NATIONAL FINANCES-SPECIE PAYMENTS.
SPEECH
OF
HON. JOHN SHERMAN,:F OH1IO,
IN THE
SENATE OF THE UNITED STATES,
}ARCH 6, 1876.
W A S I N G TO N.
1876.








NATIONAL FINANCES-SPECIE PAYMENTS.
SPEECH
OF
HON. JOHN SHERMAN,
OF OHIO,
IN  TH1I I,
SENATE OF THE UNITED STATES,
MARCH 6, 1876.
WA S 1 I N G TO:N.
1876.








SPEECH
OF
HON. JOHN SHERMAN.
Mr. SHERMAN. I now move that the Senate proceed to the consideration of the motion to refer the resolutions of the Chamber of
Commerce of the State of New York, relative to the national finances
and in favor of the resumption of specie payments at the time now
provided by law.
The PRESIDENT pro tempore. The Senator from Ohio moves that
the Senate proceed to consider the motion to refer the resolutions of
che Chamber of Commerce of New York,
The motion was agreed to.
OUGHT THE RESUMPTION ACT OF 1875 BE REPEALED?
Mr. SHERMAN. Mr. President, I have taken the unusual course
of arresting the reference to the Committee of Finance of the memorial of the Chamber of Commerce of New York in order to discuss in
an impersonal and non-partisan way one of the questions presented
by that memorial, and one which now fills the public mind and must
necessarily soon occupy our attention. That question is, " Ought the
resumption act of 1875 be repealed?" The memorial strongly opposes such repeal, while other memorials, and notably those from the
Boards of Trade of New York and Toledo, advocate it. These opposing views are supported in each House of Congress, and will, when
our time is more occupied than now, demand our vote.
And, sir, we are forced to consider this question when the law it is
proposed to repeal is only commencing to operate, now, three years before it can have full effect-during all which time its operation will
be under your eye and within your power-and while the passions of
men are heated by a presidential combat, when a grave question,
affecting the interests of every citizen of the United States, will be
influenced by motives entirely foreign to the merits of the proposition.
QUESTIONS NOT INVOLVED.
And the question presented is not as to the best means of securing
the resumption of a specie standard, but solely whether the only measure that promises that result shall be repealed. We know there is a
wide and honest diversity of opinion as to the agency and means to
secure a specie standard. When any practicable scheme to that end
is proposed I am ready to examine it on its merits; but we are not considering the best mode of doing the thing, but whether we will recede
from the promise made by the law as it stands as well as refuse all
means to execute that promise. If the law is deficient in any respect
it is open to amendment. If the powers vested in the Secretary are
not sufficient or you wish to limit or enlarge them, he is your servant,
and you have but to speak and he obeys. It is not whether we will
accumulate gold or greenbacks or convert our notes into bonds, nor
whether the time to resume is too early or too late. All these are sub



4
jects of legislation. But the question now is whether we will repudiate the legislative declaration made in the act of 1875 to redeem the
promise made and printed on the face of every United States note, a
promise made in the midst of war, when ournation was struggling for
existence, a promise renewed in March, 1869, in the most unequivocal
language, and finally made specific as to time by the act of 1875.
And let us not deceive ourselves by supposing that those who oppose this repeal are in favor of a purely metallic currency to the
exclusion of paper currency, for all intelligent men agree that every
great commercial nation must have both: the one as the standard
of value by which all things are measured, which daily measures your
bonds and notes as it measures wheat, cotton, and land; and also a
paper or credit currency, which, from its convenience of handling
or transfer, must be the medium of exchanges in the great body of
the business of life. Statistics show that in commercial countries
a very large proportion of all transfers is by book-accounts and
notes, and more than nine-tenths of all the residue of payments is
by checks, drafts, and such paper tools of exchange. Of the vast
business done in New York and London not 5 per cent. is done with
either paper money or gold or silver, but by the mere balancing of
accounts or exchange of credits. And this will be so whether your
paper money is worth 40 per cent. or 100 per cent. in gold. The only
question is whether in using paper money we will have that which
is as good as it promises, as good as that of Great Britain, France,
or Germany; as good as coin issued from your mints, or whether
we will content ourselves with depreciated paper money, worth 10
per cent less than it promises, every dollar of which daily tells your
constituents that the United States is not rich enough to pay more
than 90 per cent. on the dollar for its three hundred and seventy
millions of promises to pay, or that you have not courage enough to
stand by your promise to do it.
Nor are we to decide whether our paper money shall be issued directly by the Government or by banlks created by the Governmenlt;
nor whether at a future time the legal-tender quality of United States
notes shall continue. I am one of those who believe that a United
States note issued directly by the Government and convertible on demand into gold coin, or a Government bond equal in value to gold,
is the best currency we can adopt; that it is to be the currency of the
future, not only in the United States, but in Great Britain as well;
and that such a currency might properly continue to be a legal tender except when coin is specifically stipulated for.
But these are not the questions we are to deal with. It is whether
the promise of the law shall be fulfilled, that the United States shall
pay such of its notes as are presented on and after the 1st day of January, 1879, in coin; and whether the national banks will at the same
time redeem their notes either in coin or United States notes made
equal to coin; or whether the United States shall revoke its promise
and continue for an indefinite period to still longer force upon the
people a depreciated currency always below the legal standard of
gold, andd.uctuating daily in its depreciation as Congress may threaten
or promise, or speculators may hoard, or corner, or throw out your
broken promises. It is the turning point in our finanicial history,
which will greatly affect the life of individuals and the fate of parties, but, more than all, the honor and good faith of our country.
At the beginning of our national existence our ancestors boldly and
hopefully assumed the burden of a great national debt, formed of the
debts of the old confederation and of the States that composed it;




and, with a scattered population and feeble resources, honestly met
and paid il good solid coin every obligation. After the war of 112,
which exhausted our resources, destroyed our coLmmerce, and greatly
increased our debt, a republican administration boldly fundedl onur
debt, pllacedl its currency upon the coin basis, pro1mptly paid its interest, and reduced the principal; and within twenty years after that
war was over, under the first democratic President, paid in coin the
last dollar, both principal and interest, of the debt. And now, eleven
years after a greater war, of grander proportions, in which not merely
foreign domination threatened us, but the very existence of our nationl
was at stake, and after our cause has been blessed with unexampled
success, with a country teeming with wealth, with our credit tequal
to that of any nation, we are debating whether we will redee:n our
promises according to their legal tenor and effect, or whether we will
refuse to do so and repeal and cancel them.' I would invoke in the consideration of this question the examplep
of those who won 6ur independence and preserved it to us, to inspire
us so to decide this question that those who come after us may po:int
to our example of standing by the public faith now solemnly pledged,
even though to do so may not run current with the temporary pressure of the hour or may entail some sacrifice and hardship.
THE VITAL OBJECT OF THE ACT OF 1875.
What then is the law it is proposed to repeal? I will state its lrovisions fully in detail, but the main proposition-the essential core
of the whole-is the promise to which the public faith is pledged
that the United States will redeem in gold coin any of its notes that
may be presented to the Treasury on and after the 1st day of January, 1879. This is the vital object of the law. It does not, lndcr' l1Cke
to settle the nature of our paper money after that, whether it shlall
be reissued again, whether it shall thereafter Be a legal tender, nor
whether it shall or shall not supersede bank-notes. All this is; purposely left to the future. But it does say that on and after that day'
the United States note promising to pay one dollar shall be equal to
the gold dollar of the Mint.
The questions then arise —
First. Oulght this promise be performed?
Secondi. Can we perform it?
Third. Aire the ag'en:ies and measures prescribed in the law sufficient for the purpose?
Fourth. If not, what additional measures should be enacted?
Let us consiodr these questions in their order with all serious deliberation that their conceded importance demands.
And first, ougtht this promise be fulfilled?
THE LEGAL PURPORT OF UNITED STATES NOTES.
To answer this we must fully understand the legal and moral obliationis contained in the notes of the United States. The purport of
the note is as follow-s:
The United States promises to pay the bearer one dollar.
This note is a promise to pay one dollar. The legal effect of this
note has been announced by the unanimous opinion of the Supreme
Court of the United States, the highest and final judicial authority in
our Government.
The legal-tender attribute given to the note has been the subject
of conflicting decisions in that court, but the nature and purport of
it is not only plain on its face, but is concurred in by every judge c f
that court and by every judicial tribunal before which that question
has been presented.




In the case of Bank vs. Supervisors, 7 Wallace, 31, Chief Justice
Chase says:
But, on the other hand, it is equally clear that these notes are obligations of
the United States. Their name imports obligation. Every one of them expresses
upon its face an engagement of the nation to pay to the bearer a certain sum. The
dol ar note is an engagement to pay a dollar, and the dollar intended is,he coined
dollar of the United States, a certain quantity in weight and fineness of gold or silver, authenticated as such by the stamp of the Government. No other dollars had
before been recognized by the legislation of the National Government as lawful
money.
Again, in the case of Bronson vs. Rhodes, 7 Wallace, 251, Chief Justice Chase says:
The note dollar was the promise to pay a coined dollar.
In the Legal-Tender Cases, 12 Wallace, 560, Justice Bradley says:
It is not an attempt to coin money out of a valueless material, like the coinage
of leather, or ivory, or cowry shells. It is a pledge of the national credit. It is a
promise by the Government to pay dollars; it is not an attempt to make dollars.
The standard of value is not changed. The Government simply deniands that
its credit shall be accepted and received by public and private creditors during the
pending exigency.  *
No one supposes that these Government certificates are never to be paid; that
the day of specie payments is never to return. And it matters not in what form
they are issued. * * * Through whatever changes they pass, their ultimate
destiny is to be paid.
Ift all these legal-tender cases there is not a word in conflict with
these opinions.
Thus, then, it is settled that this note is not a dollar, but a debt due;
a promise to pay a dollar in gold coin. Congress may define the
weight and fineness of a dollar, and it has done so by providing a gold
coin weighing 25-r grains of standard gold -1- fine. The promise is
specific and exact, and its nature is fixed by the law and announced
by the court. Here I might rest as to the nature of the United States
note; but it is proper that I state the law under which it was issued
and the subsequent laws relating to it.
The act of February 25, 1862, gave birth to this note as well as the
whole financial policy of the war. The first section of that act authorizes the Secretary of the Treasury to issue upon the credit of the
United States, United States notes to the amount of $150,000,000,
payable to bearer at the Treasury of the United States. The amount
of these notes was subsequently increased during the war to the maximum sum of $450,000,000, but the nature and character of the notes
was the same as the first issue. The enlargement of the issue did not
in the least affect the obligation of the UJnited States to pay them in
coin. This obligation was recognized in every loan law passed dnuing
the war; and to secure the note from depreciation the amount was
carefully limited, and every quality was given to it to maintain its
value that was possible during the exigencies of the war. I mlight
show you from the contemporaneous debates in Congress that at every
step of the war the notes were regarded as a temporary loan, in the
nature of a forced loan, but a loan cheerfully borne, and to be redeemed soon after the war was over. It was not until two years
after the war, when the advancing value of the note created an interest to depreciate it in order to advance prices for purposes of speculation, that there was any talk about putting off the payment of
the note. The policy of a gradual contraction of the currency with
a view to specie payments was in December, 1865, concurred in by
the almost unanimous vote of the House of Representatives, and the
act of April 12, 1866, authorized $4,000,000 of notes a month to be




7
retired and canceled. No one then questioned either the policy, the
duty, or the obligation of the United States to redeem these notes in
coin.
WVHY THE UNITED STATES NOTE IS BELOW PAR.
Why has not this obligation been performed? How comes it thi,;;
fourteen years after these notes were issued, and eleven years after
the exigency was over, we are debating whether they shall be paid
and when they shall be paid? We may well pause to examine how
this plain and positive obligation has so long been deferred by a
nation always sensitive to the public honor.
The fatal commencement of this long delay was in this provision
of the act approved March 3, 1863, as follows:
And the holders of United States notes issued under and by virtue of said acts
shall present the same for the purpose of exchanging the same for bonds as therein
provided on or before the 1st day of July,' 1863, and thereafter the right so to exchange the same shall cease and determine.
Thus, under the pressure of war and the plausible pretext of a statute of limitations, the most essential legal attribute of the note was
taken away. This act, though convenient in its temporary results,
was a most fatal step, and for my part in acquiescing in and voting
for it I have felt more regret than for any act of my official life. But
it must be remembered that the object of this provision was not to
prevent the conversion of notes into bonds, but to induce their conversion. It was the policy and need of the Government to induce its
citizens to exchange the notes freely for the bonds, so that the notes
might again be paid out to meet the pressing demands of the war. It
was believed that if this right to convert them was limited, in time
this would cause them to be more freely funded; and Mr. Chase, then
Secretary of the Treasury, anxious to prevent a too large increase of
the interest of the public debt, desired to place in market a 5 per
cent. bond instead of a 6 per cent. bond. The fatal error was in not
changing the right to convert the note into a 5 per cent. bond instead
of a 6 per cent. bond. This was in fact proposed in the Committee
on Finance, but'it was said that a right to convert a note into a bond
at any time was not so likely to be exercised as if it could only be exercised at the pleasure of the Government. And this plausible theory
to induce the conversion of notes into bonds was made the basis after
the war was over for the refusal of the United States to allow the
conversion of its notes into bonds, and has been the fruitful cause of
the continued depreciation and dishonor of United States notes for
the last five years, during which our 5 per cent. bonds have been at
par with gold, while our notes rise and fall in the gamut of depreciation from 6 to 22 per cent. below gold.
Notwithstanding that the right to convert notes into bonds was
taken away, yet in fact they were during the war received par for
par for bonds; and after the war was over all the interest-bearing
securities were converted into bonds; but the notes-the money of
the people-the artificial measure of value, the most sacred obligation,
because it was past due, was refused either payment or conversion,
thus cutting it off from the full benefit of the advancing credit of the
Government, and leaving to it only the forced quality of legal tender
in payment of debts.
Shortly after the war was over, and notably during the presidential campaign of 1868, the question arose whether the bonds of the
United States were.payable in coin or United States notes. Both
notes and bonds were then below par in coin, the notes ranging from
sixty-seven to seventy-five cents in coin; and 5 per cent. bonds from




8
seventy-two to eighty cents ill coin. Here again the opportunity
was lost to secure the easy and natural appreciation of our notes to
the gold standard. Had Congress then authorized the conversion of
notes into bonds when both were depreciated both would have advanced to par in gold; but on the one hand it was urged that this
would cause a rapid contraction, and on the other that the right to
convert the note into a bond was not specie payment; it was only
the exchange of one promise for another. It was specie payment
they very much favored, but did not have the wisdom then to secure.
If the advocates for specie payment had then supported a restoration
of th( right to convert notes into bonds they would have secured their,object with but little opposition. But all measures to fund the notes:,t the pleasure of the holder were defeated, and instead there was
in lgraf ted into the act to strengthen the public creditFi.ist, a declaration "that the faith of the United States is solemn-;i ipledlged to the payment In coin, or its equivalent, of all the obliga-, itls of the United States not bearing interest, known as United
St:itea notes, and of all the interest-bearing obligations of the United
States" except such as by the law could be paid in other currency
than gold and silver.
Second, " and the United States also solemnly pledges its faith to
make provision, at the earliest practicable period, for the redemption of the United States notes in coin."
Here again the obligation of the Government to pay these notes in
coin was recognized, its purpose declared, and the time fixed, " as
early as practicable." What was the effect of this important act of
Congress? Without adding one dollar to the public debt, or the
burden of the debt, both bonds and notes rose in value. Within one
year the bonds rose to par in gold, making it practicable to commence the refunding of 6 per cent. bonds into 5 per cent bonds. l'he
notes rose under the stimulus of this new promise in one year from
seventy-six cents to eighty-nine cents in gold, but no steps whatever
were made to redeem them.
The amount of bank-notes authorized was increased fifty-four millirns. The executive department pursued the policy of redeeming
delbs not due, and did from an overflowing Treasury reduce very
largely the public debt, but no steps whatever were taken to advance
the value of our notes. The effect of the act of 1869 was exhausted
on the adjournment of Congress in March, 1870, when the United States
notes were worth eighty-nine cents in gold; and thereabouts, up and
down, with many fluctuations, they have remained to this day. The
bondholder, secure in the promise to him, is happy in receiving his
interest in gold, with his bond above par in gold. The note-holder,
the flarmer, the artisan, the laborer, whose labor and production is
measured in greenbacks, still receives your depreciated notes worth
10 per cent. less than gold you promised him " at the earliest day
practicable." The one has a promise performed and the other a promise
postponed.
Thus we stood when the panic of'73 came upon us; with more
ipaper loney afloat than ever circulated before in any country of the
Aw(nld. Even then, had we stood firmly, the.hoarding tendency of tlh
lpanlic wouldn have advanced our notes toward the gold standard, a1ln
il fact did so during the months of September and October, until the
Itre':mium on gold had fallen to 8 per cent. But sir, at this critical
moment, the Secretary of the Treasury, acting no doubt in good faith,
but I think without authority of law, issued twenty-six millions more
United States notes-part of the notes retired and canceled under




9
previous acts. And now, notwithstanding all the talk about contraction of the currency, we have not withdrawn one-half of this
illegal issue. On the 1st of September, 1873, we had three hundred
and fifty-six million notes outstanding. Three months afterward we
had three hundred and eighty-two million; and now we have three
hundred and seventy-one million.
THE ACT OF 1875 A PLEDGE OF PUBIlC FAITH.
Sir, it was under the light of these events, after the fullest discussion ever given in Congress of any question —after debate'before the
people during the recess of Cong ress and full deliberation last winterthis act was passed. There was and is nowv great difference of opinion as to the details, but the vital promise made to the note-holder to
make his note as good as gold in January, 1879, was concurred in by
a large majority of both Houses, and by many who opposed the bill
as too slow in its operations. This act of honor and public faith was
applauded by the civilized world and concurred in by our constitlents, the doubts only being as to the machinery to carry it into effect.
The time was fixed by those who most feared resumption, and no lune
proposed a longer time. My honorable friend from Indiana [Mr.
MORTON] truly said (in the recent campaign in Ohio) that he participated in framing it; and he and those who agreed with him fixed the
time so remote as to excite the unfounded charge that the bill was a
sham, a mere contrivance to bridge an election.
And now, sir, to recapitulate this branch of the question, it is
shown that the holder of these notes has a promise of the United
States made in February, 1862, to pay him $1 in gold coin; that the
legal purport of this promise has been declared by the Supreme Court;
that we have taken away from this note one of the legal attributes
given it which would long since have secured its payment in coin —that when the note was authorized and issued it was understood as
redeemable in coin when the war was over; that our promise to pay
it was renewed in 1869 —" at as early a, day as practicabl'e; that by
reason of our failure to provide for its payment it is still depreciated
below par more than one-tenth of its nominal value; that we renewed this promise and made it definite as to time by act of 1875;
that it is a debt due from tho- United States, and in law and honor due
now in coin. Yet it is proposed to recall our promise to redeem this
note in coin three years hence. I say, sir, this would be national dishonor. It would destroy the confidence with which the public creditor rests upon the promises contained in your bonds. It would
greatly tend to arrest the process by which the interest on your bonds
is reduced. It would accustom our people to the substitution of a
tei pora'sry wave of popular opinion for its written contract cr promise.
It wnould weaken in the public mind that keen sense of honor land
pride which has always distinguished the English-speaking nations
in dealing with public obligations.
An old writer thus describes "public credit:"
Credit is a consequence, not a cause; the effect of a substance, not a substance;
it is the sunshine, not the sun; the quickening somaething, call it what you will, that
gives life to trade, gives being to the branches and moisture to the root; it is the
oil of the wheel, the marrow in the bones, the blood in the veins, and the spirits in
the heart of all the ne-oce, trade, cash, and colmmerce in the world.
It is produced, and grows insensibly from fair and upright dealing, punctual compliance, honorable performance of contracts and covenants; in short, it is the offspring of universal probity.
It is apparent even by its natuire; it is no way dependent upon persons, parliament, or any particular men or set of men as such in the world, but upon their conduct and lust behavior. Credit never was chained to men's names, but to their




10
actions; not to families, clans, or collections of men; no, not to nations. Itis the
honor, the justice, the fair-dealing, and the equal conduct of men, bodies of men,
nations, and people, that raise the thing called credit among them. Wheresoever
this is found credit will live and thrive, grow and increase; where this is wanting,
let all the power and wit of man join together, they can neither give her being no'
preserve her life.
Arts have been tried on various occasions in the world to raise credit; art has
been found able with more case to destroy credit than to raise it. The force of art,
assisted by the punctual, fair, and just-dealing abovesaid, may have done much to
form a credit upon the face of things, but we find still the honor would have done
it without the art, but never the art without the honor. Nor will money itself,
which, Solomoi says, answers all things, purchase this thing called credit or restore
it when lost. * * *
Our credit in this case is a public thing. It is rightly called by some of our writers national credit. The word denominates its original. It is produced by the
nation's probity, the honor and exact performing national engagements.
WHY PUBLIC POLICY FORBIDS ITS REPEAL.
And, sir, passing from  considerations of public honor, there are
many reasons of public policy which forbid the repeal of the act of
1875. That act was generally regarded as the settlement of a financial policy by which at least the party in power is bound, and upon
the faith of which business men have conducted their affairs and
made their contracts. Debts have been contracted and paid with the
expectation that at the time fixed the gold standard would measure
all obligations, and a repeal of the act would now re-open all the wild
and dangerous speculation schemes that fee4 and fatten upon depreciated paper money. The influence that secures this repeal will not
stop here. If we can recall our promise to pay our notes outstanding
why should we not issue more? If we can disregard our promise to
pay them, why shall we regard our promise not to issue more than
$400,000,000 as stipulated for by the act of 1864.? If we can re-open the
question of the payment of our notes, why may we not re-open the
question as to the payment of our bonds? Is the act of 1869 any more
sacred than the act of 1875? And if we can re-open these questions,
why not re-open the laws requiring the payment of either interest or
principal of the public debt? They rest upvn acts of Congress which
we have the power to repeal. If the public honor cannot protect our
promise to the note-holder, how shall it protect our promise to the
bondholder? Already do we see advocated in high places, by numerous and formidable organizations, all forms of repudiation, which,
if adopted, would reduce our nation to the credit of a robber chiefworse than the credit of an Algerine pirate, who at least would not
plunder his own countrymen. And if the public creditor had no
safety, what chance would the national banks-creations of our own
and subject to our will-have in Congress? It has already been proposed to confiscate their bonds, premium and all, as a mode of paying
their notes with greenbacks.  What expedient so easy if we would
make money cheap and abundant? Or, if so extreme a measure couldtl
be arrested, what is to prevent the permanent dethronement of gold
as a measure of value, and the substitution of an interconvertible
currency bond bearing 3.65 per cent. interest as a standard of value;
and when it becomes too expensive to print the notes to pay the interest, reduce the rate. Why not? Why pay 3.65 per cent. when it
is easier to print 3? It is but an act of Congress.  And when the
process of repudiation goes so far that your notes will not buy bread,
why then declare against all interest, and then, after passing through
the valley of humiliation return again to barter, and honor, and gold
again.
Sir, if you once commence this downward course of repudiation
there is but one ending. You may, like Mirabeau and the Girondists.




11
seek to stem the torrent, but you will be swept away by the spirit
you have evoked and the instruments you have created. You complain now of a want of confidence which makes men hoard theirmoney. Will you, then, destroy all confidence? No, sir, no; the way
to restore confidence is to inspire it by fulfilling your obligations.
You cannot make men lend you; you cannot make men sell you anything-either bread, or meat, or wool, or iron, or anything that is or
that ca.n be created-except for that which they choose to take. You
may depreciate the money which you offer, but it will only take
more of it to buy what you want. It is true that the creditor may,
by your laws, be compelled to take your money however much you
depreciate it, but he cannot buy back that which he sold, or its
equivalent in other necessaries of life, and thus he is cheated of part
of what he sold. During the war, while money was depreciating,
many a simple man gleefully counted his gains as he sold his goods
or crops at advancing prices, but he found out his mistake when with
his swollen pile he tried to replace his stock in trade or laid in his
supplies. Sir, this policy exhausts itself in cheating the man who
buys or sells or loans on credit, who produces something to sell on
credit; whether that something be food or clothing; whether it be a
necessity or a luxury of life. Productive labor, honest toil, whether
of the farmer or the artisan, is deeply interested in credit. It is credit
that gives life and competition to trade; and credit is destroyed by
every echeme that impairs, delays, or even clouds an obligation.
Again, sir, an irredeemable and fluctuating currency always raises
the rate of interest on money, while a stable currency or an improving currency always reduces the rate, of interest. This is easily
shown by statistics, but the reason is so obvious that proof is not
needed. If a man lends his money he wants it back again with its
increase; but if the money, when it is to be paid back, is like to be
worth less than when he thinks of loaning it, he will not loan it except at such rates as will cover the risk of depreciation. He will
prefer to buy land or something of stable value. If money is at the
gold standard or is advancing toward that standard, he will loan it
readily at a moderate interest, for he knows he will receive back
money of at least equal value to that he loaned.
Again, sir, with a depreciated currency great domestic productions
are cut off from the foreign market; for it is impossible that with
such a currency we can compete on equal terms with rival nations,
whose industry rests upon a specie standard. As we approach such
a standard, we are now able as to a few articles to compete with foreign industry; but it is only as to articles in the manufacture of
which we have peculiar advantages. Let us rest our industries on
that standard, and soon we could compete in the markets of the
world in all the articles produced from iron, wood, leather, and cotton, the raw basis of which are our natural productions. And it must
be remembered that all the countries with which we compete are
specie-paying countries. A country that does not rest her industry
upon specie is necessarily excluded from the great manufacturing
industries of modern civilization, and is self-condemned to produce
only the raw basis for advanced industry. Cheap food, climate, soil,
or natural advantages, such as cheap land, vast plains for pasture, or
rich mines, may give to a country wealth and prosperity in spite of
the evils of depreciated paper money; but when we come in competition with the world in the advanced grades of production which give
employment to the skilled mechanic, we must rest such industry upon
the gold basis, or we enter the lists like a knight with his armor unbound.




Ag ain, sir, a. depreciated and fluctuating currency is a premium and
bournty to the broker and money-changer. Under his manipulation
our paper standard of value goes up and down, and he gamibles and
speculates, with all the advantages in his favor. Good people look (o
and think that it is gotld that is going up and down; that their money
is a dollar still, and trade and traffic in that belief. But the shrewd
operator calculates daily the depreciation of our note, the shortening
of the yard-stick, the shrinkage of the acre, the lessening of the ton,
and thus it is that he daily adds to his gains from the indifference or
delusion of our people.
Sir, it is an old story, often repeated in our day, and most eloquently
epitomized by Daniel Webster in the often-quoted passage of his
sleech in which he said:
A disordered currency is one of the greatest of political evils. Itundermines the
virtues necessary for the support of the social system and encourages propensities
destructive of its happiness. It wars against industry, frugality, and economy:
and it fosters the evil spirit of extravagance and speculation. Of all contrivainces
for cheating the laboring classes of mankind none has been more effectual than that
which deluded them with paper money. Ordinary tyranny, oppression, excessive
taxation, these bear lightly on the happiness of the mass of the community, compared with the fraudulent currencies and the robberies committed by depreciated
paper. Our own history has recorded for our instruction enough, and more than
enough, of the demoralizing tendency, the injustice, and the intolerable oppression
of the virtuous and well-disposed of a degraded paper currency authorized by law
or in any Sway countenanced by Government.
Sir, we must meet this question of specie payments, not only because
the public honor is pledged to do so, but also for the lesser reason that
it is our interest to do so. The only questions we should permit ourselves to discuss are the means and measures ( f doing so.
And now, sir, let us examine the reasons that have been given for
the repeal of the resumption act by those who, though favoring resumption, yet think the act should be repealed for one or other of the
following reasons:
First. That it is not advisable to fix a day for resumption.
Second. Or at least until the balance of trade is in our favor.
Third. That it produces a contraction of the currency.
Fourth. That it injuriously adds to the burden of existing debts.
Let us glance at these objections.
WHY FIX A DAY FOR RESUMPTION.
First. As to fixing a day for resumption.
If it was possible to agree upon measures that would secure resumption without fixing a time, I agree it woould nrot beindispen sable, though
not unadvisable, to fix a time; but such agreement is utterly impTossible. Of the multitude of schemes that have been presented to me
by intelligent men trying to solve this problem, many could have been
selected that in my opinion would be practicable; but of all of them
not one ever has or is likely to secure the assent of a majority of a
body so numerous as Congress. One difficulty we have encountered
is that the democratic party, though in the minority, has never presented in any form through any leading member a plan for resumption, but with widely differing opinions have joined in opposing any
and every measure from the other side. I understand from the papers
that our democratic friends through a caucus, and through a caucus
committee of which my colleague is chairman, have been laboring to
agree upon a plan for specie payments. After his frequent speeches
to us about a caucus measure-a great question being submitted to a
caucus-about secret conclaves, about shams and deceptions and such
like polite and friendly comments upon the work of the republican




13
party, I might greet my colleague with such happy phrases about his
caucus; but I will not, but on the contrary I commend his labors,
and sincerely hope that he and his political friends may agree upon
some plan to reach a specie standard, and not one to avoid it, to prevent it, to defer it. Under color of intending to prepare for it, I hope
they will not make their measure the pretext for repealing the law
as it stands, which fixes a day for resumption and will secure the end
we both aim at.
I frankly state for the republican party that, while we could agree
to fixing the time for specie payments and upon conferring the ample
and sufficient powers upon the Secretary of the Treasury contained
in this law, we could not agree in prescribing the precise mode in
which the process should be executed. Nor, in my opinion, was it at
all essential that we should. Much must be left to the discretion of
the officer charged with the execution of such a law. The powers
conferred, as I shall show hereafter, are ample; and the discretion
given will be exercised under the eye of Congress.
And, sir, there is strong force in the fact that in every example we
have of the successful resumption of specie payments in this and other
countries a fixed day has been named by legislative authority, and
the details and power of execution have been left to executive authority. Thus in Great Britain the act of Parliament of July 2,1819,
fixed the time for full resumption at the 1st day of May, 1823, and for
a graduated resumption in gold at intermediate dates; and for fractional sums under forty shillings to be paid in silver coin; and the
governor and directors of the Bank of England were charged with its
execution, and authorized at their discretion to resume payment in
full on the 1st day of May, 1822. France is now successfully passing
through the same process of resumption, the time being fixed (two
years ago) for January 1, 1878, and now practically attained. In our
own coul-ntry many of the States have presented similar laws in case
of suspended bank payments, and in some cases the suspended banks
have, by associated action, fixed a time for general resumption, and
each bank adopted its own expedient for it. Sir, the light of experience is the lamp of wisdom. I can recall no case of successful resumption where a fixed future time has not been presented beforehand, either by law or agreement; while the historical examples of
repudiation of currency have come by the drifting process, by a gradual decline of value, by increased issues, and a refusal to provide
measures of redemption, until the whole mass disappeared, dishonored and repudiated.
This concurrence in the mode of resumption by so many governments was the strongest possible instruction to Congress when fixing
a plan oi resumption for the United States, and should satisfy reasonable men of its wisdom.
Besides, it would seem to be but fair that every one should have
plain notice of so important a fact. If the measures only were presented and no time fixed it would be a matter of speculation, and
the discretionary powers of the Secretary of the Treasury could be
exercised with a view to hasten or postpone the time to the injury of
individuals.
As to the date selected, I can only repeat it was placed as remote
as any one suggested; far more so than is necessary to secure the
object, and so that the fluctuations of value will scarcely exceed in
four years what they have frequently been in a single year. An:ample time to arrange all the relations of debtor and creditor, and to
enable Congress to provide any additional measure in aid of resumption, or if events make it expedient to postpone the time.




14
BALANCE OF TRADE.
Again, it has been objected that we connot resume until the balance
of trade is in our favor. This phrase, "balance of trade," has been a
favorite one with visionaries and theorists, sufficiently inde-inice to
confuse and to mislead.  As generally understood, the dogma is "that
a nation that imports more than it exports is growing poorer;" or,
conversely, "that a nation that exports more than it imports is prosperous." Now, sir, either proposition has been proven false in many
cases, and may be true in some. It does not follow that an excess of
imports creates distress, or a deficiency of exports is an evidence of
poverty. Even the excess of imports upon which interest may be
paid may be of wealth-producing productions, or a deficiency of exports may be caused by an increased domestic manufacture of raw
products by home industry. But the best way to test the fallacy of
this dogma is by reference to examples. Great Britain is known to
be a prosperous nation of accumulating and accumulated wealth, and
yet her imports have exceeded her exports every year for twenty
years. The general average of her imports in excess of exports is
~50,000,000 or $250,000,000 a year. I have here the detailed statement of her imports and exports for 1872 and 1873:
1872.  Imports. —-.......... ——......... —. —.   ~354,693,624
Exports...................................  314, 588, 834
Excess of imports over exports -—.... —.  40,104, 790 or $200, 000, 000
1873. Imports -.. —. —-. —-... --—..-.... —-.  371, 287, 372
Exports..-..-.. —................. —.....  311, 004, 765
Excess of imports over exports...........   60, 282, 607 or $300, 000, 000
Now, according to the dogma of the " balance of trade," Great Britain is going into a rapid decay; while she knows this large excess
of imports is an addition to her national wealth.
But take our own country and compare years of conceded prosperity
with years of hard times.
1867.      1868.
Imports.... —-.........-.......... —.. —-.  $391,121, 801  $351, 214,010
Exports at gold value, including gold...-....-..... 334, 350, 653  352, 788, 202
Balance of trade against us.......................  56, 771,148... —-.....
Yet we were then prosperous, as we have so often been told, with
plenty of paper money.
Take the two last years, when we are told so often that distress,
misery, and poverty prevailed:
1874.      1875.
Exports at gold value, including gold.............  $652, 913, 445 $605, 574, 853
Imports. —..-. —............ —-. —. —.... 595, 861, 248  553, 906, 153
Balance of trade in our favor..-.................  57, 052,197  51, 668, 700
And the balance of trade in our favor is more striking during the
seven months of the present fiscal year, from the 1st of July, 1875, to
the 1st of February, 1876.




15
The total exports, reduced to gold values, were.. —. $334, 853,996
The total imports were............. -2-.. —....-..  281,729,735
Leaving a balance in our favor in coin for seven
months of......-........-............ - --—..   53,124,261
All these amounts are reduced to a coin basis, and include both the
importation and exportation of coin.
According to the dogma of the balance of trade, now is the golden
moment to resume, when the balance is in our favor nearly one hundred millions a year. Yet many people cry out, "Wait for the balance of trade; don't force resumption.". Well, the time has come,
and yet they are not ready. This dogma has been the cause of infiniteconfusion, but is now abandoned. McCullough, in his Dictionary
of Commerce, thus refers to it:
In commerce the term " balance of trade " is commonlyused to express the difference between the value of the exports from and imports into a country. The balance used to be said to be favorable when the value of the exports exceeded that
of the imports, and unfavorable when the value of the imports exceeded that of the
exports. And in this country this was long believed to be the case, and down to a
late period we were annually congratulated by our finance ministers on the excess
of the exports over the imports.
The attainment of a favorable balance was formerly regarded as an object of the
greatest importance.   * 
The truth is, however, that the theory of the balance of trade was not erroneous
merely from the false notions which its advocates entertained with respect to money,
but proceeded on radically mistaken views as to the nature of commerce. *   * 
The argument about the balance of payments is one of those that contradict and
confute themselves.  *  *  *
Not only, therefore, is the theory with respect to the balance of trade erroneous,
but the very reverse of that theory is true.  * *
It is difficult to estimate the mischief which the absurd notions relative to the
balance of trade have occasioned in almost every commercial country; here they
have been particularl injurious.
This author fortifies his position with ample details, but it is sufticient to say that if the dogma is false we should not regard it, and,
if it is true, now is the golden moment for resumption, for the balance
of trade is in our favor. In my view it is utterly immaterial to the
question before us.
CONTRACTION.
The third objection is that the law produces a great contraction of
the currency.
Now, sir, it ought to be confessed, for it is true, that any plan for
specie resumption will, when it is about to take effect, produce some
contraction of the paper currency. The drifting process if it succeedA
must cause it as well. To wait for resumption until resumption will
produce no temporary contraction is to wait until the rivers cease to
flow or the mountains are level with the plains. Every time resumption has taken place in the historical cases I have referred to, contraction has preceded it. Remedies for bodily or political ailments
are apt to be unpleasant. All we can say is that public honor and
public policy demand the remedy for the dishonor and the evil of a
depreciated currency; that the time is ripe for the cure and the means
we have prescribed are suitable to the end.
And, sir, the degree of contraction and the effects of it are greatly
exaggerated. The only contraction of the currency provided for by
the act is in the substitution of one form of currency for another.
Thus, in place of the fractional currency is issued silver currency;
and where national-bank notes are issued there is retired 80 per cent.
of the amount in United States notes. Thus far no fractional currency has been retired; but, as I will show hereafter, we can now and




16
will, if the law stands, issue as much silver currency as any one may
wish in exchange for either fractional currency or United States
notes; and, as to bank-notes, the amount issued'since the act took't:lee(t is c;13,820,760, and the amount of United States notes retired is:,1,0-:>;,608, leaving of United States notes still outstanding $370,943,3:92, or;14,900.000 more than was outstanding when the act of March,
1869, was passed, and the same amount more than was outstanding
on the 14th day of September, 187, when the panic came. Thus
it appears that under the law the amount of bank-notes issued is
$2,800,000 more than the United States notes retired, and the contraction of the currency prescribed by this law is a myth.
But there has been a contraction of the currency since the panic,
and before and after the passage of the act of 1875, which will go on
whenever in any way a specie stan(ldrd approaches, and th:it is by
the voluntary retirement by national banks of a portion of theilr c iculating notes. This contraction is not provided for by the rs 1imption act, but is authorized by the national banking acts, ar:tl' is the
healthy ebb and flow of currency which it, was the object of the law
to secure. The national banks retired $24,962,327 of their notes by
depositing that amount of United States notes in the- Treaslry of the
United States to be used exclusively in redeeming the banlk-nttes
when presented. The only motive for this deposit was that in the
opinion of those banks the circulating notes could not be proftt;,ily
used, or they were not strong enough to maintain at the specie basis
the whole of their notes. This process will and ought to go on until
each bank is certain it can maintain resumption at the time stated.
Nor is this contraction in the slightest degree injurious to the bank
or to the ability of the bank to loan money to its customers.'1he
banks.will not withdraw their notes unless it is their interest to do
so. When they do surrender or redeem their notes they at once receive a larger amount of their bonds held as security for their notes,
and worth about 30 per cent. more than the notes redeemed. Thus,
when a bank surrenders $9,000 of its circulating notes it lifts from
the lien of the note-holder $10,000 of United States bonds worth today about $12,000. If the bank sells the bonds it has $12,000 of currency to loan, and has strengthened itself by paying $9,000 of its notes.
This process, instead of being a cause of alarm, should be encouraged
and hastened; and this is practically the only contraction effected by
this bill, a contraction which is in the very line clamored for by those
who oppose national banks; but a voluntary contraction, made by the
silent operation of the interest of the bank, while at the same time it
advances the residue of notes to par in gold.
RESUMPTION THROUGH NATIONAL BANKS.
Sir, in my judgment, the real solution of specie resumption will thus
come through the voluntary act of national banks, each acting for itself, under the general direction of the law, precisely as the Bank of
England, the Bank of France, and the New York banks brought about
and maintained resumption. I lhave never regarded with solicitude
the amount of United States notes outstanding, for, as I will show,
they can be easily maintained at par in gold; but the agency of the
banks in securing resumption and the effect of resumption upon their
customers were matters of solicitude. This I no longer doubt or
fear. The whole problem consists in a plartial and limited transfer of
capital now invested by national banks in United States bonds to individuals. The high price of these bonds lnd the idle capital that
seeks investment in them will enable each bank to strengthen itself




17
by a sale of bonds without in the least impairing its ability to discount or loan, and, in fact, to increase its power to do so, and the
bonds will be absorbed by the increasing demand for such securities.
Strong banks in cities do not need the currency, for their currency is certified checks. Their currency is largely held by them, or,
if in circulation, it can be retired and canceled without impairing in
the least their ability to loan or discount. The bank currency being
thus diminished, as the time for resumption approaches, the United
States notes, supported by a gold reserve and the power of the Secretary to sell bonds; will easily be maintained at the gold standard,
and the problem is solved.
And, sir, this partial contraction of bank currency will unlock and
dissipate a greater contraction which has gone on since the panic, and
will go on until the public mind rests assured that the day of resumption is not only promised but rendered certain by the course of events.
An increase of currency will follow resumption. Great masses of notes
now lie idle in bank-vaults and in the Treasury, and are hoarded in
homesteads all over the land. There is deposited in the Treasury,
without interest and belonging to banks, $31,005,000, represented by'currency certificates. There are nowin the vaults of thenational banks
$73,626,100 United States notes and fractional currency, $17,166,190
bank-notes, in all $90,792,290, and in the savings-banks, State banks,
and other banks that have made returns to the Comptroller of the Currency the sum of $48,431,409, in all making $170,228,699, and this is far
more than the reserve required by law. The practice of hoarding currency has greatly increased from the day of the panic, and it may be
safely said that there is among the people and in savings-banks and trust
companies not less than $200,00,000 of currency idle. Nothing but
the best of security will tempt it from its hiding-places; but, thO.
security offered, it can be had for a less rate of interest than ever b6fore. Capital met its periodical shock in September, 1873, and great
masses of it, some say one thousand millions, vanished as a dream,
and are now represented by worthless bonds, bills, notes, and certificates of stock, worth but little more than the paper on which they are
printed. This panic came upon us when the paper god was lord of
the ascendant, when corner lots, at fictitious prices, were the par of
exchange; when unproductive railroads were the El Dorados of visionaries, and wild schemes of improvement, both in this city and in
all the cities of the Union, increased municipal debts to an unexampled degree. This reckless inflation of credits collapsed long before
this law was passed. Money, the agent of capital, and, when idle, capital itself, was hoarded, and still remains inactive, or is loaned on call
or unquestioned security. This is the contraction of which so many
complain. It is not caused by the resumption act, but by a want of
confidence in investments that offer. Confidence cannot be restored
by a repeal or by issuing more paper money. But the occasion does
offer you an opportunity of withdrawing a portion of this idle money,
and thus reaching a specie standard. The banks can freely surrender
a portion of their circulation, and thus be strong for resumption;
while frightened and timid capital will gladly float into United States
bonds when sold by the banks. Nothing is wanted but confidence,
faith, and time to secure'the closing triumph of our war policy by the
redemption of the only promise we then made that has not been honestly redeemed.
EFFECT UPON EXISTING DEBTS.
The remaining objection to the law is that it will add to the burden
of existing debts. This objection is also inseparable from any plan of
2s




18
resumption. Postponement or repeal will not help the matter. The
time for redemption must come. Current indebtedness was never less
than now. Liquidation has gone on rapidly since the panic, and in
many cases by open bankruptcy. Debts contracted since the passage
of the act have been made in view of resumption in 1879. Many of
the old debts run for a long period of years, and when issued were
made upon the presumption of specie payments before they matured.
Other large masses of debts stipulate for the payment of both principal and interest in coin. Nearly all the best investment securities
are now at or near par in gold and are bought and sold at gold values.
Current debts in trade mature and are paid long before the time for
resumption, and if renewed, the debtor and creditor adjust the mode
of payment. All new transactions are based upon the knowledge that
specie payments will come at the time stated, and for that reason
lower rates of interest are stipulated for. Let it once be fixed in the
public mind that on the 1st of January, 1879, paper money will be
advanced to the specie standard, and debtors will readily borrow
money payable in that standard at lower rates of interest. Capital
will no longer be invested in gold bonds from the fear that if loaned
to individuals it will be paid back in depreciated paper, but will
eagerly be invested at low rates of interest on mortgage or other
security if to be paid in improved and improving currency. Industries now languid or suspended will hopefully revive now that stocks
are reduced, and productions will have a fixed commercial value, not
only in home markets but the markets of the world. Merchants now
fear the shrinkage of prices, but their stocks will be renewed at a
corresponding reduction of prices until all are measured by the gold
standard, when they need have no fear of change of prices except
those arising from demand and supply. Debtors are also generally
creditors, and the loss and gain in values will balance each other,
and the time is ample in which all losses can be adjusted. Never
could our condition be better to resume the specie standard than
now, unless we intend to perpetuate the use of depreciated paper
money and totally disregard the pledge of the public faith to redeem
United States notes in coin.
THE DRIFTLNG PROCESS.
There are two objections made to the law which I ought not to pass
over without reply. One is, that this law is forced resumption; that
it is better to drift into resumption. It will come, they say, by natural causes. The other objection is that the law has been in force a
year and we are no nearer resumption. It is therefore a dead-letter,
and ought to be repealed. These two objections are not consistent
with each other, but each has its believers, and should be answered.
The drifting process has been tried since 1868. Then the law fixed
the volunie of United States notes at $356,000,000, and forbade its contraction, and the amount of bank-notes at $300,000,000, and forbade
its enlargement. It was said we would grow into resumption. This
was the plausible dogma with which I was met when I sought the
funding of notes into bonds. The result I have already stated. In
1870 the sectional inequality of the distribution of bank currency, inflamed into a passion by the sectional appeals of Horatio Seymour
when a candidate for President in 1868, forced the enlargement of the
limit of bank notes to $354,000,000; and the vain hope of stopping a
panic by paper promises forced the enlargement of the limit of United
States notes to $382,000,000. So will it always be with this drifting
process. When we reach a specie standard it is safe enough. If na



19
tional banks then issue more money, upon sufficient security to pay
in coin, they do it at their peril, and the people cannot lose nor their
standard of value fluctuate. But even if it was possible to fix the
present volume of currency as an arbitrary limit, it would only prolong indefinitely the evils of a depreciated currency. No one believes
that we could maintain in circulation near $800,000,000 of paper
money all the time at par in gold. It must have the quality of flexibility in amount to meet the currents of trade and business-at times
withdrawn, and when needed reissued, but always of the value of
gold-and these qualities can only be secured by prompt redemption
when it is not needed, and its reissue through loans and discounts by
banks when the crops are to be moved or trade becomes active.
WHY NO APPARENT RESULTS.
And as to the objection that the law has not already produced more
immediate results, I admit that this is an objection to the law, but it
was unavoidable under the circumstances. The time for resumption
should have been fixed much earlier, so that its effect would have
been more rapid. If,by the law the banks had been compelled to prepare for resumption sooner, the appreciation of our notes would have
been more marked; and so if a portion of the notes could be funded,
or either gold or notes could be held in reserve by the sale of bonds.
Who does not wish that our notes were now worth ninety-five instead
of eighty-nine cents on the dollar? And yet to produce that result
we must have hastened either the day for resumption or strengthened
the measures for resumption. Bjit what is the remedy for this slow
process? Is it to repeal the law, not a single provision of which by its
terms has been put in full operation? Is it to revoke our promise
and all efforts to fulfill it? Obviously not, but to stand by our engagement and perform it sooner if circumstances will allow.
CAN WE REI)EEM ON THE 1ST DAY OF JANUARY, 1879?
And now, sir, I come to the second proposition stated: Can we resume specie payments on the 1st day of January, 1879'?
On this proposition we are to consider the question as it affects the
national banks, the fractional currency, and the United States notes.
NATIONAL CURRENCY.
As to the national banks, I have already stated how redemption
with them becomes an easy and natural process to be performed without injury to them, or to their customers, or to their usefulness, by a
transfer or sale of United States bonds especially set aside for that
purpose, and only to the extent that each bank may deem essential
to its safety. The national banks are now exceptionally strong.
Their circulating notes amount to $346,479,756. Of these notes they
have in their vaults the sum of $17,165,190. They have with the
Treasurer of the United States $356,680,150 in United States bonds,
worth $427,947,224 in currencyor $374,582,200 in coin. They also hold
United States bonds to secure United States deposits $13,981,500, and
other United States bonds held in their vaults to the amount of
$16,909,550. They have q surplus over and above the capital fully
paid up, the sum of $192,300,000. With the great body of them the redemption of the whole or a large part of their circulation is a matter
of indifference. To the extent of a certain per cent. of their deposits and 5 per cent. of their circulation they must maintain a reserve of United States notes, and to that extent will aid the United
States in maintaining resumption. The amount of this reserve now
required is $80,135,200, but the amount in hand is $118,800,987. As




20
United States notes are equivalent to coin with them, they will seek
to hold as much as they can, as other banks in England hold the notes
of the Bank of England. Is it not, then, apparent that the national
banks are able to resume, are prepared to resume, and that resumption by them need not be delayed a single year; and that so far as
their notes are concerned it is a shame and scandal that they are only
worth eighty-nine cents on the dollar-and all because the United
States will not advance its notes to par in gold?
FRACTIONAL CURRENCY.
Now, sir, as to the fractional currency. This was issued to take
the place of the subsidiary silver coins of the country during the war.
The amount outstanding, as shown by the books of the Treasury, is
$45,120,132; but of this many millions have been lost and destroyed,
and this is shown by the large amount of the old issues never presented although long superseded. It is probable that not exceeding
$40,000,000 will be presented for redemption. Now, sir, as to this
currency we are able to-day to issue silver coin of legal weight and
fineness in exchange dollar for dollar for fractional currency, not only
without loss but with an actual profit. One ounce of silver bullion,
or four hundred and eighty grains of standard fineness, is worth in
the market $1.05 in coin. One dollar of our silver coin contains three
hundred and eighty four grains of standard silver; so that one dollar of silver coin will cost the United States eighty-four and one-quarter cents besides the cost of coining. To the extent that our people
will take silver coin in exchange for fractional currency, the problem
is already solved. It is said this coin will be hoarded. So much the
better. We can furnish from our own mines all that is needed to the
extent of fifteen millions on hand and two millions a month more,
that being the extent of our coinage facilities. It is said it will be
exported. No such good luck will befall us, for silver bullion is
cheaper and better for export. If we issue it, we will either redeem
a note or save paying out a note, and either way we make a profit.
If fifty millions silver coin is held by our people it is to that extent a
reserve for specie payments where it is most useful among the people.
I wish they would take one hundred millions, and no doubt enough
will be taken to redeem all the fractional currency that our people
vill not prefer to hold.
UNITED STATES NOTES.
And now the only remaining question is, Can we redeem or maintain at par by the 1st day of January, l879, the United States notes?
The aumount of them outstanding to-day is $370,943,392 less those
lost and destroyed. Now, many who fear resumption suppose the
whole mass of United States notes will then be presented for the gold;
and they have counted up the number of tons of gold that will be
required to do it. They figure up the interest at 5 per cent. on the
whole sum, and state that as an addition to our annual interest account. It is not necessary to reply to such exaggerations; nor is it
possible to state with precision what amount of United States notes
would circulate at par in coin. They could then be made receivable
for customs dues without a violation of the public faith. They will
always be the reserve of national banks. They could then be made
receivable for bonds of the United States. They could be supported
by the power to sell bonds to redeem them. They would, as a matter
of course, be supported by the whole gold reserve in the Treasury.
They would take the place of certificates of deposit and be used in
clearing-house exchanges.




21
Now, sir, with all these advantages, with the growing wealth and'
credit of our country, I do not believe the present volume of United
States notes need be largely if any reduced to keep them at par in coin.
We have now a gold balance in the Treasury of $37,120,772.73, and a
currency balance of $9,529,404 over and above our currency and coin
certificates. It is true this balance is subject to overdue and accruing
demands fully stated in a recent letter of the Secretary of the Treasury, but a certain amount of these demands always remain uncalled
for, and when presented are met by accruing revenue. Suppose (what
I regard as an extreme case) that we add to this reserve $100,000,000,
fifty million in coin certificates and fifty million in coin, does anybody
doubt but it will be ample to redeem any note that is presented? Confidence being once established in their redemption, and who will want
the gold for them? They can be and no doubt will be re-issued without or with the legal-tender clause, as the law may hereafter provide,
and with their credit secured, established at par in coin, they will not
only circulate in Texas and on the Pacific slope as well as in other
parts of the United States, but, like the Bank of England note, in all
countries that have commercial relations with us.
BURDEN OF RESUMPTION.
Let us pursue the argument taking the full burden of resumption
as the interest of one hundred millions per annum. The rate of interest now in currency may be stated at 4 per cent. or 4- per cent. in
gold. Thus four to four and one-half millions a year three years
hence is the extreme burden of specie payments. Sir, the sinking
fund in three years amounts to more than the one hundred millions
you are to keep in reserve. The saving already made thus far by
funding the debt into 5 per cent. bonds is five millions a year. The
saving that you will make by the funding into 4j per cent. will be
seven and one-half millions in gold, or nearly twice as much as is
needed. The saving of four millions on the appropriation bills sent
to us will cover the cost. A duty of five cents on the gallon of
whisky will do it. One-half of the smallest duty ever levied on tea
and coffee will do it. One-half of the taxes now levied on national
banks by the United States will do it. The increased value of our
tax on whisky and tobacco being paid in coin will twice do it. Are
we able to do it? Are we able to keep our promises when made specific as to time, place, and manner? I do not care to discuss this
question further. Sir, the United States has been blessed by divine
Providence with all the gifts which He has ever showered upon the
human race. We have a broad and fruitful land, with almost every
variety of climate and production. We have forty millions of free
people, industrious, intelligent, brave as becomes men, shrewd and
sagacious in trade and production, and loving honor and a good name.
To say that we cannot redeem our promises is to dishonor the blessings of God; it is to eat of the forbidden fruit when all the productions of nature and art are within our reach; it is to dishonor our
name and credit when the world is ready to lend us at a less rate of
interest than any nation of the world except Great Britain has ever
borrowed for; it is a party retreat; it is a national retreat; it is a
retreat of cowardice from a task we promised to perform, that we are
able to perform, and which every noble motive that actuates mankind
impels us to perform.
But, it is said, where is the gold to come from to enable us to resume. Not only is the gold of the world open to our competition, but
we are the largest gold and silver producing country of the world.




The product of our mines is about one hundred millions a year, and a
single year's product would more than enable us to resume. Our facilities for accumulating gold are greater than any other nation. "But
the gold is exported." So it is, because we will not use it as the other
nations do. Give it occupation here and it will remain here, and the
products of our farms and workshops will be exported instead. It is
said we can make a standard of something else that is not exportable.
So we can by cutting ourselves off from the civilization of the human
race.
Sir, I have been struck by the absolute poverty of invention of
those who in our day seek to dispense with the gold standard. Every
plan proposed, every idea suggested is but the repetition of plans
and ideas proposed in the American colonies, in Great Britain, in
China, and by George Law. Their schemes have been tried and exploded over and over again for four thousand years, and yet gold and
silver now measure ever article of property and will measure the
daily fluctuations of the contrivances they invent.
POWERS CONFERRED BY ACT OF 1875.
And now, sir, let us turn from the main question and briefly examine the third question: Are the agencies an'd measures prescribed
by the act of 1875 sufficient for the purpose?
I need not remind this Senate and Senators around me how reluctantly I came to the support of this bill, because it does not contain
provisions that for years I have struggled to secure. Still, sir, I feel
bound to say that it contains ample agencies and powers to carry it
into a full execution without the addition of a single provision by Congress. The first section of the bill is limitedto the redemption of fractional currency. This, as I have shown, can now be fully executed,
and the only criticism is that it has not been sooner executed. Not
only can the notes be redeemed in silver without loss, but the actual
cost of coining the silver, strange as it may seem, is less than the
printing of the fractional currency.
COST OF SILVER COIN AND FRACTIONAL CURRENCY.
The cost of coining subsidiary silver coinage is shown by the Director of the Mint to be from 1~ to 2 per cent., and with the mints
running to their full capacity it is much less.
The actual profits of seignorage will not only pay this cost, but
more than the interest on the bonds we may sell to procure the bullion.
On the other hand, the cost of the fractional currency is 3- per cent.
of the amount issued; or, to be exact, the expense of preparing and
redeeming the fractional currency for the year 1875 was $1,410,746.95.
The amount issued was $40,365,145. And what is worse, the average
life of these notes is less than one year, so that this expense is an annual one almost equal to the interest on the whole sum. Thus the
stopping of the issue of fractional currency will save us $1,400,000.
The silver coin pays a debt when issued, while the fractional currency only renews it, and it must be replaced by another note within
a year. Sir, the wisdom of this provision is now so demonstrated
that a committee of the House unanimously refuse to print the currency and demand the issue of the silver coin, while two months ago
the scheme was pronounced visionary, impracticable, a sham. We
are now at a specie basis for our fractional currency; and yet when
the law passed we were told it would be hoarded, bought up by
money-changers, exported. We are now told "Nobody wants the silver; they prefer the fractional notes." So it is and so it will be




23
when we approach the gold standard. Nobody will want to give up
the United States notes for gold as soon as the note will buy as much
as gold.
But it is said we can only buy the silver bullion by issuing bonds.
That is true now, because our surplus revenue is not large; but how
will the United States ever pay its notes at a cheaper rate. One million of dollars of 5 per cent. bonds will to-day buy sufficient silver bullion to make $1,200,000 in subsidiary silver coin. When and how can
this operation of paying our debts be better commenced, unless we
mean to postpone payment indefinitely. It has been said that the 5
per cent. bonds authorized have been exhausted. Not so. The law
is plain and express, and was so designed and intended, to authorize
the Secretary of the Treasury not only to use any surplus revenue,
but " to issue, sell, arid dispose of at not less than par in coin either
of the descriptions of bonds of the United States described in the act"
for refunding the public debt. The refunding act is only referred to
for the " description" of the bonds authorized. But to make this construction more clear, it is provided " that all provisions of law inconsistent with this act are hereby repealed." Thus, not only the public
faith but all the surplus revenue and the public credit, as represented
by either of three kinds of bonds, to wit, those bearing 4, 4~, and 5 per
cent. interest in gold, is granted to the Secretary to enable him to execute this trust. The only limit in amount is the amount that will
enable him to execute the law. The only limit of price at which he
can sell the bonds, is " not less than par in coin."
The second section is only material as it tends to induce the coining of gold by repealing the mint charge.
So much of the third section as relates to national banks is not
material except as it provides a way by which circulating notes may
be issued; but if issued it will be with full knowledge that in due
time they must be redeemed in coin at the pleasure of the holder.
Then comes the provision-the vital provision-of the law: "And
on and after the 1st day of January, A. D. 1879, the Secretary of the
Treasury shall redeem in coin the United States legal-tender notes
then outstanding on their presentation for redemption." Then follows the ample power already quoted: "And to enable the Secretary
of the Treasury to prepare and provide for the redemption in this
act authorized or required, he is authorized to use any surplus revenue 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 bonds already referred to. Such are the duties enjoined, and
such are the powers conferred.
Sir, in this respect, both the powers and duties of this act are
clearer and stronger than in the acts under which Great Britain resumed and France is now resuming. Who can doubt that with or
without further legislation the work can be accomplished by a Secretary who will obey and execute the law? The power to " prepare"
for resumption is a broad discretion that commences with the passage
of the act and continues during every hour and day of its existence,
but is one to be exercised with exceeding caution and moderation.
AUXILIARY LEGISLATION.
But, sir, this is not all. When Congress passes an act imposing a
duty upon a public officer, it implies an obligation that it will furnish all the aid and auxiliary legislation necessary to carry it into
execution. The extent and nature of this is within the discretion of
Congress, but when the power conferred upon him is ample, and the
duty imposed is clear, he must act even though Congress neglect its
duty to support him by auxiliary legislation.




24
And this brings me to the last proposition I propose to discuss, and
that isWhat additional legislation ought Congress now to adopt in aid of
the law?
The Secretary of the Treasury recommends first that the legal-tender quality of the United States note be taken from it before 1879.
I cannot agree to this, for the United States note is as much a contract to pay money as a bond, and we cannot take from that note
any quality that gives it value until we are prepared to redeem it
in coin. The proposition is too much like the act of March, 1863,
already referred to, which stripped the note of its quality of convertibility into bonds.
His second recommendation isThat authority be given for funding legal-tender notes into bonds bearing a low
rate of interes. * * * It seems probable that a bond bearing interest at the
rate of 4 per cent. would invite the funding of a sufficient amount of legal-tender
notes to lessen materially the sum of gold which, in the absence of such provision,
must be accumulated in the Treasury by the 1st of January, 1879, to carry out the
imperative requirements of the act of January 14, 1875. If it be apprehended that
authority to the Secretary to fund an unlimited amount of notes might lead to too
sudden contraction of the currency, Congress could limit the amount to be funded
in any given period of time. The process being in no sense compulsory as to the
holders of United States notes, and the rate of interest on the bonds being made
low, it is not probable that currency which could find profitable employment would
be presented for redemption in such bonds. Only the excess of notes above the
needs of business would seek such conversion. Authority to the Secretary of the
Treasury to redeem and cancel two million of legal-tender notes per month bythis
process would greatly facilitate redemption at the time now fixed by law, and besides would have the advantage of publicity as to the exact amount to be withdrawn in any given month. Bonds issued for this purpose should be of the denomination of fifty and one hundred dollars, and any multiple thereof, in order to meet
the convenience of all classes of holders of United States notes.
The President in his annual message recommendsThat the Secretary of the Treasury be authorized to redeem, say, not to exceed
$2,000,000 monthly of legal-tender notes, by issuing in their stead a long bond, bearing interest at the rate of 3.65 per cent. per annum, of denominations ranging from
$50 to $1,000 each. This would in time reduce the legal-tender notes to a volume
that could be kept afloat without demanding redemption in large sums suddenly.
Third. That additional power be given to the Secretary of the Treasury to
accumulate gold for final redemption, either by increasing revenue, curtailing expenses, or both-it is preferable to do both; and I recommend that reduction of
expenditures be made wherever it can be done without impairing Government obligations or crippling the due execution thereof.
These recommendations substantially concurring are wise and
would be efficient, and to secure them ample means are provided by
the application of the sinking fund for two or three years without
additional taxation. Indeed it is neither wise or prudent to apply
the sinking fund to the purchase of bonds not due, at a high premium,
when it may be applied according to the act creating it to the purchase of notes already dire.
The honorable Senator from Vermont [Mr. MORRILL] has introduced a bill, and a number of other bills and propositions have been
referred to the Committee on Finance; and the elaborate resolutions
of the Chamber of Commere of New York are now before us.
I will not anticipate the provisions of these various propositions,
except so far as to say that I will cheerfully support any measure of
wise economy proposed to strengthen the public Treasury; that I will
cheerfully vote for a moderate tax on tea and coffee, because this will
increase our revenue without adding to the cost of the articles, and
be the means of enabling us to repeal other taxes that are both a burden and an inconvenience, and will also strengthen the Treasury;




25
that I will gladly vote for the voluntary conversion of a limited
amount of United States notes into bonds, as each of those measures
will tend to " prepare" us for a specie standard. But, sir, each of
these measures, and others that may be proper, are not, in my judgment, indispensable to the full and complete execution of the law of
1875 on or before the 1st day of January, 1879.
Indeed it may well be questioned whether all of them may not be
properly postponed until the next session, when the deliberate judgment of Congress, guided by the sense of the people, can be rendered.
I will gladly vote for them now, but we have acted together thus far
and I will not unduly press upon my associates measures they do not
fully approve.
Sir, I have a confident belief that if Congress will now hold fast
to the law as it stands, the drift of events and the practical operation
of the law will not only vindicate its wisdom, but will secure in due
time every proper auxiliary legislation to carry it into full execution.
The duty of the hour demands firmness and faith. There are times
in the lives of nations and individuals when the temptation is strong
to turn from the path of honor, to shrink from and evade the performance of obligations. Then it is more than ever that the old
adage should be remembered that "honesty is the best policy." For
one I feel that my course is as clear as the sunlight of heaven; and
I trust that the great party to which I belong may now, as in sterner
times and under greater difficulties, stand fast to the national honor
pledged by it in the act of 1875; and when the difficulties inseparable from a great duty have passed away, we will be as proud of our
position now as we are of the firmness and faith with which we prosecuted a great war, and secured to the people of our day and of future
generations the blessings of national union and universal liberty.
I move that the memorial of the New York Chamber of Commerce
be referred to the Committee on Finance.
The motion was agreed to.
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