A C 
 

 
 
 THE 
 
 Unmeasured Importance 
 
 UNFLUCTUATING 
 
 National Currency, j 
 
 OVER WHICH 
 
 The Government has Entire Control. 
 
 PETER COOPER. 
 
 
 Uarfc: ^ 
 
 Mercantile Journal Print, No. 850 Pearl Street. 
 
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The following pages, republished from The New York Herald, and The 
 New York Mercantile Journal, contain the account of an interview 
 in which my views upon Currency and the National Finances were drawn 
 out at considerable length. The writer, I believe, has fairly represented what I 
 said ; and the measures proposed, seem to me of vast importance to the American 
 people. If a policy like that indicated is adopted, I believe the Country may 
 look for a permanent prosperity hitherto unknown; otherwise, I see nothing 
 before us but a continuance of periodic panics and disaster. 
 
AN INTERVIEW WITH MR. PETER COOPER ON THE 
 CURRENCY. 
 
 [The following, stripped of preliminaries, is the interview on the subject of 
 Currency, as published in The New York Mercantile Journal, to which 
 reference is made upon the preceding page:] 
 
 Reporter. —Mr. Cooper,what do you 
 think of the late letter of Mr. Reverdy 
 Johnson on the subject of the currency? 
 
 Mr. Cooper. —1 think that Mr. John¬ 
 son has there given some very whole¬ 
 some truths, and for a man of his in¬ 
 telligence, he has made some remarkable 
 mistakes. He says truly that “the 
 question of currency is now the most 
 important one before the country. It 
 rises, or should rise, far above mere 
 party contests.” 
 
 He adds, with great propriety, that 
 “ the subject of currency affects the per¬ 
 manent welfare of every citizen—the 
 prosperity of the country, and the re¬ 
 putation of the Government.” 
 
 He then adds that “it must be obvi¬ 
 ous to every reflecting mind that a 
 currency ought to be as far removed 
 from fluctuations of value as possible.” 
 
 I believe that Mr. Johnson is unques¬ 
 tionably right in saying that, “with a 
 currency, subject at times to deprecia¬ 
 tion and at times to appreciation, the 
 consequences can but be injurious ; and 
 the extent of injury will be in propor¬ 
 tion to the changes of value.’’ 
 
 Mr. Johnson then states what, I be¬ 
 lieve to be an entire mistake, that “ the 
 experience of the world has long since 
 demonstrated that gold and silver, 
 alone, constitute a safe currency.” 
 
 He further says that “ the same ex¬ 
 perience teaches us that no na¬ 
 tion can prosper which adopts a cur¬ 
 rency not convertible on demand into 
 gold and silver.” 
 
 So far from this last statement being 
 correct, I find that the greatest pros¬ 
 perity known in the history of England 
 
 took place during the 26 years when 
 the Bank of England was unable to 
 pay specie on demand. I believe 
 the history of the world docs not show 
 a single bank that has operated through 
 a long course of years, promising to 
 pay specie on demand, that has not 
 failed to make good that promise on 
 several occasions. 
 
 Mr. Johnson “ proposes to consider 
 the whole subject from two points.” 
 
 First, “ What should a currency 
 be ?” 
 
 Secondly, “ What control has the 
 Government over it ?” 
 
 I will answer, as to what a currency 
 should be, in the language of Plato, 
 who says that a “ currency should be 
 that which is most valuable to the 
 State, and of no value to any other 
 country.” 
 
 As to what control the Government 
 has over money, this will find its best 
 answer in the language of the Consti¬ 
 tution, where it says that “ Congress 
 
 SHALL HAVE POWER TO LAY AND COLLECT 
 
 taxes,” —“ to borrow money, to regu¬ 
 late commerce,”—“ to coin money and 
 regulate the value thereof,” a most im¬ 
 portant function, and “ to make all 
 laws which are 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.” These are neces¬ 
 sary to “establish justice and promote 
 the welfare of the nation.” 
 
 Rep. But what are your views, Mr. 
 Cooper, on this question of currency 
 in relation to the Government at the 
 present time ? 
 
4 
 
 Mr. Cooper. 1 think the currency 
 question has been managed by the 
 Government very much in the in¬ 
 terests of the moneyed classes, and very 
 poorly in the interests of the people. 
 Let us look at some of the facts. 
 
 In the year i860, a civil war broke 
 out in this country which threatened 
 the integrity and life of this nation. 
 At this time, the expenses of Govern¬ 
 ment increased very largely over its 
 current expenses in time of peace. 
 
 In fact, it became necessary for 
 Government to borrow money and 
 place a large debt on the shoulders of 
 posterity, in order to transmit unim¬ 
 paired the priceless boon of free institu¬ 
 tions, and a powerful and self-protect¬ 
 ing Republic of States. Now, a nation 
 is not like a private individual, who, 
 if he wants money, must go and bor¬ 
 row it of some one else because he 
 has no resource of his own from which 
 money can come, but only some 
 security which he may give that the 
 money will be returned. A nation has, 
 always, indefinite resources on which 
 to draw, and yet can give no legal 
 security for the payment of its obliga¬ 
 tions. Money itself is a creature of 
 law, and the sovereign prerogative 
 of the State. The Government can 
 make anything a legal tender, and it is 
 only a question of expediency what it 
 shall make. But it can give no legal 
 security for payment of its debts, be¬ 
 cause a sovereign State cannot be sued, 
 nor can you replevin on its property, 
 except by war. To be sure, a nation 
 may borrow as a private individual from 
 another, or from a corporation; but in 
 doing so,it puts itself in a false position, 
 and makes itself subject to the lender, 
 as is any other debtor, to the extent of 
 his debt—except that the creditor has 
 no other resource for collection but to 
 
 TAKE ENTIRE CONTROL OF THAT GOVERN¬ 
 MENT, as respects its financial policy. 
 Therefore, the people and their inter¬ 
 ests may be shoved aside, for they be¬ 
 come antagonistic to the class who are 
 the creditors, who naturally desire to 
 make their loans at the least cost and 
 the highest interest. But if the people 
 themselves in their solid interests and 
 
 unity, as represented by a Republican 
 Government, were both the debtors 
 and creditors of all the public debt, 
 then there would be no antagonism 
 between the debtors and creditors. 
 
 Rep. But do you mean to say, Mr. 
 Cooper,that a Government has no need, 
 and should never borrow from indi¬ 
 viduals and corporations ? 
 
 Mr. C. I think that a republic like 
 ours, with its forty millions, with 
 its enormous extent of unoccupied land, 
 its wonderful resources, and its enter¬ 
 prising people—equally marvelous for 
 their growth and the increase of their 
 wealth within the century—has no 
 need to borrow from anybody. Why 
 should this people borrow, as a 
 private debtor? If, in their sovereign 
 capacity through the Government and 
 under constitutional and legal forms, 
 they can lay under contribution the 
 whole property, and the services of 
 every man, in protecting the lives and 
 property of all, they certainly can is¬ 
 sue tokens of this undoubted fact, in 
 the shape of legal tenders; and these 
 become, by this act of sovereignty, the 
 money of the country, the measure and 
 the means of exchanges. The people 
 who give them, in their sovereign capa¬ 
 city, must take them in their private 
 capacity, and again receive them in their 
 sovereign capacity as the Government, 
 for taxes. This makes their circulation 
 and their use. But the significance ot 
 these paper “ legal tenders” is that, they 
 are tokens of so much service or ma¬ 
 terial rendered to the Government; 
 and they are also promises to render an 
 equal amount of money, service, or 
 useful material in exchange, to the 
 holder, by the Government. 
 
 Now the Government keeps this 
 promise in three ways. First, by ac¬ 
 cepting these paper promises, as they 
 may be called, for all taxes and dues to 
 the Government. Secondly, by com¬ 
 pelling every individual to accept them 
 in payment of all debts. And finally, 
 by redeeming them in that which the 
 holder of the currency shall accept as 
 equivalent value, thus distributing 
 burdens and benefits over the whole 
 country. 
 
Rep. But this is only compelling in¬ 
 dividuals to accept one token of debt 
 for another. How is the public debt 
 to be paid at last, and how shall we 
 get out of this vortex of promises 
 to pay ? 
 
 Mr. C. In one sense, there is no 
 need to get out of this vortex. The 
 planets move in a vortex ; the 
 whole of society, and the universe, as 
 far as we see it, move in vortices. 
 This is the grand law of motion and 
 circulation. But circulation also signi¬ 
 fies growth, and ministers to it. 
 Parts of every circulating medium set¬ 
 tle down to something solid, which 
 makes a part of the organism, and 
 keeps up its integrity, and adds to its 
 growth. The circulating medium of 
 money settles down, at last, into some¬ 
 thing solid in interest and property, 
 under the same law of conversion that 
 makes each drop of blood contribute 
 to bone, muscle, or other organ of the 
 body. For instance. New York City 
 is building a great series of piers and 
 wharves, for the accommodation of its 
 present and future commerce and trade. 
 It is demonstrable that these piers 
 and wharves will pay in rents to the city, 
 not only the interest but the principal 
 of all the money invested, in twenty 
 years. The city issues its bonds for 
 this work, which represent a certain 
 amount of interest and principal. But 
 the city, not having the right to issue 
 money, offers its bonds for sale to the 
 banks, or to private individuals, which 
 are henceforth alienated from the pos¬ 
 session of the city, in order to get 
 the money or currency to pay for labor 
 and material in this public work. You 
 might ask, why should not the city 
 keep these bonds in its own safes, and 
 issue the money for current expenses 
 on its own-authority and credit? I 
 answer: Because that would be an act 
 of too great a local sovereignty—though 
 it is no more than is now virtually con¬ 
 ceded to local banks. Let the general 
 Government, then, in its sovereignty, 
 make such a currency, so based and 
 secured, a legal tender. Then, when 
 this work is done, and begins to pay to 
 the city rents, let the income be ap¬ 
 
 plied to the extinguishment of the 
 bonds, as well as keeping it in repair. 
 This is what I mean by settling down 
 a circulating medium or currency into 
 solid material, and capita), organized 
 into permanent use. 
 
 This makes a circulating medium 
 always expanding and always contract¬ 
 ing into a solid form. The true design 
 and highest function of currency and 
 credit are to encourage and stimulate in¬ 
 dustry and enterprise in useful forms, 
 and to promote the work by giving the 
 very tools with which it can be done. 
 It represents the material value of the 
 products of labor in process, and not 
 yet complete; for which it provides 
 merely the current wages or support, 
 till the fruit of labor comes to maturity, 
 when that pays for all. 
 
 Reporter —Mr. Cooper, what is 
 your opinion of the present Banking 
 system ? 
 
 Mr. Cooper —Financial institutions 
 are very useful, and will always be nec¬ 
 essary to carry on the commerce, trade, 
 and industries of the country. They 
 concentrate capital in financial centers, 
 from which it is again distributed all 
 over the country where it is most want¬ 
 ed. I regard a banking system pro¬ 
 perly confined to the collecting and 
 loaning out of the real capital, in aid of 
 all useful enterprises, as a national bless¬ 
 ing. But, incidentally, banks do a 
 great deal of mischief by doing business, 
 in part, on a bad system and on false 
 assumptions. They often confound the 
 distinction between credit and capital, 
 and do business on credit without capi¬ 
 tal. Credit must be distinguished from 
 capital. Credit cannot be borrowed or 
 lent; it can only be given , or exercised 
 by one mind toward another. Capital 
 is borrowed and lent, for it can be pass¬ 
 ed from hand to hand. The one is very 
 necessary to the other; for capital sup¬ 
 ports credit, and credit sets capital to 
 work in multiplying capital; thus pre¬ 
 venting the latter from waste and loss 
 of it. Credit and capital, therefore, 
 naturally imply each other, and are nec¬ 
 essary to a mutual existence. It is 
 death or disaster to both to separate 
 them, Financial troubles may come 
 
6 
 
 from the want of capital, or credit, or 
 both. 
 
 Rep. But how do you account for 
 our present financial troubles ? 
 
 Mr. C. Our present financial trou¬ 
 bles, doubtless, began in the want of 
 sufficient capital, at command, to carry 
 on certain great and small enterprises to 
 a successful issues, in which the parties 
 asked more credit than there was capi¬ 
 tal to back it. But when these parties 
 failed, it gave a shock to credit; this 
 paralysed the active use of capital and 
 withdrew it still more from the support 
 of credit, until a “panic” came. For 
 people did not know where or when 
 this trouble would stop. Like a crowd 
 in a public building, the rush for escape, 
 when there is an alarm given bears no 
 proportion to the danger; but it soon 
 substitutes a far worse source ofdestruc- 
 tion and suffering in the “panic.” And, 
 as in this case, the trouble is soon reliev¬ 
 ed by opening wide the doors of egress, 
 so, in financial panics and troubles, the 
 true remedy is expansion of credits and 
 capital, and not contraction. 
 
 Rep. But what have the banks to do 
 with all this ? 
 
 Mr. C. I have not, as yet, mention¬ 
 ed the chief source of our financial trou¬ 
 bles and panics ; it is the false system 
 which our financial institutions mix up 
 with what is true in them. They rest 
 much business on a “false bottom,” 
 which may drop out at any time. They 
 lend their credit without sufficient cap¬ 
 ital to back it, and call it “lending cap¬ 
 ital.” The old system of banks which 
 some are now anxious to renew, lent 
 out three and five dollars in paper to 
 one of gold kept for redemption. Their 
 capital was to the credit they assumed 
 as one to three, five or more ; conse¬ 
 quently, when the capital promised by 
 the paper was called for, as, sooner or 
 later, it must be, so much of the credit 
 came to naught, involving loss to the 
 banks, not of their capital but of their 
 sham credits. But these “sham credits” 
 meahwhile had transferred a great deal 
 of real property from the hands to which 
 the property belonged to those who 
 held the temporary credit. This injus¬ 
 tice and wrong comes to the surface, at 
 
 short intervals, in the shape of “panics” 
 and financial distress. The present sys- 
 of banks, although not doing business 
 on a specie basis, yet introduces a “false 
 bottom” to business in another way; 
 they do a large amount of business on 
 their depositors’ capital. If the “de¬ 
 posits” are called for faster than the 
 bank can return them, the bank fails in 
 its credit, but loses comparatively little. 
 The loss of real capital falls chiefly on 
 the trusting “depositors.” This system 
 goes smoothly, transferring property 
 and facilitating trade till the capital im¬ 
 plied by the credit is needed in substan¬ 
 tial form. The promise can no longer 
 be put off; the payment is required; 
 then the false props are all taken away, 
 and financial ruin is the result; credit 
 given to brains, muscle, industry, and 
 enterprise is one thing, and credit given 
 to actual products and estates is another; 
 but still, credit based on either is a real 
 credit, because brain-work and enter¬ 
 prise are just as real as the material pro¬ 
 ducts to which they give existence. But 
 credit based on mere assumption or 
 supposition of capital, is not property 
 based. It is a bogus credit, that looks 
 like the real thing, but sooner or later 
 fails entirely. 
 
 If the Government does not require 
 the banks to redeem their notes either 
 in gold or in bonds, or if it allows them 
 to coin their deposits, it gives them the 
 privilege of giving others the use simply 
 of the bank’s credit, far beyond their 
 capital. The banks have done too 
 much of that business already. 
 
 Rep. What, then, would be your 
 remedy for this false system of banking? 
 
 Mr. C. The true remedy for all 
 these financial shams and pretences that 
 transfer the property of the real owners 
 to those who are mere financial agents, 
 is to permit the banks to do business 
 only on real money or legal tender, in¬ 
 terconvertible with bonds. This will 
 convert all money into a safety fund, 
 and make it unnecessary for banks to 
 loan their deposits, which they can al¬ 
 ways fund in government securities, and 
 have them again “on call.” But this 
 system will expand the real credits 
 which the banks can give, based all on 
 
real capital, and make such credits equal 
 to the wants of a new and expanding 
 country like ours, with institutions that 
 stimulate the industries, the enterprises 
 and the powers of this people, beyond 
 anything that history can yet show of 
 any people. 
 
 Some people mistake altogether, or 
 put a false construction on transactions 
 called credit, whieh ate not so, strictly. 
 For instance, if you go to a bank or a 
 broker, and give your bonds, stocks or 
 securities in mortgages or any other 
 shape, and borrow a certain amount on 
 the same, that is not strictly giving and 
 receiving credit; it is simply a sale of 
 property, with an if. For if you fail 
 to pay on a certain day, there will 
 be transference of property, but no 
 credit lost. In fact, the man borrows 
 the use of credit in the shape of money, 
 but makes it good on his own property. 
 Therefore the borrower himself gives 
 the only foundation there is to that 
 credit. But if the man is about to im¬ 
 prove a farm, or build a factory, and 
 borrows money to buy material or em¬ 
 ploy labor, which money can only be 
 returned if he succeeds in his enterprise, 
 and produces a piece of property on the 
 strength of that credit, which may re¬ 
 turn all that has been invested in it, 
 that is real credit. That money 
 represents the credit or faith given to 
 an enterprise and a work in progress, 
 which may result in some valuable pro¬ 
 perty ; but if it does not, the credit is 
 lost, and both borrower and credi¬ 
 tor are sufferers by the failure. 
 There is, certainly, a difference be¬ 
 tween borrowing money on the security 
 of a tangible property, eqnivalent to 
 the sum borrowed, and borrowing 
 money on the faith of the powers, in¬ 
 telligence, and capacity for work which 
 will create a piece of property if given 
 the credit and opportunity which the 
 money furnishes. This last is the only 
 credit that the poor need, or can ask. 
 But it is essential in the world, and 
 there ought to be no limit to such 
 credit, except what is sufficient to set 
 every man and woman to some useful 
 work. 
 
 This makes credit in finance, like 
 
 faith in religion, “ the evidence of 
 things unseen and the substance of 
 things hoped for.” This process is 
 going on every day, for there can be 
 no growth or development in society 
 without it. But now governments, 
 general and local, mix up their own 
 credit, or seek altogether to sustain the 
 public, on private credit. The sove¬ 
 reign authority of making this circu¬ 
 lating medium of money, which ought 
 to be backed by the highest, the most 
 permanent and reliable ability to pay, 
 is thought safer, by many, when the 
 weight of responsibility is put upon 
 private shoulders or those of corpora¬ 
 tions, than when it is resting upon the 
 broad and secure basis of a nation 
 organized under republican institutions, 
 “ by the people and for the people,” 
 and pledging its wealth and honor as 
 a nation for the redemption of all debts 
 incurred for the public weal. 
 
 This enslaves a people, through the 
 very machinery of free institutions 
 and republican forms, to the will, the 
 caprice, or the greed ot particular 
 classes or individuals that control 
 money. The government should never 
 be a borrower, except of such labor 
 and material as is necessary to the pub¬ 
 lic service. This it must acknowledge 
 by tokens of its own creation and 
 stamp, and pay at maturity, by means 
 of taxes on property which this very 
 credit has brought into existence, and, 
 as it were, solidified into a permanent 
 source of income, such as a great 
 public work, or any form of fixed cap¬ 
 ital, or, still more, a nation s life and 
 prosperity. What 1 said New York 
 was doing, and might do with re¬ 
 gard to her public works, could be done 
 by the Government on a far grander 
 scale. 
 
 The Government, during the pro¬ 
 gress of this war of the rebellion, felt 
 obliged to employ more service and 
 material in the struggle for existence 
 with a powerful foe than it could pay 
 from any immediate resources. It 
 felt obliged to borrow this material and 
 service on credit. It issued its bonds; 
 but the government went begging, as 
 New York docs, to private individuals 
 
and to corporations to furnish another 
 credit, called money, for the purpose of 
 paying current expenses. The limited 
 amount of this latter credit which was 
 at the service of the government, made j 
 the bonds sell at great discount on 
 their face. 
 
 Gold was sought for, when there 
 was not enough of this product of labor 
 within reach to represent a tithe of the 
 credit sought by the Government. Now, 
 if the government could issue one form 
 of credit, why go begging for another ? 
 
 This occurred at last to some of 
 those in authority, and paper money 
 tokens were issued. [See Appendix, 
 Note A.] Under a patriotic impulse 
 and faith in this nation and its 
 resources, some of these were made re¬ 
 ceivable for all dues of the government, 
 and others made convertible into 5.20 
 bonds at par—at the will of the holder. 
 This made and kept the currency near¬ 
 ly at par with gold, even in the dark 
 days of civil war. But this was found 
 to be far safer than any private or cor¬ 
 poration tokens of indebtedness ; and 
 threatened to supersede all other tokens 
 of indebtedness as a currency. Thus 
 the great power and moneyed advantage 
 which the making of such tokens, and 
 the passing of them into circulation, 
 gave to private corporations would be 
 destroyed. Those who had personal 
 interests involved took the alarm ; they 
 regarded their “ vested rights” in¬ 
 fringed upon, and they had influence 
 enough with the then existing Admin¬ 
 istration and Congress to have that 
 law repealed. They represented that 
 gold would be drained from the coun¬ 
 try, and our purchasing power abroad 
 reduced to nothing. 
 
 “ How should we get our silks, our 
 wines, and our cigars?” The importers, 
 brokers, and money changers of all 
 kinds, as well as the speculators in gold, 
 would find their occupation gone ! It 
 was in vain to tell these alarmists that 
 gold was one of the many products of 
 industry, and those who needed it 
 must buy it at the market price, which 
 no legislation could control, though it 
 might falsify and interfere with the 
 natural price of gold for a time. That 
 
 it was of small importance to the peo- 
 ' pie at large, how much gold, measured 
 as a commodity, a legal tender would 
 buy, but of much greater importance 
 how much bread could be got for the 
 same money. If paper is made a legal 
 tender under the same advantages as 
 gold, that is, that it should always re¬ 
 present a real and exchangeable value 
 in interest bearing property, and receiv¬ 
 able for all debts, public and private, 
 the paper would then be on a par with 
 gold as money. No! these parties 
 understood, as they thought, their own 
 interests, and under specious but 
 false pretences and arguments induced 
 Congress to repeal the law that made 
 the currency of the United States re¬ 
 ceivable for all dues to the Govern¬ 
 ment, and also the law making legal 
 tender notes fundable into government 
 securities at par. The repeal of the 
 law permitting holders of legal tenders 
 to convert them at their option into in¬ 
 terest bearing bonds, was the most 
 cruel act of injustice that was ever in¬ 
 flicted on the American people. From 
 thence have come most of the financial 
 troubles and disasters of which so much 
 complaint is made at the present time. 
 Our bonds were rushed abroad, to be 
 exchanged for luxuries and for gold at 
 sixty cents on the dollar, instead of be¬ 
 ing taken by our osvn people at par. 
 
 M illions of gold goes abroad to pay 
 interest to foreign bondholders, instead 
 of being paid to our own people. 
 
 A policy of rapid contraction was 
 then inspired into the government; 
 when, (he necessities of the war being 
 over, further issues of bonds were 
 made and currency was withdrawn, 
 and all credits began to contract, as a 
 natural and inevitable consequence. 
 This brought on one of those irrational 
 conditions in human affairs which we 
 call a “ panic,” that brought down 
 credit at once to the zero point, and 
 shrunk the value of all property. 
 
 IIep. But, Mr. Cooper, do you not 
 think that personal extravagance, rash 
 speculations, and over-production gene¬ 
 rally, have much to do with the pre¬ 
 sent financial embarrassments ? 
 
 Mi-. C. In a restricted sense, all 
 
these causes lie at the basis of much 
 financial embarrassment. But all of 
 them put together, will not account for 
 the fact that there aie over two mil¬ 
 lions of workmen, operatives and em¬ 
 ployees, out of work at this time in 
 this country, or on short allowance of 
 work, who three years ago had ample 
 employment. Speculations ruin a few 
 in financial centers and cause merely a 
 change of ownership in property, and 
 the loss of credit to those engaged in 
 such speculations. Personal extrava¬ 
 gance is chiefly confined to a few rich 
 men, for most people care not or are 
 unable to indulge beyond their means. 
 
 Over-production and undue importa¬ 
 tions seem to he the most plausible of 
 the reasons offered for the present 
 financial embarrassments; because, 
 when goods accumulate in merchants’ 
 hands, and products multiply in the 
 factories, the mines,and farms, without 
 a corresponding demand and consump¬ 
 tion, the most obvious cause or expla¬ 
 nation is.that there has been too much 
 production and importation. But have 
 these been too much for the demand 
 and consumption previously existing, or 
 subsequently ? The true law of supply, 
 and the stimulus and the reason for 
 production, is demand; this comes 
 first, and the former comes last in the 
 order of nature. There might be a 
 production that overtakes and passes 
 an existing consumption in particular 
 cases; but it is well also to examine, 
 in a general way, whether any 
 cause has paralyzed consumption. 
 Now, it has been seen that the sys¬ 
 tematic and constant contraction of 
 Government credits naturally induced 
 the contraction of all other credits;. 
 this finally brought on a panic that 
 acted like a paralysis on all credit ; 
 this led inevitably to the stoppage of so 
 much active industry and work as to 
 take away the purchasing power of a 
 great many, and to stop a large part of 
 the previously existing consumption 
 and demand. Hence, the over-produc¬ 
 tion (so-called) has been merely an ac¬ 
 cumulation of products, due to under¬ 
 consumption. The proof of this lies 
 in the fact, as I have said, of so many 
 
 industrious people being thrown out 
 of work, and in the statistics of the 
 country, with regard to its exportations 
 and importations the last few years. 
 In this connection the opinion of Presi¬ 
 dent Grant, as expressed in his annual 
 message of 1873, is important. (See 
 Appendix, Note B.J 
 
 Rep. But how would you have 
 prevented this sad condition of things 
 from coming on ? It appears to me it 
 arose naturally out of the irredeemable 
 nature of the currency. Gold and 
 silver have always been regarded 
 as the currency and money of 
 the world. A man that is in 
 debt naturally desires to get out 
 of it as soon as he can. Why, then, 
 should not a nation exercise economy 
 or “ contraction ” for the same end ? 
 
 Mr. C. Because “ contraction ” in 
 finance is not the same thing as econ¬ 
 omy in private life. “ Contraction ” 
 in the finances of a country means the 
 stoppage of a certain amount of the in¬ 
 dustry and exchanges going on in the 
 nation, by reason of the contraction of 
 the credit by which these are sustained. 
 It means factories stopped, and men 
 thrown out of work, and distress of 
 families for want of the means to buy 
 bread. Now, this is all wrong and 
 it arises out of a false financial system, 
 not adapted to the wants of a people 
 whose wants and powers are all the 
 time expanding, by reason of a natural 
 increase in the population, and by our 
 possession of a new country of unlimit¬ 
 ed natural resources, which yet need 
 to be developed by the expansion, and 
 not the contraction of the credit which 
 capital gives to labor. 
 
 But I grant you there is a contrac¬ 
 tion on the side of debt in the finances 
 of a country which is always desirable. 
 It is in that solidifying process which I 
 have already described, that turns cur¬ 
 rency into fixed capital, as the blood is 
 deposited into bones, flesh and organ¬ 
 ism. The bond, and the currency based 
 on it, must be paid and destroyed as 
 evidence of that debt, as soon as value 
 received for them can be turned into 
 some permanent source of industry and 
 capital, like the stone wharves and 
 
10 
 
 piers of the City of New York. But 
 new credits must ever spring up, which 
 are the incipient condition of new im¬ 
 provements, public and private, and all 
 fixed forms of capital. There must al¬ 
 ways be expansion enough in the cur¬ 
 rency to set all the capacity for useful 
 labor in the country to work. This is 
 the only limit to the expansion of 
 credits. Gold and silver ceased long 
 ago in tire history of the world to serve 
 as an adequate representative of all 
 those exchanges which are going on in 
 the civilized world, and which it is the 
 proper function of money to represent. 
 Coin has long called to its assistance 
 *• paper of credit,” both private and 
 public, not merely to represent coin as 
 money, but to represent other real 
 property, and especially the current 
 daily labor of the world’s industrial 
 classes, whose aggregate wages any 
 day could not be paid by all the coin 
 in the world. France uses gold, sil¬ 
 ver and paper, all as legal tenders, and 
 keeps them all busy to satisfy her in¬ 
 dustrial and financial wants. But 
 France could not get along a single 
 day with the coin alone which is with¬ 
 in its borders, or with paper that mere¬ 
 ly represented coin as currency. This 
 being the fact, as every one ought to 
 know who talks on this subject, it is a 
 most preposterous claim that coin alone 
 can serve as legal tender, or paper al¬ 
 ways convertible into coin. You may 
 adopt the legal fiction that all legal 
 tenders should be convertible into coin 
 at the will of the holder, but you can 
 not carry out this in fact; and the failure 
 to carry it out at any given time, for 
 any cause, may produce a “ panic,” 
 with all its disasters. 
 
 Bep. But what would you have the 
 Government do in reference to its pres¬ 
 ent policy ? 
 
 Mr. (J. The course is plain. Let 
 the Government issue, not only all the 
 legal tenders but all that passes in the 
 shape of money—all should have the 
 • image and superscription” of the 
 Government, whether it be coin or 
 paper. Let the Government start from 
 a fact, that there has been, and is now, 
 through its instrumentality and neces¬ 
 
 sities, so many millions of legal ten¬ 
 ders and bank paper or currency set 
 afloat, which, with the Government 
 Bonds now out, represent so much 
 credit resting on the honor and ability 
 of the Government to pay, but furnish¬ 
 ing also the basis for a great amount 
 of credit in the financial system of the 
 country. On this the country has been 
 depending, and with this it has been at 
 work,in all its industries and trade, since 
 the credit paper came into existence. 
 
 The Government has no right to 
 take away these tools, that have set so 
 much work on foot, from the people. 
 It is not justice. Suppose a man has 
 engaged another in the enterprise of 
 building a house or factory, by promis¬ 
 ing to furnish all the tools, and by giv¬ 
 ing a certain valuation or rent for it 
 when it is finished. Then at a certain 
 stage of the process of erection, the 
 proprietor lakes away a part of the 
 tools necessary to finish the work, and, 
 moreover, diminishes the valuation of 
 both work and material. Would not 
 that be considered a great act of in¬ 
 justice, especially if the builder had no 
 remedy in law against the proprietor? 
 Bow, this is precisely what the Gov¬ 
 ernment has done to the industrial part 
 of this nation, with the additional in¬ 
 justice of compulsion in its dealings 
 with the people who are not the moneyed 
 and the governing class. The Gov¬ 
 ernment, during a time of great ex¬ 
 igency, issued millions of credit paper, 
 on the strength of which the people 
 willingly furnished labor and material 
 to carry on a war of self-preservation 
 against rebellion and disruption. But 
 not only that: the people began to build 
 up the country on the strength of this 
 same credit paper; they set on foot new 
 enterprises, built railroads, factories, 
 and opened new mines and farms on 
 the same credit, and, by the facilities 
 for paying labor and material which 
 this government currency afforded. 
 After the war was over the Govern¬ 
 ment began to contract this currency, 
 and to tax the people, in order to buy 
 its bonds before they were yet due ; 
 which policy contracted credit so much 
 the more ; and it has continued to pur- 
 
11 
 
 sue systematically a policy of contrac¬ 
 tion, for the purpose, as alleged, to re¬ 
 sume specie payments on this currency. 
 The people do not want specie; they 
 want the credits already given them 
 not to be withdrawn ; they want 
 their labor and material freely given to 
 save the country, or to build it up, to 
 be valued by the same standard as that 
 by u hicli it was measured when they 
 began to work. The moneyed class ob¬ 
 viously want scarce money and high 
 rates "of interest. This gives them 
 more power and less expense. But 
 the advantage of the whole people, in¬ 
 cluding this very moneyed class, if their 
 interests were rightly understood, is to 
 have credit easy to the industrious, the 
 honest, and the enterprising, and the 
 interest of money more nearly equitable. 
 
 Rep. What, then, Mr. Cooper, would 
 be your specific remedy for the finan¬ 
 cial troubles which involve the country 
 at present ? What would be the policy 
 you would recommend for the action of 
 Congress ? 
 
 Mr. C. At present Congress has de¬ 
 vised no better plan for the financial 
 policy of the country than this. Con¬ 
 gress has passed a law that specie pay¬ 
 ments for all currency shall be resumed 
 in 1879, and to provide for this it has 
 authorized the Treasurer of the United 
 States to withdraw currency until the 
 present volume shall shrink from four 
 hundred to three hundred, millions ; 
 and he is further authorized to sell 
 bonds at 4 or per cent, interest, to 
 the amount necessary to get the specie 
 wherewith to resume payments. As 
 the 5 per cent, bonds, outstanding, are 
 only at par. now, I think the prospect 
 is very poor for selling the 4 or 4$ per 
 cent, without ruinous discounts and 
 large addition to the debt of the nation. 
 If the banks also are made to do busi¬ 
 ness and issue their notes only on a 
 specie basis, instead of bonds, as now, 
 it will shrink their currency so as to 
 bring another panic. 
 
 But if the banks are allowed to give 
 credits secured by government bonds, 
 why should not the government itself do 
 ihe same ? If it will hurt the banks, and 
 cripple and curtail so much their re¬ 
 sources for giving credit, why is not such 
 
 a policy objectionable as to the credits 
 given by the government? But here is 
 precisely the point of departure of the 
 moneyed class from the people at large. 
 They wish to monopolize not only private, 
 but all public credits. All credits under 
 the sanction and provision of law and the 
 government ought to be public credits, for 
 which the government alone should he 
 held responsible. Such is any paper cur¬ 
 rency now, even if it is not legal tender. 
 Nothing but a legal sanction can pass a 
 bank-note into the circulation of the 
 country. The credit of the bank is in¬ 
 dorsed by the government, in order to he 
 regarded as good. The government, un¬ 
 der the present system, often borrows its 
 own indorsement! But the first point of 
 departure I would have from this whole 
 system of finance is, that everything, gold, 
 silver, or paper, that passes into the cir¬ 
 culation of the country as money should 
 have the government “ image and super¬ 
 scription ” upon it, and should be issued 
 and controlled entirely by the govern¬ 
 ment, so that there shall he no legalized 
 money, directly or indirectly, belonging 
 to private corporations. This is a part of 
 that “special and class legislation” that 
 I have always contended against as the 
 bane of republican institutions. 
 
 Now, I would have Congress repeal this 
 last act of contraction of the people’s 
 credits in the shape of currency, while it 
 is an expansion of credits to the moneyed 
 class, in the shape of Bonds. 
 
 I would have Congress pass an act that 
 should make all currency that of the gov¬ 
 ernment alone ; and, of course, I should 
 abolish the present bank currency, giving 
 these institutions the option of doing busi¬ 
 ness only on legal tenders; these they 
 may secure at any time, by simply giving 
 up to the government an equivalent 
 amount of government bonds, whose in¬ 
 terest thereafter stops until bought up 
 again by legal tenders. This will extin¬ 
 guish the interest-hearing debt of the 
 country in part, by one not hearing in¬ 
 terest. 
 
 Secondly, to start all fairly and justly, 
 I would have Congress pass an act re¬ 
 storing the currency in volume to the 
 condition in which it was at the close of 
 the war, or soon after; when, peace being 
 declared, the whole nation sprang to the 
 arts of peace with the energy of war; 
 when they took these very credits, which 
 the necessities of government had furn¬ 
 ished, as the price of the nation’s life, and 
 began to build up the country still more 
 securely in the wealth and products of 
 “myriad-handed industry;” when their 
 hopes and their faitli were stimulated to 
 new life by this mighty credit poured 
 into the circulation of the country, and 
 all the property of the country and its 
 
12 
 
 products were measured and exchanged 
 by the new standard; when none were 
 found idle except the shiftless and those 
 who sought idleness; when no factory 
 stopped its production for want of con¬ 
 sumers, for ail were consumers, because 
 all were producers. I would have all 
 that currency restored to the country, and 
 not withdrawn or contracted by taxing 
 the property of thecountrv to pay it; but 
 allowed to remain, till it had produced its 
 equivalent by the industry and products 
 which it brought into existence. 
 
 I would have this whole volume of 
 currency made as permanent and invari¬ 
 able a measure of property and exchange 
 as possible, by neither increasing nor 
 diminishing its volume by any arbitrary 
 law; but rather use the agency of gov¬ 
 ernment to keep it at its present stated 
 volume, by issuing it again with one 
 hand for labor, service, and bonds, while 
 it received it with the other as currency. 
 I would have this specific volume of the 
 currency from which we shall now start, 
 henceforth and forever, never diminished 
 at all,and only increased as per capita, very 
 gradually and imperceptibly, as statistics 
 shall show, and a rule of increase founded 
 thereon, as the exchanges and the popu¬ 
 lation of the country increase. And 
 this would be virtually equivalent to 
 making the currency a permanent and 
 unfluctuating standard of values; for it 
 would keep it in the same ratio or relative 
 measure to all the property of the coun¬ 
 try and the increase of its population. 
 I would thus make the stated volume of 
 currency which has been forced upon the 
 country at one time, but which now 
 threatens the most unhappy consequences 
 if it be withdrawn—I would make this 
 one volume an unvarying measure for all 
 time, by giving it an expansion by rule 
 and statistical measure of slow appli¬ 
 cation, and such as would never derange 
 prices or permit fluctuations. I would 
 not increase the bonded debt of the coun¬ 
 try either, except by rule and statistical 
 measure; but I would change its form 
 from the present high rate of interest, 
 and from so large a portion payable in 
 gold to foreigners, into a debt of equitable 
 rate of interest, and payable to our own 
 citizens. 
 
 Rep. But how can this be done without 
 repudiation and dishonor to the country ? 
 
 Mr. C. No vested rights can stand in 
 the face of the public welfare; common 
 and statute law recognizes this principle. 
 Hence, all vested rights can be repealed 
 by the law making power that conferred 
 them. Under this principle, private pro¬ 
 perty can be taken for public use, and all 
 corporate rights can be abolished that 
 stand in the way of the public welfare— 
 but never without proper compensation 
 
 to the parties that may be losers; and of 
 this, the public administration must ap¬ 
 point the means and provide the regu¬ 
 lations. But I propose to change the 
 character of the bonded debt by a volun¬ 
 tary process. 
 
 First. Whoever needs currency must 
 give up the government bonds for it. 
 The compulsion here is in making every 
 one do business and pay debts in legal- 
 tenders; and the principle for their use 
 exclusively is that the public welfare ad¬ 
 mits of no other money. 
 
 Secondly. Whoever desires to fund the 
 currency shall receive bonds at a lower 
 rate of interest than that which legitimate 
 business now gives, but which is higher 
 than the average yearly increase of the 
 whole property of the country. This I 
 would fix upon as the interest of the 
 bonds; it is now' about tbree per cent. 
 
 There is an element of compulsion 
 here; but as the whole country pays the 
 interest on the public debt, it seems but 
 just that only that amount of interest 
 should be paid, which the increase in the 
 public wealth justifies, and no more. 
 
 Rep. But how will you prevent the too 
 rapid funding of the currency, and keep 
 it at a steady volume, as you propose ? 
 
 Mr. C. This “too rapid funding” is, I 
 think, a groundless fear, considering the 
 low rate of interest given. Because, in a 
 country like this, so active, so enterprising, 
 and so full of new resources, the oppor¬ 
 tunities and the solicitation for safe in¬ 
 vestments is far greater than in the old 
 country, and would naturally tend to 
 draw money from funding; so that the 
 calls for currency would be equal, if not 
 superior, to the applications for funding. 
 But as the government controls the whole 
 matter.it can keep an “even hand" by 
 allowing neither the funded debt nor the 
 currency to increase beyond a certain 
 ratio to each other. As the currency 
 was received it might be paid out again 
 for service, material, or bonds; as the 
 bouds were received they could be paid 
 out again for service, material, or cur¬ 
 rency. Thus the whole of the circulation 
 between bonds and currency could be 
 kept even. 
 
 This great bonded debt of the country 
 would really become the refuge and 
 security of the widow and the fatherless, 
 and those poor and ignorant people who 
 cannot invest their little savings in legiti¬ 
 mate business even through others, be¬ 
 cause they cannot trust them, and have 
 no ability to watch the safety or protect 
 the use and return of their money. The 
 public debt would become the poor man’s 
 “savings bank,” instead of being, as now, 
 the exchequer of the rich, and the means 
 of pampering wealth and idleness. Bene¬ 
 volent institutions, churches, and college 
 
13 
 
 endowments would seek it, for the same 
 reason, because of its perfect safety; and 
 even the same funded interests of Europe 
 ■would seek investment in this country 
 for security, and will gladly pay gold for 
 all the bonds they could buy, at a little 
 higher interest than their own countries 
 could afford. 
 
 Rep. But what about the gold all this 
 time, which is now very much mixed up 
 with this question of finance, because it is 
 so universally the legal tender of civilized 
 
 nations ? 
 
 Mr. C. I would have it a part of our 
 legal tender still. France makes gold, 
 silver, and paper all legal tenders ; why 
 cannot we ? But if any one wants gold 
 as a commodity , let him buy it as any 
 other commodity, at the market price. 
 Let such exchange currency or any other 
 commodity for gold, as suits their con¬ 
 venience and the state of the market, 
 which no government can control with¬ 
 out tyranny and interference with private 
 rights. That whole subject will take care 
 of itself, and the whole circulation of the 
 world will naturally mingle and inter¬ 
 change with our national circulation, as 
 the outer air mingles and interchanges 
 with the air of the room, if passages are 
 left free. 
 
 Rep. I understand you, then, Mr. 
 Cooper, that you regard this whole con¬ 
 test about the currency as a conflict be¬ 
 tween the “vested rights” of the whole 
 moneyed class and their interests “but 
 ill understood,” and the rights and inter¬ 
 ests of the whole people; that you regard 
 the whole legislation of Congress on this 
 subject, with little exception, as made in 
 the interests of cla e s, special, and partial 
 legislation, which has been, thus far, the bane 
 of our republican institutions; because, 
 under forms of law it sacrifices the people 
 to classes of special privileges; and 1 
 understand your present remedy for all 
 the present evils, and all the future that 
 are likely to occur from our system of 
 finance, is, that government alone issue 
 all currency and whatever circulates as 
 money, and make this curreney intercon¬ 
 vertible with bonds, which the govern¬ 
 ment can control, and not with gold, 
 which it cannot control; and further that 
 the government start in the present 
 emergency, from precisely that volume of 
 credits in currency and in bonds, that 
 was set afloat by the irresistible neces¬ 
 sities of the war for the Union; that this 
 volume should be sustained substantially 
 as it was soon after the close of the war, 
 when it rose to its maximum; and be 
 made the measure of all values, and the 
 means of exchanges for all coming time— 
 subject only to the slow increase of 
 volume which statistics shall justify as 
 
 the increase of population, and its ratio, 
 per capita, to the currency. 
 
 Mr. C. That is precisely what I pro¬ 
 pose ; and my efforts to bring this sub¬ 
 ject before the public are heartily second¬ 
 ed by many able gentlemen, among 
 whom I may mention Mr. Pliny Freeman, 
 who is continually writing upon the Cur¬ 
 rency. Let me direct your attention to 
 one of his late productions- [See Ap¬ 
 pendix, Note C.] 
 
 Rep. But it appears to me, Mr. Cooper, 
 you place great powder in the hands of 
 the Government by such a policy. It 
 may lead to enormous speculations and 
 peculations on the part of individuals 
 and officials. Politics will become a 
 trade more than ever, because, of their 
 close connection with finance, commerce, 
 and moneyed institutions. Some adminis¬ 
 tration may ride again and again into 
 power, and overthrow finally all the 
 free institutions of the country with a 
 great flood of currency, which it can 
 manufacture in unlimited quantities by a 
 slight change in the laws that Congress 
 may be induced to enact at any time! 
 
 Mr. C. It would require almost a 
 treatise on republican government to 
 answer all your objections, and then you 
 could not be answered if you had no 
 faith in free principles and democratic 
 forms, and in the paternal functions 
 of a government instituted “ by the 
 people and for the people.” The slave¬ 
 holders of our country had to learn 
 this lesson at last, and I do not know any 
 vested rights in property so enormous, 
 or so intelligent and w-ell organized 
 resistance as slavery brought to bear 
 upon the free institutions of this country. 
 And yet the slave-holding portion of this 
 country will find itself the greatest gainer 
 by its losses. They lost in the conflict, 
 chiefly through the might of truth and 
 justice, which will be their great gain. 
 We shall have many conflicts, doubtless, 
 between the people on one side, and 
 moneyed, social, or religious classes 
 organized with certain claims, and even 
 vested rights. But never again so great 
 a conflict as the slave-holders brought 
 about. I think the Union and the Re¬ 
 public may be regarded as safe for a long 
 time to come. The people can and will 
 control this government in their own 
 interests in the future, as well as in the 
 past, precisely in the proportion as they 
 can be made conscious of their power 
 and their rights. The forms of the Con¬ 
 stitution and law's are all favorable to 
 them now, but their understanding is 
 darkened by bad counsels. The govern¬ 
 ment is already, and ought to be in a still 
 larger measure, paternal. It should aim 
 constantly to “establish justice,” and 
 organize love and right into law. If we 
 
14 
 
 can teach the people justice and truth, 
 they will see to it that the “Republic 
 sutlers no detriment.” There is nothing 
 that I can perceive in the policy I advise 
 that will place any uncontrolable power 
 in the bands of any Administration or 
 Congress. If the law will not protect 
 the people’s rights, let provisions of the 
 Constitution be resorted to. Let us have 
 a “civil service” that will make office 
 under government more of a “profes¬ 
 sional” and a regular occupation than of 
 trade and bargain for place and patron¬ 
 age. Let the United States embody in 
 their constitution, as has the State of 
 New York, that there shall be “no 
 special, partial , or class legislation" and 
 make its laws on the currency, conform 
 to this provision of the Constitution. 
 
 The question of the currency is of 
 boundless importance to the American 
 people. The stability of our Govern¬ 
 ment will depend on a wise settlement of 
 this momentous interest. 
 
 The American people will never allow 
 this subject to rest until it is safely 
 moored to that sure foundation of the 
 eternal principles of truth and justice on 
 which our fathers placed the constitution 
 of the these United States. 
 
 Our fathers meant that the Government 
 should be of the people and for the people. 
 They intended to embody the “wisdom 
 of simplicity” into law, and make it a 
 shield of protection for the unsuspecting 
 masses of the people against those that 
 are resorting to all forms of art to obtain 
 property without labor. The framers of 
 the constitution would never have recom¬ 
 mended one kind of money for the issues 
 of the government, and another for the 
 people. 
 
 Under the circumstances in which our 
 Government was placed at the close of 
 our late war, they would have taken the 
 advice of their most venerated member, 
 Benjamin Franklin, who said that 
 “paper money, well founded, has great 
 advantages over gold and silver, being 
 light, aud convenient for handling in 
 large sums, and not likely to be reduced 
 by demand for exportation.” 
 
 “ On the whole,” he says, “ no method 
 has hitherto been found to establish a 
 medium of trade, equal in all its advan¬ 
 tages to bills of credit made a general 
 legal tender.” 
 
 If I have done, or can do anything to 
 restore the tools of trade to the American 
 people, to enable them to work out the 
 salvation of our country from the present 
 paralyzed condition of trade and com¬ 
 merce, I shall regard it as a treasure 
 that “moth and rust cannot corrupt” — 
 one that will brighten while life and 
 thought and immortality endures. 
 
 APPENDIX. 
 
 NOTE A.. 
 
 It was intended at first to have all the 
 notes issued a full legal tender for all dues 
 public and private. 
 
 On the 22d of January, 18G2. Mr. El- 
 bridge G. Spaulding, from the Committee 
 of Ways and Means, reported a bill (II.R. 
 240) to authorize the issue of United States 
 notes and for the redemption or funding 
 thereof, and for the funding of the float¬ 
 ing debt of the United States. The bill 
 reads as follows in regard to these notes 
 paying debts: 
 
 “ And such notes shall be receivable 
 for all debts and demands due to the 
 United States, and for all salaries, debts 
 and demands owingbv theUnitedStates 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.” 
 
 This bill also granted to the holder of 
 said notes the privilege of exchanging 
 said notes for United States o.20, six per 
 cent, interest bearing bonds ; also the 
 privilege of the holder of said bonds to 
 exchange them for United States notes at, 
 anytime. (A full text of the above bill 
 can be found in McPherson’s Hand Book 
 of Politics for 1874, on pages 140-7.) A 
 slight amendment was made by Thadeus 
 Stephens, a part of which read as follows: 
 
 “ And such notes, herein authorized, 
 shall be receivable in payment of all taxes, 
 duties, imports, excises, debts, and de¬ 
 mands of every kind due to the United 
 States, &c. &c., as stated above.” 
 
 Had the bill passed in this form, the 
 financial history of this country would 
 have been widely different from what, it 
 has been. We should have had no deprecia¬ 
 tion of the greenbacks, and the cost of the 
 war would have been hundreds of mil¬ 
 lions less than it was. But those who 
 thought their interests lay in an opposite 
 direction took the alarm and found means 
 to secure an amendment requiring the 
 customs’ dues to be paid in gold in order 
 that the Government might be provided 
 with means to pay gold interest on its 
 bonds. This oiscredited the Government 
 money before it was issued. 
 
 NOTE B. 
 
 After recapitualting the vast amount of 
 contraction that had been made in the 
 currency up to December, 1873, President 
 Grant said : 
 
 “ To increase our exports sufficient cur¬ 
 rency is required to keep all the industries 
 of the country employed. 
 
 “Elasticity to our circulating medium, 
 therefore, and just enough of it to transact 
 the legitimate business of the country, and 
 
15 
 
 to keep all industries employed, is what is 
 boos' desired. 
 
 ‘•The experience of the present panic has 
 proven that the currency of the country, 
 based as it is upon the credit of the country, 
 is the best that has ever been devised. 
 
 “In view of the great actual contraction 
 that has taken place iu the currency, and the 
 comparative contraction continuously going 
 on, due to the increase of population, iucrease 
 of mauufactoiies, and all industries. I do not 
 believe there is too much of it now for the 
 dullest period of the year. 
 
 “During the last four years the currency 
 has been contracted directly by the with¬ 
 drawal of 3 percent, cerii.lcates, compound 
 interest notes ana 7-30 bonds outstanding, on 
 the4th of March, 1869, all of which took the 
 place of leval tenders in the bank reserves to 
 the extent of $63,000,000. 
 
 " During the same period there has been a 
 much larger comparative contraction of the 
 currency. The population of the country 
 has largely increased. More than 25.000 
 miles of railroad have b* en built, requiring 
 the active use of capital to operate them. 
 Millions of acres of land have been opened to 
 cultivation, requiring capital to move the 
 products. Manufactories have multiplied 
 beyond all precedent in the same period of 
 rime, requiring capital weekly for the pay¬ 
 ment of wages and for the pu'cha^e of mate¬ 
 rial; and probably the largrst of all compara¬ 
 tive contraction arises from the organizing ot 
 free labor in the South. Now every laborer 
 there receives his wages, and for want of 
 savings banks the greater part of such wages 
 is carried in th* pocket or hoarded until re¬ 
 quired for us“.” 
 
 On the 1st of July, 18G6, the public 
 debt reached itshighest point, 
 
 standing at.$2,783,425,879 
 
 and on Nov. I, 1875. 2,118.397.212 
 
 showing a reduction, in 9.L-3 
 years, of.. $665,028,667 
 
 Or, an average of 71i million dollars per 
 annum. 
 
 It is computed that on November 1, 
 1875, two-thirds, or $1,412,000,000 of 
 our debt were held in Europe, leaving 
 only one-third, or $706,000,000, held by 
 the United States. The bulk of said debt 
 is in 5-20 bonds (6 p.c. gold, or 7 p c. cur¬ 
 rency). involving the annual outflow of 
 $34,000,000 for interest. Manifestly, we 
 are paying more than double what Eng¬ 
 land pays for her enormous debt, which 
 is funded at 3 per cent., and held at 
 home. Were our debt funded at 3-65 
 per cent, per annum, and drought home, 
 $17,000,000 would be annually saved in 
 interest, whilst the other S17.000,000, 
 being in circulation, would be invaluable 
 in banishing hard times. 
 
 NOTE C. 
 
 FLINT FREEMAN’S STATEMENT OF THE 
 FINANCIAL PROBLEM. 
 
 It is claimed that the Government pa¬ 
 per money, made a full legal tender for all 
 monetary purposes, convertible into in¬ 
 terest-hearing bonds at the option of the 
 holder, said bonds being reconvertible in¬ 
 to said legal tender money, with accrued 
 inierest, at flie same option, would he a 
 perfect solution of the financial question. 
 That when established, gold and said le¬ 
 gal tender money would be on a par, nnd 
 thenceforth that both inflation and con¬ 
 traction would be practically impossibili¬ 
 ties. It is also claimed that the above 
 propositions have all been demonstrated 
 and actually put in practice. 
 
 1st, That gold and legal tender paper 
 would be on a par, was demonstrated by 
 the fact that what were termed “Demand 
 Notes”—of which sixty millions were is¬ 
 sued, and receivable tor duties on im¬ 
 ports—continued on a par with gold until 
 all were absorbed at the Custom House. 
 That fact, it is claimed, proves conclu¬ 
 sively that if Greenbacks bad been re¬ 
 ceived for duties on imports, being thus 
 made a full legal tender, gold could never 
 have risen above par. 
 
 2nd. That a free issue of paper money 
 cannot produce inflation when convertible 
 into bonds bearing interest, was demon¬ 
 strated by the fact that, when greenbacks 
 were first issued and convertible at the 
 option of the holder into 5.20 bonds bear¬ 
 ing 6 per cent, interest, during tbe six¬ 
 teen months the convertible law existed 
 there was neither inflation nor expansion, 
 but a steady uniformity in prices and val 
 ues never before known. This, it is 
 claimed, was a demonstration and proof 
 positive that when paper money is con¬ 
 vertible into bonds inflation is impossible. 
 For, should said paper money be issued 
 in excess of tbe wants of business, such 
 excess would reduce the ruling rates of 
 interest to the Government standard, 
 when all excess would return to the 
 Treasury for its bonds and restore the 
 equilibrium. 
 
 3rd. It is claimed that when Govern¬ 
 ment issues are received for duties on im¬ 
 ports and made a full legal tender and in¬ 
 terconvertible with bonds bearing inter¬ 
 est, gold will be on a par with said issue ; 
 provided ihe same act requires the Secre¬ 
 tary of the Treasury to dispose of bonds 
 in Europe—not in America—to provide 
 coin to defray the interest on the bonds 
 now in Europe, and also on the bonds re¬ 
 maining here. Then, as there will be no 
 further demand for coin in this country, 
 it will be on the market without buyers, 
 for merchants will be no longer required 
 to buy it to pay duties at ihe Custom 
 
16 
 
 House; Government will not be com¬ 
 pelled to buy at home to pay interest on 
 its bonds ; and as our mines produce more 
 bullion than can be required for the bal¬ 
 ance of trade, there will be no further de¬ 
 mand for it ; hence, it must fall to par. 
 
 I would most respectfully but emphat¬ 
 ically assert, that the day in which said 
 American System of Finance becomes a 
 law, gold and legal tender money will be 
 on a par. And I would as emphatically 
 assert, that it is not within the power of 
 Congress, by any materially different act 
 of legislation, to produce the same result 
 and restore the much desired specie basis 
 until our exports exceed our imports in 
 an amount sufficient to cause a natural 
 return flow of specie to our shores. 
 
 Should the act establishing the “Amer¬ 
 ican System of Finance” authorize the 
 banks to hold convertible bonds as their 
 legal reserves, and also to deposit such 
 bonds for national bank currency, and 
 permit said currency also to be converti¬ 
 ble into Government bonds, both banks 
 and the public would be greatly benefit- 
 ted, inasmuch as confidence would be re¬ 
 stored, business would revive, the credit 
 of dealers with the banks would improve, 
 and their risks also improve in a like ra¬ 
 tio, causing an immense increase of busi¬ 
 ness, with a corresponding increase of 
 dividends to stockholders, and this to the 
 entire satisfaction of their dealers and the 
 public generally. Then the existing pre¬ 
 judice against banks would cease, and 
 they be recognized and acknowledged as 
 indispensable aids to civilization, and be 
 sustained by popular favor. 
 
 If any continue to doubt, after our 
 past experience, that legal tender paper, 
 when received for duties on imports, will 
 keep on a par with coin, they need only 
 to look across the Atlantic to the French 
 Government for confirmation. When the 
 German war commenced it authorized 
 the Bank of France to double its issue, 
 and made said issue a legal tender for all 
 monetary purposes. According to statis¬ 
 tics before me. at the commencement of 
 hostilities in 1870 the Bank circulation 
 was about $250,000,000, when an addition 
 of an equal amount was authorized, and 
 all made a full legal tender for all purpos¬ 
 es ; and when hostilities ceased, in 1871, 
 it amounted to $420,000,000, at which 
 time gold bore a premium of 2'£ per cent, 
 when, an additional amount being au¬ 
 thorized, it soon fell to par ; and in Oc- 
 
 j tober, 1873, when it amounted to $612, 
 000,000—the highest amount ever reach¬ 
 ed—it remained at par and has continued 
 so ever since. 
 
 The query arises : Why did it continue 
 at par after the issue of so large an 
 amount ? Ans. Because it was made a 
 legal tender for duties on imports and for 
 all other monetary purposes whatever. 
 
 Then, why was there a premium on 
 gold at any lime ? For the reason that, 
 in addition to the amount required for 
 the Indemnity, the requirements to 
 to recuperate and make good the devasta¬ 
 tion of w r ar caused an excess of imports 
 above exports, which excess continued 
 until the increased flow of currency, by 
 stimulating the manufacturing mechan¬ 
 ical and agricultural industries,created au 
 excess of exports and turned the balance 
 of trade in favor of France. 
 
 It seems clear that the volume of cur¬ 
 rency, by being made a full legal tender, 
 revived and stimulated the productive 
 industries of the French peot le to sucli 
 an extent that their exportable products 
 soon exceeded their impoits, and turned 
 the balance of trade (which, when the 
 tvar ceased, was largely against them), in 
 their favor to such an extent as to render 
 them financially independent, and all 
 other nations became their tributaries. 
 And who can truthfully say, should 
 America pursue the same course, that 
 the same results would not follow ? This, 
 it is claimed, is proof which none can 
 deny ; but, on being convinced of the 
 fact, all must confess that, had the act 
 which passed the House of Ilcpresentives 
 making greenbacks a full legal tender 
 without any exception, and convertible 
 into 6 per cent, bonds, become a law, 
 coin could never have risen above. par 
 from the day in which it became a law 
 to the present time. And who can say 
 that in consequence of the paper of the 
 Bank of France being a full legal tender 
 the French people are not in a more pros¬ 
 perous condition at this time than at any 
 time in their long and eventful history '! 
 With such wonderful prosperity of the 
 people of France prominently in view, 
 and the full knowledge of its being the re¬ 
 sult of so simple a cause as the making of 
 its paper money a full legal tender, will 
 not the American Government follow so 
 glorious an example, and raise the Amer¬ 
 ican people from their present state of 
 paralysis, degradation, aud humiliation ?