3 ºversity of Michigº
º, - - general Library
º, ſº-o- iſºlº
; B542,238 A
The Surplus in the Treasury.
S P E E CH º *** * * * * // S.
HON WILLIAM McKINLEY, JR.,
º OF OHIO, *ºtº, tº 45 - ?oi
IN THE House of REPRESENTATIVEs,
Wednesday, /uly 14, 1886.
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The House being in Committee of the Whole on the state of the Union, and having -
under consideration the joint resolution (H.Res. 126) directing payment of the surplus
in the Treasury on the public debt—
Mr. McKINLEY said:
Mr. CHAIRMAN: This resolution, coming as it does from a Democratic
majority in one branch of the Government addressed to a Democratic
Executive in control of another branch of the Government, is, to say the
least, very exceptional and most remarkable. It is a proposition coming.
from a majority of the Committee on Ways and Means which is in political
accord with the present President of the United States, and will undoubtedly
receive the approval of the majority on the other side of the Chamber. It
is a proposition to compel the President of the United States and his Sec-
retary of the Treasury to do that which they have always had the power
to do, that which they how have authority to do under section 2 of the
act of March 3, 1881.
The administration, which is in accord with the committee that reports
this resolution, has been in power sixteen months. When it came into power
it found the following section on the statute-books of the country:
That the Secretary of the Treasury may at any time apply the surplus money in the
Treasury not otherwise appropriated, or so much thereof as he may consider proper, to
the purchase or redemption of the United States bonds.
Not only has the Secretary of the Treasury the power to call in and pay
off the bonds the moment they are redeemable, but he has the power under
that section of the statute to go into the money markets of the world, wherever
our bonds are held, and buy them even if they are not yet matured. And
yet in sixteen months a Democratic administration, with the expressed and
confessed authority to do it, has called but fifty-eight millions of Govern-
ment bonds for redemption, and leaves outstanding to-day one hundred and
forty millions or more of the 5 percents extended, now known as the 3 per-
cents, which are redeemable at the pleasure of the Government.
It is not to be wondered at, Mr. Chairman, that with a record like this, in
view of the professions that have heretofore been made by the Democratic
party, in view of their declarations in platform and upon public rostrum in
favor of the distribution of the surplus for the payment of Government
bonds, characterizing the Republican party, as they have repeatedly done,
as dishonest for keeping the surplus in the public Treasury—I say it is not
surprising, in view of the record made by its own administration, that the
majority of the Ways and Means Committee, under the leadership of the
leader of one wing of the Democratic party, should insist that the President

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of the United States and the Secretary of the Treasury should keep the
pledges which they made to the people. And it is all the more suggestive
and trying to these Democratic friends of ours, Mr. Chairman, when they
look back to the record made by the Republican party on this very subject,
a record that we commenced making from the very close of the war, and of
which all of us are justly proud, which the gentleman from Pennsylvania
was frank enough to say had paid over twelve hundred millions of public
indebtedneſs since the conclusion of hostilities and the reign of peace. I
say it is not surprising, looking at the record the Republican party had made
and then looking at the first sixteen months of record made by a Democratic
administration, that the two wings of the Democratic party on this floor–
in the language of the gentleman from Pennsylvania—should flap together
and demand the President should pay out some of this surplus on the public
bonds of the country, no matter what consequences would follow.
Look at the record. In 1881, two years after the resumption of specie
payments, the Republican Secretary of the Treasury called in one hundred
and twenty-one millions of Government bonds and paid them off. In 1882,
the Republican Secretary of the Treasury called in one hundred and seventy-
three millions of Government bonds and paid them off. In 1883 the same
Secretary called in eighty-six millions; and in 1884 over seventy millions
of the Government bonds were paid off and cancelled. In your first six-
teen months you have paid off $58,133, ooo. We averaged in the last four
years $153, ooo, ooo every sixteen months, and you have made a record of but
fifty-eight millions in the same length of time. It is not to be marvelled at
that the Democratic majority here smart" under such a contrast and have
become impatient with its own administration and distrustful of its capacity
for financial management.
There is another remarkable feature to which I desire to call attention in
this connection. When a Republican Secretary of the Treasury was calling
n these numerous sums and canceling the bonds we had no such surplus in
the public Treasury as you have to-day. In 188o we had but $141, ooo, ooo;
and in that one hundred and forty-one millions we included twenty-six mill-
ions of fractional silver coin which are not included in the surplus reported
by the present Secretary of the Treasury, although he reports as on hand
more than twenty-nine millions of such coin, which he does not regard as
available. In 1881, when we called in one hundred and seventy-three mill-
ions of bonds, in November of that year there was but $1oo, oë9,ooo in the
Treasury remaining after that vast payment. In November, 1882, we had
one hundred and sixty-six millions of a surplus, including the fractional
coin, and during that year we called in $86,581, ooo. In November, 1883,
we had one hundred and thirty-four millions of a surplus, and through that
year called in $70, ooo, ooo. To-day, according to the report of the Treas-
urer of the United States, we have, exclusive of fractional silver coin, over
$75,000,ooo. Why does not the administration of Grover Cleveland pay
out of that balance upon the public debt? There are one hundred and forty
millions due and payable. Secretary Folger said, in his annual report of
1883, if the estimated receipts should continue all the 3 percents. could be
paid off in three and one-half years, and before the close of the fiscal year
ending June 30, 1887. One hundred and forty millions are yet outstand-
ing, and but six months of these three and one-half years are yet remaining.
Why they have not been paid some one on the other side close to the ad-
ministration should be able to tell us. -
Some gentlemen of the majority in the confidence of the administration
ought to explain to us why the Secretary does not exercise the discretion
given him by the statute and distribute the surplus. There must be some
valid reason for it, some controlling reason, which those charged with the
management of our financial affairs know and realize better than we can.

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The Secretary has got the power to do it now, full and complete, as I have
shown you by public law. I believe that discretion ought to be left with the
executive officers of the Government. I believe it to be a wise discretion. I
believe it to be a judicious thing to give the officers charged with the man-
agement of the financial affairs of the Government, charged by the people,
the power to call the bonds or withhold a call for bonds whenever the con-
dition of the Treasury will permit the one or the other. The hands of the
President and the Secretary should not be tied; they should have full power
to act under the laws as they are, and then held to the highest responsibility
and strictest accountability.
Therefore, Mr. Chairman, unless the amendment I offered at the begin-
ning of this discussion, and another amendment which will be offered by the
gentleman from Maine [Mr. REED], and still another which will be presented
by the gentleman from Massachusetts [Mr. LONG), shall be adopted by this
House, I shall feel constrained to give a negative vote on the resolution pre-
sented by the Committee on Ways and Means. Of course we can not help,
I can not help, no gentleman on this side can help, the Democratic party
voting to-day a want of confidence in its own administration. We can not
prevent you from passing a vote of condemnation on the President of the
United States and his Secretary, and that is what this resolution means if it
becomes a law, and that is what you are doing when you vote for it.
Why, think of it, Mr. Chairman . A Republican Secretary of the Treasury
presided over the financial affairs of this Government from 1861 to 1885, a
period of twenty-four years, and no such proposition as this ever passed. A
Republican Secretary of the Treasury was in charge from 1875 until 1885,
• covering the years of resumption, a period of more than ten years; eight years
of that time the Democratic party had control of this House. The Repub-
lican Secretary of the Treasury exercised discretion under the act of March
3, 1881, and a Democratic House, with a majority larger than you have
to-day, never thought of taking that discretion away from the Republican Pres-
ident or the Republican Secretary of the Treasury:
Mr. MORRISON. Oh, the gentleman is mistaken.
Mr. McKINLEY. Did you ever pass a resolution to compel the Secre-
tary of the Treasury to pay out the surplus?
Mr. MORRISON. I introduced the proposition and sent it to the Com-
mittee on Ways and Means, and I never could get it out. [Laughter.]
Mr. McKINLEY. Exactly.
Mr. MORRISON. I offered it in the House of Representatives and had
the support of the gentleman from Pennsylvania [Mr. RANDALL] in an
attempt to pass it, but was kept from passing it by a point of order coming
from the Republican side of the House. [Applause on the Democratic side.]
Mr. McKINLEY. Yes; but you never passed it. You had control of
the House; you had the Committee on Rules; you could have fixed a time
for considering it, just as you fixed a time for considering it in this Con-
gress; you had a larger majority then than you have now. But, whatever
you may have done in the committee, whatever you may have attempted to
do on the floor of the House, one thing is certain, you never did pass a reso-
lution taking away that discretion from the Republican President and the
Republican Secretary of the Treasury. [Applause on the Republican side.]
Mr. MORRISON. I was prevented by the co-operation of Democrat
with that side of the House.
Mr. McKINLEY. That is, the two wings of the Democratic party were
not in harmony, and one wing, with the aid of the Republicans, prevented
you from taking away that statutory discretion from the Republican Secre-
tary of the Treasury. But now that you have got the Presidency; now that
you have got the administration of the Treasury Department, both wings of
the Democratic party “flap together” in denouncing a Democratic Secre-
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tary and a Democratic President of the United States for not calling in the
bonds and absorbing the surplus. And this is not to be wondered at, Mr.
Chairman. Why, the campaign of 1884 was waged and won upon the howl
raised all over this country that the Republicans had $400,ooo, ooo of idle
surplus in the Treasury, and would not pay the honest debts of the Government.
Governor Hendricks, it is alleged, said that all over the West. I have no
doubt that my greenback friend from Iowa [Mr. WEAVERJ said it all over his
State. I know that the distinguished gentleman from Pennsylvania [Mr.
RANDALL] in his famous speech at Nashville, Tenn., when he was making
that triumphal tariff march through the South [laughter], I remember that
when he was making that grand march from Atlanta to the sea [renewed
laughter], carrying the banner of protection, he said there were three hun-
dred millions of surplus in the public Treasury and that the administration
of Grover Cleveland would take it out and pay the public debt with it.
Mr. RANDALL. I am beginning in that direction now. [Applause on
the Democratic side.] • . -
Mr. McKINLEY. Yes; you are beginning, but you are beginning six-
teen months after your administration has failed to do it [applause on the
Republican side], and you have not got very far yet. [Laughter.] Suppos-
ing this resolution passes the House, supposing it passes the Senate, to give
it any force it must have the approval of the President of the United States,
and by this resolution you are asking that the President shall do what for six-
teen months he has refused to do.
He will lay down the pen, which with him within the last few weeks has been
mightier than the sword [laughter], and will refuse to sign your resolution,
or he will take up a fresh and newly sharpened pen and use it; he will veto.
your joint resolution if half the disturbance would follow its execution which
the officials in the Treasury predict, and the surplus will still remain in the
Treasury to be paid whenever and in such sums as in his wisdom and that of
the Secretary will be within the line of safety. I hesitate to join even with
the Democrats in taking away from their administration a discretion which
Republican administrations have always enjoyed. I would want that dis-
cretion continued if we still had the administration, and if it is to be taken
away from yours without qualification or condition it must be your act, not
mine. If this is a mere play of politics, if it is a mere play for position, you
are welcome to it, gentlemen; when your own Secretary of the Treasury
solemnly tells the chairman of the Committee on Ways and Means, in an
official communication, that if this resolution passes it will impair the public
credit, will shake public confidence, will destroy the good financial name.
which we have enjoyed so long, thanks to Republican fidelity, that it will
leave no working balance for the great transactions of the Government, if
that is any solace or comfort in your affliction we cheerfully grant it to you;
when he says another thing, that this resolution means trenching upon the
one hundred millions which is kept as a redemption fund for the legal-tender
notes of the country, and he asks his Democratic friends not to do it for the
sake of our public credit and our financial honor, we give you the benefit of all
the political advantage there is in it. . It is your quarrel, not ours. Yet you
do it, you heed not the warnings of their own officials whom you should
trust, and in fact this Congress seems to be given to doing just what the
President does not want it to do. If there is anything upon which the
majority of this House and the President are in accord, I would like to know it.
Several MEMBERs (on the Republican side.) Vetoing pension bills.
Mr. McKINLEY. In that way they may be a happy family.
Why, Mr. Chairman, in the annual message of the President of the United
States and the report of the Secretary of the Treasury this Congress was
asked to do three things: First, to retire the greenbacks, to get them out
of circulation, to pay them off; second, to suspend the coinage of silver.
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The fact is the President asked that before he became President. [Laugh-
ter.] He could not wait until he was inaugurated; he so feared calamity
from its continuance. He therefore repeats in his formal message to Con-
gress the statement that unless this Congress shall suspend silver coinage,
the financial situation of the country will be very much disturbed. Then
finally he asks you to revise the tariff. What have you done in the way of
carrying out these recommendations?
You have not retired the greenbacks; you have not suspended silver coin-
age; you have not revised the tariff—at least you have not revised it under
the leadership of my friend, Colonel Morrison ; I do not know what you
may do under the leadership of “Colonel” RANDALL. [Laughter.] What
a delightful situation [Laughter and applause.] The gentleman from Penn-
sylvania about three our four weeks ago showed his contempt for the tariff
bill of the chairman of the Committee on Ways and Means; and only the
other day the chairman of the Ways and Means Committee showed his posi-
tive contempt for the attempt of the gentleman from Pennsylvania to make
a tariff bill. [Laughter.] So it goes. There is not a single thing upon
which the members of this Democratic party in this House agree and are in
positive accord except in getting the offices. [Applause.]
Mr. MORRISON. And weare only doing middling well at that. [Laughter.]
Mr. McKINLEY. Yes; and in that particular you are getting along
very slowly. [Laughter and applause.] -
But my friend from Pennsylvania [Mr. RANDALI.] and my friend from
Indiana [Mr. HolmAN], impatient with the delay in getting offices when
they had an appropriation bill before this House a week or two ago, under-
took to break down the civil-service law by a rider on that bill. It seems
that the gentleman from Pennsylvania and his “wing" are for the spoils.
I was glad to find my honest and honored friend from Illinois standing
against that covert attempt to nullify and destroy a public statute. [Applause.]
Mr. MORRISON. Now the gentleman is getting on my side.
Mr. McKINLEY. After what I have stated, and much more which I
might state in the same connection, is it to be wondered at that Secretary
Manning, weary of the burdens of his office, indites a letter to the President
of the United States, dated May 20, 1886, in which he says: -
The reforms of our fiscal policy which you have maintained— º
That is, keeping up the credit of the Government and keeping up the sur-
plus in the Treasury—

and which have been commended to the wisdom of the legislative branch— * -
None of which the legislative branch has paid any attention to—
are reforms necessary to our safety, binding in honor, obligatory in the traditions of the
ocracy, set down with promises in our statute book?
That is what Mr. Manning says to President Cleveland in giving notice ,
of his intention to retire from the Treasury. Listen to what the President
says in his response to the Secretary—
I have hoped that the day was at hand when the party to which we belong, influenced tº
largely by faith and confidence in you and in the wisdom of your views, would be quick-º
ened—
Quickened º
in the sense of responsibility and led to a more harmonious action upon the important à - -
questions with which you have had to deal.
That is the way the President felt May 28, 1886.
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Mr. SESSIONS. The hope of the ungoldly shall perish. º
Mr. McKINLEY. How will the President feel after this resolution of
condemnation, this resolution of censure, this resolution of disapproval, this
resolution of want of confidence P As the gentleman from New York told
you this morning, he can not resign and go to the country; but every one of
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you and every one of us will go to the country; and the issue will then be
made up. If President Cleveland vetoes your resolution you can go to the
country on that. You will then have an issue with your own President.
The $400,ooo, ooo that it is charged Mr. Hendricks said was in the Treasury,
the $300,ooo, ooo which the gentleman from Pennsylvania said was in the
Treasury, will in the mean time remain there, unless the Secretary exercises
the discretion he now has and pays a part or the whole of it out,
I only wish to say in conclusion, Mr. Chairman, that I hope the
amendment I have submitted and others which I have indicated will be
adopted. It seems to me absolutely demanded that they should if this
resolution is to pass. Let us save that reserve, the $1 oo, ooo, ooo, from
encroachment, so that the $346,ooo, ooo of promises of the National Gov-
ernment shall be kept sacred and at par as they are to-day. Let us main-
tain the old Republican policy; let us keep our promises; and in adopting
my amendment we hold on to the Republican position and Republican pre-
cedents. If we will do this, and adopt an amendment giving the Secretary
of the Treasury a fair working balance, which any business man or corpo-
ration would keep—if we will do these two things, then your resolution
will be harmless, and it may be spared the veto of the President. [Loud
applause.] - -
In the report of the Treasurer of the United States of November 1,
1883, there is an exhibit and statement, which I herewith append, and
also the statement of the Treasurer of the United States, of June 30, 1886:
THE RESERVE.
The following table shows, for the first day of each of the past thirteen months, the
amount of the current liabilities exclusive of United States notes; the amount includ-
ing such notes; and the cash in the Treasury, certificates for gold, silver, and currency
deposits and the moneys held for the redemption of the same, having been deducted;
also the percentage of the reserve ascertained as stated above, to the United States notes
outstanding, and of the cash to current liabilities including those notes.
Sr. º. or to -- - ~ | -- ~ *
- = + F - ,- & F --
& # * ºf - E. 3 = | - T 5
£3 2 - £ ‘E 5 & 3 | * ###
§ 3 ; .#~ 3 || 3:# ; : ####
Month. # * : ## 4 3 : # 5 ####
cº-º-º: -- ºr - - 3. * 3 - 3 'T & -
= ~ : * : 7 : ă ă £5 ###
E = = 5:3 # * ## ## = 3
E: * * 3: 3 - # 3 || 3:= 3.5
£5; E #3; ~ 3% £3; #
- - -: = 5–3; 7 - 5:= Z.F
Ç C 3 & &
1882.
November..........|5105,803,01818 &452,484,034 18° 5240,954,707 17 | 39.0 53.3
Dºº ... 112,156,311 13 458.837,327 13 236,742,304 00 || 35.9 51.6
1883. - -
January............. 111,908,927 79 458,589,943 79 223,700,425 05 || 32.2 48.8
February........... 105,295,921 02 || 451,976,937 02 226,707,110 73 || 35.0 50.2
March............... 110,604,935 34 || 457,285,951 34 238,201,333.89 36.8 - 52.1
April............... 108,292,907 34 454,973,923 34 240,420,177 64 38.1 52.8
May.................. 122,080,864 40 468,761,880 40 243,783,639 91 || 35.1 52.0
June................ 116,546,697 48 || 463,227,71348 || 244,580,843 16 || 36.9 52.8
July................. 112,105,099 61 458,786,115 61 || 253,111,870 34 40.7 55.2
August............. 105,931,897 37 452,612,913 37 258,374,204 94 || 44.0 57.1
September........ 109,370,166 29 456,051,182 29 261,665,988 79 || 43.9 57.4
October............. 107,070,088 12 || 453,751,104 12 || 259,236,856 51 || 43.9 ...!
November......... 97,865,983 08 || 444,546,999 08 || 258,688,528 50 || 46.4 58.2
Average for 59
months........ 98,059,296 47 444,740,312.47 233,424,407 81 39.0 52.5
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UNIVERSITY OF MICHIGAN
iſ
The following statement shows the excess of th
its net demand liabilities on the 1st day of November, 3 9015 07789.5285
same date in 1882:
1882. 1883.
ASSETS.
Gold coin.................................................... $108,888,963 44 || $147,037,092 56
Gold bullion.......................................... ----- - 50,916,780 10 62,392,847 34
Standard silver dollars.................................... 92,414,977 00 116,036,450 00
Fractional silver coin................. ........... . ------ 26,749,432 45 26,712,424 15
Silver bullion..... ......................................... 4,012,503 27 4,936,364 86
Deposits with national-bank depositaries..... ..... 8,738,523 16 7,987,693 27
United States notes.............................. .......... 29,689,196 17 37,113,037 33
National-bank notes......... ------------------------------ 6,370,051 58 6,428,179 99
Total assets............. ...... .................. 327,780,427 17 508,644,089 50
Ll Air ILITIES. -
Old debt..…............................................... 792,012 27 775,096 84
Called bonds matured and interest........... ......... 9,661,510 16 3,531,342.84
Matured bonds and interest ...... ..................... 786,524 00 331,000 90
Interest due and not paid................. ............... 5,255,170 24 2,371,276 57
Gold certificates outstanding......... ........ ........ 11,370,270 00 52,076,180 00
Silver certificates outstanding............. . . ...... 65,620,450 00 85,334,381 00
Certificates of deposit (act of June 8, 1872) out-
standing ...... ------------------------ ---- ---------------- 9,835,000 00 12,545,000 00
Disbursing officers' balances and various small ac-
Counts...... ...... ------------------------------ ------------- 24,208,117 05 24,331,528 02
Outstanding drafts and checks........... ............ 5,635,232 31 8,379,155 26
Five per cent. find for redemption of national-
bank notes......... . . . ................................. 14,471,298 01 14,220,766 81
Fund for redemption of notes of national banks
failed, in liquidation, and reducing circulation. 38,169,253 10 35,672,219 60
Post-Office Department account........................ 6,823,901 04 8,253,587 24
Total liabilities, .......................... ....... , 192,628,738 18 | 247,821,544 08
Reserve—excess of assets.............. 135,151,688 99 wº
It will be seen that the reserve is ascertained by deducting from the cash in the Treas-
ury the aggregate of the current liabilities other than United States notes, the amounts
of certificates and other obligations nominally outstanding having been first reduced by
the amounts of those held by the Treasury. -
The reserve increased from $135,151,688.99 in 1882 to $160,822,545.42, due to the
increase in the cash owned by the Government of $8,918,286.36 in gold coin and bullion,
$4,831,403.59 in silver dollars and bullion, and $4,771,969.57 in currency; and to the
decrease in the liabilities for bonds and interest of $9,486,490.52, and in the funds
for redemption of national-bank notes of $2,747,564.70. This aggregate increase of
$30,755,714.74 is, however, reduced to $25,670,856.43 by the increase in the liabilitieson
account of Post-Office Department, outstanding drafts and checks and disbursing officers'
balances $4,297,020.12, and by an actual decrease in the fractional silver coin in the
Treasury and the funds on deposit with national-bank depositaries of $787,838.19.
The amount of the reserve a year ago would, however, have appeared greater by
$12,063,714.72 had not payment been anticipated of that amount of called bonds not
then matured; which should be considered in making any comparison.
The range of the percentage of the reserve to the amount of the United States notes
outstanding §§§ during the period was from 32.2 per cent. in January to 46.4
per cent. in November, 1883; and the average for the four years and eleven months
since the resumption of specie payments was 39 per cent.
Upon the assumption that the percentage should be computed between the cash in
the Treasury and the liabilities, including United States notes, all certificates and the
moneys for their redemption being excluded, the range was from 48.8 per cent. to 58.2
per cent, during the thirteen months and averaged 52.5 per &ent, for the fifty-nine
months since resumption.
In connection with this I want to read a dispatch which I sent to the act-
ing Secretary of the Treasury this morning and his reply. It will make cºear
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the wisdom of the amendment offered by the gentleman from Maine [Mr.
REED]. I invite for it the serious consideration of members of this House
and especially those of the party faith of the Secretary. It comes from the
Democratic Secretary of the Treasury, whose means of knowledge can not
be questioned, and whose statements should have great weight with the ma-
jority: -
Hon. C. S. Fairchild, Acting Secretary of the Treasury:
If balance of seventy-five millions, as shown by Treasurer's report of June 30 last,
should be used to pay bonds, what would the Treasury have left for working balance be-
sides fractional silver coin? An immediate answer will oblige.
To that dispatch I received but a few moments ago the following reply:
TREASURY DEPARTMENT, July 14.
Hon. William McAinley, /r., House of Æepresentatives:
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* In reply to your telegram of this date, asking what the Treasury would have left for -
working balance besides the fractional silver coin if the balance of seventy-five millions,
as shown by the Treasurer's report of June 30 last, should be used in paying bonds, I
to state that nothing would be left but trust funds, which it would be dishonorable
dishonest to use for that purpose.
C. S. FAIRCHILD,
Acting Secretary.
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