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«^,

FAYMKNT OF THP: DPJBT

H Jr> } 1 2. •
• Ms

A REVIEW

OF THB

Ohio Democratic Financial

New Departure.

•'/■

^Y Hon. Joseph Medill,

HKFUKR TIIK

COLUMBUS, OEirO, AUGUST 81,^1871. "^^■

CHICAGO:

Rand, McNali.v « Co., Printers, 51 Ci.ahk Stkekt.

1871.

K..

~dM«

•f

F^J

Pj!\.yment op the debt.

A REVIEW

or TUB

OHIO DEMOCRATIC FINANCIAL NEW DEPARTURE.

«\»y^ BY HON. JOSEPH MEDILL,

Before the YOUNG MEN'8 REPUBLICAN CLUB, at COLUMBUS, OHIO, Ang. 81, 18T1.

"*•

,1-f

The Democracy of Ohio have taken what they call a " Financial New
Departure." It is set forth in the twelfth plank of their State pUittbrm,
ana has found an expounder and defender in General Thomas Ewing,
the salt boiler's illustrious son, who stands so high in his party that
in less than two years he was a candidate for District Attorney of
Washington, Senator from Kansas, and Governor of Ohio. Of the
other parts of his speech it may be said, that " the good things
were not new, and the new things were not good." I will,
therefore, proceed to examine this new financial departure and the
arguments adduced in its behalf.

With the political New Departure, proposed at Dayton, and adopted
at Columbus, the public is tolerably conversant But I discover an
astonishing difference in the fiscal plank devised by Vallandigham und
that incorporated into the Columbus platform. For easy comparison I
place them in juxtaposition :

VALLANDiaHAM'S PLA.NE.

That we are in favor of the payment of
the public debt at the earliest practical
momdiit consistent with mudernte tnxiition,
and, more eflfeccually to socure and hasten
its payment, we demand the strictest honesty
and economy in every pitrt of the adminis-
tration of the government.

That specie is the basis of all sound cur-
rency, and that the true policy requires as
speedy a return to that basiii as is praciioal>le
without distress to the debtor class of the
people.

COLUMBUS PLANK.

« • * * « *

That the creditor is entitled to be paid in
the same currency he loaned to the govern-
ment ; that when he loaned greenbacks he
siiould be paid in g'eenbacks, unless the
contract otherwise provides ; and when he
loaned gold he should be paid in gold. That
to guard against too gre.it an expansion,
greenbacks should be made conver'.ible into
3 per cent, bonds at the option of the note
holder, said bomls to be rede^ed in green-
backs on demand, cu-itom duties to be paid
in greenbacks. This policy would secure a
uniform currency, stop gambling in gold(?)
and thereby elevate the credit of the gov-
ernment.

The one has the ring of the genuine metal ; the otheljijjs not even
pewter — it is putty. The first is a return to the ancient faith of the
Democracy ; the other is wildcat, of the most vicious breed. The for-
mer is in accordance with the principles of the constitution, and the
sentiments of sensible and patriotic men ; the latter is in flagrant viola-
tion of the Fourteenth Amendment, inasmuch as the intention and
effect are to defraud the public creditors of their just claims. Vallan-
digham's plank means honest payment of the national debt; the
Columbus plank means repudiation.

<mmt

2 H J? 112-

Not the least remarkable thing connected with this now financial
departure is the fact thai only the Ohio Democracy have taken it. The
Democratic organization in no other State, West or East, Soutli or North,
are advocating in their platform the payment of the debt in irredcemji-
ble notes, or a material expansion of the existing currency. The Ohio
Democracy must think they hold a "mighty good hand" to play this
greenback game alone. At all events, the scheme, like the old wild-cat
bank notes, has no credit, and does not pass in any State beyond the
one in which it was started,

WHO INVENTED THE SCHEME.

This Columbus twelfth plank, which General Ewing calls the " Dem-
ocratic Financial New Departure," has not even the merit of originality.
The inflation part of it is copied from Pendloton's scheme, developed m
1868; and the device for converting greenbacks into 3 per cent, cur-
rency bonds, and the bonds back into greenbacks, was invented by
Ben. F. Butler in 1866, and since discarded by him as a humbug. He
was sharp enough to perceive that an irredeemable promissory note,
convertible into a non-pav-.blo bond, was a piece of linancial machinery
that, like all other per;)Otual motion contrivances, would not go. So he
dropped it. But the Ohio Democracy have taken it up, and made it
the cliief plank in their platform. Take a serious look at this precious
scheme for enriching everybody and paying off the debt, without giv-
ing a cent of actual value. /■ r, c oa

Greenback notes are to be manufactured to the amount of the 5-20
bonds, which General Ewing says is $1,600,000,000 (though in fact but
$1,200,000,000), and these notes are to be tendered to the holders of
those bonds.

WHAT WILL THE HOLDERS DO WITH THEM?

If they i-efuse acceptance— what then ? Why, stop the interest and
" let them sweat." Yes, that's the little game. But if they should
conclude to accept this " watered " wildcat, what will they do with it?
It is not to be redeemed in gold, or made convertible into any tangible
property. As the Democratic platform sarcastically observes, there
will be no gold gambling in those nqtes. No broker in the world would
give an ounce of gold for a ton of them- There will be no speculation m
any gold-dealer's eye when shown those picture promises. Whoever
goes into Wall street with a wallet full of them will hear the pbserva-
tion of the policeman addressed to the vagrant, " Move on, sir."

But the holder, we are told, can change them into 3 per cent, bonds.
And then he can convert the bonds, when he gets tired of looking at
them, into what? Gold? No. Wheat or cattle? No. Values of
any kind? No; but back into the original wildcats. Thus they
shuttle-cock backward and forward forever, and the national debt is to
be deemed paid. It may be said of this scheme as David said of the
structure ot man : It is " fearfully and wonderfully mad&"

AN ELASTIC AND STABLE CURRENCY.

General Ewing says that those wildcat notes " will furnish the coun-
try with a very elastic currency." No doubt they will be as elastic as
air or any other gas, and as unsubstantial as the stuff of which sick

w financial
en it. Tlio
li or North,
irredeeniii-
The Ohio
) play this
lid wild-cat
jeyond the

the " Dem-
originality.
Bveloped m
r cent, cur-
n vented by
nibug. He
ssory note,
machinery
go. So he
,nd made it
lis precious
vithout giv-

of the 5-20
I in tact but
5 holders of

interest and
they should

do with it?
my tangible
erves, there
vorld would
•eculation in
Whoever
the observa-
, sir.''

cent, bonds.
f looking at
Values of

Thus they
ftl debt is to
1 said of the

sh the coun-
I as elastic as
I which sick

men'H dreams arc made. But it will make a .<»table (Mirrcncy, ho says —
whicli is probably true, as the gold value of those notes will bo zero,
and tlicirpurijliusingpowerthe same. Tlicir correlative Ibnn into bonds
will be no more.

WHAT A NOTE OU nONI) IS WORTH.

A note or bond is worth to the holder that in which it is to be paid,
provided the maker is known to be solvent and i)unctual. If it
calls for gold, wheat, cattle, or iron, it is wortli what they are worth.
If it calls for chips or chaff, it is worth so much, and no more. If it
is to be paid in another promise and that promise is redeemable
only in the first promise, then it is worth nolhing, because it i.i merely
wind, redeemable in wind. The interest on such a bubble-bond might
as well be 30 or 300 per cent, as 8 per cent, as it will cost the make "no
more to pay one rate of bubble-interest than another.

It is obvious that the authors of the Democratic financial plank have
discarded the science of political economy, and treat the exp'Tience of
mankind with contempt. They coolly anil conceitedly brush away and
reject the universal conception of the difference between capital and
credit, value and promise, money and notes, the nature and functions of
gold, and that which gives value to a promise to pay. They leave
entirely out of sxghi payment awX rede7n/)tion, and teach that the Federal
Government has the power to stamp actual value on that which in itself
has none; that it can put forth an almighty fiat that will transform an
airy nothing into -an equivalent of all values, and give that which is
worthless the purchasing power of sdlid coin.

MAKING A FALSEHOOD EQUAL TO THE TRUTH.

It recjuires a full exercise 'of Christian faith to believe that the Deity
himself can create something out of nolhing, and it has proven a sore,
stumbling-block to many a poor sinner to give the statement full and
unqualified credence But the Democratic Convention of Ohio deem it
an easy thing for the Federal Government, with " limited powers to be
strictly construed," to perform a more difficult miracle, viz.: To make a
falsehood, known to be such, equal to the truth. The proposed green-
backs will read something like this. -'The United States promise to
pay the bearer ten dollars, payable ai ir. i Treasury of the United States,
at Washington ; but this promise is m. de in a Pickwickian sense, and
is never to be redeemed in any tangible substance — especially not in gold
or silver." This is the idea, whatever the form of words may be. Is
it possible to conceive any scheme more preposterous ?

AXIOMS OP POLITICAL ECONOMY.

Let us devote a few moments to the consideration of some funda-
mental axioms and facts in regard to wealth, credit, debt, money. In
science the term " wealth " includes all objects of vah:e, and no other.
What is value ? It is an object of man's desires that can be obtained
only by labor.

Value is the exchange power which one commodity or service has
in relation to another. The degree of value a thing possesses is meas-
ured by its purchasing power. Value is the market relation of two
servicea It is what a man gets for what he gives that determines value.

In common nhrnse a thing ia worth' what it will fetch ; that is, whftt
BOJne one will volunUirily give for it.

Cai'ITAl ia the j)oitioii of wealtli employed in renrodnclinn. Mono'r
is one form of capihil. It is that })ortion of oiipital which is employed
in reproduction for the speciiil purpose of elfocting easy oxchaiigo of
values, comnKxlities, and services.

Lahok is the voluntary elVort of human beings to produce objects of
desire, or objects to be exchanged for articles of desire.

Money, by the usage of nations, ancient and modern, consists of
stamped and assayed pieces of gold and silver nietul ; and, aLso, some
baser metals for trifling transactions. The "dollar" of the United
States means 23i grains of gold, or 417 of silver.

ClTKHENCY, in mercantile meaning, consists of notes issued by gov-
ernment or private corporations, promising to pay the holder " money,"
i ft, gold and silver.

A NoTK ia a written or printed piece of paper acknowledging a
debt, and promising payment on demand, or on a day named, with or
witliout interest, according to agreement or law. This is the character
of a note, whether called a " greenback," bank note, promissory note,
or due bill.

A Debt is that which is due from one person to another, whether
goods, services or money. A debt means that A has some of B's prop-
erty, for which he has given in return no equivalent, or satisfaction to
B, except a note, which is B's evidence of the claim, and A's jm)mi8e
to pay It ; that is, to return to B, on demand, or at a time stated, capi-
tal to the amount agreed upon, in exchange for the property placed in
A's handa And the negotiable and exchangeable value of the note
depends entirely upon the faith of the holder and purchaser that the
promise ivill be performed. If it were believed that B would never
pay the note, its value would be nil. A greenback is no exception to
the rule. When it beconfes known that greenbacks are never to be
redeemed, their purchasing power will sink into nothingness. A prom-
ise not to be perlormed has the value of a falsehood, whether maue by
a nation or an individual.

GOLD AND SILVER AS STANDARDS OF VALUE.

To render the discharge of debts convenient, and the exchange of
commodities easy, mankind have agreed to exchange all values and
accept payment of all notes in the metals gold and silver. The ques-
tion of amount is fixed by the bargain or contract, and what is culled
market pric& There is no other recognized standard of value but gold
and silver. The value of a note — that is, its purchasing power — is
exactly equal to the weight of gold that some broker or banker will
give tor it Ascertain its market value in gold, and then you will
know how much of commodities or services it will purchase. The
gold brokers have fixed the exchangeable value of every United States
note since the first one was issued. The government being unable or
unready to redeem its notes as promised, but allowing them in effect to
go to protest, the gold brokers stepped forward and redeemed them at
a discount The greenbacks and all other forma of Federal notes have
been redeemed in gold by the brokers every day since they were issued,
but not at par; they have been purchased at a variable and fluctuating
discount, just as any other overdue and protested paper would be.

at i», wlint

Monov
employed
xuliiiiigo of

objects of

consista of
also, some
the tlnited

led by gov-
" money,"

wledging a
ed, witli or
e eharaeter
iasory note,

ler, whether
of B's prop-
tirtfuction to
A 'a jiromise
stated, capi-
by placed in
of the note
ser that the
A'ould never
jxception to
never to be
3. A prem-
ier made by

exchange of
1 valuea and
The quea-
hat ia called
lue bat gold
ig power — is

banker will
hen you will
•chase. The
Fnited States
)g unable or
ft in effect to
med them at
il notes have

were issued,
d fluctuating
ould be.

I I IIM M Wl .J I

NKCKHSITY OF UEDKMrTION IN COIN.

If the gold brokers should lose faith in their ultimate redemption
by the f»overnmetit, and refii.so to purchase thcin in gold at. anj?
price, they would quickly sink out oi sight as a circulating medium.
The bottom would fjiU out, as it did out of the Continental currency,
the French assignate, and Confederate notes. Their legal-tender
pro])crticH might keep them afloat at a few cents on the dollar until
debtors had discharged their debts and swindled their creditors; but
after that they would be worth what the rag-man would pay for them
by the pound. They would sell by weight, and a .$1,000 greeni)ack
would fetch no more than a $1 greenback. The government, by an
arbitary act of power, may compfd a creditor to accept a greenback in
discharge of a debt, just as it might conliacate u man's property. But,
with all its strength, it has not the power to force the people to give
their property in exchange for greenbacks, or to lix any purchasing
power to such notes. No government, however despotic or desncrate,
powerful or persuasive, was ever able to stamp exchangeable value on
notes that had no redemption behind them, or to fix their purchasing
power, or gold value, one iota above what the gold brokers would vol-
untarily pay for such notes. Either the principal or interest of a bond
must be payable in coin to give it any value whatever, and a note
must be convertible into coin or its equivalent, at some time, to render
it worth anything. There must be an umbilical cord, so to 8i)eak,
leading from the promise in the eye of faith to a golden redemption,
or the note can have no market value.

WHAT GIVES GOLD AND SILVER THEIR VALUE.

But why do mankind universally, and from time immemorial, receive
gold and silver coin in exchange for all commodities and services, and
in payment of all debts? The fact cannot be disputed. From the days
of Abraham, who paid " 400 shekels of current money with merchants
for the field of Epiiron," to the present day, the money of commerce
has been gold and silver.

Why is this?

Because, Firet. They cost labor, and are objects of human desire.
Every coin dollar in existence averaged a day's toil to extract it from
the earth. Second. They represent much labor in a very small bulk,
and are therefore exceedingly portable, and require but little eft'ort to
handle or export A pound of gold will exchange for a year's labor
in most countries. It will buy a good span of hf)r.ses and wagon in
Ohio, or 600 bushels of corn in Illinois, or a ton of cotton in the South,
for the simple reason that it costs as much labor to extract a pound of
it from the earth as to produce or obtain the other named thinga Third.
Gold does not corrode or oxydize. It is indestructible by fire, and
nearly inconsumable by use. It is malleable to a wonderful degree, and
can be wrought into any shape, and will receive and retain any impres-
sion. It may be alloyed or refined, and thus softened or hardened ; and
silver possesses all those qualities in nearly equal degree and perfection.
Fourth. These metals can be put to a multitude of uses ; they are in-
dispensable in the arts for thousands of mechanical purposes. Fifth.
They are the most beautiful of all metals, and ever nave exercised a

captiviitiiiR nttrnction for the frmnin ns well as timlo mind for pn'soiml
ormuiKMitH ai)(l \isoh. Th'-y aio almost ohjccts of worsliip aiiion^' mill-
io!is of tilt! Inimaii family. In poct'iy ami propliody tlioy furnish tho
llnost comparisons and (ij^nrcs of spci'di. Amonf? IiouUkmi nations
tlioy art! sliapi-d to represent goils and deities : and tho sacred images,
crucifixes, and sacramental vessels of all Christian sects arc moulded
from them, as they represent licanty, purity, durahility and worth. The
groat deeds of heroes and statesmen are acknowledged and rewarded,
in silver and f^f)ltlen nuidals, by grateful governments and people,
Ijastly. The quantilies of those metals arc comparatively limited, and
the increase or deenNiso of the whole amount in possession of tho world
is hardly perceptihle in years of time. Their exehnngeahle value re-
mains nearly uniform the earth over, taking all commoditi(>s into
account. In the hust thirty years there lia.s been some increa.so in the
stock of gold, but a dccreaso in silver; taken together, tho ptr capita
increase of cash coin has boon comparatively small in tho world. Tho
wisdom an(l purpose of tho Almighty aro clearly diaocrniblo in tho
creation of gold and silver. Tluit lie designed them as a money inoili-
urn of exeliange for mankind cannot bo called in question, the Demo-
cratic Now Departure to the contrary notwithstanding.

GKKKNBACKS AND GOLD COMPARED.

Compare a greenback with a gold eagle. Tho one is a piece of tissue
paper, the other is precious metal. On the greenback is the picture of a
President's head and a Goddess of Liberty. Inscribed on it are the
words: "Washington, D. C, March —, 1863. Tho United States
"will pay the bearer ten dollars (232^ grains of gold) payable a,t
" the Treasury of tho United States, at New York. (Signed) L. E.
"Chittenden, Register; F. E. Spinner, Treasurer of United States."

Now look at the gold eagle. There is no promise to pay stamped on
it; nothing but tho simple declaration "Ten Dollars," a medallion fig-
ure, and a coinage date. That is all. The "ten dollars" means that
it contains 232^ standard grains of gold. There is no promise to pay
about it It is payment itself; it is capital, property, the product of
hard labor, and is valuable for its uses independent of its employment
as money. But the greenback note is merely a promise to pay money.
That is, it promises to pay gold or silver, for the constitution recog-
nizes no other substances as actual dollars, or money, than gold and
silver. It is the promise to pay coin dollars that gives the greenback
notes whatever value they possess. A note that is convertible into a
bond which itself is controvertible back into the note, and neither con-
vertible into gold, are both utterly devoid of purchasing power. A
cart-load of them would not purchase a breakfast. Redemption in coin
or its equivalent is the touchstone of the value of a note or bond. If
a British consol is alleged to be an exception, I reply that the interest it
bears is paid in standard gold, and when the government purchases any
of the consols they are paid for in gold. The only value the bonds of
this government have ever possessed has always been determir to
the fraction of a cent, by the amount of gold they would sell for in the
money markets of the United States and Europe. The greenback
notes have been worth each day since they were emitted just what the
brokers would give for them in gold, and no more. The government

ir personal
iiiKii^' iiiill-
t'liriiidli tho
lott iiatiiiiiH
\vA iiiiitm'H,
ro inoiilfliui
worth. The
I nnvardcil,
and iH!()|)lo,
liiiiiU'd, and
A' tlio world
() value rO"
oditi(>s into
roarto ill the
) prr capita
irorld. The
nililo in the
lonoy nieili-
the Demo-

cce of tissue
picture of a
1 it are the
»ited States

payable at
igned) L. B.

States."

stamped on
edallion fig-

means that
rnise to pay
I product of
emplo}inent
) pay money,
ution rccog-
in gold and
e greenback
rtible into a

neither con-
l power. A
ptionincoin
)r bond. If
he interest it
urchases any
he bonds of
jtermif; to
ell for in the
e greenback
LSt what the

government

havinji; nogleotod to nvloorn thorn at par, the brokers liavo done it at a
di.'«'ounf. As tho (iriidit, of tlin goverriiiu^nt iiriprovcH, tlicy pay umre
gold for tlu'iii, bocauso tlio irnj)rov(>m(!nt of cnulit .signKicsan incrensing
probability that ere long it will make good its promise to rcdcein thoin
at par in gold.

VAM'K UKALIZKI) KOK THE KIVE-TWKNTY HONDH.

Tho Democratic financial plank sets forth this reason for paying the
bonded diibt in now issues of irredeemable, ami, as T have shown,
worthless notes, viz: "That tho public; creditor is eiititlc<l to bo paid in
tho samo currency he loaned to tho government; that wIkmi ho
loaneil greonbiuiks ho should bo paid in greenl)aeks, unless tho contract
otherwi.se provides, and when he loaned gold he should bo paid in
gold."

General Kwing, who heartily endorses this proposition, seeks to cre-
ate tho impression on tho public mind that tho govornmoiit only realized
40 per cent, of gold value for its bonds; thorotbro, the |)rcsent holders,
regardless of what they paid, should be forced to yield them back upon
receiving 40 per cent, of what they call for.

It is dishonest to underrate and misrepresent the amount which the
government realized from its notes and bonds. Lot mo correct these
assertions by the facts derived from the official reports to Congress.

During i8Gl the currency was at par and the first $150,000,000 of
greenbacks, issued under tho act of February 25, 1862, realized the
government almost par. The first issue of bonds, the "Sixes of '81,"
so called, realized nearly gold value to the government; amount sold,
$283,000,000.

The average value realized in 1862, for the 5-20 bonds and the 7-30s
convertible into them, was 91^ per cent. The average price of 5-20s
and 7-30s, sold in 1863, was 73i per cent. The average price of the
same securities, sold in 1864, was 55^ percent Tho average price of
the same securities in 1865, was 67J percent And the average realized
during the four years, was 72 1-5 per cent

In the dark and gloomy year of 1864, that tried the souls of patri-
otic men, the average; value realized in each quarter for the bonds sold
was as Idllows; First quarter, 68 3-5 per cent; second quarter, 67 ;
third quarter, 45, and fourth quarter, 61 per cent There were days in
the third quarter of that black year when but 40 per cent of gold value
was realized. And on these exceptional dark days General Ewing
seizes, and unfairly endeavors to convey the impression that 40 per
cent was the aveiage amount realized for the 6-20 bonds, when, iu fact,
it was more than 72 per cent

WHY THE BONDS SOLD 80 CHEAP.

But why was it that our bonds only averaged 55J per cent in the
year 1864, and at times sank to 40 per cent? That was the year, fellow-
citizeiis, when the Democratic party of the North proclaimed the war
for the suppression of the slaveholders' rebellion to be a failure, and
endeavored by every means in their power to make it a failure. The
patriotic people of the North were between two lires. Fourteen Demo-
cratic States were in rebellion and fighting desperately for the dismem-
berment of the Union, and the solid Democratic party of twenty-three

iTftftri.. 'l..A^.^s.vJ-fc^s^'«^!l■«

iiim i nn i n ii imw i ^ .

: 8

Republican States were doing everything they dare to help their
Southern brethren. It was tliis treacherous defection in the North that
so impaired the financial credit of the government that greenbacks for a
time were quoted at 250, and bonds realized but 40 per cent Does it
become the mouths of Democratic orators to prate about the depreciation
of the bonds of the government when they themselves were the chief
cause of that depreciation ? Has a man in law or morals a right to take
advantage of his own wrong-doing, and charge his innocent adversary
with the mischief himself has willtuUy and maliciously caused?

HOW DEPRECIATION MIGHT HAVE BEEN PREVENTED.

Had the Democratic party stood shoulder to shoulder with the Re-
publicans from the outbreak to the close of the war ; had they pro-
claimed to the rebel South that there could be neither truce nor compro-
mise while a rebel remained in arms ; had their orators and newspapers
called on their party to uphold the public credit with money and arms;
had they frowned down all opposition to the draft, and urged all able-
bodied men to the front, ana volunteered to load them; I say, if the
Democracy had acted in this patriotic way, instead of the quasi-treason-
able manner in which they did act, not a bond would ever have sold
below 90 ; not a quotation of greenbacks would have been made
higher than now. The war itself would have ended in 1863 at the
farthest Half the loss of precious life, and half the waste of treasure
would have been spared. Our debt to-day would be reduced to a few
score millions, our currency would be at par, and 300,000 brave young
men. North and South, now mouldering in the dust, would bless and
cheer us with their presence, strength and manliness. The North fought
the rebellion with one hand. The right hand struck ; the left hand
hung nerveless.

THE BONDS HAVE CHANGED HANDS.

But to return to the question of the payment of the bonds. The
Democratic platform says that " the public creditor is entitled to be
paid in the same currency he loaned : that when he loaned greenbacks
he should be paid in greenbacks."

One might suppose that even stupidity itself should know that the
^outstanding bonds are no longer in the possession of the original sub-
scribers, but have changed hands many times. The great mass ot
those who first bought them have sold out and now hold no bonds.
Some of the bonds have changed hands scores of times. Two-thirds
of all the 5-20 bonds outstanding are in Europe — chiefly in Germany.
More than five hundred millions have been bought since the war, by
the Germans, English, and French, at prices ranging from 75 to 100
per cent in gold. More than $900,000,000 of our bonds, chiefly 5-203,
are held in Europe, and the proceeds of their sale have passed into tho
channels of commerce, and are taxed the same as all other property. •

OP WHAT VALUE SHOULD THE GREENBACKS BE?

If the "bloated bondholdera " should be paid in greenbacks, of what
value should the greenbacks be? Several hundred millions of the bonds
first sold realized the government between 90 and 100 per cent; how
much are the holders of these be nd? to be paid ? Others brought dif-

mfrm'xmm'mmm

to help their
;he North that
jenbacks for a
sent Does it
e depreciation
ere the chief
i right to take
ent adversary
used ?

^TED.

with the Re-
lad they pro-
je nor compro-
ad newspapers
ney and arms;
jrged all able-
; I say, if the
quasi-treason-
rer have sold
B been made
in 1863 at the
ste of treasure
uced to a few
) brave young
)uld bless and
e North fought
; the left hand

} bonds. The
entitled to be
led greenbacks

know that the
3 original sub-
great mass of
lold no bonds.
8. Two-thirds
y in Germany,
ce the war, by
rom 75 to 100
I, chieny 5-20s,
passed into the
er property. •

BE?

ibacks, of what
ns of the bonds
per cent; how
srs brought dif-

ferent prices, below 90 and above 70 percent; others below 70 and
above 50 per cent, and a few sold down to 40 per cent when tiie capi-
talist at home and abroad felt apprehensions that the bottom was falling
out of the whole thing, and that the Union was going where the wood-
bine twinelb.

SEVERAL QUESTIONS.

As it is no longer possible to deal with the original purchasers of
the bonds, and as most of the present holders have paid between 90
cents and par for them, I desire General Ewing, or some one, to "rise
and explain " what they mean by the expression, " paying the bond-
holders in greenbacks.'^ Are greenbacks worth 40) per cent to be
tendered to the holders of bonds that originally realized the govern-
ment 99 per cent, or 85, or 70, or any other sum above 40 per cent. ?
How is the present holder of a bond, who paid par for it, to be forced to
receive a note worth but 40 or 50 cents, on the ground that it was sold
in 1864 for that amount? Then another man gave the government 98
or 97 cents for greenbacks, and kept them in his possession until the
Democratic opposition to the Union cause depressed their value to 45
cents, when he gave them back to the government and received a 5-20
bond in lieu of them, which he still has. How is he to be paid ?
Shall he receive the original value he gave the government for the
notes, or only what they were worth when he parted with them ? If
every present holder of a 5-20 bond is to be paid in greenbacks of the
exact gold value of those the original purchaser gave for the bond,
how are such greenbacks to be manufactured ? By what process can
the government impart to one irredeemable note the commercial value
or purchasing power of 40 per cent, and to another 50, 70, 80, 90, or
100 per cent? For unless this can be done, the whole proposition to
repay the value originally loaned falls to the ground. Is a greenback
worth ten cents on the dollar to be considered as payment for a bond
costing the holder 98 per cent?

WHAT FOREIGN POWERS WOULD SAY AND DO.

Suppose our government should adopt the Ohio Democratic financial
plank, and pass a law notifying all holders of 5-20 bonds to send them
in for exchange for non-interest irredeemable notes, worth anywhere
from 10 per cent to 20, or, say 40 per cent, what answer would the
Governments of Germany, England, and France return to us? They
would say : " Mr. Yankee, you may cheat and defraud your own citizens
to your heart's content, but we shall submit to no such swindle. We
hold your bonds to the amount of 900 millions of dollars, not payable
in shinplasters, but in gold and silver dollars, as defined in your own
constitution. Our people paid the highest market price for your secu-
rities ; some of them were purchased when your credit was nearly
destroyed by one of your own parties. They took the chance of your
bankruptcy. They loaned you the capital which enabled you to pull
through and save your government from ruin, and you were very glad
to sell your bonds for what our people were willing to pay at the time.
We knaw nothing of your stuff you call greenbacks, but we are
not verdant enough to be imposed upon with such green stuff. We
paid you for your bonds solid coin, and materials of war. We sent

i i i!a i iiM,a i i'» i !tiia! ',i M»M ) »Mi.W ' ' " " '

you clothing, arms, aild ammunition in p!irt payment, and the residue in
hard cash. You are now solvent, rich, and abundantly able to pay
your just debts, and if you undertake to defraud our people out of
their money, we shall make common cause, and proceed to collect their
claims for them, with costs of suit Do you understand that? " This is
what those powers would say to our government, and the whole world
would applaud them for it. In such a contest we should have not a
friend upon earth. All the nations would point the finger of scorn at
the great and boastful republic, and cry shame on you for such base
rascality and dishonesty.

General Ewing went into an extended calculation to show the
amount the government would make by adopting his financial new
departure. He said there were 1,600 millions of 5-20 bonds wliich
could be wiped out by the Wilkins Micawber method of paying debts
by giving your creditor a note. But he avoided any computation of
the amount the people would lose by the scheme of watering the cur-
rency.

THK VALUE OP DEPOSITS AND CURRENCY.

Let me give you some statistical facts, which the Democracy would
do well to study.

We have now a currency consisting in round numbers of—

Greenbncks ^$^ul%

8 per cent, certificates !'.*,'** 40

Fractional currency '[ aq

National Bank notes '.."!!!!!!!!!!! 324

Total I 760

"Worth at 90 per cent, in gold value | ^34

According to the latest bank returns, the following amounts were
deposited with the banks, and subject to be checked out on sight :

National Bank deposits fi"To6

State and private bank deposits !.'.".'!.'!!!! 8 jO

Savings bank deposits '.....!!!*.!!!".!!!'.. TOO

Total deposits ^^

Add currency m individual hands 45Q

Currency reserves in all banks !!'.!!!'.!!!!! 300

Total deposits and cash *2 406

The present gold value of these deposits and of the currency in the
hands of the people, and of all the banks, is 2,165 millions— estimated
at 90 per cent The amount of deposits in all the banks placed to the
credit of individuals, is greater by 48 millions than were the 5-20s at
their maximum amount in 1868, which was 1,602 milliona On the
first of AugL\st, 1871, the 5-20s outstanding were 1,327 millions.
Since then they have been reduced by payment and exchange into the
new five per cents, to something like 1,190 milliona

If the holders of the 5-20 bonds could be cheated out of every dol-

the residue ia
able to pay
)eople out of
) collect their
at?" Thiais
whole world
1 have not a
3r of scorn at
for such base

to show the
financial new
bonds wliich
paying debts
)mputation of
ring the cur-

Dcracy would
.f—

Hillions.

$ »66

324

$ 760

I 684

no ants were
n. sight :

MilliODg.

$ 606

SoO

loo

$1,666

460

300

$2,406

•rency in the
s — estimated
placed to the
the 5-203 at
ns. On the
27 millions,
nge into the

f every dol-

lat by the Democratic platform scheme, the tax-payers would seemingly
gain by the transaction 1,190 millions; bnt if their present currencd
should be destroyed in the act, they would lose 2,165 millions in goly
value.

Let us suppose that by proposed inflation the debasement only
depreciated the currency to 40 per cent. — a point it once reached
during the war — the effect would be to wipe out 1,203 millions of gold
value"of the deposits in banks to the credit of the people and of the
currency in their hands. For the purpose of cheating the bondliolders
out of iiO per cent of their rightful claims, amounting to 717 millions
of dollars, it would be necessary to destroy 1,203 millions of credits
and cash belonging to the people, for that would be the necessary and
inevitable effect of reducing the value of the existing currency to 40
cents on the dollar.

The $700,000,000 deposited in the savings banks of the United
States constitute the little hoards of three millions of poor, honest labor-
ing people. These deposits represent the pinchings of poverty, the
self denials of poor men and women, mechanics, laborers, apprentices,
hod-carriers, coal-heavers, washerwomen and servants, miners who peril
their lives in the bowels of the earth, and sailors who dare the dangers
of the deep. The 956 millions of all other deposits belong to the busi-
ness classes, the merchants, traders, shopkeepers, drovers, manufacturers,
professional men, and largely to farmers and planters. Any deprecia-
tion of the currency strikes down the value of those credits as well aH
of the money of account, A depreciation of even ten per cent, amounts
in the aggregate to a loss of $240,000,000. What kind of statesmanship
is that which would debase the currency and destroy the value of
credits amounting in the aggregate to more than the national debt in
order to swindle t^e bondholders out of their claims? Does the pro-
posal spring from intellectual darkness or from a moral nature in decay?

GREENBACKS IN REPAYMENT OF GREENBACKS,

But the public creditors loaned greenbacks to the government ; there-
fore they should be paid only in greenbacks, says the Democratic plat-
form. There is no hint given that any regard is to be had to the value
of the greenbacks.

A greenback note is not a thing of steady and determinate value,
but it is as unstable as water, as fluctuating as air. For nine years this
currency hac been in circulation, and hardly for a day, in all that period,
has its value remained fixed, but, like the mercury in a tube, it has been
forever rising and falling, and often these changes have been very sud-
den and great. But who is responsible for these continual oscillations
of value — these everlasting, never-ceasing, up-and-down movements ? It
is not the public creditors ; the bondholders have nothing to do with
it ; the people who use those notes are not answerable for it. The
bondholders and the noteholders rejoice when the value of the green-
backs improve, and grieve when they decline.

WHO IS RESPOKSIBLE FOR FLUCTUATIONS?

It is the government that is responsible for the fluctuations and depre-
ciation of its notes ; first, in repealing the original act making green-
backs convertible into 5-20 bonds, at the option of the hdlder. This

liiii i'jlMi'n ii

act of bad faith was committed March 3, 1863, and took effect July 1,
1863, when 300 millions of greenbacks had already been issued and
were in the hands of the people. It is said that it was done at the
instance of Secretary Chase, but the motive for so doing has never been
satisfactorily explained. Secondly, the government is responsible for
the depreciation, in not redeeming its notes in coin as it promised to
do. As I have already stated, a " greenback " is simply a due bill of
the government, payable to bearer, in coin, on presentation to the
National Treasury. Each dollar named on the face of the greenback
calls for 23i grains of standard gold. When the government is ready
and willing to redeem its due-bills on demand, the bondholders will
cheerfully receive them in exchange for the 5-20 bonds. Is that not
fair ? They never agreed to receive them at par, unless the government/
first made good its own promise to pay them at par. The whole trouble
grows out of the failure of the government to perform its part of the
contract with the public creditors— with the noteholders as well as the
bond-holders ; and they were the same persons, to a great extent It
was the duty of the government to keep its notes at par. If it had,
par value would have been realized for its bonds. But failing to do
this, the public creditora are not to blame for the consequent deprecia-
tion, but the government itself They paid for the bonds in the gov-
ernment's own currency, and gave it for the bonds exactly the amount
of this currency it asked for them.

What right has the government first to refuse to redeem its notes,
thereby willfully causing their depreciation, and then to force them at
par on its creditors ? What right has it to manufacture new batches of
notes in violation of its pledge in the act of June 30, 1864, that "the
total amount of U. S. notes issued, and to be issued, shall never exceed
400 millions," and, making no provision for the payment of these " wild-
cats," to foist them on the holders of bonds purchased ten or seven
years ago ? Yet this is what the Democratic platform pledges that
party to do if they get into power. They call this a " financial new
departure." It certainly is from the paths of common honesty and
national good faith.

THE MORAL LAW OP PROMISES.

Men act from expectation. Did the people in the United States and
Europe expect or believe when th^ government borrowed their capital
that it had reserved the right or privilege never to redeem its own notes,
but let them depreciate to any extent that might happen, and that it
had also reserved the right to manufacture hundreds of millions of new
and irredeemable notes at the time the bonds would become payable,
and tender these notes in full payment and satisfaction of the bonds?
Certainly not

The great Dr. Paley, the standard authority on moral science, speak-
ing of the sense in which promises are to be interpreted, says : '* Where
the terms of a promise admit of more senses than one, the promise is
to be performed in that sense in which the promiser apprehended at
the time the promisee received it" Apply this rule ot moral law :
Did the government apprehend at the time it sold its bonds that the
purchasers understood they were to be repaid in irredeemable notes of
chance value? No man believed any such nonsense. No man

effect July 1,
3en issued and
as done at the
has never been
responsible for
it promised to
y a due bill of
ntation to the

the greenback
iinent is ready
ndholders will
s. Is that not
he government/
! whole trouble
its part of the
i as well as the
eat extent It
)ar. If it had,
t failing to do
juent deprecia-
ids in the gov-
tly the amount

deem its notes,
force them at
new batches of
864, that " the
I never exceed
)f these " wild-
d ten or seven
1 pledges that
'financial new
a honesty and

ited States and
id their capital
its own notes,
;n, and that it
nillions of new
3ome payable,
of the bonds?

science, speak-
says : '* Where
the promise is
pprehended at
3t moral law:
bonds that the
Tiable notes of
se. No man

would have given a dollar a' cord for 5-20 bopds issued with
such an understanding. The government never hinted at any-
thing of the sort. It was never dreamed of until disunion dema-
gogues begun to cast a', lut for some scheme of defalcation that would
appear les° glaring and indefensible on its face than a proposition of
naked and hideous repudiation. Yet every man who supports the 12tb
plunk in the Ohio Democratic platform knows that it means repudia-
tion ; that its practical effect would be to swindle the holders of the
5-20 bonds out of every dollar of their valua

Need I add another word to prove the preposterous and destructive
character of the Democratic financial scheme ? If Vallaudigham could
be called back to life and was shown General Ewing's speech on the
New Departure, what do you think he would say? He would say, in
the language of the amazed Irishman, tJiat he was glad he was dead.

EXPANSION MAKES DEAR INTEREST.

General Ewing gives it as his opinion that his new wildcat currency
will reduce the rates of interest. His language is :

•'(4.) It will establish a moderate and nearly uniform rate of inter-
est As much will be issued at once as will command investments
preferable on the whole to government 3 per cents. It will thus
estiblish the average rates' paid by business men at about 5 per cent
instead of 9, as now. Once established, these rates will be compara-
tively uniform, because as they tend to rise more currency^ will be
issued, as they tend to fall more will be exchanged for bonds.'

A greater financial fallacy never was uttered by any man entitled to a
respectful hearing. The proposed bonds not being payable in gold
or other valuable thing, will be nothing more than one form of irre-
deemable notea Their issue will inflate the currency just the same as
the issue of the notes. luflutioa always increases the rates of
interest, as all experience has demonstrated. Before the war the
ruling rates of interest were far lower than after inflation, and
consequent depreciation, set in. Inflation causes expansion of prices,
and while the watering process goes on dealers seem to gain large
profits. This stimulates speculation, and there is a reckless rush to
borrow money ; the lenders advance their rates on account of the extra
demand, and the probability that the principal will be repaid in a less
valuable currency. Thus inflation always results in higher rates of
interest Cheap dollars means dear interest The more abundant the
currency the less purchasing power it possesses, and the higher are
the rates charged for its use.

Contraction, on the contrary, if not too sudden, produces a reduction
of interest rates, because as the dollar becomes more uluable fewer
dollars will transact the exchanges of the country, and the chances of
being repaid in a better currency make capitalists anxious to loan
money on the best attainable terms. Contraction also checks wild
speculation, because, in reducing previous prices, the speculator is
obliged to sell on a falling market. The borrowing demand thus falls
off, and, with it, the high rates of interest Men do less risky business,
carry lighter stocks of goods, go less into debt, trade for cash, and do

not spread so much sail for their ballast

■■~~~~^""*Si*#fl!f**#f""flW"

ii u- ii.g BSi B

THREE INFLATIONS, ^ITH HIGH INTEREST.

"Within the personal recollection of middle aged men there have been
three periods of cucrenoy inflation, attended with high rates of interest
and reckless speculation, and followed in two of tlio cases with sudden
contraction and commercial distress, but, utter recuperation commenced,
with greatly reduced rates of interest. The third and last inflation
was followed by gradual contraction of currency and gradual reduction
of interest. During the inflation culminating in 1837, interest rose as
high as 24 per cent., while a lew years afterwards, when business and
values had touched the " liard-pan," interest went down to 6 per
cent in the East, and 6 per cent, in Ohio— say, between 1842 and
1850.

The second inflation, which collapsed in 1857, drove the rates of
interest up to 12 percent, in Ohio, and ,15 to 18 in the further Western
btates. Ihe contraction that followed materially reduced it in all
parts of the Union. In Illinois it fell otf to 8 or 10 per cent, and in the
East 6 to 7.

Toward the close of the rebellion we had 1,000 millions of currency,
worth 60 to 60 cents on the dollar. We have now 760 milliors of
currency worth 90 per cent Wliite the currency has been contracted
25 per cent in volume, it has gained 60 per cent in exchangeable value,
and the rates of interest iiave liillen throughout the United States Irom
one-quarter to one-third since 1865. There is now a plethora of money
and low rates of interest at all the money centres. Contract the
currency a little more, and it will rise to par value of gold ; interest
will tall still lower and money be still more abundant. When the
paper currency rises to par with gold, the money of exchange will
be instantly reinforced by all the idle gold and stiver in the country.
Coin will then come into circulation, and clean silver change will take
the place of greasy, torn fractional sbinplasters. In all countries
where the paper dollar is kept at par value with gold, the rates of
Ujterest are low and loanable money is abundant, as in Great Britain,
France, and Germany, whereas in Austria, Italy, Spain, and Russia, ~
where the paper currency is depreciated, the rates of interest are high,
money hard to borrow and extortionate usury prevails.

DEPOSITS AND CHECKS.

Not only does contraction give greater purchasing power to currency
and restrain wild speculation, and thereby make money easier to get
by legitimate borrowers; but the practice becoming universal in the
cities and towns, of depositing surplus money with banks and paying
debts and balances with checks and drafts drawn against deposits, h^
the effect to double or treble the loanable funds of these institutions,
and to dispense in large measure with carrying currency about on the
person, or keeping it in actual possession, lying idle. Whereas the
loanable capital belonging to all classes of banks does not exceed 600
millions, the discounts of those banks surpass 2,0i00 millions This
results from the individual deposits made with the banks, which
average over 1,600 millions— more than three-fourths of which the
banks keep loaned out

II WHI I I I JIII I MJI WMSWMBHIWBigl

■ ij a i ii Si ' B

;here have been
ates of int^erest
les with sudden
on commenced,
1 hist inflation
.dual reduction
interest rose as
1 business and
own to 6 per
veen 1842 and

•ve the rates of
urther Western
uced it in all
:ent. and in the

is of currency,
'60 milliors of
jen contracted
mgeable value,
ted States from
hora of money

Contract the
gold; interest
It. When the
exchange will
1 the country,
lange will take

all countries
I, the rates of
Great Britain,
a, and Russia,
erest are high,

er to currency,

easier to get

iversal in the

ks and paying

deposits, has

e institutions,

about on the

Whereas the

ot exceed 600

lillions. This

banks, which

of which the

Good times and an easy money market'depend on general industry,
surplus capital seeking investment, improved credit of the government,
a secured and redeemable currency, and reduced taxation ; and, not at
all on the quantity of depreciated notes that may be issued to circulate
as money, for the greater the inflation the worse it is for the general
prosperity.

THE GOVERNMENT IS NOT A BANK.

General Ewing talks about the government furnishing the people
With a currency, which is another shallow sophistry. The government
can never furnish a stable, steady, reliable currency unless it redeems
it in coin, or makes it convertible into the exchangeable equivalent of
coin. It has no means of redemption except from surplus taxation,
and the only lawful and legitimate use to which a surplus can be put is
to redeem its promissory notes rtnd liquidate national debts, and when
tliere are none to pay, the taxes should be reduced, in order that no
more money shall be extracted from the earnings of the people than is
needed for the support of the government

The government is not a bank of loan and discount, or a credit
mobilier. It has no money to give or lend to anybody. It makes
no advances on grain, cotton, cattle, goods, or on bonds, mortgages,
collaterals, or judgment notes. Its greenbacks constitute part of its
debts, which it has promised to redeem, but don't, and hence their
fluctuations in value. Any increase of tliis sort of indebtedness adds
to the difficulty of redemption and puts off the time of their payment,
and consequently depreciates tlieir value. The more there are of

freenbacks outstanding the less each will be worth in hands of the
older. Let the government inflate the greenbacks by one hundred
millions, and the brokers will not give by 15 or 20 per cent as much
for them as they now pay. From 90 percent their value will drop
certainly to 75 per cent Let the government double the existing
amount of notes without making some adequate provision for their
redemption, ' and their gold value will fall as low as the lowest point
they touched during the war. And let the government issue the
amount contemplated by the Democratic platform, and it will take a
wheel-barrow load of them to purchase a barrel of flour. The finan-
cial New Departure leads to financial perdition. The worst and most
dangerous demagogues in organized society are financial quacks,
because their nostrums, if taken, unsettle all values, impair all
business relations, cause fever, chills, and cramps, and end always in
bankruptcy and wide-spread ruin.

CONCLUSION.

When the rebellion ended, and the cost of the fearful struggle was
footed up, it was found to be 3,000 millions of dollars. On the 1st of
August, 1865, the recognized indebtedness of the nation was 2,757 mill-
ions. In addition thereto. State war claims were presented and paid to
the amount of 50 millions ; extra pay to equalize bounties to volunteers
consumed 50 millions more. Then came tens of thousands of unsettled
claims to contractors, to railroads for transportation, to vessel-owners
for sea and river services ; for damages for property seized or destroyed

' iMP^iiaMfiff-jp^i

I :!

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by the nrmy and navy, for back pensions unpaid, etc., etc. — tlie wlinle
aggregating tnoro than 2nO niillionH, all of wliicii have since been liqui-
dated, making the total debt, as before stated, at least 3,000 millions of
dollars.

This immense debt, which represents the price paid for saving the
Union, has been reduced below 2,280 millions; 700 millions have been
extinguished in the brief period of six years. Nearly one-fourth of the
total coat of the war has been paid off. Six years ago the interest
charge was 146 millions. It is now down to 108 millions, being a re-
ducticm of 88 milliona

When the war ended we numbered 84 millions of exhausted inhabi-
tants, in debt ninety dollars per man, woman and child. We are now
a nation of 40 millions of recuperated people, in debt only fifty-eight
dollars per capita. We have six millions more population and 700
millions less debt than in 1865. The burden has already been reduced
more than onc-//«Vrf per head, and more 'than one-half as regards our
ability to bear it The credit of the government has wonderfully im-
proved. When the war terminated our 6 per cent bonds were only
worth 65 per cent in gold. The government is now able to sell 5 per
cent bonds for par in gold, both in Europe and the United States, and
with the proceeds retire 6 per cents. Let the policy of building up the
national credit and preserving the faith of the Republic pure and un-
blemished before all the world, be persevered in, and ere long our 6 per
cent bonds can be funded intoij or 4 per cents, and the interest charge
on the debt will be reduced to eighty millions per annum, and rapidly
melt away with the payment of the debt itselK

In proportion as the credit of the nation improves by living up to the
wise maxim that honesty is the best policy, the rates of interest paid
by borrowers to money-lenders will decline, and business prosper. The
States, cities, and municipal governments that are in debt will be able
to refund their bonds at lower rates of interest ; mortgages will be re-
newed, and others made on better conditions. Fanners, merchants and
manufacturer will obtain loans on easier terms, and an easy money
market, with cheap interest, and currency at par with gold, will affora
a better and more useful protection to American industry than all the
protective tariffs ever invented by the wits and wisdom of Congressmen.

As the whole embraces all its parts, so the improved credit of the
nation will improve the credit of every State and municipality. An
impairment of national credit casts a shadow and a taint on the finan-
cial reputation of every person and corporation in the land. Next to
the personal liberty of the citiz-en nothing in organized society should
be so sedulously guarded and preserved as the credit and good faith of
the government, the loss of which would be the signal for the commence-
ment of national dissolution and anarchy.

In conclusion, I submit a question for your serious consideration,
whether, for the sake of punishmg the public creditors for advancing
the capital with which the rebellion was crushed and the Union pre-
served, it is wise or prudent to set out on the Ohio Democratic Financial
NeW'Departure and march to infamy and destruction.

■J Wifl

B T —

3. — tlie whole
ice been liqui-
)0 millions of

or saving the
ona have been
•fourth of the
) the interest
3, being a re-

usted inhabi-
We are now
nly fifty-eight
ition and 700
been reduced
regards our
nderfully ira-
ids were only
; to sell 6 per
d States, and
ilding up the
pure and un-
jngour 6 per
iterest charge
, and rapidly

ingup to the
interest paid
prosper. The
; will be able
8 will be re-
lerchants and
easy money
d, will afford
than all the
congressmen,
credit of the
ipality. An
un the finan-
id. Next to
>ciety should
;ood faith of
e commence-

ansideration,

T advancing

Union pre-

tio Financial

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