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Cornell University Library 
 HG 527.P98 
 
 Theory of money & currency; an inquiry in 
 
 3 1924 013 681 550 
 
Cornell University 
 Library 
 
 The original of this book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013681550 
 
THEORY OF MONEY & CURRENCY 
 
 AN INQUIRY INTO 
 
 The New Theoky of Currency, which has been worked 
 out painfully and laboriously by the ablest men in 
 Great Britain, till they have come to be pretty nearly 
 unanimous upon the subject. 
 
 WITH OTHER WRITINGS OF 
 
 RICHARD B. PULLAN, 
 
 " Carthago dclbnda est. Bank paper must be suppressed, and the circulating^ medium 
 must be restored to the nation to whom it beloiig-s." 
 
 " Let those amon^ us who have a moneyed capital, and w^ho prefer employiug it in loans 
 rather than otherwise, set up banks, and give cash or National bills for the paper they 
 discount." — Thomas Jefferson, Writings published by Congress, Vol. VI, pages 141, 199. 
 
 " The present state of things is almost intolerable." — Goschen [see page 113]. 
 
 '* No one can doubt that the paper issue of a country, lik? its currency, ought to be in the 
 hands of the government." — Cave [page 114]. 
 
 " Banks of issue are in the strictest sense subsidized by the State, because it is exactly the 
 same thing, so far as the money is concerned, as to grant a legislative privilege to a person 
 to pay over to him a considerable sum from the Public Treasury."'— Gi.ad stone jiage 115]. 
 
 " The Government accepts, in the fullest measure, the principles of the Legisla.tion of 1844 
 and 1845, based on the theory that the privilege of issue belongs to the State, and that,the State,, 
 exercises that right of issue in such a manner as may promote the convenience and ' intefest of 
 the public,"— NoKTHCOTE, Chancellor of the Exchequer [page 115]. ^\ ''' 
 
 "The privilege of issue is not a question of fatts. It is a question of abstract opinion, 
 which has Deen worked out painfully and laboriously by the ablest men in the country, till 
 they have come to be pretty nearly unanimous upon the subject." — Lowe, Ex-Chahcellor of the 
 Exchequer [page 117I. 
 
 '* The existence of bank issue, in addition to the suffering it has caused the, people of the 
 United States, has cost the Government itself, since 1865, over seven hiindr^d ' nJill'ions of dol- 
 lars."— [Cost of Bank Issue, see page 48. ] . 
 
 t currency "i 
 
 but in Great Britain as well; and that such a currency might properly continue to be a legal 
 tender, except when coin is specifically stipulated for." — Opening of John Sherman's Plea 
 for a Bank Note Currency^ March 6, 1S76. ' \ \ 
 
 WASHINGTON: 
 
 SOLOMONS & CHAPMAN, PUBLISHERS. 
 
 1878. 
 
Entered according- to Act of Congress in the year 1878, by Richard B. Pullan, in the office 
 of the Librarian of Congress, at Washington, D. C. 
 
PREFACE. 
 
 The last half of the Clifton Address was part of 3 paper written on the as- 
 surance that the Democratic Campaign Committee would, at its first meeting, 
 order it published. It was read to some of the members-elect of the Senate and 
 House of Representatives, and other prominent Democrats. Owing to the ru- 
 mored disa^ement between the members, the gentleman who gave the assurance 
 was told to iherely mention that an answer to Secretary SherAian's speech had 
 been prepared, and leave the Committee to do as it pleased about having it pub- 
 lished. It pleased them to have nothing said that would offend the banks. 
 
 Some weeks afterward the author received an invitation from the Republican 
 Committee, to which he replied substantially as follows — " I suppose the Com- 
 mittee understand that I regard the currency question as primary, and hold that 
 ' the existence of bank notes is the chief obstruction to a safe return to the coin 
 standard. This opinion caused me to vote for Gov. Allen, to seek Senator Mor- 
 ton's nomination, and to vote for the greenback Democratic electors ; also to sup- 
 port Stanley Matthews for Congress, because I believed that, if elected, he would 
 thoroughly examine every important question, and be governed by what he found 
 to be the truth, which he had the courage and ability to maintain. His conduct at 
 Cleveland and since confirms that opinion, and has determined me to do what I 
 can to sustain him." 
 
 This expression, having been accepted, the author immediately prepared the ad- 
 dress, handed it to the Committee, and saw nothing more of it until the day of the 
 meeting. The members of the Committee had in the meantime vainly endeavored 
 to persuade the journals of its party to permit it to appear in their columns. Not 
 so appearing, the author concluded to publish it himself. After being put in type, 
 the closing declaration determined him to include its proof, contained in papers 
 published nine and ten years ago (also the two papers, the publication of which 
 was requested in 1875), and to state the circumstances under which they originally 
 appeared, to show the change that had taken place in now excluding any discus- 
 sion of that which was then invited. 
 
 This statement is made for the same reason the address is published — to show 
 the probable cause of the Republican Press refusing the request of the Republican 
 Committee ; and that the Committee perfectly understood the character of the 
 address before the appointment was made. 
 
 The author also includes the series of essays constituting Part V, in the possibility 
 that the argument may so commend itself to the true friends of the President 
 that they will submit it, with other arguments that may be made, to his considera- 
 tion on this final hearing of this great cause of The People versus the National 
 Banks. Any expression that may have been made in the message or previously 
 can be regarded only as interlocutory. He has too just an appreciation of the high 
 semi -judicial character of his position to shut out any proper pleading before render- 
 ing a final decision. No one that knows his personal integrity of character, his 
 courage and g"^at self-reliance, but knows, that while nothing can drive or draw 
 
11 PREFACE. 
 
 him from his position, he is yet open to conviction, and that when convinced he 
 has the moral courage displayed by his friend, the lamented Morton, in his great 
 speech in the Senate, in December, 1868, when he said — 
 
 " I voted for a Bill last session to legalize specific contracts to be executed in 
 coin, -without much consideration, and since have become satisfied it -was an error. 
 The unwary would be enticed into such contracts by the crafty, and those in 
 straightened circumstances or under heavy burdens would be forced into them." 
 
 If the friends of the President present all the facts in such manner as they have 
 the ability to do, there can be little doubt that they would so address themselves 
 to his understanding that he would not hesitate to follow this illustrious example. 
 Neither is he the man to close his ears against such words as these addressed to a 
 mass meeting of the citizens of Cincinnati, on October 3,1874, by one of his truest, 
 wisest, and ablest friends, the Hon. Job E. Stevenson : 
 
 " In order to restore health and activity to business, we should return at the 
 earliest period practicable, without shock to commerce, production, or property, to 
 a currency based upon coin. An uniform currency of United States notes, re- 
 deemable in gold and silver at the will of the holder. We want uniform currency, 
 so that there shall be but one measure of value, the unit of which shall be the 
 dollar, and that every dollar shall have the same power as every other dollar. 
 Now we have two kinds of paper currency — United States notes, and bank notes 
 guaranteed by United States bonds, and redeemable in United States notes. As 
 the bank notes are not legal tenders as the United States notes are, the banknotes 
 are of less value than United States notes. We want but one kind of paper, and 
 that the best kind — not bank paper redeemable in United States notes, but United 
 States notes redeemable in coin. 
 
 " The reasons for preferring a currency exclusively of United States notes seem 
 to me strong and clear. They are, first, that the constitution vests the power of 
 making money in the Government ; that it is, therefore, a sovereign franchise, 
 which should be exercised by the Government for the benefit of the people, and 
 not given or bartered away to private persons or to corporations ; second, that by 
 issuing the currency the Government, and through it the people, will secure the 
 benefit of the use of the sum required by commerce, without paying interest upon 
 it ; third, we shall avoid another dangerous political struggle over the question of, 
 a United States Bank — a struggle which would be inevitable, and which already 
 threatens us, and which could end only in one way — the overthrow of the bank, 
 with general commercial disaster and ruin. This has been the history of every 
 such contest in this country, and the nature of our Government renders it abso- 
 lutely certain that the same effect must follow the same cause, and the same end 
 be reached whenever we tread the same path. The bank is and must be a mo- 
 nopoly corporate. Providing by law for free-banking will not make it otherwise, 
 but will only extend it." 
 
 Nor is he likely to treat with indiiference the words of the Hon. Joseph H. 
 Barrett, — the friend and biographer of Lincoln, the veteran editor of the Times, 
 the only journal in the city that for months fought for his nomination, — who, 
 in a leading editorial, on the 29th of last June, said : 
 
 " Every single change that has been made in the standard, has been to the 
 benefit of the creditor. The man is seldom seen now-a-days who questions that, 
 before March, 1S69, there were certain bonds that were, by their very terms, paya- 
 ble in legal tenders. Greenbacks formed the currency the Government received 
 for those bonds. In greenbacks the greenback debt could have been paid, ought to 
 have been paid. This was the doctrine of the present Secretary of the Treasury." 
 
OOIsTTEICTTS. 
 
 PART I. — The Clifton Address. The President's title. Bank influence 
 has controlled the Democratic party. Senator Matthews, Gen. Ewing, Mr. 
 Belmont, Mr.lDrexel. Gov. Todd. Sherman's lean kine. Banks making no 
 preparation. Demonetization of silver. Remonetization. Three per cent. 
 Our present peril. Who is responsible ? " But one neck to cut," pages i to 20. 
 
 PART II. — Cost of Bank Issue. Sherman's and McCulloch's bank schemes 
 and expectations. They will fail. U. S. note policy defined. Table, showing 
 when public debt will be funded at low interest, and U.S. notes made as good 
 as gold. U. S. notes superior to gold. Effect on business and banking. 
 Baleful influence of bank issue. U. S. notes part of the Government currency. 
 The Savings Bank. Operation of Bank system and Government system. 
 The circulation must be homogeneous before a return tp specie payment. 
 Bank notes the only obstruction. U. S. notes instead of bank notes. U. S. 
 notes no part of the ordinary public debt pages 21 to 66. 
 
 PART III. — ^The Savings Bank of the People. Rise and progress under 
 an honest Secretary woi"king in the interests of the people. Decline and fall 
 under a Secretary working in the interests of the banks. Testimony of the 
 New York Produce Exchange. Secretary Chase on the panic of 1863. Mr. 
 Cisco's relief. Mr. Shuckers. A most happy agreement. The Bankers' 
 Magazine bull-dozed. Secretary Bristow's truthful statement. . . pages 67 to 82 . 
 
 PART IV. — ^The Greenback Doctrine in England. Sir Robert Peel and 
 his son. Sir Robert Peel's speech. David Ricardo. Situation of the two 
 countries ; a parallel. Resumption Acts of 1819 and 1875. "^^^ debate. 
 Hudson Gurney. Ricardo's speech. First fourteen months of specie pay- 
 ments. Three years of great prosperity. Gurney and Baring. Sudden col- 
 lapse. The close of the struggle. Warning to us. History of panics, from 
 1830 to the present time. Panics, and failures of the Bank of England in 
 1847, 1857, and 1866. Progress of" The New Theory of Currency," from 1823 
 to 1875. Extracts from McCullough's life of Ricardo. Repudiation only 
 possible from the continued existence of_the National Banks. Why the au- 
 thor wrote " Theory of Money and Currency." [Part V.] . . . .pages 83 to i lo. 
 
 PART V. — Theory of Money and Currency. 
 
 Chapter I. — Public opinion in Great Britain. Extracts from London Times, 
 Blackwood's Magazine. Mr. Goschen,. Mr. Cave, Mr. Gladstone, the Chan- 
 
IV CONTENTS. 
 
 cellor of the Exchequer, and Mr. Lowe. Amount of bank subsidies. The 
 old dogma, that gold alone is money, almost superceded by a New Theory. 
 
 Chapter II. — Money. Mr. Dombey's opinion. History. The true char- 
 acter of money. A measure entirely unlike a yard stick. 
 
 Chapter III. — Currency. Its Nature. A Representative. The amount re- 
 quired. It must conform to the value of gold and silver. Characteristics. 
 Its value depends not on the quality of the material used, but the quantity. 
 
 Chapter IV. — Application of the Theory in the work of resumption. 
 Sure way to equalize the value of the paper and metallic currency without 
 distressing the people. 
 
 Chapter V. — Amount of money on deposit in banks. Amount of currency, 
 including gold and silver. Cause of inflation. Cause of contraction. Dif- 
 ference to society between money kept for hire and that used in production. 
 In the breakers, and near the rocks. 
 
ADDEESS, delivered by Richard B. Pullan, at Olipton OouNcn. 
 Hall, on Monday Evening, October 1, 1877, at the invitation 
 of the Hamilton County Eepulican Campaign Committee. 
 
 Gentlemen : — 
 
 I came here to-night on the invitation of the Republican Committee, because 
 Republicanism seems now, as in the early days of Lincoln's administration, to be 
 rising into an atmosphere more patriotic than partizan. I desired the appoint- 
 ment to be made for this place because I would rather speak of what engaged my 
 attention here than elsewhere ; for nowhere could I expect to meet the familiar 
 faces of so many old business acquaintances and friends, many of whom are 
 identified with the system I propose to discuss, and who are therefore the best 
 able to pass a just judgment upon what may be said ; I would rather talk to them 
 than about them, as well to express my gratification with the substantial evi- 
 dences of their sagacity in availing themselves of a vicious system into which 
 the government had invited them to enter, as to convince them that they, in 
 common with all other citizens, are now interested in its extinguishment. To 
 have my remarks worthy of any attention from such an audience, I immediately, 
 on accepting the Committee's invitation on the 15th ult., prepared an address, 
 which I will now read . 
 
 The reading of an invitation from the Republican Campaign Committee to 
 make a speech dazed me. I did not know whether I was myself or another ; I 
 felt as Jones did when he awoke from a heavy, unnatural sleep in his old wagon, 
 and found his horses gone — I waS in a dreamy political condition ; I had gone to 
 sleep in the old Greenback wagon behind a good Democratic team — asleep, with 
 my head resting on a Democratic address, in answer to Secretary Sherman's 
 speech, prepared at the earnest request of my Democratic friends, who promised to 
 see it published ; I was still more surprised next day when the worthy chairman 
 called at my ofiice, and, in answer to an inquiry whether the invitation was in 
 earnest, or sent in a joke, said, " Certainly, it's in earnest ; " and still a little more, 
 when in reply to a further remark that he must know that if I said anything 
 it would be just what I thought was right, and perhaps upon a subject that my 
 old party friends did not want to hear mentioned, he said, " The Republican 
 party is still what you always said it was — the party of freedom, of free thought 
 and free speech, and we want you to say just what you think is for its good, and 
 the good of the country." What answer could I make ? What answer just then, 
 when I found myself alone in the old Greenback wagon, with the Democratic 
 ponies gone ? for you must remember that I had never heard anything from the 
 friends who had expressed delight with the answer I read to them some three 
 weeks before. 
 
 I consulted some good, honest Democrats, who told me to stick to the old 
 Greenback wagon, even with a Republican team. Therefore I appear here to- 
 night, to say that the acts of the President, so far, inspire confidence and hope 
 
in an administration tliat started on its march under the motto — " He serves hig 
 party best who best serves his country." 
 
 THE president's TITLE. 
 
 I propose to say a few words about the President's title, not because the subject 
 is worthy any consideration as an open question, but only because I participated 
 in the Pike's Opera House meeting, and wrote a letter demonstrating that there 
 had been no valid election in Louisiana, which attracted some attention from 
 The Nation and other leading journals. Unnecessary trouble has been taken to 
 establish a simple fact, that Mr. Hayes' title is the same as was that of Mr. 
 Jeiferson. Neither were elected by the votes of the people, nor by those of the 
 electoral college, but by the House of Representatives, as required by the Consti- 
 tution in default of an election by electors, recognized by the two houses of Con- 
 gress as having been duly chosen. The only Constitutional doubt that can exist 
 is as to the conduct of the House in the manner of its proceeding. That is a 
 grave one ; but cannot be raised by Mr. Hayes' opponents, for they had the 
 supreme control in the House, and directed the proceedings that were taken. 
 They are therefore estopped. As to the charge, that Justice Bradley sold out the 
 Presidency to Mr. Hayes* friends, those who make it should consider the disgrace 
 they bring upon Republican institutions in so doing ; besides, there is no more 
 evidence of the fact than there was in the equally grave charge that the member 
 of Congress, whose change of vote in the House decided the Presidential contest 
 in favor of Thomas Jefferson, made the change only after being pledged the 
 appointment of a friend to the collectorship of the Port of Wilmington, Delaware, 
 indeed, not quite so much, for the individual named did receive the appointment. 
 But few believed that scandal, and the believers in the present one will not be 
 more numerous. If, then, the House acted constitutionally in delegating its 
 powers to a commission of its own creation, Mr. Hayes' title to the Presidency 
 is as valid as that of any other President who has occupied the chair. 
 
 THE VITAL QUESTION, 
 
 And the only question that has brought me here, concerns every man, woman, 
 and child in the land. It is whether this country is to be given over to an evil 
 next of kin to African slavery, and but little less disasterous in its consequences ; 
 for, as I said in my answer to Mr. Schurz, in 1875, " Slavery was but the daily 
 appropriation by one man of the earnings of another by a legalized system of 
 violence. Bank issue is a similar appropriation, through a legalized system, which 
 transfers periodically, in times of crisis and panics, the earnings of one man to 
 the pockets of another in a manner past finding out. In the one case the victim 
 knew who robbed him ; in the other that he is robbed, nothing more. One made 
 black slaves, the other will make white ones. An abolitionist, to be consistent, 
 must seek to abolish the one as he did the other." 
 
 While I feel that this expression may grate upon the ears of some, and appre- 
 ciate the force of Lord Bacon's remark, that " he who follows truth too close to 
 the heels may have his brains knocked out," I also feel constrained to improve 
 this occasion and all other opportunities to pursuade men to inquire into this evil. 
 In the same spirit I addressed those who more angrily differed with me thirty 
 years ago on the subject of slavery. I could not better show the importance of 
 business men and all other men, examining into the National Banking System, 
 than to repeat the salutatory " To the Reader,'' in the first number of The 
 
Standard, published in 1846, by the Ohio State Liberty Committee, and edited 
 by S. P. Chase and myself, every word of which is just as applicable to the one 
 evil system as the other. Time will only permit the repetition ' of the last 
 paragraph : 
 
 " We have drawn this analogy to show the reader the folly of shutting his eyes 
 to perhaps an unwelcome truth. When he pronounces as almost insane those on 
 board a ship who refuse to take the .least trouble to examine into an iminent 
 danger which is said to exist, and of which there might be the barest possibility, 
 does he not censure himself if he obstinately refuses to examine into the slave 
 systen) of this country .' He hears men of character, in whom he confides, his 
 neighbors and friends, declare that it is undermining our free institutions, and 
 will, inevitably, ruin this fair land. The earnestness of their manner must 
 convince him of the Sincerity of their belief; and the sincerity of their belief 
 ought, at least, to make him fear that there is something to produce it. We ask 
 him, most respectfully urge him, to examine that something. We do not presume 
 to dictate how he shall do it, but we do hope that he will make the examination 
 thorough." ■ 
 
 Nothing short of a thorough examination can give one a just idea of the 
 demoralizing effect of bank issue. My first impressions connect themselves with 
 the foundation of" this beautiful village, the fruit of the first effort to resume 
 specie payments in Cincinnati, in the year 1842. All the circumstances attending 
 the resumption of specie payments by the Lafayette Bank, one of the largest in 
 the city, having a capital of one million of dollars, are familiar to me.* The 
 means used was the sheriff's hammer. It fell on the large Clifton farm. The 
 Bank bought it in, laid out the avenues, and sold it out in lots. That, and like 
 operations made resumption a complete success. How long did the bank pay 
 specie ? Until the next annual election of Directors. Then, to swell the divi- 
 dends, the virtuous stockholders changed the administration, and then the bank 
 paid only in " current funds." So it will always be, the banks will pay specie 
 when it pays to pay, and when not, not. On January 1st, 1879, or very soon after,. 
 every depositor will find, when he calls for coin, that his deposit is a special con- 
 tract, payable only in "current funds." National bankers flatter themselves that 
 this will protect their gold from sudden attack. To test whether it is not the 
 purpose of the extreme advocates of resumption, to. thus fill the circulation with 
 bank notes, some friend of a government currency should introduce an amendment 
 to the National Bank Act, that it shall be unlawful for any National Bank to 
 impose conditions, or make any contracts, wbereby payments in coin, when called 
 for by .their depositors, will be either prevented or delayed. The impressions 
 then made ripened into conviction by evei-y year's observation, by all that I 
 could read on the subject, and by the teachings of the able man who was at that 
 time solicitor of the bank, and one of its directors, but who afterwards permitted 
 his fear of the power of the State Banks to overcome his judgment, and caused 
 him to conciliate rather than to crush them. He pursued the allopathic practice 
 in removing one disease by creating another more easily controlled ; but it has 
 proved to be the removal of a lot of warts by planting a cancer. 
 
 These convictions caused me, in 1874, to labor for the success of the Republican 
 candidate, who boldly advocated the perpetuation of the Greenback as the 
 currency of the country. Then fully one thousand straight tickets were deposited 
 in the ballot boxes by the honest Democrats of the 2nd district, with the name 
 
 * James FuIIan, then of the firm of PuUaa Brothers, was President of the Bank, 
 
4 
 
 of their candidate scratched, and that of the Hon. Job E. Stevenson written 
 instead ; and there were fully seven hundred Republican tickets with Mr. 
 ' Stevenson's name scratched, and that of the Democratic candidate substituted, 
 because they feaned more from the success of a Republican,*of Mr. Stevenson's 
 ability, and holding such opinions, than they did from that of a regular Democrat. 
 These figures were approximately ascertained, after such examination as the 
 circumstances permitted, and' explains how Gen. Banning's majority was 300 less 
 than was that of the Democratic candidate for Secretary of State, in the 2nd 
 District. 
 
 The Greenback Democrats should not think the hope of their doing as 
 they did then unreasonable ; nor that they would sustain another Republican 
 who takes his stand for the perpetuation of the Greenback currency — substantially 
 the same ground Mr. Stephenson then occupied, and who everyone knows has 
 both the courage and ability to maintain any position he takes. Neither should 
 they consider a suggestion for so doing persumptuous from one who, at the 
 sacrifice of party ties, labored with them for the election of Gov. Allen, when 
 hundreds of those calling themselves wool -dyed democrats sought his defeat ; 
 the same men who are now in the management of their county organization ; 
 from one who also, notwithstanding the St. Louis platform, voted for the 
 Democratic Electors last fall, because of the hope afforded by Mr. Tilden's bitter 
 comments on the treachery of his friends, whose names appeared to a call upon 
 Mr. Evarts to speak, to which was attached the official signatures of between 
 twenty or\thirty National bank officers. 
 
 I then reminded them of the Anti-bank platforms of 1875 and 1876 ; and 
 of the appeal made by the Enquirer of July 18th, a few days before the Conven- 
 tion, as follows : 
 
 " E. D. M. of the Gazette says, ' the people of Ohio have not voted on the 
 money question. In my opinion there never has been a day on which they would 
 not have voted to keep the greenback. If the politicians are counting on the votes 
 of 1875 and 1876 as tests of what the people of Ohio think, they are certainly 
 making a mistake.' Mr. Mansfield here points out the road to victory. Let the 
 platform of the Convention give the people a chance to vote directly on the money 
 question. Let that be the only issue — ^greenbacks against bank notes, — and 
 stated so tersely and clear that no other question could possibly be raised-by per- 
 verting the meaning of the words used, as happened 1875 and 1876, A resolution 
 for the remonetization of silver and the mere repeal of the resumption law will 
 not touch the vital question. It will be only putting off the discussion. It must 
 specifically state that greenbacks shall gradually take the place of bank notes, and 
 that the silver shall be used to as gradually reduce the premium on coin to par. 
 This will be placing greenbacks and bank notes in the same relation to coin, and 
 put an end to all the cries about inflation." 
 
 And then asked them to consider how the Convention suppressed all reference 
 to the banks, and said nothing that would give them offense ; and also to read 
 the answer to Mr. Sherman's speech, prepared within a few days of its delivery 
 at the request of Gen. Banning, a portion of which was made part of this address, 
 that they might see what there was in it to offend any honest Democrat, and 
 judge of the extreme tenderness of their leaders towards the banks ; and, as fur- 
 ther evidence how the influence of the banks, or the fear of their power, paralyzes 
 the councils of their party, as well as to show the bankers themselves the necessity 
 of taking away from a privileged class, constantly liable to and inviting political 
 attacks, the power of issuing the currency, I referred to the action of the 8th of 
 
January Convention, called to create a public sentiment that would defeat the 
 election of Mr. Hayes. 
 
 The following resolutions were pressed in the Committee by some of the ablest 
 men in the state, but were resisted on the ground that their passage, in a cer- 
 tain contingency, the obstinaocy of the Senate, would create a run on the banks. 
 The same gentlemen, however, had no objection to the passage of two of them, 
 one of which called upon the masses, in the same contingency, to prepare to cut 
 each other's throat. 
 
 Resolved. First. That the votes cast on the 7th of November, and' duly 
 certified at the close of the election on that day by the officers authorized to re- 
 ceive them, alone determines the result of the election held in every precinct, 
 county, and state, and that whatever may be the returns then duly and properly 
 certified to, of the votes cast, cannot be changed by ministei-ial officers authorized 
 to canvass them and announce the result. 
 
 Second. That while clear in the conviction that Sam. J. Tilden and Thomas 
 A. Hendrick's have received not only a large majority of the popular vote, but a 
 majority of the electoral vote, and are therefore elected President and Vice-Presi- 
 dent, we yet declare that any decision made by the Senate and House of Repre- 
 sentatives will be cheerfully acquisced in by the whole people, and that any attempt 
 to inaugrate a President simply upon the proclamation of the President of the 
 Senate, will be an usurpation that will be resisted by the people to the last 
 extremity, even should that extremity be an appeal to arms. 
 
 Third. To avert so terrible a calamity the people should exhaust all peaceful 
 remedies, even to following the example set by the people of Great Britain, when 
 under the guidance of the Duke of Wellington, the House of Lords, the repre- 
 sentative of the privileged classes in that country, as the Senate is in this, obsti- 
 nately refused to pass the great Reform Bill of 1830. Then, in the last extremity, 
 when all other means had failed, there appeared posted or chalked on the walls 
 everywhere these words : " The Duke is obstinate — run for Gold." At once the 
 Duke yielded, the Lords passed the Bill, and the great body of the people were 
 enfranchised. 
 
 Fourth. It is the duty of every citizen to be outspoken, remembering that in an 
 hour like this the bold utterance of truth secures peace, while silence or timid 
 words invite the usurpation which may involve the country in civil war. 
 
 Fifth. The men and women in every city, town, and neighborhood should 
 immediatly petition Congress to preserve peace, by counting the electoral vote 
 in the same manner it always had done under the Constitution. 
 
 The last three, the only effective ones of the series, were, rejected, and the 
 following adopted instead : 
 
 Fourth. -That the impudent and unfounded charge, that those who protest 
 against the exercise of illegal and arbitrary power desire to foment strife and 
 incite civil war is made by conspirators to withdraw the public, mind from their 
 own evil designs, and to frustrate the sovereign will of the people as expressed 
 through the ballot box on the 7th of November last. 
 
 Fifth. That we denounce the action of President Grant in following the ex- 
 ample of the military chieftains of Mexico in interfering, by armed force, in the 
 elections of the people, in preventing the lawful organization of State Legisla- 
 tures, and in massing troops at Washington with the apparent purpose of 
 preventmg free action of Congress respecting the Presidential election. It 
 
evinces a purpose to render the military independent of and superior to the civil 
 power, and calls for outspoken condemnation by every friend of republican 
 government. 
 
 Sixth. That the inaugration as President of a candidate rejected by the people, 
 and counted in by fraud, is revolution, and, if acquiesced in, fatal to republican 
 government. 
 
 Seventh. That the National Democratic Committee be requested to call a 
 National Democratic Convention, to meet at Washington city, February 12, 1877. 
 
 The theory upon which the five resolutions were prepared was, that the 
 country had already its surfeit of violence, and that any settlement -whatever, 
 made under legal forms, would be accepted, and that the only chance for either 
 side was to scare their opponents, or drive them by means that did not involve 
 the sheding of blood, i. e., it was a game of scare. The contending parties were 
 like two immense trains, crowded with passengers, driving furiously in a race, 
 on converging tracks, to a point whence there was but a single track to the. end. 
 As that point of convergence was approached, the train that had the boldest 
 and most desperate conductor, and was also in the lead, would dash forward 
 and make the destination in triumph, while the other would hold up and let it 
 pass. The only hope for the Democratic train was to throw the crowd of pas- 
 sengers on the other train into a panic, so that they would call a halt. If a halt 
 was not called by one or the other, but both drove on with all their power, their 
 coming together would make a common wreck of both. The balance of the race 
 would not be made,'for there would be nothing left to make it. 
 
 It will be seen that the adoption of the first two was a. bloody threat, while that 
 of the whole would have been an imploring appeal for peace — that the first was 
 impotent, the last self-executing ; and consequently, while one could only excite 
 contempt, as it did, the other would haye inspired terror with the money power 
 that ruled Congress. Besides, it was no untried experiment, but a mere copy of 
 the inspiration of Richard Cobden to meet a like trying emergency. 
 
 Any one can see that the general circulation of such petitions would have been 
 so likely to prepare for a run, in the event named, that every one interested in Ihe 
 banks would have begged their members of Congress to avert so terrible a catas- 
 trophe. In the light of the President's patriotic course, and of the rabid bank 
 spirit manifested by the New York Democrats, the people can thank the banks 
 for having once been instrumental in rendering the country a service. It seems 
 nothing more than retribvitive justice that the man who penned the resolutions in 
 favor of the National Banking System, and forced them through the St. Louis 
 Convention, should fall by the hand of the power to which he had sacrificed tlie 
 most vital Democratic principle. 
 
 Enough has been said to cause every Greenback Democrat to diligently inquire 
 whether their leaders arc not secretly laboring to destroy the Greenback currency, 
 so that they may be in harmony with the Eastern Bank Democracy. 
 
 Senator Matthews' manly conduct directly antagonizes this effort. His 
 independent action at Cleveland brought down upon him the anathemas of the 
 whole Eastern press, Republican as well as Democratic. In the face of this fierce 
 denunciation he has hurled these brave words : 
 
 " I believe in the Greenback ; I believe it is the Constitutional currency in times 
 
of peace as well as in times of war ; I believe it pught to be perpetuated as a fun- 
 damental basis and element of our whole paper circulation. " And then he ex- 
 , presses confidence that the National Banking System can be made useful as a 
 supplement, an aid, and an aid merely, to secure elasticity in the government cur- 
 rency. And he tells us this is the true interpretation of Secretary Sherman's 
 speech at Mansfield, and that hence "the administration is responsible for the 
 doctrine," 
 
 That declaration is satisfactory to me. It is enough to know that the Greenback 
 has the superior title, for greenbacks and bank notes can no more exist together 
 than could freedom and slavery. On that account is it not the duty of greenback 
 men to sustain the Senator and great lawyer, who comes to their defense, and 
 declares that the greenback is the constitutional currency in times of peace as well 
 as in times of war ? 
 
 When through many years I insisted upon the immediate, unconditional aboli- 
 tion of slavery, it was with the full conviction that it could and should be only 
 brought about by peaceful processes, that would secure the end by righteous 
 means, and that would repair the political machine with the least violence to the 
 existing state of society ; so now, when I respond to the words of Thomas Jefferson, 
 " Carthago delenda est, bank paper must be suppressed, and the circulating me- 
 dium must be restored to the nation to whom it belongs," I neither expect nor 
 desire any sudden or violent change in existing business relations, but only that 
 the conditions shall be determined and clearly defined, which will perpetuate the 
 greenbacks as the currency of the country. This accords with the teachings of 
 that great master, Schiller, where he says : 
 
 " When the machinist wishes to improve the action of a cloc)^, he allows the 
 wheels to run down — but the living clockwork of the state must be amended, 
 while the striking part and the rolling of the wheels are changed during its 
 revolution. Some supports must therefore be brought to bear that may ensure 
 the continuance of society when we wish to withdraw that of the present state." 
 
 Viewed in this light the declaration of Senator Matthews inspires greater con- 
 fidence than if it had gone further. It is the tread of a statesman who weighs his 
 words, and seeks to fill the picture so beautifully drawn by the great German. 
 
 Gen. Ewing's br^vc words, and those of a few others like him, alone stand in 
 the way of greenback men losing confidence in Democratic leaders. What he 
 says about the financial mal-administration of the past twelve years, and about 
 the good record the Democratic members of Congress sometimes made, is as 
 true as can be stated in a partizan speech. It is the truth, and nothing but the 
 truth, but is not the whole truth. So far as the record is concerned, the votes 'on 
 pivotal occasions, when the vital question was to be settled, as upon the resolutions 
 approving Secretary McCuUoch's contraction policy, December 6th, 1865, party 
 lines were obliterated. Upon that entering wedge to the whole iniquitous business 
 the vote stood 146 yeas and only 6 nays. * 
 
 I will presently speak of one of the most remarkable of men, an honor to the 
 Jewish race, whose noble qualities had made him the recognized king of the Lon- 
 don Exchange. At the same time there was another of tlie same race, constant 
 in his attendance, repulsive in appearance, sleepless, remorseless, a sphynx, a Jay 
 Gould. His operations ran in a particular line, like Vanderbilt's, and that line was 
 to prey upon the misfortunes and necessities of governments, and his manipulations 
 
8 
 
 in creating the very conditions on which he speculated, baffled inquiry. As he 
 grew in strength, iio kingdom was too far distant to be beyond the range of his 
 vision, or too powerful to escape his arts. His name is now covered with the 
 glamour ol" gold. Unfortunately, all his attributes have passed to the members of 
 his family. At the close of the war the eyes of that family gloated over the fine 
 field presented by our immense and confused public debt ; and they entered 
 it, not with sickle, but with scythe, like the reaper death. They dealt in gold, 
 and into gold tftey sought to turn paper, even as did their ancestor, when he robbed 
 the exchequer through the army in Spain. No human being can tell, or will 
 ever know, how much of the millions which have been filched from the people of 
 this country has gone into their pockets ; but one thing is certain, its measure is 
 only that of their greed. 
 
 Some may ask, what has this to do with Gen. Ewing .' This — and only this— 
 Gen. Ewing claims that the Republican party had the control of the administra- 
 tion of affairs, and were therefore responsible for all mal-administration ; and he 
 points to the record often made by the Democrats in Congress as evidence of what 
 they would have done had they been in power. This looks very reasonable, but 
 Gen. Ewing knows that human nature is about the same now as when Dean 
 Swift said, " Money knows neither Whig nor Tory ; " and his experience and 
 intercourse with Democratic leaders must have familiarized him with that profli- 
 gate and corrupt maxim of Horace Walpole, " Every man has his price ; " a maxim 
 that made Walpole's administration a synonymn of villiany, and that debauches 
 every thing it touches ; and he well knows, or should, that his maxim guides the 
 political conduct of the Fifth Avenue Democrats, the recognized leaders of the 
 National Democracy, chief of whom is August Belmont, the American head of 
 the hydra that fattens on public debts. This man was the Chairman of the 
 National Democratic Committee, and its ruling spirit during all the period when 
 his manipulations and presence were the most necessary to wheel just enough 
 Democrats into line to secure the passage of any law required to raise the price of 
 his bonds, and leave enough to vote in opposition, to make a record to which 
 honest-minded Democrats, like Gen. Ewing, might point with pride. 
 
 Mr. Belmont is not the only agency by which the money power has effected its 
 purpose, and raised the standard, in which debts, public and private, already con- 
 tracted, were required to be paid. He was assisted by such Democrats as Wm. 
 English, President of the First National Bank of Indianapolis — " English Bill," 
 of Kansas fame, whose coterie, including its Republican cashier, J. C. New, se- 
 cretly directed the Indiana machine ; and by such Republicans as Jay Cook and 
 Drexel, of Philadelphia. One class moved in a mysterious way upon the Demo- 
 cratic members of Congress, and the other brought their seductive powei- to bear 
 on the President, not by the touch of gold, but by its glare, for it was Gen. Grant's 
 weakness to love rich men, and to love to make due return for their generous 
 hospitality. What better could he do than listen to their patriotic suggestions as 
 to the best manner of maintaining the national honor, and what could be more 
 natural to a mind trained as his had been than to accept the words of the recog- 
 nized commanders of financial forces as the words of wisdom and truth. Thus 
 was the President groomed to give ready consent to whatever action Congress 
 might take under the manipulations of a combination that was more Democratic 
 than Republican, for August Belmont and other Wall street Fifth Avenue mil- 
 
9 
 
 lionaires were its most powerful members. Can Gen. Ewing believe for one mo- 
 ment that Mr. Belmont would labor for years in the position of chairman of the' 
 Democratic National Committee, and pour out his money like water,, without 
 the expectation, and the receipt, of a satisfactory reward .' And does he not 
 know that he was appointed and continued in that position by the aristocratic 
 leaders of the party he so much extols for the same reason that moved them to 
 force the nomination of Mr. Tilden at St. Louis, — that he had a " bar'l of.money,'' 
 the all essential element with a class who had been debauched by the infamous 
 maxim of Walpole ? It was this power that blinded the eyes of the people, and 
 drove the Senate to make its financial exponent do what I described in the ad- 
 dress which I prepared at the reauest of my Democratic friends, and which I will 
 now read, in 
 
 ANSWER TO SECRETARY SHERMAN'S MANSFIELD SPEECH. 
 
 Ever since the war the heads of our Treasury Department have unfortunately 
 made England their model, not only in their policy, but in their practice. 
 
 There, whenever the First Lord of the Treasury is big with some great purpose, 
 he goes down to his estate to deliver himself before his neighbors and tenantry ; 
 so here, we had a Secretary going down to his home of Ft. Wayne, in the fall of 
 1865, to issue his proclamation of war upon the government currency, upon the 
 ground of the necessity of returning to specie payments ; and we now find 
 another at his home in Mansfield on a like errand, to declare that the law of his 
 own making, the work of his own hand, " The Resumption Act, is as full and 
 liberal as human language can frame it," in respect to the powers granted to him 
 as Secretary of the Treasury, to sell bonds to any extent necessary, to provide 
 all the gold that is necessary to redeem every greenback that ^s presented on and 
 after January 1, 1879 ; and tp announce that this monstrous grant of power "can 
 
 BE, OUGHT to BE, AND WILL BE, EXECUTED, IF NOT REPEALED." 
 
 Mr. Sherman, as chairman of the Senate Finance Committee, during 
 President Johnston's administration, when the Senate virtually ruled, was as 
 much the Finance Minister, in 1865, as now. It is impossible to believe that Mr. 
 McCulloch would have dared to make his Fort Wayne proclamation, without hav- 
 ing the advice of the financial exponent of the body to whose influence he owed 
 hig position. It should not be forgotten that Mr. Sherman was placed at the head 
 of the Senate Finance Committee by the appointment of its former chairman, Mr. 
 Fessenden, to be Secretary of the Treasury, to serve the same ends for which 
 that appointment was wrung from President Lincoln. 
 
 The circumstances attending the resignation of Secretary Chase, in the fir«t 
 week of July, 1864 — the appointment of Governor Todd — the conduct of the 
 Senate in forcing President Lincoln to withdraw his name and substitute that of 
 Mr. Fessenden, with the understanding that his appointment was only temporary, 
 to warm the place for Mr. McCulloch, are worthy the careful study of every 
 Senator arid Representative in Congress. They will discover that Gov. Todd's 
 qualifications were immeasurably superior to Mr. McCulloch's in everything, ex- 
 cept the more familiar acquaintance with the routine of a bank, afforded by an 
 exclusive and life-long employment in that business, a business in which he was 
 still engaged at his office in the Treasury building, and from which he passed by 
 the dictation of the Senate into the position of Secretary of the Treasury. They 
 will also discover that this violent and disgraceful conduct, in opposition to Gov. 
 
10 
 
 Todd, arose from the fact that he was known to be a Jacksonian, anti-bank Demo- 
 crat, -who could be neither scared, bought, tior bribed. 
 
 The lesson which this incident in our history teaches should deeply impress 
 the people with the danger of perpetuating the existence of an institution, whose 
 power threatens every public man who dares to do his duty. The remedy is alone 
 to be found in the action of the people themselves. The men of talent and ability in- 
 public life, of either party, are continually looking to the future. When they see a 
 mysterious power, that strikes down everything opposed to its greed, they are care- 
 ful to avoid giving it offense. Their very conviction even that its colossal propor- 
 tions make it dangerous to the public welfare causes them to exercise the most 
 extreme care not to provoke it, to the damage of their own. 
 
 An apology- may here be found for Mr. Sherman forgetting his constituents 
 in the presence of the Senate ; for he would have lost his headship in that body 
 if he had not. His was a difEcult position — to balance between the people of his 
 own state and the power that ever pressed him. The skill displayed in this 
 acrobatic performance causes one to charitably regard those inconsistencies in his 
 course which have caused persons to denounce him with being a trimmer, and 
 having been on both sides of every form of this question ; for he has been in his 
 utterances, but never in his work. When it came to that he was ovei-awed by the 
 immediate presence of the power he served, and forgot that of the absent to whom 
 alone he owed the service. The same mental struggle appears in the speech at 
 Mansfield, only the situation was reversed. He stood in the immediate presence of 
 those to whom he legitimately owed his service, and he was careful in the first 
 words he addressed them on the subject of specie payments to express the almost 
 universal -sentiment of the people of Ohio in favor of the 
 
 , PERPETUATION OF THE GREENBACK. 
 
 " Specie Payments. — And now, fellow citizens, this brings me to" the question 
 upon which there is so much diversity of opinion, so many strange delusions, 
 and that is, the question of specie payments. What do we mean by this phrase ? 
 Is it that we are to have no paper money in circulation .' If so, I am as much 
 opposed to it as any of you. Is it that we are to retire our greenback circulation .' 
 If so, I am opposed to it, and have often so said. What I mean by specie pay- 
 ments is simply that paper money ought to be made equal to coin, so that when 
 you receive it it will buy as much beef, corn or clothing as coin," 
 
 The Secretary leaves' us in no doubt as to the kind of paper money he here 
 describes, for further on he says, that " United States notes can be, and ought 
 to be, maintained at par in coin, with the aid of a moderate coin reserve held in 
 the Treasury ; and to the extent that this can be done they form tie best possible 
 fafer motiey, a debt of the people without interest, of equal value with coin, and 
 more convenient to carry and handle." This is the same kind of money that 
 Senator Sherman told the people of Ohio about in 1867 and '68, and we are bound 
 to believe that it was then, has been ever since, and is now, an honest expression 
 of the convictions of his heart. 
 
 Being thus assured of the Secretary's desire to have the best possible paper 
 money, and to make the extent of his limit the greatest extent possible, I would 
 respectfully ask him if he does not think that what is suggested in the following 
 resolution would absolutely secure just the kind of money his heart is set upon. 
 It was written at the suggestion of Gen. Durbin Ward, who wanted to see a hard 
 money platform, broad enough for all to stand on. It circulated among the most. 
 
11 
 
 pronounced hard money men, every one of whom admitted it secured the hardest 
 of hard money; and also among the most extreme advocates of the greenback, 
 •who were equally unanimous in declaring that it gave them all they wanted— 
 greenbacks, instead of bank notes. It was afterwards published in the Enquirer of 
 July 21, without name, initial, or notice, and therefore, like a foundling, lay first at 
 the door of the Columbus Convention, and then at the one assembled at Cleveland, 
 but neither took it in to care for it. Houseless and homeless, it would be just the 
 thing, in view of what the Secretary now says he wants, to fill the panel left en- 
 tirely vacant by the Cleveland Convention. It is true that the Democratic Con- 
 vention adopted tour resolutions, said to embody every principle that is in this ; 
 but there is a diiference between a live game cock, and one cut into four 
 parts, all stone dead. And, besides, he should bear in mind what he seems to have 
 forgotten at Mansfield — that he is no longer in the power of the Senate, but is 
 master of the situation, and responsible only to another Ohio man, who, when, in 
 Congress, always voted for the greenback, and who has annoimced that " he serves 
 his party best who best serves his country," and immediately demonstrated the 
 sincerity of his purpose by applying the policy of the Democratic party in re- 
 storing prosperity to the South, and peace to the whole country. And it would 
 do him no harm, either, to cast his eyes around and see how popular the President 
 has made himself with the people in consequence of his independent actibn. And 
 it would do him good, too, to read the Proceedings of the Indiana State Conven- 
 tion, of February 20th, 1868, and see what a grand old greenbacker he has in his 
 colleague, the Secretary of the Navy. 
 
 Resolved, That the necessities of the people demand the immediate passage of 
 an act which shall provide for the repeal of the laws demonetizing silver, the 
 repeal of the Resumption Law, and for the creation of a specie reserve which will 
 cause currency to be interchangeable with coin, by the deposit in the vaults of 
 the Treasury' of coin, or bullion, for every dollar of greenbacks issued, to take 
 the place of mutilated bank notes sent to the Redemption Bureau for exchange, 
 and of the notes of banks closing their business, either from choice or necessity. 
 
 WHAT SUCH A LAW WOULD ACCOMPLISH. 
 
 1. It would absolutely secure, within a reasonable time, a uniform currency, issued 
 directly by the Government, and interchangeable with coin, and without shock or 
 business disturbance. 
 
 2. It would not contract or enlarge the present volume of circulating notes. 
 
 3. It would entirely separate the banking business from the Government, and 
 leave it subject to no more restrictions, annoyances, and espionage than every 
 other occupation. 
 
 4. It would gradually accumulated reserve of silver, until it equaled the present 
 amount. of bank notes, and this accumulation, together with the increased business 
 activity, would gradually reduce the premium on coin to par. 
 
 5. It would not disturb the course of business of a single National Bank, nor 
 impair its ability to accommodate its customers, but, on the contrary, increase it, 
 by the difference between the amount of its circulating notes and the value of 
 the bonds deposited to secure them, which bonds it would receive to the extent 
 of, and as fast as, its mutilated notes were canceled ; and its privilege of issue 
 would continue so long as its notes lasted in a condition fit to handle. 
 
 6. It would preserve and supplement the Independent Treasury — the financial 
 anchor of the Government — whose destruction is already urged by the most 
 influential Republican journals, on the ground that the public funds should be 
 deposited with the National Banks, and be made' useful when not required by the 
 Government. 
 
 7. Its passage would give immediate relief by the restoration of confidencei 
 
12 
 
 inspired by the universal conviction that a hard-money currency could be reached 
 without hard times. 
 
 The last V70RDS of the Secretary are not like the first ; some malign influ- 
 ence seems to have come over him, for he wants something better than the best 
 possible paper money. 
 
 This better than the best, he thus describes : 
 
 " I have, fellow citizens, I hope, without wearisome detail, gone over some 
 points on this question of resumption. It is a dull, but important topic, which 
 affects your daily life, upon which my official duty compels me to act, and I 
 assure you that I have only acted upon the clearest convictions of public interest. 
 
 " A currency of United States notes, based upon the public credit, always con- 
 vertible into coin, and so limited in amount and supported by reserves that its 
 convertibility can not be endangered, and supplemented by a bank currency, free 
 and open to all alike, based upon public securities', so.that in any event the note- 
 holder is safe from loss, always redeemable in coin or United States notes, unlim- 
 ited in amount except by the wants of business — this is the kind of paper money 
 that will start again the wheels of industry, give sails to your commerce, labor 
 to your artisans. This, indeed, would be the best paper currency in the 
 
 WORLD." 
 
 The desire here expressed is for a mixture of the "best.possible paper money," 
 and of bapk notes convertible into it, " unlimited in amount except by the wants 
 or business." What a mixture ! Oil and Water ! Health and Disease ! Will 
 the Secretary please read Genesis xli. verses .2 to 7 and 17 to 24, and tell us 
 what became of the fat kine and the full ears of corn. His solid western sense 
 must tell him that such a currency would not be in existence six months ; that in 
 less than that time there would be nothing left of the best possible paper money. 
 The lean kine would have eaten up the fat ones, and be just as lean as they were 
 before. 
 
 THE BANKS ARE DOING NOTHING 
 
 Towards providing themselves with coin, except hoarding the greenbacks. This 
 the Secretary must know ; and also that this hoarding will go on for the next 
 sixteen months, so that the whole amount will be ready for presentation on 
 January 1st, 1879. He must also know that the banks look solely to the vaults 
 of the Treasury for their supplies of gold, and that they are making no prep- 
 aration whatever by any purchases of gold in the open market ; indeed, that they 
 openly declare that when the Government pays its debts (as they call the lawful 
 money) in gold, they will be ready to pay theirs ; thus admitting that the whole 
 scheme is to saddle the Government with the whole burthen of providing every 
 dollar of gold required for resumption. 
 
 Any member of Congress can convince himself that this is their purpose by 
 proposing an amendment to the National Bank Law, so that on and after Jan- 
 uary 1st, 1879, each and every National Bank shall keep its reserve required by 
 law in greenbacks exclusively, and that the same shall be counted as so much 
 coin. This will compel them to supply themselves with coin in the open 
 market to meet their obligations for circulation and deposits, even as the Gov- 
 ernment will be required to do to protect its lawful money. If this be done, 'and 
 the greenbacks are made receivable for customs, there could be no doubt of the 
 abilityof the Government to make every greenback equal in value to coin on the 
 first of next yuly, as easily as on January 1st, 1879. 
 
 The effect of such an amendment to the law would be that many of the Na- 
 
13 
 
 tional Banks would immediately return their circulation, withdraw their bonds 
 deposited to secure it, sell them at the current premium, and have the proceeds 
 for the greater accommodation of their customers. The bank note circulation 
 would thus be rapidly reduced, so that on the first of next July the total circula- 
 tion would approach a healthier point, not much above the legitimate wants of 
 trade, and hence there would be less call for coin. The consequence of thus 
 contratting the paper circulation, redeemable in lawful money, would be far less 
 disastrous than the contraction of the lawful money basis itself. Something of 
 this kind might have been in Gov. Hayes' mind, when he said, before his nomina- 
 tion, that he would like to have the currency equal to coin even before January 
 1st, 1879.* 
 
 If the Secretary does not act independently, and solely in the interests of the 
 people instead of the banks, the country might probably escape an imme- 
 diate collapse, because their power would go far to avert it. Then confidence 
 would revive, business increase, and its wants also. And what between the 
 wants of business, and the ready supply of currency to meet them, and the stimu- 
 lating effect of that supply in creating more wants, the country would have 
 plenty of money. This is what the Secretary says " will start again the wheels 
 of business, give sails to your commerce, and labor to your artizans." There 
 would be unbounded prosperity. It would be equal to the great prosperity that 
 reigned in England for the first three years after her Resumption Law took 
 full effect, ending in October, 1825, when within the space of sixty days the whole 
 kingdom was plunged from the heights of unbounded prosperity to the depths 
 of universal bankruptcy. 
 
 IT IS HIGH TrME TO THINK 
 
 About the possibility of such sudden collapse or final blow up. Every man had 
 better look more to his own interest and the comfort of his amily, than to that 
 of the party he belongs to ; let him inquire what has brought distress to his 
 door — what has reduced his salary or wages — in short, what has wrought this 
 great change in the country, that makes the owners of money richer, and the 
 owners of every other kind of property poorer, every day ; leaving a few mil- 
 lionaires rolling in luxury, and millions of better men struggling for bread. Bad 
 as things are for the hard working men, they are nothing like what they will 
 be, for the Secretary says : " The poor do not suffer alone from hard times — the 
 first blow must fall upon those who have property investments, which are swept 
 away, and then the evil must fall on all classes alike.'' Then, after those are 
 swept away who have property investments — the class that are now going under 
 the sheriff's hammer — and not until then, will the evil fall on other classes, and 
 must fall on them ; so the " poor" had better look out. They have not begun to 
 feel the hard times. Their turn, the Secretary tells them, has not yet come. Is it 
 not high time for them to think, to study, and find out what is the matter ? 
 
 DEMONETIZATION OF. SILVER. 
 
 Business men had as well give this subjeqt their close attention also. They 
 
 * The purpose of the banks appears in the speech of Geo. S. Coe, President of the American 
 Exchange Bank, at the Bankers' Convention, He gives the Government warning that with- 
 out their help Resumption will fail, and that such help can be had by paying them one per 
 cent, for negotiating $400,000,000, and also allowing them to'issue .notes to the par value of the 
 bonds deposited. The speech is a rare specimen of " cheek.*' 
 
14 
 
 \ 
 
 should not let jingling phrases — " Resumption must wait on remonetization," and 
 the like, — delude them with the idea that the passage of a law remonetizing silver 
 will make resumption easy. It will not ; it is none the less important, however, 
 that every feature of the law of February 12, 1873, by which that olfense was 
 perpetrated, should be repealed. 
 
 So deeply laid and artfully contrived was the fraud, that Senator Jones was not 
 aware of the fact when he made his metal speech in the winter of 1875 ; and the 
 discoverer of the " dollar of the fathers," did not know it had been dead nearly two 
 years when he called it to the front in the summer of 1875. Indeed, it now appears 
 that, with the exception of the Hon. Job E. Stevenson, no public man, beyond the 
 circle of conspirators, knew that silver was demonetized for two years, nor until 
 the revised statutes made their appearance.* 
 
 The extraordinary statement that not a single Democratic Senator voted to 
 demonetize silver, but that it was criminally smuggled into the revised statutes, 
 made by Senator Thurman,in his speech September 22, at Marion, causes me to 
 retain the description in the Democratic address, of the way silver was de- 
 monetized. 
 
 I was in Mr. Stevenson's office a few days after the election, in October, 1874, 
 and for want of something better to do, turned over the statutes at large to see 
 wherein a dollar differed from the trade dollar I saw lying on the- desk, the only 
 solid remains of the " hard money " campaign. It soon turned up in the garb of 
 a pauper, too poor to do any harm, hid away in a law covering twelve pages. Mr. 
 Thurman quotes the whole Sectitfn (15), and sneering at the ignorance of those 
 who " supposed that that is the thing which demonetized the silver dollar," says : 
 " Does that touch the dollar of our fathers .' Not a bit of it ; that is what that 
 act says, and the only dollar mentioned in it is the trade dollar." The Senator 
 could not see any other dollar because it was hidden — carefully covered by the 
 trade dollar. It was smothered in that way, and a little information will satisfy 
 him that 7ie helped to do it. 
 
 Section 15 describes the silver coins, including the trade dollar, aftd closes thus : 
 " And said coins shall be a legal tender at their nominal value for any amount not 
 exceeding five dollars in any one payment. Sectien 14 says, "That the gold coins 
 of the United States shall be a one dollar piece, which, at the standard weight of 
 25 8-lOth grains, shall be the unit of value." This abolished the silver dollar as 
 the unit of value, for every one knows there can be but one unit. I read on : Section 
 17 — "That no coins, either of gold, or silver, or minor coinage, shall hereafter be 
 issued from the mints, other than those of the denomination, standard, and weight 
 herein set forth." This effectually bottled up the old silver dollar ; for there luere 
 none in existence, except as curiosities. All that had ever been coined from 1792 
 to 1873 was eight millions, and they had been melted long before on account 
 of being at a premium. No ' silver coins could ever be made that were worth 
 anything in payments over five dollars. I still looked to find the " dollar of the 
 fathers," and at last found that Section 67 had saved it. "This act shall be 
 known as " The coinage act of 1873 ; and all other 'acts * * * are hereby 
 
 * The officers of the Treasury Department, (see Finance Report for 1876, pages 167 to 169, 
 280 to 285, and 296 to 305,) prove as clearly as they do other matters injected into their Annual 
 Reports in support of the banks, that the law of February 12, 1873, was before Congress for 
 three years, and that all its features were carefully examined and well understood by every 
 member of both Houses of Congress. 
 
15 
 
 repealed, * » » provided that * « * any act done, or right accrued » * * « 
 hereby saved. 
 
 This finished the job. If that job was not a theft, and the parties to it con- 
 scious of guilt, why did they try to conceal their guilt by suppressing the title 
 indicating the 'important character of the law as described in this section, that it 
 was nothing more nor less than a " coinage act." 
 
 Every one can see that the old silver dollar is still, a legal tender, for the law 
 expressly declares that all its rights are saved ; and as -there were no " old dollars " 
 to tender, they can also see that it was not possible to do anything more to demone- 
 tize silver than is done by this act, and therefore that it is an error to say that 
 silver was demonetized in 1874, or to speak of the revised statutes accomplishing 
 that end, or doing more than was necessary to keep the existing law alive by in- 
 cluding it in the revision, in the manner the commissioners did. - 
 
 After I had fully informed myself of what is here stated, I called Mr. Steven- 
 son's attention to the several sections. After reading them carefully and con- 
 nectedly he was astounded, and with indignation and great emphasis declared 
 there was not a single member of Congress who voted for the bill knew there 
 was such a feature in it, except the conspirators who put it there. To his sug- 
 gestion that the exposure of the fraud gave me a fine opportunity to reach the 
 ears of the people, I replied, that I had done enough of that kind of business, and 
 did not propose to fight for the banks. 
 
 THE REMONETIZATION OF SILVER 
 
 Would contribute towards keeping up the quantity of metal in use by the general 
 accord of mankind as a standard of value, and prevent other countries from 
 following the lead of Great Brittain, as Germany had done, and as other countries 
 wereteing pressed to do : to the extent of such contribution, it would reduce the 
 value of gold as compared with that of itself, and with all other property. This 
 would be its only effect. Its aid in the work of resumption would be limited to 
 the opportunity it would afford the government and the banks to buy the standard 
 metal cheaper. That would be well enough for the government with its un- 
 limited means to purchase ; but the banks could have only what their twenty odd 
 millions of gold would buy, and what they received from the government in 
 exchange for the greenbacks redeemed. Their only other source of supply 
 would be by contracting their loans, and pressing their debtors. Such a pressure 
 aS the emergency would demand would operate as it always has done, create 
 distrust and alarm, even if it did not increase to a panic. If it did, the banks 
 would break ; if it did not, their debtors would be badly squeezed, for a time, at 
 least, and many of them crushed. 
 
 AN IMPORTANT ELEMENT 
 
 That should enter into all conjectures as to what will follow a forced resumption 
 is the unceasing talk that has been indulged in about the danger of trusting a 
 promise to pay — of trusting even the promise of the government ; and about gold 
 and silver being the only thing the people can rely upon. The banks have 
 treacherously made the fight for " hard money," not daring to make it for bank 
 notes, and in so doing have educated the whole people to believe that nothing is 
 safe but gold and silver. They should not be surprised, therefore, to find the 
 people profiting by that education the first moment the law gave them opportunity. 
 
16 
 
 ONLY Three per cent, to par 
 Say the bankers. They talk lightly about the ease of stepping down from three 
 per cent, to par. They would do well to read these words from the speech of 
 David Ricardo, closing the memorable debate of 1819. He had been the ac- 
 knowledged head of the London Exchange ; had, by his brilliant and seductive 
 writings, impressed the public mind with the ease of resumption, and had been 
 returned to Parliament for the sole purpose of putting the finishing stroke to his 
 ten years' labor. 
 
 He said " One thing was clear, of the utmost importance to the consideration of 
 the subject — it was this, that those who had the power of regulating the quantity 
 of the circulating medium of the country had the power not only of regulating 
 the exchanges, but the prices of every commodity. The power clearly resided in 
 the hands of the directors of the bank, and it was a most formidable one. 
 
 "The question before the House was one of immense importance and principle, 
 but in the manner of bringing about was trivial, and not deserving half an hour's 
 consideration of the House. The difficulty was «>"lv that of raising the currency 
 three per cent, in value. [Hear,' Hear.] And who could doubt that even in 
 those states in which the currency was entirely metallic it often suffered a varia- 
 tion equal to this without inconvenience to the people. [Hear, Hear.] In this 
 country we had nothing but paper in circulation, and therefore every variation in 
 the value of our currency was shown by the price of gold ; but when metal alone 
 circulated, it could not be doubled that gold might, from various circnmstances 
 become more or less valuable, and thus affect all contracts, though, from there 
 being no other standard to measure it by, its variation was much less palpable. 
 His particular reason for supporting the measure under consideration was this : 
 by withdrawing paper so as to restore the note to its bullion value — an alteration, 
 by the by, of only three per cent. — ^the House vrould have done all that w&s re- 
 quired. [Hear, Hear, Hear.]" 
 
 After objecting to an a«nendment offered for the bank to pay gold coin, he 
 continued : 
 
 " As to the plan before the House, the bank directors, if they were here, would 
 wish it. They should wish to fill the circulation with paper ; and so long as they 
 had the privilege of giving gold bullion for their notes, there would be no coin 
 in circulation — they would have the monopojy. They had no real interest in 
 depreciating it. It would be rather their interest to raise it, eveii to double the 
 value. They were in the situation of creditors, not of debtors, their whole capital 
 being in money, or in securities representing money.' 
 
 " Unquestionably, a most fearful and most disastrous decline in prices had at one 
 time taken place. But from that we had recovered, and he was happy to reflect 
 that we had so far retraced our steps. We had nearly got home, and he hoped 
 that his Right Honorable friend would lend them his asisstance to reach it 
 safely. He would venture to state that in a few weeks all alarm would be 
 forgotten, and at the end of the year we should all be surprised that any alarm 
 at all had ever prevailed at the prospect of the variation of three per cent, in the 
 value of the circulating medium." 
 
 The speaker closed amid loud and general cheering. The amendments were 
 immediately withdrawn. Sir Robert Peel, Hudson Gurney, and others consented 
 to remain silent, while others Svithdrew, and the resolutions passed unanimously, 
 
17 
 
 tfinid cheers from, all parts of the House. The bill was soon after prepared and 
 adopted by the entire Legislature. Earl (Jrey, the champion of the people, who 
 carried the Reform Bill twelve years afterwards in the Upper, and Mr. Gurney, 
 the great banker, in the Lower House, alone recording their dissent. 
 
 The Great Ricardo lived four years after this triumph, long enough to see 
 the desolation he had brought on hjs country. Now let the reader who has 
 thought or talked .lightly, as he then did, about the ease of stepping from three 
 per cent, to par, stand by the death bed of this same Ricardo, and listen to the 
 dying words addressed liis friend. Sir W. Heygate, a fellow member of the 
 unfortunate Parliament of 1819 : " Aye, Heygate, you and a few others, who 
 opposed us in the cash payments, Aave proved right ; I said the difference, at 
 most, ■would be only four per cent., and you said, at the least, it ■would be twenty- 
 fiiie fer cent." 
 
 That this was not the expression of a mind affected by disease and suffering, 
 but of its mature and calm judgment, is proven by the valuable legacy to man- 
 kind which was found among his papers — A Plan for the Extinction of all 
 Bank Notes, and the establishment of 
 
 A GOVERNMENT CURRENCY LIKE OUR GREENBACKS. 
 
 In it he says : . 
 
 " After the establishment of banks, a state has not the sole power of coining or 
 issuing money. 
 
 " It is not necessary that paper money should be payable in specie to secure its 
 value ; only that its quantity should be regulated according to the value of the 
 metal which is declared to be the standard. 
 
 " The issues of paper money should be by the state, and not by a company of mer- 
 chants or bankers. The danger, however, is, that the power would be more likely 
 to be abused if in the hands of the Government than if in the hands of a banking 
 company. A company would, it is said, be more under the control of law ; and 
 . although it might be to their interest to make their issues beyond the bounds of 
 discretion, they would be limited and checked by the power which individuals 
 would have of calling for bullion or specie. It is argued that the same check 
 would not be long restricted, if the Government had the privilege of issuing 
 money, that they would be too apt to consider present convenience rather than 
 future security, and might, therefore, on the alleged ground of expediency, be too 
 much inclined to remove the checks by which the amount of their issues was 
 convertible. 
 
 " Under an arbitrary government this objection would have great force, but in 
 a free country, ■with an enlightened Legislature, the fo^wer of issuing convertible 
 fafer money might be safely lodged in the hands of commissioners, "whose fidelity 
 there could be no more reason to doubt than commissioners appointed for the 
 sinking fund, or other purposes" 
 
 ^OUR PRESENT PERIL 
 
 Will appear to every man, whatever may be his occupation, the employed as well 
 as the employer, after leading the words of Ricardo. They cannot but see 
 the extreme peril the country is now in, greater by far then than when the 
 gold premium was 12 or 15, or even 20 per cent., instead of 3 or 4, as it now is, 
 owmg to the determination of the heavy capitalists and strong banks in New 
 
18 
 
 York to take advantage of the price of foreign exchange to press down the gold 
 premium to the lowest point possible before Congress meets ; greater, far 
 greater, because the people are that much nearer the edge of the precipice, and 
 it is that much easier for designing knaves to push them over. An illustration 
 may give a better understanding of this danger. The admixture of certain pro- 
 portion? of air and gas changes its condition, until that point is reached a light 
 can be taken into the room with impunity. If the continued escape of gas, 
 while one is looking for the leak, is unheeded, the danger increases as the 
 quantity approaches the explosive point. It may be either one, or even half 
 of one, per cent., yet no harm comes, but the moment the other half is added, and 
 a change of condition occurs, every thing is blown up. So it is with a forced, 
 unnatural resumjitiou — it is the change of condition from a purely credit cur- 
 rency to one in which there is no element of credit. The nearer you get to that 
 point the greater the peril. In both cases, after the wreck is cleared away, new 
 structures can be erected. If that has got to be, let it be quickly, some may say. 
 But it has not got to be, unless the Government wants it so. It will only be 
 when resumption is forced. Do with resumption as you would with the gas — open 
 the window and let in more air. Keep back the condition until you have found 
 the leak, and stopped it effectually. Then you can close the window again, and 
 take a light into the room with impunity. To prevent a currency explosion, the 
 danger can be averted, not by stopping the issue of gas, but^by stopping the issue 
 of bank notes, and by gradually withdrawing them, and as gradually accumulating 
 coin as a reserve to make the paper money substituted for them as good as 
 gold and silver, which would be resumption, coming of itself, by the operation 
 of natural law, and not forced by a law on the statute book. 
 
 In view of these things, is it not the interest of the business man, as well as 
 the Secretary's " poor man," to read and carefully inquire into the subject ? 
 
 WHO IS RESPONSIBLE .' 
 
 Not I, says the Secretary, I am only a puppet. Hear him : " Human governments 
 can have but little influence over the causes that produce the rise and fall of 
 prices, the abundance or want of employment. These are governed by higher 
 laws, and the puppets that for the time hold official authority have as little in- 
 fluence over these great movements as flies have over the revolving wheel." 
 
 In answer to the general proposition, behind which he seeks protection, it should 
 be enough to refer him to the proverbs of Solomon. As, however, the inspiration 
 of the Good Book appears to be less i-egarded by our financial statesmen than 
 that which they draw from London, a quotation from an old book printed there 
 before the foundations of this Government were laid, may be regarded as good 
 authority. Harrington, whose aphorisms have been accepted by the most emi- 
 nent political writers and statesmen as axioms, says, in the first of the series, "It 
 is an avowed maxim of one of our first rate political writers that ' The errors and 
 sufferings of a people are from their government ; ' " and the truth of his fifth 
 aphorism will be recognized in these times by every one : "And the same excellent 
 law modeler shrewdly remarks, that the people cannot see, but they can feel." 
 It is possible that the Secretary will also recognize the truth of this just now ; 
 if not, it is probable he will feel its force before long. Hear the Secretary again 
 about the cause of hard times — the capital letters are his own, to give his words 
 greater force • 
 
19 
 
 " HARD TIMES. 
 
 " It is very common, fellow-citizens, to hold the Government responsible for 
 hard times caused by the ebb and flow of trade and production. If the crop fails, 
 the Administration is abused. If wages or prices fall, the Government is blamed. 
 If production exceeds the market made by consumption, it is easier to abuse some 
 officer of the Government than to find out tl^e real cause; And so it happens 
 that, under any Government, whatever may be its form, if a panic, or hard times, 
 or over-production, or a pestilence, famine or plague comes, the men in office are 
 made the scapegoats for troubles which it is far beyond their power either to produce 
 or remedy. And so now, when throughout the world trade is languishing, and 
 wages have fallen, and industry does not meet its nsual reward, it is 
 
 CUJITE COMMON FOR DEMAGOGUES 
 
 To say, ' Turn out the Administration and put us in, and all will be lovely.' 
 Such arguments are only fit for fools." ^ 
 
 For answer to what he here says about over-production and under-consump- 
 tion, we need only repeat the words of Alexander Baring, afterwards LoRn 
 AsHBURTON, in reply to just such talk, in the Parliament of 1821, when the 
 supporters of the Resumption Law, of 1819, were driven to find some cause for 
 the extreme distress that prevailed : 
 
 " When such is the state of the country in the sixth year of peace, and when 
 all the idle stories about over -production and under-consumftion, and such like 
 trash, are swept away, it is natural to inquire into the state of a country placed in 
 a situation without a parallel in any other nation or time . No country ever 
 presented the continuance of so extraordinary a spectacle as that of living under a 
 progressive increase in the value of money and decrease in the value of the 
 productions of the people. It appears clear that from the operations, of the cur- 
 rency we have loaded ourselves not only with an immense public debt, but also 
 with an increased debt between individual and individual, the weight of which 
 continues to press upon the country, and to the continuance of which pressure no 
 end can be seen." 
 
 The Secretary will perceive that the great political writers and bankers of the 
 Old World differ very widely from his ideas about the causes of a peoples' dis- 
 tress, and the responsibility of rulers for it, and also their accountability. As to 
 the measure of responsibility that attaches to each agency or individual, it is unim- 
 portant. In laying the burthen upon the chairman of the Senate Finance Com- 
 mittee, and his pliant tools at the head of the Treasury, the people should not 
 lose sight of the greater sinners behind him, the aristocratic Senate, who drove 
 him to the work ; nor stop there, but fasten their eyes upon the power which 
 not only drove the Senate, but the people themselves, to the commission of the 
 highest crime against society, that of self-destruction. That power has its 
 throne in Wall street, and its representatives in two thousand National banks. It - 
 is that power alone that obstructs the way to the establishment of a currency 
 that will be forever equal to coin. Besides the untold aiid immeasurable misery 
 already inflicted, the system, by its mere existence, and the subsidies granted it; 
 has cost the Government itself'since the close of the war, in 1865, a sum greater 
 than the aggregate capital of all the National banks ; and but for the obstruction 
 interposed by bank issue, the country -would have had, in the year 1873, a cur- 
 rency of cdn, or its equivalent, paper money everywhere equal in value with coin, 
 and under conditions that would have made any disturbance of that equality 
 forever impossible. 
 
20 
 
 Against this dangerous and destructive power every man should raise his voice, 
 
 and cast his vote in such a manner as in his best judgment will most effectually 
 
 . remove it — the only obstruction to the peace and permanent prosperity of ttie 
 
 country. '," ,' 
 
 [The partizan portions of both addresses are omitted. One told the people that the only way 
 they "could pronounce against the Resumption Law, the perpetuation of the National Banks, 
 and the extinction of the lawful money, was to vote for Mr. Bishop ; and the other said, the 
 best way jor them to maintain the Greenback was to support those wivo supported its brave 
 
 uu.o^^ ^..a published entire by the Bank Press. Happily this exhibition ol the hyp . 
 
 the aristocracy of the Democracy was too much for the Democratic stomach, and their tone 
 changed as the election day approached.] 
 
 At the close of the address the Hon. Robert Hosea rose "to takeoff some 
 of the husks their friend had woven around the subject." He told what his 
 friend, the late Chief-Justice Chase, had said to him about the National Banks 
 being infinitely better than the old State Banks, and the system being the best 
 ever devised ; and said, I must know that such were his expressions as well as he 
 did. Perhaps so; but if he ever told me as much, I certainly begged leave to 
 differ with him. Mr. Hosea might have told that his friend's confidence in the 
 stability of the system he had founded was such, that he did not believe ij possible 
 for them to suspend — so strong, indeed, was it, as to have caused him to remark^ 
 " If tbey ever did, the people will give me credit at least for having gathered them 
 all into one neck, and they will have but one neck to cut." This remark is in entire 
 harmony with the sentiments of the Great Secretary, for he had been bitterly 
 opposed to the United States bank, and a bank note currency, as was ever 
 Jackson or Benton. But for this fact the remark would have no significance, and 
 should not be repeated. That fact will abundantly appear by an examination of 
 his. record. 
 
 Commenting upon the authorities I had quoted, Mr. Hosea remarked, " Who 
 cares what they said ; they lived fifty and a hundred years ago ; they knew nothing 
 about this country, its wants and its great resources ; they lived before the days of 
 railroads, and never dreamed of palace cars crossing the continent from ocean to 
 ocean. This is an age of progress, and we must keep up with the age." This 
 expression fairly reflects the spirit of Young America on Change ; hence it is re- 
 ferred to, and hence I publish with the address a paper written eighteen months 
 since, which has been read in manuscript with satisfaction by many eminent rnen. 
 It shows, not what some of the departed statesmen of England thought in the long 
 past, but what all her living ones think at the present moment. 
 
 The Hon. Richard Smith followed, and said the address made him feel blue> 
 but he assured the audience that the crops were good, and the prospect bright ; 
 that " gold is the standard ; " and that in the disintegration of parties he had made 
 up his mind to only one thing, to stick to the church and the schoolhouse. This 
 is hopeful, for the church cannot long serve God and mammon ; and the school- 
 house will be all right when the boys begin to cipher out what bank notes have 
 cost the country. His entire dependence upon Providence was most gratifying. 
 It made me think of " Greenland's icy mountains," and almost feel 
 
 The balmy breezes 
 
 Blow soft o'er Ceylon's isle, 
 WJwe every prospect pleases. 
 And only man, is vile. 
 
:pjli2.t IX. 
 
 COST OF BAKK ISSUE 
 
 To the people of the United States in eleven years ending July 
 1, 1876 ; How it Destroyed " The Savings Bank op the 
 People," and Prevented the Equalization of the Value 
 OF Paper Monet and Coin. 
 
 As the Hon. Richard Smith charged me, at the time, with being chiefly 
 instrumental in compassing his defeat, in the fall of 186.7, I was anxious that 
 General Gary should do his friends credit. He read his intended deliverance on 
 the financial question, to a number of gentlemen, before he went to Washington. 
 It was sound. After he arrived there, eminent eastern financiers impressed him 
 with their ideas, and he cut the cable that held him to the anchor of gold and 
 silver, and drifted seaward. In company with others of his warm republican sup- 
 porters, I was so chagrined, that I did not feel like having any more communica- 
 tion with him on the subject. Consequently, I prepared a paper to send to his 
 friend. Senator Morton, in the hope that it might be useful in bringing him back 
 to the position he occupied when he left. 
 
 It was read by, and so pleased an intimate friend of Mr. Smith, that he insisted 
 upon his seeiiig it. After hearing it read, Mr. Smith asked it for publication ; 
 and it appeared in the Gazette of February 13, 1868, filling nearly six columns, 
 equal to eight or nine of the present form of that paper. At his request, to give 
 the article more local interest, I called at all the National Banks the following day, 
 and, upon the information received, added a chapter, showing the magnitude of 
 their profits, the gross favoritism of the Secretary of the Treasury, and the im- 
 proper influence the bank officers exerted over him. Except this local matter, 
 no change was made. , Attention was called to it by the following editorial : 
 
 FINANCIAL. 
 
 A large portion of our space to-day is given to an article from the pen of R. B. 
 PuLLAN, giving his own and the views of his brother, James Pullan, on the 
 present financial question. 
 
 The tables, we understand, were made to send to personal friends in Congress; 
 but it was afterwards concluded to put them in a more convenient form, together 
 with such explanations and comments as they seemed to require. 
 
 We need hardly say that we do not agree with the writer in all the views 
 advanced, but the article has been prepared with great care, contains much 
 valuable information,' and is worthy the attention of the public. 
 
 I will here reproduce the material portions of that paper, as an introduction to 
 another paper, written in the fall of 1875, ^^^ '^n' 'o 'he Hon. Wm. D. Kelley, 
 with one on a different branch of the subject, with a request to return them after 
 perusal. The character of the letter received in response caused me to drop him 
 a line when I accepted the Republican Committee's invitation, enclosing a copy 
 
22 
 
 of the following extract from his letter of November 5, 1875, asking his permis- 
 sion to show it to such Republicans as might dispute the propriety of my address- 
 ing a Republican meeting. His immediate reply was; "Use it in any way for 
 the good of the cause ;" I therefore use it here, that greater attention may be 
 given to the words of an unknown, and that the friends. of currency reform in 
 Cincinnati may do what its most distinguished and powerful advocate asks of 
 them : 
 
 " When I made your acquaintance during my pleasant visit to Cincinnati, I felt 
 that I had found not only a co-laborer, but an instructor. I have made this state- 
 ment in order to enforce my request that you print the matter I return to you. I 
 see how valuble it would be to me, but I speak not only of myself; what serves 
 me serves every other speaker and writer engaged in the reform to which we have 
 pledged ourselves. We need a voluminous liteiature on the question, and in 
 order to make your labor, as embodied in these papers, effective, I suggest that 
 you bring the matter to the attention, of Henry Carey Baird, 810 Walnut street, 
 Philadelphia ; Wallace P. Groom, editor of the Mercantile Journal, New York; 
 Wendell Philips, Boston; Mr. Troup, editor of the Union, New Haven, Conn.; 
 Mr. Buchanan, oi the Indianapolis Stin; Sidney Myers, of Chicago, and others, 
 and ask their co-operation in disseminating it. Your friends in Cincinnati ought 
 to enable you to send to me, or other trustworthy person in Washington, 
 enough copies to hand to every member of either House of Congress who wnuld 
 like to study the work, and make good use of tJie material he would obtain 
 from it." 
 
 The portions of the paper reproduced are, capitals and italics included, as they 
 appear in the Ga'xette of February 13, 1868. 
 
 THE NATIONAL DEBT. — THE NATIONAL BANKS.— 
 PAPER MONEY AND GOLD. 
 
 The public debt, the probability of its payment, and the period when the 
 domestic standard of value shall correspond with the foreign gold and silver- 
 are questions that interest all. Passion can do little for their solution, and vitu- 
 peration less. The truth can only be reached after careful investigati.on and 
 calm discussion. To aid in this is the object of this paper. 
 
 Preceding any discussion about the disposition of the public dsbt, it would be 
 well to know its nature. To show this, the following table has been prepared 
 from material found in the recent Annual Report of the Secretary of the Treasury. 
 The statement on pages 50-1-2-3-4 and 5 has been classified as near as possible 
 with the statement on page 23, of the public debt, July i, 1867. All that was 
 incapable of classification is placed under that head, the aggregate of which diflFers, 
 however, only $200 from the aggregate of Navy Pension Fund, §13.000,000, 
 and Matured Debt, $8,997,595,00; Total, $21,997,595,00; and this difference 
 arises from an error of $200 found in the addition of the Secretary's statement. 
 
 The tj^le is ongitted; . 
 
 DESIRES AND EXPECTATIONS OF SECRETARY M'CULLOCH AND SENATOR SHERMAN 
 AND THEIR FRIENDS IN THE BOND AND NATIONAL BANK INTEREST. 
 
 The nature of the debt being known, a more intelligent judgment can be pas.sed 
 upon the measures proposed concerning it. A knowledge of the influences prompting 
 these measures would still further assist in arriving at a correct conclusion. To 
 this end an examination of the views of Secretary McCuUorh is important, inas- 
 
23 
 
 much as by Mr. Sherman's report they seem to govern the action of the Senate 
 Finance Committee. Not only is an examination of his plans important, but 
 also the consequences that were expected to result from their practical application. 
 
 FirjU — With reprard to their views. By reference to the Secretary's report, and 
 also to that made by Mr. Sherman, it will be seen that their great anxiety and 
 chief purpose is to extinguish the United States paper money as soon as possible, and 
 lea've the national hanks to supply the circulation of the country; and to accomplish 
 this end they urge the funding, in long bonds, payable in gold, of the two 
 thousand millions claimed to be payable in lawful money. Yielding to the 
 pressure of public opinion. Congress has passed a law, suspending Secretary McCul- 
 loch's power to further contract the circulation of United States money. 
 
 It has been observed by the country that even this bill, notwithstanding the 
 unanimity of its passage by the House, was "opposed in the Senate by Mr. Sher- 
 man. 
 
 Here follows a lengthy critical examination of the effect of the policy of Mr. 
 Sherman and Mr. McCulloch, as indicated by their reports. The table found on 
 the 56th page of the Secretary's report, which he says .he had prepared by a very 
 intelligent gentleman of Massachusetts, to show how soon the debt might be paid, 
 is copied ; and a table given of the receipts and expenditures for each year, from 
 1 86 1. Referring to the Secretary's anticipation, the paper continues : 
 
 The percentage of reduction, it will be observed, is about the same with the 
 expenditures as the receipts, and therefore it is not reasonable to attribute it to any 
 proposed reduction of taxes. 
 
 The estimate of the effect of bringing everything suddenly down to the nominal 
 specie basis of National Bank notes, which the Hon. Secretary classically calls hard 
 fan, is not far from the truth. This will be seen by converting the gold expenditures 
 of the Secretary, $151,000,000, into the money standard of to-day's gold rate, 140, 
 viz., into $212,800,000, which is $9,854,372,58 more than the expenses of last 
 year, viz., $202,947,627.42. Converting the estimate for taxes, $326,800,000, in 
 the same manner, the amount would be $457,520,000, or $33,114,020 less than 
 they were last year — a difference which the Hon. Secretary no doubt considered in 
 contemplating the diminished resources of the country, and consequent inability of 
 the people to pay taxes. These reduced estimates, then, are predicated upon the 
 change, from a condition of comparative piosperity to one which he thus elegantly 
 describes: 'Let the paper dollar truely represent the dollar in coin. Let men 
 of capital and enterprise feel that the currency has come, or is steadily coming, 
 to the ' herd pan' * of specie.'" [See page 14]. 
 
 Further evidence that the Hon. Secretary expected this reduction of taxes and 
 expenditures to arise solely from the natural operation of his financial policy;^ is 
 found in the labored effort made through several pages of the report to con- 
 vince Congress and the country that a half dollar in gold is just as good as a 
 dollar of United Strtes money, contemptuously referred to throughout the whole 
 report as " irredeemable paper." This contemptuous reference to the lawful money 
 of the country also characterizes the report of the Senate Finance Committee, 
 and the speeches and reports of many others in the bond-holding and National 
 Bank interest. To the suffering people the Secretary directs a very pertinent 
 
 * As " Hard Pan " was printed in capitals in the original report, and is often repeated, 
 it evidently means a peculiar kind of specie. It was a favorite slang term of Indiana bankers 
 to describe a specie paying bank note — convertible into coin when the people did not want it, 
 and inconvertible when, as a body, they did. Secretary McCulloch evidently agreed with 
 Albert Gallatin's (the American apostle of bank i^sue) description of a bank note— that 
 its promise to pay coin carried with it an implied understanding that the coin would not be 
 called for. That will be the kind of specie the country will have after Greenbacks are wiped 
 out. 
 
24 
 
 question, and gives a comforting answer, " If," he says, " the paper circn- 
 lation of the United States should, during the next year, be reduced 50 per cent., 
 and prices of property decline correspondingly, would it follow that the value of 
 property would thus decline? In this case the currency would be increased in 
 value as it was decreased in amount. The decrease of prices, if no counteracting 
 causes intervened, would be the natural result ot the decrease in the measure of 
 value, while real property would remain the same." 
 
 These remarks of the -Hon. Secretary of the Treasury come home to every 
 business man, and to every man who has a living to earn for himself, or his family, 
 whatever may be his politics or condition, and should he thoughtfully pondered. 
 Especially should it be thoughtfully considered whether, when all property is thus 
 reduced one half, there should be a privileged class, whose property should be not 
 only exempt, but protected from the effect of what the Secretary says is a natiu'al 
 law, and more especially, when the value of that property depends upon the will 
 of the people, whose just rights it is attempted to disregard. 
 
 These remarks are made to show the animus of nearly all the linancial mea- 
 sures that have as yet taken any form in either branch of Congress, and that 
 unmistakably appears in all the recommendations of the Senate Finance Com- 
 mittee, to whose action the subject seems deferred. 
 
 Its first report so outraged the public sentiment that the Chairman, Mr. Sherman, 
 asked that it be referred back to him. It will be again presented, divested of the 
 most offensive features of the first, but not by any means the most obnoxious and 
 dangerous. The poison-pill will be coated with sugar, but none the less poison- 
 ous still. The effort will be to dispose of the question of any further issue of 
 United States money to pay the five-twenties, by immediately providing for their 
 payment in long bonds, thus entailing on the country an enormous debt, which 
 shall be the basis on which bank circulation may be issued ; for no sooner will 
 the 5-zo's be thus got rid of, than the law to suspend the retirement of 
 United States money will be repealed on the ground of wiping out the dishonor 
 of leaving the Governtnent promises past due to remain unredeemed; and with 
 this retirement will come the call for an enlargement of the National Bank circu- 
 lation to take its place. 
 
 Afterwards National Bank notes become an indispensable necessity, and the 
 National banking system, with its vast and compact power to control and direct 
 public opinion, is fastened upon the country, only to be removed after years 
 of desparate struggle. It will be the imperium in imperio, the power behind the 
 throne, to whose behests all in active business must yield obedience. 
 
 It is to be hoped that there is enough of patriotism and good sense in Congress to 
 avert such a calamity, and that will prevent the passage of any law looking, however 
 remotely, to the rernoval of United States paper money as a convenient circulation 
 for the business of the country ; or that will not remove the circulation of National 
 Bank notes, and substitute in their place that which they only pretend to represent. 
 If this cannot be done, is it not better to leave the matter as it is, to be decided 
 by the people after fair discussion ? Will any other settlement settle anything, in 
 the present state of the public mind .' Will any funding law, made in the interest 
 ot the National Banks, be regarded a moment longer than its friends are in 
 power. 
 
 These are questions worthy to be thought of, looking to the past history of the 
 country, and the determined hostility of the country twice expressed against the 
 existence of an United States bank. * 
 
 What is wanted more than anything in money matters is stability and perma- 
 nence 5 and can any be expected from such action as will instantly array in deadly 
 opposition a powerful body of the people, if not a majority, whose efforts will only 
 cease with their success ? The man is, blind, that can not see, who if there is any 
 political questions settled in this country, it is that of the existence of a United 
 States bank. Such an institution can not live by the accord of the people, and 
 without such accord its existence is only a disturbing element in society — a public 
 nuisance. 
 
25 
 
 NECESSITY FOR AN ADDITIONAL ISSUE OF UNITED STATES PAPER MONEY TQ 
 SECURE A SATISFACTORY SETTLEMENT OF THE PUBLIC DEBT, AND A SPEEDY 
 RETURN TO THE GOLD STANDARD. 
 
 In opposition to this scheme, it has been proposed to make an additional issue 
 of the United States^ nioney to replace the National Bank circulation, and to 
 ^d in the payment of the principal ot the 5-io's, according to the terms of the 
 bond. As might be expected, the proposition has received the execrations of 
 the friends of the institutions to be destroyed by it, and its supporters have been 
 (lenounced by every opprobrious epithet. It is no use. If it is true, it will live ; 
 if not, it does not deserve to. But vehether true or not can only be determined 
 after a fair discussion, and that its friends will have, whatever may be said or 
 done in Congress or out of it. If such discussion is forestalled by unwise action, 
 is there not danger that the matter will become from year to year more compli- 
 cated, even to the end of sweeping bank, debt, and ail, out of existence at the 
 same time ? 
 
 The measure, if adopted, would have three results : 
 
 I. It would satisfy the people without doing injustice to any. 
 
 ?. It would relieve the country of a heavy burthen of taxation, and secure a 
 speedy adjustment and ceitain payment of the debt within a limited period. 
 
 3. It would sooner than any other way secure a return to the gold standard, 
 and furnish, at the .same time, a convenient paper circulation, recognized of equal 
 value to gold in all parts of the world, and, at the same time, forever prevent the 
 issue of any. other notes to be used as a circulating medium. 
 
 It is not proposed to discuss each proposition in its order, but proceed as in the 
 examination of the views and purposes ot those friendly to the banks ; te.st the 
 soundness of the doctrine by the results of its application. To do this, it is neces- 
 sary to imagine the passage of a law incorporating the features understood to be 
 held by those favoring the generel proposition to pay off the 5-20's with United 
 States money of a new issue, and abolish the National Banking system. 
 
 J. That an additional issue of $500,000,000, legal tenders, be ordered in de- 
 nominations of I, z, 5, 10, 50, 100, 500, and looo. The devices to be particu- 
 larly described, and that it shall not be in the exact similitude of a bank note. 
 
 s. The work to be executed under the direction of the officers of the mint, 
 delivered on requisitions of the Secretary ot the Treasury, and afterwards, under his 
 direction, impressed with the seal of the Treasury. 
 
 3. Authorize the issue of $600,000,000 of bonds, bearing 5 per cent, interest, 
 payable in gold, to be issued in series, so that the payment of interest might occur 
 at different times; also that each series might be the more readily redeemed, 
 whenever the Government elected to do so; this option, however, to be first upon 
 those last sold or exchanged. 
 
 Each bond to expressly state that it was not payable at any fixed period, and 
 was redeemable at anytime, at the option of the Government; and also that it was 
 subject to taxation. State and National, the same as any other property. 
 
 4. The is.sue of $300,000,000 of bonds, interest and principal payable in gold; 
 not before thirty years, and after that at the option of the government. Interest 
 payable semi-annually, and at the rate of 3.65 per cent. Each bond to expressly 
 state that itis-exempt from taxation, either state or national, and that the gold in 
 which it is payable shall be at least of the present standard, or its equivalent. 
 
 5. To declare that while one Congress cannot limit its successor in the exercise 
 of its constitutional right to coin money, that the amount of the issue, $500,000,000, 
 together with that of the Government paper money now issued, shall be the ex- 
 treme limit of such description of money ; and that it was against the interests of 
 the people ever to issue beyond such limit ; and that so much of the new issue, 
 $300,000,000, necessary to retire the present National Bank circulatioB be immedi- 
 ately used to take up 5-zo's; and that the balance be only used in case their use 
 
is necessary in the taking up of the whole amount of any one series of 5-20's re- 
 deemable at any one time. 
 
 6. That either class of bonds ordered shall be sold at par for United States 
 money, or paid in exchange for 5-20's, by the regular officers of the department, 
 and no commissions allowed. 
 
 7. Repeal of circulation feature of National Bank Act, and tax all circulation 
 
 outstanding after months, an amount equal to the interest on all the bonds 
 
 pledged for its redemption. 
 
 S. That all surplus over what is necessary for current expenses be used in re- 
 deeming 5zo's, so that the whole amount of United States money authorized shall 
 be in circulation, without being increased or diminished, until all bonds redeemable 
 in lawful money are cancelled, either by their payment in lawful money, or by an 
 exchange for the bonds thus provided, and that after such use can no longer be 
 made of them, that they be accounted as money, and preserved in the vaults of the 
 Treasury, together with all gold received for customs. 
 
 9. That the customs shall be paid only in gold until the accumulation of gold in 
 the Treasury shall be not less than one-fourth of the outstanding circulation of 
 paper money, when half the customs receipts shall only be required to be in gold, 
 until the gold surplus be not less than half of the outstanding paper money, at 
 which time all the customs receipts may be paid either in gold or paper money, 
 and so continue until the gold in the Treasury should be less than half of the out- 
 standing circulation of paper, when the same proportion between gold and paper 
 in the payment of customs should exist as before. The intent being that the 
 gold in the vaults of the Treasury shall always be not less than half of the 
 outstanding circulation ; and when it is otherwise, that the equilibrium might be 
 restored by the operations of the customs. 
 
 10 That no state, municipality, or corporation shall ever issue any note or 
 device to circulate as money. 
 
 Supposing that some such measure as this now became a law, what would 
 be its effect.? 
 
 The 5 per cent bond (j) would be, practically, with a wise exercise of the dis- 
 cretion with which the Secretary was clothed, interconvertable in times of unusual 
 stringency, after the 5-20 bonds had been redeemed or exchanged as provided 
 in (8.) 
 
 To show what would be the effect, a copy of " the official statement of the 
 public debt, on January 1, 1868," is given — then a detached calculation of "the 
 amount of interest to accrue to July i, 1868," and then a detailed statement of 
 the six months' operations, after which the paper continues : 
 
 The debt, therefore, on July i, 1868, would be: — 
 Bearing gold interest : — 
 
 5 per cent $304,929,800.00 
 
 365-100 " " 50,000,000.00 
 
 6 " " 1,408,440,741.80 
 
 Bearing U. S. money interest: — 
 
 6 per cent. 20,713,000.00 
 
 $1,784,083,540,00 
 
 Adding to this the amount U. S. money 687,756,710.85 ' 
 
 Also reduction made on liability 170,486,000.00 
 
 Total $2,645,326,252.48 
 
 The debt%)r the purposes of this estimate may be stated, on July i, 1868, in 
 round numbers (the whole being treated as bearing gold interest) to be : 
 
27 
 
 5 per cent $305,ooo,cxx>.oo 
 
 365-100 " " 50,000,000,00 
 
 6 " " 1,429,000,000.00 
 
 $1,784,000,000.00 
 
 The results of similar calculations for each year until the gold standard is 
 reached is shown in the following tabl6, which is made to correspond with that of 
 the Secretary, that an easy comparison may be made between the two plans. 
 
 The calculations in this tabl& are based on the receipts from customs, being 
 $175,000,00 for each of the seven years ; and from all other sources $275,000,000, 
 for i86g, '69, '70, and '71 ; and $175,000,00 for 187a, '73 and '74; and that the Gov- 
 ernment expenses are $175,000,000 each year, for reasons given hereafter. Also 
 that there will be exchanged or sold, one hundred millions of 5 per cent, bonds, 
 and fifty millions of 3.65 percent, bonds in each of the first three years. Al.so 
 that the gold surplus can be sold in 1S68 at 140, in 1869 at 130, and in 1870 at 
 120, after which no sales to be made. With this data any one can easily verify 
 the statement. 
 
 TABLE, showing when the public debt can be paid, or funded at 
 low interest; also when the $687,756,710.85 of United States 
 paper money will be received as equal, if not superior, in 
 value, to gold, in the markets of the world. 
 
 These, estimates were predicated upon the income and legacy taxes being retained 
 to the extent of securing forty millions a year, which sum was only two-thirds of 
 the amount received in the two preceding years, viz., $120,953,971.27. By adding 
 this amount for the seven years to the sum of the receipts from other sources, in the 
 table. No. i, hereafter given, a comparison can be made between the aggregate 
 expenditures and receipts estimated, and those shown by the tabic for the seven 
 years ending July i, 1875, viz. 
 
 Estimated. Actual. 
 
 Expenditures $1,225,000,000 $1,211,841,016 
 
 Receipts 2,850,000,000 2,678,412,960 
 
 The situation, on July i, 1875, as shown by the table : — 
 
 Debt bearing interest $983,676,600 
 
 Add for the difference between estimated receipts $2,850,000,000 
 
 And the actual receipts, per Table i 2,398,412,960 451,687,040 
 
 Debt calculated upon actual receipts and expenditures 1,435,363,640 
 
 Lawful money outstanding 687,756,710 
 
 Total debt (so-called) •. . 2,123,120,350 
 
 Deduct amount in the Treasury, coin, 389,189,460 
 
 Money 44,629,851 433,819,311 
 
 Net debt 1,689,301,039 
 
 The actual situation, on July i, 1875, P^r Secretary Bristow's Report, is as 
 follows: — 
 
28 
 
 Debt bearing interest #1,734,172,226.76 
 
 Lawful money 417,901,004.19 
 
 Total debt (so-called) _ 2,152,073,230.95 
 
 Less amount in the Treasury, exclusive of amount of private de- 
 posits for which certificates had been issued 63,491,1 16.41 
 
 Net debt $2,088,582,114.54 
 
 Comparing the two situations, as above described, it appears: — 
 
 Net debt under the policy in the interest of the banks $2,088,582,114 
 
 " " ". in the interests of the people 1,689,301,039 
 
 Saving to the people in seven years $399,281,075 
 
 The table exhibits for each year the following items of interest : The amount of 
 debt bearing 6 per cent., 5 per cent., and 3.65; amount of interest paid; surplus of 
 gold after payment of interest; amount of gold surplus converted into U. S. money j 
 reduction of principal of debt each year ; amount of debt at close of each year; 
 amount of gold in the Treasury; and amount of U. S. paper money in the Treasury. 
 The exhibit for the first three items on July i, 1875, '^ ■ amount 6 per cent, is 
 $283,576,600; 5 per cent. $400,000,00; 3.65 per cent. $300,000,000. And for the 
 last two items: amount of gold in the Treasury $389,189,460, and amount of 
 U. S. money in the Treasury $44,629,851. 
 
 It also shows the gradual accumulation of money in the Treasury towards 
 bringing the paper circulation of $687,756,710 to an equality in value with coin on 
 the first of July, 1871, to be $19,113,931 ; 1872, $170,482,099 ; 1873, $291,110,503; 
 1874, $410,789,907. 
 
 These results were reached in exactly the same manner as are those in table No. 
 3, at the close of this paper; indeed, the calculations for both tables were made at 
 the same time, in January, 1868 ; those for table No. 3 being made on the official 
 figures up to that time, and thenceforward upon estimates, as in the one published. 
 In 1874, when my occupation again directed my attention to the subject, that 
 table" was revised, by substituting the actual data for the estimates, and carrying it 
 forward on estimates to the Centennial year. Table No. 3 is a copy of that re- 
 vise, with the last two years corrected. Without the aid and incitement I then 
 had, I would not have undertaken the task, nor perhaps have thought of the 
 manner of doing it; it is only because the demonstration was made to my hand 
 that it appears now. > 
 
 Following the table the text proceeds ; — 
 
 At this time, 1874, the chiracter of the 5 per cents, and the situation of the 
 Government, will secure their immediate conversion into 3-65's of an additional 
 issue, to be hereafter authorized. The same may be said of the 6 per cents, in 
 1881, when they mature. The United States paper money in circulation will be 
 $643,126,858.91, and the gold in the Treasury, $394,189,460,12. Who will 
 deny that then the paper eagle and the gold eagle will be recognized throughout 
 the world as the same, and known simply as the American Eagle? 
 
 All the calculations for the first six months are based upon the figures of the 
 Secretary, except the estimate that $100,000,000 of 5 per cent., and $50,000,000 
 
29 
 
 3-6s's will be exchanged, and that the average rate- for gold sales at regular intervals 
 iluring the six months will be 150, If the first is an error, so much the better for 
 the Treasury, as then the whole §500,000,000 United States money would be issued ; 
 and if there is any doubt expressed about not being able to sell gold at 150, it can 
 not surely come from the lips of those who have sought to alarm the country 
 about gold going up to a fabulous price. If one-half of the predictions of the 
 Hon. Secretary, and the Kon. John Sherman, and their admirers, prove true, gold 
 would be nearer 450 than ijo But as their intelligence does not permit of any 
 such belief, the rate estimated will probably commend itself to their judgment, 
 if anything it would be lower. 
 
 It will be perceived that the calculations are based upon the average receipts 
 from customs being kept up to $i75-,ooo,ooo. This is 3,000,000 less than in 1866, 
 and 1,500,000 less than 1867; and those from all other sources to $275,000,000, 
 104,000,000 less than 1866, and 40,000,000 less than 1867 — periods when the 
 country was groaning under burthens of every liind. Considering this diminution, 
 and the greater resources ot the country, practically doubled in extent, it is not out 
 of the way to say that $450,000,000 annnally, during the next seveg years, is not 
 half the burthen that has been born during the last two. . 
 
 The estimate for expenditures is based on the expentitures of last year— r 
 $203,000,000, one hundred and twenty-six of which was for War and Navy 
 Departments. Reduced to a peace footing, these can not be expected to be more 
 than double what they were before the war, and that, after allowing a large increase 
 for pensions, would make the estimate abundant. 
 
 FUTURE SUPERIORITY OF UNITED STATES PAPER MONEY OVER GOLD. 
 
 The paper circulation of the United States, on the 31st of October last, was 
 substantially $704,218,038.20 — so says Secretary McCulloch in his report, Decem- 
 ber 5, I S65 ; and the Bankers' Magazine says that the premium on gold was in 
 the same year — 
 
 For. September, , , .,..._.^.*.-.^ 42! to 45 
 
 For October, 44 " 49 
 
 For November, 45J " 48J 
 
 At this time the circulation was $17,000,000 more than it would be after the 
 issue of $300,000,000 here proposed, and yet the premium was only two or three 
 per cent, more than it is now. Thus the gold rate is not entirely conjecture. 
 
 In the table the gold rate is reduced as the debt decreases, and the day of con- 
 vertibility approaches, until there ceases to be any difference. This might be 
 called a gold currency — the hard money of old Tom Benton, but a very different 
 thing from the hard pan promised by the Hon. Secretary. Under the state of 
 things here described there never would be any " resumption of specie payments," 
 because there will be no banks to resume. The thing will do itself. The people 
 will find from year to year, in supplying themselves with gold, to make payments 
 abroad, that the price was gradually sinking from 50 to 40, 40 to 30, 30 to 20, 20 
 to 10, 5, 3, 2, until finally no premium would be asked, and then nobody would 
 have it if they could help. 
 
 The superiority of paper over metal money, when each is convertible into the 
 other beyond any doubt, can no more be disputed than can the existence of any 
 established fact. It is well-known that the notes ot the Bank of France are 
 esteemed of greater value than gold throughout Europe. Yet they are nothing 
 but the notes of a bank, whose credit is shaken by every political convulsion in 
 that country. When one considers that there has been a dozen such convulsions 
 in France, within the period of our political existence, and that some of these 
 swept away not only all obligations, but all sense of obligation, and reflect that 
 there has been but one such in this country, and out of that the Government rose 
 triumphant, and stronger than ever, he can form some appreciation of the value 
 that will be set upon a piece of paper bearing upon its face the American Eagle, 
 George Washington, the seal of the United States, and the emblem ot {.iberty, 
 
30 
 
 and in addition to tlie denomination of the paper, and the date of issue, these 
 words, and these words only : United States of America; and on the reverse, 
 the words of the law, creating a coinage peculiar to The Great Republic. 
 
 What, it may be asked, would be the value of such American money in Can- 
 ton, Calcutta, Rio. and throughout Europe, in any port where the American flag 
 carries American commerce ? What, indeed, would be the measure of its value, 
 when, throughout the world, it was known that the great power that issued it as 
 money, held three or iour hundred millions of gold sacredly pledged for its exchange 
 whenever desired ? When that hour comes. New York would be the greatest 
 money center of the world. 
 
 effect on business generally, and on that of banking particularly. 
 
 What would be the effect of this scheme commercially? It wobid make 
 money more abundant, for the reason that the largest borrowers would be out of 
 market. As things have been, and are now, capitalists, through the machinery 
 of the National Bank organization, have been able to earn more by investing in 
 Government than in individual paper. Suppose the circulating feature ot the 
 National Currency Act repealed, and the act so modified, that it would simply 
 authorize the existing associations throughout the country to act as corporate 
 bodies for the purpose of continuing the business of banking, without interruption, 
 in the same manner as could be done by individuals or firms, subject like these to 
 all legislation of the several states in wshich they are located; such corporate 
 bodies, however, having no connection with the general Government, nor re- 
 quired to report to it, the object being only to provide a corporated existence tor 
 any existing banking associations that immediately elected to continue their 
 business without interruption. After such repeal and modification, the existing 
 banking associations would immediately commence returning their circulation, 
 take up the proportion of bonds pledged ior it, sell the same, and either use the 
 money themselves, or lend it to others, for there would be no longer much 
 motive for active business men keeping money in bonds. 
 
 This business of lending will continue to be done alike by individuals and by 
 aggregated capital, the latter being, in most cases, the aggregations at present 
 existing under the National Banking system. This will be the case whenever, as 
 in this city, trade demands the use of the capital, and where the managers of the 
 banks have exhibited the skill and aptitude to command the entire confidence of 
 the present stockholders. 
 
 It is unreasonable to suppose that in the event of the repeal of the National 
 Currency Act, these stock-holders would not immediately elect to continue busi- 
 ness under the modified banking act, or organize under their old charters, or undei 
 a general law of the state, and proceed with their business with little or no inter- 
 ruption. It is hardly possible that they would do otherwise, in view of the 
 advantage they have in an established business, with everything incident to its 
 successful prosecution. 
 
 When the circumstances are otherwise, as with banks established without any 
 regard to the wants of trade, and conducted as little to the advantage of the stock- 
 holders as the public, the present aggregations of capital would be broken up, and 
 the money returned to the individual stockholders, to be more usefully and pro- 
 fitably employed. Would such a riddance be any loss either to the community 
 or to the real bankers, who are now obliged to recognize them as equals, and to 
 submit to every vexatious order issued from Washington, for the purpose of 
 directing those who never ought to have been in a position to have ever received 
 any directions whatever ? This evil will be immediately increased by throwing 
 open the National Banking system to every one who chooses to enter. No experi- 
 enced banker could then, with any self-respect, submit to the petty instructions 
 continually sent forth from Washington necessary to restrain the numerous ad- 
 venturers tempted to embark in the business of ba'nking. 
 
 It will thus be seen that solid National Banks have no occasion to distress theii 
 customers in passing out from a national organization. If it is possible to con- 
 
31 
 
 ceive that any would be otherwise disposed, it is plain that their power for mis- 
 chief is paralyzed from the fact that the withdrawal of their circulation would 
 have been anticipated by the introduction of an equal amount of currency better 
 than that withdrawn. Should the bank act be now repealed, the business of 
 the city would continue without interruption. 
 
 Immediately, each National Bank would accommodate itself to the change, (for 
 all of them are needed, and, so far as appears, have been satisfactorily managed), 
 and wind up the old organization at one desk, and start the business of the new 
 one at another. And it from any cause some should not pursue this course, 
 the public would be accommodated, as is now being done by the Ohio Valley, 
 Evans & Co., Kinney & Co., Espy, Heidelbaich & Co., and the Franklin, Lafayette, 
 and others j done, too, in the. face of a most unfair and unequal competition, created 
 and fostered by the general Government. 
 
 The remarks about the city National Banks are omitted. After showing the 
 magnitude of their profits, their corrupting influence, and that their existence im- 
 periled the legitimate banking business, not only by its unfair competition, but in 
 continually keeping the public mind disturbed, the paper went on to speak of 
 what the country had abundant evidence of in 1875, the bitter hostility of one of 
 the great political parties to a National Bank ; for the orators and the Press, who 
 filled the ears of the people with cries for " hard money," and howk against " rag 
 baby," well knew that the fight on the part of Governor Allen was solely against 
 a bank note currency. 
 
 Already the Democratic party have proclaimed relentless war upon the 
 National Bank circulation. It is true that the Eastern wing of that party, under 
 the leadership of August Belmont, the agent of the Rothschilds, seems to lean 
 toward the banks. But such efforts and such leadership will be vain against such 
 appeals as are being continually made by the party organs in the West. Can 
 any one mistake the effect of such language as this, taken from a leader in the 
 Cincinnati Enquirer: 
 
 " Opposition to the United States bank was the war cry of the Democracy with 
 our fathers, and it will be with their children. The grand assemblage of the 
 party on the 8th of January of each year will keep fresh and green the memory of 
 the great father of Democracy ; and the name of Jackson can never be uttered 
 without reminding us of his eternal hostility to a great National bank." 
 
 Is it too much to hope that, in view of all these circumstances, the clear-headed 
 business men connected with these banks will look this thing square in the face, 
 and themselves take such action as will dissolve their connection with a system 
 which, to say the least, is to be the subject of the most bitter political strife the 
 country has ever witnessed, except that which culminated in war. Will they not 
 unite with the mass of the people, and say it is time for such a system to end? 
 That it should give way to another which would be open to any and every one, 
 possessed of the tools, and the skill to use them, the same as with any other 
 business ? When the business of banking is to loan money, not to borrow it, 
 there would be no necessity for any such enactments for its regulation, as are 
 now upon the statute books ; nor any longer a pretext for that espoinage and 
 surveillance so offensive to every honorable mind. After the passage of a law 
 enforcing the constitutional prohibition of any state, or any one within the 
 state, to issue bills of credit to circulate as money, the creation of a bank of 
 issue would be impossible, and the absence of any such power will, of course, 
 remove s\ich statutes as have been made to regulate their exercise. 
 
 BALEFUL INFLUENCE OF BANKS OF ISSUE. 
 
 The insidious power of banks of issue to shape and control public opinion 
 has no higher exemplification than that of their own existence under state law, 
 
in the face of the constitutional provision forbidding states to coin money, or 
 emit bills of credit. 
 
 Neither could there be higher evidence of the effect oi that power than is 
 found in the fact that the Supreme Court of the United States decided, that 
 while the State could not emit bills of credit, it could authorize its citizens in 
 bank organizations to do so, a decision having about as much sense in it as that 
 consigning Dred Scott to slavery, and declaring a person of African descent to 
 have no rights that a white man was bound to respect. Both proceeded from the 
 same cause, a vitiated public opinion, created by the overpowering influence of 
 the very iniquity the Court was asked to remove. With the extinction iof 
 slavery has gone the law of the Dred Scott decision; and with the prphibitory tax 
 often per cent, on all state bank circulation, and its consequent disappearance, has 
 gone the power of the state banks ; and with the power will go the ancient and 
 disgraceful precedent itself, whenever the Court has opportunity to review itself. 
 State banks of issue will then be decreed dead, as the Dred Scott one has been. 
 They are of the same family, cunning devices to get the labor of others without 
 consideration, and it is fitting that both he buried by the same high tribunal that 
 warmed them into life. 
 
 The appearance of Chief-Justice Chase on the Supreme Bench settled the 
 Dred Scott business, and will, most likely, settle that of the right of the State 
 banks to issue paper money. It is not difficult to anticipate his judgment, after 
 having, in a state paper, declared that — 
 
 "It has been much questioned by the most eminent statesmen, whether a. cur- 
 rency of bank notes, issued by local institutions under state laws, is not, in fact, 
 prohibited by the Federal Constitution. Such currency comes within the spirit; if 
 not within the letter, of the constitutional prohibition of bills of credit by the 
 states." 
 
 Secretary McCuUoch, in his last report, accepts the situation that the State 
 Banks are dead, and buried in the National Banking system ; and he pleads 
 for the life of these last, on the ground of the Government being bound to keep 
 good faith ( .' ) with the State Banks, which, he says, would never have given up 
 the ghost and gone into the national organization, if they had supposed it to, 
 be a national slaughter house. His main argument for a National Bank circu- 
 lation is, that the necessities of commerce require a paper currency, which can 
 never again be furnished by State Banks. If the Secretary has not exhausted 
 himself in his extraordinary efforts to provide a paper circulation convertible into 
 gold, will it be too much to ask his attention a moment to such paper money as is 
 here proposed, to see whether it might not be even as good as bank notes? 
 
 It is a little out of the regular way, and therefore may not commend itself, it 
 is hoped, however, that the Secretary may not be altogether like a very worthy 
 gentleman, who once represented the old Hartford Protection Insurance Company, 
 in this city. A new agent of the Bank of the United States came from Philadel- 
 phia. Immediately Mr. R., naturally impressed that nothing could be insured 
 except in the regular way, paid his respects, and solicited a share of the risks on the 
 very large property held by the bank. The agent curiously inquired, " What is 
 the capital of your company, Mr. R.?" "One hundred thousand dollars. Sir; 
 all paid in ! " was the quick reply. The agent rested his head a moment in the 
 angle of his thumb and forefinger, and looking up, gently remarked, " Mr. R., 
 the capital of the bank is thirty millions ; do you think it prudent for it to do its 
 own insuring ? " " Good morning, sir," was Mr. R.'s only response, as hft 
 bowed himself out of the presence of his inquiring friend. A great many heads 
 resting not daintily in the angle of the thumb and forefinger, but heavily, and in 
 anguish, upon the hard palm of labor, and in tones as gentle as suffering will 
 permit, would make the same kind of inquiry of the Hon. Secretary McCuUoch, 
 and his friends, the Hon. John Sherman and his associate Jay Cooke, whether they 
 do not think it prudent for the people of thi» great country to do their own 
 underwriting. 
 
3^ 
 
 OOOD OPINION OF FOREICN COUNTRIES DESIRABLE. 
 
 The authority to issue more United States money than it is expected to use, is 
 to protect the Government from any combination of influences to embarrass the 
 prompt redemption of the whole of the first series of 5-20's, which the Secretary 
 says cannot be undertaken, unless there is money enough to take them all up. 
 With this provision there would be no occasion for its use ; without it, there 
 might be. And it is beneath the dignity ot the Government to put itself into a 
 position dependent upon the caprice of any set of men to enable it to accomplish 
 any of its purposes. 
 
 There can be but little doubt that a much larger proportion of 5-20's would 
 be exchanged immediately for the bonds ordered than is estimated, especially so 
 with the 5 per cents. These being subject to taxation as other property does not 
 effect them in the hands of European holders, except in case of the General Gov- 
 ernment taxing all its securities, which would be regarded as a remote probability. 
 
 The probabilities of the immediate conversion of a large amount of the 5-2o's 
 are increased by the feature that the last of the series sold would be the first upon 
 which the option was to be exercised. 
 
 The character of the 3-65 per cents, will commend it to a part of the European 
 mind in preference to the 5 per cents., and so many of them as were exchanged 
 would be a saving of i J per cent, to the Government, besides establishing a uni- 
 form security, into which all the debt of the United States might be converted, 
 in case a future Congress thought it desirable to enlarge the issue. 
 
 It may be said that the taxable feature of the bond discriminates in favor of the 
 foreign bond-holder. It is only so in appearance. Whatever be the market price 
 ot the bond in Europe will be nearly the same here ; the difference will only be 
 the cost of transmission and the usual brokerage. It is, therefore, the policy of 
 the country, as well as its duty, to have a careful regard for the good opinion of 
 persons abroad. When they see a settled policy in this country established with 
 no regard to abating anything from what is due them, their appreciation of the 
 character of American securities will be very different from that indicated by 
 Commissioner Wells' report. He gives the market value of thirty different 
 classes of bonds of Governments in North and South America, Europe, Asia and 
 Africa, showing — 
 
 United States six per cent, to be from 7o| to 70J 
 
 Moors, in, Africa, five per cent 97 to 99 
 
 And Great Britain 94<^ 
 
 Notwithstanding the debt of Great Britain is $4,003,794,235.00. Well may 
 Commissioner Wells add : " If, in the above list, the position ot American securi- 
 ties is one not flattering to the national credit, it is evident, from the data above 
 submitted, that the cause must be referred to some other than lack of national 
 solvency." That cause must have been pretty clear to the Commissioner,' but as 
 his report was to the Hon. Secretary of the Treasury, a due respect to his Superior 
 restrained a more decided expression. 
 
 The relative position of American securities abroad will not be likely to im- 
 prove under the efforts being made by the Secretary and his friend Sherman, to 
 indissolubly connect them with the fortunes of an institution whose extinction is 
 sought by a very large minority (to say the least) of the people ; rather than tinker 
 with the bonds, or change their form for such an object, or for any other purpose 
 than one that is likely to disarm opposition and meet with general accord ; it would 
 be far better to let them alone, and go to no more expense in manufacuring new 
 ones. 
 
 To say that such a measure as here proposed is just what is needed would be 
 mere presumption. The article has been written in no such egotistical spirit. Its 
 object, as stated in the beginning, being only to aid in a careful examination of 
 the subject. However small may be its contribution to that end, it will be the 
 measure of its expectation. 
 
34 
 
 It will be observed that the plan of a Government currency described did not 
 contemplate redemption, but that the U. S. notes, declared by the law of their 
 creation to be money, should, as expressly authorized by the same law, " be re-issued 
 from time to time as the exigencies of the public interest shall require." The su- 
 preme law said of each and every piece of paper thus made into money, by the 
 great seal of its power, " This is a dollar, and a legal tender" — yet the man who is 
 just now unfortunately charged with the execution of that law repeated at Mans- 
 field what he has been saying for the last ten years : 
 
 " What right have we, as a nation, or has any bank or individual, to force into 
 circulation as money its note, upon which it pays no interest ? Why ought not 
 any one who issues a promise to pay on demand be made to pay it when de- 
 manded, or pay interest thereafter ? What right has he, in law or justice, to insist 
 upon maintaining in circulation his note which he refuses to pay according to his 
 promise, and which he refuses to receive in payment of a note bearing interest? 
 ******** 
 
 "A large class of people believe that paper can be, and ought to he, made into 
 money, without any promise or hope of redemption ; that a note should be printed : 
 
 • THIS IS A DOLLAR,' 
 
 And be made a legal tender. 
 
 " I regard this as a mild form of lunacy, and have no disposition to debate with 
 men who indulge in such delusions. They have prevailed to some extent at 
 different times in all countries, but their life has been brief, and they have ever 
 shared the fate of other popular delusions.'' 
 
 It is a pity that Mr. Sherman had not exhibited ten years ago, when this article 
 was published, the "mild form of lunacy," which now prevails with '"a large 
 class of people," instead of the malignant and destructive type that afflicted him, 
 and through him has afflicted the whole country. 
 
 UNITED STATES NOTES PART OF THE GOVERNMENT CURRENCY. 
 
 It will be observed that in the preceding remarks no reference has been made 
 to greenbacks, and that United States notes have not been spoken of as represent- 
 ing coin, or anything but themselves. They have been called only United States 
 money, because in the United States they are money, with all the attributes of 
 money, and outside of the jurisdiction of the United States are not. Hence, in 
 speaking of a new issue it is suggested that they be made in the place provided 
 for the emission of all other measures of value. The business of' preparing the 
 plates and preserving them is mechanical, and has no relation to the business of 
 the Treasury Department proper. The work can be better and more economi- 
 cally done under the supervision of those whose business and education peculiarly 
 fit them for such service. Besides, these notes, being made away from and inde- 
 pendent of any immediate supervision of the Secretary, it would afford an additional 
 safeguard, and be in harmony with the whole system of checks sought to be ob- 
 served in every department of the Government ; and it would likewise contribute 
 to the efficiency of the department in relieving the Secretary of a burden of care 
 and detail not properly belonging to his position. The United States notes have 
 all the attributes of coin, are treated as coin, and should be prepared at the mint, 
 with all the care, explicitness of detail, and surrounded with all the .safeguards and 
 protection aiforded to any other description of coinage. 
 
 What is coin ? 
 
 Webster says, " It is that which serves for payment or recompense." 
 
 And he defines the verb " to coin " to mean " To stamp and convert into 
 money ; " and the word " coinage," " The act or art of converting into money ; 
 the act or process of forming or producing." Other definitions are given, but none 
 
35 
 
 say other than that it is the conversion that makes the coin, and not the material used. 
 Coin, therefore, is only the measure of value established by the sovereign power, 
 regardless of the material upon vrhich the impress is made. In this country that 
 impress has only been made upon the precious metals, for which reason the mind 
 has limited the power to coin money to its impress upon these metals alone. 
 
 The universal use of gold and silver, as measures of value, causes serious era- 
 barassment to the foreign trade of a nation using any other material, until the 
 difference between the arbitrary standard and the one recognized by mankind shall 
 be clearly defined. For instance, the first emission of United States money in 
 large quantities seriously disturbed all foreign trade, because no calculation could 
 be made about the relative value of the two descriptions of money ; but when 
 that difference became measurably fixed, the embarassment ceased, for everything 
 accommodated itself to it. 
 
 This country can make a standard of value for itself, but it ceases to be such 
 standard beyond the limits of its authority. The present paper coinage is not the 
 first instance of the making of an arbitrary standard in this country, and its effect 
 then was just what it is now. The dollar then made contained nine per cent, less 
 of pure gold than the dollar made before the law was passed, and yet the law said 
 that the last should be accounted as much as the first, and so it was among our- 
 selves, but for foreign payments we had to send the nine cents as well as the dollar. 
 
 This is what is termed the premium of sterling exchange. In what does this 
 differ from the present state of things, except that that difference of exchange is 
 greater.' Will anyone say that this introduction of nine per cent, alloy made the 
 dollar any the less a coin, or instead ot nine per cent, it had been forty-nine per 
 cent., would it or would it not have been a dollar still, and a dollar in coin, too. 
 In that event the old coin would disappear in the presence of the new, the same. 
 as the gold dollar has disappeared in the presence of the paper dollar, simply- 
 •because the former was worth more than the latter for other uses, and the latter 
 would be left the only measure of value, the only circulating medium. 
 
 Is a cent any the less a cent because it is now made of nickle instead of copper? 
 and would a dollar be any the less a dollar from any degree of debasement, even 
 to the making it of brass instead of gold? What surprise should there be then 
 at the suggestion that it would be just as much a dollar if made of paper.as of a 
 base metal, as little recognized by the balance of the world ? 
 
 But the gold dollar, it is said, is intrinsically worth the money. How ? Worth 
 what kind of dollar? It is not worth what everyone called a dollar before. It is 
 worth just what is impressed on its face, and nothing more and nothing less, and 
 worth that because it is there impressed by the sovereign power ; and this is just 
 what an impress imparts to paper. The paper dollar receives its value from the 
 power that created it j it is the coinage of the public faith, and its instrinsic value- 
 lies in public virtue. These, public faith and public virtue, are no vain abstractions. 
 
 The Constitution ot the United States, Article i. Section 8, reads : " The 
 Congress shall have power to coin money, regulate the value thereof, and of 
 foreign coin, and fix the standard of weights and measures." 
 
 The language here used vesting Congress with this prerogative, this extraordi- 
 nary power, neither defines nor limits the material out of which the standards 
 might be made by which values or quantities shall be measured; that was left 
 entirely to the wisdom of the Congress exercising the power. 
 
 The power granted was to coin money, and whatever money was thus coined 
 became the measure of values, the same as whatever standards were made under 
 the authority of the last clause of the section became the weights and measures 
 of the country. The close association of these two subjects, the power of coining- 
 money and of establishing weights and measures, show that both were regarded as 
 nothing more than the power to create certain arbitrary measures, to which all 
 might refer as a common standard. The framers of the Constitution made that. 
 instrument for all time, and, in addition to providing for all its own araendlnents, 
 wisely defined the several powers granted in. such manner, that much was left ta- 
 the wise discretion of the people, for whose guidance and protection it was estab- 
 
36 
 
 lished, and to whose wisdom and care it was confided. Each generation would 
 best know what was best for itself, and each Congress might be expected to 
 exercise the powers granted, and within the limits ot the grant, in such manner as 
 the exigencies of the time demanded. What has been this exercise ? 
 By Act, April 2, 1792, Section 9, the weights of gold coin were: 
 
 Pure gold. Standard gold. 
 
 Eagle, , 247^ grains, or 270 grains 
 
 Half Eagle, 123I " i35 " 
 
 Quarter Eagle, 61^ " Sji " 
 
 And the standard to be eleven parts weight of fine gold to one part weight 
 of alloy, or 11-12 to be pure gold, and i-ia alloy. 
 
 And the alloy to consist of silver and copper, not, however, to exceed one-half 
 silver, as may be convenient to be determined by the officers of the mint, and 
 reported. 
 
 In the monetary troubles produced by the efforts of the friends of the United 
 States Banlt to fasten the system on the country, in defiance of the popular will, 
 an exigency arose, causing the passage of the Act of June 28, 1834, by which the 
 weights of gold coin were readjusted and established as follows : 
 
 Pure gold. Standard gold. 
 
 Eagle,... 232 grains 258 grains 
 
 Half Eagle, 116 " 129 « 
 
 Quarter Eagle, 58 " „,. 64J " 
 
 Again, by Act of June 18, 1S37, these last weights were affirmed, and it was 
 further declared (Sec. 8), gold and silver coin shall hereafter be 900 parts, by 
 weight, pure, and 100 parts alloy. 
 
 And -Section 9 says, that for all sums whatever, the eagle shall be a legal tender 
 of payment for $10, the half eagle for $5, and the quarter eagle for $2.50. 
 
 And Section 12 does what should be done with any law for an additional issuing 
 of paper money, particularly describe the devices to be placed thereon, that the 
 Government paper may no longer be made a picture gallery, to gratify individual 
 vanity, at the expense of National pride. 
 
 " Tha't on the coin struck at the mint, there shall be the following devices and 
 legends: Upon one side of each of said coins there shall be an impression 
 emblematic of Liberty, with an inscription of Liberty, and the year of coinage ; 
 and on the reverse there shall be the representation of an Eagle, with the in- 
 scription, United States of America, and a designation of the value of the coin." 
 
 Wherein do these legal tender acts of 1834 and 1837, declaring that 232 grains 
 of pure gold shall be received as equal to 247J grains, differ from the legal tender 
 act of February 25, 1862 ? And upon what principle can those who recognize 
 the former object to the latter ? Public exigency seemed to require the one, and 
 a still more overpowering necessity the other. 
 
 It is true, this last Act does not declare that an abstraction of gold, makes the 
 amount no less than it was before. Yet that is no discredit. It uses paper for 
 the accomplishment of its ends. 
 
 Is it any more difficult to conceive of a bit of paper, marked ten dollars, being 
 worth 232 grains of pure gold, than it is that 232 grains is worth as much as 247J 
 grains ? Indfeed, is it not easier when the, mighty power of ttie whole people says ; 
 
 " It shall be received as ten dollars in payment of all taxes, internal duties, 
 debts, and demands of every kind due to the United States, except duties on 
 imports, and shall also be lawful money, and a legal tender in payment of all 
 debts, public and private, except duties on imports, and interest on the public 
 debt." Anything clothed with such attributes is money, deriving its value from 
 the power vested in Congress to coin money, and regulate the value thereof. 
 Whether Congress acted wisely or unwisely it is now too late to consider. It is 
 enough to know that it did exercise the power, not only once, but again and again, 
 until now this description of money is all that we have in our domestic transactions. 
 This money, unfortunately, is not dirrent beyond the limits ot our jurisdiction. It 
 
37 
 
 should be our purpose to make it so at the earliest moment practicable. Until 
 then it is useful in our foreign trade to the same extent as any other coinage 
 below the general standard of the world, useful for just what it will bring in 
 the market for sterling gold. 
 
 If these views of our paper money are correct, or even approximate to truth, 
 how happens, it may be asked, that by almost universal consent the United States 
 notes are regarded as representing so much gold, and as a part of the public debt? 
 It arises from the manner and form of their utterance. The law made them 
 money, but it left to the discretion of the Secretary of the Treasury the manner 
 of its issue, and he no doubt passed the exercise of that discretion over to gentle- 
 men of high repute in the working of financial machinery — bankers in whom he 
 had confidence — for it was impossible for even a man of such distinguished ability 
 as the head of the Treasury at that time, buried as he was under a load of other 
 cares that would have crushed an ordinary mind, to give any attention to such 
 details. Indeed, this fact is evident in the work produced, for Mr. Chase's 
 character forbids the idea that he ordered the notes issued in such manner as they 
 were, with his likeness one of the prominent devices, or that he was even aware 
 of it until too late to order otherwise. 
 
 Unfortunately for the country, the parties to whom this discretion was given 
 could not, by reason of education and habit, conceive of paper money except as 
 a bank note. Hence, they uttered it in the exact similitude of a bank note : 
 
 " The United States promise to pay to the bearer ten dollars, Washington, 
 March lo, 1862, payable at the Treasury of the United States at New York." 
 
 "J. E. Chittenden, "F. E. Spinner, 
 
 Register of Treasury^' Treasurer?'' 
 
 Still more unfortunate was it that the successor of Mr. Chase, at such a time 
 (for Mr. Fessenden's occupancy was understood to be a mere interregnum) should 
 have been one who had spent a quarter of a century behind the counter, or in 
 the cashier's room of a country branch bank, and whose ideas were shaped by 
 the influences that had so long surrounded him. He has always spoken of 
 United States paper money as notes of banks in a state of suspension, and pressed 
 upon the country the necessity of specie payments. Under these circumstances 
 it is therefore not surprising that every one has believed them to be merely the 
 representation of so much gold coin. 
 
 There was no necessity of the notes being signed Chittenden and Spinner in the 
 usual place of the signature of the president and cashier of a bank. The law 
 never intended to pay the bearer at the Treasury. There was nothing in the 
 Treasury to pay them with, except notes of the same kind, as Congress well 
 knew. These men, not the law, made the note promise on its face to pay the 
 bearer at the Treasury ten dollars, and on its back declare this note is a legal 
 tender for all debts, public and private — a legal tender for the payment of itself. 
 Could any man, not daft with the idea that bank notes are money, have committed 
 such a blunder, and dragged this great country into such a pitiful exhibition of 
 itself.' And could any one but such now avail themselves of the very device they 
 made, and cry out, with Mr. Greeley, that the very form of the note is a sham, 
 a lying promise, a burning disgrace, until the promise is redeemed ? 
 
 No such dishonor has ever been said to attach to the fifty millions" of fractional 
 currency. Why ? Both are made by the same law, possessing the same qualities, 
 and for the same purposes. Why has not the same indignation been directed 
 against them ? Because, in the utterance of those, the Secretary gave more per- 
 sonal attention, and they bear no lying promise. It simply says : 
 
 "Act, March 3d, 1863. United States Fractional Currency. FIFTY CENTS. 
 Furnished by Assistant Treasurers and Designated Depositors of the United States. 
 Receivable for all United States Stamps." 
 
 Why was not this simple declaration of power alone impressed upon all the 
 Jarge denominations, ordered by the same law? If it could make fifty cents, 
 could it not hare made fifty dollars as well? There then would have been no 
 
38 
 
 necessity to have labored to disabuse any mind of its impressions about tlie 
 " irredeemable currency," for all would have recognized it as money from the start. 
 
 In creating the lawful money here described, the law of February 15, i86z, also 
 provided, first, the means by which its value would be maintained on an equality 
 with coin ; and, second, a depository in which the people could deposit their 
 savings. To both the faith of the Government was pledged j to one in language 
 as explicit as that given for the payment of its bonds, and with the other, the 
 pledge, though not so explicitly declared, was none the less binding, for it *vas in 
 the interests of the whole people. 
 
 The pledge for the first, at the close of Section i, reads: "United States notes 
 shall be received the same as coin, af their par value, in payment for any loans that 
 may be hereafter negotiated or sold by the Secretary of the Treasury." It was 
 repudiated within a month after the National Bank Act passed. It was done by 
 a few lines at the close of Section 3, of the Act of March 3, 1863, in the same 
 clandestine way that silver was stolen out of the currency. Both offenses were 
 in the interests of the banks and money power. The reason why no outcry was 
 raised when this crime of repudiation became known, was that the banks then 
 had no interest in correcting it, as they now have in remonetizing silver. 
 
 The other pledge is described in Section 4. It gave the people the right to 
 deposit their savings in the Treasury, and draw interest thereon, not to exceed 
 five per cent. ; and to withdraw the same on ten days notice, a notice which Secre- 
 tary Chase waived, and thereby caused the deposit to be .subject to call. His 
 urgent appeals to Congress caused the limit originally placed upon it in the interest 
 of the banks to be raised from time to time, until it reached one hundred and fifty 
 million dollars. He justly described this right to thus use the vaults of the 
 Treasury as the "The Savings Bank of the People." The Section concluded 
 with the pro'viso, " that the interest on all such deposits shall cease and determine 
 at the pleasure of the Secretary of the Treasury." Under this authority. Secre- 
 tary McCulloch closed the Savings Bank as rapidly as possible, thus converting 
 $150,000,000 of debt bearing a low interest in lawful money into six per cent. gold, 
 bonds, and thus, not only trampled upon the rights of the people, but robbed 
 them. The further consequences of this second Act of repudiation in the interest 
 of the banks may be seen by the following tables (prepared as stated on page 28,) 
 showing the prpbable result of the operation of Secretary Chase's " Savings Bank 
 of the People," had it been permitted to continue in existence by the power that 
 controlled Senator Sherman and Secretary McCulloch, and a law been passed in 
 December, i%6s, to Ttqmre all hank notes to be retired on or before July i, 1867, 
 and the laws creating the depository been amended only to such slight degree as 
 would imperatively require every Secretary of the Treasury to execute it in the 
 manner Mr. Chase had done in the wise exercise of the extraordinary discretion it 
 had left with the Secretary. 
 The only amendments necessary were : — 
 
 First. That all deposits be subject to call, and that the limit of $150,000.00 be 
 removed, and the people permitted to deposit all they desired. 
 
 Second. That the option of redemption by the Government first attach to 
 certificates bearing the highest rate of interest, and to the highest number or last 
 sold of each rate or class. 
 
39 
 
 Third. That the existing proportion of fifty to one hundred and fifty should be 
 preserved, by placing in the reserve such sums in lawful money or coin as would 
 at all times cause the reserve to be equal to one third of the amount of certificates 
 outstanding. 
 
 Fourth. Authorize the Secretary of the Treasury to issue certificates i bearing 
 3.65 per cent, interest, payable in thirty years, and after that at the option of the 
 Government, principal as well as interest in gold of existing standard of fineness, 
 and also give the holder the option ot converting them, on demand, but into 
 lawful money only. 
 
 To facilitate the calculations, and relieve the mind from the confusion gen- 
 erally incident to the consideiation of millions, the amounts in Table No. 3 are 
 all stated in dollars and cents, the dollars being millions, and the cents tens and 
 hundreds of thousands of dollars. The coin receipts are those from customs in 
 Table No. 1, and the lawful money is found in the column of receipts from all 
 other sources, after deducting therefrom the amounts shown in the column of bank 
 taxes, for with the withdrawal of the privilege of issue no revenue would be derived 
 from that source. 
 
 The fourth amendment was not necessary for the successful operation ot the 
 law as it stood ; but as Table No. 3 was made out on such assumption, the modifi- 
 cation is here named. Following that table is another, showing what the amount 
 of debt would have been had there been no other than the three first modifications, 
 which would have been required only to give assurance to the people that they 
 would not be subject to the caprice of some Secretary who might use his great 
 office to enrich his friends, or lay the foundations for the establishment of a great 
 banking house in the money metropolis of the world, into which he might be in- 
 corporated, on his removal from the office he had abused. 
 
 It will be seen, therefore, that the only changes needed were the removal of 
 those features which had been introduced solely to protect and foster the privileges 
 of the banks of issue, and that with their extinction would go all such iniquitous 
 class legislation. But for the existence of bank issue there could not have been any 
 such legislation, nor any subsidies granted. The cost of both to the people could 
 not have been better demonstrated than by showing what the situation of the 
 country would have been without it, and what it is now with it. 
 
 The reader will examine Table No. 3 in connection with the synopsis on pages 
 37 and 28 of a similar table, giving the results of exactly similar calculations for 
 each year from 1868 to 1875, and published in the Gazette teB\years agoj bearing 
 in mind that the one as well as the other is the work of the past, and not of the 
 present. In the light of events that have since taken place, its , publication again is 
 only useful to give some idea what the continuance of the system will likely cost 
 in the future. In speaking of this cost no refereuce has been made to the misery 
 and suffering the "Savings Bank" might have saved the hundreds of thousands of 
 industrious, frugal people who have been robbed by the failures ot savjngs banks. 
 That is as important to consider as the saving ot dollars to the public Treasury. 
 There is no. measuring the extent of the demoraliza|Ion induced Iby the wide 
 spread ruin that has come from the destruction of " The Savings Bank of the 
 People." 
 
40 
 
 TABLE, No. 1. 
 
 Official Bepokts of Eeceipts and Expenditures, and of the 
 Situation on July 1, 1876, 
 
 Of receipts and expenditures, and of amount of taxes paid by National 
 Banks for each year, from July 1, 1860, to July 1, 1876. The Bank tax, the 
 law says, was imposed to pay for engraving notes, and other expenses inci- 
 dent to the system. These expenses, although very large, and charged to 
 general contingent expenses, have not been considered, although the tax 
 itself is deducted from the receipts from other sources, in stating the law- 
 ful money received in table No. 3 of calculations for each year. This 
 table is compiled from the Annual Reports of the Secretary of the Treasury 
 for each of the years named. 
 
 RECEIPTS Taxes paid by 
 
 Date, Expenditures. From Customs. From other sources. National Banks 
 
 1861 62,616,055.78 39,582,125.64 1,894,173,85 
 
 1862 456,379,896 81 49,056,397.62 2,862,863.47 
 
 1863 694,004,575.56 69,059,642.40 43,035 303.11 
 
 1864 811,283,679.14 102.316,152.99 141,096,818.21 167,310.45 
 
 1865 ,1,217,704,19928 84,928,260.60 237,102,897,59 1,954,029,00 
 
 1866 385,954,731.43 179,046,651.58 340,902,912.80 5,146,735.81 
 
 1867 202,947,733.87 176,417,810.88 286,428,869.04 5,840,698.21 
 
 1868 ,229,915,088.11 164,46459956 211,969,854.25 5,817,268.18 
 
 1869 190,496,354.95 180,048.42663 177,139,829.46 5,884,888.90 
 
 1870 164,421,507.15 194,538,37444 201,421,459.43 5,940,473.70 
 
 1871 157,583,827.58 206,270,408.05 168,160,69689 6,175,15457 
 
 1872 153,201,856.19 216,370,286.77 148,323,943.14 6,703,910.67 
 
 1873 180,488,636.90 188,089,522.70 134,088,151.08 7,004,646.85 
 
 1874 194,118,985.00 163,103,833.69 136,837,257.15 7,083,395.93 
 
 1875 171,529,848.27 157,167,722.35 126,853,049.06 7,268,379,16 
 
 1876 164,857,813.36 148,071,984.61 142,594,600.15 7,328,573:29 
 
 Seceetaey Moemll's Annual Eeport foe 1876, Page 8. 
 
 Interest paid on the public debt and Pacific 
 
 Railway Bonds $100,243,271.43 
 
 Public debt bearing interest. 1,714,654,787,76 
 
 Lawful money— Legal Tenders 369,772,284.00 
 
 " " , Fractional Currency 34,446,595.39 404,218,879,39 
 
 Special deposits for which certificates were 
 
 issued payable in Coin ., 28,681,400.00 
 
 " " Lawful Money 32.840,000.00 61,521,400.00 
 
 Interest due^pd unpaid 38,514,004.54 38,514,004.54 
 
 ' Totals 100,035,404.54 2,218,909,071.69 
 
 Nominal amoujit of Casb in Treasury June 
 
 30,1876 ,: 119,469,726,70 
 
 Less above amount of special deposits and 
 
 interest due.,.; 100,035,40454 
 
 Balance in Treasury July 1, 1876 119,434,322.16 
 
41 
 TABLE, No. 2. 
 
 Offcial Keport of Public Debt and Amount of Currency in 1865. 
 
 The public debt reached its highest point on the 31st of August, 1865, 
 on which day Secretary MoCuUoch says, "Every requisition was satisfied, and 
 every matured obligation paid and cancelled." Tha letters A, B, C, etc., 
 used below, are for convenient reference. 
 
 PRINCIPAL AND INTBREST PAYABLE IN COIN. 
 
 Year payable. 
 
 Rate of interest. 
 
 Amount. Totals. 
 
 A Past due 
 
 5 per cent 
 
 760,000.19 
 
 B 
 
 6 
 
 743,020.19 
 
 C 1867 
 
 6 
 
 9,415,250.00 
 
 D 1868 
 
 6 
 
 8,908,341.80 
 
 E 1871 
 
 5 
 
 7,022,000.00 
 
 F. 1874 
 
 5 
 
 20,000,000.00 
 
 G 1880 
 
 5 
 
 18,415,000.00 
 
 H 1881 
 
 6 
 
 241,779,600.00 
 
 I 1904 
 
 5 Redeemable 1874 
 
 172,770,000.00 
 
 ■■ $479,813,212.18 
 
 INTEREST PAYABLE IN COIN, PRINCIPAL IN LAWFUL MONET. 
 
 1882 to 1885 6 Eedeemeble 1867-1870 630,000,000.00 
 
 PEINOIPAL AND INTEREST PAYABLE IN LAWFUL MONEY. 
 
 K 
 
 Past due None 2,111,000.00 
 
 L 
 
 Ten days' notice 5 People's Deposit 107,148,713.16 
 
 M 
 
 1865 6 Legal Tenders 33,954,230.00 
 
 N 
 
 1866 6 85,093,000.00 
 
 
 
 1S67 and 1868 6 Legal Tenders 217,024,160.00 
 
 P 
 
 1867 and 1868 7 3-10 830,000,000.00 
 
 s 
 
 1895 6 Pacific Rail Roads 1,258,00000 1,276,599,103,16 
 
 
 Total debt 2,386,402,315.34 
 
 
 Legal Tenders , ' 433,160.569.00 
 
 
 Fractional currency 26,344,742.51 
 
 Lawful money 459,505,311.51 
 The Cueeenct. — With regard to the currency, the Comptroller reports 
 [page 63] that "the amount of legal tender notes and fractional currency, 
 issued and outstanding on Oct. 1st, 1865, was $704,584,568.00;" and Secretary 
 McCuUoch says, "a very large portion of it was in circulation as currency." 
 The Comptroller also reports "National Bank Notes in actual circulation, 
 Oct. 1st, 1865, $171,321,903.00, and State Bank Notes in circulation same date, 
 per returns to commissioner of internal revenue, $78,867,575.00," making 
 the total Bank Notes in circulation $250,159,478.00; and the grand total of 
 all currency in actual circulation, Oct. 1st, 1865, $955,774,136.00. 
 
42 
 
 TABLE, No. 3, 
 
 Showing the result of the operations of the "Savings Bank " each year. 
 The receipts and expenditures for the first period are those for ten months 
 to June 30th, 1866. The receipts and expenditures are those shown in first 
 table. The letters, A, B, C, indicate the debt as described by same letters in 
 first table. The only data not had from official reports is the amount of 
 the estimated additional deposits each year at the rate of interest named, 
 and the rate at which the surplus gold could be sold. The rate for 1865, '66, 
 67 and '68 is the actual average for those years. 
 
 Debt, Rate. Interest. Coin. Money. 
 
 2.H none August 31, 1865, 
 
 218.97 5 10.95 Balance in Treasury, 30.00 58.21 
 
 890.84 6 53.45 64.40 Revenue, 147.71 257.97 
 
 141.10 5 7.05 U. S. notes substituted 
 
 303.38 6 18.20 for bank notes .. 100.00 
 
 830.00 7 3-10 60.59 85.84 Deposit 22.85 
 
 2,386.40 177,71 439 03 
 
 Old debt paid, A 76 Expenditures, 253.63 
 
 " " B 74 
 
 " " K 2.11 185.40 
 
 " " M 33.95 Interest 64.40 85.84 
 
 " N" 85.00 
 
 '• part of O 90.00 212.65 113-31 99.56 
 
 Less New Deposit 22.85 Gold at 40 9-10 prem. 100.00 140.90 
 
 189.80 Net reduction 189.80 13.31 240.46 
 
 Debt paid 1.50 211.15 
 
 i 196.60 
 
 June 30, 1866, 
 
 218.21 5 10.91 Balance, 11.81 29.31 
 
 890.10 6 53.40 64.31 Revenue, 176.42 281.28 
 
 130.00 5 6.59 U. S. notes, 150.00 
 
 128.29 6 7.69 Deposits, 90.00 
 
 830.00 7 3-10 60.59 74.78 
 
 — — -— _ Totals 188.23 550.59 
 
 2,196.b0 Expenditures, 202.95 
 
 Debt paid C 9.42 
 
 Balance of O 127.03 347 64 
 
 Part of P 260.00 396.45 Interests, 64.31 74 78 
 
 Less Deposit 90.00 
 
 ■^"^"^ 123 9*2 979 Rfi 
 
 306.45 Reduction 306.45 Gold at 41 9-10 prem,. 100.00 14l!90 
 
 1800.15 23.92 414.76 
 
 Debt paid, 9.42 387.03 
 
 Balance 14.50 27.73 
 
Date. 
 
 218.21 
 880.68 
 220.00 
 1.26 
 570.00 
 
 1890.15 
 
 Rate. Interest. 
 
 6 
 6 
 6 
 6 
 7 3-10 
 
 10.91 
 
 52.84 
 
 11.00 
 
 .08 
 
 41.61 
 
 63.75 
 
 52.69 
 
 Debt paid, 
 
 Paid of P 150.00 
 
 Less Deposit, 90.00 
 
 60.00 Reduction 60.00 
 
 1830.15 
 
 218.21 5 10.91 
 
 880.68 6 52.84 63.75 
 
 310.00 5 15.50 
 
 1.26 6 .08 
 
 420.00 7 3-10 30.66 46.24 
 
 1830.15 
 
 Debt paid, 
 
 Part of P 170.00 
 
 Less Deposit 90.00 
 
 80.00 Reduction 80.00 
 
 1760.15 
 
 218.21 
 880.68 
 400.00 
 1.26 
 250.00 
 
 5 
 6 
 6 
 6 
 7 3-10 
 
 10.91 
 52.84 
 20.00 
 .08 
 18.25 
 
 63.75 
 
 38.33 
 
 1750.15 
 
 Debt paid 
 Balance of P 
 Less deposit 
 
 160.00 Reduction 
 
 250.00 
 90.00 
 
 160.00 
 
 1690.15 
 
 43 
 
 Coin. Money 
 June 30, 1867. 
 
 Balance 14.50 27.73 
 
 Revenue 164.46 206,12 
 
 Deposit 90.00 
 
 178-.96 323.85 
 
 Expenditures 229.92 
 
 93.93 
 
 Interest 63.75 52.69 
 
 115.21 41.24 
 
 Gold at 39 9-10 prem. 100.00 139.90 
 
 15.21 181.14 
 
 Debt paid 150.00 
 
 June 30, 1868, 
 
 Balance 15,21 31.14 
 
 Revenue 180.05 171.31 
 
 Deposit 90.00 
 
 195.26 292.45 
 
 Expenditures 190.50 
 
 101.95 
 
 Interest 63.75 46.24 
 
 131.51 55.71 
 
 Gold sold at 30 prem... 110.00 143.00 
 
 21.50 198.71 
 
 Debt paid 170.00 
 
 June 30, 1869, 
 
 Balance 21.51 2871 
 
 Revenue 194.53 195.54 
 
 Deposit 90.00 
 
 216.04 314.25 
 
 Expenditures 164.42 
 
 149.83 
 
 Interest .63.75 39.33 
 
 152.29 110.50 
 
 Gold sold at 20 prem.... 140.00 168.00 
 
 12.29 278.50 
 
 t)ebtpaid 250.00 
 
 Balance, 12.29 28.50 
 
Debt. 
 
 Rate, Interest. 
 
 2X8,21 5 10.90 
 
 880,68 6 52,84 63,75 
 
 490,00 5 24,50 
 
 1,26 6 .08 24.58 
 
 1590.15 
 
 Debt paid. 
 Part of 
 
 D 8,91 
 J 240,00 
 
 Total 248.91 
 Less Deposit 120,00 
 
 128.91 Reduction 128.61 
 
 1461,24 
 
 44 
 
 Coin. Money. 
 
 June 30, 1870, 
 
 Balance 12.29 28.50 
 
 Revenue 206.27 162,22 
 
 Deposit, 5 pc.. 40,00 
 
 " 4% 20,00.... 
 
 " 4 20.00. . . . 
 
 " 3 65-00 40.00.... lao.OO 
 
 218,56 310,72 
 Expenditures ^ 157.58 
 
 153,14 
 Interest 63,75 24.58 
 
 154.81 128.56 
 Gold sold at 10 prem. . . . 130.00 143.00 
 
 24,81 271.56 
 Debt paid 8,91 240.00 
 
 218.21 
 
 5 10.91 
 
 631.77 
 
 6 37.91 
 
 40.00 
 
 3 65-100 1,46 50.28 
 
 530.00 
 
 5 26,50 
 
 20.00 
 
 4U .90 
 
 20.00 
 
 4 -80 
 
 1.26 
 
 6 .08 28.28 
 
 1461.24 
 
 
 
 Debt paid, 
 
 
 " " E 7.02 
 
 
 Part of G 330.00 
 
 Total 337.02 
 Less Deposit 200.00 
 
 137.02 
 
 Reduction 137.02 
 
 1324.22 
 
 
 211.19 
 
 5 10.56 
 
 301,77 
 
 6 18.11 
 
 140-00 
 
 3 65-100 5.11 33.78 
 
 630,00 
 
 5 26,50 
 
 70.00 
 
 m 3.15 
 
 70.00 
 
 4 2.80 
 
 1.26 
 
 6 .08 32.53 
 
 1324.22 
 
 Debt paid, 
 Balance of J 60,00 
 5 pc. Deposit 160,00 
 
 220,00 
 300,00 
 
 80,00 
 
 Deposit 
 Addition 
 
 80,00 
 
 June 30, 1871, 
 
 Balance 15.90 
 
 Revenue 216.37 
 
 Deposit, 41^, 50.00.. 
 t 50.00.. 
 
 " 3 65-100 100.00.. 
 
 232.27 
 Expenditures 
 
 Interest 50.28 
 
 181,99 
 Gold sold at 5 prem 160.00 
 
 21 99 
 Debt paid 7.02 
 
 June 30, 1872, 
 
 Balance 14.97 
 
 Revenue 188.09 
 
 Deposit, A}4, 50.00.. 
 
 " 4 50.00.. 
 
 " 3 65-100 200,00.. 
 
 203.06 
 Expenditures 
 
 Interest 33.78 
 
 169.28 
 Debt paid 
 
 Balance 169.28 
 
 31.56 
 142J5 
 
 200.00 
 
 373.71 
 153.20 
 
 220.51 
 
 28.28 
 
 192.23 
 168,00 
 
 360.23 
 330.00 
 
 30.23 
 127.38 
 
 300.00 
 
 457.61 
 180.49 
 
 277.12 
 32.53 
 
 244.59 
 220.00 
 
 24.59 
 
 1404.22 
 
45 
 
 Debt. Rate. Interest. Coin. Money 
 
 211.19 5 10.56 June 30, 1873, 
 
 241.77 6 14.51 Balance 169.28 24.5'9 
 
 340.00 3 65-100 12.41 37.48 Eevenue 163.10 129.83 
 
 370.00 5 18.50 Deposit, 4)^ 75.00. 
 
 120.00 4K 5.40 " 4 75.00.. 
 
 120.00 4 •. 4.80 " 3 65-100 200.00. . 350.00 
 
 1.26 6 .08 28.78 
 
 . 332.38 504.42 
 
 1404.22 Expenditures 194.12 
 
 Debt paid, F I 192.77 
 
 5po. Deposit 250.00 310.30 
 
 Interest 37.48 28.78 
 
 442.77 
 
 Less Deposit 350.00 294.90 281.52 
 
 ■ Debt paid 192,77 250.00 
 
 92.77 Reduction 92.77 
 
 1311.45 
 
 18.42 5 .92 June 30, 1874, 
 
 241.77 6 14.51 Balance 102.13 31.52 
 
 540.00 3 65-00 19.71 35.14 Revepue 157.17 118.59 
 
 120.00 5 6.00 Deposit 260.00 
 
 Wo.OO 43^ 8.77 
 
 195.00 4 7.80 259.30 410.11 
 
 1.26 6 .08 22.65 Expenditures. ... 171.53 
 
 Pd. for silver cur- 
 
 1311.45 Debt paid rency below 50c. 10.00 181.53 
 
 5 p c. Deposit 120.00 
 
 4}4 " 45.00 228.58 
 
 Interest 35.14 22.65 
 
 165.00 
 
 Deposit 260.00 224.16 305.93 
 
 Debt paid........ 165.00 
 
 95.00 Addition 95.00 
 
 1406.45 ■ 
 
 18.42 6 .92 June 30, 1875, 
 
 241.77 6 14.51 Balance 224.16 40.93 
 
 800.00 3 65-100 29.20 44.63 Rev. Coin 148.07 
 
 150.00 4}4 6.75 Money 145.69 
 
 195.00 4 7.80 Less bk. tax 7-31 138.26 276.33 
 
 1.26 6 .08 14.63 
 
 224.16 317.26 
 
 1406.45 Expenditures 158.21 
 
 Debt paid, ^— ^ 
 
 4>^ Deposit 160.00 159.05 
 
 4 " 195.00 3 65-100 Deposit 250.00 
 
 345.00 409.05 
 
 Less Deposit 250.00 Interest 44.63 14,63 
 
 95.00 Reduction 95.00 179.53 394.42 
 
 Debt paid 345,00 
 
 1311.45 : Total debt on June 30, 1876. 
 
 Consisting of 
 H Redeemable in 1881 241.77 @ 6 pc. June 30, 1876, 
 
 S " "1895 1.26® 6 pc. Balance in Treasury,... 179.53 49.42 
 
 G " " 1880 18.42 @ 5 pc. 
 
 Deposit " at the Total of Coin and Money, 
 
 option of the gov.... 1050.00 @3^ all belonging to the 
 
 Government 228.95 
 
 Total 1311-45 
 
46 
 
 Of the balances reported in the Treasury, in the preceding Table, a portion 
 had been placed in the reserve, and only a part remained in the Treasury 
 for ordinary uses ; $170.00 coin had been thus transferred from time to time, 
 and $30.00 lawful money in the last year was added to the reserve instead of 
 to the circulation, all of which appears in the table describing the condition 
 of the reserve and circulation. The balance, therefore, in the Treasury was, 
 coin, $9.53, lawful money, $19.42— total, $28,950,000. 
 
 The difference between computing the interest on a part of the certificates 
 at 4J, 4, and 3 65-100 per cent., and all at 5 per cent, is $45,680,000. Adding 
 this amount to the principal, $1,050,000,000, the total debt would be 
 $1,357,130,000, instead of $1,311,450,000 as stated. 
 
 Whatever doubt might suggest itself about the Government being able to 
 dispose of the amounts named from time to time at the reduced rates, none 
 could possibly arise about its ability to place even greater sums at 5 per cent., 
 especially as the payments would continually approximate to coin. 
 
 TABLE, No. 4, 
 
 Shows the condition of the Deposit and the Eeserve Funds, the 
 amounts being stated in millions for each fiscal year ending 
 June 30. The numbers designate the character of each 
 column. 
 
 No. 
 
 Amount of deposit at the beginning of year. 
 Increase during the year. 
 Amount at the end of the year. 
 
 " in the reserve at the beginning of year. 
 
 " of coin added to reserve during the year. 
 
 " of lawful money added and withdrawn &om circulation. 
 
 " in the reserve-at close of year. 
 
 DEPOSIT. 
 
 1868 
 1867 
 1868 
 
 1870 
 1871 
 1872 
 1873 
 1874 
 1875 
 1876 
 
 X 
 107 
 130 
 220 
 310 
 400 
 490 
 610 
 810 
 950 
 1050 
 1155 
 
 3 
 
 .. 23 
 
 .. 90 
 .. 90 
 .. 90 
 .. 90 
 .. 120 
 .. 200 
 .. 140 
 .. 100 
 .. 95 
 . .—95 
 
 3 
 
 130 
 
 220 
 
 310 
 
 400 
 
 490 
 
 610 
 
 810 
 
 950 
 
 1050 
 
 1145 
 
 1050 
 
 4t 
 
 50 
 
 50 
 
 73K 
 103K 
 133K 
 163K 
 2031^ 
 270 
 316?^ 
 350 
 381Ji 
 
 RESERVE. 
 5 
 
 6 
 
 
 ... 23J^ .. 
 
 
 ... 30 .. 
 
 
 ... 30 .. 
 
 
 ... 30 .. 
 
 
 ... 40 .. 
 
 10 . 
 
 ... 56^ .. 
 
 46%. 
 
 
 53M • 
 
 . —20 .. 
 
 60 . 
 
 . -28K .. 
 
 
 • -31K ■• 
 
 V 
 50 
 
 73K 
 103J^ 
 1331^ 
 163>^ 
 2033^ 
 270 
 315% 
 350 
 381% 
 350 
 
 TABLE, No. 5, 
 
 Shows the condition of the Circulation, and the situation under 
 the " Savings Bank " System and that which has existed ; 
 the figures for the last are from official reports, stated in 
 millions. 
 
47 
 
 No. 1. Total amount of circulation at the beginning of the year. 
 
 2. Amount of reduction or addition during tho year. 
 
 3. " at the. end of the year under "Savings Bank "System. 
 
 4. " XJ. S, notes actually outstanding at the end of each year. 
 
 5. " National Bank notes in actual circulation, 
 
 6. Total amount of U. S. notes and bank notes in circulation. 
 Under "Savings Bank" System. Actual per Official Report. 
 
 1 S 3 4, 5 6 
 
 1806 710 710 460 250 710 
 
 1867 710 —23 687 421 .. . 290 711 
 
 1868 687 —30 657 400 299 699 
 
 1869 657 —30 627 388 300 688 
 
 1870 627 —30 597 388 300 688 
 
 1871 597 —40 557 395 300 695 
 
 1872 557 —57 600 396 323 719 
 
 1873 500 00 500 398 341 739 
 
 1874 500 : +20 520 400 343 743 
 
 1875 520 +38 548 427 333 760 
 
 1876 558 +02 550 418 345 763 
 
 The condition of the "Savings bank of the People,'" on July 1, 1876, as 
 shown by the two tables above. 
 Immediate liability: — 
 
 United States notes outstanding, 550,000,000 
 
 Kesources immediatly available : — 
 
 Cash in the Reserve— Coin, 170,000,000 
 
 U. S. Notes... 180,000,000 350,000,000 
 
 Balance secured by the property of the whole people,... $200,000,000 
 These two tables also show the gradual reduction of the circulation, and 
 the increase of the Coin Reserve under one system, and the increase of the 
 circulation, with comparatively no such reserve, in the other; that while in 
 one the circulation would have been 550,000,000, on July 1st, 1876, the 
 other was actually 763,000,000. As a result the Gold premium would have 
 gradually fallen to par, as shown in Table 3, while under the Bank note sys- 
 tem it has fluctuated as shown by the following table compiled from the 
 Banhers^ Magazine and the Financial Chronicle, giving the lowest and highest 
 Gold premium, and the average for each six months from 1862 to July 1876. 
 
 
 For tl 
 
 le first Six Months. 
 
 Fort 
 
 :he last Six 
 
 Months. 
 
 Aver. 
 
 
 
 
 
 
 
 
 for the 
 year. 
 
 
 Lowest. 
 
 Highest. 
 
 Average, 
 
 Lowest. 
 
 Highest 
 
 Average, 
 
 1862 
 
 par 
 
 9K 
 
 3.21 
 
 9 
 
 87 
 
 23.63 
 
 13.42 
 
 1863 
 
 34 
 
 72J^ 
 
 52.15 
 
 22M 
 
 mx 
 
 40.33 
 
 46.23 
 
 1864 
 
 51K 
 
 151 
 
 75.80 
 
 85 
 
 185 
 
 131.87 
 
 104.67 
 
 1865 
 
 28M 
 
 134:^ 
 
 71.28 
 
 38 
 
 49 
 
 44.69 
 
 67.98 
 
 1866 
 
 25 
 
 67M 
 
 37.23 
 
 31J4 
 
 55% 
 
 46.19 
 
 41.71 
 
 1867 
 
 32 
 
 41% 
 
 37.68 
 
 33 
 
 45M 
 
 39.83 
 
 38.76 
 
 1868 
 
 33}i 
 
 44 
 
 39.78 
 
 32J^ 
 
 50 
 
 30.89 
 
 39.84 
 
 1869 
 
 30M 
 
 44M 
 
 35.40 
 
 19>4 
 
 62)^ 
 
 30.58 
 
 33.83 
 
 1870 
 
 lOM 
 
 25)^ 
 
 16.00 
 
 10 
 
 22% 
 
 14.19 
 
 15.04 
 
 1871 
 
 lOM 
 
 13M 
 
 11.34 
 
 8M 
 
 15% 
 
 12,18 
 
 11.76 
 
48 
 
 For the first Six Months. For the last Six Months. Aver. 
 
 r- • , , •■ , for the 
 
 Lowest. Highest. Average. Lowest. Highest Average. year. 
 
 1872 iM U^i 1X.39 11>^ 15M 13-51 12.48 
 
 1873 11^ 19>^ 15.96 6% 16% 12.20 14.04 
 
 1874 lOM 14M 12.44 9 12% 10.52 11.30 
 
 1875 11% 17% 15,00 IIM 17% 14-20 14.36 
 
 1876 nX 15 13-24 7 13J^ 10.25 11.74 
 
 Condition of Two Thousand and Eighty Nine National Banks, as per Re- 
 port (Pages 278-9) of the Comptroller of the Currency, December 2, 1876. * 
 
 Capital Stock $499,502,232. Surplus $178,647,487. 
 Immediate liability : — 
 
 Bank notes in circulation 292,166,039 
 
 Individual deposits 651,385,210 
 
 United States deposits 11,003,583 
 
 $954,554,832 
 
 Resources immediatly available: — 
 
 United States Bonds 385,010,550 
 
 Lawful money Due from U. S. Treasurer 131,580,749 . 
 
 Cash items. 12,043,139 
 
 Specie 21,860,767 $549,995,202 
 
 Balance, secured by the property of the banks only $404,559,630 
 
 Effect on the Public Debt. 
 
 Under the system of G-overnment currency, the lawful money outstanding 
 on June 30, 1876, per Table, No. 5, forms no part of the public debt; for its 
 equality with coin would be preserved by the Reserve set apart for that 
 purpose, because the necessities of commerce would forever prevent its 
 quantity being materially reduced. The public debt would therefore have 
 been [page 46] 1,357,130,000, less cash in the Treasury, 28,950,000, leaving 
 the net debt $1,328,180,000. 
 
 The result of similar calculations, published in the Gazette ten years ago, 
 [page 28] shows, after transferring $350,000,000 of the coin to a Reserve, 
 that the public debt on June 30th, 1875, would have been $1,435,363,640, 
 less cash in the Treasury (coin $39,189,460, lawful money $44,629,751) 
 $83,819,311, leaving the net debt $1,351,444,329. 
 
 Under the bank note system, which necessarily contemplates the re- 
 demption and annihilation of the Government currency, for it cannot 
 exist long without such extinction, the lawful money must be added to the 
 existing interest-bearing debt to find the total amount ; the net public debt 
 on June 30, 1876, was, therefore, by Secretary Morrill's Report, $2,099,498,848 i 
 and on June 30, 1875, per Secretary Bristow's Report,it was, $2,088,852,114 
 [see pages 28 and 40]. 
 
 The saving to the people, as shown by one calculation, would have been 
 $737,187,785 ; by the other, $771,258,844. 
 
 With these figures before him, and after what has been said, it is left for - 
 each reader to judge how far the declaration made in the last sentence but 
 one in the Address at Clifton is sustained. 
 
49 
 
 1. The equality in the values of the paper, and the me- 
 
 tallic lawful money, or coin, cannot be permanently 
 preserved without both are issued directly and exclu- 
 sively by the Government. 
 
 2. United States Notes are not part of the ordinary Public 
 
 Debt, but are Bills of Credit, or Lawful Money. 
 
 To more fully explain what was said in the article of February, 
 1868, the following extract is made from a pamphlet published in 
 January, 1869, with a "note" of the publisher, saying: " The atten- 
 tion awakened by the papers, over the signature R. B. P., on the national 
 banks, as an obstacle to the settlement of our financial difSculties, has 
 induced me to put them together in this form. The first article ap- 
 peared in the Cincinnati Oasette, of January 5, 1869, and the others in 
 the Cincinnati Chronicle at intervals during the month. The change 
 of base, I understand, was made to satisfy a curiosity expressed to 
 see how the several positions in the Oasette article could be main- 
 tained, especially the one declaring United States notes had not the 
 same character as bonds and other forms of Government indebted- 
 ness." 
 
 The papers referred to were a review of the Financial Bill, and 
 the speech of the lamented Senator Morton. No bill could be more 
 carefully drawn to secure the end proposed, viz., to return to the 
 metallic standard, without distressing the people, and with the pre- 
 servation of both descriptions of paper circulation — the identical 
 problem that now engages the attention of Congress. 
 
 To the Editor of the Cincinnati Gazette : 
 
 The Senator's argument proceeds upon the assumption that 
 United States notes are part of the public debt; hence his error in sup- 
 posing that all the means of the Government should be applied to 
 their payment before that of any of the debt not matured. The idea, in 
 such assumption, is foreign to every expression in the laws authorizing 
 their issue. 
 
 His theory is, that the domestic business of the country will be done 
 with a paper circulation, even when that paper is convertible into 
 gold, provided the people have entire confidence that it will so con- 
 tinue; and he hence concludes, that should the Government provide 
 itself with coin sufficient to redeem all the United States notes, there 
 would be but a limited call for the gold — say not to exceed one 
 hundred millions. We might not agree with the estimate, but must 
 acknowledge the correctness of the position. 
 
50 
 
 The application of the theory, however, forbids any hope of success. 
 His plan will likely fail, because, first, he fixes a date tor the redemp- 
 tion, rather than laws which will accomplish the end desired ; and, 
 second, from the want of homogenousness in the circulation. This 
 last can only be secured by substituting United States notes (with or 
 ■without the legal tender attribute) for national bank notes. Such 
 substitution would not disturb the present volume of circulation, and 
 therefore would not work those changes in the relative values of 
 property which obstruct, and turn the regular currents of trade to the 
 general derangement of business. 
 
 [The balance of the matter appeared in five letters in the Chronicle, 
 written at the invitation of its manager, the Hon Wm. Henry Smith.] ^ 
 
 THE CIECULATION MUST BE HOMOGENOUS BEFORK A SAFE KETURN TO THE 
 METALLIC STANDARD CAN BE SECURED. 
 
 The correctness of the picture drawn by the Senator could not be 
 disputed was the circulation homogenous, ». «., did the whole circula- 
 tion consist of U. S. notes, of whose virtues he speaks ? We might 
 differ as to the exact amocnt of gold that would be called for, whether 
 it would be more or less than one hundred millions, but none will 
 question that it would be no more than would be necessary for specific 
 purposes. We are not left to conjecture alone in estimating the 
 preference that would be given by the people to such paper convertible 
 into gold over the gold itself. ' We have such a convertible currency 
 now, and commercial convenience floats nearly twenty-flve millions of 
 it in a few seaboard cities, and nearly all of it in one. Its back might 
 be printed in green as well as in letters of gold, and it would float as 
 well. These gold certificates are nothing more than a paper circula- 
 tion, established for the convenience of importers, which the holder 
 knows is redeemable at the U. S. Treasury in gold. Notwithstanding 
 gold commands thirty-five per cent, premium, this currency is pre- 
 sented for conversion only when the holder has some specific use for 
 the metal. Is it presumable that when greenbacks occupy the same 
 position of convertibility into gold, at the will of the holder, that any. 
 other course would or could be pursued toward them ? How could 
 there be, since no one could find a safer place for the deposit of his 
 gold than the vaults of the United States Treasury ? 
 
 On December 1, 1868, by the Secretary's report, there was in circu- 
 lation $389,896,341.37 of U. S. paper not convertible, and $23,255,840 
 convertible, into gold. This latter is demanded and kept afloat by 
 
51 
 
 the necessities, and for the convenience of a single branch of trade, 
 mainly in the city of New York, and the amount varies but little in 
 every quarterly report. What amount, then, would likely be de- 
 manded by the whole country, of a like convertible currency, for the 
 transaction of all its business, and which would be of uniform value in 
 everypart of it. We may diflFer with the Senator in supposing that 
 it would be nearly equal to the present volume of paper circulation, 
 but all must admit that it would be very large. Was the circulation 
 homogenous, therefore, the transition from an irredeemable to a 
 convertible currency might possibly produce as little disturbance in its 
 volume as the Senator hopes or expects. But it is not, and therein 
 lies all the ' difficulty. Nearly one-half the volume of currency is a 
 source of profit to a privileged class in the community, and, so long as 
 that currency is permitted to exist,, causes that class to unceasingly 
 use all their power of bribery and corruption to destroy the other 
 half, that they may have the undisputed monopoly of that most 
 lucrative of all businesses. To avoid this difficulty, to defend the 
 business interest of the country against this ever-threatening assault 
 of the National Banks, the Senator has made every promise possible. 
 Will it be effectual ? Indeed, will it amount to any protection what- 
 ever? No; for restraining the banks from presenting any United 
 States notes cannot prevent its being done by individuals interested 
 in them. 
 
 THE EXISTENCE OF BANK NOTES THE ONLY OBSTRUCTION. 
 
 No formidable interest is arrayed against a return to specie pay- 
 ments. It is true that large interests are affected by it, by a transi- 
 tion that will add fifty per cent, to the value of all property in credits,, 
 held by a small minority of the people, and correspondingly depreciate 
 that of all other descriptions, to the ruin of hundreds of thousands 
 who may owe a moiety of the present value of the property for which 
 their debts were contracted. But it is not true that this latter interest 
 arrays itself against it. They have no time to organize and array 
 themselves against anything, and they have no money to spare to 
 perfect such organization. All the energies of the active workers in 
 this land, and who mainly constitute the debtor, and form but a small 
 part of the creditor class, are at this time taxed to the extreme of en- 
 durance to sustain themselves in their business, and save a home for 
 their families. They have no time nor opportunity to formidably 
 array themselves in opposition to any particular measure sprung upon 
 Congress. Each and all are pursuing their ordinary business, as did 
 
S2 
 
 the people of the North in the days preceding the rebellion. Not so 
 with the other, the creditor class, to whom the speedy return to specie 
 payment will bring great gain. They have abundance of leisure. 
 They have money — plenty to accomplish any purpose — and the extent 
 of their opportunity, their facility of movement, to operate stealthily 
 for their own selfish ends, is indicated by the conspiracies in New 
 York during the first few weeks in November, when the securities of 
 the United States were pressed down four and five per cent., and the 
 soundest railroad stocks from five to thirty-five per cent, in a single 
 day; and again, during the last few weeks, when the largest railroad 
 property in the country was advanced forty per cent, in the same in- 
 credibly short space of time. Like the wealthy slaveholders of the 
 South once had, they have the time, the ability, and the opportunity to 
 conspire against the public good; and it is only when their exactions 
 press too grievously to be borne, that their disorganized victims array 
 themselves to oppose the consummation of their schemes. 
 
 The national banking system may be regarded as the grand council 
 of this power. It was through its agency, in part, that these stupen- 
 dous conspiracies in New York found means of accomplishment. 
 Even the Comptroller of the Currency, favorable as he is to the per- 
 petuation of the system, is Obliged to admit, in his last report, "that 
 nearly one half of the available resources of the national banks of the 
 city of New York are used in the operations of the stock and gold 
 exchange ; that they are loaned upon the security of stocks, which 
 are bought and sold largely on speculation, and which are manipulated 
 by cliques and combinations, according as the bulls or bears are for 
 the moment in the ascendency." This is not confined to New York, 
 for Secretary McCuUoch is also constrained to severely comment 
 upon the banks thus aiding in conspiracies and combinations against 
 the public, and to say that while " all the banks in New York are not 
 guilty," yet that " his remarks are applicable to them as a class, and 
 they undoubtedly apply in some measure to many banks in other 
 cities." It is only such a compact monied power that is capable of 
 making any formidable array for or against any measure before Con- 
 gress ; and if the Senator has any doubts that the present clamor for 
 immediate resumption cotaes from it, and that its inspiring motive is 
 the hope of securing thereby a monopoly in supplying the paper cir- 
 culation, they would be soon removed, was he to apply the principles 
 of his plan so as to work the extinguishment of the national bank 
 notes instead of those of the Government. 
 
 If there must be a decline of 50 per cent, on present values, in get- 
 
53 
 
 ting to a gold basis, the debtor, who has his property half paid for, 
 will be ruined if the loss comes to him at once; but if the decline is 
 distributed over a series of years, the loss each year can be recovered 
 by his greater activity and industry, and the practice of closer econ- 
 omy. A wise legislator will lighten the load as much as possible, 
 and then make it the easiest to be borne. It is his most imperative 
 duty to interpose every obstacle to blows that would paralyze the 
 vitalizing arms of those whose activity and enterprise cause them 
 often to forget the dictates of prudence, and to serve others better 
 than themselves. It is men of this character, who are so extended 
 as to be ruined by an extraordinary decline in prices, that have been 
 referred to as the debtor, while those who owe little or nothing, and 
 whose property consists of credits, either notes, mortgages, ground 
 rents, or bonds — the drones who live on the honey made by the bees — 
 as the creditor class. Happily, in this country the mass of the people 
 occupy a position between the two, and are affected by any sudden 
 revulsion only in the degree of their approach to one or the other ex- 
 treme. It lies with this third class to reconcile the conflicting in- 
 terests of the other two, so as to minister to its owh , in more firmly 
 establishing the reign of honesty, justice, and peace. R. B. P. 
 
 UNITED STATES NOTES INSTEAD OP BANK NOTES. 
 
 The requisites in any bill looking to a return of coin payment, 
 without distressing the country, are : First — That United States notes 
 shall be substituted for national bank notes ; and, Second — That the 
 period of their convertibility into gold must depend upon the reduction 
 of, and funding at low interest, the public debt, and the subsequent 
 accumulation of gold in the treasury, to an extent that will effectually 
 secure such exchangeability and equality between the two currencies. 
 ****** 
 
 However, whether the 5-20 bonds be paid in U. S. notes or coin, the 
 funds, as fast as they accumulate, should be applied to a reduction of 
 the debt, until all that remained was funded in a 3.65 or 4 per cent. 
 bond. Thereupon the gold should bo permitted to accumulate in the 
 Treasury until it should amount to a sum eqnal to one-third of the 
 outstanding circulation ; the announcement of which fact, in the 
 usual quarterly report, would, under the terms of the law, be notice 
 to the world that United States notes were convertible into gold at 
 the U. S. Depositories, and that they thenceforward ceased to be 
 legal tenders for the payment of debts, public or private. Thereafter, 
 whenever the reserve in ths Treasury, for gold conversion, S'hould fall 
 
54 
 
 below one hundred millions, the Secretary of the Treasury should be 
 required to restore the same by the sale of 4 per cent, bonds; and 
 whenever such reserve exceeded one hundred and fifty millions, the 
 excess should be applied to the purchase of the bonds. This pro- 
 vision, together with the fact that the legal tender attribute had been 
 taken away from the notes, would inspire the highest confidence in 
 the permanence of such convertibility, and would cause all the domes- 
 tic business of the country to be done in them, as they would con- 
 stitute the only paper circulation ; the exercise of such power or 
 privilege being expressly prohibited by States, corporations, munici- 
 palities or individuals, under the heaviest penalties. 
 
 With the authority to borrow gold to restore the minimum of the 
 gold reserve immediately when it occurred, there would not probably 
 be much, if any, occasion for its exercise. Without such provision 
 there might be abundant. Thus the national circulation, be the aver- 
 age what it might (three, four, five or six hundred millions), would 
 be like a call loan, without interest, between parties bearing such re- 
 lations to each other that the call would be seldom, if ever, made. 
 It would be the people, individually, loaning the people, collectively, 
 their gold for its more convenient representative, for such time only 
 as might suit their convenience. The interest on the average balance 
 of such loan, over the amount of coin in the Treasury for its conver- 
 sion, would be a clear profit to that people, subject to the abatement 
 of any interest that might be paid on temporary loans, if they should 
 ever be required, to keep up the gold reserve to one hundred millions. 
 Such loans would be but temporary, because while the Secretary 
 was required to sell 4 per cent, bonds to restore the reserve, when be- 
 low the minimum, he would also be required to redeem others when 
 the reserve exceeded the maximum. 
 
 Besides, it would be vain to expect that degree of confidence in a 
 national circulation necessary for its highest success, in the presence 
 of an overshadowing debt at ruinous interest. Before it be made 
 convertible, that debt must be funded, funded fairly; and not hy the 
 artifice of swearing to pay gold for the full amount of principal and 
 interest in one breath, and in the next sneakingly endeavor to deduct 
 one-sixth of it, under the name of tax — as if we had any right to tax 
 property held and owned in a foreign land ; neither by requiring all 
 the bondholders to exchange a six per cent, for a, four per cent, bond, 
 on or before the next November, under the penalty of — no one knows 
 what, except the repudiation of the balance. Not thus, but in a way 
 that will command the respect or admiration of mankind; its respect 
 
55 
 
 by redeeming the bonds according to their terms, the letter of the 
 contract, and because it is the letter, or its admiration by generously 
 purchasing the bonds in the market at whatever discount they are 
 selling, because of the general expectation that has been raised by the 
 unlawful acts of manj' of our public servants. Until then, let every 
 dollar, above what is necessary to meet the current expenses and in- 
 terest, be applied to the reduction of the debt. 
 
 During all this time of gradual reduction of the debt and funding 
 it confidence in the national circulation would be taking deeper root, 
 and, gradually lessening the difi'erence between it and gold, the 
 premium would sink from year to year, and month to month, as the 
 day approached when there could be none. When the debt had been 
 adjusted, and the quarterly reports began to show an accumulation of 
 gold in the Treasury for conversion of the national notes, the pre- 
 mium on gold would be in the unit's place, and with each reported in- 
 crease the rate would sink from 6 per cent, to 5, 4, 3, 2, 1, -J- and ^ of 
 one per cent., until the report appeared, which would show, say, cir- 
 culation, $700,080,000 ; gold in the Treasuiy, $234,000,000. On that 
 day the standing forms for quotations of " gold premium" might be 
 distributed, as they would be of use never more. 
 
 What jar would there be in stepping from ^ of one per cent, to par, 
 and how many people would rush for gold, especially when the vast 
 increase in' the business of the country might then require for its con- 
 venience nearly the full amount of the notes in circulation. Suppose 
 they did rush, if such a supposition is possible, what would it amount 
 to V Suppose all the gamblers in Wall street should unite, as they 
 sometimes do, to work iniquity, and. throw their terrible strength, 
 now resistless, against the Government, they would be as harmless as 
 a lot of bulls and bears, that might seek to obstruct the track and 
 throw off the locomotive. The yelping of such unholy combination 
 would be as insignificant as the barking of a pup dog at a passing train 
 railroad cars, for, at this juncture, the bonds of the United States 
 would be like the gold itself, and the vast interest invested in them 
 would be in harmony with the Government, to defeat any conspiracy 
 against its credit. All of that interest in Europe and this country 
 would be interested in maintaining the integrity of the national cir- 
 culation, which, from the moment of its convertibility, would be an 
 obligation higher than ordinary debt, an obligation not alone to the 
 holder of the note, but to mEi.nkind. The coined honor of the people, 
 in the hands of the people, it would be as precious as the gold itself, 
 and universally acknowledged to be what it always has been, money, 
 and no part of the public debt. R. B. P. 
 
56 
 
 U. S. NOTES NO PART OP THE ORDINARY PUBLIC DEBT, BUT MONET. 
 
 The question whether United States notes are money or a debt, 
 ■would not be worth considering (for their integrity in either case 
 must be preserved), but for the fact that the doctrine that they are 
 part of the public debt is the only support to a measure most disas- 
 trous in its consequences. 
 
 That Senator Morton's argument proceeded upon the assumption 
 that United States notes are part of the public debt, and that it led 
 him to suppose that all the means of the Government should be ap- 
 ple d for their payment before that of any of the debt not matured, 
 fully appears, when he says: 
 
 " The greenback currency is a part of the public debt, for the redemption of 
 which the faith of the nation is solemnly pledged. The redemption of this 
 pledge is not only demanded by every principle of national honor, but is impera- 
 tively demanded by the.interests of the people, collectively and individually." 
 
 If this be really so, then Mr. Greely is certainly right in saying that 
 a pledge, whose redemption is demanded by every principle of national 
 honor, should be redeemed at once. The Senator is evidently not 
 quite so clear about United States notes being part of the public debt 
 as Mr. Greely is, or his sterling integrity would compel him to act as 
 he does, and as Gen. Harrison did under like embarassing circum- 
 stances, with debts past due, and no money' to meet them. 
 
 It is related that kind friends then advised him to stave off his debts 
 and get time ; that his property would rise so as to leave him a com- 
 fortable estate after paying all up. With blunt honesty he replied : 
 " But the debts are due; the men want their money; they want it now, 
 and not after my property has risen — and they shall have it ! " They 
 got it; and the hero found himself, in his old age, in very different 
 circumstances from those whose wordly wisdom directed to a different 
 line of conduct. Should not a people, who, appreciating his virtues, 
 transferred him from a County Clerk's office to the Presidential chair, 
 follow his bright example of preferring honor before riches. Cer- 
 tainly they ought; and would they not, if they believed United States 
 notes part of the public debt ? To argue otherwise is to prove them 
 capable of repudiation ; lor faithlessness to part of one's obligations 
 affords abundant evidence of the treatment that will be extended to 
 the whole whenever it will pay. 
 
 The patient endurance of this people under the immense burthen 
 of paying one hundred and thirty millions in gold annually for interest 
 alone, shows that they have no disposition to shirk any of their obli- 
 gations, much less those due among themselves; hence it must con- 
 
57 
 
 clusively appear that they do not regard the United States notes in 
 the light which Senator Morton and Mr. Greeley describe them — a 
 part of the public debt payable on demand — bnt that they are simply 
 money. This verdict of an intelligent people, proclaimed for years in 
 their every act, it is now sought to reverse. The effort now being 
 made to turn the minds of the people to regard these notes as a debt 
 of the Government uses no argument, but only vehement declarations, 
 bitter denunciation, and shallow attempts at ridicule. Being one of 
 the million that joined in that verdict, the writer will state the grounds 
 of his conviction, and attempt the difficult task of proving the truth 
 of an axiom, — of that which has for eight years been received as a 
 self-evident truth — that United States notes are simply the lawful 
 money of the country, and form no part of that which is to be paid 
 by money, as is required to discharge all debts, either public or 
 private. 
 
 IN THE LIGHT OF COMMON SENSE. 
 
 In doing this we will first attempt to show the absurdity of the 
 contrary doctrine, by speaking of the singular position in which it 
 places those who follow it to its logical conclusion, and then give the 
 evidence to show that it can find no fofundation in the laws author- 
 izing the utterance of United States notes. 
 
 The language now used toward these notes presents the strange 
 spectacle that many who saw no wrong in the creation of legal tenders, 
 and were the most denunciatory of all that opposed their acceptance, 
 cannot now find language strong enough to describe them as lying 
 promises, degraded things, that all honorable men should unite in 
 sweeping out of existence ; while, on the contrary, those who opposed 
 their issue as unconstitutional, dishonorable, and wicked, are now the 
 advocates of their continuance as a circulating medium. 
 
 The conduct of the latter is consistent. They resisted the issue of 
 that currency on account of its taking money out of the pockets of 
 the creditors and giving it to the debtor, by compelling the former to 
 take in full paj'ment a currency other than that in which the debt was 
 contracted. Who can say they were not right ? Surely not those who 
 clamor for another change of tender which will compel the poor 
 debtor to pay fifty per cent, more than he ever contracted to pay — 
 who now demand coin payment for debts, many of which were con- 
 tracted when the currency they received was not worth half as much 
 as coin . The Gazette well describes the demand for such payment, 
 and the men making it : 
 
 " They have a notion struggling in their overtaxed brains that if a debtor does 
 not pay 50 per cent more than his debt he is dishonest. The creditor who com- 
 
58 
 
 pels a debtor to pav 50 per cent, more than the debt, is their model of honesty. 
 And they don't ^ant any specie resumption unless the law shall sacrifice debtors 
 in this way. Next we may have the robbers of the highway affirming that their 
 practice is the standard of honesty, and that those who deny their demands have 
 abandoned honor and honesty. 
 
 Those who resisted the issue of legal tenders then, now resist their 
 withdrawal, and for the same reason. They say that notwithstanding 
 their objections, the act was passed, the notes issued, and creditors 
 had to take them instead of gold — and that they were thus wronged 
 out of the diflference between gold and United States notes at the 
 time of payment; that this state of things has been going on for eight 
 years, during which the individual indebtedness contracted to be paid 
 in gold has all, or nearly all, been paid in these notes, to the injury of 
 thousands of innocent persons compelled to receive them; that during 
 all this time of depreciated currency, other men, constituting the 
 present business community, have innocently and honestly contracted 
 to pay debts in it, several hundred millions of which have not ma- 
 tured; and that to require these men to pay currency, worth more than 
 a third more than that in which the debt was contracted, is as great a 
 swindle as the first, and that those who would demand it, or for their 
 own personal aggrandizement are endeavoring to create a state of 
 things that will compel it,, exhibit that fartive obliquity of vision 
 characterizing theft. 
 
 This sentiment is not confined to those who opposed the issue, but 
 animates a large proportion (at least in the West) of those who 
 favored it. They found in the inexorable necessities of war an ample 
 apology for the offense; and, in the instincts of humanity, the law of 
 self-preservation, rising above all written contracts and constitutions, 
 find [its full justification; but they fail to find the slightest excuse for 
 the greater offense that is now being attempted — greater by the differ- 
 ence between robbing a poor man of his all, and a rich one out of his 
 abundance. They also fail to see any unconstitutionality in legal 
 tenders, save in the character of their utterance, the changing the 
 value of a currency between the time of the contraction and the pay- 
 ment of a debt, whereby the intention of the contract is defeated. 
 Whether they are or are not is a matter for the Supreme Court to de- 
 termine, and not for newspaper discussion. Until then it is uncertain 
 how far Congress may go in doing that which is not forbidden by the 
 Constitution, although expressly denied to the States. Unconsiitu- 
 tlonal or not, the feature is as prominent in the violent change now 
 proposed as in that first made. If this first breach of the Constitution 
 can not be justified by the exigencies of war, nor the instrument of 
 its accomplishment be sanctified by time, how much less can a like 
 
59 
 
 breach be justified in a time of profound peace, where there exists no 
 possible excuse for the offense. If, on the contrary, the necessities 
 of war did justify the creation of the United States notes, may not 
 the necessities of peace as strongly demand their continuance ; for 
 peace has its necessities as well as war. 
 
 To those who, for their own aggrandizement, started this doctrine 
 about the United States notes being a part of the public debt, of the 
 same character as the balance, and, therefore, demanded imniediate 
 payment to wipe out the dishonor attached to the non-payment of debts 
 matured, and whose incessant clamor has so filled the public ear that 
 some of the best men in the land have accepted it as true, we would 
 commend a chapter in our country's history that would be profitable 
 for their study. 
 
 In 1820, to secure the admission of Missouri as a slave State, and 
 to reconcile the antagonistic power of the free and slave States, an 
 arbitrary line was decreed beyond which the institutions of either 
 party could not pass. There was no more constitutional authority for 
 that act than for the legal tender one. It was equally unjust and in- 
 iquitous, and the onl3' excuse for it was the necessity that required it. 
 It was simply a plank which the nation seized hold of to keep from 
 drowning, just as it laid hold of legal tenders. Through long years 
 it served well its purpose. In an evil hour it was found to stand in 
 the way of a selfish, grasping and formidable power, that sought to 
 destroy it — that showed its injustice and unconstitutionality, and the 
 necessity of immediately undoing, a great wrong, and returning to 
 correct principles. They did destroy it. But what did it profit tbe 
 destroyers ? Let the turmoil, confusion and terrible destruction that 
 came upon them answer. May not this lesson teach that the undoing 
 a great wrong may be doing a greater, and that it may be well to 
 treat even " dishonored promises " with honor? May it not suggest 
 that the attempt to indissolubly connect the public faith with an insti- 
 tution which, if history teaches anything, one-half the people of t.his 
 country will spare no effort to destroy, will be like binding a corpse to 
 a living man ?* 
 
 The inconsistencies involved in treating United States notes as ir- 
 redeemable paper, like bank notes, partly, perhaps, from its being in 
 the same similitude, and more from the hubitual utterances of the 
 banker at the head of the Treasury, ought to cause those entertaining 
 that idea to consider, whether the popular one is not more correct; 
 
 * The force of this warning, published in the Chron/tcle^ nine years ago, has already ex- 
 hibited itself, politically. Its full strength will be made manifest, Rnancially, after the 
 National Banking System lies hurried under the ruins it has wrought. < 
 
60 
 
 for nothing is clearer than that the Government never intended to 
 pay these notes on demand when it issued them — that they were not 
 considered evidences of debt, as the word debt is universally under- 
 stood, and as applied in the same act. Careful provision was made 
 in that act, and every subsequent one, as it had been in every one 
 prior, for the redemption or payment of every debt ordered. With- 
 out that, no debt would be entitled to a particle of credit ; but no 
 such provision was made for these United States notes. They were 
 simply made payable to bearer, when the Government knew they had 
 not a dollar to pay them with, and everybody that took them knew 
 they would not be paid, and were not so intended. They were made 
 for nothing else than a circulating medium, to be used as money, and 
 declared to be money, having all its attributes, save in payment of im- 
 ports and interest. It was expected and understood by both parties 
 to the introduction of these notes as a circulation, the Government and 
 the people, that they would continue to occupy that position without 
 regard to their relative value with gold, to which, however, it was 
 hoped and expected that the restoration of peace and prosperity 
 would gradually cause them to approximate, until the one should be 
 convertible into the other. 
 
 To speak of them, therefore, in any other light, or as debts which 
 the national honor requires to be immediately redeemed, is calculated 
 to confuse the mind as to what good faith really does require. To 
 speak of these notes as lying promises, obligations which the Govern- 
 ment has failed to redeem, and that it is dishonored every day of their 
 existence, is demoralizing society, and fast causing the people to look 
 lightly upon dishonor itself. Eath6r than the indulgence of such ex- 
 pressions, it should be the desire of every one to regard them in the 
 light of their utterance, and seek at as early a dsLj, as a due regard 
 to the condition of the country, and the relation of debtor and creditor 
 will permit, the realization of the hopes and expectations entertained 
 at their creation, of their future convertibility into gold. 
 
 IN THE LIGHT OF THE LAW. 
 
 The common-sense view of these notes taken by the people is, we 
 think, sustained by the record. That the idea of their being part of 
 the public debt is an error, and foreign to every expression in the laws 
 authorizing their issue, will appear by reference to them. 
 
 From the opening of the war to the close of the session of Congress 
 in March, 1867, there were passed thirteen acts, in which direct ref- 
 erence is made to the Government notes issued, under pressing exi- 
 gencies, for a circulating medium. Five of these authorize their issue, 
 
61 
 
 seven incidentally refer to them, and one (April 12, 1866) looked to 
 their extinction in language that may be construed into a recognition of 
 the notes as a part of the debt, viz. : " That the act of March 3, 1865, 
 shall be extended and construed to authorize the Secretary of the 
 Treasury, at his discretion, to receive any treasury notes, or other 
 obligations issued under any act of Congress, whether bearing interest 
 or not, in exchange for any description of bonds authorized by the 
 act to which this is an amendment; and also to dispose of any," &C., 
 the section closing: "Provided, That of the United States notes not 
 more than ten millions of dollars may be retired and cancelled within 
 the six months after the passage of this act, and thereafter not more 
 than four millions of dollars in any one month." The inference to be 
 drawn from this proviso should be considered in connection with the 
 language used toward United States notes in every other reference to 
 them. It will be recollected that this act was passed after the United 
 States notes had been the accepted money of the country over four 
 years ; that it was inspired by Secretary McCulloch to aid him in 
 carrying on the war he had begun against them, and that the proviso 
 was tacked on to it by the friends of that currency, chief among whom 
 was Senator Morton. Under these circumstances, should not the 
 language be understood simply as a declaration for their protection, 
 and a check upon the course the Secretary had been pursuing under 
 the bank-begotten idea that United States notes were irredeemable 
 paper, and part of the public debt, and the one which he was most 
 anxious to extinguish. 
 
 The language used in defining the punishment for counterfeiting 
 " any note, bond or other security," and " any obligation and security 
 of the United States," ingeneral terms, without any specific mention 
 of United States notes, appears also to include them in the public 
 debt. This impression is, however, removed by the proviso " that the 
 words obligation and security of the United States used in this act 
 shall be held to include and mean all bonds, coupons, national cur- 
 rency, United States notes, fractional notes. Treasury notes, &c. — 
 stamps and other representations of value, of whatever denomination, 
 which have been, or may be, used, under any act of Congress." For 
 if stamps and national bank notes are not part of the public debt, 
 neither are the United States notes, so far as any language used in 
 this connection is concerned. 
 
 With these exceptions, the greatest care seems to have been ob- 
 served to keep prominent the distinctive character of the present 
 United States notes as nothing more than a currency, not to be con- 
 founded with any form of Government indebtedness. Not so, how- 
 
62 
 
 ever, with the United States circulating notes issued prior to the act 
 of February 25, 1862. They are everywhere spoken of as a debt, and 
 ample provision was made for their speedy conversion into coin, or its 
 equivalent, in the very act creating legal tenders. 
 
 United States circulating notes may, therefore, be a part of the 
 public debt, or they may not, depending upon the law of their exist- 
 ence. They are debts when that law says " that the Secretary of the 
 Treasury be, and is hereby authorized to harrow, on the credit of the 
 United States, two hundred and fifty million dollars, and may also 
 issue in exchange for coin, and as part of the above loan, or may pay for 
 salaries, or other dues, fifty million dollars of Treasury notes, of a less 
 denomination than fifty, but not less than five, dollars, not bearing in- 
 terest, but payable on demand bj"^ the assistant Treasurers of the 
 United States at Philadelphia, New York, Boston, St. Louis, or by the 
 depository at Cincinnati." [Acts July 17 and Aug. 5, 1861.] They 
 are not debts when that law says " that the Secretary of the Treasury 
 is hereby authorized to issue, on the credit of the United States, one 
 hundred and fifty millions of dollars of United States notes, not bear- 
 ing interest, payable to bearer at the Treasury of the United States, 
 and of such denominations as he may deem expedient, not less than 
 five dollars, and shall be receivable for all dues to and from the Gov- 
 ernment, and shall also be lawful money and a legal tender in pay- 
 ment of all debts, public and private, within the United States, except 
 duties on imports and interest on the public debt." [Act ^Feb. 25, 
 1862.] The words of these two creative acts are thus placed in 
 juxtaposition, because they speak for themselves. 
 
 the notes of their creation agree in not bearing interest, and in 
 being issued for the sole purpose of a currency. They difier in their 
 title, and in their essence. The first is payable on demand at a desig- 
 nated place; the second at no time and at no place, but the Treasury 
 of the United States — a mythical expression as used in this act, signi- 
 fying that the obligation was justly due and capable of being satisfied 
 in the manner the law provided. The obligation was to the whole 
 people, and not a contract with the individual holding the note, and all 
 the payment contemplated at the " Treasury " was by the tax bills of 
 the same people. The old law which required •' the Treasury of the 
 United States " to be located at the seat of Government clearly indi- 
 cated that the term meant nothing more than that it was the financial 
 headquarters, where all acounts were settled, to be paid by orders upon 
 its treasure wherever it might be. Had it been intended to give each 
 holder of a note the right to demand payment at any particular place, 
 that place would have been named, as it was in the act of July 17, 
 
63 
 
 1861. The " Treasury of the United States," therefore, described in 
 this connection, conveys about as clear an idea of locality as "the 
 army of the United States." The locality of the army of the United 
 States is where its organized force is placed by the proper authority, 
 the head of the army, and that of its treasury is also to be found 
 where its organized force, its money, with the officers having it in 
 charge, is placed by the head of the Treasury Department. 
 
 You say, it of courfee means at the Treasury in Washington ; but 
 somebody that printed the notes paj'able " at the Treasury in New 
 York," instead of " at the Treasury of the United States," as prescribed 
 in the act — does not say so. Where the authority came from to do it, 
 a careful perusal of the loan and currency laws fails to discover. If 
 there be no authority for it, the person to whom the execution of the 
 plates was entrusted by the Secretary committed a grave oflfense, in 
 doing what has contributed more than anything else to deceive the 
 people, by keeping before them that which might impress the idea 
 of their being irredeemable paper like suspended bank notes. Why 
 they were not made like fractional currency, in a form that would not 
 minister to such error, is a matter for curious inquiry ; for both were 
 created by the same act, and with the same general directions for 
 their execution and emission. It might also be interesting to know 
 why there appears on some of the notes, " the United States will pay 
 the bearer at the Treasury in New York," while others read "the 
 United States promise to pay the bearer, &c." The man that thus 
 made them "promise " anything, causpd them to promise more than . 
 what the law authorized. 
 
 The first is declared to be part of a loan, and for money borrowed on 
 the credit of the United States; the second simply an issue on the 
 credit. The first is an evidence of debt; the second nothing more than 
 a paper medium, intended to circulate as money on the credit of the 
 Government in ithe ordinary use of business. In the first the pledge 
 given was for payment in coin, on demand ; in the second that pledge 
 was for the Government to do what it promised, and nothing more ? 
 What was that V That they should be received for taxes and other 
 dues to the Government ; that they should be lawful money and a 
 legal tender in the payment of all debts; and that they "should be 
 received as coin at their par value for any loan that may hereafter be 
 made," and also be exchangeable for five-twenty bonds bearing six 
 per cent, interest. So long as the Government fulfilled these condi- 
 tions, it did all that was involved in the pledge of its credit. It has 
 failed to do it; but the dishonor lies not in failing to do what it never 
 promised, but in declaring, by act of Congress, more than a year 
 
64 
 
 afterward, that " on the first day of July, 1863, and thereafter, the 
 right so to exchange the same (United States notes for six per cent, 
 bonds) shall cease and determine." They who saw no tarnishing of 
 national honor in this, and who now propose to further violate the 
 most important condition of th« contract, by taking away the legal 
 tender attribute, denounced by Senator Morton as the foulest repu- 
 diation, are the parties who now talk the loudest about meeting the 
 obligations involved in the pledge of the Government credit given at 
 the time of their issue. 
 
 There is another provision in these laws which must have failed to 
 attract the attention of the Senator, contained in the proviso to the 
 words creating the first issue of the one hundred and fifty millions 
 United States notes : " Provided, however, that fifty millions of said 
 notes shall be in lieu of the demand notes authorized to be issued by 
 the act of July 17, 1861, which shall be taken up as rapidly as practi- 
 cable, and the notes herein provided for substituted for them." K 
 these legal tender notes were considered a debt, and payable on demand, 
 they were exactly like those issued July 17, 1861. Being so, what 
 sense was there in thus seeking to exchange the one for the other, and 
 ■why was it declared that one class of notes were receivable the same 
 as coin in payment of duties, while in another part of the same act 
 the other class were declared not to be receivable at all. Further ref- 
 erence to the language of these laws wiU only exhaust the patience of 
 the reader. Those whose inclination leads them to examine, will find 
 in them abundance of similar testimony. 
 
 If these notes be not part of the public debt, and are payable at no 
 time nor place, what is to become of them — when will they be paid ? 
 Just when the law creating them says they shall be. That law does 
 not contemplate payment, but conversion, when the Government shall 
 cease to reissue them, for it says, they may he reissued, from time to time, 
 as the exigencies of the public interest shall require, which language is re- 
 peated in some of the acts in manner to require such reissue. The 
 time, therefore, when this authority to reissue shall cease, depends 
 upon the public interest, and nothing besides. The question for con- 
 sideration, then, is simply what the public interest demands. That 
 alone is to he consulted. In discussing it, reference to other things is 
 only darkening counsel by vain words. The law directs that nothing 
 but the public interest shall be considered ; the welfare of the people 
 shall be the only object sought. Hence it should not be clouded by 
 any false assumption that the honor of the country demands an imme- 
 diate or speedy payment of these notes in coin, without regard to the 
 business interests of its citizens. 
 
65 
 
 The opinion vaguely possessing many minds, that these notes are 
 to be treated as an ordinary debt, is caused, mainly, by their being 
 made in the similitude of a bank note, and by their falsely stating 
 that " the United States promise to pay the bearer." Had they been 
 made in manner and form that would not have suggested a bank note, 
 and the words describing them been in strict conformityto the law, 
 n o.ie would have understood them to be anything but " bills of cred- 
 it," issued on the credit of the United States, in virtue of its constitu- 
 tional power. These bills would then have been considered only 
 money; for the Constitution evidently regarded instruments issued by 
 law, in the name and on the credit of the sovereign power, and in- 
 tended for circulation from hand to hand, as money. Chief Justice 
 Marshall, in the case of Craig v. State of Missouri, 4 Peters 433, un- 
 mistakably defines the character of these United States notes : " The 
 term Itas acquired an appropriate meaning ; and ' bills of credit ' signify a 
 paper medium introduced to circulate between individuals, and between Gov- 
 ernment and individuals, for the ordinary purposes of society." Those who 
 persist in speaking of such paper as is here described by the Chief Jus- 
 tice as a pledge made to the holder by the Government, to be no less 
 complete and efiectaal than that which is given in what is known as a 
 bond, will come to a different conclusion, after consulting standard 
 authorities. They will probably find that the emission of bills of credit 
 is an extreme stretch of sovereignty, and that they are payable only 
 in such manner and at such times as suits the convenience and con- 
 sists with the iiiterest of the sovereign power on whose credit they are 
 issued. 
 
 The words of Chief Justice Marshall, describing Government circu- 
 lation, are in strange contrast with those of the Senator. It is not 
 surprising, when we consider that the latter only repeats the language 
 usually indulged in by bank issuing financiers, with whom he has no 
 doubt conferred. In pressing their ends, they have succeeded better 
 in impressing their words than their opinions, for it is clearly the 
 Senator's purpose to protect the national currency rather than destroy 
 it. If the means for its accomplishment prove inadequate, it must 
 arise from his mistake in regarding these notes as obeying the laws 
 governing ordinary indebtedness, because of the habitual use of terms 
 describing it. No one regards Senator Morton as one who has made 
 finance the study of his life; but rather he is held to be a wise, saga- 
 cious statesman, seeking the best means for the best ends. He has 
 grasped the situation in substantially declaring that no return to coin 
 payment shall be permitted that will seriously contract the currency, 
 and thus bring disaster upon the country; and that the best means to 
 
accomplish that end is to create a state of things in the future that 
 will secure the convertibility of the Government notes, and permit 
 them to circulate as freely as they do now. If, in arranging the de- 
 tails, he has fallen into error, it is evidently from having been misled 
 by the degraded terms used toward an " irredeemable cuiTcncy " by 
 the very man who should have been last to usje them — the head of the 
 Treasury — the official guardian of their credit. 
 
 Without giving a specimen from an annual report of Secretary Mc- 
 Culloch, the reader can hardly conceive of his tender regard for the 
 credit of that which was entrusted to his charge. " Upon the demor- 
 alizing influences of an irredeemable Government currency, it is not 
 necessary now to enlarge. They are forced upon our attention by 
 every day's observation, and we can not be blind to them if we would. 
 The Government is virtually repudiating its own obligations by failing 
 to redeem its notes according to their terms. These notes are paya- 
 ble to bearer on demand in dollars, and not one of them is being paid. 
 It is not to be expected that a people will be more honest than the 
 Government under which they live, and while the Government of the 
 United States refuses to pay its notes according to their terms, or at 
 least so long as it fails to make a proper effort to do so, practically 
 teaches the people the doctrine of repudiation." After continuing in 
 this vein through eight pages of his annual report, he winds up thus : 
 " How much of the demoralization which exists in the Kevenue service 
 of the United States is attributable to the failure of the Government to 
 redeem the legal tender notes according to their tenor would be an 
 interesting subject of inquiry, but hardly appropriate to a communi- 
 cation like this." 
 
 It would be far more interesting to find how far the disorder in the 
 Treasury Department proceeds from the Secretary's neglect of his 
 duties, in consequence of his attention being absorbed in efforts to 
 fasten the National Banking System on the country. It is only the 
 blindness of such purpose that has permitted the Secretary of the 
 Treasury 'of the United States to so far forget the proprieties of his 
 position as to proclaim to the world, that an apology for all the vil- 
 lainy in his department, the greatest accurmilaiion ever knoum, is to be 
 found in the demoralizing influence of the lawful money of his 
 country. K. B. P. 
 
67 
 I»^I2.T III. 
 
 Having shown, in Part II, what would have been the operation and 
 effect of the temporary loan law, had it continued to be honestly ad- 
 ministered in the interests of the people, it remains to show the brilliant 
 success that attended its existence, and the cause and manner of its 
 repudiation. This cannot better appear than by one of the papers 
 Judge Kellet requested to be published, the beginning and a con- 
 siderable portion of which appeared in the Cincinnati Enquirer of 
 September 10, 1875, with the following editorial, calling attention 
 to it: 
 
 "The communication which we print this morning on the money question, 
 from the pen of R. B. Pullan, Esc^., has been in our hands several days. Its 
 earlier appearance was prevented by a pressure of news matter. The article, we 
 are certain, is one of the best yet published touching this special phase of the sub- 
 ject. It is unanswerable. We may say, without violating confidence, that it was- 
 offered to the Gazette for publication, but respectfully declined." 
 
 THE aRE.AT ISSUE. 
 
 The Savings Bank of the People. 
 
 Interchangeable Bonds and United States Notes. 
 
 To THE Editor of the Enqdiber: 
 
 The believers in the necessity of the Government, issuing the cur- 
 rency direct may treat with contempt the ravings of those who de- 
 liounce them as " Fools," " Lunatics," " Currency Tinkers," " Quacks," 
 " Petroleuse," " Communists," " Repudiators," " Sans-Culottes," and 
 " Cut-throats," but they can not ignore a challenge to answer the 
 masterly argument that appeared in the Cincinnati Gasette,- of August 
 19. If what was there " demonstrated," is true, or even approximates toa 
 the truth, there can be no doubt that any attempt of the Gtovernment 
 to issue interchangeable bonds, or to create a depository in which the' 
 people could deposit their surplus money on interest, and subject to 
 call when they wanted it, would prove more disastrous than the present 
 system; no possible doubt that ruin would follow the introduction of 
 either. They are identical, for the Gazelle says : 
 
 "These 3.65 interchangeable bonds are nothing but a provision by which banks 
 can lend their money to the Treasury on call. By them the Government is to 
 receive their idle money on deposit, and pay them interest for it." 
 
68 
 
 The Gazette commences thus : 
 
 "the elastic currency bond — HOW IT WOULD WORK. 
 
 " We freely grant that a regulator of the volume of money, which shall let it out 
 In times of panic and draw it in when it is flush, is a nice thing to contemplate, 
 and would be a desirable thing to have ; and that when our currency quacks, such 
 as Cary and Ewing, declare that the 3.65 interchangeable bonds would work in 
 this way, and would regulate the currency as the governor regulates the steam 
 engine, they tell of a desirable thing. But this is an experiment that has never 
 been tried ; and when they liken it to the operations of the Bank of England, in 
 checking overtrading and staying panics, they liken it to its opposite. And, 
 furthermore, we undertake to demonstrate as positively as any thing can be 
 proved by reason, that the interchangeable bond would work just the opposite of 
 what its inventors claim ; that is to say, it would feed the flame of overtrading by 
 inflation, when that is on the rise, and that when reaction, and alarm, and panics 
 set in, it would violently contract the currency. 
 
 " If there be any sincerity in advocating this invention — ^if it be any thing more 
 than dust for the eyes of the ignorant till after the election, its advocates will try 
 to answer this showing." 
 
 A Republican, who sincerely believed in the doctrine of the Repub- 
 lican platform of 1868, reaffirmed by the Democratic Convention of 
 June 17, 1875, and who now as sincerely believes that an interchange"- 
 able bond presents the easiest and most effectual way of getting out 
 of our present difficulty, ventures to rise, as did the celebrated Jones 
 under similar circumstances, to prove by fact the very opposite of 
 what the Gazette declares it has demonstrated " as positively as any- 
 thing can be proved by reason." 
 
 RISE AND PROGRESS 
 
 Under the administration of an honest Secretary working 
 in the interest of the people. 
 
 In the bills framed February 25, 1862, to carry out Mr. Lincoln's 
 purpose to issue legal tenders, provision was made for their conver- 
 sion into bonds, and a further and even more important one, to make 
 the Government the great depository of the savings of the people by 
 permitting them to deposit their money on low interest, and have 
 it returned to them on ten days' notice, practically to be returned 
 to them when called for. The amount of such deposit was limited to 
 $25,000,000. The scheme proved so acceptable that on May 17th the 
 limit was increased to $50,000,000, and the interest not to exceed § 
 
 PEE CENT. 
 
 So admirably adapted to the wants of both the Government and the 
 people did the plan prove, that on the making up the account of the 
 year, on the 30th of June, the deposits had run up, in four months, to 
 $66,473,324— $16,000,000 more than the limit— drawing an interest 
 of only four and five per cent. This drove Congress — for the continued 
 limitation of the deposit showed how much that body needed driving 
 
to do anything that might interfere with bank profits— to raise the 
 limit, by the act of July 11th, 1862, to $100,000,000. 
 
 Mr. Chaae, in his report of December 6th, 1862, page 10, refers to 
 the passage of those laws of February 2d, May 17th and July 11th, 
 with evident satisfaction : 
 
 " The Secretary recommended, and Congress, by different amendments, autho- 
 rized the receipt on temporary deposit, at an interest not exceeding five per cent, 
 of such sums as might be offered, not exceeding in the whol^, $100,000,000." 
 
 With equal satisfaction he refers to his first attack on bank issues 
 by the law of July, 1861, authorizing him to issue not exceeding fifty 
 million demand notes to circulate as money. 
 
 " Of these notes," he says, "$33,460,000 were in circulation at the time of the 
 suspension. Up to that dale every note presented for payment had been promptly 
 redeemed in coin." 
 
 The report also shows that up to the 30th of June, of the sixty-six 
 millions of deposits already mentioned, only $8,553,267.53 had' been 
 called for, leaving a balance in the Treasury to that account, on the 
 30th of June, of $57,926,056.57, and this balance had been steadily in- 
 creasing, notwithstanding large repayments to depositors, up to the 
 date of his report, December 6th, 1862. 
 
 IT INFLATES INFLATION? 
 
 In view of this he urged Congress to remove the limit and let the 
 people deposit all they desired, saying (page 24) : 
 
 " A considerable sum may probably be obtained by removing the limit on tem- 
 porary deposits. The amount of these deposits has steadily increased, notwith- 
 standing large repayments to depositors. The vault of the Treasury has been 
 made the Savings Bank of the Peoplb ; should the restriction be removed, 
 there is reason to believe that twenty-five millions may be received beyond the 
 maximum now fixed, during the year." 
 
 Mr. Chase could do no more than to lay before Congress the fact 
 that his deposit system had more than realized his highest hopes, and 
 that the people only desired the opportunity of depositing their mil- 
 lions in the Treasury at four and five per cent, per annum, lawful 
 , money, as well for their own profit and convenience, as to relieve the 
 wants of the Government, and to ask that the bar to their patriotic 
 progress might be removed. 
 
 What became of the recommendation ? It was smothered in the 
 Committee room, where sat in permanence the mysterious bank 
 lobby — a wolf in sheep's clothing, a traitor in the garb of a patriot. 
 
 Notwithstanding this discouragement the deposits continued to in- 
 crease, until seven months afterward, on June 30th, 1863, notwith- 
 standing there had been repayments to depositors of $67,516,293.48, 
 
70 
 
 there remained a net balance in the Treasury of $104,934,102.73, 
 drawing an interest of only four and five per cent, per annum in law- 
 ful money, for the people asked nothing else. The willing Secretary 
 had not watched the limit. While his head was turned, the people 
 had broken over the bars and placed in his strong chest $5,000,000' 
 more than the law allowed, to send to the boys in front. 
 
 This is history. But it is all a mistake ; for the Cincinnati Gazette, of 
 August 19, in the sharpest editorial that ever graced its columns, says, 
 that in times of prosperity, through an inflation of paper money, 
 there is always a growth of general confidence, an advance in general 
 prices, which brings an expansion of trade that causes an active de- 
 mand for money, and consequently, ah advance in the rate of interest. 
 The worthy editor thus exactly describes the situation in 1863 — in- 
 flation, prosperity, demand for money, high interest — and. says that at 
 such a time, instead of any deposits being made in the Treasury, the 
 balances already there would all be drawn out, and serve to inflate 
 the inflation until everything " bnsted." Here are his own words: 
 
 " Now as to its working inflation while credit was expanding. In times of pros- 
 perity, whether it be real, through increase of production and good markets, or 
 seeming, through an inflation of paper money, there is always a growth of 
 general confidence, an advance in general prices, an expansion of trade, which 
 brings an expansion of credit ; an active demand for money, whose profitable use 
 raises the rate of interest. At such times bankers would convert their call loan 
 bonds into currency to 4end at higher interest, and so would inflate the currency 
 and add to the dangerous expansion of credit. 
 
 " For it will be obsered that in this interchange the bankers and other money- 
 lenders are the medium between the people and the Government. The man who 
 has to use credit in his business — as most business men have — has not bonds to 
 go to the Treasury and draw out greenbacks ; he would have to go to the bank 
 or capialist to borrow at their rates. When business made a demand for money 
 at rates high enough, and the times were such as to create confidence, the bank 
 would return its 3.65 bonds to the Treasury, receive greenbacks for them, and 
 lend them at its own rate to the borrower. 
 
 " Thus the 3.65 bond would not keep the rate of interest to trade down to that, 
 as these political currency-tinkers think, but it would furnish a safe deposit for 
 the banks on interest, to save them from the necessity of lending their money to 
 inviduals until they could get high interest for it. It would be in reality a scheme 
 for the profit of the banks, and to keep up the rates of interest. But when real 
 or seeming prosperity created confidence, expanded trade and credit, and made a 
 brisk call for money at good rates of interest, the banks would naturally convert 
 their call loan bonds into greenbacks to use in discounting trade paper, and thus 
 these bonds would be a means of inflating an inflation." 
 
 This is good logic from the stand-point of the worthy editor, who 
 draws his inspiration from bank parlors. If he would rely upon tbeir 
 oracular delivei'ance less, and upon his own sterling good sense more, 
 he would not say, as he has done, that " the capitalists of a country 
 should furnish the currency of the country," or that " the bankers and 
 money lenders are the medium between the people and the Govern- 
 ment," and would see, as clearly as he sees other things, that the 
 
71 
 
 money of these bankers he talks about is but little more than the de- 
 posits of the people, >and that, although the bankers might have the 
 disposition to do all the mischief he describes (which no one doubts), 
 yet if the " Savings Bank of the People," described by Mr. Chase, had 
 been kept open, deposits would have flowed into the strong vaults of 
 the Treasury instead of such rotten boxes as J. Cook's National Bank, 
 standing in the very shadow of the Treasury building — receptacles in 
 which the people have been forced to confide, and which have en- 
 gulphed all the savings of an Ex- President of the United States, and 
 thousands of others less conspicuous, but equally deserving of pro- 
 tection from systematic robbery. The drawing off of these deposits 
 would not only have saved the people, and relieved the tax-payer, but 
 would also have cut the hair of this modern Samson, so that he would 
 no longer have been able to carry slaughter among his enemies with 
 the jaw-bone of an ass. 
 
 IT CONTKACTS CONTRACTION? 
 
 As remarked, the deposit on June. 30, 1873, was |104:,934,102.74. 
 The unbounded prosperity, the great activity in business, and the con- 
 sequent dangerous expansion of credit had placed the country, early 
 in the fall of 1863, in exactly the same real condition as it was ten years 
 later. Instead of the money pouring into the Treasury, as before, it 
 rolled out at an amazing rate, millions a day, after what may be 
 called an incipient panic set in, so that the deposit, instead of its usual 
 increase, showed that the payments not only equaled the receipts, but 
 took $59,427,982.69 of the balance on hand, June 30, leaving only 
 $45,506,120 on hand on December 1, 1863. The crash was averted, 
 the pressure relieved, the business men of the country saved, and the 
 wheels of commerce rolled on smoothly as before. 
 
 Such a glorious demonstration of the power of this depository for 
 the savings of the people to prevent the possibility of panic, might 
 well cause Mr. Chase to speak as he did in his report to Congress of 
 December 10, 1863, and to again urge them to remove the limit of 
 $100,000,000: 
 
 •'^The limits of deposits for temporary loan are fixed at $100,000,000. 'The 
 amount of this deposit on the first of December had been reduced to $45,596,120.01, 
 and payments of $10,000,000 had been made from the reserve. The additional 
 payments will be confined within the narrowest possible limits, and can hardly 
 exceed $25,000,000. The reflow of deposits has already begim and will probably 
 soon exceed reimbursements, and so arrest payments from the reserve. The whole 
 reflow beyond the amount of these payments will be available as part of the ad- 
 ditional loan required, and may be stated, without risk of mistake, at $25,000,000. 
 The Secretary perceives no solid reason for retaining the restriction on loans in 
 
72 
 
 this form to $100,000,000. It may, as he thiuks, be usefully removed. As the 
 advantages of these deposits become better and more generally understood, the 
 loans in this form will doubtless, in the absence of restriction, be largely increased, 
 .and the possibility of demands for reimbursements beyond means to meet them 
 can be fully provided for by an increase of the existing proportion between de- 
 posits and reserve. Such an arrangement, the Secretary inclines to think, would 
 operate beneficially, by. increasing the amount of currency when unusual strin- 
 gency shall require increase, and reducing its amount when returning ease shall 
 allow reduction." 
 
 This also is history. Can it be true, since the worthy editor of the 
 Qazette has "demonstrated," that at such a time the bankers, •' the med- 
 ium between the Government and the people," would rush their money 
 into the Treasury to find investment that they could not safely make 
 anywhere else, and thus contract contraction until even solid men were 
 squeezed out of existence? Here is the way he proves the " inconverti- 
 ble fact" that such a condition as he describes would cause all the cur- 
 rency to flow into the Treasury instead of running out as it did. His 
 chain of reasoning is so close that not a link can be taken out without 
 marring its strength : 
 
 " Second, as to our declaration that this interchangeable scheme would inflate 
 the currency in a time of credit expansion, and would contract the currency in 
 time of panic. Evidence of the latter part of this working may be seen in the 
 situation which came in with the panic of 1873, and still exists. That, like all 
 monetary panics, was the consequence of the over-expansian of credit. Money 
 was as plenty as ever, but it became alarmed and sought hoards. In the alarm all 
 the usual forms of trade credits ceased to be regarded as sufficient security. 
 Money was plenty, but it was afraid. It sought investment in undoubted securi- 
 ties, such as National Government stocks, and thereby these rose so greatly in 
 price, that the rate of interest realized on them was very low. 
 
 " It accumulated in banks, and the seemingly anomalous condition was seen of 
 business men hard pressed for money, and willing to pay high interest for it, while 
 money was lying idle, and increasing in deposits at the mnoey centers, and seek- 
 ing temporary borrowers who could give marketable securities, at rates as low as 
 1)2 per cent, a year. Thus there is a vast amount of money which would rush 
 into 3.65 call bonds if they were now to be had. Thus we show the incontro- 
 vertible fact that the panic created a situation immediately which would have 
 caused the currency to be converted into these call loan bonds, at a most rapid 
 rate, if they were to be had. 
 
 " These 3.65 interchageable bonds are nothing but a provision by which banks 
 can lend their money to the Treasury on call. By them the Government is to 
 receive their idle money on deposit, and pay them interest for it. At this very 
 time, when these political currency -tinkers are declaring that the life-blood of the 
 people is squeezed out of them by a lack of currency, and are promising that if 
 they will vote them into office they will give them an unlimited issue of green- 
 backs, regulated by interchangeability with 3.65 bonds, the monetary situation is 
 such that if their 3.65 call loan bonds were now offered by the Treasury, hundreds 
 of millions of currency would be exchanged for them as fast as clerks could count 
 them out, and thus a most violent contraction of the currency would be made in 
 the midst of the ' hard times.' 
 
 " The situation which came in with the panic, and which exists now, with hard 
 times for money in all trade, but money going begging in call loans on marketable 
 security, demonstrates that in time of distrust, alarm, pressure, and panic, this 
 interchangeable bond, instead of letting out currency, would violently contract it 
 
7S 
 
 Such a Government machine would not only burst all credit buobles, but would 
 carry down solvent men in the general collapse, which would be inevitable when 
 the Government withdrew all loanable money from the channels of business." 
 
 Here, as in the other case, where the worthy editor proved that the 
 deposit would serve to inflate inflation, the logic is good, but the 
 premise is bad. He shows what prudent men would do, after a panic 
 had prostrated the business of the country and reduced it to the de- 
 plorable condition in which he admits it now is; but that does not 
 prove what they would do to guard against one that threatened, or 
 even what they might do in the wild commotion, when the storm fint 
 Iroke over their heads. That proof is aflTorded by the action of the 
 New York Produce Exchange, and of the bankers and merchants of 
 that city, and also by that of the Chamber of Commerce of the City 
 of Charleston, in the midst of the panic of 1873. 
 
 As before, the writer agrees with him, but holds that such a situa- 
 tion as he describes would not be possible with a currency of United 
 States notes, depositable with the Government on call at a low rate of 
 interest, or, which the editor says is the same thing, a currency whose 
 quantity would be regulated by an interchangeable bond, which, like 
 the ocean, would cause the inevitable ups and downs in the currents of 
 trade, to rise and fall as gently as the tide. 
 
 Facts justify this conclusion. The outflow of sixty millions of 
 dollars in the fall of 1863 shows that the real condition then was 
 worse than in 1873 ; that the alarm spent itself against the Treasury 
 as do the waves against the rock, and only subsided when every man 
 felt that, like a rock, the vast deposit in the Treasury was able to 
 withstand every shock. That it was hardly possible for that alarm to 
 have ripened into a devastating panic is seen in the fact that when 
 it was quieted and confidence restored there still remained forty-five 
 millions of dollars in the Treasury. Had that deposit amounted to 
 five or six hundred millions instead of one hundred, its exhaustion 
 would have been simply impossible. 
 
 TESTIMONY OP THE NEW TOKK PRODUCE EXCHANGE AND THE CHAMBER 
 OF COMMERCE, OP CHARLESTOWN, S. C. 
 
 In further proof that a currency exclusively of United States notes, 
 with Mr. Chase's Depository, or an interchangeable bond, would 
 have made the panic of 1873 impossible, the worthy editor is referred 
 to pages 12, 13, 14 and 15 of the Annual Report of the Secretary of 
 the Treasury, of December 1, 1873, where he says "that great pressure 
 was brought to bear upon the Treasury Department to afford lelief 
 i)y the issue of United States notes," and that, in the opinion of 
 New York gentlemen, twenty millions placed at the service of the 
 
74 
 
 banks in the city of New York would be adequate for the emergency, 
 and that this amount was asked for as a loan upon the pledge of 
 Clearing-house certificates, secured by ample collaterals. And that 
 subsequently, on September 29th, the New York Produce Exchange 
 made a proposition to accomplish the same result in a different form, 
 which the Secretary thus describes : 
 
 " That currency be immediately issued to bankers or banks upon satisfactory 
 evidence that gold has been placed upon special deposit in the Bank of England, 
 by their correspondents in London, to be used solely in purchasing commercial 
 bills of exchange. 
 
 " It should be stated," says the Secretary, " that in the excitement there were 
 many persons in the City of New York, who insisted with great earnestness that 
 it was the duty of the Executive to disregard any and all laws which stood in the 
 way of aflFording the relief suggested by them. 
 
 " The Executive Department, ' says the Secretary,' was anxious to do ^very 
 thing in its power under the laws * * * to allay the panic, and to prevent 
 disaster to the legitimate, commercial and industrial interests of the country, but 
 it was found impossible to afford the relief in any of the many forms in which 
 that relief was asked. It was decided, therefore * * * to purchase bonds 
 for the sinking fund to such an extent as th,e condition of the Treasury would 
 allow, and thus release a considerable amount of currency from its vaults. Pur- 
 chases of bonds were commenced on Ihe morning of the 20th of September, and 
 were continned until the 24th, when it became evident that the amount offering 
 for purchase was increasing to an extent beyond the power of the Treasury to 
 accept, and the purchasing was closed after bonds to the amount of about thir- 
 teen million dollars had been bought, and without the use of any part of the 
 fourty-four millions ot United States notes, generally known as the reserve. 
 
 " The currency thus paid out of the Treasury for bonds, did much to strengthen 
 many savings banks, and to prevent a panic among the numerous depositors, who 
 began to be alarmed ; and had there developed an extended run upon those useful 
 institutions, it would inevitably have caused wide-spread disaster and distress. 
 It also fortified other banks, and checked the general alarm to some extent." 
 
 Wherein does this delivery of currency in paj'ment for bonds for 
 the Sinking Fund, differ from the same delivery to depositors, under 
 Mr. Chase's system of deposits, or in exchange for interchangeable 
 bonds, which the Gazette admits are nothing more than a deposit on call ? 
 And when the Secretary says the payment of only thirteen millions 
 saved the savings banks and fortified others, does he not admit that 
 the payment of the additional amount necessary would have stopped 
 the panic entirely, even as had been done before ? Then there would 
 have been no panic, and 1873 would have passed out of mind as 
 completely as 1863, and the business man who now may be suprised 
 to hear about there having been a panic in 1863, would have been 
 equally suprised at the mention of one in 1873. When we speak of 
 1863, it is of the conditions which would have made a panic, but for 
 
75 
 
 the presence of the great regulator, "The Savings Bank of the 
 People." All the diflference between that period and 1873 was, that 
 the great regulator had been ruthlessly removed in the interest of 
 another kind of bank, a bank that can justly be described as the 
 
 BKEEDEE OF PANICS. 
 
 The admission of the Secretary, that the paying out of thirteen 
 million greenbacks saved the saviugs banks, and fortified others, 
 justifies the conclusion, indeed makes it certain, that the payment of 
 the fourty-four millions lying dn the vaults of the Treasury, would 
 have stopped the alarm, and reassured the people. Yet, the Secretary 
 takes credit for not having paid out a dollar of this amount, although 
 bonds were offered at any price he was willing to give. He expressly 
 concedes that he had the right to make such use of them. Why was 
 it not done ? Because, he says, those who conceived that the public 
 interest would be better served by keeping the issue of United States 
 notes down to the minimum, brought as great a pressure upon the 
 Treasury, as did hundreds of others, who demanded that the notes 
 should be used by the Government in the purchase of its own bonds. 
 
 These others, the report clearly shows, page 18, were the friends of 
 the' National Banks, who would rather see the country ruined, unless 
 it can be saved by their agency and for their profit. Othei' scandalous 
 things he says : " National Banks, at the several redemption cities 
 named in the banking law, which are the great controlling centers of 
 business, might do much to give steadiness and safety, if they were 
 authorized, through properly constituted Boards or Committees of their 
 own officers, to exercise a large discretion in the use of their reserves 
 at the rate of interest to be charged at different seasons and under 
 different circumstances." Not only this, but lest the use of " their 
 reserves," the only miserably small security which the law has pro- 
 vided for the protection of depositors, might not be enough, he further 
 says : " Should it be deemed necessary or expedient to enlarge the 
 paper money circulation, in cases of great emergency, provision may 
 be made to permit the National Banks, under certain circumstances, 
 and to a limited extent, to increase their note circulation by a pledge 
 of United States bonds, bearing no interest while so pledged, or sub- 
 jecting the banks to special taxation, upon the circulating notes ob- 
 tained thereon, or upon such other terms that it would be for their 
 interest to recall the notes and redeem the bonds at the earliest pos- 
 sible day after the premium upon their securities should have ceased." 
 
 Abundance of similar evidence bristles in every report of the 
 Treasury Department, since the time the banks took possession, on the 
 advent of Mr. McCulloch, in 1865. 
 
76 
 
 To return from this long disgression to the point where we left off 
 when speaking of the balance in the Treasury, on June 30, 1864. 
 
 It was only when everything looked blue — ^before Vicksburg had 
 fallen — and when the armies of Lee were sweeping around the Capital, 
 through Maryland and into Pennsylvania, that Congress, on the 30th 
 of June, consented to do in part what the Secretary had been urging 
 two years, and fifty millions were added to the limit. 
 
 DECLINE AND FALL 
 
 Under tlie administration of a Secretary working in the 
 interests of the .Banks. 
 
 Four days after this, Mr. Chase unexpectedly ceased to be Secre- 
 tary, and his pet measure was left to the tender mercies of the Senate 
 — and when the Senate is mentioned in connection with a financial 
 question, it is always understood to mean its Finance Committee, and 
 substantially the Chairman of that Committee, whose purpose was 
 well defined by the character of the instrument (Mr. McCulloch) 
 chosen to carry out his policy to do nothing that would interfere 
 with the rights of the banks. This influence immediately displayed 
 its power, for in nine months the balance was reduced twenty millions, 
 and on March 31, 1865, stood at $52,452,328.29. At that time it 
 became necessary for the Treasury to avail itself of every agency to 
 raise money to pay the armies then being disbanded. The obstruc- 
 tions were again removed, and the balance increased over fifty-five 
 millions, and amounted on August 81, 1865, to $107,148,713.16, and 
 kept on steadily increasing during the fall, when Mr. McCulloch 
 described (in his report of December, 1865) the country to be wild 
 with an inflated prosperity — the very time when the Gazette says the 
 activity of business and high rate of interest would cause all the 
 deposits to be withdrawn. 
 
 The people, having come to understand the advantages of the de- 
 positories, as Mr. Chase predicted, the danger became imminent that 
 it would draw off" the life-blood of the banks, their deposits, and no 
 sooner had Congress given eflect to the bank Secretary's recommend- 
 ation by the act of April 12, 1866, than he commenced the work of 
 cutting off the opportunity of thus transferring their deposits. He was 
 not, however, able to get the balance of the deposit account down 
 lower on June 30 than $120,176,196. The reduction went on rapidly, 
 a hundred millions during the year following, the balance on June 30, 
 1867, being $20,225,070. By 1869 it was reduced to $186,310, and 
 now stands at $78,520. 
 
77 
 
 The end of this most useful and important institution is thus re- 
 ferred to in the S'ecretary of the Treasury's report: " The acts of 
 Congress, of February 25, 1862, July 11, 1862, and March 3, 1863, 
 together authorize the issue of $400,000,000 of United States notes, in 
 addition to $50,000,000 of such notes reserved for the purpose of 
 securing prompt payment of temporary loan deposits ; and the act of 
 June 30,1864, contains these words: 'Nor shall the total amount of 
 United States notes issued, or to be issued, ever exceed $400,000,000, 
 and such additional sum not exceeding I8!50,000,000, as may be tem- 
 porarily required for the redemption of temporary loans.' The 
 temporary loan referred to in the foregoing acts having been redeemed, 
 the maximum amount of United States notes which, under existing 
 laws, can now or hereafter be issued, is $400,000,000." 
 
 When the Secretary thus speaks of the effect of winding up this 
 GKEAT SAViNG-s BANK OF THE PEOPLE, in its enabling the Department 
 to cancel the fifty million greenbacks held for the reserve, he clearly 
 shows the influence that worked its destruction — the same influence 
 which now, under the hypocritical cry of " hard money," seeks the 
 extinction of United States notes in order that the National Banks 
 may have no competition, but enjoy the whole field of circulation, with 
 its immense profit. 
 
 Having thus presented the plain facts, they are left with each reader 
 to weigh against the Oazelte's "demonstration." The writer had too 
 high an opinion of the worthy editor's powers of logic to venture even 
 the attempt to overturn his argument by pure reasoning. So when 
 he heard that " the other Dick had rather knocked the wind out of 
 his inflation bubble," and especially when the soft, gentle voice of a 
 most estimable gentleman was heard saying, with a smile which only 
 an abundance of good bank stock can raise in these times, "The 
 National Banks are worth seven hundred millions ; I think they can 
 take care of themselves — don't y-o-u ?" This, with a further innocent 
 aggravation, of having a copy of the Gazette of the 19th handed to 
 him by a friend, with a request to rise and explain or forever after 
 hold his peace, suggested the thought that, if he could not use the 
 tools of a logician to answer it, he might reanimate the bones of Jones' 
 lost mule, in the hope that his heels might prevail in kicking over 
 what the writer confesses he had not the ability to take to pieces. 
 Hence his reference to the celebrated owner of that mule in the open- 
 ing of these remarks, whose indiscretion is so pathetically told by 
 Truthful James in his description of the happy meetings of a society 
 of " Scientific Gents " that used to meet on the Stanislaus, in the 
 golden land, which, unfortunately for it just at this moment, has 
 
78 
 
 never been troubled with a currency described by Secretary BristoTT 
 as not actually worth one cent,* nor by the existence of a depository^ 
 which the worthy editor of the Gazette says would end in general bank- 
 ruptcy. For he says, (and as this is all that is left of the Oazelte article 
 not already reproduced, it is here thrown in, that not a word of the 
 worthy editor may be lost) : 
 
 " But all expansions of trade, prices and credit have their culminations. The 
 expansion of credit and speculation requires a continual rise in prices to bring out 
 the ventures without loss. As soon as the advance in prices is checked there 
 comes an alarm. All become sellers and none buyers. Then failures begin to 
 occur and panic comes on, and money takes flight to hoards, and here, at the 
 very time when more currency was wanted it would be rushing like a mill-tail to 
 the Treasury to be exchanged for 3.65 bonds. Thus is this 3.65 scheme a plan for 
 inflating the currency in times of confidence, and for contracting the currency in 
 times of panic. One revolution of it would end in general bankruptcy." 
 
 To return from the heated atmosphere of the Gazette office to the 
 meeting on the Stanislaus, which Mr. James says was so happy: 
 
 " Till Brown, of Calaveras, brought a lot of fossil bones 
 That he found within a tunnel near the tenement of Jones ; 
 
 Then Brown, he read a paper, and reconstructed there 
 
 From these same bones an animal that was extremely rare ; 
 
 And Jones then asked the Chair for a suspension of the rules 
 
 Till he could prove that these same bones was 'one of his lost mules." 
 
 R. B. P. 
 
 It appears in the above account of the operations of Mr. Chase's 
 depository, that all the conditions of a panic existed in 1863, and that 
 it would have occurred but for the existence of the Savings Bank. 
 After that article was published, I found, upon further examination of 
 the Treasury Reports, and from Shuckers' valuable work on " Finance, 
 Panics and Specie Payment," which you [Judge Kelley] sent me, after 
 your return home, positive evidence of what I had endeavored to prove 
 by what was before me when the article was written, to-wit: 
 
 Secretary Chase, in his Eeport of 1863, page 15, says — 
 
 " The final object of the Secretary was to extract from the unavoidable evil of 
 debt as much incidental benefit as possible. 
 
 " To this end he desired authority to receive temporary loans, in the form of de- 
 posits, reimbursable after a few days' notice. This measure was regarded by many 
 with something less than favor at first ; but Congress, after full consideration , au- 
 thorized the receipt of such deposits, at an interest not exceeding five per cent., to the 
 amount of twenty -five million dollars ; then raised the limit to fifty millions, then to 
 
 '*' The telegram announcing the failure of the Bank of California, and the consequent panic 
 on the Pacific Coast, had just been received. 
 
79 
 
 one hundred millions ; and provided a reserve of fifty millions of United States notet 
 to meet demands for reimbursements, beyond any other convenient means of satis- 
 faction. It was not long before these deposits reached the highest limit, and, be- 
 fore the flow could be well checked, somewhat exceeded it. The utility of the 
 measure was very conspicuous on the recent occasion of great stringency in Neta 
 Tork, ■when the Secretary luas able to reimburse over fifty millions of these de- 
 posits during the last -weeks of the year ; by which action the pressure -was sen- 
 sibly alleviated -with a use of only a fifth of the reserve. 
 
 " In former reports the Secretary has stated his convictions, and the grounds of 
 them, respecting the necessity and utility of putting a large part of the debt in the 
 form of United States notes, without interest, and adapted to circulation as mdney. 
 These convictions remain unchanged, and seem now to be shared by the people. 
 For the first time in our history has a real approach to a uniform currency been 
 made ; and the benefits of it, though still far from the best attainable condition, are 
 felt by all. The circulation has been distributed throughout the country, and is 
 everywhere acceptable." 
 
 Eeferring to this event, Mr. Shuckers, after speaking of the happy 
 influence which every exercise of arbitrary power, in winking at the 
 unlimited issue of notes by the Government bank, in violation of law, 
 had in allaying panics, says, on page 25 : • 
 
 " Our domestic experience has not been so pronounced and decisive as that of 
 Great Britain ; but in 1863, Mr. Cisco, Assistant Treasurer at New York, with the 
 concurrence of Mr. Chase, extended relief with most beneficial results to the banks 
 of that city at a very critical time." 
 
 If any one is competent to testify on that subject it is Mr. Shuckers, 
 ■who, during Mr. Chase's administration of the Treasury, occupied the 
 most confidential position near him, not as a mere private Secretary, 
 for another gentlemen did that duty, but as a confidential Secretary 
 and collator of matters relating to finance. As such he held a high 
 place in the Secretary's confidence and esteem. 
 
 This demonstration of the absolute power of the " Savings Bdnk of 
 the People," in preventing a panic, together with the effect of even the 
 unlawful overissue of notes having no coin basis in arresting the 
 ravages of one already begun, should cause every business man to 
 demand that it be re-opened. With that, and a uniform currency, solely 
 of United States notes, the wa}"- to make these notes on a par with 
 gold is plain. How ? By having the Government pay a rate of interest 
 in gold that would cause the certificate of deposit to be on a par with 
 gold in the markets of the world. In the law making the " Savings 
 Bank," the rate of interest was left discretionary with the Secretary, 
 not, however, to exceed certain limits. That discretion was never 
 
80 
 
 abused, neither by Mr. Chase (for that was impossible) nor by his 
 successor, because, from the nature of the case, it could not be, for, 
 had the rate of interest been too high, too much money would have 
 flowed into the Treasury, or, if too low, not enough. 
 
 The same discretion can be left with the Secretary now, within 
 narrower limits, requiring that the interest be fixed at a rate that 
 would cause the certificate to sell at the same rate of discount for 
 gold as the United States notes, thus avoiding any contraction, or, what 
 would be better, have the rate fixed at that point. With the increase 
 of business and growth of the country the discount would gradually 
 diminish, until it reached par with gold, or approximate as near 
 thereto as the notes of the bank of France, whicb every business man 
 regards as equal to gold. United States notes would then be practically 
 on a par with gold, and would forever remain so, for there would be 
 no possibility of suspension, as would be certain with a circulation of 
 bank notes convertible into coin, when all the gold in the country 
 does not amount to one dollar in thirty of the actual deposits in 
 banks, every dollar of which can immediately call for gold on the re- 
 sumption of specie payments. The amounts of gold and of these de- 
 posits are given in detail in a pamphlet entitled " Issue," a copy of 
 which I send you herewith. 
 
 The only reply the Gazette made to the two answers to its challenge 
 was on September 14, in the following editorial : 
 
 " A correspondent, ' R. B. P.,' takes much space in the Enquirer to controvert 
 the Gazette's statement that interchangeable bonds and notes would work a con- 
 traction of the currency. This he does by making out that all the savings and 
 loose money of the people would flow into the Treasury instead of into the banks, 
 who loaned out, which is just about what we said. He makes a lesser showings 
 shaping facts to suit, that in times of inflated confidence and speculation, this ma- 
 chine would inflate the currency, which is what we said. Yet he labors through 
 several columns in the belief that he is controverting the Gazette. The writer is 
 as wise a Kelley ; he thinks that to extinguish deposit banking would be a 
 blessing." 
 
 In saying that " R. B. P." had said just what he said, a most happy 
 agreement, the editor failed to say a word about that portion of the 
 answer which appeared in the Enquirer of September 6th, the bulk of 
 which is attached to another paper sent herewith, and was nothing 
 more than lengthy extracts from the remarks of the moat eminent 
 British statesmen in a debate in Parliament on the 16th of last March, 
 and a few extracts from Secretary Bristow's last annnal report, by way 
 of contrast. That partial report of a debate on a question that now 
 shakes the country, seemed so important, that the Editor of the En- 
 quirer, in calling attention to the four column article, said: — 
 
81 
 
 " We print this morning an article prepared by Mr. R. B. Pullan, which will 
 doubtless attract some attention in the land. It reveals the startling fact that the 
 great financiers of England have been and are now seriously considering the pro- 
 priety of adopting something similar to the greenback system. The extract from 
 the debate in the House of Commons, which took place on the 17th of March last, 
 will be read with intense interest on this side of the water. They get a copy of 
 the London Times down in the Commercial office, but the news instinct down 
 there was not far-reaching enough to cover this valuable contribution to financial 
 literature. The Enquirer is made the happy medium of its transmission to the 
 country." 
 
 If that important debate was thus first made known to the countr}'-, 
 it was not because it had been overlooked; for the Bankers^ Maffasine 
 for last May devoted much space to the discussion of " Government 
 Currency," and gives a belittling report of what certain obscure mem- 
 bers of Parliament said in the debate referred to, winding up with the 
 declaration, — " The idea of paper currency on gold security should be a 
 /unction of Government seems to have made hut little progress in Great 
 Britain." If you will refer to that article in the Bankers' Magazine for May, 
 and also to the twenty page article on "Banking," and Mr. Goschen's- 
 Bill, in Blackwood, for June, you will be astonished at the exhibition of 
 servility to the money power which has driven one of the most useful 
 periodicals of this country to thus misrepresent. It is not surprising 
 that bankers arid merchants who rely upon this valuable magazine for 
 information, should be so badly informed of what is transpiring abroad 
 in the line of their occupation. The facts are either entirely suppressed, 
 perverted ot inverted, by the Eastern journals, on whose summary 
 of European intelligence the press of the country generally depends. 
 Under such circumstances, the intelligent business community- could 
 not be expected to know that what Blackwood calls the new theory of 
 cuKKENCT has taken possession of the mind of Great Britain ; neither 
 could tliey be expected to be much better informed than their proto- 
 type, the eminently respectable Mr. Dombey, or give a clearer expla- 
 nation of the faith that is in them, than Dickens says he did, when 
 suddenly startled by the wierd and earnest inquiry of little Paul, 
 " Papa, what's money ?" 
 
 The extracts from Secretary Bristow's Report, of December 4, 
 1874, referred to in the above communitiation to Judge Kelley, are 
 from pages 11, 14, and 16, in which last the Secretary confirms the 
 position taken in the papers published Feb. 13, 1868, and January, 
 1869, and which constitute Part II. The author then stated that in 
 the original issue of United States notes Secretary Chase's confidence 
 bad been abused by the bankers, or bank note engravers, charged 
 
82 
 
 with getting them. out, through the force of habit, or designedly to 
 deceive the people, as they have done. Re called attention to the 
 scandalous departure from the words of the law in the language of 
 the note first emitted, and how it had been corrected in part. He 
 there said that the note, as it was put in circulation, promised to pay a 
 dollar, when there were no dollars' to pay it with, and that there was 
 no provision in the law for paying the dollar at any time whatever, or 
 ! for converting them into any other kind of dollars than themselves, 
 with a provision, however, which permitted their conversion into that 
 which bore such tangible relation to a coined dollar as would cause its 
 value to be on a par with gold. 
 
 Secretary Bristow says, in the extract quoted from page 16: 
 
 " A dollar legal tender note, suck as is now in circulation, is neither more nor 
 less than the promise of the Government to pay a dollar to the bearer, while no 
 express provision is made by lavir for paying the dollar at any time whatever ; nor 
 is there any existing provision for converting it into anything that stands in a 
 tangible relation to a coin dollar." 
 
 This is the exact truth. Observe how carefully Gren. Bristow dis- 
 tinguishes between the notes which the law authorized any one to 
 make, and such as are now in circulation ; also, that when he says there " 
 is not any existing provision to secure the equality of value between 
 the two kinds of Government currency, he carefully avoids referring 
 to the solemn pledge that did exist, until it was repudiated, through the 
 influence and manipulations of the bank lobby, in the interest of the 
 banks. Gen. Bristow's great eminence as a lawyer forbade him speak- 
 ing .other than he did. 
 
 As even Gen. Bristow admits, that the present form of United States 
 notes is neither more nor less than a promise to pay the bearer a dollar 
 in coin, and that the law makes no provision for such payment at any 
 time whatever. In other words, that the note is really what Mr. 
 Greeley described it, a lying promise, uttered without any authority 
 of law; a device to deceive and delude the people, as it has done. Ha-s 
 the time not come when this standing monument of our shame that 
 daily stares the people in the face should be removed ; and would it 
 not be wise in Mr. Buckner, and the Currency Committee, of which he 
 is Chairman, to consider this subject, and take from the Secretary all 
 discretion over the form of United States notes to be hereafter issued 
 in place of mutilated ones retired ; and specifically describe the words 
 and devices to be placed thereon, in strict conformity to the words of 
 the law creating them ? 
 
83 
 
 fjl:elt zV. 
 
 THE GREENBACK. 
 
 Some Startling Facts for the People. 
 
 Tlae G-reenbaok IDoctrine in England. 
 
 British Finance in the House of Commons. 
 
 With the above head lines, the Cincinnati Enquirer, of September 
 6th, 1875, publishes the communication of R. B. P., referred to on 
 page 80, the material parts of which are : 
 
 The whole of the Gazettes remarks upon this point are reproduced, because 
 they concisely and clearly reflect the prevailing idea upon the subject, and also 
 the general reference that has been made to it by the press advocating the extinc- 
 tion of United States notes and the substitution of National Bank notes in their 
 place. The Gazette says : 
 
 "First, as to its likeness to the ofEce done by the Bank of England. That 
 bank watches the signs of overtrading, and represses it by raising the rate of 
 interest. One sign of this is the export of gold, which is caused by the inflation 
 of credit at times. This and all other signs are watched closely by the bank. 
 She raises the rate of interest, and this serves as a check and a warning. She 
 keeps on raising the rate as these signs increase. In this way she stops that which 
 would otherwise run to an inflation of credit, which would culminate in a panic. 
 But if a great panic becomes iminent, the Government suspends the penalties for 
 violating the law which requires a deposit of gold for all notes issued beyond 
 fifteen million pounds. 
 
 " This is to assure the public that money can be had ; that all solvent banks can 
 get means to pay their depositors ; and that none shall be denied money who can 
 bring good securities. This assurance has always been sufficient to stay a panic, 
 and almost without the bank having to exceed its legal limitation. She has never 
 had to greatly exceed it, nor is she allowed to suspend specie redemption because 
 of this measure. The relief comes by stopping the alarm ; by an assurance that 
 money can be had. It does not save the insolvent. On the contrary, the bank 
 keeps up by high rates of interest. Therefore, the principle of the bank of 
 England systeln is to put on the pressure as soon as there are signs of a credit 
 expansion, and to increase the pressure as these signs increase. 
 
 " On the other hand, let us look at the working of the interchangeable bonds 
 and greenbacks. They provide no sliding scale of interest to early check credit 
 expansions, as the bank of England has. Thus the vital feature of that system 
 is wanting. They promise greenbacks without limitation to all who can bring 
 3.65 bonds ; that is to say, they propose to furnish currency at a horizontal and 
 low rate oi interest to all comera. It is not only without the mainspring of the 
 Bank of England regulator, but it is entirely the opposite ; for that regulates by 
 
84 
 
 raising tiie rate of interest, and this undertakes to keep it down to one hori- 
 zontal and low rate." 
 
 The English system of issues is referred to as an example worthy of limitation 
 by all the advocates of bank issue. 
 
 [The balance of the paragraph and the one that follows, refers to 
 the periodical panics that had occurred, and concludes thus :] 
 
 The people should know the true history of the terrible consequences of a 
 resumption of specie paymehts, without a proper adjustment of the relations 
 between debtor and creditor. The recital in the histories of those times is sick- 
 ening to read, and the parallel between the condition there from 1809 to 1819, and 
 our own experience, is so amazingly accurate, that, in connection ■Vyith the suffer- 
 ing after that period, it teaches us a lessen which even a blind man might read. 
 
 To conclude this reply and satisfy the worthy editor of the Gazette, and the 
 merchants and manufacturers of this city, that the words here uttered are worthy 
 their consideration, and that all the bright pictures of " hard money " that are held 
 up for their admiration and approval, are a snare and delusion, and that the situa- 
 tion now in England consequent upon this iniquitous system of bank issues has 
 become intolerable, the writer has been at pains to copy from the London Times 
 the substance of the debate, on that subject, in the British House of Commons, 
 which he now submits for their careful consideration. 
 
 The substance of these extracts was incorporated in an introduc- 
 tion to essays on money and currency, as written in July, 1876. Those 
 papers have circulated in manuscript, and have been read with interest 
 by many learned men. They constitute Part V. of this volume. Even 
 that introductory paper was thought too long when offered for public- 
 ation some two months since, The careful exclusion of all reference 
 to that expression of public opinion in England shows to what extent 
 the press of this country is " bull-dozed " by the banks. 
 
 The Commercial, instead of giving its readers the bread the Enquirer 
 said it had in its lardei', it gave them a stone, — lengthy extracts from 
 the speeches of Sir Robert Peel, Lord Liverpool, the Earl of Granville 
 and others, advocating the Resumption Law in 1819. Upon invitation 
 the Author prepared an answer, which was published on Sept. 16th, 
 1875. That article, with a manuscript continuation of the story of 
 panics, was sent to Judge Eelley, and by him returned as before stated. 
 
 The Oazette's argument is also reproduced, because that paper is 
 more in answer to it than to what appeared in the Commercial, for there 
 was nothing there to answer, although abundance of erroneous state- 
 ment to correct. Besides, these two leading journals of the country 
 have said, in the best manner, each in its own way, all that can be 
 said on that side of the question. 
 
 The communication, whose publication was requested in November, 
 
85 
 
 1875, is as follows, the head lines being as they appeared in the 
 inquirer : 
 
 Sir Eobert Peel's Teachings on Paper Currency. 
 
 THE LESSON TO BE LEARNED FROM ENGLAND'S BLUNDER. 
 How the Commercial withholds True Financial Doctrine. 
 
 To the Editor of the Enquirer : 
 
 The Commercial of Friday last says that the Republican party mean 
 to press forward specie payments, and the Democratic party mean to 
 go the other way, and " that this is the issue of the campaign, clear 
 and lofty, above all others, and its pre-eminence must more and more 
 appear. Now is the time to come to the front." 
 
 To the front it comes, occupying between two and three columns, 
 with' a parallel between the English Resumption Act of 1819 and our 
 own of 1875, although it is hard to understand how a person who 
 holds that " one great disadvantage under which Bill Kelley labors is 
 that he actually believes what he says " can possibly believe in any- 
 thing that does not fill his own pockets ; yet I assume that the distin- 
 guished editor of the Commercial does actually believe that the lesson 
 taught by England's resumption is of vital importance to every busi- 
 ness man in this city. In that I entirely agree with hiin, and hence 
 propose to rectify the crooked lines of his parallel, and show the 
 striking resemblance between the history of two long periods of ex. 
 elusive paper currency in the two great commercial countries of the 
 world: In England, from May 3, 1797, when coin payments were re- 
 stricted by act of Parliament, to May 1, 1821, when they were resumed 
 as required by the act of July 2, 1819 — twenty -four years ; in the United 
 States, from the battle of Bull Run, in the summer of 1861, when the 
 banks virtually suspended, to the present time, and how much longer 
 no man can tell. ^ 
 
 Before entering upon the subject of the parallel between the circum- 
 stances in both countries, it may be well to correct some gross errors 
 into which the editor of the Commercial has fallen. He says : 
 
 " In the House of Commons, Sir Robert Peel, who brought in the bill for re- 
 sumption, took the lead in the debate. He first referred to his own opposition at 
 a former period — i8io-'ii — to the resumption of cash payments." 
 
 Sir Robert Peel did not bring in the bill. Neither did he support it 
 when brought in. Mr. Peel, his son, the Chairman of the Banking 
 Committee, introduced it as a Ministerial measure, but he did not lead 
 in the great debate. The recognized leader was David Ricardo. The 
 reference to Mr. Peel's opposition in 1810-11 misleads, for he, at that 
 
86 
 
 time a mere youth, merely Totcd " no " on Francis Horner's reso- 
 lution. 
 
 To better understand the subject, the character and position of 
 these three men at that time should t)e known. It will possess espe- 
 cial interest to busineas men, and enable them to place a proper 
 estimate upon the opinions of each. 
 
 SIE EGBERT PEEL AND HIS SON 
 
 Sir Robert Peel was the architect of his own fortune. He com- 
 menced as a small manufacturer in the central part of England. By 
 his extraordinary talents, energy and sagacity he amassed an immense 
 fortune — the largest in the kingdon. He stored his mind with useful 
 knowledge. In 1789 he was returned to Pa,rliament. Soon after tak- 
 ing his seat his commanding ability and great wealth commanded the 
 attention of the Prime Minister, William Pitt. He became his 
 trusted friend and counsellor through all the long administration of 
 that greatest of Ministers. He was a large hearted man. He was the 
 author of some of the most beneficent laws for the protection of the 
 defenseless, and for ameliorating the condition of the poor. One of 
 these was the law punishing any one who permitted minors to work 
 more than ten hours a day. In recognition of his services to the State 
 he was, in the year 1800, created a Baronet. At every election for a new 
 Parliament he ' was returned. He opposed the resumption resolution 
 proposed by the Bullion Committee in 1810, and again when the pro- 
 position was renewed in the following year. His son Robert had 
 every advantage which such a father could give, and in 1810, when 
 barely of age — twenty-one — he was, through his father's influence, 
 elected from a small borough, and took his seat in Parliament at the 
 time the Bullion Committee made their report, He voted the same as 
 his father — against the proposition. He was petted by the high Tory 
 party then in power, appointed Secretary for Ii-eland, and after some 
 years again returned to ParliamenJ; by the University of Oxford. He 
 returned these attentions of the aristocracy and nobility by a faithful 
 service. 
 
 In 1815 the landed or Tory party, to secure the passage of a high 
 protective tariff on corn — a prohibitory tax — bargained, through their 
 leader, Mr. Western, with the buUionists for their vote. Coin gave 
 Corn eighty shillings tax, and Corn pledged Coin its vote whenever 
 called for. Sir Robert Peel had no hand in this iniquitous compact, 
 and voted against the tax. His son voted for it — for a prohibitory 
 impost on corn — a vote, which, thirty years afterward, he expiated, 
 when, as Prime Minister, he forced the passage of the Corn Laws. In 
 like manner did his legislation on the currency, in 1844-5, expiate, in 
 
87 
 
 some degree, the iniquity of that in 1819 ; as also did the declarations 
 of his maturer years, that the State should exclusively exercise its 
 prerogative of issue, atone for his immature utterance in the great 
 debate of 1819, which the Commercial spreads before its readers as the 
 sentiments of the man who is recognized as one of the greatest states- 
 men of modern times. Why does the Commercial seek to cast the halo 
 of the grand statesmanship of Sir Eobert Peel's maturer years back 
 over the follies of his youth, and ignore the fact that the only man 
 who bore that name and title, and participated in the debate of 1819, 
 took the very opposite ground from that stated by the Commerciall 
 That man the editor entirely ignores, in speaking of what took place 
 after the report of the banking committee had been made ; for he says : 
 
 " No sooner were these reports fairly before Parliament than that body was 
 besieged by remonstrances on the part of inflationists. On the 2ist of May, 
 1819, the Earl of Lauderdale presented a petition of merchants, bankers, traders, 
 and others, of the city of London, remonstrating against the passage of any law 
 for the termination of the restriction upon payments of cash by the Bank of 
 England. We cite the following extract from this petition : 
 
 "That your petitioners have reason to apprehend that measures are in con- 
 templation with reference to the resumption of cash payments by the Bank of 
 England, which, in the opinion of your petitioners, will, as they humbly submit 
 to your lordship, tend to a forced, precipitate, and highly injurious contraction 
 of the circulating medium of the country. 
 
 " ' That the consequences of such contraction will, as your petitioners humbly 
 conceive, be to add to the burthen of the public debt, greatly to increase the 
 pressure of the taxes, to lower the value of all landed and commei-cial property, 
 seriously to affect both private and public credit, to embarrass and reduce all 
 operations of agriculture, manufacturers, and commerce, and to throw out of 
 employment a great proportion of the industrious and laboring of the community. ' 
 
 " This reads," the Commercial continues " precisely like the protests against 
 contraction and a return to honest money, which now fill the columns of the 
 inflation press. The debate in Parliament on specie resumption was long and 
 interesting." 
 
 A noble man, nobler than an earl, presented the same petition in the 
 House of Commons. 
 
 ^ SPEECH OP SIB ROBERT PEEL. 
 
 To show how wide apart were these two men (father and son), and 
 to revive one of the most touching scenes that ever took place in a 
 legislative hall, I will quote from the "Life and Times of Sir Eobert, 
 Peel," by W. Cooke Taylor and Charles Mackey, 4 vols., London,. 
 1851, vol. 1, page 32. 
 
 " 'The part of the speech in which Sir Robert Peel refers to the difference of 
 opinion between himself and his son,' say these authors, ' can not be read 
 without emotion by any man of right and generous feeling.' 
 
 " On presenting the petition of certain merchants of London in favor of a 
 co'.tinuance of the restriction of cash payments. Sir Robert Peel said, that he' 
 
now stood in a situation which he never experienced before, although he had sat 
 in that House forty years. The petition which he was now about to submit to 
 the House was from a body of men entitled to the very first consideration — a 
 body of men who, in the time of public distress and pecuniary want, were the 
 very first to come forward and relieve the Government. He should wish to call 
 to the recollection of some members who he believed now heard him, whether 
 they did not remember a meeting of merchants and bankers called in 1797 .' At 
 that time the Bank Restriction Act was projected, and could not have passed if 
 that very meeting of merchants and manufacturers had not expressed themselves 
 strongly in its favor. He begged the House would pay particular attention to the 
 petition which he now held in his hand ; it was one of no common character, but 
 that of a great and important body, all of the first respectability, praying that 
 those resolutions which were intended to be submitted to the House may not be 
 carried into effect. He begged leave to state his opinion that the petitioners were 
 the best judges of such a measure. He would add also that though they were in- 
 timately connected with all that concerned the welfare of the country, the most 
 experienced men, and the best qualified, from their connection with our commerce 
 and manufactures, yet they had not been examined by the Committee. He hoped, 
 therefore, that before a measure so destructive of the commercial interests of the 
 country ^was passed, (and when he said that, honorable members would include 
 every other interest to be combined with those, and to go along with them,) the 
 House would pause a while in order to collect the information which they so par- 
 ticularly wanted. In looking at the reports which had been published on the sub- 
 ject, he must say that the witnesses were not men likely to give any information 
 to Government ; not men acquainted with the state of the country ; the last men 
 who should have been questioned if Government wanted to arrive at the merits 
 of the case. In attending lately a meeting in London, he begged it might be 
 understood that that meeting was the only one he was ever interested in, except 
 the one of 1797, and the latter one was considered of consequence enough to 
 save the country. If, then, that was a meeting which deserved the attention of 
 the House, he hoped the present one, which originated this petition, would be 
 considered as equally entitled to it. He would implore the House to pause before 
 any rash step was taken which imight forward such an attempt. He really thought 
 the resolutions were of a very extraordinatry character. It was true that he should 
 have to oppose a very near and dear relative ; but while it was his own sentiment, 
 that he had a duty to perform, he respected those who did theirs, and who con- 
 sidered them to be paramount. The gentlemen who opposed him at the meeting 
 of which he had spoken were rather indignant at his mentioning the name of Mr. 
 Pitt. His own impression was certainly a strong one in his favor ; he always 
 thought him the first man in the country. All of us had some bias ; and he 
 should not quarrel with those who preferred some other name. He well remem- 
 bered when that near and dear relative was only a child, he observed to some 
 friends who were standing near him, that the man who discharged his duty to the 
 country in the manner Mr. Pitt had done, was most to be admired, and most to 
 be imitated ; and he thought at that moment if his own life and that of his dear 
 relative should be spared, he ■would one day present him to his country, to follotv 
 in the same fath, 
 
 " It was very natural that such should be his wishes, although those who did 
 their duty might be at once contented with their conduct. He was well satisfied 
 
89 
 
 that the head and heart of that relative was in the right place, and that he had 
 deviated a little from the path of propriety in this instance, but he would soon be 
 restored to it. 
 
 " The currency measure which Sir Robert Peel thus earnestly deprecated was 
 that very night introduced by his son. 
 
 " In the course of his remarks in the fierce debate that followed. Sir Robert 
 Peel said : 
 
 " The safest, as well as justest, course was to take no step to restore it (the 
 paper currency) to its former value ; but, on the contrary, either to take means to 
 retain it at its then level, or suffer it to go on imperceptibly, depreciating further 
 and further, at least until the burdens entailed by the war had been cleared off by 
 repayments in the same currency in which they were contracted ; after which some 
 scale of adjustment of such private debts as required it might have been arranged, 
 and the money of the country finally settled at some permanent basis of value." 
 
 Mr. Peel was restored to the path of propriety, from which he had 
 deviated to seek power by a place in the Cabinet — which he entered 
 two years afterward — but not soon. It was only after the business 
 men of that day had been driven into the gulf of bankruptcy; only 
 after wave upon wave of ruin had swepi; over the country, did he come 
 to see that bank issue was a financial pestilence, and that it was the 
 right and duty of the State to stamp its signet as well upon paper as 
 upon metal, and make both classes of its coinage of equal value 
 throughout the commercial ■world. Why did not the Gmnmercial pub- 
 lish the ripened opinions of Mr. Peel, the only opinions that were ever 
 held by Sir Robert ? For when he inherited the vast estates of his 
 father, and became a Baronet, he seems to have inherited the glorious 
 principles to which he had once turned a deaf ear. The editor has 
 them — he takes the London Times. He has been told that they are in 
 the Times of March 18, 1875, as reported by Mr. Gladstone. He has 
 been asked to publish them. Why doesn't he ? Because it might 
 open the eyes of the business men who have been deceived by the 
 clamor he has kept up about "inflation" and "hard money." In- 
 stead of giving his readers the truth, he represents that the opposition 
 to the resumption of coin payments in England is precisely like that 
 made '^ against contraction " and a return to " honest money "( ?) in 
 this country — the outcry of a lot of poor, impecunious traders, who are 
 in danger of being sold out by the sheriff. He speaks thus of the 
 poor, knavish debtors, like Sir Robert Peel and the merchants assem- 
 bled at the meeting he attended, who were trying to keep from under 
 the hammer in Great Britain : 
 
 " When the question of the resumption of specie payments filled the public 
 mind in Great Britain, more than half a century ago, as the same question now 
 comes uppermost in our politics, there was a strong inflation party, as well as a 
 party in favor of honest money. The inflation party was composed of merchants 
 
90 
 
 who owed debts, real estate owners who owed mortgages, speculators who wanted 
 paper money to float their enterprises, and money changers who drew a profit 
 from a debased currency." 
 
 DAVID RICARDO. 
 
 The third one of this group is a more remarkable man than either 
 of the others. David Eicardo was an Israelite; raised to the business 
 of his father^ on the stock exchange, from the age of fourteen. At 
 the age of twenty-one he married outside the faith of his father; was 
 cut off, in consequence, by his parents, and left to shift for himself. 
 He commenced business at the breaking out of the war with France, in 
 1793, without any capital but his brains, and the good character he 
 had earned. His career was like that of Jay Gould and Jim Fisk. — 
 There was one point of difference — he was thoroughly honest. He 
 amassed a very large fortune in a half dozen years, and then from his 
 proud position of the acknowledged head of the London exchange, he 
 withdrew, bought an estate, where he passed most his time in study, 
 and in the enjoyment of the society of the eminent men of that day, 
 attracted by his extraordinary talents. In 1808, by request, he wrote 
 a number of letters to the Morning Chronicle on the subject of the cur- 
 rency. They made such an impression as to cause the appointment 
 of a Committee, by Parliament, to inquire into the monetary condition 
 of the country. This Committee, known as the famous Bullion Com- 
 mittee, made their report in 1809. From this period to 1819, he pub- 
 lished, as occasion seemed to call for them, tracts on the subject, 
 which were, after his death, collected, and constitute a monument to 
 his genius. He was the inspiring element in the specie resumption 
 contest, and, to complete the work, was returned to Parliament in the 
 spring of 1819, where he took his seat a few weeks before the great 
 debate came off on which hung the prosperity of the country. He was 
 immediately recognized as its leader, and his leadership justified every 
 expectation that had been raised. In 1822, when he saw the terrible 
 consequences of his teaching, he endeavored to correct them in Par- 
 liament. He died in 1823, not, however, without expressing his regret for 
 tde great blunder he had made. In his papers was found a treatise which 
 has evidently exerted as great an influence in correcting error as his first 
 writings had in suggesting it. It is certain that the doctrine he last 
 taught spread from year to year, and that, in 1844, it was accepted by 
 the Premier Peel, and the other statesmen of that day, and that it now 
 prevails with nearly every intelligent public man in England. 
 
 [These teachings, extracts from McCuUough's Life and Writing of 
 Eicardo, were accidentally omitted in the communication published, but 
 were incorporated in that sent to Judge Kelley.] 
 
91 
 
 SITUATION OF THE TWO C0UNTKIE3. — A PARALLEL. 
 
 Comparing the condition of England and the United States at the 
 opening and close of the long war, which required the use of paper 
 money, we find the following facts : 
 
 ENGLAND. 
 
 The debt before the war was - - £224,102,424 
 Debt at close - - - 808,046,218 
 
 Increase fourfold. 
 
 UNITED STATES. 
 
 Debt before the war - - - $64,769,403 
 
 Debt after the war - - - 2,845,908,626 
 
 Increase fortyfold. 
 
 ENGLAND. 
 
 Circulation of Bank of England in 1797, - £9,674,780 
 Circulation of Bank of England in 1815, - 27,261,650 
 
 There is a wide discrepancy in estimates of circulation of country 
 banks, but the increase was about the same as that of the Bank of 
 England, viz: threefold. 
 
 UNITEri STATES. 
 
 Circulation, January, 1861, - - $202,000,767 
 
 Circulation, October 31, 1865, - - 704,218,038 
 
 The depreciation of the paper in England, measured by the price of 
 wheal per quarter, was, for the eight years, ending 1793, 37s., while 
 for the eight years, ending 1815, 91s. 2^d. The increase in prices here 
 was not greater than this. Measured by the gold premium, the depre- 
 ciation reached about fifty per cent, in both countries. 
 
 In England, the gold premium averaged, for three years before the 
 Resumption Act of 1819, only three per cent. The average in this 
 country, for three years before the passage of the Resumption Act of 
 1875, was four or five times three per cent; and to-day, (by the Com- 
 merciaVs daily quotation, which it is now ashamed to discontinue,) the 
 gold dollar is worth 14 4-10 cents more than a greenback dollar. 
 
 In England the proposition in the interest of the bondhold- , 
 ers was defeated because the landed interest had a controlling influ- ' 
 ence in the Government, and because the landed interest and the bank 
 interest united in support of the Government to defeat the scheme de- 
 vised to raise the price of bonds. Therethe country generally had no 
 interest in a rise in the bonds, and the Bank of England was part. of 
 the Government, and bound to do whatever the Government ordered. 
 
Here it was otherwise. The bank influence had complete control of 
 the Treasury Department, and the banks not only had nine-tenths of 
 their capital invested in the bonds, but nearly three hundred millions 
 of their depositors' money. They were speculating on a rise in the 
 market. There were, therefore, only two great interests in this coun- 
 try, instead of three as in England. Here it was only the land and in- 
 dustrial interests on the one hand, and the banks on the other. The 
 interests of these two in every thing relating to a change in the value 
 of the currency were in direct antagonism. What benefited one in- 
 jured the other. The bank interest prevailed in Congress as well as 
 in the Treasury, so that Mr. McCulloch's recommendation to resume 
 secured the almost unanimous indorsement of the House. 
 
 In England the last of the series of acts authorizing suspension re- 
 quired the bank to resume six months after the return of peace. The 
 great fall in prices, and the general distress that followed this attempt 
 , of the bank to resume, in 1814, alarmed the land-holders, and, on the 
 meeting of Parliament, in 1816, the suspension was continued, and they 
 Bought protection, and secured it by a bargain with the buUionists, as 
 before mentioned. The Bank of England, being part of the Govern- 
 ment, thenceforward co-operated in carrying out this compact. In the 
 beginning of 1817 it again paid coin for one and two pound notes. 
 The drain was between one and two millions. Toward the close of the 
 year it undertook to pay all notes issued prior to 1817. Over five mil- 
 lion sterling was rapidly withdrawn (more than all the gold in all the 
 National Banks) and shipped to the Continent. The distress was 
 such, that on the opening of Parliament further payments of coin were 
 forbidden. The circulation, which Tooke says was £69,349,128, in 
 1814, had been reduced more than one-half, and the gold premium re- 
 duced to three per cent. 
 
 In this country, after Mr. McCulloch's splendid triumph by the 
 passage of the resolution of December 18, 1865, and the law of April 
 12, 1866, in permitting him to do pretty much as he pleased, he began 
 to do just what the Bank of England did. It is true he did not take 
 up the notes by paying gold for them, but he did the same thing in 
 effect; he paid gold bonds, the most of which he admits went into the 
 hands of speculators in Europe. Under the scandalous discretion 
 given him by Congress, he boasted, in his report of December, 1867, 
 of having thus paid $71,633,384.21 of the Government circulation. 
 What happened then ? The same as in England, in 1815. The gen- 
 eral distress alarmed the politicians. A Presidential election was 
 approaching, and not daring to go before a betrayed people, they 
 stopped the iniquitous work in February, 1868. What after that ? 
 
93 
 
 The same here as there ; by secret compacts, Dy side understandings, 
 by ways that are dark and tricks that are vain, like the heathen 
 Chinee, they kept on at the game. They carried Ohio and Indiana 
 in October, 1868, by solemn pledges against the policy of contraction. 
 Fire months afterward, in March, 1869, they as solemnly pledged 
 themselves for it, and ever since has the effort been to complete the 
 work begun in 1865. One law after another has been passed, all hav- 
 ing the same object. Here, as in England, care has been taken not to 
 alarm the people. There the Government had no need to pass laws, 
 for the screw could be quietly turned by the Government Bank. That 
 bank, as before remarked, is a tool of the Ministers. 
 
 The parallel does not end here. The reduction of the gold premium 
 to three per cent, invited the fulfillment of the compact of 1815, 
 and, therefore, the final blow was struck in July of 1819, by the pas- 
 sage of a law requiring the banks to deliver gold for paper at the fol- 
 lowing rates, commencing with the average rate for the three previous 
 years, and ending with the standard of mint value of the pound ster- 
 ling, viz: 
 
 Februaay 1, 1820, - ... £4, is. 
 
 October 1, 1820, £3, 19s. 6d. 
 
 May 1, 1821, £3, 17s. lO^d. 
 
 And prohibiting the circulation of all notes of a less denomination 
 than five pounds, after May 1, 1823. 
 
 ACTS OP 1819 AND 1875. CHAKACTBE, PASSAGE, AND MEANS EMPLOTED. 
 
 If the Chairman of the Senate Finance Committee, the friend of the 
 distinguished editor, took the Resumption Act of 1819, as his guide, 
 when he drafted his Resumption Law of last winter, he certainly wan- 
 dered a long way from its careful provisions. That act contracted the 
 volume of circulation by a graduated redemption. This one contracts 
 the volume of the superior currency by issuing twenty per cent, more 
 of the inferior, and, scorning the timidity that gets down from three 
 per cent, by three steps, bound off the height of twelve or fifteen per 
 cent, with one jump. 
 
 The acts of 1819 and 1875 do not differ more widely in this respect 
 than does the manner of their passage. One was passed, after a fall 
 debate, by a legislature in harmony with the sentiments of its consti- 
 tuency, however misled that constituency might have been. The 
 other, on the contrary, waa rushed throngh the farms of legislation 
 almost without debate, by a legislative body, a large portion of whose 
 members had but three short months to live, and every member of 
 which, knew that it was for the sole puTpose of defeatiBg the will of 
 
94 
 
 the people, just expressed at the polls, in the choic^e of their successors. 
 They were alike in the means taken to secure their passage, and 
 to conciliate the country. Here, it was by the Secretary and all the 
 Bureaus of the Treasury filling their reports with arguments for the 
 return to specie payments, and by employing such men as David A. 
 Wells to gather statistics and write it up ; there, it was by Reports 
 of Committees of Parliament to take the testimony of packed witnesses. 
 The Commercial takes great pains to impress its readers with the 
 fact that the reports were conclusions arrived at after careful, pro- 
 tracted, and thorough investigation. It says : " These Committees, 
 after a protracted examination of witnesses on the financial question, 
 from all classes in the kingdom, brought in their reports." Every 
 one that knows anything about the course of Committees appointed 
 by Parliament to take testimony, and make inquiry into any important 
 matter of legislation, knows that such Committees sit for a great 
 length of time, generally refiorting at the succeeding session. Instead 
 of this, the Select Committee of twenty-three, of which Mr. Peel was 
 Chairman, was appointed the 19th of February, and made its first re- 
 port on the 5th of April. Before the days of railroads, or even of 
 macadamized turnpikes, it must have puzzled the witnesses from all 
 parts of the kingdom to have attended the "protracted examination." 
 In speaking of " Sir Eobert Peel," the editor says: 
 
 "From the nature of the evidence of practical men before the Committees of 
 Parliament, and of the other information he had received, he felt himself called 
 upon to state candidly and honestly, that he was a convert to the doctrines re- 
 garding our currency, which he had once opposed." 
 
 It is hardly possible to remove the impression that the editor has 
 deliberately misrepresented the facts, and perverted history in order 
 to deceive his readers, when one refers to the speech of Sir Eobert 
 Peel, which must have been before him, in which it is clearly stated 
 that the examination was like many of the investigations here, a sham 
 and a fraud, to cover up the iniquity of some set up job. It would 
 have been far more interesting, profitable, and edifying to have had a 
 single paragraph of what Mr. Gladstone said Sir Robert Peel did say 
 about bank issues, than to have a column of extracts from the special 
 pleadings of Mr. Peel in support of a measure to which the Cabinet, 
 of which he sought to be a member, was committed. The same re- 
 mark may apply to the speeches of the members of the Cabinet, which 
 the Commercial parades in its columns, in support of " the doctrine of 
 our currency." However valuable may be the opinions of Lords Liv- 
 erpool and Granville, and numerous other advocates of resumption, I 
 think those of the heads of the great banking houses of Baring Bro- 
 thers, and of the Overend, Gurney & Co. of that day, would possesg 
 
95 
 
 far more interest to the bankers and merchants of the present time, 
 and I propose to lay before them the brief words of these world- 
 renowned merchants and bankers, who participated in the debates 
 connected with the settlement of questions growing out of a suspension 
 of coin payments for twentyrtwo years. It is now just foarteen years 
 since coin payments were suspended in this country ; for in the month 
 of September, 1861, five per cent, premium had to be paid for coin, 
 and was paid to banks on Third street, and paid, too, in the specie-pay- 
 ing bank notes of that day. Only eight years less of suspension and 
 depreciated paper have we had than these great business men had 
 when they were called to settle the question. Their opinions, there- 
 fore, not only upon the currency question, but on the equally important 
 one of adjusting an immense debt, contracted in depreciated paper, 
 possess deep interest. 
 
 In reading what they said, and what the greatest manufacturer in 
 England said, the thought can not but rise that their descendants, 
 and the descendants of the merchants and manufacturers of Great 
 Britain they represented, must look with secret scorn upon the 
 mouthings of H. McCulloch about the necessity of the States paying 
 their interest in coin, in order to establish the credit of a Government 
 that had vindicated its power by a million bayonets, supported alone 
 by the money of its own people, without borrowing a dollar beyond 
 its own borders. The descendants of such men may take all we have 
 been fools enough to give them; but, clear-sighted as their fathers, 
 when they turn their eyes hitherward, they can no longer see the 
 eagle, — ^but the goose that lays the golden egg. And when they see a 
 man come to spend the balance of his days among them who had be- 
 trayed his great charge — the interests of the people confided to his 
 trust — for their benefit and his own profit, they will be reminded of 
 another from that Western land who once walked the streets of Lon- 
 don, and was treated by their fathers with that cold civility which 
 advertised to the world, that while they liked the treason they des- 
 pised the traitor — Benedict Arnold, 
 
 THE DEBATE 
 
 Came off in the House of Commons, in May and June, 1819, on the 
 coming in of Mr. Peel's second report. May 6th. Being Chairman of 
 the Committee, he had charge of the measure. Mr. Peel, in advocating 
 it, admitted that " In the year 1815, our commerce was in full activ- 
 ity; a great impulse had been given; speculation was at its height, 
 and the exports where great beyond example," This was the last 
 3'ear of unobstructed suspension. After that the country was cursed 
 
with vain efforts to resume, the same as ours has been since McCul- 
 loch's regime in 1866. Mr. Peel describes the blighting effect of their 
 efforts thus : " Prices fell, country banks stopped their Issues, and 
 thousands were in a moment stricken to the ground by a blow which 
 they could not forsee, and against which it was impossible to provide." 
 
 HUDSON GUENET, 
 
 The member from the City of Norwich, declared " That the price of 
 gold could not be forcibly reduced to the mint price of £3 17s. lO^d., 
 without dragging down the prices of all other things to a degree that 
 would render the public burdens intolerable." 
 
 Mr. Gurney's reference to the effect of re'sumption in increasing the 
 public burdens is the same as that expressed by Sir Robert Peel. He 
 was at the head of the oldest and most solid banking house in London 
 — Overend, Gurney & Co. Some forty years after this period, and 
 after the solid men of the firm had either died or withdrawn their 
 capital and left the house with nothing but its great name — it went 
 the way of the First- National Bank of Washington, and the way 
 many others have gone, and many others will go, whose depositors 
 confide in them under the delusion which a high-sounding name is 
 calculated to create. 
 
 THE SPEECH OF EIOAEDO, 
 
 The leader in the debate echoes the expressions of the business men 
 of to-day, who comfort themselves with the idea that the worst is over, 
 and that all that is required is persistence in the present course, they 
 will therefore be both gratified and deeply interested with the perusal 
 of even a lengthy extract; gratified in finding their views so well ex- 
 pressed, and deeply interested when they reflect that the speaker 
 within three years bent every effort to correct the mischief he then 
 made. He said : — [This speech, and the account that followed of its 
 immediate effect in the passage of the resumption resolutions, was 
 quoted by the author in his address at Clifton. See pages 16 and 17.] 
 Not only did the Prince Regent give his assent, but he exchanged 
 congratulations with the Speaker of the House of Commons. All 
 were as uproariously happy as were the bank-men in this country 
 two years ago, upon the announcement of the President's veto of Mor- 
 ton's bill. Not all. One, the grand old apostle of the greenback 
 doctrine. Sir Robert Peel, is reported to have said, with great bitter- 
 ness, "Robert has doubled the fortune of his family, but ruined his country." 
 
 RESUMPIION ACTS 01" 18L9 AND 1875. 
 
 When the merchants and manufacturers read the assuring words of 
 the author of the Resumption Act of 1819, predicting that every one 
 
97 
 
 would feel ashamed of ever having been alarmed at the idea of reduc- 
 ing the gold premium from three per cent, to par, they should recall 
 the predictions of Secretary McCulloch in 1865, '66, and '67, that if his 
 policy of contractioi) was adopted, there would be no serious embarrass- 
 ment to business, and that specie payments would be fully resumed on 
 July 1st, 1868. They should also remember that John Sherman's bill 
 of last winter, now the law of the land, is substantially the same as 
 Peel's bill of 1819, prepared with far less care to prevent accidents. 
 
 The careful preparation to step down from even three per cent, 
 quieted any immediate alarm. The uneasiness, however, increased 
 from month to month, to such a degree, that on the meeting of Parlia- 
 ment, in the beginning of 1821, we hear that " the pressure alarmed 
 the landed interest, and that Alexander Baring, and the mercantile 
 part of the House, became convinced that 3 per cent, did not measure 
 the depreciation of the currency." Laws, making two important re- 
 ductions in the taxes, were passed, against the protestation of the 
 Home Secretary, Peel, that they would impair the public credit — the 
 same hypocritical cry that has always been raised here whenever any 
 measure of relief was proposed. 
 
 FIRST FOURTEEN MONTHS OF SPECIE PAYMENT. 
 
 Thomas Doubleday, the historian, says : " The effect of the act, 
 when it went into operation on the 1st of May, 1821) was trouble, and 
 to those who had mortgages, ruin was inevitable. The kingdom rang 
 with complaints of distress and ruin, and on the meeting of Parliament, 
 in 1822, petitions from all classes loaded their table, all praying the 
 House to put an end to this state of things." Lord Brougham, on the 
 11th of February, denounced the act. Sir James Graham did also. In 
 June following, Mr. Western, who, in 1815, as leader of the landed in- 
 terest, had made the bargain with the bullionists, moved an inquiry, 
 looking to the repeal of the act of 1819. The sentiment of old Sir 
 Robert Peel found full indorsement in the debate on this motion. 
 Secretary Peel could only stem the torrent by taking the ground that 
 it was too late to reti-ace the steps then hazarded, and by making an- 
 other bargain, a compromise, to postpone the operation of that portion 
 of the act that had not yet taken effect, the only " hard money" part 
 of it. This bargain being a measure of the Ministers to save their of- 
 ficial necks, Mr. Secretary Peel was obliged to introduce the bill con- 
 summating it in the Lower House, and Lord Liverpool in the Upper. 
 There was no debate. It passed in silence on July 2, 1822, with only 
 four nays in the Commons,, and none in the Lords. It was an exam- 
 ple of retributive justice, that, the same men wha had. brought thfi ruia 
 
98 
 
 should, on the third anniversary of their folly, be driven to do another 
 act, as weak as the first was wicked. 
 
 Thus ended the first fourteen months of specie payment. Will not 
 the like happen here in half the timei when we have a currency exclu- 
 sively of " specie- paying bank notes," McCulloch's celebrated " hard- 
 pan?" And then, will not Congress follow the example of Parliament, 
 and remove whatever restrictions might prevent the banks from 
 relieving the distress of the people? It will be here just as it was 
 there — the prostrate patient will be raised by a gentle stimulant. 
 There it was very gentle, for the bill only postponed the operation of 
 the small note feature of the act of 1819 for ten j^ears, from May 1, 
 1823, without affecting in any manner the requirement for all bank 
 notes to be paid in coin, so that the country was still in the full enjoj'- 
 ment of all the blessings of " hard money" and " specie payments." 
 
 THREE YEARS OF GREAT PROSPERITY. 
 
 The banks were satisfied, and business- men happy. Everything 
 went on swimmingly, so that on the opening of Parliament, in 1824, 
 the Chancellor of the Exchequer,' Mr. Robinson, congratulated th'e 
 country on its great prosperity, and said ; " that Parliament might 
 contemplate with proud satisfaction the result of its labors;" "forget- 
 ful," says the historian, Thomas Doubleday, " that in answer to the 
 <!ries of distress, he and his associates had said that snch distress arose 
 from causes beyond the control of Parliament, and were only to be as- 
 cribed to ' over-production,' and to the transition from war to peace" 
 — the same hypocritical reply that has been made here under like cir- 
 •cumstaaces. 
 
 The enemies of the act of 1819 did not, however, participate in this 
 feeling. They knew that vicious legislation alone brought on the 
 troubles, and that they were far from being at an end. William Cob- 
 bet, the editor of the Political Register, wrote an open letter to " Mr. 
 Prosperity Robinson," predicting a crisis and panic within eighteen 
 months, and a specie-paying bank-ridden people laughed at him. Well 
 they might, tor prosperity continued to become more prosperous from 
 day to day, and .permitted "Prosperity Robinson" (for subsequent 
 events fastened Cobbet's sobriquet upon him ever after, even after he 
 became the Earl of Ripon), to again congratulate Parliament, in Feb- 
 ruary, 1825, " upon the prosperous state of things." 
 
 In July, toward the close of the session, Mr. Haven presented a pe- 
 tition from one of his constituents, a Mr. Jones, of Bristol, about 
 Rickets & Co. refusing to redeem six one-pound notes in coin, on the 
 ground that they were not required to pay coin for small notes, and 
 
99 
 
 asking that the House might do something for him. The Bank men 
 pooh-poohed, said it was beneath notice, and that no one knew who the 
 man was. Mr. Haven said he would inquire. He did, and reported 
 that the man, though obscure, was respectable. Whereupon com- 
 menced a most bitter debate, in which Hudson Gurney, before referred 
 to, and Alexander Baring participated^ — Alexander Baring (Lord Ash- 
 burton) the head of the house of Baring Brothers, whose bills had long 
 been, were then, and are now, as good as gold, in every commercial 
 mart of the world, 
 
 GURNEX AND BARING. 
 
 Mr. Hudson Gurney said, "In his view, the circulation of the coun- 
 try was now in a more unsatisfactory state than he had ever known it 
 to be. [Hear! hear!] The whole arose from the enormous blunder 
 which had been committed in not re-adjusting the standard to existing 
 c.ircumstances, after twenty-five years of another currency, at tlie time 
 of passing the right honorable gentleman's bill (Mr. Peel's) for specie 
 payments. That bill has, as everybody ought to^have foreseen, 
 greatly depressed all prices. Thence came, of necessity, ruin to farm- 
 ers, embarrassment to landlords, and that degree of distress among, 
 the whole community, agricultural and otherwise, which rendered it 
 imperative to palliate the evil. 
 
 11 * * * Gentlemen here (continued Mr. Gui-ney), in talking of 
 country circulation, always seemed to suppose that the amount of his 
 paper in circulation is the limit of the liability of the banker. In 
 point of fact, the greatest danger in time of difficulty is from deposits, 
 which persons, vdshing to realize, demanded instanter. To this conclusion, 
 therefore, he must come: the Bank of England, if this state of things 
 should occur, must either continue to discount until they themselves 
 stopped, or, by refusing to discount, they must stop the whole country." 
 
 Mr. Peel, the Home Secretary, defended the Act of 1819. 
 
 Mr. Alexander Baring following him, said : 
 
 "In looking at this question it is material to show what is the state 
 of the country in this, the sixth year of peace. Petitions are coming 
 in from all quarters, remonstrating against the state of suffering in 
 which so many classes are involved, and none more than the agricultural 
 class. When su-ch is the state of the country in the sixth year of 
 peace, and when all the idle stories about over production, and under 
 consumption, and such like trash, have been swept away, it is natural 
 to inquire into the state of a country placed in a situation without a 
 parallel in any other nation or time. No country ever before presented 
 the continance of so extraordinary a spectacle as that of living under 
 a progressive increase in the yaliie of money, and decrease in the 
 
100 
 
 value of the productions of the people. It appears clear that from ike 
 operations of the currency, we have loaded ourselves, not only with an inb- 
 mense public debt, but also with an increased debt between individual and 
 individual, the weight of which continues to press upon the country, 
 and to the continuance of which pressure no end can be seen." 
 
 He described the act of 1819 as " fraught with injustice between 
 debtor and creditor." "Honorable gentlemen (he said) strangely 
 boasted of having carried this great alteration without reference to 
 existing engagements, public and private. He, however, viewing the 
 whole as pregnant with injustice, could not understand such boasts. 
 He could give no credit to those who pursued this course, as it was 
 unjust; but now that the deed was done, he would oppose all further 
 tampering with the money of the country." 
 
 Mr. Haven closed the debate by declaring that he would continue to 
 press his motion. The matter was dropped, and a few days afterward 
 Parliament was prorogued by a speech from the Throne, concluding 
 with congratulations upon " the increasing prosperity of the country." 
 
 This happy congratulation closed three years of unbounded pros- 
 perity under the reign of '■ specie payments" and " hard- money;" just 
 three years from the time the banks had been placed in a position to 
 relieve the terrible distress then prevailing. How great had been the 
 relief they afforded! Will not our banks, under like beneficent legis- 
 lation, do as much for the people ? 
 
 SUDDEN COLLAFSi:. 
 
 With the leaves of autumn fell the hopes begotten by these specie- 
 paying times. The banks had increased their circulation fifty per 
 cent, all under the specie resumption act of 1819, which had marched 
 to its full accomplishment on May 21, 1821, over the ruin of the busi- 
 ness men of that day, without let or hindrance from the Government. 
 The drain commenced, and the banks sacrificed their customers, as 
 they have ever done and ever will do. Seventy-eight banks failed in 
 one month — sixty-three totally bankrupt. The business of the whole 
 country was tossed, as by a whirlwind that left only ruin in its track. 
 
 While the people were pursuing their business in the conscious se- 
 curity which the placid smiles and confident assurances of bank ofiicers 
 always effords ; and while they rested under the belief that they were 
 doing business on a gold basis, the gold was going out of the country 
 at a fearful rate: in 1824, 1,134,000; and in 1825, 1,273,000 ounces, 
 or $45,555,000 in two years. 
 
 During the same time, the great regulator, the model bank, that 
 every issuing banker points to with pride as the sheet-anchor of the 
 
101 
 
 financial world, had run up its circulation from £16,950,000, in 1822, 
 to £20,756,000, in 1825, and found itself, on the 17th of December^ 
 1825, with a circulation of £17,000,000, with less than £16,000 of gold 
 in its vaults to meet it — a circulation of more than a thousand to one. 
 
 Secretary Peel, the instrument by which this ruin was wrought, was 
 unnerved. The Government was paralyzed. 
 
 The credit of the country was saved, only by the presence of mind, 
 the sagacity, and council of Thomas Atwood, of Manchester, whose 
 views agreed with those of the elder Peel, Baring, Gurney, and the 
 other "impecunious inflationists" of that day. And he did it by an 
 application of the doctrine he held. In the wild confusion of hard-pan 
 bankers, when, gold-banking without gold, they found themselves 
 without anything hard, he told the Governor and the Directors to keep 
 up their courage, and pay out to the people a chest full of one and 
 two-pound notes that by mere luck had not been destroyed, but were 
 found among the rubbish of the bank. It was done. 
 
 Eeferring to this remarkable event. Lord Ashburton (Alexander 
 Baring) after saying, " I was lately called on to consult with Lord 
 Liverpool, Mr. Huskinson, and the Governor of the Bank," proceeds: 
 " The gold of the bank was drained to within a very few thousand 
 pounds, for although the published statements showed a result rather 
 less scandalous, a certain Saturday night closed with nothing worth 
 mentioning." 
 
 The Secret Committee of the House of Commons, of 1832, wrung the 
 following testimony from the Governor of the Bank, Jeremiah Harman : 
 
 " The situation in October and November, 1825, was dreadful." 
 
 "Bullion, at the end of November, reduced to £300,000." 
 
 " Exchequer bills fell, so that, but for the aid of the bank, public 
 credit was gone." 
 
 "In December, amount left miserably low." 
 
 "Mr. Huskinson (one of the Cabinet Ministers) suggested putting 
 a paper on the door — ' Temporary suspension.' " 
 
 " Eemaining treasure protected by the issue of £1 notes." " It is 
 only by good luck we had them." " One box containing a quantity 
 had been overlooked." " There was no foresight in their preserva- 
 tion." " The box had been forgotten as useless lumber." " One and a 
 quarter million was issued." " The issue of these £1 notes saved the 
 credit of the country." 
 
 This testimony is respectfully submitted for the examination of the 
 bankers and business men of this city, before making up their verdict 
 in favor of such a paper-mill as that run by Jeremiah Harman in the 
 interest of a lot of gamblers in the public credit. The credit of a 
 
102 
 
 great country saved by the good luck of finding an old chest, filled 
 •with " rag money," in a pile of rubbish ! Think of it ! 
 
 After the convulsion of 1825, the business of the country was in 
 ruins. Tlie recovery was slow and painful. The severity of the long- 
 drawn agony may be imagined when it is reported that : " The distress 
 in the manufacturing districts was intolerable, and that great numbers 
 of families were brought down to two and a half pence per day for 
 e.ach individual." It also strikingly appears in the character of a pe- 
 tition from the Birmingham Union, presented by Lord Brougham, on 
 June 4, 1829. The historian says : 
 
 " The petitioners stated, and truly, that the whole debt was bor- 
 rowed on >a money depreciated on the average of 50 per cent., the 
 nominal pound being really worth only ten standard shillings. By 
 the act of 1819 the current pound was again made worth twenty 
 standard shillings, and thus the taxes were doubled." 
 
 Mr. Peel admitted the great extent of depreciation and insolvency 
 under the act of 1819, and said : 
 
 " An equitable adj ustnfent was at that time proposed, and it was 
 proposed, accordingly, that the public creditor, with whom a debt had 
 been contracted in a depreciated paper currency, should, upon our re- 
 turning to a metallic currency, be paid only in proportion to the value 
 of the paper currency in which the debt had been contracted. [Hear, 
 hear.] The first and great objection was that it would be impossible 
 to discover the original debtor." 
 
 " The plain and obvious reply to this," "says Mr. Doubleday, " is, that 
 persons dealing in securities, notoriously of fluctuating and uncertain 
 value, must take them with all their contingencies." 
 
 THE CLOSE OF THE STKUGGLE. 
 
 As late as 1830, the historians say, distress was everywhere, the 
 working classes being the greatest sufl'erers. Petitions, from all 
 classes, piled the tables of Parliament, ascribing the diflSculties to the 
 blundering and dishonest legislation. The rural population, reduced 
 to starving wages, rebelled. The country was filled with tumult, and 
 the horizon illumined with incendiary fires. 
 
 In the Parliament of 1830 another desperate eflfert was made to cor- 
 rect the mad legislation of 1819 . Every speaker in the debate at- 
 tacked that act. Mr. Western, the great Tory leader of 1815, who, to 
 get protection for his corn, unwittingly sold out his country, described 
 the act as " oUe of the most mischievous measures that was ever de- 
 vised for the destruction of a nation." Mr. Peel, the author of that 
 act, was left to stand alone amid the storm. 
 
103 
 
 " He expressed his willingness to abandon the opinions to which he 
 was supposed to be unalterably pledged, if benefit would result, but 
 he was convinced, if any error had been committed in establishing 
 that system, we would only be exposed to still greater evils than those 
 we had suffered, by again doing anything to unsettle the currency of 
 the country." 
 
 In making this piteous appeal to the forbearance of his countrymen, 
 and in referring to what the country had suffered by his great blunder, 
 the agony of his soul can only be imagined, when one reflects that a 
 mind so clear as his must have measured the extent of suffering then 
 being endured, and which would measurably continue for generations 
 to come, in consequence of his having turned a deaf ear to the wise 
 counsel of a noble father, who was lying at the point of death, for the 
 old Baronet, the friend of the poor, died on the 3d of May, 1830. 
 
 The truth of Mr. Peel's closing words at this time, that it was too 
 late to right the great wrong, was too apparent to be overlooked. The 
 only effort afterward made to retrace the step was on the presentation 
 of petitions, in May, 1833, supported by Mr. Cobbet, John Fielden, 
 and Thomas Atwood. The hands of the people were effectually tied, 
 and they resigned themselves to the situation. 
 
 VS^ARNING TO US. 
 
 The words of Peel are pregnant with meaning to us now, before the 
 dark deed is fully accomplished. The law of 1875 is passed, the same 
 as was that of 1819, but, fortunately for us, the people have been 
 aroused to their danger before much progress has been made toward 
 its execution, and more fortunate still is it, that the people have 
 wrenched one branch of Congress from the grasp of the banks. 
 Whether that subtle power will be able, as heretofore, to sit like 
 Satan at the ear of Eve, and, in whispers, persuade the majority of 
 members to carry their principles in their purses, will depend upon 
 the expression now made by the people. Let them, therefore, take 
 warning, while it is day, or the time may come when closing a stormy 
 debate in the late hours of the night, some John Sherman may rise in 
 the Senate, and, with a sardonic smilcj make the same reply to the 
 desperate efforts of a Morton, who had unwittingly aided him in 
 bringing ruin upon his country, that Peel made to Western: " It is 
 too late! too late!" E. B. P. 
 
104 
 
 CONTINUATION OF THE HISTORY OF PANICS, FROM 1830 TO 
 THE PRESENT, TIME. 
 
 In May, 1831, the prolonged and bitter contest between the Whig 
 and Tory parties culminated in a measure of one of them, that in a 
 few days came near plunging the country into bankruptcy. The Re- 
 form Bill had passed the House of Commons, been defeated in the 
 House of Lords, and reaffirmed by the former ; and had caused the re- 
 tirement of the reform ministry, and the attempt to form another by 
 the Duke of Wellington, whose obstinacy alone stood in the way of 
 the people's will. Simultaneously appeared on the walls, in all the 
 large towns, these words— "The Duke is obstinate, run for gold." 
 Such a run was made, that the bank cpuld not have stood forty-eight 
 hours, had not the Duke yielded. Leaving out of view the good that 
 followed such action, in this particular case, is it not suggestive to 
 us? This question of "Issue" is likely to make an equally bitter 
 division between sections of the people here. Will not the millions 
 of deposits in the savings banks, besides those in other banks, con- 
 tinually threaten the possibility of maintaining coin payments ; and 
 would it not be better to ,have such a system of " Issue " as Adam 
 Smith describes; when he says : " The currency of a country should 
 be as strong as the Government?" 
 
 In 1833 an act was passed, to prevent panics, making Bank of Eng- 
 land notes a legal tender in payment of all debts, except those of the 
 bank itself. The effect, therefore, of the ministers authorizing an 
 unlimited issue of notes, to meet the pressing demand of those un- 
 able to pay their debts, on account of a want of currency, would be the 
 same as a suspension of coin payments. 
 
 In 1835-'36, there was another panic ; and in 1837, still another. 
 The description, in Doubleday's 2d volume of Peel, page 231, of the 
 convulsion following our crisis of 1837, is interesting. Equally so, is 
 the account of the drain of 1839, which Horsley Palmer, the Governor 
 of the Bank, said, " arose from the doubts existing, on the continent, 
 after May and June, 1839, of the ability of the bank to maintain 
 specie payments.' ' A continental doubt, which was pretty well founded, 
 for, notwithstanding the Barings aided it with £2,500,000, the re- 
 serve at one time ran down to £2,300,000, showing, that at that mo 
 ment it would have stopped payment without Baring's assistance. 
 Being solid, private bankers, issuing no notes, their credit was un- 
 doubted. That credit enabled them to raise the large amount cs co 
 sudden a call. They drew three-months' bilk on Paris far foriy mil- 
 lion francs, and sold them on change. These HIl* wpjs paiii i\i f^%- 
 
105 
 
 turity by the proceeds of another hatch, which last the bank, having 
 gotten on its legs again, was able to take up. 
 
 " From this period," says Shuckers, page 17, "to the end of the year 
 1843, a general commercial stagnation prevailed throughout all Eng- 
 land, accompanied by a corresponding degree of suffering among the 
 laboring population." In 1844, the charter of the bank was remod- 
 elled, so as to prevent panics, and the possibility of suspension, by re- 
 quiring a deposit of gold for every note issued over £14,000,000, 
 which were issued solely on the Government credit, as are our national 
 bank notes, and by establishing a fixed reserve of coin, below which 
 it was impossible to go. 
 
 Only three years after this, in 1847, occurred another terrible panic. 
 Its history shows how dependent business is upon the resolves of bank 
 directors. On September 23d, the bank began to fortify, and, on 
 Oct. 15, ceased discounting altogether, in consequence of which those 
 compelled to have money sold exchequer bills at thirty-five per cent, 
 discount. The bank was threatened with destruction. The Premier 
 and Chancellor of the Exchequer promised the bank oflBcers to procure 
 the passage of a law to protect them if they overissued. The bank, 
 in consequence, broke the law, issued what notes were wanted, and 
 thereby restored confidence. 
 
 The Author of "Economy of Capital," says that, " In 1857, a wave 
 from the American crisis crossed the Atlantic, and produced an equal 
 crisis on our Islands;" and that " No crisis was ever so unexpected; 
 and none ever culminated so rapidly, or proved so disastrous." The 
 suspension of firms, in the American trade, caused runs on the banks 
 connected with them. The Liverpool Borough Bank stopped; then 
 Denniston & Co., with ten millions of liabilities ; and then the West- 
 ern Bank of Scotland. To save others, the Scotch Banks united, sold 
 Exchequer Bills on London at a heavy discount, and drew five million 
 dollars of gold. The Irish and English country banks pursued the 
 same course. It saved them, but played havoc in London. On No- 
 vember 11th, Sanderson & Co. failed, liabilities twenty-five millions. 
 Peabody & Co. were on the verge of ruin. They required four mil- 
 lions assistance. The bank did not have it. Ministers saw that the 
 going down of that house would carry many others, and did, as thej' 
 had done in 1847, trampled on the law, and issued thirty-three mil- 
 lions before the end of the month — over two millions a day. 
 1 This American crisis was that which followed the failure of the 
 Ohio Life and Trust Company. Thus, from the unwise counsel of a 
 few men, who sat in secret around a director's table, in the Trust 
 Company's building, went forth a wave of ruin that was felt through- 
 
106 
 
 out the world. Under the present system of credit, begotten by bank 
 issue, who can tell, whether there is not even now, in some distant 
 city, some trust company, whose explosion will send back a wave 
 equally sudden and destructive ? 
 
 In 1866 occurred another convulsion, in this wise: In February, a 
 joint stock company failed. In March, a bank in Liverpool stopped, 
 liabilities sixteen millions; and several great railroad contractors fol- 
 lowed. On May 3d, the bank raised its rate to 7 per cent.; on the 8th, 
 to 8 per cent.; and on Thursday afternoon, the 10th, Overend, Gurney 
 & Co., stopped, liabilities sixty millions. " The 11th," says an eminent 
 French writer, quoted by Shuckers, " was a day of distress and terror, 
 and seemed to be the sequel of a general ruin." " The fall of this 
 gigantic financial firm made the very ground tremble." " A great por- 
 tion of the commerce of the world is * * concentrated in London, 
 and the house of Overend, Gurney & Co. had the foremost place in 
 the settlement of the commerce of the city. It had a renown more 
 than European." On the evening of that Black Friday, the Ministers 
 did, as they had done in 1847, and 1857, told the officers of the bank, 
 that if they broke the law, they would bring in a bill of indemnitj'. 
 The bank did break it, and, in the course of five days, made advances 
 to the amount of over £12,000,000, or sixty million dollars, without 
 any other foundation than the public credit. The announcement of 
 this action of the Ministers, Macleod and Gilbart, quoted by Shuckers, 
 (page 25,) produced, the next morning, the happiest effect, calmed 
 everything down, and abated the panic; and that "this announce- 
 ment of the suspension of the Bank Act, for the third time, operated 
 like a charm." 
 
 The importance of the lesson taught by this repeated and unlawful 
 exercise of arbitrary power, and the happy result which, in each case, 
 attended the issue of notes, in quantities to meet the wants of trade, 
 solely on the credit of the Government, and without any regard to 
 their capacity of conversion into gold, was recognized by Secretary 
 McCulloch, for he twice laid before Congress recommendations for 
 such power to be given the Treasury Department. In the report of 
 the Comptroller of the Currency for 1867, page 23, endorsed by him, it 
 is recommended, "that the Treasury of the United States, hold in re- 
 serve a certain amount of leffal tender notes, in excess of the amount 
 of money in actual circulation," to be advanced for the relief of the 
 banks, on deposit of U. S. bonds, and says, " that this would effectu- 
 ally prevent a monetary pressure from being carried to any ruinous 
 extent." He supports his recommendation by the happy effects of 
 what had been " done in England, in violation, or without authority 
 
107 
 
 of law, upon the pledge of the government, of an act of indemnity." 
 It will be observed that the alleged limitation of Ugal tenders, to 
 $400,000,000, is entirely ignored by this Bank Secretary, when the 
 issue is to relieve the bonds. ' It is only pressed when the relief is for 
 the people. 
 
 While this Bank Secretary and his subordinates were seeking rem- 
 edies distructive to our institutions, they were vigorously at work de- 
 stroying the agency that had for years accomplished the object thoy 
 desired, and had preserved the country from the most devastating of 
 panics, in 1863, a time when it might have destroyed all hope of sav- 
 ing the Union. The history and power of that agency has been fully 
 described in my answer to the Cincinnati Gazette's attempt to prove 
 Judge Kelley a fool. 
 
 In the last exercise of arbitrary power in England, the bank over 
 issued £12,000,000, or $60,000,000. Comparing this operation with 
 the paying out of nearly the same amount by the savings bank, in 
 1863, it will be observed, that while both effectually accomplished the 
 object, yet one was by an unlawful exercise of power, and the other by 
 the legitimate and quiet operation of law; — also, that while one stayed 
 the progress of a conflagration, after much destruction, the other 
 stopped its beginning. 
 
 From the resumption of specie payments, in 1821, the history of 
 the "Bank of England" tells of continued panics and convulsions, 
 occurring at intervals of about eight or nine years, in 1825, '31, '37, 
 '39, '47, '57, '66, and again, the London Economist, of July 10, 1875, 
 tells of the people having just escaped another panic, by mere good luck, 
 and shows a condition of things in England, that is enough to make 
 any thoughtful business man tremble. It is surprising, therefore, that 
 the rapacity of these issuing bankers has at last exhausted the patience 
 of the English people, and that they at last find themselves compelled (o 
 heed the dying words of the great Isrealite, David Eicardo, to his friend 
 Sir W. Heygate, a fellow-member of the unfortunate Parliament of 
 1819? " Ay! Heygate, you and a few others, who opposed us in the 
 cash payments, have proved right. I said that the difference, at most, 
 would be only fmir per cent., and you said, at the least, it would be 
 twenty-five per cent." Not only have they been painfully reminded 
 of these words, but, after fifty years of needless agitation and suffer- 
 ing, they are now driven to follow the advice given, in what might be 
 regarded his last will, found among his papers after his death, in 
 1823. That advice silently worked upon the English mind until, in 
 1844, it is found to have so far affected his talented co-worker, and 
 instrument, in the terrible work of 1819, as to cause him, as Prime 
 
108 
 
 Minisier, to openly avow the correctness of his teachings, and seek to 
 reconcile them with the continued existence of that, which Eicardo 
 declared should be extirpated. Thirty years more have passed, and 
 we now find another Prime Minister, Wm. E. Gladstone, the last sur- 
 vivor of Sir Robert Peel's cabinet, of 1844, and his co-worker in that 
 effort of reconciliation, — the Bank Charter — rising in Parliament, and 
 I'loclaring the truth of every word found in the rich legacy Eicardo 
 1 -ft to mankind, and every statesman in Great Britain responding 
 ^Vmen to the declaration. 
 
 The following extracts are from McCullough's " Life of Eicardo :" 
 
 [The extract from page 219 was read at Clifton — see page 17.] 
 " The commerce of a country would not be in the least impeded by depriving 
 the bank of the power of issuing paper money, provided, an amount of such money, 
 equal to the bank circulation, was issued by the Government, and that the sole 
 effect of depriving the banks of this privilege would be, to transfer the profit, 
 which accrues from the interest of the money so issued, from the bank to the 
 Government. — page 506. 
 
 ■'Were the Government to issue thecirculation, the merchants could suffer no 
 inconvenience from any want of facility in getting the usual advances made to 
 them in the way of discount, or in any other manner ; for, first, the amount of 
 these advances must necessarily depend upon the amount of money in circulation, 
 and that would be just the same as before ; and, secondly, of the amount in cir- 
 culation the banks would have precisely the same proportion as they had before, 
 neither more nor less, to lend to the merchants. 
 
 " It cannot be said, therefore, that, unless the banks are permitted to continue 
 the issue of paper money, the merchants will suffer inconvenience from being de- 
 prived of the usual facilities of borrowing. The attorneys of the bank, however, 
 say, that if deprived of the privilege of issuing notes for circulation, they would 
 wind up business. This could hardly be, for they would still have profitable means 
 of employing their own funds. But suppose they did, what harm would com- 
 merce sustain ? What difference would it make to the community, whether the 
 capital of a bank was managed by a few directors, chosen by the stockholders, or 
 actively employed by each individual owner of stock ? The amount wonld re- 
 main the same. It is not probable that the officers of any sound bank would per- 
 mit its dissolution. — page 504." 
 
 As in all times, and in all countries, human nature is about the 
 same, and exhibits the same avarice, rapacity, and greed, feeding on 
 the credulity of the deluded and ignorant, there is no reason to expect 
 that this monied power here will surrender its great instrumentality 
 of plunder more readily than in Great Britain. If it has taken fifty 
 years of suffering and oppression to bring such utterances as those in 
 Parliament on the 17th of last March, nothing short of a revolution 
 in public opinion can lead us to expect that the bank power will be 
 destroyed until the people liave been oppressed beyond the point of 
 
109 
 
 endurance ; and that will hardly be reached until the full fruits of a 
 forced resumption are gathered. There are too many editors, orators, 
 and legislators for sale to expect anything else; too much of that party 
 spirit which causes men to shut their eyes to a painful truth, and turn 
 a deaf ear to any warning, to permit the hope of anything more from 
 the mass of the people than that their conduct will add another illus- 
 tration to the aphorism of Harrington, "That the people cannot see, 
 but they can feel." They have been told by a hireling bank press 
 that all who oppose its plundering schemes are repudiators, and they 
 repeat the cry, unconscious that repudiation in this free country of 
 schools, of colleges, and of churches, is only possible from natural 
 causes, and that these causes can only exist in the rapacity of a class 
 that is determined to rule or ruin. If ever the temple of American 
 honor falls, it will be by the death grip of this modern Sampson, who 
 has been permitted to stand between the pillars that support it. " And 
 Sampson took hold of the two middle pillars, upon which the house 
 stood, and upon which it was borne up, — of the one with his right 
 hand, and of the other with his left. And Sampson said, ' Let me die 
 with the Philistines.' And he bowed himself with all his might ; and 
 the house fell upon the lords, and upon all the people that were 
 therein ; so the dead which he slew at his death were more than they 
 which he slew in his life." 
 
 Having thus complied with Judge Kelley's request, he will pardon a 
 reference to the incident which explains the sending of the papers to 
 him. The morning after his effective speech at the Opera House, in 
 Cincinnati, I called to make his acquaintance and congratulate. him. 
 After the usual salutations, he asked how I liked his argument ? 
 
 " Very much." 
 
 " You agree with the positions taken, I believe?" 
 
 " With all, except a single remark." 
 
 " "What was that ? " 
 
 " That money was made by the State." 
 
 " Why ! that is the premise, the base of the whole argument," he re- 
 plied, smiling. 
 
 " It seems so," I replied. 
 
 Then, with an expression of surprise, he added, " You don't think 
 gold is money ? " 
 
 "Oh no; that is more out of the way than the idea that the State 
 can make it. I know that gold is not money, because when I handled 
 the most money, I never got a glimpse of gold. And as for the paper, 
 
110 
 
 the larger the amounts of money that passed through my hands, the 
 fewer notes I saw." 
 
 "What! neither greenbacks nor gold money? — then what is 
 money?" 
 
 The earnestness and abruptness of the question startled me — " What 
 is money?" I repeated mechanicaljy. 
 
 t' Yes, what is money ? You can tell what it is not, now I want to 
 know what it is ? " 
 
 The stupidest of all Dombeys, I had just knocked away all that 
 Mr. Dombey leaned on — gold — and could only again repeat, " What's 
 monej' ? " 
 
 " Yes, I would like you to tell me what it is." 
 
 "Why! — eh — well, I don't exactly know what." 
 
 The Judge laughed heartily at the confession, and added, " It must 
 be something, and whenever you find out, you must write to me." 
 
 On parting with him he repeated his request, and made me promise 
 to write to him at length upon the subject. I left the room with a 
 very different impression from that when I entered . Instead of finding 
 a man riding a hobby, I found one without a hobby to ride — one who, 
 from a sense of duty, was seeking, by any and every means, to savfe the 
 enterprising, industrious workers of the country from being crushed 
 and degraded by a monied oligarchy. 
 
 A short time after this, in a conversation with Mr. Cockerill, I men- 
 tioned the bewildering effect of an answer made to the badgering talk 
 of some gentleman about inflationists : " that the country wanted more 
 money, but no more rags. It had too many of them already, such as 
 they were, and that there would be more money if there was less of 
 one kind." He said he would like to see it proved, and offered the 
 columns of the Enquirer for the demonstration of the proposition — 
 that the increase of money did not depend upon the mere increase of 
 notes. I undertook it. When finished, the essay was submitted to 
 Mr. Shuckers, who chanced to be in the city. He insisted upon its 
 being put in pamphlet form. It was partly in type when Mr. Schurz 
 made his speech. To make it a reply to that speech, the matter was 
 changed, and the subject belittled. The theory of that answer being 
 asked for, it was given in a manuscript of some forty pages legal cap, 
 which, during the past two years, has been read with interest by mer- 
 chants, bankers, lawyers, and journalists. Subsequently, after the St. 
 Louis Convention, some further essays were written, and circulated in 
 like manner; and they are now published as Part V of this volume. 
 
Ill 
 
 I=^K/T V 
 
 THEORY OF MONEY AND CURRENCY 
 
 How its Application would Equalize the Value of 
 the present Paper and MetalHc Currency of the 
 Government 
 
 ANJJ 
 
 Prevent Destructive Contraction or Dangerous In- 
 flation. 
 
 CHAPTER I. 
 
 INTRODUCTION. 
 
 [The term currency is here used in the sense in which it is used 
 by English writers and statesmen to describe the legal-tender law- 
 ful money of the country, and is not applicable to paper issues, 
 whose sole value lies ■ in their convertibility into such lawful 
 money.] 
 
 The financial experience of Great Britain is both a lesson and 
 a warning to the people of this country. The history of the ori- 
 gin and operation of an exclusive paper currency in England, 
 and the means taken to extinguish it, is precisely parallel to our 
 own. The consequences of her action in forcing the " resumption 
 of specie payments" proved so disastrous, that the authors of the 
 measure afterwards reproached themselves for their folly ; and 
 now, after a period of fifty years, we find that the leading states- 
 men, and the oldest exponent of the most enlightened and conser- 
 vative public opinion in Great Britain, together with the 
 " Thunderer," acknowledge the necessity of retracing their steps 
 so far as circumstances will permit. What that public opinion is 
 appears from elaborate, articles in Blackwood, and from a debate 
 
112 
 
 on the second reading of a bill looking to the suppression of 
 Bank Issue, which took place on March 16, 1875, and reported in 
 the Times of the following day : 
 
 « 
 
 The London Times of March 18, says : 
 
 "We may say at once that we adhere to the principle of Sir 
 Robert Peel's legislation, that it is expedient that the issue of 
 notes should be a function appropriated by the State, the profits 
 of which should be realized by the State. * *. * * 
 
 " Sir Robert Peel could not, however, take it away from those 
 who were systematically using it, without compensating them for 
 the loss, and he left them in possession of it, subject to provisos 
 preventing its extension. * * ***** 
 
 " Like Mr. Goschen and Mr. Gladstone, we desire to see the 
 power of putting notes in circulation every-where re-appropriated 
 by the State, but if the exercise of this power is a gratuitous sub- 
 sidy, it might be resumed in a moment; but if it is the survival 
 of a right, useful and lawful in its origin, and liable to be taken 
 away, only because it is for the general advantage that it should 
 be resumed, it can not be taken away except after negotiation and 
 bargain upon such terms of compensation as fairly represent the 
 value of the liberty expropriated." 
 
 BlacJcwood, for June, 1875, in an article covering twenty pages, 
 on " Banking, and Mr. Goschen's Bill," page 803, says : 
 
 " The debate on the second reading of Mr. Goschen's Bill ended 
 in the appointment of a select committee. The debate was re- 
 markable for the perfect unanimity which prevailed among states- 
 men on both sides of the House in regard to the leading principle 
 which should regulate the currency of the United Kingdom, and 
 marks a decided advance since the days of Peel towards what we 
 have already described as The New Theory of Currency. Mr. Cave 
 and the Chancellor of the Exchequer, on the part of the govern- 
 ment, Mr. Gladstone and Mr. Lowe, on the part of the Opposi- 
 tion, and many members on both sides of the House, agreed that 
 the issue of paper money is a prerogative of the State ; and this 
 led naturally to the assertion that banks of issue usurp the privi- 
 leges of the State, as Mr. Hubbard put it, and as subsidized by the 
 State, according to Mr. Goschen and Mr. Gladstone." 
 
 Again, in the October number, 1875, it says: 
 
 " It is singular that no physicologist has yet attempted to deter- 
 mine the exact nature of the relation between mankind and 
 
113 
 
 money. The experimental evidence called for as the starting 
 point of its induction, exists on the subject in limitless abundance ; 
 the facts stand out in glaring clearness, but the philosopher who is 
 to work them into a system has not appeared. Money is to some 
 few amongst us a mere useful tool ; to many more it is a ruthless 
 task-master ; to all it is a necessity, but to no one does it present 
 the character which must necessarily be assigned to it some day of 
 a measured universal force. There is an immense gap here ; the 
 coming generation may see it filled, perhaps ; but we of this day 
 can only gaze at the hole and say, 'How big it is.' However, as 
 we are standing on its edge, we may as well kick a few stones into 
 it to see how far they will roll." 
 
 The extracts from the debate are confined to the concluding 
 words of Mr. Goschen, the member of the city of London, in his 
 argument when calling up the bill, and to the remarks of two of 
 the leading members on each side of the House, viz.: Mr. Cave, 
 Paymaster-General, and Sir Stratford Northcote, Chancellor of 
 the Exchequer, representatives of the Government; and W. E. 
 Gladstone, the Premier, and Robert Lowe, the Chancellor of the 
 Exchequer of the preceding cabinet, from 1868 to 1874. 
 
 Me. Goschen said : " Scotch bankers said, let us have free trade 
 in banking in Scotland, and let English bankers come and issue 
 notes. But it was for the government to decide, on a question of 
 policy, whether such a course would be advisable, and he thought 
 that if that question was raised it would be decided in the nega- 
 tive, and that no body of monopolists or bankers should issue 
 notes without the State claiming its portion of the profits." 
 
 He also said that bankers issuing notes are practically subsidized 
 by the State, and continued : 
 
 " Whatever the right remedy might be, the present state of things 
 was almost intolerable. The Government proposed to deal with it 
 themselves, after they had received a report from a Select Com- 
 mittee. But the committee could not report for a considerable 
 time, and in the interum the value of the monopoly would go on 
 increasing. The House would agree that the status quo should be 
 maintained during the progress of the inquiry [hear, hear], and 
 he would therefore be glad if the Government would bring in a 
 dispensary bill. Otherwise the Scotch banks would hasten to take 
 the very steps against which the Committee might report, and in that 
 icay Parliament might be embarrassed by having to deal with vital 
 interests of greater magnitude than those now in existence" 
 
114 
 
 The Eight Honorable gentleman concluded by moving that the 
 bill be read a second time. 
 
 Mr. Cave said : " He could easily understand free trade in 
 banking, but free trade in issue was quite a different thing 
 [hear, hear], and no one could doubt that the paper issue of a coun- 
 try, like its currency, ought to be in the hands of the government. No 
 one could read the debates on the Act of 1844, and doubt that 
 that was the opinion of Sir Robert Peel, and that if he had been 
 able he would have caused effect to be given to it." 
 
 In conclusion, the Eight Honorable gentleman moved the fol- 
 lowing amendment : That a select committee be appointed to con- 
 sider and report upon the restrictions imposed and privileges con- 
 ferred by law on bankers authorized to make and issue notes in 
 England, Scotland and Ireland, respectively. 
 
 Mu. Gladstone said : " I have the melancholy privilege of 
 being the only person, now in the House, who belonged to the 
 Cabinet of 1844, and who was, therefore, cognizant — especially as 
 I filled an office connected with the trade and commerce of the 
 country — of the policy, and pretty accurately acquainted with the 
 views of Sir E. Peel in framing the Act of 1844. * * * But 
 Sir E. Peel was not also of opinion that if it were the pleasure 
 of Parliament to combine the business of banking, which is essen- 
 tially and properly a free business with the factitious and artificial 
 privilege of issue, which has nothing whatever to do with bank- 
 ing, and which rests on grounds of its own, such continuation of 
 jjrivileges might not materially modify the principle of freedom 
 in banking. The course then taken by Sir E. Peel with regard 
 to English banks, offers an illustration of his views on this ques- 
 tion. Sir Eobert Peel proceeded steadily upon the principle that 
 where the law imposed restrictions upon banks in their business 
 of banking, these restrictions should be maintained with reference 
 to another principle, that the State was entitled to resume ultimately 
 into its own hands the entire business of issue, and that that course 
 should be taken upon the first favorable opportunity. This is a true 
 statement of the case as regards the views of Sir Eobert Peel, 
 and I need not say that these views upon a question of currency 
 must always have ^reat weight and authority in this House. 
 [Hear, hear.] 
 
 The real ^juestion, which, I think, the bill, after this debate, 
 must suggest to the mind of the House, is, whether it is not de- 
 sirable, supposing a favorable opportunity to have arrived, that we 
 should now, at length, after an elapse of thirty or thirty-one years 
 since the last legislation on this subject, endeavor to deal with the 
 question of issues [cheers]. I am one of those who firmly adhere 
 to the policy of the Act of 1844, and to the principle that the 
 
115 
 
 issue is the privilege, of and prerogative of the State. Nothing 
 could be more strictly accurate, and at the same time more felici- 
 tous, than the expression of my Right Honorable friend (Mr. 
 Goschen) when he spoke of the issue-banks as being subsidized 
 by the State. They are so in the striated sense, because they have 
 in their own hands a power which, if exercised by the State, would 
 be directly productive of considerable funds available for the re- 
 lief of the Exchequer. [Hear.] It would he exactly the same thing, 
 so far as the money is concerned, to grant a legislative privilege to a 
 person to pay over to him a considerable sum from the Consolidated 
 Fund. [Hear, hear.] " 
 
 The Chancellor of the Excheqtjee said : " The Govern- 
 ment accepts in the fullest measure the principles of the legisla- 
 tion of 1844 and 1845, and it is with great satisfaction that I 
 heard from the Right Honorable gentleman (Mr. Gladstone) who 
 speaks by the additional authority on this subject, as having 
 known the mind of Sir Robert Peel, who was the author of that 
 legislation — the most complete confirmation of what I have always 
 understood to be the intention and meaning of that act, namely, 
 to make a clear distinction between the two great principles of 
 currency and issue on the one hand, and banking on the other. 
 [Hear, hear.] The design was to put currency and issue on their 
 proper basis, and do so on the theory that the privilege of issue be- 
 longs to the State, and that the State exercises that right of issue in 
 such a manner as may promote the convenience and interest of the 
 public. With regard to banking, on the other hand, there ought 
 to be no unnecessary restrictions ; and the principle laid down was 
 that the freer competition of the bankers among themselves was 
 desirable in the interests of the public. But I also understand 
 these were the principles that Sir Robert Peel laid down as the 
 basis of his legislation ; but he found himself unable to carry them 
 Jo their proper results. Being, therefore, unable to give entire and 
 absolute effect to the principle that the right of issue belonged to the 
 State, and being obliged to leave a portion of the privileges in the 
 hands of the bankers, he placed certain restrictions upon the banking 
 system." 
 
 Me. Lowe followed, and said : " I am bound to say, also, that 
 I think the Chancellor of the Exchequer deserves our thanks for 
 the very distinct and explicit manner in which he has delivered 
 his opinion on the merits of the question. He has left us in no 
 doubt either as to his own opinion or as to that of Her Majesty's 
 Government. They are of opinion, as I understand, that the issue 
 of notes is a matter which belongs properly to the sovereign power, the 
 State, and that it ought to be placed exclusively in the hands of the 
 
U6 
 
 State. I understand the Eight Honorable gentlejnan further to be 
 of opinion that it is desirable not to proceed by way of limitation 
 in this matter, by limiting, that is to say, the power of the Scotch 
 banks, but rather by equaling the privileges of all bankers, which 
 means, as I take it, depriving, in some way or other, all bankers in 
 England, Sootland and Ireland of the power of issuing notes, and 
 vesting that power solely in the supreme authority. [Hear, hear.] 
 That I understand to be the declaration which has been made on 
 behalf of the Government by the Chancellor of the Exchequer. 
 I understand, moreover, that the Right Honorable gentleman 
 adopts the statement of my Right Honorable friend, the member 
 from Greenwich, with regard to the policy of Sir Robert Peel, and 
 that he says Her Majesty's Government takes the same view of 
 the bill of 1844 and the bill of 1845 as Sir Robert Peel did. So 
 I think nothing can be more clear, ^nd nothing to a person of my 
 opinion more satisfactory, than the views which the Right Honor- 
 able gentleman has laid before us. We are indebted to him not 
 only for the clearness with which he has expressed those views, 
 but also for the candor with which, so far as theory goes, he has 
 investigated the whole question. In this respect, he can not have 
 failed to satisfy the most ardent currency reformer. [Hear, hear.] 
 But then comes another question. As long as it is a matter of 
 theory nothing could exceed the boldness and fairness of the right 
 honorable gentleman's statement. We are met, however, by the 
 question. What is to be done ? And here, I think, we have some 
 reason to say that — 
 
 The native hue of resolution 
 
 Is sicklied o'er with the pale cast of thought. [Laughter.] 
 
 I can not say I feel the same satisfaction when I come to con- 
 sider the step which the right honorable gentleman advises us to 
 take. The Government have clear and distinct views on the sub- 
 ject. They have the power, moreover, to give effect to their 
 wishes — a power which carries with it a grave responsibility. 
 They are met nowhere with any doubt or difficulty as to the principle 
 of the question. Under these circumstances, it seems to me that 
 the only thing that remains for the Government to do is to intro- 
 duce a measure immediately to give eifect to their views, and to 
 put an end to all the inconveniences of the present system. [Hear, 
 Hear.] 
 
 It seems we are to have a committee, but when I try to find 
 out what the committee is to do, I entirely fail in discovering any 
 reason for its appointment. The right honorable gentleman said 
 something about ascertaining what profit was made from different 
 banks from the issue of notes. That is a very pretty little in- 
 quiry, but what does the profit signify ? Why should the assertion 
 
117 
 
 of a great principle, upon which the Cabinet and both sides of this 
 House were agreed, wait until you have gone into these little ped- 
 dling details ? Then we were to get the facts of this case. What 
 facts ? This is not a question of facts. It is a question of abstract 
 opinion, which has been worked out painfully and laboriously by the 
 , ablest men in the country, till they have come to be pretty nearly unan- 
 imous upon the subject. It is not proposed that the theory should 
 be considered by the committee, but only that certain facts should 
 be elicited. The matter is to go over till next year, in order that 
 these facts may be found out. Why wait till next year? Why 
 lose the opportunity which we have at present ? We have got a 
 Government with strong convictions oh thig subject, and with an 
 undoubted power to give effect to these convictions. If they are 
 unprepared to act now, what state of things can give us real 
 assurance that they will ever be prepared to act ? 
 
 This piercing question the Ex-Chancellor could more easily 
 ask than answer. His eight years experience on the Woolsack, 
 must have told about the difficulty to overcome when the whole 
 business of a country is done in bank-notes and bank credits, the 
 same as will be the situation here also when the Government 
 notes are removed and the circulation consists entirely of bank- 
 notes. The replacing of a defective part of the clock-work of 
 society is a very different thing from taking the whole to pieces. 
 Had the English Government a foothold on which to take the 
 first step, every word uttered by her ministers shows that the 
 leader of the opposition would not have had the opportunity to 
 taunt them as he did. Had the situation there been as it is here, 
 with one-half the circulation already what they declared the whole 
 should be, and as soon as possible will be, no one can doubt but 
 that the other half would be replaced by Government notes \^ith 
 the least possible delay. The struggle in this country now is 
 between those who seek to preserve what the English Government 
 and people are laboring to secure, and those whose sole endeavor 
 is to destroy the hope we have, and place the country in the same 
 dangerous position Mr. Goschen and Mr. Lowe describe theirs as 
 being in. • 
 
 The reason why Sir Robert Peel was not able to carry out his 
 principles by taking from all the banks the privilege of issuing 
 notes, and giving the state the exclusive exercise of its preroga- 
 tive when framing the Bank Charter of 1864 was, that the sura 
 claimed by the country banks alone as compensation for the sur- 
 
118 
 
 render of their rights of issue was so large that the Government 
 did not feel itself able to pay it. Sir John Lubeck, the highest 
 authority on that subject, said that the value of the right to 
 issue notes was worth to the Scotch banks alone £9,000,000, or 
 $45,000,000. There was no such difficulty presented by the Bank 
 of England, for the Government did not admit that it had any 
 rights to surrender, because all the power it had was from the 
 state, and what the state gave it could take away. But the 
 property in issue belonging to country bankers was not derived 
 from any legislative authority. Some of tliem issued notes before 
 the Bank of England was in existence. It was a property that 
 had grown from small beginnings, built upon individual ability 
 and integrity, without any authority or aid from the state, and 
 was therefore as much an individual possession as any other prop- 
 erty, and entitled to the same protection. This was the portion 
 of the privilege which the Chancellor says the Government was 
 obliged to leave in the hands of the bankers, and which caused it 
 to leave the privilege with the Bank of England as well, and to 
 place the business of all under certain restrictions. The immense 
 value of the annual subsidy granted to the banks of issue in this 
 country may be estimated from the amount claimed by the minor 
 country banks of Great Britain for the value of a like privilege ; 
 for the circulation required for the trade of this country will be 
 ten or even twenty times as large as was that of these compara- 
 tively small concerns. Here the whole is a subsidy, for the privi- 
 lege of issue is wholly derived from the state, under a law which 
 expressly provides that it shall be surrendered at any time. 
 
 We are assured, by two of the leading members of the present 
 Cabinet, speaking in the presence, and by the authority of Mr. 
 Gladstone, who was " "Vice-President of the Board of Trade and 
 Master of the Mint," in the ministry of Sir Robert Peel, in 1844, 
 that had the paper circulation of the kingdom at that time con- 
 sisted entirely of the notes of banks existing under legislative 
 authority, like our National Banks, the privilege would have been 
 taken from them, to be exercised exclusively by the Government. 
 Thus the young statesman, the author of the coin payment. or re- 
 . sumption law of 1819, after witnessing the suffering it had 
 entailed upon his country for twenty-five years, admitted the error 
 of that legislation, and sought, in his riper judgment, to remedy 
 
119 
 
 the mischief he then did, against the protestation and imploring 
 appeal of his father, the first and grandest Sir Robert Peel. And 
 now, thirty years after the application of that remedy, — thought 
 to have been the best system of bank issue ever devised by the 
 wit of man, — we are told by the late Chancellor of the Exchequer, 
 in the presence of his successor and the ablest men of the king- 
 dom, that the state of things created by it was so intolerable as 
 to cause them to be pretty nearly unanimous in the opinion, that 
 the system must give place to one under which the notes must 
 be issued directly by the Government. 
 
 The extracts here given, show that both parties in Great Britain 
 are unanimous in their support of some measure to relieve the 
 people from the burden of the immense subsidies paid for a 
 service which the Government can better perform itself. Here 
 both the great parties, directed and controlled by those receiving 
 this subsidy, are equally unanimous in support of a measure of 
 the very opposite character. 
 
 England is seeking some way to substitute Government notes 
 for her bank notes, and we are as earnestly endeavoring to sub- 
 stitute bank notes for our legal tenders. She is struggling to get 
 out of the bog, and we are frantically trying to get into it. 
 
 The Ex-Chancellor did not indicate the manner in which this 
 most difficult of all problems had been solved, only that it was a 
 question of abstract opinion, which had been worked out painfully 
 and laboriously. The conclusion, therefore, that has been reached 
 is based upon some theory satisfactorily determined by patient 
 study. Whatever it is, it must be widely different from the one 
 which plunged England into bankruptcy fifty years ago, when it 
 was held that gold was the only money, and therefore that bank- 
 notes, convertible into gold, could be the only sound paper currency; 
 the same plausible theory that is now being used here to support 
 tlie demand for a forced resumption of specie payments. It must 
 differ as widely as did the theory which held the world in chains 
 for thousands of years, from the true one worked out by Kepler, 
 Galileo, and Newton ; for the one which maintained that the 
 earth was a vast plain, had not more completely failed to account 
 for natural phenomena, than has the other, that gold alone is 
 money, failed to explain the phenomena in the commercial world. 
 The fact that the supporters of the gold th^edry, and the monetary 
 
120 
 
 system built upon it, are driven to admit the necessity of periodical 
 convulsions to avert what they call the abuses of the system, 
 should of itself invite inquiry whether there can be any other 
 upon which a monetary system can be erected, that will involve 
 no such terrible necessity. 
 
 That inquiry is being made much in the spirit of the article in 
 Blackwood, by journals of the same high tone in Europe and this 
 country. Stone after stone is started into the gap, with perhaps 
 little or no hope of seeing it filled in this generation, but with 
 the conviction that discussion will aid in establishing the truth. 
 It is upon that truth alone that any permanent structure can be 
 built. If the theory of the English resumption act be true, then 
 the sooner bank-notes take the place of greenbacks the better; 
 but if it is not, the unanimity of all the packed conventions that 
 ever assembled can not prevent the one that is copied after it 
 from proving eqiially disastrous in its operation. That it is not 
 true, is evidenced by the conclusions expressed by the most emi- 
 nent men of that country, after a long and laborious investigation 
 into the nature of money, the foundation upon which must rest 
 every theory upon the subject of issue. If the people of this 
 country can not accept their conclusions in the absence of the 
 reasons which have led to them, may it not be more profitable to 
 discover what those reasons are, than to plunge heedlessly forward 
 until driven by the same long and bitter experience which has 
 determined the mind of Great Britain on the subject? 
 
 CHAPTEE II. 
 
 MONEY. 
 
 The Constitution declares, Sec. 8, clause 5, " Congress shall have 
 power to coin money and regulate the value thereof." 
 
 "What is money? 
 Me. Dombey's answer. 
 
 Mr. Dombey, stiff with starch and arrogance, and entertaining 
 .complicated worldly schemes, would, after dinner, sit by the fire 
 
121 
 
 erect and solemn, with Paul, his little image, entertaining heaven 
 knows what wild fancies, half formed thoughts and wondering 
 speculations, sitting by him in his little chair, and with an old, 
 old face peering into the red perspective, with the fixed and rapt 
 attention of a sage. The two so very much alike and yet so mon- 
 strously contrasted. 
 
 On one of these occasions, when they had both been perfectly 
 quiet for a long time, and Mr. Dombey only knew that the child 
 was awake by occasionally glancing at his eye, where the bright 
 fire was sparkling like a jewel, little Paul broke silence with : 
 
 " Papa ! what's money ?" 
 
 The abrupt question had such immediate reference to the sub- 
 ject of Mr. Dombey 's thoughts, that Mr. Dombey was quite discon- 
 certed. 
 
 "What is money, Paul?" ,he answered; "Money — '" 
 
 " Yes," said the child, laying his hands upon the elbow of his 
 little chair, and turning the old fece up toward Mr. Dombey's ; 
 "what is money?" 
 
 Mr. Dombey was in a diiSculty, He would have liked to give 
 him some explanation involving the terms circulating medium, 
 currency, depreciation of currency, paper, bullion, rates of ex- 
 change, value of precious metals in the market, and so forth ; but 
 looking down at the little chair, and seeing what a long way down 
 it was, he answered : " Gold, and silver, and copper. Guineas, 
 shillings, and pence. You know what they are?" 
 
 " Oh yes, I know what they are ; " said Paul, " I don't mean that, 
 I mean, what's money, after all." 
 
 Heaven and Earth, how old his face was as he turned it up 
 again toward his father's. 
 
 " What is money after all ! " said Mr. Dombey, backing his chair 
 a little, that he might the better gaze in sheer amazement at the 
 presumptuous atom that propounded such an inquiry. 
 
 " I mean, papa, what can it do ? " returned Paul, folding his 
 arms (they were hardly long enough to fold), and looking at the 
 fire, and up at him, and at the fire, and up at hini again. 
 
 Mr. Dombey drew his chair back to its former' place, and patted 
 him on the head. " You'll know better by-and-by, my man," he 
 said. " Money, Paul, can do any thing." He took hold of the 
 little hand, and beat it softly against one of his own, as he said so. 
 
 This intelligent answer left little Paul in a quandary ; left him to 
 grow up, still inwardly asking what is money. And ever since Dick- 
 ens told the story, innumerable Pauls have been asking the same 
 question, for it has become a question of bread. Without pre- 
 suming to anwer it so as to fill the hole referred to in JBlaekwood, 
 
122 
 
 the writer ventures to give the stone then rolled another kick, in 
 the hope that it. may be kicked again, and roll on until it rests 
 at the feet of a statesman whose wisdom is equal to his power, and 
 be made useful as the corner-stone of a financial structure that 
 will be as enduring as time. 
 
 What is money ? 
 
 We answer this question by a simple word as in a dictionary : 
 Money, n. Power. 
 
 This definition is as descriptive and exact as it is comprehen- 
 sive. The substitution of the definition for the word itself where 
 it is said " The love of money is the root of all evil " would silnce 
 even the scoffer's jest. 
 
 To show that money is not only in- its nature, but in its exist- 
 ence, and even in the very form of that existence, — power, and noth- 
 ing besides, is the object of this paper. 
 
 Its existenee is co-evil with our race. An, age of barter can not 
 be imagined. Individual cases of an equal exchange of two things, 
 an even swap, have always been and always will be ; but there 
 never was a period when the bargain between man and man did 
 not concern the exchange of two things of unequal value, where 
 the differencie had to be made up by something acceptible to both 
 parties. When the thing or agent thus used was of a nature that 
 would settle like differences in the exchange of other property, — 
 whether it was the promise, either verbal or written, of one of the 
 parties, expressed in the units of value understood and recognized 
 by both, or the promises of any other party which were alike ac- 
 ceptible, and could settle like differences; or whether it was the 
 measuring units themselves, when used as a medium to settle the 
 difference in such exchange of property, — it was money. 
 
 In ancient times the quantity of this money eliminated in each 
 individual trade bore a very small proportion to the property ex- 
 changed, but as the number of trades multiplied, it accumulated, 
 and soon existed in such quantity as to be the most convenient 
 instrumentality in the exchange of property. Then, instead of its 
 use being confined to making good the difference between the val- 
 ues of the property exchanged, it became, with few exceptions, the 
 sole equivalent on one side or the other. With the extension and 
 growth of commerce the quantity of money increased, and also the 
 necessity for its use as a medium of exchange. 
 
123 
 
 In modern times the vast increase in tte quantity of money is 
 represented in so large proportion by promises and credits, that 
 some writers have dismissed the subject by simply defining the 
 word money by another word claim, forgetful that a portion, how- 
 ever small; consists of the units by which the claim is described. 
 These units are certainly not claims, but symbols, made at diiferent 
 times and in different countries of various substances, — wampum, 
 tobacco, skins of different animals, and iron, copper, nickel, gold, 
 silver, etc., none of which are money because they have been ap- 
 plied to such use, and can not be regarded as money except while 
 having the capacity to serve as a medium of exchange, and then 
 only as an outward sign of that entity which the promise itself 
 describes. 
 
 The value of the measuring unit itself is however seriously ef- 
 fected, if not governed by the extent of its purchasing power beyond 
 the territory within which it is recognized. This may be illus- 
 trated by reference to the early western settlements, where ex- 
 changes were made by the aid of beaver, mink, and coon skins, 
 say in the proportion of twenty-five, fifty, and one hundred. The 
 hunters and trappers got what they wanted by the delivery of as 
 many of these skins as was equal to the price of the goods, or by 
 passing their word for such delivery in future, if the trader would 
 take it. The number and description of the skins required would 
 be governed by what the trader could get for them in the market 
 where he got his supplies, where the unit of value was not skins, 
 but the silver dollar and its fractional parts. Now, in that back- 
 woods settlement its money consisted of the credit the trappers 
 might have and the skins. Both serving the same place, as a med- 
 ium in which the exchanges of the settlement were made, were 
 equally money, the skins in no particular more than the promise 
 or credit, as long as it had the purchasing power. In this view 
 would not the following definition better describe 
 
 THE TEUE CHAEACTER OF MONEY? 
 
 Money is not a natural product, nor the. product of labor as it is 
 usually defined, but is the mere fruit of trade, evolved by the 
 exchange of property. It is the incorporeal measure of the value 
 of that property, and the agent by which its exchange is facil- 
 itated. The value of the money itself is determined by a unit 
 
124 
 
 fixed by the common consent of a people, or established by the 
 sovereign power of a state ; and the value of the unit thus es- 
 tablished by one community or state, as compared with the value 
 of like units of other communities, is determined by the relation 
 which it bears to some commodity whose value most 'nearly ap- 
 proximates to uniformity throughout the world, and which in 
 consequence has been universally accepted as a standard. 
 
 That money is the mere fruit fif trade and not the product of labor 
 appears in every expression referring to it. Men invariably speak 
 of making money or of others, making money without the slightest 
 Inference to production. They use the same language when refer- 
 ring to the large accumulations of a lucky adventurer from spec- 
 ulations and gambling as when speaking of the smaller gatherings 
 of the industrious laborer or artizan, or of professional toil. The 
 hypercritical objection sometimes interposed that the former never 
 made or earned anything only serves to show that the difference 
 between earning or making anything, and making money is very 
 wide ; for the first implies that the owner of the money had act- 
 ually earned or produced something, while the last only means 
 that by some kind of trade he had appropriated and got possession 
 of what had been already produced by somebody else, or by ad- 
 vantageously exchanging his own labor or product so that a margin 
 would be left in his hands. 
 
 To illustrate : When a man raises corn or builds a machine, the 
 corn or machine is the product of his labor. He has that much 
 property, but is never said to have any money until he sells it. 
 The farmer turns his crop into money by selling it, but is said to 
 have made money only when the amount of the sale exceeds what 
 it has cost to produce it. If money was the product of labor, then 
 he who performed the most labor would receive the greatest 
 amount of product : money being that product the laboring popula- 
 tion would have the most of it, which every man knows is not 
 true. On the contrary, as a general rule mere laborers make no 
 money, — they only make a living, — i. e. the amount they sell their 
 labor for does not exceed the cost of what is necessary to sustain 
 the body in a condition to perform it, and meet the necessities of 
 the social existence of the laborer. It is only when any of them 
 are able to make good trades for their labor, or successful trades of 
 property, that they make any money, and then it is the fruit of that 
 
125 
 
 trade. As with the employed so with the employers, the money 
 they make, or their profit, depends upon the character of the trade 
 they make for the product of labor and is the fruit of that trade. 
 That money is produced in the manner here described is further 
 evidenced, by the greater part of its accumulations being made by 
 merchants and bankers, whose business consist wholly in the making 
 exchanges of property or of money itself. 
 
 Honey is an incorporeal measure, because its existence does not 
 depend upon the presence of any substance. The larger portion 
 of what exists in this country is certainly incorporeal, for the Sec- 
 retary of the Treasury's report, of December 7, 1874, shows that 
 the total stock of gold, silver, and circulating notes of every de- 
 scription was, at that time, $943,518,676.16, and that the total cash 
 in the treasury and deposits in banks, that had made reports, was 
 11,664,979,364.63, and the total in banks not reporting was esti- 
 mated to be $850,000,000, making a grand total of $2,500,000,000, 
 every single dollar of which was as much money as jyas every 
 other dollar. This was $1,500,000,000 more than there was of 
 any .substance which is commonly called money. Its money char- 
 acter, then, could have existed only in the numerals on the ledg- 
 ers of the banks. To explain this disparity, which is greater in 
 England than here, some of her authorities define money to be 
 claim ; some, that it is credit ; and some, to reconcile phenomena 
 with their idea that it is a substance, speak of money and money 
 of account, admitting, however, that both are equally moneyj now 
 claim, credit, and account are certainly incorporeal. 
 
 "While money has no corporeal existence, it is an universal force, 
 the more ubiquitous and irresistible because, like the air, it is in- 
 tangible, and is known to us only by the effect either of its pres- 
 ence, its absence, or its movement. While one has no visible ex- 
 istence itself, its presence is necessary for the existence of every 
 thing else; so the other, equally subtle and impalpable, must be 
 ever present to sustain commercial life. The absence of the one 
 is death to the body ; of the other, to business. The movement 
 of one is felt in the breeze, the storm^ and the tornado ; of the 
 other, in financial cramps, crisises, and panics. They are alike also 
 in this : "When one departs in a small degree from the highest 
 purity, because of impurities in the atmosphere, from malaria or 
 epidemics, the system adapts itself to it; so when the other de- 
 
126 
 
 parts from the highest standard, by reason of an unsound cur- 
 rency, the business system of that country adapts itself to it, pro- 
 vided that departure is steady and uniform. 
 
 Money and currency are distinct in their nature and in their 
 office. Money is simply an entity of the mind, and currency the 
 representative and symbol of that entity, created by the collective 
 mind or will of a people, thus making it a " measured universal 
 force " by the mysterious and silent operation of law. 
 
 This proposition may seem absurd to many, and to none more so 
 than to the members of a profession whose judgment is governed by 
 precedent, and who define the meaning of words by the sense in 
 which they are used in the law, and who therefore can not see 
 how money can be other than that substantial thing which the 
 law requires to be delivered in fulfillment of any obligation re- 
 quiring the payment of money. Seeing thus, how will they ac- 
 count for the actual existence of many times more money than 
 there is of that which they call money, and also how the require- 
 ments of the law for the delivery of that substance in the dis- 
 charge of obligations can be satisfied when the delivery is not 
 made, as it very seldom is. 
 
 They all admit that money is the measure of value. No one 
 claims that it measures the quantity of property or its quality, 
 but only its value. Now value is entirely a mental operation. 
 Depending upon the condition of the mind, it rises or falls with 
 the moods and dispositions of men. In seasons of prosperity, 
 when the mind is cheerful, buoyant, and elastic, values are high. 
 In periods of adversity, when the mind is gloomy, dispirited, and 
 despondent, values are low. These conditions of elation or de- 
 pression arise from various causes. The danger to which property 
 may be exposed, either from violence, as in times of war, or from 
 the elements, begets a desire to convert it into that which can be 
 removed to a place of safety. Whether that danger be real or 
 imaginary, it alike fixes the value of the property in the mind of 
 its possessor, and causes any exchanges he may make of it to be 
 valid. The reduction in the usual quantity of property, by short 
 crops or otherwise, necessarily causes the possessors to keep what 
 they have, and an unusual increase of the quantity causes an 
 equal anxiety to get rid of the surplus. An actual reduction or 
 
127 
 
 increase is not necessary, but only the impression of it in the 
 mind of the person desiring to make the exchange. 
 
 Value, therefore, is determined solely by the operation of the 
 mind of the buyer and the seller, exercised with reference to the 
 same object. When the determination conforms to that of the 
 judgment of mankind, the price is said to be the market value, 
 and governed by what business men call the law of supply and 
 demand. Looking behind this cant phrase, thoughtful men will 
 admit that the value of any thing is just what the owner is' will- 
 ing to take and the purchaser is willing to give for it, and will 
 also see the absurdity of talking about measuring a mental opera- 
 tion with a yard-stick, or with any thing else that is not of the 
 same ideal character as the thing measured.* One might as well 
 talk about measuring a scale in music by a foot rule, or the notes, 
 half notes, and quarter notes by a gallon, half gallon, or quart 
 measure. Time in music is a mental operation, and has its meas- 
 ure in an entity of the mind, in the same manner as value" has its 
 measure. Both entities have an arbitrary outward expression or 
 representation : the one by the printed note and its corresponding 
 sound ; the other by the unit of value and the numerals represent- 
 ing that unit. That measuring unit, however, is no more the 
 entity it measures than are the numerals in a bank ledger, so long 
 as these numerals can not command the number of the measures they 
 describe. Thus the usual and universal description of credits in 
 bank or elsewhere, subject to call as actual money, is entirely ac- 
 curate. When the figures fail to possess the potency they profess, 
 and can not command what they call for, there is no more money 
 in them. Then it is that riches take to -themselves wings and fly ' 
 away. 
 
 In saying that verbal promises as well as those written, accept- 
 able to parties making a trade, were money, when they would settle 
 
 * "The use of money fluctuates in value, but if money itself fluctuated so vio- 
 lently, it would lose its power and forfeit its functions of acting as a standard of 
 value. For a ' standard of value,' like a yard-stick or a gallon measure, is use- 
 ful just in proportion as it is steady, unchangeable, and trustworthy. The idea that 
 paper currency on gold security should be a function of Government, seems to 
 have made but little progress in Great Britain. There is certainly something to 
 be said in its favor, but there are fatal objections to it." — Banker's Magazine for 
 May, 1875, on " Government Currency.'' 
 
128 
 
 like differences in the exchange of other property, no one will 
 understand that it is the individual promise that can be trans- 
 ferred, but that the promises of all persons of like credit, and 
 given under like circumstances, can be thus used. Thus, in sea- 
 sons of prosperity and confidence, when thirty days is considered 
 cash, the purchaser pays in his verbal promise, and, although the 
 vender can not use the identical promise he received in the settle- 
 ment for his purchases, he yet can use its equivalent, his own 
 verbal promise, because, having the same credit, it would be 
 equally acceptable as the one he received. Every merchant of 
 large experience and undoubted credit knows that at times a very 
 large business is carried on by this round of verbal credit or 
 money. 
 
 CHAPTER III. 
 CUKRENCY. 
 
 As the accepted definition of capital is every description of 
 property that enters into production, the amount of capital in a 
 country is the value of that property. A certain portion of that 
 property, gro'rring out of its exchange, as already shown, is money ; 
 with every change, therefore, in the value of the property, there is 
 a corresponding change in the amount of capital, and consequently 
 a proportionate change in the amount of the money portion. The 
 fact also appears that this money is little else than a vast accumu- 
 lation of credits, the basis of which is confidence — the growth of 
 prosperity ; and, further, that it is represented by a symbol or unit, 
 which measures its quantity. This measure differs from all others, 
 in that it can not be repeated in its use ; but there are as many 
 measuring units required in each trade as there are in the money 
 to be measured. Thus, in delivering one hundred gallons, or one 
 hundred bushels of any thing, the delivery may be accomplished 
 by using a single gallon or bushel measure one hundred times ; or, 
 when the delivery is by weight, a single standard weight repeat- 
 edly used can weigh any article. But the delivery of one hundred 
 dollars can not be made by repeating the use of the same dollar 
 
129 
 
 one hundred times ; one hundred distinct dollars are imperatively 
 required iu making the payment. This is absolute so far as con- 
 cerns each individual trade. As, however, all men are not having 
 occasion for these measures at the same time, only a limited num- 
 ber, a certain proportion of the money at any time existing in a 
 country, is required to carry on its current trade. That propor- 
 tion will constitute the currency of that country, and will be the 
 representative of its money as well as its measure; and it will 
 change with the degree of confidence that prevails. 
 
 A true representation exists only when the relation or propor- 
 tion between the representative and the body represented is legiti- 
 mately preserved. That proportion may be fixed arbitrarily by a 
 supreme power, or determined by the ratio which the representa- 
 tive bears to an unknown quantity. To illustrate : The people of 
 this country, at the close of the Revolution, established a constitu- 
 tion which arbitrarily fixed the number of representatives for each 
 State in one branch of the Legislature, and in the other left the 
 number to be determined afterwards, under a rule that it should 
 be a certain proportion of an unknown quantity, of the number of 
 inhabitants in the State at any given time. The representation es- 
 tablished, however, was none the less absolute in the one case than 
 in the other, although the number of representatives might be 
 constantly changing by reason of the increase or decrease of popu- 
 lation. Thus it is with the amount of currency required to truely 
 represent the money existing at any given time. Its quantity can 
 not be fixed, but must bear a certain proportion to the money it 
 represents, or at least approximate to that proportion. There can 
 be only an approximation when that which is represented is con- 
 stantly varying in quantity. The only thing that is fixed is the 
 ratio of representation. Therefore, a change in the quantity of 
 money works a corresponding change in the quantity of currency 
 required, and vice versa a change in the quantity of the currency 
 works a proportionate change in the quantity of money. 
 
 From what has been said, it appears that the amount of this 
 money is determined solely by the laws of trade, while that of the 
 currency is controlled by the arbitrary act of those who, for the 
 time being, make the laws of the State. From this fact, that the 
 quantity of money and the quantity of its representative, the cur- 
 rency, is determined by two separate and distinct authorities,, come 
 
130 
 
 all the convulsions and panics in the commercial world. When 
 the two work in harmony, and the proportion of currency is no 
 more nor any less than the definite proportion required, business 
 prospers. When it is otherwise, it is either dangerous or disas- 
 trous. Although that proportion can not be definitely stated, be- 
 cause the limits of money are indefinable, yet it is enough to know 
 that it must be such as to satisfy every possessor of money that 
 there are enough of the measuring units — the currency — to meet 
 every possible demand for their use. When these owners are not 
 so satisfied, they run to secure as much as they can, before it is 
 all gone. This is called a panic. Should the sovereign power, the 
 creator of the currency, give such an assurance, even in the mo- 
 ment of highest frepzy, by issuing or offering to issue whatever 
 currency was needed to meet every possible demand, confidence 
 would be restored and the panic instantly end. The world has 
 witnessed many illustrations of this physicological phenomena; 
 among them, and the most striking were the panics of 1847, 
 1857, and 1866, when the Bank of England was saved from bank- 
 ruptcy only by the government trampling upon its own arbitrary 
 enactments, and announcing its purpose to issue whatever currency 
 was necessary to meet every demand for it, entirely regardless 
 whether there was any of the metal on hand, which bullionists 
 claim is the only basis of value for paper money. On each of 
 these extraordinary occasions the demand ceased, and confidence 
 was restored within twelve hours. A similar notable illustration 
 was afforded in this country, in 1863, by the legitimate operation 
 of the legal tender act of 1862, when the Government paid out 
 over fifty millions within ninety days, and prevented a panic more 
 disastrous than the one that occurred ten years later. 
 
 These instances show, what appears in all that has been said, 
 that the currency should have the same elastic character with re- 
 gard to quantity as the money it represents, and that from its re- 
 presentative character it must also possess a value as intrinsic as 
 the value of the property measured by that money. 
 
 What is the value of property other than the price it will 
 bring? And is not that estimated by its productive power or its 
 capacity to exchange for other property having the power of pro- 
 duction? The term intrinsic value, so often used in discussing 
 the question of currency, can mean nothing more than that the 
 
131 
 
 value is not momentary, but one that has attached for some time, 
 and will likely continue without serious change. The property 
 wliich affords the highest illustration of this kind of value are 
 mortgages, ground rents, and the public funds of established gov- 
 ernments. Their value is given by their productive power — the 
 rate of interest which the funds bear. A currency, therefore, con- 
 vertible into the public funds, would possess an intrinsic value of 
 the highest character; and when such funds bear a rate of inter- 
 est, payable in the precious metals, that would cause them to be 
 on a par with the metal, the currency would also have the most 
 perfect uniformity. Whatever be the form or substance used for 
 the currency, it is money, coined by the Government under a 
 power implied or expressed, as in the Constitution of the United 
 States, which declares that "Congress shall have the power to 
 coin money and regulate the value thereof." 
 
 In the exercise of that power, however, by any single State, it 
 is an imperative necessity that the value of the currency estab- 
 lished should conform to the value of gold and silver, not because 
 they possess any intrinsic value superior to other property, but 
 from the fact that they are accepted by all commercial countries 
 as the standard by which the values of all property shall be com- 
 pared. Their superiority and uniformity of value has been im- 
 parted by the demand created by such universal accord. Take 
 that away from either, or both, and their value would be as fluctu- 
 ating and reduced as that of other property. This is illustrated at 
 this time by the effect of the demonetization of silver by Germany 
 and this country, though only partially accomplished, has had upon 
 the price of the two metals.* The increased demand for gold re- 
 quired to fill the hiatus in the currency, has caused the price to 
 advance twenty-five per cent above the price of silver. Should 
 other countries, where silver now performs the office of currency, 
 demonetize it, the difference between its price and that of gold 
 would be as great as between gold and any other article of mer- 
 chandise. 
 
 Mr. Goschen, the Chairman of the Committee of the House of 
 Commons, appointed to inquire into the silver question, in his re- 
 cent report, after reciting at length the action that had been taken 
 
 * These papers were written in July, 1876. 
 
132 
 
 by various governments with reference to the establishment of an 
 exclusive gold currency, says : " Your committee have not consid- 
 ered it to be within the scope of the questions referred to them to 
 make inquiry as to the intentions of these governments, though 
 various references to their views will be found in the various 
 official documents procured for the committee by the foreign 
 office. Your committee, on this point, would simply remark that 
 it is obvious that if effect should be given to the policy of substi- 
 tuting gold for silver, whenever it is possible, and giving gold, for 
 the sake of its advantages in international commerce, the prefer- 
 ence among its populations whose habits and customs are in favor 
 of silver, and thus dropping silver from the position (which it has 
 always occupied) of doing the work of the currency, over at least 
 as large an area as gold, no possible limits could he assigned to the 
 further fall in its value which would immediately take place." 
 
 It is obvious that this conclusion would apply with equal force 
 to gold if it was demonetized instead of silver, and to both, if such 
 a thing could be imagined as the substitution of some other com- 
 modity for the standard of value by all nations. This reflection is 
 only useful to show the folly of those who speak of the precious 
 metals having an intrinsic value other than what is given them by 
 law. While not " the only money of the constitution and of the 
 world," as declared by the late Secretary of the Treasury, in press- 
 ing his demand for the immediate resumption of specie payments, 
 they are, and of necessity must be, the prime factor, the basis of 
 any enduring system of currency. The quantity of neither, how- 
 ever, nor of both, will permit them to truly represent the vast ac- 
 cumulation of money in modern times, and alone constitute the 
 currency ; and, besides, the want of elasticity in the quantity of 
 the metals prevents any accommodation to the great changes con- 
 tinually occurring in the quantity of money. While, for these 
 reasons, gold and silver can not serve as a true representative of 
 moliey, yet, for a standard by which the public credits of all 
 established governments are or should be measured, they serve 
 to show the comparative value of each of such credits, and con- 
 sequently of the currency that might be convertible into each, 
 and thus, by a proper adjustment of the rate of interest, keep 
 it at all times in close proximity to, if not on, a level with the 
 value of the precious metal itself. 
 
133 
 
 CHARACTEEISTICS OP CUEEENCY. 
 
 The currency liere described would have the highest stability, 
 uniformity, elasticity, and intrinsic value. It would be as stable 
 as the government; as uniform as the operation of its laws; and, 
 should those authorizing its emission provide for its conversion, 
 at the will of the holder, into a public credit, bearing a rate of 
 interest that would cause the credit to be at par in the markets 
 of the world, the currency would not only be worth as much as 
 gold and silver, but be of as high, if not higher, intrinsic value; 
 for to those who hoard, it would have a facility of conversion into 
 a productive power which gold and silver have not ; and, should 
 those laws also give the holder of this credit the right to recon- 
 vert it into currency at his pleasure, or make the currency con- 
 vertible directly into gold and silver by the government's use of 
 its own credit, the quantity in circulation would be governed by 
 the interests of the people ; in other words, by the laws of trade, 
 thus making the quantity as elastic as the money it represented. 
 
 THEOEY BEIEFLY STATED. 
 
 Money measures the value of all property; currency is the 
 representative of money, and the measure of its quantity; and the 
 office of gold and silver is to preserve uniformity between the cur- 
 rencies of different countries. The money now existing in com- 
 mercial nations consists almost entirely of individual and corpor- 
 ate credits. The currency representing it should consist of bills 
 of credit ( the present legal tender notes) emitted by the Govern- 
 ment, and either introconvertible into a public credit, bearing 
 such a rate of interest, payable in the precious metals, as would 
 cause the credit, and consequently the currency convertible into 
 it, to be equal in value to the metal itself in the markets of the 
 world, or convertible directly into gold and silver under such an 
 organic law as would secure such convertibility under all circum- 
 stances and through all times, and where the quantity would be 
 regulated by the laws of trade, and not be subject to the caprice of 
 either bankers or legislators. 
 
 The theory rests upon the assumption that it is not the quality 
 of the material of which the currency is made, but the quantity, 
 
134 
 
 that determines its value. The people of this country have had a 
 striking illustration of the truth of this proposition within the past 
 year. In the beginning of the effort to retire the fractional cur- 
 rency, in April and May, the quantity was rapidly reduced by the 
 substitution of a debased silver coinage, which was hoarded. The 
 decrease in the quantity of fractional currency caused its value to 
 Increase, until at one time it sold for two or three per cent premium 
 a'oove legal tenders. The only value of this fractional currency 
 came from its convertibility into legal tenders, made of the same 
 material as itself, and in no degree from its convertibility into 
 silver, for silver was worth less than paper legal tenders at the 
 time, and has been ever since. The reason why. the convertibility 
 of paper currency into gold and silver, in a manner which will se- 
 curely maintain such convertibility, is essential for a sound cur- 
 rency, is not that it receives its value from being so convertible, 
 but because the right and opportunity to so convert it is necessary 
 to prevent an over-issue. 
 
 If the theory be correct, currency must be issued by the State, 
 in the form of legal tenders and coin, each made convertible into 
 the other, either indirectly or directly — indirectly when the conver- 
 sion of the notes would be into bonds bearing a rate of interest 
 that would cause them to be at par with coin ; or directly at the 
 offices of the Treasury, under a law which would effectually pro- 
 vide for a reserve of the precious metal for that purpose, and also 
 for such enlargement of their issue in time of sudden alarm as 
 would make a.panic impossible, and in a manner that would cause 
 any enlargement not to depend upon or admit of any discretion 
 being exercised by the Secretary of the Treasury or any other 
 officer of the Government, and would remove all motive for 
 its continuance a moment longer than the necessity which called 
 for it existed : a provision that would accomplish, by the direct 
 operation of the law itself, what the English Cabinet was driven 
 to do arbitrarily in' 1847, 1857, and 1866 to restore confidence and 
 maintain specie payments. 
 
 If a Government was in a measure isolated from the rest of the 
 world, as was this country during the rebellion, indirect converti- 
 bility could be established and maintained with the happiest re- 
 sult, as it then was, by the Legislation of 1862; but when a 
 country has a large foreign trade, with nations whose doubtful 
 
135 
 
 c .'edit causes their securities to continually fluctuate in value, 
 direct convertibility will better preserve that uniformity in the 
 value of their currencies so important for commercial convenience. 
 Practically, therefore, the theory leads to the conclusion that the 
 issue of currency is a prerogative of the sovereign power, which it 
 can not delegate, but must exercise directly and exclusively ; and 
 that in the exercise of that power it is its interest and its duty to 
 make its coinage consist of certificates of its power, impressed as 
 well upon paper as upon the precious metals,' under laws that 
 would absolutely and effectually secure the conversion of the one 
 into the other under all circumstances and through all time, and 
 to visit upon any one who might utter any note, token or other de- 
 vice to circulate as money all the penalties for counterfeiting. 
 
 CHAPTER IV. 
 
 EESUMPTION. 
 
 The correctness of the principle of such an exclusive govern- 
 ment currency is illustrated by the disasters which have invariably 
 followed any attempt to destroy even a partial approach to it, 
 as well in England as in this country. At this time, if the circu- 
 lation consisted wholly of legal tenders, instead of being one half 
 legal tender and the other half bank notes, there could be no doubt 
 about the ability of the government to make every dollar convert- 
 ible into gold, and to forever maintain such convertibility. And 
 there is as little doubt that it could be brought about with far less 
 inconvenience and distress than now exists, and that will continue 
 to attend the enforcement of a resumption law, which looks to the 
 extinction of legal tenders, to an unlimited increase of bank-notes, 
 and to the making these bank-notes, (professedly convertible into 
 gold) the actual and exclusive circulating medium. The march to 
 a hard-money legal-tender currency would be comparatively com- 
 fortable, because confidence would increase with every step of its 
 progress; while with a bank-note circulation confidence would give 
 place to uncertainty, doubt, and despair. 
 
136 
 
 There Is abundant cause for this confidence on the one hand, and 
 the utter lack of it on the other; for the most stupid could not fail 
 to see, that with a currency exclusively of legal tenders and coin, 
 the government would only be required to provide a coin reserve 
 sufficient to maintain such conversion, and of its ability to do this, 
 under all circumstances, no one could doubt. Not so, however, with 
 a bank-note circulation. The issuing banks would not only be 
 required to provide themselves with gold to redeem their notes, 
 but vastly more, to respond to every demand of their depositors 
 the instant it was made. Not only would they be required to do 
 this, but every savings bank and private banker receiving deposits 
 would also, either on demand or after a very brief notice. The 
 only legal tender then, being gold, every depositor would have a 
 right to demand it. In case of alarm, from what quarter could 
 the banks replenish their stock? Only by making their debtors 
 pay up. Their only relief could come from a violent contraction 
 of their loans, a remedy which has always served to aggravate the 
 trouble, and increase the drain into a panic, as in 1873; Then 
 bank after bank will tumble like a lot of bricks set on end. The 
 depositors would drain the banks, and then the government would 
 have to redeem the notes by the sale of the bonds deposited to 
 secure them. The market would be glutted, and prices decline. 
 This, and the apprehension (stimulated by reports of parties 
 interested in bringing down prices) that the gold, in the Treasury 
 might be exhausted in the effort to maintain specie payments, 
 would cause foreign holders to throw their bonds on the market 
 and turn them into gold, regardless of sacrifice. Under such a 
 load, the government would be paralyzed. With its gold diminish- 
 ing in the payment of bank-notes, which, under the law, it is 
 bound to redeem, there would be poor prospect for the prompt 
 payment of the interest falling due, and the bonds would rapidly 
 decline to a point from which the people would have little dispo- 
 sition to lift them. It would be practical repudiation. 
 
 In the contemplation of such a possibility, however remote, 
 every bond-holder is interested in the total separation of the gov- 
 ernment from the business of banking, and in having the currency 
 of the country rest upon the same basis as their own securities, and 
 not a circulation of bank notes whose presence is a standing men- 
 ace to the national credit. Every bank and banker in the coun- 
 
137 
 
 tiy, whose profit is not in the issue of notes, is also interested in 
 suppressing the system which has periodically convulsed the busi- 
 ness of the country. 
 
 The people do not see the danger because they turn their eyes 
 from it. They close their ears to every word of warning. They 
 only know that National banks are breaking from time to time, 
 and that their notes are just as good after they have failed as be- 
 fore, and they hug the delusion that the government can always 
 redeem them as it is now doing. They express themselves as con- 
 fidently about the banks being always able to redeem their circu- 
 lation, as the author of the system the late Chief Justice did about 
 there never being driven to suspend payments, and that too, only 
 a year before every National bank in the country refused to pay 
 their depositors, the majority from necessity, and the rest to keep 
 them in countenance. 
 
 This dire calamity occurred less than three years ago, and yet 
 seems to be forgotten. Why ? Because the all-pervading influ- 
 ence of the banks stifles reference to it, and because the forbear- 
 ance of the people during the forty days of suspension, and its 
 happy result, blinded them to the fact that the banks were as flat 
 broke as any merchant who is now driven by them into bank- 
 ruptcy, because his assets are not immediately available to meet 
 his obligations. The extreme forbearance then exercised, must find 
 a cause deeper than patriotic fervor and a generous public spirit. 
 The business community are not given to such emotional exhibi- 
 tions. They forbore them because they could not see a profit in 
 doing any thing else. If they pressed the banks they could get 
 only bank notes, or at the most legal tender notes. It would have 
 been merely an exchange of credits, and it was reasonable for 
 them to conclude, where they had confidence in the final solvency 
 of a bank, that a credit on its books was about as good as its 
 credits in their pockets. 
 
 The situation will be entirely changed after January 1st, 1879. 
 Then the banks will have to pay their depositors in gold on de- 
 mand. Then their demand could not be answered by another 
 form of credit, corporate or National, but must be in a commodity 
 whose value depends not alone upon the laws of this country, but 
 upon the value set upon it by the laws of all other countries, 
 which fact has made it a precious metal. Not much forbearance 
 
138 
 
 would be exercised whea there would be a profit in drawing gold. 
 A drain in consequence of alarm would be further stimulated by a 
 prospect of an increase in the price of gold as compared with 
 bank notes or bank credits. A powerful secret combination, or 
 conspiracy, of a few men, known in financial phrase as a Syndi- 
 cate, could shake the country with alarm and terror at any moment, 
 the same as Fisk and Gould did on the never to be forgotten, but 
 seldom remembered. Black Friday ; when the work of devastation 
 was only arrested by the Government being intrenched behind its 
 legal tenders, and at liberty to throw its millions of gold on the 
 market, and thus break the back of the conspirators. Syndicates 
 will have nothing to fear then, when the Treasury, already con- 
 verted into a great Sufiblk bank, for the sorting, exchanging, or 
 paying bank notes, will be fully occupied in delivering gold for the 
 millions presented for redemption. 
 
 Addenda. — It must be apparent that the Bureau of Redemption 
 is a counterpart of the old Suffolk Bank of Boston, and that the 
 Treasury Department has become a great bank, the care of which 
 is receiving too much of the attention of the Secretary. Was it 
 otherwise, and the principle duly recognized that issue has no con- 
 nection with the banking business, the road to resumption would 
 lie in the direction of a law described in the resolution on page 
 11, supplemented by another that would revive the "Saving's 
 Bank of the people," make the lawful money receivable for cus- 
 toms, and establish a coin reserve for the payment of interest, by 
 purchases in the open market either of coin or coupons maturing 
 within a given time. 
 
 Such laws would make the Government independent of all 
 " Syndicates " (?) The debt would be rapidly converted in 3.65 
 or 4 per cents, the danger of unlimited inflation removed, and the 
 currency maintained at or near its present level, but gradually and 
 surely approaching par. The banks should favor it. They have 
 no interest in creating others with power to convert the whole 
 public debt into bank notes. Their business will be uninter- 
 rupted, and their privilege of issue even preserved for years. 
 More important still, their assets will be strengthened by the re- 
 vival of confidence, and the return of general prosperity. 
 
ISSUE, 
 
 Shall it be by the GoYernment or the Banks ? 
 
 R. B. PULLAN'S ANSWER TO CARL SCHURZ'S SPEECH, 
 MONDAY, SEPTEMBER 27, 1875. 
 
 If the cliarge made by Mr. Schurz, that the Democratic plat- 
 form means an indefinite expansion of United States notes, and 
 that such is the purpose of those who support it, be true, then 
 may his scurrilous allusions to Governor Allen, and the scur- 
 ri'lity that permeates every nook and corner of his ten-column 
 speech last Monday night, find an apology in the justice of his 
 conclusions. Subtract that charge, and what is left ? iN^othing ! 
 Literally nothing hut a brilliant pyrotechnic display of nothing- 
 ness. 
 
 The only proof he offers is the apt but homely illustration of 
 Governor Allen, that money, while locked up in bank vaults, 
 " might just as well, for the purposes of money and currency, be 
 in the bottom, of the Pacific ocean ; for it would be no more 
 money than so many cornstalks. To be money, it must circu- 
 late as a medium for carrying. on the exchanges of the country." 
 Upon this alone Mr. Schurz, depends. He rings the Governor's 
 words through all possible changes. He constantly associates 
 inflation with an increase of paper money, and as constantly re- 
 fers to gold as something whose " intrinsic value " does not de- 
 pend on legislative action, and that nothing else that any state, 
 or any number of states, might substitute, could be money, un- 
 less it was convertible into the precious metal. He holds that 
 gold is in its very nature money, and that currency is only the 
 representative of the gold. Throughout his speech he speaks 
 of inflation and contraction as depending on an increase or de- 
 crease of the quantity of United States notes, and of money as 
 if it was some specific, concrete, tangible substance, whose value 
 depended upon the material of which it was made. 
 
 Is he correct ? • So far from it, I propose to prove that Gov- 
 ernor Allen's position is entirely and absolutely true, and that 
 it is to such vague and vacant theorizing as the speech at Tur- 
 ner Hall that the country is indebted for all its present troubles. 
 
 WHAT IS MONET? 
 
 If bargain was confined to barter the mere exchange of one 
 thing for another, or any number of things — an even swap — 
 there would be no use for anything to make up the difference of 
 va^ue; but in the most primitive times, where the bargain con- 
 
eerned tlie exchange of two things of unequal value, the differ- 
 ence had to be made up by something acceptable to both par- 
 ties. That something, whether the promise of one of the par- 
 ties, or anything else acceptable, necessarily had to be of a 
 nature which would settle like differences in the exchange of 
 o her property. "Whatever it was, whether the promise, verbal 
 or written, of one of the parties to the bargain; or wampum, 
 tobacco, coon-skins, etc., or the various metals that at various 
 times have been used — it was money. 
 
 As commerce extended, some person, whose ability and prob- 
 ity inspired confidence in every one, gave out billets, or short 
 letters in writing, known as bills of exchange, which more con- 
 veniently served to settle the differences between articles ex- 
 changed. For still greater convenience, these bills were made 
 payable to bearer, in small amounts, and circulated in the neigh- 
 borhood at first, and gradually through a wider extent of coun- 
 try. The person or company issuing them was, after a time, 
 described as a bank or banker. This is literally the history of 
 the Scotch banks — the best system of bank issue in the world ; 
 for its roots struck so wide and deep in the confidence of the 
 people as to have enabled it to stand like a grand old oak, and 
 breast every storm for generations. These various forms of 
 credit used in making good the balances in the exchange of prop- 
 erty, whether they were the promises of parties to the transac- 
 tion, verbal, or written memoranda, or checks, or the billets, and 
 circulating bills of banks and bankers, were, and are now, as 
 essentially money as were any substantial mediums established 
 by the state, or any number of states. 
 
 Money, therefore, thus defined, has no corporeal existence. 
 It can neither be tasted, handled, nor seen, and is felt only 
 as one feels the breeze , the storm, or the tornado. It is 
 as subtle, as impalpable as air, and, as is the air we breathe to 
 the natural life, so is money to the life of commerce. While it 
 has no visible existence itself, its presence is necessary for the 
 existence of everything else. The absence of one is death to 
 the body — of the other, to business. The one gives us breatii, 
 the other bread. For health and vigor, purity is as essential as 
 presence. No pent-up Utica contracts its power, and circum- 
 
si:riljed by no state limits, it rules witli eveu hand throughout 
 the earth. 
 
 The air may differ in its character, in different localities, and 
 depart in a greater or less degree from the highest standard of 
 purity, because of impurities in the atmosphere from malaria 
 or from pestilence. "When that impurity is small, the system 
 adapts itself to it; men become acclimated, and enjoy high health 
 and longevity. So with money. "When the currency that meas- 
 ures it in any country, departs in some slight degree from the 
 highest standard, provided that departure is steady, uniform, and 
 perpetual, the business. system of that country adapts itself to 
 it, becomes acclimated as it were, and grows in strength and 
 blessings. 
 
 I may seem to differ with most, or perhaps all the eminent 
 men' who have written upon this subject, but I think a critical 
 examination of their utterances will discover that it is more in 
 the manner of expression than in the spirit of their teaching. 
 However that may be, the Baconian method is the only safe one 
 in examining a subject of such practical importance, the proper 
 determination of which depends upon the correct solution of a 
 purely abstract question. I seek, therefore, rather to explain a 
 fact than to twist and distort that fact, so as to accommodate it 
 to any theory heretofore held, although it might have the author- 
 ity of one so illustrious as Sir Isaac Ifewton, the weight of 
 whose great name was used by Mr. Peel in his argument for 
 the coin payment act of 1819, which drove the business men of 
 England over the precipice. 
 
 That fact I find in our own eventful history. 
 From the annual report of the Secretary of the 
 
 Treasury of December 7, 1874, it appears the 
 
 total stock of specie in the "United States on 
 
 June 30, 1874, by H. E. Lindermann's report 
 
 of October 13, 1874, was, (page 203) |166,846,228.40 
 
 National bank-notes authorized to be issued Oct. 
 
 2,1874 (page 126) 348,791,152.00 
 
 Legal-tender notes on June 80, 1874, (page 35)... 382,000,000.00 
 Fractional currency on June 30, 1874, (page 34).. 45,881,295.07 
 
 Total of all descriptions $943,518,676.10 
 
peposits in Savings banks having no capital 
 stock in 8 States, New England and New 
 York and New Jersey, (page 146) 696,353,731.00 
 
 Deposits in State banks and Savings banks hav- 
 ing stock, (page 182) 137,594,961.00 
 
 Total in Savings banks reported $833,948,692.00 
 
 Deposits in the National banks, (page 125) 680,298,978.00 
 
 Cash in the TJ. S. Treasury, June 30, 1874, (p. 5) 150,731,694.63 
 
 Total of deposits actually reported $1,664,979,364.63 
 
 This amount does not include the deposits, in trust and loan 
 companies, or in the savings banks in all the other states than 
 the eight named. The Comptroller jf the Cur-rency, John J. 
 Knox, page 146, says that " the real and personal property of 
 these eight states were in 1870, worth $11,481,692,575, which is 
 but thirty-eight per cent, of the value of all the states and terri- 
 tories ;" also that $800,000,000 is too low an estimate of the 
 amount of deposits in the savings banks, state banks, and loan 
 and trust companies of the six New England states, New York 
 and New Jersey alone." 
 
 Upon this data, the amount of deposits in the institutions 
 named and not included in the amount reported, at a very low 
 estimate, would reach $850,000,000, making the total of depos- 
 its in round numbers, $2,500,000,000. In addition to this, would 
 be the money in the hands of railroad, insurance, and other 
 incorporated companies, and with individuals and firms, amount- 
 ing to a veiy l&i'ge sum. 
 
 It will thus be seen that the amount of deposits was more than 
 $1,500,000,000 in excess of all the specie and currency that was 
 in existence in the United States. 
 
 If a single dollar of this vast deposit could properly be called 
 money then was every dollar of the $2,500,000,000. Thus there 
 was $1,500,000,000 more than the measure. If the nine hun- 
 dred and fifty millions (in round numbers) was the only money, 
 then what was the surplus ? As however, there is not a man in 
 the country that will deny that the whole amount of deposits is 
 money, we have under the theory of the bank press, that the 
 circulating medium is alone money — a most extraordinary phe- 
 nomen— $900,000,000 of money swelling into $2,500,000,000. 
 
5 
 
 This capacity of expansion beats the swelling properties of "The 
 lloadly Panacea" for that only proposes to swell one greenback 
 into two, so " that the poor laborer may get two dollars a day 
 when he has only earned one," for this is substantially the virtue 
 which the doctor claims for his remedy. 
 
 CUKKBNOT. 
 
 Again, as the accepted definition of capital is every descrip- 
 tion of property that enters into or contributes to production, 
 the amount of capital in a country is the value of that proper|;y. 
 That value changes with the moods and dispositions of menj 
 being high in prosperity and low in adversity. A certain por- 
 tion of that property growing out of exchanges, as already 
 shown, is money. With every change in the value of the prop- 
 erty — ^the amount of capital — there is a proportionate change in 
 the amount of money. The fact also appears that this money 
 is little else than a vast accumulation of credits, the basis of 
 which is confidence, a confidence that is the growth of pros- 
 pei'ity. The representative of this money is currency. 
 
 As a representative bears only a certain proportion, in num- 
 ber or amount, to the body represented, a true representation 
 exists when that proportion is legitimately preserved. Such a 
 representation may be determined by the necessities of that 
 which is represented, or by a superior power — ^for instance, the 
 people of the confederated states, by their own volition, estab- 
 lished a representative body, the constitutional convention, 
 which, in the legitimate exercise of the power delegated by the 
 people, fixed their representation in congresses to assemble there- 
 after. The number, quantity, or amount of the representative 
 may be fixed by law, or it may be determined by a certain rela- 
 tion to something else ; it is then, however, none the less abso- 
 lute, although from the nature of that represented, its bounds 
 can not be defined, because the limits of that which is repre- 
 sented, money, is itself indefinable,. 
 
 As with the air, we only know its nature and office. We know 
 the quantity and quality necessary for health, and that in both 
 they are measured by the wants of the system. "We know by 
 observation the effect of any obstruction of the quantity neces- 
 sary, or of any poisonous element introduced; but to define 
 
6 
 
 what that quantity is, or should be, or the exact character of any 
 baleful influence, is as impossible as it is immaterial. It is suffi- 
 cient for us to know the fact. So with currency. It is enough 
 to know that the amount necessary for healthful business is a 
 certain proportion, definite though indefinable, of the money ex- 
 isting at any period — that the amount of currency, therefore, 
 required, rises or falls with the money it represents (hence the 
 necessity for what is called an elastic currency), and that the 
 amount of this money is determined solely by the number of ex- 
 changes in the property constituting the capital of the country, 
 and the amount of that capital ; or, in the language of business 
 men, upon the value of property and the activity of business, 
 or upon what is called the laws of trade, or at least that part 
 of that unwritten, indefinable law that governs in the exchange 
 of property. 
 
 The instinct or common sense of a whole people, or of all en- 
 gaged in any occupation, is a more unerring guide than the 
 demonstrations of the highest reason, when it comes in con- 
 flict with their expression. Of this fact we have had an illus- 
 tration in the " demonstration " of an " incontrovertible fact " 
 by the Cincinnati Gazette. That universal expression is, that 
 the quantity of money necessary for business is governed by the 
 laws of trade. 
 
 The value of that money, however, is fixed, not by the laws 
 of trade, as every one will admit, but arbitrarily by the laws of 
 the state ; for when the state declares what shall be the meas- 
 ure, it fixes the value of all money. That measure is no more 
 necessary to equal the quantity it measures than is twenty half- 
 bushel measures necessary to measure ten bushels of corn ; but 
 in making it the meastire, it also makes it the representative of 
 money. 
 
 "We have seen that as such representative its quantity should 
 have a certain definite proportion to the money it represents. 
 As already stated, that representative, the currency, is not fixed 
 by the same law that determines the quantity of money, but 
 by the arbitrary act of those who, for the time being, control 
 the law-making power of the state. From this fact, that the 
 quantity of money, and the quantity of the representative of 
 that money, is determined by two separate and distinct author- 
 
ities, come all the convulsions, panics, and crises in the business 
 world. When the two work in harmony — when the proportion 
 of currency fixed by the state is no more, nor no less than the 
 definite proportion required — business has a healthful prosper- 
 ity ; when otherwise, it is either dangerous, or disastrous. 
 
 No matter whether this representative, the currency, is paper 
 or gold, it is alike the creature of law. If it is paper, its 
 representative power comes only from the laws of the land in 
 which it circulates ; if it is gold, its power is governed by the 
 laws of several lands — of the great commercial states of the 
 world. We hear about the intrinsic value of gold. Take away 
 J;he virtue these arbitrary acts give it, what would it be worth ? 
 Let Germany, Russia, France, Great Britain, and this country, 
 declare that they would use silver "to coin money," and the 
 " intrinsic value " of silver would run up five times more than 
 it is now worth, and gold would run down in the same propor- 
 tion. Why, the change in one of these states from silver to 
 gold, sent the " intrinsic value " of silver down several per cent. 
 These few words are only to show that the supposed " intrinsic 
 value" of gold ofiers no argument against the position here 
 taken, and which is so well understood, that currency, of what- 
 ever substance made, is the creature of law. 
 
 The distinction between money and currency, and the nature 
 and offices of each, being thus understood, an explanation of 
 many seeming inexplicable phenomena in the commercial world 
 will readily suggest themselves. A few words only are neces- 
 sary to aid in that direction. To understand what the cry of 
 " inflation " means — if, indeed, it means anything in the mouths 
 of those who use it — it is only necessary to know what another 
 word means, which these parties found embarrassing, and are 
 now trying to hide out of sight — " contraction." 
 
 At the close of 1865, Secretary McCulloch said that the coun- 
 try was enjoying a very high state of prosperity — that there was 
 great abundance of money, and an excess of currency. He 
 thought everything was too inflated, and did as he had been 
 in the habit of doing when running the Fort Wayne Branch 
 Bank — set about " contracting." There is no evidence that the 
 quantity of currency was in excess of the money it represented, 
 yet the Secretary of the Treasury, in a voluminous report^ that 
 
8 
 
 reads like the argument of an attorney for his client, urged con- 
 gress to forcibly contract the currency, by withdrawing the 
 greenbacks and issuing national bank-notes in their place ; and 
 congress, being entirely under the influence of the banks, who 
 seemed to own Mr. McCulloch, gave effect to his recommenda- 
 tions. 
 
 ! This is the way he contracted, in the interest of his employ- 
 ers. He paid oft" seventy-one millions of greenbacks in two 
 years, with bonds bearing six per cent, interest in gold, and 
 issued one hundred and thirteen millions more national bank- 
 notes ; and notwithstanding the state bank-notes had been taxed 
 out of existence, the actual circulation outstanding at the end of 
 the two years was only eleven millions less than it was when the 
 " contraction" began. This kind of contraction has been going 
 on ever since ; and last October the amount outstanding was 
 $760,000,000, being $50,000,000 more thtm it was in 1865. 
 
 These figures are introduced, not to^do justice to Mr. McCul- 
 loch, for when that is attempted a -day should be set apart for 
 the trial, but only to illustrate the correctness of the positioc 
 taken — ^that money and currency are entirely separate and dis- 
 tinct things ; and that contraction and inflation arise from causes 
 other than the increase and decrease of the currency. These 
 causes are the power that distrust and confidence exercise over 
 the quantity of money. 
 
 DISTKUST AND CONFIDENCE. 
 
 The people have always had, and have now, the most implicit 
 confidence in the United States notes. With the currency com- 
 posed mostly of these notes, and with the " Savings' Bank of the 
 People " open, the business of the country enjoyed uninterrupted 
 prosperity without a panic or a crisis. I have already proved, in 
 a previous paper, that, with that system, a panic which would 
 have been more disastrous than the one of 1873 was prevented, 
 and, that, had the system continued, the latter could not have oc- 
 curred. The reason given, that this prosperity was consequent 
 upon the stimulus always given by a state of actual hostilities, 
 which had as invariably been followed by a violent reaction on 
 the return of peace, is without the least foundation in truth, for 
 that prosperity continued over a year after the war was over, 
 
9 
 
 and through, the very period when a collapse from such cause 
 must have occurred. 
 
 It was only after that time, and when the new war com- 
 menced, that the embarrassments to the business of the country 
 began — the war of the banks on the currency of the people. That 
 war has been waged for nine years under the lead of John Sher- 
 man, Chairman of the Finance Committee of the Senate, and of 
 the Treasury Department. The most disgraceful expedients 
 have been tried to extinguish these notes, and supply their place 
 with the notes of the !N"ational Banks. "With the varying for- 
 tunes of this war, went the confidence of the people, up or down. 
 It was only after the Administration and the party in power 
 had thrown off all disguises, and startled the country by the pas- 
 sage of the resumption act of last winter, that the people fully 
 realized their danger. 
 
 Distrust had before chat been spreading silently from year to 
 year, but it was only after that exhibition of the purposes of the 
 Government to force a resumption of specie payments in the 
 interest of the banks, that it began to exert its power. I have 
 compared the money to the vitalizing air. With equal truth 
 may the effect of confidence be compared to the gentle, health- 
 giving motion of that air, and distrust to its more violent move- 
 ment, the storm, the hurricane, and the tornado. 
 
 Distrust, the cause of all of our financial troubles, destroys 
 confidence between man and man, paralyzes effort, and suspends 
 those already begun. It denies credit based on personal integ- 
 rity and character, and grants it only upon the deposit of mar- 
 ketable securities good under the most disastrous circumstances. 
 Its greed is gold. It springs from continued disappointment in 
 the past, and lives in an undefined dread of calamity in the 
 future. 
 
 That slight distrust, which borders on confidence, begets cau- 
 tion, but not fear. As it increases, apprehension is raised, then 
 fear, dread, and despair, or the extinction of hope — in commer- 
 cial phrase, "the absence of all confidence." In this infiam- 
 matory condition of the blood or brain, a spark makes a panic. 
 This progress of distrust to despair is marked, first, by checking 
 that trading where the difference in the value of what is ex- 
 changed is settled by the verbal promise or pledge of one of the 
 
10 
 
 parties. Then such trading is stopped altogether. Then follows 
 a hesitation in taking written due bills, and then a refusal to 
 take them unless the maker has abundance of property out of 
 which the money can be made — then additional security is 
 wanted, in the names of one or more persons of undoubted 
 solvency, and soon that security must be in collaterals, and at 
 last collaterals that will bring the currency instanter under the 
 most disastrous circumstances. 
 
 With each degree of this progress the quantity of money is 
 reduced ; first, by the amount of the verbal exchange, then the 
 exchange by due-bills, then by notes, and last by collaterals. 
 Deprived of this money, those whose business depended on it 
 have to use currency. Hence, in a sudden revulsion, the in- 
 creased demand for currency causes it to rise in value, and the 
 higher rate of interest continues so long as business activity 
 continues beyond the opportunity of supplying itself with 
 money from other sources than currency. When, however, that 
 activity slackened, by reason of the unprofitableness of conduct- 
 ing business at high interest, or the difficulty in the way of 
 buying the currency at all, the demand for the currency would 
 lessen, and the rate of interest consequently fall until the last 
 point had been reached, when the highest marketable collate- 
 rals were required to secure currency. Then there would be 
 such stagnation as would reduce the quantity of money neces- 
 sary for business very low. The quantity of currency remaining 
 the same, it would be out of all proportion to the money it rep- 
 resented. Hence, the excess of currency over what was required 
 to represent the amount of money in active business, would be 
 useless, and would either be idle, or be used in a manner that 
 would directly, by investment, or indirectly, by loan, increase 
 business and consequently the amount of money. Thus it is, 
 that business is said to revive. It is nothing more than an in- 
 crease of the amount of money by the increased activity of busi- 
 ness, until it reaches a point where the amount of currency will 
 truly represent it. Then business is said to be again in a healthy 
 condition. 
 
 CONFIDENCE AND INFLATION. 
 
 This being the operation and effect of distrust, it follows that 
 if at a point of extreme depression, like the present, when money 
 
11 
 
 is loaned on marketable collaterals, commanding currency under ■ 
 any possible contingency, at the rate of one and one-half to two 
 per cent, per annum, while those, whose business require it, 
 hardly find it possible to borrow at any rate of interest. ; — if, I 
 say, anything should occur to remove the distrust that has caused 
 that depression, all these legitimate consequences of distrust 
 would disappear,, and confidence return. Kemove the cause, 
 and the effect ceases. The life of a noxious weed will end when 
 the roots from which it springs are cut. 
 
 Let any one examine carefully the situation, and see whether 
 the cause of all the disappointments of the people in the past, 
 is not found in the existence of the system of bank issue enjoyed 
 by the national banks, which were created for the sole purpose of 
 perpetuating that system — whether that is not the noxious weed 
 whose presence blights the greenback, the only currency in which 
 the whole people have any confidence. It hardly needs any ex- 
 amination to discover the calamity in the future which all dread. 
 A man mu^t be blind who can not see it ; must be deaf if he 
 can not hear the anathemas of the people denouncing the re- 
 sumption act of last winter. 
 
 After such examination let him do by his vote, what Gladstone 
 and every statesman in Great Britain say ought to be done, and 
 what the Chancelor of the Exchequer says the government in- 
 tends to do — take away the right of issue from the banks and 
 restore it to the government. Let him render his verdict by cast- 
 ing such a vote as will secure the passage of a law compelling the 
 withdrawal of every bank-note, and the substitution in its place of 
 a greenback, and that will repeal the resumption act of last win- 
 ter. The source of all disappointments and the cause of all 
 dread will thus be gone. "With their going would also go dis- 
 trust. With a rapid tread would it return to confidence, and 
 with each step, would come back the activities of business, and 
 with those activities the money begotten by them. Confidence 
 would again fill the breast of man. The basis of credit would 
 no longer be collaterals, but honor, integrity, character : — and the 
 ability to successfully conduct business would again be at a pre- 
 mium. Every wheel would turn, and every vessel float. The 
 days of starvation wages would end, and labor find full employ- 
 ment and just recompense. Prosperity would again smile upon 
 
12 
 
 tlie land, and with prosperity would come more active business, 
 and with that, more money, and all without the addition of a single 
 ■ dollar to the present volume of currency. 
 
 This would be inflation, an inflation that would always stay 
 inflated — no bank bubble to be pricked, but the inflation of joy 
 and hope, the inflation that would cause the breast of every 
 honest man to swell with pride in the consciousness that this 
 country at least was never more to be cursed with the gigantic 
 thimble-rigging system of fraud devised by William Patterson, 
 the ingenous Scotchman, who, two hundred years ago, projected 
 the Darien swindle, founded the Bank of England, and taught 
 John Law and others the tricks by which Frenchmen by the 
 hundred thousand were sent up the " Mississippi," and as many 
 more in England to the " South Seas," all to find themselves, 
 upon their return to their senses after the bubbles burst, the 
 poorest of beggars. 
 
 ' COIN. 
 
 The discussion thus far has been confined to the relations be- 
 tween money and currency existing in a single state having 
 especial reference to this country. As there are more states 
 than one, and as the character, the quantity, and the office of 
 money is determined by the same laws everywhere, the propor- 
 tion between the quantity of money and the quantity of cur- 
 rency is not only to be preserved in the single state, but is to 
 correspond to the same proportion in other states. When, there- 
 fore, there is a serious difference, compensation is made by the 
 flow of money or currency from one state to another as circum- 
 stances require. 
 
 A medium is therefore necessary by which the proportion be- 
 tween money and currency may be preserved on a level between 
 different countries ; and the medium must be something estab- 
 lished by the laws of commercial states. However various and 
 varying that medium has been heretofore, it is now by the laws 
 of the great commercial states declared to be gold. 
 
 As gold has been thus established as the standard to which 
 all currencies must conform, its true office is to preserve the level 
 between those of different countries, and thus maintain the pro- 
 portion between money and currency uniform throughout the 
 world. As before remarked, the business of a country will 
 
13 
 
 adapt itself without inconvenience or harm to any proximate 
 approach to that standard, provided that the proximation 
 be steady, uniform, and continuous. For instance, if the cur- 
 rency of our country was kept uniformly within one per cent, 
 of gold, which it could be, in this country by the natural opera- 
 tion of the " Savings Bank of the People," which was so thor- 
 oughly and successfully tried for three years by Secretary Chase, 
 the people would have all the benefits of a circulation exclu- 
 sively of gold, and without any of the attendant convulsions, 
 which are inseparable from a gold circulation, when there is not 
 sufficient gold to supplj' all the wants of trade, without the aid 
 of any of the forms of credit described as constituting part of 
 the quantity of money in existence for the time being. With 
 my friend. Judge Hoadly, I sigh for that beatific state when 
 gold alone will be used in settling the balances of trade between 
 man and man. Believing, however, what his superior intelli- 
 gence clearly sees, that the good time coming will only arrive 
 when all mankind obey the command of St. Paul, Romans 13-8, 
 " Owe no man anything, but to love one another." Until that 
 happy period shall arrive we must follow his example and piously 
 resign ourselves to the next best thing. 
 
 As a gold currency, for which " hard money" leaders cry and 
 never expect to get, is impossible, and as the hope of maintain- 
 ing the certain and continuous convertibility of bank paper into 
 gold can only be honestly believed by those entirely ignorant of 
 the monetary condition of the country ; is not the next best thing 
 to be found in a policy that will make the currency homogeneous 
 as fast as possible and that will reopen the " savings bank." 
 When that is accomplished, the wisdom of congress will cer- 
 tainly be able to devise means to gradually reduce the quantity 
 of currency, if any such reduction was found necessary, of which 
 necessity therie would be little probability, for the natural opera- 
 tion of the depository, described in a previous article, would 
 likely be found suflicient to properly adjust the quantity of cur- 
 rency to the quantity of money, not only in this country, but also 
 to cause that adjustment to be such as would be in harmonj' 
 with that of all other countries. Whether a deposit on call, or 
 its equivalent the interchangeable bond of Judge Kelly, with the 
 interest payable in currency, would or would not cause the cur- 
 
14 
 
 rency to approximate within one-half or one per cent, of gold : 
 it is certain that the making of that interest payable in gold at 
 a ra'e which would cause the bond to be at par in the markets 
 of the world would soon have that effect. Sufficient for the 
 day is the evil thereof, and the Congress at that time would be 
 fur better able to determine what is needed than can one that 
 assembles now. When the people shall have triumphed in the 
 substitution of greenbacks for national bank notes, they will 
 have the benefit of all the financial ability which is now directed 
 against them. It is now of course enlisted on the side which 
 pays the most profit. "When the war is over and the interests 
 of the bankers are identified with those of the people their expe- 
 rience and skill will greatly aid the government. It is an inter- 
 esting fact that a western banker persuaded President Lincoln 
 to insist upon legal tenders, and equally interesting to know 
 that had Secretary Chase not permitted David Leavitt, and the 
 crowd at his heels to drown the earnest remonstrances and ap- 
 peals of a president of one of the largest eastern banks, there 
 would have been no national banks, but the greenback currency 
 demanded by the Ohio Democratic platform. 
 
 Bankers should understand that all offensive reference to them 
 is a necessary incident to a discussion of the system of bank 
 issue before the people, and that, in no case is it intended to reflect 
 upon their individual character. They have wisely availed them- 
 selves of the advantages that system afforded to make money 
 easily, rapidly, and without risk. E'o one finds fault with them 
 for improving their opportunity. It is only when any portion 
 of them turn aside, and endeavor, by threats, bribery, and lies, 
 to perpetuate the system of plunder, that they become fit sub- 
 jects for the denunciation of every honorable banker, and every 
 honest man. 
 
 Bankers stand, in the discussion of issue, as did slaveholders 
 in that which uprooted American slavery. Original abolition- 
 ists said and did everything possible to destroy that system, 
 although the business of some was largely with the south, and 
 many of their friends held slaves. They could not attack the 
 system effectually except through those profiting by it. They 
 co-operated with any party for success. They united with the 
 Democrats for the abolition of the infamous black laws, and also 
 
15 
 
 in the election of Mr. Chase to the Senate. It seems hardly 
 possible for those of them who survive, or the great number 
 who are imbued with their principles, to refuse to examine any 
 iniquity, and to hesitate about co-operating with the same party 
 iu the abolition of what they find equally deserving of extinc- 
 tion. 
 
 Such inquiry will show that slavery was but the daily appro- 
 priation by one man of the earnings of another, through a legal- 
 ized system of violence.' Bank issue is a similar appropriation, 
 through a legalized system which transfers periodically, in times 
 of crises and panics, the earnings of one man to the pock- 
 ets of another, in a manner past finding out. In the one case 
 the victim knew who robbed him ; in the other, only that he is 
 robbed — nothing more. One made black slaves, the other 
 will make white ones. An abolitionist, to be consistent, must 
 seek to abolish one as he did the other — must follow the ex- 
 ample of "Wendell Phillips, who, did he live in Ohio or Penn- 
 sylvania, would doubtless forget the late war, and raise his 
 voice in support of those who stand in the same position he oc- 
 cupies in the war now being waged by the banks against the 
 people.' A hater of fraud and shams, the finished If ew England 
 orator must see that the cry of inflation and hard money is 
 only raised to throw dust in the eyes of the people, and hide 
 the real question — ^the only practical one in this canvass — whether 
 the prerogative of issue shall be exercised by the government or 
 the banks — whether the currency shall be United States notes 
 or national bank-notes. 
 
 Having defined the cause of " infiation," and its true charac- 
 ter, it only remains to speak of another catch-word, equally 
 senseless, which the father of lies has put in the mouths of his 
 children, to deceive the unwary, and spread misery throughout 
 the land — " hard money." 
 
 What is it? Gold ! Yes, Gold! Knavery gives out the cry, 
 " hard money," and ignorance sends back the echo, until the air 
 resounds with the reverberation from throats that will be cut 
 long before the coming of what the cry is supposed to mean ; 
 for if it ever comes from the point to which these poor deluded 
 eyes are now turned, it will only be after the ears of the victims 
 have become familiar with another kind of crying — cries wrung 
 
16 
 
 from agonizing breasts, brought down from affluence to indi- 
 gence, or from indigence to absolute want. This language may 
 seem strong — ^too strong. It may raise a smile of incredulity 
 now ; but if the time should ever come, as come it surely will, 
 if the declared purpose of the party controlling the government 
 is carried out,, that smile will be of another character. The 
 broken-hearted business man, stripped of everything by the 
 forced sale of his property at half its value, will feel like another 
 poor fellow, struck down by an unexpected calamity, of whom 
 it is said : 
 
 " And he smiled a kind of sickly smile, and curled up on the floor ; 
 And the subsequent proceedings interested him no more." 
 
 No more will the proceedings of the Merchants' Exchange 
 or the Board of Trade interest the enterprising merchant or 
 manufacturer, who shuts his eyes to a painful spectacle, and 
 drives on as if all was well. He may drag out the balance of 
 his days in the employment of some eastern capitalist who had 
 transferred his capital to the west, by investments in property 
 at less than half its value. It is a fine prospect for the business 
 man of to-day, to step down and out, to serve such bidding. 
 Then it will be pleasant for him to read in the old Gazette and 
 the sprightly Commercial congratulations upon the revival of 
 trade " in consequence of the introduction of so much foreign cap- 
 ital in the hands of gentlemen, whose intelligence and experi- 
 ence afford the highest guarantee against such reckless busi- 
 ness as had been done in times of "inflation," induced by an 
 inconvertible currency." 
 
 If the business men of to-day, or the men not doing business 
 on their own account, yet as usefully employed and equally in- 
 terested, think this picture too highly colored, let them pause — 
 pause one moment — and listen. 
 
 The report of the supferintendent of the mint before referred 
 to, not only gives the amount of the total of all the specie in 
 the United States, as stated, but says that the stock "is nearly 
 equally divided between the two metals." Page 204. As silver 
 under our laws can not pay a debt for more than fi.ve dollars ; 
 it can not be considered as available to answer the demands of the 
 depositors. This leaves only between eighty and ninety millions 
 of gold to answer the call of twenty -five hundred millions of 
 
17 
 
 deposite — or one dollar of gold to every twenty-eight dollars of 
 money. Comparing this amount of gold with the amount of 
 the paper currency — seven hundred and sixty millions : one 
 dollar in gold to nine of paper. Persons are continually deceived 
 not only by the press, but by the official reports of the govern- 
 ment alike under bank influence, always speaking of the circu- 
 lation as the only demand against which it it necessary to pro- 
 vide. Instead of that, it is the least of the calls. "But," said Mr. 
 Woolford, an evening or two since — and so say all of this im- 
 ported stock sent here by the money of the eastern banks — " Be- 
 fore the period of resumption arrives, the Government will provide 
 itself with gold by purchase in Europe. Then the currency, 
 being convertible, would pay duties, and confidence being re- 
 stored, there would no demand for gold beyond the amount nec- 
 essary for foreign exchanges." 
 
 This is very fine if it were only true. But consider that the 
 amount of foreign exchange necessary is not alone the diflference 
 between the imports and exports, but in addition there will be 
 from fifty to one hundred millions required every year for inter- 
 est. Confidence can not be forced, neither will it come by the 
 smiles aiid assurances of bank officers, or merchants grasping 
 each others hands on 'change and saying all 0. K. It springs 
 from a feeling of security, a consciousness that the natural law 
 that governs the relation between the quaiitity of the money and 
 its representative the currency is observed, or in the ordinary 
 way of expressing it, that there is currency enough to pay every 
 body that wants it. 
 
 Is any body foolish enough to believe that one dollar in 
 twenty-eight, or even half that proportion, will insure that 
 confidence ? But you may say that the amount of the bank 
 notes (for at that time there will be nothing but bank noles) 
 being convertible into gold must be added to it to show what 
 would be available to meet the calls of depositors. That is true 
 in a healthy state of things, but when the paper is not the rep- 
 resentative of the money, but only the representative of the 
 representative, and having a value because of its capacity of 
 conversion into the representative, it is not true. So long as 
 the paper currency rested on the credit of the State, it was 
 itself the representative, and any fluctuation in value, compared 
 
18 
 
 with gold, brought disturbance but not destruction. The pre- 
 mium might be three per cent, to-day, five per cent, to-morrow, 
 and two the day following, or even fluctuate in the fractions of 
 one per cent, premium, it would not matter much, so long as the 
 character of its foundation was not changed ; but when that 
 took place, when the premium dropped from one-fourth to 
 nothing, when the defyi point was passed, and the basis of the 
 paper currency was no longer the credit of the State but gold- 
 gold would be the only representative of the money of the country. 
 Then with the knowledge that every one would have that there 
 was only one dollar to pay twenty or thirty of paper, or, iu 
 other words, that only one out of every twenty or thirty, could 
 get any gold if any large number went for it, and the conclu- 
 sion which such knowledge would be apt to raise in the mind, 
 that in case all others, or even a half, or a quarter, or a sixteenth 
 should think as he was thinking, and draw their deposits in 
 gold, the amount would run out. "Would not a great many be 
 likely to draw it and deposit it in the stocking ? By so much 
 would the representative foundation be reduced ; and still more 
 would be drawn, and with each reduction still more, until nearly 
 every Ijfational Bank in the country would break. 
 
 Then the credit of the government would follow, for by the 
 law it would be bound to redeem in gold every bank note, no 
 matter whether the bonds deposited would bring the amount or 
 not. But the reply comes that gold in the treasury could not 
 be exhausted, as the government would buy it. Where? In 
 England, in Europe. This would not be possible. The attempt 
 to obtain such a supply would break the first and put a wide 
 crack through the second. The length and breadth and depth 
 of this gold bonanza is accurately described in a speech of Sec- 
 retary Boutwell in the Senate on January 22, 1874. After 
 speaking of the time when the rapid sale of the government 
 bonds, together with the amount of the Geneva Award of fifteen 
 millions, had accumulated about twenty-one million dollars, he 
 adds: 
 
 " The Bank of England foreseeing that there would be an ac- 
 cumulation of coin to the credit of the United States, which 
 might be taken away bodily in specie, gave notice to the office of 
 the treasury department of the United States that the power of that 
 
19 
 
 institution would be arrayed against the whole proceeding, un- 
 less we gave a pledge that the coin should not be removed, and that 
 would reinvest it in the bonds of the Dnited States as they were 
 offered in the markets of London. "Wb were compelled to do it." 
 
 Senator Boutwell did not while here mention this interesting 
 exhibition of England's weakness, and our own in being com- 
 pelled to yield to the mandate of a bank in dread of another col- 
 lapse. That the situation has not improved since, is made ap- 
 parent by the "Economist" of July 10, 1875 — the standard 
 financial authority in London — as any merchant could discover 
 by calling at the Toung Men's Mercantile Library rooms. It 
 
 " There can be little doubt that we have narrowly escaped a 
 panic. The great mercantile disasters which have followed so 
 rapidly one after another, the failure of two bill brokers, and 
 above all, the very serious losses avowed by our joint stock 
 banks, and especially by the London and "Westminster (the one 
 whose business is largest, and whose repute greatest), would, in 
 former times, have nearly or quite shaken the foundation of 
 credit. The mercantile disasters which primarily caused the 
 panic of 1857, were certainly not much greater ; perhaps they 
 were even less. The main cause to which we owe our escape is 
 the increase of the cash reserve in the banking department of 
 the Bank of England. The panic of 1857 found the bank with 
 a reserve of £2,706,000 ; the late events found it with one of 
 £10,344,000, which had increased to £12,385,000 before the 
 second group of failures came. And it is to this great improve- 
 ment that we owe our present safety. As was natural, the 
 great increase of the fund which we hold to give confidence 
 in times of alarm, had the effect of creating that confidence. 
 
 Even as it is, we, on a former occasion, showed that we have 
 but narrqwly escaped. If a war had broken out between Prance 
 and Germany just before these events, when it was so much 
 feared even by many who ought to kno.w, and if, as is most 
 likely, like the previous similar war of 1870, it had caused 
 £3,000,000 to be taken from our banking reserve for the Conti- 
 nent, these great calamities would have found the bank with a 
 probably insufficient reserve instead of a sufficient one. But, 
 nevertheless, in comparison with such times as 1875, much praise 
 is justly due to the present policy of the bank. Though it did 
 not provide for the contingency, which was near occurring, it 
 did provide for the contingency which did happen, and we all 
 have to be grateful to it. 
 
20 
 
 But the most important question is not, Why we have escaped 
 a panic ? but, Why we were in such danger of it ? And as to 
 this present circumstances, there is every motive to speak 
 plainly." 
 
 The editor then goes on through two pages, 805 and 806, 
 to show the effect of paying interest on deposits, and inci- 
 dentally confirms the position here taken, that money is the 
 creation of the very business to which it ministers. He says 
 that " the growth of the banking business is due to the extension, 
 of facilities to a smaller class of customers to open accounts. 
 In this way they obtained new money, which had never been in 
 any bank before. So great had this been, that the greater part of 
 the accounts in the modern banks were new, and that only a 
 small part were withdrawn from other banks." He illustrates 
 the position by giving the amount of deposits of this new money 
 in four London banks named, in 1875, and comparing it with 
 the deposits of 1844; then it was £7,743,000, now £84,557,000. 
 I commend this mass of cornstalks to the critical examination 
 of Governor Allen's distinguished commentator, and also the 
 colossal cornstalk structure which the Economist describes in 
 such a condition that the credit of the country was saved, and 
 general bankruptcy prevented by mere good luck, the same as in 
 1825. 
 
 It is against a system which begets such inflation that Gov- 
 ernor Allen contends. He desires, as I understand, nothing 
 more than to end the corrupt rule of a money oligarchy, in 
 restoring to the government its prerogative ot issue by a law 
 that will cause the lawful money dollar to eventually equal in 
 value 412^ grains of standard silver, or 25^ grains of gold, 
 and that will permit the amount of such issue to be determined 
 solely by the laws of trade, as declared by the resolutions of the 
 convention which nominated him. 
 
 The justice of the distinction he made between active and 
 idle money may more clearly appear by an illustration : — Sup- 
 pose a million or two of gold had found its way to " the bottom 
 of the Pacific ocean," as many millions have, would any one 
 claim that it thereafter constituted any part of the currency of 
 the state to which the vessel belonged, or of the place to which 
 it was destined, or of any country whatever? Hardly. Until it 
 
21 
 
 was recovered, as millions have been, and again used as a med- 
 ium of exchange, it was not money, but merely a deposit, whose 
 value depended upon the probabilities, near or remote, of its 
 being again brought into use. If this deposit of money would 
 thus change its character, would not the sealing it up in a vault, 
 so that it could not serve " as a medium for carrying On the ex- 
 changes of the country," have exactly the same effect ? Cer- 
 tainly ; for no matter whether locked up for an Indefinite period 
 by an accident, or for years by an order of a court of chancery, 
 or for a briefer period by the will of the owner, controlled by 
 avarice or fear, the function of these deposits, as a medium of 
 change, would be suspended. No few words could more forci- 
 bly have described their charaeier than those used by the 
 Governor. 
 
 The importance of drawing this distinction between money 
 owned by those who actively use it in production, and that 
 owned by non-producers, who keep it solely for hire, may ap- 
 pear when it is considered that distrust reduces the quantity of 
 the former and increases that of the latter. Not only does it 
 thus operate in the manner heretofore described, but with the 
 increase of bank balances, caused by the maturity of bills and 
 notes, owned by money lenders, whose fears prevent their re- 
 loaning it during the period of alarm, the bank or banker in 
 whose hands they accumulate must, for his own protection, 
 coiTOspondingly accumulate currency to protect himself against 
 any sudden call for it. Thus it will be seen that the very ple- 
 thora of these deposits — of this idle money — compels the locking 
 up of currency to an extent that renders it almost impossible to 
 buy it with the best commercial paper. Notwithstanding this 
 we hear men, whose position raises the presumption of ordinary 
 intelligence, assert that there is plenty of money for business 
 purposes leoause there is a plethora of deposits in the banks ; 
 wholly unconscious that their very abundance ties up the cur- 
 rency necessary to meet the absolute wants of trade. Mr. Schurz 
 is evidently of this opinion, and thinks, because idlers and 
 usurers have a large amount of money they won't use, that in- 
 dustrious and active business men, who could use it, and have 
 but little, have entirely too much; for he innocently asks: 
 " When will the excess of currency be admitted, if it is not ad- 
 
22 
 
 mitted now, while large quantities of money lie in the banks 
 idle?" 
 
 This distinction between active and idle money is useful in 
 another light, for while any reduction of the whole quantity of 
 money falls entirely upon that portion used by its owners in 
 production, the appreciation in value of what remains is enjoyed 
 alike by both descriptions. That value, as compared with real 
 estate and all the other forms of capital, rises or falls inversely 
 as the quantity is increased or diminished. Therefore the own- 
 ers of land, goods, and chattels, whose money is employed in 
 production, suflfer many times more in the reduction of their 
 wages and the reduced value of their property, than any benefit 
 they receive from the in^creased value of the reduced quantity 
 of money in their hands ; while those whose wealth consists of 
 money alone have both its value and quantity increased without 
 any draw-back whatever. This is the happy situation^of all 
 banks. 
 
 As a change in the volume of currency necessarily involves a 
 corresponding change in the quantity of money it represents, it 
 follows that any legislation that arbitrarily changes that volume 
 is an act of spoliation — robbing the owners of one description 
 of property to the advantage oi the owners of the other. The 
 law wTiioh practically demonetized gold and silver., for the 
 time being, and declared government issues lawful money, can 
 ie justified only ly fhe same necessity which justified the other 
 conscription laws that laid their hands upon men / so, likewise, 
 the law which demonetizes the lawful money then created, and 
 declares that gold alone shall be the legal tender, is A conscrip- 
 tion ACT, operating upon the labor and industry of the country, 
 and can find justification only in the same emineht peril which 
 justified the demonetizing of the gold, whose place it originally 
 filled. Would it not requife even stronger justification in that 
 the first only took from the abundance of the creditor, while the 
 I last reduces the value of the debtor's property, so that, in many 
 cases, he is stripped of all he has, thus increasing poverty and 
 crime. England and this country furnish notable examples of 
 this kind of legislation. The acknowledgment of all English 
 statesmen that her last act, demonetizing her legal tender issue, 
 and substituting in its place bank issue, professedly convertible 
 
23 
 
 into gold, was a stupendous bluMer, makes that of Sherman, 
 looking to the same end, a crime. The conduct of the bank or- 
 gans in suppressing that acknowledgment is worthy of the Sher- 
 man bill itself. Let it be remembered when considering 
 
 The.Les^son Taught by EnSland's Blunder. 
 
 Our resumption law, instead of being what bank orators, edi- 
 tors, and attorneys represent, stands a light house on a danger- 
 ous coast, to warn business men of their danger. Heeding it 
 not, many will be wrecked. Already in the breakers, they will 
 soon be on the rocks. That law is copied from the Act of 1819, 
 Ab the situation of England, during her long years of an exclu- 
 sive paper currency, was exactly like our own, so will the expe- 
 rience of her people, under its operation, as certainly be ours as 
 night follows day. To show briefly the parallel between that 
 situation and experience and our own, I wUl here state, that 
 both countries began what neither expected — a gigantic war — 
 and that the consequent suspension of specie payments, with all 
 its attendant circumstances, was the same there as here. 
 
 There the public debt increased four fold. Here forty fold. 
 
 There the paper Circulation ran up from about one hundred to 
 three hundred and forty millions. Here from two hundred to 
 between seven and eight hundred millions. 
 
 There the effect was to send the average price of wheat up 
 from forty shillings to ninety per quarter. Here the rise of 
 prices was not greater, if so much, measured by gold : there it 
 took £5 6s. of paper to buy £3 17s. lO^d. of gold. There and 
 here the gold premium was about the same. 
 
 There, during the period of war, and before any serious effort 
 was made to return to specie payments, the business of the 
 country was eminently prosperous. Here, as every man knows, 
 it was the same. 
 
 There, immediately on the return of peace, the bondholders 
 combined with the high-tariff protectionists to secure, for the 
 former, full payment in gold for bonds that had been bought in 
 a currency worth in gold only half its face; and for the latter, a 
 prohibitory duty on corn. Here, a similar combination was 
 made between the like kind of bondholders and the banks, to 
 secure for the former the same profit as inured to the English 
 
24 -'' ;-;, 
 
 bondholder, and for the latter the perpetuation of t^eir privi- 
 leges to furnish the country with its paper circulation. ■ ." ■/ 
 
 There and here these combinations got complete control of. 
 the administration and the legislature. 
 
 There and here these combinations disturbed and convulsed 
 the business of their respective countrie& by their efforts to pre- 
 pare the people for the final blow, — the passage of laws forcing 
 resumption. 
 
 There the work of " contraction," between 1814 and 1818, 
 reduced the circulation from $340,000,000 to $230,000,000 (the. 
 pound sterling being here expressed in our currency) ; here, the 
 peculiar " hard-pan contraction " increased the volume of paper 
 money, between 1866 and 1874,- from $710,000,000 to $760,000,000. 
 The increase, by enlarging the superstructure — banknotes — and 
 reducing the base — greenbacks — had the same disturbing and 
 distressing effect as the decrease in England. 
 
 This brings us to the resumption acts of 1819 and 1875. The 
 consequences following one we know. What will follow the 
 other we may conjecture by comparing the situation the year 
 preceding the passage of these acts, and considering the situa- 
 tion in which the one that went into execution left the people 
 of England. 
 
 There, in 1818, the accumulation of gold was unusually large, 
 looking to th'e event; here, in 1874^ the total of both gold and 
 silver was only $166,000,000. 
 
 There the circulation was $230,000,000 ; here $760,000,000. 
 
 There the balance of trade caused gold to flow in ; here, that 
 balance, together with the immense amount of gold interest, 
 causes gold to flow out. 
 
 There the circulation of $230,000,000, in 1818, was reduced, i'n^ 
 1822, when the law had in the main taken effect, to $130,000,- 
 000 — a reduction of nearly one-half in three years ; here, the cir- 
 culation for 1874 will be reduced, on December 31, 1879, one 
 year after the present law has taken full effect, from $760,000,- 
 000 to— what? 
 
 What followed there? Bankruptcy, want, starvation wages, 
 and the necessity of keeping over thirty thousand troops in the 
 field to preserve the peace. 
 
 What will follow here ? 
 
169 
 FJ^'R^T VI. 
 
 The banks have exercised a controlling influence over 
 Congress and the Administration for their own profit, 
 to the sacrifice of the interests of tlie people. 
 
 The opprobrious epithets heaped upon all who are unfortunate 
 enough to believe in what is stigmatized as the '' Greenback 
 Doctrine," provokes an inquiry into the propriety of its appli- 
 cation at this time* so far as the changed cicumstances will 
 permit. 
 
 In making that inquiry we will endeavor to establish the 
 following positions : 
 
 1. Bank iniluence has controlled the Government in every 
 
 thing relating to the interests of the banks ; and but for 
 that control the " Greenback Doctrine " would have pre- 
 . vailed. 
 
 2. That influence forced the adoption of a policy fraught with 
 
 injustice and fruitful of evil, the principles of which have 
 been condemned by the most eminent writers, financiers,, 
 and statesmen. 
 
 3. Had the greenback theory been adopted in the interests of, 
 
 the whole people, instead of the one which considered their 
 interests only in connection with the interests of the banks,. 
 we would, before this, have had a uniform currency on a 
 par with gold, and a public debt, held mostly by our own' 
 citizens, of far less proportions than the present. 
 
 4. 'She situation now is not as favorable for a resumption of 
 
 specie payments as at the close of the war, and, if com- 
 menced, cannot be maintained. If the law of last winter 
 is enforced, it will bankrupt the country, as well the banks 
 
 * The spring oC 1875, when this paper was offered for publication, but declined for fear that it 
 would ofteiid the advertising patrons of the journal, who might be in receipt, or in expectancy,, 
 of bank favors. 
 
170 
 
 as their victims, for every banker knows that the paper of 
 an impoverished people is not worth much. 
 
 5. Issue and banking have no legitimate connection. One is 
 
 the prerogative of the Government, the same as the coinage ; 
 the other should be subject to no other restraint or annoy- 
 ance than any other business. 
 
 6. The greenback furnishes a circulation stable, uniform, and 
 
 elastic, and provides the only safe way of returning to a 
 coin standard maintainable under all possible circumstances. 
 
 7. Such a homogeneous currency can be secured without causing 
 
 a single sound bank to wind up its business, — without im- 
 pairing in the slightest degree its ability to accommodate its 
 customers, and without disturbing the usual course of that 
 business a single hour. 
 
 The Two Theories. 
 
 After the issue of fifty millions circulating notes by the Gov- 
 ernment, in 1861, two theories were proposed for a permanent 
 and uniform national circulation ; and at the close of the war, 
 in 1865, the supporters of each theory differed widely respecting 
 the adjustment of the immense debt. 
 
 One theory held — First, That the Government was bound to 
 meet every one of its obligations to the very letter of the law, 
 and not a cent beyond. Second, That the issue of notes for cir- 
 culation was a prerogative of the Government, the same as the 
 coinage; and that the relations between debtor and creditor 
 should not be disturbed by a serious change in the volume of 
 circulation then existing, but that it should be permitted to re- 
 main as it was, and gradually improve with the growth of the 
 country. 
 
 The other theory helA.— First, That the Government was not 
 bound by the letter of the law, but by whet was claimed by 
 some to be the understanding. Second, That, however salutary 
 and necessary might be the policy of issuing the circulating 
 notes direct, the Government could not disturb existing condi- 
 tions or impair the value of existing investments of capital in 
 banks by taking away their monopoly to furnish the circulation 
 of the country ; and that an uniform currency could only be 
 secured by creating a system into which the banks might enter 
 
171 
 
 without losing in any degree the profit of the privileges they 
 had enjoyed; also that steps should be immediately taken, 
 without any regard to the eflFect they might have in increasing 
 the burden of debt, to withdraw the United States notes in cir- 
 culation so as to resume specie payments within a few j'ears, — 
 not longer than three, in the opinion of its chief supporter and 
 advocate, Secretary McCulloch. 
 
 One theory looked to the good of the whole people, without 
 regard to any special interest ; the other looked to the public 
 good only as it was consistent with the right of the banks, whose 
 power it was thought necessary to conciliate. 
 
 SuppoKTERS OP Each Theory. 
 
 The attention of the Government was directed to both theo- 
 ries ; each was pressed with all the power that could be brought 
 to its support. 
 
 That support on the one side could only come from the guardian 
 of the public interest at the head of the Treasury, or the disin- 
 terested eflforts of those public men whose sense of duty forbade 
 the sacrifice of the interests of the whole people for the benefit 
 of a few. No one could make any money by working for that 
 which would benefit every one equally with himself, and there- 
 fore few sought to avert the danger which many feared. 
 
 On the success of the other side depended immense private 
 interests. On the 1st of October, 1865, there were 1556 national 
 banks, with a capital of four hundred millions, and numerous, 
 state banks, unitedly having an actual outstanding circulation 
 of $250,189,478. In addition to the $376,250,500 bonds de- 
 posited to secure circulation, the banks held between two and 
 three hundred millions on speculation. There was also a little 
 army of stock-jobbers and speculators on both sides of the At- 
 lantic, who held many millions of Government bonds which they 
 had bought for the sole purpose of selling out whenever a satis- 
 factory profit could be made. 
 
 The Secretary, Mr. McCulloch, in his Eeport, 1866', page 12, 
 says this : " That there was held in Europe, at the close of 1865, 
 a large amount of American bonds, of which three hundred and 
 fifty millions were U. S.. bonds ; " and adds : " A large portion of 
 Liiese bonds have been bought on speculation, and will be likely 
 
172 
 
 to be returned whenever financial troubles in the country in 
 which they are held shall make it necessary for the holders to 
 realize upon them, or whenever satisfactory profits can be made 
 by returning them.'" 
 
 Official Proof of Propositions Here Advanced. 
 
 ISSUE RESTS UPON THE POWER TO COIN MONEY ANb TO ISSUE BILLS OF 
 CREDIT. TWO THEORIES PRESSED FOR ADOPTION. 
 
 It has been well questioned by the most eminent statesmen, whether a currency 
 of" bank, notes, issued by local institutions, under istate laws, is not in fact pro- 
 liibited by the National Constitution. Such emissions certainly fall within the 
 spirit if not within the letter of the Constitutional prohibition of the emission of 
 bills of credit by the States, and of the making by them of anything except gold 
 and silver coin a legal tender in payment of debts. 
 
 However this may be, it is too clear to be reasonably disputed that Congress, 
 under the constitutional power to lay taxes, to regulate commerce, and to regn-_ 
 late the value of coin^ possesses ample authority to conttol the credit of circula- 
 tion, which enters so largely into the transactions of commerce, and afflicts in so 
 many ways the value of coin. In the opinion of the Secretary, the time has 
 arrived when Congress should exercise that authority. 
 
 Two plans for effecting this object are suggested : The first contemplates the 
 gradual withdrawal from circulation of the notes of private corporation, and for 
 the issue, in their stead, of United States notes, payable in coin on demand, in 
 amounts sufficient for the useful ends of a representative currency. The second 
 contemplates the preparation and delivery to institutions and associations of 
 notes prepared for circulation, under national direction, and to be secured as to 
 prompt convertibility into coin by the pledge of U. S. Bonds, and other needful 
 regulations. 
 
 The first of these plans was partially adopted at the last session of Congress 
 in the provision, authorizing the Secretary to issue United States notes, payable 
 in coin, to an amount not exceeding fifty million dollars. That provision may be 
 so extended as to reach the average circulation of the country ; while a moderate 
 tax on bank notes will relieve the nation from the competition of local institu- 
 tions. — Secretary Chase's Report, i86i. Page 17. 
 
 Notwithstanding this emphatic expression of his convictions, 
 that the interests of the people demanded an uniform currency, 
 issued exclusively and directly by the Government, Mr. Chase 
 thought it expedient that the notes should be issued, not direct, 
 but through associations having such privileges as would tempt 
 the state banks to surrender those they already had. To secure 
 such surrender he matured a plan the best calculated to recon- 
 cile the demand of their managers with the interests of the 
 people ; and he expressed the highest hope, and predicted that 
 
173 
 
 even its favorable considei-ation by Congress, would secure a 
 continuance of specie payments. Three weeks after this predic- 
 tion all the banks in the country stopped payment. Referring 
 to this, he said, in his nixt Annual Eeport, December 4, 1802, 
 page 7: 
 
 At Ihat time [December, i86i,] he expected a continuance of specie paj-ments, 
 and hoped that a banking system would be authorized, which would at once 
 furnish a sound circulating medium, and afford a firm support to the public credit. 
 Neither the expectation nor the hope had been realized. 
 
 At this untoward event Mr. Lincoln, the following month, 
 took the responsibility of insisting upon the addition of the 
 legal tender attribute to the United States notes. The universal 
 acceptability of this new currency emboldened Mr. Chase to 
 speak his honest convictions in his Eeport of December 4, 1862, 
 page 16 : 
 
 The path of wisdom * * leads to the support of a United States note 
 circulation, and to the reduction of the bank circulation. The best means for 
 such reduction and substitution is a tax on bank notes. When the substitution 
 shall have been accomplished, and perhaps, if circumstances favor it, at an earlier 
 period, payments in specie of United States notes may be resumed, with less cost 
 and less injury to business than would attend a like resumption in payment of 
 corporate notes. With comparatively trivial sacrifice the Government can, when- 
 ever the expenditures are reduced to its revenue, provide, by loan or otlierwise, all 
 the coin needed to commence and maintain the resumption. 
 
 After this emphatic declaration he immediately adds : 
 
 Notwithstanding this preference he still adheres to the opinion expressed in 
 his last Report that a circulation furnished by the Government, but issued by 
 banking institutions, is the best. 
 
 The only real reason given for his thus setting aside his pref- 
 erence was the fear of the banks ; and it clearly indicated that 
 the interests of the banks were hostile to those of the people. 
 Referring to his national bank scheme, he said — 
 
 Another, and very important, advantage of the proposed plan has already been 
 adverted to ; it will reconcile, as far as predicable, the interests of existing insti- 
 tutions with those of the whole people. 
 
 The same conflict — the same effort to reconcile the interests 
 of the banks with those of the whole people — appears in the 
 Report of December 10, 1863, page 15, when he said : 
 
 In former reports the Secretary has stated his convictions, and the ground of 
 
174 
 
 them, respecting the necessity and utility of putting a large part of the debt in 
 the form of United States notes, without interest, and adapted to circulation as 
 money. These convictions remain unchanged, and seern now to be shared by 
 the people. For the first time in our history has a real approach to an uniform 
 currency been made ; and the benefits of it, though still far from the best attain- 
 able condition, are felt by all. The circulation has been distributed throughout 
 the country, and is everywhere acceptable. * * It is impossible to 
 
 estimate the advantages to national unity and national strength secured by this 
 distribution. Every holder of a note or bond, from a five cent fractional note to 
 a five thousand dollar bond, has a direct interest in the security of national 
 institutions, and in the stability of national administration. And it is another 
 and no small advantage of the distribution, that the burthen ojf debt, always 
 heaviest when loans are made by few, and especially by foreigners, diminish in 
 proportion as the receivers of interest become identified with the payers of taxes. 
 Another incidental good growing from the bitter root of debt has been fully 
 explained in observations heretofore ."submitted on the National Banking system. 
 Except through such a system no sure way is seen to the complete and permanent 
 establishment of an uniform currency, and a system of National Banking, fair to 
 all, and secure for all, can only be safely and firmly established by making use of 
 a portion of the national debt as security for the national currency. 
 
 The apparent inconsistency between these two paragraphs is 
 explained by the fact that the supreme object of Mr. Chase's 
 desire was an uniform currency; and that to his mind tiie oppo- 
 sition of the banks presented the only obstacle — hence a sys- 
 tem that would secure their support seemed to him the only way 
 to reach the object. With this understanding, his language, 
 further on in the Eeport, is also consistent with what he here 
 expressed. He there states explicitly what we have endeavored 
 to show ran through all his utterances, proving that he was 
 driven to recommend the banking system by the same power 
 that drove Sir Eobert Peel to waive his convictions about the 
 necessity of circulating notes being issued directly by the state, 
 when framing the Bank of England charter in 1844, and says : 
 
 Impelled, therefore, by a profound sense of the present necessity of a national 
 currency to the successful prosecution of the war against the rebellion, and of 
 its ability at all times in protecting labor, cheapening exchanges, facilitating 
 trade, and increasing the supply of all business transactions ; and at the same 
 time umvilling to urge even salutary and necessary reforms in such u 
 zvay as needlessly to disturb existing conditions, or imperil the value of existing 
 investments of capital, the Secretary recommended, in two successive reports, the 
 authorization of national banking associations, to which the capital of the cor- 
 porations now issuing notes for circulation might be transferred with advantage 
 to the parties in interest as well as to the general public. — Report, December lo. 
 1S63, page 19. 
 
175 
 
 Mr. McCulloch's reports, unlike Mr. Chase's, show no .conflict, 
 no effort to reconcile incongruities, but from the first to the last 
 the interest of the banks was his only care; and it has been the 
 same with all his successors. The extracts speak for themselves. 
 
 Why, it is asked, should not the Government drive out of circulation all bank 
 notes, and continue to issue, as it has done since the commencement of the war, i:s 
 own notes, and thus save the interest which otherwise will goto the banks ? I:i 
 answer, I would remark : The banking interest in the United States is an im- 
 portant one ; it has grown with the business of the country, and has been largely 
 instrumental in developing the national resources, and in increasing the national 
 wealth. Banks of issue, badly and dishonestly as many of them have been 
 managed, and disastrous as have been the failures, have still been of unquestiona- 
 ble advantage to the people. The capital of the country has been largely, and 
 in good faith, invested in them, and thousands of stockholders depend upon the 
 dividends upon their bank stock for support. It is an interest which has stood 
 by the Government in its struggles with a gigantic rebellion ; and now, when it is 
 indispensable that the Government should control the issue of paper money, there 
 has been created a National Banking System, not to destroy the state banks, but 
 to absorb them, and tliat too without prejudice to their stockholders. — 
 //. McCulloch's Report, iB6^, pages 49-50. 
 
 Had it been supposed that the object of those who advocated the measure [the 
 act creating an uniform currency,] was to bring the state banks under the control 
 of the Federal Government, for the purpose of destroying them, or that suck 
 ■would have been its effect, it would never have been adopted. No such object 
 was avowed or intended by its friends, and no such effect -was anticipated by the 
 banks. With that spirit of patriotism which was so marked a characteristic of 
 the people of the north during the war, the stockholders of the state banks relin- 
 quished, at the request of the Government, the greater privileges possessed by them ^ 
 under state laws. — McCulloclis Report, Nov. 30, 1867, page 14. 
 
 That is, notwithstanding the absolute necessity Mr. McCulloch 
 said existed for the establishment of a national banking system, 
 these patriotic bankers would never have permitted the law to 
 pass, if they had not been assured that their privilege to furnish 
 the circulation of the country would never be disturbed. 
 
 Another illustration of that spirit of patriotism is given by 
 Mr. McCulloch, in his report of December 3rd, 1866, page 16, 
 where, speaking of the passage of the legal tender act, he says : 
 
 Had it been proposed that the United States notes should be a permanent 
 circulation, there is good reason to suppose that the proposition would have had 
 few if any advocates. 
 
 This supposition is not a mere individual opinion, but the 
 grave declaration of the Secretary of the Treasury to a Congress, 
 the members of which were cognizant of the fact. 
 
 There are substantial objections to all banks of issue, and, if none existed in 
 the United States, it might be very questionable if any should be introduced ; but 
 having taken the place of state banks, and furnishing, as they do, a circulation 
 as free from objection as any that is likely to be provided, the Secretary is of 
 opinion that the national banks should be sustained, an'd that the paper'circulation 
 of the country should be reduced, not by compelling them to retire their notes, 
 but by the withdrawal of the United States notes. — Report, Dec. 3, 1^66, page 16. 
 
 Before the national banking System was established the several states, whether 
 
170 
 
 in conformity with the Constitutior) or not — jointly with the general Government, 
 during the existence of the charter of the United States bank, and solely after the 
 expiration — exercised the power of issuing bills of credit, in the form of bank notes, 
 through institutions of their own creation, and thus controlled the paper money, 
 and thereby in no small degree the business and commerce of the country. — Report, 
 Dec: 1, i858, page 27. 
 
 To all banking systems under which circulating not;s are issued there are grave 
 objections ; and if there were ncne in existence in the United States the Secretary 
 would hesitate to recommend even the most perfect that has been devised. The 
 question now to be considered, however, is not whether banks of issue should be 
 created, but whether the national banking system should be sustained. In the 
 present condition of the country, and in view of the relations the national banke 
 sustain to the Government (ignoring in this connection the question oi good faith ,) 
 the Secretary has no diflBculty in coming to the conclusion that they should be 
 sustained * * At some more propitious period, when the union shall 
 have been fully restored * '"" [as it now unquestionably is] it maj* per- 
 haps, be wise for Congress to consider whether the national banking system may 
 not be dispensed with. — Report, Nov. 30, iS(>'],page 15. 
 
 Addenda. — ^The following secret circular indicates that the 
 time of which Secretary McCulloch spoke has come. It is pub- 
 lished by Mr. Pomeroy, whose " informant, a personal friend, 
 and a national banker," feared to make it known. It was issued 
 after the adjournment of the American Bankers' Convention, 
 last September, by its secretary, a bank president, and marked 
 " Private and Suggestive." 
 
 It is advisable to do all in your power to sustain such daily and prominent 
 weekly newspapers, especiall}- the agricultural and religious press, as will oppose 
 the issuing of s[reenback paper money, and that j'ou also -withhold patronage or 
 favors from all applicants who are not willing to oppose the greenback or 
 Government issue of paper money. Let the Government issue the coin, and the 
 banks issue the paper money of the country, for thus can we the better protect 
 each other. So long as the greenback men are satisfied with the interconvertible 
 bond, no harm can come to our interests ; but to repeal the law creating National 
 Banks, or to restore to circulation the Government issue of paper money, will be 
 to provide the people with money from other than our own supplying, and 
 will, therefore, seriously aifect your individual profit as banker and lender. 
 
 Be sure to see your member of Congress at once, and engage him to support 
 our interests, that we may control legislation. We can depend on everythin:? 
 except Congress for this administrarion, and if we are vigilant we can control 
 the next one. Write if you have any suggestions to make, or anything of impor- 
 tance to communicate, to James Buell, Secretary, 247 Broadway, Room 4. 
 
 The effect of Congressmen beina: thus seen and being earnestly 
 written to, is the same now as when James Madison,"in a letter 
 to Thomas Jefferson, dated April 23, 1796, said: 
 
 The banks have been powerfully felt in the progress of the petitions in the 
 cities for the treaty. Scarcely a merchant or a trader but what depends on dis- 
 counts, and at this moment there is a general pinch for money. Under such cir- 
 cumstances a bank director, soliciting subscriptions, is like a highwayman with a 
 pistol demanding the purse. 
 
 " We can depend upon everything except Congress for this 
 administration " / / / Surely the President's action will not 
 endorse this calumny?