Responsibility FOR SENT Currency Perils Belmont MU 1) X dJ Republican Responsibility for Present Currency Perils By Perry Belmont G. P. PUTNAM'S SONS NEW YORK & LONDON Zbe 1 Rnlckcrbocher 1898 press • -> Copyright, 1898 BY PERRY BELMONT "Cbe Tknicfcerbocfcer press, t\cw Jljorh 5r PREFACE. " n^HE Hon. Perry Belmont has con- sented to write a series of seven articles on the ciirrencij question for The Citizen, and we publish the first of them to-day; the remainder will be puhlished in dne order, from day to day. '* Tlie piihlic mind has been befogged in relation to the currency by voluble ignorance on the one hand, and on the other by a I manner of treatment by experts that forbade ' the collection of clear ideas from their writings and speeches by the average man, busy with his own affairs and rarely in a mood to trach thought through the mazes of technical discussionT — Broohlyn Citizen, V December 20, 1897. " We must express the hope, therefore, in again expressing the obligations of The Citizen and its readers to Mr. Belmont, that he loill consent to their publication in a form which shall be at once desirable and within the reach of the people in generaV — ■ BrooMyn Citizen, December 28, 1897. Ill oo6386 CONTENTS. PAGE The Unconstitutional Greenback . . i The Constitutional State Banks . .12 Democratic Money 21 Republican Money 37 Payment, Redemption, Resumption, and Extinction 47 Greenbacks or Bank Notes ? . . -55 Suppression of State Banks by Congress . 67 The Banks of the Whigs and the Na- tional Bank of the Republicans . 73 Democratic Responsibility for the City OF New York 81 Republican Responsibility FOR Present Currency Perils. THE UNCONSTITUTIONAL GREENBACK. IT would obviously be premature for any one at this time to endeavor to define the currency legislation by Congress, which nearly a year from now, when called upon to nominate Democratic members of Con- gress, the Democrats of New York will advocate. Democratic principles are immutable, be- cause fundamental truths. The most essential were concisely stated by Jefferson, in his first Inaugural. One was this : " The honest payment of our debts, and sacred preservation of the public faith." 2 Republican Responsibility for Prudent and politic Democratic measures to vindicate that Democratic principle may depend this year somewhat on the conduct of the Republican party, which is now in power at Washington. We, of the Democ- racy, are in opposition. Currency reform of some sort seems to be now everyw^here demanded, excepting by those who do not think at all on the subject, or who, out of fear of censuring the Republican leaders, prefer to leave our finances, taxation, and currency to drift. There are indications that the next question to be uppermost in political debate is whether greenbacks or bank notes shall, together with paper representatives of coined dollars deposited in the Treasury, constitute our paper currency. The New York Sun had, on Nov. 26th, this opinion of what Congress should do : "In providing for the future, the aim should steadily be to substitute for bank notes Government notes only, backed by an adequate gold reserve and redeemable in gold on demand. Let us have one standard, namely, gold, and one currency, composed Present Currency Perils, 3 of Government gold coin and Government paper redeemable in gold, with silver for subsidiary use." Commenting on the multitude of schemes to alleviate the present currency perils created by Republican legislation, that journal on the 11th of December again said : " Let us suppress all bank notes and fill their place with Government notes, redeem- able on demand in gold and secured by a redemption fund not liable to depletion for any other purpose." The Sun has been a vigorous opponent of the Chicago platform of 1896, which declared : " Congress alone has the power to coin and issue money, and President Jackson declared that this power could not be delegated to corporations, or individuals. We, therefore, denounce the issuance of notes intended to circulate as money by national banks as in derogation of the Con- stitution, and we demand that all paper which is made a legal tender for public and private debts, or which is receivable for 4 Republican Responsibility for duties to the United States, shall be issued by the Government of the United States, and shall be redeemable in coin." ^ If the Convention wliich adopted that platform declaration intended to discrim- • The money and currency planks of the Democratic National platform of 1896 are radically unlike those of the Populist platform of that year. The former de- nounces national banks as unconstitutional, and affirms that if paper currency is to be issued it must be redeemed on demand "in coin." The latter "demands" a paper currency issued only by Congress — never by banks — and not redeemable in anything. The difference is so conse- quential that the Populist platform deserves reproduc- tion : " 1. We demand a National money, safe and sound, issued by the General Government only, without the in- tervention of banks of issue, to be a full legal tender for all debts, public and private ; a just, equitable, and effi- cient means of distribution, direct to the people, and through the lawful disbursements of the Government. "2. We demand the free and unrestricted coinage of silver and gold at the present legal ratio of 16 to 1, with- out Avaiting for the consent of foreign nations. "3. We demand that the volume of circulating medium be speedily increased to an amount sufficient to meet the demands of the business and population, and to restore the just level of prices of labor and production." "5. We demand such legislation as will prevent the demonetization of the lawful money of the United States by private contract. "6. We demand that the Government, in payment of its obligations, shall use its option as to the kind of lawful money in which they are to be paid, and we de- Present Currency Perils. 5 inate between " money " and " currency," then the declaration does not cover State bank notes, which are not and cannot be a legal tender. On the other hand, the national bank notes are not a legal tender, nounce the present and preceding Administrations for surrendering this option to the holders of Government obligations." Was tlie " option" surrendered by Congress, or by the Executive ? If— the "if" is in the way— a bimetallic free coinage system were possible, surely establishing parity, and surely preventing fluctuations of the exchange rate be- tween silver dollars and gold dollars, that would be an ideal system when, for paper currency, there shall be added thereto our existing device of gold and silver cer- tificates. Then the people could increase, or diminish, at will the quantity of coined dollars, subject only to the possibilities of mining. The Populist platform made no provision for antece- dent debts to be possibly affected by free silver coinage. Congress should not double, for example, the weight and purchasing power of the present gold dollar, or diminish it by half, without rescuing antecedent debts. Coin- age should not be changed with intent to serve debtors, or creditors. If Congress is to make, or estabUsh, new dollars of gold, or silver, or paper, and is to greatly vary the quantity of either dollars in order to change the prices of articles, then antecedent debtors and creditors should be protected from loss. Future transactions can take care of themselves, but the working-men who have already contracted for their labor, or deposited dollars in savings banks, cannot, or may not, protect them- selves. 6 Reptiblican Responsibility for and the declaration implies that such notes never can be a legal tender under the Con- stitution. Lawyers have a Latin maxim which reads, " Melior peter e fontes, quam sectari rivulos.^^ Freely translated, it means that, in seeking a principle of law to apply to a new condition of facts, it will be better to go back to its origin than rely on later definitions made to suit peculiar circum- stances. The question whether or not Congress has power to create full legal-tender green- backs (no one denies its power to issue an evidence of indebtedness which is not to be legal tender for private debts) depends on the inquiry whether or not the Federal Constitution was designed to forever put an end to the emission, either by Congress or by the Legislature of any State, of " bills of credit " as legal tender for private debts. The historical evidence that the Consti- tution was thus designed, was collected by the accurate historian of the United States, George Bancroft, and published Present Cnrrency Perils. 7 in 1886 as one of " Harper's Handy Series." He shows tbat, in the first draft of the Constitution, the eighth clause of the sev- enth article read : Congress " shall have the power to bor- row money, and emit bills, on the credit of the United States." And he also shows that, by the vote of nine States asiainst two, the words " and emit bills " were stricken out, and that Madison left on record his opinion that the vote cut off the pretext for a legal-tender paper currency emitted by Congress. He also shows that the Convention hav- ins: " shut and ban-ed the door " as^ainst Federal full legal-tender paper dollars, took up, twelve days afterward, the ques- tion whether or not any State should have the power to emit paper legal-tender cur- rency. The first draft of the Constitution for- bade any State to emit bills of credit unless Congress gave its consent, but, on a motion by Roger Sherman, the Convention, by more than five votes to one, prohibited 8 Republican Responsibility for any of the States from emitting bills of credit under any circumstances, and thus completely crushed out legal-tender paper dollars. I will not now to comment on the latest decision of the Supreme Court, a dozen years ago, in Juilliard's case (reversing a previous decision), wherein the Court ad- judged that because the power to make Government notes a legal tender in pay- ment of private debts is, in Europe, one of the powers of complete sovereignty, and is a power not " expressly withheld " from Congress by the Constitution, therefore Congress can emit legal-tender greenbacks in time of peace.^ ' The case of Juilliard vs. Greenmann was argued be- fore the Supreme Court in 1884 by Hon. George F. Ed- munds for JuiUiard. His argument is published in volume ex. of United States Reports, p. 435. The con- clusion of it is as follows : " The Government of the United States has no power of inherent sovereignty, but only such sovereign powers as were delegated to it by a written Constitution which carefully and expressly declared that all powers not dele- gated by that instrument were reserved to the States and people. So that the power to create a legal-tender paper currency, if it exist at all, must exist by force of a dele- gation, and not by force of inherent sovereignty. The Present Currency Perils. 9 Consider first the historical Democratic view of the question. When, by the civil revolution which the ballot-boxes accomplished in the Presiden- tial election of 1800, Jefferson became the first Democratic President, he declared in his Inaugural Address what he deemed absence of an expressed prohibition against Congress making anything but gold and silver a legal tender (as was made in respect of the States) furnishes no evidence that such a power was intended to be left with Con- gress." The Court, in its opinion, carefully avoided suh silentio that irresistible logic. It has probably not yet been overthrown by any body. The contention of the Court is that because in 1798 sovereignty in Europe could make Government notes a legal tender for debts between indi- viduals, therefore those who framed and adopted the Constitution intended what European sovereignty could then (1798) do. George Bancroft and Horace White have aflBrmed that no European sovereignty had then (1798) exercised the power. Even the Bank-of -England notes were not then a legal tender. The Court, however, did in 1884 adjudge that the greenbacks reissued under the " endless-chain "' enact- ment of 1878 were a valid tender. That is the law in that case. Any voter, or political party, or Congress, is, of course, at liberty either to acquiesce in a legal- tender law believed to be unconstitutional, because now unnecessary, improper, and unsafe, or to labor for a re- peal. It does not follow at all that, because the law was " necessary and proper" in 1878, it is either necessary or proper in 1898, lo Republican Responsibility for " the essential principles of our Govern- ment," but he made no allusion to legal- tender paper currency, and probably be- cause no one then deemed it possible in our country. When Congress made a greenback dollar (possessing in a month of 1864 only forty cents' purchasing power) a full legal tender for an antecedent promise to pay a gold or silver dollar having an hundred cents' pur- chasing power. Congress did not enforce honest payment of debts. At the beginning of the present century, no one suspected that Congress could make paper evidences of Government debt a legal tender between individuals. Down to the War of 1812, no one had even proposed it in Congress. It was suggested in the House of Representatives on November 12, 1814, but, by a vote of 95 to 42, that body re- fused to consider it. The proposition was never again suggested till January 7, 1862, when, by only one majority (which was se- cured by the consent of Stratton of Brook- lyn, whose judgment regarding the legal tender was in suspense, to vote for it so Present Ctirrency Perils. 1 1 that it could go into the House), tlie House Ways and Means Committee reported it on motion of Mr. Spaulding of Buffalo, and a Republican Congress adopted it on February 25, 1862. Secretary Chase dis- countenanced the idea in his annual report of the previous December, but on the next month he under pressure concurred. Mr. Spaulding, in his History of the Legal- Tender Paper Money ^ describes the Legal- Tender law as " a forced loan." Chief- Justice Chase in his dissenting opinion in the legal-tender cases (12 Wallace, p. 579) declared "erroneous" his concurrence of January 29, 1862, and that for the green- backs of that year "the legal-tender qual- ity is only valuable for the purposes of dishonesty." He put the legal-tender green- back under Jefferson's Democratic condem- nation. THE CONSTITUTIONAL STATE BANKS. IN my previous paper it was shown that, during seventy years after the adoption of the Constitution, neither Democrats, Federalists, nor Whigs believed or suspected that Congress had power to emit full legal- tender paper currency. The first United States Bank was in oper- ation from 1791 to 1811, and the second dur- ing twenty years from April 10, 1816. In the interval between the iii'st and second, there was a great abuse of banking by State banks. The nature of that abuse, and the evils thereby inflicted on the fi- nances of the National Government by rea- son of its relation to those State banks, are described in President Van Buren's Mes- sages to Congress. Many of the evils were remedied by the Democratic " independent " Treasiuy system for keeping and disbursing the national money, perfected during Van Buren's term of office, which completely di- 12 Present Currency Pe^'ils. 13 vorced the Treasury from all banks. The prevailing Democratic denunciation of banks, during the terms of Jackson and Van Buren, grew out of hostility to the United States Bank, and of the injury in- flicted on the Treasury and the country by the conduct of the State banks, which were the recipients of Treasury deposits. The condemned "money power" of that period of twelve years w^as the banks — National and State. The United States Bank havino; endeav- ored to constrain Southern and Western State banks to redeem their notes in coin, they made war on the former. The involved State governments endeavored to tax out of existence the branches of the Na- tional Bank, but the Supreme Court said a State could not tax "the bank." Then came a series of Southern and Western State laws in behalf of the State banks, known as the " relief " plan, which for years kept that part of the country in very hot water. This bank " relief " issue finally took on the form in 1828 of "relief" and " anti-relief " parties — the former for Jack- 14 Rep2iblican Responsibility for son and the latter for Adams. The " relief " man was one who was a State-rights man, a strict constructionist, bent on preventing encroachments by Federal power, and es- pecially by judicial power. Nearly seventy years ago there came be- fore the Supreme Court at Washington the " Craig case," which threatened, at one time, to put an end to all State bank notes. In that sense it deserves description. Owing to the refusal of the local banks to redeem on demand in coined dollars their outstanding notes, the currency in Mis- souri was worthless in 1821. There was not a money medium of proper value. With- out State aid the people of Missouri could not j^ay taxes, or debts, owed to the State. The people needed protection against the terrible evils of a debased and worthless paper currency. Missouri established " loan offices," and authorized the issue of " certificates " of de- nominations not over twenty dollars or under fifty cents, paying two per cent, interest, receivable for taxes, and debts due to the State, or any county, or town. The Present Currency Perils. 15 certificates were to be a legal tender by the State for salaries and fees of its officers. They were loanable to citizens on adequate security. A fund was created for redemp- tion of the certificates, and " the faith of the State was pledged for the same purpose." One tenth of them were to be annually withdrawn from " circulation." Craig borrowed $199.99 worth of the certificates, and gave therefor his note, payable Nov. 1, 1822, with two per cent, interest. He did not pay the note. He was sued, and he pleaded that the " certifi- cates " he borrowed were '^ bills of credit," which the State could not emit, and that there was, therefore, no valid consideration for the note. The Supreme Court was then composed of seven. Four believed the " certificates " were forbidden '' bills of credit," and three believed they were not. Chief-Justice Marshall read the opinion of the Court that they were " bills of credit." The first difficult task was to define the "bill of credit" named in the Constitu- tion. 1 6 Republican Responsibility for Marshall said it was " a paper medium, intended to circulate between individuals, and between Government and individuals, for tbe ordinary purposes of society," and that tbe probibition in tbe Constitution "must comprehend tbe emission of any paper medium by a State Government for tbe purposes of a common circulation." Tbe majoi-ity and tbe minority agreed tbat legal-tender power was immaterial. Did not Marshall's definition cover a bank note issued by the authority of a State ? All members of the Court ao^reed tbat the purpose of the Constitution was to inhibit a State from emitting any sort of a paper representative of money, but the minority looked on tbe certificates not as such paper money, but as evidences of a loan by Mis- souri to its citizens. Mr. Justice Thompson, of New York, thought a " bill of credit " must rest entirely on tbe "credit" of tbe drawer, have no pledged fund behind it, and that if the "certificates" in question were forbidden, then State bank notes must be. Present Currency Perils. l*] Mr. Justice McLean, of Ohio, read a long opinion dissenting from the opinion by Chief-Justice Marshall. He declared that a forbidden " bill of credit " must be issued by a State. It must be a promise by the State, and, no fund provided for converting it into money, it must have the credit of the State, not necessarily that it will be paid on presentation, but be paid some time or other in the discretion of the State. That definition excluded an ordinary note issued by a State bank. The judgment that the Missouri "certifi- cate" was a "bill of credit" disposed of many pending similar cases, and excited furious resentment against the Supreme Court. At about the time that Missouri estab- lished " loan ofiices," Kentucky authorized its General Assembly to elect a president and twelve directors to be a bank, all the shares of which should be exclusively owned by the State, and provided for cap- ital stock to be paid by the State Treas- urer. The bank could issue notes, payable in coin and receivable for taxes, accept de- 1 8 Rcp2ibUcan Responsibility for posits, and loan money. No capital was really paid by the State into the bank. Briscoe borrowed of the bank its bills, gave therefor his note, on whicli having been sued he plead that the consideration was void because the bills of the bank were, in fact and law, "bills of credit," unconstitutionally emitted by the State through its agent, the bank. The case was first argued before the Supreme Court, w^hen Marshall was Chief Justice, but, out of a court of seven, two (Johnson and Sewall) being absent, only five sat, and they being divided (three against two) on the question at issue, no judgment was rendered. Marshall, Story, and Baldwin were the three ; McLean and Thompson were the two. The case had to be reai'gued, but before a rehearing Mar- shall had died, and President Jackson had commissioned Taney to fill his place ; Johnson had also died, Sewall had re- sic^ned, and the President had commis- sioned Wayne and Barbour. Five of the seven then on the bench were Jackson Democrats. Present Currency Perils. 19 After reargument, McLean gave the opin- ion of six. Story alone dissented, and said that Marshall and he had ao-reed at the close of the previous argument that the bank notes were forbidden Kentucky " bills of credit." ^ The majority of the Court said that " bills of credit " must be issued by a State, involve the faith of a State, and be de- * Mr. Justice Story was so disheartened by the Demo- cratic decision that he contemplated resigning his seat on the bench. After his admission to the Massachusetts bar, he was a Jeffersonian Democrat, making vigorous speeclies in Essex County against the Federalists. He had, as a Democrat, been one term in the Lower House of Congress, and was appointed to the Supreme Bench by Madison, but under the powerful personality of Mar- shall he became a sincere disciple of his teaching. He published the following reasons for contemplating leav- ing the Court : ' ' I have been long convinced that the doctrines and opinions of the old Court were daily losing ground, and especially those on great constitutional questions. New men and new opinions have succeeded. The doctrines of tlie Constitution so vital to the country, which, in former times, received the support of the whole Court, no longer maintain their ascendency. I am the last member now living of the old Court, and I cannot con- sent to remain where I can no longer hope to see those doctrines recognized and defended." He remained on the Court till his death, which was eight years after the decision in Briscoe's case. 20 Present Currency Perils. signed to circulat(} as money in the ordi- nary uses of business on the credit of the State ; that the Kentucky b^.nk notes were issued by a bank having capital to which the hoklers couki resort, and the notes con- tained no promise by the State, although the State owned all the shares, and that the State, by becoming sole share-owner, imparted none of its sovereignty to the bank. Thus State bank notes were saved, and thus it was adjudged that a State had power to create banks of issue, which power a Republican Congress practically took away from State banks by the 10 per cent, tax after 1866 in the interest of national banks. DEMOCRATIC MONEY. WHEN the war of secession began and the Democratic party had been ex- pelled from Federal power by a division of its vote between Douglas and Breckinridge, and Lincoln became President (although he had less than forty per cent, of the popular vote), the financial operations of the Federal Treasury were conducted by means of an independent Treasury system, first enacted under Van Buren, July 4, 1840, repealed by the Whigs under Taylor in August of the next year, and re-enacted under Polk in the same month of 1846. No bank was permitted to aid in handling or transfer- ring Government money, in placing loans, or in paying principal or interest. The only Government money was coined money. There were no redemption contrivances in the Treasury. Nothing but specie was ac- cepted in payment of taxes and dues, and State bank notes were the medium in great part of private exchanges. 21 2 2 Republican Responsibility for Free coinage of silver and gold was authorized by law. The unit of value re- posed alike in gold dollars and silver dol- lars. Two in one, and one in two. All gold dollars and all silver dollars were full legal tender. Up to February 1, 1853, near the close of Fillmore's administration, all minor silver coins had also been a full les^al tender, but a chan2:e was then made because France gave free coinage to both metals at a ratio of 15^, which ratio was more attractive to silver owners by about three per cent, than our mistaken ratio of 16, adopted in 1834, and silver coins were exported. The Treasury be- gan purchasing silver and coining it at a ratio of 14 88-100, and reduced these silver coins to a legal-tender power of not over $5. That was not free silver coinage as before for all comers. Had Cono-ress then changed our coining ratio to 15| and adapted it to that of France, there would probably have been in 1860 a plenty of silver as well as gold coins in our country, all a full legal tender. The State bank notes were not quite Present Currency Perils. 23 satisfactory, but their character was steadily improving, and if the notes had continued in use till to-day, the reduction of counter- feits, better State laws, and State supervi- sion to compel redemption on demand in specie, might have made them satisfactory. The country was enormously prosperous from the advent of Polk's administration down to the close of Pierce's, a period of a dozen years, under the regime of low tariffs, an independent Treasury, divorcement of the Treasury from all banks, no Federal money other than coined money, State bank notes, and no legal tender besides dollars, which were the units of value having full intrinsic value.^ ' The Democratic administration of Pierce was mid- way between the Mexican war and the war of secession, and therefore can be taken as presenting a fair exhibition, in a period of exemption from armed disturbances, of the Democratic enforcement of the poUcy of economy, low tariffs, Government divorcement from banks, no Treas- ury money besides " hard money," and all " soft money" supplied by State banks. The preceding Whig adminis- tration of Taylor and Fillmore, occupied with measures culminating in the slave-labor "Compromise" of 1850, did not interfere with the Democratic financial and tariff legislation of Polk's administration. When Guthrie took charge of the Treasury on March 4, 1853, 24 Republican Responsibility for Since that period there have been de- vised paper certificates of gold and silver dollars, deposited in the Treasury as a pledge, and held as such to pay on demand he found his predecessor had been lax in enforcing the independent Treasury law, and more than five millions of pubUc money were in the State banks, and out of legal custody. The public debt was nearly sixty millions, but he left it at less than twenty-nine millions. The pubUc expenditures in no year of Pierce's term were over sixty-nine millions. The customs revenue in 1857 was sixty-four millions, and as not more than forty -eight were needed, tariff rates were reduced in that year. Imports in that fiscal year, less re-exports, were $336,914,534, and exports, including coin and bullion, were $338,985,065. The service rendered by the State banks was not perfect, but was fairly good and steadily improving. Absence of uniformity in State bank notes promoted the business of counterfeiters, and absence of one controlling bureau ex- tending over all the States led to bad banking methods, but forty years have given experience and education. President Pierce accurately described in his last Annual Message the general industrial situation in these feUci- tous words : " Our industrial interests are prosperous; the canvas of our mariners whitens every sea, and the plough of our husbandmen is marching steadily onward to the blood- less conquest of the continent ; cities and populous States are springing up as if by enchantment from the bosom of our Western wilds, and the courageous energy of our people is making of these United States the great Re- public of the world." But a cloud in the financial sky of all the commercial world was slowly increasing. It came of two world- Present Currency Perils. 25 the issued certificates, wliicli are convenient and safe. Those certificates are not legal tenders, and should not be, because they are not real dollars, but only " the shadows wide causes, which were gold discoveries and produc- tion, and enormous railway construction. The produc- tion of gold in our own country, during eight years ending in 1857, has been estimated at four hundred mil- Uons of dollars. During that period there were in the United States some twenty-one thousand miles of rail- way construction, of which there were thirty-six hundred and eighty-two miles in 1857. That nine years of rail- way construction absorbed over seven hundred millions of dollars largely borrowed in Europe. Since 1850, over four thousand miles of railway had in 1857 been built in England, at a cost of seven hundred and fifty millions of dollars. Bad crops, and the Crimean war, increased the size of the ominous cloud. Between 1850 and 1858, two hundred and seventy-five millions of coin and bullion were exported from our ports, which of course enor- mously promoted imports. Gold superseded silver, valued by the French coinage ratio at 15i, and silver nearly disappeared for a time from circulation. There was everywhere intensity of buying, selling, and incur- ring debts. Our banks rapidly manufactured credit in great quantity. Guthrie privately and publicly warned the banks, and cautioned them to "take in sail," but their customers and managers in their excitement were deaf to his warnings. Finally, on August 24, 1857, the cloud burst over Cincinnati. There was panic in New York. In the middle of August, 1857, all the city banks of New York, excepting the Chemical, suspended pay- ments in coin. Then came the failure of the Erie, the Illinois Central, and the Michigan Central railways. 26 Rcpiiblicaii Responsibility for of real dollars," such as Mr. Justice Jolm- son, of the Supreme Court, said in the " Craig case " was every kind of paper dollars. The Democracy of the days of Jackson, Van Buren, Polk, and Pierce condemned any association of the Treasury with banks, Federal or State, even to the extent of de- positing public moneys therein. The war against Mexico was successfully waged on that plan. Money of gold and silver was obtained by taxes and by borrowing. There were no " forced loans " by making Government debt in the form of green- backs a full legal tender for private debts. There were no Federal or national banks. There was free coinage of gold and silver, although on a blundering ratio of 16 in- stead of 15^. When Van Buren was President he had Prices fell. The cloud also burst over Europe, and there too a financial crisis followed. Scotch banks closed their doors. The law regulating Bank-of-England note issues was suspended. After the debris of the panic had been remoA'ed, the impending war over slave labor began to cast its shadows over our land, and our finances in BuchaflaD's time fell more and more into disorder. Present Ctirrency Perils. 27 to choose between a return to the United States bank, or the renunciation by the Federal Government of all concern for the paper currency which the people used. He and the Democracy chose the latter, and confined the Government at Washington solely to its own interests of collecting, keeping, and disbursing the public revenue. Tims it was in 1860. A foreign war is a test of the currency of a country which conducts such a war. The Democratic hard-money plan trium- phantly bore that test during the war with Mexico. The national bank paper Whig party hoped the war would compel a return to its theories. Every Government loan was sold at a price above par. Gold was abundant, and when peace came, our Treas- ury was well filled with it. Although free bimetallic coinage was then the statute right, yet, owing to the blundering ratio of 16 in 1834, the chief coin circulation was gold. France, by its open mints for both metals alike on the ratio of 15^, gave a steady par of exchange between gold and silver, a steadiness which, after a quarter 28 Republican Respojisibility for of a century of violent disturbances, France has recently, in London, united witli tlie United States to- endeavor to restore. A Parliament publication in October last of the " correspondence respecting the pro- posals on currency made by the special envoys from the United States," contains a statement made at the British Foreign Office by the French Ambassador, on the 15th of July, 1897, in support of those proposals. His statement has not been published in our newspapers. If evidence were needed of the absence of continuous wisdom in the conduct of our finances by the Republican party since 1860, it is to be found in the effort of President McKinley to restore now the in- ternational bimetallism wliicli the Repub- lican leaders constrained our country in 1873 to al)andon.^ The turning point in ' On February 12, 1873, when Grant was President, Boutwell was Secretary of the Treasury, and Blaine was Speaker of the House, a law was enacted on recommen- dation by the Treasury, revising and amending the coin- age statutes. A gold dollar was made "the unit of value," the coinage of silver dollars was stopped, and only minor silver coins permitted, which coins were to Present Currency Perils. 29 that unwisdom was, however, in 1861, when that party refused either to stand by the Democratic hard-money plan or to use the Clearing House appliances of the powerful State banks of the Atlantic be a legal tender only for debts less than five dollars. That law enacted precisely the English system of gold monometallism, and destroyed our bimetallism of 1793. Next to the President, Mr. Sherman is the chief per- son in the present McKinley administration. An exami- nation of the public record of both will be useful now. Mr. McKinley entered Congress in 1877. He forthwith began to vote to modify the Republican coinage law of 1873, and to restore silver dollars. A special session of Congress was called to meet on October 15, 1877. A bill was presented to the House of Representatives for the free and unhmited coinage of silver. On November 5th Mr. Bland of Missouri moved to suspend the rules so as to enable the House to pass the bill. The rules were sus- pended and the bill was passed, without consideration by a committee and without debate, by a vote of 163 to 34. Mr. McKinley of Ohio was recorded in favor of the bill. Mr. Garfield of Ohio was recorded in opposition. This bill was the basis of what afterward became the Bland- AUison Law of 1878. It was amended in the Sen- ate so as to provide for the purchase and coinage of $2,000,000 every month. When it returned to the House Abram S. Hewitt of New York moved to lay the bill, with Senate amendments, on the table. This motion, which would have put an end to all silver legislation in that Congress, was defeated by a vote of, yeas 71, nays 205, Mr. McKinley of Ohio voted against laying the bill on the table. On this roll call, as on the other, Mr. 30 Republican Responsibility for cities, which had advanced $150,000,000 of gold. Is, or is it not, feasible and prudent to now return to the Democratic plan after thirty-seven years of Republican departure Garfield of Ohio and Mr. Reed are recorded against the silver bill. Mr. Hayes returned the bill to the House, with a veto message, February 28, 1878. The bill was passed over the veto by a vote of 19G yeas and 73 nays. Mr. McKin- ley voted to override the veto ; Mr. Garfield of Ohio voted to sustain it. Mr. Sherman, then at the head of the Treasury, says in his Autohiogrcqjhy (p. 623) : " I did not agree with the President in his veto of the bill." That law of 1878, for which Mr. McKinley voted, began legislation for a series of international conferences to revive " the use of bimetallic money." It began a modifi- cation of the gold-standard enactment of 1873, and Treas- ury purchasing of silver and coining anew silver dollars. On January 29, 1878, was presented to the House a concurrent resolution declaring all Government bonds to be payable not in gold dollars, but in the before-men- tioned silver dollars, then worth in gold ninety-eight cents, and Mr. McKinley voted for it. The Ohio Republican State Convention had, on August 1, 1877, demanded " the remonetization of silver," which would have been a repeal of the gold monometallic coin- age law of 1873. Mr. McKinley reported a resolution which was adopted in the Republican National Convention of 1888, denounc- ing the Cleveland administration for its efforts to de- monetize silver. In the Fifty-first Congress, Mr. McKinley became Present Curre^tcy Perils. 31 therefrom? Caunot legal-teDcler green- backs, so long endured, be speedily exter- minated ? The existing national bank note system is not satisfactory, but how much supervision of bank notes and responsibil- Chairman of the House Ways and Means Committee, and on June 5, 1889, when the resokition of the Com- mittee on Rules, fixing a day for the consideration of the Sherman silver bill, was under discussion, he said : " It is a resolution to give to the House of Representa- tives an opportunity to pass a bill which shall take all of the silver bullion of the United States, all of the silver product of the United States, and utilize that silver for monetary purposes and put it into circulation for the movement of the business of the country. It is to give to the people of the country not $3,000,000 monthly, but to give them four and one half millions monthly, or two and one-half millions more than what is now provided by the existing law." Again, on June 24th, Mr. McKinley said : " I am for the largest use of silver in the currency of the country. I would not dishonor it ; I would give it equal credit and honor with gold. I would make no dis- crimination ; I would utiUze both metals as money, and discredit neither. I want the double standard, and I be- lieve a conference will accomplish these purposes. " Mr. Speaker, if it is practical legislation we are after, if it is the desire to coin every dollar of the silver product of the United States and make the Treasury notes issued in payment for that bullion a legal tender for debts, pubhc and private, redeemable in coin, if that is what the people of this country want, they can have it by a vote concurring in the recommendation of the Commit- tee on Coinage, Weights, and Measures to non-concur in 32 Republican Responsibility for ity for bank notes will the States consent that the National Government sliall in the future have ? It was a sharp and quick transition made the Senate amendments and have a committee of con- ference." He advocated the Sherman law of 1890 as the next best thing to opening our mints to everybody's silver. In that year he wrote that " with me political and economic questions are a conviction," and said: "I waxit the double standard." A year later he denounced President Cleveland for urging the repeal of the Sherman law. Less than a year ago, he, as President, instructed the Wolcott Commission to endeavor in Europe to obtain bimetallism, and a few weeks after the departure of the Commission on the errand, he commended to Congress currency reform on the basis of the gold monometallic standard urged by the Indianapolis monetary convention. The coinage law of 1873 had stopped the right to mint silver dollars out of the people's silver, and no minor sil- ver coins were to be a legal tender for over five dollars. The law of 1878 gave only to the Treasury the right to have coined silver dollars from which was removed the legal-tender limitation inflicted on all other silver coins. The Treasury began manufacturing silver dollars at a less cost than an hundred cents in gold, and the cost rap- idly diminished, but required the people to take the silver dollars as such hundred cents in payment for services, commodities, and debts. If the Treasury had received an hundred cents in gold for such token silver doUars, the reason why the Treasury should not therefor return such gold on demand is not plain to everybody's vision. That silver dollar law of 1878 first authorized silver certificates, and declared they should not be a tender for Present Curre^icy Perils. 33 by the Republican party from a fiscal sys- tem which tolerated no Federal dollars but coined dollars, and trusted no bank with custody of Government money, to a con- the gold certificates of 1863, but the silver dollars de- posited to obtain the certificates should be held in the Treasury to redeem the certificates on demand. The Sherman silver law of 1890 enacted that its Treas- ury notes, issued to pay for silver purchases at a gold price, must be redeemed, on demand, in either gold or silver coins, at the discretion of the Treasury, but added that it was then "f/ie established policy of the United States to maintain the two metals on a parity icith each other.'" W^ho knows what that meant? Were coins in- tended ? The following sentences in the law repealing the silver clause of the Sherman law removed the ambi- guity by a verbose enactment declaring : "And it is hereby declared to be the policy of the United States to continue the use of both gold and silver as standard money, and to coin both gold and silver into money of equal intrinsic and exchangeable value, such equality to be secured through international agreement, or by such safeguards of legislation as will insure the maintenance of the pai'ity in value of the coins of the two metals, and the equal power of every dollar at all times in the markets and in the payment of debts. And it is hereby further declared that the efforts of the Gov- ernment should be steadily directed to the establishment of such a safe system of bimetallism as will maintain at all times the equal power of every dollar coined or issued by the United States, in the markets and in the payment of debts." That deprived the Treasury of discretion to pay Con- gressmen and Government creditors in silver or gold, 3 34 Republican Responsibility for trivance which oblitei'atecl State banks of issue, and put Government money into the hands of national banks, bound the Treas- ury at Washington to print the bank permitted the creditor to choose the dollars, and forbade the Treasury to compel a Government creditor to take any dollar the Treasury tendered in payment of tlie Sherman notes. Is or is not that also true of greenbacks and silver certificates ? The Republican party solicited and received in 1890 power to reform taxation, coinage, and currency. By caucus discipline, last year, that party put the Dingley law on the statute book. It is to be expected that, in like manner, ceasing from ambiguity and evasion. Re- publicans will decide upon, declare, and put to Congi-es- sional vote its coinage and currency plan, and make an end of doubt regarding the kind of dollars in wliich the Federal debt is paj^able. Because Mr. McKinley voted, on November 5, 1877, for Mr. Bland's bill to restore free silver coinage without awaiting foreign co-operation, and because he and Senator Allison, of Iowa, voted, in January, 1878 (a month before the enactment of the Bland- Allison law restoring silver dollar coinage), that all National bonds issued, or to be issued, under the laws of 1870, were and will be payable in silver dollars contain- ing 412^ grains each of standard silver, and that to coin such dollars in j^ayment for bonds will not be " in viola- tion of the public faith," it is needful that the Republican party now declare its real relation to those silver dollars, and those bonds. Up to 1864, Congress never promised, or needed to promise, in bond legislation, anything be- sides " doUai's," but in that year the existence of legal- tender greenbacks required a promise "in coin." In 1870 the promise made was " in coin of the present (1870) Present Currency Perils, 35 notes, take cliarge of bonds pledged for circulating notes, pay on demand all notes presented in due form, restricted the kind of business tbe bank can do, prescribed the amount and quality of reserve for protection of deposits, and set up a sys- tem of banks more powerful, if they could be united in the hands of one political party, than "the bank " destroyed by Jack- son. The new plan met comparatively little opposition, because it was believed to be necessary to float Government bonds, and because it was felt that the greenbacks were to be temporar}^ The voters were induced to believe that when the greenbacks were exterminated, the standard raZtte." What did that mean? "Standard" refers, in mint language, to weight and fineness. Was the "standard" ratio of 16 intended? The gold ex- change " value " of a silver dollar in 1870 was one hun- dred and two and sixty-seven one-hundredths cents. What is now the definition of "in coin"? Is it the gold dollar, or silver dollar, or both ; and if both, who has the choice, the debtor or creditor ? Have silver cer- tificates and greenbacks been turned into gold certifi- cates by recent laws? The country is entitled to have from the Republican party a legislative answer incapable of misinterpretation, and not any more ambiguity and palaver. 36 Present CtLrrericy Perils. bauks would supply the only paper cur- rency, and that coined money would be the only legal tender. That belief has been rudely shattered. KEPUBLICAN MONEY. NO one can justly call in question the patriotism of those who, at "Washing- ton, M-ere responsible for the finances of our country at the beginning of the unex- ampled strain of the war of secession. It is, nevertheless, proper, and indeed neces- sary, to review Kepublican conduct then, in order to get light on Republican conduct now. Mr. Chase, then at the head of the Treas- ury, lived to condemn a great part of his official advice and action in financial matters during the war. He deplored, if he did not resist in the beginning, legal-tender green- backs ; but yet later, while still Secretary, he urged the law of 1862, imparting a legal- tender power, a law which afterward, when Chief Justice, he declared unconstitutional. Congress had so modified, on August 5, 1861, the Democratic independent Treasury law of 1846, as to permit the head of the 37 o 86386 o 8 Republican Responsibility for Ti'easuiy to deposit money in solvent specie- paying banks. Secretary Chase was urged by the banks to draw cheques on them to be settled at the Clearing House, but he refused so to treat the hundred and fifty millions of gold furnished by the State banks, and thereby caused the bc'ink sus- pension of specie payments on December 28, 1861. Spaulding, of Buffalo, N. Y., invented the legal-tender greenback, and in his his- tory thereof, printed in 1869, he described the greenback as a " forced loan." It was not in any sense a " loan." It was, in police lingo, a "hold-up" by Congress of every creditor having an antecedent promise to pay coined dollars, compelling him to ac- cept less than had been agreed. The green- backs had printed thereon that they would be converted into six per cent, gold interest bonds at par, but Congress broke that con- tract by refusing such conversion after July 1, 1863. Instead of resorting to needed taxation, as three years later, the Republi- can leaders used unconstitutional legal-ten- der greenbacks and national banks to float Present Ciirrency Perils. 39 bonds. The greenback dollars so far parted company with coined dollars that in July, 1864, tbe former had fallen to a value in gold of only thirty-five cents. Experts put the increased cost of the war caused up to September, 1865, by increased prices of Government purchases caused by the green- backs, at eight hundred and sixty millions, which could have been saved by heroic taxes and the use of coined money. In 1863, Secretary Chase, having pre- viously hinted a doubt Avhether any State could constitutionally empower a bank to issue its notes, State bank issues were taxed out of existence after 1866, in order that national banks should buy Government bonds. Coined money disappeared from use, excepting to pay customs duties and interest (the principal was not mentioned), on the bonds. In that period of "rag money " and " shinplasters," a Republican Treasury, under Boutwell, promoted, and a Republican Congress enacted, in 1873, a destruction of the eighty-one-years-old right of free coinage, and made gold the sole unit of value. 40 Republican Responsibility for When the legal-tender greenbacks were first created, leading Republicans told the country they were only temporary expedi- ents made necessary by war ; that they would be few ; that they could and would be automatically exchanged for bonds and then cancelled, and that the bonds were to be made the basis of a permanent national bank currency, our only paper dollars. When the war ended all that was falsi- fied. It is true that in December, 1865, the House, by a vote of 144 to 6, i)romised speedily to get rid forever of the green- l^acks, but four months later Congress re- pudiated the House promise, and, in February, 1868, ordered reduction of the volume of the greenbacks to be stopped. The natural effect was that people, not Republicans, began to say that, if the greenback is to be permanent, then the principal of the 5.20 bonds of 1862 could be paid in the legal-tender greenback dol- lars. On Feb. 27, 1868, Mr. Sherman, chair- man of the Senate Finance Committee, Present Ctirrency Perils. 41 made a speech in the Senate greatly alarm- ing the country, because, taking ground against Edmunds and the New England Senators, he maintained the right of the Treasury to pay the principal of the 5.20 public debt in existing depreciated green- backs, although denying the right to make a new issue therefor. That was the " idea of Ohio," which the New York Democracy resisted. Out of the meshes of that '' idea," Ohio Democrats did not emerge as quickly as did some of the Ohio Republicans. Hence party confusion in 1868 over that use of the greenbacks. By the election of Grant over Seymour, there seemed to be a Republican victory for coin pajnnent and not for greenback payment as Sherman ad- vised a year before. Thereafter came the Republican legisla- tion of March 18, 1869, "to strengthen the public credit," which resulted in a new de- parture in Republican infidelity to pledges. That enactment declared that " the faith of the United States" thereby "solemnly pledged to the payment in coin, or its equiv- alent, of all . . . the United States 42 Republican Responsibility for notes (greenbacks) ... at the earliest practicable period." " Payment " meant (as in the case of the note of an individual), paying, cancelling, and exterminating. That pledge of 1869 has not been kept. Those who deem the greenback dollars unconstitutional, unneces- sary, unsafe, have not united to destroy them after payment. The new device called " redemption " made " payment " read "exchanged for coined dollars, and then reissued." Finally, there came in 1875 a crisis when, as Mr. Sherman declares in his Autohiog- ra2)liy, the Republican party could not survive if it did not pay coined dollars for the greenback debt. The resumption en- actment of that year was the outcome.^ A * What happened in 1874 is an illustration of the dan- ger that lurks in Government debt made a full legal- tender Government currency. The law of 1864 declared that the total amount of United States notes, issued, or to be issued, shall never exceed four hundred millions of dollars, and that of 1866 directed that a therein specified number be "retired and cancelled.'" The last word was imperative and required extinction of such notes. Two years later, the law stopped fiirther retirement and can- cellation. Three hundred and fifty-six millions remained outstanding. The Treasuiy treated the forty -four millions Present Currency Perils. 43 Republican Senate caucus appointed a com- mittee of eleven. Only Sherman, Allison, Boutwell, and Edmunds, among those ap- pointed, are now living. Sherman's Aidohi- ogmphy says (Vol. I., p. 510) agreement was impossible on the critical question whether or not to destroy the greenbacks exchanged for coin, and so it was agreed to palter on that point, and mislead the countiy. That paltering and evasion were eloquently de- scribed in the Tilden National Democratic platform of 1 8 7 6. Senator Sherman obeyed in debate the caucus requirement. After- redeemed and ordered by Congress to be cancelled, as in life and subject to reissue, even although ordered to be can- celled. In 1869 and 1871, a portion was by the Treasury reissued, afterward withdrawn, and after October, 1873, twenty-six millions were reissued in buying bonds as an effort to relieve the depression caused by the panic of that year. The outstanding sum, in April, 1874, was three hundred and eighty-two millions, and a Republican Congress passed " the inflation bill" of that year, fixing the maximum amount at four hundred millions, and, in effect, validating the previous reissues, which bill. Grant, in his veto of it, characterized as a violation of " national obligations to creditors, Congressional promises, and party pledges." That veto promoted a popular demand that the greenbacks be paid. It led up to the resumption law of 1875, under the manipulation of which, exhibited in the text, greenbacks have been kept at $346,681,516. 44 Republican Responsibility for ward, and wlien at tlie bead of the Treas- ury, Sherman advised Congress to declare frankly that the redeemed greenback be not cancelled, and Congress enacted in 1878 the "endless chain" second repudiation of the " faith " pledged in 1869. Here it is : " That from and after the passage of this act it shall not be lawful for the Secretary of the Treasury, or other officer under him, to cancel or retire any more of the United States legal-tender notes. And when any of said notes may be redeemed, or be re- ceived into the Treasury under any law from any source whatever, and shall belong to the United States, they shall not be re- tired, cancelled, or destroyed, hut shall he paid out again and hept in circulation^ In the Juilliard case, it was rightly ar- gued by Senator Edmunds, that the above law of 1878 did not make the reissued greenback a legal tender, but the Kepubli- can Supreme Court said it did. Were ever principles thus announced and then abandoned, or pledges thus repudi- ated ? The promised temporary life of the greenbacks, their enacted automatic ab- Present CiLrrency Perils. 45 sorption into bonds, their pledged payment and retirement — all were disregarded ! The law of 1878 declared the redeemed green- backs should not be cancelled. Over the last ten words of the law of 1878 there has been and is great dispute. One side insists that the redeemed green- back must be put out again immediately, and in advance of any other type of dol- lars, but the other side replies that the Treasury can take its time, and impound them for months and years, if so be the greenbacks are all kept in life. Not content with that law of 1878, Con- gress enacted in 1890 another law which, before it could be repealed, created one hundred and twenty-five millions more of full legal-tender paper dollars to be re- deemed on demand, thus increasing the need of more Treasury redemption con- trivances. Our Federal currency now consists of gold coins, the amount of which outstand- ing is pure guesswork. They are the result of laws enacted before 1860. Be- sides these, there are in addition — and all 46 Present Currency Perils. of Republican invention since 18G0 — silver dollars, not produced by fi'ee coinage (and tbeir paper certificates), the bullion worth of each of which in gold is now some forty cents, greenback full legal-tender "endless chain" dollars, Sherman full legal-tender paper Treasury dollars, national bank note dollars not legal tenders, and a mass of underweighted minor silver coins. No State bank notes exist ! Estimating the gold coins at 400 mil- lions, there are some 2,000 millions of dol- lars of all sorts, a j)er capita sum twice as large as in 1860. And yet it is said the quantity of our currency is inadequate. Too little is said of the defective quality. Are greenbacks, or national bank notes, or neither, or both, to be the permanent paper currency of the future ? PAYMENT, EEDEMPTION, EESUMPTION, AND EXTINCTION. WHEN the legal -tender greenbacks were created in February, 1862, Congress enacted that, at par value, they be convertible into bonds, received in pay- ment for any loans, and for all dues to the United States, excepting duties, " and may be reissued." The Supreme Court there- after adjudged the greenback to be a debt, which must, some day, be paid by a coined dollar. In 1869, Congress pledged its faith to pai/ the greenback debt, and not merely to " redeem " in the modern sense of ex- chanixe for coin, and then reissue. What payment means we all know. Payment of a promissory note is its ex- tinction. " Redemption " has, in one sense, a different meaning. It is buying back. "Eesumption" is taking back that which has been given, or doing again what has been interrupted. 47 48 Rcp2iblican Responsibility for In tlie early laws of Congress the phrase was ''redemption by payment," as in the first fiscal law of August, 1790. Thus the statute meaning of redemption was fixed. The titles of those early laws used, for shoi't, the one word " redemption " when referi'ing to payment of the public debt. Congress had never before 1875 enacted payment in specie of a legal-tender debt, because none had existed before 1862. As the Treasury had never begun paying greenbacks, it could not resume the paying. Mr. Sherman relates, in his AtUohiog- raphij (page 509), that, when Congress met in December, 1874, he called attention, in a Republican caucus, to the uniting of the party " on some measure that would advance the United States notes to pay- ment in coin," and he moved a caucus com- mittee of eleven to formulate a bill. He adds (page 510) : "The most serious dispute was upon the question whether United States notes pre- sented for redemption, and redeemed, could be reissued. On the one side, it was urged that being redeemed, they could not be re- Present Currency Perils. 49 issued without an express provision of law. The inflationists, as all those who favored United States notes as pai't of our perma- nent currency were called, refused to vote for the bill if any such provision was in- serted, while those who favored coin pay- ments were equally positive that they would not vote for any bill that permitted notes, once redeemed, to be reissued. That appeared the rock on which the party was to split. I had no doubt under existing law, without any further provision, but that United States notes could be reissued. It was finally agreed that no mention should be made by me for or against the reissue of the notes, and that I must not commit either side in presenting the bill." He kept to the agreement. No one could extract an opinion from him. When ques- tioned in Senate debate, his answer was, " I will come to that in a moment." The mo- ment never arrived. Ambiguity was in- tentional. Hence the title of the law was, " An act to provide for the resumption of specie payments." It was resumption of what had never bes^un. The first section 50 Rcp7Lblican Responsibility for provided redemption of fractional currency on a silver (not gold) basis, and Mr. Slier- man affirms in his Autohiograpliy that " destruction " of tlie redeemed fractional currency was implied. Why not of green- backs ? Further on (page 701), Mr. Sherman con- fesses that "the commercial and banking classes generally treated resumption as if it involved the payment and cancellation of United States notes," but that he, and what he assumes to be " the body of the people," agreed that resumption meant merely bring- ing greenbacks up to par in coin. One detects why the words " resumption " and "redeem" were used in the law of 1875, and not "payment" or "redemption by papnent " and cancellation. The jug- gling is plain to be seen ! Those who framed the law of 1875 ex- pected an increasing emission of national bank notes under more free banking. Therefore, the law enacted that the Treas- ury must, to the extent of four fifths of the sum of the new bank notes, " redeem " greenbacks. Note the word " redeem ! " Present Citrrcncy Perils. 5 1 Then the law declared that, on and after Jan. 1, 1879, the Treasury shall "redeem" all greenbacks outstanding and presented. Observe the same word "redeem," and that there is nothing in the law demanding that the former class be extinguished when redeemed, but the latter class is to be re- issued after redemption. Mr. Sherman, when at the head of the Treasury, raised a question, Avhether notes less then the limit could be reissued. In a speech in August, 1877, at Mansfield, Ohio, he considered the meaning of "specie payments" by asking whether or not "we are to retire our greenback circulation." " If we are," he replied, " I am opposed to it. What I mean is simply that paper be equal to gold." He recommended (page 659) the "end- less-chain " law of 1878, commanding the reissue of all greenbacks thereafter re- deemed. Worse than that ! His resumption law had been denounced as " a trick." After its enactment, he (page 520) wrote to a newspaper, and said the law did refuse to 52 Rcpubiicaji Responsibility for declare whether the redeemed greenbacks, below the $300,000,000 limit, could be re- issued. That question must be decided by Congress, he added, and when presented to Congress the controversy will be whether the reissued notes shall have the lesjal- tender quality. He, and the "endless- chain " law, again evaded, said nothing of legal tender, but the Supreme Court in- terpreted legal tender into the "endless- chain " law. His purpose to retain the greenback " by hook or crook " was foreshadowed in a Senate speech on March 6, 1876 (page 56), in which he affirmed the greenback to be the best currency we can adopt, and "the currency of the future." I have endeavored to explain how and why full legal-tender Government notes, which caused the business depression of the last four years by fear the Treasury could not, on demand, redeem greenbacks in gold, continue to exist in our currency. I have not asserted my own opinions, but have analyzed historical facts. A great part of the older Republican Prese7it Currency Perils. 53 leaders, trained in the Federalist and Whig schools of opinion, believe, as did Marshall and Story, that State banks of issue are forbidden by the Constitution. Sherman has said he does. The paltering, shifting, and evading by Republican leaders regard- ing the greenbacks have led a great part of the country to look upon them as perma- nent. Populists born of the Republican party commend the greenbacks, and the existing national bank note currency seems not quite satisfactory to anybody. Out of the uncertainty and confusion, no Republi- can of authority, no member of the Gov- ernment in powder at Washington, has yet emerged, urging an immediate extinction of the legal-tender greenbacks. The Re- publican leaders hesitate, evade, postpone, and meanwhile juggle with new resuming and redeeminoj devices. The details of the proposal by Secretary Gage to create an issue and redemption bureau in the Treas- ury, isolated from the normal and ordinary operations of that department, and the sug- gested manipulation of paper currency, can perhaps be understood by banking experts, 54 Pi' c sent Currency Perils. but are too complicated and technical for the compreheDsiou of plain people who are entitled to a treasury dej^artmeut whose workings they can explain. GREENBACKS Oli BANK NOTES? REPUBLICAN evasion, Republican du- plicity, during thirty-five years, in dealing with the greenback, have, it is feared, almost discouraged the country into toleration of the greenback as a perma- nency. President McKinley and Secretary Gage probably feel that the greenback, re- quiring a gold redemption fund, is espe- cially unsafe in a deficit of Treasury income ; they must both realize that nothing will end the Treasury coin-redeeming but ex- tinction of tlie greenbacks. Their highest flight ascends only to a more or less im- perfect impounding of some of the green- backs, in violation of the " endless-cliaiu " law of 1878. Forty years ago, and after Jackson and Van Bureu had put an end to the disorder created by the two United States banks, a majority of the people of our country were perhaps favorable to sound State banks as 55 56 Republican Responsibility for inaDufacturers of credit and instruments to facilitate the exchange of commodities by cheques and bank notes, which two things are identical in their nature. Investors and experienced business men may be, and probably are, convinced that all paper currency is unsafe unless redeem- able on demand in coin, and that G-overn- ments never resort to full legal-tender paper currency when they have a plenty of coin, or when such paper currency can easily and surely be maintained at parity with coin. They prefer bank notes to Govern- ment paper currency, for the very reason that they believe banks can, on demand, redeem their notes in coin more surely and easily than even the richest Government. They say the obvious explanation is that the Government at Washington has not salable, negotiable wealth, such as a bank has, with which to get coin for redeeming and paying its notes. Oar National Gov- ernment has now no commodities to sell besides unsalable silver bullion. It can, to be sure, tax and can sell bonds, but a bank has, or should have, negotiable prop- Present Cttrrcncy PeiHls. 57 erty with which to promptly acquire coin by which to pay its cheques and notes. The largest Treasury balance in recent years was seven hundred and seventy-eight and a half millions in 1892, but at that time the banks and trust companies of the country represented that they had avail- able cash assets nine times as large. There is really nothing behind a greenback but the " faith " of Congress, and we have seen, since 1862, what that has been worth. It is misleading to say that all the wealth of the country is behind the greenback. The holder cannot sue and levy on that wealth. All he or she can do is to vote, if he or she be a qualified voter. Investors and business men generally concede that, although emitting circulating notes was once the common-law right of every one, yet, as a bulwark against the knavish, and to protect the incompetent^ Government should supervise the cheques and notes of incorporated banks. They in- sist that experience with Congress has de- monstrated that it cannot, or will not, well conduct coin-redemption business. Indeed, 58 Republican Responsibility for a good many of them seem to be thinking that Congress cannot, or will not, safely manage even legal-tender coinage, which Congress alone has Constitutional power to manage. They have been confronted with evidence that giving votes by Senate Re- publicans for the Sherman silver law was the price paid to silverites for the McKin- ley tariff of 1890. Probably the best business men of our country feel that when the banks cannot, or will not, buy Government bonded debt, as a basis of circulation, the present national banking system must come to an end. There were 350,000,000 bank- note dollars in 1872, but now there are only some 230,000,000. When the bank notes shall have departed, are there to be left only greenbacks ? How can Con- gress emit more greenbacks, except for borrowing money, or for commodities and services ? The only "money" that Congress can constitutionally coin, make, borrow, or ap- propriate for expenditures, is that which has a substance of silver and gold. Certifi- Present Currency Perils. 59 cates, or other representatives, of such money may be of another substance, such as paper, but not a legal tender because not real dollars. The "quantity" theory of money must be submitted to that constitu- tional test, but the " quantity " theory of currency has a different relation. Populists insist that the volume of money and currency in a given country must, at all times, be equivalent in exchange value to the sum of the value of all commodities " held for trade " in that country, which implies that prices are determined by the quantity of the circulating medium, that prices do not cause variation in the needed quantity of money and currency, nor do the imaginations, hopes, and fears of men influ- ence prices apart from the quantity of money. Of course, the Populistic theory regarding the quantity of money and cur- rency that our country needs excludes prod- ucts consumed by the producer's family, excludes commodities disposed of by bar- ter, or bank cheques and credit v^here no money, or currency, is used, and excludes things sold on very long credit. Nor is 6o Republican Responsibility for there a need of as much money and cur- rency when they circulate rapidly from hand to hand. Therefore the Populistic test cannot be of service in legislation by which Congress arbitrarily decides the num- ber of dollars to be in use. The making and issuing of money, which to be constitutional must be coined, is ex- clusively in the hands of the Government at Washington. The making and issuing of bank notes and other paper representa- tives of money, which are currency, may be in the hands of each State. The making and issuing of auxiliary currency, which are promissory notes, bills of exchange, cheques certified and uncertified, may be in the hands of individuals, corporated, or incorporated. The making and issuing of money, or currency, are obviously unlike loaning them at interest after lawful emis- sion. It is the function of banks and bankers to be intermediate between those having loanable capital seeking employ- ment, and those having industry and enter- prise who seek capital and credit with which to execute their plans, but it is ob- Present Curreficy Perils. 6i vious that there will not be occasion, or opportunity, for banks and bankers in places where there is no loanable capital seeking to be used. Such are some of the contentions in favor of bank notes as against greenbacks ; but, on the other hand, there has been growing, during many years, a strong body of opin- ion preferring greenbacks, which opinion must be counted with. On July 13, 1886, Mr. Warner, of Ohio, to whom, in February of the previous year, President-elect Cleveland sent his sil- ver letter, introduced this proposition in the House : " Provided, that after the passage of this act, whenever, and as fast as the circulat- ing notes of national banks are redeemed or cancelled, as provided by the act of June 3, 1864, and amendments thereto, the Sec- retary of the Treasury shall cause to be issued, in place of such bank notes re- deemed, dollar for dollar. United States notes, in denominations as nearly as may be of the bank notes redeemed, and all laws applicable to bank notes now in cir- 62 RcpiLblican Responsibility for culation are hereby made applicable to the notes issued under this act." That was done some time ago, but is now significant. Mr. Warner is now president of "The American Bimetallic Union." A reply by him to questions asked by the sitting Monetary Commission appointed by the Indianapolis Convention has been recently printed, and is worthy of atten- tion, as indicating a certain phase of a drift in public opinion. Mr. Warner says among other things : " I would not favor withdrawing the United States notes or the notes of 1890. The United States notes are the best paper money this country ever had, and no coun- try ever had a better. There is but one question to be considered in connection with such a currency, and that is the proper regulation of its amount. That this cur- rency by itself is not now excessive or re- dundant is too manifest to require argument or proof. "The United States notes cannot be withdrawn without adding to our bonded Present Currency Perils. 63 debt, and to issue bonds to take up such a currency in order to allow banks to sub- stitute for this legal-tender currency their own non-legal-tender promises to pay, would, in my opinion, be madness little less than criminal. " It is pertinent to ask what the public is to gain by the substitution of non-legal-ten- der promises of banks to pay for our pres- ent legal-tender currency ? It would seem that the advantages to the people of such a change, which must be costly at best, and likely to involve the most serious conse- quences, at any rate, while it is being car- ried out, ought to be clearly pointed out. The writer has seen no attempt of this kind, except by such vague and meaningless ex- pressions as ' sound money,' ' a currency safe and elastic,' a thing as impossible as perpetual motion. " Surely, no one will claim, and certainly no economist will agree, that a currency is or cau be improved by taking from it its chief money functions — that of legal tender. Evolution in cui-rency for a hundred years has been toward endowinsr whatever is 64 Republican Responsibility for allowed to circulate as money with this highest money function. Hence, nearly all the paper currency of Europe to-day is full legal tender. "The main question, then, is, By what principle will banks be governed in the regulation of the volume of currency if the sole riiiht to issue and control the volume is turned over to them ? Will it be as the public interest requires, or as their own in- terests dictate ? If in the public interest, who will decide — one or all, of thousands of bank presidents or bank cashiers ? Or wdll it be left to the mere discretion of those issuing the currency ? " We come, then, to the only principle which would finally prevail in a countiy like the United States, and that is the in- TEKEST OF THE BANKS THEMSELVES. For whatever may be said about an elastic cur- rency it comes to this at last. " Therefore, when the right to issue and control the volume of currency is turned over to the banks, it might as well be un- derstood first as last that they will be gov- erned in the supply of such currency as Present Currency Perils. 65 their own interests dictate, and by no other principle. No other principle can be laid down that they can or will follow. There may be some restrictions, such as the se- curity of notes, the amount of capital, etc., but the governing principle by which the supply of currency will be controlled will be the interest, not of the public, but of the banks. " With the knowledge of the fact that they who control the volume of money can control all industry and commerce, is it possible that our people will sanction the transfer of such power to banking corpora- tions ? " If any one shall say that these opinions expressed by Mr. Warner, a bimetallist, are extreme, and have not been shared by real fabricators of Republican doctrine, let him turn to page 754 of the Sherman Auto- biograpliy. He will there see it set forth by the author that his chief, President Hayes, recommended to Congress, in Iiis Annual Message of December, 1879, to re- tire from circulation all Government notes having a legal-tender facult}^, and retire 66 Present Currency Perils. them because they were war devices unfit for days of peace, but that he (tlie Secretary of the Treasury) did not concur tlierein. Mr. Slierman tlien goes on to say that he deems the greenback " the best form of cur- rency yet devised " ; that the issue of bank notes " would be governed by the opinions and interest of the banks," the amount of issue varied to suit the interest of the banks and " without regard to the public good " ; that it would be " a dangerous experiment to confine our paper money to bank notes alone " ; that the opinions and interests of ''our citizens who manage banks" and those of " the great body of our people " are in conflict, and that he (Sherman) stood by the latter, who " instinctively prefer" green- backs over " any form of bank paper yet devised " either at home or abroad. I commend to the meditation of all in New York who control, or manage, banks of issue, those concurring views of eminent citizens of Ohio, reo-ardins: the selfishness and cupidity of New York bankers emitting circulating notes. SUPPRESSION OF STATE BANKS BY CONGRESS. ANY review of our currency conditions will be imperfect wliicli does not mention the existing Ieay of Congress, lay- ing a ten per cent, tax on the circulating notes of every State bank, and also the de- cision of the Supreme Court, in 1869, up- holding the constitutionality of the tax, and does not take into consideration the consequences likely to follow from a pos- sible reversal hereafter of that decision. I have shown that in 1837 the Supreme Court adjudged, in Briscoe's case, that each State possessed the power to charter banks of issue. That judgment has been affinned by at least three subsequent cases. If a State has the right to create State banks of issue, it does not seem reasonable for Con- gress to destroy the exercise of the right by taxing it out of existence, but nevertheless, 67 68 Republican Responsibility for the Supreme Court did decide, only two Justices dissenting, tliat Congress may, by a tax, restrain " tlie circulation as money of any notes not issued under its authority." " Money " is there confused with currency. The Democratic National Convention of 1892 affirmed, in effect, that Congress could tax only for revenue. No one has ever suggested that the State bank ten per cent, tax was " for revenue only." As a neces- sary corollaiy, that Democratic National Convention recommended " that the prohib- itory ten per cent, tax on State bank issues be repealed." If it shall be repealed, is it likely that there will be a revival of the " wild-cat " State bank currency of three quarters of a century ago, which carried untold sorrow into the abodes of humble industry, of workingmen and salary-earners, by the evils of bank notes the value of which melted away ? The State banks in 1861 advanced to the Government one hundred and fifty mil- lions of the gold belonging to their share- owners and depositors. The gold when Present Ctirrejicy Perils. 6g paid out of the Treasury was lioarded or exported. Tlie banks had then no gold to pay back to the owners of the gold loaned to the United States and suspended coin payments. Four times in twelve years the national banks of New York have sus- pended by failing to meet their obligations to their depositors and customers. Can legislation, or executive supervision, pre- vent similar suspension in the future ? AVill even the fear of criminal punishment deter the average bank director and official from knowingly violating, in time of panic, the law regarding the reserve if directors and officials believe the safety of the bank, of themselves, of their customers, and of the business community, demand a viola- tion of a law under which the bank was chartered ? and especially so long as the country banks can keep their " reserve " in the city banks and obtain interest thereon ? On the other hand, who has ever suggested that our New York savings banks and trust companies are unsafe for depositors, even though not supervised from Washington ? One who would forecast the result of 70 Rcptiblicaii Responsibility for clialleiiij^ing: by a new case the correctness of the State bank tax decision, made twenty years ago, must take account of the fact tliat it was made during a new era of our history, wlien Congress and the Supreme Court had ascended, or were ascending, to an altitude of federalism not theretofore reached. Of the eight members of the Court who participated in that State bank decision (only two dissenting), none are now on the bench. Chief-Justice Chase had then been in office only five years. At the same term as that of the decision of the bank-tax case, but on a day after it. Chief -Justice Chase read, on Feb. 7, 1870, the opinion of the majority, that Congress could not make any kind of credit currency a legal tender for private debts. On that very day, Crant nominated Strong and Bradley to fill two vacancies on the bench ; and another case, involving the same ques- tion, was advanced for argument, and, in that year, the former decision against the legal-tender greenback was overthrown. The bank-tax decision is to be read in the Present Currency Perils. *J\ light of the fact that the legal-tender green- back was then deemed to be doomed be- cause of its unconstitutionality. The bank-tax case was argued for the bank by Reverdy Johnson and Caleb Gush- ing, then Democrats, both formerly Whigs. Each had been Attorney-General. They rested their contention on two points — one that the tax was an unapportioned direct tax, and the other that it was a tax on a " franchise " granted by the State of Maine. The first was overruled by the Court be- cause it said direct taxes were only on land and polls, but since then an income-tax decision has declared differently. As to the second point, the Court said the tax was not on a "franchise," or power, to issue notes, but a tax on a " contract " made un- der the franchise, or power. The minority opinion, read by Samuel Nelson, of New York, declared the tax to be on a "debt" of the bank, and unconsti- tutional because aimed at destruction of a State power to create a bank of issue, a power essential to the exercise of that State sovereignty which Congress cannot tax. 72 Present Currency Perils. The majority of tlie Court conceded that Congress cannot tax necessary agencies for the legitimate purposes of a State govern- ment, but insisted that State bank notes (being contracts) were no more exempt than State railway contracts. Lurking be- hind the decision was perhaps the old Fed- eral belief that, despite repeated Supreme Court decisions, a State cannot constitution- ally create a bank of issue. THE BANKS OF THE WHIGS AND THE NATIONAL BANK OF THE REPUBLICANS. . THE question may be asked, it is often asked, how and why, if Congress has not had, from the beginning, in the opinion of the great majority of Democrats, a con- stitutional power to create and control " the bank " of the United States, it has consti- tutional power to create and control the existing system or any other system of na- tional banks ? That the Democratic party did, as a party, condemn "the bank" is undoubted. The first bank was Hamilton's idea. Ov^er it he and Jefferson differed in Washington's cabinet. Jeiferson was till the day of his death hostile to banks. Gallatin, although in Jefferson's cabinet, could not mollify his prejudices against them. Madison did, it is true, sis-n the bill of 1816 creatine; the second bank, but George Bancroft, in his 73 74 Republican Rcspoiisibility for sketch of Martin Van Biiren, declared that the bill received Madison's "reluctant as- sent," and that the assent " has had a most powerful and far from salutary influence on the subsequent course of the Govern- ment." Under Jackson and Van Buren, the Democracy denounced "the bank," Democrats and Whigs divided over it, and in Tyler's time the Democracy made it " an obsolete idea." Seventy-eight years ago the Supreme Court unanimously adjudged the Second United States Bank to have been constitu- tionally created by Congress, and that Maryland could not tax the notes of one of its branches situated in that State. The Democracy under Jackson did not acquiesce in the decision. Because of its unconstitu- tionality he vetoed, in 1832, a bill to con- tinue after 1836 the law incorporating " the bank," and the voters upheld him. The Court had said that among the powers enumerated in the Constitution as imparted by Congress, "we do not find that of establishing a bank, or creating a corporation," but there are enumerated the Present Currency Perils. 75 great powers to lay and collect taxes, to borrow money, to regulate commerce, and, finally, "to make all laws which shall he necessary and proper for carrying into exe- cution the foregoing powers and all other powers vested by the Constitution in the Government of the United States, or in any department thereof." The words "ne- cessary and proper " were made the turn- ing point of the controversy. The Court said it could and would prescribe what was "proper" for Congress, within the constitutional meaning of the word. It did decide " the bank " to be " proper," but that Congress could decide whether or not " the bank" of 1816 was then "necessary." Jackson vetoed a continu'ince of the law of 1816 on the ground that it was unneces- sary. He also declared the law improper in a constitutional sense. Among other things, Jackson said this in his veto, which has a bearing on the question now current : " It is maintained by some that the bank is the means of executing the constitutional power to coin money, and regulate the value thereof. Con stress has established 76 Republican Responsibility for a mint to coin money aud passed laws to regulate the value thereof. The money coined, with its value so regulated, and such foreign coins as Congress may adopt, are the only currency hnown to the Constitution. But if they have other power to regulate the currency, it was conferred to be ex- ecuted by themselves, and not to be trans- ferred to a corporation. It is neither * necessary ' nor * proper ' to transfer its legislative power to such a bank, aud, therefore, unconstitutional." How unlike the composition and powers of the existing national banking system are those of "the bank " of 1816, which the Supreme Court upheld and the Democ- racy overthrew, every one now appreciates, but probably no one from 1844 down to the war of secession ever imafrined that Congress could or would be permitted to create corporations with power to furnish all the bank notes issued in the country. It cannot well be doubted that thirty years ago it was contemplated by a Republican Congress that the greenback was to be temporary. The title of the national bank Present Currency Perils. yy law of 1863, " an act to provide a national currency," indicates as much, and that the only specie should be a legal tender. Those Republicans who then urged that it would be better for Congress at once, and frank- ly, to issue greenbacks to occupy the whole field of paper currency, instead of " whipping the devil around the stump " by using national banks to issue what the Government was in the end to father, were not then as potential as they now seem to be. All along the fear of " wild-cat " State banking was, and it now is, almost cou- trollino;. The case of McCullock, decided in 1819, is interesting for a multitude of reasons. The opinion was read by Marshall. Com- mentators have described it as " immortal." It did give a definition of " necessary and proper," as used at the end of the express powers, which bids fair to be permanent. It contained the sentence, " It is the gov- ernment of all, its powers were delegated by all ; it represents all, and acts for all," which sentence Lincoln felicitously adopted and adapted. 78 Republican Responsibility for The logic and reason of that portion of the opinion tliat has been, perhaps, most criticised, which criticism is pertinent to- day in its application to the existing Fed- eral tax on State bank notes, relates to taxation by Congress of the measures and operations of a State government deemed " necessary " l)y a State. An argument denying the right of a State to tax national bank notes is likely to deny the right of Congress to tax State bank notes. But interesting as some of these ques- tions are, and. arguments thei-eon may now be in an academic sense and in the moot- court forum of a law school, perhaps they are not within the range of the practical politics of to-day. It may be asked why the Democracy does not now disclose its plans for reform- ing the currency. The answer is twofold and as old as government by party. The Democracy is now in opposition, and it is the function of an opposition to oppose. A physician does not prescribe for a pa- tient until he is called in. When the ad- ministration has foi'mulated and disclosed Present Currency Perils. 79 its plan in Congress, the opposition can expose its defects. After the administra- tion and the Indianapolis Convention have matured their schemes of reform, after de- bates in Congress, and after the newspapers have poured their illumination on the situa- tion, it will be in order for the Democracy throucch the several State conventions next autumn to proclaim its views. APPENDIX. DEMOCRATIC RESPONSIBILITY FOR THE CITY OF NEW YORK. THE anniversary of the Battle of New Orleans was celebrated by tlie Busi- ness Men's Democratic Association of New York by a dinner at the Hotel Savoy. About two hundred were present. Theo- dore W. Myers presided, with Controller Coler at his left and James B. Eustis at his right. Others at the main table were Thomas F. Grady, District Attorney Gardi- nei', Perry Belmont, Lindsay Gordon, Sena- tor Jacob A. Cantor, and Evan Thomas. Among the toasts was : "The two administrations of Andrew Jackson : they illustrate the necessity and use of party organization, party discipline, and party responsibility." Mr. Belmont, having been invited to re- spond, said: 8i S2 Appendix. "The two most illustrious and durable atiiong Jackson's many great civic achieve- ments were, first, his strengthening of the sentiment of Democracy, of nationality, and of Union by vigorously leading Congress to extinguish, by summary measures, at- tempts to peacefully nullify, within State Jurisdiction, a Federal statute, even that one as odious to all Democrats as was the protective tariff of 1832. His Nullification Proclamation was the note that set the music which afterward inspired and won the fi2:ht asjainst State secession armed. "The next most important and durable of civic triumphs by him whose greatest military glory we celebrate to-night were the destruction of the United States Bank and a revival of a currency of gold. New Orleans and South Carolina w^ere enough to 'fill his sounding trump of fame,' but, pushing onward and upward, Jackson ac- complished those last two other services to his country. " They w^ere made possible by the perfec- tion at Washington of Democratic party organization and discipline. When the Appendix. 83 political objects to be secured bad been decided in conformity to the creed taught by Jefferson, there was committed to a representative executive and Congressional committee of Democrats the choice of means and their effective employment. The Whig combination in Congress against those objects was formidable. To more than thirty of the ablest Whigs were by the opposition assigned appropriate parts in the contest. The Democrats were as numerous, zealous, and able. It matters not whether in this severe contest Jackson led or followed. The Democratic oro-anization was to the right of him, to the left of him, behind him, and in front of him. AYhere- ever the Democratic flag passed, a great cause preceded ; a great people followed. Jackson dared to lead where the oi-o-aniza- tion followed; he dared to follow where the oro-anization led. " The Democratic Executive gave its aid to Democratic Congressmen, and they, in turn, gave their aid to the Democratic Ex- ecutive. The voice of the selected leader was the voice of all. When the organiza- 84 Appe7idix. tion spoke, the response of the party in Washington was uuauimous, universal, and concurring. AVhen Jackson gave the word, the Democratic newspapers fell into line. There was concert, order, and discipline. The Democracy acted with uniformity, perseverance, and efficiency. There were common council and united strength. There had been long acquaintance among the men of the oi'ganization. There were personal trust and abiding friendship. Each one's faculties had their fitting place. " ' On the firm basis of desert they rise, From long-tried faith and friendship's holy ties.' " Men do not and can not act toofether in confidence in political affairs, said Ed- mund Burke, unless bound together by common opinions, common affections, and common interests. They must not fear to be known as in such party organization. Jackson was an administration man, a party man, an organization man, and hence his civic triumphs. A desire to vindicate Madison's administration gave nerve to the arm that struck the British forces advancing upon New Orleans a mortal Appendix. S5 blow. The Democratic party organiza- tion exemj^lified in Jackson's term is fit- ting and needed to-day among you in New York. "The ballot-boxes, two months ago, com- mitted, by the greatest number of votes, the government of this greater city to the Democracy. The issue was distinctly made and fiercely contested. The battle raged around Tammany Hall. There was a free fight, a free vote, and a fair vote. The Democracy had not an atom of patronage in the city or State. Nobody intimates that the registration, or the counting of the votes, was dishonest. The pulpit was free, the press was free and almost unani- mously, when the pulpits interfered at all, were opposed to you. London is unhappy over the Democratic victory, meanwhile anxiously inquiring of New Yoi'k how to put out a fire. Our reformers last summer pointed us to England as the place to see non-partisanship in affairs not imperial, but London has just emerged from a bitter party campaign over religious teaching in public schools. ^6 Appendix. " The greatest number of voters, I repeat, committed the governmenit of New York to you of the Democracy, and for a long period. Not merely the elected city offi- cers are responsible, but the city Democracy and Tammany Hall are responsible for good government. " In what other way can the whole body of the Democracy so well discharge that duty as by the interposition of constant scrutiny of the conduct of the Democratic officials, a scrutiny exercised not only by each Democrat, but by a regularly chosen organization of the party and by its author- ized committee ? Beyond reasonable doubt, a majority of the voters in the city to-day are Democrats, and in that sense ai'e the people who are bound to watch each official act of their servants. " Neither Jackson nor Van Wyck initiated putting none but faithful party men on guard. It began with the century. One does not readily see how a self-respecting man appointed in your city under the re- cent 'reform' government can, if he really believed and echoed what Tracy and Low Appendix. %"] said of Tammauy Hall and Vau Wyck, consent to remain in service under them. I have not heard that President McKinley consulted New York Democrats in regard to the qualifications of Republicans ap- pointed to the Federal offices in your city or on Long Island, in the places of Demo- crats removed. The ethics and patriotism of 'government by party ' and party organ- ization and discipline were set forth for our instruction much more than an hundred years ago by the most resplendent orator that Ireland — so prolific in orators — has ever produced, and by the greatest man in English political literature, who mastered the science and details of practical politics under a constitutional government. That one was in the House of Commons the powerful friend of the American colonies and of Franklin. Commended to us by such associations clustering around our na- tional birth, the utterances of that pro- found political philosopher, who more than a century and a quarter ago deplored and condemned the alarming deterioration of party government in England, are perti- 88 Appendix. nent now and here. You will have antici- pated, I am sure, that I refer to Burke's pamphlet containing his 'Thoughts on the Cause of Present Discontents.' " After I had been told of the toast by which your kindness would invite me to respond to-night, I made an extract from the concluding pages of that historic tract on party government, which perhaps you will permit me to read. "This is what Edmund Burke wrote: "'Party is a body of men united for promoting, by their joint endeavors, the national interest upon some particular prin- ciples in which they all agree. For mv part, I find it impossible to conceive that any one believes in his own politics, or thinks them to be of any weight, who re- fuses to adopt the means of having them reduced into practice. " ' It is the business of the speculative philosopher to mark the proper ends of government. It is the business of the poli- tician, who is the philosopher in action, to find out proper means toward those ends, and to employ them with effect. Appendix. 89 " ' Therefore every honorable connexion will avow it as their first purpose to pursue every just method to put the men who hold their opinion into such a condition as may enable them to carry their common plans into execution with all the power and authority of the state. As the power is attached to certain situations, it is their duty to contend for those situations. " ' Without a proscription of others they are bound to give to their own party the preference in all things, and by no mean private considerations to accept any offers of power in which the whole party is not included ; nor to suffer themselves to be led, or to be controlled, or to be overbal- anced in office or in council, by those who contradict the veiy fundamental principles on which their party is formed, and even those on which every fair connexion must stand. Such a generous contention for power on such manly and honorable max- ims will easily be distinguished from the mean and interested struggle for place and emolument.' " Lest any of those in the pulpit, or out 90 Appendix. of it, who last summer and autumn so fiercely denounced party ties as immoral, shall think the precept commanding Demo- crats ' to give to their own party the pref- erence in all thino;s' is an invention of Tammany Hall, it may be well enough to say again, for such, that the political ethics I have quoted and read were taught a quarter of a century or thereabouts before your 'Tammany Society' was born, and taught by a publicist, the centennial of whose death was last July." UNIVERSITY OF CALIFORNIA AT LOS ANGELES THE UNIVERSITY LIBRARY This book is DUE on the last date stamped below V 15 ;W?3195S I ibtoeiImibb UK JAW Form L-0 20m -1, '42(8519) UNIVERSITY OF CALIFORNIA AT LOS ANGELES '-j[j S^JUTHf RN REGIONAL LIBRARY FACILITY AA 000 594 707 2