Mr. Marshall [Samuel Scott Marshall (March 12, 1821 - July 26, 1890); McLeansborough, Illinois, D; studied law, admitted to the bar] said:
Mr. Speaker, I regret that I have not had time to mature and thoroughly digest the views I desired to present on this important question, and to present clearly all the facts and figures which I deem important for its proper understanding and elucidation. The importance of the question cannot well be exaggerated. It involves at the same time the honor, character, and good faith of our Government and the happiness and well-being of our people. Its discussion brings prominently to view the issue made up on financial questions by the two great parties struggling to gain control of our Government by the verdict of the people in November.
Position of the Democratic Party on the Debt Question.
On the one hand, the Democratic party regard the public debt not as a "public blessing," but as a public curse, weighing like an incubus upon the energies of the people, eating up their substance, and demoralizing and destructive in all its influences upon society. They propose to get rid of it just as soon as possible consistent with the rights and interests of the people and the honor and good faith of our Government. They insist that the bondholder shall not be a peculiarly privileged class, but shall be subject to taxation, and shall receive for obligations due him the lawful money of the United States, just precisely as any other citizen, excepting always those cases where the Government has agreed by its contract, or by law, to pay him in coin. They will pay the interest on the five-twenty bonds in coin, because their Government, in its contract, has agreed that it shall be so paid; they will pay both principal and interest of the ten-forty bonds in coin for the same reason; but they will pay the principal of the five-twenty bonds with the legal-tender currency of the United States, and thereby stop forever the ruinous coin interest we are paying thereon, because it was that currency, greatly depreciated below its present value, that we received for the bonds when the loan was made, and more especially because by the contract the public creditor has neither a legal nor equitable claim to be paid in any other way. This, I think, is unquestionable, and this I shall endeavor hereafter to demonstrate. We do not propose, as is contemplated by this most suicidal --I am almost tempted to say, most infamous-- act, without any consideration or claim of justice whatever, to increase this debt one third, or, in other words, vote the bondholders a bonus of nearly six hundred millions in gold; and then, by an inexorable and irrepealable decree, fasten this accumulated debt upon our country for a period of forty years, with interest in gold, to be paid semi-annually, during all that time. I cannot see the justice or propriety of thus increasing and perpetuating the burdens of a patriotic people, already nearly driven to despair by the public demands upon their scanty means and the unhappy financial condition of their country.
Position of the Radical Party on the Public Debt.
On the other hand, as already indicated, the Radical party now and for the last eight years, unfortunately having absolute control of the Federal and nearly every State government, after having, by their extravagance and unparalleled corruptions, doubled the indebtedness of the country, are making herculean efforts to perpetuate their power and increase their ill-gotten gains. They have placed in the van, as their standard-bearer, a speechless sphinx, enveloped in a cloud of tobacco smoke, who professing no principles or political convictions himself, promises most obsequiously to obey the behests of his party. And you now propose by this bill to convert a debt approaching two thousand million dollars, now payable in legal-tender notes, into bonds running forty years, payable in gold, exempt from all taxation, and the interest during all that time payable year by year in gold, to be coined from the sweat and toil and groans of an impoverished people.
You have arrayed yourselves on the side of the bondholders and the capitalists against the interest and rights of the tax-payers, and to give plausibility to your position raise the wolf-howl of repudiation against the people who demand equal and exact justice for all, and indulge in stale platitudes about public faith and maintaining the public credit, when it is by your own extravagance and corruption that the public credit has been imperiled.
Radical Platform on Financial Questions.
There is an attempt in the platform adopted at Chicago to sugar-coat the purposes of your party by the use of popular and ad captandum phrases, and thus to make them acceptable to the tax-ridden portion of your followers. I will read from the platform all that is said upon the financial issues:
"Third. We denounce all forms of repudiation as a national crime, and national honor requires the payment of the public indebtedness in the utmost good faith to all creditors at home and abroad, not only according to the letter, but the spirit of the laws under which it was contracted.
"Fourth. It is due to the labor of the nation that taxation should be equalized and reduced as rapidly as the national faith will permit.
"Fifth. The national debt, contracted as it has been for the preservation of the Union for all time to come, should be extended over a fair period for redemption, and it is the duty of Congress to reduce the rate of interest thereon whenever it can possibly be done.
"Sixth. That the best policy to diminish our burden of debt is to so improve our credit that capitalists will seek to loan us money at lower rates of interest than we now pay, and must continue to pay, so long as repudiation, partial or total, open or covert, is threatened or suspected."
It is of course understood by all that this "covert repudiation" so boldly denounced, refers to the proposition of the Democratic party to pay the five-twenty bonds, constituting the principal part of our indebtedness, in our present "greenback" currency. And according to this platform the national debt is not only to be paid all in gold, principal and interest, but the principal must not be paid now at all, but must "be extended over a fair period for redemption," and this fair period, according to the bill before us, is forty years, during which we will have no right to pay the principal, but must continue to coin our toil and sweat and muscles into gold semi-annually to pay the interest, until we all, now on the stage of action, go down to our graves.
Democratic Platform on Financial Questions.
In contrast with this bondholders' platform, I turn with pride and pleasure to the bold, clear, ringing, patriotic enunciations of the Democratic platform upon the same questions, adopted in New York at our recent national convention. I will read them, that all Radicals may blush at and all Democrats glory in the contrast presented by the two platforms:
"Third. Payment of the public debt of the United States as rapidly as practicable; all moneys drawn from the people by taxation, except so much as is requisite for the necessities of the Government, economically administered, being honestly applied to such payment, and where the obligations of the Government do not expressly state upon their face, or the law under which they were issued does not provide that they shall be paid in coin, they ought, in right and injustice, to be paid in the lawful money of the United States.
"Fourth. Equal taxation of every species of property according to its real value, including Government bonds and other public securities.
"Fifth. One currency for the Government and the people, the laborer and the office-holder, the pensioner and the soldier, the producer and the bondholder.
"Sixth. Economy in the administration of the Government; the reduction of the standing Army and Navy; the abolition of the Freedmen's Bureau and all political instrumentalities designed to secure negro supremacy; simplification of the system and discontinuance of inquisitorial modes of assessing and collecting internal revenue, so that the burden of taxation may be equalized and lessened; the credit of the Government and the currency made good; the repeal of all enactments for enrolling the State militia into national forces in time of peace; and a tariff for revenue upon foreign imports, and such equal taxation under the internal revenue laws as will afford incidental protection to domestic manufactures, and as will, without impairing the revenue, impose the least burden upon and best promote and encourage the great industrial interests of the country.
"Seventh. Reform of abuses in the administration. the expulsion of corrupt men from office, the abrogation of useless offices; the restoration of rightful authority to, and independence of, the executive and judicial departments of the Government; the subordination of military to civil power, to the end that the usurpations of Congress and the despotism of the sword may cease."
There is no equivocation, no disguise. We propose to place the bondholders, the capitalists, the wealthy classes upon an equality as to taxation and otherwise with the laborer, the farmer, and the artisan. We will not admit his claim that merely because he is a bondholder, without any contract to that effect, he has a right to be paid in gold, while the pensioner, the soldier, and the producer must be paid in a depreciated currency. Where he has no contract for coin we will pay him in the lawful currency of the United States, just as every other debt of our country is payable; and by economy in the administration of the Government, reduction of the Army and Navy, abolition of the Freedmen's Bureau, making the lazy vagabond negroes that are now being fed, and clothed at public expense go to work, and thus become producers instead of consumers, and by the reform of a thousand similar abuses that have crept into the public administration, we will have a large sum the very first year to be applied to the payment of the principal of our indebtedness, thus not only liquidating the principal, but getting rid of the interest thereon forever. Thus each year, the interest being less than the preceding year, the amount to be applied to the payment of the principal will be greater; and getting started in the right direction our enormous public debt will dwindle before the sturdy blows of a wise and economical Administration as the iceberg disappears beneath the rays of a tropical sun. It can be demonstrated that it is perfectly feasible to pay off the entire debt without increase of taxation or inflation of the currency within twelve or fourteen years at the furthest. What a happy deliverance that would be, and how proudly we would stand forth in the presence of the world when emancipated, redeemed, and disenthralled from our slavery to the bondholders and capitalists of Europe, and which thralldom you now propose deliberately to perpetuate.
Why should this be done ? Why should our entire public indebtedness be now converted into gold-bearing, non-taxable bonds, the payment of the principal of which is to be postponed for thirty or forty years ? I wish to be perfectly decorous, and to use no unparliamentary language. But this seems to me, Mr. Speaker, like a bold attempt to mortgage our country, the present generation with their children, to capitalists and to the wealthy lordlings of Europe. I can never give my assent to any such scheme, and I now protest against it, and denounce it as most unjust, unholy, and ruinous to the best interests of our country.
If there was a necessity for postponing the payment of any part of the debt for thirty or forty years, a judicious and feasible plan for reducing the interest would be worthy of commendation. But when, by a judicious and proper administration of our affairs, we can pay off the principal, and thus get rid of the entire interest forever, it would be most suicidal to execute this new mortgage upon the resources of our country.
Funding Bill Gives a Bonus of six hundred Million Dollars to the Bondholders.
I have said that you, by this bill, propose to give the capitalists and bondholders a bonus of near six hundred millions without any consideration whatever. Let me be more specific. On the 1st day of June last, being the last official statement we have had of the public indebtedness, the five-twenty bond debt amounted to $1,494,755,600, and the debt bearing currency interest, most of which is being rapidly converted into five-twenties, was $203,117,540, making in the aggregate $1,697,873,140, all of which under existing laws is legally and equitably payable in greenbacks. Let us, for the sake of simplicity in the calculation, estimate the discount on legal tenders as against coin at only thirty per cent. The above sum would at that rate represent a gold indebtedness of $1,188,511,198, and could be paid off with that sum in coin. But you now propose to issue new bonds, free from all taxation, running forty years, with interest semi-annually, principal and interest in gold, for the full amount of $1,697,873,140, thus adding to our indebtedness at one fell swoop $509,361,942 in gold; equal to $662,170,524 in currency. I have placed the present discount on our currency too low, and consequently the nation's loss by this scheme is underestimated. But this sum, as I have stated it, which you propose to do worse than give away, or cast into the sea, for you fasten it with interest in gold upon us for forty years, amounts to nearly four times as much as the entire expenditures of the Government on land and sea from the adoption of the Constitution to the close of the last British war. And this is your pet financial measure which you have kept back to the closing days of the session, and which you expect, like charity, will cover a multitude of your past sins against the people.
"Covert Repudiation."
But, says the loyal Chicago platform, "this is open or at least covert repudiation." The claim and the attempt to pay these loyal bondholders "who saved the life of the nation" is infamous, and will make us bow our heads in shame and disgrace before the nations of the earth. True, these bondholders paid the Government for the bonds when they got them, in currency only worth from forty to fifty cents on the dollar, and they have been receiving six per cent. thereon in gold ever since; true, greenbacks are good enough money for the soldier, the laborer, the farmer, the merchant, and the pensioner, but to offer anything less than gold to these loyal bondholders is "covert repudiation," and "will brand us with infamy throughout all time." And this wolf howl is raised from one end of the land to the other to intimidate the people to submit to this outrageous robbery, and induce them to yield tamely to the avaricious demands of the money lords.
"Show me," says the polite, elegant, and "loyal" Vice President, Ben. Wade, "a man who favors paying the bonds in greenbacks, and I will show you a penitentiary bird." "The claim of the bondholders to be paid in gold," says the "loyal" president of the convention that nominated Grant, amid boisterous cheers, "is as sacred as the graves of our soldiers," and this sentiment is echoed through the "loyal" press from one end of the land to the other.
"The Debt a 'Sacred' One."
And why is this debt more sacred in its character, and to be paid in gold, when all others are paid in the lawful money of the United States ? Government called for the services of a million soldiers and promised them so many dollars in monthly pay and bounties therefor. It has promised to pay the maimed soldier and the widows and orphans of those who died in battle, pensions in dollars. It makes its contracts daily for thousands and millions of dollars for supplies for the Army and Navy and other branches of the public service. These are all sacred obligations, and yet who thinks of receiving their pay in anything but the legal-tender lawful money of the United States ? This is good enough money for every other class of creditor, public and private, but to pay it, or propose to pay it, to the "loyal" bondholder is "covert repudiation," forsooth. Why is it so ? "Oh, the contract, or at least the understanding at the time the bonds were sold, was that they should be paid in gold." I deny both these propositions, and, as much will be said on this question during the canvass, and great efforts will be made to mislead the people, I propose now to submit the proofs.
Repudiation by the Radicals.
I might, however, before going into the main question, here add that the very men who, in the interest of the bondholders, are so eager in their cry of repudiation, have themselves in numberless instances been guilty of not mere "covert" but open and barefaced repudiation. For instance, the first great loan made by our Government after it found itself involved in war --the seven-thirty, three years' loan of July, 1861-- $139,999,750 in amount, was taken in gold, (the Government receiving gold on every dollar thereof.) and was paid by the Government at maturity in greenbacks and bonds at a lower rate of interest, with principal payable in greenbacks. Over six hundred thousand dollars of this loan were paid in that currency. Those who took this loan and paid their gold into the Treasury were legitimate business men, who from patriotic motives came forward in that hour of gloom and despondency to the support of the Government, and gave their means freely and willingly for its maintenance. But they had not formed a "loyal" ring, and we heard no outcry against this repudiation of the obligations of the Government to them.
And at the passage of the legal-tender act of February, 1862, there were many millions of private debts throughout the United States which, when contracted, were payable in coin, but for which the creditors were compelled to receive greenbacks at a great discount. Here was wholesale repudiation, both public and private, by the party who are now so eager to "maintain the honor of the country." But my business now is with the five-twenty bonds, constituting the principal portion of our present indebtedness, and for which you now propose to issue bonds payable in gold, non-taxable, and running forty years. I propose to prove beyond all question that the holders of the five-twenty bonds have neither a legal nor equitable claim to payment in anything but greenbacks.
On the 25th of February, 1862, Congress, to provide means to carry on the war, passed a law, the first section of which provided for $150,000,000 of legal-tender notes, the language of which, as to their purpose and character, is as follows:
"And such notes herein authorized 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 for all claims and demands against the United States of every kind whatsoever"---
Except what ?
"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."
Language could not well be more clear and explicit. This new money thus authorized is by express terms to be "receivable in payment" "for all claims and demands against the United States of every kind whatsoever, except for interest on bonds and notes, which shall be paid in coin." And it should be noted and remembered that it is only by virtue of this exception that the interest on the bonds authorized by this law can be paid in coin.
The second section of this act authorizes the issuance of $500,000,000 of bonds, registered or coupon, payable at the option of the United States in five years, and in twenty years at all events, and bearing six per cent. interest, payable semi-annually. This is the act authorizing the issuance of the famous five-twenty bonds. There is not a word here said as to the money in which these bonds shall be paid, and were it not for the exception contained in the previous section authorizing the issue of this new lawful money the interest as well as the principal of the bonds would most clearly be payable in the legal-tender Treasury notes. And that there might be no misapprehension or misunderstanding on the subject, the Government published broadcast to the whole world that these notes were receivable for "all debts except duties on imports and interest on the public debt." Every man in the United States, indeed, throughout the world, who received or handled one of these "greenbacks" found printed in clear, legible characters on the back thereof:
"This note is a legal tender for all debts, public or private, except duties on imports and interest on the public debt."
If the law itself had not been sufficient notice to all the world, here was an additional notice more extensively published and circulated than any that has heretofore been given to mankind. And it was, in fact, this very money that was loaned to the Government with this notice on the back of each note when the five-twenty bonds were sold. And it is demonstrable that the creditors when the loan was made, and the bondholders into whose hands these bonds have passed, have all understood at all times that the principal of the bonds were payable in the legal-tender notes.
On this subject I find an argument cogent and explicit, made in December last by a "loyal" member of this House, [Mr. Broomall] who I am sorry to find now favors the payment of these very bonds in gold, and will, I suppose, in obedience to the behests of his party, support this hill of iniquity now before us for consideration. I will give here his argument on the subject, which I defy even the learned gentleman himself now to answer:
"It makes no difference in the legal rights of these parties that this new kind of money was adopted before they loaned to the Government, and was the very kind of money which they did loan to the Government; but it takes from them all cause of complain upon the score of fairness. If we had borrowed when gold was the only lawful money, and had afterward created a different species of less value to pay in, we might have been accused of foul dealing, though in doing so we would only have followed the repeated example of Governments older than ours, and of much greater pretensions.
"Can the creditor complain that he had no notice of the new money when the very act that authorized the loan created the new money ? Can he complain that he had no notice when he loaned the new money, every note of which told him in language which he could not mistake that he must take all his pay in it except the interest ? He hoped the new money would soon be as good as coin, but he knew that it might not be. In taking the bond he took that risk, and, as I will show, he took the bond at a rate which fully paid him for the risk. If the Government owes the money in gold, it should pay it in gold; if it owes it in currency, it should pay it in currency. It is just as bad faith to pay the money of the people to those who are not entitled to it as to refuse to pay it to those who are. We administer this money as trustees, and bad faith toward the cestui que trust is worse, if different at all, than bad faith toward a stranger. Now, I admit the agents of the Government who negotiated the loan promised the lenders that the principal should be paid in gold. I admit that the chief one of them, Mr. Jay Cooke, in a letter which was published at the time, even went so far as to say that Congress had already made provision for the payment of the principal in gold. It is not pretended that these agents had legal power to vary the contract, but it is said that Congress, the only body authorized to bind the Government in the premises, acquiesced in the declaration of these agents by silence. Truly a novel mode of binding the Government to pay money. Hardly even an ingenious invention in the way of legislation. But was Congress silent ? It had already spoken in the enactment that authorized the loan. It is constantly speaking in that enactment, published as it is to the world and made legal and binding and continuing notice to everybody. More than that; Congress circulated far and wide on the back of every legal-tender note issued its notice that the principal of these bonds was to be paid in currency, and its caution to everybody not to believe the false promises of these agents.
"Now, I would very much regret to believe that the holders of these bonds took them under a misapprehension that the Government had bound itself to pay the principal in gold. But did they do so ? Were they deceived, or rather did they not know that these agents were hired to sell the bonds for a commission upon the amount sold ?
"What I propose to show is, that the original holders of the loan took it at as one the principal of which was to be paid in currency, and that the loan has since that time passed from hand to hand in the markets of the country and abroad, and is at this time passing as one the principal of which is to be paid in currency.
"The bonds which are now maturing at the option of the Government were issued pursuant to the act of February 25, 1862. They were made payable in five years, though not demandable until the expiration of twenty. This was the act which created the new money, the legal-tender notes, called currency to distinguish them from coin, though with no great propriety. The loan, amounting to $514,780,500, was all taken in currency and at par. I do not remember at what date after the passage of the act the negotiation began, probably about July 1, 1862. Upto June 30, 1863, $168,880,250 had been negotiated. An additional amount of $341,900,250 was negotiated during the year ending June 30, 1864, and the remaining $4,000,000 during the following thirteen months.
"Now, during the year ending June 30, 1863, the average price of gold was $137.83; and as the interest was payable in coin the average rate of interest at which the loan was taken during that year was $8.27 per $100. This was the rate which the lenders had a right to expect, but the rate actually received for that year was still more. The average price of gold in the November and May following, when the interest was payable, was $163.70; so that the rate actually received for that year was $9.82 per $100. And all this, too, was over and above all taxation except the small pittance of income tax, amounting to but thirty cents per $100 of loan.
"The average price of gold during the year ending June 30, 1864, the year in which nearly all the remainder of the loan was taken, was $158.03. The rate of interest, therefore, which the parties had a right to expect was $9.48, and the rate actually received, governed by the average price of gold in November and May of that year, was $9.78.
"If the advocates, of this claim of the five-twenty bondholders are to be believed, here was a contract under which the Government borrowed $100 at an average rate of $9.08 per annum, with a promise to pay $151.33 at the maturity of the bond if the currency system should continue the same, and with no possibility of loss if it should not.
"Now, sir, bear in mind that during all this time there was the usual amount of borrowing and loaning going on in the community at six per cent. for permanent loans; payable, both interest and principal, in currency; loans which were subject to United States, State, and municipal taxation to more than six times the amount of income taxation on the public bonds.
"Were the people afraid to trust the Government ? Why, it could purchase in the markets on time on the same terms with individuals. All its promises to pay in currency passed even on more favorable terms than the average similar ones of individuals. Its gold certificates, which were promises to pay gold, always passed for about the price of gold. More than all this, the public faith in the Government fulfilling its promises to the letter was tested and proved by placing the seven-thirty notes in the market side by side with these bonds. The notes bore a less rate of interest than the bonds. They were avowedly payable, principal and interest, in currency. Yet they were taken at par and with great avidity. You will say they were convertible into the bonds. True; and this might make them as good as the bonds, but no better. Yet they were taken in preference to the bonds, and difficulty was experienced in inducing the holders to part with them for the bonds.
"Upon this branch of the arguement, therefore, we have the facts that the original holders paid for the bonds in currency; they took them at a price which could only be justified upon the hypothesis that the principal was to be paid in currency; they had before them the acts of Congress which expressly told them that the principal was to be paid in currency; they took them at the same rate and side by side with the obligations of the Government known to be payable in currency and bearing a less rate of interest, and finally the gold certificates of the Government always sold in the same market for the price of gold. If, after all this, anybody will say that these original holders believed the Government to be bound to pay the principal in gold at maturity, he will exhibit less faith in the intelligence of the bondholders than I have."
And it is as clear as any proposition can be that the bondholders have always understood the law and the obligation of the Government just as I contend it to be, and that they so understand it now. Look at the intelligence flashed across the Atlantic giving us daily information of the market value of our five-twenty bonds in Europe. The English three per cent. bonds are quoted at nearly par, while our six per cent. bonds, on which we pay the interest regularly in gold, is quoted at about seventy per cent. --or thirty per cent. discount. We have never failed for an instant to pay the interest faithfully and punctually. The ability and good faith of our Government are doubted nowhere. Six per cent. is a large interest in Europe, and yet our six per cent. bonds are and have been all the time at about thirty per cent. discount. This can only be accounted for on the ground that the bondholders do now, and have all the time, known that we have at any time after five years from the date of the bond, a perfect and unquestionable right to pay the principal of these bonds in currency, worth about seventy cents to the dollar, and thereby stop the interest thereon forever. And they never would have thought of being paid in any other way if it had not been for the wolf cry of the astute and excessively loyal politicians of the Radical party. They have now very willingly formed a "ring" with the bondholders' candidate and the bondholders' party, and would very gladly divide with them this six hundred millions which it is proposed by this most bold and atrocious robbery of any age to filch from the already overburdened and overtaxed people of our country.
Can we Pay the debt in Greenbacks without Ruinous Inflation ?
"But," says my loyal friend, "how do you propose to pay our debt in greenbacks ? We have now in circulation only $356,000,000 in legal-tender notes. How can you pay a debt of $2,500,000,000 with that ? If you put the paper mills to work and grind out $2,000,000,000 more in legal tenders, and thus pay the debt at once, you will flood the country with a depreciated and irredeemable currency, and bring disaster and ruin to every branch of business in the country."
Now, those who talk in this way either do not know what they are talking about; or they are trying willfully to deceive the people. When it is asked how we will pay our debt with greenbacks without a further or ruinous issue thereof, I might with greater propriety ask my "loyal" friend how he expects to pay that debt with gold. There is, in fact, no gold in circulation among us as money. It is known to all intelligent observers that there is not in the United States to-day, exceeding two hundred million of gold, including the one hundred millions or thereabouts in the Federal Treasury. Our gold coin has become a mere commodity instead of being used as a circulating medium. There is no demand for it among ourselves save for imports; neither is it hoarded here. But the demand from abroad is in excess of our supply. Indeed, if we possessed all the gold that has been coined in the United States from the foundation of our Government it would fall far short of paying our national debt. Ours has been the principal gold-producing country, and yet the gold coinage of the United States from 1792 to 1866 amounts to only $845,536,591, not enough if we now had the whole of it to pay one third of the audited and ascertained public debt. But ours is and has ever been a gold-exporting country, and, as I before stated, we now have not in the entire country more than two hundred million dollars in gold, while our national indebtedness amounts to twenty-five hundred millions, and we annually export more than we produce. The production of California does not exceed $50,000,000 per annum, while there were exported to Europe---
In 1866 ........................ $86,044,071
In 1867 .............................. $60,975,186
I have not the data to give the export for the present year up to this time. For January it was reported at $8,000,000, or at the rate of ninety-six millions for the year. But as our supply is nearly exhausted, I do not suppose it will much exceed the production of our mines.
With these facts before us I again ask my loyal friend how he expects to pay these bonds in gold ? If he admits that it cannot be done, and yet insists that we have no right to pay in anything but coin, it is he, and not I, that is the practical repudiator. But no man who has brains enough to count a hundred expects to liquidate this enormous debt at one time or by one single payment, and no sane man proposes to issue greenbacks merely for the purpose of paying the bonds therewith. We do not ask for an inflation of the currency. We do not argue that it would be right, wise, or just voluntarily to produce such inflation, nor do we purpose any such thing.
All Radical Financial Measures have been Miserable Blunders and Failures.
We ask you to stop your wolf cry of repudiation when we propose in good faith to pay these five-twenty bonds in strict compliance with the contract made by the Government, and to listen to us while we show how this can easily be done without additional taxation. All your financial schemes and measures are confessedly miserable blunders and failures, and notwithstanding the enormous sums wrung from the people by taxation the public debt now, in a time of profound peace, is actually increasing at the fearful rate of nearly ten million dollars per month, and the debt bearing coin interest is increasing at a still more fearful rate. Let me give the figures from the official reports of the Secretary of the Treasury.
The Public Debt now Rapidly Increasing.
Debt bearing coin interest. On the 1st of June, 1868, the debt bearing coin-interest was $2,020,827,841.80. On the 1st of May it was $1,963,378,291.80. Increase in one month $57,449,550.
Entire debt. June 1st, 1868, the entire debt, less the cash in the Treasury, was $2,510,245,886.74. On the 1st of May it was, less the cash in the Treasury $2,500,528,827.56. Increase in one month $9,717,059.18.
Thus it is seen that the increase in the public debt for the last month of which we have any official information was nearly ten million dollars, while for the same month the increase in the debt bearing gold interest was over fifty-seven millions, or at the rate of nearly two millions per day. It is rumored, and currently believed, that if a report had been made from the Treasury Department on the 1st of July, it would have shown a still more fearful increase in our public liabilities. I cannot see how our financial affairs could well be worse managed than they are under Radical policy; and it seems that when you have so utterly and so completely failed, you might listen with some respect and some diffidence in your own infallibility to those who propose to show that all those evils can be easily and speedily remedied by the introduction of reforms plain, simple, and easily understood.
The five-twenty bonds outstanding on the 1st day of June amounted to $1,494,756,600, the annual interest on which amounts, in gold, to $89,645,386. The principal of this debt is clearly payable in legal-tender Treasury notes, as I have heretofore demonstrated. If we can pay this debt and get rid of this heavy burden of annual interest, the residue of the debt will scarcely be felt, and can easily be disposed of. That this can be done I propose now to show.
As I have already stated, no one expects to pay this debt at one time or in one year. In fact there is scarcely sufficient gold coin in the whole world to pay our public debt in one payment. And we do not expect, whatever we may use as money or for a circulating medium, to have in circulation or to put in circulation at any time an amount of it equal to our present public indebtedness. We do not think this desirable. But every one knows that when business is active and the country prosperous one dollar kept actively employed, and passing from hand to hand, may in one year supply the medium of exchange for hundreds of transactions of one dollar each, or liquidate debts amounting to hundreds of dollars. It is not absolutely necessary that there should be any increase in our currency to enable us by proper reform in the administration to pay off this debt in a very short time, although I believe a considerable increase is at this time necessary for the purpose of giving activity to business and restoring prosperity to the country.
Wind up National Banks and Substitute Greenbacks for their Currency.
As we have for the present abandoned coin as a medium of exchange, and cannot speedily return to it without reducing the whole country to bankruptcy, it is certain that no substitute has been so popular with the people, or has answered its purpose so well, as the greenback currency. I will not now discuss the wisdom or policy of introducing this currency. We must now deal with facts as they are. The establishment of the national banks was a great blunder, if not a crime. If we are to have a paper currency the Treasury notes are the most popular, the safest, and the best secured. And if there is any profit to be derived from the issuance of a paper currency the Government, representing the entire people, and not private corporations or individuals, should be the beneficiaries thereof. Why these national banks were established I never could understand. Enormous profits have been made thereby, but the Government has lost and the public have not been benefited. To show the iniquitous and ruinous working of this banking system I will repeat what a gentleman on this floor states as having occurred in an eastern State within his own observation.
An association of gentlemen raised $300,000 in currency. They went to the office of the Register of the Treasury and exchanged their currency for $300,000 in six per cent gold-bearing bonds. They then went to the office of the Comptroller of the Currency in the same building, organized a National Bank, deposited their $300,000 in bonds and received for their bank $270,000 in the national currency. They had let the government have $30,000 in currency more than they received for banking purposes and had on deposit $300,000 in bonds, on which they received as interest from the government $18,000 a year in gold. This was pretty good financeering for these bankers to receive $18,000 a year in gold on the $30,000 in currency which they had thus loaned to the Government. But this is not the whole story. They had their bank made a public depository. They soon discovered that there was scarcely ever less than $1,000,000 of government money deposited within their vaults. They did not like to see this vast sum lie idle. They therefore took $1,000,000 of this government money and bought $1,000,000 of five-twenty bonds with it. In other words, they loaned $1,000,000 of the Government's own money to the Government and deposited the bonds received in the vaults of their bank, on which they received from that same government $60,000 in gold per annum as interest. Thus, for the $30,000 in currency which they originally loaned the Government they were receiving in interest annually in all $78,000 in gold. And all this was under the regular operations of your banking law. This was certainly good financiering for these cute Yankees, but what kind of financiering is it for the Government, and when do you suppose we can get out of debt under such a system ? All this must be changed. The Government has issued in this way to the various banks $300,000,000 in bank currency, and has received $330,000,000 in bonds on deposit as security. We propose to compel the withdrawal of this bank currency from circulation, and to substitute therefor $300,000,000 in legal-tender greenbacks, with which we will pay off that amount in five-twenty bonds. We thus get rid of the payment of $18,000,000 per annum of interest we are paying thereon, do not increase the volume of currency one cent, and have a better and more popular circulating medium. If we should set apart each year this $18,000,000, which we would otherwise be paying as interest, we would, with accumulations thereon, in a few years have a sufficient sum to liquidate the residue of the five-twenty bonds.
Extravagance and Corruption of the Radical Party.
But we demand other reforms even more important than this. Your administration of the Government has been reckless and extravagant beyond all precedent. The peculations and robberies perpetrated since your party has been in power are without a parallel in the history of the world. I appeal to facts for an affirmation of these charges. You have taxed the people as no people have ever been taxed before in any age or in any country. In the three years of peace since the close of the war you have raised from their hard earnings by the drag-nets you have spread out all over the land $1,500,000,000, a sum so enormous that the mind can scarcely grasp or comprehend it. If it were possible to raise this sum in silver dollars they would load forty-six thousand eight hundred and seventy-five wagons with two thousand pounds to each wagon; and if they were to be moved, allowing twenty rods for each wagon and team, it would form a train stretching out two thousand nine hundred and twenty nine miles. You have raised from the people in one single year over five hundred and sixty million dollars. And yet with all this enormous taxation the public debt is at this moment rapidly increasing, as I have already shown. It has not required exceeding $140,000,000 at any time to pay the interest on the public debt. I arraign you before the world as guilty of high crimes against the people. I demand of you to plead and tell us what you have done with this money. You are now upon trial at the bar of an indignant and greatly wronged people. It is impossible that this enormous sum could have been expended in a legitimate and honest administration of the Government. I will contrast this iniquity with the expenditures of Administrations before your party came into power; and, that the House an the country may fully comprehend the facts, I will here produce some tables, one of which I have heretofore brought to the attention of the House:
Table giving the entire expenditures of the Federal Government, exclusive of the public debt, from the foundation of the Government to the close of the last British war.
Thus it is seen that the entire expenditures of the Government from the adoption of the Constitution to the close of the last war with Great Britain did not amount to one third of what was raised from the people by taxation for the single year of 1866.
The average annual expenditures of the Government at different specified periods for the forty years immediately preceding the advent of the Republican party to power in 1861 were as follows, according to a table furnished by Hon. David A. Wells, Special Commissioner of Revenue, in his last annual report. Mr. Wells is a member of the Republican party, and of course does not misrepresent facts to the damage of his own party:
Average annual expenditures of the Government for periods of ten years each.
1821-31 (ten years) .......... $16,170,000
1831-41 (ten years) ........... 25,030,000
1841-51 (ten years) ........... 35,740,000
1851-61 (ten years) ........... 60,680,000
The third of these periods (from 1841 to 1851) embraces the time of the Mexican war, and yet the average annual expenditures of this decade, including civil list, pensions, Indians, Navy and War Departments, do not reach $36,000,000. In view of these facts will some gentleman on the Radical side of the House tell the country why it is that it is necessary to raise from the people $500,000,000 a year, and that even with this enormous taxation the public debt is now rapidly increasing ? These are questions, answers to which an indignant people will demand of you when you appear before them again asking their suffrages. But these expenditures are not and cannot be necessary. Abolish your military governments in the South, by which you are supporting the negro governments established there. Reduce your large standing Army to what it ought to be in time of peace, a mere police force. Abolish your Freedmen's Bureau, by which you are teaching politics and laziness and vagabondism to your negro protégés. Reduce your expensive Navy, go back to the principles of economy and honesty, and introduce the necessary reforms in every branch of the service, and you can in this way save one hundred or one hundred and fifty millions more to be applied annually to the payment of the principal of these five-twenty bonds. The interest will in this way, year by year, be rapidly diminishing, and the amount saved thereby each year can also be applied to the payment of the principal of those bonds, and it requires no mathematician to see that in this way the entire five-twenty bond indebtedness may be liquidated in five or six years without any increase of either taxes or the currency.
Demand for an Additional Issue of Greenbacks.
But for myself I believe the business of the country requires and demands more money, and that we should have promptly an additional issue of the legal tender or greenback currency. I would make this not primarily to pay the public debt, but to supply the place of the millions destroyed under the mad and suicidal scheme of contraction, and because the money is needed by the people, would give renewed energy and activity to business, bring prosperity and joy to thousands who are now bowed down by embarrassments and despondency, enable the people more easily to bear the burdens of taxes, enhance the price of labor and produce, give a readier and more active market therefor, increase the public revenues, and thereby enable us the more easily and speedily to pay off our public debt.
"But," says my loyal friend, "an increase of the volume of the currency would depreciate its value and thereby produce widespread disaster." Facts are of more value than theories, however plausible they may be, and I propose to show by facts and figures that what I purpose would produce no such result. An unlimited issue would doubtless inflate and depreciate the currency, but I know of no one who contemplates any such thing.
Contraction of the Currency a Grave Blunder.
The scheme of forcing a return to specie payments by the inauguration of the policy of a rapid contraction of the currency was most fallacious, and in its results has almost brought bankruptcy and ruin to our doors. At the close of the war, the party in power had, by adopting the legal-tender Treasury note as the "lawful money" of the United States, banished gold from the country as a circulating medium. The entire business of the country had adjusted itself to the paper currency in our midst, and with an abundant circulating medium business was active and profitable in all portions of our country. The laborer found employment for his hands, and industry, activity, and thrift were seen in all our borders.
Did we at that time have too much money ? I think not. The demand for it was increasing every day. Ten States shut out from us for four years, now left after their long struggle without any circulating medium, held up their supplicating hands imploring assistance. These ten million people would soon have absorbed a large portion of our currency. New enterprises were springing up all over the land; the Pacific and other railroads, new towns, cities, factories, &c., all demanding and requiring the use of immense sums of money. Hundreds of thousands of enterprising immigrants were flocking to our shores, and our population and enterprise were rapidly increasing; thus constantly, day by day, swelling the demand and necessity for an abundant medium of exchange.
At this very time, of all others the most inopportune, the policy of contraction was inaugurated. The business of the country at first but slightly felt the shock, then staggered under the increasing weight of the burden imposed, and finally stagnation and threatened ruin hung over every branch of business. If this had gone on much longer the paper currency would have been destroyed, and there would have been nothing to supply its place. We would not have returned to specie payments, but bankruptcy and ruin would have crushed Government and people alike. None have been benefited except those who have bonds or hoarded wealth. The purchasing power of their money has been greatly increased, but we are not one particle nearer specie payments than we were when this policy was inaugurated. To understand fully why business is so greatly depressed, let us see what has been the extent of this contraction. It is in fact much greater than is commonly supposed.
Circulation Compared.
On the 1st of September, 1865, the circulating medium consisted, in part, as follows:
United States notes ................ $433,160,569
Fractional currency ................... 26,344,742
National bank notes .................. 300,000,000
Compound-interest legal tender ............ 217,024,160
Temporary loan certificates, 10 per cent. ... 107,148,713
Certificates of indebtedness ................... 85,093,000
Treasury five per cent. legal tenders ...... 32,536,901
Treasury notes, legal tenders, past due and not presented ............ 1,503,020
State bank notes ................................ 78,867.575
Total ........................................... $1,281,678,680
Of the above it will be noticed $684,138,959 were legal tender, to wit:
United States notes ................................. $433,160,569
Five per cent. notes ............................... 33,954,230
Compound-interest notes .......................... 217,024,160
Total ................................................. $684,138,959
On the 1st of January, 1868, the amount of currency in circulation of the description above mentioned was as follows:
United States notes and fractional currency ................... $388,403,565
National bank notes ................................ 300,000,000
Compound-interest notes and three per cent. certificates .................. 78,165,170
State bank notes ...................................... 4,000,000
Treasury notes ......................................... 878,503
Temporary loan, 10 per cent. ................... 2,474,625
Certificates of indebtedness ..................... 30,000
Total ..................................................... $773,953,863
Total contraction in two years and four months, $507,724,847, being a reduction of forty per cent.
Thus it is seen that in the short time of two years and three months there was a contraction of the circulating medium of our country of over five hundred million dollars. The contraction in legal tenders was two hundred and fifty millions. Has this unparalleled contraction reduced the price of gold or enhanced the value of national securities ? Has it promoted the prosperity of the country ? We all know it has not. Its effect has been to paralyze trade, suspend industries, and throw labor out of employment. In May, 1865, gold sold at less than thirty per cent. premium. It is to-day over forty-two.
The Issue of Two Hundred and Fifty Million Dollars in Greenbacks Favored.
As contraction has not increased the value of legal tenders, or brought them and gold nearer together, a reasonable expansion within the limits of the demands and necessities of the country will not depreciate their value. It will bring multiplied blessings to millions of households, and will injure no one. It will facilitate the collection of taxes, increase our revenue, and enable us more easily and speedily to pay off our public debt.
The country demands and needs more money, and must have it from some source. I say let the Government supply it. Reissue the $250,000,000 in legal tenders that have been destroyed when it ought to have been paid on our bond indebtedness, and thus kept in circulation among the people. With this $250,000,000 pay that amount of the five-twenty bonds, stop the interest thereon, unfetter that amount of capital that is now sunk, non-taxable, and a burden, and put it in circulation among the people. This is no inflation. The people need the money. It would lessen our taxes and burdens, the five-twenty debt would soon be entirely paid, and it will bring gladness and joy to thousands of homes now oppressed with embarrassments and despondency.
This would not be inflation. As our country increases in population, wealth, and enterprise we will need more than this. In no commercial and prosperous country in the world is the supply of money so small as in ours. England has twenty-five dollars per head for her inhabitants; France has thirty, while we now have scarcely thirteen. This is a demand that the people will insist on, and your cry of "covert repudiation" will not turn them from their purpose.
Another Reason why the Bonds Should be Paid Now.
There is another reason, strong and irresistible, why we should commence paying off the bond debt now in the manner indicated, and complete it as speedily as possible. These bonds continually drain the money from the people, and tie up and centralize capital. Whenever an enterprising citizen makes one or two hundred thousand dollars, instead of building railroads, improving our farms or towns, or purchasing produce from the farmers, he will make an investment where he will ran no risks, and can entirely escape the burdens of taxation. He will invest in these bonds, whereby in perfect ease and security he can retire from responsibility and duty to society, and as inevitably as fate draw his six or twelve thousand dollars per annum in gold as interest. You cannot tax him to support State, county, or town, or to keep up the roads on which he travels. If he has children his neighbor may be taxed to educate them, but you cannot reach him. Such a system cannot be defended. Those who try to fasten it on the country will soon hear the thunders of an indignant and aroused people.
Conclusion.
Let us pay off these bonds as speedily as possible. The manner in which it can be done has been in part indicated. Let us unfetter this capital that is thus tied up and put it in circulation among the people. Then again we will hear the hum of industry in our cities and in all our borders; towns and cities will spring up as if by magic; railroads and other means of intercommunication will be multiplied, and peace, prosperity, and happiness will bring joy and gladness to the hearts of our people. What a contrast this presents to the prospect held out by the bill now before us, of increasing the debt one third and fastening the incubus upon us without remedy or redress for forty years. Let the people without passion or prejudice judge between us, and settle this issue as their own interest, honor, and dignity demands.
Note.
The Funding Bill, which passed the House of Representatives during the last hour of its session, and the vote thereon in the House, are given below. It was not signed by the President, and consequently has not become a law. Those voting for it are all Republicans:
An act providing for the payment of the national debt, and for the reduction of the rate of interest thereon.
Be it enacted, &c., That the Secretary of the Treasury is hereby authorized to issue coupon or registered bonds of the United States, in such form as he may prescribe, and of denominations of $100, or any multiple of that sum, redeemable in coin at the pleasure of the United States after thirty and forty years, respectively, and bearing the following rates of yearly interest, payable semi-annually in coin, that is to say: the issue of bonds falling due in thirty years shall bear interest at four and a half per cent.; and bonds falling due in forty years shall bear interest at four per cent.; which said bonds and the interest thereon shall be exempt from the payment of all taxes or duties to the United States other than such income tax as may be assessed on other incomes, as well as from taxation in any form by or under State, municipal, or local authority, and the said bonds shall be exclusively used, par for par, for the redemption of or in exchange for an equal amount of any of the present outstanding bonds of the United States known as the five-twenty bonds, and may be issued to an amount, in the aggregate, sufficient to cover the principal of all such five-twenty bonds, and no more.
Sec. 2. And be it further enacted, That there is hereby appropriated out of the duties derived from imported goods the sum of $135,000,000 annually, which sum, during each fiscal year, shall be applied to the payment of the interest and to the reduction of the principal of the public debt, in such manner as may be determined by the Secretary of the Treasury or as Congress may hereafter direct; and such reduction shall be in lieu of the sinking fund contemplated by the fifth section of the act entitled "An act to authorize the issue of United States notes, and for the redemption or funding thereof, and funding the floating debt of the United States," approved February 25, 1862.
Then came the 1868 election campaign which decided in what direction the United States shall progress: shall it remain a union of sovereign States under a constitution, or shall it be reconstructed and become a consolidated state, under the dictatorial control of the federal government. The not yet reconstructed southern States were not allowed to vote for president and were not allowed to send representatives to Congress; those representatives, and a President Seymour, could have foiled the plans of reconstructionists.
The question whether the 5/20 bonds should be redeemed in greenbacks or in coin was made an election issue. The Democratic platform declared that they "ought in right to be paid in the lawful money of the United States." The Republicans considered this a repudiation, and fully intended to lie to the public during the campaign. They said and declared in their platforms what constituents wanted to hear ---Mr. Sherman actively campaigned and made people believe that his and his party's policy was to pay the 5/20s in greenbacks; their intentions and actions were exactly the opposite.
Senator Hendricks: "I understand that in the region of the country in which he lives it was claimed that the resolution meant that the spirit of the contract was that the payment should be made in gold, and I presume the people of Vermont decided thus, while I know that in the region of the Country in which I live the advocates of the Chicago platform claimed that it meant a payment in lawful money, in very many instances, so that very many persons in our section of the country voted for the candidates standing on the Chicago platform, assuming that that meant that the debt might be paid in lawful money, that that was the spirit of the contract as well as the letter; so I cannot say what was decided." ---In the Senate, Monday, December 14, 1868.
Investigation by the New York Legislature ascertained that "in the year 1868 more than one million dollars was disbursed" from Jay Gould and the Erie Railway to politicians "for extra and legal services." It is reasonable to think that Huntington and others also spent as much as Gould. Rothschild’s vice-roy, August Belmont, was a pillar of the Democratic Party. The same Belmont who, in 1841, hand-delivered Rothschild’s letter to Secretary of State, Daniel Webster, telling the President of the United States, please expedite payment on State debts. The following 20 years he must have learned a thing or two about buying politicians while on behalf of the House of Rothschild persuaded State governments to take out large loans for "improvements". The 1840 election campaign was another famously and somewhat documentedly corrupt campaign. He was in the thick of it and an eye-witness to it.
To see what sort of people populated the Houses of Congress:--- Letters from Collis P. Huntington to Mark Hopkins, Leland Stanford, Charles Crocker, E.B. Crocker, Charles F. Crocker and D.D. Colton. Published, New York 1891, as result of a court case in which Colton’s widow sued Central Pacific and produced handwritten letters as evidence.