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A RESOURCE OF AVAR THE CREDIT OF THE GOVERNMENT
MADK IMMEDIATELY AVAILABLE.

HISTORY
LEGAL TENDER PAPER MONEY
ISSUED DURING THE

GREAT REBELLION.
*0au toifbmtt

jtntmst anb

a ilafiomtl fetmnrji.

PREPARED BY

Hon. E. G.

SPA ULDING, Chairman,

THE SUB-COMMITTEE OF WAYS AND MEANS, AT THE TIME
THE ACT WAS PASSED.

In such a nation as this, there is one and only one RESOURCE for loans sufficient to carry
hrongh the expenses ol a GREAT WAR, namely, fundable Treasury Notes fitted for circulation
as money, and based upon adequate taxation.
;

That in the interval between war and war. all the outstanding paper should be called in
and hold the field of circulation, until another war should re

coin permitted to flow in again,

quire

its

yielding place again to the

NATIONAL MEDIUM.

BUFFALO
EXPRESS PRINTING COMPANY,

1869.

14

; '

JEFFERSON.

:

EAST SWAN STREET,

\

INDEX.
PAGHE.
-

Introduction,

No National Currency at commencement
War carried on upon credit and taxation,
Legal Tender act a War measure,
Loan of

$150,000,000

of

-

5
5

-

by the Associated Banks,

7

Who composed the

Committee of Ways and Means, Sub-Committee, Messrs. Spaulding, Hooper and Corning,
Secretary Chase's financial plan, a bank and taxation,

-

-

-

7
-

8

-----------

10

-

-

811

-

Mr. Chase does not recommend legal tender,
bill prepared by Mr. Spaulding,
Erastus Coming's letter on the Bank bill,

Bank

1112

---

12

Origin of the Legal Tender act,
Legal Tender bill introduced by Mr. Spaulding,
Ways and Means divided on the bill,

Opinion of Attorney General Bates,

Ways and Means

5

------529

War,

agree to report the

13
14

-..----15

bill,

-

15

-

-

-

-

16

by Mr. Spaulding,
Mr. Spaulding's letter to Isaac Sherman. New York,
Isaac Sherman's letter,
The Press in New York opposed to the act,
Bill reported

ia

----------is

17

19

Meeting of Bank Delegates in Washington to oppose the bill,
Meeting of Delegates and Committees at Treasury Department,
Their plan to raise money to carry on the War,
Secretary Chase modifies their plan,
Opposition to the Bank plan,
Letters of M. H. Grinell, L. F. Allen and Mr. Ganson,
Letters of J. W, Simonton, T. Denny & Co., J. E. Williams,
Section for $500,000, 000 of 5-20 bonds,
Letter of Secretary Chase, January 22, 1862,
National Intelligencer, Col. Seaton, etc.,
Mr. Spaulding's opening Speech on the bill,

-

19

-

-

20

-

19

21

22
-

23
-

2425
-

26
27

------

Value of the Real and Personal property, $16,159,616,068,
Mr. Vallandigham offers a substitute,
Mr. Pendleton's Speech on the bill,

-

-

28
28
41

43
-

43

Iv

Mr. Coming's resolution asking opinion of Secretary Chase,
Secretary Chase's opinion of the propriety and necessity of the
Mr. Chase's letter to Mr. Spaulding, Jan. 30th,
Letters of John A. Stevens, George Opdyke and R. Morris,

-

-

45

45

bill,
-

46
47

4849
4050
5152

Letters of Stephen Colwell, M. S. Hawley, J. H. Van Antwerp, Letters of Robert Dennison, C. H. Russell, Mr. Lord, Mr. Prosser,
Letters of George B. Butler, T. W. Olcott and others, -

---------52
---_...__

Mr. Vallandigham's Speech,
Mr. Hooper's Speech,
Mr. Ro'scoe Conkling, Mr. Merrill, Stevens and Spaulding,
Mr. Conkling as to Secretary Chase's position,
Secretary Chase's letter in favor of bill,
Mr. Merrill's Speech against legal tender,

54

55

5758
5859

-

------

Mr. Roscoe Conkling's Speech against legal tender,
Mr. Bingham, of Ohio, in favor of the bill,
Mr. Sheffield, Crisfield and Pike, -

-

-

-

Order to close debate passed,

66

6869

-

-

71

71
72

-

-

-

bill

64
-

Mr. Alley, of Massachusetts, in favor of the bill, Letter of Secretary Chase urging immediate action,
Mr. Spaulding's motion to close debate opposed, Mr. Horton and Mr. Wright oppose the bill,

Proceedings on the day the
Mr. Kellogg' s Speech,

59

go

73
-

passed the House,

74

-

75
-

Mr. Thomas and Mr. Edward's Speeches,
Mr. Riddle and Blake's Speeches,
Mr. Campbell's Speech,
Mr. Spaulding and Stevens' Speeches closing debate,
Five minute Speeches continued, Mr. F. A. Conkling, Shellabarger, Hickman, Mr. Lovejoy and Walton,

75
77

-------

78

.79
80

81

-

85

----------

92

Motion to strike out legal tender clause lost,
Confusion and excitement on taking vote,

The

substitute of Mr. Morrill, Conkling

Bill passed

$10,000,000

yeas

-

and others

nays 54,
Copy of bill as passed the House February 6,
George Dawson's letter to Albany Journal,
Proceedings in Senate on the bill, ;

-

8587
8891
9192

-

lost,

92, 93,

demand

notes for temporary

1862,

relief,

-

,

Senate Finance Committee propose amendments,
Mr. Fessenden's opening Speech, -

Speeches by Judge Collamer and Mr. Howe, Speeches by Chandler, Wilson and Sherman,
Speeches by Cowan, Doolittle, Simmons, Bayard,
Speeches by Willey, Howard, McDougall, Speech by Mr. Sumner,
Motion to strike out legal tender clause lost,

94

9596
6667

93,

-

98

99100

-----

-

99

100
100

106107

109, 110, 111
-

114, 115, 116

'-'------

Speeches of King, Pearce, Salesbury, Powell,
Bill passed the Senate 30 to 7,
Letter of J. W. Simonton on the origin of legal tender

-

117,118,119

--121
121
-

-

122

122

123

-

act,

-

124
-

-

124

-------

Objection in House to Senate amendments,
Mr. Spaulding's Speech opposing them,

125

Speeches by Pomeroy, Calvert, Morrill, Dunn, English, Speeches by Pike, Diven, Windom, Pendleton,
Speeches by Hooper and Stevens close debate on amendments,

-

Copy of legal tender

-

.

140

-

-

-

act,

---------------

in Sub-Treasury,

Certificates of indebtedness,

-

more

$60,000,000
legal tender declared,
Secretary Chase asks for $150,000,000 more,
Secretary Chase asks for small bills less than $5,
Action of Committee of Ways and Means on this,
Mr. Spaulding's Speech upon it,

-

-

-

-

-

Interest-bearing Treasury Notes,

Our only hope

156
157

163

-

-

-

-

165

-

167

------------.-----------------

167

167

-

-

-

-

-

168
170

-

2, 1863,

in military success,
$100,000,000 legal tender to pay the army,
is

155

163

from Committee,

Constitutionality of a National Bank,
Constitutionality of State Banks,

153

165
-

again recommended by Secretary Chase,

Spaulding's opening Speech upon it,
Particulars of the National Debt, Jan.

152
152

-162

-

-

Postage Stamps and Fractional Currency,
bill

148

161

Shinplasters prohibited, 2d Section of the act,

Bank

146
147

154
-

--------

$900,000,000 loan bill reported

144

145

154

------------

Mr. Colfax's Speech and Mr. Stevens',
Yeas and nays on passage of this bill,
Passed the Senate ; yeas 22, nays 13,
Copy of second legal tender act,

141

149

February 25, '62,
Samuel Wilkeson's letter to N. Y. Tribune,

Temporary deposits

127

133138
139140

----------------------

Yeas and nays to pay soldiers and sailors in coin,
Yeas and nays to pay interest in coin,
Yeas and nays to sell bonds at market value,
Yeas and nays to lay bill on table,
Conference Committee bill passed,

-

12G

172

172

-

-

-

-

180181

178
179

Mr. Gurly's Speech on market value of bonds,

181

Secretary Chase's special letter on Bank bill,
Special resolution passed to pay Soldiers,
President Lincoln's Special Message on the resolution, Morrill, Ward and Amasa Walker's Speeches on the

182

Loan Act,
Substitutes of Hooper
$900,000,000

Loan

Synopsis of the

and Stevens

Bill passed

bill as passed,

-

-

-

-----.-__-------

-184
185

185

both Houses,
-

nays,
No National Currency issued until 1864, The right to convert notes into bonds at par abrogated,
;

Jay Cook negotiates $500,000,000 of

5-20 bonds,

183

$900,000,000

lost,

Bank bill passed yeas and

182

-

-

-

-

-

Mistake of the Secretary in not continuing funding,
Mr. Spaulding's two letters to Morris Ketchum on the subject,

186

186187
187188
189
-

-

-

188

189

190

vi

*
Morris Ketchum's reply, March 21, 1864,
-195
*
Second letter of Mr. Spaulcling to Morris Ketchum,
195
Mr. Chase resigns W. P. Fessenden appointed Secretary Treasury, - 198
Geo. Harrington Secretary of Treasury, ad interim,
198

Gold

$2. 50 at the

-------

Board of Brokers,

Great inflation of the currency,
Gold $2.85^ Gold bill in force only 15 days,
Legal tender U. g. notes limited to $400,000,000,
All bonds, notes and other obligations exempt from taxation,

198

198199

....

How Secretary McCulloch paid the Army at close

of the War,

Tariff

-

-

200

-

200

-

-

...

$830, 000, 000 of 7-30 Treasury notes issued,
Statement of Public Debt at the close of the War,
National Bank circulation, $185,000,000,

199

199

201

200

.......
-------------

201

and Internal Ke venue laws,

Contraction of the currency,
Secretary McCulloch on contraction,
Mr. Alley's Resolution in favor of contraction,

301
202

-----

202

202

---------------

Yeas and nays on Mr. Alley's resolution in the House,

-

-

-

202

Contraction of the currency suspended,
Public Faith Debt to be paid in coin,

Yeas and nays on this bill,
U, S. Grant approves the bill,
Decision of State Courts on the constitutionality of legal tender,
Coin contracts decided valid by U. S. Supreme Court,
Conclusion

summing

204
205

-

--------

up,

203
203

-

205

206
208

213

APPENDIX.
Mr. Spaulding's Speech on the National Currency Bank
.

19, 1863,

bill,

.

February
-

i_9

.

913

Letter of Mr. Spauldingto J. N. Orvis. Esq.,
Letter of Mr. Spaulding to Hon. H. K. Hubbard, Comptroller of
Currency,'

-----------

13

18

Secretary McCulloch's reply,
National Debt No repudiation,

No

1921

State taxation of U. S. Bonds,
Mr. Spaulding's letter to Senator Morgan,

Letter of Fisk

17

---------18
-------------24
--------&
----------27

Letter of Mr. Spaulding to Secretary McCulloch,

22

2224

& Hatch to the Assistant Secretary

of the Treasury,

-

24

Assistant Secretary's reply,

Mr. Spaulding's remarks,
Secretary McCulloch's letter to L. P. Morton

Mr. Spaulding's remarks,
F. E. Spinner's letter to Mr. Spaulding,
National Currency Legal Tender,
Mr. Spaulding's letter to Secretary McCulloch,

24

------...

President Lincoln's Veto,
Mr. Spaulding's Speech, May 3d, 1862.

27

27

Co.,

-

-

28

2833
3435
36

-

-

-

-

-

3740

HISTORY
OF THE

LEGAL TENDER ACT
The United

States, at the breaking out of the rebellion,

had no

national bank currency, and no gold or available means in tlio
Treasury, or Sub-Treasury, to carry on the war for the Union, and
consequently the means to prosecute the war had to be obtained

of the government, and by taxation. The fundablc
legal tender currency was the most available form of credit which
the government could use in crushing the rebellion. It was at once

upon the

credit

a loan to the government without interest, and a national currency,
which was so much needed for disbursement in small sums during
It was indispensably necesthe pressing exigencies of the war.
and a most powerful instrumentality in saving the governsary,
ment and maintaining the national unity.

Experience has proved that, notwithstanding it was a forced
loan, the end justified the means, and that no parties were materi-

by being compelled to receive this currency, so long
it at any time in six per cent, twenty j^ears
a measure of necessity
it was a war measure
bonds.
Although
and not of choice, and could only be justified on that ground,
it has, for many years, exerted a most decisive influence over the
property and material interests of every individual in the United
States.
It has affected debtor and creditor, producer and consumer, and the price of labor and of every article consumed in

ally injured

as they could fund

It still exerts a mighty influence socially,
and politically, over the people of this great nation,
commercially
and all the ramified and extensive business in which they aiv

every household.

Whether for good or evil, it has been and still is a
engaged.
most powerful element in all business affairs of the people, as well
as the government, and the war debt of $2,500,000,000 incurred in
maintaining the national union is more or less affected by the
large volume of this currency still outstanding.
Having been requested to prepare a history of a measure of
such transcendent importance as the legal tender act, and having
in my possession a considerable number of documents, letters, and
other materials relating to the subject, I have consented to put them
into form, in order that the facts may be preserved for present

and future reference, and which may be of some use in enabling
the future historian to write a chapter on the financial history of
the war.
These facts will be presented in the form of a narrative
of the circumstances and events, of the most grave and extraordinary character, occurring in rapid succession, which led finally

tender Treasury notes, and which were
endowed with the attributes of money, so far forth as the Government had power under the Constitution and the pressure of the
crisis to impart to a paper currency that high and most important
to the issue of legal

attribute of sovereignty.
I was a somewhat prominent

though humble actor in originating
and maturing the measure, but I do not claim any particular merit
or demerit for what I did in preparing and aiding to secure the
I was placed in a position where, if I
passage of the bill.
performed my official duty, I must act, and must act with vigor
and promptitude. The perilous condition of the country did not

admit of hesitancy or delay. I endeavored, in the peculiar and
responsible position in which I was placed, to do what I conceived
to be my duty, and that is all I claim to have done.
My assoperformed their duty with equal fidelity and usefulness.
of the Sub-committee of Ways and Means, it
became my duty, in connection with my associates, to devise an
ciates

As chairman

adequate plan for obtaining the necessary means for prosecuting
the war to a successful issue.
The rebellion, after the battle of

most gigantic proportions. An Army and
of over half a million of men had been hastily brought into

Bull Run, had assumed

Navy

The Capitol itself was guarded
a vast Army, under the command of General McClellan,
by
which encircled it in all directions. The Army and Navy thus

the service of the United States.

in the service "had to be paid, fed, clothed
ships,

gunboats,

monitors and

all

the

and provided with

necessary material of

war to make them

in

effective

crushing the rebellion.

This

means; where were these means to
be obtained? It was plain that they must come from the loyal
people themselves, and that, from whatever source these means
were to come, they must be obtained, as before stated, upon the
credit of the government, then assailed and weakened by armed
required

vast

available

rebellion.

The banks in New York, Boston and Philadelphia had, during
the summer and fall of 1861, loaned to the government very nearly
the sum of $150,000,000 in gold, which had so exhausted their
resources that it was very difficult for many of them to pay the
last instalments

due on the

last

loan of $50,000,000.

These

commencement of

the war, possessed a large part of
the available gold in the country, but in paying over to the
Treasurer the gold on these loans, and in the disbursement of the
banks, at the

same

to sustain the

Army and Navy,

it

became so scattered that

it

could not, to any considerable extent, be re-loaned to the government, nor could it any longer be made available as a reserve for

The banks were consequently

danger of
assembled at its
suspending specie payments
Congress
regular session in December, of that year.
Congress met on the
2d December, 1861.
The House, having been organized at the
the banks.

in great

at the time

Extra Session in July by the election of the Hon. Galusha A.
Grow, Speaker, proceeded at once to business.
On the 5th, the Vacancies in the Standing Committees were
filled up.
Hon. Samuel Hooper, of Mass. a new member, was
,

appointed on the Committee of Ways and Means in place of Samuel Appleton, deceased; and Hon. Horace Maynard in place of

Hon. John A. McClernand, who had been appointed a Brigadier General in the volunteer army.
The Committee of Ways
and Means then consisted of

THADEUS STEVENS, of
JUSTIN

S.

Pa.

MORRILL, of Vt

JOHN S. PHELPS, of Mo.
ELBRIDGE G. SPAULDING, of N. Y,
VALENTINE B. HORTON, of Ohio.
ERASTUS CORNING, of N. Y.

SAMUEL HOOPER, of Mass*
HORACE MAYNARD, of Tenn,
JOHN L. N. STRATTON, of
Owing

to the pressure of business* in the Treasury Department,

Secretary Chase did not get his Annual Report ready to submit to
the House until the 10th, and it was not printed and laid on the
table of the Committee of Ways and Menus until nenr the middle

of December.

Soon

after the report of the Secretary of

the Treasury

was

a large volume of business in the Committee
to be disposed of, the Committee agreed to the appointment

received, finding

room
of two Sub-committees, namely,
One Committee on the National Currency bank
loans, issue of Treasury notes, bonds,

the

means

to carry

bill, making ot
and the mode of raising

on the war, consisting of
Mr. SrAULT)iX(i,

Mr. HoorKu,

Mr. CORNIX<;.

The other Committee was appointed on the

Tariff,

Internal

Revenue, and taxation generally, consisting of three or four
members, Mr. Morrill of Vermont, being chairman. The appropriation bills were then in course of preparation, Mr. Stevens
devoting a good deal of time in perfecting and passing them
through the House, as chairman of the General Committee. Mr.
Phelps was at this time absent in Missouri, and remained absent
which

for several weeks, looking after public affairs in that State,

were then in a

ver}^ disturbed condition.

The Committee of Ways and Means having thus divided the
and having referred the papers and documents to
these Sub-committees, the Committee was prepared for efficient
subjects before

it,

work.

The Sub-committee, of which Mr. Spaulding was chairman,
examined with care the report of the Secretary of the Treasur}
to ascertain what measures he proposed for providing the ways
and means to support the government and carry on the war. Here
r

,

follows an extract from that part of the Secretary's report which
was referred to this Sub-committee, viz:

To enable the government to obtain the necessary means for prosecuwar to a successful issue, without unnecessary cost, is a problem
which must engage the most careful attention of the Legislature. The
44

ting the

Secretary has given to this problem the best consideration in his power,
and now begs leave to submit to Congress the result of his reflections.
The circulation of the banks of the United States on the 1st day of

Of this circulation,
to be $202,000,767.
round numbers, was in the States now loyal, including
Western Virginia, and $50,000,000 in the rebellious States. The whole of
this circulation constitutes a loan without interest from the people to the
January,

1861,
$150,000,000, in

was computed

9

nothingexcepttheexpen.se of issue and redemption
on the specie kept on hand for the latter purpose; and it
deserves consideration whether sound policy does not require that the
advantages of this loan be transferred, in part at least, from the banks,
bank.-, cost in- iliem

and

l.Iio

interest

representing only the interests of the stockholders, to the Government,
representing the aggregate interests of the whole people.
It has been well questioned by the most eminent statesmen whether a

currency of bank notes, issued by local institutions under State laws, is
by the National Constitution. Such emissions
certainly fall within the spMt, if not within the letter, of the Constitutional prohibition of the emission of "bills of credit" by the States, and of
the making by them of anything except gold and silver coin a legal tender
in payment of debts.
However this may be, it is too dear to be reasonably disputed that Congress,
under its Constitutional powers to lay taxes, to regulate commerce, and to regulate
not, in fact, prohibited

the value of com, possesses ample authority to control the credit circulation which
enters so largely into the transactions of commerce, and affects in so many ways

In the judgment of the Secretary, the time has arrived when
Congress should exercise this authority. The value of the existing bank-note
circulation depends on the laws of thirty-four States, and the character of
the value of coin.

some sixteen hundred private corporations. It is usually furnished in
greatest proportions by institutions of least actual capital, circulation com,

monly,
large

is

and

in the inverse ratio of solvency.
Well-founded institutions, of
solid capital, have, in general, comparatively little circulation;

weak corporations almost invariably seek to sustain themselves by
obtaining from the people the largest possible credit in this form. Under
such a system, or rather lack of system, great inductions, and heavy losses
in discounts and exchanges are inevitable, and not unfrequently, through
failures of the issuing institutions, considerable portions of the circulation
become suddenly worthless in the hands of the people. The recent
experience of several States in the valley of the Mississippi, painfully
illustrates the justice of these observations; and enforces, by the most
cogent practical arguments, the duty of protecting commerce and industry
against the recurrence of such disasters.
The Secretary thinks it possible to combine with this protection a
provision for circulation, safe to the community and convenient for the
while

government.

Two plans for effecting this object are suggested. The first contemplates the gradual withdrawal from circulation of the notes of private
corporations, and for the issue, in their stead, of United States notes,
payable in coin on demand, in amounts sufficient for the useful ends of a
The second contemplates the preparation and
delivery, to institutions and associations, of notes prepared for circulation
under national direction, and to be secured as to prompt convertibility
into coin by the pledge of United States bonds and other needful regula-

representative currency.

tions.
1. The first of these plans was
partially adopted at the last session of
Congress, in the provision authorizing the Secretary to issue United States
That
notes, payable in coin, to an amount not exceeding $50.000,000.
provision may be so extended as to reach the average circulation of the
country, while a moderate tax, gradually augmented, on bank notes, will
relieve the national from the competition of local circulation. It has been
already suggested that the substitution of a National for a State currency,

1

would be equivalent to a loan to the Government without
except on the fund to be kept in coin, and without expense,
except the cost of preparation, issue and redemption ; while the people
would gain the additional advantage of a uniform currency, and relief
from a considerable burden in the form of interest on debt. These advantages are, doubtless, considerable and if a scheme can be devised by which
such a circulation will be certainly and strictly confined to the real needs
upon

this plan,

interest,

;

of the people, and kept constantly equivalent to specie by prompt and
certain redemption in coin, it will hardly fail of legislative sanction.

The plan, however, is not without serious inconveniences and hazards.
The temptation, especially great in times of pressure and danger, to issue
notes without adequate provision for redemption

;

the ever-present liabil-

be called on for redemption beyond means, however carefully provided and managed; the hazard of panics, precipitating demands for coin,
concentrated on a few points and a single fund the risk of a depreciated,
and depreciating, and finally worthless paper money the immeasurable
all these are
evils of dishonored public faith and national bankruptcy
ity to

;

;

;

possible consequences of the adoption of a system of Government circulation.
It may be said, and perhaps truly, that they are less deplorable

Without entering into that
than those of an irredeemable bank circulation.
co?nparison, the Secretary contents himself with observing that, in his judgment,
those possible disasters so far outweigh the probable benefits of the plan, that he
feels

2.

himself constrained to forbear recommending its adoption.
The second plan suggested remains for examination.

Its

principal

a circulation of notes bearing a common impression,
and authenticated by a common authority; second, the redemption of
these notes by the associations and institutions to which they may be
delivered for issue; and, third, the security of that redemption by the
pledge of United States stocks, and an adequate provision of specie.
In this plan the people, in their ordinary business, would find the advantages of uniformity in currency; of uniformity in security; of effectual
features are:

first,

safe-guard, if effectual safe-guard is possible, against depreciation ; and
of protection from losses in discounts and exchanges; while in the operations of the Government, the people would find the further advantages of
a large demand for Government securities, of increased facilities for ob-

taining the loans required by the war, and of some alleviation of the burdens on industry through a diminution in the rate of interest, or a participation in the profit of circulation, without risking the perils of a great

money monopoly,

A further and important advantage to the people may be reasonably
expected in the increased security of the Union, springing from the common

interest in its preservation, created by the distribution of its stocks
throughout the country, as the basis of their circulation.

to associations

The Secretary
desirable,

it is

entertains the opinion that if a credit circulation in any form be
most desirable in this. The notes thus issued and secured

would, in his judgment, form the safest currency which this country has
ever enjoyed ; while their receivability for all Government dues, except
customs, would make them, wherever payable, of equal value as a currency in every part of the Union. The large amount of specie now in the
United States, reaching a total of not less than $275,000,000, will easity
support payments of duties in coin, while these payments and ordinary
demands will aid in retaining this specie in the country as a solid basis,
both of circulation and loans.

11

The whole

circulaiion of

tin-

country, except a limited

amount of foreign

coin, would, after the lapse of two or three years, bear the impress of the
nation, whether in coin or notes; while the amount of the latter, alw.-iy-

and. of course, always generally known,
easily asoertalnable,
be likely to be increased beyond the real wants of business.

would

not

an opinion in favor of this plan with the greatest confidence, behas the advantage of recommendation from experience.
It is not an
In the State of New York, and in one or more of the other
ry.
States, it has been subjected, in its most essential parts, to the test of
///

<>.r/>rc*se$
it

rxjH-rimcnt. and has been found practicable and useful.
of success will not be diminished, but increased by
national sanction, and for the whole country.
It

only remains to add that the plan

is

The
its

probabilities

adoption under

recommended by one other con-

sideration, which, in the judgment of. the Secretary, is entitled to much
influence. It avoids almost, if not altogether, the evils of a great and sud-

den change in the currency, by offering inducements to solvent existing
institutions to withdraw the circulation issued under State authority and
substitute that provided by the authority of the Union. Thus, through
the voluntary action of the existing institutions, aided by wise legislation,
lie groat transition from a currency heterogeneous, unequal, and unsafe,
I

to

one uniform, equal, and

safe,

may be

speedily and almost imperceptibly

accomplished.
If the Secretary has omitted the discussion of the question of the Constitutional
r of
Congress to put this plan into operation^ it is because no argument i$

pair,

necessary to establish the proposition that the power to regulate commerce and the
value of coin includes the power to regulate the currency of the country, or the
collateral 2'>roposition that the

the necessary

power
axd expedient means.

to affect the

end includes

the

power

to ctdojif

Tin'. Secretary entertains the hope that the plan now submitted, if
adopted with the limitations and safe-guards which the experience and
wisdom of Senators and Representatives will, doubtless, suggest, may
impart such value and stability to Government securities that it will not be difficult

obtain the additional loans required for the service of the current and the sucand reasonable rates; especially if the public credit be
supported by sufficient and certain jwovision for the payment of interest and
to

ceeding year at fair

1

ultimate redemption of the principals'

Finding from the above extracts from the report of Secretary
Chase that he forbore to recommend the issue of United States
Treasury notes to circulate as money, and that he did recommend
the National Currency bank bill, Mr. Spaulding, as chairman of the
Sub-committee, addressed a note to the Secretary requesting him
to furnish the draft of a bank bill for a national
currency based
on a pledge of public stocks, as recommended in his report, and
received the following reply:

TREASURY DEPARTMENT.
Dec. 18th, 1861.
SIR:

^
$

have the honor to acknowledge the note of the Committee of
Ways and Means of this date, covering the note of yourself as chairman
of the Sub-committee, requesting him to furnish the draft of a bill for a
[

12
national currency based on the pledge of public stocks. Thei Secretary of
New York, will give to your request his

the Treasury, who is now in
prompt attention on his return.

With great

respect,

GEO. HARRINGTON,

Acting Secretary of the Treasury.

To HON. E. G. SPAULDING,
Ch. of Sub-Corn, of

On

Ways and Means, H.

the return of the Secretary from

ed that no National Currency bank

New

bill

York,

R.
it

was ascertain-

The

had been prepared.

Secretary then requested Mr. Spaulding to prepare a bill at as
Mr. Spaulding, as chairman of the Sub-

early a day as possible.

committee, immediately set to work at his rooms at the National
Hotel in preparing the first draft of the bill, which was there
copied by Mr. George Bassett, clerk of the Committee of Ways
and Means. This was during the Christmas holidays Congress
;

adjourning over two or three days at a time, without doing
business, no

quorum being

much

present.

On the 24th inst. Mr. Spaulding wrote a letter to Mr. Corning,
then at Albany, informing him that he was making a draft of the
National Currency bank bill, and requesting that he would forward a copy of the New York Free Banking Law, passed in 1838,
Mr.
and amendments thereto, for the use of the Committee.
and returned the
Corning promptly complied with this request,
following reply

:

ALBANY, Dec.

26,

1861.

MY DEAR

SIR I am this morning in receipt of your favor of the 24th
inst.
I send you by this day's mail a copy of our Bank Laws, with
amendments passed since 1856. This matter, as recommended by Secretary
Chase, will not, in my judgment, meet the approval of our State, hence I think
much care should be had in drawing up the bill.
Yours, very truly,

ERASTUS CORNING.

Hon. E. G. SPAULDING, Washington.

When

the frame

work of the

bill

was nearly completed,

it

was

submitted to Mr. Hooper, the only other member of the Subcommittee then in Washington, Mr. Corning having gone to
Albany.
the

bill.

Mr. Hooper rendered valuable assistance in perfecting

He

ence in his

incorporated into it some provisions which experiThe bill was
State had shown to be valuable.

own

completed soon after Christmas. A few days thereafter the
National Currency bank bill, thus hastily prepared, was sent by
Mr. Spaulding to the public printer, and two hundred copies

finally

printed for the use of the Committee of

Ways and Means and

13
the Secretary of the Treasury, with a view of having it more
maturely considered in the General Committee, amended ami

and

corrected,
this

printed

finally to

are

bill

be reported to the House.
Copies o!'
in the possession of Mr. Spuulding,

still

the chairman of the Sub-committee,

which formed the basis of the

adopted more than a year afterwards.
Mr. Spaulding, while preparing the national currency hank bill,
upon mature reflection came to the conclusion, that it could not l;e

bank

bill

which was

passed and

made
the

finally

available quick enough to meet the crisis then
Government for money to sustain the Army and

pressing upon
Navy. He therefore drafted a legal tender Treasury note section
to be added to the bank bill, hoping, at 'first, that it might be made
available by issuing legal tender notes direct from the Treasury,
while the bank bill was put in operation throughout the country.
In order to bring the subject of issuing legal tender fundable notes

before the country, the section thus prepared by Mr. Spaulding
was furnished to the New York Tribune, and published in the
issue of the 31st

"That

by

for

December, 1861, and

is

as follows:

temporary purposes, and until the circulating* notes authorized
be issued and put in circulation by corporations and

this act shall

associations to the aggregate

amount of

$100,000,000, the Secretary of the

Treasury be, and he is hereby authorized to issue $50,000,000 of Treasury
notes on the faith of the United States, payable on demand, without specifying any place of payment, and of such denominations as he may deem
expedient, not less than $5 each, which shall be receivable for all debts and
demands due to the United States, and for all salaries, dues, debts and
demands, owning by the United States to individuals, corporations and associations within the United States and such Treasury notes shall also be
a legal tender in payment of all debts, public or private, within the
United States, and shall be exchanged at any time at their par value, the
same as coin, at the Treasury of the United States, and the offices of Assistant Treasurers in New York, Boston, Philadelphia, St. Louis and Cincinnati, for any of the coupon or registered bonds which the Secretary of the
Treasury is now, or may hereafter be authorized to issue and such Treasury notes may be re-issued from time to time, as the exigencies of the public service may require.
Such Treasury notes shall be signed by the
Treasurer of the United States, or by some officer of the Treasury Department designated by the Secretary of the Treasury, and shall be countersigned by the Register of the Treasury, or by some officer of the Treasury
Department designated by the Secretary of the Treasury for the Register.
And all the provisions of an act entitled " An act to authorize the issue
;

;

of Treasury notes, approved the 23d day of December, 1857," so tar as the
same can be applied to the provisions of this section, and not inconsistent
therewith, are hereby revived and re-enacted."'

Upon more mature

consideration and further examination, Mr.

Spaulding came to the conclusion that the bank

bill,

containing

14
sixty sections, could not, with the State banks opposed to it, be
passed through both Houses of Congress for several months, and

The
Union cause.
Boston and Philadelphia, had just suspended
York,
specie payments, which compelled a general suspension of coin
payments by the Government, and all the other banks throughout
that so long a delay would be fatal to the

banks in

New

the country.
No more gold could be loaned to the Government,
except in small and wholly inadequate amounts, because it was

not to be had.

State

bank

bills

could

still

be obtained, but the

banks having suspended specie pajonents, this currency was deprenot being much
ciated, and had only a local character and credit

known out of the States where the banks were located. Hesitancy
and delay, with the expenses of the war running on at an average
Mr. Spaulding,
of $2,000,000 per day, would have been fatal.
changed the legal tender section, intended originally
accompany the bank bill, into a separate bill, with alterations
and additions, and on his own motion introduced it into the

therefore,

to

House by unanimous consent on the 30th of December, 1861.
was read twice, and referred to the Committee of Ways and

It

Means, and ordered printed (House
follows

Bill,

No. 182), and

is

as

:

Mr. Spaulding, on leave, introduced the following

bill

:

A BILL
To authorize

Be it

the issue of treasury notes payable on demand.

and House of Representatives of the United States
America in Congress assembled, That, for temporary purposes, the Secretary of the Treasury be, and he is hereby authorized to issue fifty millions
of dollars of treasury notes, on the faith of the United States, payable on
demand, without specifying any place of payment, and of such denominations as he may deem expedient, not less than five dollars each, which
shall he receivable for all debts and demands due to the United States,
and for all salaries, dues, debts, and demands owing by the United States
to individuals, corporations, and associations within the United States;
and such treasury notes shall also be a legal tender in payment of all
debts, public and private, within the United States, and shall be exchangeable at any time at their par value, the same as coin, at the Treasury of
the United States, and the offices of the assistant treasurers in New York,
Boston, Philadelphia, St. Louis, and Cincinnati, for any of the coupon or
registered bonds which the Secretary of the Treasury is now or may
hereafter be authorized to issue, and such treasury notes may be re-issued
from time to time as the exigencies of the public service may require.
Such treasury notes shall be signed by the Treasurer of the United States,
enacted by the Senate

of

by some officer of the Treasury Department designated by the Secretary of the Treasury, and shall be countersigned by the Register of the
Treasury, or some officer of the Treasury Department designated by the
or

f<>r the n-gisler; and all the
provisions of the
act to authori/e the issue of treasury notes," approved

Treasury

<>f ilic

S'-i-ivtary

k

act entitled

-.\n

)cc<-Mil)cr, one thousand eight hundred and
same can be applied to the provisions of this act,
and not inconsistent tlicrcwilh. are hereby revived and re-enacted.
I

h<-

lift

t

\

\\nity-lhinl

day of

I

--seven, so far as the

As soon
mil tee of

as the bill

was printed,

it

was taken up

in the Corn-

Ways and Means, and

duly considered. Mr. Hooper
took active ground in favor of the bill.
Mr. Stevens at first had
some doubts about its constitutionality, but very soon decided to

Mr. Merrill, Mr. Horton, and Mr. Corn-

support the measure.

ing actively opposed the bill in the Committee and in the House.
Mr. Maynard and Mr. Stratton took no active part in the discussions while the bill was under consideration in the Committee.
It is believed,
bill

from the

however, that Mr. Maynard was favorable to the
while Mr. Stratton was very much in doubt.

start,

what course he would take in relation to

it,

either in Committee,

or in giving his vote in the House.
Mr. Phelps was absent, and
took no part while the bill was under discussion in the Committee.

Mr. Spaulding finding that the Committee were about equally
divided, and that some members of the Committee had doubts

power of Congress to make treasurj?' notes
upon the Attorney General, Hon. Edward

as to the constitutional

a legal tender, called

Bates, for his opinion.
but consented to write
stitutionality.

obtained

He
an

declined to give an official opinion,
note in favor of its con-

un-official

The following

is

a copy of the opinion thus

:

MONDAY EVENING,

Jan.

0,

18C2.

Hon. E. G. Spaulding, M. C.,
At the National Hotel:

DEAR

Since you did me the honor of a call this afternoon, and
me a question arising out of the pending bill "To authorize the issue of treasury notes payable on demand," I have given to the
subject such attention as the very brief interval afforded, and proceed at

SIR

propounded

to

once to answer.
In the first place, permit

me to say, that my views of the place I hold
your question a formal and official answer, but in proof
of the high respect which I entertain for you and your honorable Committee, I, as a private man, and a professed constitutional legist, in all
frankness will give you my opinion upon the point proposed, and this,
\\ith all brevity and without argument, for the time does not allow

forbid

me

to give

elaborate consideration.

The

bill,

this clause,

of

after providing for the issue of treasury notes, contains i. e.
shall be a legal tender in payment

"and which treasury notes

debts, public and private, within the United States," and you desire
opinion whether this clause is, or is not, constitutional.
Certainly the Constitution contains no direct verbal prohibition, and I
all

my

16
contains no inferential or argumentative prohibition that Can be
The first article of the Constituits expressed terms'.
tion, section eight, grants to Congress specifically a great mass of powers.
Section nine contains divers limitations upon Congress, upon the United

think

it

fairly

drawn from

States, and upon individuals; and section ten contains restrictions upon
the several States. This last section is the only one that treats on tender.
"No State shall make anything but gold and silver coin a tender in pay-

This applies to a State only, and not to the nation and
thus it lias always been understood with regard to the next precedingclause in the same section no State shall "emit bills of credit." The
prohibition to emit bills of credit is quite as strong as the prohibition to
make anything but gold and silver coin a legal tender; yet nobody
doubts Congress does not doubt its power to issue bills of credit. Tr< -usury notes are bills of credit, and I think the one is just as much prohibited

ment of debts."

as the other

The time

is

;

neither is forbidden to Congress.
too short for argument, and so I remain, with

Your obedient

servant,

EDWARD

all respect,

BATES.

Mr. Spaulding read this letter to the Committee of Ways and
Means. The discussion on the bill had continued for several

when

the vote was finally taken, it appeared that the
Committee were at first equally divided Mr. Spaulding, Mr.
Hooper, Mr. Stevens, and Mr. Maynard voting in the affirmative,

days, and

and Mr.

Merrill, Mr. Horton, Mr. Corning,

the negative.
so as to allow

Mr. Stratton

finally

and Mr. Stratton

consented to vote for the

in

bill,

The bill was thus
to be reported to the House.
the Committee of Ways and Means.
passed through
On the 7th of January, 1862, Mr. Spaulding reported the bill
it

was read twice, committed
to the Committee of the whole House on the state of the Union,
and ordered to be printed. (House Bill No. 187.)
from the Committte to the House.

It

Mr. Spaulding, from the Committee of
following bill

Ways and Means,

reported the

:

A BILL

To

authorize the issue of

demand Treasury

notes.

e it enacted by the Senate and House of Representatives of the United States
America in Congress assembled, That, for temporary purposes, the Secreof
tary of the Treasury be, and he is hereby authorized to issue, on the
credit of the United States, one hundred millions of dollars of Treasury
notes, not bearing interest, payable generally, without specifying anyplace or time of payment, and of such denominations as he may deem
expedient, not less than five dollars each and such notes, and all other
Treasury notes payable on demand, not bearing interest, that have been
heretofore authorized to be issued, shall be receivable for all debts and
demands due to the United States, and for all salaries, dues, debts, and
demands owing by the United States to individuals, corporations, and
associations within the United States; and shall also be lawful money,
and a legal tender in payment of all debts, public and private, within the
;

ir
United States, and shall be exchangeable in sums not less than one hundred dollars, at any time, at their par value, at the Treasury of the United
States, and at the offices of the Assistant Treasurers in New York,
Philadelphia, St. Louis, and at the depository in Cincinnati, for any of
the six per centum twenty years coupon bonds or registered bonds which
the Secretary of the Treasury is now, or may hereafter be authorized to
issue; and such Treasury notes shall be received the same as coin, at their
par value, in payment for any bonds that may be hereafter negotiated 1>\
the Secretary of the Treasury and such Treasury notes may be re-issued
from time to time as the exigencies of the public service may require.
There shall be printed on the back of the Treasury notes, which may be
" The within
issued under the provisions of this act, the following words
note is a legal tender ia payment of all debts, public and private, and is
exchangeable for the coupon or registered bonds of the United States bearing six per centum interest." Such Treasury note shall be signed by the
Treasurer of the United States, or by some officer of the Treasury
Department designated by the Secretary of the Treasury, and shall be
;

:

countersigned by the Register of the Treasury, or some officer of the
Treasury Department designated by the Secretary of the Treasury for the
Register; and all the provisions of the act entitled "An act to authorize
the issue of Treasury notes," approved the twenty-third day of December,
one thousand eight hundred and fifty-seven, so far as the same can be
applied to the provisions of this act, and not inconsistent therewith, are
hereby revived and re-enacted ; and the sum of one hundred and fifty
thousand dollars is hereby appropriated, out of any money in the Treasury
not otherwise appropriated, to enable the Secretary of the Treasury to

carry this act into

Soon

effect.

after Mr.

Spaulding introduced his

issue of legal tender notes to circulate as

many

letters

criticising

the

proposing the
money, he received
bill

measure in rather severe terms.

Among others, Mr. Isaac Sherman, of New York, an old friend,
addressed a letter to him of this character, bearing date January
4th, 1862, and at the .same time suggesting very heavy taxation in
various forms, as the best plan for raising the
the war.

To

this letter

money

to carry on

Mr. Spaulding made the following reply
HOUSE OF REPRESENTATIVES,

Isaac Sherman, Esq.,

:

New

WASHINGTON,

Jan.

8,

1802.

\
5

York:

DEAK SIR In reply to yours of the 4th inst., I would say that the
Treasury note bill for $100,000,000 agreed upon in Committee yesterday
is a measure of necessity and not one of choice.
"fon criticise matters very freely, and very likely you may be right in
what you

say.

We will be

out of means to pay the daily expenses in about thirty days,
and the Committee do not see any other way to get along till we can get
the tax bills ready, except to issue temporarily Treasury notes. Perhaps
you can suggest some other mode of carrying on the Government for the
next one hundred days.
You do not pretend that any considerable
amount of taxes can be collected for the next three months, even under

18
your plan. It is much easier to find fault than it is to suggest
means or measures.
We must have at least $100,000,000 during the next three months, or tlio
Government must stop payment. With the navy and an army of 700,000
men in the field, we cannot say that we will not pay.
I will thank you to suggest a better practicable mode of getting
$100,000,000 of paying means during the next three months. I would be
glad to adopt it, and the Committee would be glad to adopt it. Let us
have your specific plan for this purpose one that will produce the money
and we will be very much obliged to you. In haste.
Yours trulv,
E. G.

SPAULDING.

P. S. I am as impatient as you can be for an early and successful advance
of the army, so important at this time to sustain the credit of the Government. Will it be done ? You are just as well informed on that subject
as any of us. I say to you privately that I could find fault more loudly
than you do, but I will not do that without being able to suggest a practicable remedy; and I might say many things to you, personally, that I

might not put on paper.
E. G.

Confidentially yours,

S.

MR. ISAAC SHERMAN'S LETTER.

NEW

YORK,

Jan.

22, 1869.

Hon. E. G. Spaidding :
I have received your letter of the 20th, and inclosed I send a letter
which you addressed ine January 8th, 1862, and this letter fully explains
your motives in advocating the legal tender act. I will add that I became
fully satisfied that the immediate wants of the Government rendered it
absolutely necessary that legal tender notes should be issued. It is possible that a good tax bill, passed and enforced in 1861, might have averted
the necessity of the legal tender act but in 1862 it was impossible to pay
the expenses without an issue of Government paper as currency. I was
shocked at first at the idea of issuing paper, but I have always since said
that you finally convinced me of the absolute necessity at the time of the
paper issue. I consider your letter historical, and after copying, I wish
you would return it to me.
;

Yours

BANK DELEGATES

IN

ISAAC SHERMAN.

truly,

WASHINGTON MEETING AT THE TREASURY
DEPARTMENT.

bill was reported from the Committee
and Means by Mr. Spaulding, and published in the
Ways

After the legal tender
of

newspapers of the principal

cities,

opposition to

it

manifested

New York

At first
city press were
ways.
The Times and
generally opposed to the legal tender clause.
The Tribune
Herald early came into the support of the measure.

itself in various

the

and Commercial Advertiser appeared to be in some doubt, but in
The Evening Post, World,
their editorial columns opposed it.
and Journal of Commerce were decidedly hostile, and opposed the
measure throughout. Delegates from some of the banks in New

19

Boston and

York,

oppose the

bill.

a

time, preserved

which

may

be

Philadelphia, appeared in Washington to
The reporters of the New York press, at the
tolerably

summed up

accurate account of their doings,

substantially as follows

:

They organized by appointing Mr. Singleton A. Mercer, of
Philadelphia, as chairman, and invited the Finance Committee
of the Senate, and the Committee of Ways and Menus of the

House,

to

Treasury,
invitation

meet them

at

the

of

office-

the

Secretary of the*

The
1862.
January
was accepted, and the Convention assembled accordon Saturday

afternoon,

llth,

ingly at the Treasury Department.
Delegates

from New York Banks.

Mr. COE, American Exchange Bank.
Mr. VEBMILYE, Merchant's Bank.
Mr. MARTIN, Ocean Bank.

Mr. GALLATIN, National Bank.
Delegates

from Philadelphia Banks.

Mr. ROGERS, Tradesman's Bank.
Mr. MERCER, Farmer's and Mechanics' Bank.
Mr. PATTERSON, Western Bank.
Delegates

from Boston Banks,

Mr. HAVEN, Merchant's Bank.
ALLEY, Revere Bank.

Mr.

W

Mr. BATES, Bank of Commerce.
Treas u nj Dep< rtmen t.
i

SALMON

P. CHASE, Secretary of the Treasuiy.

Finance Committee of

the Senate.

Mr. FESSENDEN, of Maine.
Mr. SIMMONS, of Rhode Island.
Mr. SHERMAN, of Ohio.
Mr.

HOWE,

of Wisconsin.

Mr. PEARCE, of Maryland.
Mr. BRIGHT, of Indiana.
Mr. MeDocGAL, of California.

House Committee- of Ways and Means.
Mr. STEVENS, of Pennsvlvania,

20
Mr. MOKUII.L, of Vermont.
Mi\ Pm:u's, of Missouri.

New York.
New York.

Mr. Si-.u U>IN<;, of
.Mi
All

1

.

1
.

COKMNC;, of
IIUM<\. <)!' Ollio.

Mr. STUATTON, of New Jersey.
Mr. HOOPER, of Massachusetts.
Mr. MAYNARD, of Tennessee.

Some of the members of the above Committees of the Senate
and House were not present, but there was n very full representaThere were some other gentlemen
tion from eaeh Committee.
from Boards of Trade of different cities.
present
Mr. James Gallatin, of

New Yr ork, made

the principal speeeli

against legal tender, and on behalf of himself and the Bank
Committees from New York, Boston, and Philadelphia, and
members from Boards of Trade associated with them, submitted
the following plan for raising money to carry on the war, viz
:

1.
A tax bill to raise, in the'difterent modes of taxation. $125,000,000,
over and above duties 011 imports.
2.
Not to issue any demand Treasury notes, except those authorized at
the extra session in July last.
3.
Issue $100,000,000 Treasury notes at two years, in sums of five dollars and upwards, to be receivable for public clues to the Government,

except duties on imports.
A suspension of the sub-Treasury act, so as to allow the banks to
4.
become depositories of the Government of all loans, and to check on the
banks from time to time as the Government may want money.
5.
Issue six per cent, twenty year bonds, to be negotiated by the
Secretary of the Treasury, and without any limitation as to the price Tie may
obtain Jor them in the market.
6.
That the Secretary of the Treasury be empowered to make temporary loans to the extent of any portion of the funded stock authorized
by Congress, with power to hypothecate such stock, and if such loans are not
paid at maturity, to sell the stock hypothecated for the best price that can be
obtained.

These propositions having been read, the Secretary and Finance
Committees of the Senate and House expressed themselves favor-

by taxation $125,000,000 a
It will be observed that
over and above duties on imports.
year,
this plan did not include the national currency bank bill, recomable to the first proposition to raise

mended by

the Secretary of the Treasury in his

Annual Report,

and was not, therefore, in this respect, satisfactory to him.
The meeting was somewhat conversational in character, but
there appeared to be a general dissent by the Secretary and Com-

mittees from

very

all

the other propositions.

decidedly his dissent to

lender act as the best

remarks

I

in

favor of the

of providing the means.

leo-;il

The only

can find reported as being made by airy member of the
tin Senate and House are in the New York Tribune,

Committees of
January

mode

Mr. Hooper expressed

them, mid was

1

13, 1862, in

substance as follows:

'The Sub-committee of Ways and Means, through Air. Spaulding,
objected to any and every form of 'shinning' by Government through
Wall or State streets to begin with; objected to the knocking down of
Government stocks to seventy-five or sixty cents on the dollar, the inevitable result of tin-owing a new and large loan on the market, without limitation as to price ; claimed for Treasury notes as much virtue of par valutas the notes of banks which have suspended specie payments, but which
yet circulate in the trade of the North; and finished with firmly refusing
any scheme which should permit a speculation by brokers,
banker*, and others, in the Government securities, and particularly any
scheme which should double the public debt of the country, and double
the expenses of the war, by damaging the credit of the Government to
the extent of sending it to shin ' through the shaving shops of New York,
Boston, and Philadelphia. He affirmed his conviction as a banker and
legislator, that it was the lawful policy, as well as the manifest duty of
the Government in the present exigency, to legalize as tender its fifty
million issue of demand Treasury notes, authorized at the extra session
in July last, and to add to this stock of legal tender, immediately, one
hundred millions more. He thought that this financial measure would
cany the country through the war, and save its credit and its dignity
at the same time we should insist upon taxation abundantly ample to pay
the expenses of the Government on a peace footing, and interest of every
dollar of the public obligation, and to give this generation a clear show
of a speedy liquidation of the public debt/'
to assent to

'

;

This Conference did not result in devising any plan or arrangement which received the assent of either the Finance Committee
of the Senate or the Committee of Ways and Means of the
House, and the Conference adjourned.
The bank delegates and others had further consultations with
Secretary Chase, continuing through two or three days, and
finally resulted in an arrangement with the Secretary alone,
which was furnished to the agent of the Associated Press and

which

published on the 15th of January, 1862, as follows:

'The

results of the Various conferences held in

Washington by reprefrom Boards of Trade, Chambers of Commerce, and Banking
institutions, among themselves, and with the Secretary of the Tiva<ur\.

sentatives

may be summed up

as follows:

The general views of the Secretary of the Treasury are assented to.
The banks will receive and pay out the United States notes (authorized by act of July last) freely, and sustain in all proper ways the credit
of the Government.
1.

3.
Tlic Secretary of the Treasury will, within the next two weeks, in
addition to the current daily payments of $1,500,000 in United States
notes, pay the further sum of at least $20,000,000 in 7-30 bonds to such

public creditors as desire, to receive them, and thus relieve the existing
pressure upon the community.
4.
The issue of United States demand notes not to be increased beyond
the $50,000,000 authorized by the act of last July, but it is desired that
Congress should extend the provisions of the existing loan acts, passed at
the extra session in July, so as to enable the Secretary to issue in exchange

United States demand notes, or in payment to creditors, notes payable
one year, bearing 3.05 per cent, interest, and convertible into 7-30 three
years bonds, or to borrow under the existing provisions to the amount of
tor

in

$250.000,000 or $300,000,000.
5.
It is thought desirable that Congress should enact the national
currency bank bill, embracing the general provisions recommended by
the Secretary in his Annual Report.
6.
It is expected that this action and legislation will render the making
of the United States demand notes a legal tender or their increase
beyond the $50,000,000 authorized in July last unnecessary."

The Committees of the Senate and House never gave airy assent
agreement made by Secretary Chase with the delegations
above mentioned, for the reason that it was not deemed by them
A majority of the Committee of Ways
adequate to the crisis.
and Means adhered to the legal tender bill, then pending in the
House, as being a more available plan, and 011 a much larger
scale.
They believed it was necessary to authorize immediately

to this

an additional issue of $100,000,000 of United States fundable
notes, to circulate as money, and be made a legal tender; and
that $500,000,000 six per cent, twenty }^ears bonds should be
authorized, so as to enable the holders of the notes, when issued,
to fund them at any time in these bonds.

As soon

as the plan of the delegates from New York, Boston,
fully known to the country, it was very

and Philadelphia became

The press spoke out plainly against the
generally disapproved.
" on the
Secretary being authorized to put United States bonds
market without any limitation as to the price he might obtain for
them in the market," as proposed lry Mr. Gallatin. Members of
Congress generally opposed it and numerous letters were received
by Mr. Spanieling from bankers, and other prominent citizens, in
opposition to any such scheme, but at the same time expressing
themselves in favor of the legal tender bill and urging its immediate passage.

The following is a sample of the letters received about this
time by Mr. Spaulding*

LKTTKIl

<>!'

MOSKS

HON.

II.

MMNKI.I. TO

\KW

Mil.

SrAULDIXG.

YORK, January

30, 18G2.

MY DEAR

SIR I thank you for your able speech, and can only say that
nine out of twelve persons in this city agree with you.
\sforG
and a few egotistical gentlemen that act with him, they should be driven
out of Washington, as they only embarrass the Government; and it seems
to me that their policy, if adopted, would soon ruin the Government credit.
and break down the country.
Go a direct tax for one hundred and rifty or two hundred millions, and
then issue one hundred and fifty millions Treasury notes legal tender, and
\\e will goon without any trouble, and the Government credit w ill be
saved from disgrace. There are not eight bank presidents that side with
He is an odd fish has very little influence here. Some action
G
must be had soon, or our country will be in a deplorable financial condition.
.

,

r

.

Yours

truly,

M. H.

GRINELL.

Hon. E. G. SrAi'LDixo.

LETTER FROM HOX. LEWIS

F.

ALLEN.

BLACK ROCK, January 31. 1862,
Hon. E. G. Spauldwg :
MY DEAR SIR I have just read, with great pleasure, your very able
speech on the Treasury note bill you have introduced into Congress. The
principle and plan are both right, and what the country demands and I
trust both Houses will put it right along through, regardless of what the
New York note shavers and usurers may say, for they, and the like, in
our large Atlantic cities, are the only ones wr ho will oppose it, and that
for the reason that they can not make their ten, twentj or fifty per cent.,
;

r

by buying
selling out the stocks which they want passed by the
Government, in place of the sound, available Constitutional currency which
you propose. I see by my Iribune to-day, that there is good prospect that
your bill will pass without material modification, if any. I hope so, and
in

and

that speedily.
L. F.

Truly yours,

LETTER FROM

J.

M.

<;AXSON,

ALLEX.

BANKER, OF BUFFALO.

NEW

YORK, January

13,

1802.

Hon. E. G. Spaulding, Washington;
DEAR SIR Your bill on Finance is received. I understand the pulse of
the people. Now, then, put on a war tax of $200,000,000, issue $150, 0000, 000 demand notes, and ten, fifteen and twenty year bonds, seven per cent
'coupon bonds," redeemable at the pleasure of the Government within
that time, and then go ahead. Put our Generals into the saddle, and all
this fussing and fooling will come to an end in ninety days.
One grand
rush from all points of our armies will cow down the rebels. Send home
the Bank Committee their proposition is awfuL Let a few leading minds,
in connection with Chase, nerve up, and let the demand notes assume the
place of specie in every particular. A tender for deposits in State banks,
a tender for State bank notes, and receivable for all Government dues.
We must have one terrible bloody battle, and must not shrink from the
Let members of Congress cease abusing our Generals.
responsibility.
Put the right men in the right place. Have no proclamations issued by
:

24
the Generals unless passed upon by Lincoln and McClellan jointly. Hard
work, less pleasure-seeking, good financiering and energy, will wind up
this war shortly, and nothing else will do it.
I remain yours truly,
J. M. GANSON.

LETTER FROM JAMES W. SIMONTON,

ESQ.,

OF

N.

Y.

TIMI.S.

WASHINGTON, January

Hon. E. G. Spaulding :
DEAR SIR I failed to make myself clearly understood

in

13,

1SG2.

our conver-

sation last evening, or rather I failed to tell the ichole story in suggesting
payment of interest on demand notes.

What do you
on
to

think of providing for the payment of interest on demand

rate than that on loan bonds) from their date, the interest
such demand notes to be allowed and paid only when they are prexe.xt^l

notes (at a

less

be converted into

bonds ?

Would not the tendency of such an arrangement be to keep the current
of demand notes steadily moving towards the loan office, and prevent any
possible depreciation of either class of paper ?
Of course, you could devise a means (if you desire) of preventing the
payment of back interest on debts already accumulated. In haste.

Truly yours,

JAMES W. SIMON TON.

LETTER FROM THOMAS DENNY

WALL

fe

STREET,

CO.,

BANKERS AND BROKERS,

NEW

YORK.

NEW YORK, January 13, 1862.
Hon. E. G. Spaulding, House of Representatives, Washington, D. C. :
DEAR SIR Although not personally acquainted with you, we take the
liberty of giving you, in few words, our views as to the most desirable
measures to be adopted for the finances of the country at the present
time. It will not do at all to cro\vd on the market at the present time
Government stock fast enough to raise the amount of money needed to
meet our wants. The price would run down so fast that people would
become alarmed, and afraid to take it, except at a ruinous sacrifice, if at
The best plan is that w hich, we understood, you propose to adopt.
all.
Issue $100,000,000 to $150,000,000 demand notes, and pay them out as the
\vants of the Government require make them a legal lender in all transactions of business in our country; make them convertible at the pleasure
r

;

of the holders into a 6 per cent, stock, or even into 7-30 three year notes,
unless there is some serious objection on account of the previous negotiations of the 7-30 notes; pass a tax bill which will produce $100,000,000 to
$150,000,000. The above plan will furnish abundant means to the Government, and will meet the approbation of the people. It will furnish an

excellent circulation to the whole country, facilitate all business transactions among the people, make the money market easy, and raise the
prices of

Government stocks

terms when more
rebellion

is

money

if

so that loans can be negotiated on favorable
wanted, especially if, in the meantime, the

pretty well crushed down.

If the above plan is adopted, public sentiment will make it necessary
for the banks to receive and pay out the demand notes, and the whole
effect will

be very salutary on our national

affairs.

The tax

bill will

25
on-ate
par.

a

general demand for the Treasury notes and keep them at or near
write in great haste, as practical business men, and are, very

We

respectfully

Your obedient

servants,

THOAMS DENNY &
LETTER FROM JOHN

E.

CO.

WILLIAMS, ESQ.

METROPOLITAN BANK,

NEW

YORK, January 20,
I leave my bank

1862.

?

5

DEAR SIR I have your favor of 18th inst.
affairs to
write you at once, and congratulate you on the prospect of being able to
effect a remedy for the fiscal malady.
With a leader in the Treasury

A

all these discordent financial schemes would disappear.
of ability, of business talent and experience, even although he be
not endowed with the creative genius of a Hamilton, or the statistical

Department

man

knowledge and general attainments^ of Albert Gallatin, would devise a
plan sufficiently comprehensive, sensible, and wise, to satisfy the public
that he knew whereof he wrote and spoke, and had no object in view but
to restore confidence and replenish the Treasury. There is one point in
reference to the demand legal tender notes to which I wish to call attention.
It may seem small, but I think it important that is, in reference
to the color of the paper on which such notes are printed. I would have
it different from that used for
any other notes; and I would again suggest
that that color be yellow. I would also have them payable one year after
the close of the war. There is no risk of embarrassment from this clause,
as we could sell our national bonds to-morrow if the war were closed
to-day. I would also simplify the matter by having the amount one
hundred and fifty millions, so as to absorb the present outstanding
demand notes into the legal demand or yellow notes, which could easily
be done, and yet leave you on this loan one hundred millions net. I think
it would make these demand notes more valuable to insert this redemption
feature one year after peace," for peace must come. As if William B.
Astor should give his note for $100,000, payable one year after his death.
He must die, and he has millions, consequently on a future day certain
(though not yet fixed), his note would be paid in full.
Please consider, then, before you finally decide, the amount, the color,
and the time of payment of the legal tender notes. One other point/
Allow me to refer to the re-convertible feature of the six per cent, twenty
years bonds. That is, I confess, a pet idea of mine, but I find it favorably
regarded by others, though new. You will readily perceive that when
this comes to be understood by the public the United States Government
is going to pick up all the
floating funds throughout the whole country,
which the owners do not require to use in less than three, four, five or six
months, whatever time you fix. Every business man seems to think this
would be the means by which the Government would borrow, in the
aggregate, a large amount. For who would not lend the United Statehis spare funds when he knew he could
get a legal tender for it, with
interest whenever he called for it? This would increase the value of the
twenty years six per cent, bonds. Let the legal tender notes be convertible at any time into any unsold securities of the United States,

26
the hands of the Secretary of the Treasury, whether now authorized
or hereafter to he issued.
But only let the six per cent, bonds be reconvertible into legal tender Treasury notes.
in

Give

my regards

to Mr.

Hooper.

Yours very

truly,
J.

E.

WILLIAMS.

Hon. E. G. SPAULDiNfi, Washington, D. C.

On the following Monday, January 20th, Mr. Spanieling, from
the Sub-committee of Ways and Means, reported to the General
Committee an additional section, and a new title to the legal
tender note bill, which were adopted by the Committee of Ways
and Means. The new section is as follows:
u

To enable the Secretary of the Treasury to fund the
treasury notes and floating debt of the United States, he is hereby further
authorized to issue on the credit of the United States coupon oonds, or
registered bonds, to an amount not 'exceeding $500,000,000, in sums of
$100, $200, $500. $1,000, $5,000, $10,000 and $20,000, and in such proportions
of each as the exigencies of the public service may require, bearing interest at the rate of six per cent per annum, redeemable after twenty years
at the pleasure of the United States, which bonds the Secretary of the
Treasury is hereby authorized to deliver at their par value to any creditor
or creditors having demands due against the United States, in payment
thereof, and to deliver the same to officers, employees and individuals in
payment for services rendered, for supplies, subsistence and materials
furnished to the United States and he may also exchange such bonds at
any time for lawful money of the United States, or for any of the treasury
notes that have been or may hereafter be issued under any former act of
Congress, or that may be issued under the provisions of this act."
SECTION

2.

;

The new

title to

the

mittee was as follows
"

An

bill

adopted at this meeting of the Com-

:

United States Notes and for the reand for funding the floating debt of the

act to authorize the issue of

demption or funding
United States."

thereof,

and new title were adopted by
and Means, Mr. Spaulding submitted the
Ways
bill and additional section to Secretary Chase and the Assistant
At this interview the form of the bill
Secretary, Mr. Harrington.
,

Soon

after this additional section

the Committee of

and the manner of engraving, signing and issuing the legal tender
notes was fully discussed, as well as the form and manner of exchanging them for the six per cent, bonds. The Secretary suggested that it would be necessary to limit the place for exchanging
the notes for bonds to the Treasury at Washington instead of the
Sub-treasuries at other cities, and that it would be necessary to
have one or more penal sections to guard against counterfeiting.

The

original bill

and additional section were

finally left

with the

2T
Secretary to put into such form as he desired, incorporating tin
amendments which he had proposed, in order to enable him to

execute the provisions of the

become a

bill

with facility as soon as

it

should

law.

k On the 22d of January, 1862, Secretary Chase returned to Mr.
Spaulding the bill as modified and amended by him, accompanied

by the following

letter:

TREASURY DEPARTMENT,

Jan.

22, 1862.

have carefully examined the bill and additional secMY DEAR SIR
tion which you left with me, and availing myself of the aid of the Assistant Secretary, have amended the bill, retaining the whole substance of
yours, but introducing such modifications as the settled modes of business
in the department and considerations of convenience and economy seem
I

to suggest.

For example the exchange of notes for bonds is confined to the course
of business of the department, by limiting the power of Assistant Treasury and Depositories to the receipt of notes and issuing certificates, entitling the holder to bonds by which serious risks are avoided and the
denominations of bonds is left to the discretion of the Secretary, by which
a considerable saving will probably be effected ; as the demand for some
denominations is so limited (for $20,000 for instance) that it may hardly
be worth while to engrave a plate. These examples show the nature of
the modifications.
The appropriation for expenses is put at three hundred thousand dollars.
Should the act be fulty executed by the issue of bonds to the amount of
five hundred millions of dollars, this sum will not probably suffice.
It
has been usual in providing for the issue of bonds merely without notes,
to allow a much larger proportion for expenses.
I will send you, if
desired, a statement which will make this clear.
;

Regretting exceedingly that it is found necessary to resort to the measure of making fundable notes of the United States a legal tender, but
heartily desiring to co-operate with the Committee in all measures to meet
existing necessities in the mode most useful and least hurtful to general
interest, I remain,

with great respect,

Very

sincerely yours,

S.

P.

CHASE.

Hon. E. G. SPAULDING.

The

bill

as

amended by the Secretary was again submitted

the Committee of

to

Ways and Means, and adopted; and thereupon,

on the 22d of January, 1862, Mr. Spaulding again reported the
the House (Bill No. 240) in the nature of a substitute for
Bill No. 187.
It was read twice, and made the special order for

bill to

the 28th inst.

,

at one o'clock.

Each day's delay made it more and more apparent that the
bill must pass in order to meet the overwhelming demands made
The end
upon the Treasury to sustain the army and navy.
seemed to justify the means contemplated by the bill.

On

the 23d inst. Secretary Chase directed his private Secretary,

28
H. G. Plants, Esq., to request Mr. Spaulding to furnish a copy
of the amended legal tender note bill to the National Intelligencer
for publication.

Up

had not
was deemed important that

to this time Col. Seaton, the editor of that paper,

been favorable

the

to

bill,

and

it

the old National Intelligencer should support the measure.
The following is a copy of the note received by Mr. Spaulding

from Mr. Plants:

TREASURY DEPARTMENT,
SIR

I

am

directed

by

the Secretary to ask

you

if

Jan.

23, 1862.

will he so

you

good

as to send a copy of the Treasury note bill to the National Intelligencer, in
order that it may be printed to-morrow.

Very

H. G.

respectfully,

PLANTS.

Hon. E. G. SPAULDING.
REPLY.

HOUSE OF REPRESENTATIVES,

Jan.

24, 1862,

The note 'of Mr. Plants reached me this morning, and I
have handed the U. S. demand note bill to Col. Seaton in person, to be

DEAR

SIR

published in the next issue of the National Intelligencer. It is important
that there should be full co-operation on the part of Col. Seaton, the Cabinet, and all our friends on the financial measures pending in Congress, to
overcome the opposition already developed and ensure success. My interview with Col. Seaton leads me to suppose that he will hereafter act in
concert with us.

Yours
Hon.

On

S.

E. G.

truly,

SPAULDING.

P. CHASE, Secretary of Treasury.

being the special order in the House,
Mr. Spaulding opened the debate upon it in the following
the 28th inst.

,

the

bill

SPEECH.
The House being
in the chair)

in

Committee of the Whole (Mr, KELLOGG, of

on the Demand Treasury

Illinois,

note bill

SPAULDING spoke as follows:
Mr. CHAIRMAN This is an important measure, and I may be indulged
for a few moments in explaining its objects, the situation of our finances,
and the grounds upon which we rest this measure, and expect it to be
adopted. ;ln the first place, I will refer to the loan bills passed at the
Mr.

:

extra session of Congress, in July, in order to show how we obtained the
means to carry on the Government from that time to the present, and to
show how the Secretary of the Treasury has performed his duty. These
bills were passed, the first on the 17th of July, and the other on the 5th of
August. They gave the Secretary of the Treasury power to pledge the
Reflections
credit of the United States to the extent of $250,000,000.
have been made by some gentlemen on the manner in which the Secretary
of the Treasury had performed his duty in borrowing that money, and
with some disposition to criticise his actions. As a general reply, I will
say that the Secretary has acted in strict conformity with the law, and

borrowed money

at the rates authorized

by Congress.

29
And,

sir,

I

am

Secretary and

upon this floor and elsewhere, to sustain the
Departments of the Government where they have
duties in accordance with the laws which have^been

disposed,

all

discharged their
passed by us.
The Secretary of the Treasury first borrowed $100,000,000, giving Treasury notes bearing seven and three-tenths per cent, interest, and he next
issued United States bonds at six per cent, interest to the extent of
$50,000,000, at the equivalent of par for seven per cent, bonds, and raised
about $44,650,000; upon such loan, a discount of over $5,300,000 was
sustained. These were the best terms that could be obtained, and were
regarded at the time as very favorable to the Government.

But if he has borrowed the money at a high rate, it was authorized by
the act of July. I am disposed to sustain the Secretary in what he has
done. He has acted in good faith, and he should be sustained by us all.
be permitted to say, in explanation of some of the estimates
I shall introduce presently, differing, as they do, from the estimates
of the Secretary of the Treasury in his annual report, that since his annual
I

may

which

he has changed his own views as to what the expenses of the war
up to July next, and what they will also be .up to July, 1863, and
that he substantially agrees with me now as to what those expenses

report,
will be

will be.

In the discussion of this important measure, I desire, Mr. Chairman, to
present the entire plan, with a view to enlist the co-operation not only of
all Departments of the Government, but also the co-operation of all the
members of the House, without regard to party distinctions. Hearty
co-operation is desirable to the success of the important financial measures
that will be presented.
Our finances deserve our

of carrying on the

most serious

war should

attention.

enlist the

The ways and means

grave consideration of every

gentleman on this floor who desires the preservation of this Government.
We were never in greater peril than at this moment. It will require all
our best energies to successfully meet the crisis through which we are
passing. I am oppressed by the magnitude of the work before us. But,
I trust we shall not any of us shrink from the
sir, I will not, I dare not
of performing every duty devolved upon us in this great
responsibility
crisis of our national affairs.
The bill before us is a war measure, a measure of necessity, and not of
choice, presented by the Committee of Ways and Means to meet the most
pressing demands upon the Treasury to sustain the army and navy, until
they can make a vigorous advance upon the traitors, and crush out the
rebellion. These are extraordinary times, and extraordinary measures
must be resorted to in order to save our Government, and preserve our
nationality.

This bill, in addition to the fifty million of demand notes authorized by
the act of July last, authorizes the Secretary of the Tieasury to issue, on
the credit of the United States, one hundred millions of dollars of Treasury notes, not bearing interest, payable to the bearer at the Treasury, or
at the office of the Assistant Treasurer in the city of New York, at the
pleasure of the United States, and of such denominations as he may deem
expedient, and not less than five dollars each; and such notes and all
other United States notes payable on demand, not bearing interest, here-

made receivable for all debts and demands due to
the United States, and for all salaries , debts, and demands owing by the

tofore authorized, are

30
United States to individuals, corporations, and associations within the
United States, and are also declared lawful money and a legal tender in
payment of all debts, public and private, within the United States, making
altogether $150,000,000 legal tender demand notes.
Provision is also made for the convenient exchange of such notes for
six per cent, bonds of the United States redeemable in twenty years.

Further to enable the Secretary of the Treasury to fund the Treasury
notes and floating debt of the United States, he is authorized to issue, on
the credit of the United States, coupon bonds or registered bonds to an
amount not exceeding five hundred millions dollars, and redeemable at
the pleasure of the Government after twenty years from date, and bearing
interest at the rate of six per cent, per annum, payable semi-annually ;
and the bonds thus authorized are to be of such denomination, not less
fifty dollars, as may be determined upon by the Secretary of the
Treasury, or in sums not less than $2,500; for which, if requested, the
Secretary of the Treasury, if he deem it expedient, may issue similar
bonds, the principal and interest of which may be expressed in the currency of any foreign country, and payable there. The Secretary is authorized to issue said bonds at their par value to any creditor or creditors of
the United States who may elect to receive them in satisfaction of their
demands ; provided that all such claims or demands shall have been first
audited and settled by the accounting officers of the Treasury ; and the
Secretary of the Treasury may also exchange such bonds at any time for
lawful money of the United States, or for any of the Treasury notes that
have been or may hereafter be issued under any former act of Congress,
or that may be issued under the provisions of this act.

than

The
It is a

simple and perspicuous
Government measure, and the
bill is

and easy of execution.
of Government are required

in its terms,
officers

to execute its provisions.

the time the Secretary of the Treasury can get these notes engraved,
and signed, ready for use, all other available means at his command, and in the Treasury, will be exhausted. This measure is therefore
presented under the highest prerogatives of Government. The army and

By

printed,

navy now

in the service must be paid. They must be supplied with food,
clothing, arms, ammunition, and all other material of war, to render them
effective in maintaining the Government and putting down the rebellion.

Having exhausted other means of sustaining the Government,

this measbrought forward as the best that can be devised in the present
exigency to relieve the necessities of the Treasury and I trust it will
pass without delay.

ure

is

;

At the extra session in July last, Congress authorized the Secretary of
the Treasury to borrow $250,000,090, for which he was authorized to issue
coupon bonds; or registered bonds, or Treasury notes, in such proportions
of each as he might deem advisable. The bonds were to be issued for
twenty years, at a rate not exceeding seven per cent, interest per annum,
payable half-yearly ; and the Treasury notes were to be issued in denominations of not less than $50 each, at three years, with interest at 7 3-10 per
annum, payable

half-yearly,

and exchangeable

at

any time

for

twenty

years six per cent, bonds. Or, at the option of the Secretary, he was permitted to issue $50,000,000 of the above loan in Treasury notes, on demand,
in denominations of not less than five dollars each, without interest, and
made receivable in payment of salaries or other dues owing by the United
States or, in his discretion, he was authorized to issue Treasury notes at
;

31
one year, bearing interest

at 3 G5-100 per cent, per

annum, exchangeable

sums of

$100, or upwards, for the three years Treasury
notes bearing 7 3-10 per cent, interest ; but in the aggregate not to exceed
further provision was made, however, to wit: that the
$250,000,000.
Secretary of the Treasury might negotiate any part of the loan for six per
at

any time

in

A

cent, twenty years' bonds, at a rate not less than the equivalent of par, for
bonds bearing seven per cent, interest per annum, half-yearly, payable in twenty
years.

Under theseprovisions. the Secretary of the Treasury has borrowed on the

7 3-10

$100,000.000
percent. Treasury notes, payable in three years
years six per cent, bonds, reduced to the equivalent at par of seven
per cent, per annum, half-yearly, say at 89 ) ($44,661,230 97 actually received
into the Treasury), for which six per cent, bonds were issued
50,000,000
Issued and put in circulation as currency (and to be put into circulation within a
few days) all the demand Treasury notes authorized in July, not bearing in-

On twenty

terest

-

Borrowed on the loan

bill of

50,090,000

July

$200,000,000

Paid out to contractors and others 7 30 100 Treasury notes within the
days, say

last

few
3,516,500

$203,516,500

The

total

which U.

S.

to the present time, and for
stock and Treasury notes have been issued, is as follows

amount of the public debt up

:

1861
$
There was paid to creditors, or exchanged for coin at par, at different dates
in July and August, six per cent, two years' notes to the amount of.
There was borrowed, at par, in the same months, upon sixty days' six per
cent, notes, the sum of.
There was borrowed, at par, on the 19th of August, three years' seven and
three-tenths per cent bouds, issued for most part to the subscribers to the
national loan
There was borrowed on the 1st of October upon like securities
There was borrowed, at par, of seven per cent, on the 10th of November,
upon twenty years' six per cent, bonds reduced to the equivalent of sevens,
including interest
There have been issued and circulated of Treasury notes payable on demand

Up to July

1,

Making an aggregate debt in various forms, to January 15, 1862...
amount required up to July 1, 1802, will be

14,019,034 66

12,877,750 00

50,000.000 00
50,000,000 00

50,000,000 00
39,000,000 00
306,764,613 34
343,235,386 66

I estimate that the

Total debt estimated to July 1, 1862
I estimate for the fiscal year up to July
time ..

90,867,828 63

650,000,000 00
1, 1863, if

the

war continues

Total indebtedness, liquidated and unliquidated, to July

to that
550,000,000 00

1,

1863

$1,200,000,000 00

This estimate exceeds that of the Secretary of the Treasury by
$300,000,000 to July 1, 1863.
This, however, includes all indebtedness
against the Government, whether funded or not, and all accounts in
process of being audited, and such as are passing through the hands of
the accounting officers.

There is now over $100,000,000 of accrued indebtedness, in different
forms, that should be paid at an early day.
With this large accrued indebtedness, and with the prospect that (unless
this bill is

adopted) the Government will put on the market, to the high-

est bidder, still further issue of bonds, to the amount of $250,000,000 to
$300,000,000, to pay current expenses to July next, it is not expected that

even the present price Of United States stocks can be maintained if forced
on the market at this time. We have the alternative, either to go into
the market and sell our bonds for what they will command, or to pass this
to
bill, or find some better mode, if one Can be devised* to raise means
on the war. The Secretary has the means of defraying the daily
carry
expenses required to be disbursed frtim the Treasury for only a few days
longer. He has on hand about one-fifth of the loan made in .November
last, a

small portion of the

demand Treasury notes authorized by

the act

of July say $10,000,000 not yet issued and such of the remaining
7 3-10 and 3 65-100 Treasury notes authorized by that act as can be used
in paying contractors, for supplies, and for salaries, and other Government
dues to such persons as are willing to receive them. With the enormous

expenditures of the Government, to pay the extraordinary expenses of
the war, it requires no extended calculation to show that the Treasury
must be supplied from some source, or the Government must stop
payment in a very few days.
You cannot borrow of capitalists any more money on twenty years seven
per cent, bonds, nor on your 7 3-10 Treasury notes at the rates fixed by
the act of July last. If you oifer to the people and put on the market
$300,000,000 more, to the highest bidder, in the present aspect of affairs,
they would not be taken, except at ruinous rates of discount. That policy
would depreciate the bonds already taken by the banks and the people
who are most loyal to the Government, and who came forward as your
best friends, and furnished the means so much needed during the last few

months to organize your army and navy ; and, besides, depreciation would
greatly increase the debt, by requiring a much larger amount of bonds to
be issued than would be needed if your loans were taken at par.
loan
put upon the market in the present depressed state of United States stocks,
to be followed by other larger loans, is not regarded as a favorable mode
of providing the means for maintaining the Government at the present
time. If it had been adopted at first it might possibly have been the best
mode ; but it is now too late to essay that plan, and I believe it would be
ruinous to adopt it. I fear the 20 years six per cent, bonds would, under
the pressure, fall to 75, 70, 60, and even 50 cents. This would be a ruinous
mode of raising the means to carry on the Government.

A

What, then, is to be done ? The Secretary of the Treasury in his annual
report does not recommend the issue of demand Treasury notes, although
he points out many advantages that would result to the Government from
the issue.
He suggests two plans first, the issue of demand Treasury
:

and second, a National currency, secured by a pledge of United
States stocks, to be issued by banks and associations, with proper regulations for their redemption by the banks themselves. On the propriety of
the issue of Treasury notes by the Government, to be put in circulation as
money, the Secretary says
" The first of these
plans was partially adopted at the last session of
Congress, in the provision authorizing the Secretary to issue United
States notes, payable in coin, to an amount not exceeding fifty millions
of dollars. That provision may be so extended as to reach the average
circulation of the country, while a moderate tax, gradually augmented,
on bank notes, will relieve the national from the competition of local
circulation.
It has been already suggested that the substitution of a
National for a State currency, upon this plan, would be equivalent to a
loan to the Government without interest, except on the fund to be kept
in coin, and without expense, except the cost of
preparation, issue, and
redemption while the people would gain the additional advantage of a
uniform currency, and relief from a considerable burden in the form of
interest On debt.''
notes

;

:

;

These remarks of the Secretary were made before the suspension of
The situation of the country is now very different from
what it was two months ago. The circumstances have changed and the
Secretary and Congress, will find it necessary, in the present exigency,
specie payments.

;

33
conform their action to what can be done, and not to what they would
were it otherwise practicable.
The second plan of the Secretary, and the one which he recommends for
adoption, namely, a national currency, to be issued by banks, and secured
by a pledge of United States stocks, the sub-Committee of Ways and
Means have examined with considerable care. A bill has been prepared
and printed for the use of the Committee, which may, after some modification, be reported to the House for its action. The Committee have come to
the conclusion that, however meritorious this system may be in providing
a way for funding the stocks of the United States, and however perfect the
system may be made by Congress, it cannot, if adopted, be made available soon enough to meet the immediately-impending necessities of the
Government.
to

like to do,

This

The

new system

would necessarily go into operation slowly.
bank notes in the loyal States is supposed to
This new currency, when issued, would come into

of banking

existing circulation of

be about $140,000,000.
competition with the existing circulation of the banks already established
in the several States and in the present embarrassed condition of mone;

months must necessarily elapse before any considerable amount of United States stocks would be absorbed by banks under
As an ultimate mode of funding some part of
this proposed new law.
the large amount of Government stock which has already been issued, and
which must from time to time be issued, it may be very valuable and the
national currency upon it would no doubt obtain a wide circulation, and
greatly facilitate the payment of taxes and other dues to the Government.
But with a navy and army of 600,000 in the field, requiring, with the
other expenses of the Government, an average daily expenditure of more

tary

affairs,

several

;

than $1,600,000, this new system of banking will not aiford relief to the
Treasury in time to enable the Secretary to meet the pressing demands
that are made upon him.

The

duties received at the different custom-houses,

and the taxes levied
wholly inadequate
emergency during

at the extra session, or that may now be levied, will be
to meet the requirements of the Treasury in the present

the next six months.
If you cannot borrow the money on the credit of the United States,
except at ruinous rates of discount, and cannot make the new banking
system available in time, and cannot realize the amount required from
your tariff and tax bills, in what mode can the means be obtained, and the
Government be carried on ? It is believed that the only way in which it
can be done is by issuing Treasury notes payable on demand, and making
them a legal tender in payment of all debts, pnblic and private, and by
adequate taxation, to be imposed by new bills. This will bring into full
exercise all the higher powers of Government under the Constitution.

The Constitution confers on Congress the power (art. 1, sec. 8:)
" To
lay and collect taxes, duties, imposts, and excises, to pay the debts
and provide

for the

common

defence and general welfare of the United

States.

To borrow money on the credit of the United States.
To regulate commerce with foreign nations, among the
and with the Indian tribes.
To coin money, regulate the value
To raise and support armies.
To provide and maintain a navy.

thereof,

several States,

and of foreign

coins.

34:

To make

which

be necessary and proper for carrying into
all other powers vested by the Constitution in the Government of the United States, or in any Department
all

laws

shall

execution the foregoing powers, and
or officer thereof."

These are among the high powers of Government which must now be
brought into full, ample play. The table which I have before me, procured from the Census bureau, shows that the true value of the property,
real and personal, within the United States, is sixteen billions, one hundred
andfifty-nine millions, six hundred and sixteen thousand and sixty-eight dollars,
(See
($16,159,616,068,) and the assessed value to be $12,006,756,585.
Appendix.)

The power in the Constitution to " lay and collect taxes, duties, imposts,
and excises," is general and unlimited. Congress has the power to levy
and collect any amount of taxes that may be necessary to preserve its
existence and pay all its debts. Government has a claim, a mortgage in
Will Congress do its duty in
fact, on all this property, to that extent.
passing bills to collect these taxes ? This is the vital question. Will Congress have the firmness and the courage to impose the necessary taxation
to sustain the credit of the Government? Direct taxation, excises, and
internal duties, are new features within the United States. They will be
heavy burdens on the people, but essential to sustain the circulation of
demand Treasury notes. The tax-gatherer will be an unwelcome visitor
to most people, but his face must soon be familiar.

Some members of Congress may hesitate to vote for the tax bills, fearing
that they may not be in favor with their constituency at home. Under
these circumstances, will members of Congress meet the question boldly
and firmly? Here is the whole property of the country at the will of
Congress. You have the power to tax it to an unlimited extent, if
necessary to sustain the Government.
This is the capital, $16,000,000,000,000 in amount, on which your Treasury notes and bonds rest. This claim of Government, in the hands of Congress, is direct and specific on the banks throughout the United States,
including the gold and silver in their vaults on commerce on all kinds
of production and business on railroads, steamboats, and their passengers; on gas companies; on manufacturing companies of all kinds; in
short, all real and personal estate of every kind is held subject to the
payment of the Treasury notes and bonds issued by the Government.
Congress is clothed with this mighty power to sustain the nation at this
time. Will you hesitate to do your duty ? This is what the people, the
capitalist, the merchant, and all who confide in your demand notes, want
to know. If they take these notes, they want to know positively whether
you will enforce the claim of the Government upon the property of the
country, to the full extent necessary to redeem the Treasury notes, and
pay punctuallythe interest on the bonds which they take of you to sustain
the government. Unless you are prepared to satisfy the country on this
pointjt is in vain to issue bonds or notes,and expect them to pass currently
among the people. Unless this is done they will depreciate, and they
ought to depreciate; but with ample taxation, cheerfully voted by
Congress, they will be the very best security in the country, because the
whole property of the country is held for their redemption. Congress has
a plain duty to perform. It has ample power. This power should now be
enforced. Will Congress perform this duty ?
;

;

;

35
The emergency is great, and the exercise of
it will.
now an imperative necessity, in order to sustain the credit of

I cannot doubt that
this

power

is

the United States and justify the Government in issuing so large an
amount of Treasury notes, to circulate as money and be made a legal tender in the payment of debts. Congress (as well as the Committee of
is of opinion that we must raise by direct taxes,
excise*?,
and duties on imports, during the current year, at least
That was shown by the recent resolution passed by the
$150,000,000.
This will pay the current ordinary expenses of the
Senate and House.
Government, and the interest on all the extraordinary war debt, and

Ways and Means)
inlrriKil duties,

rri'Mte

a sinking fund for retiring annually a portion of the Treasury notes.

In carrying on the existing war, and putting down the rebellion, it is
necessary to bring into exercise all the sovereign power of the Government to sustain itself. The war power must be exercised to its fullest exThe money power of the Government must be brought into requisitent.
ion.
The power to tax must be availed of. All the energies of the nation
must be aroused and brought into action. The power of the Government
and the means of the people must all be devoted to this great work. The
Government must be preserved, and this nation of thirty-four States must
be perpetuated. The life of the nation is in peril and all we have and all
we hope for must be devoted to maintain its existence, until peace and
quiet are restored in every part of our common country.
This bill is a necessary means of carrying into execution the powers
t

;

granted in the Constitution "to raise and support armies," and "to provide and maintain a navy."
In the present crisis of our national affairs, it is necessary that the army
"
should be " supported," and the navy maintained." This necessity will
member on this floor.
not be questioned by any loyal

The Constitution provides that "all the laws necessary and proper for carrying into execution the foregoing powers" may be passed by Congress.
If the end be legitimate, and within the scope of the Constitution, all the
means that are appropriate, which are plainly adapted to that end, and
which are not prohibited, may be constitutionally employed to carry it into effect.

If a certain means to the exercise of any of the powers expressly given
by the Constitution to the Government of the Union be an appropriate
measure, not prohibited by the Constitution, the degree of its necessity is

not of judicial cognizance.
the United States is not prohibited by the Constitution from issuing Treasury notes on demand, and making them a legal tender in payment of all debts within its jurisdiction. The Constitution
a question of

legislative discretion ;

The Government of

(Art. 1, Sec. 10) prohibits the States from making any thing but gold and
silver coin a legal tender in payment of debts ; but this does not at all restrict the sovereign power of the United States.
Congress has the power

money "regulate the value thereof, and of foreign coin." Gold
by long practice a practice that has continued for centuries
among all nations has become the legal money of the world in all com-

to coin

and

silver

mercial transactions.

Its real intrinsic value is

not as great as that fixed

upon it by Governments. All Governments fix the value of gold and silver, and without the Government stamp, gold and silver would be a simple commodity, like other things having intrinsic value. Some Governments fix the value of coin higher, and some lower, just as each, for itself
chooses to determine.

Any

other metal or thing that should be stamped,

36
its value regulated by all the Governments of the world, would
pass
equally well in all commercial transactions as gold and silver, although
not intrinsically as valuable. Exchequer bills or Treasury notes whose
value is fixed by Government, and stamped as money, would pass as
money in the payment of debts within the jurisdiction of the Govern-

and

ment

fixing such value.
In regulating the value of "coin," either foreign or domestic, Congress
may provide that gold and silver shall be of no greater value in the payment
of debts within the United States than the Treasury notes issued on the
credit of this Government, which stamps such coin and fixes its value.
These high powers of Government have been frequently exercised by
Great Britain during her continental wars, in making the Bank of England notes receivable for public dues, and virtually a legal tender in pay-

ment of

debts, by suspending the statutory clause requiring specie payments within the United Kingdom and other Governments of Europe
have exercised the same high prerogatives whenever necessary to preserve
their existence. But we are not left to this argument alone for constitutional power to issue these demand notes and make them a legal tender in
payment of debts, as I will endeavor hereafter to show.
;

The Constitution provides that Congress shall have power to pass "all
laws necessary and proper" for carrying into execution all the powers
granted to the Government of the United States, or any department or
officer thereof.

The word

necessary, as used

,

is

not limited by the additional word " pro-

per," but enlarged thereby.
" If the word
necessary were used in the strict, rigorous sense, it would
be an extraordinary departure from the usual course of the human mind,
as exhibited in solemn instruments, to add another word, the only possible
effect of which is to qualify that strict and rigorous meaning, and to present clearly the idea of a choice of means in the course of legislation. If

no means are to be resorted to but sueh as are indispensably necessary,
there can be neither sense nor utility in adding the word proper ;' for the
indispensable necessity would shut out from view all consideration of the
'

means." 3 Story's Commentaries, sec. 122.
Alexander Hamilton, in discussing these high powers of the Constitution,

propriety of the

says:

" The authorities essential to the care of the common defence are these
to build and equip fleets to prescribe rules for the government of both to direct their operations to provide for their support.
These powers ought to exist, WITHOUT LIMITATION because it is impossible to foresee or define the extent and variety of national exigencies,
and the correspondent extent and variety of the means necessary to satisfy them. The circumstances which endanger the safety of nations are infinite and for this reason no constitutional shackles can wisely be imposed
" This
*
*
*
*
on the power to which the care of it is committed"
:

to raise armies

;

;

;

;

;

;

power ought to be under the direction of the same councils which are ap*
*
"It must be
pointed to preside over the common defence."
admitted as a necessary consequence, that there can be NO LIMITATION of
that authority which is to provide for the defence and protection of the
community in any matter essential to its efficacy ; that is, in any matter
essential to the formation, direction, or support of the NATIONAL FORCES."
This statement, adds Hamilton
" Rests
upon two anxioms, simple as they are universal the means ought
1

"*

:

37
to be proportioned to the end; the persons from whose
ment of the end is expected ought to possess the means

attained."

Federalist,

No.

23,

pp.

agency the attainis to be

by which it

95, 96.

Congress may judge of the necessity in the present exigency. It may
decide whether it will authorize the Secretary of the Treasury to issue
demand Treasury notes, and make them a legal tender in payment of
debts, or whether it will put its six or seven per cent, bonds on the marruinous rates of discount, and raise the money, at any sacrifice the
money-lender may require, to meet the pressing demands upon the Treasury. In the one case the Government will be able to pay its debts at fair
ket, at

rates of interest ; in the other, it must go into the streets shinning for the
means, like an individual in failing circumstances, and sure of being used
up in the end by the avarice of tbose who may exact unreasonable terms.
The Government needs and should have, in her present peril, the aid and

protection of

all patriotic citizens.

knowing the power of money, and the

disposition there is
for the acquisition of greater gain, I am unwilling
that this Government, with all its immense power and resources, should

But,

sir,

among men

to use

it

be left in the hands of any class of men, bankers or money-lenders, however respectable and patriotic they may be. The Government is much
stronger than any of them. Its capital is much greater. It has control of
all the bankers' money, and all the brokers' money, and all the property
of the thirty millions of people under its jurisdiction. Why, then, should

go into Wall street, State street, Chestnut street, or any other street,
begging for money ? Their money is not as secure as Government money.
All the gold they possess would not carry on the Government for ninety
days. They issue only promises to pay, which, if Congress does its duty,
are not half as secure as United States Treasury notes based on adequate
it

taxation upon

all

the property of the country.

borrow money ? I am opposed,
Why,
go
in our present extremity, to all shifts of this kind. I prefer to assert the
power and dignity of the Government, by the issue of its own notes,
then,

into the streets at all to

pledging the faith, the honor, and property of the whole loyal people of
the country to maintain their circulation and provide for their redemption.

On the question of constitutional power we are not left without the
recorded opinions of the ablest jurists in the country. 1 Kent's Com.,
3512 iMcCuttoch v. Tlie State of Maryland, 4 Wheat, R., 41320.
Chief Justice Marshall, Daniel Webster, and Judge Kent lay down the
doctrine as follows

:

" The Government of the United States is one of
enumerated powers,
and it can exercise only the powers granted to it but though limited in
its powers, it is supreme within its sphere of action.
It is the Government
of the people of the United States, and emanated from them. Its powers
were delegated by all, and it represents all, and acts for all.
" There is
nothing in the Constitution which excludes incidental or implied powers, The Articles of Confederation gave nothing to the United
States but what was expressly granted but the new Constitution dropped
the word expressly, and left the question whether a
particular power \\ a>
granted to depend on a fair construction of the whole instrument. Xo
constitution can contain an accurate detail of all the sub-divisions of its
powers, and all the means by which they might be carried into execution.
;

;

38
would render it too prolix. Its nature requires that only the great outmarked and its important objects designated, and all the
minor ingredients left to be deduced from the nature of those objects.
The sword and the purse, all the external relations, and no inconsiderable
portion of the industry of the nation, were entrusted to the General Government; and a Government entrusted with such ample powers, on the
due execution of which the happiness and prosperity of the people vitally
depended, must also be entrusted with ample means for their execution. UnIt

lines should be

require it, we ought not to adopt a construcwhich would impute to the framers of the Constitution, when granting great powers for the public good, the intention of impeding their
exercise, by withholding a choice of means. The powers given to the
Government imply the ordinary means of execution; and the Government, in all sound reason and fair interpretations, must have the choice of
the means which it deems the most convenient and appropriate to the execution of the power. The Constitution has not left the right to Congress
to employ the necessary means for the execution of its powers to general
reasoning. Article 1, section 8, of the Constitution, expressly confers on
Congress the power to make all laws that may be necessary and proper
to carry into execution the foregoing powers.' Congress may employ
such means and pass such laws as it may deem necessary to carry into execution great powers granted by the Constitution and necessary means,
less the

w ords imperiously
r

tion

'

;

in the sense of the Constitution, does not import an absolute physical neIt stands
cessity, so strong that one thing cannot exist without the other.

any means calculated to produce the end. The word necessary admits
of all degrees of comparison.
thing may be necessary, or very necessary, or absolutely, or indispensably necessary. The word is used in various senses and in its construction, the subject, the context, the intention,
are all to be taken into view. The powers of the Government were given
for the welfare of the nation. They were intended to endure for ages to
come, and to be adapted to the various crisis in human affairs. To prescribe the specific means by which Government should in all future time
execute its power, and to confine the choice of means to such narrow
limits as should not leave it in the power of Congress to adopt any which
might be appropriate and conducive to the end, would be most unwise and
for

A

;

would be an attempt to provide, by immutable
which, if foreseen at all, must have been foreseen
dimly, and would deprive the Legislature of the capacity to avail itself of
experience, or to exercise its reason, and accommodate its legislation to
circumstances. If the end be legitimate, and within the scope of the Conpernicious, because

it

rules, for exigencies

stitution, all means which are appropriate, and plainly adapted to this
end, and which are not prohibited by the Constitution, are lawful."
It is plainly within the scope of the Constitution that the Government
should maintain itself; that the army should be supported; that the navy

The ways and means of doing this are left to Conmay do this entirely by taxation. It may
provide by law to levy and collect taxes enough every year to pay the
whole expenses of the war during each current year, and so "pay as we
go." It may issue six per cent, bonds and sell them on the market for
what they will bring even if they will not sell for over fifty cents on the
should be maintained.
gress to provide.

Congress

dollar to raise money to carry on he war. It may issue Treasury notes
payable on demand, and make them a legal tender in payment of debts.
Either one or all of these modes of paying the expenses of the Govern-'

39
ment is left to the discretion of Congress. Either mode is constitutional:
and it is left to the sound discretion of Congress to decide which mode it
will adopt, or

present

whether

it

will adopt a part of each, as being the best in the

crisis.

My own

impression is, that

it

will be best for us to adopt, in pait, all of

modes for providing the means.
1. Raise by taxation the current year, over and above the amount
ceived from duties on imports, the sum of $150,000,000.
these

2.

Issue $100,000,000 of

re-

demand Treasury notes

$50, 000, 000 authorized in July, making them a legal
debts, and exchangeable at any time for 6 per cent,

with a further issue of demand notes

if

in addition to the
tender in payment of

twenty years' bonds
Congress shall hereafter deem it
;

necessary.

Provide for the issue of all the twenty years' 6 per cent, bonds that
necessary to fund the demand Treasury notes, and other fundable
Treasury notes that may be issued, (say $500,000,000 six per cent, twenty
years' coupon bonds,) and pledge $30,000,000 of the annual taxes to pay
3.

may be

the interest half-yearly thereon, and pledge $25,600,000 more, as a sinking
fund to redeem the principal in twenty years.
1. This tax of $150,000,000 would afford an ample basis on which to rest
the credit of the Government for this large issue of Treasury notes and
bonds, and would insure the punctual payment of the interest to the capitalists who might hold them.
2. The demand notes put in circulation would meet the present exigencies of the Government, in the discharge of its existing liabilities to the
army, navy, and contractors, and for supplies, materials, and munitions of
war. These notes would find their way into all the channels of trade
among the people ; and as they accumulate in the hands of capitalists,
they would exchange them for the six per cent, twenty years' bonds.
These circulating notes in the hands of the people would enable them to

pay the taxes imposed, and would facilitate all business operations between farmers, mechanics, commercial business men, and banks, and be
equally as good as, and in most cases better, than the present irredeemable circulation issued

by

the banks.

twenty years' bonds in the hands of
the Secretary of the Treasury, ready to be issued, would afford ample opportunity for funding the Treasury notes as fast as capitalists might desire
to exchange Treasury notes not bearing interest for coupon bonds of the
3.

The

$500,000,000 six per cent,

United States bearing six per cent, interest, and amply secured by a tax
upon the people and all their property.
In this way the Governnlent will be able to get along with its immecli^
ate and pressing necessities without being obliged to force its bonds on
the'market at ruinous rates of discount; the people, under heavy taxation,
will be shielded against high rates of interest ; and the capitalists will be
afforded a fair compensation for the use of their money during the pending;
struggle of the country for national existence.
suspension of specie payment is greatly to be ddplored, but it is not

A

a fatal step in an exigency like the present. The British Government and
the Bank of England remained under suspension from 1797 to 1821 '2 a
period of twenty-five years. During this time England successfully resisted the imperial power of the Emperor Napoleon, and preserved her
Own imperilled existence. During all this time the people of Great Brit1

ain advanced in wealth, population,

and resources.

Gold

is

not as valu-

40
able as the productions of the farmer and mechanic, for it is not as indispensable as are food and raiment. Our army and navy must have what is

more valuable to them than gold and silver. They must have food,
and the material of war. Treasury notes issued by the Government, on the faith of the whole people, will purchase these indispensable
articles, and the war can be prosecuted until we can enforce obedience to
the Constitution and laws, and an honorable peace be thereby secured.
far

clothing,

This being accomplished, I will be among the first to advocate a speedy
return to specie payments, and all measures that are calculated to preserve
the honor and dignity of the Government in time of peace, and which I
regret are not practicable in the prosecution of this war.
I do not despair on the contrary, I have an abiding faith in the patriotism, firmness, and resources of the people to maintain this Government.
I feel that we are in great peril but when the people and our rulers become sufficiently aroused to fully appreciate the magnitude and probable
duration of the rebellion a rebellion that has grown into most gigantic
proportions then shall we be able to put forth the energy and the means
;

;

necessary to crush

it.

An early

and successful advance of our armies is of the utmost importance. We need such an advance to sustain the financial credit of the
Government. We need it to prevent foreign intervention we need it to
rouse the flagging energies of the people and above all, we need it to
vindicate the courage and invincibility of our brave soldiers, who are so
anxious to be led on to victor y.
;

;

41

APPENDIX.
TAI3LE A.
Irue Value of

STATES.

Real and Personal
1850, aud the eighth

Estate, according to the seventh

Census, 1860, respectively.

Census,

TABLE

B,

Idble showing the Federal Population, and the Assessed Value of Real
Personal Property of the Several States of the Union. Census 1860.

STATES.

and

43

At the conclusion of Mr. Spaulding's speech, Mr. VALLANDIGHAM obtained the floor and offered a substitute for the bill, which
was

read.

(Congressional Globe, p.p. 526.)

"I will follow an example set me, ajnd give notice
MR. STEVENS said
amendment which I shall offer to the bill. It is to make the semiannual interest payable in coin. I shall make it when we reach the pro:

of an

per time and place."

MR. VALLANDIGHAM. "That is included in the amendment I proMr. Stevens "Yes! but my amendment is to the original bill."
Mr. Vallandigham "I do not desire to speak upon the bill at this stage
of the debate, and therefore I will cheerfully yield to my colleague (Mr.
pose.

Pendleton), who proposes to discuss the constitutional question of legal
tender." Mr. Pendleton obtained the floor.

MR. PENDLETON'S SPEECH.

MR. PENDLETON, on the 29th

inst.

made. an elaborate speech

in

opposition to the constitutionality as well as the expediency of
He commenced by saying,
the legal tender clause.
" MR.
CHAIRMAN, I was glad to hear the announcement made by the
gentleman from Vermont, (Mr. Morrill), a member of the Committee of
>YJI ys and Means, by my colleague (Mr. Vallandigham), by the gentleman
from New York, (Mr. Roscoe Conkling), and by the gentleman from
Pennsylvania, (Mr. Stevens), that they each intended to propose to the

House

to

make changes

in this bill, either

by way of amendment or sub-

stitute."

MR. PENDLETON

"These notes are

to

be made lawful money and a

legal tender in discharge of all'pecuniary obligations, either by the Government or individuals, a character which has never been given to any note
of the United States, or any note of the Bank of the United States by any

law ever passed. Not only, sir, was such a law never passed, but such a
law was never voted on, never proposed, never introduced, never recommended by any department of the Government the measure was never
seriously entertained in debate in either branch of Congress." MR.
;

CONKLING interrupting, enquired "whether the present Secretary is
favor of making paper a legal tender?" MR. SPAULDING "In reply

in
to

the question of my colleague, I will say that the Secretary of the Treasury has been called upon for his opinion in regard to this bill. "We were

assured that his reply would be sent to us yesterday, but

we

did not re-

We

ceive it.
expect his answer every hour." MR. CONKLING "I am
not certain that I understand what my colleague said. Does he expect a
letter from the Secretary of the Treasury which will contain his views on
the financial question, and also 011 the legal question?" Mr. Spaulding
"
Upon the bill specifically." Mr. Conkling "Containing the legal ten-

der clause?" Mr. Spaulding "Yes, sir." MR. PENDLETON "I cannot
answer the question so far as the opinions of the present Secretary of the
Treasury are concerned. I affirm again the statement I have made, that
a proposition of this kind has never been recommended to either House
of Congress by any Department of the Government from its organization
The report of the Secretary of the Treasury, made at the opening of the
Session, contains no such recommendation."

44
Mr. Pendleton contended that the bill, if passed, would impair
the obligation of past as well as of future contracts, and that it
would make it illegal to make a contract for dealing in gold or
silver coin, for the reason that these legal tender notes might be
tendered in payment of coin contracts. He insisted that there
was no express power granted in the Constitution to make United

money and

a legal tender in payment of debts,
"to regulate commerce" gave no such power.
power

States notes lawful

and

.that the

He

then said:

"The gentleman from New York

(Mr. Spaulding), in his argument yesterday, deduced this power from the general powers of the Government.
He told us that Congress had power to lay and collect taxes ; to raise and
support armies, to provide and maintain a navy, and that all power necessary to effectuate these purposes was expressly given by the general grant
of the Constitution. If I should admit his statement in the very language
in which he has made it, am I not entitled to ask whether he has shown
us any legitimate connection between making these notes a legal tender
and the power to raise an army ? Might I not ask whether the repudiation of the obligations of the Government to pay its interest is a legitimate means for providing and sustaining a navy ? Whether impairing the
obligations of contracts between private individuals throughout the coun-

any degree assist the Government in its great duty in laying
and collecting taxes ? We had no demonstration of the necessity or propriety of these means to accomplish those ends.
The gentleman spoke quite at large in reference to the sovereign power
of the Government. He told us that this power was not prohibited in the
Constitution. He told us that in times of great emergency every thing
may be done except that which is prohibited and he read an argument
from the Attorney General which concludes as it began, with the propositry, will in

;

tion that such a
this

whole

When

I

power

idea.

come

is

I think

to

not prohibited to Congress. Sir, I repudiate
it has no solid foundation in the Constitution.

examine the powers of Congress according

to the

principles of interpretation to which I adhere, I look to the grants of the
Constitution. I find no grant of this power in direct t erms, or, as I think,
by fair implication. It is not an accidental omission it is not an omission
:

through inadvertency. It was intentionally left out of the Constitution,
because it was designed that the power should not reside in the Federal

Government."

MR. PENDLETON continued his argument at great length against
the Constitutional power of the government to issue legal tender
He quoted from Story, Madison,
notes to circulate as money.
Hamilton, Calhoun, and made long extracts from Mr. Webster's
speeches which, were made while the government was on a peace
footing, denying the power of the Government to issue currency
and make it a legal tender. He insisted that no State, and that

even Congress itself could not make anything but gold and silver
That the language of
coin a legal tender in payment of debts.

45
the Constitution, and the weight of authority, it seemed to him,
settled the question that Congress had not the power to do that
which it is proposed shall be done by the provisions of this bill.

He

concluded as follows

:

"Let gentlemen heed this lesson of wisdom. Let them, if need be, tax
the energies and wealth of the country sufficiently to restore the credit of
the Government. Let them borrow whatever money in addition may be
necessary borrow to the full extent that may be necessary and let us
adhere rigidly, firmly, consistently, persistently, and to the end, to the
principle of refusing to surrender that currency which the Constitution
has given us, and in the maintenance of which this Government, has
never, as yet, for one

moment wavered."

The letter of Secretary Chase of the 22d inst. was regarded by
a majority of the Committee of W^ys and Means and many
Members of the House, as non-committal on the legal tender
and many believed that when pressed to a
its constitutionality.
In order
to obtain the opinion of the Secretary more fully, MR. CORNING
clause of the

decision, he

bill,

would declare against

offered a resolution in the Committee of Ways and Means, which
was adopted, referring the bill (No. 240) to the Secretary, and
requesting him to communicate to the Committee at as early a

day as possible, his opinion as to the propriety and necessity of
immediate passage by Congress. After considerable delay the

its

Secretary sent to the Committee of

ing reply

Ways and Means

the follow-

:

EXTRACT FROM A LETTER OP THE SECRETARY OF THE TREASURY TO THE COMMITTEE OF WAYS AND MEANS,

TREASURY DEPARTMENT,

Jan.

29, 1862.

have the honor to acknowledge the receipt of a resolution of the
Committee of Ways and Means, referring to me House bill No. 240, and
requesting my opinion as to the propriety and necessity of its immediate
SIR

:

I

passage by Congress.
The condition of the Treasury certainly needs immediate action on the
subject of affording provision for the expenditures of the Government,
both expedient and necessary. The general provisions of the bill submitted to me, seems to me well adapted to the end proposed. There are,
however, some points which may, perhaps, be usefully amended.
The provision making United States notes a legal tender has doubtless
been well considered by the committee, and their conclusion needs no support from any observation of mine. I think it my duty, however, to say,
that in respect to this provision
reflections have conducted me to the
same conclusions they have reached. It is not unknown to them that I have
felt, nor do I wish to conceal that I now feel, a great aversion to making

my

anything but coin a legal tender in payment of debts.
anxious wish to avoid the necessity of such legislation.

It

It

has been

my

however,
at present impossible, in consequence of the large expenditures entailed
is,

46
by the war, and the suspension of the banks, to procure sufficient coin for
disbursements ; and it has, therefore, become indispensably necessary that
we should resort to the issue of United States notes. The making them a
legal tender might, however, still be avoided, if the willingness manifested
by the people generally, by railroad companies, and by many of the banking institutions, to receive and pay them as money in all transactions,
were absolutely or practically universal; but, unfortunately, there are
some persons and some institutions which refuse to receive and pay them,
and whose action tends not merely to the unnecessary depreciation of the
notes, but to establish discriminations in business against those who, in
this matter, give a cordial support to the Government, and in favor of
those who do not. Snch discriminations should, if possible, be prevented
and the provision making the notes a legal tender, in a great measure at
;

least, prevents it, by putting all citizens, in this respect, on the same level,
both of rights and duties.
The committee, doubtless, feel the necessity of accompanying this measure by legislation necessary to secure the highest credit as well as the
largest currency of these notes. This security can be found, in my judgment, by proper provisions for funding them in interest-bearing bonds
by well-guarded legislation authorizing banking associations with circulation based on the bonds in which the notes are funded; and by a judicious
system of adequate taxation, which will not only create a demand for the
notes, but by securing the prompt payment of interest raise and sustain the credit of the bonds. Such legislation, it may be hoped, will
divest the legal tender clause of the bill of injurious tendencies, and secure the earliest possible return to a sound currency of coin and promptly
;

convertible notes.
I

beg leave to add, that vigorous military operations and the unsparing

########

retrenchment of

all

necessary expenses, will also contribute essentially to

this desirable end.
I

*.#

have the honor to be, with very great respect, yours truly,
S.

P.

CHASE.

Hon. THADDEUS STEVENS, Chairman.

LETTER FROM HON.

S.

P.

CHASE, SECRETARY OF THE TREASURY.

TREASURY DEPARTMENT,

MY DEAR SIR

Jan.

30, 1862.

was impossible to get my answer ready before yesterday afternoon, when it was sent to the Chairman of the Committee the
messenger boy instructed to deliver it to Mr. Stevens or yourself. The
House having adjourned, he left it, he says, for you at the National Hotel
It

;

instead of at Mr. Steven's lodgings.
Had I been aware that the part read to you would have been acceptable
as an extract, (to insert in your speech,) I would have sent it earlier in
advance of completing the answer.

your speech carefully last night. It seems to me to need no
^ou do not attach, I see, so much importance as I do to the"
Banking Act as a measure of relief; nor so much as I am confident you
I read

change,

will upon reflection. I confess too, that I was a little disappointed in being merely let off without censure when I thought myself entitled to
some credit. My two first loans were negotiated considerably above the
market rate, and the last at a rate almost equal at the time, and below,
while the market almost immediately afterwards fell.
S. P. CHASE.
Your friend,
Hon. E. Gr, SPAULDING, House of Representatives.

47
/

LETTER OF JOHN

A.

STEVENS, PRESIDENT OF

BANK OF COMMERCE.

YORK, Jan. 29, 1862.
you my thanks for your able exposition of
the financial affairs of the Government. It is clear that there are but the
alternatives you state to obtain any substantial relief the one, to flood

MY DEAR SIR

I

beg

to offer

the market with the long stocks, submit to the very great depression in
the price, and abide the consequences : a great augmentation of the public
debt, and ruin to many of the warmest supporters of the Government ;
the other, for the present to issue demand notes, making them a legal tender
in order to enable you to use them. No other plans have been, or in
opin-

my

ion can be devised, I have long entertained and freely expressed these
views, here and in Washington. Even if an attempt, more or less successful, had been made at the first to sell the long stock, yet, with the
profligate expenditure since made to such fearful amounts, "to this complexion had we come at last." It is idle to look back, but had there been
economy in the great departments of expenditure from the beginning, inspiring full public confidence in their able and honest management, it
may be questioned if the necessary funds could not have been provided
without making irredeemable paper money. The war would have been
shorter, the patriotism of the whole people fully sustained, and foreign
nations shown that this Government could not be divided.
I

am,

clear sir, respectfully

and truly yours,

JOHN A. STEVENS.
Hon. E. G. SPAULDING, Washington.

LETTER FROM HON. GEORGE OPDYKE, MAYOR OF

MAYOR'S OFFICE,

NEW

NEW YORK,

YORK.

Feb.

3,

1862.

MY DEAR SIR Accept my kind thanks for your note of yesterday,
also my apology for not having sooner expressed the gratification I

and
felt

on reading your very able and statesmanlike speech on the national
finances. That speech has received, as it deserved, the hearty approval of
every one who fully appreciates the imminent danger we are in of a collapse of the public credit. If the present financial embarrassments of the
Government should be aggravated by military disasters, or threatened
foreign intervention, it might precipitate a panic that would so depress
the public securities, that it would be difficult to obtain supplies for the
army, and thus arrest the further prosecution of the war. The only safe
way of avoiding this danger is to promptly pass the bill you have introduced and advocated so ably. I shall not fail to give you whatever aid I
can. I have tried in several instances to bring Mr. Brj-ant and Mr. Greeley
over to our

faith,

but'thus far without success.
I remain, dear sir, very truly yours,

GEORGE OPDYKE.
COMMONWEALTH BANK.
PHILADELPHIA, Feb.

MY DEAR SIR

14, 1862.

have read your speech on the finances of the nation
\vith the liveliest interest. It is at once clear, forcible, argumentative
and conclusive, worthy alike of a financier, a statesman, and a patriot.
I

Very
Hon. E. G. SPAULDING.

truly yours,

R.

MORRIS.

48
LETTER FROM STEPHEN COLWELL,

ESQ.

PHILADELPHIA, Jan.

30, 1862.

Hon. E. G. SPAULDING, House of Representatives, Washington.
DEAR SIR I have just read your very able and statesmanlike exposition of our public finances and our financial policy during the war, with
a satisfaction I cannot refrain from expressing to you by letter.
You have grasped the subject strongly and comprehensively, as well as
practically. I can not doubt that your views will prevail. I trust you
will now extend the same kind of effort to accomplish some harmonious
action between the Associated Banks and the Government. I believe that
these, and other leading banks can, by the aid of the Treasury and by concert in emergencies, keep the United States notes or currency at par that
is at par less only the special premium on gold, which will not be greater
than now if the Treasury currency is well managed. The regular circulation of paper currency will absorb in no very long period the whole
$200,000,000, and keep that amount moving. But as currency in the channels of business necessarily at times gorges in particular places, and de;

preciates at once if the holders are not relieved, such occasions should not
only be watched by the fiscal agents of the Government, but the proper
remedy should be applied. It would cost the Treasury no sum worth

mentioning, if the banks would enter into the plan heartily, to keep their
currency in such credit that it would perform with complete success every
function of a sound currency. According to my view, the banks are deeply interested in keeping up the credit of those notes. The continued demand for them created by the loans, by the payment of debts at banks,
and the payment of taxes, wT ill create a rapid circulation and an absorbing
power, which will enable the Government to re-issue the whole amount
several times a year. But there can be no doubt that an average of one
hundred millions will remain so prominently in the channels of business
as seldom to revisit the Treasury. If the banks will lend their aid effectively to support their circulation it is not likely that any further issue
will be needed, if they don't, they must depreciate, and further issue will
be inevitable, if the war continues. Even the banks should be willing to
acknowledge, that whatever their opinion about the propriety of issuing
this currency, the whole financial policy of the war and commercial in-

depend very much on its management. They
should accept the necessity and make the best of it and they can make a
very good thing for themselves by making the best of it. There can be
no doubt that the city banks can enlarge their discounts bjr the use of the
United States notes beyond what they could safely do upon their own
terests of the country, will

;

But I regard their hearty co-operation in sustaining this
which you have so well justified, as so important, that I think it
would be well worth while for the Treasury to pay them for the sort of
services they can render. I contributed an editorial on this subject to the
North American, which I send you. If your speech is to appear in pamphlet form please send me one, I send you also an article in the Banking
Magazine for January, 1862, on the subject of banks and the Treasury. Be
good enough to present my respects to Mr. Horton, of your committee,
circulation.

issue

who

is

an old acquaintance of mine.

With great

respect, very truly yours,

STEPHEN COLWELL.

40

EXTRACT FROM A LETTER OF

M.

HAWLEY,

S.

ESQ.

BUFFALO, Jan.

21, 1862.

SIR I suppose of course a large issue of demand notes for circulation will be authorized, receivable for all dues and made a legal tender;
and sufficient taxation to sustain the credit of all such issues and of the
Government bonds. I see no other method so economical and effective.

DEAR

Very

respectfully yours,

M.
EXTRACT FROM A LETTER OF

J.

If.

VAN ANTWERP,

ESQ.,

S.

HAWLEY.

OF THE STATE BANK,

ALBANY.

ALBANY, Feb,

DEAR

8,

1862.

your speech on the national
finances. The demand notes, in addition to the legal tender, need only to
be fortified by a sinking fund yearly of $10,000,000, derived from taxation,
SIR

Accept

my thanks for a copy of

to every $100,000,000 of notes issued, to

Yours

make them

truly,
J.

H.

pass equal to coin.

VAN ANTWERP.

LETTER FROM HON. ROBERT DENNISTON, LATE COMPTROLLER OF NEW YORK.

SALISBURY MILLS, Orange Co., N. Y., Jan. 30, 1862.
HON. E. G. SPAULDING.
DEAR SIR I have read your financial speech (as reported in the Tribune) twice over with great interest. The necessity for such measures is
greatly to be regretted, but I do not see with the light I have, how they
are to be avoided. In our national exigency, determined boldness, both
in civil and military affairs, will be worth a mint of money to us.

Please send

me your

speech for preservation,

when

printed in pamphlet

form.

With great

respect,

your obedient servant,

ROBERT DENNISTON.
LETTER OF

C. H.

RUSSELL, VICE PRESIDENT OF THE BANK OF COMMERCE.

NEW YORK,
MY DEAR SIR

Jan.

29, 1862.

have just read your speech as published to-day in the
Times, it appears to me a very fair and clear exposition of the present
financial condition of the Government, its necessities, its resources, and
the emergency which now demands the immediate passage of the bill reported by the Committee of Ways and Means. The exigency of the
Government to which I referred recently before that Committee, to justify
the legal tender of the notes, I think is now reached, and we have no
choice of any other measure as good as you propose. But protect the
issue of this currency by limitation of its amount, by large taxation, and
be sure to require by amendment that the payment of interest by the Government shall be certainly paid in coin on all its public debts.
In haste, yours truly,
C. H. RUSSELL.
I

P. S. In some quarters are suggestions not to receive these notes from
customers. This is wrong. Such a proceeding, or to make any exception
against them as lawful money of the United States, would affix a taint and
affect the public confidence in them.

50
ELEAZER LORD, LATE PRESIDENT OF THE NEW YORK AND ERIE RAILROAD.

PIERMONT, Jan.
HON. E. G. SPAULDING, M.

29, 1862.

C.

beg to congratulate you on your lucid, forcible, and comprehensive opening of the debate on the legal tender Treasury note bill.
It is unanswerable, and I trust will issue in an early triumph. I only
wish the sum proposed was larger, so as to extinguish all hopes of national
bonds being forced on the market and sacrificed. T think there will be a
struggle in certain quarters to withdraw them from circulation and turn
them into bonds on interest. The people would do that gradually without reducing the circulation too much, were there plenty more expected ;
and with a discretion for a larger sum the inimical parties could do no
harm.
Should your speech be printed in pamphlet form, which I hope it will,
please favor me with one or more.

DEAR SIR

I

ELEAZER LORD.

Respectfully, &c.,

LETTER OF HON.

E. S.

PROSSER.

BUFFALO, Feb. 7, 1862.
HON. E. G. SPAULDING, Washington, D. C.
DEAR SIR I thank you for a printed copy of your speech on the finances
of the country, received this morning I had read it in the paper before
with great interest and entire approval, but desire this copy for preservation. Whilst all loyal citizens must regret the necessity which compels
the Government to suspend specie payments and make its own demand
;

notes a lawful tender instead, I am quite unable, after very considerable
thought, to suggest any other measure of relief, which I think would
answer the purpose so promptly, or so well hence, I hope the bill as reported by the committee will speedily become a law, and this is I think
quite the general wish here. As the Spring approaches, anxiety increases
for a vigorous prosecution of the war to a conclusion for sometime or
other, not very remote, necessity will compel at least a large decrease in our
land and naval forces; $500,000,000 annually, can and will be paid cheer;

;

fully awhile, but I need not say to you that it cannot be very long; so it
behooves the Government to act with all practicable energy to end the rebellion by any means in its power, in the very shortest time it can be done.
I hope we shall come out of the conflict speedily and triumphantly and
that all the States may be again united under the present Constitution
still most of the slave states, except upon the border, seem almost hopelessly estranged, and will not, I fear, ever again, with their present people,
yield obedience to the fundamental law of the land and the acts of Congress, unless they know the penalty for treason henceforth is to be rigidly
;

;

enforced, and that the power of the Government is quite equal to capture
the leaders of the rebellion by hundreds and thousands, and are determined
do it, and to execute them as fast as captured, unless they throw down their
arms and disband, and return to loyalty. Can it be possible the Rebel
leaders would long hold out against such a proclamation, after ~they saw
that it was the intention of the Government to fulfil it to the letter, and
they were virtually surrounded by a superior force.
to

Tours

truly,

E.

S.

PROSSER.

51
LETTER OF GEO.

B.

BUTLER, OF THE HOUSE OF

A. T.

STEWART &

CO.,

NEW

YORK.

NEW YORK,

Jgn. 30, 18G2.
MY DEAR SIR *ond .you the lilt r u series of articles written to show
that the bills of the Government should be a legal tender. I belong to
the creditor class, but my interest in the Government absorbs all others.
I

In my view the war cannot be conducted except on this plan. I would
pay the interest in gold and silver and lay heavy taxes. There should be
$100,000,000 of

demand notes

of $1000, bearing 5 per cent, interest.
GEO. B. BUTLER.

Yours, very truly,

LETTER FROM

T.

W. OLCOTT, ESQ., MECHANICS* AND FARMERS' BANK.

ALBANY, Jan.

31, 18G2.

HON. E. G. SPAULDING.

DEAR SIR I have read your well constructed argument on national
nuances, and the issue of Treasury notes made a legal tender. I do not
suppose that a loan can be made, and I regard this issue of Treasury notes
the only adequate measure for sustaining the credit of the Treasury and the well
Money must be had or the war
being if not the very existence of the Government.
cannot be successfully prosecuted.
This measure will secure means, no other will except at ruinous sacrifices. It
/'x not a debatable
The struggle is for life. The knife is at our throat.
question.
We must strike with the most available weapon, and leave theory for a more conseason.
Of course you will pass a tax law. The people will hail
and it will inspire confidence in our public securities. I had hoped that
you would authorize funding at 4 or 5 years in an 8 per cent, stock, and
20 years in a 6 or 6)^ per cent, stock. The short 8 per cent, stock would
tempt to a large amount of funding, and when that short period expires,
it is to be hoped that the Government can borrow at 5 per cent,
We want to encourage funding so as to prevent a redundant currency,
and to prepare the way for possible if not probable further issues.
I have the honor to be, Your Obedient Servant,
:

t>

it,

THOMAS W. OLCOTT.
OFFICE OF THE COLUMBIAN INSURANCE COMPANY,

NEW YORK, Jan, 31, 1862.
HON. E. G. SPAULDING, Washington, D. C.
DEAR SIR I* have read your able exposition of the condition of the
national finances and the bill which you reported to authorize the issue
of $150,000,000 of demand notes, and I beg leave to express the opinion,
that there is no other means by which the Government can escape the utter ruin of their credit, than the immediate passage of the bill, and a bill
to raise an amount of revenue which shall render the prompt payment of
interest on all their loans beyond contingency. Should the passage of this
bill be delayed until the banks have paid their last installment to the
Government, and the banks should refuse to receive the demand notes,
and pay them out, they would of course depreciate to an extent sufficient
to damage the credit of the Government essentially.
If the experience of
a life, not now short, is of any value, I say unhesitatingly, that this is the
,

most

Those in power
critical period in our history within my knowledge.
must take the responsibility and do the needful instantly, or the consequences
may be, and I think will be terrific. As to paying in gold during the war,
it is utterly and totally impracticable, and the idea of doing so should at
once be discarded. After the present emergency is provided for, I trust

52
the bill for banking on the Government stock will be passed. The plan
will be approved by nearly all the intelligent community when once

adopted, and

now by a large majority of the men of wealth and influam informed. With apologies for trespassing upon your

is

ence, so far as I

valuable time,
I

am, your obedient servant,

THOMAS LORD.
POSTPONEMENT OF THE SPECIAL ORDER.

On Thursday,

the 30th inst.

,

MR. STEVENS moved

to postpone

the special order the Treasury note bill until to-morrow, for
the purpose of going into the Committee of the Whole on the

The motion was agreed to. And on Friday, the 31st
he again moved to postpone the Treasury note bill until
Monday, the 3rd of February, which was agreed to by the House.

Army

bill.

inst.,

On Monday, the 3rd of February, Mr. Vallandigham offered a
modification of his substitute for the bill, for the purpose of havThis substitute will be found
printed for examination.
printed at length in the Congressional Globe, page 614.

ing

it

MR. ROSCOE CONKLING With the permission of the gentleman
from Ohio, I desire to submit for the same purpose, the following,
which I propose to offer, at the proper time, as a substitute for
the whole

bill.

Congressional Globe, page 615.

MR. VALLANDIGHAM being entitled to the floor, addressed the
Committee of the whole House for one hour, in favor of his substitute, and in opposition to the legal tender clause in the original
bill.

His speech

will

be found reported at length in the appendix

to the Congressional Globe, pages 42, 43, 44 and 45.

He commenced by saying:
"It has been my habit, Mr. Chairman,

to premeditate, whenever premeditation was possible, whatever I have had to say in this House for no
man has a right, in my judgment, to obtrude his immature thoughts and
;

*

opinions upon a deliberative assembly.
" I
propose to-day to discuss the subjects involved in this bill to the best
of my ability, and with becoming candor and freedom, and I may add
earnestness too ; for I have the profoundest conviction of their incalculable importance to the interests, present and future, of the United States,
and of the people of this whole continent. Nor am I to be deterred from
a faithful discharge of my duty by the consciousness that my voice may
not be hearkened to here, or in the country, because of the continued, per-

but most causeless and malignant assaults and misrepresentations,
which for months past, I have been subjected. Sir, I am not here to
reply to them to-day. Neither am I to be driven from the line of duty by
them. "Strike but hear." Whatever a silenced or mendacious press,

sistent,

to

53
outside of this House may choose to withhold, or to say, no man who is
fit to be a member of this House, will allow his speech or his votes, or his
public conduct here, to be controlled by his personal hates or prejudices.
record of the
Sir, I recant nothing, and would expunge nothing from the
past, so far as I am concerned, But my path of duty now, as a Represen-

sun at broad-noon. THE SHIP OF STATE is UPON
was not the helmsman who drove her there; not had I
directing her course. But now, when the sole question is,

tative, is as clear as the

THE ROCKS.

I

part or lot in
shall she be rescued ?

I will not any longer, or at least just now enthe mischief.
*
*
*
*
I do not agree, Mr. Chairman, with the gentleman
who has opened this debate, (Mr. Spaulding, ) that this bill is a war measure. Certainly, sir, it has been forced upon us by the war, but if peace

how

quire

who has done

were restored to-morrow, these $100,000,000 would be just as
credit as
are
the "
public

they

essential to

to-day."

Mr. Vallandigham continued his argument at great length.

He

was unconstitutional, that it
would be disastrous and unjust. He

insisted that the legal tender clause

was a forced loan, and that it
said no scheme of loan or taxation, or national bank, or currency,
or other similar contrivance, could be devised, and put into operaand disaster. The Government has no
no gold and silver coin, which is the only money in the
mone}',
He advocated Treasury notes, ^without any promise to
world.
pay money, and without the legal tender clause, which should

tion in time to avert ruin

pass as currency from hand to hand, between the Government
and its creditors and debtors, and be supported by a nearly equal
amount of taxes such taxes to be received by the Government in
these notes.

He urged that the experiment of forcing a paper currency upon
the country, was a dangerous experiment, that it would lead to
other enormous issues, gold and silver would be banished from
"
an immense inflation would take
in
circulation,

place,
cheap
materials, easy of issue, worked by steam, signed by machinery,
there would be no end to the legion of paper devils which shall

pour forth from the loins of the Secretary." That inevitably there
would follow bloated currency, high prices, extravagant speculation, enormous sudden fortunes, immense factitious wealth, and
general insanity.

" United States notes" instead
objected to their being called
"
of
Treasury notes," as they had always heretofore been called,
and deprecated the idea that they were likely to be a permanent

He

currency, or at least until the Secretary's grand fiscal machine,
"Ms magnificent National Paper Mill, founded upon the very

stock provided for in this

bill

can be put into operation."

He

54
insisted "that these notes were not money, that they would not
circulate as currency, would not be taken as legal tenders, and in

discharge of judgments, and contracts, and state debts, or private
debts,
though you should send them forth bearing ten times the
image and superscription the fair face and form of ABRAHAM
i *

now president and CAESAR of the American Republic."
He urged the substitute presented by him as follows

LINCOLN,

:

" The fundamental idea of this substitute

is to

support and float these

$150,000,000, by nearly an equal amount of taxation and revenue, payable
of course in these notes. The Government owe the people and the peo-

ple owe the Government, each $150,000,000, and these notes are primarily
to be used as a common medium of payment between them. * * * *
I do not propose or pretend that these notes are to be convertible into
gold and silver. They are not payable on demand they are not payable
to bearer, nor payable at all. They are not to be paid, but to circulate as
currency receivable in Government dues, and finally to be funded in
twenty year's stocks. They are not promises to pay, and are not therefore paper money. They do not represent gold and silver, of which the
*
*
*
The
Government has none.
United States are to cease in part, for a time, to be a specie paying hard
;

I deplore it profoundly. But imperious necessity
demands it. There is no alternative, no matter what evils may follow.
But I utterly deny, sir, the right of the Federal Government to provide a paper currency, intended primarily to circulate as money, and meet
the demands of business and commercial transactions, and to the exclu-

money Government,

sion of all other paper. It is not the intent or object of the substitute to
*
*
furnish such a currency for the country.
Such, Mr. Chairman, is the substitute which I have submitted. It difThe one relies on force, the other upon
fers essentially from the bill.

the one looks to the direct and despotic coercion of law and arms,
*
*
*
and the other to the indirect and ordinary coercion of taxes.

credit

To

;

my political friends let me now appeal

for support, not only for this
but of the taxation which must follow it, as essential to the
maintainance of the good faith and credit of the Government."
substitute,

At

the conclusion of Mr. Vallandigham's speech, Mr. Hooper,
obtained the floor.

of Mass.

,

MR. HOOPER'S SPEECH.
"

The unusual exigencies of this country require that we
MR. HOOPER
should look for other and deeper sources of revenue than any to which we
have heretofore been accustomed. We are contending for the maintainance of the Government, for the preservation of the Union, and for the
enforcement of the laws, on which depend the existence, as well as the
security of property.
To insure our success in this contest, great and unusual exertions have
already been made. An enormous army, a powerful navy, with vast
stores of artillery and ammunition, have been created. In providing for
the sustenance, comfort, and equipment of the Army and Kavy, the Government have been obliged to incur expenses far exceeding in magnitude

55
any which have been hitherto known

in our history. To continue them
in their present state of efficiency, large additional sums must be expended ; and it now becomes the duty of Congress to devise methods by which

sums can be obtained with the least hardship to the people, and the
Government. In considering the means by
which this is to be effected, it must be remembered that it is hardly possible for the Government to raise money for any purpose without occasioning some inconvenience to individuals. To oppose necessary measures, therefore, simply upon the ground that it will injuriously affect this
these

least risk to the credit of the

class or that class of the people, is unreasonable.

Parties interested

may

endeavor to show that the same objects can be effected with less hardship
than by the methods proposed, or may endeavor to obviate any objectionable features, so far as may be consistent with the attainment of the desired end but they should always remember that the end aimed at must
be attained that its attainment will require individual sacrifices in some
;

;

form, and that

it is the part of wisdom, of patriotism, and of discretion,
to submit to such necessary sacrifices cheerfully when called upon, and
not by their opposition attempt to excite popular clamour, and weaken

the public confidence in the Government, to which they are indebted for
the safety of their persons, and the security of their possessions. Everj r
step which tends to weaken the public credit has the effect of rendering
private property more insecure, because it obstructs the Government in
procuring its necessary funds in the ordinary way, and may oblige it to
resort to the arbitrary modes of forced loans and heavier rates of taxation.
At this moment, therefore, when for the time every hope of aid from foreign capital is idle, when the country is compelled to look to her owr n resources for the means with which to maintain her integrity and subdue
the rebellion, not only does every dictate of patriotism, and every enobling sentiment of humanity, call upon the capitalists of the country to
rally in defence of the Government, but the meaner instincts of self-pre-

them to submit to slight sacrifices now, that they
secure and preserve their property.
Three measures have been considered in the Committee, which are, to
some extent, connected together, and form a comprehensive system by
which, it is believed, the Government will be enabled to procure the sums
necessary to the successful prosecution of the war; while, at the same
time, the burden upon the capital of the country will be light, and the
public will be benefited in some important particulars.
The first of these measures is the one now before the House, bjr which
the Secretary of the Treasury is authorized to issue United States notes,
not to exceed $150.000,000 in amount (including those authorized by previous laws), of denominations not less than five dollars. They are not to
bear interest, but are to be issued and received as money, convertible, at the
option of the holder, into six per cent, stock of the United States, the
principal and interest being payable either here or abroad^ and these notes
are to be a legal tender.
The second measure consists of a tax bill, which shall, with the tariff on
servation admonishes

may

imports, insure an annual revenue of at least $150,000,000.
The third is a national banking law, which will require the deposit of
United States stock as security for the bank notes now circulated as cur-

rency.
In order more fully to understand and more easily to meet any objections which may be urged against the first of these measures, being the

56

now occupying

the attention of the House, it will be desirable to noother two, which are designed to be more permanent in their
character., and upon the expected results of which the. present measure is
in some degree based."

one

tice the

MR. HOOPER here explained the various modes of the proposed
taxation, by which the credit of the government was to be supported, and also went into a full explanation of the National Currency Bank bill which had been prepared, and the manner in
which the government bonds would be absorbed by the banks, as
soon as the
follows
"

bill

should go into operation.

He

then proceeded as

:

tax, the'proper inauguration of the
the successful negotiation of a new loan, are
In the meanwhile, the Treasury is commatters that will require time.
paratively empty, and the demands upon the government are numerous

The levying of the contemplated

new banking scheme, and

and pressing.

To enable

the government to support itself during this in-

to facilitate the negotiation of their loans, the committee have decided to recommend the issue of government notes.
There is a necessity for money, and the object of the authority to issue

terval of time,

and

$150,000,000 U. S. notes, not bearing interest and made legal tender,
pay the creditors of the United States, and enable them to discharge
*

is

to

their

The propositions of comdebts.
mittees from. Boards of Trade and banks, which recently visited Washingdifton, submitted to the Secretary of the Treasury and declined by him,
fered from the theory of this bill so far, as to require that instead of the
issue of the United States notes the banks should be relied upon to furnish
the amount needed. The effect of this would be that the government
bonds must first be disposed of, and the money received for them paid to
the contractors ; in other words, that the government should go into the
money market and negotiate their bonds, without restriction as to the
rate or terms, at a time when the government is discredited by the delay
and the difficulties that have occurred in paying contractors and others
taking the notes of suspended banks in payment of these bonds, and with
these bank notes, thus obtained, pay off the contractors. The obvious effect of such an arrangement would be to put the reins of our national
finances in the hands of the banks, leaving to them the direction of our
path, with little opportunity for the government to exercise any influence
on the subject. Exactly upon what terms the government bonds could
;

be negotiated now, under such circumstances, no one can say but last
Summer, when the banks made their negotiation with the Secretary of
the Treasury for $100,000,000, they at first refused to do anything, because
the Secretary was restricted by law to taking par for seven per cent,
bonds payable in twenty years, and for seven and three-tenths Treasury
notes payable in three years. They finally decided, though with great reluctanceinfluenced by patriotic regard for the public interest as well as
;

own to take $100,000,000 of 'the latter; though at
money was not worth for commercial purposes more

wisely consulting their
that time, as now,

It is proposed in this bill to limit the Secretary to par
five per cent.
for six per cent, bonds, the principal and interest to be payable in specie
or its equivalent. It is believed that there can be nothing more secure

than

57
than these bonds, which thus become, as it were, a standard of value in
reference to the currency.
In the war of 1812 the Government paid for its supplies with funds obtained from the banks in the same manner as proposed in the plan recently submitted to the Secretary by those committees. The bonds of the
United States were then negotiated in some instances at twenty per cent,
less than their par value, and paid for in bank currency of different degrees of depreciation, according to locality, but averaging from twenty to
twenty-five per cent, discount, as compared with coin. To render the
government financially more independent, it is necessary to make the
United States notes a legal tender. It is possible that they would become
a practical tender, like bank notes, without providing for them to be a legal tender. If this were a foreign war there would be no doubt of it ; but

emergency, when those

who

are openly or secretly disto suggest obstacles that
may embarrass the government, nothing should be omitted that will add
to their efficiency. I am, therefore, in favor of making the notes a legal
tender, believing the Secretary of the Treasury, who alone has the power
in this present

loyal to the

government are found everywhere

to issue them, can and will use the power with his well known discretion,
and that it will assist him in his endeavor to keep the notes at par with

We shall probably be told that England, in her great struggle,
while specie payments were suspended, never made paper money a legal
tender. But in this respect her example should serve us as a warning
rather than a guide, because instead of it she did what was much worse,
by suspending the laws to enforce the payment of debts in cases where
the paper money had been refused as a tender.

coin.

It is important in this great struggle to show the superiority of the
principles of freedom, of education, of the elevation of mankind, upon
which society at the North is based, over those of slavery, which doom

men

to hopeless ignorance in order to insure abject obedience.
To do
our resources of every kind are abundant, both in men and in means;
and it is only necessary to draw them out in order to be successful.
To fail, would not be because the nation was so poorly endowed as to
be without the means of success, but because it refused to make use of
them. Such a result, if it were possible, would not weaken the truth of
the great principles for which we are contending; but would simply
demonstrate that we, of this generation, were faithless in guarding those
principles; faithless to ourselves; faithless to our country; faithless to
good government throughout the world ; and, since such infidelity is a

this

violation of unquestionable duty, faithless to

MR. ROSCOE CONKLING obtained the

God."

floor.

" I ask the
gentleman from New York to
of the majority of the Committee of Ways
and Means have spoken on this question, and if the gentleman will permit
me now to express the views of the minority of the Committee against the pend-

MR. MORRILL,

yield the floor.

ing

bid,

of

Vermont

Two members

I will be obliged to

MR. ROSCOE CONKLING

him."

"I

yield to the gentleman from

Vermont."

MR. STEVENS " I feel it my duty to state that the Treasury Department is urgent for the passage of this bill, and I trust, therefore, that
the vote on it will not be put off longer than Thursday next."

58
" I desire to call the attention of the House to a letwhich I have just received from the Secretary of the Treasury. It is a
note to me urging the immediate passage of this bill without further delay. For the purpose of letting the House understand the necessities of
the Treasury, I ask the Clerk to read an extract from that letter."

MR. SPAULDING

ter

The Clerk read

as follows

:

Immediate action is of great importance. The Treasury is nearly
empty, I have been obliged to draw for the last installment of the November loan. So soon as it is paid, I fear the banks generally will refuse
to receive the United States notes, unless made a legal tender. You will
*
*
see the necessity of urging the bill through without more delay."
41

MR. THOMAS, of Massachusetts "Has the gentleman any further communication that has been received from the Secretary of the Treasury
with reference to this bill ? If there has been any received I hope he w ill
be kind enough to have it read to the House."
r

A

MR. SPAULDING" communication has been addressed by the Secretary of the Treasury to the Committee of Ways and Means, and I have
no objection to its being read."
MR. E.OSCOE CONKLING " I would like to know whether the gentleman intends to have the whole of the communication read, or only extracts?"

MR. SPAULDING "I ask the Clerk to read what I send to him. The
balance of the communication is in relation merely to formal amendments. "What the Clerk will read is all of the communication that refers
to the principle of the bill."

MR. VALLANDIGHAM "Has the Committee of Ways and Means reit was expecting from the Secretary of the Treasury ?"

ceived the letter

MR. SPAULDING" This

is

the one."

(The Clerk here read the letter of the Secretary of the Treason page 45.)
ury, dated January 29, 1862, as published

MR. ROSCOE

CONKLING" I now

call for the

reading of the rest of that

letter."

" There is not the least
objection to its being read.
however, in the committee room. I will state what the remainder of
the letter is. The Secretary of the Treasury suggests some amendments
to the bill. He proposes two new sections to the bill, one relating to
the notes
counterfeiting and the other in regard to the manner in which
shall be executed. He proposes instead of having them signed by clerks
that there shall be a seal or die engraved upon them, which will indicate
the authority under which they are issued."

MR. SPAULDING

It

is,

" Are those the
only amendments?"
" There are two or three smaller amendments not afMR. SPAULDING
We propose in the
fecting the principle of the bill, however, in any way.
committee to act on those amendments to-morrow morning. If the letter
were here I would not have the slightest objection to its being read."

MR. ROSCOE CONKLING

MR. LOVEJOY

to ask the gentleman of the Committee of
they intend to propose to have action on this
taken on the tax bill?"

"I want

Ways and Means whether
bill

before action

is

59
"

/ have been anxious to have the tax bill brought in to be
considered; but the gentleman from Vermont (Mr. Morrill), who is chairman of the sub-committee on the lariff and 'lax bills, informs us that the subcommittee having that matter in charge will not be able to report to the ComMR. SPAULDING

first

mittee of

Ways and Means for

MR. ROSCOE CONKLING
letter of the Secretary of the

The

several days yet.

ury, therefore, will compel us to act on this
Tax bill can be introduced."

necessities of the treas-

however reluctantly, before the

bill,

" I
hope that the remaining portion of the
Treasury will be printed in the Globe."

" I have no
objection to that."
ROSCOE CONKLING " The gentleman has read the whole letter, and
MR.
/ ask- him to state whether the Secretary is for or against this bill with the le-

MR. SPAULDING

gal tender 2^rovision in it."

"He

MR. SPAULDING
which he

states that

MR. ROSCOE

he

is

I have another letter from him in
is for it.
anxious to have it passed in that form."

CONKLING" Let us have

MR. SPAULDING

"It

is

that read."

a letter to myself."

MR. MAYNARD " I ask my colleague on the Committee of Ways and
Means whether the portion of the Secretary's letter which has been read
is not all of it that appertains to the principle of the bill and whether the
;

balance does not relate merely to matters of detail."
Mr. SPAULDING " Yes, sir. I will read a paragraph of the letter written by the Secretary to myself this afternoon
" I came with reluctance to the conclusion that the
legal tender clause
is a necessity ; but I came to it decidedly, and support it earnestly.
I do
not hesitate since I have made up my mind.
The
conclusion I have arrived at has convinced me that it is important to the
success of the measure."
:

*****

And

on motion of Mr. Wright, the House

then,

(at half-past

four o'clock P. M.) adjourned.

The following

a copy of the letter of Secretary Chase referred

is

to in the foregoing proceedings of the House,

extracts were read

and from which

:

LETTER FROM HON.

S.

P.

CHASE.

MONDAY, 3d February,

MY DEAR
to him, that

SIR

my

:

Mr. Seward said to

hesitation in

embarrassed you, and I

1862.

me on

coming up

yesterday that you observed
to the legal tender proposition

am very

anxious wish
sorry to observe it, for
to support you in all respects.
It is true that I came with reluctance to the conclusion that the
legal
tender clause is a necessity, but I came to it decidedly, and I support it

my

is

earnestly.

much

I

do not hesitate when I have made up

regret I

may

feel

my mind, however
over the necessity of the conclusion to which I

come.
I have just sent a note to Mr. Stevens, with two sections (penal) instead
of one. You will, I think, see the necessity of them. The one I have

60
already sent I fear is not quite strong enough. What has the Committee
done ahout the amendments suggested ? I thought them important.
Immediate action is of great importance. The Treasury is nearly empty. 1
have been obliged to draw for the last installment of the November loan; so
soon as 'it is paid, Ifear the banks generally will refuse to receive the United
States notes.

You

will see the necessity of

Very
HON. E. G. SPAULDING.

delay.

On

urging the
sincerely yours,

bill

through without more
S.

P.

CHASE.

the 4th of February, the House gave consent to Mr. Merrill

to have printed a substitute having the sanction of one-half the
Committee of Ways and Means, which he proposed to offer at the

proper time in place of the original bill. Mr. Stratton, one of
the Committee, changed his mind, and now favors the substitute instead of the bill first reported, leaving the Committee of

Ways and Means

equally divided.
MR. MORKILL'S SPEECH.

MR. MORRILL, of Vermont "MR. CHAIRMAN: Engaged as I have
been upon other matters of at least equal importance, I have not had the
time to prepare an elaborate speech; but the subject of issuing $150,000,000 of paper currency and making it a legal tender by the Government at
a single bound the precursor, as I fear, of a prolific brood of promises,
no one of which is to be redeemed in the constitutional standard of the
country could not but arrest my attention, and having strong convictions
of the impolicy of the measure, I should feel that I utterly failed to discharge my duty if I did not attempt to find a stronger prop for our
country to bear upon than this bill a measure not blessed by one sound

precedent and damned by
I

know

the gentlemen

all.

who have had

the latter in charge have bestowed

upon it much time and perplexing thought, and from their thorough
knowledge of the subject and large acquaintance with the monetary circles
of the country, their opinions will have great weight in this Committee
deservedly so and I shall only claim a candid hearing in behalf of the
substitute of the minority of the Committee of Ways and Means, well
knowing that we are all inflamed by the same zeal for the triumphant success of our arms, the same solicitude for the honor and welfare of the people, who mean to live and die under the flag of our Union, and that we
can have but one wish, which is-, that the best plan shall be adopted.
urged by the gentleman from New York (Mr. Spaulding) to pass
a measure of necessity," and to enforce
"a war measure"
this idea he gives you the figures of our probable requirements, if the
war should be prolonged until July 1, 1863. Sir, I have no expectation

We are

this bill as

' ;

of being required to support a war for that length of time. The ice that
chokes the Mississippi is not more sure to melt arid disappear with the
approaching vernal season, than are the rebellious armies upon its banks

when our western army

shall break

from

its

moorings and rush with

the current to the Gulf, and baptise as it goes, in blood, the people to a
fresher allegiance. At the same time, the men of the East will only ask

Cl
an opportunity to cross bayonets with the chivalry to leave epithets
and try what virtue there is in steel! That hour is approaching, and I
have no fear of the result.

for

'Fly swiftly round, ye wheels of time!

'

We

can close this war by the 30th day of July next as well as in thirty
short and sharp' conflict.
v'Mis. Let us second general McClellan for a
By so doing we shall economise both blood and Treasury notes.
'

Jf this paper money is 'a war measure,' it is not waged against the
enemy, but one that may well make him grin with delight. I would as
soon provide Chinese wooden guns for the army as paper money alone for
*
the army.
*/
If, by the provisions of this bill, we cut ourselves off from all other resources, it is to be considered how much could be realized from this, in
my judgment, the weakest resource within our grasp, which is the power
of a bank issue, without any capital, and not even specie enough to tender the odd change. It is an experiment to inject, by a governmental
force pump, into the arteries of commerce a new currency, when the arteries are already filled. The whole bank circulation of the United States

**

in 18GO

was

******

$207,102,477; that of fhe rebel States was $50,647,028, leaving
But at this time, in consequence of the

for the loyal States $150,566,449.

diminution of all business, except that nourished by the war, the bank
circulation is over $20,000,000 less, or about $136,000,000. I admit that we
can drive a considerable share of this home upon the banks, and substi*
*
tute that of the notes of the United States in its place. *
.*
thus apparent that $20,000,000 is about all that would be absorbed
country, or kept afloat in the present condition of monetary affairs
without the intervention of Congressional omnipotence in making them a
It is

by

tli is

legal tender. If so made, they would, to the extent they are tendered for
public dues, be a forced loan ; and to the extent of the difference between
their current value and that of standard coin, it would be a breach of pubIt is true that the measure might be hailed with delight
by
bankrupts ; and if the bill passes, my friend from ISTew York (Mr. Conkling) no longer need press his bankrupt law, for they would have no occasion to go into Chancery in order to scale and settle off with their creditors, as "legal tenders" would soon be offered at rates entirely within
*
#
*
#
*
their means.
The Q Overn _
ment can flood the country with 150,000,000 paper dollars, but from that
lic faith.

moment yon would

vastly increase the cost of carrying on the war; prices
would go up, and the addition we should pile upon our national debt
would prove that it might have been even wiser to have burnt our paper
dollars before they were issued. The inflation of the currency would be
inevitable. In ordinary times few comprehend the Archimedean leverage
of a few millions added to or subtracted from the currency of a nation
actively engaged in the affairs of the world.
No one here contemplates but that at some future time the banks and
the Government shall resume specie payments the banks depending entirely upon whether the Government does so or not and if so, I invite
them to calculate the cost of the descent from that basis, the cost of the
return, the expiratory pains to be suffered, and then determine whether
we shall carry on this war on a specie basis, or on a ceaseless flood of
paper, bartered at discordant prices in every city, town and hamlet of the
country, bearing in mind, however cheaply obtained, every dollar is to be

******

and will be ultimately repaid in gold and silver coin raised by taxation.
That I am not wrong in supposing if we launch this measure that we
have nothing else to put afloat, is quite apparent in the able speech of
my friend from New York (Mr. Spaulding), who plainly occupied his

ground reluctantly for besides the 150,000,000 of notes he now proposes
to authorize, he more than hints at the possibility of " a further issue of
demand notes, if Congress shall hereafter deem it necessary." I maintain that the bill, as reported by the Committee of Ways and Means,
should not pass, because it will infinitely damage the national credit be;

;

cause it will cut off all other chance of supplies because it will reduce
our standard of legal tender, already sufficiently debased because it will
inflate the currency and increase tnanyfold the cost of the war; because
it would slide into the place proper for taxation; because, as a resource,
it must ultimately fail, and tend to a premature peace
because it is a
question of doubtful constitutionality ; because it is an export -facto law, immoral, and a breach of the public faith ; because it will at once banish all
specie from circulation ; because it will dampen the ardor of our men at
home, as well as soldiers in the field ; because it will degrade us in the
estimation of other nations because it will cripple American labor, and
throw at least larger wealth into the hands of the rich ; and because there
I agree with the genis no necessity calling for such a desperate remedy.
;

;

;

;

New York (Mr. Spaulding) in one thing most cordially ; our
finances stand in need of the tonic of decided military success.
Without
that our stocks will continue to be quoted flat. And yet I am no chronic
tleman from

grumbler. Standing at zero, our army rose as if by a magical wand and
illumined the whole heavens by its magnificent sweep. Do not let it be
said we rose like the rocket and fell like the stick.
Mr. Chairman It will be seen from the substitute, as proposed on the
part of one-half of the Committee of Ways and Means, that I do not object to
the issue of United States notes to a limited extent, to circulate as currency. It is both convenient and proper. But I wish to have this issue
marked by metes and bounds, saying at the outset, thus far shalt thou
go and no further.' Then, let them be based on as solid a foundation as
the everlasting hills that they shall be the full equivalent of standard coin.
This can be done by fixing the amount ample, but reasonable, that no
more than the fixed amount shall at any time be put in circulation, and by
providing taxation sufficient at all times to retire them or to maintain their
full value.
But, with all the earnestness I possess, I do protest against
anything a legal tender but gold and silver, as calculated to unmaking
dermine all confidence in the Republic, whose reputation should be dearer
to statesmen, as well as to soldiers, than life itself.
We propose no new issue of Treasury notes, but leave the fifty millions already
'

to. be issued and re-issued as may be found necessary or convenient.
This will secure us against an inflated currency.
Then it is proposed to issue $100,000,000 in United States notes, bearing
interest at the rate of three and sixty-five hundredths per cent., payable

authorized

at the pleasure of the United States, and allowing them with accumulated
interest to be received for all debts and demands (taxes included) due to
the United States, except duties on imports, and exchangeable at the will
of the holder, whenever presented in sums not less than fifty dollars, for

United States seven and three-tenths per cent, coupon or registered stock.
They are also to be received at par, with accumulated interest, for any
bonds the Government may hereafter issue. These are to be paid out for

63
due to individuals and corporations, at
In substance this is very like English
notes issued in anticipation of revenue. It is most probable
Exchequer
these notes would maintain their credit at or near par; and if there should
be any difference between these and gold, it would be an honest difference,
visible to all men. As they accumulate they will be funded and retired,

all salaries, debts and demands
their option within the United States.

or re-issued, as the exigencies of the Government may require.
They
equip the Treasury as well as any legal tender paper could do, while bearing interest they would not pass into the general volume of the currency,
and they afford the only possible channel of obtaining any considerable
sums to be consolidated into stocks. They cannot exceed the amount of
internal duties that will be levied, which Avill create a sure and constant
for these notes, and sustain their credit in every State and Territory in the country.
We do not propose to receive these notes for duties on imports, for the
reason that it is desirable to leave the tariff stable amid all fluctuations,
and also that we may secure the coin we promise to pay out as interest on

demand

the bonds.
It is then proposed, in order to perfect this plan in all its parts, to issue $200,000,000 in coupon or registered bonds, payable in ten years, with
interest semi-annually in coin, at the rate of seven and three-tenths per
cent, per annum. This is comparatively a high rate of interest, and it
may be necessary that it should be so, in order to get the stock taken up
by capitalists ; but the time the bonds are to run is limited to ten years,
because it would be much against the interest of the United States to engage to pay a high rate of interest for a long period of time. We think
there can be no doubt that these bonds will all be taken, commencing as
soon as the tax bill shall be passed. Unless the credit of the United
States shall be utterly shattered, which is not for a moment to be apprehended, these bonds must be considered a most desirable investment, both
in large and small sums.
It is proposed to issue $300,000,000 in coupon or registered bonds, payable in twenty-five years, with interest at six per cent., payable semi-annually in coin. Usually, government bonds running for the longest time
command the highest price, and for permanent investment are most eagerly sought after, at home and abroad. As we emerge from our present em-

barrassments, the other forms of debts due by the United States will naturally be funded in such stock.

We
all

promise coin for

all

engagements assuming

on bonds, as it is indispensable that
solemn form should in no instance repu-

interest
this

diate the standard of the Constitution.

We

strike out all

war we expect

words

to fight our

in relation to

own

loan, as during this
our own means, without
we can be permitted to do that we

any foreign

battles, furnish

any foreign aid or assistance; and
shall ask no favors.

if

The substitute avoids all the material, and, we might say, fatal objec*
tions to the original bill ; is entirely practical and feasible in its character,
and will not only relieve the Treasury from its present necessities, but do
something toward making provision for the future wants. It is a quesmark for weal or for woe an important page of our history
and I invoke the courage and judgment of the Committee to meet the
question with that cool deliberation its high moment demands.''
tion that will

;

"MR. CHAIRMAN The member of the Committee of Ways and Means
(Mr. Spaulding), by whom this bill was reported, was well warranted in
all he said of its great magnitude, and of the thoughtful, serious, courageous attention due to its consideration. It concerns the life of the nation
the means whereby it lives. The credit of the government, like the
credit of an individual, consists of the ability and integrity to pay all
debts and perform all promises with scrupulous exactness and punctualThis ability and integrity, this untarnished public faith and unity.
questioned pecuniary solvency is that without which no Government can
long survive. Public credit alone cannot confer national immortality or
national longevity, but the loss of public credit will be inevitably and
swiftly followed by national decrepitude and national death. This is true
in peace, when wars and rumors of wars are hushed throughout the
it is true in uneventful times, in periods barren of action and proearth
lific of repose; but what shall be said of its urgent, warning truth, as applicable to us in this dark hour of trial and of danger? Immediate and
;

adequate financial facilities constitute, beyond all question, the overtopping,
overmastering subjects with which we have the power to deal.

Gentlemen have longed for victories to re-invigorate the languishing energies
Victory, no doubt, would exert a potent influence; but, sir,
the Treasury will control and decide the war, not the war the Treasury.
Indeed, the question of money and credit is all there is before us it is
practically the only unsettled question of the war. Armies and navies
may perish, and a public credit, well preserved, can replace them but if
the public credit perishes, the army and navy can only increase the disaster and deepen the dishonor.
I deny that any necessity is upon us to take the case out of settled rules.
We need money large sums of money and the whole resources and
property of the nation are liable to pay tribute to raise it. We owe debts
large debts and the whole property of the country is holden to pay
them. Does anybody suppose that the security is not ample, or the resources not abundant? My colleague from the Erie District (Mr. Spaulding) told us that the taxable property of the nation amounts to sixteen
thousand millions of dollars and he produced a statement from the Census Bureau to prove it. In reality it is vastly more than that, because he
gave us a self-fixed valuation the valuation fixed by proprietors themof finance.

;

;

;

having an interest in reducing and covering up the amount.
According to my colleague, at the end of this fiscal year our debt will
be only $650,000,000. One would think here was margin enough for Wall
Sir, it is margin enough, properly
street, State street, or Chestnut street.
husbanded from first to last, to enable us to raise all the money we want
at five per cent., and history proves it.
Now, sir, w hat does this plea of necessity mean this plea upon which
we are invited to leave the trodden paths of safety, and seek new methods
of winning false moneys from the crucible called debt ?' What is the
necessity which prevents adherence to the old and approved methods of
First, that the peo^raising money? The arguments must be two-fold
pie will be better ready at some other time than the present to pay what,
in the end, they must pay, with interest; and second, that necessary and
legitimate taxation will be unpopular, and bring denunciation upon those
who vote it. Sir, I take issue upon both propositions. I say the country
selves,

r

*

:

65
is rich and ready.
Money is abundant very abundant. There is in the
loyal States $250,000,000 of gold the gentleman from Massachusetts (Mr.
Alley) said the other day $300,000,000 more than ever before, and if we
deserve it, we can have it. The whole country is full of wealth. The
enormous expenditures of this home war have been made among ourselves, and the money has remained here and not gone into the channel

which foreign war prescribes for currency. The harvest has been abundant; materials and productions, raw and wrought, have been in great
demand; and nearly every loyal State teems with the elements of material prosperity.
From a very extravagant, we have lately become a
very economical people, and thus the percentage, as well as the aggregate of savings of earnings, is unusually great. We are able to pay now,
and we never can pay better than now.
There is one thing, however, about the proposed banking scheme, and
about the bill before us, intended probably to attract votes, which seems
of very questionable policy and very doubtful ethics. I mean hostility to
the existing banks of the country. Arid inasmuch as I own not a farthing in the stock of any bank, and have not the slightest connection
with one, perhaps a word in behalf of banks in loyal States will be borne
with from me.

*****

The present troubles, or rather their ow n patriotic action, have broken
the banks ; for every commercial man in this House knows that the banks
were never stronger than when the Secretary of the Treasury appealed to
r

them

for loans.

They

capital from their vaults,

Government to carry off their specie, their
that did not break them, they at all events

alloived the

and

if

might have adopted a policy which would have saved them. But they
had to suspend, and the design of this bill would seem to be to prevent
their resumption of specie payment. At all events, it is obviously the
policy in some quarters to preach a crusade against the present banks, and
*
*
*
array prejudices and votes on that issue.

my reasons

briefly for voting against the attempt by
legal tender. The proposition is a new one.
No precedent can be urged in its favor; no suggestion of the existence of
such a power can be found in the legislative history of the country ; and

I propose to assign

legislation to

make paper a

I submit to
colleague, as a lawyer, the proposition that this amounts
to affirmative authoritjr of the highest kind against it. Had such a power
lurked in the Constitution, as construed by those who ordained and ad-

my

ministered it, we should find it so recorded. The occasion for resorting
and
it, or at least referring to it, has, we know, repeatedly arisen;
had such a power existed, it w ould have been recognized and acted on.
It is hardly too much to say, therefore, that the uniform and universal
judgment of statesmen, jurists and lawyers has denied the constitutional
right of Congress to make paper a legal tender for debts to any extent
whatever. But more is claimed here than the right to create a legal tender
to

r

heretofore unknown. The provision is not confined to transactions in. future,
but is retroactive in its scope. It reaches back and strikes at every existing pecuniary obligation. This was well put by the gentleman from Ohio
(Mr. Pendleton), and I concur with him that substituting anything for gold
silver in payment of debts, and still more of precedent debts, is of

and

very doubtful constitutionality.
But,
to the

sir,

*

passing, as I see I must, from the constitutional objections
seems to me that its moral imperfections are equally seri-

bill, it

66
ous.

It will, of course,

proclaim throughout the country a saturnalia of
a carnival for rogues. Every agent, attorney, treasurer, trustee,
guardian, executor, administrator, consignee, commission merchant, and
every debtor of a fiduciary character who has received for others money,
hard money, worth a hundred cents in the dollar, will forever release
himself from liability by buying up for that knavish purpose, at its depreciated value, the spurious currency which we shall have put afloat.
Everybody will do it except those who are more honest than the American Congress advises them to be. Think of savings banks entrusted with
enormous aggregates of the pittances of the poor, the hungry, and the
fraud

homeless, the stranger, the needlewoman, the widow and the orphan,
and we are arranging for a robbery of ten, if not of fifty, per cent, of
the entire amount, and that by a contrivance so new as never to have
been discovered under the administration of Monroe Edwards or James
Buchanan.

To

reverse the picture after the act shall have gone into effect, honest
undertake transactions based upon the spurious tender at its then
value. By and by comes a repeal, and they are driven to ruin in multitudes by the inevitable loss incident to a return to metallic currency.
:

men

The whole scheme pre-supposes

that the notes to be emitted will be

lepers in the commercial world from the hour they are brought into it ;
that they will be shunned and condemned by the laws of trade and
value.

If this

is

not to be their

fate,

what

is

was

the sense, as

said in

the Federal Constitutional Convention, in attempting to legislate their
value up. Now, sir, I do not believe that you can legislate up the value

of a thing any

more than you can make generals heroes by

legislation.

Mr. Chairman I believe all the money needed can be provided in
season by means of unquestionable legality and safety. The substitute
I

have offered

will, I believe,

without essential alteration,

effect that re-

sult."

MR. CONKLING estimated the national debt up
and concluded as follows:

to July

1,

1862,

at $806,000,000,

" There has been no such occasion
presented to a nation, no such demand made upon a nation during the lifetime of the human race. The history of America, the history of free government, the history of constituWe have our career and our traditional liberty begins or ends now.
tions as a nation ; they are safe ; but our history is yet to be made. Our
destiny is without an ally in the world, with nations banded against us,
to hold fast a continent in the midst of the greatest, guiltiest revolution
the world has ever seen."

MR. BINGHARI, of Ohio, obtained the

MR. STEVENS

floor.

offered a substitute for the original

bill,

which

After Mr. Bingham had concluded
his speech, the substitute thus offered by Mr. Stevens was ordered to be printed.

he asked to have printed.

MI:.

P.I

\4;

HAMS

It
MR. BlNGHAM
was far from my purpose, when
came curly
House to-day to attend a meeting of the Committee on tin* .Judiciary, to enter upon any discussion of the important question which n<>\\
commands tlie attention of the Representatives of the people; and but for
some remarks which have been made to-day by the honorable gentleman
from New York (Mr. Roscoe Conkling). I would not feel disposed now t<>
; '

I

to the

address the Committee. But, sir, as a Representative of the people,
cannot keep silent when I see eftbrtfe made upon this side of the House and
upon that to lay the power of the American people to control their currency a power essential to their interests at the feet of brokers and of
city bankers, who have not a title of authority, save by the assent or forbearance of the people, to deal in their paper issued as money.
I am here to-day to assert the rightful authority of the American people, as a nationality, sovereignty, under and by virtue of their Constitution.
In saying that the people of this Republic arc one people, a sovereignty, I do not feel that I shall be confronted by any of the great names
of the illustrious dead who have suddenly found favor with gentlemen
upon the other side of the House. Living, there was no epithet in our
language too severe in its condemnation, or too much uncharitable in its
import, for the tit denunciation by certain parties of the alleged political
heresies, of the illustrious man, Alexander Hamilton, and that other illustrious man, Daniel Webster, who for strength of intellect stood alone
among the living; and now dead, in his honored grave, sleeps alone by
the sounding sea. I am not myself of that class of admirers who persecute men while living and heap tuns of granite and pour empty adulation
upon their ashes when dead. I prefer to respect them and their authority
while they stand among the living men of to-day. These great names
have been invoked in this debate.
For what purpose? For the purpose
of denationalizing the people for the purpose of stripping the American
people of the attributes of sovereignty; for the purpose of laying, as T
said before, at the feet and at the mercy of brokers and hawkers on
'Change the power of the people over their monetary interests in this hour
of national exigency.
1

;

Sir,

there

is

nothing in the records of these illustrious

men

that justifies

their utterances, which were made not only for the
instruction of the men of their own day, but for the guidance of all that
were to come after them. I venture to affirm without having recently

any such base use of

had the opportunity to read much of what he said upon that subject that
Alexander Hamilton, peerless almost among the founders of the Constitution, never intimated in any paper of his that the G overnment of the
United States could not, at its pleasure, issue Treasury notes, either
payable upon demand or payable upon time. There was much said by my
respected colleague (Mr. Pendleton) with which I entirely and altogether
agree but, sir, when my colleague seemed to intimate in his argument
that he found any warrant in the elaborate papers of Alexander Hamilton
against this authority or power of the Congress of the United States to
authorize the issue of Treasury notes, either payable upon time or upon
demand, he greatly mistook the spirit of all he has written, and which has
been transmitted to us. My colleague was adroit in the handling of the
papers of Hamilton, which will live as long as our language lives. He
was one of those men upon whom it pleased God to confer those extraor;

68
dinary gifts which command the homage and admiration of men, whether
they agreed with him or not. The passage which my colleague quoted
from his work was an argument in which he showed the propriety of
establishing a national bank, authorized to issue currency, and he gave
certain reasons therefor. My colleague is a most excellent lawyer. He
knows well, and so did Hamilton know well when he made that argumt'iit, that what the Government does by another it does by itself."
MR. BINGHAM argued at great length that Congress had the power under (he Constitution to authorize the issue of Treasury notes, payable, on
demand or payable on time, redeemable in gold and silver, or other legalized coin, and make them a legal tender; and that the present bill did
not contemplate any other issue. He insisted that Congress, by the Constitution, was invested with certain powers, and as to the objects, and
within the scope of those powers, it ivas sovereign. That the Constitution
contained no words giving to Congress the power to make gold or silver
coin, either foreign or domestic, a legal tender. It has the power to coin
money, and regulate the value thereof and of foreign coins, but the Constitution does not contain any words declaring that these coins shall be a
The point I make is this Congress has power by the Conlegal tender.
stitution to fix the standard value of foreign coin and of domestic coin,
and the power to declare a legal tender, and that these powers are distinct.
It may declare what shall be a legal tender, either foreign coin or domestic coin, or paper representing coin. It is done by act of Congress*
Nothing ever was a legal tender under the Constitution in discharge of
debt but by express provision of an act of Congress. That the power
il
to regulate commerce" confers on Congress the power to declare w hat
should be received in payment of debt. It is not restricted to gold and
silver, but the Government may issue Treasury notes, redeemable in gold
and silver, and declare them a legal tender 'in payment of debts. He denied that this bill would " impair the obligation of contracts." There is
no such limitation as that imposed by the Constitution upon the power of
Congress. It is a limitation upon the States, and not upon the United
States. It was not by inadvertence that the framers of the Constitution
omitted to impose upon Congress this express restriction upon the States
against impairing the obligation of contracts. They proclaimed in the
absence of such limitations that whoever, within the jurisdiction of the
United States, enters into any mere money contract, either public or
private, enters into it subject to the sovereign power of the people, to
:

r

determine at any time, by legislative enactment, what shall discharge
it.

It is of the essence of the contract.

He

did not share in any of the fears entertained or intimated that the
He had an abiding faith in their
Avill revolt at this measure.
loyalty, in their love of law, in their settled purpose to suffer and strive,
to labor and sacrifice, that they may maintain their Government and
transmit it unimpaired to their children."

people

MR. SHEFFIELD, of Rhode Island, followed Mr. Bingham in a
lengthy speech in "opposition to the legal tender clause in the
He insisted that it was unconstitutional, and an odious
bill.
feature.

The

fact that

you propose

to force these notes

public against the will of the people implies that force
sary, in your judgment, to induce people to take them.

upon the
is

neces-

He

said

69
that

the

if

bill,

(Mr.
Globe,

was stricken out he would vote for
was objectionable in other respects.

the legal tender clause

notwithstanding

S!i(.'llH>ld's

it

speech will be found reported in the Congressional

page 640-1.)

On Wednesday, February

5th, several speeches were made for
of which are fully reported in the Congressional Globe, but the limits of this narrative will not admit of
their being published here.
Only a brief sketch can be given at

and against the

bill, all

this time.

MR. CHRISFIELD, of Maryland, spoke
to the legal tender clause in the

for one

hour

in opposition

bill.

44
He admitted that the accustomed currency was wholly inadequate to
meet the exigencies of the war. The Government has for many yc:n>
used gold and silver, and it is deeply to be regretted that it is obliged to
depart from this desirable standard. But we are left no option. The sup-

ply of the precious metals is inadequate to our wants. If all the gold and
silver in the country was placed at the control of the Government, it
would be received and paid out twice in one year. It is, therefore, impossible for the Government to pay in coin. The business of the country
and the business of the Government require some substitute for coin. We
must therefore create a new or vastly enlarge the existing currency. We
must therefore create a public debt, establish a currency, and impose new
taxes. This necessity being admitted, the only question is how can these
objects be accomplished with the least prejudice to the people, and the
greatest convenience to the Government? This is a grave question the
It is the question which lies at the foundagravest which these times present.
tion of aU other questions; and on its solution depends success in every other
1

''

enterprise.'

He

argued at great length that the legal tender clause was unconstitutional, and that it would not be just to the creditor chis*
of the community. He moved to strike out this clause in the
bill, and also the clause which compelled persons in the employ
of the government to receive the notes for
salaries, debts and
4 '

demands owing by the United States," so as to make them only
" receivable for all debts and demands due the
United States.
He urged heavy taxation, and was generally favorable to the bill,
if the amendments were made which he
proposed, but could not
'

vote for the

bill

with the legal tender clause retained.

(Appen-

dix to Congressional Globe, page 47-48.)

MR. PIKE, of Maine, spoke

for one hour in favor of the

bill.

4

'He argued that the plan was expedient as well as constitutional. I'pon
the clause in the bill providing that the notes shall be a legal tender thenhas been much discussion here and elsewhere.
Its importance to the

measure cannot be overestimated.

He

regarded

it

as the

life

of the plan.

70
Strike it out and we are bid duplicating notes already at a discount.
It is real j
ly the specie clause, and no hard money man and he claimed to be one
should vote for the issue of these notes without it. It is well known that

Mr. Clay rested his support of the second bank upon the clause granting
Congress "the power to make all laws which shall be necessary and
proper for carrying into effect the powers," expressly granted by the
eighteenth section of the first article. The great patriot of the West, in
time of profound peace, was disposed to consider the financial question of
such magnitude as to plan a law calling into being a fiscal agent among
those which were "necessary and proper." With how much more force
can we, situated as it were, among the dying agonies of the republic of our
fathers, acting as many wise men believe, as the last Congress which, under the Constitution, shall represent the whole country, claim that all
power which, under any circumstances, could be exercised by the Representatives of the people, should be used now."

MR. ALLEY, of Massachusetts, made a well-considered speech
of one hour in favor of the bill.
"The measure before the House received the approbation of his judgment.

He

could see clearly that under its provisions the rights of all will be prothe prosperity of the whole people promoted, the credit of the
Government revived and its power and dignity maintained. Beneficent
as this measure is, as one of relief, nothing could induce him to give it his
sanction but uncontrolable necessity. While he had always believed it to
be the duty of Congress to regulate and control the currency by such legislation as would make it of uniform value throughout the country, he
had never regarded it as politic or wise for the Government to make istected,

sues of paper at any time, except for temporary emergencies. Disguise
it as you may, everybody knows that knows anything of the laws of
trade, that to carry this people through this crisis, collect $150,000,000 tax,
maintain these vast expenditures, and conduct the legitimate and necessary business of the country, you must increase the volume of the currency to such an amount as to make it impossible, under the present banking
system, to give it confidence upon the ground of its immediate convertiThe question then for Congress to decide, is whether
bility into specie.
the Government shall share with the banks and keep them in check this
circulation, or purchase their irredeemable bills at ruinous rates. If you
do not adopt this measure you will see the country flooded with irredeemable bank currency, a great deal of which will be found, as after the war
of 1812, utterly worthless. At that time Government securities
ere exchanged at eighty cents on the dollar for worthless bank promises, not
worth the paper upon which they were written."

w

MR. ALLEY concluded

his

remarks as follows:

"Why, I ask, are government securities worth in the market to-day
but ninety cents on the dollar in exchange for irredeemable bank paper?
Is it because they have confidence in bank paper, or because it will command specie? Not at all; but because the bank paper will liquidate the
obligations of debtors. It is for you to determine whether government
obligations shall be as good as irredeemable bank notes and whether you
will allow these irredeemable issues to be preferred and take precedence of
;

71
it,

national currency issued

by a Government that never repudiated a

dol-

lar of its indebtedness; and a nation whose fabulous growth, immense interests and exhaustless resources, have excited the wonder and admiration
of an astonished world. I confess that when I reflect upon our condition,

and the misery and suffering which such a policy inflicts upon the business interests of the country, I can have no toleration for such suicidal action.
Congress has the power to inaugurate to-day a system of financial
policy, both for Government and people, which will establish our prosperity upon a firm foundation, and give strength and stability to all our institutions; and I conjure you, by all the memories of the past and every hope
in the future, not to disappoint in this
tions of the American people-"

moment

of peril the just expecta-

While Mr. ALLEY was making his speech, Mr. Spaulding received from Secretary Chase a private note, urging the importIt was known
ance of having the vote taken on the bill that da3T
that Mr. Horton, a prominent member of the Committee of Ways
and Means, desired to speak in opposition to the bill, and that
.

several other

members desired

to express their views of the meas-

ure before the vote was taken.

The Treasury was nearly empty. Money, or other available
means must be had right off. The pressing demands made upon

much longer without ruin to
The Secretary had authority un-

the Treasury could not be put off
the credit of the Government.

der the Loan Act, passed at the extra session in July, still remaining, to issue $46,000.000 of Treasury notes bearing 3-65 per cent,
interest, or, at his option, to issue 7-30 notes but was unable to
;

put out either class of this paper without a discount. The 7-30
notes could not be paid out from the Treasury except at a dis-

count of two per cent, and he could not pay out the 3-65 notes
at all, because they would not pass as currency, except at a still
greater discount the rate of interest was so low that they were
not desirable as an investment, and not being a legal tender they

made available at par as a currency.
The following is a copy of the note received from Secretaiy

could not be

Chase at

this time

:

"Such men as Nathaniel Thayer. of Boston; Alexander Duncan, of
Duncan, Sherman & Co. Shepard Knapp and John D. Wolf, and numerous able and leading financial men, have told me within two days that you
were perfectly right, and they are deeply anxious that the legal tender
;

clause should stand in the

bill.

They say

the country

is lost

without

TREASURY DEPARTMENT, February

5,

it."

1862.

MY DEAR SIR I make the above extract from a letter received from
the Collector of New York this morning. It is very important the bill
should go through to-day, and through the Senate this week. The publicexigencies do not admit of delay.

Yours

HON. E. G.

SI-AI I.DIXG.

truly.
S.

P.

CHASE.

72
After receiving this note from the Secretary, Mr. Spaulding
thought it desirable that a time should be fixed for closing the debill.
He thought it desirable that Mr. Horton and
Mr. Stevens, members of the Committee of Ways and Means,
should speak, and such others as were prepared, and that the vote

bate on the

should be taken the next day.

The following proceedings took
Mu. WRIGHT obtained the floor.
MR. SPAULDING

place in the House.

"I move that the Committee

rise

with a view of clos-

ing this debate/'

MR. CAMPBELL

"I hope this motion will be agreed to, and that this
be pressed to a vote to-day."
MR. SPAULDING " I desire to say, in connection with this motion, that
have within the last two or three hours received a note from the Secre-

bill will

I

tary of the Treasury informing me that it is absolutely necessary that we
should press this measure to a vote without further delay. Therefore I
move that the Committee rise, with a view of closing debate."

MR. HORTON
do not make

" I wish to
say that the Committee of Ways and Means
and I hope it will be voted down." ("Good!"

this motion,

"Good!")

THE CHAIRMAN

"

The Chair would

state that this question is not de-

batable."

MR. ENGLISH

"I move to lay the motion upon the table."
" That motion is not in order in committee."

THE CHAIRMAN

The question being upon the motion that
MR. ROSCOE CONKLING demanded tellers.

the

Committee

rise.

Tellers were ordered, and Messrs. Blair, of Missouri, and
Thomas, of Massachusetts, were appointed.
The Committee divided, and the tellers reported yeas, 52;

nays, 62.
So the motion was not agreed

MR. SPAULDING

"With

to.

the permission of the gentleman from Penn-

sylvania, I wish to make one word of explanation in reference to the motion I made. The object of the motion was simply that we should limit
this debate, with a view that we might take a vote upon the bill to-mor-

row, say at one o'clock. I expected to go immediately back into committee to allow the gentleman from Pennsylvania to make his speech, and
then to allow Mr. Horton to speak, and then Mr. Stevens to close the debate. After that the vote would be taken."

MR. THOMAS, of Massachusetts "Then you arrange the manner in
shall be made on this floor."
MR. LOVEJOY "I would like to know whether the gentleman from
Kew York has any right to farm out the floor?"
MR. SPAULDING "I make this explanation with a view to show the
House that I have no disposition to cut off any member of the Committee
or to force a vote unduly. The motion was made under the necessity

which speeches

which, the Secretary of the Treasury assures us, exists for passing this

T3
bill.

I did notiiiiikeitwitli

a view to cut off those

who

arc entitled to

by courtesy or otherwise. I think this explanation will satisfy the
House that there was no effort upon my part to force a vote improperly.
I did not expect to have a vote until to-morrow at one or two o'clock.
After the debate is closed, we proceed to voting upon amendments which
are pending, and which may be offered, and then five-minute speeches
will be in order, as upon other bills. Those speeches can be continued
until amendments are exhausted."
speak,

MR. WHISHT, of Pennsylvania, spoke

for half an

hour

in op-

position to the legal tender clause of the bill.
" He was
willing to do almost anything that he considered constitutional to aid in putting down the rebellion, but he did not feel justified in going so far as to vote any such measure as the legal tender bill. He concurred in the views of Mr. Pendleton that it was unconstitutional, that
nothing but gold and silver could be made a legal tender in payment of
debts. The people have means enough in their possession, and he was
willing to go for taxation to the uttermost limit, but the time had not yet
arrived when we should resort to such an extreme measure as to make
these notes a legal tender."

*********

of

MB. HORTON, of Ohio, a prominent member of the Committee
Ways and Means, made a lengthy speech in opposition to the

legal tender clause in the bill.
" He
thought we were taking a dangerous departure from the financial
system of the country. If this bill passes, as he hoped it would not, this
will be a point from which we shall date a new financial system for the

United States. "Old things will have been done away; all things will
have become new." He thought the Loan bill and the Tax bill should
have been passed through this House side by side. The Committee of
Ways and Means were convinced of the importance of this, and were
desirous that it should be done. (Mr. Horton was one of the sub-committee on the Tax bill.) It is from no neglect of the Committee of Ways
and Means, or of the sub-committee which has had the preparation of the
Tax bill in charge, that the Tax bill and Loan bill have not been brought
forward side by side. The sub-committee on the Tax bill have worked
night and day and although they do not get much credit for being industrious, still substantial progress had been made.
There were two measures before the House, and he proposed to discuss
them. One was the proposition of the gentleman from New York (Mr.
Spaulding) and the other that of the gentleman from Vermont (Mr. MorHe insisted that the three-sixty-five hundredths per cent, notes,
rill).
"
proposed in Mr. Merrill's plan, possessed all the characteristics for circulation which the Treasury notes of Mr. Spaulding's bill will have (save
the legal tender clause), and have the important advantage of earning interest, and being fundable in a more desirable stock for the holder, because bearing a higher rate of interest, and more advantageous to the
Government, because having only half the time to run, the Government
can redeem them at an earlier day." The Committee of Wajr s and Means
;

are equally divided in regard to the two bills. He was for the substitute
of Mr. Mori-ill, and decidedly opposed to the legal tender scheme. He

thought we had not yet reached the point when the Government, exercis-

T4
ing its high prerogatives, as Mr. Spaulding called them, can take for its
use the property of the citizen without pay. Necessity for this measure
has been asserted, but not proved. The Secretary of the Treasury thinks
it is necessary, but he thought he was mistaken."

Mr. Horton argued at great length against the injustice and inexpediency of making the notes a legal tender, and concluded as
follows

:

thank the Committee for listening to me so long.
to speaking in the House, and my
remarks of course have been very desultory. But I wish to impress upon
the Committee that these opinions of mine are not merely opinions superinduced by a hopeful temperament. I have, according to the best of my
knowledge, examined this whole question in all its bearings, and I am

"Mr. Chairman

You know

that I

I

am unaccustomed

willing to take the responsibility of voting against this legal tender clause
of the bill for the reasons that I have given, and for divers and sundry
reasons which I have not given. I ask the Committee to pause before

they take a step which, once taken, will be irrevocable. When you have
once broken a pitcher it never becomes whole again ; and this fair fabric
of our untarnished faith and unbounded wealth and credit ought not to be
destroyed, simply because our leaders men that we have faith in have
become alarmed, and have told us that there is a necessity for it. When
there is danger, Mr. Chairman, then is the time to be cool and look about
you, and to see that you take no false step. Now is that time, and if you
take this step, it is a step downwards, and you will find that to regain
the high eminence from which we shall have descended is a labor very difficult to

accomplish."

MR. KELLOGG, of
MR. SPAULDING
moments, and then

Illinois,

obtained the

floor.

"I ask the gentleman to give way to me
move that the Committee rise,"

for a

few

I will

MR. KELLOGG, of

Illinois

"I yield

for that purpose."

MR. SPAULDING "I wish to make one statement in reference to the
condition of the Treasury, which I presume all will be anxious to know
before we adjourn. The Secretary of the Treasuiy has yet unexpended
of the loan of last July $46,000,000. He has a right to issue this sum in
three and sixty-five hundredths per cent, notes, or in seven and threetenths per cent notes ; but he is unable to put out either of these classes
of paper without a discount. He cannot pay out the seven and threetenths per cent, notes without a discount of two per cent., and he cannot
pay out the three and sixty-five one hundredths per cent notes because
they will not be taken as currency. This bill of Mr. Morritt proposes simply to repeat the authority to issue the same kind of notes, which cannot be issued advantageously by the Secretary of the Treasury at this time.
that the Committee do now rise."

The motion was agreed

to.

I

move

*

MR. SPAULDING " I move that all debate on House bill No. 240 be
closed in one hour after its consideration shall have been resumed in the
Committee of the Whole on the state of the Union."

75
MR. THOMAS, of Massachusetts " I suggest to
fy his motion, so as to make it read two hours."

the gentleman to modi-

MR. SPAULDING " The exigencies of the country are such that
not consent to do so unless the House so order it."
MR. VALLANDIGHAM " I move to amend the motion
*

by

one hour' and inserting two hours.' "

I

can-

striking out

*

The amendment was adopted, and the motion
agreed

as

amended was

to.

PASSAGE OF THE BILL IN THE HOUSE.
Thursday, February 6, 1862, was an exciting and important
day in the House. The final vote on the legal tender note bill
was to be taken, and in anticipation of the vote there was a very

In pursuance of the, order passed last night, general
full house.
debate was to be closed in two hours after the bill should be taken

The House on meeting and

up in Committee of the Whole.
posing of a
tion of the

dis-

little

bill.

preliminary business, immediately resolved itself into Committee of the Whole, and resumed the considera-

on the

bill

The Chairman announced that general debate
would close at ten minutes past two o'clock P. M.

While debate was continued, Mr. Frank and Mr. Colfax, who
were friendly to the bill, passed around the House with a list,
making a canvass of how the different members would vote on
the legal tender clause.
Upon footing up the list, it was ascertained that there was a large majority in favor of making the
notes a legal tender.

MR. KELLOGG, of Illinois, being entitled to the floor, spoke for
over half an hour in favor of the bill, not as a peace measure,
but as a war measure. He said
:

" I intend to detain the Committee but a little while. I
should not have
sought the floor for the purpose of offering any remarks, but for the consideration that, in my judgment, this bill was being considered and discussed as it might with propriety have been discussed and considered in
time of peace, and when there was no pressing necessity for the action of
Congress in placing the Government in possession of all the means and
powers that can be safely gathered and exercised under the Constitution.
If this question

came up in ordinary times, I am frank to confess, that I
had some doubt of its constitutionality sufficient to induce
I mean by that only to say that in time of peace, when the
Government is not threatened, I would be more careful and

might, perhaps, have

me

to

oppose

it.

integrity of the

cautious ; and if I doubted the constitutionality of the measure 1 ivoidd not vote
for it. But, sir, in this our extremity, while we are struggling to perpetuate
our Government, I am witting to go to the verij verge of the Constitution. I
will go as far as I feel that the Constitution will permit me, to gather up
the power and means to carry on the Government to that great consum-

Y6
mation which the fathers contemplated when they established it. But
while I might have some doubt in time of peace, when the monetary affairs of the country might safely be left to work out their own level and
settlement, of the policy of this measure, I have none now. What may
be policy in the one case may be vastly different in the other.
Chairman, as emphatically and dearly a war measure.
appear strange that a money bill should be considered a war
measure, and yet it is; for it is necessary in order to raise means to carry
on the Government in a war direction a direction in which all our measures are or should be tending. Sir, we should not disguise the fact of our
complications. We should not deceive ourselves. The worst deception
that men ever practice is that practiced on themselves. We should not allow ourselves to be deluded, now that we have a mighty rebellion nay,
revolution before us, and that the Powers of the Old World, who have
looked with a jealous eye on the mighty progress of the Western ContinTalk
ent, are seeking occasion to cripple our onward and upward career.
I treat this, Mr.

It

may

Our Government antagonizes theirs. The
must take all the
power we have we must throw every energy, all the means of our Government, in the direction of the war power, for the purpose of self-presernot of their sympathy for us.

We must gird up our loins; we

principles are different.
;

vation and perpetuation.

Mr. Chairman, we must look this matter in the face, not only of this
continent, but in the face of surrounding nations. We must come to the
conclusion that although -the world shall rise against us, this Republic
must and shall be preserved. All the energy of the country, all the blood
and treasure of the country, if need be, must be summoned in from every
part of the land to accomplish that object. Sir, we must give to this Government arms of iron and muscles of steel. We must think as with fire
and strike as with spears. It is necessary, sir, it must be and if we now
meet this emergency as trne men should meet it, we shall succeed. 2 he
money of the country must come to its aid, the powers of the Government must
come to the aid of the Administration, as well as the strong hands and warm
;

hearts of our people.

Mr. Chairman, I am pained when I sit in my place in the House and
hear members talk about the sacredness of capital ; that the interests of money
must not be touched.
Yes, sir, they will vote six hundred thousand of the flower
to be sacrificed, without a blush
but
of the American youth for the Army,
the great interests of capital, of currency, must not be touched. We have
summoned the youth; they have come. I would summon the capital; and
if it does not come voluntarily, before this Republic shall go down, or one
star be lost, I would take every cent from the treasury of the States,
;

from the treasury of capitalists, from the treasury of individuals, and press
it into the use of the Government.
What is capital worth without a Government ? Gentlemen must understand me, when I indulge in this strain and speak in this strain and speak
of this talk and quibble about capital, that / do not charge it upon the real
The true capitalists of the
the country, for they do not hold back.
capitalists of
are patriotic ; they have furnished their means liberally; but there
country
is a class of huckstering capitalists, there is a class of bankers proper,
there is a class of brokers, who would make merchandise of the hopes and
fears of the Republic.
It is said there is no

power

to

make

these notes a legal tender, and that

77
that

is

not a legitimate

way

of expressing their value.

If

gentlemen are

upon that subject, they would do well to run back a little further
and ascertain whether there is any power under the Constitution vested
in Congress to issue the notes at all. And I confess the argument of the
gentleman from Ohio (Mr. Pendleton) ran back legitimately to that proposition. At least it carried my mind back to that proposition so fairly and
certainly, that if I found no power to issue these notes, I would have voted
against this bill. To that my mind has turned with every argument that
has been made. I may have been obtuse, but I confess that I have come
to the conclusion that we have the constitutional power to issue these
notes and having that constitutional power we have, as an incident to that
power, the power also to make them of value by making them a legal tender. The gentleman has voted more than once for the issue of Treasury
notes to pay debts owing by the Government, which were payable in
coin. If we have power to issue Treasury notes, we have the power to
fix the value of the issue.
It is an incident to the power of issuance. Let
them be issued as money, to take the place of money. Let there be no
deception let the creditors of the Government know whether we are to
palm off a spurious depreciated currency under the guise of money. If
we have the right to issue it, and impress with the denomination of five
dollars, why not stamp upon its face that it is five dollars everywhere?"
sure

;

;

MR. THOMAS, of Massachusetts, made a speech against the
gal tender clause in the
"

le-

bill.

He regarded this

clause as unconstitutional, unjust, and inexpedient.
judicial authority, but the weight
others, was strongly against the
He argued that nothing but coined
validity of this clause in the bill.
money could be made a legal tender in payments of debts; that a matured

The question had never been settled by
of reasoning by Webster, Madison, and

debt could not be paid by another promise. He regarded this clause in
the bill in the nature of a forced loan, in itself a confession of weakness.
The friends of this feature of the bill admit the reluctance with which they
assent to it. The only ground of defence is its necessity, that no alternative is left to us.

He

deeply respected their motives, but could not himself

see the necessity.''

MR. EDWARDS, of New Hampshire, made a speech
the
"

in favor of

bill.

We

find ourselves confronted by an exhausted Treasury, and without
means of meeting its existing, or its constantly accruing liabilities.
The amount of floating liability now due is $100,000,000. The figures presented in the opening speech of this debate are immense almost appalling.
Funded and floating it is now $400,000,000; on the first of July next it will
be $650,000,000, and if the war continues $1,200,000,000 in one year from
that time. He was in favor of taxation to pay ordinary expenses and interest, and ultimately a sinking fund, but he was in favor of the issue of

the

Treasury notes for the purpose of meeting immediate expenditures, and all
seemed to concede that Treasury notes in some form must be issued. The bill reported by the Committee of Ways and Means, and the
substitute offered by Mr. Morrill, may be regarded as the only propositions
now before the House. It is understood that the other propositions will
be withdrawn, and that the dissenters from the bill will concentrate on

parties

78
this substitute. They agree in the main features of the plan, and differ
only in details. He thought the notes proposed by Mr. Merrill's plan
would not pass current among the people or the banks, but would necessarily depreciate. The army and navy might be compelled to receive
them at par, because the Government had nothing else to give them, but
they could not afterwards pass them without a large discount, which
would be unjust to the men fighting our battles. He thought that would
be a lack of faith of the most flagrant description more objectionable by
far than the legal tender clause. He also objected to the high rates of interest proposed for the bonds to be issued in funding the notes.

substitute provides for a depreciated currency and a high rate of interest
the currency proposed by the substitute would demoralize the
country as much, or more, than the legal tender notes, and would not pos-

The

He thought

sess as

many

advantages to the Government.

legal tender notes would give instant means to the Treasury, so much
needed at this time, without looking to intermediate negotiation to furnish
them. The original bill was the one in all material respects to be preferred

The

to the substitute, one of

which

it is

distinctly understood will be adopted."

MR. RIDDLE, of Ohio, made a speech against the propriety and
expediency of issuing the legal tender notes.
"

He doubted

He thought

the constitutionality of the measure.

there

money, except the metals coined in pursuance of law and a
fixed standard. Can money be made of paper ? Clearly not, by calling it
money or by stamping it as money by the Government. It would not
stand the commercial test. Paper has no appreciable intrinsic value, and
The only high deits exchangeable value is of the lowest possible grade.
gree of value it can ever attain is that which may be imparted to it by that
which is written or printed upon it. It is apparent that the whole quantity of the circulating medium must be materially increased, for obviously
that which was only equal to the demands of commerce and the ordinary
wants of the Government, is wholly inadequate now to the same demands
and the extraordinary wants of the Government. He was opposed to the
legal tender clause, and would vote to strike it out if that fails, I will
choose between the bill and its defeat." (He voted for the bill on its final

was no

real

;

passage.)

MR. BLAKE, of Ohio, spoke in favor of the bill.
"At no time in the history of our country was the peril

to

our free

insti-

tutions greater than now. The bill is brought forward as a war measure,
to meet the pressing demands now on the Treasury. He argued that it
was constitutional to issue Treasury notes and make them a legal tender.
He insisted that it was a necessary and proper means of carrying into effect the

war powers

tain a navy.

We

are

and support armies and to provide and mainin the midst of a great National exigency, and
provide for; and one that in the application of the

to raise

now

one, too, that we must
means there must of necessity be great latitude of discretion, and denied
that legal tender paper money was prohibited." (He read from the debates

on the formation of the Constitution, Vol.

MR. MASON

"He was

5,

page

435.)

unwilling to tie the hands of the Legislature. He
observed that the late war could not have been carried on had such a prohibition existed."

79

MR. BUTLER" That paper was a legal tender in no country in Europe."
MR. MASON "Was still averse to tying the hands of the Legislature altogether. If there was no example in Europe, as just remarked, it might
be observed, on the other side, that there was none in which the Government was restrained on this head."
MR. BLAKE continued his argument, insisting "that the Convention
which framed the Constitution did not attempt any prohibition, but left it
to Congress to make Treasury notes a legal tender whenever the exigency
should arise to make it necessary. It was denied in express terms to the
and permitted in implied terms to Congress. It being constitutional,
necessary to make Treasury notes a legal tender ? By these notes we
are enabled to pay our soldiers, and it is the only means we have to pay
them. Does not every gentleman know that if these notes were paid to
our soldiers without making them a legal tender, they will immediately be
States,
is it

of from four to twenty per cent. ? 2 his is not conjecwas done here only labt month ; soldiers were shaved by the
money-shavers of this District from four to twenty per cext. on the demand treasWe are not legislating for the
ury notes they had received from the Government.
money-shavers, who oppose this bill, but for the people, the soldiers, and laboring
sold at

a

loss to the soldiers

ture: this very thing

classes.^

MR. CAMPBELL, of Pennsylvania, spoke in favor of the bill.
"He said, it is proper that each member of this House should, however
briefly, express his views on the pending bill one of the most, if not the
most, important bills of this season. To support our armies in the field
and navies on the seas is a plain, patriotic and necessary duty ; to do this
with prudence, economy and foresight, is the highest evidence of statesmanship. That we have vast National resources, all admit that the public debt has for its security the whole property of the nation, is
equally
plain. The powers of the Government are ample they extend to life and
;

property.

which

free

vote the last

He would fall short of his duty in this tremendous issue, in
government is on its final trial, who would not, if necessary,
man and the last dollar to defend and perpetuate the priceless inheri-

tance of our fathers.
I humbly conceive

my duty to be a plain one. The path I have marked
out for myself I will follow, let it lead where it may. Whatever measure
is now or hereafter may become
necessary to adopt in order to maintain the
Union and perpetuate free Government, that will I support. Speak not to
of "objections" and "scruples" and "dangers," of "Constitutional
objections" and "conservative influences." Sophistry is ever plausible,
and opposition to a just and necessary measure generally wears the mask
of a " Constitutional objection." The highest duty of every member is to
maintain the Union to sustain the Constitution against this causeless and
wicked rebellion and in doing this, let us bear in mind that the Constitution was made for the people to secure to them and their posterity the

me

;

blessings of free government.
Therefore, with me the primary inquiry is,
is this measure necessary to suppress the rebellion ?
If it is, here am I
ready to sustain it* It will be found the Constitution gives ample power
to sustain this view.
The bill now before the Committee is necessary to sustain the credit of
the country, and to carry on the war. It is with reluctance that I have

come

to this conclusion.

legal tender clause

;

I

do not like the necessity which exists for the
do I like to place the issues of the Govern-

still less

80
ment

in the hands of the brokers and money-lenders of the country. Depreciated now, let the legal tender clause fail, and mark the result to-morrow. The Treasury notes will fall from four per cent, to fifteen and twenty-live

below

par,

and the Government will have to pay that per centage

additional for every article they purchase. Your soldiers will be shaved
that amount on their blood-bought wages, and the country, flooded with a
vast amount of depreciated paper, will grow restless and discontented
under so fatal a mistake. If we make the Government issues a legal tenr
der, the demand for specie will be so limited that they w ill maintain their

value."

CLOSING THE DEBATE ON THE BILL.

By order of the House general debate was now closed. The
standing rules of the House, however, provide that the member
introducing the measure shall have the right, after general debate
hour in reply to adverse speeches, in finally
Mr. Spaulding, having introduced the bill, was
the debate.
closing
Mr. Stevens, who had not
entitled to the floor to close the debate.

is

closed, to speak one

yet spoken, was desirous of expressing his views on the measure,
and Mr. Spaulding was willing to give him most of the hour to

which he was

entitled,

and intended to yield the

floor to

him

for

that purpose.

MR. SPAULDING,

summed

in closing,

up,

on his

part, as follows

:

"I have listened with a great deal of attention to the arguments and prowhich have been submitted by the various gentlemen who have

positions

addressed the House, but I shall not now make the concluding speech. I
shall leave it to the able Chairman of the Committee of Ways and Means
to close the debate. If I may be indulged, however, for a few moments, I
desire to say, summing up, first that all agree that taxation, in various
forms, must be imposed to the amount of at least $150,000,000 on which to
rest the credit of these notes and bonds, a sum sufficient to pay the ordinary expenses of Government on a peace footing, the interest on all the
war debt, and a sinking fund to liquidate annually a portion of the princiSecond we all agree that hereafter the war must be carried on prinpal.
cipally upon the credit of the Government, and that paper in the form of
notes and bonds must be issued to an equally large amount, whichever plan is
adopted. After deducting the sum raised by internal revenue, by direct
taxation, and duties on imports, the amount of paper to be issued can only be
limited by the actual expenses of the Government. The respective plans of
Messrs. Vallandigham, Conkling, and Morrill, require the same amount
of paper to be issued as the legal tender bill proposed by the Committee of
Ways and Means, and supported by the Secretary of the Treasury. Third
the main difference between the several plans is, that the legal tender bill
stamps demand notes as money, with the highest sanction of the Government
to circulate as a National currency, the same as bank notes, in all the channels of trade and business among all the people of the United States
whilst all the other plans proposed contemplate the issue of an inferior
:

:

:

;

my opinion, circulate as money either among
the banks or the people, but will, on the contrary, be depreciated and
currency that will not, in

81
sold at a large discount by all officers, soldiers, and others that are compelled to receive it from the Government in payment for services and
supplies furnished. For myself, I prefer to issue the demand notes, based
on adequate taxation, and with the highest legal sanction that can be given
to them by the Government, placing the soldiers and capitalists all on the
same footing in regard to these notes."

Mr. SPAULDING then yielded the floor to Mr. Stevens.

Mr. LOVEJOY objected to the gentleman yielding the

floor.

THE CHAIRMAN "If objection is made, the gentleman from Pennsylvania cannot occupy the floor. The gentleman from New York cannot
yield the floor to him, except by unanimous consent."
Mr. MORRILL "I trust no objection will be made; only the same time
be consumed."

will

Mr. LOVEJOY

"Well,

I will

withdraw the objection."

"MR. CHAIRMAN This

bill is a measure of necessity, not of choice.
one would willingly issue paper currency not redeemable on demand,
and make it a legal tender. It is never desirable to depart from the
circulating medium which, by the common consent of civilized nations,
forms the standard value. But it is not a fearful measure, and when
rendered necessary by exigencies it ought to produce no alarm.
The late administration left us a debt of about $100,000,000, and
bequeathed to us also an expensive and formidable rebellion. This com-

No

pelled Congress, at the, extra session, to authorize a loan of $250,000,000;
$100,000,000 of these were taken at 7 3-10 per cent., and $50,000,000 six
per cent, bonds at a discount of over $5,000,000; $50,000,000 were used in
demand notes, payable in coin, leaving $50,000,000 undisposed of. Before
the Banks had paid much of the last loan they broke down under it and suspended specie payment. They have continued to pay that loan, not in coin* but
in demand notes of the Government; that has kept them at par, but this last
of the loan was paid yesterday, and on the same day the banks refused to receive
them.
Ihey must now sink to a depreciated currency. The remaining $50,-

000,000 the Secretary of the Treasury has

been unable to negotiate.

A

small portion of it, say $10,000,000, has beeu issued at 7 3-10 per cent, in
payment of debts.
He estimated the present floating debt at $180,000,000; daily expenses,
$2,000,000; to carry us to next meeting of Congress, $600,000,000 more.
That if sufficient six per cent, bonds were forced on the market to pay
our expenses up to December, or $700,000,000, as the money should be
wanted, he thought they would sell as low as sixty per cent., as in the
last English war; and even then it would be impossible to find payment
in coin.
large part of it must be accepted in depreciated notes of suspended banks, for no one expects the resumption of specie payments until
the close of the war.
Without the legal tender clause the notes could not be kept at par.
Brokers, bankers, and others would depreciate them. The National Bank
scheme recommended by the Secretary might, in ordinary times, be very
useful, but while the banks are under suspension it was not easy to see
how it would relieve the Government. They would have the circulation
without interest, and at the same time would draw interest on the bonds,

A

82
afford no immediate relief. He thought the Government should have
the benefit of the circulation of legal tender notes, and did not see how
we could get along in any other way.
He argued in favor of the constitutionality of the legal tender 'clause,
and that it was a necessary and proper measure at this time. In short,

and

whenever any law

and proper to carry into execution any
That necessity need not be absolute,
inevitable, and overwhelming if it be useful, expedient, profitable, the
necessity is within the constitutional meaning. Whether such necessity
is

necessary

delegated power, such law

is valid.

exists is solely for the decision of Congress. Their judgment is absolute
and conclusive. If Congress should decide this measure to be necessary
to a granted power, no department of the Government can rejudge it.

The Supreme Court might think the judgment of Congress erroneous, but
they could not review it. Now, it is for Congress to determine whether
this bill is necessary " to raise and support armies ami navies, to borrow
money, and provide for the general welfare." They are all granted
powers. It is for those who think that it is not "necessary, useful and
proper," to propose some better means, and vote against this; if a majority think otherwise, its constitutionality is established.
If constitutional, is it expedient ? It is objected by the gentleman from
Ohio, that the legal tender clause would depreciate the notes. All admit
the necessity of the issue ; but some object to their being made money.
It is not easy to perceive how notes issued without being made immediately payable in specie, can be made any worse by making them a legal
tender. And yet that is the whole argument, so far as expediency is con-

Other gentlemen argued that this would impair contracts, by
making a debt payable in other money than that which existed at the
time of the contract, and would so be unconstitutional. Where do gentlemen find any prohibition on Congress against passing laws impairing
contracts ? There is none, though it would be unjust to do it. But this
impairs no contract. All contracts are made not only with a view to present
We have more than once
laws, but subject to the future legislation of the country.
cerned.

Changed the value of coin. Neither our gold nor our silver coin is as valuable as it was fifty years ago. Congress in 1853, I believe, regulated
the weight and value of silver. They debased it over seven per cent.,
and made it a legal tender. Who ever pretended 'that that was unconstitutional?
The gentlemen^ from Vermont (Mr. Morrill), and Ohio (Mr.
Pendleton), think it an ex port facto law. It is not wonderful that my distinguished colleague, not being a professional lawyer, should not be aware
that the ex port facto laws prohibited by the Constitution refer only to
crimes and misdemeanors, and not to civil contracts. The gentleman

from Ohio no doubt knew, but forgot

it.

Gentlemen are clamorous in favor of those who have debts due them,
debtor should the more easily pay his debt. I do not much sympathize with such importunate money-lenders. But widoivs and orphans
are interested and in tears, lest their estates should be badly invested. I pity no
one who has his money invested in United States bonds, payable in gold in twenty
years, with interest semi-annuatty. But while these men have agonized
bowels over the rich man's case, they have no pity for the poor widow,
the suffering soldier, the wounded martyr to his country's good, who
must receive these notes without legal tender or nothing, and who must
give half of it to the Shylocks to get the necessaries of life. Sir, I wish
lest the

83
nor with our bill could any happen but if any must
not be the soldier, the mechanic, the laborer or the farmer.
Let me relate the various projects. Ours proposes United Stales notes,
secured at the end of twenty years to be paid in coin, and the interest raised by

no injury

to any,

;

lose, let it

taxation semi-annually ; such notes to be money,
No better investment, in

and

of uniform value through-

my

judgment, can be had no
better currency can be invented. The amendment of the gentleman from
Ohio (Mr. Vallandigham) proposes the same issue of notes, but objects to
a legal tender; but does not provide for their redemption on demand in
Let him who is sharp
coin. He fears our notes would depreciate.
out the Union.

;

enough to see it instruct me how notes that every man must take are
worth less than the same notes that no man need take, and few would,
But he doubts its constitutionality. He
being irredeemable on demand.
who admits our power to emit bills of credit, nowhere expressly authorized by the
Constitution, is a sharp and unreasonable doubter when he denies the power to
make them a legal tender.
The proposition from the gentleman from New York (Mr. Roscoe
Conkling) authorizes the issuing of seven per cent, bonds, payable in
thirty-one years, to be sold ($250,000,000 of it) or exchanged for the currency of the banks of Boston, New York and Philadelphia.
proposition seems to me to lack every element of wise legislaa loan payable in irredeemable currency, and pay that in its
depreciated condition to our contractors, soldiers and creditors generally
The banks would issue unlimited amounts of what would become trash,
and buy good hard-money bonds of the nation. Was there ever such a
Sir, this

tion.

Make

!

temptation to swindle

?

He

further proposes to issue $200,000,000 United States notes, redeemable in coin in one year. Does not the gentleman know that such notes
must be dishonored, and the plighted faith of the Government broken ?

No

we could then pay them, and it would run down at
we are to use suspended notes to pay our expenses, why not
own ? Are they not as safe as bank notes ? During the suspen-

one believes that

once.

If

use our

sion, the

Government would have the

benefit of the

whole

circulation,

without interest, until they were funded that is, the interest of all we
could keep out would accrue to the Government. If the $150,000,000
were constantly afloat, it would be a loan to the Government, without
But if we used the suspended
interest, to that amount, $9,000,000 a year.
paper of the banks our bonds would bear interest from the instant we got
their notes a good thing for suspended banks. Besides, the Government
would have the benefit of all the lost and destroyed notes a considerable
item.

Last comes the substitute of the minority of the Committee (introduced
Morrill). I look upon it as a curiosity. It proposes to issue
United States notes, not a legal tender, bearing an interest of three and
sixty-five hundredths per cent., and fundable into seven and three-tenths
per cent, bonds, but not payable on demand, but at the pleasure of the
United States. This gives one and three-tenths per cent, higher interest
than our loan, and not being redeemable on demand, would share the
But the ingenious
fate of all non-specie-paying notes not a legal tender.
minority have invented a kind of currency never before known a circulation bearing interest.
Bonds or notes intended for investments bear interest, but no one expects they will be used as currency whether in the
shape of bonds or notes, they will be used only as investments, or as

by Mr.

;

84:

pledges on which to procure loans. Suppose a tailor, shoemaker, or other
mechanic, or laborer, were to take one of these bills, and in a week he
should wish to use it in market or store, or elsewhere, he must sit down
and calculate the interest on the days he has had it to find its value. This
would be rather inconvenient on a frosty day. This currency would make
it necessary for every man to carry an arithmetic or interest table with
which to guage the value of the circulating medium. Gentlemen must
see how ridiculous, if not impracticable, this scheme is.
Here, then, in a few words, lies your choice. Throw bonds at six or
seven per cent, on the market between this and December, enough to
raise at least $600,000,000 about this sum is already appropriated, $557,000,000 or issue United States notes, not redeemable in coin, but fundable
in specie-paying bonds at twenty years ; such notes either to be made a legal
tender, or to take their chance of circulation by the voluntary act of the
people.
I maintain that the highest sum you could sell your bonds at would be
seventy-five per cent., payable in currency itself at a discount. That
would produce a loss which no nation or individual doing a large business

could stand a year.

contend that I have shown that such issue, without being made money,
depreciate, and would go on from bad to worse. I flatter myself that I have demonstrated, both from reason and undoubted
authority, that such notes, made a legal tender and not issned in excess of
the demand, will remain at par and pass in all transactions, great and
small, at the full value of their face that we shall have one currency for
I

must immediately

;

all sections

of the country and for every class of people, the poor as well

as the rich.

Some gentlemen

are as

much

frightened as

if this

were an unwonted

apparition, for the first time prowling forth to swallow the rich creditor
and smouse the poor debtor. No nation, it is said, has ever tried anything
like

it.

Let us look at the greatest and wisest commercial nation in the world.
In 1797 England was struggling for existence against armed Europe. She
needed money, as we do now. She found it impossible to borrow. Gold
was likely to leave the country. She passed a law prohibiting the Bank of
England from paying coin for her notes until six months after the final
ratification of peace. That law remained in force till 1823. It is said she
did not make those notes a legal tender.
She provided that whoever
refused to take them for a debt should have no remedy for its collection
and that a plea of such tender should be a bar to the action. This, I think,
is the most stringent legal tender; yet those notes never depreciated to
;

any great extent."
Mr.

VALLANDIGHAM "Did

they not depreciate twenty per cent. ?"
"No, sir; at no time after they were made a legal tender
did they depreciate twenty per cent."
Mr. VALLANDIGHAM " I have the authority of Mr. Canning, which
I think is quite as good as that of Mr. McCulloch. They were receivable

Mr. STEVENS

all

the time for

Mr. STEVENS

Government dues."
"Yes,

sir;

but they

still

run down until they were made

a legal tender, and after that they never depreciated a single dollar. Had
they been made an absolute tender, they would not have depreciated a
farthing. But now, in times of peace, the notes of the Bank of England are

85
a legal tender in all the vast business of that nation, and in every place, except at
What else are Bank of England notes than bills of
the counter of the bank.

Government? Her whole capital consists of Government
and her issues are based on that alone. Prussia holds the
currency in paper issueable by Government alone, and is always at par.
What becomes of the fine-spun theories of the opponents of this bill ? I
think they have distressed themselves very unnecessarily and yet, gentlemen have shown all the contortions, if not the inspirations, of the Sibyl,
lest Government should make these notes a uniform currency, rather than
leave them to be regulated by sharks and brokers. I look upon the immecredit of the
securities,

;

diate passage of the bill as essential to the very existence of the Government.
Reject it, and the financial credit, not only of the Government, but of all
the great interests of the country, will be prostrated."

MR. CHAIRMAN "Let me say in conclusion, that unless this bill is to
pass with the legal tender clause in it, it is not desirable to its friends, or
to the Administration, that it should pass at all, and those who think as I
do will have to vote against it, if it should be thus mutilated and emasculated. If it is to be defeated, I should be glad if we had the power which
they have in the British Parliament to resign our places on the Committee of Ways and Means, and leave it to those who oppose this bill
to mature some other measure. So far as I am concerned, I shall be
modest enough not to attempt any other scheme. The Committee of
Ways and Means have labored in the preparation of this measure
anxiously, and to the best of their poor abilities. We are not infallible.
We do not come near it. I am but poorly qualified for anything of this
kind. But we have given it our most anxious consideration, and have
consulted those whom we believed to be the best qualified to advise us.
We have sought to harmonize conflicting views in the substitute which
the majority of the Committee have prepared, and we hope it will pass.
We believe that the credit of the country will be sustained by it, that
under

it all

classes will be paid in

money which

all classes

can use, and

no advantage on the

capitalist over the poor laboring
man. If this bill shall pass, I shall hail it as the most auspicious measure
of this Congress ; if it should fail, the result will be more deplorable than

that

any

it

will confer

disaster

At

which could

befall us.'*

the conclusion of Mr. Stevens' speech the Chair announced

Amendments were now in order,
that general debate was closed.
and under the rules of the House, five-minute speeches could be

made in favor of, or in opposition to, each amendment proposed.
Under this rule, several short speeches were made by members
who had not an opportunity to speak during the general debate.
Mr. F. A. CONKLING, who opposed the legal tender clause in
the

bill,

follows

"The

read an extract from an eminent citizen of

New

York, as

:

advocates of a paper substitute

may

find an

argument

in the

necessities of the crisis, but are certainly not guided by the light of
experience, if they recur to the fact that in 1814 a Boston bank note was

capable of buying

tivice its

nominal value in Treasury notes (not a legal tender).

had some little experience of the working of 'paper vs. gold,' in
Denmark, in 1813, when their currency, which was printed on blue paper.
I

86
depreciated to such an extent that the King, to remedy the evil, issued a
currency, printed on white paper, accompanied by an edict that one
rix dollar of the new emission should be regarded in all transactions as
worth six of the old, and taken as a legal tender, which required an
amount of faith equal to that which was exacted by Lord Peter of Martin
and Jack that they should believe a loaf of brown bread to be a shoulder
of mutton,' or suffer for their incredulity.
This arbitrary edict led to the ruin of many creditors, especially mortgagees, who were thus compelled to receive 'rags and lampblack' in
satisfaction of debts contracted in gold and silver.
At that time I had bargained with the King's painter, in Copenhagen,
to take my portrait (a half length, still in my possession), for three hundred
and six dollars, the frame included. Such was the rapid decline in the
paper currency of the Government, that when it was completed I purchased with nine Spanish milled dollars the three hundred and six dollars
to pay for the portrait and frame and such was the faith and loyalty of
the painter, that he believed, or was bound by law to believe, that the one
currency was just as good as the other! Being in London during the
same year, I was guilty of the felonious act of selling my gold guineas for
twenty-seven shillings in paper, while honest, patriotic and credulous
John Bull insisted that in theory their value was the same ; and Eight
Honorable the Chancellor of the Exchequer could cause the transportation
to Botany Bay of any man who practically proved the contrary."

new

l

:

;

"I would

Mr. HUTCHINGS

gentleman who wrote that

[Here the

hammer
<k

Mr. CRISFIELD

1

letter?'

like to .inquire as to the occupation of the
''

fell.]

ln order to accommodate what seems to be the wish

of the Committee, or some members of it, I propose to modify my amendment by confining the motion to strike out to the words, "and. shall also
be lawful money and a legal tender in payment of all debts, public and

United States."
" Mr.
Chairman, I rise to oppose the pending
amendment. I did desire to submit to the Committee some views touching this measure when we were in general debate, but omitted to do so in
deference to the more matured views which other members of the Committee desired to submit. I propose to occupy the few minutes I have,
in making some statements in relation to the charges of bad faith and
injustice which have been so persistently, earnestly, and, doubtlessly,

private, within the

Mr. SHELL ABARGER

sincerely

Now,

made by

sir,

the opponents of the

I think

it

bill.

must be

plain, beyond all cavil, that if these notes,
this bill, are made of the value imposed upon

proposed to be issued under
them by law, so that they will be to the citizen the true and real representatives of that amount of the intrinsic wealth of the country, which is
stamped by law upon them as their nominal value, then there can be no practical
a debt precisely
injury, injustice, or bad faith in the law which makes them pay
equal to that real value or wealth of the country, which that note, so made a tenIt is, of course, not my purpose now either to discuss or
der, represents.
state those views by which others see in this measure as distinguished
from those they advocate only disaster, in the shape of destruction of
all standards of value ;' in the inflation of the business and the prices of
'

'

the country

;'

operations of trade and commerce ;' and
of the Government and of the people. I

in disordering the

in the ultimate

*

bankruptcy

'

'

have no doubt this cry is made sincerely by many, and perhaps it is
believed by all who make it. I do not discuss the sources and reasonableness of this cry of alarm, but only wish to present a parallel to it, and
say that this cry is, to my mind, as unreasonable as that other to which I
allude. I find that parallel in the history of the growth of the debt of
England; and in the light of that history, I declare that this cry of
'bankruptcy' and national disaster and ruin is utterly unreasonable, and

now most

pernicious.
the history of the growth of that debt, which one of the great
Commoners of England calls 'the greatest prodigy that ever perplexed
the sagacity and confounded the pride of statesmen and philosophers,'
furnishes as conclusive refutations of the theories and predictions of our

just

Sir,

alarmists of this House, as

it

did in the past of other Parliaments.

end of the war of England with Louis XIV, in 171.1 the
debt of England was, in round numbers, $250,000,000. But, sir, at that
period, not pot-house politicians merely, but profound thinkers, declared
the Government permanently crippled. But while these were engaged in
proving the nation ruined, the nation was growing richer and richer.
Soon came that war which was ended by the peace of Aix la Chapelle
and the national debt had come to be $400,000,000 in 1748. Now, again,
historians, statesmen and economists concurred in declaring that the case
of England was certainly now desperate; but now again the nation persisted, although demonstrated by the books to be a bankrupt, in becoming
far richer than in any period of her history.
Soon the nation became
again involved in the continental wars of the reign of George II, and at
the end of Chatham's administration, at the period of 1760, the national
debt came to be $700,000,000. Then, again, it is declared that both men
of theory and of business united in declaring that now, at all events, the
fatal day had certainly arrived.
Adam Smith, the father of politico-economical science, thought the limit had been reached, and an increase of
the debt would be fatal. David Hume, the profoundest man of his age,
declared it wr ould have been better that England had been conquered and
crushed by Prussia and Austria, than by debts for which all the revenues
of the Kingdom north of Trent and west of Reading w ere mortgaged.
He said the madness of England exceeded that of the crusaders. Richard
Coeur de Lion and St. Louis had not gone in the face of arithmetic.
England had. You could not prove that the road to Paradise was not
through the Holy Land but you could prove that the road to national
ruin was through a national debt.
But still, in defiance of Hume and
Smith, and even Burke, the nation would live and grow richer, and pay
the interest on its public debt.
Sir,

at the

;

f

;

Then came George Grenville's policy to tax the colonies of America to
help pay the interest on this debt, and brought on our war of the Revolution. In that England lost the colonies, and found an addition to her
public debt of $500,000,000 making the aggregate, at the time of the
treaty of peace, $1,200,000,000. Again England was pronounced hopeless
but again she continued to be more prosperous than ever before.
;

Then came the wars growing out of the French Revolution and the
debt of England ran up to $4,000,000,000. Again the cry of despair and of
bankruptcy w as louder than ever; but also again the cry was false as
ever and the interest on the debt of England not only continued to be
paid to the day at the bank, but such was her prosperity that at the close
;

r

;

88
of these French wars, her people expended for railroads in the island, in a

few years, more than $1,200,000,000!
Such is a sketch of the history of the debt of England, and such the

by the logic of history to the logic of abstract reashowever profound.
A great historian and a great commoner of England declares that all
these cries of bankruptcy and ruin were based on a double fallacy. They
who raised these cn'es imagined thai there was an exact analogy between the case
of an individual who is in debt to another, and the case of a society which is in
debt to itself; and they also forget that other things grew as well as the debt.
Sir, I do not make this allusion to the debt of England to show that 'a

refutation furnished

oning,

national debt is a national blessing,' nor to indicate that this nation ought
permanently to depart from its old and traditional policies of avoiding
public debt and direct taxation. I do not think we either ought to or
will.
But, sir, this parallel between the alarms of this day and this country, and those of the past in another country, is only introduced to indicate
the strange infirmities of vision in all these prophets of evil, and to
indicate how unjust and cruel it is to weaken, by these refuted cries of
ruin and bankruptcy, the faith of the people in the Government, which
now, in its day of peril, so preeminently rests upon the faith of her
children.

these obligations of this Government go out to the people borne
the faith and all the property of the people; and they have all
the value which that faith untarnished, and that property unestimable,
can give them. It is not because they lack intrinsic value that they need
the quality of 'lawful tender,' but it is to secure to the Government in
their issue their true value, and to retain for them that true value as you
Sir, all

up by

all

pass them as all agree you must to your noble soldiery in the field, and
to all classes of the people not engaged, as the most persistent outside opposition to this bill is, in endeavoring to destroy the value of these, so that out of the
blood of their sinking country they
1

may

be enabled to coin the gains of their

''

infamy.'

Mr. HICKMAN, of Pennsylvania, spoke in favor of the bill:
The only question, Mr. Chairman, which I have ever had with reference to this bill, has not been a question as to the powers of Congress,
"

but as to the policy of the enactment. I would, myself, have preferred
that this bill had followed the tax bill. I would have preferred that,
before the credit of the Government had been tried to that extent, the
basis of that credit should have been exhibited to the country. Before I
take my neighbor's note, I should require him to show me on what his
of what his capital consists. I have, therefore, had great
;
to the propriety of voting for this bill as it stands at this time.

credit rests

doubt as

But being assured by the Chairman of the Committee of Ways and Means
that the Treasury, and, perhaps, the Administration, regard this as a

governmental necessity, I am disposed to waive the question of propriety
or expediency, and to vote for it as a necessity, having no doubt about
the right. That clause of the Constitution which gives to the Government the right to coin money, and to regulate the value thereof, is, to my
mind, conclusive of the great question that has been raised in this House,
4

To

coin money.'

which

is

what the material shall consist,
might be gold, or silver, or copper,

It does not indicate of

to be regarded as

money.

It

or brass, or iron, at the pleasure of the Government. In other words, it
is not demanded that the thing itself, which shall be coined as money,
shall have any intrinsic value. The coining of money is merely impressing upon that which is designated to be the circulating medium the mark
of the sovereign, indicating the will of the sovereign that it shall be
received in the exigencies of trade and commerce at the stated value.
And that mark of the sovereign, indicating the will of the sovereign, may
just as well be impressed upon paper as upon gold or silver. Nothing else

can be made out of the Constitution in this regard.

According to the arguments which have been addressed against this
the Constitution should have been made to read
Congress, or the
Government, shall have power to coin gold and silver money according
'

:

bill,

to their intrinsic value.'

to the material out of

Why,

which

it

sir,

the

Government

may make money;

is

is not restricted as
not restricted as to

the metal that shall be adopted as money ; it has perfect power to adopt
iron as well as any other metalic basis ; and if any other metal, why not
not impress upon paper the mark of the sovereign, indipaper ?
cating the will of the sovereign as to the value at which it shall be
received, and make it a circulating medium, there being nothing in the

Why

Constitution to restrict us in this necessary exercise of sovereign power,
without which no Government can carry on its'operations without which
no Government could exist ?
I have no doubt, whatever, in regard to the right of Congress to pass
;

and I am therefore willing to vote for
a necessity at this time.

this bill,
is

it

upon the ground that

it

MR. LOVEJOY'S SPEECH.

Mr. LOVE JOY, of

Illinois,

"MR. CHAIRMAN

I

opposed the

bill:

have endeavored for a day or two to obtain the
floor, for the purpose of expressing my views a little more at length than
I can in the five minutes to which I am now limited but, by an arrangement between the Chair and the Committee of Ways and Means, my
purpose has been averted.
;

I will now simply say in regard to the question of constitutionality, that
there has not been a respectable argument advanced in defense of the
constitutionality of this bill ; and, inasmuch as great talent and eminent
ability have been brought to bear upon it, I take it that no respectable

argument can be made in vindication of the constitutionality of this bill.
I would admit the plea of necessity, if I believed it and I think it is more
;

to confess, as Jefferson did, than it
constitution into the support of a measure

manly

to attempt to torture the
which everybody must see to
is

be unconstitutional.
Now, Mr. Chairman, in regard to the general idea of the bill, it is a
mere fallacy. The whole argument used in favor of the issue of these
legal tender notes is based upon precisely the same foundation as the old
theological dogma, crede ut edes. et edes believe that you eat the real flesh
of Christ in the wafer, and you do eat it. Believe that this piece of paper
is a five dollar gold piece, and it is a five dollar gold piece ; believe it is

worth

five dollars,

am

and

it is

worth

five dollars.

it is not in the power of this Connor in the power of any legislative body, to accomplish an impossibility in making something out of nothing.
The piece of paper you stamp as five dollars is not five dollars, and it

Now,

gress,

sir,

I

prepared to state that

90
it is convertible into a five dollar gold piece ; and to
simply a delusion and a fallacy. You may say even
by legislative enactment that sixty or eighty or even ninety-nine cents are
a hundred, but the rigid, inexorable digits will stand lixed and immovable

never will be unless

profess that

by your

it is, is

legislative legerdemain.

Mr. Chairman,

and Means
do not pass

we

are urged

by the Chairman of the Committee of Ways
Government if we

to pass this bill, because ruin is before the

me

very forcibly of Cowper's Xeedless Alarm.
rhyme, but I will give the substance of it.
You will remember that, hearing the deep braying of the hounds, and the
sound of the hunter's horn, the sheep coursed round and round the field,
until the frightened flock came to the brink of a precipice, and to get away
I

it.
It reminds
cannot undertake to give

it

in

from the hounds and huntsman the^afer
" I
hold

That

The matron

there

to save,

more

we

and most

them thus:

fit

leap into the pit."

discreet than the spouse, replies

:

leap into the pit our life to save?
save our life, leap all into the grave?"

no precipice, there

is

gregis advised

therefore, wisest

How?
To

Sir,

life

of the flock,
"

it,

is

no chasm, there

is

no possible yawn-

ing, bottomless gulf before this nation so terrible, so appalling, so ruinous,
as this same bill that is before us, and that it is proposed to pass under the

pressure of these influences brought to bear upon it.
You issue $100,000,000 of those notes. The gentleman tells us they are
have got to pay the paper out almost before we can
already due.
make it. It has taken us six months to manufacture $50,000,000, and we
cannot manufacture it as fast as we shall spend it at that rate; so that

We

issued $100,000,000 we must issue another $100.000,000, and
then another $100,000,000. And thus we plunge from lower depth to still
lower, till we are buried in an ocean of inconvertible paper. At every

when we have

step your paper will depreciate more
will swell to such an appalling

and more, until the expenses of the
that redemption will be imposFacilis deocensus averni, etc., which
sible, and repudiation inevitable.
means it is easy to slide down hill, but very hard work to draw the sled
back over smooth ice. But the question is pressed what will you do ?
What do you propose ? I propose this
First Adequate taxation, if need be, to the extent of $200,000,000.
Second Adopt legislation that shall compel all banking institutions to do

war

sum

:

:

business on a specie basis.
Every piece of paper that claimed to be money,
but was not, 1 woidd chase back to the man or corporation that forged it,
1 would not allow a bank note
and visit upon them the penalties of the law.
to circulate thai

was not

constantly, conveniently

and

certainly convertible into

specie.

Third I would issue interest-paying bonds of the United States, and
go into the market and borrow money and pay the obligations of the
Government. This would be honest, business-like, and in the end
This could be done.
Other channels of investment are
economical.
blocked up, and capital would seek the bonds of investment.
This

is,

war poor

in substance, what I propose. This would bring us through the
indeed, for half the nation has to support the other half, but

with the health and vigor of the athlete, and not with the bloated flesh of
Did I not know that the passage of this bill was a forethe beer guzzler.
gone conclusion, I would move to re-commit, with instructions to that
effect."

91
MM-:

I

.<

II

OF MR. WALTON.

Mr. WALTON, of Maine, advocated the

bill.

"Necessity compels us to pay our creditors in treasury notes. Our
credit is exhausted or perhaps it will be more accurate to say that the
menus of those who are willing to lend to the Government have become
;

To lay and collect taxes will require considerable time;
cannot reasonably be expected that revenue enough can ever
be derived from taxation to meet all the expenses of the Government
while the war lasts. Practically, therefore, our Government is reduced to
the necessity of paying not only its other creditors, but our brave soldiers,
in its own notes. Thus compelling our creditors (our brave soldiers
included) to take their pay in treasury notes; is it not just, is it anything
more than common honesty, to allow them to pay their debts in the same
exhausted.

besides,

way.

it

made a legal tender, they will circulate
payment of debts, and will only cease thus to

If these treasury notes are

as readily as specie in the
circulate, if ever,

when they have reached

And

the hands of those

who have

as the enemies of the legal tender clause
predict, they ever fall in value below par, will not the loss fall upon those
who have money, and no debts to pay ? And can it fall on a class who

no debts to pay.

if,

will feel it less? And as it is this class of persons that constitute our
money-lenders, it will be rather a favor than an injury to them for these
notes are convertible into United States bonds, with semi-annual interest
;

coupons attached, and therefore accomplishes for them just what they
a safe loan of their money. I say a safe loan, for the issue of these
notes is to be followed by vigorous taxation; and in equity the lender
will have a lien on the whole property of the United States as security for
every dollar of his debt, and a pledge of the public faith that this security
shall be made available.
The legal tender clause of the bill, therefore, while it secures to our
soldiers and the poorer class of our citizens, who have debts to pay, great
advantages, does no real injury to capitalists, and ought to be retained.
The constitutional objections have not been overlooked. I think the
Federal Government has the same power to make these notes a legal
tender that it has to make anything else a legal tender. It can make nothing a legal tender by virtue of any express poiver. It has but an implied power
in any case. And if it is admitted, as it always has been, that the Government possesses the power to declare what shall be a legal tender in any
case, it has it without limitation. It can make one thing a legal tender as
well as another and whether these notes shall have that character or not,
is a question of expediency only, and not one of power.
desire

;

It is objected by some that to make these notes a legal tender will
impair the obligation of contracts, and is therefore unconstitutional. But
In every contract payable in money, and no particular
this is not true.
kind of money is named, it is implied, and is a part of the contract, that it
may be discharged in what shall be the legal currency at the time of payment.
change or enlargement of the legal currency of the country,
and a payment in such new currency, is no violation of the new contract,
but is in pursuance of one of its implied conditions.
Having the power, and believing, on the whole, that the legal tender

A

clause

is

a beneficial one, I

am

in favor of retaining

The question recurred on Mr.

Crisfield's

it

in the bill."

amendment,

to strike

out the legal tender clause in the original
taken in Committee of the Whole by tellers-

On taking the vote the tellers
amendment was rejected.

reported

bill.

The vote was

ayes 53, noes 93, so

the

Several other

amendments were made

in

Committee of the

Whole, but inasmuch as they were all cut off, modified or adopted
by subsequent proceedings, after the bill was reported to the
House, it is not necessary to report them here. The bill, as
adopted, is copied at the end of this day's proceedings.

Having gone through the

bill in

Committee of the Whole,

there was a good deal of preliminary skirmishing on the part of
different members, who had proposed substitutes and amendments
as to the order of taking the vote.
Some members feared that
would not be able to get a square vote in the House on their
they

Several members were on the floor at
respective propositions.
the same time.
Motions, objections and counter-motions were
made in quick succession, and in various forms, which continued
for

some time, causing confusion and preventing any action of a
and preventing any vote being taken on either

practical character,

It finally resulted in an arrangement being made
proposition.
that the bill should be reported to the House, and a square vote
be had on the two main propositions pending before the Com-

Mr. Vallandigham and Mr.

mittee.

Conkling withdrew their

substitutes, so that all of the opponents of the legal tender clause

could concentrate on the substitute agreed to by Mr. Morrill, Mr.
Horton, Mr. Corning and Mr. Stratton, one-half of the Committee
of Ways and Means; and that the vote should be first taken on
that substitute, which was modified to meet the conflicting views
of the various gentlemen on that side, in order to make it as

acceptable as possible to all the opponents of the original bill.
This substitute finally offered by Mr. Horton, will be found

(Cong. Globe, p.

The

,)

and

substitute which

after the

word "that,"

is

as follows:

was read was,

to strike out of the bill all

in the first section,

and insert the

follow-

ing:

"For temporary purposes, the Secretary of the Treasury he, and he is
hereby, authorized to issue on the credit of the United States $100,000,000
of Treasury notes, bearing interest at the rate of three and sixty-five hundredths per cent, per annum, payable in two years after date, to bearer, at
the Treasury of the United States, or at the office of the Assistant Treasurer, in the city of New York, or at the office of the designated depository
in the city of Cincinnati, arid of such denominations as he may deem

93
expedient, not less than five dollars each; and such notes shall be
receivable for all public dues, except duties on imports, and for all salaries, debts and demands owing by the United States to individuals, corporations and associations, within the United States, at the option of such
individuals, corporations and associations and any holder of said United
States notes, depositing any sum not less than fifty dollars, or some multi;

ple of fifty, with the Treasurer of the United States, or either of the
Assistant Treasurers, or either of the designated depositories at Cincinnati or Baltimore, shall receive in exchange therefor duplicate certificates

of deposit for the amount, with any accumulated interest thereon, one of
which may be transmitted to the Secretary of the Treasury, who shall
thereupon issue to the holder an equal amount in bonds of the United
States, coupon or registered, as may be desired, bearing interest at the
rate of seven and three-tenths per cent, per annum, payable semi-annually
in coin, and redeemable at the pleasure of the Government after ten years
from date and such Treasury notes shall be received the same as coin, at
their par value, with accumulated interest, in payment for any bonds
that may be hereafter negotiated by the Secretary of the Treasury and
the Secretary of the Treasury may, from time to time, as the exigencies
of the public service may require, issue any amount of such Treasury
notes equal to the amount redeemed. There shall be printed on the back
of the Treasury notes, which may be issued under the provisions of this
The within note is receivable in payment of
act, the following words
all public dues, except duties on imports, and is exchangeable for bonds
of the United States, bearing seven and three-tenths per cent, per annum,
;

;

'

:

payable in coin, semi-annually.
SEC. 2. And be it further enacted, That to enable the Secretary of the
Treasury to fund the Treasury notes and floating debt of the United States,
he is hereby authorized to issue, on the credit of the United States, coupon
bonds, or registered bonds, to an amount not exceeding $500,000,000,
$200,000,000 bearing interest at the rate of seven and three-tenths per cent,
per annum, payable semi-annually in coin, and redeemable at the pleasure
of the Government, after ten years from date, and $300,000,000, redeemable
at the pleasure of the Government, after twenty-four years from date, and
bearing interest at the rate of six per cent, per annum, payable semiAnd the bonds herein authorized shall be of such
annually in coin.
denominations, not less than fifty dollars, as may be determined upon by

the Secretary of the Treasury; and the Secretary of the Treasury may
also exchange, at par, such bonds at any time for lawful money of the
United States, or for any of the Treasury notes that have been, or may
hereafter be, issued under any former Act of Congress, or that may be
issued under the provisions of this Act.

And be it further enacted, That the Treasury notes and the coupon
$ 3.
or registered bonds authorized by this Act, shall be in such form as the
Secretary of the Treasury may direct, and shall bear the written or
engraved signature of the Treasurer of the United States and the Register
of the Treasury; and also, as evidence of lawful issue, the imprint of
a copy of the seal of the Treasury Department, which imprint shall be
made under the direction of the Secretary, after the said notes or bonds
shall be received from the engravers, and before they are issued; or the
said notes and bonds shall be signed by the Treasurer of the United States,
or for the Treasurer, by such persons as may be specially appointed by
the Secretary of the Treasury for that purpose, and shall be countersigned

94
by the Register of the Treasury, or
as the Secretary of the Treasury

for the Register,

by such persons

may

specially appoint for that purpose ;
entitled, 'An Act to authorize the issue

and all the provisions of the Act
of Treasury notes,' approved the 23d day of December, 1857, so far as they
can be applied to this act, and not inconsistent therewith, are hereby
revived and re-enacted; and the sum of $300,000 is hereby appropriated
out of any money in the Treasury not otherwise appropriated, to enable
the Secretary of the Treasury to carry this act into effect.

And be it further enacted, That any person or persons, or any cor$ 4.
poration, holding Treasury notes, may, at any time, deposit them, in
sums of not less than $500, with any of the Assistant Treasurers or designated depositaries of the United States, authorized by the Secretary of the
Treasury to receive them, who shall issue therefor, transferable certificates
of deposit, made in such form as the Secretary of the Treasury shall
prescribe, and said certificates of deposit shall bear interest after thirty
days, at the rate of five and two-fifths of one per cent, per annum and
any Treasury notes so deposited may be withdrawn from deposit at any
time, on the return of said certificates, but no interest shall be allowed
except after thirty days. And all such deposits shall cease and deter;

mine

at the pleasure of the Secretary of the Treasury, and after ten days'
notice shall have been given to the depositor.

And

5.

falsely

made,
falsely

it further enacted, That if any person or persons, shall
forge, counterfeit or alter, or cause or procure to be falsely
forged, counterfeited or altered, or shall willingly aid or assist in

be

make,

making, forging, counterfeiting, or altering any note, bond or
under the authority of this act, or heretofore issued

certificate, issued

under acts to authorize the issue of Treasury notes or bonds, or shall pass
utter, publish, or sell, or attempt to pass, utter, publish, or sell, or bring
into the United States, from any foreign place, with intent to pass, utter,
publish or sell, as true, or shall have, or keep in possession, or conceal, with
intent to utter, publish or sell, as true, any such false, forged, counterfeited
or altered note, bond or certificate, with intent to defraud anybody, corporate or politic, or any other person or persons whatsoever every person
so offending, shall be deemed guilty of felony, and shall, on conviction
thereof, be punished by a fine not exceeding $5,000, and by imprisonment
and confinement to hard labor, not exceeding fifteen years."
;

being reported from the Committee of the Whole
to the House, the vote was first taken on this substitute.
The yeas and nays were ordered.

Upon

the

bill

The question was
yeas

55,

taken, and

nays 95, as follows

it

was decided

in the negative

:

Yeas Messrs. Ancona, Baxter, Biddle, George H. Brown,
William G. Brown, Cobb, Frederick A. Conkling, Roscoe Conkling, Conway,
Corning, Cox, Cravens, Crisfield, Crittenden,
Diven, Eliot, English, Goodwin, Grider, Harding, Holman, Horton, Johnson,

Law, Lazear, Lovejoy, May, Menzies, Justin S.
Nugen, Odell, Pendleton,

Morrill, Morris, Nixon, Noble, Norton,

Perry, Pomeroy, Porter, Edward H. Rollins, Sedgwick, Sheffield,
Shiel, William G. Steele, Stratton, Benjamin F. Thomas, Francis

95

Thomas, Train, Vallandigham, Wadsworth, E.
Webster, Chilton A. White and Wright 55.

P. AValton,

Ward,

Messrs. Aldrich, Alley, Arnold, Ashley, Babbitt, Goldsmith F. Baile3r Joseph Bailey, Baker, Beaman, Bingham, Francis

Nays

,

P. Blair, Jacob B. Blair,

Samuel

S. Blair,

Blake, Buffinton, Burn-

ham, Campbell, Chamberlain, Clark, Colfax, Cutler, Davis, Delano, Delaplaine, Duell, Dunlap, Dunn, Edgerton, Edwards, Ely,
Fenton, Fessenden, Fisher, Franchott, Frank, Gooch, Granger,
Gurley, Haight, Hale, Hanchett, Harrison, Hickman, Hooper,
Hutchins, Julian, Kelley, Francis W. Kellogg, William Kellogg,

Knapp, Lansing, Leary, Loomis, McKean, McKnight,
McPherson, Marston, Maynard, Mitchell, Moorhead, Anson P.
Morrill, Olin, Patton, Timothy G. Phelps, Pike, Price, Alexander
H. Rice, John H. Rice, Richardson, James S. Rollins, Sargent,
Killinger,

Shanks, Shellabarger, Sherman, Sloan, Spaulding, John B. Steele,
Stevens, Trimble, Trowbridge, Upton, Van Horn, Van Valkcnburg,

Van Wyck,

Whaley, Albert
cester

S.

Verree, Wall, Wallace, Charles

White, Wyckliffe, Wilson,

W. Walton,

Windom and Wor-

95.

So the substitute was not agreed to.
The question then recurred on the modification of the original
bill, offered by Mr. Stevens as a substitute, which was not read,
but which Mr. Stevens had just before explained as follows
Mr. STEVENS

"I wish

to state in regard to

modification of the original

bill.

my amendment,

:

that

it is

a

Those who are

in favor of the original
thought it better to adopt the

this in lieu of it. We
suggestion contained in the amendment of the gentleman from Ohio of
$150,000,000, retiring the $50,000,000 of demand notes (authorized last
July), and of making $150,000,000 the maximum to which they shall go.
That is about all the change there is, except that we have left out the foreign
loan clause, which is in the original ; and we have agreed to adopt an
amendment by which the holders of these notes may convert them either
into a twenty years' bond at six per cent., or five years' bonds at seven

have agreed upon

per cent., at their option."

had the concurrence of
Ways and Means Messrs.
Stevens, Spaulding, Hooper and Maynard, and was adopted by
the House without a division.
The bill, as amended, was ordered to be engrossed and read a
third time.
The yeas and nays were ordered on the final passage
of the bill.
The question was taken, and it was decided in the
This modification of the original
the other half of the Committee of

yeas 93, nays 59, as follows
Messrs. Aldrich, Alley, Arnold, Ashle}', Babbitt, Gold-

affirmative

Yeas

bill

:

96
smith F. Bailey, Joseph Bailey, Baker, Beaman, Bingham, Francis P. Blair, Jacob Blair, Samuel S.
Blair, Blake, Buffinton, Burn-

ham, Campbell, Chamberlain, Clark, Colfax, Cutler, Davis, Delano,
Delaplaine, Duell, Dunn, Edgerton, Edwards, Ely, Fenton, Fessenden, Fisher, Franchot, Frank, Gooch, Granger, Gurley,
Haight, Hale, Hanchett, Harrison, Hickman, Hooper, Hutchins,
Julian, Kelley, Francis W. Kellogg, William Kellogg, Killinger,
Lansing, Leary, Loomis, McKean, McKnight, McPherson, Mars-

Maynard, Mitchell, Moorhead, Anson P. Morrill, Nugen,
Olin, Pat.ton, Timothy G. Phelps, Pike, Price, Alexander H.
Rice, John H. Rice, Riddle, James S. Rollins, Sargent, Shanks,

ton,

Shellabarger, Sherman, Sloan, Spaulding,

John

B. Steele, Stevens,

Van Horn, Van Valkenburgh, Van
Verree, Wall, Wallace, Charles W. Walton, Whaley,
Wyck,
Albert S. White, Wilson, Windom and Worcester 93.
Trimble, Trowbridge, Upton,

Messrs. Ancona, Baxter, Biddle, George H. Brown,
Frederick A. Conkling, Roscoe Conkling, Conway, CornCobb,

Nays

ing,

Cox,

Cravens,

Crisfield,

Diven,

Dunlap,

Eliot,

English,

Goodwin, Grider, Harding, Holman, Horton, Johnson, Knapp,
Law, Lazear, Lovejoy, Mallory, May, Menzies, Justin S. Morrill,
Morris, Nixon, Noble, Norton, Odell, Pendleton, Perry, Pomeroj^,
Robinson, Edward H. Rollins, Sedgwick,
William G. Steele, Stratton, Benjamin F. Thomas,

Porter, Richardson,
Sheffield, Shiel,

Francis Thomas, Train, Vallandigham, Voorhees, Wadsworth, E.
P. Walton, Ward, Webster, Chilton A. White, Wickliffe and

Wright 59.
Thus the legal tender

act, after a

protracted debate, and a most

determined opposition, by prominent and influential Republicans,
as well as Democrats,

was passed through the House

r
bj a large

majority.

The following is a copy of the
on the 6th of February, 1862:
"

An Act to authorize the issue of
funding

thereof,

bill

as

it first

United States notes,

and for funding

passed the House,

and for

tfie

redemption or

the floating debt of the United States.

SECTION 1. Be it enacted by the Senate and House of Representatives
of the United States of America, in Congress assembled: That to meet the
necessities of the Treasury of the United States, and to provide a currency
receivable for the public dues, the Secretary of the Treasury is hereby
authorized to issue, on the credit of the United States, $150,000,000 of
United States notes, not bearing interest, payable to bearer at the
Treasury of the United States, at Washington or New York, and of such
denominations as he may deem expedient, not less than five dollars each.
Provided, however, that $50,000,000 of said notes shall be in lieu of the

97
demand Treasury notes authorized to be issued by the Act of July 17,
which said demand notes shall be taken up as rapidly as practicable,

1861

;

and the notes herein provided for substituted for them And provided,
further, that the amount of the two kinds of nots together, shall, at no
:

time, exceed the sum of $150,000,000. And such notes, herein authorized,
shall be receivable in payment of all taxes, duties, imports, excise, debts
and demands of every kind due to the United States, and for allsalaries,
debts and demands owing by the United States to individuals, corpora-

and associations within the United

States, and shall also be lawful
payment of all debts, public and private,
within the United States. And any holders of said United States notes,
depositing any sum not less than $50, or some multiple of $50, with the

tions

money and

a legal tender, in

Treasurer of the United States, or either of the Assistant Treasurers, shall
receive in exchange therefor duplicate certificates of deposit, one of which
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

centum per annum, payable semi-annually, at the Treasury
or Sub-Treasury of the United States, and redeemable at the pleasure of
the United States, after twenty years from the date thereof. Provided,
that the Secretary of the Treasury shall, upon presentation of said certificates of deposit, issue to the holder thereof, at his option, and instead of
the bonds already described, 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 seven per cent, per annum, payable semi-annually,
and redeemable at the pleasure of the United States, after five years from
the date thereof. And such United States notes shall be received the

rate of six per

same as coin, at their par value, in payments for any loans that may be
hereafter sold or negotiated by the Secretary of the Treasury, and may be
re-issued from time to time, as the exigencies of the public interests shall
There shall be printed on the back of the United States notes,
which may be issued under the provisions of this act, the following
words
The within is a legal tender in payment of all debts, public and
private, and is exchangeable for bonds of the United States, bearing six
per centum interest at twenty years, or in seven per cent, bonds at five
require.

*

:

years.'

And be it further enacted, That to enable the Secretary of the
$ 2.
Treasury to fund the Treasury notes and floating debt of the United
States, he is hereby authorized to issue, on the credit of the United States,
coupon bonds, or registered bonds, to an amount not exceeding $500,000,000, and redeemable at the pleasure of the Government, after twenty
years from date, and bearing interest at the rate of six per centum per
annum, payable semi-annually and the bonds herein authorized shall be
of such denominations, not less than fifty dollars, as may be determined
upon by the Secretary of the Treasury and the Secretary of the Treasury
may dispose of such bonds at any time for lawful money of the United
States, or for any of the Treasury notes that have been, or may hereafter
be, issued under any former act of Congress, or for United States notes
that may be issued under the provisions of this act and all stocks, bonds,
and other securities of the United States, held by individuals, corporations, or associations, within the United States, shall be exempt from
;

;

;

taxation
3.

by any

And

be

State or county.

it

further enacted,

That the United States notes and the

98
coupon or registered bonds, authorized by this act, shall be in such forms
as the Secretary of the Treasury may direct, and shall bear the written or
engraved signatures of the Treasurer of the United States^ and the Registry of the Treasury, and also as evidence of lawful issue, the imprint of a
copy of the seal of the Treasury Department, which imprint shall be
made under the direction of the Secretary, after the said notes or bonds
shall be received from the engravers, and before they are issued ; or the
said notes and bonds shall be signed by the Treasurer of the United
States, or for the

Treasurer by such persons as may be especially appointed
by the Secretary of the Treasury for that purpose, and shall be countersigned by the Register of the Treasury, or for the Register by such persons
as the Secretary of the Treasury may especially appoint for that purpose ;
and all the provisions of the act entitled "An act to authorize the issue of

Treasury notes," approved the 23d day of December, 1857, so far as they
can be applied to this act, and not inconsistent therewith, are hereby
revived and re-enacted; and the sum of $300,000 is hereby appropriated,
out of any money in the Treasury not otherwise appropriated, to enable
the Secretary of the Treasury to carry this act into effect."

Two

and

were adopted as part of this
bill,
guard against counterfeiting, but it is not important to
insert them here, as they do not affect the principles of the bill.
penal sections

(

4

5)

to

LETTER FROM GEORGE DAWSON, ESQ., TO THE ALBANY EVENING
JOURNAL.
''WASHINGTON, February
"This has been an exciting day

in the House.

6,

1862.

A fierce battle has

been

against the 'legal tender' Treasury notes. But, as I think, the
right has prevailed, and by a vote of 95 to 59 a much stronger force than
was counted upon, the real argument was reduced to a very small compass. All admitted the necessity of a resort to paper currency ; and the
question was whether that paper should be made as nearly par value as
possible, or subjected to the fluctuations and depreciations of an ordinary
irredeemable currency. If made a legal tender, these notes could never
sink below the best bank paper. If not so made, they would very soon
cease to be available as a circulating medium.
Besides, if Treasury notes were to be used to pay the Government
creditors, why should not their creditors be required to take them ? Why
should the soldier be required to take what the sutler might refuse ? To
be sure, the now legal tender bill left it optional with the soldier, whether
he should take the notes or not; but if he availed himself of the 'option,'
what had the Government to give him ? Practically, it would be Treasury
notes or nothing, as, during a general Bank suspension, it is irredeemable

waged

bank bills 'or no pay.'
It was not strange that members of the same political family, differed
on a question of really doubtful expediency. And but for the necessities
of Government, I doubt whether the legal tender principle would have
received a dozen votes in the House. It is a new financial principle, and
its workings may result in some, if not all the evils predicted from it.
Nevertheless, as Treasury Notes had to be resorted to, the common sense
'

'

of the House, as well as the common sense of the people, determined that
they should be made as near the practical value of gold as possible. Mr.
Spaulding, of Erie, has had to assume the laboring oar in this financial

99
expedient. He had but a bare majority of his Committee with him at the
outset; and, when the Secretary of the Treasury hesitated, as he did for
several days, the Committee became equally divided./ And yet, the
measure carried a large majority of the House with it a fact as gratifying
to

Mr.

S. as it is

complimentary to his financial acumen.

The legal tender bill has passed the
freer!
House, and national bankruptcy is averted. The grateful thanks of all
loyal men are due to Mr. Spaulding and the representatives who supported
the measure, for this timely effort in behalf of the public credit. The
N"ow let the Senate do its duty
relief comes not a moment too soon.
"
promptly, and we shall be clear 'of the breakers.'
The country breathes

PROCEEDINGS IN THE SENATE ON THE

The

legal tender bill

was sent

to the Senate

BILL.

on the 7th

and was, on motion of Mr. Fessenden, read twice by
referred to the Finance Committee.

inst.

its title,

,

and

The Treasury was nearly empty, and the Secretary was unable
any more of the loan authorized by the act passed at
The act
the extra session in July, at the rates fixed by the law.
limited him to par in disposing of any of the bonds or notes
The six per cent, twenty year bonds
authorized by that act.
to negotiate

were then selling at about 88, and the 7 3-10 notes were below
In this emergency, Secretary Chase sent to Mr. Fessenden

par.

a letter, urging the immediate passage of a bill giving temporary
while the legal tender bill was being perfected in the
Mr. Fessenden obtained unanimous consent to consider
Senate.

relief,

the subject forthwith.

The following proceedings were had:

Mr. FESSENDEN "I have just received a letter from the Treasury
Department, which I will read
:

"TREASURY DEPARTMENT,

Feb.

7,

1862.

The condition of the Treasury requires immediate legislative
provision. What you said this morning leads me to think that the bill
which passed the House yesterday, will hardly be acted upon by the
"Sir:

Senate this week.

Until that

bill shall

receive the final action of Con-

gress, it seems advisable to extend the provisions of the former acts, so as
to allow the issue of at least $10,000,000 in United States notes, in addition
to the $50,000,000 heretofore authorized. I transmit a bill framed with that

which will, I trust, meet your approval and that of Congress.
Immediate action on it is exceedingly desirable.
object,

Yours, truly,

S.

P.

CHASE."

"Hon. WILLIAM P. FESSENDEN,
Chairman Committee Finance, Senate."
The
'

'

bill is

a very short one, and I will read

A BUI to authorize an additional
Be it

:

That the Secretary of the Treasury, in addition to the
on demand, of denominations not less than
heretofore authorized by the acts of July 17, and August 5,

enacted,

etc.,

$50,000,000 of notes, payable
five dollars,

it

issue of United States Notes.

100
186], be, and he is hereby, authori/ed to issue like notes, and for like
purposes, to the amount of $10,000,000, which said notes shall be deemed
part of the loan of $250,000,000 authori/ed by said acts."
"I will state that this has just been received by me. It has not been
submitted to the Finance Committee, but the emergency is known to all.

The bill is simple and easily understood, and I presume there will be no
objection to passing it now. At all events, I ask the unanimous consent
of the Senate to enable me to introduce the bill without notice, and to
have

it

considered now."

By unanimous

consent, leave was granted to introduce the bill,
No. 190,) to authorize an additional issue of United States
(S.
This bill was
notes; and it was read three times and passed.
sent to the House on the 10th inst., and on being read was immediately passed, without opposition.

On the 10th inst. Mr. Fessenden reported the bill (House Bill
No. 240) from the Finance Committee, with amendments. The
important amendments thus reported were
:

First That the legal tender notes should be receivable for all claims
and demands against the United States of every kind whatsoever, "except
for interest on bonds and notes, which shall be paid in coin."

Second
the

That the Secretary might dispose of United States bonds

market value

" at

thereof, for coin or Treasury notes."

A

Third
new section, No. 4, authorizing deposits in the sub-Treasuries
at five per cent., for not less than thirty days, to the amount of $25,000,000, for which certificates of deposit might be issued.

Fourth An additional section, No. 5, "that all duties on imported
goods and proceeds of the sale of public lands," etc., should be set apart
to pay coin interest on the debt of the United States and one per cent,
;

for a sinking fund, etc.

On

Fessenden, Chairman of the Finance
Committee, opened the debate on the bill in a lengthy speech.
the 12th

inst.

Mr.

(Cong. Globe, p. 762.)

SPEECH OF MR. FESSEXDEX.
"I propose, Mr. President, before any question is taken on any one of
the amendments, to make some remarks upon this bill. They may be
very dull and dry, for it is rather a dry subject, but still it becomes my
duty, as the organ of the Committee on Finance, to explain the provisions
of this

bill.

The honorable Secretary of the Treasury, at the beginning of the session, recommended two measures taxation and a bank. Both of these
subjects require, at this stage of the country, and under existing circumand long consideration. The opinion of the country has

stances, peculiar

tended towards what is called indirect taxation, taxation upon different
American and other products, and different kinds of property. Sir, that
requires great time. I have examined it sufficiently to be aware that it
It is substantially new
is not the labors of a day, or a week, or a month.
in this country, and it requires much time, much study, and much inform-

101
ation to acquire all the knowledge of the various products which would
be likely to produce a revenue, and upon which a tax might, with propriety, be laid. So, too, with reference to the scheme suggested by the
honorable Secretary of the Treasury with regard to a bank. And yet,
notwithstanding all that, a bill of that description has been reported.

With regard to the particular bill now before the Senate, we all know
that it was resorted to as a temporary measure, not in the beginning, but
in consequence of the necessities of the Treasury, arising from a greater
expenditure than the Secretary could have imagined, and arising from the

nesessary delay with reference to other measures. Can it be said that a
measure like the one now pending before the Senate and the country is a
measure of a day or an hour? Why, sir, what does it propose? It proposes something utterly unknown in this Government from its foundation
a resort to a measure of doubtful constitutionality, to say the least of it,
which has always been denounced as ruinous to the credit of any Government which has recourse to it ; a measure, too, about which opinions in
the community are divided as perhaps they never have been divided upon
any other subject; a measure which, when it has been tried by other
countries, as it often has been, has always proved a disastrous failure.
Sir, it would hardly be expected that a measure of this description,
brought into the House of Representatives and the Senate for the first
time in the history of the country, involving questions of such infinite
importance, not only with reference to to-day, but with reference to the
future, to all time, because it is setting a precedent which may be followed, should be taken up and passed at once, as we pass appropriation
It needed long, careful and vigorous discussion.
bills.
It has had it in the
I have read that discussion from beginning to
other branch of Congress.
It has been able and clear upon both sides of the question.
end.
The subject
deserved that discussion and the House of Representatives would have
been faulty if it had suffered a measure of this kind to be passed without
its having undergone a discussion which should not only enlighten the
House, but enlighten the country upon all the aspects of it. Shall Congress be considered in fault because they have not before acted, or did not
act heartily, upon a measure of that description ? I think not, sir. The
time has been well spent, and although I regret as much as any man can
regret that we have not been able to act more promptly, I see no fault to
be imputed anywhere not in the other House of Congress, and certainly
not in this; for it has reached this body as soon as it could possibly reach
it, when you consider the nature of the questions that were to be discussed
by the Committee to whom it was referred.
;

;

;

I have already said that we have never attempted to resort to such a
measure before. We have had a war with England since our Government
was formed; and if I am rightly informed, at that clay, the stocks of the
Government went down to sixtj per cent, and pay was taken for them in
such currency as could be received, itself depreciated; and yet it did not
occur as a serious question to the men of that day to put forth, under the
Constitution, irredeemable paper made a legal tender for the payment of
debts. To be sure, the country then was poor; it is now rich, comparaThe country had not then the resources that we have; and
tively.
perhaps it would have had the more excuse for adopting such a course. I
do not urge this as an argument against it at the present time, but only as
showing the nature of the measure itself, to which it is now proposed
to have recourse, in order to place the Government in a better position
r

;

102
especially, sir, when you observe that everybody
question, I believe without an exception there

who has spoken on

may have been

this

one or

two but all the opinions that I have heard expressed, agree in this that
only with extreme reluctance, only with fear and trembling as to the
consequences, can we have recourse to a measure like this, of making our
paper a legal tender in the payment of debts.
:

The Committee on Finance have reported several very important
amendments. The first amendment, which the Senate will notice is made
in the first section, is that the interest on the public debt shall be paid in
coin. The Senate will observe that without this, under the provisions of
the House bill, a creditor of the Government, holding Government paper,
notes, or bonds, would be compelled to take his interest in notes or bonds,
as the casfc might be, when the time for the payment of the interest came
round. He would have no choice. The tender of a note for the interest
that might be due on his bonds, however large or small, would be equivalent in its effect to the tender of coin. According to our amendment, the
Government will be obliged to provide itself with coin for the payment of
the interest. The object of this provision is not only to do justice in this
regard, but also to make it raise and support the credit of the Government
obligations ; and it will be perceived how very important it is to that end.
The Secretary, by the provision which I have referred to, is obliged to
provide himself with coin for that purpose, and he is obliged to do it at

whatever

may be

necessary, in order to accomplish that purpose.
it proves the good faith of the Government; that it means to do all it can; that it means to spare no effort
at whatever cost, to give to those who take the Government paper, what
they wish to receive, something besides Government paper, and thus running round in a circle of paper, for the interest upon their debts.
sacrifice

This certainly will have one effect;

was not enough, perhaps, to show the good faith of the GovThe Committee have recommended that w e
go further, and that we provide a specific fund, in order to accomplish
that purpose, and set it aside for that object. It was proposed in the
Committee and it struck me favorably at first to set aside, specifically,
the public duties, by providing that the duties on imports should be paid
in coin but on consideration, it was deemed by the Committee that that
would be hardly fair. The result would be to make a distinction between
different classes of the community, and to impose a very heavy burden
upon those who are engaged in trade, and who would be called upon to
pay duties. If we provide a paper currency, the natural and inevitable
The consequence would be,
effect of it is, that coin increases in price.
unquestionably, that those obliged to pay duties on imports might be
compelled to make a severe sacrifice, in order to raise the coin to pay the
duties; and, in the next place, the general effect would be to, in effect,
increase the duties provided by our tariff. Necessarily, if coin appreciates, if it becomes worth more than the ordinary currency, and duties
are to be paid in coin, the effect of such a provision would be to increase
the duties, which are already very high, and in some cases almost prohibitory. The Committee, therefore, thought that, under the circumstances,
that would not be wise; although it will be perceived that, not having
But,

sir, it

ernment in

r

this particular.

;

the converse of the proposition may be true that the effect, if we
currency by paper, and allow the duties to be paid in paper, is
necessarily to diminish the duties on imports, and thus, perhaps, to lead
to a greater importation.

done

so,

inflate the

:

103
Having rejected this, it becomes necessary to make some other proand accordingly provision was made, and will be found in the
fifth section, by setting aside the amount of duties received, the amount
received from the sales of the public lands, and the amount that may be
vision;

received from the confiscation of the property of the rebels, to form a
fund. The Senate will consider whether all these provisions are necessary
ml wise, to create a fund which shall be devoted, in the first place, to
pay the interest upon the coin and on the notes ; and, in the second place,
to create a sinking fund, which, in the end, might be able to pay the
whole debt, and would in a certain course of time.
:i

This, undoubtedly, will be a very sufficient security ; but, sir, the Committee have gone further. In order that the Secretary may be sure, and
that the public creditors may feel safe with reference to it, they give to the
Secretary the power to sell the bonds of the Government at any time that it
may lie necessary, at the market price, in order to raise coin. That can

always be done. The sacrifice may be great, or it may not; it depends upon
circumstances ; but at any rate that will bring coin. These two provisions, taken together, have the effect necessary to create an entire
confidence in the minds of the purchasers of the public obligations, that
the interest will be surely paid at the time it is due, and paid in coin and
having done that, the result is obvious to the Committee that our securities
must necessarily be placed upon a more stable foundation, and be of very
much greater value in the market, because what the holder of public
securities wants, is to be sure that his interest will be paid, especially if it
is on long time.
But, sir, the power to sell the obligations of the Government at the market price is not confined to the interest. The Senate will
observe that it is made general that instead of being confined and obliged
to sell the obligations of the Government at par, the Secretary of the
Treasury is authorized to sell them at any time at the market price; and
instead of being confined to sell them for coin, merely for the purpose of
raising money to pay the interest on the public debt, he is permitted to
sell any amount at any time that it may be necessary, for what he can get.
This is a bold, strong measure, and it may strike the Senate with some
surprise, or, at any rate, it may lead them to deliberate upon the subject.
;

;

**/*

#

*

if-

#

####

#

But the Committee thought, in giving this enlarged power to the Secretary at this time, that it was bound if this legal tender was to be resorted
to, especially if the bill of the House as it stood should be adopted by the
Senate, and should become a law that an assurance should be given to
the country that it was not to be resorted to as a policy; that it was what
it professed to be, but a temporary measure.
The opinions of the Secretary
of the Treasury are perfectly well known. He has declared that, in his
judgment, it is, and ought to be, but a temporary measure, not to be
resorted to as a policy, but simply on this single occasion, because the
country

is

driven to the necessity of resorting to

it.

I

have not heard

anybody express a contrary opinion, or, at least, any man who has spoken
on the subject in Congress. The Chairman of the Committee of AVays
and Means, in advocating the measure, declared that it was not contemplated, and he did not believe it would be necessary to issue more than
the $150,000,000 of Treasury notes made a legal tender, provided by this
All the gentlemen who have written on the subject, except some
bill.
wild speculators in currency, have declared that as a policy it would be
ruinous to any people and it has been defended, as I have stated, simply
;

104
the ground that it is to be a single measure, standing by
le repeated.
Section four of the bill, as reported Iby the Committee, contains a provision to which I will call the attention of the Senate. It provides for

and

itself,

upon

solely

and

not

to

certain deposit certificates.

This provision was very

was thought

that

it

would

much

by the banks in all the cities. It
them facilities that would give greater
would enable them to deal with them better
desired

afford

;
currency to the notes, that it
and therefore we have offered a provision, that for a period of not less than
thirty days, any person or institution may deposit their Treasury notes,
in sums of not less than $500, at the Sub-Treasury, and receive an interest
of five per cent.
Mr. President, I wish now to say something upon the main question of
the bill, which I have avoided touching, except incidentally and that is
the clause making these notes a legal tender; for, after all, that is the great
to the /Senate.
The Senate will observe that the
question now submitted
Committee make no recommendation on that subject, except such as may
be inferred from the fact that they report it back retaining the clause, and
so far an inference might be drawn that the Committee were in favor
of it. Under the circumstances of the case in the Committee, (of which,
perhaps, I may speak with propriety as the Committee as a whole, had
;

7

subject, their opinions being so divided,) I deem
at liberty, as I should, perhaps, be under any circumstances, if
myself
need be, and if
opinions lead me that way, to say what I have to say

no opinion upon the

my

in opposition to that clause. I do not propose to do this except incidentI propose rather to state the argument as I understand it, on both
ally.

sides, in relation to the

matter as briefly as I can, without attempting to

argument of the subject myself.
go
The ground upon which this clause making these notes a legal tender is
stated. It is put upon the ground of absolute, overput, I have already
ivhelming necessity; that the Government has now arrived at that point
when it must have funds, and those funds are not to be obtained from
ordinary sources, or from any of the expedients to which we have heretofore had resource, and therefore, this new, anomalous, and remarkable
in order to enable the Government to pay
provision must be resorted to
off the debt that it now owes, and afford circulation which will be availainto the

ble for other purposes.

The question then

is,

does the necessity exist?

That is a question which I propose in some degree to discuss, because
I admit fully and decidedly that the Government, or the country, rather,
is to be sustained in its present undertaking, and that we are bound to
obtain the means to effect that object. If the necessitj^ exists, I have no
hesitation upon the subject, and shall have none. If there is nothing left
for us to do but that, and that will effect the object, I am perfectly willing
to do that. The question, however, is whether it is necessary, whether
we have arrived at that stage, and whether something can or cannot be
done in order to accomplish the object.
do not hesitate to say here, that I would advocate the use of the strong
any extent in order to accomplish the purpose in
which we are engaged. I would take the money of any citizen against his will to
sustain the Government, if nothing else was left, and bid him wait until the Government could pay him. It is a contribution which every man is bound to make
under the circumstances. We can take all the property of any citizen. That
Thank God, we have not arrived
is what is called a forced contribution.
Sir, I

arm

to
of the Government

105
at that but I am not certain that it would not be a more manly course to
meet the matter straight in the face, and if we are to compel a man to part
with his property, to do it without offering him what may appear to be
security, and yet I am not certain that that would not be the more manly
and praiseworthy course to pursue. Then, sir, as to this question of
necessity, I wish to ask the gentlemen to consider upon what public
credit is founded ? According to my reading and my view of the case,
it has but one foundation, and that is, the confidence of the people in
the ability and integrity of the Government, and its power and its will
to pay. Public credit has no other foundation that I am aware of than
If that is so, then the question arises, w hat is the ability and what
that.
is the integrity of this Government, and what is its will to pay ? Are they
such as of themselves, under proper legislation, will enable the Government
to raise means in the ordinary way?"
;

r

Mr. FESSENDEN went on to show that the country was rich in
means, land fertile, people industrious, agricultural and manufactured products in great abundance, and that under any circumr

stances we must be entitled to credit for our abilit}^ to pay, and
that no person placing himself in the position of a money-lender
could hesitate to say that we were entitled to all the credit of a

He said our
productive, strong and healthful people.
had been somewhat injured by the conduct of the war, and
He saw no reason for loss of credit
yet he thought unreasonably.
the conduct of the war.
by
great,

credit

He

then proceeded

"The

:

all, returns: is this measure absolutely indispensable to procure means ? If so, as I said before, necessity knows no law.
What are the objections to it ? I will state them as briefly as I can. The
first is a negative objection.
measure of this kind certainly cannot

question, after

A

increase confidence in the ability or the integrity of the country. It can
make us no better than we are to-day, so far as this foundation of all
public credit is concerned.
Next, in my judgment, it is a confession of bankruptcy.
begin and
go out to the country with the declaration that we are unable to pay or

We

borrow, at the present time, and such a confession
increase our credit.

is

not calculated to

Again, say what you will, nobody can deny that it is bad faith. If it
be necessary for the salvation of the Government, all considerations of
this kind must yield but, to make the best of it, it is bad faith, and
encourages bad morality, both in public and private. Going to the extent
that it docs, to say that notes thus issued shall be receivable in payment
;

however contracted, is in its very essence a
compels one man to take from his neighbor, in payment of
a debt, that which he would not otherwise receive or be obliged to receive,
and what is probably not full payment.
Again, it encourages bad morals, because, if the currency falls, (as it is
supposed it must, else why defend it by a legal enactment?) what is the
result ? It is, that every man who desires to pay off his debts at a discount, no matter what the circumstances are, is able to avail himself of it
of

all

private obligations,

wrong, for

it

106
against the will of

liis

neighbor,

who

honestly contracted to receive

something better.
Again, sir, necessarily as a

result, in my judgment, it must inflict a stain
upon the national honor. We owe debts abroad yet. Money has been
loaned to this country, and to the people of this country, in good faith.
Stocks of our private corporations, stocks of our States and of our cities,
are held and owned abroad. We declare that for the interest on all this
debt, and the principal, if due, these notes, made a legal tender by act of
Congress, at whatever discount they shall stand, shall be receivable.
Payment must be enforced, if at all, in the courts of this country, and
the courts of this country are bound to recognize the law that we pass.
That result, then, is inevitable.

Again, sir, it necessarily changes the values of all property. It is very
well known that all over the world gold and silver are recognized as
money, as currency ; they are the measures of value. We change it here.
What is the result ? Inflation, subsequent depression, all the evils which
follow from an inflated currency. They cannot be avoided; they are
inevitable the consequence is admitted.
Although the notes, to be sure,
;

pass precisely at par, gold appreciates and property appreciates.
Again, sir, a stronger objection than all that I have to this proposition
I

am

stating the objections

which everybody must

suppose these facts are palpable is, that the loss
upon the poor, by reason of the inflation."

is

entertain, because I
to fall most heavily

Mr. Fessenden continued his argument at great length, urging
taxation, good faith and economy, as the best means of maintaining the credit of the Government.

Said he would not argue the

constitutional question, proposing to leave his own mind uninstructed on this question, and if need be, leave that question to

be settled by the courts. That this was a great
he believed we would be as well able to meet the
out the legal tender clause as with

"We always meet,

it.

And

and must always expect

crisis truly,

but

difficulties with-

concluded as follows

to meet, in a

like ours especially, difficulties such as attend us
great, but greater or less in the course of time.

:

Government

now

perhaps not so
ever escaped
them, and no nation can hope to escape them. I would not have perfect
quiet always, in a republic especially. It would be a bad sign if it were
It is contrary to the very nature of our Government that it should
so.
exist. You never find quiet except under a tyranny.
Only in the dead
sea of despotism is there a perfect calm. It cannot be looked for in the
wide ocean of liberty. Storms arise inevitably, and the waves roll and
dash turbulently, but bright skies again cheer us, the agitated waters subside, and their broad bosom is traversed by thousands of tall ships laden
richly with hope for the nations of the world."

No nation

JUDGE COLLAMER'S SPEECH.
Mr. COLLAMER, of Vermont, made an elaborate speech against
the legal tender clause in the

"He
necessity,

argued that

it

was

bill

:

unconstitutional,

he could not vote for the measure.

if it was a
the oath he had

and that even

To him,

107
taken to support the Constitution, was recorded in Heaven as well as

upon earth, and there is no necessity that, in his estimation, would justify
him in the breach of it. He admitted that when the Government borrows
money, it must give some evidence of the debt, whether by the name
of Treasury note or some other name, is immaterial, but denied the power
He quoted
of Congress to make them a tender in payment of debts.
largely from Story on the Constitution, to show the illegality as well
as inexpediency of this measure. He said it would be aiding and assisting
men who owed debts, to pay those debts with a depreciated paper, at the
cost and expense of the creditor. His honest opinion was that the ConstiHe
tution never intended to invest Congress with any such power.
referred to the debates in the convention that formed the Constitution, to
show that the men of that period always entertained the opinion that the
While they
'United States could have nothing else a tender but coin.'
lived there never was such a thing thought of as attempting to make tho
evidences of the debt of th,e Government a legal tender, let their form be
what they might. He argued that there was an express power ' to bor-

row money on the credit of the United States.'
That where there is an express power to do a thing, there can be no
implied power to do the same thing. There were two modes of replenishing the Treasury. One was by taxation, and the other to borrow money.
To borrow money there must be a lender and a borrower, and both should
and not compel the lender to part with his money without
an inducement. The operation of this bill was not anything like as honorable or honest as a forced loan. Such paper always depreciates, and
generally fails altogether, and is never paid."
act voluntarily,

He urged

taxation, and the issue of Treasury notes receivable
and closed as follows

for public dues,

:

"You have nothing to do but

powers you possess in commanding the resources that you can command, and you can have money
and credit enough. I think some little courage becomes us, too, in performing our duty. I have no doubt that this country is able to sustain
to exercise the

pecuniarily as well as physically. I, for one, desire to
it by saying that now, because the
necessity requires money, I will go and steal it, or authorize anybody
else to steal it. I will not say to a man
Here is my note for so much,
and if I do not pay it, you must steal the amount from the first man you
come to, and give him this note in payment.' I will do nothing of that
kind. I have faith in the Government. I no way despair of the success
itself in this strife,

do that; but

I

do not want to do

'

:

It cannot fail. Its power, its resources, its members
not possible it should fail. If we are not competent to
exercise the proper moral courage to do our duties and come up to what

of this Government.

are such that
is

wanted,

I

it is

hope we

shall give place to

men who

are."

MR. HOWE'S SPEECH.

Mr.
the

HOWE,

bill,

which

made a lengthy speech in favor of
be found in the Appendix to the Cong. Globe,

of Wisconsin,
will

p. 51-2-3.

"Mr. PRESIDENT Hitherto the effort of the Government has been to
borrow the immense sums demanded for the war in coin. It is clear to
my mind that this effort should be abandoned. We are excluded from
borrowing in foreign markets for the present. It suits both the financial

108
and

purposes of other nations, at this time, to discredit our

political

Not until we have demonstrated that, in the devotion of our own
people, the Government has resources equal to its utmost needs, can we
command the confidence of the gold-mongers of Europe? To borrow of
those communities, in their present temper, would subject us to such discounts now as would neither comport \\ ith our interests or our honor,
and would subject us hereafter to heavy annual exportatious of specie for
the payment of interest.
To continue borrowing of our own banks, and borrowing coin, is imposability.

In their efforts to lend to
They have not the coin to lend.
ment they have already been forced to suspend the payment of

sible.

their

own

the

Govern-

specie

upon

The entire sum of specie in all the banks in the United
May last, was only $99,751,627; of that sum $27,125,000 was in

notes.

States, in

the vaults of banks within the seceded States, and not just now available
for the purposes of this Government. Thus the specie capital, which the
banks of the loyal States could place at the disposal of the Government,

was but

little more than
That sum will not
seventy-two millions of dollars.
defray the expenses of the Government for fifty days. The Government may
be able to borrow of the banks, but the Government cannot borrow specie

If it borrows anything from them it must borrow, not
money, but their promises to pay money. Nothing is more certain
than that, whatever our wishes may be, it is impossible to command the
revenues for this war in coin. We must rely mainly upon a paper circulation; and there is another thing equally certain, which is, that that
paper, whoever issues it, must be irredeemable. All paper currencies have
been, and ever will be, irredeemable. It is a pleasant fiction to call them
redeemable it is an agreeable fancy to think them so. I would not dispel
that fancy, I would not expose that fiction, only that the great emergency
which is upon us seems to me to render it more than usually proper that
the nation should begin to speak truth to itself; to have done with shams,
and to deal with realities.

of the banks.
their

;

To talk of borrowing of your banks the money to support your army
and your navy, is as idle as for England to talk of borrowing from her
national bank the money to pay her national debt. There is but one fund
adequate to supply the national finances, and that is, the property of the
nation.

There

securely rest,

is

and

but

one guarantee upon

that is the national faith.

which the national credit can
In the discharge of that duty

clothed with unrestricted power to raise and support armies,
and maintain navies. Congress is also clothed with power to
make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the Government of the United States.'
To preserve for these eleven misguided States a republican form of
government, we have raised such armies and provided such navies as this
continent never before saw such as the world has rarely seen. I deem
those armies and navies necessary and proper for the occasion. To support those armies and maintain those navies I deem the measure before the
Senate 'necessary and proper.'
Those who deny the constitutional authority to pass this bill must deny
Those who deny its necessity or its proits necessity or its propriety.
priety ought to show us some plan for avoiding it. some measure adequate
to the emergency, and more proper than the one proposed by this bill.

Congress

is

'

to provide

i

'

109

Two months

have elapsed since the policy of this bill lias been discussed,
its opponents lias yet produced a substitute.
The total
neglect to oft'cr a. substitute is />ri.ma facie evidence of the necessity for
this.
But it is not the. only evidence of that necessity. It is evident
that no substitute can be provided, except it be taxation or direct loans.
I have already said that luxation is inadequate to the supply demanded
for this terrible occasion.
No nation of modern times has been able to

and no one of

provide from taxes alone, the immense sums we are called upon to
I will presently show that direct loans are quite as impracticable as taxation.

expend.

The Senator from Ohio [Mr. Sherman,] proposes to amend this bill, so
as to authorize the Secretary of the Treasury to sell the public stocks for
whatever he may be offered for them; to go into the market with the
national credit, and to sell it for whatever the crippled capital of the
country chooses to offer for it, to fling the financial character of the
Republic, as a bone, to be quarreled and growled over by the bulls and
bears of the stock market. To that amendment I am opposed. If you
notify the capital of the country that you are prepared to pay for money,
whatever it is pleased to exact, it will be hoarded to wait the extremity
of your distress. No man likes to sell for less than he buys. No man

more than his neighbors. And if we advertise to the
any other spendthrift, we are prepared to pay for money
according to our necessities for it, no man will purchase our bonds at
ninety cents for fear we shall presently sell at seventy-five; and if we
offer them at seventy-five per cent., w e give the best of assurances that
likes to

world

buy

for

that, like

r

we

will soon sell at fifty.

Sir, if one of your soldiers shrinks from duty, and deserts his country's
cause for fear of losing his life, he is called a coward, and he is ignominiously dismissed from his company, or shot in its presence. By what
fitting term, then, shall \ve designate him who deserts his country in its
greatest need, for fear of losing his money? By what penalties should he

be visited ?

Money and men alone do not constitute the wealth of a nation. The
genius, the generosity, the courage, the intellect, and the patriotism of
the people are all national resources. In an emergency like this, the
Government should not draw upon one fund alone, but every fund should
respond alike. Surely avarice and cowardice should not alone be exempt
from the common burdens.*'
Mr. FESSENDEN moved to amend the
cent,

bonds should be "redeemable in

bill

so that the six per

five years,

and payable

/>'>///

years from date"

MR. CHANDLER'S SPEECH.

Mr. CHANDLER, of Michigan, spoke

make

on

the

amendment

to

"
the bonds redeemable in Jive years.

Mr. CHANDLER "I am in favor of the amendment of the Senator from
Maine, for the reason that 1 believe we need not borrow money at long
dates at a high rate of interest.
Still, I object to the Senator's hypothesis
that this war may last one or two years. There has not been a day since

110
the 1st day of November, when we could not have closed the war in sixty
days, with our forces then in the field, and from this day forth we can
close the war in sixty days, by an advance of our armies ; and I believe
that the time has now arrived when we will advance our armies, and
when the war will be brought to a close within sixty days from this date. I am
therefore, in favor of restricting the bonds, and giving the Secretary of
the Treasury the right to redeem them within five years, and I would
even make the time shorter than that, and say "within three years."

The time has arrived when this rebellion is within our grasp. The time
has arrived when the order, "forward," will close this rebellion. The
We can remove the only
obstacles are small. The objects are great.
obstacle that stands in our way, and we can close this rebellion before the
1st day of .May next, and I believe, I believe solemnly, that we shall do it.
We have but one obstacle, and that obstacle is so small that we can
remove it to-morrow, if Congress, if the Senate say so. It is a very small
obstacle, yet it

has stood in our

way for four

months.

hope that the amendment of the Senator from Maine will prevail and
I would prefer to reduce the time which he has fixed, from five years to
three years. I would not pay seven per cent., nor even six per cent.,
more than three years. Our five per cent, bonds will be worth more than
par in three years from this date. I know that the money market is the
touchstone of the national credit; but I know, at the same time, that the
United States five per cent, would be worth more than par to-day, if the
country and Congress knew our present position. One obstacle stands in
our way, and that is a very small one.
I hope the amendment will prevail, and that we shall reduce the time at
I

;

I should prefer its reduction to three years. This war
nearly ended.
single order, "forward," to-morrow, and we have the
man to give the order in the Secretary of War, and the war is ended."

least to five years.

A

is

The amendment was agreed

On

the 13th

inst.

tender clause in the

the

to.

Mr. Collamer moved

bill,

and on

this

to-

strike out the legal

motion Mr. Wilson obtained

floor.

MR. WILSON'S SPEECH.

Mr. WILSON, of Massachusetts, spoke as follows
"Mr. PRESIDENT This proposition is a very simple and plain
:

certainly very easy of comprehension ; but,
measure itself is involved in the decision.

it

seems to me, the

one.

and

fate of the

If the amendment proposed
by the Senator from Vermont is accepted, I shall vote against the whole
bill under any and all circumstances, for I conceive that it would be
unjust to issue a currency of $150,00,000 of Government paper, and impose
it upon all persons in the employ of the Government, upon our soldiers in
the field, and upon those who have made contracts to supply the armies

of the Kepublic, and to do nothing to protect the credit of that currency
in their hands, imposed upon them by our necessities. I should
consider such a measure as that unjust, wickedly unjust; and I could not,
and I would not, under any circumstances, be guilty of giving a vote of

When

that character. If that amendment should be adopted, I hope every Senator in favor of the legal tender clause will vote against the bill and defeat
I think we owe it to the character of the Senate, and the
it if possible.

character of the country.

Ill
Passing by the question of constitutional powers, and coming to it
simply as a practical question, it is a contest between brokers, and jobbers,
and money-changers on the one side, and the people of the United States
on the other. I venture to express the opinion that ninety-nine of every
hundred of the loyal people of the United States are for this legal tender
clause. I do not believe that there are one thousand persons in the State
I represent who are not in favor of it.
The entire business community,
with hardly a solitary exception, men who have trusted out of the country
in commercial transactions their tens and hundreds of millions, are for
the bill with this legal tender clause. Yes, sir, the people in sentiment
approach unanimity upon the question. What is true of Massachusetts
is, in my judgment, true to a considerable extent of New England, and
true to some extent of the Central States and the West. I believe that no
measure that can be passed by the Congress of the United States, unless
it be a bill to raise revenue to support the credit of the
Government, will
be received with so much joy as the passage of this bill with the legal
tender clause. On that question I entertain no shadow of doubt.
If you
pass this bill with the legal tender, the legal tender cannot injuriously
affect the credit of this currency you propose to circulate.
No harm can
certainly come of it. It seems to me, sir, the argument made by the Senator from Vermont, and the Senator from Maine, is an argument against
issuing these notes as a currency at all. The legitimate inferences from

arguments are against this proposition for $150,000,000 of demand
Treasury notes. I have received several letters from my own State in

their

favor of the bill
clause.

persons representing millions, in favor of the legal tender
intelligence I obtain from all portions of the country is to
I shall, therefore, vote against striking out that clause.
effect.

The

the same
If it is retained, I shall vote for the bill ; if it is stricken out, I shall give
my vote against putting upon the people, upon the soldiers of the country,
$150,000,000 of demand notes, and doing nothing to protect those upon

whom we

impose

this

Government

paper.'*

MR. SHERMAN'S SPEECH.

Mr. SHERMAN, of Ohio, made an elaborate speech in favor of
the bill, and in opposition to the motion of Mr. Collamer to
strike out the legal tender clause.

"The motion

of the Senator from

Vermont now for the first time preupon which the members of the

sents to the Senate the only question

Committee of Finance had any material difference of opinion, and that
whether the notes provided for in this bill shall be made a legal tender
in payment of public and private debts ? Upon this point I will commence
the argument where the Senator from Maine left it.
is,

In the first place, I will say, every organ of financial opinion if that is
a correct expression in this country agrees that there is such a necessity*
in case we authorize the issue of demand notes. You commence with
the Secretary of the Treasury, who has given this subject the most ample
consideration. He declares not only in his official communications here,
but in his private intercourses with the members of the Committee, that
this clause is indispensably necessary to the security and negotiability of

We

all know from his antecedents, from his peculiar
demand notes.
opinions, that he would be probably the last man among the leading politicians of our country to yield to the necessity of substituting paper

these

112

money for coin. lie has examined this question in all its length and
breadth. lie is in a position where he feels the necessity. He is a statesman of admitted ability, and distinguished in his high position. He
informs us that without this clause, to attempt to circulate as money the
proposed amount of demand notes of the United States, will prove a fatal
experiment.
In addition to his opinion, we have the concurring opinion of the Chamber of Commerce of the city of New York. With almost entire unanimity
they have passed a resolution on the subject, after full debate and consideration.
That resolution has been read by your Secretary. You have
also the opinion of the Committee of Public Safety of the city of New
York, composed of distinguished gentlemen, nearly

all

of

whom

are

good

financiers, who agree fully in the same opinion. I may say the same in
regard to the Chambers of Commerce of the city of Boston, of the city of
Philadelphia, and of almost every recognized organ of financial opinion in

They have said to us in the most solemn form, that this
measure was indispensably necessary to maintain the credit of the Government, and to keep these notes an}^where near par. In addition, we
have the deliberate judgment and vote of the House of Representatives.
After a full debate, in which the constitutionality, expediency and necessity of this measure were discussed, in which all the objections that have
been made here, and many more, were urged, the House of Representathis country.

by a large vote, declared that it was necessary to issue demand
notes, and that this clause was indispensable to their negotiation and
credit."
tives,

He continued his argument at length
" A hard
necessity presses the Government. $100,000,000 is now clue
The Banks of New
the army, and $250,000,000 more up to July first.
York, Boston and Philadelphia, have exhausted their capitals in making
loans to the Government. They have already tied up their capital in your
bonds. Among others, the cashier of the Bank of Commerce, (Mr. Vail,)
the largest bank corporation in the United States, and one that has done
much to sustain the Government, appeared before the Finance Committee,
and stated explicitly, that the Bank of Commerce, as well as other banks
of New York, could no further aid the Government, unless your proposed
currency was stamped by, and invested with the attributes of lawful
money, which they could pay to others as well as receive themselves.
Bonds cannot be sold except at a great sacrifice, because there is no
money to buy them. As soon as the banks suspended, gold and silver
:

You cannot sell your bonds for gold and silver,
ceased to circulate as money.
which is the only money that can now be received under the Sub- Treasury law.
This currency made a legal tender was necessary to aid in making further
The Senator from
loans. He argued that the bill was constitutional.
Vermont has read extracts from the debates in the national convention,
and from Story's Commentaries, tending to show that Congress cannot
authorize the issue of bills of credit. But I submit to him that this question has been settled by the practice of the Government. We issued such
bills during the war of 1812, during the war with Mexico, and at the recent
r
session of Congress. We receive them now for our services we pay them
to our soldiers and our creditors. These notes are payable to bearer; they
pass from hand to hand as currency ; they bear no interest. If the argument of that Senator is true, then all these notes are unauthorized. The
Senator admits that when we owe a debt and cannot pay it, we can issue
;

113
But where does he find the power to issue a note in the ConstituWhere does In; lind he power to prescribe the terms of the note,
Jle draws all HM-Hto make it tr:insf<T:ibIr, receivable for public dues?
as incidents to the power to borrow money.
According to his
powers
argument, when we pay a soldier a ten dollar demand bill, we borrow ten
dollars from the soldier; when I apply to the Secretary of the Senate for a
a note.

tion?

I

month's pay, I loan the United States $250. This certainly is not the
view we take of it when we receive the money. On the other hand, we
>\
recognize the fact that the Government cannot pay us in gold.
receive notes as money. The Government ought to give, and has the
'<

power to give, to that money, all the sanction, authority, value, necessary
and proper, to enable it to borrow money. The power to fix the standard
of money, to regulate the medium of exchanges, must necessarily go with,
and be incident to, the power to regulate commerce, to borrow money, to
coin money, to maintain armies and navies. All these high powers are
expressly prohibited to the States, and also the incidental power to emit
bills of credit, and to make anything but gold and silver a legal tender.
But Congress is expressly invested with all these high powers, and to remove all
doubt, is expressly authorized to use all necessary and proper means to carry these
pmvers into

effect.

you do so with a knowledge that
these notes will fall dead upon the money market of the world. When
you issue demand notes, and announce to the world your purpose not to
pay any more gold and silver, you then tender to those who have furIf

you

strike out the tender clause

nished you provisions and services this paper money. What can they do ?
They cannot pay their debts with it they cannot support their families
with it, without a depreciation. The whole then depends on the promise
of the Government to pay at some time not fixed on the .note. Justice to
our creditors demands that it should be a legal tender ; it will then circulate all over this country, it will be the life blood of the whole business of
the country, and it will enable capitalists to buy your bonds. The only
He did not
objection to the measure is that too much may be issued.
believe the issue of $150,000,000 would do any harm. It is only a mere
temporary expedient, and ought not to be repeated."
;

He

closed as follows

:

U I have
thus, Mr. President, endeavored to reply to the constitutional
Our arguments must be submitted finally to the arbitration of the courts of the United States.
When I feel so strongly the necessity of this measure, I am constrained
to assume the power, and refer our authority to exercise it to the courts.
I have shown, in reply to the argument of the Senator from Maine, that
we must no longer hesitate as to the necessity of this measure. That
necessity does exist, and now presses upon us. I rest my vote upon the
proposition that this is a necessary and proper measure to furnish a cur-

argument of the Senator from Vermont.

rency

a

medium

money,
ample authority

to enable the Government
army and support a navy. Believing

of exchange

to maintain an

to

borrow

this, I find

my vote. We

have been taught by recent
doubt in this time of revolutionary
I have sworn to raise and support
your armies to provide for and maintain your navy to borrow money
to uphold your Government against all enemies, at home and abroad.
That oath is sacred. As a member of this body, I am armed with high
to authorize

fearful experience that delay and
activity are stagnation and death.
;

;

;

114:

powers for a holy purpose, and I am authorized nay, required to vote
for all laws necessary and proper for executing these high powers, and to
accomplish that purpose. This is not the time when I would limit these
powers. Rather than yield to revolutionary force, I would use revolutionary force. Here it is not necessary, for the framers of the Constitution
did not assume to foresee all the means that might be necessary to maintain the delegated powers of the national Government. Regarding this
great measure as a necessary and proper one, and within our power to
enact, I see plain before me the path of duty, and one that is easy to
tread."

MR. COWAN'S SPEECH.

Mr. COWAN, of Pennsylvania, made a lengthy speech in favor
of the amendment to strike out the legal tender clause in the
bill, on the ground that Congress had no power to make anything
but gold and silver a tender in payment of private debts.
"He argued at length that Congress had no power to 'emit bills of
credit, make anything but gold and silver coin a tender in payment of
They are
debts, or pass any law impairing the obligation of contracts.'
powers which belong neither to the United States nor to the States, and
He had supposed that
they ougM to belong to no Government anywhere.
this question could never enter the American Senate that the day had
gone by when it was open to discussion, if it ever was open since the
Constitution was formed. Surely, if anything in the Avorld is settledsettled by the fathers, by cotemporary history, painful experience, and
;

the total absence of all precedent for the exercise of these powers it is
that they were not delegated, nor intended to be delegated. The exercise of such a power would be subversive of all our notions of Government, and the ends for which it is established, which are, the protection

and preservation of society. The life and soul of society is the faith man
has in his fellow-man that he will speak truth, deal justly, and perform
his engagements and maintain his credit. Will it strengthen this credit ?
It proposes that in all money contracts notes shall be taken as money, the
same as gold and silver all men who have money due them will be
obliged to receive these notes as money at par ; they are made a legal tender on all debts. The power claimed for the Government subverts the
Government itself, and makes it destroy that which it was intended to
protect and preserve. It is abhorrent of reason, justice and all notions of
He thought that the legal tender clause would not give the notes
right.
It would disturb the relations
credit, but would be injurious to them.
between debtor and creditor, and impair all the contracts of the people,
;

;

more or less,

He

all

over the country."

concluded as follows:

"I am willing

to yield to the better judgment of the administration in
matters of policy or expediency, but I am still my own conscience
keeper, and in all questions of power under the Constitution I must judge
for myself, and act accordingly. That Constitution is the charter of our
liberties, and the covenant for the Union which we are all so anxious to
all

preserve and defend. I will stand upon it to the last, despite every necesand if the time comes when we must all go down
sity, however imperious
together, I say let it come but let us go down as honest men, with our
faith unviolated ; and in that spirit, I hope the amendment to the bill may
;

;

prevail."

115
SIR.

DOOLITTLE'S SPEECH.

Mr. DOOLITTI.E, of Wisconsin, regretted that this
acted upon before the tax bill was matured.

bill

must be

" If we had a sufficient tax law to sustain the credit of the
Government,
he would vote to strike out the legal tender clause. He was assured that
this bill must pass immediately, or the Government could not go on.
As
an original proposition, he did not believe in paper money, but it had
become engrafted on our system. He thought the framers of the Constitution intended nothing but hard money, coined gold and silver.
Had
their intentions been carried out ; had we always held fast to the Constitutional currency; had not paper money, under both State and Federal
authority, become the actual currency of our people ; had we to-day no
other currency but gold and silver, I would not tolerate the idea of passing
this bill for a single moment.
But, such is not our condition ; we are in
the midst of a gigantic war we can not go back ; we must go forward ;
we must go through; we must start from where we are, and not from
where we would be ; we must behold the real necessities of our position
as it is, and not as we would have it, and look those necessities squarely
;

in the face.

The
silver,

truth is, while in theory the only money of our people is gold and
the fact is otherwise. It is almost exclusively of paper. Aye, sir,

moment

it is the irredeemable paper of suspended bank corporaMost unfortunately, paper money does now exist, and has existed
so many years in this country, issued under the sanction of State authorities in violation, as I admit, of the spirit and intentions of those who
framed the Constitution, that a man must be blind, indeed, who would
not now, in time of war, in a measure of practical legislation, recognize
the stubborn fact that these banking corporations, created by the States,
so long acquiesced in by this Government, have become great and powerful institutions, and have practically displaced the currency of the

at this

tions.

Constitution, by substituting in its stead their own paper money. At all
times it is much the greater part of our circulating medium, and when, in
times of panic and disaster, comes suspension of specie payments, it
becomes our only currency. Such is our condition now. What shall we
do now ? We must have deeds, not words ; facts, not theories. We
cannot sell our bonds abroad. The paper money issued by banking corporations is all, or nearly all, the money our own people have. Shall we
sell our bonds for the paper money of suspended banks?
No, sir; no
man will advocate that.
The only alternative is to issue these Treasury notes, which will go into
the circulation of the country as a part of its currency. If, as I have said,
the question now were whether we should begin to build up a paper currency in this country, or hold fast to the currency of the Constitution,
I would oppose this measure. But we cut our moorings from the solid
ground long, long ago. We have been embarked upon a sea of paper
money for years. We have suffered periodically financial crashes and
revulsions, tossed upon its uncertain waves, blown up and down by the
breath of speculation. We are still at sea, and in the beginning of a
terrific financial storm, and the question is whether we shall seize the
rudder and direct the ship, or suffer it to go without direction, to founder
and make shipwreck of all public and private securities and values, to
become the prey and spoils of wreckers along the shore. The simple

116
question which presses upon us in this extremity is, whether we shall rule
this currency, created by these corporations, in violation, in my opinion,
of the original intention of the Constitution of the United States, or

whether they shall rule us.
For their good, for the security of

all,

as well as for

its

own

safety, this

Government must assert its Constitutional authority over the currency of
the country, in some practicable way, and it seems to me that the mode
proposed in this bill is the simplest and most direct in the present exigena temporary measure, until the great measure of finance, the tax
can be perfected and set in operation."

cies, as
bill,

MR. SIMMONS' SPEECH.

Mr. SIMMON?, of Rhode Island, opposed the legal tender clause
in this

bill.

"He did not see its necessity, nor the Constitutional power for passing
He thought the Constitutional objection about as difficult a matter to
get over as anything could well be. He thought that if the legal tender

it.

clause was stricken out, the notes would not be bills of credit, but mere
evidences of debt. In contemplation of the Constitution, the old fashioned bills of credit were promises to pay, with a State law enforcing
their passage against the will of those who were to take them.
These
were the national bills of credit, which were made a tender by State laws
under the old Confederation. He thought it better to make our securities
desirable by increasing the rate of interest, as high even as eight per cent.
He intended to move an amendment at the proper time, to increase the
interest to eight per cent, on notes and bonds payable in two years."

MR. BAYARD'S SPEECH.

Mr. BAYARD, of Delaware, opposed the legal tender clause,
because

"He
moved

it is

unconstitutional, impolitic and inexpedient.

concurred in the argument of the Senator from Vermont, who has
to strike out the legal tender clause in the bill. The first article of

the Constitution, in its first section, provides that 'all legislative powers
herein granted shall be vested in a Congress of the United States 'not an
indefinite delegation of all powers of legislation, as is the case in our State
Constitutions, where the legislative power of the community is vested in
a Senate and House of Representatives ; but here in this Constitution of
specially delegated powers, 'all legislative powers herein granted shall
be vested in a Congress,' and none other. When you come to the other
clause, which specifies these powers, you find but a solitary provision
which has any relation to the power to make money. The power to borrow is a distinct thing ; but the power to make money, is to coin money,
regulate the value thereof, and of foreign coin, and fix the standard of
weights and measures.' I have supposed that the power being designated
in that form, and Congress having a right to exercise only the power
granted, under no species of interpretation could you hold that a power
to coin money implied, or could be extended to a power, to make your
own paper, your promise to pay money, for the purpose of discharging
debts between individuals, or as against yourself.
In my .judgment, therefore, apart from the constitutional objection,
which alone would be sufficient to control my vote, upon the ground that
'

117
you have no power to insert this clause in any hi\v, I cannot vote for a bill
which embodies it. It is impolitic and inexpedient, as well as unconstitutional. It is a mere temporary expedient. It may give present inflation
and present relief for the hour, and a very brief hour indeed, but it will
be followed by a weakening of the resources of the Government, a depreciation of its credit, and it will produce nothing but disaster and ruin to
the country."

SPEECH OF MR. WILLEY.
Mr. WILLEY, of Virginia, spoke as follows:
"I do not rise, Mr. President, certainly not at the present time, for the
purpose of making a speech, but I wish to place upon record the reason
why I shall give the vote which I feel compelled to give on the present
If this were a question merely of expediency, I would most
occasion.
readily defer my judgment to that of other gentlemen better capable of
forming a correct estimate. But, sir, consulting my own opinion, I should
say that the legal tender clause of this bill will have the contrary effect
upon the currency and credit of the Treasury notes from that which some
gentlemen seem to suppose.
I fear

it

I believe

it

will depreciate their credit,

will depreciate the character of our

in the estimation of all honest

and

Government and our country

and well-meaning nations abroad.

But,

believing, as I sincerely do, that this clause is unconstitutional, I can
not vote to retain it in the bill. I have felt the appeal of
honorable
sir,

my

friend from Ohio

the plea of necessity. Sir, that is a dangerous plea,
and it found its origin in a dangerous quarter. It is said that the plea of
necessity is the plea of tyrants. I nevertheless recognize the fact that
there are occasions in the history of a nation when the old maxim salus
popidi suprema lex, may apply ; but it is my opinion that the exigencies
of the country do not, at this time, warrant the application of that maxim
and I should be sorry if, in prosecuting this holy war to put down an
infamous rebellion, to restore and maintain the Constitution, we are ourselves, in the very act of doing so, guilty of a most palpable violation of
;

that instrument."

SPEECH OF MR. HOWARD.
Mr. HOWARD, of Michigan, said:

"I do not

rise, Mr. President, at this late period of the discussion, to
When this measure was
detain the Senate longer than a minute or two.
first proposed, and after I had given it merely a perusal, I came, or
thought I came, to the same conclusion at which the gentleman from Virginia seems to have arrived, and was rather disposed to think that

was no authority in the Constitution to warrant such an enactment
which constitutes the Treasury notes a legal tender in the payment
of private debts. The thing was so anomalous, so unusual to me, that E
could scarcely entertain the idea, and I confess that my mind struggled
strongly against it. But after a little reflection, and giving the question
of constitutional power such examination as I have been able to give it,

there

as this,

I have arrived at the conclusion that Congress has the constitutional
power, particularly under the clause authorizing them to borrow money,
to declare this species of paper a legal tender in the payment of debts

between individuals.
It is undoubtedly a hard necessity

to

which we are driven; but the

118
necessity of the case I submit, has nothing to do with the naked question
of authority, under the Constitution. If I were convinced that we had no
authority, under the Constitution, to enact such a clause as this, I should
not feel at liberty to vote in favor of it, and should certainly vote to strike
I believe that we have the authorit out ; but such is not my conviction.
this, I must say at the same time,
are friends of this bill, have placed
estimate upon this particular clause in the bill. I doubt
whether it will add greatly to the currency and credit of the

ity

;

and

while I say

still,

several gentlemen

who

that I think

too high an

very
paper

much
itself.

it will, and I am certainly disposed to give it a trial.
under the Constitution, the power to borrow money. This no
one disputes. If we have the power to borrow money, we have the right;
and it is our duty to place in the hand of the lender, an evidence or the
fact that we have so borrowed it, and further, that we intend to pay what
we have borrowed. These two things are manifest!}^ in their very nature,
inseparable and the only real question, it seems to me, which addresses
itself to the Senate is this: whether we have any power, after having
issued this description of paper to the public creditors, in payment of their
debts, to protect the credit of the United States, expressed upon the face
of the paper, while it is in the hands of innocent and honest holders ? I
think we have. I think this is one of the most obvious means of extend-

They think

We have,

;

ing protection to the public credit thus expressed upon the paper. If we
it not ; if we cannot subject, so to speak, the entire property of the
nation, to something like an assistance to the public credit, then this
power to borrow money at once ceases to be a power of any value, and it
If we cannot
is a mere mockery upon the face of the Constitution.
declare that this paper shall, in commercial transactions, be of equal
validity to transactions based upon gold and silver, then I say that the
power to borrow money ceases, in and of itself, to be of any benefit to the
Government or to the nation; and it is because I believe that we have this
power, thus to protect the public credit, expressed and pledged on the
face of a Treasury note, that I shall vote to retain this clause in the bill.
I think we have the constitutional power, and I am willing to use it on

have

this occasion."

MR. McDOUG ALL'S SPEECH.

Mr. McDouGALL, of California, advocated the bill as a lawful
and proper measure to be adopted at this time.
"He thought this a just and reasonable war measure. ISTecessity, it is
it is better said, 'necessity makes its own laws.'
exhausted. Money is the first necessity of war
vigorous successful war. Delay is not to be contemplated not to be permitted. Prompt present action is a necessity.
To give efficiency, the
legal tender clause should be retained the bill ought not to be amended
by striking it out. He argued that the bill was constitutional that we
had the right to issue these notes as money, to be used as a currency for
the country in the present exigency. He was not able to maintain against
it any good constitutional objection, and did not see in it any special
injustice. We are at war; this is a war measure; we must take war
responsibilities. This measure can ruin no one, destroy no one, and we
are advised upon the highest authority that it is needed for the maintainance of the Republic. I believe the law constitutional, just and necessary.
I hope to see it passed, and when passed, I shall hope on."

said, is

above

Our Treasury

all

law

is

now

;

;

119
MR. SUMNER'S SPEECH.

Mr. SUMNER, of Massachusetts, made a lengthy speech in favor
of the constitutionality and expediency of the legal tender clause,

and said he would confine
ent

his

remarks to this feature of the pres-

bill.

"In the present exigency, money must be had; and we are told that
the credit of the Government can be saved only by an act that seems like
a forfeiture of credit. Paper promises to pay are to be made a legal tender like gold and silver, and this provision is to be ingrafted on the present
authorizing the issue of Treasury notes to the amount of $150,000,000.
to him that the power of Congress to make Treasury notes a
legal tender was settled as long ago as when it was settled that Congress
might authorize the issue of Treasury notes for from time immemorial
the two have gone together; one is the incident to tho other, and, unless
bill

It

seemed

;

expressly severed, they naturally go together.
It is true, that in the Constitution there are no words expressly giving
to Congress the power to make Treasury notes a legal tender; but there
are no words expressly giving to Congress the power to issue Treasury
notes. If we consult the text of the Constitution, we shall find it as
silent with regard to one as with regard to the other. But, on the other
hand, the States are expressly prohibited to emit bills of credit, to make
anything but gold and silver coin a tender in payment of debts. Treasury
notes are 'bills of credit,' and this prohibition is imperative on the States.
But the inference is just that this prohibition, expressly addressed to the
States, was not intended to embrace Congress indirectly, as it obviously
does not embrace it directly. The presence of the prohibition, however,
shows that the subject was in the minds of the framers of the ConstituIf they failed to extend it still further, it is reasonable to conclude
tion.
that they left the whole subject in all its bearings to the sound discretion
of Congress, under the ample powers intrusted to it.
'

The

stress that is so constantly

the States will justify
in his Commentaries
:

put upon the prohibitions addressed to
in introducing the opinion of Mr. Justice Story
'
It is manifest that all these prohibitory clauses as

me

to coining money, emitting bills of credit, and tendering anything but
gold and silver in payment of debts, are founded upon the same general

considerations.

The policy

is to

provide a fixed

and uniform

rule throughout

by which commercial and other dealings of the citizens,
the moneyed transactions of the Government, might be

the United States,

as well

as

1

adjusted." (2 Story s Com., Sec. 1372.)
If this view be correct, then no inference adverse to the powers of the
national Government can be drawn from these prohibitory clauses ; for
whatever may be the policy of the national Government, it will be a fixed
and uniform rule throughout the United States.
From the proceedings of the Federal Convention it appears that a propo'
sition empowering Congress to emit bills of credit ' was negatived, after
*
Will it not be sufficient to prodiscussion, in which Mr. Madison said:
hibit the making them a tender? This will remove the temptation to

emit them with unjust views.' And in a note to the debate, this same
'
great authority says that he became satisfied that the striking out the
words would not disable the Government from the use of public notes, as
far as they could be safe and proper, and would only cut off the pretense

120
for a paper currency, and particularly for making bills a tender, either for
public or private debts.' Then it appears that the suggestion was made
to prohibit the making of bills a tender; but this suggestion was not acted
on, and no such prohibition was ever moved. It is evident that the Convention was not prepared for a measure so positive. Less still was it
prepared for the prohibition to emit bills. Such is the record. While all
words expressly authorizing bills were struck out, nothing was introduced
in restraint of the powers of Congress on this subject.
Indeed, Mr. Madison declares his own personal belief, that the striking out of the power
'to emit bills of credit,' would not disable the Government from the issue
of public notes, so far as they could be safe and proper, but would only cut
It would seem from this language, in
off the pretext for a paper currency.
so careful. a writer, that lie imagined the whole subject was left substanIndeed, the inference from his
tially to the sound discretion of Congress.
report and comment, is identical with the inference from the text of the
Constitution itself. (See Madison's Papers, vol. 3, p. 1343.)
But in conceding that Congress might issue 'public notes, as far as they
could be proper,' in other words, 'bills of credit,' the whole question was
practically settled ; and the usage of the Government has been in harmony

with this settlement. Treasury notes were issued during the war of 1812,
also during the war with Mexico, and constantly since, so that the power
to issue them cannot be drawn into doubt. If there was any doubt originally, an unquestioned practice, sanctioned by successive Congresses, has
completely removed it. I do not stop to consider whether the power
is derived primarily from the power <to borrow money,' or the power 'to
regulate commerce,' or from the unenumerated powers. It is sufficient

power exists. But it is difficult to escape the conclusion, that if
Congress is empowered to issue Treasury notes, it may affix to these notes
such character as shall seem just and proper, declaring the conditions of
their circulation and the dues for which they shall be received. Grant the
Careful you will be in the exercise
first power and the rest must follow.
of this power, but if you choose to take the responsibility, I do not see
what check can be found in the Constitution.
It appears that the phrase 'bills of credit,' was familiarly used for bank
that the

notes as early as 1683, in England, and also as early as 1714, in New EngBut the first issue in America was in 1690, by the Colony of
land.
Massachusetts, and the occasion, identical with the present, was to pay
soldiers returning unexpectedly from an unsuccessful expedition against

Canada.
Mr. Sunnier went into a brief history of the issue of bills of credit
paper money in the States of Massachusetts, Rhode Island, Connecticut,
Virginia and North Carolina, which led to the passage of an act by
the Imperial Parliament, (24 George II, Sec. 2, CTiap. 53,) 1751, which
expressly forbade the issue of any paper bills, or bills of credit, except for
certain specific purposes, or upon certain specified emergencies; and
declaring that such paper money should not be a legal tender for private
debts. Continental paper money was issued during the Revolutionary
war, not made a legal tender by Congress, although the States were recommended to make them such. He argued at great length the power of
Congress to issue Treasury notes and make them a legal tender; and that
it was purposely left by the framers of the Constitution to the sound discretion of Congress, in great emergencies, to decide whether it was
necessary to exercise the power or not,"
He closed as follows
:

121
"But, while recognizing the existence of the discretion, in the last
under the law of necessity, the question still remains if this necesIs
sity now exists? And now, as I close, I shall not cease to be frank.
it necessary to incur all the unquestionable evils of inconvertible paper,
forced into circulation by act of Congress to suffer the stain upon our
national faith to bear the stigma of a seeming repudiation to lose for
the present that credit which, in itself, is a treasury and to teach debtors
everywhere that contracts may be varied at the will of the stronger?
resort,

Surely, there is much in these inquiries which may make us pause. If
our country were poor or feeble, without population and without
resources; if it were already drained by a long war; if the enemy had
succeeded in depriving us of the means of livelihood, then we should not
even pause. But our country is rich and powerful, with a numerous population, busy, honest, and determined, and with unparalleled resources of
all kinds, agricultural, mineral, industrial and commercial; it is yet
undrained by the war in which we are engaged; nor has the enemy succeeded in depriving us of any of the means of livelihood. It is hard
very hard to think that such a country, so powerful, so rich, and so
beloved, should be compelled to adopt a policy of even questionable propriety. If I mention these things if I make these inquiries it is becau.<o
of the unfeigned solicitude which I feel with regard to this measure, and
not with the view of arguing against the exercise of a constitutional

power, when, in the opinion of the Government, in which I place trust,
the necessity for its exercise has arrived. Surely, we must all be against

we must all
and we must

upon maintaining the integrity of the
our faces against any proposition like the
present, except as a temporary expedient, rendered imperative by the exigency
of the hour. If I vote for this proposition it will be only because I am
unwilling to refuse to the Government, especially charged with this
responsibility, that confidence which is hardly less important to the public
interests than the money itself. Others may doubt if the exigency is
sufficiently imperative ; but the Secretary of the Treasury, whose duty it
In his opinion the war
is to understand the occasion, does not doubt.
requires this sacrifice. Uncontrolable passions have been let loose to
overturn tranquil conditions of peace. Meanwhile your soldiers in the
field must be paid and fed.
Here, then, can be no failure or postpone-

paper money

Government

ment.

A

remedy which,
"Whatever

may

insist

all set

at another

moment you would

reject, is

be the national resources, they are not

now
now

proposed.
within reach, except by summary process. Reluctantly, painfully, I consent that the process should issue. And yet I cannot give such a vote
without warning the Government against the dangers from such an
experiment. The medicine of the Constitution must not become its daily
bread. Nor can I disguise the conviction that better than any legal
tender will be vigorous, earnest efforts for the suppression of the rebellion,
and for the establishment of the Constitution in its true principles over
the territory which the rebellion has usurped."

The question was then taken by yeas and nays on

the motion

of Mr. Collamer to strike out the legal tender clause in the Mil,

and resulted as follows:
Yeas Messrs. Anthony, Bayard, Collamer, Cowan, Fe^semk'ii,
Foot, Foster, Kennedy, King, Latham, Nesmith, Pearce, Powell,
17.
Salisbury, Simmons, Thompson and Willey

122

Nays
lan,

Messrs. Chandler, Clark, Davis, Dixon, Doolittle, Har-

Harris,

Henderson,

Howard,

Lane

Howe,

(of

Indiana),

McDougall, Morrill, Pomeroy, Rice, Sherman, Sunnier, Ten Eyck,
Wade, Wilkinson, Wilson (of Mass.) and Wilson (of Mo.) 22.
So the motion to strike out the legal tender clause was not
agreed to.
On Mr. Simmons' motion to pay eight per cent, interest on two
years' notes or bonds, the amendment was agreed to
ayes 20,
noes 16.

The other amendments proposed by the Finance Committee
were agreed to substantially as reported by the Committee.
Mr. DOOLITTLE moved to limit the legal tender clause to debts
hereafter contracted,

but the amendment was not adopted.
MR. KING'S SPEECH.

Mr. KING, of

New

York, spoke as follows

:

"My opinion is so decided against this measure, which, it is evident, has
the favor of a large majority of the Senate, that I must vote against it; but
I deem it due to myself to offer a substitute for the first section. I propose to strike out the first section of the bill, which relates to Treasury
notes and the tender, and to insert what I send to the chair in three sections. The second and subsequent sections of the bill, providing for bonds
and making other provisions, I do not propose to interfere with.
The change which this amendment proposes, is to strike out the tender
make the demand notes, which are issued without interest, five

clause, to

year notes, bearing an interest of seven and three-tenths per cent, per
annum, receivable for all Government dues, or exchangeable for long
bonds at six per cent., interest payable semi-annually, at the option of the
holder, and providing by tax a sufficient sum, which is pledged to the
redemption of these notes, and ultimately to pay them, principal and
interest ; which I think is a provision that ought to accompany any measure providing for borrowing money, either by notes or bonds."

The amendment was not agreed

to.

MR. PEARCE'S SPEECH.

Mr. PEARCE, of Maryland, opposed the legal tender clause in
the bill.
" Ours is a Government of limited and
granted powers. We can exercise no authority which Congress has not, by reason of the grant of some
express power, or some power necessarily implied from that which is
granted. If there be a power necessary and proper to carry into execution any of the granted powers, we possess it under the general clause of
the Constitution in reference to that subject. The power to make a legal
tender is not granted expressly in the Constitution, nor, as I think, by
any implication from any of the granted powers. It is true there is a
qualified power of making a legal tender to be found in the clause which

123
authorizes us to coin money, and to regulate the value thereof, because
there can be no purpose in regulating the value of the money we are
authorized to coin, except to make it a legal tender. When we establish
the value of gold and silver coin, which we have the express authority to
do, we of course have the implied authority to declare that its value thus
fixed by law, shall be the measure of value in all contracts, and to make
a legal tender. There is no other purpose for giving us the authority
to regulate the value of the money which we are authorized to coin ; and,
it

accordingly, Congress has declared silver coins to be a legal tender. I do
not know whether that provision is in the law regulating the value of the
gold coins. I suppose, however, that it must be so. I know that when we
passed the act by which we apportioned the silver and the alloy in our
silver coins, we did declare that coinage to be a legal tender for sums
under five dollars. Even, however, if that were not so, it would follow
it being provided in the Constitution expressly that gold and
be coined by authority of Congress, and their value regulated
by law, that they must necessarily be a legal tender. It is so according
to the custom of all civilized nations, and so the convention that framed
the Constitution assumed it to be. But I can see no power from which
we can infer authority in this Government to make paper money a legal
tender. It clearly cannot be inferred from the power to coin money,
which is to be made of metal. I do not see how it is to be inferred, as I
think one Senator derived it, from the power to borrow money, since, to
make paper money cannot be necessary to the execution of the power to
borrow money. As well could we infer a general authority to lend money

necessarily,
silver

may

or to deal in brokerage.
Mr. President, the exigencies of the country are very great ; I admit my
obligation to co-operate with gentlemen here in furnishing the Government with the means of carrying on all its operations; but when a
constitutional objection is presented to me, the very allegiance which I
to the Constitution, and therefore to the Union, compels me not to
violate any one of its provisions, as I think I shall do if I vote for this bill.

owe

I must, therefore, cast

my

vote against it."

Mr. SAULSBURY, of Delaware "It was my desire and intention to vote
for this bill, provided the provision making these notes a legal tender had
been stricken out. That provision has been retained in the bill. It is so
clearly unconstitutional, in my opinion, that I cannot conscientiously vote
for it. I cannot attempt at this late hour to assign the reasons for my
opinion. The speech of the Senator of Vermont has not been answered,
and it is not in the power of man to answer it."
Mr. POWELL, of Kentucky "It is not my purpose to make a speech.
It would affordme pleasure to vote for any measure I thought constitutional to relieve the country from its present embarrassment but believing
that this bill is unconstitutional, I cannot vote for it. I had intended, if
time permitted but the hour is too late now to give briefly, my reasons
for the vote I shall give but after the very exhaustive speech made by
the Senator from Vermont yesterday, it would be unnecessary, particularly after the excellent speech made by the Senator from Pennsylvania
to-day, and the brief but very pointed speech of the Senator from Maryland, who has just taken his seat.
In my judgment this bill is plainly and palpably violative of the
Constitution of the United States, and I do not believe that issues of paper
;

;

money, unless they are convertible into coin

at the pleasure of the holder,

124
ever did, or ever will, relieve any country permanently from any embarrassment. I think all such issues of irredeemable paper lead the country
into further and greater embarrassments, instead of relieving it; and I
very much fear that those who expect great benefits to the country from
this bill will be greatly disappointed. I shall not detain the Senate by

speaking."

PASSAGE OF THE

THE PRESIDING OFFICER
Mr.

HOWARD

BILL.

" The

question is on the passage of the bill."
" I call for the
yeas and nays."

The yeas and nays were

ordered.

LATHAM, of California *' I merely desire to say, in order that I
may appear right upon the record, that I have entertained very grave
doubts during this discussion as to the constitutionality of the legal
Mr.

tender issue, and entertaining those doubts, I cast my vote against that
clause when it was under consideration. The majority of this body having now, however, indicated their desire that it should be in the bill. I
cannot, consistently with my sense of duty, withhold my vote from the
bill.
I shall therefore vote for it.
' '

Mr. ANTHONY, of Rhode Island "I voted against the vital clause of
this bill making the paper issued by the Government a legal tender, but
having no project of my own to present to the Senate, I shall not take the
responsibility of voting against the only measure which is proposed by
the Government, and which has passed the House of Representatives, and
received the sanction of a majority of this body."

The question being taken by yeas and
nays

7

;

Yeas

as follows

Messrs.

nays, resulted

yeas 30,

:

Anthony,

Chandler,

Clark,

Davis,

Dixon,

Doolittle, Fessenden, Foot, Foster, Grimes, Hale, Haiian, Har-

Henderson, Howard, Howe, Lane (of Indiana), Latham,
McDougall, Morrill, Pomeroy, Rice, Sherman, Simmer, Ten Eyck,
Trumbull, Wade, Wilkinson, Wilson (of Massachusetts) and Wil-

ris,

son (of Missouri)

Nays

Messrs.

30.

Collamer,

Cowan,

Kennedy,

King,

Pearce,

Powell and Saulsbury 7.
So the bill was passed.

AUTHORSHIP OF THE LEGAL TENDER
Letter of JAMES

W. SIMONTON

to N. Y. Times.

"WASHINGTON, D.

"The

BILL.

C.,

Feb.

13, 1862.

Senate, of the Treasury Kote bill, including the
legal tender clause, is a subject of very general congratulation among the
friends of the Administration. Among the opponents of the legal tender

passage,

by the

provision were some of the ablest and firmest friends of the Administration, whose sincere desire for the most effective support of the Government
cannot for a moment be justly questioned. They honestly believed the
policy injudicious, and made strenuous fight in support of their theory.

125
But the overwhelming necessity existing for the measure is a stronger argument
than anything offered against the bill, and received the decisive vote of 30 to 7.
Having made their record, the opposition yielded with excellent grace,
and the Democratic opponents in both Houses confess to a sense of relief

when the bill, legal tender and all, had passed. There are few members
who would care to assume the responsibility which would have rested
upon them in the event of the defeat of the measure, and the risk of the
consequences to themselves of the financial panic that would speedily
follow the admitted bankruptcy of the Government.
]S"ow that the bill has passed, it is but just that due credit should be
awarded to the author of the legal tender scheme, the Hon. E. G. Spaulding,^Member of Congress from the Buffalo (N. Y.) District. It was Mr.
Spaulding

who

originated the proposition to force a fixed paper currency

upon the country by making Treasury notes a legal tender. His practical
knowledge and experience as a banker and financier, early disclosed to his
own mind the fact, which since then has become so patent to overwhelming majorities in each House of Congress and the country, to wit that no
other scheme could possibly provide for the wants of the Government in
time to save it from absolute financial ruin. He gave the subject unremitting study and attention, devoting to it the entire holiday season, and
maturing, finally, a measure which has received the endorsement of the
Administration and of Congress, and withstood the combined assaults of
selfish and honest opponents alike.
He has reason to be proud of the
triumph he has achieved, and the country will not soon forget his
:

services."

OBJECTION TO SENATE AMENDMENTS.

The main

seemed to be well settled by the
and able discussion, and its passage by large mapreceding
jorities through both Houses; and the Secretary of the Treasury
in administering the Finances during the war, would find it
easy
to execute the two simple provisions of the bill, viz
principles of the bill

full

:

Issue these Treasury notes fitted for circulation as money, and by
the legal tender provision made a forced loan from the people to the Government, without interest, which could only be justified by the imperative
necessities of the Treasury, and by the fair and equitable provision,
1.

2.
That these notes might at any time, at the option of the holder, be
funded in six per cent, twenty year bonds, interest payable semi-annually.

The Secretary could issue notes and pay them out for supplies
and material of war, and to the Army and Navy, making money
plenty, and filling all the channels of circulation, which would, as
soon as it became redundant, enable him to float the six per cent,
bonds, and funding would take place, thereby preventing too great
an excess of this circulating medium. The Senate amendments

seemed

some measure to complicate these simple provisions.
amendments of the Senate were very important in
to details and special provisions of the bill, but the most
regard
of them were verbal and unimportant.
The four amendments of
in

Several of the

126
tne Senate, to which a large number of the members of the House
made the most objection, were in substance as follows
:

1.

Requiring payment of 'interest semi-annually in coin on bonds and

7-30 notes.'
2.
Conferring on the Secretary power to sell six per cent, bonds,
the market value thereof for coin,' which would reduce the price.

'

at

And

the provision making the bonds * redeemable in five years, and
payable in twenty years from date,' at the option of the Government,
making them less valuable.
3.

4.
Temporary deposits in the Sub-Treasury at G per cent., which
retard funding in long bonds.

would

All former loan laws passed by Congress, from the organization
of the Government to this time, contained only a provision to
pay dollars.' The word dollars had a well known legal meaning
*

under our coinage and legal tender laws, and it was difficult to
see any good reason for changing the phraseology, and thereby
make a departure from established usages at this time, especially
per cent, bonds (which were then selling at about 88,)
should, as a necessary consequence of such provision, be sold at

if six

the market price to raise the coin to pay this interest. At this stage
of the bill there was no provision in it, or in the Senate amendments, to
collect the duties
tJiere

was no

bonds.

on foreign imports in

coin, so that as the bill then stood,

mode of obtaining tlie coin except by a forced sale of
This coin provision was deemed by many members to be
other

an unnecessary discrimination in favor of the bond-holders over
It was
other creditors of the Government equally meritorious.
difficult to see the propriety of paying coin interest to the bond-

holders while the soldiers and others were paid in notes; and
besides, the terms used made the coin payment of interest
applicable to the 7-30 Treasury notes and bonds
banks during the previous summer.
BILL

The

issued to the

RETURNED TO THE HOUSE.

and Senate's Amendments were returned to the House
on the 14th inst, and on motion of Mr. Stevens, were referred to
bill

Ways and Means. This Committee had a long
upon the Senate's Amendments, and were about equally
divided on the most material and important of them.
Some were
others were concurred in, and some unimportant
disagreed to,
amendments to the Senate amendments were recommended. On
the 18th, Mr. Stevens, from the Committee of Ways and Means,
reported back the bill and amendments to the House and said:
the Committee of
discussion

127

it

"I have no purpose of considering the bill at this time. I desire that
shall be referred to the Committee of the Whole, and be made the

I hope gentlemen of the
special order for to-morrow at one o'clock.
House will read the amendments. They are very important, and, in my
judgment, very pernicious, but I hope the House will examine them."

The motion was agreeed

On Wednesday,

to.

the 19th inst., the

amendments of the Senate

to the bill being the special order, Mr. Spaulding opened thedebate in opposition to some of them, as follows
:

MR. SPAULDING'S SPEECH.
I desire especially to oppose the amendments of the
Mr.. CHAIRMAN
Senate which require the interest on bonds and notes to be paid in coin
semi-aunually, and which authorizes the Secretary of the Treasury to
sell six per cent, bonds at the market price for coin to pay the interest.
The Treasury note bill, as reported first from the Committee of Ways
and Means as a necessary war measure, was simple and perspicuous in its
It was so plain that everybody could
terms, and easily understood.
understand that it authorized the issue of $150,000,000 of legal tender
demand notes, to circulate as a national currency among the people in all
parts of the United States, and that they might, at any time, be funded
in six per cent, twenty years' bonds. The passage of this measure in
this House was hailed with satisfaction by the great mass of people all
over the country. It received the hearty indorsement of such bodies as
the Chambers of Commerce of New York, Cincinnati, Sfc Louis, Chicago,
Buffalo, Milwaukee, and other places. I have never known any measure
receive a more hearty approval from the people.
Nearly every amendment to the bill since it was matured has rendered
it more complex and difficult of execution.
I regret to say that some of
the amendments of the Senate render the bill incongruous, and tend to
defeat its great object, namely to prevent all forcing of the Government
to sell its bonds in the market to the highest bidder for coin. It might be
very pleasant for the holders 'of the seven and three-tenths Treasury
notes and six per cent, bonds, to receive their interest in coin semiannually, but very disastrous to the Government to be compelled to sell
its bonds, at ruinous rates of discount, every six months to pay them gold
and silver, while it would pay only Treasury notes to the soldier, sailor,
and all other creditors of the Government.
I am opposed to all those amendments of the Senate which make unjust
soldier or
discriminations between the creditors of the Government.
sailor who performs service in the army or navy is a creditor of the Government. The man who sells food, clothing, and the material of war, for
the use of the army and navy is a creditor of the Government. The capitalist who holds your seven and three-tenths Treasury notes, or your six
per cent, coupon bonds is a creditor of the Government. All are creditors
of the Government on an equal footing, and all are equally entitled to their
:

A

pay

in gold

am

and silver.

amendments of the Senate which discriminate
bonds and notes by compelling the Government
to go into the streets every six months to sell bonds at the 'market price,'
to purchase gold and silver in order to pay the interest in coin' to the
I

opposed to

all

those

in favor of the holders of

4

128
capitalists

who now hold United States stocks and Treasury notes heremay hold bonds and notes hereafter to be issued;

tofore issued, or that

other persons in the United States (including the Army and
all who supply them food and clothing,) are compelled to
receive legal tender Treasury notes in payment of demands due them from
the Government.
Why make this discrimination ? Who asks to have one class of creditors
placed on a better footing than another class? Do the people of New
England, the Middle States, or the people of the West and Northwest, or

while

all

Navy and

have any such discrimination
Does the soldier, the farmer, the mechanic, or the
merchant ask to have any such discrimination made in his favor ? No,
sir no such unjust preference is asked for by this class of men.
They ask
for the legal tender note bill pure and simple. They ask for a national
currency which shall be of equal value in all parts of the country. They
want a currency that shall pass from hand to hand among all the people
in every State, county, city, town and village in the United States. They
want a currency secured by adequate taxation upon the whole property
of the country, which will pay the soldier, the farmer, the mechanic, and
the banker alike for all debt due. They ask that the Government shall
stand upon its own responsibility, its own rights, and exert its vast
powers, preserve its own credit, and carry us safely through this gigantic
They
rebellion, in the shortest time, and with the least possible sacrifice.
intend to foot all the bills, and ultimately pay the whole amount, principal and
interest, in gold and silver.
Who, then, are they that ask to have a preference given to them over
other creditors of the Government ? Sir, it is a very respectable class of

anywhere

made

else in the rural districts, ask to

in their favor ?

;

gentlemen, but a class of men who are very sharp in all money transactions. They are not generally among the producing classes not among
those who, by their labor and skill, make the wealth of the country ; but a
class of men that have accumulated wealth men who are willing to lend

Government if you will make the security beyond all questhem a high rate of interest, and make it payable in coin. Tes,
sir, the men who are asking these extravagant terms, who want to be preferred creditors, are perfectly willing to lend money to the Government
in her present embarrassment, if you will only make them perfectly secure,
give them extra interest, and put your bonds on the market at the 'market
price,' to purchase gold and silver to pay them interest every six months.

money

to the

tion, give

Safe, no hazard,
entirely willing to loan money on these terms
and the interest payable *in coin!' Who would not be willing to
loan money on such terms ? Sir, the legal tender Treasury note bill was
intended to avoid all such financiering and protect the Government and
people, who pay the taxes, from all such hard bargains. It was intended
as a shield in the hands of the patriotic people of the country against all
forced sales of bonds, and all extravagant rates of interest.
The legal tender note bill is a great measure of equality. It proposes a
currency for the people which is based upon the good faith of the people
and all their taxable property. All are obliged to receive and pass it as
money, and all are obliged to submit to heavy taxation to provide for its ultimate
redemption in gold or silver. Every attempt on the part of any class of citizens to create distinctions and secure a legal preference, mars the simplicity and success of the whole plan. The very discrimination proposed
carries on its face notice to everybody that although the notes are declared

Yes,

sir,

secure,

!

129

money and a legal tender in payment of debts,' yet that
something of higher value, that must be sought after at a sacrifice
to the Government, to pay a peculiar class of creditors to whom it owes
money a kind of absurdity and self-stultification which does not appear
well on the face of the bill. It is an unjust discrimination which does not
appear well now, and will not look well in history. You will, if the Senate's
amendment is adopted, depreciate, by your own acts, your own bonds and notes,
and effectually destroy the symmetry and harmonious working of the whole plan.
to be 'lawful

there

is

I am in favor of having the Government pay in coin, if it can do so without loo
am unable to see any good reason for departing, in this
great a sacrifice; but
case, from the usual practice of the Government in expressing the mode of paying

I

All bonds

the interest.

and Treasury

notes heretofore issued are payable gener-

ally 'without specifying that either the principal or the interest shall be paid in
I do not see
should now, in
coin, and yet the legal effect is the same.

why we

the present embarrassed condition of the Goverment, give any preference
to one creditor over another, or change the form of our bonds and
Treasury notes by inserting the words 'payable in coin.' The capitalist
who holds your bonds or seven and three-tenths Treasury notes is not
entitled to any preference over the soldier or the man who furnishes sup-

your Army. We should pay both in specie, if possible; but I am
tie up the hands of the Government by compelling it to pay
'in coin,' the interest on all the bonds and notes heretofore issued, or that
may hereafter be issued. The bonds and notes heretofore issued contain
no such express provision it is not so nominated in the bond ;' and I am
unwilling to have it inserted at this time, either as to those now outstanding or as to those that are hereafter to be issued. Besides, if you commence in this way, by stipulating expressly to pay in coin on the bonds
to be issued, it becomes a contract which cannot, without a breach of
You unnecessarily commit the
faith, be changed by a repeal of the law.
Government to a stipulation which may be very inconvenient, if not
impossible, to fulfill, if the public debt runs up to $2,000,000.000, the
interest upon which, at six per cent, per annum, would be $120,000,000
annually, requiring $60,000,000 of coin every six months to pay interest on
your funded debt. I think we should pause before committing ourselves
to any such proposition, for no man here is wise enough to tell how long
this war w ill continue, or how many complications with foreign nations
will grow out of it, or how great will be the war debt. By all means let us
pay the interest in gold to those who desire it, if it is practicable to do so ; but let
us keep the power in the Government itself, and exercise it wisely for the
best interest of the whole people.
The people in the country who hold seven and three-tenths Treasury
plies to

unwilling to

'

;

r

r

notes are patriotic enough, while the war lasts, to receive their interest in
any money that will pass currently at the banks and among the people.
Money with them is only valuable for its uses. Legal tender Treasury
notes can be used for all business purposes, without compelling the Government to sell its bonds at fifteen or twenty per cent, discount to procure
coin

At

w hen
r

******

it is

entirely unnecessary.
the extra session in July we passed

two very important bills

one to

$250,000,000, for which bonds and notes were to be issued, and the
other to call into the .service five hundred thousand volunteers, and pay

borrow

the soldiers thirteen dollars per month, and the officers a higher rate of
fixed compensation, Both bills were war measures, both were necessary,

and action has been had under both.

Under

the

first bill

the associated

130

New York, Boston and Philadelphia took the sum of $100,000,000 of seven and three-tenths three years Treasury notes at par, and
$50,000,000 twenty years six per cent, bonds at a discount of ten and two
thirds per cent, from their face say net $44,661,230.97, being a loss of
$5,338,769.03 on this transaction. This is a higher rate of interest than

banks of

our Government, with all its immense power and resources, ought to pay ;
but the loan has been made, and I only refer to it now for the purpose of
showing what has been done under these two acts of Congress.

Under the army

bill, five hundred thousand volunteers have been called
and are now in the field, ruder both of these bills a
debt has been created against the Government. The associated banks of
New York, Boston and Philadelphia are creditors of the Government to
the extent of $150,000,000. The five hundred thousand volunteer army
are also creditors of the Government to a large amount. We owe them
both, and both are creditors under laws passed by us at the extra session.
Are not both classes of these creditors on the same footing? Are the
bankers entitled to any preference over the volunteer army? Is the
banker's money any more sacred than the services of the soldier in battle,
on guard, or in the tented field ? I cannot see that the banker or the
holder of Treasury notes is entitled to any preference over the soldier,
under these two laws of Congress, and yet, if you concur in these hardmoney amendments of the Senate, you will compel the soldier to take
legal tender Treasury notes in payment for his thirteen dollars per month
which you agreed to pay him, while you pay the banker his high rate of
interest, semi-annually, in gold and silver coin. Is this right? Will this
be meting out just and equal laws to the loyal citizens of this Government ? What will your army say to an arrangement of this kind ? Sir, I
can consent to no such discrimination, no such amendment, no such

into the service,

injustice.

************

be hoped that this will be a short war. It is very desirable that
it should be pressed on with the utmost
vigor, and be brought to a speedy
and successful termination. God grant that this may be the issue. I
have no expectation, however, that the authority of the United States
Government will be respected and enforced in all the Southern States for
many years. I think the rebels are desperate and determined, and will
never submit to the Constitution and laws until compelled to do so by
armed force. They may be beaten and compelled to fall back, but until
Union governments are successfully established in all the Southern States
the laws of the United States will not be respected, and can only be
enforced by the army and navy in actual occupation of the rebellious
States. This will require a large and expensive army for many years, the
total expenses of which cannot now be estimated. It will require Federal
It is to

troops in every rebellious State to collect your direct taxes and internal
duties; and until you can peaceably collect taxes in all the rebellious
*
States the rebellion is not ended.

In every aspect in which you view this hard-money provision, its pracworkings will be disastrous. It would be all very well if the amount
was small and applied to carrying on the Government on a peace footing,
when you know what amount will be required but in carrying on the
Government at this time, when the magnitude of the expenditures are so
overwhelming, all theories applicable to peace must give way to the inexorable necessities that are forced upon us in the prosecution of this war.
Look at your long line of offensive operations, extending from Kansas to
tical

;

131
and thence to fortress Monroe, Jlatteras, IJeaufort, Key West,
Pensacohi, and Ship Island a, distance of more than lour thousand miles.
This very Ion-' line of military operations cannot !), maintained except at
an enormous expense tor transportation, supplies, and material of war.
One million six hundred thousand dollars does not cover the daily expenditures. Peace theories of finance must give way to what is practicable to
this capital,

be done in the present exigency. The Government is at this moment in
the situation of ti merchant who lias overtraded, who owes more than he
has the present means of paying. lie may be compelled to stop payment

A mere
specie, when lie has ample assets to cover all his liabilities.
suspension of specie payments does not imply bankruptcy or insolvency.

in

Our country and Government at all hazards must be preserved. To
accomplish this, our plan of finance must be simple and practical. As has
been shown, we have various descriptions of property in abundance. We
have not the money to meet the sudden demands that are thrown upon us.
Is it not better to pledge oar honor, our lands, houses, personal estate,
incomes, and wealth of all kinds to create this money, on the faith of the
nation, than to run the risk of utter ruin to all interests for the sake of
holding on to theories which may be excellent in time of peace, but which
are wholly impracticable in the prosecution of this w ar.
It is very clear that in the prosecution of this war to maintain this
Union, the ways and means of carrying it on can only be limited by the
r

actual expenditures.
must, while the

We

war

lasts,

incur

all

the debt necessary to crush out

the rebellion, and maintain the authority of the United States Government
over all the thirty-four States.
cannot, therefore, now limit the
amount of the debt to be incurred, nor can it be accurately estimated.
Notes and bonds must be issued in some form for all the debt incurred,

We

excepting what we may realize annually from taxes, excises, and duties
on imports. In issuing these notes and bonds I think it will be much
better for the Government, and for the people, to have one uniform
system. It would be better for all concerned to have a iixed policy, not
to be changed, so that all business men may conform to it at once. That
policy should, in my judgement, be the issue of legal tender demand
Treasury notes not bearing interest, to be paid out for what is necessary
to support the army and navy, and fnndable at any time in twenty years
bonds, bearing interest at six per cent., payable semi-annually. This is
as high a rate of interest as the Government ought to pajr especially as our
people are to be heavily burdened by taxation to pay, ultimately, the
interest and principle in gold and silver of all this debt. Let our policy be
distinctly fixed and settled, and we shall hear no further importunities for
higher rates of interest, or for any preference of one class of creditors over
,

any other

class equally meritorious.

me

sense of duty compels
to differ so widely from the
I regret that
Senate. I have great respect for that body, and would gladly yield to
their views, if I did not regard it so fatal to the public interest. So soon

my

funded debt reaches $700,000,000, which will be in a very few
I believe it will be impossible to procure the coin to pay the
interest semi-annually without the most serious consequences to our
The amount of discount on our bonds to procure specie would be
credit.
very large. In every view, the Senate amendment seems to me unnecessary, injurious, partial and unjust. I trust the House will non-concur in
the amendments."
as our

months,

132

At

made by Mr. Spaulding,
on imports were, as the bill then stood, payable in legal
tender notes, but this was afterwards changed in the Committee
tlie

the time the above remarks were

duties

of Conference, making those duties payable in coin, so that the
interest might be paid in coin, without being obliged to force the
bonds on the market to obtain coin for that purpose. This was

probably the best compromise that could be made, as will more

appear in finally adjusting the disagreeing votes between the
Senate and House.

fully

SPEECH OF MR. POMEROY.

New York, spoke one hour in favor of paying
on bonds and Treasury notes. He said

Mr. POMEROY, of
the

interest in coin

"The

action already

:

had upon the

the sense of Con-,
gress is concerned, settled, if not the constitutionality and expediency of
issuing, to a limited amount, Treasury notes, made a legal tender in payment of debts, at least the existence of a necessity, under which such
constitutional power will be assumed and its exercise declared expedient.
I do not propose, therefore, to enter at all upon the discussion of those
questions, nor would it be pertinent to the only amendment I propose to
discuss, to wit: that providing for payment of interest on the national
debt in coin. They were fully discussed when the bill was first before the
committee, to the neglect, as I then thought and now think, of the point
presented by the pending amendment, upon which alone I desire to
submit a few remarks.
The question is not now whether $150,000,000 of Treasury notes shall be
issued and made a legal tender in payment of public and private indebtbill has, so far as

That proposition has been decided in the affirmative but if my
and expediency of such issue was stronger even than
that of the able and distinguished Kepresentative, [Mr. Spaulding,] who
has originated this measure, and carried it triumphantly over the Administration and through Congress, still, deeming this amendment, as proposed by the Senate and now under consideration, vital to the success of
the scheme, and the only regulation by which financial explosion under it
can be prevented, I could not, as an original proposition, and cannot now,
without such amendment, support this bill. My opinion may be unfounded
and erroneous. I hope it is, if this amendment is to fail. I have no pride
of opinion upon this matter, but I have convictions, clear, decided and
conscientious, which I cannot trample upon without violating my own
The opposition which this
sense of self-respect and of public duty.
amendment meets from the fraraers of the bill sufficiently demonstrates to
us and to the country that it is not merely formal in its character, but is
of primary importance and entitled to the highest consideration. I shall
be very brief, and ^yill endeavor to.be plain in my views respecting it.
It is conceded by the friends of the House bill, that the policy of issuing
Treasury notes under it with the characteristics of money is to be temporary, and that it is a divergence from the correct principles of political
economy, to be justified only by necessity, and yet the primary and
principal fault I find with it is, that instead of being a temporary measure,
edness.

;

faith in the necessity

it really, >by its

failure to

make adequate

provision to raise

money by

loan,

133
inaugurates and necessitates the perpetuation of a reliance upon a forced
paper currency alone to meet the demands of the war, the amount of the
issue of which, if sufficient for that purpose, must depreciate it to a mere
nominal value, and result in ultimate repudiation. It may be expedient as

a remedy for an existing
manent existence.

political disorder, but it is death if relied

upon for per-

Government has been recently brought to the test of
much more favorable time than the present,
when the banks were plethoric with gold beyond all former experience
and promptly meeting all engagements in coin, when suspension had not
been thought of, and the patriotism of the people was fully aroused in the
enlistment of those armies that are to-day more than meeting our proudest
anticipations; and yet, under those most favorable auspices, the rate of
interest, as established, was seven and three-tenths per cent, for three
year coupon bonds, and seven per cent, for those running twenty years,
each payable semi-annually in coin, and with the added advantage to the
banks, who were the purchasers, of holding the proceeds on deposit without interest until drawn out in the usual course of expenditure; and
The

credit of the

practical experiment in a

$50,000,000 of the long bonds, authorized at the extra session, have not
*
*
*
been, and could not be, sold even at the rate above named.
The science of Government is one purely experimental.
code of laws

A

men

ought to be, would be a terrible code applied to
We experience no difficuly in recognizing in legislation
are.
the natural laws of matter, and we should have no more in recognizing
the natural laws of mind, association, trade, commerce and business.
designed for
men as they

as they

If we ,are to borrow money, we must recognize these laws and I may
well call them higher laws, for while legislation cannot change them, they
are continually changing legislation. One of these is that the precious
metals are the representative of value. The gold dollar of our curre7icy is the
;

unit of value.

Conversion into this representative

is the

only criterion of value.

Those who invest money or loan will make it a condition precedent that
the interest shall be in money, and not in promises to pay money. Legislation has not changed, and cannot change, paper currency into coin or its
equivalent, except through convertibility. Without this requisite it is a
mere naked promise. We cannot make Treasury notes money until we
can change by act of Congress a promise into a performance, and Almighty
power alone can do that. We propose to compel the Government and
citizens to receive this paper as money in payment for debt but we do
not propose to attempt to compel anybody to take it by way of loan, nor
to compel anybody to loan it, not even to Government. Then people must
be induced to loan it and how can you expect them to do it at rates less
favorable than you have already established in more prosperous times,
to wit: a rate of seven and three-tenths per cent., payable in coin.
;

;

Xow, this paper is or is not equal to gold. My colleague may take
whichever horn of the dilemma he pleases. If it is not, it is foil}' to
suppose that people are voluntarily going to place themselves in a position
where, for a term of years, they compel themselves to receive it as interest,
and assume all the risk of depreciation. If it is equal, then there can be
no unjust discrimination in paying interest in gold. I prefer to look at
the question just as it is, and admit the fact that it is not and cannot be
made equal, because it lacks the essential quality of convertibility. To the
extent to which it is not equal, we work a hardship in forcing it into circulation; but we have already decided that a necessitj- exists which

134
compels us to accept this hardship rather than to inflict upon the people
or submit the Government to a greater. And we believe farther, that the
evils thus produced will, in the aggregate, if not in each individual case,
be more than compensated by the relief they will afford from financial
stringency, and as a medium of exchanges, especially with the Govern-

ment

itself.

While, however, we exercise the power to compel the people to receive
it as gold in payment of debts, we, unfortunately, have not the power to
compel them to loan it back to us on time, and receive more of the same
kind as interest. There is just the practical point where our new political physiology fails. As 'Artemus Ward would say, its forte is not in
'

*

borrowing, but in paying,' and we have got to make it work both ways.
It is all nonsense to say that while we pay out Treasury notes from necessity in some cases, we will forbear to borrow money, without which our
credit must go down entirely, because it will necessitate the payment of
interest in coin, and thus conflict with our theory ; that because we pay
ourselves and our soldiers and everybody else with wr hom we are under
contract, in paper, we will stop paying even them rather than to continue
the ability to do so by borrowing money and stipulating in advance to

pay the interest in a different commodity. The inconsistency consists in
not considering that we must first get the principal before we put on airs
about the manner in which we will pay the interest, in which transaction
the lender as well as the borrower is usually consulted. The Committee
of Ways and Means are talking about paying, whereas the problem is
how to borrow.
N"or does the agreement to

pay

interest in coin tend in the least to

The very necessity for this agreement
depreciate the value of the notes.
arises from the fact of the pre-existing differences in value between coin
and paper. It does not create the inequality. It recognizes an existing
fact, and applying legislation practically to that fact, enhances the value
of the paper, by allowing its conversion into a permanent loan, the principal and interest of which are to be paid in money ; and instead of depreciating the paper, checks depreciation

by reason of this very

convertibility,

and presents the only possible mode, that I can conceive of, by which
serious depreciation can be prevented and the funding process kept in
operation. In fact, this very difference between the intrinsic values of
notes and coin, thus recognized and embodied in our legislation, tends to
produce the very object desired the funding of the public debt. If capital w ill seek Treasury notes at par, for the purpose of investment in
bonds, with the interest payable in notes, how much more readily will it
seek these same notes, at a slight depreciation, for the purpose of such
investment, with the interest to be paid in gold and the very demand
for this purpose, while it prevents serious depreciation, is induced by the
very depreciation inherent in the character of the paper which it continually checks. It produces a self-adjusting funding access, based upon
things as they exist in the commercial world, by which the disparity
between the value of the two currencies ceases to be an element of discord, and becomes, during the temporary period in which the funding
process is going on. an element of good. In this manner, and through
the happy instrumentality which may in this way be exerted by these
notes, imperceptibly, and through the ordinary channels of financial
operations, the whole process of funding the public debt will be accomT

;

plished.

*

*

*

135
One thin^

I'lirthcr is

visions of the

House

evident.

bill, it

If the debt can be

funded under the proamendments.

certainly can under the Senate

The Treasury lias prided itself on its ability to obtain money at the rate
proposed by the latter in more prosperous times. If it was satisfactory
then, it should be still more satisfactory now. In this work we cannot
The part of wisdom is, then, to accept the greater safety.
a Mb rd to fail.
When paper shall have taken the place of coin, and the latter, true to its
it cannot be whistled
insfiiiels, shall have taken wings and flown away
back. It is idle to argue that two representatives of value of equal nominal amount, but intrinsically unequal, will stay together and consent to
become convertible. The more valuable always abandons the field.
One fact more must not be overlooked in considering this matter that
the sivurity remains the same in all cases, namely: the faith of the Government. No inducement is offered by the House to fund these notes in
the nature of the new security.
The credit of the Government is alike
bound for the payment of both classes of indebtedness ultimately in gold. Each
derives its entire value from that.
The only advantage that can be then
offered in funding is the mere convenience in the form of the security,

and the payment of interest in a commodity similar to that which the
principal represents.
Now, I do not know

by what class of soldiers my colleague [Mr.
Spaulding,] may be represented in the field, but I do know the character
of the two thousand soldiers from my own county, and of the four thousand soldiers in the field from my congressional district, and I know that
their present condition as soldiers is purely ephemeral. Their normal
condition is that of citizens, and as such I represent them here; and they
will appreciate at what it is worth the appeal of my colleague in their
behalf as a class, as soldiers, in distinction from their character as American citizens.

*

********

*

whether it be to my credit or
any recommendation backed by a majority of the Committee of
Ways and Means of this House. As amended by the Senate in this
respect, I will cheerfully support this bill. In its original form I could
not, though it has been unpleasant to diverge from so large a proportion
of my political associates. It were easier to have followed in the wake of
inclination, and covered myself from criticism with the mantle of necessity.
I have preferred to walk the plank of duty, trusting to time and practical
I believe I have never failed to sustain,

otherwise,

results for the vindication of its policj-."

SPEECH OF MR. CALVERT.
Mr. CALVERT, of Maryland, advocated the payment of interest

He

in coin.

"Let me

said:
the gentleman from

New

York, [Mr. Spaulding,] that it is
paying brokers in one currency and
other people another. When you want to borrow money you must go to
the brokers to borrow it. Farmers and others may be induced by the
brokers to invest their money in your bonds; but they will not do it without the advice of the brokers or agents with whom they are in the habit of
counseling, and therefore it is the broker at last who holds in his hands
your credit, and it is useless for gentlemen of this House to talk about a
tell

useless to talk about the injustice of

down the brokers who are constantly dealing in these
He contended that the amendment of the Senate would benefit the

proposition to put
notes.

136
Government more than anything else that could be clone.
People would not loan money to be payable in paper, because, although
you make paper a legal tender by legislation, it will not be so in fact the
question has yet to be tried before the State Court, as well as before the
United States Court. The only way in which you can possibly have any
notes funded is by paying the interest in coin. Then if the notes fall
below par they will be immediate!}' funded."
credit of the

SPEECH OF MR. MORRILL.
"

Our whole difficulty in this matter, it
Mr. MORRTLL, of Vermont
appears to me, arises from our departure from sound principles in the
It appears that the House and the Senate have both decided
first place.
that they will issue paper and make it a legal tender. I deeply deplore
the fact as a blot on our national history that cannot be effaced; but as I
do not now see it probable that any other result will be reached, my only
purpose and desire is to perfect and pass the best possible bill to be
obtained.

amendments

are, on the whole, a great improvepassed the House. I could wish that we might,
even at this hour, slaughter both the original bill and the Senate's amendments, and then mature such financial measures as would preserve a
sound specie-paying basis; but having no hope of that now, I trust we
may adopt the Senate amendments, which will, in some degree at least,
mitigate the evils to be apprehended from the bill as it left this House.

I believe the Senate

ment upon

the bill as

it

the gentleman from New York (Mr. Spaulding) talks as though
would be an abandonment of the honor and good faith of the Government to pay the soldiers in any different species of money from that
which we pay our public creditors. I recollect to have read that Frederick
the Great, upon a certain occasion, directed his minister, when he was
about to seize upon some province of one of his neighbors, to draw up a
proclamation justifying the measure to the world; and his minister drew
Said Frederick, 'strike out all
it up, commencing, 'In the name of God.'
about God, and say that I did it.' Now, I recommend to the gentleman

Now,

it

New York, when he is talking about this subject of compelling the
public and private creditors to take paper money for all debts heretofore
or hereafter contracted, to omit all mention of "honor and good faith.'

from

But what is the fact in reference to this matter of paying off the soldiers
any different money ? Why, the fact is that we are going to pay them
in paper, according to this bill. Now, if these soldiers were debtors, and
owed a grocer at home or here, and could make a tender of this paper, it
might then indeed be of some service but how are you to compel the
grocer, or any man who has anything to sell upon which these soldiers or
their families subsist, to take this paper at anything more than its market
value ? Of course, if coin is worth more than paper, they have to pay to
that extent more than they would pay if they had coin and I am in favor
in

;

;

of keeping our promises equal to coin. In my judgment, if we pay the
interest on the public debt in specie, it will have a tendency to keep up
the credit of the country, and there will be less depreciation upon these
notes than there otherwise would be.
But, Mr. Chairman, the great object is to fund some portion of the public
Now, it is perfectly apparent, not only from the statement of the
gentleman from New York (Mr. Spaulding), but from the knowledge all
debt.

137
imhave of the subject, tluit our wants are large, and that we will be
pelled to issue our bonds or notes, or paper of some kind, to a large amount
hereafter.
Now it is proposed to issue twice, thrice or quadruple the
amount of this legal tender paper before this session of Congress closes?
Within sixty days we must have at least twice the amount of notes which
is proposed now; and unless they can be funded into debts due at some
future time, from necessity, as we shall again be told, we shall have to

repeat the dose we are now offering to the public. Anybody may see that
while it might be possible for this country to endure $150,000,000 of additional currency, even if it did unhinge all commercial transactions, that it
would be utterly impossible that we could absorb twice or thrice that
amount without a vast expansion of the whole monetary system of the
country turning even sober and industrious citizens into the wildest of
speculators.

******

*

But, Mr. Chairman, I believe that if we could stand up here in the vigor
of a nation not yet taxed a single dollar for the cost of this war, and
mature a proper policy by which we can negotiate a loan standing on the
credit of the country, standing on the proposed taxation of the country,
standing on our hitherto untarnished honor, that there could be no need
whatever of a resort to such a desperate scheme as the one now under consideration. I hope, therefore, that we shall adopt the amendment of the
Senate. I wish that we might go much further, but that at least is better

than a measure whose symmetry

is

only measured by

its

exclusively paper

character."

SPEECH OF MR. DUNN.
Mr. DUNN, of Indiana, spoke as follows

:

"Mr. Chairman when this bill was under consideration in the House,
(in Committee of the Whole,) a direct vote was taken upon the proposition
to pay the interest on the bonds in coin, and the Committee sustained that
proposition by a very decided vote. I do not quite understand by what
legerdemain the bill went to the Senate in a different form. I voted then
that the interest should be paid in coin, and I shall vote so now, notwithstanding the arguments employed here to induce us to vote differently.
The principal argument urged against the Senate amendment is that it
provides for paying our creditors in different ways, and an appeal is made
to the patriotism of the House to know if we are willing to pay different
kinds of money for our interest from that with which we pay our soldiers.
Now, I shall vote for this proposition with the direct view and object of

making the paper we

I believe
offer to the soldier as good as possible.
impossible to pay them in coin, or I would vote for that. It is
necessary to make our notes as good as possible, and if there is any equivalent for coin, let us approach that point as nearly as possible. If we
cannot remove the cloud of debt, let us, at least, give it a golden lining.
One mode of sustaining the credit of the notes is to have them converted
into bonds; and in order to make those bonds acceptable to those who
have money to lend, we must make the interest payable in coin. We
must try to induce capitalists to lend us money; for we have no mode of

that

it is

The gentleman from Vermont, [Mr. Morrill,]
the West expected some advantages
from making Treasury notes a legal tender. The members from the West,
generally, who voted for making the notes a legal tender, did so because
we believed it to be a governmental necessity. We wanted a bridge to
compelling them to do
who has just taken his

so.

seat, said that

138
carry us over the morass. We make it of trestle-work, u temporary work,
to serve only until the ground hardens.
We do not believe this ivar is to be of
We do not believe the necessity of the legal tender clause will
long continuance.
long exist. I think that those who were despondent ten days ago have
now great reason to rejoice. The rapid succession of Union victories has
filled every loyal heart with joy, and I do not doubt but that we shall soon
be relieved from our pecuniary difficulties."

MR. ENGLISH'S SPEECH.

Mr. ENGLISH, of Connecticut, spoke in

t'uvur

of paying the

interest in coin.

He concurred

with Mr. Pendleton on the constitutional question,
and considered it settled by his argument that it was not consti-

make

tutional to

these notes a legal tender.

lie also

argued at

considerable length that the measure was not necessary at this
time.
He was in favor of ample taxation, and that the States

should be allowed to collect the taxes and pay over the money to
He wanted no Government tax collectors.
the United States.

On

the pending

"In order

to

amendments he

make

said

:

these bonds valuable to those

who have money

to

invest, we must adopt the amendment of the Senate providing that the
it is ascertained that the
interest shall be paid in gold and silver.
interest is to be paid in gold and silver, then the bonds will be sought for

When

If you issue Treasury notes, and if these Treasury notes go
market and depreciate as I think they will not what will be the
efi'ect?
The effect will be that, just in proportion as the Treasury notes
depreciate, in the same proportion will the interest payable on bonds be
diminished. These Treasury notes answer very well as a means of circulation, provided the amount of the issue shall not exceed that provided for
in this bill. My opinion is that these Treasury notes may answer a very
good purpose but the moment their volume is swollen beyond that, so

investment.

into the

;

soon will they depreciate.

amendment of the Senate will be concurred in by this
judgment, it is the very best thing that we can do under
the circumstances. I voted for the issuing of these Treasury notes, but
against the 'legal tender' clause. Otherwise, I was in favor of the measure; but the judgment of the House was against me on that point. I
think that now the best thing the House can do is to concur in the Senate
amendment; and I trust that it will be concurred in."
I trust that the

House.

In

my

SPEECH OF MR. PIKE.
Mr. PIKE, of Maine, spoke as follows:
gentlemen who differ with
matter of paying interest
in coin is a controversy about goat's wool. The interest will be paid in
coin in any event. The recent victories of our armies have changed the
whole matter. (Just heard of the capture of Fort Donelson and the movement on Nashville.) Wr e have now to return to a normal condition of

"Mr. Chairman with all due deference
me on this subject, it does seem to me that

currency.

*

*

to

this

A

139
"I not only assent most cheerfully to the proposition to pay the interest
in coin, but I also assent to the cognate proposition to sell these bonds at
the highest price we can get for them.
are returning now to a solid

We

I hail the cause of the return as well as the return itself.

basis.

Let u-

our bonds to pay the creditors whom we are under contract to pay.
We never can have a better time for doing so than now, when an effervescence of delight is felt all over the country, because of the victories
achieved by our armies. It is felt everywhere now that we not only have
a Government, but a country on which to base this issue. Therefore, I
say, let us now sell these bonds. Let us realize as much money from them
as we can. Let us provide to pay the interest in coin, and let us pay the
sell

public creditors."

SPEECH OF MR. DIVEN.
Mr. DIVEX, of

New

York, spoke as follows

:

" It strikes
me, Mr. Chairman, that the fallacy of all the arguments in
favor of this amendment consists in the fact that the amendment fails to
meet the evil. It is not proposed to go back and remedy the great
national wrong, national dishonor, and inconsistency of the step that has
been taken by declaring that these notes shall be a legal tender. If this
that, if as the gentleman from Vermont
the child is dead, if the national credit is gone, if we are ready
to assume the humiliating attitude that national credit and honor are
dead, then the argument of the gentleman from New York (Mr. Spaul-

House

is

determined to adhere to

has said

is

ding)

sound.

The same plea

of necessity which

tender clause, will require us

is

to resort to

resorted to in support of the legal
every effort to do away with all dis-

paper money and coin. The requiring the payment of
have a tendency to make such distinction. It will have that
Let me make one appeal
effect, and all that we can do will not help it.
have not yet
to members. It is not yet too late to retrieve the error.
declared that we will compel men to take those promises to pay, and to
treat them as substance. The way to recede from that dangerous proposition is before us.
The times are auspicious. One good reason urged in favor of that policy
was that the people were discouraged from the want of success in our
have now the encouragement of success. Only let the
army.
moneyed men of the country believe that the Government is to succeed
tinction between this
interest in coin will

We

We

down this rebellion, and we will not have to plead for credit.
not gold and silver that we want. It is not things that are to be
taken for gold and silver that we want. It is credit ; it is confidence on
the part of men who have money to lend, and who can lend it to the Government with the assurance that it will be returned to them. That is all
that is wanted. And now, in view of the brilliant prospect before us of a
speedy termination of the rebellion, and in view of the immense resources
of the Government, in Heaven's name, let us leave no national dishonor,
to forever remain a stain upon the country. We will do that, if we do this
great wrong. I appeal to the House, in the name of honor and justice, to
retrace the step it has taken, and to save the Union from the loss that will
afflict it by the passage of this law."
in putting
It is

.

WINDOM, of Minnesota, objected to the proceeds of Hie public
being pledged to pay interest or principal on the bonds, as

140
proposed by the Senate, for the reason that it would tend to
This provision was afterwards struck
defeat the Homestead Law.
out in the Conference Committee.

On

amendment of the Senate, providing that these
notes should be received for all claims and demands
Treasury
against the United States of every kind whatsoever, 'except for
interest on bonds and notes, ivhich shall be paid in coin,' Mr. Pendleton
the 6th

moved an amendment

to the effect

seamen and mariners engaged

i

that the officers,

soldiers,

the militaiy service of the
United States,' should also be paid in coin. Being opposed to
the whole legal tender principle, he offered it to meet the objecin

tion of the gentleman from New York, [Mr. Spaulding,] in reference to our unjust discrimination against soldiers and others.

He

said:

"I am not
officers

and

in favor of that discrimination, but am in favor of paying the
and naval service of the Government

soldiers in the military

in the legal coin of the country."

The amendment was not agreed to.
The amendments of the Senate having been acted upon in Committee of the Whole, Mr. Stevens moved that the Committee rise
and report the bill and amendments to the House, which was
agreed to. The bill and amendments were accordingly reported
to the House.

On

the 20th, the

House resumed the consideration of the Senate

amendments.
Mr. STEVENS was entitled to one hour in closing the debate.
gave a part of this time to Mr. Hooper, of Massachusetts.

He

MR. HOOPER'S SPEECH.

Mr. HOOPER, of Massachusetts, spoke as follows

:

"Mr. SPEAKER with the present large expenditures of the Government, and while the banks throughout the country are acting under a
suspension of specie payments, it is an absurdity to insist on the strict
enforcement of the existing laws, which require all Government receipts
and payments to be made in coin. It is absurd, in my opinion, because it
is impossible ; and it is also absurd because it is useless.
What private
corporations or individuals in this country receive and pay coin in the
conduct of their business? There are none. Nearly all the ordinary
receipts and payments throughout the country are made in bank notes,
credit in some other form; and coin is only required
occasionally for a very small per cent, of those receipts and payments,
which in amount, extend, in the course of a single year, to thousands of
millions of dollars.
The object of this Treasury note bill is to furnish a substantial and

bank checks, or

141
uniform currency that will aid the Government, and enable it to receive
dues and make its payments, like all others, with credits. This bill
declares that, for all dues to the Government and for all payments by the
Government, these notes shall be received 'the same as coin.' One way
to make them the same as coin would be to make them at all times convertible into coin. Another is to use them, so far as possible, for all the
purposes for which coin is used and in this latter mode their value will
be the same as coin, unless the amount that is issued exceeds the amount
needed for such uses.
At the end of twelve months from this time the receipts of the Government and the payments by the Government, amounting to many hundred
millions of dollars, will be found to be nearly equal that is, the Government during that time will have received about the same amount that it
will have paid and if these Government notes are, in part, paid out by
its

'

'

;

;

*

'

;

the Government, as it is proposed they shall be, in anticipation of the
receipts for taxes and loans, they must all come back again in the course
of the year, when those taxes and loans are paid for. The people may tind

a portion of these notes more convenient for other uses, and may, theremake their payments to the Government partly in coin.
Unless, therefore, the Government is to be broken down, by the refusal to
furnish the means in the form of taxes and loans to carry it on, these notes
cannot depreciate to any extent, because they will be needed, and probably a large amount of coin in addition, to pay into the Treasury for the
loans and taxes; they will be received by the Government the same as
coin, and therefore must be for this purpose, and all others, the equivalent
of coin, unless they are imprudently issued in excess of the requirements
fore, prefer to

for such purposes.
I am opposed to this

amendment

of the Senate which requires the interto be absolutely paid in coin, because
its effect will be to
depreciate these notes as compared with coin, by declaring them
in advance to be so depreciated. It creates a necessity for the Government to
est

on Government notes and bonds

obtain a large amount of coin by purchase, if it is not received in payment
of taxes and loans, which hold out an inducement to speculate on the
necessity of the Government, by collecting and hoarding the coin against
the time that will be required by the Government to pay its interest;
and because it is an unnecessary inconvenience to require the whole
amount of the interest to be paid in coin, when only the small amount is
necessary that is to be remitted to foreign holders of bonds, which could
easily be obtained at small cost, if the effect of the issue of the Govern*
ment notes should be what the friends of this bill expect.
If the opponents of this bill have proved anything, they have proved too
much in reference to the question now before the House, which is to make
a distinction in favor of the holders of Government securities, and pay
what may be due to them in coined money, while all other creditors of
the Government shall be paid in what they have denounced to the country
from the high places they occupy here, as the meanest paper tra<li."

CLOSING DEBATE

MR. STEYEXS' SPEECH.

Mr. STEVENS, of Pennsylvania, spoke as follows
"Mr. SPEAKER I have a very few words to say. I approach the sub^
ject with more depression of spirits than I ever before approached any
question. N"o personal motive or feeling influences me. I hope not, at
least.
I have a melancholy foreboding that We are about to consummate
:

142
a cunningly devised scheme, which will carry great injury and great loss
to all classes of the people throughout this Union, except one. With
colleague, I believe that no act of legislation of this Government was ever

my

much delight throughout the whole length and breadth of
Union, by every class of people, without any exception, as the bill
which we passed and sent to the Senate. Congratulations from all classes
merchants, traders, manufacturers, mechanics and laborers poured in
upon us from all quarters. The Boards of Trade from Boston, New York,
hailed with as

this

Philadelphia, Cincinnati, Louisville, St. Louis, Chicago and Milwaukee,
approved its provisions, and urged its passage as it was.
I have a dispatch from the Chamber of Commerce of Cincinnati, sent to
the Secretary of the Treasury, and by him to me, urging the speedy passage of the bill as it passed the House. It is true there was a doleful sound
came up from the caverns of bullion brokers, andfrom the saloons of the associated
banks. Their cashiers and agents were soon on the ground, and persuaded
the Senate, with but little deliberation, to mangle and destroy what it had

House months to digest, consider and pass. They fell upon the
hot haste, and so disfigured and deformed it, that its very father
would not know it. [Laughter.] Instead of being a beneficent and invigIt has all the bad
orating measure; it is now positively mischievous.
qualities which its enemies charged on the original bill, and none of its
cost the

bill in

benefits.

It

now

currency.

It

makes two

money, and by

very terms declares it a depreciated
one for the banks and brokers, and
It discriminates between the rights of different
another for the people.
classes of creditors, allowing the rich capitalist to demand gold, and compelling the ordinary lender of money on individual security to receive
notes which the Government had purposely discredited.
creates

classes of

its

money

Let us examine the principal amendments separately, and see their
The first important one (being the fifth,) makes the notes issued
under the laws of July 17, a legal tender, equally with those authorized by
this bill. There can be but little wisdom in putting these two classes on an
equality. The notes of July bear seven and three-tenths per cent, interest,
and are payable in three years. This gives them a sufficient advantage
over notes bearing no interest and payable virtually in twenty years
bonds, with six per cent, interest. Why give them this additional advaneffect.

Simply because the $100,000,000 issued are all held by the
associated banks, and this is their amended bill. They would displace
$100,000,000 of this money in the circulation, and render it impossible to
tage?

use any considerable amount of these United States notes as a currency.
These notes have served their purpose. Why allow them to block up the
market against further relief to the Government?

The banks took $50,000,000 of six per cent, bonds, and shaved the Gov<ernment $5,500,000 on them, and now ask to shave the Government fifteen
or twenty per cent, half yearly to pay themselves the interest on these
,

They paid for the $50,000,000 in demand notes, not specie,
and now demand the specie for them. Yet gentlemen talk about our
making other loans in these times. They are crazy or sleeping, one or the

very bonds.

other, I

When

do not

know which.

was discussed before, the distinguished gentleman
from Kentucky (Mr. Crittenden) asked me whether it was the intention
or expectation of the House to go on and issue more than one hundred and
a pertinent question, which
fifty millions of dollars of legal tender notes
I saw the whole force of at the time. I told him that it was my expectathis question

143
tion that no more would be issued by the '.Government; that they would
be received and funded in the twenty year bonds."

Mr. LOVEJOY "I ask the gentleman from Pennsylvania whether $150,000,000 of gold could not be put into circulation as well as $150,000,000 of
"

Treasury notes?
Mr. STEVENS "If this $150,000,000 would come out of the banker's and
miser's hoards; but they have suspended specie payment, and would not
give out a dollar. They say pay us a discount, and then when these notes
are made a legal tender we will be again in the clutches of these harpies.
I do not want to use hard names. I suppose these men act from instinct.
If I were now to answer the question of the gentleman from Kentucky, I
would not give that answer. I do not expect one dollar of the $150,000,000
of legal tender notes ever to be invested in the twenty years bonds. I
infer from the amendment that before we adjourn $150,000,000 will be
asked for, which will never be funded in those bonds, and so on, as they
are needed, as no bonds will be funded until our circulation will become fright*

fully inflated.

**********

*

But now conies the main

All classes of people shall take these
legal tender notes at par for everv article of trade or contract, unless they
have money enough to buy United States bonds, and then they shall be
clause.

Who is that favored class? The banks and brokers, and
They have already $250,000,000 of State debt, and their commissioners would soon take all the rest that might be issued.

paid in gold.

nobody

else.

But how is this gold to be raised? The duties and public lands are to be paid
for in United States notes, and they or bonds are to be put up at auction to get
coin for these very brokers, w7io would furnish the coin to
ting twenty per cent, discount on the notes thus bought.

I

pay
*

themselves, by get*
*
*

have proposed an amendment to the Senate amendment upon the prin-

you may make as palatable as
you can an amendment which you do not like, before the vote is taken
upon it. My amendment is offered for the purpose of curing a little the
evils and hardships of the original amendment of the Senate. And though
it may be adopted, I shall vote against the whole as amended.
My
amendment is to except from the operation of the legal tender clause the
officers and soldiers of the army and navy, and those who siqqily them with provisions, and thus put them upon the same footing with the Government
creditors who hold their bonds. I hope they will not be thought less merciple of legitimate parliamentary rules, that

itorious than the

it will be adopted as an
so that if this pernicious system is
to be adopted, if the beauty of the original bill is to be entirely impaired,
those who are lighting our battles, and the widows and children of those
who are lying in their graves in every part of the country, killed in

amendment

money-changers.

to the Senate

I trust

amendment,

defense of the Government, may be placed upon no worse footing than
those who hold the bonds of the Government and the coin of the countr}-."

At

the conclusion of Mr. Stevens' speech the House proceeded
on the Senate amendments, some of which were concurred

to vote
in,

and others were disagreed

to.

The first important division of the House was on the
amendment of the Senate, as follows

sixth

:

"

Immediately

words *aiul
and demands owing by the United States to iudivid^

after the clause last quoted, strike out the

for all salaries, debts

144
and associations within the United States,' and insert,
and of claims and demands against the United States, of any kind what"
soever, except for interest upon bonds and notes, which shall be paid in com.'

uals, corporations
'

To

amendment Mr. Stevens moved an amendment
word "notes," the following:

this

after the

"And payments
navy of

to

be

made to officers, soldiers and sailors
and for all supplies purchased for

the United States,

in the

to insert

army and

the said Govern-

ment."

"I appeal to the gentleman from Pennsylvania
withdraw that amendment. It was only intended to illustrate an
absurdity, and I hope he will withdraw it."
Mr. WHITE, of Indiana

to

Mr. STEVENS
Mr.

"No

BINGHAM

sir; I

cannot withdraw

it."

"I demand the yeas and nays on the amendment

to the

amendment."

The yeas and nays were
Mr.

BAKER "I

ordered.

should like to ask the Chairman of the Committee of

Ways and Means a question."
THE SPEAKER" No debate

is

in order at this time."

The question was taken, and
yeas 67, nays 72; as follows:

it

was decided

in the negative

Yeas

Messrs. Aldrich, Ancona, Babbitt, Joseph Bailey, Baker,
Biddle, Bingham, Francis P. Blair, Jacob B. Blair, Samuel S.
Blair,

George H. Browne, Buffinton, Campbell, Chamberlin, Clark,

Cobb, Davis, Diven, Edwards, Ely, Fenton, Fessenden, Fisher,
Franchot, Frank, Gooch, Granger, Hale, Hanchett, Harrison,
Holman, Hooper, Johnson, Julian, William Kellogg, Killinger,

Lehman, McPherson, Marston, Majiiard, Mitchell, Anson P.
Morrill, Noell, Odell, Olin, Perry, John H. Rice, James S. Rollins,

Shanks. Sherman, Shiel, Sloan, Spaulding, William G. Steele,

Stevens,

Van Horn, Van Valkenburg,

Wallace, Ward, Albert

Worcester

S.

Verree, Voorhees, Wall,
White, Wilson, Winclom, Woodruff and

67.

Nays Messrs. Alley, Arnold, Ashley, Baxter, Blake, William
G. Brown, Burnham, Calvert, Clements, Frederick A. Conkling,
Roscoe Conkling, Conway, Cox, Cravens, Crittenden, Dawes,
Duell, Dunlap, Dunn, Eliot, English, Goodwin, Grider, Gurley,
Haight, Hall, Harding, Hickman, Horton, Kelley, Knapp, Law,
Loomis, Lovejoy, McKnight, Mallory, May, Menzies,
Moorhead, Justin S. Morrill, Nixon, Noble, Norton, Nugen, Patton, Timothy G. Phelps, Pike, Pomeroy, Alexander H. Rice,
Riddle, Robinson, Sargent, Sedgwick, Sheffield, Smith, John B.
Leary,

145

Thomas,^ Francis Thomas, Train,
Trimble, ^Trowbridge, Vallandigham, Charles W. Walton, E. P.
Walton, Washburne, Webster, Wheeler, Wickliffe and Wright
Steele, Stratton,

Benjamin

F.

72.

So UK- amendment of Mr. Stevens to pay the army and
navy
the^same as the bondholders interest in coin, was not

in specie,

agreed

to.

The question being upon agreeing to the sixth amendment of
the Senate, to pay interest in coin on bonds and notes, in which
the Committee of the Whole on the state of the Union recom-

mended concurrence.
Mr. Roscoe Conkling demanded the yeas and nays.

The yeas and nays were ordered.
The question was taken; and it was decided
yeas

88,

Yeas
die,

in the affirmative-

nays 56; as follows:
Messrs. Ancona, Arnold, Ashley, Baxter, Beaman, BidBlair, George H. Browne, William G. Brown, Burn-

Jacob B.

ham, Calvert, Clements, Cobb, Frederick A. Conkling, Roscoe
Conkling, Corning, Covode, Cox, Cravens, Crittenden, Diven,
Dunlap, Dunn, Eliot, English, Goodwin, Grider, Gurley, Haight,

Holman, Horton, Johnson, Kelley, Knapp, Law,
Lehman, Loomis, Lovejoy, McKnight, Mallory, May,
Leary,
Menzies, Justin S. Morrill, Nixon, Noble, Norton, Nugen, Odell,
Patton, Pendleton, Periy, Timothy G. Phelps, Pike, Pomeroy,
Price, Alexander H. Rice, Riddle, Robinson, Edward H. Rollins,
James S. Rollins, Sargent, Sedgwick, Sheffield, Sherman, Shiel,
Smith, John B. Steele, William G. Steele, Stratton, Benjamin F.
Hall, Harding,

Thomas, Francis Thomas, Train, Trimble, Vallandigham, Vibbard, Voorhees, Charles W. Walton, E. P. Walton, Ward, Washburn, Webster, Wheeler, Wickliffe, Woodruff and Wright 88.
Messrs. Aldrich, Alley, Babbitt, Joseph Bailey, Baker,
Bingham, Francis P. Blair, Samuel S. Blair, Blake, Buffinton,

Nays

Campbell,

Chamberlin,

Clark,

Davis, Dawes, Duell, Edwards,

Ely, Fenton, Fessenden, Fisher, Franchot, Frank, Granger, Hale,

Hanchett, Harrison, Hickman, Hooper, Julian, William Kellogg,
Killinger, Lansing, McPhcrson,
Alison P. Morrill, Noell, Olin,

Marston, jMaynard, Moorhead,
John H. Rice, Shanks, Sloan,

Spaulding, JStevens, Trowbridge, Van Horn, Van Valkenburgh,
Verree, Wall, Walhico. Whaley, Albert S. White, Wilson, Win-

dom and Worcester

56.

146

So the amendment of the Senate
was adopted.

to

pay

the interest

on bonds and

notes in coin

Fifteenth amendment.

In line thirteen, second section, after the word 'time,' insert,

market value thereof;* so that the clause

'at the

"And

the Secretary of the Treasury
time, at the market value thereof."

may

The Committee of the Whole on the
mended non-concurrence.
Mr. Horton asked for a division.
Mr. Washburne demanded tellers.

will read:

dispose of such bonds at any

state of the

Union recom-

Tellers were appointed.

Mr. Chamberlin called for the yeas and nays.
The yeas and nays were ordered.

The question was taken and
;

it

was decided

in the affirmative

yeas 72, nays 66; as follows:
Yeas Messrs. Ancona, Goldsmith F. Bailey, Baxter, Beaman,
Biddie, George H. Browne, William G. Brown, Calvert, Clark,

Cobb, Frederick A. Conkling, Roscoe Conkling, Conway, Covode,
Cravens, Crittenden, Cutler, Dunlap, Dunn, Eliot, English, Good-

Holman, Horton, Johnson, Kelley,
Knapp, Law, Leary, Lovejoy, McKnight, Menzies, Justin S. Mor-

win, Grider, Hall, Harding,

Nixon, Noble, Norton, Nugen, Odell, Patton, Pendleton,
Perry, Pike, Pomeroy, Porter, Alexander H. Rice, Riddle, Robrill,

inson,

Edward H.

Rollins,

James

S.

Rollins, Sargent, Sedgwick,
Smith, William G. Steele, Stratton, Benjamin F.
Thomas, Francis Thomas, Train, Trimble, Verree, Vibbard, Voorhees, Charles W. Walton, E. P. Walton, Washburne, Wheeler,
Sheffield, Shiel,

Woodruff and Wright

72.

Nays Messrs. Aldrich, Alley, Ashley, Babbitt, Joseph Bailey,
Baker, Bingham, Francis P. Blair, Jacob B. Blair, Samuel S.
Blake, Buffinton, Campbell, Chamberlin, Clements, Cox,
Davis, Dawes, Diven, Edgarton, Edwards, Ely, Fenton, FessenBlair,

den, Fisher, Franc hot, Frank, Granger, Haight, Hale, Hanchett,

Harrison, Hickman, Hooper, Hutchins, Julian, Killinger, Lansing,

Lehman, Lcjomis, McPherson, Marston, Maynard, Moorhead,
Anson P. Merrill,' Noell, Olin, Potter, John H. Rice, Shanks,
Sherman, Sloan, Spaulding, John B. Steele, Stevens, Trowbridge,
Vallandigham, Van Horn, Van Valkenburgh, Wall, Wallace,
Albert S. White, Wickliffe, Wilson, Windom and Worcester 66.
So the amendment was concurred in.

147
Mr. HOOPER "I consider the adoption of the fifteenth amendment of
the Senate, which authorizes the Treasurer to sell the bonds at the market
price, as nn invitation to the public to depreciate their value, and RO
entirely contrary to the principle of the bill, that I niovo, to lay the bill,
\\

ith the

amendments, on the table."

"The

Mr. YTASIIBURXI:
"

The SPEAKER
ries the bill

Mr.

not before the House."

to lay a single

amendment on

iho table car-

1

with

HOOPER

bill is

A motion

it.'
'

;

I

move

to lay this

amendment on

the table

;

and demand

the yeas and nays on that motion."

The yeas and na} s were ordered.
The question was taken; and it was decided
T

yeas

2

1

Yeas

,

nays 110; as follows

Messrs. Baker, Samuel

S.

Granger, Hickrnan, Hooper, Anson
Norton,

Olin,

Pendleton,

in the negative

:

Blair,

Diven, Eliot, Fisher,

P. Merrill, Justin S. MorrilJ,

Sedgwick,

Sheffield,

Shiel,

Stevens, Benjamin F. Thomas, Train and Vallandigham

Sloan,
21.

Nays Messrs. Aldrieh, Allej^, Ancona, Ashley, Babbitt, Goldsmith F. Bailey, Joseph Bailey, Baxter, Bearnan, Bingham, Jacob
B. Blair, Blake, William G. Brown, Buffinton, Calvert, Campbell,
Chambeiiin, Clark, Clements, Cobb, Frederick A. Conkling, ROEcoe Conkling, Conway, Cox, Cravens, Cutler, Davis, Dawes, Dun-

Dunn, Edwards, Ely, English, Fenton, Fessenden, Franchot,
Frank, Goodwin, Grider, Gurlejr, Haiglit, Hale, Hanchett, Har-

lap,

Holman, Hutchins, Johnson, Julian, Kelley,
Killinger, Knapp, Law, Leary, Lehman, Loomis, Lovejoy, McKnight, McPherson, Mallory, Marston, Maynard, Menzies, Moording,

Harrison,

head, Nixon, Noble, Noell, Nugen, Patton, Perry, Pike, Pomeroy,
Porter, Potter, Price,

John H.

Rice, Richardson, Riddle, Sargent,

Shanks, Shellabarger, Sherman, Smith, Spaulding, John B. Steele,
William G. Steele, Stratton, Francis Thomas, Trimble, Trow-

Van Horn, Van Valkenburgh, Verre, Vibbard, Voorhees,
Wallace, Charles W. Walton, E. P. Walton, Ward, Washburne,

bridge,

Webster, Wheeler, Whaley, Albert S. White, Wickliffe. Wilson,
Windom, Woodruff, Worcester and Wright 110.

So the House refused to lay the amendment on the

The amendment

table.

providing for a sinking fund, being the lifth

Section of the Senate amendments, was now concurred in 3r eas
The remainder of the amendments being merely
51, nays 52.
verbal, were read, voted

on

in gross,

and

all

concurred

in.

the same day, 20th inst., the amendments were returned to
the Senate with a concurrence of the House in a part of the

On

148

amendments, a non-concurrence in others, and with some amendments to the Senate's amendments.
Mr. FESSENDEN moved that immediate action be had on the
amendments. The motion was agreed to, and after some preliminary remarks by Mr. King and Mr. Sherman, and without any
separate action on the several amendments, Mr. Fessenden said:

"I will move, as I understand the House has adjourned until to-morrow, that the Senate insist on its amendments, disagreed to by the House,
and disagree to the amendments of the House to the amendments of the
Senate, and ask for a Committee of Conference on the disagreeing votes of
the

two Houses."

The motion was agreed to, and the Chair appointed Mr. FessenSherman and Mr. Carlisle, as such Committee.

den, Mr.

the 21st., the action of the Senate was reported to the
House, and on motion of Mr. Stevens, a Committee of Conference

On

was appointed on the part of the House, as requested by the
Senate, consisting of Mr. Stevens, Mr. Horton and Mr. Sedgwick.

The Conference Committee had long consultation, extending
through two or three days. They finally compromised some of
the most material of the disagreeing votes between the two
Houses.

The most material change made was

to require the duties on

to be paid in coin, and held as a fund to pay the interest in
on the funded debt, thereby doing away with the necessity of
forcing the bonds on the market to procure coin for that purpose.
Several other alterations and amendments were agreed to in the

imports
coin

Committee of Conference.

On the 24th, Mr. Stevens reported to the House the action of
the Conference Committee, which was agreed to yeas 97 nays 22.
On the 25th, Mr. Fessenden made the same report in the Senate
;

which was agreed to by the Senate without a division; and on the
same day President Lincoln approved the bill, and thus the Legal
Tender act, after a most able and determined opposition, became
a law.
It is not

deemed important

to set forth in detail the several

amendments and compromises made in the Committee of ConferA copy of the bill as it passed the House on the 6th inst.
ence.
,

will

as

it

be found on page 96, and the following is a copy of the bill
By comparfinally passed both Houses, and became a law.

ing them, the amendments made after the

House

will fully appear:

bill first

passed the

149

"An

Act

to

authorize the issue of United States notes, and for the redemption
and for funding the floating debt of the United States.'11

or funding thereof,

and House of Representatives of the United
That the Secretary of the Treasury is hereby
authorized to issue on the credit of the United States one hundred and
fifty millions of dollars of United States notes, not bearing interest, payable to bearer, at the Treasury of the United States, and of such denomi-

Be

it

enacted by the Senate

States in Congress assembled,

nations as he

may deem

expedient, not less than five dollars each.

Provided, however, that fifty millions of said notes shall be in lieu of the
demand Treasury notes authorized to be issued by the act of July 17th,
18G1, which said demand notes shall be taken up as rapidly as practicable,

and the notes herein provided for substituted for them and
Provided further, 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 ot
all taxes, internal duties, excises, debts and demands of every kind
due to the United States, except duties on imports, and of all claims
and demands 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 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 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 six per centum per annum, payable semi-annually, and redeemable at the pleasure of the United States

and payable twenty years from the date thereof; and
such United States notes shall be received the same as coin, at their par
value, in payment for any loans that may be hereafter sold or negotiated
by the Secretary of the Treasury, and may be re-issued from time to time
after five years,

as the exigencies of the public interests shall require.
$ 2.

And

be

it

further enacted,

That

to enable the Secretary of the

Treasury to fund the Treasury notes and floating debt of the United
States, he is hereby authorized to issue on the credit of the United States
coupon bonds or registered bonds, to an amount not exceeding five hundred million dollars, and redeemable at the pleasure of the United States
after five years, and payable twenty years from date, and bearing interest
at the rate of six per centum per annum, payable semi-annually and the
bonds herein authorized shall be of such denomination, not less than fifty
dollars, as may be determined upon by the Secretary of the Treasury
and the Secretary of the Treasury may dispose of such bonds at any time
at the market value thereof, for lawful money, the coin of the United
States, or for any of the Treasury notes that have been, or may hereafter
be, issued under any former act of Congress, or for the United States
notes that may be issued under the provisions of this act; and all stocks,
bonds, and other securities of the United States held by individuals, corporations or associations within the United States, shall be exempt from
taxation by or under State authority.
;

;

150

And be it farther enacted, That the United States notes and the
$ 3.
coupon or registered bonds authorized by this act shall be in such form as
the Secretary of the Treasury may direct, and shall bear the written or
engraved signatures of the Treasurer of the United States and the Register
of the Treasury, and also, as evidence of lawful issue, the imprint of a copy
of the seal of the Treasury Department, which imprint shall be made
under the direction of the Secretary, after the said notes or bonds shall be
received from the engravers, and before they are issued or the said notes
and bonds shall be signed by the Treasurer of the United States, or for the
Treasurer, by such persons as may be specially appointed by the Secretary of the Treasury for that purpose, and shall be countersigned by the
;

Register of the Treasury, or for the Register, by such persons as the Secretary of the Treasury may appoint for that purpose ; and all the provisions of the act entitled * An act to authorize the issue of Treasury notes,
approved the twenty-third day of December, eighteen hundred and fifty'

seven, so far as they can be applied to this act, and not inconsistent
therewith, are hereby revived and re-enacted and the sum of three hun;

dred thousand dollars is hereby appropriated, out of any money in the
Treasury not otherwise appropriated, to enable the Secretary of the Treas-

ury to carry

this act into effect.

And be it

further enacted. That the Secretary of the Treasury may
any person or persons, or any corporation, United States
notes on deposit for not less than thirty days, in sums of not less than one
hundred dollars, with any of the assistant treasurers or designated
depositaries of the United States authorized by the Secretary of the Treas4.

receive from

ury to receive them, who shall issue therefor certificates of deposit, made
in such form as the Secretary of the Treasury shall prescribe, and said
certificates of deposit shall bear interest at the rate of five per centum per
annum; and any amount of United States notes so deposited may be withdrawn from deposit at anytime after ten. days' notice on the return of said
certificates "Provided, that the interest on all such deposits shall cease
and determine at the pleasure of the Secretary of the Treasury and Provided further, that the aggregate of such deposits shall at no time exceed
;

;

the
$

amount of twenty-five million dollars.
And be it further enacted, That all duties on imported goods which
5.

shall

be paid in coin,

or in notes

payable on demand, heretofore

authorized, to be received and by law receivable in payment of public
dues, and the coin so paid shall be set apart as a special fund, and applied
as follows
:

FirstTo

the payment in coin of the interest on the bonds and notes of
the United States.
Second To the purchase 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 Secretary of the Treasury shall from time
to time direct.

Third

The residue thereof

to be paid into the Treasury of the United

States.

And be it further enacted, That if any person or persons shall falsely
$ 6.
make, forge, counterfeit, or alter or cau^e or procure to be falsely made,
forged, counterfeited or altered, or shall willingly aid or assist in falsely

making, forging, counterfeiting or altering any note, bond, coupon, or

151
other security issued under the authority of this act, or heretofore issued
under acts to authorize the issue of Treasury notes or bonds; or shall pas?,
utter, publish or sell, or attempt to pass, utter, publish or sell, or bring:
into the United States from any foreign place, with the intent to pass,
utter, publish or sell, or shall have or keep in possession, or conceal, with
intent to utter, publish or sell, any such false, forged, counterfeited, or
altered note, bond, coupon, or other security, with intent to defraud any
body, corporate or politic, or any other person or persons whatsoever,
<;vory person so offending shall be deemed guilty of felony, and shall, on
conviction thereof, be punished by fine not exceeding $5,000, and by
imprisonment and confinement to hard labor not exceeding 15 y

And be it farther enacted, That if any person, having the custody ot
$ 7.
any plate or plates, from which any notes, bonds, coupons, or other securities mentioned in this act, or any part thereof, shall have been printed, or
which shall have been prepared for the purpose of printing any such notes,
bonds, coupons, or other securities, or any part thereof, shall use such
plate or plates, or knowingly permit the same to be used for the purpose
of printing any notes, bonds, coupons, or other securities, or any part
thereof, except such as shall be printed for the use of the United States, by
order of the proper ota*cer thereof; or if any person shall engrave, or cause
or procure to be engraved, or shall aid in engraving any plate or plates in
the likeness or similitude of any plate or plates designed for the printing
of such notes, bonds, coupons, or other securities, or any part thereof; or
shall vend or sell any such plate or plates, or shall bring into the United
States, from any foreign place, any such plate or plates, with any other
intent, or for any purpose, in either case, than that such plate or plates
shall be used for printing of such notes, bonds, coupons, or other securities, or some part or parts thereof, for the use of the United States; or shall
have in his custody or possession any metallic plate, engraved after the
.similitude of any plate from which any such notes, bonds, coupons, or
other securities, or any part or parts thereof, shall have been printed, with
intent to use such plate or plates, or cause or suffer the same to be used,
ill forging or counterfeiting any such notes, bonds, coupons, or other
securities, or any part or parts thereof, issued as aforesaid or shall have in
his custody or possession, any blank note or notes, bond or bonds, coupon
or coupons, or other security or securities, engraved and printed after the
similitude of any notes, bonds, coupons, or other securities, issued as
aforesaid, with intent to sell or otherwise use the same; or if any person
shall print, photograph, or in any other manner execute or cause to be
printed, photographed, or in any manner executed, or shall aid in printing,
photographing or executing any engraving, photograph or other print, or
impression, in the likeness or similitude of any such notes, bonds, coupons,
or other securities, or any part or parts thereof, except for the use of the
United States and by order of the proper officer thereof, or shall vend or
sell any such engraving, photograph, print, or other impression, except to
the United States, or shall bring into the United States from any foreign
place any such engraving, photograph, print, or other impression for the
purpose of vending or selling the same, except by the direction of some
proper officer of the United States; or shall have in his custody or possession any paper adapted to the making of such notes, bonds, coupons, or
other securities, and similar to the paper upon which any such notes,
bonds, coupons, or other securities shall have been used, with intent to
;

152
use such paper, or cause or suffer the same to be used in forging or counany of the notes, bonds, coupons, or other securities, issued as
aforesaid, every such person so offending shall be deemed guilty of a
felony, and shall, on conviction thereof, be punished by fine not exceeding
five thousand dollars, and by imprisonment and confinement to hard labor
not exceeding fifteen years, according to the aggravation of the offence.

terfeiting

Approved February

A.

25, 1862.

Passage of the Treasury note

LINCOLN."

bill.

SAMUEL WILKESON TO THE

X.

Y.

TRIBUNE.

WASHINGTON, Tuesday, Feb. 25, 1862.
The Conference Committee of the Treasury note bill having concurred,
and Mr. Washburne having defeated another endeavor to adjourn the House
yesterday as early as two o'clock, the prospect of an invigoration of the
war by a supply of money, and the payment of soldiers and contractors,
was good. The bill as agreed upon by the conferees authorizes the issue
of $150,000,000 of Treasury notes, uniform in similitude, and a legal tender in the payment of all debts, public and private. It withdraws the
fifty millions of the July issue as soon as it conveniently can be done,
makes the new notes fundable at any time in six per cent, twenty years
bonds, redeemable at the pleasure of the United States after five years
makes the interest on the bonds and notes payable in coin, and (a new
feature) makes the duties on imports also payable in coin, and devotes
them to the payment of the interest on the notes and bonds, and the creation of a sinking fund by setting apart one per cent, of the amount. The
provisions insisted on by the Senate authorizing the Secretary of the
Treasury to sell six per cent, bonds for what they will fetch, in order to
raise coin for interest, is retained in the bill. All the funded debt is
exempted from taxation. Authority is given to temporarily deposit
demand notes to the extent of twenty-five millions, on an interest of six
per cent, after thirty days. The bill has gone through both Houses, and.
it is supposed, will receive the President's signature to-night.
An influence from Xew York sent the bill back again to the Senate this morning,
for an amendment that should permit sixty millions of Treasury notes to
be used for the payment of custom duties, the fifty millions authorized in
July, and the temporary relief ten millions authorized this month. This
was adopted and accepted by the House, and it is to be hoped that the
President will now have a chance to sign the bill, and the abused public
;

creditors get their pay.
It is but just to say, that to the patient labor of the Hon. E. G. Spaulding the country is greatly indebted for the early maturity of this finance

measure, and for what vigor has been displayed in

its

passage through

Congress.*'

TEMPORARY DEPOSITS
It will be noticed that

IX SUB-TREASURY.

by the 4th section of the Legal Tender

Secretary of the Treasury was authorized to receive
deposits in the sub-Treasury to the amount of $25,000,000, in sums
of not less than $100, at five per cent, interest, with the privilege
act the

to the depositors of drawing it out again at any time, on ten days
r
This was but another form of borrownotice, after thirty daj s.

153
ing

the

money by

Government

at a

low rate of

interest.

Its

operation
sub-Treasury was somewhat like that of a
and the privilege was largely availed of by banks,
Saving's Bank,
It became a very popular
insurance companies and individuals.
at

the

mode

of temporary investment for corporations and individuals,
and although it operated against funding in the 5-20 bonds, yet it
became an advantageous mode for the Government to borrow

sums of money.

large

It

became so popular that on the 17th of

March, 1862, the authority to receive these deposits was increased
to $50,000,000.

On

the 11th of July following the power was enlarged to $100,b}^ the act of January 30, 1864, the authority was
further enlarged to $150,000,000, and the Secretary was

000,000; and
still

authorized to pay as high as six per cent, on these deposits.
Certificates were issued to the persons making the deposits, which
were circulated to some extent at the Clearing Houses, and among
individuals,

which was one mode of increasing the credit circulaand thereby aiding the general inflation which

tion of the country,

commenced with

the passage of the legal tender act.
sum of $120,176,196.

These

deposits reached at one time the

CERTIFICATES OF INDEBTEDNESS.

The

issue of CERTIFICATES OF

INDEBTEDNESS at one year, was

another expedient resorted to for borrowing money, and was
another mode of increasing the credit circulation of the Government.

By

the act of

was authorized

March

1,

1862, the Secretary of the Treasury

to issue to creditors,

who were

willing to receive

them, 'in satisfaction of audited and settled demands against the
United States,' certificates of indebtedness (in effect promissory
notes,) in sums of not less than $1,000 each, payable in one year

And by the act of the 17th of March,
was enlarged, so as to embrace checks drawn in
power
favor of creditors by
disbursing officers upon sums placed to
their credit on the books of the Treasurer.'
The power thus conat six per cent, interest,

1862, this

*

ferred on the Secretary to issue certificates of indebtedness for
these purposes was broad and unlimited.
The certificates issued

under these two acts were in the similitude of bank notes

fitted

money, and did circulate to a considerable
extent as currency until there was such an accumulation of interest upon them as to make it an object for capitalists to hold them

for

circulation

as

as an investment.

The Secretary commenced issuing these certifiTender (greenback)

cates simultaneously with the issue of Legal

154

them in large amounts during the
of the war, which was advantageous to the Government,
progress
but at the same time was another fruitful source of inflation, and
notes, and continued to issue

operated directly against any considerable funding in the long
5-20 bonds.
The amount of indebtedness in this form on the first
of November, 1864, was $238,593,000, being an amount greater
than the market would bear; they were consequently depreciated

and considerably below

par.

MORE LEGAL TENDER AUTHORIZED.
In

less

than a month after the passage of the

first

legal tender

was passed at the request of Secretary Chase,
March 17, 1862, by which the demand notes authorized
approved
by the act passed at the extra session in July, 1861, and the supplementary act of February 12, 1862, amounting to $60,000,000,
were declared to be lawful money and a legal tender, in like manner, and for the same purposes, and to the .same extent as the
These notes, when
notes authorized by the first legal tender act.
first issued, were receivable by the Government for duties on
imports, but that was not enough to prevent them from depreciating, and some of the banks in the principal cities refused to
receive them from their customers as money.
The object to
tender was to make them pass currently as
make them a legal
money at the Clearing Houses, and in all business transactions,
act another act

without loss to the holders.

SECRETARY CHASE ASKS FOR $150,000,000 MORE LEGAL TENDER
NOTES.

Secretary Chase sent to the Committee of Ways and Means on
the 7th of June, 1862, an official communication, accompanied by
a bill proposed by him, asking, among other things, for an additional issue of $150,000,000 of legal tender notes;
this

sum $35,000,000 should be
This communication

of a denomination

and that of
less

than five

published as Miscellaneous Document, No. 81, and sets forth at length the reasons why, in the
opinion of the Secretary, this additional issue should be authordollars.

is

by Congress. He states that the daily receipts from customs
were about $230,000, and that the average daily conversions of
legal tender notes into 5-20 bonds did not exceed $150,000, while
ized

the daily expenditures could not be estimated at less than
$1,000,000, and would probably exceed that sum; and that he had
already exhausted the issue of legal tender notes authorized by
the act of February 25th, 1862.

155
"lie proposed that authority be given to the Secretary of the Treasury
to issue $150,000,000 in United States notes, in addition to the issue already
authorized ; and that these be made a legal tender for debts, except inter-

on loans, and receivable in payment of all loans to the United States,
and for all Government dues, except duties on imports and interest.
est

If Congress shall see

lit

to authorize the additional emission proposed,

seems highly expedient that such part as the public convenience shall
require be issued in denominations less than five dollars. I am aware of
it

the general objections to the issue of notes

under

five dollars,

and

concede their

Indeed, under ordinary circumstances they are unanswerable.
cogency.
But in the existing circumstances of the country, they lose most, if not
all,

their force.

The country is involved in the expenditures of a contest for national
existence, and it is highly desirable that the burdens of the people be
made as tolerable as possible. If the restriction on the issue of small
denominations be removed, the wants of the country will absorb a circuand perhaps more. The interest on this circulation,
say $1,500,000 a year, will be saved to the tax payers.

lation of $25,000,000,

Payments to public creditors, and especially to soldiers, now require
amounts of coin to satisfy fractional demands less than five dollars.
Great inconveniences in payment of the troops are thus occasioned.
With every effort on the part of the Treasury to provide the necessary
amount of coin, it is found impracticable always to satisfy the demand.
When the amount required is furnished, the temptation to disbursing
officers to exchange it for any small bank notes that the soldiers or the

large

public creditors will take,

when

too great to be always resisted. And even
it is seldom held, but passes, in general, immeand others, and disappears at once from circula-

is

the coin reaches the creditors

hands of sutlers
incoiiveniencies, therefore, to the Government and creditors,
the absence of United States notes of small denominations, are not

diately into the

The

tion.

from

compensated by benefits to anybody.
It may properly be further observed that since the United States notes
are made a legal tender, and maintained nearly at the pav of gold, by the provision for their conversion into bonds bearing six per cent, interest,
payable in coin, it is not easy to see why small notes may not be issued as

The notes made a legal tender circulate as money
authenticate, by device and imprint, small notes
as well as small coins. The limit is to be found only in public convenience, which indicates denominations in gold, leaving the smaller circulawisely as large ones.

and the Government

;

may

tion of silver (less valuable than gold, ) as before.
Another consideration which deserves to be taken into the account

is

payments in specie can be more certainly and
easily effected, and with far less of inconvenience and loss to the community, if the currency, small as well as large, is of United States notes, than
if the channels of circulation are left to be filled up by the emissions of
non-specie paying corporations, solvent and insolvent.
These considerations of economy, of public advantage, and of private
convenience, seem to me to justify fully the removal of the restriction
upon the issue of small notes.
this

:

that resumption of

make arrangements for the necessary engraving
work for the printing and preparation for issue of these notes in the
I am led to believe that a very conTreasury Department at Washington.
I propose, further, to

and

other

156
siderable reduction of expense can be thus effected. The prospect, in my
judgment, certainly warrants the trial.
With these objects I have prepared a bill, which I herewith submit to
the consideration of the committee. The condition of the Treasury renders
prompt action highly desirable ; and I trust it is not necessary to assure the
Committee or Congress that, should the powers asked for be granted, they
will be exercised only with the most careful reference to the requirements

of the public interests. Whatever the authorit}r granted may be, no issue
of notes will be made except to replace notes withdrawn and canceled,
and to meet the current expenditures authorized by Congress, which cannot be met from the receipts of revenue, from the increase of deposits, and
from the proceeds of the conversion into five-twenties.

With great

respect,

S. P. CHASE,
Secretary of the Treasury."

"Hon. THADDEUS STEVENS,
Chairman Committee of Ways and Means."

The

bill

thus recommended by Secretary Chase was taken up in
Ways and Means and duly considered. After

the Committee of

considerable discussion Mr. Stevens was authorized to report it to
the House, but without the power to issue notes less than five dol-

On

the llth of June, Mr. Stevens reported the bill and the
They were
foregoing letter of the Secretary to the House.
referred to the Committee of the Whole and ordered to be printed.
lars.

On

the 13th inst, the bill was made the special order for Tuesday, the ,17th., and to continue the special order until disposed of.

On

the 17th of June, the second bill for an additional issue of
$150,000,000 legal tender notes, Mr. Spaulding opened the debate

The House being in Committee of the
Whole (Mr. Phelps, of Missouri, in the chair) on the bill recommended by the Secretary of the Treasury, for authority to issue
the additional sum of United States notes, Mr. Spaulding said:

in a lengthy speech.

"Mr. CHAIRMAN This is an important measure, and I desire to submit
a few remarks in the opening of the debate upon the subject.
The requirements of the Treasury will probably not be less than $250,000,000 to meet the current expenses to the 1st of January next. How is

sum to be obtained ? I believe it can only be obtained in the
mode which has been successfully adopted during the last six months.
The financial plan initiated six months ago as a necessary war measure

this large

It has exceeded the most sanguine expectations of its
strongest advocates. The Secretary of the Treasury recommends a continuance of the plan which has so successfully carried the country through
the perils of the past six months. I shall cordially co-operate with the
Secretary, hoping that it may be equally successful in the future. It is
our duty now to provide all the means which shall be necessary to pay all
the current expenses to the 1st day of January. The bill now under consideration is deemed necessary for that purpose, and the Secretary assures

has worked well.

157
us that the condition of the Treasury renders prompt action highly
desirable.

During the pending war, neither the President, the Secretary of the
Treasury, nor Congress, can fix a limit to the expenditures of the Government, and cannot, therefore, fix a limit to the obligations to be issued
on its credit. All that the Secretary can say, all that Congress can
declare, is, that the President, as Commander-in-Chief, by his subordinate
officers, must contract all the debts which shall be necessary to maintain
the army and navy, and all other expenses incident to a vigorous prosecution of the war. The largest latitude is given to the President, Secretary
of War, and Secretary of the Navy, in carrying on the war. They have
full discretionary power to contract all the debts which they may deem
necessary to amply supply the army and navy. All parties loyal to the
Government are united in urging a vigorous prosecution of the war ; all
parties, therefore, ought to be willing to furnish all the means necessary
for this purpose. We must, at any rate, pay all the debts contracted by
the Executive in the progress of the war. If we knew how much this
would amount to we could easily figure up the amount of the bonds and
notes which Congress must authorize the Secretary to issue. No man,
not even the President, the Secretary of War, the Secretary of the Navy,
the Secretary of the Treasury, or the Chairman of the Committee of Ways
and Means, or all of them together, can give even an approximate estimate as to the whole cost of this war, because they do not know the
number of years it will continue, nor what will be the final solution of
the grave questions involved. We are working out a great problem, the
result of which 110 man can know. Slavery was the cause of this war
and until the solution of the slavery question is arrived at, and the cause
of the rebellion removed, we have no hope of permanent peace and tranThis will take a long time but how long no man is wise enough
quility.
to determine. The war debt we all know is already large, and that it is
;

;

fearfully larger every day. Many capitalists and bankers have
already invested all their surplus means in United States stocks.
During the debate on the Treasury note bill in January and February
last, I submitted, with some degree of diffidence as to its accuracy, an
estimate of what I thought the whole debt (floating as well as funded
debt) of the United States would be on the 1st of July next, and also
what the funded and floating debt would be on the 1st of July, 1863, if
the war should be prosecuted to that time on the same scale that it is now
carried on. I have not seen since, and do not now see, any reason to
change the estimates I then made. I then said it was impossible to esti-

growing

mate, definitely, what the war would cost, and therefore it was impossible
to fix any limit to the amount of paper (obligations of the Government
either in the form of notes, bonds or certificates of deposit) that must be
issued during its prosecution. The experience of the last few months has
demonstrated the truth of these remarks. We must first apply all the

money we can
direct taxes,

collect from duties on imports, excises, internal duties,
and confiscations of the property of rebels, which may

amount, during the current year, (of money actually realized) to $125,perhaps more, and possibly less. All the expenses of the war.
over and above the amount realized from these sources, must be provided
for by borrowing in some form upon the credit of the Government.
Paper credit in some form must be issued during the next fiscal j^ear to a
very large amount. However much we may depreciate it, this will be an
imperative necessity which we cannot avoid. However much this may

000,000,

158
be a departure from sound business and financial principles applicable to
times of peace, we cannot, we must not, shrink from the responsibility
which is forced upon us in the prosecution of this war. We must boldly
meet every exigency in financial as well as in military and naval operaISTotes and bonds must be authorized by Congress, and must be
tions.
negotiated by the Secretary of the Treasury, amply sufficient to sustain
the army and navy, or the war must stop. If we have not the money, we
have what is equally or more important the country is full of provisions,
clothing, and the material of war. Treasury notes and bonds, issued on
the credit of the Government, will procure all these supplies to maintain
:

The war, therefore, can go on, and will go on vigcarry out the views submitted to us by the Secretary of the

your army and navy.
orously if
Treasury.

we

In what form or mode has the credit of the Government been thus far
uied in the prosecution of this war ? Five different forms of credit have
been resorted to. Loans to the Government, for which obligations have
been issued, are as follows
:

interest, made a legal tender, and circulated as money among the people in all parts of the United States.
This is the people's loan to the Government, and the most popular mode
of borrowing ever adopted by any Government. It has given the country
a sound national currency, in which the people have had entire confidence.
Every man, woman and child having a five dollar legal tender greenback
note in possession, has directly or indirectly loaned to the Government
that amount, and becoming thereby interested in the perpetuity of the
Government, is a strong advocate for a vigorous prosecution of the war.
fair test of the loyalty of all such holders of notes may be seen in their
manifestation of confidence that they are perfectly good. The soldiers
1.

United States notes, without

A

and endure all the hardand privations of the campaign, and cheerfully take these
notes in payment. Supplies, subsistence, and material of war of every
kind is eagerly furnished, and these greenbacks taken in exchange for the
same. This kind of loan is so popular with the people, and being without
interest, is so advantageous to the Government, it is desirable that it
should be extended as far as it can be clone safely, and without unduly
stimulating speculations to such an extent as to cause an unfavorable
reaction to the legitimate business of the country. But when bonds can
and

sailors give their services, risk their lives,

ships, sickness,

be negotiated at par,

I think

it

will be safer to

have bonds negotiated than

to

issue legal tender notes.
2.

The second kind of loan has been

five to

the issue of bonds running from

at six per cent, interest per annum, which is an
for the Government to borrow money, because the

twenty years

advantageous mode
debt is then funded; and

it is also favorable to commerce, because it
causes no disturbance in the money market or business ot the country,
provided the money is not taken from the capital of men engaged in
active business, but is obtained from capitalists who desire permanent
investments, and who only want to use the interest half-yearly. This
mode of borrowing must necessarily be limited to the amount of accumulated capital in the country, held by those who are willing to invest it
in this way. It is a permanent and safe investment in the hands of those
persons who want to use only the interest on their accumulated capital.
3.

tice,

A

third kind of loan which has thus far worked very well in pracare deposits in the Treasury of the United States, for which certificates

159
five per cent, interest, and which deposits
the Treasury on giving ten days' notice after
thirty days. The Government has borrowed, over fifty million dollars at
this low rate of interest, and the bill now before us proposes to give the
Secretary power to extend the amount to $100,000,000. To guard against
any sudden call that may be made for these deposits, the Secretary pro-

are issued, bearing four

and

may be withdrawn from

poses to keep on hand, in Treasury notes, ready to be issued, one-third
of the amount of the current deposits which may at any time be in the
Treasury. With this safeguard, this kind of loan will be very advantageous to the Government as well as to the depositors.
Certificates of indebtedness at one year, '.bearing six per cent, interper annum, given in payment of supplies, transportation, and material
furnished in the prosecution of the war. This is an advantageous form of
credit given to the Government, because it is for a definite time and at the
customary rate of six per cent, interest. This form of indebtedness has
already reached about fifty million dollars, and may be still further
increased under the law already in existence.
I.

est

5.
Treasury notes at three years, bearing seven and three-tenths per
cent, interest per annum, payable half-yearly, and convertible into twentyyears six per cent, bonds. This is the most objectionable form of borrow-

ing of any that has been adopted, for the reason that the rate of interest is
a much higher rate than this great Government, with all its
immense power and resources, ought to pay. I think this form of borrowing money should only be resorted to when we cannot obtain the money
to carry on the war in any other wr ay.
^.
The liquidated and funded debt of the United States, as reported by the
Secretary of the Treasury to Congress, May 29, 1862, w as as follows
too high

r

:

Rate of
Loan,
Loan,
Loan,
Loan,

Interest.

Amount.

1842

6

1847
1848

6

9,415,250

6

8,908,342

5

20,000,000

5

7,022,000

:

1858

Loan, 1860
Loan, 1850
Loan, 1861 February 8
Loan, 1861 July 17
Loan, 1861 July 17
Loan, 1861 Oregon
Loan, 1862
Treasury Certificates
Treasury notes, ordered
United States notes

Temporary deposits
Temporary deposits
Total, (average interest 4.35)

$2,883,364

5

3,461,000

6

18,415,000

6
7.3

50,000,000
120,523,450

6

878,650

6

2,699,400

6

47,199,000

6

3,382,162

145,880,000

5

44,865,524

4

5,913,042

$491,446,184

Reducing the above total to the round sum, in English money, of 100,000,000 sterling, we have this contrast of the magnitude of the public debts
respectively of Great Britain and the United States, and the annual cost of
their support; public debt of Great Britain,
800,000,000, at an annual
charge of 28,262,000; public debt of the United States, 100.000,000, at an

annual charge of 4,350,000.
There is still another kind of indebtedness

the floating debt created in

160
various forms every day by officers of the Government.
This accrued
indebtedness, existing in different forms, must, with our extended line of
military and naval operations, be very large. It exists in the shape of
accounts, services, transportation, bounties, and all other modes in which
debts are made against the Government in enlisting, calling out the
militia, and in supplying the army and navy with the necessary material
of war.
On this kind of indebtedness the Government gets a credit of
from one to four months. The whole accrued indebtedness of the United
States, funded and unfunded, on the 1st day of July next, it is believed,
will not exceed $650,000,000.

and

I never have been,

I trust I never shall be, unnecessarily an advounsound or an inflated currency ; but, sir, I

cate for the creation of an

have long ago resolved, since this savage war has been forced upon us, to
do whatever was necessary, and which I might lawfully do, to crush out
the traitors and annihilate their armies. This cannot be done without the
'sinews of war.' Your army and navy must be supplied with all the terrible armament necessary to crush the enemy. Your sick, wounded and
famishing soldiers must be supplied with hospitals, medical attendance,
and all necessaries and conveniences to make them comfortable. This is
a plain duty which we cannot any of us fail to perform. If, in the performance of this duty, it becomes necessary to authorize a further issue of
United States notes, I shall not hesitate to give my vote for it. / am not
in favor of increasing the issue of them beyond the imperative necessities of the
Government to sustain the army and navy. I much prefer to have our six per
cent, bonds issued on permanent loans.
I would like to see the Secretary of the
Treasury borrow at par
authorized

all the

money he can on

the six per

cent,,

bonds heretofore

to be issued.

par on six per cent, bonds, I would prefer to
a very large amount of legal tender notes. Too
large an issue of demand notes, to circulate as money, will no doubt lead
to an expansion which will inflate prices, stimulate undue speculation,
and ultimately produce a reaction that will derange the whole business of
the country. This is to be avoided if possible. I cannot, therefore, advocate any greater issue of demand notes than the absolute necessities of the
Government require to carry on the war with vigor. I am disposed to
give the Secretary power to issue the additional $150,000,000 United States
notes asked for by him but, at the same time, 1 feel the importance of hav-

When money can be

have that done

to the

obtained at

issuing

;

ing

this power exercised discreetly,

and

I trust that he will not issue,

or pay them

par on our six per cent, bonds. I do
not understand that the Secretary intends to have them all issued and put
into circulation at any one time on the contrary, I believe he has no such
intention. He wants the power to issue and use them if necessary, but
not otherwise. When he can obtain a sufficient amount of money at par,
on six per cent, bonds, or by temporary deposits in the Treasury, there
will be no necessity for their issue, and the Secretary assures us in his letter
that no further issue of notes will be made when that can be done; and, besides,
the bill provides for his retaining in his own hands legal tender notes
equal to one-third of the temporary deposits that may be in the Treasury.
Our army and navy and all debts of the Government should be punctually
paid. No sacrifice on our part should be too great to raise all the means

out at

all,

when money can

be obtained at

;

necessary for this purpose.

The Secretary

should, therefore, be clothed

with ample power to meet any exigency that

The money for the

large liabilities of the

may

arise.

Government that have actually

161
been met and canceled since the passage of the first legal tender note bill,
could not have been raised by a forced sale of six per cent, bonds without
a heavy sacrifice.
When that litt jiassed this House our six per cent, twentyyears bonds were ienper cent. below r^ar. Now they are from one to two per cent,
above the price of gold. If, at the time of the passage of the first note bill,
large amounts of bonds; had been forced upon the market, as would have
been necessary but for the passage of that bill, it would have depressed
the six per cent, bonds still lower. There was not then money enough in
the country seeking permanent investment, to absorb all the bonds
required by the Government to meet the immediate and pressing demands
upon the Treasury. This state of things may again occur. I hope not.
I trust that there will be no necessity for any considerable issue of new
notes but to guard against possible contingencies, I am willing to confer
large powers upon the Secretary, believing that he will exercise the power
wisely, patriotically, and for the best interests of the country. I shall not,
therefore, hesitate to clothe him with this great power, and shall, under
;

the exigencies of the

crisis,

vote for this additional issue of legal tender

notes.

As
this

to the propriety of authorizing the Secretary to issue a portion of
in sums less than five dollars, I should, under ordinary cir-

amount

cumstances, oppose giving such authority. As a general rule, the issue of
small notes should not be adopted for a national currency ; but I am disposed, in the present exigency, to vote for this provision, in accordance
with the suggestions of the Secretary of the Treasury, and for the reasons
urged by him In his communication, sent to us on the 7th inst.
I have thus briefly stated the condition and wants of the Treasury.
Two hundred and fifty million dollars will be required, as I stated before,
to carry us to the 1st of January next. That is more than the coin in all
the banks of the United States, and nearly equal to all the coin of the
United States in the hands of individuals and banks ; the whole amount of
gold and silver held by the banks and individuals being only about $265,The ground upon which the Secretary of the Treasury, and upon
000,000.
which the Committee of Ways and Means rest this issue of notes, is the
necessity of the case. The Secretary urges immediate action in view of
the condition of the Treasury. I therefore trust the House will take up
this bill in the regular way, debate it to the extent which may seem desirable and necessary,

and pass

it

at as early a

day as possible."

MR. COLFAX'S SPEECH.

COLFAX

suggested that the bonds, into which the notes are conabsolutely twenty years bonds, instead of allowing the
Government the right to redeem them after five years. The bonds of '81

Mr.

vertible,

ought to be

r
having absolutely twenty years to run, were selling yesterdaj in New
York at six per cent, above par for greenbacks, while the 5-20 bonds
would not bring such a premium. If they would command any such
premium, these notes, convertible into such bonds, would be brought in
for conversion Avith great rapidity, and there would not be a margin of
six per cent, between gold and legal tender notes. He thought it best to
legislate in such a manner as to approximate these notes to gold.
Mr. STEVENS "I agree perfectly with the remarks made by the gentleman from Indiana. I opposed the substitution of five years bonds for
twenty years bonds when the question was before the House, but the
House differed with me. The Senate amended the bill, and when it came

162
back from the Senate, the House agreed with the Senate after discussion
here. He said that a majority of the Committee of Ways and Means were
not in favor of the recommendation of the Secretary to issue notes less
than five dollars, but he understood that some member of the Committee
would offer an amendment in accordance with the recommendation of
the Secretary of the Treasury."

Mr. SPAULDING afterwards offered an amendment that no part
of these legal tender notes should be "for fractional parts of a
dollar, and that not more than $50,000,000 should be of a less

denomination than

five dollars,"

which was adopted.

The bill continued to be discussed by different members of the
House from day to day until the 24th of June, when it passed the
House in substantially the same form as recommended by the
Secretary of the Treasury, by yeas 76, nays 47, as follows:

Yeas

Messrs. Aldrich, Alley, Arnold, Babbitt, Baile}^ Beaman, Bingham, Francis P. Blair, Jacob B. Blair, Samuel S. Blair,
Blake, William G. Brown, Campbell, Casey, Chamberlin, Clark,
Colfax, Cutler, Davis, Delaplaine, Duell,

wards,

Fenton,

Fessenden,

Dunn, Edgerton, Ed-

Franchot,

Granger, Gurley,
Haight, Hale, Hall, Hanchett, Harrison, Hooper, Hutchins, Kelley, Francis W. Kellogg, Lansing, Loomis, Lovejoy, Law, McEly,

Maynard, Mitchell, Moorhead, Nixon, Noell, Nugen,
Timothy G. Phelps, Pomeroy, Potter, Price, John H. Rice,

Knight,
Olin,

Riddle, Sargent, Shanks, Shellabarger, Sherman, Sloan, Spaulding,

Stevens,

Trimble,

Trowbridge,

Van Horn, Van Valkenburgh,

Verree, Wall, Wallace, Washburne, Wheeler, Whaley, Wilson,

Windom and Worcester

76.

Nays Messrs. William J. Allen, Baker, Biddle, George H.
Browne, Buffinton, Calvert, Clements, Cobb, Roscoe Conkling,
Corning, Cravens, Crisfield, Dawes, Delano, Dunlap, Eliot, English,
Fouke, Goodwin, Grider, Harding, Johnson, Law, Menzies, Justin S. Morrill,

Norton, Pendleton, Perry, John

Alexander H. Rice, Richardson,

S.

Phelps, Porter,

Benjamin
Thomas, Francis Thomas, Vallaiidigham, Vibbard, Wadsworth,
Walton, Ward, Webster, Chilton A. White, Wickliffe, Wood and
Woodruff 47.
So the bill was passed.
Sheffield, Shiel, Stiles,

F.

BILL IN THE SENATE.

On

the 25th of June the bill was received in the Senate and

On the 28th this Committee
amendments. On the 2d of July it was

referred to the Finance Committee.

reported the

bill

with

163
fully discussed,

yeas, 22, n:iys

:md nfter

I;*,

Ix-ini;

amended, pn^-ed the

Seii.-de

by

as follows:

Yeas Messrs. Anthony, Browning, Chandler, Clark, Dixon,
Foot, Hale, Harris, Henderson, Howard, Howe, Lime (of Indiana),

Simmons, Sunnier, Ten Kyrk,
and Wilson (of Missouri) 22.
Wade, Wilkinson, Willey
Nays Messrs. Carlisle, Collamcr, Cowan, Davis, Foster, II;<r
l.-ui.
King, Powell, Saulsbnry, Sherman, Stark, Trumbull and

Lane

(of Kansas), Morrill, Pom'eroy,

Wright

13.

The amendments of

the Senate were not jigreed to by the
House, and the disagreeing votes between the two Houses, were
finally settled by a Conference Committee, consisting of Mr. Fes-

senden, Mr. Sherman and Mr. Wright on the part of the Senate,
and Mr. Stevens, Mr. Spanieling and Mr. Phelps on the part of
The report of the Conference Committee was finally
the House.
agreed to on the 8th of July, and on the llth President Lincoln

approved the

bill,

which

is

as follows:

CHAPTER
"

An

Act, to authorize

an

CXLII.

additional issue of

United States Notes,

and

for

other purposes.

and House of Representatives of the United States
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 denominations 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 dollars 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 upon bonds, notes, and certificates of debt or 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 may be transmitted to the

Be it

enacted by the Senate

of America, in Congress assembled,

;

;

;

Secretary of the Treasury, who shall thereupon issue to the holder an
equal amount of the bonds of the United States, coupon or registered, as
may by said holder be desired, bearing interest at the rate of six per cent,
per annum, payable send-annually, and redeemable at the pleasure of the
United States after five years, and payable twenty years from the date
thereof; Provided, hoivever, That any notes issued under this act may be
paid in coin, instead of being received in exchange for certificates of

164
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 six per centum interest, and redeemable after five, and payable in twenty years, which have been or may be
lawfully issued under the provisions of any existing act; may re-issue the
notes so received in exchange may receive and cancel any notes heretofore lawfully issued under any act of Congress, and in lieu thereof issue
an equal amount in notes such as are authorized by this act; and may purchase, at rates not exceeding that of the current market, and cost of
purchase not exceeding one-eighth of one per centum, any bonds or certificates of debt of the United States as he may deem advisable.
;

SECTION 2. And be it further enacted, That the Secretary of the Treasury
and is hereby, authorized, in case he shall think it expedient to procure said notes, or any part thereof, to be engraved and printed by contract, to cause th,e said notes, or any part thereof, to be engraved, printed
and executed, in such form as he shall prescribe, at the Treasury Department in Washington, and under his direction and he is hereby empowered to purchase and provide all the machinery and materials, and to
employ such persons and appoint such officers as may be necessary for

be,

;

this purpose.
3.
And be it further enacted. That the limitation upon temporary
deposits of United States notes with any assistant treasurer, or designated
depositary authorized by the Secretary of the Treasury to receive such
deposits, to fifty millions of dollars be, and is hereby repealed; and the

Secretary of the Treasury is authorized to receive such deposits, under
such regulations as he may prescribe, to such amount as he may deem
expedient, not exceeding one hundred millions of dollars, for not less
than thirty days, in sums not less than one hundred dollars, at a rate of
interest not exceeding five per centum per annum; and any amount so
deposited may be withdrawn from deposit, at any time after ten days
notice, on the return of the certificate of deposit. And of the amount of
United States notes authorized by this act, not less than fifty millions of
dollars shall be reserved for the purpose of securing prompt payment
of such deposits when demanded, and shall be issued and used only when,
in the judgment of the Secretary of the Treasury, the same, or any part
thereof may be needed for that purpose. And certificates of deposit and
of indebtedness issued under this or former acts, may be received on the
same terms as United States notes, in payment for bonds redeemable after
five, and payable in twenty years.

And be it further enacted, That the Secretary of the Treasury may
any time, until otherwise ordered by Congress, and under the restrictions imposed by the 'Act to authorize a national loan, and for other
purposes,' borrow on the credit of the United States, such part of the sum
of two hundred and fifty millions mentioned in said act as may not have
been borrowed, under the provisions of the same, within twelve months
from the passage thereof.
$ 4.

at

And be it further enacted, That any part of the appropriation of ten
$ 5.
thousand dollars for the detection and bringing to trial of persons engaged
in counterfeiting the coin of the United States, made by the act entitled

An Act making appropriations for the legislative, executive and judicial
expenses of the Government, for the year ending the thirteenth of June,
eighteen hundred and sixty-one,' approved June twenty-three, eighteen
4

165
hundred and

sixty, may be applied in detecting and bringing to trial and
punishment, persons engaged in counterfeiting Treasury notes, bonds, or
other securites of the United States, as well as the coin of the United
States.

And

to carry into effect the preceding sections of this act the

sum of three hundred thousand dollars is hereby appropriated,
money in the Treasury not otherwise appropriated.
*

out of any

And be it further enacted, That all the provisions of the act entitled
6.
An Act to authorize the issue of United States notes, and for the redemp-

tion or funding thereof,

and

for funding the floating debt of the

United

States,' approved February twenty-five, eighteen hundred and sixty-two,
so far as the same can or
be applied to the provisions of this act, and

may

not inconsistent therewith, shall apply to the notes hereby authorized to

be issued.

Approved, July

A.

11, 1862.

LIXCOLX."

POSTAGE STAMPS AND FRACTIONAL CURRENCY.

Another expedient resorted to for providing means to carry on
the war, was the issue of postage stamps and fractional currenc}'.
After the suspension of specie payments by the banks and the
passage of the first legal tender act, gold and silver were in a

There was a great
great measure banished from circulation.
of small change in ordinary business transactions.
Corscarcity
individuals and firms commenced issuing shinplasters to
porations,
supply the deficiency. It soon became apparent that unless some
action was taken to prevent it, the country would be flooded with
a heterogeneous fractional currency of very
vexatious in business transactions.

To remedy these

evils,

and

little

in order that the

value,

and very

Government might

avail itself of the advantages of this circulation, Congress, at the

request of Secretary Chase, passed the following

bill:

CHAPTER CXCVI.
"An Act to
less

authorize

payment in Stamps, and

denomination than one

to

prohibit circulation of notes of

dollar.

SECTION 1. Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That the Secretary of the
Treasury be, and he is hereby directed to furnish to the Assistant Treasurers, and such designated depositaries of the United States as may be by

him

selected, in such sums as he may deem expedient, the postage and
other stamps of the United States, to be exchanged by them, on application for United States notes: and from arid after the first day of August
next such stamps shall be receivable in payment of all dues to the United
States less than five dollars, and shall be received in exchange for United
States notes when presented to any Assistant Treasurer or any designated
depositary, selected as aforesaid, in sums not less than five dollars.
$ 2.

And

be

it

further enacted,

That from and

after the first da}r of

August, eighteen hundred and sixty-two, no private corporation, banking
association, firm or individual, shall make, issue, circulate, or pay any-

166
memorandum, token, or other obligation for any less sum
than one dollar, intended to circulate as money or to be received or used
in lieu of lawful money of the United States and every person so offendnote, check,

;

on conviction thereof in any district or circuit court of the
United States, be punished by fine not exceeding five hundred dollars, or
by imprisonment not exceeding six months, or by both, at the option of
ing

shall,

the Court.

Approved July

17,

1862."

The use of stamps

for small change did not work well in pracand Secretary Chase recommended that fractional currency
tice,
should be authorized in the place of postage and revenue stamps.

This recommendation was carried into

effect by the 4th section of
by which the Secretary was authorized
to issue fractional currency to any amount not exceeding $50,000,000, redeemable in United States notes in sums not less than
three dollars, and receivable for postage and revenue stamps, and

the act of

also in
dollars,

March

3d, 1863,

payment of any dues to the United States less than five
This fractional currency was
except duties on imports.

not made a legal tender for private debts, but upon the whole it
has served a useful purpose and the second section of the act of
;

other shinplasters, has kept the counJuly 17, 1862, prohibiting
free from a flood of small " paper trash," which at one time
try
all

was very annoying to the business community. The Government
has had the benefit of an average circulation of this form of credit
to the amount of about $30,000,000, which is still outstanding,
and which should at an early day be replaced by the silver coins
which were in common use before the war. Would it not be well
to destroy this currency as fast as it becomes mutilated and is
returned to the Treasury Department?
If no more should be
or issued it would not be long before the present issue
printed
would wear out and be replaced by small coins.
SECOND ANNUAL REPORT OF SECRETARY CHASE, DEC.

4,

1862.

Secretary Chase again earnestly recommended the National
Currency Bank Bill, and urged its passage by additional argu-

ments, which he presented more in detail than in his

"He

first report.

adhered to the opinion expressed in his last report that a circuby the Government, but issned by banking associations
organized under a general act of Congress, is to be preferred to either
United States legal tender notes or notes of State Banking Corporations.
Such a circulation, uniform in general characteristics, and amply secured
as to prompt convertibility by national bonds deposited in the Treasury
still

lation furnished

by the associations receiving it, would unite, in his judgment, more
elements of soundness and utility than can be combined in any other.

167
Little direct aid

is,

however, to be expected from this plan during the

present, nor very much, perhaps, during the next year. He briefly argued
the constitutionality of this plan as an auxiliary to the power to borrow
money ; as an agency of the power to collect and disburse taxes ; and as

an exercise of the power to regulate commerce, and of the power to regulate the value of coin."

He recommended

a further limited issue of legal tender notes
and as an occasional

as a wise expedient for the present time,

expedient in future times, and the immediate passage of the bank
bill for raising the additional means to carry on the war.
$900,000,000 LOAN ACT.

We now

come

to the consideration of the $900,000,000

Loan

Act, which, in connection with loan acts already passed, conferred
more discretionary power on the Secretary of the Treasury than

was ever granted by law to any other Finance Minister in the
world; and which ultimately led to a dangerous expansion of
credit circulation in various forms, and in connection with the
bank bill, which passed about the same time, to an enormous
caused by the over-issuing of paper mone}'
which came very near proving fatal to the finances of the Government and the legitimate business of the county.
inflation of prices,

The

bill having been carefully considered in the Committee of
and Means, was, on the 8th of January, 1863, reported from
Ways
It was entitled,
the Committee to the House by Mr. Stevens.
and Means for the support of the GovA bill to provide Ways
' '

ernment;" which wns road twice, ordered to be printed, referred
to the Committee of the Whole, and made the special order for

Monday, the 12th

inst.

(House

bill

No.

The

659.)

bill

as

reported did not contain some provisions which Secretary Chase
was very anxious to have passed one was to repeal the provision
restricting him in the sale of bonds to the 'market value'

another was to abrogate that most equitable and just provision
contained in the original legal tender act, allowing the holders of
legal tender notes to convert them at airy time into 5-20 six per
cent,

bonds, interest payable semi-annually in coin.

deem

The Com-

just to abrogate this provision, while SecChase believed its repeal would enable him to make better
retary

mittee did not

it

terms in selling bonds.
MR.

On

SPAULDING'S OPENING SPEECH ON THE HILL.

the 12th, the bill being the special order,

Committee of the Whole, and,

was taken up

an amendment

having

in

been

168
offered
it

by Mr. Stevens, Mr. Spaulding opened the debate upon

in the following speech

:

"Mr. CHAIRMAN This subject is a very dry one, but it is intensely
interesting at the present time. I propose to discuss the bill reported by
the Committee of Ways and Means, with the amendment of the gentle-

man from Pennsylvania,
to me under the rules of

so far as I shall be able during the

hour allotted

the House.

The immediate requirements of the Treasury are not less than $100,000,Before you can pass this bill through both Houses, have it approved
by the President, and get bonds and notes engraved, printed and issued,
The pressing demands upon the
at least $50,000,000 more will be required.
Treasury between this and the first of next month, for the pay of soldiers and
other creditors, may be put down at $150,000,000.
The gold and silver in
the banks in New York, Boston and Philadelphia, on the first of this
month, probably did not exceed $49,000,000; to which you may add the
gold and silver in all other banks in all the loyal States, as will appear in
official reports to the first ot January, 18G3, and the whole sum will not

000.

All this coin is necessary for the banks to take care
of their own liabilities but even if the Secretary could, on the credit of
the Government, by a sale of bonds at any sacrifice, or by the aid of the
military power, visit every bank in the country, and by force compel all
this coin to be paid into the Treasury, it would not pay fifty cents on the
dollar on the demands due from the Government, and which ought to be
paid in the next twenty days. It is therefore perfectly plain that even
the small sum of $150,000,000, now due, cannot be paid in gold. It would
be a gratification to me, and, I doubt not, to every other loyal citizen, if
It is no fault of the /Secretary or of Congress that gold
it were otherwise.
cannot now be paid to the soldiers and other creditors. It is simply an imposthat purpose.
There was never a more
sibility, by any plan, to get enough for
pertinent application of the old maxim than when applied to our present

exceed $87,000,000.

;

when we cannot do as we would, we must do as we can.'
have had a strong desire to provide money upon a specie basis, for the
support of the army and navy, during the pending struggle to preserve
the Constitution and the National Union. I would much prefer to pay
gold and silver to all the creditors of the Government. During the first
six months of the war, I was in hopes that our expenditures might be
kept within limits that would admit of such a financial policy. I believe
that this was the earnest wish of the Secretary of the Treasury, and of
every member of the Committee of Ways and Means. But with an army
in the field of from seven hundred thousand to one million of men, to be
fed, clothed and paid, and all the material of war provided to make them
efficient for active duty, it was very soon ascertained that the coin in the
country, amounting only to about $250,000,000, if every dollar held by
the banks and the people could have been availed of, was far too small to
meet these large expenditures. We could not shut our eyes to the vastness of the volume of debt that was open before us. It was very soon
'

condition,
I

made apparent

that our national debt would, at an early day, reach

$2,000,000,000, equal to half the debt of Great Britain; and that it would
be utterly impossible to make loans on a specie basis fast enough to meet

such enormous expenditures.

At

the last session, and after there had been a general suspension of
payments by the banks and the Government, Congress authorized

specie

169
the issue of $150,000,000 of legal tender notes; and by another law, passed
a few months later in the session, an additional issue of $150,000,000 was
also authorized, but the Secretary was required to hold in reserve $50,000,000 to meet any calls that might be made for temporary deposits in tinsub-Treasury. We all hoped that this would be all the legal tender notes
that would be necessary. Congress also authorized the Secretary to bor-

row

$500,000,000, payable in twenty years, and redeemable at the pleasure
Government after live years, bearing interest at the rate of six per

of the

centum per annum, payable half-yearly in coin, and gave him authority to
at the market price, to raise money to carry on the war ;
sell them at any time
and further authorized the holder of any legal tender notes to convert them at
'

'

any

time, at par, into these six

per

cent, bonds.

The Secretary has paid out nearly $250,000,000 legal tender notes, being
and notwithstanding he has had authorall that he was authorized to issue
;

last ten

months

$500,000,000 of five-twenty six per cent, bonds,
at the market price, he has only disposed of about $25,000.000, and has still
authority to sell $475,000,000 at the market price, and take his pay for them in
ity

for the

to sell

legal tender notes.

One of the reasons why more of

these bonds have not been disposed of
that there has been no redundancy of currency, and it has been difficult for the Secretary to get legal tender notes on a sale of the bonds and
seven-three-tenths notes that he has already negotiated.
is,

The War and Navy Departments have almost unlimited power

to con-

tract debts for the supply of the army and navy. The volume of supplies
and supply trains for your army are enormously large ; and extending

over such a widely extended field of military operations as that in which
our several army corps are engaged, no one can fail to see that it is next
to impossible to estimate accurately the amount to be appropriated for a
year in advance. But it is painfully certain, that with the present army
in the field, there is no way of limiting the amount of expenditures when

they are actively operating to put

down

so gigantic

and desperate a

rebellion.

We know that the liquidated and

funded debt is already large, and that
a large accrued indebtedness, which ought to be paid at an early
day, but without any adequate means in the Treasury to pay it. There is
a large amount due to the soldiers that must be paid at the earliest moment pos-

there

sible.

is

The

enduring

soldiers

now on the field of battle, or encamped in front of the enemy,
and hardships of war, many of whom have not received

all the perils

pay for months, ought not to be put off any longer. They can hardly be
expected to perform their duties with alacrity, unless they are promptly
paid, especially when they know, as many of them do, that their families
their

home

want of the means of life. It is an imperameans for paying the army and navy should not be
delayed any longer. If the Secretary cannot raise the money to pay the
creditors of the Government by a loan on five-twenty six per cent, bonds
at the market price, other authority must be given him to raise the
money, and Congress ought to confer that authority upon him as soon as

at

are suffering for the

tive necessity

that the

possible.

The time has arrived when our finances must engage the earnest and
united attention of all loyal Representatives. We were in great peril last
year, but our dangers are now two-fold what they were then. It was
very difficult last year to provide the money to meet the large appropriations made for the support of the army and navy. It will be still more

170
difficult to

meet the enlarged requirements of the current and the next

The army bill alone appropriates over $731,000,000, which,
to the estimates of all the other expenditures for the fiscal year
ending June 30, 1864, amount to the enormous sum of $1,095,431,183.56, to
which must be added the amount still required for appropriations and
fiscal year.

added

deficiency for the year ending June 30, 1863, and which, according to the
report of the Secretary of the Treasury, amounted on the 1st of December
last to the sum of $551,221,131.59, making the whole aggregate required
to meet appropriations during the next eighteen months $1,646,634,315.15,

NATIONAL DEBT.
Loan of

1842 in course of

payment ....................... $

2,883,364 11

"
"

1847 ..............................................
1848 ...............................................

9,415,250 00
8,908,341 80

1858 ...............................................

"

1860 ...............................................
1861, act of February 8, 1860 . ....................

20,000,000 00
7,022,000 00

.'

"

1861, act of

July

18, 1861 ......... .................

1862, five-twenty six

per cent .....................

Texas indemnity ..........................................
Oregon war debt ..........................................
Texas debt ................................................
Old funded and unfunded debt ............................
Treasury notes under acts prior to 1857 ....................

18,415,000 00
50,002,000 00
25,050,850 00
3,461,000 00
1,026,600 00

112,092 69
114,115 48
104,561 64

"
"
subsequent .....................
2,750,35000
Treasury notes seven-thirty per cent, interest ............. 139.998,000 00
Temporary deposits at four per cent ...................... 38,458,008 50
"
"
fivepercent ....................... 41,777,62816
United States notes, legal tender and receivable for customs 14,913,315 25
United States notes, legal tender .......................... 223,108,000 00
Postal currency less than one dollar .......................
6,844,936 00
Certificates of indebtedness, six per cent .................. 110,321,241 65
Requisitions on the Treasury for soldiers' pay and other
creditors, due but not paid ............................
59,117,597 46

Total funded and unfunded debt to January 2, 1863, accord783,804,252
ing to the books in the Treasury Department
To which may be added the estimates of appropriations
made and asked for to July 1, 1864, (including $100,000,000 that may be undrawn at the end of the year, and
which will be due though not paid), amounting to, say. 1,216,197,745 35
<i

Public debt estimated to July 1, 1864,
on the same scale to that time

How is this large sum to be

if

the

1

war continues
$2,000,000,000 00

obtained ?

The Secretary of the Treasury, in his annual report, indicates t\\o
modes of obtaining it, as follows
A national bank bill.
1.
2.
By loans in some of the forms heretofore authorized.
I propose to examine these modes of obtaining the money in the order
:

above stated.
1.
A national bank law. It is proposed by this bill to authorize the
formation of banking corporations in all parts of the country, with the

in
usual powers of State banks. They are to have the power to issue bank
notes to circulate as money, and to be secured by United States stocks,
deposited in the Treasury Department as security for the redemption of
the currency thus issued. This bill in all its essential features is like the
free banking law ol the State of New York. It proposes to nationalize all
the bank currency of the country by the adoption of such a coercive policy

toward existing banks as will compel them to throw up their present
State charters, and organize anew uncfer this bill. A tax of two per cent,
per annum is proposed on all State bank circulation, in addition to the
State, county and city taxes which State banks are compelled to pay under
State laws, and in addition to the internal revenue tax of three per cent,
on their profits, making an aggregate tax upon State banks of about live
per cent. By this hostile policy toward existing banks, it is proposed to
compel them to surrender their present chartered rights, to make a market
for United States stocks, to be deposited in the Treasury Department as a
basis for national bank circulation under this new system, to the amount
of $250, 000, 000.
It is anticipated that in the course of a few years, and certainly as soon
as the system goes fully into operation, United States bonds will be deposited to this amount. There is no provision requiring new banks, organbill, to redeem their circulating notes in coin.
They arc
remain under suspension of specie payments, the same as existing
banks, until there is a general resumption on the part of the Government
and the banks, long after the close of the war. The central idea of the
measure, as stated in the Secretary's report, 'is the establishment of one
sound uniform currency, of equal value throughout the country, upon the
foundation of national credit, combined with private capital,' and making
This is the scheme prothis the settled financial policy of the country.
posed. The first question presented is: will this materially aid the Government in the present exigency ? I think it will not, and the Secretary
frankly admits that 'little direct aid is to be expected from this plan
during the present, and not very much, perhaps, during the next year.'
We have already issued, and put into circulation, legal tender notes direct
from the Treasury, and without the machinery or expense of a national
bank, to about the sum of $250,000,000. These Treasury notes are based,
for their security and ultimate redemption, upon the good faith of the
r
people and all their property. For w hat currency we need in the pending
for national existence, will it be wise to attack the State banks ?
struggle
Will it be wise to raise up powerful enemies in the States to oppose any of
the measures of the Government? The State bank system is older than

ized under this

to

the Constitution. It has become deeply rooted. Immense interests are
involved in the banks organized all over the country under the protection
and guarantee of State sovereignty. Individuals have, in good faith, paid
in their money to establish these banks. Vast interests are involved in
various ways. They are intimately interwoven with the commerce and
business of the country. In the State of New York alone over $19,000,000 of stocks and bonds, many of which have been purchased from the
State at a large premium, constitute the security for the redemption of
their circulating notes. The State of New York has now the best banking
system in the world. These banks are under much more careful supervision, of a superintendent in their midst, than they would be under an
officer residing as far off as Washington.
The State banks have been
liberal in making loans to the Government in this hour of the nation's

172
greatest need, and their stockholders, directors, and managers are mostly
loyal and patriotic. Still further aid will be solicited and expected from
the existing banks. Will it be wise to make demands upon them that are
not made upon all other property ? Any invidious discrimination against
them, in the way of taxation, it seems to me, would be unjust.
I am not opposed to a national bank, nor am I disposed to interfere with
Both systems of banking may be legitimate within their
State banks.
sphere of action. I am willing that the country should have both. I am
willing that they should go on pari passu and in competition with each
other ; but I am unwilling to make war at this time on the State banks,
because I do not believe that the benefits to be derived from such a course

compensate for the evils that will follow any attempt to
destroy the present State bank system.
I now propose to examine the constitutionality of these two systems of
banking. If it can be shown that a national bank is constitutional, it can
be more clearly established that State banks are also constitutional.
Jackson, Jefferson, and other statesmen always insisted that the Constitution did not empower Congress to charter a national bank and the former
was especially favorable to State banks. (For Mr. Jefferson's opinions
see his letter to Hon. John W. Eppes, chairman of the Finance Committee,
bearing date November 6, 1813, wherein he opposes the charter of a
will sufficiently

;

United States bank.)

CONSTITUTIONALITY OF A NATIONAL BANK.
have no doubt that the general principle of the national bank bill proposed by the Secretary of the Treasury is constitutional. It is true that
there is no express grant of power in the Constitution to incorporate a
United States bank. The power to create a bank is incidental to the powers expressly granted. The national bank proposed may be considered
an appropriate means to carry into effect many of the enumerated powers
of the Government. By its provisions it has a direct relation to the
national debt, to the power of collecting taxes, internal duties and excises
to that of borrowing money, to that of regulating commerce between the
States, and to that of raising money to maintain the army and navy. It
would, no doubt, be a useful instrument in administering the fiscal and
I

;

financial operations of the Government, and it would moreover, in time,
be a useful support to the credit of the Government, by providing a market
for a considerable amount of the bonds issued in the prosecution of the
war. (See Hamilton's celebrated argument submitted to President Washin
ington, in favor of the constitutionality of the United States Bank,
1791 ; McCullock vs. The State of Maryland, 4 Wheat. R. 422-3, Chief Justice Marshall's opinion.)

STATE BANKS ARE ALSO CONSTITUTIONAL.
In the case of Briscoe

vs.

The Bank

of the

Commonwealth

of Kentucky,

doctrine that a State
(11 Peter's R., 317,) Judge McLean laid down the
cannot emit bills of credit, or, in other words, it cannot issue that description of paper, to answer the purposes of money, which was denominated
before the adoption of the Constitution, "bills of credit." But a State
may grant acts of incorporation for the attainment of those objects which
are essential to the interests of society. This power is incident to soveron its
eignty; and there is no limitation in the Federal Constitution
exercise by the States in respect to the incorporation of banks.
At the time the Constitution was adopted, the Bank of North America

173
and the Massachusetts bank and some others were in operation. It canto
not, therefore, be supposed that the notes of these banks were intended
be inhibited by the Constitution, or that they were considered bills of
within the meaning of that instrument* In fact, in many of their
most distinguishing characteristics, they were essentially different from
bills of credit, in any of the various forms in which they were issued.
nor
If, then, the powers not delegated to the Federal Government
reserved to the States are retained by the States or the people, and, by a
fair construction of the term bills of credit, as used in the Constitution,
they do not include ordinary bank notes, does it not follow that the power
to incorporate banks to issue these notes may be exercised by a State ?
A uniform course of action, involving the right to the exercise of an
important power by the State government for three-fourths of a century,
and this almost without question, is no unsatisfactory evidence that the
power is rightfully exercised to charter banks to issue bank notes to circulate as money. The Supreme Court of the United States decided in this
case that the act incorporating the Bank of the Commonwealth of Kencredit,

tucky was a constitutional exercise of power by the State of Kentucky
and the notes issued by the bank were not bills of credit, within the
meaning of the Constitution of the United States, but were ordinary bank
;

issued and circulated as currency.
was argued in this case that if the Bank of the Commonwealth of
Kentucky should be declared unconstitutional by the court, all State
banks founded on private capital would be unconstitutional. Justice

bills,

It

who gave a dissenting opinion in that case, denied this position,
and declared that the States may create banks as well as other corporations
upon private capital, and, so far as the prohibition in the Federal Constitution is concerned, may rightfully authorize them to issue bank bills or
Story,

notes as currency. The Constitution does not prohibit the emission of all
bills of credit, but only the emission of bills of credit by a State; and when
1 say by a State, I mean by or in behalf of a State in whatever form issued.
It does not prohibit private persons, or private partnerships, or private
corporations, (strictly so called,) from issuing bills of credit.

In the case of Darrington vs. The State Bank of Alabama, (13 Howard
Reports, 12,) the Supreme Court of the United States decided that the bills
of a banking corporation, which has corporate property, are not bills of
credit within the meaning of the Constitution, although the State which
created the bank is the only stockholder, and pledges its faith for the ultimate redemption of the bills.
It must not be understood from anything I have said, that I am in favor
of an expansion of the circulation of existing banks. On the contrary, I

am

opposed to

it.

The

existing banks should be kept under close super-

and

for all increase in their circulation, since they suspended
specie payments, I am entirely willing that some policy should be
adopted by the States or General Government to prevent them from

vision;

inflating the currency. I am willing that a tax of two per cent, should
all their increase of circulation since the first of January,

be levied on

This would be a tax on their abuse of chartered privileges, and not
a blow aimed at the total destruction of all banks alike, good and bad.
What I oppose is an attempt on the part of Congress to destroy the vested
rights of citizens, which they hold under the guarantee of State sovereignty, and which are to be protected as sacredly as any other chartered
rights or property held under State laws. Let all property be taxed as
1862.

174:

nearly equal as possible, leaving no just cause for complaint from any
class of citizens.

Having shown that the proposed national bank bill is not only unjust
some of its provisions, but that it will not yield any considerable
amount of money to meet the appropriations for the current and next

in

fiscal year,

the other question to be considered

is

:

Can the money be obtained by loans ? It will be recollected that
the amount to be provided for, over and above the sums to be realized
from duties on imports and internal revenue, exceeds the sum of $1,000,2.

is a large sum to be borrowed in the ensuing eighteen
have before stated, over $2,500,000 will be required every
day, Sundays included, between this and the first day of July next. The
receipts from postal currency, customs and taxes during that time will
not probably exceed the sum of $600,000 per day, leaving $1,900,000 to be
obtained daily in some form by loan. Congress, by its legislation at the

000,000.

This

months.

As

I

last session, has, to a considerable extent, changed the standard of value
for all business operations within the United States.

The standard of value fixed by Congress is legal tender Treasury notes,
convertible at any time into United States specie-paying bonds, bearing
interest at the rate of six per centum per annum, payable half-yearly in
coin, based upon adequate taxation upon the entire property of the country.
Legal tender notes constitute the national currency now established
by law. All exchanges of property, all contracts, and all loans, are based
upon the value of legal tender notes and United States six per cent,
The law of Congress declares that these notes shall be lawful
money, and a legal tender in payment of all debts, public and private.
The Secretary states in his Annual Report that previous to the first of
November, 1862, 'the coin had been practically demonetized and with*
*
*
*
drawn from use as currency, or as a basis for currency.'
for coin
That on the suspension of specie payments, and the substitution

bonds.

*

of United States notes, convertible into six per cent, specie-paying bonds,
as the legal standard of value, gold became an article of merchandise,
subject to the ordinary fluctuations of supply and demand, and to the

extraordinary fluctuations of mere speculation.'
Gold does not circulate at all as currency, and there is no probability
that it will circulate as money for several years to come certainly not
during the progress of this gigantic war to put down the rebellion. This
We have the monster rebelis to be regretted, but it cannot be avoided.
lion by the ears, like the backwoodsman who held the ferocious wolf if
we let go, he will destroy us we must therefore hold on till we subdue
him. No compromise can be made. The rebels will not negotiate on
any basis except that of separation and an acknowledgment of their independence. The war, therefore, must go on. While the war lasts the
magnitude of the expenses will be so great that there is not coin enough
in the country to carry it on with gold and silver. It cannot be obtained.
We must try to mitigate, as far as we can, the evils growing out of the
necessity of making legal tender notes the standard of value.
;

You cannot dispose 'of your twenty years six per cent, bonds for gold without
submitting to a loss of over thirty cents on every dollar; in other words, for every
Even if you should
dollar of bonds issued you can only get seventy cents in gold.
it is not at all
probable that you could nego$25,000,000 of bonds for gold before you would be obliged to submit to a sacNot because your bonds are not good,
rifice of fifty cents on every dollar sold.

be willing to submit to this sacrifice,
tiate

175
dollar for dollar, as gold, but because the whole amount of gold in the
country that could be had for circulation does not probably exceed $250,-

Not a sufficient sum to carry on the immense operations of the
people and the Government at this time, even if it could all be brought
out and put into circulation a thing wholly impracticable at this time.
No one at all acquainted with monetary affairs believes that we can make
sale of any considerable amount of our six per cent, bonds at over fifty
cents on the dollar for goid a sacrifice too great for this House to
seriously consider, if any other mode can be devised which is practicable.
It is believed to be practically impossible to negotiate your bonds for gold
without too great a sacrifice. If you cannot negotiate loans for gold, will
it be wise to change the independent Treasury law so as to allow loans to
be negotiated for notes of suspended banks ? There was a general suspension of specie payments by the banks and the Government on the 31st of
December, 1861. In February following, Congress passed the law for the
issue of legal tender notes, and authorized the Secretary to make loans,
and receive these notes in payment; but the Government has not deemed
it best to take suspended bank notes in payment for loans or any other
dues to the Government. I do not think it wise to adopt that policy at
this time.
The question then arises, can you sell bonds enough every day
and get your pay for them in legal tender notes already issued ? It is perfectly apparent to all who are acquainted with the money market that this
cannot be done. Currency has been scarce all the time for the last eight
months, an is now very difficult to be obtained in sufficient quantity to
meet the business wants of the country. In many places through the
interior of the States, bankers and business men have been obliged to pay
as high as one-quarter and one-half per cent, premium to get currency
(bank bills arid greenbacks) to carry on ordinary business operations.
It is well known that all the New England and New York country
banks redeem their bills now at the Suffolk Bank, Boston, and the Metropolitan Bank, New York, precisely as they did before the suspension of
specie payments. This system checks any tendency to over issue, and is
a touchstone by which to test daily the demand for bank bills. If they
are not needed for legitimate business, they flow in rapidly to the redeeming banks, but if they are wanted they stay out. This test is unerring.
The daily redemptions, for months past, have not been half what they
were when the volume of bank circulation was less by a third than it is at
this time. What causes this scarcity of currency ? In the first place, as
before stated, gold and silver no longer circulate as currency within the
000,000.

United States. Gold is only required to settle foreign balances, pay
custom duties and interest on the public debt. It is bought and sold for
these purposes as a commodity, but it does not circulate as money in
ordinary business* operations. Its place is supplied by bank bills and legal
tender notes. In the next place, the large increase of business suddenly created
by [such a gigantic war as we are now prosecuting, has largely increased the
demandfor a larger volume oj currency than was ever required before.
There has been a large demand for currency in the western States to
purchase and bring forward the immense crops that have been produced
during the last two years. The winding up of a large number of badly
organized and badly managed banks in those States left a large vacuum to
be filled by bills of solvent banks and legal tender notes. The Government has been buying largely, in all parts of the country, food, clothing,
and all munitions of war, beside the large sums required for pay and

176
bounty money of the volunteer soldiers that have gone forth from all the
No doubt considerable amounts of this money still remain in the
hands of the soldiers themselves and their families, practically withdrawn
from circulation for the time being. Fifty, one hundred, and as high,
even, as two hundred dollars, were paid for volunteers to fill up the two
States.

made by the President. Fifty dollars paid to each soldier, to
number of six hundred thousand, would require $30,000,000 to say
nothing of the amounts required for the army previously sent into the
last calls

the

where the currency has gone during the past
The operations of the army and navy alone have required in all
forms, not less than $200,000,000 in bank bills and legal tender notes. It is no
wonder that currency has been scarce in all the ordinary channels of trade and
It is still very scarce and difficult to be obtained for ordinary
business.
business purposes in New York and all the western States. I am assured
by bankers and the best financiers in New York, that if the Secretary
should put on the market a proposal for a loan of $50,000,000 it could not
be taken, for the reason that the legal tender notes could not be obtained
in sufficient quantity to pay for a loan of that amount. It is doubtful
whether a loan of $15,000,000 could be taken at this time for the want of
field.

It is perfectly plain

six months.

.

currency to pay for it.
It is also very difficult for the collectors of internal revenue to make collections on account of the scarcity of legal tender notes. Legal tender
notes are not plenty among the people who are required to pay your taxes ;
they are continually asking for more. Why, then, should we be alarmed
at a further issue of legal tender notes ? So long as they are wanted by
the business of the country,

demanded by the

soldiers for their pay,

begged for by all the needy creditors of the Government, surely Congress
ought not to hesitate in an exigency like the present.
It is no time now to depress business operations, or hold back the pay
due to honest creditors of the Government. It is much better to stimulate,
make money plenty, make it easy for people to pay their taxes, and easy
for Government to make loans. This is the only way in which we can go
on in the present imperiled condition of the country.
During the last war with Great Britain, Jefferson, in letters written
during that period, repeatedly urged upon the Government the propriety
of issuing Treasury notes of convenient denominations to circulate as
money. In his letters to John W. Eppes, chairman of the Finance Committee, under dates of June 24 and September 11, 1813, he urged upon
Congress the importance of issuing Treasury notes whenever loans could
not be made upon satisfactory terms. In one of his letters, bearing date
I never did believe you could have gone beyond
October 15, 1814, he says
a first and second loan not from want of confidence in the public faith,
which is perfectly sound, but from a want of disposable funds in individThe circulating fund is the only one we can command with ceruals.
tainty. It is sufficient for all our wants and the impossibility of defending
the country without its aid as a borrowing fund renders it indispensable
that the nation should take and keep it in their own hands.' He admitted
that the issue of Treasury notes would banish gold and silver from circulation, and in another letter adds: 'In such a nation there is one and only
one resource for loans, sufficient to carry them through the expenses of
a war; and that will always be sufficient, and in the power of an honest
Government, punctual in the preservation of its faith. The fund I mean
is the mass of circulating coin.
Every one knows that, although not liter*

:

;

177
ally, it is true that

every paper dollar emitted banishes a silver one from

A nation, therefore, making its purchases and payments with

circulation.

an equal sum of coin out of circulation.
equivalent to borrowing that sum; and yet, the vendor receiving
payment in a medium as effectual as coin for his purchases or payments,
has no claim to interest. And so the nation may continue to issue its bills
as far as its wants require, and the limits of the circulation will admit.'

bills fitted for circulation, thrusts

This

is

So it will be seen that Jefferson, so far from regarding it as an evil that
coin should be banished from circulation during war, regarded it as a
great advantage ; because the Government would then be able to circu-

own notes, without interest, in place of the coin of individuals.
Treasury notes issued by the Government, he regarded as a loan from the
people, without interest, and the only available resource in time of war.

late its

He urged ample

taxation as a basis for Government paper issue, and
That during the interval between war and war, all the outstanding
paper should be called in, coin be permitted to flow in again, and hold the

adds

'

:

field of circulation until another war should require its yielding place again
to the national medium.' An essential feature of the financial plan adopted

year was the passage of the tariff and internal revenue laws. It was
of great consequence that our public debt should rest upon a solid foundation.
The property of the country, liable to taxation, amounted in 1860
to over $16,000,000,000, and Congress having ample power to tax it to the
last

amount necessary to pay all Government debts, it was agreed by all
parties that it was necessary to impose taxes upon this property, and the
profits of business based thereon, in various forms, for an amount sufficient
to pay the ordinary expenses of the Government on a peace footing, and

full

the interest on the extraordinary war debt. The ordinary expenses of
Government in time of peace do not exceed $75,000,000, and the interest on the war debt will not probably exceed during the next year the
sum of $45,000,000, while it is believed that the revenues derived from the
all

the

and internal revenue will not be less than $200,000,000, leaving $80,000,000 as a sinking fund to keep down the war debt. It is believed that
the revenue realized on the present tariff and tax law will pay ordinary
tariff

current expenses of the Government, and interest on the war debt \vhen
it reaches $2,000,000,000, which is
only half the present debt of Great
Britain.

*

*

*

**********

a full examination of the whole subject, and with a deep solicitude
for the success of the measures that may be finally adopted by Congress,
I see no way in which the ways and means can be obtained to carry on
the Government for the next eighteen months, except by a continuance
of the measures adopted at the last session, and which have so successfully
carried us through the perils of the last year, with such additions and
modifications as experience has shown to be necessary.

Upon

An

additional section has been proposed to the financial plan adopted
There is a large amount of available means in the country,
which, if it can be drawn into the national Treasury, will be of most
essential service at this time. It has been the subject of much consideration as to the best form in which it could be offered to the people to induce

last year.

them to let the Government have the money for which they have no
present use, and be allowed a fair compensation for its use during the
time it is borrowed by the Government. Interest bearing Treasury notes
are believed to be the best form in which it can be offered to the public.

178
INTEREST-BEARING TREASURY NOTES

Under

the operation of this new section, these interest-bearing Treasury
notes and the legal tender notes would be convertible and reconvertible
into each other at the will of the holder ; and as both can be paid out to
the creditors of the Government, they will soon find their way into all the
channels of business in all parts of the country. The interest-bearing
notes will be laid aside, out of circulation, better than gold as an investment, because yielding a fair rate of interest ; while the legal tender notes
will continue to circulate as money. The object of this section is to reach
the money invested in temporary loans, in all the cities, villages and towns
throughout the country, and apply it to sustain the Government at this
time.
large amount of money is now held by individuals and corporations, bearing a small rate of interest, or no interest at all, which
is on deposit in banks or in private safes and drawers,
waiting a
good opportunity for permanent investment in the purchase of stocks,
Forehanded farmers, mechanics, manmortgages, or other property.

A

ufacturers, merchants, and even retired capitalists would like some
mode of investing their surplus means at fair rates of inter-

convenient

and with a certainty that when a good opportunity is presented
make some business transaction they can have legal tender notes
returned to them to use as money.
Xotes issued at six per cent,
est,

to

and in denominations of $20, $50, $100, $200, $500, $1,000, $2,000
and $5,000 would be in a convenient form for all classes; and at this rate
of interest there is no doubt that large amounts would be drawn into the
Treasury. Savings banks, trust companies, and other places of deposit,
now overburdened with money, would, no doubt, have drawn from them
considerable amounts for investment in these interest-bearing notes.
Guardians, executors, and trustees would largely invest their money in
these Government securities. Insurance companies might invest in them,
get six per cent, interest, and be sure, in cases of loss, to get legal tender
notes with which to pay their outstanding policies. Even savings banks
and trust companies might invest a part of their funds in these notes, and
be able to respond when their depositors should call for their money.
The operations under this section would be like deposits in banks, and it
is very probable that $300,000,000 might be reached in a reasonable time.
It would be, in fact, a national savings bank, so arranged that its benefits
can be extended to all, while, at the same time, the Government would
be able to realize a large amount of money to aid in the prosecution of
the war. Some would draw out their funds from time to time, as occasions should arise for business operations, while others again would invest
in new notes issued under the authority to re-issue them and the average
amount in the Treasury would be about the same from week to week.
The average deposits in the banks in the city of Xew York are about the
same. Their weekly published statements show that there is no great
*
variation in the amount for weeks and months.
I was in favor of giving to them the highest legal sanction and the most
desirable character possible, within the power of the Government, not
interest,

;

above six per cent.

interest, in order to prevent their depreciation. It
cost so little to have given them this most desirable character
of immediate convertibility, that I strongly urged its adoption, and upon
.

would have

the same principle that I urged the legal tender clause last year. The
more desirable the notes are as an investment, the longer they would stay
out, and the higher would be their price in the market. I trust, however,

179
that, in their present shape, they will be sought after, and be a valuable
aid to the people in the payment of internal revenue, and materially assist
the Secretary in the arduous duties of furnishing the means for a vigorous
prosecution of the war.
In nearly aU the plans that have been submitted to the committee for providing

means

to
to

posed
a further

carry on the Government for the next eighteen months, it has been promore legal tender notes, if the exigencies of the service shall render

issue

issue necessary.
The Secretary of the Treasury, in submitting the
proposed by him for a loan of $900,000,000, says: 'The committee will
observe that the provision in respect to loans is very general. Under it
the Secretary will have the power to borrow money in any of the ordinary
forms, or, if exigencies require, to make additional issues of United States
notes.' I have an aversion to any considerable further issue of legal tender notes, and can only consent to it as an imperative necessity. I think
too large an issue will tend to inflate prices; but I do not see how it can
be avoided. I do not see how the soldiers are to be paid, or how the Gov*
ernment can be carried on, in any other way. I shall therefore vote for
this provision, in connection with the other provisions of the bill, as a
necessary measure to enable the Government to prosecute the war.
bill

OUR ONLY HOPE OP RESTORING THE UNION
gun was

IS

IN MILITARY SUCCESS.

on Fort Sumter, my conviction has
been deep and abiding that this was to be a long, expensive, bloody,
and desperate conflict and that it would be very difficult to determine in
advance what results would flow from such a deadly encounter. I have
never for a moment doubted that the leading conspirators meant to establish and maintain a separate government, and a total separation from the
free States. This has been their deliberate purpose from the beginning.
Nearly two years of concerted action, embittered by the most deadly con*
flict with the armed power of this Government, has consolidated their
strength. They have organized a form of civil government, under a
constitution, with Jefferson Davis as President for six years, who is surrounded by a cabinet, congress, judiciary, and all other officers necessary
to keep it in full operation. This rebel government has organized and
maintained a powerful army, which has been able thus far to successfully
repulse every attempt that has been made on our part to take their capilol,
distant only one hundred and twenty-five miles from the Hall in whioh
Sir,

since the first

fired

;

we

are

now

sitting.

never believed, and do not now believe, that the cabal at Kiehmond, the only responsible power to which overtures of peace can be
made, will listen to any offers of compromise, however liberal, which will
induce them to throw up their present de facto government, come back
into the Union, and submit to the constitutional Government over which
Abraham Lincoln presides, or any other President that can be elected by
the loyal people of the United States. Jefferson Davis and all the high
officers about him are men of high political aspirations.
Inordinate ambition, and a desire to rule, were the chief motives that prompted them to
Sir, I

rebel against the Constitution and Government they had sworn to support.
Those who suppose that Mr. Davis and his co-conspirators will voluntarily
negotiate to surrender the power they now hold, have but little apprecia'
tion of the motives that stimulate them to so desperate and determined

men are in earnest, and will fight to the death.
of ability, fighting for power, for empire, and will neither
compromise nor surrender unless they are compelled to do so at the point
action.

They

are

These desperate

men

180
of the bayonet, pressed forward by an overwhelming and crushing force.
They must be whipped, badly whipped, before they will compromise or
surrender. Any expectation to the contrary is not only fallacious, but
mischievous in its consequences, because it divides and weakens the people
in the loyal States, and prolongs the war.
Sir, I have no expectation that this rebellion will be crushed in many
years unless there is a more united and a more determined effort on the
part of the people in the northern States. The great fact to be ascertained
by all doubting men is will Jefferson Davis compromise on any terms
short of a separation? Will he voluntarily surrender the power he now
holds ? Will he receive any proposal for peace except on the terms of
dividing the old Union, and a recognition of his government over the
southern half. For myself, I have no desire to compromise, and no proposals to make to Mr. Davis or any of his cabinet ; but those who do wish
to make peace with the rebel government ought to submit their propositions at once, so that all compromisers may know what to do. If no compromise can be made with the rebel government, short of dissolving the
Union, it should be known at the earliest moment possible, so that all
doubters and cavilers may decide immediately what they will do. The
daily expenses of the war are enormous. The public debt is running up
at a fearful rate. This war ought not to be procrastinated a day longer
by divisions at home. This state of things cannot be continued for any
considerable length of time, without entailing a public debt so large that
it will burden present and future generations.
The best blood of the
nation flows freely. Large numbers are killed in battle, but more die
from exposure and disease than in any other way.
Sir, all this blood and treasure is given freely to crush the rebellion and
maintain the Union. Why have we not been more successful? It is
because we need more earnestness, greater determination manifested,
better discipline in the army, and a closer unity of action. Unless these
essential requisites can be had, and that speedily, I have very little hope
.

of crushing the rebellion. The way to secure a permanent peace is, first
of all, to annihilate the rebel forces. The army between Washington and
Richmond must be beaten. The power of the rebel government is in
their army. If they can maintain their military strength, their government will be perpetuated. If we cannot achieve decisive victories over

the rebel forces, the

maintained, and

it

Union is lost. The Union is priceless ; it ought to be
will be maintained if all citizens rise above party and

perform their whole duty to the country. The people, our commanding
generals, Congress, and the Executive, ought all, without regard to party
distinctions, to rouse up to the magnitude and perils of the crisis, and by
unity of action put forth an earnest and determined effort to crush the rebel
armies. No compromise can be made or ought to be made. Our only
hope is in military success. This is the only way in which we can maintain our finances, and restore the national Union.

$100,000,000 LEGAL TENDER NOTES REQUIRED TO PAY THE
AND NAVY.

ARMY

There was a large amount due to the army and navy, and complaints were being made in consequence of the delay in making
payments. The subject was discussed by the Military CommitA resolution passed the House as
tees of the Senate and House.
follows

:

181

"WHEREAS, Grevious

delays happen in the payment of money due
if any, and what, legislation

soldiers; therefore, in order to ascertain
may be necessary to remedy such delays,

Resolved, That the Secretary of the Treasury be requested to furnish to
this House the reasons
requisitions of paymasters in the army are

why

not promptly filled."

The Secretary made answer as follows:
No one can feel a deeper regret than the Secretary that a single Amer-

"

ican soldier lacks a single dollar of his pay, and no effort of his has been
to prevent such a condition. It is not in his power, however, to

wanting

demands upon the Treasury beyond the pos*
*
*
*
of provision for them under existing legislation."
"The Secretary, solicitous to regulate his action by the spirit as well as
the letter of the legislation of Congress, did not consider himself at
liberty to make sales of the 5-20 bonds below the market value and sales
arrest the accumulation of

sibility

;

except below were impracticable."

SPEECH OF MR. GURLEY.
Mr. GURLEY, of Ohio, spoke of the great importance of our
financial measures.

"The Government which can

raise the largest

amount of money must,

in the end, triumph ; that a large army was essential to success, but the
most essential thing was money or money means. He did not agree with

the Secretary in several things contained in his reports; the banking
scheme, which the Secretary admits would not afford any immediate relief,
should be rejected; we need a sensible, practicable plan that will furnish
immediate means to pay the army and navy. He insisted that Congress,
by the act of February 25, 1862, authorized the Secretary to sell $500,000,000 six per cent. 5-20 bonds at 'the market value thereof,' which he had
not done, as intended by Congress, and the consequence was that the soldiers
and sailors were not paid, as they ought to have been before this time.
Of course we do not call in question the motives of the Secretary, or deny

good intentions, but when the Secretary says, in his reply to the resolution of the House, that he had no authority, he was evidently mistaken

his

The words 'market value do not mean
par value, nor at any specified time or sum. The market value was the
price they would bring when offered in the market. There has been no business day or week since the law was passed, when any of the many agents
of the Secretary in New York could not have placed one million, or
several millions, in the market, and sold them somewhere near par, to
in his construction of the law.

raise

money

to

'

pay the army and navy."

A

joint resolution was proposed that provision ought to be
made immediately by the Treasury Department to pay the sums
due the soldiers and sailors, and that a preference should In-

given to this class of creditors.
Secretar}' Chase was consulted
subject, and in a letter dated January 7, 1863, addressed

on the

to the Finance Committee, he stated that the amount then due
to the army and navy was about $60,000,000, and that provision
oitght to be

made

for

immediate payment.

He thought

the tern-

182
porary measure proposed might answer for present purposes, and
concluded his letter as follows
:

"It should be regarded, however, only as an expedient for an emergency.
JVb measure, in my judgment, will meet the necessities of the occasion, and prove
adequate to the provision of the great sums required for the suppression of the
rebellion, which does not include a firm support to public credit through the estab-

lishment of a uniform national circulation,

secured by bonds of the United

The joint resolution and amendment are herewith
With great respect, yours, etc.,

States.

Hon. WILLIAM P. FESSENDEN,
Chairman Com. on Finance, U.

returned.

S. P. CHASE,
Secretary of the Treasury.

S.

Senate."

After some disagreement between the Finance Committee of
the Senate and the Committee of "Ways and Means of the House
as to the right of the Senate to initiate a bill of this kind, a joint
resolution was passed by the House and concurred in by the Sen-

by yeas 38, nays 2 as follows
Yeas Messrs. Anthony, Arnold, Browning, Chandler, Clark,

ate,

:

;

Collamer,

Davis,

Dixon,

Doolittle,

Fessenden, Foot,

Hale, Harding, Harlan, Harris, Henderson, Howard,

Lane

Lane

Foster,

Howe, King,

Latham, McDougall, Merrill,
Nesmith, Rice, Sherman, Sumner, Ten Eyck, Trumbull,
Wade, Wilkinson, Willey, Wilmot, Wilson (of Massachusetts),
(of Indiana),

Wilson

(of Missouri)

(of Kansas),

and Wright

38.

Kays Messrs. Powell and Saulsbury 2.
So the joint resolution was passed, and is as follows
[PUBLIC RESOLUTION

No.

:

4.]

provide for the immediate payment of the
navy of the United States.

"Joint Resolution

to

army and

WHEKEAS, It is deemed expedient to make immediate provision for the
payment of the army and navy therefore
Be it resolved by the Senate and House of JRejwesentatives of the United
;

States of America, in Congress assembled,

and he

That the Secretary of the Treas-

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 expedient, not bearing interest, payable to bearer on demand,
and of such denominations, not less than one dollar, as he may prescribe,
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 for duties on imports and inter"
est on the public debt and the notes so issued shall be part of the amount

ury

be,

is

;

provided for in any bill now pending for the issue of Treasury notes, or
that may be passed hereafter by this Congress.

Approved January

17,

1863."

183

MESSAGE OF PRESIDENT LINCOLN.
The^Speaker laid before the House the following message, in
writing, from the President of the United States
" To the Senate and House
of Representatives:

:

I have signed the joint resolution to provide for the immediate payment
of the army and navy of the United States, passed by the House of Representatives on the 14th, and by the Senate on the 15th inst.
The joint resolution is a simple authority, amounting, however, under
existing circumstances, to a direction to the Secretary of the Treasury to
make an additional issue of $100,000,000 in United States notes, if so much
money is needed, for the payment of the army and navy.

My

approval

afforded for the

and our sailors.
While giving

is

given in order that every possible facility may be
all arrears of pay due to our soldiers

prompt discharge of

this approval, however, I think it my duty to express
sincere regret that it has been found necessary to authorize so large an
additional issue of United States notes, when this circulation and that of
the suspended banks together have become already so redundant as to

my

increase prices beyond real values, thereby augmenting the cost of living
to the injury of labor, and the cost of supplies to the injury of the whole

country.
It seems very plain that continued issues of United States notes, without
any check to the issues of suspended banks, and without adequate provision for the raising of money by loans, and for funding the issues so as to
keep them within due limits, must soon produce disastrous consequences.
And this matter appears to me so important that I feel bound to avail

myself of this occasion to ask the special attention of Congress to it.
That Congress has power to regulate the currency of the country can hardly
admit of a doubt; and that a judicious measure to prevent the deterioration

by a reasonable taxation of bank circulation, or otherwise,
needed, seems equally clear. Independently of this general consideration, it would be unjust to the people at large to exempt banks, enjoying
the special privilege of circulation, from their just proportion of the public
burdens.
In order to raise money by loans most easily and cheaply, it is clearly
necessary to give every possible support to the public credit. To that
end a uniform currency, in which taxes, subscriptions and loans, and all
other ordinary public dues, as well as all private dues may be paid, is
almost, if not quite, indispensable. Such a currency can be furnished by
banking associations, organized under a general act of Congress, as suggested in my message at the beginning of the present session. The
security of this circulation, by the pledge of United States bonds, as
therein suggested, would still further facilitate loans by increasing the
present and causing a future demand for such bonds.
In view of the actual financial embarrassments of the Government, and
of the greater embarrassments sure to come, if the necessary means of
relief be not afforded, I feel that I should not perform my duty by a simple
announcement of my approval of the joint resolution, which proposes
relief only by increasing circulation, without expressing my earnest desire
that measures, such in substance as those I have just referred to, may
receive the early sanction of Congress. By such measures, in my opinion,
will payment bo most certainly secured, not only to the army and navy,
of this currency

is

184
but to

made

all

honest creditors of the Government, and satisfactory provision
demands on the Treasury.

for future

January

ABRAHAM LINCOLN."

17, 1803.

SPEECH OF MR. MORRILL.
" Mr.

MORRILL, of Vermont, said we had often been called upon during
Congress to furnish means to carry on the war. The figures now are
larger than ever before, being $900,000,000, and if the war should be prolonged to July 1, 1864, it is believed not to be too much. He was constrained now to give his vote for this measure, although such as in the
outset he did not support, and never should have countenanced as an
original proposition, because he knew of no other so efficient for immediate relief to the Treasury, and so safe to adopt. He should hold his
opposition to legal tender in abeyance, so far as to allow money for the
army and navy to be raised in this way, if it could be raised in no other.
this

He was

willing to restrain excessive issues of State Bank circulation by a
it best at this time to engage in a struggle
for its extinction.
He was opposed to the national bank bill which he said was urged with
great zeal and ability by the Secretary of the Treasury, and gave his

proper tax, but did not think

reasons at length why, in his opinion, it ought not to pass. The new
plan, fully executed, would obtain very little if any more aid from the
banks than is already secured, and the Treasury at last, would find itself
The
in actual possession of no more than a new dollar for an old one.
Secretary admits in his annual report that little direct aid is, however, to be
expected from this plan during the present, nor very much, perhaps, during, the
'

next yearS "

MR. WARD'S SPEECH.

Mr. WARD, of New York, made an elaborate speech on the
Finances and the currencjr.

"The condition of our financial affairs and the regulation of the circulamedium are regarded with much anxiety by the people of this country, from motives of their own personal interest, and yet more from

ting

patriotic devotion to the cause of unity in our great struggle for national
existence. He was desirous of supporting the Government of his country
in a vigorous prosecution of the war, but was opposed to the legal tender

earnest desire is, and always has been,
principle and voted against it.
to furnish the Government with every resource and power necessary to
solicitude for the re-establishthe suppression of the rebellion. From
ment of the Republic, I desire to avert any increase of such paper money,

My

my

as is now in use, knowing how injuriously it affects public confidence,
enlarges expenditures by raising prices, lulls the public mind into false
security, and lessens the vigilance which prevents frauds. He expressed
himself in favor of a commission composed of the most wise and distinguished bankers and commercial men in co-operation with the Secretary
to inquire into the best method of arranging our financial affairs."

SPEECH OF MR. WALKER.
Mr.

AM AS A WALKER,

of Massachusetts,

made a

speech in favor of the general provisions of the

"He

well considered

bill.

maintained that the vast expenditures involved in the prosecution

185
war could not be raised except upon the credit of the Government.
ordinary means of raising revenue were sufficient to meet a great
emergency like the present. The bill before us proposes measures of
finance, currency and taxation. 1. An issue of bonds. 2. An issue of

of the

No

interest-bearing circulating notes, receivable for all Government dues,
except customs. 3. An issue of legal tender notes, known in common
parlance as greenbacks. 4. The issue of fractional parts of a dollar, to
take the place of postal currency now in use. 5. Provides for deposits of
bullion in the public Treasury ad libitum. 6. To tax the banks of circulation.
7.
proposition that the public funds may be deposited in these

A

same banks,

at the discretion of the Secretary of the Treasury.

He

did not approve of paying interest in coin on the bonds, it has
already exerted a pernicious influence on the public funds. He was in
favor of the greenback circulation, and in favor of a six per cent, tax on
State bank circulation, in order to drive it out, so as to give place to the
national circulation. He urged adequate taxation to sustain the public
credit, and thought that these measures had become a stern military
necessity, and indispensable to a successful prosecution of the war.

On the 16th inst. Mr. Hooper offered a substitute for the bill,
which was ordered to be printed. This substitute will be found
printed at length in the Cong. Globe,

p. 382.

After a long discussion, in which different members of the
House participated, a vote was taken on the 23d inst. by tellers,

Committee of the Whole, on Mr. Hooper's substitute ayes
noes 67 so the substitute was lost. Several minor amendments were however made to the original bill, and on the 26th
inst. a vote was taken in the House on the substitute offered by
Mr. Stevens, and it was decided in the negative yeas 37, nays
The bill as amended was then passed without a division,
91.
and sent to the Senate for concurrence.

in

32,

;

On

the 13th of February the

the Senate by the following vote

bill,

after being

amended, passed

:

Yeas Messrs. Anthony, Arnold, Chandler, Clark, Collamer,
Cowan, Davis, Dixon, Doolittle, Fessenden, Foot, Foster, Grimes,
Harlan, Harris, Henderson, Hicks, Howard, Howe, King, Lane

Lane

Pomeroy, HUT,
Ten Eyck, Wade, Wilkinson and Wilson (of
Sherman, Sumner,

(of Indiana),

(of Kansas), Morrill, Ncsmith,

Massachusetts) 32.
Nays Messrs. Carlisle, Powell, Richardson and Wall

So the

bill

4.

was passed.

Three several Conference Committees were appointed on the
A compromise was
disagreeing votes between the two Houses.
finally

the

made on

the section taxing State bank circulation.
finally agreed to, and the bill passed.

amendments were

All

186
SYNOPSIS OF $900,000,000 LOAN ACT.
* '

The

Ways and Means for
Approved March 3, 1863."

act to provide

ment.

the

support of the Govern-

The first section authorized a loan of $300,000,000 for the
current year, and $600,000,000 for the then next fiscal year,
then
and to issue bonds therefor at not less than ten nor more than
1.

forty years, at not exceeding six per cent, interest, in coin, not
exceeding in all $900,000,000.
2.

By

section second of the

same

act the Secretary, in lieu of

an equal amount of said bonds, was authorized to issue $400,000,000 of Treasury notes, bearing interest not exceeding six per
cent., payable in lawful money, which notes, payable at periods
expressed on their face, might be made a

legal tender at their face

value.
3.

By

the third section $150,000,000 in amount of United
made a legal tender, might be issued. The restric^

States notes,

tion in the sale of bonds to 'market value

1

was repealed.

'And

the

holders of United States notes issued under former acts, shall present the

same for

the purpose of exchanging them for bonds as therein provided,
on or before the first of July, 1863, and thereafter the right to exchange
the same shall cease and determine.
'

This section imposed a tax of one per cent, each half year,
on a graduated scale of State bank circulation, according to the
7.

capital stock of each bank.

BANK

Qn

BILL PASSED.

the 2d February, 1863, the National Currency

Bank

bill,

as

prepared by Mr. Spaulding, in December, 1861, after being altered
and amended in several important particulars, was reported from
the Finance Committee to the Senate by John Sherman of Ohio.
The debate upon it was opened on the 9th, and continued from

day to day until the 12th, when
vote

Yeas

was passed by the following

Messrs. Anthony, Arnold, Chandler,

Fessenden, Foster,

Lane

it

yeas 23, nays 21, as follows:

Harding,

Harlan,

Harris,

(of Kansas), Morrill, Nesmith, Poineroy,

Clark,

Doolittle,

Howard, Howe,
Sherman, Sumner,
(of Massa- %

Ten Eyck, Wade, Wilkinson, Wilmot, and Wilson
chusetts)

Nays

23.

*

-y -

Messrs. Carlisle, Collamer, Cowan, Davis, Dixon, Foot,

Grimes, Henderson, Hicks, Kennedy, King, Latham, McDougal,

187
Powell, Rice, Richardson, Saulsbury, Trumbull, Turpie, Wall and

Wilson

(of Missouri)

So the

The

bill

bill

On

13th.

21.

was passed.

passed the Senate was sent to the House on the
motion of Mr. Hooper it was ordered to be printed,
as

it

but was not referred to the Committee of

Ways and Means.

It

remained on the Speaker's table until the 19th, when it was taken
up for consideration in the House. A motion to refer it to the

Committee of the Whole having been defeated, Mr. Spaulding
opened the debate in a lengthy speech in favor of the bill, which
be found in the Appendix. The debate continued until the
20th, when the bill was passed without amendment by the follow-

will

ing vote

yeas 78, nays 64, as follows:

Yeas Messrs. Aldrich, Alley, Ashley, Babbitt, Beaman, Bingham, Jacob B. Blair, Blake, Buffinton, Calvert, Campbell, Casey,
Chamberlain, Clements, Colfax, Conway, Covode, Cutler, Davis,
Delano, Dunn, Edgerton, Eliot, Ely, Fenton, Samuel C. Fessenden, Thomas A. D. Fessenden, Fisher, Frank, Goodwin, Granger,
Halm, Haight, Hickman, Hooper, Hutchins, Julian, Kelley, Francis W. Kellogg, William Kellogg, Lansing, Leary, Lovejoy, Law,
Mclndoe, McKean, McPherson, Marston, Maynard, Moorhead,

Anson

P. Morrill, Noell, Olin, Patton,

Timothy G. Phelps,

Potter,

Alexander H. Rice, John H. Rice, Sargent, Sedgwick, Segar,
Shanks, Shellabarger, Sherman, Sloan, Spaulding, Stevens, TrimTrowbridge, Van Horn, Van Wyck, Verree, Wall, Wallace,
Washburne, Albert S. White, Windom and Worcester 78.
Nays Messrs. William Allen, Ancona, Baily, Baker, Baxter,

ble,

Cobb, Frederick A. Conkling, Roscoe Conkling, Cox,
Cravens, Crittenden, Dawes, Edwards, English, Gooch, Grider,

Biddle,

Harding,

Hall,

Gurley,

Harrison,

Holman, Horton, Johnson,

Kerrigan, Knapp, Law, Lazear, Loomis, Mallory, May, Menzies,
Justin S. Morrill, Morris, Nixon, Noble, Norton, Nugen, Odell,

Pendleton, Perry, Pike, Pomeroy, Porter, Price, Robinson, James
S. Rollins, Sheffield, Shiel, John B. Steele, William G. Steele,

Benjamin F. Thomas, Francis Thomas, Vallandigham, Wadsworth, Wheeler, Whaley, Chilton A. White, Wick64.
liffe, Wilson, Woodruff and Wright
Stiles,

Stratton,

the

bill

was passed and approved by President Lincoln,

25, 1863.

No

National Bank currency was issued until about the
After that time it was gradually issued.
January, 1864.

first

On

of

the

188
first of July, 1864, the sum of $25,825,695 had been
issued; and
on the 22d of April, 1865, shortly after the surrender of General
Lee, the whole amount of National Bank circulation issued to that
It will therefore be seen that comtime, was only $146,927,975.

paratively little direct aid was realized from this currency until
Att the channels of circulation were well
after the close of the war.
filled

up with

the

greenback notes, compound interest notes, and

certifi-

of indebtedness, to the amount of over $700,000,000, before the
National Bank act got fairly into operation.
TJiis Bank issue was in

cates

fact

an

additional inflation of the currency.

THE RIGHT TO CONVERT NOTES INTO BONDS ABROGATED.

The

first legal tender notes were issued bearing date March
and on the back of them was printed these words:
1862,

10,

"This note is a legal tender for all debts, public and private, except
duties on imports and interest on the public debt, and is exchangeable for
U. 8. six per cent, bonds, redeemable at the pleasure of the United States after
five

years."

The

right to exchange these notes at par for six per cent, bonds
was distinctly authorized by the second section of the legal tender act, and was in the nature of a contract made by the Govern-

ment with the holders of the

notes.

It

was inserted

as a just

and equitable provision for the benefit of those persons who
should be compelled, by the legal tender clause, to take the notes,
by giving them, at any time, the privilege of converting them
into a six per cent. bond.

It was, in effect,

a forced loan, but

the right of immediately returning them to the Government for
gold bonds, divested the forced character of the transaction of

any material hardship.

It also

had a tendency

to prevent an}'

great inflation, for the reason[that as soon as this currency became
redundant in the hands of the people, and not bearing interest,

they would invest
of interest.

it

in the six per cent,

bonds to prevent any

loss

This right to exchange the notes for bonds was, at the request
of Secretary Chase, taken away by the third section of the above
act after July

1,

1863.

It is true that the Secretary

had

still

the

discretionary power to receive the notes at par for bonds, but it
never seemed to be quite right to change the law while any of
the legal tender notes were outstanding with the above endorsement upon them.

After passing the $900,000,000 loan act and the national currency bank bill, authorizing $300,000,000 of national currency,

189
Congress adjourned on the 4th of March, 1863, leaving the Secretary of the Treasury clothed with most extraordinary discretionary power to carry on the financial affairs of the Government,
In April and May it became apparent that the paper currency

expanded to enable the Secretary to float the 5-20
bonds authorized, to the amount of $500,000,000, by the first
legal tender act, which, up to that time, had been taken only to
was

sufficiently

a very limited amount.

JAY COOKE, an enterprising banker at Philadelphia, was employed as General Agent by Secretary Chase to negotiate these
He advertised very extensively, and employed subbonds.
in all the principal cities and towns in all the loyal States.
agents
The editors of newspapers and others were enlisted to bring the
advantages and importance of this loan before the people, in order
to make it a great popular loan, to be taken by them in large and
Mr. Cooke succeeded admirsmall sums in all the lo}^al States.
The loan became very popular, and
in this undertaking.
ably
was taken extensively by farmers, mechanics and laboring people
in all the towns, villages and cities all over the country.
By the
amount of $168,880,250 of these bonds
first of July, 1863, the
were taken; and by the first of October following $278,511,500
had been taken up; and by the 21st of January following the
whole sum of $500,000,000 had been taken at par, and the rush
1

was so great near the closing out of the loan, that nearty $11,000,000 extra had been subscribed and paid for before notice
could be given to sub-agents that the amount authorized by that
act

had been taken

this extra

sum

up.

Congress, however, soon after authorized

to be issued.

This successful funding of 5-20 six per cent, bonds showed
conclusively that it was not necessary to inflate the currency any

means to successfully prosecute the
per cent, bonds would furnish sufficient inducement
for people to take them at the rate of from $1,500,000 to $2,000,000 a day, Which was about the amount required to pay the dnily
further in order to raise the

War.

The

six

expenses of the Government. It looked as if the limit of p:ij idmoney expansion had been reached that the greenback currency
would not further depreciate below the standard of gold and
;

:

that the price of commodities would not continue to advance.

MISTAKE OF THE TREASURY DEPARTMENT.

The policy of funding into six per cent, bonds, which had been
successful during the last eight months, was changed to five per

190
cent. 10-40 bonds, which proved unsuccessful, and
funding to any
considerable extent was arrested for several months.
The people
were not satisfied with this change made by the Secretary in the

The loan became unpopular, and only $73,337,750 was taken between the 21st of January, 1864, and the 1st of
July following, more than five months, and this sum was taken
rate of interest.

mostly by bankers, because the

five

per cent, bonds could be used
The Secretary had the

in the organization of national banks.

discretionary power, under the $900,000,000 loan act, to continue
the funding at six per cent. but he desired to lower the rate of
interest, and believed that he could successfully negotiate the five
,

per cent, bonds, which proved to be a mistake.
Congress passed an act supplementary to the $900,000,000 loan
This
act, giving still further discretionary power to the Secretary.
act

was approved March 3, 1864, and is .the law under which the
five per cent, bonds above mentioned were issued.
It

10-40

authorized the Secretary to issue bonds not exceeding $200.000,March 1, 1864, or any subsequent date, redeemable at the pleasure of the Government after any period not less

000, bearing date

and payable at any period not more than forty
from date in coin, bearing interest not exceeding six per cent.
years
per annum, payable on bonds not over $100, annually, and on all
other bonds semi-annually, in coin.
than

five years,

IMPOLICY AT THIS TIME OF THE 10-40 BONDS
E.

G.

"

To Morris Ketchum, Esq., Banker,

Dear

Sir

When

I

TWO LETTERS BY

SPAULDING ON THIS SUBJECT.

met you

New
in

BUFFALO, March

19, 18G4.

York:

New York

in

December

last,

you

expressed the apprehension that the rate of interest on government securithat there would be a further
ties would be reduced to five per cent.
;

and consequently, that gold would advance,
and the price of labor and commodities would be greatly increased. The
apprehensions which you then expressed are now being realized, and the
government and people are alike feeling its evil effects. By reducing the
rate of interest from six to five per cent, on bonds and notes issued to
redeem greenback currency printed and paid out by the government, one
per cent, interest is apparently saved to the government on its notes and
bonds, but all the flour, beef, pork, and other supplies for the army and
navy have advanced ten to fifteen per cent., thereby making it necessary
for the government to pay ten to fifteen per cent, more for all supplies
purchased, while it saves only one per cent, on its notes and bonds.
Five per cent, bonds, running from five to twenty years, can, no doubt,
be floated on the market nominally at par, if the currency is sufficiently
diluted and the volume increased large enough for that purpose and so
may four per cent, bonds be carried on the surface, if the currency is
inflation of the currency

;

,

;

191
printed and paid out in such a large volume as to still further dilute the
government pnpcr already afloat. But if this should be successfully carried out, and four per cent, bonds be negotiated at par in consequence of a
1'iirthrr expansion of the currency, gold would advance to 90 or 100 per
cent., and all commodities for the army and navy would advance in the
What would be saved in the rate of interest would be
-a nc proportion.
lost fourfold on the enhanced price of all supplies purchased to carry
i

on the war.
Five per cent, interest, payable in currency, which has been the rate
the twenty-first of January last, for redeeming legal tender notes, is
a most exhilarating atmosphere to be reveled in by speculators and jobwho are engaged
bers, but very unsatisfactory to men of steady purposes,
siiu-r

in

With such a
consumed by laborers advance in price, rents
laborers and common laborers combine and strike for
order to be able to pay for the enhanced prices of living

manufactures, commerce, and other legitimate pursuits.
all articles

money market,

increase, skilled

higher wages, in
caused by the excess of paper issue.

illustrate what I desire to say further on this subject, you
allow me to make a brief review of the laws of Congress
bearing upon the increased price of labor and commodities, and the
advance in the price of gold. Gold and silver, as you well know, are the
standard of value in conducting the commerce of all the civilized nations
of the world. The commerce of the United States is still carried on with
all foreign nations with gold as the standard or measure of value.

In order to

will, I trust,

The laws of Congress, passed in 1792, fixed the gold standard in the
United States, for the ten dollar eagle, at two hundred and forty-seven
grains and four-eighths of a grain of pure gold, or two hundred and seventy-five grains of standard gold, and half that quantity for the half eagle.
The law of Congress, passed in 1837, changed the gold standard established
in 1792, by providing that the standard of both gold and silver should be
such, that of one thousand parts by weight, nine hundred parts should be
pure metal and one hundred of alloy that the alloy of silver coins should
be of copper, and the alloy of gold coins should be of copper and silver.
That the weight of the gold eagle should be two hundred and fifty-eight
and twenty-nine grains, and
grains, that of the half eagle one hundred
that the eagle should be a legal tender for ten dollars, and the half eagle
for five dollars. This was the standard value up to the time when the legal
;

tender note

The

bill

was passed.

last loan of $50,000,000,

made by

the government before the suspen-

sion of specie payments, was on the issue of six per cent, twenty year
bonds at 89^, being a discount of 10% per cent., and a loss to the Treasury
of about $5,338,769. The agreement for this loan was made with the associated banks of
York, Boston and Philadelphia, in the fall of 1861*

Kew

specie basis, and in the efforts made by the banks to pay
the gold on this loan into the Sub-Treasury, it brought on such a stringency in the money market as to cause a general suspension of specie
payments on the 31st of December, 1861, which made it exceedingly difficult for the banks to pay the last instalments to complete the loan. Xo
further loans could be negotiated except at a still greater discount ; indeed,
or quite impossible to make any further loans on a
it was deemed

It

was made on a

nearly

was then
specie basis, unless at the most ruinous rates of discount. There
due to the army and navy, and for supplies, not less than $100,000,000, and
at least $200,000,000 more would be required within six months. The

192
immediate action was most pressing and urgent. We were
grappling with a most gigantic rebellion. We were in a most extraordinary crisis, and extraordinary measures had to be resorted to, in order to
save the government and preserve our nationality. In this great emergency the original legal tender note bill, introduced by me as a necessary
necessity for

war measure, and which, after being amended and passed, was approved
by the President February 25th, 1862, changed the standard of value, not
with the world at large, but within the United States, by authorizing the
Secretary of the Treasury to issue $150,000,000 of United States notes to
circulate as currency, making them lawful money and a legal tender for
all debts, public and private, and providing for their redemption at all
times at the Treasury Department in five-twenty six per cent, bonds,
interest payable semi-annually in coin ; and further authorizing the issue
of $500,000,000 of these bonds for that purpose. This was not the issue of
an irredeemable paper currency. There was a fixed standard and measure
of value for the redemption of all these legal tender notes as they should
be issued and re-issued from time to time. That standard was five-twenty
six per cent, bonds, principal and interest payable in gold, whatever might
be their value. Every person who should receive these notes voluntarily,
or by compulsion, knew exactly what he could do with them. He knew
that the laws of Congress provided that he should have gold bearing bonds
for all the notes taken by him. The redemption in this case was not gold
on demand as formerly, but six per cent, interest in gold every six months,
and the principal payable in gold within twenty years. This was the
standard of value fixed by the legal tender note bill. It was in effect a
forced loan from the people to the government, but at a fair rate of interest
for both the lender and the borrower.
This was a radical change in the standard or measure of value within
the United States, but it was a fixed standard established by law, and every
business man could act upon it, and shape all his contracts and business

transactions accordingly.
The act of July llth, 18G2, authorized a further issue of $150,000,000 of
legal tender notes, and requiring their redemption by the government at
all times, on demand, in the 5.20 six per cent, bonds; still leaving the
standard of value of legal tender notes by providing for their conversion

any time into six per cent. United States bonds, principal and interest
payable in gold. Although this was in effect a forced loan from the
people, it was so fair and equitable in its terms, the peril of the country so
great, and the object to be attained in crushing the rebellion so important,
that no loyal citizen could object to it. There was no very great danger
that the currency would become excessively inflated so long as every
person holding greenbacks, not bearing interest, could exchange them
at his own will into gold-bearing bonds at six per cent, interest per
at

annum.
In the remarks which I made in the House on the 17th of June, 1862, in
favor of this additional issue of legal tender notes, I said that I never
have been, and I trust I never shall be, unnecessarily an advocate for the
creation of an unsound or an inflated currency; but, sir, I have long ago
resolved, since this savage war has been forced upon us, to do whatever
*

was necessary, and which I might lawfully do, to crush out the traitors
and annihilate their armies. This cannot be done without the sinews of
war.' Your army and navy must be supplied with all the terrible armament necessary to crush the enemy. Tour sick, wounded and famishing
soldiers must all be supplied with hospitals, medical attendance, and all
'

193
necessaries and conveniences to make them comfortable. This is a plain
duty which we cannot any of us fail to perform. If, in the performance of
this duty, it becomes necessary to authorize a further issue of United
States notes, I shall not hesitate to give my vote for it. I a in not in favor
of increasing the issue of them beyond the imperative necessities of the
government to sustain the army and navy. I much prefer to have our six
per cent, bonds issued on permanent loans. I would like to see the Secre-

tary of the Treasury borrow at par all the money he can on the six per
cent, bonds heretofore authorized to be issued.

When money can be

obtained at par on six per cent, bonds,

I

would

prefer to have that done to the issuing a very large amount of legal tender
notes. Too large an issue of demand notes, to circulate as money, will no
doubt lead to an expansion which will inflate prices, stimulate undue
speculations, and ultimately produce a reaction that will derange the

whole business of the country. This is to be avoided if possible. I cannot
therefore, advocate any greater issue of demand notes than the absolute
necessities of the government requires to carry on the war with vigor. I

am disposed to give the Secretary power to issue the additional $150,000,000 United States notes asked for by him ; but, at the same time, I feel the
importance of having this power exercised discreetly, and I trust that he
will not issue, or pay them out at all, when money can be obtained at par
on our six per cent, bonds. I do not understand that the Secretary intends

have them all issued and put into circulation at any one time ; on the
contrary, I believe he has no such intention. He wants the power to issue
and use them if necessary, but not otherwise. When he can obtain a sufficient amount of money at par, on six per cent, bonds, or by temporary
deposits in the Treasury, there will be no necessity for their issue, and the

to

Secretary assures us in his letter that no further issues of notes will be
made when that can be done ; and, besides, the bill provides for this retaining in his own hands legal tender notes equal to one-third of the temporary deposits that may be in the Treasury.'

The government was

carried on smoothly

and the war prosecuted

vigorously under this system up to January 21, 1864, when the 5-20 six
per cent, bonds authorized by the act of 25th of February, 1862. were
exhausted. In the mean time, the standard of value for the redemption
of greenbacks had been changed, which is the principal cause of the ^yresent
advance in the price of gold and other commodities and services, as I will now
proceed

to

show.

act of the 3d of March, 1863, to provide ways and means for the
support of the government, commonly called the $900,000,000 loan bill, so

The

modified the legal tender note bill as to leave it in the discretion of the
Secretary of the Treasury to fix the time and manner of issuing the bonds
or notes, and the rate of interest they should bear under the act. It gives
him the power to issue them at six per cent., five per cent., or even at a
lower rate of interest if he deems advisable but under the modification of
the act, there is no longer any standard of value fixed by law. It rests with
;

the Secretary to say, from time to time, what the rate of interest shall be.
He also has the power to issue and re-issue legal tender notes on demand
and on time in sufficient volume to float five per cent., and even four per

bonds and notes, if he shall deem it advisable to do so. Xo man can
regulate his contracts or business aftairs with any certainty. No person,
when he takes legal tender greenback currency, can fix in his own mind
what is its real value. It is no longer convertible at the will of the holder
cent,

194
into United States six per cent, bonds, nor is there any provision in the
law which compels the government to redeem them in any kind of bonds,
or in any other way except for dues to the government. It has, however, been the practice of the Treasury Department during the past two
months to redeem legal tender greenbacks, not bearing interest, by
exchanging for them one and two years Treasury notes bearing five per
cent, interest, both principal and interest payable in currency.
I did not, at the last session of Congress, think it wise to change the
standard of value fixed in the legal tender note bill. 1 thought it better
to issue and pay out to the army and navy, and other creditors of the
Government, an amount of greenbacks sufficient to float, easily, the fivetwenty six per cent, bonds, but no more. I believed seven and 3-10 per
cent, interest too high a rate ; but I deemed it fair and just that on forced
loans of this kind that the Government should pay six per cent., and that
the war should be prosecuted until the rebellion should be crushed, on
the basis of six per cent, interest on all the funded debt to accomplish
that result. I thought it better for the Government and the people that
there should be that stability attached to business transactions which can
only be fully realized by a public law establishing the measure of value.
In the remarks which I made in the House on the 12th of January, 1863,
I said, that Congress, by its legislation at the last session, has, to a considerable extent, changed the standard of value for all business operations
with the United States. The standard of value fixed by Congress is legal
tender Treasury notes, convertible at any time into United States speciepaying bonds, bearing interest at the rate of six per centum per annum,
payable half-yearly in coin, based upon adequate taxation upon the entire
property of the country. Legal tender notes constitute the national cur*

rency

now

all loans,

per

established by law. All exchanges of property, all contracts, and
are based upon the value of legal tender notes and United States six

cent, bonds.'

At a

later period in the session the $900,000,000 act was passed. I was
not in favor of the change made by that act in the standard of value, or
rather I was not in favor of the discretionary power given to the Secretary
of the Treasury to change it, as provided in the act ; not because I had
not full confidence in the Secretary, but because I thought it better that
so important a matter, relating as it does to the stability of the whole
business operations of the country, should be fixed in the law itself, so
that all men could shape their business accordingly. This would have

relieved the Secretary from a vast responsibility, and the inflations, fluctuations and changes now so apparent would have been less likely to have

happened. I reluctantly assented to the change. It was against my
better judgment, and I am now satisfied that it was a mistake.
The daily conversions, during the past year, of legal tender notes into
the 5-20 six per cent, bonds, at the rate of from one to two millions a day,
furnished the means for paying the daily expenditures of the Government; the conversions went on so smoothly, so steadily and so satisfactorily to all parties, without causing any great inflation of the currency,
or increase in the price of labor or commodities, that I was in hopes it
would be continued by the Secretary, under the discretionary power given
him to continue it, under the $900,000,000 loan bill. This would have
kept things steady, kept down the price of gold, and would probably have
prevented any necessity for paying out the reserve $50,000,0000 of greenbacks which have been issued since the meeting of Congress, and over

195
$150,000,000 live per cent, one and two years legal tender notes, also is-m-il
to a considerable extent as currency, making about $200,re -^
000,000 that have been printed and paid out since the meeting of Cong

and circulated

in December las!, which, added to the $400,000,000 of greenbacks preand
viously issued, amounts altogether to $600,000,000 of greenbacks
tender Treasury notes, and which is probably a volume of currency
legal
large enough to float the proposed new issue of live per cent, ten-forty
bonds; but it is not my wish or desire to say a word that will in any way
retard or embarrass the operations of the government in a vigorous pro-e
eiilioii

war to put down this gigantic and wicked rebellion, and
remove the cause that brought on such a bloody war. The last

of the

ell'eelually

man and

the last dollar are pledged for this purpose, and, if necessary, to
Hate the currency to such an extent that 10-40 live per cent, bonds may
be floated at par, I am ready to yield my assent to such a measure, and
will lend my feeble efforts to sustain the administration in carrying it out.
in

The rebellion must be crushed
The principal object I have

at all hazards,
in writing to

and at every sacrifice.
you at this time, is to solicit

the co-operation of our friends in New York in submitting to Congress
the propriety of establishing, by law, the standard value of legal tender notes,
rate of interest at which they may at any time be converted
into the funded debt of the United States, principal and interest payable
If it is to be five per cent, bonds, gold and prices will be considin gold.

by lixing the

erably higher than they will be if such notes are convertible into six per
cent, bonds. I think it will be cheaper in the end, and specie payments
ran be resumed at an earlier day, for the Government to continue the conversion of legal tender notes into six per cent, bonds, because gold will
be lower and prices less ; but whatever the rate of interest is to be, I trust
it will be fixed in the law itself, so that all business men may be able to
shape their contracts and business in accordance with the public law
establishing such standard of value.

few words on one or two other points, but this letter
already longer than I intended, and I must defer to some other more
convenient time what more I may desire to say on the national finances.
I intended to say a

is

I

remain yours, very

truly,

E. G.

NEW
Dear Sir I am in receipt of
subject of national finances.

My

SPAULDING.

YORK, March 21.
inst., upon the

your favor of the 19th

and clearly my own views so admirably, in fact,
beg your permission to publish it, as I think it of great importance
that the attention of business men should be drawn to the subject than
which nothing is of greater or more immediate consequence to their interests.
Truly yours,
It expresses fully

that I

MORRIS KETCUIM

Hon. E. G. SPAULDING.

BUFFALO, April
Mom-is Kctchum, Esq., Banker,

Dear

Sir

desire to

subject

Y.

11, 1SC4.

:

letter to you of the 19th of March last, I
additional remarks on the National Finances. It is a
which I feel a deep interest, for you well know that if we fail

Referring to

make some

upon

T
i\ .

my

196
here there is danger that we may not succeed in accomplishing what is
the most ardent wish of all patriotic citizens that of crushing the rebelThe national debt will
lion, and a restoration of the national unity.
increase at a fearful rate, under any policy that can be devised, and prudent, patriotic citizens are looking anxiously at the result of measures
that are adopted. Desiring, as I do, the crushing of the rebellion in the
shortest time, and with the least possible expenditure of blood and treasure, I venture to make a few suggestions further on the future policy of
executing the $900,000,000 loan act.
It seems to me that the policy of the Treasury Department for the last
three months has been that of inflation, and over-issues of a paper circulating
medium. It has, by such a policy, unintentionally stimulated and encouraged speculations in gold, stocks and other things, rather than to encourage
industry, the production of commodities, and other legitimate business.
Under this policy, gold has advanced 20 percent., and the price of labor
and commodities continues to increase to such an extent as to render it
very embarrassing for business men to carry on their ordinary pursuits.
I know very well that these evils cannot be fully guarded against during
the prosecution of such a gigantic war, and the large amount of paper
necessarily issued by the Government; but it is the duty of the Government that these evils should be mitigated and rendered as light as
possible.

The Department has partially executed the $900,000,000 loan act; the
section of which authorized the Secretary to borrow the whole amount

first

of nine hundred millions of dollars on the ten-forty bonds, bearing six per
cent, (or, in his discretion, five or four per cent.) interest payable semiannually iii coin ; or, by other sections of the bill, he had the discretionary
power to print and pay out to creditors of the Government an additional
amount of $150,000,000 of greenbacks, and $400,000,000 legal tender Treasury notes, which, in the form issued by, him, circulate to a considerable
extent as currency ; and a further contingent authority to issue a still further sum of $150, 000, 000, of greenbacks; but the whole aggregate of all

kinds of bonds and notes to be issued under the

bill

was not

to exceed

$900,000,000.

In administering and carrying into effect the provisions of this act, it is
plain that, by borrowing on the issue of ten-forty six per cent, bonds
under the first section of the act, the tendency would be to repress and
keep down inflation, prevent speculation in stocks, gold and other commodities, and, at the same time, by holding a steady money market,
encourage all kinds of productive industry and other legitimate pursuits.
On the other hand, by resorting to the other sections of the bill and
issuing greenbacks and legal tender treasury notes in large volume, the
is still further expanded and cheapened to such an extent that
legitimate business is greatly embarrassed by the increase in the price
of labor, the cost of living, transportation, and the cost of the raw materials used in building, manufacturing, and other industrial operations.
In the partial execution of this law, the Treasury Department has

currency
all

printed and paid out $150,000,000 greenbacks as currency, and over $175,000,000 of one and two years legal tender Treasury notes, which also
circulate to a considerable extent as currency, making $325.000,000 of
inflating paper issued under this act, thus far ; while the department has
only borrowed on a permanent loan, under the first section of the bill and
the supplementary act, less than $15,000,000 on Jive instead of six per cent,
ten-forty bonds.

The whole

policy thus far under this law has been one

197
of inflation on temporary loans, rather than funding on long government
bonds at a fair rate of interest.
It has been supposed that by this policy of inflation a five per cent, tenforty bond might be floated nominally at par. Funding the present
excessive floating debt at five per cent, interest is better than not to be
funded at all, and I hope that the bonds now offered at five per cent, may
be taken up rapidly, and that the evils of the present inflation may be
removed but I fear the conversions will not be rapid enough at this rate
of interest. The bonds do not seem to be readily taken, as yet, by the
people. It required the printing and paying out of $400,000,000 of greenbacks before the five-twenty six per cent, bonds could be floated easily at
par, and it will probably require the circulating paper issues of the Government, now amounting to about $625,000,000, to be increased to $650,000,000 or $700,000,000, before the people will be induced to take five per
cent, bonds in order to get rid of the surplus circulation that may
accumulate in their hands, that cannot be more profitably invested in
other modes.
I agree with all that has been said by the Press and in Congress in favor
of annual taxation to the amount of $300,000,000. At the extra session of
Congress in July, 1861, I advocated immediate taxation to the extent of
paying the annual expenses of the government on a peace footing, and the
interest on all the war debt, and I have advocated that policy ever since.
I hope Congress will not adjourn without providing for raising at least the
;

sum

of $300,000,000 each year by taxation. Assuming that Congress will
provide for raising that sum by taxation for the next fiscal year, still the
whole expenses of the year will not be less than $1,000,000,000, which will
leave the additional sum of $700,000,000 to be borrowed in some form to
pay the expenses of the army and navy. This. brings us to the practical

How is this

large sum to be .obtained? Shall it be on tempopaper calculated to still further inflate the currency already
afloat, thereby adding to the embarrassments already bad enough; or
shall it be on a permanent loan, based on the issue of long bonds, principal
and interest payable in gold, and at such a fair rate of interest that the
bonds will be readily taken, in such large amounts as not only to make
any further temporary issues under the $900,000,000 act unnecessary, but
This
also materially diminish the present excess of paper currency?
would check speculation, and bring down the price of gold and all other
commodities to a more safe and stable standard.
It is of great consequence for all business men to know what is to be the
still further
future policy of the Treasury Department. Whether it will
or whether it will contract
inflate the currency by temporary expedients,
the floating debt by funding in long bonds. Shall it be inflation and high
is of vital interest,
prices* or contraction and lower prices ? This question

question:
rary issues of

in the prosecution of the
affecting the large purchases of the Government
war, as well as the legitimate business of the people.
If the Treasury Department will print and put at the disposal of the
in
people ten-forty bonds, paying six per cent, interest semi-anuually
takon.
coin, for the balance of the $900,000,000 loan, it will be so rapidly
from the manner in which conversions were made into the 5-20

judging

all its other printing presses employed in printing temporary
and
circulating paper may be safely stopped until this loan is exhausted,
with the most beneficial results to the Government and the people.

bonds, that

I remain, yours, truly,

198

SECRETARY CHASE RESIGNS, AND WM. P. FESSENDEN APPOINTED
SECRETARY OF THE TREASURY.

The attempt of the Secretary of the Treasury to float five per
bonds made it necessary, in order to pay the current

cent. 10-40

expenses of the Government, to issue and keep out large amounts
of currency in the form of greenbacks, legal tender notes, interest-bearing Treasury notes, certificates of indebtedness, postal
and fractional currency, and national bank notes, besides the cur-

rency issued by State banks. Gold and commodities continued
to advance in price.
On the 15th of Januar}', '64, gold was 1. 55, on
the 15th of April 1.78, on the 15th of June 1.97, and on the 29th
of June 2.35 to 2.50, which showed that the legal tender notes

were worth only forty cents on a dollar in gold.

On the 30th of June, 1864, Secretary Chase resigned the office
of Secretary of the Treasury.
President Lincoln announced the
fact to the Senate by nominating David Todd, of Ohio, to fill the
vacancy, which was the first announcement of the resignation of
Gov. Chase. Gov. Todd declined the appointment. Mr. George

Harrington, Assistant Secretary, was appointed Secretary of the
Treasury ad interim. William P. Fessenden, U. S. Senator from

Maine, with some reluctance, finally consented to take the place.

He was nominated and confirmed, and entered upon the duties
of the office on the 5th of July.
He

subsequently published a statement of the audited public
debt as it existed on the books of the Treasury Department on
the 30th day of June, which was the close of the fiscal year, and
the day that Secretary Chase resigned, showing the total amount

The 10-40 five per cent, bonds
amounted only to $73,337,750.
This statement showed that the currency items and others

of debt to be $1,740,690,489.49.

operating to inflate prices were as follows

:

$431,178,670 84
22,894,877 25

U.

S. notes, greenbacks
Postal, fractional currency

Interest-bearing legal tender Treasury notes
Certificates of indebtedness
National bank notes

Add

State

bank

circulation, not less than

.

.

.,

168,571,450 00
160,720,000 00
25,825,695 00
135,000,000 00

$944,190,693 09

$109,356,150 00
Seven-thirty Treasury notes
Temporary deposits for which certificates
were issued
$ 72,330,191 44
.

June

.

30, 1864. total inflating

paper issued

$181,686,341 44
$1,125,877,034 53

199
This great

inflation,

with the military situation doubtful mid
11, 1864, when
more accurately speak-

unsatisfactory, caused gold to advance until July
it,

ivuchcul its highest quotation, 2.85|-, or,

United States notes continued to decline until they were
worth in gold 35 cents on the dollar at the Board of Brokers
only
in the city of New York.
ing, the

1

1

;ind

sale

was thought at the time that the gold Ml passed by Congress,
approved June 17, 18G4, prohibiting time contracts for the
of gold and foreign exchange, operated to advance the y>/-/Vr

It was intended by Congress,
of gold, instead of depressing it.
in passing the act, to prevent the gold speculators from operating
for an advance, but it had the contrary effect, and only aggravated

the difficulty.

The

price of gold

would advance

in spite of the

legal enactments, and the act only continued in force
(the 2d of July) when it was repealed.
Secretary Fessenden says "that on assuming the

fifteen days,

office

on the

The
5th of July he found his condition peculiarly embarrassing.
cash balance in the Treasury was, on the first of July, $18,842,.
558.71, and the unpaid requisitions, chiefly for the army, were
$71,814,000, and the daily 'expenditures $2,250,000." The loan
of $33,000,000, advertised by Secretary Chase on the 25th of
Secretary Fesseuden
June, was withdrawn on the 2d of July.

means

raised the

to carry

on the Government

to

March

4,

1865,

by the issue of greenbacks, 7-30 Treasury notes, interest-bearing
Treasury notes, certificates of indebtedness, loans of mone}'
obtained on six per cent. 5-20 bonds, and the receipts from ta\r<.
Tn liis Annual Report he says:
"

The experience of the past few months cannot have failed to convince
the most careless observer that, whatever may he the effect of a redundant circulation upon the price of coin, other causes have exercised a
greater and more deleterious influence. In the course of a few days the
price of this article rose from $1.50 to $2.85 in paper for $1.00 in specie,
and subsequently fell, in as short a period, to $1.87, and then again rose,
as rapidly, to $2.50; and all without any assignable cause, traceable to an
increase or decrease in the circulation of paper money, or an expansion
or contraction of credit, or other similar influence on the market, tending
to occasion a fluctuation so violent. It is quite apparent that the solution
of the problem may be found in the unpatriotic and criminal efforts of
speculators,

and probably of secret enemies, to raise the price of coin,
injury inllictcd upon the country or, desiring to

regardless of the
intlict it,"

UNITED STATES NOTES LIMITED TO $400,000,000.

By the second section of the act of June 30, 1864,
vided that "the total amount of United States notes

it

was pro-

-issued,

or to

200
be issued, shall not exceed $400,000,000,

and such additional sum

not exceeding $50,000,000, as may be temporarily required for
the redemption of temporary loans."

This act contained a further provision that "all bonds, Treasury notes, and other obligations of the United States, shall be

exempt from taxation, by or under State or municipal authority ;"
and the last section of this act declares that 'the words 'obligation
*

or other security of the United States,' used in this act, shall be
mean all bonds, coupons, national currency,

held to include and

United States notes, Treasury notes, fractional note's, checks for
money of authenticated officers of the United States, certificates
of indebtedness, certificates of deposits, stamps, and other representatives of value of whatever denomination, which have been

may be issued under any act of Congress."
This act also authorized the issue of $200,000,000 of interestbearing Treasury notes, payable at any time not exceeding three
or

years from date, and made a legal tender at their face value to
the same extent as United States notes, except in redemption
of notes issued by banks.
And the power to issue interest-bear-

ing Treasury notes, of this character, was still further enlarged by
This was the last act of Congress
the act of January 28, 1865.
giving power to the Secretary of the Treasury to issue any

Mnd

of legal

tender notes.

HOW SECRETARY McCULLOCH

PAID THE ARMY AT THE CLOSE
OF THE WAR.

Upon the inauguration of President Lincoln for a second term,
Hugh McCulloch was appointed Secretary of the Treasury in
place of Mr. Fessenden, who wished to be relieved from the duties
of the office, and who returned again to the Senate.
Secretary
McCulloch did not increase the issue of United States notes, but
continued the issue of bonds, 7-30 Treasury notes, and compound
interest-bearing Treasury notes made a legal tender at their face
value.

After the surrender of the rebel armies to General Grant

and General Sherman, the volunteer army was mustered out of
the service, and had to be paid in full.
Secretary McCulloch
obtained the means to pay them chiefly by the issue of 7-30 Treasury notes, which were negotiated under the general agency of Jay
Cooke, at par. The amount required for this purpose was veiy
large, and the amount of 7-30 Treasury notes outstanding in
October, 1865, .after paying the army was $830,000,000, which
were convertible in three years into 5-20 six per cent, bonds.

The

201
public debt during that month run up to about the highest figures
The following is a statement of the debt, withit ever reached.
out deducting funds in the Treasury, as it stood on the books of

the Treasury Department on the 31st of October, 1865.

STATEMENT OP THE PUBLIC DEBT.
Bonds,
Bonds,
Bonds,
Bonds,
Bonds,
Bonds,
Bonds,

10-40's, live

per cent, due in 1904

..$172,770,100 00
1,258,000 00

Pacific Railroad, 6 per cent., due in 1895
5-20's, 6 per cent., due in 1882, 1884 and 1885

due
due
5 per cent., due
5 per cent, due
6 per cent.,
5 per cent.,

in 1880

659,259,600 00
265,347,400 00
18,415,000 00

in 1874
in 1871

20,000,000 00
7,022,000 00

in 1881

$1,144,072,100 00

Bonds, 6 per cent, due in 1868.
Bonds, 6 per cent, due in 1867

...,

$

8,908,341 80

9,415,250
interest notes, due in 1867-'68 173 N012,141
7-30 Treasury notes, due in 1867 and 1868 830,000,000
Bonds, Texas indemnity, part due
760, 000

Compound

Bonds, Treasury notes,

etc.,

part due...

Temporary loans, ten days' notice
Certificates of indebtedness, due in 1866.
Treasury notes, 5 per cent., Dec. 1, 1865.

United States notes

00
1,021,335,732 80

00
00

613,920 09
99,107,745 46
55,905,000 00

1,373,920 09

32,536,901 00

187,549,646 46

428,160,56900
454,218,038 20

26,057,469 20

Fractional currency

Total debt October

00

31,

1865

$2,808,549,437 55

National bank notes issued
State bank notes issued

$185,000,000 00
65,000,000 00

Total bank circulation

$250,000,000 00

TARIFF AND INTERNAL REVENUE LAWS.

The act of July 1, 1862, called the INTERNAL REVENUE LAW,
was passed, providing for a levy of duties on various domestic
manufactures, upon trades and occupations, and also providing a
system of stamp, license, income, and other duties. And the act
of July 14th, of the same year, largely increased the duties on
These laws were from time to time amended and
sums were realized from this mode of taxaand formed a very substantial basis on which to rest the

imports.

enlarged, until large
tion,

credit of the

Government

for the large issue of notes,

bonds and

other obligations. Enough money was realized from these sources
to pay the ordinary expenses of the Government, all the interest

on the war debt, and liquidate a considerable portion of the prinThe total debt, October 31, 1865, was over $2,800,000,000,
cipal.
and it does not at the present time much exceed $2,500,000,000,
exclusive of Pacific Railroad bonds.

202
CONTRACTION OF THE CURRENCY.
Secretary McCuLLOCH, in his first annual report, 4tli of Decem" that the
ber, 1865, expressed the opinion
legal tender acts were

war measures, passed in a great emergency that they should be
regarded only as temporary; that they ought not to remain in
force a day longer than would be necessary to enable the people
;

and that the work of
which have been issued, should be commenced
without delay, and carefully and persistently continued until all
are retired." The House of Representatives on the 18th Decem-

to prepare for a return to the gold standard

;

retiring the notes

concurred in these views, expressed in the annual
of Mr. McCulloch, by the adoption of the following resolureport
tion offered by Mr. Alley, of Massachusetts

ber,

1865,

:

That

House

cordially concurs in the views of the Secretary
of the Treasury in relation to the necessity of a contraction of the currency, with a view to as early a resumption of specie payments as the
business interests of the country will permit; and we hereby pledge
co-operative action to this end as speedily as possible.
Resolved,

The above
144, nays

6,

this

resolution

was passed by the following vote

yeas

as follows:

Messrs. Alley, Allison, Ames, Ancona, Anderson, James M.

Ashley, Baldwin, Banks, Barker, Baxter, Beaman, Bergen, Bid

Bingham, Blow, Boutwell, Boyer, Brandcgee, Brooks,
Broomall, Bundy, Reader W. Clarke, Sidney Clarke, Conkling,

well,

Cook, Cullom, Darling, Dawes, Dawson, Defrees, Delano, Deming,

Dennison, Dixon, Driggs, Eldridge, Eliot, Farquhar, Ferry,

Finck, Garfield, Gridcr, Griswold, Hale, Aaron Harding, Abner
C.

Harding, Hart, Hayes, Henderson, Higby, Hill, Hogan,
Holmes, Hooper, Hotchkiss, Asahel W. Hubbard, Chester D.
Hubbard, Demas Hubbard, John H. Hubbard, Edwin N. Hubbell,

James R. Hubbell, Hulbard, James Humphrey,

Ingersoll, Jencks,

Johnson, Julian, Kasson, Kelley, Kelso, Kerr, Ketcham, Kuykendall, Laflin, Latham, George V. Lawrence, William Lawrence,

Longyear,

Marshall,

Marston,

McKee, McRuer, Mercur,

Miller,

McClurg, Mclndoc,
Moorhead, Merrill, Moulton,

Marvin,

Myers, Niblack, Nicholson, Noell, O'Neill, Orth, Paine, Patter-

Perham, Phelps, Pike, Plants, Price, Radford, Samuel J.
Randall, William H. Randall, Raymond, Alexander H. Rice, John

son,

H. Rice, Ritter, Rollins, Ross, Rousseau, Sawyer, Scofield, Shanklin,

Shellabarger, Sitgreaves, Sloan, Spaulding,

Starr,

Stillwell,

Strouse, Taber, Taylor, Thornton, Trimble, Trowbridge, Upson,
Van Aernam, Burt Van Horn, Robert T. Van Horn, Voorhees,

203
\V:ml,

Kliliu

\V:irmr,

35.

>Y;i>lil.uni,

William

I',.

Wcntworth, Whaley, Williiims, James F. Wilson, Stephen
Wilson Mnd Wright 144.
Nays Messrs. Baker, Cobb, Eckley, Harris, Smith, and

\VYIk>T,
F.

6.

Thayer

In order
(lie :ict

of

into effect the above resolution, Congress, by
12, 1866, authorized the Secretary of the Tiv:i>

ta^avry
^Kbi-l'li

ury to exchange bonds for notes, but "that of United States notes
not more than $10,000,000 should be retired and canceled within
six months from the passage of the act, and thereafter not more

Mm

11

$4,000,000 should be retired in any one month."
this act the Secretary

Under the provisions of
retiring

and canceling

commenced

legal tender notes, but contraction very soon

affect speculators and the debtor class of the community,
As
raised a cry against the course pursued by the Secretary.
contraction gradually went on, money became more in demand,

began to

who

soon became unpopular with a large class of the community.
Members of Congress very soon changed their opinions on the

and

it

subject,

and in January, 1868, a law was passed, declaring "that

from and after

its

passage, the authority of the Secretary of the

Treasury to make any reduction of the currency by retiring or
canceling United States notes, shall be and is hereby suspended."
Before this law was passed Secretary McCulloch had reduced
the circulation of United States notes down to about $356,000,000,

which at
for

this time (April, 1869), is the

which the Government

amount outstanding, and

is still liable,

besides fractional cur-

rency amounting to over $36,000,000.

THE PUBLIC FAITH.
Since the close of the war there has been considerable discussion
in regard to the

meaning of the words used

in the legal tender

act.

It has been insisted by a large class of citizens that the 5-20
bonds might, after five years, be redeemed in legal tender notes,
Others insisted that the bonds are
instead of gold and silver.

payable in "dollars," which means gold and silver coin, and that
an attempt to pay in legal tender notes would not be payment but

merely changing the form of the debt. That a matured debt cannot be discharged by another promise; that it is contrary to
reason that a bond should be paid in an inferior obligation and
;

that
est,

would be unjust to force inconvertible paper, without interin payment of an interest-bearing obligation, especially as the
it

204
right was given in the original act to fund legal tender notes at
any time in the bonds which were authorized by the same act.
Taking up bonds not due with greenback notes, would simply be
to twfund a debt already funded, which would be
contrary to the
whole spirit and intent of the legal tender act.

To remove

doubt upon the subject, and with a view to
improve the public credit, Mr. Shenck, Chairman of the Committee of Ways and Means, reported a bill, which, after a lengthy
discussion,

all

was amended, and

finally

passed both Houses of

Congress.

The following
97,

nays

Yeas

is

the vote by which

it

Yeas

passed the House.

47.

Messrs.

Allison,

Ambler, Ames, Armstrong, Arnell,

Asper, Axtell, Bailey, Banks, Beaman, Benjamin, Bennett, Bing-

ham,

Blair, Boles, Boyd, Buffinton, Burdett, Cessna, Churchill,
Cobb, Cook, Conger, Cowles, Cullom, Dawes, Donley, Duval,

Dyer, Farnsworth, Ferriss, Ferry, Finckelnburg, Fisher, Fitch,
Gilfallan, Hale, Hawley, Heaton, Hoar, Hooper, Hotchkiss,
Jenckes, Jones (N. C.), Judd, Julian, Kelsey, Ketcham, Knapp,
Laflin,

Lash, Lawrence (Ohio), Lynch, Maynard, McCrary, Mc(111.), Moore (N. J.), Morrill (Me.), Neg-

Grew, Mercur, Moore
ley, O'Neill,

Prosser,

Packard, Paine, Palmer, Phelps, Poland, Pomeroy,

Roots, Sanford, Sergeant, Sawyer,

Sheldon, Smith (Ohio), Smith

(Vt.),

Schenck,

Smythe

(Iowa),

Scofield,

Stokes,

Stoughton, Strickland, Tanner, Tillman, Twichell, Upson,

Van

Washburn (Wis.), Washburn (Mass.), Welker,
Wheeler, Whittemore, Wilkinson, Willard, Williams, Winans 97.
Nays Archer, Beatty, Beck, Briggs, Bird, Burr, Butler

Horn, Ward,

(Mass.), Butler (Tenn.),

Cobb, Coburn, Crebs, Dewees, Dickinson, Eldridge, Getz, Golladay, Hawkins, Holman, Hopkins, Johnson, Jones (Ky.), Kerr, Knott, Marshall, Mayhem, McCormick,

McNeely, Moffett, Mungen, Niblack, Orth, Reading, Reeves,
Rice, Shanks, Smith (Oregon), Stevenson, Stiles, Stone, Strader,
Sweeney, Taffe, Trimble, Tyner, Van Trump, Wilson (Ohio),
Winchester,

The

Woodward

48.

was approved by President Grant on the 18th of
March, 1869, and was the first act approved by him after his
inauguration, and is as follows
bill

:

'

'An Act

Be it

to strengthen the public credit of the Untied States.

enacted,

etc.,

That in order to remove any doubt

of the Government to discharge all

its

as to the purpose

obligations to the public creditors,

205
and to settle conflicting questions and interpretations of the law, by virtue
of which such obligations have been contracted, it is hereby provided and
declared that the faith of the United States is solemnly pledged to the
payment in coin, or its equivalent, of all the obligations of the United
States not bearing interest, known as United States notes, and of all the
interest-bearing obligations, except in cases where the law authorizing
the issue of any such obligations has expressly provided that the same
may be paid in lawful money, or in other currency than gold and silver
but none of the said interest-bearing obligations, not already due, shall
be redeemed or paid before maturity, unless at such times as 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 Us faith to make provision at the earliest practicable
period for the redemption of the United States notes in coin.
;

Approved March

U.

18, 1869.

S.

GRANT."

DECISIONS OF THE COURTS ON THE CONSTITUTIONALITY OF THE ACT.

In most of the States where the constitutionality of the legal
tender act has been raised, the State Courts have decided that the
law was constitutional and valid. The decisions in such cases

were generally made upon the ground that the United States had
express power to wage war, to raise and support armies and
navies

;

to borrow

money on

the credit of the United States

;

and

laws necessary and proper to carry into execution these
In borrowing money to carry on the war, it was
great powers.
and proper for the Government to give its notes for the
necessary
pass

all

amount borrowed; that Congress had the right to affix to such
notes the attributes, and prescribe the terms which would give
most value and the greatest facility to their negotiation, in order
to obtain the necessary means of sustaining the army and navy
in the prosecution of the war; that it was a form of credit justified
by the exigency of the crisis, and necessary to the execution of
And that
the war powers expressly granted in the Constitution.
"
the authority of Chief- Justice Marshall,
Congress must
upon
the choice of means, and must be empowered to use any
possess
means which are in fact conducive to the exercise of the powers
granted by the Constitution."
The Court of Appeals, the highest Court in the State of New
York, decided in the case of Myer vs. Rosevelt, 27 N. Y. Rep.,

" that the
power to borrow money on the credit of the United
carries with it the power to attach the quality of a legal
States,

400,

tender to the notes issued, when, in the judgment of Congress, it
is necessary to make them effectual for the purpose of borrowing."

Judge Davies,

in his opinion, says:

206

"We take notice

of the fact, that to maintain armies and provide a navy

for the prosecution of the war,

more money

is

needed annually than

all

the specie within the United States, and that a resort by the Government
to the use of its own credit, was not only a matter of necessity, but the result
has demonstrated that it was a measure of prudence and wisdom."

The issue of Treasury notes under the Constitution commenced
during the last war with Great Britain. On the 30th of June,
Further issues were authorized by
1812, the first act was passed.
the acts of Congress of February 25, 1813; March 4, and December 26, 1814; October 12, 1837; January 31, and August 31, 1842;
In Thornclike vs. The
July 22, 1846, and January 28, 1857.

United States,

(2

Mason,

1, 18,)

Judge Story

said:

United States, under which the Treasury notes
have been from time to time issued, it is enacted that such notes shall be
receivable in payment to the United States, for duties, taxes and sales of
public lands, to the full amount of the principal and interest accruing due
on such notes. It follows, of course, that they are a legal tender in payment of debts of this nature due to the United States, and by the very
tenure of the acts, public officers are bound to receive them."

"By the

statutes of the

The

legality of the issue of Treasury notes has been sanctioned
all the departments of the Government since 1812, but the

by
United States Supreme Court has not yet decided that Treasury
notes can be made "lawful money and a legal tender in payment
of all debts public and private," but on the contrary it has decided
that contracts expressly payable in coin, must be paid in coin.
COIN CONTRACTS DECLARED VALID.

The Court of Appeals in the State of New% York, in the case of
Bronson vs. Rhodes, went so far as to decide that a contract made
before the passage of the legal tender act, payable expressly "in
gold and silver coin, lawful money of the United^States," might
be paid and satisfied by a tender of United States notes, issued
under the act of February 25, 1862.

Supreme Court at Washington reversed this
Chief Justice Chase announced the opinion of the

But the U.
decision.

S.

Court on the 15th of February, 1869, as follows:
" This is an
appeal from a judgment of the Court of Appeals of the
State of New York, holding that a tender of Treasury notes for the satisfaction of a mortgage made in 1851, by its terms to be satisfied in gold and
silver coin, was suificient. The tender was made in January, 1865, when

was equal to two dollars and twenty-five cents in legal
tender notes, and, the tender being refused, action was commenced to
The Supreme Court of the
compel the cancellation of the mortgage.
State subsequently adjudged the mortgage paid, and required it to be satThe Court of
isfied of record, holding the tender to have been sufficient.
a dollar in coin

207
Appeals affirm that judgment, and the affirmance is here for review. The
Chief Justice delivered the opinion of the Court, holding that it is the

duty of courts of justice to enforce contracts according to the intent of
the parties to them;
intent of the parties

and in this case it is held that it is clear that the
was that payment should be made in coin. There

were two descriptions of money in use at the time the tender in this case
was made, both aiithori/ed by law, and both made legal tender. The
general denomination of both descriptions was dollars, but they were
essentially unlike in nature. The coined dollar was a piece of gold or
The note dollar was a
silver of a certain degree of purity and weight.
promise to pay a coined dollar, but not on demand, nor at any fixed time,
It was impossible, in the
it convertible into a coined dollar.
nature of things, that these two dollars should be equivalents of each
There were
other, nor did the currency act purport to make them so.
then two descriptions of money issued by the same Government, and contracts to pay either were equally sanctioned by law. No question can be
made as to this fact ; doubt concerning it can only spring from that confusion of ideas which always attends the introduction of varying and

nor was

uncertain measures of value into circulation as money. In the absence
of any specific control for the payment of coin, legal tender notes may be
a sufficient tender, but it is clear to the Court that express contracts for
the payment of coined dollars can only be satisfied by the payment of
coined dollars. They are not debts which may be satisfied by the tender
of Treasury notes. As to the judgments to be entered on contracts for
the payment of coin, it is said the difficulty arises in the supposition that
damages can be assessed in only one description of money; but where
there are
to avoid

two kinds of currency provided by law, it is necessary, in order
ambiguity and prevent a failure of justice, to render judgment

money where the
Where no specified

for coined

money.

contract provides for payment in coined
description of money is made, judgments

entered generally without such specification.

maybe

Judgment below

reversed.
Mr. Justice Miller dissented, holding that, although it was the intention
of the parties that gold should be paid, it was only so because gold was
then the currency of the Government, the lawful money of the United
There was nothing in the contract to
States, mentioned in the contract.

When
it differ from any other ordinary contract payable in dollars.
Treasury notes became lawful money of the United States, their tender
was sufficient to discharge the contract, and within its terms and within
the understanding and intention of the' parties. This decision in no way
affects the legal tender cases argued by Mr. Potter and the Attorney General at the present term of the Court, although argued at the time of the

make

argument of those cases."

The

constitutional question has been argued and is still pendSupreme Court of the United States: "was Con-

ing before the

w:i r,
gress authorized, under the extraordinary exigencies of the
for circulation as currenc}-,
to make United States notes fitted

money and a legal tender in payment of all debts, public
and private " The business men of the country are anxiously
1

lawful

?'

waiting for the highest tribunal
this question.

under the Government to an<\\rr

208

CONCLUSION.
Having completed the Historical narrative of the origin, progand development of the system of Finance adopted during
the rebellion, and which furnished the means of prosecuting to a
successful issue the greatest civil war known in the history of the
human race, some reflections on the subject may not be uninress

teresting.

At the breaking out of hostilities, the financial affairs of the
banks and people were in a remarkably good condition, except,
perhaps, in some of the Northwestern States, where the banks

were badly organized.
In the Atlantic cities the banks were never in a better condi-

k>

The balances were settled through the Clearing House, in
New York and other cities, with great regularity. There was

tion.

paper currency and gold and silver enough to do the legitimate
Bank notes were regularly convertible
business of the country.
at the will of the holder into specie, and to a large extent these
notes were redeemed in New York, Boston and other Atlantic

The

machinery and credit institutions of the
country were in a prosperous condition, and there was no lack of
cities.

financial

means for legitimate wants.
It was not long after the war began before
to the best financial

men

it

became apparent

of the country, that a financial

system
adequate to the wants of the nation in time of peace, was wholly

inadequate to meet the requirements of a great war; that the war
was a new and great business of itself, demanding new and additional facilities, greater even than existed before the war.

That

the facilities for carrying on the business of the country as they
existed before the war, were still necessary to carry on that business, and could not safely be withdrawn from it and that a new
;

currency, national in character, and to some extent a new financial system, must be created to meet the new and enlarged demands

This was an
of the war which had been forced upon the country.
exigency not foreseen, and the Government was obliged to exercise all the

power

it

possessed in passing the war measures detailed

in the foregoing narrative.

The plan of Finance adopted

in

1861-2 was successful, and

proved adequate to these enlarged requirements. The Government was maintained and the Union preserved. By this plan all
the

men and

material of war necessary to crush the rebellion were
difficulty.
Many mistakes were made in the

obtained without

209
conduct of the war, but the financial plan, including taxation, was
an ample resource sufficient at all times to meet the vast requirements of the War and Navy Departments. The credit of the

Government was brought
able form.

into

immediate action in the most

Some mistakes were

made by the
Loan acts, and

also

avail-

Secretary of
too large an

the Treasury in administering the
inflation occurred in 1864, which might have been prevented by
continued funding in 5-20 six per cent, bonds, yet in the main the
financial

management during the war was a decided

success,

carried the country through the terrible ordeal, and
It is true that this
the ship of state safely into port.
brought
was not at all in accordance with peace notions of finance,
plan

because

it

and marines were paid in
full, and all demands for supplies and material of war were
promptly discharged. It was a complete success as a means of
These
carrying into effect the war powers of the Government.
but by

facts

it all officers,

soldiers,

sailors

abundantly prove the efficiency and wisdom of the plan

adopted in bringing the war to a successful termination. Although
successful it was a heavy drain upon the resources of the country,
and at times very embarrassing to business men, and they had to
submit to many

sacrifices.

ber of youthful laboring
labor,

The withdrawal of such

men

into a vast

a large

num-

army of unproductive

and the mistake made in the over-issue of paper currency,

so inflated prices as to materially increase the expenses of the
It also embarrassed the people engaged in legitimate purwar.
laborers struck for higher wages, and the price of comsuits;
in
greatly increased, causing considerable difficulty
keeping up the productive energies of the country, especially in
establishments where large gangs of men are employed.

modities

be denied that the management of the fiscal affairs
Government, both legislative and executive, during

Nor can
of

the

it

the war, was a material departure from sound political economy,
The demand for money
applicable to ordinary times of peace.

means forced upon the country by such a gigantic

rebellion,

was

wholly unprecedented nothing ever recorded in history equaled
and reached to such overwhelming amounts, so
this demand
vastly beyond ahy former financial requirements, that the careful
observer cannot but look back with wonder and amazement that
the Government was at all able to pass successfully through such

an extraordinary crisis. The authorization of a loan of $900,000,000, in one act, and an increase of the public debt in one

210
year of over $940,000,000, over and above custom duties and
internal taxes, are matters of history.
The amount of the issue
of paper currency and temporary obligations in various forms
was almost appalling. Considerably over one million of men

were at one period of the war withdrawn from productive labor.
The strain upon the credit of the Government, with eleven States
It would seem that
practically out of the Union, was very great.
no other country could have borne up under such a sudden expansion of the credit circulation, and the changing of so many men
from producers to destroyers of life and property. This great
inflation of the paper medium had, however, some compensating

It stimulated into wonderful activity all the proadvantages.
ductive energies of common labor, skilled labor, and machinery
of all kinds.
War material was produced with amazing rapidity,

and in abundant quantity, for equipping, supporting and moving
all the great armies in the field and navies afloat.
The people
never flagged, hesitated, or faltered in producing and furnishing
these vast war materials, and receiving in exchange for it the
promises issued to them by the Government. They seemed to be
all

getting rich by the operation, and although it was to some extent
unreal, yet this stimulus, aided by patriotic determination to

maintain the Union, was great enough to induce the people to
furnish every thing necessary to supply the army and navy to
crush the rebellion, at the mouth of the cannon and point of the

No compromise was made. Superior force, backed by
and abundant resources, accomplished this great achievepowerful
ment.
The army and navy were powerful and victorious, because
bayonet.

the}'

were sustained by

all

the vast resources of the country,
and by the superior power of the

brought to their aid voluntarily,

Government which commanded these

These bold and
and dignity to the Governpower
ment, and although it operated upon the unwilling as a forced
loan, the crisis demanded it; it was the price of the national
resources.

decisive financial measures gave

Union; the national faith is pledged, and every dollar of
paid, principal and interest, in gold and silver.

this debt

must be

The value of the Union and the Government preserved

in full

vigor under the Constitution, cannot be estimated in dollars and
vast continent, embracing terricents.
It is above all price.

A

tory and people, is now held under the control of a mighty central
and consolidated Government, based upon the will of an enterprising, intelligent

and powerful people.

The mind of man

is

211
of estimating the future progress and destiny of the
American people under such a Government wisely administered,
lint in a financial and economical aspect, these vast sums expenViewed simply as an
ded present an entirely different view.
economical question, the immense war debt represents only lives

and property consumed. All the unproductive labor, vast material
ol war, provisions and supplies of all kinds are used up, wasted
This immense debt rolled up during
(our years of bloody war, stands out in bold demand upon the
nation for liquidation from the future earnings and income of the

and blotted out of existence.

Future labor and economy must furnish the means for
payment. This debt is the price of the Union and Constitu-

people.
its

tional

Government, but their value cannot be estimated in

dollars.

The Government value is intangible and not present as a means of
payment, but the war debt is already tangible the bills are footed
up, and the total amount is over $2,500,000,000.
;

This sum must be paid, principal and interest, not by the issue
new promises to pay it, but by the production of actual value,
measured by gold and silver, the world's commercial standard, as

of

well as the standard regulated

To

illustrate

more

fully.

by

law.

When

individuals in commercial

transactions give their notes, bonds or other promises to pay
money, they usually receive in exchange either real or personal
property, or labor, which is made valuable in some form to pay

Not so with the war debt; the propthe obligation given for it.
received and services performed for the United States notes
erty
and obligations, outstanding, has not, in a financial sense, been
employed in such a useful way as to furnish present value to pay
them with, but on the contrary it was consumed by the war.
Hence the difference between a debt created for commercial purThe one is generally for property or labor
poses and a war debt.
made useful and productive, while the other is for unproductive
labor or property consumed, wasted or destroyed not for any
pecuniarily useful purpose.
Immediately after the war began we commenced our departure
from the gold standard, for the reason that every dollar expended
for the waste of war was expended for a pecuniarily unproductive
purpose.
Every dollar expended took out of existence a dollar of
value for which the Government gave its promise to pay. Every

dollar of property thus destroyed led us farther

and farther away

from the specie standard, and has to be produced again by labor

212
before the value

is

restored.

In one year, from July

July 1, 18^5,
The Expenditures of the War Department were
For Navy Department
.

Total waste of

The

War

.

.

in

one year

1,

1864, to

$1,031,323,360 79
122,567,776 12
$1,153,891,136 91

human

race shows no such consumption and
waste in any war during a single year.
One billion, one hu wired
<urd fifty-three million, eight hundred and ninety-one thousand, one

history of the

hundred and

thirty-six dollars

and

ninety-one cents

expended

in

one

At

the close of this year, July 1, 1865, and the close of
active hostilities, one dollar in gold was worth, in greenbacks,
All the bonds and
1.41, at the Broker's Board in New York.

year!

greenback promises to pay dollars, now outstanding, do not represent tangible property or means owned by the Government, but
property in the possession of the people under its jurisdiction, and
all this waste must be reproduced again, and the value
restored, in order to bring us to the specie standard and enable

from which

In short, the debt must be paid from the
and income of the people, in some form of taxation to be
earnings
enforced by the Government.
It was fortunate that the debt, during the war and since, was
distributed to a large extent among all classes of people.
In fact,
this was the only way in which the resources necessary to sustain
us to pay the debt.

the war could be obtained.

The

legal tender notes were paid out

and distributed to the army and navy and

for supplies and mateof indebtedness and interest-bearing
Treasury notes, were also paid out to contractors and others.
The loans were negotiated by direct appeals to the people to sub-

rial

of war.

scribe in large

Certificates

The great body of the people
took up the loans, and became directly interes-

and small amounts.

in the loyal states

ted in sustaining the Government, and the great diffusion of the
notes, bonds and certificates all over the country, was the only

way

in

which the enormous debt so suddenly created could be

The greenback notes
were very popular among the people. It was a currency in daily
It was
use, uniform in value, and passed freely in every state.
the people's loan to the Government, without interest, and was at

carried through to the close of the war.

same time advantageous to them, because it was money in all
It immediately became the people's war.
All became pecuniarily intrusted in its success, and they furnished
the means to carry it on.
The crushing of the rebellion was the

the

business transactions.

213
people's triumph and the people will in due time pay the debt,
and thereby preserve the honor and good faith of the nation.
Notwithstanding the great destruction of values consequent
;

upon the prosecution of the war, the nation was, at its close, still
possessed of great power and resources, and the material interests
of the Northern and Western States were still advancing.
They
continue to advance; and now that peace and order are restored,
and the whole country North and South have a common interest
There is a
and a common destiny, will continue to advance.

new fields of enterprise are continnew strength and ability to the people to
opening, adding

rapid increase of population;
ually

work back to the specie standard, and ultimately pay, without
embarrassment, every dollar of the debt incurred in maintaining
the national Union.
To make this more plain the following estimate of the increase
of the population of the United States is submitted.
r
According to the rate of increase in past } ears, our population
will

advance in the following proportion

:

42,000,000,

56,500,000,

76,500,000,

In 1870
In 1890

In 1880
In 1900

103,600,000,

In 1 910

The vast means

138,900,000.

war to a successful issue
were furnished by a population not over 20,000,000. The population subject to the jurisdiction of the national Government and
giving it support in 1870, will be double what it was in 1862.
The resources of the country will increase with as great rapidit}
as its population.
New and improved systems of communication
are expanding in all directions; the Atlantic and Pacific slopes
for prosecuting the

r

" across the convery soon be bound together by iron bands
tinent;" the mechanic arts, improved machinery, with agricultural,
mineral and commercial facilities fully developed, will carry the

will

nation so rapidly forward in power and resources, that nothing
need prevent the Government, if wisely and economically admin-

from retiring the legal tender notes within a reasonable
and as early as the year 1900, pay the last dollar of the debt
time,

istered,

incurred in crushing the greatest rebellion known in the world's
of the
history, and without retarding the growth and prosperit}'
great Republic.

MR. SPAULDING

S

SPEECH ON THE NATIONAL CURRENCY BANK

FEBRUARY

19,

BILL,

1863.

"Mr. SPEAKER This is a very important bill, and I may be indulged
few remarks upon its scopef and objects. I have already stated in
the debate on the finance bill that I had no doubt of the constitutionality
of the national bank bill proposed by the Secretary of the Treasury, nor
had I any doubt that State banks were also constitutional that both systems of banking might be useful within their sphere of action, and that I
was willing that the country should have both kinds of banking; that
inasmuch as the National Government had hitherto failed to establish a
permanent system of national banking, State banks had, as a necessary
means of commerce and the operations of State governments, become
firmly established, and that the Supreme Court of the United States, by
repeated decisions, held that they were constitutional and legitimate State
in a

;

institutions.

The coercive features in the pending bill against State banks having
been stricken out, I intend to give it my vote not because I think it will
afford any considerable relief to the Treasury in the next two or three
years, or that it will in any manner lessen the issue of paper money, but
;

because I regard it as the commencement of a permanent system for providing a national currency that will, if wisely administered, be of great
benefit to the people, and a reliable support to the Government in the
future.

The President, in his annual message, and the Secretary of the Treasury, in his annual report, recommend the passage of a free banking law,
authorizing the issue of a national currency which shall be of uniform
value in all parts of the country, and to be secured by a pledge of United
States stocks, deposited in the Treasury of the United States. The bill, in
all its essential features, is like the free banking law of the State of
York, which has been in successful operation in that State since 1838.

New

Legal tender notes issued direct from the Treasury, without the agency
of a bank, constitute a national currency uniform in value, in all parts of
the United States, and bearing no interest, is an advantageous loan to the
Government by the people who receive and circulate this kind of currency. These legal tender notes are based solely on the faith of the
Government and all the taxable property under the jurisdiction of the
United States. If Congress performs its duty by imposing taxes on this
property, and the Executive enforces the collection thereof, all these notes
will be ultimately

redeemed and

retired

from circulation.

These notes are declared by law to be money, and they circulate as

money in all parts of the United States. The free banking law is proposed by the Executive for the purpose of combining private capital with
the credit of the Government in the issue of bank bills, similar in all
respects to legal tender notes. The only difference between them will be
that the legal tender notes have only the United States Government to
provide for their redemption, while the bank bills, when issued, will have,
1

in addition to the liability of the Government, the direct promise of the
banking associations issuing them that they will redeem them on presentation at the bank, not in specie, certainly, during the suspension of specie
payments, but in legal tender notes, and after a general resumption of
specie payments by the banks and the Government, then to be redeemed
in coin.
Legal tender notes issued direct from the Treasury constitute a
loan to the Government without interest. Bank notes, under this bill,
would be loaned to the Government and the people at six and seven per
cent, interest. We give to the banking associations the interest on the
national currency issued by them, as an inducement to them to form these
associations and become liable for its redemption. Instead of the Government issuing this national currency direct to the soldiers and other
creditors without interest, it sells its own six per cent, bonds to the banking associations, and takes its pay in legal tender notes; the banking
associations take the six per cent, bonds from the Secretary of the Treasury and deposit them with the Treasurer, and thereupon the Comptroller
of the Currency furnishes to such banking associations the national currency, the Treasurer holding the bonds as security for their redemption.
This national circulation is, then, money owned by such associations,
like any other bank bills.
They may be loaned to the people or the Government, like any other money belonging to a bank; and when loaned,

the banking associations get six or seven per cent, interest for its use.
The associations also draw the interest on the bonds previously hypothecated with the treasurer. By this operation the associations gain, first,
six per cent, interest on its loans; and second, six per cent, interest on the

bonds hypothecated with the Treasurer.

In this way the banking associations get ten or twelve per cent, gross interest per annum, and the
Government pays six of it on the bonds sold to the associations, and

which are hypothecated with the Treasurer. The Government gives this
bonus and the privileges of banking to capitalists, to induce them to combine their credit with the credit of the Government in issuing this
national currency, and providing for its redemption, during suspension,
in legal tender notes, and after resumption of specie payments, in coin.
The Secretary of the Treasury, in his annual report, recommends 'the
organization of banking associations to supply circulation secured by
national bonds, and convertible always into United States notes, and after
resumption of specie payments into coin.'
The additional advantages held out by the bill to induce rich men, men
of accumulated capital, to join the Government in maintaining this
national currency, are:
The national character given to the bills to circulate at par in
1.
parts of the United States.

all

made receivable at par for all internal taxes and all other dues
Government, except customs, and payable to the army and navy,
and all other creditors of the Government.
The banking associations are to be exempt from all State and United
3:
2.

to the

It is

a
States taxation, and only pay two per cent, per annum for engraving.
all the
paper, and printing their circulating notes, and which is to include

other expenses of the Currency Bureau at Washington.
On a full review ol' this proposed plan of a national currency, it will be
seen that it is kisetl on public and private faith; that it proposes to combine the interest of the nation with the rich individuals belonging to it.
Men df Mirplus capital only can profitably engage in the business of bankto
speculators and adventurers, without positive capital, attempt
this bill they will fail.
Money-lenders, and not money-borrowers, can successively organi/e and manage banking associations under
the provisions of this act.
How far it will be found practicable to extend the organization of associations on the credit of the public and of individuals, can only be ascer-

ing.

If

bank under

A

tained by the experiment.
banking association of $100,000,000 capital,
of
paid in by wealthy individuals, and firmly established in the city
Xew York, and acting as the fiscal agent of the Treasury Department,

all

would be a most valuable support to the credit of the Government. It
might be made the depository for all the public moneys in that city.
It might receive the public moneys derived from loans, from customs and
internal taxes, and disburse all these moneys to the creditors of the Government. This would give the moneyed men who are stockholders of the
bank an immediate pecuniary interest in upholding the credit of the GovSimilar organizations in Boston, Philadelphia, New Orleans,
cities of the Union might be made with less amount of
and, in like manner, become fiscal agents of the Government in
capital,
those cities. The Bank of England is a striking example of the combined
power of public authority and private influence in sustaining the credit of
the Government. We may safely profit by this example. This bank has

ernment.

and other principal

been the chief agent in sustaining the British Government in the long and
exhausting wars in which she has been engaged. The Bank of England
is the fiscal agent of the British Government, and notwithstanding it is a
bank of discount, deposit and circulation, it has thus far received and disbursed the public moneys without the loss of a dollar of the money
entrusted to it.
It is also well known that our Government never lost any of the money
deposited in the first or second Bank of the United States. They were
both fiscal agents of the Government. All the public money was received
and disbursed by them with fidelity and usefulness to both parties.
Sound and well-managed banks tend to increase public and private credit,
and extend as well as to facilitate commerce with States and individuals.
They stimulate industry, commodities are multiplied, agriculture, mining,
and manufactures flourish; these constitute the true wealth, greatness,

and prosperity of the country.
I have no doubt that the framers of the Constitution contemplated a
national currency adequate to the wants of the general Government, and
that for all national purposes it has the power to control and regulate the
currency. In all Government transactions it has the right not only to
provide by law for issuing the kind of currency that shall be received for
taxes, custom duties, and all other dues to the United States, but also the
kind of money that shall be paid to the army and navy, and all other
If there had been established years ago a
creditors of the Government.
sound national bank of $200,000,000 capital, which had been in full operation as the fiscal and financial agent of the Government at the time of the

breaking out of the present rebellion, what a mighty support it would
have been in sustaining the Government at the present time! The independent Treasury law unnecessarily isolated the Government from all the
capitalists and the accumulated capital of the country.
At the very outset of this rebellion there was no money in the SubTreasury, and, notwithstanding the hostility heretofore and now manifested toward State banks, the Government was obliged to resort at once to
the State banks in ISTew York, Boston and Philadelphia, for money to
prosecute the war. The States had fostered and built up strong State

Government had been vacillating and weakened by conflicting views and opinions as to the constitutionality and
policy of a national bank. It is now most apparent that the policy advocated by Alexander Hamilton, of a strong central Government, was the
true policy. A strong consolidated Government would most likely have
been able to avert this rebellion; but if not able to prevent it entirely, it
would have been much better prepared to have met and put down the
traitorous advocates of secession and State rights, who have forced upon
us this unnatural and bloody war. A sound national bank, upheld and
supported by the combined credit of the Government and rich men
residing in all the States of the Union, would have been a strong bond of
Union before the rebellion broke out, and a still stronger support to the
Government in maintaining the army and navy to put it down.
Sir, the United States Government has thus far established no permanent system of national currency except that of gold and silver. Ever
since the adoption of the Constitution there has been a conflict of opinion
institutions, while the general

the ablest statesmen of the country upon the question of a national
Jefferson opposed the creation of all banks, both State and
national.
Alexander Hamilton proposed a national bank during the

among

currency.

struggle for American independence in 1780, but his suggestions were not
then adopted. During Washington's administration, in 1791, the first
Bank of the United States was incorporated, mainly under the influence
of Mr. Hamilton, which continued in operation until 1811, when its charter expired. No national bank was in existence during the second war
with Great Britain. That war was carried on by loans and by the issue
of Treasury notes. In 1816, the second Bank of the United States was
chartered, and continued in existence until 1836, when its charter again
expired. All will remember the decided opposition of General Jackson to
its re-charter, and the fierce struggle that ensued between the friends and
opponents of a United States bank. The friends of the bank were finally
beaten when Jackson was re-elected President in the fall of 1832. The
friends of a United States bank again rallied in 1840-41. but w ere again
defeated by the veto of John Tyler. In 1846 the independent Treasury
law was finally adopted, by which it was established that the operations
of the Government should thereafter be carried on wholly in gold and
silver coin, and that this money of the Government should be kept separate from all banks and banking transactions. Thus the law continued up
r

to the session of the present Congress.
settled policy has as yet been established

Ko
by which the Government
has assumed permanent control over the national currency. State banks
still go on issuing circulating notes, selling exchange, discounting promissory notes and bills, and receiving deposits, and the Sub-Treasury law
is still unrepealed.
national currency, adequate to the operations of the
Government in peace and war, has yet to be established. It seems that the

A

present is a propitious time to eiiact this great measure as a permanent
system, and that the duty of the Government in providing a national currency shall no longer be neglected.
not to depend on State
Sir, the Government of the United States ought
institutions for the execution of its great powers. In the administration
of the high prerogatives conferred by the Constitution, this Government
need not depend at all upon State oilicers, State institutions, or State laws.
its own means, if brought into active exercise, are
adequate to the ends for which the Government was established. In
the long interval of peace many of the powers granted in the Constitution
have not been fully exercised, nor was it necessary during peace to put
them fully into execution. But now, when engaged in a gigantic war,
when the very existence of the Government is in such imminent peril, it
is of the highest importance that it should exert all those great powers to
maintain itself, preserve its own dignity, and enforce its own prerogatives.
Congress and the Executive cannot fail now to do all in their power to

Its

own powers and

tullv

Government and restore the national Union.
Government has power to issue a national currency entirely
independent of State authority power to support armies independent of
Governors of States or State laws power to provide and maintain a navy
in like manner; and power to regulate commerce with foreign nations,
among the several States, and with the Indian tribes. These great powers
may, by means of proper legislation, be made to operate directly upon the
people independently of State boundaries or State sovereignty. Under the
power 'to raise and support armies' we may provide for calling the ablebodied men of the nation directly into the army of the United States, and
without the aid of Governors of States; and in like manner the navy may
be increased. As a necessary means for supporting such an army and
save the

Sir, this

;

;

*

'

'maintaining' such a navy, we may provide for the issue of a national
currency, through the agency of banks, or by the issue of legal tender
notes direct from the Treasury. Either mode will require about the same
amount of currency to be issued to pay the army and navy ; either mode
will be constitutional; and it is in the sound discretion of Congress to
decide which is the best mode of providing the means for carrying on the
Government in the present exigency.
are self-acting,
Sir, all the powers conferred on the general Government
self-sustaining,

and wholly independent of State authority; and when

men

of will, strong nerves, enlightened self-reliance, energy,
ability sufficient to put them into active exercise, are fully adequate
to the putting down of this gigantic rebellion and maintaining the Consti-

enforced by

and

tution and laws over all the thirty-four States and the Territories included
The duty of putting these constitutional powers
in the national Union.
into active exercise devolves upon Congress and the Executive. Congress
fail to perform every duty devolved upon it in the present great
emergency.
In the absence of a national bank the State banks have been liberal in
making loans to the Government since the war begun. It has been ascertained from reliable data that on the 19th day of January, 1863, the banks
in the State of New York alone held United States securities to the amount
of $153,637,174; being $45,000,000 more than the entire capital of all the
banks in the State, their capitals being only $108,606,062. This shows the
ability and willingness of the banks in New York to support the Government in her present peril. There is in the present imperiled condition of

cannot

the Union more distrust of the stability of the general Government than
there is of the State Governments. Some doubt exists, owing to divisions
at the North, as to our final success in crushing the rebellion.
Could you
make it certain that the Union will be preserved, and the national jurisdiction maintained over all the thirty-four States and the $16,000,000,000
of taxable property therein, which is liable for our public debt, excluding
therefrom the debt of the rebel government, said to be $900,000,000, the six
per cent, bonds of the United States would not be five per cent, below par,
while the six per cent, bonds of the State of New York are worth a premium of twenty-eight per cent. Capitalists are naturally timid, and will
hesitate about entering into new projects until they can see the way clear.
They desire to know that the Union is to be maintained and the Govern-

ment perpetuated.

Being fully assured of this, your bonds will be immediately above par, and there will be less difficulty in organizing banking
associations and carrying this act into effect.

To be successful, it must
Sir, banking is eminently a practical business.
be based on accumulated capital, and conducted by practical men, who
are intimately acquainted with the commerce and business of the country.
Finance and financial questions must all be finally brought to a practical
spun the theories of visionary men may be, they
on to provide money in the present exigency to pay
the army and navy and other needy creditors of the Government. Our
plan of finance must be simple, efficient and practical. It consists of two
parts, debts and taxation, namely
1.
Contracting debts for the supply of the army and navy, issuing legal
tender notes, and borrowing money in some form on the faith of the Govstandard.

cannot

However

now be

fine

relied

:

ernment.

Taxation on the entire property, commerce, and business of the
amply sufficient to pay the principal and interest of all the debts
which have been or may be contracted on the faith of the Government.
Sir, no theories can be imagined, nor shifts made that will be allowed to
evade the tariff on imports and internal taxes on property and business
adequate to the payment of the entire debt contracted, both principal and
interest.
The property and business of the country are amply sufficient
for this purpose; but it will require a strong, stable Government, wisely
administered, to adjust and enforce the collection of so large an amount
of taxes as will be required to pay the extraordinary war debt that must
be contracted to crush the rebellion and restore peace and tranquility over
the whole Union. I have no doubt that the patience and energies of the
people are to be taxed to the utmost before the Union is restored and we
be assured of future loyalty in all the southern States. You are not yet
able to collect taxes in the disloyal States without the aid of a powerful
army. Before you can be assured of loyalty in the rebellious States, Union
State Governments must be established and maintained in each of them.
To do this will require a large army for many years. Until you can collect your taxes in all the rebel States without the aid of military force the
rebellion is not subdued.
Many of our friends express sanguine expectations of immediate relief
from the passage of this national bank bill, and I should be much gratified
to know hereafter that their expectations have been fully realized. But,
sir, in my judgment, the Secretary of the Treasury must not place too
much reliance upon this plan. It will not give much relief to the Treasuiy
for one, two, or three years. It will not to any considerable extent.
2.

country,

supersede the necessity for the issue of Treasury notes. It will go into
operation slowly. The Government having heretofore failed to provide a
national currency, the State banks in the older States have been organized,
become deeply rooted, and firmly established. It will take a long time to
supplant these banks. Every coercive or violent attempt to do so will do

This new system will come in competition not
only with existing institutions, but will encounter the prejudices of a large
class of people who are hostile to banks, and especially hostile to a United
States bank. It will be towards the close of the war, when the Govern-

more harm than good.

firmly established and its authority respected in all the States,
most valuable in providing a way for funding the public
debt and establishing a permanent system of national currency. It is
chiefly on this ground that I am induced to support the bill at this time.
It is more for the benefits to be realized in the future than during the

ment

that

is

it

will be

pending war that I am induced to give it my support.
Debt and taxation are the inevitable necessities of war.

Hence the

importance of a reunion of all parties in a vigorous prosecution of the war,
in order to crush the rebellion in the shortest time and with the least posThis is the only way to stop the
sible expenditure of blood and treasure.
burdens and calamities of the present war. Fight vigorously and in
earnest while the war lasts. Every consideration of duty and patriotism
require all the loyal people to come at their country's call, to fight the
rebels forthwith, by all the means within the range of civilized warfare, to
save us from a protracted war, save the further effusion of blood, and stop
the vast expenditures which must, unless speedily terminated, burden
present and future generations.

We need more economy in

the management of the war. It is manifest
not that close supervision and scrutiny over the expenditures that
are necessary. Every man in the service should be required to perform
with fidelity the duties devolved upon him. All supernumerary officers
and men should be dispensed with. All disbursing officers should be held
to a rigid economy and strict accountability. As we approach the termination of this war the expenses must be greatly reduced, and preparation
made for a resumption of specie payments. Our public debt will then
appear in all its vast proportions, for it must all be paid ultimately in gold
and silver. This makes it necessary for us to cut off all unnecessary
expenses of every kind.
Every day that the war is prolonged the debt is largely increased. The
daily increasing debt of $2,500,000 must all be raised by taxation in some
The Government is spending at a
form, or the debt will not be paid.
fearful rate the accumulations of former years of prosperity. Every dollar
of debt contracted becomes a first mortgage upon the entire property and
It affects the fanner, laborer,
productive industry of the country.
there

is

mechanic, manufacturer, merchant, banker, commission merchant, professional man, and retired capitalist.
Every pound of tea, coffee and
sugar used is taxed to pay the expenses of the war, and the persons using
these articles of daily consumption pay the tax in the increased price.
Every person that uses wine, brandy, whisky, beer, cigars, or tobacco,
pays a portion of the war tax. All necessary articles of dress, such as
shoes, boots, hats, and wearing apparel, are taxed in like manner, and all
superfluous and unnecessary articles, such as silks, laces, diamonds and
jewelry, are heavily taxed, and I would be glad to see the tax still further
increased on them, in order to prevent, if possible, their use nt this time.

8

Every person that rides upon the railroads, reads a newspaper, draws a
check, or sends a telegraphic message, is taxed for war purposes. But I
need not further enumerate the different modes in which every body is
taxed every day to pay the expenses of the war.
Sir, this war debt is a mortgage alike on all the productive industry and
property of Republicans, Democrats, old line Whigs, conservatives, and
All these classes of persons are taxed alike to pay the war
abolitionists.
debt. Every Democrat or Republican who chews tobacco, drinks beer or
bad whiskey in the sixth ward of New York pays his proportion of the
war debt, the same as the conservative who drinks his choice wine on the
Fifth Avenue. This war tax is already beginning to be noticed by the
people; but as the war is procrastinated, and the debt increased, the
burden will be more deeply felt. While we are running along at fortj^
miles an hour, under the pressure of irredeemable paper, necessarily issued
and circulated to prosecute the war, the present taxation is easily paid,
and there is a seeming prosperity; but I can assure gentlemen that a
reckoning day will surely come. Look at the immense army in the field,

their commissariat, supply vessels, supply trains, ambulance corps, sutlers,
teamsters, hangers-on, idlers and assistants of all kinds, extending over a
line of military operations of more than four thousand miles, and you will
be impressed with two important facts
1.
The enormous expenditures necessary to their present support, and
the future bounties and pensions that must be paid.
:

2.

The number of men

and the consequent

that are

withdrawn from industrial pursuits,
which ought to be added

loss of productive industry

to the wealth of the country.

All this immense army add nothing by their labor to the wealth of the
country, and the expense of supporting such an army devolves upon
those who do labor and those who have already acquired property.
What a mighty drain this war is upon the productive energies and
resources of the country. It is, indeed, an exhausting as well as blood}'
war. Whether it be successful or unsuccessful, vast consequences are
involved. If terminated successfully within three years, the Union maintained and the Government perpetuated under the Constitution, the
results to flow from such a triumph would amply compensate for all this
expenditure of blood and treasure. If it terminates unsuccessfully, the
Union divided and the rebel government maintained, the war debt must
but no man here is wise enough to predict what results will
still be paid
follow such a calamity.
;

am

asked almost daily, will the Union be maintained and the national
all over the States and Territories ?
I cannot
doubt that it will. No efforts of mine certainly shall be wanting to
I

Government perpetuated

I cannot, however, shut niy eyes to the
accomplish so desirable a result.
formidable character of the rebellion, nor to the difficulties in the way of
accomplishing such a result. The inherent difficulties of conquering and
subduing so large and intelligent a people, extending over such a wide
extent of territory as is contained in the revolted States, are verj^ great.
An advance in the
It is very difficult to move and supply large armies.
enemy's country for any considerable distance always involves the difficulties of keeping the rear line open to the base of supplies.
This has
been demonstrated in the advances that have been made in attempting to
take Richmond. Even the armed occupation of a part of any one of the
revolted States does not make the people in the State loyal to the General

Government. The hatred of the people in the rebellious States is deepseated and abiding.
They have a separate de facto confederate governand separate State governments. As States they revolted from the
ment,
United States Government, and with their State governments remaining
intact and in full force. They still maintain their separate State organizations, with power to enforce their State laws. This insurrection was
commenced very differently from most other insurrections. It was not
commenced by disorganized bodies of the people, but by the constituted
:mt hority of States in their capacity of independent sovereignties. These
State authorities had power to suppress immediately the Union sentiments of the people within their jurisdiction, and to enact as well as to
enforce any new laws that might be necessary to accomplish their wjcked
purposes. Hence the formidable character of the rebellion at the outset.
It will take a long time to supplant the present State organizations in the
revolted States, and to institute new Union State governments in their
stead. It can only be accomplished by armed force. It will require a
large standing loyal army in the actual occupation of each State. Until

Union State governments ar.e organized and permanently maintained
the Southern States, you cannot hope for a lasting peace.

in

all

All
Sir, it is proper for us to look these difficulties square in the face.
the people in the Northern States ought to look at the formidable characIt will
ter of this rebellion, and act up to the demands of the hour.
require the active energies of a united North to maintain the integrity of
It is unwise, ay, criminal for us, while incurring a debt of
$2,500,000 every day, to deceive ourselves as to the real situation. The
business men, at a distance, are going on making money, speculating,
buying and selling, almost unconscious of the dangers that surround us.

the Union.

Party organizations are maintained, party platforms set up, and a partisan
struggle constantly made for power, wholly inconsistent with the mighty
issues involved in the present war. This applies to all parties and ail
party organizations. The people in the loyal States, without regard to
party distinctions, have a common interest and a common destiny; all are
intensely interested in the deadly conflict, all become liable for the debts
contracted in the prosecution of the war, and all must be taxed to pay both
principal and interest.
But, sir, the higher inspirations of duty and patriotism impel us to sustain the President in a vigorous prosecution of the war a war that has
been forced upon us by ambitious men, whose chief object is power.

Considerations infinitely above mere party or pecuniary gains or losses
should compel us to united action. Your country, my country, is in danger of being divided and destroyed. Oaths have been broken, the Constitution defied, and the laws trampled under feet of rebels. 'United we
stand, divided we fall.' I appeal to gentlemen of all parties to uphold and
sustain the constituted authorities in vindicating the majesty of the Constitution and laws over all the States and Territories, from the great lakes
This
to the Gulf of Mexico, and from the Atlantic to the Pacific oceans.
Let it have one national Government one destiny."
is our country.

REDEMPTION OF NATIONAL CURRENCY

ASSORTING HOUSE.

"BUFFALO, September 30th, 1865.
Dear Sir I am in receipt of your favor of the 28th inst, asking me to
communicate niy views of the plan proposed by the New York banks for
the redemption of national currency.

10
t

In repl}r I would say that I am clearly of the opinion that a prompt
redemption of the national currency is necessary to insure success and
permanency to the system. No system of banking is safe that does not
enforce rigidly the obligation of each bank to redeem its circulating notes
on demand. During the suspension of specie payments they are required
to be redeemed in legal tender demand notes, and on the resumption of
This is one of the
specie payments they must be redeemed in coin.
requirements of the National Banking Law, which should be strictly
enforced, and every sound and well managed bank will no doubt be able
and willing to conform to this law, and every weak and badly managed
bank should be compelled to live up to its requirements. But in stating
these general propositions, which no sound banker will controvert, it does
not follow that a combination called an Assorting House is the best mode
of compelling them to fulfill its obligation to redeem.
An Assorting House would require large rooms, a great number of
clerks they would handle a large amount of currency, the expenses would
be heavy, and in these times of knavery and fraud, the risk would be very
And to what end would this assorting process be carried on?
great.
Simply to separate the money of each bank into packages to be sealed up
and sent home by an express company for redemption. Is this necessary ?
,

;

Is it necessary to incur all this expense and risk to secure a prompt
redemption of the national currency. Let us consider the subject a little
more in detail, and see if a prompt redemption of it cannot be attained
under the law as it now stands, or by a proper amendment of it if found

defective.

In the first place, it is not necessary to assort and send home this currency for redemption so long as it is required by the people to carry on
the business operations of the country. Every time a hundred dollar bill
passes from one person to another it is a practical redemption of it by the
person who takes it. Every time a merchant at Chicago pays to a farmer
$500 in national currency for 3, car load of wheat, the farmer by the operation redeems such national currency, not in greenbacks, nor in gold, but
in a commodity better than either, namely wheat, a staple article useful
to all. So every merchant in New York that sells a bale of cotton goods
and receives his pay for it in currency, redeems such currency, not in the
way that banks redeem it, but in cotton goods, which is far better because
performs the true functions of money by facilitating the legitimate sale
of commodities. So every time that a merchant or manufacturer pays his
internal revenue tax to the United States Collector in national currenc}-,
the Government redeems such currency by receiving and discharging such
tax. So every mechanic or laborer that receives national currency for his
services, redeems such currency by the labor performed. So it will be
seen that just so long as the national currency is practically redeemed
every day in its passage from hand to hand in the payment of commodities
and services and in the ramified operations of trade and business botli with
the Government and the people whose operations it greatly facilitates,
there is not the slightest necessity for resorting to the expensive and risky
operation of assorting and sending it home for redemption.
it

With a proper amendment to the National Bank law, I am clearly of the
opinion that it w ould be unwise to establish an Assorting House, and even
without such amendment, I do not think it good policy to establish it. In
the first place the Assorting House will be as I have stated, attended with
great risk and expense. And in the next place it is opposed to sound
r

11
policy and will have a niiM-liirvu> effect upon the legitimate circulation
of the national currency. The leadingobject of the national bank law was
to furnish a currency of uniform value and similitude to be used by the
Government and people as an instrument to facilitate the exchange of commodities and services, and the collection of internal taxes, in all parts of
the United States. It is amply secured by gold bearing bonds deposited
with the Treasurer of the United States at Washington. Only ninty per
cent, of currency is issued on the amount of bonds hypothecated, thus
The Government
leaving a margin of ten per cent, for depreciation.
.-tamps it with the imprint of the Treasury and guarantees the ultimate
payment of every dollar put in circulation by any bank, whether such bank
is solvent or insolvent.
It is made a legal tender for all taxes and other
debts due to the Government except customs, and for all debts due from
the Government except interest on the funded debt. All national banks
art- obliged by law to receive it for all debts due them, and each national
bank depositary is further obliged to receive it on all Government deposits
made in the bank by any public officer. These provisions in the bank law
give great advantages and credit to the national circulation over that of
State banks. These provisions of the law provide to a considerable extent
for a, practical redemption of this currency in the every day operations of the
Government and people, not only in
York, Boston and Philadelphia,
but also in Charleston,
Orleans, St. Louis, Cincinnati, Chicago and

New

New

Buffalo, and in every other city and village throughout the length and
breadth of the whole country. With the facility thus given to the national
currency to circulate at par in every part of the United States, and the
guarantee of the Government that every dollar of it shall be paid, it passes
freely among all classes of people and corporations without any one stopping to enquire whether a particular bank is badly managed or not. The
national currency with the pledged security and guarantee of the Government, is good in any event, and is not likely to become a dead weight in
any of the banks in the principal cities. If a weak or badly managed bank
(like the First National Bank of Attica, for instance) should fail, its creditors may be large losers by the failure, but every dollar of the circulation
will be paid, and the notes continue to circulate equally as well after as
before its failure. No one ever stopped taking the circulating notes of the
First National Bank of Attica, notwithstanding its failure more than six
months ago. It is not the bill holder that will lose by the failure of a
national bank, but its depositors and other creditors, hence the security of
national currency over all other currency. Thus far the national banking
system in respect to its circulation has gone on smoothly. All this currency in miscellaneous packages consisting of the issues of banks in
Maine, Minnesota and Tennessee, pass equally well without being assorThis system of furnishing a circulated, in all parts of the United States.
ting medium thus far works as well, or better than was anticipated by its
most sanguine advocates. It is fulfilling admirably the great desideratum

of a true national currency, so long needed to carry on successfully the
business of the enterprising people of this great country.
I should regret very much to see a combination of bankers in any of
the principle cities organize an Assorting House to disorganize the harmonious working of this system by assorting this currency, sealing it up

and sending it home to each bank issuing it for
redemption, unless there should be an imperative necessity for so doing.
The tendency of such an operation would be to materially disturb the
financial operations of the country. Once begin the operation of assort-

in separate packages,

12
ing currency by
large organised Assorting House in the city of New
York, with a large number of clerks under good salaries, and you begin
a system that will ultimately draw into its support every bank in the
whole country. What will be the operation of such a combination ? In
the first place it may not be illegal, but is not specially authorized by the
national law. In the next place it begins by the city banks sending all
national currency received by them to the assorting house, whether necessary or not, to be assorted, sealed up in packages, and sent home to each
bank, either through its redeeming agency or directly by express to the
bank that issued them. Each bank, on receiving this currency so sent
home, is obliged to provide for it either in legal tender greenbacks, which
are no safer than national currency, or by drafts which are at par in New
York, but generally by providing a fund in advance at a bank in one of
the principal cities. As the currency continues to be assorted and sent
home, it creates the necessity for each bank out of New York to provide
more par funds to be placed to their credit ready for redeeming their
notes as they shall be again assorted and sent home for that purpose.
These banks not being able to make exchange or par funds in other
modes, will very soon begin to gather up the circulating notes of other
banks, and especially notes issued by other banks in their own locality,
and send them to New York for their own credit. These notes, on reaching New York, will again go immediately to the assorting house, and be
again counted, sealed up, and sent back by express to the country. As
this process of sending money packages to and from New York goes on
through the machinery of the assorting house, the volume will continue
to increase until every bank in the country will be obliged to contribute
directly or indirectly to the support of a combination unknown to the
law. It seems to me that the good to be attained by any such combinations will be greatly overbalanced by the mischiefs it will create to the
It would no doubt be a
present harmonious working of the system.
profitable business for the express companies to carry these money packages to New York and back again to the country, but I am greatly
puzzled to know how it will be any advantage to the people, the Government, or the banks, either in New York or elsewhere, to carry such a
:i

scheme into practical operation. If this combination is adopted, the
national currency issued by the banks in New York city which now circulate freely everywhere, will be unnecessarily returned upon them for
redemption under the operations of their own assorting house. This will
be one of the legitimate results of the system of assorting which cannot be
avoided.
I watched with considerable care the working of the system instituted
by the Suffolk Bank of Boston and the Metropolitan Bank of New York,
compelling the old State banks to redeem their circulating notes by a similar process.
This was no doubt a check against the excessive issues of
banks at that time, especially to banks in New England, which were not
very strongly restricted by law as to the amount of these issues, but I very
much doubt whether even this plan to coerce the redemption of even an
inferior currency did not do more hurt in deranging the free and legitimate circulation thereof than it did good in preventing excessive issues.
It certainly afforded a fine business for the express companies in carrying
money packages to and from New York and it is certain also that the
activity with which these packages were hurried back and forth, greatly
accelerated the panic that occurred in August, September, and the first
;

13
half of October.

lsr>7;

banks in New York, by common
home, and took this secured currency of the

until linally the

consent, ceased sending
State of New "York and

it

made

it

a basis for Clearing House Certificates,
in stopping the panic and restoring

which had an important influence
confidence.

Upon a lull examination of the subject, I arrive at the conclusion that so
long as the national currency is required for legitimate business purposes,
it will not largely accumulate in the banks of either of the three cities of
New York, Boston or Philadelphia, nor will it be sent home for redemption.
Thus far it does not appear that there has been a plethora or glut of
n.it ioual currency in either of those cities.
But suppose that in the course
of a few months there should accumulate a few millions dollars of national
currency in those banks more than could be readily disposed of in the
operations of the Government and the people, in what manner should it
be disposed of?
In such a contingency, when it does occur, I think the issuing banks
should be called upon to redeem their circulating notes, and it seems to
me to be right that each bank should be required by law to redeem in
the principal city where such surplus currency accumulates, as well as at
their

own

counter.

New York city
ted
for

is

the great commercial emporium, and

is

clearly indica-

by the course of business, foreign and domestic, as the proper place
each bank located out of that city, to have an agent for the redemption

of its circulating notes.
An amendment to the national banking law can probably be made at
the next session of Congress, which shall require all the banks to have an
agent for the redemption of their circulating notes in the city of New
York, instead of being allowed to select as they now do, any one of the

seventeen

named

This being accomplished, any
or elsewhere, in any city or town in the
United States, could send the circulating notes of any bank to the agency
selected by it for redemption without the expense and risk of an assorting
house, which I think is the true mode of providing for the redemption of
cities

bank or individual

in

in the present law.

New York,

the national currency. This would be in accordance with the law, and
would, I think, give better satisfaction and better promote the welfare of
all concerned.

This
J.

is

my

answer

to

your request.
Yours truly,

U. ORVIS, Esq.,
Pres't 9th National Bank,

E.

G SPAULDING.

New York."

MR. RANDALL'S HILL TO DESTROY NATIONAL BANKS.

BUFFALO, January

22, 1867.

Hon. H. E. Hidbw'd, Controller of Currency, Washington;

Dear Sir I am much obliged for the information contained in your
and I trust you will pardon me for the remarks I am about to
make.
I have watched with a good deal of interest tlie various plans brought
forward in Congress, in relation to the National Finances and Amendments to the National Banking Law. Every man in the country is on
the lookout to see what is to come next. Every one engaged in legitimate
pursuits wants a fixed policy and steadiness in financial affairs, and yet
letter,

14
all are under constant apprehensions, fearing that some scheme will be
hastily passed by Congress which will derange monetary affairs, and upset
all their business calculations.
Many enterprises are postponed. The

building of railroads, ships, warehouses, elevators, furnaces, and other
manufacturing establishments, are held in abeyance until it can be more
clearly seen what is to be done with these schemes, and what is to be the
future in regard to financial affairs.
It is obvious that this suspense and apprehension operates very unfavorably upon individuals, as well as upon the revenues of the Government.
Congress in its official capacity has thus far acted wisely. It has not

passed any of the individual schemes that have been brought forward.
It has been content to let well enough alone.' It has refused to increase
the national currency above $300,000,000. It has not passed Mr. Randall's
grand scheme of repudiating the faith of the Government with the
National Banks, and turning the Treasury Department, in time of peace,
into a permanent machine, for the issue of an irredeemable paper currency when there is not the least necessity for it, and when all history
proves it to be unwise, as tending to retard the resumption of specie pay'

ments, and resulting in general financial disaster, bankruptcy and ruin,
both to the Government and people. It has refused to pass the twenty
pages of pending amendments to the National Bank act, (House Bill No,
In
771,) which, if passed, would make the law worse instead of better.
short, the Senate and House, as legislative bodies, have submitted to the
introduction of these injudicious measures to be talked about, but as yet
they have not been unwise enough to let any of them be passed into laws
to further disturb existing arrangements under laws already passed, and
which, up to the time of the meeting of Congress, were operating very

favorably, under a moderate contraction of the currency, in preserving a
good degree of steadiness and uniformity in the money market, keeping

business steady and prosperous, and enabling the Secretary of the Treasury to establish more certainly the public credit at home and abroad, and
make a most favorable exhibit of the national debt. These are matters
of great consequence to the welfare of the nation, and I sincerely hope
that no hasty or indiscreet measures will be allowed to pass. The people
of the country need rest, and in order to secure it I trust that Congress
will hold a steady purpose, and not pass laws at one session to be repealed
in the next. We are cursed with too much legislation, and I am gratified
to see the present Congress holding back on all impracticable schemes.

The act of Congress passed on the 12th of April last, it seems to me is a
wise and judicious measure. It authorizes the Secretary of the Treasury
to dispose of 5-20 gold bonds, and with the proceeds to retire six per cent,
compound interest notes, and the plain legal tender greenback currency
and other indebtedness of the Government, but not to retire more than
$4,000,000 of greenbacks a month, or $48.000,000 a year, but without
restriction as to the amount of compound sixes that may be retired during
any week or month. This law is discretionary with the Secretary of the
Treasury. Power is given him to contract the currency, but he will no
doubt use his discretionary power prudently, and not retire either greenbacks or compounds, any faster than it can be done without materially
disturbing the legitimate business of the country. His object will be in
the future, as it has been during the past year, to keep a steady and uniform money market. This will be a necessity on his part to enable him
to successfully carry on the fiscal affairs of the Government. Under a

15
very stringent and paniky money market, the 5-20 bonds would fall below
par, thereby stopping conversion of 7-30 into the 5-20 bonds, and this, in
view of $650,000,000 of 7-30s falling due between this and July 15, 1858,
would embarrass and derange all the operations of the Treasury Department. The Secretary of the Treasury must therefore, of necessity, be

moderate and discreet in contracting the currency under the law of the
12th of April.
The Secretary will no doubt, by a moderate and prudent course of contraction, endeavor to keep the business and industry of the nation in a

prosperous condition, in some degree check wild speculation, gradually
reduce prices, and bring greenbacks and national currency nearer the
specie standard. On this point the Secretary, in his last annual report,
How rapidly the United States
makes the following judicious remarks
notes may be retired must depend upon the effect which contraction may
have upon business and industry, and can be better determined as the
work progresses. No determinate scale of reduction would, in the presThe policy of contracting the
ent condition of affairs, be advisable.
circulation of Government notes should be definitely and unchangeably
established, and the process should go on just as rapidly as possible without producing a financial crisis, or seriously embarrassing those branches
As
of industry and trade, upon which our revenues are dependent.'
the volume of currency is reduced, it will increase in value, and as soon
as the specie standard is reached, the national banks will be obliged to
redeem their circulating notes in specie. The Government can retire
whenever it seems best, from the field, as an issuer of paper currency,
and consequently will not be under the necessity of providing gold and
The burthen of redeeming the national currency in
silver to redeem it.
gold and silver will then be thrown exclusively upon the banks that issue
it, and they will be required to keep the necessary reserves of coin for
'

:

that purpose.
It seems to

me

that the act of the 12th of April contains all the

power

for contracting the currency which is necessary to bring the business of
the country back to the specie standard, as it was before the rebellion.

take three years, five years, or even ten years, to accomplish that
When the old uniform standard of gold and silver is reached, and
prices and the business of the country are again based thereon, national
banks will take the place of State banks in the issue, circulation and
redemption of the currency necessary to carry on the fiscal affairs of the
It

may

result.

Government and people. The Treasury Department will be relieved from
a duty that was forced upon it as an imperative necessity during the war,
and the Government left to perform its legitimate functions under the
Constitution, the currency being thereafter regulated by the wants of
trade and industrial pursuits.
It was never intended by the originators of the legal tender acts that
the issue of an irredeemable paper currency should ever become the permanent policy of the Government. In the opening speech I made in the
House on the 28th of January, 1862, on the bill introduced by me, I said
that the bill before us is a war measure a measure of necessity and not
of choice, presented by the Committee of Ways and Means, to meet the
most pressing demands upon the Treasury, to sustain the army and navy,
until they can make a vigorous advance upon the traitors and crush out
the rebellion. These are extraordinary times, and extraordinary measures nmst be resorted to, in order to save our Government and preserve
'

;

our nationality.'

16

The credit of the Government, by the legal tender act, was brought into
immediate requisition, and in the most available form to provide ways
and means for sustaining the army and navy to crush the rebellion. It
was in effect a forced loan from the people to the Government, in a most
perilous period in our history, and was justified mainly on the ground of
imperative necessity. It was a temporary measure passed in a most
pressing exigency, and should not be continued any longer after peace is
restored than seems to be necessary to conduct us safely back to that
standard of value, which is recognized by all the nations of the world.
In the speech to which I have above referred, I further said, 'a suspension of specie payments is greatly to be deplored, but it is not a fatal step
in an exigency like the present.'
The British Government and the bank of England remained under suspension of specie payments from 1797 to 1821-2, a period of twenty-five
years; gold is not as valuable as arc the productions of the farmer and
Our
mechanic, for it is not as indispensable as are food and raiment.
army and navy must have what is more valuable to them than gold or
silver, they must have food, clothing and the material of war.
Treasury
notes issued by the Government on the faith of the whole people, will
purchase these indispensable articles, and the war can be prosecuted until
we can enforce obedience to the Constitution and laws and an honorable
peace be thereby secured. This being accomplished, I will be among the
first to advocate a speedy return to specie payments, and all measures that
are calculated to preserve the honor and dignity of the Government in
time of peace, and which I regret are not practicable in the prosecution of
4

this war.'

The national banking law, passed to continue for twenty years, was
intended as a permanent system. It was intended that it should take the
place of the State banks, in furnishing a solvent national currency ot
uniform similitude and value for the whole county. The arguments put
forth in the last annual reports of yourself and the Secretary of the Treasury in favor of sustaining the national bank currency seem to me to be
cogent and conclusive. I advocated the national bank law, not for any
immediate relief it would give to the Treasury, but as a permanent system
of currency and banking. In the remarks which I made in the House on
the day of the passage of the bill, I said 'that I should vote for it, not that
I think it will afford any considerable relief to the Treasury in the next
two or three years, but because I regard it as the commencement of a permanent system

for providing a national currency that will, if wisely
administered, be of great benefit to the people, and a reliable support to
the Government in the future.'

All the advocates of the legal tender act while

it

was pending

in

Con-

gress, based their arguments upon the necessity of its passage as a temporary relief to the Treasury during the war, and not as a permanent policy

of the Government.
On the contrary, the national banking law was
advocated as a permanent system of national currency and banking for
the whole country. The State banks in this and other States, especially
the banks in the State of !N"ew York, gave up their State organizations
with great reluctance. But in consequence of the law which taxed State
circulation out of existence, the State banks were obliged to come under
the national banking law for self-preservation, a law which on its face was
to continue for twenty years.
It

has taken something over three years to put in successful operation

17
about 1,G50 national banks under one system, and which arc directly under
the control and regulation of the officers of the Government at Wa>hingA few of the banks have but recently perfected their organ i/ations
ton.
and obtained from the Department their circulating notes. Before the ink
we are startled with a
i.<
fairly dry on the last issue of national currency
bill reported from the bunk committee in the House to emasculate and

destroy this system of national banking. I say destroy it, for no man at
all ronyersant with the advantages of private banking and its freedom
from taxation and other restrictions, would consider it any inducement to
remain under the inquisitorial supervision imposed by the national banking law, if the right to issue circulating notes is taken away from them.
TlH'M- banks have been organized in good faith by the stockholders under
the national law, because in the first place State bank circulation was
killed by United States taxation, and in the next place great inducements
were held out to them for a national circulation to continue twenty years.
What a breach of faith on the part of the Government in holding out
inducements to organize under this law, killing off the State banks first.
and then turning a short corner to kill off the national banks, children of
its own creation.
Are all the rights which the stockholders of the banks
have acquired under this law to be thus summarily disposed of? How
many banks would have organized under this law if the stockholders had
supposed that their rights to issue circulating notes would be taken away
from them as soon as they w ere organized ? Kot one in a hundred, for the
simple reason that there would be no inducement to come under the
r

law without, circulation.
banks can continue to do business on their capital
and deposits, this is no doubt true, but it could be much better carried on
by the stockholders as private bankers without the onerous taxation and
restrictions imposed by the national law. The organization of State and
private banks would be much better, larger latitude being given to operate, and much freer from inquisitorial examinations.
If this bill now pending in the House is passed and becomes a law, it
will pretty effectually use up the national banking system. It has taken
about four years to "build it up, and within three years it will be so far
destroyed as to make it no object for stockholders that can organize into
private banking companies to remain in the emasculated and restricted
condition in which they will be placed.
What security can men have for investing their money and basing their
business calculations under a national law ? The insecurity and scandal
that will attach to such hasty and inconsiderate legislation will deter all
prudent men from placing too much reliance upon a law of Congress,
passed at one session, organizing a great system of national policy, to be
restraints of the national
It is said that these

emasculated or repealed before it gets fairly into operation. It looks too
much like confiscating the property of individuals under the pretence of
creating a sinking fund to pay off the national debt.
I hope the Senate and House will carefully consider this measure in all
its bearings before they pass a law involving such important consequences
in regard to its breach of faith in destroying the acquired rights of the
stockholders in these banks, and the disastrous consequences likely to
follow the issue of Government paper money as a permanent policy.
Yours very truly,
E. G. SPAULDIXG.

18
MR. SPAULDING TO SECRETARY MCCULLOCH.
S K,
FARMER'S AND MECHANICS' NATIONAL BANK,
T

No. 3 Spaulding's Exchange,
pge,

)

>

BUFFALO, December 4, 1866.
Dear Sir You will do me a favor by sending to me by mail a pamphlet
copy of your report and accompanying documents. I have only seen a
synopsis of it, but it seems to me that you understand the situation, and
have stated it with force and ability. I congratulate you on the favorable
exhibit of the public debt, which is in a great measure due to your discreet and prudent management of the national finances. You have no
doubt now, to a large extent, control of the finances of the country, and
I think that you will, of necessity, contract moderately, so as to preserve
a tolerably easy money market, in order to be able to fund the compound
6's and the 7-30's into long gold-bearing bonds, between this and the 15th
of July, 1868. There may be occasional spasms and tightness for money

with the speculators, but generally I shall look for plenty of money for
legitimate business for at least a year to come. If the speculators should
get some check it would be a good thing for the country, and all men
engaged in industrial pursuits would not complain.
I hope you will be able to reach the specie standard with at least $250,000,000 of plain legal tender United States notes still outstanding. The
amount of gold and silver coin now available in this country is so small

that it constitutes a very adequate basis on which to rest the largely
increasing volume of business to be transacted, and unless we can have
legal tender in some form, other than gold or silver coin, I think we will
hereafter be very much subjected to panics and revulsions, to the injury

of legitimate business, and, consequently, diminished revenues. If we
can maintain $250,000,000 of the paper tender at the specie standard, in
addition to the supply of gold and silver, I think the business of the coun-

more steady and uniform.
Yours truly,

try would, in the future, be

E. G.

Hon.

HUGH MCCULLOCH,

SPAULDING.

Secretary of the Treasury.

SECRETARY McCULLOCH's REPLY.

TREASURY DEPARTMENT,
WASHINGTON, December 7, 1866.
Dear Sir -Your favor of the 4th inst. is received. You will receive a
copy of my report through the Comptroller of the Currency. It was very
hastily written, but is, I think, sound in doctrine.
What we need is an increase of labor. If we could have the productive
industry of the country in full exercise, we could return to specie payments without any very large curtailment of United States notes. My
object has been to keep the market steady, and to work back to specie
payments without a financial collapse. I shall act in the future as I have
in the past, with great caution, and attempt no impracticable thing.
I

am

very trulv yours,

H. MCCULLOCH.
Hon. E. G. SPAULDING,
Farmer's and Mechanics' Bank, Buffalo, N. Y.

19

NATIONAL DEBT

NO REPUDIATION.

Will the public debt of the United States ever be repudiated? The
answer to this question depends upon the efficiency and fidelity of the
national Government. The Government has ample power under the Con-

and ample means at its disposal to pay every dollar of the public
Believing that the Government will continue faithful and efficient,
I answer no the public debt will not be repudiated.
large majority of
the people also say no, but nevertheless there is a small minority that have
answered this question in the affirmative, and continue to repeat the assertion that the public debt will never be paid. This reckless assertion has
some inlluence in depressing the national securities and keeping up the
price of gold. This grumbling class of people say that the "old Continen" issued
tal money
during the war for independence, became worthless
and was never paid. This is no doubt true the Continental money did
greatly depreciate and was never fully paid, but it was issued under the
feeble authority of the old Continental Congress, when there was no
adequate executive authority to enforce the collection of taxes for the payment of the public debt. This depreciated currency was issued both
before and after the adoption of the articles of Confederation of the old
stitution

debt.

A

!

thirteen states, and before the formation of the present efficient Government under the new Constitution.
Under the articles which composed the old compact, there was no power
vested in the Continental Congress to collect taxes. The power to enforce

the collection of taxes was left to the legislatures of the several States.
Upon a quota furnished and a requisition made by Congress, the several
States were required to levy and collect taxes to support the Federal Compact. This plan was a fallacious system of quotas and requisitions, inconsistent with every idea of vigor or efficiency which pertains to every well

organized Constitution of civil Government. It is not at all surprising
that the Continental money which depended upon thirteen other Governments to levy and collect taxes to raise money for its payment, should
depreciate and become of little or no value. The power contained in the
old Continental Compact was nominal, without a president or other executive to enforce its requisitions. It was ineffectual to raise money by
taxation, and consequently the old Continental money fell into disrepute

and was never

fully paid.

Under

the present Constitution all is changed. Instead of the old feeble
compact existing at the close of the seven years war for independence, we
have now a strong, well organized civil Government, under a Constitution
with ample executive legislation and judicial powers, fully adequate to
the objects for which it was formed. This Government is now invested
with power to protect and defend the Constitution, enforce the laws and
preserve its own existence ; power to provide for the common defence and
promote the general welfare ; and for these purposes has power to raise

and support armies,

to provide and maintain a navy, and provide for calling forth the militia to execute the laws of the Union, suppress insurrections and repel invasions. To raise the money for these purposes, the
Government is invested with further power to borrow money on the
credit of the United States, and to repay the money thus borrowed, to

levy and collect uniform taxes, duties, imports, and excises throughout
the United States. These are some of the great powers intrusted to the
general Government for the preservation of its own existence.

When this most

wicked and gigantic rebellion broke

out, in

an open and

20
avowed determination to break up the Union, it became necessary to bring
into active exercise all these high powers of the Government. Armies and
navies had to be raised and supported. All the material of war necessary
for their efficiency had to be provided.
Money had to be borrowed, and
in vast amounts.
The old Continental money possessed none of the
elements of vitality and credit that is imparted to the legal tender demand
notes and bonds issued under the present Constitution, with this great
power vested in the President to enforce the laws.

The debt thus incurred

in the prosecution of the

war

to

put

down

the

and restore the national authority over all the States, will be
about $3,000,000,000. This large sum has been borrowed on the credit of
the United States, to maintain the Government and perpetuate the Union,
and the beneficial results flowing from the triumph of the national cause
are amply sufficient to compensate for all the money expended in accomrebellion

plishing this great achievement. The secureties issued as evidence of this
large indebtedness, consist of bonds, notes and certificates, which are
widely distributed among all classes of people.

All the forms of law have been complied with to bind the Government
to these different forms of indebtedness. The good faith
of the nation is pledged in the most solemn manner to the payment of
every dollar of this debt, both principal and interest.

and give validity

The Government of the United States is not now dependent at all on
the State Governments for the execution of its great powers. All the
powers conferred on the General Government by the present Constitution
are self-acting, self-sustaining, and wholly independent of State author-

The Constitution and laws of the United States operate directly
upon the people, without any regard to State boundaries. We have now
a Congress to pass all the tariff and tax laws necessary to raise all the
money required to pay the current annual expenses of the Government,
pay the interest on the public debt, and raise a surplus sufficient to retire
ity.

annually a portion of the principal.

The grand results of the last four years have most abundantly shown
power and efficiency of the present National Government under the

the

existing Constitution.
It is clearly demonstrated that we have a strong, stable and efficient
Government, fully competent to levy and enforce the collection of custom duties and internal revenue adequate to support the Government.
The true value of the property, real and personal, within the United
States, according to the census of 1860, was $16,000,000,000, and it has,

notwithstanding the exhausting nature of the war, greatly increased
All this property is liable to be taxed to the full extent
necessary, to support the Government and pay every dollar of the debt
incurred in the prosecution of the war. The Government has a claim
under the Constitution, a mortgage in fact, which is the first lien on all
All the debts of States,
this real and personal property to that extent.
counties, cities, corporations and individuals are second and subordinate
to this first claim of the National Government.
since that time.

Our credit rests on this property and the good faith and fidelity of the
Government to collect these taxes.
Since the creation and distribution of this large debt among all classes
of people, and a large part of it made the basis for the organization of over
sixteen hundred banks, the whole fabric of credit, public and private,
must, to a great extent, rest on the efficiency and determination with

21
\\hirh thc,-e tuxes are to be levied and collected.
Public and private
credit are so interwoven with all the commercial transactions of the counThe
try, that if the public credit fails, individual credit must also fail.

value of legal tender notes, national currency, five-twenty bonds, tenand seven-thirties, all depend upon the revenues derived from
custom duties and internal taxes. Our own people and the people of
Europe must be fully assured, not only of the ability, but of the willingness and determination of the Government to pay promptly every one of
the obligations of the Government as they become due, and that the financial credit of the Government will be maintained on the stable and sure
basis of ample taxation.
There is no other sure basis for it to rest upon.
There can be no doubt that the suggestions of the Secretary of the Treasury to gradually retire a portion of the currency, are wise and judicious.
If it cannot be done by funding without bringing down the price of fivetwenty six per cent, bonds below par, so as thereby to embarass the
operations of the Treasury in providing for the large temporary debt as it
becomes due, then I think it should be accomplished by Congress providing for an increase of revenue. The credit of the Government can be
maintained, and it ought to be maintained at all hazards, and prices should
be reduced. All who have read the late admirable reports of the Secretary
of the Treasury, the Comptroller of the Currency, and the nearly unanimous resolution of the House of Representatives, must be satisfied that the
Government is united and strong in its determination to enforce the full
power it possesses to carry us safely through all our financial difficulties,
and bring the business of the country back to a more safe and secure
standard.
So long as Congress and the Executive departments of the
forties

Government continue,
efficiency

and

fidelity,

impossibility.
I have lately seen

now do, to discharge their duties with
the repudiation of the public debt will be an

as they

and read

in the public

newspapers much that

is

of a

fault-finding character, and much theorizing on the subject of our national
finances, but after all that has been said or written on the subject, it comes

down
stood
1.

to a plain matter-of-fact business, which seems
by the Secretary of the Treasury, viz
That frugality and economy should be practiced

to be well under-

:

in all the depart-

ments of the public service.
Find out all the taxable property and business of the country, and
2.

modes of collecting revenue therefrom.
Levy and collect a tax upon it amply sufficient

the best
3.

to raise a

sum

that

pay the yearly expenses of the Government, pay the interest on all
the public debt, and leave a surplus of at least $50,000,000 annually
towards retiring a part of the public debt, and the credit of the Government will be firmly maintained. Xo repudiation of the public debt will
ever take place so long as this policy is pursued with vigor on the part of
the national Government.
The great mass of the people are honest and patriotic, and believe that
the public debt was incurred for just and patriotic purposes. They will
stand by their rulers in maintaining the public faith. They will pay the
taxes freely, and will never consent that the fair fame of their free Government shall ever be tarnished by a repudiation of one dollar of the debt
incurred in such a righteous and noble cause.
will

E. G.

SPAULDING.

22

NO STATE TAXATION OF UNITED STATES BONDS.
The Supreme Court of the United States, at Washington, has decided
Government Bonds and Treasury Notes cannot be
taxed by States, Counties or Cities. The power to borrow money by the
Government of the United States is supreme, and cannot be interfered
with by any State law. All the Government securities have been issued
under a positive law, which makes it a part of the contract that they
should not be taxed for local purposes, and the contract cannot be changed.
The first section of the act of Congress, passed June 30, 1864, provides that
'all bonds, Treasury notes and other obligations of the United States shall
be exempt from taxation by or under State or Municipal authority.'
The Constitution of the United States provides that This Constitution
and the Laws of the United States, which shall be made in pursuance
thereof, shall be the supreme law of the land, and the judges in every State
shall be bound thereby anything in the Constitution or laws of any State
that United States

'

;

to the contrary, notwithstanding.'

The Supreme Court of the United States has decided that all the State
laws passed to tax United States securities are unconstitutional and void.
These loans are the best security in the market. No searches of title
are necessary. The Constitution of the United States and the act of Congress make the public debt the first lien on the real and personal property
of the country. The Government bonds and notes are the first claim to be
are only a
paid, city bonds, railroad bonds and bonds and mortgages,
second lien, to be paid after the Government securities are paid.
E. G.

PUBLIC DEBT

GOOD

FAITH

HON.

E.

SPAULDING.

SPAULDING's LETTER TO

G.

BUFFALO, Dec.
Hon. E.

Dear

I).

Sir

Morgan, U.
I

am

S. Senator,

24, 1867.

Washington.

in receipt of the recent report of the

brought in by Senator Sherman, and Senate Bill No.

Finance Committee

207,

'for

funding the

national debt, and for the conversion of the notes of the United States,'
accompanied by your letter of the 19th instant, asking my opinion on the

proposed measure, or any of its parts, and desiring me to communicate
my suggestions at an early day.
I am deeply impressed with the importance of a return to the specie
standard at the earliest moment consistent with the operations of the
Government and people. I concur fully in that part of the report of your
committee which seeks Ho secure to the holders of United States notes, as
soon as possible, their value in gold.' This, in my opinion, should engage
the earnest efforts of Congress and the Executive; and I am much gratified to see your committee so earnest and decided in urging a return to
the specie standard at the earliest practicable moment.
resumption of
specie payments by the Government, the banks and people, is the first
great thing to be accomplished. This would dispose of nearly all the complicated and disturbing issues that have been raised by politicians and
others, as to the time when, and the kind of money in which, the public

A

debt shall be paid. It would demonstrate more clearly than any thing
else, our resources and ability to pay the public debt, and our determination to preserve unimpaired the good faith of the nation, and establish all
business operations on a firm and enduring basis.

23
I notice that Senator Sherman, In his report, (pages G and' 7,) giving
countenance to the idea that the 5-20 bonds, under the act of 25th February,
1862, may be paid in the depreciated greenback currency, is laboring under

a material misapprehension of the facts in regard to the representations
made by the agents of the Government when the loan was negotiated, and
especially as to the time when those representations were made. Mr.

Sherman says:

'It is said that the distinguished Secretary of the Treasury
negotiated the 5-20 loan, gave a construction to this act at the time
the loan was offered; that this was announced to the people, and upon the
taitli of this the loan was taken.
Your committee can find no official declaration made by the Secretary on this subject, until after the loan was
negotiated,' and then refers to a letter written by Secretary Chase, May
18, 18G4, as being the first official declaration on the subject that has come
to his knowledge. The Senator seems to concede that if the Secretary
made official declarations, at the time the loan was negotiated, giving a
construction to the act, to the effect that the principal, as well as the
interest, was payable in coin, and that if both parties understood that to
be the construction of the law, such declarations would form a part of the
contract, and that the Government would be bound to make these declarations good, and to give effect to the contract as understood by both parties
when it was made. Now, the proofs are at hand that such official representations were made by the distinguished Secretary of the Treasury,
before and at the time the loan was being negotiated, as I will now pro-

who

ceed to show.
Secretary Chase, who negotiated that loan, decided as early as December, 1862, that a fair construction of all the loan acts under which the
funded debt was contracted, required us to pay actual money gold and
silver

on

all

the funded debt of the

Government; that a pretended pay-

ment

in another promise of the United States was no payment, but merely
changing the form of the debt. In other words, that a payment of the

bonds in greenbacks, would be merely substituting the debt of the Government in the form of legal tender notes bearing no interest, for bonds
bearing six per cent, interest, which would be manifestly unjust. This
question came up on the kind of money that should be provided for paying
that part of the funded debt, created prior to the rebellion, which fell due
January 1st, 1863, and this decision was then made and published. The
Committee of Ways and Means, in December, 1862, a short time before its
maturity, desired to know whether any further legislation would be necessary to ensure the payment of coin on that part of the funded debt
falling due within a few days. In order to ascertain in a formal manner
what construction the Secretary of the Treasury would put upon the law.
a Sub-Committee from the Committee of Ways and Means was appointed,
consisting of Mr. Hooper, Mr. Merrill and myself, to confer with the Secretary on the subject. This Sub-Committee called upon the Secretary at
the Treasury Department, and after a full and free conference, the Secretary decided that a fair construction of the law, as well as good faith,
required him to pay all the funded debt in coin, and that he did not deem
it necessary to have any further law passed to enable him to do so.
Under these circumstances, the Committee of Ways and Means did not
deem it necessary to report a bill authorizing or requiring the funded debt
to be paid in coin, and consequently no further law was passed ; and on
the first of January, 1863, the funded debt falling due at that time was
paid in coin. From the time this decision was made by Secretary Chase,

24:

down to the present time, the same language has been held by each Secretary of the Treasury, namely, that the funded debt of the Government
was payable in coin, both principal and interest, and that the Government
would not seek to avail itself of the five years option to redeem the 5-20
bonds until it was prepared to pay coin for the principal as well as the
But this is not the only proof.
Messrs. FISK & HATCH, bankers in New York city, were prominent
sub-agents of the Government in negotiating the 5-20 bonds under the act
of February 25, 1862. Many persons who were desirous of subscribing to
this loan, wanted to know authoritatively, whether the principal of the
bonds was payable in coin as well as the interest. In order to have the
proof in hand to satisfy people on this point, Fisk & Hatch, at the very
time they were negotiating large amounts of this loan, addressed a letter
to the Secretary of the Treasury on the 3d of August, 1863, and received
from him an official reply, signed by the Assistant Secretary of the Treasury, which was immediately published in the New York Times, as follows:
interest.

THE POPULAR LOAN.

We

To the Editor of the New York Times:
are receiving numerous inquiries as to whether the United States 5-20 bonds are redeemable in gold.
We have received a letter from the Treasury Department most satisfac-

answering this question, (as it was once before answered by Mr.
Chase, ) a copy of which we hand you herewith. The popular character
of this loan, and its wide distribution among the people, renders the subject one of universal public interest and importance, and we presume the
publication of this letter will be acceptable to your readers.
torily

FISK & HATCH,

(Signed,)

TREASURY DEPARTMENT, WASHINGTON,
August
Gentlemen
6 per cent. 5-20

Bankers.

D.

C.,

5th, 1863.

Your

letter of the 3d instant, relative to the redemption of
bonds of the loan of February 25, 1862, has been received.

The following is the decision of the Secretary of the Treasury in regard to
the redemption of the public debt: 'All coupon and registered bonds
forming a part of the permanent loan of the United States, will be redeemed
in gold. The 5-20 sixes, being redeemable at any time within twenty years
after the lapse of five years, belong to the permanent loan, and so also do
the twenty years sixes of July 17, 1861, into which the three years 7-30s

are convertible. All obligations and notes forming a part of the temporary loan will be paid at maturity in United States notes, unless before
such maturity payment in specie shall have been generally resumed. The
7-30 three year bonds or notes form part of the temporary loan, with the
privilege of conversion into 20 years sixes, in sums not less than $500.
They will therefore be paid, if the holders prefer payment to conversion,
in

United States notes.

GEORGE HARRINGTON,
To

Messrs. FISK

&

Acting Secretary of the Treasury.
HATCH, Bankers, New York.

This official letter from the Treasury Department, in addition to its
being published in all the newspapers, was published in hand-bill form,
(one of the original hand-bills being now in my possession,) and sent
broadcast among the people, to induce them to come forward and take up
these bonds which were then on the market under the direction of the

25
Secretary of the Treasury, and offered by him at par. I was at this time
actively engaged in negotiating this loan. I advertised and circulated this
letter extensively myself, and gave copies of it to subscribers at the time
of making their subscription to this loan. I regarded these representations, made by authority of the Treasury Department, and upon the faith
of which people were induced to subscribe for the loan, as forming a part
of the contract, and that the Government is now bound to make these representations good ; and that, whenever they seek to redeem these bonds,
the principal as well as the interest should be paid in coin. I should

regard it as a gross breach of faith 011 the part of the Government to
attempt to evade these declarations, or equivocate in fulfilling this con-

any part of it.
But aside from these representations made by the Secretary, I would
suggest that the plain meaning of the act of '62, when read in connection
with its title, leads to the same conclusion, and that Secretary Chase, in
giving the construction to the law which he did in negotiating the loan,
gave a correct, practical, common sense decision. The argument of the
present Secretary, in his last annual report, (pages 24, 25 and 26,) is able
and conclusive on this point. The interpretation given to the act by both
tract, or

these distinguished Secretaries

is

in exact accordance with

my intention

drew and iatroduced the bill in the House, in January, 1862,
and as I believe it was fully understood by Congress when it passed. The
title of the act is expressive of the intention and purpose for which it was
passed, namely, an act to authorize the issue of United States notes, and
for the redemption or funding thereof, and for funding the floating debt
at the time I

'

of the United States.'
It

was intended by

this measure, in the

imminent

peril in

which we

make

a forced loan from capitalists, by
compelling them to take legal tender United States notes, which should
be paid out to the army and navy, and for supplies and material of war,
but at the same time give them a fair rate of interest for the use of their
money, by allowing them to fund these legal tender notes as they should
accumulate in their hands and not bearing interest, into a twenty years
bond bearing six per cent, interest. In the opening speech which I made
in the House on the 28th of January, 1862, I said: 'The demand notes put
in circulation would meet the present exigencies of the Government in
the discharge of its existing liabilities to the army and navy, and contrac-

were then placed by

rebellion, to

tors for supplies, materials and munitions of war. These notes would lind
their way into all the channels of trade among the people, and as they
accumulate in the hands of capitalists, they would exchange them for six

per cent. 20 years bonds. These circulating notes in the hands of the
people, would enable them to pay taxes imposed, and would facilitate all
business operations between farmers, mechanics, commercial business
men and banks, and be equally as good as, and in most cases better than,
the present irredeemable currency issued by the State banks. The $500,000,000 six per cent, twenty years bonds in the hands of the Secretary of
the Treasury, ready to be issued, would afford ample opportunity for
funding the Treasury notes as fast as capitalists might desire to exchange
notes not bearing interest for coupon bonds of the United States bearing
six per cent, interest, and amply secured by a tax on the people and nil

In this way the 'Government will be able to get along
immediate and pressing necessities, without being obliged to
bonds on the market at ruinous rates of discount; the people

their property.

with

its

force its

26
under heavy taxation will be shielded against high rates of interest, and
the capitalists will be afforded a fair compensation for the use of their
money during the pending struggle of the country for national existence.
'A suspension of specie payments is greatly to be deplored, but it is not
a fatal step in an exigency like the present. The British Government and
the Bank of England remained under suspension of specie payments
from 1797 to 1821-2, a period of twenty-five years. Gold is not as valuable
as are the productions of the farmer and mechanic, for it is not as indispensable as food and raiment. Our army and navy must have what is
more valuable to them than gold or silver they must have food, clothing
and the material of war. Treasury notes, issued by the Government on
the faith of the whole people, will purchase these indispensable articles,
and the war can be prosecuted until we can enforce obedience to the Constitution and laws, and an honorable peace be thereby secured. This
being accomplished, I will be among the first to advocate a speedy return
to specie payments, and all measures that are calculated to preserve the
honor and dignity of the Government in time of peace, and which I regret
are not practicable in the prosecution of this war.'
These are, in part, the remarks I made in the House on the loan bill
introduced by me, and which became a law February 25th, 1862. The
operation of the bill, in the issue of the legal tender notes, the paying
them out to the army and navy, their final funding into a twenty years
six per cent, bonds, have been substantial^ what I stated would be its
operation at the time I introduced it into the House. The object of the
bill was to provide the means by which the floating and temporary debt,
then bearing heavily upon the Treasury, might, by the operation of the
act, be funded into a long bond without a heavy sacrifice in making the
negotiation. Some gentlemen are now trying to reverse the obvious
intent of the act, and zmfund all this bonded debt, by again putting it
into & floating and temporary form. I regard all these late shifts and
quibbles to unsettle what is already honorably fixed and determined by

the Treasury Department under and in pursuance of law, as unworthy of
this great nation, unstatesmanlike in those who advocate it, and, if persisted in, will, I think, inevitably destroy the credit of the Government,
and postpone indefinitely a resumption of specie payments.
Why take the back track under these funding loan bills ? Why open
the question at all at this time? The floating debt and temporary loans
are already funded, or so nearly funded that there cannot be any reasonable doubt that, by the 15th of July next, when the last series of 7-30
notes fall due, the whole will be funded into bonds, none of which are

being fifteen years yet before they become due. The
not legally or morally bound to pay one dollar of the principal of these bonds until they become due. Then why trouble ourselves
about funding that which is already funded, especially when it has to be
done by repudiating the acts and declarations of the Secretary of the
Treasury in the discharge of his official duties ? Why raise the question
now as to the kind of money with which we are to pay bonds already
outstanding, and which are not becoming due until 1882 ?
The $830,000,000 of three years 7-30 notes were all negotiated under
representations made by the Treasury Department, similar to those made
in respect to the 5-20 loan of '62, with an express stipulation that the
holders of these notes should have the privilege of converting them at
maturity into 5-20 bonds. The bonds of '62, as well as the bonds issued
in redemption of the three series of 7-30 notes, all stand upon the same
payable until

Government

1882,

is

as
footing, and the Government is no doubt bound to pay the principal
well as interest in coin, whenever it seeks to retire these bonds under the
That such is the
live years option, reserved in the face of the bonds.
the present Secretary of the Treasury, fully appears by his
view taken

by

Morton

letter to L. 1.

&

Co..

bankers in

New

York, in which he says:

TREASURY DEPARTMENT, Nov.

15, 1866.

Your favor of the 13th instant is received. I regard, as did
also my predecessors, all bonds of the United States as payable in coin.
The bonds that have matured since the suspension of specie payments
have been so paid, and I have no doubt that the same will be true of all
(

Jentlemeji

This being, as understand it to be, the established policy of the
Government, the .VJO bonds of 1862 will either be called in at the expiration of live years from their date, and paid in coin, or be permitted to run
others.

until the

I

Government
1

is prepared to pay them in
am, very truly yours,

coin.

HUGH MCCULLOCH,

Messrs. L. P.

MORTON &

Co.,

New

Secretary.

York.

Under the influence of this official declaration, most of the bonds have
been taken on the exchange of the 7-30 notes, in pursuance of the stipulation on the back of the notes, and long before these bonds become due,
specie payments will no doubt be resumed, and we shall then have but
one standard of value, and only one kind of money, namely, coin, or its
equivalent, in which to pay these bonds. Our population and resources
will be nearly double then to what they are now. We shall be abundantly
able to pay at that time in that currency Which is recogni/ed by all civilized nations as the true standard and measure of value, and thereby the
honor and good faith of the nation will be fully maintained.
I would suggest that it is not wise to prematurely agitate the question,
and am not able as yet to see any good reason for doing so. On the contrary, I think all agitation now, on this branch of the financial question,
is mischievous, and calculated unnecessarily to impair our credit at home
and abroad.
I would suggest

further, that the provision in the bill which limits the
legal tender currency to $400,000,000, is a good one, provided there is any
sane man in Congress who proposes, in a time of peace, to dilute and still
further depreciate the currency, by increasing it above that sum ; but I

think the

maximum

of the greenback currency must not exceed $250,-

000,000 or $300,000,000 when we reach the specie standard, if we
successfully maintain specie payments. And it seems to me that it

would
would

greatly facilitate a resumption of specie payments if the national banks
were required to hold a part of their reserves in coin, and that some safe
plan should be devised by which the sub-treasuries in the principal cities,
especially in New York, could make daily settlements with the banks
through the clearing-house, and requiring only balances to be paid, substantially in the same manner as the banks in the principal cities make
their daily settlements with each other. In this way no large movement
in coin to or from the sub-Treasury would be necessary, and the daily
payments could be made with comparative ease. But this letter is already
too long, much longer than I intended when I commenced it, and I will
not enlarge further on this subject at this time. I may desire to make
some further suggestions, and if so, will write you again.
I remain, very truly, your friend,

E. G.

SPAULDIXG.

28

FROM HON.

F.

E.

SPINNER

WASHINGTON, Nov.
Hon. E. G. Sjmidding,

r

Buffalo, J\ .

9.

Y.:

Sir Your note of the 6th inst. has been received. If some
believes in high-toned swindling will write in favor of open
repudiation, 1 will agree to give the subject the consideration of a careful
ivading, but I have not the patience to read anything advocating the

My

one

Dear

who

.sneaking expedient of paying the national debt in depreciated currency.
The Secretary of the Treasury is sound on this subject ; and in his forthcoming Annual Report will address an argument to the Congress and the

country, that

nor

fools.

1

am

sure will please you and those

who

are neither knaves

.

The finance question is to become the leading one in the organization
of parties, and I had hoped that such men as Butler and Stevens would
have remained with the great body of their friends. Having an abiding
faith in the honesty of the people, I believe the question will be settled
honestly,

and that honest Americans will be spared the shame of having
band of cheats and swindlers.
Very truly, your friend,

their nation stigmatized as a

F. E.

NATIONAL CURRENCY
The avowed policy of the Government

SPINNER.

LEGAL TENDER.
is

to retire the legal tender green-

back currency, issued during the war, and bring the business of the
country back to a gold standard, and a resumption of specie payments.
This policy is avowed by the President in his annual message, and by the
Secretary of the Treasury in his Fort Wayne speech, and in his annual
report. As this policy will sooner or later be carried out, it is important
we should look ahead and be prepared for the change. It will take time
to accomplish so great a result, and it must be done with great prudence
and discretion, or it will produce a shock to the legitimate business of the
country, which will paralyze our business operations and thereby diminish the revenues that will be so much needed to maintain the public credit.
Whatever measures will aid in promoting the healthy and legitimate business of the country during the process of contraction will be of essential
service both to the Government and the people.
It is not so very important just at this time, that there should be any
material change made in the functions of the national currency, but as the

Government

legal tender notes are withdrawn from circulation, and the
contraction policy fairly begun, I think it will be of great importance to
the country, in giving stability to its financial operations, that the national
currency should be, like the Bank of England notes, made a legal tender,
except for debts owing by the banks. I feel confident that it would lessen
the liability to a panic, as contraction goes on, and be useful and beneficial to the Government and people, in maintaining the financial credit
and business of the country.
The national currency is limited to a proper amount, so that there will
be no chance for an over issue, and as the banks issuing it are required on
the resumption of specie payments, to redeem it in coin, I can see no harm
that would arise from making it a legal tender, but on the contrary, much
good to follow the enactment of such a law. Let us consider this subject

a little

more in detail.
the Government and people want and must have

What

in this great

and

29
enterprising country, is a currency of universal credit and uniform value.
Such a currency is a vital necessity to the well being of the business of the
country. It should possess all the attributes of money, adequate in
amount, and receivable alike in all payments, public and private. Men

no especial worship for
but I would not discard
those metals in fixing the standard of value of paper money, and the relaIn devising and regulating a
tive value of commodities and services.
system of national currency, I would have coin and paper money as nearly
on an equality as it is possible by having the paper convertible into coin
on demand.

engaged
gold and

in large commercial transactions have
silver, either as money or for ornament;

I know it is insisted by some persons that the only money is coined
metal, and that paper money us its substitute, is only credit. This may
be true in a certain sense, but at the same time both coined money and
paper money are the creation of law, and it is equally true that credit

underlies the whole financial operations of the Government and people,
and if that credit is broken down, the Government and people will become
bankrupt, business paralyzed and revenues largely diminished. Coined
money like paper money is made in pursuance of statute law, and has
impressed upon it the Government stamp, indicating its weight and purity.

This stamp does not, however, give the metal its value, the value is in the
metal independent of the stamp, but gold of individuals so coined into
eagles under the laws of the United States, does determine the rate in
arithmetical terms at which the metal thus coined shall be a legal tender,
and the standard of value in all exchanges and payments, and this makes
it

by law money.

Paper money

is

made by

a

somewhat

different process,

but when both are stamped with the functions of money they are both the
creation of law. It is true that gold and silver are esteemed a valuable
commodity without being coined, and are within a small fraction, rated
as high in the form of bullion, as in the form of coin. The coined money
rests on its own inherent or estimated value, while the paper money is
based upon a well-founded credit. A payment in coin or bullion closes
the transaction, because the bargained for equivalent is rendered at once,
leaving no credit to be upheld or promise to be performed in the future.
United States demand Treasury notes, are also by law made lawful money
and a legal tender as a substitute for coin, and th^ir value is based upon
the credit of the Government, and all the taxable property under its jurisIf they were not issued in excess they would not be below the
diction.
gold standard, and would constitute as good, and even a better currency

than coin, because less expensive and more convenient, and because they
are based on a well founded credit, no less than an adequate tax on all the
real and personal property of the country.
The principal difference
between coin and paper money may be stated thus: the exchange and
delivery of one hundred bushels of wheat for one hundred dollars, in

value of gold bars or coined gold, the transaction is closed on the spot, by
each party delivering to the other, what is regarded by them as an equivalent; according to the estimation of both parties, it is an exchange of
equivalent values. In such a transaction, no credit is given on either side ;
but if instead of gold, the purchaser of the wheat should deliver to the
seller in exchange for it, one hundred dollars in paper money, the equivalent for the wheat, although perfectly secured, would not be rendered on
the spot, but a credit would intervene in taking the paper money, which
contained only a promise to deliver one hundred dollars in gold at another

30
time. In one sense it is true that the seller of the wheat takes even gold
on a credit, trusting that it will continue at all times as valuable as it now

notwithstanding it possesses very few useful qualities, and is not intrinFranklin says, 'that the value of gold and
sically as valuable as iron.
silver rests chiefly in the estimation they happen to be in, among the gen-

is,

erality of nations, and the credit given to the opinion that that estimation
will continue ; otherwise a pound of gold would not be a real equivalent
for a bushel of wheat.' It is the universal estimation in which gold and
silver are held, that gives them their present value, and not the labor
expended upon them, or any particularly useful qualities contained in the
metal itself. Any other well founded credit is as much an equivalent as
gold and silver, and in some cases more so, or it would not be preferred by
commercial people in different countries. For this reason a well secured
convertible paper money, in a normal state of the business of the country,
is fully equal to gold and silver, because less expensive, and more convenient. But where commercial transactions are small, and among barbarous
nations where credit is unsafe, gold and silver, on account of their comparatively steady value, and the universal estimation in which they are held
by all mankind, no doubt constitute the best money. These precious
metals, so called, being limited in amount, and used extensively in the
arts and luxuries of life, are desired the world over, not only by civilized,
but by barbarous nations, and having great estimated value in small bulk,
are easily transported from continent to continent. This universal estimation gives them pretty steady value as money, and an equally steady
value in the arts, and for ornament. They therefore constitute at present,
the best standard by which to measure the relative value of all other commodities. They are, therefore, the standard of value in all countries, and
it will be very difficult, if not impossible, for the nations of the world to
agree upon any other standard of value. They have not become so by
reason of a congress of nations, nor by any concert of action among them,
but by the quiet action of commerce among the people for many centuries,
and in all countries and climes. Gold and silver therefore, are the universal standard of value, made so by the acquiescence of all mankind, and
But
consequently all foreign balances are settled in gold and silver.
owing to the scarcity of the precious metals, and the great expense attending their use as money, and the risk of transporting them from place to
place, credit has been resorted to in some form by all civilized countries,
under well established Governments, as a substitute for gold and silver,
and especially for domestic purposes; for instance, the Bank of England
notes, for the British Empire.
Bills of exchange, promissory notes, credits on bank ledgers, checks,
bank bills, and clearing house certificates are among the forms of credit
chiefly used in commerce at the present time. In consequence of this
scarcity of gold and silver money adequate to the wants of commerce,
these forms of credit have been extensively used by the people of all commercial countries, because business in this form could be done more
cheaply, with much greater facility, and in vastly greater amounts, than
it could be done by contracting it to the actual use of gold and silver in
each transaction; and although there is no actual use of coin in the
exchange of commodities and services, nevertheless all these credit transactions have a relation to gold and silver, as the standard or measure of
value, and ought to have an equally close relation to the amount of commodities and services to be exchanged and to be safe, should never exceed
;

31
the wants of legitimate business. It is generally conceded that these different forms of credit, when not carried to excess, are of the greatest
usefulness to every well regulated society. So apparent are their advan-

deemed indispensable, and that without them, the
present large volume of commercial transactions could not be carried on.
Most of these forms of credit have grown into use by the necessities of
commerce for centuries past, and are governed by universal commercial
tages, that they are

law, modified in some particulars
merchant regulates and governs
bills

laws,

by
all

local statutes, but generally the law
of them, except in the case of bank

and Government paper money, which are wholly the creation of local
and are regulated and governed by the statute laws under which

they are created. This brings me to the consideration of a paper currency
authorized and regulated by statute laws.

NATIONAL CURRENCY

LEGAL TENDER.

In discussing the subject of a national currency, and the functions that
should be imparted to it by law, I assume that Congress deems it necessary
and proper to have a paper national currency, not only to carry on the
fiscal operations of the Government, but also to facilitate the business
operations of the people; and that such a currency is created because it is
the duty of the general Government to provide a domestic circulating
medium of uniform value, to be used and circulated as money in all parts
of the United States. Now, if it is desirable and proper to have a national
paper currency at all, as I think it is, it seems to me to be obvious that it
should be the best that the Government is capable of making. If it is
necessary to create a paper currency, as a substitute for, or as a representative of, gold and silver, why not give it all the attributes of money, so
far forth as it can be made so by law ? Why should not Congress confer
upon it in all respects, the highest qualities possible to make it suitable,
useful and acceptable in all the ramified operations of the Government and
people over the whole country ? This currency is a creation of the Government. Its object is to make money for circulation; to make it of
uniform value all over the United States in effecting exchanges and payments, and as nearly equal to gold and silver as it is possible to make it.
This great nation surely ought not to create a currency inferior to the
best paper money in the world. It should have all the attributes of money
to pay debts and facilitate exchanges. It should be backed by the whole
power of the Government to make it what it purports to be, a national
currency, and the representative of gold and silver, and convertible into
gold coin on demand. Nothing should be withheld by Congress which
would in any degree add to the stability or usefulness of such a currency.
It is created as an instrument of usefulness to benefit the Government and
people, and if made at all, it should be, like a locomotive, or any other
instrument, the best that can be made. I took this ground on the passage
of the legal tender act introduced by me in 1862. I then said that if we
issued a Government paper money at all, it ought to have imparted to it
the highest legal sanction that could be given to it by the Government, to

make it fulfill the purpose for which it was made. There are very few
business men who now question the wisdom of that enactment. Though
in the administration of the laws authorizing it, more was unnecessarily
issued, and less funded, than was intended by the originators of the
measure.

The

British

Government

is

the great pioneer in providing a paper

32
national currency. The Bank of England, a creation of that Government,
has existed one hundred and seventy-two years. She has had great experience in the issue, circulation and redemption of the circulating notes of
that bank; and the British Empire has increased in material wealth and
power with astonishing rapidity since the bank was established. Previous
to 1834, the circulating notes of the Bank of England were not made a
legal tender, but after an experience of over 140 years, she passed an act
making them a legal tender for all debts, except those owing by the bank
itself; and for the avowed reason that it would not remove any of the

guards against over-issues, and that it would increase the stability of the
bank, guard against panics, and consequently improve the whole monetary
system of that empire. Since that act of Parliament was passed, she
requires the notes of the bank to be perfectly secured by gold and Govern-

bank to redeem in coin on demand at its own
and then makes them a general legal tender except at the bank.
The Bank of England notes admirably perform the functions of money.

ment

stocks ; requires the

counter,

They are current money in all parts of the empire. They are probably
the most perfect paper currency in the world, because they are not only
perfectly secured and redeemable in gold on demand at the bank, but
they have imparted to them by law the functions of money in the payment of debts and- effecting exchanges, in the cities and villages remote
from London, as well as in the metropolis itself. They are backed by the
whole power of the British Government, and circulate with

as

much

The bank
the Government itself.

vitality at the circumference as at the centre of the empire.

and

its

circulating notes are as stable

and secure

as

Why should we not profit by the

experience and example of the British
Government in respect to its national currency ? "VVe have provided by
Congressional enactment for the organization of a system of national
banks, and the issue of a national currency. This was deemed a necessary
measure for the support of the Government in providing a circulating
medium to facilitate the easy exchange of commodities, thereby stimulating enterprise, industry and production adding to the ability of the
people to pay revenue, and furnishing a currency in which the internal
taxes may be paid. The leading idea was to combine the capital of individuals with the credit of the Government, to provide a national currency,
and throw the burthens of redeeming such currency upon the banks that
issue it, the Government only guaranteeing its ultimate payment.
;

The national currency act is generally right as far as it goes. It limits
the amount to $300,000,000; requires the circulating notes to be well
secured by gold-bearing Government bonds, deposited with the Treasurer
of the United States ; requires each bank to redeem its circulating notes
in lawful money on demand, and to keep an adequate reserve for that
purpose makes them a legal tender for all taxes and other debts due to
the Government, except customs, and for all debts owing by the Govern;

ment, except principal and interest of the funded debt; it also makes
them receivable by each national bank for all ordinary debts due to thenij
and each bank, designated as a depository, is also required to receive it
on deposit from all public officers. These are important provisions in the
for nationaliziny this currency, and it consequently obtains a wide
circulation. I would not change or alter any one of these provisions for

law

de-centralizing the currency, but I think it does not go quite far enough in
that direction. It will be perceived that all persons in the employ of the
Government are compelled to receive it in payment for salaries and for

33
materials and other services performed for the Government. It is now in
made a legal tender from the Government to all this class of persons, including the salary of the President, Cabinet, Members of Congress
effect

and the army and navy. If the President and other officers of the Government are obliged to receive it in payment for their salaries, why should
not everybody else be required to take it from them for all ordinary debts
they may incur ? I can see no valid reason why they should be a legal
tender to persons employed by the Government, unless such persons can
also compel other parties to receive it from them. I think that sound
policy requires the act to be still further extended. I would go one step
further and make the national currency, like the Bank of England notes,
a general legal tender, so long as the bank issuing it, redeem in lawful
money, except that the currency issued by any bank separately should
not be a legal tender for any debts such bank might itself owe.
I would not relax any of the duties or obligations now imposed on the
banks. I would compel them to redeem their circulation in legal tender
United States notes on demand, until the resumptions of specie payments,
and after that in specie, and oblige them to keep a sufficient reserve for
that purpose. The reason for such additional legislation would not be so

much

for the benefit of the banks, as it would be to benefit the public, by
providing a domestic currency, made legal tender the same as gold
belonging to individuals is made a tender, and which could be used to the
greatest common advantage among all classes of people in all parts of the
country. I would make it a legal tender because it would lessen the
demand for coin, and have a tendency to prevent unnecessary runs on the
banks to obtain it. It is argued by many persons, with much plausibility
that a well secured paper currency would be better in many respects, if
not made redeemable in coin, for the reason that coin is scarce as compared with the volume of business to be done ; that it is easily exported,
and that when brought to the test of requiring the paper money issued to
be redeemed in coin it has always failed, and always will fail, because
there is never available coin enough for that purpose. I admit that the
frequent suspension of specie payments, whenever there is a panic or
revulsion, furnishes an argument in favor of those wr ho present this view
of the subject, but as no proper standard can be had at present, without
making paper currency equal to coin, I think it must be convertible into
coin on demand. Every attribute, however, that can be given to improve
its quality will lessen the necessity for its redemption in
coin, and consequently the more steady and uniform will be the business of the country.
With this object in view, I can see no valid reason why the highest
legal sanction should not be imparted to this currency by the Government, which holds the pledged security and guarantees its payments, not
,

only to give it stability, and guard against panics and suspensions of
specie payments, but to make it useful to the people as money, in the
remote districts as well as at the centre of business, and make it fulfil in
the highest possible degree the object for which it was created, a national
currency.

E* G.

February

28, I860.

SPAULDIXG.

M
LEGAL TENDER IN TIME OF PEACE.
BUFFALO, December

9,

1868.

Hon. Hugh McOuttoch, Secretary of the Treasury :
Dear Sir Will you be kind enough to send me a pamphlet copy of your
Annual Report I have seen a synopsis of it in the newspapers, and desire
to study it in a more readable form. I have always read your able and
well-matured reports with pleasure and profit. I judge, from the extracts
of the report which I have seen, that you continue firm in the opinion
that we should get rid of the evils of a depreciated currency by returning
;

to the specie standard at the earliest practicable moment; this is the first
great and important duty of the Government, and I sincerely hope that
efficient measures will be adopted to that end at the present session of

Congress.

You justly observe that the legal tender act was adopted as a war measure a measure of necessity to sustain the army and navy while crushing
the rebellion.
In the summer and fall of 1861, all the great powers
expressly granted in the Constitution had been brought into active exercise in bringing into the field an army of half a million of men, which
had to be fed, clothed and provided with all the material of war necessary
to make them effective, requiring an average daily expenditure of $2,000,000.
This required very large amounts of money, and we had to have it
delay would have been fatal. The banks in New York, Boston
and Philadelphia had exhausted themselves in loaning to the Government
$150,000,000 in gold during the summer and fall of 1861. A large part of
the available gold in the country had thus been paid over to the Government, and expended during that time, and so scattered that it was not
right off

available as a reserve for the banks, or in a situation to be re-loaned to the

Government. The Government and banks suspended specie payments on
the last of December, 1861. No more gold could be loaned because it was
not to be had, except in small and wholly inadequate amounts. State
bank bills could be obtained, but the banks having suspended specie payments this currency was depreciated, and was only local in character

and

credit.

In this great emergency, with this large army to be supported and the
navy to be maintained, and which were organized under the unlimited
war powers expressly granted in the Constitution, there arose an overwhelming necessity for resorting to the incidental and implied powers,
and especially to that provision in the Constitution w hich empowers Congress to make all laws which shall be necessary and proper for carrying
into execution the foreign powers and all other powers vested by this
Constitution in the Government of the United States, or any department
or officer thereof.' In the imminent peril in which we were then placed
by a gigantic rebellion, Congress decided that the legal tender act was
a measure necessary and proper to carry into effect those powers expressly
granted in the Constitution, to maintain the army and support the navy.
Secretary Chase relied at this time mainly upon the passage of the national
currency act to furnish the means, but it appeared to me that it would be
wholly inadequate, and besides it could not be made available quick
enough. I therefore introduced the legal tender bill early in January,
In this great
1862, immediately after the suspension of specie payments.
crisis I advocated the bill as a war measure, a measure of temporary
relief to the Treasury, and on the ground that it was an imperative necesr

*

35
sity to preserve the life of the nation. I conceded that it
and could only be justified on grounds of necessity.

was a forced

loan,

As a war measure passed during war, continuing during the war, and as
long as the exigency lasted, I believe it was necessary and proper to suc-

cessfully carry on the war, and was therefore constitutional. I am equally
No one would now
clear, that as a peace measure it is unconstitutional.
think of passing a legal tender act making the promises of the Govern-

ment, (a mere form of credit,) a legal tender in payment of 'all debts,
Such a law, passed while the Government is on a
peace footing, could not be sustained for one moment.
I think now that it is unfortunate that we did not have incorporated
into the original legal tender act, at the time of its passage, a provision
that the legal tender clause should cease to be operative in one year after
the close of the war. In that case all parties would have shaped their
business accordingly, and the law would have served its purpose as a war
measure, and would not have been continued (as I think unnecessarily, )
eo long after the close of the war.
I see that the constitutionality of the law has finally come up for decision
before the Supreme Court of the United States, at Washington. If the
Court had been called upon to decide the question during the war, or at its
close, they would most likely have decided that the law was valid, inasmuch as Congress had decided that it was a necessary and proper means
to be used in crushing the rebellion ; but the law has been continued in
force so long after the close of the war without any real necessity for it,
that I should not be much surprised if the Court should now declare it
public and private.'

unconstitutional.

Three great measures were adopted by the Government, which, in my
judgment, were necessary to crush the rebellion and maintain the national
unity, viz.
1.

The

:

legal tender act,

by which the

credit of the

Government was

brought into immediate action in the most available form.
2.

by which 4,000,000 slaves became intensely interested
Union cause.
The draft, by which the army was speedily re-inforced at the turning
Emancipation,

in the
3.

point of the rebellion.
These three measures, backed by the people, and enforced by the army
and navy, finally gave us a national triumph.
If Congress will not act promptly in devising some plan for bringing
the legal tender greenback currency on a par with gold, rather than continue the demoralization incident to a postponement of specie payments,
it will perhaps be as well for the country in a long run, if the Court, on
due deliberation, should decide the legal tender clause to be unconstitutional.
This would involve serious consequences for a while, and business

arrangements would be materially affected, but we would very soon
accommodate ourselves to the situation, and we would then emerge from
the evils of an irredeemable currency, and all business operations would
be established on a firm and enduring basis.
This letter

and

I trust

is

you

longer than I intended when I sat down to write,
me for writing so much.
I remain, yours truly,
E. G. SPAULDING.

much
will

pardon

President's Message in favor of a National Currency, but vetoing irredeemable
bank notes in the District of Columbia, June 23, 1862.

To the Senate of the United States :

The

which has passed the House of Representatives and the Senate,
act to repeal that part of an act of Congress which prohibits
the circulation of bank notes of a less denomination than five dollars in the
District of Columbia,' has received my attentive consideration, and I now
return it to the Senate, in which it originated, with the following objecbill
*

entitled,

tions

An

:

The

proposes to repeal the existing legislation prohibiting the
less denomination than five dollars within
the District of Columbia, without permitting the issuing of such bills by
banks not now legally authorized to issue them. In my judgment it will
be found impracticable, in the present condition of the currency, to make
such a discrimination. The banks have generally suspended specie payments, and a legal sanction given to the circulation of the irredeemable
notes of one class of them will almost certainly be so extended in practical
operation as to include those of all classes, whether authorized or unauthorized. If this view be correct, the currency of the District, should this
act become a law, will certainly and greatly deteriorate, to the serious
injury of honest trade and honest labor.
2.
This bill seems to contemplate no end which cannot be otherwise
more certainly and beneficially attained. During the existing war, it is
peculiarly the duty of the national Government to secure to the people a
sound circulating medium. This duty has been, under existing circum1.

bill

circulation, of

bank notes of a

stances, satisfactorily performed, in part at least, by authorizing the issue
of United States notes receivable for all Government dues except customs,
and made a legal tender for all debts, public and private, except interest

debt. The object of the bill submitted to me, namely, that
of providing a small note currency during the present suspension, can be
fully accomplished by authorizing the issue, as part of any new emission
of United States notes, made necessary by the circumstances of the country, of notes of a similar character, but of less denomination than five
dollars. Such an issue would answer all the beneficial purposes of the bill ;

on the public

would save a considerable amount to the Treasury in interest; would
greatly facilitate payments to soldiers and other creditors of small sums,
and would furnish to the people a currency as safe as their own Government.
Entertaining these objections to the bill, I feel myself constrained to
withhold from it my approval, and return it for the further consideration

and action of Congress.

ABRAHAM LINCOLN.

SPEECH OF HON.
DELIVERED

E. G.

IN

SPAULDING, OF

NEW

YORK,

THE HOUSE OF REPRESENTATIVES,

Friday,

May

3d, 1862.

The House having under consideration the bills to confiscate the property and free from servitude the slaves of rebels, Mr. Spaulding said:
Mr. SPEAKER It seems to be right and proper, while we are taxing
our own loyal people to pay the enormous expenses of this war, that we
should endeavor to make the ring-leaders of the rebellion, who have
fomented and brought on this terrible state of things, pay as large a portion of these expenses as is possible. To this end it is fit and proper that
Congress should exert all the power it possesses in confiscating the property of rebels, and having it sold under an order of the court, and the
proceeds thereof, paid into the Treasury of the United States ; and also
that such rebels should be deprived of the labor and services of their
These propositions
slaves, from which they derive their chief support.

now pending in this House, and we shall be called to vote upon them
on Monday next. These are important measures, and I desire to say a
few words before giving my vote. After the able arguments that have
been made in the Senate and House by those who have been especially
charged with the subject of confiscating the property of rebels and the
emancipation of their slaves, I do not deem it necessary for me to make
any extended remarks.
Sir, the time has come when we must meet the actual condition of
things, and dispose of these and other momentous questions presented for
our consideration in a practical way, and with a firm determination to
suppress this rebellion and establish law and order in every part of the
United States. Success, regardless of the cost, is the all-important thing
to be attained. This rebellion must be crushed out, and all the means
which God has given us must, sooner or later, be brought into requisition
to accomplish that result. The sooner we earnestly put forth every effort,
and apply all the means at our command, the sooner will the rebellion be
suppressed, and the less of life and treasure will be expended.
are

What

All the horrors of war are
the actual condition of things ?
a gigantic scale savage, unrelenting war is waged
against us by the rebels. Not only do they kill our brave sons and
brothers on the field of battle, but they murder them stealthily, stab

upon

is

us.

War on

and scalp them when wounded, and disfigure and mangle them after they
are dead. The rebels in arms against us are enemies de facto, possessed of
all the bitterness and determination of the most unrelenting foreign enemies. We are obliged to accept this condition of things. It has been
forced upon us by their own acts. The life of the nation is attacked, and
a most determined effort made to overthrow the Government ol the

38
United States

in all of the confederate States.
They are our enemies. I
disposed, while they are so in rebellion, to treat them as enemies, and
to give them only the rights of war. and apply to them all the disabilities

am

and penalties of war.
As alien enemies, throwing off all allegiance to the Government, trampling the Constitution and laws of the United States under their feet, how
can they claim any protection from us ? As enemies de facto, they can
claim no rights except the rights of war. Any gentleman on this floor
holding up the Constitution as a shield to protect these rebels it seems to

me has not duly considered the subject. Is it possible that men who
utterly repudiate the Constitution, confederate together, declare war,
issue letters of marque and reprisal, and are in open war against us, can
claim any rights under the Constitution ? The laws of war are against it.
Common sense and common justice would revolt at any such claim, even
if the public law was not so emphatically against it.
If we were to proceed and indict the traitors in arms against the Government for treason, (as we have an undoubted right to do,) under the

provisions of the Constitution, then they might, in such case, claim to
have their criminality decided by the court, under the strict rules of the
common law and the Constitution and statute laws of the United States.
In such a case, the argument of the gentleman from. Massachusetts [Mr.
But when the traitors are
Thomas,] might have some application.
engaged in actual war, then you apply to them the laws of war. Having
themselves repudiated the Constitution, and having expelled the United
States courts from all the rebel States, so that you cannot indict and try
them under the ordinary forms of judicial proceedings, they cannot complain if you apply to them the laws which are clearly applicable to the
position which they have voluntarily, but most criminally, chosen for
themselves. Having declared war against the United States, they must
submit to all the rules of civilized warfare, and if their property is confiscated and their slaves emancipated, they have no right to complain.
What is the war power conferred on the President and Congress ? By
the Constitution, the President is made
Commander-in-chief of the
army and navy of the United States, and of the militia of the several States
when called into the actual service of the United States.' The Constitution confers on Congress the power, first, to raise and support armies ;'
second, to provide and maintain a navy ;' third, to make rules for the
government of the land and naval forces ;' fourth, to provide for calling
forth the militia to execute the laws of the Union, suppress insurrections,
and repel invasions ;' fifth, to grant letters of marque and reprisal ;' sixth,
'to make rules concerning captures on land and water;' seventh, 'to
declare war;' eighth, 'to make all laws which shall be necessary and
l

'

'

'

*

'

proper for carrying into execution the foregoing powers.' In pursuance
war powers conferred on Congress by the Constitution, laws have
been passed to carry them into execution. The public laws of nations
declare the rights and penalties of war. More than one hundred articles
of war have been adopted by Congress for the government of our army.
At the extra session in July last, Congress passed various laws which
were then deemed 'necessary' to crush out the rebellion. Congress
passed those laws, and the President executes them, in accordance with
the rights of war.
Among the rights of war is the power to confiscate the enemy's property
and liberate their slaves. One of the express powers conferred on Congress by the Constitution, is to call out the militia 'to suppress insurrecof these

39
which means that you have unlimited po\ver to effectually suppress
the present or any other insurrection. All the means necessary may be
employed to suppress it. Nothing within the range of civilized warfare
is withheld from you in this crisis.
Congress may, in the language of the
tions,'

Constitution, pass 'all laws which may be necessary and proper' to suppress the 'insurrection.' If the laws now on the statute-book are not
sufficient, it is our duty to pass other and more stringent laws, confer
more power on the President, give him ample power to make our success
complete and certain. Let the rebellion be terminated in the shortest
time, and with the least possible sacrifice of life and treasure. The continuance of the war is extremely hard and exhausting to our volunteer
soldiers, and the enormous expenses will impose heavy burdens upon the
people. Every consideration of patriotism and duty requires us to put
into active exercise at once all the means within our reach to bring the

war

to a speedy

and successful termination.

What are the rights of war, and what are the ordinary means which
may be brought against these rebels to weaken their power and crush out
the rebellion ? As enemies de facto it is conceded you may blockade their
ports, preventing all exports and all imports or supplies from abroad; you
may cut off all internal supplies by depriving them of the use of rail-

roads, canals, lakes, rivers,

and

all

other means of transportation

;

you

may cut off all communication by mail, telegraph, express, or otherwise
you may capture their vessels, their supply trains, sink their ships, destroy

;

their military stores, and meet them face to face in battle, and kill, capture and disperse their hostile forces. All these ordinary means have
last year, and still the ring-leaders who fomented
more desperate than ever. War, gigantic, unrelenting
war, still goes on. The rebels are more determinedly our enemies than
ever before, arid a call is made by the President for more troops to fight
them. In this state of things what is to be done? Are there no other
means that can be used to strengthen ourselves and weaken the power of
the rebels, and thereby insure their defeat? This is the great question

been tried during the
this rebellion are

we

are

now

considering.

All the authorities sustain the doctrine that
confiscate the property of enemies, and

you may, under the war power,

may liberate their slaves.
On the power of liberating

slaves, John Quincy Adams lays down the
doctrine that, in time of war, civil or foreign, ' not only the President of
the United States, but the commander of an army, has the power to order
the universal emancipation of the slaves.' It is evident, however, that he
regarded it as a power subject to the action of Congress. With a call to

suppress insurrection, he says, 'comes full and plenary power to the Senand House over the whole subject. It is a war power.'
The extreme measures of confiscating the private property of rebels,
and the liberation of their slaves, have not yet been tried to any considerable extent during the war. Is it a war measure necessary to success at

ate

time? If it is necessary, will. Congress and the President have the
courage and the firmness to exercise this power boldly? Will this Government strike these rebels where it will do them the most harm ? Will
you take from them their property and liberate their slaves? Will you
this

deprive them of the most effective means of carrying on the war? Take
their individual property, and deprive them of the labor and services of their slaves, and you strike a blow at the heart of the rebellion.
You would then strike directly at the root of the evil. Give a death-blow
to slavery, and you would soon be able to terminate the war.

away

40

We have already taken some positive steps in advance on the slavery
question during the present session. Slavery has been abolished in the
District of Columbia. The capital of the nation is forever freed from the
We have passed a new article of war,
taint of involuntary servitude.
which prohibits commanders of divisions from returning slaves that voluntarily come within their lines. We have extended the ordinance of
And
1787, prohibiting slavery in all the Territories of the United States.
we have passed a resolution offering pecuniary aid to States that shall
enter upon a gradual emancipation of the slaves within their limits.
These enactments are in accordance with public sentiment and the progressive spirit of the age. Shall we advance still further in the work of
This depends somewhat upon the necessity of such a
emancipation ?
measure and the probable duration of the war. How long is the war to
continue ? No man here is wise enough to determine how long it will
continue, nor how much blood and treasure will be expended in its prosecution.
The Richmond Enquirer (official organ of the confederate
administration) uses the following language, evidently by authority
:

say that the time has come when, for the future at least, we all shall
be agreed. All voluntary falling back has ended, and the fighting has commenced. What the
enemy gains henceforth he gains by the bayonet. What we can win from him we will have.
We will break his columns, and pursue him into his own country, if God shall prosper our
4

But we are

arms.

Strike

gratified to

I

strike often, strike hard, strike at every opportunity is henceforth the rule.
we trust, to be its interpreter.'

Vigilance, activity, enterprise, daring, are,

The longer the war continues, the more desperate will it become, and
more certain will it be that slavery is doomed. The advice of the
Richmond Enquirer to the rebels, to "strike! strike often, strike hard,
strike at every opportunity," shows the desperate character of their cause.
Are we to be struck often, and struck hard at every opportunity, without giving hard blows in return ? I trust not. War means to strike often
and strike hard on both sides. "An eye for an eye, and a tooth for a
tooth."
War teaches us to use all the means within our power to
strengthen ourselves and to weaken our enemy. Let us weaken him in
the

We

should
way within the rules of civilized warfare.
personally, strip him of his property, and strike the shackles
from every slave that by his labor and services gives him support. These
are the rights of war, and I am prepared to see them fully enforced.
have been forced by rebels into this unnatural and unnecessary war.

every possible
strike

him

We
We have already expended over six hundred millions of dollars in its pros-

ecution ; besides, what is of far greater consequence, many thousands of
ot r brave soldiers have been slain on the field of battle, and have died by
disease brought on by the perils and hardships of the campaign. Is all
this blood and treasure to be expended without accomplishing anything
beneficial to the nation, to civilization, and the rights of man ? I trust
not.
now want and must have a final settlement of this whole difficulty.
Slavery was the cause of this gigantic and wicked rebellion.
Slavery should receive its doom, thereby removing the cause of future

We

Rebels have fomented and brought on the war, and their
difficulty.
property should pay a large share of the expenses incurred. These questions must now be met. They cannot be postponed. The laws of God
and man require us to vote on the side of justice and humanity. I shall,
under the circumstances, vote to confiscate the property of leading rebels,

and

to liberate their slaves.