Be it enacted by the Senate and House of Representatives of the United States of America, in Congress assembled, That in order to remove any doubt as to the purpose of the government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the laws by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin or its equivalent of all the obligations of the United States not bearing interest, known as United States notes, and of all the interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or other currency than gold and silver.  But none of said interest-bearing obligations not already due shall be redeemed or paid before maturity unless at such time United States notes shall be convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin.  And the United States also solemnly pledges its faith to make provision at the earliest practicable period for the redemption of the United States notes in coin.

THE PUBLIC CREDIT.

Mr. MORRILL, of Vermont.  I think it is quite time that we commenced with the business which we came here this evening to transact.

The PRESIDENT pro tempore.  The bill (H.R. No. 1744) to strengthen the public credit and relating to contracts for the payment of coin is before the Senate as in Committee of the Whole; the pending question being on the amendment offered by the Senator from Missouri, [Mr. Henderson,] upon which question the Senator from Wisconsin [Mr. DOOLITTLE] is entitled to the floor.

Mr. DOOLITTLE.  Mr. President, the relations which we bear toward this great question of finance are not those of a party.  We, as members of the Senate and members of the House, are not parties to any contract with anybody.  We are here in a representative capacity, representing not only the tax-receivers but the tax-payers, and the duties which we owe are equally binding this us toward them both.  In discussing this great question as to what shall be done with the finances of the country we must bear in mind the fact that we represent both the bondholders and the taxpayers.  We represent them all, because the two classes combined embrace the whole of the American people and all the States.  The taxpayers on the one side and the tax-receivers on the other are the parties to this gigantic controversy which is now upon our country and which may rest upon it for, it may be, a generation to come.  In meeting these great questions we must meet them as judges, as men who, under the Constitution, are clothed with the power of dealing with them, not as parties to them at all, but in a judicial or a representative capacity.  We are bound to do justice and justice to them both.  If we deny the just obligation toward the creditor, that is repudiation.  If we deny the just obligation to the tax-payer, that is repudiation also;  and it is repudiation as oppressive, as unjust, as unjustifiable as the repudiation of the public debt.  We must do neither;  we must stand upon the contract in its spirit and in its letter.  We must stand upon the principles of eternal justice and equity, not as parties, but in a much higher relation -- as judges upon whom the responsibility of decision rests.  There is no higher tribunal upon the earth than the Congress of the United States in dealing with this question of finance.  No suit can be brought by a creditor against the Government;  no suit can be brought by a tax-payer in any tribunal against the Government;  but here in this Senate and in the House of Representatives the question must be considered.  Before this high tribunal, having sole and exclusive jurisdiction over the whole matter, stand these parties.  On one side are the bondholders with $2,000,000,000 of bonds;  on the other side the thirty or forty million people, who are the tax-payers, and must bear the burden, whatever it is, both of the principal and the interest.  We are here to discuss and decide this question neither in the interest of the one nor in the interest of the other, but to do justice between them both for the good of our common country and those who are to come after us.

Mr. President, when we bear in mind that Congress is no party to these bonds, although many of its members may be bondholders, that Congress has nothing to do as a Congress with the contract, but that it is sitting in judgment upon the just claims of the bondholder on the one side and the just rights of the tax- payer on the other.  Congress must rise to the height of this great argument and take the responsibility.  In view of the principle of eternal justice, in view of the contract, both in its letter and m its spirit, Congress is to decide between them.

Now, Mr. President, this measure is brought forward at this very late period in the session, and pressed upon the Senate for its decision at a time when our term is so short that we can hardly have an opportunity to consider it;  and when members of the Senate are so impatient of any discussion why should a question as important as this be pressed at this late period of the session, and pressed with haste, with pertinacity, and almost with a disposition to complain of any man who rises hereto give utterance to his opinions upon it ?  I say to the honorable Senator from Ohio this is one of the most important measures which have been brought forward at this session, or can possibly be conceived to be brought forward at any time.  And why has this measure such great importance ?  Has not my honorable friend from Ohio, in his speeches in the Senate and in his reports to the Senate from the Committee on Finance, from time to time urged the funding of the national debt at a lower rate of interest ?  Have we not often heard him, as we have heard many others, say that this great amount of interest at six per cent. in gold is more than the people can bear, and that it is necessary that we should fund the debt at a lower rate of interest ?  Sir, it is this high rate of interest which is pressing upon our people.  It is this high rate of interest, higher than any Government has ever paid or can ever pay for any great length of time upon a debt as large as this, which presses down our people and calls for some financial remedy.

But what is this measure ?  This measure, Mr. President, is in substance to put it out of the power of this Government to fund the five-twenty bonds at any lower rate of interest than six per cent.  Pass this bill, and what is the effect of it ?  Let us see.  I refer particularly to the five-twenties, for it is upon the five-twenties that this bill has its operation.  This bill says substantially that whereas a conflict of opinion has arisen whether the five-twenties are to be payable the principal in gold or not, for the purpose of settling these "conflicting questions and interpretations of the laws by virtue of which such obligations have been contracted it is hereby provided and declared that the faith of the United States is solemnly pledged for the payment in coin or its equivalent of all the interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or other currency than gold and silver."

Mr. President, allow me to ask you how you can fund the five-twenty bonds bearing six per cent. interest into a bond bearing a lower rate of interest after the Congress of the United States in a public act expressly pledges the faith of the Government to pay the five-twenty bonds, principal and interest, in gold at six per cent.?  Sir, put the case home to yourself; suppose you had $10,000 in five-twenty bonds, and Congress now enacts this statute and declares that the faith of this Government is pledged to the payment of those $10,000 with six per cent. interest, principal and interest in gold;  and then afterward suppose my honorable friend from Ohio should propose to exchange bonds bearing five per cent. interest, or four per cent. interest, or four and a half per cent. interest with you for those five-twenty bonds, you would laugh in his face;  you would not take his bonds;  you would not consider his proposition.  It is impracticable and absurd to talk about funding the five-twenty bonds when you have passed this bill.

Mr. DIXON.  Will my friend allow me to ask him a question ?

Mr. DOOLITTLE.  Yes, sir.

Mr. Dixon.  My question is whether the resumption of specie payments will not have the same effect;  whether if we were to resume specie payments to-day the effect would not be the same;  and whether the Senator's argument does not go against the resumption of specie payments until the debt is funded at a lower rate of interest ?

Mr. DOOLITTLE.  Mr. President, the question of the resumption of specie payments is altogether a different question;  a question that depends, in my opinion, upon other considerations;  a question which is to be determined by the revived industry of the country, and which is to take a period of time, I cannot say how long, but perhaps a long period before specie payments will be completely resumed;  but it does not bear on this question.  I admit if specie payments were resumed by everybody, by the Government of the United States and by private individuals, and our greenbacks were as good as gold, that the question as to the five-twenty bonds would have disappeared, because practically there would be no other money than gold and silver, or its equivalent;  for greenbacks then would have become the equivalent of gold and silver.

Mr. DIXON.  Could you then fund at a lower rate of interest ?  Would not the same argument apply to that subject ?

Mr. Doolittle.  The question of resuming specie payments is an entirely different one from the question I am now discussing;  and if my honorable friend will allow me, it is distracting my argument upon this bill and drawing me off on altogether another subject of consideration, the question of the resumption of specie payments.

The PRESIDENT pro tempore.  The Senator from Wisconsin must not be interrupted without his consent.

Mr. DOOLITTLE.  Now, Mr. President, to return to the subject.  There are some authorities to which I should like to refer and to give some information which has come into my possession.  I have had placed in my hands by a friend in the city of New York a copy of a letter from a gentleman connected with a financial house in London in which originated the scheme of funding the first national debt of the United States and which was carried through to a success.  This gentleman says:

" In this office in the year 1793 the first scheme for the mode of discharging the principal and interest of the six per cent. stocks of the United States was first eliminated, and it was ultimately adopted and carried out by Congress.  It was an accumulative interest of two per cent.

"Having been intimately connected with the funds of the individual States from that date to this time it will be readily comprehended that I have steadily followed and studied all the financial matters connected with the different loans of the United States.

"It is evident to me that a large loan in sterling money might be raised in this country, the proceeds to be applied to the payment (in greenbacks) of the six per cent. bonds known as five-twenties.

"A stock bearing four and a half per cent. interest, principal and interest payable in sterling, and having an accumulative sinking fund of one and a half per cent., which would pay off the debt in thirty-one years, could be negotiated at seventy-five per cent. in sterling money, and this sum of money converted into greenbacks will pay the capital of the debt at par and leave a balance to the Treasury.

"The larger the loans the wider the basis and the more marketable it would become."

Mr. Sherman.  I should like to remind my friend of a fact at that point.  We passed at the close of the last session and sent to the President of the United States a funding bill based upon that idea of having a sinking fund of one per cent. and a bond paying four and a half per cent. interest, and the President with whom my friend is so much in love, pocketed the bill, and we have never seen it from that day to this.

Mr. DOOLITTLE.  My honorable friend from Ohio is now raising another question.  I wish to discuss the point on which I am addressing the Senate, to wit, that if you pass this bill, in which you pledge yourselves and the faith of this Government that you will pay these five-twenty bonds in coin, principal and interest, at six per cent., you cannot after you have made that pledge fund them at a lower rate of interest.

Mr. Corbett.  If the Senator will allow me ---

Mr. Doolittle.  My friend will excuse me.  I am endeavoring to make an argument.  I do not intend any discourtesy to the honorable Senator.

Mr. Corbett.  Should like to ask the gentleman a question, right on the point he is discussing.

Mr. DOOLITTLE.  My friend has just come in.  I have been questioned by gentlemen on the right twice on that point, and now on the left my friend who has just come in puts the question over again.  I confess that for one I do not like the mode into which we seem to be falling in the Senate of the United States, that the moment a Senator rises to address the Senate three or four begin to put questions.  It is not the best mode of discussing and arguing questions, in my opinion.  I think it beneath the dignity of the Senate.

The President pro tempore.  The Senator must not be interrupted.  It is a new practice in the Senate, and a bad one.

Mr. Doolittle.  I was referring to information contained in this letter which I think important.  The writer continues:

"To make this proposition clearly understood I will suppose that a foreign holder of $10,000 of six per cent. bonds, redeemable after five years, before twenty years from date of issue, he gets $600 per annum, which he sells for four shillings sterling per dollar, equal to £120 per annum;  but he is in doubt if his capital may not be returned to him at any moment in greenbacks, in which case at this time the rate will be two shillings and nine pence per paper dollar, equal to £1,375."

He speaks as a foreign capitalist.  He tells you the truth, that the holders of these bonds, both at home and abroad, feel an instinctive consciousness that the principal of their bonds may be paid to them in greenbacks under the terms of the law under which they were issued.

"If he can exchange his bonds in London and obtain £2,000 of four and a half per cents., true he will only get an income of ninety pounds per annum, but there he will be sure of £2,000 ultimately, and as the bonds would be drawn payable at par he would be sure of the cash within thirty-one years, which is the entire period requisite under the action of this accumulative sinking fund.

" But if he held twenty bonds of £100 each he might reasonably expect to have two of them drawn every three years on an average.  The commercial world has now become so used to the action of these accumulative sinking funds and to calculations dependent thereon for the profits arising from the difference between the par value of the drawn bonds and the price at which it be replaced in the market that we can and do estimate it in this instance at about one half per per cent. annum on the capital.  If this be added to the interest it will make the total five per cent.

"As soon as it is notified to the holders that any of the present bonds are called in for redemption in greenbacks and that the coupons thereon would not be paid after a certain date the holders would become very anxious and debate in their minds the propriety of sending their bonds to the United States to be cashed or of making an exchange in London, thereby saving all the commissions and other expenses.

"To show the effect of this proposition on a large scale we will deal with having interest to the extent of £400,000,000 sterling now carrying six per cent. interest, say £24,000,000.  If nothing is done to alter matters at the end of thirty-one years the debt will be the same, but if my plan be carried out it will be paid off altogether, both principal and interest.

" Each bond of $1,000 or £200 should give the owner the option of receiving the capital for his bond when drawn under the action of the sinking fund either in America or in London, giving three months' notice.  And the same applies to the coupon, which should be either forty-five dollars or nine pounds, at the option of the holders, which is customary in the European loans."

The point to which I wish to call special attention is that British capitalists do understand that these bonds, which were issued under those laws of Congress authorizing the issue of greenbacks and making those greenbacks a legal tender in the payment of everything but the interest on the bonds, may be called in and may be paid in greenbacks.  There is precisely the same understanding in the German market.

Mr. EDMUNDS.  Where is the evidence of that ?

Mr. DOOLITTLE.  The evidence is the market price of the bonds, precisely running pari passu with the value of the greenback as compared with gold.  It is because they know it was not a gold contract that they doubt whether they can receive the gold.  True, as parties to the contract they will press upon this Government to pledge itself to pay principal and interest in gold;  and so will the bondholders at home;  it is their interest to do so.  But what is the fair construction of the contract ?  When these bonds were issued the very law which authorized them to be issued declared that the legal-tender notes which were authorized to be issued should be lawful money and a legal tender in payment of every public debt except the interest and except the duties on imports.  When it is so declared in the law, and when you take into account the fact that what the Government received was depreciated paper money, and when the bondholders took the bonds they took those bonds under a law which declared in express terms that that very same lawful money which they loaned to the Government should be a legal tender, should be received in discharge of all debts, public and private, except the interest upon the public debt and duties upon imports, they knew that they took the bonds subject to that contingency.

I have no desire to waste the time of the Senate;  I simply wish, as briefly as possible, to express my views on this question.  I will refer you to the authority of one of the ablest men of our time, or of the last generation, who is still living among us -- a man for a long time a member of this body, the associate of Webster, of Wright, of Calhoun, of Clay, and of Benton, and in some respects greater than either of them;  I refer to Mr. Thomas Ewing, of Ohio [a whig scum, wanted a 3rd Bank o'USA, family friend of Shermans].  When speaking upon this great question how these bonds are to be construed in the eye of justice, how they would be construed by any court, he holds this unequivocal language:

" The act of February 25, 1862, which provides for the issue of the $500,000,000 of five-twenties, provides expressly that Treasury notes, which it also authorizes, 'shall be receivable in payment of all taxes, internal duties, excises, debts;  and demands of every kind due to the United States, except duties on imports and of all claims and demands of every kind whatsoever against the United States, except for interest upon bonds and notes, which shall be paid in coin, and shall also be lawful money and a legal tender in payment of all debts public and private within the United States, except duties on imports and interest as aforesaid.'

"This law is the authority of the Secretary of the Treasury to borrow the money.  Having defined his powers in this it gives him instructions as to the management of the finances;  but these instructions have nothing to do with the loan or the contract with the creditor no more than the economical resolution of the ordinary debtor has to do with his contract with his creditor.  The creditor in either case has much interest in the general good financial management of his debtor, but a departure by the debtor from his expressed purposes is no breach of the contract unless it be distinctly inserted and expressed as a pledge.  In this case the United States borrows its own legal-tender notes and stipulates that the interest on the bonds which it exchanges for them shall be paid in gold;  but the creditor is at the same time told, and it is made part of the contract, that when the principal becomes payable at the end of five years he must receive in payment legal-tender notes, precisely the character of funds which he lent unless by a new arrangement the creditor may give him something which he prefers;  and there is no pledge contained in the law or in the contract unless raised by forced implication, that the United States will not provide in due time in the way deemed most expedient legal-tender notes to make the payment.

"What is said of promises made by the Secretary of the Treasury and his agents, that the bonds would be redeemed in specie, is so far absurd that no respectable lawyer would venture to urge it in a court of justice.  The act of Congress, which was the Secretary's power of attorney, was in the hands of the whole reading public, especially of the capitalist and his counsel, who could not fail to know that the Secretary had no power to pledge the Government by parol, or in any manner not written down in the law.  He doubtless entertained and expressed a strong opinion that specie payments would be resumed before the bonds became payable, but the nation is certainly under no obligation now to bankrupt itself and add its whole wealth for ages to the already enormous profits of the capitalists in order to make good the prediction."

" This settles the question as to the right of the United States to pay these bonds in legal-tender notes if nothing more acceptable to the debtor and creditor can be agreed on.  I would then propose that the Secretary of the Treasury be directed to prepare and hold ready for delivery $1,000,000,000 in bonds, payable at the option of the United States at any time after the expiration of forty years, bearing an annual interest of four per cent., payable semi-annually, both principal and interest in gold, continue by law the payment of gold for the customs duties and pledge their proceeds for the payment of interest on the bonds until they be paid and retired, and by a present act appropriate the proceeds of those duties to the payment of such interest during the continuance of the bonds, and authorize and require the Secretary of the Treasury, without any further act of appropriation, to pay such interest as it shall accrue, and exempt the bonds from taxation by the United-States and all States and Territories and all municipal corporations in any State or Territory or district within the United States."

Again; I quote his clear and powerful statement of the true equities of the case:

"We are not bound in faith or morals to make the fund which we pay to the creditor for his principal -- be it what it may, gold or legal-tender notes -- worth more at the time of payment than it was worth when it was borrowed.  This appears to me strictly just the view which a righteous arbitrator or judge would take of the subject if submitted to him for decision;  and it were better for the creditor than an exuberant generosity which would promise him more than he is entitled to when the debtor is but just able to comply with his actual contract.  Fairly interpreted.  Looked at in this point of view names are nothing.  If you borrow a piece of coin called a dollar, having in it one hundred cents' worth of pure metal, and by virtue of your sovereign power so debase your coin that the dollar contains but seventy-five cents' worth, it is repudiation or its equivalent act of injustice.  If you, in behalf of the nation, borrow coin having in it but seventy-five cents' worth of pure metal and call it a dollar and afterward improve your coin and put in it one hundred cents' worth of pure metal to make the dollar and pay this improve dollar to discharge the loan of the baser coin it is generosity to the lender and injustice to the nation;  it is taking from the tax-payer without reason and giving to the capitalist without consideration:  the same is the case whether the fund loaned and borrowed be adulterated coin or depreciated currency."

Now, Mr. President, put this case:  suppose that you in your individual capacity were the sole creditor of the United States, holding all its five-twenty bonds, and suppose that you in exchange for those bonds gave depreciated paper money worth only fifty cents upon the dollar, and the Government by the express language of it, contract with you, the express language of the law by which it authorized the bonds to be taken by you, declared that that same paper money which you give to the United States in exchange for the bonds shall be taken by you for the principal of the debt, and that meantime the interest upon it shall be paid at six per cent. in gold.  I ask you would it be just for you, having given paper money worth but fifty cents on the dollar, having received for six or seven years six per cent. interest in gold upon that depreciated money, which would be equivalent to twelve per cent. upon the gold value with which you parted, would it be just in the sight of Heaven for you to say that you would not take back the same money in payment, when it is just as valuable and more valuable than that which you let the Government have ?  Would it be just in the sight of God or man to persist on payment in gold of the whole amount of the face of the bond ?  That is the question.  If the Government had said in the bond that they would pay you in coin it would be bound to pay it;  but it said they would pay you interest in coin, and that the paper money which you let the Government have should be a legal tender in the discharge of every debt, public and private, except the interest.

Mr. President, the great question with us is how to reduce this amount of interest, for as Mr. Ewing says, in that able paper to which I have referred:

"It is not the depreciated currency but the heavy annual interest on the debt that pressed with such enormous weight on the productive industry of the country.  We, the people, want to reduce this burden of interest and bring it within manageable compass."

That is or should be the great purpose of our legislation;  first of all, of course, to reduce our expenses within the range of economy, but as far as the public debt is concerned to reduce the rate of interest by funding the debt in some shape at a lower rate of interest.  The burden of taxation in this country has become so great that everywhere the great mass of the people whom we represent, and whose interests we are bound to defend as well as the bondholders', whose interests we also are bound to protect, according to a fair construction of the contract with them, are so heavily burdened by the taxes which are now drawn from them that it is all-important that the Government should take no step by which it renders itself powerless to reduce the rate of interest.  I maintain that if this bill shall pass which declares that it is hereby, provided and declared that the faith of the United States is solemnly pledged to the payment, in coin or its equivalent, of the principal of these five-twenty bonds as well as the interest, it will put it out of our power to fund this debt at a lower rate of interest, without repudiation.  The burden will become so great, so oppressive, and the great mass of the people will feel it to be so unjust that it may be the means of creating throughout the country an excitement against this mode of dealing with the public debt so great that we may have greater troubles than we have yet conceived of in the discharge of our indebtedness.  The burden of debt resting upon us almost realizes what Sidney Smith said would one day come upon Brother Jonathan if he should ever indulge in the fiendish luxury of war.  He declared in 1820, in speaking of Brother Jonathan, and what he declared then seems almost to be prophecy now:

"We can inform Jonathan what are the inevitable consequences." ***** "Taxes upon every article which enters into the mouth, or covers the back, or is placed under the foot;  taxes upon everything which it is pleasant to see, hear, feel, smell, or taste;  taxes upon warmth, light, and locomotion;  on everything on earth and the waters under the earth;  on everything that comes from abroad or is grown at home;  taxes on the raw material;  taxes on every fresh value that is added to it by the industry of man;  taxes on the sauce which pampers man's appetite and the drug that restores him to health;  on the ermine which decorates the judge and the rope which hangs the criminal;  on the poor man's salt and the rich man's spice;  on the brass nails of the coffin and the ribands of the bride;  at bed or board, couchant or levant, we must pay.  The schoolboy whips his taxed top;  the beardless youth manages his taxed horse with a taxed bridle on a taxed road;  and the dying Englishman pouring his medicine which has paid seven per cent. into a spoon that has paid fifteen per cent. flings himself back upon his chintz-bed which has paid twenty-two percent., makes his will on an eight pound stamp, and expires in the arms of an apothecary who has paid a license of a hundred pounds for the privilege of putting him to death.  His whole property is then immediately fixed from two to ten percent.  Besides the probate, large fees are demanded for burying him in the chancel;  his virtues are handed down to posterity on taxed marble, and he is then gathered to his fathers to be taxed no more.  In addition to all this, the habit of dealing with large sums will make the Government avaricious and profuse;  and the system itself will infallibly generate the base vermin of spies and informers, and a still more pestilent race of political tools and retainers of the meanest and most odious description;  while the prodigious patronage which the collecting of this splendid revenue will throw into the hands of Government will invest it with so vast an influence and hold out such means and temptations to corruption as all the virtue and public spirit even of republicans will be unable to resist."

Mr. EDMUNDS.  Whose lucubrations are those ?

Mr. DOOLITTLE.  Sidney Smith.  He was giving advice to Brother Jonathan not to go to war and get into debt.

Mr. EDMUNDS.  Not to have a revolution against British power !

Mr. DOOLITTLE.  Not to go to war and get in debt.

Mr. DAVIS.  Is that written about the present condition of things in this country ?

Mr. DOOLITTLE.  This was written a long time ago, as long ago as 1820.  One of my friends here suggests that it is a little out of date.  Mr. President, old-fashioned, homely truths seem to be getting out of date;  but it is well enough occasionally to remind ourselves of some of these wholesome truths.  Here, almost as if he were an inspired prophet, he gave to Brother Jonathan, forty years in advance, a foretaste of the luxury he would enjoy after having great wars with their armies, debts, and taxation.  Sir, we have almost realized this prophecy to the very letter.  The very first point, as it seems to me, in dealing with our financial question is in some mode or other to reduce this exorbitant rate of interest upon the public debt;  and I think that this bill with which my honorable friend from Ohio is charged is the very bill of all others to prevent him from ever changing the five-twenty bonds into bonds bearing a lower rate of interest.

Mr. President, I hold that the principles of sound morality require me to deal justly with the whole people of the United States.  If the law provided that when the creditor parted with this depreciated paper and took the bonds of the Government we should pay him six per cent. interest in gold, and that he was bound, if we tendered him back the same money which he let us have, to take it in discharge of his debt, if such was the law of the contract, then I say it would be repudiation on the part of those who contend that the Government shall now declare that these bonds shall be paid, principal and interest in gold.

What have you done, sir ?  You have issued your paper until the currency has become depreciated so that it stands at the depreciated figure now of seventy-five cents on the dollar;  precisely the same as if you had introduced just so much copper into your coin;  and there is no more justice in saying that a contract which has been made between man and man in reference to this depreciated money shall be enforced by payment of one hundred cents in gold than there is in saying that the whole debt shall be repudiated.  It is injustice both ways.

Suppose, sir, that instead of issuing this paper by which we depreciated our money to seventy-five cents on the dollar you added one fourth of copper to your coin and then put it in circulation as the lawful money of the country, and men had all arranged their contracts on the depreciated basis;  will you tell me that it would be right to insist that the debtor shall pay one hundred cents of pure gold in the dollar when his contract was only made for seventy-five cents of gold in the dollar ?  There is no justice in it.  It will not bear scrutiny.  You cannot go before the tribunal of earth and heaven, where justice is done, and maintain that it is just to enforce a contract made in depreciated money in an appreciated money.  I agree that those contracts which were made before the passage of the legal-tender act, before the depreciation of our currency by this vast inflation of paper took place, were payable in gold and silver;  and I never believed that Congress had the power to discharge those contracts in anything but gold and silver, and when the legal-tender act was before this body I moved in the Senate of the United States to except from the operation of that law all contracts made before the passage of the act, upon the express ground that the contract was made in reference to gold and silver as its basis, that the men entering into the contract had agreed in substance to pay so many ounces of gold and silver of a certain quality in order to discharge the debt, and the Government had no power to change that;  but in relation to contracts in futuro the rule would be different, because since the passage of the legal-tender act and the depreciation of the standard of value by the infusion of this vast amount of paper which now stands at a depreciation of twenty-five per cent. contracts are now made in reference to this depreciated currency, and therefore justice requires them to be enforced in this depreciated currency or its equivalent.

What did a contract made any time within the last two years to pay a given number of dollars mean ?  So many of the current dollars;  and what are they ?  Your lawful money, your circulating medium;  and the Government has no right to come in now and say that these contracts can be discharged only by a different kind of currency.  We have no more right now, in my opinion, to compel private debts or public debts to be discharged in a currency of one hundred cents pure gold on the dollar than we had in the beginning to say that contracts which had been made payable in gold and silver by their terms -- for the law of the case was a part of the contract -- should be discharged in depreciated paper.  We have no more right to say the one than we had to say the other, and we have no right to do either, and the Supreme Court, by their decision, as I understand the reasoning of the Supreme Court, have placed themselves upon that position.  Although the case decided was one which arose before the passage of the legal-tender act, and one in which gold and silver coin was specifically promised by name, still the reasoning of the case in my opinion goes so far as to hold that all contracts made previous to the passage of the legal-tender law would be enforced in gold or its equivalent.  Therefore, sir, having that view of the case, I voted to strike out the second section of this bill altogether.

Mr. President, if instead of issuing paper money we had done what almost every Government upon the face of the earth has done, and which I think we have done on a small scale on two or three occasions, if we had alloyed our currency, depreciated it by adding to it so much alloy at the beginning of this war, if we had taken away one fourth of gold and added one fourth in copper, so that the real value of a dollar in gold, instead of being one hundred cents of pure gold would have been but seventy-five cents, and that had been our currency during all this time, and you had parted with your bonds to the public creditor and received that amount of currency, what would you say now if Congress should by law declare that bonds which were given in exchange for seventy-five per cent. of gold and twenty-five per cent. of copper should now be paid one hundred per cent. in gold without any copper or alloy ?  Would it be just ?

Mr. President, I know that on this question there is a great division of opinion.  There are around me gentlemen who maintain one side just as earnestly as I maintain the other side.  What is advisable to be done ?  In my opinion it is better to rest upon the law as it is.  If the law under which you issued your bonds by its fair construction makes the principal payable in gold let the law stand where it is;  but if the law be otherwise, as I maintain its fair construction is, let the law stand;  do not come in now with a new declaration which is equivalent to issuing over again your five-twenty bonds.  It is just the same as if you took in all these five-twenty bonds to-day and passed this law that hereafter they shall be paid in gold coin, principal and interest, and then issued them again to-morrow.  That is the effect of the passage of this bill;  and what effect will it have in Wall street ?  What effect will it have in the markets of London, Paris, and Frankfort-on-the-Main ?  Who does not know that the effect of this declaration will be at once to produce a great amount of speculation in the markets in New York and abroad ?  Perhaps the speculations have already been made;  the purchases on time perhaps have already been made by millions and by hundreds of millions, and fortunes, if this bill passes, are to be realized by the operators in Wall street to the extent of millions upon millions of dollars, and what good can it do our country ?  What good does it do towards relieving our burdens ?  Does it enable you to fund your bonds at a lower rate of interest ?  How does it enable you to reduce the amount of taxation ?

Mr. President, as I said in the beginning, I have no disposition to stand in the way of the action of the Senate;  but this question is so important that I could not allow the bill to pass without frankly expressing some of the opinions which I entertain upon it.  I have done so freely.  I do not believe it is wise.  If the honorable chairman who represents the Committee on Finance desires ever to succeed in what is most to be desired in reference to the public debt, the reduction of the rate of interest which it bears, I do not believe that he can succeed by pressing this bill through the Congress of the United States.  He had better pause and let things be as they are.  Let the industry of the country revive;  let economy begin to be practiced;  call home those Americans who by thousands upon thousands are all over Europe carrying our bonds abroad and spending the proceeds and bringing home nothing valuable in return;  let him urge and let all the men who lead public opinion urge upon our people a more economical mode of life;  less extravagance in life, in dress, in equipage, for it is in these things that the substance of our people is now eaten out.  Sir, it is by economy, it is by industry, it is by reviving all the industries of the whole country, East and West, North and South, that we can ever hope to overcome this great difficulty which stands in the way of our progress.

We were not always burdened thus.  The time was when the burdens of this Government rested so lightly upon all the people that they were scarcely felt at all;  and I believe the very prosperity of our condition, the burdens of our Government resting so very lightly upon all sections of the country, was the basis of one of those fatal delusions which led the people of the South to believe that the Government had no power to maintain itself, because it imposed no burdens upon the people which could be felt -- the burdens and the blessings of this Government rested upon us like the air which surrounds us, essential to our life and our being, yet we do not feel it.  And may we hope and trust that the time will come when industry, frugality, and economy will be revived, when we shall once more enjoy what we enjoyed in the past, a Government whose blessings came down like the dews of Heaven, unseen and unfelt save in the richness and the beauty they contribute to produce.

Mr. COLE.  [Cornelius Cole (September 17, 1822 - November 3, 1924), Senator from California, where in those days gold coins were currency. A participating eye-witness to monetary legislations. He lived long enough, yet (not surprisingly) not one of the paper money writers looked him up and interviewed him. ]

Mr. President I cannot persuade myself even at this late hour of the session to permit this bill to go to a vote without expressing my dissent to its provisions.  I regret that it comes in for discussion so late in the session, for now its discussion must be attended with more or less restraint.  I believe the second section of the bill is rendered entirely unnecessary by a recent decision of the Supreme Court.  That decision, as I understand it, goes to the extent of sustaining a contract payable specifically in coin, a contract made prior to the rebellion, but the principle enunciated in that case I believe covers all other specific contracts, and is sufficient to sustain contracts made after the passage of the legal tender law as well as contracts made prior to that, and it will cover all cases of specific contracts which may be made hereafter.  If I am correct in this there certainly can be no necessity for the passage of the second section of the bill for any purpose of authorizing specific contracts in coin.  But it is alleged that the passage of this section is desired for the purpose of restricting the operation of this decision of the Supreme Court.  If so, I am equally opposed to it.

I am also opposed to the first section of the bill, which declares that the faith of the United States is solemnly pledged to the payment in coin or its equivalent of all the obligations of the United States except in the cases where the law authorizing the issue of any of said obligations has expressly provided that the same may be paid in lawful money or other currency than gold or silver.  This proposition was before the Senate over a year ago, and was then very fully discussed.  Since that time until these last hours of the session it has been permitted to rest upon your table, and is now brought up, as I believe, without adequate opportunity for its discussion.

The Senator from Vermont [Mr. EDMUNDS] this afternoon congratulated the country on the advances made toward sustaining the honor and good faith of the country.  It seems to me his congratulation would have been more applicable had it been directed to the bondholders for their advances upon the interests of the tax-payers, of the aggressions of the creditors of the country over the labor and industry of the country.

We are told by the chairman of the Finance Committee that it is only intended as a declaration of policy;  but what are we to understand by this ?  Is it to be merely a vain and empty declaration of policy, or is it to be a solemn act of Congress, a declaration of law, which is to be binding upon us ?  It seems to me the latter will be its force and effect if it passes.

Perhaps it is well that this question should be disposed of without further delay, in order that the people may know with some degree of certainty the weight of burden upon them.  If they really owe the whole $2,556,000,000 in gold coin, as the passage of this section will indicate, or the equivalent of that sum in currency, amounting at the present rate to about thirty-three hundred and fifty millions, the sooner it is proclaimed the better.  It can be of no advantage to the people to fondle a delusion, however pleasant, which must finally cost them hundreds of millions.  It is customary to speak of the national debt as about two and a half billions, but if we owe the whole of this $2,500,000,000 in gold dollars we actually owe about three and a third billions, as we usually estimate money.

If, as is alleged, it will improve our credit to put forth the statement that our national debt is three and one third billions, I am sure there is no rule by which that proposition can be demonstrated, and the result must depend upon a trial for its proof.  I believe the hope is father to the opinion and the latter a most illegitimate production.

With an acknowledged indebtedness of $2,500,000,000, honored in all respects according to the strict letter of the obligation, our securities are worth less than seventy-five cents on the dollar, can it be said that by largely increasing the indebtedness, as this proposition virtually does, our credit will be improved ?  However clear this may seem to the bondholder, it has not yet been made so to the debtor.  The people will never take that view of the case.  An insolvent whose available assets are unequal to his obligations, and whose credit in consequence is below par would not expect a favorable result from a similar transaction.  It would take a long time for him to reestablish his credit by the process of adding voluntarily to his indebtedness.  If unfortunately one is unable to meet his currency obligations he cannot improve his credit by acknowledging the indebtedness to be upon the basis of coin and by binding himself to pay all in gold.  Such a step, on the part of a person or firm would be regarded as rash in extreme, and instead of improving would work an utter destruction of credit.

What is to be gained by the adoption of this proposition ?  It will not of itself pay a dollar of our obligations even in greenbacks, much less in gold.  It will not dispense with a single exaction.  The tax-gatherer will come as before and be not a whit less extortionate.

An admitted indebtedness of $3,300,000,000 will afford a better pretext, if one shall be wanting, for demanding a larger percentage on your small salary and mine.  It will furnish a strong argument for increasing taxes and tariffs, which are already too high.  The debtor class, the people, the labor of the country, which after all has to pay the debt, would repel this monstrous proposition at once could they be heard.  The people do not, nor have they ever asked by petition or otherwise for the adoption of the principle embodied in this bill, and their creditors have no shadow of right to demand it.  The form and substance of the bonds are prescribed by the public laws, and in accordance with them interest is paid regularly in gold.  Let their holders be content with what is nominated in their favor, lest popular impatience should eventually require the utmost exactness in taking the pound of flesh.

It is not easy to divine the real object of this proposition.  The debt is either payable in gold or it is not.  If it is payable in gold as the law now stands then there can be no necessity for its passage.  It would only be a vain repetition of an existing fact, and any number of reiterations would not alter it.  But if, on the other hand, a large portion of our debt is not payable with gold dollars it would be great injustice to the debtors to declare it so payable while any description of lawful money bears a less value, dollar for dollar, than gold.  Suppose my note is in bank for $1,000;  if the banker can exact of me its payment in gold, the gold being at thirty-five per cent. premium, my debt is actually $1,350, and my banker would not relieve my anxiety nor improve my ability to pay by graciously informing me that it is not due till some time hence.  Such a demand, if it could ever be enforced, would tend to impair rather than improve my credit, and no sophistry could prevent that result.

Is it in a spirit of braggadocia that this declaration is sought to be enacted ?  Is our contempt of a burden of $2,556,000,000 so great that we ought voluntarily to shoulder about seven hundred millions more ?  Can we prove our ability to pay $2,550,000,000 by voluntarily, or at the dictation of our creditors, adding largely to it ?  To suppose so is to forget entirely that the present amount, mostly due as it is in a medium easiest to raise, weighs down our credit to a deplorable degree.

I am not unmindful of the indignation, assumed or otherwise, which bondholders manifest toward those who, like myself, believe that it is not unfair to pay in kind, if of equal or greater value, this borrowed money, and that the creditor has no right to demand coin for his greenbacks unless the contract calls for coin or unless we are paying coin when they become due;  but at the same time I will not forget that the people, the many, have rights no less sacred than the fortunate few.

The $283,000,000 of 1881 bonds ought to be and unquestionably will be paid in gold, as they were mostly purchased with that commodity.  In like manner the $221,000,000 of ten-forty bonds must be paid every cent in coin;  for upon those terms the loan was made.  But what justice or equity demands that the five-twenty securities should be paid in a different medium from that with which they were purchased, especially if that medium possessed a value far greater than it had at the date of purchase ?  All this loud talk about the dishonor of a refusal to respond to this extraordinary demand of the bondholder shall pass by me as the idle wind.  Repudiator is one of the commonest appellations indulged in against the opponents of this measure;  but that name is equally applicable to him who refuses his purse to the footpad.

I have already said that if the five-twenty bonds were really payable, as this bill attempts to declare, in coin, or its equivalent, there could be no necessity for its passage;  but the very fact that the measure is brought forward is a palpable confession of the truth that they are not so payable.  The letter and spirit of the law are in harmony;  and these bonds should be discharged, like the ordinary and multifarious obligations of the country, in any lawful money -- in gold if we are paying gold when they must be paid, and if not, then not.  Should business reach a specie standard before these bonds become due, of which there is some hope provided we do not rashly forfeit our credit, as is now proposed, the holders of them would have nothing either to complain of or deplore, for they would be paid in current gold dollars.  But here we are met with the statement that we are soon to reach specie payments in spite of events;  and that the five-twenty bonds will in that case be paid in coin, and the passage of this bill therefore can do no harm.  The fallacy of such a position is easily exposed.  If we could arrive at a gold basis without much delay, and notwithstanding this proposed action the statement would possess considerable force.  But some calculation is admissible to determine the effect of adding this $700,000,000 to our acknowledged indebtedness.

Before the war, when we owed but a few millions, not more than fifty or sixty, United States bonds commanded a premium of fifteen or twenty per cent.;  but when that indebtedness is run up to $2,556,000,000, they are thirty-five per cent. below par.  If it were increased to $3,300,000,000, they must go still lower, and we should be fortunate if we escaped financial ruin like that which overtook this Republic at an earlier period of its history.  It may have escaped the attention of same who ought to remember the historical fact that millions upon millions of the old continental or sage-leaf money became utterly worthless, and very many citizens who had exchanged their property, the produce of their farms and workshops, for it were utterly ruined.  It is true that as a nation we were then weak and poor, and, boasting aside, we are comparatively so still, certainly poor if we may judge from the rate our securities bear in the markets of the world.  Our population was then four millions, it is now ten times that number;  but if I mistake not our debt is nearly as large in proportion to population as that which our forefathers neglected to pay.

But we are told our resources are inexhaustable, and much calculation is made upon a great unborn population and boundless wealth yet undeveloped.  A ready response to this is furnished in the fact that our ancestors had all the undeveloped wealth of the new world, all that has since been developed and all that will be forever hereafter, and still, they flatly repudiated.

We expect to discharge our debt in full, principal and interest, down to the last cent, but it may be well to suggest to the creditor before hundreds of millions are unnecessarily added to our burdens that our fathers survived the death of the continental money, and the notion of Washington and his compeers in this regard is not even remembered against them.

The persistent effort of the bondholders to carry their point by appeals to our fears and false pride may eventually succeed, but a victory gained by such device would be no less dishonorable than the worst form of repudiation, and in my judgment far from advantageous to those who are urging it.  It may result in utter discouragement of the people.

It was a great mistake in the first place to make the interest on any portion of the public debt payable in coin.  The object was to tempt the cupidity of money lenders, and it succeeded admirably;  but it was a most unfortunate step for the Government.  Better have resorted to more stringent taxation, or even to forced loans, than to have submitted to this exaction.  Capitalists were more interested in the suppression of the rebellion than any other class of people, and their property should have been required to contribute to its overthrow without any extraordinary inducement such as gold interest or high premiums upon loans.  The consent of the drafted man to render his service was never asked;  he was compelled to march and to fight, and the capital of the wealthy is not more sacred than the life or limb of the poor.  If "it is sweet and becoming to die for one's country," it ought to be equally agreeable to surrender a portion of one's property for the common safety.  There was really no overwhelming necessity for this promise to pay interest in coin;  and had half its evil results been forseen it would never have been made.  About the only public advantage I am able to see in that provision is found in the fact that it prevents the exportation of an amount of coin sufficient for that use.  It is but poorly disguised, even by the able and ingenious arguments of Senators, that by far the greater portion of the coin that was in the country before the war has gone abroad, and the principal obstacle in the way of getting back to specie payments will prove to be the want of specie itself.

An unintentional confession of the need of coin in the country before its use can be resumed appears in the persistent effort of its advocates to show that a large amount is already in the country, whereas, in fact, the amount is extremely limited.  One hundred million dollars -- a little more or less -- are in the Treasury, but not nearly as much beside, in my judgment, in the country all told.  But for this requirement of coin to pay interest there would have been no necessity for even this $100,000,000 which revolves over and over in connection with the Treasury, and that, too, would have sought a foreign market.  This solitary advantage, however, weighs but lightly in the balance against the disadvantages to the country from that source.  The obligation to pay interest in coin presents a strong inducement for the holders of securities to depreciate their value.  It is too plain to need more than the bare assertion that the lower the price of such bonds the higher will be the yield of interest on the capital invested in them.  Six per cent. gold interest on a bond at par is equal to twelve per cent. when the bond is worth only fifty cents on the dollar, and nine per cent. when it is worth but seventy-five cents on the dollar.  The holder of securities bearing gold interest therefore has a powerful incentive to decry their value in the market.  He puts money in his pocket precisely in proportion as he injures the public credit.

It is impossible to tell what precise extent men are governed by their own interests, and equally impossible to prove that the extremely low price of United States bonds all along is attributable to this cause;  but I cannot withhold the belief that it has had very much to do with depressing their value.  That the bond-holders have it in their power to affect the public credit at any time few will deny;  and the only question to consider is whether or not their interests would lead them in that direction.  The reduced rates of our securities in the markets of America and Europe is a profound mystery, if it cannot be ascribed to this influence.  The United States six per cent. securities are hardly second to the best in the world, and ought to command a large premium but the German banker, with an outlay of $75,000, draws his six per cent. gold interest semi-annually on $100,000, which is equivalent to nine per cent. on his capital.  He at least can have no motive in building up our credit while more bonds can be purchased.  By reducing it he adds to his capital and his income.

Suppose the bonds were silent as to the kind of interest to be paid, and the interest were discharged regularly in current money the same as all other obligations of the Government, the case would then be precisely the reverse.  It would then stand the creditor in hand to build up the public faith.  He would gain in that case by the enhanced value of the money he received as interest, and every detraction from the credit of the Government would result directly in loss to each and every bondholder.

Further argument upon this head seems superfluous, and I hasten to notice the disadvantages of recognizing a distinction between coin and the Government currency.  But when this distinction is so clearly acknowledged by the Government itself as it is in paying all its ordinary obligations in paper and interest on the public debt alone in coin, the people individually cannot avoid discussing it, and comparisons are often drawn unfavorable to the public credit.  This leads to frequent disparagement of the Government securities, and it turns out that these paper promises are a much better representative of the public credit than of dollars.  The reputation of a Government, like that of an individual, for solvency is impaired by being much questioned.

We have long been hoping that by some means we might succeed in funding our national debt into a security bearing a less rate of interest.  Plans for that end have been introduced almost without number, and the committee that reports this bill have brought forward at least one plan during this session for the funding of the public debt.  But pass the hill and you will have reached the end of the question of funding the public debt.  It will be utterly impossible to effect loans at a less rate of interest than that which these bonds which are already issued bear.  When we agree to pay the principal and interest in gold, interest at six per cent., who will be induced by any motive you can present to take a bond at a less rate of interest ?  No one.  The suggestion is absurd.  The debt will not again be funded.

It will be remembered that the public debt affords an opportunity for a very large proportion of the capital of the country to escape taxation entirely, and as a consequence the burdens of taxation fall the heavier on the remaining property.  The interest on the public debt, therefore, should be no higher than the ordinary net profits on prudently conducted business.  It should in no case exceed the clear income upon money otherwise invested and subject to taxation, which, as a role, falls far below six per cent.

Every inducement presented to capital to evade active employment is a disadvantage to the public.  Its tendency is to stifle industry and retard the increase of fixed capital.  And from this cause possibly it may turn out that too high an interest is disadvantageous in the long run, not only to the producing classes, but to the bond holders themselves.  The best rule for all is to pay regard to the interests of all -- the poor as well as the rich, to labor as well as capital, to the unfortunate as well as the fortunate.  I fear the tendency of much of our legislation is to make the rich richer and the poor poorer.  This is not an unnatural result of the great calamity of civil war and the creation of a large creditor class in the Republic.  The rich and powerful are always vigilant and active, while the poor, intent alone upon their own subsistence, are apt to overlook their rights.

But the eternal principles of justice can never be violated with impunity.  While we render unto Cæsar the things that are Cæsar's the more humble citizen must not be neglected or forgotten.

The PRESIDING OFFICER, (Mr. Welch in the chair.)  The question is on the amendment of the Senator from Missouri, [Mr. Henderson]

Mr. SHERMAN.  Let it be read.

The Chief Clerk.  The amendment is to strike out in the first section, after the word "that," the following words:

In order to remove any doubt as to the purpose of the Government to discharge all just obligations to the public creditors and to settle conflicting questions and interpretations of the laws by virtue of which such obligations have been contracted.

And after the words "pledged to," in the eighth line, to insert:

An early resumption of specie payments by the Government in order to that conflicting questions touching the mode of discharging the public indebtedness may be settled, and that the same may be paid in gold.

And to strike out the residue of the section, so that, if amended, will read:

That it is hereby provided and declared that the faith of the United States is solemnly pledged to the early resumption of specie payments by the Government, in order that conflicting questions touching the mode of discharging the public indebtedness may be settled, and that the same may be paid in gold.

Mr. Sherman.  I suggest if the Senator wants this section amended that he move to strike out all the words down to the close of the seventh line, so as to read grammatically, and, then it will stand:

That the faith of the United States is hereby solemnly pledged to the payment of the debt in coin.

Mr. Henderson.  I do not object to that.  Strike out to the end of the seventh line containing the first word "that," so as to read:

That the faith of the United States is solemnly pledged to the early resumption of specie payments, and, &c.

The PRESIDING OFFICER.  The amendment will be so modified.

Mr. MORTON [reconstructionist].  Mr. President, as this bill came from the House it was applicable only to the payment of bonds;  it was made applicable only to interest-bearing obligations;  but it has been amended by the committee here so as to strike out the words "interest-bearing," and therefore applies the pledge to payment in coin of all the obligations, of the United States except those that are expressly made payable in currency.  Under the operation of this amendment the pledge to pay in coin is made applicable to the United States notes, commonly called greenbacks.  This part of the bill meets with my approval.  I believe it is the first time that it has been proposed in Congress to declare that the greenbacks are to be paid in coin.  Although logically there is nothing else in which a greenback can be paid, yet I believe it has never been sought or desired on the part of those who have been tinkering with the law upon this question to declare that the greenbacks were payable in coin.

Mr. President, if the bill shall pass in this form the faith of the Government is solemnly pledged to the payment of the currency in coin -- not that the currency may be funded;  not that it may be indefinitely postponed;  not that it shall be allowed to run until natural causes shall improve it;  but it is now proposed to pledge the faith of the Government that it shall be paid in coin.

Mr. Pomeroy.  That was so before.

Mr. Morton.  That was the logical result before, but it has never been so declared, and I congratulate the Committee on Finance as having taken a long step in the right direction.  When this Government has given an assurance to the country that the United States notes shall be paid in coin certain duties will result from that pledge.  It will then become a duty to take steps to make the pledge good and to pay these notes in coin.  They are now due, over due;  the bonds will not be due for years;  and when we solemnly pledge the faith of this Government that they shall be paid in coin it devolves on us an immediate duty of making preparations for such payment.

If I could vote for this part of the bill without voting for the rest of it I would be glad to do so, but I cannot vote for this first section because it commits me to a definition of the contract and construction of the law in regard to the five-twenty bonds that I do not believe to be true.  This bill proposes to settle conflicting questions in regard to the interpretation of the law and to declare the true intent and meaning of the statutes creating the several classes of bonds, and providing that all of them, except those expressly made payable in currency, shall be paid in coin.  I do not believe that is the law.  I cannot vote for that declaration without proving false to my own convictions, and therefore I will not vote for it.

And now I propound this question:  it is either intended by this bill to make a new contract, or it is not.  If it is intended to make a new contract I protest against it.  We should do foul injustice to the Government and to the people of the United States, after we have sold these bonds on an average for not more than sixty cents on the dollar, now to propose to make a new contract for the benefit of the holders.  And therefore, if the effect of this declaration is to make a new contract, is to assume an obligation that does not now exist, I protest against it.  If it does not propose to make a new contract, but simply to enforce that which now exists by law, then it is unnecessary.

Mr. President, this bill begins with a title "An act to strengthen the public credit."  It is a small stump speech injected into the title of the bill.  The idea that we are to strengthen the credit of the United States by this enactment would be absurd if it did not emanate from such a highly respectable quarter.  That the credit of this Government is to be improved or, in the language of this bill, is to be strengthened by a resolution, I do not believe.  No, sir;  that will not be the effect of it.  What is the purpose of it, and what will be the effect of it ?  Simply to raise the price of bonds in the market and to put money into the pockets of the speculators.

Sir, it is understood, I believe, that the passage of a bill of this kind would have the effect in Europe, where our financial questions are not well understood, to increase the price of our bonds and increase the demand;  and that will enable the great operators to sell the bonds they have on hand at a profit.  It is in its nature a brokers' operation.  It is a "bull" movement, intended to put up the price of bonds for the interest of parties dealing in them.  This great interest is thundering at the doors of Congress and has been for many months, and by every means attempting to drive us into legislation for the purpose of making money for the great operators.  That is what it means, and nothing else.  So far as it may have any effect upon the future result, as to whether these bonds actually will be paid in coin or currency, it can have none possibly.  Why, sir, do we not all know just as well as we know anything that if when the first five-twenties shall come due in 1882 our currency is still depreciated and we have not returned to specie payments we cannot pay these bonds in gold ?  This Government cannot procure the gold on a depreciated currency to pay these bonds.  Hence, no difference what the contract may be, no difference what may be the declaration of the law, if when these bonds come due we have returned to specie payments and our currency is equivalent to gold, then we shall pay in gold or its equivalent without regard to the contract, because we shall have nothing else to pay in.  So far as the final result is concerned, it makes no kind of difference what the contract is, one way or the other.  If when these bonds come due we have returned to specie payments we shall have nothing to pay with but gold or its equivalent.  If we shall not have returned to specie payments we cannot pay in gold;  we must either pay in currency or not pay at all.

What good is to be obtained by this declaration so far as the final result is concerned ?  Absolutely nothing.  Why, sir, here is an exception in the bill that is wholly unnecessary:

Except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money.

That exception is of no importance at all, because when we come to specie payments our lawful money will be equivalent equivalent to coin.  Therefore we will pay those bonds in just the same money that we will pay others that are provided expressly to be paid in coin.  Then, Mr. President, why this higgling about the contract ?  It cannot possibly affect the future result.  It is therefore for the present.  It is simply for speculative purposes, and for no others.

Mr. President, I confess my surprise that the same committee that brought forward the bill which we discussed the other day, and which, I believe, died a natural death in this body, should now indorse this one.  What was the purpose of that bill ?  It was to provide that the surplus gold now in the Treasury, and that which is hereafter to accrue through the form of gold notes, should be applied to the purchasing of these securities in the market at the market price.  Of course it was the interest of the Government to get those bonds, when it came to buy them thus, at as low a price as possible;  but here is a bill the object of which is to put up the price of those bonds in the market so that the Government would have to pay more for them.  I disagreed to that policy, because I said it was bad faith -- and I desire to repeat that statement here to-night -- to take the gold in the Treasury and use it for the purpose of buying up bonds that would not become due for years, instead of applying it to the payment of obligations that are now due and which we are bound to pay in coin, or not at all.

But, sir, while it is contended one day that we shall take our gold and buy up these bonds in the market and let the currency go, by the next bill the attempt is made to raise the price of these bonds in the market, and thereby increase the cost for which we will get them.  As has been stated here to-night, if this bill passes all prospect of funding the public debt until we return to specie payments has passed away.  When you have declared that a six per cent. bond is to be paid in gold, and you give the public a general assurance of that kind, will you expect the holder of that bond voluntarily to give it up and take a four and a half per cent. bond ?  No, sir;  all prospect of funding the debt after the passage of this bill must be put by until we return to specie payments.

When do the Committee on Finance expect to return to specie payments ?  According to the bill we had before us the other day there was a theory for that;  there was a mode of returning to specie payments;  and that was that the currency was not to be brought to par until the five per cent. bonds were brought to par -- until the bonds bearing the lowest rate of interest and the last ones to get to par had been bought up.  Why, sir, it would take ten or fifteen years, perhaps, to accomplish that.  The currency was put behind the whole bonded debt, according to the theory of that bill.  Although that bill has perished its friends have not given it up;  and here is a bill that says substantially to the country, all ideas of funding must be put away until we have returned to specie payments.

Now, sir, after we return to specie payments we can fund the debt.  How ?  We can take a bond drawing as low a rate of interest as it will sell for at par in gold, take the gold and redeem the six percent. bonds, and by repeating that operation we can fund the debt.  But you cannot sell a new bond bearing a low rate of interest at par in gold until you return to specie payments.  Therefore, returning to specie payments is the condition precedent for the whole operation.  The idea has been cherished -- I confess I never thought very well of it, but I know it was the idea of the Committee on Finance -- that we might fund the debt in a four and a half per cent. bond.  I believe we passed a bill through the Senate, and I think I voted for it, providing that we should offer the bondholders a four and a half per cent. bond.  We did not say whether the existing bonds should be paid in gold or not, but we left them to understand that perhaps they would be paid in greenbacks, and it was thought that that would be an inducement for exchanging the existing bonds for this new bond that was expressly payable in gold.  That bill passed the Senate upon that very idea.  But even that poor chance of funding is now expressly discarded by this bill.

Mr. President, I regarded the other bill as a bill for the benefit of the speculators.  This bill is unmistakable in its character;  it is a bill for the benefit of those who are operating in bonds, and who expect to profit largely even by a small rise in them.  That it can have any ultimate effect on the final result as to whether the bonds shall be paid in gold or not is utterly impossible.  That does not depend upon the law at all.  It depends upon the simple fact of our ability and our condition at that time.  If in 1882 we have returned to specie payments we shall then pay our bonds in gold, but if at that time we have not returned to specie payments we cannot pay them in gold;  it makes no difference how many declarations we make on that subject.  When you return to specie payments you have nothing to pay any of your bonds with but gold or its equivalent, and therefore the exception here in favor of bonds expressly in currency is utterly worthless, because we shall have nothing then but gold and silver with which to pay those bonds.

Why, then, Mr. President, at this late hour of the session is this bill so earnestly pressed ?  I do not doubt the patriotism of those who are urging it;  but that its only effect can be to improve the present value of the bonds in the market, and put money into some men's pockets, is clearly manifest.  The provision in it that the greenbacks are specifically payable in coin I regard as valuable, if it is put in to mean anything.  If it is put in as a mere placebo, for the purpose of getting votes and allaying the apprehension in the public mind, it means nothing and will not be acted upon.  But if we mean what we say, that this currency is specifically payable in coin, then we should begin the preparation to pay it in coin.  And how shall we do it ?  By collecting the gold to do it.  You cannot pay the debt unless you have got the money to pay it.  You cannot pay the greenbacks in gold unless you have the gold.  But we are told we cannot get the gold to pay $350,000,000 of greenbacks;  and yet we are required solemnly to pledge ourselves to pay $2,200,000,000 of bonded debt in coin.  When we ask for the redemption of the currency in coin we are told it is impossible.  The Government cannot get gold enough to do it;  and yet the same Senators turn round and ask us to pledge the faith of the Government solemnly to pay $2,200,000,000 of bonded debt in gold.  Sir, as the payment of these bonds in gold does not depend upon the form of the contract, but depends entirely upon the future condition of the country, why should we be higgling about this contract ?  This bill ought not to pass.  It is tinkering with the law, not to strengthen the public credit, not for the permanent good of the country, but for the benefit of men who are dealing in bonds.

Mr. Sherman.  The Senate seem to manifest impatience, and I thought nothing in the world could tempt me at this late hour of the night to say a word upon this bill, but the remarks made by the honorable Senator, from Indiana [Mr. Morton] are so extraordinary that I deem it my duty to reply, and if it were night or morning I would do it alike.

The Senator seems to attack with great violence the Committee on Finance ever since we had the misfortune to disagree with him in regard to his plan to promote the public credit and resume specie payments.  We were not able to report in favor of it, but reported against it, and ever since that time everything that we have done seems to meet his disfavor.  He says the plan reported by us is dead, still-born.  I suppose he killed the bill, according to his idea.  Let me inform the Senator from Indiana that every word and every clause in the bill introduced by the Committee on Finance, in my judgment, will be the law of the land within twelve months from this time.  This bill contains one section of it;  and I have no doubt that all the other features of that bill will be embodied in the law of the land.  If we could have had a vote of the Senate upon it, probably by this time it would have received the sanction of the Senate;  but every one saw the impatience of Congress, the hesitation and delay, and unwillingness to settle this question on broad principles.  The bill that is sent to us from the House of Representatives is not a bill of my own choosing.  So far as it goes I approve of it;  so far as it meets my views I approve of it.  What does it contain ?  The remarkable declarations now made by the Senator from Indiana to cast reproach on this bill will attract attention.  What is the bill ?  The second section of it has been often debated and has twice passed this body.  What is the first section ?  It does not contain a single thing except the preamble, or in the nature of a preamble, but what the Senator himself advocated.  He proposed the resumption of specie payments in two years, and then every dollar of this debt became payable in gold.  According to his plan the people were to hoard the greenbacks and the United States were to hoard the gold, and by this process we were to get back to specie payments;  and because not a single member of the Committee on Finance could see any virtue in this remedy of his therefore everything that we do meets with his disapprobation.

Mr. MORTON.  I enter my protest against the declaration of the Senator that I have attacked the committee.  I have not.  I have imputed nothing wrong to the committee.  I attribute to them nothing but patriotism and the desire to do what is for the best interests of the country.  But, sir, I have attacked their measures;  and I suppose I have the right to do that without having it regarded as personal.  Certainly for the distinguished chairman of that committee I entertain nothing but profound respect.  But so far as the measures of that committee are concerned they are public property.  Now, sir, in regard to the bill---

Mr. Sherman.  I think I have given way long enough.

Mr. MORTON.  Just one word.  The Senator stated that I intimated that I had killed the bill.  Did I say one word like that ?

Mr. Sherman.  About the same thing.

Mr. MORTON.  No, sir;  I intimated nothing of the kind.  I did not refer to the fact that I had said one word about the bill, but I did say it died a natural death, and who can dispute it ?  I did not say it was murdered by me or by anybody else.

Mr. Sherman.  Mr. President, I dispute it.  It is not only not dead, but it liveth and will be the law of the land;  and you here in this bill will make one of the most important and fundamental provisions, the first section of that bill, the law of the land, and I suppose that every section of it will be hereafter made the law of the land.  Now, in justice to the Committee on Finance let me state what those sections were, because one of the organs of this body cannot sit here quietly and hear its measures thus arraigned at any time, in the night or in the morning, without a reply.  What were the measures of that bill ?  The first was that gold contracts should be legalized.  Here it is in this bill.  The second was that $140,000,000 should be set aside to redeem the public debt, and that will be done unquestionably.  Now, more than that is set aside;  but it is not applied because the law is not put in force.  The third was to tie the fate of the greenbacks to the fate of the bonds.  That is done here by the amendment proposed by the Committee on Finance, so as to put the bond and the note precisely on the same footing, both to be paid in gold;  both to be treated alike;  and I have no doubt what ever that at the next session of Congress the demand of the public as well as the sense of justice of Congress will compel us to authorize the holder of the greenback to receive his bond, dollar for dollar, for his paper money;  there is no doubt of it.

What else ?  The other section of the bill, the only material one, was a section which provides for free banking.  The Senator himself professed to be in favor of it.  He himself desired and voted to withdraw from all the eastern States nearly or more than one half of their circulation with a view to place it in the South, and then to compensate the East by free banking.  Those were the provisions of the bill from the Committee on Finance and there was not one of them that I think the honorable Senator himself would not approve.

But now this bill came to us from the House of Representatives, and I will state very briefly what it is, for I know it is wrong for me to delay the action or vote of the Senate upon it.  What is the first section of this bill ?  It is simply a solemn pledge of the United States that all the obligations of the United States, notes and bonds, shall be paid in gold and silver coin, except only those where the law expressly provides that they shall be paid in lawful money.  But my honorable friend says, why the exception ?  It shows that he has not examined this question with his usual care, or he would not have asked that question.  Why, sir, there are some fifty or sixty million dollars of three per cent.  certificates expressly payable in currency.  If they were not excepted from this declaration they would to-morrow be payable in coin on demand at the Treasury of the United States.  Therefore this exception is made.  There are also bonds issued to the railroads expressly payable in currency.  But for this exception they would be paid principal and interest in gold.  The interest on those bonds is semi-annually paid in lawful money.  It was necessary to except certain currency obligations.  But we say that with regard to all other obligations, paper money and bonds, they shall be paid in gold and silver coin.

Now, sir, the first part of this section I should like to see the Senate strike out, because it makes the declaration clearer, stronger, and more emphatic than I wish.  Why ?  I do not believe, and I never could reason myself into the belief, that the law which authorized the issue of these bonds made a discrimination against the lawful-tender money of the United States.  I think so yet;  and I do believe now that by a fair and reasonable construction might those laws the bonds of the United States might be paid in lawful money issued within the limits and according to the terms of those laws.  But do we propose to pay those bonds in lawful money ?  Certainly not.  We have not the money to pay them.  We dare not increase the taxes in order to gather in this lawful money to pay the bonds.  We must postpone the payment of the bonds.  I repeat that under the condition of our finances it is impossible to pay any considerable sum of the principal of this public debt either in lawful money or in gold.  Our people do not and will not ask as to levy more taxes upon them in order to avail themselves of the legal privilege or right which they have to pay in lawful money.

My honorable friend from Wisconsin [Mr. Doolittle] was talking about taxes.  According to his doctrine he would have us levy more taxes in order to gather in this lawful money so as to avail ourselves of the legal privilege to pay the bonds in lawful money.  That is his idea.  Sir, the people of the United States do not desire now to pay any more of the principal of this public debt than one per cent., a small amount, and to adopt a policy which will in the end pay the whole of it.  But what shall we do in the mean time ?  Shall we suspend specie payment until we can pay the whole of this debt by taxes ?  Is that the policy of the gentleman ?  Is the payment in specie to be postponed indefinitely ?  My friend from Indiana says only for two years, and then he would bring it about by hoarding gold and by hoarding greenbacks.

Do our Democratic friends propose to postpone the resumption of specie payments until this debt matures, until we can gather in a sufficient amount of taxes to pay off the principal of the debt in lawful money ?  No, sir.  The honor of the country, the good faith of the nation, the public interest of the laborer, the rich and the poor, all classes demand that we should resume specie payments as early as possible and place all the obligations of the people of the United States upon the solid basis of gold and silver coin.  We cannot delay that primary duty;  and therefore I look upon this first section as simply a declaration that we will now perform our primary duty of making our notes equal to coin, and I have no doubt that if that policy is pursued and adopted the bondholder will be glad to get the lawful money of the United States in payment of his bond.  But now all that this first section does is to declare as a matter of public policy that the notes and the bonds shall alike be paid in gold;  the bonds as they gradually mature, and the notes long before any of the bonds mature.  Why, sir, none of these bonds mature until 1881, and we cannot get the lawful money to redeem them even at the end of five years, when we have the right to redeem them, except by taxes.  We cannot draw in the lawful money of the United States except by taxation.  We cannot adopt the repudiating scheme of our Democratic fellow-citizens of the United States of issuing broadcast in violation of law a large amount of legal tenders and thus repudiating our debt.  I never could see how honest men could propose that.  Then, the only way we can get lawful money to pay this debt is by taxation, and our people will endure no more than they are now paying.  They have no desire to assume all the burdens of paying the public debt now.  They are willing to see a portion of it postponed, but in the mean time we cannot prolong this suspension of specie payments until we can avail ourselves of that privilege.

I say, then, that the primary duty of the United States is to resume specie payments as rapidly as possible and make the lawful money of the United States equivalent to gold.  Therefore I look to see the bonds of the United States advancing step by step with the money of the United States to the par of gold.  Sir, it gave me a thrill of pleasure when I saw that the bonds of the United States are now worth eighty-nine cents in gold in the markets of London.  I do not care who made money by it;  God knows I did not.  I have no interest in it, directly or indirectly.  I was glad to see our bonds appreciate in the market, and that the holders should get the benefit of that appreciation;  and I trust that in three or four or six months, or a year, these bonds will touch par in gold.

But my honorable friend from Wisconsin comes back and says, how can you fund the public debt ?  I will tell him.  We will do it just as England and just as every other country did that reduced the rate of interest.  Whenever the bonds of the United States rise above par in gold then we can place in the money market of the world a bond bearing a lower rate of interest.  If our bonds this day had reached the par of gold we could put in the market without question or difficulty a bond bearing a lower rate of interest.  Sir, I believe that if we would now, wisely and persistently, firmly and boldly, march to the resumption of specie payments in such a way as not to distress our people;  not by increasing taxes, but by steadily appreciating our public credit until the five per cent. bonds rise to par in gold, the whole of the six per cent. bonds could be paid off.  There is now only about fifteen per cent. difference between the market value of the ten-forty bonds and gold.  If we can wipe out that fifteen per cent. by an appreciation of the public credit then your funding will go on with rapid speed;  the whole of the five-twenty bonds will be paid off.

Why, sir, when the bonds of England rose to one hundred and three per cent., three per cent. above par in gold, then it was that they reduced the rate of interest one per cent, by putting a bond at a lower rate of interest in the money market.  That is the only way that you can carry out a process of funding.  In my judgment it is the most rapid way.  If we were able to gather in taxes more rapidly, if we were able to levy upon our people a larger amount of taxes and apply fifty or one hundred million dollars to the payment of the principal we could carry on the process just so much the more rapidly, but we dare not extend our system of taxation without losing the confidence of the people.  The only other resort is to advance our public credit, to elevate our bonds from the slough of despond in which they were cast by the burden of the war, to elevate our public credit to where it was before the war, and then the burden of this interest will pass away by the reviving credit of our country, and we may hope to see our bonds bearing in the money market of the world, in the hands of the rich and the poor, the foreign and the native, all the credit that now clusters around the three per cent. consolidated debt of England.  Then it may be that we will not satisfy ourselves by reducing the rate of interest to five but to four and a half or four per cent.;  and probably within twenty or thirty years we may stand as Great Britain does with our credit such that we can get par for our bonds at three and a half per cent, interest in gold.

But, sir, in the mean time we must not be diverted from the difficulties that stand in our way.  In my judgment the plan reported here at this session by the Committee on Finance is the best, the most rapid, and the most effectual way to bring about this state of affairs.  I am not discouraged by the reluctance of the Senate to assume it.  I know that such propositions are always of slow growth.  But I assure my honorable friend from Indiana that if he supposes that any section or line or word of that currency bill is dead, or even that it sleeps, he is very much mistaken.  He will find it either in whole or in part meeting him at every stage of this progress until every word of it is ingrafted in the laws of the United States.

I know that my friend, for whom I have the utmost kindness and the greatest good feeling, did not intend any unkindness in the remarks he made;  but when he attacks an organ of this body, and speaks of me as the chairman of that committee, and accuses them of being guilty of vacillation and mutations and changes in their reports of bills, as a matter of course he naturally excites a feeling which will not submit in quiet to that imputation.

Sir, I myself came with slow reluctance to the declaration made in the first section of this bill.  I declare now to you here that my construction of the law under which these five-twenties and under which the greenbacks were issued still remains unalterable;  for I have examined it carefully again at the present session;  but I do assert, as a question of public policy, that it is wise now for us to declare in the language of this bill that the bonds and greenbacks alike shall be paid in gold as rapidly as we can do so;  that these greenbacks and these bonds may be linked together in every law that is passed;  that every privilege that is given to the bondholder shall be given to the holder of the greenback;  that both together shall rise gradually to the par of gold, when the bondholder may be paid off by bonds bearing a lower rate of interest and with a large saving of interest to the people of the United States in that most oppressive form of our expenditure.

I again beg the pardon of the Senate, not for being excited -- I do not think I am excited -- but for being aroused to occupy a few moments of their time at this late hour of the evening.  I think this question has been fully considered, and I hope, therefore, that without any more debate on the subject to-night we may have a vote upon it.

Mr. Doolittle.  I shall occupy but a moment in reply to the honorable Senator from Ohio.  He began in the fore part of his speech by saying, and he concludes by saying, that the five-twenty bonds by the fair construction of the law and the contract are payable in greenbacks.  Now, sir, I take him at his word.  By the law of the case the principal of these five-twenty bonds is not payable in gold, but in greenbacks;  and the question that I put home to the Senator from Ohio is this:  if the principal of nearly two thousand millions of bonds are payable in greenbacks by the fair construction of the law, as he has often said and now repeats as his deliberate opinion, can you now justly force the people of the United States to pay them in gold, without a violation of the contract in letter and in spirit ?  If the contract to which the great mass of this people are pledged is to discharge those bonds in greenbacks, which are only worth seventy-five cents on the dollar, can any man who takes that view of the law of the case, who says that is the true construction of the law under which the bonds were issued, stand before the American people and say "You are bound to pay them in gold ?"  No, sir;  no man can give that construction to the law and consistently vote for this bill.  You must either stand upon the law, that the true construction is that the people were bound to pay the principal in gold or that they were bound to pay them in greenbacks;  and if they are allowed to pay them in greenbacks, you cannot, without inflicting injustice upon the people of the United States, now say that they shall pay them in gold.

Mr. WILSON.  May it not be their interest to do that very thing ?

Mr. Doolittle.  The honorable Senator from Massachusetts asks me is it not the interest of the people of the United States to pay in gold when they have only agreed to pay in greenbacks ?  No, sir.  It makes about eight hundred million dollars difference in the amount of their public debt.  It adds that amount to the debt if you take the whole debt;  but if you refer simply to the five-twenty bonds, it adds about one fourth to their amount.

Mr. EDMUNDS.  Will the Senator permit me to ask him a question ?

Mr. DOOLITTLE.  I am arguing now with the Senator from Ohio, the chairman of the Committee on Finance, and replying to his speech, and if my honorable friend from Vermont will wait until I have replied to him, if he then makes a speech I may reply to that, though I do not wish to occupy the time of the Senate further.

Mr. EDMUNDS.  As the Senator misstated the fact entirely with reference to the amount of these bonds, I wished to call his attention to it.

Mr. DOOLITTLE.  I am dealing with the Senator from Ohio, the chairman of the Committee on Finance.

Mr. EDMUNDS.  Yes;  but you are misstating facts.

Mr. DOOLITTLE.  The chairman of the Committee on Finance admits here, and repeats it twice solemnly, after a full examination of the law at this session, that these bonds are payable in the lawful currency of the country, or the greenbacks;  and yet he stands here urging the Senate of the United States to declare that the people who may discharge these bonds in greenbacks, which are worth seventy-five cents on the dollar, shall discharge them in gold at a hundred cents on the dollar.

Now, Mr. President, the honorable Senator from Ohio, says, while he gives that construction to the contract, the difficulty is to know where can you get the greenbacks ?  He asks, will you adopt the repudiating scheme of the Democratic party, and issue an unlimited amount of greenbacks equal to the amount of bonds ?  Nobody ever proposed anything like that.

Mr. Stewart.  Pendleton did.

Mr. Doolittle.  No, he did not.  The gentleman says Pendleton did.  Even Mr. Pendleton, who went further than any other man on this subject of issuing greenbacks, distinctly, and over and over again in the canvass repudiated as false the declaration that he was in favor of issuing an unlimited amount of greenbacks in order to discharge these bonds;  and I can say for myself -- and I believe for the great mass of those who acted with me in supporting for President Mr. Seymour in the last canvass -- the large majority of them everywhere maintained that the law under which the greenbacks were issued limited the amount of greenbacks to the amount of $450,000,000.  I stand upon the law.  I am not for repudiating it in favor of the bondholder, nor am I for repudiating it in favor of the tax-payer.  I stand upon it as it was made.  I take the construction of it that the Senator from Ohio gives it, and in this argument I hold him to that construction.  I assume, therefore, they are payable in greenbacks, and not in gold.

Mr. Stewart.  I should like to ask the Senator---

Mr. DOOLITTLE.  I desire not to be interrupted when I am dealing with an important subject of this sort.

Mr. STEWART.  I did not wish to interrupt the Senator.  I only wished to ask him how he was going to pay them in greenbacks ?

Mr. DOOLITTLE.  I will come to that in a moment.  The honorable Senator from Ohio asks, where will you get the greenbacks ?

Mr. MORTON.  Where will you get the gold ?

Mr. STEWART.  Let him answer first where he will get the greenbacks.

Mr. DOOLITTLE.  Mr. President, if the Senator from Ohio had given his attention to the important letter which I read in the Senate to-night he would have had no difficulty on that subject in seeing just how it could be done.  That letter was from a member of the same house in London that negotiated the first six per cent. stocks of the United States which funded our original debt, the house which eliminated the scheme and put it in operation.

Mr. STEWART.  Tell us how it was done.

Mr. Doolittle.  If the honorable Senator will be quiet for a moment, I will repeat the substance of the letter.  It was in substance this:  that the Government of the United States should issue its stocks for four and a half per cent.;  that upon that stock seventy-five per cent. in sterling could be realized, and with your seventy-five per cent. in gold you could obtain your greenbacks, which are worth seventy-five cents in gold upon the nominal par, and then with your greenbacks you could pay the principal of these five-twenties which have become payable under the law.

But the Senator says there are not as many greenbacks as there are bonds.  That is very true;  but what did you get for your bonds ?  You got these same greenbacks and nothing else.  They were paid over and over and over again;  and you can go into the markets of the world, at home or abroad, and with a four and a half per cent. stock pledging the Government to pay principal and interest in gold you can raise the gold and exchange that gold for greenbacks, and with the greenbacks discharge a portion of the public debt;  and you would not be compelled to go further than to pay one or two hundred million dollars of the principal of these bonds in greenbacks before every holder of your five-twenty bonds would gladly accept a four and a half per cent. bond, or a four per [cent] bond payable principal and interest in gold in lieu of his present six per cent. five-twenty bond.  That is the substance of the proposition of the man who represents the very house in London that negotiated the first debt of the Government of the United States.

Mr. Stewart.  The proposition, then, is to compel the bondholders to agree to a repudiation of twenty-five per cent of their bonds by scaring them into taking bonds of less value.

Mr. DOOLITTLE.  I am interrupted by the Senator from Nevada to say---

Mr. GRIMES.  Will the Senator be kind enough to allow me one moment ?

Mr. DOOLITTLE.  Certainly.

Mr. GRIMES.  As I am anxious to get through this debate in time to-night to make proper preparations for church to-morrow morning, and as I find by a rule of the Senate that it is out of order for any Senator to interrupt another while speaking, I give notice that from this time forward I shall call any one to order that interrupts the speaker.

The PRESIDENT pro tempore.  It is out of order to interrupt a Senator on the floor.

Mr. Stewart.  I shall not do it again.

Mr. DOOLITTLE.  The Senator from Nevada interrupts me to say that we propose to the bondholder to repudiate one fourth of the debt.  We propose no such thing.  We propose to pay the debt according to the letter and spirit of the law.  The Senator from Ohio, to whom I am replying, expressly declares to the Senate, speaking for himself, that by the fair construction of the law we are not pledged to pay anything but greenbacks.  We are not pledged to pay the gold;  and therefore it is not repudiation.  I say to the Senator from Nevada that if that be the fair construction of the contract that the people are bound only to pay these bonds in the lawful money of the country, which is worth but seventy-five cents on the dollar, you are for repudiating the contract;  you are the repudiator;  you would tax the people one hundred cents where by the law of the contract you only have the right to tax them seventy-five.  I brand your proposition as repudiation;  repudiation, and nothing but repudiation.

The PRESIDENT pro tempore.  Senators must address the Chair and not each other.

Mr. DOOLITTLE.  Mr. President, I stand upon the contract as the Senator from Ohio admits it to be;  and you have no more right to repudiate it so as to bring heavier burdens upon the people than you have to repudiate it in order to destroy the real and just obligation which the bondholder has against the Government.  The bondholder has his obligation worth seventy-five cents on the dollar in gold, as it now stands, and no more;  and you propose to put this additional burden of twenty-five cent. on the people of the United States.  You repudiate the contract.  We agreed to pay a dollar in paper money, not a dollar in gold.  Sir, this cry that it is our purpose to repudiate the just obligations of the Government is a false cry from the beginning to the end.  We stand for the contract.  You are for repudiating it.  You began by repudiating the old contracts when you passed your legal-tender law.  You made the paper money issued under that law a legal tender in payment of contracts already in existence as well as a legal tender for contracts in futuro.  You declared that you would allow a contract which a man had solemnly engaged to pay in gold to be discharged in paper money.

Mr. President, I confess that I feel some interest in pleading in this case.  I am not pleading, I admit, for the bondholders or the bond-purchasers in Wall street or London or elsewhere, but I am pleading for the great mass of the people of this country who have to bear the burdens, who have to pay these bonds and pay the interest upon them.  You admit that they are only bound to pay seventy-five cents on the dollar;  that they have the right to discharge them in the lawful money of the country, which is only worth that amount at the present time, and yet you propose to force upon them the necessity of meeting these obligations at one hundred cents on the dollar in gold.

I should not have spoken again on this subject but for the fact that the Senator from Ohio charged me with favoring repudiation, when upon his own ground he is for repudiation and I am for standing by the contract.

Mr. MORTON.  One word further, sir.  My friend, the distinguished chairman of the Committee on Finance, spoke with some asperity.  I do not think he had occasion to do so, but I do not complain of it.  I simply desire to call attention at the conclusion of this debate to the fact that the main position that I took he has not answered and did not even approach.  I took the ground that if when these bonds became due the Government had not returned to specie payments and our paper money was still depreciated the Government could not pay the bonds in gold, and that when we had returned to specie payments and our paper currency was convertible into gold then we would have nothing but gold or its equivalent to pay, and therefore the particular form of the contract was unimportant;  that this change that he proposes to make in the contract could not affect the final result, and therefore the only object of it was to affect the present price of the bonds.  That was my position;  and with all his knowledge and ingenuity he did not even approach it.

I might also refer to what has been referred to by the Senator from Wisconsin, that he distinctly admits in his speech, as he has done perhaps upon a dozen occasions in the Senate, that according to the law of the contract the Government has the right to pay the five-twenty bonds in legal-tender notes.  He admits that here to-night;  but he presents a bill that proposes to make a new contract for the Government of the United States by declaring that the faith of the Government is pledged to pay in coin a bond which he admits by the terms of the original contract may be paid in legal-tender notes.  Let it be understood then that according to the confession of the chairman of the committee this bill is intended to make a new contract.  Long after these bonds have been sold and long after they have been taken upon the old contract it is now proposed to make a new contract.  For whose benefit ?  Not for the benefit of the Government of the United States;  but to enable the men who deal in bonds to realize a rise upon them and a speculation.  It is a new contract, because if the old contract is, as he says it is, and as he has always declared it to be, he now proposes to change it and say that the Government has not got the right to pay in legal-tender notes, but is bound to pay in coin.

Mr. Hendricks.  Will my colleague allow me to suggest to him---

Mr. Fessenden.  I call the Senator from Indiana [Mr. Hendricks] to order.  He has no right to interrupt the Senator on the floor.  Notice has been given that that rule would be enforced.

Mr. Hendricks.  I am not interrupting I my colleague;  I am asking my colleague if he will allow me to ask him a question.

Mr. MORTON.  Certainly, with pleasure.

Mr. Fessenden.  Then I addressed the Chair before the Senator did, and I think I was recognized.

Mr. Hendricks.  If the Senator from Maine wishes to speak I certainly do not wish to be in his way.

The PRESIDENT pro tempore.  The Senator from Indiana.

Mr. Hendricks.  I was going to suggest to my colleague, with his permission, before he took his seat, that this will not be the making of a new contract, for there is no new consideration passing as between the people and the persons who hold the public securities.  It is an effort simply at a legislative construction of the law and the contract already made;  and if it be competent for this Legislature to put a construction upon the contract it is equally competent for a future Legislature to put another construction upon it.

Mr. Fessenden.  Mr. President---

Mr. MORTON.  Will the Senator allow me to answer the question my colleague asked me, and then I will give way to him ?

Mr. Fessenden.  If every question is to be asked in the form of a speech and to be answered by a speech I do not see that I shall get a chance to speak at all.

Mr. MORTON.  I certainly give way to the Senator.

Mr. FESSENDEN.  If the Senate will excuse me at this late hour of the night in saying a word or two I very much desire to do so, because I have heard doctrines advanced here to-day and this evening to which I cannot assent and as I was somewhat intimately connected with the enactment of this law which has been so much commented upon I feel a little interest in it, that it should not be totally misunderstood and totally perverted.

The honorable Senator from Indiana, [Mr. Hendricks,] in the speech that he made this forenoon, undertook to say that the policy adopted by the Republican party, who passed the bill, was originally to depreciate our money;  that they passed that bill with the design of issuing a depreciated currency and having it depreciated upon the market for the uses of the time.  Sir, the Senator draws upon his imagination and not upon any fact when he makes that statement.  That the money did become depreciated in consequence of the continuance of the war and the great expenses to which this country was subjected is true;  but that it was the deliberate design or the dream of those who passed the bill to make a depreciated currency purposely I utterly deny.  There is not a word of real foundation for the statement.

Mr. President, what were the circumstances under which we authorized the issuing of these notes ?  Senators will remember that gold had gone out of the market.  Senators will remember that it was no longer in the power of the Government to obtain the gold.  It was necessary that they should have some currency in which to collect the taxes which they were about to levy, and something which could pass as money for all the uses of the war.  It was with that design that they issued their promises to pay;  and it is a foul reproach upon the character of this people and of Congress to say or to intimate that when they issued a currency, their own promises, in which they engaged to pay so many dollars to the holder, they meant to pay less than so many dollars to the holder.  They guarded against the possibility of it, or endeavored to do so, in every way that they could imagine to be feasible.

What did they do ?  They provided that that money thus issued, those promises, might at any time be turned into a bond;  and that bond should promise to pay so many dollars with so much interest, and that that interest was to be paid in gold.  I will explain presently the distinction between the principal and the interest which existed.  Was it the design that that should be depreciated paper ?  Was it the design that it should fall in the market, that less was to be paid for it than the promise that it bore on its face ?  Did they mean, when they said they would pay one dollar, that they intended to pay only sixty or seventy cents ?  Was that the object ?  The men of those States and the Senator himself, had he been here, would have repudiated the very idea as a reproach and a scandal;  and for a Senator of the United States to rise here in his place to-day and say to the country and the world that the people of the United States, by their representatives, when they issued their promises to pay, did it with the design of defrauding the public, I say again is without the slightest foundation in fact.  Sir, I meant what I said, and the Congress of the United States meant what it said, that it would pay so many dollars.  What was a dollar ?  A dollar was defined by statute.  It was gold or silver coin.  That was the promise;  and a promise which I for one meant to perform;  and a promise which the people of the United States, through their representatives, meant to perform.

Now, sir, having alluded to that, I desire to say one word about another point, for I do not design to go into the argument.  I utterly protest against the idea that two Senators in this body -- the honorable Senator from Indiana [Mr. Morton,] and the honorable Senator from Ohio, [Mr. Sherman,] the chairman of the Committee on Finance -- shall be held as representing the Congress of the United States and the people of the United States on this subject because their opinions happen to be one way.  Why, sir, this matter has been argued by the two Senators, and is argued by the honorable Senator from Wisconsin, as if the words of the Senator from Indiana and the Senator from Ohio were law to all the people of this country and to all the representatives of the people.  I do not hold them to be law to me.  The Senator from Indiana talks about making a new contract.  Sir, it is no new contract.  He assumes that as the basis of his argument.  I deny it.  It is the old contract.

Mr. MORTON.  I assumed that on the admission of the Senator from Ohio.

Mr. FESSENDEN.  And on the Senator's own admission, for he made a speech here at the last session of Congress in which he laid down the same doctrine;  and I understood him to say at the time, very distinctly, that no man who was a lawyer could dispute the fact;  and I undertook to dispute the fact at the time in so many words.  He maybe of the same opinion still;  but it does not bind me.

Mr. MORTON.  I never said that.  You cannot find any such statement made by me.

Mr. FESSENDEN.  Perhaps not, in so many words.

Mr. MORTON.  The Senator cannot find it.

Mr. FESSENDEN.  I think I could.  That was the idea.  I am very positive about that.  It struck me at the time.  It might have been that no man of common sense would do it;  but that would be a little more offensive, and I do not think the honorable Senator said that.

Mr. MORTON.  No, sir.

Mr. FESSENDEN.  And the honorable Senator from Ohio, in the report that he brought in from the Committee on Finance, undertook to say substantially the same thing, that that was his construction of the statute, but did he represent the Committee on Finance in that ?  I understood not;  that he represented simply his own opinions;  and however much I may defer to his opinions, and however much respect I may have for him, and I certainly have a great deal, as I have for the honorable Senator from Indiana, I wish to say to them that they cannot get up here and argue at one another and let anybody else found an argument that because they think so therefore everybody else must think so;  and yet that is really the style of argument that is adopted as between themselves, that they are to settle this question, and because they have given these opinions one is reproaching the other and holding him to it as if that was the conclusion of the country and of Congress.  Sir, I undertake to say that if gentlemen accustomed to construe statutes will take the most ordinary, the best received rule of construction, and take that statute as a whole, there is no doubt about what the construction must be, and that is that the principal as well as the interest was to be paid in coin.

Gentlemen found themselves on this, and that is all the argument there is, because by the words of a section the interest simply is mentioned as to be paid in coin, it not being said that the principal is, therefore, as a matter of necessity, the principal is not.  Sir, take all the statute together;  construe it as a judge does;  construe it as a lawyer does;  find out what the meaning of the law is.  I undertake to say that that construction would render the statute ridiculous and perfectly absurd on the face of it.  What does it propose ?  It says that any man who has a given amount of these greenbacks, as they are called, may carry them at any time to the Treasury and take out a bond redeemable after five years and payable in twenty, bearing interest payable in coin.  You must take that statute by itself;  not as construed by other statutes, and what would be the result as a matter of fact ?  Why, sir, if the bond is payable in greenbacks which you have just received, the result is all a person has to do who has one of those bonds is to go to the Treasury and receive his greenbacks for it, if it may be paid in greenbacks, and then he steps over to the other side after he has got his greenbacks and demands another bond, precisely the same thing on the same day, within any five minutes;  and thus he keeps alternating from one side of the Treasury Department to the other;  going and getting greenbacks for a bond, if it is payable in greenbacks, and then going over to another part of the building and getting a bond for it redeemable after five years and payable in twenty.  Mind you, the statute which repealed that clause authorizing the demand of the bond for greenbacks was not passed until afterward, and when you are construing a contract arising upon a statute you cannot take a construction that is made upon a part of it afterward by a subsequent statute;  you must take it by itself.  Sir, the whole idea always struck me as a perfect absurdity on the face of the statute itself.  It was sticking in a word against the whole spirit and the whole meaning of that law.  I will not argue it over at length, because it is too late at night.  I rose to enter my protest against this debate going out to the country between Senators who have expressed these opinions previously and who occupy high positions in this body as the sense of the body.  It is not the sense of the body, as I take it the vote of to-night will demonstrate, if we ever get to a vote on this subject.

Now, sir, what does the honorable Senator from Wisconsin propose as a means of getting out of this difficulty and paying off debt ?  That we shall issue our bonds and go into a foreign market and borrow gold ?  that we shall then come into this market with the gold and buy up our depreciated paper and pay off our old six per cent. bonds ?  that we shall trade in that way and settle our debts in that way ?  Sir, what would be thought of a private individual, a merchant, if he dealt in that way ?  Would you not call him a knave ?  Would you not say he was a cheat ?  Would you trust him ?  Would you have any confidence in his contract ?  Would you sell him a chest of tea or a bushel of corn ?  It is nothing but flat knavery;  it is flat cheating;  nothing more nor less than that;  and when that is put forth as the doctrine of the Democratic party, as a new phase of the doctrine of repudiation, which they advanced in the last canvass, and which the people repudiated, I trust it will meet the same fate.  It certainly deserves it.  That is the short and the long of the proposition;  the plain construction of it;  and unless we mean---

Mr. Dixon.  Allow me to ask the Senator a question.

Mr. FESSENDEN.  It is out of order under the notification we have received.

Mr. WILSON and others.  I object.

Mr. DIXON.  With the Senator's consent I will ask him a question.

Mr. Fessenden.  Well, sir, ask it.  I have no objection.

Mr. Dixon.  I desire to ask the Senator whether it is any more knavery when propounded by the Senator from Wisconsin than the same doctrine precisely when propounded by the Senator from Indiana ?  Anything that comes from the Senator from Wisconsin is called Democratic.

Mr. FESSENDEN.  Well, sir, I stated that it was so because I did not hear the Senator from Indiana propound that doctrine, and I did hear the Senator from Wisconsin propound it;  and as I have listened to the debate to-day from divers and sundry gentlemen of the Democratic party I see that this is to be their platform hereafter.

Mr. Dixon rose.

Mr. Fessenden.  Not my friend's.  I desire to exclude him, for he has put himself upon a proper platform.  I only hope, with the company around him, he may be able to stand upon it.  [Laughter.]

Mr. Dixon.  If the Senator will allow me, he does not seem to hear what falls from the lips of the honorable Senator from Ohio and the honorable Senator from Indiana.  He only hears what falls from my friend from Wisconsin.  The Senator was here present, I believe, at the time those Senators made their speeches.  Now, with the Senator's leave -- I will not go on without his consent---

Mr. Fessenden.  I have no objection.

Mr. Dixon.  The Senator from Indiana [Mr. Morton] and the Senator from Ohio [Mr. Sherman] both declared in the hearing of the Senator this evening that in their judgment the law authorized the payment of the five-twenties in greenbacks;  that we had a right to pay in greenbacks;  that that was the contracts.  I think I did not misunderstand the Senators.  Now, when that doctrine is propounded by those Senators, I ask my friend from Maine if it was not as dishonest and as objectionable as when it came from a Senator whom he calls Democratic ?

Mr. Fessenden.  There is a wonderful difference between the theory of knavery and the practice of it.  That is all I have to say about that.  The honorable Senators alluded to have contended and no doubt they believe that by the law of the case strictly we had a right to pay in greenbacks;  but they have both placed themselves, as I understand them, on the higher plane that we ought not to pay in greenbacks, but that we ought to bring our credit up to the point and the greenbacks themselves up to the point where payment in greenbacks would be equivalent to payment in gold and a discharge of the contract.

Mr. Dixon.  Does not the Senator from Wisconsin take the same ground ?

Mr. Fessenden.  No, sir;  he does not take the same ground.  He takes the ground, and he reads us a document to show what we ought to do, that we ought to issue our bonds at a lower rate of interest, go into the London market and get the gold, come back, buy up our greenbacks at a depreciated rate, and with those greenbacks pay off our six per cent. bonds.  That is his proposition in so many words, and that is an entirely different proposition.

Mr. Dixon.  I will wait until the Senator gets through to reply.

Mr. FESSENDEN.  I am glad the Senator has concluded to wait until I get through.  He cannot dispute that fact, because the Senator from Wisconsin has himself over and over again put it so this evening to my very great surprise.  I characterize that now just exactly as I did before, as dishonest in its nature and essence, and that any private individual acting upon the same system would not have credit in any community or retain the reputation of an honest man.  I have sufficient regard for my country to hope that it will not lose its reputation for integrity;  and it certainly will whenever it resorts to any such plan of payment as that.

With regard to the bill before the Senate it meets my approbation altogether.  I should like very much to have had the second section a little more definite.  I voted to make it so.  But with regard to the first section I never had any doubt about the true meaning of the law under which these bonds were issued.  I have been with my honorable friend from Vermont [Mr. EDMUNDS] from the first time he made the proposition that we should make this declaration.  Why ?  Not that it makes a new contract, as the Senator from Indiana stated, not that it in any way places us under any new obligations, but that inasmuch as a great party in this country has taken the ground that we ought not thus to deal with our contracts, and as two very distinguished Senators in this body have taken the ground that by the true legal construction of that law we had a right so to act, I wish to dissipate all such clouds that are over-shadowing the credit of this country.  I wish to put it upon the broad ground that by the original contract, according to any true legal construction of it, these bonds must be paid in gold, and also upon the fact that we ourselves time and again so declared by the proper officers of this Government, with the approbation of the people, that inasmuch as we did that we now make a legislative declaration of it that we, the representatives of the people, that we at least who represent the great party which originated this debt, from the necessities of the case borrowed the money and promised to pay it, shall keep our faith intact.  If Senators on the other aide of the Chamber desire to go before the people again, as they say and as we may infer they mean to do, with the declaration in their mouths that we are not bound either in law or honor to pay the dollars that we promised to pay, according to the original meaning and promise, I wish the Congress of the United States to speak upon that subject and to say that until some other set of men acquire the power to rule, in these halls and to make laws, we will keep the faith of this Government on the proud eminence where it has stood hitherto unshaken by any efforts that have been made willfully to break it down anywhere, unshaken even by the mistaken ideas of the contract that we entered into on the part of eminent and excellent gentlemen who are, I am sorry to see, mistaken upon a matter so vital to the welfare of the people.

My friend from Ohio, I think, began wrong when he adopted any such idea.  That original error of his has tainted his excellent mind and his great knowledge of this subject all through.  I am glad to see that it has not tainted his perceptions of right, and that, whatever may be his views with regard to what was the legal construction of the contract, the time has not come with him, and never will, when he wishes to avoid what is the truth and the fact in regard to it to enable the people of this country to do what they are expected to do, and that is, to discharge all their obligations in full faith and honor.  This bill, this production of the Committee on Finance, now is a proof to me that all error upon that subject is fast vanishing, and that we can reach the point I have so long wished to reach, where there can be no doubt in the mind of any man in this country or elsewhere of what the people of the United States mean to do;  that is, preserve their credit, keep their faith, raise the credit of this country to the point where it ought to stand, make themselves able to discharge all their obligations according to the spirit as well as the letter, and not be deluded by any idea that a party can rule here who seek to flatter and deceive the people into false notions of what constitutes public faith.

Mr. DOOLITTLE.  Mr. President, the honorable Senator from Maine, it seems to me, has fallen into a very great error when he says that what I proposed to do, to pay the bonds in the legal-tender notes of the Government, is knavery;  that it is not consistent with honesty to propose it.  That, of course, depends upon the construction to be given to the contract.  If the contract is as the Senator from Ohio and other Senators on this floor have admitted, and as I believe a fair construction of its language is, that the principal of the debt is payable in the lawful money which has been created by Congress, there is no dishonesty in discharging that debt according to its terms.

Now, Mr. President, let me bring the Senator from Maine to the point.  Suppose that I as an individual had gone to him and borrowed of him $10,000 of the lawful money of the United States, the greenback currency, which at the time he loaned it to me was worth forty cents on the dollar, and I agree in consideration of the loan that I would pay him six per cent. interest in gold so long as I kept it and until I paid the debt;  and when I paid the debt I should pay him in the same money which he loaned to me, and which at the time I offered to pay it to him is worth seventy-five cents on the dollar.  Is that knavery ?  I, for six long years, have paid him six per cent. interest in gold for the loan of paper money worth but forty or fifty cents in gold, equivalent to twelve per cent. interest on the amount of gold value which he loaned to me, and then I offer to pay him the principal of the debt by giving him the value in gold, not at fifty per cent., but at seventy-five per cent.  The $10,000 in currency which he loaned to me were worth $5,000 in gold.  I pay him $600 per year for the use of $5,000 in gold.  I pay him that sum for a term of years, and then I offer to discharge the debt by giving him $7,500 in gold or its equivalent, $10,000 in the same money which he let me have in exchange for my land;  and that he says is knavery;  that he says no honest man will do, and no honest man can justify himself for offering to do.

Sir, let me tell that honorable Senator that if he should appear in any court of equity, before any tribunal upon earth, and should insist upon my paying him in another kind of money than that which he loaned to me and I agreed to return to him, and should insist that I should pay him $10,000 in gold, when the contract was between him and me that I could pay the debt in $10,000 in paper money worth seventy-five cents on the dollar, every court on earth and every honest man would say that he was a usurer and a Shylock if he should undertake to enforce it against me.

The Senator talked about my repudiating the obligations of the United States.  No, sir;  I stand upon these obligations;  and I will stand there for the benefit of the people of the United States as well as for the benefit of the bond-holder.  I will not be driven by the cry of repudiation from speaking the truth.  I will not be driven into usury, nor into playing the part or suffer myself to aid others to play the part of Shylock, demanding not only what is nominated in the bond the pound of flesh, but good Christian blood.  I will defend the rights of the people under this contract as well as the rights of the bondholder.  While I oppose the idea of repudiating the debt which legally, morally, and equitably binds the Government of the United States, I repudiate as usurious and as based upon the principles of Shylock that other doctrine that would force the people to pay one hundred cents in gold where the fair construction of the contract is that they should discharge the debt in lawful money, worth from forty to sixty when borrowed, but now worth seventy-five.  Sir, let us look at this thing as it is.  The great mass of these bondholders let the Government of the United States have this depreciated currency at a value not exceeding sixty cents on the dollar in gold, much of it not exceeding forty cents.  They have received their interest at six per cent. on $100 in gold for a term of years, and now, substantially, the proposition to which I have referred is to offer to pay them in greenbacks.  Not by the issue of new greenbacks;  I admit that would be a species of repudiation, and I protest against it and all idea of violating the letter or the spirit of the law on that subject;  but we may use all the greenbacks that we have on hand or the greenbacks that we can purchase for gold to pay the bondholders.  If we choose to borrow the gold to purchase the greenbacks there is nothing dishonorable or objectionable in that.

Sir, I made no proposition such as the Senator refers to, that we should go to the London market and there borrow gold for the purpose of purchasing greenbacks.  I only read a statement of a gentleman in London who is connected with the house that negotiated the first funded debt of the United States.  He states that United States bonds bearing four and a half per cent. interest, payable in gold in London, would command seventy-five cents in sterling, and with that seventy-five cents in sterling we could discharge the bonds or a portion of them.  You would not be compelled to proceed in the payment of more than $100,000,000 of the five-twenty bonds in greenbacks before all the holders of those bonds would exchange them for your bonds at four or four and a half per cent., payable, principal and interest, in gold;  and, sir, that would be no repudiation.  The way to save ourselves from repudiation is to stand by the contract;  and I tell gentlemen here if you do not stand by the contract in favor of the people the people will not stand by you in enforcing any new contract that you choose to make increasing their burdens twenty-five per cent.  You must stand by the contract as well for the benefit of the people who pay as you do for the people who receive the bondholders.  Sir, let me read again this statement from the London gentleman, that Senators may see whether it is liable to the attack which the Senator from Maine has made upon it:

" In this office in the year 1793 the first scheme for the mode of discharging the principal and interest of the six per cent. stocks of the United States was first eliminated, and it was ultimately adopted and carried out by Congress.  It was an accumulative interest of two per cent.

"Having been intimately connected with the funds of the individual States from that date to this time, it will be readily comprehended that I have steadily followed and studied all the financial matters connected with the different loans of the United States.

"It is evident to me that a large loan in sterling money might be raised in this country, the proceeds to be applied to the payment (in greenbacks) of the six per cent. bonds known as five-twenties.

"A stock bearing four and a half per cent. interest, principal and interest payable in sterling and having an accumulative sinking fund of one and a half per cent., which would pay off the debt in thirty-one years, could be negotiated at seventy-five per cent. in sterling money, and this sum of money converted into greenbacks will pay the capital of the debt at par and leave a balance to the Treasury.

" The larger the loan the wider the basis, and the more marketable it would become.

"To make this proposition clearly understood I will suppose that a foreign holder of $10,000 of six per cent. bonds, redeemable after five years, before twenty years from date of issue, he gets $600 per annum which he sells for four shillings sterling per dollar, equal to £120 per annum;  but he is in doubt if his capital may not be returned to him at any moment in greenbacks, in which case at this time the rate will be 2s. 9d. per paper dollar, equal to £1,375.

"If he can exchange his bonds in London and obtain £2,000 of four and a half per cents., true he will only get an income of ninety pounds per annum, but there he will be sure of £2,000 ultimately, and as the bonds would be drawn payable at par he would be sure of the cash within thirty-one years, which is the entire period requisite under the action of this accumulative sinking fund.

" But if he held twenty bonds of £100 each he might reasonably expect to have two of them drawn every three years on an average.  The commercial world has now become so used to the action of these accumulative sinking funds and to calculations dependent thereon for the profits arising from the difference between the par value of the drawn bonds and the price at which it be replaced in the market that we can and do estimate it in this instance at about one half per cent. per annum on the capital.  If this be added to the interest it will make the total five per cent.

"As soon as it is notified to the holders that any of the present bonds are called in for redemption in greenbacks and that the coupons thereon would not be paid after a certain date the holders would become very anxious and debate in their minds the propriety of sending their bonds to the United States to be cashed or of making an exchange in London, thereby saving all the commissions and other expenses.

"To show the effect of this proposition on a large scale we will deal with having interest to the extent of £400,000,000 sterling now carrying six per cent. interest, say £24,000,000.  If nothing is done to alter matters at the end of thirty-one years the debt will be the same, but if my plan be carried out it will be paid off altogether, both principal and interest.

" Each bond of $1,000 or £200 should give the owner the option of receiving the capital for his bond when drawn under the action of the sinking fund either in America or in London, giving three months' notice.  And the same applies to the coupon, which should be either forty-five dollars or nine pounds, at the option of the holders, which is customary in the European loans."

To return once more to the point, let me inquire, Mr. President, why is this bond held by the bondholder in Europe or in the city of New York any more sacred than many other of the obligations of the United States ?  Here are the obligations to pay your soldiers, to pay your widows, those poor widows whose husbands have been sacrificed to save the country.  You discharge your obligation to them in the paper currency of the country.  Why ?  Because such is the law of the contract.  Is that knavery ?  No, sir; no.  It may be hard, but it is the law of the contract.  Why do you pay the poor soldier who has come home from the battlefield maimed, with one arm or one limb, his pension in paper money and not in gold ?  Is there any contract more sacred ?  Are you repudiating because you pay him in paper money ?  No, sir;  because it is the law of the contract;  and if it be the law of the contract, as I maintain that it is, as the chairman of the Committee on Finance certainly maintains -- and it was in the argument that I had with him to-night, and in reply to him that I was making the observations which the Senator from Maine denounces as wanting in honor and as suggesting a species of knavery and dishonesty -- if, I repeat, these five-twenties may be discharged in lawful money in the same paper money which was given in exchange for them, the paper money which now, as we offer it to them is worth almost double what it was when they let us have it, there is no knavery, no dishonesty in our offering to pay them in the lawful money of the country any more than there is in paying the widow her pension or the maimed soldier his pension in the same money.

Sir, I repudiate this whole idea that because a man is a money-lender a contract to pay him is any more sacred than to pay anybody else.  I protest against it, I spit upon it, and, sir, this charge hurled at me that I favor dishonesty, suggest knavery and dishonor, because I stand upon the contract, and stand upon the contract in favor of the rights of the great mass of the American people in letter and spirit, as well as stand upon the contract for the benefit of the bondholder.  I will not repudiate the bondholder's just rights.  I will not issue a flood of greenbacks, depreciate all values, bring bankruptcy and ruin and wreck upon the whole country for the purpose of making new greenbacks to discharge those debts.  That would in my judgment be a violation of the spirit of the law under which they were issued, and under which the bonds were taken.  But, sir, upon the law as it is, upon the greenbacks which have been issued under that law, the effect of which has been to depreciate the currency of the country and to make the word dollar in the contract which we made mean seventy-five cents in gold and not a hundred cents in gold, upon that law I stand, and I stand without dishonor.  Let the Senator from Maine or any other Senator say what he will, I retort upon them and I charge home upon them that if they undertake to force a construction upon the law which it does not legitimately bear, if they undertake to add one fourth to the value of these five-twenty bonds against the true construction of the statute, they are the repudiators, they are the Shylocks, they are the men who advocate dishonesty, for there is nothing more dishonest than in the present condition of our country to increase in violation of law the burdens of an over-taxed and burdened people.  Sir, the whole idea of repudiation, on the one side or the other, I reject and protest against;  but in pleading and contending for the contract as it is, the contract as it was made, the contract as it was intended, and in the fulfillment of it which does ample justice to the bondholder, I am in the path of rectitude and the path of honor.

Mr. DIXON.  Mr. President, I do not propose at this late hour of the night to go into the merits of the question now before the Senate, but I propose to call the attention of the Senate and of the country to the spectacle presented here this evening in view of the remarks which have fallen from the Senator from Maine [Mr. Fessenden] and the Senators from Indiana and Ohio, [Mr. Morton and Mr. Sherman]  What have we heard ?  What have we seen ?  Sir, if there are any two men in the United States who may be called representative men they are the honorable Senator from Indiana and the honorable Senator from Ohio.  One of them holds the high position of chairman of the Committee on Finance of the Senate;  the other is acknowledged to be a leading member of the Republican party of the country.  It is no disparagement to other Senators to say that those two Senators have no superiors in this body in talents, in influence, in character, in the estimation of the country.  Now, what have we heard ?  The Senator from Ohio repeats what he has previously said;  he repeats his deliberate opinion, as a question of law, that the five-twenty bonds are payable by the statute which created them in greenbacks, in paper currency.  The Senator from Indiana declares the same opinion.  He says he will not vote for this bill because it is against his convictions of the actual intention and meaning of the law;  and he goes further and says that the sole object and the only effect of the bill is to benefit the bondholders and the speculators in bonds without any advantage to the country.  He agrees fully with the honorable Senator from Wisconsin, [Mr. Doolittle;] he quoted his argument;  he cited his illustration;  he declared that if this bill were to pass, there would be no possibility of funding the debt at a lower rate of interest until specie payments were restored.  The honorable Senator from Ohio and the honorable Senator from Indiana have each of them a perfect right to their opinion.  They are men capable of forming an opinion;  and it is not my purpose this evening, although I differ from them somewhat, to dispute their opinions;  I speak now for another purpose.  These Senators having stated their opinions are responsible for the same, and I am sure they have no desire to shrink from the consequences.  Whatever odium may attach to their opinions they are willing to incur.

But the Senator from Maine has seen fit, with his usual ability, to comment upon the debate which has taken place here to-day.  He listened to what fell from the lips of the honorable Senator from Indiana and what was said by the honorable Senator from Ohio and also the speech of my friend from Wisconsin.  He passed over what was said by those two Senators with approbation or with silence, yet he saw fir to comment with great severity upon the opinions of my friend from Wisconsin.  Why was this ?  I am not here to impute any motives to that honorable Senator.  He said that this was a new phase or a repetition of an old opinion of the Democratic party;  that it was knavery, dishonesty, when it came from the honorable Senator from Wisconsin.  I took occasion to ask him if it was not equally dishonesty and knavery when it fell from those two distinguished members of the Republican party, and he replied to me that those Senators took a different view of it;  they had a different object and a different end from that of the honorable Senator from Wisconsin;  that they desired to restore specie payments, and in that way that the bonds might be paid in specie.  I replied to him that the honorable Senator from Wisconsin also desired to restore specie payments.  He had said that it was his desire at the earliest possible day to restore specie payments.  They stand upon precisely the same ground therefore in that regard, and in fact so far as I can see their views are practically identical.  I am somewhat at loss therefore to understand why it is that what is knavery and dishonesty when avowed by one of these Senators loses this character and is pure, unsullied honesty and probity when announced by the others.

It is true -- candor compels me to admit -- that the honorable Senator from Ohio, as an act of generosity to the bondholders, says that now he is willing to pay them in gold, although he declares he does not think it our duty to do so;  he does not think us bound in law to do so.  If I agreed with him in regard to the question of law I certainly never should say I was willing to pass this bill.  If I vote for it I shall not vote for it as an act of generosity.  I do not propose to go to the bondholder and say to him, "I am not bound to pay you in gold;  I have a perfect right to pay you in paper;  but I propose to make you a present, a compliment, a gratuity of twenty-five per cent. upon your debt."

What right has the Senator from Ohio to make this gratuity to the bondholder ?  If there is anything which endangers the payment of the debt it is the doctrine taught by the Senators from Ohio and Indiana that it is not legally payable in specie;  yet the Senator from Maine seems to think this a pardonable error, a venal offense only to be denounced when it comes from a Democrat, then it is knavery and dishonesty.

The honorable Senator from Indiana lakes no such ground as that occupied by the Senator from Ohio, [Mr. Sherman.]  He declares that we are not bound to pay in gold;  that we have a right to pay in paper, and therefore he sturdily, and I have no doubt honestly, refuses to vote for the bill, because he says it is not right; it is not the true meaning and intention of the law.  He does not differ at all from the Senator from Wisconsin.

Now, sir, I desire the people of the country to understand that a large portion, a respectable portion, at least, in intellect and capacity, of the Republican party here declare this opinion.  I might go further.  I will not speak of members of the House of Representatives as such.  I will allude to them as citizens of the United States.  I desire to call the attention of the country to the opinions of two citizens of the United States of high position in the Republican party in talent, in character, in influence.  One of them is no longer in the land of the living.  Perhaps it is not proper to allude to him.  I speak of a distinguished former member of the House of Representatives, now no longer living, highly respected by the Republican party of this country for the honesty of his opinion's and the sincerity of his intentions -- the late Thaddeus Stevens.  What was his opinion on this subject ?  What did he believe with regard to it ?  What opinion did he pronounce to the people of this country ?  Every Senator knows very well what his opinion on this subject was, what his idea was with regard to the legal question whether the five-twenty bonds were payable in gold or payable in paper.

Permit me to call attention to the opinions of another distinguished citizen.  I speak not of him as a member of the House of Representatives;  I speak of him as a citizen of the United States;  a leading member of the Republican party;  a man of as much influence, of as much position, and of as much character in the estimation of that party as any citizen in this country.  He has lately, in a position occupied by him, addressed the people of this country in his capacity as a member of the House of Representatives.  He has put forth a plan for the payment of the debt.  He has accompanied it by a speech;  and it is utterly subversive of the idea of any payment other than in paper, either of the national debt or any other debt.  It is repudiation in all its forms of every debt in this country, repudiation not only of gold and silver in payment of debts, but as a currency utterly throwing it out of view, in favor of abandoning the use of gold and silver as a currency, declaring it to be a relic of despotism, if not of barbarism.  I am not at this moment animadverting on that opinion.  But I desire the people of this country to understand that men holding the very highest position in the Republican party, standing in the front rank as Radicals, avow and advocate this doctrine that the debt of this country ought to be paid in paper.  I have given these illustrations.  And yet the honorable Senator from Maine thinks it his duty to say here to-night -- I will not say for party purposes;  no doubt for honest purposes;  for I have not the least doubt he is sincere in his opinions -- that this is exclusively a new phase, or a repetition of an old phase and doctrine of the Democratic party.  Sir, the truth is that this idea of paying the Government debt in paper is a doctrine advocated by a very large portion of the Radical party.  During the recent canvass and previous to it, especially in the western portion of the country, it was, as you well know, sir, in your own State and elsewhere in the West extremely popular.  Democratic and Republican candidates for Congress placed before the people both advocated the doctrine;  and it so happened in your own State that the man who advocated it with the most zeal and the most effect was the Radical candidate, and he was on that issue elected last winter to the House of Representatives.

But, sir, I will not at this time ask the attention of the Senate on this subject at any greater length.  I wish it to be understood that here in this body leading and influential members of the Radical party have to-day announced the doctrine that the debt is properly and legally due and payable in paper currency.  If that is a dishonest doctrine, if it is knavery, then it is knavery when it falls from the lips of a Radical, unless it be that there is some thing so pure and lofty and holy in Radicalism that it redeems the iniquity and the knavery and the dishonesty of this doctrine which seems so completely to shock my friend from Maine when it is avowed by a Democrat.

Why, sir, when he spoke of the views of the Senator from Ohio, I could not but be struck with the mildness, the softness, the sweetness of his temper, the smile that played on his features, as compared with the holy horror which filled his whole soul when he commented upon the remarks of the honorable Senator from Wisconsin.  He turned with the blandest and kindest smile to the Senator from Ohio and said it was true he had fallen into an error and entertained certain sentiments on this subject which did not entirely agree with his own opinions, but the Senator from Ohio favored this bill and therefore he was ready to pardon him.  And then again his anger kindled against the honorable Senator from Wisconsin, and he went on to denounce the knavery and the villainy of the very same doctrine which, when held by the Senator from Ohio, was only a pardonable error and an innocent abstraction.  That may be all consistent and right;  I dare say it is;  but it struck me as somewhat remarkable, and possibly in the partisan zeal of the Senator intended for partisan effect, and my object was to call the attention of the Senate to it as an instance of the effect of partisan zeal in warping the judgment of wise and candid men.

Mr. Fessenden.  I desire to ask my friend a question before he sits down.  Does he agree with the honorable Senator from Ohio and the honorable Senator from Indiana in that construction of the law, that the debt is payable in greenbacks ?

Mr. Dixon.  I stated that I did not.  If the Senator had been present this afternoon he would have heard me remark that I intended to vote for this bill, as I am happy to say all my colleagues in the other House voted, and as my colleague, I presume, in this body will also vote.  Connecticut thus seems to be a unit on this question in both Houses of Congress.

Mr. Fessenden.  Then, Mr. President, the object of the Senator, as I understand it, is to prove not that he approves of doctrines of that kind, but to prove that although he differs from the doctrines of his party he means to be found a very strong defender of them anyhow;  that is, that he will hold fast to the Democratic faith in other things, although he cannot agree with them in this doctrine with regard to money.  That, I suppose, is the object of his speech.

Now, let me say that I find no fault with gentlemen, whatever party they may belong to or whoever they may be, who believe that by the true construction of the law this debt may be payable in United States notes or greenbacks.  That opinion they may entertain.  What I complained of was the doctrine advanced by the Senator from Wisconsin, that we should make such use of it as to commit what I called a fraud upon the community who hold the paper.  That idea was not advanced by the Senator from Ohio or the Senator from Indiana;  nor do I know that it was ever advanced by any gentleman holding the same political faith that they do.  It was a speculative opinion upon the true construction of the statute as to what we might do.  I do not know that either of them proposed to do it as the Senator from Wisconsin did.  There was the distinction that I drew.  If the Senator understands me now I suppose he will recognize that distinction.

Mr. DIXON.  If the Senator will allow me a word

Mr. Fessenden.  I have no objection to the Senator saying what he desires to say.

Mr. Dixon.  It seems that the difference between the Senator from Wisconsin and the Senators from Indiana and Ohio is this, according to the honorable Senator from Maine: the Senator from Wisconsin believes in a doctrine, and, as the Senator says, proposes to carry it out;  and the other Senators believe in the doctrine and do not propose to carry it out.  Is that a fair statement ?

Mr. FESSENDEN.  No;  I do not think it is.  It may satisfy the Senator, however.

Mr. DIXON.  Let us see whether they propose to carry it out or not.  The Senator from Ohio announced the doctrine here a year ago, and introduced a bill in consequence of it and as a sequel to it proposing to compel the creditors of this country to accept bonds at a less rate of interest.

Mr. Fessenden.  No, sir; he did no such thing.

Mr. Dixon.  The bill on its face did not propose to compel them;  the bill did not say "if the creditors will not accept this they shall take something less;"  but the bill introduced by the honorable Senator from Ohio as the chairman of the Committee on Finance and the speech which he made in support and advocacy of it, taken together, were compulsory;  for he declared in his speech that in his opinion the law authorized the payment of the five-twenty bonds in greenbacks;  and he introduced a bill with a view to carry out that idea, which reduced the rate of interest at least to five per cent.;  and I think to four and a half per cent. on the long bond.

Now, let us see whether the Senator from Indiana proposed to carry out his views.  He believes in a doctrine which he does not intend to carry out in practice, it is said.  What has he done ?  It is true he has not introduced a bill precisely of that character;  but be declared this evening in as strong language as the honorable Senator from Wisconsin that he would not vote for this bill because he did not think it right;  because it was a bill introduced for the purpose of benefiting the bondholders;  and then he alluded, by way of illustration, to the very argument of the Senator from Wisconsin, to which the Senator from Maine objects, that if this bill were adopted and became a law it would be impossible for us to fund the greenbacks at a lower rate of interest;  in other words, that you must hold out the idea that the bonds can be paid in paper in terrorem over the creditor, or otherwise you cannot fund your debt at a lower rate of interest.  If that is not carrying out a principle into practice;  I do not know what is.

Mr. FESSENDEN.  That is rather a long interjection into the very few remarks I intended to make about this matter.  As I said before, there is a very great difference between expressing the belief that by the terms of a law we may do a dishonest thing and actually proposing to do it;  and that is the difference between the Senator from Ohio and the Senator from Wisconsin, according to my construction of their remarks.

Now, sir, I have only one word more to say, for I will not protract this debate.  I admit that the honorable Senator from Ohio does hold that by the true construction of that law we might pay our debt in greenbacks.  I admit that the honorable Senator from Indiana held the same doctrine as a question of law.  I do not admit that the honorable member of the House from Pennsylvania did hold that doctrine;  for he said expressly in the debate on the bill that the principal was payable in coin, and had I time I could turn to his remarks and show it.  However we may respect the authority of those two gentlemen, and however high may be their standing, what I endeavored to say was, that because they believed so their belief did not make the faith of the Republican party or of the Congress of the United States.  The Senator from Connecticut does not hold with his party upon that point as he expressly says.

Mr. DIXON.  Will the Senator allow me to say---

Mr. FESSENDEN.  Not now.  He expressly says he does not hold with his party.

Mr. DIXON.  I have not said so.

Mr. FESSENDEN.  The Senator proposes to vote for this bill.  No other member of the party does propose to vote for it, and it has been fought by every member of the party on this floor except the Senator from Connecticut.  What are we to conclude ?  That they propose to carry out the doctrine of the New York Democratic platform.  Now that the Senator himself is an exception to the great rule, although, I admit that his powerful aid brought to that Party may do a great deal, it does not give it a character, I am sorry to say, and, never will so long as he holds his present opinions;  and I am afraid that unless he becomes a little more orthodox he will not stay there with a great deal of comfort.  Therefore I say that however I may respect the authority and the opinions of the gentlemen who have been referred to hope the vote of the Senate to-night will show that they do not represent the opinions of those who made the Chicago platform, in which it was said that we intended to pay our debts not only according to the letter but the spirit of the contract into which we entered.

Mr. DAVIS.  It is a very late hour, Mr. President; still I shall say a few words on this important subject.

Mr. Pomeroy.  Will the Senator give way to a motion to adjourn ?

Mr. Davis.  Oh, no; I do not want an adjournment.

Mr. President, the courts of the country have no jurisdiction over the subject-matter of the bill that is now pending before the Senate between the Government of the United States and the bondholders.  I wish they had.  I wish that the point in dispute between the bondholders and the Government could be referred to the Supreme Court of the United States for its decision, and I have no doubt what that decision would be.  The Government has had a transaction of borrowing money from the bondholder.  It did not receive in this loan coin.  It did not receive gold or silver.  It received greenbacks and a depreciated currency, and gave its bonds for the nominal amount of money thus borrowed.  What is the law of usury, and what is the law against usury and extortion in such a state of case ?

Suppose the honorable Senator from Ohio, the chairman of the Committee on Finance, had loaned me $1,000 in greenbacks and I had given him my note for the repayment of the sum of $1,000, and upon the maturity of the paper I refused to pay and he was forced to bring a suit against me, I could make him disclose upon oath as to the consideration and the manner in which that bond had originated, and could make him confess that it was a loaning on his part and a borrowing upon my part, not of $1,000 in gold and silver, but of $1,000 in greenbacks; and upon his admission of those facts, or my proof of them, what would be the judgment and the duty of the court ?  It would be that the greenbacks should be scaled at their value at the time of the loaning and the borrowing of the money;  and that he should have his judgment for the value in gold and silver of these greenbacks with legal interest upon it.  That would be the simple judgment of the court.  I say that any court of chancery of intelligence in the United States in precisely an analogous transaction between individuals would render the judgment that I have indicated, and that decree would be according to the law and the equity of the case.

What is my further position ?  The same law that would regulate a transaction of this character between individuals ought to regulate it, and ought to be the rule of it between the Government and the bondholders.  The Government does not permit itself to be sued.  It establishes its own rate of interest.  It may make it six, five, four, or three per cent., according to its sovereign will, and there is no power on earth that can control the action of the Government in relation to that matter.  But, sir, when the Government goes into the market and barrows money, and that money is a depreciated paper, the same rule of law and equity, and the same judgment of the chancellor and the same judgment of the court that would be rendered in a case between individuals would be just, equitable, and reasonable between the Government and its creditors who had loaned it in money.

Men may talk as much as they please about bonds and greenbacks.  I am against any such medium of payment.  The Constitution and the law knows no greenbacks as a legal tender or as the payment of debt.  The only legal tender is gold and silver currency;  and when judgment is rendered in favor of a creditor against a defaulting debtor the only proper judgment that can be rendered is for dollars, meaning gold and silver.  But when the transaction has been a lending and borrowing, and a depreciated, spurious currency has been the subject loaned, although the bond may call for dollars according to the nominal amount of this spurious and depreciated currency, it is usury, it is extortion, to exact it;  it is against conscience;  and whenever a chancellor is appealed to he ascertains the consideration of the bond, its value at the time of the loan, and he gives a judgment or decree for the value of the consideration of the bond in gold and silver.  Now, Mr. President, I say that what is equitable and right and according to conscience between individuals in a court of chancery is equitable and right between the Government and its creditors, the bondholders.

I wish that this case could go before the Supreme Court just as it would between private parties who were residents in different States.  Upon the making out of the transaction before that court as it appears before the Senate and Congress the only relief and the full extent of the relief to which the creditors, the loaners of this depreciated paper to the Government, would be entitled would be the value of their depreciated paper at the time it was loaned, with legal interest upon it.

Now, Mr. President, what does the bill under consideration propose to do ?  It proposes to pay about nine hundred million dollars more than the sum that is actually due the bondholders upon this equitable principle.  The law of usury is familiar to every tyro in the legal profession.  A bond may not say anything about borrowing and loaning money or about the medium in which it is borrowed;  but all this may be the subject of allegation and proof, and when it is alleged and proved in a court of chancery the only relief that the lender is entitled to is the value of the depreciated paper which he has loaned with interest upon it.  I ask these gentlemen by what authority, by what principle, can they give $900,000,000 to those bondholders that they are not in equity entitled to ?  I turn to the honorable Senator from Ohio, and I tell him that if he was the executor of a deceased party who was a debtor for $1,000 in just such a transaction as exists now between the bondholders and the Government he would be bound to plead the usury in a suit brought against him as the personal representative of the obligor.  He would be bound to make the plea, and if he failed to make the plea he would be personally responsible for the difference between the gold value of the money and the nominal amount of the bond in gold.

Mr. President, I would appeal to the honorable Senator from Ohio in another aspect that will illustrate this whole matter.  Suppose he was the guardian of an infant child whose father had had a transaction of borrowing money in this depreciated paper and that child was sued in connection with the personal representative, and the property which it inherited from its father was sought to be made subject to the payment of the debt.  As guardian of that infant child he would have to put in the plea of usury, he would have to plead the facts of the case.  If he omitted to do so he would be guilty of default in his fiduciary capacity;  and of such default as would make him personally responsible for the amount which he might save to his ward by making the plea.

Sir, is the fidelity and obligation of a guardian or of an executor greater to his cestui que trust than is the obligation and fidelity of the Congress of the United States to their cestui que trust, the people ?  No, sir.  It is the duty of Congress now to ascertain the value of the greenbacks that were loaned upon the issue and sale of these bonds by the purchasers to the Government at the time of the transaction, and when this value is ascertained all that in justice and in equity, all that would not be condemned as usury and extortion which Congress would be authorized to pay would be not the nominal amount of the bonds, but their value in gold and silver at the time that they were sold by the Government, at the time that the Government borrowed the money upon them.

Sir, there is no difference in principle, there is no difference in justice and equity between the Government of the United States when borrows money and your honor who presides over the Senate borrowed money of the same kind.  You, sir, having borrowed money in the form of these greenbacks, there is not a man who has read law for three months who would not concede that although you had executed your notes for the nominal amount, and although you had expressly promised in the most explicit language to pay in gold, and silver coin, still you could go into an investigation of the nature and consideration, of the contract of loaning and borrowing and you could scale it to the value of the paper which you borrowed, which with interest from that time would be the relief and the utmost relief that your creditor would be entitled to against you.

Sir, I ask for the application of this simple and universally executed principle of law and equity to prevent fraud, extortion, and usury.  I ask for the application of this simple and just principle to the present bill.  If it be applied there is no difficulty.  All that is to be done is to ascertain what was paid for these bonds when they were purchased by the bondholders.  At the time of the purchase they purchased by loaning to the Government money upon them;  they received bonds for the nominal amount that was loaned, but is a fact demonstrable that the average amount of money loaned on these bonds did not exceed sixty cents in the dollar.  I have made the computation.  The excesses of interest upon the gold value of the bonds that has been paid being six per cent. in gold is usury;  and what is a universal principle of law in the decision of usurious contracts ?  That such sums as are paid in interest above the legal rate shall be applied to the satisfaction of so much of the principal at the time that it was paid.

I have made a computation upon these bonds on these two principles.  I have ascertained their gold value at the time they were sold, and I have charged as principal the usurious interest that was paid from time to time as it was paid upon the bonds, and it makes a difference of upward of nine hundred million dollars between their nominal amount and what is really due according to their gold value at the time the money was loaned upon the bonds.  What is the proposition of the honorable Senator from Ohio and of the majority in the Senate ?  It is simply to give as a gratuity to the bondholders against the people of the United States, and to make the people of the United States answer by taxes for $900,000,000 beyond what they owe upon the bonds according to all the principles of law and of equity.  Against that I protest, and I say that so far from this being a dishonest rule of settlement, any rule that would give this $900,000,000 in addition is the foulest extortion;  it is usury excessive;  it is fraud and robbery upon the people;  it is a flagrant violation of their trust and power by the Congress of the United States to the people who are to be taxed to pay this $900,000,000 in addition to what is honestly and equitably due on the bonds;  and I say that the bill for these reasons ought not to pass.

The PRESIDENT pro tempore.  The question is on the amendment of the Senator from Missouri, [Mr. Henderson.]

Mr. Hendricks.  Before the vote is taken I have a very few remarks to make.  I did not expect to add anything to what I had said until I heard the rather remarkable suggestion of the Senator from Maine, [Mr. Fessenden.]  He attributed to me a sentiment that is to be in the report of the Committee on Finance, and said that such a sentiment was a foul reproach.  Of course the Senator did not understand that that sentiment had been first expressed by the Committee on Finance, but in this debate it was simply quoted by myself from their report as a part of my argument.  And then the Senator went on further to state that it was not the report of the committee, but the report of the learned Senator from Ohio.  I am sure that before the Senator from Maine expressed himself so positively he ought to have examined the subject.  It is not right for him to attribute to me, and then to characterize in rather offensive language, sentiments that are found expressed in an elaborate report of the leading committee of this body.  Now, sir, this report commences in this wise:

"The Committee on Finance, to whom was referred so much of the President's message as relates to the public debt, and the report of the Secretary of the Treasury on the state of the finances, is called upon to report upon three important subjects necessarily connected with each other."

Then the subjects are stated in the report, important subjects connected with each other; and the report closes, as in the language of the committee, by what was known as the funding bill.  And yet the Senator from Maine in the excitement of the debate attributed this report, one of the most elaborate and deliberate productions of a committee that this body has witnessed, as simply a report of the Senator who made it.  Why so ?  If this were a foul sentiment and a reproach that it should be uttered why did not the Senator so denounce it at the time, and why did he wait until I simply repeated the sentiment ?  Is it because the committee were of his own party and I was not ?  Is that the justice of the Senator in public debate ?

Now, sir, I will read again the sentiment that he characterizes as a foul reproach;  and then the question is distinctly between him and the distinguished committee that expressed it.  Discussing the question whether the five-twenty bonds might be paid in greenbacks as an equitable and just proposition the committee uses this language:

"If this question rested solely upon the act of February 25, 1862, and the bonds had been negotiated under that act alone, it would be manifestly a breach of faith to redeem the bonds with the present United States notes.  They are very different from the first legal-tender notes, which, from the limited amount authorized and the privilege to convert them into bonds, could not have had a less market value than the bonds.  But it was found that with such restrictions upon the notes the bonds could not be negotiated, and it became necessary to depreciate the notes in order to create a market for the bonds.  The limit of notes was trebled and the right to convert them taken away.  The amount of United States notes in circulation when the bonds were negotiated was equal to the amount now outstanding, so that the question arises whether by the terms of these several acts the bonds may be redeemed with notes of the precise character paid for the bonds when negotiated by the United States."

Mr. President, I have read the entire passage.

Mr. SHERMAN.  It is but just to the committee, and the Senator will find it in the report which is carefully considered, to say that the committee expressed no opinion whatever, and expressly disclaimed the purpose of expressing any opinion on the question of the legal construction of the law.  I have no doubt some misapprehension has grown out of the fact that subsequently in a speech I made on the funding bill, in which I expressed my own opinions and expressly disclaimed expressing the opinions of the committee, I did give the opinion that has been commented on, that by the legal terms of the acts issuing the bonds there was no distinction made between the lawful money of the United States in the payment of the bonds.  And in the report -- I have not read it for a long time -- I am quite sure the Senator will find that no opinion was expressed by the committee or for the committee as to the legal construction of the law, because there was a difference in the Committee on Finance as there was a difference in the Senate, and is to this day, as to the legal construction of the law.

Mr. Hendricks.  I believe that I understand not only the letter but the very spirit of this report, and when I advert to it I think the Senator from Ohio will concede that I place a proper construction upon the language which it uses.  I am not just now discussing the question which the Senator from Ohio raises in his interruption.  I am answering the language of the Senator from Maine.  He felt himself authorized to use that very strong language that it was a foul reproach that the sentiment was expressed that there had been a purpose to depreciate the currency of the country with a view to float the bonds in the market;  that it became necessary.  I was not a member of this body when the several laws were enacted authorizing the issue of the Treasury notes.  I of course did not have a personal knowledge by any association with the gentlemen of this body of the purpose of the several enactments;  but first it is plain that there were $150,000,000 provided for, and again there was a further issue of $150,000,000, and again six months afterward another $150,000,000, making an aggregate of $450,000,000 provided for.

I am commenting upon that action of the Senate and of the House at different dates providing for these large issues of Treasury notes, and how does the committee state it ?  That by the act of 25th February, 1862, $150,000,000 of Treasury notes were provided for, and an issue and sale of Government bonds by the same act was authorized, and the committee states it logically and forcibly that the $150,000,000 of Treasury notes would not float the bonds, that these Treasury notes had value because of their limited amount and because of the fact that at the pleasure of the holder they were convertible into bonds, so that these notes being thus convertible into bonds could not fall below the market value of the bonds, and it became necessary, says the committee, to depreciate the notes by taking away that quality which gave them a market value equal to bonds, a convertible quality, and treble their quantity.  This was the means resorted to.  I say I was not here to know the motive, and it was right for me, in judging of the purpose of this legislation and judging of the equities that are now urged upon us in favor of the bondholders, to ascertain the spirit and purpose of this legislation from the authoritative statement of the leading committee of this body;  and when I did say so it was not right for the Senator from Maine to say that it was a reproach.  Was it a reproach ?  Was it a reproach that deliberately the Congress of the United States by taking away the convertible quality of the notes and by trebling their quantity upon the market depreciated them, and that this was necessary in order to secure a market for the bonds ?  If that were necessary it is not to be charged upon me as a reproach that I referred to it in this debate.

Mr. President, the Senator also said that it was without foundation in fact that the people did ever intend to pay less than a dollar when they promised to pay a dollar.  Who said they promised to pay less than a dollar ?  Who defined what a dollar is ?  I did not.  I have never given a very earnest support to the doctrine that Congress ought to define what should be a dollar.  I have not questioned, I have not yet felt it to be my public duty to question, the constitutionality of the legal-tender clause;  but the Senator from Maine I expect was a supporter of the act of the 25th of February, 1862;  and that act in as plain and emphatic language as can be commanded declares that these Treasury notes are dollars, declares that they are not only legal tenders in the discharge of public obligations and private debts but that they are lawful money of the United States.  When the Senator by the act of February 25, 1862, said that these notes were lawful money of the United States what did it mean ?  I want to know of the Finance Committee what it meant.  I understood it to be, in my plain understanding of language, that these Treasury notes in respect to their power to discharge debts and as a standard of value should be equal in dignity and force with gold and silver, and that for the purpose of discharging all public indebtedness except the interest on the public debt and except where the Government has promised to pay gold, and also in the discharge of debts between man and man, these Treasury notes were dollars.  Was it not so ?  If I am wrong now let the Senator correct me.  If they were not dollars it was because your act had not constitutional force and validity.  If it had constitutional force and validity you said that these Treasury notes were dollars, dollar for dollar, according to the face of the obligation.

Then, sir, my argument this afternoon did not state that the people of this country had ever undertaken to pay a dollar with less than a dollar, but that when the people of the United States promised to pay so much money, and did not expressly agree to pay it in coin, then the reading of the obligation is that they will pay it in the lawful money of the country.  If I promise to pay to the honorable Senator from Maine by my note $1,000 in money, let me ask him will he raise the question whether I may discharge that with less than dollar for dollar ?  He would not ask gold of me upon such an obligation;  he would say that the construction of that promise made by me to him was a promise to pay in the lawful money of the United States, and that if I did not in my obligation agree to pay gold the legal construction would be Treasury notes, upon which you by law have impressed the quality of money.

Then, sir, why make the fling that somebody wants to pay less than a dollar for a dollar upon a promise of the Government ?  I have not suggested it.  I have said, however, that when the promise is plain and the construction cannot be doubted we have no more right to impose upon the people of the United States an additional obligation without some new consideration than the Senator would have a right to demand of me twenty-five per cent. more than the legal construction of my contract entitled him to.  That is where the question is.  It is not a question of legal construction;  it is a question of now making the bonded debt of this country, $600,000,000, worth more than it is under the contract.  That is the question.

Why, Mr. President, who can doubt it ?  The very law that said that these bonds might be issued and did not authorize the Secretary of the Treasury to say that the bonds should be paid in gold provided for the issue of paper which should be lawful money and which might pay these very bonds, and these Treasury notes were issued at the same time the bonds were issued and before the bonds were sold, and upon these Treasury notes you impressed the quality and the power to pay these bonds.  What did you mean when you said in the act of February 25, 1862, that these Treasury notes should be receivable in the discharge of all the obligations owing by the Government except the interest of the public debt ?  What do those plain words mean to the people, to common sense people ?  When you said in plain words that the Treasury notes, amounting in all before these bonds were negotiated to $450,000,000, according to the statement of the committee, should be receivable in payment of the public obligations except the interest on the public debt what did your law mean ?  If these five-twenty bonds cannot be paid with the Treasury notes what public obligations can be ?

The other bonds the laws provide shall be paid in gold.  Then the other securities can be paid in currency.  If these Treasury notes are not a legal-tender discharge at the election of the Government of these five-twenty bonds what is the meaning of the language in the act of 1862, I should like to know ?  It is not going to satisfy the country even for a Senator of the great weight and eminence before the country of the Senator from Maine simply to say that it is not honest.  That will not quite do;  he has got to come to the point for the people to understand it.  In 1862 that Senator said that this paper was money, that it was lawful money, that it was the lawful money of the United States, and by his vote that Senator said that this lawful money in the Treasury of the United States should be a full and sufficient discharge of the Government's obligations except the interest, and it would seem to be reasonable that the Government should then have so provided, for in that very law you said that these Treasury notes should be receivable by the Secretary of the Treasury in payment for the bonds when they were sold, and then when the bonds are to be paid the same kind of money should go in their discharge in the hands of the holder.  That is just the plain statement of what your law says.  If it is knavery to stand by that, then you have induced me to the knavery by very singular language.  Go back and correct the language of 1862 before you talk to me about knavery.  Go back and correct your own legislation.  Do not charge me with knavery when I form a judgment that is supported by the language that you put upon the statute-book;  and when you vote a gratuity of $600,000,000 to be taken from the people and to be given to the men that hold these bonds do not say that it is knavery if I refuse, because I stand upon the letter of the statute.  I stand there.  I wish to see the bondholders get all that is consistent with the interests of the people and with the obligations of the people toward them;  but I wish to see it brought about by a restoration of prosperity, by an increase of production, by a sale abroad of our great staples which will bring the gold in a current toward our shores instead of a constant flow from them.  I have no faith at all in a restoration of our finances to a sound condition and a sufficient volume of currency in the country, except as we find it in a restoration of production, an increase of production, and a command of the foreign market.

We may be deluded.  We may have fair promises made.  It is not the first time.  Assurances are very easily given;  but commerce has never yet been restored in this world by mere paper promises.  Commerce has its own great laws, and it is restored, becomes sound and successful by its own development, by production, by the results of labor.  Our legislation must be of such stable and wise character as that it will give confidence to industry and will stimulate enterprise and investment.  We must have the lands that are now lying waste cultivated once more.  Our unfilled fields must blossom and bloom and ripen with the grain and with the cotton and tobacco.  Then I see a way to a sound currency and a sufficient volume.  But in the assurances that are given us I do not see it;  I do not expect to see it.  When I know that there is an increase of production then I know that we shall have an increase of currency.  When the people have much to sell there is no difficulty in having plenty of currency.  He who causes two blades of grass to grow upon the ground where but one grew before renders a higher service to his country than the ablest politician.  That is the philosophy upon which we are to have restored prosperity in this country, in my judgment.  We must have abundant corn crops, and stock, and all the productions of the different sections, buy less and sell more, and we shall soon have a specie basis for our currency;  but you may tell the Secretary of the Treasury to commence paying out gold to-morrow, and the result will be what was beautifully described by the Senator from Kentucky [Mr. McCreery] a few I days ago.  The sun of that day, as he said, will go down upon an exhausted Treasury.  It cannot be done.  You cannot pay a debt of this magnitude with $200,000,000 of gold in the country.

Mr. President, I have occupied now more of the attention of the Senate than I expected to do on this question.  It is an important one, and ought not to be disposed of in this way.  If we are ready to provide for this debt let us do it.  If Congress is now ready to provide for this debt let us go to the work.  This bill does not pay it.  It does not pretend pay it.  It does not suggest resources from which the payment is to be brought.  It simply proposes a construction.  What an advance would a couple of gentlemen make in the adjustment of their affairs, one owing the other and not having the means to pay and the debt not being due, if they met and held a consultation as to the meaning of the contract ?  That is what we are at to-night, as I understand it.  We are trying to put upon the contract a construction that the letter will not admit;  that is the trouble of it, and a construction that the people of this country will not hold themselves bound by if you put it upon it to-night.

If we have such a return of prosperity as that the currency will become of uniform value, that our paper currency will be of the same value with the gold currency, then, indeed, this question will be removed, all controversy about it will be removed;  but as long as there is a material difference between gold and paper the people will say, "We will stand by the contract."  I think so, and I guess they have the right to say so.  If this declaration of construction to-night were made upon a new consideration then of course it would become obligatory.

Mr. PATTERSON, of New Hampshire.  I should like to ask the gentleman if it was not a part of the contract in the law of 1862 that the greenbacks should be absorbed in five twenties.  Now, if they had been all absorbed in the five-twenties, in what would the five-twenties be redeemed but gold and silver ?

Mr. Hendricks.  The act of February 25, 1862, did provide that the holder of the greenback might deliver that to the Secretary of the Treasury and receive a bond.  That was the convertible quality of that note;  but under the acts of July 11, 1862, and March 3, 1863, referred to in this report, there was not that convertible quality, so that $300,000,000 of the Treasury notes were not of the character that the Senator refers to, and hence his question does not have very much bearing on the matter.  The right to convert was repealed after the first $150,000,000 were issued.

Mr. MORTON.  And as to the first $150,000,000.

Mr. HENDRICKS.  My colleague says it was repealed as to the first $150,000,000, and that was done before these were negotiated, according to the statement of the committee.

Mr. PATTERSON, of New Hampshire.  The gentleman appealed to the Senate to know what that act of February 25, 1862, meant if it did not mean that the bonds were to be paid in greenbacks, when the very act itself provided for the absorption of the greenbacks into the bonds.

Mr. HENDRICKS.  The act provided that the bonds might be bought by the people with greenbacks, and then provided that the Government might pay to the people these bonds in greenbacks again.

Mr. PATTERSON, of New Hampshire.  Oh, no.

Mr. HENDRICKS.  At any rate that is the construction, I put upon the law.  The Government might re-issue these bonds when they came in.  Have they not done it always ?  So that if $100,000,000 of greenbacks found their way into the Treasury in payment for bonds the Secretary of the Treasury was authorized to reissue them, I suppose.

Mr. PATTERSON, of New Hampshire.  Are not the greenbacks redeemable in gold, and what difference does it make whether you pay the bond in gold or pay the bond in greenbacks and then pay the greenbacks in gold ?

Mr. HENDRICKS.  You may say that in law the greenbacks are redeemable in gold, but still they are not redeemable in gold, they have not been yet that I have heard of, and they have not had a par value yet;  and because they do not have a par value this question is an important and essential one.

When I was interrupted I was just about concluding what I had to say.  This bill, which is simply a construction of former laws and former contracts, is not upon any new consideration, and subsequent Congresses will claim the same right to put a construction upon the laws of 1862 and 1863 that we exercise, and they will not regard this construction as conclusive upon them.  I simply wish to state that I should be very glad if we have a return to specie payments by that return of prosperity that I look for in the country, and then of course there will be no controversy about a question of this sort;  but at a time when there is a difference of twenty five or thirty per cent. between the paper and gold currency of this country I am not willing that we shall volunteer an attempt to tie the hands of the people to a construction that is not the right one of the contract made.

The President pro tempore.  The question is on the amendment offered by the Senator from Missouri, [Mr. Henderson]

Mr. HENDRICKS.  I was desired by the Senator from Pennsylvania [Mr. Buckalew] and the Senator from West Virginia [Mr. Van Winkle] to say that they have paired off.  Mr. Buckalew, if here, would vote against the bill and the Senator from West Virginia would vote for it.

Mr. Fowler.  Mr. President, I wish to say in a few words why I oppose the bill.  The first section is merely a declaration of the opinion of Congress as to the meaning of a section of a certain law.  I think it objectionable legislation always after a Legislature has passed a law to be construing it.  The construction should be left to the courts, and the Legislature should not usurp that province themselves.  I do not see any good that can result from this mere declaration except benefiting a few speculators and jobbers in bonds.

There is another objection I have to it.  I do not see clearly through this financial question, and am not exactly willing to commit myself on a question that I do not thoroughly understand.  I am very well aware that most of the Senators appear to understand the subject well, as most of them have expressed their opinions, but I believe that every one who expresses an opinion thinks that his opinion is better than anybody else's.  I have not arrived at a satisfactory conclusion yet in regard to the solution of this problem.  I shall not vote for a measure that commits me in this kind of style.

Again, I do not think that any of the financial measures, that have come before Congress meet the question which I think is necessary to be settled in order to the solution of this great problem.

The bill was reported to the Senate as amended, and the amendments were concurred in.

Mr. HENDERSON.  I now renew the amendment to the first section.  On my amendment to the second section I did have a yea and nay vote.  I ask for the yeas and nays on my amendment to the first section.

Several Senators.  Let the amendment be read.

The Chief Clerk.  The amendment is to strike out the following words, commencing in the third line:

That in order to remove any doubt as to the purpose of the Government to discharge all just obligations to the public creditors and to settle conflicting questions and interpretations of the laws by virtue of which such obligations have been contracted it is hereby provided and declared--

And then, after the word "to," in the eighth line, to insert:

An early resumption of specie payments by the Government in order that conflicting questions touching the mode of discharging the public indebtedness may be settled, and that the same may be paid in gold.

And to strike out the residue, of the section;  so as to make it read:

That the faith of the United States is solemnly pledged to an early resumption of specie payments by the Government in order that the conflicting questions touching the mode of discharging the public indebtedness may be settled and that the same may be paid in gold.

Mr. Sherman.  I desire a division of the question.  Let the question first be taken on striking out.

Mr. Edmunds.  That is contrary to express rule.  You cannot divide a motion to strike out and insert.

Mr. Sherman.  It can be, because it is to different parts of the section.

Mr. Edmunds.  The rule expressly declares that you cannot.

Mr. Sherman.  You can where the motion applies to different parts of a bill.  It is a double motion.

The President pro tempore.  The question is on the amendment.

Mr. Wilson.  I wish to announce that Mr. Vickers has paired off with Mr. Trumbull. The question being taken by yeas and nays, resulted-- yeas 8, nays 34; as follows: .............................

So the amendment was rejected.

The amendments were ordered to be engrossed and the bill to be read a third time.  The bill was read the third time.

Mr. Edmunds called for the yeas and nays;  and they were ordered.

Mr. Anthony.  On this bill I am paired with the Senator from Minnesota, [Mr. Norton]  If he were present he would vote against the bill, and I should vote for it if I was at liberty to vote.

Mr. Cattell.  I am requested by the Senator from Pennsylvania [Mr. Cameron] to say that he is paired off with Mr. Kellogg, of Louisiana.  If they were present Mr. Cameron would vote for the bill and Mr. Kellog against it.

The result was announced-- yeas 30, nays 16; as follows: ............

So the bill was passed.

Mr. Sherman.  I move to amend the title so as to read "An act relating to the public debt."

The motion was agreed to.

In Senate, March 3