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."
 
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