that no more paper 
 money shall at any time be issued than can be maintained at par with gold. 
 There is no other method, as yet known, whereby the amount of such money 
 necessary to meet the requirements of business can be determined. It is the 
 simple natural law of supply and demand, the indications of which are always 
 clear and easily understood by those issuing circulating notes. Under such a 
 system the legal tender character of government notes may be dispensed 
 with, and our national paper, like our gold, will pass everywhere on a par 
 with each other. Excuse this digression, and believe me to remain. 
 Very truly yours, 
 
 H. BOWLBY WILLSON. 
 
 HON. ISAAC SHERMAN, 
 
 Political Economist. 
 
 18 "West 20th Street, ) 
 New York, Oct. 10, 1875. \ 
 Hon. E. Q. Spaulding : 
 
 I have received and read with great pleasure the preface to your new 
 edition of " The History of the Legal Tender Act." Your work will not 
 only do good at present, but it will remain as an historical authority on the 
 subject, and cannot fail to be an important contribution to the reliable records 
 of our recent war. It will also put in a compact and accessible form the 
 most forcible arguments for a return to specie payments. I doubt if you 
 know how much good and effective results yotir work is doing, and I hope 
 that you will continue to make new editions — at least until we shall have a 
 resumption of specie payments. 
 
 I wish to call your attention to a fact that it is possible may not have been 
 brought to your notice. In the case of Piosvelt vs. Meyer, 1 Wallace, 513, 
 involving the constitutionality of the legal tender, a motion to dismiss was 
 granted ; and in the case of Trefilcock vs. Wilson, 13 Wallace, 687, involv- 
 ing the same question. The case of Rosevelt vs. Meyer was fairly and 
 squarely submitted. Now, have you ever reflected what would have been 
 the decision in the case of Rosevelt vs. Meyer, in the winter of 1864, if the 
 
82 
 
 case bad not been dismiesed ? If you will examine the list of judges, you 
 will see that seven members of the court would have voted against the con- 
 stitutionality of the law. I suppose the case was undoubtedly dismissed for 
 political reasons, and not on law grounds. Mr. Chase was still Secretary 
 of the Treasuiy, and the war progressing, and an adverse decision would 
 have entailed great financial disturbance while we were confronting the 
 enemy. Mr. Roelker, the counsel of Mr. Meyer, has told me that Mr. Chase 
 was very anxious that the case should not be decided on its merits, and that 
 it should be dismissed. It is probable, considering the later overruling of 
 the dismissal, that the dismissal was a judicial dodge. The court quite proba- 
 bly, therefore, has been once manipulated and once packed on the legal 
 tender question. It seems to me that in some of your future editions of 
 your work it would be well to insert in full the conflicting decisions of Rose- 
 velt vs. Meyer and of Trefllcock vs. Wilson. These decisions are very in- 
 structive, and will show to those who hereafter come upon the political 
 stage not only what Congress will do in great national emergencies, but also 
 what the highest court will do in such emergencies. I do not mean by this 
 language to condemn either Congress or the judiciary, because I have always 
 said that if it was absolutely necessary to save the country to violate the 
 constitution, I would not hesitate to violate the constitution. The constitu- 
 tion was made for the country, and not the. country for the constitution ; 
 and the absolute safety of the country must therefore be paramount to the 
 constitution. Still, I think it best to give posterity all the facts, and I think 
 you can with propriety say that your only hope is that future generations, m 
 a like great emergency, will only act as wisely, discreetly, magnanimously 
 and patriotically as the people in your generation have acted against the 
 great slave rebellion. Yours very respectfully, 
 
 ISAAC SHERMAN. 
 
 hon. john j. knox. 
 
 Trbasubt Department, 
 
 OfPICB op CoMPTROLLKK of the CUHTiENCY. 
 
 Washington, Oct. 29, 1869. 
 
 I 
 
 Mt Dear Sir:— I have received your note of the 35th inst., and also the 
 volume you were so kind as to send me. "Truth is stronger than Action," 
 and the " History of the Legal Tender Paper Money used during the Great 
 Rebellion,'' and the results are more interesting and wonderful than any 
 work of fiction. 
 
 Tou have done yourself great honor by your services as a financial general 
 during the rebellion, and in the preparation of this little volume you have 
 furnished a most convenient record of the sayings and acts of those servants 
 of the people whose duty it was to supply the means with whichto protect 
 and finally save the country. Please accept my thanks for the volume, and 
 believe me, Very truly yours, 
 
 JlSrO. JAY B.NOX. 
 Hon. E. G. Spatlding, Buffalo, N. Y. 
 
83 
 
 HON. W. P. FESSBNDEN. 
 
 Portland, Aug. 7, 1869. 
 Eon. B. O.Spaulding, 
 
 My Dear Sir:— On my return from a short visit to the eastern portion of 
 
 our state, I found your letter of the 21st of July, and the book referrtd to 
 
 therein. I have not yet had time to examine the history, but, from your 
 
 close connection vrith the financial events of the war, I have no doubt of its 
 
 correctness and value. As a iDarticipator in those event?, I am able to testify 
 
 to the vf ant of comprehension of all previous vrriters upon the subject. You 
 
 were entirely able to fill the void, and I have no doubt you have done so. 
 
 Please accept my thanlss, and believe me. 
 
 Truly yours, 
 
 W. P. FESSENDEN. 
 
 \ 
 
 HON. JOHN COBUEN, 
 
 Member of Congress from Indiana. 
 
 House op Eepresentatives, 
 Washington, U, C, April 13, 1870. 
 Hon. E. Q. Spaulding, 
 
 Dear Sib: — Your letter, with " Financial History of the War," came duly 
 to hand. Please accept my thanks for the work. It is really an invaluable 
 portion of the great history of the great struggle for national life. Your 
 opportunities for knowledge of the subject being of the finest character, 
 posterity, as well as the present age, must owe you a debt of gratitude for 
 this timely service in fixing in permanent form a clear and concise statement 
 of all the facts The conduct of our finances and the struggle in the field are 
 equally creditable and memorable, and must be forever linked inseparably 
 together as exhibitions of the energy and geoiusof our race. 
 
 Yours truly, 
 
 JOHN COBUKN. 
 
 A. B. WSO. 
 
 New York, March 39, 1864. 
 Hon. E. O. Spaulding, 
 
 Dear Sir: — If the truths in your letter coulil have been placed before the 
 public at an earlier day, in the clear and forcible manner in which you have 
 stated them, I think they would have so i^ifluenced public sentiment that we 
 should. have been spared a portion of the mischief resulting from present 
 inflation. Mr. Chase has done well. I hope his great success will not render 
 him indifferent to wise counsel. I thank you for sending me the letter, and 
 am, Very truly, your' obedient servant, 
 
 A. R. BNO. 
 
 p. a. conkling. ' 
 
 New Yobk, Oct. 17, 1875. 
 Ron. E. G. Spaulding, 
 
 Dear Sir:— Accept my hearty thanks for the advanced sheets of the 
 " Introduction" to a further publication of your " Financial History of the 
 
84 
 
 War of the Rebellion.'' I am glad that you contemplate the issuing of a new 
 edition of a work, for the prepartion of which you are fitted above all other 
 men. Your position as Chairman of the Sub-committee of Ways and Means 
 of the House of Representatives, at the time the legal tender act was passed, 
 placed you in possession of facts which, from the nature of the case, others 
 could not know. 
 
 The Thirty -seveuth Congress was one of the most statesmanlike and patri- 
 otic bodies which ever assembled in this or any other country. It promptly 
 apprehended the magnitude of the questions before it, and to the utmost of 
 its ability met them in the most efficient manner. It was, perhaps, the 
 greatest calamity of the war that the financial policy established by that 
 Congress was not cordially seconded and continued by successors and by the 
 ' head of the Treasury Deparment: 
 
 Mr. Chase was pressed for that position because of the regard of the people 
 for his high personal reputation. He had been an original free-soiler, and 
 had won tlie favorof the men of advanced views upon that subject. He had 
 been originally chosen to the United States Senate by Democratic votes on 
 the supposition that his views on financial and analagous questions were 
 acceptable to the Democratic party as it was then constituted. He was a 
 conspicuous candidate for the presidential nomination in 1860, and, in the 
 estimation of many, presented the ideal of an American statesman. 
 
 Upon the election of Mr. Lincoln, it was the demand of Mr. Chase's friends 
 that he should occupy a leading position in the cabinet. The President-elect 
 was himself disposed to comply with this desire. A.t the request of Mr. 
 Horace Greeley, I accompanied him on a visit to Mr. Lincoln, to urge that 
 Mr. Chase should receive the portfolio of the Treasury. We had been led to 
 believe that another choice had been made for this all-important position. 
 We I'epresented to Mr. Lincoln that a struggle was imminent which would 
 be decided in favor of the party whose resources held out the longest, and 
 accordingly that a minister of finance was required who would command, in 
 the highest degree, the public confidence. Mr. Chase, as we believed, pos- 
 sessed that confidence as no other man did whose name was under consid- 
 eration. 
 
 The day following this interview I received a note from Greeley, informing 
 me that Mr. Chase had declined the offer of the Treasury Department. I lost 
 no time in calling upon him at his hotel. Mr. Chase pleaded that his educa- 
 tion and habits had not fitted him for the duties of the place ; and, he. added 
 with his accustomed courtesy, that if he had had an education like my own, 
 he would feel less distrust of his qualifications for the office. Him appro- 
 priate sphere he believed to be the Senate, to which he had just been chosen 
 for the full term of six years. In response, I assured him that his friends 
 regarded it as his duty to accept the Secretaryship of the Treasury; and 
 furthermore, that he could at all times count upon the support of every 
 patriotic man whose services he might desire to command. Mr. Chase finally 
 eaid, substantially, that he would be guided by the convictions of his friends. 
 
 A few days subsequently on my return to New York, I took the liberty to 
 
85 
 
 suggest to him the aclvisability of inviting proposals for what remained of 
 the twenty-five millhm lonn which had been authorized in the closing days of 
 Mr. Buchanan's administration. At his invitation I visited Washington, but 
 I found him disinclined to offer the loan except upon terms which I felt con- 
 fident could not then be obtained. It was apparent that he had thus early 
 become a convert to the so-called paper policy. Finding it of no use to argue 
 the point, I made no further attempt to influence his views. It was an acute 
 disappointment that the man whom we had regarded as the strongest sup- 
 porter of a stable financial system, had so utterly abandoned that idea. If he 
 had depended on loans properly secured by taxation, and had placed his 
 reliance upon the patriotism of the country, it is my belief that the credit of 
 the nation would have been maintained upon a permanent foundation, and the 
 depreciation of cur currency would have been, in a great measure, obviated. 
 The machinery of our banks was at his disposal, and never had a more gener- 
 ous disposition been shown by the monied interest of any country to support 
 the measures of a financial minister. 
 
 The two loan acts passed at the extra session of the Thirty-seventh Congress 
 provided for the modification of the sub-treasury law, for the express purpose 
 of enabling the Secietary to avail himself of these facilities. But he refused 
 to accept them, an dpersisted in demanding that the banks should pay in coin 
 the amount of the loans for which they had subscribed. The effect was most 
 disastrous. He thus destroyed, almost at a blow, the basis of bank credits, 
 and forced a suspension of specie payments. The gold which had constituted 
 the basis of banking transactions was absorbed by the Treasury, to be paid 
 out to contractors, and immediately to be hoarded where it could no longer 
 be useful in business or for the public exigencies. Mr. Chase might have 
 avoided this, but he saw fit to precipitate the disaster. To do this in a period 
 of national calamity, I shall always regard, as an act of most extraordinary 
 infatuation. 
 
 Immediately after the failure of the banks, the bill was introduced by your- 
 self authorizing the issue of United States notes to circulate as currency, and 
 providing for the funding of them in six per cent, bonds. Your plea was 
 that of necessity. I did not share your views. Accordingly, I opposed in 
 debate the proposition to issue a legal tender paper currency which the fram- 
 ers of the constitution had wisely intended to inhibit. At ihe same time, I am 
 free to admit, that the accompanying provision to fnnd these paper promises 
 promptly in the bonds of the United States was a measure of redemption 
 which could not, under the circumstances, be loo highly commended. At 
 this moment it presents the only means possible for an early and safe return 
 to specie payments. Had it been consistently adhered to, it would have 
 brought the country to tliat point before the present administration came into 
 power. 
 
 But unhappily, a Congress succeeded to the thirty-seventh which was not 
 controlled by the high moral considerations, and which did not possess the 
 capacity of its predecessor. Loose views of financial integrity were enter- 
 tained. The Secretary of the Treasury found the majority were pliable to 
 his purposes. At his demand legislation was had abrogating the provision 
 
86 
 
 for the conversion of the legal tender notes hito bonds and also empowering 
 him to issue other evidences of debt at his discretion. A power so tremen- 
 dous lias seldom, if ever before, been hidged in the hands of a minister. I 
 am constrained to say that it was exercised almost wantonly. The credit of 
 the nation was depreciated to the verge of banltruptcy. A five per cent, loan 
 was placed on the market; compound interest notes and other ephemeral 
 devices were resorted to in order to shove up the stupendous financial fabric 
 which seemed to be tottering to its fall. I counted the different varieties of 
 paper which were emitted until, if my memory serves me right, the number 
 reached thirty-three, when I gave up in despair. 
 
 The instinct of the people was wiser than the subtlety of the men who 
 assumed to guide it. Mr. Lincoln was placed a second time in the field for 
 President, while Mr. Chase was compelled to yield to the stOJ'm which he 
 had created and retire from the Treasury. To the errors of his three years 
 of office the country is indebted for the needless augumentation of the public 
 debt by the sum of at least one thousand million dollars. But perhaps a still 
 greater evil was the repudiation, by an obsequious majority in Congress, of 
 the national faith which had been pledged to the holders of the legal tender 
 notes. By section I of the act approved February 35, 1873, it is provided 
 that " any liolder of said United States notes, depositing any sum not less 
 than iifty dollars, or some multiple of fifty dollars, with the Treasurer of the 
 United States, or either of the Assistant Treasurers, shall receive in exchange 
 therefor duplicate certificates of deposit, one of which may be transmitted 
 to the Secretary of the Treasury, who shall thereupon issue to the holder an 
 equal amount of the bonds of the United States, " etc. This provision, which 
 was endorsed upon every note issued, was repealed in a manner which I 
 must characterize as clandestine. Henceforth the notes were irredeemable, 
 and in that form they sunk f i om one depth of degradation to another, until 
 they were worth but one-third of their face value. The moral sense of the 
 community was also debased until it became as low as that of the govern- 
 ment. 
 
 Under the ensuing administration an ability and integrity of purpose was 
 displayed by the Secretary of the Treasury, the Hon. Hugh McCuUuch, 
 which, had he been pj-operly seconded by Congress, might still have retrieved 
 the national faith. But a career of jobbery had now been entered upon. 
 Partisanship superseded the dictates of national honor. This chapter of- our 
 history will be perused by Americans in the future only with .emotions of 
 shame. 
 
 The appointment of Mr. Boulwell to the Treasury Department was a con- 
 cession to the spirit of the times. Under his administration of the public 
 finances, the currency, which had been legalized only as a war measure out- 
 side and beyond the constitution, was still further expanded, although peace 
 had been restored and its original purpose had been accomplished. 
 
 It is an encouraging omen that the iiublic mind has at length become aroused 
 to Ihe importance of restoring the constitutional currency. Wherever elec- 
 tions have been held, the people, in disregard of partisan considerations, have 
 
87 
 
 voted against any further inflation of the cutrency. I devoutly trust that the 
 good work will go on until the great wrong which has been inflicted upon 
 the industry of the nation shall he righted. You will, I trust, pardon me 
 • for saying in conclusion that the first requisite for the accomplishment of 
 this desirable end is a radical change in the administration of the govern- 
 ment. Faithfully yours, 
 
 F. A. CONKLING. 
 
 Hon. S. S. Cox having made a good speech in the House ia opposition to 
 inflj,tion and repudiation, Mr. Spaulding addressed him a letter on the sub- 
 ject. The following is an extract from Mr. Cox's letter in reply: 
 
 " Tou see I have refreshed myself at your fountain. I am happy that the 
 
 opportunity occuned to hit repudiation between the eyes. We are all on our 
 
 side so entirely powerless we cannot but challenge the Republicans to do 
 
 something in the coin line. I will never cease to remind them of your pledges 
 
 and the plighted faiih of Congress. As if a debt in the people's pockets was 
 
 not as honorable an obligation, and more so, than any other i * * * 
 
 Yours truly, 
 December 24, 1869. S. S. COX. 
 
 A. A. LOW, ESQ. 
 
 Nbw Yori^, Sept. 24, 1869. 
 Son. E. G. Spaulding, Buffalo, 
 
 Dear Sir : — Y'our valued favor of the 17th instant was duly received, 
 together with the volume on the " Financial History of the War," for which 
 1 am much obliged. It is an interesting and valuable work. I can say this 
 without having progressed ver}- far in the reading of it. I shall take it up 
 and finish it at my leisure. 
 
 - I was, from the first, in favor of the " legal tender " act, of which you were 
 so largely the author, believing it to be a necessity. I have not seen any 
 reason to change my mind with the progress of events. But the war being 
 over, I confess to a good deal of disappointment to find how great and how 
 geaeral is the unwillin^aess of the people at large to return to a sound cur- 
 rency. The patriotism that carried the North through the war setms to be 
 exhausted, and demoralization to have taken its place. Some few there are in 
 favor of returning to specie payments, professedly, but if any plan is suggested 
 looking to contraction as a means to this end, it will be found to have no 
 friends. 
 
 If we cannot have existing evils remedied in any other way, I hope the 
 Supreme Court ot the United States will find that while the law making 
 United States notes a "legal tender " was " necessary and proper " during the 
 war, it is neither constitutional or right, now that the war and the necessity 
 have passed away. Certainly this view should apply to any further issue. 
 Unless we get relief in this way, I despair of any that does not come by the 
 severe discipline that follows -wrong doing. » * * i remain, dear sir, 
 Most respectfully youj-s, 
 
 A. A. LOW. 
 
gen. j. d. cox. 
 
 Dbpartment of the Interiob, ) 
 Washington, Nov. 10, 1869. ) 
 
 Mt Dear Sir: — I thank you very heartily for the copy of the " Financial 
 History,'' which I recognize as a valuable contribution toward the elucidation 
 and final solution of our great financial problem. I have so often heard your 
 views referred to by my brother and his partner, Mr. Robinson, that I am 
 eager to have the opportunity of personal conference with you on what I 
 regard as the crucial question this administration has to meet, viz., the return 
 to specie payments, and a currency with a real and fixed value. 
 
 To tui'n our faces at once, and like a flint, in the direction of resumption, I 
 hold to he our cardinal duty. The rapidity of the movement is of less conse- 
 quence, the danger being rathepthat we should go too fast when once started. 
 
 I am rejoiced that the country is to continue to have the benefit of your 
 experienced counsels, nnd trust it may not be long till I shall have the oppor- 
 tunity of discussing these matters with you in person. 
 
 Very respectfully and truly, your obedient servant, 
 
 Hon. B. G. Spaulding. J. D. COX. 
 
 HON. JUSTIN S. MORRILL, 
 
 A. memher of the Senate Finance Committee. 
 
 Staeford, Vt., Oct. 9, 1875. 
 Hon. E. G-. Spaulding, Buffalo, W. Y., 
 
 Mt Dear Sir :^I have received and read with interest your " Introduc- 
 tion " to the s-econd edition of your " Financial History of the War." It is 
 able, impartial and timely, and, like the original work, reflects great credit 
 upon the author. I hope it is destined to exert all the influence in the settle- 
 ment of the grave questions pending that its merits so well deserve. If you 
 differed.from me at the inception of some of these financial measures, we do 
 not differ now, and I am glad you find leisure and feel it to be your duty to 
 still render services to your country. 
 
 Very sincerely yours, JUSTIN S. MORRILL. 
 
 HON. JOHN J. CISCO, 
 
 Asst. Treaurcr in New York while Mr. Chase was Sec'y of the Treasury. 
 
 , 59 Wall Street, ) 
 
 New York, Oct. 25, 1875. j 
 
 Mt Dear Sir:— With your letter I duly received the advance sheets of 
 your " Introduction " to a further edition of the " History of the Legal Ten- 
 der Act," for which please accept thanks. 
 
 I have carefully read your statement of facts, and they fully accord with 
 my memory regarding them. Your volume will be an exceedingly valuable 
 acquisition to the financial histories of the world. Since the' close of the 
 rebellion there has been no well defined financial policy leading us in the 
 direction of specie payments, and to this failure on the part of the govern- 
 ment we may attribute the downfall in the panic of 1873 of the "paper struc- 
 ture " we had reared, and the subsequent paralysis of the mercantile and 
 industrial interests of the nation. There can be no permanent prosperity to 
 our country until we are restored to a sound basis for our transactions. With 
 kind regards, Yours very truly, JOHN J. CISCO. 
 
 Hon. B. a. Spaulding, Buffalo, N. Y. 
 
89 
 
 GKOKGB S. COB, ESQ., 
 
 On our early Financial War Measures and the First and Second Mistakes of 
 Secretary Chase — War Currency — Specie Payments, Sub-Treasury, etc. 
 
 Ambkioan Exchange National Bank, ) 
 New Yoke, Oct. 8, 1875. j 
 Bon. E. O. Spaulding, Buffalo, iV". T., 
 
 Dbab Sm: — Your favor of the 35th ult. came duly to hand, in which you 
 ask me to give my personal recollection in full of the circumstances con- 
 nected with the early part of the financial history of the war. 
 
 After the accession of Mr, Lincoln to the Presidency, the securities of the 
 government became diflBcult of sale, and they declined to such an extent that 
 for the week ending June 24, 1861, the following quotations were published: 
 
 U. S. Bonds, 1881 (coupon),. 6 per cent 83% 83^ 
 
 " Treasury notes, 12 per cent, int 101^ 102 
 
 11 " 101 1011^ 
 
 10?i " lOOJi 
 
 Zealous exertions had been made by carefully-organized committees of the 
 New York Chamber of Commerce, the month before, to obtain subscriptions 
 to government loans by sending circulars throughout the Northern States, in 
 which citizens, public officers, banks, and other institutions, were solicited 
 to act as voluntary agents. But the aggregate secured was inconsiderable, 
 and utterly failed of the amount required for pressing necessity. The great 
 conflict was rising daily into more appalling magnitude. Moneyed capital, with 
 instinctive timidity, buttoned tiglitly its pockets, and shrank from the danger. 
 
 Fortunately, the commercial conditions of the Northern States were alto- 
 gether favorable. The panic of 1857 had been followed by three or four 
 years of great productiveness and economy, which had so turned international 
 exchanges in favor of this country that larger balances in coin than ever 
 before had, during 1860 and 1861, been imported from Europe. The banks in 
 New York alone holding the unpredecented amount of 'fifty millions, equal 
 in August, 1861, to about fifty per cent, of their liabilities, while the appre- 
 hension of war had produced a general curtailment of credit throughout the 
 Northern States. 
 
 After the disastrous battle of Bull Run, and when Washington was closely 
 beleaguered, and the avenue thence to New York through Baltimore was 
 intercepted by the enemy, Mr. Chase, then Secretary of the Treasury, came to 
 this city via Annapolis, and immediately invited all persons in this community 
 who were supposed to possess or to control capital to meet him on the evening 
 of August 9th, at the house of John J. Cisco, Esq. , then Assistant Treasurer ot 
 the United States in New York. This invitation drew together a large unmber 
 of gentlemen of various occupations and circumstances. During the discus- 
 sion which ensued, I suggested the practicability of uniting the banks of the 
 North by some organization that would combine them into an efficient and 
 inseparable body, for the purpose of advancing the capital of the country 
 upon government bonds in large amounts, and through their clearing-house 
 facilities and other well-known expedients, to distribute them in smaller sums 
 among the people in a manner that would secure active co-operation among 
 the members in this special work, while in all other respects each bank could 
 
90 
 
 pursue its independent business. This suggestion met the hearty approbation 
 of the assembled company, and arrested the earnest attention of the Secre- 
 tary. At his request it was presented to the consideration of the banlis at a 
 meeting called for that purpose at the American Exchange Bank on the 
 followmg day, and was so far entertained as to secure the appointment of 
 a committee of ten bank oflBcers, to give it form and coherence. The com- 
 mittee convened at the Bank of Commerce, whose officers zealously united in 
 the effort, and a plan was reported unanimously. It may be found, with the 
 names of the committee, in the Bankers' Magazine of September, 1861. Their 
 report was cordially accepted and adopted by the banks in New York, those 
 in Boston and Philadelphia being represented at the meeting and as zealously 
 and cordially united in the organization. It was greatly desired to include 
 also the banks of the West, but it was found impracticable to secure the co- 
 operation of the state banks of Ohio and Indiana, and the state banks of 
 Missouri, the only other organization under a compacted system, were sur- 
 rounded by combatants. 
 
 It was at once unanimously agreed that the associated banks of the three 
 cities would take fifty millions of 7 3-10 notes at par, with the privilege of 
 an additional fifty millions in sixty days, and a further amount of fifty mil- 
 lions in sixty days more, making one hundred and fifty millions in all, aad 
 offer them for sale to the people of the country at the same price, without 
 change. In this great undertaking the banks of New York assumed more 
 than their relative proportion. To ensure full co-operation and success, the 
 expedient of issuing clearing-house certificates, and of appropriating and 
 averaging all the coin in the various banks as a common fund, which had 
 been invented but the year before, was applied to this special object with 
 good effect. 
 
 So vast a responsibility, involving figures of such magnitude, had never 
 before been attempted in this country, and the assumption of it with such 
 promptitude was wilhout precedent in history. 
 
 The capitals of the banks thus associated made an aggregate of one hun- 
 dred and twenty millions, an amount greater than the Bunk of England and 
 the Bank of France combined, each of which institutions had been found 
 sufficient for the gigantic struggles of those great nations, from time to time, 
 in conflict with all Europe. And this combination, made up of distinct and 
 independent corporations, while it possessed all needed capacity for govern- 
 ment work, was free from the objections made to one great financial institu- 
 tion. The following figures also show that its financial condition was one of 
 great strength: 
 
 . ■ LIABILITIES , ASSETS IN 
 
 Deposits. Circulation. coin. 
 
 Banks in New York $ 93,046,308 | 8,531,436 $49,733,990 
 
 Boston 18,285,061 6,366,466 6,665,929 
 
 Philadelphia 15,335,838 3,076,857 6,765,130 
 
 ■ $135,617,307 $ 16,964,749 
 135,617,207 
 
 Total $142,581,956 against $63,165,039 
 
 coin on hand, equal to 45 per cent, of all liabilities. Surley, such conditions 
 
91 
 
 as these, with judicious administr;ition, were adequate to the work which the 
 country required. A great merit of this banlt combination al that critical 
 moment, when the life of the nation hung' in the balance, consisted in the 
 fact that it fully committed the hitherto hesitating moneyed capital of the 
 North and East to the support of the government. The bank officers and 
 directors who thus counselled and consented were deeply sensible of the mo- 
 mentous responsibility which they assumed, but all doubt and hesitation were 
 instantly removed, and perfect unanimity was secured by the question, 
 ^^ What if we do not unite!" And, acting as guardians of a great trust 
 exposed to imminent danger, they fearlessly elected thp alternative best cal- 
 culated to protect it. 
 
 The problem to be practically resolved by the Banks was this. How can 
 the available capital be best Uriiwn from the people, and devoted to the sup- 
 port of Government, with the least disturbance to the country ? and by what 
 means can arms, clothing and subsistence for the army be best secured in ex- 
 change for Government credit ? These were simply questions of domestic 
 exchange, and most naturally suggested the use of the ordinary methods of 
 Bank checks', deposits and transfers, that the experience of all civilized na- 
 tions had found most efficient for the purpose, and that this should be accom- 
 plished by the Associated Banks, in a manner best calculated to prolong their 
 useful agency, and to preserve the specie standard, it was indispensible that 
 their coin reserves remain with the least possible change. Accordingly it 
 was at once proposed to the Secretary that he should suspend the operations 
 of the Sub-Treasury Act in respect to these transactions, and following the 
 course of commercial business, that he should draw checks upon some one 
 Bank in each city representing the Association, in small sums as required, in 
 disbursing the money thus advanced. By this means his checks would serve 
 the purpose of a circulating medium, continually redeemed, and the ex- 
 changes of capital and industry would be best promoted. This was the 
 •more important in a period of public agitation when the disbursement of 
 these large sums exclusively in coin, rendered the reserves of the Banks all 
 the more liable to be wasted by hoarding. To the astonishment of the com- 
 mittee, Mr. Chase refused. Notwithstanding the act of Congress of August 
 5th, which it seemed to us was passed for the very object then presented, but 
 which he declared upon his authority as finance minister, and from his per- 
 sonal knowledge of its purpose, had no such meaning or intent. This issue 
 was discussed from time to time with much zeal, but always with the same 
 result. It was seen by the most experienced Bank officers to be vital to the 
 success of their undertaking. To draw from the Banks in coin the large 
 sums involved in these loans, and to transfer them to the Treasury, thence to 
 be widely scatter over the country at a moment when war had excited fear 
 and distrust, was to be pulling out continually the foundations upon which 
 the whole structure rested. And inasmuch as this money was loaned to the 
 Government, and was in no sense a trust reposed iu the Banks, there appeared 
 to them no reason why it should not be drawn by checks in favor of Govern- 
 ment contractors and creditors, who would require to exchange them for 
 other values in commerce and trade, through the processes of the clearing- 
 
92 
 
 house. And this consideration was greatly strengthened by the fact that 
 these advances were made and the money publicly disbursed, a long time 
 before the Treasury Notes were ready tor delivery to the Banks which had 
 paid for them. In the light which has since been shed upon the act of Con- 
 gress referred to, it is evident that undue weight was given to the views of 
 the Secretary, and that the Banks would have conferred an incalculable ben- 
 efit upon the country, had they adliered inflexibly to their own opinions. But 
 the pressure of startlins^ events required prompt decision, and the well known 
 Intelligence and patriotism of the Secretary, gave to his judgment overwhelm- 
 ing power. It soon became manifeht that in consenting to have their hands 
 tied, and their most efficient powers restricted, while engaged in these great 
 operations, and in allowing tbeir coin reserves to be wasted, by pouring them 
 out upon the community in a manner so unnecessary and exceptional, the 
 Banks deprived themselves and the Government of the ability of long c<jn- 
 tiuuing, as they otherwise could have done, to negotiate the national loans 
 upon a specie standard. 
 
 This first great error, if it did not create a necessity for the legal tender 
 notes, it certainly precipitated the adoption of that most unhappy expedient, 
 and thereby committed the nation at an earlier day, to the most expensive 
 of all methods of financiering. 
 
 One other subject of discussion between the Secretary and the Associated 
 Banks at the same time arose, which led in the same direction. Congress by 
 its act of 17th July, had authorized loans to the amount of two hundred and 
 fifty millions. This could be issued eitherln Bonds running twenty years at 
 not over seven per cent, interest — 7-30 notes running three years, or fifty 
 millions of the amount could, at the discretion of the Secretary, be made in 
 currency notes payable on demand without interest. As the undertaking of 
 the Associated Banks covered one hundred and fifty millions of this sum, 
 and it was desired that they continue the work thus auspiciously begun, a 
 question of the expediency of putting out the circulating notes was immedi- 
 ately raised by one of its members. A very small amount had been emitted. 
 The Treasury was empty of coin to redeem them, and could only be replen- 
 ished by the proceeds of the Bank loans. It was evident to the Bank otBcers 
 that they could not sustain coin payments, if the transfers from their vaults 
 to that of the Treasury, were subject to be intercepted and absorbed by these 
 notes of Government. Nor could the Banks receive them upon deposit from 
 the public as money, while they were responding to the Government and to 
 their own dealers in coin. It was an inflation of the currency in the torm 
 most embarrassing to the enterprise they had commenced. Accordingly the 
 Secretary was urgently solicited to refrain from exercising the discretionary 
 powers given him of creating the Treasury currency, until all other means 
 were exhausted. In response to a resolution to that -eflect, the Secretary as- 
 sured the Bank officers, of his acquiescence in their suggestion, but at the 
 same time insisted that it 'was improper for a public officer to openly pledge 
 himself not to exercise a power conferred by the law. With this understand- 
 ing the Banks began their work, paying into the Treasury in coin one hun- 
 dred ?.nd fifty millions in sums at the rate of about five millions at intervals 
 
93 
 
 of six days. Even with all these unfavorable circumstances surrounding 
 them, it was an encouraging fact observed by those who were anxiously 
 watching the practical operation of this great and novel experiment, that 
 while the circulating notes in the country were restricted, the disliursements 
 of the Government for the war, were so rapid, and' the consequent internal 
 trade movement was so intense, that the coin paid out upon each instalment 
 of the loan, came Ijacls to the Banks through the community, in about one 
 weels. The natural effect of this general commercial activity upon the cir- 
 culating medium, being simply to quicken its flow. 
 
 After taking the third amount of fifty millions by the Associated Banks, 
 those in New York who had at tliat time paid in of their proportion over 
 eighty millions in all, found themselves in this position. 
 
 Their aggregate coin, which on the 17th August, before the 
 first payment into the Treasury, was .' $49,733,990 
 
 "Was in December 7th 43,318,610 
 
 A reduction of only |7,415,380 
 
 and the other two cities in like proportion. 
 
 In the meantime the 7-30 notes taken by the banks had been purchased by 
 the people to the extent of some fifty millions, notwithstanding a prolonged 
 and vexatious delay in issuing them by the Treasury Depai'tment. The pop- 
 ular feelmg was all that could have been desired for continuing that method 
 of distribution. It may be confidently aflirmed that had the banks been 
 peimitted to exercise their own methods of exchanging the bonds for the 
 varied products of industry required by the Government, they could have 
 continued their advances in sums of fifty millions for an indefinite period, 
 and until the available resources of the people had been all gathered in. It is 
 to be borne in mind that these resources were all existing at home, and that 
 the increased industry which the war excited, was daily creating ' new means 
 for investment. It may be presumptuous to afiirm that the legal tender 
 notes could have been dispensed with altogether. But it is safe to say that 
 the causes which seemed to justify that act would have been long deferred to 
 the saving of hundreds of millions to the country. 
 
 But at this time the demand notes were paid ouit freely by the Treasury, 
 and began to appear as a cause of embarrassment among the banks who 
 were pressed to receive them upon deposit, and while they could not decline 
 them without diminishing public confidence in the Government credit, they 
 could not give them currency without impairing their own specie strength. 
 In fact the notes became at once a substitute for coin withdrawn from circu- 
 lation, and their emission expressed a purpose of resorting to Government 
 paper issues to carry on the war. So soon as these notes thus appeared the 
 reflux of coin to the banks at once sensibly diminished. During three weeks 
 from the 7th December, the reserves of the banks in New York fell to 
 $39,357,713; a loss of thirteen millions within that short period, and on the 
 28th December, after conference with the Secretary, in which he still adhered 
 to the views before expressed, it was decided as expedient for the banks to 
 suspend specie payments. 
 
94 
 
 At that moment the associated banks yet held over fnrty millions in coin, 
 and it was still possible for tbem to continue their advances to the Govern- 
 ment but for the two obstacles thus interposed. Before entering into this 
 last conference with the associated banks, some of ihe members expressed to 
 the Secretary the impoftance of continuing his relation to an organization 
 which combined so much of experience, capital and financial resource, and 
 which was yet capable of rendering the Government invaluable service. And 
 that if an irredeemable paper currency was the inevitable resort, it would be 
 more expedient and economical for the Government not to become involved in 
 its dangers, but to impose the duty and responsibility of issuing the notes upon 
 the banks, who would naturally be compelled to keep ttie day of redemp- 
 tion continually in view. Thus, as a suspension of coin payment was about 
 to be declared, it was practicable to preserve from distribution and set aside 
 the forty millions of coin then owned by the banks, together with one hun- 
 dred and fifty or sixty millitas of Governmnnt bonds, which could be taken 
 by them as a special security for two hundred millions of notes, which could 
 then be immediately issued by the associated banks from their own plates, 
 and be verified and made national by the stamp and signature of a govern- 
 ment ofiScer. And that such an issue, so supported by coin and bonds, at 
 once simple and expeditious, would serve the temporary purpose required, 
 with little, if any, deterioration below coin value, and that it would be then 
 practicable for the banks to continue without further agitation their ad- 
 vances. But the Secretary declined to entertain this suggestion, preferring 
 the system of national banks, which he had already conceived. 
 
 Looking back over events that have since transpired, it must be admitted 
 that this suggestion possessed true merit. It would have preserved a coin 
 basis for the currency, prevented the destructive expansion, relieved the 
 Government from its almost inextricable entanglement with the circulating 
 notes, and compelled an early restoration of coin payments. And with a 
 proper use of the expedients and machinery of banks, by utilizing their 
 power of effecting exchanges, which was subsequently applied by the Secre- 
 tary in the national banking system without reserve, this amount would have 
 been found sufficient. When we review the excessive cost of the war, the 
 vast increase of the national debt, and the public and private evils which a 
 profuse currency have entailed upon the country, it must appear evident that 
 in failing early to use and to exhaust all those means and appliances of 
 commerce and banking that the experience of other civilized nations have 
 proved most effective, a great and irreparable mistake was made. 
 
 One more good service the banks in New York were yet enabled to perform, 
 which, although not great in amount, was most important in its effect upon 
 the credit of the government. 
 
 On the first day of January, 1863, $8,000,000 of the national debt, issued in 
 1842, became due. It was the first loan that matured after the passage of the 
 legal tender act, and upon its prompt payment in coin, in which the debt was 
 incurred, depended the reputation and credit of the United States at home and 
 abroad, and its ability to make future loans upon favorable terras. It was a 
 momentous question whether the government would apply the new law to its 
 
95 
 
 own obligations, and thus establish a precedent for the future. There was 
 not sufficient money in the Treasury to pay the debt, and up to the latest hour 
 the question was anxiously discussed in the departments at Washington, 
 and almost decided, to plead inability and to fall back upon the legal enact- 
 ment. At this juncture Mr. Cisco, Assistant Treasurer in New Yorli, to 
 whose patriotic service and wisdom the nation is greatly indebted, zealously 
 interposed his influence. Upon his application to the banks there, they 
 promptly furnished the requisite amount in gold, receiving his personal 
 assurance that it should be repaid out of the revenue when received at his 
 office, and thus the country was again saved from an irretrievable financial 
 disaster. 
 
 The legal tender act was regarded by very many men of influence, from 
 the beginning, as a foregone conclusion, and as a measure of inevitable 
 necessity in war. Great doubt was continually expressed whether this peo- 
 ple would submit to the necessary taxation for war purposes, and whether 
 the country would bear the strain of so gigantic a struggle if conducted upon 
 principles of sound commercial economy. However we may now honestly 
 differ upon that subject, as we did then, it is certain that had the real temper 
 of the nation been earlier felt by the government, it would have greatly 
 modified and retarded the financial legislation of Congress, and the practical 
 administration of the Treasury. The people proved t^i mselves to be thor- 
 oughly in earnest. They needed no patronage to awaken the most heroic 
 devotion, and to draw out the noblest sacrifices as well in private life as in 
 the army. 
 
 It is more immediately practical to enquire what was the nature and effect 
 of that important act ? 
 
 It was, in simple fact, an arbitrary and absolute decree of the government, 
 that with an empty treasury, and in need of all things, its notes payable 
 whenever able and without interest, should be accepted by the people as 
 money. The primary object was to secure material of war without present 
 payment, and in order to effect this exchange it was necessary, secondly, that 
 the edict should empower those who first received the notes to enforce them 
 as money in like manner upon others, and so to distribute the burthen 
 throughout the community. 
 
 This forcible entry of the government into the private afiairs of the people, 
 so utterly at variance with the fundamental principles of our system, so great 
 an abridgment of personal liberty, and operating as a tax so unequal in its 
 effects, was a rigorous measure of war, and as such was vindicated only as a 
 temporary act of dive necessity. In enforcing this unequal burthen. Congress 
 did not leave the holders of the notes without some measure of relief, but it 
 gave to all the option of converting them at pleasure into a six per cent, 
 gold-interest-bearing bond, payable in twenty years. By this means, the notes 
 became equal in value to the bonds for which they were made exchangable, 
 and while during the war the payments of gold interest continually operated 
 to produce a curtailment of the volume of the notes in circulation, the return 
 of peace opened a market abroad for the bonds, which would have ensured 
 
96 
 
 the early and entire absorption of the war currency, and thus cleared th« 
 way for specie payments. 
 
 But, in an evil hour for the country, other counsel obtained possession of 
 the good judgment of the Secretary, and yielding to it, he consented and 
 urged Congress to withdraw this privilege of converting the notes, so that 
 thenceforth all issues were made without it. All notes emitted consequently 
 became an unmitigated burthen upon commerce of indefinite duration, from 
 which there was no escape. A new currency was created utterly at variance 
 with all economic laws, and in conflict with all recognized rules of com- 
 merce and exchange. It did not, like all sound currency, naturally spring 
 out of industry, production and trade, but it "was an enforced result of ex- 
 haustion and necessity. It did not come and go, following the beneficent 
 courses of commerce, expanding and contracting with the times and seasons 
 that required it. But it remained an unyielding, inflexible mass, subject only 
 to the chances and vicissitudes of war. As the war progressed and the country 
 became poorer, this currency increased, giving new instruments and facilities 
 to expend just in proportion as the means of payment were consumed. With 
 a compulsory currency thus made, the measure of prices and daily deterior- 
 ating yet still increasing, is it strange that all other property was eagerly 
 sought for in preference to this, and that prodigal expenditure became the 
 law of the land ? 
 
 In depriving the currency of its convertible privilege, it has been made per- 
 petual. Ten years of peace have elapsed and it yet remains. Commerce did 
 not originate and cannot absorb it. There is no natural relation between the 
 two, but they continue in their original antagonism. 
 
 I believe that the only practicable relief to the country must come from 
 restoring this privilege. Not of conversion into six per cent, bonds, but 
 in those bearing such rate of interest — say five per cent. — as will induce 
 holders to exchange them. This simple measure, coupled with the repeal of 
 the legal tender act for all future operations, will, in my judgment, open the 
 way for the gradual and easy disposition of this unnatural currency — will 
 restore commerce to the operations of natural laws, give a new and healthy 
 stimulus to industry and trade, and with acountry as rich and productive as 
 ours, we shall speedily return to general prosperity. This is the last struggle 
 of the war, and I believe that the whole country earnestly desire to meet and 
 to finish it. Very truly yours, 
 
 GEO. S. COE. 
 
 HON. JOHN B. WILLIAMS. 
 
 Historical and Prophetic Letter to Secretary Chase. 
 
 MKTBOPOLrrAN National Bank, ) 
 New York, Oct. 21, 1875. \ 
 Eon. E. 6. Spaulding, 
 
 Mt Dbak Sie: — Since I read your greenback history and introduction to 
 the second edition, I have looked over copies of some of my letters of the 
 war period. I found one dated Oct. 4, 1861, to Secretary Chase which so 
 
97 
 
 coincides with your views that I have copied it and send it to you enclosed. 
 Do with it what you please, # * * 
 
 Yours very truly, 
 
 J. E. WILLIA.MS. 
 
 Metropolitan Bank, ) 
 ISTew York, Oct. 4th, 1861. [ 
 
 Son. Salmon P. Ohase, Secretary, etc., Washington Gity: 
 
 Mt Dear Sir: — Many thanks for the kiodly words to me, personally, in 
 your letter of the 1st instant. I only wish they were better deserved. 
 
 Will you permit me to add afew more plain words — as you like frankness 
 — on this all engrossing subject? In the hope, not only that I may make 
 myself more intelligible, but with the hope, also, ( I confess,) of modifying 
 your views. 
 
 A complete understanding of this subject is of quite as much importance 
 to the Government as to the banks. Indeed, as you substantially suggested, 
 our interests in this inatter are identical. Whatever strengthens the banks' 
 vaults, increases public confidence in them, and in their ability to carry the 
 Government through. While an increase in the Sub-Treasury's coin weakens 
 us and the Government too. For the public, the people understand that you 
 rely on us. Herein is a mutual interest, then, which I propose to speak of 
 plainly, directly and respectfully. 
 
 You give as a reason for not drawing your checks on the "Loan Banks," 
 that, " however, harmless or beneficial it might be, if confined to the New 
 York banks, it would inevitably result in a general payment and receipt for 
 public dues Of bank notes, which in turn would lead to expansion, which in 
 turn would terminate in suspension and vast injuries to the sound banks." 
 
 1st. I confess this dark array of disastrous consequences has a black face 
 on it. But as neither of us is afraid to look into faces of that color, let us try 
 and see what lies beneath. 
 
 The law authorizes you to select specie paying banks. Suppose you designate, ■ 
 as such, only banks in New York, Philadelphia and Boston, as " Loan Banks" 
 to draw upon. You are thus relieved from any necessity of looking at what 
 might be the consequences if you were to draw on other or less responsible 
 banks. This narrows the question down to those three cities in which the 
 banks have made common cause with you, and they guarantee each other for 
 the fulfilment of their contract with you. The banks in all these cities are as 
 sound as the banks in either city. 
 
 2d. What yon seem to regard as a dangerous element, the bank officers look 
 upon as essential to their safety. What you think would guard against sus- 
 pension of specie payments, they think most likely to precipitate that demor- 
 alizing calamity. What you claim for the Sub-Treasury, they ask for the 
 banks — the disbursement of all United States funds ! While .you regard the 
 payment of public dues in bank notes, convertible at the pleasure of the 
 holder into coin, as an evil to be avoided, they hold it to be as convenient and 
 safe a mode of discharging public obligations as it is private debts. While 
 you speculate as to what is best for sound banks, they think, with their practi- 
 
98 
 
 cal experience, they know wbat is best for their institutions. And inasmuch 
 as the law was made to give the banks this advantage, they feel they have a 
 right to demand it. 
 
 3d. Their general reasons for these conclusions are that Congress meant 
 something, (it is but fair to suppose) when they passed the act of August 5th, 
 1861, suspending so far the Sub-Treasury Act as to aMow you to do what we 
 ask, namely, draw on the loan banks. You will remember you agreed, so far 
 as it was in your power, to conform your operations in this regard to our 
 wishes. That was the result of our understanding vrith you as taken down 
 after you left us on Saturday, from the lips of each of the bank officers com- 
 posing the committee, who heard all you said and noticed your earnest 
 manner. For myself, I was instructed not to agree to take our share of the 
 second fifty millions unless the Government would so far agree to help us as 
 to draw on the banks that furnished the money. This feeling arose, not so 
 much from a desire to derive any petty gain of time or interest by this mode, 
 as it did from a wish to adopt a method which would enable the banks to 
 carry through, without ruin to themselves, this unprecedented loan to the 
 Government. In point ot magnitude without a precedent, I believe, in any 
 country. 
 
 4th. You can now, perhaps, better than before, enter into our feelings and 
 understand our surprise that you should not take our judgment in this mat- 
 ter, but rather argue on the supposition that we do not understand the legiti- 
 mate operations of our own business so well as you do. This happens, too, 
 under circumstances very peculiar. Bui for the banks the Government could 
 not pay aX all! It would have been bankrupt six weeks ago. Surely, my 
 dear sir, this is no time for splitting hairs, or for you to tell bank officers — 
 (impliedly, it is true,) that they don't understand what dangers they propose 
 to encounter. Nor is it a time for you to refuse what they ask merely on an 
 abstract theory of yours as to what might happen. If, on the other hand, 
 you should persist in the course you indicate, is there not danger that you 
 will create the very evil we all desire to avoid, namely, a suspension of specie 
 payments? 
 
 5th. As to the two-years' treasury notes, I am more and more of the opinion 
 that you have no legal right to take them of the people at large, whether our 
 treasury note committee requests you to take them or not to take them, it is 
 all the same, in my opinion, as to your duty. The associated banks paid 
 you a consideration for taking these notes out of their vaults, and you con- 
 tracted to do so. They pay you in another loan ot fifty millions. If the 
 public or a foreign country had loaned you fifty millions on similar terms, 
 you would have been justified, no doubt, by Congress in making a law unto 
 yourself predicated on public necessity. But no such loan has been made, 
 either by the public or by Europe. 
 
 Already the brokers are telling us that they shall pass in the two-years' 
 notes, which they have bought at a discount, take out the 7-30 notes and sell 
 them on the street at a discount, which they can, and make a profit — thus 
 commanding the market. This is the first disastrous demonstration, but, I 
 jear, by no means the last. 
 
99 
 
 The case plainly stated looks unsightly. You hire money at 7-30 to pay 
 obligations bearing only 6 per cent, interest not due for a year and a half, 
 when you need that very money to maintain your existence, and when, as I 
 sincerely believe, you are under no moral or legal obligation to pay a dollar, 
 but on the contrary, are bound not to pay without the sanction of Congress. 
 
 One word and I have done. You will remember that you said to us in the 
 committee, " I am so desirous of meeting your views that I would almost 
 place myself in the hands of this Treasury Note Committee, to do as they 
 should say, confident they would not ask of me anything illegal or improper." 
 This, sir, induced me to move the taking of the second fifty millions. 
 I am, most respectfully and very truly yours, 
 
 jr. E. WILLIAMS. 
 
 hon. george william ctjbti88. 
 
 West New Beighton, ) 
 Staten Island, Oct. 11, 1875. J 
 
 Mt Dear Sir: — I thank you for your introductory pamphlet, which comes 
 
 at a most opportune moment, and will be of great assistance in enlightening 
 
 the public mind and in forming a sound opinion. 
 
 With great regard, very truly yours, . 
 
 GEORGE WILLIAM CURTISS. 
 Hon. E. G. Spaulding. 
 
 HON. E. H. STOTJGHTON. 
 
 New York, Nov. 35, 1869. 
 Dear Sir: — Accept my thanks for the copy you were kind enough to send 
 me of your instructive and interesting " History of the Legal Tender Paper 
 Money Issued During the Great Rebellion." I there find, within a narrow 
 compass, admirably arranged, all that need be studied on the subject ; and 
 in connnection ^ith what is purely historical, may also be found thoughts and 
 suggestions on questions of finance worthy of deep attention. The extent to 
 which the book may be circulated will be the measure of its usefulness. 
 Very truly yours, 
 
 E. H. STOUGHTON. 
 Hon. E. G. SPATTLDnfG. 
 
 hon. montgomery blair. 
 
 456 Louisiana Avenue, ) 
 
 Washington, D. C, Oct. 19, 1875. \ 
 
 Dear Sir: — I thank you for the " Introduction " to the new edition of your 
 
 "Financial History of the War." The work will always form an interesting 
 
 chapter in the history of our great struggle, and it ought now especially to 
 
 attract attention when the effort is being made to perpetuate the error of 
 
 abolishing money, which, in effect, abolishes property, and which your book 
 
 shows was only consented to amid the excitement of war, and in the belief 
 
 that it was necessary to maintain the Union. 
 
100 
 
 I did not concur in the measure even then, and still think it only aggra- 
 vated the evils it was iniended to meet, and added, as General Dix estimates, at 
 least $1,000,000,000 to our debt. Is there anything more susprising than that 
 now, more than ten years after the war, after the man who, as Secretary of 
 the Treasury, recommended the measure, has, as Chief Justice, pronounced it 
 not only unconstitutional, but a blunder, and as having impaired instead of 
 aiding our credit; and when the great body of those who then supported it 
 to aid the governinent have abandoned it, that a portion of those who then 
 opposed the war, and opposed this and all other measures adopted to carry it 
 on, and denounced it as.unconsdtutional, should now seek to make permanent 
 this disastrous policy ? The fact that the Supreme Court validates only ilie legal 
 tenders issued during the wa/r, to which you call attention, shows, however, 
 that there need be no fear of that, and that the court will soon put down the 
 fraud even if the people would tolerate it, of which I have no fear. 
 
 Tours truly, 
 
 MONTGOMERY BLAIR. 
 Hon. E. G. Spaulding, Buffalo, N. Y. 
 
 SENATOH CHKISTIANCT. 
 
 Gold and Paper — Their Actual Value. 
 
 Senator Isaac P. Christiancy, of Michigan, in his letter to the Hard-money 
 Convention, in Detroit, said: '• Now, I am so old fogy in my notions and 
 opinions as to hold that, when an individual or nation is deeply in debt, the 
 true and only honest way of getting rid of that burden is the plain, old-fash- 
 ioned way of paying the debt in money where it was agreed to be paid in 
 money, or in something of equal value and convertible into money ; and if 
 we cannot pay the whole at once, or when due, then to pay the interest in the 
 meantime, and the debt as fast as we can. If we have not the money to pay 
 with, then the better plan is to go to work in any and every foim of productive 
 industries, producing values which will command the money, rather than to 
 adopt the plan substantially followed by a large proportion of our people of 
 speculating out of each other in purely fictitious values, like two boys who 
 shut themselves up in the same room for a week, and both got rich, or fancied 
 they had got rich, by tradmg and retrading jackets with certain offers of 
 boot money each way, which neither ever intended to pay. 
 
 GOV. B. D. MOEGAISr. 
 
 Nbwpobt, R. I., Sept. 13, 1869. 
 Hon. E. Q. Spaulding, Buffalo, 
 
 My Dbak Sir:— I have read just enough of the " Financial History of the 
 War," this morning, which you'have very kindly sent to me, to be much 
 interested therein. As a history it is invaluable, showing as it does, in the 
 clearest possible manner, how the means were obtained for prosecuting the 
 war which finally saved the Union. I feel under great obligations to you for 
 preparing this valuable and concise narrative. I am, dear sir, 
 Very truly yours, 
 
 E. D. MORGAN. 
 
101 
 
 (From the Washington Daily Chronicle, Oct. 4, 1869.) 
 HISTORY OF THE GREENBACK. 
 
 Hon. E. Q. Spaulding, of Buffalo, wlio was a member of the Committee of 
 Ways and Means of tlie House of Representatives at the time of the passage 
 of the legal tender act, as well as of the sub-committee which had especial 
 charge of that subject, has written a " History of the Legal Tender Paper 
 Money Issued During the Great Rebellion.'' This has just been published in 
 the form of a neat octavo volume of two hundred and thirteen pages, and 
 constitutes one of the most valuable contributicms to the history of the late 
 struggle for the preservation of the Union. It presents copious extracts 
 from the speeches of members of both Houses of Congress for and against 
 the bill, and is a complete compendium of the views which then prevailed on 
 both sides of 'the question, as well as a faithful record of the circumstances 
 under which the measure was resorted to. The moment when the nation 
 was engaged in a struggle which taxed its utmost energies and resources, was 
 certainly not the time for that elaborate consideration necessary to the deyelop- 
 ment of the most desirable system of finance. Action, prompt, decisive, and 
 practical, was what the crisis demanded; and while it cannot be denied that 
 the issue of a legal tender paper money unsettled values, and thus occasioned 
 more or less injustice among the people in their settlements with each 
 other, besides increasing th? expenses of the war through the general rise in 
 prices of all commodities, it is equally undeniable that it was a most efficient 
 instrument in the hands of the government in enabling it to meet the exigen- 
 cies of the time, and in bringing the war to a successful termination. It is 
 not as an advocate of a particular plan of finance, however, but as its his- 
 torian, that Mr. Spaulding appears before the public, and in this light his 
 book is of incalculable value. Its strict accuracy is endorsed by the most 
 prominent of the members of both' houses of Congress who aided or opposed 
 the measure whose history he relates, and participated in the discussions by 
 which it was preceded. The experience of that time contains invaluable 
 instruction for our future guidance, and even the mistakes committed may 
 be converted into benefits by turning to profitable account the lessons which 
 they afford. This instruction, and these lessons, Mr. Spaulding has placed 
 before us in the most compendious form possible, and no statesman, business 
 man, or student of finance — indeed, we might almost say no citizen — cah 
 afford to be without his book. 
 
 HON. ALMON M. CLAPP, 
 
 PubUc Printer. 
 
 Washington, Oct. 15, 1875. 
 My Deak Sik:— I am indebted to your polite attention for an advance 
 sheet of your "Introduction" to the second edition of that more than exeel*- 
 lent "J'inancial History of the War," which emanated from your pen some 
 years since. I read that effort, soon after it made its appearance, with more 
 than ordinary pleasure and profit, and now have just completed the perusal 
 of your introductory to the forthcoming edition. 
 
102 
 
 It is but the part of candor that I should here express the opinion that 
 your criticisms relating to the management of our national finances during 
 the period that has intervened since the commencement of the war to crush 
 rebellion occurred, are but merited and just. That war found the nation 
 with an empty treasury, and an imperious necessity for the ways and means 
 to enlist, equip, pay and sustain an army of sufficient force to maintain the 
 National Union from overthrow. That was a trying and fearful crisis, but 
 the ingenuity of statesmanship proved adequate to the emergency. The 
 nation had neither gold nor silver nor paper currency with which to meet 
 the wants of that important and critical period, and hence the national faith 
 was pledged in bonds and paper money to an extent that met the demands of 
 a protracted and expensive struggle. That achievement was without parallel 
 in the history of nations, and reflected great credit upon the wisdom of our 
 statesmanship and the patriotism of our people. 
 
 To you, sir, as much as to any other statesman of that period, i^ the nation 
 indebted for a financial policy that bore it through the war successfully. I 
 apprehend that the second edition of your ' Financial History of the War ■' 
 is superinduced by an effort now being made to inflate our paper currency 
 and postpone the day of its redemption in gold and silver. This movement 
 may be regarded as of serious import. It seems, indeed, incredible that any 
 considerable number of citizens should make an assault upon the national 
 faith and credit by placing our currency beyond the hope of Immediate or 
 remote redemption, but such is the lamentable fact. The call for an unlim- 
 ited volume of paper money issue, when every effort should be made in the 
 direction of early resumption, is indeed alarming. A more reprehensible 
 policy at this period of our history cannot well be imagined, and it demands 
 all the wisdom available to avert the impending evil. The government is 
 pledged to resumption at the earliest day practicable. To postpone that 
 important period indefinitely, as the advocates of inflation propose, would 
 bring discredit upon the national faith and honor, and cover our government 
 with inevitable disgrace. And, beyond this, it would involve the industrial 
 and commercial interests of the country in a common ruin. 
 
 Our currency is irredeemable now, and yet it is proposed that the govern- 
 ment shall issue untold millions more, and thus plunge the nation into 
 ultimate repudiation. This policy is a delusion, and would, if it should 
 obtain, border upon crime. It is a fraud in its intent, and its consummation 
 would stamp the nation with infamy. Its advocates contend that the issue of 
 five or six hundred millions, more or less, of government promises-to-pay 
 will give an impulse to the business energies of the country and bring early 
 prosperity, when its eSect would be to depreciate every paper dollar to a 
 standard of value below fifty cents. Now a paper dollar is worth but eighty- 
 live or eighty-six cents, with a downward tendency. It would not take long 
 under inflation to bring us to a point where it would require two dollars of 
 paper currency to purchase one dollar of gold or silver. Such a prospect is 
 to be deeply deplored, and the danger that it foreshadows should be promptly 
 met aud turned aside. 
 
103' 
 
 If the, nation should yield to the demands of the inflationists, and set its 
 printing presses and paper mills at worlt to pour forth a flood of new-made 
 paper money, that would afford no adequate relief to the business interests 
 of the country. There is more currency now than can be reached for general 
 business purposes, inasmuch as there are but two ways of calling it forth from 
 the vaults of the Treasury and the banks. One is to purchase with currency 
 property or labor, and the other is to obtain it by stealth. Hence to make 
 millions more would not afibrd the promised relief, for the simple reason 
 that the people do not seem to possess the means of purchase, and the chances 
 for theft are not very favorable. 
 
 The ills complained of, and which seem to prompt to inflation, arise from 
 the fai!t that we have in this country at the present time too many consumers 
 and too few industrious producers. There is a numerous class who have 
 undertaken to live by their wits and upon the eflforts of the more industrious. 
 This condition of affairs brings business want and distress where there shculd 
 be abundance, and those who have thus brought themselves to such estate 
 by idleness, extravagance, or mismanagement, are now loudest in their 
 demands for inflation. It is upon such that the engineers of this pernicious 
 measure rely for its success, and yet that class would suffer the deepest dis- 
 appointment when it should fully be consummated. 
 
 It occurs to me that your views of finance are peculiarly adapted to the 
 , work of bringing this nation back to the paths of resumption, prosperity and 
 happiness, and that it will be a fortunate day for the country when they are 
 fully accepted and adopted as the policy of the government. 
 
 In 1861 wfe were called upon to make sacrifices to preserve the national 
 unity and integrity. In 1875 the duty is none the less imperious to rally in 
 behalf of honest money, and that we may preserve the national faith and 
 honor. I am, sir, with much respect, 
 
 Your obedient servant, 
 
 A. M. CLAPP. 
 Hon. E. Gr. Spaulding. 
 
 GEN. J. B. HAWLBT. 
 
 THE POSITION FOR SANE MEN TO TAKE. 
 
 Gbntlembn, I repeat, there is no road to resumption through expansion, 
 except the road that goes through repudiation. If I am not altogether wild in 
 this matter — I have with me the boards of trade, the chambers of commerce, 
 the great merchants and bankers and financiers — if I am not altogether wild 
 in this matter, this is the decisive, the turning-point in the national finances, 
 and what is of infinitely less importance, a turning-point in the history of 
 political parties. Many men who long for political reorganization have, 
 looked eagerly for the action which was to bring it about. Sir, parties are 
 not called into existence by a proclamation. Parties create themselves. 
 They grow out of some profound belief, some great moral purpose. You are 
 furnishing that belief and that purpose to-day, by making it necessary for 
 men to rally, without regard to party lines, for the defense of sound eco- 
 
• 104 
 
 nomical principles and the preservation of tlie honor of the nation. There 
 is no man so good that I will vote for him for any office, from president 
 down to constable, if he is unsound upon this financial question. There is 
 no man so dear to me that I will not fight him from the word "go" until 
 the election closes, if he is unsound on this question. And I know very 
 many men who agree with me on this point. But I do not care whether 
 there bo five, or fifty, or five hundred; I am planted as firmly on this ground 
 as in the days when I was a radical abolitionist, though I could not see the 
 possibility of triumph within a hundred years. I believe, I know what is 
 right upon this matter, and I have no doubt that what is right will come 
 uppermost in this country, that the people will sustain. — Speech of Gen. J. E. 
 Mnwley, of Hartford, in the Souse of Representatives, April 1, 1874. 
 
o 
 
 ADDRESS 
 
 HON. ELBpGE&EHRYjPAULDIf 
 
 mi OFFICERS UNO BANKERS' BUILDING, 
 
 CENTENNIAL GROUNDS, FAIRMOUNT PARK, 
 PHILADELPHIA, 
 
 OCCASION OF THE FORMAL OPENING, MAY 30, 1876. 
 
 Aiiii.ntniiHniil.Xmr CuJ'liiln . 
 THE Sir.NINd OF IHE UECLARATl'JN OF INDEVFNUENCE, JULY 4. ^ll^- 
 
CENTENNIAL. 
 
 OFFICE CENTENNIAL COMMITTEE. 
 14 Pine Street, New York, June 5th, 1876. 
 
 To the Subscribers to the Bank Officers' and Bankers^ Building, 
 
 Centennial Grounds, Fairmount Park, Philadelphia : 
 
 The undersigned committee appointed to take into considera- 
 tion the comfort and conveniences of Bank Officers, Bankers and 
 their families during their attendance at the Centennial Interna- 
 tional Exhibition, to be held in Fairmount Park, Philadelphia, in 
 1876, in commemoration of the one hundredth anniversary of our 
 nation's independence, in the discharge of the duties of their 
 appointment, addressed circular letters to all Bank Officers and 
 Bankers of the United States, asking their co-operation, and a small 
 contribution in money from each, to be applied to the erection and 
 maintenance of a suitable building on the grounds of the Centennial 
 Commission. The Committee have the pleasure to acknowledge 
 a prompt and generous response from all sections of the country to 
 their appeal. The Centennial authorities kindly furnished an eligible 
 site, east of Memorial Hall. The supervision of the erection of the 
 building was confided to a committee, consisting of Messrs. George 
 Philler, President of the First National Bank of Philadelphia, 
 and B. B. Comegys, Vice-President of the Philadelphia National 
 Bank. The building being completed and furnished, was for- 
 mally dedicated to the purpose of its erection on the 30th of May 
 last, in the presence of a large assembly of Bank Officers and 
 Bankers. 
 
 E. C. Knight, Esq., President of the Guarantee Trust and Safe 
 Deposit Company of Philadelphia, Chairman of the Reception 
 Committee, called the meeting to order, and made a few remarks in 
 reference to the object and purpose of the building. After prayer 
 by the Rev. J. Walker Jackson, D. D., the meeting adjourned to 
 the Judges' Pavilion, where, on motion, Joseph Patterson, Esq., 
 President of the Western National Bank of Philadelphia, and 
 President of the Clearing House Association, was called upon to 
 preside. On taking the chair, Mr. Patterson in a few appropriate 
 
and eloquent remarks, introduced the Hon. Elbridge Gerry Spauld- 
 ing, President of the Farmers and Mechanics' National Bank of the 
 City of Buffalo, New York, who responded in an interesting historic 
 review of banking in the United States during the past one hun- 
 dred years. 
 
 The undersigned, for themselves, the Bank Officers and Bankers 
 of the United States, desire to express their grateful thanks to 
 Col. J. E. Peyton, of Haddonfield, New Jersey, for his kindly and 
 courteous assistance in the accomplishment of the work, to the use, 
 and purpose for which it is intended, and to the Building Com- 
 mittee for the valuable services, good judgment and taste displayed 
 by them. 
 
 Thanks are also due to the American Bank Note Company, Phila- 
 delphia, for the compliment of their beautifully engraved card of 
 admission to members. 
 
 Your committee recognize in banking an identity of interest in 
 Common with all the great industries of the country; and in con- 
 clusion, feel that they cannot too strongly recommend the Exhibition 
 as illustrating the progress in the arts and industries of the world. 
 As an educational instrumentality, its benefits can only be attained 
 through personal inspection. It is eminently worthy of the event 
 it so appropriately commemorates. 
 
 Committee of the Associated Banks of the City of New York. 
 
 BENJ. B. SHERMAN, Chairman, . 
 
 President Mechanii^s National Bank. 
 GEO. S. COE, Treasurer, 
 
 President American Exchange National Bank. 
 CHARLES BARD, 
 
 Continental National Bank. 
 W. A, HALL, 
 
 President Oriental National Bank. 
 C. N. JORDAN, 
 
 Cashier jd National Bank. 
 GEORGE F. BAKER, 
 
 Cashier 1st National Bank. 
 
 COMMITTEE OF RECEPTION. 
 
 E. C. Knight, Pres't Guarantee, Trust and Safe Deposit Co., Philadelphia. 
 JNO. A. Stewart, Pres't United States Trust Co., New York. 
 Daniel E. Dodd, Pres't Newark Savings Co., Newark, N. J. 
 Arch'd Sterling, Pres't Savings Bank, Baltimore, Bait., Md. 
 Wm. R. Vermilye, Esq., Vermilye & Co., Bankers, New York. 
 
A. J. Drexel, Esq., Drexel & Co., Bankers, Philadelphia. 
 
 W. A. Tower, Esq., Tower, Giddings & Co., Bankers, Boston. 
 
 G. H. LoKER, Loker & Bro., Bankers, St. Louis. 
 
 Merril Ladd, M. Ladd & Co., Bankers, Chicago. 
 
 Jos. F. Larkin, Larkin, Wright & Co., Bankers, Cincinnati. 
 
 Henry G. Gowen, President Philadelphia Stgck Exchange. 
 
 G. W. McLean, President New York Stock Exchange. 
 
 COMMITTEE ON COINS AND CURRENCY 
 Invite your attention to the Exhibit by the American Bank Note Company of the 
 City of New York. In their card they present specimens of bank notes in the 
 greatest perfection of the art attained through progressive civilization to the date 
 of the exhibition, and in all the written languages of the world. 
 
 The card should receive the attention of all who visit the building. It forms 
 a subject for study and gives assurance that the art has attained its greatest 
 perfection in this country, 
 
 Hon. James Pollock, Superintendent U. S. Mint, Chairman, Philadelphia, Pa. 
 
 Albert G. Goodall, American Bank Note Co., 142 Broadway, New York. 
 
 W. S. Appleton, Boston, Mass. 
 
 Chas. J. HoADLEY, State Librarian, Hartford, Conn. 
 
 R. C. Davis, Philadelphia. 
 
 COMMITTEE ON BUILDING. 
 
 Geo. Philler, Pres't ist National Bank, Philadelphia. 
 
 B. B. COMEGYS, Vice-Pres't Philadelphia National Bank, Phila. 
 
 NATIONAL CENTENNIAL COMMITTEE TO REPRESENT THE 
 STATES AND TERRITORIES. 
 
 New York — Chas. M. Fry, President Bank of New York, Chairman. 
 
 Alabama — Charles Hopkins, President National Commercial Bank, Mobile. 
 
 Arizona — L. M. Jacobs, Tuscon. 
 
 Arkansas — Logan H. Roots, President Merchants' National Bank, Little Rock. 
 
 California — George F. Hooper, President First National Gold Bank, San Fran- 
 cisco. 
 
 Colorado— Yion. Jerome P. Chaffee, President First National Bank, Denver. 
 
 Connecticut — James Bolter, President Hartford National Bank, Hartford. 
 
 Dakota — J. C. McVay, President .First National Bank, Yankton. 
 
 Delaware — Edward Betts, President First National Bank, Wilmington. 
 
 District of Columbia — Fitzhugh Coyle, President National Bank of the Republic, 
 Washington. 
 
 Florida — J. W. C. Moore, President First National Bank of Florida, Jackson- 
 ville. 
 
 Georgia — Henry Brigham, President Merchants' National Bank, Savannah. 
 
 Idaho — B. F. Channel, President First National Bank of Idaho, Boise City. 
 
 Illinois — L. J. Gage, Cashier First National Bank, Chicago. 
 
 Indiana — Hon. Wm. H. English, President First National Bank, Indianapolis. 
 
Iowa — Lyman Cook, President First National Bank, Burlington. 
 
 Kansas — Lucien Scott, President First National Bank, Leavenworth. 
 
 Kentucky — H. C. Caruth, President Merchants' Bank, Louisville. 
 
 Louisiana — S. H. Kennedy, President State National Bank, Nevir Orleans. 
 
 Maryland—'^. S. Norris, President First National Bank, Baltimore. 
 
 Maim — H. J. Libby, President First National Bank, Portland. 
 
 Massachusetts — Franklin Haven, President Merchants' National Bank, Boston. 
 
 Michigan — Alex. H. Dey, President American National Bank, Detroit. 
 
 Minnesota — Horace Thompson, President First National Bank, St. Paul. 
 
 Mississippi — John A. Klein, President Mississippi Valley Bank, Vicksburg. 
 
 Missouri — ^J. H. Britton, President National Bank of the State of Missouri, St. 
 
 Louis. 
 Montana — S. T. Hauser, President First National Bank, Heleni. 
 Nebraska — Ezra Millard, President Omaha National Bank, Omaha. 
 Nevada — ^George Tufly, President Carson City Savings Bank, Carson. 
 New H&vipshire — W. H. Y. Hackett, President First National Bank, Ports- 
 mouth. 
 New Jersey — O. L. Baldwin, Cashier Mechanics' National Bank, Newark. 
 Neiu Mexico — Hon. S. B. Elkins, President First National Bank, Santa Fe. 
 North Carolina — Isaac B. Grainger, President Bank of New Hanover, Wil- 
 mington. 
 
 Ohio — D. J. Fallis, President Merchants' National Bank, Cincinnati. 
 
 Oregon — Henry Failing, President First National Bank, Portland. 
 Pennsylvauia — James W. Weir, Cashier Harrisburg National Bank, Harrisburg. 
 Rhode Island — Col. Wm. Goddard, President Providence National Bank, Provi- 
 dence. 
 
 South Carolina — C. O. Witte, President People's National Bank, Charleston. 
 
 Tennessee — James Whitworlh, President Fourth National Bank, Nashville. 
 
 Texas — J. M. Brown, President First National Bank, Galveston. 
 
 Wfl/i-rHun. Wm. H. Hooper, President Deseret National Bank, Salt Lake City. 
 
 Vermont — Hon. John B. Page, President National Bank, Rutland. 
 
 Virginia — Geo. M. Bain, Jr., Cashier Exchange National Bank, Norfolk. 
 
 West Virginia — J. N. Catnden, President First National Bank, Parkersburg. 
 
 Wisconsin — C. S. Bradley, President Milwaukee National Bank, Milwaukee. 
 
 Wyoming — A. R. Converse, President First National Bank, Cheyenne. 
 
 E. G. SPAULDING, President of Farmers' and Mechanics' National Bank, 
 Buffalo, President of the Association. 
 
 GEORGE PHILLER, President of First National Bank, Philadelphia, 
 Vice-President of the Association. 
 
 GEO. S. COE, Esq., President of the American Exchange National Bank 
 Broadway, N. Y., Treasurer. 
 
 BENJ. B. SHERMAN, 
 
 CHARLES BARD, 
 
 W. A. HALL, \ Commitiee. 
 
 C. N. JORDAN, 
 
 GEORGE F. BAKER, 
 
At a meeting of Bank Officers and Bankers of the United States, 
 held on May 30, 1876, at loj^ A. M. in the Banker's Building on the 
 Centennial Grounds, E. C. Knight, Esq., Chairman of the Com- 
 mittee of Reception, called the meeting to order by the following 
 remarks : 
 
 Gentlemen : — As Chairman of the Committee of Reception, I 
 take pleasure in extending to you a hearty welcome. The Building 
 which we now dedicate has been erected and furnished out of the 
 funds contributed by the Banks, Bankers and Trust Companies of 
 the United States, under the supervision of a Building Committee, 
 consisting of Mr. George Philler, President of the First National 
 Bank of Philadelphia, and Mr. B. B. Comegys, Vice-President of 
 the Philadelphia National Bank. For the good services rendered 
 by these gentlemen we are greatly indebted. The object is that 
 the subscribers and their families may have a suitable and conveni- 
 ent place to use during their visits to the Centennial. 
 
 The Judges' Pavilion has been tendered for our use this morning, 
 to which, after prayer by the Rev. J. Walker Jackson, whom I now 
 have the pleasure of introducing, we will adjourn to complete the 
 exercises of the day. 
 
 PRAYER. 
 REV. JNO. WALKER JACKSON, D. D. 
 
 O Almighty God and most merciful Father, who day after day dost minister to 
 sinful men infinite occasions of praising Thee, accept of our unfeigned thanks 
 for all the blessings we have and every day receive, from Thy good providence. 
 
 Thou hast given us being in a land blessed with abundance of temporal bless- 
 ings, a land rich witii the bounties of Thy providence, favored with all the con- 
 ditions necessary to material and intellectual progress and prosperity. Thou hast 
 blessed us with civil and religious libeiiy ; and by Thine own right hand hast led 
 us, through all the dangers that have encompassed us in the past, up to this glad 
 year of our joy and rejoicing, in the divine goodness that made and preserved 
 us a Nation. We bless Thee for the republican form Thou hast given to our 
 government; for the success Thou hast given to the great experiment of self-gov- 
 efnment, in the assured liberty to worship God according to the dictates of con- 
 science; in the wide provision for the education of the people by our common 
 schools and colleges and other institutions of learning ; in the prosperity of ou"" 
 free churches ; in the liberty of the press. We thank Thee, O God, that we cele- 
 brate this hundredth year of our National life at peace with each other and with 
 all mankind. O Lord, m.ollify all exasperated minds, take away all animosities 
 and prejudices, contempt and heart-burnings, and by uniting the hearts of the 
 people, prepare for the reconcilmg all opinions, for the furtherance of Thy glory 
 in the continued preservation of our national being and well-being. 
 
 We thank Thee, O God, for the success Thou hast given to the efforts of Thy 
 people, appropriately to celebrate this year in peaceful rivalry with all nations, 
 
in the exhibition of their and our relative progress in all the arts and industries 
 that adorn and add comfort to the homes of men. There is a spirit in man, and 
 the inspiration of the Almighty giveth him understanding. Inspire us, O God, to 
 glorify Thee in the meditations of our hearts, in the words of our mouth, in the 
 products of our hands, guided by the intelligence with which Thou hast en- 
 dowed us. 
 
 O, that the prosperity with which Thou hast so abundantly blessed us may not 
 lead to dissoluteness of life ; but may we be established in true holiness, putting 
 away all sin, and clothing ourselves in all righteousness of endeavor. 
 
 Bless Thou those who have met here to-day to dedicate this building. Thou 
 hast given them the heart to honor Thee in prayer and praise and thanksgiving. 
 May their lives and health be precious in Thy sight. Let Thy blessing rest upon 
 the entire commercial interests of this land, that all buying and selling and get- 
 ting gain may be done in the fear of God. 
 
 Give to all rulers, both in national and State governments, wise and under- 
 standing hearts. Bless all the nations of the earth ; sanctify their intercourse 
 with each other in the interests of human brotherhood, to the abolition of war, 
 and for the universal dissemination of the knowledge of the glory of the Lord. 
 Forgive us, O God, our sins, accept our praises and answer our prayers as they 
 are in accordance with Thy will ; we humbly beseech Thee, O our God and 
 Father, through the infinite riches of Thy goodness and mercy in Christ Jesusj 
 our Lord. Amen. 
 
 The Bankers' Building not being of sufficient capacity to ac- 
 commodate all who were present there the meeting was adjourned 
 to iht Judges' Pavilion in which seats had been provided, when on 
 motion Joseph Patterson, Esq., President of the Western National 
 Bank of Philadelphia, and President of the Philadelphia Clearing 
 House Association, was made president of the meeting, who on 
 taking the chair made the following introductory remarks : 
 
 Gentlemen : — In obedience to your request, I have assumed 
 the Chairmanship, and direction of this meeting, and I thank you 
 for the honor you have conferred on me. The duties of the Chair 
 will not be difficult to discharge, being only to present to you the 
 distinguished gentleman from the State of New York, who will ad- 
 dress you on topics appropriate to the character of this meeting of 
 Bankers from all parts of our country ; and afterward, to share with 
 you the pleasure of hearing one, who, from his large experience as 
 a Banker, and the positions he has filled in public life, is well quali- 
 fied to interest and instruct you ; and I will not invade his province 
 by reference to or discussion of subjects relating to Banking, but 
 will confine myself to expressing to you a cordial welcome to this 
 birth-place of the nation, and to the patriotic commemoration of 
 the one hundredth anniversary of that great event. 
 
Did I speak of Mr. Spaulding as from the State of New York ? 
 I recall that expression. On other occasions, and in any other 
 place than this, we may regard our local habitations and State sepa- 
 rations as worthy of advertisement ; not so here, and to-day, sur- 
 rounded as we are by so many hallowed memories of the first years 
 of our national life, associated with this locality; standing on 
 ground almost sanctified by Revolutionary dust, for just across this 
 river a few miles is the scene of the battle of Germantown ; up this 
 same river, a few miles distant, is Valley Forge, where Washington 
 and his exhausted army endured the rigors of the severe winter of 
 1777 and '78. 
 
 Here, almost within your sight in this beautiful Park, is the old 
 Belmont mansion, where Washington, Robert Morris, and other 
 Revolutionary worthies were honored guests, and their feet have 
 often trod the turf pressed by yours to-day. 
 
 In this city was the home of Robert Morris, the Financier of the 
 Revolution, whose name should be an honored one by this assem- 
 bly, who devoted his personal services, property, and credit to his 
 country in the hour of its greatest need, and of whom it may be 
 said, as truly as it was of Hamilton, that " He smote the rock of 
 the national resources, and streams of revenue came forth ; he 
 touched the dead body of the public credit, and restored it to life. ' ' 
 
 In that historical building in the city, the Hall of Independence, 
 there is now deposited the original paper on which is inscribed that 
 memorable declaration which, one hundred years ago, in that room, 
 the conscript Fathers made, and there you may now see the venera- 
 ble bell which, in the language of its prophetic inscription, " Pro- 
 claimed Liberty throughout the land, and to all the inhabitants 
 thereof," and standing.here, at the close of the first century of the 
 nation's life, with all these clustering associations, and grateful and 
 solemn memories, it is right that we meet here, not as citizens of 
 New York, or Pennsylvania, or any other State or territory in our 
 land, and hence it is, gentlemen, that I bid you welcome as citizens 
 of the United States, all regarding with pride that flag which, 
 wherever it meets the eye of a true American, is to him the symbol 
 and declaration of the authority, not of any State, but of the gov- 
 ernment of the people of the United States. 
 
 You have come here, not only to assist in a great national com- 
 memoration, but to witness an International Exhibition of the 
 World's Industry and Art ; comparing the progress made in our 
 country with that of others, in all that affects and promotes the 
 
8 
 
 welfare of man ; and to this the governments and people of the 
 world are invited, and are represented here > and there is no nation 
 on earth which at present is attracting so much inquiry and obser- 
 vation as is this young Republic. 
 
 Thoughtful men abroad are looking at the working of our politi- 
 cal system with interested attention, a,nd good men everywhere de- 
 sire the success of this experiment of republican liberty, for they 
 know that the Democratic Idea is extending in European society, 
 that it is gathering strength with the passing years, and they hope 
 that when the time will come for its expression as a force, it may be 
 directed by our successful example, and result in peaceable modifi- 
 cations of existing forms of government, and not in violence, blood- 
 shed, and anarchy. 
 
 More than a century ago, it was said, " Westward the star of 
 Empire takes its way." That which, when first uttered, was re- 
 ceived only as the rhapsody of the Poet, is now accepted as the 
 prophetic judgment of a Philosopher, applying the lessons of His- 
 tory. I^et us hope that it will move on its destined course a bril- 
 liant and benignant orb, to the enlightenment and benefit of man- 
 kind ; and now, with revolution achieved, popular liberty secured, 
 and the authority of government established, in the coming cen- 
 tury, we may seek no victories except those which follow in the 
 train of Peace ; that in our country, the Arts will find a peaceful 
 asylum, that here may be the chosen seat of Science and the home 
 of Learning, that toward this western world all men may look for 
 opportunities of rational life, and examples of wise and beneficent 
 government, and gratefully and freely acknowledge, that "Time's 
 noblest offspring is its last." 
 
 One hundred years. How brief a time in the history of a 
 nation, when compared with that of some of the nations 'of the 
 Old World. The great Napoleon on his expedition to Egypt, 
 when his wearied army was in sight of the gigantic Pyramids, 
 which for more than four thousand years have reared their vast 
 bulk over the sands of the desert, to stimulate the flagging energies 
 of his fainting soldiers, said to them, " From the summit of these 
 Pyramids, forty centuries are looking down upon you." Although 
 we regard the period of our National life as only one century, the 
 first causes of it lie much farther back up the stream of Time ; and 
 although this is only the first century of American Independence, 
 it is the nineteenth of Christian Civilization. 
 
 In the progress we have made as a nation, in the last century, 
 
^ 
 
^&M>i^i^. 
 
 ^i>- 
 
 
 '^^:->>»?*'>-'-» 
 
there is cause of pride, and much rejoicing ; and tliere should be 
 thanksgiving that so much has been done for the welfare. of man on 
 this continent. Let us thank God, and take courage for the future, 
 remembering that in the Divine economy, beside every right, 
 privilege and enjoyment, there is corresponding duty, let us re- 
 solve, that as our fathers gave us this, plea^anj;^land, and this free 
 government,, we will preserve and transmit it to- those who will 
 succeed us, a government of cont'|olfed and regiil|ted liberty. 
 
 Gentlemen, I will no longer detaiii you frbm the pleasure and 
 instruction now awaiting you. We rejoice to meet you here ta-day, 
 surrounded by so much that reminds us ""of the founders of our 
 government who did their work so Inohly. Let ^s cherish and 
 honor their memories, and try to emulate their patriotism!; and 
 may the citizens of this Republic,'now living, so -discharge their 
 duty to their country that the un'born milTTons who a centuryhence, 
 will be here, when we shal]( all have passed awa^'.f^ay speak 
 gratefully of the inen of this generationi: as we nSw" do of the 
 Fathers of the Republic*. V 
 
 Gentlemei, I have,.iiow the pleasure of presenting' to yt3u the 
 Hon. Mr: Spau,lding/ at other times, and elsewhere, of the Senate 
 of New Yorll, ^ut to-day, and here, citizen of the United States. 
 
 ADDRESS OF HON. ELBRIDGE GERRY SPAULDING. 
 
 GENTLEMEN : i 
 
 Invoking the continued guidance of the Supreme Ruler of the 
 Universe, who Jiasj shaped the destiny of this great courftry for the 
 last hundred years, I appear here to-day with my fellbw !!Bankers 
 to express our tr^teful thank* to the- governments anjd people 
 participating' in this i great International '^Expositioft', for .uniting 
 with us to comimemorate the patriotic deeds of the departed heroes 
 of the American Revolution. We assemble here' with reverence 
 and gratitude to join this vast assembly in paying proper tribute 
 to the heroic men who achieved American Independence. This 
 great Centennial gathering has two objects in view ; the first 
 inspires patriotic and grateful feeling forlhe»great worjc. accom- 
 plished by the founders of our Republican fori,)^o/ government ; 
 the second arouses the pride which wg all feel in exhibiting, in 
 common with all other countries, the industry arid skill developed 
 in a hundred years of progress. • 
 
 I revere and honor the patriotic fathers of 1776, for organizing 
 
the thirteen English Colonies into an independent Union for self- 
 defence, resulting in successful resistance to the civil and military 
 oppressions of King George the Third. On this hallowed ground, 
 in this historic city, they declared their independence of the British 
 Crown. After long years of hardships, privations and blood, this 
 Union was finally made perpetual by the formation of a Constitu- 
 tional Government, which went into operation in the City of New 
 York in 1789. 
 
 The illustrious Washington was there inaugurated its first Presi- 
 dent by the unanimous voice of the American people. Under this 
 constitution we became a nation, having mutual interests and a 
 common destiny ; under it we have greatly prospered. The partial 
 development of this Empire of Freedom has thus far brought forth 
 astonishing results. The grand and imposing display of industry 
 and skill we here witness on these beautiful grounds has no parallel 
 in history. The various departments before and around us, exhibit 
 the marvelous progress which has been made in our own country 
 during the last hundred years. Enlarging our view, and taking 
 in the whole of this International Exposition of art, science, ag- 
 riculture, manufacturing, mining, commerce, including all the 
 various occupations, business and industries of the human race, 
 we behold a greater collection of products which contribute to the 
 well being and social intercourse of mankind, than was ever before 
 known to be exhibited in the history of the world. I feel that I 
 cannot command language adequate to describe the grand Exposi- 
 tion here presented to our admiring view. Each of the depart- 
 ments will have its own speaker to narrate its discoveries and 
 achievements, and record its history. I will, therefore, without 
 further preliminary remarks, proceed at once to speak of the won- 
 derful progress made in the business of banking, which is the part 
 assigned to me on this memorable occasion. 
 
 "ONE HUNDRED YEARS OF PROGRESS." 
 
 These are significant words when applied to th'e business of 
 banking within the United States. Marvelous progress has indeed 
 been made. At the time of the Declaration of Independence, there 
 was no organized bank in the thirteen colonies to furnish any aid 
 or support to the Revolutionary Army. Previous to that time 
 merchants assisted in a qualified way in carrying on a limited 
 commerce, and the foreign exchanges were principally furnished 
 
II 
 
 by those engaged in shipping to foreign countries. The exchange 
 of commodities was largely carried on in all parts of the colonies 
 by what was called barter, namely, exchanging one commodity for 
 another ; and the sturdy yeomanry manufactured their own wear- 
 ing apparel in their own homes. Gold and silver were, however, 
 the basis of the limited foreign commerce then carried on. Now, 
 there are within the United States 907 chartered State banks, 2,118 
 National banks, 666 saving banks, and 2,375 private bankers; 
 making a total of 6,066 banks and bankers. [See table in the 
 Appendix, which has been furnished to me by Mr. B. Romans, 
 Editor of the Bankers' Magazine, New York]. I am not here to 
 present a treatise on banking, but I may, perhaps, with propriety 
 make some general statements respecting its origin, and the general 
 principles which govern the business. In collecting historical facts 
 I have frequently adopted the verbatim statements of those who 
 have previously written upon the subject. The Bank of Venice, the 
 first establishment of the kind in Europe, was' established in 1171, 
 and owed its existence to the Crusades, and the necessity of the 
 government obtaining means for conducting these wars. It was 
 originally, a bank of deposit, and in the earlier days of the institu- 
 tion these deposits were not subject to draft, as is generally the 
 case with banks of this kind. These deposits could, however, at 
 the pleasure of the owner, be transferred on the books of the bank. 
 This system was at a later period discontinued, and the deposits 
 became subject to draft. This bank continued in existence without 
 interruption until it was overthrown by the revolutionary army of 
 France in 1797. 
 
 The Bank of Genoa was projected in the year 1345, but did not 
 go into full operation till 1407. It was for centuries an important 
 institution in that commercial city, but in 1800 it shared the same 
 fate as the Bank of Venice, by being pillaged by the French army 
 under Massena. 
 
 The Bank of Amsterdam was founded in 1609, Holland being 
 then possessed of a large foreign trade. This bank was only a 
 bank of deposit, and the money in its possession was transferred 
 on the books of the institution at the pleasure of its owner or 
 owners. The primary object in the establishment of the bank was 
 to give a standard or certain value to bills which might be drawn 
 upon Amsterdam — rendered necessary by the depreciation of the 
 coin owing to its having been worn or clipped. Here these coins 
 were received on deposit, and had their value established by weight 
 
or fineness. It was not the design on founding the institution that 
 the funds should at any time be lent out, but should remain in its 
 vaults. However, the directors having lent to the governments of 
 Holland and Friesland a large sum of money, the fact became 
 known on the invasion of the French army, and produced the ruin 
 of the institution. The Bank of Hamburg was established in the 
 year 1619. This institution is a bank of deposit and circulation, 
 which circulation was based upon fine silver in bars. 
 
 BANK OF ENGLAND. 
 
 The Bank of England was established in 1694 — William and 
 Mary then being on the throne. To the war with France, and the 
 extreme difficulty experienced by the Government in raising funds 
 for that war, is the institution of the monopoly due. Like the 
 earliest of these institutions, the Bank of Venice, it owes its exist- 
 ence to the wants of the government which gave it life. The idea 
 first originated with Mr. William Patterson, a merchant of Lon- 
 don, who readily saw that the Government, which had been paying 
 interest at the rate of from 20 to 40 per cent, per annum, would, 
 without much hesitation, grant exclusive and almost unlimited 
 privileges to such parties as would in turn furnish it with a fixed 
 and permanent loan at a reasonable rate of interest. The plan 
 being brought to the attention of the King, was submitted to the 
 Privy Council, where the details were completed, and it was laid 
 before Parliament. There, however, it met the violent opposition 
 of a formidable party. Nevertheless, the bill was carried by the 
 Government, and on April 25, 1694, became a law. It was pro- 
 vided that the capital, ;^i, 200.000, should be permanently lent to 
 the Government at 8 per cent, per annum ; and that in addition to 
 the interest, an allowance of ^4,000 per annum should be made 
 by the Government for the management of the debt. 
 
 The capital has, at various periods, been as follows: 1694, 
 ^1,200,000; 1697, ;^2,2oi,i7i; 1708, _ ;^4,402, 343; 1709, 
 £5,°5^,54T, 1710.^^5.559.996; 1722, ;£8',9S9,996 ; 1742, £g,- 
 800,000; 1746, _;^io,78o,ooo; 1782, ^^11,642, 400; 1816,^14,- 
 553.°°°- 
 
 Since first this institution was founded, its capital and the loan 
 to the Government have been nearly identical in amount. The 
 following are the dates of the several renewals of the charter, with 
 the amount of Government debt at each period, to wit: 1694, 
 
13 
 
 j^i,2oo,ooo ; 1697, _;^i, 200,000 ; 1708, ;£3,37S,o27 ; 1713, 
 ;^3.375>°27J 1742, ^10,700,000; 1764, ;^ii, 686,800; 1781, 
 ;^ii,686,8oo; 1833, ;^ii, 015, 100 ; 1844,^11,015,100. 
 
 The management of the entire public debt of Great Britain is 
 placed in the hands of the Bank of England, for which service it 
 has received compensation which has from time to time varied in 
 amount, according to circumstances. During the year 1845 this 
 compensation was _;^94,iu, 19s. lod. 
 
 The Bank of England is a striking example of the combined 
 power of public authority and private influence in sustaining the 
 Government of England, as well as the agricultural, manufactur- 
 ing and commercial business of that empire. The bank has been 
 the chief agent in sustaining the British Government in the long 
 and exhausting wars in which she has been engaged. It has also 
 been an important aid to the industry and commercial prosperity 
 of its people, and the business of the country has gredtly prospered. 
 
 The Bank of England is the fiscal agent of the Government. It 
 receives and disburses all the public months ; and notwithstanding 
 it is a bank of discount, deposit and circulation, it has thus far con- 
 ducted the business in a very satisfactory manner, and without the 
 loss of any of the money entrusted to it. It has been in operation 
 182 years, and the United States Government may safely profit by 
 this example. 
 
 There was neither a regularly organized Treasury Department, 
 nor an organized bank, during the first years of the War for Inde- 
 pendence, and consequently great embarrassments were experi- 
 enced in raising the means to prosecute the war. Hon. Robert 
 Morris, an able, experienced financier and true patriot, was very 
 efficient in managing the fiscal affairs of the country. On his own 
 responsibility he frequently borrowed large sums of money for the 
 use of the Government, which, on account of its known embarrassed 
 condition, could not be procured in any other way. In June, 1780, 
 Mr. Morris, in conjunction with other patriotic citizens of Phil- 
 adelphia, effected a temporary organization by means of which 
 3,000,000 rations of provisions and 300 hogsheads of rum were 
 forwarded to the army. On February 20, 1781, he was unani- 
 mously elected Superintendent of Finance, and by subsequent res- 
 olutions of the Continental Congress, was invested with almost 
 the entire control of the financial affairs of the Government. 
 At this time the Treasury was more than ^2,500,000 in debt for cur- 
 rent expenses, the army destitute, and the credit of the country 
 exhausted. 
 
14 
 
 During the financial administration of Mr. Morris, he several 
 times pledged his private credit for public supplies. In the begin- 
 ning of 1781, he furnished the suffering army with several thousand 
 barrels of flour; and in the campaign of that year, he supplied 
 nearly everything required for the advance upon the British army 
 under Cornwallis. For this purpose, and as a part of the means 
 used, he issued his own notes to the amount of ^1,400,000, which 
 were finally paid. 
 
 Our acknowledgments are also due to the French Government 
 and people, for the tiniely and efficient aid rendered the United 
 States Government, which resulted in compelling Lord Cornwallis 
 to surrender the British forces at Yorktown to the American army 
 under the command of General Washington, in October, 1781. 
 
 BANK OF NORTH AMERICA. 
 
 The first bank organized in the United States was the Bank ot 
 North America, at Philadelphia, in 1781. This institution was 
 established under the auspices of Mr. Morris, Superintendent of 
 Finance, and a delegate to the Continental Congress from the State 
 of Penn*ylvania. 
 
 During the year preceding its incorporation, the finances and. 
 credit, both of the States an4 of the Continental Congress, were, 
 as before stated, almost entirely exhausted. In order to procure 
 supplies for the support of the army. Congress and several of the 
 State Governments had been obliged to have recourse to the issuing 
 of bills of credit, which was the principal circulating medium. 
 
 On May 10, 1775, soon after the battle of Lexington, Congress 
 made provision to issue Continental paper to circulate as money — 
 ^2,000,000 of which were put in circulation, commencing five days 
 after the memorable battle of Bunker Hill. 
 
 From month to month these issues, which in the aggregate 
 reached ^350,000,000, depreciated until eventually they became 
 entirely valueless, notwithstanding the laws making them a legal 
 tender for private debts. Until the issues exceeded $9,000,000 Con- 
 tinental currency, according to the concurrent testimony of Mr. 
 Jefferson and Mr. Paine, passed at its nominal value. The depre- 
 ciation was afterwards very great. In May, 1781, this currency 
 ceased to citculate as money, but was afterwards bought on specu- 
 lation at various prices, from 400 to one, up to 1,000 to one. On 
 May 17, 1 781, a plan for a National Bank having been submitted 
 
IS 
 
 to the Continental Congress, the principal provisions of which were 
 as follows: The capital to be ^400,000, in shares of ;^4oo each ; 
 that there be twelve directors chosen from those entitled to vote, 
 who at their first meeting shall choose one as president ; that the 
 directors meet quarterly ; that the board be empowered, from time 
 to time, to open new subscriptions for the purpose of increasing 
 the capital of the bank ; statements to be made to the Superin- 
 tendent of the Finances of America; that the bank notes payable on 
 demand shall by law be made receivable in the duties and taxes of 
 every State, and from the respective States by the Treasury of the 
 United States; that the Superintendent of the Finances of America 
 shall have a right at all times to examine into the affairs of the 
 bank. On May 26, Congress passed the following: ^^ Resolved, 
 That Congress do . approve of the plan for the establishment 
 of a National Bank in these United States, submitted for their 
 consideration by Mr. R. Morris, May 17, 1781, and that they will 
 promote and support the same by such ways and means, from 
 time to time, as may appear necessary for the institution and con- 
 sistent with the public good ; that the subscribers to the said bank 
 shall be incorporated agreeably to the principles and terms of the 
 plan under the name of ' The President, Directors and Company 
 of tlie Bank of North America.' So soon as the subscription shall 
 be filled, the president and directors chosen, an application for 
 that purpose was made to Congress by the president and directors 
 elected." On December 31, following. Congress passed "an ordi- 
 nance to incorporate the subscribers to the Bank of North America.' ' 
 The first president was Thomas Willing, and the bank formed a 
 most important auxiliary in aid of the finances of the Government 
 to the final conclusion of the war. This institution was incor- 
 porated by the State of Pennsylvania on April 18, 1782. The bank 
 commenced business in January, 1782, with a capital of $400,000,^ 
 of which ;g2So,ooo was subscribed by the Government. In the- 
 year 1785, when an ill feeling had arisen between the Government 
 of the State of Pennsylvania and the bank, the former repealed 
 the charter which it had granted in 1782. The bank, however, 
 continued its operations under the charter granted by the General 
 Government until in 1787, when it was re-chartered by the State 
 of Pennsylvania. It has, from to time, been re-chartered, and in 
 1865 it organizied under the National Bank law, and now has a 
 capital of ^1,000,000, and a surplus of the same amount. 
 
 Previous to the time when this bank went into operation, the 
 
i6 
 
 Continental army became very much reduced ; the necessary arti- 
 cles of clothing and provisions could not easily be procured, the 
 soldiers became dissatisfied, and fears were entertained that the 
 campaign must terminate unfavorably, or in a relinquishment of 
 everything for which the American people were then contending. 
 Owing, however, to the timely aid of Mr. Morris, and other patri- 
 otic citizens, and the support given to the financial department of 
 the Government by the establishment of this bank, confidence was 
 in a great measure restored to the army, provisions and supplies 
 were obtained, fresh vigor was infused among the troops, and to it 
 and the efforts of Mr. Morris may be ascribed the expulsion of the 
 British from the Southern States, and the termination of the con- 
 flict that secured American Independence by a treaty of peace in 
 1782-3. Some further details in regard to the Bank of North 
 America will be found in the Appendix. 
 
 BANK OF NEW YORK — 1 784. 
 
 This was the first organized bank in New York. Its business 
 was commenced as an association without charter on 9th of June, 
 1784, under the name of "The President, Directors and Company 
 of the Bank of New York," in the Walton House, Franklin Square, 
 then known as 159 Queen street. 
 
 The first president was General Alexander McDougall ; cashier, 
 William Seton. 
 
 In 1786, Isaac Roosevelt, Presid'ent; William Maxwell, Vice- 
 President ; Directors — Samuel Franklin, Nicholas Low, Daniel 
 McCormick, Robert Brown, Thomas Houghton, Joshua Wadding- 
 ton, Comfort Sands, Thomas Randall, Gen. Alexander Hamil- 
 ton, John Vanderbilt, James Buchanan. 
 
 The bank removed to Hanover Square and continued business 
 •as an association until 1781, when on the 21st of March of that 
 year a charter was granted by the Legislature of New York for a 
 period of twenty years, with a capital of ;g9oo,ooo, divided into 1,800 
 shares of ^500 each, with the addition of a subscription on the 
 part of tlie State of 100 shares of the same amount — total, ^950,000. 
 Business under the charter began May 3, 1791. 
 
 On the 1 8th of May, 1852, the Bank of New York was reorgan- 
 ized as an association under the general banking law of the State 
 of New York, with the name and title of " The Bank of New 
 York," and the capital increased to ;j;2, 000,000. On the 17th of 
 
17 
 
 April, 1857, the capital was increased to ^3,000,000, and on July 
 6, 1865, it was organized under the National Bank act under the 
 name of "Bank of New York National Banking Association." 
 The accompanying Appendix contains further details in regard to 
 this bank. 
 
 THE BANK OF THE MANHATTAN COMPANY, 
 
 in the City of New York, was organized under an act of the Legis- 
 lat^lre of the State of New York, passed April 2, 1799, with a 
 capital of $2,000,000. The chief object of the act appearing on its 
 face, was to supply water to the City of New York, but there was a 
 section in the act which, it was claimed, conferred perpetual bank- 
 ing powers. The words in the act were that the corporation might 
 employ its surplus capital "in the purchasing of public or other 
 "stock, or in any other moneyed transactions or operations not 
 " inconsistent with the Constitution and laws of this State or of the 
 "United States." The first directors were Daniel Ludlow, John 
 Watts, John B. Church, Brockholst Livingston, William Edgar, 
 William Laight, Pascal A. Smith, Samuel Osgood, John Stevens, 
 John Broome, John B. Coles, Aaron Burr. 
 
 On the 25 th March, 1808, it was authorized to increase the 
 capital stock $50,000, and it is now carrying on business with a 
 capital of $2,050,000. 
 
 The Bank of the Manhattan Company is the fiscal agent of the 
 State of New York in the City of New York. It keeps a registry 
 of the State stocks, pays the interest, and also makes the transfers 
 on the books, under the general supervision of the State Comp- 
 troller and Treasurer. 
 
 THE merchants' BANK 
 
 is the third of the old banks-organized in the City of New York. 
 Like the Bank of New York, it was first organized as a " Company 
 or Limited Partnership ". in 1803, with a capital of $1,250,000. 
 On the 26th of March, 1805, an act was passed "to incorporate the 
 stockholders of the Merchants' Bank." On the 2d of February, 
 1831, the charter was renewed (subject to the provisions of the Safety 
 Fund Act of New York, which was passed April 2, 1829), with 
 authority to continue its business until January i, 1857. It sub- 
 sequently organized under the General Banking Law of New York, 
 
and in June, 1865, it organized under the National Bank Act, and 
 its present capital is ^3,000,000. (See Appendix for further de- 
 tail.) 
 
 BANK OF MASSACHUSETTS. 
 
 The Bank of Massachusetts at Boston, was the first bank organized 
 in the New England States. 
 
 During the latter portion of the year 1783, a movement was made 
 in the town of Boston, Mass., to obtain subscriptions for the Capi- 
 tal Stock of a Bank, under the following preamble : 
 
 " Taught by the experience of many nation's, that well regulated 
 Banks are highly useful to society, as they promote punctuality in 
 the performance of contracts, increase the medium of trade — facili- 
 tate the payment of taxes, — prevent the exportation of and furnish 
 a safe deposit for cash ; and in the way of discount, render easy 
 and expeditious the anticipation of funds at the expense only of 
 common interest ; whilst by the same means, they advance the 
 interest of the proprietors : We the subscribers, desirous of pro- 
 moting such an institution, do hereby engage to take the number 
 of shares set against our respective names, in a bank to be esta- 
 blished in the town of Boston." 
 
 Under the foregoing preamble, the requisite number of subscri- 
 bers were readily obtained, and at the Session of the Legislature of 
 Massachusetts, which opened on the first Wednesday in January, 
 1784, a petition was presented for a Bank Charter, by a committee 
 of the subscribers for stock, consisting of William Phillips, Isaac 
 Smith, Jonathan Mason, Thomas Russell, John Lowell and Stephen 
 Higginson, Esquires. 
 
 Upon their application, and after due deliberation, a bill was 
 enacted under the name of the President and Directors of the 
 Massachusetts Bank, with a capital not to exceed Five Hundred 
 Thousand pounds, which bill was passed on the 7th day of Febru- 
 ary, 1784, signed by 
 
 TRISTRAM DALTON, 
 Speaker of the House of liep's. 
 
 SAMUEL ADAMS, 
 
 President of the Senate. 
 Approved, 
 
 JOHN HANCOCK, 
 
 Gov'rofye Commonwealth. 
 
19 
 
 This bank commenced business July 5th, 1784, with a capital of 
 $300,000, at which time it opened an account with the Bank of 
 North America, Philadelphia, and the Bank of New York, and 
 these are continued with the Massachusetts Bank to the present 
 time. In 1865 this bank was orgaAized under the National Bank 
 Act, and its present capital is J8oo,ooo. For further details in 
 regard to it, and also for a list of all the early State Banks, with 
 the dates of their organization and the amount of capital stock of 
 each, will be found in the Appendix. William A. Clark, President 
 oT the National Bank of Rhode Island at Newport, is probably the 
 oldest active bank officer in the country. In a recent letter he 
 says: " I have continued in this .institution in different capacities 
 fifty-eight years, having entered it as a clerk in A. D., 1818. Mr. 
 Mygatt, the United States Bank Examiner, says, that I am probably 
 the oldest bank officer in the country. I have outlived every man 
 on the books doing business with the bank at that time, and also 
 every stockholder and director." 
 
 Under the old confederation, formed in 1777, the evils arising 
 from the want of a uniform currency, redeemable in gold on de- 
 mand, under some general control, were severely felt, and was one 
 of the causes that led to the adoption of the federal constitution, 
 which became operative in 1789. 
 
 Upon the organization of our present government, the currency 
 of the country, arid the establishment of the public credit, were 
 among the first subjects of legislation that engaged the attention of 
 Congress ; accordingly, by a resolution of that body of the 9th of 
 August, 1790, that peerless statesman, Alexander Hamilton, Secre- 
 tary of the Treasury, was required to prepare and report to them 
 such further provision as might, in his opinion, be necessary for 
 establishing the public credit. Pursuant to this resolution, the 
 Secretary of the Treasury, on the 13th of December following, 
 made a report upon the subject referred to him, in which he re- 
 commended the establishment of a National Bank. 
 
 The following extracts from the report of Mr. Hamilton upon 
 the subject, will show the principal reasons urged by him in 
 favor of 
 
 THE FIRST UNITED STATES BANK. 
 
 "That from a conviction that a National Bank is an institution 
 of primary importance to the prosperous administration of the 
 finances, and would be of the greatest utility in the operations con- 
 
nected with the support of the public credit, his attention has been 
 drawn to devising the plan of such an institution, upon a scale 
 which will entitle it to the confidence, and be likely to render it 
 equal to the exigencies of the public. ***** 
 
 "It is a fact well understood, that public banks have found ad- 
 mission and patronage among the principal and most enlightened 
 commercial nations. They have successfully obtained in Italy, 
 Germany, Holland, England, and France, as well as in the United 
 States, and it is a circumstance which cannot but have considera- 
 ble weight, in a candid estimate of their tendency, that, after an 
 experience of centuries, there exists not a question about their 
 utility, in the countries in which they have been so long estab^ 
 lished. Theorists and men of business unite in the acknowledg- 
 ment of it. 
 
 "Trade and industry, wherever they have been tried, have been 
 indebted to them for important aid, and Government has been re- 
 peatedly under the greatest obligations to them in dangerous and 
 distressing emergencies. That of the United States, as well in 
 some of the most critical conjunctures of the late war, as since the 
 peace, has received assistance from those established among us, 
 with which it could not have dispensed. 
 
 "With this two-fold evidence before us, it might be expected 
 that there would be a perfect union of opinions in their favor. 
 Yet doubts have been entertained ; jealousies and prejudices have 
 circulated ; and, though the experiment is every day dissipating 
 them, within the spheres in which the effects are best known, yet 
 there are still persons by whom they have not been entirely re- 
 nounced. To give a full and accurate view of ithe subject, would 
 b,e to make a treatise of a report ; but there are certain aspects in 
 which it may be cursorily exhibited, which may perhaps conduce 
 to a just impression of its merits. These will involve a comparison 
 of the advantages with the disadvantages, real or supposed, of such 
 institutions. 
 
 " The following are among the principal advantages of a bank : 
 
 "First, the augmentation of productive capital of a country. 
 Gold and silver, when they are employed merely as the instruments 
 of exchange, alienation, have been not improperly denominated 
 deadstock; but when deposited in banks, to become the basis of 
 a paper circulation, which takes their character and place, as the 
 signs or representatives of value, they then acquire life, or, in other 
 words, an active and productive quality. 
 
 " Deposits are of immense consequence in the operations of 
 a Bank. Though liable to be drawn at any moment, experience 
 proves that the money so much oftener changes proprietors than 
 place, and that what is drawn out is generally so speedily replaced, 
 as to authorize the counting upon the sums deposited as an effective 
 fund, which concurring with the stock of the bank, enables it. to , 
 extend its loans, and to answer all the demands for coin, whether 
 in consequence of these loans or arising from the occasional return 
 
of its notes. These different circumstances explain the manner in 
 which the ability of a bank to circulate a greater sum than its ac- 
 tual capital in coin is acquired. This, however, must be gradual, 
 and must be preceded by the firm establishment of confidence — a 
 confidence which may be bestowed on the most rational grounds, 
 since the excess in question will always be bottomed on good secu- 
 rity of one kind or another. This, every well-conducted bank 
 carefully requires before it will consent to advance either its money 
 or its credit — and where there is an auxiliary capital (as will be the 
 case in the plan hereafter submitted), which, together with the 
 capital in coin, define the boundary that shall not be exceeded by 
 the engagements of the bank. The security may, consistently with 
 all the maxims of a reasonable circumspection, be regarded as com- 
 plete. The same circumstances illustrate the truth of the position, 
 that it is one of the properties of banks to increase the active capi- 
 tal of a country. This, in other words, is the sum of them : The 
 money of one individual, while he is waiting for an opportunity to 
 employ it, by being either deposited in the bank for safe keeping, 
 or invested in its stocks, is in a condition to administer to the 
 wants of others without being put out of his own reach when occa- 
 sion presents. This yields an extra profit, arising from what is 
 paid for the use of his money by others, when he could not himself 
 make use of it, and keeps the money itself in a state of incessant 
 activity. 
 
 " Purchases and undertakings, in general, can be carried on by 
 any given sum of bank paper or credit as effectually as by an equal 
 sum of gold and silver. And thus, by contributing to enlarge the 
 mass of industrious and commercial enterprises, banks become 
 nurseries of national wealth, — a consequence as satisfactorily veri- 
 fied by experience as it is clearly deducible in theory. 
 
 " Secondly, greater facilities to the Government in obtaining 
 pecuniary aids, especially in sudden emergencies. This is another 
 and an undisputed advantage of public banks — one which, as 
 already remarked, has been realized in signal instances among our- 
 selves. The reason is obvious : the capitals of a great number of 
 individuals are, by this operation, collected in a point and placed 
 under one direction. The mass formed by this union is, in a cer- 
 tain sense, magnified by the credit attached to it ; and while this 
 mass is always ready, and can at once be put in motion in aid of 
 the Government, the interest of the bank to afford that aid, inde- 
 pendent of regard to the public safety and welfare, is a sure pledge 
 for its disposition to go as far in its compliance as can in prudence 
 be desired. There is in the nature of things, as will be more par- 
 ticularly noticed in another place, an intimate connection of in- 
 terest between the Government and the bank of a nation. 
 
 " Thirdly, the facilitating of the payment of taxes. This ad- 
 vantage is produced in two ways. Those who are in a situation to 
 have access to the bank, can have the assistance of loans to answer, 
 with punctuality, the public calls upon them. This accommoda- 
 
?2 
 
 tion has been sensibly felt in the payment of the duties heretofore 
 
 laid by those who reside where establishments of this nature exist." 
 
 ******* * 
 
 On the reception in the Senate of the report, from which are 
 made the foregoing extracts, the same was referred to a committee 
 consisting of Messrs. Strong, of Massachusetts; Morris, of Penn- 
 sylvania ; Schuyler, of New York ; Butler, of South Carolina, and 
 Ellsworth, of Connecticut. On the 3d of January, 1791, Mr. 
 Strong, chairman of the committee, reported a bill " to incorporate 
 the subscribers to the Bank of the United States." 
 
 The history of this bill, on its passage through the Senate, is to 
 be learned only from the Journals of that body. Its debates and 
 proceedings were not then, as now, open to the public. Such 
 extracts from the Journal as appear to be most essential, are here- 
 with given : 
 
 A motion was made to subjoin to a certain clause, the following 
 words : 
 
 "Provided, nevertheless, that nothing herein contained shall 
 be construed to exclude the right to amend the same (the bank 
 charter), on giving twelve months' notice, from and after the first 
 of January, 1800." It passed in the negative. (Yeas and nays 
 not given.) 
 
 On the nineteenth of January, a motion being made to expunge 
 the twelfth section, to wit: 
 
 " And be it further enacted. That no other bank shall be estab- 
 lished, by any future law of the United States, during the con- 
 tinuance of the corporation hereby created, for which the faith of 
 the United States is hereby pledged." Passed in the negative. 
 (Yeas and nays not given.) 
 
 Twentieth January, 1791. On motion to reconsider the term of 
 incorporation and limit it to the year 1801 instead of 181 1, the 
 vote stood as follows : 
 
 Yeas. — Messrs. Butler, Few, Gunn, Hawkins, Izard and Monroe 
 —6. 
 
 Nays. — Messrs. Bassett, Dalton, Dickinson, Ellsworth, Elmer, 
 Foster, Johnson, King, Langdon, Maclay, Morris, Read, Schuyler, 
 Stanton, Strong and Wright — 16. 
 
 Whereuppn, Resolved, that this bill do pass. (The yeas and 
 nays are not given. It is, however, supposed that the vote was 
 unanimous.) 
 
 The bill was then sent to the House for concurrence. 
 
 On the twenty-first of January, 1 791, the bill (in the House o!" 
 Representatives), was read a first and second time, and committed 
 to a committee of the whole House. 
 
23 
 
 On the twenty-first of January, the House resolved itself into a 
 committee of the whole (Mr. Boudinot in the chair), and the bill 
 was read by paragraphs, and no amendments being offered, the 
 chairman reported it to the House, which voted that it should be 
 read a third time the«next day. 
 
 Chief Justice Marshall, in his Life of Washington, says (vol. 5, 
 pages 294 to 298) : 
 
 " On the final question, a great, and it would seeii, an unex- 
 plained opposition was made to its passage. Mr. Madison, Mr. 
 Giles, Mr.. Jackson and Mr. Stone spoke against it. The general 
 utility of banking systems was not admitted, and the particular 
 bill before the House was censured on its merits ; but the great 
 strength of the argument was directed against the constitutional 
 authority of Congress to pass an act for incorporating a national 
 Bank. 
 
 "The Government of the United States, it was said, was limited ; 
 and the powers which it might legitimately exercise were enumer- 
 ated in the constitution itself. 
 
 "The clause which enables Congress to pass all laws necessary 
 and proper to execute the specified powers, must, according to the 
 natural and obvious force of the terms and the context, be limited 
 to the means necessary to the end, and incident to the nature of 
 the specified powers. The clause, it was said, was in fact merely 
 declaratory of what would have resulted by unavoidable implica- 
 tion as the appropriate, and as it were technical means of execut- 
 ing those powers. Some gentlemen observed that ' the true expo- 
 sition of a necessary mean, without which the end could not be 
 produced.' The bill was supported by Mr. Ames, Mr. Sedgwick, 
 Mr. Smith, of South Carolina, Mr. Lawrence, Mr. Boudinot, Mr. 
 Gerry and Mr. Vining. 
 
 "The utility of banking institutions was said to be demon- 
 strated by their effects. In all commercial countries they had been 
 resorted to as instruments of great efficacy in mercantile transac- 
 tions ; and even in the United States, their public and private ad- 
 vantages had been felt and acknowledged. 
 
 "Respecting the policy of the measure, no well-founded doubt 
 could be entertained ; but the objections to the constitutional au- 
 thority of Congress deserved to be seriously considered. 
 
 " That the Government was limited by the terms of its creation 
 was not controverted, and that it could exercise only those power's 
 which were conferred on it by the constitution was admitted. If, 
 on examination, that instrument should be found to forbid the pass- 
 age of the bill, it must be regretted, though it would be with deep 
 regret that its friends would suffer such an opportunity of serving 
 their country to escape for the want of a constitutional power to 
 improve it. 
 
 " In asserting the authority of the Legislature to pass the bill, 
 gentlemen contended, that incidental as well as express powers 
 
24 
 
 must necessarily belong to every Government ; and that, when a 
 power is delegated to effect particular objects, all the known and 
 usual means of effecting them must pass as incidental to it. To 
 remove all doubt on this subject, the Constitution of the United 
 States had recognized the principle by enabling Congress to make 
 ' all laws which may be necessary and proper for carrying into exe- 
 cution the powers vested in the Government.' They maintained 
 the sound construction of an authority in the National Legislature, 
 to employ all the known and usual means for executing the powers 
 vested in the Government. They then took a comprehensive view 
 of those powers, and contended that a bank was a known and usu- 
 al instrument by which several of them were exercised. (See opin- 
 ion of Chief Justice Marshall in the case of McCulloch vs. State 
 of Maryland, 4 Wheat. R., 422.) 
 
 "After a debate of great length, which was supported on both 
 sides with ability, and with ardor which was naturally excited by 
 the importance attached by each party to the principle in contest, 
 the question was put, and the bill was carried in the affirmative by 
 a majority of twelve voices." 
 
 The following were the ayes and nays on the final question, — 
 "Shall the bill pass ? " : 
 
 Ayes — 39. Messrs. Fisher Ames, Mass. : Egbert Benson, N.Y. ; 
 Elias Boudinot, N. J. ; Benjamin Boom, R. I. ; Lambert Cadwalla- 
 der, N. J. ; George Clymer, Pa. ; Thomas Fitzsimmons, Pa. ; Wil- 
 liam Floyd, N. Y. ; Abiel Foster, N. H. ; Elbridge Gerry, Mass. ; 
 Nicholas Gilman, N. H. ; Benjamin Goodhue, Mass. j Thomas Hart- 
 ley, Pa. ; John Hathorn, N. Y. ; Daniel Heister, Pa. ; Benjamin 
 Huntington, Conn. ; John Lawrence, N. Y. ; George Leonard, Mass.; 
 Samuel Livermore, N. H. .; Peter Muhlenberg, Pa. ; George Par- 
 tridge, Mass. ; Jerem. Van Rensselaer, N. Y. ; James Shureman, N. 
 J. ; Thomas Scott, iPa. ; Theodore Sedgwick, Mass. ; Joshua Seney, 
 Md. ; John Sevier, N. C. ; Roger Sherman, Conn. ; Thomas Sin- 
 nickson, N. Y. ; Peter Sylvester, N. Y. ; William Smith, Md. ; Wil- 
 liam Smith, S. C. ; John Steele, N. C. ; Jonathan Sturgess, Conn. ; 
 George Thatcher, Mass. ; Jonathan Trumbull, Conn. ; John Vin- 
 ing, Del. ; Jeremiah Wadsworth, Conn. ; Henry Wyncoop, Pa. 
 
 Nays — 19. Messrs. John Baptiste Ashe, N. C. ; Abraham Bald- 
 win, Ga. ; Timothy Bloodgood, N. C. ; John Brown, Va. ; Edanus 
 Burke, S. C. ; Daniel Carrol, Md. ; Benjamin Contee, Md. ; Jona- 
 than Grout, Mass. ; William B. Giles, Va. ; James Jackson, Ga. ; 
 Richard Bland Lee, Va. ; James Madison, Jr. , Va. ; George Math- 
 ews, Ga. ; Andrew Moore, Va. ; Josiah Parker, Va ; Michael Jeni- 
 
25 
 
 fer Stone, Md. ; Thomas Tudor Tucker, S. C. ; Alexander White, 
 Va. ; Hugh Williamson, N. C. 
 
 The following abstract of the first five clauses of the charter will 
 give an idea of the act : i. The capital shall be g 10,000,000, to 
 be divided into 25,000 shares of I400 each. 
 
 2. Any person, co-partnership, or body politic, may subscribe for 
 such number of shares as he, she, or they may think proper, not 
 exceeding i,ooo, except as regards the subscription of the United 
 States. The subscriptions, except those of the United States, shall 
 be payable one-quarter in gold and silver, and the remaining three- 
 quarters in certain 6 per cent, stocks of the United States. 3. 
 The subscribers are incorporated under the name and style of 
 "The President, Directors and Company of the Bank of the 
 United States," and to continue until March 4, 1811. The bank 
 is authorized to hold property of all kinds, inclusive of its capital, 
 to the amount of ^15,000,000. 4. Twenty-five directors are to be 
 elected, by a plurality of votes cast on the first Monday in January 
 of each and every year, for one year only, and the directors are 
 empowered to choose one of their number for President. 5. As 
 soon as the sum of ^400,000 is received on account of the sub- 
 scriptions, in gold and silver, on proper notice being given, the 
 bank may be organized. 
 
 The point which had been agitated with sO' much zeal in the 
 House of Representatives, was examined no less deliberately by 
 President Washington. Thomas Jefferson, Secretary of State, and 
 Edmund Randolph, Attorney-General, concurred in opinion that 
 Congress had transcended their constitutional powers in passing 
 the bill; while Alexander Hamilton, Secretary of the Treasury, 
 with equal clearness, maintained the opposite opinion, in which 
 General Knox, Secretary of War, concurred. The advice of each 
 minister, with his reasons in support of it, was required in writing. 
 
 A perusal of the arguments used on the occasion by the heads 
 of departments would afford much gratification to the curious, but 
 the limits prescribed for this historical sketch will not permit the 
 mtroduction of such voluminous papers. (For an examination of 
 them at full length, the reader is referred to the "Legislative and 
 Documentary History of the Bank of the United States," published ' 
 at Washington by Gales & Seaton, 1832 ; p. 82 to 112.) 
 
 An outline, however, of that train of reasoning with which each 
 opinion was supported, and on which the judgment of the execu- 
 tive was most probably formed, will be briefly stated. 
 
26 
 
 Opinion of Thomas Jefferson, Secretary of State : 
 "To prove that the measure was not sanctioned by the Consti- 
 tution, the general principle was asserted that the foundation of 
 that instrument was laid on the ground, 'that all powers not 
 delegated to the United States by the Constitution, nor prohibited 
 to it by the State, are reserved to the States or to the people.' 
 To take a single step beyond the powers thus specially drawn 
 around the powers of Congress, is to take possession of a boundless 
 field of power no longer susceptible of definition. 
 
 "The power in question was said not to be among those which 
 were specially enumerated, nor to be included within either of the 
 general phrases which are to be found in the Constitution. The 
 article which contains this enumeration was reviewed ; each speci- 
 fied power was analyzed, and the creation of a corporate body was 
 declared to be distinct from either of them." 
 
 The general phrases are : 
 
 "First, to lay taxes to provide for the general welfare of the 
 United States. The power here conveyed, it was observed, was 
 ' to levy taxes. ' 
 
 " The purpose was, 'the general welfare.' Congress could not 
 lay taxes ad libitum, but could only lay them for 'the general 
 welfare;' nor did this clause authorize that body to provide for 
 ' the general welfare ' otherwise than by laying taxes for that por^ 
 pose.' Secondly, ' To make all laws which shall be necessary and 
 proper for carrying into execution the enumerated powers. But 
 they can all be carried into execution without a bank. A bank, 
 therefore, is not necessary, and consequently unauthorized by this 
 • phrase. 
 
 " It had been much urged that a bank would give great facility 
 and convenience in the collection' of taxes. Suppose this were 
 true ; yet the Constitution allows only the means which are neces- 
 sary, not those which are convenient. If such a latitude of con- 
 struction be allowed this phrase, as to give any non-enumerated 
 power, it will go to every one ; for there is no one which ingenuity 
 may not torture into convenience, in some way or other, to some 
 one of so long a list of enumerated powers. It would swallow 
 all the list of enumerated powers and reduce the whole to one 
 phrase. Therefore, it, was that the Constitution restrained them 
 to necessary means — that is to say, to those means without which 
 the grant of power would be nugatory. 
 
 "The existing State Banks would, without doubt, enter into 
 arrangements for lending their agency. This expedient alone 
 suffices to prevent the existence of that necessity when it may justify 
 the assumption of a non-enumerated power as a means of carrying 
 into effect an enumerated one. It may be said that a bank whose 
 bills would have a currency all over the States, would be more con- 
 venient than one whose currency is limited to a single State. So 
 it would be still more convenient that there should be a bank 
 
27 
 
 whose bills should have a currency all over the world ; but it does 
 not follow from this superior conveniency, that there exists any- 
 where a power to establish such a bank, or that the world may not 
 go on very well without it. 
 
 "For a shade or two of convenience, more or less, it cannot be 
 imagined that the Constitution intended to invest Congress with a 
 power so important as that of creating a corporation." 
 
 Substance of the opinion of Mr. Hamilton, Secretary of the 
 Treasury, in support of the bill. 
 
 In supporting the constitutionality of the act, it was laid down 
 as a general proposition 
 
 " That every power vested in a government is, in its nature, sov- 
 ereign, and includes by force of the term a right to employ all the 
 means requisite and fairly applicable to the attainment of the ends 
 of such power ; and where it is not precluded by restrictions and 
 exceptions specified in the Constitution and not immoral, are not 
 contrary to the essential ends of political society. This principle, 
 in its application to government in general, would be admitted as 
 an axiom ; and it would be incumbent on those who might refuse 
 to acknowledge its influence in American affairs to prove a distinc- 
 tion ; and to show that a rule which, in the general system of 
 things, is essential to the preservation of the social order, is inappli- 
 cable to the United States. The circumstance that the powers of 
 sovereignty are divided between the National and State Govern- 
 ments does not afford the distinction required. 
 
 "If it could be necessary to bring proof of a proposition so 
 clear as that which affirms the powers of the Federal Government, 
 as to its objects, were sovereign, there is a clause in the Constitu- 
 tion which is decisive. It is that which declares the Constitution 
 of the United States, the laws made in pursuance of it, and the 
 treaties made under its authority to be the supreme law of the land, 
 the power which can create the supreme law in any case, is doubt- 
 less sovereign as to such case. 
 
 " That the Government of the United States can exercise only 
 those powers which are delegated by the Constitution, is a proposi- 
 tion not to be controverted ; neither is it to be denied, on the other 
 hand, that these are implied as well as express powers, and that 
 the former are as effectually delegated as the latter. For the sake 
 of accuracy, it may be observed, that there are also resulting 
 powers. It would not be doubted that if the United States should 
 make a conquest of any of the territories of its neighbors, they 
 would possess sovereign jurisdiction over the conquered territory. 
 This would rather be a result of the whole mass of the powers of 
 the Government, and from the nature of political society, than a 
 consequence of either of the powers especially enumerated. This 
 is an extensive case in which the power of creating corporations is 
 either implied in, or would result from some or all of the powers 
 vested in the National Government. 
 
28 
 
 " A corporation may be created in relation to the collection of 
 taxes, or to the trade with foreign countries, or between the States 
 or with the Indian tribes, because it is in the province of the Fed- 
 eral Government to regulate those objects, and because it is inci- 
 dent to a general sovereign or legislative power to regulate a thing, 
 to employ all the means which relate to its regulation, to the best 
 and greatest advantage. 
 
 "A strange fallacy seems to have crept into the manner of think- 
 ing and reasoning upon this subject. The imagination has pre- 
 sented an incorporation as some great, independent, substantive 
 thing : — as a political end of peculiar magnitude and moment ; 
 whereas it is truly to be considered as a quality, capacity, or mean 
 to an end. Thus a mercantile company is formed with a certain 
 capital for the purpose of carrying on a particular branch of busi- 
 ness. The business to be prosecuted is the end. The Association, 
 in order to form the requisite capital is the primary means. 
 
 "It is certain that neither the grammatical nor popular sense of 
 the term necessary requires that construction. According to both, 
 necessary means no more than needful, requisite, useful, or con- 
 ducive to. It is a common mode of expression to say that it is 
 necessary for a Government or person to do this or that thing, 
 where nothing more is intended or understood than that the inter- 
 ests of the Government or person require, or will be promoted by 
 doing this or that thing. 
 
 " This is the true sense in which the word is used in the Consti- 
 tution. The whole tenor of the clause containing it indicates an 
 intent to give it a liberal latitude to the exercise of specified 
 powers. The expressions have peculiar comprehensiveness. They 
 are '■ to make all laws necessary and proper for carrying into 
 execution the foregoing powers, and all other powers vested by 
 the Constitution in the Government of the United States, or 
 in any department or ofSce thereof To give the word 'neces- 
 sary,' the restrictive operation contended for, would not only 
 depart from its obvious and popular sense, but would give it the 
 same force as if the word absolutely or indispensably had been pre- 
 fixed to it. 
 
 " The degree in which a measure is necessary, can never be a 
 test of the legal rights to adopt it. The relation between the 
 measure and the end; between the nature of the means employed 
 towards^ the execution of a power, and the object of that power, 
 must be the criterion of constitutionality, not the more or less 
 necessity or utility. 
 
 " While, on the one hand, the restrictive interpretation of the 
 word necessary is deemed inadmissible, it will not be contended, 
 on the other, that the clause in question gives any new and inde- 
 pendent power. But it gi/es an explicit sanction to the doctrine 
 of implied powers, and is equal to an admission of the proposition 
 that the Government, as to its specified powers and objects, has 
 plenary and sovereign authority. It is true that the power to ere- 
 
29 
 
 ate corporations is not granted in terms. Neither is the power 
 to pass any particular law, nor to employ any of the means by 
 which the ends of the Government are to be obtained. 
 
 " The power of the Government then to create corporations in 
 certain cases being shown, it remained to inquire into the right to 
 incorporate a banking company in order to enable the more effect- 
 ually to accomplish ends which were in themselves lawful. 
 
 "To establish such a right it would be necessary to show the 
 relation of such an institution to one or more of the specified 
 powers of Government. 
 
 " It was then affirmed to have a relation more or less direct to 
 the power of collecting taxes, to that of borrowing money, to that 
 of regulating trade between the States, to those of raising, sup- 
 porting, and maintaining fleets and armies ; and in the last place 
 to that which authorizes the making of all needful rules and regu- 
 lations concerning the property of the United States, as the same 
 had been practised upon by the Government." 
 
 The Secretary of the Treasury next proceeded, by a great variety 
 of arguments and illustrations, to prove the position that the mea- 
 sure in question was a proper mean for the execution of the several 
 powers which were enumerated, and also contended that the right 
 to employ it resulted from the whole of them taken together. To 
 detail those arguments would occupy too much space, and is the 
 less necessary because their correctness obviously depends on the 
 correctness of the principles which have been already stated. 
 
 The opinion of each Minister was considered by President Wash- 
 ington with all that attention which the magnitude of the ques- 
 tion and the interest taken in it by the opposing parties, so emi- 
 nently required. This deliberate investigation of the subject 
 terminated in a conviction, that the Constitution of the United 
 States authorized the measure, and the sanction of the Executive 
 was given to the act by George Washington, July 25, 1791. (Sub- 
 stance of Marshall's Life of Washington, vol. 5, p. 297.) 
 
 About the time the bank went into operation, the French revo- 
 lution broke out. This event produced an increased demand, and 
 an increased price for our agricultural productions. Owing to the 
 facilities afforded by the bank to the trading community, added to 
 the judicious provisions of the act of Congress, of July 20, 1 790, 
 imposing a duty of fifty cents a ton upon all foreign vessels en- 
 tering any port of the United States, while a duty of only six 
 cents a ton was laid on American built vessels, and owned wholly 
 by a citizen or citizens of the United States, the products of our 
 soil, which before had been in a languishing condition, met with a 
 
3° 
 
 brisk and profitable sale ; and our commerce, about one-half of 
 which had been before engrossed by foreigners, was almost exclu- 
 sively secured to our own citizens. The system seemed to operate 
 like magic in favor of the ship-owners of the United States. 
 
 Great advantages, and beneficial results, in consequence of the 
 establishment of a National Bank, were generally experienced by 
 the Government, and by every class of community, during the con- 
 tinuance of its charter, — the public funds were kept in a safe de- 
 positary, — the credit of the nation was established upon a firm and 
 solid basis, — the demands of public creditors were promptly paid, 
 at places convenient to them, and in a currency equal to gold or 
 silver, in all parts of the United States. The Government real- 
 ized a profit of ^671,860 on the sale of two millions of its stock. 
 A salutary restraint was exercised upon State Banks, as to the 
 amount of their issues, and as to a failure in promptly redeeming 
 their bills in specie, — a reasonable amount of circulating medium 
 was afforded to the community, whereby the industry of the 
 country was brought into profitable and successful operation, and 
 a steady, uniform, and safe currency was afforded to every one. 
 
 During the period covered by the charter of the first United 
 States Bank, the population increased from 3,929,827 in 1790, to 
 7,239,814, and 89 new banks were created under State charters with 
 an aggregate capital of ;g4o,6oi,6oi. This was no more than was 
 demanded by the increased volume of business. The country 
 flourished in all the essential elements of wealth and power. 
 " Public and private credit was raised from its prostrate condition 
 at the close of the war, to a very elevated condition, and the finances 
 of the nation were placed upon the most solid foundation." 
 There was reasonable ground to hope that an institution which 
 had proved so beneficial to the country, would be preserved and 
 cherished as the continuing base on which might be permanently 
 established the industrial and commercial policy of the Govern- 
 ment. 
 
 SECOND UNITED STATES BANK — 1816. 
 
 The charter of the First United States Bank expired March 4, 
 1811. On the 20th of April, 1808, a memorial of the stockholders 
 of the Bank petitioning for a renewal of their charter, was pre- 
 sented to the Senate of the United States, who ordered " that the 
 same be referred to the Secretary of the Treasury, to consider 
 and report thereon at the next session of Congress." On the 2d 
 
3* 
 
 of March, 1809, Mr. Gallatin, then Secretary of the Treasury, 
 made a report upon the subject, and in favor of renewing the 
 charter. After giving a detailed statement of the general opera- 
 tions of the bank, he says : "It sufficiently appears from that gen- 
 eral view, that the affairs of the Bank of the United States, consid- 
 ered as a moneyed institution, have been wisely and skillfully man- 
 aged]" but no definite action was had at that session of Con- 
 gress. 
 
 On the i8th of December, 1810, the subject was referred in the 
 Senate to a select committee consisting of Messrs. Crawford (tJa.), 
 Lieb (Pa.), Lloyd (Mass.), Pope (Ky.), and Anderson (Tenn.). On 
 the 29th of January, 181 1, the committee addressed a note to the 
 Secretary of the Treasury, requesting him, among other things, "to 
 furnish the committee with the facts and reasoning upon which his 
 opinion has been formed, together with other information upon the 
 subject as might be in his possession." 
 
 On the 30th of January, 1811, the Secretary of the Treasury ad- 
 dressed a letter to the committee, giving some additional views in 
 favor of a re-charter of the bank, and closed his communication 
 by saying, " The continuation of a bank of the United States has 
 not, in the view which I have been able to take of the subject, ap- 
 peared to me unconstitutional." 
 
 On the sth of February, 181 1, Mr. Crawford reported a bill to 
 amend and continue in force, an act entitled "An Act to incorpo- 
 rate the subscribers to the Bank of the United States ;" also a copy 
 of the letter (aforementioned) of the Secretary of the Treasury, of 
 the 30th of January, 181 1. 
 
 The provisions of the bill are said to have been, in a great 
 measure, conformable to the views of the Secretary of the Treasury, 
 contained in his able report. The question on the passage of the 
 bill was debated with warmth and animation for several days. 
 The principal speakers in its favor were Crawford (late Secretary 
 of the Treasury), Lloyd (Mass.), (Pope (Ky.), Pickering (Mass.), 
 and Taylor (S. C). Those in opposition were Anderson (Tenn.), 
 Leib (Pa.), Smith (Md.), Giles (Va.), and Clay (Ky.). 
 
 For a perusal of the speeches delivered on the occasion, the 
 reader is referred to " Legislative and Documentary History of the 
 Bank of the United States," by Gales & Seaton, p. 302 to 446. 
 
 Those opposed to a re-charter, urged that the creation of corpora- 
 tions was not authorized by the Constitution, and that the bank 
 was unconstitutional ; that the article in the Constitution giving 
 
32 
 
 Congress authority "to make all laws which shall be necessary and' 
 proper for carrying into execution " the delegated powers, did not 
 warrant the establishment of a bank ; that a bank was not " neces- 
 sary," in the sense of the Constitution, to carry into effect the 
 collection of the revenues; that. State banks could be employed as 
 a public depositary ; that the bank was an aristocratic institution, 
 and calculated to acquire an influence inimical to our republican 
 institutions ; that foreigners held a large amount of the stock, and 
 in case of war, the stockholders might exercise an influence danger- 
 ous to the Government ; that State banks could supply all the 
 wants of the Government on any emergency, and that the resources 
 of the country, added to the patriotism of the people, were a suffi- 
 cient guaranty against sudden embarrassments. 
 
 Those in favor of a re-charter urged, that the right of the Na- 
 tional Government to charter a bank as a fiscal agent to the Gov- 
 ernment, was clearly one of the incidental powers of Congress — 
 that Mr. Jefferson, who was at first strenuously opposed to it upon 
 constitutional grounds, had virtually assented to its constitution- 
 ality, by signing a bill establishing a branch at New Orleans. 
 That the bank was indispensably necessary to the successful opera- 
 tions of the Treasury — that as Congress had no control over the 
 State banks, the Government would be subject to such regulations 
 as they might prescribe, and moreover, that the public funds might 
 not always be safe in such institutions. That inasmuch as the 
 general Government would have a reasonable control over a bank 
 of their own creation, it would exercise a salutary influence over 
 State banks, in restraining them from an excessive issue, and from 
 failing to promptly redeem their bills in specie — that the idea of a 
 bank being an aristocratic institution, was wholly fallacious, inas- 
 much as the stock was owned by any one who might wish to pur- 
 chase it; and that self-interest alone, on the part of the bank, 
 would restrain it from entering into any combination, unfriendly 
 to the interests and liberties of the people, and that of itself was a 
 sufficient guaranty to the people on that head — that it was impos- 
 sible for foreign stockholders to exercise any direct or indirect in- 
 fluence, inasmuch' as they could not even vote for directors, and 
 that in case of war, foreigners would furnish us with the necessary 
 weapons to fight them with — that wisdom and prudence dictated 
 the policy of fostering as far as possible, all our moneyed resources 
 preparatory to a war in which yre might be engaged, and with 
 which we were then threatened, by the great contending powers of 
 
33 
 
 Europe — that in the event of a war, and without a National Bank, 
 the United States would be destitute of the necessary means to 
 carry it on — that no reliance could be placed upon State Banks, 
 and that the Government would be completely at the mercy of 
 speculators. 
 
 On the 2oth of February, 1811, the question, on a motion of 
 Mr. Anderson, to strike out the enacting clause, was decided as 
 follows : 
 
 Those who voted in the affirmative were, Messrs. Anderson, 
 Campbell, Clay, Cutts, Franklin, Gaillard, German, Giles, White- 
 side, Gregg, Lambert, Leib, Mathewson, Reed, Robinson, Smith 
 (of Maryland), Worthington — 1 7. 
 
 Those who voted in the negative were, Messrs. Bayard, Bradley, 
 Brent, Champlin, Condict, Crawford, Dana, Gilman, Goodrich, 
 Horsey, Lloyd, Pickering, Pope, Smith (of New York), Tait, Tur- 
 ner, and Taylor — 17. 
 
 The Senate being equally divided, the President of the Senate, 
 George Clinton, determined the question in the affirmative, first 
 submitting to the Senate the following prefatory remarks : 
 
 " Gentlemen : As the subject on which I am called upon to de- 
 cide has excited great sensibility, I must solicit the indulgence of 
 the Senate whilst I briefly state the reasons which influence my 
 judgment. Permit me to observe, that the question to be decided 
 does not depend simply on the right of Congress to establish, un- 
 der any modification, a bank, but upon their power to establish a 
 National bank, as contemplated by this bill. In other words, can 
 they create a body politic and corporate, not constituting a part of 
 the Government, but by forfeiture of charter, and bestow on its 
 members privileges, immunities and exemptions not recognized by 
 the laws of the State, nor enjoyed by the citizens generally? 
 
 " It cannot be doubted that Congress may pass all necessary and 
 proper laws for carrying into execution the powers specifically 
 granted to the Government, or to any department or officer thereof ; 
 but, in doing so, the means must be suited and subordinate to the 
 end. The power to create corporations is not expressly granted ; 
 it is a high attribute of sovereignty, and in its nature not accessorial 
 or derivative by implication, but primary and independent. 
 
 " I cannot see that this interpretation of the Constitution will, 
 in any degree, defeat the purpose for which it was formed ; on the 
 contrary, it does appear to me that the opposite exposition has an 
 inevitable tendency to consolidation, and affords just and serious 
 cause for alarm. 
 
 " In the course of a long life, I have found that government is 
 not to be strengthened by an assumption of doubtful powers, but by 
 a wise and energetic execution of those which are incontestable ; 
 
 3 
 
 r 
 
34 
 
 the former never fails to produce suspicion and distrust, whilst the 
 latter inspires respect and confidence. 
 
 " If, however, after a fair experiment, the powers vested in the 
 Government shall be found incompetent to the attainment of the 
 objects for which it was instituted, the Constitution happily fur- 
 nishes the means for remedying the evil by amendment, and I have 
 no doubt that, in such event, on the appeal to the patriotism and 
 good sense of the community, it will be wisely applied. 
 
 " I will not trespass upon the patience of the Senate any longer 
 than to say, from the best examination I have been able to give the 
 subject, I am constrained, by a sense of duty, to decide in the 
 affirmative ; that is, that the first section of the bill be stricken 
 out." 
 
 Thus, the bill to renew the charter of the first United States 
 bank was defeated in the Senate, by the casting vote of the Vice- 
 President. 
 
 In the House, a bill to renew the charter of the bank, the vote 
 stood 73 to 74 ; so the bill was lost in the House by a majority of 
 one vote. 
 
 The charter of the First United States Bank expired on the 4th 
 of March, 1811. In the month of June, 1812, the General Govern- 
 ment declared war against Great Britain, and in a short time, more 
 than all the disasters to the country predicted by the supporters of 
 the bank in consequence of its dissolution were verified. We soon 
 learned, from sad experience, that although pretended wise legis- 
 lators could form new plans of finance on paper, which to some 
 would appear quite plausible, still, on trial the most essential 
 thing was wanting — the State bank machinery would not work 
 for national purposes in a great war. The country was soon flooded 
 with from forty to fifty millions of new State bank currency, with 
 scarcely even a nominal basis of coin for its support. The inevit- 
 able consequence was little delayed. In September, 1814, all the 
 banks outside of New England suspended specie payments. The 
 Secretary of the Treasury informed Congress that he had been 
 under the necessity of selecting ninety-four different State banks, 
 from Maine to Louisiana, as depositaries of the United States 
 Government. 
 
 The various kinds of paper money in circulation made it neces- 
 sary to keep four separate ledger accounts in each ; and thus, 
 instead of a single account, which was all that the " Treasury re- 
 quired when the Bank of the United States was its fiscal agent, 
 the Government finances were represented by 276 different bank 
 
35 
 
 accounts, scattered from one end of the country to the other. But 
 what was still more serious, it was found impossible to maintain 
 that continuous supervision of the revenues, and to exact those 
 periodic settlements which constitute the only effectual safeguard 
 against error, demoralization and fraud. The banks were ready 
 enough to receive the dues of the Government, but, specie being 
 no longer a part of the currency, the Treasury was forced into a 
 corner. It could not receive irredeemable State bank currency, 
 and all its efforts to obtain settlement were futile. Thus the 
 Treasury funds, amounting to near nine, million dollars, were 
 locked up in the suspended banks. As a consequence, the Gov- 
 ernment fell in default on the interest of its funded debt. Its 
 Treasury notes were dishonored, the business of daily life was 
 prostrated, and universal distrust prevailed. " The multiplication 
 of State banks has so increased the quantity of paper currency,": 
 said Secretary Dallas, in his report to Congress, *'that it would be 
 difficult to calculate its amount, and still more difficult to ascer- 
 tain its value." 
 
 The last year of the war presented the singular and melancholy 
 spectacle of a nation abounding in self-devoting patriotism, and a 
 Government reduced to the very brink of avowed bankruptcy, 
 solely for the want of a national institution which, at the same 
 time that it would have facilitated the Government loans and 
 other Treasury operations, would have furnished a circulating 
 medium of general credit in every part of the Union. 
 
 The Government borrowed, during a short period of the war, 
 eighty millions of dollars, at an average discount of fifteen per 
 cent., giving certificates of stock, amounting to eighty millions of 
 dollars, in exchange for sixty-eight millions of dollars, in such bank 
 paper as could be obtained. In this statement. Treasury notes are 
 considered as stock, at twenty per cent, discount. Upon the very 
 face of the transaction, therefore, there was a loss of twelve millions 
 of dollars, which would, in all probability, have been saved if the 
 Treasury had been aided by such an institution as the Bank of the 
 United States. But the sum of sixty-eight millions of dollars re- 
 ceived by the Government wks in a depreciated currency, not more 
 than half as valuable as that in which the stock given in exchange 
 for it has been, redeemed. Here, then, was another loss of thirty- 
 four millions, resulting, incontestably and exclusively, from the 
 depreciation of the currency, and making, with the sum lost by 
 the discount, forty-six millions of dollars. 
 
36 
 
 The finances of the Government continued in a demoralized 
 condition, when in October 6, 1814, Alexander J. Dallas was called 
 to the head of the Treasury Department. Never before had there 
 been greater need of a master mind in that important ofifice. 
 Within less than a fortnight the new Secretary communicated to 
 Congress a report of extraordinary ability, in which he strongly 
 recommended the establishment of a National Bank, as the remedy 
 required to bring the finances into order. Various plans for a bank 
 were brought forward in Congress, which resulted in nothing until, 
 in January 20, 1815, a bill was passed. Many of the prominent 
 members of both Houses, who had but five years before defeated 
 a renewal of the former bank, now voted for this bill. It was, 
 however, vetoed by President Madison, on the ground that it would 
 not accomplish the objects rendered necessary by the state of the 
 revenue and the condition of the country. On April 3, 1816, 
 however, another bill for a Bank of the United States, which had 
 previously passed the House of Representatives, was adopted by 
 the Senate. The corporate title of this institution was "The Pre- 
 sident, Directors and Company of the Bank of the United States." 
 Its capital was to be ^35,000,000, composed of 350,000 shares of 
 gioo each. I7, 000,000 of this stock was to be subscribed by the 
 United States, and the remaining 1^28,000,000 by individuals, com- 
 panies, or corporations. The charter was to extend to March 3, 
 1836, and the Bank was authorized to organize and commence 
 business as soon as ;?8, 400,000, exclusive of the subscription of the 
 United States, had been paid in. It was prohibited from lending 
 on account of the United States more than ^500,000, or to any 
 State more than ^50,000, or to any foreign prince or power any 
 sum whatever, without the sanction of law previously being ob- 
 tained. 
 
 The Bank was also obliged, by its charter, to give the Govern- 
 ment the necessary facilities for transferring the public funds from 
 place to place within the United States without charging commis- 
 sions, or claiming any allowance on account of the difference of 
 exchange, and to transact all business of commissioners of loans when 
 required so to do. The Bank was prohibited from issuing bills 
 under the denomination of ^5. 
 
 This bill was approved by the President, James Madison, on the 
 loth of April, 1816, and the Bank went into operation on the 7th 
 of January, 1817. 
 
 In the latter end of the same month, a meeting of delegates from 
 
37 
 
 the banks of New York, Philadelphia, Baltimore, and Virginia, 
 took place at Philadelphia, with a view to a general and simulta- 
 neous resumption of specie payments. In consequence of a com- 
 pact between them and the Bank of the United States, sanctioned 
 by the Secretary of the Treasury, cash payments were resumed. 
 To facilitate this object, the Bank of the United States imported 
 from abroad seven millions of dollars in specie, and agreed to 
 afford reasonable assistance to such of the State Banks as might 
 require it. The resumption of cash payments was now general 
 throughout the Union. 
 
 The year 1819 was one of great commercial difficulty in America. 
 This distress was attributed to those measures which it had found 
 necessary to adopt in order to effect a return to specie payments. 
 To accomplish this object, the State Banks had been compelled to 
 restrict their issues by limiting their discounts. 
 
 Many of those Banks which were formed at the dissolution of 
 the first Bank of the United States, which had in the first instance 
 made very liberal advances to the Western States, were obliged 
 to resort to measures for compelling the repayment of their loans. 
 Those too who had contracted debts either to the Banks or to pri- 
 vate parties in the depreciated currency, sustained considerable 
 loss when required to discharge their obligations in a currency 
 convertible into gold. 
 
 SOUND CONDITION OF THE U. S. BANK. 
 
 Specie payment having been firmly established after the organ- 
 ization of the Second Bank of the United States, the finances of 
 the Government were in a good condition down to 1833-34. A 
 uniform currency upon a spede basis was furnished to the people 
 in all parts of the United States. From 1820 to 1832 the busi- 
 ness of the country was in a prosperous condition, and the Gov- 
 ernment accumulated a large surplus. 
 
 Mr. Dallas was succeeded in the Treasury by William H. Craw- 
 ford, of Georgia. On the 12th of February, 1820, he made an 
 able report on the currency which was very favorable to the bank 
 for so conducting its operations as to establish and maintain a 
 specie basis for all business transactions. 
 
 Hon. Richard Rush, of Pennsylvania, succeeded Mr. Crawford 
 in the Treasury, who gives the following picture of the state of 
 commerce subsequent to that date : 
 
38 
 
 "No term of eight years since the establishment of the Gov- 
 ernment, was so exempt from the influence of external events that 
 disturb the regular operations of National industry and commerce 
 as the term ending with 1828." In the Secretary's report of De- 
 cember 6th, of that year, will be found a general view of the state 
 of the currency, before and after the establishment of the Bank 
 of the United States, sustaining the views already presented by 
 Mr. Crawford concerning the healthful influences of the institution 
 over the general affairs of trade. "It received the paper, of the 
 State banks paid on public account, and, by placing it to the credit 
 of the United States as cash, rendered it available wherever the 
 public service required ' ' This was in effect to guarantee the State 
 Bank currency on the footing of par in gold and silver. This gave 
 steadiness and prosperity to the legitimate business of the country, 
 ^nd was a salutary check upon too great an expansion of credit, 
 either in the form of currency or bank loans. 
 
 The Bank of the United States located in Philadelphia, estab- 
 lished a branch or office in each State. At each branch deposits 
 were received, bills and notes of hand discounted, and letters of 
 credit granted, payable on demand upon all other branches. Their 
 notes were legally payable at the respective branches where they 
 were issued, but were often paid as a matter of courtesy at the 
 other branches. The five dollar notes, the lowest issued by any 
 branch, were made legally payable at every branch. 
 
 Aperage Amount for the years i8ig-i82g, of the principal items of 
 the situation of the Bank of the United States. 
 
 
 Discounts 
 
 Domestic 
 
 Funded 
 
 Total on 
 
 Real 
 
 Specie, 
 
 Deposits, 
 
 Gross am't 
 
 
 
 Bills. 
 
 Debt. 
 
 Interest, 
 
 Estate, 
 
 
 
 of Notes.* 
 
 i8ig 
 
 32,211,674 
 
 336.760 
 
 7,236,153 
 
 39,784,587 
 
 
 2.743.834 
 
 5,734.682 
 
 5,056,829 
 
 1820 
 
 28,808,267 
 
 1,526,600 
 
 8,258,701 
 
 38,593.568 
 
 
 5,214.773 
 
 6,581.628 
 
 4.410.332 
 
 1821 
 
 27,099.050 
 
 1.598.473 
 
 ij. 859,296 
 
 40,556,619 
 
 245,846 
 
 6,469,224 
 
 6.990,073 
 
 5,609,220 
 
 JB22 
 
 28 574,893 
 
 2,394,688 
 
 13,116,004 
 
 44,085,785 
 
 579-152 
 
 3,7"i45 
 
 6.365 570 
 
 3,562,335 
 
 1 8211 
 
 30,584,919 
 
 2,588,245 
 
 10.911,700 
 
 44,084,864 
 
 736,370 
 
 4,899,686 
 
 10.401,786 
 
 4,671,271 
 
 1824 
 
 29.478,255 
 
 2.563,672 
 
 J3.373.°95 
 
 45,4i5,°22 
 
 1,393,193 
 
 5,909.351 
 
 i2,gi8,io8 
 
 5-935 496 
 
 182'; 
 
 29,327,219 
 
 3,270,699 
 
 19,807,665 
 
 52,405.583 
 
 1,566,728 
 
 4,686,557 
 
 12,885,829 
 
 8,836,646 
 
 1826 
 
 29,592,103 
 
 3.592,145 
 
 17,885,210 
 
 51,069,458 
 
 1.745.566 
 
 5,174.643 
 
 12.578,523 
 
 10,235,528 
 
 JB27 
 
 27,948,592 
 
 4.568,297 
 
 17.724.192 
 
 50,244,081 
 
 2,118,560 
 
 6,327.758 
 
 13 727,274 
 
 10,808,244 
 
 J 828 
 
 30,820 944 
 
 6,018,784 
 
 17,127077 
 
 53,966,805 
 
 2,298,352 
 
 6,205,107 
 
 14,454,169 
 
 12-414,390 
 
 1829132,703,280 
 
 8,417,021 
 
 13,925,701 
 
 55,046,002 
 
 2,474,750 
 
 6,411,998 
 
 15,172,164 
 
 15.011.352 
 
 ' The actual amount of circulation is generally four-fifths of the gross amount, the rest 
 heing notes in transitu, or accumulated in offices where they are not payable. 
 
39 
 
 Actual Circulation of the Bank of the United States aud Branches 
 in September, 1 8 JO, and f laces where the Notes were payable. 
 
 WHERE PAYABLE. 
 
 NOTES IN 
 CIRCULATl'l 
 
 WHERE PAYABLE. 
 
 NOTES IN 
 CIKCULAN. 
 
 Bank United States.. 
 
 Portland 
 
 Portsmouth 
 
 Boston 
 
 Providence... , 
 
 Hartford 
 
 New York..; 
 
 Baltimore 
 
 Washington 
 
 Richmond 
 
 Norfolk 
 
 Fayetteville 
 
 Charleston :.... 
 
 Savannah 
 
 Amount carried forward.. 
 
 Jl,367,i8o 
 79,280 
 101,985 
 271,180 
 113,920 
 171,532 
 834,733 
 528,638 
 647,602 
 469,440 
 532,400 
 713,760 
 835,840 
 522,605 
 
 $7,190,095 
 
 Amount brought forward 
 
 Mobile 
 
 New Orleans 
 
 St. Louis 
 
 Nashville 
 
 Louisville 
 
 .Lexington 
 
 Cincinnati 
 
 Pittsburgh ; 
 
 Buflfalo 
 
 Burlington 
 
 Agencies Cincfnnati and Chilli- ) 
 cothe J " 
 
 317,190,095 
 940,825 
 
 2,623,310 
 228,700 
 
 I7235.275 
 662,375 
 908,625 
 047,240 
 
 554,102 
 258,130 
 
 96/595 
 2,375 
 
 J15.347.657 
 
 NEW YORK SAFETY FUND LAW. 
 
 On April 2, 1829, the " Safety Fund Act," so called, was passed. 
 Mr. Van Buren and his friends, then in the control of the State 
 Government at Albany, exerted an important influence in procur- 
 ing its passage. Banking under special charters was then a mono- 
 poly in that State. 
 
 It was very difficult to obtain new charters, and there was con- 
 siderable hostility manifested at that early period to the United 
 States Bank by those who controlled the State Government. 
 
 The Safety Fund Act of 35 Sections, contained provisions which 
 gave considerable patronage and influence to the State Govern- 
 ment. The United States Bank in Philadelphia, and its branches 
 va. the State of New York, came in competition with the State 
 Banks. Mr. Van Buren, who had been elected Governor of New 
 York, resigned that position, and became Secretary of State upon 
 the inauguration of Gen. Jackson, in March, 1829, just previous to 
 the final adoption of the Safety Fund Act, which was pending in 
 the Legislature of New York. 
 
 HOSTILITY TO UNITED STATES BANK, 1 829. 
 
 On the 8th of December, 1829, more than six years before the ex- 
 piration of the Charter of the United States Bank, President Jack- 
 son, in his first Annual Message to Congress, manifested his hos- 
 tility to it in these words : The Charter of the Bank of the United 
 States expires in 1836, and its stockholders will most probably ap- 
 
4° 
 
 ply for a renewal of their privileges. Both the constitutionality 
 and the expediency of the law creating this Bank, are well ques- 
 tioned by a large portion of our fellow-citizens ; and it must be ad- 
 mitted by all that it has failed in the great end of establishing a 
 uniform and sound currency !" The same views were repeated in 
 his annual messages in 1830 and 1831. The Cabinet was not har- 
 monious on the subject. Mr. Van Buren strongly supported Presi- 
 dent Jackson in the position he had taken in these messages. Hon. 
 Lewis McLean, Secretary of the Treasury, was decidedly opposed 
 to the President. In his annual report to Congress in December, 
 1 83 1, he declared his conviction that the Bank was a necessary part 
 of the plan for the improvement and management of the revenue, 
 and for the support of the public credit. He said : 
 
 " The important charge confided to the Treasury Department, 
 and on which the operations of the Government essentially depend, 
 in the improvement and management of the revenue, and the sup- 
 port of public credit, and of transferring the public funds to all 
 parts of the United States, imperiously requires from tlie Govern- 
 ment all the facilities which it may constitutionally provide for 
 these objects, and especially for regulating and preserving a sound 
 currency. * * 
 
 " The authority of the present Government to create an institu- 
 tion for these purposes cannot be less clear. It has moreover the 
 sanction of the executive, legislative, and judicial authorities, and 
 of a majority of the people of the United States, from the organiza- 
 tion of the Government to the present time. 
 
 " The indispensable necessity of such an institution for the fiscal 
 operations of Government in all its departments for the regula- 
 tion and preservation of a sound currency, for the aid of commer- 
 cial transactions generally, and even for the safety and utility of the 
 local Banks, is not doubted ; and, as is believed, has been shown 
 in the past experience of the Government, and in the general ac- 
 commodation and operation of the present Bank. 
 
 " The present institution may, indeed, be considered as pecu- 
 liarly the offspring of that necessity — springing from the incon- 
 veniences which followed the loss of the first Bank of the United 
 States, and the evils and distresses incident to the excessive, and, 
 in some instances, fraudulent issues of the local banks during the 
 war — the propriety of continuing it is to be considered, not more 
 in reference to the expediency of banking generally, than, in regard 
 to the actual state of things, and to the multiplicity of State Banks 
 already in existence, and which can neither be displaced, nor in 
 any manner controlled in their issues of paper by the general Gov- 
 ernment. This is an evil not to be submitted to ; and the remedy 
 at present applied, while it preserves a sound currency for the 
 
41 
 
 country at large, promotes the real interests of the local banks by 
 giving soundness to their paper issues. 
 
 " If the necessity of a Banking institution be conceded or shown, 
 that which shall judiciously combine the power of the Government 
 with private enterprise, is believed to be the most efficacious. The 
 Government would thus obtain the benefit of individual sagacity in 
 the general management of the Bank, and by means of its deposits 
 and share in the direction, possess the necessary power for the pre- 
 vention of abuse. 
 
 "These considerations, and others which will be adverted to in 
 a subsequent part of this Report, — the experience of the depart- 
 ment in the trying periods of its history, and the convictions of his 
 own judgment, concurring with those of the eminent men who have 
 preceded the undersigned in its administration — induced him to 
 recommend the expediency of chartering the present Bank at the 
 proper time, and with such modifications, as, without impairing its 
 usefulness to the Government and the community, may be calcu- 
 lated to recommend it to the approbation of the executive, and-^ 
 what is vitally important — to the confidence of the people." 
 
 On the 9th of January, 1832, Mr. Dallas presented a memorial 
 of the Bank petitioning for a re-charter, which was referred to a 
 Select Committee. On the 13th of March, this Committee reported 
 in favor of a renewal of the charter for fifteen years, with the fol- 
 lowing modification : 
 
 "First. No notes (under fifty dollars) were to be issued from 
 the Bank or any branch, unless made payable at the Bank or branch 
 whence issued, except at the request of the persons to whom they 
 are delivered. 
 
 " Second. The notes of the Bank to be received by every branch 
 in payment of balances due by any State Bank. 
 
 "Third. The corporation to be prohibited retaining any real 
 estate, other than for Banking purposes, longer than two years, 
 under a penalty of ten thousand dollars in each case. 
 
 " Fourth. Not more than two branches to be established or re- 
 tained in any State; and not more than one, except in the States 
 in which they now exist, without the assent of the legislature. 
 
 " Fifth. A bonus of ^1,500,000 to be given to the Government, 
 payable in three annual payments. ' ' 
 
 This bill was ordered to a second reading, and then laid upon 
 the table of the Senate, until after the Report of the Committee 
 appointed by the House to inquire into the affairs of the Bank. 
 
 The Committee appointed consisted of Messrs. Clayton, Cam- 
 berling, Thomas, R. M. Johnson, McDufifie, Adams, and Wat- 
 mough. 
 
 When the two reports were made it appeared that the investi- 
 
42 
 
 gation had not been confined to the -lalleged violation of the 
 charter, but had been extended to all the affairs of the Bank. 
 These reports were very lengthy, and attracted much attention at 
 the time. 
 
 The conclusion at which the majority, consisting of Messrs. 
 Clayton, of Ga., Camberling, of N. Y., Thomas, of Md., and R. M. 
 Johnson, of Ky., arrived, from this investigation was, that Con- 
 gress should not act upon the question of re-chartering the Bank 
 until after the public debt was discharged, and the revenue ad- 
 justed to the expenditure of the Federal Government. They did 
 not, however, give it as their opinion, that the Bank had violated 
 its charter. 
 
 The minority, composed of Messrs. John Quincy Adams, of Mass., 
 George McDuffie, of S. C, and Watmough, of Pa., made a counter 
 report, vindicating the conduct of the Bank, and recommending a 
 renewal of the charter, concluding as follows : 
 
 " Upon a review of the whole ground occupied in the examina- 
 tion they have made, the minority are of the opinion that the 
 affairs of the Bank have been .administered by the President and 
 Directors with very great ability, and with perfect fidelity to all 
 their obligations to the stockholders, to the Government, and to 
 the country. They regard the Bank as an institution indispensa- 
 ble to the preservation of a sound currency, and to the financial 
 operations of the Government, and should consider the refusal of 
 Congress to renew the charter as a great national calamity. 
 
 "They will add in conclusion, that they are equally decided in 
 the opinion that Congress is called upon by the most weighty and 
 urgent considerations to decide this important question during 
 the present session. The uncertainty which prevails on this sub- 
 ject, is calculated to exert a very, pernicious influence over the in- 
 dustry, enterprise, and trade of the country. If the charter of 
 the Bank is not to be renewed ; if the tremendous operation of 
 witlidrawing from the community fifty millions of Bank accom- 
 modations, and twenty-two millions of its circulating medium, 
 must take place, it is full time that it should be distinctly known, 
 that the shock of this opeiration may be mitigated by timely 
 arrangements on the part of the Bank, and that the community 
 may have time to prove the necessary substitutes. Considering 
 the immense extent of the operations of this institution, the time 
 which its charter has yet to run will be scarcely sufficient for the 
 winding up of its affairs." 
 
 GEO. McDUFFIE, 
 
 J. Q. ADAMS, 
 
 JOHN H. WATMOUGH. 
 
43 
 
 These reports were ordered to be printed for general circulation, 
 , and on the 2 2d of May, the bill was taken up in committee ol the 
 whole in the Senate for consideration. The bill was very fully 
 discussed and various amendments voted upon. 
 
 The bill was finally prepared by the 9th of June for a third 
 reading, and after an unsuccessful effort to indefinitely postpone 
 it, it was ordered to a third reading. Yeas 25 — Nays 20; and on 
 the nth of June was passed. Yeas 28 — Nays 20; as follows: — 
 
 Yeas^Messrs. Bell, Buckner, Chambers, Clay, Clayton, Dallas, 
 Ewing, Foot, Frelinghuysen, Hendricks, Holmes, Johnson, Knight, 
 Naudain, Poindexter, Prentiss, Robbins, Robinsoij, Ruggles, Sey- 
 mour, Silsbee, Smith, Sprague, Tipton, Tomlinson, Waggaman, 
 Webster, Wilkins. — 28. 
 
 Nays — Messrs. Benton, Bibb, Brown, Dickerson, Dudley, Ellis, 
 Forsyth, Grundy, Hayne, Hill, Kane, King, Mangum, Marcy, 
 Miller, Moore, Tazewell, Troup, Tyler, White. — 20. 
 
 Mr. Dallas said, that having been oWner of stock in the Bank, 
 he had sold it out as soon as he knew the subject of re-chartering 
 the Bank would come before the Senate. 
 
 Mr. Silsbee said the same. 
 
 Mr. Webster said he had seen his name on the list of Stock- 
 holders, but it was altogether the mistake of a Clerk at the Bank in 
 Philadelphia. 
 
 When it came into the House strenuous efforts were made to 
 postpone its consideration, but that body having refused by a vote 
 of III to 88 to lay the bill upon the table, the minority yielded 
 to a motion of Mr. McDuffie, that it be made the special order of 
 the day for the i8th of June. The House was then, however, 
 engaged in the consideration of the Tariff, and it was not until 
 the 30th of June that the subject was taken up in the Committee 
 of the Whole. A motion then made for its postponement to the 
 next session was negatived. Yeas 75 — Nays 100; and Mr. McDuffie 
 proposed an amendment to that section, which limited the number 
 of branches in each State, providing the existing branches should 
 not be interfered with. Various attempts were then made to 
 alter this proposed amendment, so as to incorporate in the bill 
 all the provisions with which its opponents sought to restrict the 
 Bank. 
 
 The bill was then ordered to a third reading. Yeas 106 — Nays 
 84. A motion was then made to suspend the rule of the House in 
 order to permit the third reading of the bill the same day and car- 
 
44 
 
 ried. Yeas 124 — Nays 61. The previons question was again called 
 and ordered, 109 to 76, and the bill was then passed with Mr. Mc- 
 Duffie's amendment. Yeas 107 — Nays 85: 
 
 The following are the yeas and nays on the final passage of the 
 bill, viz : Yeas— Messrs. Adams, Chilton, Allen, H. Allen, Alli- 
 son, Appleton, Armstrong, Arnold, Ashby, Babcock, Banks, Noyes, 
 Barber, Baninger, Barstow, Isaac C. Bates, Boon, Briggs, Bucher, 
 Bullard, Burd, Burgess, Choate, Collier, Lewis Condict, Silas Con- 
 diet, Eleutheros Cook, Bates Cook, Corwin, Coulter, Craig, Crane, 
 Crawford, Creighton, Daniel, John Davis, Dearborn, Denny, 
 Dewart, Dodridge, Dayton, Ellsworth, G. Evans, Joshua Evans, 
 Edward Everett, Horace Everett, Ford, Gilmore, Grennell, Hodges, 
 Heister, Horn, Hughes, Huntington, Ihrie, Ingersoll, Irvin, Isaacks, 
 Jenifer, Kendall, Henry King, Kerr, Letcher, Mann, Marshall, 
 Maxwell, R. M'Coy, M'Duffie, M'Kennan, Mercer, Milligan, New- 
 ton, Pearce, Pendleton, Pitcher, Potts, Randolph, John Reed, 
 Root, Russell, Semmes, William B. Shepherd, August H. Shepherd, 
 Slade, Smith, Southard, Spence, Stanberry, Stephens, Stewart, 
 Storrs, Sutherland, Taylor, Philemon, Thomas, Tompkins, Tracy, 
 Vance, Verplanck, Vinton, Watmough, Wilkin, Elisha Whittle- 
 sey, Frederick Whittlesey, E. D. White, Wickliffe, Williams, and 
 Young. — 107. 
 
 Nays. — Messrs. Adair, Alexander, Anderson, Archer, Barnwell, 
 Jas. Bates, Beardsley, Bell, Bergen, Bethune, James Blair, John 
 Blair, Bouck, Bouldin, Branch, John C. Broadhead, Camberling, 
 Carr, Chandler, Chinn, Claiborne, Clay, Clayton, Connor, Daven- 
 port, Dayan, Doubleday, Felder, Fitzgerald, Foster, Gaither, Gor- 
 don, Griffin, Thomas H. Hall, William Hall, Hammons, Harper, 
 Hawes, Hawkins, Hoffman, Hogan, Holland, Ho'^ard, Hubbard, 
 Jarvis, Cave Johnson, Kavanagh, Kendall, Kennon, Adam King, 
 John King, Lamar, Lansing, Leavitt, Lecompte, Lewis, Lyon, 
 Mardis, Mason, M'Carty, M'Intyre, M'Kay, Mitchell, Newman, 
 RuCkolls, Patton, Pierson, Plummer, Polk, Edward C. Reed, 
 Rencher, Roane, Soult, Speight, Standifer, Francis Thomas, W. 
 Thompson, Ward, Wardwell, Wayne, Weeks, Wheeler, Campbell, 
 P. White, Wilde, Worthington— 85. 
 
 The S2nate concurred in the amendment, and the bill July 4th, 
 1832, was sent to the President for his approbation and signature. 
 It was by many apprehended, that the President would resort to 
 the mode previously adopted by him to avoid the responsibility of 
 rejecting bills that he disapproved of, and that he would retain 
 it until after an adjournment of Congress. 
 
45 
 
 To prevent this, the Senate declined acting- on the resolution for 
 an adjournment until the bill had been sent to him for concur- 
 rence, and then the i6th of July was inserted so as to leave ten full 
 days exclusive of Sundays, by which he was compelled to return 
 the bill to Congress, or permit it to become a law. Accordingly 
 on July loth, the next day after the Senate had fixed the time of 
 adjournment a veto message was sent to that body, stating the rea- 
 sons of the President for refusing his signature to the bill. 
 
 The great length of this Message prevents its entire insertion ; 
 the reasons assigned by the President are familiar, it is presumed 
 to all, and were in substance as follows : That the act was uncon- 
 stitutional because the law creating this Bank is not one of the ne- 
 cessary and proper means vested in Congress to carry into effect 
 the powers expressly granted ; that the bill granted exclusive privi- 
 leges and was a dangerous "monopoly ;" that it was not subject to 
 State taxation ; that it was ill-timed, inexpedient, and unnecessary 
 for the public service. 
 
 This veto message having been received in the Senate, Daniel 
 Webster, on the nth July, 1832, proceeded to the consideration 
 of the objections made by President Jackson to the re-charter of 
 the Bank, and his reasons for not signing the bill. Mr. Webster 
 said that the objections of the President " go against the whole 
 substance of the law originally creating a Bank. They deny in 
 effect that the Bank is constitutional ; they deny that it is expedi- 
 ent ; they deny that it is necessary for the public service." 
 
 "It is not to be doubted, that the Constitution gives the Presi- 
 dent the power which he has now exercised ; but while the power 
 is admitted, the grounds upon which it has been exerted become 
 fit subjects of examination. The Constitution makes it the duty 
 of Congress in a case like this, to reconsider the measure which 
 they have passed, to weigh the force of the President's objections 
 to that measure, and to take a new vote upon the question. 
 
 "Before the Senate proceeds to this second vote, I propose to 
 make some remarks upon those objections. And, in the first place, 
 it is to be observed, that they are such as to extinguish all hope, 
 that the present Bank, or any bank at all resembling it, or resemb- 
 ling any known similar institution, can ever receive his approba- 
 tion. He states no terms, no qualifications, no conditions, no 
 modifications, which can reconcile him to the essential provisions 
 of the existing charter. He is against the Bank, and against any 
 Bank constituted in a manner known either to this or any other 
 country. One advantage, therefore, is certainly obtained, by pre- 
 senting him the bill. It has caused his sentiments to be made 
 known. The bill is negatived ; the President has assumed the 
 
46 . 
 
 responsibility of putting an end to the Banks ; and the country- 
 must prepare itself to meet that change in its concerns which thfe 
 expiration of the charter will produce. Mr. President, I will not 
 conceal my opinion, that the affairs of this country are approach- 
 ing an important and dangerous crisis. At the very moment of 
 almost unparalleled general prospei ity, there appears an unaccount- 
 able disposition to destroy the most useful and most approved insti- 
 tutions of the Government. Indeed it seems to be in the midst of 
 all this national happiness, that some' are found openly to question 
 the advantages of the constitution itself. 
 
 " Within three years and nine months from the present moment, 
 the> charter of the Bank expires ; within that period, therefore, it 
 must wind up its concerns. It must call in its debts, withdraw 
 its bills from circulation, and cease from all its ordinary opera- 
 tions. All this is to be done in three years and nine months ; 
 , because, although there is a provision in the charter, rendering it 
 lawful to use the corporate name for two years after the expira- 
 tion of the charter, yet this is allowed only for the purpose of 
 suits, -and for the sale of the estates belonging to the Bank, and 
 for no other purpose whatever. The whole active business of the 
 Bank, its custody of public deposits, its transfers of public moneys, 
 its dealings in exchange, all its loans and discounts, and all its 
 issues of bills for circulation, must cease and determine on or be- 
 fore the third day of March, 1836; and within the same period, 
 its debts must be collected, asno new contract can be made with 
 it, as a corporation, for the removal of loans, or discount of notes 
 or bills, after that time. * * *. 
 
 "As to the time of passing this bill it would seem to be the last 
 thing to be thought of, as a ground of objection, by the President ; 
 since from the date of his first message to the present time, he 
 has never failed to call our attention to the subject with all possi- 
 ble apparent earnestness. So early as December, 1829, in his mes- 
 sage to the two Houses, he dj^clares, that he ' cannot, in justice to 
 the parties interested, too soon present the subject to the deliber- 
 ate consideration of the Legislature, in order to avoid the evils 
 resulting from precipitancy, in a measure involving such impor- 
 tant principles and such deep pecuniary interests.' " 
 
 Gen. Jackson was re-elected President in the fall of 1832, which 
 settled the question that the second United States Bank must like 
 the fii-st go into liquidation and wind up its affairs. 
 
 REMOVAL OF GOVERNMENT DEPOSITS. 
 
 Without the authority of law the President assumed that the 
 Secretary of the Treasury might select as many of the State JBanks 
 as he might deem necessary to receive the Government deposits, 
 and perform the fiscal service of the Government. A large num- 
 ber were subsequently selected. But the i6th Section of the 
 
47 
 
 United States Bank Act required, " that the deposit of the money 
 of the United States, in places in which the said Bank and 
 branches thereof may be established, shall be made in the said 
 Bank, or branches thereof, unless the Secretary of the Treasury 
 shall, at any time, otherwise order and direct, in which case the Sec- 
 retary of the Treasury shall immediately lay before Congress, if in 
 session, and, if not, immediately after the commencement of the 
 next session, the reasons of such order or direction." 
 
 The Secretary of the Treasury, in his report of December 5th, 
 1832, advised Congress that doubts were entertained in some quar- 
 ters of the safety of the Bank as a depositary of the public reve- 
 nues, and that, in consequence, he had appointed agents to examine 
 into its condition. The President's Message of the same date ex- 
 pressed similar doubts, and indicated the propriety of removing 
 the Government deposits from the Bank. A committee of investi- 
 gation was appointed by Congress, and on the two reports, together 
 with the statement of the Bank Directors, the House of Repre- 
 sentatives declared, by a vote of 109 to 40, that the public deposits 
 might safely be continued in the institution. The three examina- 
 tions agreed so closely as to exclude all possibility of collusion or 
 error. The Hon. Gulian C. Verplanck, of New York, chairman 
 of the Congressional Committee, stated in his report, that they 
 " had examined the report of the Treasury agents, and also the 
 Directors of the Bank under oath, and that it appeared that the 
 Bank had ;g8o,866,ooo of available resources, and that its liabili- 
 ties, exclusive of its stock, amounted to only ;^37, 800,000. 
 
 After this report was rendered, and after the vote of confidence 
 by Congress, Secretary McLean expressed his final determina- 
 tion to take no part in changing the custody of the public revenues. 
 Whereupon the President transferred him to the State Depart- 
 ment, to make room for a more pliable officer ; but his successor, 
 the Hon. William J. Duane, of Pennsylvania, proved even less 
 tractable. He declared his unwillingness to act in the matter 
 without reasons that would justify him in the eye of the law. The 
 President summoned a special meeting of the Cabinet for consul- 
 tation, with no better result. He then announced that he would 
 assume the responsibility of issuing a mandatory order of removal, 
 which he expected the Secretary to obey. But that officer, like 
 his predecessor, deeming the proposed action of the President 
 illegal, would neither execute the order nor voluntarily retire from 
 the office. The President had no alternative but to remove him 
 
48 
 
 by an arbitrary dismissal ; and he appointed in his stead the Hon. 
 Roger B. Taney, whose opinions were known to coincide with those 
 of the President. 
 
 On the i8th of September, 1833, the President issued a pe- 
 remptory order for the removal of the Government deposits, and 
 on the first of October following, the order was executed by Mr. 
 Taney, and such deposits transferred from the United States Bank 
 to the "State Deposit Banks." 
 
 The amount of deposits thus transferred was about ^11,000,000, 
 and the State Banks thus favored were encouraged to expand their 
 loans upon the faith of such deposits. Thus ended the services of 
 the United States Bank as the Financial Agent of the Government. 
 
 Mr. Taney, in his report December 3d, 1833, stated that he had 
 selected certain State Banks as depositarifs and fiscal agents of the 
 Government, and that the "deposit banks" so employed, were all 
 institutions of high character and undoubted strength, and under 
 the control of persons of unquestioned probity and intelligence. 
 And to insure the safety of the public money, each one of them 
 was required to give security whenever the amount of the deposits 
 should exceed the half of the amount of its capital actually paid 
 in." He also gave his reasons to Congress as required by law, for 
 removing the deposits, which were deemed by the' Senate as insuf- 
 ficient to justify such removal. 
 
 On the 5th of February, 1834, Mr. Webster, from the Finance 
 Committee, made a lengthy and very able report on the subject 
 which concluded as follows : 
 
 " The Committee cannot but regard the removal of the deposits, 
 on the whole, as a measure highly inexpedient, and altogether 
 unjustifiable. The public moneys were safe in the Bank. This is 
 admitted. All the duties of the Bank connected with these pub- 
 lic moneys were faithfully discharged. This, too, is admitted. 
 The subject has been recently before the House of Representatives, 
 and that House had made its opinion against the removal known 
 by a very unequivocal vote. Another session of Congress was 
 close at hand, when the whole matter would again come before it. 
 Under these circumstances, to make the removal, with the cer- 
 tainty of creating so much alarm, and of producing so much pos- 
 itive evil and suffering, such derangement of the currency, such 
 pressure and distress in all the branches of the business of private 
 life, is an act which the Committee think the Senate is called on 
 to disapprove." 
 
 In pursuance of the recommendation contained in the above 
 
49 
 
 report of the Finance Commiftee, the Senate on March 28th, 1834, 
 passed the following resolutions by decided majorities : 
 
 ^'Resolved, That the reasons assigned by the Secretary of the 
 Treasury for the removal of the money of the United States 
 deposited in the Bank of the United States and its branches, com- 
 municated to Congress the 4th day of December, 1833, are unsat- 
 isfactory and insufficient. 
 
 " Resolved, That the President, in the late executive proceedings 
 in relation to the public revenue, has assumed upon himself autho- 
 rity and power not conferred by the Constitution and Laws, but 
 in derogation of both." 
 
 It was not until near the termination of the United States Bank 
 Charter when the act of June 23d, 1836, was passed, giving the 
 authority of law, for using the State Banks as depositaries of the 
 public monies belonging to the United States. 
 
 GOOD CONDITION OF UNITED STATES BANKS. 
 
 On November 1st, 1834, {after the removal of the U. S. Deposits^ 
 
 LIABILITIES. 
 
 Notes in circulation ;^I5,968,73I.90 
 
 Deposit to the credit of the Treasury 429,465.07 
 
 do. Public Offices .-. 1,837,168.66 
 
 Private Deposits 6,741,752.24 
 
 Capital Stock 35,000,000.90 
 
 Total liabilities ". ^59,977,117-87 
 
 RESOURCES. 
 To meet the foregoing, the Bank had the following resources, viz : 
 
 Discounts (Bills Receivable) ^34,667,828.24 
 
 Mortgages '. 87,591,29 
 
 Domestic Bills 11,086,373.07 
 
 Foreign Bills 2,727,782.11 
 
 Real Estate 3,024,788.45 
 
 Due from State Banks 427,102.89 
 
 Specie on hand...^ 15.910,045.31 
 
 Total resources ^67,931,511.36 
 
 Showing a surplus overall liabilities of. ^7.954,393-49 
 
 The immediate consequence of the defeat of the bill for renew- 
 ing the charter of the United States Bank and the illegal removal 
 of the Government deposits from that institution, was the incor- 
 poration by the several States of a great number of local Banks. 
 Capital stock was authorized for each, but in most cases the stock 
 was not bona fide paid up. The Banks in most cases went into 
 4 
 
so 
 
 operation upon an insecure basis upon fictitious capitals. In the 
 seven years from 1830 to 1837 no less than 304 sprang into exist- 
 ence, with a nominal capital of 1145,000,000, and paper circulation 
 of ^59,000,000, and the total circulation rose to ^104,000, 000. The 
 mass of Bank loans increased from ^200,000,000 to ;g5 25,000,000. 
 
 The Treasury balance in the " deposit banks " rose from ;J 11,- 
 000,000 October 1, 1833, toover|49, 000,000, onNovember i, 1836. 
 The Bank of the United States, instead of closing up on the expi- 
 ration of its charters, obtained a new charter from the State of 
 Pennsylvania, and transferred its assets to the new State institu- 
 tion, and maintained its proportion in the general expansion of 
 credit. Speculation and overtrading increased to an alarming 
 extent all over the country. The expansion of bank credit, the 
 increase of State, corporate and individual indebtedness was far in 
 excess of legitimate business. Reckless speculation in corner lots 
 on paper, and running into debt generally was the order of the 
 day. This kind of speculation extended to the public lands. Large 
 quantities were taken up — not by actual settlers — but by large ope- 
 rators who paid for it in State Bank currency. " Wild-cat" bank- 
 ing became rampant in many of the Western States, which ope- 
 rated to swell the indebtedness enormously in that portion of the 
 country. 
 
 The importations from foreign countries had been large and the 
 specie in the country had been diminishing for some time previous. 
 The duties paid on these large importations served to increase the 
 revenues ; the National debt was paid in full, and a surplus in 
 paper money was accumulating in the United States Treasury which 
 was then being deposited in the State deposit banks to the credit of 
 the Treasurer in Bank ledgers. 
 
 SURPLUS MONEY DISTRIBUTED TO STATES. 
 
 On the 23d of June, 1836, an act was passed for distributing to 
 the several States, the supposed surplus monies above $5,000,000, 
 belonging to the Treasury of the United States, in proportion to 
 their respective representation in the Senate and House. The sums 
 to be thus deposited for safe keeping with the several States was to 
 be made in the following piroportions : — one-fourth part on the first 
 of January, 1837, one-fourth part on the first of April, one-fourth 
 part on the first of July, and the remaining fourth part on the first 
 day of October, all in the same year. It was supposed that the 
 whole amount to be thus distributed would be between ^40,000,000 
 and 5850,000,000. 
 
51 
 
 CONDITION OF THE STATE DEPOSIT BANKS. 
 According to the returns made to the Treasury Department, April i, 1836. 
 
 NAME. 
 
 Maine 
 
 Commercial 
 
 Commonwealth 
 
 Merchants' 
 
 Burlington , 
 
 Farmers' and Mechanics'.. 
 
 Mechanics' , 
 
 Arcade 
 
 Mechanics* and Farmers'.. 
 
 Banlc of America 
 
 Manhattan Co 
 
 Mechanics' , 
 
 Glrard , 
 
 Moyamensing ~. , 
 
 Union, T<(cl , 
 
 FranklinT. , 
 
 Bank Metropolis , 
 
 Vir. and Branches , 
 
 Nprth Carolina 
 
 Planters' and Mechanics'.. 
 
 Planters', Georgia 
 
 Augusta 
 
 Btanch of Alabama 
 
 Commercial 
 
 Union Bank of Lduisiana.. 
 Merchants' and Mechanics'... 
 
 Franklin 
 
 Commercial 
 
 Clinton 
 
 Savings Institution 
 
 Union Bank, Tennessee 
 
 State 
 
 Agency C. Bank, Cincinnati. 
 
 Planters' 
 
 Michigan 
 
 Farmers' and Mechanics' .... 
 
 PLACE. 
 
 Portland 
 
 Portsmouth 
 
 Boston 
 
 Burlington 
 
 Hartford 
 
 New Haven ... 
 
 Providence 
 
 Albany 
 
 New York 
 
 Philadelphia... 
 
 Baltimore 
 
 Washington ... 
 Richmond, &c. 
 
 Raleigh 
 
 Charleston 
 
 Savannah 
 
 Augusta 
 
 Mobile 
 
 New Orleans... 
 
 Pittsburgh 
 
 Cincinnati 
 
 Columbus 
 
 Louisville 
 
 Nashville 
 
 Indianapolis... 
 
 St. Louis 
 
 Natchez 
 
 Detroit 
 
 CAPITAL. 
 
 Dollars. 
 
 30,000.00 
 
 102,000.00 
 
 500,000.00 
 
 750,000.00 
 
 127,912.00 
 
 410,496.00 
 
 472,970.00 
 
 300,000.00 
 
 442,000.00 
 
 2,001,200.00 
 
 2,050,000.00 
 
 2,000,000.00 
 
 1,500,000.00 
 
 174,950.00 
 
 1,845,562.50 
 
 508,970.00 
 
 500,000,00 
 
 3,240,000.00 
 
 1,206, zoo.oo 
 
 1,000,000.00 
 
 535,400.00 
 
 897,000.00 
 2,060,000.00 
 
 2,94S.430.oo 
 7,051,000.00 
 
 600,000.00 
 1,000,000.00 
 1,000,000.00 
 
 289,225.00 
 
 96,512.00 
 
 1,817,255.00 
 
 1.279.857.78 
 
 4,143,940.00 
 448,200.00 
 150,000.00 
 
 SPECIE. 
 
 Dollars. 
 
 27.339.82 
 
 11,065.56 
 
 209,064.54 
 
 29S.546.30 
 
 12,082.35 
 
 10,763.80 
 
 153.546.38 
 
 52,231.26 
 
 114,032.33 
 
 1,274,220.66 
 
 1,028,946.33 
 
 1,271,593.00 
 
 461,374.86 
 
 93,030.32 
 
 107,943.24 
 
 124,197.74 
 
 217,219.39 
 
 633,700.07 
 
 292,018.15 
 
 317,162.81 
 
 178.472.45 
 
 313.750.03 
 
 339,723.01 
 
 202,533.17 
 
 2SS.559.01 
 
 127,514.59 
 
 167,020.90 
 
 266,803.87 
 
 121,143.47 
 
 50,807.58 
 
 116,585.17 
 
 964,758.34 
 
 513,859.06 
 
 438,324.32 
 
 62,139,34 
 
 59,923.70 
 
 43,690,980.28 10,885,996 92 33,294,024.08 
 
 DEPOSITS 
 
 Treasurer 
 
 United States 
 
 Dollars. 
 
 113,074.94 
 
 128,338.33, 
 
 1.009,731.52 
 
 931,105.79 
 
 52,893.48 
 
 67,560.89 
 
 41,315.06 
 
 115,132.40 
 
 , 217,430.22 
 
 3,858,750.20 
 
 3,462,800.38 
 
 3.985,083.72 
 
 2,516,858.76 
 
 502,042.25 
 
 906,491.54 
 
 347,388.74 
 
 200,394.40 
 
 358,230.56 
 
 38,471.07 
 
 252,522.42 
 
 111,862.48 
 
 129,770.95 
 
 1,623,818.12 
 
 1,119,314.50 
 
 1,261,116.73 
 
 51,095.72 
 
 244,048.12 
 
 395,175.82 
 
 328,127.52 
 
 494,842,26 
 
 484,086,61 
 
 1.379.949.98 
 
 1.978,383.94 
 
 2,732,319 38 
 
 1,070,820.03 
 
 703,675.25 
 
 
 Dollars. 
 
 
 Dollars. 
 
 
 68,850,287.67 
 
 32,775.529-42 
 
 1,929,056.68 
 
 15.931.916.22 
 
 11,107,447.78 
 
 10,885,996.92 
 
 532,450.96 
 
 184,901.22 
 
 10,651,759.92 
 
 152,849,346.78 
 
 43,690,980.28 
 33,294,024.08 
 
 3,477.252.42 
 
 15,366,674.49 
 
 1,102.763.15 
 
 4,094,358,12 
 
 Domestic Exchange 
 
 Real Estate . 
 
 
 Public Officers 
 
 
 
 
 
 
 Profit and Loss, &c 
 
 
 28,796,186.68 
 
 15,453,092.11 
 
 7.574.015.16 
 
 
 
 
 
 
 Total 
 
 Total, 
 
 15" 849.346.79 
 
52 
 SPECIE CIRCULAR. 
 
 To check speculation in the public lands, President Jackson, on 
 the nth July, 1836, issued the famous Specie Circular, in the form 
 of an order from the Treasury Department, prohibiting the receipt 
 of anything but gold and silver coin in payment of lands sold by 
 the Government. 
 
 STATE BANKS FAIL IN MAY, 1837. 
 
 By the successive acts and proceedings just narrated, a-'train was 
 skillfully laid for a general crash in the financial affairs of the 
 government, the Banks and the people. The natural result of what 
 had taken place during the last six years, led inevitably to a gen- 
 eral smash up. The Bank, which President Madison, in his first 
 annual message, after approving its charter, declared was " essential 
 for the interests of the community at large, as well as for the pur- 
 poses of the Treasury," was killed by the veto of President Jackson, 
 and forced to wind up its affairs as a national institution ; the 
 government deposits were illegally removed to a great number of 
 State deposit banks ; the State Banks were increased, upon ficti- 
 tious capitals, to an alarming extent ; bank credits were extended 
 in the form of paper currency and improper loans upon inadequate 
 and unconvertible security ; high prices, overtrading and extrava- 
 gance in living followed as a natural consequence. The catastrophe 
 resulting from this unnatural and reckless state of things could not 
 long be delayed. 
 
 The specie circular issued by President Jackson, showed distrust 
 of the State Bank currency ; gold and silver was demanded. Fail- 
 ures became frequent in the latter part of 1836, and the early part 
 of 1837. State Bank currency, in many cases, was not redeemed 
 in coin when presented for that purpose, and very soon became un- 
 current money. The Wild Cat and Red Dog Banks at the West 
 first broke down ; the Safety Fund of New York received a blow 
 from which it never recovered, and finally went out of existence. 
 
 Each day developed some new case of insolvency on the part of 
 Banks and individuals. Finally, the distrust extended to all classes 
 of business ; credit was destroyed ; the panic became general, when 
 in May, 1837, all the banks in the country suspended specie pay- 
 ments, and the "deposits" in the "Pet Banks" to the credit of 
 the Treasurer of the United States became unavailable. The de- 
 moralization was complete and general in all private as well" as 
 
53 
 
 governmental transactions. It was difficult for the Secretary of the 
 Treasury to manage the fiscal affairs of the government. 
 
 EXTRA SESSION OF CONGRESS, 1 837. 
 
 Martin Van Buren having been inaugurated President on the 
 4th of March of that year, issued a Proclamation for an Extra Ses- 
 sion of Congress in the following words : 
 
 PROCLAMATION. 
 
 " Whereas, great and weighty matters claiming the consideration 
 of the Congress of the United States from an extraordinary occa- 
 sion for convening them, I do, by these presents, appoint the first 
 Monday of September next for their meeting at the city of Wash- 
 ington ; hereby requiring the respective Senators and Representa- 
 tives then and there to assemble in Congress, in order to receive 
 such communications as may be made to them, and to consult and 
 determine on such measures as in their wisdom may be deemed 
 meet for the welfare of the United States. 
 
 "MARTIN VAN BUREN." 
 
 It is a remarkable fact that in a time of profound peace the 
 finances of the country should have been so badly managed as to \ 
 "form an extraordinary occasion " for an extra session of Con- 
 gress. Five years previously the public finances were in a remark- 
 ably good condition and a large surplus was accumulating in the 
 IVeasury. A uniform currency convertible in gold on demand, 
 had been maintained for nearly twenty years, and the business of 
 the country had greatly prospered. The great convulsion which 
 made an extra session of Congress necessary was very annoying to 
 the friends of the administration who had largely participated in 
 bringing it about. 
 
 Mr. Van Buren was very much disgusted with the State Deposit 
 Banks for their mismanagement in locking up and rendering un- 
 available the public deposits. His motto became "an entire di- 
 vorce of the United States Treasury from all banks and banking 
 transactions." The institutions which Mr. Taney declared in 1833, 
 to be of " high character and undoubted strength, ' ' proved to be very 
 weak in 1837. Many of them proved to be not only a failure but 
 a fraud. 
 
 General Jackson wrote from his retirement at the Hermitage. 
 that "the history of the world never has recorded such basetreach- 
 
ery and perfidy as had been committed by the deposit banks against 
 the government." 
 
 Thomas H. Benton, a pronounced hard money man, familiarly 
 known as Old Bullion, said, at a subsequent date, "I am one of 
 those who promised gold, not paper. I promised the currency of 
 the constitution not the currency of corporations. I did not join 
 in putting down the Bank of the United States to put up a wilder- 
 ness of local banks. I did not join in putting down the paper cur- 
 rency of a National Bank, to put up a national paper currency of 
 more than a thousand local banks. I did not strike Csesar to 
 make Antony master of Rome." 
 
 On the 4th September, 1837, the extra session of Congress opened 
 its proceedings. President Van Buren sent in his special message, 
 in which he stated that the object of the session was : — 
 
 " To regulate by law the safe keeping, transfer and disbursement 
 of the public moneys ; to designate the funds to be received and 
 paid by the Government ; to enable the Treasury to meet promptly 
 every demand upon it ; to prescribe the terms of indulgence and 
 the mode of settlement to be adopted, as well in collecting from 
 individuals the revenue that has accrued, as in withdrawing it 
 from former depositaries ; and to devise and adopt such further 
 measures within the constitutional competency of Congress as will 
 be best calculated to revive the enterprise, and to promote the pros- 
 perity of the country. * * 
 
 " A system," he said, "which can in a time of profound peace, 
 when there is a large revenue laid by, thus suddenly prevent the 
 application and the use of the money of the people in the manner 
 and for the objects they have directed, cannot be wise, but who 
 can think without painful reflection, that under the same unfore- 
 seen events might have befallen us in the midst of a war, and 
 taken from us at the moment when most wanted the use of those 
 very means which were treasured to promote the national welfare 
 and guard our national rights." 
 
 The first act passed postponed the payment of the fourth instal- 
 ment of surplus moneys to the States, providing, however', "that 
 the first three instalments should remain on deposit with the States 
 until otherwise directed by Congress," amounting to $28,101,645, 
 which is still to the credit of the U. S. Treasurer on the books of 
 the Treasury Department. 
 
 An act was also passed for the issue of ten million 6 per cent. 
 Treasury Notes, redeemable after one year, which were intended to 
 be circulated to some extent as a paper currency, by making them 
 receivable in payment of "all taxes and duties laid by the autho- 
 
55 
 
 rity of the United States, of all public lands sold, and for all debts 
 due to the United States of any character whatsoever." 
 
 An act was also passed for adjusting the remaining claims against 
 the late deposit banks, which were in default in making payment of 
 the monies deposited with them. 
 
 NEW YORK IN A TIGHT PLACE. 
 
 The State of New York was also in a tight place, and had con- 
 siderable difficulty in raising coin to pay the interest on its funded 
 debt, falling due October ist, 1837. In the month of August the 
 Commissioners of the Canal Fund finally placed in the Bank of 
 America, State Stocks issued for the Chenango Canal, to the 
 amount of 1545,000 at the par of gold and silver, and obtained 
 from that bank an advance of ^73,000 in specie with which the 
 _jnterest on the State debt was paid on the first of October, which 
 prevented any default on the part of the State. 
 
 To aid in the resumption of specie payments, Canal Stock was 
 also placed in the following banks : — 
 
 Bank of New York $209,000.00 
 
 Merchants' Bank 310,000.00 
 
 Manhattan Company 426,526.55 
 
 Union Bank '. 209,000.00 
 
 National Bank . 160,000.00 
 
 Bank of State of New York 416,000.00 
 
 These advances of Stock were made to the several banks amount- 
 ing to ^2,030,000, under a special agreement for " facilitating an 
 early resumption of specie payments by the banks," and finally 
 pay the State for the Canal Stock thus advanced to them. 
 
 FAVORABLE WINDING UP OF U. S. BANK. 
 
 At the time of closing the United States Bank after its charter 
 expired, the stock was worth a premium of more than 15 per cent., 
 and the stock in the Bank owned by the United States was paid 
 back to it in full, and also a premium on the same exceeding 15 
 per cent., besides the previous regular dividends, so that the United 
 States actually made money on its stock, and did not lose a dollar 
 of the money deposited in the Bank. It fulfilled all its obligations 
 to the Government, redeemed all its circulating notes, paid all its 
 private depositors, and as a National institution went out of ex- 
 istence with a clean record. 
 
S6 
 
 BANK OF THE UNITED STATES OF PENNSYLVANIA. 
 
 When it was finally settled that no re-charter of the National 
 Bank was to be obtained, a plan was projected to combine the 
 advantages of the long established correspondence, name, and 
 machinery of the former Bank, by incorporating its stock with a 
 new institution under the name of " The President, Directors, and 
 Company of the Bank of the United States of Pennsylvania," which 
 was chartered on the i8th of February, 1836, by the Legislature of 
 that State. The transfer of the funds of the old institution was 
 made into the new State Bank. In consequence of the advantages 
 to be derived from the new institution, the stockholders were gene- 
 rally content to subscribe anew in the new State Bank ; and it is 
 alleged that all of them might, at this juncture, have received their 
 investments back, not only at par, but with a large advance. This, as 
 before stated, the Government actually did, and no power was en- 
 joyed by the Government that was not shared by every individual. 
 Indeed, it was alleged by Mr. Nicholas Biddle (who held the ad- 
 ministration of the affairs of the State Bank, as he had done in the 
 National Bank), as recently as April, 1841, that the State institution 
 was prosperous down to the end of his administration in March, 
 1839. But under the pressure of the revulsion which followed the 
 panic of 1837, the stock of the State Bank declined from 116 to 17 
 per cent, in 1841, and finally failed along with a great number of 
 other State Banks. The depression and hard times continued until 
 
 1843. 
 
 A bill for establishing a Fiscal Bank of the United States passed 
 the House of Representatives, August 6th, 1841 ; vetoed by Presi- 
 dent Tyler, August i6th. Another bill for a Fiscal Corporation 
 vetoed September 9th, 1841, followed by a resignation of all the 
 Cabinet, except Mr. Webster, which ended for a time all efforts to 
 obtain under any name a new National Bank. 
 
 On January 1, 1837, the Bank circulation of the country, accord- 
 ing to the Treasury reports, was ^149,000,000. By January ist, 
 1843, it was reduced to ^58,000,000. A ruinous fall of prices was 
 the consequence, and wide-spread distress, attended by many 
 failures. In the four years ending with 1842, the exports of specie 
 exceeded the imports by ^8,500,000 ; but under the favorable in- 
 fluence of the Tariff of 1842, in the nine months ending June 30, 
 1843, the imports of specie exceeded the exports by ;^2o,ooo,ooo ; 
 as the Banks of New York and New England had paid specie 
 regularly since 1838, they soon recovered from the effects of the 
 
57 
 
 revulsion ol 1842-43. Those of the grain-growing States, from 
 New Jersey to Missouri, did not fully recover till 1847, when the 
 demand for breadstuffs in Europe gave a balance of specie in our 
 favor of J22, 000,000. The Banks in the South and West were not 
 fully re-established until some years later, when an extraordinary 
 demand for cotton replenished their coffers. 
 
 FREE BANKING LAW OF NEW YORK. 
 
 On April 18th, 1838, the monopoly of banking under special 
 charters, was brought to a close in the State of New York, by the 
 passage of the act " to authorize the business of Banking." Under 
 this law Associations for Banking purposes and Individual Bankers, 
 were authorized to carry on the business of Banking, by establish- 
 ing offices of deposit, discount and circulation. Subsequently a 
 separate Department was organized at Albany, called "The Bank 
 Department," with a Superintendent, who was charged with the 
 supervision of all the Banks in the State. Under this law institu- 
 tions could be organized simply as Banks of "discount and 
 deposit," and might also add the issuing of a paper currency to cir- 
 culate as money. At iirst the law provided that State and United 
 States stocks for one-half, and bonds and mortgages for the other ' 
 half, might be deposited as security for the circulating notes to be 
 issued by Banks and individual Bankers. Upon a fair trial, how- 
 ever, it was found that when a Bank failed, and the Bank Depa,rt- 
 ment was called upon to redeem the circulating notes of such Bank, 
 the mortgages could not be made available in time to meet the de- 
 mand. The mortgages when brought to the test of raising ready 
 money proved to be unavailable, and by an amendment of the law 
 the receiving of mortgages as security for circulating notes was 
 discontinued. 
 
 This law with the various amendments that have been made, has 
 proved to be a valuable and useful mode of carrying on the busi- 
 ness of banking, and ultimately a very large majority of the banks 
 in New York came under its provisions in the transaction of their 
 business. Among them I may name a few of the most promi- 
 nent. 
 
 The Bank of Commerce in the city of New York, organized 
 under the provisions of this act, January ist, 1839, with a capital 
 of |i5,o"oo,ooo, which was afterwards increased to ;^ 10,000,000, and 
 was among the first of the Free Banks in the State. It was a bank 
 
S8 
 
 of " discount and deposit " mainly, and issued only a small amount 
 of circulating notes until it came under the provisions of the Na- 
 tional Bank Act in 1865. 
 
 The American Exchange Bank is another of the large and 
 prosperous banks which came early under the provisions of the free 
 banking law of New York. Its capital is ^5, 000, 000, and in 1865 
 it organized under the National Bank Act. 
 
 The Metropolitan Bank of New York City, is another of the 
 prominent banks which, at a later period, organized under the 
 same law, with a capital of ^4,000,000, and is uow doing business 
 under the National law. 
 
 Many other banks ought to be specially mentioned for the ability 
 and fidelity with which they have been managed, did time and space 
 permit. 
 
 sub-treasury act. 
 
 For more than ten years there was an earnest discussion in Con- 
 gress and in the Treasury reports, for and against an Independent 
 Treasury. Robert J. Walker, Secretary of the Treasury, in his an- 
 nual report in December, 1845, said that " the only proper course 
 for the Government was to keep its own money separate from all 
 banks and bankers, in its own Treasury — whether in the mint, 
 branch mints, or other Government agencies ; and to use only gold 
 and silver coin in all receipts and disbursements. Various forms of 
 paper credit have been suggested as connected with the operations 
 of the Treasury, but they are all considered as impairing one of the 
 great objects of the Independent Treasury, namely, an augmented 
 circulation of specie. ' ' In other words a complete divorce of the 
 Government from all banks and banking transactions. 
 
 On the 6th of August, 1846, the Sub-Treasury act was finally 
 passed, and went fully into operation January ist, 1847, upon the 
 theory mainly of gold and silver in all the financial transactions of 
 the Government ; but with the expectation that Treasury notes 
 might be resorted to if necessary. 
 
 THE sub-treasury LAW NOT ADEQUATE TO THE EXIGENCIES OF 
 THE WAR WITH MEXICO^NOT GOLD AND SILVER 
 ENOUGH FOR THE PURPOSE. 
 
 In less than a year after the passage of the Sub-Treasury Act, it 
 was found that very little gold was in the Treasury. It was easy to 
 
59 
 
 enact that " all disbursements " from the Treasury should be made 
 in coin, but soon after the commencement of the war with Mexico, 
 it was found very difficult to get the coin into the Treasury for 
 " disbursement." The Army and Navy had to be supported, and 
 material of war had to be provided. Coin in sufficient amount 
 could not be obtained for that purpose. Resort was almost imme- 
 diately had to the alternative oi paper to carry on the war. The acts 
 of July 22, 1846, and January 28th, 1847, authorized the issue of 
 ^28,000,000 6 per cent. Treasury notes, to be put upon loan, and 
 paid to contractors and others who furnished supplies to carry on 
 the war. A large part of the " disbursements " for the war were in 
 Treasury notes instead of gold, showing the impracticability of the 
 Sub-Treasury to carry on even a small war in gold and silver. 
 
 THE PANIC AND REVULSION OF 1857. 
 
 This crisis, like the revulsion of 1837, was caused by too great 
 an expansion of credit. Debts in all forms becamS excessive. The 
 Railway system had been largely extended upon borrowed capital. 
 There had been excessive importations of foreign goods. The 
 banks loaned too njuch of their funds on stocks, bonds and other 
 securities that could not be readily converted into money to meet 
 checks of depositors. The Ohio Life Insurance and Trust Company, 
 which had a large branch office in the city of New York, was com- 
 pletely loaded down with unavailable securities, and on the 2Sth 
 of August, 1857, failed with very large liabilities outstanding. 
 This was the startirig-point of the panic. Distrust very soon 
 became general. Confidence was destroyed. It was soon ascer- 
 tained that too much floating capital had been converted into fixed 
 capital. Call loans were called in. A large part of the hundreds 
 of millions of stock and bonds that had been created during the 
 previous ten years, proved to be unavailable. Wall street and the 
 Stock Exchange became greatly excited. A large number of the 
 members of the Board of Brokers were unable to respond to their 
 call loans, and failed. Stocks fell 50 per cent. At the height of 
 the panic New York Central R. R. stock sold down to 48, Illinois 
 Central, Michigan Central, and Rock Island at about 30, Michigan 
 Southern at 5. Money so stringent that bankers were unable \to 
 borrow currency on gold bullion ; the Michigan Southern sold at 
 ten per cent, guaranteed stock at 50, and the Michigan Central, an 
 eight per cent, mortgage bond, at the same price. 
 
 The panic continued about fifty days, until the middle of Octo- 
 ber, 1 85 7, when all banks suspended specie payments. 
 
6o 
 
 The system of redemption of bank notes then in force by the 
 Suffolk Bank in Boston, and the Metropolitan Bank in New York, 
 operated unfavorably. This mode of requiring redemption of the 
 interior bank currency which was sent in packages to these banks 
 and then hurried back again to the interior, frequently in the 
 same packages, greatly accelerated the panic. Finally the banks 
 in New York, by common consent, ceased sending home good cur- 
 rency and finally took the secured currency of the State of New 
 York, and made it a basis for Clearing House Certificates, which had 
 an important influence in stopping the panic and restoring confi- 
 dence. When the banks suspended, relief came, of course. Confi- 
 dence gradually returned, money flowed into business channels, 
 prices improved, and the banks were enabled to resume in Decem- 
 ber. 
 
 STATE BANKS — REBELLION — SUB-TREASURY. 
 
 At the breaking out of the Rebellion in 1861, the Government 
 of the United States had no National institution to resort to, like 
 the Bank of England or the Bank of France, for aid to sustain 
 the Union Army and Navy. It had only a barren Sub-Treasury, 
 which in every effort of the Government to make loans, was 
 knowp to be antagonistic to the Customary commercial operations 
 of the State Banks. The Sub-Treasury was in no way connected 
 with Clearing House operations, and could not check on the Banks 
 for Government disbursements, and if the Government borrowed 
 money on its bonds from the banks, the money had to be paid 
 into.the Sub-Treasury in gold and silver coin, or treasury notes, 
 which at once weakened the bank reserves, and tended to disturb 
 the whole financial business of the country. The Sub-Treasury 
 law was a positive obstacle to a successful management of the 
 finances in the great war then in progress to maintain the Union. 
 
 LOAN OF JS250, 000,000 AUTHORIZED. 
 
 Two important loan acts were passed at the extra session of 
 Congress in July and August, i86iy authorizing a loan of $250,- 
 000,000. The first act was approved July 17th, and the second 
 August 5th. By section six of the last mentioned act, the Sub- 
 Treasury law passed in 1846,' was so far suspended as to allow the 
 Secretary of the Treasury 
 
 " To deposit any of the moneys obtained on any of the loans 
 now authorized by law, to the credit of the Treasurer of the 
 
6i 
 
 United States, in such solvent specie-paying banks as he mayse- 
 lect ; and the said moneys, so deposited, may be withdrawn from 
 such deposit, for deposit with the regular authorized depositaries, 
 or for the paymevt of public dues, or paid in the redemption of the 
 notes authorized to be issued under this act, or the act to which 
 this is supplementary, payable on demand, as may seem expedient 
 to, or be directed by the Secretary of the Treasury." 
 
 "After the. battle of Bull Run, which occurred on the twenty-first 
 of July of that year, the necessities of the Government in clothing, 
 arming and feeding troops — in providing munitions of war, and 
 building a navy — became so urgent that the banks in New York, 
 Boston and Philadelphia, most patriotically came forward and 
 made arrangements in several negotiations with Secretary Chase, 
 to loan to the Government $150,000,000, under the provisions of 
 the two loan acts passed at the extra session. Of this sum $105,- 
 000,000 was apportioned to the associated banks in the city of 
 New York, payable by installments. The banks were then in 
 good condition, transacting their busine.ss on a specie basis, and 
 paid coin for all balances at the clearing house, and redeemed their 
 circulating notes in coin, and the loan to the Government was 
 made with the expectation that the money would be deposited in 
 the banks, and be checked out under the direction of the Secre- 
 tary, in pursuance of the sixth section above referred to. The 
 Secretary of the Treasury refused to use the discretionary power 
 conferred upon him by that section, and would not check on the 
 banks for the expenses of the war, so that current bank notes 
 could be paid or balances settled through the clearing house, but 
 insisted that the banks should pay the money loaned into the Sub- 
 Treasury in gold or gold treasury notes, and from thence it was 
 distributed for war purposes and scattered in different parts of the 
 country. By far the greater part of this loan was paid in gold 
 coin, taken from the reserves of the banks, commencing on the 
 nineteenth of August, 1861. This unnecessary mode of requiring 
 the payment of the loans, so weakened the banks, that it brought 
 on a general suspension of specie payments, during the last days 
 of December, 1861. Mr. Chase in breaking the banks at the same 
 time broke the Sub-Treasury, and both were discredited together." 
 (See Spaulding's Financial History of the War, Second Edition, 
 pages 2 and 3 of Introduction.) 
 
 Hon. Salmon P. Chase, Secretary of the Treasury, in his report 
 in December, 1861, stated that there were about sixteen hundred 
 local banks, and that the value of the then existing bank note cir- 
 culation depended upon the laws of thirty-four States, and the 
 character of those private corporations. He estimated the total 
 circulation of all these banks, January ist, 1861, to be 11202,000,- 
 767. " Of this circulation, $150,000,000 in round numbers was in 
 the loval States, aid ^50,000, 000 in the rebellious States." 
 
62 
 
 The Government was without any National paper currency to 
 circulate as money, and Mr. Chase was not then favorable to the 
 issue of legal tender notes. He however was in favor of a National 
 currency under the authority of the United States, and recom- 
 mended the , 
 
 NATIONAL BANK ACT. 
 
 Mr. Chase in hjs annual report in December, 1861, above referred 
 to, said : 
 
 "It has been well questioned by the most eminent statesmen 
 whether a currency of bank notes, issued by local institutions 
 under State laws, is not, in fact, prohibited by the National Consti- 
 tution. Such emissions certainly fall within the spirit, if not 
 within the letter, of the Constitutional prohibition of the emission 
 of ' bills of credit ' by the States, and of the making by them 
 of anything except gold and silver coin a legal tender in payment 
 of debts. 
 
 " However this may be, it is too clear to be reasonably disputed 
 that Congress, under its Constitutional powers to lay taxes, to regu- 
 late commerce and to regulate the value of coin, possesses ample 
 authority to control the credit circulation which enters so largely 
 into the transactions of commerce, and affects in so many ways 
 the value of coin. In the judgment of the Secretary, the time has 
 arrived when Congress should exercise this authority. The value 
 of the existing bank note circulation depends on the laws of thirty- 
 four States, and the character of some sixteen hundred private 
 corporations. It is usually furnished in greatest proportions by 
 institutions of least actual capital, circulation, commonly, is in the 
 inverse ratio of solvency. Well-founded institutions, of large and 
 solid capital, have, in general, comparatively little circulation, 
 while weak corporations almost invariably seek to sustain them- 
 selves by obtaining from the people the largest possible credit in 
 this form. Under such a system, or rather lack of system, great 
 influctions and heavy losses in discounts and exchanges are inevita- 
 ble, and not unfrequently, through failures of the issuing institu- 
 tions, considerable portions of the circulation become suddenly 
 worthless in the hands of the people. The recent experience of 
 several States in the valley of the Mississippi, painfully illustrates 
 the justice of these observations; and enforces, by the most cogent 
 practical arguments, the duty of protecting commerce and industry 
 against the recurrence of such disasters. 
 
 " The Secretary thinks it possible to combine with this protection 
 a provision for circulation, safe to the community and convenient 
 for the Government. 
 
 "Its principal features are: first, a circulation of notes bearing a 
 common impression, and authenticated by a common authority ; 
 second, the redemption of these notes by the associations and insti- 
 
63 
 
 tutions to which they may be delivered for issue, and third, the 
 security of that redemption by the pledge of United States stocks, 
 and an adequate provision of specie. 
 
 " In this plan the people, in their ordinary business, would find 
 the advantages of uniformity in currency ; of effectual safe-guard, 
 if effectual safe-guard is possible, against depreciation; and of pro- 
 tection from losses in discounts and exchanges ; while in the opera- 
 tions of the Government, the people would find the further advan- 
 tages of a large demand for Government securities, of increased 
 facilities for obtaining the loans required by the war, and of some 
 alleviation of the burdens on industry through a diminution in the 
 rate of interest, or a participation in the profit of circulation, with- 
 out risking the perils of a great money monopoly. 
 
 "A further and important advantage to the people may be rea- 
 sonably expected in the increased security of the Union, springing 
 from the common interest in its preservation, created by the distri- 
 bution of its stock to associations throughout the country, as the 
 basis of their circulation. 
 
 "The whole circulation of the country, except a limited amount 
 of foreign coin, would, after the lapse of two or three years, bear 
 the impress of the nation, whether in coin or notes ; which the 
 amount of the latter, always easily ascertainable, and, of course, 
 always generally known, would not be likely to be increased beyond 
 the real wants of business. 
 
 " He expresses an opinion in favor of this plan with the greatest 
 confidence; because it has the advantage of recommendation from 
 experience. It is not an untried theory. 
 
 "In the State of New York, and in one or more of the other 
 States, it has been subjected, in its most essential parts, to the test 
 of experiment, and has been found practicable and useful. The 
 probabilities of success will not be diminished, but increased by its 
 adoption under national sanction, and for the whole country. * *" 
 
 This report of Mr. Chase was referred to the sub-committee of 
 Ways and Means, consisting of myself as chairman, Mr. Hooper, 
 of Mass., and Mr. Corning, of N. Y. After a careful examination 
 of the report, I applied to Mr. Chase for the draft of a Bill to carry 
 into effect the plan of a National Bank in accordance with his re- 
 commendations. He had not prepared any bill, and requested 
 me to prepare one as soon as practicable. Hon. John J. Knox, the 
 present Comptroller of the currency, in his last able report to 
 Congress, says: "A National Bank bill was prepared by Mr. 
 Spaulding, of New York, in accordance with the plan of Secretary 
 Chase." This is true; I prepared the Bank Bill during the holi- 
 days in December, 1861, and had two hundred copies of it printed 
 by the Public Printer for the use of the Committee of Ways and 
 Means, with a view to have it considered, amended, and finally to 
 
64 
 
 be reported. (I here produce one of the original copies of the biFl 
 as prepared by me at that time, and which I have retained until 
 now). Considerable opposition was manifested to the bill. It be- 
 came certain that it could not at that time pass without a long dis- 
 cussion. The expenses of the Government were running on at a 
 fearful rate, and the Treasury was nearly empty. It soon became 
 apparent that the bank bill could not be passed and made available 
 in time to meet the gigantic expenses of the war. It was, there- 
 fore, laid aside for future consideration. There was an imperative 
 necessity for a National circulating medium, as well as immediate 
 availjible means to sustain the Army and Navy in the prosecution 
 of the war. The State Banks and Sub-Treasury suspended specie 
 payments on the 28th of December, 1861. The notes of these 
 banks became uncurrent money, and at best had only a local char- 
 acter and credit. Under these circumstances I immediately intro- 
 duced into the House of Representatives 
 
 THE LEGAL TENDER ACT. 
 
 On introducing the bill, I stated that it was a temporary "War 
 Measure" — a measure of necessity and not of choice, and that it 
 would at once insure a loan to the Government without interest 
 and a national currency. (For a full history of this measure see 
 Spaulding's History of Legal Tender Act, commencing at p. 6). 
 
 The real purpose and object of the Legal Tender Act was to fund 
 the debt incurred for war expenses. To do so it was necessary to 
 quickly create a temporary National currency for disbursement to 
 the Army and for other war expenses, and which should also be 
 receivable for taxes and other dues to the Government, except 
 custom duties. In order to prevent any redundancy it was also 
 provided that it might at any time be converted into six per cent, 
 gold bonds. 
 
 The act authorized the issue of ^500,000,000 six per cent, gold 
 bonds, into which these legal tender notes could be funded. 
 
 The title of th^ act was very expressive of its object, "An Act 
 to authorize the issue of United States notes and for the redemp- 
 tion and funding thereof , and ior funding the floating debt of the United 
 States." 
 
 In the opening remarks I made, I said "The demand notes put 
 in circulation would meet the present exigencies of the Govern- 
 ment in the discharge of its existing liabilities to the army, navy 
 and contractors, and for supplies, materials and munitions of war. 
 
65 
 
 These notes would find their way into all the^channels of trjide 
 among the people; and as they accumulate in the hands of capital- 
 ists they would exchange them for the six per cent, twenty years' 
 bonds. 
 
 "These circulating notes in the hands of the people would ena- 
 ble them to pay the taxes imposed, and would facilitate all busi- 
 ness operations between farmers, mechanics, commercial business 
 men and banks, and be equally as good as, and in many cases bet- 
 ter, than the present irredeemable circulation issued by the State 
 banks. 
 
 "The $500,000,000 six per cent, twenty years' bonds in the hands 
 of the Secretary of the Treasury ready to be issued, would afford 
 ample opportunity for funding the treasury notes as fast as the 
 capitalists might desire to exchange treasury notes, not bearing in- 
 terest, for coupon bonds of the United States, bearing sIk per cent, 
 interest, and amply secured by a tax upon the people and all their 
 property? 
 
 " In this way the Government will^e able to get along with its 
 immediate and pressing necessities without being obliged to force 
 its bonds on the market at ruinous rates of discount ; the people, 
 under heavy taxation, would be shielded against high rates of in- 
 terest ; and the capitalists will be afforded a fair compensation for 
 t^e use of their money during the pending struggle of the country for 
 national existence. * * * 
 
 " Our army must have what is far more valuable to them then 
 gold and silver. They must have food, clothing, and the material 
 of war. Treasury notes issued by the Government, on the faith of 
 the whole people, will purchase these indispensable articles, and the 
 war can be pr6secuted until we can enforce obedience to the Con- 
 stitution and laws, and an honorable peace be thereby secured. 
 This done, I will be the first to advocate a speedy return to specie 
 payments, and all measures that are calculated to preserve the honor 
 and dignity of the Government in the time of peace, and which I 
 regret are not practicable in the prosecution of this war. ' ' 
 
 The first Legal Tender Act for ^^150,000,000 was passed and ap- 
 proved by President Lincoln, February 25, 1862. 
 
 The second Act for an additional 1150,000,000 was passed and 
 approved by Mr. Lincoln, July 11, 1862. ' 
 
 On the back of the notes issued under these two acts was printed 
 the following words : " This note is a legal tender for all debts, 
 public and private, except duties on imports and interest on the 
 public debt, and is exchangeable for U. S. six per cent, bonds redeem- 
 able at the pleamre of the United States, after five years.'' 
 
 These notes in the form of greenback currency, were immediately 
 
 issued by Secretary Chase and disbursed for war expenses, and the 
 
 Treasury of the United States was soon relieved of the pressing demand 
 
 that was made upon it. The army and navy were paid, and sup- 
 
 5 
 
66 
 
 plies and materials' of war obtained on these paper promises in suf- 
 ficient quantity to prosecute the war with vigor. A further issue 
 of ;j; 1 5 0,000,000 of un-fundable greenbacks was authorized in 
 1863. 
 
 This currency did not grow out of industry and production, and 
 was not, therefore, a legitimate commercial, currency. It sprang 
 from the dire necessity of a gigantic civil war. It was debt created 
 in the absence of ready means. It was the evidence of want, and 
 the waste of war. The Government had no gold or pther products 
 of industry on Jiand with which to redeem it. It was simply a tem- 
 porary war currency. During the war we were obliged to accept 
 it, but with a view to get rid of it as soon as possible on the return 
 of peace, it was by the original acts made convertible, as before 
 stated, into a six per cent, gold bond, which was a practical re- 
 demption, and an easy and natural mode of getting rid of the evil 
 effects of this redundant and unnatural currency. 
 
 THE GREAT MISTAKE OF THE WAR. 
 
 I said on another occasion and I reproduce it here : " The great 
 mistake — greater than all other mistakes in the management of the 
 war — was the abrogation of the right to fund the greenback curren- 
 cy into gold bonds, as provided for in the two preceding acts." 
 
 All the other mistakes, civil and military, which occurred dur- 
 ing the war were of slight consequence when compared with the 
 mischievous and grave consequences resulting from this one ,mis- 
 take. • Taking away from the holder of this paper currency the 
 right to redeem it on demand in gold bonds, besides being mani- 
 festly unjust to the holders, let the Government and the whole 
 country — ^banks and people — down into the slough of an irredeem- 
 able paper currency, where we have remained for over eleven years. 
 From 1864, to 1876, it has been a dead weight on the business and 
 industry of the country, without elasticity, and without any provi- 
 sions whatever being made for its redemption or payment. Its re- 
 dundancy, and consequent depreciation, has operated very injuri- 
 ously to the legitimate business of the' country. It was an instru- 
 ment of expenditure, a visible evidence of the waste of war, and 
 not possessing the essential elements of a commercial currency. A 
 majority of the people, however, have been deluded into the belief 
 that those broken promises, mere evidences of debt, were money 
 and a proper standard of value as a basis for doing business, and 
 have plunged headlong into all sorts of ^speculation, unprofitable 
 
67 
 
 enterprises, extravagance in living, general abuse of credit, idleness 
 and consequent demoralization. 
 
 If the right to fund the greenbaclcs into the six per cent, gold 
 bonds had not been abrogated, no financier or practical business 
 man, whose opinion is worth quoting, can doubt that we would 
 have gone to specie payment within two or three years after the 
 close of the war, in spite of ourselves. The individual indebted^ 
 ness at the close of the war in 1865 was small. Every one was com- 
 paratively free from debt. The six per cent, gold bonds were 
 sought for as an investment. They soon appreciated to par in gold, 
 and if the right to fund had been continued, the greenback currency 
 would have appreciated to par in gold along wjth bonds. The legal 
 tender act would have served its purpose as a war measure, and we 
 would have returned to the specie standard without material detri^ 
 ment to the legitimate business of the country. In this way we 
 would have avoided a large part of the extravagance and demoral- 
 ization that has been so reckless since the close of the war. 
 
 THE BANK BILL PASSED 1 863. 
 
 On the 2d February, 1863, the National Currency Bank bill, as 
 prepared by Mr. Spaulding, in December, 1861, after being altered 
 and amended in several important particulars, was reported from 
 the Finance Committee to the Senate by John Sherman, of Ohio. 
 The debate upon it was opened on the 9th, and continued from 
 day to day until the 12th, when it was passed by the following vote 
 — ^yeas 23, nays 21, as follows : 
 
 Yeas — Messrs. Anthony, Arnold, Chandler, Clark, Doolittle, 
 Fessenden, Foster, Harding, Harlan, Harris, Howard, Howe, 
 Lane (of Kansas), Morrill, Nesmith, Pomeroy, Sherman, Sumner, 
 Ten Eyck, Wade, Wilkinson, Wilmot, and Wilson of Massa- 
 chusetts) — 23. 
 
 Nays — Messrs. Carlisle, CoUamer, Cowan, Davis, Dixon, Foot, 
 Grimes, Henderson, Hicks, Kennedy, King, Latham, McDougal, 
 Powell, Rice, Richardson, Saulsbury, Trumbull, Turpie, Wall, and 
 Wilson (of Missouri) — 21. 
 
 So the bill was passed. 
 
 The bill as it passed the Senate was sent to the House on the 
 1 2th. On motion of Mr. Hooper it was ordered to be printed, but 
 was not referred to the Committee of Ways and Means. It re- 
 mained on the Speaker's table until the 19th, when it was taken 
 up for consideration in the House. A motion to refer it to the 
 
68 
 
 Committee of the Whole having been defeated, Mr. Spaulding 
 opened the debate in a lengthy speech in favor of the bill. The 
 debate continued until the 20th, when the bill was passed with- 
 out amendment by the following vote — yeas 78, nays, 64, as 
 follows : 
 
 Yeas — Messrs. Aldrich, Alley, Ashley, Babbitt, Beaman, Bing- 
 ham, Jacob B. Blair, Blake, Buffington, Calvert, Campbell, Casey, 
 Chamberlain, Clements, Colfax, Conway, Covode, Cutler, Davis, 
 Delano, Dunn, Edgerton, Eliot, Ely, Fenton, Samuel C. Fessen- 
 den, Thomas A. D. Fessenden, Fisher, Frank, Goodwin, Granger, 
 Hahn, Haight, Hickman, Hooper, Hutchins, Julian, Kelley, Fran- 
 cis W. Kellogg, William Kellogg, Lansing, Leary, Lovejoy, Law, 
 Mclndoe, McKean, McPherson, Marston, Maynard, Moorhead, 
 Anson P. Morrill, Noell, Olin, Patton, Timothy G. Phelps, Pot- 
 ter, Alexander H. Rice, John H. Rice, Sargent, Sedgwick, Segar, 
 Shanks, Shellabarger, Sherman, Sloan, Spaulding, Stevens, Trim- 
 ble, Trowbridge, Van Home, Van Wyck, Verree, Wall, Wallace, 
 Washburne, Albert S. White, Windom, and Worcester — ^78. 
 
 Nays. — Messrs. William Allen, Ancona, Baily, Baker, Baxter, 
 Biddle, Cobb, Frederick A. Conkling, Roscoe Conkling, Cox, Cra- 
 vens, Crittenden, Dawes, Edwards, English, Gooch, Grider, Gur- 
 ley, Hall, Harding, Harrison, Holman, Horton, Johnson, Kerri- 
 gan, Knapp, Law, Lazaer, Loomis, Mallory, May, Menzies, Justin 
 S. Morrill, Morris, Nixon, Noble, Norton, Nugent, Odell, Pendle- 
 ton, Perry, Pike, Pomeroy, Porter, Price, Robinson, James S. 
 Rollins, Sheffield, Shiel, John B. Steele, William G. Steele, Stiles, 
 Stratton, Benjamin F. Thomas, Francis Thomas, Vallandigham, 
 Wadsworth, Wheeler, Whaley, Chilton A. White, Wickliffe, Wilson, 
 Woodruff, and Wright — 64. 
 
 So the bill was passed and approved by President Lincoln, Feb- 
 ruary 25, 1863. 
 
 No National Bank currency was issued until near the first of 
 January, 1864. After that time it was gradually issued. On the 
 first of July, 1864, the sum of ^25,825,695 had been issued ; and 
 on the 2 2d of April, 1865, shortly after the surrender of General 
 Lee, the whole amount of National Bank circulation issued to that 
 time was ^146,827,975. 
 
 FREE BANKING NO MONOPOLY. 
 
 At first the act limited the amount of currency to be issued 
 under it, to ;j;3oo,ooo,ooo, but by a subsequent act this limitation 
 
69 
 
 was removed. Free Banking is now allowed to all the people who 
 comply with its provisions. There is no longer a monopoly of 
 banking under the laws of the United States. It is a system of 
 National Banking and National Currency co-extensive with the 
 boundaries of our National Union. It requires the circulating 
 notes to be well secured by gold-bearing Government bonds, depos- 
 ited with the Treasurer of the United States ; requires each bank 
 to redeem its circulating notes in lawful nioney on demand, and to 
 keep an adequate reserve for that purpose ; makes them a legal 
 tender for all taxes and other debts to the Governrnent, except cus- 
 toms, and for all debts owing by the Government, except principal 
 and interest of the funded debt ; it also makes them receivable by 
 each National Bank for all ordinary debts due them, and each 
 bank designated as a depositary, is also required to receive it on 
 deposit from all public officers. These are important provisions in 
 the law for nationalizing this currency, and it consequently 
 obtains a wide circulation . Congress, by the act of March 3d, 1 865 , 
 drove all State Bank circulation out of existence by the imposition 
 of a tax upon it of ten per cent. 
 
 REDEMPTION OF PAPER MONEY. 
 
 Redemption is an essential requisite of paper money. To fulfil 
 the functions of money it must be convertible into coin on de- 
 mand. No other device which has been tried during the last hun- 
 dred years by any Bank or any Government, to circulate its issues 
 of paper currency on a par with gold has been successful, unless it 
 could be immediately and conveniently converted into gold on 
 demand. In regard to the truth of this proposition history repeats 
 itself wherever and whenever it has been tried. The attempt to 
 circulate the Assignats and Mandats of France without such con- 
 vertibility, is a striking example of the folly of such an undertak- 
 ing. They depreciated under excessive issues, until they possessed 
 no value, and were finally repudiated. In the case of France there 
 was no necessity or valid excuse for trying the experiment. In the 
 case of the Thirteen Colonies, united in self-defence, there was 
 some justification for the issue of Continental currency. The ne- 
 cessity of self-preservation and the ultimate aim of American In- 
 •dependence, were the reasons assigned for its excessive issue. It 
 depreciated until it was valueless, and its final total loss operated as 
 an unequal tax upon the people. It was irredeemable, and shared 
 the same fate of all such currency. 
 
7° 
 
 REDEMPTION OF NATIONAL CURRENCY. 
 
 The National Bank Act requires that each National Bank which 
 issues National Currency, shall redeem it on demand " in lawful 
 money of the United States." 
 
 In a normal condition of the country this requirement means 
 gold coin, the value of which is regulated by Congress. 
 
 Unfortunately eleven years after the close of the war, the tem- 
 porary " war currency" issued in the form of greenbacks, still lin- 
 gers as an evil element, and is declared by law to be " lawful mo- 
 ney," so that the banks can and do redeem their circulating notes 
 in this depreciated greenback currency. This is practically no re- 
 demption at all. It is merely swapping one kind of paper for an- 
 other of about the same current value, and both of them depreciated 
 about 13 per cent, below the price of gold. 
 
 There has been recently established a Bureau in the Treasury 
 Department at Washington, for the purpose of assorting and en- 
 forcing redemption of National Bank Currency. This operation 
 furnisl;ies clean notes for those that are worn and defaced, but it is 
 in no sense an efficient redemption, and cannot be made so, until 
 the Government takes out of the way its irredeemable greenback 
 currency. When this is done the Banks will then be obliged to 
 redeem their notes in gold or in funds on a par with gold. This 
 redemption bureau will then have a real significance, and tend to 
 hold in check excessive issues of Bank Currency. 
 
 PROGRESS made IN BANKING. 
 
 The refusal of Congress to re-charter the first United States 
 Bank, and the arbitrary and illegal action of the Executive in re- 
 gard to the second United States Bank, seriously retarded the 
 progress of sound banking, under the authority of the United 
 States. By these blunders the Government and people have been 
 deprived of the great benefits they would have received from the 
 stability given to business by the continuance of such an institu- 
 tion. In spite, however, of this incongruous and unwise action of 
 Congress and the Executive there has been real progress made in 
 the business of banking during the last hundred years. The Bank 
 of North America in Philadelphia, the Bank of New York in New 
 York City, the Massachusetts Bank in Boston, the first three banks 
 organized in the United States, have always maintained a respectable 
 
71 
 
 position, and are to-day performing their duties to the public, and 
 are favorably regarded for their high-standing and solidity. Hav- 
 ing been re-organized, they are to-day doing a prosperous business 
 under the present National Bank Act. 
 
 Most of the Banks organized in the principal cities since Jan- 
 uary ist, 1790, have maintained their existence in some form ; have 
 increased their capitals, have done a successful business, and are 
 now highly creditable institutions, and doing as good a business 
 as the present state of trade will admit. 
 
 State Banks and National Banks are generally in a prosperous 
 condition, and most of the ol(i State Banks finally re-organized 
 under the National Bank Act in 1865. 
 
 Hon. John J. Knox, Comptroller of the Currency, in his last 
 report made to Congress in December, 1875, gives a detailed re- 
 port of the condition of all the National Banks. It is a most valu- 
 able and interesting statement of the favorable condition of the 
 business of banking in the United States. Those desiring further 
 details in regard to the banks can study this report to great advan- 
 tage. 
 
 Capital Stock of National Banks paid in is ^505,485,865 
 
 " " State Banks " " 164,366,669 
 
 Aggregate amount of deposits in Savings Banks 849,581,633 
 
 Capital Stock of Loan and Trust Companies 21,854,020 
 
 Si,54i,288,i87 
 
 Private Bankers do not i-eport the amount of capital employed 
 in their business. It is therefore difficult to make any approximate 
 estimate of their aggregate capital. It is known, however, to be 
 large, and their business transactions largely swell the banking 
 operations of the country. 
 
 Bank officers and private bankers are generally men of high char- 
 acter. Their business is intimately interwoven with all the indus- 
 trial and commercial operations of the country. Their customers 
 are also generally men of the same high character. They have a 
 common interest in the success of the trade transactions of the 
 country. Bankers and customers are alike interested in maintain- 
 ing a high standard of integrity, punctuality, and commercial 
 honor. 
 
72 
 
 CREpiT AND CLEARING HOUSE. 
 
 Credit is the essential element that underlies the business of 
 banking. Banking in all its forms is dependent upon credit. Well 
 organized banks, and the system of daily settlements through the 
 clearing Houses in all the great commercial centers, and a weekly 
 publication of the condition of the banks, has an im portant influ- 
 ence in keeping all credit transactions under due control, and con- 
 fining them within proper limits. About one hundred yearS ago, 
 the private banks in London organized the first Clearing House in 
 that city. The New York Clearing House Association, com- 
 posed of New York Bankers, went into operation October ist, 1853, 
 and its present constitution was adopted June 6th, 1854. 
 
 The system of Clearings by off-set is one of the most useful im- 
 provemerits of modern times. It economizes both time and money 
 in the liquidation of debts, especially all the large commercial 
 transactions of the world, amounting to several hundred millions 
 daily, with only a very small resulting balance to be paid in money. 
 Very little gold or paper money is required to do the business of 
 any of the large cities. 
 
 When the economy of the check-system had caused the innumer- 
 able daily payments of the community to be carried on v^ithout 
 any withdrawal of money from the banks, the next and culminat- 
 ing step in the process was to allow the payments among the banks 
 themselves to be likewise effected without the use of money. This 
 has been admirably accomplished by means of the clearing-house. 
 To this establishment each bank sends the checks upon other 
 banks which have been paid in by its customers, so that a balance 
 of these check transactions is struck for each bank with each of the 
 others. 
 
 The balance due to or by each bank being thus ascertained at 
 the Clearing-House, the debtor bank in New York pays its balance 
 in money. In London each debtor bank gives its check on the 
 Bank of England, where the private banks keep accounts. In this 
 way the balance is paid without using any money at all. This is 
 effected simply by a transference of a certain amount from the 
 credit of one bank to the credit of another, on the books of the 
 Bank of England. 
 
 For the year ending April 30, 1875, 'he aggregate debts paid at 
 the London clearing-house without the use of any money, was the 
 enormous amount of ^^6,013,299,000. Mr. Hankey, former Presi- 
 
73 
 
 dent of the Bank of England, says : " That all this has been effect- 
 ed without the use or employment of a single bank note, or one 
 single sovereign." 
 
 In New York the currency exchanges of the year ending in Octo- 
 ber, 1875, amounted to ^23, 042, 276,858.47 ; and the currency bal- 
 ance to ^1,104,346,845.32. The gold exchanges amounted to 
 §108,940,058.85, and the gold balance to ;^i8,284,429.6i. Thus 
 the total transactions of the year at the Clearing-House amounted 
 to §24,273,848,192.25, showing a daily average for the year of 
 §79,326,301.28 of debts thus paid. 
 
 Clearing Houses have been established in Boston, Philadelphia, 
 Baltimore, and the other principal cities of the United States, with 
 useful and beneficial results. 
 
 THE PANIC OF 1873. 
 
 After the right to fund the greenback currency into 6 per cent, 
 gold bonds was" revoked in 1863, which rendered this currency ir- 
 redeemable, credit became so expanded under the excessive issues 
 of paper currency and other obligations during the war, that neither 
 the banks, the Clearing House, nor any other human agency could 
 restrain it within reasonable limits, especially under the vacillating 
 course adopted by Congress. The abuse of credit became general 
 in the creation of debts in all its forms — States, cities, counties, 
 corporations, and individuals combii;ied to swell the paper bubble 
 until it finally burst in the great panic of 1873. The combination 
 of the banks in the Clearing House in New York, exerted a most 
 powerful influence in staying the calamity, and preventing the gen- 
 eral suspension of all the banks. By an extra form of credit in the 
 shape of clearing-house certificates, they continued to pay and 
 liquidate a very large amount of debts each day, without paying 
 money for even resulting balances. The Clearing House Associa- 
 tions in other cities exerted a favorable influence in the same di- 
 rection. The panicy feeling passed away in due time, and the 
 banks again resumed their former mode of settling balances. The 
 Temporary Clearing House certificates, improvised during the 
 panic, were soon after redeemed and taken off the market. 
 
 REVIEW AND CONCLUSION. 
 
 The lesson taught by the experience of the last hundred years 
 may, if rightly comprehended, be of great advantage in the future. 
 It clearly shows that we need more stability in financial legisla- 
 
74 
 
 tion — more statesmanship — less passion and political partisanship. 
 We have been on a high wave of financial uncertainty too long. It 
 affects in too many ways the industrial interests of the country. 
 Upon a review of the banking and financial legislation of the na- 
 tion from 1 791 to the present time, we are struck with the changes 
 and uncertainty that has prevailed. In 1791, under the auspices 
 of Washington and Hamilton, the first United States Bank was or- 
 ganized, to continue twenty years, with a capital of ;gio,ooo,ooo. 
 After very careful examination and unusual deliberation,. it was de- 
 cided to base the bank upon the combined power of the govern- 
 ment united to the private influence of its people ; that the govern- 
 ment and people had a common interest, and that the two interests 
 combined in a national institution, was the best mode of carrying 
 on the financial affairs of the country. Upon the organization of 
 this bank, the finances were soon placed upon a specie basis, and 
 the business of the country was steady and prosperous for nearly 
 twenty years. 
 
 In 181 1, this prosperous and useful institution was, by a very 
 close vote in the Senate and House, refused a re-charter, and was 
 obliged to wind up its affairs. This produced great confusion and 
 uncertainty. The war with Great Britain, from 1812 to 1815, add- 
 ed to the embarrassments, until, in 1816, the second bank of the 
 United States was organized, with a capital of ;g35,-ooo,ooo, upon 
 the same principles as the first, to continue for twenty years. As 
 soon as this bank got fairly into operation, order was again restored 
 to the finances of the government, and specie payments were again 
 resumed in all parts of the country. This restored prosperity again 
 to the business of the country, which continued, with but little in- 
 terruption, down to 1832, when President Jackson, by his veto, 
 prevented a re-charter of this bank. The next year he illegally 
 removed the government deposits, which led to a panic and general 
 crash in 18-37, which depressed all the industrial interests of the 
 country for nearly six years. 
 
 The sub-treasury law was finally passed in 1846, which was found 
 to be wholly inadequate to meet even the exigencies of the small 
 war with Mexico, and still more so to meet the requirements of the 
 great war of the rebellion. The State banks have always been un- 
 favorably affected by the uncertainty that attended the financial 
 legislation of the national government. 
 
 It is remarkable to notice how frequently many of the leading 
 statesmen of the country have changed their minds on this ques- 
 
75 
 
 tion. James Madison, in 1791, led the opposition, in the House, 
 to the charter of the first United States bank, and voted against 
 the act. In 181 6, he being then President, recommended the 
 second United States bank, approved the bill, and afterwards said 
 that it was "essential for the interests of the community at large, 
 as well as for the purposes of the treasury." Henry Clay, in 181 1, 
 voted against a renewal of the charter of the first bank, but after- 
 wards changed his mind, and was a firm supporter of the second 
 bank. Daniel Webster opposed the chartermg of the second bank 
 in 181 6, but in 1830 he became its warm advocate. 
 
 In 1791, Thomas Jefferson gave a written opinion to President 
 Washington against signing the first United States bank bill. Af- 
 terwards, and while he was President, the Territory of Louisiana 
 having been acquired from France, he approved a bill to establish 
 a branch of the same bank in the city of New Orleans. 
 
 General Jackson and Mr. Van Buren, in 1833, were very favor- 
 able to the State deposit banks, and in 1837, during the revulsion 
 of that year, changed their minds and denounced them in very 
 decided terms. 
 
 Many other similar cases might be named, of gentlemen, who, 
 having become convinced of their error, did not hesitate to change 
 their minds on this question, and it is highly creditable to them 
 that they had the courage to do so. 
 
 The present national banking system — organized in the midst of 
 civil revolution, and which could only be brought into existence 
 under the pressure of a great public calamity, and amid the enthu- 
 siasm of the people determined to maintain the Union — ^has drawn 
 to its support a very large majority of the banking capital of the 
 country. Experience has shown that it is well adapted to the 
 wants of American industry and progress ; that it is a convenient 
 and safe depositary of the public funds which can easily be trans- 
 ferred to any part of the country without any of the machinery or 
 expense of the sub-treasury, and that when more fully perfected 
 will be adequate to meet the demands of our anomalous situation 
 in war as well as in time of peace. That it is not perfect, is not 
 the fault of those who originated it ; that it is not perfected and 
 the sub-treasury discontinued, is the fault of the government it- 
 self. Let the government return to its integrity, re-adopt, at a 
 lower rate of interest^ the funding of the greenbacks, or in the 
 mode prescribed in Senator Sherman's act of last year, retire its 
 over-due indebtedness in the recognized money of the commercial 
 
76 
 
 woild, and the national banks will be ready to redeem their circu- 
 lating notes in the same kind of money. Meantime they loyally 
 await the action of Congress, and will be ready to redeem in law- 
 ful money, whether it be greenbacks or gold, whatever shall be 
 recognized by the government for itself, and by it prescribed to 
 the people as the legal standard of redemption. 
 
 The causes which led to the panic of 1873, were too deep and 
 far-reaching to be easily got rid of or overcome. Debt and taxa- 
 tion are heavy burdens ; defaulted railroad bonds lie dormant in 
 safes and drawers ; irredeemable paper money is still in excess ; 
 industry and production languish; Congress still vacillates and 
 fails to settle the financial problem on a firm basis ; the de- 
 pression and stagnation in business which commenced in the panic 
 of 1873, still continues, and is likely to continue until the finances 
 are finally settled on a specie basis, the question removed from 
 political agitation, and the business of the country allowed to re- 
 sume its normal condition free from the excesses and demoraliza- 
 tion of the war. Then will be the time to complete the history of 
 the paper bubble, which has been so demoralizing for the 
 last twelve years. I await that time with a good deal of anxiety, 
 and trust that the day is not very distant when we shall reach 
 solid bottom, and again commence another era of general pros- 
 perity. 
 
77 
 
 APPENDIX. 
 
 FIRST BANKS ORGANIZED IN UNITED STATES. 
 
 In Vol. III. of the American edition of the Edinburgh Cyclope- 
 dia published in 1813, the following table is given "to exhibit in 
 one view the names of the Banks most deserving of notice, the time 
 of their institution, and the amount of their capital." The table 
 is not complete, but it shows the time in which the State Banking 
 System was introduced in the diiFerent States : 
 
 Names. Instituted . 
 
 Bank of North America, Pa., 1781 $ 
 Bank of New York, 1784 
 
 Massachusetts Bank, Boston, 1784 
 Bank of Maryland, Z790 
 
 Providence Bank, R. I., 1791 
 
 Bank of Albany, N. Y., 1792 
 
 Bank of South Carolina, 1 792 
 
 Uoion Bank of Boston, Mass., 1792 
 New Hampshire Bank, 1792 
 
 Bank of Alex^TBdria, Va., 1792 
 
 Hartford Bank, Conn., 1792 
 
 Union Bank, N. London, Conri.j792 
 New Haven Bank, Conn., 1792 
 
 Bank of Columbia, N. Y., 1793 
 
 Bank of Columbia, D. C, 1793 
 
 Bank of Pennsylvania, ^793 
 
 Bank of Nantucket, Mass*, 1795 
 Bank of Delaware, 179S 
 
 Bank of Baltimore, Md., 179s 
 
 Middletown Bank, Conn., 1795 
 
 Bank of Rhode Island, 1795 
 
 Norwich Bank, Conn.. 1796 
 
 Manhattan Bank, N. Y., 1799 
 
 Portland Bank, Me., 1799 
 
 Essex Bank, Salem, Mas3., 1799 
 Washington Bank, Westerly, 
 
 K. 1., 1800 
 
 Bank of Bristol, R. I., 1800 
 
 lixchange Bank, Providence, 
 
 R. I., 
 Farmers' Bank, Lansingburg, 
 
 N. Y., 
 State Bank of' South Caro- 
 lina, 
 Maine Bank, Piortland, Me., 
 New Hampshire Union Bank, 1802 
 Lin. and Ken. Bank, Wiscas- 
 
 set, Me., 1802 
 
 Kentucky Insurance Company,i8o2 
 Merchants' Bank, N. Y., 1803 
 
 Bedford Bank at N. B., Mass., 1803 
 New York State Bank, 1S03 
 
 Newbury port Bank, Mass., r8o3 
 Saco Bank, Mass., 1803 
 
 Albany Merchants' Company, 
 
 N. Y., 1803 
 
 Plymouth Bank, Mass., 1803 
 
 Boston Bank, Mass., 1803 
 
 Stafford Bank, Dover, Mass., 1863 
 Philadelphia Bank, Pa., 1S03 
 
 Miami Exporting Company, 
 
 Cincinnati, Ohio, 1803 
 
 Salem Bank, Mass., 1803 
 
 j8oi 
 1 801 
 
 1801 
 z8o2 
 
 Capital. 
 
 400,000 
 950,000 
 300,000 
 300,000 
 400 000 
 260,000 
 640,000 
 
 1,200,000 
 100,000 
 500,000 
 930,000 
 500,000 
 400,000 
 160,000 
 500000 
 
 2,000,000 
 100,000 
 irojooo 
 
 1,200,000 
 400,000 
 100 000 
 200,000 
 
 2,000,000 
 300,000 
 300,000 
 
 50,000 
 
 S20,000 
 400/K>0 
 
 7S1OOO 
 
 800,000 
 300,000 
 200,000 
 
 200,000 
 150,000 
 I 250,000 
 150,000 
 460,000 
 550,000 
 100,000 
 
 25,000 
 100.000 
 
 1,000,000 
 150,000 
 
 2,000,000 
 
 . 200,000 
 200,000 
 
 Names. Instituted. Capital. 
 
 Boger Williams' Bank, R. I., 
 Newport Bank, R. I., 
 Warren Bank, R. I., 
 Exeter Bank, N. H., 
 Union Bank of Maryland, 
 Bank of Cape Fear, N. C, 
 Bank of Newbem, N. C., 
 Newark Banking and Ins. Co., 
 
 N.J., 
 Trenton Bank, N. J., 
 Hallowell and Augusta Bank, 
 
 Me., 
 Worcester Bank, Mass., 
 Nantucket Pacific Bank,gMass. 1804 
 Marblehead Bank, Mass., 
 Rhode Island Union Bank, 
 Smithfield Union Bank, R. I., 1805 
 Narragansett Bank, R, I., 
 Rhode Island Central Bank, 
 Bank of Virginia, Va., 
 Mechanics' Bank, Baltimore, 
 
 Md., 
 Bankof Chillicothe, O., 
 Bridgeport Bank, Conn., 
 Derby Bank, Connr., 
 Bank of Kentucky, 
 Bank of Nashville, Tenn., 
 Barak of Marietta, Ohio, 
 Farmers* Bank of the State of 
 
 Delawaie, 
 New Brunswick Bank, N. J., 
 Farmers* & Mechanics' Bank, 
 
 Pa., 
 Hagerstown Bank, Md., 
 Mohawk Bank, N. Y., ' 
 New London Bank, Conn., 
 Hudson Bank, N. Y., 
 Bank of Steubenville, Ohio. 
 Chambersburg Bank, Pa., 
 Commercial Bank. R. I., 
 State Bank of North Carolina, 
 Commercial &;Farmers' Bank 
 
 of Baltimore, Md., 
 Fairmers* & Merchants' Bank 
 
 of Baltimore, Md., 
 Franklin Bank, of Baltimore, 
 
 Md.,. 
 Marine Bank of Baltimore, 
 
 Md., 
 ElktonBank, Md., 
 Farmers* Bank of I<ancaster, 
 
 Pa., 
 Mechanics' Bank, N. Y., 
 
 1803 
 
 150,000 
 
 IS03 
 
 I20f000 
 
 1803 
 
 6B,ooo 
 
 
 200,000 
 
 1804 
 
 '■258.775 
 
 1804 
 
 330,000 
 
 1804 
 
 300,000 
 
 1804 
 
 225,000 
 
 1804 
 
 300,000 
 
 1804 
 
 200,000 
 
 1804 
 
 150,000 
 
 1804 
 
 100,000 
 
 1804 
 
 100,000 
 
 1804 
 
 150,000 
 
 I80S 
 
 50,000 
 
 1805 
 
 60,000 
 
 1805 
 
 60,000 
 
 1805 
 
 1,500,000 
 
 1806 
 
 1,000,000 
 
 1806 
 
 100,000 
 
 1806 
 
 200,000 
 
 1806 
 
 200,000 
 
 1807 
 
 1,000,000 
 
 1807 
 
 500,000 
 
 1807 
 
 100,000 
 
 1807 
 
 500,000 
 
 1807 
 
 ■ 150,000 
 
 1807 
 
 1,250,000 
 
 1807 
 
 250,000 
 
 1807 
 
 200,000 
 
 1807 
 
 200,000 
 
 1808 
 
 300,000 
 
 1809 
 
 100,000 
 
 1809 
 
 250,000 
 
 1809 
 
 50,000 
 
 I8I0 
 
 1,600,000 
 
 I»IO 
 
 1,000,000 
 
 I8I0 
 
 500,000 
 
 I8I0 
 
 600,000 
 
 x8io 
 
 600,000 
 
 1810 
 
 300,000 
 
 l8la 
 
 300,000 
 
 1810 
 
 2,000,000 
 
78 
 
 Names. Instituted. Capital. 
 
 Bank of Troy, N.Y, 1811 500,000 
 
 Mechanics' & Farmers' Bank, 
 
 Albany, 1 81 1 600,000 
 
 State Bank at Boston, Mass., 1811 2,000,000 
 Merchants' Bank at Salem, 
 
 Mass., 1811 200,000 
 
 Cumberland Bank of Alle- 
 gheny, Md,, i8ti 
 Bank of Newburg, N. Y., i8n 
 Farmers* Bank of Wor. and 
 
 Som., Md.i i8ir 
 
 Middle District Bank, N, Y., 1811 
 Bank at New Orleans, La., 1811 
 Union Bank, N. Y., 1811 
 
 Eagle Bank, Conn., 1811 
 
 Bank of America, N. Y., 1812 
 
 City Bank. N. Y., 1812 
 
 Farm. & Mechanics' Bank of 
 
 Cincinnati, O., 1812 
 
 Bank of Muskingum, Zanes- 
 
 villa, O., 1812 
 
 Monong^hela Bank, O., 1812 
 
 New York Manufacturing Co,, 
 
 N. Y., i8i2 
 
 200,000 
 400,000 
 
 200,000 
 
 500,000 
 
 500,000 
 
 1,800,000 
 
 750,000 
 
 2,000,000 
 
 1,000,000 
 
 500,000 
 
 100,000 
 250,000 
 
 Namci. Instituted. Capital. 
 
 Camden State Bank, N. j.. 
 
 1812 
 
 800,000 
 
 
 1812 
 
 300000 
 
 New Bmnswicic State Banlc, 
 
 
 
 N.J., 
 
 1812 
 
 400,000 
 
 Newarli State Bank, N. J., 
 
 1812 
 
 400,000 
 
 Elizabeth " 
 
 1812 
 
 200,000 
 
 Morris *' " 
 
 1812 
 
 200,000 
 
 Utica Bank, N. Y., 
 
 1812 
 
 1,000,000 
 
 Pittsburg Manufacturing Co., 
 
 
 
 Pa., 
 
 
 1,000,000 
 
 City Bank of Baltimore, Md., 
 
 l8l2 
 
 i,50c,ooo 
 
 Bank of Wilmington & Bran- 
 
 
 
 dywine, Del , 
 
 l8l2 
 
 120,000 
 
 Farmers' & Mechanics' Bank 
 
 
 
 of Delaware, 
 
 I8I2 
 
 7S,ooo 
 
 Commercial Bank of Dela- 
 
 
 
 ware, 
 
 I8I2 
 
 200,000 
 
 Farmers' & Mechanics' Bank 
 
 
 
 ofVir^Qia, 
 Savannah Bank, Ga., 
 
 I8I2 
 
 1 ,500,000 
 
 ^— 
 
 1 ,000,000 
 
 Union Bank, S. C, 
 
 
 1,000,000 
 
 Planters' & Mechanics' Bank, 
 
 
 
 S.C., 
 
 
 1,200,000 
 
 NUMBER- OF BANKS AND BANKERS IN THE UNITED STATES. FROM 
 THE BANKER'S ALMANAC AND REGISTER FOR 1876. 
 
 STATE. 
 
 Alabama 
 
 Arkansas 
 
 Arizona 
 
 California 
 
 Colorado 
 
 Connecticut 
 
 Dacotah 
 
 Delaware 
 
 DisL of Columbia- 
 Florida 
 
 Georgia 
 
 Idaho 
 
 Illinois 
 
 Indiana 
 
 Iowa 
 
 Kansafi 
 
 Kentucky ...... ...... 
 
 Louisiana 
 
 Maine.. 
 
 Maryland 
 
 Massachusetts 
 
 Michigan , 
 
 Minnesota 
 
 Mississippi....,.^..... 
 
 BANKS. 
 
 Under State 
 Charter. 
 
 Capital, 
 f 1 ,600,000 
 200,000 
 
 23,839,000 
 
 380,000 
 
 2,700,000 
 
 880,000 
 422,950 
 
 16,336,700 
 
 6,111,000 
 
 570,000 
 
 1,7.76,900 
 
 934i6i7 
 
 12,363,025 
 
 4,500,000 
 
 175,000 
 
 4.408,714 
 
 1,300,000 
 
 2,285,000 
 
 500,200 
 
 685,000 
 
 81,968,106 
 
 STATE. 
 
 Missouri 
 
 Montana 
 
 Nebraska 
 
 Nevada 
 
 New Hampshire,... 
 
 New Jersey..., 
 
 New Mexico. 
 
 New York State.... 
 
 New York City 
 
 North Carolina 
 
 Ohio 
 
 Oregon 
 
 Pennsylvania 
 
 Rhode Island 
 
 South Carolina 
 
 Tennessee 
 
 Texas -»,..-.... 
 
 Utah 
 
 Vermont. 
 
 Virginia 
 
 West Virginia...... 
 
 Wisconsin 
 
 Wash. Territory... 
 
 Wyoming 
 
 Forward 
 
 BANKS. 
 
 Under State 
 Charter. 
 
 Capital. 
 104 $14,437,124 
 
 595,000 
 
 150,000 
 
 150,000 
 
 2i925.75o 
 
 9,065,870 
 
 18,935,200 
 
 1,125,000 
 
 1,207,500 
 
 18,336,672 
 3,727,880 
 1,875,000 
 1,400,000 
 2,225^000 
 
 100,000 
 
 4,168,567 
 
 856,000 
 
 1,118,000 
 
 81,968,106 
 
 [64,366,669 
 
 6 
 =5 
 x8 
 
 3 
 204 
 26 
 
 8 
 
 237 
 
 5 
 
 324 
 
 5 
 
 19 
 
 12 
 
 80 
 
 6 
 
 z 
 
 .30 
 
 7 
 
 69 
 
 Chartered State Banks 907 
 
 'National Banks 2,118 
 
 Savings Banks 666 
 
 Private Bankers 2,375 
 
 Total Banks and Bankers 6,066 
 
 Capital. 
 
 ;S!i64,366,669 
 
 505.485,965