»s mnp ms HG 525.B76"°"""'"""'"-"'™^i' Hate O^oUcge of Agricttltutc Kt (dornEll MmuerattH ailjaca, Sf. 1, SIthratg The original of tliis book is in tlie Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013816958 .^ Knterbd at the Indianapolis, Ind., FostofQce as second-class mail matter. The Economic Library (vol.1. no. 1. monthly. (June, 1890. Subscription, $5.00. THE CAMPAIGN AUTHORITY COMPLETE IN THIS NUMBER A FiuancialcS^ Catechism and History of . Financial Legislation From 1862 to 1896 By S. M. BRICE and C. VINCKNT TWENTIETH THOUSAND VINCENT PUBLISHING COMPANY INDIANAPOLIS, IND. }io.i<^. L. Labor's jslinety arid JHine. Better sung as. a^Solo. I. Tliereare ninety and nine that live and die, In want and hunger and '' They toil in the fields,theniue-tyandnine,Forthefruitsofourmoth-er By the sweatof their brows the desertblooms,And the forest before them :. The night so dreai-y, so dark, so long, At last shall the morning 1 fe^E4 * — •-r • - — • — • — » — F — ri — r — r — » "^'-rP f^p* — » F- SS^ CO ^m^mm ^^s --N— N- V- S-fs— p,-- JS. ^gg I CD =^?=-*=r* cold. That one may revel in lux - u-ry,And be wrapped in its silk-en earth;Tliey dig and delveiuthedusky mine, And bring its rich treasures falls; Their labor has builded hnmble homes, And cit - ies withloft-y bring; And o\er the land the Victor"ssong Ofthe ninety and nine shall —J 1— •— -•— • — I 1 \-'-0 • — I- V rold; The ninety and nine in their hovels bare, Theoneinhis palace with forth; Buttlie wealtlinleaseilby theirsturdy bIows,Tothehandsoftheonefop- halls ; But the one owns cities and homes and lands. Whi le the ninety and nine hare ring. And ech o a - far, from zone to zone,Rfjoice,ror la- bor shall iirS^H t=t±i=t=t :! ^ ^ ^ u i ilizrpi =t=i=1: »^qi=:^^= qc; rich - es rare, The one in his palace with rich es rare, ev - er flows, To the hands of the one for ev er flows, empty hands, While the ninety and nine have empty hands, have its own, Re-joice, for l;i - bor shall have its own. ^^mm * 5-; * -t- e!=^ I o ra -2 •a c es r> o The Economic Library. A REGULAR PUBLICATION. THIS NUMBER CONTAINS FIHAHCIAL CATECHISM HISTORY OF THE Financial Legislation OF THE UNITED STATES, FROM 1862 TO 1896. INDIANAPOLIS, IND.: VINCi:.NT PIBI.ISHIXC CO. 1898. @ >^ o^g- ^ ^ f^l Entered According- to Act of Congress, in the year 1S82, Bv S. M. LRICE, ^n the Office of the Librarian of Congress, at 'Wasnington, Ij. All Rights Reserved. PREFACE. In presenting this work to the public, the author is fully conscious that great obstacles are to be overcome before it can meet with success. The prejudice existing in the minds of those who have never investigated the subject of financial economy against accepting any proposed change which may be recommended, on account of the fear that the change will be for the worse instead of the better, deters many from investigating this subject who have no fear of the investiga- tion of any other. The false theory which has been so long taught, that finan- cial economy, or the relation of moaey to labor, is of such an intricate character that it cannot be understood by the common people, has discouraged the masses from attempting to inform themselves on the subject, and to trust to its man- agement entirely by those whose business it is to deal in money — the result of which has been a constant drain of the wealth of the laboring people into the coffers of those who produce no wealth, but sit "at the receipt of custom," masters of the financial situation. It is from this class that the most formidable opposition to the introduction of any work intended to educate the com- mon people on this subject arises; for they knoTi' that when the gauzy veil of falsehood is torn from the subject, and the people view it in the sunlight of truth, they will see that the creation of money is an act of sovereignty inherent in the people, and that in order to maintain a government "'of the people, by the people, and for the people," that that sover- eign power must be exercised by the people's Representatives PREFACE. for the benefit of all, instead of that class who deal in money alone. It is no matter of wonder that this class who control the destinies of the people by controlling their finances, are strongly opposed to the education of the people on the sub- ject of finance, for they know that when this is effected their dominion as financial rulers must cease. The prime object of the formation of our government was to " establish justice, insure donlestic tranquility, and pro- mote the general welfare." It is the strong desire of the author that these declarations made by our fathers, who had passed through seven years of bloody war in order to rid themselves of British oppression, may grow to that fruition which it was their design should crown their efforts, that has impelled him, in the evening of his days on earth, to devote whatever ability he may possess in the preparation of a work designed to assist in its accom- plishment. While our government has been lavish in its expenditures for the education of the people on all other subjects, the science of money; what it is; its relation to labor and com- merce; who should make it, and how its volume should be governed, are subjects which have been entirely neglected in our general system of education. The plan of this work is intended to supply this want. It is believed that by adopting the form of catechism, or questions and answers, the subject is made so plain and easy of comprehension that it strips it of that dry, irksome mo- ' notony, which so frequently wearies the student without enlightening. The author has adopted this system of questions and an- swers from his own experience in making the investigations which have led him to the conclusions he now entertains on the practical workings of the financial systems of the civil- ized world as now administered. No plan of education is as successful as that which arouses PREFACE. 5 the spirit of inquiry and permits the student to ask the questions which arise in his own mind and receiye short and explicit answers. The questions in this work are arranged so as to, as nearly as possible, represent those which will arise in the mind of every inquirer as he pursues his investiga- tions, and the answers are short, simple, and concise. The historical portion consists of facts gleaned from his- tory, from the earliest period of civilz^ition, before money was known in commerce, down through the ages to 1882. The history of the financial legislation of the United States is carefully prepared and faithfully presented, as obtained from the records of the proceedings of Congress and reports of the heads of departments. Great pains have been taken to insure accuracy in every department of the work, in order to make it a reliable text book for that great class of workers who may desire to infcrrm themselves on the subject that most of all others interest them — the relations of money to their several avocations and to free government, and the danger which is constantly accumulating, of the loss of civil liberty, in consequence of the growing power of concentrated capital and its manifest disposition to seek for its support monarcliial power. The starving condition of famine-cursed and legthargie India and down-trodden but struggling Ireland are the legit- imate results of class legislation, which as certainly follows large accumulations of capital in the hands of the few as the ebbing follows the flowing of the tide; and if not pre- vented by a determined effort of an enlightened and intelli- gent laboring population, the virgin soil of these United States will be grasped by the same insatiate power, and its teeming millions of laborers doomed to suiFer all the horrors which have been, and are now being, suifered in these un- happy countries, crushed under the iron-heel of concentrated capital, in the name of Christian civilization. There are but two methods by which the American people can prevent having fastened upon them an untaxed, non-pro- 6 PREFACE. ductive aristocracy as a governing class, with all the over- bearing arrogance on the one hand, and all the degradation and misery on the other, which has followed its footsteps through all the older countries of Europe. The one is an honest, intelligent and fearless exercise of the elective fran- chise, and the other is revolution — that last resort of the people to secure to themselves and their posterity liberty, equity and justice. -, The first can only be produced by arousing to activity an unconquerable spirit of inquiry and energetic action in the minds of the great mass of wealth producers, until they are able to comprehend the fact that the future destiny of them- selves and their posterity rests entirely in their own hands; that it is for them to say whether constitutional liberty shall be perpetuated under the peaceful but determined influence of the ballot-box, with happiness and contentment for all ; or whether it must be secured after passing through all the horrors of civil war, or perhaps forever lost through their own neglect to assert their manhood until all of manhood is lost. If this work shall be instrumental in assisting those who peruse its pages to an easier solution of what constitutes their duty as citizens of a people's government, and stim - ulates them to use the means which rests in their own hands for its perpetuity, the object of the author will be accom- plished. FINANCIAL CATECHISM. CHAPTER I. Question. What is money? Answer. Money is a medium of exchange created by la-w, by which the value of all commodities produced by labor are represented and exchanged. Q. If money is created by law, is it money outside of the limits of the government that created it? A. No — unless by the agreement of different govern- ments to recognize as money that created and issued by each other, and this can only be done through laws enacted by the several governments entering into such agreement. Q. Did not the United States Government recognize and use the money of other nations in the earlier period of its history ? A. It did; but it required an act of Congress creating a law by which the coins of certain other nations were recog- nized as money. The Act of April 2, 1792, made the gold and silver coins of European, Mexican, Central American and South American nations legal-tender money of the United States, and set the value upon them by law — thus FINANCIAL CATECHISM. making money of them. On the 21st of February, 1857, Congress passed an act withdrawing the money property from all foreign coins, and they have not been money in the United States since. The law both makes and unmakes the money. Q. If the metallic coins of other nations are not money in the United States, what are they? A. They are nothing but a commodity, with the stamps of a state or a nation, vouching that they are of a certain weight and fineness, and are received in thp market at their commercial value, just as those metals of the same fineness are received without being coined or containing the stamp of any government. Q. Does the rule apply to all nations, or only to the United States? A. To all civilized nations. As soon as the coin passes the limits of the realm that created it, its money property ceases tu exist until recoined or stamped according to law by the government to which it has been transferred. Q. If this is true, is there any such a thing as a money of the world? A. There is not. The term '' money of the world " is used for the purpose of mystifying the subject of finance, and deceiving those who have not made themselves acquainted with the fact that money can only be created under sanction of law. Q. If gold and silver are not money until the law makes them such, why do the uncoined metals, as commodities, stand so near on a par in value with the same metals after they are coined and declared the money of a nation? A. The fact that these metals have been largely used by the nations of the world for the purpose of coining them into money, creates a demand for them for that purpose, which governs their prices in the market. , Q. If the nations of the earth should cease to use gold and silver as money, what would be the result? FINANCIAL CATECHISM. A. Those metals would then depend upon their own intrinsic value, and stand like other commodities in the market, their price being governed by demand and supply. Q. What are we to understand by intrinsic value? A. It is the property which an, article possesses within itself to contribute by its use to the comfort and happiness of man, and the advancement of the civilization of the world. Q. Does gold and silver possess more of this intrinsic value than other metals? A. No; iron, copper, zinc, tin and lead, all possess greater intrinsic value than gold and silver, because they can be used so much more extensively in the manufacture of imple- ments and material for the use of man. Q. Why then is gold and silver used for coining money? A. History does noh run back to the time when it was first so used, but the probability is that it was adopted when man was in a very rude and barbarous condition, and was selected on account of its scarcity, beauty and durability. It is known that in this rude state of civilization there was but little stability in governments, and these metals were used as money, so that in case of war those who held it could remove it to a place of safety and thereby secure themselves from loss. Q. If this was the object of selecting gold and silver to use as money, did it not endanger the stability of the govern- ment by placing it in the power of the citizen to remove the coin from circulation in time of war when it was most needed ? A. It does; and the fact is realized by all civilized nations, but in every war through the history of the ages, the same thing has occurred wherever metallic money was used; the coin has been removed to other countries, buried in the earth, or otherwise secreted so as to not serve the purpose of 9, circulating medium. 10 FINANCIAL CATECHISM. Q. Why has its use been continued in our more advanced state of civilization? A. The avarice of mankind had much to do with this. First, it was discovered that the amount being small com- pared- with the needs of commerce for a medium of exchange, it could be concentrated in the hands of a few persons, who, by withdrawing it from circulation, could greatly enhance its purchasing power. Having made this discovery, the next step was to instil it into the minds of the people that these metals possessed a peculiar fitness for money which could not be found in anything else, and a consequent engrafting in the statutes of the different nations, laws making coins of these metals of a certain weight and fineness, legal-tender money. Q. By what standards of measurement is the value set upon these metals when used for coin? A. By an arbitrary standard fixed by law, declaring that so many grains of a certain fineness shall be worth a dollar, shilling, or a pound. The law thus sets a fictitious value on gold and silver which these metals do not possess for any other purpose. This is fiat value, and every gold or silver coin of any nation on the earfh, is a fiat coin to the extent that its legal value exceeds its intrinsic value. Q. In purchasing a piece of property and paying for it in gold and silver coins, what does the parry selling receive for his property ? A. Gold and silver of course. These are commodities worth, perhaps, one-fourth of their legal values as such ; the other three-fourths is money created by the fiat of the gov- ernment issuing the coins. Q. If the value of coins are established by the fiats of the different governments issuing them, may not those values be changed from time to time ? A. Yes, they can; and have been for time immemorial, as will be seen by consulting the following table cf English money prepared by Sir Frederick Eden, covering a period FIN AN VIAL CATECEISM. 11 from 1060 to 1610, in which the value of an ounce of gold was changed by the fiat of that government fifteen times — being nearly three times as great in 1060 as it was in 1610: £ s. D. A D 1060. 1300 1344 1316 1353 1412 1464 1527 1543 1545 1546 1551 1552 1553 1560 1601 Gold per it it tt it it it tt ounce 2 18 ijg u 2 17 5 tt tt 2 12 5)4 2 11 8 tc (I 2 6 6 <( tt 1 18 9 tt tt 1 11 " « 1 7 6^ it tt 1 3 31^ it (t 13 11)^ •' tt 9 3M tt " 4 IM ...... 1 6M (( ft 1 5M tt tt 1 8 " ti 1 Q. Has not the advancing civilization, since 1610, settled the value on gold, so that it can be relied upon as a uniform standard of value by which all commodities can be justly measured and exchanged? A. No. By examining the following table, taken f i-om Doubleday's Financial History of England, page 277, you will discover that the value of an ounce of pure gold at the Bank of England for the ten years running from 1810 to 1820, changed ten times, or once for every year: £ s. D. 1810 an ounce of gold waK worth 4 5 1811 " " " 4 17 1 1812 " " " 5 8 1813 " " " 5 10 1814 " " " 5 10 1815 " " " 4 12 9 1816 " " " 3 18 6 1817 " " •' 4 1818 " " " 4 15 1819 " " " 4 3 1820 " " " 3 17 iQi^ Still later, in 1845, during the Peel Administration, the English Government passed a law making one ounce of gold worth £3 19s. 9d. Q. Has the United States Government ever changed the 12 FINANCIAL CATECHISM. weight or relative value of any of its metallic coins since the establishment of its mints? A. Yes. The law of April 2, 1792, made the silver dollar to contain 412^ grains of silver, nine-tenths fine, and made it the unit of value and the money of account throughout the United States. The same law made 27 grains of gold, eleven-twelfths fine, equal in value to the silver dollar. The law of Juae 28, 1834, made 25 8-10 grains of gold, nine-tenths fine, equal to the silver dollar. The weight of the gold was reduced one and 2-10 grains, hut the legal value was the same. The eagle, created by the law of 1834, contains 16^ grains less pure gold than the one created by the law of 1792; yet their legal value is the same. The law of 1792, made one pound troy of gold, equal to fifteen pounds of silver. The law of 1834, made one pound of gold worth sixteen pounds of silver, and they were bought and sold at these relative values, until the law of February 12. 1873, when the silver dollar was demonetized. ; The silver dollar was not money in the United States from thati^time until February 28, 1878, when Concress passed a law over the veto of the President, remonetizing the silver dollar, thus reinstating it as money. These dollars now bear the same legal relation to gold, sixteen pounds to one. Q. If the silver dollar has taken its former place as money, why is it called the ninety-cent dollar? A. This law of 1878, providing for its coinage and the restoration to its legal-tender property, did not restore it to free coinage as before. It provides that the government shall buy the bullion on the best terms it can in the market, and coin not less than two million dollars per month. In consequence of the demonetization of silver by this and several of the European nations, the demand for silver bul- lion declined in the market, until the amount in a dollar would only bring from 86 to 90 cents. PINANCIAL CATECSISM. 13 Q. . What kind of coins was first issued from the United States mint? A. The first coin issued from the. -United States mint, under the law of 1792, was copper cents and half-cents. Each cent contained 260 grains of pure copper. One hundred of them made a dollar, and contained 26/)00 grains. These copper coins were full les^al-tender, the sameas gold and silver coins, which were issued later. Q. Have there been any changes in the copper coins since that time ? A. Yes. The law of February 21, 1857, provides for a one-cent coin, composed of 88 parts copper and 12 parts nickel, to take the place of the pure copper coins. These coins were also made legal-tender, notwithstanding they differed widely in weight, in the metal of which they were composed and in commercial value. Q Has the government ever issued any other one-cent coins ? A. Yes. The law of April 22, 1864, provides for the coinage of a new one-cent and two-cent piece; the cent to weigh 48 grains, and to be composed of 95 parts copper and 5 parts tin and zinc. These coins were made legal-tender, the one-cent coin to the amount of ten cents, and the two-cent piece to the amount of twenty cents. One hundred of these one-cent coins contain 4,800 grains, while those coined under the law of 1792 contained 26,000 grains, but the law made them of the same value. Q. What is the commercial value of a pound of metal of which these one and two-cent pieces are composed? A. Twenty cents. Q. How many one- cent pieces can be coined from a pound? A. One hundred and sixty, worth one dollar and sixty cents. Q. How is it that a pound of metal, the commercial 14 PlNANClAL CATMCMISM. value of which is twenty cents, is converted by coining into one dollar and sixty cents of legal-tender value? A. It is by the .fiat of law. The Congress of tiie United States has said " let it be done/' and it is done. In every one hundred of these one-cent pieces there is twenty cents worth of commodity used, upon which to impress the stamp of the government, and one dollar and forty cents in money created by the fiat of law. Q. Are there any other instances in which the gover^i- ment has exercised this fiat power in coining money? A. Yes. The law of March 3, 1865, provides for coining a three-cent piece, and the law of May 16, 1866, provides for the coinage of a five-cent piece. Both of these coins are composed of 75 parts copper and 25 parts nickel. The commercial value of a pound of this metal is seventy cents. Q. How many five-cent pieces are coined from a pound of this metal? A. One hundred, worth five dollars in gold or any other legal-tender money. In one hundred of these coins there is a commodity, valued in commerce at seventy cents, and four dollars and thirty cents of money created by law. Each one of these coins contain 7 6-10 percentum of com- modity at its commercial value and 92 4-10 per cent, of value created by fiat of law. Q. If the government has power to increase the value of these commodities for the purpose of making money of them, may it not with equal propriety select any other material suitable for the purpose, and coin it into money and declare it a legal-tender? A. The fact of the government having exercised this power in the foregoing instances is the best of evidence tliat it possesses such power; but we are not left to infer how much power is guaranteed to Congress on this subject, for the Constitution expressly declares that it shall have such power. Q. Are there any other instances in which the govern- FINAIiClAL CATECHISM. 15 ment of the United States has by fiat of law increased the value of any of its coins as compared with the com.mer^.'ial value of the metals of which they were composed ? A. Yes. By the law of 1792, half dollars, quarter dollars, g,nd all fractional parts of a dollar, contained its proportioned weight of the silver dollar of 412^ grains; and was legal- tender for any amount. The law of 1853 reduced the weight of all the fractional silver coins 7 per cent., and made them legal-tender for five dollars only. Up to five dollars they have an additional fiat value of 7 per cent, above the silver dollar. Above five dollars they are only commercial bullion 7 per cent, light. Q. Is there any instance in which the government has entirely withdirawn the legal- teader property from any of its coins and still authorized their coinage at the mints? A. There is. The coinage afit of 1873 authorized a silver coin of the same fineness as the standard dollar of 412^ grains, to be designated as the trade dollar, and to contain 420 grains; which dollar was made a legal-tender for only five dollars. The law of July 13, 1876, takes away the legal-tender property altogether; so that, notwithst,anding it is a United States coin containing 7i grains of standard silver more tham the dollar of 412^ grains, this is a full legal-tender for all sums at its coin value of 100 cents, while the trade dollar is only worth its weight at the price of bullion in the market. The law of 1873 made it money, and fixed the value on it. The law of 1876 robbed it of its money property, and by so doing changed its value. The law both makes and unmakes the money. Q. Why was the trade dollar demonetized? A. It was done at the instance of those who favored a single gold standard, that there might be no metallic money in circulation except the light weight silver coin and the compound minor coins, none of which was full legal-tender. Q. Why was the half dollar and all the similar silyer coins made 7 per cent, light? 16 FINANCIAL CATECHISM. A. It was claimed to be necessary in order to prevent exportation to other countries in case of extraordinary demands for silver. These coins being worth more at home as money, than they would be abroad as bullion, the country would at no time be robbed of the use of them for change. Q. Why, then, were they deprived of their legal-tender property, and made legal-tender for five dollars only? A. It was done in order to compel its circulation among the small dealers and laborers of the country, and protect the bankers and money-dealers from the trouble and loss sus- tained by handling them in large amounts. It was the first step taken by the American government in adopting the British system of finance. Q. What loss does coin sustain by abrasion inordinary circulation? A. The loss is estimated at one-half of one per cent, per annum, making a loss of 10 pet cent in twenty years. Q. When it becomes so much worn as to be too light for circulation, how is it renewed? A. It is gathereji up by. bullion brokers at a discount sufficiently large to give them a good margin of profit when they sell it to the government by weight as bullion. It is then reeoined and put into circulation again to pass through the same process. Q. Who bears the loss sustained by the use of these light coins and their constant loss by abrasion ? A. The small dealers; the working people; and the poor, who handle but little money, sustain the loss, on account of being unable to procure enough at one time to return to the mint for recoinage. Q. Has any other government adopted a similar system of fiat and light-weight coins? A. England has a single gold standard, but the principal part of her retail trade is with copper coins, and silver coins 6 per cent, light when they come from the mint. These coins the JSnglish goveruraent, by its fiat, has. made full FINANCIAL CATECHISM. 17 legal-tender in sums of two pounds sterling, about ten dollars — above that amount they are not money at all. The law of 1879 made the subsidiary silver coin of the United States legal-tender for ten dollars — thus adopting the English system. Q. What is the practical result of the use of this light- weight silver coin in trade? A. It is a tax on productive industry of 7 per cent, in the United States, and 6 per cent, in England, when this money first goes into circulation and is of standard weight; and if used in trade, a steady loss of one-half of 1 per cent, per annum, until it becomes so far worn as to compel its re- turn to the mint for recoinage. The loss of one-half of 1 per cent, for twenty years amounts to 10 per cent., as before stated. This loss by wear, added to the 7 per cent, light weight, makes a tax on the industries of the United States of 17 per cent, for the use of small silver coin for twenty years, and a tax on the industries of England of 16 per cent, for the same period. Now, admitting the estimated stand- ard of loss to be correct, in order to keep the coinaa;e within 10 per cent, of its legal weight, it would have to be recoined once in twenty years. In one hundred years it would have to be recoined five times. The brokers' profit for buying and returning to the mint would not be less than 3 per cent, for each twenty years, which would amount to 15 per cent. This added to the 7 per cent, light weight, and 10 per cent, loss by wear in each twenty years, would make 100 per cent, the laborer of America is taxed for the use of subsidiary silver coin, or 1 per cent, per annum — while the English laborer is taxed 99-100 of 1 per cent, per annum for the same purpose, while in both countries gold, the money of the rich, is subject to no such tax. Q. What amount of subsidiary silver coin have we in the United States? Ar A little more than $50,000,000. In addition to the tax of 7 per cent, for light weight, the people pay an annual tay» 18 FINANCIAL CATECHISM. of 5 per cent, on the $50,000,000 of bon^ls which were sold by the Secretary of the Treasury in order to pay for the bullion which was coined into these subsidiary coins. Q. Why were these snbsidiarj' coins issued? A. It was a part of the plan of specie resumption. We had in circulation $50,000,000 in fractional paper currency, issued by the government, which was more convenient and better than silver; for when any of the notes became unfit by use for circulation, they could be sent to the Treasuiry and exchanged for new ones without loss, while the loss on the silver by use is sustained by those who use it. This paper currency, like the United States notes, cost the people com- paratively nothing, and therefore must be withdrawn and replaced with coin 7 per cent, light, in order to make a mar- ket for $50,000,000 of bonds, at an annual expense to the people of 12,500,000. At the end of twenty yeairs, when these bonds mature, the people will have paid $50,000,000 in interest, added to the $50,000,000 of principal, making in round numbers $100,000,000 for the privilege of using silver coin 7 per cent, light for twenty years, whik the use of the fractional paper currency for the same period would not hare cost more than I per cent, or $1,000,000. Q. Are those subsidiary coins redeemable in any other money which is a full legal-tender? A. They were not under the law creating them, redeem- able in anything; but the law of June 9, 1879, provides that these coins shall be legal-tender in sums of ten dollars; that the government shall pay it out at par in sums of twenty dollars; and that it shall be redeemed in legal-tender notes in sums of twenty dollars and upwards. Since legal-tender notes are as good as gold, it makes the same per cent, fiat in these coins as good as gold also. This is another demon- stration of the fact, that it is the law that makes the money. Q. Has there ever been any fixed standard of value in Europe between gold and silver bullion ? VlIfANGtAL CATECHISM. 19 A. Yes, for more than one hundred years, before silver was demonetized, England and most of the European nations had set the value of gold and silver as one to fifteen and a half — one pound of gold for fifteen and a half pounds of silver, at which rate it was bought, sold and exchanged. The law in this case, not only set the value upon the money, but upon the metal of which it was coined. Q. What is the value of the smallest gold coin issued by the English Government? A. The half-sovereign, worth in money of the United States standard coin, $2.43f, cents. All below that is light- weight silver and copper coins. In the city of London, containing five million inhabitants, and one hundred thousand retail stores, nearly all the money ngedin the daily retail trade is copper and light-weight silver coin. More than half of this money is copper Some idea of the extent of this trade may be drawn from the fact that it requires thousands of tons of copper coins to supply it; and that the copper coins in England amounts to the enor- mous sum of four million four hundred thousand pounds. Q. What is the metallic or commercial value of thes& copper coins in England, compared with their legal value? A. About one-fifth. In a pound sterling of these coins, there is 20 per cent, commodity and 80 per cent, money created by law. On account of the demonetization of silver, silver bullion is at a discount of 15 per cent.; this added to the 6 per cent, light-weight, makes the commercial value of the silver coin 21 per cent, less than its legal value, but the fiat of the English Government has added a money value to the silver coins of 21 per cent., and to the copper coins four hundred per cent., making them equal with standard gold to the value of two pounds sterling. The same power has issued its fiat, that above two pounds these coins are not money at all. The English Government, by its fiat, both makes and unmakes money. 20 fftNANCIAL CATMCitmM, Q. What is the relative effect in trade upon the rich and the poor by the use of these light-weight .coins which are not full legal-tender? A. To draw continually from the substance of the poor, for the benefit of the rich. Q. How do you make that appear? A. The poor are the ones who are compelled to use this kind of money in their business transactions; their purchases and sales being necessarily small, they must use this kind of money; and every time one of these coins passes from hand to hand in the retail trade, it levys a tax on labor of 6 per cent, in England, and 7 per cent, in America; while the rich deal in large amounts, and payments are made in full weight legal-tender money, and therefore use but little of the sub- sidiary coin, — and what they do get, they pay out at par to laborers. Senator Sherman stated very accurately the work- ing of English and American law, providing money for the people of their realms, in his speech in the United States Senate in 1866, when he was advocating the bill providing for $50,000,000 of subsidiary coin, when he said, "Gold is the money of the rich, — of those who have acquired property, but copper and subsidiary silver is . the money of the poor and laboring classes." The merchant who deals in thousands and millions is furnished a money composed of gold, a com- modity, the price of which is fixed by fiat of law, and is legal- tender for any amount ; so that he is fully protected from loss. The working man, — the great mass of the people, are fur- nished with a money which is made by law, many times more valuable than the commodity of which it is composed, and demonetized entirely above a certain amount, so as to force its circulation among those who most need the protec- tion of their government, and get the least of it. Q. What metal is the most extensively used by the dif- ferent nations of the world as a material for coining into money? A. Copper. All nations use it. Some use nothing else. WmANCIAL CATECItmM. 21 All gold and silver coins are alloyed with it except the gold coins of Persia, which are the only pure gold coins in the world. Q. If it is in the power of a government to make money a legal-tender without regard to the value of the metal com- posing it, why is such costly material as gold and' silver used for that purpose ? A. It is done for the purpose of benefiting that class of citizens who deal in money. The scarcity of these metals creates a demand for them for the purpose of coining in all parts of the world, so that, when the demand for them at home is not equal to that abroad, they can be shipped from one country to another as commodities, with a profit like that which has flown from Europe to the United States in 1879-80. Q. Why should gold and silver have left Europe and come to America at this time? A. Short crops in Europe for several years produced a famine, and consequently raised the price of the necessaries of life far above the normal standard compared with gold; while, on the other hand, the contraction of the volume of the currency in the United States, and a succession of large crops produced here, caused the price of the necessaries of life to be relatively lower in this country when compared with gold. The result was, that those holding gold in Eur- ope, saw that they could largely increase their wealth by shipping their gold to the United States and exchanging it for the cheap provisions to be obtained here, produced by labor at starvation wages, and selling them to the starving people of their own country at a large advance. Q. What effect will this drain of gold from Europe have on the productive industries of that country? A. It will reduce the price of productive labor there in an exact ratio with the reduction in the amount in gold; the banks will raise the rate of interest, and thereby stop the outflow of gold; loans will be called in and the currency in circulation contracted, producing great prostration in 22 PlIfAli'CIAL CATBCRI8M. business, and a period of bankruptcy, until the money dealers become sufficiently gorged by the wreck, when they will lower the rate of interest, increase their loans, and prepai'e for another harvest to be gathered from human suffering Q. Will the same results follow in the United States? A. Certainly. The flow of gold from Europe is already becoming slack. Should our crops be short for one or two yep-rs, and those of Europe be good, the tide of gold would turn the other way, and we should have another panic; the price of labor with all its products would be prostrated, and all the people suffer, except those dealing in money, annuitants, and those receiving fixed salaries. This class always thrive on low prices for everything but money. They constitute the law-makers [of all nations; and while the people permit this to be the case, such laws will certainly be the result. Q. Where do governments obtain the power to coin money and set a value upon it? A. Coining money is an act of sovereignty, and belongs to the people. Nations under despotic governments have had the right usurped by their rulers. The money of those natiops is issued by the fiat of the despot, and by arbitrary power. In representative govern- ments this power is delegated by the people to their repre- sentatives, either through legal enactments acquiesced in by the people, or specifically stated in a constitution. The Constitution of the United States is very explicit on this point; it says, Art. 1, Section 8, "Congress shall have power to coin money and regulate the value thereof, and of foreign coins, and fix the standard of weights and measures." In adopting the constitution, the people of the United States surrendered this right of sovereignty to their representatives in the two Houses of Congress, so that whatever power the people possessed before the adoption of the constitution, Congress has possessed since its adoption. Q. Does not the constitution prohibit Congress from FINANCIAL CATECHISM. 23 making anything but gold and silver a legal-tender in tlie payment of debts ? A. No. The constitution, in defining the power of a state, Article 1, Section 10, says: " No state shall enter into any treaty, alliance or confederation ; grant letters of marque and reprisal; coin money; emit bills of credit ; make anything but gold and silver coin a tender in the payment of debts; pass any bill of attaiiider, expost facto law, or law impairing the obligation of contracts, or grant any title of nobility." (See page 3J2.) This provision applies to the power of individual states and has nothing to do with the power of Congress. • Q. Did the people of the colonifs ever exercise the sovereign power to issue money and make it a legal-tetfder previous to the adoption of the Constitution? A. They did. We learn by consulting " Sumner's Remin- escences of Colonial Times," that the Massachusetts colony was the first to issue money. This occurred in 1690, six years before the Bank of England was established. Q. Was this money gold, or silver? A. It was neither gold nor silver. It was paper money, issued in bills of from five shillings to five pounds, and the issue amounted to seven thousand pounds sterling. These notes were made receivable for all dues to the Colonial Gov- ernment, and circulated at par with gold for twenty years. In 1703, an additional fifteen thousand pounds was issued and made legal-tender for both public and private debts. One hundred and fifty thousand pounds was issued in 1716, and was loaned to the people of the colony, at five per cent, per annum in specific sums on real estate security, for a terni of years. Fifty thousand pounds more was issued in 1720, making in all 222,000 pounds, or $1,110,000. The issue of this money enabled the colony to declare herself clear of debt in 1773. Q. Did any of the other colonies issue money during their colonial existence? A . Yes. Rhode Island issued bills in 1720, which were a 24 FINANCIAL CATECHISM. legal-tender for all debts. Connecticut issued money from 1709 to 1731. New York issued money first in 1709; Penn- sylvania, in 1723; Maryland, in 1733; Delaware, iu 1739; Virginia, in 1755; and South Carolina, in 1703. The first issue of Virginia bore 5 per cent, interest, and was soon locked up by hoarders as a safe investment. Thomas Jefferson says : " The next issue was bottomed on a redeem- ing tax, and bore no interest." These bills, he says: "were readily received, and never depreciated a farthing." He further says, that several hundred thousand dollars of this colonial paper money remained in circulation more tha» twenty years at par with gold, with no other basis or advant- ages than being receivable for debts and taxes. Q. How were those colonies governed at the time they issued this money? A. They were under the control of the English Govern- ment with governors appointed by the crown. Their legis- latures were elected by the people. That government had passed no law providing for issuing money by the colonies; so they asserted their right of sovereignty and provided the necessarj' legislation themselves. So long as there was no law of the English Government . prohibiting this exercise of sovereignty, the bills issued by these colonies was, to all intents and purposes, the money of the people, and circulated as such, at par with coin. Q. Did the English Government sanction the acts of the colonies in issuing this money? A. No. It took no action whatever in the matter until 1751, forty-eight years after the first bills were issued, when the growing prosperity of the colonies aroused the jealousy of the money lords, and they prevailed on Parliament to pass a law forbidding the issue of any more money by the colo- nies. Not satisfied with that, in 1763 they procured the passage of a law declaring all acts passed by the colonies pro- viding for the issue of money void. Here is another striking instance, in which the fact is demonstrated, that money is FINANCIAL CATECHISM. 25 created by law. The law of the colonies made these bills, issued by them, money; and they performed all the functions of money. The English Government, being superior to the Colonial Governments, declared it was not money, by declar- ing the legislation of the colonies providing for its issue void; when it ceased to be money at all. Notwithstanding its demonetization by Great Britain, it was received for tax by the Colonial Governments, until it was all retired from circulation without the loss of a dollar. Q. What effect did this act of Parliament have on the colonies? A. It produced wide-spread dissatisfaction among the peo- ple, £.nd contributed largely toward the culmination of that feeling which resulted in the Declaration of Independence. Q. Why did the bankers and money lords of England op- pose the issue of money by the colonies? A. The success attending the use of this money in develop- ing the weak, struggling and neglected colonics into wealthy and prosperous communities, was educating the people to understand that they could be independent of the usurers of the world; and hence, must be crushed out, in order to satisfy the greed of the money sharks, who dictated the policy of the British Government, just as the same class now dictate the policy of the American Government. Q. How did the colonies procure their money after they declared themselves independent, and before the adoption of the constitution? A. They fell back on their right of sovereignty and issued what is known in history as continental money; the consider- ation of which we reserve for a subsequent chapter. Q. Are we to understand that previous to the introduction of paper money into use, all metallic money was created by the fiat of law? A. Yes. There never was a dollar, a shilling or a penny coined by any nation that was not fiat money — and any metal coined without the fiat of law, is not money. Money is that 26 FINANCIAL CATECHISM. which will pay any debt or obligation, public or private, and the refusal to accept which by any creditor, when tendered by a debtor, releases such debtor from further obligation to such creditor. This money must be absolute, and can only be made so by the fiat of the government by which it is issued. (See also pages 312-315.) Q. Can you give any instances in which this proposition has been sustained by the decision of the courts? A. Yes, and in order to do this, we will quote from the very able work of Judge Warwick Martin, on the fiat money of England, page 143. He says: " Before the invention by England of bank notes, by which one dollar of coin was made to represent twenty dollars of liabilities, and before the people were enslaved by the issue of interest-bear- ing bonds, governments supported their wars and provided for their newly contracted debts by increasing the fiat or legal-tender value of their coins, or by adding greatly to the copper alloy therein. By these means they added greatly to the amount of coin in circulation." "This was done by a long line of English kings, among whom were Edward III., Henry IV., Henry VII., Henry VIII., and Queen Elizabeth. Each one of these monarchs reduced the quantity of pure metal by making it light weight, or by substitut- ing copper for pure metal, sufficient to increase the quantity of money to meet the demand. These fiats of monarclis did not relate to paper money. Until 1694 no paper money existed. Their fiats related to and changed the metallic money, which was then the only money in use. These fiats always changed the fiats of their predecessors upon the same thrones, the former fineness of the coins having been established by the fiats of former kings. •' When Elizabeth greatly changed the fineness of the coins of her realm, increasing the alloy therein, a citizen refused to receive the new coin in payment of a debt contracted before the new coin was made. A suit at law was commerced to collect the debt in old coin. The defendant pleaded a tender of the coin of the Queen to the full amount of the claim. The most learned judges were called upon to he^ir and try the case. The decision of the court was in tavor of the defendant. It sanctioned the money of the Queen and the right of the sovereign to issue such money as she saw proper. The report of the case is very voluminous, and in substance as follows: '• That six things or circumstances ought to concur to make lawful money. "First, weight; second, fineness: third, impression; fourth, denomination; fifth, authority; sixth, proclamation. 'For every piece of money ought to have a certain proportion of weight or poise, and a certain proportion of purity or fineness, which is FINANCIAL CATECHISM. 27 called alloy ; also, every piece ought to have a certain form or impression, which may be knowable and distinguishable; for as wax is not a seal without the stamp, so metal is not money with- out an impression, and money is named from monendo — informing — because by its impression it informs us whose money it is.' ' Whose image is this ?' asked Christ. ' Caesar's.' ' Then render to Csesar the things that be Caesar's.' Also, every piece of money ought to have a denomination or valuation for how much it shall be accepted or paid, as for a penny, a groat, or a shilling; and all this ought, to be by the authority or commandment of the Prince, forotherwise the money is not lawful; and it ought to be published by proclanaation, for otherwise the money Is not current. "These circumstances appear in the ancient ordinances made by the King for the coinage of money, as well in tliis kingdom (Ireland) as in England, which are to found in the tower of London and in the castle of Dublin. Also the indentures between the King and the masters of the mint prescribe the proportion of weight, fineness and alloy, the impression or inscription, the name and the value. And the King, by his proclamation, may make any coin lawful money of England ; a fortoi-i, he may, by his proclamation only, establish the standard of money coined by his authority within liis own dominions. And that the King, by his prerogative, may also put a price or valuation on all coins, appears bv a remarkable case in the twenty-first reign of Edward III " Thus, for hundreds of years, the Kings of England changed • either the fineness of the coin or the weight thereof, and were sustained in so doing by the common law and the decisions of their highest courts. The fiats of the Kings created and regulated all the money of the country. In the reign of Elizabeth, the ster- ling money was created by her flat. It was all silver. A troy pound of silver was coined into twenty shillings, which were a pound sterling. The silver was made 925 parts pure in the 1,000 parts and 75 parts alloy. This flat has stood as the English standard of fineness of silver from that time until now. But by a subsequent fiat of Parliament, though this fineness was con- linued, a troy pound of silver was coined into 62 shillings, making more than three times as much money out of the pound of silver as had been made by the former fiat. The pound of silver by this fiat was made to have more than three times the money value which it had under the flat of the Queen. " The money of the country was then increased by fiat, as the increase was demanded. The value was then given to the money by fiat. This money, however, was just as good as the former, and answered all the purposes of money that the former had done. "This fiat remained in force and unchanged until 1816, when the fiat of Parliament authorized the coinage of 66 shillings out of every troy pound of silver. This reduced the weight of the coin just 6 per cent., though the standard of the fineness of the metal in the coin was the same as before. TJiis flat of 1816 remains the law of the land, and all silver coins in England are 6 per cent, light and money for only forty shillings. 28 FINANCIAL CATECHISM. " Forty of these shillings, though light weight, are equal to two pounds sterling or two sovereigns, though over that sum they are not money, but light bullion, at least 21 per cent, discount. "So far as gold money is concerned, the fiat of Parliament, many years ago, made it eleven-twelfths fine, and this fiat has never been changed, and in all probability, it never will be so long as the debt of Great Britain remains payable therein. "In 1694 the Bank of England was established, not upon coin or money of any kind, but upon a loan of one million two hundred thou- sand pounds sterling, to the government. At this time a public debt was created, and funding was brought into use. Since that time the government has not been so of cen driven to the necessity of changing the weight and fineness of its coins to increase the vol- ume of public money. The government has never resorted to it excepting in 1816, and then the change was in weight only. " When England needs money now. which she cannot collect by taxes, she borrows it of th-e Bank of England, or realizes it' from the sale of her bonds. The nation is therefore always increasing its debt, and the people are being weighed down with interest, which is worse for them than any kind of flat money. "In 1816, England demonetized all silver above forty shillings or two pounds sterling. Previous to 1816, silver had been for centuries the only full legal tender fiat money of the nation. All money is flat. The fiat regulates the value. The value of all bullion and of all coins of gold and silver are now regulated in Great Britain by an English fiat. Let the fiat of England say, 'let gold no longer be money,' and it would at once cease to be money in the Kingdom. It would be as silver now is, over forty shil- lings, at a heavy discount for silver or whatever the flat money of the nation might be. If the fiats of all nations were to say, 'let gold and silver no longer be money,' they would both fall in price below copper, as they would have nothing to commend them but their inherent values to supply the wants of man, which are much less than iron, copper, and other metals." Q. What was the character of the first subsidiary coins of the United States? A. The first subsidiary coin of the United States was authorized by an act of Congress on the 26th of February, 1853. Previous to this time, all copper, silver, and gold coins of the United States had been full legal-tender, as well as many gold and silver coins of other nations, the value of which had been fixed by acts of Congress. Q. Is not all of the subsidiary silver coins of the United States debased coin ? A. No, it is not debased coin. Under the law of 1837 all the silver coins of the United States contained 90 per cent, silver and 10 per cent, copper. But it is 7 per cent, light weight. FINANCIAL. CATMCHISM. 29 Two half-dollars of this coin contain 28^ grains less under "the law of 1853, than our silver dollar of 412^ grains. Each half-dollar contains 192 grains, and two of them weighs 384 grains, but in any sum not exceeding five dollars, the govern- ment, by its fiat, has made two of these half-dollars worth as much as the standard silver dollar of 412^ grains. There was one peculiarity about the law of 1853, which is worthy of notice. It makes those light-weight subsidiary coins a legal-tender to the amount of one hundred dollars when used by the Treasurer in purchasing gold for the mint. With the government it is legal-tender, and equal to gold to the amount of $100. Between individuals, and in payments to the government, it is legal-tender for only f 5. This law and the coinage law of 1873, are both framed in the interest of the rich and against the poor and laboring people. They provide for the rich, full-weight par coins. The poor and laboring classes are compelled to accept 93 cents in standard silver and' 7 cents national fiat for a dollar. If the laborer asks the reason why this should be so, he is informed, by organs of political power, that the American laborer must make up his mind henceforth not to be so much better ofp than the European laborer. He uses light-weight coin, and the American laborer must do likewise. Men must be contented to work for less wages. In this way the work- ingman will be nearer to that station in life to which it has pleased God to call him. The act of February 21, 1857, is a striking illustration of the power of a national fiat on metallic money. Under the operation of the laws of the United States making foreign coins a legal-tender, large quantities of British sovereigns and half-sovereigns, French 20 franc-pieces, Spanish and Mexican doubloons, and the silver coins of Norway, Sweden, Denmark, Germany, Austria, Spain, Mexico, and Central and South America had accumu- lated in the United States and was performing all the functions of money. This act, by the fiat power of the government, withdrew the legal-tender property from all 30 FINANCIAL CATECHISM. these coins, and they immediately ceased to be money in the United States. French fiat money. — 1. Back in the days of Henry VIII. of England, the King of France greatly reduced the com- mercial value of the coins of his country by increasing the copper aloy thereof. His right to do so was not only sus- tained by France, but conceded by Henry VIII. of England, who increased the alloy in all English coins, and justified himself in so doing, because the King; of France had done it. Again, not long previous to 1720, the Royal Bank of France was established. It was a bank of issue. To provide against a future increase of alloy in the coins of the country, and to make the notes of the bank popular with the people, they were made payable in the coins of France, at their then standard fineness, as our 5, 4^, and 4 per cent, bonds were made under the laws of 1870 and 1871, as to our standard fineness of gold and silver coins. But the Royal Bank had not been long in operation until the French government increased the copper alloy in its coins until they were fully one-half copper. The bank protested against this act, but it was of no use. The fiat went forth, and the coins were so alloyed and made lawful money. But the bank continued for some time to pay according to the face of the notes in coin of the fineness created by the former fiat of the government. This greatly added to the credit of the notes, but operated against the new fiat money of the government. The result was that the government compelled the bank to disregard its contract upon the face of the notes, and to pay demands in the newly alloyed coin. This caused people to lose confidence in the bank, and to make such a run upon it as compelled it to do what all banks of issue sometimes do, suspend specie payment. The notes of the bank was not fiat money. The bank, therefore, went down, but the new coin, being lawful, regu- lar fiat money, remained the standard of payment. The fiat of the French government provides for limited legal- FINANCIAL CATECHISM. 31 tender silver and copper coins. She has about one billion six hundred million dollars of fiat metallic money. The fiat of the United States government, in 1792, said that gold and silver and copper coins should be coined at the mint then created, and it was done, and by the same fiat they were made lawful money of the United States. In the whole history of metallic coins, there has never been any issued and declared money by any government, unless it was fiat money. It is the fiat of the nation issuing it that makes it money. Q. In using the word " fiat," what force or power do you apply to it? A. The same force and power that is contained in the word " law." Both words imply a superior power who issues the fiat or enacts the law. Fiat is a command to do some- thing; and when issued by a recognized law-making power, it carries with it all the force of the nation whose law-makers issue it. In national affairs, it is the command of the gov- ernment. In the collection of taxes, it says how much shall be collected, upon what the levy shall be made, and what shall be exempt. In providing money for commerce, it says how much shall be made; what material shall be used, and what value shall be set on each piece. Every mandatory law on the statute books of any nation, is. simply the fiat of the nation pl'aced upon record. 32 FINANCIAL CATECHISM. CHAPTER II. FIAT PAPEK MOSTET. Question. If the fiat of a nation makes the money, is it necessary that it should be composed of metals?; , Answer. No. Whatevei- a nation chooses to select, upon which to stamp its device and so stamp and declare it money, it is money to all intents and purposes, within the limits of such government, and none can go farther than that as money. Q. Have we any instancies on record of any nation, by its tiat, making money of any material other than metals? A. Yes. The lisb of articles used by the different nations in past ages is very large. Mr. Madden, the author of a work entitled " The Coins of the Jews," says that the people of the West Indies and South America, used bread, soap, snuff, eggs and chocolate as current money. As late as 1673, the Massachusetts colonists made and used wampum as legal-tender money. In the twelfth century, in the reign of William I., the Sicilian Government used leather legal-tender money with which gold and silver was redeemed. The Chinese Government, by its fiat, coined money made of the inner bark of the mulberry tree, as late as the fourteenth century. The Roman Government made money of both wood and leather, 700 years B. C. France made leather money in 1360, and Spain in 1574. Jevon, in his work entitled " Money and the Mechanism of Exchange," informs us that a fiat money composed of leather was used in Persia and Tartaryin the fourteenth century; that this money was full legal-tender, and at that time, there was no other money coined within the empire. Seneca, writing of the Spartans, says: "They used leather money, having a stamp to show what value it represented, and by whose authority it was issued." FINANCIAL CATECHISM. 33 Jonathan Duncan says: " From the reign of Henry I. to the establishment of the Bank of England, the legal-tender money of England was made of wood. These were called exchange tallies, and sustained the trade of England until the Bank of England was created." During the reign of Qaeen Catharine of Russia, that gov- ernment was at war with Turkey. The metallic money was not sufBcient to sustain the nation. The government issued treasury notes, which carried it through the war successfully. It done the same thing in order to carry on its war with N apoleon. So popular was this national fiat money with the people, that before it was withdrawn from circulation, it commanded a premium over coin. By the fiat of the British Government, the notes of the Bank of England were made legal-tender money from 1797 until 1823. This money sus- tained the government during its wars with the French, and the war of 1812 with the United States. In 1813, the allied powers of Russia, Prussia and England, in their attempt to conquer Napoleon discovered that their gold and silver money had retired from circulation, and could not be relied upon. The notes of the banks of the several powers were not international money, and would not support them. The three nations, by agreement, issued a joint paper fiat money, with which they prosecuted the war to a successful termina- tion. The credit of France was shaken after the abdication of Louis Philippe, and the change to a Republican form of government, in 1848. The Bank of France was unable to procure coin enough to conduct its legitimate business; its circulation was necessarily greatly reduced, which threw the people into idleness for want of means to stimulate the industries of the country. In this condition of things the government took charge of the bank, and by its fiat, made the notes full legal-tender, and increased its circulation to six hundred million dollars, being a much larger amount than it had in circulation before. This money was the money of the government, and always at par with coin. S4 FINANCIAL CATECHISM. France was conquered by Germany in 1870-71; and beside the loss of two of her most valuable provinces, she was com- pelled to pay Germany an indemnity of one billion one hundred million dollars. The bank and the country were both in a prostrate condition. But the government again took charge of the Bank, making its notes full legal-tender, and increasing its issues two hundred millions. These notes depended entirely upon the credit of the government for their par value, for the bank had suspended specie payment, and never has professed to pay coin since. These notes are preferred to coin by the people on account of their greater convenience and the implicit confidence they place in the integrity of their government. Q. What was the character of the money issued during the revolution by the Colonial Congress ? A. It had but little of the form or character of money. The Colonies had surrendered their individual Sovereignty to the Colonial Congress, but they had not endowed it with the power to collect customs or coin money. As a government, it had no power to collect revenue, neither had it any revenue to collect. But, notwithstanding its weakness, Congress issued $200,000,000 of paper money, which carried our fathers through the great struggle for liberty against one of the most powerful nations on the earth, and provided the means for defense until 1780, when France loaned them five million dollars in coin, and assisted them to establish their independence. Six millions of this continental money was issued prior to the Declaration of Independence. Q. What was the final result of the issue of this money by the Colonial Congress? A. The first result was their success in securing their independence, which gave them a national character. Q. Did not th's money largely depreciate in value? A. It did. Not because it was fiat money, for it promised to pay in coin when there was no coin to pay with, and no power was obligated to pay it. FINANCIAL CATECHISM. 35 Here is the form of the continental notes : " This note entitles the bearer to receive Spanish mill dollars or the value thereof in gold or silver, according to the resolution of Congress of the 10th of May, 1775." These notes circulated at par until the most critical peiiod in the revolutionary struggle, when the faith of the people was shaken with regard to their success; and knowing that the notes could not be paid in case of the failure of the colonies to establish their inde- pendence, they were placed at a discount, and when confi- dence was once lost, the Tory element exerted its power to destroy it as money, in order to weaken the colonial govern- ment. Added to this, the English flooded the country, with counterfeits, so that but few could distinguish it from the genuine. ' These circumstances, all combined, reduced the value of the notes until a one pound note was only worth two shillings and six pence, while many of them were sold at a much greater sacrifice. The Colonial Congress, in 1779, passed an act pledging the faith of the United Colonies for their payment, but having no credit abroad, and no coin to pay with, this assurance did not satisfy the holders, and, believing that they would be an entire loss, many disposed of them for any thing they could get. These notes lacked the properties essential for their suc- cessful use as a circulating medium. They were not made legal-tender for private debts or public dues; but they were not an entire loss. On the 10th of April, 1780, Congress passed the following resolution : " Resolved, That when Congress shall be furnished with proper documents to liquidate the depreciation of the continental bills of credit, we will, as soon thereafter as the state of public finances will permit, make good to the line of the army and the indepen- dent corps thereof, the deficiency of their original pay occasioned by their depreciation." — Journals of Congress, vol. S,p. 447 There were more than fifty acts of Congress, running from 1783 to 1832, providing for liquidating the debts contracted by the depreciation of the value of the continental money 36 FINANCIAL CATECHISM. during the period of the revolution. Some of the best lands in the world were dedicated by the government for that pur- pose ; so that, notwithstanding these notes depreciated in value for a time, the government of the United States has fully liquidated every claim, which has been duly presented, for loss by such depreciation. From 1777 to 1784, the territory, of which Tennessee is constituted, formed a part of North Carolina. In 1785, the Tennesseeans, becoming dissatisfied with their government, organized a state government under the name of " Franklin," which was maintained for several years. This state after- ward surrendered its organization, and its territory was again attached to North Carolina. Daniel Webster, in a speech delivered by him on the currency question in. 1838, refers to this organization, and quotes the statute providing for the payment of the salaries of the officers. We insert the act in full in order that our readers may see that these unsophisticated pioneers did not consider it neces- sary to base their currency on gold and silver. They were hunters and could get deerskins, and converted them by fiat of law into legal-tender money. Here is the statute: •' Be it enacted by the General Assembly of tJu State of Franklin, and it is hereby enacted by the authority of the same, " That, from the first day of January, 1789, the salaries of the officers of the CommoniAealth be as follows: " His Excellency, the Governor, per annum, 1,000 deer skins. "His Honor, the Chief Justice, per annum, 500 deer skins. " The Secretary to His Excellency, the Governor, per annum, 500 raccoon skins. " The Treasurer of the State, 450 raccoon skins. "Each County Clerk, 300 beaver skins. "Clerk of the House of Commons, 200 raccoon skins. '■ Members of the Assembly, per diem, 3 raccoon skins. "Justices' fees for signing a warrant, 1 muskrat skin. "To the Constable, for serving a warrant, 1 mink skin. " Enacted into law the 18th day of October, 1789, under the great seal of the State." Q. Were not the French assignats fiat money ? A. No. They were based on the confiscated lands of banished priests and nobles. When the French people de- FINANCIAL CATECHISM. 37 posed their king in 1790, and declared for a republic, a large amount of the land in Prance was held by priests and nobles, who had formed an aristocracy which had become so arrogant and overbearing that it produced a revolution. When the revolutionists came into power, they banished the priests and nobles and confiscated their property. The new government issued these notes, not on the faith and credit of the nation, but payable in coin as it was realized from these confiscated estates. Q. Did not this money depreciate in value and finally become worthless ? A. It did depreciate in value, but did not become worth- less. From 1790 to 1792, one billion two hundred million francs, equal to about two hundred and forty million dollars, was issued and circulated as money, never in that time falling below ten per cent, discount for coin ; though money dealers done all they could to discredit it. The government very unwisely continued to issue on this basis, until the amount in circulation reached forty-five billion five hundred and sev- enty-eight million of francs, or nine billion dollars. This amount was entirely beyond the demands of commerce ; but it was still worth sixty cents on the dollar in coin for a con- siderable time. These notes, like the continental notes, were counterfeited extensively by those opposed to their circulation as money, in order to destroy their credit with the people. The fur- ther fact that schisms arose in the revolutionary government, such as gave evidence of its early dissolution, and the prob- able return of the confiscated estates to their original owners, destroyed the confidence of the people in the assignats, until it required eighteen dollars of this money to purchase one dollar in coin. As the evidence of this destruction of the government grew more conclusive, the money continued to decline in value. At this juncture an edict was issued re- quiring that it be received at the value to which it had fallen, and authority given to enter any of the confiscated lands with 38 FINANCIAL CATECHISM it at this reduced value. The peasantry of the country availed themselves of this opportunity and invested their assignats in small tracks of the confiscated lands, securing themselves homes vrhich no government has dared to take from them. Owning them in fee simple, they have no rents to pay, and are able to enjoy the fruit of their own labor. They are now able to make and save money; as is proved by the fact that when the first payment of two hundred and fifty million dol- lars fell due to Germany as indemnity for the war of 1871-72, this class of farmers advanced all the money. So that, not- withstanding the depreciation of the assignats in value as compared with coin, France is a richer nation to-day than it would have been had they never been issued. The French people realize this fact; and in 1848-49, and again in 1870-71, when panics occurred in the country, the notes of the Bank of France were increased in volume sufBcient to meet the demands of commerce, and made full legal-tender by the fiat of the government. These notes never depreciate, because they are fiat money. The assignats depreciated because they promised to pay coin which the government had not and could not get, just as all notes must depreciate when issued on a coin basis, unless every dollar put in circulation is rep- resented by a coin dollar in the Treasury. Q. Have we any instances in which paper money issued by the fiat of any government has proved a safe and reliable currency? A. Many instances. In 1770 the Russian government issued its own notes, which sustained the government through two wars, and the people were so well satisfied with them as money, that they commanded a premium over coin. The English government made the notes of the Bank of England full legal-tender money, from 1797 to 1823; and we are informed by history that the natioji never enjoyed such prosperity as it did during that twenty-six years. In that period, her currency was infiated from forty to one hundred and twenty-seven million dollars. FINANCIAL CATECHISM. 39 Sir Archibald Allison, in speaking of the great benefit de- rived from this act of the government, says: " It was ushered in by a combination of circumstacces the most calamitous, both with reference to external security and internal industry, yet it terminated in a blaze of glory and flood of prosperity which have never, since the beginnins; of the world, descended on any nation." The government of the United States issued treasury notes in 1812, 1813, 1814 and 1815, and made them legal-tender for all debts due the government. The people were so well satisfied with this money that it required two acts of Con- gress to withdraw it from circulation. Treasury notes were issued and made lawful money of the United States in 1837, and used until 1848, at the close of the Mexican War, being always at par with coin, and were at a premium in Mexico during the war. During the great panic of 1857, when the banks suspended, the government issued twenty million dollars of legal-tender notes, with which the business of the country was transacted. Since 1861 the Congress of the United States has exercised its legitimate power in the issue of demand notes, legal-tender notes, 7.30 notes, three years' interest notes, compound in- terest notes, certificates of indebtedness, certificates of deposit for coin, and 3 per cent, interest certificates; these were all made money of the government and circulated as such. In 1873, when the banks all suspended, and were unable to meet their obligations, they besought the Secretary of the Treasury to pay out the reserve of forty-four millions of legal-tender money which had been held in the Treasury after it had been retired from circulation under the contrac- tion policy, in order to save them from destruction. At their solicitation the Secretary paid out twenty-six million dollars of this reserve, which tided them over the great panic until they could get themselves in a condition to transact business. 40 FINANCIAL CATECHiaM. Q. If these notes issued by the government are safer and more reliable in cases of emergency than other paper money, why do bankers and men dealing in money always oppose their issue and circulation? A. For the very simple reason that it interferes with their business. The business of these aentlemen is to make money by usury — ^by charging the people a certain per cent, for the use of money. Every dollar issued and paid out by the government in its disbursements to the people, robs the banker of so much usury. Like Demetrius and the crafts- men at Ephesus, they know that if such money is allowed to circulate, their craft is in danger, for it is by this they have their wealth. Q. How does the money issued by the government rob the bankers of usury? Please explain. A. Give us your attention and we will try to make that clear to your comprehension. The government pays out, for ordinary expenditures, about two hundred and fifty millions of dollars each year. If it uses its own legal-tender money it would cost the people about 1 per cent, to pay the expense of issuing it. But, suppose the government refuses to issue legal-tender paper money, and has not gold and silver enough to defray its expenses, it is compelled to borrow from the banks, or realize the money by the sale of interest-bearing bonds. In either case, if the banks had the entire control of the paper money of the naiton, the rate of usury would never be less than 6 per cent. In this case, while the money of the gov- ernment would cost the people 1 per cent., or two million five hundred thousand dollars per annum, the money of the banks would cost 6 per cent., or fifteen million dollars for the same amount for one year. This makes a difference of twelve million five hundred thousand dollars, which the government can save to the people each year by issuing its own money instead of delegating that power to the banks. Under the operation of the national banking system it is FINANCIAL CATECHISM. 41 still worse. The banker buys a government bond for one hundred thousand dollars, bearing 3^ per cent, usury, and deposits it with the Treasurer of the United States, and receives in return ninety thousand dollars in bank notes, which he loans to the people at 6 per cent, per annum. The people pay the 3^ per cent, per annum on the whole of the bond of one hundred thousand dollars and 6 per cent, on the ninety thousand dollars of bank notes, making the national bank notes cost them nearly 9 per cent, per annum, or 8 per cent, more than the legal-tender money of the government costs them. Eight per cent, on two huadred and fifty million, is just twenty millions o£ dollars taken from the banks each year by the use of United States currency, instead of bank currency, in the disbursements of the gov- ernment alone. We have now, in round numbers, seven hundred millions of dollars of paper money in circulation. Eight per cent, on this amount makes fifty-six millions of dollars of tax the people would pay annually on that amount of national bank currency, more than for legal-tender currency, which would only cost seven million. So, you see, the use of money issued by the government would rob the banks annually of fifty-six million dollars. This is the reason why the bankers always oppose the issue of paper money by the government. Q. That appears to be clear, but are these national bank- notes really money? A. They are only money for that which the government by its fiat has made them a legal tender. In fact, they are only certificates of corporate indebtedness, or promises to pay money endorsed by the government. When they go into circulation they represent so much debt, and whenever these notes are loaned to individuals the persons borrowing pay usury on what the banker owes. So, that strictly speaking, the banker lives in luxury on the usury on what he owes. Q. Is all money, both coin and paper, issued by a govern- ment of competent jurisdiction fiat money? 42 FINANCIAL CATECHISM. A. It is, so far as it is money. If the fiat of the nation makes it full legal-tender, it is money in the broadest sense. If it makes it a--partial legal tender it is money in a limited sense. The United States Government by its fiat makes its gold coins and its silver dollars full legal-tender; which makes them money for every purpose within the limits of the government. It has restricted the legal-tender note and the national bank note in their legal-tender properties; hence they are money in a limited sense. By the fiat of the gov- ernment the greenback is money for every purpose except for duties on imports and interest on the public debt; for these purposes they are not money. By the fiat of the gov- ernment, the national bank notes are money for taxes, excises, public lands, and all other dues to the United States, except for duties on imports; also for all salaries and other debts and demands owing by the United States to individuals, cor- porations and associations within the United States, except interest on the public debt, and in redemption of the national currency. For these purposes, and in transactions between individuals they are not money, and only used as money by consent of the parties using them. Q. Have not the legal-tender notes been used for paying interest on the public debt and for paying customs dues? A. Yes. But in direct violation of law. The law posi- ■ tively provides that the interest on its bonds and customs dues shall be payable in coin, and as positively provides that the greenback shall not be a legal tender for these purposes. So that when it has been used for paying customs dues or interest on bonds, it was used just as the national bank note is used between individuals; because the creditor preferred it to coin, and not because it was money for that purpose which could be paid or not at the option of the debtor. Q. How has the greenback been made receivable for duties on imports? A. By the order of the Secretary of the Treasury to the FINANCIAL CATECHISM. 43 collectors of customs at the different custom houses in the United States. Q. How long have they been so received ? A. Since a little before the 1st of January 1879, the time fixed by the law of 1875 for the resumption of specie payment. The government had in circulation at that time ^376,000,000 of this partial legal-tender money, and only $133,000,000 of coin in the treasury to redeem it with. So long as these notes were not received at the custom house for duties on imports they were held at a discount at the banks. Secretary Sherman knew that unless they were raised to par with coin, the treasury would be drained in less than one week after the 1st of January, 1879. In order to prevent this drain he ordered the collectors of customs to receive them for customs dues, which immediately raised them to par with gold. As soon as this occurred they were preferred to coin by those who held the government obligations, and they requested that payments be made to them in legal-tender notes instead of coin as the law requires. Q. Does not this contradict the proposition that all money is made by the fiat of law ? A. No. The fiat of the nation made these notes money for every purpose except for duties on imports and interest on the public debt. Secretary Sherman, the financial agent of the government, took the responsibility of ordering his subordinates in the custom house to receive them for duties the same as coin. The government has not countermanded his order, and these notes are used as money in the custom house, not as legal-tender, but a? the national bank notes are used between individuals, by consent of parties; but the money property of the bills are in no way affected thereby. Q. Is there any other instance in which United States treasury notes, which were not made full legal-tender by law, have raised from a discount to par with coin by the order of the Secretary of the Treasury that they should be received for duties on imports? 44 FINANCIAL CATECHISM. A. Yes. In accordance with the laws of July 17 and August 6, 1861, $50,000,000 of treasury notes were issued and made payable in coin on demand, but were not made legal-tender. When the first of these notes was issued the banks professed to pay coin and refused to receive them. Though the government had guaranteed their payment in coin on demand, the banks placed them at a discount. Mr. Chase, who was then Secretary of the Treasury, as soon as he ascertained this fact, telegraphed to the Assistant Treas- urer in the city of New York to receive these notes in pay- ment of customs dues. As soon as this order was made by the Secretary the notes sprang to par and the banks suspended, while the demand notes remained at par, and went to a pre- mium the same as gold. In 1862, $10,000,000 more were issued, making $60,000,000 in all. This act, February 3, 1862, made both issues legal- tender. They were always thereafter at par with gold, and on account of their great convenience, sometimes at a prem- ium. To the extent of their circulation they took the place of gold; but the bankers and money dealers of Wall street denounced this money as beneath the dignity of a great nation, and demanded its withdrawal from circulation. In obedience to their demands provision was made for its withdrawal from circulation, but it was not demonetized by law; and the people liked it so well that they would not re- turn it to the Treasury and exchange it for coin, as Seen by the report of the Secretary of the Treasury for July 1, 1879, which shows that $61,470.00 was still in circulation eighteen years after the provision had been made for its withdrawal. Q. Are there any other instances in which the United States Grovernment has issued full legal-tender money ? A. Yes. The government has issued certificates for the deposit of both gold and silver coin. These certificates bear no interest and are legal-tender for all debts, public and private. The law limited the issue to $50,000,000. There FINANCIAL CATECHISM. 45 has been from $30,000,000 to $50,000,000 of these certificates in circulation since 1863. Q. Is it not a fact that in every instance where the United States Government has declared anything but gold and silver money, it has been done in violation of the constitution ? A. No. The constitution is entirely silent on the sub- ject. It simply authorizes Congress to coin money and regu- late the value thereof, and leaves it discretionary with that body to select the material upon which it will stamp the design and denomination of the money. It further delegates to Congress the power to make all laws which shall be neces- sary and proper for carrying into execution the foregoing power, and other powers vested by this constitution in the government of the United States, or in any department or officer thereof. By these clauses of the constitution. Congress is not only endowed with power to select the material of which it makes money, but it is given full power to pass such laws as are necessary for the enforcement of obedience to the laws which they pass declaring what is money, as for the enforcement of the law for collecting revenue. Q. Has it not been contended by our ablest statesmen and wisest and most experienced financiers, that Congress is not clothed by the constitution with power to issue full legal- tender paper money, unless as a last resort, to save the na- tion ill time of war. A. This objection has been raised and strongly urged by statesmen of noted ability; but with all their legal acumen, they have been unable to point out any clause in the consti- tution which in the least degree abridges the power of Con- gress to " coin money and regulate the value thereof ;" while all through the history of America, from the first settlement of the British Colonies to the adoption of the constitution of the United States, and on down through one hundred years of national existence, our purest patriots and statesmen of unquestioned ability have contended that the 46 FINANCIAL CATECHISM. right to make money was inherent in the people until it was delegated to their representatives by the formation of a government. This power being delegated by the constitu- tion to Congress, it has full power to issue money. Benjamin Franklin, one of the greatest philosophers and purest statesmen of his day, and the originator and defender of the Pennsylvania system of Colonial paper money, when called before a committee of Parliament in 1764, after show- ing the great advantage the use of the paper money had been to the Colony, summed up in these words: " On the whole, no method has hitherto been formed to establish a medium of trade, in lieu of coin, equal in all its advantages to bills of credit, founded on sufflcent taxes for discharging it at the end of the time, and in the meantime, made a general legal- tender." Thomas Jefferson, who has the reputation of having drafted the constitution, and should certainly understand with what power it clothes Congress, when writing to Mr. Epps on the danger of bank associations, says : " Bank paper must be suppressed, and the circulating medium must be restored to the nation, to whom it rightly belongs. ****** It is the only resource which can never fail them, and it is an abundant one for every necessary purpose. Treasury bills, bottomed on taxes, bearing or not bearing interest, as may be found necessary, thrown into circulation, will take the place of so much gold and silver." Albert Gallatin, who was twelve years Secretary of the Treasury, said: "The right of issuing paper money as currency, like that of gold and silver, belongs exclusively to the nation." Daniel Webster, who stands acknowledged as one of the most profound constitutional lawyers and statesmen the world has ever produced, in a speech delivered in the United States Senate on the 31st day of January, 1833, said: "The constitutional power vested in Congress over the legal currency of the country is one of the very highest powers and the exercise of this high power is one of the strongest bonds of the union of the States. It is not to be doubted that the constitu- tion intended that Congress should exercise a regulating power a power both necessary and salutary, over that which should con- stitute the actual money of the country, whether that money were coin or the representative of coin." FINANCIAL CATECHISM. 47 President Madison said, in his message to Congress in 1816: " It is essential that the nation should possess a currency of equal value, credit and use wherever it may circulate. The con- stitution has intrusted Congress, exclusively, with the power of creating and regulating a currency of that description." In a speech delivered in the Senate on September 28, 1837, Mr. Calhoun used this language: " The constitution does not stop with this grant of the coinage power to Congress. It expressly prohibits the states from issu- ing bills of credit. The states are therefore prohibited from issu- ing paper for circulation on their own credit, and this provision furnishes additional and strong proof that all circulation, whether coin or paper was intended to be subject to the regulation and control of Congress. The constitution declares that Congress shall have power to regulate commerce, not only with foreign nations, but among the states. This is a full and complete grant and must include authority over everything which is a part of commerce, or essential to commerce. And is not money essential to commerce? No man in his senses will deny that. If Congress then, has power to regulate commerce, it must have a control over that money, whatever it may be, with which commerce is actually carried on, whether that money be coin or paper. The regulation of money is not so much an inference from the com- mercial power of Congress as it is a part of it. Money is one of those things without which, in modern times, we can form no idea of commerce. I insist that the duty of Congress is commen- surate with its power. A general and universally accredited currency, therefore, is an instrument of commerce, which is necessary to its just advantages, or, in other words, which is essential to its beneficial regulation. Congress has power to establish it, and no other power can establish it, and therefore Congress is bound to exercise its own power. It is an absurdity on the very face of the proposition to allege that Congress shall regulate commerce, but shall nevertheless abandon to others the duty of sustaining and regulating its essential means and instru- ments." Mr. Dallas, who was Secretary of the Treasury in 1816, said in his report of that year: "Whenever the emergency occurs that demands a change of system, it seems necessarily to follow that the authority which was alone competent to establish the national coin is alone com- •petent to create a national substitute." In the annual message of President Madison, of Decem- ber 5, 1815, he said: " It may become necessary to ascertain the terms upon which the notes of the government (no longer required as an instru- ment of credit) shall be issued upon motives of general policyas a common medium of circulation." 48 FINANCIAL CATECHISM. John C. Calhoun said in a speech in the United States Senate, on the 18th of December, 1837: " I would ask, then, why should the government mingle its credit with that of private corporations ? No one can doubt but that the government credit is better than that of any bank- more stable and more safe. Why, then, should it mingle its credit with the less perfect credit of those institutions ? Why not use itsowncredittotheamountof its own transactions? Why should it not be safe in its own hands, while it shall be considered safe in the hands of eight hundred private institutions scattered all over the country, and which have no other object than their own private profits, to increase which they almost constantly extend ■ their business to the most dangerous extremes ? And why should the community be compelled to give 6 per cent, discount for the government credit blended with that of the banks, when the superior credit of the government could be furnished seperately, without discount, to the mutual advantage of the government and the community';' Why, let me ask, should the government be exposed to such difficulties as the present, by mingling its credit with the banks when it could be exempt from all such bj using by itself its own safer credit? It is time the community, which has so deep an interest in a sound and cheap currency, and the equality of the laws between one portion of the country and another, should reflect seriously on these things, not for the pur- pose of oppressing any interest, but to correct gradual disorders of a dangerous character, which have insensibly in the long course of years, without being perceived by any one, crept into the state. This question is not between credit and no credit, as some would have us believe, but in what form credit can best perform the functions of a safe and sound currency. On this important point I have freely thrown out my ideas, leaving it for this body and the public to determine what they are worth, believing that there might be a sound and safe paper currency founded on the credit of government exclusively." President Jackson said, in his message to Congress in 1829: " I submit to the wisdom of the legislature whether a national one (currency), founded on the credit of the government and its resources, might not be devised which would obviate all constitu- tional difliculties, and at the same time secure all the advantages of the government and the country that were expected to result from the present bank." The reference here made is to the United States Bank, the charter of which expired in 1837, and was not renewed. Senator Wilson, of Massachusetts, than whom there was no purer statesman in his day, said, in a speech in the Senate in opposition to the Senate amendment to tb 'egal-tender act FINANCIAL CATBCHISM. 49 which robbed the greenback of the most important feature of its legal-tender property : " I venture to express the opinion that ninety-nine out of every hundred of the loyal people of the United States are for the legal- tender clause. I do not believe there are one thousand people in the State I represent who are not in favor of it. The entire busi- ness community, with hardly a single exception — men who have trusted out in the country in commercial transactions their tens and hundreds of millions— are for the bill with the legal-tender clause. Yes, sir, the people in sentiment approach unanimity on this question. I believe that no measure that can be passed by Congress, unless it be a bill to provide revenue to support the government, will be received with so much joy as the passage of the bill with thejegal-tender clause." Thaddeas Stephens, whose name will go down in history to future generations fes one of the ablest statesmen and most consciencious representatives that ever occupied a seat in the American Congress, when the bill was returned from the Senate with the exceptions to the legal-tender clause, after denouncing the amendment as an outrage upon the sol- diers and the people at large for the benefit of the few, said: " I approach this subject with more depression of spirits than I ever approached any question. * * * i have a melancholy foreboding that we are about to consummate a cunningly devised scheme which will carry great injury and great loss to all classes of the people throughout the Union, except one. No act of legis- lation of this government was ever hailed with so much delight throughout the whole length and breadth of the Union, by every class of people, without exception, as the bill we passed and sent to the Senate. * * * * It is true there was a doleful sound came up from the caverns of the bullion brokers and the salons of the associated banks. Their cashiers and agents were soon on the ground and persuaded the Senate, with little delibera- tion, to mangle and destroy what it cost the House months to digest, consider and pass. They fell upon the bill in hot haste and so disfigured and deformed it that its very father would not know it. * * * * It now creates money, and by its very terms declares it a depreciated currency." A host of other names of the most illustrious men of the country, all bearing testimony to the fact that they all un- derstood the constitution to give full power to issue full legal- tender paper money, and make it the current money of the nation, could be given. But the limits of this work will not admit of further quotations from this source. Q. Have not a number of men occupying high positions 4 50 FINANCIAL CATECHISM. in the government, entertained and expressed a different opinion with regard to the power delegated to Congress by the constitution ? A. Yes. But such present their objections as doubts, without showing any constitutional grounds upon which such doubts are predicated. Senator Sherman said, in a speech delivered in the Senate in 1863, as chairman of the finance committee of that body : " The issue of government notes can only be a temporary meas- ure, and is only intended as a temporary measure, to provide for a national exigency." Secretary Chase, in his report in 1862, objected to legal- tender notes, not because the constitution did not authorize Congress to issue them, but on account of the " facility of excessive expansion." In Secretary Bristow's report to Congress, in December, 1875, he says, in speaking of the great financial distress of that period : " These disastrous disturbances have been brought about in our own country by over-trading, over-credit and excessive enterprise of a speculative character, stimulated by too great nbundance of promises to pay, existing in the form of currency not based upon or convertible into the only actual money of the world and the constitution — gold and silver." The Secretary simply assumes, without giving any reason therefor, that gold and silver is the only money of the world and the constitution, in the face of the fact that there is no such thing as a money of the world or of the constitution. As we have previously shown, every nation in the world makes its own money, and the constitution is silent upon the kind of material Congress shall select and make the money of the United States. Secretary Sherman, in his report to Congress in 1879, says: " It would seem, therefore, that now, and during the maintenance of resumption, it (the legal-tender clause) was a useless and objec- tionable assertion of power, which Congress might now repeal on the ground of expediency alone. When it is considered that the constitutionality is seriously contested, and that from its nature it is subject to grave abuse, it would now appear to be wise to with- draw the exercise of such a power, leaving it in reserve to be again FINANCIAL CATECHISM. 51 resorted to in such a period of war or grave emergency as existed in 1862." President Hayes said, in his message to Congress, December 2, 1879: " It is my „rm conviction that the issue of legal-tender paper money, based wholly upon the authority and credit of the govern- ment, except in extreme emergency, is without warrant in the constitution, and a violation of sound financial principlos." These objections are mere assumptions, without a shadow of proof for their establishment, the constitution being en- tirely silent as to the kind of material Congress should select. Q. Does not the word coin, in the constitution, imply that all money should be made of metal? A. No. The words coin and print are synonymous terms, and are iised interchangeably in Europe. If we construe coin- ing to mean melting and casting the metal into moulds, that would not constitute money. It must pass through the dies and have the legal device stamped or printed thereon before it becomes money, whether of gold, silver or paper. As it is the stamping or printing in obedience to law that imparts the money property, the word coin in the constitution means to stamp or print, and this can be done on paper as well as on gold. Q. If Congress so understood the constitution, why did it pass a law in 1792 for establishing a mint for coining metallic money? A. The fact that metallic coins, used as money by other nations, found their way to this country, and in order to utilize them as a part of the currency, it was expedient to establish a mint and coin them into money of the United States instead of using them with a foreign stamp, which did not indicate the value set upon them by Congress. And, as gold and silver bullion were articles of commerce, it was thought to be good policy to prepare for its coinage in order to swell the amount of money so as to meet the demands of commerce at home, and have a metallic reserve to adjust balances with other nations. But Congress fully recognized 52 FINANCIAL CATECHI8it. its power, under the constitution, to create paper money, as to coin metallic money, for, on the 25th of February, 1791, it passed a law chartering the First United States Bank for a term of twenty years, with a capital stock of f 10.0D0,000. Becoming satisfied that it had transcended its constitutional authority in giving into the hands of a private corporation the power to issue money, it so amended the charter, on the 2d day of March following, that the government should own $2,000,000 of the stock and have a controlling voice in the directory. This act shows that that Congress not only understood that the constitution clothed it with power to issue paper money but to form a partnership with individuals for that purpose, which it certainly could not do if it had not power to issue it itself. This bank was authorized to issue bills of credit, which were made legal-tender for all debts due the United States. After the expiration of this charter, the Congress of 1812, 1813, 1814 and 1815 issued Treasury notes, all of which were made legal-tender. The Congress of 1816, chartered the Second United States Bank for twenty years, with a capital of $35,000,000, the government owning $7,000,000 of the stock. In this charter the government agreed to relinquish to the bank the power to issue all legal-tender paper money for the term of twenty years, in consideration of which grant the bank paid the government $1,500,000. Thus ^Congress not only recognized its power to issue legal-tender paper money, but asserted the right (which is nowhere guaranteed in the constitution) to transfer a part of this power to private individuals for a consideration. If that body did not possess such power under the constitution, it could not transfer it to others, for it is an axiomatic fact that no legislative body can transfer any power to an indi- vidual or corporation which it does not itself possess. Q. As there appears to be so wide a difference of opinion as to the power conferred by the constitution upon Congress to issue legal-tender paper money, why has the matter not FINANCIAL CATECHISM. 53 been brought before the courts and settled by judicial decision ? A. It has in a number of instances. When the Second Bank of the United States went into operation in 1816, a large amount of the treasury notes of 1813, 1814 and 1815 were in circulation. These notes were legal-tender for all debts due the government, and circulated among the people on a par with gold. The government having sold to the bank the exclusive privilege of issuing all the legal-tender paper money of the United States for a term of twenty years, the bank claimed that the government, permitting these treasury notes to remain in circulation, was violating the contract entered into with the bank, and demanded their withdrawal. In 1817, Congress, in obedience to this demand, passed an act calling in all the said notes, a}Ld providing that they should be receivable at the treasury only. The people paid no attention to this act, knowing that it did not demonetize the notes as they were still receivable at the treasury; they therefore held oji to them and kept them in circulation. In 1818 a business firm in Boston tendered some of these treasury notes for duties on imports, for which they had formerly been received. The District Attorney in Boston instructed the collector of the port to refuse to receive treasury notes for duties and they were so refused at the Custom House. The government brought suit for the duties. The merchant pleaded a tender of treasury notes. The government responded that treasury notes were not a legal-tender. The case was agued before Judge Story, in 1819. His review of the case is very elaborate, covering eighteen pages. He gave judgment in favor of the defendants. In his decision he says: " Treasury notes were and are a legal-tender for everything for ' which the law makes them receivable." (2d Mason, pp. 1 to 18.) The result of this decision was to keep the notes in circu- lation, notwithstanding the protest of the bank, until the 3d day of May, 1822, when Congress passed another act, provi- 54 FINANCIAL CATECHISM. ding that these treasury notes should not be received by any collector of revenue in the United States, anjj that they should be received and paid at the treasury of the United States only. Congress did not, by these acts, unmake the money which previous Congresses had made, but it threw such restrictions around it as to drive it out of circulation. The decision of Judge Story, though against the government, was never appealed to the United States Court, and stands upon the statute books as the law at the present time. As additional evidence of the recognition of the power of Congress to issue legal-tender paper money in time of peacei by the people and the courts, I quote from a speech delivered in the House of Representatives in February, J1880, by Hon. John M. Bright, of Tennessee, in which he said : " I shall not elaborate the constitutionality of this subject, but will give a synopsis, which I submit to the consideration of any of the objectors in relation to it. I say it has been held to be consti- tutional by Congress in various acts and by the courts in repeated cases ; that it has been held to be constitutional by both parties ; that it has been held to be constitutional by a majority of the state courts of the United States ; that it has repeatealy been held to be constitutional by the Supreme Court of the United States; that it has been acquiesced in by the people of the United States and they have adopted it as their money of account, and that the man who would rush against this question with such an array of authority against him, must be struck with an unaccountable presumption. Now let us look a little in detail at the question. Here is the legislative action of February 25, 1862; July 11, 1862, and March 3, 186?, all declaring it 'lawful money'" and 'legal-tender.' February 4, 1868, when contraction was going too rapidly, another act was passed to prevent the further con- traction of the currency, and stopped it at $."82,000,000. Why was that, if it were unconstitutional when the zephyrs of peace were blowing over the land? Not only so, February 17, 1876, Mr. Kasson offered a resolution in this House which is in the follow- ing language: " 'Resolved, That the constitutional authority of Congress to coin money and regulate the value thereof, and of foreign coins, does not include the authority to issue the paper of the government as money, and in the judgment of this House the constitution no- where confers on Congress the power to issue, in time of peace, promises or obligations of the government as legal-tender in pay- ment of debts.' " The vote on the resolution stood yeas 9ff, ayes 146, thus denying fene aflnrmative power of the resolution and afflrmingihe opposite— FINANCIAL CATECHISM. 55 that the legal-tenders in time of i)eace were constitutional, and that the authority and power to issue them were found in the constitution. ***** Not only so, but in 1878, there was a joint resolution passed here — that is of recent date, after ample room for reflection — to suspend the further retirement of these notes, which were said to be unconstitutional. The joint resolution was passed by a decided majority. " Up to the time of the decision of the Supreme Court of the United States, in the case ot Knox against Lee, 12 Wallace, page 457, there were fifteen state courts which had affirmed the consti- tutionality of it, independent of the Supreme Court of the United Stt^tes. "I have six cases from the Supreme Court of the United States: Knox against Lee, 12 Wallace, 4.57; Tribilcox against Wilson, 12 Wallace, 687 ; Dooley against Smith, 13 Wallace, 604 ; Bigler against Waller, 14 Wallace, 297; K. B. Company against Johnson, 15 Wallace, 195; Broderick against McGraw, 15 Wallace, 639 — all affirming the constitutionality of it. Chief Justice Chase himself, inHepburn against Griswold, -stated that the constitutionality had never been called in question except as to its retrospective effect ; and then, by the submission of the people to this and the con- temporaneous construction of other courts bring to its relief a general principle of law which has all the force of law itself. The mere fact that there is a concurrence is an argument in favor of the proposition, which is concurred in by the different courts." Here is an. array oi: testimony which it would seem ought to satisfy the mind of every honest doubter, that the con- stitution clothes Congress with unlimited power in the selection of the material of which it creates the money of the United States; but in order to remove every possible doubt on the subject, I will give a synopsis of the decision rendered by the Supreme Court of the United States in the case of Knox vs. Lee, and Parker vs. Davis, which were con- solidated and brought before the court and fully argued for the purpose of obtaining a decision from that body which would put the question of the constitutionality of the legal- tender acts of Congress, and its power to determine when such power should be exercised, fully at rest. I give the language of the court, as recorded in 12 Wallace, United States Supreme Court reports. It says: "Before we can hold the legal-tender acts unconstitutional, we must be convinced they were not appropriate means, or means conducive to the execution of any or all of the powers of Congress or the government, not appropriate in any degree (for we are not 56 FINANCIAL CATECHISM. judges of that degree of appropriation), or we must hold that they were prohibited. Page 509." On page 542 of these reports we find this language: " The degree of the necessity for any congressional enactment, or the relative degree of its appropriateness, is for consideration in Congress, not here. When the law is not prohibited, and is really calculated to effect any of the objects entrusted to the government, to undertake here to inquire into the degree of the necessity, would be to pass the line which circumscribes the judicial department, and to tread on legislative grounds." It will be seen by the above quotations, that the court did not decide the simple question of the constitutional power of Congress to issue legal-tenders in time of war, but the whole matter of the necessity of all acts for whatever purpose not prohibited by the constitution. The court continues on page 545 : "The constitution was intended to frame a government as distinguished from a league or compact; a government supreme in some things over states and people. It was designed to provide the same currency having a uniform legal value in all the states. It was for this reason the power to coin money and regulate its value was conferred upon the federal government, while the same power to emit bills of credit was withheld from the states. The states can no longer declare what shall be money or regulate its value. Whatever power there is over the currency is vested in Congress. // the power to declare what is money is not in Congress it is annihilated." Still further, on page 546, the court saj''s: " And, generally, when one of such powers was expressly denied to the states only, it was for the purpose of rendering the federal power more complete and exclusive; how sensible, then, its framers must have been that emergencies might arise where the precious metals might prove inadequate to the necessities of the government and the demands of the people — when it is remem- bered that paper money was almost exclusively in use in the states as a medium of exchange, and when the great evil sought to be remedied was the want of uniformity in the current value of money ; it might be argued, we say, that the gift of power to coin money and regulate the value thereof was understood as con- veying general power over the currency, and which had belonged to the states and which they had surrendered." By this decision the whole power over the currency, whether metallic or paper, is vested in Congress, by the con- stitution, to regulate in its wisdom for the interests of the whole people. This question being settled, the court proceeds FINANCIAL CATECHISM. 57 to decide upon the power to make whatever the government issues as money, legal-tender. On pages 548 to 549 it says: "By the obligation of a contract to pay money is to pay that which the law shall recognize as money when the payment is to be made. If there is anything settled by decision it is this, and we do not understand it to be controverted. ISio one ever doubted that a debt of one thousand dollars, contracted before 1834, could be paid with one hundred eagles coined after that year, though they contained no more gold than ninety-four eagles when the contract was made, and this is not because of the intrinsic value of the coin, but because of its legal value. The eagles coined after 1834 were nob money until they were authorzed by law, and had they been coined before, without a law fixing their legal value, they could no more have paid a debt than uncoined bullion, or cotton, or wheat." Once more, on page 553: " It is hardly correct to speak of a standard value. The consti- tution does not speak of it. It contemplates a standard for that which has gravity or extension; but value is an ideal thing. The coinage acts fix its unit as a dollar, but the gold or silver thing we call a dollar, is in no sense a representation of it. There might never have been a piece of money of the denomination of a dollar. ***** It will be seen that we hold the acts of Congress constitutional as applied to contracts made before or after their passage." Q. Has it not been charged that the Supreme Court was "packed" in order to obtain a decision sustaining Congress in its legal- tender acts ? A. Such charges were made, but only by those who opposed the legal-tenders and contended that their issue and use as money was in violation of the constitution. That such charges had no foundation in fact is more fully demonstrated as the subject becomes more fully and fear- lessly investigated by the people. Three points, then, are definitely settled. First. The only power to issue money and regulate the value thereof in the United States is vested by the constitu- tion in Congress. Second. The constitution does not restrict Congress to any special material of which to construct money. Third. Any money which Congress creates and declares a full legal-tender, will pay any debt, either public or private. 58 FINANCIAL CATECHISM. CHAPTER III. THE FUNCTIONS OF MONET. Question. If monej' is essentially a creature of law, how does it obtain value ? Ansicer. It has no value within itself. Its only value is imparted by law. It is a certificate from the government that the party holding it is entitled to pay any debt, or exchange it for any of the products of labor or other val- uable thing, for the amount of value specified on its face. Q. If it has no value within itself, how can it measure the value of commodities? Must we not have value to meas- ure value? A. No. It is impossible to measure value with value as a uniform standard of measure; for there is no such a thing as a uniform value for anything unless that value is fixed by law. The cost of production is the only true measure of value, and as that is constantly fluctuating, no commodity can be selected, the value of which could be a uniform meas- ure of the value of any other commodity. The legal measur- ing power of money is arbitrary — the amount of each piece a denomination, which represents so much value. In chang- ing these denominational pieces of money for commodities, the value of the commodities are measured by the mentality of the persons dealing, who agree upon such value, and the amount of these denominations, which corresponds with the mental measurement, constitutes the price paid for the arti- cle sold. The dollar being established as the unit of value, and of the mnney of account in the United States, any piece of whatever denomination, is either a multiple or fraction of the unit, and act as vehicles through which property of all kinds is transferred from one person to another, just as the title deed transfers a tract of land from one person to FINANCIAL CATECHISM. 59 another. In this case the value of the land is not measured by the deed of conveyance. It is mentally measured by its productive capacitj'^, its convenience to market and other surroundings which contribute to its value. In this mental measurement the parties agree upon a value which constitutes the price and is equal to a certain number of these denominational units — say one thousand. The party trans- fering the lands makes out and delivers the title deed and the party purchasing delivers the one thousand units of value, which are also title deeds from the goverment to the holder to an interest to the extent of their denominational value, in all the wealth of the nation — just the same as the title deed from the goverment gives the holder thereof a title in fee simple to an interest to that amount of the land of the government. Q. Are we to understand that this denominational title to an interest in the wealth of the government is unconditional, and that it authorizes the holder thereof to appropriate to the amount of its legal value any of the property belonging to the (Jnited States? A. No. Being a medium of exchange, it gives no power to appropriate any property or available thing, only such as are offered for sale. The government owns the public lands, on which it has established a price by law. When it offers any of this land for sale, the holder of the denominational titles called money, can exchange them at their legal value for any such land as he finds unappropriated by any other person. Having made a selection of a tract of land, he surrenders, or pays to the government, his title to an interest in the general wealth of the nation and receives in return a title in fee simple for his tract of land. The only difference between these two titles is, the one given by the government to the individual for the tract of land, must be placed on record, and the land cannot be transferred from one person to another without a deed of conveyance to perfect the transfer, while the denominational title is issued by the 60 FINANCIAL CATECHISM. government to the bearer and may be transferred from person to person without recording each transaction. The land title is a specific title to property already located. The denominational title is a general title giving the privilege to the holder to exchange it for any unoccupied property, labor or other valuable thing. Both titles are equally secured by all the wealth of the government. Q. If I buy a farm and pay five thousand dollars in gold eagles for it, do I not measure value with value? A. No. You mentally measure the farm by its produc- tive capacity, and havine determined in your mind that it is worth five thousand dollars, you transfer to the party of whom you purchase, two hundred and fifty gold eagles, upon which the government has stamped its certificaie that the holder thereof is entitled to pay any debt or obligation with them to the amount of five thousand dollars. The intrinsic value of the gold has nothing to do with measuring the value of the farm; it is the legal value of the eagles that enables you to pay for it. Q If money does not measure value, how does it act as a medium or vehicle of exchange in commerce? A. This is a very important question, and one that vitally effects the prosperity of a country. The real value of all commodities that enter into commerce, is the actual cost of production and distribution. The price is regulated; first, by demand and supply; and, second, by the facilities for production and distribution. Money, then, being the vehicle for distribution, must be furnished in sufficient quantity to supply all the necessary implements for successful produc- tion, and also enough for uniform and speedy distribution of the products of labor to the markets of the world. Q. In what way does the quantity of money effect the products of labor or its distribution ? A. If there is a large amount of money in circulation it increases the value of the products of labor, thereby stimu- lating every industry and furnishing the most approved FINANCIAL CATECHISM. 61 implements for cultivation and manufacturing, thus increas- ing the products of every industrial department, resulting in a large increase in the aggregate productions of the country. This increased amount of production necessarily requires increased facilities for distribution, such as the building of railroads, improvement of water-ways, and the facilities for transportation on them. If money is furnished in sufficient quantity for these purposes, every industry in the country will prosper. Trade will be active and remunerative, civili- zation will advance and the whole community be piosperous and happy. While, with a scarcity of money in circulation, the very reverse of this occurs; production is crippled, labor is poorly remunerated, the agricultural and manufacturing industries languish, fields run to waste because they will not produce enuogh to pay the cost of tillage, the hum of the spindles and the click of the loom cease to be heard in the factories, the fires in the forges go out, merchants are bank- rupted and laborers turned out of employment, become tramps and their families left destitute. This is not bare assumption, but is established by the most positive evidence obtained by the government by actual investigation of the subject for sixteen years — from 1864 to 1880. In the report of the Commissioner of Agriculture for 1878, after showing the decline in the price of farm labor from 1864 to 1878, and the relative cost of living in this period in the different states and territories of the United States, the Commissioner sums up in the following words: " The table given below embraces the results of sixteen annual investigations of the corn crop, and shows our remarkable progress in this branch of production. As in the case of wheat, the first three years included in the table were years of civil war, and a large portion of our corn area was involved in its disasters. Hence the aggregate for those years were abnormally low. The acreage of ]865 was nearly doubled in 1866. and nearly tripled in 1878. During the year last named our cornfields were nearly equal in area to the State of Kansas. " The average product per acre was substantially the same throughout, amounting to 26.6 bushels during the latter eight years, against 26.8 bushels in the previous eight years. Our four last crops each exceeded considerably a billion and a quarter of 62 FINANCIAL CATECHISM. bushels. As in the case of wheat, the supplies have grown faster than the population. During the first eight years the out-turn averaged 21.40 bushels per capita, and during the latter eight years 24.07; in 1875 it amounted to nearly 30 bushels. "Our surplus in later years has found an increasing outlet. During the first eight years we sent abroad but 1.20 per cent. ; during the latter eight years 4.37 per cent. ; of the crop of 1877 we shipped abroad G% per cent., and the crop of 1878 is going out probably in about the same proportion. " The average price obtained by the farmer has fallen off two- thirds in fifteen years, being 99.7 cents per bushel in 1864, and 31.8 cents in 1878. The last named crop, though greater by 46,000,000 bushels than its predecessor, fell short of it $39,000,000 in aggregate value. The average value of each acre's yield has fallen to the unprecedented low figure of $8.55 in 1878 ; in 1864 it amounted to §30.64. The last tiamed year, however, was one of extreme money inflation." (pp. 289-90.) This testimony comes from a sworn officer of the govern- ment, having all the facilities at his command for ascer- taining the facts, and is the more forcible from the fact that he was a member of the Republican party, which had legislated to reduce that inflated currency which made an acre of corn in 1864 worth $30.64 to the contracted volume which reduced the product of the same acre to $8.55 in 1878. Q. In what way does the difference of the amount of money in circulation produce this result? A. Money being the vehicle by which the products of labor are transferred from one person to another, stands in the same relation to production that the railroad or water- way does in transferring the products of labor from one place to another. If there is a large crop of corn or wheat produced in the West, it requires an additional number of cars to transfer it to the Eastern seabord, the point of consumption. If there is not a sufficient number of cars on the road to move the grain to the market in the proper season, the warehouses at the point of shipment become crowded with grain; extra bills for storage have to be paid; the grain is subject to damage and loss; and is prevented from reaching the Eastern market in time to meet the best demand, and heavy loss is sustained by the producers thereby. FINANCIAL CATECHISM. 63 Now, while the cars are the vehicles for removing the grain from Wichita to New York, the money is the vehicle for exchanging the owuership of the grain from the producer to the shipper. If money is plenty, the shipper takes the advantage of the best time to secure the grain for transpor- tation. Having abundant means, he pays fair prices, which produces active sales, and enables the producer to realize a fair return for his labor and prepare for increased pro- duction the following year. But a scarcity of money produces the very opposite of this. Prices are low and sales only made by producers when com- pelled by dire necessity; the crop is kept on hand subject to damage and loss; debts contracted in the hope of realizing better prices to be followed by disappointment and forced sale at ruinously low prices. Q^ If the scarcity of money reduces the price of wheat produced by the western farmer, does it not reduce the price of labor, and consequently the price of ever commodity pro- duced by labor, whether in the agricultural, mining or manu- facturing departments? A. It does have just that ejBfect. Q. In the exchange of these commodities, what difference does it make to the producers whether prices are high or low; if wheat this year will sell for a dollar a bushel in cash, and a pair of boots will sell for five dollars, it requires five bushels of wheat to pay for a pair of boots. If next year a bushel of wheat will sell for fifty cents, and the same kind of boots can be bought for two dollars and fifty cents, the five bushels of wheat still retains its purchasing power, for it will purchase a pair of boots of the same quality as sell this year for five dollars — are not the parties both just as rich as when the products of their labor commanded double the amount in cash? A. As between the producers it makes no difi^erence, so long as they can exchange commodities between themselves, whether the price in the exchange is set high or low, so they 64 FINANCIAL CATECHISM. are uniform as compared with their cost of production. But this is not the important point. There are two classes in every nation or government; a class of producers and a class of non-producers. The class of producers create all the wealth of the nation by labor. The class of non-producers iive upon this wealth without contributing anything toward its production. It is between these two classes that the difference exists between high and low prices, or cheap and dear money. In the first place, the expense of administering the affairs of a government is furnished by a tax collected from the people. It is necessary to have legislators to enact laws for the government of both state and nation, and officers to adminis- ter those laws, running through all the ramifications of gov- ernment, from president to road supervisor, and from chief justice to constable. This class all have salaries fixed by law. Whether yt heat is worth a dollar a bushel or fifty cents a bushel, they draw the same number of dollars for their salary, and the govern- ment collects it off of the wealth created by labor; so that when wheat is a dollar a bushel, it requires one thousand bushels of wheat to pay the salary of an officer who gets one thousand dollars a year for his services ; but when wheat is only fifty cents a bushel, it requires two thousand bushels of wheat to pay the salary of one thousand dollars to the same officer. As it requires as muck labor to produce a bushel of wheat when it is only worth fifty cents a bushel, as it does when it sells for a dollar, it requires just twice as many days labor to pay the thousand dollars as it did when wheat sold for a dollar a bushel. When the price of wheat falls from a dollar to fifty cents per bushel, it doubles the purchasing power of the dollar, but does not reduce the salary of the officer;'so that, while the fall in price reduces his expenses 100 per cent., and virtu- ally raises his salary to two thousand dollars, it reduces the FINANCIAL CATEOHmM. 65 price of the products of labor 100 per cent., thereby com- pelliug the producer to perform double the number of days' labor in order to pay the salary. In other words, if a bushel of wheat represents a day's labor when wheat is a dollar a bushel, it requires, the labor of one thousand men one day to pay one man for working three hundred days, or three and one-third days' labor by the producer to pay for one day's service of the non-producer. But when wheat falls to fifty cents a bushel it still represents a day of productive labor, and, consequently, it requires two thousand days' labor OR the farm to pay for three hundred days of official service, or six- and two-thirds days of the former for one of the lat- ter. This illustration applies to all persons who receive fixed salaries or annuities; all the officers of the govern- ment in its various departments of national, state, county and municipal; the officers of all public institutions, both state and national, with all their clerks or subordinates whose salaries are fixed by law. Besides these are the officers of all the great corporations who levy tribute upon the people in- dependent of law, and fix their own salaries at su( h sums as will satisfy their own ambition or avarice without regard to the amount of money in cii'culation. Thus it will be seen that all this class are interested in dear money and cheap labor, because it doubles their individual wealth, while it robs the producer of one-half of his earnings. Money is a purchaseable article, just as much as wheat or beef, and the amount in market has just as much to do vnth its purchasing power or price as it does with any other com- modity in the market. buy money with labor, either by selling our labor direct to another, or by laboring on our own account and exchanging the product for money. In either case we buy money with labor. If there is a full sup- ply of money in the market to satisfy the demands of com- merce we can buy it for a fair consideration, measured by labor, or in common parlance, money is cheap. But if there is not a sufficient quantity to meet this demand the price 5 FINANCIAL CATECHISM. goes up and we have dear money. Scarce and deai money creates a very large amount of indebtedness in order to meet the demands of commerce .in the distribution of the products of labor. But few persons engaged in buying produce can furnish a sufficient amount of money to move the produce in the district in which they operate. They are therefore compelled to hire money from the banks. Whatever usury they pay the bank is deducted from the value of the pro- duce so bought, and is a tax upon the labor of the country to that extent, and this tax runs through the whole system of credit imposed upon the people by keeping the volume of money in circulation below the amount demanded by the commerce' of the country. Money in its proper sphere in commerce i.*! simply crystal- lized labor, just the same as pork or flour. The farmer pro- duces by his labor more pork than his household will consume; the blacksmith works in his shop and receives his pay for his labor in money ; the money in itself will not feed or clothe his family — his labor has become crystallized. He exchanges this crystallized labor for the farmer's pork in- stead of paymg him in blacksmith work; he has simply changed work with the farmer, and the crystallized labor in the form of money was the medium of exchange. Q. If money is crystallized labor, why can all debts and obligations be paid with it, when it cannot be done with labor itself, or any of its products when crystallized in other forms than that of money ? A. Because it is so stipulated by law. The money being a title deed issued by the government, and paid out by it in consideration of labor done, or other valuable thing received, it is bound to make it receivable for all dues; and hence has enacted laws making a tender of money the end of the law in all contracts. Q. Is money any more crystallized labor than land? A. No. The soldier enlists in the service of his countrjf in time of war; he serves out his time faithfully and receives FINANCIAL CATECHISM. 67 sixteen dollars per month in money, and in addition thereto, in consideration for his services, the government gives him a land warrant which authorizes him to locate it upon any of the unoccupied land in the United States. He makes his selection of a quarter section and signifies it to the proper officers of the land office, the government takes in and cancels his warrant and issues to him letters patent for the land — thus his labor, while in the service of the government, was a part crystallized into money and a part into land. There is three forms which crystallized labor assumes in one transac- tion: the money is made by law a legal-tender for debt and the end of the law in all contracts; the land warrant is a legal-tender to the government for any of its unoccupied lands; while the land, when secured by the title of the gov- ernment, is not a legal-tender for anything. The object of the law in making money a legal-tender in preference to any other thing, is on account of its denominational character; it being of all denominations, from the unit to any multiple or fraction thereof; it is capable of expressing all values, in any or all the transactions of commerce. Q. Is money crystallized labor before it passes from the office of issue into the hands of individuals for labor per- formed or other valuable consideration? A. Yes. When it comes from the mint or the printing press, it is a product of labor, and its true value consists in the value of the labor required to produce it; but its legal value is established by law. Q. If the function of money is to act as a denominational representative of value by the authority of the government issuing it, is it necessary that the material of which it is com- posed should possess a large commercial value ? A. No. In a Republic, the people constitute the govern- ment; their representatives in Congress are clothed with power to create the money necessary for the demands of commerce. It is the duty of Congress to obtain the labor and material necessary for this purpose at the smallest cost 68 FINANCIAL CATECHISM. to the people, after allowing a fair compensation for the labor of those persons employed in this service. The material should not be selected on account of its jcoramercial value, but on account of its fitness and convenience for the purpose for which it is designed. Q. Why should not commercial value be taken into con- sideration ? A. From the fact, that in order for money to perform its proper function, it should always possess the same repre- sentative power as money, independent of all other contin- gencies. This, a money, the material of which possesses a large commercial value on account of the demand for it for other purposes than for making money, cannot do. It makes the cost of production unequal and uncertain from year to year, and in ease of great demand for commercial use the money would be diverted from its legitimate use and applied to a use which gives a lergar return of profit — thus with- drawing a portion of money from circulation and converting it to other uses, until the commercial demand should be so far satisfied as to make it less profitable than when usei for making money. This was the case with the American silver dollar. It was worth from two to three per cent, pre- mium from 1865 to 1872-. After 1873, when silver was demonetized by the United States and several of the European nations, it decreased 15 per cent, in the commercial market. Gold, on the other hand, being made by law the only money receivable for customs dues and interest on national bonds rose in the market until 25 8-10 grains, 9-10 fine, which had formerly sold for a dollar, brought, in 1864, two dollars and eighty-five cents. If the gold and silver dollar had had no commercial value for anything but money, and could have been steadily produced at small cost, and both made full legal-tender, there would have been no such fluctuation in their value. Q. If money is crystallized labor and belongs to him who exchanges labor, or the product of labor for it, has he not a FINANCIAL CATECHISM. right to hire it out to another as he would his horse or his wagon ? A. He has the right to hire it to another, but the law steps in and prescribes a limit beyond which he may not pass in his exactions for its use. Q. Why should the law set a limit to the price to be paid for the use of money any more than for the use of the horse? A. Because the law makes the money, and makes it the only legal tender for the payment of debts — making it thus compulsory upon the people to procure money in order to pay debts, the law limits the amount which may be charged for its use in order to prevent those who get possession of more than they use in industrial pursuits from demanding of others an extortionate price for its use for a given time. The horse is a species of property which the law does not create, nor does it compel a person to obtain a horse in order to liquidate a debt; hence it leaves the owner of the horse entirely free to obtain whatever he can for the use of his horse, while it limits him in his charge for the use of his money. Q. Is it not a fact that any consideration received by one person from another for the hire or use of money for a given time is usurj-? A. It is usury in fact, just the same as the consideration received by one person from another for the use of a plow or horse — a consideration charged for the use of a thing. Tn modern parlance, when applied to the use of a man or an implement, it is called hire. When applied to a house or farm it is called rent; when to money, it is called interest. The three terms all imply the same thing, and being a con- : in legal-tender notes to purchase one dollar in gold. There can be no doubt of this law being passed under the direction of the money -power and in its interest, and that those who framed the law fully understood its power and scope and all the obstacles which would be likely to stand in the way of the accomplishment of their design. In addition to the provisions before enumerated for con- verting the legal-tender notes into bonds, this act provided for the issue of $400,000,000 three years' treasury notes bear- ing usury at 6 per cent, and payable in legal-tender notes. The three years' notes being legal-tender also and bearing usury, it was supposed that the legal-tender greenbacks could be absorbed by them and converted into bonds at maturity; thus accomplishing by strategy that which they might fail to secure openly. But, cunningly as this plan was devised, and deep and dark as was the plot for giving the national bankers an open field to ply their vocation without let or hindrance, the people showed a firm determination to hold in circulation the money of the nation which they had received from the government in good faith, instead of exchanging it for the notes of any private corporation. The 1400,000,000 three years' notes were a part of the $900,000,000 first named, as provided .for in this act. At 108 FINANCIAL CATECHISM. this time no bonds had been sold, as is shown by the report of Senator Sherman, Chairman of the Senate Committee on Finance, made on the 12th of November, 1867. In review- ing the past history of the finances, he, in speaking of the legal-tender notes, says: " These notes were issued to the amount of $400,000,000, before the bonds were negotiated." Now, as only 1300000,000, were issued before those pro- vided for in this act, no bonds had been negotiated at that time. One whole year had elapsed and the people had not come forward as was anticipated and loaded themselves with bonds bearing usury in place of the money of the people, which imposed no usury burden. Hence the haste with which this act followed the passage of the National Banking act. It was a part of the 'same plan, and prepared by the same hand that prepared the National Bank bill; else it could not have been prepared to meet every supposed con- tingency in that act and passed through both Houses of Congress, signed by the President, and become a law in the short period of six days after the passage of the former act. The object of this act was to prepare the way for buying up the greenbacks while gold commanded a large premium, and investing them in bonds at their face value, so that every dollar of the money dealers' gold would buy two or three dollars in bonds to deposit in the United States Treasury as a basis to bank on. That this was a part of the plan, and well understood by those who were manipulating it, is acknowledged in the same report, made by Mr. Sherman, on December 12, 1867, to which attention has been called. On this subject he says: "But it was found that with such a restriction upon the notes the hands could not he negotiated, and it heoavie necessary to depre- ciate the notes in order to make a market for the hands." Again, on the 27th of February,. 1868, (see appendix to Congressional Globe, pages 182-184:), Senator Sherman, in a speech in the United States Senate, used this language: " When we loot at the law, which is the contract, it so happens that the identical act which provided for the legal-tenders also FINANCIAL CATECHISM. 109 provides for the 5.20 bonds. Every man who bought a bond bought it under an act which also provides for the legal-tenders. They were contemporaneous. However, the notes were issued before the bonds were issued. The notes were all outstanding before a single bond was issued." Mr. Edmunds.—" What was the limit of the legal-tenders ?" Mr. Sherman.—"' I will come to that presently. Now, the legal- tender clause provides that 'Such notes herein authorized shall be receivable in payment of all taxes, internal duties, debts and demands of every kind due to the United States, except duties on imports, and of all claims and demands against the United States of any kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin; and shall also be lawful money and a legal-tender in payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid. "Does not this act, in so many words, declare that while coin should be paid for the interest of the public debt, yet the notes provided by this act shall be a lawful tender in payment of all public debts v ***** * Finally, after long consideratiOQ— for the subject was debated over and over again— the committee on finance agreed upon the act to which 1 will now refer— the act of March 3, 1863. That act repealed the limit as to the amount of circulation, and raised it to $450,000,000, and it also took away the right to convert, which the Secretary said was the other restriction that prever.ced the sale of bonds, and by an ingenious device, suggested by the SeuKtor from Vermont (Mr. Collamer), it was proposed to limit the holders of the outstand- ing greenbacks, the right to convert them, up to the first of July then next ; but if they did not do so by that time the right was to cease. " By this legislation, in the act of March 3, 1863, the limitations which prevented the sale of the first 5.20 bonds were repealed, and then, for the first time, this loan was taken. Then it was that an agency was organized, and. means were taken to spread these bonds all over the country, and they were sold ; but they were not sold until these restrictions were removed, and they were sold upon a basis of $450,000,000, without the right of re- demption ; with no privilege whatever, except that of being receivable in payment of taxes. That was the state of the law upon which the legal right of the holders of the five-twenties rest. They refused to buy these bonds upon the terms of the act of February 2.5, 1862. They did buy them under the act of March 3, 1863, and it is idle to rest their claims upon restrictions repealed before their bonds were issued. "On that day, March 3, 1863, the act to provide ways and means for the support of the government, received the approval of the President and became a law. In addition to various provisions for loans it contained clauses repealing the restrictions affecting the negotiation of the five-twenties, and thus disengaged that im- portant loan from the embarrassments which had previously rendered it almost unavailable. "Then he goes on and says that every dollar of it was sold in a short 110 fflNAlS'CIAL CATECHI8U. time, presenting a remarkable case of success ; but it was not sold, as my friend from Vermont sajs, under the act of February 25, 1862. On the contrary, there was an utter failure to sell the loan under that act, It was sold under the subsequent law which repealed the restrictions of the act of 1862, and it was sold upon a basis of currency amounting to $450,000,000, and when the notes had been so depreciated by our legislation, purposely, for wise pur- poses, when the right to fund was taken away, and no right was given to these notes except to be paid to the government in the way of taxes." If there had been any doubt before about the complicity between the money-dealers and officers of the government in discrediting the legal-tender notes so that they could be bought cheap, this declaration of Secretary Chase, that the 6.20 bonds would not sell while the notes were restricted in amount and were receivable for bonds, as under the act of 1862, but when the demand that these restrictions should be removed was obeyed, the bonds were sold in a very short time, and the further statement of Senator Sherman that the legal-tender notes were purposely depreciated bij the leg- islation of Congress, the case appears to be so plain that there can be no question of its correctness. All the legislation on the subject of finance from Feb. 25, 1862 (the date of the passage of the legal-tender act), to Feb. 3, 1868, had in view, as the acts show, the design to convert all uon-usury-bearing obligations of the government, used as money by the people, into usury-bearing bonds, for permanent investment by the money dealers. On July 1, 1864, as shown by the Treasury statement, there was outstanding 5 percent. bonds,$300,213,480,andof 6 per cent, bonds, 1842,882,652.09, none of which had been purchasable with greenbacks since July 1, 1863. According to thesamestatement, there was then outstanding 1431,178,670.84 in legal-tender notes. Notwith- standing the determined effort to discredit them, they would not come back into the Treasury as was desired. Something more must be done, and the Congress of the United States was equal to the occasion. On June 30, 1864, an act was passed providing for an additional $400,000,000 6 per cent, bonds, running from five to thirty or forty years, at the dis- FINANCIAL CATECHISM. IH cretion of the Secretary of the Treasury. This act provided that these bonds might be sold in Europe or America for coin or " other lawful money." As the greenback was law- ful money, these bonds were made purchasable with them, but this provision did not apply to any other bonds. The object now was to flood the market with usury-bearing bonds, that they could buy with greenbacks at their face value, which they had procured by selling a dollar in gold for two dollars and eighty-five cents of these notes. This act also provides for the issue of $200,000,000 7.30 treasury notes, and $150,000,000 lemporary loan certificates, bearing usury. All these were made convertible into bonds. The programme was now f airlj' laid down. Usury-bearing bonds of different kinds were now issued and outstanding to the amount of $1,359,930,763.50, and this bill provided for $450,000,000 more, making in all, at this date, $1,809,930,763.50. These bonds were on the market, and gold must be appreciated, and it was. The ahylocks set their figures at thirty-eight and 7.10 cents in gold for a dollar in greenbacks or other government currency, and a large amount of the 5 and 6 per cent, bonds was bought with this currency, obtained by them at this shameful sacrifice of the interests of the people for the ben- efit of a few favored individuals who had complete control of the financial legislation, and manipulated every act in such a way as to rob the people of the products of their honest toil, and increase the volume of the stream of gold which they had succeeded in turning away from the people's treas- ury into their own unholy coffers. No scruples were entertained with regard to the means to be used, so that the robbery could be accomplished under cover of law. The laws under which the bonds were issued provided for paying the usury in coin, semi-annually. Coin was now at a premium of $2.85. The opportunity must not be lost. A law must be passed in order that this advantage could be realized to its fullest extent; accordingly, on March 112 FINANCIAL CATSCHISM. 17, 1864, an act was passed authorizing the Secretary of tiie Treasury to pay the usury one year in advance, without rebate. Here was an opportunity for a nice financial transaction. The money dealer has invested $35,100 in coin in $100,000 legal-tender notes; he steps into the United States Treasury and pays these notes for a bond of $100,000, bearing usury at the rate of 6 per cent, per annum. He now draws usury from the government on nearly three times as many dollars as he has invested in gold.. But still not satisfied, he says: " Mr. Secretary, I believe since the passage of the late act of Congress, you are permitted to pay the usury on these bonds one year in advance, without rebate, would it be convenient for you to pay me the first installment on this bond this morning?" Certainly. And the accommodating Secretary counts him out $6,000 in gold for the first years' usury on his bond. He steps across the street and sells his gold to an importer for $2.85 in currency for a dollar in gold, giving him $17,100, with which he returns to the treasury and invests it in another 6 per cent, bond of that amount. He now has, on account of the vicious class legislation of the Congress of the United States, 6 per cent, bonds to the amount of $117,100, for an outlay of $35,100 — more than three dollars for each one invested. He might have demanded, under the law, the usury on this bond also for a year in advance, but extreme modesty compelled him to forbear encroachments on the- time of the gentlemanly officials, in order to give oppor- tunity for others of the bond-holding fraternity to avail themselves of the special privilege created for them by law to rob the treasury of the United States. Q. Did any of the Secretaries of the Treasury pay any usury on the bonds they sold, a year in advance of its becom- ing due, without reserving a rebate to the government? A. They did. But what amount was so paid has not yet been discovered. During the Forty-fifth Congress, Hon. J. B. Weaver introduced into the House the following reso- lution: "Resolved, That the Secretary of the Treasury be and is hereby dir§cted to report to this House whether he has at any time FINANCIAL CATECHISM. 113 anUcipated the payment of interest on the public debt ; if so, how much has been paid in advance, and to whom." This resolution was referred to the Committee on Ways and Means, of which the late Hon. Fernando Wood was chairman. Mr. Wood sent the resolution to Secretary Sherman, with a request to state when he could report. Mr. Sherman replied that "there was no public document that would give the information required^ But, he added, " The Department has been in the habit for five years of paying the interest in advance tvithout charging anything.^'' When we recollect that the act permitting this outrage was passed on the 17th of March, 1864, when gold was at a premium, which made it an object to oblain the usury in advance, and this resolution of inquiry was sent to the Secretary of the Treasury in 1880, sixteen years after, when gold commanded no premium, and he states that it has been the custom for the last five years to pay the interest on bonds one year in advance without charging anything, connected with the other statement, that there was no public document in his office which would show how much money had been so paid and to whom paid, we are driven to the conclusion that it has been the practice since the passage of the act, and that the Secretaries of the Treasury have conspired with the money dealers to rol) the government through all this period and keep no record of the fact by which the amount of the robbery could be ascertained. Whether these honorable gentlemen participated pecuni- arily in the spoils so wrongfully obtained, will, perhaps never be known; but it is hardly to be supposed that their sympathy for the suffering bondholders should be so strong as to prompt them to rob the people, whose servants they were, without a motive which would tend to place them in the same position as those to whom they were granting this favor. IW FINANCIAL CATECHISM. CHAPTER V. FURTHER DEVELOPMENTS OF THE ENORMITIES OF THE NATIONAL BANKING SYSTEM. Question. Was no attempt made by Congress to protect the interests of the people against such flagrant abuse? Answer. There was at all times a party in Congress which done all within its power to procure just legislation, but un- fortunately, that party was in the minority, and was power- less. This party was not confined to any particular political organization, but consisted of those members who recognized the fact that they were servants, bound by their oaths and their duty to protect the interests of the whole people. But all they were able to do was to use their voices and their votes in solemn protest against the system of laws being enacted to foster and protect the most iniquitous scheme of robbery and spoliation ever known in the history of civilization. It sometimes occurred that the better judgment of the majority prevailed, and they would enact a law throwing some re- straints around those 'who were gambling upon the misfor- tunes of the government, but some new revelations soon throwed such light on the subject that such laws were re- pealed. On the 17th of June, 1864, a law was passed prohibiting the sale of gold and sterling exchange for future delivery. This law was intended to prevent the system of gambling then prevalent in Wall street and elsewhere among the money-changers, by which they were able to maintain the pre- mium on their gold, and rob the people day by day. As soon as this law was passed the bankers, brokers, and money lords assembled at Washington in force; and such was their influ- ence on Congress that that body, on July 2, 1864, repealed the law, just fifteen days after its passage. This repealino- FINANCIAL CATECHISM. 115 act provides for free gambling by the brokers, provided they vs^ould pay a tax of 1 per cent., which they agreed to do; but this tax v^as never collected. The overshadowing influence of this host of freebooters was such that the two houses of Congress was as putty in their hands, and ready to be molded into any shape required for their use. On July 1, 1865, the tables prepared at the Treasury Depart- ment shows that there was then outstanding in legal-tender notes $432,687,966. A large portion of these had beeai bought by the money dealers at forty cents on the dollar, since the passage of the law of March 3, 1863, limiting the time in which they could purchase bonds to the 1st of July, 1863. The period had now arrived when they desired to exchange those legal-tenders for bonds. If the restriction clause was simply repealed it might inhance the value of bonds in the market. In order to prevent sucli a contingency, the act of March 3, 1865, was passed. (See Statutes 13, page 468). This act provided for the issue of $600,000,000 of bonds or treasury notes to run four years, and payable jn forty years, and bear 6 per cent, usury; none^f which should be of a less denomination than fifty dollars. Authority was given by this act to sell these bonds for coin or for treasury notes, or legal-tender notes, or any obligation of the government, bear- ing or not bearing usury, excepting bonds of the United States. Hugh McCulloch was then Secretary of the Treasury. He had given notice in his report that it was his intention to retire all the legal-tender notes and denounced them as "disreputable, dishonorable money." He appealed to Con- gress for power to redeem all the money of the government, whether bearing usury or not. It will be remembered that at this time there was nearly $2,000,000,000 in legal-tender notes, treasury n-otes,' certificates and bonds, that were used as a circulating medium, all of which Mr. McCulloch pro- posed to withdraw from circulation and fund into bonds bearing usury which would not be available for the purpose; thus carrying out the proposition of Senator Sherman that 116 FINANCIAL CATECHISM. '■' as soon as peace came, the legal-tenders must be withdrawn, so as to throw the whole amount of the paper circulation of the country into the hands of the National banks." It was in answer to this appeal that the act of March 3, 1865, was passed. Q. Are you not mistaken about so large an amount.of bonds nnd treasury notes being used as currency? It is gen- erally contended by those who claim to know, that our cir- culating medium of all kinds never exceeded $1,000,000,000. A. According to the Treasury statistics, there was in June, 1866 (one year after the passage of this act), outstand- ing treasury notes which had been paid to the army and for supplies, as follows- Demand notes $ 272,162 Greenbacks 400,619,206 Temporary loan 120,176,196 One and two years' treasury notes 3,454,230 Certificates of indebtedness 26,391,000 Postal currency 7,030,700 Compound interest treasury notes 159,012,140 Fractional currency 20,040,176 7-30 treasury notes, August and September, 1864 ' 139,301,700 7-30 treasury notes, 1864 and 1865 806,251,550 Making ©1,682,549,060 At the same period, as shown by the Secretary's report, thfire was outstanding: State bank circulation $ 19,996,163 National bank notes 281,479,608 Making $ 301,475,771 which gives the sum of all kinds of paper money then in circulation at $1,984,024,831, exclusive of gold and silver. Q. Admitting that these treasury notes were made legal- tender to the same extent as greenbacks, did they really enter into the circulation of the country and perform the func- tions of money? A. For an answer to this question, we will appeal to Mr. S. A. Stevens, of New York, who was President of the Cham- ber of Commerce of that city in 1873. In a letter vrritten FINANCIAL CATECHISM. 117 by him to the New York Times in that year, he says, when speaking of the effects of contraction: "The country at large has felt the pressure of the screw, but they have not been able to discover precisely from what quarter the pinch comes, because the currency contraction being mostly confined to those treasury notes which, though not currency in the strict sense of the term, they wwe used as such in the larger transactions of trade and financial exchange." To whatever extent these treasury notes took the place of the legal-tender notes in the large transactions in the great business centers, they relieved them from that service and allowed them to flow through the country and supply the channels of trade with a circulating medium, and in the pro- portion that those treasury notes were withdrawn from cir- culation the business of the country was crippled. Under the act of March 3, 1865, Secret nry McCulloch reduced the circulation of the legal-tender notes to the amount of SIO,- 000,000. This act contained one good feature. After the state and individual banks suspended in 1861, they increased their circulation and used all the means within their reach to discredit the legal-tender notes. Their war was as directly against the government as was that of the rebellion. It was a struggle for life or death with them. If the legal-tenders lived they must die. In orde)- to end this struggle for suprem- acy, this act placed a tax of 10 per cent, on their circulation, to take effect after July 1, 1866, which drove them out of existence, but not until a more powerful adversary had been provided to take their place. The act of Sept. 12, 1865 (Statutes 14, page 31), provided that the legal-tenders might be received by the Secretary for bonds at the rate of $10,000,000 for the first six months, and $4,000,000 per month after that time. This act was intended to convert all the legal-tenders into bonds bearing usury, and was entitled, " An Act to Retire the Legal-tender Notes." The act of April 12, 1866, still further authorized the Secretary of the Treasury to receive for bonds $4,000,000 per month, which law he executed promptly until he had il8 FINANCIAL CATECHISM. retired $94,000,000, when the people peremptorilj^ demanded that the conversion of their money into usury-bearing bonds should be stopped. Congress did not dare to turn a deaf ear to this demand, and on the 3rd day of February, 1868 (Statutes 15, page 34), passed an act prohibiting their further retirement and destruction. Mr. McCulloch and the bondholders complained of being hindred by Congress in their policy of contraction, but $94,000,000 of legal-tenders had now been withdrawn, besides a large amount of the treas- ury notes. The people felt the pressure so severely that they demanded a halt in this policy with a voice that was not to be misunderstood, and Congress dared not disobey. In the first part of 1864, gold had accumulated in the Treasury to the amount of more than $150,000,000. In order to utilize this, Congress, on March 17, 1864, passed an act authorizing the Secretary of the Treasury to sell gold for legal-tender notes. This act was of great benefit while it was faithfully executed, which was done for a time by Secretary McCulloch and Secretary Fessenden. They both sold gold without previous notice of the time or amount of such sales. This prevented the gold gamblers from holding gold at their own price, and thus controlling the market. This course was pursued by the secretaries until 1869. This act was in the interest of the people and must be modified. It interfered with Wall street, and, as has ever been the case, Wall street succeeded in convincing Congress that the law must be changed. Accordingly, in 1869, it passed an act authorizing the Secretary of the Treasury to give notice of the time and place when gold would be sold and bonds purchased by the government. As soon as this plan was adopted the gold and bond dealers formed a combination, and on the day set for the sale of gold it always ruled low in the market, and on the day set for the purchase of bonds they always ruled high; so that the notice of sales and purchases, inst(!ad of increasing the receipts of the Treasury, robbed it of a part of the profits on every sale and gave it to the brokers. So well was this FIWAJSCIAL CATECHISM. 119 matter arranged and understood, that in the period between the publication and sale, gold would decline from day to day until the Secretary sold gold at the lowest figure. The next day after the sale gold would advance, and those who bought of the Secretary could realize large profits on their purchase. The same policy was adopted on the sale of bonds. When notice was given that on a certain day the Secretary would purchase a certain amount of bonds, the price of bonds would steadily advance, so that bonds were bought at the highest figure to which they could be forced. This change of policy occurred after General Grant was elected President, and Mr. Boutwell was appointed Secretary of the Treasury, and was followed out by all the succeeding secretaries, until the latter part of 1878, when Secretary Sherman ordered that legal-tender notes be received for cus- toms dues, which at once took the premium off of gold, and no further sales were necessary. Had Congress, at any time during all that period, passed an act repealing the exception clause in the legal-tender act, the same result would have followed, and many hundreds of millions would have been saved to the people, which has been ruthlessly wrested from them through this criminal neglect. Q. Could Congress at any time, or can it now, repeal the exception clause in the legal-tender act without being guilty of acting in bad faith with the creditors of the nation, and subjecting itself to the charge of repudiation by the violation of its sacred obligations? The persons who invested their money in the bonds of the government did so under a spe- cific contract and declaration stipulated in the face of the bond, that the interest should be paid in coin and the act which created the legal-tender notes as positively declares that customs dues shall be paid in coin. Would not the repeal of the exception clause, while any of those bonds remain unpaid, be a gross violation of national honor and justly stamp the act as rank, bald repudiation? A. These questions can be answered best by a review of 120 FINANCIAL CATECHISM. the history of the case. There was two parties with which the government was dealing; the parties to whom it paid its legal-tender notes on the one side and those to whom it sold its bonds on the other. The legal-tender notes were all issued before any of the bonds were sold. They carried upon their face a stipulation that they should be receivable at their face value for the bonds of the United States. The people purchased them with service and material to support the government, and after they had been so purchased, and while in the hands of the people, the Congress of the United States, on the 3d of March, 1863, passed an act declaring that they should not be receivable for such bonds after July 1, 1863. On April 12, 1866, it passed an act that this money which it had authorized to be issued, and had been issued and sold to the people for a good and valid consideration, should be withdrawn from circulation and destroyed at the rate of not more than ten millions for the first six months and four millions for each succeeding month until it was all destroyed. More than $1,500,000,000 of the bonds that had been issued and sold by the government previous to 1869 was payable in lawful money of the United States, which the act of Con- gress creating the legal-tender notes declared them to be; but on March 18, 1869, Congress passed an act pledging the faith of the nation that they should be paid in coin. And on July 14, 1870, passed an act authorizing the Secretary of the Treasury to refund those bonds into bonds specifying on their face, that they should be paid in coin of the United State at its then standard value. The full legal-tender coin at that time was gold coin and silver dollars. On the 12th of February, 1873, Congress passed an act dropping the silver dollar from the coinage of the United States which made those bonds payable in gold alone, and on the 24:th of January 1875, passed an act declaring that the gov- ernment of the United States would resume specie payments on January 1, 1879. H&re is six instances in which Congress has passed laws FINANCIAL CATECHISM. 121 changing the contracts made with the people, without con- sulting them with regard to such changes, everyone of them are open and flagrant violations of faith, and against the interests of the people whom they were elected to represent. If the violation of contracts stamps a nation with the brand of repudiation, the record of the legislation of the last eighteen years on the finance question, as it stands recorded on our United States Statutes, makes one of the blackest records of repudiation that ever stained the statutes of any nation or party. But it would not be repudiation to repeal the exceptions to the legal-tender act, for the legal-tender notes are at par with coin, and are preferred to coin by those who are entitled to receive interest on bonds. The repeal of these exceptions is demanded in justice to the people, and cannot do injustice to the bondholders. The cry of repudia- tion, therefore, falls to the ground, because it is without foundation to stand upon. There was a notable incident connected with this gold speculating mania, which should never be forgotten. Senator Boutwell had been selling gold about once a month until September, 1869. By some means, incomprehensible to the uninitiated, it become known to the money dealers that the government would sell no gold that month. The premium on gold for three years had ranged from 25 to 30 per cent. The brokers saw their opportunity, and run the premium up day by day until on the memorable " Black Friday " of that month, when it reached, at the gold room in New York, 60 per cent. The next day the Secretary sold $5,000,000, and the premium dropped at once to 30 per cent. Whether there was, or was not, a conspiracy between the brokers and any of the government officials to bring about this scheme of robbery, the sequel shows that it might have been prevented by the Secretary if he had desired to do so. He had the gold in the Treasury, and could at any time command the market by the sale of a few million dollars. The neglect to do so was both cowardly and criminal. On March 2, 1867 (Statutes 14, page 558), Congress passed 122 FINANCIAL CATECHiaM. an act providing for the issue of $50,000,000 3 per cent, interest certificates to pay compound interest notes. The act provided that these certificates should be held as reserves by the National Bankers instead of legal-tender notes. This liberated that arf.ount of the notes Per circulation; but so completely was Congress under the control of the bond- holders that it did not dare to issue $50,000,000 legal-tenders, and save to the people the payment of $1,500^000 usury per annum, or, even to use the $14,000,000 that was then lying idle in the Treasury. Q. Was not the contraction* of' the currencj! a wise policy, and an actual necessity, in order to 'secure our finances on a' firm and reliable specie basis, so as to prevent the wild specu- lation and extravagant indebtedness always incident to an inflation of the currency of a country above what can be supported by prompt coin payment? A. No. The contraction policy was not wise or necesary. We have previously shown that the pretense of basing the circulating medium of a country upon coin payment has always proved to be a fraud and a swindle; that it only lasts so long as the public confidence is such that the coin is not demanded, but as soon as danger pre^nts itself, and coin is demanded, the bottom falls out of the system and reveals its rottenness. The coin is not there. It was not necessary to contract the currency to prevent wild speculation and extravagant indebtedness; for, before contraction commenced, when we had about two thousand millions of dollars as a circulating medium, there was less wild speculation and extravagant indebtedness than after the currency had been contracted nearly two-thirds. Before contraction was commenced, there was money enough in circulation to fill the channels of commerce, and the great mass of business was transacted on a cash basis. Every productive industry was stimulated and received a fair consideration for its products; labor was fully employed and well remunerated, not in extravagant promises, but in FINANCIAL CATECHISM. 123 the lawful money of the United States — which was theirs, and Congress had no more right to withdraw any portion of that money from circulation than it had to rob the farmers of the country of two thirds of their wagons, plows and horses — and in the end it did do this very thing. The loss sustained by the industrial interests of the people, amounted to fully two-thirds of thier wealth. In order to show more clearly the fallacy of the proposition, that a redondant currency produces wild speculation and extravagant indebted- ness, we need only refer to the period from 1863, to 1866, at which time the volume of our currency was the largest. During these years, there were failures of business firms as follows: In 1863, failures 485 ; amount $ 6,864,700 In 1864, " 520 ; " 8,579,000 In 1865, " 580; " 17,625,000 In 1866, " 532; " 47,333,000 2,067 $80,401,700 These were years of intense commercial activity, and immense business transactions, as shown by the reports of the Secretary of the Treasury. The revenue collected, For the year 1863, was $112,697,290.95 For " " 1864, was 264,626,771.60 For " " 1865, was 333,714,605.08 For " " 1866, was 558,032,620 06 Making $1,269,071,287.69 In these years there were only two thousand and sixty-seven business failures, with an aggregate of $80,401,700. At the end of this period the money of the country had been reduced more than one-half in volume. Business was arranged and contracts made on the full volume. In order to meet such engagements, business men were compelled to substitue their own obligations for money, and here is where the so-called extravagant indebtedness commenced — on a contracted, and not on an inflated currency. Still hop- ing to tide over the pressure, they continued to increase their obligations; but in this struggle the weaker were driven to 124 FINANCIAL CATECHISM. the vsrall, and only those who were possessed of immense resources survived the wreck that followed, as the statistics of the next four years show. In these years the business failures amounted, In 1867 to 2,386, amount $86,208,000 In 1868 to 2,008, amount 63,774,000 In 1869 to 2,799, amount 7 5,945,009 In 1870 to 3,551, amount 88,242,000 10,744 $314,169,009 This exhibit shows that the business failures in the latter four years on a contracted currency, was more than fivg times the number that occurred in the former four years on a redundant currency; and that the amount of loss involved was more than fifteen times as great in the latter as in the former period. The revenue for these four years shows a constant decline until the last year, 1870, when there was a spasmodic effort to sustain business on the amount of money then in circula- tion; but it was like the last flickering of the burning wick in the oiless lamp, only a flash which preceded the darkness and ruin of the crash of 1873, The revenue of these four years, as shown by the Secre- tary's report, is: For 1867 $490,634,010.27 For 1868 405,638,083.32 For 1869 370,943,747.21 For 1870 411,225,477.63 In the former four years under an inflated currency the revenue increased from $112,697,290.95 in 1863, to 1558,032,- 620.06 in 1866; in the latter four years of contracted currency it decreased from $558,032,620.06 in 1866, to $370,943,747.21 in 1869; or, to state it differently, under a redundant currency the revenues of the government increased $445,265,325.11, and in four years immediately succeeding, under the contrac- tion policy, it decreased $187,088,872.85. It is evident then that it was the contraction of the cur- rency that produced the wild speculation and extravagant indebtedness that existed from 1866 to 1870, and thereafter, FINANCIAL CATECHISM. 1 15 instead of a redundancy of money. But we are not without lessons of history to strengthen our conclusions that wild speculation and extravagant credit are not prevented by hav- ing the currency of a country based upon coin. About the year 1720 over two hundred speculating com- panies were organized in England. The people became so in- fatuated with the idea of the vast wealth to be realized by these schemes, that many of them paid large premiums for the privilege of subscribing for the stock of the companies. Speculation ran wild over the prospect of immense gains to the lucky holders of these shares. The money that set this speculative machinery in operation was the notes of the Bank of England, which professed to pay coin for all liabilities. The ruinous speculations which were engaged in botli in England and the United States, from 1833 to their culmina- tion in the terrible panic of 1837, were set on foot and fostered by eight hundred banks in the United States, and all the banks of England, which banks all professed to be specie pay- ing banks, and did pay specie when demanded, while they were increasing their circulation, and loaning their promises to pay to the wild dreamers who were thoughtless enough to suppose that those promises would be redeemed in coin when there was not a dollar in coin for ten dollars of their specie basis currency in circulation. But the day of reckoning came in 1837, when all the banks of both England and the United States suspended specie payment except the Bank of England, and it would have been compelled to suspend if it had not been assisted by the Bank of France. All the loss and bankruptcy of that distressing period was caused by reckless speculation with a currency furnished by banks established on a coin basis. Thirty years later, in 1866, the English people became wild in their speculations on railroad and other stocks, with money furnished by the Bank of Eng- land, and other banks of the kingdom, all professing to pay coin. They, by their extensive loans, stimulated and in- creased these speculations until the^ had arrived at such vas FINANCIAL CATECHISM. gigantic dimensions that when the bubble burst it prostrated every legitimate interest of the island. Twenty-seven banks in the city of London failed in one day. Many hundreds of old, well established business firms were compelled to succumb to the pressure, and the Bank of England only saved itself from a like fate by availing itself of the provision of the law of 1844, permitting it to raise the rate of usury on loans that was equal to suspension. The most gigantic scheme of speculation in the world's history, up to that time, was inaugurated in France just pre- vious to 1720. The Royal Bank of France furnished money for these wild enterprises. The plan contemplated controlling the business of the world. Money was furnished by the bank to buy out the Senegal Company, and the company of the Indias; thus securing the business of the Eastern and Wes- tern hemispheres. Their ambition was as boundless as their anticipations were extravagant, and the scheme collapsed in 1720, producing wide-spread bankruptcy, misery and destitu- tion in its train. The Royal Bank was compelled to suspend, but the money advanced to these wild adventurers was no after suspension, but while the bank was actually paying coin for its liabilities. When it could no longer do this the whole speculative fabric which it had reared fell to the ground. The speculations in the United States in 1812 and 1813, succeeded by the panic of 1814, was organized and supported by banks based upon coin. When these banks had succeeded in placing in circulation enough of their specie basis notes to make it more profitable for them to fail than to bank, they hoarded their coin, suspended specie payment, left their promises to pay in the hands of their deluded victims, and retired to private life with their ill-gotten spoils. Upon the suspension of the banks, the speculations collapsed as an inevitable consequence. Another period of speculation occurred in the United FINANCIAL CATECHISM. 127 States, running from 1833 to 1836, which culminated in the panic of 1837. The speculations of this period was principally confined to Canal Stock, roads, and property in general, but most exten- sively in wild lands in the west. The United States Bank bill had been vetoed in 1832, and the state and individual banks, anticipating a clear field for future operations, increased their circulation and extended their loans for the purpose of fostering this extravagance, until the country was completely flooded with their notes, all promising to pay specie on demand. But this proved, as it always has, to be a seductive snare, and a base fraud upon the people. In 1837 the banks all suspended, and the speculations were exploded; the banks contained no coin in their vaults with which to redeem their worthless notes. Prom 1837 to 1848, the government issued a large amount of Treasury notes which were used as currency, yet no extravagant indebtedness or wild speculations was entered into during that period. During the period from 1837 to 1848, the banks in the United States had all resumed specie payment. They had so managed as to again obtain the confidence of the people, and as soon as this occurred, another period of wild specula- tion set in; the banks furnishing the money to carry it on. The speculations at this time were not in stocks or roads, but in American produce, such as beef, pork, corn, wheat, oats, rye, flour, in short, every kind of produce furnished by American industry. Extensive purchases were made for the English market, but before the cargoes arrived at their desti- nation prices fell, the bottom went out of the market, and many of those engaged in the enterprise were left penniless and so deeply involved that nothing but bankruptcy could set them on their feet again. Ten years later, in 1857, there was another suspension of specie payments by all the banks in the country, but this, unlike the former suspensions, was not brought about by over trading, wild speculation, or extravagant indebtedness; 128 FINANCIAL CATECHISM. but was a legitimate result of tlie policy of attempting to furnish a stable currency by banks pretending to pay coin for their circulating notes. This they never do, only to a limited extent. When the people do not want coin, they are ready to pay; but when coin is demanded to any extent they always refuse to produce it. The legislation of 1853 and 1857, on the metallic currency of the United States, probably aided in producing this sus- pension at an earlier day than it would otherwise have occurred. In 1853, Congress passed an act which demonetized aJl silver half dollars, quarters, and dimes, for any sum above five dollars. As the reserves of the banks were then held in coin, a large part of such reserves was in the fractional cur- rency, which, until that time, had been full legal-tender for any amount. The silver dollars of Spain, Mexico and South America, then being at a premium over gold, had been bought up on speculation and shipped out of the country. This reduced the amount of coin in the United States; the frac- tional currency was not available for reserves, or for the payment of circulating notes, as it was not money for any sum above five dollars. A large share of such reserves con- sisted of the gold coins of other nations, which were full legal-tender at the values fixed on them by the United States. As gold had been over-valued in this country since 1834, a very large amount of the gold coins of other nations had been sent here and constituted a part of our money — and consequently was held by the banks as a part of their reserves. On the 21st of February, 1857, Congress passed an act de- monetizing all foreign coins, both gold and silver. This des- troyed the legal-tender property of them, and they were no longer available for reserves or the payment of debts. The bankers were therefore compelled to sell them for what they were worth in the countries in which they were coined, and they were sent back home to stay. The efiiect of these two laws, was to very largely reduce the amount of FINANCIAL CATECMiaM. 129 the full legal-tender coin in the United States, and also in the bank reserves, and made the banks less able to respond to a demand for any considerable amount of coin. By the law of 1846, all bank notes were excluded from the Treasury. Nothing was received for debts due the govern- ment but gold, silver, and treasury notes. The tendency of this law was to destroy confidence in the banks, an dit had its effect. With confidence thus weakened, a catastrophe was imminent, whenever any disturbing cause presented itself. This occurred in the fall of 1857, in the failure of the Ohio Life Insurance and Trust company, with a capital of |2,000,- 000, and a credit, the solvency of which had never been doubted. So popular had it become, that the western banks kept very large deposits with the New York agency of this institution. Its failure was the tocsin of alarm, and a run was at once made on the banks for coin, and the old story was simply repeated: they were not able to respond. The eastern banks suspended first, and then the south and the west followed in close succession. Four years later, in 1861, another panic occurred, but it was not produced by wild spec- ulation, or extravagant indebtedness. An attempt was made by the Southern States to dissolve the union. Hostilities had commenced and war was declared. The hour of danger had arrived, when the country needed every dollar that could be obtained to pay the expense of a war to save the life of the nation. When it called upon the banks for assistance, they did what they always do in an emergency: suspended specie payments and had nothing to offer the government but their suspended bank promises to pay, and demanded that it should accept these and use them to pay the expense of the war, and give them in return 6 per cent, bonds of the government at eighty cents on the dollar. This was virtually the end of the banking system, based on coin payment, by individuals or corporations. This class of banks never resumed until they were taxed out of existence 9 ISO MNANCIAL CATECHISM. in 1866. This bank crisis was the inevitable sequence of attempting to furnish a money to meet every contingjency, established upon a coin basis. The fraud in this case was made apparent without the shadow of excuse on account of over speculation, and presents a wall of impregnable evidence around the fact, that gold and silver cannot he relied upon in a nation's emergency, and that bank paper established upon such a basis is equally unreliable. The government refused to accede to the proposition of the banks, and from that time forward to the close of the war, issued its own money in the character of demand notes, legal-tender notes, Treasury notes, certificates of indebtedness, coin certificates and bonds ; to all of which it attached the same legal-tender property which it had given the greenback. This money, it was, which armed, fed, clothed and paid the army in its struggles for four years, to save the life of the nation. This money, it was, that filled all the channels of trade when peace was established; and gave us more prosperity and less indebted- ness per capita than at any other period of our history. Q. If your statement is true, that under the influence of this large amount of money created and put in circulation by the government, the country was really in a prosperous condition, how do you account for the panic which occurred in 1867? A. This panic wa.s produced by the reduction of the amount of currency. In September, 1865, after the close of the war, our money consisted of government notes, national bank notes, and state bank notes to more than 12,000,000,000. This money was needed to repair the wastes of war, and was actually at work, giving employment to the returned soldiery, who had now taken their places in society as producers of wealth. The vast expense incurred during the war demanded that our production should be increased, and additional facilities for transportation furnished, to the end that we might be able to throw a large amount of our products into foreign markets, and thereby furnish suflicient revenue to FINAWOIAL CATECHISM. 13i meet the expenses of the government, and liquidate our indebtedness at the earliest possible moment. The whole volume of the currency was thus employed. The people had paid the government a full and valid consideration for all that it had issued, and it in justice belonged to them. Beli v- ing that they would be permitted to use that which they had paid for, they formed their plans for the future, and based their contracts, as they had a right to do, on the amount of money then in circulation, which would have resulted, had it not been arrested by the act of the government, in the grandest development of national wealth which has ever occurred in the history of the world. There was no over-production, for every description of the products of American enterprise found a ready and remunera^ tive market. There was no wild speculation, for legitimate business was sufficiently remunerative to satisfy the aspira- tions of business men, and prevent them from entering into any schemes of speculation not established on a safe basis. There was no extravagant indebtedness, for there was money enough to fill all the channels of trade, so that there was no need of substituting individual obligations for money. It was in this period of prosperity that Hugh McCulloch was appointed Secretary of the Treasury. He at once com- menced contracting the currency and continued the process until, by 1867 he had withdrawn $1,300,000,000 of the cur- rency of the government from the people and converted it into bonds bearing usury. This left only a little more than $700,000,000 to carry on a business based upon a circulation of more than $2,000,000,000. The panic was inevitable, and was the result of the government permitting its financial agent to rob the people of this amount of money, in order to make what he was pleased to term a specie basis. By this ruinous policy, every branch of productive indus- try was crippled to the same extent that the currency was contracted. The only class that flourished was the bankers and the money dealers. Fortunately for the national banks, 132 FINANCIAL CATECHISM. they were not established on a specie basis. If they had been, they too would have been compelled to follow " in the footsteps of their illustrious predecessors," and suspend, as such banks always do. But while all other interests were suffering, these banks flourished; and in the period from July 1, 1865 to July 1, 1867, they increased their circulation from 1146,137,860 in 1865, to 1298,625,379 in 1867. . Uader these adverse circumstances the people struggled on from year to year, only to find themselves less able to meet their obligations than they were the previous year. Each year the number of business failures increased, and the possi- bility of recovering from the shock produced by this stab at their most vital interests, grew less until the great panic of 1873, when the number of business failures reported amounted to 5,183, involving a loss of $228,499,000. Q. Was there any material change in the business of the country to which this panic can be attributed, or was it the legitimate result of the contraction of the currency ? A. This panic and suspension was of a different character from any of those which preceeded it. It was a suspension of currency payment, instead of specie payment by the banks, for none of them had pretended to pay specie since 1861. The crisis was not brought about by any material change in the ordinary business of commerce. The bankers, the gold gamblers and the stock jobbers were the parties responsible for the crash which occurred at that time. The foundation of it was in the law of Congress, authorizing banks in the interior to keep a large part of their reserves in banks in certain large cities, termed redemption cities, and permitted such banks to pay usury on the money so deposited with them. In order to justify them in paying this usury, they must make some disposition of it. As it was deposited sub- ject to draft on sight, they could not loan it to engage in ordinary business. It therefore was loaned to gold and stock gamblers to be paid on call. In the early part of the fall of 1873, while this kind of FINANCIAL CATECHISM. 133 * speculation was at flood-tide, Jay Cook & Co., -which had been one of the largest operating firms in railroad stocks failed. Confidence was immediately destroyed, and a run was made upon the banks. They could not convert their stocks which they held as collateral, and was compelled to suspend, and many of them failed entirely. This suspension con- tinued for three months. The sales at the gold room were suspended and the banks issued $30,000,000, clearing house certificates, to use as money among themselves, in order to make their weekly settlements. They also appealed to the Secretary of the Treasury for relief, and in response to their appeal he paid out $26,000,000, which had been retired and laying idle in the Treasury since 1868. One peculiar char- acteristic of this panic was, that instead of the prenium on gold increasing it declined. Before the failure of Jay Cook & Co., it was quoted at 14 per cent., and immediately after it dropped to 7 per cent, premium. The largest share of the distress created by this panic is attributable to the fact that the law providing for redemption banks in the large cities caused the money to be drawn from«among the people, when it was needed for legitimate business, and concentrated in the cities in order to be used in these gambling operations. There was another peculiarity about it in which it differed from all those which had occurred during the specie basis system of banking. In all cases under that system, when the banks suspended, the people lost confidence and invested their money in property at almost any price, so that the money was kept in circulation until it became entirely worthless. In this case the people lost confidence in the banks, but they had full faith in the government, and instead of investing their greenbacks in property, or depositing them in bank, they hoarded them; thereby contracting the cur- rency to a still greater extent. Once more. One of the most disastrous speculations which the country has witnessed, took place on the Pacific coast in 1875, the result of which transferred the greater part 134 FINANCIAL CATECHISM. ♦ of the wealth of California into the hands of a few indivi- duals, who have ever since borne down on the people of that state with such relentless oppression, that revolution has been imminent, and was only prevented by the partial suc- cess of the people at the ballot box in thwarting the designs of their oppressors and staying them in their unbridled career of robbery. These speculations, be it remembered, were not based on paper money of any kind, nor on silver. Neither were they based on a redundancy of money of any kind; for the total amount of currency of all kinds in circulation, and held as reserves (as shown by the report of the Secretary of the Treasury) only amounted to $773,646,728.69. These speculations, wild as they were, v^ere based upon gold banks and gold bank credits, and a currency contracted to a specie basis. The remedy for the prevention of wild specula- tion and extravagant indebtedness must be sought in some other direction than contraction to the specie basis or gold standard. Q. Have we any instances in the histoi-y of modern times vrhere the people of any nation have prospered for any con- siderable period of time without panics, when the circulation was irredeemable or inflated above a specie basis ? A. The history of England presents one remarkable in- stance. The nation was at war with France, and the expen- ditures had taxed her resources until she found herself unable to meet her demands in coin. The Bank of England had exhausted its resources until it was unable to further advance coin on government securities. In 1797, the government took charge of the bank, ordered it to suspend specie pay- ments, and made its notes legal-tender, so that the notes of the bank were virtually the notes of the government. At this period the vrhole volume of the currency in England, bothcoin and paper, amounted to $45,000,000; butthe paper currency was inflated during the period of suspension until it reached $127,000,000. This suspension existed for twenty-six years, FINAJSCIAL CATECHISM. 135 during which period she carried on her war with France and her late war with the United States, and enjoyed a state of domestic prosperity such as she never had enjoyed before, nor never has since. Such was the state of her progress, that, whereas her revenue in 1797, when inflation commenced, was only $115,000,000, in 1815, eighteen years after, it had rose to $360,000,000. Durine; the whole period of twenty-six years, from 1797 to 1823, while the suspension of specie payments and inflated currency continued, there was no wild specula- tions, no extravagant indebtedness; and, consequently, no panics. In less than ten years after the bank had resumed specie payments the kingdom was involved in the wild spec- ulations which resulted so disastrously from 1833 to 1837. Another notable instance is to be found in France. In 1848 she changed her form of government from an empire to a republic. Being surrounded by monarchical governments, all hostile to republican institutions, every means was used by them to prevent the success of the experiment. Her credit was attacked, and her securites depreciated in the market. This produced a panic, and a run was made on the Bank of France for coin which it found itself unable to withstand. It was about to go into liquidation, when the government interfered and compelled it to suspend specie payments, made its notes a legal-tender, and increased its circulation to $600,000,000, a much largar amount than it had ever reached before. Previous to this act of the government, business was stag- nated; every industry was crippled; th^ people were idle for want of means to prosecute the industries of the nation. But as soon as the government took this step confidence was restored; business revived as this irredeemable paper money entered into and swelled the amount of the circulating me- dium, until every laborer found ample employment at remunerative wages; every industry was stimulated and built up to its normal prcportions, and its products found a profit' able market. 136 FINANCIAL CATECHISM. This money, being virtually the money of the government, would buy anything in the market, or pay any debt; conse- quently, it went out among the people and entered into all their business. It was not hoarded, nor did it produce any wild speculation, but it so increased the wealth of the nation that coin flowed into the Treasury until it amounted to $1,200,- 000,000 — more than was held by any other nation in the world. For twenty-two years France enjoyed a prosperity with this redundant currency which was only checked by the war with Germany in 1870-71. After confidence and prosperity had been restored the bank again paid specie when de- manded; but the people had become so accustomed to look upon its notes as superior to coin that they kept it in circu- lation the same as when it was the money of the govern- ment. The expenses of the war with Germany had impoverished the nation and crippled the bank. In addition to the ex- pense and destruction produced by the war, the conditions of peace imposed the necessity of paying to Germany |1,- 100,000,000. Their experience since 1848 taught the French people a lesson which they were not slow to improve. The govern- ment at once took charge of the bank and caused it to sus- pend specie payments, and increased its circulation $200,- 000,000, making its notes legal-tender as before. This at once set the industries into active operation. Everyfarmer, manufacturer and laborer found ample demand for his efforts and received a generous reward for his toil. So active and successful was this industrial movement of the French people that within three years after the close of the war, which left them demoralized, despoiled and impoverished, they sold to Germany enough of the surplus goods manu- factured through their energy, stimulated by a redundant currency, to pay more than two-thirds of the 11,100,000,000 assessed upon them as indemnity for the war. FINANCIAL CATECHISM. 137 Ten. years have elapsed and the same financial policy is adhered to. The currency has not been contracted to a pre- tended specie basis, notwithstanding the Bank of France holds more coin than any other bank in the world. It does not pretend to pay specie, but its notes are at par with coin for any and every purpose. This money is the choice of the people, because they know it will be sustained by the gov- ernment. During all this period — from 1848 to 1881 — there has been no panics in France produced by speculation, while the currency has been inflated and not redeemable in coin. The foregoing historical facts compel us to adopt the fol- lowing conclusions: 1st. That it is the scarcity and not the abundance of money that creates extravagant indebtedness. 2nd. That wild speculation is set on foot and encouraged by bankers, who furnish the money to carry them on for the purpose of realizing large profits out of the failures which must inevitably follow. 3rd. That the adoption of the specie basis is first intended to deceive the people and inspire confidence in the banks, in order to get their notes into circulation until they have flooded the country, and then to be used as a pretext for fail- ing because they cannot redeem them. 4th. That when they do not fail, after furnishing the money and getting biTsiness established on a redundant cur- rency, they invariably call in their loans and contract the currency, thereby compelling the substitution of individual indebtedness, and then in turn take advantage of that in- debtedness to rob and ruin their deluded victims. 6th. That the only sure method of preventing wild spec- ulation, extravagant indebtedness and ruinous panics is to discard the specie basis and prohibit the issuing of currency by individuals or corporations. Let all the money be issued by the government, based upon the faith and credit of the whole nation and all its wealth, and such money made a full 138 FINANCIAL CATECHISM. legal-tender and furnished in sufficient amount to meet all the legitimate demands of commerce, and regulated by Congress so that there could be no sudden expansion of its volume unless in case of emergency, and no contraction so as to cripple business and produce panics. CHAPTEE YI. FUETHEK DEVELOPMENT OF THE PLOT OF THE BANKERS AND BONDHOLDEES. Question. Was not the act of Februarj- 3, 1868, which forbid the further destruction of the legal-tender notes an act in behalf of the people and against the interests of the bankers, and if so, does it not show that that body was not actuated by mercenary motives, but acting in the interest of their whole constituency, of whatever calling or pro- fession ? Answer. The act of February 3, 1868, was, in its opera- tion an act in behalf of the people ; for it prevented them from being robbed of $346,000,000, and six per cent, bonds being saddled upon them, adding $18,000,000 annually to the burden of usury, which they were then staggering under — and this to obtain ninety per cent, of currency which had no redeemer provided except these legal-tender notes, which the bankers and their representatives were so anxious to destroy. The people had been awakened from their lethargy through the suffering they had borne since this ruinous policy was commenced, and demanded of this Congress that it should proceed no further. As by magic, the two houses of Con- gress were aroused to a sense of the danger with which B'lNANCIAL CATECHISM. 139 the people were threatened, and honorable Senators and Representatives vied with each other in making themselves conspicuous in advocating this great measure for the pro- tection of the people. Ev^en Senator Sherman, who was known to be the champion of the National Bank Act, and who in his speech in the Senate on the introduction of the bill, declared that the legal-tenders must be withdrawn from circulation the very moment that peace came, now made an able and elaborate argument against their further with- drawal and destruction. This bill was passed as a salve to apply to the wound already made ; not to heal, but to palliate ; not because they regarded the interests of the people as paramount, but they saw that they would bear no more. Had th'ey been legislating for the people they would not have been satisfied to stop the further exercise of the cause which produced the distress, but would have restored to them that which, by their act, they had been robbed. This they did not do. On the 25th of July, 1868, nearly six months after the passage of the former act, the cry from the country for more money still gi'eeted the ears of Congress. Another plaster must be applied to the wound- On this date they passed an act authorizing the issue of ?25, 000,000 more three per cent, certificates to be held by the National Banks as reserves, in order to liberate that amount of legal-tender notes for cir- culation. While this act was pretended to be an act for the relief of the people, it was a cunningly devised scheme to load them down with additional usury. Notwithstanding this pretended effort to relieve the peo- ple of the distress produced by the withdrawal and destruc- tion of the legal-tender notes, the reports of the Secretary of the Treasury show, that from July 1, 1868, to July 1, 1869, the currency was contracted in volume 126,466,546.14. Q. How could this be, when there was no further retire- ment of the legal-tender notes and an additional issue of 125,000,000 of certificates to liberate the same amount held 140 FINANCIAL CATECHISM. by the banks as reserves, for circulation ; did the banks refuse to exchange the legal-tender notes for the certificates, and thus withhold them from circulation? A. No, the bankers were too well versed in the scheme, of finance for that. They knew that if they should seem to resist this demand of the people, it would cause them to be on the alert, and perhaps defeat the next step in their programme, which was of much greater importance to them than this small temporary increase in the amount of cur- rency even had it been real. But it was not real. During this period, from July 1, 1868, to July 1, 1869, the Secretary of the Treasury was continually taking up and converting into bonds all that class of treasury notes which were in- tended for currency and were used as such; so that, notwith- standing the apparent increase in the circulation, it was actually diminished to the amount of 126,466,546.14, as before stated. Q. You referred to what you call the next step in the bankers' programme. What are we to understand by that? A. At the time of the passage of the act of Feb. 3, 1868, there was to be a Presidential election in the ensuing fall. The party in power was compelled to put on the appearance of protecting the interests of the people in order to secure a further lease of power, and this act was passed for the pur- pose of inspiring such confidence as to prevent any violent opposition in the pending campaign, even from those who had suffered most from the recklesb policy which had been pursued on the finance questions. The Republican party has the prestige of power, and was responsible to the people for every law that was enacted; but when legislating on any question where the contest came between the interests of the money power and the people, the old party lines were obliterated, and both parties vied with each other in becoming the servants of this immaculate gold ring. The administration of Andrew Johnson had been one of PiNAdfUIAL CATBCmS^. lai dissatisfaction and discontent, which gave the Democratic party some hope of again obtaining control of the govern- ment. The great point was to find a suitable man for a candidate for President. General Grant had made himself notorious as the successful general who had led the army of freedom and crushed out the great rebellion. He had never cast but one vote before the war, and that was for a Demo- crat. Many of the Democratic papers suggested his name for the candidate of their party, hoping that his great pop' ularity so soon after the close of the war would be sufficient to lead them to victory, but no decided steps were taken in that direction. A more secret and potent agency was at work. There was now nearly fifteen hundred millions of the bonds of the government in the hands of a few individuals, which were payable in lawful money of the United States, known as currency bonds, which had been bought by the holders for about forty cents on the dollar. The holders did not want them paid, or, if paid, not until they could realize a dollar in coin for each dollar called for in the face of the bond. We had a large surplus revenue, and the people were clamoring for its application to the liquidation of our debt. Something must be done to forestall such action. The man- agers of the scheme saw at once that it would not be safe for them to risk the success of their plans on the success of the Democratic party. The war record of General Grant would carry the great mass of the Republicans, and his for- mer Democratic record would be sufficient justification for such Democrats as it was desirable should support him to do so. General Grant's name soon appeared in the Republi- can papers as the probable candidate of that party, and was as promptly dropped from the columns of the Demo- cratic press. The National Republican Convention met at Chicago, on the the 20th of May, 1868, and General Grant was put in 142 FINANCIAL CATECHISM. nomination for President, and Schuyler Colfax for Vice- President. The Democrats appeared to be demoralized, but, at last, on July 4, 1868, they met in national convention, in New York, and nominated Horatio Seymour for President, and Francis P. Blair for Vice-President. It has been rumored, but without sufficient reliable data to establish the fact, that previous to the nomination of General Grant, there was an agreement entered into between certain political leaders of both parties, who were largely interested in the bonds of the government, that in case General Grant's co-operation with them could be assured, there would be no formidable opposition by the Democratic party. Whether this statement is true or not, the campaign on the part of the Democrats was a feeble one throughout, while some of the great Democratic papers of the city of New York, where the bond-holding interest chiefly centered, denounced the nomination of Mr. Seymour as an unwise one, on account of his being a weak man, when it was patent to every one at all acquainted with the history of New York politics, that he had been for many years one of the most popular men in the Democratic party of that State. Whether the charge of bargain and sale between the lead- ers of the parties is true or not, when the election took place, in November of that year. General Grant was elected by an overwhelming majority. Congress met in the following December. This being the last session uiider the administration of President Johnson, and as he antagonized Congress in much of its work, there was but little important legislation completed until after the 4th of March, when his term expired. There was, however, a joint resolution introduced in the House by Representative Schenk, and discussed to some extent, before the advent of President Grant's administration. This resolution was entitled "An Act to Strengthen the Public Credit." FINANCIAL CATECHISM. 143 0: An acb to strengthen the public credit! Who was doulting the credit of the government in 1869, four years after the close of the war? Was it the soldiers who had survived the terrible struggle and had been paid for their services in legal-tender notes of the government, at their face value? A. No. Q. Was it the farmers who had furnished subsistence for the army, and had accepted the legal-tender notes in return, relying upon the faith of the government that they were lawful money of the United States ? A. No. Q. Was it the manufacturers, who had clothed the sol- diers and furnished the arms and munitions of war for the conflict, and had been paid in legal-tender notes, without discount? Was it any, or all of these, who had become doubtful of the credit of the government, and demanded some legislative action to strengthen it. A. Don't start, my friend, it was none of these. These were all well satisfied with the legal-tender currency, and were anxious to retain it in circulation, having full faith that the credit of the nation, which had carried it through four years of devastating war, would not fail in time of pro- found peace. Q. If this class of our citizens, who had borne the hard- ships of the war, and exchanged the products of their labor for the notes of the nation, which it had constituted lawful money of the United States, and were still using them as such, did not question the credit of the government, who else could possibly do it? A. It was the bankers, the brokers and the bondholders. That band of vampires, who preyed upon the government during the war, who crippled the legal-tender notes at their birth that they might be able to obtain extortionate prices for their gold, that inaugurated the national-banking system that they might saddle the people with a bonded debt which 144 FINANCIAL CATECHISM. they could buy for a trifle, to bank upon, and from whicii to exact usury from the people. In short, it was that class who were determined to inaugurate a system of perpetual bond- age for the great mass of the people for the, benefit oi them- selves and their children from generation to generation. Notwithstanding the suffering and bankruptcy caused by the contraction of the currency, the activity, energy and industry of the people, together with our boundless re- sources, was overcoming every obstacle and furnishing ample evidence that unless something was done to impede its progress the indebtedness of the government would surely be paid within a reasonably short time. As it was at the option of the government to pay those currency bonds as they fell due in legal-tender notes and stop the usury, the fear of the holders of those bonds was that they would be so paid, and hence their demand for an act to strengthen them— the creditors of the government. They were gov- ernment creditors. If it paid its bonds, which they held, they would cease to be such. They wished to hold it as a debtor, and demanded such legislation as would enable them to do so. Q. What kind of legislation could they demand of Con- gress that would prevent the government from paying these bonds according to contract, and liberating the people from paying usury upon them? A. The best answer to this question is to allow the act to speak for itself. Here it is : "An act to strengthen the public credit. Approved March 18, ]869. "Be it enacted by the Senate and House of Representatives of the United States, in Congress assembled : Tliat in order to remove any doubts as to the purpose of the government to discharge all just obligations to the rublic creditors, and to settle conflicting questions and interpretations of the law by virtue of which such obligations have been contracted, it is hereby provided and de- clared that the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all the obligations of the United States, except in cases wheie the law authorizing the issue of such obligations bas expressly provided that the same may be paid in lawful money, or other currency than gold and FINANCIAL CATECHISM. 145 silvei. But none of said interest-bearing obligations not already dae shall be redeemed or_p;iid before maturity, unless at suoh time the United States notes shall be convertible into coin at the option of the holrler, or unless at such time bonds of the'Uniteii States bearing a lower rate of interest than the bonds to be re- deemed can be sold at par in coin. And the United States also solemnly pledges its faith to make provisions at the earliest pos- sible period for the redemption of the United States notes in coin." Q. In what way could the passage of this act strengthen the public credit when the bonds which had been sold were principally of that class which were made payable in lawful money, and so specified on their face; could this act change the nature of that contract without violating the Constitu- tion of the United States? A. This act made an exception to that class of bonds so far as their payment in coin was concerned, but it pledged the faith of the government that none of them should be paid before maturity, unless United States notes should be convertible into coin at the option of the holder, which was invalidating the contract, and consequently an expost facto law. This act was only an entering wedge, a preparatory step toward the consummation of a series of acts which will ever stain our statute books, and show to the unbiassed mind of the future historian, the evidence of a plot so dark and damning, that Guy Fauk's plot to blow up the British Par- liment sinks into insignificance beside it. This act further pledges the faith of the government to redeem the legal- tender notes in coin, which meant no more nor less than withdrawing them from circulation. There was no lack of faith in the public credit, but there was a lack of faith in the bondholders, in the belief that the representa- tives of the people could be so basely false to the interests of their constituents, as to be used as tools for the purpose of robbing and plundering them. It was this faith they desired to have strengthened. How well they succeeded will be seen in the sequel. This measure met with strong opposition, and was dis- cussed at length by some of the ablest members of both 10 146 FINANCIAL CATECHISM. houses; and, strange as it may appear, Senator Sherman, then chairman of the Senate Committee on Finance, delivered au able an elaborate speech in the Senate against the adop- tion of a measure making these bonds payable in coin, on the 27th of February, 1868. During this discussion Senator Sherman took the ground that the outstanding legal-tenders were all issued before any of the bonds were sold, that it was known to the purchasers that they were lawful money of the United States, and that payment in such money at the option of the government being stipulated on the face of the bonds, the holders, therefore, had no right to expect or claim any thing else. In the course of his remarks he made use of these forcible and truthful words: " I say that equity and justice are amply satisfied if we redeem these bonds at the end of five years in- the same kind of money, of the same intrinsic value it bore at the time they were issued. Gentlemen in ay reason about this matter, over and over again, and they cannot come to any other conclusion — at least that has been my conclusion after the most careful consideration. Senators are sometimes in the habit, in order to defeat the argument of an antagonest, of saying that this is repudiation. Why, sir, every citizen of the United States has conformed his business to the legal-tender clause. He has collected and paid his debts accord- ingly. Every state in the union, without exception, has made its contracts since the legal-tender clause, in currency and paid them in currency. •' Public as well as private debts, contracted since the legal-tender act, did not rest upon opinion or upon express stipulation in the law, and it is equitable and right that the United States should avail itself of that part of the contract. * ***** Just consider it: seventy-six dollars of gold will buy a five-twenty bond for one hundred dollars, bearing per ceut. interest in gold, and that bond cannot be redeemed according to one construction, until the United States are ready, not only to pay this per cent on the one hundred for the use of seventy-six dollars^ but also to pay one hundred dollars in gold for what now costs seventy-six dollars. ******! repeat that, if this offer is refused (the offer to refund the five-twenty bonds into bonds bearing a lower rate of usury), I will not hesitate to redeem maturing bonds in the currency in existence when they were purchased. This conclusion I have arrived at against the earnest arguments of personal and political friends, and against my own personal and pecuniary interests. " But, Sir, I saw two years ago, and we all see clearly now, that the existing relations between the public creditor arid taxpayer is one by wliich the former enjoys all the blessings of the govern- ment without cost, receives without diminution a higher rate of FINANCIAL CATECHISM. interest than courts would enforce between citizens, and may demand payment of the principal in gold for paper loaned, while your courts refuse to enforce a special contract of gold for gold, juch a system cannot endure in a government not entirely des- potic, without creating discontent that may endanger the fair and equitable performance of the public engagements. You cannot disguise your knowledge of this growing discontent. The un- avoidable effect of preaching specie payments, in reducing prices and shrinking values, will increase the discontent. In that painful process the people will see that the untaxed producti\e annuities of the bondholders alone will be increased in value, while all other forms of property will be reduced in value. "It is not the interest, nor do I think it will be the desire of the public creditors to invite this public discontent. " Senators have told us that we must not be influenced by public discontent or clamor. I agree with them when the discontent is not founded upon substantial equity, but when it is founded upon equity it will make itself felt through you or over you." Oae month after the delivery of this speech in the Senate, Mr. Sherman, in reply to a letter from Mr. Mann, sent him the following letter: "United States Senate Chamber, / Washington, March 30, 1868. j "Dear Sib: I was glad to receive your letter. My personal interests are the same as yours, but, like you, I do not intend to be influenced by them. " My construction of the law is the result of careful examina- tion, and I feel quite sure an impartial court would confirm it if the case should be tried before a court. I send my views as fully stated in my speech. Your idea that we propose to repudiate or violate a promise when we offer to redeem the principal in legal- tenders is erroneous. I think the bondholder violates his prom- ise when he refuses to take the same kind of money he paid for the bonds. If the case is to be tested by law, I am right ; if it is to be tested by Jay Cook's advertisements, I am wrong. I hate repudiation, or anything like it, but we ought not to be deterred from what is right for fear of undeserved epithets. If, under the law as it stands, the holders of the five-twenties can only be paid in gold, the bondholder can only demand the kind of money that he paid; then he is a repudiator and an extortioner to demand money more valuable than that which he gave. "Yours truly, John Sherman." Hon. Oliver P. Morton, in a speech delivered in the United States Senate on the 6th of July, 1868, made use of this em- phatic language: " When it is asserted that the government is bound to redeem the five-twenties in coin, I say it is in express violation of at least four statutes." On the 17th of the same month, Hon. Thaddeus Stevens, FINANCIAL CATECnmM. in a speech in the lower House, said: " I would vote for no such swindle on the tax-payers of the country; I would vote for no such speculation in favor of the bondholders and millionaires." With such truths so plainly spoken in the halls of Con- gress, by men of distinguished ability, that body cannot screen itself from intentional wrong behind the gauzy veil of ignorance. The purpose to rob the people in order to add to the wealth of the bondholders is so plainly marked at every step that it cannot be misunderstood. One notable thing in this apparently noble plea of Sen- ator Sherman for the rights of the people, is the fact that he had constantly in view his favorite scheme — a funded debt — and this speech was evidently a menace on his part in order to secure a long bond with a lower rate of usury before any of those of which he was speaking became due. This was the position occupied by the leading members of the Republican party in both houses of Congress, after General Grant was nominated by that party for the presi- dency. These speeches were sent out broad-cast all over the country as campaign documents, showing to the people who were their friends, and were used as text-books by the local canvassers and stump orators to convince the people that the Republican party, which had broken the shackles of slavery from the limbs of four millions of bondsmen, and relieved them from the curse of unrequited toil, would be equally true to the interests of the laboring and tax-paying citizens of the United States, and guard them sacredly from aggres- sion and outrage from any source whatever. The State platforms of both the Republican and Demo- cratic parties throughout the west and south, in 1868, de- clared either in plain terms or by inference, that the five- twenty bonds were payable in legal-tender currency. The fourth and fifth sections of the Republican platform of Indiana, for that year, read as follows : /I'burth—" The public debt made necessary by the rebellion sliould be honestly paid, and all bonds issued therefor should be FINANCIAL CATECHISM. i49 paid ia legal-tenders, commonly called greenbacks, except where by their expressed terms they provide otherwise, and paid in such quantities as to make the circulation commensurate with the commercial wants of the country, and so as to avoid too great an inflation of currency and the increase in the price of gold. Fifth — "The large and rapid contraction of the currency, sanctioned by the vote of the Democratic party in both houses of Congress has had a most injurious effect on the industry and business of the country, and it is the duty of Congress to provide by law for supplying the deficiency in legal-tender notes, com- monly called greenbacks, to the full extent required by the busi- ness wants of the country." The Republican platform of Ohio for that year was more guarded than that of Indiana in its language, but was equally explicit in its pledges to pay the five-twenty bonds as provided for by the law under which they were issued, as the following resolution will show : Resolved — "That the Bepublican party pledges itself to the faithful payment of the public debt according to the laws under which the five-twenty bonds were issued ; tliat said bonds should be paid in the currency which may be a legal-tender when the government shall be prepared to redeem such bonds." The Democratic platform provided that : " "When the obligations of the government do not expressly state upon their face, or the law under which they were issued does not provide for it, they (the five-twenty bonds) ought in right and justice, to be paid in lawful money of the United States." It was under such declarations as these that the campaign of 1868 was carried on, and General Grant was elected presi- dent. Soon after his election the animus of the money power presented fresh demonstrations of impending danger. The subsidized press began at first to hint that there was danger of repudiation, and hinted that it was the intention of the law under which the five-twenty bonds of the govern- ment were issued that they should be paid in coin, notwith- standing it was stipulated that they should be paid in lawful money of the United States. A short time after the election Senator Sherman, who had expressed himself so emphatically— only in the February and March before — of his conviction that these bonds were payable in legal-tender notes, both in law and equity, had, through some mysterious revelation, received new light, and in a 150 FINANCIAL CATECHISM. speech delivered at Toledo, Ohio, said, that, " To refuse to pay these bonds in gold would be repudiation and extortion, and would be scoffing at the blessings of the Almighty God." He advocated and assisted to procure the passage of that odious act of robbery known as the Credit-Strengthening act of 1869, and pursued the same policy unrelentingly during the remainder of his term as Senator, and through his four years' term as Secretary of the Treasury. In March, 1869, when this bill was on its passage in the Senate, after it was found that it would pass over all oppo- sition, Senator Morton made use of this language: " And now I propound the question : Is it either intended by this bill to make a new contract, or is it not? If it is intended to make a new contract, I protest against it; we should do foul injustice to the government and the people of the United States, after we have sold these bonds on an average of not more than 60 cents on the dollar, now to make a new contract for the benefit of the bondholder. It gives to those laws a construction that I do not believe in, and that 1 have shown is contradicted by at least four statutes of Congress. Sir, it it understood, I believe, that the passage of a bill of this kind would have the effect in Europe, where our financial questions are not understood, to increase the demand, and that will enable the great operators to sell bonds they have on hand at profit. It is in the shape of a broker's operation. It is a bull movement, intended to put up the price of bonds for the interest of parties dealing in them. This great interest is thundering at the doors of Congress, and has for many months been attempting to drive us into legislation for the pur- pose of making money for the great operators. That's what it means, and nothing less." But the fight of these noble patriots for the rights of the people was unavailing. The money power had possession of both branches of the National Legislature, and had just inaugurated an executive in full sympathy with them. The bill was passed by the two Houses, and on the 18th day of March, 1869, was approved and signed by President U. S. Grant, as the first official act of his execiltive career. Q. Did the passage of this act raise the price of bonds in the market, as was anticipated? A. Yes. According to the quotations on July 1, 1868, bonds were worth 70 cents on the dollar. On July 1, 1869, FINANCIAL CATECHISM. 151 73 cents, and on July 1, 1870, they sold for 85 cents on the dollar. But this was only the first step toward the enhancement of the value of these bonds. The faith of the nation had been pledged, by its Representatives, to violate the law under which they were issued, and to abrogate the contract under which they were sold. It was not considered safe to risk the strength of this pledge while both the law and the bonds provided that they might be paid in currency. Something must be done in order to insure the success of the plan thus commenced, and Senator Sherman's fertile brain was equal to the occa- sion. He proposed, that in order to settle any disputes or litigation on the subject in the future, the bonds already sold should be refunded and made payable in coin. As a pretext of justification for this movement, it was proposed to issue these bonds at a lower rate of usury than those already sold, and thereby save for the people a large amount of usury. Accordingly, on the 14th of July, 1870, a bill was passed authorizing the funding of the $1,500,- 000,000 of currency bonds into bonds payable in the coin of the United States at its then standard value. These bonds were divided into three classes. Two hun- dred millions were to beS,r usury at 6 per cent., three hun- dred millions were to bear 4^ per cent., and one thousand millions were to bear 4 per cent. This act was doubly deceptive in its character. While it was held to be in the interests of the people, by lightening the burden of taxation, it really increased that burden by making the bonds payable in coin. It added 1500,000,000 to the value of the bonds already sold and in the hands of speculators, and reduced the value of all the products of labor in the same proportion. Q. How could the law making the bonds payable in coin reduce the value of the products of labor? A. The currency bonds were approaching very near the 152 FINANCIAL CATECHISM. time for the government to pay them at its option. Such payment would necessarily keep the legal-tender notes in circulation and perhaps increase their vohime. While this condition existed all the products of labor was measured in value by the legal-tender standard, but when these became coin bonds it increased the probability of the withdrawal of those notes from circulation, and hence reduced everything to the coin standard. Q. Why was it that the people did not protest at the time against this conduct of their representatives ? A. There are several reasons: First. At the close of the war, in 1865, the country was in the flood- tide of prosperity. The money put in circula- tion for the defense of the country had filled every avenue of commerce; labor was in demand, and at remunerative prices; every one was busily engaged in some paying occu- pation, and, so long as this condition existed, no one had time to attend to politics except politicians; therefore the acts of the people's representatives were but little heeded or cared for so long as they were not felt. Second. The people had come to place such implicit confi- dence in the Republican party, since, under its auspices, the country had been saved from disruption, that it was thought entirely safe to leave the matter of legislation wholly in the hands of its political leaders. Third, and last. But most important of all is the fact that the people had been taught to believe that the science of government was so intricate in its character that only those who had been educated for politicians could possibly under- stand it, or have any conception of its nature, and, above all, the subject of national finance was of so deep and mys- terious a nature that the ablest financiers, who had spent their whole lives in its study, could not comprehend it, and, there- fore, it was useless for the farmer, the manufacturer, the artizan, or any one in the common walks of life to spend any of their time or give themselves any trouble about it; the FINANCIAL CATECHISM. 153 financiers of the nation must manage that. Having been thus educated from generation to generation, the fruitage showed itself in the little heed which the people paid to the warning given by the faithful few of their representatives all the way through this contest with the money power from 1861 to 1870. True, they had been aroused when they discovered that they had been robbed of their currency, and felt the pressure of such robbery, and demanded that it should be stopped; but they did not seem to recollect that ''Eternal vigilance is the price of liberty," and relaxed at once into their former apathy as though there was no enemy to contend with in the field. This kind of education has been a curse to humanity from the earliest dawn of human civilization, and has done more to impede the car of progress than all the active and open hos- tility to free government which it has ever had to encounter. It operates like an opiate on the physical system, which lulls to sleep and prevents sensation to pain, while disease is prey- ing upon its vitality; or like chloroform, administered by the burglar, which causes his victim to sleep while he enters his house and despoils him of his goods. Q. If it was intended that the five-twenty bonds, which were made payable in lawful money of the United States,should be paid in coin, why was it not so stated in this law and so stipulated in the bond ; and why did the law make the usury upon those bonds payable in coin? A. The reasons which governed the legislators of that period can only be reached by inference, through the laws which they have left recorded on our statute books. The first inference to be drawn from the law as enacted, and the bonds issued in accordance therewith, is that the law did not contemplate the coin payment of the principal of these bonds, and the fact that the usury is made payable in coin is strong presumptive proof of this position. But, as this was a part of the plan for creating a perpetual 1S4 MRANCIAL CATMcmsM. natioual debt as a basis for a permanent banking system and aristocracy in the United States, it was doubtless understood and intended by those members who were initiated into their secrets and in sympathy with them, that these bonds should be so managed that they should ultimately be paid in coin. This being granted, the policy of making them payable in lawful money would leave them open to construction, and this would detract from their market value. It was in the interest of the money dealers to buy these bonds cheap, and risk securing the necessary legislation after they had secured them. The question as to what kind of money those bonds should be paid in was raised as early as March, 1864, and in June, 1864, Mr. Brooks offered an amendment in the House of Representatives, providing for making them payable, both principal and usury, in coin; which amendment was promptly voted down. Whether intentional or not, this vote was in the interest of the bond brokers, and against the people; for it tended to depreciate the price of bonds, and in an equal ratio enhanced the purchasing power of the broker's gold. The question was kept open until March 3, 1865, when Congress shifted the responsibility from their own shoulders to those of the Secretary of the Treasury, by leaving it with him to fund the outstanding bonds in new bonds or treasury notes made payable in coin or other lawful money, at his option; and what is very remarkable, the bonds issued under this act were nearly all equally inde- finite in their stipulations with regard to what kind of money with which they were to be redeemed, so that the strongest reason for such wording of the law made apparent by the history of the case is, that the policy was dictated by the money power, and in their interest, and Congress being under their control, could not avoid it. The reason that the usury was made payable in coin is equally obvious as a part of the same plan to rob the people and enrich the brokers. Here was $1,600,000,000 of bonds FINANCIAL CATECHISM. 155 to be sold, bearing usury at 5 and 6 per cent., making an average of five and a half per cent, on the whole amount to be paid annually, amounting to $82,500,000. This made a mar- ket for that much gold that must be iiad for that especial pur- pose, and put it in the power of those who were operating in coin and bonds to command the market for both, and sell their gold at whatever they demanded and buy the bonds at what they might be pleased to give. One of the strongest proofs that the bonds were issued in this condition for the purpose of depreciating their value in the market, is found in the fact that Hon. Garret Davis, of Kentucky, introduced a resolution, authorizing public credi- tors to bring suit in the courts for the adjustment of their claims, which resolution was promptly rejected. They were not willing to have ther action passed upon by the highest judicial tribunal of the government. With all the advantages already obtained, the money power was not yet satisfied. The funding bill of 1870, only provided for issuing 1200,000,000 of the new bonds at five per cent, usury. On January 20, 1871, only six months afterward they procured the passage of an act, amending the act of July 14, 1870, so as to make the amount of 5 per cent, bonds provided for in that act, five hundred millions instead of two hundred mil- lion dollars, thereby making $15,000,000 of additional usury to be paid annually by the people for the privilege of suffer- ing the robbery which had been perpetrated upon them by the acts ofl869 and 1870. 356 FINANCIAL CATECHISM. CHAPTER VII. THE KEPEAI- OF THE INCOME TAX AND THE DEMONETIZATION OF SILYEE. The next legislation in favor of the money power and against the people, in 1871, was the repeal of the law provid- ing for the collection of a tax upon incomes. Question. .How did that law apply and why was it re- pealed ? Answer. The object of the law was to raise money to sup- port the government and pay the usury on the public debt, as expressed in the title. In order to meet this demand a heavy tax was levied upon all imported articles sold in our own markets, such as iron and steel in all their forms and articles manufactured from them; lead, copper, zinc, tin, spices, groceries and dry goods, drugs, medicines, queensware, hides, leather and all articles manufactured from it; in short, all articles manu- factured in foreign countries which were in general use by all classes of our citizens. This is termed import duty, which, by the law of 1862, could only be paid in coin. Our internal revenue has been raised by taxing all articles of our own manufacture, such as tobacco, whisky, brandy, wine, trades, occupa"tions, business callings and professions; checks on banks. State and National; all deposits in banks of whatever character; all bills of exchange, receipts, notes, and mortgages; all conveyances of real estate or personal property were taxed to support the government. A tax was FINANCIAL CATECHISM. 157 also levied ou all incomes over $500 in 1865 for the same purpose, which law was amended in 1867, increasing the amount of income exempt from taxation to $1,000. The bonds of the United States was the only property or thing of value that escaped taxation to support the government. They were left untaxed. Q. What amount of government bonds was outstanding in 1867? A. A little over $2,000,000,000. Q. Why were they not taxed like other property ? A. It was claimed on the part of the money dealers that it was desirable to sell these bonds in foreign markets, and if they were taxable it would depreciate their value to the same extent, so that what the government collected in tax it would pay in additional discount, and would be injurious rather than beneficial; but it is certain that it would have been better to have sold those bonds to our own people at six per cent., with the privilege of taxing them, than to sell them in Europe at four per cent., without the power to tax them, for then both the money and the bonds would have been held by our own people, as the national debt of France is, and the holders of the bonds would have borne their proportional part in providing funds for their liquida- tion. Prior to 1870 the income on those bonds was subject to taxation the same as income from other sources, but capi- talists had been for several years clamoring for its repeal. As early as 1867 Jay Cook, the agent of the government at that time for the sale of United States bonds, declared that it should " be scornfully abandoned, and that right speed- iiy." Hon. William D. Kelley, of Pennsylvania, in the interest of manufacturing monopolists in the United States, made use of this language on the floor of the House of Repre- sentatives: " Mr. Chairman, within an hour of the opening of the present session I introduced the following resolution, which was adopted 158 FINANCIAL CATECHISM. without dissent: 'That the Committee of "Ways and Means be Jnstructed to -aquire into the expediency of immediately repeaL ing the provisions of the internal revenue law, whereby a tax of live per cent, is imposed on the mechanical and iaanufacturlng interests of the country.' " The subsidized press of the country denouuced the law as unjust and unconstitutional — that it was inquisitorial, and led to perJLiry, because it required parties to state, under oath, the true am.ount of their incomes. Q. Why should this requirement of the law result in perjury any more than the law requiring the party to give a truthful list, under oath, of his property to the assessor, under ihe ordinary rules of assessing property ? A. There really can be but one answer to this question. The greed for wealth has so distorted the minds of such, that they would wilfully commit perjury rather than bear their equitable share in supporting the government that protects them and theirs. There were three distinct parties who were contending for the repeal of this law, all actuated by one spirit — the desire to monopolize the wealth and business of the country by preventing the payment of the National debt and fastening it on the productive industries of the country for all coming time. The first of these was the association of bankers and money dealers, who produced no wealth, but were constantly absorbing that which others produced. The second was the railroad corporations, who were levying enormous tributes from the people for transportation, regard- less of the cost of construction and expense of running the roads, which had been more than paid for by subsidies from the government and the people. The third was the manu- facturing associations, who. by the protection placed upon their goods, had been enabled to break down competition and individual enterprize, and monopolize the business and draw enormous profits from it, compared with that obtainable from any other branch of productive industry. Jay Cook recognized these powers, and as agent of tha government, appointed by Secretary Chase, he appealed to S'INANCIAL CATBCHISM. 159 them in the following language. To the capitalists, he said: "We lay down the proposition that our national debt, made permanent and rightly managed, will be a national blessing." " The funded debt of the United States is the addition of $3,000,- 000,000 to the previously realized wealth of the nation. It is three thousand millions added to th^ available active capital. To pay this debt would be to extinguish this capital and loose this wealth. To extinguish this capital and loose this wealth would bean inconceivably great national misfortune." Then, he says to the manufacturers: "The maintainance of our national debt is protection. The destruction of it by payment is bondage again to the manufac- turers of Europe." Fallacious as this proposition was, it enlisted the manu- facturers in its favor, for it promised them protection by the necessity it would produce for raising revenue to pay usury on the debt. Lastly, to the national bankers, he says: " That is not a hazardous opinion which declares that in less than twenty years our national bank circulation will be $1,000,000,000. The currency that sixty-one millions of people, unequalled in industry and untrammeled in enterprise, will require, has got to have the basis of a national debt. There is no other founda- tion for it to stand on that will impart to it at once safety and nationality." How well these propositions were received, and how much Congress was under the dictation of the money power, may be seen by the following resolution, offered by Representative Kelley, on the first Monday after the commencement of the session of 1867: Resolved — " That the war debt of the country should be extin- guished by the generation that contracted it, is not sustained by sound principles of national economy, and does not meet the approval of this House." The foundation was thus laid for the accomplishment of the work, but the extreme pressure produced by the contrac- tion of the currency prevented further action at that time. The act of 1868, preventing the further withdrawal and destruction of the legal-tenders, inspired confidence and hope among the people, until, by 1870, business had some- what revived, and people had become less watchful of their interests. It was during this period of apathy that CoDgress m FINANCIAL CATECHISM. joined hands with the money power and repealed the income tax law, which was the most just and equitable tax law that was ever entered upon the statute books of any nation. Q. What amount of property was exempted from national taxation by the repeal of this law? A. There was railroad property to the amount of five thou- sand millions of dollars, which returned to its owners a net annual revenue of one hundred and eighty millions; capital to the amount of two thousand millions, invested in manu- factures, which y-.elded an annual income to the owners of 40 per cent, on the investment, and other capital invested in bonds and other speculations, which yielded to the holders (who were less than three hundred thousand) an annual income of $800,000,000. The amount of capital of the rich relieved from taxation by the repeal of the income tax and the amendment of the revenue laws, yielded an annual rev- enue to the government of about $200,000,000. Had the law not been disturbed, this amount of revenue, added to what we have raised beside, would have liquidated the whole amount of the national debt in 1880. This was the great calamity which the money power was determined to prevent, and the reason for the passage of the act of 1870, repealing the law providing for an income tax. While this tax was collected it compensated, in a measure, for leaving the bonds untaxed, for the income arising from them annually was subject to taxation. But when the act of 1870 was passed, it repealed the law so far as it applied to incomes, legacies and successions, and further provided that the new bonds provided for in the funding act, should neither, principal nor usury, be subject to taxation, either national, state or municipal. While this matter was under discussion in Congress, in 1868, Mr. Burchard, of Illinois, delivered a speech in the House of Representatives, in which he presented and had read an extract from the New York Monetary World headed "New York Millionaires."' It says: " No street in the world, except probably London, represents, FINANCIAL Catechism. loi in the short space of two miles and a half, anythin^like the enor- mous aggregate of wealth represented by Fifth avenue (New York) residents, between Washington Square and Central Park. We give, haphazard, a few names: Mr. Khinelander $ 3,000,000 Marshall O. Eoberts 5,000,000 Moses Taylor 5,000,000 August Belmont 8,000,000 Robert L. and A. Stewart 5,000,000 Mrs. Faren Stevens 2,000,000 Amos R. Eno 5,000,600 John Jacob and William Astor 60,000,000 Mrs. A. Stewart 50,000,000 Pierre Lorilliard , 3,000,000 James Kernochan 2-,000,000 William H. Vanderbilt 75,000,000 Mrs. Calvert Jones 2,000,000 Mrs. Mary Jones 2,000,000 J ames Gordon Bennett 4,000,000 Fred. Stevens 10,000,000 Louis Lorilliard 1,000,000 Total $242,000,000 Here are seventeen families on one street in one city of the "United States who held two hundred and forty-two millions of dollars in 1868, and the number has largely in- creased since that time. All of these, under the operation of the law as it stands since the repeal of the income tax, pay not one dollar toward the support of the government from all their vast incomes, and yet this is called a govern- ment of the people, by the people, and for the people. Q. If these persons, by their energy and perseverance, have been able to accumulate large fortunes, use those ad- vantages lawfully for the purpose of increasing their wealth, are they to be blamed for it; is it not human nature? A. The fault is not with those persons who simply pro- ceed under the law to accumulate wealth ; the fault on their part is, that they form combinations and conspiracies, and use their wealth for the purpose of procuring legislation which relieves them of all burden and lays it upon the shoulders of those who are least able to bear it. Technically they are not to blame for using any privilege given them by the law, but when they use their wealth for the purpose of 11 162 FINANCIAL CATECBISM. corrupting legislation, they become unworthy of the name, of Americans, which should be a symbol of government which protects equally the rights of the rich and the poor. The income tax by the American people is not an untried experiment. It is the law in almost all civilized nations except the United States, and is recognized by the citizens as a just, equitable, and beneficent law. We have said that less than three hundred thousand of -the citizens of the United States, under the operation of the law since the repeal of the income tax, held property which yiel- ded them an income of $800,000,000 per annum, upon which they paid not a dollar of tax to support the government. We will now refer to it in detail. According to the statistical tables of the revenue department in 1866, when the amount exempted was $500.00, there were four hundred and sixty thousand one hundred and seventy persons who had incomes on which they paid revenue to the government, to the amount of $966,358,599. In 1867 the exemption was raised to $1,000.00, and the number was decreased to 266,135. This change, though of 194,045 from the list, reducing its number nearly one half, did not reduce the amount of income in the same proportion ; for the 266,135 persons showed an income of $819,968,333, a reduction of less than one-sixth. It is remarkable to note how nearly the ratio between the number of persons and the amount of income run for the succeeding years. In 1868, there were reported 276,661 as paying income tax, and the income reported was $806,006,475; in 1869, the number of persons was 272,843, and the amount of income was $819,907,392: in 1870, there were 276,661 persons whose incomes were $806,006,476. These incomes were almost ex- clusively in the hands of the same pensons, whose net earnings, for a period of five years, aggregated S4,128,665,195. Under what rule of equity and justice this vast amount of capital should be exempted from bearing any part of the bur- dens of the government is a problem which cannot be solved FINANCIAL CATECHISM. 163 to the satisfaction of an intelligent people. The question will force itself upon the thinking mind, why should this be so? And when it has penetrated the deepest caverns of thought, and reverberated through the rock-ribbed mountains of intellectuality, and laid itself uncovered before the god- given tribunal of honest judgment, every lip is sealed, and echo answers, why should this be so ? Looking at it through the light of the history of the case, and leaving equity and justice confined in the dungeon where this act placed them, the inquiry is easily answered. It was a part of the plan by which the national banking system was to be perpetuated. The shylocks demanded it, and a venal Congress performed the dirty work to the everlasting dis- grace of republican institutions. Q. Is it not a fact that this law was very unpopular, and was violated to a great extent by evasion, which made it ope- rate unequally and oppressively on some, while others escaped entirely from its operation ? A. The law was not unpopular with the mass of the peo- ple. It was only unpopular with those who were unwilling to contribute a fair proportion of their net incomes to rid the nation of debt and liberate the arms of productive indus- try from their galling fetters. The law was evaded to a great extent, and many millions of dollars was lost to the government on account of unfaith- ful and dishonest officials conspiring with large operators to defraud the government, and a corrupt Congress screening them from payment. A few prosecutions under Secretary Bristow were success- ful, but the guilty parties were soon released by the clemency of President Grant, who, at the commencement of the prose- cutions ordered his Secretary to "let no guilty man escape." Through the honesty, integrity and perseverance of private individuals in support of the law, investigations had been made at their own expense, which showed that the govern- ment had beeu defrauded by the eyasion of the law, in the id* FINANCIAL CATECHI8M. seven years from 1865 to 1872, to the amount of more than $100,000,000. This money was due the government for taxes on whisky, tobacco, railroads, incomes, banks, insurance companies, suc- cessions and legacies, and had been, until 1872, through dis- honest conspiracy, criminal neglect, or other incompetency of revenue officers, overlooked, fraudulently withheld, or not reported. Much of this money could have been collected if the gov- ernment had enforced it. But •••th« rwenue officers of 1872 were not furnished with the necessary means or authority to make the investigations necessary for its accomplishment. They could not obtain the iuformation from those who had prosecuted the investigations with their own means. The matter was placed before the Secretary of the Treasury for his consideration, and being convinced that these parties were in possession of such evidence as would insure the col- lection of a large sum of these delinquent taxes, he prevailed upon Congress to enact a law authorizing him to contract with them for the collection of so much as could be collected. In answer to this request an act was passed on May 8, 1872, authorizing the Secretary to contract with those per- sons who were in possession of the evidence, the contract providing that, as they collected the money, they should pay it all into the Treasury, and the Secretary would refund to them one half of the amount so collected and paid in, they being at all the expense of collection. In a few months 1500,000 were collected. The plan was working admirably, and arrangements had been made to secure about $50,000,000 in the next two years, and, principally, without suit. But, as matters progressed, it was discovered that it was only the rich who were guilty of these acts of fraud. Corporations, bondholders, capitalists and politicians were the ones who had been robbing the governmeut by withholding the money required of them by law. Many of these had great influence iu Congress, and stood high in the political parties. It FINANCIAL CATECHISM. 165 would not do to have them exposed. These robbers and their friends appealed to Congress for relief — asked that the law be repealed and the collections suspended. They suc- ceeded, as they have always have done, when they come down upon the two Houses in force. The law was repealed in June, 1874, and the contract for the collection annulled, and the government robbed of at least $50,000,000 that was justly due it, and which it could have had without one dollar of expense. The repeal of this law gave reason for the belief that the government would not attempt to prosecute for a violation of the revenue laws, and stimulated others to acts of viola- tion, until they became so numerous, and on such a stupen- dous scale, that the government was pressed into prosecution, the results of which, under Secretary Bristow's administration, revealed a system of fraud, corruption and perjury of the most unblushing character and the most gigantic proportions — reaching out its arms, like the devil fish, and grasping in its slimy embrace persons of high rank and standing in both political parties. While the order was given by the party in power to prose- cute every offender, and spare not, those who were found guilty were speedily relieved by executive clemency from the penalties imposed upou them by the courts of justice. While U- S. Grant, the Republican President of the United States, made haste to release from punishment the violators of the revenue laws, Samuel J. Tilden, who was charged with refusing to obey them, was selected as the standard- bearer of the Democratic party for President, in 1876; and William M. Springer, of Illinois, who refused to obey the law, was retained in his place as a Democratic member of Congress from that State, defending a suit which was decided against him, in the Supreme Court of the United States, in the winter of 1881, and the Republican party made a desperate effort to reinstate General Grant as Presi- dent again in 1880. 166 FINANCIAL CATECHISM. Judged by their acts, both the Republican and Democratic parties stand pledged against the re-enactmeut of an income- tax law by which the burdens of the government may be equitably born by all its citizens, and revenue justly collected to assist in paying our national debt. Having been fortified and strengthened by all the legisla- tion they had asked, the money dealers remained apparently quiet until 1873. But during this period important changes had taken place. Since the so-called Credit-Strengthening act of 1869, Germany, Sweden, Norway and Denmark had demonetized silver, and thereby reduced the value of silver bullion in the Londo)i market, while our late discoveries of rich mines in Colorado, Montana and Idaho was adding to our stock of this metal, until our coinage of the standard silver dollar had risen from almost zero in 1869 to $588,308 in 1870, 16.59,929 in 1871, $1,112,961 in 1872, and in three months of 1873, |977,150. This was a startling development, and aroused the shy- locks to renewed action. They had procured the change in the payment of their bonds from currency to coin, but it was coin of the United States at its standard value at the time of the passage of the law, and the silver dollar of 412-|- grains, nine-tenths fine, was one of these coins, and under the law and the contract stipulated on the face of the bonds, they might be paid, and justly too, in those silver dollars. A large amount of the bonds had passed into the hands of European holders. Their agents in Wall street flashed the news by cable to their principals, informing them of the dilemma. Europe at once became deeply interested in the study of American financial policy, and in order to become fully posted the large operators in foreign securities raised a bonus of $500,000 and sent Mr. Ernest Seyd, the great En- glish financial economist, over to the United States to in- vestigate and study the situation and report to them. Mr. Seyd came and investigated. He found the situation un- mistakably such that the bonds were payable in silver, which FINANCIAL CATECHISM. 167 would fill both the letter and the spirit of the contract. What should be done ? Silver must be demonetized. Q. For what reason did they want to demonetize silver, when it would assist us to pay the bonds which they held? A. For the reason that they did not want the bonds paid It was not the money which they had invested in the bonds that they wanted — it was the usury. If they could demone- tize silver it would rob us of one-half of our coin, and as our bonds had now bien made payable in coin, it reduced our ability to pay just one-half, and would double the purchas- ing power of the remainder for everything except bonds and salaries. This class who deal in money and bonds always clamor for dear money and cheap labor, and insist on a nation funding its debts instead of paying them. Q. Why are they in favor of refunding our national debt? A. Because money invested in bonds is exempt from tax- ation, and therefore returns a better revenue to its owner than can be realized in any of the productive industries; be- side, the investment is perfectly safe, and requires no labor to make it produce. As the late Hon. Fernando Wood said, on the floor of the House of Representatives: "It is neces- sary in order to provide a safe deposit for idle capital." It provides the meaus whereby the rich and idle can be pro- tected, fed, and clothed, and "fare sumptuously every day' at the expense of the poor who labor incessantly for the simplest necessaries of life. Q. In what way would the demonetization of silver oper- ate to interfere with the ability of the government to liqui- date the national debt? A. It would leave gold the only money with which the bonds could be paid according to contract, and, as the ability of the people to pay revenue depends on the amount of money in circulation, the reduction of the circulation by the withdrawal of silver would reduce the revenue of the gov- ernment in the same proportion, and hence make it impossi- ble to pay the bonds as they mature. 168 FINANCIAL CATECHISM. Q. What was the amount of the national debt in 1873, when silver was demonetized? A. It is shown by the report of the Secretary of the Treasury to be 13,234,482,993.20. Q. How much of that was payable in gold and silver? A. All. After the passage of the law of 1870, providing for refunding the 11,500.000.000 currency bonds into bonds payable in coin, except $60,000,000, issued to the Pacific Rail- road Company, which was, and still remains, payable in greenbacks, or " lawful money of the United States." Q. How much cash was it the Treasury at that time? A. We are informed by the Secretary of the Treasury, in his report, that the cash in the Treasury amounted, at that time, to $129,020,932.45 Q. What did the revenue of the government amount to then? A. The Secretary informed us that it amounted, in 1873, to $333,738,204.67. Q. What was the amount of the expenditures for the same year? A. The same report informs us that they amounted to $290,345,245.33. Q. How much was the annual interest charge on the national debt in 1873? A. The Secretary's report for that year shows that it was $98,049,804.00. Q. Was any steps taken by the goverment to provide the coin to pay the bonds as they matured? A. No. On the 24th of March, 1875, Congress passed an act providing for what it called specie resumption, to take place on the first day of January, 1879, and authorized the Secretary of the Treasury to sell bonds, in order to obtain gold for that purpose, $90,000,000 of which was sold. Q. What rate of usury did the bonds sold for resumption purposes bear? A. $65,000,000 of them dear 4^ per cent, and mature iu FINANCIAL CATECHISM. 169 1891, and $25,000,000 bear 4 per cent, and mature 1907. The annual usury on the two issues amounts to $3,925,000, and if these bonds shall be paid at maturity the usury will amount to $60,950,000. This added to the principal will make $150,- 950,000. The taxpayers of the country will have paid for ninety millions of gold to lay idle in the Treasury, producing no revenne whatever. Q. Was the government able to resume the payment of its obligations in gold and silver, in fact, on the first day of January, 1879, as provided for by the law of 1875 ? A. No. The government had outstanding, in legal-tender notes, $375,771,580.00; demand notes, $62,287.50; one and two years' notes of 1863, $90,485.00; compound interest notes, $274,920.00; fractional currency, $16,447,768.77; national bank currency, for which the government is responsible, $324,514,289.00; making, $817,161,330.27. The amount of cash in the Treasury, was $249,080,167.10, leaving a deficit of $568,081,163.17, exclusive of the seven hundred and eighty millions of bonds that was to mature in 1880 and 1881. Q. What were the specifications of the law providing for resumption? A. The specifications of the act of January 24, 1875, which provides for (so-called) resumption, reads as follows: "And on and after the first day of January, A. D. 1879, the Secretary of the Treasury shall redeem, in coin, the United States legal-tender notes then outstanding on their presentation for redemption at the office of the Assistant Treasurer of the United States, in the city of New York, in sums of not less than $50." Q. Did not this act provide for the resumption of specie payment by all the National Banks? A. No! The National Banks are not compelled to pay out a dollar in gold and silver for their notes. They are re- deemable in legal-tender notes; so that the (so-called) specie resumption does not apply to them at all. It applies to the legal-tender notes when presented at the otSce of the As- sistant Treasurer in the City of New York in sums of fifty dollars and over, and to no other place or any other cur' eency. 170 FINANCIAL CATECHISM. Q. If this act was what it purported to be — an act pro- viding for the resumption of specie payment in the United States — why was the National Banks exempted from its operation? A. It nevef was intended that they should be specie-pay- ing banks. The law under which they were created pro- vided for the redemption of their notes in legal-tender notes of the United States, and nothing else. The sole aim and object of the law was to retire all the legal-tender money from circulation and supply its place with national bank notes, which the government was pledged to redeem. When its legal-tender notes were all retired and destroyed it would be compelled to redeem the national bank notes in coin, re- pudiate its contract, or issue a new series of legal-tender notes to redeem them with; and this the bankers would not permit. This law removed all restrictions on the amount of national bank notes to be issued, and provided that for every thousand dollars of additional issues by the banks the Secre- tary of the Treasury should retire from circulation eight hundred dollars of legal-tender notes, until only three hun- dred millions remained in circulation. Then, after January 1, 1879, the remainder should be redeemed in coin in the city of New York, at the office of the Assistant Treasurer of the United States. This was intended to put not only all the paper currency into the hands of the bankers, but all the coin also. As the money passed through the banks after the 1st of January, 1879, the bankers could hold the legal-tender notes and replace them with their own currency, and return them to the Treasury, and draw the coin for them as fast as it accumulated in the Treasury, thereby substituting their own currency for the legal-tender notes and depleting the Treasury of its coin at the same time. Having accom- plished this, the national bankers would then have been the " sole dictators of the commercial and business affairs of the country," FINANCIAL CATECHISIf. 171 Q. How much of the legal-tender money was retired from circulation under the operation of this law? A. The report of the Secretary of the Treasury shows that in 1875 there was in circulation legal-tender notes to the amount of 1375,771,580, and on the 1st of July, 1879, there was in circulation $346,681,016, showing a reduction of $29,090,564. Q. Why was the withdrawal of the legal-tenders discon- tinued before they were all redeemed, as the law provided? A. The terrible stringency in the money market produced so much bankruptcy and ruin throughout the country that the people became thoroughly aroused, and demanded legis- lation preventing the further retirement of the legal-tenders and the restoration of the silver dollar to its former place in the currency, that the Representatives in the two houses of Congress dare not resist them. In obedience to their im- perative demands the Forty-fifth Congress, in 1873, enacted laws prohibiting the farther withdrawal of the legal-tender notes from circulation, and for the remonetization of the silver dollar and its restoration to its full legal-tender prop- erty. Q. Had the people been consulted, or did they ask Con- gress to pass the law demonetizing silver? A. No. The matter had not been canvassed in any political campaign. The question had not been submitted to them for their approval or rejection. So silently and stealthily was this odious measure passed through Congress, and so quietly was it managed, that it was from two to three years before the people knew that such a law had been passed. Many Senators and Representatives declare that they were not aware of the fact that the bill demon- etized silver when they voted for its passage. The Secre- tary of the Treasury, Mr. Richardson, did not so understand it, for in the fall of 1873, eight months after the passage of the law, he recommended immediate resumption of specie payments in silver. President Grant (though he 172 FINANCIAL CATECHiaM. signed the bill) did not understand that it demonetized the silver dollar; or, if he did so understand it, he convicts himself of an act of gross cupidity in order to deceive the people, who had trusted and honored him with the highest gift of the nation, which ought to forever damn him in the ejTS of every honest American. On the 3d day of October, 1873, he wrote a letter to Mr. Cowdry, in which he uses the following suggestive language: "I wonder that silver is not already coming into the market to sup- ply the deficiency in the circulating medium. Experience has proved that it takes about $40,000,000 ot fractional currency to make the sma\l change necessary for the transaction of the business of the country. Silver will gradually take the place of this currency ; and, further, will become the standard of 'values, which will be hoarded in a small way. I estimate that this will consume from $200,000,000 to $300,000,000 of this species of our circulating medium. I confess to a desire to see a limited hoarding of money. But I want to see a hoarding of something that is a standard of value the world over. Silver is this. Our mines are now produc- ing almost unlimited amounts of silver, and it is becoming a question, 'What shall we do with itV I suggest here a solution which will- answer for some years, to put it in circulation, keeping it there until it is fixed, and then we will find other markets." These declarations of the President compel every honest thinker to adopt one of two conclusions. He was either deceived himself, or he intended by this letter to deceive the people. Charity for the frailties of human nature would plead that he was honest in his intentions, but did not under- stand the nature of the law to which he placed his signature. But a critical examination of his letter shows strong marks of an intention to deceive. He says silver is a "standard of value the world over^" but he only speaks of our fractional currency, which was not a standard of value, even in the United States, for any sum over five dollars. It was this he wished to see hoarded by the people to the amount of two or three hundred million dollars. He does not mention the standard silver dollar of 412^ grains, which was one of the coins of the United States until February 12, 1873, which was a legal-tender for the payment of the coin bonds issued in 1870. As he makes no mention of this coin, or the appli- cation of any part of our vast silver product to the payment FINANCIAL CATBCHISM. 173 of the national debt, we are driven to the conclusion that he did know the full force and scope of the bill when he signed it, and that his letter to Mr. Cowdery was intended for a blind to deceive the people and cover the perfidy of the act. Add to this his letter written from Smyrnia to Judge Long, of St. Louis, on the 24th of February, 1878, in which he says : "If I was where I was one year ago, and for the seven previous years, I loould put a detrimental veto upon the repudiation hill — called the silver hill. I fear it has passed, hut hope, if so, all busi- ness men in the country will work to defeat its operation by refus- ing to make contracts except to he paid in gold coin." In this letter he fairly commits himself as being com- bined with the money power to rob the people of the benefits of the vast amount of silver produced by our mines, but so zealous was he in their behalf that he would advise the open and flagrant nullification of the law in order to thwart the will of the people, emphatically expressed through their rep- resentatives. Giving this evidence its proper weight, there appears to be no other conclusion to be drawn than that General U. S. Grant, upon whom the people had conferred the highest honors in their gift, proved recreant to his trust, and a traitor to the interests of the wealth-producers of the Nation. Q. How could it be possible for a bill of such vast impor- tance to pass both houses of the National Legislature and receive the signature of the President, without its whole scope and operation being fully understood; and especially the dropping out of the bill the only silver unit the government had ever issued from its mints ? A- It ought not to have been done, and it was nothing short of base, criminal neglect on the part of those who did not understand it. It was their duty as representatives of the people, to examine the character of every bill presented for their consideration before acting upon it, and the President is bound by his oath to examine every bill presented for his signature before approving it and making it a law of the land. But this was not done, and the bill became a law, with 174 PINANCIAL CATECB18M. intent to defraud on the part of those who were initiated into the plot, and culpable neglect on the part of those who were not. The fact exists, but the precise manner of its accomplishment is not so readily explained. The history of the case is like this: There had been for several years a bill before the House entitled, "An act revis- ing and amending the laws relative to mints, assay office and coinage laws of the United States." This bill had been dis- cussed in both Houses, and amendments attached to it, but the two Houses had failed to agree, and it had been laid over. After Mr. Seyd had been at Washington for a considerable time, this bill was called up and placed in the hands of the Committee on Coinage, Weights and Measures of the House of Representatives, of which Hon. William D. Kelley, of Pennsylvania, was chairman. Mr. Kelley says that "on account of urgent business of the Committee of Ways and Means, of which he was a member, he appointed Mr. Hooper, of Massachusetts, to take charge of the bill." A new draft of this bill was made, containing more than sixty sections, and leaving out any provision for the coinage of the standard silver dollar of 412i grains. This bill was ingeniously drawn. Section 47, the first one relating to silver coinage provids: " That the silver coins of the United States shall be a trade dol- lar, a half dollar or fifty cent piece, a quarter dollar or twenty- five cent piece, a dime or ten cent piece; and the weight of the trade dollar shall be 420 grains troy, the weight of the half dollar shall be twelve grammes and one half gramme, the quarter dollar and the dime shall be respectively one-half and one-fifth of the weight of said half dollar; and said coins shall be a legal tender at their nominal value for any amount not exceeding five dollars in any one payment." This section does not prohibit the coinage of the silver dollar of 41 2^ grains, nor does it make any provision for its coinage. Section 48 does not refer to it, but section 50 provides: "That no coins, either of gold, silver or minor coinage, shall here- after be issued from the mint, other than those of the denomina- tions, standards and weights herein set forth." It was by this means this bill provided for the demoneti- ^■FINANCIAL CATECHISM.^ 175 zation of the silver dollar of 412i grains without naming it, and to this, in part, may be attributed the success of the measure. On the 27th of May, 1873, Congress having agreed to ad- journ on the 29th, and within less than forty-eight hours of adjournment, and in the hurry and confusion always pre- ceding adjournment, and during which time it is in order to suspend the rules, Mr. Hooper called up the bill reported by the Committee on Coinage, Weights and Measures, and offered a substitute. He said : "I desire to call up House bill No. 1,427. I do so for the pur- pose of offering an amendment to the bill in the nature of a sub- stitute, one which has been carefully prepared, and which I have submitted to the different gentlemen who have taken a special interest in the bill. 1 move that the rules be suspended and the substitute put upon its passage." Objection was made to the suspension of the rules, to which Mr. Hooper replied that it was not necessary that the bill should be read, that it had been carefully examined by those desiring to examine its provisions. The House refused to allow the bill to pass in that way; but he again called it up and moved to suspend the rules and pass the substitute. This aroused the apprehension of some of the members that this substitute made some important change in the existing coinage law. Mr. Holman propounded the following question to Mr. Hooper : Mr Holman. " Before the question is taken on suspending the rules and passing the bill, I hope the gentleman from Massa- chusetts will explain the leading features of the changes made by this bill in the existing law, especially in reference to the coinage. It would seem that all the small coins of the country is intended to be recoined." Mr. Hooper replied as follows : Mr. Hooper. " This bill makes no change in the existing law in that regard. It does not require the recoinage of the small co'ms:'—Cong)es.'iional Record, 1878, page 1,605. This was a distinct and emphatic answer. First, that the bill made no change in the existing coinage law, and second, that the small coins were not to be recoined. 176 FINANCIAL CATECHISM. This so far satisfied Mr. Holman and the House, that the bill was permitted to pass under the suspension of the rules without further scrutiny or discussion ; but from all that can be gathered from the statements of members, there was not 3- \\ iawful money in this country. Such measure, it will hardly Ic questioned, will, in the judgment of mankind, be an act of bad faith. As to all debts heretofore contracted, the silver dollar should be made a legal- tender only at its market value. The standard of value should not be changed without the consent of both parties to the con- tract. National promises sliould be kept with unflinching fidelity. There is no power to compel a nation to pay its just debts. Its credit depends on its honor. The nation owes what it has led or allowed its creditors to expect. I cannot approve a bill which, in my judgment, authorizes tlie violation of sacred obligations. The obligation of the public faith transcends all questions of profit or public advantage. Its unquestionable maintenance is the dictate as well of the highest expediency as of the most necessary duty, and should ever be carefully guarded by the Executive, by Con- gress, and by the people. " It is my firm conviction that if the country is to be benefited by a silver coinage, it can be done only by the issue of silver dol- lars of full value, which will defraud no man. A currency worth less than it purports to be worth will, in the end, defraud not only creditors, but all who are engaged in legitimate business, and none more surely ihan those who are dependent on their daily labor for their daily bread. li. b. Hayes "Executive Mansiox, "February 28, 1878." On motion of Mr. Stephens, of Georgia, the House pro- ceeded to the business on the speaker's table, for the purpose of taking up and considering the foregoing message. After it was read by the clerk, th'e speaker stated that: " The ques- FINANCIAL CATECHISM. 213 tion before the House is, ' \'\iin the House, on reconsideration, agree to pass the bill?" Upon that, Mr. Stephens moved the previous question, which was sustained by the House, and the main question was put, which was: "Will the House, on reconsideration, agree to pass the bill?" The question was taken, and there were — yeas, 196; nays, 73; not voting, 23; as follows: Aiken, Cole, Aldrich, Conger, Atkins, Cox,JacobD. Baker, Jno.H.Cox, Sam'l S. Banning, Bayne, Bell, Benedict, Bicknell, Blackburn Bland, Blount, Boone, Bouck, Boyd, Bragg, Brentano, Brewer, Bridges, Bright, Brogden, Browne, Buckner, Bundy, Burchard, Burdick, Butler, Cravens, Crittenden, Culberson, Cummings, Cutler, Danford, Davidson, Davis, J. J. Deering, Dibrel, Dickey, Dunnell, Durham, Eden, Elam, Brrett, Evans, J. L. Evins, J. H. Ewing, Felton, Finley, Eorney, Fort, Caldwell.JW Foster, Caldwell, WPFranklin, Calkins, Candler, Cannon, Carlisle, Caswell, ■ Chalmers, Fuller, Garth, Giddings, Glover, Goode, Gunter, Clark, of Mo. Hamilton, Clark, Rush, Hanna, CIarke,of Ky .Harris, J. T Clymer, Harrison, Cobb, Hartridge, YEAS, 196. Hartzell, Haskell, Hatcher, Hayes, Hazelton, Henderson, Henry, Herbert, Hewitt,G.W. Hooker, House, Hubbell, Humphrey, Hunter, Hunton, Ittner, Jones, J. T. Jones, J. S. Keightley, Kelley, Kenna, Knapp, Knott, Landers, Lathrop, Ligon, Luttrell, Lynde, Mackey, Manning, Marsh, Mayham, McGowan, McKenzie, McKinley, McMahon, Metcalfe, Mills, Mitchell, Monev, Monroe, Morgan, Muldrow, Neal, Oliver, Page, Patterson, G. W. Patterson, T. M. Phelps, Phillips, Pollard, Pound, Price, Pridemore, Kainey, Randolph, Rea, Beagen, Rice, Am.V. Riddle, Robbins, Roberts, Robertson, Robinson,M. S. Ryan, Sampson, Sayler, Scales, Sexton, Shallenber- ger, Shelley, Singleton, Slemous, Smalls, Smith, W.E, Sparks, Springer, Steele, Stephens, Stone, J. W. Stone, J. C. Strait, Thompson, Thornburgh, Throckmor- ton, Tipton, TownsendjA. Townsend, M. I. Townshend, R. W. Tucker, Turner, Turney, Vance, VanVorhes, Waddell, Walker, Walsh, Welch, White, H. White, M.D. Whitthorne, Wigginton, Winiams,C.a Williams.J.N Williams, R. Willis, A. S. Willits, Wilson, Wren, Wright, Yeates, Young. 214 FINANCIAL CATECHISM. Bacon, Bagley, Baker.W. H. Ballou, Banks, Beebe, Bisbee, Blair, Bliss, Briggs, Cain, Camp, Campbell, Chittenden, Clafflin, Covert, Crapo, Davis, H. Denison, Dwight, Eames, Eickhoff, Ellsworth, Field, Freeman, Frye, Garfield, Gibson, Hale, Hardenbergh, NATS, 73. Harmer, Harris, B.W, Hart, Hendee, Hewitt, A. S, Hiscock, Hungerford, James, Jones, r. Joyce, Ketch am, Lapham, Lindsey, Lockwood, .Loring, McCook, Morse, Mulier, Norcros, . O'Neill, Overton, Potter, Powers, Pugh, Keed, Sinniekson, Smith, A. H, Starins. Stenger, Stewart, Veeder. Ward, ■ "Warner, Watson, William s,A.S Rice, W. W. Williams, A. Eobinson,GDWilliams, J. Ross, Willis, B. A. Schleicher, Wood. NOT VOTING, 23. Acklen, Evans, J. L. Keifer, Martin, Eeilly. Cabell, Gardner, Killinger, Morrison, Southard, Clark, A. A. Gause, Kimmell, Peddle, Swann, Collins, Hankie, Leonard, Quinn. Wait. Douglas, Jorgensen, Maish, The result of the vote was then announced, as above stated. The Speaker— " Two-thirds having voted for the passage of this bill upon its reconsideration, the bill is passed, the objections of the President to the contrary notwithstanding." [Great si^^\3MS,&.'\— Congressional Record, February 28, 1878, pages 1418- 1420." On the same day the bill went to the Senate, which body, after a few dilatory motions, came to a vote. The yeas and nays being called for, the secretary called the roll, and the following Senators answered to their names and voted yea: Allison, Bailey, Beck, Bruce, Chaffee, Cockrell, Coke, Conover, Davis, of 111. Harris, Davis, W.Va. Hereford, Dennis, Dorsey, Eustis, Ferry, McCeei y. Plumb, Hill, McDonald, Saulsbury, Howe, McMillen, Saunders, Ingalls, Matthews, Spencer, Johnston, Maxey, Teller, Garland, Jones,of Fla. Merrimon, Thurman, Gordon, Jones,ofNev Morgan, Voorhees, Grover, Kellogg. Paddock, Windom, Kirkwood, Patterson, Withers. — 46 The following named Senators answered to their names and voted nay: Barnum, Conkling, Hoar, Mitchell, Sargent, Bayard, Davis, Kernan, Morrill, Wadleigh, Blaine, Eaton, Lamar, Randolph, Whyte, Butler, Hamlin, McPherson, Rollins, — 19i FINANCIAL CATECHISM. 215 ABSENT. Anthony, Burnside, Cameron, Pa. Edmunds, Eamson, Armstrong, Cameron, of Christiancy, Oglesby, Sharon. Booth. Wis. —11. Being a majority of over two-thirds voting in the affir- mative, the bill passed and became a law, notwithstanding tlie objections of the President. (See Congressional Record, p. 1411.) The passage of this bill was a compromise with wrong which lis always of doubtful expediency, but the friends of remonetization, seeing that this was the best they could get, concluded to accept it and trust to future legislation for its improvement. The . President, the Secretary of the Treasury and the Comptroller of the Currency were all bitterly opposed to the law, and only obeyed it in the most tardy manner. The Secretary only provided for the coinage of the mini- mum amount provided for in the law, andi'.ref used to pay it out to government creditors unless they demanded it, revers- ing the law of the debtors' option, which is recognized in all civilized nations. The banking associations at once organized against it, and availed themselves of the benefit of the clause in the law excepting special contracts, and refused to receive the silver dollar on deposit unless the depositor agreed to receive the same kind of money in return, and the Clearing House Association of New York refused to receive it in settlement of balances. With this evidence of hostility. Secretary Sherman made the United States Treasury a member of that association, and as such entered into a conspiracy with the enemies of the people to discredit and degrade the coin of the govern- ment of which he was the financial agent. The agents of the money power, both in and out of Con- gress, attacked the new coin. It was caricatured by a venal press, and held up to public gaze as the "' clipped dollar," the "buzzard dollar," the ''ninety-cent dollar" and the "dis- 216 FINANCIAL CATECHISM. honest dollar," wliile kid-gloved Congressmen, gold-specta- cled bankers and their paid attorneys and lesser tools all over the country shouted themselves hoarse with the cry of "dis- honest dollar," " repudiation dollar," the " dollar of the lunatics." But the people had made up their minds to have their original unit of value restored to its former position, and, having secured a partial restoration, they were not to be driven from their purpose by the foam and froth of a few aristocrats and their hired minions. The great field of productive industry in the West was ready to receive them for their corn, wheat, beef, pork and all the vast products of the soil or the shop which labor had brought forth in profusion. The dollar of 412^ grains was not a ninety-cent dollar with them. They received it as honest people for an honest dollar, and was willing to return an honest consideration therefor. Not- withstanding this fact. Secretary Sherman complained that he could not get these dollars into circulation; that the people did not want them; the holders of government bonds did not want them; the bullion brokers and bankers of Wall street did not want them; the national bankers, who had conspired against them, of course did not want them, and these were the people who appeared to come within I'he range of the financial vision of the Secretary, while the great mass of the wealth-producing people were apparently too insignificant to make a shiidow on the horizon of his financial economy. He did propose to bankers in the inte- rior of the country to furnish enough to fill their orders, delivered at their banks at the cost of the government. But the bankers, being unfriendly to the law, ordered no more than enough to silence the clamor of the people. He did for a time pay officials and employes of the govern- ment at Washington 10 per cent, of their salaries in silver dollars, but during the whole period of his administration of the Treasury Department he refused to exercise the govern- ment option to pay debts in this legal-tender money of the FINANCIAL CATECHISM. ill United States, and continued to pay interest on bonds while millions of silver dollars were accumulating in the Treasury, until he was compelled to ask of Congress an appropriation of money to provide additional room for storage. The law providing for the issue of silver certificates, placed it within the power of any one receiving silver dollars, to deposit them in the Treasury and receive certificates therefor, and the certificates being more convenient for circulation, a large share of those dollars which were paid on salaries went directly back into the Treasury and the certificates went into circulation; but the result was the same on the volume of the currency, as if every dollar of the silver thus returned had remained in active circulation. The people do not want gold and silver for a circulating medium; what they want is paper money, based on all the wealth of the nation, and a full legal-tender for all daes in all transactions, either of a public or private character, anywhere within the limits of the United States. When the Silver bill was passed over the veto of the President, the money power saw that that Congress could not be relied on to do all their bidding, and when Mr. Fort's bill to prevent the further retirement and destruction of the legal-tender notes was called up, it did not meet with the arrogant opposition that was offered to the passage of the bill to re-monetize the silver dollar; but the vote in both Houses on the two bills, shows more of a disposition to shirk responsibility on this, than on the Silver bill. When the question was taken on Mr. Fort's bill in the House, there were — yeas, 177; nays, 36; not voting, 79; as follows : YEAS, 177. Hanna, Mayhem, Shelley. Hardenberg, McGowen, Singleton, Harris,H.R., McKenzie, Slemons, Harris, J. T., McKinley, Smalls, Hartridge, McMahon, Smith, W. E, Hartzell, Metcalfe, Southard, Haskell, Mills, Sparks, Acklen, Call, Aiken, Cole, Aldrich, Conger, Atkins, Cook, Baker, J. H. , Cox, J. D., Banning, Cravens, Bayne, Crittenden, 218 FINANCIAL CATECHISM. YEAS— contini;ed. Beebe, Culberson, Hatcher, Mitchell, Springer, Bell, Cummings, Hayes, Morgan, Steele, Benedict, Cutler, Hazelton, Morrison, Stephens, Bicknell, Danford, Henderson, Muldrow, Stone, J. W.. Blackburn, Davidson, Herbert, Neal, Stone, J. C, Blount, Dunn, Hewitt,G.W.,01iver, Strait, Boone, De^ring, Hovse, Overton, Swann, Bouck, Dibrell, Humphrey, Page, Thompson, Boyde, Douglas, Hunter,. Patterson.G . Thornburgb, Bragg, Dunnell, Ittner, W., Tipton, Bridges, Durham, Jones, J. T., Patterson. T . Townsend, Brogdon, Eden, Jones. J. S., M., Townshcnd,E Browne, Elam, Jorgensen, Phillips, W., Buckner, . Errett, Keifer, Pollard, Tucker, Bundy, Ewing, Keightley, Pound, Vance, Burchard, Felton, Kelley, Price, Walker, Bnrdick, Finley, Knapp, Eainey, Walsh, Cabell, Forney, Knott, Eandolph, Warner, Cain, Fort, Laiiders, Eea, Welch, Caldwell, JWFoster, Lathrop, Eeagen, White, H., Caldwell,WPFranklin, Ligon, Eice, A. v., White, M.D., Campbell, Fuller, Lockwood, Bobbins, Wigginton, Candler, Gardner, Luttrell, Eobertson, Williams, CG Cannon, Garth, Lynde, Eobinson,M . Williams.JlS Caswell, Giddings, Mackey, S., Willis, A. S., Chalmers, Glover, Maish, Eyan, Willits, Clark, A. A. , Gunter, Manning, Sampson, Wilson, Clark, B., Hale, Marsh, • Sapp, Wren, Clarke,of Ky,Hamilton, Martin, Sayler, Wright. Clymer, NATS, 35. Bacon, Covert, Gibson, Loring, Sinnickson, Baker,W.H ., Crapo, Hendee, Monroe, Smith, A. H., Blair, Davis, H., Hiicock, Norcross, Stenger, Briggs, Fames, Hunger ford , Potter, Ward, Camp, Eickhoff, Joyce, Pugh, Williams, E. Chittenden, Frye, Ketcham, Eice, W. AV. .Willis. B. A. Clafflin, Garfield, Lapham Eobinson,GDWood. NOT VOTING, 79. Bagley, Dickey, Hooker, Pridemore, Townsend, M Ballou, Dwight, Hubbell, Quinn, 1. Banks, Ellis, Hunton, Eeed, Turner, Bisbee, Ellsworth, James, Eeillv, Turney, Bland, Evans, I. N, ., Jones, F., Eiddle, VanVorhes, Bliss, Evans, J. L ., Kenna, Eoberts, Veeder, Brentano, Evins, J. H, ., Killinger, Ross, Waddell, Brewer, Freeman, Kimmell, Scales, Wait, Bright, Gause, Lindsey, Schleicher, Watson, Butler, Goode, McCook, Sexton, Whituhorne, Calkins, Harmer, Money, Shallenber- Willianas, A, Carlisle, Harris.B.W ., Morse, ger, s., FINANCIAL CATECHISM. 219 Clark,ofMo. Collins, Cox, S. S., Davis, J. J., NOT . Harrison, Hart, Henkle, Henry, VOTING— Muller, O'Neill, Peddie, Phelps, ■CONTINUED. Starin, Stewart, Throckmor- ton, Williams, A., Williams, J., Yeates, Young. Denison, Hewitt. A.S.,Powers, The result of the vote was announced and the bill passed. {Congressional Record, April 29, 1878, pages 2928-2929). It was sent to the Senate and held by that body until the 28th of May, 1878, before it was called up for final consideration. After due consideration and discussion, in Committee of tile Whole, the bill was reported to the Senate without amend- ment, put upon its third reading, read a third time and passed. The roll-call having been concluded, the result was announed — Yeas, 41; nays, 18; not voting, 17; as follows: TEAS, 41. Hill, Ingalls, Johnston, Jones, Pla. Kellogg, Kirkwood, McCreery, Allison, Armstrong, Bailey, Beck, Blain, Cameron, JD.Grover, Cameron, A. Harris, Conover, Davis, 111., Dennis, Ferry, Gordon, Cockrell, Coke, Anthony, Barnum, Bayard, Burnside, Hereford, McDonald, McMillan, Matthews, Maxy, Merrimon, Morgan, Oglesby, Paddock, Kansom, Saunders, Spencer, Teller, Thurmon, Voorhees, Wallace, Windom, Withers, Butler, NAYS, Hoar, 18. Christeancy, Howe, Conkling, Kernan Eaton, Boothe, Dawes, Bruce, Dorsey, Chaffee, Edmunds, Davis, W-Va. Eustis, So the bill was passed 1878, page 3871.) ' Mitchell, ABSENT — 17, Garland, Hamlin, Jones, Nev. Morrill, Bandolph, Eollins, Lamar, McPherson, Patterson, Saulsbury. Wadleigh, Whyte. Plumb. Sargent, Sharon. {Congressional Record, May 28, 220 FINANCIAL CATECHISM. CHAPTER IX. THE COUKSE OF POLITICAL PARTIES AND FINANCIAL LEGISLA- TION FROM 1878 TO 1881. The political campaign of the fall of 1878 was a peculiar one. The voice of the people had been recognized at last, to a small extent. An apparent recognition of their rights must be maintained, or it was evident that the members of Congress to be elected that year would be elected as repre- sentatives of the people and not of the old political parties. The Republican and Democratic parties till over the South and West not only indorsed the acts of Congress remonetizing silver and preventing the further retirement of the legal- tender notes, but many of them demanded the free coinage of the silver dollar and the retirement of the national bank notes and the substitution in their place of full legal -tender Treasury notes, but q_ualified these declarations with the accompanying statement that such notes should be on a par with gold, thereby declaring themselves in favor of making gold the only standard by which all values should be meas- ured in the United States. The National Greenback party took the broad ground that the sole power to create money was in the government, and that it was not only its privilege but its duty to exercise that power to a sufficient extent to meet all the legitimate wants of the people, whether such money was made of gold, silver, paper or any other material. Both the Republican and Democratic parties joined issue with the new party on this question, and raised the cry of " fiat money," " repudiation money," " national dishonor," and every other epithet by which they could appeal to the prejudice of the ignorant and unthinking. But, notwithstanding all their efforts, the FINANCIAL CATECHISM. 221 Greenback party obtained enough strength among the mem- bers of the House of Representatives elected that year to hold the balance of power in the House for the next two years. After the election was over both the old parties declared the finance question settled, and denounced all agi- tation of the subject either in or out of Congress. They claimed that what the country needed was rest, in order that it might recuperate. But the great financial problem would not down at their bidding. Nearly $800,000,000 of bonds, bearing 4, 4|- and 5 per cent, usury, became payable at the option of the govern- ment in 1880 and 1881. What disposition should be made of them? was the great financial question to be settled by Congress. On this question the money power again came to the front. The leading spirits. Republican and Demo- cratic, 'in both houses of the National Legislature, without regard to political afiBliations, favored refunding this debt into long bonds bearing a lower rate of usury. The National Greenback party demanded that they should be paid as fast as they could be paid out of the surplus revenue of the country and the money lying idle in the Treasury. During the session of 1879 Hon. James A. Garfield (Re- publican), of Ohio, and Hon. Fernando Wood (Democrat), of New York, both introduced bills in the House providing for funding these maturing bonds into 4 per cent bonds, running from twenty to forty years. These bills were simply referred to the Committee on Finance, where they were held until after the Presidential election in 1880. During this whole period the representatives of the money power declared the finance question was settled and should not be disturbed. They raised a contest in Congress between the North and the South on the elective franchise, and pushed that forward as the all-absorbing question, in order to arouse the old spirit of hostility between the sections and array the two old parties solidly against each other and 222 FINANCIAL CATECHISM. thereby prevent the growth of the Greenback party and the agitation of the question of finance. About the first of Januarj', 1880, Hon. James B. Weaver, of Iowa, offered the following resolution, which was read and laid upon the table, subject to be called up at any time for discussion by permission of the House. "BeMlved. That it is the sense of this House that all currency, whether metallic or paper, necessary for the use and convenience of the people should be issued, and its volume controlled by the government, and not by or through the bank corporations of the country; and when so issued should be a full legal-tender in payment of all debts, public and private. "2. Resolved, That, in the judgment of this House, that portion of the interest-bearing debt of the United States which shall be- come redeemable in the year 1881, or prior thereto, being in amount $782,000,000, should not be lef uncled beyond the power of the gov- ernment to call in said obligations and pay them at any time, but should be paid as rapidly as possible, and according to contract. To enable the government to meet these obligations, the mints of the United States should be operated to their full capacity in the coinage of standard silver dollars, and such other coinage as the business interests may require." Both of the old parties were so determined to prevent any discussion on national finance that every obstacle that could be raised was thrown in the way of the consideration of these resolutions. Once every week, for thirteen weeks, did the author of these resolutions rise in his place and ask for their consideration, only to be refused recognition by the Speaker, or choked off by the chairman of some committee who claimed priority under the rules of the House. In the meantime the organs of the money power had been vigorously at work manufacturing public sentiment against them and their author, whom they had cartooned as a jack- ass and denounced as an addle-brained lunatic, who was en- deavoring to ruin the credit of the nation, In this matter they had done more than they intended; for they had aroused public curiosity, which created a demand for action, so that the resolutions might go to the people, and let them decide upon their bearing upon the interest of the country and the public credit. On the fifth day of April, 1880, on motion of Mr. Weaver, FINANCIAL CATECHISM. ^ the rules were suspended and the resolutions taken uP^-lec opposition was determined to have as little discuss^ff*'o'h them as possible. As Hon. James A. Garfield had been the champion of the bond holders and money dealers in the former contests with the representatives of the people, he was selected by his party to attack and demolish these incendiary resolutions, and if possible, their author and the young party of which he was a conspicuous leader. In order to be just to all parties we insert the discussion which took place in the House before the vote was taken, and the vote by which the resolutions were defeated: Mr. WEAVER. " I move to suspend the rules and adopt the resolutions which I send to the desk." The clerk read as follows : "Resolved, That it is the sense of this House that all currency, whether metallic or paper, necessary for the use and convenience of the people should be issued and its vo'ume controlled by the government, and not by or through the tank corporations of the country; and when so issued should be a full legal-tender in pav- ment of all debts, public and private. "2. Resolved, That, in the .iudgment of this House, that portion of the interest-bearing debt of the United States which shall become redeemable in the year 1881, or prior thereto, being in amount $782,000,000, should not be refunded beyond the power of the government to call in said obligations and pay them at any time, but should be paid as rapidly as possible, and according to contract. To enable the government to meet these obligations, the mints of the United States should be operated to their full capacity in the coinage of standard silver dollars, and such other coinage as the business interests of the countiy may require." Mr.UAREIELD. "Mr. Speaker, 1 never heard the provision s of this resolution until it was read from the desk a few moments ago It has, however, attained some historical importance by being talked about a good deal in the newspapers, and by block- ing the other business of the House for some weeks. As I listened to its reading I noticed that it is one of those mixed propositions which has some good things in it which everybody would proba- bly like and vote for if they were separated : but the good things are used to sugar over what, in my judgment, is most pernicious. "There are three things in this resolution to which I wish to call the attention of the House before they vote. The tirst is a prop- osition of the largest possible proportion, that all money, whether of coin or paper, that is to circulate in this country ought to be manufactured and issued directly by the government. I stop there. I want to say on that proposition to the majority in this House, who are so strongly opposed to what they call centraliza- tion, that never was there a measure offered to the Congress of so 224 FINANCIAL CATECHISM. — ■»itiid far-reaching centralism. It would convert the Treasury '■he*''^" Jpiited States into a manufactory of paper money. It makes tne Hause of Representatives and the Senate, or the caucus of the party which happens to be in the majority, the absolute dic- tator of the financial and business affairs of this country. This scheme surpasses all the centralism and all the Csesarism that were ever charged upon the Republican party in the wildest days of the war or in the events growing out of the war. " Now, I say, without fear of contradition, that prior to 1862 the wildest dreamer in American finance was never wild enough to propose such a measure of centralization as that single proposi- tion implies. The government should prescribe general laws in reference to the quality and character of our paper-money, but sho-dld never become the direct manufacturer and issuer of it. " The second point involved in this resolution is that the gov- ernment of the United States shall pay all its public debts in this manufactured money, manufactured to order at the Treasury fac- tory. Notwithstanding the solemn and acknowledged pledge of the government to pay the principal and interest of its public debt in coin, this resolution declares that in this legal-tender paper the public debt shall be payable. "The third point I wish to call attention to " Mr. EWING-. " Will my colleague allow me to interrupt him for a moment?" Mr. GARFIELD. " Certainly." Mr. EWING. " Tf ou certainly misunderstand the resolution. It declares that all public debts of the United States shall be paid in the money of the contract, and not in any coin or money the government may choose to pay them in." Mr. GARFIELD. "Any money the government may issueis by this resolution declared to be lawful money, and, therefore, is to be made the money of the contract by the legislation proposed to-day." Mr. EWING. " That is a mere quibble, based on a total miscon- struction of the resolution." Mr. GARFIELD. "Answer in your own time. " Now, the third point in this resolution is, that there shall be no refunding of the $782,000,000 to fall due this vear and next, but that all shall be paid. How ? Out of the resources of the nation ? Yes; but the money to be manufactured at the Treasury is to be called part of these resources. Print it to death-»-that is the way to dispose of the public debt, says this resolution^ "I have only to say that these three make the triple-headed monster of centralization, inflation and repudiation combined. This monster is to be let loose on the country as the last spawn of the dying party that thought it had a little life in it a year ago. It is put out at this moment to test the courage of the two political parties; it is offered at this moment when the roar of the Presi- dential contest comes to us from all quarters of the country. In a few moments M'e shall see what the political parties will do with this beast. All I have to say for one is, meet and throttle it; in the name of honesty, in the name of the public peace and pros- perity, in the name of the rights of individual citizens of this WmANCIAL CATMCHISM. 226 country against centralism, worse than we ever dreamed of, meet it and flglit it like men. Let both parties sliow their courage by meeting boldly and putting an end to its power for mischief. Let the vote be taken." Mr. WEAVER. " 1 yield two minutes to the gentleman from Pennsylvania." Mr. E!ELLEY. "1 cannot say much in two minutes. lean, however, say that the announcement of tlie gentleman from Ohio [Mr. Garfield] that to require the government to make our money tended to consolidation was idle vapor, as there never was an hon- est dollar, or franc, or mark, or shilling that was not made by a government. No other power than governmentcan make money. Currency there has been which government did not create, bank notes and notes of individuals promising to pay money ; but money other than that made and issued by a government, by its authority and upon its responsiblity, has never existed here or in any other country. And all thatthe gentleman said on that point was, I repeat, balderdash. So was his allusion to the wildest dreamer that ever lived. In voting for this resolution I will stand with that wildest of dreamers, to borrow the gentleman's wild phraseology, Thomas Jefferson, who, when portraying the dan- gers of using bank notes as money, as was the practice at the time he wrote to Mr. Eppes, said : "'The power to issue money should betaken from the banks and restored to Congress and the people, to which it properly belongs.' "The gentleman also vociferated against the resolution because it proposes to put an end to the refunding of our debts. If there is to be no more refunding of maturing or matured bonds into those which are to have either thirty or fifty years to run, I wiil thank God with fervent thanks, for Secretary Chase never said a wiser thing than when he told Congress that the optional con- trol of the debt was of vastly more importance than the rate of interest, unless he at some time exclaimed: 'It is with nations as with men; out of debt, out of danger.' " Just here I beg leave to tell the gentleman and the House that if we convert redeemable bonds into those which will have thirty or fifty years to run, as is proposed, we will pay in premium to the members of the syndicate, from whom we will be compelled to purchase them if our debt is not to be perpetuated, more tlian we will seem to save by having reduced the rate of interest on a debt, which since the 8th of November last we have been extin- tinguishing at the rate of $9,000,000 a montli." [Mr. Ewlng addressed the House. He withholds his remarks for revision.] Mr. WEAVER. " I yield for a minute to the gentleman from Indiana." [Mr. Calkins asked, and obtained, leave to print some remarks upon this sub.iect.] Mr. WEAVER. " Mr. Speaker, I reckon myself most happy in having an opportunity of witnessing a vote upon these resolutions which have so attracted the attention of this House and of the country for the past three months. I am not surprised at the opposition of the gentleman from Ohio [Mr. Garfield]. I under- 15 226 FINANCIAL CATECHISM. stand very well that that gentleman and his party stand in the road blocking the progress of the people toward financial reform. "He assailed these resolutions with two distinct propositions: First, that they favored centralization; second, that they are in violation of the public faith of the nation, in that they propose to pay the public debt in ' manufactured money,' as the gentle- man styles it. 1 call his attention to the resolutions themselves in response to that. There is not one word in these resolutions look- ing to a violation of the public faith or to the payment of the public debt in anything not strictly in accordance with the con- tract. We all understand very well what the gentleman means when he raises the cry that the public faith is about to be endan- gered. He means that it is a violation of the public faith to pay the public debt in silver dollars of iVi% grains. That is what the gentleman means. The resolutions propose to pay tlie bonded debt in silver dollars, if the bondholders prefer coin. Every man of sense in all this broad land knows that the holders of fhese bonds do not want them paid in either gold, silver or greeabacks. They simply want them to be funded perpetually and he exempted from the burdens of the (State. " I say here and now that the National Greenback party is opposed to the violation of the public faith, and is squarely opposed to the repudiation of any portion of the public debt. [Applause.] We are in favor of the payment of the debt according to the con- tract, and we are the only party that desires ever to pay it. And while we are in favor of that, we are determined that the moneyed interests of the country shall not repudiate again those features in the contract which are in favor of the people. We say that the bondholder having specified in the law that he would receive the silver dollar of 412}^ grains in payment for his bond, in all good faith he should be held to the strict terms of the contract. He may have his pound of flesh, but not another drop of American blood. " We do not seek to compel the bondholder to receive the green- back in payment of his bond. The people once had the right so to pay them, but that right was ruthlessly and wickedly taken away by a change of contract in 1869, which took from the toiling tax-payers $600,000,000, more than half of which went to enrich foreign princes and usurers. These resolutions do not propose to interfere with the contract, notwithstanding it was conceived in sin and fraud and brought forth in iniquity. It proposes to pay in standard silver dollars. Ah, it is not greenbacks, it is not silver, that you hate. It is the payment of the debt that so enrages you. But the gentleman charges, vehemently, that the resolutions tend to centralization and Csesarism. It is well that the gentleman has announced to the House and the country that the Republican narty prefers to trust the national-bankers, and the banking cor- porations to control and issue the volume of the currency, rather than a Congress of the sworn llepresentatives of the people. That be prefers the bankers of the country, not elected by the people and not responsible to them, should have the power to control thf volume of the currency according to their own will, rather than the representatives of the people, who are directly responsible to FINANCIAL CATECHISM. 22T their constituents. Let that issue be sharply and squarely drawn. [Applause.] It is the great practical issue to-day in the Amer- ican Republic. Who shall issue the currency and control its volume? Shall the bankers control it for their own selfish ends, or shall its issue and volume be controlled by the whole people for the benefit of all ? " That, I say, is the colossal issue, and in it is involved the very existence of this government and the freedom of the people. 'Centralization!" The Congress of the United States, chosen for two years, coming directly fromtne people and directly responsible to them for their conduct, are not to be trusted ! but the bankers of the country, who are not chosen by the people or elected by them, are to be trusted with this great power involving the hap- piness and welfare of fifty millions of people, and their countless posterity, without a murmur from the gentleman and with his express approval. Let me repeat it again, so that the American people may fully understand it. These bankers are to be trusted, says the gentleman, in preference to the people and tlieir chosen representatives! "Is there no centralization, no Ceesarism here? In the name of the public peace, in the name of honesty and fair dealing, in the name of the laboring millions, who toil and dig and pay the taxes of the country, I invoke the soft-money Democrats of the United States and the hundreds and thousands of Republicans who have been lon§ looking in vain for economic reform within their party, to join with us in a death-grapple with this corporate monster. In toe name of the humble poor who struggle not for office, and who simply want a fair chance in the race of life, I ask you to give one vote for the Republic. Let there be no dodging to-day, no hiding in the cloak-room; you cannot serve two masters. You cannot avoid the issue if you would. It is vital, permeating all classes, and engaging the attention of the people as never before in our history. This is a supreme moment in the history of men and parties in this House. Reflect well before you vote. "I ask the Congress of the American people to stand up and assert, with Thomas .Jefferson, that the issue of the circulating medium should be taken away from the banks and restored to the government, to which it properly belongs. [Applause.] I ask my Democratic friends to stand where Jackson stood when he said, in his farewell address, that the banks could not be relied upon to keep the circulating medium uniform in amount. [Applause.] I ask you to stand where Calhoun and all the other great leaders of your party stood in the past and purer days of your history. "And I ask my Republican fiiends here to repudiate the doctrine of the gentleman from Ohio. You owe it to your dignity and to the American people to repudiate the doctrine that you cannot trust yourselves as the people's representatives." Mr. B A YNE. " Will the gentleman allow me to ask him a ques- tion?" Mr. WEAVER. " Certainly." Mr. BAY'NE. " Where will the government get the money to pay the matured bonds ?" Mr. WEAVER. " It is very easy to answer. First, from the 228 FINANCIAL CATECHISM. surplus revenues properly increased by a judicious income tax; second, by the coinage of silver. The bonds are not mature; they are payable at the option of the government." Mr. BAYNE. "But where vcill the government get the money to pay when they do mature?" Mr. WEAVER. " They are only payable at the option of the government, and the government can coin all the silver that is necessary." Mr. BAYNE. "And where will the government get the silver ?" Mr. WEAVER. " Where does it get it now ? It buys it with the surplus revenues, and manufactures silver dollars; and $4,000,000 a month, even under the present law, will pay off the principal and interest of the debt now maturing in half the time that it is now proposed to fund it." Mr. MORTON. " How do you propose to secure the $4,000,000 a month to pay for the silver ?" Mr. WEAVER. " With the surplus revenues of the country. You are paying the debt now for electioneering purposes at the rate of two millions a week, and do not feel it. There is ample surplus revenue for the purpose; all that is needed is the dis- position to pay." Mr. CHITTENDElSr. " Is there any other way that the govern- ment can pay for the silver with which you propose to pay off the bonds than "by issuing legal-tender greenbacks therefor? Will you answer me squarely ?" , Mr. WEAVER. "I will. We can buy the silver bullion with the surplus revenue that is now coming into the Treasury." Mr. CHITTENDEN. "There is nothing in that answer. The surplus revenue is in greenbacks. You dodge the question." Mr. KELLEY. " The greenbacks are convertible into gold." . The SPEAICER "rapped to order." Mr. CHITTENDEN. "Will the gentleman answer me that question ?" The SPEAKER. "The g(!ntleman from New York will be seated. The gentleman from Iowa has the floor." Mr. WEAVER. "I dodge no question. In further and direct answer to the gentleman's question, I say that this government has the power to issue and reissue its own currency, as has been held by the highest court of this country; and it can issue enough to redeem the national bank circulation, and then it can cancel, having paid the debt of the banks, it can cancel, as fast as they mature, the bonds now held by the banks to secure their circula- tion—" Mr. HAZELTON. "Will the gentleman yield to me ?" Mr. WEAVER. "Not now. And in that way we can pay $330,- 000,000 more of the national debt. There is no trouble about pay- ing the debt. The trouble with the gentleman from New York [Mr. Chittenden] is that he does not want to pay the public debt at all." Mr. CHITTENDEN. "You admit the paper is to be issued to pay it."*' Mr. WEAVER. "The government has the same power to issue a paper dollar that it has to issue a gold dollar, the s.;me power FINANCIAL CATECHISM 229 to issue a paper dollar that it has to authorize the national banks to issue their circulation. The gentleman claims that the govern- ment cannot even reissue a paper dollar, as a legal tender, after it has been received into the Treasury for public dues. What su- preme folly!" SPEECH OF HON. EDWAED H. GILLETTE, OF IOWA. Mr. GILLETTE. "Mr. Speaker : After thirteen weeks of pati- ent waiting, at last the Trojan horse has been admitted into this House. He has been recognized, and we are to see how many war- riors come forth from his loins. "The Weaver resolutions are before us. Every effort has been made to prevent this result, until even the newspapers, without regard to party, were alarmed at the absolute despotism of this House, and called us a Congress of cowards. My colleague who presents them has been derided, persecuted and cartooned as a jackass by the organs of the capitalists, in order to create preju- dice against these resolutions. Nevertheless, with unbounded faith in the great principles of his party, he has risen, week after week in his place to demand a right, which has been denied him until this hour, under rules which have well nigh destroyed the representative features of this government. Is there anything wrong, unfair, or unjust about these resolutions? I defy any man to show it. Men do not appeal to prejudice and abuse, and adjournment, and iron-clad rules for protection until argument and reason fail them. These resolutions contain doctrines which are fundamental and must prevail, if Democratic principles are to prevail. They are as conservative as the Constitution, and so plain and simple, they can be read and understood of all men. " The national bank party pre-eminent has spoken through its leader and chief, the gentleman from Ohio [Mr. Garfield]. In this emergency the ablest advocate on the floor has been called out to crush these resolutions. He commenced by saying, 'I never heard their provisions until they were read from the desk a few moments ago.' They have been advertised by the Associated Press, commented upon by leading papers of all parties, read to the House by the Clerk over a month since, and printed in the Record at the same time for the information of the House. The gentleman admits in the next breath, they have, 'however, attained some historical importance by being talked about a good deal in the newspapers and by blocking other business of the House for some weeks,' yet he was ignorant of their contents. "In replying to the proposition 'that all currency should be issued and its volume controlled by the government, and not by or through the banks,' he says never was there a measure offered to Congress of so vast and far-reaching centralism. It would convert the Treasury of the United States into a manufactory of paper money ; it makes the House of Representatives and the Senate the absolute dictator of the financial and business affairs of the country. Centralism, indeed! Every act of sovereignty is an act of centralism, if the issue of the currency is. "Like Egypt, we better farm out our taxes, selling them to the highest bidder, for fear of centralism, rather than to farm out our money manufacture; for to collect taxes requires an army, a. 230 FINANCIAL CATECHISM. navy, and thousands of officials, but to issue the currency is the simplest, easiest, least expensive duty of the government. We better give capitalists the power to declare war and make peace, because that power carries with it a thousand-fold more of "Csesarism ' than does the issue of the currency. "The Monetary Commission, composed of three Senators and three Representatives, half Democrats and half Republicans, with a Republican Senator for Chairman, said in their report (volume 1, page 10), 'an increasing value of money and falling prices have been and are more fruitful of human misery than war, pestilence, or famine; they have wrought more injustice than all the bad laws that were ever enacted ;' yet the aentleraan scouts the idea that the American people should through Congress have any con- trol over a subject more fruitful of misery than war, pestilence or famine, and this is the position of his party. The people must submit in silence while suffering supreme injustice. " If this is a republic, our government is simply the people. Its laws are their voice. Its oflicers are constantly changed in order that these laws shall be made and executed precisely as they de- sire. The government is their right arm. It is the people in council. Can the people fear the people? Can the head fear the power of the hand ? The very object of this government is to protect the masses from the cunning tricks and usurpations of the few. As Daniel Webster said; 'To that very end (the protection of labor), with that precise object in view, power was given to Congress over the currency and over the money system of the country.' [Works of Daniel Webster, Vol. Ill, p. 535.] "No power of government is dangerous in a true republic. To deny this is to affirm that the people may become too strong, the nation too great. The only centralization to be feared is the cen- tralization of power in the hands of corporations and capitalists, who usurp government authority and fasten themselves like para- sites upon the people, and by cunning schemes under the forms of law, defeat the representative character of this government, 'win- ning us with honest trifles to betray us in deepest consequence.' The cry of centralism ill fits the lips of the gentleman from Ohio or his party, just after he bus recommended, and they have helped to adopt, rules for the government of this House that practically give a half dozen committees, appointed by ove member (the speaker), and hence amenable to him. the control of all important legislation and a veto upon this House. It comes with poor grace from these advocates of a o«e-man power in this government who have tied the hands of the majority on this floor in the interest of corporations, to howl centralism. The founders of this republic well understood where the danger lay. Jefferson said, in a letter to Mr. Kercheval (Vol. VII, p. 14): "'I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom. And to pre- serve their independence, we must not let our rulers load us with perpetual debt.' " And again in a letter to John Taylor (Vol. VI., p. 608) : " ' I sincerely believe that banking establishments are moredan- gerous than standing armies.' FINANCIAL CATECHISM. 231 " The gentleman is alarmed lest our Treasury become a manu- factory of paper money. Will he advise the House what the Treasury now is, if not a vast manufactory of national bank paper money and interest-bearing bonds? Over one thousand persons, employed there at government expense, are devoted to this work. Every paper dollar that circulates in the country is made in that factory. Every mutilated or worn note is replaced at government expense by this factory. A legal apulication from any national bank, new or old, will set every machine and every hand at work printing and preparing bank money. This is all done in the interest of corporations that already boast greater power than this government, and defy it, and control its officers from President down to many members on this floor The gen- tleman does not objeet to the "Treasury being a great money fac- tory so long as it receives its orders from rich bankers and syndi- cates, and not from the representatives of the people. He is afraid Congress will become the master of that department, instead of the bond-holders as now. And if it should, it would make Congress the • absolute dictator' of the financial and busi- ness affairs of this country. O, yes; so the gentleman admits that the power that controls the volume of our currency is the 'al3solute dictator' of the financial and business affairs of the nation; so he acknowledges that we have made the national banks, that now control it, the 'dictators' of our affairs! It is true! the gentleman's party has surrendered this government, sur- rendered the people and their most sacred interests into the hands of national bank 'dictators' It is true! he who controls the purse controls the nation; and the national banks control the purse. " It is simply a question whether the people will have a repre- sentative government or be governed by self-appointed 'dictators' The National party stands by the people; the Republican party stands by the banks. He says, ' without fear of contradiction, thait prior to 1862 the wildest dreamer in American finance was never wild enough to propose such a measure of centralization as that single puoposition implies.' vVhat child-like innocence! ' Ah Sin,' the ' heathen Chinee,' is outdone by the gentleman from Ohio. Did he never read Thomas Jefferson, so eloquently quoted by the gentleman from Pennsylvania [Mr. Kelley] ? Did he never hear of Albert Gallatin, Secretary of the Treasury for the first dozen years of this century, who said (Writings of A. Gal- latin, Vol. III., p. 429): "'The right of issuing paper money as currency, like that of issuing gold and silver coins, belongs exclusively to the nation and cannot be claimed by any individuals.' " Or of Daniel Webster, another ' wild dreamer,' who said in the United States Senate, January 31, 1833 (Works of Daniel Web- ster, Vol. III., pp. 527-529) : " ' The constitutional power vested in Congress over the legal currency of the country is one of its very highest powers, and the exercise of this high power is one of the strongest bonds of the union of the States. * * * It is not tobe doubted thatthe Constitution intended that Congress should exercise a regulating 232 FINANCIAL CATECHISM. power, a power both necessary and salutary, over that which should constitute the actual monoy of the country, whether that money were coin or the representative (>f coin. So it has always been considered ; so Mr. Madison considered it.' " Ho then quotes from President Madison's message, December 3, 1816 [Annals of Congress, 14th Congress, 2d Session, p. 16] : " It is essential that the nation should possess a currency of equal value, credit and use wherever it may circulate. The Con- stitution has intrusted Congress exclusively with the power of creating and regulating a currency of that description. " He further said in a speech in the Senate. Sfeptember 28, 1837 (Works of Daniel Webster, pp. 836-340) : " The Constitution does not stop with this grant of the coinage power to Congress. It expressly prohibits the States from issuing bills of credit. * « * The States, therefore, are prohibited from issuing paper for circulation, on their own credit; and this pro- vision furnishes additional and strong proof that all circulation, whether of coin or paper, was intended to be subject to the regu- lation and control of Congress. * * * The Constitution declares that Congress shall have power to regulate commerce, not only with foreign nations, hut between the tstates. This is a full and complete grant and must include authority over everything which is a part of commerce, or essential to commerce. And is not money essential to commerce. No man in his senses can deny that. * * * If Congress, then, has power to regulate commerce, it must have control over that money, whatever it may be, by which commerce is actually carried on, whether that money be coin or paper. * * * The regulation of money is not so much an inference from the commercial power of Congress as it is a part of it. Money is one of those things, without which, in modern times, we can form no idea of commerce. * * * j insist that the duty of Congress is commensurate with its power. * * * A general and universally accredited currency, therefore, is an instrument of commerce^ which is necessary to its just advan- tages, or, in other words, which is essential to its beneficial regu- lation. Congress has powder to establish it, and no other power can establish it, and therefore Congress is bound to exercise its own power. It is an absurdity on the very face of the proposi- tion to allege that Congress shall regulate commerce, but shall nevertheless abandon to others the duty of sustaining and regu- lating its essential means and instruments. " By the national bank act we have ' abandoned ' to bondholders the duty and power of 'regulating' not only the volume of our currency but also its value, for the value of the circulating medium, of whatever material made, depends upon its volume — hence they are able to control the value of coin by the increase or decrease of its substitute. Mr. Dallas, Secretary of the Treas- ury, in his report, December 6, 1815, said (Reports on the Finances, 1815 to 1828, p. 41): " 'Whenever the emergency occurs that demands a change of system, it seems necessarily to follow that the authority which was alone competent to establish the national coin is alone com- petent to create a national substitute.' FINANCIAL CATECHISM. 283 "Or has the gentleir.an never heard of President Madison? In his annual message, December 5, 1815, he said (Annals of Con- gress, 14th Congress, 1st Session, p. 15); "'It may become necessary to ascertain the terms upon which the notes of the government (no longer required as an instrument of credit) shall be issued, upon motives of general policy as a common medium of circulation.' "Or of John C. Calhoun, who said in the United States Senate, September 18, 1837 (Congressional Debates, Vol. XIV, Part I, 1837, pp. 64-66) ; "'I would asli, then, why should the government mingle its credit with that of private corporations? No one can doubt but that the government credit is better than tliat of any banli — more stable and more safe. Why, then, should it mix it up with the less perfect credit of those institutions? "Why not use its own credit to the amount of its own transactions? V/hy should it not be safe in its own hands while it shall be considered safe in ihe hands of eight hundred private institutions scattered all over the country, and which have no other object but their own private profits, to increase which they almost constantly extend their business to the most dangerous extremes? And why should the community be compelled to give 6 per cent, discount for tlie gov- ernment credit, blended with that of the banks, when the superior credit of the government could be furnished separately, without discount, to the mutual advantage of the governuient and the community ? Why, let me ask, should the government be exposed to such difflcu.ties as the present, by mingling its credit with the banks when it could be exempt from all such by using l^v itself its own safer credit? It is time the community, wliich has so deep an interest in a sound and cheap currency, and the equality of the laws between one portion of the citizens of the country and another, should reflect seriously on these things, not for tlie' pur- pose of oppressing any interest, but to correct gradual disorders of a dangerous character, which have insensibly in the long course of years, without being perceived by any one, crept into the State. "'The question is not between credit and no credit, as some would have us believe, but in what form credit can best perform the functions of a safe and sound currency. On this important point I have freely thrown out my ideas, leaving it for this body and the public to determine what they are worth, believing that there might be a sound and safe paper currency founded on the credit of government exclusively. * * * My aversion to a pub- lic debt Is deep and durable. It is in my opinion pernicious, and is little short of a fraud on the public. I saw too mucli of it dur- ing the late war not to understand something of the nature and character of public loans. Never was a country more egregiously imposed on. * '■ * I shall oppose strenuously all attempts to originate a new debt; to create a national bank; to reunite the political and money power— more dangerous than that of church and state — in any form or shape. '•Time forbids further reference to the 'wild dreamers' of the past that believed in the principles of these resolutions. The gentleman is alarmed lest the government pay its debt in 'manu- 234 FINANCIAL CATECHISM. factured money,' a frank confession that he never wants it paid, for neither this nor any other money debt can be paid unless paid with 'manufactured money.' He screams, 'Print it to death!' He would have the printing-presses all run, but instead of print- ing it to death he would have them forever continue to print it into new life to suck the blood from the people, and for that pur- pose has introduced a bill to issue new interest-bearing bonds, to run thirty years before they can be paid, with which to meet the seven hundred and eighty-two millions soon to mature. He would print new bonds and bank-notes, the tools of oppression, caste, and slavery forever, but greenbacks and silver, the symbols and agents of prosperity and freedom, never! He proposes this government shall meetitsdebts with interest-bearing, irredeemable bonds. He knows every bond could be paid with greenbacks before the silver now in the Treasury would be taken, because bondholders would prefer, as everybody else prefers, legal-tender paper to legal-tender silver. He knows that bonds are now paid in that way, and so he shouts Repudiation at a proposal to pay these bonds ac?ording to contract. "The gentleman is pleased to refer to ours as the 'dying party.' How strange that these simple resolutions embodying principles of a ' dying party ' should create such a flutter in this House, leading it to fight of£ their consideration by adjournment and other devices, for over three months. His wi«h is father of his thought. Truth never dies. Our young party, representing prin- ciples of justice, will survive old parties that represent only onpressive systems, monopolies and spoils. The National Green- back party will never die until its principles are ingrafted into the laws of the land, until this government discharges its duty to the people by supplying them with a perfect money and ceases to farm out the labor of the millions to banners and bondholders. The only possible way of postponing the day when we shall take control of government is by inflaming anew the sectional pre- judices and hatreds of the war. " The gentleman closes with an appeal to Democrats and Repub- licans, in the name of 'honesty, peace,' etc., to throttle ' this beast.' He in suDstance said: if there remains in your bosoms, Repub- licans and Democrats, one spark of freedom's fire, a single desire to overthrow this bond-holding, national-bank dynasty, that my party has fastened upon the country, a single hope that you may yet restore to the people their rights under the Constitution, then, in the name of honesty and peace, crush it out and throttle it forever. "'Honesty and peace' are good. There never was a despotism that did not appeal to the people for support in the name of 'hon- esty and peace.' American slavery for over two centuries had no stronger prop than 'honesty and peace.' Does the gentleman mean to intimate what Joseph Cook and Senator Sharon say in plain English, that before this national bank oligarchy can be over- thrown with the party tliat created it. this land will again be drenched in blood ? If he does, let the people understand it! for come what may, it shall he overthroiuii .' "How are the mighty fallen ! I appeal from the Republican flNANCIAL CATECHISM. 285 party of to-day. owned and controlled by banking and other cor- porations, to the Eepublican party of 1868, when it spoke with no uncertain sound, and in convention in tlie gentleman's own State, after pledging itself to the payment of the public debt according to law, and then declaring that the 5.20 bonds were payable in greenbacks, it resolved 'that we heartily approve the policy of Congress in stopping the contraction of the currency, and believe that the issue of currency should be commensurate with the indus- trial and commercial interests of the country.' Similar resolutions vrere passed in Indiana, Iowa, and other States. John Sherman was so 'wild a dreamer' that in February 27, 1868, in a speech in the United States Senate, he said (.Vppeiidix to Congressional Globe, Part V, 2d second, 40th Congress, p. 189): " 'The whole public debt should be made to assume such form as to be a part of the circulating capital of the country.' "The greatest exhibition of power ever shown by this Republic was in speaking freedom to four millions of slaves. In one su- preme moment the people, Samson-like, broke through the cob- webs of court decisions and precedents and red tape, and their combined voice was truly the voice of God. For one moment we rose up, shook off the shackles of class, of combinations, of the rich and powerful, and did justice, only to relapse into the toils of an anaconda more dangerous than slavery, because more wealthy, more stealthy, more subtle, and less sectional. Oh, for a supreme moment now in which Congress shall speak freedom to fifty millions ot people from the domination of centralized capi- tal in all its forms! Will you do it? This House can show the world, without violating court decisions, precedents, or laws, whether it most regards the people or their task-masters. Choose you this day whom you will serve, the people or the banks! I re- joice that from this hour it can be known who wears the ear- mark of the national banks. 1 call attention to the votes, and shall append them to my remarks, that all may know where the different parties and members stRnd upon this supreme issue. Especially do I call the attention of the people of Iowa to the votes of her Representatives, that they may understand in future who have been true and who false to their pledges. If these reso- lutions are defeated it can only be by a fusion of the Republicans and the bank wing of the Democracy, whose union will thus be consummated and their marriage should be celebrated. " The question was taken ; and there were— yeas 85, nays 117; not voting 90; as follows: Yeas- *Armfield, *Atherton, *Atkins, *Beale. fBelford, *Berry, *Bicknell, *Blackburn, *Bland, -85— Democrats 1%, *Dibrell, *Dickey, *Dunn, *Elam, *Ewing, *Felton, *Finlay, tFord, *Forney, Nationals 12, Republican 1. ILadd, JLo we, *Manning, *McKenzie, *MoMillin, *Mil]s, *Muldrow, tMurch, ^ *Myers, *Sca]es, *Singleton, J.W. "i^SingletonjO.R. *Slemons, *Smith, Wm. E. *Sparks, *Speer, ♦Steele, tStevensoD, 236 FINANCIAL CATECHISM. YEAS- *Cabell, trorsvthe, *Clardy, *Frost, *Clark, John B. *Geddes, *Cobb, *CofEroth, *Colerick, *Cook, *Cox, *Culbersoi\. *Davidson, *Davis, Jos. J. *Davis, L. H. |De La Matyr. Nays- tGillette, *Gunter, *Harris, J. *Hatch, *House, *Hull, tJones, JKelley, *Kenna, -CONTINUED. *N'ew. *Nicbolls, *Persons. * Phelps, *Phillips, T. *Reagan, *Richmond, *Robertson, *Rothwell, IRussell, U. L. *Ryan, J. W. *Sawyer, ♦Taylor, *TilIman, ♦Turner, Oscar *Turner, Thos. *Vance, *Waddill, ^Weaver, *Willborn, *Whitthorne, ♦Williams, T. ♦Willis, ♦Wilson. -117— Republicans' 87, Democrats 30. • Aldrich, N. W. fBavis, Horace •Aldrich, Wm. fDeering, Anderson, *Bachman, ■(■Baker, jBarber fBayne, ♦Belthoover, ■fBlake. Boyd, Bre'wer, Briggs. Brigham, Bro'wne, ♦Buckner, ■ Burrows, ■ Butterworth, ■ Calkins, ■Cannon, *Carlisle, fCarpenter, ■[Caswell, {Chittenden, ♦Clymer, fConger, *Covert, fCrapo, ♦Cravens, fDaggett, f Davis, G. E. Deuster, ■(■Dunnell, •fErrett, ♦Evins, ■fFarr, fPerdon, jField, ■fFisher, ■fFrye, •fGarfleld, ♦Goode, Hall, Harris, B.W. Haskell, Hawk, Hawley, ■ Hayes, Hazelton, Henderson, ♦Herbert, ♦HerndoD, Hiscock, Houk, Hubbell, Humphrey, Hunton, *Hurd, fJames, ♦Johnston, fJoyce, fKeifer, ♦Kimmel, fLapham, ♦Lewis, fLindsey, ♦Lounsbery, ■ Mason, McCoid, McGowan, ♦McLane, tMitchell, ♦Money, •fMonroe, ♦Morrison, ♦Morse, Morton, Neal, Newberry, Norcross, O'Neill, ♦O'Reilly, fOverton, fPage, ♦Phister, •IPierce, {Pound, jPrescott, {Price, {Reed, {Robinson, ♦Ross, ■j-Russell, W. A. {Ryan, Thos. ♦Samford, fShallenberger, ♦Shelley, f Smith, A. Herr {stone, {Thomas, ♦Thompson,P.B ■|-Thompson,W.C- {Townsend, A. ♦Tucker, {Tyler, {Updegrafe,J.T. tUpdegrafi, T. ♦Upson, Valentine, Van Aernam, Voorhis, ■Wait, ■ Washburn, •White, ■Wilber, Williams, C. G, NOT VOTING — 90. * Democrats ; t Republicans ; t Nationals. The contest over the question of using troops at the polls to protect the voters in a free ballot, was that to which the attention of the people was directed, from the fact that it prevented the passage of appropriation bills at the regular FINANCIAL CATECHISM. 287 session of 1880 and caused an extra session of Congress to be called for the purpose of providing means to defray the ordinary expenditures of the government. The leaders of the Republican and Democratic parties continued the struggle in the extra session, and allowed no measure which would have a tendency to allay the burning hatred between the North and the South, which they kindled from its smouldei'ing embers, to be considered if they could possibly avoid it. The money power was well aware that unless they could manage to array a solid North against a solid South, that it was uncertain into whose hands the control of the government would fall at the ensuing election of that year. The Republi- can party having proved true to their interests so far, it was natural for them to desire that no change should be made in the administration, and they consequently done all in their power to so shape and manupulate the canvass as to insure a solid vote of all the Northern states for that party. General Grant was evidently the first choice of the " Aris- tocrats" to succeed President Hayes, but the threatening language of some of their leaders in suggesting his name pro- duced a feeling among the Western people, unfavorable to his nomination; but his supporters presented his name as a candidate for President before the National Republican convention, which met in Chicago on the 2d of June 1880, and manifested a determination seldom witnessed in such cases, to force him upon the party as their candidate at all hazards. But the opposition prevailed after a seven days' con- flict, and James A. Garfield, of Ohio, was nominated for President and Chester A. Arthur, of New York, for Vice President. The rank and file of the convention had cast the majority of the votes, but the aristocrats were successful, notwith- standing, for Mr. Garfield's former record, in every case where the interests of the money dealers collided with those 238 mNANClAL CATECHISM. of the people, shows that his sympathies were with the former and not the latter. The National Greenback party met in convention in Chi- cago on June 9, 1880, and by a unanimous vote nominated James B. Weaver, of Iowa, for President, and Benjamin J. Chambers, of Texas, for Vice President of that party, which was laboring to p"omote the interests of the whole people, and especially the interests of the laboring man. On the 27th of June, 1880, the Democratic National Con- vention met in Cincinnati, and put in nomination W. S. Hancock, of New York, for President, and William M. English, of Indiana, for Vice-President. The three parties, having nominated their candidates, pub- lished to the world their platforms, or declaration of princi- ples, upon which they asked the suffrage of the voters of the United States, which are as follows: THE NATIONAL REPUBLICAN PLATFORM FOR 1880. "The Eepublican party, in National Convention assembled, at the end of twenty years since the Federal Government was first committed to its cliarge, submits to the people of the United States this brief report of its administration : " It suppressed a rebellion which armed nearly a million of men to subvert the national authority. " It re-cemented the Union with freedom, instead of slavery, as its corner-stone. " It transformed four million human beings from the likeness of things to the rank of citizens, and relieved Congress from the infamous work of hunting fugitive slaves, and charged it to lee that slavery does not exist. " It has raised the value of our paper currency from 38 per cent, to a par with gold. " It has restored upon a solid basis the payment in coin of all i>he national obligations, and has given us a currency absolutely aod and equal in every part of our extended country. ■' It has lifted the credit of the nation from the point where 6 f-er cent, bonds sold at 86 to that where 4 per cent, bonds are souglit at a premium. "Under its administration the railways have increased from 31,000 miles in 1860 to 80,600 in 1879. " Our foreign trade has increased from $700,000,000 to $1,150.- 000,000 in the same time, and our exports, where $200,000,000 less than our imports in 1860, were $264,000,000 more than our imports in 1879. " Without resorting to loans, it has since the war closed defrayed the ordinary expenses of the government, besides the accruing FINANCIAL OATEClIISil. 230 interest on the public debt, and disbursed annually more than $30,000,000 for soldiers' pensions. " It has paid $888,000,000 of the public debt, and by refunding the balance at lower rates has reduced the annual interest charge from nearly $150,000,000 to less tlian $89,000,000. "All the industries of the country have revived; labor is in demand; wages have increased throughout the country. There is evidence of a coming prosperity greater than we have ever enjoyed. " Upon this record tlie Republican party asks for the continued confidence and support of the people, and this convention sub- mits for their approval the following statements of the princi- ples and purposes which will continue to guide and inspire its efforts : " First. We affirm that the work of the last twenty-one years ias been such as to commend itself to the favor of the nation, and that the fruits of tlie costly victories which have been achieved through immense diiHculties should be preserved; that the peace regained should be clierished ; that the dissevered Union, now happily restored, should be perpetuated ; th t the liberties secured to this generation should be transmitted undiminished to future generations; that the order established and the credit acquired should never be impaired; that the pensions promised should be paid ; that the debt so much reduced should be extin- guished by the full payment of every dollar thereof; that the reviving industry should be further promoted, and that commerce already encouraged should be further stimulated. "Second. The constitution of the United States is a supreme law and not a mere contract between confederated states. It makes a sovereign nation. Some powers are denied to the nation, while others are denied to the states, but the boundary between the powers delegated and those reserved is to be determined by the national and not by the state tribunals. " Third. The work of popular education is one left to the care of the several states; but it is the duty of the national government to aid that work to the extent of its constitutional ability. The intelligence of the nation is but tlie aggregate of the intelligence of the several states, and the destiny of tlie nation must be guarded, not by the genius of any one state, but by the average genius of all. "Fourth. The constitution wisely forbids Congress to make any law respecting an establishment of religion; but it is idle to hope that the nation can be protected against the influenceof sec- tarianism while each state is exposed to its domination. We there- fore recommend that the constitution be so amended as to lay the same prohibition on the legislature of each state as to forbid the appropriation of the public funds to the support of sectarian schools. " Fifth. We affirm this belief, avowed in 1876, that the duties laid for the purpose of revenue should so discriminate as to favor American labor; that no further grant of the public domain should be made to any railway or other corporation; that slavery having perished in the states, its twin barbarity, polygamy, must 240 FINANCIAL CATECHI8M. die in ttie territories ; tiiat everywhere the protection accorded to a citizen of American birth must be accorded to citizens of Amer- ican adoption ; that the obligations of the Republic to the men who preserved its integrity in the days of battle are undiminished by the lapse of fifteen years since their final victory. Their per- petual honor is and shall forever be the grateful privilege and sacred duty of the American people. "Sixth. Since the'authority to regulate immigration and inter- course between the United States and foreign nations rests with the Congress of the United States and its treaty-making powers, the Republican party regard the unrestricted importation of Chin- ese as an evil of great magnitude, and invoke the exercise of that power to restrain and limit that immigration by the enactment of such just, humane and reasonable provisions as will produce that result." The National Greenback party adopted the following plat- form, at Chicago, June 9, 1880: "Civil government should guarantee the divine right of everv laborer to the results of his toil, thus enabling the producers of wealth to provide themselves with the means of physical comfort, and the facilities for mental, social and moral cuiture, and we condemn, as unworthy of our civilization, the barbarism whicli imposes upon the wealth-producers a state of perpetual drudgery as the price of bare animal existence. " Notwithstanding the enormous increase of productive power, the universal introduction of labor-saving machinery, and the discovery of new agents for the increase i.f wealth, the task of the laborer is scarcely lightened, the hours ot toil are but little short- ened, and few producers are lifted from poverty ijiio -romfort and pecuniary independence. " The associated monopolies, the international syndicates and other income classes demand dear money and cheap labor, a 'strong government,' and hence a weak people. " Corporate control of the volume of money has been the means of dividing society into hostile classes ; of the unjust distribution of the products of labor, and of building up monopolies of asso- ciated capital, endowed with power to confiscate private property It has kept money scarce, and scarcity of money enforces debt- trade and public corporate loans — debt engenders usury, and usury ends in the bankruptcy of the borrower. " Other results are, deranged markets, uncertainty in manufac- turing enterprise and agriculture, precarious and intermittent employment for the laborer, industrial war, increasing pauperism and crime and the consequent intimidation and disfranchisement of the producer, and a rapid declension into corporate feudalism. "Therefore, we declare— "1. That the right to make and issue money is a sovereign power to be maintained by the people for the common benefit. The delegation of this right to corporations is a surrender of the central attribute of sovereignty, void of constitutional sanction, conferring upon a subordinate, irresponsible power, absolute dominion oyer industry and commerce. All money, whether FINANCIAL CATECHISM. 241 metalic or paper, should be issued find its volume controled by the government, and not by orthrouuli Iniukin:,' corporations, and when so issued, should be a full legal-tender for ;ill debts, public and private. '•2. That the bonds of the United .states should not be refunded, but paid as rapidly as practicable, accoi-ding to contract. To ena- ble the government to meet these obligaiioir. legal-tender cur- rency should be substituted for notes of the national banlcs, the national banking system abolished, and the unlimited coinage of silver as well as gold, established by law. " 3. That labor should be so protected by national and State authority as to equalize its burdens and insure a just distribution of its results ; the eight-hour law of Congress should be enforced ; tbe sanitary condition of industrial establishments placed under rigid control; the competition of contract convict labor abolished; a bureau of labor statistics established; factories, mines and workshops inspected ; the employment of children under fourteen years of age forbidden, and wages paid in cash. "4. Slavery being simply cheap labor, and cheap labor being simply slavery, the importation and presence of Chinese serfs necessarily tends to brutalize and degrade American labor; there fore, immediate steps should be taken to abrogate the Burlingame treaty. "5. Railroad land grants forfeited by reason of non-fulfillment of contracts should be immediately reclaimed by the government; and henceforth the public domain reserved exclusively for homes for actual settlers. " 6. It is the duty of Congress to regulate inter-state commerce. All hues of communication and transportation should be brought under such legislative control as shall secure moderate, fair and uniform rates for passengers and freight traffic. "7. We denounce as destructive to prosperity and dangerous to liberty the action of the old parties in fostering and sustaining gigantic land, railroad, and money corporations and monopolies, invested with and exercising powers belongingtothegovernment, and yet not responsible to it for the manner of their exercise. " 8. That the constitution, in giving Congress the power to bor- row money, to declare war, to raise and support armies, to provide and maintain a navy, never intended that the men who loaned their money for an interest consideration should be preferred to the soldier and sailor who periled their lives and shed their blood on land and sea in defense of their country, and we condemn the cruel class legislation of the Republican party which, while pro- fessing great gratitude for the soldier, has most unjustly discrim- inated against him and in favor of the bondholder. "9. All property should bear its just proportion of taxation, and we demand a graduated income-tax. ,, ^ , " 10 We denounce as most dangerous the efforts, everywhere manifest, to restrict the riglit of suffrage " 11 We are opposed to an increase of the standing army m time of peace and the insidious scheme to establish nn enormous military power under the guise of militia la\vh\ " 12 We demand absolute democratic rules for the government 16 242 FIISANCIAL CATECHISM. of Congress, placing all representatives of the jieople upon an equal footing, and taking away from committees a veto power greater tiianthat of the President. " 13. We demand a government of the people, by the people and for the people, instead of a government of the bondholders, by the bondholders and for the bondholders; and we denounce every attempt to stir up sectional strife as an effort to conceal monstrous crimes against the people. " 14. In the furtherance of these ends we ask the co-operation of all fair-minded people. We have no quarrel with individuals, wage no war upon classes, but only against vicious institutions. We are not content to endure further discipline from our present actual rulers, who having dominion over money, over transporta- tion, overland and labor, and largely over the press and machinery of government, wield unwarrantable power over our institutions and over life and property." RESOLUTIONS. The Socialists submitted the following resolution, which, sub- sequent to the nominations, was adopted: "We declare that land, air and water are the free gifts of nature to all mankind, and any law or custom of society that allows any person to monopolize more of these gifts of nature than he has a right to we earnestly condemn and demand shall be abolished." The following resolution was introduced and referred to the Committee on Kesolutions, who recommended it to the favorable consideration of the States : "Resolved, That the rights of self-government inheres in the individual as the fundamental principle of our government ; and we hereby pledge ourselves to secure a constitutional amendment to give the right of suffrage to the women citizens of the nation." Democratic platform, adopted by the National Convention, Cincinnati. June 27, 1880: "The Democrats of the United States, in convention assem- bled, declare: " 1. We pledge ourselves anew to the constitutional doctrines and traditions of the Democratic party as illustrated by the teachings and examples of a long line of Democratic statesmen and patriots, and embodied in the platform of the last National Convention of the party. "2. Opposition to centralization and to that dar.gerous spirit of encroachment which tends to consolidate the powers of all the departments in one, and thus create, whatever be the form of government, a real despotism. No sumptuary laws; separation of church and state for the good of each ; common schools fos- tered and protected. "3. Home rule; honest money, consisting of gold and silver, andpai • • convertible into coin on demand; the strict mainte- nance o\ \lie public faith, state and national, and a tariff for rev- enue orjly. "4. The subordination of tlie military to the civil power, and saauerai and thorough reform of the civil service. "5, Ttesvightof a free ballot is the right preservative of all FINANCIAL CATECHISM. 243 rights, and must and shall be maintained in every part of the United States. " 6. The existing Administration is the representative of a conspiracy only, and its claim of right to surround the ballot- boxes with troops and deputy marshals to intimidate and obstruct the electors, and the unprecedented use of the veto to maintain its corrupt ^and despotic power, insult the people and peril their institutions. "7. The great fraud of 1876-7, by Which, upon a false count of the electoral vote of two States, the candidate defeated at the polls was declared President, and for the first time in American history the will of the people was set aside under a threat of military violence, struck a deadly blow at our system of repre- sentative government. The Democratic party, to preserve the country from a civil war, submitted for a time in firm and patri- otic faith that the people would punish the crime in 1880. This issue precedes and dwarts every other ; it imposes a more sacred duty upon the people of the Union than ever addressed the con- science of a nation of free men. "8. We execrate the course of the Administration in making places in the civil service a reward for political crime, and de- mand a reform by statute which shall make it forever impossible for the defeated candidate to bribe his way to the seat of a usurper by billeting villains upon the people. "9. The resolution of Samuel J. Tilden, not again to be a can- didate for the exalted place to which he was elected bya majority of his countrymen, and from which he was excluded by the lead- ers of the liepublican party, is received by the Democracy of the iUnited States with sensibility, and they declare their confidence n his wisdom, patriotism and integrity unshaken by the assaults of the enemy, and they further assure him that he is followed into the retirement which he has chosen for himself by the sym- pathy and respect of his fellow-citizens, who regard him as "one ■who, by elevating the standard of public morality, merits the lasting gratitude of his country and his party. " 10. Free ships and a living chance for American commerce on the spas and on the land. No discrimination in favor of trans- portation lines, corporations or monopolies. "11. Amendment of the Burlingame treaty. No more Chinese immigration, except for travel, education and foreign commerce, and therein carefully guarded. "12. Public money and public credit for public purposes solely, and public land for actual settlers. " 13. The Democratic party is the friend of labor and the labors* ing man, and pledges itself to protect him alike against the cor- morrant and the commune, " 14. We congratulate the country upon the honesty and thrift of a Democratic Congress, which has reduced the public expendi- ture $40,000,000 a year, upon ths continuation of prosperity at home and the national honor abroad, and, above all, upon the promise of such a change in the administration of the govern- ment as shall insure its genuine and lasting reform in every de- partment of the public service." 244 PmAjSrCIAL CATMCMI8M. Standing upon these platforms, the three parties entered the canvass of 1880. The Republican and Democratic par- ties both declaring that the question of finance was settled and not an issue in the campaign. They vied with each other on the rostrum in proclaiming their undying fealty to a free ballot and a fair count without fraud or intimidation in erery part of the United States. Both parties denounced each other as opposed to such freedom — the Democrats on account of the charges (which were doubtless many of them well-founded) that that party had resorted to violence and intimidation in the South in order to prevent a free expres- sion of the public will at the ballot-box, and that the Republicans, having control of the government, had used the army of the United States for the same base purpose, under pretense of protecting inviolate the rights of the voter, which charges were, perhaps, as fully substantiated by positive evidence as those made against the Democrats. In their discussions through the campaign there was no perceptible difference in these two parties on the policy to be adopted by the government. The only controversy between them was, in whose hands it should be intrusted for the next four years. They both, as far as possible, ignored the existence of the National Greenback party, declaring that the issues upon which it was organized having been fully settled, it had no foundation for further existence. The appeals were made to party feeling and sectional prejudice, and to those alone, and so bitter were both the old parties against any interference in the campaign that, where they dared to do it, they used threats and intimidation, and in some cases murder, and when they did not dare to resort to such means they adopted the more cowardly plan of per- suading their dupes to not listen to any argument offered by the Greenback party, or by destroying pesters announc- ing their meetings. The Greenback party adopted an aggressive policy, and, standing upon the declarations in its platform, carried the FINANCIAL CATECHISM. 245 war into the enemy's country and battled for the rights of the people. At the close of the struggle the result showed a vote of 9,209,177, of which Mr. Garfield received 4,446,623, Mr. Hancock received 4,443,106 and Mr. Weaver received 306,- 867; scattering, 12,576. So that Mr. Garfield, though elected to the Presidency, received 157,960 votes less than a majority of the popular vote of the people of the United States. The relative strength of the Republican and Democratic parties is distinctly presented in the fact that m this can- vass, where more than nine million votes were cast, Mr. Gar- field's plurality over Mr. Hancock was only 3,622. While the increase in the popular vote from 1876 to 1880 was a little over 8 per cent., the increase in the Greenback vote for the same period" was nearly 400 per cent. While it was the constant endeavor during this canvass of both the Republican and Democratic parties to shove the finance question entirely out of sight by refusing to discuss it, the speakers and press of the Greenback party held it before the people in all its important bearings on the present and future prosperity of the country, and by so doing created a public sentiment which, though not sufficiently strong to cause many to disregard the party lash, so far as to break the shackles that bound them to the old organiza- tions, it was felt at Washington when Congress convened in December and Congressional work commenced. The bills introduced by the leaders of the Republican and Democratic parties in the House — Hon. James A. Garfield and Hon. Fernando Wood — during the previous session, providing for the refunding of the $780,000,000 of bonds which became payable at the option of the government in 1881, were looked forward to as the most important business devolving upon Congress. These bills provided for funding the whole amount of 246 FINANCIAL CATECHISM. these bonds into twenty and forty years bonds at 4 per cent, usury. Mr. Garfield having been taken out of the House by his election to the Presidency, and the leaders of the two parties in the interest of those who were striving to perpetuate the bondage of the people, placed Mr Wood in charge of the measure as Chairman of the Committee on Finance of the House. During the deliberations of that committee they became satisfied that the greenback leaven had been at work among the people to that extent that such a bill could not be passed, or, if passed, would seal the political doom of those who supported it. The committee, therefore, prepared a substitute for the Wood bill, providing for funding at 3^ per cent., but retain- ing the time at twenty and forty years. A strenuous -effort was made to carry this bill through the House, but such was the effect of the agitation of the subject by the Green- back party, both in and out of Congress, that it was so amended as to place the whole amount not liquidated by the 1st of July, 1881, at the option of the government in from one to ten years, with usury at the rate of 3 per cent., with a further provision repealing the law of 1874, which per- mitted the national banks to at any time deposit legal-tender notes to the amount of their own notes in circulation and withdraw their bonds upon which their notes were based, thus giving them the power to contract the currency and create a panic whenever it suited their convenience. This bill passed the House after a stormy and long-pro- tracted discussion, showing clearly that a majority of that body had been fully awakened to a sense of the fact that the great majority of the people of the United States were in no temper to submit to the yoke of perpetual bondage. During the whole period the bill was under consideration in the House the subsidized press of the money power used all its power and influence to manipulate public sentiment against any change from the twenty-forty year bonds ; but FINANCIAL CATECHISM. 247 when it passed the House aad went to the Senate they clamored more urgently for its defeat by that body. They denounced the bill as vicious in its tendency and ruinous to the best interests of the country if it should be enacted into law, and went so far as to suggest that the President ought to forestall the action of the Senate by notifying it in advance that if passed by that body he would certainly veto it. While this role of intimidation was being played by the press the national banks made a demonstration of the very power of which this bill proposed to deprive them, and deposited nineteen millions of legal-tender money for the retirement of their circulation, with the threat that in case the bill passed a very large amount would be immediately retired. The money dealers in the eastern cities cried panic, and brokers loaned money on call at one per cent, per day. But the Senate stood firm, and passed the bill as it came from the House without any material alteration. When it went to the President it met the fate to which the previous course of that functionary on the finance question unmistakably pointed. He returned it to the House from whence it originated without his signature, and with it his objections in a veto message. We append the bill and message as found in the Congres- sional Record of March 4, 1881, pp. 36 and 37: AN ACT TO FACILITATE THE REFUNDING OF THE NATIONAL DEBT. " Be it enacted by the Senate and House of Representatives in Congress assembled: That all existing provisions of law author- izing the refunding of the national debt shall apply to any bonds of the United States bearing a highei- rate of interest than 4% per cent, per annum, which may hereafter become redeemable: Provided. That in lieu of the bonds authorized to be issued by the act of July 14, 1870, entitled, ' An act to authorize the refunding of the national debt,' and the acts amendatory thereto and the certificates authorized by the act of February 26, 1879, entitled ' An act to authorize the issue of certificates of deposit in aid of the refunding of the public debt,' the Secretary of the Treasury is hereby authorized to issue bonds to the amount of not exceeding 248 FINANCIAL CATECHISM. $400,000,000 of denominations of $50, or some multiple of that sum, which shall bear interest at the rate of 3 per cent, per annum, payable semi-annually, redeemable at the pleasure of the United States after Ave years, and payable twenty years from the date of issue, and also treasury notes to the amount of $300,000,- 000 in denominations of $10, or some multiple of that sum not exceeding $1,000, either registered or coupon, bearing interest at a rate not exceeding 3 per cent, per annum, payable semi- annually, redeemable at the pleasure of the United States after one year, and payable in ten years after the date of issue, and no treasury note of a less denomination than $100 shall be regis- tered. " The bonds and treasury notes shall be in all other respects of like character and subject to the same provisions as the bonds authorized to be issued by the act of July 14, 1870, entitled 'An act to authorize the refunding of the national debt,' and acts amendatory thereto ; Provided, That nothing in this act shall be so construed as to authorize an increase of the public debt; Pro- vided, further, that interest on the 6 per cent, bonds hereby au- thorized to be refunded shall cease at the expiration of thirty days after the publication of notice that the same have been designated by the Secretary of the Treasury for redemption. It shall be the duty of the Secretary of the Treasury, under such rules and regulations as he may prescribe, to authorize public sub- scriptions, at not less than par, to be received at the depositories of the United States and at all national banks, and such other banks as he may designate, for the bonds and for the treasury notes herein provided for, for thirty days before he shall contract for or award any portion of said bonds or treasury notes to any syndicate of individuals or bankers, or otherwise than under such public subscriptions; and if it shall happen that more than the entire amount of said bonds and treasury notes, or of either of them, has been subscribed within the said thirty days, he shall award the full amount subscribed to all persons who shall have made bona fide subscriptions forthe sum of $2,000 or less, at rates most advantageous to the United States, and the residue ratably among the subscribers in proportion to the amount by them respectively subscribed at rates most advantageous to the"United States. "Sec. 2. The Secretary of the Treasury is hereby authorized, in the process of refunding the national debt, to exchange, at not less than par, any of the bonds or treasury notes herein author- ized for any of the bonds of the United States outstanding and uncalled bearing a higher rate of interest thaji 4^^ per cent, per annum, and on the bonds so redeemed the Secretary of the Treas- ury may allow to the holders the difference between the interest on such bonds from the date of exchange to the time of their maturity, and the interest for a like period on the bonds or treas- ury notes so issued ; and the bonds so received and exchanged in pursuance of the provisions of this act, shall be cancelled and destroyed ; but none of the provisions of this act shall apply to the redemption or exchange of any of the bonds issued to the Pacific Railway Companies. FINANCIAL 'CATECHISM. 249 " Sec. 3. The Secretary of the Treasury is hereby authorized to make suitable rules and regulations to carry this act into effect, and the expense of preparing, issuing, advertising and disposing of ttie bonds and treasury notes authorized to be issued shall not exceed one-half of 1 per cent. "Sec. 4. That the Secretary of the Treasury is hereby author- ized, if, in his opinion, it shall become necessary, to use temporarily not exceeding $50,000,000 of the standard gold and silver coin in the Treasury in the redemption of the 5 and 6 per cent, bonds of the United States authorized to be refunded by the provisions of this act, which shall, from time to time, be repaid and replaced out of the proceeds of the sale of bonds or treasury notes authorized by this act, and he may at any time apply the surplus money in the Treasury, not otherwise appropriated, or so much thereof as he may consider proper, to the purchase or redemption of the United States bonds or treasury notes authorized by this act; Provided, That the bonds and treasury notes so purchased or redeemed shall constitute no part of the sinliing fund, but shall be cancelled. "Sec. 5. "From and after the lirst day of July, 1881, the 3 per cent, bonds authorized by the first section of this act shall be the only bonds receivable as security for national bank circulation, or as security for the safekeeping and prompt payment of the public money deposited with such banks; but when any such bonds, deposited for the purposes aforesaid, shall be designated for purchase or redemption by the Secretary of the Treasury, the Banking Association depositing the same shall have the right to substitute other issues of the bonds of the United States in lieu thereof : Provided, That no bond upon which interest has ceased shall be accepted, or shall be continued on deposit as security for circulation, or for the safe-keeping of the public money ; and in case bonda so deposited shall not be withdrawn, as provided by law, within thirty days after interest has ceased thereon, the Banking Association depositing the same shall be subject to the liabilities and proceedings on the part of the, Comptroller provided for in Section 5,234 of the Bevised Statutes of the United States : And provided, further, That Section 4 of the act of June 20, 1874, entitled 'An act fixing the amount of United States notes, pro- viding for a redistribution of the national bank currency, and for other purposes, be, and the same is hereby, repealed, Sind Sections 5,159 and £,160 of the Revised Statutes of the United States be, and the same are hereby, re-enacted. "Sec. 6. That the payment of any of the bonds hereby authorized after the expiration of five years, shall be made in amounts to be determined from time to time by the Secretary of the Treasury at his discretion, the bonds so to be paid to be distinguished and described by the dates and numbers of the time of which intended payment or redemption the Secretary of the Treasury shall give public notice, and the interest on the particular bondf' so selected at any time to be paid shall cease at the expiration of thirty days from the publication of such notice. "Sec. 7. That this act shall be known as 'The funding act of 1881 ;' and all acts and parts of acts inconsistent with this act la hereby repealed." ^ 250 FINANCIAL CATECHISM. PRESIDENT HAYES' MESSAGE VETOING TUB REFUNDING BILL. "To the House of Representatives : Having considered the bill entitled "An act to facilitate the refunding of the National debt," I am constrained to return it to the House of Bepresentatives, in wliicli it originated, with the following statement of my objec- tions to its passage; "The imperative necessity for prompt action, and the pressure of public duties in the closing week of my term of oflftce, compel me to refrain from any attempt to make a full and satisfactory presentation of the objections to the bill. "The importance of the passage at the present session of Con- gress of a Sditable measure for the refunding of the national debt, which is about to mature, is generally recognized. It has been urged upon the attention of Congress by the Secretary of the Treasury^ and in my last annual message. If successfully ac- complished it will secure a large decrease in the annual interest payments of the nation, and I earnestly recommend if the bill before me shad fail, that another measure foi' this purpose be adopted before the present Congress adjourns. "While in my opinion it would be wise to authorize the Secre- tary of the Treasury, in his discretion, to offer to the public bonds bearing 3J^ per cent, interest in aid of refunding, I should not deem it my duty to interpose my constitutional objection to the passage of the present bill if it did not contain in the fifth section provisions which, in my judgment, seriously impair the value, and tend to the destruction of the present national banking system of the country. "This system has now been in operation almost twenty years. No safer or more beneficial banking system was ever established. Its advantages as a business is free to all who have the necessary capital. It furnishes a currency to the people which for conveni- ence and the security of the bill-holder has probably never been equaled by that of any other banking system. Its notes are se- cured by the deposit with the government of the interest bearing bonds of the United States. "The section of the bill before me which relates to the national banking system, and to which objection is made, is not an essen- tial part of a refunding measure. It reads as follows : "'Sec. .5. From and after the first day of July, 1881, the 3 per cent, bonds authorized by the first section of this act shall be the only bonds receivable as security for national bank circulation, or as security for the safe-keeping and prompt payment of the public money deposited with such banks; but when any such bonds, deposited for purposes aforesaid, shall be designated for purchase or redemption by the Secretary of the Treasury, the banking association depositing the same shall have the right to substitute other issues of the bonds of the United States in lieu tliereof ; Provided, That no bonds upon which interest has ceased shall be accepted or shall be continued on deposit as security for circulation or for the safe-keeping of the public money; and in case bonds so deposited shall not be withdrawn, as provided by law, within thirty days after interest has ceased thereon, the banking association depositing the same shall be subject to the FINANCIAL CATECHISM. 251 liabilities and proceedings on the part of the Comptroller, pro- vided for in Section 5,234 of the Revised Statutes of the United States: And provided, further, That Section 4 of the act of June 20, 1874, entitled 'An act fixing the amount of United States notes, providing for a redistribution of the national bank currency and f(r other purposes,' be, and tlie same is hereby repealed, and Sec- tions 5,159 and 5.160 of the Revised Statutes of the United States be, and the same are hereby, re-enacted.' " Under this section it is obvious that no additional banks will hereafter be organized, except, possibly, m a few cities or locali- ties where the prevailing rates of interest in ordinary business are extremely low. No new banks can be organized, and no increase of the capital of existing banks can be obtained except by the purchase and deposit of 3 per cent, bonds. No other bonds of the United States can be used for the purpose. The one thou- sand millions of other bonds recently issued by Ihe United States, and bearing a higher rate of interest than 3 per cent., and therefore abetter security for the bill-holder cannot, after the 1st of July next, be received as security for bank circulation. This is a radical change in the banking law. It takes from the banks the right they have heretofore had under the law to purchase and deposit, as security for their circulation, any of the bonds issued by the United States, and deprives the bill-holder of the best security which the banks are able to give, by requiring them to deposit bonds having the least value of any bonds issued by the government. The average rate of taxation of capital employed in banking is more than double the rate of capital employed in other legitimate business. Under these circumstances, to amend the banking law so as to deprive the banks of the privilege of se- curing their notes by the most valuable bonds issued by tlie gov- ernment will, it is believed in a large part of the country, be a practical prohibition of the organization of new banks, and pre- vent the' existing banks from enlarging their capital. The national banking system, if continued at all, will be a monopoly in the hands of those already engaged in it, who may purchase government bonds having a more favorable rate of interest than the 3 per cent, bonds prior to next July. To prevent the further organization of banks is to put in jeopardy the whole system of taking from it that feature which makes it, as it is now, a bank- ing system, free upon the same terms to all who wish to engage in it. Even the existing banks will be in danger of being driven from business by the additional disadvantages to which they will be subjected by this bill. In short, I cannot but regard the fifth section of the bill as a step in the direction of the destruction of the national banking system. " Our country, after a long period of business depression, has just entered upon a career of unexampled prosperity. Believing that a measure for refunding the national debt ia not necessarily connected with the national banking law, and that any refunding act would defeat its own object if it imperiled the national bank- ing system or seriously impaired its usefulness, and convinced that Section 5 of the bill before me would, if it should become a law, work great barm, I herewith return the bill to the House of 252 FINANCIAL CATECHISM. Representatives for that further consideration which is provided for in the Constitution. " RtjTHERFORD B. Hates. "Executive Mansion, March 3, 1881." Remarks : In the foregoing message we find its spirit and animus expressed in the following languasje : " Which would, in my judgmint, seriously impair the useful- ness and tend to the destruction of the present national banking system of this country." Q. In what way would such a bill produce this eiFect ? A. In the language of the President : "Under this section (Section 5) it is obvious tliat no additional banks will hereafter bo organized, except pcssibly in a few cities or localities where the prevailing rates of interest in ordinary business are extremely low " And, as a further reason for thus using his constitutional prerogative to thwart the will of the people expressed through their representatives, he says : "It takes from the banks the right they have heretofore had under the law to purchase and deposit, as security for their cir- culation, any of the bonds issued by the United States, and deprives the bill-holders of the best security which the banks are able to give by requiring them to deposit bonds hav'ng the least value of any bonds issued by the government." This statement of the President is false in theory and false in fact. Previous to 1874 the national banks were compelled to keep on deposit in the Treasury of the United States one thousand dollars of the interest-bearing bonds of the government for every nine hundred dollars of their circulation, and could only withdraw those bonds when they called in their circulation and surrendered it to the govern- ment. The act of June 20, 1874, permitted the banks at any time to withdraw their interest-bearing bonds and deposit non- interest bearing legal-tender notes as security for their cir- culation. Section 5 of the bill, to which the President objects in his veto message, proposes to re-enact the law which was repealed by the act of 1874, and compel the banks to keep on deposit interest-beariiig bonds as security for their notes, instead of legal-tender notes, which bear no FINANCIAL CATECHISM. 253 interest. If it is the amount of interest that gives the bill- iiolder the greater security, this bill provided for 3 per cent, better security than was provided by law as it then stood. Q. Is it a fact that the bill-holder is any more secure with a government bond bearing 6 per cent, interest than he would be with one bearing 3 per cent, deposited in the Treas- ury as security ? A. No! The bonds of the government are not deposited in the Treasury of the United States for the purpose ot securing the bill-holder, but to secure the government in case it has to redeem the bills of the banks. The govern- ment agrees that in case the banks fail to redeem their cir- culation, it will redeem it with legal-tender notes, and holds its own bonds to the amount of 10 per cent, more than the circulation of the banks in order to indemnify it against loss in case it has them to pay. The security of the bill- holder rests in the ability and willingness of the govern- ment to redeem the national bank notes, and not on the value of the bond in the market, measured by the rate of interest it bears. But if this was really the security of the bill-holder, and the credit of the government was so good as to float its bonds at 3 per cent, per annum, such a bond would certainly be better security than the bond of the same government whose credit was so poor that its bonds stood at a discount of 10 or 20 per cent. Both the law and the facts are against the statement of the President. The President's idea of the object of a refunding bill is very clearly stated in his objections to this bill, in the following words: "And that any refunding act would defeat its own object if it imperiled the national banking system or seriously impaired its usefulness." Q. How would a refunding bill defeat its own object, even if it should drive every national bank in the United States out of existence? Was it that it would destroy the market for the bonds? A. If the destruction of the national banking system 254 FINANCIAL CATECHISM. would defeat the object of a funding bill, the object of that bill must be the perpetuity of that system, which could not be perpetuated without making the national debt perpetual as its basis. Logicallj', then, the sole object of such a fund- ing bill as would meet the approbation of President Hayes and the national bankers, whose cause he was advocating in this message, was one so framed as to rivet the chains of perpet- ual bondage on the limbs of the American laborers for the benefit of a few aristocrats who should govern them. Immediately after the adjournment of Congress, the Sec- retary of the Treasury, Mr. Windom, adopted the idea of compromising with the bondholders and continuing the 5 and 6 per cent, bonds then falling due at 3^ per cent., paya- ble at the option of the government. There was no law providing for any such refunding, but the bondholders promptly accepted the proposition and sur- rendered their bonds to the amount of $670,000,000, which the Secretary received and issued more bonds, bearing 3i per cent., payable as above stated, and gave them in exchange for the old ones. This was an unwarranted assumption of legislative power by an executive officer, but, as it saved a large amount of usury to the people, and placed the bonds at the option of the government, this exercise of arbitrary power was tole- rated; not, however, without very sharp criticism by Con- gress in 1882. Early in the above named session, Mr. Crapo, of Massa- chusetts, introduced a joint resolution authorizing national banking associations to extend their corporate existence for another twenty years. This resolution met with strong opposition in the House, but was finally passed and sent to the Senate for considera- tion; when, after full discussion, it was returned to the House with about twenty amendments, to all of which the House agreed, with the exception of a few on which it nan- concurred, and returned it to the Senate. That body refused FINANCIAL CATECHISM. 255 to recede from its amendments and requested the House to appoint a committee of conference to meet with a similar committee of the Senate to agree in perfecting the bill. Messrs. Allison, Morrill and Beck were appointed on the part of the Senate, and Messrs. Crapo, Dingley and Buckner on the part of the House. This committee agreed upon the bill, with but little change from what it was when it passed the Senate, and the two Houses accepted it as modified by the Conference Com- mittee. This bill was approved by the President, and became a law on the 12th of July, 1882, and shows that the bank power is not broken, that it runs every department of the government and controls legislation in its interest as com- pletely as though the whole power of the government was given over to that institution. APPENDIX. THE CRISIS AND THE REMEDY. A SPEECH DELIVERED BY DR. S. M. BEIGE, OF MOUND CITY, KANSAS, ON THE 30tH OF MAKCH, 1882. " Me. Chaieman, Ladies and Gentlemen: Nations, like individuals, have their periods of rise, progress, decline and fall. " Within these four grand divisions, they, like individuals, are subject to critical periods, in which it requires the great- est skill to carry them through the crisis and strengthen their capabilities for future healthy growth and develop- ment. "When the individual, knowingly or unwittingly, violates the law of his physical organization and is suffering the con- sequence of such violation under the influence of disease, it is the wise physician who can correctly diagnose the case and provide such remedies as will carry his patient success- fully over the crisis and build him up again to his normal condition. " So, when governments violate political or economic law and are suffering in consequence of such violations, it requires the same skill in statesmanship to diagnose the con- dition and provide the remedy that it does in the case of the individual. " As the wise physician employs the simplest means to assist nature to restore the physical system to a healthy condition, so the wise statesman seeks, by the simplest 17 ^8 FINANCIAL CATECHISM. means, to remove the cause or tne disease in the body politic, and restore it to normal and healthy action. " As individuals are liable to become diseased from the operation of different causes, the means to be used for their restoration to health will vary in character; so the causes vfhich produce a diseased condition of governments may vary in character, and require different remedies to remove the disease and restore the government to its normal condi- tion. " The causes which produce disease in individuals or nations are sometimes external and sometimes internal, but more frequently partaking of both characters. " The disease to which I propose to call your attention this evening is of this two-fold character, and for the want of a better name I will call it malignant financial fever. " Our government has suffered from several attacks of this disease, each of which has made serious inroads upon its constitution, but time will not permit me to refer to them in detail. " The last attack — the one from which it is now suffering — commenced on the 25th of February, 1863, a little more than nineteen years ago, when the first national banking law was passed, and, notwithstanding the financial doctors have been continually at work, and declaring the nation was in a healthy condition, they are now compelled to acknowl- edge that the disease is just approaching a crisis and needs new medication. " In this conclusion I fully agree with them. '' A crisis is approaching. "The finance question is forcing itself on the American people, whether welcome or unwelcome. " The fact set forth by the Secretary of the Treasury of the United States, in his statement of February 6, 1882, that the charters of 396 national banks will expire before the 3d of March, 1883, and that 282 expire on the 25th of February, X883 (just twenty years from the date of the passage of the FINANCIAL CATECHISM. 259 first national banking law), and that the circulation of these banks amounts to $69,160,980, establishes the fact that the question can no longer be ignored, and that some measures must be adopted by which the commerce of the country can be protected from derangement by the withdrawal of this amount of currency from .circulation. " It is clearly the duty of the present Congress to make provisions to meet this contingency, but if it should fail to perform this important duty it will devolve upon the suc- ceeding Congress to make the necessary provision in the first ninety days of its existence. " With these facts staring us in the face, who can deny the fact that the finance question is not settled, or who can say that it is not the present overshadowing issue in national politics. " Senator Edmunds, in his remarks on the Sherman 3 per cent, funding bill, after referring to the rapid extinguish- ment of the public debt and the expiration of the charters of the national banks, frankly confesses that the time has come when the people should declare, through their repre- sentatives, what the future money of this country shall be. He says: "'What are we to do? There are fourthings, and I cannot think of any more. We are to go on as we are, with the system ol' na- tional bank notes, with all their good qualities and all their bad ones, although nobody has found any bad qualities in the notes, I believe, but what are said to be bad qualities in the banks them- selves. That is one. We are to abolish it altogether and go back to the state bank system we had before the war. That is two. We are to provide a national currency issued by the Treamry. Tliat is three. We are to stand, like Thomas H. Benton, on the doc- trine of gold and silver, and nothing else; and that will make up the fourth. Something within those boundaries the public ad- ministration of the laws of this country, as it regards the finan- cial welfare of this people (and that is the financial welfare of the day-laborer just as much as it is of the capitalist) is to be con- ducted.' {Cong. Record, Jan. 31, 1882, page 47.) "Here we have a frank acknowledgment by one of the leading representatives of the gold standard and national bank interests, that the issue is upon us, and ought to be met 260 FINANCIAL CATECHISM. and considered in the interest of the people of this country of every condition in life. "As the Senator has laid down these four propositions, let us consider them in their order. ''''First. Is it for the interests of the people of the United States to continue the present national banking system? "Every intelligent thinker must acknowledge upon a ino- ment's reflection that it is not; for the reason that it restu on a national debt, while the holders of that debt are ex- empted from taxation on the money so invested, and all other interests are taxed to pay the usury on such debt. "The solvency of the national bank notes is based on the ability of the government to liquidate the debt, and no sane person will contend thafrit is good policy for a nation or an individual to postpone the payment of a debt after they ac- quire the ability to pay it; hence, upon true principles of financial economy we cannot, in justice to the people, con- tinue our national banking system for the reason that we intend to pay the public debt on which it is based. "We cannot afford to continue this system, for the reason that it requires double usury to get it into circulation; first, usury on the bonds on which it is based, and then usury on the currency when it is drawn from the bank. "This usury is so much money drawn from the productive industries of the country for the privilege of using the pro- missory notes of a chartered corporation as a medium of exchange instead of money, and giving the national bankers the privilege of living in idleness and luxury on the usury on what they owe. "Another reason why we cannot afford to continue the present national banking system, is the unbridled power it places in the hands of a few persons to expand and contract the volume of the currency at their own will, and thus set the price on the product of every man's labor in the whole % grains of pure, or 208 gi'ains of standard silver. Quarter Dollars— 'Ea.ch to he of one- fourth the value of the dollar or unit, and to contain 92 13-16 grains of pure, or 104 grains of standard silver. Dimes— Ba,ch to be one-tenth of the value of a dollar or unit, and to contain 87^^ grains of pure, or 41?^ grains of standard silver. Half Dimes— Each to be of the value of one-tvi^entieth of a dollar, and to con- tain 18 9-10 grains of pure, or 20 4-5 grains of standard silver. Cents— 'Each to be of the value of one hundreth part of a dollar, and to contain 11 penny-weights of copper. Halif Cents— Bach to be of the value of half a cent, and to contain 5J^ pennyweights of copper. " 5. The proportional value of gold to silver in all coins which shall, by law, be current as money within the United States shall be as fifteen to one, according to weight of pure gold and pure silver; that is to say, every fifteen ;)Ounds weight of pure silver shall be of equal value in all payments with one pound weight of pure gold, and so in proportion as to greater or less quantities, of the respective metals." (Act of February 9, 1793.) " 6. At the expiration of three years next ensuing from the time when the coinage of gold and silver, agreeably to an act entitled 'An act establishing a mint andregulating the coinsof the United States,' shall commence at the mint of the United States (which shall be announced by proclamation of the President of the United States) all foreign gold coins, except Spanish milled dollars and parts of such dollars, shall cease to be legal tender as aforesaid: "7. All foreign gold and silver coins, except Spanish milled dol- lars and parts of such dollars, which shall be received in payment for moneys due to the United States after the said time when the coinage of gold and silver coins shall begin at the mint of the United States, shall, previously to their being issued in circula- tion, be coined anew, ir conformity to the act entitled 'An act establishingamint andregulating tl)e coins of the United States.'" (The Act ot March 2, 1799.) "7. All foreign coins and currencies shall be estimated at the following rates, viz.: Each pound sterling ot Great Britain at four dollars and forty-four cents ($4.44); each lirve tournois of France at eighteen and a half cents (18>^); each florin ox guilder ot the union Netherlands at forty cents (40) ; each marc-banco of Ham- burg at thirty-three and one-third cents (33J^) ; each riac dollar of Denmark at one hundred cents (100); each real of plate and each rial of ullon ot Spain, the former at ten cents and the latter at five cents each; each noilreeot Portugal at one dollar and twenty- four cents; each pound sterling of Ireland at four dollars and ten cents; each tale ot China at one dollar and forty-eight cents: each pagoda ot India at one dollar and ninety-four cents; each rupee of Bengal at fifty-five and one half cents; and all other denomi- nations of money, as nearly as may be to the said rates or the 288 FINANCIAL VATECHimr intrinsic value thereof, compared with money of the United States. "9. All duties and fees to be collected shall be payable in money of f ho United States, or in foreign gold and silver coins at the following rates, that is to say: The gold coins of Great Britain and I'ortugal of the standard prior to the year 1792 at the rate of one hundred cents for every twenty-seven grains of the actual weight thereof; the gold coins of France, Spain and the domin- ions of Spain, of the standard prior to the year 1792, at the rate of one hundred cents for every twenty-seven grains and two- fifths of a grain of the actual weight thereof; Spanish milled dollars at the rate of one hundreclconts for each dollar, the weight whereof shall not be less than Mvonteen (17) pennyweights and seven (7) grains— and in (the same) proportion for the parts of a dollar; crowns of France at the rate of one hundred and ten cents for each crown, the actual weight whereof shall not be less than eighteen (18) pennyweights and seventeen (17) grains — and in pro- portion for parts of a crown ; provided, that no foreign coins shal be receivable which mc not by law a legal-tender for the payment of debt — except in consequence of a proclamation by the Presi- dent of the United State;; authorizing such foreign coins to be received in payment of duties and fees aforesaid." (The Act o£ March S, 1801.) " 10. The foreign coins aiicl currencies hereinafter mentioned shall be estimated in the computation of duties at the following rates : Each sicca rupee of Bengal and each rupee of Bombay at fifty cents, and each star pagodn of Madras at one hundred and eighty-four cents." (TlieAcinf April 10, 1806.) " 11. Foreign gold and silvercoins shall pass current as money within the United States, and be a legal-tender for the pay*nent of all debtn and domanSs rt the several and respective rates fol- lowing, and nou othorv;ise, to-wit: The gold coins of Great Britain and Portugal, r.t iheir present standard at the rats of one hundred cents for every iwenty-seven grains of the standard weight thereof; the gold coins of France, Spain and the domi- nions of Spain, o:" ulieir present standard, at the rate of one hun- dred cent.7. for evoiy twenty-seven grains ;tnd two-fifths of a grain of the actual weight thereof; Spanish milled dollars at one hun- dred cents for each, the actual weight whereof shall not be less than seventeen (17) pennyweights and seven (7) grains, and in proportion for parts of a dollar. Crowns of France, at the rate of one hundred and ten cents for each crown, the actual weight whereof shall not be lesr; than eighteen (18) pennyweights and seventeen (I'i) grains, and in proportion for the parts of a crown. And it shall be the duty of the Secretary of the Treasury to cause assays of the gold anel riilvcr coins of the description made cur- rent by this act, and which shall issue subsequently to the pas- sage of this act, and shall circulate in the United States, at the mint aforesaid, at least once in r^very > ^ar, and to make report of the result thereof to Congress, for liie purpose of enabling Con- gress to make such coins current, if they shall deem the same tfl Be proper, at their real standard value. FINANCIAL CATECHISM. 289 " 12. That the first section of the acC entitled ' An act regulating foreign coins and for other purposes,' passed the 9th day of Feb- ruary, 1793, be and the same is hereby repealed, and the opera- tion of the second section of the same act is hereby suspended during the space of three years from the passage of this act." (The Act of March u, 1823.) " 13. The following gold coins shall be received in payments on account of all public lands at the several and respective rates following, and not otherwise, viz.: The gold coins of Great Brit- ain and Portugal, of their prest it standard, at the rate of one hundred cents for every twenbysevcn grains, or eighty-eight cents and eight-ninths (88 8-9) yer pennyweight ; the gold coins of France, of their present standard, at the rate of one hundred cents for every twenty-seven and one-half grrins, or eighty-seven and a quarter (87J40 cents per pennyweight, anc; uhe gold coins of Spain of their present standard, at the rato of one hundred cents for every twenty-eight and a half grainCj c? oighty-four cents pef pennyweight. " 14. It shall be the .1uty of the Secretary of the Treasury to cause assays of the foregoing coins to be made at the mint of the United States at least once in every year, and make report of th» result thereof to Congress." (The Act oj Juuo 23, 183y of the goid coins shall be of copper and silver, provided that the silver do not exceed one-half of the alloy. "18. Of the silver coins the dollar shall be of the weight of ^121^ grains, the half-dollar of the weight of 2063^ grains, the quarter-dollar of the weight of Wo% grains, the dime or tentli part of a dollar of the weight of 41,14 grains, and the half dime or twentieth part of a dollar of the weight of 20^8 grains. " 19. And that dollars, half-dollars, quarter-dollars, dimes and half-dimes shall be legal-tenders of payment according to their nominal value for any sums whatever. "20. Of the gold coins, the weight of the eagle shall be 258 grains, that of the half-eagle 129 grains and of the quarter eagle Gi}4 grains. "21. And that for all sums whatever the eagle shall be a legal- tender of payment for ten dollars, the half-eagle for five dollars, and the quarter-eagle for two and a half dollars." (The Act of July 27, ISiZ ) "22. In all payments by or to the Treasury, whether made here or in foreign countries where t becomes necessary to compute the value of the pound sterling, it shall be deemed equal to four dollars and eighty-four cento (.$4.84)." (Tlie Act of March 3, 1843.) "2.3. The following ?old coins shall pass current as money in the United States and be receivable by weight for payment for all debts and demands at tin rates following, that is to say, the gold coins al' Great Britain of not less than nine hundred and fifteen and a half thousandths (915 3^-1,000) in fineness, at ninety-four cents and six -tenths (94 6-JO) of a cent per pennyweight, and the gold coins oE France of not less than eight hundred and ninety- nine thousandths (899-1,000) in fineness, at ninety-two cents and nine-tenths of a cent (92 9-10) per pennyweight. "Tlie following silver coins shall pass current as money Avithin the United States, and be receivable by tale for the payment for all debts and demands at' the following rates, that is to say; the Spanish pillar dollars, and the dollars of Mexico, Peru and" Boli- via, of not less than eight hundred and ninety-seven thousandths (897-1,000) in fineness, and tour hundred and fifteen (415) grains in weight at one hundred cents each, and the five franc piece of France of net less than nine hundred thousandths (900-1,000) in fineness, and three hundred and eighty-four (-384) grains in weight at ninety-three (9;)) cents each." (The Act of March 3, 1849.) "24. There shall be from time to time struck and coined at the mint of the United States and the branches thereof— conform- ably in all respects to law, and conformably in all respects to the standard for gold coins now established by law— coins of gold of the following denominations and value, viz: Double eagles, each to be of the value of twenty dollars or units, and gold dollars', each to be of the value of one dollar or unit. "25. For all sums whatever the double eagle shall be a le^al- lenderfor twenty dollars, and the gold dollar shall be a legal- iendey for one dollar. FINANCIAL CATECHISM. 291 "26. In adjusting the weights of gold coins henceforward the following deviations from the standard weights shall not be ex- ceeded in any of the single pieces, namely : In the double eagles, the eagle and the half-eagle, one-half of a prain; and in the quarter-eagle and gold dollar, one quarter of a grain ; and that in weighing a large number of pieces together, ^'\ hen delivered from the chief coiner to the Treasurer, and from the Treasurer to de- positors, the deviation from the standard weight shall not exceed three pennyweights in one thousand double eagles, two penny- weights in one thousand eagles, one and one,-halt pennyweights in one thousand half-eagles, one pennyweight in one thousand quarter-eagles, and one-half of a pennyweight in one thousand gold dollars. (The Act of March 3, 1851.) "27. It shall be lawful to coin at the mint of the United States and its branches a piece of the denomination and legal value of three cents, or three-hundredths of a dollar, to be composed of three-fourths silver and one-fourth co^sper, and to weigh twelve (12) grains and three-eighths (?s) of a grain ; that it shall be legal- tender in payment of debts for all sums of thirty cents and under. (The Act oJ February 21, 1853.) "28. That the weight of the half-dollar, or piece of fifty cents, shall be one hundred and ninety-twn(l92) grains, and the quarter- dollar, dime and half-dime shall In- respectively one-half, one- fifth and one-tenth of tlie weight of the half-dollar. "29. The silver coins issued in conformity with the above sec- tion shall be legal-tenders in the payment of debts for all sums not exceeding live dollars. " 30. From time to time there shall be struck and coined at the mint of the United States and the branches thereof conformably in all respects to the standard of gold coins now established by law, a coin of gold of the value of three dollara or nnits. "31. And that hereafter ths three-cent piece now authorized by lawshall be m-ide of the weight of three-fiftieths of the weight of the half-dollar, as provided in raid act, and of the same stand- ard of fineness. And said act, entitled 'An act amendatory of existing laws relative to the ha'f- lollar, quarter-dollar, dime and half-dime; shall take effect r.nd be in force fr(nn and after the first (la,\ (if April, 1853, anything to the contrary notwith- standing." (The Act of February 21, 1857.) "32. The standard weight of the cent coined at the mint shall be seventy-two (72) grains, or three-twentieths of an ounce troy, with nc greater deviation than four grains in each piece, and said cent shall be composed of eighty-eight (88) per centum of copper and twelve (12) per centum of nickel. And the coinage of the half-cent shall cease." (The Act of February 21, 1869.) "33. The pieces commonly known as the quarter, eighth and sixteenth of the Spanish pillar dollar and the Mexican dollar shall be receiA able at the Treasury of the United States and its <<92 FINANCIAL CATECHISM. several oflficos and the several post-offices and land-offices at the rates of valuation following, viz. : The fourth of a dollar, or piece of two reals, at twenty cents; the eighth of a dollar, or piece of one real, at ten cents, and the sixteenth of a dollar, or half real, at five cents "34. All former acts authorizing the currency of foreign gold or silver coins, and declaring the same a legal-tender in the payment of debts are hereby repealed; but it shall be the duty of the director of the mint to cause assays to be made from time to time . of such foreign coins ,as may be known to commerce to determine their average weight, fineness and value, and to embrace in his annual report a statement of the results thereof." (Tlie Act of April 22, 1864.) "35. The standard weight of the cent coined at the mint of the United States shall be forty-eight grains, or one-tenth of one ounce troy, and said cent shall be composed of ninety-five per- centum of copper and five per centum of tin and zinc in such pro- portion as shall be determined by the director of the mint, and there shall be, from time to time, struck and coined at the mint a two-cent piece of the same composition, the standard weight '^f which shall be ninety-six grains, or one-fifth of an ounce troy, with no greater deviation than four grains to each piece. "36. The said coins shall be a legal-tender in any payment, the one-cent coin to the amount of ten cents, and the two-cent coins to the amount of twenty cents, and it shall be lawful to pay out said coins in exchange for tlie lawful currency of the United States (except cents or half cents issued under former acts of Congress) in suitable sums by the treasurer of the mint, and by such other depositories as the Secretary of the Treasur;- may designate." (The Act ot March 3, 1865.) " 37. There shall be coined at the m,int of the United States a three-cent viece composed of copper and nickel in such proportion —not exceGding twenty-five f25) percentum of nicKel — as shall be determined by the director ol the mint, the standard weight of which shall be thirty grains, with no greater deviation than four grains to each piece. "38. The said coin shall be legal-tender in any payment to the amount of sixty cents, and it shall be lawful to pay out said coins in exchange for the lawful currency of the United States (except cents or half-cents or two-cent pieces coined under former acts of Congress) in suitable sums by the treasurer of the mint, and by such other depositories as the Secretary of the Treasury may designate; provided, that from and after the passage of this act no issues of fractional notes of the United States shall be of less denomination than five cent?. "39. Tlie one and two cent coins of the United States shall not be a legal-tender for any payment exceeding four cents in amount >5. That all other acts and parts of acts pertaining to the mints, assay offices and coinage of the United States, inconsistent with the provisions of this act are hereby repealed: Provided, that this act shall not be construed to affect any act done, right accrued, or penalty incurred under former acts, but every s-jch right is hereby saved. ' FINANCIAL CATECHISM. 295 (The Act of March 3, 1873.) "56. The value of the sovereign, or pound sterling shall be deemed equal to four dollars eighty-six oents and six and one- half mills; and all contracts made after the first day of January, 1874, based on the assumed par of exchange with Great Britaiii, of fifty-tour pence to the dollar, of four dollars forty-tour cents and four-ninths cents to the sovereign or pound sterling shall be null and void." (The Act of March 5, 1876.) "57. Tliere shall be coined from time to time at the mint of the United States, conformably in all respects to the coinage act of 1873, a coin of silver of the denomination of twenty cents, and of the weight of five grams. Tliat the twenty cent piece shall be a legal- tender at its nominal value for any amount not exceeding live dollars in any one payment. That in adjusting the weight of the twenty cent piece, the deviation from the standard weight shall not exceed one and one-li;i]f grains." (Joint resolution ol CoiiRress pnividmg tor the coinage of .subsidiary silver coins, en.LCted July 13, ln7H.) "58. That the Secretary of the Treasury, under such limits and regulations as will best secure a just and fair distribution of the same through the country, may issue the silver coin at any time in tlie Treasury to an amount not exceeding 5?10,000,000, in ex- change for an equal amount of legal-tender notes, and so received in exchange shall be kept as a special fund, separate and apart from all other money in the Treasury, and be issued only on the retire- ment and destruction of a like sum of fractional currency received at the Treasury in payment of dues to the United States, and said fractional currency when so substituted, shall be destroyed and held as part of Che sinking fund, as provided in the act of April 17, 1876. ".59. That the trade dollar shall not hereaftei be a legal tender, and the Secretary of the Treasury is hereby authorized to limit, from time to time, the coinage thereof to such an amount as he may deem sufficient to meet the export demand for the same. "60. That in addition to the amount of subsidiary silver coin autliorized by law to be issued in redemption of the fractional currency, it shall be lawful to manufacture at ihe several mints, and issue through its several offices, such coin to an amount that, including the amount of subsidiary silver coin and of fractional currency outstanding, shall, in the aggregate, not exceed $50,000,- 000. "01. That the silver bullion required for the purposes of this act shall be purchased from time to time at the market rate by the Secretary of the Treasury with any money in the Treasury not otherwise appropriated, but no purchase of bullion shall be made under this resolution w en the market rate for the same shall be such as will not admit of the coinage and issue as herein provided without loss to the Treasury, and any gain or signiorage arising from this coinage shall be accounted for and paid into the Treas- ury as provided under existing laws relative tosubsidiary coinage, inovided that the amount of money at any time invested in such Kiiver bullion, exclusive of such resulting coin, shall not exceed $200,000." 296 FINANCIAL CATECHrSM. (The Act of February 28, 1878 ) "62. Thatthere shall be coined at the severalmints of theUnited States, silver dollars of the weight oiAl2H grains troy of standard silver, as provided in the act of January 18, 1837, on which shall be the devices and inscriptions provided for in said act; which coins, together with all silver dollars heretofore coined by the United States of like weight and fineness, shall be a legal-tender, at their nominal value for all debts and dues, public and private, except where otherwise expressly stipulated in the contract. And the Secretary of the Treasury is authorized and directed to pur- chase, from time to time, at the market price thereof, not less than two million dollars' worth per month, nor more than four million dollars' worth per month, and cause thesametobecoinedmonthly, as fast as purchased, into such dollars. THE FIJTAKCIAL LEGISLATION OF THE UNITED STATES EELAT- ING TO BONDS AND CURRENCy FROM J 860 TO 1868. In order to give the greatest amount of liistory pertain- ing to this subject in the smallest possible space, in copying the acts of Congress, only the sections of these acts that bear directly on the subject are recorded: (The Act of December 17. 1860.) "1. That the President of the United States'be authorized to cause treasury notes to be issued for such sums as the exigencies of the public service may require, but not to exceed at any time the amount of ten millions (® 10,000,000). That sjch notes _ shall be redeemed after the expiration of one year. They shall ' bear interest at 6 per cent, per annum." (The Act of Februarys, 1861.) "2. That the President of the United States be authorized to borrow on the credit of the United States a sum not exceeding twenty-live millions ($25,000,000) ; that stock shall be issued for the amount so borrowed, bearing interest not exceeding 6 per cent, per annum, and to be reimbursed within a period not beyond twenty years and not less than ten years." (The Act of March 2, 1861.) ".3. That the President of the United States be and hereby is authorized at any time within twelve months from the passage of this act to borrow on the credit of the United States, a sum not exceeding ten millions of dollars; provided that no stipulation or contract shall be made to prevent the United Statps from reim- bursing any sum borrowed under the authority of this act at any time after the expiration of ten years from the first day of July next, by the United States giving three months' notice, to be pub- lished in some newspaper published at the seat of government of their readiness to do so, and no contract shall be made to prevent the redemption of the same at any time after the expiration of FINANCIAL CATECHISM. 297 twenty years from the said 1st day of July next, without notice. That stock shall be issued for the amount so borrowed bearing interest not exceeding 6 per cent, per annum." (The Act of July 17, 1861.) (This act authorizes the issue of bonds and treasury notes to the amount of $2,50,000,000.) " 4. That the Secretary of the Treasury be authorized to borrow, on the credit of the United States, within twelve months, a siiin not exceediag .$250,000,000, for which he is authorized to issue coupon bo7ids, or registered bonds or treasury notes, in such pio- portions as he may deem advisable, the bonds to bear interest at not exceeding 1 per cent per annum, payable semi-annually, irredeemable for twenty years, and after that at the pleasure of the United States, and the treasury notes to be of denominations not less than $50, payable three years after date, with interest at the rate of seven and three-tenths per cent, per annum. And the Secretary may also issue, in exchange for coin, treasury notes of a less denomination than $50, not bearing interest, but payable on demand at the Assistant Treasurer's of the United States, or treasury notes bearing interest at the rate of S.Go per cent, per annum, payable in one year from date, and exchangeable at any time for treasury notes (li'-iO's) for $50 and upward. " 5. That the Secretary is authorized, whenever he shall deem it expedient, to issue, in exchange for coin or in payment of pub- lic dues, treasury notes of any of the denominations hereinbefore specified, bearing interest not exceeding 6 per cent, per annum, and payable at any time not exceeding twelve months from date; that the amount of notes so issued shall at no time exceed $20,000,000." (The Act of August 5, 1801.) (This act was intended to enable the Secretary to convert the one-year treasury notes into twenty years 6 per cent bonds.) " 6. That the Secretary of the Treasury is authorized to issue bonds of the United States, bearing interest at 6 per cent, per annum and payable at the pleasure of the United States after twenty years from date. If any holder of treasury notes bearing interest at the rate of seven and three-tentlis per cent, per annum desire to exchange the same for said bonds, the Secretary may, at any time before the maturity of said treasury notes, issue to said holders, in payment thereof, an amount of said bonds equal to the amount due on said treasury notes, nor shall the whole amount of such bonds exceed the whole amount of treasury notes bearing seven and three-tenths per cent, interest, issued under said act of July 17,1861." (The Act o£ Feb. 12, 1862.) "7. That the Secretary of the Treasury, in addition to the $50,000,000 of notes payable on demand, of denominationsnot less than five dollars, authorized by the acts of July 17 and August 5, 1861, is authorized to issue like notes to the amount of $10,000,000, said notes shall be deemed part of the loan of $250,000,000 author- ized by said acts." (This act also gave the $60,000,000 demand notes issued by this 298 FINANCIAL CATECHIS3I. and former acts the legal-tender property which has always held them on a par with gold.) (The Act o{ February 25, 1862.) (This is the first act providing for the issue of the treasury note known as thegreenback, and for robbing it of the most im- portant features of its legal-tender quality.) "8. That the Secretary of the Treasury is hereby authorized to issue, on the credit of the United States, one hundred and tjfty millions of dollars of United States notes not bearing 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 each; provided. That fifty millions of said notes shall be in lieu of the demand treasury notes authorized to be issued by the act of July seventeen, eighteen hundred and sixty-one, which said demand notes shall be taken up as rapidly as possible and the notes herein provided for substituted for them ; And provided, fmtlier. That the amount of the two kinds of notes together shall at no time exceed the sum of one hundred and fifty millions of dollars, and such notes herein authorized shall be receivable in payment of taxes, internal duties, excises, debts and demands of every kind due to the United States, except duties on imports, and of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin, and shall also be lawful money and a legal- tender in the payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid. And any holders of said United States notes depositing any sum not less than fifty dollars with the Treasurer of the United States, or either of the Assistant Treasurers, shall receive in exchange therefor, duplicate certificates of deposit, one of whicli may be transmitted to the Secretary of the Treasury, who shall thereupon issue to the holder an equal amount of bonds of the United States, coupon or registered, as may by said holder be desired, bearing interest at the rate of 6 per centum per annum, payable. semi- annually, and redeemable at the pleasure of the United States after five years, and payable twenty years from the date thereof.. And such United States notes shall be received the same as coin at tbeir par value in payment for any loans that may be here- after sold or negotiated by the Secretary of the Treasury, and may be reissued from time to time, as the exigencies of the public interest shall require. " S. That to enable the Secretary to fund the floating debt of the United States, he be authorized to issue, on the credit of the United States, bonds to an amount not exceeding $500,000,000. redeemable at the pleasure of the United States after five years, and payable in twenty years after date, bearing interest at the rate of 6 per cent, per annum." (The Act of FebruEry 25, 1862.) (This act provides for a sinking fund to liquidate the national debt.) " 9. That all duties on imported goods shall be paid in coin, or in notes payable on demand, heretofore authorized to be issued, and by law receivable in payment of public dues, and the coin, so FINANCIAL CATSCmSM. 299 paid shall be set apart as a special fund, and shall be applied as follows : " First. To the payment in coin of the interest on the bonds and notes of the United States. " Second. To the purqhase or payment of one per centum of the entire debt of the United States, to be made within each fiscal year after the first day of July, 1862. which is to be set apart as a sinking fund, and the interest of which shall in like manner be applied to the purchase or payment of the public debt, as the Sec- retary of the Treasury shall from time to time direct. "Third. The residue thereof to be paid into the Treasury." (The Act of March 17, 1862.) "10. That the Secretary may purchase coin with any of the bonds or notes of the United States authorized by law at such rates and upon such terms as he may deem most advantageous to the public interest." (The Actof Julyl, 1862.) (Providing for the issue of bonds to the Pacific Kailroad.) "11. That for the purposes herein mentioned the Secretary of the Treasury shall, upon the certificate in writing of said commis- sioners of the completion and equipment of forty consecutive miles of said railroad and telegraph, in accordance with the pro- visions of this act, issue to said company bonds of the United States of ond thousand dollars each, payable in thirty years after date, bearing six per centum per annum interest, said interest payable semi-annually, which interest may be paid in United States treasury notes, or any other money or currency which the United States have or shall declare lawful money and a legal- tender, to the amount of sixteen of said bonds per mile for such section of forty miles, and to secure the repayment to the United States, as hereinafter provided, of the amount of said bonds so issued and delivered to said company, together with all interests therein which shall have been paid by the United States, the issue of said bonds and delivery to the company shall, ipso facto, con- stitute a first mortgage on the whole line of the railroad and tele- graph, together with the rolling stock, fixtures and property of every kind and description, and in consideration of which said bonds may be issued, and on the refusal or failure of said com- pany to redeem said bonds, or any part of them, when required so to do by the Secretary of the Treasury, in accordance with the provisions of this act, the said road, with all the rights, functions, immunities and appurtenances thereunto belonging, and also all lands granted to the said company by the United States, which at the time of said default shall remain in the ownership of said company, may be taken possession of by the Secretary of the Treasury for the use and benefit of the United States; provided, this section shall not apply to that part of any road now con- structed. " 12. That the grants aforesaid are made on condition that said company shall pay said bonds at maturity, and shall keep said railroad and telegraph in repair and use, and shall at all times transmit dispatches over said telegraph line, and transport mails, troops and munitions of war, supplies and public stores upon said 300 FINANCIAL CATECHISM. railroad for the government whenever required to do so by any department thereof, and that the government, shall at all times have the preference in the use of the same for ail the purposes aforesaid at fair and reasonable rates of compensation, not to exceed the amounts paid by private parties for the same kind of service, and all compensation for services rendered for the gov- ernment shall be applied to the payment of said bonds and inter- est until the whole amount is fully paid. Said company may also pay the United States, wholly or in part, in thii same or other bonds, treasury notes, or other evidences of debt against the United States, to be allowed at par, and after said road is com- pleted, until said bonds and interest are paid,at least five per centum of the net earnings shall also be annually applied to the payment thereof." (The Act ol July n, 1862.) (This act provides for the issue of the second $150,000,000 legal- tender notes.) "IS. That the Secretary of the Treasury is hereby authorized to issue, in addition to the amounts heretofore authorized, on the credit of the United States, one hundred and fifty millions of dollars of United States notes not bearing interest, payable to bearer at the Treasury of the United States, and of such denomi- nations as he may deem expedient. Provided, That no note shall be issued for the fractional part of a dollar, and not more than thirty-five millions shall be of lower denominations than five dol- lars, and such notes shall be receivable in payment of all loans made to the United States, and of all taxes, internal duties, excises, debts and demands of every kind due to the United States, except duties on imports and interest, and of all claims and demands against the United States, except for interest on bonds, notes and certificates of debt and deposit, and shall also be lawful money and a legal-tender in payment of all debts, public and private, within the United States, except duties on imports and interest, as aforesaid. And any holder of said United States notes depositing any sum not less than fifty dollars, or some multiple of fifty dollars, with the Treasurer of the United States or either of the Assistant Treasurers, shall receive, in exchange therefor, duplicate certificates of deposit, one of which maybe transmitted to the Secretary of theTreasury, who shall thereupon Issue to the holder an equal amount of bonds of the United States, coupon or registered, as may by said holder be desired, bearing interest at the rate of 6 per centum per annum, payable semi-annually, and redeemable at the pleasure of the United States after five years, and payable twenty years from the date thereof. Provided, Jiotcever, That any notes issued under this act may be paid in coin, instead of being received for certificates of deposit, as above specified, at the discretion of the Secretary of the Treasury. And the Secretary of the Treasury may exchange for such notes, on such terms as he shall think most beneficial to the public interest, any bonds of the United States, bearing 6 per centum interest, and redeemable after five and payable in twenty years, which have been or may be l;iwfully issued under the provisions of any existing act, may reissue the notes so miTANCTAL CATECHISM. 301 received in exchange, may receive and cancel any notes heretofore lawfully issued under Congress, and in lieu thereof issue an equal amount in notes such as are authorized by this act, and may pur- chase, at rates not exceeding one-eighth of one per centum, any bonds or certificates of debt of the United States as he may deem advisable." (The Joint Kesolution of January 17, 1863.) "14. That the Secretary of the Treasary is hereby authorized, if required by the exigencies of the public service, to issue, on the credit of the United States, the sum of one hundred millions of dollars of United States notes, in such form as he may deem ex- pedient, not bearing interest, payable to bearer on demand, and of such denominations, not less than one dollar, as lie may pre- scribe, which notes so issued shall be lawful money and a legal- tender, like the similar notes heretofore authorized in payment of all debts, public and private, within the United States, except duties on imports and interest on the public debt." (The important provisions of the Natlonai BanlcinK Law enacted February 25, 1863, copied from the Revised United States Statutes.) •'1.5. Sec. 5,13.3. Associations for carrying on the business of banking under this title may be formed by any number of natural persons, not less in any case than live. They shall enter into arti- cles of association, which shall specify, in general terms, the object for which the association is formed, and may contain any other provisions, not inconsistent with law, which the association may see fit to adopt for the regulation of its business and the conduct of its affairs. These articles shall be signed by the persons unit- ing to form the association, and a copy of them shall be forwarded the Comptroller of the currency, to be filed and preserved in his office. "Sec. 5,138. No association shall be organized under this title with a less capital than one hundred thousand dollars ; except that banks with a capital of not less than fifty thousand dollars may, with the approval of the Secretary of the Treasury, be organized in any place the population of which 'does not exceed six thousand in- habitants. No association shall be organized in a city, the popu- lation of >vhich exceeds fifty thousand persons, with a less capital than two hundred thousand dollars. "Sec. 5,171. Upon a deposit of bonds as prescribed by sections flfty-one hundred and fifty-nine, and fifty-one hundred and sixty, the association making the same shall be entitled to receive from the Comptroller of the Currency circulating notes of different denominations, in blank, registered or countersigned as hereafter provided, equal in amount to ninety per centum of the amount of the current market-value of the United States bonds so trans- ferred and delivered, but not exceeding ninety per centum of the bonds at the par value thereof, if bearing interest at a rate not less than five per cent, per annum; prowded, that the amount of circu- lating notes to be furnished to each association shall be in propor- tion to its paid up capital, as follows, and no more: "First. To each association whose capital does not exceed five hundred thousand dollars, ninety per centum of such capital. Second. To each association whose capital exceeds five hundred 302 FINANCIAL CATECHISM. thousand dollars, but does not exceed one million of dollars of eighty per centum of such capital. "Third. To each association wliose capital exceeds one million of dollars, but does not exceed three millions of dollars, to per- centum of such capital. "Fourth. To each association whose capital exceeds three mil- lions of dollars, 60 per centum on such capital. "Sec. 5,182. After any association, receiving circulating notes under this title, has caused its i)romise to pay such notes on demand to be signed by the Piesident or Vice-President inid Cashier thereof, in such manner as makes them obligatoiy promissory notes, payable on demand, at its place of busiiies-s, such association may issue and circulate the same as money. And the same shall be recieved at par in all parts of the Unitetl States -in payment of taxes, excises, public lands, and all other dues in the United States, except duties on imports, and also fur .■!!] salaries and other debts and demands owing by the United ^t;!ll•s to individuals, corporations and associations within the Uniii'U States, except inteieston the public debt, and in redemption of the national currency. Sec. 5,214. In lieu of all existing taxes, every association shall pay to the Treasurer of the United States, in the months of Jan- uary and July, a duty of one-half of 1 per centum each half year upon the average amount of its notes m circulation, and a duty of one-quarter of one per centum each half yearupon the average amount of its deposts, ai;d a duty of one-quarter of one prr centum each half year on the average amount of its capital stock, beyond the amount invested in United States bonds. Sec. 5,230. Whenever the Comptroller has become satisfied, by the protest of the cashier and admission specified in section fifty- two hundred and twenty-six, or by the report provided for in section fifty-two hundred and twenty-seven, that any association has refused to pay its circulating notes, he may, instead of can- celling its bonds, cause so much of them as may be necessary to redeem the outstanding notes to be sold at public auction in the city of >Jew York, after giving thirty days' notice of such sale to the association. For any deficiency in the proceeds of all the bonds of the. association, when thus sold, to reimburse to the United States the aVnount expended in paying the circulating notes of the association, the Unite:! Stiites shall have a perm.anent hen upon all its assets; and such deliciency shall be made good out of such assets in preference to any and dll other claims whatsover, except the necessary costs and expenses of administering the same." (The Act o£ Marfh 3, 18C3.) " 16. That the Secretary of the Treasury be, and he is herebv authorized, to borrow, from time to time, on the credit of the United States, a sum not exceeding three hundred millions of dol- lars for the current fiscal year, and six hundred millions for the next fiscal year, and to issue therefor coupon or registered bonds, payable at the pleasure of the government after such periods as may be fixed by the Secretary, not less than ten nor more than forty years from date, in coin, and of such denominations, not less FINANCIAL CATECHISM. 303 than .fifty dollars, as lie may deem expedient, bearing interest at a rate not exceeding 6 per centum per annum, payable on bonds not exceeding one liundred dollars, annually, and on all others semi- annually, in coin; and he may, in his discretion, dispose of such bonds at any time, upon such terms as he may deem most advis- able, for lawful money of the United States, or for any of the cer- tificates of indebtedness or deposit that may atany time be unpaid, or for any of the treasury notes heretofore issued, or which m.ay be issued, under the provisions of this act, and all the bonds and treasury notes issued under the provisions of this act shall be exempt from taxation by or under the State or municipal author- ity ; Provideil, That there shall be outstanding of bonds, treasury notes, and United States notes, at any tim°, issued under the pro- visions of this act, no greater amount altogether than the sum of nine hundred millions of dollars. " 16. That the Secretary of the Treasury be, and he is hereby authorized, to issue, on the credit of the United States, four hun- dred millions of dollars in treasury notes, payable at the pleasure of the United States, or at such time or times not exceeding three years from crate, as may be found most beneficial to the public in- terest, and bearing interest at a rate not exceeding 6 per centum per annum, payable at periods expressed on the face of said treas- ury notes; and the interest on the said treasury notes and certifi- cates of indebtedness and deposits hereafter issued shall be paid in lawful money. The treasury notes tlms issued shall be of such denominations as the Secretary may direct, not less than ten dol- lars, and may be disposed of on the best terms that can be obtained, or may be paid to any creditor of the United States willing to re- ceive them at par. And said treasury notes may be made a legal- tender to the same extent as the United States notes, for their face value excluding interest; or they may be exchangeable under regulations prescribed by the Secretary of tlie Treasury, by the holder thereof, at the Treasury in the city of Washington, or at the office ot any Assistant Treasurer or depository designated for that purpose, for United States notes equal in amount to the treas- ury notes offered for exchange, together with the interest accrued and due thereon at the date of interest payment next pr?-!eding such exchange. And in lieu of any amount of said treasury notes thus exchanged, redeemed or paid at maturity, the Secretary may issue an equal amount of other treasury notes; and the treasury notes so exchanged, redeemed or paid shall be cancelled and de- stroyed as the Secretary may direct. In order to secure certain and prompt exchanges of the United States notes for treasury notes when required as above provided, the Secretary shall have power to issue United States notes to the amount of one hundred and fifty millions of dollars, which may be used if necessary for such exchanges; but no part of the United States notes authorized by this section shall be issued for, or ai)pliedto any other purposes than said exchanges; and wlienever any amount shall have been so issued and applied, the same shall be replaced as soon as prac- ticable from the sales of treasury notes for United States notes. "17. That the Secretary of tlie Ireasury be, and he is hereby authorized, if required by ihe exigencies of the public service, foi 304 FINANCIAL CATECHISM. I'he payment of the army and navy, and other creditors of the.gov- «rnment, to issue, on t-he credit of the United States, tlie sum o. one hundred and fifty millions of dollars of United States notes. Including the amount of such notes heretofore authorized by the joint resolution approved January seventeen, eighteen hundred and sixty-three, in such form as he may deem expedient, not bear- ing interest, payable to bearer, and of such denominations, not less than one dollar, as he may prescribe, which notes so issued shall be [awful money and a legal-tender in the payment of all debts pub- lic and private, within the United States, except for duties on imports and interest on the public debt; and any of the s;iid notes when returned to the Treasury may be reissued from tinietoti.ne as the exigeijces of the public service may require. And in lieu of any of said uotes, or other United States note?, returned to the Treasury, an,l cancelled or destroyed, there may be issued equal amounts of United States notes such as are authorized by tlis act. And so much of the act to authorize the issue of United States notes, and for other purposes, approved Februry twenty-flve, eighteen hundred and si.-,-cy-two, and the act to authorize an additional issue of United States notes, and for other purposes, approved July eleven, eighteen hundred and sixty-two, as restricts the negotiation of bonds to market value is hereby repealed. And the holders of United States notes, issued under and by virtue of said acts, shall present the same for the purpose of exchanging the same for bonds, as therein provided, on or before the first day of July, eighteen hundred and sixty-three, and thereafter the right to so exchange tlie same shall cease and determine. " 18. That in lieu of postage and revenue stamps for fractional currency, and of fractional notes commonly called postage cur- rency, issued or to be issued, the Secretary of the Treasury mav issue fractional notes of like amounts in such form as he may deem expedient, and may provide for the engraving, preparation and is- sue thereof in the Treasury Department building. And all such notes issued shall beexchangeableby the Assistant Treasurers and designated depositories for United States notes in sums not less than three dollars, and shall be receivable for postage and reve- nue stamps, and also in payment of any dues to the United Stales less than five dollars, except dues on imports, and shall be re- deemed on presentation at the Treasury of the United States in such sums and under such regulations as the Secretary of the Treasury shall prescribe. Provided, That the whole amount of fractional currency issued, including postage and revenue stamps issued as currency, shall not exceed fifty millions of dollars. '"19. That the Secretary of the Treasury is hereby authorized to receive deposits of gold coin and bullion with the Treasurer or any Assistant Treasurer of the United States in sums r.ot less than twenty dollars, and to issue certificates therefor in denomi- nations of not less than twenty dollars each, corresponding with the denominations of the United States notes. The coin and bul- lion deposited for or representing the certifijates of deposit shall be retained in the Treasury for the payment of the same on de- mand. And certificates representing coin in the Treasury may be issued in payment of interest on the public debt, which cerdfi- FINANCIAL CATECHISM. 305 cates, together with those issued for coin and bullion deposited, shall not at any time exceed 25 per centum beyond the amount of coin and bullion in the Treasury; and the certificates for coin or bullion in the Treasury shall be received at par in payments for duties on imports." (The Act ol March 3, 1864.) " 20. That in lieu of so much of the loan authorized by the act of March 3, 1863, the Secretary of the Treasury be, and he is hereby authorized to borrow, on the credit of the United States, not ex- ceeding two hundred millions of dollars during the current fiscal year, bearing date March first, eighteen hundred and sixty-four, or any subsequent period, redeemable at the pleasure of the gov- ernment after any period not less than five years, and payable at any period not more than forty years from date, in coin, bearing interest not exceeding 6 per centum a year — and he may dispose of such bonds at any time, on such terms as he may deem most ad- visable, for lawful money of the United States, or, at his discre- tion, for treasury notes, certificates of indebtedness or certificates of deposit issued under any act of Oongress." (The Joint Besolution of March 17, 1864.) "21. That the Secretary of the Treasury be authorized to antici- pate the payment of interest on the public debt, by any period not exceeding one year, from time to time, either with or without a rebate of interest upon the coupons, as to him may seem expedi- ent, and he is hereby authorized to dispose of any gold in the Treasury of the United States not necessary for the payment of interest on the public debt." (The Act ol June 30, 1864.) " 22. That the Secretary of the Treasury be authorized to bor- row four hundred millions of dollars, and to issue bonds of the United States, redeemable at the pleasure of the government after a period of not less than five nor more than forty years from date, and bear an annual interest not exceeding 6 per centum, payable sejsi-annually in coin. "The Secretary of the Treasury may issue, on the credit of the United States, and in lieu of an equal amount of bonds authorized by the preceding section, and as a part of said loan, not exceeding two hundred millions of dollars in treasury notes of any denomi- nation not less than ten dollars, pavable at anytime not exceeding three years from date, or, j#thought more expedient, redeemabte at any time after three years from date, and bearing interest not exceeding the rate of 7 3-10 per centum, payable in lawful money at maturity. And such of them as shall be made payable, principal and interest at maturity, shall be a legal-tender to the same extent as United States notes, for their face value, excluding interest, and may be paid to any creditor of the United States at their face value, excluding interest, or to any creditor zoilling to receive them at par, including interest." "23. That the total amount of bonds and treasury notes author- ized by the first and second sections of this act shall not exoeert four hundred millions of dollars, in addition to the amonnt Here- tofore issued; nor shall the total amounts of United States notes, 20 308 FINANCIAL CATECHISM. issued, or to be issued, ever exceed four hundred millions of dol- lars, and such additional sums not exceeding fifty millions of dollars, as may be temporarily required for the redemption of temporary loan; nor shall any treasury note bearing interest, issued under this act, be a legal tender in payment or redemption of any notes issued by any bank, banking association or banker, calculated or intended to circulate as money.' "24. The Secretary of the Treasury may issue notes of the frac- tions of a dollar as now used for curiency,in such form, with such inscriptions and with such safeguards againstcounterfeiting.ashe may judge best; but the whole amountof all descriptions of notes or stamps less than one dollar issued as a currency, shall not exceed fifty millions of dollars. (The Amendment to the Pacific Eailroad Act of .July 2, 1864.) '"25. That section 5 of the said act be so modified and amended that the Union Pacific Eailroad Company, the Central Pacific Railroad Company and any other company authorized to par- ticipate in the construction of said road, may, on the com- pletion of each section of said road, as provided in this act. and the act to which this act is an amendment, issue their first mortgage bonds on their respective railroad and telegraph lines to an amount not exceeding the amount of the bonds of the United States, and of even tenor and date, time of matu- rity, rate and character of interest, with the bonds authorized to be issued to said railroad companies respectively. And the lien of the United Mates bonds shall be subordinate to that of the bonds of any or either of said companies hereby authorized to be issued on their respective roads, property and equipmentn, except as to the provisions of the sixth section of th(^ act to which this act is an amendment, relating to the transmission of dis- patches and the transportation of mails, troops, munitions of war, supplies and public stores for the government of the United States." (The Act of Jan. 28, 1865.) "26. That in lieu of any bonds authorized to be issued by the first section of the act entitled ' Ar. act to supply ways and means for the support of the government,' approved June 30, 1864, that may remain unsold at the date of this act, the Secretary of the Treasury may issue, under the authority of said act, treasury notes of the ciescription anc! character authorized by the second section of said act ; provided, that the whole amount of bonds authorized as aforesaid and treasury notes issued and to be issued in lieu thereof shall not exceed the sum of four hundred million.^ of dollars; and such treasury notes maybe disposed of for lawful money, or for other treasury notes or certificates of indebtedness or certificates of deposit issued under any previous act of Con- gress; and such notes shall be exempt from taxation by or under State or municipal authoriij " (Tl-.? Act Or "March 3. 1865.) • That the Secretary of the Treasury be, and he is hereby, atithorized to borrow, from time to time, on the credit of the United States, in addition to the amounts heretofore authorized. mNANClAL CATECHmM. SO? any sums not exceeding in the aggregate six hundred millions of dollars, and to issue therefor bonds or treasury notes of the United States in such form as he may prescribe, and so much thereof as may be issued in bonds shall be of denominations of not lessthan fifty dollars, and may be made payable at any period not more than forty years from date of issue, or may be made redeemable at the pleasure of the government at or after any period not less than five years nor more than forty years from date, or may be made redeemable and payable as aforesaid as may be expressed upon their face, and so much thereof as may be issued in treasury notes may be made convertible into any bonds authorized by this act. "Provided, That the rate of interest on any such bonds or treasury notes, when payable in coin, shall not exceed 6 per" centum per annum, and when not payable in coin shall not exceed seven and three-tenths per centum per annum. " Provided, That nothing herein contained shall be construed as authorizing the issue of legal-tender notes in any torm"- The Act of April 12, 1866. " 28. That the act approved March 3, 1865, shall be intended 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 description of bonds autliorized by said act, either in the United States or elsewhere, to such an amount, in such manner and at such rates as he may think advisable, for lawful money of the United States or for any treasury notes, certificates of indebted- ness or certificates of deposit or other representatives of value which have been or which may be issued under any act of Con- gress, the proceeds thereof to be used only for retiring treasury notes or other obligations issued under any act of Congress, but nothing herein contained shall be construed to authorize any increase in the public debt. Provided, That of the United States notes not more than ten millions of dollars may be retired and cancelled within six months from the passage of this act, and thereafter not more than four millions of dollars in any one month." (The Act ol March 2. 1867.) "29. That for the purpose of redeeming and retiring any com- pound interest notes outstanding, the Secretary of the Treasury is hereby authorized and directed to issue temporary loan certifi- cates in the manner prescribed by Section 4 of the act entitled, ' An act to authorize the issue of United States notes and for the redemption or funding thereof, and for funding the floating debt of the United States,' approved February 25, 1862, bearing inter- est at a rate not exceeding 3 per cent, per annum, principal and interest payable in lawful money on demand, and said certificates of temporary loan may constitute and be held by any national bank holding or owning the same, as a part of the reserve pro- vided for in Sections 31 and 32 of the act entitled, ' An act to pro- 308 FINANCIAL CATECBISM. vide a national currency, secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof ;' Provided, That the amount of such certificates outstanding at any time shall not exceed fifty millions of dollars." (The Act of July 23, 1868.) "30. That for the sole purpose of redeeming and retiring the remainder of the compound-interest notes outstanding, the Sec- retary of the Treasury is authorized to issue an additional amount of temporary loan certificates not exceeding twenty-five millions of dollars, said certificates to bear 3 per cent, interest, payable in lawful money.'' " AN ACT TO STKENGTHEN THE PUBLIC CREDIT (AND HOB THE PEOPLE OF $500,000,000 FOR THE BENEFIT OF BONDHOLD- ERS), APPROVED MARCH 18, 1869. " 81. Be it enacted hy the Senate and House of Representatives of the United States of America in Congress assembled : That in order to remove any doubt as to the purpose of the government to dis- charge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the law by virtue of which such obligations have been contracted, it is hereby pro- vided and declared that the faith of the United States is solemnly pledged to the payment in coin or its equivalent of all the obliga- 'ons of the United States not bearing interest, known as the Jnited States notes, and of ail the interest-bearing obligations of the United States, except where the law authorizing the issue of such obligations has expressly provided that the same may be paid in lawful money, or other currency than gold and silver. But none of said interest-bearing obligations not already due shall be redeemed or paid before maturity, unless at such time the United States notes shall be convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin. And the United States also solemnly pledges its faith to make provisions at the earliest practicable period for the redemption of the United States notes in coin." (The Funding Act of July 14, 1870.) rThisactis supplementary to the act of March 18, 1869, carrying out the pledge given in that act to pay all government obligations in coin or its equivalent, except such as the law under which they were contracted provi-ded that they should be paid in currency, and goes one step further and provides for funding this very class of excepted obligations— the 5-20 bonds— into bonds payable in coin.) "32. That the Secretary of the Treasury is hereby authorized to issue in a sum or sums not exceeding in the aggregate two hun- dred millions of dollars, coupon or registered bonds of the United States, in such forms as he may prescribe, and of denominations of fifty dollars, or some multiple of that sum, redeemable in coin of the present standard value, at the pleasure of the United States after ten years from the date of their issue, and bearing interest' payable semi-annually in coin, at the rate of 6 per cent per annum ; also a sum or sums not exceeding in the aggregate three hundred millions of dollars of like bonds, the same in all respects FINANCIAL CATECHISM. 309 but payable at the pleasure of the United States, after fifteen years from their issue, and bearing interest at the rate of i}4 per centum per annum; also a sum or sums not exceeding in the aggre- gate one thousand millions of dollars of like bonds, the same in all respects, but payable at the pleasure of the United States after thirty years from the date of their issue, and bearing interest at the rate of 4 per centum per annum; all of which said several cliisses of bonds and the interest thereon shall be exempt from the payment of all taxes or duties of the United States, as well as from taxation in any form by or under state, municipal or local authority ; and the said bonds shall have set forth and expressed upon their face the above specified conditions, and shall, with their coupons, be made payable at the treasury of the United States. But nothing in this act, or in any other law now in force, shall be construed to authorize any increase whatever of the bonded debt of the United States. " 33. That the Secretary of the Treasury is hereby authorized to sell and dispose of any of the bonds issued under this act, at not less than their par value for coin, and to apply the proceeds thereof to the redemption of any of the bonds of the United States out- standing, and kno wn as the fi ve-twenty bonds, at their par value ; or he may exchange the samefor suchfive-twenty bonds, par for par; but the bonds hereby authorized shall be used for no other purpose whatsoever. And a sum not exceeding one-half of 1 per cent, of the bonds herein authorized is hereby appropriated to pay the expense of preparing, issuing, advertising and disposing of the same. " 34. That the payment of any of the bonds hereby authorized after the expiration of the said several terms of ten, fifteen and thirty years, shall be made in amounts to be determined from time to time by the Secretary of the Treasury at his discretion, the bonds so to be paid to be distinguished and described by the dates and numbers, beginning for each successive payment with the bonds of each class last dated and numbered, of the time of which intended payment or redemption the Secretary of the Treasury shall give "public notice, and the interest on the particu- lar bonds so selected at any time to be paid shall cease at the expiration of three months from the date of such notice. " 35. That the Secretary of the Treasury is hereby authorized, with any coin in the Treasury of the United States, which he may lawfully apply to such purpose, or which may be derived from the sale of any of the bonds, the issue of which is pro- vided for in this act, to pay at par and cancel any six per cent, bonds of the United States of the kind known as the live-twenty bonds, which have become or shall hereafter become redeemable by the terms of their issue. But the particular bonds so to be paid and cancelled, shall in all cases be indicated and specified by class, date, and number, in the order of their numbers and issue; beginning with the first numbered and issued, in public notice to be given by the Secretary of the Treasury, and in three months after the date of such public notice, the interest on the bonds so selected and advertised to be paid shall cease. " 36. That the Secretary of the Treasury is hereby authorized, SIO FINANCIAL CATECHISM. at any time within two years from the passage of this act, to re- ceive gold coin of the United States on deposit for not less than thirty days, in sums of not less than one hundred dollars, with the Treasurer or any Assistant Treasurer of the United States, authorized by the Secretary of the Treasury to receive the same, who shall issue therefor certificates of deposit, made in such form as the Secretary of the Treasury shall prescribe, and said certifi- cates of deposit shall bear interest at a rate not exceeding two and a half per cent, per annum ; and any amount of gold coin so de- posited may be withdrawn from deposit at any time after thirty days from the date of deposit, and after ten days' notice and on the return of said certificate. Provided, That the interest on all such deposits shall cease and determine at the pleasure of the Secretary of the Treasury. And not less than twenty-five per cent, of the coin deposited for or represented by said certificates of deposit, shall be retained in the Treasury for the payment of said certificates ; and the excess beyond twenty-five per cent, may be applied, at the discretion of the Secretaryof the Treasury, to the payment or redemption of such outstanding bonds of the United States heretofore issued and known as the five-twenty bonds, as he may designate under the provisions of the fourth section of this act; and any certificate of deposit issued may be received at par with the interest accrued thereon, in payment of bonds au- thorized to be issued by this act. " (The Act of January 20, 1871.) - "31. That the amount of bonds authorized by the act approved July 14, 1870. entitled 'An act to authorize the refunding of the national debt,' to be issued bearing five per centum interest per annum, be, and the same is, increased to five hundred millions of dollars, and the interest of any portion of the bonds issued under said act, or this act, may, at the discretion of the Secretary of the Tj-easury, be made payable quarter-yearly. Provided, however, that this act shall not be construed to authorize any increase of the total amount of bonds provided for by the act to which this act is an amendment." (The Act of June 2, 18T2.) "38. That the Secretary of the Treasury ^s hereby authorized to receive United States notes on deposit without interest from bank associations, and to issue certificates therefor. The certificates issued may be held and counted by national banks as part of their reserve. "39. That nothing contained in this act shall be construed to authorize any expansion or contraction of the currency ; and the United States notes for which such certificates are issued, or other United States notes of like amount, shall be held as special deposits in the Treasury, and used only for the redemption of such certificates." (The Act of Deoemher 17, 1873.) "40. That for the purpose of redeeming the bonds called the loan of 1858, it is hereby declared to be the pleasure of the United States to pay all the coupon bonds of said loan on the first day of January, 1874. That the Secretary of the Treasury may issue an equal amount at par of principal and interest of 5 per cent, bonds FINANCIAL CATECHISM. 311 of the funded loan under the act for refunding the national debt, approved January 20, 1871, for any of the bonds of the loan of 1358, which the holders thereof may, on or before the first of Feb- ruary, 1871, elect to exchange." (The so-called Specie Resumption Act of January, 24, 1875.) " 41. That the Secretary of the Treasury is hereby authorized and required, as rapidly as practicable, to cause to be coined at the mints of the United States, silver coins of the denominations of ten, twenty-flve and fifty cents, of standard value, and to issue tliem in redemption of an equal number and amount of fractional currency of similar denominations, or, at his discretion, he may issue such silver coins through the mints, the Sub -Treasuries, pub- lic depositories and postoiflces of the United States, and upon such issue he is hereby authorized and required to redeem an equal amount of such fractional currency until the whole amount of such fractional currency outstanding shall be redeemed. "42. That so much of Section 3,524 of the Revised Statutes of the United States as provides for a charge of one-sixth of 1 per centum for converting standard gold bullion into coin is hereby repealed, and hereafter no charge shall be made for that service. " 43. That Section 5,777 of the Revised Statutes of the United States, limiting the aggregate amount of the circulating notes of tlie national banking associations, be, and is hereby repealed, ; nd each existing banliing association may increase its circulating notes in accordance with the existing law, without respect to said aggregate limit; and new banliing associations may be organized in accordance with the existing law without respect to the aggre- gate limit; and the provisions of the law for the withdrawal and re-distrilDution of national banlc currency among the several states and territories are hereby repealed ; and whenever and so often as circulating notes shall be issued to any such banking associa- tion, so increasing its capital or circulating notes, or so newly orga- nized as aforesaid, it shall be the duty of the Secretary of the Treasury to redeem the legal-tender United States notes in exceed of only $300,000,000 to the amount of 80 per centum of the Sum of natic nal bank notes so issued to any such banking association as aforesaid, and to continue such redemption as such circulating notes are issued until there shall be outstanding the sum of $300,- 000,000 of such legal-tender United States notes, and no more. And on and after the first day of January, A. D. 1879. the Secre- tary of the Treasury shall redeem in coin" the United States notes then outstanding on their presentation for redemption at the office of the Assistant Treasurer of the United States, in the city of New Ybrk, in sums of not less than $50. And to enable the Secretary of the Treasury to prepare and provide for the redemption in this act authorized or required, he is authorized to use any surplus revenues from time to time in the Treasury not otherwise appro- priated, and to issue, sell, and dispose of, at not less than par in coin, either of the description of bonds of the United States de- scribed in the act of Congress approved July 14, 1870. entitled, An act to authorize the refunding of the national debt,' with like Tirivileges and exemptions, to the extent necessary to carry this S12 FINANCIAX CATECHISM. act into effect, and to use the proceeds thereof for the purposes aforesaid. And all provisions of law inconsistent with the provis- ions of this act are hereby repealed." THE POWER OF CONGEESS TO COIN" MONET. An extract from the work of Judge Joel Tiffany, of N. Y., entitled "Government and Constitutional Law," 1867. This work was published and used extensively by the bar of the United States for years before the organization of the greenback party, and is therefore entitled to candid consid- eration. His discussion of this subject runs from section 400 to section 407 of this work, which we quote: " Section 400 . To coin money and regulate the value thereof as an act of sovereignty involves the right to determine what shall be taken and received as money; at what measure or price it shall be taken, and what shall be its effects when passed or tendered in payment or satisfaction of legal obligations. The act of coining money consists in affixing to that which is to con- stitute money, the stamp or seal of sovereign authority by which it may be recognized and known in market as authoritatively en- titled to be received at the price or value stamped thereon. The authority which coins or stamps itself upon the article can select what substance it deems suitable to receive the stamp and pass as money ; and it can affix -what value it deems proper. Independ- ent of the intrinsic value. ****** xhe currency value is in the stamp when used as money, and not in the metal or ma- terial, independent of the stamp. In other words, the money quality is the authority which makes it current and gives it power to accomplish the purpose for which it was created— the power to ])ay debts. To coin or stump money and regulate its value, induden the whole power of sovereignty in respect to currency. It includes the authority to select the substance to receive the impression, to determine what impression shall be stamped thereon, what shall be its office as a medium of exchange, at what price it shall be received, and what shall be the penalty to be inflicted for discrediting, counterfeiting, or in any manner in- terfering with its legal or authoritative value. "Because gold and silver have usually been selected as the basis of currency, the popular idea of value attaches to the metal rather than to the royal or sovereign authority stamped upon it ; and while they recognize the authority of the governmeut to change the relations between the intrinsic valueof the metal and the current value of coin, they are slow to understand that such relation is arbitrary, and depends solely upon the will of the sovereign. "Sec. 401. By keeping constantly in mind that the quality of FINANCIAL CATECHmM. 313 money or legal currency consists in the enstainped authority of the government upon tliat which Is used as sucli, and that the authority to coin money, and affix its value, involves the whole power of sovereignty over the subject of legal currency, to select what substance, to affix what stamp, ordain what value it pleases — the whole law upon the subject of money, as a currency and as a commodity, becomes comprehensible. But to confound the legal quality of money with the commercial value of that which is used to receive the royal impression, begets infinite difficulty, be- cause there is no necessary relation between the two. Govern- ment, like the Spartan law giver, may put its stamp upon leather, and make that currency ; and so long as it can provide against the counterfeiting of the same, and thus can regulate the quan- tity in use, it can give its stamp upon leather the same money value as if put upon gold or silver, or any other substance. Thus, government may put its royal or sovereign stamp upon paper, affixing its money value, and if it limit the quantity and provide fully against the counterfeiting of it, it will have the same cur- rency value as any other substance. It must be remembered that, legally speaking, money is not a commodity, and commerce can make it such only by dealing with that upon which the money quality is impressed. " Sec. 402. Much has been said about paper money, and gold and silver and copper money ; but, after all, such language is de- ceptive. There is no such thing, legally, as gold and silver and paper money. Money, as the muasure of price or value, Is the sovereign authority impressed upon and attached to that which is capable of taking (ind retaining the impress of authority It is the recog- nized presence of sovereignty in the market,and in the court, ap- plying the measure and determining- the equality of exchanges of commodities between subject and subject, between peasantand prince, between crown and peopia As a, medium of exchange, as a means to an end, it has no value but the sovereign will recorded upon its face, and in respect to its use, its value is unchangable as the authority which created it. It measures all values by its own, and can know no other measure of value. Its value being fixed by the will of the sovereign, and not by the intrinsic quali- ties of that upon which it is impressed legally, it cannot vary. Its relative proportion to other things may disturb their relative val- ues but its legal value is fixed and immutable, while the price of commodities, measured by it, rises and falls. The philosopher can explain the reason, but he cannot change the law. " Sec. 403. The art of coining money consists in imparting to any substance this legal currency quality, by which it legally can be used as a medium of exchange without permitting its value as authority to be questioned in the domestic market. That upon which the stamp is placed is called coin; the art of stamping is called coin- ing, and, as the practice of all governments using currency has been generally to place its money stamp upon metals of some kind the common idea of coin is, that it must be a metal, as a sub- stance distinguished from all other substances. But this rests solely in the discretion of the sovereign or sovereignty ; whether thin coin, shall he metal, parchment, paper, or any other substance, 314 FINANCIAL CATECHISM. is a question of expediency, of public economy, and not of auth- ority. Tlie authority selecting the substance to coin, if wise, will consider the fitness, the adaptation, the economy, and the neces- sity for tlie public use. There is need in every society for a med- ium of exchange — for money. Hitherto no nation or state has dis- covered the means of dispensing with it. It is a public necessity as v^ell as private ; and it should be provided in such a way as to subserve the public as well as the private use- There are times when large expenditures are required to be made, beyond the ordi- nary capacity of the currency to represent them. There must, necessarily, exist the authority to adapt the currency as money to the public exigencies. The necessity which requires thatitshould be used at all, requires that it should be made adequate to any public emergency. The sovereignty or sovereign is then author- ized by sovereign necessity to coin the necessary amount of money to answer as a means of making the purchases or exchanges demanded. If that be neglected, the responsibility of a State or nation ruined will attach. The necessity which requires money as a medium of exchange at all, requires that the public authority should make the supply at least equal to the imperative demand of the public welfare, and the government would be as direlict in omitting this, as any other duty to the public. " Seo. 404. The United States, as anation, has the same authority to coin money and regulate its value as other nations. It is sub- ject to the necessities, and can adopt the same facilities for adapt- ing the currency to the needs of the nation, and there is no earthly authority to call it to account for so doing. In instituting the general government for administering its authority with respect to all subjects in the Constitution, dnd for the purposes therein named, it conferred upon Congress the unlimited authority to coin money and regulate its value. Tliat is, it committed the whole sub- ject of crml'mg and regidating the legal currency to Congress, as the national kf/islnture is vested with plenary poiwrs -upon this subject. It was the intention of the people that this power should be exercised in such a manner as to make the currency of the na- tion adequate to any emergency which could arise. The govern- ment was instituted, and the powers conferred, that they might be used in such a manner as to make every department of the ad- ministration to contribute to the declared end the people had in view, to-wit: to the establishment of justice, to provide for the common defense, and promoting the general welfare. Tor these among other purposes. Congress was empowered to coin money and regulate its value, and was further authorized to make all laws necessary and proper for carrying into execution this power The pretense of attempting to restrictthe powers of Congress over subjects committed to its jurisdiction, based upon the assumption that Congress is a body separate from the people, is without foun- dation. The people are as eminentlv and potentiallv present in Confj-ress to administer their own authoritv In- legislation, as they were in the conventions that framed their government and established the mode of administration. Therefore, they may be as safely intrusted with the exercise of their authority to com money and regulate its value, as tliey were to institute FINANCIAL CATECHISM. 315 the government, and ordain by whom that power to coin money, etc., should be exercised. "Sec. 405. As the people of the United States conf»Tred upon Congress the plenary authority to coin money and regulate its value, and denied to the states the exercise of such powers, they thereby made it the duty of Congress to make all necessary pro- visions for supplying the nation with money as a medium of exchange. This proposition admits of no denial. As a sovereign nation, the people had a right to provide for the creation of a legal-tender currency which should be of equal value as money throughout the United States. It was necessary that this authority should be exercised by some one, (o provide this cur- rency. It should be exercised by no power that is not sovereign and not co-extensive with- the United States. It could be exer- cised by no other than the government of the United States. In the distribution of jurisdiction between the general and state governments, that of coining money and fixing its value, that is, of providing a legal measure of value or currency, was commited to Congress, not by limited or restricted terms, but the most liberal and unqualified; so that Congress is vested with all the authority of the nation in this respect. Congress is the only body author- ized to provide for this individual, state and national necessity ; the whole duty and responsibily to supply, under all circum- stances, so much money or currency, or to provide for the same as the exigencies of the public or nation may require. It is no excuse that there is not gold enough or silver enough, in the country to furnish or supply tlie amount. "The authority of the nation to supply itself witli the amount of money necessary for any emergenc.y is not confined to any particular metal, or to any metals at all. The quuUlij of money is neither gold nor silver nor any precious metal It is simply the sovereign authority of the nation so imprrxped «pon any substance as tiy its presence to represent such aulhority in determin- ing at what price or value it shall be received in discharging legal obli- gations. " Sec. 406. The object of the grant of the power to Congress is to give uniformity of value as a standard of price throughout the union. " The power of coining money is uniformly exercised by the sovereign authority, for the purpose of supplying a uniform cur- rency to the home market." The necessity for such currency, denominated money, is imperative. This duty requires it to sup- ply a currency of such quality and in such amount as to answer the imperative demands of the public exigencies. It should also provide against the discrediting, debasing or counterfeiting of the currency, or wit! ' :*'2r-fe'-i"ig in any manner with its authorita- tive value. "Sec. 407. Leg.i obligations are f,uch as are created by positive law, and can oniv irise in accord.'xnce with the requirements of law. When the > w le^avcs contracts made for the loan of money, reserving for its use an amount greater than 7 per cent. usurious and void, no legal obligation arises from the making of such contract. When it declares that all contracts by which one 316 FINANCIAL CATECHmM. man undertakes to answer for the debt, default or miscarriage of another, to be valid and obligatory, shall be in writing and signed by the parties, a contract of that character by parol merely, raises no legal obligation. And thus with every condition which the law-making power sees fit to impose. Inasmuch as the obligation is created by law it can also be discharged by law. For it is a principle of general application that the power which creates an obligation can also discharge it." HOW NATIONAL BANKS EVADE THE LAW. Extract from United States Treasurer Gilfillin's report for 1880, pages 19, 20, 21 and 22, showing the manner in which the national banks evade the law. He says: "Attention is invited to the practical bearing on the question of bank note redemption of the construction heretofore placed by the Department on the various provisions of law authorizing the reduction and increase of the circulation of national banks. The fourth section of the act, approved June 20, 1874 (18 Statutes, 124), authorizes any national bank desiring to withdraw its circulating notes to take up the bonds for the security of such notes, upon the deposit of lawful money with the Treasurer of the United States, and provides that an equal amount of the outstanding notes shall be redeemed at the Treasury of the United States. The banks have availed themselves of the privilege accorded by this provision to a very large extent, more than eighty-five million dollars of circulation having been surrendered in the manner prescribed, and nearly seventy-one million dollars having been redeemed at this office. The notes are received at the Treasury mixed with other bank notes, and if they come from Assistant Treasurers, or in packages marked ' unfit,' the express charges on them are defrayed out of the 5 per cent, redemption fund. They necessarily pasn through the various stages of counting and assort- ing before they can be separated from the other notes, so that almost the entire cost of redemption of the whole $71,000,000 has been borne by other national banks, there being no means of charging the 'reducing' banks with the expenses of redeeming their notes untiltheir deposits of legal-tender notes are exhausted This provision was adopted in the expectation that it would act as a regulator of the bank circulation. It was expected that when the circulation became redundant the surplus would be retired, and that when a demand for more circulation should spring up, the banks would increase their issues to meet it. This expectation has nat been realized. The almost invariable answer to inquiries made of officers of banks which have reduced their circulation has been that the reduction was made solely to enable the bank to avail itself of the ruhng premium on the bonds withdrawn, either because the bonds were exceptionally high, or because the bank FINANCIAL CATECHI8M. 311 needed the premium to enable it to meet losses sustained, or t( reduce its premium account. " It is plain that the action of the banks would not be affecteCi by the fact that the volume of the circulation was redundant, for the simple reason that a bank has more money at its disposal after reducing its circulation than before. A bank which deposits $45,000 to reduce its circulation and takes up $50,000 of its bonds, which it sells for 10 per cent, premium, has $10,000 more to -end than it had before. While, therefore, the bank circulation diminishes the aggregate volume of the circulation, it increases the loanable funds of the particular bank whose circulation is reduced. "Under the construction placed upon the law, banks which have thus reduced their circulation have been permitted to increase it again as often and as largely as they chose, whether their legal-tender deposits were exhausted or not. "Although the exact amount cannot be ascertained, it is safe to say that many millions of dollars of additional circulation have been issued under the general provisions of the national currency act to banks which were still reducing their circulation under the act of June 20, 1874. The consequence has been that the new notes thus issued have, to a large extent, speedily been presented to the Treasury for redemption out of the legal-tender deposit. Banks which have applied in vain to the Treasurer for the sur- render of their legal-tender deposits have accomplished the same object by obtaining new circulation. " The cost of printing the new notes thus issued is borne by the United States, so the government, though not deriving the remotest benefit from the transaction, has been obliged to bear the whole expense of their issue and a part of the expense of their redemption, simply to enable a bank to do by indirection what it was not permitted to do directly. In several instances banks have repeated the operation of reducing and increasing their circulation several times within a brief period, taking up their bonds and selling them, it would appear, whenever the pre- mium constituted a sufficient inducement, and increasing their circulation again whenever bonds could be bought at better rates, the United States all the while redeeming their notes at its own expense or that of the other banks, and issuing others, also at its own expense, whenever called upon by them. "An example will better illustrate these operations. In Janu- ary and February, ISTo, a certain bank reduced its circulation from $308,490 to $45,000 by deposits of legal tender notes. Between September 26, 1876, and May 26, 1877, and before that deposit was exhausted it increased its circulation to $450,000. Between August 14 and September 10, 1877, it again reduced its circulation to $45,000. On September 19, 1877, nine days after completing the deposits for its reduction, it again began to take out additional circulation, although $402,550 of prior deposits remained in the Treasury, and by the 26th of that month its circulation had again been increased to $450,000. July 22, 1878, it, for the third time, reduced its circulation to $45,000, and in August and September, 1879, again increased it to $450,000, at which it now remains, the 318 FINANCIAL CATECHISM. balance of its former legal-tender deposit in the treasury being $112,615. From January 18, 1875, to the date of this report, $778,- 275 of its notes have been redeemed, of which only $40,700 were redeemed at the expense of the bank, although during more than one-third of that period it had outstanding and was deriving the benefit from the full amount of circulation which its capital authorized. The only assessments which have been made on the bank for the expenses of redeeming its notes were $24.74 in 1875 and $1.39 in 1878. At one time there were in actual circulation $852,550 of its notes, although the highest amount ever borne on its books was $450,000. "Other banks have reduced and forthwith increased their circulation to its former amount with the avowed object of reliev- ing themselves from the trouble and expense of redeeming their notes through the 5 per cent, redemption fund. For example, a bank deposited $45,000 in legal-tender notes for the redemption of its circulation on April 3, 1878, and on April 5, 1878, two days afterward, without having touched the bonds deposited as secu- rity, took out $45;000 additional circulation. In like manner, on July 11, 1879, it deposited |9,000 for the same purpose, and on the very same day, without disturbing its bonds, it took out $9,000 of additional circulation. "It is plain that such transactions as these are not within the spirit of the act of June 20, 1874. That act authorizes the de- posit of legal-tender notes by any national bank 'desiring to withdraw its circulation in whole or in part.' A wish to sur- render circulation with the reserved intention of taking out more at once, or as soon as the price of bonds shall make the transac- tion profitable, is not, it is submitted, such a desire to withdraw circulatun as the law contemplates. " The reduction of circulation therein authorized is a hona fide reduction, based on a well settled intention of the bank to curtail its note issues. It could neither have been intended nor expected that the law would become the means of enabling banks to ope- rate in the securities of the government deposited to secure the redemption of their notes, or to throw upon the United States or upon other bunks of the country the expense of redeeming their notes while maintaining and enjoying the full circulation to which the Jaw entitles them. "Such a construction utterly perverts the original intention of the act. Instead of the col'ume of the currency leing regulated hy the business needs of the iMnntry, it is governed by the price of the United States bonds. The price of bonds may be such as to induce bank- ers to surrender their circulation at the very time when there is a legitimate demand for more circulation. The profit to be de- rived from taking up and selling their bonds may be greater than that derivable from their circulation. Within the hist year a large reduction of bank circulation has taken place in the face of an active demand for money, simply because a good profit could be made by withdrawing and selling the four per cents deposited as security for circulation. Nearly twenty-five million dollars in 4 per cent, bonds were thus withdrawn within the last fiscal year. FINANCIAL CATECHISM. 319 " Banks can afford to forego the profit on their circulation for a few months, in order to realize more from the premium on their bonds. Such operations should not, in the Treasurer's opinion, be permitted. A bank having signified its intention to reduce its circulation, and having acted on that intention by depositing legal-tenders for the purpose, should be held to its determination until the deposit is exhausted. "It should not be permitted to increase its circulation until it had disappeared from the category of ' reducing ' banks on the books of the department or to extend its note issues through one branch of the department at the same time that they are being redeemed and destroyed in another. The adoption of this con- struction, while it would work no injustice to any legitimate interest, would confine the operations of the fourth section of the act of June 20, 1874, to cases where banks had formed a well-con- sidered intention to permanently curtail their circulation, and would relieve the United Ststes from the expense of issuing notes to banks, only to have them forwith returned for destruction. " It is equally clear that where additional circulation has been issued to reducing banks the new notes ought not to be redeemed out of the legal-tender deposits previously made. The law pro- vides for the redemption out of those deposits of tiie ' outstanding notes ' of the association, plainly meaning the notes that was out- standing at the time the deposit was made. The deposit has rela- tion only to the notes then outstanding. It would be absurd to suppose that the law intended to permit a bank to deposit legal- tenders to-day to redeem new notes issued to it to-morrow on a ■ fresh deposit of bonds, or on the self-same bonds. The additional notes issued stand by themselves. They are properly subject to the same provisions as to their redeemability as the notes of a bank which has made no legal-tender deposit. The United States has no concern with them, and should, if practicable, refuse to redeem them when presented for redemption out of the bank's legal-tender deposit. All ' reducing ' banks are required to main- tain a 5 per cent, deposit under Section 3 of the act of June 20, 1874, on the circulation borne on their books— that is, the circula- tion for which no legal-tender deposit has been made. Any part of the additional circulation of such a bank presented for redemp- tion should be charged to its 5 per cent, account; and be reim- bursed for and disposed of in the same manner as the notes of banks not reducing their circulation." 320 FINANCIAL CATECHISM. (Act of July 12, 15820 An Act to enable national banking associations to ex- tend THEIB CORFOKATE EXISTENCE, AND FOK OTHER PtTB- POSES. "Be it enacted hy the Senate and House of Representat&Bes of the United States in Congress assembled : That any national banking association organized under the acts of February 25, 1863, June 4, 1864, and February 14, 1880, or under sections 5133, 5134, 5135, 5136 and 5154 of the Revised Statutes of the United States, may, at any time within the two years next previous to the date of the expiration of its corporate existence under pre- sent law, and with the approval .of the Comptroller of the Cur- rency, to be granted as hereinafter provided, extend its period of succession by amending its articles of association, for a term of not more than twenty years from the expiration of the period of succession named in such articles of association, and shall have succession for such extended period, unless sooner dissolved by the act of shareholders owning two-thirds of its stock, or unless its franchise becomes forfeited by some violation of law, or un- less hereafter modified or repealed. " Section 2. That such amendment of said articles of associa- tion shall be authorized by the consent, in writing, of sharehold- ers owning not less than two-thirds of the capital stock of the association ; and the board of directors shall cause such consent to be certified r.nder the seal of the association, by its president or cashier, to the Comptroller of the Currency, accompanied by an application made by the president or cashier, for the approval of the amended articles of association by the Comptroller ; and such amended articles of association shall not be valid until the Comp- troller shall give such association a certificate under his hand and seal that the association has complied with all the provisions re- quired to be complied with, and is authorized to have succession for the extended period named in the amended articles of asso- ciation. " Sec 3. That upon the receipt of the application and certifi- cate of the association, provided for in the preceding section, the Comptroller of the Currency shall cause a special examination to be made, at the expense of the association, to determine its con- dition ; and if, after such examination or otherwise, it appears to iiim that said association is in a satisfactory condition, he shall grant his certificate of approval provided for in the preceding section, or if it appears that the condition of said association is not satisfactory lie shall withhold such certificate of approval. Sec 4. That any association so extending the period of its suc- cession shall continue to enjoy all the rights and privileges and immunities granted, and shall continue to be subject to all the duties, liabilities and restrictions imposed by the Revised Statutes of the United States, and other acts having reference to national banking associations, and it shall continue to be in all respects the identical association it was before the extension of its period of succession. Provided, however. That the jurisdiction for suits hereafter brought by or against any association established un- der any law providing for national banking associations, except FINANCIAL CATBCHiaU- 321 suits between them and the United States, or its officers or agents, shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business when such national banking associations may be doing business where such suits may be begun. And all laws and parts of laws of the United States inconsistent with this proviso be, and the same are hereby repealed. "Sec. 5. That when any national banking association has amended its articles of association as provided in this act, and the Comptroller has granted his certificate of approval, any share- holder not assenting to such amendment may give notice in wri- ting to the directors, within thirty days from the date of the cer- tificate of approval, of his desire to withdraw from said associa- tion, in which case he shall be entitled to receive from said banking association the value of the shares so held by him, to be ascertain- ed by an appraisal made by acommittee of three persons, one to be selected by such shareholder, one by the directors, and the third by the first two; and, in case the value so fixed shall not be satis- factory to any such shareholder, he may appeal to the Comptrol- ler of the Currency, who shall cause a re-appraisal to be made, which shall be final and binding ; and if said re-appraisal shall exceed the value fixed by said committee, the bank shall pay the expenses of said re-appraisal, and otherwise the appellant shall pay said expenses; and the value so ascertained and determined shall be deemed to be a debt due, and be forthwith paid to said shareholder from said bank ; and the shares so surrendered and appraised shall, after due notice, be sold at public sale, within thirty days after the final appraisal provided in this section : Provided, That in the organization of any banking association intended to r6place any existing banking association, and retain- ing the name thereof, the holders of stock in the expiring associ- ation shall be entitled to preference in the allotment of the shares of the new association in proportion to the number of shares held by them respectively in the expiring association. "Sec. 6. That the circulating notes of any association so extend- ing the period of its succession which shall have been issued to it prior to such extension shall be redeemed at the Treasury of the United States, as provided in Section 3 of the act of June 20, 1874, entitled 'An act fixing the amount of United States notes, providing for a re-distribution of national bank currency, and for other purposes,' and such notes when redeemed shall be forwarded to the Comptroller of the Currency, and destroyed, as now provided by law; and at the end of three years from the date of the extension of the corporate existence of each bank the association so extended shall deposit lawful money with the Treasurer of the United States sufficient to redeem the remain- der of the circulation which was outstanding at the date of its extension, as provided in sections 5222, 5224 and 5225 of the Re- vised Statutes, and any gain that may arise from the failure to present such circulating notes for redemption shall inure to the benefit of the United States; and from time to time, as such notes are redeemed or lawful money deposited therefor, as provided 21 322 FINANCIAL CATBCmsM. herein, new circulating notes shall be used as provided by this act, bearing such devices, to be approved by the Secretary of the Treasury, as shall make them readily distinguishable from the circulating notes heretofore issued. Provided, however. That each banking association which shall obtain the benefit of this act shall reimburse the Treasury the cost of preparing the plate or plates for such new circulating notes as shall be issued to it. "Sec. 7. That national banking associations whose corporate existence has expired or shall hereafter expire, and which do not avail themselves of the provisions of this act, shall be required to comply with the provisions of sections 5221 and 5222 of the Eevised Statutes in the same manner as if the shareholders had voted to go into liquidation, as provided in section 5220, of the Eevised Statutes ; and the provisions of sections 5224 and 5225 of the Revised Statutes shall also be applicable to such associa- tions, except as modified by this act ; and the franchise of such association is hereby extended for the sole purpose of liquidating their affairs until such affairs are finally closed. "Sec. 8. That national banks now organized, or hereafter organ- ized, having a capital of $150,000 or less, shall not be required to keep on deposit with the Treasurer of the United States, .United States bonds in excess of one-fourth of their capital stock as se- curity for their circulating notes ; and such banks shall keep on deposit or deposit with the Treasurer of the United States the amount of bonds as herein required ; and such of those banks having on deposit bonds in excess of that amount are authorized to reduce their circulation by the deposit of lawful money as pro- vided by law. Provided, That the amount of such circulating notes shall not exceed in any case 90 per cent, of the par value of the bonds deposited as herein provided. Provided further. That all national banks which shall hereafter make deposits of lawful money for the retirement in full of their circulation shall, at the time of their deposit, be assessed for the cost (;f transporting and redeeming their notes then outstanding, a sum equal to the aver- age cost of the redemption of national-bank notes during the preceding year, and shall thereupon pay such assessment ; and all national banks which have heretofore made or shall hereafter make deposits of lawful money for the reduction of their circula- tion shall be assessed and shall pay an assessment in the manner specified in section 3, of the act approved June 20, 1874, for the cost of transporting and redeeming their notes redeemed from such deposits subsequently to June 30, 18S1. '•Sec. 9. That any national banking association now organized or hereafter organized, desiring to withdraw its circulatingnotes, upon a deposit of lawful money with the Treasurer of the United States, as provided in section 4 of the act of June 20, 1874, en- titled, ' An act fixing the amount of United States notes, provid- ing for a redistribution of national-bank currency, and for other purposes,' or as provided in this act, is authorized to deposit law- ful money and withdraw a proportionate amount of the bonds held as security for its circulating notes in the order of such de- posits ; and no national bank which makes any deposit of lawful money in order to withdraw its circulating notes shall be entitled mar ARC I AL catechism. sij to receive any increase of its circulation for a period of six montlis from the time it made such deposit of lawful money for the purpose aforesaid. Provided, That not more than three mil- lions of dollars of lawful money shall be deposited during any calendar month. And, Provided further, That the provisions of this section shall not apply to bonds called for redemption by the Secretary of the Treasury, nor the withdrawal of circulating notes in consequence thereof. " Sec. 10. That upon a deposit of bonds as described by Sections 5159 and 5160, except as modified by Section 4 of an act entitled, ' An act fixing the amount of United States notes, providing for a redistribution of the national bank currency, and for other pur- poses,' approved June 20, 1874, and as modified by Section 8 of this act, the association making the same shall be entitled to receive from the Comptroller of the Currency circulating notes of differ- ent denominations, in blank, registered and countersigned as hereinafter provided, equal in amount to 90 per cent, of the cur- rent market value of the United States bonds so transferred and delivered, and at no time shall the total amount of such notes is- sued to any association exceed 90 per cent, of the amount at such time actually paid in of its capital stock ; and the provisions of sections 5171 and 5176 of the Revised Statutes are hereby re- pealed. "Sec. 11. That the Secretary of the Treasury is hereby author- ized to receive at the Treasury any bonds of the United States bearing SJ^ per cent, interest, and to issue in exchange therefor an equal amount of registered bonds of the United States of the denominations of fifty, one hundred, five hundred, one thousand, and ten thousand dollars, of such form as he may prescribe, bearing interest at the rate of 3 per cent, per annum, payable quarterly at the Treasury of the United States. Such bonds shall be exempt from all taxation by or under state authority, and be payable at the pleasure of the United States. Provided, That the bonds herein authorized shall not be called in and paid so long as any bonds of the United States heretofore issued bearing a higher rate of interest than 3 per cent, and which shall be redeemable at the pleasure of the United States shall be outstanding and un- called. The last of the said bonds originally issued under this act, and their substitutes, shall be first called in, and this order of payment shall be followed until all shall have been paid. "Sec. 12. That the Secretary of the Treasury is authorized and directed to receive deposits of gold coin with the Treasurer or Assistant Treasurers of the United States, in sums not less than $20, and to issue certificates therefor in denominations of not less than $20 each, corresponding with the denominations of United States notes. The coin deposited for or representing the certifi- cates of deposit shall be retained in the treasury for the payment of the same on demand, Said certificates shall he reeeiwible for customs, taxes and all public dues, and when so received may be reissued ; and such certificates, as also silver certificates, when held by any national hanking association shall be counted as part of its lawful reserve ; and no national banking association shall be a member of any clearing house in which such certificates shall not 324 FINANCIAL CA1':ECH18M. he receivable in the settlement of clearing hovse balances. Pro- vided, That the Secretary of the Treasury shall suspend the issue of such gold certificates whenever the amount of gold coin and gold bullion in the treasury reserved for the redemption of United States notes falls below 1100,000,000; and the provisions of section 5207 of the Kevised Statutes shall be applicable to the certificates herein authorized and directed to be issued. Seo. 18. That any officer, clerk or agent of any national banking association who shall wilfully violate the provisions of an act entitled 'An act in reference to certifying checks by national banks,' approved March 3, 1869, being Section 5208 of the Revised Statutes of the United States, or who shall resort to any device, or receive any fictitious obligation, direct or collateral, in order to evade the provisions thereof, or who shall certify checks before the amount thereof shall have been regularly entered'':; the credit of the dealer upon the books of the banking association, shall be deemed guilty of a misdemeanor, and shall, on conviction thereof in any circuit or district court of the United States, be fined not more than $5,000 or shall be imprisoned not more than five years, or both, in the discretion of the court. Sec. 14. That Congress may at any time amend, alter or repeal this act and the acts to which this is amendatory. BUSINESS FAILURES. [Part of Appendix B]. The following table is taken from the Statistical Ab- stract (compiled by Treasury officials) for 1892 and fol- lowing years : No. of Per cent, of Failures. Failures. Liabilities. 1879 6,658 .95 $98,149,053 1880 4,735 .63 65,752,000 1881 5,582 .71 81,155,932 1882 6,738 .82 101,547,566 1883 9,184 1.06 172,874,192 1884 10,968 1.21 226,343,427 1885 10,637 1.16 124,220,321 1886 9,834 1.01 114,644,119 1887 9,634 .90 167,560,944 1888 10,697 1.02 123,829,973 1889 10,882 1.04 148,784,337 1890 10,907 .98 189,856,964 1891 12,273 1.07 189,868,658 1892 10,344 .88 114,044,167 1893 15,242 1.28 346,749,889 1894 13,895 1.25 172,993,856 1895 13,197 1.09 173,196,000 1896'' 4,512 for 1st quar., or 700 more than same period 1895. *Bradstreet. Preface to Appendix B. In the latter part of the year 1895 the then existing editions of this volume were nearly exhausted, and al- though it had been before the public for about fourteen years without any alterations or additions, still, none of the numerous works on finance seemed likely to fill the want so completely supplied by Dr. Brice's admirable style and clearness of statement. When, therefore, the loss of this work seemed about to produce a serious vacuum in the economic literature of the closing years of the nine- teenth century, and when this imminentloss seemed to be likely seriously to afl'ect the cause of monetary reform in the United States, it was suggested to the writer that he revise the work and add such history of financial leg- islation as would make it a comprehensive history from 1862 to 1896. It has been my pleasure to read and re- read its pages for many years, and always with profit, and when the work of revision was suggested, the vol- ume was scanned through to discover, if possible, what should be omitted in the revision. But, so con- scientious and so thorough was the work of Dr. Brice, that it is determined to leave it unmarred by the omis- sion of any word he so faithfully penned in the comple- tion of the most remarkable book, in many respects, that has found a place among the economic literature of our day. It is decided, however, to make such additions in the form of an Appendix as shall make it an " up-to- date" text-book for the student of financial legislation. In the accomphshment of this purpose, no pains have been spared. The writer spent weary days delving amidst the musty files of documents in the Congres- sional Library at Washington, and the quotations made in this Appendix may be relied upon with that implicit faith in their correctness that the reader has always had in perusing the writings of Dr. Brice. In the editions heretofore published one typographical error existed. It has been corrected, and it is now confidently believed that this volume presents the most accurate history ex- tant of financial legislation from 1862 to 1896. C. Vincent. Indianapolis, Jnd., May 1, 1896. APPENDIX B. The body ofthis work brings the history up to and a lit- tle beyond the passage of the Bland-Allison bill in 1878. Opposition to it had as yet taken no definite shape, but soon began to make itself felt. Recent developments and indications as to future actions on the great question of national finances, point to the settled determination of both Democratic and Republican parties irrevocably to commit this country to the policy of a continued issue of United States bonds, and the establishment and per- petuation of the single gold standard. It matters not that there seems to be no justification for such a course; that our resources are ample to enable us with ease to pay oS and cancel the last national bond within the life of the present generation, leaving the next to develop a more wonderfully prosperous nation than any of its pre- decessors, unhindered by our debts and unchained by any bonds binding it to the past with links of usury. It matters not that protest after protest has been made by all classes of people but one, the edict seems to have gone forth, and in the succeeding pages will be given the evidence from the records made by themselves, to show that both the dominant parties have been and now are controlled by the pawnbrokers who deal with parliaments rather than with paupers, and with ministers of state rather than with mendicants in society. The United States government is to be used as a fiscal agency to sup- ply a source of safe investment for the millions of dol- lars extorted and to be extorted from toil by usury and FINANCIAL CATECHISM. 327 unbridled greed. When the possessors of this wealth have so overreached themselves in their grasping for gain that ordinary investments are no longer safe, it is proposed that the United States turn rent collector, inter- est ear ner,dividend-maker, andunder theforms of govern- ment and by means of the taxing power, furnish its wealthier citizens an income from the toil and labor of her poorer and productive classes. This is the supreme question of the hour, as the sun of time is setting on the nineteenth century. When the sunlight streams in glory across our fertile fields, our great forests, and tries to penetrate with gladsome rays into our mines on the joy- ous morn of the twentieth century, shall that sun light a race of freemen or of bondmen? In the first place, let us trace the course pursued by the dift'erent chief magistrates since 1881, as set forth in official utterances. Chester A. Arthur was President from the autumn of 1881 to March 4, 1885. On December 1, 1884, he made use of this language (State Papers of Chester A. Ar- thur, page 311) : " It appears that annually for the past six years there have been coined in compliance with the requirements of the act of Feb. 28, 1878, more than twenty-seven million dollars. The number now outstanding is reported to be nearly $185,000,000, whereof but little more than forty millions, or less than twenty-two per cent, are in actual circulation. The mere eiis- tenee of this fact seems to ine to furnish of itself a cogent argument for the repeal of the statute which has made such a fact possible." Again, on the same page, in speaking of the "trade dollar," there occurs this language: "While the trade dollars have ceased, for the present tit least, to be an element of active disturbance in our currency system, some provision should be made for their surrender to the government. In view of the circumstances under which they were coined and of the fact that they never had a legal tender quality, there should be offered for them only a slight advance over their bullion value." Reference is here made to this statement concerning the trade dollar, simply to illustrate the inaccuracy that 328 FINANCIAL CATECHISM. sometimes occurs in official papers and the consequent ne- cessity for every individual to become well informed for himself on questions of vital concern to society. By re- ference to the law of Feb. 12, 1873 (or see page 293 ante) it will be seen that the trade dollar was originally a legal tender for amounts not exceeding five dollars. The his- tory of its demonitization is graphically told by Dr. Brice on pages 192-3 (see also page 15.) When such inaccuracy of statement occurs in state papers of government officials, may it not be presumed that their real knowledge of the subjects under discus- sion is extremely limited? Further, it will be seen that the President conveys the idea that only about forty mil- lions of silver dollars were in use and that no more could be coaxed into the channels of trade. He therefore uses strong language to express his views, and excite the fears of Congress and of the people so as to stampede them into a repeal of tlie act of February 28, 1878. By examination of the "Debt Statement" for Novem- ber 29, 1884 (two days prior to the date of the message above quoted), it will be found that there were silver certificates outstanding amounting to $133,940,121. The President admitted the use of about forty millions of silver dollars as coin, which added to the above makes about one hundred and seventy-four millions of dollars in actual use and only about eleven millions lying idle in the vaults. For it will be conceded by all candid people that a silver dollar is doing duty just as well when represented by a certificate as though it were itself in the pockets of tradesmen instead of in the government vaults. (The forms used in 1884 in publishing the Debt Statement did not itemize the kinds of cash in the Treasury, so only round numbers are here given.) FINANCIAL CATECHISM. 329 The utterances above were made to the last session of the 48th Congress, just prior to the inauguration of G-rover Cleveland. In some way the idea gained cur- rency that the incoming President shared the views of Mr. Arthur and an effort was made, by letter, by A. J. Warner and others to induce Mr. Cleveland \o withhold any expression on the subject until he should have an opportunity fully to examine it in all its relations. The result was a most extraordinary letter, written under most peculiar circumstances. Eight days before Mr. Cleveland obtained the constitutional right to address Congress, he sent a reply to the public press — to the Congress and to the country — in which he uses this lan- guage (Cong. Record, 48th Congress, page 7199, quoted in the remarks of a member) : .1* » Si I hope that you concur with me, and with a great majority of our fellow citizens, in deeming it most desirable at the present junc- ture to maintain and continue in use the mass of our gold coin as well as the mass of silver already coined. This is possible by a present sus- pension of the purchase and coinage of silver. I am not aware that by any other method is it possible. It is of momentous importance to pre- vent the two metals from parting company ; to prevent the increasing displacement of gold by the increasing coinage of silver; to prevent the disuse of gold in the custom houses of the United States in the daily business of the people; to prevent the ultimate expulsion of gold by silver." This remarkable alignment of himself with the single gold standard element amazed the country, and great in- dignation was expressed, because it was regarded by many as an attempt to coerce Democrats in the expiring Congress to assist gold standard Republicans to repeal the law of February 28, 1878, feeling that he could not trust the large Democratic majority in the next Congress to pass such a measure. Following are his later public utterances on this subject as taken from " Public Papers of Grover Cleveland," in the library of Congress. On page 32 of this volume, in his message to Congress on December 8, 1885, occurs this language: 830 FINANCIAL CATECHISM. "The necessity of an addition of the silver currency of the nation as is compelled by the silver coinage act is negatived by the fact that up to the present time only about fifty millions of the silver dollars so coined have found their way into circulation, leaving more than one hundred and sixty-five millions in the possession of the government, the custody of which has entailed considerable expense for the construction of new vaults for its deposit. Against this latter amount there are outstanding silver certificates amounting to about ninety-three millions of dollars." Attempting to frighten the country and Congress he further says, on the same page: "At times during the past six month.s fifty-eight per cent of the re- ceipts for duties has been in silver or silver certificates, while the average within that period has been twenty per cent." The laws of our country n ever have recogn ized any class of obligations as being payable in gold alone, and yet Mr. Cleveland in his first message says (lb. 35-6): " The condition in which our treasury may be placed by a persistence in our present course, is a matter of concern to every patriotic citizen who does not desire his government to pay in silver such of its obliga- tions as should be paid in gold. * * * * We have now on hana all the silver dollars necessary to supply the present needs of the people and to satisfy those who from sentiment wish to see them in circulation, and if their coinage is suspended they can readily be obtained by all who de- sire them. If the need of more is at any time apparent, their coinage may be renewed. * * * I recommend the suspension of the com- pulsory coinage of silver dollars directed by the law passed in February, 1878." During the following year the use of silver and silver certificates increased from about one hundred and forty- three millions of dollars to nearly one hundred and sixty- seven millions of dollars (the entire amount coined be- ing absorbed), although the President had said that no more could be crowded into circulation, and in his next annual message (December 6, 1886, lb. 198) he said: "I see no reason to change the views expressed in my last annual message on the subject of compulsary coinage." In the annual message of Dec, 1887, the President was too intent on tariff discussion to make any special men- tion of silver or of currency legislation. In Dec, 1888, although the tarift" is again the burden of the message, yet he renews his former recommendations in these words (lb. 454) : FINANCIAL CATECHISM. 331 "The Secretary recommends the suspension of the further coinage of silver, and in such recommendation I earnestly concur." This recommendation was made in face of the fact previousiy set forth in detail in the same message, that up to November 30, 1888, |312,570,990 of silver had been coined, of which there was in active use by the people 60,970,990 silver dollars and $237,418,346 in sil- ver certificates, making a total of $298,389,336 or an in- crease since his last utterance of about one hundred and thirty-one millions of dollars in actual use — all but about fourteen millions of the coined stock. And it must be remembered that suspension of coinage was recom- raiended on former occasions/or the reason that we had all we could use. It would seem as if the frequent failure of his predic- tions and assertions as to the capacity of the country to absorb silver, would discredit his future utterances on the subject, but he now passes from view for four years, taking the message utterances in their chronological or- der. The plan of this chapter requires that we now intro- duce the messages of another Kepublican President. As before, the quotations are taken from the volume in the library of Congress containig all the addresses of the chief executive. President Harrison in his first message to Congress, December 3, 1889, said (State Papers of Benjamin Harrison, page 44-5): " The total coinage of silver dollars was on November 1, 1889, $348,- 638,001, of which $283,539,521 were in the treasury vaults and $60,098,- 480 were in circulation. Of the amount in the vaults.$277,319,944 were represented by outstanding certificates, leaving $6,219,577 not in circula- tion and not represented by certificates." Is it any wonder that this welcome acceptance of sil- ver by the people and its ready absorption into the chan- nels of trade in one or other form (coin or certificates) 332 FINANCIAL CATECHISM. should wring from the President these further words? (Page 45) : " The evil anticipations which have accompanied the coinage and use of the silver dollar have not been realized. As a coin it has nothad genera] use, and the public treasury has been compelled to store it. But this is manifestly owing to the fact that its paper representative is more convenient. The general acceptance and use of the silver certificate shows that silver has not been otherwise discredited." It is true the people never discredited silver nor the silver certificates, and possibly Mr. Harrison never had called to his attention the attempt made by the New York banks and Senator Sherman, then Secretary, to discri- minate against them and drive them to a discount in 1878. For details of this conspiracy, see Mr. Weston's statement and Mr. Morgan's comment on page 347 of this volume. It would seem as if the above eulogy upon silver, and testimonial as to its glad acceptance by the people, were made for the sole purpose of reflecting discredit upon the public utterances of Mr. Cleveland, just quoted above, for in cautious and guarded language he hints at the possibility of discontinuing the coinage of the silver dollar in these words (lb. 45): " I think it is clear that if we should make the coinage of silver at its present ratio free, we must expect that the difference in the bullion values of gold and silver dollars will be taken into account in commer- cial transactions, and I fear the same result would follow any consider- able increase of the present rate of coinage. * * * We should not tread the dangerous edge of such a peril." At the same time the Secretary of the Treasury (Mr. Windom) recommended the issuance of certificates upon the "bullion value" of the silver, and touching this re- commendation the President refrained from expressing an opinion farther than to say: "The details of such a law require careful consideration, butthegen- eral plan suggested by him seems to satisfy the purpose — to continue the use of silver in connection with our currency, and at the same time ob- viate the dangers of which 1 have spoken." The Congress to which this message was addressed seemed to share the "fears" of the President, for it FINANCIAL CATECHISM. 303 passed the Sherman law of July 14, 1890. President Harrison's next utterance on this subject was in his mes- sage of Dec. 9, 1891 (lb. 106), where he says : "I am still of the opinion that free coinage of silver under existing conditions would disastrously atfeet our business interests at home and abroad." In 1892 Mr. Harrison does not refer to coinage in his annual message. This brings us again to the re-introduction of Mr. Cleveland, for the country has constantly— since 1884 — jumped from frying pan to fire and back again. In his first message to the 53d Congress, at the beginning of the extra session of 1893, Mr. Cleveland said: "Our unfortunate financial plight is not the result of untoward event.«i nor of conditions related to our natural resources; nor is it traceable to any of the afl[lictions which frequently check natural growth and pros- perity. With plenteous crops, with abundant promise of remunerative production and manufacture, with unusual invitation to safe investment, and with satisfactory assurance to business enterprise, suddenly finan- cial distrust and^ f?ar have sprung up on every side. Numerous moneyed institutions (banks) have suspended because abundant assets were not immediately available to meet the demands of frightened depositors. Surviving corporations and individuals are content to keep in hand the money they are usually anxious to loan, and those engaged in legitimate business are surprised to find that the securities they offer for loans, although heretofore satisfactory, are no Linger accepted. Values sup- posed to be fixed are fast becoming conjectural, and loss and failure have invaded every branch of business. I believe these things are principally chargeable to congressional legislation touching the purchase and coinage of silver by the general government. This legislation is embodied in a statute passed on the 14th day of July, 1890, which was the culmination of much agitation on the subject involved, and which may be considered a truce, after a long struggle, between the advocates of free coinage and those intending to be more conservative. * * * * If * * silver ought to occupy a larger place in our currency and in the currency of the world through general international co-operation and agreement, it is obvious that the United States will not be in position to gain a hear- ing in favor of such an arrangement so long as we are willing to con- tinue our attempt to accomplish the result single handed." (Cong. Kecord 53d Congress, page 205.) In other words, our building is burning and the fire is liable to spread to adjoining residences and factories, but we must cease our efforts to put out the flames and call a "conference" of our neighbors, who may then be in- 334 FINANCIAL CATECHISM. duced to consider the advisability of using the hose and engines that gathered when the alarm was turned in, but who now hold aloof because of our "discourtesy" in not consulting them as to the best means of fighting the fire ! But to continue the quotation : "The knowledge in business circles among our own people that our government can not make its fiat equivalent to intrinsic value, nor keep inferior money on a parity with superior money by its own independent efforts, has resulted in such a lack of confidence at home, in the stability of currency values, that capital refuses its aid to new enterprises, while millions are actually withdrawn from the channels of trade and com- merce to become idle and unproductive in the hands of timid owners. Foreign investors, equally alert, not only declijie to purchase American securities, but make haste to sacrifice those which they already have." The President talks as if it were the principal business of the TJnited States to furnish a safe investment for the capital of Great Britain ! And any step thatwe may take that excites the displeasure of "foreign investors" must be quickly retraced with apologies ! What shameful sycophancy! What degrading subserviency! What more beneficent thing could happen than that English capital should be induced to let us alone, and cease to absorb our life-blood from every pore by her interest charges on " investments" ? In colonial days, when Brit- ain prohibited industries here that tended to promote our growth and prosperity (see any United States His- tory and also Appendix to Cong. Record, 53d Congress, pages 655, 656), and loaded the colonies with such tax- ation in its various forms (as now), that its coin was ab- sorbed in a perpetual balance of trade against us (as is now the case if we count, as we should, the interest money paid on " investments" of various kinds, A. C. Fisk estimates this total balance against us at $940,000,- 000, which is a constant addition to our debts, since it is impossible to pay so much), the colonies, with an inde- pendence that would be refreshing in the present crisis, created a currency for themselves, a paper currency, FlyA^'UlAJ^ i..iij^i,HlSM. 335 based on the taxing power (see pages 23 to 26 ante), and now if English capital sees fit to do independently what it did then through its government, coerce this country into the adoption of a course that will be " satisfactory" to the money changers of Europe, a proper regard for our own dignity as a nation, a just regard for the lives and fortunes of generations yet unborn, demand that the American people resent the unwarranted interference, and proceed without unnecessary delay to the formation of a purely American system that may ignore England and all Europe, if they render such action advisable by their unwarranted and impertinent demand as to our in- stitutions. But let us proceed with the quotation : "I earnestly recommend the prompt repeal of the provisions of the act passed July 14, 1890, authorizing the purchase of silver bullion, and that other legislative action may put beyond all doubt or mistake the in- tention and the ability of the government to fulfill its pecuniary obliga- tions in money universally recognized by all civilized countries." This language is capable of but one interpretation, that the United States must pay all her financial obliga- tions in gold on demand. It opened the memorable con- test in the extra session in 1893 while the banks were closing their doors and the business men were failing by the thousands. *In that debate, Mr. Sherman boasts of his hostility to silver in 1878 in these words (page 1912):. " The Bland bill did provide for free coinage of silver and * * * I was very glad indeed to escape from free coinage of silver by the Bland- Allison act." Here is a good place to insert a very important con- fession wrung from Mr. Sherman by a senatorial com- mittee on the 19th of March, 1878, only a few days af- *It Is believed, but probably would be difficult to prove, tliat many banks "closed their doors" in response to the demand of the New York banks in March, 1893, to curtail loans and crowd collections, only to open them again as soon as Congress had been forced, by a manufactured panic, to repeal the provisions of law that were obnoxious to the bankers— the law of 1890. The probability that the crisis of 1893 was a "Bankers' Panic" is increabed to a certainty by the statement* of J. W. Shuckers (formerly Private Secretary to Salmon P. Chase, Lincoln's Sec- retary of the Treasury), in his pamphlet, '"The Bankers' Conspiracy." Price, 25 cents. For sale by The Vincent Pub. Co., Indianapolis, Ind. 336 FINANCIAL CATECHISM. ter the Bland- AUisou act went into effect. (Quoted in Senator Jno. P. Jones' remarks, lb. page 665 of Appen- dix): "CHAIRMAN. What effect has the silver bill had, or is likely to have, upon resumption? "SECEETAEY SHERMAN. I do not want to tread on delicate .ground in answering that question, Mr. Chairman. I shall have to con- fess that I have been mistaken, myself. Now, as to the silver bill, I ha\'e watched its operations very closely. * * * The silver bill sat- isfied a strong public demand for bimetallic money and that demand is, no doubt, largely sectional. No doubt there is a difference of opinion between the West and South and the East on this subject, but the de- sire for remonitization of silver was almost universal. * * * Re- sumption can be maintained more easily upon a double standard than upon a single standard." Again, when asked how long silver could be kept equivalent to gold by control of the coinage, he said: "Just so long as it can be used for anything that gold is used for. It will be worth in this country the par of gold until it becomes so abun- dant and bulky that people become tired of carrying it about; but in our country that can be avoided by depositing it for coin certificates.'' Mr. Sherman further admitted in debate that the act of July 14, 1890, was given as a tub to a whale, a con- cession granted to prevent free coinage. Here are his words (lb. 216): "The passage of the act of July 14, 1890, * * was caused by the imminent danger of the two houses of Congress agreeing to the free coinage of silver." The Senate had voted for free coinage by the follow- ing vote: Yeas — Republican, 15; Democrat, 27; total, 42. Nays — Republican, 22 ; Democrat, 3 ; total, 25. Not voting — Republican, 10; Democrat, 7. (This vote is given in detail in Cong. Record, 51st Congress, p. 6183.) The House had passed the bill for the purchase of bullion, and now the two bills went to a conference com- mittee, of which Mr. Sherman was chairman. The con- ference report was embodied in what has since been known as the Sherman law of 1890, and it passed the Senate by a strict party vote — all Republicans voting for it. (Page 7109.) FINANCIAL CATECHISM. 337 But let US return to the chronological statement of leading Republican and Democratic officials. SBNATOE SHERMAN'S PROPHECY. In the memorable Extra Session of 1893, Mr. Sher- man urged prompt action so vigorously that some mem- bers regarded his remarks as a " scolding" for the delays incident to a thorough discussion of the Repeal Bill. Here are his words (Coug. Record, Extra Session 53d Congress, page 2597): " Why should we be here seventy odd days without a single vote on any question ? Let us try it 1 If we would try it to-morrow after all the long debate that has been had, and dispose of this question as we think best for the people of the United States, while you are assuming your responsibility, we would gladden the hearts of millions of laboring men who are now being turned out of employment. We would relieve the business cares of thousands of men whose whole fortunes are em- barked in trade. We would relieve the farmer and his product for free transportation to foreign countries, now clogged for the want of money, » ss ■» » Break down the barrier now maintained by the Senate of the United States, check this viper called obstruction to the will of the majorityj give the Senate free power and play (in other words, pass the Eepeal Bill — Ed.) and in ten days from this time the skies will brighten and business will resume its ordinary course." The history of business has been just what every thoughtful man then believed. Mr. Sherman was a false prophet, promising results that were utterly impossible under his proposed policy. It is true that 1894 witnessed fewer failures than during the fever of the panic of 1893, but still they were far more than formerly, while the re- cord for 1895 is nearly as bad as for 1894. (See page 324 of this volume for table — also pages 123-4.) Thus we see the predictions of both Mr. Cleveland and Mr. Sherman, that the repeal of the law of 1890 would start the wheel of commerce, were empty promises of design- ing men, using their official position to give weight to opinions utterly at variance with the dictates of good sense and reason. Their rosy prediction and alluring 838 FINANCIAL CATECHISM. promises remind one of the scene mentioned in Holy Writ, where Satin, upon certain conditions, promised Christ all the nations and kingdoms of the earth, while at the same time he owned not a foot of land and had nothing to give. Pursuing his hostility to any form of money not based on gold, Mr. Cleveland's next record was the veto of the bill providing for the coinage of the seigniorage ly- ing idle in the Treasury. (For Summary of votes, see page 350.) This bill passed both Houses, despite the stren- uous efforts of the gold ring and the administration to de- feat it. On March 30, 1894 (page 3352), it was returned to the House with the veto message. On April 4 a vote was taken on a motion to pass the bill over the veto. No debate was allowed, but Speaker Crisp tyranically cut off all discussion and with threats of arrest stopped the mouths of protesting members. At first the Republican members refused to vote (trying to break a quorum), but the roll-call showed a quorum present and voting, and on this roll-call the hill was passed over the veto, but under the rules a seoond roll-call was had — or a verification of the roll, as it is called — and then the Republican members rallied to the support of a Democratic President and de- feated the bill. The final vote is given in full on page 3460 Cong. Record, Second Session 53d Cong. CARLISLE S SHARP PRACTICE. The utter lack of principle and appalling depravity of the oflicials was most vividly shown when Mr. Carlisle caused the mints to coin a few silver dollars in the sum- mer of 1894. This was just following the veto of the Seigniorage bill and a congressional election was ap- FINANCIAL CATECHISM. preaching. A few hundred silver dollars were struck off and were all placed either in the hands of politicians, who, in their campaign speeches, could produce a silver dollar dated "1894" as "evidence" that the administra- tion was not unfriendly to silver, or they were placed in Southern banks and used to pay cotton pickers and thus "prove" to the workman that the "party" was loyal to silver. Coinage was again stopped after election. Again, in the President's message of December 3, 1894 (Eecord 53d Cong., Third Session, pages 2-11), he avows his intention to continue the issue of bonds as he, in his judgment, thinks they are needed. He says: "The absolute divorcement of the government from the business of banking is the ideal relationship of the government to the circulation of the currency of the country." For the opinion of Jeffersonian Democracy on this subject see pages 46, 47, 48, ante. But to proceed: "This condition can not be immediately reached, but as a step in that direction » » » the Secretary of the Treasury presents in his re- port a scheme modifying present banking laws and providing for the issuing of circulating notes by state banks, free from taxation under cer- tain limitations. The Secretary explains this plan so plainly, and its advantages are developed by him with such remarkably clearness that any effort on my part to present argument in its support would be super- fluous. I shall" therefore content myself with an unqualified endorse- ment of the Secretary's proposed changes in the law and a brief and im- perfect statement of their prominent features." These are summarized as follows : 1st. Repeal all laws requiring bonds to be deposited as securities by national banks. 2d. Permit national bank circulation up to 75 per cent of paid-up capital upon a deposit of 30 per cent of such issue in greenbacks and treasury notes of 1890. 3d. Repeal all laws relating to increase or decrease of amount of circulation, leaving it entirely optional with the banks to increase to any amount or to retire all as quickly as they choose, or in the language of Mr. Cleve- land himself: 340 FINANCIAL OATECEtSM. "Thus permitting such increase or reductions within the limit of 75 per cent of capital to be quickly made as emergencies arise." (Page 11.) 4th. It is proposed that when a bank fails (they all provide for failures and many fail full-handed) the above 30 per cent is to be added to the 5 per cent of guaran- tee fund to be contributed by all the banks, and this fund shall be used to " redeem" the outstanding notes of the failed bank, and farther, these notes are to be made good by the other hankB, pro rata, and they re-imbursethemselves from the "cash assets" of the bank at time of failure, on which they are given first lien, i. e., on your deposits and mine ; on the deposit of the merchant and the savings of the washer woman — these are the real security for the bank notes proposed by Mr. Carlisle, and to which scheme Mr. Cleveland officially gives his " unqualified endorse- ment." The infamy of the gold pirates in control of both old parties grows blacker as we examine it more closely. Not content with recommending and trying to enact such unbusiness-like schemes as the above, they attempt again the complete retirement of all legal tender cur- rency. On January 28, 1895, Mr. Springer introduced his bond bill. (See Record, 53d Cong., 3d Session, page 1459.) The meat in this bill is found in the following words : " Be it enacted, etc. That in order to enable the Secretary of the Treasury to procure and maintain a sufScient gold reserve to redeem and retire United States legal tender notes and Treasury notes issued under the act of July 14, 1890, « « ® » he is hereby authorized to sell at not less than par, in gold, except as provided in Section 2 of this act. United States registered or coupon bonds, * » payable fifty years after date in gold coin of the United States of the present weight and fineness, and bearing interest at a rate not exceeding 3 per cent, pay- able quarterly in like com." Section 2 provides that a holder of greenbacks or treasury notes may convert them into bonds without the annoyance of going to the Treasury for gold and FINANCIAL CATECHISM. 341 then exchanging the gold for the bonds. The idea is to get rid of the legal tender notes and all hindrance to this end is removed. This bill was discussed until Feb- ruary 7, 1895, when a vote was had — 135 for and 162 against, with 52 not voting. (Cong. Record, page 1926.) The administration failed to pass the Springer bill, and its author, rejected at the polls, received an appoint- ment as United States Judge in Oklahoma that is re- garded as "pay" for his adherence to the cause of the gold-holders of the East. PERSISTENT TORYISM. Never tiring in his efforts to destroy the legal tenders and fasten upon us a perpetual bond system, Mr. Cleve- land again began with his annual message to the 54th Cong., on December 3, 1895 (Cong. Record, page 15), and by special message later emphasized his wishes. In this work he is again assisted by Republicans, they hav- ing a large majority in the House. But here are the words of the message : " I am convinced the only thorough and practical remedy for our troubles is found in the retirement and cancellation of our United States notes, commonly called greenbacks, and the outstanding treasury notes issued by the government in payment of silver purchases under the act of 1890." The message then goes on to prescribe in detail how an issue of one or another kind of bonds may bring about this cancellation and he states that he "confidently expects" to see the national banks fill the vacancy created by the retirement of the treasury notes. He says they now issue one hundred and ninety millions and can issue on present capital four hundred and seventy-eight mil- lions more than they now do issue, and yet he " confi- dently expects" them to issue their notes when the 342 FINANCIAL CATECHISM. treasury notes are retired. Has he any assurance that they will? Or is this another " will-o'-the-wisp"? Congress had scarcely gotten about its work when on December 17, 1895, President Cleveland electrified the Congress and the country with his Venezuelan or Mon- roe Doctrine message. This message was allowed three days to echo and re-echo across the country when sud- denly as a lightning bolt from a clear sky, on December 20, 1895, came another message strongly urging an issue of bonds. Here are his words : "We are in the midst of another season of perplexity caused by our dangerous and fatuous financial operations. These may be expected to occur with certainty as long as there is no amendment in our financial system. * * * The real and sensible cure for all our recurring troubles can only be effected by a complete change in our financial scheme. * * I ask at the hands of the Congress such prompt aid as it alone has power to give, to prevent in time of fear and apprehension any sacrifice of the peoples' interests and the public funds, or the impairment of our public credit in an effort by executive action to relieve the daiigers of the present emergency." In response to this appeal a Republican house pre- pared two bills, one providing for the issue of bonds and the other providing for an increase of revenue, com- monly called the "bond bill" and the "tarifi" bill." These were both rushed through the House under gag rule, the Populists not being recognized for the purpose of dis- cussing the measures at all, and the only way they could express themselves upon these questions was by securino- leave to print their remarks in the Cong. Record. Sen- ator Carter exposes this gag rule in the following lan- guage (Cong. Record 54th Cong., page 2439): "The Record shows that three and one-half hours were allowed for the consideration of the revenue measure and about one day to the con- sideration of the bond bill." On February 1, 1896, the bond bill (H. R. 2904) came up for action by the Senate. Here the finance committee introduced an amendment providing for the free coinage of silver, which amendment was adopted by the vote of FINANCIAL CATECHISM. 343 42 to 35 — all the Populists voting for the amendment and both of the other parties being divided, with East- ern Republicans and Democrats voting together, as usual. (Cong. Record 54th Cong., page 1344.) The bill as amended was returned to the House, where it was debated and defeated on February 14 by the very decisive vote of 90 yeas to 215 nays (lb. page 1883.) The affirmative vote was Republican, 25 ; Democrat, 58 ; Populist, 7. Negative vote was Republican, 187 ; Demo- crat, 28. Here again party lines were not closely drawn, old party members voting on both sides. It is proper to state here that in the Senate debate the Populist Sen- ators, Allen, of Nebraska and Butler, of N. Carolina, both introduced amendments prohibiting any further is- sue of United States bonds unless specially authorized by act of Congress. The purpose of this effort was to prevent the issue by the President and Secretary of the Treasury of bonds, as had already been done to the amount of two hundred and sixty-three millions of dol- lars. These amendments were both defeated, Congress going upon record as being willing for the plundering policy of Carlisle and Cleveland to continue unchecked. These votes are recorded on pages 1335 and 1337. Mr. Butler's amendment received but 13 votes, and Mr. Al- len's 21, the negative vote being 60 and 54, respectively. Here again the Populists stood solidly by a safe policy and the large majority of the old parties voted for a con- tinuation of the unbusiness-like methods in practice for some years. The votes on the tariff bill (H. R. 2749), while not strictly classed as votes upon the financial question, yet are equally significant. The tariff bill was forced through the House by the same gag rule as was the bond bill and when it reached the Senate committee on finance it was 344 FINANCIAL CATECHISM. amended by the same silver amendment. On February 13, Mr. Morrill moved to call up this bill for action. The fate of the bond bill, with a silver amendment, in the House, made it apparent that a further attempt to pass silver legislation was time wasted, and the motion to take up the tariff bill was defeated by a vote of 21 to 29. (Page 1841.) A further attempt was made on Feb- ruary 25 by Mr. Morrill to call up this bill. Thefriends of silver had determined that no tariff legislation should be had without accompanying legislation friendly to silver, and the vote in the House having demonstrated that this was impossible of attainment, they voted against wasting the time of the Senate with further consider- ation of the bill. The vote was taken with the follow- ing result, yeas 22, nays 33. (Page 2404.) Here again the Populists were the only party voting solidly for silver, the other parties being divided. This vote produced a most acrimonious discussion, in- dulged in by members of all parties. At the time this appendix is being prepared (March 1,1896) it looks as if this vote marks the " parting of the ways" between the ad- herents of a single gold standard and the disciples of bi- metaLism. On February 26, the " forks of the road" was reached when Mr. Allen, speaking for the Populists and referring to the heated debate of the 25th, offered to in- sure the Republican party six votes for the tariff bill ac- companied by the provision for free coinage of silver. This was flatly refused by both Mr. Piatt and Mr. Aid- rich, and the discussion of the previous day was re- sumed and records made that will be of value in coming discussions. A few quotations are here presented. (Cong. Record, 54th Congress, page 2407 — February 25) : "MK. ALLEN. * » ® The Senator from Vermont has under- taken to cast upon the Populist party the responsibility for a failure to carry Ms motion this morning. It is responsible, Mr. President, and it FINANCIAL CATECHISM. 345 is perfectly willing to assume the responsibility and all the consequences thiit may flow from it. I see present my amiable and disting-uished friend, the Senator from Rhode Island (Mr. Aldrich), who always coaches the Senator from Vermont (Morrill), Chairman of the Com- mittee on Finance, and I wish to ask the Senator from Rhode Island, who has said he is a bimetallist, and that his party is a bimetallic party, whether he will take the tariff bill jnst as it came from the House of Rep- resentatives with a free coinage amendment attached to it ? " MR. ALDRICH. I answer, frankly, no, with as much emphasis as it is possible for me to use. "MR. ALLEN. I am glad to hear it, because it stamps the Re- publican party as the enemy of bimetallism. Your party has been mas- querading for three years under false pretenses in this Chamber. "MR. MORGAN. (To Mr. Allen) Ask him if he would take the McKinley law with free coinage. " MR. ALLEN. The Senator from Alabama suggests that I aslc you if you will take the McKinley bill with free coinage. Will you do that?" "MR. PLATT. No. "MR. ALLEN. The Senator from Connecticut says " no." Are there any circumstances under which you will take free coinage? "MR. ALDRICH. No, Sir "MR. PLATT. Except by an international agreement? "MR. ALDRICH. Unless an international agreement on the subject shall be first secured. "MR. ALLEN. Oh, yes. Now that discloses exactly what we have always claimed. There are no circumstances under which you are bi- metallists." After some further sparring, the discussion closed, only to be resumed on the following day when these proceedings were had after Mr. Carter, of Montana, had delivered a powerful speech in favor of free coinage of silver. (See pages 2434 to 2440.) WHAT IS BIMETALLISM? The debate grew so warm that Senators forgot Tally- rand's injunction to "use words to conceal ideas," and they used language that clearly brought forth the double meaning attached to the term " bimetallism." Mr. Sherman's definition is as follows (page 2443): " I believe that the policy of the United States, adopted in 1853, of coining fractional silver coins, in limited quantities from silver bullion pur- chased at market price and making them legal tender for small sums, is the only way to preserve the parity of gold and silver coins at a fixed ratio. This is properly called bimetallic money." * * * * * « * MR. TELLER. (Page 2444.) The question here is, what did the Re- 346 FINANCIAL CATECHISM. publican platform mean by bimetallism? * * "* The question now is whether we who believe in bimetallism — as bimetallism is defined by the economic writers of the age — are recreant to Kepublican principles or whether we can be driven out of our party because we do not agree with this most astonishing, unheard-of, and unusual bimetallic definition of the Senator from Ohio, which it seems that the Eepublican party is about to accept. • * * * The Eepublican convention never sug- gested a bimetallism so ridiculous as I have read to the Senate (refer- ring to the above definition by Mr. Sherman). I believe if it had been suggested in the convention it would have been laughed out of the con- vention. "•■■' "'' "•■■ Why did we want to say anything about it if that was the kind of bimetallism? Everybody knew that you could not get along without subsidiary silver money, and that is all that the Senator is now contending for; and he is contending that when you have subsi- diary silver money you have got bimetallism. Does he mean to say Great Britain has bimetallism? Does he mean to say that Germany has got bimetallism because they use subsidiary silver money ? Mr. President, he knows better. Everybody knows better. Bimetallism means, as I have stated, the use of the two metals as legal tender money upon equal terms. Mr. Teller then introduced the following definitions of bimetallism : "Mr. Maurice L. Muhleman, deputy assistant treasurer of the Un- ited States, at New York, in his recent book, "Monetary Systems of the World," page 12, says: "By bimetallism, strictly defined, is meant the free and unlimited coinage of both gold and silver into coins of full debt-paying power." Next ia the definition given by the British commision created to examine this question : " A bimetallic system of currency, to be completely effective, must, in the view of those who advocate it, include two essential features; (a) an open mint ready to coin any quantity of either gold or silver which ma}- be brought to it; (b) the right on the part of the debtor to discharge his liabilities, at his option, in either of the two metals at a ratio fixed by law." Mr. Teller concluded his remarkable speech with these words (page 2445) : " It may be that for a time the advocates of the so-called sound money may deceive the people. They can not do it always. They can not do It long. If the Eepublican party puts itself under the lead of the Senator from Ohio and adopts the gold standard, it will be a party of the past, and the glory and splendor of its achievements will be ob- literated and destroyed in the infamy of that transaction." DISRAELI ON THE GOLD STANDARD. Before closing this chapter, it is desired to place in the history of finance, the opinion of a great statesman. FINANCIAL CATECHISM. 347 although it does not relate to American financial history. " In a, speech delivered at Glasgow, in November, 1873, Mr. Disraeli said: "The monetary disturbance which has occurred, and is now to a great extent acting very injuriously upon trade, I attribute to the great changes which the gov- ernments of Europe are making in reference to their standard of value. Our gold standard is ?io( the cause of our commercial prosperity, but the consequence of that prosperity." (Quoted by Senator Jones in tbe United States Senate, May 12, 1800.) CONSPIRACY TO DISCREDIT SILVER. In a Congressional debate, Mr. Morgan, of Alabama, called attention to the concert of action, amounting to a conspiracy, to discredit silver. Reading from a state- ment by Mr. Weston, who was Secretary to the Mone- tary Commision of 1876, and who is one of the best in- formed men in the world on financial matters, he said: "On the 8th inst. (November, 1878), a committee of these banks (New York Clearing House Association) had a conference at Washing- ton with Secretary of Treasury (Mr. Sherman) at which were present the Attorney General and some minor oflBcials. The result was a plan submitted by the banks on the 12th inst., and agreed to, only one bank representative (Mr. Colgate) objecting. The leading features of it, are first, that the banks will reject silver deposits, except as re-payable in kind; second, that silver shall not be allowed as clearing house money, except for small fractional sums not exceeeding $10; and third, that in respect to all payments by Government drafts on the New York banks or on the United States Assistant Treasurer at New York, they shall be cleared at the Clearing House in New York, at which a desk is to be as- signed to a representative of the United States treasury. At the bank meeting on the 12th, Mr. Colgate objected to the plan, that it could only mean " to fly in the face of Congress and declare the silver dollar that had been declared a legal tender, to be worthless." After reading the above, Mr. Morgan continued : " Now- there is the statement of Mr. "Weston. * * * I should like to know what that was but a discrimination by a Government ofScer and an agreement with the banks that they could reject silver and silver certificates? What did we do here? The very next Congress that met after this declarati m was made public, passed a law requiring that no national bank should become a member of any clearing house or exercise any privilege therein of any kind at all, unless they had agreed to take silver on deposits and use the silver certificates as the money through which the balances might be settled." (Cong. Eecord, 51st Congress, pages 7096-7). FINANCIAL CATECHISM. WHAT FIXES THE VALUE OF GOLD? Politicians, and particularly those adhering to the be- lief in a single gold standard, are so fond of reiterating that "cost of production " establishes the price of the money metals as well as of other things, that it is thought advisable to insert here the testimony of the best living experts on this subject. Alexander Del Mar, owing to his special fitness, was employed by the Monetary Com- mission of 1876, of which Senator Jones was chairman. Later he was Director of the IF. S. Bureau of Statistics. In 1880 he published his "History of the Precious Metals," in which we find this language, page 233 : " Reviewing what has been adduced concerning the influences which practically determine the ratio of value between gold and silver, it may- be said, briefly, that among these influences, cost of production finds no place at all; that the principal ones are the stocks of the precious met- als, and the laws concerning money." Again, on pages 281-2, we find the following : " Mr. Lewis A. Garnett, formerly Manager of the San Francisco As- saying and^ Kefining Works, whose vocation necessarily rendered him more or less familiar with the production and conditions of mining in California, published a pamphlet on the 'Rapid Decline of the Produc- tion of the Precious Metals in the United States,' dated San Francisco, 1869, on page 36 of which he calls gold and silver mining a ' very haz- ardous and unprofitable pursuit,' and continues as follows: ' Nearly all writers persist in repeating the old dogma of the political economists that 'the value of the precious metals depends upon the cost of produc- tion,' wAereas stfcA Aas mraer Jeera ^Ae case. * * ® Simply taking the minimum day's wages of the 100,000 men employed in minino-, and we have nearly $90,000,000 spent in wages to produce $50,000,000 in pre- ^^cious metals. It would be entirely safe to say, therefore, that every dollar produced cost two dollars.'" It will thus be seen that these distinguished writers entirely reject the idea sought to be engrafted on the public mind. THE LAW FIXES THE PRICE. In Chambers' Encyclopedia— edition 1869— Vol. I, page 667, or in the edition of 1888, Vol. I, page 711, it is stated that by the terms of the charter of the Bank pf England, granted in 1844, that corporation must pay FINANCIAL CATECHISM. 349 for all gold bullion or mutilated coins, the sum of $18.92 per ounce, or in English money, £3 ITs 9d. The mon- etary value of an ounce of gold was fixed at £3 17s lOJd. and the Bank was not permitted to "speculate" in bullion nor to discount it more than IJd per ounce, that being approximately the cost of coinage. If " free coinage " of gold by England is able to main- tain the above fixed price of gold bullion, then most cer- tainly would "free coinage" of silver at a fixed rate by the United States, maintain that metal at the fixed price, and this is especially true of us since this country produces most of the silver for the world. THE "DUMPING" THEORY EXPOSED. The monetary value of an ounce of silver, under free coinage at 16 to 1, is $1.29+ ; at 15Jto 1 (the French ra- tio) it is worth $1.33+ ; at 15 to 1 (the East Indian ra- tio) it is worth $1.37+. If our mints were opened to the free coinage of silver at the ratio of 16 to 1, all sil- ver would be worth $1.29 per ounce as it came from the mint ; but coins of France, the Latin Union, and India, ai;e worth more than $1.29 in their present form, and if they were brought here and coined they would lose 4 and 8 cents per ounce respectively of their present value. Hence, it is readily seen that coins of other countries would not be "dumped" here when such "dumping" could be done only at such loss to the owner. Silver bullion that might be denied free coinage elsewhere probably would seek our mints, but the existing coins of other countries would not seek our mints. 350 FINANCIAL CATECHISM. The vote on the Repeal Bill aryi on the principal amendments, was as follows : FOE FEEE COINAGE AT 16 TO 1. (Kecord 53d Cong., 1st Ses- sion, page 1,004, Aug. 28, 1893). Dem. Kep.. Pop.. IN THE HOUSE. Aye. 100 15 10 Nay. 115 111 125 226 (Same Volume, page 2920, Oct. 28, 1893). Dem. Eep.. Pop.. IN THE SENATE. Ave. 20 6 __5 31 Nay. 17 24 41 To revive the Bland- Allison law ; lb. page 1006, Aug. 28, 1893. IN THE HOUSE. Aye. Nay. Dem Ill 105 Eep 15 108 Pop J^ ™^ 136 213 lb. page 2920, Oct. 28, 1893. IN THE SENATE. Yea. Kay. Dem 20 17 Eep 8 20 Pop _5 ^^ 33 37 For unconditional repeal of the purchasing clause of the Sherman Act, of 1890 : lb. page 1008, Aug. 28, 1893. Dem. Eep.. Pop.. IN THE HOUSE. Yea. 138 101 Nay. 75 23 10 239 108 lb. page 2958, Oct. 30, 1893. Dem., Eep.. Pop.. IN THE SENATE. Yea. 20 23 43 Nay. 20 7 5 32 Vote on the Seigniorage Bill : Kecord 2d Session, 53d Cong., page 2524, March 1, 1894. Dem. Kep.. Pop.. IN THE HOUSE. Yea. 137 22 Nay. 62 77 168 129 lb. page 2981, March 15, 1894. Dem. Kep.. Pop.. IN THE SENATE. Yea. Nay. 30 10 10 21 __i 44 31 FINANCIAL CATECHISM. 351 Vote to pass the Seigniorage Bill over President Cleveland's veto : lb. page 3460, April 4, 1894. Dem. Eep.. Pop.. IN THE HOUSE. Yea. 118 18 Nay. 54 60 144 114 Vote on the Income Tax : Record 2(1 Session, 53d Cong., page 1795-6, Feb. 1, 1894. IN THE HOUSE. Yea. Nay. Dem , 166 44 Eep 6 4 Pop JO .^^ 182 48 117 Eepublioans refused to vote, trying to defeat the bill by- breaking a quorum. No vote on the Income Tax amendment to the revenue bill was obtained in the Senate, be- cause it was made a part of that measure by the House and no separate vote was had. CONTENTS. Page Preface 3 CHAPTER I. What Constitutes Money 7 Intrinsic Value 9 Change of Legal Value of Coins 10 Loss of Coin by Abrasion 16 Coining Money an Act of Sovereignty 22 Money is Created by the Fiat of a Nation.. 26 French Fiat Money 30 CHAPTER II. Paper Fiat Money 32 Continental Money 34 French Assignats 36 The Different Kinds of Legal-Tender Money 38 The Difference Between Money Issued by the Government and that Issued by the Banks 40 Opinions of Eminent Men 46 The Old United States Banks 62 Decisions of the Supreme Court 52 Citations by John M. Bright 54 Three Points Definitely Settled 57 CHAPTER III. Page How Money Obtains Value 58 How Money Acts as a Medium of Ex- change.... 60 The Effect of the Scarcity of Money 63 Money Crystallized Labor 67 Usury 69 Example 71 CHAPTER IV. Banks and Banking 80 Bank Commissioners' Report 81 The Banks and the Government at the Commencement of the War 82 What it Cost to Adopt the Bond Policy 85 The Legal Tender Act 89 Did Resumption Bring the Greenback to Par 92 The Intention to Perpetuate the Bonds 93 Amount of Legal-Tenders Provided For.... 94 Market not Controlled by Gold 96 Enactment of the National Banking Law.. 97 Legal- Tender Notes Depreciated 108 Interest Paid in Advance 112 362 FINANCIAL CATECHISM. CHAPTER V. Page Time Restricted for Converting Green- backs 115 Araoiint of Money in June, 1866 116 Acts of Congress Changing Contracts.. 120 Financial Failures 123 Wild Speculation and Extravagant Credit.. 125 Bank Notes Excluded from the Treasury.. 129 Panicof 1867 130 Prosperity Under Suspension of Specie Payments 134 CHAPTER VI. Stopping Contraction in 1868 138 The Next Step in the Bankers' Program.... 140 The Credit Strengthening Act 143 CHAPTER VII. Repeal of the Income Tax.. ., 156 Jay Cook's Appeal 158 Amount of Property Exempted 160 Demonetization of Silver Determined on... 167 Specification of Resumption Act 169 Grant's Letter to Cowdry 172 Grant's Letter to Long 173 History of the Act of Demonetization 174 CHAPTER VIII The Resumption Act 181 The Canvass of 1876 189 Demonetization of the Trade Dollar 192 The Panic of 1876, '77 and '78 194 Expressions of the Servants of the Money Power 195 The Banks Refuse to Respond 199 Remarks of Senator Ingalls 201 Remarks of Senator Vorhees 203 Remarks of Hon. James A. Garfield 205 Bill Remonetizmg Silver 209 Veto Message 210 Passage of Bill Over Veto 213 The Money Power Combined Against It.... 215 Passage of the Bill to Prevent the Further Destruction of Greenbacks 217 CHAPTER IX. Campaign of 1878 220 Garfield and Wood's Bond Bills , 221 The Weaver Resolutions 222 Vote on the Resolutions 235 The Three Parties and Their Platforms 237 The Vote of Each Party 245 The 3 per cent. Funding Bill 247 Veto Message 250 Remarks 252 Extention of National Bank Charters 254 Page The Crisis and the Remedy (A speech de- livered by Dr. S. M. BrlceJ 257 Senator Edmunds' Remarks on the 3 per cent. Funding Bill 259 Treasurer Gilfillin's Report 261 What Constitutes Money 267 James A. Garfield's Remarks 270 lieport of Chamber of Commerce 277 Hon. John Sherman's Speech 279 National Banking Laws 286 Articles of Confederation 286 Legislation Relative to Bonds and Cur- rency ..296 Strengthening the Public Credit 308 Power of Congress to Coin Money — Tif- fany 312 How National Banks Evade the Law 316 Extending Existence of National Banks.... 320 APPENDIX B. Business Failures (Table) 324 Purpose of Plutocracy , 326 Arthur's Message 327 Cleveland's First Annual Message 330 Use of Silver Constantly Increasing. 330-1 Harrison's First Message 331-2 Repeal of Sherman Law of 1890 .,. 333-5 Sherman in 1878 335-6 Sherman in 1890 336 Sherman's False Prophecy 337 Seigniorage Bill 333 Veto of Same 333 Carlisle's Sharp Practice 338 Relation of Government to Currency 339 Carlisle-Cleveland Bank Plan 339 Retirement of Legal-Tenders 340 Persistent Toryism 341 Venezuelan Message 342 Bond Message 342 Republican House Obeys Cleveland 342 Silver Amendment to Bond Bill 342-3 Revenue Bill 343 Piatt and Aldrich Refuse SUver on any Terms 344.5 What is Bimetallism 345-6 Disraeli on the Gold Standard 346 Conspiracy to Discredit Silver 347 What Fixes the Value of Gold 343 The Law Fixes the Price 348 Chamber's Encyclopedia ' .. 343 The "Dumping" Theory Exposed 849 Value of Silver at Various Ratios 349 Vote on Free Coinage 16 to 1 350 Vote on Reviving Bland-Allison Law..!!.!! 350 Vote on Unconditional Repeal of Law of 1890 360 Vote on Coining Seigniorage 350 Vote on Veto of Above Bill 351 Vote on Income Tax Measure 351 ..-^'