tf0n0r^ssJ0tia FIFTY-THIRD OONaHESS, ir The Currency. SPEECH HON. EOBEKT ADAMS, Je., of pennsylvania, In the House of Eepresentatiyes^ Thursday, January 3, 1895. The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 8149) to amend the laws relating to national banking associations, to exempt the notes of State banks from taxa- tion upon certain conditions, and for other purposes — Mr. ADAMS of Pennsylvania said: Mr. Chairman: The numerous resolutions and memorials which I have received from my district make it incimibent on me to enter a protest, as their Representative, against the passage of this bUl. What is demanded by the manufacturing and business interests of the district which I have the honor to represent, and what, in my opinion the country at large needs, is rest; peace to continue their avocations and to develop the resources of our country. Ever since the incoming of this Administration — and I speak, sir, in no partisan sense — our country has been in a state of finan- cial and business turmoil. The silver question for sis long raoiith^. agitated this country, until it was finally settled by the patriotic efforts of the men of both political parties. No sooner was this question removed from the arena of agita- tion than the tariff question was precipitated upon the country, and again business waited in suspense to see what its outcome would be. At the adjournment of the first session of this Congress last August a spirit of business revival began, the people took heart, the mills opened, some employment was received, and the outlook was more propitious, at least for a time. But no sooner did this session of Congress assemble than the party in power, which is responsible for its direction, precipitated another issue into the halls of legislation, which has again brought business to a stand- still and made people halt and wait before entering into any new financial relations. What is the necessity, sir, for the introduction of this measure at this time? It is claimed that our currency lacks those qualifi- cations which tend to business prosperity and that that is the necessity for this measure. There are three qualifications which seem to be universally ad- raitted, which tend to form a sound currency. The first is secu- rity, the second is uniformity, and the third is elasticity. Great should be the pressure to force this question upon the Further' '< With $10Cl which car^l pressure i g fore, sir, ] '" but the a^ J the distri(T-^ are busin those of a^ Sir, if ifct tion should are begin:i* ienced dr^ questions d mercantil''' What do the histor» prices of a particular party I am in favor of aspHci:iI rl:r-., I ,.),], it to that, and desire to refute it. I am in fav..r ..t all rhKs^s. X,,w, when the gentleman said that a re- dnction m the price of coal of 50 cents a ton was a great calamity to the people of this country it occurred to me, inasmuch as the viem't^T^^- £«^ ^^^ gentleman from Pennsylvania yield to the gentleman from New York? ""ayivania Mr. ADAMS of Pennsylvania Not just now I must d line This ul ti di turban I W\RNER WUhtnmanvid w Th CHAIR! 4JT D ea fi^ g n m n v? dto h ^ n ««,«« UN \ 5 T 1 T Mr WAKNEE H wm Ml ADAMS f P nnay ma I nn yi a m nd toyi i W will urn time hha h y (lu dwa^^ea— 50 ents n answ I suppose ..^.... ... .._™, ^^^,^ Hfloiium L-aiamity, ana cnat it was reaUv 1 tliL< interest and for the benefit of the general public. I merely ..i-tlfi tin- MiK'gestion in order to prevent him from putting me in -Mr A 1 L\ MS of Pennsylvania. I wiU answer the gentleman bv -r.ti],.; ih,,i u-hilethe consumer maybe benefited by the reduc*- ii.ju 111 til. i>iKe of coal, it would bring the miners to stan'ation wiigt-s; and if he should \-iBit the State which I have the honor in part to represent he would find that there were thousands of miners whom this reduction of 50 cents a ton in the price of coal senoush- affects. Mr. PENCE. WiU the gentleman permit me to ask him a question? ^^ Mr. ADAMS of Pennsylvania. Tea. Mr. PENCE. Did not this condition of starvation wages for Hungarians, unported as miners, exist before any reduction in the taiiff upon coal? Mr. ADAMS of Pennsylvania. No, sir. These people were weU off and happy and Uving well, and we had no diatirbances ot any kind, fljaughter and jeers on the Democratic side.l Now.IwoiUdbietoask the gentleman from Kansas a Ques- tion; and that IS, it the present value of wheat does not bear the same relation to the producer and the consumer as the price of Mr. .SIMPSON. Mr. Chairman, I would say yes; that it cer- tainly does, and it ought to under certain conditions, but that under our present system governing transportation, and the low jince of wheat, after it passes through the hands of mononolv— the mUimg and railroad monopolies-unfortnnately the consumers uo not get the benefit of it. «■■• P.ftHSS''- ^' """' "="' true of coal also? ?5'- WFSS^: i' " '"'Sely true also ot coal. Mr. ADAMS of Pennsylvania. The gentleman has now an- irf w.^SS™'"™ '{"(tteimttome in regard to coal himself, and after hu answer it is nof necessary thatl should go any fur^ q^^?^^^' "^"^ '^° gentleman aUowme to ask him a ^. ADAMS of Pennsylvanio. H the House will e^end my ^- ?SK?9^i J°^ *^' •"* •'««■ eitended. ^^ADAMS of Pennsylyania. I really want to fini sh my re- Mx. WABNEB. Ten cents? Mr. ADAMS of Pennsylvania. Thevarpinli'Tio wjfi. «.« ,..=* e the sn«erers and governed b™the S'mrc™dMons"SchV^er°n 5<°'^»?4S"°5 "^ " ''"Vaih upon freight charges. Mr w/^°J Pennsylvania, I can not answer that question. m^e to thf™ impression is that there was no reduction mS:,nSf^^ o^'Pennsylvania. There has been a reduction I, w . J.^JS?''*' I i'otest not only against the passage fitation of this measure at this time, in the interest of ;t which I have the honor to represent, in which there ess, mercantile, and manirfactm-ing interests equal to ny district of the United States. his necessity does not exist in pressing form, this ques- d not be precipitated upon the country at this time. We aing to realize what the agitation we have already exper- , iring the past year, since the panic of 1893, on the two \} to which I have referred has cost this coimtry. The e and business returns for 1894 are beginning to come in. f they show? The largest increase in the national debt in * y of our country in a time of peace has been made. The jommodities have fallen to the ruin of farmers and manu- Iron has fallen $1.50 a ton and wheat and cotton has he lowest point on record. The values of the leading rail- es has fallen $125,000,000 and the net earnings of 136 P decreased $37,000,000 as compared with 1892, costing the share holders $15,000,000 of income. As compared with le bank clearings decreased 15 to 36 per cent monthly up Since then they have gained 3 to 6 per cent over the panic that year. Coal has averaged about 50 cents a ton less, loss of $20,000,000 to the producers and a loss of 1,500,000 e output as compared with 1893. consider what necessity required the introduction of this ;he halls of Congress at this time and in so precipitate libera five a way that the majority of the committee de- be held personally responsible for its provisions and the was not even ?.ccorded the visual pri\nlege of d^snus^ing mittee. MPSON. WUl the gentleman allow me to ask him a right there? I want to understand this matter as we I take a deep interest in it. The gentleman said, if I Dd him right, that the decline in the price of coal of 50 ■n was that much loss to the people of this country. Now gentleman mean loss to the people who produce the coal, people who consume it? DAMS of Pennsylvania. I mean the people who form a 16 population of this country to the extent of thousands — rs. MPSON. You mean the people who mine the coal? DAMS of Pennsylvania. And I mean the people who railway shares and the bonds? MPSON. Oh, that is it? DAMS of Pennsylvania. They have lost also. MPSON. That is what I want to get at. I want a fair .nding as to the people upon whom these losses have K it has been a loss to the consumers of coal to have it 50 cents a ton in price, I am surely shocked at that con- ■ affairs. DAJMS of Pennsylvania. I will tell the gentleman upon le loss falls. Like all those of his party he wishes to speak •o-ntiTirr a sincle class; but when you come to legislate for '^ CONGEES! his rnately they will be lost or destroyed, thus enhancing their he i at the cost of the people. per National banks are required to receive each other's notes ]V tlement of any liability. State banks are not. National dov must make reports five times a year to the Comptroller, on banks need not. National banks are required to report M same ofl&cer their dividends declared and profits in excess era dividends. State banks are not. National banks are subjf M visits by examiners to look into their affairs. State banks i con National banks are restricted to one-tenth of their capital plai one loan and forbidden to loan on their own stock as col 'M State banks are not. A national bank retiring or reducing Mc] culation receives no rebate from the safety fund of the i. M it had paid in to secure the said circulation about to be 5 a di which constitutes a loss. A State bank, having made no su ing] tribution to the safety f mid, can incur no such loss, son These provisions, so discriminating in favor of State M would ultimately drive the national banks out of existt Mel force them to reorganize under the State laws and thus M the people the value of the safety f^md as provided in tht title as national banks. The two facts that State banks are r M of the 1 per cent tax and the mutual liability for failed thea place them at a disadvantage as compared with national glac under this bill. TJ Mr. Chairman, the debate already had on this bill has so yeai strated its impossibility as a practical measure, and so nu neec are its faults that amendment was out of the question, t and committee has offered a substitute. The changes amount enti; little and offer even further objections to this bill. The r that of the compulsion upon the national banks to come in un> Gren pact or ermitting them to retain their bond deposit as seen ban] circulation, as at present, is done to avoid the catastrophe ( behi 000,000 of Government bonds being thrown upon the mar then brealdng down the credit of the Government in the hopt Ev'l slower change would avert that damage. That this will be tl' 1 already demonstrated by the fall in price on the market of < r ment bonds, and, as I have already endeavored to show, the i 1T45 CONGRESSIONAL RECORD. c i based on a general eat m e t in he really knows the facts. Hiive you tl e Dun a at period also? Mr. ADAMS of Pennsylvania. The coll enesha down eversiiicethe Democratic party tanib ntopow on the Republican side.] Mr. WARNER. Weretheynotehuttrngdownb f cratic party came into power? Mr. ADAMS of Pennsylvania continnes in power they will al' plaose on the Repablican side. ] Mr. WARNER. Were not more of them shut do v McKinlej bill than there ever have been e nee ' ' ? Penusylv! "" _ the passdfee e b "^n lo mj, \s ages e needs of the countrj so veil that we should mo and with del beration in making changes let a intirely The holder of a national bank i ndsfor the very gold t< e would at least : al gold c ^ , he Treasury thii 'sellmg them m New York n be withdrawn withm t venty four hours. i a fore gn supp j pat such difficoltiea around 1 as veil as thej do The balau<^ of trade and yet $7 OOO 000 in gold has flovra ve allow fore gne 8 to recoup heir gold it CO \ nnd Pans andS Petersburg that it 18 secured by a General Government a a ted S ate b. nd. ■ at hat di n e l t, for the fa th of he C er behind it. It is this characteristic n them received in all sections of our countrv ' Even when bomed or partially destroyed they i their full or partial value as the presenter is able t man has ever lost a dollar thi-ough the worthless! a national bank which has failed, while the liability ■ 1 State banks they make one r f thisq I espe ally a ■f C nfcTess when the hairman of tte i 'kJ led the opposition to repeal the 10 per cent tax on kg whi h waa def a ed bv a vote of 10 to 1 against U and w now beho d the same gentleman reverting his liid sustaining this feature of &e bill. Sir, a greater I ijould not bef^ our country than a return to the systei (ii: under the State laws. When this subjectw holders to the additional a it of the value of th'-i t under coiudderatiou calls for a deposit of 30 per cent of the issue of notes to be made in legal tender and Treasury notes of the act of July 14, 1800. In addition a tax of one-half of 1 per cent on the average circulation is to be paid by each bank until it amounts to 5 per cent of all the national-bank notes ontstanding. Should this security be insufficient, aU the solvent banks are to be assessed pro rata to make up the deficit. To my mind this is offering a premium on illegitimate and specu- lative formation of banking ■ '" ^ . . . -- d f doubt if prudently t system which holds them ) favorable provisions relating to the establishment of ) the $150,000,000 of national bonds This bill, by allowing the establish] « the basis of security, do 3 the laws of the i Therefore, Mr. Chairman, I c 1 the fear of insnfHciei available for leposit for national bank notes, and s Thebest eridence of the hur r and Treasury noteS; or their redemptioi t the $100,000,000 i E the dra n of the gold June, I brought and exhibited to the House a copy -im's Bank Note Detector, a more fore* ' lieenexliibitedof theevilsattending thee: It waa a necessary • ■ - - "- ■ ed over the counter, i nere is notniUL. safe the security of the note issue of State bunks ) forcible proof could „ theexist^nceof f ' (very office of every s narket vale ' s nothing i e the market value of € posited with the Treasurer of ttie United States, but with some &t=+^ officer designated by State law. No provision ia made that i security for its circulation; current funds. "The banks of the different States ill exist under the laws of the several States, thus making as any different kinds of currency as the said laws may differ, and The ol^ect of this bill is to reestablish the wild-cat ba nkin g sys- ;, and wh(>n it goes they go, and v t deposit held by the State and find same bank, their notes of issue will I pajier and the bank-note detector in its 11 report them as of no vali and wind np the affairs of these banks? No State laws for their ( .fa25pei r the dep oldei-s are only liable as security for t _.,, — - ., - to the extent of their stock, and no assessment funded as under e: isting national-bank law. Under this bill national banks c sue no notes under $10, while no -.- -> the issues of State banks. This ii c • CONGRESSIONAL RECORD. mately they will be lost or destroyed, thns enhancing their profits at the cost of the people. National banks are required to receive each other's notes in set- tlement of any liability. State banks are not. National banks t make reports five times a year to the Comptroller. State " ---' 't report to the dividends. State banks are not. Nation b nks a \isit3 by esaminers to look into their affair Sta National banks are restricted to one-ten h h ir one loan and forbidden to loan on the wo State banks are not. A national bank r tirmg dilation receives no rebate from the saf ty f it had paid in to secure the said circulati n b which constitutes a loss. AState bank.h vmgm tribution to the safety fund, can incur n h These provisions, so discriminating i sof said would ultimately drive the national b nk force them to reorganize under the State the people the value of the safety f»nd w a hi . ^d d m 1 _3 national banks. The two facts that nk of the 1 per cent tax and the mutual il ty place tl^em at a disadvantage as compar d wi h n ti nf under this bill. Mr. Chairman, the debate already had his etrated its impossibility as a practical mea ur are its faults that amendment was out h committee has offered a substitute. Th h little and offer even further objections hi of the compulsion upon the national ba k pact or ermitting them to retain their b p circulation, as at present, is done to avo d h 000,000 of Government bonds being thrown p breaking down the credit of the Govemm n in slower change would avert that damage. Th wi fjready demonstratedby the fallin price h ina k ment bonds, and, as 1 have already eudea d h w h 1745 banks will be compelled to adopt the State system under this bill, as competition will be impoasible under the burdensome conditiouH placed upon them and not upon State banks. Besides, should ttiey adopt the provision in the substitute, in this respect it would add " currency, which is certainly not a step toward uniformity. Another provision i the substitute reimposes the tax for the SIOE^AL EECORD. profits in set- banks State to the of said ■ctt'd to ire not. in any lateral, its cir- uioiint •etired, ch con- hanks, nee or lose to ,'ir case elieved hanks hanks losnon- UKi'ons hat the t- hut enoval le" this vi V for )f?700,- lv(t and tiat a fitileis Tivern- ia:ional hanks will he compelled to adopt the State system under this hill, as competition will he inipossihle under the hurdensome conditions placed ui)on them and not iipon State hanks. Besides, should they adopt the provision in the suhstitute, in this respect it would add one more kind of currency, which is certainly not a step toward luiiformity. Another provision in the suhstitute reimposes the tax for the safety fund the moment it falls helow the 5 per cent limit of the whole circulation, thus making the national hanks perpetually lia- hle for the insolvency of the weaker ones, a hurden not imposed on State hanks, and another clause provides that notes of failed hanks shall hear 6 per cent interest from date of suspension until thirty days after notice of their redemption is made, and he a first lien thereafter on all moneys received into the safety fund, thus increas- ing,' the liability of the national hanks. None such imposed on State banks. The last amendment in the suhstitute endeavors to drive the nail into the coffin of the national hanks by authorizing the Secretary of the Treasury and the Comptroller of the Currency, upon being satisfied that a State hank has complied with the State hanking laws and certain conditions imposed by this act, to issue certificates to that efi'ect,thus endeavoring to give these State cor- poi'ations a national character while not imjiosing the same con- ditions as are meted out to the national hanks. I have thus endeavored to substantiate. Mr. Chairman, my claim, before advanced, that the real object is to rehabilitate the system of State banks. The i)eople have a great interest in this qxiestion, far in excess of the bankers, who with their knowledge of the value of different issues of notes can always protect themselves. Indeed, large fortunes were made in discounting the notes of the various States to the loss of the innocent and hard-working o'wners who had received them in pa>niient (jf their services. No such loss has been incurred by any man under the present banking system, and we should proceed with much more deliberation than has been accorded this measure. Mr. Chairman, this whole question should be relegated to a commission to report to the incoming Congi-ess. [Here the hammer fell.] •o-n+HTi>r a sinele class; but when yon come xu i«giaiow3 >.kjl THE CARLISLE CURRENCY BILL SPEECH HON.W.M.BECKNER, OK KENTUCKIY, HOUSE OF REPRESENTATIVES. Thursday, January 3, 1895. WASHINGTON. 1895. AS SPEECH OF HOIST. W. M. BBCKT^EE The House being in Committee of the Whole on the state of the Union for ^ the furtlier consideratin of the bill (H. R. 8119) to amend the laws relating r- to national banking associations— . Mr. BECKNER said: Mr. Chairman: It is urged in some quarters that Congress ought not at this session to undertake any important legislation because the political views of a majority of its members are not in accord „ with the sentiments of the people as expressed last fall at the ballot box. In 1892, an overwhelming majority in the electoral colleges and an emphatic plurality of the popular vote rebuked the ,^u Republican party for bringing on the conditions from which, after M all thatijas been since done for their amelioration, the country still seriously suffers. In 1894 the people simply declared their lack of confidence in the Democratic party because it had not done more toward alleviating a situation which continued to be distressing. They gave us notice in no unmistakable terms that they require further legisla- tion, and woe unto those public men who do not heed the warn- ing. Trade still droops, the wheels of manufacture move slowly, the sails of commerce are only partially extended, and no industry is yet *' so flourishing as that of the sheriff." The prices of our leading products continue to have a downward tendency, agi'i- culture is unprofitable and depressed, labor lacks employment, our mercantile classes vainly sigh for the return of prosperous times, and our financiers observe with dismay the constant tend- ency of gold to fly to foreign shores. Mr. Chairman, I was elected to fill a vacancy on this floor by a decisive majority cast by an intelligent and patriotic constituency- after a thorough canvass, in which I stood firmly by the princi- ples of the Democratic party as declared at Chicago, and insisted that this House had done its duty at the first and second sessions of the present Congress, and that it could be relied on to go for- ward in the good work it had so earnestly and faithfully begun. We have ample time and a gi-eat opportunity in dealing with the questions now before us to again demonstrate to the country that the Democratic party is still alive and that its representatives have the wisdom to devise and the courage to adopt a plan that 1739 3 .">89390 will at least be instrumental in doing away with the hard times and restoring the prosperity we enjoyed before Republican legisla- tion had precipitated the panic in this country. Those who have the power can not shirk the resi)onsibility it implies by pleading what was intended as a reproof for their halting course. Wise men ne'er sit and wail tlieir loss. But cheery seek how to redress their harms. None of the thoughtful leaders of the Republican party honestly regard the result of the election in November as an indication that the people desire a reenactment of the leading laws passed by tlie Fifty-first Congi-ess that have been repealed since the Democrats got control of the Government. Outside its actual beneficiaries, who is it that really mourns the repeal of the McKinley bill ? It la rumored that John Sherman will even sui)port Foraker rather than have so extreme a measure receive an indorsement such as the election of its author to the United States Senate might be con- strued to be. Where is there in any quarter worthy of attention ' a demand for the restoration of the election laws? Who of any party laments the repeal of the purchasing clause of the Sherman Act ? I insist that it can not be truthfully claimed that the people changed the political complexion of this House in November be- cause they disapproved of what it had done with reference to these or any other matters. The Democratic party has incurred their censure rather for what it did not do than because of that which it actually did. I notice that no one raised the question of the pro- priety of positive action by this Congress when the great railroad corporations were demanding the passage of a bill that would allow them to pool their issues so as to increase the rates that have so much to do with the prosperity of the whole country. All elements agree that the financial situation is critical and that remedial leg- islation is needed. The Republican minority of the Committee on Banking and Cur- rency admit that something ought to be done when they say, as they do in their report, that they " appreciate the pressing de- mand for wise and prompt action by Congress to relieve the sti'aiued financial condition of the whole country and more es- pecially the pressing necessities of the United States Treasury." The shrewd and earnest gentleman [Mr. Walker] selected by that minority to open this debate in opposition to the pending bill and whose practical hard sense, in spite of his politics, I had learned to admire before I had a seat on this floor, has drawn the strongest picture I have yet seen of the situation with which we are confronted. Monetary collapse- He says — may come to us any morning as we awake. There ij not a business man, there is not a manufacturer, there is not an intelligent leader among the workingmen who does not look into his morning paper first to learn the financial condition in thi.g great country and who does not at night retire with apprehension, knowing that his daily bread depends upon circumstarices and conditions which to our disgrace as legislators needlessly threaten the monetary system of this great country. * * * No language that I can command is adequate to describe the situation. Sincere man as he is, he emphasizes what he professes to believe by offering a bill which he frankly admits went through the Fifty-first and the Fifty-second Congresses without more appre- 1739 elation than it is likely to have in the pi*esent House. Tlie gen- tleman from Connecticut [Mr. Russell] , who seemed to derive so much satisfaction from the fact that the revenues of the Gov- ernment are less than its expenditures, said in his speech the other day: The constant and menacing drain on the Treasury gold reserve is the se- rious difficulty. That is the critical situation which m fact as well as in con- templation threatens the financial solvency and the maintenance of the credit of our National Government. There is not a single member v?ho has spoken in opposition to this bill who does not admit the dangers of our condition and the necessity for action. And yet only one Republican even suggests a plan of relief, and this is so unsatisfactory and insufficient that in three Congresses, so far as I can learn, he has found no man even of his own faith willing to indorse it. My colleague, from the Second district of Kentucky, who is an honest and patriotic gentleman, and whom I deeply esteem for his many noble quali- ties, while savagely assailing the bill, clearly comprehends the nature of the crisis, but can suggest no relief save the impossible substitute of the gentleman from Missouri. The others who have spoken in opposition admit all that is claimed with regard to the necessity for remedial legislation, but are unwilling to relieve the people on the only terms that are practicable in this Congress. The bankers, the editors, the econo- mists, and the business men whose opinions are to be found in the report of the hearings before the committee all agree that some action should be taken, however far apart they may be as to what should be its character. These witnesses thus concurring, and there being none on the other side, it must be conceded that there is not only a call, but a necessity, for Congress to pass some meas- ure of relief. Whom will the country hold responsible if we fail . to discharge so manifest and pressing a duty? Narrow as the margin is in the Senate, Congress and the Exec- utive, who have full power so far 'as legislation can affect the situ- ation, are classed as Democratic. Unless the men whom the party has placed in power here are willing to be branded as cowards, or incompetents, or traitors, they must act. The eyes of the world are on them and they are bound by every consideration of policy as well as of duty to make a change in a situation which, although improved, is yet deplorable. Mr. Chairman, I believe in party rule. It is the surest guaranty of the perpetuity as well as of the purity of republican institu- tions. Wherever there is freedom of speech there will be differ- ences of opinion which will crystallize into organizations that will absorb all who take an interest in public affairs. There was a period following the close of the second war with Great Britain when there seemed to be no longer party strife, but it was charac- terized by as mean exhibitions of what human nature is capable of as have ever been seen in oiir public life. Clay, Jackson, John Quincy Adams, Crawford, Calhoun, and De Witt Clinton were each at the head of factions which seemed to be controlled solely by personal hatreds. It was an era of slime and vituperation, and will ever be an argu- ment in favor of clearly defined parties rather than of irresponsible and snarling factions. We have two great national pohtical or- 1729 6 ijanizations in this country, formed on the lines laid down by Jet- lerson and Hamilton respectively. There will neA'er be room for another that will have more than a fleeting life. Already Popu- lism in the West, which had gained control of several States, has been submerged by the Republican tidal wave. In North Caro- lina it is entering the shadow of the same dark body, and will soon be lost to view. Its organization was conceived by men patriotic but erratic. It has never had practical management, and when- ever encouraged has soon degenerated into a scramble for the offices. In the present struggle it will combine with the Repub- licans to defeat the pending bill and throw over to the next Con- gress if i)ossible the settlement of the terms on which our finances shall be conducted. Its representative men will take this course in spite of the fact that Wall street and the bondholders, as they well know, will then have absolute control of this House. The leaders of the Republican party, as their utterances show, understand full well the importance of the crisis thi-ough which we are passing, but we need not hope for any help from them. They are dominated by a spirit which the true representatives of the people can not trust. They are in sympathy with the classes. It is our mission to act for the masses. They take their cue from the bankers and the capitalists. We are here because those who toil and produce have interests to be protected. Of course all who are with us are not for us. There are gentlemen on this side of the Chamber who see no impropriety in discussing political questions in time jdelded to them by Republican leaders. We have in our ranks representatives who would be offended if called Republicans, but who insist tliat the party in control of this House shall be less democratic than the British Parliament with its House of Lords and its Commons, embracing many of the ricliestmen of England, who accept, without complaint, an income tax that places a reasonable share of the burdens of government- on those best able to bear them and most interested in what tax- ation is intended to secure. But the Government is under our control and to the Democratic party the country looks for relief. We need, Mr. Chairman, a bold, vigorous policy, and a crack of the party whip sharp enough to bring every man into line or else drive him into the enemy's camp, where, if he is more at home there, he properly belongs. As for me, I have always trained with the Democratic party and hold myself amenable to its discipline. K I had the power all political questions before Congress should be settled by a caucus, and I woiild fill every office. State and na- tional, with an honest, faithful Democrat, even if there should be a Republican applicant who might outspell him or better knew the difference betwixt a comma and a semicolon. Does the bill under consideration present a political question? Democrats, look across the hall and you need not have a doubt. It is opposed by an unbroken Republican front. The party line has been unmis- takably dra-svn. As shown by the minority report, all the Repub- lican members of the Committee on Banking and Currency have agreed in ad\'ising that the bill be "indefinitely postponed." President Harrison, in his last message, said: The conditions that have cn-ated this drain of the Treasury gold are in an important degree political and not commercial. 1729 It is currently rumored that the Republicans have already held a caucus and decided to oppose the pending bill in whatever form it may be presented, because — 1 . It is not acceptable to Wall street and the more powerful bank- ing interests of the country, and 2. Its defeat might force the President to call an extra session of Congress and thus put them earlier in position to serve the classes to whom they belong. It being clear then that the questions embraced in this measure are strictly political and that the Democrats are wholly responsi- ble for all action of this character, let us consider whether the measure we are considering is worthy of Democratic support. I regret that it is to be antagonized by the substitute of the gentle- man from Missouri. I am as sincere a friend of silver as he is, and just as indignant over the wrongs it has undoubtedly suffered. But I do not think it is at all strengthened by using it on every occasion to defeat a good measure that has a chance of passage, or to continue in force laws that ought to be modified or repealed. He knows that no free silver bill can be passed at this session, how- ever much this is to be regretted. It is unnecessary to discuss who is responsible for such a state of case. We are engaged now in considering a condition, and not in studying history. I do not believe the substitute to be in order, but whatever the ruling on this point may be, I shall unhesitatingly vote against it and thus act like a man who has at heart a purpose, and not as a child cry- ing for the moon. Mr. BLAND. How does the gentleman come to the conclusion that that bill is any more likely to be defeated than the one he is talking about? Mr. BECKNER. That bill has been heretofore practically dis- posed of by the action of the House. Mr. BLAND. Not at all. Mr. BECKNER. The silver question has been disposed of by the House; and the position of the President, as we know, is such that if a measure of that kind should be passed by this and the other House it would not become a law. We know the position of the President with reference to this bill. Mr. BLAND. Then you claim it to be Democratic to establish national banks throughout the country? Mr. BECKNER. No, sir; I would like to explain Mr. BLAND. I think the gentleman's position needs explana- tion. Mr. BECKNER. I should be glad to enlarge upon that point if I had time, but I fear I have not. I will only say that I am ready to meet that question. The national banking system as provided for in this bill vsdll be Democratic. The gentleman from Connecticut [Mr. Russell] in his speech the other day declared the pending bill to be "emphatically and distinctively a Democratic measure." How could it be otherwise, recommended as it has been by John G. Carlisle, who since he entered the Kentucky house of representatives thii'ty-five years ago has never uttered a sentiment or cast a vote that was not strictly in line with the Democracy of Jefferson and Jackson? It is approved by Grover Clevelan(i, who has had more indorsements from the Democratic party in national convention assembled than 1729 8 any other man ever had. It is tlie reaUzation of the suggestion in his letter written to Governor Northen in September, 1893, when lie said: Within the limits of what I have written I am a friend of silver, but I be- lieve its proper place in our currency can only be fixed by a readjustment of our currency lopislation and the inauguration of a consistent and compre- hensive fluancial scheme. However little those of iis who are silver men may like his course with reference to the free coinage of that metal, we are boiind to remember that each time he has been made the standard bearer of our party his views were well known with reference to this ques- tion and that he has simply acted in his high ofl&ce as everybody believed that he would. No man can truthfully charge that Cleveland and Carlisle are acting in this matter under the dicta- tion of Wall street. The Secretary, in spite of all the pressure that came from that quarter, steadfastly refused to issue bonds even to keep up the gold reserve until the exigencies of the situation forced him to resort to this step, and then his action was taken vdth evi- dent regret. Even so ardent a Republican as the gentleman from Massachusetts who has spoken in opposition to this bill shows his confidence in Mr. Carlisle's honesty of purpose when he says that he "has on the stump and everywhere deprecated criticism of Secretary Carlisle and has defended him with whatever ingenuity he could command." If Cleveland and Carlisle are not Democrats, then the party has fewer members than even the elections of last November indi- cated. Ah, gentlemen, let us lay aside this narrow and intol- erant spirit and remember that neither in church nor in state can we find associates who will entirely agree with us in every article of our individual faith. The bill before us is Democratic in its evident purpose to retire the greenbacks and other legal-tender representatives of money as far as may be done without contrac- tion of the currency. There is one cardinal difference between a Republican and a Democrat — one believes in protection ; the other does not. There is equally as pronounced a distinction between a Populist and Democrat — one believes that the Federal Government can make paper into money; the other denies this in toto. The Con- stitution says Congress shall have power to coin money, not to make it. God alone can create gold and sUver which, when coined, are the only sources of money supply. In fact, Justice Clifford, in his dissenting opinion in the case of Knox vs. Lee, in 12 Wallace, intimates very strongly that Congress has nothing to do with giv- ing to either gold or silver its legal tender quality, that when a coin is minted and stamped it passes current for its face value by virtue of the Constitution, and that no one can refuse to receive it for every purpose as money. The Democrats in Congress, when the acts makiiig paper currency a legal tender were passed, strenu- ously opposed them in a body. Such Republicans as Justin S. Morrill, Roscoe Conkling, and Owen Lovejoy likewise believed the act to be unconstitutional and refused it their sanction. Secretary Chase jnelded at the last moment, and then only be- cause of the necessities of the Government gi-o\Aring out of the war, and was never convinced that the legal-tender clause was author- ized by the organic law of the lai^l. No Democratic judge of the Supreme Court has ever giA'en his appvoval to this provision of the I73y 9 law, and in fact that great tribunal had to gradually approach the argument needed to sustain what none but those believing in the HamUtonian theory of government could have been induced to approve. It was an evolutionary process, which brought the only serious scandal ever connected with our highest court. The Locof oco Democrats in national convention assembled in 1836 declared gold and silver to be " the only safe and constitutional cur- rency," and in only one instance, that I now recall, did the Demo- cratic platform ever recognize paper currency as lawful money of the United States. This was in 1868, when politics were still some- what chaotic as a result of the war, but in 1876 the party came up to the full measure of its duty and denounced ' ' the legal-tender notes as a changing standard of value in the hands of the people and their nonpayment a disregard of the plighted faith of the nation." I deny that it is the duty of the Government to furnish currency to the people. It has no such function under our system. The plea that it is dangerous to leave a matter of so much importance to individuals or to corporations is just as applicable in relation to food and clothing, or any of the other necessaries of life. It is all socialism, which is contrary to the genius of Anglo-Saxon institu- tions. If American freedom is to be preserved we must maintain that spirit of individualism which is the foe of despotism and which so stimulates industry, thrift, and enterprise, and, above all, we must stick to the chart laid down by the fathers in the Federal Constitution for the guidance of the ship of state. Another commendable feature of the bill is that it provides for substituting noninterest-bearing obligations of the Grovernment for the interest-bearing bonds on which the circulation of national banks has heretofore been based. One of the chief objections always urged by Democrats and Populists to the national banking act has been the advantage thus given to those who engaged in this kind of business. One of the effects that will be accomplished by the success of this measure will be that it is a step toward divorcing the Federal Government from the banking business. Mr. George G. WUliams, president of the most powerful banking institution in America, said, before the committee last month, that ' ' the Treasury is one of the greatest banks in the world, and that it is trying to conduct its business without sufficient reserve." The subtreasury at New York is a member of the clearing house in that city, on the footing of a regular bank. This is socialistic and can not be defended by either Democrats or Republicans. Mr. A. B. Hepburn, the accomplished Comptroller of the Cur- rency under President Harrison, and now the president of a national bank in New York, says, in a letter to the committee, that whilst it would " add responsibilities to the banks it would benefit the Government and the people to have the Government retire from the banking business." Secretary Carlisle followed his Democratic instincts when he sought to accomplish this object in his bill. The Federal Government was not organized for any commer- cial or mercantile purpose. Martin Van Buren, in his History of Political Parties in the United States, admirably expresses the Democratic view of its functions when he says: AH that the people can ask from administration is the maintenance of order, protection in the enjoyment of their civil and political rights, and the man- agement of public affairs in a spirit of equal justice to all men. 1729 2 10 Public sentiment has been so much debauched by Republican practices and policies that orators and editors now glibly talk about the duty of the Government to take care of the people. Such a system as these would establish is thoroughly illustrated in Russia, where the Czar, who is the government, is the guardian of all the people, and in return reciuires absolute submission on their part to his imperious will. With us the Government is merely the agent of the people and has its power of attorney in the Constitu- tion, and beyond that it is without authority. There is one i)ro- \-ision in the pending bill which every man who believes in the Democratic platform of 1892 must approve. It is to be found in section 10, which allows the issuance of circulation by State banks on terms safe to those into whose hands it may come. For more than thirty years the lawmaking power of the United States, under the pretense of a tax, has deprived the States of a power which Democrats believed they reserved in making the Federal Constitution. I know that the Supreme Court has affirmed the validity of this action, but, like Secretary Carlisle, I still have my own opinion with reference to the question. This provision of the pending bill is an important concession to home rule or local government, which is one of the most cherished tenets of Democratic faith. I deny that national banks, conducted on the lines laid down by the Secretary in this measure, are anti-Democratic. They were de- vised by Salmon P. Chase, who was elected to the United States Senate in 1849 as a Democrat, and who was never a Republican except on the one and only issue of slavery. Writing to Joshua R. Giddings, in 1846, he said: I will give you briefly my own views. I can not adopt a Whig antislavery platform because I do not at all concur in Whig views of public policy, either as an antislavery man or a simple citizen. 1 tnink that tne political views of the Democrats are in the main sound. * * * I do not believe in a high tariff, in a bank of the United States, or a system of corporate banking. In 1863, writing to Joseph Medill, of the Chicago Tribune, who is now making so valiant a fight against McKinleyism within the Republican ranks, and who was opposed to the national banking system on the ground that " we ought to get rid of banks alto- gether and come to gold currency," Secretary Chase said: I do not propose to discuss these objections. My time does not permit. I only wish to say that I have looked on all sides of the subject with all the care I could use, and lam fully satisfied we can not get rid of banks and their cir- culating notes. What I seek is to deal with what must be in such a way as to get from it the greatest possible good. Banks are merely exchanges for money. Those who have a sur- plus of this most convenient commodity simply put it into the stock of a bank or place it on deposit for safe keeping, and it is hired out to those who need it and who can give satisfactory assurance of its return with the profit it has earned. Banks are sometimes mis- managed, as is government itself, and may be used to the detriment of a community or of those who deal with them, but they are great conveniences and as necessary as any other business enterprise. I have been astonished to hear the objections urged by Jefferson and Jackson to the United States Bank quoted in this debate as applicable to the present national banking system. The United States Bank was a great, overshadowing institution which was making itself , felt in political matters and was too power- 1729 11 ful an organization to be tolerated in a free government. Demo- cratic leaders denied the right of the Federal Government to have an interest in its business, and finally Jackson attacked it in the plenitude of its power, and by the force of his mighty will and the support of the people whom he arorised to appreciate the danger of its existence it was so completely crushed that no po- litical party has ever since dared to champion its resurrection. Its career ought to be an object lesson to all holding Populistic views. The national banking system scatters the associations it authorizes all over the country and makes no common bond by which they can have sufficient inducement to combine. Mr. Carlisle's plan separates them still further from the Government and makes them less united in interest than they have been heretofore. Our farming and laboring classes who feel that capital does not treat them fairly will have better prospects of success in the great struggle they are always engaged in when they learn that no citadel was ever captured until the approaches had been first taken. "Valor is a good thing, but discretion is its better part. There is another strong reason why a Democrat should support this bill. It may soimd to some people rather out of date in the year 1895, but each Democrat and good citizen who has read the earlier history of our country and stops for a moment to consider will appreciate its force. Under the present system of national banking nearly every community, and especially those in which capital seems disposed to concentrate, have a powerful interest opposed to the payment of the national debt, on which the circu- lation of these banks is based. This is shown in the clamor that comes from New York and other sources for the passage of a law that will authorize the funding of the legal-tender notes in interest- bearing bonds, thus providing for a contraction of the currency and affording a safe investment for the surplus capital that is now idle in those regions. If there was any one great purpose that animated and gave pecu- liar tone to the policies of Jefferson, Madison, and Gallatin, that triumvirate of patriots and statesmen who so firmly laid the foun- dations of the Democratic party in popular confidence, it was the extinction as speedily as possible of the national debt, which Ham- ilton, on the other hand , contended was a source of blessing. "The discharge of the debt is vital to the destinies of our Government," wrote Jefferson to Gallatin in 1809, and he regarded a failure to secure its early payment as leading inevitably "to the English career of debt, corruption, and rottenness, closing with revolution." In 1792 the same great man, in a letter to Washington, said: This exactly marks the difference between Colonel Hamilton's views and m^ine — that I would wish the debt paid to-morrow; he wishes it never to be paid, but always to be a thing wherewith to corrupt and manage the Legis- lature. Pitt invented the sinking fund for England, and through it gave the moneyed classes an infliience in governmental affairs which they could not have secured in any other way. Hamilton followed his example, but was resisted by Jefferson in this, as well as in every other policy looking toward a stronger Government. Their views differed so materially that aroiind each leader gathered the elements that have since made the distinctions between the two leading parties of the Republic. 1729 12 In writing to Madison in 1793, Jefferson, in terms that might almost be used to-day, described the forces that, in substance, stand facing each other in politics now. " The line," he wrote, " is now di-awn so clearly as to show on one side — 1. The fashion- able circles of Philadelphia, New York, Boston, and Charleston (natural aristocrats). 2. Merchants trading in British capital. 3. Paper men. (AU the old Tories are foimd in some one of the three descriptions. ) On the other side are — 1. Merchants trading on their own capital. 3. Irish merchants. 3. Tradesmen, me- chanics, farmers, and every other possible description of our citi- zens." Whatever, therefore, tends to weaken the disposition to con- tinue the national debt is what a true Democrat should favor. The biU ought to be supported by every reasonable friend of silver because it proMlMts the national banks from issuing any cur- rency of a denomination less than $10. The significance of this is to leave a place for silver dollars and subsidiary coin, which wiU at once strengthen and make a demand for the weaker metal. This policy is not a new one at all. As far back as 1856, Mr. Chase, afterwards the great minister of finance during the war, when sworn in as Governor of Ohio, suggested in his inaugural address that it would be " wise and salutary " for Congress to prohibit the circiilation of small notes as a substitute for coin. Of course the bill does not and could not do all that every Demo- crat desires to see accomplished with reference to our finances, but certainly it will be another milestone on the road to pros- perity toward which the repeal of the purchasing clause of the Sherman Act and the new tariff law undoubtedly point, and, what is of great importance, will show that the party has convictions and is not afraid to carry them into practice. Doubts can be raised as to the effect of any bill that provides for the future, but we will certainly be condemned if we allow the session to close with- out having done something intended for the public relief. No great deed is done By f alterers who ask for certainty. The chief objections urged to the bill by all who have spoken against it have been removed by the substitute offered by the gentleman from Illinois with the known approval of the Secre- tary of the Treasury. Mr. PENCE. Will the gentleman jaeld for a question? Mr. BECKNER. Yes. Mr. PENCE. Do I understand the gentleman to state that the substitute was offered with the "known approval" of the Secre- tary of the Treasury ? Mr. BECKNER. That has been currently reported, that I have accepted it as a fact. I do not know it of my own knowledge. The withdrawal of Government bonds and the acceptance of the system provided for in this measure by United States banks now organized are no longer mandatory, and the immediate lia- bility of each bank for the notes of all others is not one of its fea- tures as now presented. Better provision is made with reference to redemption facilities than was provided for in the orginal bUl, and the constitutional question as to the right of Congress to change the security of those holding notes of issue has been elimi- 1729 13 nated. A most important modification with respect to State banks has been made in authorizing the Secretary of the Treasury and the Comptroller of the Currency to grant a certificate that the in- stitution asking for it is allowed to issue currency under the act before it undertakes to do so, and in making the bank and not the holder of its paper liable for the tax to be imposed in case it should fail to carry out the provisions of the law. The bill does not yet please the bankers and brokers of Wall street, and I confess that I am glad it does not. They unite in this contest with those of Popu- listic views in the South and West, and are equally as selfish and unreasonable. To neither would it be safe to intrust the powers of government. Republicanism has made Populism possible, just as despotism finally gives rise to anarchy. The extreme dislike of the New York banks to the bill may in part be accounted for by the change that it makes in the matter of reserves, which are to them so rich in profit. I refer to the reserves which the coiintry banks now keep on deposit in great part in New York, but which they can do as they please with, or eyen not keep at all, under the provisions of this measure. There is one consequence of this bill which a representative of the constituency who sent me here ought to approve most heart- ily. The sixteen counties of my district contain a population dependent in large measure at present on agriculture. Some of these counties have deposits of coking coal equal to that found in the Connellsville region, and abundant enough to supply the in- dustries of the continent for ages to come. They have great beds of cannel and bituminous coals of the richest grades and vast forests of yellow poplar, oak, walnut, maple, and other valuable woods which the world will soon need. The toughest and best car-wheel iron that has yet been found in America, building stone, fire clay, potter's clay, and other elements of wealth abound in that region so favored by Providence. Lands are still cheap be- cause capitalists have not yet learned their value. We have been cut off from the lines of railroad that have developed other re- gions so near the center of the country, because the great Cum- berland range of mountains has presented an obstruction which until recently enterprise has not been encouraged to surmount. My district has several ever-flowing rivers which could easily be made highways of commerce of inestimable value to other sec- tions of the country. What we need is capital to develop all this dormant wealth, and nothing would so stimulate investments as an increase of currency. In the entire district there are only nine banks, and none of these is to be found outside five of the sixteen counties. It can not be doubted that this bill will make currency more abundant. There were a nvimber of experts before the committee who gave their views with reference to this question. Mr. Rich- ard P. Roth well, editor of the Engineering and Mining Jom-nal of New York, says: The first point I want to make in regard to the plan of Secretary Carlisle is that it is a measure of large inflation. Mr. George A. Butler, president of the National Tradesmen's Bank of New Haven, Conn., said: Mr. Butler. I think no section of the country will be moro g^reatly hene- fited by the adoption of any one of these plans than the South. 1729 14 Mr. Black. When you say "any one," do you include the plan of the Secre- tary of the Treasury ? « , . . Mr. Butler. Yes ; becaxise that provides for an increase of the note issue. Mr. A. J. Warner, president of the Bimetallic League, and one of the most ardent and best informed friends of silver in the world, was asked by Mr. Ellis of Kentucky whether in his opinion if either the Baltimore plan or the pending bill were adopted it would increase the volume of currency in the country: Mr. A. J. Wakner. I think either of them would increase the volume materially, after time onouu'h had been given to let it get into full operation. INIr. Ellis of Kentucky. What would be the effect on agricultural products if that happened? Mr. A. J. Warner. There would be a general rise in prices, except in products which depend for their market mainly on foreign demand, such as cotton or wheat, the surplus of which goes abroad. These would be affected only to the extent that the entire currency of the country depreciated under the influence of an augmentation of value. Other things, however, pretty fenerally, such as lands, houses, and everything not exportable, and not ependeht on foreign demand, or on gold prices abroad, would rise. Other gentlemen of the highest standing in the financial world, and whohave evidently given the subject careful consideration, express substantially the same opinions. In fact, every man of common sense who vnll read the bill must see that it allows the banks more ciirrency on the same amount of capital, and that they get this on such terms as will encourage them to adopt the Secretary's plan. It has 'been urged against this bill, Mr. Chairman, that it will not be effective in accomplishing the principal purpose that its author had in view; that it makes no adequate provision for retir- ing permanently the legal-tender issues which are used so ruth- lessly in dravdng gold from the reserve fund of the United States Treasury, and thus compelling repeated resorts to a sale of the bonds which the Secretary has been so loth to put upon the market. Those who take this \'iew of the matter have not the faith that I have in the recent revision of the tariff. The receipts during the past month have increased so encouragingly that we may fairly anticipate the near approach of the time when the surplus, referred to in the bill, will be sufficient to secure a retirement of the legal tenders at as rapid a rate as the business of the country will stand. The McKinley bill had seriously crippled the revenues in order to provide unreasonable protection for the pets of the Republican party, but as soon as the times shall reAave, as they will do under the legislation of this Congress, there will again be an overflow- ing Treasury, and the surplus will be ample to carry out the cher- ished purpose of the Secretary. In addition to all these good and sufficient reasons for supporting the bill, Mr. Chairman, I am much persuaded to do so because it is the work of a brain and con- science as patriotic as the land contains, and is the result of a long experience in public life and a diligent study of the questions with which it deals. John G. Carlisle has what Lamartine, in speaking of Mirabeau, called "the infallibility of good sense." It has been suggested as weakening the force of his potent name that he lias never been a banker or in any sense a financier. America has had three great finance ministers since the Constitu- tion was adopted — Hamilton, Gallatin, and Chase — but neither of these was connected with a bank or had in any way had special training in financial matters until called to preside over the Treas- 17^9 15 ury Department. Tliey did not possess clearer intellects and had had no experience with public qiiestions that entitled their views to greater weight than should be attached to those of the able man who is the financial head of the present Administration. I have watched his career so long and so carefully that I feel it is not extravagant for me to say that if the Government could be admin- istered on the policies that he believes and to which he has adhered throughout his public life the country would see how apt and true is that eloquent tribute to Democratic principles which Chase often so approvingly quoted. Democracy — Said William Allen, of Ohio, whose statue stands in Statuary HaU— is a sentiment not to be appalled, corrupted, or compromised. It knows no baseness; it cowers to no clanger; it oppresses no weakness. Fearless, gener- ous, and humane, it rebukes the arrogant, cherishes honor, and sympathizes with the humble. It asks nothing but what it concedes; it concedes nothing but what it demands. Destructive only of despotism, it is the conservator of liberty, labor, and property. It is the sentiment of freedom, of equal rights, of equal obligations. It is the law of nature pervading the law of the land. The stupid, the selfish, and the base in spirit may denounce it as a vulgar thing, but in the history of our race the democratic spirit has devel- oped the highest moral and intellectual attributes of our nature. Yes; that is a noble and magnanimous sentiment which expands our affections, en- larges the circle of our sympathies and elevates the soul of man until, claim- ing an equality with the best, he rejects as unworthy of his dignity any po- litical immunities over the humblest of his fellows. [Prolonged applause.] 1729 2 C0NGKES8 And yet this did not bring universal happiness and oon ment. The annuitant and bondholder of Europe complain( their Grovernments that by the combined use of gold and r as money the general prices of the necessaries of life ^ range too high, making their incomes and their annuities 1 smaller amount of the products of labor than before tlie inc in the gold output, and therefore they then and there organiz destroy the money functions of one of the metals. Gold promising to be the more abundant was selected for theonsla In pursuance of this determination Germany and Austri monitized gold in 1857. The intention was to make this general in Europe, but France became stubborn and wouh join in the crvisade, and as the charter of the Bank of Enj required it to purchase at a fixed price all gold offered ; counters, England could not join the movement, and thei Gex'many and Austria rehabilitated gold, and the movemen inaugurated in 1865 for the destruction of silver. The owner of ready money and securities had watched thf up and up in value during this forty-year money famine j proportion as the price of general property went down as n became scarce. With equal anxiety they watched the purcli power of their annuities and annual interest collections go and down as the outpouring of the gold from the mines so n increased the volume of legal-tender money in the world ant eral prosperity and the prices of general property and labor up and up in proportion to this increased money supply. During these contrasting periods the inflexible economic p pie that any increase in the volume of money increases the of general property and any decrease in the money supply, as- pared with the population and quantity of property and la be exchanged, likewise decreases the general prices of proper i labor, was so burnt into the qixick and marrow of the owi ready money, securities, and those receiving annuities, tha redoubled their efforts to destroy the money functions of < the metals. They preferred to destroy gold, but could no: hence, in 1865, they firmly moved on silver, not because i depreciated, because it was then at a premium over gold, t the sole purpose of making money dearer and scarcer and n< rily property and labor cheaper everywhere. The minority of the French monetary commission of !■ ported to its Government to this effect, and declared that use of the two metals for money that it made general pr high and injuriously affected that class of people having fij comes and nothing to sell but everything to buy. The United States Monetary Commission of 1876 repoi Congress, among many other things, as follows: Manifestly the real reason for the demonetization of silver was thi hension of the creditor classes (money-lending classes) that the cc production of the two metals would raise prices and cheapen mone one of them was shorn of the money function. In Europe this rea distinctly avowed. These reasons, so conspicuously stated when the annuitai creditors were trying to establish a silver standard and wh< were trying to fasten a gold standard upon the world, ougli continually impressed upon the minds of the farmers, mine toilers generally until they see the true cause of our distrt correctly spot the special classes fastening it upon the worl Gold and silver money of practically the present standar constituted the legal-tender money of this Government ft foundation down to the destruction of silver in 1873. Tha' destroyed without the knowledge or request of the peop simultaneously with the destruction by so many nations in I is conclusive that the objects sought in the United States Europe were in pursuance of a common and fixed purpos international money power to destroy silver; not because -1 ^„4-,;i f^n.ii-.-nmt, fKo>i cif Q ■nrprnimii of 3 cen*"S ab' ^0ugiT >iottaI %tK vL FIFTY-THIRD COInTGRESS, THIRD SESSION. Tbe Currency SPEECH HON. J. C BELL, In the House of Represehtatites, Friday, December Si ISH Mr. BELLot Colorado said: J present deplor ble conditinn gartial and vxpeusive bunking Hystem TIub ib more than a anking amendment. It is intended as a complete change I monetary policy. It is offered as an amj le epeLific for the ii gTiiitiea of our present financial chios The sires of this measure intend that it sliall aupnl rt thi= ' ' c money circulation of gold an 1 sil* er with hank [ | r rency of the country. limitations. Tne primarv objett f tl e r -i -x.consummat«the! ti|, 1 I Jtoha-vetbe Amen i Refubl )m and equal ngbts delegate to the exclusive right to issue and control the paper cur it^gral part of the grand plan of operating on a siandard as the international monej and measure of the world. The S4 000 00 1 000 of gold in thp world tributed among 1,500 000 000 mhabitants would mve each ^.75 or $23 leas than our own per capita circulation The would comer this little mite of gold coin and ibsue fr m $S0 of bank paper as the exclusive money among the people, r " "' considered and urged equally diet each ^." banks ^ a settlement o r circulation cial difficulties t stand alone i ational y famine faa.s Bof the producing and nonrnl- lands and climes, than a generation the unified bank powers of the world iigging at a single cable endeavoring to drag down the national money and hoist the bankers' paper. the misf ortnnes of waror panic have overwhelmed aprovince have been tugging a erty and distress. Tills maudlin sentiment of the banker and professional money changer as to sound finance, honest money, and unimpaired pub- lic credit is an ingenious specious plea in their self-defense. Who is or ehonld be dearer to this Government than its own in- The enlightened statesman Burke. In speaking 1 the property of t bankers, pertinently said .._- r---j — - — "- and not to the dei creditor of the State, that the original faith of soeiet Tlie claim of the citizen is prior m time, paramount' superior in equity." pledged. Ai This hill IS another mast r utroke in the name m the excIuBiTe interest f the banking v rl 1 If passed it is exppcted t and it will 11 1 the requiem of the circulati n of gold i 1 Constitution for a generation ti come T this country wh are nothing but mere j ready -dhhd and per necessity the destmy of the nandpitn tic Jackson bo effectually checked t said Jacks n h conqaered but lilt The bank pow r the banking power Thomas I the b. the jungles will r +tfn tb^ bank jet the bank j fa to m rease the in ut I t 1 SUt L n la vhi h the G vern ment then felt it was c m] elle It r nt ui n the market In the nudst of this dire distress the bank p wer has audaci uslv reap- peared and impudently demanded that we \nel 1 up t the b r„ J j„_» — ^ 1 * *»,„ 1 ttle pittam ' ' if val 1. m dependent nal [cept the 1 ttle pittame if ^old n 1 II -ses f the leoplehave I I r dl> drift d fr m the m nej i.hungei anl I r(,e ha\e demanded an abun lance , impregnable pro if that no indi £hgliteen hundred and eight ushered m a money famme which unbroken until after the discovery R49 ind m Australia soon after The UnitedStateamonetary commission of 1876 reported ' ' '" r increased in purchasing poT '■' r with which to repay. ^ very essence of good money i [uality, a-s compared with all other pure of sound and hones ply, which invariably H'y loaned nmh- y gradually a between it and and prosperity in every civilized and semicivilized ci r bad been witneseed before. CONGRESS ION AL EECOED. And yet this did not bring nniversal happiness and ron^nt- ment. The annuitant and bondholder of Europe complained to their Governments that by the combined use or gold and Tilver as money the general prices of the necessaries of life would range too high, making their incomes and their annuities Suy a In piirsuance of this determination Germany and Anstrin de- With equal anxiety they watched the purchasing power of their annnities and annual interest collectiooB gojdown and down as the outpouringof the gold from the mine* so rapidly increased the volume of legal -tender money in the world anfl gen- eraj prosperity and the prices of general property and labon up and up in proportion to this increased money supply. During these contrasting periods the inflexible econom pie that any increase in the volume of money increases t of general property and any decrease in the money supply, a:!" pared with the population and quantity of property and Ir be exchanged, likewise decreases the general prices of propei labor, was so burnt into the quick and marrow of the ow ready money, securities, and those receiving annuities, thajt they redoubled their efforts to destroy the money functions of the metals. They preferred to destroy gold, but could n hence, in 1865, they firmly moved on silver, not because depreciated, because it was then at a premium over gold, the sole purpose of making money dearer and scarcei rily property and labor cheaper everywhere. The minority of the French monetary commission of l| ported to its Govermnent to this effect, and declared that 'oy the use of the two metals for money that it made general pr aperty high and injuriously affected that class of people having fijced in- comes and nothing to sell but everything to buy. The United States Monetary Commission of 1876 repo- ted to Congress, among many other things, as follows: Manifestly the real reason for the demr>netization of silver was th ^ appre- > creditor c 9 would I lending classes) i. liBtinctlv These reasons, so conspicuously stated when the annuitailits and creditors were trying to establish a silver standard and whi-n they , i:_„. ,j ..__j._^ .,. .o ..__. ^ ^g toilers generallV until they see the true cause of our disti correctly spot the special classes fastening it upon the wor „. Gold and silver money of practically the present standar i val constituted the legal-tender money of this Govermnent fi ■__ foundation down to the destruction of silver in 1873. Tha it destroyed without the knowledge or request of the peor le. and simultaneously with the destruction by so many nations in I lurope, is conclusive that the objects sought "" '^'"" "^--^-^ '^'--' ~ • • Europe were in pursuance of a comn international money power to destroy silver; not because depreciated, for it wae then at a premium of 3 cent's ab price it was proportioned to gold by the parity act. With the destruction of silver the producer's trouble As the prices of his products went down, the value of mor securities generally, and ready money went up. ^^ " The money changers of the world own $35,000,000,000 boi ads and debts of the different national governments, which they ha. ve been trying for a quarter of a century to reduce to gold debts by hav- ing the contracts actually changed by legislatures, and wh en that can not be done, by having the executive branches of the ) govern- ments do as they induced ours— that is, adopt a goverr uuental policy of allowing the creditor and bondholder to choose t he kind of money he will accept on hia debt. 7 of tlie le^rdemain used by our Gove rnment atheii t of and at the dictation of our bondholders d Uy serve s ociated to he steered under the money-changer's compass. They system- atically and premeditatedly stranded it upon a rock of th eir own choosing, where they can d.aily loot the Treasury. When Lincoln and Chase as a dernier reasort eecnred t he of $60,000,000 in noninterest-bearing greenbacks or demand notea, and afterwards made them full legal tenders and receivable for import duties, it brought every professional money-changer and banker of the land to his feet. Thev peremptorily demanded and secured an exception clause in all subsequent issues, making them partial legal tenders, not acceptable for import duties or for the interest on our public debt by them held. The first notes never depreciated ana no speculator ever made a dollar out of them, bat those with the banker's exception-clause dictation were by him de- preciated and bought in for an average of about 68 cents on the They secured an act of Congress permitting them to exchange these depreciated greenbacks for interest-bearing bonds ' of these bonds, however, in some mysterious way secured the demonetization of silver in 1873, covertly, without even the vigi- lant newspaper representatives detecting the act. This was not sufficient, however, because their bonds bylaw and upon their face were payable in gold or silver of the standard value of July 14, 1870, and even the new bonds issued by Secretary Carlisle are so payable, because the act under which they were issued provides that all bonds issued or hereafter to be issued shall be payable in coin of the standard value of July 14, 1870, including the standard silver dollar. The inflexible rule of law is that any or all debtors, public or private, may choose any kind of legal-tender money for the payment of their debts, and their creditors are compelled to accept the money offered. The bondholder fully recognized thia rule of law, but plaintively appealed to Secretary Hugh McCnlloch under the fraudulent guise of an honest-money league that the Government pay its creditors in any kind of money they might desire. He promptly decided to adopt a governmental policy dif- ferent from every other government of earth of allowing the creditor instead of itself to choose the kind of legal-tender money it will accept. They lately secured the decision of the Secretary that he has the right to issue interest-bearing bonds for the ostensible pur- pose of redeeming greenbacks, but really to pay the expenses of of present conditions will be ine\'itably doned for a so-called public policy, dictated by and for the special benefit of the great creditor classes of the world. This poUcy is not that of the law, but dictated by a class of men schooled and tutored only in handling ready money for hire rather than invest- ments in developing enterprises. Had good fortune smiled on the masses rather than theclasses in the last Presidential campaign and have placed in the Executive chair a Jones, a Morgan, a Hab- Eis. a Teller, or a Richard P. Bland, instead of the present incumbent, the country woiild have had a complete reversal of policies and conditions. The debta of the Government would have been paid in gold and sUver at the option of the Govern- ment; the seignioragewould have been coined and paidout on cur- rent expenses. We would have had no gold scramble, no repeal of the Sherman act without something better as a substitute, no bond issue, no shutting down of mines, mills, and manufactures, no bankers' panic, and no Carlisle bill. No well-informed person can have the temerity to deny that this would have been the course of any one of these gentlemen, or to assert that any one of them has less patriotism, less covemmental experience, less ability, or has been leas successful in the correctness of his governmental forec aste than the present distinguished Execu- tive. With all due deference 1 will ask, Why all of this cringing to the one-man power? It is subversive and destructive of a re- publican form of government. What has become of all of the dire threats of members of this House, if bonds wereissued without the consent of Congress? Whither are all those grandiloquent silver pledges finding such secure hiding places since the election? Were these sincere? Have so many changed their convictions since November, or were they mere electioneering paraphrases? Every specific the Executive furnished has betrayed him by a majority of his o\vn party lawmakers from the House and from the Senate, was arrogantly vetoed and cast away as trivial and dangerous. m Cj lONAL KEOORD. of $60,000,000 in mninterest-bearing greenbacks or demand notes, and afterwards made them full legal tenders and receivable for import duties, it brought every professional money-changer and banker of the land to his feet. They peremptorily demanded and secured an excei)tion clause in all subseciuent issues, making them partial legal tenders, not acceptable for import duties or for the interest on our public debt by them held. The first notes never depreciated and no speculator ever made a dollar out of them, but those with the banker's exception-clause dictation were by him de- preciated and bought in for an average of about 68 cents on the dollar. They secured an act of Congress permitting them to exchange these depreciated greenbacks for interest-bearing bonds at par. These bonds were purchased with greenbacks and upon their face made payable in ' ' lawful money. " The owners of these bonds cun- ningly, under an ostensible aim to strengthen the public credit, se- cured a Congressional act on Jiily 14, 1870, making them payable in coin of the standard value of that day, which included our pres- ent standard silver dollar with our gold coin. The public thought but little of this, because silver was at that time more valuable than gold, according to the established ratio of 16 to 1. The own- ers of these bonds, however, in some mysterious way secured the demonetization of silver in 1873, covertly, without even the vigi- lant newspaper representatives detecting the act. This was not sufficient, however, because their bonds bylaw and upon their face were payable in gold or silver of the standard value of July 14, 1870, and even the new bonds issued by Secretary Carlisle are so payable, Ijecause the act under which they were issued provides that all bonds issued or hereafter to be issued shall be payable in coin of the standard value of July 14, 1870, including the standard silver dollar. The inflexible rule of law is that any or all debtors, public or private, may choose any kind of legal-tender money for the payment of their debts, and their creditors are compelled to accept the monej' offered. The bondholder fully recognized this rule of law, but plaintively appealed to Secretary Hugh McCulloch under the fraudulent guise of an honest-money league that the Government pay its creditors in any kind of money they might desire. He promptly decided to adopt a governmental policy dif- ferent from every other government or earth of allowing the creditor instead of itself to choose the kind of legal-tender money it will accept. They lately secured the decision of the Secretary that he has the right to issue interest-bearing bonds for the ostensible pur- pose of redeeming gi-eenbacks, but really to pay the expenses of the Government, and then to reissue them ad infinitum. With all of the Treasury machinery rigged in the interest of the Treas- ury looters, a continuance of present conditions will be inevitably ruinous. But the laws are not so blamable as the law officers of the Government. The letter and spirit of the laws have been aban- doned for a so-called public policy, dictated by and for the special benefit of the great creditor classes of the world. This policy is not that of the law, but dictated by a class of men schooled and tutored only in handling ready money for hire rather than invest- ments in developing enterprises. Had good fortune smiled on the masses rather than the classes in the last Presidential campaign and have placed in the Executive chair a Jones, a Morgan, a Har- ris, a Teller, or a Richard P. Bland, instead of the present incumbent, the country would have had a complete reversal of policies and conditions. The debts of the Government would have been paid in gold and silver at the option of the Govern- ment; the seigniorage would have been coined and paid out on cur- rent expenses. We would have had no gold scramble, no repeal of the Sherman act without something better as a substitute, no bond issue, no shutting down of mines, mills, and manufactures, no CONGRESS' the name of Democracy what hope and virtue are in it." "W precise diagnosis of the party condition to-day. In the lif.' recent events, can the "docility and zeal of the masses"' adore the precepts and examples of Jefferson and Jacksoi the benificence of pure Democracy be further impoverishe(' enslaved through the glare of insane partisanship for a moi 1744 CONGKESSIONAL RECORD. Those things are ennngh to cause the advocates of a republican form of government to stop and inqnire what special traiuinx or qualification is required of an Executive? He is not chosen to di- rect the making of laws, hut rather to execute those enacted by tlie law-making branch of the Government. It is true the Executive is expected to suggest defecta and pomt out remedies for the consideration of Congress, but it never was expected that an Executive would pit his own judgment against the combined and deliberate judgment of his party m Congress. The hietorj- of this country has shown for the pajit half a cen- tmy that men are not selected for Presidential nominees beL^ause of mdindual greatness, but rather because of availability and prospect* of carrying pivotal States. Generally the leas national record the more availability. Witli all due deference to those in high places, their country- men recognize no one in position to-day as atjinding out distmctly above his fellows in morals, intellect, or political sagacity. n of life, and that i i has been given by on common sense or ordinary sagacity. > have such is a dangerous imposter and clearly demonstrates his unfitness for public pli The intention of our republican form of goveruun^m. m moi. 1.11D combined and unbiased judgment of Congress, as enlightened by an intelligent and practical confltituency, should furnish the gov- emmentid policy and the specific for the country's legislativemala- The President, because he hails from the great F hiso interest of the banier and n , _. ,_, not even go far enough to fill the measure of their greed, but it is practically the Baltimore plan. The people, the farmers, the miners, and the producers generallj;. mand more absolute money pendence. The great Fede) . rather than an augmentation of corporate p In a report of the Committ " * * " - "-- Fifty-first Congress it is said: roten, stepped forward and laid on tbe table tbe petition of tbese tolUJig The Transmihs ssippi Congress representing twenty two States from any one of them about n meeting of the National Bank passage. Is their general eincerity? this enough t ...r general eince _„ In the very inception of the panic last spring the Secretary of the Treasury threatened to obey the law and pay demands in gold ir silver according to the contract and tV - "" ■hangers threatened ti t and the 1 The money dire disasters threat. The Administrution, vrith much 'kness and trembling, made an insipid and childish surrender. of thpse sacred privileges o of this Government, whether old or new. is payable by c of Juh- 14, 1870, 1 of the standard 1 which is the present gold and silver coine back is not payable in gold, but in the sui that the banker, the creditor, and the legislatively favored I ""■ tent with their lot and with "' ' ... ' much distress and misery g' a keeping with vain hnmau """•" — *" their Bools that the unprecedented a burst 01 inventive genius has applied labor-saving machinery a overcome distanc '■ the destiny and f 1 distance by rapid ti rich and powerful o ion and of every country have been linked together for a c o aggression and defense y great corporate ii ' ponding chord in any oiDf . sented. regardless of indiridual rights. No doubt but that t«ruational gold standard, with an international banking system dominated and owned by "■ the destinj^ of the world. I. would aid them i formerly? They ought t< clearly that they f"" ) believe that the Democratic party of the i ideal of the old Democracy as we all lovers of true manhood, proclaimed that "bank paper n suppressedandrestoredtothe nation to whomit belonged; " tlie power to issue money should be t •cy of banks h people learned of the disreputal threatened the perpetuity of o property was at the mercy of The ne v Democracy says it would be an ideal condition ■o pletely di orce the Government from banks of issue and to the whole responsibility to the banks. ill and the conduct of this Administriitinn evinces the ratic creed to be promulgated ami if tin' ji^wt re^-niil r great party ahful be the light >if n- fntnn- mi tdn n 1 18 high time indeed that from tin .lU.iiiiliiind ;i-1ji-^ 1 Democracy of Jefferson and J;ii k-i.n .imi hjm.i, ih>' of the Republicanism of Lnni-ln mIhI rhii-' ttn' he people who weave and spin, mine and plow, and ry caste who live by labor were aligning themst-lves arty wherein humanity iiwtead of accumulated wealth a recognition, where the debtor as well as the creditor dered, where the laws 1 mtrodu ed a bill ' e justified hie a itroduced tl tbe passage of a free silver bill at that ti floor of the Senate that he introduced the original the pur e sought by saymg on the a declared pat laiiiy tiiai me masses of ' " i shonesty but that the s. leaders that they reap 1 a wh ch they direct; that as be Democrats have th ' ' of vhich the phil 3vot«,"huth(- can popular party prcj those liberalities. They have n t the persons wlion t the ends which give U G CONGRESSIONAL KECOED. the niune of Democracy what hope and vu-tue are in il. What a precise diagHMia of the party condition to-day. In the li.fht « recent events, can the "dooUity and zeal of the masses who adore the precepts and examples of Jefferson and Jackson anrt (luuio 1 1 Ti.^„„„„o„„ hfl fnrtlipr imnnvpnahed and adore the precepts ana examples oi jeneroou ouu «a.^n^"„ ...... thebenifioenceof pnre Democracy be further impoverished and . ••—••■■•■■■••■ endaved through the glare of insane partisanship for a moneyed I the founders. oligarchy, and will they continue their '■-!...! the heavens fall? I think there is a linnl partisan endurance and that it has been iil'. party will, that some party must pres'^nt m. who will have at heart the true and puic Del '1,I0XAL RECORD. tehat a 3d:ht of 'il-- who 'o\ and 'Ui and tl ?^ < m( I ; 3'lF ■it •ef t-* ^no as' lo: as dc ipi oligarchy, and will they contintie thoir '' docility and zeal " though the heavens fall? I think there is a limit even to political and partisan endurance and that it has lH>en about reached; that some party \viY\. that some pai'ty must i)res'>nt men in the coming years wlio wiU have at heart tliu true and pure Democracy as taught by the founders. pr < c bo fcy ler tt )n t; t .u1 JCt 3P c;e« .•t€ ml soJ its ■n t rs '.at d. 01 i le ai e ( i1 The Currency. SPEECH OF HON. 0. K. BELL, OF TEXAS, In the House of Kepresentatives, Saturday, December 23, 1894. The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 8149) to amend the laws relating to national banking associations, to exempt the notes of State banks from taxa- tion upon certain conditions, and for other purposes — Mr. BELL of Texas, said: Mr. Chairman: It is a noticeable fact that no gentleman who has addressed this body in favor of the pending measure has failed to inform ns that it does not meet with his approval. As the members of the committee who reported the bill under considera- tion have endeavored to explain its incongriiities and to reconcile its conflicting pro\-isions I was reminded of Touchstone's quaint but affectionate introduction of Audrey to the exiled Duke in the forest of Arden: A poor virgin, sir, an ill-favored thing, sir, but mine own; a poor humor of mine, sir, to take that that no man else will. Not being biased by the pride of paternity nor embarrassed with the responsibilities of sponsorship for the proposed legislation, Und believing that its operation would be injurious to those I rep- resent as well as to the American people in general, I shall attempt to antagonize it in all its material provisions. Most of the defects in the bill have been commented upon but there are some points to which I desire to invite renewed atten- tion, and some objections which I wish to further elaborate. Be- fore proceeding to do so I desire to submit a few observations with reference to the general subject-matter under discussion. Money performs three different functions. First, it serves as a medium of exchange, as when, having a surplus supply of a given commodity, we sell it for money in order that we may obtain that with which we can purchase something we desire; second, it serves as a means of expressing the relative value of different com- modities; and, third, it serves to liquidate contracts for future performance. In order to properly iierf orm these functions money should pos- 1728 1 389390 2 Bess some intrinsic valne, and should be of the substance that is the least liable to fluctuate in value. By general consent gold and silver have been found to possess these essential requisites to a greater degree than any other commodity. Of course, they are not absolutely stable in their value, but they are more nearly so than any other commodity. Paper is simply the representative of the coin into which it can be converted. It has no appreciable in- trinsic value, and.miless it was redeemable in something that has it would fluctuate in value to such an extent that no one could safely make a contract for future performance and agree to pay or receive payment in it; but as long as the currency is certainly and instantly convertible at the will of the holder into real money it is more convenient to use and more acceptable to intelligent peo- ple than is the coin in which it is redeemable. Manifestly, there must be a limitation of the quantity of paper money issued, or its convertibility into coin can not be maintained, because the quan- tity of the precious metals which can be used as money is limited by the decrees of nature, which have fixed the amount of them ob- tainable at any given time. The question then is, can the quan- tity of the paper money be better determined audits convertibility better maintained by the Government, acting through its officials, or by some agency established by the Grovernment with avtthority to issue it? The volume of currency which can be floated in any community or nation is the amount that can be more conveniently and profit- ably used as a representative of money than can the real money for which it can be exchanged. As I have stated, as long as cur- rency is convertible into coin on demand and as long as there is no doubt of either the ability or of the disposition of those upon whom the burden of redemption rests to promptly and certainly comply with their contract, inasmuch as it is more convenient to handle, it will be used instead of that of which it is the repre- sentative. If money can be made to j-ield its owmer a better return by being put to some other tise, as by being manufactured into salable arti- cles, it will be devoted to that purpose, and if it can be loaned on more satisfactorj' terms elsewhere it will be sent there. In other words, the law of sup])ly and demand applies to money as to every- thing else. If there is more currency than can be used at a greater profit , than can the coin into which it can be converted, the surplus cur- rency will be converted into coin, which Avill be exported to a for- eign countrj' or used in the arts, or in such other manner as may be most advantageous to its ownier. If our people could use $1,000,000,000 of currency to a greater advantage in their business transactions than they could by ex- changing a part of it for coin and using the coin in the arts, or by sending it to some other country, the whole billion dollars woiild be allowed to remain in circulation. But if only one billion dollars of currency could be so used, and a greater quantity should be put out, as, for instance, one billion one hundred million dollars, the surplus, one hundred million, which could not be profitably employed, would be converted into coin, and the coin used in some way which would yield the owner a greater profit than would the currency which had been ex- 1728 chaiigetl for it. Manifestly, as long as the paper currency will pass without question in business transactions it displaces to the extent of its circulation just so much other money, and similarly, to the extent of their circulation, bank bills displace the national currency. No one in this country in his biTsiness affairs ever inquires as to whether the money which he receives is a national-l^ank bill or a United States note, for the simple reason that each of them can be converted into coin. There are at present in circulation in the United States $346,681,016 United States notes, commonly called greenbacks, and $151,609,267 in Treasury notes, commonly called Sherman bills. The distinctive feature of the measure under consideration is that it provides for the retirement of this currency and the sub- stitution of national-bank bills in lieu of it. There are, of coiirse, many other provisions in the bill, but this is, as I say, its distinc- tive feature. There have been a number of amendments siTbmitted by the Committee on Banking and Currency, by which it is intended to improve the bill. I think that most of them have the contrary effect, but I shall disciiss the measure upon the theory that they will be adopted. The first section of the bill provides that national banks which accept the provisions of the act shall not be required to deposit bonds for the purpose of securing their circulation. When the national banking law was originally passed the re- quirement that bonds should be deposited for the purpose of se- curing their circulation was intended for two purposes: First, to ' provide a market for and to enhance the price of Government bonds, and, second, to seciu-e the bank notes. As the Government is no longer interested in having its bonds command a premium » the first reason for requiring the deposit of bonds does not now exist, and the question then, assuming that banks should be au- thorized to issue currency, is, would the notes of the banks_ be made secure by the safeguards and limitations proposed to be im- posed upon their issuance ? It is provided that national banks shall be authorized to issue currency to the amount of 75 per cent of their paid-up and unim- paired capital upon their depositing with, the Treasurer of the United States a portion of that part of the United States currency which is redeemable in gold to the amount of 30 per cent of the circulation applied for. This 30 per cent is held for the purpose of securing the circulation of the banks. It is manifest that there will only be 53i per cent of the notes issued without seciirity; and the question is, would the guaranty afforded by the assets of the bank and the provision for the establishment of a safety fund be sufficient to maintain their absolute and unquestioned convert- ibility? I think that whether the currency is issued by the United States Government, by a national bank, or by a State bank, it ought to be so secure that no citizen would ever be called upon to consider the question as to whether it was as good as any other money in circulation or not. If we have paper in circulation which is not so secure that its immediate redemption on demand can be en- forced everyone is liable to sustain a loss because he has received 1728 the money of au insolvent or of an embarrassed institution. This ought not to be. All any citizen should be required to do is to ex- ercise precaiition in seeing that the bill is not counterfeit, and if it be a genuine bill he oiaght to know that the power which issued it or which authorized its issuance is ready to make good to him any loss that he might sustain from having received it. It is contended by the advocates of this bill that because under the national banking laws, which have been in existence for over thirty years, the total amount of loss from circulation of failed banks, if there had been no requirement of bond deposit, would have been very small and much less than the sum which would be collected by the tax which is pro\dded for the puri)ose of accu- mulating the safety fund, therefore the safety-fund provision will render the notes that may hereafter be issued perfectly secure. I do not think this correct. Heretofore there has been no inducement to organize banks with a Anew of making money by failing, but under the provisions of the proposed bill it would be very different. Let us suppose that five unscrupulous men organize abank with $100, 000 capital. Thej' would be authorized to issue $75,000 in bank bills on depositing $22,500 United States notes. After these bills are in circulation they could absorb the assets of the bank and make $52,500 by the transaction. This is ample inducement to cause many adventu- rers to iindertake the scheme. However, it is said that there would be a safety fund accumulated in order to pay off the notes issued bj' such banks as fail. But when would there be an adequate accu- miilation of this fund, and who is to redeem the notes of the failed banks while the safety fund is being accumulated? It would neces- sarily be many years before the tax of one-half of 1 per cent per annum on the circulation of banks organizing under the proposed act would amount to enough to make the safety fund <* guarantee of the immediate redemption of the notes of failed banks, and, of course, everyone understands that when a bank fails, however solvent it may be. it generally takes months to collect even a small portion of its assets, and in the meantime the holders of the notes of the failed bank would have to discount them, if they do not lose them altogether. The original bill provided for an assessment of the associated institutions to raise a fund with which to redeem the notes of de- funct banks, and that would have rendered them reasonably safe; biit it vnll be observed that the amendments submitted by the committee limit the amount that can be collected from the other banks to one-half of 1 per cent per annum of their circulation. The banks now have to pay a tax of 1 per cent per annum upon their circulation. The difference between the present and pro- posed tax would be enoiTgh to induce the banks to take out circu- lation under the new law, especially since, as I will show later on, the premium commanded by the bonds which they are compelled to deposit is such that there is no profit in issuing currency under existing conditions. Another section of the bill gives a first lien upon all the assets of the bank to secure the notes. As these notes have to be redeemed in the first instance by the api)lication of the money in the sinking fund, there would be a lien in favor of the sinking fund upon all the assets of the bank which would be prior to the lien of depos- 1728 itors; and since the collection of the tax on circulation is to be suspended as soon as an amount equal to 5 per cent of the total circulation is accumulated, this would give the banks a lien prior to all other creditors. The Government in authorizing them to issiie currency confers a great and valuable privilege on the banks, equivalent to a loan without interest of the unsecured portion of their paper, and yet it is proposed that banks which voluntfft'ily become partners in the issuance of the currency shall have a lien prior to that of the depositors and other creditors who receive no similar favors. Nothing could be more unjust or unreasonable. It is also i3roposed to repeal the tax on circulation. Last year this tax brought to the Treasury $1,721,095.18, and now, while our expenditures are largely exceeding our receipts, what excuse can there be for releasing this just source of revenue? Mark you, this is not a tax on the banking business, but only on their circiilation. The Government is put to great expense anniially on account of the banks, and it is but right that they shoiild contribute some- thing in return; and yet, if the pending bill is adopted, the banks will cease to pay to the National Government anything for the privilege of issiiing currency, while the exi:)enses which they occa- sion will be continued. This is so inequitable and unfair that I can not understand how it can receive the support of anyone. Of course, all understand that the requirement that a certain amount of United States currency must be deposited to secure the circulation of the banks is intended primarily for the purpose of removing what is called the drain iipon the gold reserve. Cer- tainly the remedy proposed is utterly inadequate. There are, as ■ I have stated, about $500,000,000 of currency in circulation, which can be used to drain the gold from the Treasury. If all but $100,000,000 of this should be sequestered under the provisions of this bill that would be sufficient to enable those who desire to do so to take out of the Treasury all of the gold that could be ac- cumulated there as long as the bills when redeemed are reissued, and it is not claimed by anyone that over a third of the $500,- 000,000 referred to would be used in taking out circulation. In- stead of reducing the drain upon the gold reserve, the new law would aggravate it. If there was any considerable increase in the volume of the bank notes, to the extent of their circulation and by taking their place and serving in their stead, they would displace the national currency in which they would be redeem- able, which would cause the United States and Treasury notes to be converted into coin, and thus deplete the Treasury of its re- demption fund. However, I am devoting too miach time to defects which are not fundamental, which could be cured by amendments and which, from the readiness with which those having charge of the bill acquiesce in other alterations of their work, we may reason- ably hope to see remedied. The most objectionable feature in the measure, in my judgment, is that which proposes to repeal the ninth section of the act of 1882, which prohibited the banks of the country from retiring their circulation to a greater extent than $3,000,000 a month. No more dangerous power could be conferred upon any set of men than that which would give them control over the volume of 1728 6 money in circulation in a country. This is no new question. It has been discussed time and again, and it is impossible to advance any new argument concerning it. While the volume of money in circulation in a country does not absolutely control the price of commodities, it is universally ad- mitted that it affects them. The ability to gi-eatly increase the quantity of money could be so used as to compel the creditor to accept pajTuent in a mSdium of much less purchasing power than it had when the contract was made. The ability to decrease the quantity of money could be so used as to compel the debtor to pay in a medium of much greater pui'^hasing power than it possessed when he contracted. The evil effects of the contraction and ex- pansion of the currency have been often shown. In speaking on this subject, and having reference to the contraction and expan- sion of the currency indulged in by the banks of issue during his day, Mr. Webster said: It is hardly necessary to dwell upon the evils of a suddenly diminished cir- culation. It arrests business; puts an end to it, and overwhelms all debtors by the depression and downfall of prices; and even if we reduce circulation not suddenlv. but still reduce it further than is necessary to keep within just and reasonable limits, it would produce many mischiefs; it would augment the necessity of foreign loans; would contract business, discoui-age enter- prises, slacken the activity of capital, and restrain the commercial spirit of the country. But the evil effects of the proposed law would not be confined to cases of actual contraction of the currency. The very fact that it was in the power of a small number of persons to decrease or increase greatly the supply of money would deter prudent men from engaging in large enterprises, This matter was investigated in 1857 in England by the select committee on the banking acts, and the e\i[ effects which would result from confeiTing authority like that proposed to be conferred in the pending measure upon the bankers is vei-y clearly expressed by Lord Overstone. He was asked: " The practical question with regard to this matter is, how far the tendency of the control of bankers over issues is dangerous, and, therefore, requires to be restrained by positive law?" He answered: "I have no hesitancy in giving my opinion upon that point — that the bankers intrusted ^ith the power of issue are intrusted -svith a power of a very formidable and a very dangerous character; one that has been repeatedly abused, and by the abuse of which the public has repeatedly suffered serious injury." But it is not necessary for us to conjecture as to what might happen if the banks could increase and decrease their circulation without some reasonable restraint. Rather l^t lis see what has happened. For some years prior to 1883 there was no limitation of the time in which the banks coiild retire their circulation. In 1881 a bill was passed by both Houses of Congress providing for the refunding of the interest-bearing national debt on terms which were iinsatisf actor y to the bankers. The bill was vetoed, and did not become a law. In discussing the measure the present Secre- tary of the Treasury, Mr. Carlisle, then a distinguished member of this body, dwelt upon the danger of conferring the power upon the banks, which the present bill confers, of contracting and ex- panding the currency, and used this language: But, Mr. Speaker, by far the most dangerous feature yet introduced into the national Danking system is contained in that part of the fourth section of 1728 the act of June 20, 1874, which authorizes the banks at any time, and for any reason which they may choose to consider sufficient, to deposit lawfiil money witli the Treasurer, contract the currency to that extent, and withdraw their bonds; and, sir, it is not going too far to say that until this feature is wholly eliminated or materially modified there can be no assurance of safety to any legitimate investment or business enterprise in this country. If there was ever a doubt as to the dangerous character of the power which this part of the law gives to the banks over the business and property of the i)eople, the arbitrary and unjustifiable proceedings of the last week ought to dispel it forever. The power was conferred in the first instance, as I have said, for a special and temporary purpose, the equalization of the national-bank cir- ciilation, but when the resumption act of January 14, 1875, was passed, which removed all restrictions as to the amount of such currency and made the sys- tem entirely free, there was no longer any necessity for this clause, and it should have been instantly repealed. It is a standing menace against the prosperity of the country. Armed with this destructive weapon the banks may at any time, without a moment's notice or a shadow of provocation, sti-ike down every industry and every commercial enterprise of the people. The banks, or some of them at least, first began to pervert this section of the statute from its original purpose and abuse the power which it conferred upon them, by depositing lawful money and withdrawing their bonds from time to time, in order to speculate upon them in the market. They thus withdrew lai'ge amounts of their circulation and contracted the currency, not because the reduced demands of business made the outstanding volume of circulation unnecessary or unprofitable, but simply because they wanted to realize the high premiums on their bonds and speculate in the securities upon which the Government had already delivered to them 90 per cent in notes. These notes would be left outstanding for the time being, but an equal amount of Treasury notes would, of coui'se, be withdrawn from circu- lation and held at the Department to redeem the bank notes as they might come in. The Treasurer, in his last annual report, describes this process by reference to actual transactions in liis office; and as his statement on this sub- ject can not be conden.sed without impairing its force, I give it in his own words. He says: " Under the construction placed upon the law banks which have thus reduced their circulation have lieen permitted to increase it again as often and as largely as they chose, whether their legal-tender deposits were exhausted or not. An example will better illustrate these operations. In January and Feb- ruary, 1875, a certain bank reduced its circulation from $308,490 to $45,000 by deposits of legal-tender notes. Between September 26, 1876, and May 26, 1877, and before that deposit was exhausted, it increased its circulation to $450,000. Between August 14 and September 10, 1877, it again reduced its circulation to $45,000. On September 19, 1877, nine days after completing the deposits for this reduction, it again began to take out additional circulation, although $402,.5.50 of prior deposits remained in the Treasury, and by the 26th of that month its circulation had again been increased to $450,000. July 22, 1878, it, for the third time, reduced its circulation to $45,000, and jn August and Septem- ber, 1879, again increased it to $450,000, at which it neeu met by measures which they had no power to prevent. The prompt action of the Secretarv of the Treasury in purchasing a large amount of bonds at the city of Xcw "^ork. and the course of the Canadian banks in throwing seven or eight nnllii m dollars of their loanable capital on the market, alone prevented a catastrophe fnmi the effects of which we might not have entirely recovered for many years. Wlien Secretary McCulloch, several years since, in ]iursuance of his contraction policy, began to retire and cancel legal- tender notes at the rate of S4,(XH),(X)0 per month, it produced such consterna- tion in l)usiness circles that Congress was forced to intervene at once and arrest the process by the passage of a joint resolution; but now we have seen nearly j;W.. Ml' ;;;i,;M:, ,;; ,,„ :„,.„ , thobiwiitaiifc,lti» qiHt.. ■■>..:.., Loif DOH, Fibi-uari I, » < bftSSup?! Itacnf.l'iVV. . SmF'''-' ,,.;is£ssHsS at the dictation of the ci-e aeem to have full possession at creditor classes of the world tha' of the Administratiou. • SIGNAL EECOllD. WANTS MOKE CONTRACTION. " In any caso, mere borrowing will not avail, as the experience of the past year has shown tliat sooner or later there must be a contraction of the cur- renry ..r tluTi' will be a panic." Till' Statisi 1)1 eeds to discnss the consequences in the event, firstly, of gold bt^iuLC (It'ui'iiu'tized: secondly, no legislation whatevi>r bi'ing arrived at; thirdly, tin- etfcct of the tree i-oiluiLre of silver. Theii the Statist remarks: " It gold is demonetized, it is iierlVrtly clear that there will be a great trans- fer of property from the capitalist and lending classes to the producing and borrowing classes. This would be of immense advantage to the West and South and would prove a sei'if)us loss t<^ tlu^ Rastern States and to Europe. INI'LUK.VOK ON TirE MAHKET. "Of course a great country like the United States adopting a silver standard would have great influence on the whole of the world, and silver would un- doubtedly rise, but it would be long before it reaclu'd til) pence. The great reduction of debts all over the United States by a fall t( i silver would give the farming and producing clas.ses generally a seiise of freedom and prosperity which they liav(> not had for many y(>ars, and would probably give a great stimulus ti) prodiK'tion. If silver did not rise much tor a while, Aniei'ican wheat, cotton, pork, etc., would compete witli the product of other countries at a very gi-eat advantage, and there would jiroliably be a very rapid and great growth of e.Ki>orts and the beginning of an era of great prosperity. "On the other hand, the lending and creditor classes wonldsuffer anit their losses woul(l not atfect i)roduction to anything like the same extent as the gains of the del)torsand pi-odueeis woidddo. Further, there would be a very serious fall in stH-nritios, which would injure capitalists and lenders, both in the United States and Europe. '• If Congress refuses legisl;ition, then gold would go a premium, but prob- ably not high. The tendem-y would still be to benefit debtors and producers, and would injure capitalists and lenders, while production and exports would be stimulated, though not to a great extent. WOULD REDUCE. "Thirdly, if the mints were opened to free coinage, which would tend to make the gold premium higher still, the premium would not be very high, and the reduction of the debt and the losses of capitalists would be small compared with the demonetization of gold." Summing up this review of the financial pos.sibilities, the Statist represents the West and South as being jierfectly I'ight in the view that a change of the present system would benetit tlieir sections of the Union. The effect of the change tliey advocate would be a tendencv to transfer property by wholesale from the Easl and Eurojje to the West an^ South. In fact it would be a form of repudiation, and it would lower the credit of the United States and pre- vent the free influx of Eur(jpean capital. In the future, proliahly, European capitalists will always insist ui)on the gold clause— they will require a clear contract that they will be repaid in gold. "In the event of gold demonetization, matters will right themselves in the long run, but the run might be very long, and another i)oint is that a great ti'ansfer of property would not act uniformly. Debts falling due soon after the change would be immensely reduced, whereas debts falling due lat^r, when silver has risen, would be less reduced, and if silver reached (50 pence there would be no reduction in debts whatever." The great indebtedness of the country and limited money sup- ply are the chief causes of our present difficulties, and you now propose to increase it. It is mere cant and false pretense to talk about the danger of a silver basis or the danger of a suspension of specie payment, heralded to the world daily. During one of our most prosperous periods we were under a complete suspension. The Bank of England from time to time, once for a period of twenty-five years, and the Bank of Franc;e in 1818 and 1870, sus- pended s])ecie payment till a convenient time and came out stronger than ever. The banks of New York in the late panic suspended all money payments and came out vrithout discredit, and this Groveniment, if it desired to serve the people instead of the banks, has ample power.sto protect the Treasury and the peo- ple, but it refuses, and is ])layingthis game of cant and hypocrisy at the dictation of the great creditor classes of the world that seem to have full possession of the Administration. The Plighted Faith of the Nation.' SPEECH OF HON. FRANK E. BELTZHOOVER, OF PENNSYLVANIA, IN THE House of Representatives, TUESDAY, JANUARY 8, 1895. "We denounce the failure (of the Republican Party), for all these eleven years of peace, to make good the promise of the legal-tender notes, which are a changing standard of value in the hands of the people, and the nonpayment of which is a disregard of the plighted faith of the nation." DEMOCRATIC NATIONAL PLATFORM, 1876. WASHINGTON. 1895. SPEECH OF HON. FRANK E. BELTZHOOVER. The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R.8149) to amend the laws relating to national banking associations, to exempt the notes of State banks from taxa- tion upon certain conditions, and for other purposes — Mr. BELTZHOOVER said: Mr. Chairman, I desire to present and have read an amendment which I shall propose to the pending bill at the proper time. The amendment was read, as follows: Mr. BELTZHOOVER moves to amend the substitute offered for the pending bill by adding a new section, to be numbered— "Sec. 12. To enable the Secretary of the Treasury to fund the Treasury notes of the United States which may remain in circulation after the 1st day of August, 1895, which were issued under the act approved February 25,18(53, entitled 'An act to authorize the issue of United States notes and for the re- demption and funding thereof, and for funding the floating debt of the United States,' and under the act approved July 11, 1862, entitled 'An act to authorize an additional issue of United States notes, and for other purposes,' and under the act approved March 3, 1863, entitled 'An act to provide ways and means for the support of the Government,' and under the act approved July 14, 1890, entitled 'An act directing the purchase of silver bullion and the issue of Treasury notes thereon, and for other purposes,' he is hereby authorized to issue on the credit of the United States, coupon or registered bonds to an amount not exceeding $500,000,000, redeemable at the pleasure of the United States after five years, and payable twenty- five years from date, and bearing interest at the rate of 3 per cent per annum, payable semiannualy in gold coin. " The bonds herein authorized shall be of such denominations, not less than S50, as may be determined on by the Secretary of the Treasury, who may dispose of such bonds at any time, at not less than the par value thereof, for gold coin of the United States, or for any of the aforesaid Treasury notes, which when received shall be canceled; and all such bonds shall be exempt from all taxation by or under national. State, or municipal authority." Mr. BELTZHOOVER. Mr. Chairman, there are three things which now perplex the Secretary of the Treasury: First, how to protect the gold reserve from the constant assaults made upon it by the redemption of Treasury notes; second, how to retire and cancel these notes without unduly contracting the volume of the currency, and third, how to raise revenue sufficient to run the Government. The amendment which I have offered vdll meet 3 1742 very clearly the first difficulty, and if adopted as a part of the pending measure would probably render it efficient to remedy also ^he second. These are the only aspects of the subject which come within the jurisdiction of the Committee on Currency, and there- fore the only ones which can now be properly considered. The most interesting and comprehensive character which has ever been portrayed by human genius and germane to this discus- sion is WilMns Micawber. He was always indulging in long, windy speeches; always voraciously hungry; always hounded by numerous creditors; always expecting something to turn up to re- lieve his situation; always paid his debts by giving his note, and when the note fell due always gave a new note in exchange, ex- claiming as he did so, "Thank God! there's another debt paid." He was the type and ideal of a vast number of the financiers of the world, and if his life-sized bust does not adorn the room of the Committee on Banking and Currency there has been a gross dis- regard of the eternal fitness of things. The history of the world is filled with Micawbers, who discharged their debts by promises to pay, and nations have been the chief imitators of this historical character. The Carthagenians wrote their promises on leather; the Romans, in their palmiest days, on strips of wood; the Moguls, on mulberry bark; the semicivilized citizens of sundry lands, on the skins of animals, and their linea successors in the Bureau of Engraving and Printing put theirs on paper. The greatest of all the apostles of paper money was old Kooblai Khan, whom Coleridge has immortalized, who issued during his brief reign more than $600,000,000 of mulberry bark legal-tender notes, which went — Wliere Alf the sacred river ran, Through caverns measureless to man Down to a sunless sea. The fiat money of all ages and climes has gone down the setme dark and fathomless abyss. The experiment was tried in the con- tinental money of the Revolution, and when the founders of the Republic met to frame its fundamental law they profited by the sad experience and the teachings of history. Thomas Jefferson, the father of the party to which we belong, was thoroughly imbued 1742 with this idea, and in writing to Colonel Carrington on May 27, 1788, while the Constitutional Convention was in session, declares: The bankruptcies in London have recommenced with new force. There is no saying when this fire will end, perhaps in the general conflagration of all their paper. With only twenty millions of coin, and three or four hundred millions of circulating paper, public and private, nothing is necessary but a general panic produced by failures, invasion, or any other cause, and the whole visionary fabric vanishes into air and shows that paper is poverty; that it is only the ghost of money and not money itself. The convention, admonished by such teachings which were ac- cepted by almost all the leading statesmen of that day, gave to Congress no power on the subject except "to coin money and reg- ulate the value thereof." The strictest construction of this provi- sion of the supreme law was the policy of the Democratic party from its birth down to 1868, and, with the exception of the unfor- tunate declaration in its national platform of that year, has been ever since. In its first platform, in 1836, it declared an — Unqualified hostility to bank notes and paper money as a circulating medium, because gold and silver is the only safe and constitutional money. That doctrine, with the modification of paper convertible into coin on demand, has been adhered to consistently. This was the policy not only of the Democratic party but of the Government from its establishment down to 1862. When the war of the re- bellion threatened the destruction of the Republic the great prin- ciple of self-preservation, which is the first law of nations, became supreme and superseded, as it had a right to do, all constitu- tional and statutory provisions . Inter arma silent leges . When the Treasury was empty and our armies in the field and our sailors on the sea were unpaid. Congress, by the act of February 25, 1862, authorized the issue of $150,000,000 of Treasury notes, based on the credit of the United States. By the act of July 11, 1862, another $150,000,000 of similar notes were authorized and issued. By the joint resolution of January 17, 1863, an additional $100,- 000,000 were authorized for the immediate payment of the Army and Navy of the United States. This last issue was fiu'ther legal- ized by the act of March 3, 1863, which increased the amount by $150,000,000, making the aggregate of such Treasury notes $450,- 000,000. All these acts distinctly recognized the fact that these notes were an 1742 6 einerj^ency loan for the preservation of the Government and pledged pajiuent to the holders in coin. The acts of 1862 and 1863 provided that bonds of the United States bearing interest should be sold, and that the holders of these Treasury notes had the right to convert them into such bonds. These acts further provided that all im- port duties of the Government should be paid in coin, and that these accumulations of coin should be used fii-st to pay the inter- est on the Government bonds, and second to the redemption of such bonds. These Treasury notes thus issued on the credit of the United States were therefore redeemable in coin by the law cre- ating them. Their constitutionality, for the reasons already stated, was con- tested, but after the most exhaustive discussion theii* issue was held in 1870 to be a constitutional exercise of the power of Con- gress as an " appropriate means for legitimate ends." (Hepburn vs. Griswold, 8 "Wallace, 603; Legal Tender Cases, 12 Wallace, 457.) The question, however, was one of great exigency like the events which raised it, and should never have been permitted to come to an issue if these notes, after they had served their legiti- mate purpose, had been funded and retired as the law tmder which they were issued intended they should be. The act of April 12, 1866, in this spirit and in this view of the law, provided for their retirement at the rate of about $50,000,000 a year. The act of February 4, 1868, however, suspended the operation of the act of 1866, and the question got into politics, and the Democratic party, which had always stood by gold and silver as the only con- stitutional money, solemnly declared in its national platform of 1868 that— Where the obligations of the Government do not expressly state upon their face, or the law under which they were issued does not provide that they shall be paid in coin, they ought in right and justice to be paid in the lawful money of the United States. The Republican party, led in the memorable campaign of that year by the gi'eatest soldier of the Republic, declared in their plat- form that all the obligations of the Government should be paid in coin, and made a square and unmistakable issue against the un- Democratic theory that paper was the money of the contract. The result was an overwhelming triumph for the preservation 1743 of the public f aitli and the credit of the Grovernment of the United States in the election of G-eneral G-rant, who was inaugurated on March 4, 1869, and immediately convened Congress, which in just a fortnight passed the law of March 18, 1869, which " declared that all United States notes, etc., should be paid in coin or its equivalent," and that — The United States also solemnly pledged its faith to make provision at the earliest practicable period for the redemption of the United States notes in coin. This statute crystallized into law the overwhelming verdict of the people at the polls and further declared for the policy of speedy redemption of the notes, which should long ago have ceased to vex the finances and breed a brood of false notions on the great subject of the people's money. In 1870 the vast debt of the coun- try was funded into new bonds, but not until five years later, in the act of January 14, 1875, was the earliest practicable period found for providing for the redemption of these notes. By the act referred to it was resolved that aU greenbacks over $300,000,000 should be redeemed in the ratio of 80 per cent of national-bank circulation issued, and that after January 1, 1879, the Secretary of the Treasury should redeem all greenbacks in coin and sell bonds for that purpose. This policy was not only in accord with the general sentiment of the nation then dominated by men of sound views on finances but the Democratic national i^latform of the next year, 1876, on which the Democratic party won its first signal triumph for twenty years, declares: We denounce the failure (of the Republican party) for all these eleven years of peace to make good the promise of the legal-tender notes which are a changing standard of value in the hands of the people, and the nonpayment of which is a disregard of the plighted faith of the nation. This was the declaration of a convention composed of more dis- tinguished Democrats of this country than any which has ever been held. The Democratic party, thus led and counseled, planted itself again on the teachings of Jefferson and the founders of the Government and of the party, and maintained that the greenbacks should not have been permitted to exist beyond the close of the war, and that the failure to return them was a disregard of the plighted faith of the nation. 1742 8 Why was this solemn pledge not redeemed? Perhaps the stu- pendous fraud by which the verdict of the people in that historic contest was utterly ignored and defied, and by which Mr. Hayes, on ]March 4, 1877, was given the place to which Mr. Tilden was clearly chosen, demoralized the sterling sense of honesty and honor and the plighted faith of the people of the nation. Some strange and inexplicable change certainly came over the spirit of the country, for within one year Congress passed the act of Feb- ruary 28, 1878, and began the coinage of fiat silver dollars, and by the act of May 31, 1878, within but two months more, peremptorily forbade the further retirement of the legal-tender paper money. What a strange spectacle of inconsistency or indecision of pur- pose or idiocy do these acts of January 14, 1875, and May 31, 1878, present standing side by side as declarations of the wisdom and courage of the greatest legislative body in the world. The act of 1875 commands the Secretary of the Treasury to sell bonds bearing interest and buy gold and redeem and cancel the greenback circulation. The act of 1878, permitting the command to sell bonds and buy gold and redeem these notes to stand, orders the Secretary of the Treasury to stop canceling and reissue them as fast as received. The act of 1878 compels the Secretary to knock the bottom out of the water bucket. The act of 1875 compels him to keep pour- ing in with the hope of getting it full. The one act compels him to laboriously roll the stone up the hill; the other compels him to let it roll down again, and so continue on from year to year a labor like unto that of the fabled Sisyphus. What child's play under the name of statesmanship! Why did not Congress then, and why does it not now, do one thing or the other? If greenbacks are money and perform properly all the functions of money and do not need to be redeemed, why not re- peal the act of 1875 and save the sale of bonds and purchase of gold? If these promises to pay are not money, why, after having paid them, shall they be issued again and again to break the Treas- ury and the taxpayers on the ever-revolving wheel of a financial Ixion? The whole issue which confronts us to-day and threatens disaster, and perhaps disgrace, to the nation arises from the fact 1742 9 that the intelligent people of this country and of the world want a substantial redemption of some of the promises made on this subject and reiterated again and again for a quarter of a century. Why should not the most loyal friends of the Government dis- trust the situation? On January 1, 1895, there were outstanding of these greenback notes not bearing interest and resting solely on the credit of the United States the sum of $346,681,016. They are fiat money — ^mere promises to pay and thirty years overdue. On the same date there were $422,426,749 of silver dollars, $77,155,722 of subsidiary silver coin, and $150,823,731 of Sherman notes, aggregating $650,406,202 of additional promises to pay by the Government written on silver, which is worth in the markets of the world certainly not more than one-half its certified value. The one-half of this amount ($325,202,201) must therefore be added to the fiat money and non- interest-bearing debt of the Government, for it too rests solely on the credit of the United States, and with the greenbacks reaches the enormous aggregate of $671,884,117. On the same date, January 1, 1895, the bonded interest-bearing debt of the United States was $679,168,130, without including, I presume, about $65,000,000 of bonds issued to the Pacific rail- roads. In all, therefore, we owe over $1,400,000,000, for the re- demption of which we have certainly not over $100,000,000 of gold. Is it any wonder gold is seeking a refuge from our legisla- tion abroad, and that people everywhere are afraid to invest? Will this bill relieve the situation? No one pretends that it will. Mr. Carlisle, in his statement before the Currency Committee, at page 54, says: I do not see the immediate prospect of the Treasury Department being in a position which will enable it to avoid the issue of bonds. I am sorry to say it, but that is the actual condition, provided we are to continue the redemption of these notes in gold, not in silver, and maintain the parity of the two metals. Every financier called before the committee concurred in sub- stantially the same result to be expected from the pending meas- ure. Mr. Eckels, in his statement, at page 61, says: Undoubtedly the manly thing to do, and the thing that ought long since to have been done, would be the redemption and canceling of these notes in ac- cordance with what was designed at the time of the enactment of the legal- tender act, followed by the authority given to Secretary McCulloch, but which was afterwards repealed. 1742 -2 10 The only plea which I desire to make in this debate is to do what Comi)troller Eckels declares is undoubtedly the only manly thing to be done. Why not do what is manifestly not only the manly thing, but what is honest and just and patriotic and due to the plighted faith and honor and good repute of this great Gov- ernment? Why not issue such bonds as are proposed by the amendment which I have offered, bearing a low rate of interest and redeemable almost at the pleasure of the Government, and stop the inexorable necessity of issuing them under an old law at a higher rate and to the confusion of the purchaser and at the cost of the people. Such action will restore confidence, and be one great step in securing the parity of our money and bringing it back to the channels of trade. Such an addition to the measure now before the House will give some assurance of its achieving the purpose for which it is designed. The Government has no right to engage in banking; neither has it any right to pledge its credit to secure the currency issued by private corporations organized for the profit of the parties who control them. The country needs banks, however, and the exi- gencies of the great war, which settled forever that we are a nation and not a confederacy, wiped out the old system of banks char- tered by the States, and gave us in its stead a sound and satisfac- tory national system, which can be readily revised and extended and encouraged, so that its branches may reach out over the whole land where the property and business of the people require banks. But after you have redeemed your promises to pay and settled your system of currency, if you would insure the return of public confidence and prosperous times, you must reduce your public ex- penditures to the amount of your reventie or increase your revenue so as to promptly pay every obligation of the Government as it matures. Governments can only be successfully maintained by money. They starve on theories, or grow attenuated and unstable and unhappy like theorists themselves. The measure, therefore, which would relieve the whole situation should provide for three things: First. The redemption and retirement of the legal-tender notes in conformity with the law under which they were issued and in keeping with the plighted faith of the nation. 1742 11 Second. That the bonds of the Government issued for the re- demption of the greenbacks shall be the basis of national-bank circulation to their full amount, and that the taxes on such banks shall be so reduced as to encourage their establishment in such numbers as to supply an abundant currency in place of that retired. Third. The collection of sufficient revenue to pay the expenses of the Government, economically administered, remembering always that a surplus is vastly better than a deficit in maintaining the public credit and securing satisfactory administration. 1742 12 a .s 8 S 8 S i' O O Q S S 3 8 S§ 'i 8 8 S 8 § I So o MQ '-56 & g .2 '-*' §2n. « 1^ P< A j_'co o 5 =5 >.oa 5 -si ■cfe' so ^ o 1742 S o ® aj o 4^ Cd fi - 0) m t>cP S o2 MO ill. Why? Because it is pi-actically Uoverniuent paper and is as good as tlie paper in which it would be redeemed. The ponding bill i)roposes to extenil the charters of these banks for twenty years and thus give tuem for tlic term of forty years the use of the Government paper without costing thrni a dollar. That is one of the objects of the pending bill. It pnnioses to e.\ti'nd the time for the banks to redeem their circul.-ition, and thev know it. Yet they couie ht-re and claim they are acting for the benefit of tne people. This i.s one of the swindles to be perpetrated. — Conyressional Record, Forty- seventh Congress^ first session, page 3910. Since my record on rechartering the national banks has been questioned, not here, where my uniform opi)osition is loiown, but in other quarters, I shall refer to the Record. I voted against the bill to recharter these banks when the bill passed the House. (See Congressional Record, volume 13, page 4137.) The bill after it passed the House went to the Senate. I was called home on important business. While absent I paired with Mr. Heilman, Republican, who, on its passage in the House, voted for the bill, and was a friend of the measure. (See Record, vol- ume 13, page 5853.) The Record shows that when the conference report was agreed 1748 13 to and the bill finally passed I was paired with Mr. Heilman. (See Record last referred to.) I also offered an amendment to the bill rechartering national banks, prohibiting any further issue of bank notes, and providing for the retirement of all bank notes and issuing Treasury notes, having the same legal-tender qiialities as the bank notes, to take the place of the bank notes. (Volume 13, Congressional Rec- ord, Forty-seventh Congress, page 3911.) Hear what the great Thomas H. Benton had to say about the old national-bank system. I quote from Benton's Thirty Years' View, volume 2, page 263. Mr. Benton rapidly summed up with a view of the dangerous power of the bank and the present audacity of her conduct: She wielded a debt of $70,000,000 with an organization that extended to every part of the Union, and she was sole mistress of the mc^neyed power of the Republic. She had thrown herself into the political arena to control and govern the Presidential election. If she succeeded in that election she would wish to consolidate her power by getting control of other elections. Gov- ernors of States, judges of the courts, Representatives and Senators in Con- gress, all must belong to her. The Senate especially must belong to her, for there lay the power to conflrm nominations and to try impeachments; and to get possession of the Senate the legislatures of a majority of the States would have to be acquired. The war is now upon Jackson, and if he is de- feated all the rest will fall an easy prey. What individuals could stand in the States against the power of the bank, and that bank flushed with a vic- tory over the conqueror of the conquerors of Bonaparte? The whole Gov- ernment would fall into the hands of this moneyed power. An oligarchy would be immediately established, and that oligarchy in a few generations would ripen into a monarchy. All governments must have their end. In the lapse of time this Republic must perish ; but that time he now trusted, was far distant; and when it comes it should come in glory and not in shame. Rome had her Pharsalia and Greece her Chaeronea, and this Republic, more illustrious in her birth than Greece or Rome, was entitled to a death as glorious as theirs. She would not die by poison — perish in corruption — nol A field of arms and glory should be her end. She had a right to a battle, a great immortal battle, where heroes and patriots could die with the liberty they scorned to survive, and conse- crate with their blood the spot which marked a nation's fall. If one bank had or threatened all this power for mischief what could or would the many thousand banks this bill would cause to be organized do — all of them looking to Congress for aid and special privileges? See what a power to control the Government. Appendix. The following appendix is submitted: Mr. Butler, referred to in the foregoing remarks, stated before the committee that reported the currency bill, as follows, pages 128, 129, 130: Now, Mr. Chairman, there are only two ways by which that immense amount of maturing obligations can be paid by this country — that is, by the product of its soil and industry, or by its gold and silver. Of course, gold and silver produced from our mines in excess of our own local needs are as legitimate an article of export as cotton, wheat, or petroleum. But we are met by this fact: If our exports exceed our imports by $100,000,000 year after year there is still a variable balance of trade. Now, the Government does not occuijy any pi isitii )n by which it can come in and arrest that tendency and that outflow of the precious metals. It is purely a question of commerce and trade, and to commerce and trade it must be left. The Government is as powerless in the matter as a 10-year-old child. Selling bonds will have no effect upon it. And I will inject this remark just here: It has been fre- quently urged on the Government to sell its bonds abroad and import gold. You can bring the mountains of Switzerland here just as well as you can do that. So long as these conditions exist gold will leave the country, and the 1748 14 niiestion which forces itself to-diiy on every reasonal)le man's mind is this. How long will that continue and the country remain on a sound financial basisi* I am not an alarmist. I have been in th<> liankini; business iUl my life, from a boy uj). I havi' been throuRh all the piiiiics, but I will confess that I have never seen the time when I felt my K()li>ly iirt> charged, present evils may bo mitigated and dangers threat- ening the Vut\ire may bi' averted. Our unfortunate tinancial plight is not the result of untoward events nor of cojuliti'ins relati'd to our natural resources; nor is it traceable to any of the afflictions which frcouently check national growth and i)rosperity. With plenteous crops, with abundant ])romise of remunerative ])roduction and manufacture, with unusual invitation to safe investment, and witli satisfac- tory assurance to business enterprise, suddenly tinancial distrust and fear have sprung up on every side. Numerous moneyed institutions have sus- pended bocause abundant assets were not immediately availaljle to meet the demanils of friijrlitened depositors. Surviving c-orporati(ms and individuals are contple from these cormorants that the latter exercised unlaw- f ullv in holding on to other people's money, what would happen? A panic? Well, who would be hurt? You can not hurt the farmer much more than you have. You have made his fields unjjrofitable. You are buying your barley in Russia to be used in the barley- growing State of Wisconsin, your wheat in the Argentine Repub- lic, and importing cotton from India into the New England States. The producer and the wage worker are already at the bot- tom of the well. Bring on your financial panic! It will then be Greek meeting Greek, Shylock versus Shylock. You can not make matters miich worse for the people, and if oiir credit shall fall so that we can not buy abroad, and ydW be compelled to trade at home, it will be a consummation devoutly to be -wished. K in these "times of distrust at home and abroad" United States bonds can be sold at a i)remium of 17 per cent to obtain gold (to pour into an unfathomable abyss) is the supposition violent that the credit of this nation wiU admit of the authoriza- tion and issuance of four himdred and seventy-five million ten and twenty year 3 per cent bonds, none of which shall be of a greater denomination than $100, to be exchanged for these legal-tender notes and the same destroyed, and the guerrillas thus disarmed, the Government to give notice that one j^ear after said bonds were ready for delivery in exchange for said notes, all notes outstand- ing would be paid in standard silver dollars onlj^? Would not something like this be better sense than to go on buying gold to "pour into an unfathomable abyss?" This would be somewhat in the nature of a popular loan, and the small bonds would siibstantially take the place of the currency thus withdrawn. Then let the Government say to the people : ' ' We will establish a postal savings system, and at all first, second, and thii'd class post-ofiices you can deposit your savings and have" them forwarded to the United States Treasury -without risk. They A\all be safely kept and safely used, and you -will be paid 2 per cent interest on such deposits, and when you have deposited $100 j'ou may, at your option, receive a United States i)ostal bond for that amount, bearing 3 per cent interest. " This done, the United States Treasury would no longer be at the mercy of the shylocks, but would be firmly upheld by the people of the United States. All tlie machinery necessary to begin this postal-savings system is in place and the offices now open. I know there are several 1725 13 very great objections to this system, perhaps insuperable. The first is, that while it is in the interests of the Government, it is very largely in the interests of the common people of the United States, and not in the interests of the slop-bucket-savings attach- ments to national banks, or of schemers who prey upon the sav- ings of others; and next, it does not require an army of additional Government emploj^ees. But, Mr. Chairman, let us try to legislate for the common peo- ple part of the time. If they are prosperous, all are prospering. In all these financial matters we legislate from the banker's stand- point, and consult his and the money changer's interests. Let us consult the people's interest in this matter; let us whenever possi- ble coin real mioney instead of printing Government debentures. If these legal tenders are making all the trouble, and we can not have the advantages possessed by independent nations like Eng- land and France of exercising our option of paying them in silver, let us retire and destroy them by way of a popular loan for United States bonds of small denominations. But let us be very slow in changing a banking system that has proved the safest and best ever devised. Mr. Chairman, I intended to read in my time my proposition for a postal savings system, which I think would give greater relief to the Treasury and be of far greater benefit to the people than the pending bill, but will print it in the Record as an appendix to my remarks. Appendix. A bill to establish a postal savings bank department. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That all first, second, and third class post- ofiices are hereby designated as postal savings bank otlices, at which lawful money of tlie United States may be deposited as hereafter provided. Sec. 2. That any person of the age of 13 years or over may deposit at such offices any sum of lawful money of the United States: Provided, That no fractious of a dollar shall be received for deposit, nor shall any depositor have standing to his credit more than |1,C0 I, exclusive of interest, within the year following his first deposit, nor more than $3,000, exclusive of interest, to his credit at any time thereafter. Sec. 3. That upon the receipt of any deposit at such an office the postmaster shall deliver to the depositor a postal savijigs bank pass book, in which he shall enter the amouTit of the deposit and certify it by his official stamp, and in which book succeeding deposits shall be entered ana certified in like manner. Sec. 4. That any depositor wishing to withdraw all or any part of his de- posits may apply to the postmaster, who shall furnish him with a blank form of application for withdrawal, which, when prorjerly filled out and signed, the postmaster shall forward to the Postmaster-General at "Washington, who, upon its receipt, shall draw a check upon the Treasury for the amount and forward the same to the depositor, under cover to the postmaster who for- warded the application, and by him shall be delivered to the depositor. Sec. 5. That everjr depositor shall forward his deposit pass book to the Postmaster-General in an envelope, whi(;h will be f ui-nished him at the post- office, once in each year, namely, on the anniversary of the first deposit made, for examination and entry of amount of interest found due. Sec. 6. That intei-est at the rate of 2 per cent per annum shall be computed, allowed, and entered in the pass book to the credit of the depositor once in each year upon the average amount on deposit for the year preceding: Pro- vided, That if in any case it shall be found that the total sum of interest for the year be less than half a dollar, then no interest shall be allowed or entered upon the pass book, but if the interest shall be found to be more than half a dollar and less than$l, then the interest diie shall be entered on the passbook as $1, and in no case shall fractions of a dollar be entered upon the pass books or books of account of the postal savings bank department, it being the intent of this act that a dollar shall be the unit of all accounts of the postal savings bank department. Sec. 7. That no sum of money deposited under this act shall, while in the hands of any postmaster, or while in the course of transmission to or from the Postmaster-General, at any time be liable to demand, seizure, or deten- tion under any legal process against the depositor thereof. 1725 14 Sec. 8. That tlio postmristors and otlior ofticors of tho post-offioo engaefedin the receii)t or payiiiciit of (l.'jKt.sit slmll nntdisclnsi^ tlie name of any depos- itor, or the amount iKpositi-'d or willulrawn, exct-pt to the Postmiister-Gen- erul, or to such of his otlict-rsas are appointed to asuist in carrying into oper- ation the provisions of this act. Sec. !•. That nil moneys received for depo.sit under this act shall be for- warded to tho Po.stma.sti'r-Gcneral,or to such United States depository as he mav direct, as often as once each week, and dailyfrom such officers as he may dcsifrnate: and all moneys so forwarded shall he paid into tho Treasury and shall be credited to an account to be culled "the post-office savings bank" account, and all sums withdrawn on account of depositors shall be charged to such account. Skc. 1(1. That postmasters of postal savings bank offices shall make daily reports to the Postmaster-Cieneral of all sums received by them for deposit, giving? particulars of each deposit on blanks to be furnished them, and upon receipt of such reports the Postmaster-General shall transmit to the depos- itor, under cover to the i)ostiiia>iti'r making the report, an acknowledgment of sucii deposit. Such ackuowlcdtninnit shall be conclusive evidence of the claim ol rhe depositor to the repayment f)f the deposit on demand, with any interest that may have been allowed and entered, and until such acknowl- edgment is received the entry by the proper officer in the depositor's pass book shall be conclusive evidence of the title as respects the deposits made. Sec. 11. That the Postma.ster-Qeneral may, with tho advice and approval of the Secretary of the Treiusury, designate such United States de])ositories as may be cunvcnient for the postal savings bank offices and for the Treasury, where deposits authorized liy this act may be made by postmasters. Sec. 12. That any depositor having had siaTidiiig to his credit for six months the sum of fKK) or move Tnay make application to the Postmaster-General that United States bonds be issued to hiiii in lieu of such deposit; thereupon, the amount specified by the applicant being $100, or a multijtle thereof, shall Ix' transfi'rrcd to the general fund of the Treasury, and bonds of the denomi- nation of JloO i'iu-h shall be issued to the depositor in lieu thereof, one bond for each ?100 transferred. All such bonds shall be of the denomination of $100; shall be due and payable twenty years after date; shall be dated July 1 or January 1 of the yearissued, and shall bear interest at the rate of 3 per cent per annum, which interest shall boc-orae due and payable on the SOth daj' of June of each year; and such bonds shall be known as United States pcstal savings bonds, and the words "United States postal savings bonds" shall be printed upon the face of each of said bonds. Sec. V,i. That the Postmaster-General may. in his discretion, require an ad- ditional bond ot any postmaster of a postal savings btvnk office, provided such bond sliall not be excessive oi' unreasonable in amount. Sec. U. That the Postmaster-General, with tho con.scnt and approval of tho Secretary of tho Treasury, shall make the necessary regulations and pre- ]>are the necessary instructions for carrying this act into effect, including regulations regarding the deposits and withdrawal of deposits by minors and trustees, and the final disposition of doyjosits of deceased persons, and such regulations and inst" ictions shall bo binding on all persons to the same ex- tent as if such regulations formed part of tiiis act; and the Postmaster-Gen- eral may, with the approval of the Secretary of the Treasury, change such regulations from time to time as may be found necessary to secure the best administration of this act; and the Postmaster-General shall transmit to Congi-oss on the first day of each session a copy of all regulations made and in force and of all changes made subsequent to his last report, and the rea- sons for such changes. Sec. 15. That tht; Postmaster-General shall cause to be prepared and printed all necessary books and blanks required to carry this act into effect, Hn<) miles" an hour, for the solitary horseman i-irryin.ij: the mails in saddle- 1 Mips over corduroy roads at li miles an hour. In my Jtidpment there is no more reason for this eountry returning; to tlu' polic.y of State bank curreTicy tlian there is for reestal)lisiiint; slavery, or for i)eacefully permittinji; the secession of any State of the I'nion. The dead past has buried its dead, and for State corporations authorized to issue circulating notes let there be no resurrection. J Applause.] So say I, aiul so say we all. Mr. TALBEK.T of South Carolina. Wise men change their minds sometimes. Mr. BROSIUS. I am willing for men to change their minds when they are convicted of wi-ong; but I do not like to see them change their minds when they are convinced they are right. That is the troiible with some people, that is the trouble with some members of the House, who say they are for the bill, but are against every section of the bill. [Laughter.] "The elasticity of money, Mr. Chairman, is, I say, the very crux of this whole matter. The idea of it is variously stated by different writers, but the substance of it, divested of imnecessary verbiage, is that the amount of circulation adjusts itself to the needs of busi- ness, goin.g out when needed and coming in when the need is past. To put out notes when the need arises requires that they be on hand when no need exists. The bank must be oversupplied when the need is less, in order not to be undersupplied when the need is great. This involves keeping notes idle in the vaults at times, and unless the bank can obtain the notes on conditions which will enable tlieni to keep them idle at times without too great loss, elasticity is impossible. The situation is developed in the follow- ing examination of Mr. Butler, president of the National Trades- man's Bank of New Haven, before the Banking and Currency Committee the other day, which I take the liberty of reading: Mr. Biiositrs. I desire to bring into more distinctive view your thought upon the real nature of the difficulty of inelasticity in our present banking currency. If I understand you, the chief difficulty is that, in order to have an elastic paper currency, the banks must be able to keep on hand at times a greater amount than is needed, in order to have it to use at other times when tlie ne<'d is greater. Mr. BuTi.ER. Yes, sir. Mr. Bhosius. The portion of the currency which the banks are required to hold idle must not cost them too much. Under the jjresent system you say it costs the bank too much to hold any amount of idle notes for issue when the need increa.ses. Mr. TJuTr.EK. That is correct. Mr. Bkosius. That is the idea, is it? Mr. BuTLKR. Yes, sir. Mr. Bitosius. Then in order to have the volume of currency sufficiently elastic the; banks must get that currency gratuitously; they can notalfoi-d to pay anything for it. Is that the idea? Sir. licTi.KH. They can not afford to pay very much for it. Mr.Buosius. When the banks issue the notes themselves, as proi)osed ia yf)ur plan, that costs them nothing? Mr. BuTt.Kit. .Ko. Mr. Buosirs. Andwhon the notes are required to lie idle in the bank, thei-e is no expenditure to the bank? Mr. BuTLKR. That is correct. 1720 9 Mr. Brosius. But they have to spend a part of their capital for the bonds to secure their notes, and that costs them too much. Is that the idea? Mr. Butler. That is correct. Mr. Brosius. Now, suppose the bonds of the Government were sufficiently- abundant to be obtainable with ease, and that they paid a sufficient interest, so that the banks could afford to hold in their vaults at all times a sufficient amount of currency to use when the need increased— you understand me? , Mr. Butler. Yes. sir. Mr. Brosius (continiiing) . Without any loss to the bank; then the elasticity would not be diminished, because the currency would be based upon Govern- ment bonds as security. Mr. Butler. On the condition that the bonds carried the rate of interest that the bank must make on its loans, and only on that condition. Mr. SPRINGER. Will the gentleman allow me to correct one statement that he has made? Mr. BROSIUS. Certainly. Mr. SPRINGER. The gentleman has assumed that I am in favor of going back to the State bank system which existed before the war. I desire to say to him that I am jnst as mnch opposed now to going back to the system which prevailed before the war as I was when I made the speech from which he has quoted. Mr. JOHNSON of Indiana. Now, will the chairman of the committee [Mr. Springer] permit me to ask him a question? Mr. SPRINGER. The gentleman from Pennsylvania has the floor, so that I can not permit an>'thing. Mr. JOHNSON of Indiana. Well, will the gentleman from Pennsylvania permit me to ask the chairman of the committee a question? Mr. BROSIUS. I desire to reply to my friend [Mr. Springer] , who has undertaken to correct statements which I have made. I understood that my friend wanted to correct a misapprehension into which he said I had fallen. . Mr. SPRINGER. Yes, sir. Mr. BROSIUS. Now, I do not think I have fallen into any misapprehension; but I wish to direct the attention of the House to the statement made by my friend on the floor but a few months ago — within the year — and I wish to show that by inference those sentiments sustain the views that I am advocating, though my friend may put a different construction upon them. Mr. SPRINGER. I am as much opposed now to going back to the system of banking which prevailed before the war as I was then. This bill does not propose to do that. I stand by every- thing I said at that time. Mr. BROSIUS. I am most happy to be assured of that. It is thus evident that elasticity does not concern itself with the source from which the notes emanate, nor the character of the security behind them, provided it is suifflcient, but only about the fact of their presence or absence when needed. The authority to issue notes and the incentive to do so result in the act of issue. From the imion of power and profit springs elasticity. Any sys- tem of banks, whether national or State, which have authority to issue notes, and there is sufficient incentive in the profits to do so, will supply an elastic currency. The note in bank waiting to be used, whether it is issued on Government bonds or against the credit of the bank, goes out to meet a demand and returns when the demand ceases. If the note is not there, because the bank could not afford to keep it in waiting or for any other reason, the need goes unmet, and the currency is inelastic because it does not adjust itself to the needs of business. 1720 10 The conditions of elasticity may be present in a bank without any circulation at all if its deposits supply all the money it can use. The Mechanics' National Bank of New' York, with $30,000,000 of deposits, needs no circulation. There is always money on hand to meet any need that arises, and money that costs them nothing they can afford to hold to meet the coming need. So that, and the conclusion is irresistible, if the cost of carrying a circulation is not too great and bonds can be supplied that will yield a rate of interest that will make it profitable for banks to issue notes, they will be issued to meet the demands of business and we Avill have an elastic currency as we had for many years under our present national banlring law, because all the conditions of elasticity were fully met. Accordingly we find that all the complaints of the inelastic quality of our currency spring from the cost of bonds and the expensiveness of carrjnng a circulation, together with the fact that inelastic Government issues fill the channels of circulation to the exclusion of the bank issues. I propose by amendments to relieve these onerous conditions, that the currency may be elastic, and any further revision of the national banking system at this time "cometh of evil "to the country, and I am opposed to it. Mr. SMITH of Illinois. In addition to the remedies which the gentleman has just suggested in order to furnish a sufficiency of currency, would he object to stating his views with reference to the funding of the outstanding greenbacks and Treasury notes as atfor(^ng some additional relief? Mr. BriOSIUS. I ^vill say to my friend from Illinois that if I had time I should be glad to go into that, but it is not a part of the subject that I had intended to discuss, and if I should take time now to express my views on that topic I should be compelled to omit some things that I would much prefer to say. Mr. SMITH of Illinois. Then I will not press the question, of course. Mr. BROSIUS. I will say, however, in passing (not to be dis- courteous to my friend) , that I am not in favor at this time of redeeming all the legal-tender notes by a new issue of bonds. I am not in favor of converting the whole of them — §500,000,000 of noninterest-bearing debt^into $500,000,000 of interest-bearing debt. Yet I am not prepared to say that a part of them could not be profitably redeemed wnth a view of remedying some other distresses that probably may in part be produced by the great abundance of Government paper. And in this connection I may say that the fact that the channels of circulation in this country are filled up to a considerable extent by this inelastic Government paper produces one of the difficulties under which our national banks suffer to-day, TWO METHODS OF ISSUING PAPER MONEY. There are two methods of putting out paper money; one is the Government method, the other the banking method. In the fomier the money goes out in pajTnent of an obligation with no pro\'ision for its return, as for example the greenbacks and the Sherman notes of 1890. In the latter it goes out in loans with an accompanying pro\'ision for its return. The supply needed to re- pay the loans at maturity ^vill be equal to the amount put in cir- culation, and what the English bankers call the efflux and reflux will be equal. 1720 11 Let me give an illustration of these contrasted modes of issuing paper money. The Farmers' National Bank of Lancaster, Pa., issues in loans $50,000 on sixty-day paper. While the money is out the Govern- ment buys from a citizen of Lancaster $50,00*) worth of silver bullion. There wovild be thus put out $100,000 with a counter demand for the withdrawal from circulation of $50,000 only, to meet the paper maturing in the bank, the demand for the return being equal to the demand for the issue, while the $50,000 of Gov- ernment paper being once out is always out, for it is accompanied by no provision for its return to the issuing source. JOINT LIABILITY OF BANKS. The currency we now have is absolutely safe. The new cur- rency may be practically, but not ideally so, and the security it will enjoy will be realized by all honest banks standing for the defaults of dishonest and badly managed ones; a principle of in- surance which, when applied to banking, is so vicious that the mind revolts at its contemplation. It is difficult to believe that national banks will accept such an onerous condition and place themselves in the grasp of so vague, indefinite, and illimitable a liability. If they do so and there happens to come along a finan- cial cyclone and banks begin to tumble and people begin to trem- ble and take alarm, there would be a run on deposits as certainly as that men in a state of fright seek safety for themselves and their property. But there will be another consequence which has not been men- tioned that I think ought not to be overlooked. The effect will be to offei* a premium for mushroom concerns conceived in fraud and operated for a season for dishonest gain, then to collapse and throw the losses on honest banks. Such "wild- cat " establishments can prosper for a time as far as their circula- tion is concerned, for all banks of issue are equally good. Men of means and character will have no advantage in business over ras- cals, rakes, and renegades, for all are equally protected. Pirate crafts are given the same rights on the sea as honest merchantmen. Reputation and rectitude will fall to the level of "ne'er-do-wells, " and knaves for the law will clothe them all in one livery and jjlace them upon an equality, and the inducements to deal with men of known honor, probity, and property for your own security wrill cease to operate, for the circulation issued by honest men will en- joy no advantage over that issued by knaves organized for plunder under this banking law. For example, the notes of the Mechanics' National Bank of New York, if it had any, with a surplus and undivided profits of $7,000,000, with an annual dividend of 150 per cent, with $30,- 000,000 of deposits, its stock quoted at 4300 — 43 times its par, the notes of such a magnificent institution, which by the rectitude and skill of its management so commands public confidence that copious streams of deposits pour over its counter, supplying it with all the money it can handle, would enjoy no advantage over those of a bank organized by a group of knaves for the purpose of plunder. This would be an assault upon the rights of honest men and a menace to the morals of the people, and ought to invite the disfavor of all honest men, STATE BANKS. The tenth section of the bill, which provides under certain con- ditions for the repeal of the 10 per cent tax on State bank circula- 1720 12 tioii. opens H Pandora's box of evils. In view of the discrimina- tions in tills spftion against national-bank circulation it seems to me the bill iniyht have been aptly entitled "A bill to provide for the gradual extinction of the national banking system." The national bank must pay one-fourth of 1 per cent tax semiannu- ally upon its circulation to defray the expenses of the Comptrol- ler s department; the State bank pays nothing. The national bank pays one-foiirth of 1 per cent semiannually toward a safety fund for the redemption of the notes of failed banks. The State banks are exempt from this tax. All national banks are liable to be assessed pro rata to reimburse the depleted safety fund, making national banks jointly liable for the defaults of all failed banks; no such liability is imposed upon State banks. The national banks are forbidden to issue notes in denominations less than §10. States banks are xanrestricted in their right to issue. National banks under the existing law are required to take and re- ceive at par the notes of other national banks. State banks un- der this bill are not required to receive the note of any national bank in payment of any liability. The national bank is required to accumulate a surplus fimd to be set apart out of the profits of business until it reaches one-fifth of the capital of the bank. No such requirement is imposed on the State bank. The national bank must make detailed statements of its condi- tion not less than five times in each year to the Comptroller of the Currency. No such onerous dut j' is imposed upon the State bank. The national bank is required to make report to the Comptroller twice a year of the dividends declared and the amount of their profits in excess of dividends. No such duty is required of the State bank. The national banks are subjected to periodical exam- inations by expert examiners and all their books, accounts, and securities overhauled. State banks are subjected to no such in- quisitorial proceedings. Nationjil banks are prohibited from loaning more than a tenth of their capital to any person or corporation. No such restriction is imposed upon the State banks. National banks are prohibited from making any loan or discount on the security of their capital stock. No limitation of that land is imposed upon the State bank. The national banks are forbidden to pledge any of their circula- tion notes for the purpose of procuring money for any purpose in connection with the bank. No such restriction is imposed upon the State bank. These are some, but not all, of the discriminations which this bill, in connection with the existing law, makes against national banks, and I have entirely omitted many penalties imposed for infrac- tions of the law, from which the State bank will enjoy entire im- munity. If there is any excuse or any justification for these invidious discriminations, which tend to limit and fetter the freedom of movement in the banking business, short of a predetermined pur- pose to handicap the national banks as means of afifor85 Net gold in Treasury .Tanuary. 1891 141,7:^8,097 Not gold in Treasury .Tanuary, 1M93 119,574,904 Net gold iu Treasury January. 1893 108,181,713 Net gold in Trea.sury January, 1894. 65,050,175 Net gold iu Treasury .January, 1895 44,705,967 This statement shows the rate of speed at which the Treasury in the last seven years has descended into low southern latitudes in finance. "Easy is the descent into hell"' in more senses than one. REDEMPTION. United States notes and Treasury notes redeemed in gold by calendar years. Year. United States notes. Treasury notes. Total. 1879 §11,456,536 54;^, 800 28.750 115,000 $11, 4.56, .5.36 1880 54;}, 800 1881 28, 750 1883 115,ort and sustain its credit at all times and under all circumstances by appropriate legislation. FUNDAMENTAL PROPOSITIONS. Two propositions are fundamental. We must maintain our gold reserve, and we must provide the means of paying the ex- penses of the Government. No man will dispute with me the propositions that the obliga- tions of the Government must be paid, the financial honor of the United States must be maintained, the commercial credit of this Republic must be kept above suspicion, and all kinds of currency in the people's use must be kept at a parity with the best. 1804 The first requirement might be met to some extent by requiring one-half the duties on imjiorts to be paid in gold, and I would favor so amending the bill. I see no objection to it. It would not be a discrimination against other money, but would be paying equal honor to both. It may be said with some truth that those who take legal tenders to the Treasury and demand gold in ex- change discriminate against the paper money they surrender. To meet that discrimination the Treasury is compelled to replenish the reserve. The only means of doing this under existing law is by the sale of bonds, and this bill proposes no other means. Mr. BRYAN. May I ask the gentleman a question? Mr. BROSIUS. With pleasure, if in the line of my argument. Mr. BRYAN. I only caught a part of what the gentleman said a moment ago. Do I understand you to insist that there should be sufficient gold kept in reserve for the redemption of any kind of Government paper, silver certificates as well as Treasury notes? Mr. BROSIUS. I have not said that. Mr. BRYAN. Do you believe that? Mr. BROSIUS. I wiU not answer that question now. It is not involved in this discussion, and I do not care to go into it. It is not a practical question now. I am quite clear in my mind that we should go a certain length, and I am endeavoring feebly to pre- sent my views; and when the silver-certificate question comes up I will give careful attention to it. I was observing when my friend from Nebraska came in that a suitable means of replenishing our gold reserve would be to re- quire one-half of the duties on imports to be paid in gold, and I was observing that following that method of replenishing our gold reserve was not dishonoring or discriminating against any portion of our money, becaiise it really bestows equal honor upon both. Excluding this mode of relief there are but two ways known to honest people of doing these two indispensable things — one is to raise sufficient revenue by customs or taxes, and the other is to borrow what we need to meet the demands of our gold reserve and those of our creditors. The former and natural and customary means of supplying the needs of Government meets with the disfavor of the majority, and it need not therefore be considered in this connection except to say that in my judgment the deficiency in the revenue is the chief sin- ner in the comedy of errors which has brought us to our present unhappy pass. If we had an abundant revenue there would be no occasion to pay out the legal-tender notes that are redeemed and they would remain harmless in the Treasury until such times as they could be paid out without danger of being used to embarrass the Treasury. Mr. BRYAN. Will the gentleman permit a question? Mr. BROSIUS. Certainly. Mr. BRYAN. I believe that the amount of gold withdrawn out of the Treasury within the last two months has been something like §70,000,000, while the excess of expenditures over receipts in the same time 'has been less than $20,000,000. Will the gentleman explain how the supplying of that deficit would help the gold re- serve, when gold is being drawn out so much more rapidly than the greenbacks are being reissued? • 1804 8 Mv. BROSIUS. :My answer to that is that my friend from Ne- brtv^ka is laboring- under a misapprelicnsion. The fact, or rather the assumption, npon which he proceeds is not warranted in fact. I tliink there is a mistake in his statement abont the revenues. Mr. BRYAN. Does the gentleman mean to say that the excesa of expenditures over receipts has been more than twenty millions in two months? Mr. BROSIUS. The excess of expenditures over receipts yes- terday was $800,000. The day before yesterday it was over $700,000. During the last year it has been .S: 55. 000. 000, according to state- ments that I have seen, and $100,000,000 already appropriated are awaiting payment. When the gentleman puts his suggestion in an interrogative, it reminds me of a question which many years ago stirred up the wise men of England, and France as well. The q^^estion was. " Why is it that when you put a pound fish into a bucket full of water the water does not run over? " They could not answer it: but a Yankee got hold of it and put the fish into the bucket full of water and found that the water did run over, and that was the answer to the question. Mr. BRYAN. But the fact is that the deficit has not exceeded twenty millions in two months, while the gold drawn out of the Treasury has been about seventy millions. ;Mr. BROSIUS. I trust that my friend will allow me to pro- ceed with my argument. He understands how difficult it is for arithmeticians to agree in their figures in regard to financial matters. One hundred millions of gold have been borrowed within a short time, and that must be reckoned with in any com- parison that is made of the expenditures with the revenues of the Grovernment. So that, Mr. Chairman, our only recourse now is to borrow money to maintain the gold reserve and to provide for the run- ning expenses of the Government to the extent to which our re- ceipts are lacking. I say we must adopt that policy or we must suffer the consequences that are certain to ensue, namely, gold suspension, with all that that implies. THE BILL PROPOSED. What is the measure proposed? It authorizes the Secretary to borrow money to meet the obli- gations of the Government of whatever kind. Nobody doiibts that he ought to possess that authority, excepting the few who tarry in hope, with an all hail of welcome on their lips to the expected catastrophe of gold suspension. Some say he already has the power and periodically exercises it. That is true, but there is a cloud upon the legitimacy of that power under the ex- isting law, and the conditions and limitations imposed by that law are not suitable to the circumstances of this time, and it is expedient to remove the doubt and give the people the benefit of bonds for a longer time and at a lower rate of interest, and which will sell at par. COIN OR GOLD. The main proposition being conceded, why should we contend about the details? Any kind of a bond is better than no bond. It matters little to the i)resent or future generations whether it is payable in coin or in gold. Mr. TAWNEY. What effect would it have upon the outstand- 1804 9 ing o bligations of the Government to now use the word ' ' gold " instead of "coin "? Mr. BROSI US. That is a very pertinent inquiry and right in the line of my thought. I was about to say, Mr. Chairman, that, in- terpreted in the light of the declared purpose, deliberate pledge, and distinct policy of the United States, the terms are identical in meaning. Our existing bonds are payable in " coin " in the letter, but in the spirit and purpose and intent of the United States they are payable in the best money that is in vogue at the time they mature. Woiild it do any serious harm to express in words our meaning, purpose, and intent, when we issues bonds, that intent being to ijay them in the best money in the world? My friend from Minnesota asks me what effect such a declaration would have upon the existing obligations of the Government. I will direct my friend's attention to the resolution adopted by Congress in 1869, and in passing I may say that I listened to ob- servations upon this floor not later than yesterday that did scant justice to the policy of the Government and the meaning of that resolution of 1869 to strengthen the credit of the United States. Gentlemen will remember that at the time of the i^assage of that resolution some of the obligations of the Government were pay- able in ' ' lawful money " and some were payable in " coin;" so that the contrasted forms of money in contemplation when that resolu- tion was adopted were not gold and silver, but coin and paper. That resolution declared the purpose and intent of the United States to be to liquidate all those obligations, whether payable in terms in " lawful money" or in "coin," in coin, because coin was the best money of the world at that time, and the word had no specific reference either to gold or silver, because silver then was better than gold and at a premium in the market. Let that thought find a place in your minds, that when that resolution of 1869 was adopted the contrasted forms of money were coin and paper, while here the contrasted forms of money are gold and silver, and not coin and paper. Now, when one is better than the other it is right to presume, and I, for one, never shall presiime anything else of the United States, than that it in- tends to pay its obligations in the best money that the world knows. Mr. McKEIGHAN. Will the gentleman permit a question in the line of his remarks? Mr. BROSIUS. Certainly. Mr. McKEIGHAN. Is it not a fact that the paper obligations which were set aside by the act of 1869 bore a greater rate of in- terest because they were payable in "lawful money," and that there was a change of the contract in favor of the creditor and against the masses of the people? I would like an answer. Mr. BROSIUS. I will answer my friend with great pleasure, but I will first state his inquiry, because I do not think it was heard distinctly. The inqiiiry of my friend from Nebraska is this: When the act of 1869 was passed was not a higher rate of interest paid on the obligations that were payable in ' ' lawful money" than on those that were payable in "coin"? I answer affirmatively. On some of the obligations payable in ' ' lawful money" 7.3 per cent interest was paid while the obligations paya- ble in " coin" bore only 6 per cent interest. That demonstrates the very point I am making. " I thank 1804 10 thee, Roderick, for the word." I was trying to impress iipon the House the fact that at that time the contrasted forms of money- were i)aper monej* and coin, and coin was lietter money than pajjcr, and therefore the liolders of paper obligations got more in- terest. To-day, under the conditions under which we are attempt- ing to legislate, the contrasted forms of money referred to in the bill before us are not coin and paper, but gold and silver, and fol- lowing the policy of the United States to pay in the best, if we use the word "gold" we are only expressing the intent and pur- pose of the Government to pay its obligations in the Itest money the world knows at the time of the maturity of the obligation. It may be suggested in support of the contention in favor of gold payment that while the word "coin" has always been used in our bonds heretofore, it must be remembered that when our bonded war debt was created silver was at a premium over gold, and when the existing law was passed, which is the only authority for the issue of bonds, silver was not in circulation to any extent, and since that time it has depreciated to 50 cents on the dollar. So that the word "coin " in a money obligation has not the same ring it had when it was first employed in our bonds to express the money of payment. Changed conditions and sentiments at home and abroad are facts with which many wise men think we shoiild reckon in the proposed legislation, lest the bonds fail to find a market in Eiirope Avhere it is hoped and expected some of them will go to arrest the exiwrt of gold. But I do not wish it to be implied that I am. strenuous about using the word ' ' gold " in these obligations. I am perfectly con- tent to use the word "coin." 1 am not discussing the question because I think it very material. I am rather discussing it to im- press the fact that it is a mere subsidiary matter which ought not to divide the House. I shall vote for either word, if we can pass a bill. I was going to say there might be an objection to the use of the word "coin" — an objection I heard the other day — that in \aew of the rapid increase in the production of gold it might be possible that before these obligations mature silver may be the better money; and if the obligation is a gold one the United States might yield to the solicitation of opportunity and pay in the infe- rior money — gold — and thus tarnish, the fair fame and good name of the United States. Why, sir, Mr. Rothschild, the great banker and financier of Lon- don, paid the United States a beautiful compliment the other day. When he was asked which he would ijrefer, American obligations payable in coin or in gold, he said, ' ' I would rather have them pay- able in coin, for at the rate that gold is being produced now, and in anticipation of the enlarged production in the near future, it is not impossible that silver may be the better money when these bonds mature. And. at any rate, I know that the United States, as long as it enjoys the option, will always pay its obligations in the best money in the world." I believe with Mr. Rothschild, and therefore I think it not a matter of great importance whether you put the word "gold" or the word "coin" in our obligations. CANCELLATION OF NOTKS. Whether the notes that are redeemed shall be canceled or re- tained in the Treasury Avithout being reissued except in exchange for gold I do not think is a matter of great importance as long as the> are disabled for active duty. Whether they are tied hand 11 and foot so as to be harmless or killed outright, it comes to the same thing in effect. To go on borrowing gold to meet an endless drainage would be as vain a task as that of the daughters of Danaiis, doomed to draw water from a well and pour it eternally into a perforated cask. Such a process of redeeming notes that are never redeemed is not consonant with reason, and sound statesmanship requires that we kill with the utmost dispatch what has been called the auriferous tapeworm that wriggles back and forth between Wall street and the Treasury. I am not sure that in view of all the aspects of the situation ex- isting and in anticipation it would not be wise to cancel the notes as they are redeemed. There are at least two considerations in support of this view. First, there is no utility, outside of mere sentiment, in retaining the notes in the Treasury to be exchanged for gold. That would make them gold certificates in fact though not in form, and it would be better on grounds of general reason- ing to adhere to the gold certificates already authorized than add another form which would be in some degree unsuitable. The other thought bearing on this point is the expectation, aris- ing almost to a belief, that the entering upon the policy of redeem- ing and canceling will so far reassure the public mind, compose its agitation, allay its fears, and dispel its doubts of the ability and purpose of the United States to redeem its obligations in the best money and keep all its currency equ.ally good, that we will ex- perience a progressively diminishing activity in the redemption business, and in a short time the presentation of notes in any con- siderable amounts for redemption will cease and our difficulties vanish. If that expectation should be realized a comparatively small number of the legal-tender notes would be canceled and the buying of gold would cease. EXCHANGE OF BONDS TOR NOTES NOT APPROVED. But these suggestions are not intended to go to the length of supporting that portion of the bill which provides for the exchange of the bonds for the legal-tender notes. This has in contemplation the conversion of all the legal tenders into interest-bearing indebt- edness without regard to the necessity for so doing, it being a dis- tinct end to get rid of that class of currencj^ entirely. I totally disavow any acquiescence in such a purpose. The people of the United States do not desire to be rid of the limited number of greenbacks now in our currency excepting so far as it is necessary to afford present relief, and I believe the process of cancellation should be limited to the notes presented for redemp- tion and should cease as soon as sufficient relief is afforded, so that the destruction of our greenback currency shall not exceed the actual necessities of the situation, nor our people be unneces- sarily biirdened with interest by the needless conversion of non- interest-bearing into interest-bearing indebtedness. Of course, if the expectations I have indicated are disappointed, and it is established by actual experience that we can not main- tain our gold reserve with our greenbacks in circulation, then they must go, but that assumption I will not admit except on the compulsion of absolute demonstration. VARIETY IN THE ISSUE OF BONDS. Nor does there seem to be much substance in the inquiries whether there shall be one or many lands of bonds authorized. 1804 12 In my .iudKment the only bond that should be issued is the best bonil for the iiurpose intended. After that I do not see it very iuiporrant to trouble the market with an inferior bond. The most marketable bond is a long-time bond, bnt I have no doubt of the ability of the United States to float a 3 per eentbond jtayable in coin orin gold for a short or a long term. I would tlierefore make the bond suit the convenience of the United States in respect to time. It is not likely that we will be ready to pay anv of these bonds within five years, and if we make them paya- ble at the pleasure of the United States after five years we woxild enjov the privilege of i)ayment whenever we were ready and not until then. To name a time of maturity when they must be jiaid it seems to me unnecessary, though it can do no harm and I do not object to it. 6HOCLD BE KEPT AT HOME. Then I would provide that such amounts of the bonds of the denominations of $20, $50, and $100 as could be disposed of in that manner slioiild be placed for sale at such national banks and post- (_)ffic-es in the United States as shall be selected by the Secretary of the Treasury, so as to give our own people the first opportunity to take the bonds, until the home demand is supplied. This would popularize the loan and inure greatly to the advantage of the Government. If all our existing bonds were held at home it would afford a large element of relief in our present situation, if it would not have prevented it altogether. Our gold indebted- ness abroad imposes an enormous burden upon us which we must meet and must continue to meet until it is paid or is transferred to our own people. France, \Anth the fabulous debt of $4,000,000,000, suffers little inconvenience because it is owing to her own people. The only remedy conceivable for this state of things is to restore confidence at home and abroad in oiir integi*ity and our solvency, so that not only our securities will remain al)road but our interest be rein- vested at home, otherwise the foreign drain will continue, for no financial legerdemain has ever been discovered to escape paying our foreign balances in gold when the rate of exchange is at or above the gold shipping point. This, Mr. Chairman, being the situation, and in view of the ex- treme urgency with which the matter presses upon our considera- tion, can it be possible that we can not secure sufficient unity of view and action to do the one thing and the only tiling left for us to do — t;o authorize the Secretary of the Treasury to borrow the means of carrying on the Government and rescuing the United States from impending disaster and dishonor? PROMPT ACTION DESIRED. 3Ir. Chairman, the mischief works while we wait; the difficulties deepen while we dally with our duty, promptitude is of the es- sence of our obligation to act, and therefore I believe that any union of minds and voices in this Chamber that will bring succor to the country and spare us national disgrace will be an honorable and patriotic alliance. AVOID POINTS OF CONTROVERSY. That action might be unimpeded by the delays of controversy and the peril of final disagreement, I have sought in my humble way to have the bill as free as possible from causes of division 13 among us, for I have believed it would promote the passage of a measure to limit its scope to the very mischief to be remedied. A bill, short, sharp, and decisive, that goes directly to the pur- pose in view, without circumlocution, without the baggage of in- cidental and unnecessary meddling with other and different mat- ters of legislation, will be much more likely to pass this House than one containing a variety of unrelated provisions which mul- tiply the points of controversy and invite contention and disagree- ment over matters in which one and another sees a service to some siDCcial interest. There is hope of agreement only in minimizing the grounds of controversy, and hence I have tried to keep out of the bill provi- sions looking to the reorganization of our financial system, which undertaking is not, in my judgment, suitable to the circumstances of our situation, and can be wisely deferred to a more appropriate season instead of engaging our minds when they are already taxed to the limit of their capacity in finding a way to strengthen the Treasury and insure the solvency of the Government. What then, Mr.' Chairman, stands in the way? Are we kept from agTeement by an unworthj^ pride that is ashamed to yield or an equally censurable obstinancy that delights to contend? It is not patriotic nor wise to waste time and further embarrass the situation by hypercriticism and cai)tious and carping com- plaints of the details of the proposed measure as long as it is in substance calciilated to answer the end proposed. If it bridges the chasm it ought to pass in one form or another. In one of the trying hours of Mr. Lincoln's experience during the war, when he keenly felt the unkindness of those who carped and caviled at his conduct, when he bent and swayed under the mighty responsibilities of the war, he illustrated the situation in this striking manner. He said, "If all your property was in gold, and you had put it in the hands of Blondin to carry across Niagara on a rope, would you shake the cable or keep shouting at him, ' Stand straighter; walk faster; walk slower; lean north or south '? No; you would hold your breath and your tongue as well. " The Administration is trying to keep the gold in the Treasury to save the honor of the United States, and it is uhijatriotic to catch at iinconsidered trifles to impede the consummation of the undertaking. Or is it mere partisan politics that hinders us? Per- ish the thought! The representatives of the people must be pa- triots before they are partisans. Will any member dispute the proposition that in the situation which invites our consideration, with a crisis looming, huge and hideous, in the twilight future, we ought to see nothing but the best interests of the country? The member of this House who in this supreme exigency suf- fers his vision to be obscured, his judgment to be warped, and his conclusions to be vitiated by prejudice, passion, or partisanship discredits himself in the eyes of his country and will be held to strict accountability by his constituents. There is but one word that can express the inspiring and controlling influence of this hour, and that word is "patriotism." [Applause.] There is but one word that can denote the action which that overruling in- spiration commands, and that word is "duty." He who is insen- sible to the one or disobedient to the other is not a safe custodian of his country's interests and was misdirected when he was sent to this body. 1804 14 I inthilge the liope that no member of this House entertains views of public duty which constrain him in determining his ac- tion upon this measure to ask who initiated it, but only is it wise legislation; not which side of this Chamber is advocating or op- posing it, but only is it calculated to meet the need of the hour and mitigate the afflictions we are suffering by restoring the con- fidence of our people in the money of the country. I am profoimdly moved by the conviction that this is the time and this the occasion (if I may be pardoned for using an ilhistra- tion a second time in this presence) for us to emulate the gener- ous sentiment expressed by Philip of France in the Crusades, when he said to Richard of England: '' Let the only strife between the lions of England and the lilies of France be which shall carry tliem farthest into the ranks of the infidels." So I pray you, let the only strife between the parties represented in this Chamber to-day. in the presence of this impending crisis, be which shall carry the banner of honorable, patriotic, and effective relief far- thest into the ranks of the opposition. [Applause.] 1S04 CURRENCY REFORI I have ever been tlie enemy of banks ; not of those discc )at of those foisting tlieir own iiaiier into circulation and thus b.'i My ?eal against those institutions was so warui and open at tl wf the Bank of the UMited States that I was derided as a maniac oy tue tribe of bank mongers who were seeking to filch from the public their swindling and barren gaius. ^Thoinafi Jefferson. So persecuted they the prophets which were before you. — Matthetv, v, 12. SPEECH HON. WILLIAM J. BRYAN, OF NEBRASKA, HOUSE OF REPRESENTATIVES, Saturday, December 22, 1894. WASHINGTON. 1895. SPEECH OF HON. WILLIAM J. BEYAN. The House being in Committee of the Whole on tlie state of the Union, and having under consideration tlie bill (H.R.8149) to amend the laws relating to national banking associations, to exempt the notes of State banks from taxa- tion upon certain conditions, and for other purposes — Mr. BRYAN said: Mr. Chairman: I desire, in the first place, to call attention to the extraordinary circumstances which surround the presentation of this measure. This is the closing session of the Fifty-third Con- gress, and nearly half of the members of the House will retire in about two months. Yet the President of the United States has asked this Congresg to pass a bill which changes the entire char- acter of our paper money. If this proposition were to take off the 1 per cent tax from national-bank circulation, or if it were to al- low them to increase their circulation to 100 per cent on the bonds, it would not, although objectionable, involve any new principle; but the plan proposed involves an entirely new principle. It revo- lutionizes our currency system, and this change, which affects every man, woman, and child in the nation, which concerns every inhabitant, is asked of this Congress without the subject ever hav- ing been discussed by the American people. I doubt if you will find a ijarallel in the last twenty-five years. I doubt if you will find such a repudiation of the theory of demo- cratic government. Why do we have platforms? It is in order that the people who vote, kno^\ang the policies to be pursued, may express themselves on those policies, and select such agents as will carry out their ijurposes. If that is the purpose of platforms, if we believe that what power we have really comes from the people, and if we believe that they are competent to govern them- selves, what excuse can be given for proposing so important a change in the monetary policy of the country, without ever hav- ing submitted the question for public consideration? Has any President ever proposed before to annihilate the green- backs? Has any party ever declared for it? Have any campaign speakers ever presented that isstie to the American people? And yet after an election, one of the most extraordinary elections ever held in the United States, after a political defeat withoiit prece- dent, the defeated party in control of Congress is asked, before it retires, to please turn over the issue of all paper currency to the banks. More than that, the Banking and Currency Committee at once takes up the question and certain people are invited to come and be heard. And who are invited? The bankers are invited to come and give their opinions as to the proposed plan. Has any 1779 8 one else been heard? Is the banker the only man interested in this question? And yet, after hearing for a week from the bank- ers, a report is made — one of the most extraordinary reports ever made to Congress. By a bare majority the committee decide to throw the bill into the House, and they say that owing to the exigencies of the Treasury they agree to the report, each one re- serving the right to propose amendments and to vote against the bill I [Laughter.] Mr. PENCE. They begin to see that they are going to do it. Mr. BRYAN. Another extraordinary feature in connection with this bill. Before this Congress has been in session a month we are brought face to face with this proposed change in our cur- rency, and, withoiTt having time to read the testimony of the bank- ers even, the matter is brought up in this House for discussion. It was at first proposed to have two days of general debate. That was the first proposition; and then unanimous consent was asked to close debate under the general rule this week, when it took three days for the members of the committee to get through, not to speak of the few other members of Congress who may feel that their constituencies are interested. I say, Mr. Chairman, that when you consider the circumstances surrounding this question I doubt whether you will find a parallel even in the history of the United States. What does it mean? The President has launched upon the country an issue, an issue which must be dominant until either all Grovernment paper is an- nihilated or until all bank paper is annihilated. That is the issue. And instead of submitting it to the country for calm discussion we are asked now to take snap judgment upon the people and decide the question finally, so that if the people want to change it hereafter they must get a House, Senate, and President to agree to the change. Mr. Chairman, what excuse has been given for presenting this bill at this time? Well, there was a lame excuse in the beginning. But while there might have been some possible excuse for the original bill, the committee recommends a substitute which takes away the only shadow of an excuse that the committee ever had. What was the excuse given for the bill? Why, it was said that the exigencies of the Treasury required immediate action. And what were those exigencies? They said, "They are presenting greenbacks and Treasury notes and drawing out tiie gold and will compel another issue of bonds!" And this plan as first proposed was commended to Congress on the ground that it woiild absorb about half of the Treasury notes and greenbacks, and thereby protect the gold reserve. It is useless to reply that it will not take up all these paper obliga- tions, and that so long as any are outstanding they can still be used just the same as if they are all outstanding. That is a com- plete answer to the excuse. But men who desire a thing, and give a pretended excuse for wanting it, will not be deterred when you take away theii* excuse. The influence back of this bill is the same influence that was back of the repeal of the Sherman law a j'ear ago; and when we fully met and answered the excuse they gave for that bill it did not lessen the power behind the bill. Did they not tell us then that the reason why the Shei'man law must be re- pealed was that they were drawing out gold on the Treasury notes? Do you remember that? iVnd I, among others, tried to call the 1779 attention of the House to the fact that as long as we had $346,000,- 000 of greenbacks which could be used for the same purpose it was foolish to complain that the gold was being drawn out on the Sher- man notes. I suggested that it was like finding fault because the gate was open when the whole fence was down, and that the gold drain would go on just the same, until the Secretary exercised the option to redeem in silver, as he should do. But we labored in vain. The reason given was not the real reason, and therefore to answer it gained no advantage, and it will not have any effect on those who are urging the passage of this measure noAV to show them that the bill will not bring a particle of relief to the Treasury. I will call your attention to the testimony of Mr. Butler, of New Haven, one of the bankers, whose testimony is conclusive on this point. Mr. BLACK of Georgia. Does the gentleman mean to say that the committee invited bankers only to appear before the commit- tee? Mr. BRYAN. Perhaps I should not make it so broad as that; but they were nearly all bankers. Mr. WARNER. Oh, no; the gentleman is mistaken in that. Mr. PENCE. All but Mr. Carlisle and Mr. Warner. Mr. BRYAN. I think if the members will take the testimony they will find that the great bulk of this testimony was given by bankers. Mr. WARNER. Horace White is not a banker; Mr. Dods- worth is not a banker; A. J. Warner is not a banker. Mr. BRYAN. You have named three. Mr. WARNER. C. C. Jackson is not a banker. Mr. BRYAN. Well, that is fdiir; but Mr. Jackson is a broker, Mr. WARNER. If you will give me the list I will show you a number who are not bankers. Mr. BRYAN. Take another list, please, and I will proceed while you count them. Mr. WARNER. I know the gentleman wants his statement to be correct. Mr. Carlisle and Mr. Eckels took up a large part of the time of the committee. On going over the record I find that those who are not bankers whose hearings were extended were Mr. White, Mr. Dodsworth, Mr. Gunton, Mr. Rothwell.Mr. A.J, Warner; that those who are either bankers, brokers, or financiers, were Mr. Butler, Mr. Corn well, Mr. Jackson, Mr. Homer, Mr. Pratt, Mr. Ripley. Mr. Williams, and one other gentleman, Mr. St. John, of New York, who came here repudiating the idea that he represented the bankers and declared himself in favor of free silver. If Mr. St. John be added to those who are not bankers or brokers or in any way allied with them, the time and the space given them is greater than tliat given to all those who are classed as bankers and brokers — this even though the time and space given to Mr. Carlisle and Mr. Eckels be left entirely out of considera- tion. Mr. BRYAN. In numbers, how do they compare? Mr. WARNER. In numbers, there is one more of those whom the gentleman considers as bankers than of the others, if we omit Mr. Carlisle and Mr. Eckels, upon whom so much time was spent. Mr. BRYAN. Now, Mr. Butler says: It seems vei'y much like pouring water into a sieve and catching it in 1779 6 another sieve. One million of legal-tender notes deliberately worked coiild take one hundred millions of koIu out of the Treasury of the United States in any one year. Ten millions or legal-tendei' notes, worked to the full capacity that they mi^rht be worked, could withdraw a thousand millions of yola from the Treasury. This is Mr. Butler's statement and it is common sense. Leave cen millions of these notes ontstantling and they can draw ont a,old from the Treasury as effectttally as if you leave every one of them outstanding. And yet. Mr. Chairman, even in the begiuTiing this bill did not remedy this ditHculty, and the amendment proposed, which allows the national lumks to go on under their present char- ters so that they need not reorganize and deposit this money, takes away the excuse uixm which the bill was first brought in. At this time there is m > excuse for it. There is no excuse for this bill unless it can remedy the Treasury difticitlty complained of. But if the real difficulty was what some gentlemen say it is. there has been a remedy proposed in keeping with the gold-standard idea. There is one thing about this debate which has gratified me, that is, that some of the advocates of tliis plan — perhaps not in detail, but generally — have been frank enough to meet the issue squarely and tell us just what they want. The great difficulty which we have had to contend with in dis- cussing this money question heretofore is that we have been de- bating with men who were behind masks, and who were pretend- ing friendship to silver, Avhen they could not be relied upon to vote for silver in any i\ >rm or at any time. But in this discussion some gentlemen have been frank enough, I say, to tell us what they really think, and they have pointed out what they regard as the only measure of relief, and I want the members of this House to realize just what the gold standard means. The gentleman from Connecticut []Mr. Sperky} who. from his standpoint, dis- cussed this subject with great intelligence, says that you must fund the greenbacks. Mr. Chairman, that is all you can do. If you want the green- backs taken up. so that there will be no more of them and no more Treasury notes with which to draw gold out of the Treasury, there is only one thing that you can do, and that is to fund them in bonds, and you may as well accept that conclusion. But I asked two or three gentlemen this question: ' ' Suppose you do that, what are you going to do then? Does that protect the Treasury? " And they answered, "No; we have $.500,000,000 of silver and silver certificates outstanding, and when the greenbacks and the Treasury notes are out of the way, we must then redeem silver in gold, or the same difficulty will confront us that confronts us now.'" This question was asked of Mr. Jackson, of Boston, who testified before the committee. This is his testimony: Mr. JoHxsox of Ohio. You want to retire the greenbacks so that there will be no call loans for gold? Mr. Jacksox. Exactly. Mr. JoHNsox of Ohio. And then you want to propose a step further — that is, to make every silver dollar or silver certificate redeemable by the Govern- ment in gold. Mr. Ja< Ksox. Every one of them. Mr. JOHXSON of Ohio. So you would still have to carry gold. Mr. Jackson. Yes, sir. »♦*♦♦•* Mr. JoHXSON of Ohio. After destroying the belief of the people in further silver, as you think ouLrht to be done, you think the next stij) would be to re- tire greenbai-ks and finally to retire all the silver in circulation? Mr. Jackson. Tliat is it. Mr. Johnson of Ohio. And that is the feeling among the people of New York City? Mr. Jackson. I live in Boston, but I should say it is, decidedly. The gentleman from Connecticut [Mr. Sperry] told us, toward the conclusion of his very able speech yesterday or the day before, that in his judgment it was not sufficient to fund the greenbacks and Treasury notes in bonds, but that we must fund also a part of our silver in gold bonds. Now, Mr. Chairman, the members of this Congress might just as well meet this question. Even if the proposed plan would ab- sorb every greenback and Treasury note oiitstanding, still it would bring no relief. It would require more than a billion and a half of new bank notes to do that, but if it could be done still we would not be any nearer the end. What is the difficulty? The law says: Upon demand of the holder of any of the Treasury notes herein provided for the Secretary of the Treasury shall, under such regtilations as he may pre- scribe, redeem such notes in gold and silver coin, at his discretion. But there is a clause reading as follows: It being the established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio, or such ratio as may be provided by law. Now, the present Secretary, and the one preceding him, have constriied that to mean that the option really belongs to the note holder, and the same principle has been applied to the greenbacks. Mr. Chairman,! find the English language hardly adequate to express my feelings on that subject. What does that construction mean? Why, there is not a lawyer who would apply such a con- struction in anything except finance. You construe laws so that they will stand, not so that they will fall; and yet that construc- tion means this: "The option is with the Secretary, but it is the policy of the Government not to allow him to use it!" If you construe the last clause so as to take away the option from the Secretary, from the Government, then you construe a part of the law so as to contradict the other part; and no law ought to be construed in that way if there is any other reasonable construc- tion. Now, that construction is the authority of the Treasury Department for paying in gold when it is demanded, and the Government pays in gold simply because the note holder demands it, and the Govei'nnient is afraid that if it refuses gold will go to a premium. But when you have taken the greenbacks and Treasury notes out of the way, and men come and present silver, does not that same clause, " it being the established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio, or such ratio as may be provided by law," ap- ply with as much force? And will they not say that the moment the Government refuses to redeem a silver certificate in gold, gold will go to a premium, and that we will be on a silver basis? I call attention to this in order that members of the House may xxnder- stand that there is no relief for the Treasury provided in this bill, and would not be if the bill allowed twice as many bank notes to be issued as it does permit. Now. what will bring relief? There is only one remedy for this difficiilty, and we must make up our minds either to accept that remedy or follow the gold standard to its legitimate conclusion and issue bonds. Either the Government has the option, and can exercise it, to pay in silver when it wants to, or we must make all paper redeem- 1779 8 able in gold only and abandon tbe bimetallic standard. I am in favor of the former. I believe in bimetallism. We find that along in 1878 or 1879, 1 think it was, a gentleman, afterwards on the Su- preme Bench, Mr. INIatthews, of Ohio, introduced a resolution de- claring it the sense of Congress that the Government had the right to redeem its coin obligations in either gold or silver. The resolution passed, and he was not called a lunatic either. That was the public opinion at that time. Mr. Sherman admitted in an interWew before one of our committees about that time that the fact that the Government had this option and could exercise it helped him in the resmnption of specie payments. If we had the right then, we have it now; and if we have it now, why not exercise it, Mr. Chairman, and not turn over our finances to the contfol of those who conspii-e to defeat the purposes of the Gov- ernment? The word "conspire" is perhaps strong, but I want to call at- tention to what is, to my mind, conclusive evidence of conspiracy in the sense of collusion. The members of the House will re- member that when we were here discussing, a little more than a year ago, the proposed repeal of the SheiTnan law, we were told that they were presenting Treasury notes and drawing out gold. I have the report of the Treasurer of the United States on that subject. You remember that we assembled in August, and that the bill repealing the purchasing clause of the Sherman law be- came a law about the 1st of November. I find that during the three months, August, September, and October, there was presented in greenbacks $1,595,861 for redemp- tion, and ia Treasury notes $1,788,480. Now, we have outstand- ing, speaking approximately, about twice as many greenbacks as we have Treasury notes, and if they had been used promiscuously at that time we would have been called upon to redeem about two dollars in greenbacks for every dollar in Treasury notes. But that was a time when they were trying to show that the Treasury notes were dangerous; and for those months the Government was re- quired to redeem more Treasury notes than greenbacks. Now, there were two months when the discus^n was going on in the Senate — September and October — and for those two months the Treasury notes presented amounted to $630,115, while the green- backs amounted to only $436,104, abotltone dollar and fifty cents in Treasury notes to every dollar in greenbacks, when the ratio would naturally have been two of greenbacks to one of Treasury notes. Why was that? I believe it was because the people who wanted that law repealed were bringing those notes for redemption in or- der to present an "object lesson" before the American people. How is it now? On the 13th, I believe it was, of November the President decided to issue some more bonds; and I think it was on the 14th that the advertisement appeared in the papers. From November 14 down to December 19, both days incliisive, there were drawn out of the Treasury $31,971,533 in gold; and during that time bonds to the amount of $38,570,000 only had been deliv- ered. You can see how rapidly we are gaining gold. Between the time of advertising the bonds and the delivery of thirty-eight and a half million of the bonds, they had drawn out about $32,- 000,000 in gold with which to pay for them. But what was the proportion of greenbacks? Now, you know the cry is "the 1779 greenback must go." Do we find that now the Treasury note is being used more than the greenback? No; beginning with No- vember 14 and ending with December 19 we find that §30,867,333 in greenbacks has been brought in and only $1,104,300 in Treasury notes — more than twenty-five dollars to one dollar, whereas the natural order would be only about two to one. Thus we see that the people who are behind these measures were able to force the Government to the repeal of the Sherman law and stop the Treasury notes by showing how dangerous they were; and now they try to present an "object lesson " on the greenbacks, and offer more than tAventy-five dollars in the greenbacks to one dollar in Treasury notes for redemption. Do these figures not show design? The New York banker is the "honest lago," thetrtisted friend, who first whispers suspicion, then manufactures evidence to dis- credit, and then tries to destroy. These men have it in their power to bring this influence to bear against Government paper, and are they not doing it? Yet, in the face of this conspiracy against the people of the United States, some members of this Congress tell us that the only reply Congress can make to this or- ganized band to assume the attitude of the child Samuel, and say, "Speak! for thy servant heareth." Ah, Mr. Chairman, if in the White House we had the Andrew Jackson who was once there, he would say: "By the Eternal! the rights of the people are dearer than the interests of Wall street! " [Applause.] But it seems that the only reply that the Executive is able to give is: " Whatsoever thou shalt ask of me, I will give it thee, unto the half of my kingdom." Mr. Chairman, I do not speak in the sense of personal criticism. Men in official position are responsible for their conduct; every act and utterance is a proper subject for discussion. And I ask, is the President, in the measures that he is presenting, regarding the interests of our people on this financial question, or is he shaping his policy to suit the interests, the wishes, and the de- mands of those who conspire against the credit of the Government and against the welfare of the people? And, Mr. Chairman, this brings me to the first objection I have to make to this bill; and the objection applies to all bank notes, whether they are issued under State or Federal control. Re-' member it is the bankers who are asking for this measure. The " Baltimore plan " was proposed by a bankers' association. They ask you to allow them to issue the paper money of the country. Do they ask it because they are interested merely in the pixblic good? Have they no desire for profit? Let me call your atten- tion to the language of Mr. Williams, the president of the Chemical National Bank of New York. He was before the com- mittee advocating the funding of the greenbacks into 3 per cent bonds. He said: United States bonds bearing a rate of interest not over 3 per cent — and my idea would be that a 3 per cent bond would be the most advisable to issue, as it would never go below par — and that these bonds should be received as security for circulating notes of national banks on a basis of par for the bonds, the Government having a first lien also on the assets of the banks as addi- tional security. No further margin need be required, as the security would be ample. These notes should be redeemable in the city of New York, and when issued in sufficient volume and being readily convertible would furnish ade- quate elasticity to the currency, which is so much desired, but in no event should be made subordinate to that of security. 1779 10 Now note: The tax on the circulation of national banks shonlrl at onco be removed, and it will be readily seen that with a 3 per cent bond at par and no tax to be paid on the circulation there will be some inducement for national banks as a matter of profit to take out circulating^ notes. Mr. Chairman, I assert as my honest con\nction that the only- reason why the national banks desire to issne paper money at all is because of the profit to be derived from it. No person in com- mittee or elsewhere has suggested that they would ever issue a note tmless there was profit in it. So it is a mere proposition pre- sented here, shall we make the issne of notes profitable to the banks, or, in other words, shall we make it profitable for them to issue money at all? Now. yoti may call it what you like. Mr. Chairman, but, stripped of all its verbiage, the proposition to allow banks to issue money is equivalent to a proposition that the Government shall loan money to the banks at a low rate of interest, or, as Mr. Williams suggests, at no interest at all. and let them reloan it at whatever rate of interest they can secure. I insist that there is no differ- ence in ]irinci]ile between the national banking system as now ex- isting, between the banking systems as in-oposed by this bill, between the system proposed by Mr. Williams, between any of these plans, and the subtreasury plan pi'oposed by some of the farmers. The principles are identical. It is only a question of security and to whom we shall loan. Mr. Chairman, if I had no other reason for opposing this bill I would be opposed to it because it says, in substance, to the farmers and to others, "You cannot borrow money from the Government at 1 per cent or at H per cent or at any per cent, but we will loan to the banker in your community at a nominal rate, and he will loan to you at 8 or 10 per cent or at whatever he is able to collect." I say. if there was nothing else objectionable in the bill, that ob- jection alone would, to my mind, be insurmountable and condemn the whole proposition. Men talk of the preservation of law and order Mr. BLACK of Illinois. Will the gentleman yield to me for an inquirvV Mr. BRYAN. With pleasure. Mr. BLACK of Illinois. Is it not true that the farmer, by tak- ing position with other farmers or financiers, can, and very fre- quentlv does, become a stockholder in national banks? Mr. BRYAN. Yes, sir. IVIl'. BLACK of Illinois. So there is nothing against the farmer having tliis power — nothing to prevent him having it the same as anyone else? Mr. BRYAN. Nothing at all if he wnll go into the banking business. Mr. PENCE. But not as a farmer, only as a banker. Mr. BRYAN. I have heard before the argument suggested by the incjuiry of the gentlenian from Illinois, and it would justify a subsidy to lawyers, on the theory that everybody can become a lawyer if he wants to. It would justify a subsidy to any other class of people on the ground that anybody can go into that busi- ness. Mr. WILLIAMS of Mississippi. May I ask the gentleman a question? 1779 11 Mr. BRYAN. Certainly. Mr. WILLIAMS of Mississippi. Will the gentleman from Ne- braska please explain clearly to the House how he identifies the exercise of the natural right, inherent in any natural or incorpo- rated person, to issue his promissory note to anybody who chooses to take it, with a loan from the Government of the money pro- vided by the people for the support of the G-overnment? Mr. BRYAN. I am glad the gentleman has asked the question, because it recalls to my mind a point that I had myself overlooked, and I think I can in a word make it so plain to him that he will not ask the question again. If he wants to borrow money he has a right to issue his note, and he has a right to issue it to any per- son who will take it and let him have the money. But in prac- tice, when he finds a man who will take the note and let him have the money, he finds a man -^ho will make him pay interest upon it. So that the natural right that men have is a right to issue their notes /or money and to pay interest on them. But the right AA'hich you ask for the bank, on a proposition similar to this, is a right to issue its notes as money and draw interest on them. Mr. WILLIAMS of Mississippi. Will the gentleman permit me? Mr. BRYAN. Certainly. Mr. WILLIAMS of Mississippi. If the gentleman will allow me to say so, he is but obscuring the issue when he makes it a ques- tion of interest. The question I asked was based upon my natural right, whether as an individiial or a corporation, to issue my promis- sory note, with or without interest, to anybody who is willing to take it, not invoking the power of the Government to make him take it by a legal tender enactment, biit leaving him free to take it as he chooses. The question of interest or no interest cuts no figure at all in the controversy. Mr. BRYAN. I think the illustration I have given covers the case absolutely, for the tax is equivalent to interest. The bank does not ask the privilege of circulating its notes as other people circulate theirs. Nor does a bank's issue circulate on the credit of the bank, but on the faith of the Govern- ment which authorizes and controls the bank. Bank notes are accepted on the supposition that they are safe because the bank is expected to comply with the law, but an individual's note can only circulate on his own credit. The bank asks the privilege of circulating its notes as money, a right which no individual has, and a right which you would have to give to every individual who would give like security in order to make the law ecxual in its operation. Mr. WILLIAMS of Mississippi. If the gentleman will excuse me, I thought, according to his definition of money at any rate, the legal-tender quality was altogether essential. I thought again and again I had understood him to say that was what made money. Then the gentleman says this man wants to circulate his promis- sory notes as money without the legal-tender quality which would make it, according to the gentleman's definition, money. Is not that the play of Othello with Othello left out? Mr. BRYAN. Well, Mr. Cliairman, I will not discuss with thp gentleman the technical meaning of words. I do believe that there ought to be no money except a legal-tender money, and no money except what the Government issues. That is my opinion; but the bank wants to issue a paper to be used as money, to cir- 1779 12 dilate as money, for the profit there is in it to the bank; and I in- sist that when the bank asks it, it is asking a right whicli nobody else has, and it is asking of the Government a favoritism whicli the Government can not afford to show. Mr. Chairman, we talk of the necessity of suppressing riot, and of quelling mobs. It is necessary. Law and order must be pre- served at any price, because there can be no security to life, lib- erty, or property without law and order; but, Mr. Chairman, when these gentlemen propose the preservation of law and order, by sowing the seeds of discontent, and then bringing the Army near to the cities to suppress the manifestations of discontent, I want to propose a more patriotic plan. I want to i)ropose the only real remedy, namely, that we take away the causes of dis- satisfaction and cease to scatter the seeds of discontent. Favoritism shown by the Government breeds more discontent to-day than all other things combined. The love of justice is the deepest sentiment in the" human heart, and just as long as men see that others are treated as they are, they can bear almost any condition. But, sir, when men see that a few are favored and, by special class legislation, are taken out of general conditions and given unfair advantages; when they see these abuses of gov- ernment, then they begin to feel dissatisfied and to clamor against certain laws, and some even blindly begin to clamor against gov- ernment itself, confusing the Government ^^dth obnoxious laws. Mr. Chairman, we read in holy wi-it that when the father of Joseph gave to him a coat of many colors, his brethren hated him because the father had shown his special affection for him; and favoritism to-day breeds discontent among citizens as effectually as it did four thousand years ago among the brethren who kept their flocks in Dothan. If you put a splinter into the flesh it will fester; nature will try to expel it. If you take it out the wound will heal; but if you keep that si)linter there the corruption vdll spread over the whole sys- tem until sometimes life itself is sacrificed. Let this little splinter be inserted in our political system and others will demand like favoritism. The corruption will spread throughout our body politic, and -on every hand we shall see the effects of the vicious principle which we are asked to declare as a right principle in the case of banks. Mr. Chairman, I believe that if to-day an appropriation were proposed for the spread of smallpox throughout the United States it would be far less dangerous to the people of the country than legislation like this, which takes up a particular class of our peo- ple and applies to them a vicious principle, with all the conse- quences that must necessarily follow from it; because when the smallpox is raging in the country, it is an open and obvious dis- ease, and people may escape from it, but the influence of this pleasant but poisonous principle is such that other people insist upon having it applied to them because it has been applied to somebody else. And therefore, Mr. Chairman, I do not believe that we can afford to give this valuable privilege — because it vsdU not be used unless it is valuable — to a particular class of our peo- ple. If the brethren of Joseph complained because his father gave him the insignia of favoritism without his asking, what will be the feeling when this favor is given, not as a voluntarj' token of parental affection, but because of the demand made by the 1779 13 banks for it, a demand backed iip by all the influence wMch they can bring to bear. Mr. WILLIAMS of Mississippi. Is not the gentleman from Nebraska perfectly aware of the fact that to-day a great majority of the national banlcs and other banks of this country are oppos- ing this very identical bill? Mr. BRYAN. Yes; a great many of them are. Mr. WILLIAMS of Mississippi. Then why does the gentleman say Mr. BRYAN. I intend to speak of that in a moment, and per- haps I may as well take it iip now, as the gentleman has called, attention to it. The second objection which I have to this bill is that the moment you vest in a private individual or corporation a particular or valuable right or privilege you make him or it the enemy of any law that seeks to take away the privilege. Of course the national banks vnll object to any law which they do not think as good as the one they have; and there is a special reason whj^ they may object at this time to this bill; they may think that by waiting imtU next year, when the Republicans have a large majority in Congress, they can get a better bill than they can get now. That is one reason why the national banks may object to this particular bill at this time. Mr. WILLIAMS of Mississippi. Did I understand the gentle- man from Nebraska a moment ago to say that we did not give them that as a voluntary act, but on their demand? Mr. BRYAN, I am not speaking of this particular bill, but of the right to issue paper money. And I want to call attention, Mr. Chairman, to the difference between the principle enunciated by the first Democratic President and the principle enunciated by the last Democratic President. Mr. Jefferson gave this advice in 1819: " Interdict forever to both the State and National Govern- ments the power of establishing any paper banks." Mr. Jefferson's idea was to annihilate every form of bank paper and to prevent its ever being revived. Mr. Cleveland on the other hand says in his message sent to Congress at the beginning of this session: "The absolute divorcement of the Government frona the business of banking is the ideal relationship of the Government to the circulation of the cm-rency of the country." Mr. Cleveland thinks that the issue of paper money is a function of the banks and that the Government ought to go out of the banking business. Mr. BLACK of Georgia. Will the gentleman permit me? Mr. BRYAN. In a moment. Mr. Jefferson thought that the issue of paper money was more properly a function of the Govern- ment, and that the banks ought to go out of the governing busi- ness; and I am not ashamed to say that I would rather stand with Thomas Jefferson and drive the banks out of the governing busi- ness than to stand jvith Grover Cleveland and drive the Govern- ment out of the business of issiiing paper money. [Applause.] Now, Mr. Chairman, when I say that banks will attempt to pre- vent any legislation hostile to them, I do not say that they are worse than others. In all our legislation we must remember that people are human, that men are much alike, and that they are very apt to look after their own interests rather than the interest of somebody else. It is not strange that when you have given to the banks a valuable privilege they will try to prevent that privi- lege from being taken away from them. 1779 14 Mr. BLACK of (xeorf^ia. Did Mr. jetfersou favor the issue of paper moiicv by the Government Mr. BRYAN. Yes, sir. Mr. BLACK of ( jeorgia. Excejit on emergency, and its redemp- tion to be provided for by the revenue of a tax. Mr. BRYaN. I will quote what he says. The Supreme Court, nowe\er. has decided since that Government paper can be made a legal tender. Mr. BLACK of Georgia. We are not talking about the deci- sion of the Supreme Court, but we are talking about Jefferson. Did he hold the same idea that you have advanced? Mr. BRYAN. Let me read his idea. I have quoted to you what he said about interdicting to both the State and National Governments the power to establish paper banks. He said he was opposed to paper banks; he even said that he believed they were more dangerous than a standing armj^ and in that I fully agi'ee with him. I do not believe that a standing army can drive the Government to legislation. Mr. BLACK of Georgia. Does he Mr. BRYAN. Wait a minute. If the gentleman will pardon me, I will reach that point dii'ectly. I do not believe that a stand- ing army can menace the Government as much as the association of all our great moneyed interests in favor of or against a par- ticular law. Now, I will read what Mr. Jefferson said iMr. BLACK of Georgia. I thought you were taking him as your leader? Mr. BRYAN. I was quoting his words against paper money issued by banks. Now, I will read what he said about Govern- nient paper. In a letter wi'itten from Monticello, June 24, 1813, to John W. Epps, Mr. Jefferson said: This is equivalent to borrowing tliat sum, and yet the vendor, receiving payment in a medium as effectual as coin for his purchases or payments, has no claim to interest. And so the nation may continue to issue its bills as lar as its wants require and the limits of the circulation will admit. * * * g^t this, the only resource which the (Tovernment could command with certainty, the States have unfortunately fooled away, nay, corruptly alienated to swin- dlers and shavers, under the cover of private banks. * * * The States should be applied to, to transfer the right of issuing circulating paper to Con- gress exclusively, in perpotuum, if possible, but duriag the war at least, with a saving of charter rights. He wanted the States to confer upon the Federal Government the exclusive right to issue paper money. Mr. WARNER. Was that a legal tender? Mr. WILLIAMS of Mississippi. To issue what? Mr. BLACK of Georgia. He said he wanted the people of the States to transfer that right. Mr. BRYAN. Yes, sir. Mr. BLACK of Georgia. But he says that the right resides in the States. Mr. BRYAN. I am not discussing the right. I am discussing the policy of establishing banks of issue. State or national. Mr. BLACK of Georgia. We are discussing Mr. Jefferson. Mr. BRYAN. I am discussing the words which I qiioted from Mr. Jeffei-son. Mr. BLACK of Georgia. But the gentleman is not discussing the other view. I thought th9 gentleman took him for a leader, 1779 15 "but he seems to only follow upon those positions in which he agrees with Jefferson. Mr. BRYAN. I hope the gentleman will not expect me to quote everything Mr. Jefferson said on all subjects when I quote him in siipport of one proposition. Mr. WARNER. Was that legal tender? Mr. WILLIAMS of Mississippi. Read the language again. [Mr. BRYAN read again the language of Jefferson, just given.] Mr. BRYAN. Now, does the gentleman from Mississippi wish to ask a question? Mr. WILLIAMS of Mississippi. I merely desired to have the language of Mr. Jefferson read again. Mr. WARNER. What I want to ask the gentleman is whether he for one moment suggests that those remarks of Jefferson ap- plied to i)a,per having any legal-tender quality whatever, or to any such paper as that which the gentleman is now advocating? Mr. BRYAN. Mr. Chairman, I have not quoted Jefferson as sustaining the idea of legal-tender paper, nor is it necessary, in order to make the argument good, to find that Mr. Jefferson ever did approve any such idea. I do not know whether he ever advo- cated or opposed legal-tender paper. I have qiioted Mr. Jefferson as against State-bank paper and national-bank paper, and I have quoted him as in favor of the Government exclusively issuing paper to circulate as money. Whether that paper is to be a legal tender or not, is another question on which I shall speak later. How much time have I remaining, Mr. Chairman? The CHAIRMAN. The gentleman has twenty minutes remain- ing. Mr. SPRINGER. Mr. Chairman, I ask unanimous consent that, if no other gentleman desires to speak this afternoon, the gentleman from Nebraska be allowed to occiapy sufficient time to conclude his remarks. The CHAIRMAN. There is no other speaker on the list for this afternoon. There was no objection to the request of Mr. Springer. Mr. BRYAN. I am grateful to the gentleman from Illinois [Mr. Springer] and to the members of the committee for this courtesy. I had not intended to occupy much time this afternoon, because the House has indulged me very generously on former occasions, and also because my argument made on this floor on the 5th of last June covers much of the ground I am now going over. However, the questions which have been asked have occu- l>ied a considerable portion of the time which I should other- wise have devoted to the direct discussion of this bill. Mr. Chairman, I was quoting what Mr. Jefferson said in regard to the danger of these banks. I believe that it is a question which this Congress ought seriously to consider, whether the establish- ment of these banks of issue, State or national, tends to build up a class hostile to any change, and makes it difficult for the people to withdraw from the experiment if they become tired of it. That is my second objection to any sort of a bank of issue; for, while other i^eople will look after their rights and their interests — and it is proper for people to look after their own rights and to protect their own interests — while other people, I say, atT* a rule, will op- pose any legislation which interferes with their rights or interests, there is no class on earth of its size that can bring such tremen- 1779 1;; dons intlnence to bear \ipon le.u'islation as the bankers. For they not only have the power of concentrated capital but they have the leverage of the obligations which they hold, by which they can, if they will, without acting openly, almost coerce those who bttrrow of them. But there is another objection. I am opposed to banks of issue, State or national, because I do not believe we can safely give to private corporations the power to control the volume of the paper currency of the country. Tliis bill has for its purpose nothing less than the surrender to the banks of issue of the control of all the paper money to be used — because our silver certificates and gold certificates are not, in one sense, paper money, they are sim- ph- certificates of deposit. Now, can that safely be done? Mr. Chairman, we who believe in the bimetallic idea, and, in fact, nearly all those who believe in metallic money at all, favor it mainly for the reason that the supply in the world is so large, compared with the annual addition— that annual addition being determined by the supply from the mines — as to prevent any sudden expansion or contraction of the currency. That is the main argu- ment in favor of a metallic currency. That is the reason which makes me believe in metallic money as a base. I believe that if we leave the metallic idea undisturbed by restrictive legislation the volume of currency will be more uniform, and consequently the A'alue of the dollar more stable, than it will be under any other plan. There is another way in which you can control the currency, namely, by legislation. There are those who believe in what they call irredeemable paper money, to be regulated in volume by legislation. In legislative control there are two diflSculties to be met. First, there may be a lack of knowledge on the part of the legislative body as to how m\ich money is needed, a lack of knowl- edge of the various factors which enter into the supplj- of and demand for money. Then there is another difficiilty. Even if there is great intelligence, infinite intelligence, there miist be as- sociated with, it absolute impartiality, or else one class will get an advantage over another; and my fear of a money controlled en- tirely by legislation is that, as one party or faction or influence becomes dominant, and then another, they may increase or de- crease the currency, inflating or contracting it; and by so doing change the value of the dollar, change its i^urchasing power and therefore change the value of all the proi^erty o%vned by all the people who live within the jurisdiction of the Government. Now that, to my mind, is the danger. And yet, Mr. Chairman, when I am compelled to choose between the regulation of the vol- ume of currency by legislation and regulation of it by banks or other private corporations, I shall without hesitation risk the dan- gers attendant upon regiilation by the Government. The repre- sentative of the people is answerable to them. He must act openly. His conduct is known and he is responsible to his con- stituents. But when that power is given to private individuals or private corporations they exercise it for their profit and not for the public good. Having no more knowledge than the legislators have, they have an uuiestrained desire to act so that they will secure the greatest possible advantage. Banks have combined in the past; we know that. Banks can combine again; we know that. Banks will combine in the future whenever they can secure 1779 17 a profit by it. No one can dispute that who will read the testi- mony of the bankers themselves, for they tell lis that we miTst make the issue profitable. But if they find that by siirrendering their paper issiies suddenly they can make more jirofit, are we not bound to believe they will do if? This nnist be so if we believe the testimony of the bankers themselves. And this bill not only gives to the banks the power to control the ciirrency, but it takes away every safeguard that the present law i)rovides to prevent the unfair use of that i)ower. The present law provides that the banks can not surrender in the aggregate more than $3,000,000 in any single month, and that any bank after surrendering any part of its circulation can not take out more for six months. But this bill wii^es out those restric- tions. More than that. For fear the banks may not be able to act suddenly, this bill provides that the Secretary of the Treasury must keep on hand blank notes, ready to be issued on demand. This bill not only surrenders to the banks the entire control over the currency, but it wipes out every restriction upon the exercise of the power. By this bill we simply say to the banks. " Noav you have absolute control of the volume of currency; please be merci- ful unto us." Mr. Chairman, I, for one, am not willing to surrender this at- tribute of sovereignty to national banks nor to State banks nor to any private individuals whatever. I am no more willing to give tliem the right to contract and expand the currency at will than I am to farm out the right to collect our taxes or to enact penal statutes. Mr. SPRINGER. Will the gentleman allow me a question? Mr. BRYAN. With pleasiire. Mr. SPRINGER. The gentleman states that this bill gives to the banks the i)ower to enlarge or contract the currency at their will. Will he tell us how the banks can enlarge the volume of currency unless there are some i^ersons who want to borrow the money — persons who come to the bank and take it out? And how can the banks contract the currency unless some iDersons come to the banks and x^ay their debts? How can the currency be expanded unless people who want the money and can use it come to the banks and take it out? Mr. BRYAN. The gentleman's question is partly pertinent. Under natural conditions what he says is true — that expansion or contraction would depend upon the demand. But, Mr. Chair- man, whenever the banks found that they could secure a greater profit by suddenly drawing in the money they had out and pre- senting it for cancellation I have no doubt they would do it. Mr. SPRINGER. Under this bill the banks would have no more use for money if the people did not want it than they would for "the fifth wheel to a wagon." You might give the banks a thousand millions of currency, and it would simply lie in their vaiilts unless persons wanted to use that money and went to the banks and drew it out. Mr. BRYAN. You can stimulate the use of money by lowering the rate of interest. Mr. SPRINGER. You want it lowered, do you not? Mr. BRYAN. I do; but I do not want the banks to hold a string to it. I do not want them to lower the rate of interest at one time and raise it at another, just as they may choose. I do 1779 2 18 not think yon can trnst this power to expand and contract the cnrrency to private individnuls without danger of abuse — too gi'cat a (lan,n-or for Congress to overh)ok. :Mr. SPRINGER. The friends of this bill regard the power to exi)an(l or contract the cnrrency as one solely with the people, who may or may not need money in the transaction of their busi- ness. I'lie banks themselves can not expand or contract. Only the people who need it, and therefore obtain it from the banks, can expand the currency. Wlien the people do not need money the civrency will be contracted by the return of the money to the banks. Mr. BRYAN. That is doubtless the ji^dgment of those who favor the bill. They believe it will always be profitable for the banks to issue money when it is needed and to take it in when it is not needed: but I am not willing to trust the banks to act upon that theory always. If at any time they find that by going con- trarv to the theory they can make more money they will do so. Mr. WILLIAMS of "Mississippi. Will the gentleman permit one further interru])tion. and then I will not trouble him again? :Mr. BRYAN. Certainly. Mr. WILLIAMS (^f Mississippi. I suppose the gentleman and I agree about one thing, namely, that the banks and the bankers are contolled entirely by the dictates of self-interest, that there is no philanthropy of any sort in regard to their business manage- ment, and that they would not cut oft" their noses merely to spite their faces. Neither animosity nor philanthropy is paramount in the control of the banking business. We agree on that, I pre- sumed Ur. BRYAN. Yes. Mr. WILLIAMS of Mississippi. Then we agree about another thing also, and that is that the market value of money to be loaned, at what we call interest, depends on the law of supi)ly and demand. Now. in view of that, would it not follow that the desire of the bank to utter its notes, T)ased o.i*,ts self-interest, would in turn be necessarily based on the condition of the loan market as to tlie demand for loans and the supply of loanable fimds? In other words, would not the self-interest of the banker in trying to get the best interest and the highest profit from the conduct of his bvisiness make him utter notes when there was a demand for notes, and therefore a higher rate of interest; and is not the con- verse of that also true, that he woiild retire the notes when there was a small demand for them and a low rate of interest, and would not that work exactly and automatically in accordance with the demands of business and the interests of the people in connec- ti:i,340 — 1779 23 Mr. PENCE. What Carlisle? Mr. BELL of Texas. John G. Carlisle. [Laughter.] (Continu- ing reading) — and precipitated a crisis which would have been disastrous to the country had it not lieen met by measures which they had no power to prevent. Tlie prompt action of the Secretary of the Treasury in purchasing a lai'ge amount of bonds at the city of New York and the course of the Canadian bants in throwing |7,er representatives of gold and silver. And yet you want to flood the country with a papT:>r currency that you can not pay a debt with and can not di-aw money on unless you X)resent the paper at the bank which issued it or at a redemption agency. Now. let me call your attentifm, Mr. Chairman, to the testimonj- of Mr. Butler, and I was interested in it because it perhaps gives the origin of one of the popular songs of the jjresent day. One of the great arguments in favor of a l)ank currency is that it is an elastic currencj^ and they tell us it can. only be elastic by bei7ig a nonlegal-tender currency and not redeemable at all the banks, so that it will always return to the bank issuing it when there is a surphis. That is the argument in favor of an elastic currency — that it is not a legal-tender currency; that when there is no use for it it Avill always tend to come back to the bank of issue. And in the old wild-cat currency days the banks used to send their currency off as far as they could, so that it would be as long as possible in getting back. Mr. Biitler says: Under every effort we made to keep it oiit it remained about $135,000; and even then weused to send it to (Miio and Illinois and Indiana. But no matter how far it was sent awa3-,or how often, this wild- cat currency would always come back at last, and I think that may be the origin of the song, "And the cat came back." [Laughter.] 1779 27 Now, that is the idea of some of our financiers as to this money. I do not believe we can afford to substitute for legal- tender money a money which is not legal tender. There is nobody demanding it. The people who use the money are not demanding it. No party is demanding it. No association is demanding it, except the people who want to issue the money. They are the only ones. Mr. BLACK of Georgia. Let me ask the gentleman if there was not something of a. pledge or a demand for it in the Democratic platform on which the gentleman was nominated? Mr. BRYAN. There was not. There was a demand in the na- tional ijlatf orm that we take off the tax on State-bank circula- tion. Mr. BLACK of Georgia. Will the gentleman question the fact that the purpose was to allow the State banks to be restored to the rights they enjoyed before that tax was imposed? Mr. BRYAN. That was the intention, I think, of those who secured the adoption of that plank; but I heard some very eloquent men on this floor say that the reason was because it was an uncon- stitiitional tax. Mr. BLACK of Georgia. Of course unconstitutional. But the gentleman started out in his address that has been so entertaining and instructive to us, and I quite agree with very much that he has said, with the opening declaration of the obligation of plat- forms. Now, I wanted to knoM' what he was going to do about that demand of the Democratic party in its platforni. Mr. BRYAN. I think the gentleman is rather straining niy lan- guage. I said the object of platforms was to x>ut questions before the people so they could choose their servants on them, and I made the point that this currency scheme had never been under public discussion. The platform did not demand the retirement of green- backs and Treasury notes. Mr. WILLIAMS of Mississippi. So you do not stand on the Democratic platform? Mr. BRYAN. So far as that plank is concerned, many men, elected as Democrats, repudiated that plank entirely. I was one of those who voted against taking off the tax before and after the election, and I expect to continue to occupy that position. Mr. BLACK of Georgia. Then the gentleman is boimd by the platform when he chooses to be bound by it, but not otherwise? Mr. BRYAN. I can not see how the gentleman can put that constriiction upon what I have said. I think when a man repu- diates a plank in advance of election he is not bound by it. That is often done. So far as I am concerned, however, I denounced that plank during the campaign, and, besides, I was nominated be- f oi'e the i)latf orm was adopted and on a platform which differed in some respects from the national platform. I consider myself bound by tlie platform on which I was nominated and elected rather than by the national platform. But I must not dwell on that. I do not believe, Mr. Chairman, that the notes will be safe under this proposed plan. I do not want to present too long a list of objections to the notes, but I do not be- lieve that they are safe, and let me give you one of the strongest evidences that they are not safe. You know why the substitute took away the dangei; of assessment? It was because the banks were afraid of the liability under it. Now, if the notes are good without that, the banlw were in no danger. If the banks Avere in 1779 28 tl;ni,t>er hecaiise of that, then the notes are not good without it. Ami if the clanger of being called upon to make good the losses was so gi-eat that banks would refuse to go into the business be- cause of it. I want to ask if the danger is not great enough to make the holders of the notes fearful if the assessment is done away with? Tliere is no absohite security for paper money unless the Gov- ernment is back of it. If we are going to liave paper money I be- lieve the first essential is that it shall be absolutely good. If we are going to have bank money I believe the best bank money we ever had is the present national-bjink money, becaiise it is always good in the handset the note liolders. But the national bank has objectionable features — all the objectionable features, in fact, that banks of issue have on princi])le. Still it furnishes security for its notes, and this biU now pending does not give security to the notes. Yoii may say that generally they will be good. That is true. Ordinarily they Mall be good, but you can not make them good enougli to meet emergencies. Let me call your attention to the experience had in Newfound- land quite recently. They had two large banks of issue there which had $1,200,000 of currency outstanding. These banks re- cently suspended payment. They were g0( )d banks. Things went on smoothly in prosperous times. One declared a 13 per cent div- idend last year and the other a 15 per cent dividend. In time of prosperity they prospered; but wliat was the result when ad- ver.sity came? Why, the banks sus]:)ended payment, the notes became mere merchandise, and I have just noticed in the press dispatches that a government leader has oifered a bill providing that the Grovernment shall investigate the matter, find out how much the banks anhII pay, and then guarantee the notes to that extent so that they ^\^ll again pass as money, the concluding words of tlie paragraph being that some are advocating a plan which provides for issuing treasury notes. Ah, Mr. Chairman, when we come to the time of need private banks of issue are a failure, and the people, after all, must fall ba-ck upon the Government. If the Government is good enough to give relief in time of distress, whj- is it not good enougli to fur- nish in times of prosperity the notes required to meet the needs of business? Why is the greenback, which is so good whenever there is an extremity, so repugnant to every idea of "good bank- ing ■■ when the time comes that the banker can take something else and make more money out of it? The State-bank circulation contemplated is not as safe even as the national-bank notes proposed. The bill allows the revival of State banks of issiie under certain conditions, but it does not pro- vide for any safety fund. It pro\'ides the guaranty fund, but not the safety fund. You have simply the assets of the bank. You say, -'If men do not want to take the money they need not do so." That, Mr. Chairman, is not a sufficient answer. We have a law that requires the inspection of baiaks by Government agents. Why do you not say that if men do not want to deposit in banks they need not do it. We know, Mr. Chairman, that we must in- spect and regulate them, because otherwise the people will be im- posed upon and advantage be taken of their necessities. And the same argument that justifies a law regulating the rate of interest, the same argument that is behind a law inspecting banks and 1779 29 inspecting scales, etc., is the argument that will compel yon to make paper money good before yon allow it to circulate. You do not do it with state banks. I appreciate the contention of these gentlemen who say that the States ought to be allowed to regulate that themselves. But. Mr. Chairman, this money is a matter which aftects the whole country. It is a matter which affects one State as much as another. The law now virtiTally prohibits, not in terms, but in effect. State banks from issuing circulation; and I prefer to let it stay as it is, rather than repeal the law and risk the reestablishment of wild-cat banks. It is not that every bank would be a wild-cat bank. It may be the majority of them would be good, but Mr. Chairman, the fact that some of them are bad will throw discredit upon all the rest of them, and people will be first negotiating the price of a horse, and then the price of the money that pays for the horse. But I must not dwell upon that. I believe that this bill lessens the security to depositors. G-entlemen talk about the banks keep- ing a reserve without any compulsion. They probably would. Good banks would, and you say bad banks will evade it anyhow. Well, men try to evade all good laws; but, Mr. Chairman, I do not think this provision which repeals the necessity for a reserve fund is in the interest of the depositors, or in the interest of the public. Just as soon as there is a threatened panic, the fact that there is no legal reserve required will make people suspicious, and will hasten the run upon that bank. Mr. PENCE. Will the gentleman permit me? Mr. BRYAN. Yes, sir. Mr. PENCE. Is it your understanding that this bill repeals the provision of the national banking act requiring a reserve? Mr. BRYAN. Yes; this bill does it in so many words. Mr. PENCE. You are speaking of the substitute? Mr. BRYAN. Both of them do. Mr. WARNER. What protection is a reserve to depositors in case of a run, or in case of close times? Mr. BRYAN. Itis just this protection. People differ in timidity. The very timid will go first. If they get their money, that tends to allay the panic, and if there is no legal reserve there they are more apt to start a run in the first place, and if, when they get there they find the money gone, then the bank has to suspend. Mr. WARNER. I understand that the gentleman admits that in times when money was not tight there was no trouble. Now what I am getting at is, how does the proviso for a reserve afford any additional security whatever for depositors in the time of a run? Is not the reserve comparatively small and paid out to those who first get there? Mr. BRYAN. Certainly. Mr. WARNER. Then, how is it any protection to a depositor in the case of a run? Mr. BRYAN. It is a great protection to have some money there to be paid to the first who come, and stop the panic, rather than to have none there when they come for it. It gives a feeling of confidence which is very important. Mr. WARNER. Does it give a feeling of confidence to have it understood that the bank is encroaching upon its legal reserve? Mr. BRYaN. It can only encroach upon its reserve to pay its depositors, but without a law on the subject it can encroach upon 1779 3(» its reserve to make loans, and if the desire to loan monej' and get intorcst for it is ji^reater than the caution of the officers of the bank the dfpKsitors suffer. Mr. WARNER. Do I understand, then, that a bank can stop a run, or can do anything else than cause a run. by refusing to extend its loans, and thereby compelling the people to get the cur- rency? I appreciate the gentleman's argument as to general times, but i ask liiui in all candor whether every argument for a reserve in ordinary times does not fail in times of panic, and whether the fact of a reserve is any protection or unj^thing else than a prohibi- tion to the bunk from extending loans so as to prevent tinaucial stress and rxms upon the bank? Mr. BRYAN. Well, Mr. Chairman, I have no idea that I will ever be able to entirely agree ^\'ith the gentleman in opinion: but my point is this, that if a l)ank is permitted to loan all its ca))ital and not required to keep any reserve, then as soon as a imnic is started the bank will have to draw in its loans and embarrass its borrowers or find its vaults empty. Mr. WARNER. Will it rn^t have to withdraw those loans if it is not allowed to discount while its reserve is not kept up? Mr. BRYAN. No, sir. It will have to refuse loans. Mr. WARNER. If there should be a run on the bank, and it should withdraw its loans, will it not make a greater rush for the currency. ■Mr. BRYAN. No, sir. The run would not be as great as it would be without a reserve. Mr. WARNER That is the way it looks in our part of the country. Mr. BRYAN. If its legal reserve is safe it can renew its loans and the gentleman can see how much more danger there is of the panic being extended if the bank must draw in its loans and create a reserve after the ])anic begins. Mr. WARNER. But if you refuse to extend loans, does not that cause a greater demand for currency? • Mr. BRYAN. If j-ou have to refuse extension in order to create a reserve you will cause embarrassment, but if you have the legal reserve on hand you can extend loans. Mr. WARNER. The gentleman's understanding of the law is entirely different from that which we have in our part of the country. The understanding we have of the present law is that it forbids the extension of loans and discounts which might keep money easy and save the cash reserve from being drawn out by depositors in a run. Mr. BRYAN. Why, certainly, if the reserve falls below the limit. Mr. WARNER. In other words, whenever there comes a time when the demand for ni( mey is such as to Tiring it down to the reserve line, the proviso for a reserve prevents the bank from ex- tending loans and thereby protecting itself from the run upon its currency. Mr. BRYAN. I have tried to state my position clearly and have given the reastnis which lead me to believe that -without a legal reserve depositors are less secure and panics more jsrobable. And now. let me add. that the security of the depositors is still further lessened by this bill, because the payment of the circu lating notes is made a first lien upon all the a.ssets of the bank. 1779 31 Under the present law the bonds are always more than sufficient to redeem the bank notes outstanding, but imder the new law, if an officer of the bank runs away with the funds on hand, an amount of notes equal to more than one-half of the capital must be i-edeemed out of the assets which ought to secure the deposi- tors. The danger to depositors occasioned by this new liability will intensify financial disturbances and invite general panic. But why particiilarize further'? There is hardly a dangerous financial idea now extant which has not found a place in the bill, and there are several days left in which to supply newly discovered ones by amendment. The presentation of the bill at this time is not only inopportune, but is absoliitely without excuse. The measure is half national bank and half State bank, the deformed offspring of two false systems, and has all the faults, weaknesses and frailties that might be expected in the child of such a union. I said that it was without excuse. I will modify the statement. It is without an excuse which can be boldly declared. There is an excuse for it. but the excuse does not appear in the argument of those who advocate the bill. There is a purpose behind it, but it is not the jmrpose blazoned upon the banners. The real piiri)Ose of the bill is to take another and a long step in the direc- tion of gold monometallism. When we were considering the repeal of the Sherman law some of the members who voted for that bill did not like it, but they made themselves believe that it would help silver: that it would "clear away the rubbish," as some said, and that we would "get down to the foitndaticm," and on that we would build up bimet- allism. There were men in this House who voted for the repeal of the Sherman law under the belief that there would be subse- quent affirmative legislation in favor of silver. Some of us tried to convince those members that the infl^^ences behind that bill were hostile to the reestablishment of silver. There was never anything in the President's attitude to encourage any man to be- lieve that he intended to do anything toward the rehabilitation of silver, but there were some people who voted for that bill in the vague hope that in some way it would turn out to the advantage of silver; and to-day there are men who are going to vote for this bill who are trying to justify their action on the ground that in some way this bill will redound to the benefit of silver. I desire to call the attention of any such to a statement made in the New York Evening Post of December 19, this week: Whatever may be the fate of the Carlisle bill, the movement for currency reform through better banking methods will go on, and it will draw more and more of Mr. Bland's cohorts. Already the newspapers of the mining States have taken the alarm. Some of them say that either the Carlisle bill or the Baltimore plan, if adopted, will be the '•death knell of silver." Yes, gentlemen, the death knell of silver, in the sense that you mean, is already sounded. It was sounded when th3 attention of the public was drawn to a cheaper and speedier way of supplying the public with the instruments of exchange needed to transact their daily business Mr. Chairman, it is my humble judgment that the influences behind this bill are bent on nothing less than the total arniihila- tion of silver as standard money. Notwithstanding the distress and misery already brought upon our people by the appreciation of money: notwithstanding the declaration of all national platforms in favor of bimetallism; notwithstanding the known sentiment of 1779 32 the pec^ple in favor of the use of both gold and silver as standard moiK'v; not\\ithst;inding the constant contest waged by the agri- cnltnral comninnities in favor of the rehabilitation of the white nu'tal: notwithstanding the recent resolutions of the Federation of Labor in favor of the immediate restoration of the free and nnliinited coinage of gold anresent this insolent demand for further legislation in favor of an universal gold standard. I. for one. will not yield to the demand. I will not help to crucify mankind upon a cross of gold. 1 will not aid them to press down upon the bleeding brow of lal)or this crown of thorns. The menil)er who votes for this Ijill may justify his vote in his o^^^l mind and indiilge the hope that in some way it will turn out for the benefit of silver, but I warn him that when this bill is dis- posed of the forces which are pushing it through Congress will never allow any legislation favorable to bimetallism if they can prevent it. It is a part of the gold conspiracy, and like every other act in the conspiracy comes to us in disguise. The demonetization of silver in 1878 was not secured after open discussion. The law was not enacted after the people had passed upon the question. De- monetization was secured then without popular consent, and was hidden in a bill to codify the mint laws. Again, what about the bill of last summer? Had the people gone into the campaign and demanded the unconditional repeal of the Sherman law? No, sir. The same x)lank of the platform which declared for the re- lieal of that law declared for the coinage of gold and silver on equal terms "nathout charge for mintage, and you Southern mem- bers, most of you at least, took that ptank in the platform before your constituents and told them that it meant the restoration of silver. And yet. after a national victory had been won on that platform vrhich declared for the equal treatment of both metals, we assembled here and were told that we must first repeal the Slierman law and that then we could carrj^ out the other part afterwards. One-half of the work was done, but where is the other half? I insisted at the time that it was not the purpose of those who were behind that rei)eal bill to restore silver. I, for one, have not been deceived by the events which have followed. But those members of this Congress who voted for the repeal of the Sherman law in the Ijelief that it was going to bring the restoration of silver, what have they seen to justify their hopes? The gentleman from New York [Mr. Hendrix] stood on this floor and told us that if Congress would pass that repeal bill '-within three months" England would be here asking for an international agreement. The bill was passed. Three months passed, and England did not come. Three more months passed, and England did not come. Nine months — more than a year has passed away, and yet England has not asked us for an international agreement. A year has passed away, and yet the President of the United States has not proposed a single plan for the rehabilitation of sil- ver. A year has passed away, and the President has never inti- mated a desire or a purpose to help in the restoration of the gold and silver coinage of the Constitution. You can be deceived, gentlemen, if you want to be, but if you are deceived you will 1779 33 deceive yourselves. You can not deceive the people. The evi- dences of intent are too plain. The great New York daily from which I read tells yon that the death knell of silver has already "been sounded because there are cheaper substitutes for silver; and yet you expect to join with these gentlemen in getting the substi- tutes and then hope to fool them alaout the effect on silver ! Do not expect to fool the people who manufacture our financial legisla- tion! They may not know what the public needs, but they know what their own interests demand and what will best suit their purposes, when they propose laws. They may fail in prophesy, they may make excuses which are not good, but they drive straight to their purpose, and that purpose is the annihilation of silver as a standard money of this country. This bill proposes to create substitutes for money, but what we need is not more stibstitutes for money but more real money. These physicians are treating symptoms when they ought to be eradicating disease; they are trying to ciire a boil when they oiTght to be purifying the blood. The money question can not be settled by turning over our paper currency to the banks. We might af- ford temporary relief to the Treasury by coining the seigniorage, redeeming coin obligations in silver when that is more convenient, and by making it a criminal offense to present greenbacks and Treasury notes for redemption when they are presented for the purpose of forcing an issue of bonds. The first would supply more than $50,000,000 to meet the deficit, the second would enalale the Treasurer to protect the Grovernment from the raids made on the gold reserve by the banks, while the last would apply the same punishment to those who plunder the people in large amounts that we now apply to petty criminals. It is true that it might be difficult to prove the criminal purpose of those presenting the notes for redemption, but it would be some restraint upon wrongdoers to have the Government declare that those who conspire to lay burdens upon the people for the pay- ment of interest on bonds needed only for investment stand in the same attitude as men who conspire to rob individuals directly. But even these measures, while giving in reality the relief which this bUl falsely pretends to give, and far more, would only be a partial remedy. Let us go further and strike at. the root of the diflBculty by restoring silver to its ancient place, or, if you will not come with us, then have the courage to carry out your idea to its legitimate conclusion. Do not longer deceive the people with shams and makeshifts. If you favor the continuance of the gold standard, stand up like the gentleman from New York [Mr. Warner] and the gentle- man from Connecticut [Mr. Sperry] and advocate the funding of all greenbacks and Treasury notes with gold bonds and the re- demption of all silver and silver certificates in gold. That is the only alternative. It is either a gold standard, with more bonds and all money convertible into gold on demand, or it is the restor- ation of the gold and silver coinage of the Constitution. If gold is your god, follow it; but if you shrink from the incalculable evils of an universal gold standard come with us and help in the reestablishment of bimetallism. To those who are really in favor of the use of both gold and silver, and in favor of other needed reforms, I commend the platform adopted by the Nebraska Demo- crats in their last State convention, held on September 26, 1894. 1779 3 34 I quote it in full, for it covers the most important of the pending issues: We. the rank and file of the Democracy of Nebraska, at last in convention assembled, send greeting to the common people, who constitute the strength of the Demoeraey of the nation. We renew the spirit of our institutions any attempt to apply a religious test to the citizen or to the official. We appeal to all Democrats who have been led into political hostility to the members of any church to remember the princi- ples of religious liberty promulgated by Thomas Jeflferson and defended by the party which he organized. We apprtjve of the maximum-rate bill passed by the last legislature and favor its reenactment if it is declared void by the court on account of irregu- larities which can be remedied. 1779 35 The coinage plank announces the position which we must take if we expect to restore silver. We do not ask for the inauguration of any new system, but we ask for the restoration of a coinage system which existed from the beginning of the G-overnment until 1873. We ask that the restoration shall be immediate, because we can not afford to delay for a single day the amelioration of present conditions. We ask that the coinage shall be free and unlimited, because the coinage of gold is free and unUmited and because the bimetallic principle can not be reestablished in any other way. We ask for coinage at the present ratio, because we believe that friendly legislation vsdll restore silver to its former place without changing the ratio and because a change in the ratio, made by increasing the size of the silver dollar, would lessen the number of dollars, appreciate the value of each dollar, add to the burden of all debt, and further depress prices. We ask for independent action by this country, because we can not submit the rights of our people to the action of other nations and because we have vainly waited for twenty years for other nations to help us to help our- selves. The currency plank presents an idea directly opposed to the idea embodied in the pending measure. This bill looks to the per- manent retirement of all Government paper which is payable in coin and the substitution therefor of bank issues. This is the challenge which the President throws down. We meet his de- mand with a counter demand that all bank notes shall be retired and that all paper money shall be supplied by the Government. I indorse the position taken in the platform of our State conven- tion, and believe it more in harmony with Democratic principles and with the teachings of Jefferson and Jackson than is the new- fangled doctrine which has been borrowed from the Republican party and incorporated in the bill now before us. The amendment which will be proposed by the gentleman from Missouri [Mr. Bland] embodies our plan in substance, and I shall gladly support it. It provides for the immediate restoration of the free and unlimited coinage of gold and silver at the ratio of 16 to 1. It provides that the paper money to be issued shall be redeemable in coin and that the Government, not the note holder, shall have the option as to the kind of coin and may pay in which- ever is most convenient. The amendment also provides that the money issued shall be a full legal tender. The Supreme Court of the United States has decided that the Government's notes may be made a legal tender, and I believe that legal-tender money is better than any other kind of money. Not only am I in favor of the Government supplying all the paper money needed, but I be- lieve that it can and ought to prevent any private citizen or cor- poration from setting aside the legal-tender laws by private con- tract. Why should a citizen be allowed to suspend the operation of a legal-tender law any more than he should a criminal statute or other legislative enactment? We are sometimes asked why we are not willing to compromise. Our answer is that principles can not be compromised. No com- promise has been offered which does not require the abandonment of a principle. Gentlemen plead for harmony, but there can be no harmony between those who adhere to the financial views of Mr. Cleveland and those who adhere to the financial views of Thomas Jefferson. Shall we go with our opponents farther away 1779 36 from bimetallism because they will not join us in going toward it? Shall we join oiuv-opponents in destroj-ing what Government paper we have because they will not join us in securing more Government paper? Shall we join our opponents in establishing new banks of issue because they will not join us in abolishing the ones we now have? Gentlemen say that something must be done. Is it better to do the wTong thing than to do nothing? If the Resident is determined to make our financial bondage still more oppressive than it now is, let him carry out his purpose with the aid of a Republican Congress. If we can not relieve the people, we can at least refuse to be responsible for further wrong doing. We are told that the President will not approve any bill which carries out the pledge of the last national platform in favor of the coinage of gold and silver without discrimination against either metal or charge for mintiige, biit is that any reason why we should join him in making the restoration of silver more difficult for the Administration which shall succeed his? It is useless to shvit our eyes to the division in the Democratic party. We who favor the restoration of silver deplore the division as much as our oppo- nents; but who is to blame? Did not the President ignore the sil- ver Democrats in making up his Cabinet? Has he not ignored them in the distribution of patronage? Has he not refused to counsel with or consider those Democrats who stand by the tra- ditions of the party? Did he not press through Congress with all the power at his command the unconditional repeal of the Sher- man law, in spite of the earnest protest of nearly half the Demo- cratic members of the two Houses? And did he not join with the Republicans to defeat the seigniorage bUl, which was supported by more than two-thirds of the Democratic party? Did he not oppose the income tax, which a large majority of the Democratic party favored? Has he not in fact joined with the Democrats of the Northeast time and again to defeat the wishes of the Democrats of the South and West? We desire harmony, but we can not purchase it at a sacrifice of principle. We desire to live on friendly terms with Mr. Cleveland and our Eastern breth- ren, but we can not betray our people or trample upon their wel- fare in order to do so. If the partj' is rent in twain let the re- sponsibility rest upon the President and his followers, for no other Democratic President ever tried to fasten a gold standard upon the country or to surrender to the banks the control of oiu- paper currency. Let the fight go on. If this bill is defeated the people will profit by the discussion it has aroused. I have confidence in the honesty, iutelli^-ence, and patriotism of the American people, and I have no doubt that their ultimate decision wUl be right. [Loud applause.] 1779 O Gold Bonds. Be it known unto thee, O king, that we will not serve thy gods, nor worship the golden image which thou hast set up.— />«?»>?, 3, 18. SPEECHES HON. WILLIAM J. BRYAN, OF NEBRASKA, In the House of Representatives, (UNDER THE FIVE-MINUTE RULE) Febrvary 6th and 7th, 1895. The House being in Committee of the Whole on the state of the Union and having under consideration tjie bill ( H. R. 8705) to authorize the Secre- tary of the Treasury to issue bonds to maintain a sufficient gi>ld reserve, and to redeem and retire United States notes, and for other purposes — Mr. BRYAN said: Mr. Chairman: I submit that the amendment proposed by the gentleman from Wisconsin [Mr. Haugen] ought to be de- feated, because it simiily proposes to establish more national banks; and there is now enough influence brought to bear on legis- lation by the banks which we have, without establishing new ones. So far as the amendment proposed by the gentleman from Illi- nois is concerned, I want the House to understand that its only effect is to reduce the annual tax upon bank issues from 1 per cent to a quarter of 1 per cent. And I hope that gentlemen on the Re- publican side of the House who are so anxious for some measure to increase the revenues will not vote for this amendment, which is going to decrease the revenues of the Government. Mr. Chair- man, tiie national banks have advantages enough under the pres- ent law. We are contending against the whole system ; for one reason, because it extends special and valuable privileges to the banks, and I insist Mr. REED. Why not introduce an amendment providing that this amount shall come out of the surplus? Mr. BRYAN. Well, Mr. Chairman, the gentleman from Maine [Mr. Reed] is in an excellent position to advocate this amend- ment after he has proposed an amendment to issue bonds to make up the deficit. In other words, we are first to increase the deficit and then issue bonds to make it up. Mr. Chairman, why should we take off this tax? Why should we remove any part of the light burden which is now resting upon these institutions? If we are going to have national banks, I think we should rather increase the tax on their circulation than decrease it. 1810 1 Mr. COX. "Will the gentleman yield to me a moment? Mr. BRYAN. I have but five minutes. Mr. COX. I will give you a point. [Laughter.] Mr. BRYAN. In five minutes I have not time enough to dis- cuss the points I now have. Mr. COX. This may be a better one than you are going to make yourself. [Laughter.] Mr. BRYAN. Well, give it to me quickly. Mr. COX. It is this: The bill allows these banks to take out circulation equal to the par value of their bonds, and now, in ad- dition, it is proposed to reduce the tax on their circulation. Mr. BRYAN. Certainly, the point is a good one. We are asked to help the banks both ways. We ai-e asked to increase the amount of circulation they can issue and then decrease the tax on their circulation. But I want to say a word in regard to the substitute offered by the gentleman from Maine [Mr. Reed]. His proposition is no better than that of the gentleman from Illinois so far as gold is concerned. So far as we can judge by the action of the gentle- man from Maine on this floor, there is but little difference between his opinions on finance and the opinions of the President. The only difference is that the President of the United States boldly and frankly tells us that he is in favor of the gold standard, while the gentleman from Maine proposes an amendment T/hich means the same thing, but he has not the courage to tell this House that he indorses the President's policy. Now, if I were compelled to choose between two financiers — the President, who boldly advocates a financial policy which we oppose, and one who, like the gentleman from Maine, agrees with the President but will not declare himself — I should prefer the one who is frank enough to take the people into his confidence. The amendment jiroposed by the gentleman from Maine allowing the Treasury Department to issue bonds of different kinds is a recognition of the duty of the Treasury Department to pay out gold on demand, while we deny the construction placed by the President upon the law and oppose any further issue of bonds, because we can not authorize an issue of bonds without indorsing the position taken by the President. We may not be able to prevent an issue of bonds by the Presi- dent, but we can compel him to bear the responsibility alone. If the Secretary of the Treasury would exercise the option and re- deem greenbacks and Treasury notes in silver, no bonds would be necessary; therefore, to authorize the issue of any kind of bonds is to declare that the President is right in paying gold on demand, and to make such a declaration is equivalent to saying that silver is not a standard money, equal to gold in debt-paying power. We can not afford to make such a declaration because it is an aban- donment of bimetallism. Mr. BRYAN. Mr. Chairman, if we require the payment of customs duties in gold, we either put gold at a premium by creat- ing an extra demand for it, or else persons required to pay duties in gold will take greenbacks and Treasury notes to the Treasury and draw out the gold which they require for the purpose of pay- ing the duties. One word in reply to the gentleman from Iowa [Mr. Hender- 1810 son]. He says he is in favor of the greenback, yet he supports the substitute offered by the gentleman from Maine [Mr, Reed] . The gentleman from Maine will not come out and say that he wants to destroy the greenbacks, but he wants to keep them idle in the Treasury so that some future Congress can destroy them if it wants to do so. If those greenbacks are good, why not pay them out for the expenses of the Government? They are there in the Treasury. "We have enough of them. We do not need to issue bonds for the payment of our expenses. "We have green- backs enough in the Treasury now to pay any deficit that can possibly occur until the receipts of the Government equal its ex- penditures, according to the estimate of the Secretary of the Treasury. "We do not need any short-time bonds. To vote short-time bonds is to declare that we will draw in the greenbacks and let them remain in the Treasury until they can be destroyed. I want to ask the gentleman from Iowa [Mr. Henderson] if he is really in favor of the greenbacks, why he is not willing to let them be paid out in meeting the expenses of the Government? Why take in these greenbacks and hold them in the Treasury? If they are good money, they are' good enough to pay our current exiienses with, and if they are a good enoiigh currency with which to pay our running expenses, we do not need to issue long-time bonds or short-time bonds for that purpose. The amendment proposed by the gentleman from Maine em- braces two propositions. In the first place, it really indorses the action taken by the President. It says that he is right in redeem- ing greenbacks and Treasury notes in gold; because unless they are to be paid in gold there is no reason why bonds should be is- sued. The gentleman from Iowa says that the President is going to do this in order to maintain the credit of the country and he commends the President's determination. Mr, Chairman, I for one do not believe that this Government is under any greater obligation to maintain its credit than is any private individual. I believe that the dollar which the Govern- ment makes good en )ugh for one citizen to receive from another is a good enough dollar for the Government to use when it pays its own debts. I do not believe the Government should make one rule for itself and another rule for the people of the country. If the silver dollar is good enough to be a legal tender between citizen and citizen, it is good enough for the Government to use when it pays a debt which it owes. I am not in favor of increasing the Gov- ernment indebtedness and discrediting the greenbacks, as proposed by the gentleman from Maine. Why is not the same coin which is receivable between individuals in payment of debts good enough to redeem the greenbacks or any coin notes or the bonds of the Government? « • • « • « • Mr. BRYAN. I want the House to understand what they are voting on. Mr. SPRINGER. The gentleman from New York will explain this provision. Mr. BRYAN. I will use my time first. I want to say, sir, that the present law provides that no more than $3,000,000 of bank currency can be surrendered in any one month by all of the banks, and that a bank which surrenders a 1810 part of its currency can not take out additional currency within six months. Now. the purpose of that provision of the law is to prevent the natiimal ])anks from expanding or contracting the currency sud- denly. The object of the pending amendment, however, is to take away all limitation in that regard and give the national banks ])ower to contract or expand the currency at will. If we adopt this amendment we remove all the restricticms now exist- ing and put ourselves absolutely at the mercy of the banks. I hope the amendment will not be adopted. Thursday, February 7, 1895. Mr. BRYAN. I shall offer at the proper time an amendment to the substitute proposed by the gentleman from Maine [Mr. Reed]. 1 understand that it is not in order just now, but I shall ask for recognition as soon as it is in order. It reads as follows: Provided, That nothing heroin shall be construed as suri-endering the right of the Government of the United States to pay all coin bonds outstanding in gold or silver coin at the option of the Government, as declared by the fol- lowing joint resolution, adopted in IMT? by the Senate and House of Repre- sentatives of the United States of America, to wit: '■ That all the bonds of the United States issvied or authorized to be issued under the said act of Congress horeinboforo recited are payable, principal and interest, at the option of the Government of the United States, in silver dollars of the coinage of the United States, containing WZh grains each of standard silver; and that to restore to its coinage such silver coins as a legal tender in jiayment of said bonds, principal and interest, is not in violation of the public faith nor in derogation of the rights of the public creditor." This amendment simply reenacts the Matthews resolution, as it is called, or rather expressly declares that the United States still adheres to the doctrine set forth in that resolution. If we are in favor of bimetallism we must sustain the doctrine set forth in the Matthews resolution, for it simply declares, in substance, that the word " coin," when used in Government bonds, ^means stand- ard gold and silver coin of the United States. I desire to call the attention of the House to the recent vote taken upon the amendment of the gentleman from Colorado [Mr. Bell] . Our friends on the Republican side of the House have been telling us that they want the bonds payable in coin; that they are willing to authorize the President to issue bonds, but are not willing to vote for gold bonds. I want the Record to show — because the vote was not taken by yeas and nays — that when Mr. Bells proposition came before us — it was simply to strike out the word " gold " and make the bonds payable in gold or silver — there were not 10 Republicans who rose in support of Mr. Bell's proposi- tion, and that all the other members who rose on the Republican side, including the distinguished gentleman from Maine who pro- poses the substitute providing for coin bonds, voted against Mr, Bell"s proposition. I also want to call attention to the fact that the ten, or less than ten, Republicans who voted for Mr. Bell's proposition are free-silver Republicans who live in the Northwest: and if the gentlemen on the other side find any satisfaction in looking at the division in the Democratic party on the silver question, I ask them to turn their gaze upon their own party, and remember that in their party they have a few free-silver Republicans who can never indorse the policy of the Republican party in favor of a gold standard. We have been divided upon this side, because the West and the South will not consent to the establishment of a single gold standard. 1810 Mr. BOWERS of California. Which side do you mean? Mr. BRYAN. Our side. I am speaking of the Democratic side now. Mr. DINGLEY. You are on the Democratic side, are you? Mr. BRYAN. The gentleman from California is one of the few Republicans who voted for Mr. Bell's proposition, and he has no more sympathy with the Republican party on the financial ques- tion than he has with the Eastern Democrats on the financial ques- tion. Mr. Chairman, this question is one which will not be decided by parties. The Democratic party and the Republican party are rent in twain upon the money question; but the Republican party has a larger majority in favor of the gold basis than the Demo- cratic party has ever shown on this floor. I believe the great ma- jority of the Democratic party believe in bimetallism and willnot submit to a gold standard. If the Republicans who voted for Mr. Bell's proposition expect to indorse the Republican party in its financial policy they will have to betray the people whom they represent. I also call attention to the fact that west of the Missouri River not a single gold-standard Republican has been elected to the Sen- ate this year. Mr. BOWERS of California. I want to ask the gentleman if the proposition made by the Republican leader is not better than the proposition made by the Democratic party and its Administra- tion? Mr. BRYAN. No, sir; it is not. Mr. BOWERS of California. They go for gold, and the Repub- lican leader will not go for gold. [Applause on the Republican side.] Mr. BRYAN. No, sir; his proposition is not better. The only difference is that Mr. Cleveland's proposition comes before us open and aboveboard, while your leader brings his proposition here behind a mask. [Applause on the Democratic side. J Mr. BOWERS of California. He brings a proposition to pre- vent the President from issuing gold bonds. Mr. BRYAN. When the gentleman from Maine [Mr. Reed] , who offers a pretended "coin" proposition, had a chance to vote for the proposition of the gentleman from Colorado [Mr. Bell] and put that provision in the Springer bill, he refused to do it and voted against it. Now let him stand before the country and con- vince the people, if he can, that he is sincere in his desire for bimetallism. [Applause on the Democratic side.] The Clerk reported the next amendment reported from the Com- mittee of the Whole, as follows: On pa^e 3, line 6, insert the following: "And in lieu of all existing taxes every association shall pay to the Treas- ury of the United States in the months of January and July a duty of one- eighth of 1 per cent each half year upon the average amount of the notes issued to it by the Comptroller of the Currency. And banks with a capital of not less than |30,000 may, with the approval of the Secretary of the Treasury, be organized in any place the population of which does not exceed 6,000 in- habitants." Mr. BRYAN. I call for a division of those two propositions. Mr. WILLIAMS of Mississippi. They were voted upon sep- arately in the Committee of the Whole. The SPEAKER. An amendment reported from the Committee of the Whole as a single amendment can not be divided. 1810 6 The question was taken on the amendment; and the Speaker an- nounced that the ayes seemed to have it. Mr. BRYAN demanded a division. The Hoiise divided; and there were — ayes 200, noes 41. Mr. BRYAN demanded the yeas and nays. The yeas and nays were refused, 24 members, not a sufficient number, rising to second the demand therefor. • «««««« The SPEAKER. The clerk will report the next amendment agreed to by the Committee of the Whole. The clerk read as follows: On page 4, in section 6, insert tlu' following: after the word "that: " So much of all laws and parts of laws us limit the amount of lawful money which may be deposited during any ( alcndar month for the purpose of with- drawing national-bank circulation,'or prohibit any national banking associa- tion from receiving any increase of its circulation during the period of six months from the time it shall have made any deposit of lawful money for the purpose of withdrawing its circulation, and also so much of — The question being taken on the amendment, the Speaker an- nounced that the ayes seemed to have it. Mr. BRYAN demanded a division. The House divided; and there were — ayes 149, noes 60. Mr. BRYAN. Yeas and nays. The yeas and nays were refused, 18 members, not a sufficient number, rising in support of the motion. 4> • « « • * « Mr. BRYAN. Mr. Chairman, I rise to offer an amendment to the substitute proposed by the gentleman from Maine in order that it may be pending. The amendment was read, as follows: Provided, That nothing herein shall be construed as surrendering the right of the Government of the United States to pay all coin bonds outstanding in gold or silver coin at the option of the Government, as declared by the fol- lowing joint resolution, adopted in IsTs by the Senate and House of Repre- sentatives of the United States of AnK-rica, to wit: That all the bonds of the United Stutes issued or authorized to be issued under the said act of Congress liereinbrfore recited, are payal)le, principal and interest, at the option of the (lovei-nnient of the United States, in silver dollars of the coinage of the United States, containing 412^ grains each of standard silver: and that to restore to its coiTiaL^c such silver coin as a legal tender in payment of said bonds, principal and interest, is not in violation of the public faith nor in derogation of the rights of the public creditors. « ♦ • • • • * ' The SPEAKER. Now the Clerk will report the amendment offered by the gentleman from Nebraska [Mr. Bryan] to the sub- stitute that has just been read, and on that amendment the vote will first be taken. The question being taken on the amendment, the Speaker de- clared that the ayes seemed to have it. A division was demanded. The House divided; and there were — ayes 119, noes 133. Mr. BRYAN and Mr. WILLIAMS of Mississippi called for the yeas and nays. The yeas and nays were ordered; and the Speaker appointed Mr. Bryan and Mr. Bingham to act as tellers at the desk. 1810 The question was taken; and there were — yeas 127, nays 169, an- swered " present "3, not voting 50; as follows: YEAS— 137. Aitken, Alderson, Alexander, Arnold, Baker, Kans. Bankhead, Beckner, Bell, Colo. Black, Bland, Boatner, Boen, Bower, N. C. Bowers, Cal. Branch, Breckinridge, Bretz, Broderick, Brookshire, Brown, Bryan, Caminetti, Clark, Mo. Cobb, Ala. Cockrell, Coffeen, Wyo. Cooper, "Wis. Cox, Crawford, Culberson. Curtis, Kans. Davey, Adams, Ky. Adams, Pa. Aldinch, Avery, Babcock, Baker, N. H. Baldwin, Barnes, Bartlett, Barwig, Beltzhoover, Berry, Bingham, Blair, Boutelle, Brickner, Bromwell, Brosiuss, Bundy, Bynuin, Cabaniss, Cadmus, Campbell, Cannon, Cal. Cannon, 111. Caruth, Causey, Chickering, Childs, Clancy, Clarke, Ala. Cobb, Mo. Coffin, Md. Coombs, Cooper, Fla. Cooper, Ind. Cornish, 1810 Davis, De Armond, Denson, Dinsmore, Dockery, Donovan, Doolittle, Edmunds, Ellis, Ky. Ellis, Oregon English, Cal. Enloe, Epes, Fithian, Fyan, Grady, HaU, Mo. Harris, Hartman, Hatch, Heard, Henderson, N. C. Hepburn, Hermann, Holman, Hooker, Miss. Hopkins, Pa. Hudson, Hunter, Hutcheson, Ikirt, Izlar, Kem, Kyle, Lane, Latimer, Lawson, Layton, Lester, Little, Livingston, Lucas, Maddox, Maguire, Mallory, Marsh, Marshall, McCreary, Ky. McCulloch, McKeighan, McLaurin, McMilUn, McRae, Meredith, Money, Moore, Morgan, Moses, Neill, Newlands, Ogden, O'Neill, Mo. Pendleton, Tex. Pickler, Richardson, Mich. Richardson, Tenn. Ritchie, Robbins, Robertson, La. Russell, Ga. Sayers, Settle, Shell, Sibley, Simpson, Snodgrasa, Stallings, Stockdale, Stone, Ky. Strait, Swanson, Talbert, S. 0. Tarsney, Tate, Taylor, Ind. Taylor, Tenn. Terry, Turner, Va. Turpin, Tyler, Wheeler, Ala. Whiting, Williams, 111. Williams, Mi33. Woodard. NAYS— 169. Cousins, Covert, Grain, Curtis, N. Y. Dalzell, Daniels, De Forest, Dingley, DoUiver, Draper, Dunphy, Durborow, Erdman, Everett, Fielder, Fletcher, Forman, Gardner, Geary, Geissenhainer, Gillett, Mass. Goldzier, Gorman, Gresham, Griffin, Wis. Grosvenor, Grout, Grow, Hager, Hainer, Nebr. Haines, Hall, Minn. Hammond, Harmer, Harrison, Haugen, Hayes, Henderson, lU. Henderson, Iowa Hendrix, Henry, Hicks, Hitt, Hooker, N. Y. Hopkins, HI. Hulick, Hull, Johnson, N. Dak. Kiefer, Kribbs, Lacey, Lapham, Lefever, Lockwood, Loud, Loudenslager, Lynch, Mahon, Marvin, N. Y. McAleer, McCleary, Minn. MeDannold, McDowell, McGann, McKaig, McNagny, Meiklejohn, Mercer, Meyer, Montgomery, Moon, Mutchler, Northway, O'Neil, Mass. Paschal, Patterson, Payne, Pearson, Pendleton, W. Va. Perkins, Phillips, Pigott, Powers, Quigg, Randall, Ray, Rayner, Reed, Reilly, Reyburn, Richards, Russell, Conn. Ryan, Schermerhorn, Scranton, Sickles, Sipe, Smith, Somers, Sorg, Sperry, Springer, Stephenson, Stevens, Stone, C. W. Stone, W. A. Storer, Straus, Strong, Talbott, Md. Van V.).pi-his,N.Y. Warner, Wilson, W. Va. Van Vrliis.()hi<) Washington, Wise, Wa^ve stated. 1810 THE GOLD BOND CON1 'T will be recorded for a precedent, And many an error, by the same example, Will rush into the state. It can not be. THE MERCHANT OF VENICE. SPEECH HON. WILLIAM J. BRYAN, OF NEBRASKA, HOUSE OF REPRESENTATIVES, THURSDAY, FEBRUARY 14, 1895. WASHINGTON. 1895. SPEECH OF HON, WILLIAM J. BRYAN The House having under consideration the joint resolution (H. Res. 375) au- thorizing the issue of $65,116,275 of gold 3 per cent bonds — Mr. BRYAN said : Mr. Speaker: This resolution embodies two piirposes. It pro- poses to ratify the contract made by the Executive by authorizing the substitution of gold bonds to the amount of $65,116,275, bear- ing interest at a rate not exceeding 3 per cent, and payable not more than thirty years after date, in accordance with the request made in the President's message, and it also provides that green- backs and Treasury notes redeemed with the gold purchased with these bonds shall not he reissued. I desire to call the attention of the House to the fact that the latter provision is intended to lock up in the Treasury $65,000,000 of legal-tender jiaper without making any provision whatever to supply the place of that currency. If we vote for this proposition, we vote to retire that much money without filling the void. Mr. WARNER. Will the gentleman allow me to ask him a question? Mr. BRYAN. I hoj)e I shall not be interrupted. Mr. WARNER. Does not the gold fill the void ? [Cries of " No ! "] Mr. BRYAN. Mr. Speaker, the House knows that when I have time I never object to questions, and it is only because of my limited time to-day that I ask gentlemen not to interrupt me. In answer to the question, however, I would say that unless the greenbacks and Treasury notes are reissued they will accumulate and a few more bond issues will retire all of them and deprive the country of that much of its circulating medium. For all practical purposes it is equivalent to a cancellation of this money and will ofi'er a con- stant temptation to those who oppose greenbacks to draw out the gold and force further issues of bonds for the purpose of getting this kind of money out of the way. But the main question presented by this resolution is whether we shall ratify tlie contract made by the Executive and issue gold bonds in order to save about a half million a year in interest. The 8Uiq5orters of this resolution urge us to consider it as a business proposition and I shall discuss it as a business proposition. One gentleman has suggested that Democrats ought not to criticize the Administration. I want it understood that, so far as I am con- cerned, when I took the oath of office as a member of Congress, there was no mental reservation that I would not speak out against an outrage committed against my constituents, even when com- mitted by the President of the United States. [Loud applause.] 1859 3 The President of the Uuitod States is only a man. We intrust the administration of govornmeut to men, and when we do so, we know that they are lial)h' to err. When men are in public office we exi)e('t them to make mistakes — even so exalted an ollicial as the President is liable to make mistakes. And if the President does make a mistake, what should Con,i;ri'ss do If Ouj:;ht it to blindly approve his mistake, or do we owt! it to the people of the United States, and even to the President himscdf, to correct the mistake so that it will not be made a,i;ain? But some jfentlemen say that tiie Democratic party should stand by the President. What has he done for the party sinci' the last election to earn its gratitude? 1 want to sugij'est to luy l)enu)cratic Iriends that the jiarty owes no great debt of gratitude to its President. What gratitude should we fed? The gratitude which a couliding ward feels toward liis guardian without bond who has squandered a rich estate. Wliat gratitude should we feel? The gratitude which a passenger feels toward the traininan who has o])cned a switch and ])recipitatod a wreck. What has he done for the party f lie has attem])ted to inoculate it with Kepublican vims, and blood poisoning has set in. [Laughter and applause.] What is the duty of the Democratic party ? If it still loves its President, it is its duty, as I under-stand it, to prove that it has at least one attribute of divinity left by chastening him whom it loveth. [Laughter and applause.] Mr. Speaker, I do not intend to (jnestion the motives of the officials who are responsible for this contract. We might criticize the conduct of the President in excluding all other advisers and consulting only with the magnates of Wall street; and we might even suggest that he could no more expect to escape unharmed from such associations than one could expect to escape asphyxiation if he locked liimself up in a room and turned on the gas — but without questioning the motive of the President, I say. we have a right to express our judgment as to whether the discretion vested in the President has been wisely exercised. AVe are told that this is not only a business proposition but a very insignificant (|uestion — ^^just a little matter of saving half a million a year, that is all. Mr. Speaker, I desire to ask these gentlemen wlio are always coming here with these ''business i^ropositions," why it is that no advocate of the gold standard dares to stand before the American people and unfold the full plan of the gold conspiracy. Why is it that our ojjponents keep bringing up one proposition at a time and saying, " An emergency is upon us; let us adopt this proposition at once and leave the final settlement of the money question until some other time ? " Why is it that we never reach a time when these gentlemen are willing to consider the greatest of all the questions which are demanding settlement at the hands of the American peo- ple! Save $16,000,000 in thirty years? Why, sirs, this is a bigger question than $16,000,000. Will you set a price upon human life? Will j-ou weigh in the balance the misery of the people? What is the value of civiliza- tion to the human race — because the settlement of this '' little ques- tion " may enormously alfect the welfai'o of maukinfl. [Applause.] And yet, gentlemen talk a1)out its being a matter of small conse- quence, a little question, the mere saving of half a million dollars a year. Save the people $16,000,000 in thirty years — twenty-five cents apiece — by this resolution and $16,000,000,000 will not measure the damage which may result to them in a third of that time. What is this contract? I am glad that it has been made public. 1859 It is a contract made by the Executive of a great nation with the representatives of foreign money loauers. It is a contract made with men who are desirous of changing the financial policy of this country. They recognize by their actions that the United States has the right to pay coin obligations in either gold or silver and they come to us with the insolent proposition, "we will give you $16,000,000, paying a proportionate amount each year, if the United States will change its financial policy to suit us." Never before has such a bribe been offered to our people by a foreign syndicate, and we ought to so act that such a bribe will never be offered again. By this contract we not only negotiate with foreigners for a change in our financial policy but give them an option on future loans. They are to have the option on all bonds which may be issued before the first of next October. What would be the effect of such a condition? Do you suppose that anybody else will care to bid when it is known that these men have the refusal of all bonds at any price? It makes a popular loan impossible. If these men alone bid for the next issue they can insist upon a condition that they shall have an option on a still further issue of bonds. Shall we bind ourselves to these men jier- petually ? I shall not raise the question, because I am not prepared to discuss it from a legal standpoint, whether the President has a right to sell an option on bonds which may be hereafter issued, but, sirs, I will say that, if he has the right, I believe he has made an inexcusable use of the discretion vested in him. We can not afford to put ourselves in the hands of the Rothschilds, who hold mort- gages on most of the thrones of Europe. The press dispatches stated that the French steamer. La Gascogne, when she came into jiort a few days a£:o, had three red lanterns on her foremast, signifying: "Get out of the way, I can not control my course." The President may be persuaded that this country has reached a point where it cap not control its own course and must supplicate foreign financiers to protect our treasury, but he mis- takes the sentiment of the American people if he thinks that they share with him in this alarm. The United States is able to take care of itself. It can preserve its credit and protect its people without purchasing at a high price the " financial influence " or the " legit- imate efforts " of banking corporations, foreign or domestic. I call attention also to the fact that these bonds may be made payable in thirty years. The contract does not call for thirty-year bonds; it says that "any bonds of the United States," payable in gold, and drawing 3 per cent interest, may be substituted in the place of the coin bonds. Bub there seems to be a fear that the bond buyers may insist that the spirit of the contract would compel the issue of thirty- year bonds. In describing this contract, Mr. Speaker, I find in "The Merchant of Venice " language more expressive than any I can command. That language fits the contract which we are asked to ratify, and is as follows : Shtlock. This kindness -will I show: Go with me to a notary, seal me there Tour single bond, and, in a merry sport, If you repay me not on such a day, In siich a place, such sum or sums as are Express'd in the condition, let the forfeit Be nominated for an equal pound Of your fair flesh, to be cut off and taken In wliat p.art of your body pleaseth me. * i i- * * * • AKTONIO. Yes, Shylock, I will seal unto this bond. 1859 6 Mr. BOWEN. Who wrote that, Shakespeare or Bacon? [Laugh- ter.] Mr. BRYAN. I shall leave Mr. Donnelly and Mr. Inftersoll to set- tle the question of antliorship. But, Mr. Speaker, it was decided that Sliylock's bond, wliilo it caHed for a pound of llesli, did not include any blood. The ditVerence between the construction placed upon that bond and the construction which this House is asked to place upon the contract before us is, that we are asked to make the construction so liberal as to include the blood with the flesh. We have a right, according to the terms of the contract, to substitute a short-time bond, and yet the resolution permits the Secretary to issue a thirty -year bond. This House is not prei)ared to give its sanction to a policy which contemplates a permanent public debt, but the rule adopted allows no opportunity for an amendment limiting the bonds to five or ten years. If we give the Secretary of the Treasury authority to issue a, thirty-year bond, he is i)owei-lcss to resist the demands of the bond purchasers, because the contract is made; ten days only are given for the exercise of The option; lie can not negotiate with anyl>ody else; he can not offer bonds to anybody else; lie is in their hands: he must make a thirty-year bond if they ask it — and who doubts that they will ask it? Tliere is another objection to this contract. It provides for the privntf sale of coin bonds, running thirty years, at $1.04^ which onglit to be worth $1.19 in the open market, and which cuuld have been sold at jiublic auction for $1.15 without the least effort. Why this sacrifice of the interest of the United States? The Oovernment's credit was not in danger; the bonds of tlie United States were selling in the market every day at a regular premium. The same kind of bonds, having only twelve years to run, were selling at over $1.12. What excuse was there for selling a thirty- year bond for$1.04|? What defense can be made for this gift of something like seven millions and a half dollars to the bond syndi- cate? We are told that we can avoid the sale of coin bonds at $1,041 by authorizing 3 per cent gold bonds. What a privilege! Why, it is less tliau three montlis since ten-year coin Itonds were sold by the President at a premium which reduced the rate of interest to less than 3 per cent. Has the credit of the country fallen so much in three months that a tliirty-year 3 per cent gold bond is worth less now than a ten- year 3 percent coin bond was then? Nothing has occurred within three months, excejit the President's messages, to injure the credit of the country. If the President is correct in assuming that the financial world places a higher estimate upon gold bonds than upon coin bonds, why did he not secure a higher price for gold "bonds? Did not purchasers know three months ago that coin bonds coujd be paid in silver? They certainly did, and yet they were willing to loan money on those bonds lor a short time at a lower rate of interest than Messrs. Morgan and Rothschild now offer to loan on long-time gold bonds. But why are gold bonds demanded? Gentlemen say that all our bonils are in fact payable in gold now. They either are payable in gold or they are not. If they are, then this legislation is not needed; if they are not, then the proposed legislation is a radical and violent change of jiolicy. We insist that outstanding Vjonds are payable in gold or silver and that the United States has the right to choose the coin. The men who contracted for coin bonds understood this, and insisted upon a higher rate of interest 1859 on the ground that they might be paid in silver. By what author- ity, then, does the President declare in his message: "Of course there should never be a doubt in any quarter as to the redemption in gold of the bonds of the Government which are made payable in coin." Is he liot aware of the fact that the debtor always has the choice of the coin, where only coin is mentioned? Is he not aware of the adoption of the Matthews resolution in 1878? That resolu- tion expressly declared the right of the Government to i)ay its bonds in either gold or silver. The resolution reads as follows : That all the bonds of the United States Issued or authorized to be issued under the said act of Congress hereinbefore recited, are payable, principal and interest, at the option of the Government of the United States, in silver dollars of the coinage of the United States, containing 412^ grains each of standard silver; and that to restore to its coinage such silver coin as a legal tender in payment of said bonds, principal and interest, is not in violation of the public faith nor in deroga- tion of the rights of the public creditors. That policy has never been changed by law, but the resolution before us makes a departure from the settled policy of the Govern- ment and provides for a bond payable specifically in gold. Do members realize the influence which would be exerted upon the public generally by the adoption of this resolution ? The gentleman from Florida [Mr. Cooper] told us that his city recently issued gold bonds and we know that pressure is being brought to bear on other cities and on individuals to induce them to enter into gold contracts. If the Government discredits silver by making these bonds payable in gold only, it will set an example which will go far toward com- pelling all borrowers to promise payment in gold. As gold contracts increase in number the demand for gold will increase. What a farce for men to talk about maintaining the parity between the metals by means of legislation which directly tends to destroy the parity and drive gold to a premium! The legislation proposed will either pledge the Government to redeem all bonds in gold or it will discredit bonds already in existence. The probabil- ity is that the adoption of this resolution would be followed imme- diately by a demand from the holders of other bonds that they l)e put upon the same gold footing. I say probably; I may say that such a course is certain. No sooner had the President asked for authority to issue gold bonds than his faithful lieutenant in the Senate, Mr. Hill, oiiered a resolution pledging the Government to redeem all bonds in gold if gold goes to a premium. This remark- able resolution reads as follows : Besolved (if the House of Representatives concurs), That it is the sense of Con- gress that the true policy of the Government requires that its eiforts should be steadily directed to the establisbinent of a safe system of bimetallism, -wherein gold and silver may be luaintaiued at a parity, and everj' dollar coined may be the equal in value and power of every other dollar coined or issued by tlie United States ; but if our efforts to establish or maintain such bimetallism shall not be wholly successful, and if for any reason our .silver coin shall not hereafter be at parity -with gold coin and the equal thereof in v.alue and power in the market and in the payment of debts, then it is hereby declared that the bonds of the United States now or hereafter issued which by their terms are payable in coin, shall nevertlieless, be paid in standard gold dollars, it being the policy of the United States that its creditors shall at all times be paid in the best money in use. This would not only pledge the Government to the payment of previous issues in gold but would relieve the recent purchasers from the loss which they guarded against by an extortionate interest and yet leave them to enjoy the fruits of their extortion. Thus does one vicious proposition tread upon the heels of another. Mr. Hill's plan is even worse than the President's, for under the plan of the latter, the bondholder would bear whatever loss might arise if gold 1859 8 should happen to fall below silver, but Mr. Hill's plan burdens the Governiuoiit witli all the risk and guarantees to the bondhohler all the chance of gain. Not only is Mr. Hill's ])lan directly antagonistic to the princii)le of bimetallism, but it otters a reward to the creditor if he can destroy the parity between the metals, whereas tlie cred- itor is interested in malDtaining the parity when the option lies with the Government. It is alarming to note the aggressiveness of the creditor classes, and humiliating to think that Congress should be asked to comply with tlieir wishes regardless of consequences. The first effect of this movement in the direction of gold contracts would be to reduce the amount oPour primarj' money and to build our entire credit system upon a narrow base of gold. Think of making an indebted- ne.ss, public and private, of .$13,000,000,000, payable in gold, with only $600,000,000 of gold in the country, and that an estimate! The Government estimate of gold coin in the United States on the 1st of January, 1895, was about $000,000,000, and of that sum only about $214,000,000 was visible. About $100,000,000 was in the Treasury of the United States, and $114,000,000 was held by national banks. Beyond that, no one knows the whereabouts of any large amount of this gold. We know that no large amount of gold is in circulation among the people, or in hiding, and yet, with only $214,000,000 of visible gold, the United States isexpe<-tod to conduct a safe business on a gold basis. To make the attempt is to invite a panic — nay, more, it is to guarantee disaster. And yet, Mr. Speaker, if the immediate effect is bad, the ultimate effect of the proposed policy is infinitely worse. Every act of legislation discriminating against silver gives an impetus to the movement in favor of a gold standard and makes the restoration of bimetallism more difficult. No one act could, in my .judgment, do more to obstruct the reestablishment of free bimetallic coinage as it existed prior to 1873 than the act which the President is attempt- ing to force upon Congress. Are the gentlemen who are urging it deceived as to its purpose and necessary effect when they speak of it as an insignificant matter, or do they presume upon the credulity of their hearers? Believing that it is a long step in the direction of universal gold monometallism, and believing that universal gold monometallism would bring to this country continuous and increas- ing financial distress beyond the power of language to exaggerate, we protest against the passage of this resolution. If we love our country and are interested in its welfare, no sacrifice on our part should be too great, if necessary to jirevent the adoption of such a policy by this, the foremost nation upon the earth. While" the question innuediately before us is whether we shall authorize the issue of gold bonds, I ask yon to consider for a moment whether we need to issue bonds of any kind. Bonds have been issued to replenish the gold reserve, and the gold reserve has been drawn out because the holders of greenbacks and Treasury notes have been allowed to designate the coin of redemption. In other words, the option which belongs to the Government has bejen sur- rendered to the holders of the notes, and this has been done, not by legislative enactment, but by an administrative policy. If the withdrawal of gold could be stopped no bonds would be necessary. It becomes'important, therefore, to know whether the Government has a legal right to protect itself from gold grabbing by redeeming greenbacks and Treasury notes in silver when silver is more con- venient. On the 21st of' January, 1895, Secretary Carlisle made a statement before the House Committee on Appropriations, and I 18.59 quote the following question and answer from a printed report of his testimony: Mr. Sibley. I would like to ask you (perhaps not entirely connected with the matter under discussion) what objection there could be to' having the option of redeeming either in silver or gold lie with tl>e Treasury instead ot the note holder? Secretary Carlisle. If that policy had been adopted'at tlie beginniugof resump- tion -and I am not saying this for the purpose of criticising the action of any of my predecessors, or anybody else — but if the policy of resei'ving to the Govern- ment, at the beginning of resumption, the option of redeeming in gold or silver all its paper presented, I believe it would have worked beneflcially, and there would have been no trouble growing out of it, but the Secretaries of the Treasury from the begiuniug of resumption have pursued a policy of redeeming in gold or silver, at the option of the holder of the paper, and if any Secretary had after- wards attempted to change that policy and force silver upon a man who wanted gold, or gold upon a man who wanted silver, and especially if he had made that attempt at such a critical period as we have had in tlie last two years, my judg- ment is, it would have been very disastrous. There is a vast difference between establishing a policy at the beginning, and reversing a policy after it has been long established, and, especially, after the situation has been changed. This is sufficient proof that the Secretary of the Treasury has the legal right to redeem greenbacks and Treasury notes in silver, but is restrained by the fear that, a different precedent having been established, an exercise of the legal right at this time would be " very disastrous." Senator Sherman in March, 1878, in testimony given before a Sen- ate committee, also recognized the right of the Government to redeem greenbaclis with silver. I quote from his testimony : Senator Bayard. Tou speak of resumption upon a bimetallic basis being easier. Do you make that proposition irrespective of the readjustment of the relative values of the two motals as we have declared them ? Secretary Sherman. I tliink so. Our mere right to -pity in silver would deter a great many people from presenting notes for redemption who would readily do so if they could get the lighter and more portable coin in exchange. Besides "gold coin can be exported, while silver coin could not be exported, because its market value is less than its coin value. * * * Senator Bayard. By the 1st of July next or the 1st of January next you have eighteen or twenty millions of silver ilollars which are in circulation and payable for duties, and how long do you suppose this short supply of silver and your con- trol of it by your coinage will keep it equivalent to gold — when one is" worth 10 cents less than the other ? Secretary Sherman. Just so long as it can he used for anything that gold is used for. It will be worth in this country the par of gold until it becomes so abundant and bulky that people will become tired of carrying it about; but in our country that can be avoided by depositing it for coin certificates. No law has ever been passed surrendering the Government's right to redeem in silver; and it is as valuable now as it was just after the passage of the Bland law of 1878, which restored silver as a i:)art of our standard money. The testimony above quoted was given by Senator Sherman, then Secretary of the Treasury, soon after the passage of the Bland act and before the resumption of specie pay- ment. Now, notwithstanding the fact that the Government has a legal right to redeem in silver and thus protect the people from the gold hoarders and gold exporters, the President continues to pay in gold even when gold must be purchased by an issue of bonds, and we can not authorize the issue of any bonds for the purpose of buying gold, without indorsing the policy which permits the drain of gold and thus gives an excuse for a bond issue. So far, the surrender to the note holder of the right to designate the coin of payment is purely an act of the Executive and has never received legislative approval. If it is said that the President will issue bonds anyhow and that we ought, therefore, to authorize a bond drawing a lower rate of interest, I reply that until we can restrain the President from 1859 10 further increasing our bonded indebtedness and compel him to pro- tect the Government by redeeming in silver when that is more con- venient, we can better attbrd to allow him to bear the responsibility alone than, by a]ii)ri)ving his course, pledge the Government to a continuation of his jiolicy. If the .Secretary thinks that it would now be disastrous to depart Irom a jtrecedeut established by a former Secretary of the Treasury, liow much more difficult it would be to change the poli cy after once indorsing it by an act of Congress. So long as the note holder has the option, bonds may bo issued over and over again without avail. Gold will be withdrawn either directly or indirectly for the purpose of buying bondfj, and an issue of bonds compelled again, whenever bond buyers have a surplus of money awaiting investment. This experiment has been tried, but, instead of convincing the President of the futility of bond issues, it has simply led him to try a new experiment. By purchasing gold in Europe he may enlarge the circle around which the gold must pass, but he will not change the operation or protect the Govern- ment. The onlj' remedy is the restoration of the bimetallic prin- ciple and the exercise of the option to redeem greenbacks and Treasury notes in silver whenever silver is more convenient, or whenever such a course is necessary to prevent a run upon the Treasury. To delay the remedy is to prolong our embarrassment; to authorize bonds of any kind is to rivet upon the country the policy which has brought our present troubles upon us ; to authorize bonds payable specifically in gold is to invite new difficulties and to establisli a still more dangerous precedent. I am glad to hear some of our Republican friends denounce this gold-bond proposition, but are they not in eflect condemning a Kepublican policy? The gold bond is the legitimate result of the policy inaugurated and continued by Republican administrations. It was a Re])ublican administration which first surrendered to the note holder the option to demand gold in redemi)tion of greenbacks and Treasury notes, and it was rumored that President Harrison was prejiaring to issue bonds to buy gold .just before his term expired. The substitute for the Springer bill, that is, the substi- tute ottered by the gentleman from Maine [Mr. Reed], authoiized the issue of coin bonds to buy gold, and yet the Republicans, almost w'ithout exception, voted for that substitute. I ottered an amendment to the Reed substitute, an amendment "which reaffirmed the Mathews resolution declaring all coiu bonds payable in gold or silver, and yet less than twenty (I think only thirteen) Republicans voted for my amendment. The great majority of the Republicans tlius declared that coin bonds are gold bonds in fact. If coin bonds are really gold bonds, there is less reason for agitation about the use of the word gold in the bond. We, who believe that greenbacks and Treasury notes are redeemable in eitlier gold or silver at the option of the Government — we, who believe in the right of the Government to redeem its coin bonds in either gold or silver — we, I say, can object to gold bonds as a violent change in our monetary policy, but those who insist that greenbacks, Treasury notes, and coin bonds are all payable in gold on demand have far less reason to criticise the President. I repeat, the President is simply carrying a Republican policy to its logical conclusion. If the Republicans are in earnest in their opposition to gold bonds let them come with us and help to make all bonds unnecessary by restoring the bimetallic principle and exercising the option vested in the Government to redeem coin obli- gations in either gold or silver. The Government is helpless so long as it refuses to exercise this option. 1859 11 Mr. DUNN. Don't you want to make it more helpless? Mr. BRYAN. No, sir ; I do not propose to make it more lieljiless. I jiropose the only policy which will help the Government. I pro- pose the only policy which will stop the leak in the Treasury. I only ask that the Treasury Department shall be administered in behalf of the American people, and not in behalf of the Rothschilds and other foreign bankers. [Applause on the Democratic side.] But, Mr. Speaker, I desire, in conclusion, to call the attention of our Eastern brethren to the fact that this controversy can be no longer delayed. The issue has come and it mvist be met. t)n these financial questions we find that the Democrats of the East and the Republicans of the East lock arms and proceed to carry out their policies, regard- less of the interests and the wishes of the rest of the country. If they form this union, off'ensiv' e and defensive, they must expect that the rest of the people of the country will drop party lines, if necessary, and unite to preserve their homes and their welfare. [Applause.] If this is sectionalism, the East has set the example. The demand of our Eastern brethren, both Republicans and Democrats, is for a steadily appreciating monetary standard. They are creditors; they hold our bonds and our mortgages, and, as the dollars increase in purchasing power, our debts increase and the holders of our bonds and mortgages gather in an unearned increment. They are seek- ing to reap where they did not sow; they are seeking to collect that to which they are not entitled; they favor spoliation under the forms of law. The necessary result of their policy is the building up of a plutocracy which will make servants of the rest of the people. This effort has gone on steadily, and, for the most part, stealthily, during the past twenty years, and this gold bond proposition is but another step in the direction of financial bondage. But I warn them that no slavery was ever perpetual. It has often been at- tempted, it has even been successfully attempted for a time, but the shackles are always broken at last. Bondage is ephemeral, freedom is eternal. "Weeping may endure for a night, but joy cometh in the morning." [Applause.] The time will come when the unjust demands and the oppressive exaofions of our Eastern brethi'en will compel the South and West to unite in the restoration of an honest dollar — a dollar which will defraud neither debtor nor creditor, a dollar based upon two met- als, "the gold and silver coinage of the Constitution." "Thomas Jefferson still survives" and his principles will yet triumidi. He taught equality before the law ; he taught that all citizens are equally entitled to the consideration of government; he taught that it is the highest duty of government to protect each citizen from injury at the hands of any other citizen. We seek to apply his princijiles to-day to this great question; we seek to protect the debtor from the greed of the creditor; we seek to protect society from the avarice of the capitalist. We believe that in the restora- tion of bimetallism we shall secure the reestablishment of equity and restore prosperity to our country. [Prolonged applause.] Appendix. contract. This agreement entered into this 8th day of February, 1895, between the Secretary of the Treasury of the United States, of the first part, and JNIessrs. August Belmont & Co., or New York, ou behalf of Messrs. N. M. Rothschild 1859 12 & Sons, of London, England, and themselves, and Messrs. J. P. Morgan & Co.. of New York, on behalf of Messrs. J. S. Morgan & Co., of London, and themselves, parties of the sfcimd part. Witnesseth: Whereas it is provided by the Revised Statutes of the United States (section 37IK1) tliat the Secretary of tlu? Treasury may purcha.so coin with any of the bonds or notes of the United States authorized by law, at such rates and upon such terms as he may deem most udvaiitavceous to the pulilic interests; and the Secretary of the Treasury now dccuis tliat an emer- gency exists in whicl) tile puMic interests retiuire that. as hereinafter pro- vided, coin shall lie purchasi-d with the bondsof the United States, of the de- scription hertniiafter meiitioiii>d,;iut!io!-i/,ed to be issued under the act enti- tled "An act to provide for the resumption of specie payments," approved January 14, 1875, being bondsof the LTnited States described in act of Con- gress approved July 11, 1870, entitled "An act to authorize the refunding of the natioiKil debt." Now, therefore, the said jiartiesof the second part hereby agree to sell and deliver to the United States ;i.r)()().0(K) ounces of standard gold coin of the United States. at the rate of $17.S()U1 per ounce, payaljlo in United States 4 per cent thirty-year coupon or registered bonds, said lionds to be dated Feb- ruary 1,1 WI5, and j)ayable at the pleasure of the United States after thirty years from date, i.ssiied under the acts of Congress of July 14, 1870, January 20, 1S71. and January 14, ls7."), bearing interest at the rate of of 4 per cent per annum, jiayablo (puirterly. First. Siich purchase and sale of gold coin being made on the following con- ditions: 1. At least one-half of all coin deliverable hereinunder shall be obtained in and shipped from Europe, but the .shipments shall not be required to exceed SOO.ttoo ounces per month, unless the parties of the second part shall consent thereto. 2. All deliveries shall lio made at any of the subtreasuries or at any other legal deposit(.)ry of the United States. 3. All gold coins delivered shall be received on the basis of 25.8 grains of standard gold jier dollar, if williiu limit of tolerance. 4. Bonds delivered under this contract are to be delivered free of accrued interest, which is to be assumed and paid by the parties of the second part at the time of their delivery to them. Second. Should the Secretary of the Treasury desire to offer or sell any bonds of the United States on or before the 1st day of October, 1895, he shall first offer the same to the iiarties of the second part; but thereafter he .shall be free from every such obligation to the parties of the second part. Third. The Secretary of the Treasury hereby reserves the right, within ten days from the date hereof, in case he shall receive authority from Congress therefor, to substitute any bonds of the United States, bearing 3 percent in- terest, of whicli the principal and interest shall be sjiecifically payable in United States gold coin of the present weight and fineness for the bonds herein alluded to: such 3 per cent bonds to be accepted by the parties of the second part at par. i. e., at §18.6041)5 per ounce of standard gold. Fourtli. No bonds shall be delivered to the parties of the second part, or either of them, except in payment for coin from time to time received here- under: whereupon tlie Secretary of the Treasury of the United States shall and will deliver the bonds as herein provided, at such places as shall be desig- nated by the parties of the second part. Any expense of delivery out of the United States shall be assumed and paid by the parties of the second part. Fifth. In consideration of the purchase of such coin, the parties of the second part, and their associates hereunder, assume and will bear all the ex- pense and inevitable loss of bringing gold from Europe hereunder; and, as far as lies in their power, will exert all financial influence and will make all legiti- mate efforts to protect the Treasury of the United States against the with- drawals of gold pending the complete performance of this contract. In witness whereof the parties hereto have hereunto set their hands in five parts this 8th day of February, 1895. J. G. CARLISLE, Secretary of the Treasury. AUGUST BELMONT & CO., On behalf of Messrs. JV. M. Rothschild followed by a demand for hii art making existing bonds payable in gold, and it would be urged that it would be disastrous to depart Irom tlie policy of gold bonds when oiicc inaugurated, just as it is now urged that it will be disasti'ous for the (■Jovernmunt to resume a discretion which has Ijeen temporarily sni-rendered to the note hokler. It is impossible to overestimate the isvil influence which would be exerted by the issue of gold bonds by the government, because such action would naturally and iie<'essarily encoura'..;e if not actually compel the i.ssue of gold bonds by all public and private corjiorations and the making of gold c(mtracts by individuals generally. Such an increased strain upon gold would manifest itself in a further risein the purchasing i)ower of th(^ dollar and in a fur- ther and distressing addition to the load of debt now borne by the people. Third. If we were in favor of an issue of gold bonds we would stilloe op- posed to the issue of bonds running for tliirty years. According U> the terms of the contract tlu' bond juirchasers agree to accept 3 per cent gohl bonds without mentioning the date of payment, but it can not oe doubted that the purchasers will insist u])on a thii'ty year bond if discretion is given to the Secretary of the Treasury to issue such a bond. Fotirth. If W(! W(!re willing to authorize the issue of thirty-year gold bonds we Would still be opposed to recognizing or ratifying a contract as harsh in its terms and as imperious in its demands as the contract insisted upon by the bond \^iur<'ha.sers. Fifth. It we were willing to approve of such a contract under ordinary circumstances we would, still bo opposed to approving it when made by a sov- ereign gt)vernment with foreign financiers under circumstances which sug- gest a desire upon the part of the subjects of another country to purchase a change in the hnaiicial policy of this nation for a sum stated. These are some of the reasons which lead us to withhold our support from the measure recommended by a majority of the committee, and they are, in our judgment, sullicient to justify our dissent. If further reasons were nec- essary tliey might be found in the fact that the contract provides for the sale of coin bonds at about lO-W, which would sell in the market at about 119; in the fact that the contract agrees to sell thirty-year gold bonds, drawing 3 per cent interest, for less than the Government three months ago sold twelve- year coin bonds, and in the additional fact that foreign investors are by the contract given a preference over American investors in the purchase of any bonds which may be issued 1)efore next October, and are also given a pref- erence now over the American investors who but a short time ago stood ready to purchase more bonds than were then offered. WILLIAM J. BRYAN. JCJSTIN R. "WHITING. Mr. McMiLLiN and Mr. Wheeler of Alabama, while dissenting from the majority of the committee, reserve an expression of their views until they have an opportunity to present them more at length upon the floor of the House. 1859 THE REFORM OF THE CURRi:::. SPEECH OF Hon. ASHER G. CARUTH, OF KENTUCKY, HOUSE OF REPRESENTATIVES, TRIDAY, JANUARY 4, 1895. WASHINGTON. I»y5. SPEECH HON. A. G. CARUTH. Tlie House being in Committee of the Whole on the state of the Union, and haviiifr under consideration tlie bill (H. R. 8149) to amend the laws relating to national banking asssoi-iations, to exempt the notes of State banks from taxa- tion upon certain conditions, and for other purposes — Mr. CARUTH said: Mr. Chaiuman: Miuch has been said in this debate by opponents of this measure of the apparent haste with which this bill has been prepared and brought into the House. Gentlemen seem to desire to have it appear that this is a new measure formu- lated since the assemblage of this Congress in thist session, and they wash the country to believe that it was brought into this body an "ill-shaped and ill-formed " bill, lacking both study and care in its preparation. I am surprised to hear this argument Berioiisly advanced by members of the Committee on Banking and Currency, like my friends, the gentleman from Massachusetts [Mi-. Walker], the gentleman fi-om Indiana [Mr. Johnson], and the gentleman from Connecticut [Mr. Russell] . Each of these gen- tlemen is a member of the Committee on Banking and Currency. Now, the rules of the House make it the duty of that committee to take charge of all matters pertaining to the banking interests of the country and to the bank issues. It is the duty of its mem- bers to study all questions connected with banking and currency and to suggest legislation which will promote the interests of the people and preserve the credit of the Government. Under the organization of the House, owing to the multitude of matters of legislation presented to the consideration of the members of the body, it can not be supposed that each individual representative can keep fully informed upon all subjects which demand consid- eration by the lawmaking power; but members must be guided 2 1732 in their action to a great extent by the reports of the committees having the various subjects of legislation in charge. The Committee on Banking and Currency was appointed at the extra session of, the Fifty-third Congress, in Aut^ust, 1893, and should have been considering the subjects over which it has juris- diction ever since that time. It will not do for meml)ers of that committee to argue siir prise in regard to this measure or ignorance of the wants and needs of the country, for the notes of warning as to the nation's danger sounded in the message of the President of the United States were nottl^e first heard in this Capitol. The present distinguished Secretary of the Treasury, he who bravely took charge of the finances of the Government when the millions which had been accumulated in the Treasury of the United States had disappeared and a surplus had given place to a deficit, more than a year ago, in his first report to this Congress, called atten- tion to the condition of the Treasury and urged the importance of action. I quote from the first report of Secretary Carlisle, made to this Congress in December, 1893: In the meantime it will be the duty of all who have power to influence the course of events or to assist, by legislation or otherwise, in the solution of the grave quesl^ons presented by the altered condition of our monetary sys- tem, to carefully consider the whole subject in all its aspects, in order that it may be permanently disposed of by the adoption of a simple and compre- hensive system, which will, as far as possible, relieve the Government frora the onerous obligations now resting upon it, and at the same tune secure for the use of the people a currency uniform in value and adequate in amount. So since December, 1893, reform of our currency laws has been directly a subject for the consideration of the Committee on Bank- ing and Currency; and to say now at this day that it is a new idea is for gentlemen to confess their ignorance of the duties assigned them under the rules of this House. No two men in the nation are as much concerned in the proper administration of our financial affairs as the President of the United States and his Secretary of the Treasury. No one who knows the men will doubt the patriot- ism, the honesty of purpose and integrity of Grover Cleveland and John G. Carlisle. They know that their individual reputation, their standing amongst those who before them have held the high offices they now occupy, their place in our country's history, depend upon the success of their administration. Holding to the same political 1732 faith which they profess, believing in the ultimate triumph of the principles of public policy which they entertain, I am not willing to accept the results of the recent election as the death of all our hopes or the blight of their reputation, for I b^ilieve when these obstructing clouds roll by there will be a brighter and more pow- erful sun shining in the heavens. [Applause.] I believe when the history of these times comes to be written that it wiU be acknowledged by all that Grover Cleveland was a great President, and that he will take his place in history along with the illustrious names which are immortal in fame; and I believe that John G. Carlisle, even if he does not mount to a yet higher position, as I believe he will, will be regarded as great a Secretary of the Treasury as he was a wise, just, and impartial Speaker of this House and a learned and dignified Senator of the Republic. Congress met and adjourned at its long session, and althoiigh the danger to the country was apparent no action was taken to afford the Treasury financial relief. The Secretary was powerless, although he directed the attention of Congi-ess to the situation and called attention to the needs of legislation in that regard. In that first report, from which I have already quoted, he said: So long as the Government continues the unwise policy of keeping its own notes outstanding to circulate as currency, and undertakes to provide for their redemption in coin on presentation, it will be, in my opinion, essential for the Secretary of the Treasury to possess the means, or to have the clear and un- doubted authority to secure the means, which may from time to time become necessary to enable him to meet such emergencies as the one which has re- cently occurred in our financial affairs. Under existing legislation the Treas- ury Department exercises to a larger extent than all the other financial insti- tutions of the country combined the functions of a bank of issue; and while the credit of the Government is so strong that it may not be necessary to maintain at all times the actual coin reserve which experience has shown to be requisite in the case of ordinary banking companies, still it would be mani- festly imprudent, to say the least, not to adopt such precaiitionary measures as would enable the Government in tunes of unusual monetary disturbance to keep its faith vrith the people who hold its notes and coins by protecting them against the disastrous effects of an irredeemable and depreciated cur- rency. While the laws have imposed upon the Treasury Department all the duties and responsibilities of a bank of issue, and to a certain extent the functions i)f a bank of deposit, they have not conferred upon the Becrotary any part of the discretionary powers usually possessed by the executive heads of institu- tions engaged in conducting this character of financial business. He is bound by mandatory or prohibitory provisions in the statutes to do or not do cer- tain things, without regard to the circumstances which may exist at the time he is required to act, and thus he is allowed no opportunity to take advantage 1732 of changes in the situation favoi'able to the interests o^ the Government, or to protect its interests from injury when threatened by adverse events or in- fluences. He can neither negotiate temporary loans to meet casual deficien- cies nor retire and cancel the notes of the Government without substituting other currency for them when the revenues are redundant or the circulation excessive, nor can he resort, except to a very limited extent, to any of the expedients which in his judgment may be absolutely necessary to prevent injurious disturbances of the financial situation. These considerations em- phasize the necessity for such legislation as will make the Department more independent of speculative interests and operations and enable it to main- tain the credit of the Government upon a sound and secure basis. Congress having failed to act on these suggestions, having failed to either amend the law enlarging the power of the Secretary, or to provide some adequate means of relieving the Treasury of the drain upon it, the Secretary of the Treasury has been forced to borrow, within twelve months, $100,000,000 in two different loans of $50,000,000 each; and the President has been com- pelled to proclaim to the country his determination to sanction still further the increase of the bonded obligations of the Gov- ernment until the only power in the nation which, under our Constitution, can pass laws. has provided measures of relief. Al- though more than thirteen months have elapsed since the attention of Congress was called to these matters, nothing has been either proposed or accepted by the lawmakers, and in the presence of a deficit of nearly $70,000,000 between the receipts and expenditures of the Government this Congress is again in session. Again the President has called the attention of this body to the defects in our monetary system, and again the Secretary of the Treasury implores action, which must be prompt and effective if the credit of the Government is to be sustained. He says: In my last annual report I called attention to the unsatisfactory condition of our financial legislation, and especially to the issue and redemption of circulating notes by the Government, and the inability of the Secretary of the Ti'easury, under existing laws, to make prompt and adequate provision for the support of the public credit. The experience of the past year has confirmed and strengthened the opinions then expressed, and I therefore re- spectfully but most earnestly urge upon Congress the necessity for remedial legislation during its present session. The well-known defects in our finan- cial system and the serious nature of the evils threatened by them have done more during the last two years to impair the credit of the Government and the people of the United States, at home and abroad, and to check our industrial and commercial progress than all other thmgs combined, and our first and plainest duty is to provide, if possible, some effective method for the prompt and permanent i-eliof of the country from the consequences of the present unwise policy. 1732 G I do not desire to reflect upon the Bankinj^ and Currency Com- mittee, which is composed of some of our btst, most patriotic, and able members, but I do say it does not become any member of that committee to complain that there is uiuhie haste in regard to the proposed legislation. Since his entrance into the Cabinet of President Cleveland, Mr. Carlisle has given much thought and study to the great subject of currency reform, and the result of that study has been the preparation of the pending bill. Now, some members contend that, as Mr. Carlisle prei)ared the bill one night and submitted it to the committee the folloviing morning, that this argues want of study and consideration of this great question. Doubtless Mr. Carlisle has revolved this matter over in his own mind hundreds of times when all thoughts of leg- islation Avere banished from the minds of Repi-esentatives. Doubt- less, Mr. Chairman, he considered this subject when you and I were coui-ting the sweet rej^ose of sleep, or when we were divert- ing oui" minds Avith thoughts far different from those which oc- cupy them to-day. For on the St'cretarj' of the Treasiu-y rests the important matter of the care of the finances, and the maintenance of the credit of the greatest Republic in the world; and the act of dictating to his secretary the words of the proposed bill was the least of all the work done in its preparation. Members do not stop to think that it is our business to make the laws, not the duty of the Secretary of the Treasury, and he is too modest a man — for his greatness is unimjjaired by egotism — to presume to dictate to the lawmaking power. He is ready at all times to advise, eager to aid when asked, but never willing to obtrude. At the request of the committee he has prepared this bill which is now submitted to the House. That was the bill in his mind which before that he had outlined to the President of the United States and which is so emphatically indorsed by Mr. Cleveland in his message. Mr. Carlisle did not contend, nor does anyone contend, that this is a perfect measure of reform or that it will accomplish all that could be desired in the way of relief to the country and to the Treasury. In drawing the bill there were several objects in view; first, to give the country a safe and elastic bank currency; second, to re- lieve the Treasury from the constant drain on the gold reserve, 173:; and third, to give the States which desired it, a State bank issne. That there was a necessity for a change in the national banking law was not only demonstrated by the experiences during the panic of 1803, but is admitted by all who have watched the work- ings of the law and whose business connected them with theba7ik- ing system under it. A convention of bankers in Baltimore, rep- resenting 1,700 national banks, of which convention the gentleman who has so recently taken his seat [Mr, Hendrix] was a member, formulated a plan and desired the national banking system to be changed to conform to their ideas. They were looking at it purely from a business standijoint, and were considering their own in- terests in the premises, and frankly so stated, when interrogated by the gentleman from Massachusetts [Mr. Wat^ker] when their representatives appeared before the Committee on Banking and Currency. I agree with the gentleman from Massachusetts in the remark that their plan is not worthy of consideration now, because they treated the subject from the bankers' standpoint, and did not place themselves in the position of the Secretaiy of the Treasiiry or the people. Theirs was purely a selfish proposition, and you know, gentlemen of the House, that it is believed all over the country by all thinking men that the most soulless people in all the world are the bankers. Donn Piatt, I believe, gives this as the bankers' prayer: Teach me a counterfeit to know, And bargains good to see; For quarters I to others show Show fifty cents to me. [Laughter.] I do not believe, however, that any banker ever wrote that prayer, because 1 do not believe that any banker ever read, in a proper spirit, the original of which it is a parody. [Laughter.] The original of that poem, says: That mercy I to others show That mercy show to me. [Laughter.] But the gentleman who has just taken his seat was a member of that convention, and the plan that was then proposed was not, as he stated here, to base a bank issue upon a deposit of govern- ment bonds, but to remove the security of the government bt)nds 1733 8 and to allow the issue to be made upon the unimpaired capital of the bank, and to place back of it not the liability of the institution that had made the issue, but of the Goveniinent of the United States. Mr. SPRINGER. Will the gentleman allow me to suggest also that that convention made no proposition whatever in regard to retiring the greenbacks, or funding them into bonds, which my friend from New York (Mr. Hendrix] has emphasized so much? Mr. CARUTH. Not at all. They did not i)lace themselves, as I have said, in the position of the Secretary of the Treasury, or of the people. Their only object seemed to be to so arrange the law as to make it profitable to the national banks to issue notes, and impose upon the Government the duty of final redemption. The end in view ^vith lis as legislators is to pass laws, not for the bene- fit of bankers alone, but for the good of the whole people; and to do this we must not only provide a safe and stable currency, but also protect the Govermnent by measures which will maintain a sufficient reserve in gold to meet the demands of the holders of Government obligations. It is stated by the Secretary of the Treasury, it is demonstrated by experience, that the .§.34(),000,0()0 of greenbacks and the $152,- 000,000 of Treasury notes issued for the purchase of silver buDion under the Sherman Act are used to reduce the gold in the Treas- ury and to coerce the issue of bonds. This policy has forced an addition of $1 00.000, 000 to the bonded in- terest-bearing debt of the Govermnent within the last year; and there is no telling to what extent the United States will be com- pelled to go in this matter unless this Congress enacts some reme- dial legislation. In the plan now before this House is suggested to Congress amendments to the national banking law, the two objects being to give a safe, elastic currency and at the same time stop the drain on the public Treasury. If this bill by its provisions accomplishes these two desirable purposes, ougtit it not, gentlemen, to pass both Houses of Congress and become the law of the land? I have read with great interest the statements of the bankers and of the students of finance before the Committee on Banking and Currency, and find that all admit that the provisions of the bUl will give a safe currency; that there is no danger of loss to the 1732 9 note holder, and that in reality the security is much greater than is necessary. In this all the witnesses before the committee agree. Nor is it denied that this measure will provide elasticity in the currency. I can not, within the time at my disposal, review the provisions of the bill which will bring about these desirable results; but there is no question that this bill will accomplish the purposes in view. Many matters of doubt have been removed by the provisions of the substitute which will be offered by the chairman of the com- mittee, and many objectionb to the details of the measure, as orig- inally reported have also been met in the perfected bill, such as removing the ultimate liability for the notes of the failed banks by all the organizations of the system and the removal of the mandatory requirement that existed in the original bill requiring national banks, on the 1st of July next, to enter under the new system. The substitute leaves this optional with the banking con- cerns. As now perfected, the bill gives the banks the right to issue up to 75 per cent of their unimpaired capital, by a deposit of 30 per cent of its circulation in greenbacks or legal-tender notes, instead of requiring a deposit of Grovernment bonds, and giving a circulation of 90 per cent of the par value of the deposited Grovern- ment obligations. It reduces the tax to one-half of 1 per cent, payable semiannually,, and provides a way of raising additional notes by removing the limitation of the act of July 12, 1882. To this extent it helps the banks; but in so doing it helps the people by giving a larger and a more elastic volume of ciirrency. It gives ample security to the note holder, and there is no danger of the loss of a single dollar. Experience demonstrates that the security is far beyond the demand of safety, and the testimony of the bank experts who have been heard by the committee bears this out. There is, therefore^ so far as national banks them- selves are concerned, or the holders of the notes they issue, no danger of there being any alarm created in the public mind by the passage of this bill. Grood, and not evil, will result. So far as the State bank issues are concerned there need be no fear. We told the people in 1893 that if placed in power the Demo- cratic party would repeal the obstruction in the way of the issue of notes by banks incorporated under State laws. In this bill we 1733 — 3 10 propose to cany out the pledge, ami to do it in such a manner as will protect the pockets of the people from loss. Gentlemen pro- fess to fear return to the " wild-cat " or " red-dog " notes of ante- belliTm times. There is no danger of this. On this point I might simply multiply evidence indefinitely, but will content myself with an extract fi'om the testimony of Secretary Carlisle. He said: But I do not believe that yoti can reestablisli what was called the wild-cat banlring system in the United States any more than you can I'eestablish the conditions out of which the system arose. Those conditions have all passed away, and you can not have a bank of issue that could sustain itself unless its notes are safe or reasonably safe. The education and the experience of the people of the United States for the last thirty years have carried them a lonji way beyond the point of keeping in circulation any depreciated bank paper. Hence I fear no danger from State banks which issue notes un- der this bill — free to operate if they obey the law, doomed to de- struction if they disobey its mandates. The provisions of the bill would lead to the enactment of State laws requiring vigilant su- pervision by State officials in addition to that scrutiny to which the banking concerns chartered by the States would be subjected by the Federal authorities. But over and beyond all is the ques- tion whether the pending measure will relieve the Treasury from the dangerous condition in which it was found by Mr. Carlisle when he took charge of its affairs, and which, from the then ex- isting causes, not from any fault of the party in power, has grown worse and more alarming witli each passing month. There are, as has been so often stated in this debate, nearly $500,000,000 of our obligations outstanding which on presentation at the Treasury miTst be redeemed in gold if we would sustain our credit as a Gov- ernment, and no sooner are they redeemed than they are required of necessity to be reissued. Had we not at the extra session of this Congress repealed the purchasing clause of the Sherman Act our Treasury difficulties would have almost overwhelmed us and brought discredit to the nation. Hence 1 am astonished to hear gentlemen on this floor, men whose ability and statesmanship I have admired, congratu- late themselves that they did not favor the repeal of this obnoxious law. The great question is, how shall we stop the flow of gold out of the Treasury and oiit of the country? Mr. Richard P. 173;} 11 Rotliwell, one of the witnesses Lefore the Committee on Banking and Currency, gave the figures setting out the situation, as fol- lows: As the Sherman Act inspired apprehensions as to our ability to maintain gold payments, the effect was to encourage exports of gold. NET EXPORTS OE GOLD. Years ending June 30 — 1891 _ 168,130,087 1892. 495,873 1893 87,506,463 156,133,423 Sherman Act notes outstanding June 30, 1893 146, 341 , ;386 It will be noticed that the country's loss in gold was siibstantially the amount of the issues under the Sherman law. That bill was " a political makeshift." We so denounced it in our platform and demanded its repeal, and it ill becomes Demo- crats who arraign our party for alleged violation of party pledges to raise their hands to high Heaven and thank their Maker that they did not vote to carry out this promise, as solemnly made to the country as any contained in the resolutions of the Denio- ratic National Convention. But, Mr. Chairman, the pending measure will at least lock up from circulation, of these dangerous legal-tender and Sherman notes, 30 per cent of the amount of the circulation of the national banks and 30 per cent of the amount of the circulation of the State banks operating under the provisions of this law. Whilst this bill vnll not give entire, it will give partial relief, and under the discretion given the Secretary of the Treasury to retire the notes out of the surplus revenue these greenbacks and Sherman notes may finally be eliminated, retired, and destroyed, as all admit they should be. Mr. McMILLIN. If it will not interrupt my friend from Ken- tucky, I would like to know what it is proposed to bank on wlieu they are destroyed. They are the basis of this currency, and it seems to me that to authorize their destruction is to authorize the destruction of the very system we propose to enter upon. Mr. CARUTH. That is provided for in the bill, so as to leave sufficient basis for the circulation. Certainly you can not retii'e the 30 per cent that is i)ut up for Ininking purposes. 1733 12 Mr. MfMILLIN. You could if auy hank wishing to surrender its charter saw fit to go and present them. Mr. CARUTH. The provision in the bill is that the amoTint shall not exceed 70 per cent. I will ask the chairman of the Com- mittee on Banking and Currency if that is not so? Mr. SPRINGER. Yes: that is to say, the net increase under the new law. Mr. McMILLIN (to Mr. Springer). What is the greatest amount that could be destroyed under your bill? Mr. SPRINGER. If no new banks are established and the capi- tal stock of none is increased, the State banks and the national banks, having together an aggregated capitalization of a thousand millions, could take out only ^TilO.OOO.OOO, and 30 per cent of that would be $225,000,000, which would be the aggregate amount that could be retired under the total capitalization of all the banks. Mr. McMILLIN. While we are on that subject, inasmuch as you authorize the continuance of banking on the bonds, if existing banks should continue on the bonds, then there coiild be a total destriiction of the other circl^lation. Mr. CARUTH. If all of the banks continued on the bond basis, that would be true; but we are offering in this bill great induce- ments for the national banks to organize under this system, and to abandon the old one. Mr. LACEY. I understand the gentleman from Kentucky to claim that the issuance of what were called the Sherman notes re- sulted in the driving of an equivalent amount of gold from the country. Mr. CARUTH. That is the testimony. Mr. LACEY. Now, on what basis do you claim, or do you claim at all, that the issuance of additional bank currency will not operate in the same way? Mr. CARUTH. I want to relieve the Treasury. I am not car- ing whether gold goes out of the country or not, provided there is enoiigh left to meet the obligations of the Government and the needs of the people. Mr. SPRINGER. The bank currency will be redeemed by the banks, while the Sherman notes have to be redeemed by the Gov- ernment of the United States. I7:j:i 13 Mr. LACE Y, So the gentleman from Kentucky thinks that an equal amount of gold will be displaced and sent abroad. Mr. CARUTH. No; I do not think so. Mr. SPRINGER. Not by this bill. There will be a demand for it in this country. Mr. CARUTH. Now, Mr. Chairman, it is easier to criticise than it is to create. It is easier to pull down than it is to build up. It takes an architect to plan a beautiful structure, and it takes a skilled and experienced artisan to erect the building ac- cording to the plan, but an untutored hod carrier, an ignorant la- borer, can pull it down, brick from brick, and raze it to the ground. I have thought of this during the discussion of the pending meas- ure. Many gentlemen have criticised it. Many have f oimd fault with its various provisions, but no one has produced a better bill. Some say that while they admit the condition of the Treasury and deplore the situation of the country, they will not vote for any measure which does not carry out their own peculiar views. They want free silver or they will not take anything. They know they can not get this, but they do not know that even if they had it it would relieve the difficulties of the Treasury. Men say that this measure is purely experimental. So would that measure be; it would be purely experimental. I recollect, Mr. Chairman, to have heard one of the most distinguished edi- tors and most eloquent orators of this country say when discussing the silver question that he had for thirty years been a writer and speaker upon economic and financial questions, and that it was his business as such a writer and speaker to be familiar with all matters regarding the finances of the country, and he said: "Now, at the end of that time, I am willing to make a confession that I know nothing whatever about the silver question, and never in all my life knew but four men who did. " [Laughter. ] "Of those four men, two are dead, and the other two ne\ er had a dollar in their lives." [Laiighter.] But these advocates of this idea are willing to defeat all finan- cial legislation at this session rather than surrender their pet views. They would let this Congress die on the 4th of March next and be succeeded by a Republican Congress. They would let that Congress wrestle with the great financial problem, solve 1732 14 it ill some manner, and Teeeive credit for so doing. It is not so mncli opposition to this bill that inspires j^entlemen on the other side (jf this House m their fight as the fear lest the Democratic party will be equal to the emergency and enact this measure into law. Why, Mr. Chairman, the gi-eat difficulty with the Democratic party is not want of ability; it has a superbnndance of ability It is not want of leadership; it has too many leaders. It is not the need of a general; there are too many generals and no privates in the Democi'atic ranks. [Laughter.] I hope now, however, when we are about to surrender control of the legislative body of • the nation to our successful opponents, we will lay aside our pride of opinion, and although it may not carry out our particular views or be in accordance Avith our individual ideas — although it may not be the offspring of our brains, let us unite in support of a measure of relief for a distressed country and a suffering people. I had hoped, Mr. Chairman, at the outset that this matter might have been handled in a spirit of patriotism, without the bias of partisanship. But if gentlemen on the other side of the House wish to place the entire responsibility on the party in power, I ac- cept the issue and believe the passage of the pending bill will redound to the interests of the political organization to which I belong. With the passage of this measure we can submit the work of this body to the people of this country. We can point to the ballot box rescued from the interference of Federal authority. We can show reduced expenditures of the people's money. We have given the country tariff reform; and if we pass this measure we will give it honest money. The people will do us justice. Each passing day will add to our party's strength; and before many months have fled into the past we shall find the — Winter of our discontent Madp gU)rious summer; * * * And all the clouds, thiit lowered about otii- house, In the deep bosom of the ocean buried. [Applause.] 1733 UPON THE REFORM OF THE CUR ND RELIEF OF THE TREASU SPEECH OF HOK T. C. CATCHINGS, OF MISSISSIPPI. HOUSE OF EEPRESE^TATIVES, Saturday, January 5, 1895 WASHINGTON. 181)5. SPEECH OF HON. T. C. CATCHINGS. The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 8U9) to amend the laws relating to national banking associations, to exempt the notes of State banks from taxa- tion upon certain conditions, and for other purposes- Mr. CATCHINGS said: Mr. Chairman: We are told that when David Copperfield was born he was found to have a caul over his face. It was a belief in those days that to own a caul was a protection against death by drowning. About ten years afterwards, it being regarded as an article of value, David's caul was put up in a raffle and won by an old lady, who died triumphantly in bed at the age of 93 with out having been drowned. She had a great dislike of water, and frequently expressed her indignation at the impiety of mari- ners and others who had the presumption to go "meandering about the world." When it was represented to her that great con- veniences sometimes resulted from this practice of theirs, she would testily reply: "Let us have no meandering." I shall not roam, Mr. Chairman, in the domains of philosophy, as my friend the gentleman from New York [Mr. Cockran] has done; but I can offer the committee something in the way of com- pensation by the assurance that I shall speak to my text and have "no meandering." I do not mean to be unkind when I say, Mr. Chairman, that my friend from New York would have left a far better impression upon the House if he had stopped his speech when he stopped his "meandering," for so soon as he actually began the discussion of the question before us it was discovered that he had nothing what- ever to suggest of interest to the Treasury, whose condition, as we all agree, presents now the most serious aspect of the problem before us. The gentleman said he would joyously support the Baltimore plan, and yet he confessed that the framers of that plan never in- tended that it should have any effect whatever upon Treasury con- ditions. I suppose that we may take as the upshot of all his long discourse that he would have the Baltimore plan, and then, to use his expression, he would turn his back upon the Treasury, as if the Treasury of itself, without the steering hand of legislation, could take care of itself. My friend discoursed at great length upon the evils of Government paper issues, and in much that he said in that connection I am in hearty accord with him. And yet 1743 3 we find that he is willing joyously to support the Baltimore plan, whose only effect, so far as the CTOverniiient is concerned, would be to increase the obligations of the Government by something like $200,000,000. Because you may be sure that the national banks under the Baltimore plan would all take out the 50 per cent of cir- culating notes allowed by it, and instead of having, as now, about $175,000,000 of these notes outstanding, we should have more than $350,000,000. And these notes, Mr. Chairman, being Government obligations — for the Baltimore plan expressly declares that the Government shall be under obligation to redeem them upon presentation — would also all have to be paid in gold, as is the case with all of our legal tenders. So that the upshot of his whole proi)osition is to add greatly to the burdens under which the Treasury is now strug- gling, without providing a single atom of relief. I think, there- fore, that I am justified in stating. Mr. Chairman, that the gen- tleman would have done better for his o\\ni reputation if he had not broached this subject at all, and had stopped about fifteen minutes before he did, at the conclusion of his "meandering." Mr. Chairman, the bill which we are considering has several purposes Avhich it seeks to accomplish. One of these is to provide the people of this country with a more abundant and more useful and more expansive currency. Another is to relieve the Treasury as far as practicable, under existing conditions, from the necessity of maintaining the cur- rent redemption of so large an amount of paper money; and still another is to supply a field in which our silver money maj' most profitably and usefully be engaged. It is therefore seen that the gentleman from New York scarcely touches the legislation pro- posed in anything said l)y him. His speech, so far as practical re- sults are concerned, is absolutely barren. Absolutely so. I have manj^ times said, Mr. Chairman, that the foundation of all the financial heresies which have taken root in this country and have so confused many of our people is to be found in the un- fortunate, and. I think, wholly unjiastified, decision of the Su- preme Court, that this Government has the power to issue paper money and make it legal tender in the payment of debts. Mr. WALKER. That is so. Mr. CATCHINGS. If any man prior to 1861 , of any party, had suggested that the Government possessed such power he would have been derided as a tit subject for the lunatic asylum. The legal-tender issues and the decision sustaining them yet re- main with us as one of the evils of the war. There was pressure put upon the court to maintain what was confessedly a war meas- ure, and, unfortunately for the good of the country, the court yielded to that popular influence. When these greenbacks were issued, Mr. Chairman, it was done almost apologetically. Nothing but the great stress which was then upon the people of this country to equip and maintain armies -with which to prosecute a great civil war could have induced the Congi-ess of the United States to pass such a measure. It was asserted, pending its consideration, that it was meant to be purely temporary, and that when hostilities had ceased and normal conditions had been restored the first step the Government would take would be to redeem and cancel these promises to pay. 1743 In 1875, for the purpose of making good that promise, it was pro- vided by the resumption act that the Secretary of the Treasury should proceed to carry that pledge into effect by the redein])tion and cancellation of the greenbacks. No man can compute the cost which has come to the American people through the absurd vaga- ries, the crude financial heresies, and, latterly, the loss and dis- turbance of credit, as a result of the prohibition against their cancellation contained in the subsequent act of 1878. The Treas- ury of the United States has no control whatever, and can not have in the nature of things, of its revenues, either when you con- sider their quality or their quantity. It must receive what is paid to it; and as these obligations are to be redeemed in gold when presented, whenever conditions are such that the Treasury is not receiving the gold with which to redeem them, then we have got to the point when we must let our notes go unpaid, and suffer the loss of credit that would surely ensue, or use the only power left — and that is to provide the gold by the sale of bonds. It was stated by the Secretary of the Treasiiry in his last report that but for the necessity of current redemption of Government * paper money there had nev^er been a year when the ordinary rev- enues of the Treasury would not have suflQ.ced to meet all its obli- gations. Within the last twelve months, for the purpose of maintaining the credit of this Government, you have seen the Secretary of the Treasury sell $100,000,000 of bonds, which have been added to the debt of this country, the interest-bearing debt; and yet we are practically where we were before they were sold. As the matter stands now, so long as these notes are ijresented for redemption so long will this necessity upon the Secretary of the Treasury exist of maintaining your credit and mine and that of the Government by adding to our bonded indebtedness. So that really the exposed and impotent state of the Treasury constitutes the most serious aspect of the problem which confronts us to-day. But for this condition, Mr. Chairman, as defective as I think our banking currency system is, we might get along with it fairly well, as we have done heretofore. There is no such crying neces- sity for a reform of our system of currency issues as there is for some provision by which the honor of the Government can be maintained without imposing this great burden upon the people by the constant sale of bonds. No man can tell how serious the effect must be upon all biisi- ness and upon our standing with the nations of the earth of this spectacle which we to-day present. It is not the fact that gold exportations are going on or have been going on that has afflicted us. Ever since we have been a nation, and so long as we shall be a nation, under certain conditions of trade exports of gold have occurred and will occur, for it is conceded by all political econo- mists that no system will suffice to enable a nation to retain per- manently more than its just distributive share of the gold in the world. Gold is the international medium of exchange through which the commerce between nations is transacted. If it were not for the needless strain imposed by our unwise system upon the Treasury these gold exportations would go on in pursuance of the natural laws of commerce without exciting a question or attracting the slightest attention, and let no man bo deluded into the belief that anything that we may now do or any- 1743 6 thin;: that those who come after us may do will ever prevent gold from lea\'ing oiir shores when it can boused more profitably in otlicr hinds. It goes where it can find the reward it demands, and we maybe sure that if the time shall come when the conditions of trade favor us, no matter how great the quantity of gold that may have gone from lis in the meantime, it will be swift and eager to return and seek eniplojonent here. But as it is, with our Treasury standing absolutely exposed to the assaults of all, the whole world sees that we have assumed obligations which we can not in the ordinary course of business comply with. The world knows to-day that we can maintain the current re- demption of our paper money only by resorting to the process which the insolvent or the disabled debtor resorts to, of extend- ing the time of payment by executing a new obligation for money borrowed with which to satisfy the creditor pressing for payment. This condition of things has been foreseen for a long time by many sagacious men as one which might happen. So long as the con- ditions were in our favor and our Treasury was plethoric, and be- fore the great panic of 1893 came upon us, all was fair sailing, and these greenbacks were maintained, so far as we could see, without the slightest difficulty. It was a fair-weather system. So long as the breezes were gentle and the sea smooth the ship of state went along in a gladsome way; but it was unfitted by its construction to buffet with the waves or to resist the icy frosts of wintry seas. Now, Mr. Chairman, is it not important that if we can do so we should remedy this condition and rescue our Treasury from its embarrassment? And if we can, at the same time, remodel our banking laws so that we can have an elastic currency which shall be able to ex- pand and contract, so that it shall adapt itself to all conditions and demands of business, it is our duty to do so. No man can tell how much money is needed to enable the people properly to transact their affairs. The amount required can only be known when business speaks and makes its necessities known. What may be sufficient at one time may be wholly insufficient at another. We should therefore have a system capable of adjusting itself to the fluctuating demands of business, so that there will, at all times, be an abundance of currency and no more. It should pos- sess the power of making this adjustment without the interven- tion of legislation. We have to-day a rigid and inflexible systei' which wholly fails to come up to this standard, and there can be no change in our conditions so long as we have nothing but legal- tender money, issued by the Government. The people, through well-regulated banks operating under equal and impartial laws, which shall prevent monopoly, can make their own money better than the Government can, and adjust the amount of it to their necessities as the Government can not possi- bly do. Let us see if the plan proposed by the Secretary of the Treasury does not comprise all that is required to furnish a safe, sound, and abundant currency. It provides that national banks may issue circulating notes to an amount equal to 75 per cent of their paid up and unimpaired capital, upon depositing with the Treasury 30 ])er cent of the amount of their notes in greenliacks or notes issued under the Sherman law. A tax is imposed upon 1743 the notes of all banks until a fund is created, to be known as the safety fund, equal to 5 per cent, and as this fund is reduced from time to time in redeeming notes it is to be replenished by further taxation. A tax of one-half of 1 per cent per annum is levied on all notes each year to cover the cost of printing them and replacing them when worn or mutilated and administering the law. A first lien is given for the payment of the notes on all assets of the bank, and stockholders, as under the present law, are liable to an amount equal to their stock. The practical operation would be this: If a bank should organ- ize with a capital of $100,000, it could take out $75,000 of notes. Against this it would deposit $22,500 in legal tenders. Thus it would be able to make a net increase in its means of serving the people of $52,500. The existing tax of 10 per cent on notes of State banks and which has prevented them from issuing notes at all is not exacted as to the notes of any banking corporation duly organized under the laws of any State, and which transacts no other than a bank- ing business when it is shown to the satisfaction of the Secretary of the Treasury and the Comptroller of the Currency: First. That such bank has at no time had outstanding its cu-cu- lating notes in excess of 75 per cent of its paid-up and unimpaired capital. Second. That its stockholders are individually liable for the re- demption of its circulating notes to an amount equal to the par value of the stock owned by them. Third. That the circulating notes constitute by law a first lien upon all the assets of the bank. Fourth. That the bank has at all times kept on deposit with an officer of the State, authorized by law to receive and hold the same, a guarantee fund in legal-tender notes equal to 30 per cent of its outstanding circulating notes. Fifth. That it has promptly redeemed its notes at par on demand at its principal office, or at one or more of its branch offices, if it has branches. Under the plan, it will be seen that State banks, upon the con- ditions named, may issue their notes just as national banks are empowered to issue theirs. The following excerpt from the report of the Committee on Banking and Currency clearly shows what abundant security would be afforded to the holders of the notes of national banks organized under the plan: According to the report of the Comptroller of the Currency for the year ending October 31, 189f, it appears that there were at the close of that year in operation in the United States 3,756 national banks, with an authorized capi- tal stock of $672,671,365. The bill reported by your committee limits the amount of circulating notes which any bank may issue to 75 per cent of its capital stock. If, under this bill, the national banks should take out the entire circulation to which they would be entitled the aggregate of circulating notes would be $504,000,000. The 5 per cent safety fund upon this circulation would amount to $^^5,030,000. The guaranty fund required by the bill upon this circulation would amount to $151,000,000. The resources of all the banks at that time amounted to $3,473,922,055. It thus appears that upon a possible circulation of $.504,000,000 there would be a present available security of $151,(KH),()0iJ guaranty and $i"),(XK),(KK) of safety funds, and an iiltimate fund upon which assessments could be made to th« amount of $;3,473,922,055. During the great financial crisis of 1893, 15» n»tio&»J 1713 banks siisponded pay mont, having a capital stock of $:?0,350,0(T0. If the national Imnks in tuis United States liad tuk u out the full finiouut of circulation to which they were entitled at that time, under the proposed bill, if it had heen in force at tliat time iiud if the susp.Mided hanks had taken out their maxi- mum circulation, the notes of such hanks would have amounted to $:i;i,7t):i,()()0. Thirty per cent of that amount would luive been secured by the deposit of le^'al-tender notes. This would have left $i;j,y34,(IOO of circulating notes for pa vment out of the safety fund, which, as before stated, would have amounted These facts demonstrate conclusively that if the proposed bill had been in force during the crisis of 1893, if all the banks had tu(n-etofore tak<'u out cir- culation to the maximum amount allowed bylaw, and if the failed l)anks had also taken out theii' maximum circulation, the giiaranty and safety funds would have been ample for the payment of the entire cii-culation of tln' out- standing notes, and would have left a surplus of over $11,(KKI,IKHI still in the safety fund without the necessity, even in a great crisis of that kind, of mak- ing aiiy assessment on the resources of the other national banks. But of the 1.T.S banks which suspi-nded payment, 86 banks, with a capital sto'k of i;l>',;'05,- (XX), resumi>d business within the year, and were able to pay all tlic-ir liabili- ties, incliiding their circulating notes. Only 65 banks, with a ca]iit;d stock of $10.9;i5.(KHl, i)assed into the hands of receivers. If we assume tliat tlie notes of the 05 banks only were to be paid out of the safety and guaranty funds, there would have been only $8,200.Unnt which would be received on account of the personal liability of the stockholders, would further lessen the amount which would have to 1)6 paid out of the safety fund. If it should bo assumed that all of the national banks which were in existence on the 31st of October, 1894, were organized under the ]iroposed bill, and that all of them in a great financial crisis should fail, and if it should be assumed that all of them had taken out circulation to the maximum amount allowed by the proposed bill, the conditions would then be as follows: The whole amount of circulation would be $.504,00f),000. The guaranty and safety funds in the Treasury would amount to $17C,(KJ(),000. This would leavy $:{i.'<,i»ix 1,000 in circulating notes, the payment of which would be secured be pro rata assessments upon all the national banks whose resources, as before stated, amounted, on the 31st of October, 1894, to $3,473,933,055. The amount of notes, it will be seen, would not equal 10 per cent of the resources out of which they could be paid. The resources of tne national banks do not include the personal hability of the stockholders, which is equal to the whole amount of the stock, and this amount, which at that time, as before stated, was $t>73,- OOfJ.fKlO, is an additional security for the ultimate redemption of the circu- lating notes. In view of these facts, your committee are of the opinion that should the proposed bill become a law, the notes which would be issued under it would be absolutely safe under any and all possible business conditions. The total capital of State banks is about $375,000,000 and their deposits amount to about $700,000,000. If they should take out the full 75 per cent of circulation allowed, their notes would amount to $206,250,000. Against this they would deposit 30 per cent in legal tenders, or $01,875,000, leaving them a net increase of currency with which to supply the demands of business of $144,- 375,000. Taking national and State banks together, if they should take out the full circulation allowed, their notes would amount to $710,250,000, and against this the amount of legal tenders deposited would be $212,875,000. Thus it vnll apjiear that even if the capital of our banks should not ])e increased at all, the plan of the Secretary of the Treasury permits, if the business of the country should demand it, a net exjiansion of our currency of $497,375,000. We have now out- standing $498,000,000 of legal-tender notes. Of this, as much as l74;j y $212,875,000 would be withdrawn and deposited with the Treas- ury, so that it would be relieved of the necessity of redeeming them in gold if the banks should take out the full circulation allowed. It is expressly declared that the Government shall not be liable for the redemption of any of the bank notes issued beyond the amount of the 5 per cent safety fund deposited v(ath it as already stated. What is known as the Baltimore plan, like that of the Secretary of the Treasviry, dispenses with the deposit of Govern- ment bonds as a security for note issues, and requires the crea- tion of the 5 per cent safety fund. It authorizes national banks to issue notes in an amount equal to 50 per centof their paid-up and unimpaired capital, and makes the Goverimaent responsible for their redemption. It stops here, and makes no effort whatever to relieve the Treas- ury of its present difficulties. Nor does it permit State banks to issue circulating notes under any circumstances. The difference between it and that of Mr. Carlisle is therefore radical and fun- damental. The national banks provided for under the pending bill differ from those existing under the present law as widely as possible. Under the present law national banks are required to deposit bonds of the Government as a security for their notes, but they are only allowed to issue notes in an amount equal to 90 per cent of the face or par value of the bonds deposited. In addition they are required to leave with the Treasury 5 per cent as a redemp- tion fund. United States bonds are at such a premium that it would cost to buy $100,000 of them about $115,000, so that a bank depositing $100,000 of bonds would lose aU benefit of the premium of $15,000 and the $5,000 redemption fund, and would get back in bank notes but $90,000. It is therefore so unprofitable that national banks have been for many years reducing instead of increasing their circulation. Under Mr. Carlisle's plan they would be allowed to issue notes amounting to 75 -per cent of their capital upon de^^ositing 30 per cent in legal tenders. This would encourage the establishment of banks in those parts of the South and West where now a bank does not find it profitable to go, to the infinite benefit of the peo- ple. The plan looks to the ultimate retirement of all Government notes, but not until their place has been filled by bank notes so that there shall be no contraction. I am confident that under it the amount of currency in the section in which I reside would be greatly enlarged, that rates of interest would be very much low- ered, and that vast relief would be given to the people. It has been so long since we had bank notes based upon bank credit that the impression prevails with many that the notes of our antebellum State banks were utterly worthless and ineffi- cient, or to use the popular expression, that they were "wild-cat money." This is wholly unfounded. Here is what Mr. George A. Butler, president of the National Tradesman's Bank of New Haven, said a few days ago before the Banking and Currency Committee of the House of Representatives: Much as the old State banks have been censured and maligned, the country never suffered the annual depression, the severe constrictions in moving 1743 10 crops, which it has suffered under our present financial system. With a cir- cuhition that never exceeded at its highest point $:iO(),()()(XO(JO, there never was any dilliculty then in moving cotton, corn, and wheat to market. The notes of the l5tato banks expanded, the wheat, cotton, and corn came to mar- ket, and the notes followi''ment of customs dues. M r. SIMPSON. Now, that is what I want to get at. If the large certificates are destroj^ed, will not the people be forced to use the smaller ones? Mr. SPRINGER. They will want to use them. Mr. SIMPSON. They ^vill have to use them. Mr. CATCHINGS. I must decline to yield further. I think that gentlemen who are listening to me understand quite well the point I make without my engaging further in this colloquy. Now, Mr. Chairman, the plan known as the Baltimore plan met the indorsement of more than sis hundred bankers. ^Ir. SPRINGER. Seventeen hundred met in convention. Mr. CATCHINGS. Seventeen hundred, my friend from Illinois tells me. I was making mj- statement upon the authority of what I had read in a newspaper. Now, is it not surprising that every banker practically in the United States is fighting bitterly this plan of the Secretary of the Treasury which runs almost, except as to two essential features, upon all fours with the Baltimore plan? The fundamental ditfer- ence, Mr. Chairman, between the Baltimore plan and that which we have up for discussion is that the Baltimore plan proposes to make the Government still stand siKmsor for the issues of the banks, while under this i)lan the Treasury is under no obligation of that kijid whatever. That is the key to the whole opposition. If we were willing to provide in this bill that the Goverrmient 1713 13 should stand behind the notes of the banks, there would be no longer anj" opposition to the 30 per cent deposit of greenbacks or to any other part of this measure. If this bill passes, as we pro- pose it shall pass if we can get the votes, all the notes provided for resting mainly upon bank credit, no matter how good they may be thought to be, would be constantly sent back for current re- demption, as they ought to be, to the banks that issued them. Now, the iirofit of a bank upon its issues is largely measured by the length of time that they remain in circulation before being returned for redemption. Under the Baltimore plan, with the Government standing sponsor for them, bank notes would be just as good at one time as another, without any sort of regard to the condition of the bank that issued them or whether they were pre- sented to-day or ten years from now. For that reason such issues would remain a long time in circulation before coming back for redemption. That in my judgment is the key to the whole fight that the bankers are making upon this bill. Mr. BOATNER. Will the gentleman allow me a suggestion? Is it not also a significant fact that the bankers in the great cen- iers, who have been in the habit of rediscounting largely for the tnterior banks, are also opposed to the bill? Is not that fact — that they may be deprived of the opportunity to loan a good deal of money in the way of rediscounting — a factor in the situation? Mr. CATCHINGS. I am disposed to question the correctness of that surmise. Mr. DINGLEY. "Will the gentleman pardon me a moment, because I know he desires to reach a correct statement? Mr. CATCHINGS. I do. Mr. DINGLEY. After all, does not the real opposition to the plan proposed here on the part of those who favor the Baltimore plan arise from the fact that this measure proposes a rehabilita- tion of the State banks of issue, while the Baltimore plan does not? Mr. CATCHINGS. No, sir. I have heard that feature criti- cised, but the criticism was made merely as an incidental pre- text for opposition. I have also heard objection made to the 30 per cent deposit of greenbacks required, but I do not doubt that the objection is an incidental pretext for opposition. If this bill were amended so as to make the Government stand sponsor for the notes provided for by it the gentleman from Maine and others might object to State banks upon principle, but these bankers who are now up in arms would be satisfied to take the measure in that form and would in my opinion withdraw their objection in- stantly. I have no sort of doubt of it. Now, Mr. Chairman, our people have for a long time been ac- customed to bank notes for which the Government was respon- sible, and if we would adopt a plan which would be acceptable to the people we must at the very outset, no matter how we might be able hereafter to modify it, begin by making the notes that we propose to authorize so absolutely good that they will be ac- cepted cheerfully l)}- the American people. I believe myself that a bank note secured by the assets of the bank and the right to proceed against the stockholders of the bank is as good money as can be made under any scheme that the wit of man can devise. I have no sort of doubt that if such a system of bank issues was 1743 14 in operation for a short time they would become acceptable throuy:li()Ut this country. But we must keep in mind that our peojjle have been accustomed to a different kind of bank note, and K) it is tlie i)art of i)riKlence that we shouhl. at the beginning at all . .vuts. Ko beyond an amplitude of security for the purpose of insurhi^ that these notes shall be acceptable to the people. Now, the plan offered by the Secretary of the Treasury not only gives a first lien on the assets of the bank and also the liability of the stockholders, but while withdrawing the bond deposit required by existing law supplies its i)lace by exacting a deposit with the Treasury of 'SO per cent of legal-tender notes for which the Gov- ernment itself is liable; and I do not think anj"^ man in America can be found who will not say that under such provisions the notes would be absolutely good. It has not been denied in this debate, and will not be, that the notes issued under the plan sug- gested by Mr. Carlisle would be perfectly and absoliitely safe, secure, and sound. The only criticism that has been made on this point is that it exacts too much security, and would be so burden- some to the banks that they could not afford to take out circula- tion under it. But it seems to me, Mr. Chairman, that the com- plete answer to that criticism is that the 30 per cent of greenbacks which are deposited have their places taken by that amount of bank notes authorized, thias making the banks whole as to that; and that the banks may issue 45 per cent, I think, in addition, as their biisiness may demand. Now, it has been said that if we adopt the plan of the Secretary of the Treasury we would not put an end to the raids for gold on the Treasury. That is possible. But if we should, as is proposed, make such use, as I have explained, of all of the silver certificates in the country except about nineteen millions that they would no longer be paid in for customs dues, and by that means keep gold out of the Treasury, and if we should withdraw 30 per cent of the greenbacks and Treasury notes outstanding, by having them de- posited as security for bank notes, no man can deny that we \vill have made the operation of raiding the Treasury, now per- formed with such great facility, one of comparative difficulty; and that it would operate to afford extensive relief to the Treasury I am quite clear. But in discussing this question it must be borne in mind that the Secretary of the Treasury understands that we must deal with the question in view of conditions as they are, that he fully understands that there can be no absolute remedy afforded except the heroic one of canceling and destroying all of the legal tenders, and that he seeks ultimately to approach that end, in which desire I am in full accord with him. But he knows, as we all do, that no matter how desirable that end may be, neither of the great political parties in this country will contemplate, even for a second of time, the funding of all of the legal tenders and their immediate \Nnthdrawal from circulation without putting something in their place. It may be right to do it. I am not dis- cussing that. But 1 am discussing this question as a practical man, and I say that there are comparatively few in either party who would vote to destroy the legal tenders withoiit at the same time i)roviding something to take their place. So, when theorists come here and insist that there is but one remedy, and that the 1743 15 cancellation of all the legal tenders, while we may concede the principle of it, yet we recognize the fact that it is wholly imperti- nent even to sxTggest it. One great superiority of Mr. Carlisle's plan over that devised in Baltimore by the hankers is that it does contemplate the ultimate retirement of all of the Grovernment issues. It makes a beginning in that direction, whereas the Baltimore plan had in view nothing beyond the interests of the private gentlemen composing the con- vention. I have been much surprised that our eloquent colleague from New York [Mr. Hendrix] , who descanted with so much accuracy in describing the burden of the legal tenders and the necessity for their extinction, should not have found voice in that convention, of which he was a conspicuous member, to suggest that some provision of that sort should be made. Mr. HENDRIX. Will the gentleman allow an interruption? Mr. CATCHINGS. Yes, sir. Mr. HENDRIX. There was not a single banker in the Balti- more convention, or a single man who supported that plan when it was presented, not a single gentleman who advocated it either there or anywhere else, who did not proceed on the theory that the Government would retire its demand notes. Mr. SPRINGER. Why did they not make some provision for it? Mr. HENDRIX. It was not their business to do so. They were not acting outside their province. Mr. CATCHINGS. The gentleman from New York is well acquainted with our statutes and well knows that we have an express law which forbids the retiracy of a single dollar of the gi'eenbacks, and no law under which the Treasury notes of 1890 can be canceled; and he well knows that it requires positive legis- lation under which power shall be conferred for their extinction either presently or ultimately, and yet there was no suggestion in that beautiful plan that these gentlemen devised around the ban- quet table in Baltimore. I say, Mr. Chairman, that the plan suggested by Mr. Carlisle is a great step forward to reach an important economic result in our finances, and it stamps his measure with infinite superiority over that so ostentatiously paraded by the bankers in Baltimore. Mr. Chairman, there is an impression among some people that greenbacks are the favorite money of the American people, and some think it is almost a sacrilege to hint at a possibility of their cancellation. At one time, indeed, the greenbacks did constitute a popular money with the American people, but it has been many a long, weary day since they have had the opportunity to handle or make use of them. They might as well not be in existence, so far as you and I are concerned, because so far from being the peo- ple's money they have become the bankers' money. [Applause.] The greenbacks no longer circulate among the people, but are held almost exclusively by the bankers. What I want is to destroy the bankers' money and give a cur- rency which the i)eople can get the benefit of and can make use of, and that I think we get under this plan of Mr. Carlisle's. Why should we continue the existence of these greenbacks and legal tenders in order that banks, knowing that they are the equivalent of gold, may quietly put them away in their reserves or in their vaults, to be peddled out to all who wish to get gold from the 1743 16 Treasury ror exportation or otherwise? Sir, the wit of man could not devise a scheme more favorable to the hanking interests of this country than to maintain these legal tenders. I confess that I am surprised wlienever I hear a banker talk about canceling them. A great deal of fuss and feathers is made by some gentlemen whenever the proposition of permitting State banks to issue their circulating notes is broached. The reports show that the sound- ness of State banks, as evidenced by the ratio of capital to loans and reserves, is absolutely as good as that of the national banks. We have a system of State banks in this country just as well offi- cered, just as well managed, presided over by just as honest men, and just as i)atriotic citizens as can be found in connection with the national banking system. Their capital amounts to $270,000,- 000, and they are intrusted by customers with $700,000,000 of de- posits. Why should not such institutions be vested with the pri\'ilege of issuing their circulating notes, if we are to confer it upon national banks? There would be no more danger in a State- bank note than in a national-bank note under the plan which we have uj) for discussion; because, barring the requirement of the 5 per cent safety fund, the security exacted is the same in one case as in the other. There is a good reason why Mr. Carlisle did not provide for a 5- per-cent safety fiand as to State banks. It would be a great bur- den to them and yet would furnish no substantial security. The ntunber of State banks in each different State is so smaU, that to require a deposit of 5 per cent, while being a gi-eat burden to them, would furnish no sort of security to the holders of their notes, whereas when you embrace in a system banks extending all over the United States, as nafional banks do, the 5-per-cent fund does become an active and substantial security. So far as the tax of one half of 1 per cent per annum upon the circulation of national banks is concerned it could not be imjiosed upon the State banks, for that tax is not proi)()sed for the purpose of supplying the Treasiiry with revenue, but simply for the pur- pose of providing it \%'ith the means of printing and engi'uving national bank notes, executing the law. and maintaining the general administration of the system. Of course such a tax could not be exacted of State banks; but does any gentleman supijose Mr. COX. Will the gentleman yield to me for one moment? Mr. CATCHINGS. Yes, although I wish to hurry on. Mr. COX. I want to call your attention to one point. You must remember the additional fact in behalf of the national-bank notes that they are receivable Mr. CATCHINGS. I am coming to that presently, if you will wait and allow me to go along Avith my argument. Mr. Chairman it can not be assumed — it would be folly to assume — that you, would have a State banking system without some supervision by the State, and that supervision would necessarily be accompanied by some expense, and the States themselves would unquestionably impose as great a tax as one half of 1 per cent upon the notes of their banks for the purpose of providing the means of executing their banking laws. Laborious argument has been made to establish the fact that these so-called exceptions in favor of State banks would consti- 1743 17 tute a great inducement to national banks to surrender their char- ters and become State banks. There is one absolute and complete answer to that whole proposition, and that is, that the notes of national banks would continue to be, as they now are, legal ten- ders in the payment of all debts to all national banks and of all dues to the Government except customs, whereas the notes of State banks would be a legal tender for no purpose on the face of the earth. The necessary effect of this would be that the notes of national banks woiild have a far wider circulation than the notes of State banks could possibly be expected to have. And having this wider circulation, they would be longer in re- turning for redemption, and conseqiiently the profit of national banks xipon their notes would be much greater than that of State banks. There would be no serious competition between State banks and national banks. Yet if State-bank notes should hap- pen to stray far away from home and get into the hands of the gentleman from New York [Mr. Hendrix] at his bank, if the rate of exchange was favorable he would take them at par, and if not he would charge a small discount, just as he would if I should go and sell him a draft or a bill of exchange drawn by my bank; and nobody would be hurt by the operation. In fact, Mr. Chairman, to my mind one of the most attractive features of this whole pro- posed system, even as to national-bank notes, is that inasmuch as the Government is not to be responsible for their current redemp- tion, and in no event to be bound for them beyond the safety fund, they would necessarily partake of a local character more or less and be frequently returned for redemption. They would largely stay at home, and they would be of infinitely more service to our people by staying at home than by floating away and becom- ing congested in the great centers, as all national money does. Speaking for myself, I would be glad to amend this bill so as to provide that no bank shall pay out over its counters any notes but its own, so as to make them drift back to the locality in which they were issued. What a strange conception some of us nowadays have, Mi\ Chairman, of a bank of issue! A bank of issue, in its true sense, was never intended to be a medium for supplying money of ex- tensive and prolonged circulation. The true conception is a bank with a paid-up capital of active, live, qiiick assets, which under ordinary conditions will supply all the money that its community wants, but which, when a little stress for money exists in that community, meets it by issuing its notes, to be redeemed and re- tired when the demand for money again becomes normal. Measured by that standard our national banks are not banks of issue at all. If we should organize under our present law a bank with a caxiital of $100,000 and should take out the full amount of circulation we would be in the attitude of a bank hav- ing its notes out with nothing to redeem them with, as our capi- tal would all be tied up in the bonds deposited with the Treasury; and it has only been made possible to organize and conduct banks under such a system because the Government stood ready to sup- ply the capital with which to redeem their notes. Why a national bank absolutely strips itself of all its capital to the extent that it takes out notes; and we saw the discredit that fell upon banks of issue in antebellum days, whose notes were supposed to be secured 1743 2 18 by deposits of honds, which sprang up all over the West, and whose inevitable collni)se crt'ated such a feeling against State banks. Biit there were other State banks organized ui)on sound princi- ples, wliose notes tvera secured by live assets, that furnished to the peoi)le of this country a very sound and useful kind of money. I have seen it recently stated, perhaps in the speech of my friend from New York [Mr. Warner], who has a great way of finding out everything that is useful and good, that in the time of the old State baidcs the whole of the capital of the New England States wasbut>;r)(l,000,000, and that the redemption of their notes through the Bank of Suffolk alone was $-100,000,000 a year. I say that the Eeople of New England in those days had better money than they ave ever had since, a most active, a most efficient, and useful money. I have not been able to see much beyond a sentiment or a fanciful notion in the idea that all our bank issues must be uniform in ap- pearance. Under the provisions imposed upon them by this bill they would be absolutely uniform so far as their security went. Now, it has been said that one of the great advantages of the national banking system is that every man knows that the note of every national bank is issued and secured in the same manner, and that the charter of one bank is the charter of all. There is much to be said in behalf of that claim. But the particular thing that the note holder wants to know is not so much the many de- tails of the charters, but what security there is for the notes he is asked to take or to help put in circulation. If tliis plan of Mr. Carlisle's should become law, the taker of every State bank note would know that that note is secured just as all other State-bank notes are secured, and .inst as the notes of every national bank is secured; for the provisions as to note se- curity are made exactly and absolutely the same both as to State and national banks. But in my judgment, Mr. Chairman, you would in the main find State banks established in localities where national banks will not go. Thej- wo;ild not compete to any great extent with the national banks, as, for many reasons, the banks in the large cities would still be national banks. And the fact that the notes of the State banks would partake of a still more local character is one thing which commends them to my mind. I am quite aware that it is often said that Ave of the South and West, when we clamor for more money, simply represent people who have nothing to ex- change for that money, and that our clamor has no foiindation. So far as the people whom I rei)resent are concerned, that state- ment is absolutely without foundation. We have the property to exchange. We have planters and merchants perfectly solvent and able and competent to meet all their obligations, but there are many times when our banks are wholly incapable ot supplj'ing the money actually needed for the daily transactions of business. One conse(iuence of that is a high rate of interest. There are mercliants in my city whose notes would be taken gladly if they were known in New York as they are in Vicksburg at any rate whicli they themselves might choose to fix, but who are compelled to pay from 8 to 12 per cent for the use of money, and of course that is retaxed upon theii- customers. 1743 19 Mr. WILLIAMS of Mississippi. With a profit. Mr. CATCHINGS. With a profit. So that this clamor for more money does not come altogether from people who have noth- ing to exchange for it. When a man sees that he is himself ham- pered by reason of an insufficient supply of money and when he sees that his neighbors are in the same condition, and when they get together and begin to talk the matter over you will at once see, Mr. Chairman, the thought naturally strikes every man's mind that the difficulty results from a scarcity of money in the country at larare. Mr. WALKER. The old Suffolk system of Massachusetts would have answered the gentleman's demand exactly. Under that sys- tem the bank might have several thousand dollars of its own bills in its till, and if you wanted money to pay out locally it would dis- count your note, but if you wanted money to pay in New Yoi'k or in Boston, the bank would tell you that it could not discount your note. In fact, it is the capital that you borrow, and not the circula- tion; it is not circulation that you need in your part of thecountry, but capital. Mr. CATCHINGS. The effect would be that if a State bank, or a national bank either, located in the city of Vicksburg had reached a point where it had made use of all the money of its depositors that it could safely use, and had used as much of its own capital as it felt that it could safely employ, then it would have got to a pass where it must stop doing business or else it must go to New York (as it does in fact xmder the present system) and by discounting its portfolio borrow money at 5 or 6 per cent interest and come back and lend that money to its customers at from 8 to 10 per cent; whereas if those banks were authorized to issue their notes they could, so to speak, capitalize their own credit and furnish to that extent the equivalent of capital. Mr. WALKER. These notes would be of no more value to the bank than a simple obligation of the bank not printed in that form. The notes of the bank that it held itself would be of no use whatever either in borrowing from another bank or loaning to a customer. Mr. CATCHINGS. That is true as to borrowing from another bank, but I do not admit the last part of the gentleman's state- ment. Mr. WALKER. Of course whatever money they could use in circulation would be all right, but according to the gentleman's own statement all that would be out already and they could not loan their own notes. Mr. CATCHINGS. Wliat I mean is that to all intents and purposes, for the oliject of enabling the people of that community to have more facilities for the transaction of their business, those notes would be equivalent to a certain increase of capital. I find this same idea stated in standard works on banking, so that I do not ask this committee to accept it as something coming from me. Of course when the notes come back and are redeemed and can- celed that is the end of them; so that they are not additional capital in the sense of something permanent that will stay. But in the other sense they are eqiiivalent to additional capital. If a bank has a capital of §100,000 and can issue its notes for $50,000, and those notes have the same force and effect as other money in 1743 20 the transaction of the ordinary business of the community in which tlie bank is located, then that bank furnishes business facilities equivalent to a capital of $150,000. Mr. WALKER. If they can keep the notes out. Mr. WILLIAMS of Mississippi. They can certainly keep them out, at least as long as the fellow who has borrowed them wants them. Mr. OATCHINGS. Of course, as long as there is a demand for them, so long as men want them and give good security for th«m, they A\nll stay out; and when that state of things ceases they ought to l)e tiirned in and redeemed and canceled, for I do not know of anything more demoralizing commercially than an excess of useless money piled up in banks. Mr. W ASHINCtTON. And that increased currency would come without having to pay tribute to the great money centers. Mr. CATCHINGS. Certainly. Mr. WALKER. Oh, not at all. Mr. CATCHINGS. So, Mr. Chairman, I am perfectly satisfied upon this question in my own mind, and I do not believe that any man in this House is less given to even the suggestion of unsound money than I am. I want every piece of money which goes out to the people, whether it goes out from the Treasury or from a national or State bank, to l>e so good that the peopile may accept it with absolute confidence and certainty. But I do not want it so good (as it would be under the Baltimore plan and as the national-bank notes are to-day and as the greenbacks and Treasury notes are to-day) that a man hav- ing this money and having no use for it would hoard it or lend it to a bank possibly in some financial center where it woiild find its way into illegitimate and speculative ventures. I want it to be such money as will in that case go back to the bank that issued it and retire from the sight of the people altogether until a new demand arises for its issuance. Mr. Chairman, what takes place under our present system? The money which we have finds its way to the great financial centers; and wherever you have what may be called a fixed or a national currency it will continue to do so. There are times in the year when the country banks have no use for their money; it lies in their vaults as idle and profitless capital, which woiild not be the case with their own notes. Now, inducements are held out by these great centers in one way or another to obtain control of this currency even when it does not go there in tiie discharge of obli- gations. In .some cases these banks at the great centers will pay a small rate of interest, which is a consideration to the country bank, since it would otherwise have its money idle. Of course the New York banker is going to make some use of this money if he can, and so he puts it out in one shape or another. But finally the time comes when our great agricultural crops must be moved — our enormous crops of cotton and gi'ain — and then just as certainly as that the sun will rise to-morrow morn- ing there comes what we are accustomed to speak of as a stringency in the money market. It is absolutely inex'itable. And it comes in this way: The country banker withdraws his deposits. The city banker, knowing that the deposits vdll be withdrawn, makes preparation for it by calling in his loans. And there conies about a general diminution and curtailment of business. 1743 21 The effect of this stringency in New York is instantly felt like an electric shock in every hamlet in our whole broad land. And the effect is always worse than the conditions would justify; be- cause the merchant, seeing that the banker is calling in his loans and being told by the banker that times are getting a little tight and that he must be a little modest in his demands, begins to cur- tail his trade. The manufacturer and every other business man does this. And inasmuch as it is impossible for them to tell how serious the condition is, every man assumes that it is going to be worse than in fact the conditions would make it. So that when- ever you have one of these stringencies it is exaggerated in its effects and is infinitely more harmful than it ought to be. Mr. WILLIAMS of Mississippi. I think it might be of interest to others if my colleague would state his experience of a matter well known to him and myself. I therefore ask him whether there does not occur in his town every year this state of things, which I know occurs in Yazoo City and Meridian and other towns of our State, that in October or the beginning of November the banks practically quit all other business except lending money to move the cotton crop? Mr. CATCHINGS. That is absolutely so; and they are some- times hard put to it to get money with which to move the crops. I have seen such a condition that it was impossible to sell cotton in the city in which I reside for a week at a time; not because there was any fault in the price or any fault in the general demand, but because of the absolute inability to supply the money needed with which to handle and sell that crop. There are always great difficulties about that; and it is a very costly ijrocess that we go through with in this country whenever our great crops are to be harvested. We can never remedy this condition of things until the Govern- ment cuts itself loose entirely from all obligation to redeem the paper money of this country. So long as the Government stands behind this money, so long as it has the imx)riniatur of the Gov- ernment upon it, you have made it equivalent to gold, because every man knows that this Government never means to let its credit suffer any sort of diminution; and that is equivalent to saying that this Government means to make its obligations as good as gold, now and forever. Consequently, no matter what you may call the obligation — whether it is a Treasury note or a greenback or a national-bank note or any other obligation — when- ever you make the Government bound for its paj'uient you have at once given it those characteristics for travel which will make it a wanderer from home and the habitue of the great centers — a condition which always produces this great congestion and trouble. [Here the hammer fell.] Mr. DINGLEY. I ask unanimoiis consent that the gentleman from Mississippi be allowed to conclude his remarks. There was no objection. Mr. CATCHINGS. I am very much obliged to my friend for the courtesy. Now, Mr. Chairman, there is nothing new in this question of bank money depending alone for its redemption on the bank that issues it. It is only new to us of this generation, who have been 1743 22 accustoinod to get along without such issues. But if you go to Greniiituy. Franco, England, or Canada you Avill find bank issues, notos not paid out as the notes go out of our Ti'easury in the set- tlfuicnt of del)ts. but i)aid out in the course of banking business, in the purchase of credits, in the trcconiniodation of business, in supplying their customers with the monej^ needed to carry on their affairs. That is the way their notes go out, and there is no trouble about their redeeming their notes. Every man who takes the notes of a bank gives to the bank something in excliange for thein. If a banker issues a thousand dollars in notes to me, they are not given to me as a mere donation, but the banker, being a prudent man and knowing that they consti- tute an obligation which he must be ready to pay, sees to it that I do not get my hands on those notes until I have put into his pos- session what he considers as an ample and good security for their payment. Now, the affairs of a bank are always so arranged that while it is constantly, daily, hourly, I may say, putting out its obligations in one form or another in the shape of deposits or notes, it is jiist as constantly gathering in fr(.)m its customers the resources with which to meet the fresh obligations as they arise. Mr. STOCKDALE. Will my colleague allow me to suggest that the Louisiana State banks were always at a premiiim? Mr. CATCHINGS. Oh. ihey were always good. No man ever disputed the sufficiency of the security for the issues of the banks of Louisiana and those in many other parts of the country. Men shrink fi'om the consideration of bank notes 1 lecause in some way they get the idea confused in their minds that there is something mysteri- ous or exceptit)nal about that sort of obligation, whereas there is not the slightest difference between the obligation of the bank to return to the depositor his deposit than there is for the bank to make good the note it issues Avhen presented for redemption. The difference is simi)ly a difference in form. Why, when you speak of extending credit to banks let it be remembered that the American people have deposited not less than$4,(JUU,UUO,UU0 in the banks of this country. Does that exhibit a lack of contidence in the banks? A man will, according to his means, deposit dailj^ with his bank a hundred or a hundred thoiisand (hdlars, as the nature of his business permits, and it never occurs to him to question the credit of the bank. But when the idea is suggested that he might i)0S- sibly, in the course of events, have bank notes amounting to five or possibly five hundred dollars paid to him, the '■ bogii; man " is up at once and suggests that to make such a thing possible is to perpetrate a great crime upon the people. And yet, Mr. Chairman, there is no distinction . except a matter of form, between indebtedness by deposits and that by notes. Why, the bank deposits constitute to-day the money of the people. They make up of themselves the medium by which probably !)U per cent of all our business is transacted Mr. WALKER. Ninety-five. Mr. CATCHINGS. And they do it better than we possibly could if we had undertaken by legislation to meddle with the mat- ter. You go to the gi'eat cities of the country and you find there that very few of the banks issue their notes, simply because 1743 23 they discover that the use of money in the form of bank deposits is in the kind of business there? done better adapted to the needs of the great cities and more useful to their customers. But when you go into the rural districts, where depositors are scarce and the customers of the banks are so situated that they can not use so well in the transaction of their business money in the shape of certificates of deposit or checlvs, then the bank note' comes into play, and banks there ought to be permitted to make such use of their credit as will best supply the wants of the communitj', as they do now without any law in the great cities where they fur- nish their customers the money which is best adapted to the trans- action of their business in the foi'm of deposits against which checks are drawn. Coimtry banks and those in small cities can best meet the needs of their customers, by furnishing their credit to them in the form of bank notes. Mr. HENDKIX. Will the gentleman allow a suggestion? Mr. CATCHINGS. Certainly. Mr. HENDRIX. Suppose the banks should issue certificates of deposit under the existing situation, would it not meet the de- mand to which the gentleman refers? Mr. CATCHINGS. I think not. Mr. SPRINGER. They are prohibited by the 10 per cent tax. Mr. CATCHINGS. And it would not be the sort of money, either, that the people are accustomed to. They are accustomed to handling soniething in their ordinary transactions which has the form, the appearance, and the convenience of money. Mr. WARNER. If my friend from Mississippi will permit me to refer to the point which seems to me to be so important, which he has just suggested — do I understand the particular point he is pressing now is the extent of the benefit to the coimtry districts and to the districts where there are comparatively few depositors, of an elastic bank-note currency bej'ond, or at least in proportion to that which would be given to the larger depositors in the cities where checks are used? Mr. CATCHINGS. Yes. I was very much struck, Mr. Chair- man, by a very interesting and eloquent interview with my friend from New York [Mr. Hendrix] — who is always clear in express- ing his views, and almost always eloquent — wliich came out shortly after the adoption by the bankers' convention at Balti- timore of the plan suggested there, in which interview he made the statement tliat if our system had been such as was there pro- posed, by the bankers having a margin by which they could have increased their circiilation of credits in the form of notes to the amount of 50 per cent, they could have stopped the money famine in 1893 and destroyed it in ten days. I believe that to be true. The plan of Mr. Carlisle, if it had been the law in 1893, would have been just as effective as the Baltimore plan in stop- ping the money famine resulting from the panic of that year. The business of the country is struggling against old traditions, striTggling to be freed from the swaddling clothes which have kept its limbs bound to its side. The banks of New York, perhaps without authority of law — certainly not by authority of law— have found themselves time and again compelled to combine their reserves through their clearing-house certificates in order to provide themselves with 1743 24 that which would take the place of money; and yet those clear- ing-house certificates, barring the fact that they could only be used by the banks that belong to the association, were just as truly issues of those banks^as they would have been if they had come in the form of notes issued by the several banks constituting that association. In 1893 $48,000,000 of these certificates were issued. Mr. WALKER. I should like to ask the gentleman a question. Mr. CATCHINGS. Certainly. ]\Ir. WALKER. What you say of this money and the issuing of it I believe to be true, and you have heard my views in this Hoiise with reference to these matters. Now, what I want to ask you is, what conceivable advantage can it be to organize banks with a charter granted by a State rather than a charter granted by tlie nation when five citizens can to-day form a bank anywhere under the conditions which apply to such banks? What possible advantage can there be? Mr. CATCHINGS. There are two answers to that question. Either one woiild suffice. Mr. WALKER. That is what we want to know. If there is an advantage, you ought to have it. Mr. CATCHINGS. If you give the privilege to issue these large amounts of uncovered notes to our national banks, and deny them to our State banks, you have exercised an improper pressure upon those banks to abandon their State charters and come into the national system. Mr. WALKER. We are talking now about the people, not about the bankers. Mr. CATCHINGS. I am talking about the whole thing. Now, those banks prefer to be State banlc s for reasons suitable to them- selves, and they are good banks. The States have the right to charter banks. Now, to my mind, it will be quite siafBcient to say that we have no right, by the use of our supreme power, to coerce States practically into the cessation of chartering banks. That is one answer, and to my mind it is sufficient, because those banks would have to go out of business Mr. WALKER. Oh, no. Mr. CATCHINGS. Or they would have to become national banks, one or the other. I mean the country banks. I can well understand how a bank wdth a large line of deposits, like the Chemi- cal National Bank of New York, for instance, might get along without note issues and would have no eartlily use for them. The second answer is that you would find banks multiplying in all the little towns and communities in the South and West if thej" had the power to issue their uncovered notes Mr. WALKER. A proper banking bill would give them that lander a national system. My bill gives that. Mr. CATCHINGS. That, of course, would not answer under the present system. And then, again, Mr. Chairman, speaking for myself — I have already emphasized my views on that point — the State banks would furnish to those sparsely settled communi- ties a local currency which would be satisfactory to them, and which people elsewhere would not be troubled with, which they would never see. Tlierefoi'e it was I made the statement a mo- ment ago that, if I could have my way. I would reimpose the old inhibition which found its way into nearly all charters in this 1743 25 <;ountry prior to the war, against any bank paying out any notes but its own. Mr. WALKER. Now one tiling further. Is it not a fact that the moment you say "local issue" you say "depreciated cur- rency?" Mr. CATCHINGS. No, sir; I do not think so. Mr. "WALKER. For this reason. When you say local issue, you see the broker attached to it, jiist as under the Suffolk sys- tem, with which I did business, which bank had two brokers who were patrons of the bank, and the bank sent customers to them; and therefore the moment you say "local issue" it involves a dis- count which the broker is allowed to change the money. Mr. CATCHINGS. Why, Mr. Chairman, the conditions which surround us to-day are entirely different from those days. Mr. WALKER. They are identical with those days. Mr. CATCHINGS. I think they are wholly different. Mr. WALKER. Not at all. I beg the gentleman's pardon. Mr. CATCHINGS. At that time we had about $16 per capita, and that included $200,000,000 of State-bank notes; and they were absolutely essential in the transaction of interstate business, by reason of our then limited banking facilities, for they were limited in those days. When these State notes would go away temporarily from home it became necessary that this brokerage or discount should be paid. But I think I am entirely within the limit of truth when I state that by natural law the discount amounted to merely the cost of ordinary bank exchange. Mr. WILLIAMS of Mississippi. I do not wish to interrupt my coUeagiie, but I ask him, is it not that we need something that will take the place of the national-bank currency in the rural districts and answer the same xHirpose? Mr. CATCHINGS. In lieu of bank-deposit credits. Mr. WILLIAMS of Mississippi. That is it precisely. Mr. WILLIAM A. STONE. If you give the national banks the same inducements to do business in your localities as you would the State banks, what preference would there be in having the or- ganization of a State bank? Is it not a distinction without a differ- ence? Is it not a myth? Mr. CATCHINGS. I have tried in my feeble way to show that the notes of State banks, having only local functions, would be used absolutely in the neighborhood of their issuance. Mr. WALKER. Because it stays at home, what has that to do with its value? Mr. CATCHINGS. For the use of the people in the neighbor- hood in which it is issued it would be a gi-eat deal. It is a diffi- culty which you gentlemen from the East can not understand. Mr. DINGLEY. Would it stay at home unless it was discount money? Mr. CATCHINGS. Certainly, it would stay at home. Mr. DINGLEY. The supplies must be bought in some of the distributing centers. Can not you see that in that event the local money is sure to be brought to the broker for payment? Mr. CATCHINGS. No; it is not necessarily so. If I had not been interrupted awhile ago I think I would have saved the neces- sity for some of these qxiestions. I was about to say that in 1861 we had $16 per capita in this 1743 26 country. %m\ that inclndetl l^^OO.OOO.OOO of State-bank notes. Now, we have to-day in this country about $:j3 or $34, all of which may be spolcen of as fixed currency. Mr. BLACK of Georgia. iSTot .$34. Mr. CATCHINGrS. I am speaking of the amount in the coun- try. I do not mean per capita in circulation. Now, we have a large amoiint of fixed or national money with which to transact the interstate business. You can hardly conceive the conditions in which State-bank money could find its way from home. In making the exchanges necessary to transact business this local money would be left at home, because remittances wotdd be made by bills of exchange and paid in funds current where they go. If. for instance, in my town of Vicksburg, I desired to make a remittance of $.5,000 to New York and had the $5,000 in notes, maybe, of the bank itself, I would not send those notes to New York, but would take them to the bank that issued them, if they were issued by one of the banks of that town, and I would purchase with these notes a bill of exchange on New York, pay- able in such funds as were usually current there. Mr. HENDRIX. Siippose the bank had no funds in New York? Mr. CATCHINGS. I am supposing that every bank keeps its deposits so that it can draw its drafts. Every bank that I have ever had any acquaintance with had possessed itself of the power to draw bills of exchange on New York. Mr. OUTHWAITE. And the State banks do it now. Mr. CATCHINGS. Certainly. Mr. HENDRIX. Then they must have some other kind of money than that which the gentleman has been describing. Mr. CATCHINGS. Of course. Mr. HENDRIX. How would they get it? Mr. CATCHINGS. They would, of course, as they do now, keep their deposits with their banlc correspondents in New York or elsewhere in what I have designated as fixed or national cur- rency. I can not conceive of any condition by which these notes would go away from home. Mr. CANNON of Illinois. If my friend will allow an interrup- tion at this point, I Avill say that I am a little older than my friend, and I remember Mr. CATCHINGS. Before my friend proceeds I wish the com- mittee to remember that he lived in the ^-ery storm-center of Mold- cat money. [Laiighter.] I do not come from the home of wild- cat money. Our Soiithern banks were good. Mr. CANNON of Illinois. Oh, there were good banks in the West in those days; the State Bank of Indiana, for instance, whose bills were among the best money in the country; but it is a fact that all over Indiana and Illinois the Georgia money, the wild-cat money, was circulated; it was sent as far from home as possible, and it was the first money to circulate to the exclusion of the notes of the Bank of Indiana. Now, 1 ^^n.]l ask my friend in good faith whether he does not think that with banks in forty-four States issuing money it is very likely that the cheapest money would go first? Mr. CATCHINGS. Oh, no. That notion about cheap money- driving out good money has no earthly connection with banks of issue. Gentlemen persist in confusing this question with what is 1743 27 called Gresham's law, although that law refers only to legal-ten- der money — money of the nation. No bad bank note would ever drive out a gold dollar, but the gold dollar would drive out the bank note. Mr. WILLIAM A. STONE. If you would strike out of your bill the proposition to rehabilitate State banks and leave the business with the national banks, those existing and those which might be organized hereafter, would not that benefit you just as much as your proposed local banks? Mr. CATCHINGS. Well, Mr. Chairman, I have gone over that question so thoroughly that I do not feel that I could add much to what I have already said. Besides, I observe that it is about time to bring my remarks to a close. Several Members. Go on. Mr. WILLIAM A. STONE. You have made them so interest- ing that we want you to continue. Mr. CATCHINGS. My friend is very kind to say so. I have spoken with great earnestness on this subject because I feel great interest in the question. I feel that we ought to find some means by which the great, the unnatural burden under which our Treas- ury is resting to-day should be taken from its shoulders. And, inasmuch as I have satisfied myself at all events that it is out of the question to talk about a bill which shall retire these legal ten- ders without putting something in their place, I have come to the conclusion that this bill of Mr. Carlisle's is a long step in the direction of attaining the ultimate cancellation of all these legal tenders and the relief of the Government from the obligation of issuing or redeeming money, a thing which, by the very nature of its constitution, it is unfitted to do. As to the deposit of 30 per cent of greenbacks, while it is wholly unnecessary from a scientific point of view, and while I believe that the notes of these banks would be absolutely good without that deposit or the guaranty of the Government, still I recognize the fact that we must not travel too rapidly, and that when we tell the people that we are taking away the bond deposit, although it never was of the slightest consequence to them, since the Comp- troller's report shows that if there had been no bonds deposited as security, and the only security had been the first lien on assets and the stockholder's liability, the Government would only have lost in the redemption of notes from the beginning of the system until now about $1,000,000,000, we must be able to tell them that we are piitting something in its place in the form of a Gov- ernment guaranty. Instead of 100 per cent guaranty by the Government, we propose 30 per cent; for this greenback deposit simply means that the Government will stand responsible for the redemption of 30 per cent of the notes issued, just as the bond deposit means that it will stand responsible for the redemption of every one of them. Mr. PENCE. As I understand the suggestion of thegcntleman, it is that the Government will stand behind the greenbacks with its gold. Now, as I understand, we have to-day in round numbers $346,- 000,000 of greenbacks based on §100,000,000 of gold reserve, and also $150,000,000 of Treasury notes base'd upon the same gold re- serve, according to the pretension made here this afternoon. 1713 28 Then we have in ronnd numbers $500,000,000 based upon that gold reserve. Now, under this bill we pr(>i)ose to make that $500,- 000.000 the basis, at the rate of 1 to 3, of a bank currency Mr. CATCHINGS. Oh, we do not do anything of the sort. Mr. PENCE. If the entire outstanding body of greenbacks and Treasury notes should be used as a basis for banking circulation under this bill, wotild not that be the effect? Mr. CATCHINGS. If people organized banks simply for fun, and not for the purjiose of doing business, you might tind such an amotmt of circulating notes taken out as would require the de- posit of the whole $500,000,000 of greenbacks and Treasury notes. But I consider the gentleman's question as absolutely irrelevant because no possible use could be made of that amount of paper money in this country, for banks would not organize and takeout circulating notes except to the extent that it might be profitable for them to do so. Mr. PENCE. I hope the gentleman will not regard me as hav- ing a disposition to ask irrelevant (luestions Sir. CATCHINGS. Oh, I did not mean any offense to the gen- tleman. Mr. PENCE. Now, if the banks did not take out circulation to that extent, there would still be left some portion of these green- backs and Treasury notes which might be used for the purpose of draining the Treasury of its gold. Mr. CATCHINGS. I think my friend can not have been listen- ing to my remarks. Mr. PENCE. I was listening to every word the gentleman said. Mr. CATCHINGS. I made the statement in the beginning that this bill "vvas not intended to be a perfect measure of relief; that there could be no complete relief except the cancellation and ex- tinguishment of all these legal tenders. But the conditions, as I stated, are siich that that result can not be accomi)lished, and this bill is the only thing leading in that direction which we could hope to enact into a law. Mr. WILLIAM A. STONE. I trust the gentleman from Mis- sissippi will say something in regard to the difficulty which it seems to me might arise from the want of uniformity in State legislation ^vith reference to the issues of the State banks. Here is a measure reciuiring a deposit of 30 per cent of the amount of the bank circulation with some recognized officer of the State. Now. it is possible and probable that the States may differ with respect to the taxation imposed on the State banks and as to the system of impounding the securities. In view of these circum- stances, may not a bank in one State carry on its business under mucli more favorable conditions than a bank in another; and ^\^ll not this tend to affect the circulation and its security? Mr. CATCHINGS. I can hardlv understand how that could be. Mr. WILLIAM A. STONE. What assurance will any note holder have that there will be a uniform measure of security behind these State-bank issues? Mr. CATCHINGS. My friend will certainly understand, if he will read this bill thouglitfully, that the seciirity, at all events, will be at least equal to and of the same kind as that furnished to the note holder of the national banks. While some States might exact greater security, none could exact any less. So that I say 1743 29 in any event the holder of a note of a State bank would be secured just as amply and in fact in precisely the same way that the holder of a note of a national bank would be. Mr. WILLIAM A. STONE. The States wiU not animpose the same taxation. Mr.'HENDRIX. If my friend from Mississippi [Mr. Catch- INGS] is correct in his statement, why shotild the national-bank note have any legal-tender quality whUe the State-bank note has none? Mr. CATCHINGS. I will say to my friend that if I could pass a law in a form which would exactly suit myself I would take away from the national-bank note its legal-tender quality. If that were done, I think it would be better and more useful money. Personally I would never agree that the note of any bank should have any legal-tender quality. Mr. HENDRIX. I agree with the gentleman. Mr. NEWLANDS. I understood the gentleman from Missis- sippi to say a few moments ago that it was the duty of the Gov- ernment to maintain all its obligations on a par with gold; in other words, to make all Government obligations gold obhgations. The purpose of this bill, as I understand, is to prevent the drain- age of gold from the Treasury by the redemption of United States notes and greenbacks. But there are about $500,000,000, 1 believe, of silver certificates outstanding. Mr. CATCHINGS. About $337,000,000. Mr. NEWLANDS. Three hiindred and thirty-seven millions. Now, do I understand the gentleman from Mississippi to main- tain that the silver certificates would be redeemable in gold? Mr. CATCHINGS. Not at all. I have not said anything of the kind. The gentleman has misunderstood me. Mr. NEWLANDS. Tlie gentleman connected them with the gold withdrawn from the Treasury Mr. CATCHINGS. I connected them with the burden on the Treasiiry in this way: These silver certificates are, as the gentle- man knows, receivable for customs duties, and to the extent that they are received for customs duties I stated that it kept gold out of the Treasury. So they perform as a matter of fact as harmful work to the Treasiiry as the legal-tender notes do as far as the gold is concerned. What is the difference between money which takes gold out of the Treasury and money which keeps gold from going into the Treasury? Why, we are like an army ambushed all around. We have notes that take away gold from the Treas- ury and others that keep it from going in. Mr. NEWLANDS. Would it not follow, then, from the argu- ment of the gentleman, as a matter of necessity, that in order to complete the protection of the Treasury it would be necessary to retire the silver certificates as well as the legal tenders? Mr. CATCHINGS. Not at all. A Member. Where is the distinction? Mr. CATCHINGS. Why, I have already stated that one of the most attractive features of Mr. Carlisle's bill is the proposition it embodies to retire all notes under the denomination of $10, whether national-bank notes, greenbacks, or Treasui-y notes, for the purpose of leaving the field open to a monopoly of circulation as to notes under that denomination by silver dollars and silver 1743 30 certificates. I have said that if these notes were withdi-awn and were replaced by the silver certificates all the silver certificates except about §1!), 000, 000 would find occupancy in that field; and that they would take it I think can not be questioned by any- body, because it is a recognized fact that the country requires about that anaount of small notes, or else they would not be kept out at all. ]\Iy friend, of course, understands that otir small notes now are only used where they are nectvssary, because they are inconvenient in large transactions; and the fact that we keej) that large amount of small notes in circulation among our people is evidence of the fact that the business of the coimtry requires that amount for its transaction. Therefore, it is safe, I think, to assume that the field as to small notes will be filled by the silver certificates and the silver dollars. Mr. NEWLANDS. But can not the State banks also issue the small notes? :\Ir. CATCHTNGS. That provision is made in the bill. I have not the slightest objection, however, if it is deemed desirable to do so, or if there be any objection to it. to strike it out altogether. It is not. in my judgment, very material to enable the State banks to perform this function. In some localities, undoubtedly, it would be a matter of very great convenience to the people; but for my- self I make no point upon it and wUl have no objection, if it is deemed desirable, to strike it out of the bill. That would give the entire field to silver dollars and the silver certificates. Mr. NEWLANDS. I understand the bill provides that the banks in the issuance of the notes may declare them payable in gold. Mr. CATCHEISrGS. That was the provision inserted for the benefit of you millionaires in California, you silver men, who make your obligations always pavable in gold. [Laughter.] ]Mr. NEWLANDS. What is the difference, I ask the gentle- man :\Ir. CATCHINGS. It is a little "meandering." [Laughter.] Mr. NEWLANDS. Assuming that the banks make the notes payable in gold ^Ir. CATCHINGS. You understand, of course, that that is in the present banking law. Mr. NEWLANDS. But we are passing a measure here to rem- edy everything. Now, I say suppose the banks in the great money centers make their notes redeemable in gold, and the other banks in the States make them redeemable in gold or silver, and make a practice of redeeming in silver, will that not of itself attach dis- credit to the banks issuing notes redeemable in either gold or sil- ver, and result in having paper throughout the country part of which is good and part at a discount? Mr. CATCHINGS. I think not. I think my friend, who is always qiiite interesting, has made a rather unusual appeal to his imagination in getting up that question. I do not think he need have the slightest apprehension that any bank outside of Califor- nia or outside of what I might call the silver States is going to make its obligations payable in gold. Why should they wish to do so and imx)Ose that specific burden upon themselves? Mr. NEWLANDS. Does not the gentleman know that all loan and trust companies have been di-ifting in that direction; that the 1743 31 obligations in the shape of promissory notes and bonds of this country are gradually di-ifting into gold obligations exclusively? Mr. CATCHINGS. But those are not bank notes. Mr. NEWLANDS. Very well, but will not that practice extend to bank notes? Will not one bank seek to make its notes better than those of another by paying them in gold and thus discredit- ing the others? Mr. CATCHIlSrGS. I will answer my friend's question by ask- ing him one. If that is so, why have not some banks under the present law been making their notes payable in gold? Mr. NEWLANDS. Recollect this practice of making various obligations throughout the country redeemable in gold has only been a practice of the last two or three years. Mr. CATCHINGS. My friend is mistaken about that. Mr. NEWLANDS. And a gi'adually increasing practice. Mr. CATCHINGS. My friend is mistaken about that. I have written many a gold mortgage fifteen or twenty years ago. Mr. WALKER. Why, certainly; and should they not have the right to do it if they want to? Mr. CATCHINGS. But that has nothing to do with this case. 1 think it is hardly a practical question. Mr. Chairman, I am very much obliged to gentlemen for listen- ing to me so patiently, and I will not impose upon their good nature any longer. 1743 Bimetallism Promised by the Ecpiiblioaii Party. No Siuffle Oold Standard. SPEECH HON. WILLIAM E. CHAXDLEE, OF NEW HAMPSHIRE, In the Senate of the United States, Wednesday, February 20, 1895. The Senate having under consideration the following resolution, submitted February 19, 1895, by Senator Wolcott, of Colorado: Resolved, That it is the sense of the Senate that the welfare and prosperity of the United States require the enactment of a law for the free and unlimited coinage of silver at the ratio of 16 to 1 — Mr. CHANDLER said: Mr. President: In deference to the prevailing opinion of New England, and because it may be unwise to open our own mints to the unlimited coinage of silver, without concurrent action upon the part of other great nations, I shall vote against the resolution offered by the Senator from Colorado. But I very much regret that I can not also now vote in favor of some affirmative measure in the direction of bimetallism, to pro- mote which the Republican party is sacredly pledged by the promises of its national convention in 1892, which, as yet, noth- ing has been done to redeem. Bimetallism, as I understand it, is the use of gold and silver as money metals, each equally entitled to coinage as money in the mints of the bimetallic nations. It is the principle of bimetallism 1811 1 that with such coinage at a ratio established by a consensus, there can be no inferiority of either metal to the other. Each will always be of the same comparative value with the other. As neither is of gi-eat intrinsic value, the market value of both is derived from their use jointly as money metals, and neither can depreciate in value as long as both are used as money. The discoverers and producers of either metal in unusual quantities are entitled to the profits of their enterprises and labors. At one time the propor- tion of new gold may increase, at another time that of new sil- ver may preponderate; but as time runs the alternations will bal- ance each other, and all the gold and silver, being the coined money of the world, will forever measure all the world's values. This is the bimetallism, to secure and preserve which the Repub- lican party is bound, and from the support of which no Republi- can can be released without the utterance of a new national con- vention of his party. Bimetallism has been attacked and destroyed by England, the g^eat creditor nation of the world. England's demonetization of silver has been up to this time acquiesced in by the United States, It is folly to say that silver is a money metal merely because we use it for subsidiary coinage and maintain the parity with gold of our present limited quantity of coined silver dollars. As long as our mints are absolutely closed to the coinage of silver bullion we shall be fast approaching a single gold standard; if we have not already reached it. Gold monometallism is our destiny if some affirmative action in another direction is not soon taken. Against the adoption for America of the single gold standard it is my duty to speak and act, in accordance with the pledges of my party and with the interests of the great mass of the American people, debtors, producers, and property owners. It may be, it doubtless is, the pathway of strength and honor for the National Government to pay all its existing obligations in gold. But that is a small branch of the pending question. It is agreed by all ^Titers on political economy and the question of money that a diminution in the quantity of the metallic money causes an appreciation of the remainder and produces a faU in 18^ the prices of all commodities. If there are $4,000,000,000 of gold and $4,000,000,000 of silver in existence, constituting together the world's measure of value, and one-half the quantity is abandoned as a money metal and measure of value, the other half appreciates in value and destruction comes to the values of all other property, while the debts of the world remain unreduced. This brings in- solvency to debtors and ruin to business enterprises. To such a fate the people are now exposed. To what extent other causes than the demonetization of silver have brought about the distressing condition in which this country has found itself for the last two years it is not clear. But I can not avoid the con- clusion that the adoption of the single gold standard has helped to produce the impending calamity. It is not, as I have said, a ques- tion of paying the public debt, or whether it shall be paid in gold or in silver. That debt is insignificant comi^ared with the thousands of millions of obligations which weigh with crushing force upon the millions of our fellow-countrymen, equal to or greater in amount than tliey were a few years ago, while in the meantime half the world's money has been stricken from existence, and the prices of all property, from which debtors must derive the means to make their payments, have gone down one-half. If, with the fall of one-half in the prices of commodities, the debts of the people were also scaled down one-half, we might pos- sibly go forward on a single gold standard to revived business prosperity. But ^^^th the debts and the prices as they now are, widespread bankruptcies are, in my belief, to blight and curse the country in the months and years now close at hand, and the re- turn of full prosperity will long be deferred. Therefore, the people of this Republic will vote against the single gold standard. The time is approaching when it will be necessary for the Republican party to present some affirmative measures of bimetallism. What those measures shall be must be determined by the wisest members of that party, which is soon to control, by an overwhelming majority, the popular branch of Congress. The bimetallism we have promised must be reached, or steps toward it must be taken, or the American voters will 1841 decide between gold monometallism as the one alternative and silver monometallism as the other. It is useless to shut our eyes to the fact that the debtors are more numerous than the creditors, and that the citizens who want prices of property to go up outnum- ber those who want them to remain as they now are. Bimetallism has been promised to the people of this country. They wait with much impatience for the fulfillment of the pledges solemnly made by both political parties. 1£41 CONGRESSI^^ h payment of the loan. It would be perfectly proper and entirca; safe for the bank to issue a note of its own based on the propeii ] which through its assistance is in process of creation. By meapfa of that note the bank could make a further loan to the miller w 1: will grind the wheat or to the carrier who will transport t maniTfactured article, enabling each to discharge with greaV ' efficiency his part in the general scheme of production. Whfet a bank enjoys this power of issue, and exercises it prudently. m is able to make capital effective for a greater development of tra^a for a wider spread of industry. Credit knits men closeb^ togethte it makes each man's product a stimulus to the enterprise and tie industry of every other producer, and the G-overnment should pi? no restraint upon a force so beneficent as this except the requi ; ment that it shall be exercised within the limits of prudence. Li every great force credit may be abused and its abiise leads to ci astrous results. Siipervision by the Government is a check ,u fraud and recklessness and it should be vigilantly exercised. Ijie the Government has no right to interfere with this branch of tr; further than to prevent any bank from defrauding the public false pretenses through its paper circulation. No conditif, a should be imposed upon any device to economize money except t'l there should be actual property behind every note sent into \st channels of trade to float our commerce and broaden our industji: [Applause.] tt My friend from Tennessee [Mr. Cox] applauds that centime n. When my friend smiles I feel that the clouds have passed fr mi h n 1 unit n doubt if i Dur ng recent >ei ded by tur-nd rhetonc that who- d he key o m a e ea was a ej el as a i and mystihed i is e na n an f d h aft ly ou 1 trns and f m ula> kahest rdof pt to look back v^ p ty on the f,eneration<* wh b acco ded occult powers to J istTodamus and were av.ed by the [ua ker es of Ca^ ostro ut pr< pa*al 2 > 1a \\ 1 1 r and beyond the control o Ike e of ff the # congrEvSsional record. f'ai 1 have prosperity Mr. COCKRAN. Mr. Cbaiiman. I did uot intend to yield, bot the centlemau from Missouii. always illumines every questi- thatlie examines, even when ht; does not int'-nd to nnveil tr- "' liKht of his intellect. [Laughter. | I thank him for hia int tion. I challenge the gentlumim from Missouri to point ont , word of mine which prophesied that the repeal of the Sberm}^,, law would bring prosperity t*t this enuntry. It is the provin*. of the quack and the i-harlatan to prett'nd that prosperity can 1, created by legislation; that any party, faction, or leader possesseSj , secret by wffich wealth can be produced through any other fore than the industry of man. I do not propose to begin this disi r than my fello' , but to 8t r mysteric on by to be bfttr with the 3eclaratiC)n r diJE&cult in politioal There is nothing in the laws governing the trade of a counti ^ different from the laws which govern the trade of an individual for the commerce of a country is hut the commerce of the inc viduala that compose if. I d- iii>t .-laim to have discovered ai new principle. Wh-ii fl.- m.-rninl r ;,„l t..i,Hli^ tirst man that the8weatoEhiBbr..ivh^Miin.^liatlii-^l.iv:i\' the knife of the cutli-r wer.^ .-.\. Ii:iiiui-rl. At the end of the trai actions I had the beefsteak, the cutler had another commodity, a; the butcher had a knife. Now, if there never had been a dollar ^ existence, some of those commodities would have been exchangei ■ but the exchanges would not have been so rapid or so numerou ' The butcher would have waited until the cutler needed a steaL' In the fullness of time the cutler would be compelled to porchaj ' meat. He would then bring his cutlery to the butcher's stor^ ranty; that Mr. COCKRAN. When the gentleman speaks of money as fii- ig values and aa a medium of exchance be is really stating the ; men have fixed the 1 .ites at which the'; iiv commodity; that is principle that things thin;; are equivalent to each other. The selection of one commodity among the ^roj^""^^' human labor as the standard by which the value r" "' should be measured does not in any v - • -' particular commodity. Water is universally accepted as the is to say, the substance by compiiris.in wun ■>\ii]' n lue *> any other substance may be meitsuri'l l>ur rlut fact l increase the weight of auygiven lin.iiinry m w.li^t. \i be measured by gold, silver, copper, imti, Icid, it -.my otl modify. If. for instance, a given quantity of li?ad he equal to five bushels of corn, and the same quantity of lead be --^ value to two bushels of wheat, it is plain that two bushels ot wheat areas valuable as five bushels of corn. The equivalenceof com and wheat is thus established with certainty and simplicity. The fact that the valiieof both cereals was ascertained by compar- ing them with lead did not in any way affect the value of tliat^ metal. If our whole commerce were limited to domestic trade values could be measured by silver as well as by gold. Bnti since the prices of our staple products are fixed by the pn^M which they command in markets where values a NAL RECORD. and if the butcher at that time happened to need a knife an ex- change of their wares coiild have been effected. If all commerce were stispended until each person who produced a commodity should lueet a person who needed that precise com- modity, and at the same time had a commodity of his own which the first producer needed, trade would be reduced to a very narrow compass, intercourse between men would be greatly restricted, and this would be an age of poverty, of ignorance and decay, in- stead of Mr. HUTCHESON. Will the gentleman yield to a question here? Mr. COCKRAN, Yes, sir. Mr. HUTCHESON. The gentleman's argument is perfectly un- answerable if he will simply allow me to introdtice an element for him. If a butcher had the dollar with which he paid the haber- dasher his ai'gument is unanswerable; but if the butcher had contracted a dollar's worth of debt for the article he was to sell for that dollar, and had to pay it, would he have a dollar to ex- change for the next thing he wanted and at the same time satisfy his debt? Mr. COCKRAN. The gentleman, as I understand him, asks me how one dollar can discharge and perform the functions of two dollars at the same time. The question answers itself, it seems to me. To do all that the gentleman suggests the butcher would need to sell two beefsteaks for two dollars instead of one beefsteak for one dollar. [Laughter.] Mr. HUTCHESON. He would have to get more dollars to doit. Mr. COCKRAN. Not at all. The same dollar through which he had effected one exchange might come back to him in another exchange for another beefsteak. An increase in the nunaber of dollars would do him no good — an increase in the sale of his beef- steaks would be of immense advantage to him. All trade is an exchange of commodities, and money is merely the wheel by which the exchange is usually accomplished. Wheels are not absolutely essential to motion, biit they facilitate it. Money does not make trade, but it has wonderfullV increased its volume by facilitating exchange. Wheels are of in calculable value to transportation, but to equip a car \snth more than are necessary to its movement would impede the progress of the vehicle and would be a waste of mate- rial. Money is a most important stimulus to trade, but to inflate its volume beyond the needs of commerce is a waste of capital which deranges enterprise and paralyzes industry. There is no profit in exchanging money against money; there is always a profit in exchanging commodities against commodities. If I ex- change com for shoes, the shoemaker makes a profit on the shoes which he sells me, but the exchange is equally profitable to me because it enables me to obtain the shoes for much less than it would cost me to produce them. From what I have said the gen- tleman who has inteiTupted me wiU understand that the prosper- ity of commerce depends not so much on the volume of money as on its soundness; that the exchange of commodities does not depend so much on the number of circulating wheels as on the efficiency with which each wheel discharges its functions. Mr. LIVINGSTON. Will the gentleman let us hear him on the double function of money — fixing values as well as the medium of exchange? Mr. COCKRAN. When the gentleman speaks of money as fix- ing values and as a medium of exchange he is really stating the same thing in different forms. Money could not be a medium of exchange if it were not a means of fixing or determining values. Throughout the whole history of the world men have fixed the values of their commodities by fixing the rates at which they would exchflTiP'ft all fnTirmnrlitipt; for snmp nnp pmmijndit.v. .that is CONGRESSI^' h payment of the loan. It would be perfectly proper and entir(Qi safe for the bank to issne a note of its own based on the propeii i which through its assistance is in process of creation. By meat-e of that note the bank could make a further loan to the miller wh will grind the wheat or to the carrier who will transport t manufactured article, enabling each to discharge with greaV efficiency his part in the general scheme of production. Wh^el a bank enjoys this power of issue, and exercises it prndently.,n is able to make capital effective for a greater development of trac a for a wider spread of industry. Credit knits men closely togethie it makes each man's product a stimulus to the enterprise and tie industry of every other producer, and the Grovernment should pip no restraint upon a force so beneficent as this except the requi ; ment that it shall be exercised within the limits of prvidence. Li' every great force credit may be abused and its abuse leads to d astrous results. Supervision by the Government is a checks fraud and recklessness and it should be vigilantly exerc'sed. Hie the Government has no right to interfere with this branch of tr; further than to prevent any bank from defrauding the public false pretenses through its paper circulation. No conditi; a should be imposed upon any device to economize money except 1 1 there should be actual property behind every note sent into ns! channels of trade to float our commerce and broaden our indust;h: [Applause.] t( My friend from Tennessee [Mr. Cox] applauds that centime ir. When my friend smiles I feel that the clouds have passed fnf the sun and that I am sailing under favorable skies. n Mr. COX. I am very glad the gentleman is gratified by ai » thing I do. Mr. COCKRAN. I have never met my friend that the me^^ ing was not a source of pleasure. One of my deepest regrets e leaving this House is the fact that my association with him m-|-, be severed. t-^ Mr. HUTCHESON. Let me ask the gentleman thi>^ questi/ You say the banks should be permitted to issue a note on ^y; note of a farmer. Now, why should the note of a bank be savi, tified as money any more than the note of the farmer? |j Mr. COCKRAN. The gentleman puts a question wliich is \- unimportant to this discussion. I do not think any commercj^ paper ' ' should be sanctified as money " except so far as eomme will accept it. If the gentleman will favor me with his attent,^, he will learn that I deny the right of the Governmeno to inljj, fere in any way with the money of the country except to coin sc,^ particular metal, some one product of human industry by wlig^, custom has declared that all other commodities should be mt-. ured. I have alwaj^s regarded the hand of the Government'^-,, the issue of paper money as a destructive hand. Bankmg, in g' its features, is but an economy in the use of money, and an incrCj, in the amount of productive capital, I have stated that before &-[^ I repeat it now. f< Mr. HUTCHESON. Will the gentleman allow me to elabor.j that now? ^; Mr. COCKRAN. I am afraid that if I do allow the gentleuj to elaborate it this speech will run into next week. ,, Mr. HUTCHESON. The only thing is this Mr. COCKRAN. If it be the only thing I will let it go. In not expect to cover this whole subject, and if only one featur((] it be overlooked I shall feel well satisfied. Mr. HUTCHESON. Under the same tax which you imini you prevent the farmer from having sixch currency? ^s Mr. COCKRAN. My dear sir, I am opposed to all tax on i.y rency as such. Mr. HUTCHESON. Exactly. Mr. noCKRAlsr J o™ endeRvoriTisr, to shn\v_t]iat i1 is an CONaKESSIONAL RECORD. il by tlie metal which is the intemational standard, i Mr. CX)CKRAN. They are always paid for in gold. If the f ar- mer were forceil til measure his own iiroduct in a commmlity tif inferior value, wliili? tln' v;ilnf= nf tlif arrirl.-- he n(-r.(lr,1 wm- ia''ii- mouStroilS rtiMi'iv Tli'- 'Uilv -\ -t.'Ui i.| L'^i-l.trimi wljirh lia^ sanctioned robli'i v -■■ t.ir ,i- I kn.iw. i- r li- i.inil', ^nul lli it, I .nn me tne value of com- t which they should be exchanged. Il values are detf rmined, and that rVi:iii-e. TnirlM in it^ ii;ituralfMrui iif the national banks for the year ' sll,'Jo5,000, or in round numbevs to liiid the banics had in their custodv iivi.TtiiuL'iit. jNow, money la a t^ature, an , liL'aithy commercial system it can not, uf government; it must be the product of tiint feature in facilitating exchange, but v!l;.>.- uf ; h- b^i uilliuu and odd dollars, Deducting DiJU.OtH) which they earned, we find r the safe-keeping of the funds of de- iilly and which they invest I 'MX. Let me call the g> there. While the gentlett f of profit which the bankshave realized in'that direction, 7 important item in the profits of the banks — • ■ Lientleman will pardon n 3 these undivided pro la'nks all the way through. lar. COCKRAN. The gentleman e\idently a laning. In the figures which I have give il 'It-red the surplus pinlits. If I should tfal the value of the stocks of the !■ baaed on arethemselvi' issued for thi of the deposit. , the banks of this jn the floor of this m CONGRESSIONAL RECORD. ])a\-inent of the loan. It would be perfectly proper and en safe for the bank to issue a note of it« own baaed on tLe pro which through its aBs''»tan e is in pro ess of creation Bv ii of that note tl e bank could make a f irther loan to the niillei will ^'ind the wheit or t the cimer who will tr d r i a bank enjoys this ] is able to make caj for a wider spread t monument to f upon a force so beneficent as th a a^trons results Supervis o there shonld be actual property behind < channels of trade to float our commerce and broaden our [Applause.l My friend from Tennessee [Mr. Cox] applauds that d When my friend amiles I feel that the clouds have passed fn^m ' " ■ ' im sailing under favorable skies. j very glad the gentleman is gratified by amy- 1 and that I Mr. COS. I am thing I do. leaving this House is the fact that my a 1 with him r be severed. Mr. HUTCHESON. Let me ask the gentleman th qnesh You say the banks should be permitted to s e a not« on ] note of "a fanner, Now. why should the n e f a bink be ' tified as m*>!icv anv nior.? than the note of thu farme Mr. COCKRAN' The gentleman put a on w ch unimportant to this discussion. I do not th nk anv c mm paper "should be sanctified as monev" except so tar as om u will accept it. If the gentleman will favor me ^th h atteu he will learn that I deny the right of the C ovemmen to n fere in any way with the money of the count j tx p o n s i particular metal, some one product of human nd tr by wL custom has declared that all other commo ti s b ured. I have always regarded the hand f the the issue of paper money as a destructive 1 n 1 B its featnree.isbutaneconomyintheuseof u in the amount of productive capital. I ha e a a modifies orth t^\ n without aid assiptini capable of th s eft lassed ■ behere^ 'he butcher wo lid not ha e part 1 with h s beefsteak if he had any doubt as to the \ al The cutler would i ot 1 e j feared the m nev woul 1 s it for another commod t causes men to keep close p money to idleness and p 1 r -i 1 llai If _, o dj xchunge a e nf money . HUTCHESON. Will the gentleman allow i not expect to cover this whole subject, and if onl> one featnri it be overlooked I shall feel well satisfied Mr. HUTCHESON. Under the same tax whicl j t you prevent the farmer from having such irrency Mr. COCKRAN. My dear sir, I am opposed to all t u rency as su ch. Mr. HUTCHESON. Exactly. ..Mr- COCKRAN . I.«i ondeavnrine t^ fihow that tion of property and in the prcie! i , has been said dnriii;^ Gnv.Tuni.-Tit t.^th.^ currency that I hav 1 u 1 t oh a (lisr 11-.^ ;it tlii-^l.-Ti^rth the elementary econ mcpnnc plea that Pas-iiiL: II, iw ti> a consideration of the pend ng b 11 nobod deny tliiit it-; principle is sound so far as t pro ndes that ; shouUi be based on the capital of banks; but he pro isione o 8 object.^ In my opinimi if th s b fshoaldpais House and Senate and i . 3 the Pres len fall stillborn on our statute books. There vould' „„>, ^ ^^^ ^^y,^ curculated under it in twenty years. It would be another make- shift as ridiculous as the Sherman Act; t would remam mopera- " " I provu ous it would stand a tive through the absurdity of i s gnature t would the circulation and find Mr Char the Treas ir of a bank l n 1 e pa -m n of his aim not m the eqm ^ent of money but in money itself A TOible supply or gends on which vou pu and which you put second. I think the order in wliich the placed makes very little difference Mr. BouTELLE rose. Mr. COCKRAN. Now, I trust that one gentleman at a will catechise me. Let me answer the gentleman from It is quite true that the deficit in the revenue is an embarrasf to the Government. It is also quite true that the deficit in th: enue tends to exhaust the supply of gold, and therefore ti doubt on the Goveriunent notes which circulate as n- But surely that statement is the strongest possible proof financial system is vicious which makes the trade an commerce of every citizen dependent on the solvency » Treasury. In addressing this House my chief object has been to pei it that every principle of sound policy demands the divorce Treasury from the function of furnishing money. Whetl Treasury be l)ankrui3t or prosperous, whether it be full t' flowing or empty of treasure, the circulating medium by my neighbor and I exchaiige our commodities should alw; independent of any condition in wliich the Treasury migli itself. The imprudence of a Secretary, or the sliortsightedi legislation, for which I am in no wayTesponsible, which I c avoid or prevent, affects the money in my pocket, disordt trade, i^aralvzes my industry, blights mv prospects. Mr. HENDERSON of Iowa. Now, will my friend allo^^ moment further? He knows that I am in thorough syn' with him in desiring to meet in some efficient way the present tion of the country. I know he will give me credit for tha has admitted that no financial plan pending before this will supply the revenues of the Government. He has appe; the members of this House, irrespective of party, to come help of the coantry. Now, I say that instead of wastin;. over the discussion of currency measures which, as is adi by the distinguished gentleman, and as has been admiti everyone on both sides of this discussion to whom I ha dressed the question, can not give any relief, is not the gent at fault in the line of remark he is pursuing, and shoiild direct the attention of this body to the sole question of th( to raise money to meet our obligations? Mr. COCKRAN. I have just stated that the actual condi 'the country strikingly illustrates the folly of making the d condition of the Treasury any feature of our moii'. tary : whatever. I liave endeavored to prove that it is safer am' to base the pa])er money used in trade on the property assets the people of the country than upon the debts of the Govei in whatever f ( )rm they may be. Mr. WALKER. I shou.idlike to have the gentlem m frc^ York point out to this Eonse thn f(>n:'d.->-;.vr. ''>^- ^ ' >^. ■ CONGKESSIOXAL EECOED. iH.inL\ 1-- thenesspuhaltoth di k N w m k til inc tbmg wblLh this b d n d b k hall keel It t mi bunks to p b T dp themiiitheTieitiin butei it b mny (liarntTthH\ w.iuMnntbe b nk nst^Mintil ittirtbefaUur. < h b m Thlll^ 1 1 1 t 1 i l.mk. S ao d n b H u b n many a Ihu den wliuli might usb ng n ] not i>if\ tilt fire but when a m ding burn dd the li ss among all who contnbu b nsuran a-ibip i-s wretlii^d at sea tbe imd a m appDrtiuntd among many sh p wn all wh m an inMirimr or guaranty fund An n u ance cnJitini; notes will place behind b funi sufti lent to m ike them ab y ae ur wha € enl tun htion of trade may be Mr Lhurman Ibebpvemtbepnrposeeipressed by theframera of tbi^ 1 ill but I oppoie itis ena<. tment because its provisions are bos tilpt()tbppnntiplfonwbn,h it is bat>ed. I am aware that tbe de Wt f tins bill will pniUnger all pro'jpect of current legislation dunu^ tbLs L ingress But it is better to bear the ills we know than nsk esptnmfuts whose reaulta no man can foretell lif we Lin nut a„THe upon a plan for tbe issue of bank notes let us it leist sup] iLss tbe gr-i\est danger which threatens our mtrnnal ci e lit ThL bill 'suggested by the gentleman from New \ oi k [Mr Cor MBsj would not be i complete measure for the regulation uf mir faimi 'le paid ' It is 'esents je scat- mback lied if ?r dol- There 'w'hich ry. I .uisap- 3 from rith so Age on in not ,in the create aid by gi'een- called le first •erates riggra- of the ossary X debt -t does >f pro- .rcula- ■•e and oature. ons of 1 bnsi- : with- J pros- of the e f oot- sment credit n of its lation which il obli- onesty lich it ■ prob- e time rid the [ have lences e is no in not when ilation luallv, tlhaiV- 7 tariff Icting um of in operation at a loss, bnt the loss does not fall upon those who conduct them, but upon the self -sustaining, respectable, aggress- ive industries that ask no favor from our Government and fear no competition anywhere on the globe. [Applause on the Demo- ratic side.] If a successful merchant, with an extensive and profitable trade, should establish his son in business, and maintain him in it although it was conducted every year at a loss, making good out of the profits of his own prosperous trade the losses incurred in his son's unprofitable commerce, he would be doing precisely what our Government forces the self-sustaining indiastries to do for the protected industries. [Applause.] If the natural equiva- lent of three pairs of hose be a bushel of wheat, and by legisla- tion a farmer is compelled to accept two pairs of hose for a bushel of wheat, he is forced to contribute fi'om his prosperous, self- sajiporting, unprotected agi-iculture the eciuivalent of one pair of hose to the maintenance of the unprofitable industry of hosiery. The maker of hose has made a profit on the money invested in his business, not by production, but by taxation — not from any- thing which he has cre»ited, but from the goods of his neighbor which he has been allowed to confiscate. [Applause.] There has been a loss in one man's business and it has been made good through taxing the industry of another. The losses have not been avoided; they have been transferred from those who incurred them to those who were in no way responsible for them. And these losses, growing year after year in the rise of large por- tions of capital, have been made good "by taxation on articles which enjoyed no benefit and could be granted no advantage under the tariff laws. [A])plause on the Democratic side.] Mr. BOUTELLE. Will the gentleman permit me Mr. COCKR AN. I shall be very glad to yield to the gentleman if I can have additional time. Mr. BOUTELLE. I only desire to pay a tribute to my friend from New York by saying that I have not heard anything like that since the 6th of last November. [Laughter.] Mr. COCKRAN. The gentleman from Maine, when he shall liave lived a little longer, may find that an election does not change my views on economic questions, nor does it cause me to be silent when the truth is questioned. [Applause on the Demo- cratic side.] Mr. BOUTELLE. I understand that; but I wanted in a mild and gentle way to suggest that the argument the gentleman has just advanced here did not succeed in con^^ncillg the people of New York or the people of a large area of the country in the last campaign. I do not know wliy; perhaps because the gentleman made so few speeches during this campaign. Mr. COCKRAN. I have well-defined notions as to the real causes of the disaster which overwhelmed the Democratic party in 1894. I think the Democratic party was not in the canvass. [Laughter and applause.] I will admit that frankly. Mr. B( J 1 ELLE. The gentleman from New York and the gen- tleman from Maine can never hold a debate on that point. [Laughter. ] Mr. COCKRAN. I think that campaign was conducted by some- thing which masqueraded under the name of Democracy, and which the people ground beneath their heels, as it deserved to be gi'ound. [Applause.] If the gentleman from Maine [Mr. Bou- tklle] bases his belief in the popularity of protection upon the verdict of 1894, I ijoint him to the verdict of 1892 and the verdict of 1890, and I say to him the American people are not inconsistent. They did not intend this year to reverse the policy which they adopted in 1892; but they did intend to condemn the heresies which were engrafted upon party measures by the Democratic caucus, and which were a betrayal of Democratic principles. 8 CONGEESt diminish them. I appeal to the experience of the whole b. race to confirm that statement; and if the gentlem;in f ron: (with the authority which he will exercise as a Republican 1 over fntiire legislation) will blaze the pathway in that dire^ he will find me the humblest, but the most enthusiastic, of h lowers. [Laughter.! Mr. HENDERSON of Iowa. My good friend from New ' whose words I always listen to with great pleasure, whet agree with him or not, has not, I fear, answered my question question is not about how we are to raise the money. Wha him is, whether the pressing qviestion upon this legislative at this time is not the question of raising money to pay the current running expenses of our Government? Mr. COCKRAN. That is the question, Mr. Chairman; is not all the question. Mr. BOUTELLE. It is the first question. Mr. COCKRAN. Well, that dej^ends on which von pu and which you put second. I think the order in wliich the placed makes very little difference Mr. BouTELLE rose. Mr. COCKIi AN. Now, I trust that one gentleman at a will catechise me. Let me answer the gentleman from It is quite true that the deficit in the revenue is an emJjarrasi to the Government. It is also quite true that the deficit in tli enue tends to exhaust the supply of gold, and therefore ti doubt on the Government notes which circulate as ii But surely that statement is the strongest possible proof financial system is vicious which makes the trade an commerce of every citizen dependent on the solvency ( Treasury. In addressing this House my chief object has been to pei it that every principle of sound policy demands the divorce Treasury from the function of fiTrnishing money. Wheth Treasury be bankrupt or prosperous, whether it be full tc flowing or empty of treasure, the circulating medium by my neighbor and I exchange our commodities should alw; independent of any condition in which the Treasury migl^ itself. The imprudence of a Secretary, or the shortsightedi legislation, for which I am in no wayTesponsible, which I c avoid or prevent, affects the money in my pocket, disordr trade, paralvzes my industry, blights mv prospects. Mr. HENDERSON of Iowa. Now, will my friend allov moment further? He knows that I am in thorough syn with him in desiring to meet in some efficient way the present tion of the country. I know he will give me credit for tha has admitted that no financial plan pending before this will siipply the revenues of the Government. He has api)e; the members of this House, irrespective of party, to come help of the country. Now, I say that instead of wastinr. over the disciission of currency measures which, as is ad. by the distinguished gentleman, and as has been admit 1 everyone on both sides of this discussion to whom I ha dressed the question, can not give any relief, is not the gen; at fault in the line of remark he is pursuing, and should direct the attention of this body to the sole question of th( to raise money to meet our obligations? Mr. COCKRAN. I have just stated that the actual condi 4;he country strikingly illustrates the folly of making the d condition of the Treasury any feature of our mou', tary ; whatever. I have endeavored to prove that it is safm- ani' to base the ijaper money used in trade on the property asset;- the people of the country than upon the debts of the Gover in whatever form they may be. Mr. WALKER. I shon.ldlike to have the gentlem,-;.iv. ''-"'• -rS'-iiii'''"^'^ ''' CONGRESSIOlSrAL RECORD. 3 Af twr a lav stem of ehand bvi period of unbpaltliy, feverisb ftus country weakened byexci n attennated corrency on tbe otber, higbest development of our natural regoni bers of this House to sbow in onr comme liberty which we profess in political ilisi. n\ affair;^ that love of sioiiy. Lot US leave (lev'^l'ijiiiient of tbe HMR 4N T KR N Ii Ti ENDER ON TKRAN be same aoxiety that the to d what 13 best for the country d underst nd my friend to say n i Dt, 1 efore the House? lid understand e plan. t favor any plan r re plan would be mu b from tbis House. Ai m favor of it if it could h ill before tbe House, d b Th ifi no such proposition as nb d to tbe gentleman tbe plan p be Baltimoreplan myself, t whatever of its passage. to be maintained by each my friend to say that be upport it, and support fltt ' ■ ■' 6 gentleman believe that r the Walker plan, either gold from the Treasury; be gentleman asked that ■nring to show that the ]>iii<\. I agree ivitb tbe II- .I'-bts we would have . vHHues and our credit I place all our debts on a be tbbX question wbicb we^ address our nilnda to the ebta? gentleman baa revived at ask his H us gr h m ustnal fi d th taxation, but to still further CONGKESSIOlsrAL RECOED. !uu ul ijismy mL.m-y i tb Jaily onr Govemment? i the question, Mr. Chainnan; but it Mr. BOUTELLE. I am d ^c I s ng a I Ian for the reUef of the people at .K' \ic oua monetary system. »'™l"eoitii„ I ER Must not that be accomplished through the I R VN Not neceasarily. There ti no mora i h Itiea of the Treasurv shoul.l pmlrLrrT== ^^^^ th tl \ &i Uties fd nmercial!!oiisi-lik.-H R i'l,fii„ i""*"! mlaTass me Tl re 3 no mort^ r.^.-.un wl,v tl/" ,, 'i V'"^''?''!'! Treas r eh Ud di t rl 1 y ramm.To^ tl^,r, il.ai tl,,. ,3"!fi ™ Drexel More n Jt C s! o ill interf.T.- \wtl, it I'^^'^ionaof Mr "^ \LKER Is t a t a fact tliat th,- aisturhance of financial condition of the n intry shows itsplf fir^t rif rIi ji J?'"' condition of the Treasury, and that anything' which will fbI- the Treasury will relieve the country? ^"^''■® Mr. COCKRAN. In one sense the gentleman's statemenl ia «™ rect. but it only shows that our monetary system in y h d bts h li 1 ttvicioM h Tr ■■ g ma fr ra w r H fr mMassacb [Mi V ha If laCo gress : r~ rilOXAL llECOED. .iiman ^'lowa eador .■tion, ^isfol- ^Zork, 'lier I ''\ Mv ^lask V body ^ daily 'Ibut it ■jt first .V are ,i , time ^■.owa. '' ment ,;3rev- .(• «^^* , )ney. ■ hat a 'l tlie f the i3uade yof the fir the \ over- ly.vhich ( ^ys he iZ find ;i3ss of > an not 'cvs my s' me a (pathy !r.ondi- 1. He viouse liled to ito the 1 time lifted •d by (,'6 ad- lueman [ 18 not .1 hour e :) ion of -bts or « 3'stem I. wiser ( of all r iment '.••New am not. I am discussing a plan for the relief of the people of this country from a vicious monetary system. Mr. WALKER. Must not tliat be accomplished through the Treasury? Mr. COCKRAN. Not necessarily. There is no more reason why the difficulties of the Treasury should embarrass me than that the difficulties of a commercial house like H. B. Claflin should embarrass me. There is no more reason why the condition of the Treasury should disturb my commerce than that the operations of Drexel, Morgan & Co. should interfere with it. Mr. WALKER. Is it not a fact that the disturbance of the financial condition of the country shows itself first of all in the condition of the Treasury, and that anything which will relieve the Treasury will relieve the country? Mr. COCKRAN. In one sense the gentleman's statement is cor- rect, but it only shows that our monetary system is on a vicious basis. Mr. WALKER. That embarrasses the Treasury, does it not? Mr. COCKRAN. Assuredly it does — or rather I should say the Treasury embarrasses the monetary system. Mr. WALKER. Then correct that. Mr. COCKRAN. That is what I am trying to do. I do not say the Baltimore plan would afford any relief whatever to the Treas- ury; it is not pretended that it would Mr. HENDRiX. It was never intended to. Mr. COCKRAN. And I believe it was never intended to re- lieve it. Its object is to emancipate the money of the country from the control of the Treasury and to leave the supply of currency to the natural operations of commerce. To support that principle I have taken the floor. Mr. WALKER. Just one word further. Is it not a fact that it is impossible to do what you say ought to be done and must be done until we direct our attention to the Treasury in its connec- tion -with the greenback issues? Mr. COCKRAN. 1 do not believe there is any substantial dis- agreement between the gentleman and me. He says we must turn our attention to the Treasury. I say we must turn our backs to the Treasury. There seems to be a difference between us, but I think we mean the same thing. I regard the Treasury as a dis- turbing influence in our currency, and I am sure he I'egards it in the same light, although we use different words to convey the same meaning. A contribution of !$1 from each inhabitant of the United States would cure the deficit; the losses of the people from the corruption of the currency through the circulation of Gov- ernment notes may be computed by billions of dollars. The ques- tions of the gentleman from Iowa [Mr. Henderson] and the gentleman from Massachusetts [Mr. Walker] are themselves un- answerable arguments that if the country is to gain a permanent l)rosperity it must liberate its monetary affairs from the control of the Trea.surv. Mr. WALKER. So say we aU. Mr. COCKRAN. I am glad to hear that. If this Congress pro- vide for the extinction of the greenback the currency cpiestion will settle itself. If we leave the circulation of commodities to the medium of exchange which trade finds most effective, tne Treasury will be at once reduced to its natural functions of col- lecting from the commerce of the country that proportion of money that is necessary to the support of the Government. When the authority of Government shall have been limited to the lines prescribed by Democratic institutions and Democratic principles, when the currency shall have been emancipated from the control of ignorance and the interference of folly, when it shall have been firmly established upon the industry and the capital of our citi- zens, it will be no longer a source of danger and disturbance to THE CURRE CY. SPEECH OF Hon. JEREMIAH V. COCKRELL, OF TEXAS, HOUSE OF REPRESENTATIVES, Thursday, February 14, 1895. TV^SHIISTG-TON'. 1895. SPEECH OF HON. JEREMIAH V. COCKRELL. On the joint resolution (H. Res. 275) authorizing the issue of $62,116,275 of gold 3 per cent bonds. Mr. COCKRELL said: Mr. Speaker: I believe this, is the last time the Fifty-third Con- gress will be called upon to determine an uncalled-for issue which was precipitated upon the country over two years ago by those holding United States bonds, together with all other classes of securities running for a long time, payable in the current coin of the United States. This issue was not before the people when they determined who should fill the executive chair of this great Republic. The Democratic party won the victory in the last Presidential campaign on the tariff issue. It was true that the standard bearer of the party did not claim to favor free coinage; in fact it was known that he opposed this measure, but he declared himself a bimetallist and was elected upon a platform which by every fair and lanstrained construction meant the use of both gold and silver as the money of final redemption. No one dreamed of any- thing else, except those who were conspiring to change the whole administration of financial affairs. Now, it is too thoroughly and certainly known from past events, which can not be successfully denied, that speculators, bond hold- ers, and bankers precipitated this un-called for crisis upon this country which has cost the people of this nation billions of dol- lars, has paralyzed every industry, filled the country with paupers, and brought upon the people of our country more want and suffer- ing than was produced bj' the late war outside the mental anguish and suffering caused by the loss of life. This was accomplished by a concerted scheme to repeal an ob- noxious law which discriminated against one of the metals, a metal which has been used as money in all business transactions of this country for a hundred j^ears, and in which every obliga- tion of the Government might be paid; had been inserted on the face of all the Government obligations, and by implication on the face of all time contracts. The sole object of this issue being forced upon Congi-ess was to try to destroy one-half of the money of ultimate redemption and thereby increase the purchasing power of the remaining one-half by forcing the country to a gold standard. This was most vehemently denied and those advocating the un- conditional repeal of the purchasing clause of the Sherman law declared in the most tragic manner that they were bimetallists, and promised the country immediate relief from the terrible strain 1853 3 upon every industry. The law was repealed, but tlioir predictions have not been f ufilled: the clouds of distress still obscure the finan- cial vision. Grold left the Treasury in increased amounts. In fact, more gold left the Treasury in 1^94 than for eight or ten years all told prior to that time. The next move on the financial chessboard by the players of this mystic game of finance was to prove to Congress that it was impos.sible to retain $100,000,000 of gold under existing conditions, as a redemption fund, to redeem the outstanding greenbacks. This $100,000,000 of gold reserve and these outstanding green- backs had been in existence for twenty years, and yet no complaint was ever heard iintil after the purchasing clause of the Sherman Act was repealed. It was well knowTi to those who were manipulating the moves on the financial chessboard that as long as the power remained to pur- chase silver bullion and coin even a limited amount of silver dollars, being a i)art of the money of the Constitution and of final redemp- tion, a raid on the gold reserve would not accomplish their pur- pose. After the purchasing clause was repealed the hoarding of greenbacks and Treasury notes began, and as their object lesson had succeeded so well in accomplishing the repeal they began their raids on the gold reserve, and when the gold in the Treasury reached the seventy-million-dollar dot they began to cry " want of confidence." The honor and credit of the nation was at stake and the gold reserve must be restored. With the greenbacks and Treasury notes they raided the gold reserve and locked it up in the vaults of banks, and these bankers were then ready to restore confidence and to maintain the honor and credit of the Government bj' ex- changing this gold for bonds. The bonds were issued, the gold reserve was restored, and the confidence of the manipulators was restored. The next move was to shake their own confidence, for no one else had lost confidence either in the honor of the Government or the ability to meet all its obligations in the money of the contract and that to the perfect satisfaction of the people, but in order to quiet their own fears another raid on the Treasury began; they took their hoarded notes to the Treasury a second time, drew out the same gold they had deposited, and again reduced the gold re- serve in the Treasury below what they termed the danger point, and again they cried want of confidence and tried to get the peo- ple all over the country to take up the cry, and in trying to spread the contagion so alarmed the Administration that another bond issue was proposed in order to satisfy these cormorants in in- creasing their wealth by dealing in bonds at the expense of the taxpaj'ers of the nation. This was done, and as soon as the bonds were safely stored they began for a third time to raid the Treasury: and they had evi- dently added workers in their scheme, for there was a regular scramble among the patriots, whose confidence had been restored, to see who could draw the greatest amount of gold from the Treas- ury: and again it was in order to put on the sable gai-ment of want of confidence and parade the streets as mourners over the down- fall of a nation's honor and credit. And yet, strange as it may Beem , this nightmare of ruin has frightened and deluded many good and ])atriotic men into the belief that the Government is on the verge of financial ruin. I85;i The next move of these financiers, all clothed in mourning, was to declare that there was no relief from the disastrous con- sequences which surrounded the Treasury except to take up this hated and despised Treasury and greenback notes, with which they had raided the gold reserve for the third time, bj' issuing $500,000,000 in gold bonds bearing 3 per cent interest. This unrea- sonable and arrogant demand was acceded to by the President, who sent a message to Congress asking that power be granted to the Treasurer to issue these bonds. It is a fact shown by the sale of the bonds that on the very day Congress was called upon to enact into law this uncalled-for meas- ure, United States bonds, payable in coin, running for less than twelve years, were selling in the markets for 3 per cent, and yet Congress was called upon to issue gold bonds bearing 3 per cent. Congress promptly refused to carry out this scheme of the con- spirators to compel the Government to submit to their demands — the measiTre was defeated by a decided majority, a majority of Democrats voting against the measure. Let it be understood up to this point it was declared the credit of the country woiild be ruined and the gold was still being with- drawn from the Treasury, but upon the demand being made on Congress for this bond issue, and after the defeat of the measure, gold suddenly ceased to leave the Treasury, having reached the low-water mark of $42,240,000, and it has since that time slightly increased. The danger point was reached by the bankers them- selves; they covild not afford to go farther in their efforts in dis- criminating against their own securities, made pa.yable in coin, as it might discredit them abroad, and they began at once to hedge against the disastrous resvilts that might follow. Now, to show the opinion of some of the bankers in regard to a Treasury depleated of gold, and what it means. I will quote frona Mr. Henry Clews, of the firm of Henry Clews & Co., a large bank- ing house in New York, men who have and continue to demand gold bonds. The effect of the failure of the Government, to pay gold on demand is clearly and truly portrayed by this banker in his circular of February 2, 1895 Hear what he says: The worst of the squall, I think, is now over. Some people have been more frightened than hurt. If the United States Treasury should by chance sus- pend gold payments, which is the worst that can happen, and that is not likely, even in that event the holders or legal tenders would most likely want to get out of their money and take stocks and bonds instead, as at the present prices most of the active marketable securities are about down to a solid gold basis, while the money they hold will lose its gold value, for a time at least, if the Treasury should discontinue gold payments. The business interests of the country have gone down to a ^old basis. It is so with manufactured goods of every description. It is so with iron, steel, cotton, grain, and securities also. The threat now is that the circulating money of the country is going to drop from a gold basis to a silver Viasis, which would be so if gold redemption of its notes were stopped by the Treas- ury, in which event the next turn would be for sagacious people to exchange thwr nonredeemable paper money into manufactured goods or raw material, such as iron, grain, and cotton: also into securities or anything els > that has dropped down to a low basis of value. The feeling would set in to Ijuy (-very- thing that looks like a bargain, which would be the forerunner of buoyant and advancing markets in all lines of business in this country. Mr. Speaker, it seems to me that the very decided vote against the $500,000,000 bond bill, including a majority of both Demo- cratic and Republican Congi-essmen. should have satisfied ^Mr. Carlisle that the Fifty-third Congress would never consent to de- 1853 6 grade its o^^m outstanding indebtedness by making gold the only money of ultimate redemption in the interest of the creditor classes. In view of the desperate effort to discredit the outstanding obli- gations of the Government, for that would be the result of the proposed legislation, during this uncalled for and, in my opinion, unwise demand made for a gold standard, the outstanding Gov- ernment bonds made ])ayable in coin have maintained a steady and uniform price, equal to that of any period of the i)ast, in all of the markets of the world, and to-day, outside of attempted legalized legerdemain and official diplomacy, have stood the fearful strain attempted to be placed on them to discredit them in the hands of holders. Yet they maintain their accustomed value except by those who are proposing to soil them to a foreign syndicate below the market price, by private bargain with men whose very presence in the transaction cast a shadow ui)on the sale, at a loss of from nine to sixteen million dollars, principal and interest, to the people of the United States. Mr. Speaker, some of us who have watched with interest each succeeding event that has transi)ired, and each move made by the players for a gold standard (oiK;e so vehemently denied on this floor) on the financial chessboard, are not at all surprised at this the expiring hope, once buoyant in the minds of financial plotters, that they might increase the vahie of their hoarded gold and give it a double purchasing power over the jjroducts of all labor. I trust that the action of this House will crush this hope and that this will be the final funeral, and that those opposing the measure will bury it so deep that it can never rise again. The mysterious garment, confidence, has played a conspiciious part in each move, yet the credit of the Government has remained unimpaired during all of the mad, hideous cries which were cal- culated to destroy the confidence of our creditors in our ability to pay the small debt we owe in any money that would be acceptable to them. The ^vl■itten history of iiast events is an open book out of which we can gather information which will prove to us the power of this Government to meet all demands made upon it; hence none who are acquainted with the financial history of our country have lost confidence in its ability to meet all its obligations and in a manner perlectly satisfactory to its creditors; none doubt this but the gold shylocks. Let us see what some of the history of the past shows. At the close of the late war the Government had outstanding demands against it for the enormous sum given below. The figures also show the amount of expenditures for all purposes up to date. Interest-bearing debt in 1805 $3, 396, 561, 186 Bonds afterwards issued for redemption 195,500,000 Total 2,592,061,186 Bonds and interest-bearing debt outstanding now, not including iiig tliiise issued in ai:U, (i6,'J Administration expenses. Pension Department estimate tiO.O(H),(K)0 Interest on public debt 2,4f use as far as possible, and then pretending they do not know why price of silver bullion has gone down. They talk against the greenbacks and legal-tender notes of the Government as being "founded on nothing," meaning on Grovem- ment credit, and yet make their own notes redeemable in green- backs and founded on Government bonds, both of which rest purely on Government credit. They assured us of "relief from the financial stringency" and the raiders on the gold reserves if the purchasing clause of the Shei-man law of 1890 was repealed. By these assurances and various other means the law was re- pealed November 1, 1893. Instead of relief and prosperity following, the lowest prices 1770 29 ever known have overtaken all products, and as to the raiding of the gold reserve by j)resentation of greenbacks, it has suffered greater depletion during this last year, 1894, than in all the fifteen years preceding. DID REPEAL OF THE PURCHASE CLAUSE OP THE SHERMAN LAW STOP THB GOLD RAID? That none may question the statistics I have given on the gold redemption of the United States notes since 1879 in comparison with the raids of the last year, I will insert the following tables and a brief letter from the honorable Treasurer of the United States, bringing the computations by months down to the begin- ning of tnis month, and from current reports the raid on our gold this month still continues: Treasury Department, Office of the Treasurer, Washington^ D. C, January 10, 1895. Hon. H. A. Coffeen, House of Representatives: Sir: In compliance with the request made in your memorandum of this date, I have the honor to say that the redemptions of United States notes and Treasury notes in gold diiring the months of October, November, and De- cember, 1894, were as follows: Month. United Treasury States notes. notes. Total. October November . December . Total. $2,543,719 7,OS5,]:i:3 30, 819, 622 $505,171 714,614 1,086,416 $3,047,890 7, 799, 747 31,906,038 40,447,474 2,306,201 42,753,675 I inclose herewith a statement showing the redemptions, by calendar years, since January 1, 1879. Respectfully, yours, D. N. MORGAN. Treasurer United States. United States notes and Treasury notes redeemed in gold, by calendar years. Year. United States notes. Treasury notes. Total. 1879 $11, 456, .5.36 54:5. H(X) 28.7.50 115,:X;0 $11, 456, .536 1880 54.3,800 1881 28,750 1883 115,000 1883 1884 810,000 2,927,400 9,;349,,507 1,3:39,945 475, 181 9.59, r)48 ;«t, 273 9,016,727 15,96:1813 44,49:5,512 123,941,059 810,000 1885 2,927,400 1886 9,:549,.507 1887 1,3:59,945 1888 475,181 1889 $686^870" 20, 296, 747 32,062.778 17,802,944 9.59, .548 1890 :«9. 273 1891 9,7>):5,.597 1892 . - ■3»>,;.'ta),,560 1893 76, 'hV>, 290 1894.. 141,7-44,003 Total - 221,760,051 70,849,339 293,609,390 Office of the Treasurer United States, January S, 1895. 30 Remember that the gross exports of gold give no indication of the net exports. Mnch of the gold that was drawn on Treasury notes and others while the scare was being worked up against Treasury notes and to secure the repeal of the silver-purchase clause was shipped back again from Europe in the same kegs that contained the gold when exported. Now, having stopped the issue of legal-tender Treasury notes, the scare and clamor is worked up against the United States notes, or greenbacks: so they are being used, as you see from the tables, instead of the Treasury notes of 1890. Will the people be caught again by the tricks of the bank and bond and gold consi)iracy and allow the complete destruction of their legal-tender greenbacks and the issuance of interest-bearing gold bonds — not coin but gold bonds — instead? Not by my vote shall the conspiracy ^^'in as long as I shall rep- resent the interests of Wyoiuing on this floor. Let us stand by the gi-eenbacks and silver as a permanent part of our currency. HOAV THK BANKS SAVE THE COUNTRY. The redemption of greenbacks in gold began January 1, 1879, under the law known as the specie resumption act. and from that time to January 1, 1894, a period of fifteen years, the amount of gold paid out on United States notes, or greenbacks as com- monly called, w^as less than $98,000,000 for the entire period, being an average of less than $7,000,000 ($6,521,266) per year. This brings us to the year 1894, just closed, the first calendar year since the repeal of the silver-purchase clause, pushed through Congress by the gold and bank power to " save the country and stop the raids on the Treasurj- gold." Did this stop it? Did it even reduce the payment of gold on greenbacks below the average of $(),o21,26C per year? Oh, no; here, as in nearly all other claims and prophecies, they have again failed. The payment of gold to the raiders in 1894 under this repeal measixre. entirely cutting off the coinage of silver, has been over §123,000,000 — a sum far greater than all paid ovit during the fifteen years proceeding, including silver coinage under the Bland Act for over eleven years and the purchase of silver for the remain- der of the period up to the time of the " gi-eat unconditional." It would at the preceding average rate take over nineteen years to deplete the Treasury of as much gold as has been looted from the Treasury by the gold and bank combine within the last twelve months on greenbacks alone, leaving out of the account the ma- nipulation of Treasury notes also. And during this last month of 1770 31 December nearly one-tlaird as niucli gold has been taken out by these vicious processes of the false jirophets as in fifteen years before. WHY ARE THE PEOPI^E NOT PROTECTED AT THE TREASURY? Who can rely upon such sources of teaching? Why should Con- gress longer listen to them? On what important financial proposi- tion have they ever taken position since the gold conspiracy began but what has been directly or indirectlj' dangerous and detrimental to the people, who ought to have a circulation of currency inde- pendent of bank manipulation and who ought to have a Govern- ment and a Congress that would give the people such a currency? Why is it not done? Why are the xseople not protected? Because the people have too long been following the false teach- ing and the false prophecy of the money power. And because, too, I fear, that we have not had an Administra- tion and Secretary of the Treasury since the days of Lincoln and Johnson biit what has allowed the money power the benefit of every possible construction, and sometimes bold misconstruction, of the laws, and as far as i^ossible cut off the people from their highest and best legal rights and options to pay all coin obliga- tions in silver as well as other lawful money for payment. To-day, m one hour of bold, patriotic action, the raid on gold woiild be stopped forever if our Administration and the Secretary would pay out silver in all coin redemptions properly. I know not what others may think of the actions of some of our highest officials during this twenty-five years' struggle with the money power, but as for me, " I would rather be a dog and bay the moon than such a Roman." LET CONGRESS RESIST EXECUTIVE INTERFERENCE ON LEGISLATIVE MATTERS. I can not attack motives. I must, however, be allowed to attack ignorance and error in method. I must be permitted to appeal to this House — a parliament than which none should be found on the face of the earth more honor- able and intelligent and triie to the people — so if possible to arouse them to break loose and throw off the hypnotic spell that the glare of wealth and power has thrown over this legislative body. In our sphere as Representatives in the legislative branch of this Grovernment there is no power greater than ours. Our commissions are from the highest sources— the sovereign people themselves. We do not derive our authority on legislative questions from the Chief Executive, and we ought to withstand encroachments upon our prerogatives from that source as we would those of the 1770 32 most insidious enemy that could undertake the subversion or sub- jugation of our country. We miist prove ourselves men and patriots and true to the trust the people have placed in our hands. Is this a hard thing to do? From what I have witnessed in the brief period I have been trjang to serve as Representative on this floor, I must conclude that it is exceedingly diihcult for many, but I also must conclude that it arises from either ignorance or cowardice. No others will surrender to this money power in this great crisis. Stand, then, for your people and the right. (Applause). WHO CONTllOLS THE VOLUME OF MONEY CONTROLS THE WEALTH OP A COUNTRY. The Government alone can be trusted with control of the money volume, and the Constitution makes it the explicit duty of Con- gress to regulate the value of money, which can not be done other- wise than by regulating the volume of dollars in circulation. Well, you say, what shall that volume be? I will answer, first, in coin, in gold, for those who prefer it in circulation; second, in sil- ver, freely coined, for those who prefer silver, and I would have it coined at the old ratios of 16 to 1 ; and thirdly, paper money. Treas- ury notes of full legal tender, shall be supi)lementary to the coin, and issued in volume suiiicient to answer the demands of business and suffieient to bring prices up to an equitable basis with the prices existing when the greater debts of our people were contracted. Contracting the volume of money, which process by the unerring law of monetary science results in contracting and lowering prices of aU products and property, while debts are pending is robbery of debtors, and our nation should guard our people against such robbery as faithfully as they would guard us against the invasions of a foreign foe, HOW TO DETERMINE THE PROPER VOLUME. Now, I will take up the question, What will answer the de- mands of business, and what will answer the demands of equity? While on the one hand there is an unlimited demand for money, since money will exchange for or buy all things offered to supply man's necessities, on the other hand the demands of equity must be considered and the supply or volume be limited. I will answer the question. What, then, shall the quantity or volume be? in this way. Our business, our prices, our enterprise, our industries are prostrated to-day l)y panic and contraction. These are financial troubles, not tariff troubles. We have heard, perhaps, too much from some quarters on this floor in the attempts to throw the blame for the depression of prices upon tariff legislation. The 1770 33 question of prices is a financial question, not a question of exports and imports. It is a question of money. It is a question chiefly of local concern. You can not understand money without under- standing its effect on prices, because money by its volume con- trols jjrices, and there is no other way to maintain prices properly. Now, a word or two further. If, then, we acknowledge, as we should and do, and as all civilized nations practically do acknowl- edge, that we must have paper money in addition to coin, and if we also take the position, as I do, that the Government alone can safely be intrusted with this vast power over all these industries, over profits, over property, over enterprise, over prices, and that there must, for convenience and sufficiency, be supplemental paper money, you may ask me very pertinently, what is to be the vol- ume? What are the demands of business? What amount will be proper? Let us see if I can answer that question. I would say, begin at once by issuing full legal-tender Treasury notes for the most immediate relief pending time necessary to coin silver, and let silver be freely coined up to the capacity of the mints. There is a loud outcry to-day for the locking up and the can- cellation of the legal-tender notes. That seems to be a clamorous* demand from Wall street and financial communities, but do you know in whose interest that outcry is made? Who is it that is demanding the return and cancellation of the legal-tender paper money isstied by the Government? The people generally do not demand the destruction of the greenback money in circulation. The demand comes from those who, either intentionally or unin- tentionally, are favoring the banks of issue and would increase the opportunities of those banks to supply the currency of the country in place of the greenbacks withheld or destroyed. It does not come from the people. It never has come from the people. The people did not demand the demonetization of silver. They have no hatred toward either silver or legal-tender green- back currency. They will in future rebuke this demand for the cancellation of the greenbacks. They do not demand the with- drawal of the notes called Treasury notes issued under the law of 1890 for the purpose of displacing them with bonds or with non- legal-tender bank notes. RESTORATION OF PRICES AND PROSPERITY INDICATES THE REQUISITB VOI^UME. Now, taking the prostrate condition of the country into ac- count, equity demands, the interests of business and prosperity demand, the rights of the people to life, liberty, and the ptarsuit of happiness, and the opportunity to obtain happiness and wealth, all demand that you should expand the body of money to a de- gree sufficient to restore prices, profits, and prosperity. If the 1770 3 34 free coinage of silver and issue of a certain quantity of legal- tender paper does not give us a sufficiently expanded currency to bring up jirices to a profitable range for business prosperity and for the employment of labor, then still expand vp^ith Treasury notes until business prosperity is reachea and then stop, but not till that comes. These notes should be full legal tender, because no otlier kind of money ought to circulate among the people. The paper money in the pockets and hands of the people ought to have the legal power to cancel debts of all kinds by presentation in payment. The people should not be compelled for their general circulating medium to depend on bank-note issue that you can not compel creditors to accept when tendered in payment. Mr. PICKLER. How much capital would you provide? Mr. COFFEEN of Wyoming. Let me finish this question of volume, as that will answer your question, I presume. I say ex- pand, if you find it necessary, even beyond the free coinage of silver, until you have reached a point where your enterprise and your industry — the productive and laboring energies of your peoi)le — are utilized to the best advantage, and there stop except to keep the volume increasing as wealth and population and business increase. If that amounts to $40 per capita issue that much, and stop at $40. If it is $50, stop at $50. But go on un- til the productive energies of your people are utilized to the best advantage. Ajiy Congressman who sits on this floor, I care not from what State he hails, who will stop short of that which is necessary to the utilization to the best advantage of the energies of the people of this country, is not the statesman who ought to represent his people here. [Applause.] Therefore I say go on with the expan- sion and you ^n^II not need to go very far to attain the desired result. The very announcement of this policy wall be hailed with delight by three-fourths of the people. Perhaps the unlimited coinage of silver with right to deposit the silver coin against legal-tender notes may accumplish the proper rise in prices. With silver freely coined and legal-tender paper as far as necessary as supple- mentary to coin go on by proper gradations imtil you have util- ized the energies of the nation to the best advantage. This is not difficult to understand, and the point to which expansion should be carried and where expansion should stop are matters as easily determined as any other matter upon which we legislate. As you ex^jand the volume of your currency prices will rise in equal ratio. As prices rise profits will accrue, for profits in all kinds of business depend on the rise or at least the maintenance of prices, and as profits accrue labor will be fully employed. 1770 35 INCREASING VOLUME GIVES EMPLOYMENT TO LABORERS. Your 3,000,000 tramps in this country forced out of employ- ment by the bankers' panic of 1893, the object lesson to illustrate the gold standard ideas of money, will be needed, every one of them; and they will all be invited, at good fair wages, into employment and activity. This will surely come about by the efforts of employers of labor to get the benefit of the profits ac- cruing by the rise in prices and the expansion of the volume of money. Realizing that the rise in prices means increase of profit, and that increase of profit means the employment of the labor and energies of the nation, when you find you have reached that point, then in view of equity to the creditor class, I would stop expanding the currency beyond the proper ratio to business, but would continue it at a ratio which would always maintain rea- sonable prices. To stop short of that is contraction, and I care not what your currency system may be, it is unjust to the people to have a volume of currency that does not expand with expansion of business. Money does not serve to exchange commodities only, but must also be a standard of equitable payment and the support of prices that will yield just reward to labor and enterprise. A contract- ing or diminishing volume of money can not maintain equity nor support prosperity. Neither can a stationary volume answer in a growing country or increasing population or expanding busi- ness. Expanding the mass of wealth demands for equity the ex- pansion of the volume of money in circulation . Banks already have enough power over prices without giving them power to issue or contract the volume elastically at their pleasure. Mr. WARNER. Allow me to ask my friend how he would secure the putting out of this money in order that it should be properly distributed? Mr. COFFEEN of Wyoming. I will answer my friend from New York. It is an old question. We have had it asked for twenty years — if the Government issues money how will you get it out among the people? By paying it out for services, salaries, supplies, and so on, as all paper money issued and reissued is now paid out and distributed. Mr. WARNER. Among the right people. Mr. COFFEEN of Wyoming. Yes; among the right people. It circulates and goes out in a thousand channels to the end of the country. Mr. WARNER. We do not want it congested at a few points. Mr. COFFEEN of Wyoming. No; when contraction comes 1770 36 and prices fall as they do, follo%ving any great and sudden contrac- tion of the currency, money always flows to the money centers. Congestion of money itself is a sign that money has been contracted and enterprise retarded and prices have fallen. When gentlemen are discussing this question before the farming community they say, " How are you going to get your share of this money unless you have something to sell or exchange for it?" I say that if pi'ices rise as they will in proportion to the expansion of money, the fanner will not only be able to get something for what he sells, but will command a better price, which all of us agree he should justly have, for we all know he does not get justice under the present range of prices. If the people of the interior and West and South had been able to get prices that should have been maintained on their produce and manufactures they would have that much more money and wealth to command money among themselves, and monej' would have been out among the right people instead of being congested at New York. Gentlemen say there is a deficit in the Treasury; but this is not altogether on account of the tariff question; it is very slightly owing to the tariff question. It is because of a paralysis of the industries and acti\nties of the coiintry, a destruction ' of the ability of the people to obtain prices and money sufficient on what they do sell, and shrinking of prices also as well as quantity on imports that cut short Government revenues. When people get good prices they readily consume, more of home products and more of imports as well, and thus the revenues of the Government are more abundant. A shrinking volume of money is destruc- tive of revenues and resources of the laboring people, and for the same reason of the Government also. All suffer that the money dealer may appreciate his money and get advantages of the debtor classes. Hear Mr. St. John, president of the Mercantile National Bank, of New York, in his evidence before the Currency Committee, page 352 of the hearings: Mr. St. John. Primarily and underlying the whole thing is the fact that the aggregate sura of money in the United States is not sufficient. If there were a general business revival in the United States we would have a pain- fully stringent money market within ninety days. That is one answer to the question. Mr. Johnson of Indiana. Is it not a fact that at the very time that these people in the agricultural sections are complaining about the scarcity of money there are large quantities of money lying idle and congested in the money centers? Mr. St. John. Undoubtedly so, as I thought I had explained. Mr. .Johnson of Indiana. Then would you say that the reason why this complaint exists is that there is not sufficient money for the purpose of mov- ing the crops? 1770 37 Mr. St. John. I would, undoubtedly. When I find an accumulation in every bank of Europe greater this year than for years past, I know there is a reason for it. The increase of the aggregate money of the world is stopped, except as one can provide 4.03 pounds of gold when he wants to add a thousand dol- lars to it. Distrust is the concomitant and distress the achievement. Mr. Johnson of Indiana. Is the reason why money can not be had in agri- cultural districts in sufficient quantities to enable the crops to be moved because of the fear among lenders that there is no security for the money? Mr. St. John. It is one and a sufficient reason for bank caution. The people who are making these complaints, and justly too, I think, are not prosperous. They are mortgaged to death to their factory and stoi*es and country mer- chants. "What they mortgage their homes and crops for is dollars. If their product will not yield dollars they can not pay their debts. Cheap overcoats do not concern the planter and farmer unless dollars are the outcome of their crops. I have said that the aggregate of all our money is our measure of all values. It follows that the aggregate of money must increase with the aggregate of the commodity considered if the price of that commodity is to remain un- changed. Large volume of wheat, low price for it; large volume of dollars, low value of dollars. I do not mean interest value of dollars. I mean rela- tive value of wheat and dollars. High prices for flour and high rates of in- terest are found together. We see this conjunction in mining districts. To be brief, it is the fact that the world's growing abundance of the necessaries and luxuries is surpassing the world's sufficiency of money. The prime suf- ferer is the producer of the abundance. Reflectively and painfully all ele- ments suffer on account of him. * * * Mr. Cobb of Alabama. Is it not a fact that it is because of this vast accumu- la tiou of money in New York, and a number of other cities, that the country is not generally prosperous? • Mr. St John. These accumulations are not the cause; they are one evi- dence of the lack of prosperity. Mr. Cobb of Alabama. Have you any opinion as to what causes this want of general prosperity, whether it is from natural conditions, or from the re- sult of operations of law, or what is your idea? Mr. St. John. My opinion is that the aggregate sum of money in the United States is insufficient to establish confidence in its ability to meet the demands upon it under ordinary prosperity. Also, our money has a scarcity value pro- portionate to our abundance of the commodities which it values. " Prices," or dollar valuation of commodities, is ruinous to those who provide pi osperity (by labor and production) when we have any. Mr. Cobb of Alabama. What remedy can you suggest? Mr. St. John. Enlarging the primary money of the United States. Mr. Cobb of Alabama. How? Mr. St. John. Abandon ex periment and go back to eighty years of our own experience and the world's experience in money. Mr. Cobb of Alabama. In your opinion, would that give us a more general dissemination of the volume of money in the country? Mr. St. John. It would decidedly. May I read my answer to that Inquiry on another occasion? I assume that I may. "At this present moment a dollar, as the means of acquisition and measure of value, is more efficient than in any other period of recent years, prices of staple commodities being ruinously low. And yet at this same time money seeking wages, entitled interest, seeks employment vainly, or at rates that barely pay. Under these conditions fixed capital suffers in the failure of investments, the banker suffers as a lender, the merchant in the restricted 1780 38 distribution of commodities, the manufacturer and other producer in the current low prices, and labor in want of employment starves. In the mutual relations between these elements of the people, accumulated wealth loses in the reduction of its income, but regains a portion in the increased efficiency f if the remainder as related to the commodities which he consumes. No other one of these elements, as such other, has profited at all. Labor has lost every- thing in losing its employment. The enduring fact, therefore, if these func- tions in money were the only ones to be preserved, would be 'the rich made relatively richer at the expense of the poor made poorer,' as one achievement of statute law." HOW TO QET GOVERNMENT LEGAL TENDERS INTO CIRCULATION. But to answer more explicity and fully, how can the Govern- ment get its issues of paper money into circulation? This is easily answered. The yearly expenses of the Government, current ex- penses, are nearly ,$.500,000,000, about $40,000,000 per month, nearly $10,000,000 per week, far above $1,000,000 per day. Let tlie Governiiiont pay out and distribute the legal-tender notes that should be issued in the current expenses. Will not this be practicable and convenient and safe? Certainly so. And would it not distribute it with sufiScient rapidity? Yes, far too much so. If one-half of the current expenses of the Gov- ernment were paid by issues of legal-tender notes, it would be abundantly rapid to cure present stagnation in three to six months' time. It would be at the rate of $20,000,000 per month, and this would immediately revive business, with the promise of better prices, profits, and success in all kinds of manufacturing and pro- ductive enterprise. Tliis would, at the same time, very quickly cure the deficiency in the Treasury and help out the Government as well as the people. But wotdd it go to the right people? Very quickly, for tlirough the salaries of Government officials and in payment of sup- plies and other expenses it would go to all parts of the country and render money more abundant everywhere. DIFFERENT PLANS FOR BANK CURRENCY PROPOSED. We are all .agreed that our present mongrel system of currency is wrong, dangerous to prosperity, fuU of confusion, and full of injustice to all the laboring and debtor and property-holding classes. It is, by its variations, contractions, and manipulations, used constantly to break the equities of all time contracts, lower gen- eral range of prices, and rob debtors of their rights and products. We are all agi-eed that a remedy for these evils and relief from confusion should be applied. What remedies are proposed? PLANS TO AMEND PRESENT SYSTEM. One is to give more power to the banks by issuing to them a greater amount of currency without compensation— that is, by 177C 39 isstiing to them not only 90 per cent on their deposits of United States bonds at a charge of I per cent per year, but to furnish them 100 per cent or possibly 114 per cent while the Government bonds stand at 14 per cent premium and release them also from paying even 1 per cent tax or interest on this currency furnished thus to the banks, and, as in all of these bank plans, it provides for the issuance of more bonds payable in gold. OTHER BONDS FOR SECURITY. Another is to allow banks to deposit other than United States bonds for security, and yet make the Government liable for ulti- mate redemption of all the bank notes and issue gold bonds in place of the greenbacks. BALTIMORE PLAN. Another plan is to allow banks to have a national form of cur- rency printed for them that may be issued and loaned out as notes of the banks based nominally on bank assets, but the Government to guarantee ultimate redemption. This is the Baltimore or bank- ers' own plan. CARLISLE PLAN. Another is to practically turn the entire responsibility of supply- ing currency over to both State and national banks under a sort of supervisory provision upon deposit of a 5 per cent and 30 per cent fund in legal tenders; but relieving the Government entirely from all responsibility of final redemption of circvilating bank notes. ECCLES PLAN. Another is to take 50 per cent of assets of the bank on which to determine amount of note issues allowed to the banks, and an ad- ditional amount may be allowed them under heavy Government charge or taxation as an emergency currency. WHAT THESE AND OTHER BANK PLANS INVOLVE. All of these plans involve the following: 1. The banks to control the volume of currency. 2. The banks to secure all the profits on currency. 3. The banks to be allowed to exercise the principle called elas- ticity, another name for sudden contraction or expansion, as their own profits may dictate without public notice and without regard to the rights or needs of the people generally. 4. The banks to protect one another as note holders (for they axe the principal holders of bank notes under the deposit system of our country), while depositors are left completely improtected. 5. The banks to have to themselves and all creditor classes all the benefits of a highly appreciated gold-standard money, possess- ing double the purchasing power that money should have in ex- 1770 40 chanKe* for all other property, while the burden of maintaining the ijold redemption for a tiiue and the dishonor of an ultimate and a certain ])reakdown will fall on the Government. G. The banks to have all and unrestricted opportunity for pool- ing their interests and to have all limitations that are disagreeable to them removed under the pretense of removing obstructions to elasticity. 7. The banks and money dealers to have the most absolute nad fully legalized control over the prices and values of all property, all profits, all industries, all eciuities of contract, and through these channels they will have the most complete control over all political power and governmental administration that the world has ever seen in any age or clime. 8. If there is anything else in sight that Congress can give them they will, as humble conservators of financial integrity and wis- dom and as saviors of the country in its time of need, accept that also. WILL THE PEOPLE HOW UOWN? Will the people of America bow down to worship fn abject servi- tude this golden image of the modern Babylon and the money sjti- dicates of the empire of wealth? Will Congressmen bow down? It might possibly have some eif ect on the cowardly Congressmen who have so far forgotten their constituencies to have the Chap- lain of the House start up the Sunday-school song of " Dare to be a Daniel." Imagine the cuckoos and followers of Senator John Sherman singing that song. There are times and crises among all peoples who seek to main- tain liberty and justice that try the courage of discerning minds. Such a trial is now impending over you who sit here to either protect or betray the rights and liberties of 70,000,000 people. What will you do? Has the fad of elasticity become epidemic? Has the disease at- tacked your backbone? If so, have the manliness to resign and go home to your people and you will, by freely mingling with them and avoiding the blandishments of wealth, soon regain stamina and a clearer vision of the rights of mankind in its great contest with the combinations of wealth and iniquity. Byron said, in his Song of the Greek Poet, in trying to arouse the Greeks to regain their lost liberty- — Must we but weep o'er days more bless'd? Must tve but blush?— Our fathers bled. Earth: render back from out thy breast A remnant of our Spartan dead! Of the three hundred grant but three, To make a new Thermopylae I 1770 41 STAND AGAINST ALL EVIL SYSTEMS OP LEGISLATION. • But, Mr. Chairman, they tell iis we must choose between the evils of the present system and the imperfections of the Carlisle plan of currency reform. , I have no hesitancy in sajdng that if such were the only alter- natives I would prefer the plan of the Secretary, which will give temporary relief and break for a time at least the intolerable mo- nopoly of the money power and the international gold conspiracy manifest in Wall street as well as in Europe. But, sir, our case is not so desperate as they would have us be- lieve. There is another alternative — that of opposing all schemes of the gold and bank and bond forces, and standing and fighting to the end for a true and simple plan of Government issue and Gov- ernment control of the volume of money in circulation against all theories of bank issues and bank control. Mr. Chairman, there is still another way out of the difficulty. When our revolutionary sires were told that they must submit to the new demands of the British King and Parliament or suffer fines, penalties, and imprisonment, they responded that they would not submit to either, but would choose a pathway and course of action of their own, and from one end of the country to the other camp fires were kindled and the humble but brave colonists formed in lines of battle. The King found out that the American Colonies would not sub- mit, bat were determined to choose alternatives of their own. So, now, we choose neither your bill nor the present banking law. but go to the country on appeal from both. Who controls the volume of currency in circulation controls the welfare of the people, for the most fundamental and universally admitted truth in monetary science is that volume controls price. To control price is to control profits, to control property, to con- trol all branches of ind^^stry, and to control the happiness and prosjierity of the people and the safety of our Republic. Therefore we must never surrender this control to the banks or to any other one class of citizens whatsoever. The Government must hold against all combinations of private capital the right to issue and coin all money for general circula- tion and control its volume in the interest of industry and equity. This is the main question — this is the vantage ground over which the battle is raging. Who shall control the aggregate volume of currency in circulation thus to regulate value of money for purchase, exchange, and payment, and thus to protect property and prices for all producers and maintain the equity of all time payments. There are other incidental questions. 42 To maintain compulsory redemption of all currency in gold is to cramp and limit the people to the conditions of the dark ages, and subject the welfare of mankind to the tricks of those who have their clutches upon and practical control of all the gold available in the world. GOLD MONOMBTALLISM WILL END IN OOLLAPSB, The gold standard or gold monometallism is a failure, and it can not be otherwise. There is great gain and power and wealth in it for those who control and manipulate the supply of gold, but for the people and the nations there is no wisdom or equity in it — no progress, no chance even to maintain the present status of civilization. It hangs like a pall over the commercial world. It is the most stupendous and unjustifiable experiment ever forced upon mankind, and is followed by a long train of injustice and extortion. It is transferring the wealth and property of the industrial and debt and tax paying millions to the money dealers, until here, at the close of a century of wealth production exceed- ing perhaps that of any three centuries preceding, the net results of this marvelous wealth production is passing out of the posses- sion of the producer into the possession and control of the money power. This I have, as I believe, clearly shown by a strong array of facts and monetary statictics on a former occasion in my speech on Money, Banks, and the Debts of the "World. I have also shov^m that civilization must break down or the gold standard be abandoned. Mankind and the imiversal product of all his toil and invention are greater than the one little yellow product called gold: so, even if the gold standard must be abandoned, man and liberty must survive. Gold must again be conqiiered and made a servant instead of a master by the sovereignty of law. When I think of the cruelty ot the gold power and how easily the prolonged suffering of our impoverished workers might be re- lieved by abandoning the gold standard and securing a sufficient supply of money through the sovereign power of government I think of the poet's song: ' Tis for this they are dying where the golden corn is growing, ' Tis for thLs they are dying where the crowded herds are lowing, ' Tis for this they are dying where the streams of life are flowing, And they perish of the plague where the breeze of health is blowing. The remonetization of silver, although a gi-eat question and under present conditions so important to the welfare of this nation, is yet an incidental matter and a subordinate question to 1770 43 this greater question of the control of the total volume of money in circulation. Silver remonetization will double the metallic base of coin re- demption money and successfully break the present control of the European gold power over the welfare of America. But neither silver nor gold alone nor both in conjunction can in themselves furnish an adequate volume of money for the pres- ent stage of civilization. Paper money is necessary to supplement the supply of gold and silver, and this is generally admitted by all competent authority. So we come again to the question, Who shall issue the paper money and who control its volume? We answer again, unhesitatingly, that the Government must coin and issue all money, for there is no other way in which it can control the aggregate volume. Coming to a more direct consid- eration of the pending currency bill, which has been prepared by the honorable Secretary of the Treasury himself, and is so gen- erally known as the Carlisle plan, I am astonished to find him tak- ing such an interest in upholding banking institutions to-day for the issuance of money, independent of the United States bonds, for the marketing of which the tiational banks were created, as shown by Mr. Carlisle himself. His plan divorces all new banks of issue from the deposit of Government bonds. Perhaps no man in America has more strongly contended, in these very halls, that the only sufficient excuse for the creation of national banks and conceding to them the privilege of issuing paper money was to provide a market for the bonds. He even contended that except for this purpose of making the banks to a degree agencies of the Government to facilitate the placing and marketing of bonds the Federal Government would not have been competent under the Constitution to create such corporations. Hear what he said on March 1, 1881, found in Appendix to the Record for the third session of the Forty-sixth Congress, page 247: What was the primary purpose of the Government in establishing this sys- tem in the first instance? If any gentleman entertains a doubt upon this sub- ject let him read the reports in which Mr. Chase, then Secretary of the Treas- ury, suggested and recommended the passage of the original national-bank act, and he will be convinced that the principal purpose of that eminent financier was to create a certain demand and reliable market for Govei-nment securities. Considered with reference to that purpose, it was unquestion- ably a wise stroke of financial policy, and it justly won for its author the highest encomiums from ministers of finance in all parts of the world. In fact, the constitutional power of Congress to create these corporations can not be maintained except upon the ground that they were to constitute, when organized, agencies of the Government for certain public purposes. 1770 44 He then quotes Chief Justice Marshall to establish his position, and later takes up tli6 evils of contraction and elasticity in bank issues. I will quote further what INIr. Carlisle has said of allow- iiif< 1 tanks to contract and expand wlieni come to show that banks should be dei)rived of all privilege of issuance. So we find now that instead of supporting the national banks as an agency of the Government, requiring them to deposit bonds and thus aid the Government in placing and marketing bonds, he projjoses to perpetuate the banks for their own profit simply ( w'hich he has sho\vn could not constitutionally be done), and allow them issue privileges in increased degree and he would stop any further use of bonds to secure circulation. The rights of the people, safety against contraction of currency, and even the Constitution itself as it once appeared to him are now thrown overboard. He still sells bonds, but weakens the market. He points out how the bankers and exporters raid the Treasury for gold on coin obligations, yet refuses to pay them silver coin and protect the rights of the Government. He claims that silver ought to be kept at a parity, yet keeps it in sulijection and disgrace. The very Treasiiry notes paid out for silver he insists must be paid in gold instead of silver, if exporters and speculators demand it. To me it seems clear, as I have said, that the way to stop the drainage of gold is to stop it. He has the legal power unquestionably. It is just to the people that silver should be paid when gold is in sliort supply. He should do the proper thing and stop the drainage. [Ap- plause.] OUU SECRETAHY YOKED TO REPUBLICAN DOCTRINE. Like all former Secretaries of the Treasury for the last twenty- five years he has yoked himself to the bank and bond and gold scheme, and so upon the most doubtful authority sells bonds under the pretense of maintaining coin redemption for greenbacks and Treasury notes, while the vaults are filled with hundreds of mil- lions of full legal-tender silver coin and with tons of bullion out of which more should be coined if needed. You have heard of the man in the old settlements who had one fine yearling steer that he thought best to subdue and train up in a good, proper manner; so he yoked himself up with the steer to break him. All went well for a little time, until the steer, becom- ing disgusted with the situation, started with the man down the lane furiously. When the neighbors called out to the man, ask- 1771) 45 ing where they were going, the very proper reply of the man was, ' ' I don't know — ask the steer. " And he loudly called on all to stop them, if they could, for he believed they were " running away." So this Administration has yoked itself to the Anglo-American gold and bond scheme, and unless stopped soon it may land in the arms of the Republican party in this financial runaway. "The way to resume," said Greeley, " is to resume." Were he alive to-day he woiild say the way to stop doing the impractical thing and stop paying out gold voluntarily is to stop it. The fact was clearly brought out a few days ago by the gentle- man from New York [Mr. Hendrix] that France, the greatest gold and silver holding nation in the world, through the Bank of France and for the protection of the Government, refuses to pay out over 5 per cent of gold on demand when raids are made for export, and pays out instead 95 per cent in silver. Will any one say that France is therefore and thereby thrown on a silver basis? Will anyone say France thereby endangers her credit? Does it not in fact give confidence in a government to see it use its options in all financial matters in the interest of its own people and their treasury instead of the gold-mongers? Nearly all Treasury obligations are payable by explicit terms in coin, and it is optional with the Secretary to pay in silver coin, and he should do so. CARLISLE AS A PATRIOT VERSUS CARLISLE IN THE PRESIDENT'S CABINET. In taking up the Carlisle plan in the bill pending I wish to use Mr. Carlisle's own testimony against the principles retained in this bill, uttered by him in ringing and patriotic words in his speech of March 1, 1881, before he had been seduced into support- ing bank and bond issues and the gold conspiracy that he once so strongly condemned. He says: But, Mr. Speaker, by far the most dangerous feature yet introduced into tlie national banking system is contained in that part of the fourth section of the act of June 30, 1874, which authorizes the banks at any time, and for any reason which they may choose to consider sufficient, to deposit lawful money with the Treasurer, contract the currency to that extent, and withdraw their bonds; and, sir, it is not going too far to say that until this feature is wholly eliminated or materially modified there can be no assurance of safety to any legitimate investment or business enterprise in this country. If there was ever a doubt as to the dangerous character of the power which this part of the law gives to the banks over the business and property of the people, the arbitrary and unjustifiable proceedings of the last week ought to dispel it forever. The power was conferred in the first instance, as I have said, for a special and temporary purpose, the equalization of the national-bank cir- culation, but when the resumption act of January H, 187.5, was passed, which removed all restrictions as to the amount of such currency and made the sys- tem entirely free, there was no longer any necessity for this clause, and it 1770 46 8h()ulii have boon instantly repealed. It is a standing menace against the prosi)erity of the country. Armed with this destructive weapon the banks may at any time, without a moment's notice or a shadow of provocation, strike down every industry and every commercial enterprise of the people. He speaks of the power given to the banks to withdraw bonds for speculation and contract the currency by depositing lawful money with the Treasurer as "the most dangerous feature yet in- troduced into the national banking system." To-day he advocates releasing them from deposit of bonds, as in the substitute bill, and the deposit of these legal tenders. It may be held l)y advocates of the Carlisle plan that the deposit of 30 per cent of circulation in greenbacks will not contract the currency, but the iioints I would make in rei)ly are — First. That it is optional with banks to contract or expand, and Mr. Carlisle points out how they pervert and abtise the power conferred. Second. That the deposit of lawful money will contract the amount of legal tenders in circulation just to the extent that they are deposited, and the people must put up with nonlegal tenders instead. Mr. Carlisle then goes on to say: The banks, or some of them at least, first began to pervert this section of the statute from its original pur])ose and abuse the power which it conferred upon them by depositing lawful money and withdrawing their bonds from time to time, in order to speculate upon them in the market. They thus withdrew large amounts of their circulation and contracted the currency, not because the reduced demands of business made the outstanding volume of circulation unnecessary or unprofitable, but simply because they wanted to realize the high premiums on their bonds and speculate in the securities upon which the Government had already delivered to them 90 per cent in notes. These notes would be left outstanding for the time being, but an equal amount of Treasury notes would, of course, be withdrawn from circ-u- lation and held at the Department to redeem the bank notes as they might come in. The Treasurer, in his last annual report, describes this process by reference to actual transactions in his office; and as his statement on this subject can not be condensed without impairing its force, I give it in his own words. He says: " Under the construction placed upon the law banks which have thus reduced their circulation have been permitted to increase it again as often and as largely as they chose, whether their legal-tender deposits were exhausted or not. An example will better illustrate these operations. In .January and February, 1875, a certain bank reduced its circulation from $3(J8,490 to $4.5,(100 by deposits of legal-tender notes. Between September 26, 1876, and May :26, 1877, and before that deposit was exhausted, It increased its circulation to $450,000. Between August 14 and September 10, 1877, it again reduced its cir- culation to $4.5,000. On September 19, 1877, nine days after completing the de- posits for this reduction, it again began to take out additional circulation, although $402,550 of prior deposits remained in the Treasury, and by the 26th of that month its circulation had again been increa.sed to $4.50,000. July 22, 1878, it, for the third time, reduced its circulation to $45,000, and in August and September, 1879, again increased it to $4.50,00(j(( at which it now remains, 1770 47 the balance of its former legal-tender deposit then in the Treasury being $112,615." • * * This was elasticity for you. It would seem that the then Treas- urer of the United States and the now Secretary of the Treasury looked with suspicion upon so much elasticity as the banks then possessed and even now possess. It seems that in 1881, as at other times, the associated banks could and did produce panics at will — contracting the circulation, as Mr. Carlisle says further along, to the extent of over $18,000,000 in thirteen days — and let me remark here in passing that the then Secretary of the Treasury, to rescue business from their intended ruin, at once went into the market at New York and bought bonds, which threw that many more dollars at once into circulation, to counteract the contraction of the bankers, but here recently, in 1893, when the national banks contracted their circulation to the extent of about $40,000,000 and shortened their loans to produce another panic, our present Secretary, in line with the preceding Administration, left the people at their mercy, held back silver, and instead of buying bonds uselessly assisted the raiders on the gold reserve and sold bonds in exchange for the very gold extracted. But let us quote further from Mr. Carlisle. He then was fighting the powers he now upholds. Through all that long and fearful night The prayer of Ajax was for light. ELASTICITY, SO DANGEROUS THEN. SO CHARMING NOW. He says, continuing and commenting upon the bobbing up and down elasticity of the banks as shown by his quotation from the Treasurer's report: No one will contend that this was a legitimate and proper method of con- ducting biisiness under the national banking system, and yet it can be resorted to every day by every .bank in the United States as long as the fourth section of the act of June 30, 1874, remains unrepealed. It disturbs values, affects the money market, and subjects the Government to unnecessary expense merely fco gratify a spirit of speculation and gain on the part of the managers of the bank, and it ought to be peremptorily forbidden in the future. Under this section the banks have it in their power to contract the cur- rency and produce financial distress, involving every interest in the country and embarrassing the operations of the Government itself, whenever they may think it will promote their special interests to do so. If they do not like proposed legislation in Congress or elsewhere; if they are opposed to the success of a particular political party; if they conclude that they ought to be exempt from all taxation, State and Federal; if they want additional privi- leges conferred upon them in respect to any matter connected with their business; in short, if their opinions and interests are not consulted in all cases whatsoever, they can resort at once to this tremendous power over the fortunes of the people and thus bring the timid to terms and ruin all who re- fuse to accede to their demands. A plausible pretext can always be found or invented for the exercise of such a power as this, and powerful influences Can always be brought to justify and sustain it. 1770 48 In confirmation of the threats of the bank power many years ago through the New York press, that they were getting the ma- chinery in order by which, on a few hours notice, they could act 80 strongly that no act of Congress could withstand them (which showed to my mind that treason was lurking close to the star chamber consultations of Wall street) , and in confirmation with Jefferson's warning concerning such bank powers, that they were more dangerous than standing armies, and in general accord with what has long been pointed out by those of us who are Demo- cratic enough to want bank issues suppressed and the circulation restored to the Government where it belongs, let us quote the arraignment that Mr. Carliale makes against the national banks. Continuing from sentences quoted above, he says: The two Houses of Conjjress, representing the aggregate interests of fifty millions of people, have, after mature deliberation, passed a bill which the banks have chosen to consider obnoxious to them, and forthwith— within thirteen days— they have contracted the currency to the extent of $18,723,340 and pre- cipitated a crisis which would have lx?en disastrous to the country had it not been met by measures which they had no power to prevent. The prompt ac- tion of the Secretary of the Treasury in purchasing a large amount of bonds at the city of New York, and the course of the Canadian banks in throwing seven or eight million dollars of their loanable capital on the market, alone prevented a catastrophe from the effects of which we might not have entirely recovered for many years. When Secretary McCulloch, several years since, in pursuance of his con- traction policy, began ty the experience of every country that has tried it. The principle of regulation, as laid down by Sir Robert Peel on the recommendation of Lord Overstone. was that the currency, in orde- to maintain its value, must be made to vary, both as to time and amount, as a purely metallic currency would vary; that in no other way could it be kept at the same value as the standard. In l(>7-t Germany adopted substantially the same principle with a modifica- tion which I think was a very gi'eat improvement. Under the act of 187.5 of the Reichstag, the Imperial Bank of Germany was established and a unifica- tion of the currency undertaken by withdrawing the currency of the several states of the federation and substituting .for it the currency of the Empire. By this law the Imperial Bank of Germany is permitted to issue a certain fixed amount of uncovered paper, just as the Bank of England was permitted to continue in circulation a certain fixed amount of notes without security, and so are the country banks, but that amount can not be increased as to the country banks, and only by the Bank of England by absorbing a part of the currency surrendered by the country banks. The Bank of England is permitted to issue additional currency only upon the deposit in the issue department of coin or bullion for all the notes issued. That is the distinction between notes covered and notes uncovered. The Im- perial Bank of Germany may issue notes in time of stress or panic in excess of the uncovered notes, upon condition of paying 5 per cent interest to the State. The purpose of that is to force the retirement of notes as soon as the exigency that called them out is over. For all notes issued beyond a fixed amount specified in the act coin or bullion must be deposited. That principle in the main governs all the countries of Europe. The Bank of France, it is true, is governed somewhat differently, but it is a state institution with officers appointed by the Government, as is the Bank of Berlin, the chancellor of the exchequer being president of the bank. So that the issue and regulation of currency in all the countries of Europe is now made in accordance with certain fixed principles. The primary object of the act of 1844, 1 say, was to separate the banking business from the duty of issuing and regulating currency, creating money, and on that question, after a discussion of fifty years, there was almost no division of opinion in England. The concurrent judgment of nearly every- body was that the business of banking is necessarily distinct and separate from that of currency creation, and that the two can not be blended with- out doing mischief. On that point I beg to quote from a few of the authori- ties of that day. and I will not take up much time in doing so, but I am sure It will not be without interest. " The one great question before the commission of 1857 was whether the right to issue circulating notes should be kept under the control of the Govern- ment, or whether the banks or the Bank of England should be permitted to issue notes to circulate as money." On page 328 of this report Lord Overstone, who, as SamuelJones Loyd, was one of the most distinguished and successful bankers and writers on the cur- rency question, and, in fact, the real author of the act of 1844, was asked: ''Do you consider the separation of the issue and the banking departments of the Bank of England to be founded upon the principle that the business of issue and the business of banking are in their nature distinct? "A. L'ndoubtedly ; it is impossible to entertain any other view of the matter. " 1770 55 Further on in his testimony he says: " I certainly think it quite essential that the issue of paper money should be kept entirely separate and distinct from everything connected with the banking business." Again, on page 338: " The supply of the current coin— that is, the money of the realm— ought to be entirely separated from the banking business, which is simply trading in money, borrowing at a lower rate and lending at a higher rate. * * * Notes and certificates oiight to be issued as the money, whether copper, silver, or gold is coined, under strict provisions of law, and by an authority, such as the mint, established by law and subject to stiict regulations laid down in that law." And again: "The sole privilege of coining money, whether copper, silver, gold, or paper, ought to be vested in one institution, established for that ex- clusive purpose and subject to strict regulations of law; no share of such priv- ilege ought to be conceded in any form to banks or to private individuals." And again, ou page 329, he says: " Perfect freedom of competition should be established in the business of banking, correctly understood, and effectually distinguished from the func- tions of coinage or from that of issuing paper tokens or representatives of coin— that is, bank notes, which, in fact, is coining under a form peculiarly susceptible of abuse — because the undue issue of paper notes is not resti'icted by that intrinsic value which effectually regulates the issue of metallic money." Loi'd Over stone then quotes from Daniel Webster, I think from his subtreasury speech of 1838, as follows: " The circulation of paper tends to displace coin; it may banish it altogether. At this very moment it has banished it." Asking the committee to mark well that fact, he says: "A dis tinct statement by so great an authority of that as "Webster, that the coin of the United States has been banished entirely by paper money, by currency payable to the bearer on demand and issued in obedience to what was deemed to be the wants of the public." He continues then his quotation from Webster, as follows: " If others may drive out the coin and fill the country with paper which does not represent coin, of what use is that exclusive power over coins and coinage which is given to Congress by the Constitution? Whatever paper is to circulate as subsidiary coin, or as performing in a greater or less degree the functions of coin, its regulation naturally belongs to the hands which hold the power over coinage. This is an admitted maxim by all writers; it has been admitted and acted upon on all necessary occasions by our own Gov- ernment throughout its whole history." He then quotes Tooke as saying : "The privilege of issung paper money is a delegation of that which is uni- versally considered as a privilege residing in the State." Mr. George Ward Norman, so long connected with the Bank of England, referring in his testimony before the commission of 1857 to the bank act of 1844, said: "I conceive the ground of the act to have been that the issue of paper money is a perfectly distinct operation from the ordinary business of banking, and that you can not mix up together the issue of paper money and ordinary bank- ing business without doing mischief." Again, on the same page, 373, he says: "I consider bank notes as money, and I think that you do mischief when you place the issue of money in the hands of persons who carry on ordinai'y banking business. * * * i consider that the issue of money should be regu- lated by the State, and when the money is issued then that bankers shoiild be allowed to deal with it as they pleased, * * * the principle of competi- tion can not be introduced into the issue of paper money without doing mis- chief." 1770 56 Apain, on page 276, he says; "A bank lias to deal with the money of the country which exists, but it ha^ properly notliing to ao with the issue of money." Ak'xander Hamilton, the younger, said, referring to the old State banks: " There is now no check to the creation of these money mints; anybody and everybody, with or without character, has a right to enter the field of com- petition. * * * Thesuperiutendence of a power of such immense and vital consequence to the integi-ity, stability, and permanent interests of the public as that of money making ought not, in the very nature of its operation, to be legislatively lodged in the hands of individuals." Mr. Henueusox. Do you know when he said that? Mr. Wakneh. I think in 1839. It was immediately after the panic of 1837. The value of no man's property, much less that of a commtinity, should be placed at the capricious will of private cupidity and speculation. 1 quote again from one of Webster's subtreasury speeches, in which he says: "Whenever paper is to circulate as subsidiary to coin or as performing in a greater or less degree the functions of coin, its regulation naturally belongs to the hands that held the power over the coinage." SO.ME objections TO THE CARLISLE BILL. Section 1 of the substitute bill which the committee favors carefully leaves the present national-bank acts in force except so much as requires the deposit of United States bonds. Section 2 states the conditions on which national banks may issue currency under this bill. Amount to each bank is limited to 75 per cent of its capital. Thirty per cent of amount of circulation must be deposited with the United States Treasurer in United States notes or Treasury notes, thus locking up as against the people, but not as against the banks, the legal-tender paper currency. Banks that so desire can have their notes on a gold basis by having their notes made payable in gold coin. Thirty per cent deposit on the 75 per cent for circ lation makes the guaranty fund equal to 22+ per cent on the entire capital. So bj' putting down 22^ per cent the bankers can take up 75 per cent, a gain of 52^ per cent added to their working capital for which they have paid nothing to either the Government or the people. This is " richness " as a scheme for getting rich. Worse than this — it is a temptation to the fraud of organizing diuiimy banks on dummy cai)ital, as the gentleman from Ohio [Mr. Johnson] has this day so ably pointed out in his challenge to the advocates of the bill to show why it may not be done. I not only indorse the position of my friend from Ohio, but would point out to him and to this House that all schemes for issuing bank notes on assets or property of any kind deposited as secur- ity in less amount than 100 per cent of the circulation allowed the banks is vicious in principle and permits fraud to the degree of the difference between the deposit and circulation. If, therefore, 1770 57 any plan is proposed that requires a deposit of less than the total amount of the bank notes issued for circulation, then his argu- ment of opportunity for fraud under this bill will apply to all such plans as well as to this one. But if the deposit of 100 per cent is required for protection against the possibility of fraud, then the banker will not favor such plan, for he may as well loan out the money he deposits, as the amount is the same. But if the bank syndicate would deposit 100 per cent in Govern- ment legal-tender paper money instead of 30 per cent only, as this bill requires, although this would remedy the opportunity for fraud, yet a new question arises. What reason can be returned to the people who have given us commissions to represent them on this floor if we favor any scheme of banking which simply locks up one kind of paper money, or de- stroys it, so that an inferior nonlegal-tender paper money may issue in place of the better kind? Can you find in all history of finance a more foolish legislative provision than that? We can readily see that if jow give the banks a chance to put down $30 in paper money and take up and walk away with $75 in other paper money that they may use for an indefinite length of time it will help the bankers, but it is not so clear to others than bankers just where the people come in for any benefits. They lose from cu-culation the better kind of paper money and get the elasticity game worked upon them besides. It is also well to point out, that owing to the limited amount of the two kinds of paper money to be deposited and the very large amount that may come forward as banking capital to get the ben- efit of the 30 to 75 per cent exchange, there is very great probabil- ity of the older banks and those in the money centers getting a corner on the greenback and Treasury note supply necessary for deposit of organizing banks, and forcing these notes to a premium. In the bond-deposit system, as at present existing, the banks pay 1 per cent tax or interest and receive 90 per cent in circulating notes. In this Carlisle bill, on a tax of only one-half per cent per year, they receive back 300 per cent on their deposit investment. Even this one-half per cent tax per year is not for the benefit of the Grovernment, but it goes into a fund to pay off the debts or notes of failed banks, and it will take 10 years' time in which to accumulate 5 per cent. NOT FAIR TOWARD THE DEPOSITORS. Depositors under this and all similar plans are left out in the cold, to say so. in case of failed banks, for both assets and the liabil- 1770 58 itifs of stockholders are practically mortgaged to the note holders, and ai-e not likely to bring the depositor any relief, even though his own deposits may have been used a few days before failure in a scheme to get out circulating notes for loan to some accomplice who, by this trick, can come in ahead of the depositor. In estimating security for the people we must keep in mind that all of these bank plans provide only for the safety of note holders. This protects the banks who have the notes and circulation on deposit. But no security is offered for depositors. The banks offer no safety plan whatever for the people who deposit money with them. Carlisle says (and correctly) that the deposit of money with a bank is iDurely a voluntary and private transaction. I say that the issuance of a noulegal-tender bank note and the taking of it by any man is also a voluntary matter, the note not being legal tender. But it should not at the whim of a banker be allowed to circulate as money. The Government alone should control the issuance of money and control its volume. It has been well pointed out by Mr. George J. E. Mayer, who has given much attention to this question of the rights of depositors to better security, that from the very lack of security for deposi- tors more banks fail by runs upon them by the unsecured deposi- tors, and more money is kept hoarded away and held out of cir- culation. Since 90 per cent of all current business transactions are said to be transacted through banks by means of deposits, we should give more attention to the safety of the depositors. This, by bulk, as well as for other reasons, is five to ten times as important as se- curity for bank notes. In section 5 of the substitute bill the provision is made for 6 per cent interest on all notes of failed banks not redeemed on pre- sentation to the Treasurer or assistant until thirty days after notice has been given of readiness to pay them, and such notes are a first lien on the safety fund. As our Western men would say, this is a "pay streak." The rate of interest being so much better than United States 3 per cent or 4 per cent bonds, it will entitle such notes to a good premium over the notes of all other banks. Section 6 puts the Government into the business of making in- vestments of the safety fund, not for the benefit of the Treasury, but all for the banks. There is nothing in this bill anywhere that gives any benefits or compensation to the Government or the peo- ple. It is all for the banks. Section 10 and forward provides, under certain conditions being complied with, that the State banks may also take out circulation 1771) 59 in same proportions to assets and deposits as in the case of tlie national banks. Here, then, we have concurrent jurisdiction by the State and the General Government over some points regarding State-bank paper money and separate jurisdiction over other features. This will give us also two kinds of bank paper at least, and proba- bilities of complications between State and Federal jurisdiction. The national-bank circulation to be issued remains apparently legal tender for payment of all taxes to the Federal Government excej^t duties on imports, this provision of the present law remain- ing as at present. This will make them, by their receivability by the Government for such extensive revenues, so secure that they will have great advantages over all State issues. In same section provision is made for the Secretary to give a sort of certificate of good character to State banks, which may lead the public to be satisfied with. State issues. THE CARLISLE PLAN BETTER THAN THE PRESENT LAW. I would not feel that I had done complete justice in my treat- ment of the Carlisle plan of currency legislation after pointing out its many faults if I did not also point out what I believe are its advantages over the present national banking law and the pro- posed Baltimore plan, which is fairly representative of the prefer- ences of the associated national banks. To me they are all wi'ong in principle, as any system must be that permits the issuance of circulating notes and control or inter- ference of the aggregate volume of money to pass into the hands of banking corporations. They are all of them more or less founded on the idea that our Government must in all financial legislation keep constantly in view the regulation and issuance of currency in the interest of those who use currency for profit making on loans. Instead of viewing money principally as an investment or form of property to hire out and loan to our 70,000,000 people for the profit of those who are in general the wealthy classes, the dominant idea ought to be the issuance and regulation of currency in the interest of investors and for the exchanging of all other forms of property so as to render the manufacturing and productive work of our people profitable. "WE SHOULD CREATE MONEY TO MAKE INVESTMENTS PROFITABLE RATHER THAN FOR LOANABLE PURPOSES. Money for profitable investment in other forms of property rather than money for loans should be uppermost in the mind of Congress. Money as an instrument for the profitable exercise of the pro- ductive energies of our people and the maintenance of equity in 1770 GO eettlement of all time contracts is the proper idea, so that money shall be subsei'vient as a means of exchange and payment to tho needs of our people engaged in all the varied industries of this ad- vanced and progressive age and country rather than issue and regulate money for the sole profit of money dealers and money loaning. Money for investment, exchange, and equitable payments means money as a servant, but money issued by and regulated in the sole interest of money dealers moans money as master and all other forms of property in subjection. That party is the party of the people and truly democratic that will take the people's side of this question and issue and control all of oiir money in the interest of property and the general indus- tries. If, however, the people must be subject to bank control and bank issuance of the circulating medium, then that System which prevents centralization and monopoly in control of currency is best. It is precisely in this matter that the Carlisle plan is superior to and better for the people than all the other plans for bank issues. It starts out in an effort to make the centralized power of the present associated banks compromise or yield a part of the profits and control of ciirrency volume to the States and State banking institutions. It introduces a new and strong competitor in the field of banking and note issuance, and one that will, to some degree, permit the people of every State jurisdiction to protect themselves against money contractions in the interests of and by the national bank association. It therefore threatens to break the intolerable monopoly of Wall street in financial matters. Not only this, it permits people of smaller means to enter the business of issuing their credit notes to circulate as money and become participants of the showers of financial blessings sent forth by the Government for the profit of the banking fraternity, for the restrictions of $50,000 as the minimum for State banks and the ownership or use of United States bonds for deposit as security for all banks are both left out of the Carlisle plan. So much for the antimonopoly and free-banking features of the Carlisle plan. But for these reasons the strong and wealthy bankers of Wall street and other allied money centers will sooner or later, as I have believed, sound a note of warning to their cuckoos and " make themselves heard in tones of imperative urgency" against the adoption of the Carlisle plan. WALL, STHEET'S IMPERATIVE DEMANDS. Again, the Carlisle plan does not sufiSciently insure the retire- ment and destruction of all the Government legal-tender money and the issuance of bonds to please the centralized money power. 1770 61 Hear them throngli one of their favorite spokesmen, Henry- Clews, in the Financial Review of December 22, 189-4. In speak- ing of the Carlisle bill he says: Among the clauses deemed objectionable is the requirement that the banks of issue shall deposit legal tenders at the Treasury to the amoimt of 30 per cent of their circiilation ; which would largely restrict the net earnings from the notes, and so far lessen the inducement for the banks to avail themselves of their privilege of issuing; besides which it might keep a very large amount of legal tenders in existence after the remainder had been retired. * * * The great and universal objection, however, is that Mr. Carlisle fails to make — any adequate provision for carrying out the main feature of his plan, the re- tirement of the five hundred millions of legal-tender notes. He asks for au- thority to use for that purpose any money in the Treasury not otherwise ap- propriated, but does not mention authorization to borrow money for these vast liquidations. * * * The men of intelligence and the organizations rep- resenting our great commercial and financial interests must make themselves heard in tones of imperative urgency. So, now, ye Republican jumping jacks operated by a Wall street string, and ye Democratic cuckoos, ever anxious to call out the plausible sophistries of the money power, take warning in time. If you mean still to serve the money lords you would better begin now to liedge against this bill. If you resist, you may hear those " tones of imperative urgency." Retirement and destruction of all Government legal tender and the authorized issuance of United States bonds are imperatively demanded by Wall street and a lessening of the 30 per cent de- posit requisite as a condition for the issuance of notes is very urgently requested, for it ' ' restricts the net earnings from the notes," and remember always that the banks, in the language of a character in the Hoosier Schoolmaster, desire " while they're gittin' to get a plenty," and it ought to be clear to all of their Congressional servants that if they are required to put down ac- tually of their own money $30 on deposit for every time they loan $100 in their own circulating notes, they can not make as much off the people as if they were only required to put down $5 or $10 for every $100 taken up and used in loaning. If now the national-bank interests can secure large additional bond issues and overcome tlie present premium on bonds, and can obtain 100 per cent on their deposit instead of 90 per cent, as now, and secure repeal of the 1 per cent tax on their circulation, they can make more profit, getting interest on capital invested in bonds and at the same time getting interest on-same capital loaned out in notes to the people, as anyone can easily see, but we, in behalf of the people, must remember that all the additional profits they thus secure, as comi^ared to the Carlisle plan, are just so much to the disadvantage of the people. 1770 ()2 Every dollar of profit to banking corporations on issuance of circulating notes must come out of the people who use that money, ami is that much of a burden on productive industry. HOLDING TOO MUCH OUTSIDE " RESEKVES" IN NEW YORK. Tliere is one feature of the present banking system that is gen- erally overlooked, and yet of more importance than gentlemen usually suppose. I refer to the provisions of the law favoring re- serve cities, and especially New York. Banks in other cities are allowed to keep part of their reserves in New York on deposit, sub- ject to check, and yet coimt it in their legal reserves. This results in vast accumulations of outside money in New York, and tempts the banks in that city to loan a large part of it at any rate of interest they can get. This increasing of the supply in New York tending at the same time to decrease it elsewhere makes it impossible to obtain money in other places at such low rates as in New York. On the evidence of more than one banker before the Committee on Banking and Currency recently it was shown that interest for the last year on call loans and short notice loans has been from 1 to 1^ per cent per annum. How can business men and industries in other parts of the coun- try, where they must pay from four to eight times as much for money, compete successfully with business in New York? This special favoritism for New York in the law ought, in fair play, to be repealed. It would result in a wider and better diffu- sion of whatever volume of currency may exist. BANKING IS SUFFICIENTLY PKOFITABLE WITHOUT ISSUE PRIVILEGES. Mr. Chairman, remembering what great advantages the associ- ate banks in the money centers have already, and how little they have in common with banking in the interior and on the frontier, I hold that we can not, for these reasons, follow their ideas and advice on financial matters, even if their desire for selfish advan- tage were not to be considered. And I would say, too, that the business of banking independent of issuing notes for circulation is already sufficiently profitable, and especially in New York, from which city so much financial wisdom has been poured out upon Congress from time to time for many years. Let me introduce the testimony of Mr. George Q-. Williams, president of the Chemical National Bank, New York, one of the gi-eatest banks in the country (page 'SO'6 and 308 of Hearings, Dec. 15,1894): Mr. Warner. So that the capital of your bank now represents how many millions of dollars? Mr. "Williams. Our capital is $300,000 and our surplus is about $7,000,000. Mr. "Warner. Your stock is worth about $4,3fXJ a share? 1770 03 Mr. "Williams. Yes, sir; it sells for that. Itsells for more tlian it is worth. Mr. Warner. Forty-three times as much as its par. What is the amount of your bond deposit"? Mr. Williams. The Chemical Bank has never taken out any circulation whatever. Our bond deposit is $50,000; but we have never circulated any notes. Mr. Warner. What is the reason, may I ask, that you have not taken out circulation? Mr. Williams. We were under the State-bank system, and issued circu- lating notes up to the breaking out of the war, and at that time we had about S;^(lO,0(X) of notes in circulation, and we redeemed every one of them in gold— and we did not care, as a matter of pride, and a little profit in it, too; but we did not care, as a matter of pride, to issue notes which could not be redeemed in gold. The Chairman. Mr. Williams, some members of the committee desire to understand exactly the condition of your bank. What did you state the cap- ital was? Mr. Williams. Three hundred thousand dollars. The Chairman. And the surplus? Mr. Williams. The surplus and undivided profits are about $7,000,000. The surplus is $6,000,000 and the undivided profits a little over a million dollars, making a little over $7,000,000 of surplus and undivided profits. The Chairman. And how much deposits? Mr. Williams. Thirty million dollars. The Chairman. What dividend do you pay per annum on your stock? Mr. Williams. We pay now 150 per cent per annum. 41 il; 41 41 lie « « The Chairman. You stated the dividend last year was 150 per cent. Mr. Williams. Yes, sir. The Chairman. What were the undivided profits of that year? Mr. Williams. Well, I have not it in mind; but owing to the panic our profits last year were not as large as usual. Usually we expect to add to our surplus 100 per cent besides the dividend we pay of 150 per cent. The Chairman. That is $300,000 a year? Mr. Williams. Yes, sir. The Chairman. And a dividend of 150 per cent besides? Mr. Williams. Yes, sir. We see, then, that without circulation banking is sufficiently profitable. Here a great bank of New York is testifying that its stock is selling at 4,200 per cent above par, and we see that in a few years, on a capital of $300,000, besides paying enormous amounts in dividends, it has accumulated a surplus of about twenty-four times its capital. And this bank does not take out circulating notes. How long will it take 4,000 to 6,000 banks like this to eat up the wealth of America? brief inventory of CARLISLE PLAN. We have seen how fast even the present system of banks is de- vouring the substance of the people. Let us make no further con- cessions of any kind. 1770 04 The measure before its, however together with the substitute. tliat the counnittee propose to otter, aj-e already practically dead. Sibley's appeal, Tom Johnson "s thrusts, and Bland's expose — the work of these honorable gentlemen to-day has been too much for the survival of the bill under discussion. Let us, however, make a brief inventory: Democratic doctrine is not in it. The people's interests are endangered by it. Equity of payment is endangered by it. Party exigencies are against it. Drainage of gold is not stopped by it. Cancellation of greenbacks (the desire of banks) is not compnl- sory in it. Locking up of greenbacks is made certain by it. Rights of depositors are endangered by it. The needful supply of legal tenders is taken from the people by it. Government receivability of national-bank notes is retained in it. This receivability of State-bank notes is not in it. Double jurisdiction over note issues is found in it. Two kinds of money are added to our present complexity by it. Power of banks over prices, profits, and prosperity is in it. It threatens first undue expansion; then final collapse. It makes no provision for free coinage or true currency reform. Let us hope that it is dead, and that all other plans for the ex- tension of power over our currency shall die with it. THE COINAGE COMMITTEE QUORUM BROKEN BY THE GOLD POWER. Although our Committee on Coinage was organized with so small a margin and majority in favor of free coinage, only 1 majority, and that 1 doubtful, and the money power has been able thereby to prevent the free-coinage men on our committee from securing a quorum with which to present a free-coinage measure to this House, yet we believe the country is with us for free coinage, and even a majority of this House, if we can get the bank and gold schemes out of the way. The money power do not hesitate to hold their portion of our committee absent to pre- vent silver legislation. We claim the country ought to know this fact. MONEY AND PRICE— AS ONE GOES UP THE OTHER COMES DOWN. The plainest possible terms would seem most necessary to sim- plify the money question, although in using some of them in application to money I vnll meet prejudices and be misunderstood by some and misconstrued by others. I refer especially to the 1770 Go word cheapness when applied to money and the dollars or units of money. It is difficult, owing to long-standing prejudices fostered pur posely by the self-ordained priesthood of the money dealers, for people to understand that money derives its value through its power and rate of exchange for other goods, and so its value is in its exchangeability for other things on the same general principle J that wheat, shoes, cloth, or anything else has value, and so money value is relative to its supply and may be cheap or dear in the same sense that other things are cheap or dear, and so again it measures all other property on the same general principle that the general range of prices on other things measures the value of money. There is this peculiarity, however, regarding money, that it is a universal solvent for all other things, and is therefore in uni- versal demand, while other things are only partially so; hence we find the value of money is almost wholly regulated by its supply, for its demand is universal, while other things are regulated or modified in value by both supply and demand. Hence, again, we find that the volume or supply is the chief est element in regulating value of money since the demand is universal, while both siipply and demand must be equally and constantly considered in esti- mating the value of other single kinds of property, and owing to the variations in supply or demand for special kinds or lines of goods we must take the general range of prices on the staples or more generally used articles for a basis on which to test and dis- cover the value of monetary units such as dollars. The value of dollars or monetary units will be found remaining constant or uniform; therefore, if we find the general range of prices are constant ; that is, prices neither going up nor down. This should be the condition to maintain — by Congress if we would maintain equity — imiformity of general prices, which shows with unerring certainty uniformity or constancy in the value of money. If, however, money becomes dear or high, then the general range of prices becomes lower or cheaper ; but if money becomes plenti- ful and cheap, then prices, moving always in the opposite direc- tion, become higher. So, then, we must conclude from the very nature of the case that the general range of prices of commodities measures the value of money as certainly and on the same prin- ciple that money measures the values or prices of commodities. One is the standard of the other, and the movement of one is al- ways in exact but reverse movement of the other, so that as one goes up the other always goes down. 1770 5 G6 MONEY AND PKOrEHTY PRICES ACT AS A LEVER. To illustrate this reverse action of depreciating or appreciating money on prices I have called into play tlie action of a lever as an illustration with money on one end, property to be priced or valued in money on the other, and the fulcrum between representing con- stancy and stability. There ought to be maintained a level or equilibrium between money on one end of the lever and i)rice on the other. One thing is certain, however, that if one end, say the money end, of the lever goes up the property end or price must go down, and vice versa. If there is variation, however, in either end you can certainly know that the other end is moving in the opposite direction. As dollars go up — are appreciated — their purchasing power in- creased — property goes do^vn, prices go down, and profits are lost. On the other hand, if money comes down, depreciates, becomes cheaper, it is equally certain that the general range of prices on property appreciates, increases, becomes higher. So money and property are iiitted against each other. Money on one end of the lever, and price, or valuation of property, on the other. It is the w^ork and duty of the people to produce property, but of the Government to produce or furnish money in proper and sufficient volume to maintain prices for the people, to keep their property at a true level. Bankers want to appi'eciate their end of the lever — that is, the money end. The people must remember that as they are the workers and pro- ducers and holders of property they are all on the property and price end of the lever, and their interests suffer, their prices go down, and values shrink, and profits to them are destroyed if they allow the money dealers to manipulate the Government and secure a lifting of their end of the lever, increasing the purchasing power of money. INTERESTS AND METHODS OF MONEY DEALKRS ANTAGONISTIC TO PRODUC- TIVE ENTERPRISE. From this clear and exact illustration of the relation of money to price we desire also to expose another fallacy and false phrase of the monetary syndicate. They are forever prating about their interests being identical with tlie industrial interests. They are not, but are exactly oppo- site to the interests of the producing classes when they appreciate money, for to appreciate or raise the purchasing power of money is to depreciate all other property by lowering prices, and this destroys also the profits that equitably belong to the producing clas.ses. They thus pit themselves against the people. 1780 67 Another assumption of theirs equally false is that they repre- sent the business interests of the country. They do not. The property and producing side of the lever is the side of business and industry, and the Government alone should regulate the other end of the lever, and that in the direction of supplying money for circulation and keeping volume, and therefore prices, both at a proper level and protect the business and the debtor classes against ruinous ai)preciation of money. To turn over to bankers the privilege of supplying the money of circulation and controlling to any degree its volume, the privi- lege of changing up or down, as may suit their interests, the money end of the lever, and so holding power over the prices, profits, property, and prosperity of all the people, is to give them the power that belongs to sovereign government alone. With this power to supply the currency and control its volume they can devour the surplus and encroach rapidly upon the wealth ah-eady held by the people, as they have been so rapidly doing for twenty-five years. They prate about elasticity of bank currency; but it is contrac- tion and expansion, sudden and without warning, and in the in- terests of the banks, who work the india-rubber scheme, and al- ways to the disadvantage of the rest of the people, and to the ruin of one generation of debtors after another. They talk aboufr maintaining public confidence; but instead of playing a fair game they demand as a condition that they shall hold all the trump cards and thus keep the people on the other side en- tirely at their mercy. They talk about honest and best dollars; by which they mean the highest purchasing-power dollars, which kind is a cheat and a robbery of all who labor or sell anything at the ruinously low prices necessary to obtain the high gold-standard dollars. They are thus blocking the wheels of industry and forcing debtors to bankruptcy or crime. What chance have the people if banks con- trol the volume of money? THE PBODUCINO CLASSES HAVE LOST $10,000,000,000 OR MORE Bf THE APPRE- CIATION OF MONEY. It is safe to say that if the same tact and energy had been used during the last twenty-five years by CongTess to appreciate prop- erty and the prices, that is to say, the general range of prices thereon, that has been used to appreciate money and advance the interests and profits of the money dealers, the producing classes in this country would have been worth at least ten thousand mil- lion dollars more than they are to-day. A truer estimate would be that their wealth and holdings would be twenty thousand mil- 1770 68 lions more than it is to-day. The agricultural classes alone would hold ten thousand million dollars more wealth than now. But this would have ret^uired an appreciation or at least the maintenance of price and i)roperty values and a protection of profits instead of an appreciation of money and legislation con- stiintly in the direction of securing greater advantages and profits to the creditor classes. This at least would have required a protection against deprecia- tion of prices. For, let it never be forgotten, that the appreciation of either prices or money is the depreciation of the other — as money goes up prices come down, and as prices go up money comes down. The law is invariable, and the appreciation or depreciation of either prices or dollars is dependent on the relative volume of currency in circulation. THE DISHONEST DOLLAR. Let us be plain about the matter and say what all competent judges know but what few dare to say, that to have better prices we must have cheaper money, cheaper dollars, dollars of less pur- chasing power. But is not a cheaper dollar a dishonest dollar? No, not necessarily. There is no dishonesty in keepiagthecountry well supplied with reasonably cheap dollars. The very fact that there will be a good supply of dollars in cir- culation is a guaranty that they will be reasonably cheap and that prices consequently will be reasonably good. Dollars that are not reasonably cheap, making prices reasonably good, are dishonest or unfair dollars, unfair and unjust to nine- teen-twentieths of our people who are dependent upon exchanging products, property or labor, for dollars, and the whole question of honesty is involved in the question of rates or prices at which they must exchange what they have to obtain dollars. High value or appreciated dollars produce low and depreciated prices on all other forms of property and labor, and this robs pro- ducers, and especially robs those who have debts and fixed amoxmts and taxes to pay. Dollars, then, have been dishonest ever since they began to ap- preciate under the policies of the money dealers, who have con- trolled financial legislation for twenty-five years. The honesty of dollars, therefore, must be determined by look- ing at the general range of prices. Are prices too low? Then money is too high and dishonest. Are prices good and running at a fair level and profitable to 1770 69 producers? Then the dollars in circulation are honest and reasona- bly cheap in relation to prices or exchange for property. When prices are honest and fair to the debtors and producers, then money is honest and fair. Are prices abnormally high so that you, in the old phrase, get a hat full of dollars for a pair of boots, or barrel of pork, or a few bushels of wheat, then money or dollars must be unreasonably cheap, and therefore dishonest again and unfair toward the cred- itor. The whole question of the honesty of the dollars in general cir- CTilation is dependent upon the question of general prices, for one is always a true index of the other. To look at the material of which the dollars are composed with the idea that the value of the material in the dollar as a commod- ity is the essential basis upon which to measure the value or honesty of the dollar for monetary uses is a childish delusion and resTilts from ignorance of the nature and function of money, which is an instrument of exchange and should be a constant support of prices and measure of values in the payment of debt. THE MAINTENANCE OF HONEST PRICES SHOWS HONEST DOLLARS. Look to prices, then, to estimate the value and honesty of dollars. Is the farmer getting $1.25 per bushel for his wheat and 16 cents per pound for his cotton as examples of the general range of prices necessarily consequent upon the volume of currency circulating and regulating the prices and payment of debts as the nation came out the great struggle for the maintenance of its existence? Then these are honest prices brought about, not by selfish schemes of farmers, manufacturers, and producers generally, but by the patriotic action and highest and best motives of the truest friends of the people and their Government. Remember that the whole country had adjusted its business, both its debits and cred- its and its varied industries and commercial conduct, to the vol- ume of currency and range of prices then existing. This, the established volume of currency and range of prices fol- lowing the war, was honest money and honest prices. These two always go together. Equity demanded the maintenance of these prices, and main- tenance of prices demanded the maintenance of a proper volume of currency. This currency, to maintain these general post bellum prices, as from 1865 to 1868, should have expanded in volume to correspond with the expansion and extension of the volume of business and population. If this had been done prices would have been upheld and the equities of contract between debtors and creditors would 1770 . 70 have been maintained. This maintenance of equity and protec- tion of the interests and prices of the producing and true business world should have been vigilantly and thoroughly done by the Gov- ernment. This is tlie true province of government. But contraction and demonetization policies have been followed instead, and so now the farmer to pay a hundred-dollar debt or a hundred dollars in taxes, must produce and sell 200 biishels of wheat to pay the debt instead of 80 or 100 bushels. This more than doubles the burden of payment upon him. The same great loss comes upon all producers in their efforts to obtain dollars in the general fall of prices consequent upon the raise in the pur- chasing power of the dollars. But the creditor gains what the producer loses. He gets 200 bushels or the value of it where the value of 80 bushels only was due him. The general fall of prices, which means the appreciation of money, has caused a loss of about one-half on price and a doubling of the valiie of money to the very great advantage of the creditor classes. This wrong upon the people is greater than generally supposed. That it has not been forced upon them all at once but has been by gradual process of appreciating the money scattering the losses and disturl)ance3 over a period of twenty-five years has not in any manner lessened the injustice of it, but it has been borne by the people with a degree of patience and submission that could not have been otherwise obtained. I am not sure but this generation would be better off if the change had come all at once instead of by slow gradations. The boy who undertook to shorten his dog's tail by cutting off an inch at a time may have secured one point by getting his dog hardened to the process; but I am not sure but what the dog would have been as well off if the tail had been all cut off at once. LOSSES ON NATIONAL DEBT BY APPUECTATION OF MONEY. The great losses to the people on their general business for the last twenty-five years can be perhaps illustrated by noticing the losses to the Government on the national debt by the same proc- esses; but we must remember that the national debt only repre- sents about one-eighth to one-tenth the entire volume of the jieo- ple's indebtedness upon which their losses have occurred. Remembering that the people in general produce and sell com- modities as a means to obtain the money necessary to pay debts, I call your attention to the following ascertained facts which, for present use, I derive chiefly from the speech of Senator Jones, in the United States Senate, October 23, 1893, page 267 of his pub- lished speeches: United States bonds sold, 1801868, nominal value, S2,019,975,70a 1770 71 The Government received for these only $1,400,000,000. The average rate received was 67 per cent of par value. These were payable when due in lawful money, interest in coin. The Government has paid back on principal $1,756,000,000. There has been paid in interest on them $3,538,000,000. Paid in premiums on bonds bought $58,000,000. Total amount paid (three times the amount received) $4,353,000,000. The value of money is its purchasing power, and this to main- tain equity ought to maintain uniform prices. The purchasing power received from bondholders in wheat was 1,007,000,000 bushels. If equity had been maintained we ought to be able to pay the debt principal with the price of same amount of wheat, but by appreciation or increase of the purchas- ing power of the dollar lowering the prices of commodities we find we have paid on principal 1,986,000,000 bushels; on interest, 2,974,000,000 bushels; in premiums, 62,000,000 bushels; total paid, 5,022,000,000 bushels. This is paying five times as much in equity as originally re- ceived. If estimated in cotton we would have paid 94,690,000 bales, whereas we received on the then cotton prices 14,184.000 bales, or less than one-sixth as much as has been paid back to them, and yet to pay the remainder to-day will require as much wheat or cotton as woiild have paid off the entire net amount re- ceived of them at the close of the war. It is no sufficient reply to say that those were "war prices," for they were also "war values" of dollars, and both dollars and prices were the same to all, whether bondholders or bond payers. Now, figured in the general range of prices on commodities, the results are substantially the same, as illustrated in the two great staples of wheat and cotton. How much, then, have been the losses already accrued by in- creasing the value of dollars and lowering prices? Estimating that the interest paid doubles the amount of principal on pay- ments so far made, the people have lost not less than $3, 000,000, U(jO on the national debt, and they have lost not less than five times as much, or $15,000,000,000, on all other kinds of debts. No other age or nation ever suffered siich robbery. Shall we, then, vote to allow tliese extortions to continue? Shall we, in presence of this grievous wrong, In this supremest moment of all time. Stand trembling, cowering, when with one bold stroke These groaning millions might be ever free ? — And that one stroke so just, so greatly good, So lev^l with the happiness of man That all the angels will applaud the deed. Mr. HAINER of Nebraska. If the gentleman will pardon a further interruption, I desire to submit for his consideration, con- ceding his argument to be soimd, that with an increased circula- 1770 72 tion we have a consequent and proportionately higher price; with higher prices a consequent and proportionately greater prosperity, and that the Government has the power to increase this circula- tion by an issue of paper money in such quantities as Congress desires or deems conducive to the prosperity of the people; then why i^lace a limit on such issue? Why not have unlimited issues of paper money and thus usher in a millennium of prosperity? As I know my friend would not seriously propose a Utopian scheme, but wishes to be practical, will he not admit that paper money is simply andin the last analysis the obligation — debt — of the Government, which must at some time be either paid or repudiated, and when, we authorize the issue of paper money we thereby mort- gage the future revenues of the Government? The seeming pros- perity attending the issue of even a limited amount is that of the mortgagor who has just made a loan, is spending the proceeds, and has not yet been called upon to pay. Mr. COFFEEN of Wyoming. I am pleased to find siich interest in my discussion of the currency question and do not object to the interruption of my friend from Nebraska. The question submitted, briefly stated, is: First. Why not have imlimited issue of currency if expansion brings prosperity? Second. Is not paper money issued by the Government in the form of debt which must be paid or repudiated? Third. Is not the prosperity secured by better prices if occa- sioned by Government issue of currency notes like the prosperity of one spending boi rowed money, which prosperity will be re- versed when pay day comes? These are questions ai-ising sometimes out of the failure to com- prehend the true nature of money and the Government's relation to it. As to the first, why not issue an unlimited amount of Govern- ment paper if more money brings more prosperity? A short yet incomplete answer would be by contrasting the Government's condition with that of a hungry or sick man and to say, If a man is hungry and needs more food, why not stufr him with an unlimited amount of food? The case is similar. If a man is weak and emaciated for want of blood in sufficient quantity to revive him, why not furnish him an unlimited quan- tity of blood? A prf)per amount of food is useful and a proper amount of blood to circulate through the body is necessary to health and prosperity. If prices are too low and people unable to pay their debts and make any profit on their labor and ijroduce and workers are idle for want of employment and more money will cure the evil and 1770 73 raise prices and employ labor, then, some say why not issue too much money and give the patient an overdose of the remedy? MONEY IS THE LIFE-BLiOOD OF THE NATION. The need of a proper supply of money to circulate through the body politic, or the organized nation, is like the need of food or blood for the human body. Money is an instrumentality to facilitate exchange among the people so necessary to their existence in civilized life, and also to maintain prices at an equitable standard so as to enable all the in- dustrial interests and people of the nation a fair opportunity to cal- culate safely on the values or prices of their future crops, products, and manufactures in relation to all kinds of obligations, debts, profits, and emplojnnent of themselves and others, as w^ell as the employment of their acquired property resources. If prices are properly sustained, and this depends, as my friend, at least for the present, has admitted, on the proper amount of money in circulation, then prosperity can and will ensue in all commercial and manufacturing affairs. Not only can all debtors get dollars in exchange at fair prices for their labor and products with which to pay debts and interests and taxes, but also all men, in whatever productive or manufacturing enterprises they may engage, can safely count on the profits that ought to obtain in the future if prices are maintained. If prices and the money which sustain prices remain at a fair and eqiiable standard their investments in property and labor in general will be profitable. But while there are debtors there are creditors. While there are sellers of goods there are buyers. While there are calculations for a reasonable profit there are calculations and a reliance against unreasonable profits and prices on the part of those whose forms of wealth and resource are fixed and, so to say, not productive of anything that would get a compensating benefit from higher prices. Now, if I have made this sufficiently plain, my friend will at once see and agree with me that money value, and price or prop- erty value, which represent the two ends of a swinging lever, ought to be kept at a fair level, so that neither end of the lever goes so high as to sink the other into ruin and injustice. The question of money volume is a question of justice, but so, too, is the question of prices. I have already shown how property values swing against money values as on a lever. The prosperity that we want is one where justice prevails and equity between the money dealers and property producers, or wealth producers, is maintained. 1760 In the face of this idea of prosperity for the whole and all classes, fonmled upon justice to all. how can iny friend insist that an unlimited issue of money would, by raising prices constantly liigher when coimted in that overissue, be conducive to pros- l)erity? The true fvinction of money is to maintain equity as well as to facilitate exchange of commodities, and equity protests against too great expansion on the one hand as against too great contrac- tion on the other. MONEY TO MAINTAIN EQUITY AS WELL AS TO EXCHANGE COMMODITIES. We can destroy equity and the proper function of money, let my friend remember, as easily by contraction as by expansion. It is as great a wrong for prices to fall too low as it is to raise them too high; and, indeed, when you consider how many are in- terested on the property side and their needs in contrast with the few and the rich on the money side of the lever, if we depart from a proper level at all it ought to be by expanding the volume of money and raising the value of property and products instead of contracting the money and lowering the prices of all products and property. Do you ask me what is the proper volume and the proper level between money and price? I have already gone over that subject, but ^\^ll say in passing that the $20,000,000,000 of debts of our peo- ple, that on present low' prices of i)roperty requires twice as much labor and products of labor to pay as it required in the period and conditions out of which these debts and renewals have arisen — that is, the period following the civil war, in which money was abun- dant — demands of us, in the interestof equity andfair play, that we again double our money volume by fair yet sure gi-adations, so that prices shall again be restored to the old level from which they have been cast down by the schemes of contraction and demoneti- zation. By breaking down equity we have broken down pros- perity. If the volume of business transactions and exchanges requiring the use of and counting in money is fourfold what it was at the close of the war, and I believe it is fully that, then we need not two times but four times the volume of money we had in general circulation. CURRENCY IS ESSENTIALLY TRANSFERABLE DEBT On the second question — is not the paper money issued by the Government in the form of a debt? — let me answer yes. All currency is debt or in the nature of a certificate of indebt- edness, and is carried or circulated or held by us as representing something sold or services rendered when it was received, for 1770 75 which property or service compensation is not yet made, but re- mains in suspense until we pass the currency or money to some other person for property or service that we receive from them. When we buy some other person's property or service or pay it out to others for value received then we get pay for the services or property we parted with when we first received that money. From the time we receive the money until we part with it we carry it as an evidence of property sold or service rendered, and it is therefore and in this sense in the form and nature of a debt. When it passes to another in exchange for his service or property the debt is transferred to him and is evidence in the case of money or currency that the society or the Government owes him so many dollars. When he passes it or transfers it to the next one the debt is again transferred. So we may say currency, money, all money is in the nature of transferable debt. Money is transferable debt, and do not be startled if you find that all money, whether coin or paper is transferable debt. The only exception is that when one takes a coin and uses the material in it as a commodity as in mak- ing something useful out of it besides money, then in that case he has accepted the material as pay for the debt, and the coin in con- sequence ceases to be money. So teaches MacLeod, the great English economist, in his Eco- nomic Philosoi)hy, and so teach many other profound writers as to this question. On page 188 of volume 1 he says: We may therefore lay down as our fundamental conception that currency and transferable debt are convertible terms; whatever represents transfer- able debt of any sort is currency; and whatever material the currency may consist of it represents transferable debt and nothing else. In volume 2, page 365, MacLeod again says: We shall find that bj- starting from our fundamental definition of currency as transferable debt and that the value of the currency depends upon the quantity of the transferable debt which it represents, the fallacy of this theory (that of issuing on " good bills ") can be demonstrated with great ease In his attack on what he calls Lawism, after quoting from John Law, MacLeod says, page 34G, volume 2: In this sentence is concentrated the whole essence of that eternal delusion * * * which we designate Lawism. It is, indeed, nothing but the stupen- dous fallacy that money represents commodities. * * * No man who does not thoroughly understand the great fundamental doctrine established by Turgot and others, that money does not represent commodities, can ever have sound ideas on this subject. Money does not represent commodities at all, but only debt or services due which have not yet received their equivalent in commodities. So Aristotle taught in ancient days (Economic Phil., volume 1, page 191): But with regard to a future exchange (if we want nothing at present, that it may take place when we do want something), money is our security. 1770 76 So Adam Smith, in Wealth of Nations, says: A guiuoa may bo considered as a bill for a certain quantity of necessaries ana oonveniencea upon all the tradesmen in the neighborhood. Bandeau, the economist, is quoted by MacLeod as saying, page 191, volume 1: This coined money In circulation is nothing, as I have said elsewhere, but efifeotivo titles on the general mass of useful and agreeable enjoyments. Mr. Henry Thornton says: Money of every kind is an order for goods. Again MacLeod says, after quoting other authorities to show that money represents debt, page 195, volume 1: So that when a person receives an obligation expressed in metallic cur- rency, he is able to command the services, not only of the original debtor, but also those of the whole industrial conomunity. There is clearly, then, no dif- ference in principle between a metallic and a paper currency. now DOES THE GOVERNMENT PAY ITS NOTBSt On the third question, when the Government issues even a lim- ited amount of its own notes, will it not be like a mortgagor who borrows money to spend that must afterwards be paid? Yes, in some slight degi-ee. But the repayment by the Govern- ment is chiefly in receiving the notes circulating back again in taxes, customs, excises, and so on, in exchange for what the Gov- ernment has done and is doing in behalf of its own people. There is no mortgage about it, but there is an exchange of serv- ices, with the notes of the Government circulating in the interven- ing time, the Government redeeming its currency notes by receiv- ing them back. And still more, the note is being redeemed every day, when it passes among the people, being a legal tender and competent unit of account in all monetary transactions among the people. But it is the duty of the Government to both issue an adequate supply of currency and by reissuing and making all of it legal tender keep it out in circulation. The people need this currency, and, since they are in an organ- ized form the Government also, it is practically the people pro- viding themselves with a proper currency and agreeing that they will circulate it also among themselves. VALUE IS NOT INTRINSIC IN ANYTHING. Many, especially many advocates of bank interests, still cling to the idea that the money of ultimate redemption, as they call it, must have and does have intrinsic value. This arises from a mis- understanding of the nature of value. For anything to have value it must be exchangeable for something else of value with which it is compared. 1770 77 If you say to me that any certain thing has value, you are giv- ing me but one side of the comparison or equation. I will reply by asking value in what or what value, and your answer will com- plete the equation or comparison. Thus, if you say this horse is value, I ask value in what? You may say in cattle, and equal to three cattle, or you may say in dollars, and is equal to or valued at $100. To say that a thing has value in itself or per se is an error, and it is as useless as to say that a number is equal or has equality without giving us the other term of the comparison. If you say 15 is equal to 3 times 5 we understand it. If you say a certain house is distant one mile, you shotdd also give us the term of comparison by saying, for instance, one mile from the bridge. So value of anything always implies comparison with some- thing else outside of itself, and so value is by comparison or ex- trinsic. Value is not intrinsic. Qualities or properties of things are intrinsic, as brittleness for glass, malleability for gold, and so on, but value is not intrinsic. It is founded on exchangeability for other things and on demand and stipply, and is measured by its power in exchange for other things. On this definition of value, which we shall find applies to dol- lars and all other denominations of money as well as to all that money can buy, we have thus tried to comprehend the truth or statement that value is extrinsic and not intrinsic in anything. Now, for authorities, for some attach more value to authorities than they do to the reasonableness of any proposition; and again, quoting authorities is a convenient way of showing even the rea- sonableness of our propositions in other ways of stating them. Professor Jevons says in his work on Political Economy: Value in exchange expresses nothing but a ratio, and the term should not be used in any other sense. To speak simply of the value of an ounce of gold is as absurd as to speak of the ratio of the number 17. What is the ratio of the number 17? The question admits no answer, for there must be another number named in order to make a ratio. — The Theory of Political Economy, page 83. John Stuart Mill, in defining "value," says, touching question of exchange: The word '"value," when used without adjunct, always means, in political economy, value in exchange.— Political Economy, Book 3, chapter 1. And so, too. Prof. Francis A. Walker says: Value is not a property of anything. It arises whoUy out of relations which exist between things.— 3/one^ in its Relations to Trade and Industry, page 32. 1770 78 Prof. A. L. Perry, in his work on Political Economy, speaking of value, says: Value, then, is not a quality of single things, belonging to them as if by nature, as luvi-dnoss is a (luality of a rock or gravity is an attribute of gold; because all physical (lualities in physical things, all that which niakesor helps to make anything such as it is, may be learned by a study of the things themselves, by themselves. The questioning of the senses, however minute, the test of the laboratory, however delicate, can never determine how much anything is worth, because that always implies a comparison between two things or more strictly a comparison between two renderings in exchange. Value is not an attribute of single things; not even if the things be physical and tangible.— Principles of Political Economy, page 34. Senator John P. Jones says: Numberless citations could be made from writers of the first rank to prove that value is not a property residing in any object, and that therefore it can not by any possibility bo "intrinsic." A correct definition of value I conceive to be: Human estimation placed upon desirable objects whose quantity is limited. • ♦••••♦ If value were intrinsic, if it resided in the article, it could not be taken from it, and it could not be changed by changes in the number of the objects of which value is asserted, or with modifications in the desire of men to be- come posse.isftd of such articles. Qualities that are inherent do not vary with the shifting degrees of estimation in which they may be held by mankind. DEFINITION OF VALUE. Aristotle said: Now the term "value" is used in reference to ex- ternal goods. (Ethics IV, C 3, Nicomacs): The vahie of a thing is what it can be sold for. MacLeod says (volume 1, page 185) : We have, then, this definition: The value of any economic quantity is any other economic quantity for which it can be exchanged. » If we are told that an oljject is distant, or equal, we immediately ask, dis- tant from what or equal to what? So it is equally clear that a single object can not have value. If we hear of an object having value we must always inquire, value in what? And it is clear that as it is absurd to speak of a single object having absolute or intrinsic distance or being an absolute or intrinsic quality, «o it is equally absurd to speak of absolute or intrinsic value. And as no single body can be a standard of distance or equality, so no single obiect can possibly be a standard of value. * * * Value necessarily reqtiires the concurrence of two minds. * ♦ * There is no such thing as absolute value or universal value. Let me quote further from those whose opinions carry great weight. In MacLeod's Elements of Economics, on page 231 of first volume, we find: This unhappy phrase "intrinsic value " meets us at every turn in econom- ics; and yet the slightest reflection will show that to define value to be some- thing external to a thing, and then to be constantly speaking of intrinsic value, are self -contradictory and inconsistent ideas. And it came to be held that labor is necessary to and is the cause of all value. 1770 70 On page 233 the following occurs: The expression " intrinsic value " is so common that persons are apt to over- look its incongruity of ideas; it is, however, a plain contradiction in terms, and if we use words of similar import whose meaning has not been so cor- rupted, its absurdity will be apparent at once. Thus, who ever heard of in- trinsic distance, or of an intrinsic ratio? The absurdity of these expressions is apparent at once, but they are in no way more absurd than intrinsic value. If we speak of the intrinsic value of money, we may just as well speak of the intrinsic distance of St. Paul's, or the inti-insic ratio of five. To say that money has intrinsic value because it is material and the produce of labor, and that a bank note or bill of exchange is only the representative of value, is just as absurd as to say that a wooden yard measure is intrinsic distance, and that the space between two points a yard apart is the representative of dis- tance. On page 235 of the same book we find the following: That unfortunate confusion of ideas between the value of a commodity being the quantity of another commodity it will purchase, and the quantity of labor embodied, as it were, in the commodity itself, which is chiefly owing to Smith and adopted by Ricardo, has not only led to that mischievous ex- pression "intrinsic value," the source of endless confusion in economics, but also to the search for something which very slight reflection would have shown to be impossible, namely, an invariable standard of value. Aad also from pages 230 and 231 of the same, the following: There is nothing which troubles this controversy more than for want of distinguishing between value and virtue. Value is only the price of things, and that can never be certain, because it must be tUpre at all times and m all places of the same value; therefore noth- ing can have intrinsic value. But things have an intrinsic virtue in themselves, which in all places have the same virtue — the loadstone to attract iron, and the several qualities that belong to herbs and drugs, some purgative, some diuretical, etc. But these things, though they may have great virtue, may be of small value or no price, according to the place where they are plenty or scarce; as the red nettle, though it be of excellent virtue to stop bleeding, yet here it is a weed of no value from its plenty. And so are spices and drugs in their own native soil of no value but as common shrubs and weeds, but with us of great value, and yet in both places of the same excellent intrinsic virtue. Senator Jones, in addition to what I have already quoted from him, says of this " intrinsic- value " fallacy: Like the pillars which were believed to support the earth, this intrinsic value, whether 6t gold or silver, is purely imaginary. Notwithstanding the rejection of the theory by all well-informed ecomomists, it continues to be a refuge for ignorance and sciolism. In the whole history of time there has been no error in any department of thouhgt that, in the degree of contribution to the martyrtom of man, can compare with this notion of "intrinsic value." Fully refuted and rejected by science, the theory had well nigh disappeared from economic literature until the discovery was made that the hold which, Uke a blighting supersti- tion, it had obtained on the ignorance of men could be utilized to discredit silver and to plume the single gold standard. Immediately the teachings of science are set at naught, and "intrinsic value " is declared to be the deter" minative factor in the discussion. mo 80 I wholly deny the existence of intrinsic value, whether in gold or any other object. ■ Professor Jevons, in his work The Mechanism of Exchange, says: Value, like utility, is no intrinsic quality of a thing; it is an extrinsic acci dent or relation. The same author, in his work upon Political Economy, says: Value implies, in fact, a relation; but if so, it can not possibly be some other thing. A student of economy has no hoj)o of ever being clear and correct in his ideas of the science if he thinks of value as at all a thing or object, or even as anything which lies in a thing or object.— T/ie Tlieory of Political Economy, page 82. In his essay on "Value of Gold this same noted political econo- mist says: There is no such thing as intrinsic value. Senator Jones quotes John Stuart Mill, as follows: There can not, in short, be intrinsically a more insignificant thing in the economy of society than money. — Principles of Political Economy, Volume II, page 23. And then says: Professor Perry, while a most ardent champion of the gold standard, is com- pelled to admit the absurdity of the expression " intrinsic value," and to deny such value to gold as well as to everything else. In reviewing the statements of another writer on the subject of money, who had used that term, Professor Perry says: "This author is led astray by the worse than useless adjective 'intrinsic,' having never yet learned that there is only one kind of value in economics, namely, purchasing power." — Principles of Political Economy, page 341. Mr. MacLeod, in his elaborate treatise upon the Theory and Practice of Banking, speaking of the expression "intrinsic value," says : " Moreover, we see on considering the term value that it is nonsense to speak of the representative of value. Value is a ra^io— an external relation. What can be the representative of a ratio, or of an external relation? To say that money, becau.se it is material and the produce of labor, has intrinsic value, and that a bank note is only the representative of value, is just as absurd as to say that a wooden yard measure is intrinsic distance, and that the space of 36 inches between two points is representative distance It is of the first importance to economic science to exterminate this unhappy phrase 'intrinsic value,' which is clearly shown to be a contradiction in terms." — MacLeod, Theory and Practice of Banking, 1, 50. Ricardo (than whom no financial authority stands higher) lays down the principle that oven paper money, having not a shred of what the gold- standard advocates call "intrinsic value," will have real value equal to that of gold money, provided the number of the notes be sufficiently limited in quantity. Speaking of uncovered paper money, he says: "By limiting its quantity its value in exchange is as great as an equal de nomination of coin, or of bullion in that coin". — Political Economy and Taxor tion, chapter 27. After further discussion of the subject, he continues: " On these principles it will be seen that it is not necessary that paper 1770 SI money slioiiM be payable in specie to secure its value; it is only necessary that its quantity be regulated according to the value of the metal which is declared to be the standard." (Same work and chapter.) In other words, Ricardo's statement here is, that if the amount of irredeema- ble paper money in a country were jiist equal to the amount of gold which would form that country's distributive share of the gold money of the world, the paper money would have precisely the same value, dollar for dollar, as would an equal amount of gold in that country. All these writers and many others declare that the value of money— other things being equal— depends on its quantity and not on its material. It is therefore absurd to claim that silver has ceased to be adaptable for the money use because it is said to have lost some supposed attribute that neither silver nor gold nor anything else ever possessed, namely, intrinsic value. So, too, the value of the units or dollars of our current money is not intrinsic value, since value can not be intrinsic in anything but the value of a dollar, or the unit of any system of money is in its exchangeability, and measured by its purchasing or exchange- able power in commodities, and is constantly related to the quan- tity, whole number, volume, or aggregate supply of units or dollars in circulation. Its purchasing power or value may be great or small — great if the volume or supply of them is small, and of small value if the volume is great relatively to the quantity of exchange- able things — commodities — to be exchanged for them. Money or the units of money have no intrinsic value but relative value only. Money is not a natural thing nor the natural property or quality of anything, but is constituted or decreed by custom, convention, or law. All money is the creation of law. If it existed otherwise than by law it could not be demonetised by law. Those who talk about money existing otherwise than by force of law in any legalized and civilized nation are either knaves or they are ignorant of what constitutes money. While on this work of exposing the fallacy in the theory of the money power that gold and silver money is money because of in- trinsic value, on the testimony of Ricardo, as quoted by Senator Jones, and so ably commented upon by him, I wish to call atten- tion to the point that has such an important bearing on the ques- tion of paper money to be issued elastically by the banks if this bill shall pass. He points out clearly that uncovered paper money such as our bankers spit at with svich terms as "irredeemable trash," "money founded on nothing," etc., will have "value as great by limiting its quantity as an equal denomination of coin or of bullion in that coin." Eicardo does not stop with this statement. He says: On these principles it will be seen that it is not necesary that paper money should be payable in specie to secure its value. 1770 6 82 He is demolishing, it would seem, all the pet sophisms of "in- trinsic value money " and ' ' coin redemption money " of the Wall street advocates at once and emphasizing what I have tried here- tofore on this floor to point out to my fellow-members, that quan- tity of cun-ency in circulation regulates and controls the value of money without regard to the material of which the money is com- posed, and also that redemption of one kind of a legal-tender dol- lar in coin or any other kind of a dollar is not necessary to main- tain the value of money. Note how Ricardo goes on to say that '"it is only necessary that its (uncovered paper money) quantity be regulated according to the value of the metal which is de- clared to be the standard." It must be an annoyance to the advocates of bank issues and gold standard and intrinsic value money theories to find that fundamental principles, historic examples, and the best authorities are constantly furnishing evidence against them. GOVERNMENT PAPER MONET THE HIGHEST ACHIEVEMENT OF WISDOM. My position is that the regulation and control of the quantity of currency in circulation is of supreme importance, and that therefore it must not be turned over to banking corporations or any other private interests. The Government alone must retain and constantly exercise con- trol over the volume of all kinds of money permitted to circulate as money among the people so to maintain general prices and the equity of pajonent on all future obligations. Since the coinage, if unlimited, either for one or both metals, is slightly automatic as to quantity and may vary with the produc- tion, the export, the import, and the consumption of these metals in the arts, and therefore the quantity may vary, to the ruin of prices and bankruptcy of debtors v^athout some compensating balance, therefore I see in paper money the highest achievemeHt of wisdom; for by issuing it through the authority of Government, the aggregate volume of money in circulation can both be con- trolled and rendered adequate for the progressive march of indus- try and ciWlization. The remonetization of silver has its chiefest benefits in breaking the monopoly of the Anglo-American gold conspiracy by increas- ing to some degree the volume of money so as to relieve price de- pression and the ruin of debtors. We can thus double the volume of coin redemption money so as to better secure our redemption system of money from collapse so long as the Jewish trick and scheme of "coin redemption" shall be followed foolishly by man- kind. We thus render ourselves, by free coinage of silver, more independent of gold exports and appreciations during the mad , scramble of the nations in effort^s to maintain the gold standard, 1770 83 That it would cheapen money is possibly its first effect, and this would be curative or remedial, and would save the industrial world from further extortion and ruiu at the hands of the money power that for many years has been appreciating money and rendering it so dear that ruin has been greater among all western nations than could have been wrought by invasion either of armed forces or Asiatic cholera. A PROPER AMERICAN SYSTEM OP MONEY NECESSARY. As to the effect of our legislation regarding silver on the other nations, let me say that we should keep in mind the effect of money legislation on our own country. We must legislate for America, not Europe. Senator Jones of Nevada has well said: It is one of the inalienable rights of a free people to provide themselves with a sufficient and properly regulated money system, regardless of the systems prevailing in countries of less enlightenment, or in which the rights and in- terests of the people are subordinated to the cupidity of money lenders and privileged classes. But, to say a brief word on effect of free coinage of silver by our nation upon other nations, I will state that it will cheapen gold and raise silver all over the world, and that almost instantly. Relieving the undue strain that now exists on gold by injecting silver as fast as our mints could coin it into the metallic money of our country would at once show to Europe that we would no longer pursue a blind competition with them for gold. It would at once make a new valuation of gold in relation to silver and all other commodities throughout Europe, and even in China and In- dia. If silver displaced gold in our coinage so much as to permit the flow of a single hundred millions of gold to Europe it would so far enlarge their supply and raise prices all through the countries where we now have to sell on prices ruinously low. Silver, on the other hand, would rise to our mint price, $1.29 per ounce, in every market of Europe and the Orient. I quote the Senator from Nevada again— page 395, speech of October, 1893: I must here repeat that there is no ground whatever for supposing that in case of the remonetization of silver in this country all the silver of the world would be sent here. As quickly as the telegraph could convey the news that the United States had fully remonetized silver, that metal would command $1.39 an ounce in every market in the world. As I have said, there is no silver bullion in the markets of the world to exceed 25,000,000 ounces, if so much. Such silver as may exist in any market would not need to come to the United States, be- cause when men knew they could get $1.29 for it by sending it here they would not part with it for less. "We have a demonstration of this in the fact that when in 1800 there was some expectation that a free-coinage bill might become a law in this country, 1770 84 and silver rose in consequence to $1.20 an ounce, it rose to that price not in the AnuM-ican market alone, but in every market of the world that had any silver bullion for sale. When it is said that the hoards of silver in India would come here to be exchantjed for gold there is not the slightest foundation in reason for such a supiH>sition. Gold is not the money of the 280,000,000 people of India, and it is impossible to conceive that it ever can be. The romonetization of silver simply means that with silver freely admitted to the mints gold would fall in relation to silver. Yet let me say that silver coinage alone is not sufficient for the protection of our people. Metals are always subject, more or less, to go and come by export and import. Paper money must be also issued and added to give adequate volume and steailiness of value to our currency, and its highest utility will be found when issued by the Government to supple- ment the volume of specie and used to maintain adequacj' and uniformity of circulating volume. If metallic money becomes relatively scarce by export or otherwise, let the deficiency be sup- plied by Government issues to prevent contraction of the aggre- gate volume of coin and paper in cu-culation and to keep up an increase of money to accord with the increase of population and business. If by balances of trade or from other sources there should come too great an addition of coin tot)ur ciirrency so as to raise prices too high and do injustice to the creditor class of our people, then let the Government withdraw and cancel enough paper money or notes to keep the aggregate volume at a proper equilibrium. This would be wisdom in financial legislation. This would secure justice regarding debts. This would maintain prices and profits. This would insure prosperity. This would protect the people. But to secui-e these results we must recognize the right of the. Government to issue Treasury notes and to make them full money or legal tender. We must insist on the value of money always dependent on vol- ume, being regulated by Congress and Congress must represent the highest good of the people. Congress shall have power to coin money and regulate the value thereof. This is our constitutional power and duty, and we know that there is no way to regulate the value of money except by regulat- ing the quantity or volume. To give the power, " elasticity," of controlling the volume over to banking corporations is to betray our people. 1770 85 DO BANKING COKPORATIONS STAND HIGHER THAN SOVEREIGN GOVERN- MENT? From what sources have banks received a higher power or right of isstie than is held by the Government itself? It is in vain for the bank syndicate to cry out against Govern- ment issues of paper money on the theory that the Government has insufficient power to issue and legalize paper money while banks have power to do it or can obtain the power to do it by law. What arrogance for them to assume that the Government can by law bestow upon the banks a right to issue money while not itself possessing the right! What stupidity for them to teach that they are greater than the Government! What ignorance or deception for them to insist that paper money issued by the Government is any more fiat money than what they would issue by fiat of law supplemented by the fiat of the banks! We say again, there is no money in nature. Money is an artifice of man and the creation of law. Any money issued vdthout the authority or decree or fiat of the sovereign Government is counterfeit and fraudulent, and the is- suers of such money, whether of paper or coin, should be appre- hended, and, if found guilty, should be punished accordingly. In my speech on Money, Banks, and Debts of the World while the bill for the repeal of the tax on State-bank issues was pend- ing I endeavored to make this the legal basis of money clear But to what I then said I shall add additional authorities on this occasion so as to clear away all doubts on the matter. MONEY EXISTS BY LAW AND NOT BY NATURE. Henry Cernuschi was perhaps the ablest scholar that appeared before the monetary commission of our own country in 1877. He defines money and speaks of it as follows: I will give you my definition of money: Money is a value created by law to be a scale of valuation and a valid tender for payments. * * * * » * * Certainly everyone imderstands that, as regards paper money, the value is created by law; but it is, perhaps, not easy for everyone to admit that, with regard to metallic money also, the value is created by law. It is, how- ever, the fact. If you suppose that gold is not money, is not legal tender— if you suppose that silver is not money, is not legal tender— the value of gold -and the value of silver is lost. ******* This fact that money is a value created by law is one of great importance, and I can cite you the highest authorities in proof that what I say is true. When this question was put to the wdtness — Q. Supposing the gold and silver metals to have no other use than as money, would they then maintain the same value that they now maintain as money? 1770 86 He answered — A. There would be a dimimition of their purchasing power, because tha pnrchasinff power of money is in direct proportion to the volume of money existing- It all K"'ld and silver are used solely as money, all the ornaments and all the jewelry will be melted and coined, and the volume of money will be increased. It will be exat;tly as it a new mine of money had been opened. And the volume of circulating money being made larger than before, there will be a corresponding diminuti(jn in the purchasing power of every metallic dollar. Again he says: Mr. Chairman, the doctrine that money is a value created by law was pro- mulgated twenty-two centuries ago. It was advanced by Aristotle, the great phDosopher— is practical and so positive that I would dare call him an Amer- ican philosopher. I quote from his writings: "Money (nomisma in Greek) by itself is but a frivolity, a futility, a trifle, and has value only by law (nomos in Greek), and not by nature, so that a change of convention between those who use it is sufficient to deprive it of all its value and power to satisfy all our wants. (PoUtica.)" In virtue of a voluntary convention, money (nomisma) has become the me- di\im of exchange. We say "nomisma," because it is not so by nature, but by law "nomos," and because it is in our power to change it and to render it useless. (Ethica.) There is great weight attached to what that great economic writer Henry Dunning MacLeod may say, and rightfully so, when, he is not a special pleader, as in his recent article against silver. In his Principles of Economic Philosophy, volume 3, page 346, 1 find that, after approving some things John Law has said, he quotea this from Law: "Any goods that have the qualities necessary in money (by which he means the commodity value of the thing) maybe made money equal to their value." " In this sentence," Macleod goes on to say, as I have quoted him already while speaking on the nature of money, ' ' is concentrated the whole essence of that eternal delusion * * * which we desig- nate Lawism. It is indeed nothing but the stupendous fallacy that money represents commodities. No man who does not thoroughly understand the great fundamental principle established by Tur- got and others, that money does not represent commodities, can ever have sound ideas on this subject. Money does not rexn-esent commodities at all, but only debt or services due which have not yet received their eciuivalent in commodities." SOVEREIGN GOVERN.MENT.S, NOT BANKS, SHOULD ISSUE ALL MONEY. On the general proposition of permitting banking corporations to issue currency and expand and contract volume and the prices of all things that money measures or prices or values at their own option, I desire to support my general arguments against it by referring to some great names and authorities under the general heading 1770 87 SHOULD BANKS BE ALLOWED TO ISSUE CURRENCY? The money power are doing tlieir utmost to establish the claim by constant assertion, for they have no argument in the case that the Government should as they call it, "go out of the business of banking." In this they are begging the question by a misuse of terms, for issuance of circulating notes is no proper function or duty of banks any more than coining money is the duty of banks instead of the National Government. The legitimate business of banking is to deal in exchange, loans, and deposits. The Government should indeed keep out of this, but the legiti- mate and constitutional duty of the National Government under our Constitution is to coin and issue all money needed for circula- tion and regulate its value by the only method possible, which is to regulate and control its volume. Daniel Webster, who has been so greatly eulogized within the last few days in this House, on the occasion of unveiling his statue, said of paper-money circulation: Its regulation naturally belongs to the hands which hold the power over coinage. This is an admitted maxim by all writers. The plea of the advocates of bank issues instead of Government issues of paper money rests largely upon these points, which they say are essential in a sound currency and can be furnished by the banks — First. Security of final redemption. Second. Convertibility. Third. Elasticity. On this third point I have already shown that elasticity such as they mean, which disturbs the volume, disturbs prices and profits and these must not be under private control. The first two rest on the deliision that it is in money roatters safer to have representatives of money in circulation — credit sub- stitutes, as they call them — than to have legal-tender money itself in circulation. Of course the idea that substitutes for legal-tender money are better than the money itself is a snare and a delusion. The whole theory of compulsory coin redemption of money is wrong to those who will take the trouble to investigate. The old economists did not have the benefit of full light and liberty on a qiiestion of a properly discovered system of legal- tender paper money isstied and controlled by the Government, in- dependent of the coming or going of gold, nor did all the fathers of our own Republic prior to the issuance of the greenback prop- erly discern the idea that money is wholly a creature of law. But 1770 88 they bad no doubt as to the effect of volume on prices, and there- fore generally took ground against bank issuance. But General Warner, from whom I have already quoted, in his testimony and statements before the committee says, on page 245: Artiug upon this principle, the business of banking and the creation of money are so distinct and separate in their nature that they can not be safely blended. I siiy that all enlightened nations have abandoned the practice of turning over the issue and regulation of currency to an indefinite number of banks. It was stated yesterday before the committee that the three things neces- sary to a sound currency were, first, security; second, convertibility as a means of regulation, and third, elasticity. Now, I wish to refer to these three principles briefly in their order. First, security. One of the earliest Secre- taries of the Treasury, Crawford, I think, and I have not had time to look that up, sjiid that the security of final payment of notes was no such regula- tion of quantity as. would secure stability in the value of the currency. That saying was quite extensively quoted in the British discussions on that ques- tion as being a clear statement of a perfectly sound doctrine. Mr. Cobb of Alabama. Please state that over again. Mr. Wahnek. That the security of final payment of notes, or their re- demption, is no such regulation of the quantity of money as will insure sta- bility of value, and the reason for that is very apparent. The United States might now issue $.5(X),000,U00 of 5 per cent bonds, and if it would allow banks to take these bonds at par, is there any doubt but that the national banks would issue $500,000,000 of currency, or as much as they are allowed bylaw to issue? The ultimate payment of the notes would be amply secured— there would be no question about that, none whatever— but the quantity of the currency would be so increased that its value would become immediately de- preciated. At first the depreciation would extend not only to the paper part but to the coin as well, involving the entire currency of the country as compared with the currency of other countries; hence the principle of ultimate security was abandoned sixty years ago as a principle upon which the regulation of the currency could be safely founded. If security of note circulation is a safe pi-inciple, then security by a pledge of land ought to be as good as a pledge of bonds. John Law said : ' 'Any goods that have the qualities necessary in money maybe made money equal to their value." Mirabeau said of the French assignats: " They represent real property, the most secure of all possessions, the land on which we tread." The funda- mental error in this principle lies in the attempt to hold a thing as property and at the same time to coin it into money. At bottom the principle of basing the currency on bonds is just as vicious as basing it on land. There is no limit to the amount of bonds that may be issued any more than for the land that may be pledged, nor as much; but the principle itself is wrong for the reason that security of final payment affords no proper regulation of quantity upon which the value of each unit depends. Ricardo, in his evidence before the secret committee of the House of Com- mons in 1819, says: "Plans for an improved system of currency are frequently laid before the public which rest entirely iipon this fallacy. The exclusive object of these systems is to obtain for the paper currency to be issued under them a greater degree of security than that which is supposed to attach at present to the notes of the Bank of Entjiand. This end the authors of these schemes gener- ally propose to accomplish by contrivances which they deem to be extremely 1770 89 ingenious, but whicli always resolve themselves into the simple plan of making property of some kind or other the basis of the circulation. Sometimes the plan suggested proposes to issue a paper currency against the security of land, sometimes against the security of the public debt, and sometimes against mer- chandise in the docks; but, having provided for the security of the notes, the plan generally terminates at this point: the projector apparently conceiving that he has satisfied all the desiderata of a good paper currency, although he has introduced no specific measure for regulating the amount of that cur- rency and maintaining its value relatively to the currencies of the other coun- tries of the world." The second principle, as a means of regulation, is convertibility. In the bullion report of 1810 the doctrine seemed to be conceded that if a currency was convertible— although the report stoutly contended against the doctrine that ultimate security was a safe principle at all times— that then it never could fall below the value of metallic money, or of the metallic standard; and that doctrine was held and acted upon, almost without dissent. I believe, until 1826. But the experience in England, after resumption in 1819, up to 1826, was such as to lead to a very careful reexamination of that principle, and, although the directors of the Bank of England had prior to that time acted upon that principle and considered it perfectly safe, they were obliged, as Mr. Norman admitted, to abandon that principle. It was during this period, from 1819 to 1826 and on to 1844, that the question underwent siich a thorough discussion, when everything was thoroughly thrashed out. Every suggestion and every claim was ground to powder and all errors sifted out and the truth finally established, and one of the conclu- sions reached was that even convertibility could not be relied upon as a safe principle for the regulation of the amount of currency. There were those even before 1826 who had opposed the doctrine that either security or convertibility could alone be relied upon to properly regulate the currency. Mr. Horner, in the Bullion Report of 1810, says: "An increase in the quantity of the local currency of a particular country will raise prices in that country exactly in the same manner as an increase in the general supply of precious metals raises prices all over the world." Eicardo says (see High Price of Bullion) : '■It would be readily admitted that whilst there is any great portion of com circulation, every increase of bank notes, though it will for a short time lower the value of the whole currency, paper as well as gold, yet that such depression will not be permanent, because the redundant and cheap currency will lower the exchange and will occasion the exportation of a portion of the coin, which will cease as soon as the remainder of the currency shall have re- gained its value and restored the exchange to par." Webster said, in his speech on the subtreasury bill, March, 1838: "I contend even that convertibility, though itself indispensable, is not a certain and unfailing ground of reliance. There is a liability to excessive issues of paper, even while paper is convertible at will; of this there can be no doubt. Where, thjen, shall a regulator be found? What principle of pre- vention may we rely upon?" J. R. McCullough says: " When the currency of any particular country, as of England, consists partly of tne precious metals and partly of paper converted into them * * * the excess of paper is not indicated by depreciation or fall in the value of paper, as compared with gold, but by a depreciation of value in the whole currency, gold as well as paper, as compared with other States." Lord Overstone said, in his testimony before the commission of 1875, page 408: 1770 00 " Convertilile notes may he issued, contiiuially depreciating the currency, until the metallic portion of the currency has been entirely banished from the country." On the following page he says: "The changes in the amount and value of the paper currency of the United States have been greater than in any other country, and it has produced an unprecedented amount of bankruptcy and ruin." And again, page 41, he says: "It is undoubtedly true that convertibility is an ultimate security against a permanent excess of the currency, and fixes a limit beyond which*such ir- regularity in its management can not be carried. But this principle only comes into operation through the medium of prices. If the currency be in excess, prices of all articles are affected in a corresponding degree; hence the balance of trade is disturbed, the exchanges are consequently affected, and a tendency is produced to export gold. * * * Convertibility will not by itself prove a.suflScient protection against excess in a paper currency." And in his pamphlet on the management of the circulation previous to 1839, he says: " It is not sufficient merely to ordain, as Peel's bill did. the convertibility of the notes: it is further necessary to see that effectual means are provided for that end. It is now discovered that there is a liability to excessive issues of paper, even while that paper is convertible at vcill." The next principle is that of elasticity. They say we must have an elastic currency. The Secretary of the Treasury says: "A sound and elastic currency, capable of adjusting its volume easily and rapidly to the actual demands of legitimate business, is what the common interest of all our people rerjiiires." I say to the Secretary of the Treasury that perpetual motion is a great deal easier to obtain than that kind of elasticity. It never did exist in the world ana it never can. There is absolutely no such relation between the supply of paper money and the uses for money as admit of aiitomatic regulation, and for a single reason. If paper money was issued only to meet the demands of business ai'ising out of an increased number of transactions— that, is increased purchases and sales of goods— then such a principle might be possible; but the fact is the effect of an excessive currency is immediately to raise prices, and as prices rise the demand for money increases pari passu with the rise of prices, and when prices are doubled the demand for $2 in every transaction is just as great as the demand for $1 was before. Mr. Hall. Does that principle apply to bank ciirrency? Mr. Warner. Certainly, to bank currency as well as to any other, as I will show you a little further on; it applies to any currency that is issued in excess, I care not what kind of currency it is. It would apply to the precious metals if there was. at any time, such a production of the precious metals as would gi-eatly increase the proportion of metallic money to commodities to be bought and sold or to be circulated by money, then the rise of prices that would follow would create an enlarged demand for money. Rising prices never take up and give back. They take up and hold. The experience of the whole world is against the idea that business takes up money and gives it back automatically. Our experience under the old bank-note system is enough to set that at rest. One single fact is enough. Between 1830 and 1837 the notes of the banks of this country increased from ?61. 000,010 to «:149.fXi0,0fHJ, and then they went down until, in 1843 there were only ^'iU)(K).()0() of them. That was the way an elastic currency worked then, and it is the way it always worked. It is the way it worked in England when they had much more rigid restrictions than ■we ever had in this country. 1770 91 An elastic currency! It is a delusion. By wnat principle are banks gov- erned, or will they be governed, if we tiirn over to tliem the issue and regula- tion of the currency? I ask that qixestion. Banks are institutions organized for private gains. They are controlled by one principle alone— their own ia- terest. If they can derive a profit by putting out more currency, they will put it out. There is no limit to the quantity of money they would put out or that the country would take. On this question of elasticity let me read from the Bullion Report. Mr. Hall. What bullion report? Mr. "Warner. Of 1810, the Horner report, the famous bullion report. As far back as the Bullion Report of 1810, Mr. Whitmore, then late governor of the Bank of England, stated the rule of the bank then to be " to govern its issues by the amounts of good paper offered for discount, on the principle that the public will never call for more than is absolutely necessary for their wants." This is what the Secretary of the Treasury seems now to think a safe principle— that is, business will not call for any more money than it wants, and banks will not put out any more than business calls for. But, re- ferring to this principle, the Bullion Report says: " That this doctrine is a very fallacious one, your committee can not enter- tain a doubt. The fallacy upon which it is founded lies in not distinguishing between an advance of capital to merchants and an additional supply of cur- rency to the general mass of circulating medium." (Bullion Report, page 55.) Lord Overstone. in his testimony before the commission of 1857, says, page 364, " the public will call for and take money to any extent " — there is no fear of that; and again, on page 365: "I have no hesitation in saying that the Bank of England can put out any quantity of its notes that it thinks proper; that the effects of that will be to drive gold out of the country; that the notes will take the place of gold in the circulation, and that will go on until the whole of the gold has been driven out of the country." Sir Charles Wood said, discussing the act of 1844: "It was held in the bank parlor, as it is by many even now. that to issue paper on good commercial security was all that was necessary to insure the proper amount of paper being in circulation." That idea, however, long ago was abandoned in England, but it seems still to hold a place in this country. Mr. Warner. As Mr. Weguelin said, the wealth of the world is offered against money. A distinction must be drawn between borrowing money and buying money. Money on the one hand stands offered against everything, and everything on the other hand stands offered against money. Money will go out and continue to go out as prices rise, and as prices rise and confidence increases the demand for money increases, and there is no principle of elas- ticity which operates until the point of explosion is reached. This is reached when gold begins to go oiit, or somiich of it goes that confidence is destroyed; then paiiic follows and there must be a contraction all along the line. It is a contraction, however, after the explosion, and that is the way such a cur- rency is regulated and always has been. The experience of every country, I think, has been the same; that is, first an expansion, then a sudden, violent, and ruinous contraction. That is the necessary consequence of a currency the issue of which is left to the discre- tion of those issuing it or to their interest. It was shown in report of 1857 of the commission that even the 205 country banks of England could not be in- trusted with the responsibility of issuing circulating notes. Sir Robert Peel said on that point : "It appears to me that we have, from reasoning, from experience, from the 1770 92 admissions made by the issuers of paper money, .abundant ground for the conclusion that under a system of unlimited competition, although it be con- trolled by convertibility into coin, there is not an adequate security against the excessive issue of promissory notes." Now, take the 10,000 banks in the United States, and delegate the power to all of them to issue notes, and entrust to them the duty of regulating the cur- rency of the country. What will be the result? When will they begin con- tracting? Not until the issue of money ceases to be profitable to themselves. The drain of gold will fall first, of course, upon the banks of the seaboard, the great cities. They may check their issues, but the country banks will pay no attention to that. Inflation will go on long after the gold begins to leave the country. Why, the idea of maintaining a gold standard under a system of currency of that kind is so at variance not only with the experience of every nation in the world but of reason, that I am astonished that such a proposition as this should be brought forward at all. Compare this with the restriction system of England, Germany, and other European countries. What other country would even for a moment enter- tain a proposition to turn over the issue and regrulation of currency to 10,000 banks? Indeed, it is a proposition too monstrous for anybody to consider and maintain mental equanimity. If the author of this scheme had ever read the discussion on the subject of the regulation of currency which took place from 1810 to 18.57 in England, or if he had ever read the Report of the Parliamentary Commission of 1857 he would never have connected his name with a scheme that can be compared with no other ever proposed, except that once under- taken by John Law. Any proBOsition that turns over the regulation of currency to institutions organized for private gain is at bottom wrong. Unless it is to their interest to furnish the business world with money they wiU not do it, and the busi- ness world must suffer the consequences. There is the fatal defect in this proposition, and which in my judgment is enough to condemn it utterly. Mr. Chairman, I will not take up the time of the committee any longer, but will simply say I am very much obliged to you, and that I would like to add to my statement a few quotations which I have not had time to read. Mr. Cobb of Alabama. Can you give us something as a substitute? You have been tearing down, but you are not building up anything. Mr. Wahner. I would do this. I would do exactly as is recommended in the report of 18.57. There is but one way by which the currency can be automat-, ically regulated. The world has never found but one, and that is through the production of the metals. Subject the supply of money to the same laws that govern the supply of everything else. Then if the production of metal- lic money should be undulyjincreased, it would, of course, become depreciated, as would be made manifest by rise in prices; but the point would very soon be reached where it would be easier to obtain a doUar, or where a dollar could be obtained with less laV>or and energy by producing something else to ex- change for it than digging it from the ground; then the production of the metals would in that way be checked. I say that is the only automatic way the world has ever devised or ever known for regulating money. In addition to that, all money that supplements the metals should be rigidly limited to some proportion between population and business, the one pur- pose being to maintain stability— the greatest possible stability. Again, another objection to the kind of currency proposed in this bill is that it is not a legal tender. All money ought to be a legal tender. If it pretends to be money, it should be money when you pay it out as well as when it is paid to you. Nothing should be allowed to circulate as money that is not money. I wish to acknowledge the clearne.ss and great value found in 1770 93 the statement of General Warner as against banks of issue, but I desire to say that I do not agree with him that the automatic theory of regulation of volume founded on the mining product of gold and silver is either a safe regulation at all times or a basis of suflBcient supply, and there is no assurance as to the quantity of the future supply or adequacy for the i)resent needs of civilization. In the last sentences I have quoted from him he himself practi- cally gives up the automatic theory of metallic limitation when he says that — all money that supplements the metals should be rigidly limited to some proportion between population and business, the one purpose being to main- tain stability. This is correct and defensible as a basis of limitation. THE "scare word" OF "FIAT MONEY." From what source have banks ever, in this country, derived the privilege of issuing notes to circulate as currency? Always and only by the grant or law of the colony, State, or nation in which such banks exist. Will anyone, then, state on this floor that foolish and indefen- sible doctrine that a government can grant a power to banking corporations that it can not maintain and exercise itself? To state the question plainly is to expose the fallacy of our op- ponents; for Congress cannot authorize any corporation or agent to do what it can not properly and constitutionally do for itself. It is now generally seen and conceded, and no member on this floor will deny, that money can not be coined or issued or other- wise sufficiently certified for general circulation without the au- thority of law, and the right and force of money as such, what- ever it may be, are legal rights — not natural. In short, money is the creature of law. All genuine money, whether coin or paper, is in this sense fiat money. The term " fiat money " is another scare word or " bogy man " with which the cunning bank syndicate would scare people out of the right to exercise their own authority to issue legal-tender notes. Bank notes can not and do not circulate in this country except by the fiat of law. They are the joint creation or fiat of the banks and the Government. BANKS VERSUS GREENBACKS. In my speech before this House on money, banks, and debts of the world, when the question of repeal of the tax on State-bank circulation was before Congress, I gave a strong list of noted au- thorities to establish the quantitive theory of money value — I need not repeat the quotations here— but a few words on the applica- 1770 94 tion of this elemental and universally accepted monetary truth to the (luestion now before us. All the propositions coming from this Committee on Banking and Currency and all advocated by those anxious to befriend the money and bank power in this country, as far as I know, and especially the Carlisle plan, and the Baltimore plan, provide for banks to have control over the issuance of notes to circulate as money and thus to control the volume of money in circulation. To give this power to the banks is to turn over to them the power over prices and the prosperity of the people. Why should Congress abdicate its rights and turn away from its responsibilities to protect the people from the ruinous aggressions of the money power? Has Shylock in these modern days become a saint, that he should receive greater power and service than ever before? Have gentlemen on this floor lost view of the great injustice and irreparable damage they do to the people who sent them here when they propose to turn over to the banks the control of all prices, profits, and through these ultimately all property and wealth of our unsuspecting population? Surely no Congressman can be ignorant at this stage of the dis- cussion that all of these propositions look to the denial to the G-ov- emment of the right to provide and maintain in circulation an adequate supply of money "and regulate the value thereof." Shall we sun-ender the constitutional duty and power of Congress to banking corporations by vote of the Democracy? In the corrupted currents of this world Offense's gilded hand may shove by justice; And oft 'tis seen the wicked prize itself Buys out the law. But Congress must see to it that Shakespeare's cutting analysis of the corruptions of the coiuts have no fitting application in an American Congress. I can not imagine a more dangerous surrender of power than this would be that could ever come in times of peace to the Con- gress of the United States — When all the blandishments of life are gone, The coward sneaks to death, the brave Uve on. Mr. Chairman, I could never believe that the freely chosen rep- resentatives of 70,000,000 Americans could be induced to so far betray their people, if I had not on a former occasion witnessed the confusion and cowardice of so many Representatives who yielded to the threats and clamors and blandisliments of the gold and bond conspiracy when the people stood for, and still ask for, the restoration of silver as a standard money. 1770 95 THE PARITY B'RAUD AND THE GREENBACK. The so-called Sherman silver-purchase bill, enacted as a com- promise measure in the act of July 14. 1890, between the free- silver and gold-standard opponents, had in it a more vicious, far more vicious, measure than simply the purchase of four and one- half million ounces of silver bullion per month. I refer to that clause and provision of the law, which is the cunning statement of a doctrine or the catch phrase of a cam- paign speech rather than the enactment of a law, declaring it to be— The established policy of the United States to maintain the two metals (gold and silver) on a parity with each other upon the present legal ratio (16 to 1) or such ratio as may be provided by law. The free-silver men were permitted to believe that this admitted the doctrine that silver should henceforth have equal right before the governmental authorities with gold at the standard ratio of 16 to 1 until some other ratio should be established by law; but Senator John Sherman, who was as deep in this scheme to sub- ordinate silver to the gold standard in 1890, and is still in 1895, as he was in the demonetization scheme of 1873, seemed to have known just what interpretation the Harrison Administration would put upon that phrase, and so keeping " the two metals at a parity with each other upon the present legal ratio " has from that time to this been construed to require not an equality or parity between them on the 16-to-l ratio, but a constant and de- termined subordination of one of the metals — silver — to the other — gold — on the theory that all other money, silver as well as paper, must be redeemable on demand instantly in gold; as if gold alone was the only money of ultimate redemption. Surely the eminent services that the eminent demonetizer has rendered the European gold mongers ought to entitle his portrait to a place in the innermost temples of the gold worshippers of Europe. Surely the shylock, chuckling over the successful game and trick of gold redemption of all other money which they are play- ing upon the leading nations of the commercial world, while they play the elasticity scheme of contracting and clutching the gold always when most needed by the debtor world, can find abundant reasons for lauding the financial qualities of their greatest advo- cates in America. Parity! As played upon our people it is worse than the plague of fiery serpents upon ancient Israel in the wilderness. And the lifting up of silver before the people, coined without limit, into good, bright, and honest dollars will have as great an effect in- stantaneously and psychologically to cure the gold plague of our 1770 96 day as dul the lifting up of the brazen serpent to cure the plague of the ancient times. But I have already sufficiently discussed the question of mis- construing the word parity. Does anyone believe, after a careful and fair-minded investiga- tion of that " parity" clause, tliat the two metals — not coins, but metals —gold and silver, are kept at a parity or on an equality on the old ratio by such a subordination and noncoinage of silver? Does such conduct tend to keep iip the price or value of silver? Does it not, on the other hand, cast silver down and greatly depre- ciate its use and value and destroy the very parity that they pro- fess they desire to uphold? And to-day listen to the ominous sounds that come up to these halls from the tamed and untamed beasts (the bulls and bears) of Wall street declaring that the public credit is endangered; that the gold in the Treasury is about to be carried away and the Gov- ernment to be left without gold resources with which to keep up the redemption of United States notes and Treasury notes— aye, that even European money speculators are afraid we will, by this drainage of gold, be driven upon a silver basis. Is there any member of this House wlio needs to be told that the policy and decision of our Treasury officials to keep silver in subordination to gold are the very means that subject our Treasury to a constant drainage of its gold reserves? Does not every member who is in any degree competent to legis- late on this question know that if our Treasury officials would at once exercise, as our present laws allow, the option that European governmental officials, notably in France, constantly exercise of paying all coin obligations in silver coin, and to such extent as best agrees with the needs and supplies of the Treasury, that this would at once protect the gold reserve and stop all runs upon our Treas- ury to obtain gold? THE PURPOSE OF THE MONEY POWER REGARDING TREASURY GOLD. What, then, is the meaning of this clamor from Wall street and the bond markets? It means that they wish to keep up the very condition of a gold redemption of gi'eenbacks or some other form of money easily accessible to them, that permits the drainage of gold, at their option, from the Treasury. But at the same time by trying to alarm the country generally they hope to secure financial legisla- tion that secures to them these two points: First. To get United States bonds issued in quantities sufficient to provide them investments for idle monej', money that declines to take any part in the risks and contingencies of oiir industries and property, which suffer in falling prices necessarily while the 1770 97 country is being driven upon the narrow and contracted gold standard. And these bonds, they insist, must be exempt from taxation, with interest semiannually or quarterly and payable in gold. Second. To get the noninterest-bearing legal-tender notes of the Government, so highly valuable to the people, retired, canceled, or locked up out of circtilation, so as to provide more room for them to issue and loan their bank notes to the people, and so also to better control the volume of money in circtilation for expansion or contraction at their option, thus making it elastic for them, and as their interests and profits may require. Never yet have they proposed a currency elastic for the relief of any other clasa than themselves. GREENBACKS NOT THE CAUSE OP FINANCIAL, STRINGENCY. I challenge any member on this floor or any man elsewhere to find any instance among intelligent business men and laborers anywhere in the country where they have ever shown lack of con- fidence in the monetary qualities and debt-paying power of the greenbacks. The people everywhere know they are as reliable as the founda- tions of the Government itself. They are the best money ever coined and issued to the people. Then away with this sham cry against the legal-tender Govern- ment money. It is because Government money is the best money that the bank syndicate clamors so boisterously for its retirement. They want the best and full legal-tender money out of the way, so that from sheer necessity the people will have to use their in- ferior bobtail nonlegal-tender bank issues. They are trying to play the old fox game on the Government and people to persuade them that it is far better for them to cut off theii' own legal-tender currency. REMEMBER ^SOP'S FABLE. By his own avariciousness an old fox had lost his tail in a trap and feared he would, owing to this shortage, become the laughing stock of all the other foxes in the country. So he resolved to try to induce them to have their tails cut off also. At the next assembly of the foxes he made a speech on the unprofitableness of tails in general, on the greater advantages of promissory substitutes for tails, and the inconvenience of foxes' tails in particular, since they so greatly exhausted the resources of the central body while in circulation, and were often switched around so as to disturb the gold reserves. 1770 — 7 98 WHY DESTROY THE GREENBACK CURRENCYt Again we ask, Why this sudden and impulsive haste to get rid of United States legal-tender notes? Whence arises the banker's animosity to them. Have the common people, manufacturers or merchants, ever demanded their retirement? Have they ever failed to pay debts or to circulate at par for debt-paying purposes and exchange for commodities? Has anyone ever questioned their reliability to perform all the functions of money given to them by law? But we need not go far to find the reasons why the associated banks are against them. First. They are better money than any the banks can issue in competition ^vith them. Second. They supply near $500,000,000 of money for circulation ($346,000,000 greenbacks and $153,000,000 of Treasury notes) to the people without interest cost, and the bankers can make no profit on their issue. Third. Their volume is beyond the option and power of the" banks to contract and expand at their pleasure. So to that ex- tent illustrate a currency which, if issued in proper volume, would destroy the power of the banks to manipulate prices, profits, and progress of industry. They rest on the law and credit of the Government without the mediation of a priesthood of Jewish bankers. They are pure and perfect money to the extent of their volume and legal-tender qualities. They are the noninterest-bearing form of national debt, and if issued in proper volume would destroy the burdens of bonded debt. Mr. St. John, before the Committee on Banking and Currency, well said "that the underlying demand of the gentlemen who have been here to testify in behalf of any of these bills is that the green- backs shall be retired. That is basal in their demands. Profit to the issuing banks is the fii'st requisite of any creation of bank notes." It may not be improper here to suggest that every one of these r easons why the bank-issuing fraternity dislike the greenback currency is also a strong reason why the people of our country should hold to them and resist the selfish demands of the . banks regarding them. Why should banks decry the credit of the little noninterest-bear- ing bonds in shape of greenbacks, which the people need even in greater volume in circulation, resting, as they do, on the law and decree of the Government, while at the same time they have used larger and interest-bearing bonds, resting on the same law and fiat 1770 99 of the Government, as an all-sufficient basis of security for their own national-bank issues? Why do they still decry greenback form of money, while they still use it with universal approval among themselves as bank re- serves and perfect redemption of their own note issues? That want of parity does not interfere with international trade, and that paper legal-tender money will stay at home better than metallic money, and yet be no interference to our foreign trade, while maintaining prices at home, I quote again Senator Jones, and through him Professor Cairnes and John Stuart Mill: With a national money— a money ■which would not be sent out of the coun- try—there would be no great rise or fall of prices, and no great changes in the volume of money. All the money would remain in the country, for the use of our own people, and all differences in exchange would then be settled (as they should be settled) by commodities. It would then be as profitable to meet balances of trade with commodities as with money, because our money would in foreign countries be mere mer- chandise, which, I assert, is as it should be. The money supply of our coun- try should not be continually oscillating between a feast and a famine, alter- nately raising hopes and dashing them to the ground. WANT OF PARITY NO OBSTACLE TO FOREIGN TRADE. The absence of a parity between the moneys of nations does not affect their foreign trade, as some would have us believe. I challenge any gold-standard Senator to point to an authority of repute on political economy who any- where pretends to assert that any nation having money other than gold is , or can be, injuriously affected in its business or other relations by any vari- ance in what is called the parity of moneys. The money of this country, whether gold, silver, or paper, will always command— will always purchase— npon equitable terms, the money of any other country with which we have commercial relations, whether those relations be directly with itself or through other countries. One of the most eminent of economists. Prof. J. E. Cairnes, of the Univer- sity College, London, though an eminent advocate of the gold standard, in his Leading Principles of Political Economy, says: "It appears to me that the influence attributed by many able writers in the United States to the depreciation of the paper currency, as regards its effects on the foreign trade of the country, is, in a great degree, purely imaginary. An advance in the scale of prices, measured in gold, in a country, if not shared by other countries, will at once affect its foreign trade, griving an im- pulse to importations, and checking the exportations of all commodities other than gold. "A similar effect is very generally attributed by American writers to the action on prices of the greenback inconvertible currency. But it may be easily shown that this is a complete illusion. Foreigners do not send their products to the United States to take greenbacks in exchange. The return which they look for is either gold or the commodities of the country; and if these have risen in price in proportion as the paper money has been depre- ciated, how should the advance in prices constitute an inducement for them to send their goods thither? The nominal gain in greenbacks on the im- portation is exactly balanced by the nominal loss when those greenbacks come to be converted into gold or commodities. The gain may, in particu- lar cases, exceed the loss, but, if it does, the loss will also, in other cases, 1770 100 exceed tho gain. On the whole, and on an average, they can not but be the equivalents of each other." I find this point touched npon also by an American writer whom I regard as one of the ablest contributors to the literature of political economy to be found in this or any other country. I allude to Mr. John P. Young, the managing editor of the San Francisco Chronicle. In a luminous article on bimet4illism, in the issue of that journal for August 3 last, Mr. Young says: "But the suggestion that this country might have a sole silver currency is the bogie that frightens many who know little or nothing of the subject. ' To have a sole silver currency ' in their eyes means unparalleled disaster. Such people completely ignore the fact that during the period that we had a sole gold currency no one thought that the country was threatened with ruin be- cause the dearer silver was not coined. Such as gave the subject a thought at all and had any real knowledge of the difficulty desired that the mistake of undervaluing silver might be corrected, but they would have judged a man a fit candidate for the lunatic asylum had he asserted that disaster would cer- tainly follow the free coinage of gold because it was cheaper than silver. * * * If a nation has resources and a people capable of developing them it will increase its wealth, no matter what sort of money it employs to circulate values, provided the standard of values is not tampered with. "Between 1860 and 18S0 the precious metals, silver and gold, were not used to circulate values in the United States. Our only currency was the green- back—except in California. There was no demand for gold except that ar- tificially created by promising to pay the interest on bonds in money of that metal, yet during the period in question, in spite of a devastating war, dur- ing which production was interrupted and vast quantities of property de- stroyed, the wealth of the United States increased from $16,160,000,000 to $4;3,t>t"3,(X)0,(XK), or nearly threefold in twenty years. If the theory of those who make a fetich of gold were sound this could never have happaned. Nor while we were increasing our wealth at home did our foreign trade suffer. That went on precisely as described by John Stuart Mill in his chapter ' On the Foreign Exchanges.' After supplying an illustration, Mill remarked: " ' It thus appears that a depreciation of the currency does not affect the foreign trade of the country. This is carried on precisely as if the currency maintained its value. * * * if the currency is depreciated 10, 15, or 30 per cent, then in whatever way the real exchange arising from the variation of international debts and credits may differ the quoted exchange will always vary 10, 1.5, or 30 per cent from it. However high this nominal premium may be, it has no tendency to send gold out of the country for the purpo.se of drawing a bill against it and profiting by the premium, because the gold so sent must be procured, not from the banks at par, as in the case of a con- vertible currency, but in the market at an advance of price equal to the pre- mium.' " A currency issued by the Government, in adequate volume and made full legal tender, circulating among a people, is the best pos- sible form in which a people can fund its debt, for these three principal reasons: First. It is an absolutely inexpensive form in vphich the people of a nation can carry their nation's indebtedness. Second. It provides a more convenient form of currency than coin and independent of the international scramble for accumu- lations of precious metals. 1770 101 Third. It provides a perfect safeguard, when issued in adequate volume, against contraction and expansion of volume in the inter- est of money dealers and protects prices of all other property and preserves the equities of time contracts. WHY THEN COIN METALS INTO MONEY? Then would you have the precious metals coined at all? asks an opponent. Yes; not that a Government paper currency can not, when wisely provided and its volume wisely regulated, prove the best currency independent of coins that a nation may have when competent to reach the highest ideals in practical realization, but because the traditional or race thought of our people demands an adherence to the coinage of metals, I would have the Government freely coin into dollars for all who desire it all the bullion that they choose to bring to the mints. And again, as long as the banking forces can keep up the con- viction among the people that money made of paper mtist rest on the basis of instant and compulsory redemption at the demand of the holder in coin, instead of resting on the decree of law and re- ceivability of the issuing government, which principles keep up the monetary value of coins themselves, so long must we have the broadest possible basis of coin to furnish a sufficient and available supply of coin to support said redemption. This requires a bimetallic basis, for all competent authorities are settling down to the conviction that gold alone can not furnish an adequate supply of coin for a sure maintenance of coin redemption. But, Mr. Chairman, why give away the interests of the public, the interests of all classes — the laboring, developing, and progressive classes — the truly American interests in a laboring and debtor nation, on this banking and currency question? Why divert the bankers by temptations so strong to depart from the true, safe, and legitimate business of handling loans, discounts, deposits, and exchange which at all times and in every country is understood to be the proper sphere of true banking, and induce them to go into the business of issuing currency notes to supply the money that the Government itself should supi)ly for the cure of the money famine now existing? A THREE-CARD-MONTE GAME. Why by law authorize bankers, in a sort of three-card-monte game with the public, to take up $100 for every $30 (30 per cent) that they put down, and to have the free use of the $100 taken up for an indefinite length of time — to such time as they choose to lay it down again and take up the $30? Why allow this extraordinary privilege to the present bankers, with their thousand-million-dollars capital, and aU other bankers 1770 102 who choose to bring other millions of capital into the bankers' side of tlie game? Have such privileges been offered to any other class of our citizens? Coupling these privileges with the provisions looking to the re- tirement and destruction of the Government legal-tender notes so that the money issuers will have complete control of the circulat- ing medium of the people, is there anything in sight left for the industrial interests of the country? Is there anything to keep the money dealers from manipulating prices in their own interests and taking ultimate possession of as much property as they may desire? Since they will have complete control of volume, who can pre- vent their control of price, for the most fundamental truth in monetary science is that the volume in circulation will and does control the price of all other forms of property? Remember, too, that prices control profits and profits control the emplojanent of labor and the prosperity and welfare of the people. OUR ATTACK IS ON BAD MEASURES, NOT MEN. Let no man on this floor jump too hastily to a false conclusion or assertion concerning my views or relations to the business of banking, nor let any man assert that I have any animosity toward bankers. I have no such views or feelings. I do not so much condemn the bankers who are urging legislation in their special interests as I condemn you who, on this floor by the confidence of your people and the sacred duty upon you of protecting their in- terests, seek by vote and speech to turn your people over to the control of the money power. NEEDLESS FEAR OF FREE COINAGE OF SILVER. There is a sort of terrorism on this silver question in New York City and a strong effort to suppress facts as bearing on the bene- fits of free coinage. I will quote what Mr. St. John, president of the New York Mercantile National Bank, said before our Cur- rency Committee: Public oinnion is under a newspaper terrorism in New York. Men who agree with me fully, and I know many of them of considerable wealth, prefer to keep silent for the present. Any nobody who will write at lengtti a lot of nothingness adverse to silver money will be accorded certain newspaper's space and be dignified into great authorities. Rejoinder, if complete, and the more complete the more certainly is denied even a limited space. Again, other men believe that until a change of administration here approaclies it will merely cost them influence to speak their conclusions favorable to silver money. Then, too, certain newspapers shield their readers against intelli- gence and cow them out of any timid convictions they might indulge. As an instance. Mr. Horace White's Evening Post a few weeks ago quoted at length from the London Economist one Rawlinson's criticism of Manchester's complaint of England's gold monometallism as relating Manchester to India. 1770 ( 103 The complete rejoinder two weeks later in the Economist, a compilation of facts that refuted Rawlinson totally, has never even been mentioned by the Evening Post. But conditions current here and elsewhere are forcing the truth upon gen- eral attention, and a rebellion against this tyranny and concealment of facts will manifest itself ere long in New York as elsewhere. I have no doubt that a very great number of persons honestly fear that free coinage of silver at this time would have disas- trous results — and so they would thus sacrifice the sure relief and gi'eat benefits it would bring to us. They fear that we would at once be thrown upon what they would call a silver basis, or, in other words, that gold would go to a premium over silver and our other ordinary forms of cur- rency. Let me observe to quiet needless fears on these points — First. That for export purposes there would be no more demand for gold than now exists, so we would lose nothing in that regard. Second. That there would be no inducement for hoarding gold for the reason that its monetary use in coins is its principal use, and it could pay no more debts legally than the same amount of silver dollars could pay. Third. That if Europe became afraid to sell us goods and take their pay — as some imagine — in silver, the result would be that they would have to pay for our products— of which they must con- tinue to consume large amounts — in money instead of goods, and that would bring gold into the country instead of taking it out. Fourth. They have no stock of silver, outside of their own silver coins, that they could use to pay us or to " dump " upon us, as some express it; and besides this condition existing their own coinage of silver is on a basis of 15^ to 1 of gold, so they would lose one-half ounce of silver out of every 16 ounces sent us, as our ratio is 16 to 1. So silver will not come. Fifth. There would as a first impulse probably be a tendency to send their holdings of United States bonds in Europe back to this country. The result of that would be that interest payments thereon would stay in this country instead of being as now a con- stant drain upon us and a present means of withdrawing gold from us at their option. These returning securities would require a portion of our gold supply unless in their need of our wheat, cot- ton, and other staples they preferred to leave the gold with us and take our staple products which at any rate they must have. Sixth. The mint price of silver lander free coinage becomes $1 .'29 per fine ounce instead of a present market price of 65 cents })er ounce. With our use for all of it at home Europe would still have to get supplies of silver for their Asiatic trade and would have to give also $1.29 per ounce for it, as I have already shown. 1770 104 Seventh. But lesseuing the demand on gold by bringing silver into fuller use for money would tend to cheapen gold throughout the world as well as here. So, as silver went up to mint price, gold would tend to come down or be less valuable than before. Eighth. The more thoroughly silver under free coinage would stay at home, as some hold, and accumulate in our circulation and vaults the further we would be removed from panic and fail- ure on account of coin redemption of all coin obligations. The history of gold movements under the adoption of the Bland- Allison silver law of 1878 will verify these claims. (See testimony of St. John on this. ) DOES SILVER COINAGE INCREASE EXPORT OF GOLD? In addition to e\'idence already quoted let us add that from the exceUent tables prepared by Maurice L. Muhleman, cashier of the United States subtreasury at New York, we find the following facts, showing that the increase of our stock and coinage of silver, instead of driving gold out of the country, as the goldites then prophesied and still do. the effect is exactly the opposite. The figures are given by the author in round numbers the more readily to indicate the general fact. Our entire stock of gold in this countrj' at the end of fiscal year 1877 was $145,000,000. Restoring silver to coinage under the Bland- Allison act of February 28, 1878, was followed by ac- quisition and coinage of $16,000,000 of silver the first year. In- stead of loss in the stock of gold there was an actual gain of $68,000,000 in gold. The prophecy of the goldites was wrong and that of the friends of silver was right. During the next year there was a gain in silver of $25,000,000. Did it drive out gold? On the contrary, there was again of $33,000,000 in gold. And going on increasing our stock of silver the following year $28,- 000,000, there was also an increase of $10(5,000,000 in gold, and while our stock and coinage of silver kept on upward there was another addition to our stock of gold of $120,000,000 the next year. The same tendency for gold and silver stock to accumulate to- gether in a country is noticeable in the total general results. While our stock of silver has increased to a total of $538,000,000 at end of fiscal year in 1893, our stock of gold also was $592,000,000. SILVER LESSONS FROM OTHER NATIONS. The most recent available statistics showing money systems and aggregate stocks of the various countries of the world, on page 130 of the Coinage Laws and Statistics, prepared by the present Senate Finance Committee, show the following: The two countries having 1770 105 the greatest stock of silver in the world, except India, are France and the United States, and these two countries instead of losing their gold have accumiilated and hold the greatest stocks of gold also. Enlarging the use and coinage of silver then does not drive out gold but seems to have in a general way the exact opposite effect. The philosophy of this is that whatever conditions of finance and trade enables a country to best utilize its productive energies and accumulate either of the precious metals enables it to accumulate and to hold both. Dismiss, then, your fears, Oh, ye timid, that by unlimited coin- age of silver you will drive gold from us or throw us for any length of time upon a silver basis. With the bitter irony that students of monetary science in Europe ought to appreciate the gold standard British bankers themselves at the time of the Barings failure had to go to France for help and for gold — to France, where not only a very large volume of silver money exists, but where the Bank of France in- sists on using silver as a money of redemption at her own option, and not the option of others, as is the case at our Treasur J^ THE ENTIRE MASS OF MONEY MEASURES THE ENTIRE MASS OF WEALTH. Again recalling the illustration of the lever, with money and the banks on one end of it and property and the people on the other, I wish to spend a little time in speaking to you of the entire mass of money on one side and its divisions, and of the entire mass of wealth or property and its divisions and price or valuation and measurement of its divisions on the other side. When we speak of the value of money what is generally under- stood is that we are referring to each unit or dollar measured in prices of other things. By proper subtraction of all money now held in bank reserves, in secret niding, in hoarding to await revival, and in the conges- tion of money in the deposit banks of reserve cities, we shall find there is not over $500,000,000 in actual circulation against $50, 000,- 000.000 of wealth. Before this late "bankers' panic" — the panic of 1893 — the valiv ation of the wealth was at least $60,000,000,000, but we must allow at least 15 per cent for shrinkage in the wealth. So there is to-day one dollar in money, approximately, for every hundred dollars of wealth or property, or about 1 per cent, and if we do not make the subtractions for congestion of currency in banks it may amount to 2i per cent. Senator Plumb, in 1890, in Jiine, said: If I was deciding this case [the actual number of dollars in circulation] 1770 106 upon what I consider the V>est evidence. I would be bound to say that I believ« the money in actual circulation did not much, if at all, exceed $500,000,000. Now, Mr. Cliairman, having such high justification of the reasonableness of my estimate of the number of dollars in actual circulation as the case stands under present conditions of money stringency and record-breaking decline of prices resulting there- from, let me go on with my elucidation of relations between the tinits of money and their entire mass on one side and the entire mass of property on the other side, subject to exchange for money. Our entire mass of actually circulating money is then divided we will say into five hundred million parts, which we call dollars or units of valuation in oiir monetary system. Let us compare these units now with some specific part of ex- changeable wealth to see where prices are ranging. Our illustration will be true whether you regard five hundred million or fifteen hundred million parts or dollars as the present circulation. Each of the parts now equals in value two bushels of wheat, which gives us 50-cent wheat, or two bushels to the dollar. If, now, we would divide the entire mass of money in circula- tion into double as many parts or dollars, making money twice as abundant, then it would take two parts or dollars to equal the two bushels of wheat. This must be clear to all and would give us dollar wheat in- stead of 50-cent wheat. As we divide the mass of money into greater numbers of parts we multiply or increase the price in same proportion. Now, suppose we divide the mass into fewer parts than the present status, then each part will be larger or of greater value or purchasing power. If we divide the entire mass into only one- half as many as now exist, then we have exactly doubled the value of each part or monetary unit — and so our one dollar for two bushels changes its ratio into one dollar for four bushels, which gives us 35-cent wheat. And if the gold standard contractionists shall continue their proc- esses to produce by contraction what they call the "highest and best dollars" we will yet see 2o-cent wheat in Chicago, and cotton 8 cents, and all other things reduced in proportion. It is idle to talk about reaching bottom in prices or to claim that the industrial world can not see prices go lower. There is no bottom, except that which stands on the number of dollars in circulation, and if Congress perpetuates the present banking sy.stem, witli unlimited bond issues, or enacts this pres- ent so-called Carlisle bill, which, to an equal, if not greater de- gree, puts the power tc^ control the aggi'egate circulation into the 1770 107 hands of banking corporations, then as certainly as the law of gravitation regulates the general movements in planetary sys- tems so sure will these corporations control and regulate price to add to their own gams and those of their favorites at the loss and expense of the laboring and producing world. They will, as far as they are able to act in concert, contract cir- culation and price when they desire a period of liquidation and set- tlement, and then expand the circulation and boom prices when they wish to sell back to the people the harvestings of their periods of panic and liquidation. This is the elasticity they want, the india-rubber game they have been playing for twenty-five years, and the game tliey stUl will play if they can get bonds enough on the one hand or the Carlisle bill on the other. It is like the great wickedness of the Israelites of old in changing standards between the periods of buying and selling, against which iniquity and robbery the prophet Amos hurled his vehement utter- ances: Hear this, O ye that swallow up the needy, even to make the poor of the land to fail. Saying, When will the new moon be gone, that we may seU corn? and the Sabbath, that we may set forth wheat, making the ephah small, and the shekel great, and falsifying the balances by deceit? — Amos, viii 4,5. The modern method is much more subtle and unobserved by many of the producers of the land, but far more effectual and far reaching than any scheme the Jews had ever invented until within the last two centuries. Their game now is not to change weights and measures between the periods of buying and selling, but to change prices, so as to take in wealth at depressed and panic prices and tlien reverse the processes, expanding so as to sell back again at higli prices on gold contracts until the next period of contraction, panic, and liquidation. Yes—' 'elasticity of the currency" is a catchy phrase for the game . Loading the dice and packing the cards are such dishonorable methods that few gambling houses can maintain their reputation by such tricks; but they are comparatively harmless beside the game the money power seeks continuously to play, by their tricks of gold redemption and bank issuance in which all the people are involved. When the bankers of Wall street started in the spring of 1893 to give us an object lesson, aided by those who sit in high posi- tion, and aided further by the fine hand of the Europsan gold conspirators in the sudden demonetization of silver for the sub- jugated people of India, did they not successfully teach us the lesson of contraction? 1770 108 They iu)t only smldenly contracted bank circulation thirty to forty milhous of dollars in a few months, but they pushed all the associated and corresponding banks into shorteniuir up their loans and credits at the same time. They followed this after October, 189;^. with such an expansion as suited their purposes. This is the elasticity game well exhibited. Then since that they have secured an issue of $10IJ. 000, 0;)0 in bonds under the claim of maintaining the suppos.^d gold redemption basis, paying for the bonds largely out of gold thit they lojt from the Treasury under the pretense of helping the Governmeut maintain parity and its gold reserve. Although these bonds are of very doubtful if not absolutely illegal issue, yet doubtless they intend using them largely as basis on which to expand the currency. Is not this object lesson enough to show what elasticity for the banks means to the people? Is it not sufficiently evident, Mr. Chairman, that the banks ought to be deprived forever from having anything to do with the issue of currency, and, as Jefferson taught, that bank issues should be suppressed, and the circulation be restored to the Government, where it i)roperly belongs ? If we can not learn from these lessons, and from the threats of their insolent power, often given, and, on the other hand, from the teachings of the fathers of true Democracy, from the teachings of eminent authorities and the testimonies of able financiers in every country, and from the lessons of history and the ruin of our industries and our x>eople, then when can we learn the curse of submission to the bank and bond and gold conspiracy? Our enemies are united in both Europe and America and throughout the world. The in^^sible empire of wealth is not bounded by the shores of wide salt seas nor by the snow-capped mountain ranges that have through long centuries bounded and limited the usual ag- gressions of national power. Its conquests are the wealth of the all-trading nations; its vic- tims, the helpless people of all climes; its dem?.nds, the patient toU and slavery of all races; its instrument, gold redemption bank money. If there is one thing above others that it has hated and feared, it is that America and her legal-tender greenbacks might live and teach mankind to provide their own money independent of the ba nks. Wlien we see the insolence vsdth which the gold conspirators seek to plant themselves in power, may we not say of them as Cicero against Cataline said: Hove long. O Cataline, wilt thou abuse our patience? Art thou not daunted 17T0 109 by the nightly watch posted to secure the Palatium? * * * Thy wretched conspiracy is laid bare to every man's knowledge herein the Senate. * * * We are well aware of thy proceedings last night. * * * Alas the times 1 Alas the public morals! The senate understands all this. The consuls see it. Yet the traitor lives! Lives? Ay, truly, and confronts us here in council; takes part in our deliberations; and with his measuring eye marks out each man of us for slaughter. * * * And may we not say as he again said against the rich and strong tyrant praetor Verres, in which Cicero so strongly pleaded for ac- tion on the higher motives: liberty ! O sound once more, once more delightful to every Roman ear I Once sacred — now trampled onl Is it come to this? * * * Shall nothing restrain the merciless monster who, in the confidence of his riches, strikes at the very root of liberty, and sets mankind at defiance? And shall this man escape? Fathers, it must not be! It must not be unless you would certainly undermine the very founda- tion of social safety, strangle justice, and call down anarchy, massacre, and ruin on the commonwealth. SHOULD WE INCREASE THE VOLUME IN CIRCULATION? 1 have already referred to the volume of circulation. It is not the absolute volume of currency in circulation that en- dangers prosperity so much as the variations occurring in the vol- ume after business is established. It is by the change of the money end of the lever up or down that carried the property and people's side of the lever up or down in opposite directions. The general range of prices when money was abundant at the close of the civil war marks a proper level. Shrinkage from those prices was what destroyed the equity of time payments. The changing of circulation disturbed price and valuation of all these things, and so broke the demands of equity. It is impossible to maintain prices and secure an equitable share of profits to producers on a shrinking voltime of currency. In speaking on this subject, and having reference to the con- traction and expansion of the currency indtilged in by the banks of issue during his day, Mr. "Webster said: It is hardly necessary to dwell upon the evUs of a suddenly diminished cir- culation. It arrests business: puts an end to it, and overwhelms all debtors on the depression and downfall of prices; and even if we reduce circulation not suddenly, but still reduce it further than is necessary to keep within ,iust and reasonable limits, it would produce manv mischiefs: it would augment the necessity of foreign loans; would contract business, discourage enter- prises, slaciien the activity of capital, and restrain the commercial spirit of the country. To keep up the increase of currency with the increase and de- 1770 110 velopment of business and population is no relief, for that simply prevents an actual relative shrinkage. I know of no method to exactly measure the volume of business and excliange in our country, buying, selling, and paying debts. We can approximate to it by taking the population of a country as a basis and stating circulation as being so much per capita. This, all points considered, is perhaps the best tSrm to use. But when it comes to determining what number of dollars per capita should be in circulation I do say that we have an infallible index of a departure from the proper circulating volume when we see a general decline or fall in prices. When that is detected the true method to be used by Congress, if it seeks the welfare of the whole people and the maintenance of equity on all time contracts, is to begin at once to increase the volume of currency to cure the evils of falling prices. Expand the currency until the general average of prices is re- stored and all the productive energies of the nation are utilized to the best advantage. When this point is reached the circulation is right and the volume is proper. THOSE WHO PLEAD FOR EQUITY MUST DO EQUITY. The creditor portion of the community have no right to complain of expansion, for they have had the benefit of twenty-five years of contraction. "He who demands justice must administer jus- tice," is a good old German maxim. Starting to correct wrongs as we find them, however, and not undertaking to reverse the contraction methods of the money power and creditor world any further than necessarj' to provide for the present and future protection of the people from the finan- cial wrongs they have suffered, we should not expand the circu- lating currency volume only to that point where prices are restored , profits accrue to legitimate industrial effort, and labor is fully em- ployed at remunerative wages. These good, price-restoring results of expansioi of the currency may be reached at $40 per capita. If so, stop at that and keep the volume substantially uniform in relation to business at that ratio. If the full and profitable employment of our productive forces are not secured at $40 per capita, as I have said, issue more, for we should never stop short of issuing and coining together the requi- site amount to secure the results of restored prices and activity. The best and most productive and prosperous times we have ever had in this country was at the close of the war or soon thereafter, when the circulation was slightly above $50 per capita, and no men nor class of men were suffering any injustice by reason of the good times secured. 1770 Ill OUBBENCY CONTEACTION FOLLOWED THE CLOSE OF THE CIVIL WAB. I will submit the table published in the Chicago Inter Ocean, which circulates largely in the West, and is high authority among Republicans there: The volume of currency was for— 1866 $50.76 1867 36.68 1868 22.05 1869 19.80 1870 19.30 1871 - 18.47 The volume of currency was for — 1872 $17.00 1873 17.48 1874 17.89 1875 17.a5 1876.; 15.89 1877 14.40 This table shows gradual contraction down to the year 1877. In the same connection, the Inter Ocean makes this remark in regard to the circulation of the 7.30 notes, of which at one time there were over $800,000,000 out: The 7.30 three-year notes, whose circulation as currency is most scouted, were outstanding on the 1st of September, 1865, to the amount of |830,1J(JO,000, every dollar of which was legal tender for its face value under the terms of the law " to the same extent as United States notes." Gen. John A. Logan in 1874 (from page 139, Congressional Record of that year) , in a speech he made in this body, said that there had been at that time a contraction of over one thousand miUion dollars ($1,018,167,784). He once was high and honorable authority in the West. General Grant said in his message of 1873: In view of the great actual contraction that has taken place in the cur- rency, and the comparative contraction continuously going on, due to the increase of population, increase of manufactories, and all the industries, I do not believe there is too much of it now for the dullest period of the year. Speaking of the volume of money — During the last four years the currency has been contracted directly by the withdrawal of 3 per cent certificates— compound-interest notes and 7.30 bonds —outstanding on the 4th March, 1869 (all of which took the place of legal ten- ders in the bank reserves), to the extent of $63,000,1X)0. During the same period there has been a much larger comparative con- traction of the currency. The population of the country has largely in- creased. As the annual increase of population is 3i per cent, to even keep pace with it, if we did nothing else, would require over $50,000,000 additional currency per year. We should issue more in addition to this annual demand to secure any increase and relief. In a full discussion of this question of circulation we should take into account the marvelous increase of business through all the various new appliances and rapid development of our coiintry. To keep up with this alone would require great additions to our currency. But when banks desire the appreciation of money and the consequent depreciation of prices, what care they for the ruin of industry and property prices? 1770 112 If we compare our money circulation to the wealth of the coun- try as generally estimated, it is 3^ per cent. We ought to have more nearly 5 per cent circulation. That of France is 4 per cent; Belgium, 3.2 per cent; Italy, 3.1 per cent: Portugal, 4.6 per cent. With oiir greater expanse and variety of business and our peo- ple scattered across an entire continent we ought to have more than any of these. CHEAPER MONEY IS NECESSARY FOR RELIEF AND EQUITY. The same question is pertinent as to silver coin and money coined from silver in possession of the Grovernment. How can the Government get this silver money into circulation if it does coin it? We answer, by paying it out in current expenses and on aU coin obligations. But our opponents wUl say tliat by issuing paper money or silver money and putting it into circulation, in addition to the money now out, will so increase the supply or volume of money in circulation that money will become too cheap. This is the plea against free coinage of silver and is also against the issue of legal-tender notes by the Government. It makes money too plentiful and too cheap, say our opponents. Too plentiful and cheap tor whom? I know that increasing the volume by adding any kind of money to the circulation will make money cheaper; and so will withdraw- ing money from circulation make money scarce and dear and high in its purchasing power. But who is harmed by making money more plentiful and cheap? Surely not those who have been suffering from falling prices for the last twenty-five years by money having been made too dear. I have never uttered a word favorable to a careless and un- limited expansion of the currency. I have protested against making money too abundant on the one hand, and against making it too scarce and dishonestly dear on the other. But the coinage of all silver offered, or the issue of a certain amount of Government legal tender strictly limited to reasonable bounds, as I have suggested, will not make money too cheap for all who own or produce other properties than money, bonds, and mortgages. It tends to bring the value of our dollars in circula- tion back again to that ratio to property and price that formerly obtained. MOrJE MONEY MEANS MORE INVESTMENTS IN OTHER PROPERTY. And then it will pay to invest money in lands and products of field, farm, and factory, for profit will then follow these indus- tries. 1770 113 Even bankers would, many of them, seek to invest money in the various forms of property, produce, and manufacture. Hear what Mr. George A. Butler, bank president, had to say of the advantages accruing to property if silver were even paid out freely on our coin obligations by the Secretary of the Treasury. I quote his testimony before the Banking and Currency Com- mittee of this House on December 13, page 153 of the hearings: Mr. Black. I will ask you even a broader question than that. I should like to get your opinion as to the effect of the Government establishing the policy, as to redeeming this paper currency, of exercising its own option whether it would pay in silver or gold, rather than to let the holder decide that question for himself. Mr. Butler. I can not answer that any better than to say this: The very hour that I am convinced that the Government wUl doit I will sell every dol- lar's worth of personal property I have on earth and invest it in real estate. Mr. Ellis. Why? Mr. Butler. Because that brings the country to a silver basis and elimi. nates more than half the value of personal property in the form of stocks, bonds, mortgages, and everything of that sort. Mr. Hall. "Would it not affect real estate in the same way as personal prop- erty would be affected? Mr. Butler. No; because in the case of real estate you can put up the rents in iiroportion. Before the last election I was intending to do this, and, indeed, commenced, but then the election occurred, which was not so favorable to the silver men, and I thought better of it and stopped. Remember that the personal property to which he refers, as he explains, is such as he owns — "stocks, bonds, mortgages, and everything of that sort." Personal property, the product of fac- tory or field, goes on the other side. A very intelligent friend of mine, another bank president, took the same position with me in conversation on the silver question. If money becomes abundant enough to raise prices and make products and property profitable, then even the bankers will in- vest in property. They will invest on the side of property if it once gets out from under the domination of high and scarce money. They see as clearly, it would seem, as anybody, that with an in- creasing volume of money the property side of this controversy with the banks will become profitable by reason of improved prices. efforts of chevalier and the income classes of EUROPE TO demon- etize GOLD FORTY YEARS AGO— GOLD DESPISED IN 1863. Mr. St. John, president of the Mercantile National Bank, New York, said before the committee: Our "goldites" would dismiss all this on the ground of an overabundance of silver. Had the most influential doctrinaire in money in Europe been as influential with lawmakers in 1853 as our aforesaid tutor was influential with law dictators in 1893, France would have closed her mints to gold. Silver 1770 8 114 monometallism would have been the coinage system of the world. Chevalier threatoned France with an abundance uf gold as cheap and overwhelming as iron. Silver is the overabundant in-odiction of our influential doctrinaires. Note, however, that $.'),(KHt,(>00 worth of .silver bullion is at this moment an overestimate for the world's di.stributing markets' supplies of silver. Senator John P. Jones in the following marks the parallel be- tween Chevalier and the French bondholders of that dtiy and the same class of to-day: THE EX.\.M1'LE OF FKANCE IN DEAT.ING WITH BONDHOLDERS. The attempt of the American bondholder to get the woi-d "coin" erased from his contract, and to get written into its place some word which would describe a coin that was always getting dearer, is not the first attempt of the kind in history. A similar attempt was made on behalf of the French bond- holders after the discoveries of California and Australia. Gold was then the metal that was becoming cheap money, and the French bondholders took ready alai'm at the prospect of the purchasing power of their incomes being reduced by the inflow of the now money. They found, as all bondholders find everywhere, ready and pliant agents and advocates in the literary guilds. Chevalier and those in arccord witli him made a demand for the payment of the bonds of the French Government in silver. Their cry was for honest money. It is the same cry that we hear now, and have heard for more than twenty years. It was a demand for a payment of the money that was be- coming dearer. For it appears that when money is becoming dearer it is honest money, while if wheat and cotton become dear, which means that money is Ijecoming cheap, the wheat and cotton are dishonest and fraudulent. Chevalier demanded the payment of the bonds in silver. In order that the people might suppose that he had some ground in reason for his demand he maintained that silver had always been the money of France, and that when people bought the bonds of the Government they supposed they were buying bonds payable in silver— very much the same sort of argument that has been used in the United States, except that in this country the demand was for bonds payable in gold. This ruse did not work, however. The oflicers of the Government refused compliance with the demand. They declined to transfer to the creditor the option which the jjeople of Prance had reserved to themselves. That they were right no man but a bondholder could have the hardihood to deny. Our modern Chevaliers have been more successful. * * * He (Chevalier) was arguing that gold would probably depreciate one-half in purcha.sing power. It was for the national creditor that his sympathies were aroused, and it is for the national creditor that the sympathies of the bankers are now aroused. "All commodities — " He continued — excepting gold (the money that was growing cheap) and every kind of prop- erty excepting that of which the incomes, from the present, fixed, as is the case with Government funds ought, from the moment that the monetary crisis is terminated, to have attained in a gold currency double the price which they are at present worth.'" His opinion then was that the nrice of commodities and of property, ex- cept Government funds, would "double in price." How was it with wages — the reward of the workingmen? Were they to continue low as before while prices were rising? Chevalier says: "It will be the same eventually with the wages of labor [that is to say, wages would double], and with all personal services, whether rendered in the factory or on the farm or from the liberal professions." * ♦ * 1770 115 "It is another class of persons," he says, "whom we have previously de- fined in a general way (the national creditors) who have to submit to a sacri- fice in the proportion to the fall in the precious metal." WILL, HIGHER PRICES DRIVE GOLD TO EUROPE? My friend from New York [Mr. Tracey] , my colleague on the Coinage Committee, now kindly honoring me with his attention, is, however, fearful that the rise of prices will drive gold out of the country. There are a few points that I wish to make on this question in addition to what I have already said. First. Gold in export goes as a commodity at its commodity value in exchange for other commodities. Whatever nation bids highest for gold in such exchange — that is, gives greatest quantity of other goods for gold — will get the gold, on the same principle that they would get wheat or any other product for gold in international trade as a commodity, to be bought as such. When prices are so low on other things that nations can better afford to take them instead of gold, they will go to settle balances of trade, and gold will stay. When, however, prices rise on other articles above the commod- ity or mercantile value of gold, then gold will go out in export. It flows then toward countries of low prices on other articles. High prices, however, can not obtain on other articles without money volume is ample. So we can be sure gold will not leave us until other money is in circulation to more than take its place — enough more to raise prices of other property. Even the matter of distrust regarding our bonds and securities abroad so often mentioned do not entirely set aside these economic forces, as some suppose. Suppose a hundred millions in bonds should be, so to say, sent back to us from England suddenly. The payment is not necessarily in gold; it is in wheat and cotton if they can take them to better advantages in exchange for our bonds, and that depends entirely on the price of wheat, cotton, etc. Gold will not go, then, unless other money is so abundant that prices are up or rising, and in that case, mark you, we can easily spare the gold. We can get along without it while other money is sufficient to keep up prices. If, however, we have bank money dependent upon gold redemp- tion, bankers must hold gold, or must contract their paper cur- rency at the same time gold is being reduced by export, then the contraction resultant quickly forces prices down so low that our other products will be taken instead of gold. 1770 116 Let Government issue onr paper money as far as necessary and silver be freely coined, then the outflow of gold should excite no alarm, for our money is siire, founded on the law of the Govern- ment. Gold going abroad under these conditions would be profitable to oiir people in many ways: First. Having other good money to take its place, we would get for it value in other things more than it would be worth to us for money uses. Second. It would swell the prices in Europe by increasing money volume there so we would get higher prices on all of our exports to tiiose countries. Third. And by silver being accepted at our mints freely at $1.29 per ounce, Europe could not longer buy wheat in India with silver at 65 cents per ounce, but wheat would at once rise to meet the new price on silver. VALUABLE MONETARY FACTS— MOVEMENT OF GOLD. From valuable tables by Maurice L. Muhleman, cashier of the United States svibtreasury at New York, found in his Money of the United States, we derive the following: Table showing gold and silver movement 18755-1893. page 60. From 1873 to 1877 exports of gold were against us $127,000,000 in a period of silver demonetization complete, neither one of the five years securing us any gold by international trade. From 1878 to 1888, the first period of coinage of silver under the Bland Act. we gained an excess of import over export of gold every year amounting in six years to §187,000,000. Coinage of silver did not drive out gold, therefore, as our mono- metallists claim, but had the direct opposite effect of increasing our gold by trade with foreign nations, and at the same time our product of gold mines was increased from $184,000,000 during the first five-year period preceding the coinage of silver under the Bland Act. to ,$200,000,000 during the next five years. After the passage of the Sherman silver-purchase act which we were told would drive out gold, the reverse was true again, for we saved all our product and gained in three years, July 1. 1890. to July 1 , 1893, $156,000,000 by international trade, gaining $68,000,000 of this the first year after said act. Now. since the repeal of all laws favorable to silver we are losing gold by international trade at an alarming rate, and that, too. while Europe could get our products instead of gold at lower rates than ever before. These great facts and experiences are all against the claims of the advocates of silver demonetization. On silver we have exported more than we imported every year 1770 117 from 1873 to 1893, as shown by the tables, so again the evidence is that by reason of the European and Oriental demand for silver for their own coinage there is no danger of silver becoming too abun- dant by free coinage in America. In studying questions of banking, it will be well to notice the growth of tiie deposit feature of banks in this country. GROWTH OF DEPOSITS IN BANKS. We give the following on the authority of Muhleman, page 59. The period from 1873 to 1893 is the period we have taken: National-bank deposits start at $673,000,000 in 1873— siiver demonetization act. They continue nearly same for six years to $677,000,000, in 1878— ending de- monetization period. They grow next six years to $1,099,000,000, in 1884— during Bland Act period. They grow next six years to $1,759,000,000, in 1890— during Bland Act period. They grow next two years to $2,032,000,000, in 1892— silver. purchase period. So the growth of deposits is threefold during the fourteen years of partial silver coinage, and practically nothing during six years pre- ceding, and they drop again in 1893 to 1,575,000,000, being year of purchase-clause repeal. Again during and succeeding panics de- posits fall short. Notice the shrinkage in 1877 and 1878, 1884 and 1893, panic years. State-bank deposits increase nearly fivefold, being $111,000,000 in 1873, and increasing, except during panic years, to $648,000,000 in 1892. Savings-bank deposits increase to more than double, $802,000,000, in 1873, growing, except during panic years, to $1,712,000,000 in 1892. People seem to distrust banks, especially national and State banks, during years of panic or financial disturbances; but banks also seem to distrust the people, for, as Muhleman points oiit, ' ' the only two years" wherein cash reserves equaled 20 per cent of de- posits were 1874 and 1885, " years succeeding panics." These accumulations of cash in banks following panics are often claimed to be evidences of abundance of money, but they are in fact evidences of the flow of money out of active channels of trade and away from investments into the money centers owing to the preceding contractions and withdrawals of credit, which, break- ing down prices, render all business and property investments unprofitable. If we take New York City and large cities alone we VTill find, as to-day, excessive congestion of idle money in the money centers. A GLEAM OF LIGHT ON THE MONEY QUESTION FROM BOSTON. We have found most excellent treatment of some of the essen- tial elements of monetary science in the brief monthly letters of Cox. Bickf ord & Co. , bankers and brokers, of Boston. In their circular letter of March 1, 1894, they say, in defining money and quoting J. S. Mill: We stated in our February letter that money is a function or relation* 1770 118 not a commodity; that its vahte can not be intrinsic underany circumstances, nor due to its first cost of production, as is the csise in the general range of commodities, but is clearly expressed in what it exchanges for; i. e., the gen- eral i-ange of commodity price. '• The value of money is to ajipearance an expres.slon as precise, as free from possibility of misunderstanding, as any in science. The value of a thing is what it will exchange for, the value of money is what money will exchani^o for— the purchasing power of money. If prices are low, money will buy much of other things and is of high value; if prices are high, it will buy little of other things and is of low value. The value of money is inversely as general prices, falling as they rise and rising as they fall."— JoHie.s Sturirt Mill. Beiore such an authority as the above, and such a plain stat2m3Ut of thn value of money, what becomes of the term "the intrinsic value of money," so often repeated as to have become a popular by-word, a plausible false- hood, generally credited without a particle of proof and only bearing con- viction to its hearers through constant reiteration. The value of money is not, and can not, in the very nature of its function, be intrinsic. " The value of money is inversely as general prices, falling as they rise and rising as they fall." and therefore dear money is expressed in a low range of prices, while cheap money attends a high plane of general prices. Contraction is the oompression of prices to a low level, always attended by dear money, while inflation is the expansion of prices to a high level, finding expression in the term cheap money. Falling prices is the sure index of a rising value in money, while rising prices is the exact reverse, or an indication of the decreasing value of money. The stability of money is the all-essential of an honest standard of value and Is of inestimable worth in maintaining the equilibrium of civilized effort and the equitable distribution of the wealth of production. Unstable money, one that is either appreciating or depreciating in value, is thoroughly dishonest. These are siicli clear-cut statements from practical bankers that I am pleased to quote them as indorsing so forcibly what I have claimed on these points: 1 . That there is no intrinsic value in money. 2. That volume controls and regulates value of money. 3. That the unstable money of either unduly contracted or ex- panded money is dishonest money. 4. That the value of money, like other things, is what it will exchange for and is so measured by the general range of prices. 5. That money is a function and not a commodity. BOTH EQUITY AND PROSl'KHITY DESTROYED BY FALLING PRICES. Unstable money, caused by change of volume,. and especialh- appreciating money, caused by contraction, is not only dishonest toward i)eople who have invested monej' in property and i)r()ductive enterprises, but when seen in its action on those who have con- tracts to pay in dollars, it is a crime that even ignorence ought not to excuse. Look to the range of prices if you would determine the extent and grade ot variations in monej-. Tables of prices covering the average prices of a certain period 1770 119 on leading commodities have been prepared by many able statis- ticians to determine the relative value of money. Such averages over quite a large number of staple articles are called index numbers. Mr. Augustus Sauerbeck, a gold monometalist as far as his interests are concerned, made a most thorough set of price aver- ages or index numbers that has been published by the Royal Sta- tistical Society of England. To obtain a base line, or starting valuation, with which to com- pare the range of prices, he takes prices in gold for ten years, five of which precede and five succeed the year in which silver was demonetized, 187b, and calls this average 100. This will show the value of gold rising in nineteen years, given in table, to nearly double its purchasing power as it stood in 1873, prices falling about one-half from 1873 to 1891. I quote his tables from the Boston circular mentioned, in which the various prices of commodities are averaged in grou^DS of different lines of staples. I have also added from another source Sauerbeck's table of aver- age prices of silver bullion for period 1874 to 1893 so as to show . how silver and commodities compare. Wholesale gold prices of commodities in England. 8 u If > r 1 y JacS 02 13 o o <4-l 1 1 'S 01 3 CO CO 03 1 a o El 1 o' 13 6 On |i 1-H ^ 1873 106 105 93 93 100 95 87 89 84 84 82 71 68 65 64 67 65 65 75 109 103 108 108 101 101 94 101 101 104 103 97 88 87 79 83 86 83 81 106 105 100 98 103 90 87 88 84 76 77 63 63 60 67 65 75 70 71 107 104 100 99 101 96 90 94 91 89 89 79 74 73 70 73 75 73 77 141 116 101 90 84 74 73 79 ■ 77 79 76 68 66 67 69 78 75 80 76 103 93 88 85 85 78 74 81 77 73 70 68 65 63 65 64 70 66 59 106 96 93 95 94 88 85 89 86 85 84 81 76 69 67 67 68 69 69 114 100 93 91 89 81 78 84 80 80 77 73 70 67 67 69 70 71 68 111 102 96 95 94 87 83 88 85 84 83 76 73 69 (J8 70 73 73 73 1874 95 8 1875 93 3 1876.. 86.7 1877 90 2 1878 86.4 1879 84 2 1880.. 85.9 1881 85.0 1883 84.9 1883 83.1 1884 83.3 1885 -. 79.9 1886 74.6 1887 73.3 1888 70.4 1889 70.3 1890 78.4 1891 74.1 1892 65.4 Mr. Robert Giffen, statistician of the London Board of Trade, in speaking on this subject, says: We can say positively that the recent change from a high to a low level of prices is due to a change in money of the nature or in the direction of abso- lute contraction. 1770 120 WHO ARE THE INFLATIONISTS OF THIS DAY? I have hinted at the probabilities of inflation. I do not know of any Democrat who, contending for the value, safety, and perfect convenience of Treasury-note legal tenders, has ever yet on this floor proposed such a loose, gigantic, and uncontrolled and possible inflation of the paper money of the country as do the advocates of the j)resent and pending plans of issuing currency. I have no doubt but that the first effect of the adoption of the Carlisle plan would be an inflation of the currency. Neither do I doubt that the first effect of this inflation would be a rise in prices and a temporary relief for the people generally. It would be a convenient time in which people could get out of debt on the rising prices, great profits, and general prosperity. The remonetization of silver possibly could not appreciate prices or cheapen the relative value of money, which is the same thing as raising general range of prices, so rapidly, nor even to so great a degree, as could be done under the inflation of currency likely to ensue under the passage of the so-called currency-reform bill now pending. It would, for a time at least, set the people free from the intolerable monopoly of Wall street. The aggregate volume of banking capital could and under the temptations for multiplied profits I believe would be increased to double the present volume, which is estimated, in round numbers, to be $1,000,000,000, and indeed it might easily be swollen to three times the present amount as rapidly as men of wealth perceived that they could safely to themselves have the free and unrestricted use of $100 for every $30 they chose to deposit with the Govern- ment in Treasury notes. It is useless for anyone to attempt to answer me on this point by saying that they would be restricted to the $498,000,000 of legal tenders and Treasury notes now existing, for let it be remembered that all currency of the present national banks now issued on bond security can remain out under the proposed amendments and provisions of the substitute bill offered and supported by the committee. The $498,000,000 of existing Treasury notes as a 30 per cent safety fund deposit provides for an actual inflation of the currency on top of existing bank issues, which are permitted to remain in circulation, of $1,600,000,000. From this should be subtracted the 30 jjer cent reserve to find the extent of inflation, which would leave over $1,200,000,000. Does any Populist on this floor at this time desire to distinguish himself by proposing a greater inflation than this by one single act of legislation? 1770 121 The famous Coxey public-road bill, wliich bill I have never in- dorsed, although favoring a proper discussion of it, only proposed an issue of $500,000,000, and even this he did not propose to make redeemable in coin on demand so to favor gold mongers. No, Mr. Chairman and gentlemen, the inflationists of to-day are those who advocate plans for bank issues of currency. I have long seen that this great cry of the money power against inflation meant only that they were in favor of contracting Government legal-tender issues that have for so long a tin^e furnished a safe, popular, and convenient legal-tender ciirrency to the people, but they were all of the time in favor of allowing inflation of bank is- sues when it suits their private interests to do so. They have cried out against fiat money, but they have been all of the time favorable to alternate expansions and contractions of currency under the fiat of the bankers. Many common laboring people can not see why the fiat of a bank is better than the fiat of a sovereign Government. WHO WANT MONEY TURNED OUT BY PRINTING MACHINES. They have cried out against running the printing machines of the Government to print greenbacks to pay out to the people for service or supplies, but they have all along been in favor of run- ning these same printing machines to turn off millions of bank notes that they might loan to the people at high rates of interest. And under the present banking system they have insisted that they shall draw another stream of interest on their capital de- posited in th§ form of United States bonds. Surely the national bank forces understand that it makes a great difference to them ' ' whose ox is gored. " I believe there are gentlemen on the floor of this Chamber who would split their throats, even, if thej'- did not endanger the solidity of the cerulean skylights above them, in their efforts to decry any proposition to issue circulating notes to farmers, merchants, man- ufacturers, or any other class of citizens to any extent whatever upon their deposit of 30, 40, 50, or even 100 per cent of theii- capi- tal, or property, or titles to property. Yet these same Congressmen will vote and work for the passage of this bill, which proposes to issue millions upon millions of notes to the banks with unrestricted opportunity for them to put the same into circulation upon their deposit of 30 per cent of the amount of their circulation in that same despised fiat paper that they have sought so long to discredit. To my mind, the jewels of consistency do not shine abundantly on the shirt fronts of such fellows. 1770 122 THE PROPOSED COIN REDEMPTION BY THE BANKS. But the Democratic advocates of this measure, if the term were l)t'nnissible. tell us that they propose to relieve the Government of the responsibility of coin re(lenip1;ion of all of this volume of bank currency and throw that burden on the banks and off the shoulders of the Government. How? This bill fails to make any such provision. As long as any Treas- ury legal tenders are out, and practically also as long as coin cer- tificates are out, they can redeem them in these. If they shall struggle to accumulate gold in which to redeem these notes, notice the condition of competition for gold in which they place the Government. Does any one believe that if any sin- cere effort of the banks to accumulate gold coin in quantities suf- ficient to redeem any adequate supply of paper currency were made that there would be any chance for the Government to main- tain gold paj-ments of all of its maturing coin obligations and its current expenses? Hear Mr. St. John again regarding ability of banks to redeem in gold (Hearings, page 345): Mr. Johnson of Indiana. What is your opinion of section 10 of the Carlisle bill* Mr. St. John. My opinion of that is just what I said when I came here, that it is absolutely impossible for the banks of the United States to redeem a liberal issue of bank notes in gold. The possibility d(;es not exist. The Government now, without any serious competition from the banks, is unable to keep up a supply of gold on its present methods. What, then, when 4,000 to 10.000 banks enter the field against the Government for the gold supply, to say nothing of the strained conditions that this situation would produce in Europe as well? The retirement as a safety deposit of $335,000,000 of legal ten- ders that the committee speak of as the probable result of the proposed act does not prevent the withdrawal of gold from the Treasury by any holders of other coin obligations, as well as holders of the remaining legal tenders. So there is practically no relief on the Treasury holdings of gold on this theory. But if there were, still the annual expenditures of the Govern- ment must, on the vicious " parity " idea, be payable on demand in gold. So, after all, the burden of maintaining the gold stand- ard still rests on the Government. A permanent and reasonable expansion is desirable. Let no man conclude that I am opposing an expansion of the currency either by silver coinage or by the issue of full legal-tender notes by the Government because they find me opposing the power of the banks to expand the currency under the Carlisle bill. 1770 123 Expansion by tlie banks means also contraction by the banks as soon as they may desire it and are able to associate for it — which power of combination is, however, doubtful under this Carlisle bill; ' ' hence these tears. " Either this or it means a collapse more ruinous and more widely extended than any the world has yet seen by the gold redemption trick that promises yet never fulfills. It is the dangerous elasticity quality of bank issues that I oppose, rendered still more dangerous by destroying legal tenders. It is the perfectly safe and efficient expansion of currency, both of coin and legal-tender Treasury notes by the National Govern- ment, in proper form and quantity that I uphold, well knowing that this will prevent the manipulation of currency voUime and property prices by the banks, and that equity can be easily main- tained when the Government, recognizing that the money ques- tion is also and essentially the property question, shall turn its attention to rendering property and industry safe, prices secure, and equity to the debtors safe by constancy of circulation. CAN THE BANKS MAINTAIN THE GOLD STANDARD? But let us suppose for the moment that the legal tenders were all retired by the 30 per cent safety fund, and that by surplus reve- nues enough could be seciired in gold (although no one, so far. has been able to precisely explain how) to payoff maturing bonds and interest on the public debt; and suppose enough of the present national bank issues are kept in circulation according to provisions of the amended substitute bill to permit the Government to re- ceive them and pay them out except on import duties and public interest as now provided by law in current expenses; and suppose that the Secretaries of the Treasury continiTe the policy of keeping silver coins and coinage in complete subordination to gold under the anomalous pretense of keeping it equal ("at a parity '") with gold, yet continue to receive silver in customs dues as now? And suppose, however difficult it may seem to some suspicious mortals, that all of the banking corporations are honest and earnest in efforts to keep a fiall supply of gold coin on hand, both in their own vaults and at the redemption agencies designated for them, so that they can also maintain the gold standard of payment and note redemption, and thus maintain their honor and dignity, and at least consistency in turning out gold, ' • the money of the world, " instead of the despised fifty-cent silver dollars that they say is such a cheat and swindle for creditors when forced upon them. Sup- pose all of these in accordance with the arguments and claims of our opponents, then what will be the financial condition and the probabilities of the banks maintaining coin redemption? 1770 124 Here is the showing: Circulation on $498,000,000 deposited $1,660,000,000 Present bank notes retained 200, 000, 000 Due on deposits, all banks, estimated 3, 738, 418, 819 Total bank debt payable in gold 5,588, 418,819 Gold (probable) accumnlations in banks 350, 000, 000 Uncovered paper and obligations 5, 238, 418, 819 We here have less than § 1 in gold Avith which the banks can redeem about $15, or in actual test $350,000,000 resting honestly and cer- tainly on gold basis, and $5,238,418,819 resting on the pale blue air of confidence. Does anyone believe that gold redemption could be maintained against the first ripple of suspicion that would come against the banks? To maintain public confidence the people have a right to demand an intelligent basis for that confidence. Why prate about wanting to establish public confidence, and constantly abuse that confidence? The basis here when examined shows that there is no just groimd for confidence, and the whole superstructure would collai)se on first disturbance. But this is not all. The total stock of gold coin, by last annual report of the Secretary ot the Treasury, in reserve and in circula- tion November 1 was $564,738,578. Ot this the national banks held only small amount, their entire holdings of specie (gold and silver both) on October 2, 1894, was $237,250,654. In the above estimates, however, I have allowed that the banks might possibly accumu- late $350,000,000 in gold, leaving, say, only $50,000,000 in Treasury and $164,000,000 in circulation among the people in gold. While considering the vast superstructure of bank obligations, resting on gold basis ot less than one-tenth the i^romises of the banks, let us also notice that the total debt of all kinds in the United States is $20,000,000,000, and all of this is resting on a pivot of $564,000,000 gold, which is less than 3 cents in gold on the dol- lar of debt. The imjjossibility of maintaining gold redemption by the banks is clear to every conservative mind that will study the facts. Even with unlimited coinage of silver the redemption of such a superstructure of credit in both gold and silver is still exceedingly doubtful. If anyone believes I have estimated the issues of bank paper too high, let him remember that if the whole body of legal tender is not deposited in the 30 per cent safety fund which would give the $1,660,000,000 circulation, as in my estimate, then what- 1770 125 ever is not so used, remains in circulation and can be used to pump gold out of the Treasury, as now, being used over and over again. It would leave the Government still responsible for the redemption in gold and throw it in sharper competition with the banks in the general scramble for gold. What is the remedy? First. Bmietallic basis by free coinage of silver so to enlarge the money of specie redemption. Second. Pay out silver as well as gold at the option of the G-ov- ernxnent, and as its own interests might appear. Third. Suppress bank circulation and issue legal-tender Treas- ury notes instead, and increase the volume to equalize against any or all exports of either metal. THE BLAND FREE COINAGE SUBSTITUTE BILL. To this end, and as the nearest approach possible at present time to a complete remedy and safe American system of money, for the protection of all against the schemes of the European gold power and all of its Tory allies in this country, I shall favor and vote for the Bland free-coinage substitute. It provides first for the unlimited coinage of silver at the old ratio, to the end that silver coinage may be restored to the Amer- ican people from whom it was taken away by the cunning and treachery of the Anglo-American gold and bond conspiracy. Bimetallism and the equal coinage of both gold and silver into standardmoney without discrimination against either, and without any entangling foreign alliances or agreements, is the best possible salvation for the maintenance of property values and prices and redemption of debtors in this country. Persistency in the appreciation of money in the mad career after a gold standard will yet bring wheat and cotton and the general range of prices still lower, and this means the ruin of a majority of business men in all the ordinary lines of business. "Why further enslave our people to the money dealers and in- come classes? The people must and will ultimately destroy every political* party that ui^holds the gold conspiracy, or their ability to main- tain freedom and equity is gone forever. The second section of the Bland substitute bill provides for the issuance of coin notes for all depositors of gold or silver who pre- fer paper money to coin for currency, and these notes shall be full legal tender. It is safe to say that nineteen-twentieths of our people prefer legal-tender paper money to either gold or silver for general use, and so any satisfactory system of money issues must provide for a legal-tender paper money. 1770 120 The third section provides for the redemption of these coin notes in either gold or silver at the option of the Government, and pro- poses to enact into law the declaration of our last National Demo- cratic Convention that there shall be no discrimination against either gold or silver coin in redeeming either coin notes or other Treasury notes now in circulation. It proxades also for the retirement of gold and silver certificates, and issuance of legal-tender coin notes in lieu thereof. The fourth section provides for depositing gold or silver coins and recei%-ing coin notes in exchange at any subtreasury of the United States. The aggregate volume of coin notes put in circulation must not exceed the coin and bullion in the possession of the Government except in emergencies caused by panic or stringency in the money market. The Secretary of the Treasury may at his discretion issue coin notes against United States bonds deposited with the Govern- ment, but the interest on such bonds while deposited shall accrue to the Government. The limit of issue in emergencies is such that the coin and bul- lion shall not fall at any time below 60 per cent of the aggregate volume of coin notes outstanding. Section 5 provides that the coin notes may be reissued. EXCELLEXT FEATURES OF THE BLAND PROPOSITION. First. In the provisions of this bill it will be observed that all money coined or issued under it is Government money and legal tender. Second. That the volume is automatically controlled in relation to the aggregate amount of coins and bullion in possession of the Government by present stock, by exchange, or by deposit. Third. That ready expansion of the volume of coin notes is pro- vided for to meet panic and emergencies to all persons or asso- ciations in exchange for deposited interest-bearing bonds. Fourth. The interest on deposited bonds is retained by the Gov- ernment while on deposit instead of being paid out to the persons or associations depositing them. This is right. Why should the Government furnish emergency currency to anybody and pay them interest on its own bonds at the same time? Fifth. This is an elasticity where banking associations have no monopoly of control as to contractions and expansions, and gives all classes equal chance to obtain emergency circulation. Sixth. It leaves the national -bank system intact, but destroys their ability to control volume and force a panic or stringency to the ruin of all others. 1770 127 Seventh. It provides for a perfectly safe and immediate expan- sion of tlie volume of money in circulation. Eighth. It at once relieves the Treasury from any further dan- gerous drainage of its gold supply and establishes an immediate and sure parity between gold and silver by admitting both metals at a parity to the mints and in payment of all coin obligations, and thus secures their full utilization at the old standard ratio as standard money metals. I can not see on what grounds any sincere and patriotic Repre- sentative can oppose this bill with so much of relief and safety in it, and at a time when both of these things are needed. It will be notice to the world, and especially to the gold conspiracy, that America is yet to be maintained and governed in the interest of Americans. We have already spoken of the questions of elasticity, convert- ibility into coin, and so-called security of note holders. We wish now to briefly refer to that subject again. ELASTICITY AT OPTION OF THE BANKS IS DANGEROUS. The advocates of bank issues seem to believe that elasticity, convertibility, and ultimate security are the great and necessary elements for the regulation of the currency. On the question of elasticity we have shown that it is equivalent to sudden contraction and expansion at the option of the issuing banks; that is intended by them. This is one point of the greatest possible danger of any scheme of bank issues, for it allows the appreciation and depreciation of the purchasing power of money to be constantly manipulated in the interest of the associated banks and to the detriment and fre- quent ruin of all others. The appreciation of dollars means the certain depreciation of everything that the dollar measures, and so the interests of the people, the property holders and producers, are in this respect directly opposite that of the money dealers. This simple fact seems forever to be overlooked by those who favor allowing the banks to manipulate the volume. Elasticity at the option of the banks, and without regard to the interests of the people, is therefore to be avoided. Adequate supply of money in circulation independent of bank control is the sure safeguard to maintain prices and the equities of contract, and prevent panics and monetary stringency. CONVEBTIBILITY DOES NOT CONTROL VOLUME. Neither will convertibility into coin furnish any safe regulation of the banks in the issuance of notes to circulate as currency. All bank notes are issued, and will be issued under any of these 1770 128 systems, upon the theory that there is a dollar in coin, or as now in United States legal-tender Treasury notes, held in reserve with which to redeem, if called upon to do so, every dollar issued. But we know, and the people know, that in tlie practical workings of the banks this is not true. If banks were compelled to keep in re- serve $1 in Government coin or Treasury notes for every dollar they issue, they would not issue such notes. Tliey could just as well put out or loan out the coin and Govern- ment notes themselves as to hold them against circulating notes dollar for dollar in amount. The only inducement to the banks for issuing their own notes for currency is in the privilege or opportunity to promise to pay more dollars than they hold in reserve against those promises. Their profits on circulation arise wholly upon the practice of increasing the circulation above the reserve, and the more they are permitted to owe the people on their circulation the gi'eater their profits. They draw interest on what they owe, which en- courages them to put out larger quantities of their promissory notes. Sir Robert Peel was quoted before the Currency and Banking Committee of this House, page 249, and his words should be heeded: It appears to me that we have, from reasoning, from experience, from the admissions made by the issuers of paper money, abundant ground for the conclusion that iinder a system of unlimited competition, although it be con- trolled by convertibility into coin, there is not an adequate security against the excessive issue of promissory notes. Thus we have his own clear statement that from reason, taking hold of the nature of the case, from experience, the lesson of his- tory, and from admissions of the bankers themselves, the control of the volume of note issues, even with convertibility into coin as a requirement, could not safely be left to the banks, although there were probably not more than the twentieth part as many banks then to regulate as in our country. Notice also that convertibility into coin was a greater limita- tion than convertibility into any form of legal tender, as well as coin contemplated by these banking schemes. One will ask me if I would deny to the banks the privilege of loaning their capital to merchants and business men when needed. Certainly not; let them loan all the capital they choose and all the spare money they have on hand, as any otlier business firm could do, but never permit them to make their promissory notes a permanent part of the currency in circulation. 1770 129 SECURITY TO NOTEHOLDERS DOES NOT CONTROL VOLUME. The ultimate payment of their notes may be as secure as the payment promised in the notes and obligations of other branches of business, although banks are not in the habit of giving any- thing near such strong security to the holders of their notes as they require from others. Yet let me say that all plans of security based upon assets and liens and double liability and partial re- serves will still fail to prevent the manipulation of the volume of notes in circulation to the constant advantage or supposed ad- vantage of the banks. The theory of ultimate redemption and strong security for the notes they issue when they are allowed to draw intei'est instead of being compelled to pay interest on their notes, does not prevent even bankers (sacred as their calling seems to be in the minds of many Congressmen) from giving way to the strong temptations be- fore them. The burdens of interest on other lines of business on what debts they owe, tend strongly to keep up their efforts to lessen their in- debtedness, while profits on notes issued for circulation by bank- ers lead to efforts to increase their note issues, and as far as pos- sible keep the debt out perpetually. Even United States bonds as security afford us no protection as to volume of bank issues and expansion and contraction by the banks, unless we have a limit on bond issues, and that seems dif- ficult to enforce on recent Administrations. I have long felt that if our money system could be so simplified as to have only three kinds in circulation it would be far better for the people, and besides they could better understand the subject in all finan- cial discussions. I would have gold and silver freely coined at 16 to 1 for all who bring them to the mint, and in addition United States Treasury notes, and all of these made full legal tender; and all other kinds of money funded or changed into these three kinds as fast as possible. I have, however, prepared a table showing the status of all of our different kinds of money, as far as can conveniently be done, as they stand at this date, 1770 9 130 §-9 j^Q Q Z, 'i- O O I j^.ri 0) £ c a - 5 a !* : £ 3 Si L! oTa fa « c5 - /a o p j5 ^^ ear 03 El 3g 2 ^ i (!, S CO r f^f— ' 'tJ r^ ra W J- UJ ] CO ® S "2 "« • fa 0.2 2 a ■S-Sp.® CO ^fl a ca « ® 3 fl L +J c o 12; ^ c 9 ? .- " aj ^ cj h® flco ca sJ (0 -.3 Hi •s ® 3 2 3 jam ®-2^S aaaS) J3 --r 35 ® i-^-H a'^'C "a a^^■3'*^ 1^ o cj ►>> a o o o (D o a s •g^ i2®g ;a tj.S o 4) 3 a U-C^ P<4J Pi S'-C t;-^ a « a^ §« S^5.2.2am2» :i^ a^"-n " P o TS -a*-'®i . o * ® a >-<'^ Pc3 a -^o S's^aaJ fa % ®.9 ® :S 3 5-55:3 P--i5^ o ca a ® ® tH 3 oi'Otn o © — J 0.2 ^3.2 ® 3 ® 5-M ^o"al •^ M-o a ^ ®'te.2 o a,^ i>'-a u >H X a o m a^ S -^ i-O m »g.s>:'^ "S-Sp'22 0) a-o "fa" D "^ t: . 3 =* O 3 " P. O . P< " =613 - ? _ Tj 2-^ 3 '^ '^ "3 ® ^ > 2 M^ a fa : =«•*-' i fa Si 5:r;'-c5 "a P a Pc»^ ".a -"-o^ o '3.9 .18 ai-i ^9 . -gM >J ^5 131 ADDITIONS TO TABLE OF LEGAL STATUS OF UNITED STATES MONET. 1. Subsidiary coins are issued up to the needs of the country, coined of standard or nine-tenths fine silver, on basis of 385.8 grains to the dollar; into 10-cent (or dimes), 25-cent, and 50-cent denominations. They are legal tender in sums not exteeding $10, exchangeable for minor coins, and redeemable in "lawful money " at the United States Treasury in sums of $20 or any multiple thereof. 2. Minor coins are the 5-cent piece, made 77.16 grains, being three- fourths copper and one-fourth nickel, and the 1-cent piece of 48 grains, 95 per cent copper and 5 per cent tin and zinc. They are issued up to the needs of the covintry, legal tender not to exceed 25 cents, and redeemable at Treasury in sums of $20 or more. 3. National-bank notes — The Treasurer of the United States on examining this table says the clause attributing limited legal tender to national-bank notes seems not quite warranted by lan- guage of the statute. APPEAL. I have endeavored to present to you the greater facts and more fundamental principles of the money question. Will you heed them and forever remember that, other things being equal, the volume, that is, the number of units in circulation in a nation, con- trols the general range of prices of commodities that the people must produce and exchange to pay the various monetary obliga- tions of modern civilization and supply themselves with the neces- saries of civilized life. The money question is a question of prop- erty and prices. Prices regulate profits in all industries. Profits are necessary to equitable employment of labor. Money, prices, profits, employment, equity of payments, all of these are necessary to prosperity and freedom. In the face of these all-important principles, will you betray all of them into the further control of the banks and the Anglo-Amer- ican gold conspiracy? Will you betray the people of your country, 70,000,000 of them, with upturned faces looking out of discouragements and unjust sufferings to you who sit here in the high places of legislative power, praying for relief and deliverance from the gold power? Have you neither sense of justice nor sense of official obligation, nor a heart for the suffering of the trustful, yea, the too trustful people, who have sent you to this Chamber to legislate for them? If not, yet humanity must exist, despite the betrayal of those lifted into political power. And when once aroused and indignant at in- justices long suffered, the people mount to the chariot and ride on and over the entrenchments of selfishness and error with a ven- 1770 132 geance and unsparing cruelty that remind us ot God's greater forces in wind and storm that show no respect of persons. There's a cry among the needy, there's a wrong on every side; For the bankers take the harvest and the reaper is denied. Now the king mounts to his chai-iot, whose warning was defied. For the rising sons of freedom shall soon come marching on. In the old Plutonian temple there's an image made of gold, Where his worshipers assemble in their revels as of old. But a Samson now is feeling for its pillars, we are told. Then arouse the sleeping people, and forward, men, march on. But a greater poet said also: But life shall on and upward go; The eternal step of progress beats To that great anthem, calm and slow. Which God repeats. So sang Whittier for the reformers of his day, when the arro- gance of the slave power threatened the overthrow of the nation. It was not long after that he sang of the victory, saying, with true poetic fire: Loud and long Lift the old exulting song. BEHOLD A CLOUD OP WITNESSES FOR JUSTICE. I am a fiiin believer in the ultimate victory of America over monetary conspiracies. We have all things about us in this glori- our country to encourage us to persist in the line of justice and patriotism. Our plains are fertile, covered over with waving fields of abund- ant and ntitritious grain. Our mountains are beautiful, often majestic, and always beckon- ing to highest thought and bravest action. The statues of our heroes and statesmen range themselves in ever-increasing numbers along the aisles and corridors of our pub- lic buildings to inspire to noble action. Our homes for the people, whether cabin or palace, show the efforts and aspirations of the Americans for beauty and comfort, and justice and peace. Our schoolhouses, colleges, universities, bedeck our hills with greater strength and promise for the maintenance of the state than the rock-built embattlements and turreted castles of the for- eign and ancestral lands across the sea. Religion, reaching out in the direction of equity and fraternity, unpinioned by dogmatism, leads our people toward a common brotherhood for all mankind. Art, culture, wealth, and inde- pendence. What more can be needed to stimulate patriotic ac- tion? If these great surroundings and your own ambition to be worthy of citizenship in this age, surpassing the dreams of the 1770 133 Magi, and tMs country, opening a new epoch for freedom and prog- ress, will not enable you to brave the threats and clamorings of the mercenary agents and venal influences of the greedy money mongers, then surely anything I may say will be in vain. I have indeed been hopeful, yet in the midst of misgivings, that the members of this gi-eat legislative assembly might prove themselves worthy of the land and the people and the high order of citizenship and responsibility that they represent in this Con- gress. To make it so and bring justice and prosperity back to a long- betrayed iieople we must withstand in this great crisis the insid- ious and merciless encroachments and legislative advantages that the gold and bond conspirators now seek to fasten upon our be- loved country. I pray you, gentlemen, stand up erect, gird for the battle, and move forward like men worthy of the confidence and love of man- kind. But if you will not, still mankind is of greater value and power than money and aU of its treacherous methods. Still, whether you go with it or no, shall humanity move forward toward the dawn of a new and better day. [Applause.] 1770 Denomi nations of Currency. Keeping small denominations of our legal-tender notes in abundant cir- culation ameng our people and paying out silver in due proportion on all coino bUgations when presented wiU stop the raids on our Treasury for gold. SPEECH O F HON. HENHY A. COEEEEN, OF WYOMING, In the House of Eepresentatives, Friday, Jannary 25, 1895. The House being in Committee of the Whole to consider House bill 8518 making appropriations for sundry civil expenses of the Government. The following amendments were offered: Mr. SAYERS. Now, Mr. Chairman, I offer the amendment which I send to the Clerk's desk. It is one amendment to two clauses of the section under consideration, I offer this in order to test the sense of the House upon the proposition. The Clerk read as follows: On page 20, at the end of line 8, insert the following: ''Provided, That no portion of this sum shall be expended for printing United States notes of a larger denomination than those that may be can- celed or retired." On page 20, at the end of Une 15, insert the following: " Provided, That no portion of this sum shall be expended for printing United States notes of a larger denomination than those that may be can- celed or retired." During progress of the debate the following amendment was also offered: Mr. COOMBS. I ask that my amendment be read. The Clerk read as follows: On page 20, after line 15, insert the following proviso: "Provided, That no part of the appropriation made by this and the preced- ing paragraph shall be used for printing gold certificates, and that so much of section 12 of the act approved July 12, 1882, entitled 'An act to enable national banking associations to extend their corporate existence, and for other purpose,' as authorizes and directs the Secretary of the Treasury to receive deposits of gold coin with the Treasurer or assistant treasurer of 1770 134 135 the United States, and to issue certificates thereon, be. and the same is here- by, repealed; and all such certificates, after received into the Treasury, shall be canceled." Mr. COFFEEN said: Mr. Chairman: There are two or three points involved in this amendment and this discussion that I believe are not yet suffi- ciently noticed and developed. In reply to the gentleman from New York [Mr. Coombs] , who has just introduced a substitute amendment providing that no part of this fund shall be used for the issuance or preparation of gold certificates, my conviction is that the gentleman is speaking un- der a misapprehension. The law already provides that when the gold reserve is less than $100,000,000 no issue of gold certificates shall take place. Mr. COOMBS. I said that; but when our gold reserve went up to $110,000,000 or $115,000,000 then the Secretary had to issue more. Mr. BLAJND. The proposition now is not to issue them at all? Mr. COFFEEN of Wyoming. As far as that part of the amend- ment is concerned, taking away from the Secretary all power to issue gold certificates, I have no objection to it, for at all times I am in favor of reducing the mongrel and manifold system of cur- rency in circulation to the simplest possible form. Mr. VAN VOORHIS of New York. Will the gentleman please tell us what is the gold reserve, where it is, in what form it is, and how it is to be got at? Mr. COFFEEN of Wyoming. If the gentleman needs informa- tion on that point, I have a document here that will give the gen- tleman all the information necessary, and I will hand it to him and proceed with the other matters, as I have only five minutes. Mr. VAN VOORHIS of New York. Is there any gold reserve, except as a matter of bookkeeping? Mr. COFFEEN of Wyoming. Will the gentleman be kind enough to look over the report of gold reserve and other matters pertaining to circulation in yesterday's report of the Secretary of the Treasury? I will go on now with my remarks. I want to say that it has been clear to this House for some time that there is a general movement on the part of the associated monetary influences to retire the legal tenders from circulation, and from the reach of the common people in their retail trade. The very bill that has lately been defeated, sent "glimmering down the slope " a few days ago, had this provision in the very heart and core of it, to retire the gi-eenback circulation. One way in which that can be accomplished, since the Secretary of the Treasury and those who favor his policy have failed to accomplish the passage of the ciirrency bill, is to have a discretionary power 1770 13G to change the denominations of these legal-tender notes in circu- lation into what are called "bank money," or bills of large de- nomination. That will practically take these notes out of circu- lation. I am, therefore, in favor of the amendment of the gentleman from Texas that was first offered, providing against the change from the smaller to larger denominations, and am opposed to giv- ing the Secretary of the Treasury any discretionary power on this matter. All the way through, the Secretaries of the Treasury, for twenty to thirty years, by some influence or other, by soma fatality that I can not or, at least, shall not take time now to ex- plain, have been forever construing every doubtful clause and every regulation possible against the circulation of the greenbacks, and in favor of that which best suits the national banks of the larger cities whose circulation comes in competition wnth the small notes of the greenljack and Government currency. Mr. Chairman, it has been clear to all who are carefully watch- ing the maneuvers of the banking interests on this money (lues- tion that they are doing all they can to cancel, convert into in- terest-bearing gold bontls, or otherwise retire all of our forms of legal-tender money; and failing to accomplish the destruction, they are doing all they can now to discredit our legal tenders, lock them up in the Treasury, in bank vaults, in bank reserves, and in every way possible to get them out of general circulation. The strong power of these banking influences has for many years manifested itself in warping and perverting the administration of financial affairs at our Treasury here in Washington. This has been the case through several Administrations and is the case to-day to too great a degree. Why should our honorable Secretary of the Treasiiry at this time and under a Democratic Administration join in or at least give way to the clamor of the banks of Wall street against the general circulation of our legal-tender greenbacks and Treasury notes? I shall not undertake to answer why it is so, why our Treasury Department has constantly listened to the seductive influences of the monetary syndicates for the last twenty -five years, and turned a deaf ear to the voice and pleading of the laboring and industrial classes for a convenient and abundant retail currency for their own use. But that our present Secretary is following, in part at least, the demands for the retirement or impairment of the circulation of legal tenders is sufficiently evidenced in his efforts to secure the passage of a bill contemplating the locking up and retirement from circulation of om- legal-tender paper money, in his bill for per- 1770 137 mitting both State and national banks to supply bank money in- stead. Therefore I must stand against the passage of any law or the negative action by omission (as in the case now before us) of any law that would give the Secretary of the Treasury any discre- tionary power over the denominations of otir greenback and Treas- ury note legal tenders now in circulation. We know sufficiently well how that power will be used. We know that by changing the small and convenient denomi- nations of these notes into large and inconvenient denominations he can get them largely out of circulation and under the control of the banks, and accomplish by this flank movement what he has failed to accomplish in behalf of the money and bank powers in his currency bill for the deposit and retirement of this same legal- tender Government paper. This greenback legal-tender money is the favorite money of the people to-day, and has been for over twenty years. It becomes the duty of this House to prevent the accomplish- ment of the money dealers' designs against the general circulation of greenbacks and treasury notes. Let us then insist on carrying this amendment that compels unfriendly administrative powers to reissue and keep out the small denominations suitable for the retail and general trade of the country. Does any member need be told that the retirement of small de- nominations of our legal tenders means to make more room for the circulation of nonlegal tenders? Does anyone need to be told that it will have the effect of re- moving, for the benefit of banks that much of the competition between their bank-note circulation and legal-tender notes of the Government? It is not sufficient reply to this that silver certificates can be issued in small denominations instead. Silver certificates are not full legal tender. Besides this there is nothing compulsory on the Secretary of the Treasury requiring the issue of a greater amoiint of small denomi- nations of silver certificates than are already issued. WHAT AMOUNT OF SMALL DENOMINATIONS IS REQUIRED? The entire amount of silver certificates in circulation last Mon- day, January 19, shown by the Treasury statement, was only $337,- 784,277. Of this we have no very recent authoritative statement at hand showing the different denominations, but it does not vary greatly fi-om the condition given by Maurice L. Muhleman in his hand- 1770 138 book on the Money of the United States, He was cashier of the snbtreasury at New York. On page 51, in table giving entii'e stock of paper money by de- nominations, we find that there were, in 1893, only $39,000,000 of one and two dollar silver certificates, $94,000,000 of fives, $107,000,- 000 of tens, $56,000,000 of twenties, $35,000,000 of higher denomi- nations. If the entire amonnt of silver certificates was in small denomi- nations it would not make over one-third enough for the needs of the country. Muhleman well says: The proportion of the entire stock of paper issue in small denominations fluctuated between 79.5 per cent and 66.1 per cent, with an average of 73.5 per cent. This is the average showing of twenty-one years, from 1873 to 1893. The total of small denominations in paper money given by him in 1893 is $844,000,000. He then says — and remember this is a most valuable witness: In view of the fact that even in 1893, when the proportion of small notes appears to have been nearly 77 per cent, the supply of the smallest denomina- tions was not equal to the demand, it is not an unreasonable conclusion that an average of 75 per cent of our paper issues might be in denominations not exceeding $20. Now, since $844,000,000 in small denominations of various kinds of paper money, being about $13 per capita, were not sufficient in 1893, as has been shown and as is generally known, how can you supply the needs for small denominations to-day by using silver certificates when there is only $327,000,000 of them in circulation? This is not half enough, if all of them were used. Then add all of the national-bank notes now in circulation, and suppose they were all in small denominations, still the supply is insufficient by $300,000,000. This ■\^dll require about three-fifths of all of our legal tenders in circulation also; and we must therefore, to protect the people in their right to small denominations, insist that none of the legal tenders shall be converted by the Secretary of the Treasury into larger denominations, or into "bank money," as the larger de- nominations are called. The bankers are already sufficiently favored with "bank money " denominations of United States notes and Treasury notes to raid our Treasury and carry away gold out of our gold reserves. Why give them any more advantages? They also tie up a great amount of the small denominations in legal tenders by deposit of them and taking out currency certificates instead in denomina- tions of $5,000 and $10,000 only, and these are very large denomi- nations; and further, let me say that only the $10,000 denominar tion of these has been recently issued. 1770 139 In 1893, to obtain supply of smaller denominations so impera- tively demanded in times of panic, the banks, as shown by MuMe- man's tables, page 50, suddenly returned about $60,000,000 in gold certificates of large denominations, $55,000,000 of these being in denominations of $500 and over, and they returned also |18,- 000,000 in currency certificates to the Treasury. It was found that there was not a sufficient supply of small denominations to stand the test of the great "object-lesson panic." It should be observed that the law of May 31, 1878, which re- pealed the law for the cancellation of the greenbacks and ordered them reissued when this kind of money came into the Treasury, also made it mandatory on the Secretary to reissue same denomina- tions for all mutilated notes. When they are not mutilated they should and must be reissued as they are. This law is still in force, and the retention or preservation of these United States legal-tender notes rests on this law of May 31, 1878. The last clause of that beneficent law reads as foUows: Provided, That nothing herein shall prohibit the cancellation and destruc- tion of mutilated notes and the issue of other notes of like denominations in their stead, as now provided by law. Now, under the comijulsory laws as they exist regarding the reissue of same denominations in United States notes as those that come into the Treasury, and with some discretion left with the Secretary as to denominations in issuing and reissuing other kinds of paper currency, still the amount of all kinds of money now ex- isting in the Treasury and out of it in small denominations is not so large to-day as the needs of the country require. And we base the needs of the country for the purpose of this statement and comparison on the statement of the cashier of the subtreasury at New York. In 1893 by his tables, to which we have referred, there were $844,000,000 in circulation. This was then insufficient. About sixty to eighty millions of larger denominations were sent in for exchange into small bills and silver. Silver even was selling at a good premium over gold and all large denominations in New York for the purpose of securing smaller denominations for cash payments, and yet the sum then proven to be so far in- adequate was greater than the sum reported recently by the Treas- urer of the United States as in existence to-day. Why then, we ask, permit an insufficient supply of small denom- inations to be changed into larger ones by the Secretary or any other power? The honorable Secretary himself says that then, in 1893, small currency was at a premium, in his testimony before the Commit- 1770 140 tee on Appropriations, and yet the report of the Treasurer shows still less in his last annual statement existing now. THE CRY OF THE GOLD BAIDEHS STILL HEARD IN THE LAND. But those who oppose the amendment and the maintenance of these convenient retail denominations of our legal-tender money say that they desire to assist the Secretary to prevent the raids on the gold reserve, of the Treasury. How anxious they are to help the Secretary to protect the gold. This has been the cry during this entire Congress when the money power wanted to secure any advantages. "We heard it, when the repeal bill was being crowded through, on both sides of this Chamber. We heard it when the Carlisle currency bill was brought for- ward. "We have heard it frequently as an excuse for selling bonds. "We hear it now again. Is there one on this floor that recognizes any sincerity in that cry? The way to stop the holders of bur coin obligations from raid- ing our undefended Treasury is to pay out silver, as every other nation of any consequence on the face of the earth exercises the right to do, except England, and in that country the same result is accomplished by raising rates of discount. Paying out silver in due proportions under the option and right that Congress has always reserved to the people in redemption of coin obligations will stop these raids instantly. On gold certificates, to be sure, we must pay out gold, but I shall support that portion of the amendment of the gentleman from New York [Mr. Coombs] that forbids further issue of these. Our nation is the only one that has to any great extent issued gold obligations instead of coin obligations. Before the Commit- tee on Appropriations, in answering the following questions, no- tice Mr. Carlisle's own testimony against other than coin obliga- tions: Mr. Coombs. I would like to ask in this connection, do European countries have gold certificates? Secretary Carlisle. Not that I am aware of. I do- not at this moment think of any Government except the United States which issues a certificate based specifically upon any particular coin. Mr. Coombs. Are we not by the use of these gold certificates furnishing a facility for the obtaining of gold from the Treasury— making it easier? Secretary Carlisle. I have just stated, in my opinion if the holders of gold coin could not put it in the Treasury and use that institution substan- tially as a warehouse, taking out the paper representative of it, the gold itself would come in and stay there. The banks and other institutions do not like to hold gold coin; it does not circulate from hand to hand among the people, but the gold certificate does, and that is the most convenient form in whicl>they can put their gold for circulation; we simply take care of the coin for them. 1770 141 And yet the honorable Secretary insists on paying out gold on coin notes and greenbacks as well as on gold certificates. So, Mr. Chairman, I protest against the Secretary leaving the door of the gold vaults open to holders of greenbacks, Treasury notes, and all other obligations in which coin instead of gold is specified, and then clairaing that he desires to stop the raid on gold reserves. Outside gold contracts that we are told exists to the amount of $5,000,000,0000 is practically that much gold sold for future de- livery. This condition is growing more dangerous and ought to be remedied by law. I will here read the Stanley Matthews resolution passed by an overwhelming majority in both branches of Congress in 1878. Be it resolved by the Senate (the House of Representatives concurring therein). That all the bonds of the United States issued or authorized to be issued under the said acts of Congress hereinbefore recited are payable, principal and interest, at the option of the Government of the United States, in silver dollars of the coinage of the United States, containing iVZi grains each of standard silver, and that to restore to its coinage such silver coins as a legal tender in payment of said bonds, pi-incipal and interest, is not in violation of the public faith nor in derogation of the rights of the public creditor. This is the position of our people on the payment of silver and other money to prevent gold raids. John Sherman him- self while Secretary of the Treasury bore testimony as follows, just following the howl of Wall street in 1878 against silver: On the other hand I will give the favorable effects. In the first place, the silver bill satisfied a strong public demand for bimetallic money, and that de- mand is, no doubt, largely sectional. No doubt there is a difference of opin- ion between the West and South and the East on this subject, but the desire for remonetization of silver was almost universal. In a Government like ours it is always good to obey the popular current, and that has been done, I think, by the passage of the silver bill. Resumption can be maintained more easily upon a double standard than upon a single standard. The bulky character of silver would prevent payments in it, while gold, being more portable, would be more freely demanded, and I think resumption can be maintained with a less amount of silver than of gold alone. * * * Senator Jones. "Would the fact that they (our bonds held in Europe) come back enable us to maintain resumption much easier? Secretary Sherman. Undoubtedly. Senator Bayard. You speak of resumption upon a bimetallic basis being easier. Do you make that proposition irrespective of the readjustment of the relative values of the two metals as we have declared them? Secretary Sherman. I think so. Our mere right to pay in silver would deter a great many people from presenting notes for redemption who would readily do so if they could get the lighter and more portable coin in ex- change. Besides, gold coin can be exported, while silver coin could not be exported, because its market value is less than its coin value. Senator Bayard. I understand that it works practically very well. So long as the silver is less in value than the paper you will have no trouble in re. deeming your paper. When a paper dollar is worth 98 cents nobody is going to take it to the Treasury and get 93 cents in silver; but what are you to do 1770 142 as your silver coin is minted? By the 1st of July next or the 1st of January next you have eighteen or twenty millions of silver dollars which are in cir- culation and payable for duties, and how long do you suppose this short sup- ply of silver and your control of it by your coinage will keep it equivalent to gold— when one is worth 10 cents less thjin the other? Secretary Sherman. Just so long as it can be used for anything that goldis used for. It will be worth in this country the par of gold until it becomes so abundant and bulky that people will become tired of carrying it about; but in our country that can be avoided by depositing it for coin certificates. We, too, are in favor of stopping the raid on onr gold reserves and know that the quickest and best way to do so is to assert at ouce the right and option of the Government to pay all coin obli- gations in silver. Changing the denominations of greenbacks from small to large denominations that go at once into the banks do not prevent but actually facilitate the raid by those banks on our gold so long as silver is held back and not applied. I am disgusted with this sham cry and pretense. Let the law be obeyed and the rights of the people outside of the monetary circles be respected and the raids on our gold will cease forever. [Applause.] 1770 GENERAL INDEX. Page. ^sop's fable, "Fox without a tail" ........ 97 Aggregate of money determines prices 4,6,10,14,36 Alternatives, no compromise with the gold conspiracy ..... 41 Amount of small bills required in circulation 137 Amos, the prophet, on "Elasticity" ..... . 107 Appeal to Congress to give the people relief 131,133 Appreciation of money depreciates property 8,11,64,65 Aristotle, early teaching on money 75,78,86 Attack not on bankers but iipon systems of banking 5,102 Automatic theory— the metals to regulate volume 93,126 Banks— their true province 53,54,85,87,93,101 Banks seek to control circulation 5,28,33,39,51,67,94,138,137 Banks of New York no critei'ion for the country. 36,62,117 Baltimore and other plans for currency .. 38,94 Barring, Alexander, quoted _,. . 13 Beadeau, as quoted by MacLeod 76 " Best " or highest dollars, and "plenty " of them, inconsistent 8,67 Belgium, ratio of wealth to circulation 112 Bland's substitute proposed for Carlisle bill 125,126 Bonds of United States... 26,44,96 British monetary commissions 53,89 Butler, Mr. Geo. A., bank president's testimony 113 Carlisle-Springer currency bill 50,56,64 Carlisle bill is better than present law 59 Carlisle, his former teaching, contrasted with present 43,46,140 Cairnes, Prof. J. E., of University CoUege, London 99 Cernuchi, Henry, quoted 85 Challenge to Senators on quantitative theory.. 8,9,16,99 Charles 11 restored as "legitimate tyrant" r-- 50 Cheaper money means better prices for commodities 8,21,65,68,83,112 Chevalier endeavored to demonetize gold in Europe 113 China, money and prices 17,21,83 Cicero against CateUne and Verres - 108-9 Circulation of money— (See Aggregate and Volume) HI Clews's Financial Review 50,61 Coin redemption not necessary to maintain value 13, 14, 15, 42, 80, 87 Coin obligations, all payable in silver also 26,27,45 Colange, Professor De, quoted U Congestion of money in New York banks— and Europe 36,37,52,117 ConvertibiUty of paper money — - 76-79,87,89,127 Coombs. Amendment to prevent issue of gold certificates 134, 135, 140 Cox, Bickford & Co., of Boston, nature of money 117 Cry of the "gold raiders" still heard in the land 140 Currency is essentially transferable debt - 74 Currency denominations— for retail trade 134,137 1770 143 Debt in transferable form becomes currency 74 Definitions and the nature of money. (Sec Money.) Deknar, Alexander, gives valuable testimony 16 Demand for money universal, but supply limited 65 Democracy and the money question 5,49,52,60,125 Demonetization of silver 20,28 Demonetization of gold, why urged by Chevalier 013 Denominations of paper money should be small 134,137 Deposits in banks, growth of, 1873-1893 117 Depositors, security of, endangered 57 Edmunds, Senator, opposing Stanley Matthew^' resolution 24 Elasticity, its meaning and dangers 40,46,47,67,90, 91,97,107,127 Empire of wealth, the invisible 108 England, money and prices in 18, .>l Equity of payments on time contracts..-. 1,40. (i"), 69, 101 European markets and money 7,18,19,20,83,140 Evils of contraction and demonetization 20,46,47,70,118 Executive interference' in legislation to be resisted 31,137 Expansion of volume, to what extent 33,34,69,72,110,123 False teaching and prophecy of the money power 25,23,30,31,48,67,140 Faw^ett, Professor, quoted 14 "Fiat money," scare words 83,93,98 Fitche, quoted 10 France and her finances 23, 4.5, .54, 96, 105, 112, 114 Fraud possible by issuing money on bank assets 56 Gallatin, quoted 13 General Grant on contraction Ill Germany, money in 54 Giflfen, Robert, of London, on fall of prices 119 Gold exports 19,25,30,99,104,115 Gold standard 12,15,21,42,95,100,123 Gold raid on our Treasury 32,26,29,30,140,142 Gold redemption 12,13,14,15,26,29,42,122 Government legal-tender paper, why issue 34,92,97,98 Government legal tenders, how put in circulation 35,38 Graham, Sir James, quoted - 11 Greenbacks and the banks 28,30,33,45,48,93,96,97,98 Grey, Earl, to governor of Bank of England 15 Hainer, Hon. Mr., of Nebraska, questions on per capita 17,71 Hamilton, Alexander, the younger 56 Harrison-Administration and the parity clause 95 Hendrix, Hon. Mr., of New York, on coin redemption in Prance 45 Honest money, what is it 28,67,68 Homer, Mr., in bullion report of 1810 89,91 How to stop the raid on the gold reserves 23,30,44 How the banks save the country 21,30,46,48,96,140 Hume, David, the historian, quoted 10 Huskisson, William, quoted 10 Importance of the currency question 6 India, silver and prices in 18,20,83,107 Inflation and who are the inflationists 50,51,92,120,124 International trade is goods for goods 19,99 1770 14i) " Intrinsic-value " money 12,13,14,16.76,79 Internal trade and commerce of United States .- 22 Interocean and the contraction of currency Ill Investments, more profitable if more money was issued 59, 73, 112 Issue in controversy stated _ 3,5,6,41 Italy, ratio of wealth to circulation 112 Jevons, Prof. Stanley,on money 12,77,80 Johnson's, Hon. Tom L. challenge on Carlisle bill 56 Jones, Senator John P., on gold and silver 15,23,114 Jones, Senator John P., on material in money 9,12,78,80,83 Jones, Senator John P., on parity clause 27,99 Jones, Senator John P., on volume and price : 8,70,83 Justinian Pandects and teaching of Paulus 9 Key that unlocks monetary mysteries 9 Labor and wages dependent on volume 4,16,31,34,35 Law of denominations in reissuing greenbacks 139 Law, John, quoted by MacLeod 75,86,88 Lever, money balancing against commodities 66, 109 Locke, John, on money 10 ■ Logan, Senator John A., on contraction Ill Losses to this country by contraction policies 21,67,70,71 Legal tender, aU money should be , 34,92,97,98 MacLeod, Henry Dunning 75,78,80,86 Main question, who shall control volume 3,5,41 Matthews, Stanley, resolution of, to pay silver 23, 24, 141 Mayer, Geo. J. E., on security for depositors 58 McCuUoch, Mr. J. R., quoted 12,48,89 Mill, John Stuart, on money 8,10,77,79,100,118 Mirabeau, quoted 88 Money, its nature and functions 3,4,35,73,74,78,85,93,99 Money, dealers in, antagonize production and enterprise 66,68 Money, table of legal, status of United States money 130 Money, material in, is of secondary importance 4,9,11,76,81 Money, volume in circulation regulates prices.. 10,33,68 Money,mass of,measured against mass of wealth 10,16,22,91,105 Money, Hon. Mr., of Mississippi, questions on control of prices 7 Muhleman, Maurice L., cashier New York subtreasury 104,116,138,139 National banks, Carlisle on 45-48 Nicholson, Prof. Shield, of Cambridge, quoted 15 Nicholson, N. A., of Oxford, quoted 15 Norman, George Ward, quoted — 55 Option of payment the right of the debtor 23 Oriental countries, silver and prices in 20 Overstone, Lord, on money 13,54,89,91 Our challenge on money questions ^ Panics and "object lessons" 28,47,91,105,108,139 Paper money, if Government legal tender, is best 84 Party clause a trick and excuse 23,27,28,30,95,99 Paulus, the Roman, on the origin and nature of money 9 Peel, Sir Robert (the Second) 6,53,91,128 1770 10 146 Per capita circulation, how to consider it 17, 18, 19, 22, 110" Perry. Professor, of Williams College 78,79 Plans of the bank power to secure bonds and circulation 38,94 Plumb, Senator, on volume in circulation 105 Prices affected by supply of money 5, 8, 12, 16, 18, 20, 22, 26, 31 , 37, 41 , 64, 68, 90 Fainting machines of Government, turning out money for whom 121 Proi)erty holders and producers' interests v. the banks 16, 17, 66, 68 Profits of present banking system 62, 71 Power to issue notes and coin money is governmental 17,41,43,67,82,84 Quantity of money circulating controls prices 6,10,14,16,41,74,118 Questions for money dealers to answer 25,51 Quorum of Coinage Committee broken by scheming 64 Raid on the Treasury gold reserve 22,26,29,31 Redemption in coin not essential to value of money 12,13,14,15,76,80 Redemption of United States notes should be in silver coin also.. 23,35,27,116 Remonetize silver and issue legal-tender money 18,22,104 Repeal of silver-purchase clause and its effect / 28,29,30 Republican party and the money power 49,61 Retirement of greenbacks, who demands it 64,97,98,122,135 Ricardo on nature and value of money 10,12,13,80,81,88,89 Sauerbeck's index tables of average prices 119 Sayers amendment to prevent change of denominations 134 Sherman, John, his work and his words ' 25,26,95,141 feidgwick. Professor, quotations from 11 Silver coinage... 18, 21, 26, 42, 82, 84, 101, 10? Silver in India 1«,20,83 Silver payable lawfully on all "coin" obligations 23,25,27,44 Smith, Adam, quoted 7ft St. John. William P., president Mercantile National Bank, New York, on money 4,30,98,102,113,122 Thornton, Mr. Henry, quoted 7ft Three-card-monte game 95,101,107 Tooke on money 55- Treasury gold redemption since repeal of purchase clause 29,30' Treasury deficit, what the cause 36,38' Treasury Department has too long served the money power 136 Torrens - 11 United States, ratio of wealth to money in 110 United States, vast internal trade and production of 22 United States, bonds of... 26,44,61,96 United States money, table showing legal status of 130 Van Voorhis, Hon. Mr., of New York, wants information 135 Volume in circulation, change of, and the effect 14-30,32,73,90 Volume, diminishing, destroys prices and prosperity 13.17,36,70 Volume chitif element in the control of prices 5,10,14,90,102 Volume, how far should it be expanded 31,69,72,74,110 "Wages and money volume 5,35,37,114 Wagnetin, Mr 91 Wall streets demands and conduct 25,33,60,9d 1770 147 Walker, Francis A 77 Warner, A. J., president Bimetallic League 53,88 Warner, Hon. Jolin De Witt, of New York. How put money out. 35 Webster, Daniel, quoted on banks and volume 55, 56, 87, 89, 109 Wealth of different countries compared to their circulation 113 What is the great issue between people and the banks 3,5,41 Whitmore, governor of Bank of England Wheat and cotton prices in Europe and the East 7,18,30 Who, then, shall control the volume of money issued 3,6,33 Why, then, coin metals into money 101 Will the people bow down or surrender 40,94 Williams, Q-. G., president Chemical National Bank, New York 63 Wood, Sir Charles, quoted 91 Yardstick has nothing in common with money 4 Yoked to Republican doctrine 44 Young, John P., of San Francisco Chronicle 100 mo o THE ANGLO-AMERICAN GOLD BC )Y. And where are our great newspapers and journals of to-day? where our orators and lawyers and even the clergy and all of those who sell their words and eloquence and influence for hire ? Is it strang-e, that beholding the might of intellect and power of wealth and position all arrayed on the side of the gold combine, the people become discouraged and, at times, confused? Is it stranjie that personal integrity and love of country and all moral qualities decline under the withering blast of this strongly felt but dimly seen Empire of Wealth, which leaps in its stealthy movements over all national boundaries, over mountain ranges and ocean barriers to fasten its wealth-sucking tentacles on every form of production and enterprise ? But on the part of labor and industry it is a fight for life, and this contest shall go on, and on, and on until either man or money is brought into complete subjection the one to the other. SPEECH OF HON. HENRY A. COFFEEN, OF ■W^OHa.lNCBr, HOUSE OF REPRESENTATIVES, WEDNESDAY, FEBRUARY 6, 1895. "WASHINGTON". 1895. SPEECH OF HON. HENRY A. COFFEEN The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 8705) authorizing the Secretary of the Treasury to issue bonds to maintain the gold reserve, and to redeem and retire United States notes, and for other purposes — Mr. COFFEEN of Wyoming said: Mr, Chairman: It would seem that again we must meet the in- sidious and persistent efforts of the money power in the form of another bond and currency bill in this present measure reported from our Committee on Banking and Currency. Although in this case the bill professes mainly to be for the issuance of bonds, the double purpose, as I construe the bill, is — First. To secure the issuance of more bonds that bankers may invest the idle money deposited with them in forms certain of payment, exempt from taxation and good as a basis of issuing their own notes for circulation. Second. That these bonds shall be made payable in gold instead of coin, thus placing it beyond the power of Congress and the peo- ple to use the option at all times so far maintained in the law, al- tliough not properly applied by our various Secretaries of the Treasury, of paying in silver as well as in gold. Third. Of lea\'ing the amount to be issued, the time of issuing, and the place of marketing these gold bonds entii'ely with the Ex- ecutive, who has more than once, and in more than one Admin- istration, shown a desii-e to inflate the bonded debt of the country, even in times of peace, while contracting the volume of legal- tender money, and with no reasonable excuse. Fourth. To make these bonds, having such qualities as already mentioned, to be 50-year bonds, so to put out of the reach of this generation the power to rectify the wrong. There is in this an effort to fasten a perpetiaal debt upon our people in the form of interest-bearing gold bonds, where there should be a noninterest- bearing note of the Government issued instead, which the people would gladly absorb and use as currency at home, and thus not only save interest to the extent of many millions, but prevent for- eign investors from getting our people under bondage (for that is what bonds mean) to them. Fifth. The cry of the bankers for the destruction of the Gov- ernment legal tenders now in circulation is also met with a com- plete surrender to the money power in destroying the only legal- tender paper money that the people can under this system possibly obtain. 2 1823 3 Sixth. To still further grant every favor to the money power and take every favor away from the people it is designed to re- duce the tax on national-bank issues from 1 per cent per annum to one-quarter of 1 per cent. This to aid the banks in their elasticity scheme. Thus, first, with silver demonetized; second, legal-tender Treas- ury notes destroyed; third, gold bonds instead of coin bonds issued; fourth, bank notes to take the place of legal tenders; fifth, taxes or interest on these reduced to one-fourth of 1 per cent; sixth, and all of this arranged so that the banks can inflate and contract the volume of curre-ncy in circulation at their own sweet will. What more could Wall street demand? Is there anything more that the people can surrender to the Anglo- American gold conspiracy? If so, either the conspirators have not yet thought it out or they have not yet thought the time opportune for demanding it. THE PEOPLE HAVE BEEN OFTEN BETRAYED. We are in this peculiar situation, which is humiliating indeed to every true Democrat and every lover of his country, that in pre- senting our objections and opposition and warding oflE the attack of these organized and sjTidicated vampires we find ourselves using the same arguments and weapons that the great demone- tizer of 1873 used in his earlier and better days, to wit, the Sena- tor-Secretary John Sherman, before he had become completely servile to the gold power, and again, this second edition of the orig- inal demonetizer, the present Senator-Secretary of the Treasury, who also was but a few years ago found battling like an Ajax against the money power. And last and smaller in their generation, a lot of cuckoo birdlets, not able yet to soar and sing, but with an ambition to serve in a most humble manner their masters of the gold and bond conspiracy. If a patriotic Jetferson, or a brave and fearless Jackson, or any other great Democrat with like principles and love of justice, were President there would be said to the minions of the Anglo- American conspiracy in all places, as once was said in England by a great re- former to a mercenary crowd that assumed to legislate for tyranny and all corriipting powers in the name of the people: Ye are a factious crew and enemies to all good government. Ye are a pack of mercenary wretches, and would, like Esau, sell your country for a mess of pottage. Gold is your god. Is there among you that hath the least care for the good of the commonwealth? Have ye not defiled this place and turned this temple into a den of thieves? * * * You who were deputied here by the people to get their grievances redressed are yourselves become their greatest grievance. In my humble judgment there were no greater encroachments upon the rights of the people when those words were uttered than is now imminent, while the gold worshipers seek to destroy both '" the silver and the greenback money of the country and deliver our country over wholly to the gold conspiracy. But we have neither a Jackson nor a Jefferson nor a follower of these great patriotic heroes in the seat of executive power at this time. Nor. to do proper honor to a great patriot of the early and iincorrupted days of the Republican party, let me say, we have no brave, patient, humanity-loving Lincoln at the head of affairs to stand as best he could, and did, against the money powers of his day that hovered like vultures over the nation in its great crisis and struggle with slavery. 1823 It is said of Lincoln that almost the only time when he exhib- ited anij:er at the oi)position so often scheminj? to embarrass him was wlien he referred to the treachery and false pretenses and mercenary schemers from Wall street and the gold and bond markets. At another time he wrote to a friend in Illinois that letter full of warning as to the future when he said of the civil war: Yes: it has been indeed a trying hour for the Republic; but I see in the near future a crisis approaching that unnerves me and causes me to tremble for the siifety of my country. As a result of the war corporations have been enthroned aiid an era of corruption in high places will Idllow. and the money power of the country will endeavor to prolong its reign by working upon the prejuditres of the ix;(jple until all wealth is aggregated in a few hands and the Republic is destroyed. Wliat a contrast to the Presidents who have succeeded of late years! LINCOLN'S PROPHECIES WERE TOO TRUE. Let me quote from our present Secretary of the Treasury some few of his words when he was battling so bravely against the con- spirators that now, as it seems to me, he willingly serves. I have quoted him more at length in a former address to this House when I was speaking against the former Carlisle-Springer currency T)ill: Mankind will be fortunate indeed if the annyal production of gold and sil- ver coin shall keep pace with the annual increase of population, commerce, and industry. Mr. Carlisle was then the friend of silver, and saw that it was aU necessary to keep up the proper supply of currency. But I ■w-ish to use him as a watness to the conspiracy of the money power that he knew existed then, and we all know that it still is work- ing just as certainly now, even though the honorable Secretary may have gone into its service. According to my view on the subject the conspiracy which seems to have been formed here and in Europe to destroy by legislation and otherwise from three-sevenths to one-half of the metallic money of the world is the most gigantic crime of this or any other age. The consummation of such a scheme would ultimately entail more misery upon the human race than all the wars, pestilence, and famine that ever occurred in the history of the world. What a strong and severe enemy to the gold conspirators was Mr. Carlisle in those days, and how humiliating it is to us wha still fight the gold power to find that he has deserted us! Let not the defenders of the honorable Secretary and his finan- cial mea>sures in this House blame anyone to-day for using harsh terms against the conspirators that are still trying to get the American people in absolute serfdom to the money power. We have now far more evidence accumulated against the conspiracy than when Mr. Carlisle, in 1878, was talking of the "conspiracy" "here and in Europe," and declaring the "misery "that would follow this " scheme " to be greater than "all the wars, pestilence, and famine in the history of the world." FEATURES OF THE PENDING BILL. But the present bill involves, as I have said, the destruction of our greenback currency to follow the continued demonetization of silver, and at the same time enlarges the power of the national banks on gold bonds, at one-fourth their former expense of taxa- tion, to expand and contract the currency at their own option and without regard to the losses entailed upon the rest of mankind for their gain. Let us have Carlisle in his patriotic days speak to an- 1823 swer Carlisle in these days of his servility. We quote now from his great and masterly speech of March 1, 1881, against the right of national banks to contract the currency or even to exist, except as aids in marketing bonds, for which purpose they were allowed to base a currency issue on deposit of bonds. Speaking of the power of banks to contract the currency he says: It is not going too far to say that until this feature is wholly eliminated or materially modifled there can be no assurance of safety to any legitimate in- vestment or business enterprise in this country. He then condemns the fraud now called "elasticity," the con- tracting of the money volume in circulation, as we condemn it now. He was right then, as we are right now, and he made ar- guments against the dangers of contraction when left to the banks that neither he nor anyone else now can answer. Further along he arraigns the banks for contracting the circulation — "within thirteen days they have contracted the currency to the extent of $18,723,340." He exclaims in the same speech that— When Secretary McCulloch, several years since, in pursuance of his con- traction policy, began to retire and cancel legal-tender notes at the rate of $4,000,000 per month, it produced such consternation in business circles that Congress was forced to intervene at once and arrest the process by the pas- sage of a joint resolution; but now we have seen nearly $19,000,000 of circula- tion withdrawn in less than half a month, not by the Government but by in stitutions in the management of which the Gfovernment has no voice, and still gentlemen here insist that the power under which this has been done, and under which it may at any time be repeated, shall not be taken away. Why, sir, the whole contraction of legal-tender Treasury notes under the provi- sions of the resumption act, from January 14, 1875, to May 31, 1878, when it was prohibited by law, was only $34,318,984, not twice as much in more than three years as the bank contraction has been in less than two weeks. This experience warns us that we can not safely permit this great power to remain in the hands of these institutions unchecked by legal restrictions. It is an engine of destruction standing in the very narrowest part of the way to permanent industrial and commercial prosperity in this country. We protest, therefore, now and continuoiisly, against any further following after the "schemes "of the " conspiracy here and in Europe." Let the present Administration, if it can, find proper and sufficient answer to the arguments made by its own present Secretary. But this pending bill is against the Carlisle of former days and «ven recently in another respect. No other nation makes any such promises to pay in specific coin of one metal (gold) as Mr. Carlisle himself and the gold power he now serves aim to force this Con- gress to do. Although he is speaking in regard to gold certifi- cates instead of gold bonds, yet the principle is the same and the statement concerning other nations is equally true in regard to payment on all kinds of obligations. Before the Committee on Appropriations in this present session of Congress, in answering the following questions, notice Mr. Carlisle's own testimony: Mr. Coombs. I would like to ask in this connection, do European countries have gold certificates? Secretary Carlisle. Not that I am aware of. I do not at this moment think of any Government except the United States which issues a certificate based specifically upon any particular coin. What, then, must we think of this remarkable effort of the hon- orable Secretary to get fifty-year bonds issued payable specifically in gold? The conspiracy of the European gold power that he once so clearly pointed out is still working, and he seems now to fa- vor it. 1833 THB GREAT ORIGINAL. AMERICAN DEMONETIZER. Let me quote a few sentences from that former and great orig- inal demonetizer, the honorable Senator Sherman, who, also, prior to the specie resumption act, had many words of warning against the policies he has since so successfully and fatally pressed into legislation, and it may be properly noted that he still leads his Rex>ublican party on financial questions, and it would seem leads, also, a few so-called Democrats who espouse the cause of the money power. Speaking of the progressive contraction of the currency then going on. Senator John Sherman, in 1869, said: The contraction of the cxirrency is a far more distrossinj,' thint? than Sena tors suppose. Onr own iiiid other nations have gone through that process before. It is not possible to take that voyage without the si >rest distress. To every person except a ca])itaUst out of "debt, or a .salaried officer, or an an- nuitant, it is a period of los<. danger, lassitude of trade, fall of wages, suspen- sion of enterprise, Viankruptcy. and disaster. * * * To attempt this is to imjiose upon our people by arresting tln'iu in the midst of their lawful busi- ness, and applying a new standai'd of value to tht;ir ])roperty, without any deduction of their del)ts. or giving them any opportunity to compound witu their creditors, or to distribute their losses, and would be an act of folly with- out example of evil in modern times. This was said as against contracting even the paper money of the country. Since this time he has been advocating both the destruction of our legal tenders through the specie-resumption law and the demonetization of silver in the law of 1873, and is now the leading ' ' financial weathercock " for the present Admin- istration. The Democratic platform called for the repeal of the Sherman Act of 1890 ''as a cowardly makeshift, fraught with possibilities- of danger in the future." But after the election Mr. Sherman, to save that part of the cunning makeshift which is the so-called "parity clause," an- novmced through an interview a few weeks preceding the caU of the extra session, from his home in Ohio, to the effect that the parity clause must not be repealed, but only the *' purchase clause;" and thus he gave the cue by which to save the gold standard and again demonetize silver, and forthwith the President, carrying- out the suggestions of the "weathercock of finance," as he has been called, convened Congress in extra session to combine Repub- licans and a sufficiency of Democrats to repeal the purchase clause and retain all the rest of the "makeshift." But they of the gold worshipers tell us. Mr. Chairman, that we must pass this bill to sell bonds and raise gold to keep up the "parity," which they use as an excuse for suppressing silver pay- ment. They thus keep the gold of the Treasury subject to raids- of the bankers and exporters, who are thus piimping gold out of the Treasury on the gold-redemption plan in place of the coin re- demption which would stop the raid if duly enforced almost in- stantly. Let us hear John Sherman again as to the right and projiriety of paying silver on coin obligations as- a sure protection of the Treasury gold. He was before a Senatorial committee about three weeks after the passage of the Bland law of 1878. while he was Secretary of the Treasury. I quote brief fragments of his testi- mony, having quoted him more fully in my remarks on currency last month: 1823 JOHN SHERMAN'S TESTIMONY AS SECRETARY OF THE TREASURY. Resumption can be maintained more easily upon a double standard than upon a single standard. The bulky character c f silver would prevent pay- ments in it, while gold, being more portable, would be more freely demanded, and I think resumption can be maintained with a less amount of silver than of gold alone. Senator Bayard. You are speaking of resumption upon the basis of silver, or of silver and gold? Secretary Sherman. Yes, sir; I think it can be maintained better upon a bimetallic, or alternative standard, than upon a single one, and with less ac- cumulation of gold. In this way remonetization of silver would rather aid resumption. He then shows how readily oiir bonds are absorbed by our own people on a bimetallic basis — payable in silver as well as gold — at the rate of a million and a quarter per day upon their returning from Europe. This shows that there is really no need of selling specific gold bonds unless it is simply to please Europe, and even in this respect as Sherman pointed out it is better for our coun- try that the bonds stay at home. He further says for bimetallism: Our mere right to pay in silver would deter a great many people from pre- senting notes for redemption who would readily do so if they could get the lighter and more portable coin in exchange. Besides, gold coin can be ex- ported, while silver coin could not be exported, because its market value is less than its coin value. * * * Senator Bayard, of the committee, asked him: How long do you suppose this short supply of silver and j^our control of it by your coinage will keep it equivalent to gold, when one is worth 10 cents less than the other? Mr. Sherman answers: Just so long as it can be used for anything that gold is used for. It will be worth in this country the par of gold until it becomes so abundant and bulky that people will become tired of carrying it about; but in our country that can be avoided by depositing it for coin certificates. BANKS SHOULD HAVE NO POWER TO CONTRACT VOLUME. I am opposed now and all the time to giving to the banks or to any private institution any power whatever over the volume of currency. Whoever controls the currency in its volume, whoever has the power to increase or decrease it, controls thereby the ups and downs of prices, controls the prices of wheat, and cotton, and corn, and beef , and all the products of the country, "We are con- stantly hearing gentlemen talk on this floor as if we were bound in all financial or monetary matters to legislate in the interest of the banks. Sir, there are some 69,000,000 of people outside of the banks who have some rights that ought to be considered here. [Ap- plause.] This " elasticity " that we hear so much about is an utter fraud against 69,000,000 of the people of this country. They can not pro- tect their prices or their opportunities or their business if you give into the hands of the banks the control of the volume of the currency, for, I repeat, whoever controls the volume of the cur- rency controls prices, as I demonstrated in my speech delivered here on January 8. In my remarks on that occasion, adding my humble contribu- tion to the defeat of the Carlisle currency bill, I quoted such an array of authorities who stand as the great writers and financiers of the modern world that I presume no one who considers that galaxy of brilliant witnesses vnll ever again question that the chief est ele- ment in the control of the general range of prices is the volume of currency in circulation in relation to the volume of exchanges and payments dependent upon currency. 1823 8 And further, we have shown that the material of which cur- rencj- is composed is not an essential element in relation to price, lam aware that there is one gentleman, the chairman of the Com- mittee on Banking and Currency, who holds on to the exploded theory that prices of commodities or the reciprocal value of our dollars is controlled by the cost of production of the precious metals. He therefore must hold, since demonetization of silver, that the cost of gold production regulates prices of products and the purchasing power of money. He may possibly draw his in- spiration and enlightenment on the money question from that end of tlie Avenue that never seemingly consults either the lessons of history or the needs of mankind. But surely anyone, even without the help of the great teachers and writers I have quoted in my former speech, on a moment's re- flection ought to comprehend that demonetization and remoneti- zation laws and laws for issuing paper dollars for general circula- tion, whether legal tender or not, have so much to do with increas- ing or decreasing the sui)ply, that is, the abundance or scarcity of money in circulation, that the mining of gold, or of silver either, is and can be only incidental to the main question. Money is the creature of law and not of nature or of mines. This has been more or less clearly seen by wise men for at least two thousand years. In this discussion to-day I will only enumerate the names of persons quoted and refer those who wish the fuller quotations to my former remarks as published. They are such authorities as John Stuart Mill, Paulus, the Roman jurisconsult; the Justinian Pandects, John Locke, David Hume, Fitche. Ricardo, William Huskisson, Sir James Grraham, Torrens, Professor De Cola nge. Pro- fessor Sidgewick, of Cambridge; Prof. Stanley Jevons, J. R. McCul- loch. Lord Overstone, Professor Fawcett, N. A. Nicholson, of Ox- ford; Earl Grey, Prof. Shield Nicholson, of Edinburg; Professor Perry, of Williams College; Alexander Delmar, Henry D. Mac- Leod; and I think of many others who could be cited to prove the same proposition that I have endeavored to enforce upon the at- tention of Congress. VOLUME OF CURRENCY CIRCULATING CONTROLS PRICES IN GENERAL. Then who should control the volume of money in circulation, all money, paper as well as coin? Surely the Q-overnment itself should control the entire volume designed for general circulation, and to do this requires control of paper money as well as coin. But, in behalf of the bank and bond and gold scheme, there will be invoked all the sophistries and ridicule and false pleas and mis- leading prophecies that can be brouglit forward against those of us who have stood for sound and sensible teaching on the money question and the rights of the laboring world to a more equitable money, adequate in volume to meet the needs of mankind and maintain the general range of prices. SOME PROPHECIES VERIFIED. Ernest Seyd, the great bullion expert of the Bank of England and a remarkable man in more ways than one, said of the gold conspiracy even two years before it accomplished the demonetiza- tion of silver: The strong doctrinarism existing in England as regards the gold valua- tion is so blind that when the time of depression sets in there will be this 1823 I 9 • special feature: The economical authorities of the country will refuse to hsten to the cause here foreshadowed [the general decline of prosperity all over the world if the gold standard be adopted by other nations of whicn he had spoken] ; every possible attempt will be made to prove that the decline of commerce is due to all sorts of causes and irreconcilable matters; the work- man and his strike will be the first target; then " speculating " and " over- trading" will have theii- turn; many other allegations will be made totally irrelevant to the real issue, but satisfactory to the moralizing tendency of financial writers. Note the singular precision with which the sophisms and false teaching of the gold power in these days of commercial depres- sion were pointed out by such clear-seeing men as Ernest Seyd, who at such times spoke as an expert and statesman, although at other times as a hireling, notably when sent as a hired attorney to this country preceding the accomi^lishment of silver demonetiza- tion. COUNT WOLOWSKI'S PROPHECY. I desire also to give you the prophecy of Count Wolowski in 1868, regarding the effect of the demonetization of silver should it be forced upon European, and American nations. After pointing out the disasters that would follow, he says: One of the principal difficulties in this period of general depression will be that the people will look for its causes in all possible directions. The advo- cates of the gola standard will offer all possible fantastic and groundless ex- cuses and reasons of a secondary nature only, and the real cause — the demon- etization of silver — will be overlooked until dire necessity shall force thinking men to point it out. Throughout the world a decline in prices will follow, injurious alike to owners of real property and the laboring classes, and advantageous only — and unjustly so— to the owners of State bonds and similar securities. Another prophecy is that of Thomas Carlyle, the philosopher, still further back, given mainly from his clear comprehension of the methods of the plutocratic forces to overcome the rights of labor. THOMAS CARLYLE'S PROPHECY. More than thirty years ago Carlyle wrote: The Republic west of us will have its trial period, its darkest of all hours. It is traveling the high road to that direful day. And this scourge will not come amid famine's horrid stride, nor will it come by ordinary punitive judgments. It will come as a hiatus in statecraft, a murderous bungle in policy. It will be when health is intact, crops abundant, and the miiniticont hand open. Then so-called statesmen will cry overproduction, the i)t'iii>le will go to the ballot-box amid hunger and destitution, but surrounded by the glitter of self-rule, and ratify by their ballots the monstrous falsehood, over- production, uttered by miss-statesmen, and vindicate by the same ballot the infamous lie overproduction, thrown upon the breeze by servile editors through a corrupt press, and thus bring ruin upon his country, serfdom upon himself, and oppression upon his children. We who live to-day and behold the mad rush of the gold con- spirators to ride still on over suffering humanity, a humanity whose rights to the fruits of their toil are so gi-ossly outraged, whose prices on products of labor are so broken down, whose op- portunities to meet and pay their creditors and taxgatherers on terms of equitable payment are so completely destroyed, whose values and ownerships are destroyed and wiped out by the appre- ciation of money, and whose spirit of enterprise and progress and hope of betterment and free homes for themselves and children are so crushed by the onward sweep of the gold and bond and bank conspiracy, is it not time, if we be men and not dull brutes or mercenary cravens, that we oppose this conspiracy? [Ap- plause.] 1833 10 WHERE DO YOn STAND IN THE GREAT CONFLICT? And where are our great papers and news journals to-day, where our orators and lawyers and even the clergy and all of those who sell their words and argmaents and eloquence and influence for hire? Is it strange that beholding the might of intellect and power of X'osition all arrayed on the side of the gold conspiracy the people become discouraged? And is it strange to any thought- ful mind that morality and character and love of country shall all decline under the withering blast of this strongly felt, although partially unseen, empire of wealth that leaps over mountain ranges and ocean barriers to fasten its venal wealth-sucking tentacles on every form of production and enterprise? But it is on the part of labor and enterprise a fight for exist- ence, a fight for life, an,d this contest will go on and on and on until either man or money is brought into complete subjection the one to the other. If mankind can not win by the peaceful and deliberate methods — if corruption of the ballot, of legislatures, of courts, and of Ad- ministrations shall crystallize into a hard encrustation, threaten- ing civilization and the rights of man with destruction, then the earthquake will come, will come whether you and I will it or not, will come and rend assunder the crusts and covering of injustice and let in the sunlight of heaven, and the judgments higher than those of man -will be executed again on the earth. These judgments may come attended with fire and sword, and terror and blood, and suffering and death; but revolutions such as this are the great, deep impulses of God sweeping through the hearts and consciences of mankind, and they are of a purify- ing and cleansing nature. Equity and fraternity are the decrees of Heaven, and must be regarded among men upon the earth. But be not deceived. Humanity is a great, massive, and impul- sive giant with an instinct of preservation and a conscious appre- hension of justice that will ultimately turn on its mercenary and tyrannical oppressors and giind to the earth their hoarded prop- erties and vested wrongs, often improperly called vested rights, and all civilization will tremble at the excesses ofits retaliation. Can this possible culmination to a world-wide conspiracy to rob and enslave humanity be prevented? Only by doing the right thing now and here, and overthrowing the conspiracy of the gold mon- gers and hurling the conspirators and all of their hireling forces from places of governmental power. In this America must lead. America, the hope of the world. America, the chami^ion of free government and the rights of man- kind. Aiuerica, the aegis of human liberty and justice! [Ap- plause.] The overthrow of the gold power by America to-day would be the most glorious achievement possible to fall to the lot of any nation, and it can be done if the proper word is uttered by you in this great national Congress, It is but to reply and answer No, to the gold power here and else- where, and to all of its minions high and low, when they come for- ward with their aggressions upon the money of the people and the rights of man to an equitable and adequate standard of pay- ment, an equitable currency of account and exchange and good 1823 11 prices, and when they ask us to place all money for payment and commerce out of the reach of the laboring and wealth-producing people. It is forever to say no. No, to all of their propositions until they shall give back and concede to tlie people of this country again their silver as a standard money of payment and the right of our sovereign nation to coin, issue, and furnish a national cur- rency of both legal-tender paper and legal-tender coin without any further interference from any source whatever. And I would, if I could, teach all men in America to treat as an enemy to our rights, our liberty, and our national sovereignty all who plot and scheme by any measures whatever to deprive this nation of the un trammeled right at all times to coin, issue, and maintain its own money, and maintain it in volume sufficient to maintain prices and prosperity. FURTHER EVIDENCES OF A CONSPIRACY. Mr. J. W. Schuckers, once private secretary to Secretarj^ Chase- during the war. has recently said in his able letters to Henry Carey Baird, of Philadelphia: I seek to present the case, the fact, and the proofs that the panic of 1893 was the result of a deliberately determined conspiracy; that it originated in "Wall street; that it was organized in Wall street; that it was engineered from Wall street, and that in its front stood a half score lawless and reckless bank presi- dents. He then follows this with some rejnarkable evidence that shows how daring and reckless the gold power at times has been; but for this I must refer you to his own recently published pamphlet on the Conspiracy of New York Bank Presidents. The conspiring of the national-bank presidents, with the newly- appointed subtreasurer, Mr. Conrad N. Jordan, and Mr. Carlisle as the intermediary counselors between the White House and the Wall street financiers, together with their frequent secret meet- ings and conferences in April and May, just before the turning loose of their object-lesson panic of 1893, are matters generally known and acknowledged. But the effort to get the unconditional repeal of the silver-pur- chase clause through in the closing months of the Fifty-second Congress have not been so often noted. This was urged by Mr. Cleveland's friends upon the Republicans fearing and indeed discovering by the ' ' cute " New York newspaper interview and polling methods that the newly elected Democratic majority of the incoming Fifty-third Congress could not be relied upon to do the bidding of the gold mongers. First, Henry Villard was sent in January, 1893, to confer with Sherman and others, among them being some so-called "leading Democrats" (I would say misled Democrats), to see if the anti- silver purposes of Wall street and Mr. Cleveland could be carried out before the adjournment of that Congress. He failed in his mission. Next, in February Don M. Dickinson, of Michigan, came, as it has been said, "clothed with more extensive powers than Henry Villard." The Washington correspondent of the New York Her- ald, in a published dispatch of February 1, said: Don Manuel Dickinson came to the city last night and has spent the day in consultation with Democratic leaders. The reiieal of the silver hiw never before received siich an agitation. * * * The word has gone out among Democrats that this act must be repealed at this session. * * * Mr. Cleve- land has it in his power to make matters very uncomfortable for certain sli- 1823 12 ver Democrats. The question of the patronage will >)e an important one af- ter March 4. The scare is pretty general. * * * There is no doubt that this second exprcssi(jn of President-elect Cleveland will V)eiir fruit. He gave his first iutiiiKitidii when Henry Vilhird came to the city and consulted with Democratic nioml)ers of Congress. The seci)n(l can not be niisundeistood. No; it was not mismiderstood. but the people's representatives among the Democrats stood their ground. In the same issue the New York Herakl in an editorial, speak- ing dotibtless with full consent of the machine and Wall street in- terests which it always loyally supports, said: As a party man, as an upholder of the regular organization, as a vindicator of the machine, Mr. Cleveland will stand on firm ground when he declares that every aspirant for office, patronage, favor, or any consideration will be expected to hne up for the rei)eal of the silver law. The New York Times spoke on the same day in a similar tone, but it would seem that the plans of the Republico-Democratic-Wall- street combination failed of accomplishment. Then, after the inauguration, and after the close and secret con- ferences of which I have spoken between the national-bank presi- dents and agents and ollicials of the Executive, to which on one special occasion, April 24, in the subtreasmy office, the mem- bers of trust companies and representatives of the great foreign banking houses in Wall street were also invited. After this, and immediately after the conference of the bank presidents on the 27th with the Secretary of the Treasury, the furies were uncaged and the dogs of financial war against the South and West and into all regions tributary to New York as a money center were turned loose. The great and threatened "object lesson of panic " was sent sweeping over the country to do its deadly work of ruin and com- mercial disaster and bring the West and South and all antigold- power regions into servile subjection to the schemes and dictation of Wall street and the Anglo-American gold conspiracy. Mr. Carlisle's former comparisons of the destructive character of the gold-standard conspiracy with the misery entailed by wars, pestilence, and famine w^as proving to be true. The record of disaster, failing banks, mercantile houses, mills, factories, and all the more enterprising purposes and industries of the people and the rapid transference of the wealth from the ownership of those who earned it to those who speculate and scheme for it through financial legislation and manipulation has never perhaps been exceeded in this country in so short a time. The highways were soon filled with tramping thousands and suf- fering spread rapidly on every hand. The clergymen and good religious people who still keep voting to help enforce the gold standard and its ruinous effect on prices and industry in this country were called upon in almost every city, both East and West, to contribute to and organize and carry into operation soup houses and relief societies. John Sherman's prophecies were also proving to be true, as well as those of Mr. Carlisle and others whom we have already quoted. But Wall street schemers were cold-hearted and determined in their purjjose to carrj' out their part of the international, as well as the national , movement to wipe silver legislation from the face of the commercial world. How deep and extensive was this dark conspiracy with the gold mongers and Jewish syndicates of Europe, or to what ex- 1823 13 tent the Executives of our own nation for recent years may have been involved in it, is a secret that may never be fully revealed. But on the 25th of June, 1893, not by action of the people of India, but by the tyrannical powers that govern India, the Indian mints were also closed to silver, where silver had been used from time immemorial. This was at once used in this country to work a scare upon our people just as the panic in relation to silver re- peal was being worked as a scare in Europe. So the President issued a call on the 30th of June for an extra ses- sion of Congress for the purpose of reaping the harvest of an uncon- ditional repeal of the last vestige of silver use and the issue of legal- tender Treasury notes in purchase of silver. To secure the issu- ance of gold bonds was another part of the Wall street programme, but although the cuckoo Democrats aided the Sherman-Reed Re- piiblicans to carry the great "unconditional," yet the Democrats in Congress were too solidly against giving the President any authority whatever to issue bonds. And so this part of the Wall street programme failed. Now another effort is being made here in this pending bill to get the bond issue authorized and the retirement of gi-eenbacks provided for, that all legal-tender paper money may be destroyed or taken out of circulation. It must not and, as far as my vote and influence may go, it shall not be done. Does anyone believe, with all the evidences of the last few years, and especially of the last two years, before him, that the excessive raids on the gold in the Treasury are for other purposes or reasons than to prejudice the people against the legal- tender greenbacks and Treasurv notes issued bythe Government, thus to fool the people, destroy their legal-tender money, and issue gold bonds instead? Only one other purpose can exist— that of getting gold to a premium for their profit. I must regard him as to some degree at least stupid or hypno- tized by a too steady gazing iipon the yellow metal who can not see through these movements and the scheme of the gold bank and bond conspiracy with which we have been compelled to con- tend, not only during this Congress but for many years since this scheme for contraction, demonetization, and confiscation of the wealth produced by the laboring world was first made plainly manifest under Grant's Administrations. While the destructive forces for contracting circulation and loans was being cruelly pushed forward the New York Tribune coolly said (May 7, 1893): The effort of the Administration to bring the West and the South to a full realization of the inevitable consequences of compulsory purchases of silver bullion — The inexcusable and tyrannous trick of bank contraction, I would rather say — has brought distress and perhaps ruin to many innocent persons; but there is no reason to suppose that it will be relaxed. The Tribune's own political party was the main strength of the Administration through all this dark and devious way of the gold conspiracy. After a month of financial disaster the New York Sun, on the 7th of June, in its money article, said: The presidents of the New York banks think that the so-called " object lea son "has been carried far enough. * * * They see nothing to be gamed by a further shrinkage in values and unsettling of credits. 1823 14 I commend this last quotation to the pious consideration of the chairman of the Committee on Banking and Currency [Mr. Sprix(JKu]. who has brought in here this pending bill and who in his late article in the North American Review tries so hard, yet so vainly, to ignore the doctrine and practice so well comprehended in Wall street, as well as all over the civilized world, that values are made to shrink and gains to accrue at times to the banks by their contraction of currency and credits. He tries vainly to prove that cost of mining and producing the precious metals is the controlling element m the value of money. As we have pre- viously endeavored to show by reason, by history, and by a long and unchallenged array of financial authorities, the chiefest ele- ment of control and regulation in the value of money and the con- sequent general range of prices on commodities is the volume or quantity of money in circulation. This is the "most elementary proposition " of monetary science, says John Stuart Mill. On the 27th of June, 1893, two days after the demonetization decree of the British Govei'nment in India in its cooperative movement with the allied conspirators in this country and three days before the call for the extra session, an oracle of the gold and bond speculators of New York, Henry Clews's Financial Review, said, in clamoring for an extra session of Congress to be called by the President: There is every reason why Congi-ess should be brought together at the very earliest possible day. The htnises that were engaged until lately in ship- ping gold became so zealous in that enterprise that they tried to outstrip each other. The result was that more gold was actually shipped than Europe required. The natural result must appear in the return of the surplus thus exported. Exchange has now fallen, indeed, to the specie-imi)orting point. As soon as our crops ripen there will be inevitably a return of a good deal of gold to the country. One of the arguments in favor of tlie repeal of the Sher- man law has been that the baser metal has driven the finer metal out of the country. In a little while, with gold returning to us, the strength of that argument will be sapped. An early session of Congi-ess will leave the argu- ment still in full force. Yes, gold being shipped largely to Europe for the very purpose of scaring silver advocates and advancing the schemes of the money power in Congress was stire to return upon this country by the laws of legitimate trade before they could get their legis- lation through unless they hurried the call for the extra session. Oh. what tricks, what perfidy, what venality, what consummate selfishness, what disregard of right and justice, what cruelty to suffering and unsuspecting humanity! Has their diabolism ever been excelled? Did ever vultures tear at the vitals of their victims vnth a more cool and heartless cruelty? And so by false and cunning statements and manipulations of gold exports and redemption of greenbacks in gold raids, and by every trick known to stockjobbers and gamblers, the gold con- spirators still work to deceive the people and still endeavor by every known method to capture votes in Congress to carry forward their gold-standard bond and bank tyrannies. Yet I believe they are again doomed to defeat. This bill and all of the substitutes are presented and urged with but little chance of success^ What I most fear is a reorganiza- tion of the gold forces and money power on new lines, in which the Republicans will come to the front to "save the country," as they would falsely term their movements, by combination herein the House under their present gold-standard leaders and almost solid gold-standard ranks, and under the generalship of John 1823 15 Sherman in the Senate, whose stratagems and peculiar methods have given him great prestige as a leader and won for him and his coworkers dozens of victories on hard-fought financial battle- fields, and that thus the gold forces in a Repuhlico Cleveland- Cuckoo combination may yet secure the destruction of the legal tenders y^et remaining and the forcing of the Grovernment upon a perpetual gold-bond debt and bank-issue policy. Last month the Washington Star gives away to the public some of the reserved information that hovers about us here in Wash- ington. On January 11, 1895, it says concerning Senator Sher- man's importance and ability in behalf of Wall street interests: HIS WORK ON THE SILVER REPEAL This leads to discussion of the part Mr. Sherman tooJs in the repeal of the bill) ion-purchasing' clause of the silver act bearing his name. The assertion has always been made in Washington that it was the advice of the Ohio Sen- ator that finally prevailed in that fight. His participation in the open debate in the Senate was conspicuous, but his principal service, as is claimed, was performed in the conferences that were held. Many of these were nonpar- tisan, and Mr. Sherman took part in them upon the ground that as the ques- tion was one affecting the welfare of the whole country it was his duty to assist Mr. Cleveland fully as much as if the occupant of the White House were a Republican. That Mr. Sherman was fully consulted during the con- test both by Mr. Cleveland and Secretary Carlisle has long been an open se- cret, and that it was his criticism of the compromise offered by the silver men which indiiced the President to reject it, and thereby force uncondi- tional repeal in the end, is openly asserted and believed by many of the best inforuied men in political life. * * * It can be stated that many Democrats would value his assistance very e;reatly, and would not for a moment doubt its unselfishness because ren- dered by a Republican leader to an embarrassed Democratic Administration. But some of the Southern men , who have grown up in opposition to every prom- inent stand Mr. Sherman has ever taken, would prefer to see the Sherman leadership, if essential to solve the problem, exercised in circumstances of Re- publican control and responsibility. These men, therefore, do not look with disapproval on the proposition for an extra session, but rather hold that, all things considered, such a step would be both logical and effective. They do not hesitate to admit that the President and Mr. Sherman are in much closer accord on the money question than the President and the Southern leaders are, and nence if it is the Sherman view that, in any part, is to prevail, they think it would be franker and better to await the day, which need not be dis- tant, wUen the Ohio Senator, in the full panoply of party leaaer.ship, would be able to take the field and carry out in person his own plan of action. It is admitted at the same time, however, that the situation is becoming so grave a delay of only three months might be attended with the most alarming con- sequences to the business of the whole country. The suggestion is made that the panic of 1893 developed in less time, and got entirely beyond the control of Congress. " It was his (Sherman's) duty to assist Mr. Cleveland," says this editor and supporter of the gold scheme, " fully as much as if the occupant of the White House were a Republican," and "that Mr. Sherman was fully consulted during the contest both by Mr. Cleveland and Secretary Carlisle has long been an open secret." Yes, the leader of the Republican forces on all financial ques- tions, the silver demonetizer and contractionist and the ever-per- sistent enemy of the people's interests in their efforts to withstand the conspiracies of the money power, is taken into close and secret and frequent consiiltation by this that should be a Democratic Administration— this is what has so thoroughly disgusted nearly all true Democrats in Congress and has cost the party such exten- sive defeat at the late elections. " The people want relief ," is a frequent cry; but not such re- lief as the Wall street-JoHN Sherman combinations would give them. Sherman is, and has been since 1873, the careful and vigi- lant guardian of European bond holders and goldholders' interests. 1823 IG Mr. Gordon Clark, once editor of the North American Review, author of a most excellent recent book called "Shylock," exposing the conspiracy of the Anglu- American gold conspiracy and the part that John Sherman has played in their movements, has well said: The American people must learn the lesson of money or they are lost. * * * Shall England impose lipr plan of white slavery upon the people of the United Stateri? War with England— and not a financial war, but a conflict of powder and dynamite— would be more merciful, better, and cheaper in the end than to permit the permanent infliction upon us of her present money conspiracy. The conspiracy producing the panic of 189.i used their " scare " circulars to make it clearly understood tliat their demands for the silver-purchase repeal bill must ba complieil with. In one they said, as has been quoted on this floar heretofore — The interests of national bankers require immediate financial legislation by Congress. Silver, silver certificates, and Treasury notes must be retired and the national-bank notes nx)on a gold basis made the only money. This will reciuire the authorization of from S50l),0ligations, while the Government would not have to issue another $100,000,000 of bonds which It will cost the country $320,(XK),IKX) to pay, principal and inter- est. * * * Are they seriously expecting gold to go to a premium? Or are they and the banks all over the country in a tacit " combme " to compel repeated bond issues for theii- speculative profit? These banks ought to answer these questions. 1823 18 On the foUowiBg day the World editorially says again: Their replies are evasive, shifty, insincere. They have no obligations payable in gold. * * * There is no possible reason for them to hoard gold, except that they expect a premium upon it, or that they wish to force the Government to borrow money which it does not need. The New York Times of January 26, with less loyalty to the people and far more loyalty to the money power, urges them to use means of coercion, which it would seem has frequently been done before, to drive Congi-ess to do their bidding. It says: * * * But we close, as we began, with the unqualified statement that Congress will not do this — That is. authorize the Secretary to borrow on gold bonds — that it will not do anything, unless it be forced to action by the over- whelming pressure of publi(; opinion. It is sheer folly to rely on anything else. This force organized, directed, and concentrated upon Congress, as it was in the spring of 1891. when the free-coinage bill was killed, as it was in 1893, when the repeal bUl was enacted, will do the work. Nothing else will. The country quite well understands what their methods were in 1891 and 1893. We all should know by this time that they never move in a straightforward course, but always by feint and stratagem to gain their \ictories. But I have already detained the House long enough on these questions. The steps of the gold conspiracy in the past are an in- dication to us of what their steps and purposes v/ill be in the fu- ture. The relief necessary and for which the laboring people are anxiously waiting is to see Congress, the loyal and truly Demo- cratic part of Congress, again roll back the tide of selfishness and the organized gi'eed of the gold and bond combine and, at the earliest possible moment, if opportunity should offer, to crush the gold conspiracy forever and set America free again from the severely threatened stibjugation that England and her Tory allies in Wall street would fasten iipon our country. But I am persuaded that it is not so much simple intelligence needed now to see what is wi-ong and what are the motives of the gigantic forces with which we must contend, and how the gold raid must and can be stopped by obej^ing the present law and en- forcing the option of coin, including silver i)ayment, which our present Secretary of the Treasury as well as those preceding him have been constantly violating, and how an adequate legal-tender system of money of both coin and paper will revive prices, revive profits, revive hope and prosperity — all of these things every true and honest Representative can see — but more courage, more heart, more sjonpathy for struggling hmnanity , more patriotism is needed. The eloquent Archbishop Ireland has well said: Patriotism is love of country and loyalty to its life and weal— love tender and strong, tender as the love of a son for the mother, strong as the pillars of death; loyalty, generous and disinterested, shrinking from no sacrifice, seek- ing ao reward save country's honor and country's triumph. And I shall close with a warning and a challenge to the money power that if it shall not curb its selfishness and greed and realize that its votaries are but part of the great struggling mass of hu- manity, whose rigdits to lite, liberty, and a fair opportunity in this country are as well founded as that of any of the minions of the gold power, then the people must rise up, and, if need be, crush their enemies by whatever means are lawful in defense of the life and liberty of this country and its people. 1823 O The Currency. Nothing but evil springs from this imaginary money wherever it is tried.— James Madison. SPEECH OF RON. GEOEGE W. COOPEH, OV INDIANA, In the House of Representatives, Wednesday, February 6, 1895. » The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 8705) authorizing the Secretary of the Treasury to issue bonds to maintain the gold reserve, and to redeem and retire United States notes, and for other purposes — Mr. COOPER of Indiana said: Mr. Chairman: I listened with mnch interest to the remarks of the very able and distinguished gentleman from Maine [Mr. Reed] yesterday upon the pending question. He began by calling our attention to the fact that under our present financial system there had devolved upon the Treasury Department, in addition to its ordinary administrative duties, the business of banking; that the United States, having issued its notes and announced its readi- ness to redeem those notes at the pleasure of the holders, was under the necessity of keeping a reserve constantly on hand for that purpose, and to respond to every demand upon that fund. He says that the "business establishment" of the Treasury has been running astern, and that instead of borrowing money on its own account it has taken the money of the banking department and reissued it: that the result is what is known in popular i)hrase as the "endless chain," and that by this j^rocess the United States is made purveyor of gold to the rest of the world. So far, Mr. Chairman, there is no reason to complain of this statement of the case. That such process is and has been going on no one will dispute. But when the gentleman tells us that this condition is not the legitimate and unavoidable operation of our sys- tem of finance as affected by existing conditions I must beg leave to dissent. The gentleman knows perfectly well that the Secre- tary has no power or authority under existing law to borrow money with which to meet current deficiencies; he knows that under the act of May 31, 1878, the Secretary is obliged to take from what he calls the banking department, the redeemed Treasury notes, and reissue them. That law is mandatory; there is no dis- cretion. Mr. Chairman, I am unable to understand the gentleman when 1S28 1 '2 he tells us that this condition of things never need to have occurred under existing law, or that it is not the logical and necessary re suit from our present system of finance. He has offered a substitute, and perhaps we may be able to see his real position in this propused measxire. This substitute con- sists of two sections and, omitting matters of detail, they embody each a separate proposition. The first section confers authority to issue bonds to support the operations of the banking department of the Treasury, and the second to meet the engagements of its business department. But what disposition does this substitute make of the Treasury notes? Where, in either or Ijoth of these sections taken together, is the remedj- for the operaticm of the "endless chain?" With all due respect to the gentleman, it seems to me that he is just a trifle shy on that (iiiestion. Now, this substitute will cer- tainly enable the Secretary to replenish his gold reserve, if need be, over and over again; but how are we to escape, what we all de- plore, the unprofitable task of furnishing gold to all the world? There is absokitely nothing in his bill to provide against that contingency. I Iviiow. Mr. Chairman, that the gentleman tells us that the Secretary should not pay out the gi-eenbacks, but should borrow money to meet current deficiencies: but this is equivalent to a repeal of the law of 1878. The gentleman can not repeal tliat law by his argument: why does he not write it in his substitute. Let us now, therefore, see where the gentleman stands, construing his substitute and his s])eech together. First, he would autliorize bonds with which to buy gold with which to redeem Treasury notes, Second, he would authorize bonds to meet Treasury deficiencies, so that the Treasury notes should remain untouched, their fate awaiting some future determination. Third, he would not repeal but leave in force the law of May 31, 1878, which reads as follows: And when anv of said notes may be redeemed under any law. from any source whatever, and shall belong to the United States, they shall not lie re- tired, canceled, or destroyed, but they shall be reissued, paid out again, and kept in circulation. Here are the gentleman's words: Our situation is this: "We were redeeming greenbacks when they were pre- sented. If the revenue was equal to tin; expenditures whenever a grceiilinck was redeemed it would stay in the Treasury, and this notwithstandiiii,' the fact the Secretary is authorized to reissue: lor it is not either the authoriza- tion or even the demand of the law that t hey shall be reissued that causes the trouble. It is the fact that they arc reissued. It is the fact that their reissu- ance causes this continued depletion "f the Treasury. But the law says they " shall be rei-ssued, paid out again, and kept in circulation."' Now, what becomes of the gentleman's con- tention that the Secretary may retain these notes and issue bonds for other money \\ ith which to meet his engagements? If the gentleman will examine the debates in the Senate while the bill was pending there, he will see that the language used was purposely, deliberately chosen. Why. sir, an effort was made to amend and modify the bill somewhat after the fashion of the gentleman's conception of this law. 1829 Senator Mathews offered this substitute for that very manda- tory provision: They shall be reissued from time to time as the exigencies of the public serv- ice may require. That svibstitute was defeated, and the law was enacted as I have given it. There is no escape from this sitxiation except by legisla- tion, and this substitute does not attempt to deal with that which seems to me the most serious cause of the present complication. It neither proposes to retire the Treasury notes nor to modify the law which compels their post-redemption issue. RETIRE THE TREASURY NOTES. Mr. Chairman, if the Government embarks in banking and is- sues paper promises intended to circulate as money it becomes amenable to the conditions and responsibilities which attach to that kind of business. It must be ready at all times to redeem its promises in money on demand or they will depreciate. In order to float these promises and make them equal to gold it was thought necessary to accumulate $100,000,000 in gold, and that sum has been so kept except when temporarily depleted. Mr. Chairman, I am in favor of retiring these Treasury notes entirely and finally. I wish to see our Government relieved from the responsibility of the banking business, the Treasury limited to the exercise of its legitimate functions under the Constitution, and the people secured against the danger of an unsound cur- rency. THE CONSTITUTIONAL QUESTION. First, I wish to call attention to the fact that the power of the Government under the Constitution to issue its notes and make them a legal tender in payment of debt is and always has been dis- puted. In the "Plan of a Federal Constitution," as proposed by Charles Pinckney, among the powers which were to be given to the " Legislature of the United States " there were enumerated, "Bor- row money and emit bills of credit." In committee this language was changed so that it read when reported: Borrow money and emit bills on the credit of the United States. In the convention Gouverneur Morris moved to strike out the words "and emit bills," and the motion, after a full debate, was carried by the votes of all the States but two, and the clause was made to read as it now stands: ' ' Borrow money on the credit of the United States." An outline of that debate may be found in the Madison Papers, and if anyone has any doubt as to the purpose of that body to for- ever ijrohibit Government issiies of paper money, an examination of that discussion will remove that doubt. Mr. Madison said that this action was taken to cut off the pretext for a paper currency, and particularly for making the bills a tender either for public or private debts. It has been contended, I believe, by some that the authority to coin money included the power to issue a legal-tender paper cur- rency, but it was provided in another section that no State should have power to make anything but ' ' gold and silver coin a tender in payment of debts." It would therefore seem that having dis- cussed and rejected the only proposition which they thought might 1829 confer that power ii])on Congress and having expressly prohibited it to the States, the framers of the Constitution had limited legal- tender money to gold and silver coin. In a letter written by Mr. Madison to Thomas Jefferson, while the Convention was in session at Philadelphia in July, 1787, he said: * * * I am still iinder the mortification of being restrained from disclos- ing any part of their proceedings. As soon as I am at liberty I will endeavor to make amends for my silence, and if I ever have the pleasure of seeing you 1 shall bo able to give you full gratification. In this letter, written as you see at the very time and place when and where the Constitution was being discussed and created, Mr. Madison adds, referring to paper issues: Nothing but evil springs from this imaginary money wherever it is tried, and yet the appetite for it where it has not been tried continues to be felt. That great Missourian, Thomas H. Benton, who was then the especial champion of President Jackson, said in the Senate in 1834: The power granted to Congress to coin money is an authority to stamp metallic money, and is not an authority for emitting slips of paper contain- ing promises to pay money. He said that he — •was one of those who believed that the Government of the United States was intended to be a hard-money Government. * * * It is the money and the only money of the Constitution, and every early statement on the sub- ject of money confirms that idea. Mr, Webster, in discussing this subject in the Senate in 1836, said: Most unquestionably there is no legal tender and there can be no legal tender in this country under the authority of this Government or any other but gold and silver, either the coinage of our own mints or foreign coins, at rates regulated by Congress. This is a constitutional principle, perfectly plain and of the highest importance. That such was the belief of those who framed the Constitution and of those who interpreted that great instrument to us is shown by the fact that never during the lifetime of any of those illustri- ous men was a legal-tender issue proposed or seriously discussed. Such, I repeat, Mr. Chairman, were the views of the fathers of the Republic, and such were the opinions and the practices of those who administered this Government for three-quarters of a century prior and up to the passage of the first legal-tender act in 1862. If you will read the debates in this House and in the Senate upon the constitutionality of that measure you will be impressed with the reluctance which characterized the resort to this ex- traordinary and theretofore entirely unassumed authority. Mr. Conkling said: The proposition is a new one. No precedent can be urged in its favor; no suggestion of the existence of such a power can be found in the legislative history of the country. ::: :l: * O * ::: V^ It is hardly too much to say, therefore, that the uniform and universal judg- ment of statesmen, jurists, and lawyers has denied the constitutional right of Congress to make paper a legal tender for debts to any extent whatever. Mr. Pendleton said: When I come to examine the powers of Congress according to the principles of interpretation to which I adhere, I look to the grants of the Constitution. I find no gi'ant of this power in direct terms or, as I think, by fair implica- 1829 tion. It is not an accidental omission : it is not an omission through inadvert- ency; it was intentionally left out of the Constitution, because it was de- signed that the power should not reside in the Federal Government. Those who favored the bill did so tinder the plea that it was a "war measure," a "measure of necessity." Mr. Kellogg said: If this question came up in ordinary times I am frank to confess that I might perhaps have had some doubt of its constitutionality sufficient to induce me to oppose it. * * * But, sir, in this our extremity, while we are strug- gling to perpetuate our Government, I am willing to go to the very verge of the Constitution. Senator Fessenden rested the argument for the action "upon the ground of absolute, overwhelming necessity." He put it in the same category with such acts as confiscation. He said: The question after all returns: Is this measure absolutely indispensable to procure means? If so, as I said before, necessity knows no law. Mr. Chairman, it was under conditions and influences such as appear from the statements contained in this discussion that these notes were issued. It is true they were u]3held by the courts and their constitutionality affirmed, yet even here they were regarded and treated not as money, but as a Government loan, forced tipon the people to meet a great emergency. I quote from the opinion of Justice Bradley. He says: It is a pledge of the national credit. It is a promise by the Government to pay dollars. The standard of value is not changed. The Government sim- ply demands that its credit shall be accepted and received by public and pri- vate creditors during the pending exigency. i^ if Hi it if * * No one supposes that these Government certificates are never to be paid— that the day of specie payment is never to return. And it matters not in what form they are issued. * * * Through whatever changes they pass- their ultimate destiny is to be paid. THE PROMISE OF REDEMPTION. But, Mr. Chairman, not onlj^ were these notes issued as I have shown by a great stretch of constitutional authority, under the pressing plea of military necessity, but they were accompanied with a promise of redemption. The Hon. Hugh McCulloch, an able, honored, and distinguished citizen of Indiana, in his report as Secretary of the Treasury of December 4, 1865, in discussing this subject, said: The present legal-tender acts were war measvires, and while the repeal of those provisions which made the United States notes lawful money is not now recommended, the Secretary is of the opinion that they ought not to re- main in force one day longer than shall be necessary to enable the people to prepare for a return to the constitutional currency. It is not supposed that it was the intention of Congress by these acts to introduce a standard of value in times of peace lower than the coin standard, much less to per- petuate the discredit which must attach to a great nation which dishonors Its own obligations by unnecessarily keeping in circulation an irredeemable paper Qurrency. It has not in times past been regarded as the province of Congi'ess to furnish the people directly with money in any form. Theii- au- thority is to"ooin money and fix the value thereof," and inasmuch as a mixed currency, consisting of paper and specie, has been foiind to be a com- mercial necessity it would seem also to be their duty to provide, as has been done by the national-currency act, that this paper currency shall be secured beyond any reasonable contingency. To go beyond this, however, and issue Government obligations, making them by statute a legal tender for all debts, public and private, is not believed to be under ordinary circumstances within the scope of their duties or constitutional powers. The reasons which are sometimes urged in favor of United States notes as a permanent currency are the saving of interest and their perfect safety and uniform value. The objections to such a policy are that the i)aper circulation of the cur- rency should be flexible, increasing and decrea.sing according to the require- ments of legitimate business, while if furnished by the Government it would 1829 6 be quite likely to be governed hy the necessities of the Treasury, or the in- terests of parties, rattier than the demands of commerce and trade. Besides a permanent Government currency would be greatly in the way of public economy, and would give to the party in possession of the Government a power which it might oe under strong temptation to use for other purposes than the public good— keeping the question of the currency constantly before the pulilic as a political question, than which few things would be more inju- rifius to business. But the great and insuperable objection as already stated to the direct is- sue of notes by the Government, as a ixjlicy. is the fart tliat tlirCxDVLTntnent of the United States is one of limited and defined powers, and that the au- thority to issue notes as money is neither expressly given to Congre.ss by the Constitution, nor fairly to be inferred, except as a measure of necessity in a great national exigency. No consideration of a mere pecuniary charai'ter should induce an exercise by Congress of powers not clearly contemplated by the instrument upon which our political tabric was established. Mr. Chairman, this was the view taken by the Secretary in the very first report made by him after the close of the war. It has practically been the view maintained by all the Secretaries from that day to this, so far as I am advised Mr. BAILEY. If the gentleman will permit an interruption, does he not remember that Senator Sherman expressly recom- mended that they should not Ije retired. Mr. COOPER of Indiana, Perhaps I ought to except Senator Sherman on the suggestion of the gentleman from Texas: but I am in doubt of it, for I know that he favored at one time their re- tirement. It is possible that he has been on both sides of the ques- tion. [Laughter.] Mr. WHEELER of Alabama. Let me remind my friend from Indiana, for whom I entertain the very highest regard, that a Democratic House passed a law expressly providing against their retirement beyond S84(5.O0U.OO0. Mr. COOPER of Indiana. I can not be interrupted now. I will answer my good friend from Alabama after I call attention to these recommendations of the Secretaries in brief. Secretary Bristow in his report December 7. 1874, following the example of his predecessors in office, made an earnest appeal for the retirement of these notes and gave utterance to this very sound and timely warning: The history of irredeemable paper currency repeats itself whenever and wherever it is used. It increases present prices, deludes the laborer with the idea that he is getting higher wages, and brings a fictitious prosperity from which follow inflation of business and credit and excess of enterpise in ever- increasing ratio, until it is discovered that trade and commerce have become fatally diseased, when confidence is destroyed, and then comes the shock to credit, followed by disaster and depression, and a demand for relief by fur- ther issues. Again, Mr. Chairman, this report reads almost prophetically of conditions which we have but recently seen: The universal use of, and reliance upon, such a currency tends to blunt the moral sense and impair the natural self-dependence of the people, and trains them to the belief that the Government must directly assist thdi' individual fortunes and bu.siness, help them in their personal aifaii's, and ciialtle them to discharge theri debts Ijy partial payment. This inconvertilile i)Hi)er currency begets the delusion that the remedy for private pecuniary distress is in legis- lative mea.sures, and makes the people unmindful of the fact that the true remedy is in greater production and less spending, and that real prosperity comes only from individual eff(}rt and thrift. In 1876 Secretarj- Morrill said: The United States notes, commonly known as legal tender, regarded as a substitute for money, are an anomaly in our monetary system, tolerable and possible only in the exigencies of civil war— the offspring of its perils and limited to its necessities. To allow their continuance as such, after the cause is2:) which justified their existence had ceased, is to violate the conditions of their inception and to sanction what was only tolerable as a necessity, by impress- ing upon it the stamp of legitimacy. In December. 1884, Secretary McCulloch, having been called again to administer the duties of this high and responsible office nearly twenty years after the date of his report from which I first quoted, said: A government which engages in banking by furnishing a paper circulating medium must be governed by the rules which prevail with prudent bankers, and be constantly prepared to meet such calls as may be made upon it. Many persons regard legal-tender notes as being money, and hold that no means should be provided for their redemption. That this is a delusion will be proven whenever there is a large demand for gold for export. They are not money, but merely promise.s to pay it. and the Government must be pre- pared to redeem all that may be presented or forfeit its character for sol- vency. This language, used ten years ago, is vindicated and exemplified to-day by oiir exj)erience and j^resent situation. And while some may continue to believe that these notes are money, and for cer- tain reasons so contend, it is, it must be, perfectly plain to those who desire to know the truth that they are drafts upon the na- tional Treasury, and that their nonpayment means national dis- honor. Mr. Chairman, no more able, conscientious, patriotic man ever presided over the Treasury Department than the late lamented Manning. I wish especially to call the attention of my Demo- cratic friends to the very able report made by him on this subject. I refer to his annual report of December 6, 1886. I wish I had time to read extensively from this report, but I have not, and will content myself with calling your attention to his concluding rec- ommendations. No better Democratic platform could be written: I therefore respectfully recommend: 1. Repeal of the clause in the act of February 38, 1878, making compulsory Treasury purchases of silver, for the reason heretofore given and in order to reduce surplus and unnecessary taxation S31,0IK),I)(K) a year. 2. Further reduction of surplus taxation, beginning in a manner which will be suggested below, close down to the necessities of the Government econom- ically administered. 3. Repeal of the act of May 31, 1878, making compulsory post-redemption issues and reissues of United States legal-tender notes, thus facilitating— 4. Gradual purchase and payment of $:W().ri.'ponsible. The deficiencies in the reve- nues are mainly traceable to three causes. First, the McKinley tariff law, which by the confessions of its author and friends was intended to curtail revenues, and which did yield an annually de- creasing income to the Treasury; second, to the profligate legis- lation of the Fifty-first Congress; and third, to the unreasonable delay in the passage of the Wilson bill, caused by factious oppo- sition and i)artisan obstruction. The resiilting deficiencies have only served to expose the weakness of the Treasury situation and to render aciite the ills which have continually lurked in its system. In his annual report for 1893 he very clearly states the situation as he finds it, and in so far as that situation is complicated by the existence of the Treasury notes and the laws relating to them he says: So long as tho Government continues the unwise policy of keeping its own notes ontstandiufr to circulate as currency, and undertakes to provide for their redemption in coin on presentation, it will be, in my opinion, essential for the Scci'otary ol the Treasury to possess the means, or to have the clear and undiiuhted authority to secure the means, which may from time to time become, necessary to enaole him to meet such emergencies as the one winch has recently occurred in our financial affairs. Under existintr le,t,'islation the Treasury Department exercises to a lartcer exti-nt than all the other finan- cial institutions of the country comliined the functions of al)a]ik <>i issue, and while the credit of the Government is so strong that it may not be necessary to maintain at all times the actual coin reserve which experience has shown to be refiuisite in the case of ordinai-y banking companies, still it would be mivnlfestly imprudent, to say the least, not to adopt such precautionary meas- ures as would enable the Government in times of unusual mouetai-y distni-b- ance to keep its faith with the peoiDle who hold its notes and coins 1 ly i)ri )tect- ing them against the disastrous effects of an irredeemable and depreciated currency. While the laws have imposed upon the Treasury Department all the duties and responsibilities of a bank of issue, and to a certain extent the functic^ns of a bank of deposit, they have not conferred upon the Secretary any part of the discretionary powers usually possessed by the executive heads of insti- tutions engaged in conducting this character of financial business. He is bound by mandatory or prohibitory provisions in the statutes to do or not do certain things, without regard to the circumstances which may exist at the time he is required to act, and thus he is allowed no opportunity to take advantage of changes in the situation favorable to the interests of the Gov- ernment, or to protect its interests from injury when threatened by ad- verse events or influences. He can neither negotiate temporary loans to meet casual deficiencies nor retii'e and cancel the notes of the Government without substitiiting other currency for them when the revenues are redun- dant or the circulation excessive, nor can he resort, except to a very limited extent, to any of the expedients which in his judgment may be absolutely neces.sary to prevent injurious disturbances of the fanancial situation. These considerations emphasize the necessity for such legislation as will make the Department more independent of speculative interests and operations and enable it to maintain the credit of the Government upon a sound and secure basi.s. Whatever objections may be urged against the maintenance of a large coin reserve, procured by the sale of interest-bearing bonds, it must be evident that this course can not be safely avoided unless the Government abandons the policy of issuing its own notes for circulation and limits the functions of the Treasury Department to the collection and disbursement of the public revenues for purely public ])urposes and to tho performance of such other administrative duties as may be appropriate to the character of its organiza- tion as a branch of the executive authority. Now, Mr. Chairman. I have brought down the expressions of opinion which have been carefully, solemnly made from time to time by those who have l)een charged ^vith responsibility in this Department. They are full of instruction; they ought to have great weight with the legislative branch of the Government. 1829 9 It is not necessary, Mr. Chairman, to further quote the opinions and recommendations which have come to us from time to time from those who have been in position to realize and to feel the great embarrassment and danger incident to the issue and main- tenance of these Treasury notes, nor to attempt to further em- phasize their appeal for legislation which will cause them to be finally redeemed. But to my Democratic friends let me say that I realize that some names are more potent than others in our coun- cils, and I wish to call to your minds the testimony and add to what I have said here to-day the approval and sanction of one who has long since passed from among us, but whose spirit still inspires our highest purpose and commands our most loyal service. I re- fer to the name and the TEACHINGS OF THOMAS JEFFERSON. What I am about to read is from a letter addressed by Mr. Jef- ferson to the President. It is dated Monticello, October 15, 1814. I ought to say perhaps in explanation before I read this letter that during the war of 1813 resort was had to the issue of Treasury notes, not legal tender, for the purpose of carrying on that war, and it was with reference to that matter that he said: Sux)pose we require, to carry on the war, an annual loan of twenty millions; then I propose that in the first year you shall lay a tax of two millions, and emit twenty millions of Treasury notes, of a size proper for circulation, and bearing no interest, to the redemption of which the proceeds of that tax shall be inviolably pledged and apjilied by recalling annually their amount of the identical bills founded on them. The second year lay another tax of two- millions and emit twenty millions more. The third year the same, and so on until you have reached the maximum of taxes which ought to be imposed. Here is a precedent for our proposed action — noninterest-bear- ing Treasury notes, to be redeemed from the proceeds of a tax inviolably pledged and applied. Further on he says: All we should have to do would be, when the war should be ended, to leave the gradual extinction of these notes to the operation of the taxes pledged for their redemption; not to suffer a dollar of paper to be emitted either by public or private authority, but let the metallic medium flow back into the channels of circulation and occupy them until another war should oblige us to recur, for its support, to the same resource and the same process on the circulating medium. Mr. Chairman, he does not content himself with a mere outline of a plan, but with characteristic perspicuity this great man.iier- fectly tireless in detail, accompanies his letter with a table care- fully wrought out by which he indicates vnth mathematical ac- curacy the very year in which the last of the notes must be paid. I have read from the sixth volume of Jefferson's Works, on pages 392 and 393. In brief, the remedy proposed by Mr. Jefferson was to pay the Treastiry notes, stop the further issue of paper money, and "let the metallic medium flow back into the channels of circulation." Again, on page 139 of the same volume, he says: Every one knows, that although not literally it is nearly true that every paper dollar emitted banishes a silver one from the circulation. A nation, therefore, making its purchases and payments with bills fitted for circula- tion thrusts an eqiial sum of coin out of circulation. There is in this no suggestion of a permanent paper issue. On the contrary, he never spared to teach the distinction between money and paper promises to pay money, which to his clear com- prehension was no other than the difference between debt and property. To my friends around me here who still contend for the free and unlimited coinage of silver, permit me to say that I am wholly un- 10 able to iTnderstand how you can consistently ask for a wider use of silver while you insist iipon the retention of this paper money. Why not retire it and •' let the metallic medium flow back into the channels of circulation." Treasury notes have been resorted to as a method of borrowing by the Government at five different periods in our history. First, in the war of 1812; second, in the panic of \h:]7: third, during the Mexican war; fourth, in the panic of 1857; and fifth, during the late civil war. As I have already shown, none of these notes were made a legal tender in the payment of debts prior to the act of 1862. All notes issued prior to that were based solely upon the power to boiTow money, and nearly all of them bore some rate of interest. As bear- ing upon the proposition to retii'e our outstanding Treasury notes, I desire to call attention to the opinion of Mr. Benton, expressed in the Senate on the occasion of the authorization of the notes of 1837: BEXTOX ON TREASURY NOTES. I will now say a few words on the policy of issuing Treasury notes in time of peace, or even in time of war, until the ordinary resources of loans and taxes had been tried and exhausted. I am no friend to the issue of Treasury notes of any kind. As loans they are a disgiiised mode of borrowing and easy to slide into a currency. As a currency it is the most seductive, the most dangerous, and the most liable to abuse of all the descriptions of paper money. The stamping of paper (by the Cxovernment ) is an operation so much easier than the laying of taxes or of borrowing money tliat a government in the habit of paper emissions woiild rarely fail in an emergency to indulge itself too far in the employment of that resource to avoid as much as pos- sible one less auspicious to present popularity. So said General Hamilton, and Jefferson, Madison, Macon, Randolph, and all the fathers of the Republican (Democratic) church concurred with him. These sagacious statesmen were shy of this facile and seductive resource, '■ so liable to abuse and so certain of "being abused." They held it inadmissi- ble to recur to it in time of peace, and that it could only te thought of amidst the exigencies and perils of war, and that after exhausting the direct and responsible alternative of loans and taxes. Bred in the school of these great men, I come here at this session to oppose at all risks an issue of Treasury notes. I preferred a direct loan, and that for many and cogent reasons. There is a clear authority to borrow in the Constitution: but to find authority to issue these notes we must enter the field of constructive powers. To borrow is to do a responsible act; it is to incur certain accountability to the constituent, and heavy censure if it can not be justified. To issue these notes is to do an act w4iich few con.sider of, which takes but little hold of the public mind, which few condemn aiid some encourage, because it increases the quantum of what is vainly called money. Loans are limited liy the ca- pacity at least of one side to borrow and of the other to lend. The issue ol'chese notes has no limit but the will of the makers and the supply Of lamp- black and rags." EVILS OF A BAD PRECEDENT. But, Mr. Chairman, we are met at this point by some who say that conditions have changed; that we can do what our fathers failed to accomplish, what other nations failed to do; that we are above the ijiecedents, and, in short, that we are great enough and strong enough to discard the lessons of experience and defy the limitations of established pc^litical science. It is also contended by others that no danger exists and no harm can come from the continuation of the Treasury notes in circulation because the amount is limited and the responsibility not great when compared with our resoitrces. Mr. Chairman, the.se are the very reasons that should move us now to finally close this transaction. It is one of the objections to this kind of paper that in times of business activity and general prosperity, when speculation is active and c(jnfidence unshaken, it is mistaken for real money and men build upon it as if it were substance in itself, and then when the time comes, as it always 1829 li does come, for liquidation, collapse and ruin must follow. It is also one of the symptoms of this fatal malady that the patient can not be iindeceived. He will not believe that his misfortune is due to the deceptive influences of the inflated medium, biit rather demands that the artificial stimulus be restored and even increased. He is, to borrow an expression from Jefferson, like a dropsical man crying for "Water! water!" or, to use another of his expressions, he insists upon resorting "for the ciire of colic to in- flations of more wind." Mr. Chairman, we are not more likely to perform this miracle of making monej^ out of "lampblack and rags" than have the generations of men who have gone before us. We have not yet discovered the philosopher's stone. On the contrary, the continu- ation of these notes in circulation constantly deceives and misleads those who know nothing of the cost and danger, who have not felt the weight of responsibility or known its harassing details; they form the notbed out of which has sprung in the last few years so many noxious weeds that the poison from them afflicts our entire body politic. Perhaps the most vicious of the many offspring of this fruitful error is the Stanford loan bill. It was introduced in the Fifty-first Congress and was entitled "A bill to provide the Government with means stifBcient to sup- ply the national want of a sound circulating medium." The se- ductive feature of the bill was that it proposed to lend United States notes to ' ' every person who is a citizen of the United States, or who has declared his intentions to become such, and who is the owner in fee of unincumbered agricultural lands." And for that purpose the bill directs that — The Treasurer of the United States is hereby authorized and dii-ected to Cause to be printed, signed, and ready for use * * * circiilating notes of the United States. The very able report of the Finance Committee against this measure, written by the venerable Senator Morrill, contains much information and sound reason. Among other equally good things, it says: Many persons may be captivated with the plausible idea of obtaining cheap loans and plenty of money on easy terms, but the experience of enlightened nations shows wherever siich reckless financial experiments have been tried that they have ended in commercial crises, bankruptcy, and general national disaster. The principle is unsound and can not bring forth good fruit. It may not be improper to refer briefly to some of the ill-born national ex- amples which conclusively demonstrate the inexpedience that has always attended all such measures, and their final ruinous catastrophe. The Mississippi scheme was started in Paris in 1717 by .lohn Law, embrac- ing trade and other privileges, and finally amalgamated with the national bank, which issued an immense amount of paper. Law had promised annual returns of 130 per cent. The stock at first rose to an enormous premium. Upon the issue of 50.0CI0 new shares there were 3<)(1,0(X) applicants. Soon, how- ever, gold began to be hoarded, and though laws were passed to punish all persons who were found in possession of a sum beyond a fixed amount, large sums were sent out of the country, to Belgium and England, for safe-keeping. In 1720 the bank stopped payment and the whole scheme collapsed, bringing ruin upon all of the great multitude who had unwisely put faith in the finan- cial soundness and integrity of the Mississippi scheme. Law immediately fled the country. The insurmountable disorder of the French finances, and annual excess or expenditures beyond receipts, without doubt was the first cause of the French Revolution. Fresh loans were required for the treasury every year. The nobles and clergy would not consent to be taxed, and lenders at last re- fused to lend. The King and Queen sent all their plate to be melted down, but it was insufficient for the public expenditures. The treatise of John Law on "Money and Trade " had been translated into French, and at length Tal- leyrand brought forward and carried his measure for the confiscation of the whole ecclesiastical property of the Kingdom, reserving a pension to the 1839 12 clergy, and appropriating what was estimated at £80,000,000 to aid the public necessities. In December, 178!), the assemlily ordered a sale of church and crown prop- erty to the amount of t'li'i,iiiKi.()»H» and decreed that a paper currency should be created of that amount, beariiif^ ."> jut cent interest, and called assignat.s, for the redemption of which the confiscated lands were to be sold. Not to enter into all the progressive steps taken, in less than 5 months, by another decree, the assi^ats were declared a legal tender, with interest at ^ per cent. The public debt rapidly increased, and in 1790 now assignats were created of double the amount. Further large amounts were created in 1791-9:2, and in 1793 the assignats wei-e at a discount of 30 per cent. Shop- keepers refused them for prime necessities and their shops were plundered in gc»neral riots. With the creation of more assignats in 1793 the convention decreed six years' imprisonment to any person who should sell assignats at less than their nominal value, or make any difference in price whether i)aid in paper or specie. A silver franc got to be worth six m v>aper. Tlie penalties for making any difference in price were greatly increased and death was decreed against all who kept back from public sale articles of first necessity. Trade and production ni>arly ceased. Public functionaries could no longer live on their salaries and one-third of the army deserted. In 1795 the a.ssignats in nonainal value amounted to $3,800,000,000, and had fallen to one-thousandth part of their nominal value. Finally, the Govern- ment refiised to ])art with the national domain at the depreciated value of their paper currency, and destroyed it at a single blow by decreeing "that anyone might make bargains in whatever currency he pleased." Thus dropped out of circulation, perhaps, the largest batch of legal-tender paper currency ever created, notwithstanding it was based upon land security and supported by all the terrors of national power. The Argentine Republic established in 1886 a great national mortgage bank to make loans on the h5^)Othecation of real estate. The minister of finance regarded it as "a great boon to the i)eople for the reason that land is the great patrimony, the immense capital of the country, and every facility," he said, should be given to mobiUze the capital and increase its value." Its func- tions were not to loan money on mortgage, but to issue transferable mortgage bonds on the execution of mortgages in its favor, which were put on the mar- ket for what they would fetch, with national guaranties to the holder the service of interest and amortization. The bonds were made payable to bearer and bore interest at not exceeding 8 per cent, and with an annual sinking fund for their ultimate payment of not exceeding 2 per cent. The chairman and dii'ect(;rs were appointed by the President of the Republic. The bank was to make no loan of less than S1,(m;)0 nor above $250,0(X). The mortgage extended to all other property of the mort- f:agee, though not mentioned in the mortgage, and no loan was to be granted or more than half the value of the property mortgaged. A delay of over sixty days in the payment of the hypothecary obligation authorized the bank to put up for sale at public aiiction the property mortgaged, without any legal proceedings, and to award it to the highest bidder. It is not necessary to say that the financial scheme of the Argentine Repub- lic has been hardly more fortunate than that of John Law, or than that of the assignats of France, and has brought shame and disaster upon the credit of the Argentine Repiablic. The inflated paper money market became easy for speculators, but specie payments were soon suspended, gold rose to over 200 per cent premium and suddenly went out of the country to pay balances of trade and interest on foreign bonds, and the Argentine national-bank notes are now worth only 50 cents on the dollar. The Argentine Government is grievously embarrassed and now proposes to obtain relief by the extraordinary measure of offering for sale in Europe at public auction no less than 24,000 square leagues of land in their recently organized territories at a minimum price of $2 in gold per hectare, or about $1.2-5 per acre. These lands, according to the Buenos Ayres Herald, are situ- ated in Terra del Fuego, or in territories where the best lands have already been disposed of in large tracts, or where only swamp lands remain unsold, and would not attract eager bidders among foreigners. From this desperate measure they hoped to have raised $120,000,000 of gold to be deposited.in the mint for the conver.sion of the Argentine national-bank notes. The emergency it appears was great, but it is very likely gray hairs will cover the heads of the holders of these notes long before the notes will be redeemed either in gold or silver. Referring to the scheme of the notorious John Law, to which Senator Morrill refers in this report, Thomas Jefferson once said, in a letter written by him at Monticello in 1813, that it — ended in France in the bankruptcy of the public treasury, the crush of thou- sands and thousands of private fortunes, and scenes of desolation and distress equal to those of an invading army burning and laying waste all before it. 1829 13 THE MONEY OF THE CONSTITUTION. We frequently hear men declare their undying allegiance to "the money of the Constitution." I shall not be personal. I have no other aim than the preservation of vv^hat seems to me the correct principle as applicable to this question. But there are those, I repeat, who contend for the money of the Constitution and at the same time support a money unknov\^n to the Constitution, denied by the Constitution, and despised by its founders. Here is my good friend from Alabama, General Wheeler, serv- ing notice on me that a Democratic Congress passed the law of 1878 to prevent the retirement of these notes, as if that were an authority against my present position or illustrative of Democratic principles. Gentlemen must remember the conditions that prevailed at the time that act was passed. We were then just on the eve of com- ing to a specie basis. We had passed practically through the era of contraction, but we had not yet obtained a fair share of metal- lic money. The Treasury statement for that year shows that we had in circulation only $805,793,807, as follows: [n cii-ciilation Mar. 1, 1878. Gold coin Standard silver dollars. Subsidiary silver Gold certificates Silver certificates United States notes National-bank notes 83,530,163 53,573,833 44,364,100 311,436,971 313, 888, 740 Total. 805,793,807 From this table it will be seen that we then had no silver dol- lars and very little gold in circulation. It is a singular coin- cidence that the Bland- Allison Act was passed this same year. In view of all the vicissitudes of our financial affairs, it seems clear to me that it would have simplified matters very much and probably afforded a happy solution of most, if not all, of our troubles if when the silver coins were issued under the Bland law of 1878 it had been provided that for each dollar so issued a dollar in paper promises should be retired. Our stock of silver and gold, both of coin and bullion, is now about $1,300,000,000. or $500,000,- 000 more than all the money in circulation of every kind in 1878. I am aware, Mr. Chairman, that the advocacy of this law to prevent the further retirement of the greenback was taken by many as a pledge of the party to Government paper money. It seemed for the time to promise well for the party. It was sup- posed by some to be a necessary remedy suitable only to the then distressed condition of the country. It was opposed then by some of our ablest Democratic leaders, and the dangers of the move- ment clearly pointed out. But we should not follow as a prece- dent that which was done as an exception to, and recognized as a departure from, sound Democratic principles. I realize that we have honest differences among us upon this subject, differences which seei^i to be irreconcilable; but, Mr. Chairman, there will be a revisiftn of views, a codification of doc- trines, and a unification of the faith. Whatever shades of opinion may divide us, whatever local influences may give /"olor to our con- victions or promjit our actions, whatever of pride or resentment 1829 14 growing out of our struggles over this question may now be felt, they will all pass away; and when that time comes, as it must come, our party will be found standing by the Constitution, fol- lowing the teachings and abiding in the faith of the fathers. THE COINAGE OF THE CONSTITUTION. Mr. Chairman, it is not uncommon to hear gentlemen declare that they are for the coinage of the Constitution. We hear this most frequently from those who insist upon the free and unlimited coinage of silver at the ratio of 10 to 1. They seem to think the one thing alone which will answer the demands of the Constitution will be free coinage at 16 to 1. What was the coinage of the Con- stitution? There are but two references in that instrument to this subject. Section 8 of Article I declares that — Congress shall have power * * * to coin mone3r, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures. Section 10 of the same article declares — that no State shall coin money, emit bills of credit, make anything but gold and silver coin a tender in payment of debts. There is no suggestion of ratios in either of these provisions, ex- cept in "regulate the value." No ratio was named, no mint was in existence, no coinage laws or precedents were recognized or adopted or sanctioned. Congress was simply given the power to coin money and regulate the value of that coin. What was meant by the word regulate as used in that connec- tion? Was it to declare arbitrarily a value not found to exist in the coin? The Congress should fix the standard of weights and measures. This was to be an act arbitrary in its nature, but Ctm- gress could not under this grant of power fix values where they did not exist. Necessarily this language means that after establishing a Tinit of value and providing for various denominations both of gold and silver it was left with Congress to ascertain and declare the relation which the one metal shall sustain to the other in the coinage, viz, how much gold shall be in the one and how much silver shall be in the other to make the dollars equal. But in ad- dition to this the word " regulate " has in it the idea of continuous action, of supervision. The relative value of gold and silver had been constantly changing since the dawn of history. It is said that in ancient Egypt they were of equal value, or a ratio of 1 to 1. Among the Greeks and Romans the ratio was 9 to 1. It never ran to 12 to 1 until in tlie seventeenth century. The men who wrote this Constitutifni knew the use of language, and they knew that the relative value of these metals was con- stantly changing, and that it was not even uniform among the nations, and so they provided a power to regulate. If we had any doubt on this subject only a slight investigation of the dis- cussion which led up to the first ratio under the Constitution would remove that doubt. Mr. Jefferson says in his autobiography that some difference of oi)inion arose as to the monetary system which should be adopted. The financier, Robert Morris, had sulnnitted to Congress, in 1783, a very comiilicated and cumbersome system, in whicli the value of a dollar was to be expressed by 1.440 units. Jefferson tells us that he replied to this and printed his notes, and, putting them into the hands of members of Congress for consideration, that the committee agi'eed to report on his principle, and he adds: " This was adopted the ensuing year and is the system which now pre- 1829 15 vails." These notes appear in Ms published works under the heading, "Notes on the establishment of a money tinit and of a coinage for the United States." I will quote his very langiiage on this question. It will be found on page 168, volume 1, and reads as follows: The proportion between the vahies of gold and silver is a mercantile prob- lem altogether. It would be inaccurate to fix it by the popular exchanges of a half joe for $8, a louis for 4 French crowns, or 5 louis for S~3. The first of these would be to adopt the Spanish proportion between gold and sil- ver; the second, the French: the third, a mere popular barter, wherein con- venience is consulted more than accuracy. The legal proportion in Spain is If) for 1; in England 15.V for 1; in France 15 for 1. The Spaniards and English, are found, in experience, to retain an overproportion of gold coins, and to loose theii' silver. The French have a greater proportion of silver. The difference at market has been on the decrease. The Financier states it at present as at 14J for 1. Just principles will lead us to disregard legal proportions altogether; to in- quire into the market price of gold in the several countries with which we shall principally be connected in commerce, and to take an average from them. Perhaps we might, with safety, lean to a proportion somewhat above par for gold, considering our neighborhood and commerce with the sources of the coins, and the tendency which the high price of gold in Spain has, to draw thither all that of their mines, leaving silver principally for our and other markets. It is not impossible that 15 for 1 may be found an eligible pro- portion. I state it, however, as a conjecture only. Now, jvLst think of it, Mr. Chairman; here are the utterances of the very man who prepared, proposed, and secured the adop- tion of our coinage system. He tells us that the proportion be- tween the metals is a mercantile problem altogether, and that " just principles would lead us to disregard legal proportions alto- gether." That we "might lean with safety to a i^roportion some- what above par for gold." The ratio actiially adopted was 15 to 1. If there is any coinage of the Constitution it is coinage at the ratio of 15 to 1, or at some ratio which expresses the values of gold and silver in the mercan- tile world. The first might historically be called the ratio of the Constitution, because it was the first established under the Consti- tution. The second might be called a constitutional coinage be- cause the spirit of the system as declared by its author was one based on relative commercial values. But, Mr. Chairman, the ratio of 16 to 1 has neither claim to its credit. As I have said, the power to regulate contained the idea of su- pervision. This power we have exercised. The first ratio was 15 to 1. Under this ratio we lost all of our gold because we had undervalued it. A bill to change the ratio was proposed in 1834, the object being to procure gold in circulation. Benton was the great champion of the movement. He demanded that " the mint drops should shine in the purses of the poor." He submitted a set of resolutions in the Senate, calling for a joint committee of T^oth Houses to inquire into the cause or causes of our loss of the yellow metal. A bill was finally introduced which changed the ratio to 16 to 1. It passed both Houses and received the signature of President Jackson. They thought in those days that it was the commercial and not the legal ratio that would keep the metals in circulation. They were hard-money Democrats, and their fame rests largely upon their loyal devotion to sound-money principles. In speaking upon this bill Mr. Benton said: That gold was undervalued by the laws of the United States and expelled from circulation was a fact which everybody knew; but there was something else which everybody did not know; which few, in reality, had an opportu- nity of knowing, but which was necessary to be known to enable the friends of gold to go to work at the right place to effect the recovery of that precious metal which their fathers once possessed, which the subjects of European 16 kings now jjossess, which the citizens of the young republics to the south all possess, which even the free negroes of San Domingo possess, but which the yeomanry of this America have been deprived of for more than twenty years, and will "be deprived of forever unless they discover the cause of the evil and apply the remedy to its root. Mr. Chairman, it is not my purpose to follow these various ex- pressions of oinnion with further comment. I prefer to present the utterances of others rather than to give my own. It occurred to me that possibly the weight of their great names and the clear- ness and strength of their reasons might have more weight than anything that could be said by the living. Paper money based alone on faith or mere authority is a delu- sion and a snare. It is not a new experiment. Almost every na- tion at some time in its history, either tempted by its necessities or guided by unwise counsels, has pursued this phantom, but each in turn has been compelled to retrace its steps with blasted hopes and bleeding feet. Actual money may not always be needed, and, in fact, comparatively speaking, is little used in the larger fields of commerce and trade; but whatever takes its place must, like warehoiise receipts, represent and entitle the holder to the thing of real value. I submit, therefore, that it is clearly established, both by reason and authority — First. That the Government ought not to issue paper money; Second. That there can be no honest money without value — actual commercial value — equal to that which it purports and rep- resents itself to be; Third. That the precious metals can not be coined and kept in circulation together at a mere arbitrary ratio; that is, without re- gard to their respective commercial values; and Fourth. That the Democratic party from the days of Jefferson in all its history has been and is the hard-money party and the honest-money party of the country. To this I will add a hope and a prophecy that with a worthy, able, and fearless successor to his illustrious predecessors in the Presidential chair, there is nothing which we can do that wiU strip our party of the laurels won in defense of these doctrines in the past, nor reverse its policy for the future. 1829 o THB CURRENCY. SPEECH OF HON. NICHOLAS NICHOLS COX, OF TENNESSEE, HOUSE OF REPRESENTATIVES, Friday, January 25, 1895. ■WJVSHTIMGXON. 1895. SPEECH OF HON. NICHOLAS NICHOLS COX The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 8518) making appropriations for sundry civil expenses of the Government for the fiscal year ending June 30, 1890, and for other purposes — Mr. COX said: Mr. Chairman: In a discussion of so important a matter I do not think that any character of remarks at all personal or partisan should be indulged in. I do not think that any light will be thrown on the pending bill by charges and countercharges as to the causes of our troubles made by either of the great political parties. We are not now called upon to discuss our errors, only so far as they may disclose a way for substantial and speedy relief. What good can be accomplished by abuse and unfriendly criticisms I am un- able to see. If the honorable gentleman from Pennsylvania [Mr. Sibley] , who has just spoken, has information, as he says he has, by the confessions of a member of this body that he sold his vote to se- cure an appointment from the President, and the President be- stowed an appointment for a vote, then that member should be exposed and the gentleman have him expelled. I have too much confidence in every member of this body to entertain for a mo- ment such a thought, and too much esteem for any President, without regard to party, to believe that that high officer would be so influenced. When the gentleman further says that members have had golden locks put on their mouths, ought he not to name them? Is such an insinuation or charge just or proper, when he can name no one, nor prove the guilt of a single man? I speak for myself , that since I have been a member of this House I have never seen or heard anything that cast a suspicion on a single man in this body. Gold will lock the gentleman's mouth, I have no doubt, as soon as it will his equals here and everywhere. I have my convictions as to the caiises of our troubles. They have been stated on this floor in my feeble way. Biit shall we, as representatives of our people, engage in disputes with each other and refuse to attempt to relieve our constituents. I leave all this behind, and will labor all I can to restore to our country that prosperity it ought to enjoy. I quarrel with no one, and will abuse none. Our financial officer stands as high in statesmanship as any man. His high reputation will not suffer from a few blasts of words, de- livered in spite; and that he is laboring with fidelity to duty in 1794 3 this matter no one doubts, and he is worthy of the highest praise; that he is working for our people, believing his views will help them, no one that knows his efforts questions. He comes to us, he asks us to help him and hold up his hands with the great power confided to us, so that he may, if possible, relieve the peo- ple of their distress, and turn in again sunlight on them. Will we do it, or will we leave him unaided and alone? I speak for myself, and every effort I can make, feeble as it will be, shall be done to give relief to our business, independence to our Treasury, and prosperity to our people. The proposed bill is not perfect, and I do not believe any great financial measure can at once be formed. It must be built up with experience and careful thought, and there can be no doubt that apparently just criticism can be made on any plan proposed; but is it not better to try and cure instead of sitting down com- plaining and doing nothing? THIS BILL, IN CONNECTION WITH THE TREASURY. We all understand the sad condition our financial system is in as it affects the Grovemment. Our receipts of money are below our exx)enses, and each day adds to our indebtedness. Now, we believe that this will not last long, but the great cause of this de- ficiency is not our taxing laws, but the prostration of business. If we can let loose business and permit our people to proceed un- restrained by vicious legislation, it will be but a short time until the receipts of the Government will pay its expenses and more than pay them, and again make the Government absolutely inde- pendent of all other financial powers. The banking features of this bill operate more directly on this part of the subject. The Secretary of the Treasury in his report calls direct and em- phatic attention to another great evil that is continually forcing his finance in a most unsatisfactory condition. About five hun- dred millions of the notes of the Government are out. They are promises to pay money. They are due and owing, and no one con- tests their validity. The people expect them to be paid whenever presented. They are, so to speak, checks on the Treasury of the United States, and the Secretary is charged by law with their payments. In order to be ready so to do he is charged by law to hold one hundred millions of gold as a pledged fund for the pay- ment of these notes or checks. He is not only charged with the duty of paying them, but when he pays them he must again put out these promises and again pay them when presented; an end- less claim and a process of obtaining money from the Treasury regardless of its condition and regardless of the condition of the people, who must in the end furnish the Treasurer with the money to keep up this process. These notes are remarkable in another respect. They are prom- ises to pay money and are themselves lawful money. Three hundred and forty-six millions of these notes are legal tenders and are as effectual in the discharge of obligations as gold; the remainder of the sum, in effect, occupies exactly the same position. You may in the contract stipulate against receiving them in pay- ment, yet the holder can convert them into gold at his own option. So you have a legal-tender, lawful money, a debt-paying money, continually draining another legal-tender, debt-paying money from the vaults of the Government at the will of the holder of these notes. 1794 Mr. Chairman, let me call the attention of the House to another important fact connected with these notes. They are the most desirable money we have. They can pay a debt, and can at any time be converted into gold. As a matter of convenience they are more desirable to hold than gold. There is less risk in hold- ing them than gold and they are the great power that at any moment can bring the Treasury to borrowing and begging to ob- tain gold. They are the great instrument through which specu- lators in gold, either foreign or home gold gamblers, can empty our vaults regardless of the welfare of every citizen of the United States. These notes were at one time great favorites with our peo- ple. But now they are gone from common circulation. You hardly ever see one. They are hoarded and held, always ready to obey the gold gambler and gold speculator. Look what a ridiculous figure we displajsed in borrowing gold. These notes were taken out of their hiding places, presented to the Treasiiry for gold, and then syndicates and speculators traded with the people as to how much they must have for their gold that had just been drawn from their Treasury. The terms being agreed on, again these notes assume the same functions they had before, and await another opportunity to make another raid. This proposed legislation is to make these notes the basis of a banking system in place of United States bonds. Each bank op- erating under this bill is to deposit with the Treasurer 30 per cent of its circulation in these securities, and if necessary use the same for redemption of the notes of the bank if it becomes insolvent. If the plan of the Secretary succeeds it wotild in a few years dis- pose of so many of these notes that the remainder could not threaten the Treasiiry or stand as a menace to its successful op- erations. I know this is not an extinguishment of the paper, but holds it in check and converts it into a use bonds are now per- forming, these bonds in no way interrupting the business of the Treasury. Is this not wise in view of what we see every day? No man can manage successfully our financial system so long as five hundred millions of our obligations have a mortgage on every dollar of gold that reaches our vaults, and an interminable mort- gage that is never satisfied. We all recognize something must be done. This great country can not and ought not to be disturbed in its financial operations by every order for gold that may be sent from other nations, and it is more humilitating that it should be disturbed by money traders and shylocks of our own country. IS IT PRACTICABLE? Mr. Chairman, we must not forget that we have to do one of two things. We must get these notes under our control, either by paying them at once, or place them where we can control them without prejudice or wrong to the holders until our condition is such that we can pay and discharge them and then destroy them. No one is so blind as not to recognize the disturbed conditions of our finance and our business. Our revenues will certainly in- crease if our business is made prosperous. So we are dealing with a state of facts that exist now. Our banking system must be changed in a few years, or abolished, and any delay is dangerous. Now, if we can make this a success, does not the highest sense of duty demand immediate action? If we decide to raise money and pay the notes, and cancel them 17M 6 when paid, we must first get the money to do so; and this money must be gold, as the construction of law is now. We can get it but one way. and that is to borrow it at the lowest rate of interest possible. We issue our bonus, say, to run for twenty years at even 3 per cent. That increases our bonded indebtedness to the extent of the notes. Assume that they do not exceed four hundred and fifty millions and that the interest is paid quarterly, or even semiannually, you have paid at the end of the twenty years two himcb-ed and seventy millions in interest; more than half the ex- isting notes. You have at the same time reduced your volume of circulation foiir hundred and fifty millions. Every year your money becomes less, your debt running, draw- ing interest on that which at present draws no interest, becoming larger. It does not seem to me you are strengthening you finan- cial standing bj^ goingjin debt. I am sure it has an opposite ef- fect with an individual. You pay seven hundred and twenty mil- lions for a debt of four hundred and fifty. You miist under this plan provide a fimd each year to be ready to pay the bonds, tlius drawing from the money of the country each year that which the people so much need in their own business; and as you do this you increase the difficulties in obtaining the money to meet these obli- gations. To my mind there could be but one excuse for such a course as this, and that excuse only should be self-preservation. We are in no such trouble as that. An objection has been urged that these notes would go to a pre- mium, and could not be procured for banking purposes. While I do not have the least fear of such a result, yet a slight amend- ment in the bill authorizing the Secretary to accept other lawful money, at his discretion, to bank on, places this point beyond de- bate. This system places back into circulation every dollar that is taken out. True, it is not exactly the same character of paper, but it is a paper dollar redeemable in lawful money at the option of the holder — not by the Government, but by the bank that gets the benefits of putting it in circulation. This in no way ever touches the Government so long as redemption by the bank is maintained. There are no bonds bearing interest issued; in- deed, the obligations of the Government are lessened when com- pared with the present system of banking. But it is argued that the plan is impracticable, for the reason that no one will bank under it. Of course if the scheme can not be put into operation we are where we commenced. It will be a dead statute and no relief obtained. This objection addresses itself to the citizens who wish to bank, and the first question will be as to the profits of the busmess. If the proposed legislation offers equal opportunities for profits as compared with the present system, and imposes no more obligations or labor, then there will hardly be any objections to entering on the new plan. So far as that branch of the business which relates to depositors, evidently the advantage, if any, is with the new system. I believe how- ever, this will in practice amount substantially to the same, but we can make that safe by amendment. Now, so far as obtaining and issuing notes as a means of mak- ing profits, I think I can clearly show the proposed system is su- perior, and superior not only to the bank but to the patrons of the bank. If the notes of the bank are regarded as useful in making 1794 profits, then the more the bank can get (always assuming they are good) on the amotmt of money invested, certainly the facilities for profits are greater. The plain reason why banks now do not want to issue their notes is from the fact that it costs the bank too much to get them. Now, this proposed system affords the opportimity to take oxit circulation that can be used with profit. This is a mere matter of calculation, and it places in the hands of the bank a fiind which can be issued or not as the bank may decide, and relieves it to a great extent from the uncertainties which attach to deposits. The bank is in a certain sense its own de- positor. Having this increase of circulation, it can lower its rate of interest. Upon this point I have no fears as to the course of banks that need more circulation. Just in this connection let me say that this opportunity to banks to obtain circialation, in my juclgment, gives birth to a large amount of opposition from the great money centers that have an overabundance of money, as it creates an opposition to them and destroys greatly their monopoly in the use of the circulating mediiim. Just here, Mr. Chairman, may I not connect another idea that has been advanced to show how contradictory are the positions of our opponents. This idea is that such an opportunity is given the banks to take out circulation that a ruinous inflation will occur, while the others contend that none will be taken out, as the banks will not accept what is offered. Now. below these con- flicting t^ieories lies the truth. No bank that is bound by per- sonal oaths, and with its entire assets and personal liability pledged and bound to redeem its notes at its own counter, will put them in circulation for mere exi)eriment. It will be the de- mand of its customers that controls this, and when the demand is such that a fair compensation can be realized by the bank in is- suing its notes they will go, and when they cease to be remuner- ative the whole interest of the bank is centered in having them in its vaults. In this line lies the whole idea of elasticity. The expansion is created by the demands of business, the contraction is from the same identical cause. No combination to make currency scarce or plentiful will ever be made between the banks unless banks are so foolish as to surrender the rights thej' have to make reasonable profits. That is not likely to occur. Banks are not so sentimental. Each bank looks to its own interest and uses its own opportunities, not for oppression of its customers but for reasonable profits. As to the expenses in the way of taxation under the proposed system, including the amount to be paid for the safety fund, they are reduced exactly one-half. So again the practicability is dem- onstrated and currency provided for the great business of a great country. Mr. Chairman, if I have been able to demonstrate the great ad- vantages and good that will result to the Government, then that good is for the whole people and all alike receive the benefits. If I have been able to show that a legitimate banking business can and will be conducted under the proposed legislation, not only conferring great benefits to all the people, but benefits in locali- ties where most needed, then my support of the measure is free and cordial. There remains, however, another recommendation that is to me of great value, not only as it affects the Government in its finance, 1794 8 but as it affects the people in their business — that every bank shall redeem its own notes in lawful money, without the inter- vention of the Government. The notes of a corporation should not be more sacred than those of an individual. Tliis certainly is true when the corporation has the valuable franchise of using its notes as money. It thus far alienates the Grovernnient from banking, and draws it that much nearer to its proper functions. It forces each bank to preserve its own financial character, and at the same time gives to it the power to enlarge its issue as needed, or contract when not needed, being responsible directly and im- mediately to its own customers in its own locality. The Secre- tary vidth great force emphasized this very important departure from the present system. SOME OBJECTIONS ANSWERED. I am met by the proposition that this proposed measure is not democratic and is a perpetuation of the national-bank system. I do not hesitate to say that if this was a system being proposed for the first time I should not support it. But that is not the question before us. We have a system that in vital points has proved de- fective. Banking has become so interwoven in our business that you can as easily dispense with railroads as banks, and certainly it is more important to cui-e defects within our reach than to complain about matters we can not remedy. What are you going to do? You can not destroy the system. You can not satisfy our people by sitting quietly down and doing nothing. Our promises are made, our duty is plain, and I appeal to my party friends to redeem their promises, exert their talents, and be a living, moving power, capable to legislate and brave enough to execute. [Applause.] And another objection is that the depositor is deprived of certain securities which he now has under existing law. I admit there is force on this point; but that can easily be remedied by an amend- ment that does not in the least destroy the symmetry of the bill, and I see no reason why we should not go forward and perfect the biU, instead of trjdng to destroy it, and in our vote say we will not even consider this most important and vital subject. If we shall decide that we will have nothing to do with it, may not our constituents very well decide that they will have nothing to do with us? Is nonaction to be our course, and allow the opportunity presented to us to pass? Is our party so utterly unconcious of our obligations as to become dead to the demands of our constitu- ents? I hope not. This brings me to the other subject embraced in this bill, and to my mind one of the most important features connected with it. STATE BANKS. At the last session of Congress this subject went under thorough discussion, and the House indulged me then in a discussion of the proposition to such an extent that I do not now wish to take but a short time in reference to this matter. The proposition now by thia bill is materially changed from what it was. This bill recognizes the authority of the Government to exercise its taxing power on State- bank circulation, and limits such taxing power to the exercise of the same on certain conditions. It will be conceded readily that if the power exists, then the same may be exercised or not upon the compliance or noncompliance vnth certain limitations and re- 1794 9 strictions named in the law. These limitations can certainly be prescribed, if it is conceded the general power exists. The greater includes the smaller. These limitations have but one object in view and that is to make certain the redemption of the notes issued by State organizations. Their solvency is assured by the restric- tions interposed and their final redemption in lawful money ren- dered certain. Thirty per cent of their circulation must be deposited in legal- tender notes, just as is provided for national banks. A first lien is also given on the assets of the bank, to make sure their notes, and then the liability of stockholders equivalent to their stock is also secured. These conditions precede the issuance of any notes, and must affirmatively appear before the tax can be released. Not a single gentleman who was examined before the committee but admitted that no danger could arise as to the ultimate or speedy redemption of such notes, some of these gentlemen stat- ing that more security for the redemption of the notes was re- quired than necessary. It will be seen that these limitations and restrictions are pre- scribed before the bank can issue a note. And the Secretary of the Treasury and Comptroller of the Currency ascertain and officially announce that the bank has placed itself in a position to be excused and liberated from the tax on its circulating notes. After the bank has issued its notes the restrictions of the Gov- ernment are not removed, but are held to force the bank to keep good its notes. If it should fraudulently attempt to put in circu- lation more notes than it had authority to issue, the tax attaches to the whole, and would in its enforcement close the bank. If it should permit its capital stock to become impaired it must make it good in thirty days or its doors are closed by collecting the tax. While there is no examiner of these banks appointed by the Gov- ernment to inspect them, yet there is an inspection, and a most effective one, in the United States officer engaged in collecting the taxes. The same power is at work that seizes the unlawful dis- tillery, that watches and collects the income tax and the various taxes due to the Government. No man or set of men with any business sense would ever undertake to violate the law and their oaths, with a certainty of detection, for an experiment that could not possibly be of any benefit to them. But anyone who speaks against these banks brings up the state of things that existed before the war, and it seems to frighten men, and they charge we are trying to rush in on a currency sys- tem that would be utterly unreliable. They seem to think that whatever progress we have made in other matters, we have been at a standstill in regard to finance and banking. They couple this with the statement that forty-four States could have a circulation based on different securities and the holder of the notes subject to all kinds of troubles and loss in regard to the same. There is no such scheme proposed. All these banks are under the same restrictions. All must provide the same securities for its notes. All are subject to same inspection and are at all times un- der the eye of taxing power of the Government. But outside of tiiese safety guards there are others more effectual and can not be evaded. Last May I had the honor to address the House directly on this question, and I here repeat what I said then on this point: "There has never existed in the United States a state of facts 1794 10 and circiimstances like the present when State-bank paper was in circulation. It is well remembered that before the war there was no paper circulation but State bank paper, and its redemp- tion was based on gold and silver. At present if loose legisla- tion or bad management in tlie bank was undertaken — and it may be — the notes of siich institutions would never pass over its own counters. They must be regarded as good and stable as national- bank notes or Treasury notes. They will have to circulate side by side with them, and the moment they are treated as of less value they can never leave the vaults of the bank, or if by chance they have left the home bank and gone into circulation, and they go below the national currency, immediately they will be returned for redemption. ' ' This plain truth will be known to every business man that at- tempts to put into circulation State-bank notes. He recognizes at the very outset that these notes are worthless to the bank unless good and solvent and as good as the notes they have to come into competition with. He further knows that iinless their character is fully maintained equivalent to the national currency his bank will have to redeem them in money which is as good. No legisla- tive restrictions could possibly be so effective, and the bank issu- ing notes must occupy the position of utter indifference as to the use of the State cii'culation or national circulation, and accept one as readily as the other. So whatever may be the legislation of the States, here is found a law absolutely certain in its results and re- straints. " Biit let me extend this idea further, and we can see at onc« the effective and certain check on the circtilation of bad paper. "There are in the United States 3,781 national banks, including all the State banking institutions of different characters, of which there are 5,685, a total of 9,466 banks, one bank to every 7,000 in- habitants. I do not suppose there is one of these banks, at least very few, that is not on some line of transportation, either rail or water. I do not suppose that there is a single one that does not have telegraph communications. Compare this for a moment with the conditions that existed in 1840 to 1856, when unsound and worthless banks existed. It was in this period the greatest disaster resulted from bad bank circulation. If any State insti- tution was to become a bank of issue, each one woulci at this time operate as a check on the other; if ever the circulation of a bank was refused at one of these institutions it would drive that circu- lation home for redemption. " Nearly 4,000 national banks doing business with these institu- tions, with a circiilation beyond disintte, would never permit un- safe currency to float for a day. It is well understood the immen- sity of business done by checks and drafts. Woiild any bank, State or national, ever receive a dollar of doubtful currency and give to the owner a credit upon which he could demand legal- tender money? ' ' Would any solvent bank to-day become a debtor by accept- ing a check of another unless the bank knew the check to be absolutely good? Certainly not. Now, these notes issued are but the checks of the banks on themselves, and we all remember what great relief was obtained in our financial troubles by the use of certified checks issued by banks, drawn on their own institutions. "But I have no reason to assume that any State legislature will 1794 u license institutions to cheat and steal. It wotild be just as reason- able to presume Congress would do such a thing. The welfare of every State is substantially in the hands of its legislature, and if one legislature should by careless lavv^s permit bad banking, if such could be done, in issuing bad paper, then that State would be the sufferer, and certainly Congress is not the guardian of State legislatures. But, Mr. Chairman, this idea of States permitting the issuing of bad currency is based on the idea of ignorance in the legislators and the people. It assiimes that experience in finance, experience in banking, the facilities of communications, and all these combined have taught us nothing. " In the financial troubles we are in, and have been for sometime, the per cent of failures between the two systems shows the State banks in advance in solvency. Mr. Chairman, there is in the opposition to this system, when carefully scrutinized, somewhat of a selfish motive. No State can force its notes on anyone. No one need take them that does not want them, and everybody can thoroughly protect himself. Then where is the legal authority or tlie justice that confers on represent- atives of one State the power to manage the local concerns of an- other State? If Texas is willing to permit her people in an organi- zation created by her law to use their credit with the other citi- zen, then why should Maine say no, although it may not even af- fect a single citizen of Maine? Surely it can not unless such a citizen permits it at his own choice. That the national system has not been adequate and sufficient is demonstrated by the large number of these State institutions. And they have in a great degree located themselves in the rural districts and smaller towns, rendering excellent service. If they have been of universal benefit, how much more would their use- fulness be increased if their opportiinities were enlarged? The great cities and great manuf actiu'ing centers need large banks and large capital. The necessity does not arise for such large institutions in the agricultural districts or smaller towns, but their needs, so far as they extend, are to them as imperative as the greater industries. It is the car load of wheat, hogs, corn, etc. , that make up the gi-eat distributing centers. Will you permit them to utilize what they have in legitimate and honorable busi- ness, or circumscribe their advantages, and year after year drive them to the great money centers to obtain money at fearful and ruinous rates of interest? Your system has them by the throat, and you refuse to release them or permit them to escape from a system that is a disgrace to justice. Turn our intelligence loose, unfetter it, and let our energy, per- severance, and sound judgment be our guides and the days of idleness will soon disappear. [Applause.] 1791 o THE CURRENCY. SPEECH Hon. Nicholas Nichols Cox, OF TENNESSEE, HOUSE OF REPRESENTATIVES, Tuesday, February 5, 1895. WASHINGTON. 1895. SPEECH OF HON. NICHOLAS NICHOLS COX. The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R.8705) authorizing the Secretary of the Treasury to issue bonds to maintain the gold reserve, and to redeem and retire United States notes, and for other purposes- Mr. COX said: Mr. Chairman: The committee, when we had this matter under discussion on a former occasion, kindly gave me all the time I asked, and 1 do not think that I would be treating other members with proper courtesy if I were to consume much of their time to- day. I shall not attempt a discussion of the character that has been made by the gentleman from Illinois. Suffice it to say he has got on every side of every question connected with this finan- cial matter, and his arguments upon one position are about as good as upon another. I am at a loss to see when the question comes up again what kind of position he will assume. But I desire only about fifteen or twenty minutes of the time of the committee on the points presented by the two bills on which we will be called to vote. The original bill, or the bill advocated by the gentleman from Illinois, has got this provision engrafted in it: That all of the legal-tender notes or the greenback notes, for I treat them in the same class, that shall be presented to the Treas- ury of the United States for redemption shall be paid in gold, and in order to secure the gold for that purpose that bonds of the United States shall be issued, running for a period of fifty years, I)ayable, at the option of the Grovernment after ten years, in gold. Now, let me call attention to the first important fact. There never has been a bond of the United States issued payable in gold. There is no such statute on our books, and never in all the history of the country has the credit of the United States been disturbed because the bonds were payable in coin. This is the first time that we have ever seriously considered the proposition to make our bonds gold bonds, interest and principal payable only in gold. We have outstanding now something over six hundred millions to be redeemed in 1907. We have issiied one hundred millions more within a very short time past, all of which are payable in coin. Now, whenever you change the obligations of the United States and issue another bond, a gold bond, of five hundred niil- lions"under this act, if so much is necessary, you have, transferred every obligation of the United States of every character into a gold obligation. Now, whatever may be the argument about the parity of the metals is not a matter of importance here; but what I say is that 1805 3 whenever you issue one bond of the United States payable in gold you must assume every other bond of the United States as of the same quality, or you make a difference between the one obligatif)n and the other. That is the first important clause, and I hasten through the two bills for the piirpose of giving the committee what is in them. You can make the comparison and your own argu- ment ui^on them better than I can. I simply give you the facts. What is the next proposition? That whenever the legal-tender notes come into the Treasury of the United States for redemption they will be redeemed in gold. But there is a qualification there that they shall not be canceled under this bill unless the banks take out a circulation equivalent to the amount of the canceled notes. Now, suppose the banks do not take it out or decline to take it out. You have the contraction of the currency to the ex- tent of the notes canceled and the w^hole fal)ric will fall to the groiind unless the banks give the opportunity for the redemption in the manner prescribed. As a member of the committee, I enter my protest against put- ting the circulating medium of the country in the hands or at the control of the national banks. What is the next proposition? You provide that the bonds shall be paid in gold, but when you come to collect the customs duties you strike out the provision that any part of that shall be paid in gold. Now, I ask the chairman of the committee, or any other intelligent gentleman here, how are you going to get the gold to meet the bonds? Where is it to come from? Mr. WILLIAMS of Mississippi. Issue more bonds. Mr. COX. Yes; borrow more gold, issue more bonds, and in this way you put this debt on the country, and you do this by methods imknown in our history heretofore. But there are other provisions which are equally dangerous. I call attention to these points for the present, and then pass to the consideration of the substitute that will be offered. Mr. FITHIAN. Will the gentleman point out the objections to the pending bill as he progresses? j\Ir. COX. Well, I have not time to point out the defects of this bill. I can only name some of the objections. Mr. MARSH. What substitute does my friend refer to? Mr. HAUGEN. There will be two. Mr. COX. There is but one so far as I am concerned. Mr. HAUGEN. There will be two admissible by the rule. You refer to your own. ]\Ir. COX. ' Now I come to the discussion of that question. Under the Carlisle bill, and all are familiar with its provisions, for we discussed it at length when we were considering it, I need not state what is proposed. The only material difference between tliat bill and this bill in regard to the banking lies in one proposition. Now, keep in mind that we are talking of the bill as a banking bill. That important provision lies in this, that the national banks constituted and organized under the scheme proposed by the Sec- retary shall hold one-half at least of the legal-tender notes, under the discretion of tlie Treasury Department, as a part of their reserves. Now. what is the reason of that? There is $1 54.000,000 of these notes in the banks. If they hold $100,000,000 of them as a part of their reserve, there is $100,000,000 of them that is kept away from 1805 5 the doors of the Treasury. They are the best reserves that they can have, becatise they are convertible into gold; and they are held now, and they are all down at the bottom of the pile. No banking- man that has sense enough to run a bank pays out a greenback. They are at the bottom, because they are equivalent to gold, and they are much better for reserve for banks than even the gold. Now, this substitute retires, so to speak, $100,000,000 of these notes. What is the next proposition in the substitute? In the banking system proposed, the banking on these notes instead of gold bonds that you propose to issue, it will take $200,000,000 of them as a basis of circulation. They cost the people nothing. There is nothing oppressive in that line. No interest accumulates upon them, and it will require $300,000,000 of these bonds as a basis of this circulation. You have now covered, then, $300,000,- 000 of these notes. They can raid the Treasury no more until the Treasury arrives at the point where the Treasury will raid them. What is the next proposition in the substitute. There is about $124,000,000 of this same character of notes that is in denomina- tions of ones, twos, and fives. They are in circulation, and they perform the same function in raiding the Treasury as do the large notes, except they are not so convenient for that. Now, the sub- stitute proposes that when these notes come into the Treasury, either for redemption or by collection of revenue, the moment they are received they are canceled by the Government and forever extinguished. Now, what is proposed to supply their place? The original bill stops there. You would contract the currency of the land to the extent of these small notes. Then I say coin the bul- lion that belongs to the Government of the United States and to its people. Mr. TERRY, How much have you got? Mr. COX. There are $181,000,000 of coinage value of coin and bullion. About $29,000,000 is in dollars coined, the remainder in bullion. You can issue like notes of like denomination for these that are canceled, and when you have done that you have absorbed $124,000,000 of the small notes and have put in their places $124,000,000 of silver. Now, will the committee pardon me one moment. What are you going to do with this silver? There is no silver certificate on a dollar of that amount. Now, there are 29.000,000 silver dollars lying in the Treasury to-day that have not got a certificate out on them, and that money is there, dead to the iDeople, as if it were buried in the Potomac. Mr. TERRY. Was it uncovered by the redemption of the Sher- man notes? Mr. COX. They have paid the Sherman notes in gold. Mr. TERRY. How did this $29,000,000 get there? Mr. COX, It was coined out of the bullion purchased by the Sherman notes, but when you redeemed the Sherman notes, and they come in under the original bill, this money is left just where it is now. Mr. TERRY. That is what I say is uncovering them. Mr. COX. The Government decides that it will not pay them in silver, nor will it use its assets to pay them, biit pays them in gold; then Ave ought to have the silver to help ourselves. Mr. TERRY. That is what I have been trying to get out. 1805 Mr. COX. I hope we have got it out. Mr. TERRY. I think together we have got it out. Mr. COX. Now, what is the next propositionV After you have got this .$124,000,000 of the notes for redemption, ones, twos, and fives, you have got then remaining in your Treasury about ^oQ,- 000.000 or .$60,000,000 more of silver. Why not coin that, and whenever you redeem a note that calls for gold, why not cancel it and use an asset which the Government has and whit:h causes no increase, but maintains your circulation? Why not do it? What are you going to do with this bullion? Is this Congi-ess going to let it lie tliere? Are you going to give it away, throw it into the river, or coin it? Now, mark yooi, it will take nearly four years to coin that much and put it in circulation; it will use the silver, and the silver vdll amount to §181,O00.O()O. and it will not be a drop in the ocean com- pared with the circulation that we need. Under this idea the sil- ver takes the place of the canceled notes, and leaves the circulat- ing mediiam in amount as it is now. Now, I submit, Mr. Chairman, to any intelligent man why should this Government rush in debt to the extent of $r)00,000,000 of gold and refuse to utilize an asset of $181,000,000 that it has of its own. The man who would transact business that way in my country would be jjut in the asylum. Mr. FITHIAN. Does yoiir substitute provide for bonds? Mr. COX. I will come to that as I pass along. I want to get gentlemen thinking about this matter. There is no difficulty in it at all if you come down to practical sense. I do pro\ide for bonds in my substitute. Why? I provide that the Seci-etary of the Treasury shall have full authority to issue bonds under the acts of 1870 and 1S75. I do not change their character. We have had those bonds and nobody has objected to them. The reason I ])rovide for bonds is to put the credit of this Government beyond dispute. Mr. FITHIAN. You give the Secretary the same authority that he has now to issue bonds, but you ijroWde for a lower rate of interest? Mr. COX. Yes; I extend the discretion of the Secretary of the Treasury to issue bonds for five years, six years, ten j^ears, or fifteen years, for it will be observed that as these notes are can- celed or destroyed the necessity for Ixmds will diminish. No man can tell how fast the notes will come in. 1 give the Secre- tary discretion to issue these bonds, and the only limitation I put upon him is that he shall not issue a b(jnd bearing a gi'eater rate of interest than 4 per cent. Some gentleman suggested to me that the rate ought to be 8 per cent, but I will tell you why I make it 4. A short-time bond must have a higher rate of interest. \\"*iiile a long-time bond can be placed at a lower rate. The Secretary has the discretion: he is the man who manages all that. He issues these bonds just as the necessity for them arises, and the whole ciuestion can be summed up in a very few words. The real question is: Will this Congress vote to buy five hundred millions of gold when they can control every dollar of these circulating notes by a proper process in their banking and a proper process of redemption? Mr. CULBERSON. What about the State banks? Mr. COX. I will get to that in a moment. There is another 1805 important point to be considered, wliicli relates to the fact that there are certain localities in this country that are almost desti- tute of small change, and this proposition is to coin as much sil- ver as is necessary into siibsidiary coin to supply those localities; but when it is coined into subsidiary coin, that coin is to be used, jtist like the other, for the extinguishment of these notes that give us so much troul)le. Mr. HENDRIX. Will the gentleman permit a suggestion there? Does not the gentleman know that there is in the Treasury now $15,000,000 of fractional-currency coin which the Treasury is unable to get into circulation? Mr. COX. I admit the fact: but there will be none of it coined if it is not needed. I leave that with the Secretary. It is subject to his discretion. I need not discuss a fact that causes no troiible. If this is not needed the Secretary will not coin it; but if it is needed he will coin it. Now, I will ask the gentleman from New York, Are yoii willing to put your vote down on the record here to in- crease the debt of the United States $500,000,000 and leave that silver lying there dead? I for one will not do it. Mr. FITHIAN. A hmidred and eighty millions of it. Mr. COX. Yes; that is its coinage valiie, and there is twenty- nine millions already coined and locked Tip. Mr. WILLIAMS of Mississippi. As a trust fund to redeem the Sherman notes; bvit they will not use it. Mr. COX. Yes; that is what they say; but I am not going into all those details. My friend from Texas [Mr. Culberson] has asked me about the State banks. Mr. CULBERSON. My question was whether the State-bank proposition was incorporated in your substitute. Mr. COX. It is. But while I am more devoted, perhaps, to the State banks than any other man on this floor, for I think they furnish the key that will unlock this whole problem, I have nothing to conceal, and if any friend of this substitute should go to the extent of moving to strike oiit the State-bank provision (which can be done without interfering with the other features of the bill), while I will vote against striking it out, I will vote for the substitute even with it out. I know that this measure will help my covmtry, and I know that the great fight we have got to meet is to get loose from these money centers. Let me close with one word. The greatest principle in the sub- stitute lies in this, that every bank is required to redeem its OAvn notes over its own counter, and until you provide for that you will never have an elastic currency; neither will you ever have a perfect banking system. Mr. Chairman, I have consumed more time than I had intended, and I now thank the committee, and yield the rest of my time to the gentleman from Missouri [Mr. Hall], 1805 THE CURRENCY QUI SPEECH Hon. JOHN DAVIS, OF KANSAS, HOUSE OF REPRESENTATIVES, TUESDAY, JANUARY 8, 1895. WASHINGTON. 1895. SPEECH OF HON. JOHN DAVIS On the bill (H. R. 8149) to amend the laws relating to national banking associ- ations, to exemi)t the notes of State banks from taxation upon certain con- ditions, and for other purposes — Mr. DAVIS said: Mr. Speaker: In a former session of this Congress I discussed verj' fully the dangers of permitting the control of the finances by banking corporations. Sir, the Constitution of the United States places the business of coining and issuing money entirely in the hands of the General Government. The coining and issuing of money is an act of sovereignty, and to delegate the business to corporations is in that respect to abdicate government. The issu- ing of currency is in no respect a proper branch of the banking business. It is, in effect, " making money," and it should not be performed by any other power than the sovereign Government, as mentioned in the Constitution. The proposition that the coining and issuing of money is a sovereign act is so plainly expressed in the organic law that it should not be doubted for a moment. And as to the dangers arising from delegating that sovereign power to banking institutions, they are so plainly seen in the history and experiences of the past that we can not too often recur to them. The old Democratic platfonns uniformly condemned the policy of surrendering the control of the finances into the hands of bank- ing corporations. They declared such a policy to be "unconsti- tutional and dangerous to liberty." And, five times, at as many Presidential elections, the people have decided that the Demo- cratic platforms were right. Mr. Speaker, I know it is disputed that the language of the Con- stitution authorizing the General Government to "coin money" and to regulate its value applies to paper. It is well, sir, to be right in the matter, and I appeal to the writers contemporary with 1752 2 the Constitution, and to the very highest authorities to prove that the words " coining money" applies to both metal and paper, and to one as truly as to the other. Webster's Dictionary admits that the word "coin" means to " stamp," and that the act of stamping may apply to either metal or paper. Dr. Franklin, discussing the sub.iect of trade and industry, said: As to paper circulating as money, it is highly profitable, as its quick passing from one to another is a gain of time, and thereby may be understood to add hands to the comm.unity ; inasmuch as those who would be employed in telling and weighing, would follow other business. The issuers or coiners of paper are undei'stood to have an equivalent to answer what it is issued for or valued at; nor can any metal or coin do more than find its value. • * « « « « * Any paper in the general chain of credit and commerce is as useful as they are; since the issuers or coiners of that paper are understood to have some equivalent to answer for what the paper is valued at; and no metal or coin can do more than find its value. Moreover, as incontestable advantages of paper, we must add, that the charge of coining or making it is by no means proportionate to that of coining of metals; nor is it subject to waste by long use or impaired by adulteration, sweating, or filing.— i*Vanfch'?i's Works {lti09), volume 4, pages 166-184. Sir Archibald Alison, of England, discussing the French finances, said: In the midst of the apparent prosperity produced by that excessive increase (of paper) the sagacious mind of Napoleon perceived the seeds of future evil; and amidst all the turmoil of his mUitary preparations at Boulogne, he repeat- edly wrote to the minister of finances on the subject, and warned him of the danger of the Bank of France trusting too far the delusive credit of individu • als engaged in extensive transactions, or pushing to an undue length in the form of a paper circulation the royal privileges of coining money.— Alison's Etirope, volume 7, page 93. Loudon, 1860. Napoleon Bonaparte, writing from Boulogne, September 24, 1805, said: The evil originates in the bank having transgressed the law. What has the law done? It has given the privilege of coining money in the form of paper to a particular company. * * * In a word, in discountmg after this manner, the bank is coining false money. So clearly do I see the dangers of such a course that, if necessary, I would stop the pay of my soldiers rather than persevere in it. I am distressed beyond measure at the necessities of my situation, which, by compelling me to live in camps and engaging in dis- tant expeditions, withdraws my attention from what would otherwise be the chief object of my anxiety, the first wish of my heart— a good and solid or- ganization of all that concerns the interests of banks, manufactures, and commerce.— .4hson's Europe, volume 7, pages 93, 93— note. London, 1860. David Hume, of England, said: In our colony of Pennsylvania the land itself, which is the chief commodity, is coined and passes into circulation.— Hari;ei/ on Money, pages 60, 61. Lon- don, 1877. 1752 Prof. J. Stanley Jevons, discussing the subject of bank notes, said: The right of coining bank notes. According to the view which I adopt, tho issue of notes is more analogous to the royal function of coinage than to the ordinary commercial operation of drawing bills. We ought to talk of coining notes, as John Law did; for, though the design is impressed on paper instead of mcta.1, the function of the note is exactly the same as that of a representa- tive token. As to the right to issue promises, it no more exists than the right to establish private mints. For our present purposes that alone is right which the Legislature declares to be expedient to the community at large. As almost everyone has long agreed to place the coinage of money in the hands of the Executive Government, so I believe that the issue of paper rep- resentative money should continue to be practically in the hands of the Government, or its agents acting under the strictest legrislative control. M. Wolowski, in his admirable works on banking, has maintained that the issue of notes is a function distinct from the ordinary operations of a banker; and Mr. Gladstone has allowed that the distinction is a wholesome and vital one. Bankers enjoy the utmost degree of freedom in this country at pres- ent in every other point, so that it is wholly a confusion of ideas to speak of the unrestricted emission of paper representative money as a question of free banking. Albert Gallatin, who was Secretary of the Treasury for two terms under Jefferson, and also under Madison, wrote: The right of issuing paper money as currency, like that of issuing gold and silver coins, belongs exclusively to the nation, and can not be claimed by any individuals.— GoUafin, volume 3, page 429. Mr. Gallatin further said: But issuing a paper currency is not dealing in money, but making money * * * The unrestricted right of coining gold or silver might be claimed with as much propriety as that of coining a paper currency. — Gallatin, vol- ume 3, page 431. Quotations might thus be extended indefinitely, but the above will suffice to show conclusively that contemporaneous writers agree that the right to " coin money" as given to Congress by the framers of the United States Constitution applies to paper as well as metal money. And, as a logical consequence, neither States, corporations, nor individuals have any better right to issue cur- rency than they have to " coin money." The coining and issuing of money is an act of sovereignty , and it can not properly or legally be performed except by the sovereign authority of the General Government, as authorized by the Federal Constitution. Speaking of Napoleon's sentiments on this subject. Senator John Sherman said: Surely, when Napoleon was so jealous of the power of the Bank of France, as William Pitt was of the Bank of England, which were institutions of a national character, under the control of the national legislature, and care- fully watched by executive power, to coin money, or, which is the same thing when specie payments are suspended, to issue paper money, we should be jealous of the power exercised by a multitude of local banks chartered by 1753 twenty-eight States, whose issues are not secured by any uniform standard and are not restrained by the obligation to redeem in coin. This idea expressed by Napoleon Bonaparte embodies the real objection to bank paper money issued in time of war when specie payments are sus- pended. It is a power that ought never to be exercised except by the Gov- ernment, and only when the State is in danger. It is the power to coin money; because when a bank issues its bUl without the restraint of specie payments, it substantially coins noney, and false money. Sir, this is a privi- lege which no nation can safely surrender to individuals or banks.— /SAermare, in United States Senate, February 10, 1863. Mr. Speaker, having settled the point that money may be coined from either metal or paper, and that the coining and issuing of money is an act of sovereignty which should be performed by the Government only, the next point is the regulation of the vahie of the money. This, too, is the business of the Government. The Goverimient must " coin money and regulate the value thereof." Now, money is valuable in proportion to its volume, and the value of a dollar can only be regulated by controlling the number of dollars afloat. Hence, the value of money can be regulated by regulating or controlling its volume, and in no other way. Yes, sir, this is the only way that the value of money can be "regulated." I know there is a theory abroad that wnen the law fixes the number of grains of a given metal that shall be coined into a dollar that by that act the value of the dollar is fixed. Yet when the number of metal dollars are scarce they are much more valuable than when plentiful. Gold is the most fluctuating of commodities and is the least reliable of the money metals as a standard of value, it is of greater or less value in proportion to the plentifulness or scarcity of the metal from time to time. Hence the one and the only way that the value of money can pos- sibly be regulated is by controlling its volume or quantity as com- pared with the commodities of commerce. It is in practice an agent or commodity of commerce, and, like other commodities, it is cheap or dear in proportion to its supply compared with the de- mand for it. Mr. Speaker, it is now plain that the Government has both the authority and the power to coin money of any proper material, and to regulate its value by regulating the volume or supply as compared with the demand for it. The- next question is as to preserving the value of money which is coined from a material without value. I reply that all money must be redeemed. That is what money is for, to be redeemed. 1758 An irredeemable money is a worthless money. But let iis not be misled by terms. Swapping dollars is not redemption. All dollars, both metal and paper need redemption. Money does not depe:id for its value on the value of the monetary material, bi ^^ on the values that are behind it; on the ralues of the commodities with which it is redeemed. Mr. E. G. Spaulding, a banker of Buffalo, N. Y., who was a member of Congress and chairman of the subcommittee of Ways and Means, in 1861-62, stated the subject of redeeming money very plainly and truly as follows: Every time a hundred-dollar bill passes from one person to another it is a practical redemption of it by the person who takes it. Every time a mer- chant at Chicago pays to a farmer $500 in national currency for a car load of wheat, the farmer by the operation redeems such national currency not in greenbacks, nor in gold, but in a commodity better than either, namely, wheat, a staple article, useful to all. So every merchant in New York that sells a bale of cotton goods and receives his pay for it in currency redeems such currency, not in the way that banks redeem it, but in cotton goods, which is far better, because it performs the true functions of money by facil- itating the legitimate sale of commodities. So every time that a merchant or manufacturer pays his internal-revenue tax to the United States collector in national currency, the Government redeems such currency by receiving and discharging such tax. So every mechanic or laborer that receives national currency for his services redeems such currency by the labor performed. So it will be seen that just so long as the national currency is practically re- deemed every day in its passage from hand to hand in the payment of com- modities and services, and in the ramified operations of trade and business, both with the Government and the people whose operations it greatly facili- tates, there is not the slightest necessity for resorting to the expensive and risky operation of assorting and sending it home for redemption. — Spauld- ing's History, appendix, page 10. Dr. Franklin, discussing the money question before a commit- tee of the English House of Commons, said: The English bank bUls being payable in cash upon sight by the drawer is indeed a circumstance that can not attend the colony bUls, for the reason just above mentioned, their bullion being drawn from them by the British trade; but the legal tender being substituted in its place is rather a greater advantage to the possessor, since he need not be at the trouble of going to a particular bank or banker to demand the money. On the question of issuing a legal-tender paper, Senator John Sherman, in his speech of February 13, 1852, said: The power to fix the standard of money, to regulate the medium of ex- changes, must necessarily go with, and be incident to, the power to regulate commerce, to borrow money, to coin money, to maintaia armies and navies. All these high powers are expressly prohibited to the States, and also the incidental power to emit bills of credit, and to make anything but gold and silver a legal tender. But Congress is expressly invested with all these high powers, and, to remove all doubt, is expressly authorized to use all necessary and proper 1762 means to carry these powers into effect. Congress is not prohibited from emitting bills of credit or from making a standard of value, nor are these powers expressly conferred. Congress has repeatedly issued bills of credit; it has fixed gold and silver as the standard of value, and made them a legal tender. Certainly gold and silver coin is the best standard of value, for it has inherent value in aU commercial countries; but if, in the course of events, gold and silver can not be had in quantities sufficient to form a medium of exchange for the increased wants of the country, then Congress may estab- lish another medium of exchange— another standard of value. This was twice done by establishing a Bank of the United States. I much prefer the credit of the United States, based as it is upon all the productions and prop- erty of the United States, to the issues of any corporation, however well guarded and managed. Further along in the same speech Mr. Sherman said: If you strike out this legal-tender clause you do it with the knowledge that these notes will fall dead upon the money market of the world; that they will be refused by the banks; that they will be a disgraced currency that will not pass from hand to hand; that they will have no legal sanction; that any man may decUne to receive them, and thus discredit the obligations of the Government. I ask again if that is just to the men to whom you have contracted to pay debts? When you issue demand notes and announce your purpose not to pay any more gold and silver coin, you tender to those who have furnished provisions and services this paper money. What can they do? They can not pay their debts with it, they can not support their fami- lies with it, without a depreciation. The whole, then, depends upon the promise of the Government to pay at sometime not fixed on the face of the note, and you bring about an era of irredeemable, depreciated paper money. In his speech of January 8, 1863, Senator Sherman discussed this subject again and said: There can be no doubt about the power of Congress on this subject; and, in order to fortify my opinion and show that the whole qiiestion has been ex- amined by much wiser men, I will read an extract from the report of Mr. Dallas, in December, 181.5. I read this short extract to show that never was the exclusive power of Congress over the currency denied even by those gen- tlemen who were in favor of gold and silver as the standard of all values. Mr. Dallas, in his famous report made in December, 1815, says: " By the Constitution of the United States Congress is expressly vested with the power to coin money, to regulate the value of domestic and foreign coins in circulation, and (as a necessary implication from positive provisions) to emit bills of credit, while it is declared by the same instrument that ' no State shall coin money or emit bills of credit.' * * * The constitutional authority to emit bills of credit has also been exercised in a qualified and limited manner. During the existence of the Bank of the United States the bills or notes of the corporation were declared by law to be receivable in all payments to the United States, and the Treasury notes, which have been since issued for the services of the late war, have been endowed with the same quality. * * * " The constitutional and legal foundation of the monetary system of the United States is thus distinctly seen; and the power of the Federal Govern- ment to institute and regulate it, whether the circulating medium consist of coin or of bills of credit, must, in its general policy, as well as in the terms of its investment, be deemed an exclusive power. It is true that a system de- pending upon the agency of the precious metals will be affected by the va- rious circumstances which diminish their quantity or deteriorate their qual- ity. The coin of a State sometimes vanishes under the influence of political 1752 8 alarms, sometimes in consequence of the explosion of mercantile specula- tions, and sometimes by the drain of an unfavorable course of trade. But whenever the emergency occurs that demands a change of system, it seems necessarily to follow that the authority which was alone competent to estab- lish a national coin is alone competent to create a national substitute." These extracts from a document of great abUity state the whole (luestion in a few words. Congress has the power to regulate commerce; Congress has the power to borrow money, which involves the power to emit bills of credit; Congress has the power to regulate the value of coin. These powers are exclusive. When, by the force of circumstances beyond our control, the national coin disappears, either because of war, or of other circumstances, Congi'ess alone must furnish the substitute. No State has the power to inter- fere with this exclusive power in Congress to regulate the national currency, or, in other words, to provide a substitute for the national coin. Mr. Speaker, from all that has been said it appears that a money, either metal or paper, that is receivable in the revenues of the issuing government is good money, and, then, if in addition to that receivability it is endowed with the quality of general legal tender, it becomes redeemable with all the commodities or values that are for sale in the country. Such a money rests not on gold alone, but on all values, and all men are eager to redeem and accept such money to the utmost extent of the values they have for sale. But, sir, an important point like this can not be too closely ex- amined or too strongly supported. I therefore caU attention to the following discussion of the matter from an English stand- point. The Daily Star, of Montreal, December 6, 1893, discussing my paper in the Arena, of Boston, on the " Bank of Venice," said: But let us suppose that the whole people of the United States, for instance, would mutually agree to accept such a system, would that solve the problem? This is what Congressman Davis proposes. He says: "As Americans we may learn a lesson from the Bank of Venice and improve upon the system. We may admit the deposit of gold and silver in the Treas- ury as Venice did, and instead of placing it to the credit of the depositor we can issue him a legal-tender Government note. That note should read, ' Re- ceivable in the revenues of the Government, and lawful money in all pay- ments.' The deposits and the issuing of the notes in the proper denomina- tions and amounts should end the transaction. There need be no money held in the vaults of the Government for redemption purposes." Let us suppose the United States is satisfied with this. Then what about the rest of us? What would a London merchant say if asked to sell goods for a United States note, redeemable nowhere in particular, unless he wanted to pay some United States customs charges? His prices would go up like a balloon. How could such money compete with gold that would do all it could and immeasurably more? It would be the old mistake of imagin- ing that when trade is world-wide the machinery of trade can be .safely tam- pered with by one nation. Even the powerful and rich Venetian Govern- ment, we are told by Mr. Davis, used coin "in foreign countries and anions; barbarous peoples, where paper credits could not be used." 1752 9 If tlie editor of the Star had read his own British writers on this subject he would not have asked the above questions. Men and nations do not make payments in foreign countries with money, but with commodities — vdth wheat, cotton, pork, bullion, etc.— never with money. Venice used bullion when trading vnth barbarians, and, having a domestic money not subject to exportation, the repub- lic was able to devote all its bidlion to the foreign trade without de- ranging its domestic finances. My critic will observe that London merchants do not sell goods payable in foreign money, but in ex- change convertible into English money. With a domestic non- exportable currency in the United States, aU of our bullion could be used abroad without deranging our home finances. This doc- trine is not new, and it seems strange that a great British editor shoTild stUl remain in the kindergarten class on so important a subject. Sir Archibald Alison, in his History of Europe, Volume VI., Chapter XXXV., new series London edition, 1860, discusses this subject very fully. He argues that the great objects of a currency are to be " adequate and retainable." It must not be exportable. Nor should it be established on a basis " which is either too narrow or liable to fluctuation." Mr. Alison says: A system of currency mainly dependent on the retention of gold leads to alternations of prosperity and suffering as inevitably as night succeeds day and day night, and that altogether irrespective of drains of gold from ex- traneous causes, such as war loans, extensive importations of grain owing to bad harvests, or the like, which necessarily, and still more immediately, lead to a ruinous contraction of the currency, and consequent stoppage of credit and general suffering. * * * In the first place, if the gold can only be retained, when exchanges become adverse, by strengthening industry, starving the country, and so lowering the prices of the produce of every species of industry, the r'jmedy is worse than the disease. Gold is a very good thing and necessary for foreign ex- changes, but it is not worth purchasing by the ruin of the country. In every one of the great monetary crises which have occurred every five or six years during the last thirty, from a hundred to a hundred and fifty millions ster- ling have been destroyed. Is the retention of gold worth purchasing at such a price? "What is the use of it, if it can only be retained by making the capi- talists rich and all other classes poor? In order to establish a safe and satisfactory domestic currency, Mr. Alison says: The currency should be issued by Government and Government only, and the nation responsible for its value as it is for the 3 per cents. Nothing would be easier than to establish such a currency, and confine it within the requisite limits. * * * It belongs to practical men to devise the details of such a system; but if honestly set about by men of capacity nothing will be more easy of accom- 1752 10 plishment. And it may be safely affirmed tliat if tlac requisite change is not made the nation will continue to bo visited every four or five years by periods of calauiity which will destroy all the fruits of former prosperity, like the unfortunate culprits who, under the former inhuman system of military law, when sentenced to one thoiisand or fifteen hundred lashes, were brought out at successive times to receive their punishment by installments as soon as their wounds had been healed in the hospital. The sad experiences of England for several hundred years, with her full bullion value exportable silver coins, should have taiii^ht our critic a lesson. Finally that conservative Government, in 1816, determined to coin 6 pence from an ounce of silver instead of 62. After that the British silver coins were nonexportable; they then stayed at home and served the people. At the present time the bullion value of the English silver coins is about half their coin value, with no evil results. I wonder that my critic has not considered these facts. Suppose a British subject should buy wheat in America and offer English silver money in payment? What would be done in the premises? Simply this: The payment would not be made with English money at all, but with bullion, or some form of valuable commodities, or with exchange convertible into American money. Wlien my critic graduates from the kindergarten class and reads the horn books on finance, he will learn that there is no inter- national money. Money is and should be a domestic device only. It should be nonexportable. It should not be based on an ex- portable commodity, but on the quality of legal tender. Then, and not until then, it may become adequate and retainable, which, Mr. Alison claims, are " the greatest objects of a currency." Mr. Alison discusses the fluctuations of gold as a basis for money in Volume I, page 132, as foUows: He [Mr. Homer] saw clearly that oscillations in the value of money, and consequently in the price of every article of commerce, were among the most grievous evils which can aflBict society, and rendered property and undertak- ings of every kind to the last degree insecure; and he thought that he would gruard effectually against them by fixing the entire currency on a gold basis, forgetting what he himself at the same time saw, that gold itself is an article of commerce, and, like every other such article, is subject to perpetual variations of price; and that, from its being so portable and valuable, and everywhere in request, it is subject to more sudden and violent changes of value than any other article in existence. That is British history and British sentiment; and yet we find a British subject in Canada contending for the oscillating, export- able, and unsafe gold basis for money, under the infantile im- 1752 11 pression that money is or should oe international. The bank funds of Venice were a nonexportable domestic money, setting free all bullion for the foreign ti'ade; yet, to a greater extent than usual, those book credits performed also the functions of an international money for large payments among the commercial and more civi- lized tribes and nations bordering upon the Mediterranean, Mr, Speaker, the discussion of the money question seems to per- vade the very air in all parts of the country. I have letters asking the status of the first $60,000,000 of United States Treasury notes issued during the war. In reply I v?ill state that the first fifty millions were authorized by the act of July 17, 1861, and an- other ten millions were authorized by the act of February 12, 1863. These two issues made up the sixty millions of notes in question. They did not bear interest. They were not at first legal tender. They were legally redeemable in coin "on demand," which caused them to be called ' ' demand notes, " But as the coin of the country disappeared during the first six months of the war they could not be redeemed in coin when demanded, so they began to depreciate. In this emergency the Secretary of the Treasury ordered them to be received for duties on imports. As soon as they were thus re- ceived they rose to par with coin. In addition to being receivable in the revenues of the Government, the act of March 17, 1863, made the demand notes legal tender to the same extent as the greenback. To recapitulate: The demand notes, amounting to $60,000,000, were not actually redeemed in coin during the war because the coin was not on hand, but they were receivable by the Government the same as coin, and were legal tender to everybody except bond- holders. These qualities of legal tender and receivability kept them as good as gold at all times, while the greenbacks which were not receivable by the Government depreciated badly. It will be noted that the greenback and the demand note were equally redeemable on demand. The greenbacks bear no future date of redemption, hence they are due on demand in accordance with a recognized principle of law, that a note demanding pay- ment with no date of maturity is due on demand. Such in prac- tice and in law is a demand note. Hence the greenbacks were due and redeemable in coin the moment of issue the same as the 1752 12 demand notes, but through lack of coin, in point of fact, neither was so redeemed during the war. So, in the matter of coin redemption, the demand notes and the greenbacks were on the same legal footing. In the matter of legal tender to individuals they were on the same footing after March 17, 1862. The demand notes were, however, receivable in the revenues of the Government and the greenbacks were not. That was the only legal difference. This gave rise to the differ- ence in values of the two classes of notes during the war and up to October, 1878, when the Government began to receive the greenback in the revenues. The late Judge Martin, in his work on the Money of Nations, cites numerous examples of the efiicacy of receivability on the part of the Government in the maintenance of money at par. At page 168 he says: Any paper money issued by the United States, and made receivable for all debts due tbe Government will always be preferred to coin. Every step of United States history under the Constitution proves this: "1. The notes of the first bank of the United States, from 1791 until 1811, were made by the law creating the bank full legal tender for all debts due the United States, whether the bank paid coin or not. These notes were always preferred to coin. "2. The Treasury notes issued, with and without interest, in 1812,1813,1814' and 1815 were full legal tender for all debts due the Government, and Galla- tin and Campbell, Secretaries of the Treasury, say were equal to coin, though the banks opposed them as they do legal-tender notes now. (1880.) "3. The notes of the Bank of the United States from 1816 until 1836 were made by the law creating the banks full legal tender for all debts due the United States. They were for twenty years, at home and abroad, better than and preferred to coin. From 1837 until 1848 the Treasury notes of the United States, to the amount of nearly $100,000,000, with and without interest, were not only par with but preferred to coin, for the reason that the law made them receivable for aU debts due the United States. "4. In 1857 Congress authorized the issue of $20,000,000 Treasury notes, which the law made full legal tender for all debts due the Government. They were equal with and preferred to coin. "5. In 1861 and 1862, before the issue of legal-tender notes, Cengress issued $60,000,000 demand notes. They were payable in coin, but at first they were not made legal tender for debts due the Government. They went to a dis- count, though payable in coin. But when, by the order of Secretary Chase, they were made receivable for duties on imports, they were at once not only equal with coin, but preferred thereto. In 1862 they were made full legal tender." On page 164 Judge Martin states that $69,000 of the demand notes were still in circulation in 1880. The rest has been redeemed and retired. Mr. Speaker, much is said about the necessity of having a flexi- 1752 13 ble currency. A currency that will be plentiest at those times when most needed to move the farmers' crops to market, and which then may be retired when not sc much needed. It is argued that, in order to insure flexibility, the power to control the money should be surrendered to the banks, with the infantile "confidence" that they (the banks) will control the volume of the money in the interest of the people. Sir, our sad experiences and observations as to bank management of the currency has proven the dangers of such a policy. When money is most needed it has been the practice of the banks to make money scarce, that they may put up the interest and reap a larger profit. When money is less needed they will ask less for its use, and it can be had cheaper. This is the logic of the matter, and the facts prove it to have been the practice. The banks are not doing business for charity's sake and they never do, but for profit, and if per- mitted to control the currency they will make it flexible in their own interests and against the interests of the people. This, sir, has been the uniform history of the past, and in the very nature of things it can not be otherwise. Mr. Speaker, we do not need or want a flexible currency, but, on the other hand, we need a steady, unfluctuating currency. There is no period of the year when money is not needed. The wheat crop is ready for market in the South in May and June, in the Middle States in July and August, farther north in September and later. And, sir, wheat will keep in the bin of the farmer and may be marketed and sold and the flour handled the entire year. The same general principle holds good with corn and all the cere- als, and with wool and cotton. As to pork and beef, with cold storage and frozen shipment the marketing season lasts all the year. The marketing of fruits and vegetables begins with the early berries and other early fruits in the spring and ends with potatoes, winter apples, oranges, and lemons the following spring. The sale of horses and other live stock on foot is confined to no particular season. Nor are the products of the shops, factories, and mills thrown on the market in bulk, to be sold at any special time of the year. Mr. Speaker, when we come to examine this subject in all its parts we find there is no particular season of the year when all 1752 14 the products of land and labor must be thrown upon the markets to be sold, but, sir, on the other hand, when we consider our vari- ous climates and products, and our diversified industries, it will be seen that salable commodities dovetail into each other as to times and seasons most beautifully and perfectly, and that there is never a month of the entire year when there is not a steady stream of commodities flowing into the markets. Hence, then, we do not want a flexible or fluctuating money. Such a money as we need has never been furnished by the banks, and, in the very nature of things, can never be. But, on the other hand, it can be furnished by the Government, and the Government only. This is the uniform testimony of all history and experience in this country. Give us a uniform, steady, and unfluctuating cur- rency, issued by the Government, receivable in the Government revenues, legal tender in all payments, and in sufiicient volume to maintain a normal sea level of average prices, and the people will have firm ground to stand upon. A commercial system thus founded will have stability, safety, and firmness, It will be built upon a rock which will not be shaken by the shifting sands of other systems founded on "flexibility " in the hands of banking in- stitutions. A flexible or elastic currency in the hands of the banks means unlimited power over the people and their dearest interests. A steady, unfluctuating currency in the hands of the Government means prosperity for the people and the country. It is the sim- plest possible system of finance, older and better tried than all others, and always successful and satisfactory when fairly tried. Mr. Speaker, the President and most of the journals of the East insist on a paper remedy for our distresses in the form of interest-bearing bonds. Sir, there is a better way. Since gold, by its scarcity and cowardly absence, fails to meet the necessities of the occasion, and, since we must appeal to paper, why not choose the best form of paper? And since the best paper is the least costly for the people, there are two great reasons for adopt- ing it. It seems, by the admission of all, that a legal-tender cur- rency in this country at the present time is about as good as 3 per cent bonds, and they are both at the present time on a par v/ith gold coin. This being so, the gold reserve can be as easily and readily replenished with a legal-tender noninterest-bearing 1753 10 Treasury note as with a 3 per cent bond. In other words, endow your noninterest-bearing Treasury note with all the legal-tender qualities attached to gold coin and we car. buy gold coin w^th it as readily as with a 3 per cent bond. This will save the interest on the bonds, and the currency will enter into circulation as money and give prosperity to the country. As to the redemption of the Treasury notes, of course that must be provided for. All money must be redeemed with value. Gold redemption is neither safe, satisfactory, nor necessary. We must provide a better, broader, and safer redemption than that. In the first place, as already stated, the currency must be receivable in the public revenues. That is primary redemption by the Grov- ernment. In the second place, the currency being legal tender in all payments, it will be eagerly redeemed by the people with all the values in the country that are for sale. And a currency so redeemed, resting on aU the revenues of the National and State Governments and on all commercial values, need not be other- vnse redeemable. Hence there would be no necessity for main- taining a gold reserve. Any gold needed for special purposes could be readily purchased with the Government currency. No interest-bearing bonds would be needed and the financial prostra- tion of the country wotdd be changed to financial and industrial prosperity. Mr. Speaker, I am not mentioning any new or untried experi- ment. I appeal to the facts of history as they have transpired in commercial nations. It is a well-known uniform fact that the lawful currency of a given country is more valuable than the bonds of that same country, until sufficient interest or usury has been attached to the bonds to bring them up to par with the currency. Mr. Speaker, I ask attention to some illustrations of the posi- tion I have here taken. The case of the Bank of Venice is the oldest well-authenticated case in point. And I ask special atten- tion to three principal features of the Venetian finances. Besides the bank funds for large payments by transfers on the books, and besides the cash office for smaller special purposes, there was an interest-bearing debt. This debt arose from the policy of limiting the bank deposits to the needs of business and not expanding the bank funds recklessly to the full amount of the 1753 16 expenditures of the Republic. And gentlemen may be surprised to learn that, while the noninterest-bearing bank funds were at all times above par as compared with coin, the interest-bearing bonds were never at par. Mr. Sidney Dean, in his History of Banking and Banks, states a well-known fact, as follows: Near the close of the eighteenth century, while the bank credits were at a premium and in demand, the bonds of the Venetian Government were quoted at 60 per cent of their nominal value. It is clear from this that the bank credits had something behind them more substantial than popular confidence in the Government of the Republic itself. (Page 15. ) The question at once arises in full force and prominence, What was that " something " behind the circulating bank credits "more substantial " than was behind the Government bonds? Both the bonds and the bank credits had the "popular confidence in the Government of the Republic " behind them. The bonds also had the promise of coin redemption and the profits of interest to sus- tain them. The bank credits had neither the promise of coin re- demption nor, at that date, the profits of interest to rest on, but " something more substantial." What was that "something"? There can be but one answer. That ' ' something more substantial than confidence in the Government of the Republic, " more substan- tial than coin redemption and the profits of interest, was the de- mand for payments— for use as money — arising from the quality of legal tender in the usual transactions of business. To show that this apparently strange fact is nothing unusual, it may be remarked that during the Napoleonic wars the nonin- terest-bearing, legal-tender English currency was twice as valuable as the 3 per cent gold-bearing bonds of England. In proof of this I ask attention to the following statement of Mr. Alison in his History of Europe (Volume VHI, page 68, note). Mr. Alison says: The public creditors were frequently, in the 3 per cents, inscribed for much more than 100 pounds in consideration of 60 pounds advanced. In particular in 1807 they received no less than 140 pounds of stock for each 60 pounds paid. That is to say, the British 3 per cent bonds were worth only 40 to 60 per cent of their face value, while at the same time British legal-tender currency was circulating in the channels of business at par with gold. On this latter point Mr. Alison (Volume IV, pages 234, 225) says: 17.52 17 Notwithstanding all that the spirit of party may have alleged, there does not appear ever to have been any trace of the latter effect (the depreciation of paper) in this country, or that at any period a higher price was exacted for articles when paid in bank notes than in gold. These facts clearly prove that the demand for payments, aris- ing from the qviality of legal tender, is far more powerful in sustaining the value of Government paper than is the expensive adjunct of interest or usury. The same thing is plainly proven by the fact that during our late war the gold-bearing American bonds were frequently 20 to 50 per cent below par as compared with coin, while that portion of otir currency which was receiva- ble in the Government revenues was uniformly at par with coin. Mr. Speaker, a savage can readily perceive that the earth will support heavy burdens, and that a burden maybe lifted by a man or drawn by a horse; but he may doubt that the yielding water of the sea can bear a ship with a cargo of 1,000 tons, and that said ship can be driven to all parts of the globe by the fickle and unre- liable winds of heaven. And when we tell him that a few ounces or pounds of superheated vapor of water will drive a ship of iron through the billows of the ocean at the rate of hundreds of miles per day, we excite his derision. Then if we say to him that the unseen and imponderable thing known as electricity can act more powerfully and more speedily than steam, he will lose patience. If we go still further and try to explain to him that the entity known as the mind and will of man is still more powerful, subtle, and active than either water, steam, or electricity, and that this godlike attribute can harness to its service all the potent elements of nature, he will no longer listen to us. Now, it is this last and greatest power, known as the will of man, enacted into law by a sovereign government, which is the true basis for money. Of course the untutored mind can not com- prehend this; and yet this is the broad, sound, and stable basis for money which has always succeeded and never failed when fairly tried. It is this broad and safe basis for money that the gold vul- tures desire to discredit and abolish. They desire to bind the Prometheus of our civilization to the rock of savagery, and to give us, instead, the open box of Pandora. To do this they cor- rupt the corruptible; they flatter and cajole the ambitious; and, through a truckling and subsidized press, they mislead the unsus- 1752 18 pecting. All this has been done and is being done to degrade sil- ver and to destroy the sovereignty of the Government over money. Mr. Speaker, in an editorial of the Times, of this city, dated De- cember 22, 1894, I find the following: There is plenty of money in the country if a way could be found to make it cir- culate. At present most of it lies locked up in banks and other places of de- posit, there to remain until a revival of trade puts it in circulation. Start up our mills and factories on full time, giveworkins.r people a remunerative employment, create a demand for our products, and there will be no scarcity of money. Our monetary system needs remodeling, but not on the Carlisle plan. Mr. Speaker, if we will cast aside all prejudices and preconceived opinions on the subject and look at the naked facts in the case the money question is not difficult. First, the money hoarded in the banks does not belong to the banks, but to individuals. Second, it fails to circulate because of general falling prices. No man will invest his money on a declining market if he can help it. So the money lies in the banks waiting for prices to touch bottom. Third, now if some one will put in operation a plan by means of which prices will cease falling and commence to rise, then the hoarded money will at once leave the banks and enter into active circula- tion. It is a fact plain to every thinker and student of history that money will not ciixulate in a time of declining prices. On the other hand it can not be prevented from circulating during a time of rising prices. This statement is as true and self-evident as is the fact that water does not naturally run up hill, but uniformly runs freely down hill. Then when it is desired that money should circulate all we have to do is to create the conditions which uni- formly insure its circulation. To make the subject very plain, I wiU state it in the form of an arithmetical example in long division, thus: Divisor. I Dividend. I Quotient. Commodities. | Volume of money. | Average prices. The divisor in this example is the people and the commodities they have for sale. The dividend is the volume of money afloat to do business with. The quotient is the general average of prices. Now, it is a fact, that the people and commodities of this country, and the people and commodities of the money-using world, are increasing; that is to say, the divisor in our example ia i;r.2 19 continually increasing. This being so, then the dividend, or volume of money, must equally increase, or, as is plain, the quo- tient must decrease; that is, the general average of prices must continually decline. And, as already seen, as long as prices de- cline the money in existence vdll not circulate. It will remain locked up in the banks waiting for prices to touch bottom. The hoards will never circulate; the enforced idleness of labor will continue. Enforced idleness of labor means public distress, which must grow worse continually until, in the delii'ium of starvation, the suffering people may commit unlawful acts. Then to keep the peace the hungry people are usually suppressed by force; in other words, if we do not adopt the just and civilized plan of increasing the volume of money as the people increase, then may be forced upon us the unjust and savage plan of reducing the divisor, be- cause we refuse to increase the dividend as the divisor grows. Our true remedy in the matter is obvious. We can double tht money of ultimate pavments by using both gold and silver on equal terms, instead of gold only. And then the metals may be supple- mented vnth legal-tender Treasury notes, receivable in the revenues of the Government, but not otherwise redeemable. Such a money is uniformly as good as the issuing Government, and in our case that is good enough. There is not a case on record in this country or in England where a full legal-tender Government currency, receiv- able in the revenues of the issuing Government, has fallen below parvsdth gold coin; but on the other hand such notes have usually been preferred to coin. It may be replied to what I have here said that the money of the United States has been increasing and still is increasing as the peo- ple and their commodities increase; that the monthly Treasury reports show that the money per capita is as gi-eat or greater now than ever before. In reply to that position I desire to say, with all due deference to the Treasury officers, that the monthly reports do not state all the facts. They do not show all the exports of gold coin, nor the waste, loss, and destruction of coins and notes. The late Senator Plumb, a very high authority on this subject, stated the matter in 1888 as follows: It is estimated that there are in circulation, including that which is locked ui. 1752 2 20 in the Treasury and held in the bank as a reserve fund, about $1,600,000,000, of all kinds of currency of the United States, gold and silver, the overplus of gold and silver certificates, gi'eenback notes and national bank notes, all told, and there are more than $60,000,000,000 of property which must finally be meas- ured by this volume of currency. It has been contracted during the last year more than 5 per cent in addition to all that has occurred by reason of abrasion and loss. No man can tell the volume of greenbacks outstanding. Nominally it is $346,000,000 and a fraction, but that volume has been subject to all the accidents which have occurred during the past twenty-five years, whereby money has been consumed, worn out, lost, and it is doubtful if the amount is really over $300,000,000 to-day. In June, 1890, Senator Plumb continued the discussion of this subject, as follows: Let us see, therefore, how much money is available for actual use among the people. From the total of $1,560,000,000 arrived at as above, must be deducted an average of $260,000,000 which the Treasury keeps on hand, and about which something has heretofore been said in the debate on this bUl, and that leaves as the maximum which can by any possibility be used $1,300,00000,0. There ought, in fairness, to be deducted from this $150,000,000, error in estimate of gold in the country, which would reduce the money outside the Treasury to $1,150,- 000,000. From this is to be subtracted the $600,000,000 as a reserve, as before computed, leaving a balance of $550,000,000 which is available for delivery or use in the transaction of the business of all the people, or a trifle over $8 per cap- ita. But the force of my argument is not materially weakened by conceding the gold coin to be as estimated by the Treasury Department, which would leave in actual circulation $700,000,000. In order to make up this amount all doubt must be resolved in favor of the Treasury and against the people, both the doubt as to the amount of lost and destroyed notes and that as to the gold supply. If I were deciding this case upon what I consider the best evidence, I would be bound to say that I believed the money in actual circulation did not much, if at all, exceed $500,000,000. Upon this narrow foundation has been built the enormous structure of credit of which I have spoken. It is the greatest of the kind that was ever built, because it was built by the best people that ever built anything. Over twenty thousand millions of debts, the enormous and widely extended business of 65,000,000 people, all rest upon and must be served by a volume of currency which must seem to the most veteran finan- cier as absolutely and dangerously small. Mr. Speaker, I think it is plain to every candid person that the monthly Treasury reports are false and misleading; that there is no such increase of available money as is demanded by the in- creasing numbers and needs of our people. It is only on this ground that we can explain why we witness hoarded money, de- clining prices, enforced idleness of labor, and general distress among the people. Now let us look at some historical examples. At the close of the war money was plenty and times were good. In 18G6 a law was enacted to sell registered bonds for currency and to cancel the currency by burning. This at once caused decreasing money, falling prices, general hoarding, and hard times. The New York 17.32 21 clearings ceased to increase witli an increasing population. The hard times and popular discontent caused the repeal of the con- traction law in 1868. This at once " restored confidence." The hoarded money went to work and the New York clearings bounded up from twenty-eight billions in 1868 to thirty-seven bUlions in 1869. But as there was no actual increase in money correspond- ing to the increase of the people the good times, founded on con- fidence only, was fitful and could not last. Then came the law of 1869, making the currency bonds payable in coin, and the laws of 1873-74, demonetizing silver. This caused hard times, as is plainly shown in the New York clearings. In 1875 was enacted another contraction law, preparatory for specie payments. This intensified the public distresses. Anarchy seemed imminent. Pittsburg was partly burned, and troops were called out in places to shoot starving people. The New York clearings indicated the situation, and were smaller in 1876 than they had been since 1863. Though the people had increased about a dozen millions in ten years, yet the New York clearings were seven billions less in 1876 than 18G6. To relieve the situation Congress passed two remedial measures in 1878. One (May 31, 1878,) forbade the further retirement of greenbacks; the other authorized the coinage of over $3,000,000 per month of silver, to be added to the cii'culation. These laws assured the holders of money that prices had touched bottom, and at once, as if by magic, the hoarded millions of money in the banks was at once checked out and put into circulation. The New York clearings immediately registered the good times. They bounded from twenty-two and a half billions in 1878 to forty-eight and a half billions in 1881. But these good times were not pleasing to the banks. In 1882 there was afloat $360,000,000 of bank currency. By 1888 it had been reduced to less than $300,000,000. This contraction caused falling prices and hard times. The New York clearings promptly. noted the fact, and to this day the banks have not loosened their grip on the currency of the country. Since 1880 our population has increased nearly 30,000,000; yet the New York clearing house records about $15,000,000,000 less business per annum in the nineties than in 1881. 1752 If asked how we may dissipate the hoarded money from the banks and set it to circulate the answer is plain and certain: 1. Let silver be remonetized and placed on an equal footing with gold. 2. Let there be issned fifty millions of greenbacks to replace the lost and destroyed notes, in accordance with the intent of the law of May, 1878. 3. Let there be issued one hundred and fifty millions of green- backs to replace the bank currency which has been retired since 1882. 4. Let all newly issued notes be legal tender and receivable in Government revenues, but not otherwise redeemable, and let all new notes be covered into the Treasury and paid out in the lawful disbursements of the government. These issues of money can in no just sense be considered an ' ' in- flation " of the currency. They would only be restoring the lost, wasted, and retired currency which the banks and the Govern- ment considered as necessary for a population several millions less than we now have. Mr. Speaker, the policy here indicated would start every wheel, furnace, pick, spindle, hammer, and plow of the industries. It would employ every man, woman, and child able to work in all this broad land at good wages. There would be no longer any necessity to increase the standing Army for the purpose of re- ducing the population, as recently intimated by the General of the Army. No, sir; but, on the other hand, we would have gbod times, as so truly described by Col. R. G. IngersoU prior to the contraction of the currency. The colonel said: On every hand fortunes were being made, a wave of wealth swept over the United States, huts became houses, houses became palaces, tatters became garments, and rags became robes; walls were covered with pictures, floors with carpets, and, for the first time in the history of the world, the poor tasted of the luxuries of wealth. We began to wonder how our fathers en- dured life. Every kind of business was pushed to the very sky line. Mr. Speaker, in order to bring out of its hiding the money that "Ues locked up in the banks," it is not necessary to start any scheme of imlimited currency inflation, but merely to restore the ancient coin of the world as it has existed from the days of Abra- ham, and, in this country, until 1873; to reissue the lost and de- 1752 23 stroyed currency since 1878, in the form of new greenbacks, and then to gradually increase the money as the people increase. How easy and simple this would be if the money changers who have us by the throat would only permit it! As a matter of hope in this line I am glad to note, recently, some symptoms of sound policy, even among the banks. Once in a while some of the bankers open their eyes, and begin to see that even the banks could do more and better business by dealing with a prosperous people than they are now doing by skinning the dead. Let us then work and patiently hope that deliverance may yet come to the working people of America and of the world. IVIr. Speaker, I am utterly opposed to the currency bill now be- fore the House. I am opposed to any and every bill which enables the banks to usurp the rights and powers of the General Govern- ment in the matter of supplying a sound and stable currency for the use of the people. Through such a measure there can be no permanent relief or prosperity for the country. But, sir, a measure in accordance with the platforms of Jeffer- son, Jackson, and Benton, so often approved by a general vote of the people at the Presidential elections from 1830 to 1860, giving us the standard coins of gold and silver, supplemented by legal- tender Treasury notes, will afford instant relief, with assured and permanent prosperity. Sir, in the light of aU monetary history and in accordance with the principles of equal justice, there is no other certain and safe policy for the relief of the country's dis- tresses. Already our civilization shows symptoms of distress and de- cadence. Through shrinking money and falling prices, industry is stagnant, bankruptcies are increasing, debts and taxes are be- coming more burdensome; families are losing their homes through foreclosures and forced sales; able-bodied men by millions are tramping and begging for bread; women and children are famish- ing for the want of food, raiment, and shelter; mothers and little ones infest the streets, or retreat into loathsome dens and slums, no longer able to live otherwise; churches and schools are lan- guishing for lack of money, the revenues of colleges and great universities feel the stringency of the times, and teachers and pro- fessors are dismissed because of insufficient funds to meet expenses. 1753 Ii4 I wonder that gentlemen have not observed these threatening sjTnptoms of social decadence. Rome experienced the same distresses through the failure of the gold and silver mines of Greece and Spain. Roman society was disintegrated, and the population of Europe fell off one-half. The history of those times is very painful to read. The Christian civilization of the present day is entering the penumbra of the same eclipse which darkened, distressed, and decimated Europe for a thousand years. Relief came through the discovery of the American mines, expanding money and rising prices for labor and its products. An expansive money system is the chief remedy in such cases. With the broad and safe basis of legal tender, we may at once have increasing money and rising prices. This will give quick and lasting relief. Theories of distress wiU cease; the recuperation of society will begin; the burden of debts and taxa- tion will gradually wear away; and our Christian civilization and free institutions will be preserved. Popular enlightenment is the necessity of the hour. Patient, earnest, and persistent work in spreading the light among men is the duty of every patriot. 1752 The Currency — Condition of tlie Treasury. SPEECH OF HON. NELSON DINGLE Y, JR., OF MAINE, In the House of Eepresentatives, Friday, January 4, 1895. The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 8149) to amend the laws relating to national banking associations, to exempt the notes of State banks from taxa- tion upon certain conditions, and for other purposes — Mr. DINGLEY said: Mr. Chairman: The pending bill proposes two important ob- jects: First, a radical revision of tbe banking system of the United States and a readjustment of oiir currency; and, second, the relief of the necessities of the Federal Treasury. Perhaps I should reverse the order in which I have stated the two objects, because nearly every gentleman who has advocated the passage of this bill, from the Secretary of the Treasury down, has presented as the main consideration for its passage the claim that it would relieve the necessities of the Treasury. It must be admitted that both these objects are important, the relief of the necessities of the Treasury being pressing and imme- diate, while the remodeling of the banking system and of the cur- rency may be deferred. Indeed, it may be deferred for the time being vrithout any injury, for the reason that it is conceded by all gentlemen acquainted with the finances of this country that for the present at least, while the business of the country is so de- moralized, we have more currency than we are using. At every great center in this country there is lying idle to-day a large vol- ume of existing currency unused — unused because there is no profit in its use. Business is impaired and the consumption of the country has declined nearly one-third. When business shall revive, as we hope it will at an early day, then we shall need 1733 1 more currency undoubtedly. And at an early day there should be provision for such an amendment of our banking laws as will meet this demand when it shall come. But the pressing need for legislation on the part of this Congress to-day is in reference to the relief of the present necessities of the Treasury of the United States. Now, if this bill wtII relieve the necessities of the Treasury Oi the United States, so far it maj^ commend itself to us. I have been listening to this discussion from the beginning with considerable interest, becaiise I have looked upon it as a i)xirely business ques- tion. From my point of view there is no partisanship that should be involved in the consideration of such a question as this. What is sound and conducive to the prosperity of this country, for j^our interest and mine, is a pitrely business question; and I am not disposed, notwithstanding the reflections on the Republican party that we have had to such an extent from some gentlemen on the other side, to depart in the consideration of this question from a strictly business ijoint of view. When the gentleman from Kentucky [Mr. McCreary] was speaking yesterday he declared that unless this bill should be passed before adjournment it would become necessary within one 3'ear to issue from one hundred to one hundred and fifty mil- lions of dollars additional bonds. I felt an interest in ascertain- ing how that would be affected by the passage of this bill, because I was seeking light, and I asked the gentleman to explain how it was that if this bill should pass it would change in a single iota the necessity for the issue of bonds. You heard the response. It was not satisfactory to me, however it may have been to you. I have been listening from the beginning of this discussion for an answer to that query: How will the passage of this bill relieve the present necessities of the Treasury? And I think that gentle- men who siipport this bill should give clearly to this House an answer to this question before we give our assent to its passage. THE DEFICIENCY IN THE TREASURY. Now, what are the difficulties which surround the Treasury of the United States? First, in the past eighteen months the revenue has so declined below the expenditures that we have a deficiency of almost §100,000,000, or, to speak more precisely, $98,500,000. Every month for eighteen months this state of things has been go- ing on, and within the last three months, from the 1st of October to the 1st of Januarj', notwithstanding there has been placed upon the statute book a new revenue measure, which was enacted to raise more revenue, the deficiency has been over $28,000,000 — one- third more than in the same period of 1893. Now, Mr, Chairman, no country on the face of the earth can retain the confidence of its own people or of the commercial world if it suffers such a state of things to continue and become chronic. For eighteen months, while this House has been in existence, with this ever-recurring deficiency in our Treasury, we have failed to take practical measures to make the revenue in that period equal to necessury expenditures. The Government of Great Britain, even, could not have a constant deficiency like this and maintain its credit. The Government of France can not do it. Italy has been attempting something similar in the last two years, and has come to grief, as might be expected. 1733 Now, in my judgment, Mr. Chairman, the foundation of all our financial difBculties lies right here. I will not enter into a dis- cussion of the question as to what has caused this falling off of revenue. I simply point to the fact that, after constantly main- taining reveniie at a point that met current peace expenditures every year from 1861 to 1893, commencing vnth the latter year we have had a continuous deficiency for eighteen months, and one that is likely to be continuoiis for the next six months. And the fact that this has existed so long has carused a disturbed financial situation in this country, which has affected us in every direction, even the private business of our 70,000.000 of people. And I may remark, parenthetically, that the statement — so fre- quently made on the other side — that this deficiency has been caused by the tariff legislation of 1890, is disproved by the fact that for three years after that legislation was enacted — viz, in the fiscal years ending June 30, 1891, 1892, and 1893 — the revenue under that law, notwithstanding it surrendered nearly sixty millions per annum by the aboHtion of the duty on raw sugar, was ample each year to meet the current expenditures and pay the interest on the public debt, including pensions, and leave a surplus each year, and that it was only after its repeal had been determined upon and it was understood that another and revolutionary policy was to be substituted, that a deficiency appeared. Now, in my judgment, we shall not have any marked revival of confidence nor any noteworthy revival of business until the Grov- ernment of the United States sets the example of providing reve- nue equal to its expenditures. There are peculiar circumstances that make this specially necessary in our case. As has already been said in the progress of this debate, we are undertaking to do not only the legitimate work of Government, but we are also under- taking to do a banking business on the largest scale ever known. Who ever heard of a bank or any fiduciary institution maintain- ing the confidence of its customers when every month its revenue was less than its expenditures? And if possible, confidence in the finances of iit government is more dependent on the raising of reve- nue that meets the ordinary expenditures of a peace establishment than it is in the case of the individual. Now, then, the first question that I asked myseK and now ask the committee — because I consider that as vital in any measure that promises to restore confidence in the finances of the Government and of the country — is. Does this bill in any way tend to make the revenue equal to expenditures? Will any gentleman inform me, and, if so, how? It is evident that it does not. It does not touch the question, even. Well, if it does not, how is the passage of the bill going to restore confidence in the finances of the Government and in the business of this country? If there were in this bill a proposition to raise more revenue, a proposition that ought to have been presented to this House and passed long ago to make up this deficiency, that would be a ground for a restoration of confidence. You will impart no confidence by legislation until you do that, or bring revenue up to the point of expenditu^res. Ah, but it is said that after the first of next July, when this fiscal year is over, then we hope existing laws will give us revenue sufficient. That may or may not be the case. But what are you 1733 going to do in the meantime? You have run on hope for eighteen months, and " hope deferred maketh the heartsick." Is it not about time to have some fruition? Indeed, in view of the fact that your new reventie law failed in the last thi-ee months to pay the expenses by over $28,000,000, there is no doubt it will fail for the next three months to the extent of many millions; and by the time the income tax shall begin to come in, which it will not until about the 15th of June, you will have added, between the 1st of January and the 15th of June, perhaps, $30,000,000 more to your deficiency; and yet a bill which does not propose to raise a dollar of additional revenue is presented as something which will relieve the necessities of the Treasury. It is true that there are some peculiar circumstances that have prevented the tariff act of August 28 last from yielding the rev- enue that it was expected to do during this fiscal year. In the first place it gave sufficient notice to all the whisky distillers in the land that there was to be an increase of 20 cents per gallon in the tax, so that every one of them took out of bond and paid the old tax on a siifl&cient amount to carry the country through for perhaps this year. Then, again, when you put a duty of 40 per cent upon raw sugar ample opi)ortunity was given to the sug^r trust to import raw sugar sufficient to carry the country through nearly a year before the dvLty on sugar took effect; and notwithstanding legitimately you should have had $10,000,000 of revenue within the last quarter from the sugar tax you had less than $2,000,000. I am glad, for one, that the sugar trust has not made anything out of this grab. They imported so much raw sugar that they broke the market, and they have not as yet been able to raise the price of sugar to accord with the increase of the duty. They will do it, however, as soon as this stock is exhausted. Then there was that most absurd piece of legislation ever en- acted, the extension for five years of the period during which whisky coiild remain in bond to age and become more valuable, without pajdng the tax — the Grovernment losing the wastage as well as the interest on the deferred tax. The result is that instead of whisky coming out of bond at the present time and paying the tax that would have been paid without this legislation, the Gov- ernment is issiiing bonds on which it is paying interest, that the whisky distillers ought to have paid. It is such legislation as this that is making our deficiency under the new tariff. It is done and can not be remedied ; but it is within the power of this Congress, within ten days, to put upon the stat- ute book an act that will add $30,000,000 to the revenues of this country without disturbing anybody that ought not to be disturbed. Yet we fritter away our time here, amusing ourselves with the idea that we are going to relieve the Treasury by passing this bill when its passage would do nothing of the kind. THE RUN ON THE GOLD REDEMPTION FUND. Now, Mr. Chainnan, there is another diflficulty which the Treas- ury has to encoimter, and I want to ask whether this bill meets that. That is the fact that during the last two years there has been a run on the gold redemption fund by the holders of United States notes and Treasury notes presenting them for payment. 1733 Here are the official figures of redemption for each year since 1879: United States notes and Ti-easfuiry notes redeemed in gold, by calendar years. Year. United States notes. Treasury notes. Total. 1879 - Ill, 4.56, ,5.36 54;;}, 800 28, 7.50 115,000 $11, 456, ,536 1880 54;i 800 1881 - - - 28, 7,50 1883 115,000 1883 - 1884 810, (X)0 3,927,400 9,349,507 1,339.945 475, 181 959. 548 3;^9,273 9,016,737 1.5, 96;:}, 813 44,493,513 123,941,059 810,000 1885 3,937,400 1886 9, 349, ,507 1887 . .. . 1,3:39.945 1888 475, 181 1889 9,59,, 548 1890 3:39, 373 1891 $686, 8TO 20,296,747 32,063,778 17,803,944 9, 70:3, .597 1892 36, 3150, .560 1893 76.5,56,390 1894 141.744,003 Total 331,760,051 70,849,339 293,609,390 Within the last two years it appears that $218,000,000 of legal- tender demand notes (the volume of outstanding greenbacks be- ing $346,000,000, and of Treasury notes $1.53,000,000) have been pre- sented to the Treasury for redemption in gold, and have been redeemed; and on being redeemed have been reissued, and are coming up again and again to the Treasury unless confidence shall be restored. Between October 1 and January 1 of the past year $42,753,657 were redeemed — nearly $33,000,000 in December. On the 1st of March, 1893, there was in the gold redemption fund $107,000,000. This fund had been maintained at a minimum limit of $100,000,000, frequently reaching $130,000,000, since the resvimp- tion of specie pajinent in 1879, and not one hour had it been suf- fered to fall below that minunum; and during that time, iip to 1893, very few legal -tender demand notes had been presented for payment. Perfect confidence has been maintained — maintained simply because the Grovernment of the United States having a revenue greater than its expenditure, and having a gold redemption fund maintained at a minimum of $100,000,000, everybody had perfect confidence that if he should go to the Treasury at any time with a legal-tender demand note he could obtain payment, and having that confidence he preferred the note to the gold. Confidence in matters of this kind is a very peculiar thing and we have to deal v^^th it as we find it. I remember hearing of an excellent citizen who, ha\^ng heard a flying rumor that a savings bank in which he had a deposit had failed, at once rushed to the bank. When he got into the bank- ing room he threw down his deposit book and said, " I want my money." The treasurer of the bank at once went to his cash drawer and proceeded to count out the money, and when he had got it and counted it to see that the amount was correct the old Quaker, looking somewhat nonplussed, said, "Well, thee has the money, has thee?" "Of course we have, "replied the bank officer. 1733 " Well, if thee has it, I don't want it; but if thee hasn't the money, I want it right off." [Langhter.] Now, that illustrates this mat- ter of confidence. So long as you can maintain perfect confidence that an institution or government will redeem its promises on de- mand, there is no question about them; but to maintain such con- fidence you must have some reality as a basis. It is not a ques- tion of mere faith in somebody. The confidence must be l)ased on the actual existence of a fund that can be used at a moment's warning, and also upon perfect confidence in the promisor; and, in the case of a government, based also on the fact that its reve- nues exceed its expenditures. Now, as I have said, from 1879 to 1893 our Treasury, preserving the conditions which give confidence, namely, a revenue larger than the ex]ienditure, and a gold redemption fund never allowed to fall a dollar Ix'low what the public believed to be the minimum point of safety, had no demand for gold. But the moment those conditions changed and public confidence was disturbed, no mat- ter for what cause, then people immediately began to discover that they had great need for gold, and there has consequently been a run iipon the gold redemption fund during the past two years to the extent of §218,000,000, which could not be met by the gold revenue from customs. In short, notwithstanding the issue of $100,000,000 of 5 per cent bonds, yielding'$117,000,000, the gold re- demption fund fell at one time to $52,000,000, and it is now only $80,000,000. And, Mr. Chairman, I ask again what does this bill do vnth ref- erence to meeting the necessities of the Treasury in that direction? I have pointed out that it does not provide more reventie. When any individual finds that he has not sufficient revenue to meet his paper as it matures, if he has credit and does not propose to repudiate and go into bankruptcy, he goes out and borrows, does lie not? Is there any other way? Is there any other way for a man or for a Government to pay debts at maturity, when for the time being there is not sufficient revenue to do it, than to go out and borrow? I do not know of any other. I have heard, of course, of the John Law method of obtaining money which was resorted to in times past, biit it never has worked successfully and it never will work successfully. Now, the Government of the United States during the past eighteen months has not had suf- ficient revenue to meet its expenditures, and what must it do? There was but one thing to do in the absence of revenue and the neglect of Congress to pro\'ide for more revenue, and that was for the Government to go out and borrow. Do gentlemen know of any other patent method? I do not. I have noticed in the papers that til ere have been bodies of people meeting to protest against the issue of interest-bearing bonds in time of peace. It is all well enough to resolve, but do those people act upon that principle in their own business? If they _^ have not revenue sufficient to pay their bills as they mature are they not flying around trying to boiTOW of someliody? I do not know how it may be with the rest of you, but that is what I have to do, unless I propose to repudi- ate and go into bankruptcy. Now, if the revenue has been less than the expenditures, as it has been during the past eighteen months to the extent of $98,- 500,000, then, in order to meet our obligations as they mature, we 1733 nrnst go out and borrow. Is there any doubt about that? la there any other way of carrying on this Government? Now, there is not a line on the statute book that authorizes the Secretary of the Treasury to issue bonds to meet a deficiency in the Treasury; not a line. For the past two years he has been asking Congress to enact a law giving him authority to issue a low-interest bearing bond to meet this deficiency and maintain the gold redemption fund, but you have refused to do it, and the Seci-etary of the Treasury has in the meantime been whipping the devil around the stumj) trying to meet the deficiency. What has he been doing? He has turned to the act of 1875, which authorizes the issue of 5 per cent ten-year bonds, for the purpose of maintaining the re- demption fund, and, under the plea of maintaining that fund, he has used the money in very large part to meet the deficiency, and I do not condemn him for doing it. If I had been in the same position I would have done exactly the same thing. Saliis popuU suprema lex. Mr. BRYAN. Do I understand the gentleman to say that the Secretary of the Treasury has asked for authority to issue a bond for the purpose of obtaining money to pay the expenses of the Gov- ernment ? Mr. DINGLEY. I so understand. Mr. BRYAN. I thought his request had been for authority to issue gold for redemption purposes. Mr. DINGLEY. I think his request has been for both. There- need be no misunderstanding aboiit that. He must have the authority for both purposes. I am not going to condemn the Sec- retary of the Treastiry for straining the law of 1875. Mr. BOUTELLE. He has authority to issue bonds for redemp- tion purposes now. Mr. DINGLEY. He has atithority to issue bonds for redemp- tion purposes, and yet we have had $98,500,000 of deficiency, and the money which he has obtained ostensibly for the redemption fund has been used in i^art in meeting that deficiency in the Treas- ury. There was no other course open to the Secretary unless he proposed to have this Government go to protest, and I woiild not vote to-day to condemn him for taking the course that he did take. The Government must be preserved. But I do condemn this HoiTse and Congress for not giving him plain, clear authority to issue bonds bearing not more than 8 per cent interest, for the double purpose of meeting any deficiency in the Treasury and of maintaining the gold redemption fund, in consequence of which failure he has been obliged to issue 5 per cent ten-year bonds at great disadvantage and cost to the country, when he might have made a loan at 2^ per cent if we had given him authority to do so. Now, if private individuals should run their business in that way, I think they would come to ruin very soon. Mr. BLAND. May I ask the gentleman a question right there? Mr. DINGLEY. Yes, sir. Ml'. BLAND. Since the gentleman has criticised the action of the House upon this question— he and I may differ as to the pro- priety of the measure of which I am about to speak, biit certainly we did pass a bill which would have given the Treasury at least $50,000,000 of revenue, a bill which was vetoed, 1733 8 Mr. DINGLEY. To what does the gentleman refer? Mr. BLAND. I refer to the seigniorage hill, which proposed to turn over t« the Treasury $.55,000,000. a hill which was vetoed. Mr. DINGLEY. Oh, that would have made .the difficulty greater by increasing distrust, as it would have taken away part of the bullion behind the Treasury notes and used it to pay cur- rent expenses. Mr. BLAND. I said that perhaps the gentleman and I might perhaps differ as to the propriety of the measure. Mr. DINGLEY. If that 1)111 had been passed, tlie Treasury, in- stead of haiang one hundred and forty-one millions of demand notes to redeem the past year, would have had many more; and instead of two bond issues we should have had several more. Mr. BLAND. That may be; but the gentleman was talking about deficiencies in the Treasury and the issue of bonds to meet those deficiencies. Mr. DINGLEY. The measure to which the gentleman refers was simply robbing Peter to pay Paul; that was all there was of it. Mr. BLAND. You are robbing both by this means. Mr. CHILDS. There is one question I should like to a.sk the gentleman from IMaine. He has said that he woiild authorize the Secretary of the Treasury to sell a 3 per cent bond Mr. DINGLEY. A bond bearing interest not exceeding 3 per cent. Mr. CHILDS. For the double purpose of providing a redemp- tion fund and of meeting the current expenses of the Government. I should like to ask him how long he would have that condition of things continue? Mr. DINGLEY. I have already said that if I could have my way in reference to this matter the first thing I woiild do, con- currently with conferring this authority to issue bonds, would be to take measures to make the revenue equal to the expenditure. I consider that a primary duty. [Applause on the Republican side.] But exigencies are liable at any time to arise during which the revenue may not be equal to the expenditure; and the Sec- retary of the Treasury ought to have authority to meet such exi- gencies at all times, esijecially now that such an exigency is upon us. I agree, however, entirely with my friend that the idea of issuing bonds to maintain a chronic deficiency is one which can not be entertained for a moment. This deficiency has been run- ning eighteen months; and it has grown to be pretty chronic. If there is any measure which gentlemen who control this House ought to adopt it is one to immediately provide revenue sufficient to meet expenditures, so this deficiency may not continue. This ought to have been done a year ago. The trouble was that the tariff act of August 28, 1894, was, in all except three respects, a revenue-destrojing measure, not a reve- nue-raising measiire. In three respects onlj' was it a measure to in- crease revenue — the imposition of 40 per cent duty iipon raw sugar, the levj-ing of 20 cents additional tax upon whisky, and the im- position of the income tax, from which we shall receive no benefit until the beginning of the next fiscal year. In almost every other respect tliat bill was a revenue-destroj'ing measure. Now, Mr. Chairman. I was inciuiring what there is in this bill which wotild aid in maintaining a redemi)tion fund. There is no 1733 9 provision for more revenue. There is no provision for the issue of a bond bearing interest not exceeding 3 per cent. To maintain that fund, if it is to be maintained, the Secretary of the Treasury must go on, so far as we have had any legislation up to date, issuing an antiquated 5 per cent ten-year bond at great disadvan- tage and cost to the Treasury w^hen a 2^ per cent bond could be floated the moment it is understood that this nation proposes to have revenue sufficient to pay its expenses. There is nothing of that kind in this bill. How is it supposed, then, that this bill is going to aid in main- taining a redemption fund? In two directions it is argued it may do so. First, it is said that so far as the banks avail themselves of the provisions of this measure for reorganization they will be required to deposit 30 per cent of the circulation they take out in legal-tender notes — not to be canceled of course — to be held there as long as the bank has the circulation outstanding. In addition to that it is provided that the surplus reveniie shall be used for the purpose of calling in and canceling the legal-tender notes to the extent of 70 per cent of the increase of bank currency. Now, this last provision, in view of what has been going on for eighteen months past, will certainly not afford us a great deal of relief within the life of some of us who are now living — certainly not for a year. It does not meet the present exigencies at all. And as to the deposit provision of the bill, it is to be borne in mind that such a provision would be availed of slowly by the national banks. There are now about $300,000,000 of circulation out. Sujipose this proposed measiire should be availed of to the extent of the whole two hundred millions, which it would not be within six -months or a year, you would have withdrawn and put on deposit in the Treasury only sixty millions of legal-tender notes. You change the place, btit you still keep the pain. The with- drawal of sixty or one hundred millions of dollars of the five hun- dred millions of legal-tender demand notes outstanding will not take away the means for making demands on the Treasury. Where is the relief to come in during the time in which relief is absolutely necessary? I wish I could see some relief in such a measure, if it be passed, but I can not. Again, you are to bear in mind tnat under this bill, when the banks take out currency, that currency is redeemable in law- ful money; and the banks will naturally use the legal-tenders in redeeming their notes, and in order to obtain the gold they will go to the Treasury with these notes. You do not really relieve the Treasury, therefore, by such an exchange as this. It seems to me, Mr. Chairman — and I have endeavored to look at the matter carefully and from the most favorable point of view— it seems to me that there is nothing in the bill that meets the pres- ent situation of the Treasury in any degree. Whether it passes or not, unless you take measures at this session to increase the reveniies of the Government, within two months there will be another issue of fifty millions of 5 per cent interest-bearing bonds (unless you do the sensible thing and authorize a 2| per cent or 3 per cent bond to be issued) and before the end of the fiscal year another fifty millions must be issued. There is no end to this sort of business wath the distrust that prevails. Unless you can restore confidence in some way this thing must go on. 1732 3 10 Now. how is confidence to be restored? What is the essential thing for yon to do in order to restore it? The first thing, as I have already said, is to make your revenues equal to your expendi- tures. The next is to give the Secretary of the Treasury abundant authority to issue a low-interest bearing bond to maintain the re- demption fund at the minimum of one hundred millions. When I say that, I mean the most vital thing to be done in reference to our redemption fund is not to allow it to drop a single dollar be- low the minimum of one hundred millions. It ought to be main- tained at a higher figure, vrith the Treasury notes pressing on it. With the redemption fund running down from one hundred mil- lions to ninety, from ninety to eighty, from eighty to seventy, from seventy to sixtj-, and then to fifty -two millions, it is impos- sible to prevent distrust from creeping not only over our own peo- ple, but over those people who deal with us abroad. I believe that if the Secretary of the Treasury, even under the situation as it then existed, as early as March, 1893, had issued fiftj^ millions of bonds and placed fifty millions more of gold in the redemption fund, and announced to the world that that re- demption fund under any and all circumstances would not be al- lowe'd to drop below $100,000,000, confidence wotild have been maintained and we should not have had the presentation of legal tenders for redemption to the serious extent they have been. Certainly that would have been the case if early steps had been taken to increase the revenue. I think it was a fatal mistake in 1893. and it is a fatal mistake to-day, to allow the gold redemption fund to decline below one hundred millions. You can not restore confidence unless this minimum amount of gold for redemption of the outstanding legal tenders shall be permanently maintained. In the public mind it is the line between confidence and distrust. When it is suffered to go below, distrust begins to creep upon the country. Now I did not intend to delay the committee so long on this branch of the subject, yet it is, in my mind, the most important part of the legislation required. Whatever is done with reference to relieving the necessities of the Treasury should be done promptly. I wash I could see presented here some simple legisla- tion in such directions as are absolutely essential to the restoring of the confidence which has been lost. THE SILVER CERTIFICATES. One thing in this bill, Mr. Chairman, I regard as of exceeding value, and hope it will be enacted into law as a separate measure before the session terminates; and that is the provision that there be "withdrawn all denominations of paper money outside of silver certificates in excess of $5, and that silver certificates shall be given the exclusive field of circulation for one. two, and five dollar denom- inations. It is exceedingly wise for this reason: Nearly ail of the silver certificates that are now outstanding, about $337,000,000 in. all, would be required to fill the field of circulation for one, two, three, and five dollar notes. At present the silver certificates are largely of larger denominations than that, and are being used to ?ay customs duties, and thus prevent gold from getting into the reasury. Why, on some days in the last year 84 per cent of the duties 1733 11 were paid in silver certificates. If this provision could be enacted into law, and all the denominations of silver certificates above $5 withdrawn from circulation, then nearly all of the three hundred and thirty-seven millions of such certificates would be kept in circulation for daily use amongst the people and would not ac- cumiilate in the money centers to be used for the payment of gold duties. Then we should receive gold into the Treasury for customs duties instead of silver certificates. I regard that as the most valuable provision there is in this bill, and I hope, as I have said, it v^ll be taken from it and put in a position where it can pass before the end of the session. GOVERNMENT NOTES AS CURRENCY. Mr. Chairman, while criticising the pending bill for its f^tal departure from the fundamental national idea, I wish at the same time to commend its recognition of a sound principle of finance: That in time of peace whatever credit currency is reqiiired by modern business outside of coin— and I may add that modern business can not be successfiilly and economically carried on with coin and coin certificates alone — should be issued not by the Government itself on its , own credit, but b.y banking institu- tions authorized to issue their own notes under such Government restrictions and regulations, and with such Government super- vision as will secure their final payment, permanent convertibility, and constant adaptation to the wants of business. It is of inestimable value to the business of this country to have this important financial truth, established by the experience of commercial nations, at last admitted even by those who have in the past maintained otherwise, notwithstanding it has required the costly lessons of our own experience in the past year, with a limited volume of Government legal-tender demand notes, to work conviction. It is probable that on the 1st of July next there will be outstand- ing at least three hundred millions of United States bonds, includ- ing the ninety-five and a half millions originally sold to establish the fund, which have been sold to provide the coin reqiiired to re- deem a part of the United States legal-tender notes issued as cur- rency, while every dollar redeemed has been reissued and is liable to be presented again and again for redemption. If this state of things shoiild continue through the next fiscal year it is easy to see that the annual interest on "the bonds sold to maintain the redemption fund in these two years— not to mention the probable necessity of many other issues of bonds in the future — would be far more than the annual interest on the bonds required to fund every dollar of the outstanding notes; and the cost to the Treasury of maintaining our issues of Government demand notes the past eighteen months is infinitesimal compared with the inju- ries sustained by the business of the country through this unsat- isfactory condition. Mr. Chairman, several times in the course of this debate the inquiry has been made, " Why not stop this draft on the Treasury gold reserve by availing ourselves of our technical legal right to pay owv legal-tender demand notes in silver?" It is sufficient to say in reply that when the Government adopts the policy of forc- ing its creditors to accept silver in payment for obligations here- 1733 12 tofore held to be gold obligations, against their consent, it ■will be regarded by the biisiness world as a confession that hereafter silver is not to be maintained at parity wdth gold in our currency, and gold will go to a premium and this coiintry will go to a de- preciated silver basis. From the hour when this i)olicy shoiild be adopted this country would witness the beginning of a panic such as never before been known in this country. A bank may tem- porize by inquiring into the necessities of the holder of its notes, as the Bank of France does, although it is doubtful if a bank in any country but France, with her great holding of nine hiindred millions of gold and only ninety millions of uncovered paper, could do this ^-ithout injuring its credit; but a government can not do this without impairing confidence. There is but one course open to us if we issue Government de- mand notes as legal-tender currency, even in a limited and fixed volume, and that is to maintain a sufficient gold reserve — never less than 30 per cent of even a limited issue — to redeem such notes, at whatever cost, whenever presented for payment, taking all the risks which en\dron the issue of Government legal-tender demand notes, risks which increase in geometrical progression as the issue enlarges, and keeping constantly in mind the fact that beyond a limited and fixed volume, which leaves abundant place for a com- mercial currency they can not subserve the wants of trade. From the nature of the case a Government currency can not be responsive to business demands. It can be issued by Government only, as Government expenditures are to be made and Government debts are to be paid without regard to the pulses of b^^siness. In- deed, the Government pulse can never be in accord with the pulses of business. When the country is prosperous and needs the most currency the revenue is larger than the expenditures, and the Government has no occasion to issue its notes. When the busi- ness of the country is depressed and less currency is required, the national revenue falls below exjjenditures and the Government proceeds to issue more notes when they are not needed. The characteristics of Government notes unfit them for ex- changes, while those of bank notes peculiarly adapt them to busi- ness requirements. A Government note always represents dead propert}' — property already consumed, and therefore having noth- ing behind it but the Government promise. A bank note, on the other hand, generally represents live property — property in the course of adaptation to the wants of man or in the process of dis- tribution — which, when it reaches the consumer, is exchanged for an equivalent available to the bank for redemjjtion purposes. Indeed, the business of banking is simply the exchange of its well-known and generally acceptable demand credit foflocal time credits unavailable in trade. This indicates the striking difference between the reserve re- quired to maintain bank demand notes at par and that required to maintain Government demand notes at par. Every note of a bank is issued for a quick asset, available usually in thirty, sixty, or ninety days, and the legal-tender reserve required in addition is, therefore, not only limited but continuously renewed. Every note issued by a government is issued for property which it has already consumed, and is simply evidence of government indebt- edness, for whose redemption in coin the government must rely 1733 13 exclusively on taxation or borrowing. From the necessity of the case a bank can maintain its notes at par with less reserve and less expense than a government can. A government can not protect its reserve in any other way than by reusing payment, which is fatal. Banks can protect their reserves, as the Bank of England does, by raising the rate of interest or by other devices. Moreover, as Congress is political and dependent on votes, all ex- perience shows that the issues of Government notes generally mul- tiply, because it is more popular to issue demand notes than to im- pose taxes, in consequence of which eventually they depreciate. The financial history of the world is filled with warnings of the danger incurred in issues of Government notes to be used as cur- rency. I have no doubt that our present fixed volume of greenbacks ($346,000,000) can be retained with a minimum redemption fund of $100,000,000 without inviting a run on that reserve, provided our revenue shall be kept constantly equal to and a little more than our expenditures, and provided it shall be distinctly under- stood that no additions are to be made to it, leaving to national banking institutions to issue whatever additional credit currency may be desired by business in the futiire, under such modifica- tions of the system as will make it elastic in issixe, that is, respon- sive to business demands. THE VOLUME OF CURRENCY OBJECTION. Mr. Chairman, I am aware that gentlemen who entertain the views of money held by what was popularly known as the Green- back party are accustomed to brush aside these objections against the issue of Government legal-tender notes in time of peace to hold exclusively the field of a credit currency, by declaiming against the alleged danger and even wickedness of the Govern- ment surrendering to banks the power of determining the volume of money, which they affirm is what is granted to banks by any laws which allow the issue of their notes for use as currency. Gentlemen have pressed this objection during this debate with great ingenuity and eloquence, contending that for this reason, if no other, the Government itself should directly issue all credit notes Congress may from time to time determine, as well as other forms of money, that go to make up the volume of currency required by business. Now, if gentlemen will reflect, they will reach the conclusion that in every well-ordered and successful financial system the vol- iime of currency required at any time is not, and never can be, wisely determined beforehand by any body of men, however wise and skilled in business affairs— least of all by a party majority in Congress, outside of the pulses of business, and too many of that majority thinking more of votes at the next election than of the laws of trade. It can be determined only by the demands of bus- iness. Suppose I should present as an argument against the free coin- age of silver, or of gold, that this would leave the owners of silver or gold mines to determine what should be the volume of standard silver dollars and of gold coined, and that for this reason the Gov- ernment should buy and coin on its own account and thus control the volume. Would not these gentlemen conclusively reply that with free coinage, when business requires more silver or gold 1733 14 coins, and is ready to buy or loan them, it would be for the in- terest of the owners of silver bullion to take their silver to the mints and have the Government exercise its proper function of coining, that is, certifying that each coin minted by it has tlie weight and fineness required to give it the coinage value indi- cated by the stamp? For the same reason that it is not the function of Government to buy and coin gold and silver bullion on its own account, and to determine the volume of ftill legal-tender gold or silver that shall be coined and outstanding— and never can be where bullion is coined at its market value — but its function is simply to coin bul- lion belonging to others, i. e., see that each piece of such bullion which it stamps as coin has the requisite weight and fineness, leav- ing business demands to regulate the volume; it is also not the function of Government to issue its own credit notes as credit cui*- rency or to determine the volume that shall be issued, but simply to authorize associations of any citizens organized for that pur- pose under general laws, with restrictions and regulations that will secure the safety, constant convertibility, and elasticity of their issiies, to issue their circulating notes as credit currency without legal-tender power, on blanks furnished by the Govern- ment, under such constant control and supervision of the national authorities as will secure their payment and convertibility, leav- ing business demands to determine the volume from time to time. For under a banking system so organized as to secure a slight profit from the issue of circulating notes whenever business de- sires them the same self-interest that would lead the holder of biallion to take it to the mint and have it coined will also lead a banking institution to issue its notes when they are wanted, while the self-interest of holders of bank notes will lead them to return such notes for payment when they are not wanted. Gentlemen have condemned laws authorizing the issue of notes by national banking associations as the gi'anting of favors to bankers which are denied to other men. As well might they have stigmatized the granting of charters to companies to erect mills as legislative favors to manufacturers. Any five men, whether laborers or farmers or mechanics, may organize a banking asso- ciation to issue circulating notes under the conditions provided by law, just as they may be organized into a company to build a mill or to carry on a newspaper or do other business. To be sure, they can not commence the banking business without the requisite capital or credit any more than they can build a mill or buy and successfiilly run a newspaper or do any other business without means or credit to use in such business. The business of banking under the national banking law is open to the fullest com])etition. and has not in it a single element of monopoly or favoritism. National banks are the freest institutions in the land. STATE BANKS AS BANKS OF ISSUE. I now come, Mr. Chairman, to the overshadowing objection to this bill, and this is that it revives State banks as banks of issue. It is to me a matter of surjirise that after this House, only six months ago, declared by 70 majority against the rehabilitation of State banks as banks of issue, the Secretary of the Treasury should formulate and the majority of the Committee on Banking and 1733 10 Currency should report a banking bill whose central feature pro- vides for exactly that which the House so recently and so em- phatically declared it would not tolerate. And the excuse given by the chairman of the Banking Com- mittee [Mr. Springer] for this right-aboiit-face, viz, that this bill provides for the rehabilitation of State banks as banks of issue only on conditions which he thinks are entirely satisfactory, only serves to increase my surprise. For if there was one argu- ment against State banks of issue made by him and by others more prominent than any other in the discussion of this question at the last session, it was that after our experience of the great advantages of one uniform national banking system, under na- tional control and national supervision, over twoscore different State systems, under the divided and discordant control and super- vision of as many different States, the country never would con- sent to go back. If the conditions under which the pending bill proposes to re- habilitate State banks as banks of issue make them practically na- tional so far as note issues are concerned, as the gentleman from Illinois [Mr. Springer] worild have us infer, then certainly it would be not only a waste of time, but unwise from any point of view, to attempt to maintain State banks of issue in name when in reality the limitations, restrictions, control, and supervision of their chief function are to be national. If this were to be the case in fact I am sure that every stipporter of the State-bank sys- terd would say, " Better avoid confusion, ^^ncertainty, and conflict of jurisdiction by not undertaking to establish a double-headed system with a State annex in form, when it must be national in reality." But, Mr. Chairman, it is because the conditions proposed are only shadow and not substance that gentlemen who cling to State banks of issue as if they recognized something of State rights ideas accept them as a realization of their dreams of State sov- ereignty. Do these conditions contemplate, as to issue functions, national control and national supervision? Nothing of the kind; but, on the contrary, the control and supervision of forty-five States. If it be said that in four respects, viz, the maximum limit of issue, the deposit of a guaranty fund, personal liability of shareholders, and first lien on assets, it is proposed to require that State banks of issue shall conform to the status of national banks as a condition of exemption from the 10 per cent tax, I reply that, in the first place, these are only a part of the requirements for na- tional banks, and that, even if they were all, the failure to pro- vide for effective national supervision would make the requirements practically nugatory. Practically it would be found impossible to exercise any effect- ive national control over State banks of issue under such legisla- tion as is proposed, as State banks receive their franchises from the several States and are subject to State control and supervi- sion; and even the right of the national Comptroller of the Cur- rency to investigate from time to time the condition of a State bank to ascertain whether the four national conditions of issue have been complied with is left purposely to an uncertain implica- tion, rather than positive provision, of law. Certainly, gentle- men who take the ground, as many friends of State banks do, that 1733 the National Government has no right to interfere with State banks of issue, ^vill not be likely to hereafter provide any serious Federal restrictions on the issues of such banks. I call attention to the fact that even the editor of the New York Journal of Counnerce, who has been improperlj- quoted during this debate as an advocate of this bill, expressly repudiated the idea of such a double-headed State and national bank-note issue, and, on being cross-questioned, declared that the issue function of State banks should be placed exclusively under national laws and na- tional supervision, leaving the deposit and discount functions of State banks under State authority. Mr. Dodsworth clearly saw — what the advocates of this bill seem to have onaitted to practically take note of — that it would be a fatal mistake to surrender the issue function of State banks in any manner to State authority, and imjiracticable to place this function under the divided author- ity of both State and nation. Mr. Chairman, the fact must not be overlooked that the condi- tions proposed practically offer a premium for even existing na- tional banks to change to State banks of issue, by exempting State banks of issue, not only from the essential but exacting Govern- ment supervision, but also from the payment of the general tax of half of 1 per cent per annum, and also the payment of the special safety-fund tax of the same ahiount. When it is borne in mind that banking is a business, pursued because of the expectation of profit like other kinds of business, it will be seen that if this bill should become a law there would be serious danger that under the guise of extending the national banking system it would prove to be a potent inducement for its destruction and for the substitution of forty-five State bank systems. Mr. Chairman, I do not propose at this time to recall at length the arguments for one national rather than forty-five State-bank systems which led this House at the last session by 70 majority to declare against the rehabilitation of State banks as banks of issue in any form. I merely indicate some of the points of these argu- ments. The four essentials of a good bank ciin-ency are, first, ultimate safety or pajTnent of issues; second, immediate convertibility into coin or its equivalent: third, uniformity, convenience, and econ- omy; and fourth, elasticity of issue — that is, response of issue to the demands of business. The iirst three of there essentials have been found in the circu- lation of our national banks as they never have been and never can be found in the circulating notes of forty-five different State- bank systems. As to ultimate safety, contrast the fact that in thirty years' ex- perience with State systems before the war, according to the Comptroller of the Currency, the losses throiigh the notes of the failed banks averaged one-fifth of the aggregate circulation; while not one dollar has been lost by holders of notes of national banks in the thirty years since the national banking system became gen- eral. As to convertibility, contrast the fact that the notes of State banks were constantly from one-half of 1 per cent to 5 per cent dis- count, where they were received at all, otitside of the States of issue, with the fact that during the thirty years in which we have had 1733 17 the national system the notes of national banks in Texas or Oregon have been as current at par in Maine or New York as in the States where issued. As to uniformity, convenience, and economy, contrast the fact that in the years of our different State systems before the war the diversity of circiilating notes made counterfeiting easy, promoted distrtist, and limited the usefulness of notes of issue, and the ab- sence of a common control and common regulations and a com- mon tie increased the friction and cost of exchanges; while in the thirty years since the war. under the national system, counterfeit- ing has been made difficult and the detection of counterfeiters easy — it has been unnecessary for the traveler or business man to consider for a moment whether the national notes which he carried were issued in Vermont or Montana or Mississippi, and has so promoted and economized exchanges that the Comptroller of the Currency estimates a saving of at least one hundred and twenty millions per annum on bil >s of exchange alone in the con- duct of the business of the country. In directions affecting elasticity of issue alone the national sys- tem needs amendment to adapt it to changed conditions. When established it was reasonably elastic as to issue, because United States bonds were abundant and obtainable at or below par, so that a profit could be made on note issues which could be loaned. But in progress of time such bonds have become scarce and com- mand a premium, and this, coupled with the fact that the law still permits an issue of only 90 per cent of the par value of the bonds, has made the issue of circulating notes on such bond secu- rity unprofitable, and in making it unprofitable has made it unre- sponsive to business demands. If, instead of devising a bill to rehabilitate State banks of issue, the Committee on Banking and Currency had assumed, what they should have assumed, that any legislation dealing with banks of issue must be on the lines of a uniform national system, under the sole control and constant supervision of the nation, and had proceeded to make such changes in the national system as would have provided reasonable sectirity on the one hand and reasonable elasticity of issue on the other hand, they would have done them- selves more credit and the country a real service, even if their work had not resulted in legislation at this session. But in bringing into the House a hastily framed bill, which has not even had the benefit of the criticisms and amendments of the members of that committee in the committee room, whose central idea is the rehabilitation of State banks as banks of issue, they have failed to strike the keynote of the legislation which the country expects. I can not understand, Mr. Chairman, why it is that so many of our Southern friends look so favorably upon State banks of issue. If it is because they find the national system requires so excessive security for the issue of circulating notes as to fail to adapt itself to their wants, then I ask. Why not join those who believe in the national system in so modifying the security requirements en- acted under different conditions as to make them conform to the present situation? For it must be apparent to every student of finance that a national system in which each bank must receive at par the notes of every other bank in payment of debts due to 1733 — -3 18 it — which would be impossible with the notes of State banks — re- quires less security to make circulating notes safe and convertible than would be necessary under disunited State systems. It ought to be evident, as the Comptroller of the Currency so clearly shows in his last report, that for this reason, as well as for the reason that there is greater confidence in the intelligence, efficacy, and courage of national supervision than State supervision of bank issues, there is more confidence, not only among the people, but also among capitalists, in national banking institutions than in State banks. Inasmuch as the Southern people rightly regard it as of the greatest importance to them that Northern capital should be attracted to their States, not only for banking purposes, but also for industrial development, it is certainly surprising that their Representatives in Congress should for a moment fall into the error of regarding State banks as more desirable than national banking institutions for that part of the Union, for capital would be much more likely attracted to a national than to a State bank. If it is because it is thought that State-bank notes vdll stay at home and not tend, at certain seasons when payments are to be made for supplies and when there is little demand for home loans, to move to commercial centers, then I call attention to the fact that there can be no difference in this respect between a good currency issued by State banks, or by national banks, or even by the nation itself, for the unwritten laws of trade are supreme. The only way that I know of to keep currency at home when there is no demand for it for home business, and when it is required to make pajnnents at the commercial centers, is to make it so poor that nobody outside will take it except at a discount. It is the addled eggs, not the good eggs that stay at home. If there be any pro\Tsions in the laws regulating our national system which im- properly act as an inducement for country banks to deposit in reserve cities loanable funds needed at home, as sometimes charged, such provisions may be easily modified. A little reflection ought to satisfy everyone that any currency which will not pass beyond the State lines where issued, except at a discount, entails a loss on the people of such State proportioned to the discount to which it is subjected when purchases are to be made outside of State limits. I have heard some of our Soiithern friends say that they wanted a home currency — a currency in which their own people were in- terested, but I can not understand why a dozen citizens of Georgia, for example, who organize a State bank, are any more interested in their people than when they organize a national bank, or why the issues of a national bank in Charleston are any the less a home currency than the issues of a State bank in the same city. Mr. Chairman, the regulation of the currency is a function essen- tially national, and no State has any more business with it than with the regulation of postal affairs or the regulation of interstate and foreign commerce. Whatever possesses the circulating quahty, that is, the quality which causes it to pass on delivery from hand to hand in exchange for valuables — a quality entirely distinct from that possessed by a check or bill of exchange — is money, and as such shovQd be issued under national laws alone and subject alone to national control and super\nsion. And in saying this, I only- repeat what the people of this country have settled beyond recall; and whatever party or whatever men or set of men undertake to 1733 19 settle our currency problem may as well understand first as last that it must be settled on national and not on State lines, StTGGESTIONS OF TENTATIVE LEGISLATION. Mr. Chairman, I do not propose at this time to enter further into this discussion. I wish simply to say that I regret exceedingly that this bill could not have had that careful consideration by the whole committee for the purposes of inquiry and investigation and amend- ment that so important a measure demands. Why, the changes that have been already made in this bill indicate that it has not had the carefiil consideration in committee which it should have had. If I understand correctly, this bill was never considered by the full committee for the purposes of amendment. Mr. WALKER. It was never read. Mr. DINGLEY. My friend from Massachusetts says it was never read. Mr. WALKER. They refused to read it. Mr, DINGLEY. Mr. Chairman, you could not imagine a bill of greater importance in its details than this, and the statement of the gentleman from Massachusetts amazes me. But, as I have said, I do not intend at this time to take the bill up in detail. The details are to come before us when the bill is under consideration for amendment, and I shall have something to say during the five-mintite debate upon some of the provisions of the bill to which I have not as yet alluded. I have simply discussed some of the general principles involved. Before I close I wish to repeat that it seems to me that a measure of this magni- tude, involving purely business questions, ought to be considered in a business spirit. I can imagine that we may not have sufficient time this session to perfect the details of such a measure as this, but if we are not to have legislation on a broad scale requiring careful examination and investigation, some legislation ought to be had, and I have suggested some of the directions in which it should be had. For the present, until there can be sufficient time to examine the whole subject and to frame a bill that shall meet future exigencies, a bill simply increasing the amount of notes that may be issued by national banks to the par of the bonds, and providing that the tax shall be reduced one-half, as provided in this bill, would meet the exigency as to banking legislation. If that should be done it would give time for a commission to be appointed to consist of members elect of the Fif ty-f oiirth Con- gress, a joint committee of the Senate and Hoiise, to consider this whole subject and report further. But we ought not to be deluded with the idea that in hastily passing a measiTre of this kind we are relieving the Treasury in its present necessities, and we should direct our attention to legislation that will accomplish that pur- pose and then should take all the time that may be required to de- vise such a banking system as will be adapted to the future business needs of the country. GOLD EXPORTS. Mr. LIVINGSTON. What would the gentleman suggest as a means of stopping the outflow of gold from the Treasury for the time being? Mr. DINGLEY. Does the gentleman imagine that there is anything in this bill that would stop it? 1733 20 Mr. LIVINGSTON. I asked the sfentleman what suggestion he would make to meet the present exigency in that respect. Mr. DINOLEY. If I may be allowed to express a personal judgment on that matter, it is this: We are having an outflow of gold now under very peculiar circumstances. The circum- stances are these: The balance of trade is in oiir favor, and under that condition gold ought to \w coming into this country. The past two fiscal years we exported two hundred and eighty-three millions more of merchandise than Ave imported — the last j'ear, two hundred and sixty -four millions more; and yet in 1S!)8 our net ex- ports of gold were eighty-seven and one-half millions, and the past fiscal year four millions. The exports since July have been renewed. Mr. LIVINGSTON. Gold is going out. Mr. DINGLEY. Gold is going out. Now, there is some cause for that. I think there are two causes. I think, first, that in view of the amount of business that is being done to-day, we have a re- dundant currency. We are having a large volume of currency lying idle, and when there is a currency lying idle and there is a demand abroad for money manifested by a return of our securities, the only money that can be sent abroad is gold. If we had no more currency than we needed, gold would not go abroad, because more would not be paid for it there than here, as is the case now, as it would be needed here. Mr. LIVINGSTON. Does the gentleman believe that the gold is going out for legitimate purposes or for speculation? Mr. DINGLEY. Undoubtedly for legitimate purposes. Men do not engage in any business except for what in trade is regarded as legitimate, namely, for the purpose of making money. Mr. LIVINGSTON. Or speculation. Mr. DINGLEY. Oh, everybody engages in business for the purpose of making money. There is no doubt about that. If gold were worth more here than it is worth abroad it would not be go- ing out under present conditions. But there is another reason which operates and which I think exercises more influence than that which I have named. We have borrowed an immense amount of money in the past in foreign countries for the purpose of constructing railroads in this country, many of which have been constructed, perhaps, ahead of the ne- cessity for them; and' the bonds which we have issued for the money we have borrowed to build those rt)ads have been coming back to us. Secretary Carlisle says in his report of last year that at least $391,000,000 of American securities came back to this country last year, and were sold in our market, necessarily be- ing paid for by shipments of gold. On the face of the case what does that show? It shows that there is distrust abroad as to the financial conditions in this country? Is there any other efiBlcient cause for this return of our bonds? Mr. BLAND. Can not that be explained on another supposi- tion — that they require gold abroad and are sending securities here to get our gold? Mr. BOUTELLE. It shows that they would rather have the gold than our securities. Mr. BLAND. Certainly; it shows they must have the gold, and they send the securities here iu order to get it. There is not gold enough to go round. 1733 21 Mr. BOUTELLE. They would not want the gold if the secu- rities were worth more than the gold. Mr. BLAND. But the gold is worth more than the securities here, and there, and everywhere else. Mr. DINGLEY. Why do these gentlemen who send our secur- ities back to be sold in our markets take the money and carry it to Europe to invest it in European securities? Is it not simply for the reason — I will not say whether the reason is a good one — they distrust the financial conditions in this country? Mr. BLAND. When the Baring Brothers failed, did they not have to get gold wherever it could be obtained, and did they not send their securities to this country for that purpose? Mr. DINGLEY. Certainly. Mr. BLAND. And when the Austrian Bank required gold, did it not have to send here for it? Mr. DESTGLEY. Oh, that was a temporary condition. Mr. BLAND. Then this is all temporary. Mr. DINGLEY. Not at all. It was not until the spring of 1893 that our securities began to be returned to any serious extent, and the proceeds reinvested in Europe. Why did not this condition of things occur long ago? Why has it taken place within the last year or two, and not before? Mr. BLAND. The gentleman understands that European coun- tries are in financial distress as well as ourselves, that times are really worse there than here, and there is over there a great de- iiand for gold. And all the watered railroad securities are sink- ing, like other property, during this demand and struggle for gold. Mr. DINGLEY. Is not the gentleman aware that there is more t^old in the Bank of England to-day, and also in the Bank of France, than there has been for a long time? Mr. CANNON of Illinois. Just at this point wiU the gentle- man from Maine aUow me to suggest that silver has also gone abroad during the last eighteen months, because there was a de- mand for it? Mr. BLAND. At what price? Mr. CANNON of Illinois. At the world's price, the same as in the case of gold. Mr. LIVINGSTON. WUl the gentleman from Maine allow me a suggestion? Mr. DINGLEY. Certainly, I yield for a moment to the gentle- man. Mr. LIVINGSTON. The gentleman will allow me to suggest that the return of those securities to this country was largely con- sequent upon European losses in the Argentine Republic and other places, and did not result from the fact that there was more gold here than abroad or more gold abroad than here. Is it not true that those securities were returned on account of such losses as I have indicated? Mr. DINGLEY. Undoubtedly to a certain extent that waa true; but those conditions were temporary and long since passed away; those are not the conditions which have affected gold ex- ports the past two years. Mr. LIVINGSTON. Is there anything to show that there have been reinvestments? Mr. BRYAN. Is it possible that this going of gold abroad ia 1733 22 dne to the fact that we are so prosperous that we have been pay- ing off our foreign debt and holding our securities at home? Mr. DINGLEY. I hardly think that during the last two years the wonderful prosperity which the gentleman's question would indicate has existed. Mr. BRYAN. Then that explanation does not seem to the gen- tleman a satisfactory one? Mr. DINGLEY. It does not. Mr. WALKER. K the gentleman from Maine is about to con- clude, will he kindly allow me to occupy a few minutes of his time? Mr. DINGLEY. I believe I had concluded what I desired to say. I yield the residue of my time to the gentleman from Mas- sachusetts [Mr, Walkee], 1788 THE CONDITION OF THE TREASUKY. SPEECH OF HON. ARTHUR P. GORMAN, OF MARYLAND, SENATE OF THE UNITED STATES, Monday, January 14, 1895. "WASHINGS-TON". 1895. SPEECH OF HON. ARTHUE P. GORMAN. The Senate having under consideration the bill (H. B. 8148) making appro- priations to supply urgent deficiencies in the appropriations for the fiscal year ending June 30, 1895, and for other purposes- Mr. GORMAN said: Mr. President: The proposition pending before the Senate is a simple and plain one. The debate has taken a very wide range, (jovering mimerous subjects, all of importance; but after all, the question before the Senate is, as I have said, a simple and plain one. An appropriation bill has reached this body providing for the deficiencies which have occurred because of legislation. Among other provisions in the general revenue law passed in August last, a tax was levied upon the incomes of individuals exceeding $4,000 per annum, and a certain tax was levied upon corporations within the United States. It was made the duty of the Secretary of the Treasury, under such regulations as he might prescribe, to enforce that law. It is mandatory. It is the duty of Congress to provide the money to enable the Secretary to carry out the provisions of the law. Ordinarily there would not be a single objection in either House of Congress to a proposition such as I have stated. The senior Senator from New York [Mr. Hill] and the junior Senator from Pennsylvania [Mr. Quay] have offered amendments to this simple provision of an appropriation bill. The amend- ments offered by those two distiaguished Senators are identical in language. The one offered on the 9th day of January by the Sen- ator from Pennsylvania is the same amendment as that proposed by the Senator from New York on the 10th. The Senator from New York in his recent speech advocating his amendment used the following language, to be found on page 932 of the Record: The law has been passed. I have no expectation that this Congress will repeal it. I put a stress— Says the Senator from New York — upon the words "this Congress." It is the Congress that enacted it. Now, there conies an appropriation to carry it out. I concede the general rule to be that there ought to be an appropriation to carry out every existing law duly enacted. Further on in his speech, on page 933 of the Record, the Sen- ator from New York said: But, sir, I stand here to resist any legislation that seeks to take moneys from the citizens of my State by statute when Congress refuses to provide a remedy by which the constitutionality of that statute can be tested. 1758 3 Mr. President, the Senator from Ohio [Mr. Sherman] has so clearly pointed out to the Senate and the country that there is ample provision for any citizen of the United States to test the constitutionality of the income-tax law, or any other law, that it is not necessary for me or for anyone else to discuss further that question. The right to test the constitutionality of the law exists. What the Senator from New York desires is a provision separate and distinct, exceptional in this case, which will enable any tax- payer in the United States who is liable to pay the tax to sus- pend its collection by injunction, to reverse the rule in this par- ticular case, and prevent the money which should come into the Treasury under the law from reaching its portals until every ques- tion that may be raised by every unwilling taxpayer in the coun- try shall have been decided by the Supreme Court of the United States. While the Senator concedes that the appropriation ought to be made, he would by this method render the statute, for the time being, absolutely null and void. The distinguished Senator from Pennsylvania [Mr. Quay], a little more frank and direct, in presenting the same amendment offered by the distinguished Senator from New York, used the following language, which will be found on page 935 of the Reo ORD: The appropriation proposed to pay for the expense of the collection of thla discredited, inquisitorial, and obnoxious levy upon the private business of the people of this country should be at least postponed. Warming up to his subject, he added: It should, indeed, be absolutely defeated. The income-tax proTision of the last tarifE law should, so far as the votes of this body we able to accomplish it, bo made absolutely nugatory. There we have the clear, undoubted object of both the Senator from New York and the Senator from Pennsylvania. It is not necessary in this presence to assert the fact that the Senate of the United States has no power under the Constitution to originate any measure which reduces or adds to the revenue. Such a proposition can come only from the coordinate branch, and when it does reach this body it is within our power to amend it and change it as radically as we see proper. But the Senate has no moral or legal right on an appropriation bill to change the revenue laws. Sir, I say without the slightest hesitation that the attempt to do it in the indirect manner in which it is proposed would be wrong, would be without our power, and would operate, if the House of Representatives should consent to such a proposition, most destructively to the interests of the Treasury. If such a proposition could be properly made, if we had the power to enact it, I submit that no Senator acting upon his responsibility, no matter on which side of the aisle he may have a seat, would be justified in presenting it, unless he could show that the tax which has been imposed by the law is unnecessary for the support of the Government; that the Treasury is in such a condition as to war- rant the reduction or suspension. If the Treasury is not in that condition it would necessarily be his duty, if he had the interests of the people of the country at heart, to propose instead a tax which would prevent a deficiency in the Treasury. Mr. QUAY. Will the Senator from Maryland allow me to in- terrupt him for a moment ? Mr. GORMAN. With great pleasure. 1758 Mr. QUAY. The Senator from Maryland will have noticed that I introduced amendments which propose to supply the de- ficiency in the revenue, first by reenacting the McKinley law. Another proposition was to reenact the tax upon wool and to sup- plement that by a duty upon woolens. Mr. GORMAN. I understand the Senator from Pennsylvania for one purpose or another offered those amendments, but, of course, with perfect knowledge on his part that they are not ger- mane to any bill pending in the Senate, or up for consideration in the Senate; at all events not upon an appropriation bill. The question involved in the amendments suggested by the Senator can only come up when there is pending a bill providing revenue for the Government. It has no place here now. Mr. President, the policy, the desirability, the legality of the tax known as the income tax is not before this body for consid- eration, although the question has been very ably discussed by the distinguished Senator from New York [Mr. Hill] . I shall not detain the Senate to again express my views as to the income tax. I did that at the only tune when it could properly be done — when the bill to reduce taxation was before the Senate for consideration. I have nothing to retract from what I said then. I agreed with much the distinguished Senator from New York himself said as to the policy of such a tax. I was opposed to the Government entering, as a permanent policy, upon that system of levying taxes. On the 23d of May Last, when the revenue bill was under consideration, I said: In the matter of internal revenue, I may say that personally I am in full ac- cord with the sentiments so ably and eloquently expressed by the Senators from New York and New Jersey regarding the income tax. Like them, I con- sider that it served its purpose as a war tax, and has no fitting place in our fiscal system in a time of peace. I could not, I say frankly, vote conscien- tiously or consistently with my judgment and convictions to make this method of taxation a part of our settled policy. But, much as I deplore the fastening of an income tax in any form upon our tariff bill, I can not ignore the fact that a large majority of my Democratic colleagues honestly differ from my- self in this matter, and are so confident of the soundness of their position that they are willing to subject it to the test of a few years, thus enabling the people to see its actual workings and then pass upon it directly. In these circumstances, and m view of the necessity of obtaining additional revenue from some source if we would reduce customs taxation, without dis- avowing the frightful financial obligations heaped up by Republican legis- lation or further increasing the debt of the Government, I can not, as a Demo- crat, bound in honor to let no ordinary prejudice or difference in opinion prevent the passage of a tariff measure, refuse to vote for this amendment, simply and solely, however, as an emergency tax. Mr. President, I accepted the income tax as a part of a compro- mise of a great reform measure of tax legislation. I accepted it because I knew then, as I know now, that that tax, with the frame of the biU such as we had and could only have, was absolutely necessary to prevent a deficiency in the Treasury. I accepted it as an eraergency tax, limited in time, and necessary to prevent the issiiance of interest-bearing bonds of the Government to pay the ordinary current expenses from year to year. It is there as a part of that structure for which we are responsible. It is a neces- sary part, if Congress proposes to give the Treasury as much money as it appropriates for expenses. Any delay, any hamper- ing of its collection, or any attempt to prevent its collection sim- ply means, as the case stands to-day, to strike from the tax list all taxes on incomes, and vote for bonds to pay the current expenses. 1758 I aTu not for such a plan, but the proposition of the Senator from New York and the Senator from Pennsylvania is that and that alone. Mr. President, this Government is controlled by parties, and never in its history has either of the great parties, in framing a revenue measure, gone to work deliberately to cut the receipts below the expenditures. That condition has occurred two or three times in the history of the Government by the error of the men who made the estimates of the revenue which would be produced under the proposed law. It has occurred now again. When we considered the bill that came here from another House it was an easy and comfortable matter for any member of the majority in this body, for any member of the other side, or for reformers here and elsewhere, to pose as the special champions of decreased taxa- tion; and I suppose it added to the popularity of an individual to stand here or elsewhere and denounce a tax that happened to be unpopular without apparently having the slightest concern whether the Government should or should not be banki-upt. NeA'er in the history of the land has there been such an oppor- tunity for demagogues as in these troublesome times, when men in all occupations of life have been most solicitotas for their concerns and anxious to know what wovild become of private business and public affairs. But there were those of us who believed that an intelligent people, free and independent, would not tolerate any scheme made by their public servants in either or both branches of Congress which failed to raise enough revenue to pay ordinary expenses as we went along, and that the people would condemn their representatives for such action. No party can live which deliberately cuts down the receipts, while keeping up the expendi- tures, and then issues gold bonds by the hundred milli»n dollars' worth to pay the ordinary expenses. Yet, sir, that is precisely the proposition which has been presented to this body. It is the pre- cise proposition which is advocated elsewhere and which caused complaint against the Senate through the public press when it proposed to add, and did, as we thought, add, sufficient revenue to a bill that came here which was totally deficient in revenue-pro- ducing capacity. That responsibility had to be taken. It was taken; it was taken by the Senate, as it has always been taken by this body, by deliberation, by consideration, by weighing every item that was to be passed upon. Having in mind all these con- siderations, the compass by which we were guided was that the act must produce revenue enough to support the Government. Have we done it. Senators? No. In our anxiety to carry out party pledges, to reduce taxation, to prevent favoritism, this great body, organized and created for the purpose of resisting the popular waA'es, and standing for justice and right when other men would bend to the storm, was swayed by popular clamor and the great power of the American press and cut too close, reduced too much. It is true, sir, that we added about $60,000,000 per annum to the revenue biU that came here from another branch of the Government. Sixty million dollars per annum did we add to the measure kno'^\Ti as the Wilson bill, as it came from the House of Representatives. I for one supposed when we had made those additions, necessary for the support of the Government, that we had added a sufficient amount to pay all the current expenses of 1768 the Treasury. Had I not believed so, and believed it from the estimates made by the Treasury, I never should have voted for the bill as we finally put it in form without further provisions creating more revenue. The storm that has swept over the country, alluded to by the distinguished Senator from Pennsylvania [Mr. Quay] in terms far from complimentary to the Democratic party, was a storm based in part upon misinformation. It was believed universally that this body stood here and kept up a high rate of taxation, higher than was necessary. I fully believe that nine-tenths of the Democratic party thought we had failed to carry out the promises as they stood in the platform made at Chicago. But there was no time then for them to \mderstand; the time is only now, when they at last begin to understand and to know — for the truth is mighty and will prevail — that the reductions we made were too radical, as the law will not for this year, and prob- ably the next, produce enough revenue to meet the expenditures of the Treasury. Instead of deliberating too much in this body, as the distin- guished Senator from New York claims, if we had only deliber- ated longer, if we had only gone more carefully into the estimates furnished, we would have saved the necessity of the issuance of a part of the $100,000,000 of bonds recently issued, and would have prevented the further issuance of bonds this year to pay the ordi- nary expenses of the Government. Mr. VEST. May I ask the Senator from Maryland a question? Mr. GORMAN. With great pleasure, sir. Mr. VEST. I understand the Senator to state that upon esti- mates, whether they be official or made by himself I do not know, for the fiscal year ending June 30, 1896, there wiU not be revenues enough to carry on the Government. Is that his statement? Mr. GORMAN. Practically. Mr. VEST. Does the Senator take into that consideration or estimate the amount that will be brought into the Treasury by the 40 per cent tax upon sugar and by the whisky tax, neither of which is available for this year, but will be for 1896, beyond ques- tion? I wish to call the attention of the Senator to the fact that from the returns of the Treasury Department there has been a steady increase in the receipts of the Government for the last three months. I think I can state, without having the written olHcial statement, or upon information derived from the Treasury Depart- ment, that it is only a reasonable anticipation to presume that about the 1st of April the receipts of the Government will be sufficient to pay its ordinary expenses. But the question I immediately put to the Senator is whether for the fiscal year 1896 he takes into consideration the $40,000,000, at least, that we shall receive upon sugar from the 40 per cent tax and the additional tax upon whisky which we have imposed by the increase of the internal-revenue taxation upon that article. Mr. GORMAN. Mr. President, I shall not vnthout authority speak upon this question. I will let a man answer it who I know commands the resi)ect of every Democrat in the United States, whom, while I have differed with him in the past, and do now in many of his ideas, I regard as the foremost man in finances in the 1758 8 party, the one selected by the President of the United States to preside over the Treasury Department, who in all the terrific tur- moil through which we have passed, has stood for a tax sufficient to support the Government, who has had the courage, when slan- der was rampant and the vipers were striking at him, to stand and to tell an excited Congress who wanted to cut off $50,000,000 of the revenue provided in that act, " You can not do it without putting the Treasury in jeopardy." I wiD let him answer the question of the Senator from Missouri, and I will do it a little later on, if the Senator will pardon me. Mr. President, I repeat, you can not eliminate a single provision of the late tariff act that brings revenue into the Treasury with- out substituting something in its place that will produce an equal amount of revenue. I repeat, sir, there is no justification, there can be no excuse, for any Senator to propose a reduction unless he can show that this body at the same time can legally add to the revenues an equal amount by some other provision, and that can not be done. No party in the history of this country in times of peace ever faced such difficulties as confronted the Democratic party when Mr. Cleveland was inaugurated upon the 4th of March, 1893. The distress throughout the country was widespread. It was only beginning, possibly, but it was still widespread, and it has grown in volimie from that day to this. A depleted Treasury, with enormous expenditures, was the condition that confronted our great Secretary of the Treasury. Business was stagnant and trade and commerce were hampered. The prices of all com- modities were falling lower and lower. Banks were suspending, and there were defects in oiu* currency laws. It is no wonder that we have had conflicts within our own ranks; that we have had divisions here and elsewhere; that we have had disappoint- ments; tnat we have had failures in our attempts to remedy all these evils. But, sir, it Avill be truthfully said by him who writes the history of this time, when he is far enough removed from the personalities of the hour; from the ambitions of men, from their desire to gain i:)opularity; when he collects and sums up carefully he will truthfully say that never since the adoption of the Constitution has any Congi-ess done so much benefit to the people of the country as has been done by the present Congress. Mr. GRAY. May I interrupt the Senator for a moment? Mr. GORMAN. Certainly. Mr. GRAY. In order that the Senator may be clear in his statement let me ask him whether he means to be understood — I have not so understood him — that the revenue laws displaced by the legislation of last summer were producing sufficient revenues to meet the wants of the Government? Mr. GORMAN". Not at all. The Senator has only anticipated what I will come to in my ovm way a little later on, although I am indebted to him for the inquiry. Mr. President, I do not believe that there ever was a more haz- ardous undertaldng than the thorough revision of the revenue laws of this country at the time at which the Democratic party attempted to do it. The conditions of the country, to which I have simply alluded, were of themselves enough to make us hesi- tate, and would, in my judgment, have been sufficient to have justified us to stop and halt and wait until the affairs of the world 1758 and of tile country were in a better financial state. But the pledge of the party was so emphatic, so often made, that we could not delay. We were bound to march forward to the redemption of our pledges, no matter what the immediate result in a political point of view would be to the party in power. Speaking for my- self, looking at the history of the country and of the parties, I never doubted that if we did remodel the tariff law, no matter how perfect our provisions might be, it would lead us to defeat at the following election. It was only a question — I speak for myself alone — whether we would postpone the time of carrying out our obligations, or do it then with a perfect belief on my part that to do it would put this side temporarily in the minority. We concluded, sir, in our wisdom, to go on and carry out our pledges and perfect the law. It was a compromise measure, as was said recently by the Senator from New York [Mr. Hill] in the discussion of this income-tax provision — as he puts it, "the WUson-Grorman-Brice-Smith bill, or whatever it is." Mr. President, it was a compromise bill; and no tariff bill could ever have passed the Senate, constituted as it was, except by a compromise among its friends. It was a compromise bill to which every Democratic Senator except the Senator from New York agreed. Mr. VOORHEES. Every tariff bill has been a compromise. Mr. GrORMAN. There never was a tariff bill that was not a compromise. That measure was a compromise, and as a whole, as it stands to-day, it is the act of the Democratic party. It is the best act that has been placed upon the statute books for thirty years. The Senator from New York was not a party to that com- promise. There is something in the atmosphere of northern New York which, it seems, makes it impossible for a statesman from that section ever to compromise. It was the McKinley Act or this one, and the Senator, as he had a right to do, and he did it openly and manfully, told his colleagues on this side of this Chamber, " either give me my way or you shall never pass a bill." It was his right and he did it openly. He went directly at it, and I always admire a bold man. In that compromise measure we placed a tax on incomes. I could excuse the Senator from New York for antagonizing this provision, if it were not for the fact that, while we were consider- ing the tariff bill, he not only opposed the income-tax feature, which I have shown is necessary for the support of the Govern- ment for the time being, but he joined with all the extreme — I do not use any offensive phrase, I beg Senators to know that I do not — with aU the extreme tariff reformers who wanted to cut down the revenue from the imports on goods brought in. He was ready in that case to cut those down and to eliminate the in- come tax also; and, judging by his vote, if he had had his way he would have had $500,000,000 of bonds to issue to pay the cui-- rent expenses of the Grovernment between that time and 1897. Mr. President, I can never foUow a leader in this body or else- where who would deliberately put this Government in a position to increase the national debt to pay its current expenses. I do not believe a national debt is a blessing. I have no sympathy with the men who proclaim themselves advanced reformers, and who under the guise of reform want to increase the national debt so that bonds of the United States can be trafficked in or invested in. because the Government bonds are exempt from taxation of 1758 10 ev(»ry sort and description, national and State. I prefer that the thrifty and the enterprising shall have the opportunity to put their money in private enterprises, and pay their full and just share of taxation for the support of the city, the State, and the National Government. It was upon that theory and upon those conditions that I for one stood in this body with no little personal inconvenience, with the full knowledge that a large number of my associates on this side of the Chamber were disappointed because I could not with my convictions vote with them for lower rates of duty on sundry articles, because it was my conviction that to do so would tend to bankrupt the Treasury and create a debt by the issue of bonds. It was not a view made up for the hour or in the consideration of that bill when it came from the other House. It had happened to be my diity (in conjunction with my distinguished friend, the Sen- ator from Missouri [Mr. Cockrell] , as members of the Committee on Appropriations, then in the minority as we were) to follow closely the operations of the Treasury, before we had our great suc- cess in 1893, when Mr. Cleveland was elected by an overwhelming majority. When you on ihe other side controlled every branch of the Government, when you had the President and both Houses of Congress and the Supreme Court — the whole Government — under your control, the Senator from Missouri and myself pointed out to you and to the country, as far as we could be heard, that the revenue laws you had enacted — the McKinley Act — produced an insufficient amount of revenue, and that you had left the Treas- ury without sufficient revenue. I was frank enough to say, be- cause it was the truth, that you did not do it deliberately; that you had no intention of creating the deficit. I do not believe that the distinguished Senator from Iowa [Mr. Allison] , the Senator from Rhode Island [^Ir. Aldrich] , the venerable Senator fi-om Vermont [Mr. Morrill] , and the Sena- tor from Ohio [INIr. Sherman] , the then leading members of the Committee on Finance, would deliberately do an act of that kind. But the fact was that the estimates upon which you based your bill were at fault, just as the estimates on which we based*^ the late tariff act were at fault. The most experienced men in the Treasury, who made your estimates and who made ours, could not measure the great depression that has spread over the world. No man could have thotight in 1890, no man thought in 1892, that the prices of all the staple articles would be 25 per cent cheaper than was ever known in the history of the world; and that would of necessity affect the revenues. With normal conditions, even with fair conditions, the McKinley Act would have produced a revenue equal to the expenditures. If the tariff act that we passed had had the same conditions it would have given a surplus of from forty to fifty million dollars per annum, which could have been applied toward liquidating the national debt. Now, ]\Ir. President, I come to the suggestion made by the dis- tinguished Senator from Missouri [Mr. Vest] as to whether it is a fact that the act of August last will not produce sufficient reve- nue. The tariff bill as it came from the House of Representatives to this body carried a revenue, as estimated at that time, of about $37.5,000,000. It came here for consideration. The distinguished Senator on my left, the Senator from Indiana [Mr. Voorhees] , 1758 11 chairman of the Finance Committee, and his colleagues on that committee weighed the result of that measure. I do not desire to discuss the little differences among Democrats, which amounted to nothing in the past and can amount to nothing in the future, as to action upon a particular item, whether the rate should be a third or a quarter of a cent. That is a matter of detail and amounts to nothing; but the Senator from Indiana looked, as I know, to the main question, " Will the bill produce revenue enough to support the Government? " In a public declaration in the Senate and out- side of the Senate he declared emphatically that it would not, and that it was mere idle nonsense for people to talk about passing the bill as it came from the House of Representatives. Mr. VOORHEES. In this connection it may not be improper for me to state that in April last I published at length in the press of my own State my views in regard to the situation, and in that publication, widely circulated, I drew attention to the fact that the bill as it came to us from the House of Representatives would inevitably make a deficiency of at least $30,000,000 from the start. I knew from the beginning that it was not a revenue bill of suffi- cient proportions, and because of that fact, we added to it, as the Senator from Maryland has said, at least $60,000,000. In- asmuch as I am on my feet, the Senator from Maryland will par- don me for saying that in a very short time the provisions will be ample in amount for the revenues of the Government. In the meantime, however, I do not disguise from myself the perils which surround us. Mr. GORMAN. I am much obliged to the Senator from Indi- ana for the statement. As the Senator states, we added to that bill $54,593,712.84. Mr. VOORHEES. That is a very low estimate. Mr. GORMAN. It is a very low estimate, but we certainly added that amount. Now, Mr. President, what is the result of the operation for the present year? I vsdll let the Secretary of the Treasury answer the question. You will find in his late report that for the fiscal year ending June 30, 1894, under the operation of the old law, the deficit was $69,803,260.58; that is to say, that the actual payments from the Treasury were greater than the re- ceipts into the Treasury by nearly $70,000,000, under the opera- tions of theMcKinley Act; and, notwithstanding the expenditures of the Government, the payments out of the Treasury were fifteen million nine hundred and fifty-two thousand and odd dollars less than they were the year before; that is, the last year of the Mc- Kinley Act. The Secretary of the Treasury in this same report estimates that there will be a deficit on the 1st day of July, 1895, of $30,000,000 under the operations of the McKinley law from July to the 26th of August, the date when the recent act went into effect. That is an estimate— the best estimate he can get. Yet, Mr. President, on the 12th day of this month the statement of the Treasury Depart- ment, made since the report of the Secretary of the Treasury, shows what? That the deficit, the excess of expenditures, as he puts it. over the receipts from July 1 last until the 12th day of the present month is $34,464,121.13, showing that the estimates made honestly, made with the same set of old and skilled offi(;ers who have heretofore made them, differ widely from the actual opera- tions of the Department. The statement of the condition of the 1758 12 Treasury and the receipts and expenditures of the Government on the 12th day of January, 1895, shows the following: Receipts and expenditures of the Oovei-nment from July 1, 1S9U, to January U, 1S05. Total receipts $171,309,980.72 Total expenditures 205,774,101.85 Excess of expenditures over receipts 34,404,121.13 [At this point the honorable Senator was interrupted by the expiration of the morning hour, and by unanimous consent the unfinished business was temporarily laid aside that the appro- priation bill might be proceeded with.] Mr. GORMAN. Mr. President, I was saying that the estimates made by the Secretary of the Treasury in his annual report, and a statement of the actual operations of the Treasury Department since July last imtil January 12, this month, differ widely. There is already a deficit of $34,464,121.13, or $14,464,121.13 in excess of what the Secretary estimated in his annual report that it would be for the entire year. To show you how impossible it is to make accurate estimates or to pass revenue acts which will produce within a few million dollars of the estimates, how liable legislative bodies are to mislead, and how only you can be safe by having a large margin with such a great upheaval of the business interests of the world, let me read what the Secretary himself said when we had this matter under consideration on the 15th day of August last, when the tariff law had been passed and when there had been an attempt made to re- duce the revenue forty or fifty million dollars. His estimate then was that the revenue under the tariff law up to July, 1895, would be $378,000,000, and that our expenditiires during that time would be $363,000,000, giving an estimated surjjlus dm-ing that time of $15,000,000, and now, by his own statement, made three months afterwards and taking into consideration the conditions which he could not anticipate in August last, he says there vsdll be a deficit of $20,000,000. The statement on the 12th of this month shows that it is already $34,000,000. The letter of Secretary Carlisle to Senator Harris, dated August 15, 1894, is as follows: Treasury Department, Office of the Secketabt, Washingtoti, D. C. August 15, ISOU. Dear Sir : Your letter, advising me that the Hou.se of Representatives had passed and sent to the Senate bills jJiitting sugar, coal, iron ore, and barbed wire on the free list, and requesting " an otticial statement from you [nie] as to the effect that the passage of these bills, or either of them, would have upon the revenues of the Government," is received, and in response I have the honor to say that, according to the most careful estimates that can be made, if no change is made in the proposed revenue legislation which has recently passed through Congress, the total receipts into the Treasury during the cur- rent fiscal year will be as follows: Estimated revenues for fiscal year ending June SO, 1S05. From duties on imports: Senate VMU, including $43,000,000 on sugar $179,000,000 From internal taxes: \Vhisky $9.5,000,000 Tobacco X\,m)Am Fermented liquors 3:5, ()(K),(K)0 Income 1.5, 000. OIJO Oleomargarine 1,8IK),(IOO Playing cards - l,00(),()f)0 Miscellaneous 200,000 179,000,000 From sales of lands and other miscellaneous sources 30,000,000 Total estimated revenue 378,000,000 1758 13 The estimated receipts for the present year from the proposed tax on in- comes and playing cards and the proposed additional tax of 20 cents per gallon on distilled spirits are, it will be observed, much less than is stated m the various tabulated statements which have heretofore been used in the discus- sion of these subjects, but I am satisfied the amounts here given are approx- imately correct. The proposed income tax will not become payable, by the terms of the bill recently passed, until "on or before" July 1, 1895, which is the close of the fiscal year, and it is estimated by the Commissioner of Internal Revenue that, by reason of the large stock on hand, the receipts from the tax on playing cards will not amount to more than $1,000,000 during this year. The estimated increase of receipts on account of the additional tax on dis- tilled spii'its during the present year has already been prevented to a great extent by the withdrawal of large quantities of goods from the bonded ware- houses and the payment of the tax thereon at 90 cents per gallon, and this process is still going oh. The total expenditures during the current fiscal year will be as follows: Civil and miscellaneous, including deficiency in postal re venues] .. $90,000,000 War, including rivers and harbors 56,000,000 Navy, including new vessels and armament 33,000,000 Indians 10,000,000 Pensions 143,-500,000 Interest 30,500,000 Total estimated expenditures 363,000,000 Estimated surplus for year 15,000.000 The duty on sugar proposed in the recent bill will, according to importa- tions of that article during the fiscal year 1893, yield an annual revenue of $43,478,958, and the duties on the other articles mentioned in your communica- tion would yield, under that bUl, about $1,000,000: that is to say, iron ore, $370,920; coal, $436,149; and barbed wire, fencing wire, and wire rods, of iron or steel, when imported for the manufacture of barbed-wire fencing, about $300,000. It will be seen, therefore, that if sugar alone is placed upon the free list the expenditures during the present fiscal year will exceed the receipts to the amount of $28,478,058, and if the duties are removed from all the articles specified in your letter the deficit will be $39,478,058, not including any expend- iture on account of the sinking fund, or the payment of $2,363,000 of Pacific Railroad bonds which will mature during this fiscal year. In view of the existing and prospective requirements of the public service I am of the opinion that it would not be safe to place all the articles enumer- ated in your letter, or even sugar alone, upon the free list, without imposing taxation upon other articles or subjects sufficient to raise an annual revenue of about $a),000,000. I have the honor to be, very respectfully, yours, J. G. CARLISLE, Secretary. Hon. ISHAM G. Harris, , Acting Chairman Senate Finance Committee. In the last annual report of the Secretary of the Treasury, dated December 3, 1894, the Secretary, in his estimate for the year end- ing the 30th day of June, 1895, modifies his statement of August 15. His estimate of revenues, other than the postal service, is as follows: Fiscal year 1895. The revenues of the Government for the current fiscal year are thus esti- mated upon the basis of existing laws: From customs $160,000,000 From internal revenue 165,(XK),000 From miscellaneous sources 15,000,000 Total estimated revenues 340,000,000 The expenditures for the same period are estimated as follows: For the civil establishment $91,2.50,000 For the military establishment 53,350, 0(X) For the naval establishment 33,500.000 For the Indian service ]1,.5(K).000 For pensions 140, .500, 000 For interest on the public debt 31,000,000 Total estimated expenditures 360,000,000 Or a deficit of 20.000,000 1758 14 This shows, Mr. President, a difference in the estimated revenue on the loth of August last and the 3d day of December of $38,- 000,000 decrease. The expenditures were estimated in August last at $363,000,000, and on December 3 at $360,000,000. This, of course, does not include the postal service nor the permanent ap- propriations. Mr. COCKRELL. That is the statement of December 3 in the Secretary's report? Mr. GORMAN. The statement of December 3 in the Secre- tary's report. Mr. President, I say in that condition of affairs no Senator, no matter what his party affiliations may be, can afford to trifle with the condition of the Treasury. It is the highest duty, as expressed by the distinguished Senator from Ohio [Mr. Sherman] and the Senator from Colorado [Mr. Teller^ , in a crisis of this kind, for which no party is entirely responsible, that we shall maintain without party dl\dsion the honor and integrity of the Government. Let us see as to the expenditures for 1896, to which the Senator calls my attention. The Secretary of the Treasury says in his re- port that in 1896 under the operations of the tariff law, based upon the same calculations on which he made his estimate for 1 895, under the same method, which has tm*ned out to be defective, as I have shown, he will have a bare surplus of twenty-eight million eight hundred and fourteen thousand and odd dollars, but I submit that it is not safe to follow his estimate for 1896 and hold him to his figures. He ought not to be held to them. Mr. President, we have in this act, for which the Democratic party is responsible, made a radical departure from the rule of the Government and, as I think, from all the provisions of the tariffs as heretofore made. We have departed from that rule which I had always understood was fundamental with us, and that is, that the greater part of the revenue for the support of the Gov- ernment should come from customs duties, taxes levied upon the wares and productions of other peoples who ship them here to be sold, and that whatever deficit there was after levying a revenue duty upon importations should come from the internal revenue. Only once, from 1864 to 1868, during the war and immediately following, when this immense debt was piled up against us, was that rule departed from. Then we collected more revenue from internal taxation than we did from customs duties. Now, so zealous have we been to redeem our party's pledges, that we have come back to that method, and in this law we have provided for more tax from internal sources than we receive from customs, and it has been for me a matter of amazement that the advanced tariff reformers should not be satisfied with the fact that under this law we are getting more from internal-revenue taxation than we are from the tariff. We did not receive enough duty upon the foreign goods which were brought into this coimtry in 1894 to pay the pensions which we are compelled to pay every year. In other words, the ordinary expenses of the Government are now paid exclusively from internal taxes, and we did not last year collect by $10,000,000 enough from customs duties to pay the $140,000,000 of pensions which we were required to pay. Mr. President, I have shown that since 1892, under the opera- 1758 15 tions of the McKinley law and under the present law, we have not collected sufficient revenue to meet all the demands upon the Treasury. We shall not collect until 1896 a sufficient amount under the present law, and unless there is a gi'eat revival in busi- ness affairs it is possible that the deficiency will extend until 1897. If business revives and resumes the normal condition, then, sir, under the recent act there will not only be enough revenue, but a surplus. I speak, however, of present conditions which must be met. How can they be met? Can we reduce the expenditures? That question has been answered heretofore. I answer, no, you can not reduce your expenditures materially. In 1893 the great pension budget, for which we are not responsi- ble, amounted to $160,000,000. It is now said to have then reached the highest point, and it is now down to $141,000,000. No man in either House of Congress, no man on either side of this Chamber or the other, will say that we can reduce that pension list. It will only decrease as the old soldiers die and pass away. Its reduc- tion will be gradual, but it may be counted on as $135,000,000 per annum for the next ten years. You can not reduce, says our Democratic Secretary of the Treasury, any of the ordinary ex- penses of the Government to amount to anything. Look at his estimates of expenditiu-es. These he can measure accurately. With your postal service extending, and not being self-support- ing; with your Navy, which is created, and which is the pride of the nation, and can not be diminished; with your rivers and har- bors, which must be completed, where contracts are made; with the ordinary expenses of the Departments, which can not be re- duced much, not more than ten or twenty millions, but which will rather grow than diminish, there can be no great reduction of the expenditures of the Government. Indeed, the Secretary of the Treasury puts his expenditures for the year ending 1896 some millions higher than the expenditures of 1895. The junior Senator from Pennsylvania [Mr. Quay] has been good enough to say that the Democratic party has been rebuked by the people, that it has been dismissed from power, and has been commanded by an overwhelming voice to do no further mischief. Mr. President, the Democratic party was defeated at the polls in November last. I admit that. The Senator from Colorado [Mr. Teller], another distinguished Republican, stated the case more fairly when he said on Saturday last that by an overwhelm- ing majority the Republican party had been swept into power. This is true, but it is not because the people had more confidence in your sagacity or your ability than in the Democratic party, but in the hour of their great distress they would have removed from power any party which had control of the Government. You will come into power after the 4th of March next under bet- ter conditions than we did on the 4th of March, 1893. We have removed from your path many of the obstructions you otherwise would have had. As compared with our work you will have comparatively little to do. You will come with a majority else- where as great as we had; you wiU have in this body a majority equal to, if not greater, than that we had, for we were only sus- pended by the thinnest kind of a thread. The responsibility will then be on you. I say to the Senator from Pennsylvania that when bis party is 1758 16 met with the questions which confront us now, I for one will treat him and his friends in a different spirit from that which he has manifested toward us. I will say now that, without waiting for you to ask for help on any question which affects the finances of the Government, on any proposition which is necessary to pre- vent the embarrassment of the Treasury, and on any proposition which is necessary to reform the currency and which will give us sound and good money, I will help you, as I think you ought to volunteer to help us now. Mr. QUAY. Mr. President The PRESIDING OFFICER. Does the Senator from Maryland yield to the Senator from Pennsylvania? Mr. GORIVIAN. Certainly. Mr. QUAY. I have no hesitancy in saying that I am willing to cooperate with the Senator from Maryland and with the friends of the Administration in supplying additional revenue and in re- vising the currency. It was my privilege to act with the Admin- istration and the Senator from Maryland in the contest over the repeal of the purchasing clause of the Shei-man law, and I will pursue the same course again. Nothing in my remarks in the Senate the other day can be construed into any general opposition to a conservative policy upon the other side of the Chamber. ;Mr. GORMAN. I am very glad to hear the statement of the Senator. Mr. ALDRICH. Will the Senator allow me to interrupt him a moment? Mr. GORMAN. Certainly. Mr. ALDRICH. The Senator says that the responsibility of legislation will be upon this side of the Chamber after the 4th of March next. Does he mean to have it inferred from that that the Executive will be with us after the 4th of March? [Laughter.] Mr. GORMAN. Mr. President, I distinctly stated that the party of the distinguished Senator from Rhode Island would be in the majority in both Houses of Congress; that is, the legisla- tive department of the Government, and the Republican party will have the power to frame any measure that they may think wise and judicious. I have no doubt whatever that the President of the United States will gladly cooperate with that majority and aid in the passage of any measure which looks to the advancement of the prosperity of this country. I have never known a Presi- dent of the United States who would not pursue that course, no matter what party was in power in both branches of Congress. Mr. HALE. Mr. President^— The PRESIDING OFFICER. Does the Senator from Maryland yield to the Senator from Maine? Mr. GORMAN. With great pleasure. Mr. HALE. Only for a moment. The Senator has declared that after the 4th of March next the responsibility will be with this side of the Chamber, and he has promised his aid in anything which shall be attempted by this side to relieve the country from its embarrassments and to protect and reenforce the Treasury. Does he not know that the administration of the Government, the conduct of the Treasury Department, the management of its revenues, and the collection of its revenues will be for two years after the 4th of March as much with his Administration as it ifl now? 1758 17 Further, when the Senator says that the President will patriot- ically join this side of the Chamber in any measure that will re- lieve the situation, I ask the Senator does he believe, if the re- sponsibility in both branches falls upon the Reptiblicans for the next two years and a Republican meastire shall be submitted on Repriblican lines, which shall raise revenue enough to free the Treasury from its embarrassments and, instead of causing a defi- cit, will overflow its coffers, that the President mil join with the Republicans in helping to pass such a measure? We, Mr. President, have our ideas of the present situation; it is becaiise the revenues are not sufficient under the present laws to run the Government, and the Senator has stated that plainly. We also have our ideas — and they are a part of the Republican policy of protection — how money enough can be raised, and when the full power is given us we expect to furnish that money. Now, I ask again if the Senator is authorized to state from the President that if the Republicans have the power in the next Con- gress and shall frame a bill upon Republican lines so that ample revenue will be afforded, the President will aid us in making it a law? Mr. GORMAN. The Senator from Maine simply did not catch the point of my remarks. I stated to him and to the Senate and to the country frankly that here is a condition which confronts the American people more appalling than any which has occurred in our history. I have been generous enough with you to say that the acts of the Republican party when they were in the majority were not alone responsible for the condition, because I believe that to be the truth. I believe the condition which confronts us now we inherited in part from you, but the great, the underlying cause is beyond party, and now is the time for patriotic action. I appeal to you now to do your duty as patriots, not as Repub- licans. I have told you frankly that when you come into power in both branches of Congress, if you will in the same spirit sink mere partisanship and treat the question as one of national honor and national interest, then I will stand with you. Whilst I have no right to speak for any executive officer, I think I can say, with- out the slightest hesitation, that there is not a man in the Govern- ment, from the President down, who vrill not help you in any such patriotic effort, and not in a purely partisan one, which I am sure the Senator does not intend to make. Mr. ALDRICH. Will the Senator permit me a moment? Mr. GORMAN. Certainly. Mr. ALDRICH. So far in his speech the Senator has only called attention to the fact that we have a deficient revenue, and he asks us to help him in this emergency. I hope he will state before he gets through with his speech what remedy he proposes to secure a sufficient revenue. Mr. GORMAN. The first thing to do, Mr. President, is to pass the pending appropriation bill, which makes provision for the en- forcement of a law which will bring from fifteen to thirty mil- lion dollars per annum into the Treasury. I prefer to deal with one thing at a time in applying remedies, and that can be the only question in the consideration of this bill. But now let us go back and see what the people will say, who will now begin to have time to inquire why this condition of af- 1758 2 18 fairs exists and who is responsible for it. They will ask what is the condition of the Treasury now, and what was it when the other side had control of every branch of the Government? The answer must be this — and it is a fearful answer: That in 1891, 1892, 1893, and for the fiscal year 1894, with two years of abso- lute control by the other side and one year and six months under a Democratic Administration, the revenues of the Gover:iment under the McKinley law amounted to how much in those four years? One billion seven hundred and eighteen million nine hun- dred and thirty-one thousand five hundred and fifty -three dollars and forty-eight cents; the expenditures, including the postal serv- ice and the sinking fund, amounted to $1,838,150,767.20, showing an excess of expenditures from 1891 to 1894 over receipts amount- ing to $119,219,213.72. Mr. President, that is not all. When we came into power the appropriations which had been made, and of course not met — be- cause it was impossible to meet them on account of a deficient revenue — the appropriations in 1891, 1892, and 1893, when the Re- publican party had the entire control of the Government, exceeded your whole revenue by $362,000,000. What is the condition to-day? The appropriations we made from 1891 until the 1st of Julv last exceeded the entire revenues of the Government $296,868,547.41. Fiscal year ending June 30— Revenues, in- cluding postal. Expenditures, including postal and sinking fund. Appropriations, including postal and siuking fund. 1891 $458,544,233.03 425,868,ai0.23 4fil,nt),.5(31.94 372,802,498.29 $475,711,802.44 453,527,986.54 442,827,34«.07 $463,398,510.79 1892 .... 525, 018, 672. .55 1893 507, 878, 5.58. Si 1894 . .. 519,504,359.21 Total for four years. 1,718,931,553.48 1,838,150,767.20 2,015,800,100.89 Excess of expenditures over revenue for four years - $119,219,213.72 Appropriations in excess of revenue for four years 29<), 868, .547. 41 Is it the fault alone of Congress that these appropriations are made? No. The power to economize is in the executive depart- ment to as great, if not greater, an extent than it is in Congress. What have they said to Congress? "We want more money than you have given us." The Senator from Maine [Mr. Hale] , the Senator from Iowa [Mr. Allison] , the Senator from Missouri [Mr. Cockrell] , and others of us have stood here for years combating the Departments, and not making the appropriations they have demanded. We on this side of the Chamber aided you to restrain your own party when you were in power, and you have aided us to restrain ours. Here are the estimates of the appropriations for 1892, 1893, 1894, and 1895. I shall not tire the Senate to read the whole of the table. In 1892 the estimates were $532,032,169.40, and the appro- priations were $525,018,672.55— $7,013,496.85 less than the Depart- ments wanted. That was during Mr. Harrison's Administration. In 1893 the estimates were $509,449,257.26, and the appropriations $507,600,188.71, the estimates exceeding the appropriations by $1,849,068.55. There was no estimate for rivers and harbors, for 1758 19 which $21,154,218 was appropriated. In 1894, under our Admin- istration, the estimates were $538,611,3o5.33, and the appropria- tions $519,504,359.21, the appropriations being $19,106,976.12 less than the estimates . For 1 895 — that is , the current year —$520 , 662 , - 840.71 was estimated for. Mr. COCKRELL. Estimates to that amount are already here. Mr. GrORMAN. Yes; the appropriations alreadymade or about to be made aggregate $492,230,685.03, being $28,432,155.68 less than the estimate. There the figures stand. What is to be done? This Govern- ment can not repudiate. It has the ability to pay, and it wiU pay. It has assumed obligations in the payment of which there is not a citizen in the land who would have a moment's default. It lias agreed to complete great public works embraced in the $298,000,- 000 not yet expended, but which must be expended. It is con- structing yet a Navy for which it must pay. It has contracted to pay the pensions, and no man would stay it. It has agreed, and 1 am not going into the question of the propriety of the act in the past, to maintain its currency on a gold basis. It intends to keep that currency as sound as any in the world, and for one, no mat- ter what it may cost, so long as that obligation rests as it is upon the Secretary of the Treasury, I say he and the President of the United States were right in their acts and declarations that they would continue to issue bonds and, keep the credit of the Govern- ment intact; and they have continued to do it. Now, whether the policy inaugurated by the law is right is a question into which I shall not at this time enter, but there is one fact that stares us squarely in the face. It is a consideration upon which I acted when I supported amendments to the revenue bill to increase the revenue — that you could not reduce taxes as was proposed and meet the expenditures of the Government without issuing bonds. I wished to avoid the issuance of bonds, as I do now. But $100,000,000 of bonds have been issued, for which the Treasury has received about $116,000,000. It is true that these bonds were sold, as is stated by the Secre- tary, to replenish his gold reserve. They were sold for gold; but within a short time after the sale of the bonds the holders of Treas- ury notes and United States notes presented them to the extent of over one hundred millions and demanded gold, as they had a right to do under the law; and these United States notes and Treasury notes have, in turn, been used for the purpose of paying the cur- rent expenses of the Government. So that in fact the greater part of the proceeds from the sale of bonds has been applied to pay the current expenses of the Government. Mr. President, i am not unmindful of the fact that when we considered the revenue bill in this body, myself and many other Senators, who insisted upon increasing the levy to be made, were misunderstood and grossly misrepresented by a portion of the press of the country. Even brother Senators did not hesitate to declare that there was no necessity for the increase which I advocated. It is no wonder, then, that our position was misunderstood by the peo- ple and that many of them believed that we were advocating simply increased taxation when there was no Treasury necessity for the increase. I for one knew that the time would come — hardly so speedily, however — when the people of the country, 1758 20 the great mass of intelligent men who love justice and want fair play, would do full justice to us when they realized the fact that the course we advocated was a justifiable one, and made neces- sary by the condition of the Treasirry, The people want economy in expenditures; but they are content to have sufficient taxes im- posed to pay the current expenses. They will not tolerate a policy which will bring the Government in debt and which can only be met by the issuance of bonds for the ordinary expenses. The distinguished Senator from Indiana [Mr. Voorhees] , chair- man of the Counnittee on Finance, and his colleagues on that committee are entitled to great credit for standing as they did and as was their duty, and insisting that the bill as it came from the House should be amended so as to make it a revenue measxu'e, which would meet the wants of the Treasury. I do not refer to the little details of the bill; I care nothing about them. Nor do I care for the miserable attempts to dwarf the importance of that great measure, or for the attempts to fix upon certain individuals the responsibility for any or all the minor defects in the act. The country will give the great statesmen on the Committee on Finance, who in the midst of excitement and abiise insisted upon a measure to create revenue and not to provide a deficiency, credit for their action. For one, I willingly take my share of the re- sponsibility for whatever minor mistakes may have been made. For the vast improvement made in the bill after it reached the Senate the members of the Committee on Finance are entitled to the credit. That the measure has not and will not in the next year produce enotigh revenue is, as I have shown, no fault of theirs, but comes from causes not foreseen and impossible to be measured at the time of the passage of the act in August last. It is another pointed reminder that in legislative matters we are not infallible. The Senator from Rhode Island [Mr. Aldrich] asks me what remedy I i)ropose. We can not do anything, Mr. President, in this body at this time, except to pass this deficiency bill giving the Secretary of the Treasury a sufficient amount of money to enforce the provisions of the revenue act and bring into the Treasury all the money that that act will produce. Mr. ALDRICH. Why not pass a simple measure to increase the revenue? Mr. GORMAN. I was about to say that we in this body have no power to increase the revenue. Mr. ALDRICH. But we have lying on the table several biUs coming from the House of Representatives which can be amended. Mr. GORMAN. Oh, they are bills to reduce the revenue. Mr. ALDRICH. As the bills stand now they are to reduce the revenue, but the Senate can change the nature of them, I take it, so as to increase the revenue. Mr. GRAY and Mr. VEST. Will the Senator from Rhode Is- land help lis to take up those bills? Mr. ALDRICH. I certainly will if the Senator and those on the other side will agree as to some method of increasing revenue. Mr. VEST. If we will agree to do that which will kill the biUs the Senator will help us to take them up. Mr. GORMAN. Mr. President, I answer the Senator frankly and tell him that a measui-e to increase taxation can not and 1758 21 ought not to originate here, and the Senator knows as well as I do that to pass any measure to give relief to the Treasury in the expiring hours of this Congress could only be such a measure as would not reopen the whole tariff discussion. I do not misstate the attitude of the party, of which the Senator is so distftiguished a member, when I say that it has declared against reopening and agitating the whole tax question. The business people of the country want rest and an opportunity to build up their affairs, and therefore nothing can be done by the Senate at this time. We must wait and see if such a simple proposition will come to lis as will relieve the emergency without reopening the whole tariff discussion. Mr. President, can we do anything to relieve the condition? There is an impression widespread, extending beyond this Hall, throughout the country, that the modification of or radical change in our currency laws would give great relief and would do much to start the wheels of industry, to give the railroads increased trade and bring increased prosperity to every avocation, and that some morning after such an act should be passed, with or without reason, as it always occurs, you would find upon the faces of the in- dustrial masses a bright smile, and that we would at once move on to better conditions. Mr. President, I am ready to aid in the passage of any act which will give such relief, but no human being, so far as I know, has yet devised such a measure as will meet the approval of both Houses of Congress. Mr. President, we all understand how difficult it is to frame a wise measure affecting the currency; such a measure as would give the proper elasticity and yet secure a sound currency in such form that the notes issued shall be acceptable in every part of the country without question, as is the case now, and at the same time relieve the Treasury of the onerous duty of furnishing the coin for the redemption of the notes. With the wide, with the radical dif- ferences of opinion between our friends from the Western, South- ern, and Eastern sections of the country upon such measures, it is impossible, sir, in my judgment, that such an act can be passed either in this Congress or in the next, unless it has support from both parties. The Democratic party is not responsible for the cur- rency laws as they now stand. As I have said, they will probably not be modified; they ought not to be modified in a crisis like tliis solely by party action. It is a time when those of us on both sides should arise above party and give our best thought and patriotic action to the country. Mr. President, I do not know whether between now and the 4th day of March any well-devised plan which would have a beneficial effect will be formulated. I hope there may be. I trust that, if it can be done, when the measure comes it will have the earnest support of the distinguished Senators on the other side of the Chamber. It would be good politics for you, coming as you do with this overwhelming majority in another place and a safe ma- jority here, to unite with us who now have the responsibility, biit have not the power of the votes on this side, and eliminate that question so far as you can from the politics of the country. [Senator Hill, of New York, having at this point taken the fioor in reply. Senator Gorman resumed the floor and spoke as follows:] Mr. G-ORMAN. Mr. President, it is far from my intention or 1758 22 desire to get into a controversy with the Senator from New York, or any other Senator who claims to be a Democrat. What I had to say to-day I think was legitimate, in view of the utterances of the distinguished Senator from New York and others in their at- titude ui)on the item of the appropriation bill under consideration. The Senator from New York seems to understand that my ob- ject was personal vindication. Mr. President, I have never thought for a single moment in my public life that any act of mine re- quired vindication. I have had but one rule, which is, when after patient and careful investigation I had determined in my own mind whether a proposition was right, to support that proposi- tion no matter how great the storm, and let vindication come when truth should permeate the minds of my fellow-citizens. Disagreeable as slander is when incurred and insinuated by those with whom you cooperate, I have uttered no word of complaint and never thought a word of explanation was necessary. There is another rule that I have followed, to which there has been no exception. When I have met with my party fellows in council, recognizing their better judgment after discussing ques- tions of public interest, I have subordinated my own individual views to that of the majority of ray fellows, unless a principle is involved. Hence it is, that I stood by every provision in the tai'iff bill, many of which were as distasteful to me as they could have been to the Senator from New York. The Senator says I make a piteous appeal to those upon the other side of the Chamber. I have never made a piteous appeal to any living man. I have never made a piteous appeal to my party fel- lows here or elsewhere, and I think I have too much manhood and courage to do it. I have declared in the face of political power, great as it is, that I would leave public life before being swayed by power. But in matters of public concern, I have said when I was in the minority, as I say now when we have a doubtful majority, that a sound currency bill, as I imderstand it (as the people in the part of the country from which I come understand the meaning of the word " sound"), can not be passed in this body by the votes alone of the other side of the Chamber or by the votes alone of this side of the Chamber. I recognize another thing. When the distinguished Senator from New York, for whom I have a high personal regard, set up the standard that unless he could have absolutely his own judg- ment followed upon the income-tax feature of a great tariff bill containing thousands of items, he. the man who had been looked to as the foremost Democratic organizer m this country, would leave his party upon that question and join the other side and keep the McKinley Act in force, I submit, Mr. President, on a matter where party is not at stake, where the credit and honor of the country are at stake, where the question of sound money, which means prosperity to every industry in the land is at stake, I have a right to say to our friends on the other side of the Chamber, " You are hesitating too much; you ought not to wait to be asked to help us in this emergency; you ought to volunteer your best judgments and your votes in the interest of a distressed people." That I did, and I coupled it with the further statement I have made when I have been in the minority (and there is not a Senator 1758 23 on tne other side of the Chamber who has served with me who does not know it to be a fact) that when you come in, if there is further legislation to be had, I will do all that I suggest you shall do now. I will not hesitate, but I will wait on you and tender you my services. Yet that is called a "piteous appeal.'" Mr. President, I shall not follow the Senator from New York in all his criticism about the little details of the tariff act. I pass that over. It has gone. I respect the judgment of every Senator about the details of a tariff act. I have no quarrel with any Dem- ocrat in the United States because he advocates this or that rate of duty upon chemicals, or iron ore, or sugar, or any other partic- ular item of the tariff. As long as the country stands and we have free government, so long will there be as many divisions of opinion upon the various items as there are States, localities, and interests. Mr. President, the Senator reminds me that on the 23d day of May last in what I had to say upon the tariff biU, I predicted a bright future for the Democratic party. I did, sir. I com- mended that bill. I spoke from this place with the firm convic- tion that every Democrat in this body and all who had been con- sulted about the measure had agreed that in the interest of the country, for the purpose of producing a revenue to support the Grovemment, we had come together as one man to the support of that bill. That was my belief; and if it had turned out, as unfor- tunately it did not, that the individual membership of oiir party, from its head to the man in the lowest rank on the Pacific, could have stood conscientiously in the Democratic party and indorsed that measure we would have had greater success. But, Mr. President, the unforeseen always happens. I did not know then that we were to have this unfortunate division. I had no idea then that the Senator from New York intended tt> leave us and vote with the gentlemen on the other side for the defeat of the bill. I knew he was opposed to the income tax, but I did not know then that he would go to the extent of voting against the bill. Mr. President, no man could have foreseen the diflSculties which were encountered by us. Resolutions, says the Senator, were passed in Maryland and other States which did not indorse the bill. In every State of the Union resolutions were passed con- demning the Senate bill, condemning the final action of our party, everyone complaining that we had not gone far enough in the re- duction. That was the issue. And with it there was this terrible depression that kept coming on and on and on, until there was paralysis in every industry. One-third of all the rolling stock of the railroads of the United States was on the side tracks and com- merce was paralyzed. Industries were going out of business and laboring men were without work. I repeat, sir, under such conditions that came after the 23d day of May no party could have succeeded. But that the party will come back into power, that it will reassert itself, that it will get together, that it will come back to the proposition of providing enough revenue to support the Government without issuing bonds, I have no doubt. That it will be for low taxes there can be no ques- tion. That it will preserve and protect and keep intact American industries is the history of the Democratic party, and on that plat- form it will come back into power. 1758 24 Mr. President, I do not want to bo disai^-eeable to the Senator from New York. I have no quarrel with him. I did not, as I think, comment upon liis course ^\^th a view of putting him in a false position. I would not knowingly do that with any Senator in this body. But I have a right to state that if the Senator were to carry his present proposition the effect would be to still further embarrass the Treasury. Mr. HILL. Does the Senator from Maryland want the income tax collected if it is unconstitutional? To determine that question is all I have suggested. Mr. GORMAN. I want the same rule applied to the man who has an income of over $4,000 a year, and who is a reasonably well- off man, that you apply to the poorest merchant in the cities of New York and Baltimore. When the merchant pays either the customs or interaal-revenue tax he can not embarrass the G-overn- ment by an injunction, but after he has paid the tax he can test its constitutionality in the courts. I would not permit, as the Senator from New York would do, the richer man, the man more able, to have a different remedy from that which we have always given to the poorer man. Mr. HILL. Will the Senator from Maryland aUow me? Mr. GORMAN. Certainly. Mr. HILL. Neither would I. I was not aware that there was any other provision of the law that anybody was claiming to be unconstitutional. If there is, let him point it out, and if we can facilitate the disposition of that question it strikes me it would be the proper thing to do. I did not suppose that there was any question about any other provision of the law. Mr. GORMAN. Mr. President, I shall not detain the Senate by reading the law. The Senator from Ohio [Mr. Sherman] made this case so plain on Friday that there can not be any question about it. The Senator from New York is seeking to change the law, to make a special provision in this case. It was perfectly legitimate in the argument to say to that Senator, and try to demon- strate it, that his proposition was unfair upon its face and would be disastrous to the Treasurj-; and that is all I say about that matter. But, Mr. President, the Senator from New York wants to know why I do not bring in some proposition to remedy other defects in the law. It is not a part of my special duty, sir. I am not a member of the Finance Committee', l)ut I am ready to aid in any sound measure in that direction, as I have stated. Those who are charged with the resjjonsibility will, I have no doubt, bring it for- ward, and for the benefit of the Senator from New York. Every Democrat here knows that from the beginning of this session I joined with every Senator on this side in saying we ought to do it. We are doing it, or trying to do it, for I have frankly stated that the problem is so great that up to this time I have not found a dozen Senators on either side of the Chamber who can agree on t he proper remedy. The Senator from New York, like myself, has not formulated such a measure. He probably would siiggest a remedy, he says, but there is no use to do it in this body until we change the rules; that it is not possible to do anything here. He, vnth all his experience as the great governor of the greatest State in the Union, the great finan- 1758 25 cial center of this continent, one supposed to be in direct contact with all the best financial minds, representing at least a commu- nity that claim they have the greater portion of the ability to de- vise a plan, hesitates, refuses to enlighten the country and the Senate with a proposition that wonld help to solve this problem, because, as he says, the rules of the Senate have not been changed. He will not do it until that is done, and he seeks to hold me re- sponsible for a failure to change the rules. Mr. President, I have been a member of this body for over twelve years. I have been connected with it from the time I was the size of that boy who sits upon the step of the rostrum. I have seen since 1852 all the great measures that have been considered, not only for the ordinary conduct of the Q-overnment, but all the great measures that were necessary to carry throitgh the most enormous war that has ever been known within our time. There never has been a measure yet that looked to ameliorating the con- dition of the people, to advancing their interests at home, to adding to the honor of the people of the country and its credit abroad, that the Senate has not passed on with these identical rules; no Senator with the ability of the Senator from New York has ever in the history of this body failed to get a measure through it when the measure met with the approval of the majority. Mr. President, with your rules as they are, with perfect freedom of debate, we have passed the McKinley bill, the most extraordinary tariff bill, as we Democrats thihk, ever placed upon the statute book. Yet when the time came to vote, when you on the other side of the Chamber had the majority, you passed j-our bill. There are not manj^ measures of importance now upon the statute book that have not been conceived, framed, and passed in this body. There is not a single case where if the majority of the body was in favor of a measure it was ever defeated. There has been but once in the history of the body an appropriation bill defeated, and that was in 1852, when a distinguished Senator from Georgia, Mr. Robert Toombs, taking advantage of the last two hours of the session, spoke the time out and compelled an extra session of Congress; and the very fact that he did it injured the Democratic party, becaiise they violated the traditions and the rules of the Senate — the un- written rule, which is more binding than any written rule. Mr. President, the Senate of the United States has passed more measures than the House of Representatives in every Congress for the last ten years, with rules in that body which absolutely stifle debate, which prevent the utterance of the Representatives of freemen — a body which passed the tariff bill in 1890 without read- ing more than 15 pages of the 150 pages of the bill. It passed measure after measure during the last Congress that was scarcely read and never fully debated. That has been the case since the drastic rules have prevailed in the other House. No full debate, no opportunity to present public questions and let the people understand them, has been in existence except on this floor. The liberty of debate, the right of the people to know what their ptib- lic servants are doing, is left alone to this body. Nowhere else does it exist. And yet the Senator from New York says we can not pass bills here. What is the test, Mr. President? It is the action of the Senate. It is its history in the past. The body has grown, says the Sena- 1758 26 tor from New York. Yes, we have 88 members when full, in this body, and will soon have a hundred. But does the Senator know the fact that since the membership of the Senate has increased to 88 members it has transacted more business, passed more bills than it did when it had 44 members? Does the Senator know how many- bills have been passed by the Senate without rules, as he terms it? I will give the figures. In the Forty-ninth Congress the House passed 1,820 bUls, the Senate passed 1,997 bills. In the Fiftieth Congress the House passed 2,284 bills and the Senate passed 2,818 bills. In the Fifty- second Congress the House passed 882 bills and we passed in the Senate 1,242 bills. In the Fifty-third Congress, up to December last, the House, where they can apply the rule and close debate in an hour, passed 624 bills and we passed 724^a hundred more; and there was not a single bill of importance left on the files of the Senate that ought to have passed. Now, during these two Congresses where the question was of a political nature, where the McKinley bill came over, as I said, without having been read in another place halfway through, what did the Senate do? The Senate disctissed it and dissected it, put 600 amendments upon it, and made in fact a new tariff bill. If we had passed that bill as it came from the other House, we should have had a deficiency of $100,000,000 in revenue. This body under its rules had the opportunity to discuss the measure. My friend from Missouri on my right [Mr. Vest] , entered largely into that debate, as did other Senators on the Finance Committee. I do not know that the Senator from Missouri was on the Finance Committee at that time, but he took the role on account of the ab- sence of some Senator who was a member of that committee. We worked day and night and kept you here, we dissected your bill, pointed out its shortcomings, showed you where it would operate badly, and forced you by that debate to amend it. Infamous as we Democrats thought that bill was as you passed it, it would have been much more so if you had had a gag law here and forced us to a vote without being able to expose its shortcomings. Measured by the only proper standard by which you can gauge the action of the Senate, I submit that all this talk of the Sena- tor from New York and others who think with him that an amendment of the rules of the Senate is necessary to legislation is idle vaporing. It is not true, sir. There never was a period in my time where, if you had a clear majority, you could not come to a vote, not always in a day, not always in a week, but it would be reached in proper time. It was the intention of the framers of the Constitution that here all the States should be equal, that Delaware and New York should have the same voice here, that a State containing a population of 130,000 should have the same power as one containing 3,000,000. This is a body composed of different political parties, but it is a body of patriotic Americans, who will, when the proper time comes, always vote upon a meas- ure. Now, I say, let the Senator from New York bring forth his measure to remedy the defects in the currency laws, and the Senate will be ready to adopt them if they are wise meastires, and if there be a majority in their favor they will be passed. 1758 27 Mr. President, not only has this body exceeded the other House in the number of bills which has been passed and in the character of legislation, but I will venture the assertion — and later on I in- tend to furnish a list of the great measures which have originated in this body — that there is scarcely a statute upon the books since 1850 which is far-reaching, which |is broad, which has been per- manent, which is necessary for the promotion of the welfare of the country, which has not originated in this body. There is not a single one which has come from the other House which has not been amended or remodeled before being finally accepted. This applies to every tariff, to every currency bill, and every bUl of any importance which is now upon the statute books. In addition to that, Mr. President, without rules, as the Senator would say, what else has this body done? Exercising the power delegated to it by the Constitution, the Senate has conferred and acted with the President of the United States in the hundreds of thousands of those appointments which have been made since this body was created. There is not a relation we have with any for- eign Grovemment on the face of the earth but has been made by treaty, and the treaties embrace every subject from trade to the acquisition of territory. In the transaction of this business, in addition to the legislation which we have passed in the ordinary way, weeks and months of the time of the Senate has been con- sumed, and it must be remembered that the other branch of Con- gress does not deal with the great questions of treaties and with other executive matters. This body has instructed Presidents and Secretaries of State; it has approved of their acts or condemned their acts, or suggested amendments to treaties, and I venture to say that from the history of what has been done in executive session, exposed as it has been up to a recent period, it will be shown, notwithstanding our great success in the passage of these bills, that the impress of the Senate is upon many of the important treaties which have been made. Mr. President, I only desire to say in conclusion that I have no quarrel with the Senator from New York. I respect his views; I accord to him the same right which I have myself to discuss all measures and to oppose them if he sees proper; but, sir, when it comes to a question such as that which is now pending, I did have a right, as a member of the Democratic party, as a member of the Committee on Appropriations (which is charged with the duty of formulating the appropriation bills, of defending them, of seeing that the provisions of law are carried out) to criticise him as freely as I do the Senator from Pennsylvania. I have no desire, however — I think I am above that— to associate the Sena- tor from New York with any Senator on the other side for the purpose of being disagreeable to him. That is not in my mind. The Senator from New York claims to be and was elected here as a Democrat, and is a Democrat, but it so happens that the two propositions coming from those two Senators on different sides of the aisle are identical — not by combination — but the effect of the action of both Senators is, in my judgment, to deplete the Treas- ury. I have said so in my remarks during the early part of the day, and I repeat it. I say that the Senator from New York is making his fight at the wrong time. I say that if the Senator from New York were to succeed in his effort it would still f m-ther 1758 28 embarrass the Treasury. Bflieving that. sir. I protest against his action, and I appeal to every Senator on this .side of the Clianiber, and I appeal to Senators on the other side of tlie Chamber, not be- cause we want any favors from you, but as American Senators, to stand by this proposition, wliich yoii know to be right. 1758 ISSUE OF SHORT-TERM CERTIFICATES. SPEECH HON. ARTHUR P. GORMAN, OF MARYLAND, IN THE SENATE OF THE UNITED STATES, WEDNESDAY, FEBRUARY 27, 1895. "WA.SHINGTOIfl'. 1895. SPEECH OF HO^. ARTHUR P. GORMAN. The Senate having under consideration the bill (H. R. 8518) making appro- priations for sundry civil expenses of the Government for the fiscal year ending June 30, 1896, and for other purposes, the question being upon the following amendment reported from the Committee on Appropriations: Sec. 2. That in order to provide the moneys not supplied from current reve- nues and miscellaneous receipts, and necessary for the execution of this act and necessary for the execution of any act, or all the other acts passed or to be passed during the present session of Congress appropriating money to be paid out of the Treasury for the fiscal year ending June 30, 1896, and also in order to provide the moneys necessary to be paid out of the Treasury on ac- count of appropriations heretofore made for the fiscal years ending Jime 30, 1893, June 30, 1894, and June 30, 1895, and not covered into the Treasury, the Secretary of the Treasury, with the approval of the President, be, and is hereby, authorized to, from time to time, borrow on the credit of the United States such sums of money as may be necessary to meet said expenditures, and to issue, sell, and dispose of, at not less than par, for lawful money of the United States, such an amount of certificates of indebtedness, payable to the bearer, of the denominations of twenty, fifty, and one hundred dollars, or any multiple of $100 not exceeding $1,000. as may be needed for said purposes, bearing at the rate of not exceeding 3 per cent per annum, payable semian- nually, and redeemable at the pleasure of the United States after two years frora'their date; and the Secretary of the Treasury is hereby authorized, with the approbation of the President, to cause such portion of said certifi- cates as may be deemed expedient to be issued by the Treasurer in payment of warrants in favor of public creditors, or other persons lawfully entitled to payment, who may choose to receive such certificates in payment at par. And the Secretary of the Treasury may, in his discretion, under rules and regulations to be prescribed by him, sell and dispose of the certificates herein authorized at designated depositories of the United States, and at such post-offices as he may select; and the Secretary shall use the moneys received for such certificates for the purposes herein prescribed, and for none other: Provided, That the total amount of such certificates shall not exceed $100,000,- 000: And provided further, Thac'the power to issue such certificates shall determine on the 1st day of July, 1896. And hereafter any United States bonds sold or disposed of shall first be ofl'ered to the public for a period of not less than twenty days, under rules and regulations to be prescribed by the Secretary of the Treasury, and shall be sold to the highest bidder, in case such bids or any of them are satisfactory. Mr. GORMAN said: Mr. President: The point of order having been submitted to the Senate, naturally the main question comes upon the first vote, whether this proposition shall be considered, whether it is in order, whether it is proper, for this provision to be inserted upon an appropriation bill, and necessarily the merits of the qtiestion involved must be touched upon in the disctission. I hope to be verj^ brief and simply to state the facts as the Committee on Ap- propriations understood them, which made it, in our judgment, necessary that such a provision should be inserted in an appro- priation bill. It is well known that at this hour in the session, if relief is to be given to the Treasury, if additional authority to is- sue certificates of indebtedness is necessary to maintain the credit of the Government, the only possible way in which it can be done is on an appropriation bill. 1904 8 I regret exceedingly, Mr. President, that it has become the duty of any of us to inaugurate and to suggest here any proposition of this kind. I regret exceedingly that such a proposition did not reach us from a coordinate branch on a separate measure early in the session, when it could have been deliberated upon and fully discussed. As intimated by the Senator from Rhode Island [Mr. Aldrich] and by the Chair, two years ago this identical qxiestion was be- fore the Senate, as to whether it was proper to authorize the issu- ing of bonds for the purprse of supplying deficiencies in the Treasury. It was held in that case, as wUl be seen by reference to the Journal of the Senate, that the Senate by a vote of 28 to 18 determined, as they had previously in years gone by, that it was perfectly legitimate, perfectly proper, to put such a provision ui)on an appropriation bill it the requirements of the Treasury demanded it. So much for that. Mr. President, I trust that in the discussion of a question so simple as this we may be able to confine ourselves to the one ques- tion, the needs of the Treasury Department, whether it is abso- lutely necessary for the proper conduct of that Department to have the provision of law contained in this amendment. I know how difficult it will be to keep out of the discussion all of the questions which are involved in our financial policy, which have been sug- gested and discussed in both Houses. Here, where debate is un- limited, I know it is going very far to make such an appeal, and yet I must appeal to the Senate to determine this question upon the one proposition. Mr. WOLCOTT. Will the Senator permit me to ask him a question, which I do solely for information, he being a member of the Committee on Appropriations? Has not the Secretary of the Treasury advised the Senate that he does not need more money at this time? Mr. GORMAN. If the Senator will only permit me in my crude way to go along and make my statement, I shall be indebted to him. Mr. WOLCOTT. I shall do so with pleasure, but I hope before the Senator sits doAvn he will answer my question. Mr. GORIVIAN. I shall be very glad to do so, and that is the whole qiTestion involved. Mr. WOLCOTT. Oh! I did not know that. Mr. GORMAN. If we could by common consent take up in these closing hours of the session, in that spirit alone, the question as to whether it is necessary for the honor of the Government to maintain its credit and enable the Secretary of the Treasury to discharge his duty in such a way as not to trench upon the rights of anybody, I trust we may do it, and eliminate all question as to the kinds of currency we are to have. If that can not be done, as a matter of course the Senator from Colorado and other Senators who, after the facts are presented, do not believe that such a pro- vision is necessary for the Treasury, will vote against the propo- sition. If there is a determination on the part of any number of Senators to take advantage of this opportunity to go into all the questions which are involved in our financial structure in the closing hours of the session, as a matter of course they must take that responsibility, which would prevent action and leave the Treasury embarrassed, if it would be embarrassed, vnthout this provision. 1904 Mr. President, as to the necessities of the Government Mr. VILAS. I wish to make a parliamentary inquiry. The VICE-PRESIDENT. The Senator will state his parlia- mentary inquiry. Mr. VILAS. I wish to ask whether when the question of order is submitted to the Senate it opens for discussion the whole sub- ject, which is only to be discussed if in order? The VICE-PRESIDENT. It opens for discussion the question as to whether the point of order shall be sustained or overruled. That is the question now before the Senate. The Chair can not, however, limit Senators or indicate to them the line of argument thej^ shall pursue. Mr. TELLER. Mr. President, I should like to suggest to the Senator from Wisconsin [Mr. Vilas] that the Senator from Mary- land [Mr. Gorman] or any other Senator is at liberty to discuss any question he sees fit, there being no rule which will prevent the discussion of this or any other question when a Senator has the floor. Mr. GRAY. Except the general parliamentary rule. Mr. TELLER. There is no parliamentary rule which has been applied in this Chamber which requires a Senator's speech to be germane to the subject pending before the body. Mr. GRAY. The pai'liamentary law is stated in Jefferson's Manual. The VICE-PRESIDENT. The Chair has stated, in reply to the parliamentary inquiry of the Senator ftom Wisconsin, that the pending question, being the question of order, has been submitted to the Senate, but it is not for the Chair to indicate to Senators the line of argument they shall pursue in discussing the question. The Senator from Maryland [Mr. Gormajst] is entitled to the floor. Mr. GORMAN. Mr. President, I have no desire to detain the Senate. If we could come to a vote on this question without dis- cussion I would be content. That, however, can not be. There- fore, as a member of the Committee on Appropriations, which reported this proposition, I will briefly and frankly state, without reflecting iTj^on anybody, what we believed to be the necessities for such a grant. That is the question, as I understand it, to be determined when we vote to consider this proposition. There is, therefore, in my view, Mr. President, but one ques- tion involved in this matter. Is the Treasury in such condition that it can provide for the wants of the Government under the present laws? Are the revenues of the Government up to this hour, brought in by the existing laws, sufficient to meet the ap- propriations made annually by Congress and the permanent appro- priations? Mr. President, if it should appear from the oflficial reports of the Treasury that we have appropriated more money than can be supplied from the revenvies of the Government, if it should ap- pear that our actual expenditures are greater than our receipts, then I submit to the Senate we can not afford to adjourn until provision shall have been made to meet that deficiency, unless the Senate and the House of Representatives desire that bonds of the United States running for tliirty years, at 4 per cent interest, or bonds of the United States running for ten years, and bearing 5 per cent interest, shall be sold to meet the deficiency. I take it for granted that there is not a Senator upon this floor who would 1904 have the Government repTidiate a single obligation and to have a payment which ought to be made by the Government postponed because of the lack of revenue. The Senate has asked the Secretary of the Treasury in various resolutions whether or not the revenues of the Government are equal to the expenditures; whether in fact it is necessary to give him further authoritj' to meet the appropriations made by Con- gress. The Secretary has answered those inquiries. I am bound to say, sir, that the form of the answers that have been made are on their face somewhat misleading, and that those unfamiliar with the condition of affairs in the Treasiiry might draw the con- clusion that there is a sufficient amount already provided to meet the demands on the Treasury. But I will try to give to the Sen- ate the exact condition of the Treasury. The Secretary of the Treasury states that on July 1, 1890, we had in the Treasury from revenue from all sources an actual bal- ance available for the payment of debts of the Government of $89,993,104.20. We began on that date with that amount. Every dollar that has been received into the Treasury, except the postal receipts, from June 30, 1890, to the 31st of December just past, 1894 — that is to say, to the 1st day of January of this year — amounts to $1,590,481,336.90. The expenditures— that is, the payments out of the Treasury during the same period — from June 30, 1890, to December 31. 1894, four years and a half , have been $1,737,390,- 560.93, showing that the expenditures during that whole period have been .$146,809,224.03 more than the Treasury received from all sources. I speak of the actual expenditures and actual pay- ments out of the Treasury. We e.xpeiided — paid out — not only every dollar received from July. 1890. to December 31, 1894, but all of the §89.993,104.20 on hand Jiily 1, 1890, and §56,816,119.83 more, every dollar of which was from the proceeds of the sale of bonds. The statement in detail, which is taken from the books of the Department, is as follows: Cash balance available for current oxpenses of the Govern- ment (exchiding gold reserve), Jiilv 1, l,-!)ii $89,993,104.20 Eeveuues for fiscal year ending .June ;iii, Isdl... S^WS, 6l2, 447. 31 Revenues for fiscal year ending .Tun!':i(i, is;);,'... 3.'j4, 937, 784. 24 Revenues for fiscal year ending .1 unc :>(). is!i:{. . . ;5A5, 819, 628. 78 Revenues for fiscal year ending .June :>0, lMt+. .. 297,723,019.25 Revenues for six months ending December 31, 1894 - - - l.')9,389,457.32 1,. 590, 481. 336. 90 Total available l,l)Sl),474,441.10 Expenditures for fiscal year ending June 3(i, 1891 - 409,780,016.72 Expenditures for fiscal year ending June IW, 1892 - 382, 597, .510. 56 Expenditures for fiscal year ending June 30, 1893 390,186,098.99 Expenditures for fiscal year ending June 30, * 1891 307,746,867.03 Expenditures for six months ending December 31,1894. 186.979, 467. 03 Total expended 1,737,290,560.93 Expenditures in excess of revenues and available cash.. .56,816,119.83 The above statement of expenditures includes amounts paid for deficien- cies in the postal revenues and amounts applied to the sinking fund. The deficiencies in the postal service being thus taken into the account on the 1904 expenditure side, it is unnecessary to add the revenue and expenditure to the totals on either side, as the oalance of the expenditures are paid from the revenues of the Post-Ofhce Department — one offsetting the other — and would not change the final result. Excess of payments over receipts from Juno 30, 1891, to De- cember 81, 189i ( four years and six months) $146, 809, 234. 03 Mr. President, the question arises whether that condition of affairs will continue during the next year. The Secretary of the Treasury in his answer to a resolution of the Senate has said that during the calendar year of 1895 he will have revenue enough to meet the expenses of the Government. That is misleading. The ac- counts are made up from July 1 to June 30. I shall demonstrate, I think, that the Secretary of the Treasury is entirely mistaken in that statement ; that with all the revenues he will get this calen- dar year he will have a deficiency of over $30,000,000 if he pays the debts contracted or appropriations made; and for the fiscal year which ends June next he will have a deficiency of from $40,000,000 to $60,000,000, unless he suspends payments on various accounts to a greater extent than heretofore. It is only by neglecting to audit or by postponing the payments that the deficiency can be kept within the limits I have named, Mr. ALDRICH. Will the Senator from Maryland permit me? I understand him to state, as his opinion, that there will be a defi- ciency of $60,000,000 in the present fiscal year, instead of a sur- plus of $23,000,000, as is estimated by the Secretary of the Treasury. Mr. GORMAN. For the fiscal year. But the Secretary of the Treasury does not estimate a surplus for the fiscal year. He esti- mates a deficiency of twenty-odd million dollars during the fiscal year. Mr. ALDRICH. What is the estimate of the Senator from Maryland for the calendar year? Mr. GORMAN. I say, taking the condition of the appropria- tions as they are to-day and the revenues — of coui'se it is a guess from now until December next, but I will take the average for the past three or four years and the appropriations — that if the appropriations we are now making are met, if the obligations of the Government are discharged, there will be a deficiency of $30,000,000 for the calendar year. But for the fiscal year thei'e can be no question as to the deficiency. The Secretary admits that. But the Secretary of the Treasury, in the report to the Senate, which is dated February 18, says: The available cash balance in the Treasury at the close of biisiness this day (18th of February, 1895), exclusive of gold reserve, is $99,875,284.32. Then says: It is not probable that such deficiencies will occur during the remainder of the current fiscal year as Mall exceed the availaljle balance now on hand, and it is estimated that during the next fiscal year the receipts will exceed the expenditures. It will be noted that this entire balance came directly from the sale of bonds. The Secretary thinks it is sufficient, with current reveniTes, to carry him through to July 1, IHl'."). If youcoimt that balance and want to continue the process of selling b(mds for gold and then permitting the holders of United States and Treas- ury notes to present them and draw the gold out, as the Secre- tary frankly says is done, and then turn the Treasurj" notes into the general accounts to pay the expenses of the Government, then 1904 8 of course there will be no necessity for the provision which we have reported. But I submit that it is not wise for Congress to adjourn without making some other and more advantageous pro- vision, such as that now proposed, when the President of the United States, in his message to us, has frankly stated that if the emergency arises he will continue to sell those bonds. It is too expensive ; it is piling up the public debt in a form that is dis- tasteful to the people of the country. I do not criticise the Presi- dent for his action in the past. I have not one word to say in re- gard to it except what I have said heretofore, that the honor and the credit of the Government must be maintained, and if Congress refuses or fails to provide sufficient money otherwise, and we proceed under the construction of law given by the Department and by the President, which I think is a mistaken one, not war- ranted by the act of 1875, but which is one that has been acted upon and one that the President declares to Congress he will con- tinue to exercise, then the responsibility will be upon us. I wish to change that policy, Mr. President; I wish to make provision in this matter for a certificate of indebtedness, running only for two years, redeemable at the option of the Government, so that there can be no excuse hereafter for the Department to sell bonds run- ning ten or twenty years or thirty years. Mr. PLATT. As the Senator from Maryland is going on, will he at some time state, if he can, the amount of the surplus now in the Treasury, which we all know is the result of borrowing money? But there is some surplus in the Treasury. Mr. AliDRICH. That depends in some degree upon the extent of the reserve fund of course. Mr. GRAY. The Secretary of the Treasury, in his letter of February 18, states the amount up to that date. Mr. DANIEL. Will the Senator from Maryland allow me to ask him a question somewhat in extension of that of the Senator from Connecticut? Mr. GORMAN. Certainly. Mr. DANIEL. How much of the money realized from the sales of bonds has been used for current expenses? Mr. GORMAN. I will answer the Senator from Virginia with great pleasure. In the reply of the Secretary of the Treasury, which I said was so involved that it would take an accountant to understand it, he says what I will read, so that there shall be no mistake about it. On page 4 of the communication, if the Senator will refer to Executive Document No. 73, he will see that the Sec- retary says, in answer to the resolution of int^uiry of the Senate as to the balance of cash in the Treasury on December 31, 1894, that is, last December, the balance of cash in the Treasury on December 31, 1894, available for the current expenses of the Gov- ernment, but not including the gold reserve fund, was $106,375,- 740.55. This is the statement of the Secretary of the Treasury to the Senate of the actual amount of money on hand, which included everything — ordinary receipts and the amount of greenbacks that he had redeemed in gold — placed in that fund. This statement is misleading. It is not true to the extent that against that were thirty-odd million dollars in the shape of checks and drafts which had gone out and were in the hands of paymas- ters and others. So the actual balance which the Secretary had 9 on that day available for all classes of expenditures, as shown in his statement to me later, was $67,093,134.99. On the 1st day of January of this year we had only $67,093,134.99 in the Treasury available Mr. CAREY. Including gold? Mr. GrORMAN. No, sir; exclusive of gold, available for cur- rent exjienses to meet appropriations by Congress, including every- thing he had in the Treasury except the amount of gold that was there to redeem greenbacks. Mr. GRAY. May I ask the Senator from Maryland where he finds the deduction on account of checks in the hands of disburs- ing agents that is to be taken from the balance of $106,375,000, which the Secretary of the Treasury gives as the cash balance on December 31, 1894? Mr. GORMAN. If the Senator from Delaware will send for the statement of the Secretary of the Treasury made on the first day of every month, if he has it not befoi'e him, he will find the exact amount. I will hand the Senator the statement, if he has not one. Mr. GRAY. But how does that qualify the statement made by the Secretary of the Treasury that on December 31, 1894, that was the actual cash balance? Mr. GORMAN. I am trying to explain to the Senator that the statement was made up by some official in the Department, show- ing the exact amount the Treasury had on hand without taking into account the checks and the drafts that had been given and were outstanding. Therefore it is misleading. The statement of the Secretary of the Treasury, which was made on the 1st day of January of this year, j^ves the correct, the exact amount. Mr. GRAY. That is what I want to get. Mr. GORMAN. As soon as I discovered this statement in the report to the Senate I went to the Treasury Department and said, " This statement is misleading; it is not accurate, or else your regular statement made on the Ist day of January is incorrect." "When they went to the books and went over them they said, " Cer- tainly ; the correct bala,nce is $67,093,184.99 and not $106,375,740.55, as reported to the Senate." Mr. GRAY. That is the statement I wish to see. Mr. GORMAN. I will send and get one for the Senator if he desires it. It is the statement of December 31. Mr. STEWART. I should like to call attention to the state- ment of February 18, 1895, wherein the Secretary of the Treasury says he has a cash balance of $99,875,284.32, exclusive of $55,101,- 704.63 of gold reserve. Mr. GORMAN. That is the statement to which I referred a few moments since. Will the Senator permit me to go on with the monthly and yearly statements? I will come later to what he refers to. I will read first the figures, so that the Senator from Delaware can ascertain them for himself. On the first day of each month the Secretary of the Treasury makes an actual statement from the books of the Treasury, and he reported there that the net cash on hand was $67,093,134.99. That is the actual money on hand available for ordinary expenditures. His subordinates — some of the new ones, I do not know who — in answering the reso- lution of the Senate failed to deduct from that the checks that had already been passed away or given out. That was misleading. 1904 10 Tliere is no hesitation on the i^art of the Secretary of the Treas- nry. and no question that instead of its being $106,000,000 it is $07,- OOU.OOO. The Senator can look over the stateiuenis if he desires. There is no question about it. Nobody dovabts it. That is a dif- ference of thirty-odd million dollars, to begin with. But the Secretary of the Treasury estimates that the revenue from now out will be sufficient to meet the ordinary disburse- ments, provided he uses the balance in the Treasuiy that he has received in the shape of greenbacks for which he has paid gold. In that I think he is mistaken. We do not believe that if we per- mit him to use every dollar in the Treasury so received, giving the most liberal estimate for all the possible revenue from now until July, IHOo, he will have enough money to meet the cvirrent expenses of the Government by $00,000,000, taking into account the amount that is diie on account of former appropriations, a part of which must be paid. The Secretary of the Treasury has great power in the way of suspending payment on any account ■which has been appropriated for by Congress. Up to this date the balance unexpended, other than the sinking fund, is about .$103. 44'.). 201. 59 that has been appropriated by Con- gi-ess, and to the sinking fund $1.50,506, 838. 8o, making a total of $255,955,039.94, which is available for expenditure. But. deducting the sinking fund, there is over $100,000,000 owing now for i)ublic buildings, for rivers and harljors, on account of the Navy, and on account of the other appropriations made. As a matter of course if you will suspend payment, refuse to pay your debts, paralyze all these enterprises and works which Con- gress has determined are necessary, there maybe a forced bahmce in the Treasury in 1896. But it will be simjtly by piling up your debt obligations to the extent of sixty or eighty million dollars more. The Secretary of the Treasury has estimated — I Avill give his figures, becaiise I received them from the Department (the Sena- tor from ISIissouri' [I\Ir. Vest] has stated what he understood to be the case, which turned out to be accurate, and the Senator's statement was accurate as to what the Secretary said) — that for this calendar year, with which we are dealing now, he woiald receive in revenues from customs $174,000,000 (I do not give the odd figui-es) , f rom internal revenue $190,000,000, and from miscel- laneous receipts $15,000,000; that his whole receipts during the year would be $380,610,543. That is, from last January to next January. He estimated that his expenditures during the same period would be $358,000,000. That is the full estimate; all they can guess will be received. The question is whether that is a fair estimate of his receipts. If it is, then that item would be correct. The estimate of the Secretary is as follows: Treasury Department, Februar]/ SI, 1895. Sir: In reply to your communication of the 19th instant I have the honor to state that the items of estimated revenue and expenditure during the calendar year beginning January 1, 1895, and ending December 31, 1895, both inclusive, are as follows: Revenue- Customs $174,33.5,670 Internal revenue 190, S-iO, Ji:iO Miscellaneous 15,435,653 Total "380,610,543 1904 11 Expenditiares— Civil and miscellaneous $90,6P7,520 War 53,075,000 Navy 32,930,000 Indians 11,805,000 Pensions 139,540,000 Interest 31,000,000 Total 358,047,520 This is the estimate upon which the Secretary's response to Senate resolu- tion of January 38, 1895, was based. Respectfully, yours, J. G. CARLISLE, Sea-etary. Hon. A. P. Gorman, United States Senate. If any Senator will take up the receipts in the last three years and will average the recei]>ts per month he will find that that es- timate of receipts is $25,000,000 greater for the whole year than it has averaged in the months we have already passed. There is some reason to believe that the revenues will increase, that there will be a very considerable increase after July and until Decem- ber 31. But it is not safe to estimate such a decided increase as the Secretary hopes to have. But take it on the other hand. He says the expenditures will be §358,000,000. Let us see what the expenditures actually are and what is appropriated for. Now, remember that the Secre- tary's estimates for expenditures are only $358,000,000. The ap- propriations for the fiscal year from July, 1891, to July, 1893, were $385,736,308.71 and the permanent appropriations were $121,863,- 880; making thewhole appropriation for that year $507,600,188.71. A part of the permanent appropriation is the sinking fund, which they can ignore, that is about $49,000,000, making the amount to be provided for about $460,000,000. For the fiscal j^ear of 1894 and 1895 the total appropriations were $492,230,685.03. Now I come to this year's appropriations, which we are making now for the fiscal year beginning July. 1895, and ending June 30, 1896. The bills which have passed the other House already amount to $374,170,111.51. Add to this amount the increases we must make and the permanent appropriations, and they will be about $490,000,000. I will insert in this connection a statement of the appropriations for several years past and an estimate as to the appropriations for the approaching fiscal year: Appropriations for the fiscal year ISO 1 and 1S92. Regular approi^riations $385,736,308.71 Permanent appropriations.- 121,803,880.00 Total 507,600,188.71 Appropriations for the fiscal year 1S9U and 1S95. Regular appropriations S'^W, 15ti, 005. 03 Permanent appropriations - - 101,074,080.00 Total -- 492,230,085.03 Appropriations for the fiscal year 1895 and 1S90. The bills that have passed the House of Representatives so far, not including miscellaneous appropriations, but only the reg- ,~n m ular appropriations, amount to - P<4, 1(0, 111.51 It is perfectly safe to say that the additions in the Senate that ^, ^„ _. „ have been and will be made will exceed 30,000,000.00 1904 12 Makins; the total appropriations by the regular appropriation bills at this session about $390,000,000.00 Add the permaiiout appropriations for this fiscal year 113,073,956.00 And the total will be about 5(JO,0()0,000.00 Which includes the sinking fund, of about 49,000,000.00 Deduct the sinking fund and the amount to be provided for is, in round numbers 4")0, 000, 000. 00 As against the Secretary's estimate of 35.8.047,530.00 Or a difference of about 91, 005,0CK),000, but it is not in gold, and therefore does not meet our dithculty. But every dollar of it was a part of the proceeds of the sale of the bonds. The Treasury notes were presented and redeemed in gold, and hLs entire balance was from the sale of bonds. Not in gold. No, Mr. President. The act of 1875 that authorized the issue of these bonds provided for keeping up the gold reserve alone. It was intended for the purpose of keeping up the gold re- serve alone; but it was afterwards construed, and stated by the Secretary frankly, that after he had thus bought his gold and I took my greenbacks tliere and presented them he gave me the gold back for them and then put my greenbacks into his general re- ceipts. That never was in contemplation. Now, I am not criticising the President or the Secretary of the Treasury. On the contrary, I have said over and over again, and I desire "to repeat it, that under the circumstances there was noth- ing else for them to do. The credit of the Government had to be maintained. What I do say is that Congress, in my judgment, would be recreant to the duty they pwe the people of the country if they did not give the President and the Secretary of the Treas- ury power to issue certificates of two years, bearing 8 per cent interest, to let the Secretary of the Treasury meet any emergency of the Treasury Department. We do not direct him to dispose of them. I have that confidence in every President and every Secre- tary which leads me to believe that they would not abuse a trust of this sort and dispose of them if it were not necessary, but we ought to give the power to them. Then, Mr. President, we ought to say to them, and I will, so far as I can, publicly and privately, that " Having given you this power there will be no necessity for you to sell thirty-year bonds here- after, and the people of tlie country will not sustain you if you do it." But if Congress fails to give this power, then, as the President has said to you, he will continue the sale of bonds. Who can com- plain of him hereafter if there is a failure here and now? Sena- tors who are on more intimate terms than I am and may know more of the personal views of the Executive may have some inti- 1904 19 mation that this is distasteful to the Administration. That would not control me, because my view is that I must represent the in- terests of the people of the country as I understand them. I would not desire to force upon a coordinate branch any power that they ■did not want, unless in my judgment it was absolutely necessary to protect the taxpayer. I can not, with my view, permit the session to close without making the effort to give some such power as will save a repetition of the transactions of the past. I refer to to all three sales of long-year bonds. Now, Mr. President Mr. GRAY. Before the Senator leaves the general discussion of the resources of the Treasury and its present condition, which is so interesting to the people of this country, will he explain how it is that January 1, 189.5, the available cash balance was about §67,000.000, after making the deductions which I admit ought to be made, the checks in the hands of disbursing agents, and that February 18, by the statement of the Secretary of the Treasury, there was an available cash balance, exclusive of gold reserve, of ^99,000,000, and there has been about that available cash balance from that day to this? Mr. GORMAN. Yes; I can explain it to the Senator. Mr. GRAY. How can the Senator explain it except by the im- proving condition of the Treasury? Mr. GORMAN. Not at all. I can explain it to the Senator, and when he reads the Record he will find the figures all here from the Treasurer of the United States. There was some small in- •crease in the current revenue, which I say is going on to increase under the present law, but not enough to meet the wants until a year hence in my judgment. But the difference in the cash that he names there is just the precise point I have stated. They came down here and bought 5 per cent bonds and paid gold for them. Then when they were about to induce another sale of bonds they came in with greenbacks and drew the gold out, drawing out $70,000,000 within two or three months. They handed the Secre- tary of the Treasury greenbacks, and he turned it over to the other side of the counter and counted it so much cash in the Treasury. Mr. GRAY. From an analysis of the figures given on the back of the letter of February 18 I do not find those figures sustained. Mr. GORMAN. Let me show the Senator. Mr. GRAY. There is undoubtedly an increase in greenbacks by reason of their having been redeemed in gold and held by the Secretary of the Treasury for current purposes. Mr. GORMAN. For the six months ending June 30, 1894, which covers the period the Senator talks about, $79,000,000 of notes were received for gold. In the six months ending December oO. 1894, the very period the Senator is talking about, they brought in $63,337,100 in greenbacks or Treasury notes and took the gold out of the Treasury; and the Secretary under his rule turned it over into the cash book and said, " I will count this as surplus." That is the whole point in the case. The Treasury has been maintained. It would have represented $117,000,000 more of debt than it has but for that gold transaction. At this point I submit Treasury statements showing the con- dition of the Treasury from July 1, 1884, to January 1, 1895: 1901 20 Condition of the Treasury from July 1, 188k, to January 1, 1895. Cash balance July 1, 1884 $161,390,577.18 Receipts to March 1, 1885 214,732,476.33 $376,129,053.51 Ordinary expenditures, July 1, 1884, to March 1, 1885 173, 39i), 1%. 29 Redemption of debt, July 1, 1884, to Mflrch 1, 1885 44,(581,704.64 218,a80,900.9a Balance March 1,1885.... 158,048.1.52.58 Cash in Treasury as per debt statement 1.59,356,506.41 Cash balance. March 1, 1885 1.59, av.. .506. 41 Receipts to July 1, 1885 Mt, 34(1,743.88 268, 697, 250. 2» Ordinary expenditures, March 1, 1885, to July 1, 18.S5 .--- -- .'... 7,820,746.31 Redemption of debt, March 1, 1885, to July 1, 1885 1,302,780.79 89, 133, 827. 10 Balance July 1, 1885 179,573,723.19 Cash in Treasury as per debt statement 178,602,643.23 Cash balance July 1, 1885 178,602.643.23 Receipts fiscal year 1886 336,439,727.06 515,ai2,370.29 Ordinary expenditures fiscal year 1886 242, 483, i;58. ,50 Redemption of debt fiscal year 1886 44. 54^3, 993. 36 287, 027, 131. 8(> Balance June 30, 1886 228,015,238.43 Cash in Treasury as per debt statement 227.265,253.34 Cash balance July 1.1886 227, 2a5, 253. 34 Receipts fiscal year 1887 371,403,277.66 598,668,531.00 Ordinary expenses fiscal year 1887 267. !i;}2, 179. 97 Redemption of debt fiscal year 1887 127,918,468.15 395,850,648.12 Balance June 30. 1887 202,817,882. Cash in Treasury as per debt statement 206,323,950.21 Cash balance July 1. 1887 206,323,9.50.21 Receipts fiscal year 1888 379.2(36.074.76 — 585,590,024.97 Ordinary expenditures fiscal year 1888 267,924,801.13 Redemption of debt fiscal year 1888 74, 813, 563. 05 342,738,364.18 Balance June 30, 1888 242,851,660.79 Cash in Treasury as per debt statement 243,674,167.85 Cash balance July 1,1888 24.3. 674, 167. a5 Receipts to March 1, 1889 25:5,210,423.38 498,884,591.23 Ordinary expenditures, July 1, 1888, to March 1,1889 222,434,625.25 Redemption of debt, July 1, 1888 to March 1, 1889 92,869,643.85 315,304,269.10 Balance March 1,1889 183, .580, 322. 13 Cash in Treasury as per debt statement 183,827,190.29 1904 21 •Cash balance March 1,1889 $183,827,190.29 Receipts to July 1,1889 139,663,280.40 $313,489,470.69 Ordinary expenditures, March 1, 1889. to July 1,1889 _..: 77,36.5.088.00 Redemption of debt, March 1,1889, to July 1,1889. 38,389,794.50 105,6.54,883.50 Balance July 1,1889 207,834,588.19 Cash in Treasury as per debt statement 309,479,874.01 Cash balance July 1,1889 209,479,874.01 Receipts fiscal year 1890 4U3, OSO, 983. 63 ■ 613,560,856.64 Ordinary expenditures fiscal year 1890 318, 040, 710. 66 Redemption of debt fiscal year 1890 104, 642, 149. 50 423,683,860.16 Balance June 30, 1890 189,877,996.48 Cash in Treasury as per debt statement 189,993,104.30 Cash balance July 1,1890 189,993,104.30 Receipts fiscal year 1891 393.612,447.31 National-bank fund deposited fiscal year 1891 ... 63, 571 , 690. 75 — i 646,177,343.26 Ordinary expenditures fiscal year 1891 365, 773, 905. 35 Redemption of debt fiscal year 1891 100,989,306.37 National-bank notes redeemed fiscal year 1891. . 33, 5-53, 298. 50 490,316,510.33 Balance June 30, 1891 155,860,733.04 Cash in Treasury as per debt statement 153,893,808.83 Cash balance July 1, 1891 1,53,893,808.83 Receipts fiscal year 1893 354,937,784.24 National-bank fund deposited fiscal year 1893. . . 3, 977, 838. 00 511,809,431.07 Ordinary expenditures fiscal year 1893 345,033,330.58 Redemption of d ebt fiscal year, 1S93 34, 1333, 836. 98 National-bank notes redeemed fiscal year 1893. . 16, 233, 731. 00 385,588,888.56 Balance June 30, 1893 126,220,543.51 Cash in Treasviry as per debt statement 126,693,377.03 Cash balance July 1, 1893 126,693,377.03 Receipts fiscal vear 1893 38-5,818,638.78 National-bank fund deposited fiscal year 1893. . . 3, 937, 580. 00 515,448,585.81 ■Ordinary expenditures fiscal year 1893 383,477,954.49 Redemption of debt fiscal year 1893 687, 003. 00 National-bank notes redeemed fiscal year 1893.. 9,037,651.50 393,202,608.99 Balance June 30, 1893 123,245,976.83 Cash in Treasury as per debt statement 122,463,290.38 Cash balance July 1, 1893 123,463,390.38 Receipts fiscal year 1894 397,723,019.35 National-bank fund deposited fiscal year 1894. . . 16, 637, 783. 50 Receipts from sale of 5 per cent bonds 58,633,395.71 495,455,388.84 Ordininary expenditures fiscal year 1894 367,525,279.83 National -bank notes redeemed fiscal year 1894 . . 10, 929, .535. 75 378,454,815.58 Balance June 30, 1894 117,000,573.26 Cash in Treasury as per debt statement 117,584,438.13 1904 22 Cash balance Jwly 1,1894 $117,584,436.13 KccfiiJts to. raimary 1,1895 159. Ss<), 457. 33 Natioual-bank fund deposited to Jaimary 1, 1895. S, 606, 755. 00 Receipts from sale of 5 per cent bonds. 58,538,500.00 Ordinary expenditures to January 1, 1895. 180,953,923.63 National-bank notes redeemed to January 1, 1895. 5, 433, 991. 00 $344,179,148.45. 192,376,913.6a Balance January 1, 1895 151.803,234.83 Cash in Treasury as per debt statement 153,337,579.99 This statement includes gold and available cash. Note. — Many deposits of cash imludod in the cash balance in the Treasury are not taken into the receipts of the (rovernment until adjustments of ac- counts are reached and the amounts finally rovered into thi- Treasury by warrants. This will explain the difference betwcL-n the receijits and expend- itures, as shown in this statement, and the cash balance as shown by th& public debt statement. The amount of debt annually required to be redeemed on the sinking fund account aggregat'-^s about 5;49,(KX).0(W. The amount redeemed for the fund for the fiscal year 1893 fell short of the requirement by Sll,3 '7,825.36, and for the fiscal years 1893 and 1^94 S41,904,.54o.72 and S48,4-Sii,(il4.37, re.spectively, making a total balance due the fund on June 30, 1894, of $101,783,383.35. Public debt redeemed. Fiscal year — , 1881 S8.5,4;e,381.05 Fiscal year — 1888 $74. 813, .503. 05 1889 121,264. 4:i8.;« 1890 lil4,tU2, 149.50 1891 *124,542.6U4.87 1892 t40, 565, .5.57. 98 1803 t9, 734, 654. .50 1894 55,466,0.50.55 1882 - 166,279,955.55 1883 134,057,916.96 1884 99,861,684.50 1885 45, 984, 485. 4;^ 1886 44,51^5,993.36 1887 127,918,468.15 From this statement it appears that on Jnly 1, 189.5, the total balance in the Treasury, includ- ing gold. Treasury notes. United States notes, and fractional coin and silver dollars, was $153, 337. .579. 99 Deduct the reserve fund. 100. 000, 000. 00- Available 53,337,579.99 Balances appropriated and unexpended January 1, 1895, including the sinking fund 255, 955, 039. 94 The amendment reported by the committee is intended to equip and arm the Secretary of the Treasury so that hereafter, if he chooses to exercise it, when the Senator from Delaware [Mr. Gr-\y] goes to the Treasury Department and says, "I want my money," he will say, '' We will give you greenbacks or we will give you these certificates if you desire them." It makes it a popular loan, and enables the Secretary of the Treasury to dispose of a securitj' that runs only two years at the option of the Government, and at a rate of interest far below that which he has paid for the gold which he now has. Mr. GRAY. If the Senator will allow me, as this statement is a very interesting one, I wish to ask him whether it does not bear out the hopefulness of the Secretary of the Treasury that we find that since December 31, 1894, there has been an increase from whatever cause in the available cash balance, and that increase or that * Includes $23,553,298.50 national-bank notes redeemed under act of July 14, 1890. + Includes $16,333,721 national-bank notes redeemed under act of July 14, 1890 t Includes $9,037,651.50 national-bank notes redeemed under act of July 14> 1890. 1904 23 Mr. ALDRICH. How much does the Senator say the increase has been? Mr. GRAY. From about $67,000,000 to about $100,000,000— $99,000,000; and that available cash balance (so called) has been steadily maintained for a period of thirty days. Mr. ALDRICH. Will the Senator from Maryland permit me? Mr. GORMAN. That comes exactly as I have stated — and I tried to make myself understood — not from any increase in the ordinary receipts of the Government, but from the redemption of United States notes and Treasury notes. Mr. GRAY. If the Senator will understand my point, I admit the greenbacks that have come into the Treasury and have been redeemed in gold, have been carried to the account of the gen- eral fund and made available as part of the cash balance; but since that operation ceased the available cash balance has been maintained at that figiire, to wit, at about $100,000,000, for a pe- riod of nearly thirty days. Mr. ALDRICH. If the Senator from Delaware will permit me, the statement of the Senator from Maryland is easily ex- plainable. Mr. GRAY. I understand the statement. Mr. ALDRICH. The available cash balance as shown on the 31st of December, 1894. was obtained by deducting $100,000,000 as a reserve from the cash on hand. The statement of February 18 only dedvicts $55,000,000 from the cash on hand as the amount of the reserve. According to the Secretary of the Treasury the re- serve has diminished from $100,000,000 to $45,000,000 from the 1st of January to the 18th of Febriiary. Mr. GRAY. It only bears out what the President said in his message, that the revenues promised to be ample but that they do not come in the shape of gold, which was what he asked Congress to arm him with the power of obtaining. Mr. ALDRICH. But there has been a great change in the available cash balance from the 1st of January to the 18th of Feb- ruary, as can be easily seen by an examination of these two state- ments. Mr. GRAY. That is what I say. Mr. ALDRICH. If you place the reserve at $100,000,000 in both- cases there was no such increase, in fact there was no perceptible increase between the 1st of January and the 18th of February. Mr. GRAY. It shows that there has been no decrease in the cash balance. The Secretary of the Treasury is maintaining our position. Mr. GORMAN. Mr. President, there is no escape from the gen- eral proposition, and that is the one which is to be met by Con- gress. You have only paid the expenses of the Government by using the proceeds of the sale of $100,000,000 of bonds in the last twenty-five months. Mr. President, that was the case before the present Administra- tion came into power. During the last Administration the very qiiestion was presented here, and I stated the views then as I do now, that the revenue laws up to that date had failed to produce a sufficient amount of money by $150,000,000. It was nearer $250,- 000,000. When the present Administration came into power they were interfered with by the commercial conditions that no legis- lation in Congress was responsible for. They have been intensi- 1904 24 fied in the last two years. The revenues have fallen off and the expenditures have increased year by year. 1 will place the statement in my remarks to show, as I did three years ago, that our expenses were about $500,000,000 a year, and there was no possibility in the near future of decreasing them: Revenues for fiscal year ending Jiino ;50, 1801 . . $.»Z, 012, 447. 31 Revenues for fiscal year ending June 30, 1892. . 354, 937, 784. 34 Total revenues for fiscal years ending Juno 30, 1891, 1892. . $747, 550, 231. 55 Expenditures for fiscal year ending June 30, ISi'l .- - 409,780,016.73 Expenditures for fiscal year ending June 30, lsy2 aS2,597,510.56 Total expenditures for fiscal years ending June 30, 1891, 1892 792,377,527.28 Excess of expenditures over revenues for fiscal years ending June 30,1891,1892 44,827,295.73 Revenues for fiscal year ending June 30, 1891 . . 392, 612, 447. 31 Revenues for fiscal year ending June 30, 1892. . 354, 937, 784. 24 Revenues for fiscal year ending June 30, 1893. . 385, 819, 628. 78 Total revenues for fiscal years ending June 30,1891, 18!»2, 1893. 1,133,369,800.33 Expenditures for fiscal year ending June 30, 1891 409,780,016.73 Expenditures for fiscal year ending June 30, 1892 382, 597,. 510. 56 Expenditures for fiscal year ending June 30, 1893 390,180,698.99 Total expenditures for fiscal years ending June 30,1891, 1892,1893 - -..- 1,182.564.220.27 Excess of expenditures over revenues for fiscal years ending June 30,1891,1892,1893 09,194,365.94 Revenues for fiscal years ending June 30, 1894. 297, 722,019. 35 Revenues for six months ending December 31, 1894 1.59,389,457.33 Total revenues for fiscal year ending .June 30, 1894, and for six months ending December 31, 1894 457,111,470.57 Expenditures for fiscal year ending June 30, 1S94 ., 307,740,807.03 Expenditures for six months ending Decem- ber 31, 1894 180,979.467.63 Total expenditures for fiscal year ending June 30, 1894, aiid for six months ending December 31, 1894 554,720,334.00 Excess of exjjenditure^ over revenues for fiscal year ending June 30, 1894, and for six months ending December 31, 1894. . 97, 014, 858. 09 Revenues, other than postal receipts, for the fiscal years ending June 30, 1891, 1892, 1893, 1894, and for six months ending December 31 1894 1,590,481,336.90 Expenditures for the fiscal years ending June 30, 1891, 1892, 1893, 1894, and for six months ending December 31, 1894, in eluding deficiencies paid in the postal service 1,737,290,-500.93 Expenditures for the fiscal years ending June 30, 1891, 1892, 1893, 1894, and for six months ending December 31, 1894, ex- ceed the revenues for the same period by 146, 809, 224. 03 The Secretary estimates, in his answer to resolution of Jan- uary 28, ImC). that the revenues from customs, interiial rev- enue, and niiscellant'ous, all revenues except tiiat from the sale of bonds, will be 380,610,543.00 1904 25 "Which is an average rate for each month in the year of $31,717,545.00 From the 1st day of July, 1894, to the :iOth day of February, 18'ja. abont seven and two-third months, the" total I'eceipts have been 203,533.595.67 Which is an average rate diiring each month of 2ii,417,251.60 The total receipts during the month of January (which is the first month embraced m the Secretary's estimate) were 37, 804. 399. 71 As against his average of.. 31,717, .545. 00 For the first twenty days of February the total receipts were. 15, 338, 738. 64 This shows that the estimated receipts are unquestionably largely in excess of the actjial result. The expenditures for the calendar year are estimated at $358,047,530.00 While the average actual payments per year out of the Treas- ury for the four fiscal years ending June 30, 1891, 1893, 1893, and 1894 were 387,577,733.33 Which is greater than his estimate for this calendar year by over 29,000,000.00 The qnestion arises, whether it is possible to reduce expendi- tures $29,000,000 when the appropriations are as lai'ge as hereto- fore. Mr. Presitlent, I do not think it possible to make .such re- ductions. There is nothing to warrant such a statement. Mr. President, the Government has been like any individual wovild be. We have spent more money than we have made, and there was but one alternative, bankruptcy or to borrow money. We borroAved $150,000,000 or $1(50,000,000. The question now arises whether we will continue to borrow upon the onerous terms which have been imposed upon us, or whether we will give the pjttriotic people of the country an opportunity to take an obliga- tion of the Government as good as gold, one that is perfectly good .and bears only 'd per cent interest, and will be redeemable when the act which the distinguished Senator from Indiana [Mr. VooR- HEEs] and those of us on this side passed will produce the revenue, as it will produce the revenue in two years, to retire these very securities. There is no reflection vipon the President in any proposition that we submit. There is no reflection upon the Secretary of the Treasury, whom I admii-e. But I say that if this proposition is to be defeated, and if we are to run the risk of suspending payment, paralyzing works of public enterprise, preventing the Navy from being fairly increased and the Army from being properly con- diicted, that responsibility must be imderstood by the people to be taken by whatever ofificial has the power to say that he does not want this grant of power, and that he will not exercise it if he has it. Mr. TELLER, after addressing the Senate, made a motion to lay the amendment on the table. Mr. GORMAN. I hope the Senator will withdraw his motion for a moment. Mr. TELLER. I will withdraw it until I hear what the Sena- tor desires. Mr. GORMAN. Mr. President, I tried to state this niorning frankly withoiit reservation the views entertained by the Com- mittee on Appropriations in regard to this provision. We were perfectly well aware of the fact that efforts had been made in both branches of Congress, bvTt particularly in the other, to dis- pose of this entire financial question, all of which had resulted in no legislation whatever, and, being compelled to ascertain as best we could the exact condition of the Treasury, taking into 1904 26 account the appropriations which are provided for in the bills ■which are before ns and those before the Coiniuittee on Appro- priations, we believed it to be tlie highest duty to give the Senate the opportunity to determine whether additional power should be granted to the Secretary of the Treasury to meet, as we believed what must be, a deficiency, if the obligations of the Government are to be paid. From the remarks which have been made by Senators on this side of the Chamber, who I take it speak after consultation elsewhere who at all events put a constriaction upon the official statement of the Secretary of the Treasury and of the President of the United States which we on the Committee on Appropriations do not think is warranted by the facts in the case; confronted as we are with the statement made by the distinguished Senator from Ohio [Mr. Sherman], which iinder the circumstances was per- fectly proper and riglit from his standpoint; in view of the state- ments made on this side by the distinguished chairman of the Committee on Finance [Mr. Voorhees] . whose judgment is that additional provision is not required, if I did not misunderstand him; considering the statements of the Senator from Nevada, and others, whom it is not necessary to mention, that they will persist in discussing the entire financial problem . to which of course there will be no end, or at least no end before the 4th of March; with the sudden conversions which have apparently taken place, as sudden as those we read of in sacred history, which I confess have amazed some of us on this side of the Chamber, on the part of Senatoi\s whose active support we hoped to have in dealing with this question of the condition of the Treasury; in view of the fact that b(>]iind this bill, which is a great appropriation bill, there stands the legis- lative bill, not yet considered by this body, the general deticiency bill, and the naval appropriation bill still in the Committee on Appropriations — the bill to be reported to-morrow, as the chair- man of the committee requests me to say — with the fortifications bill, the District of Cohambia appropriation bill, the diplomatic api)ropriation bill, the Post-Office appropriation bill, and the agri- cultural and Indian appropriation bills still in conference, and by 12 o'clock on Monday next all those bills must be disposed of; and, furthermore, in view of the attitude of Senators here on both sides of the Chamber, by instruction of the Committee on Appropria- tions, I wish to say to the Senate that it will require every mo- ment of time now remaining to pass those bills, and controverted questions such as the one now pending can not be discussed for three hours more, and therefore, with a view to facilitating the public business, not changing our views as to the necessities of the Treasury, I withdraw the amendment. The VICE-PRESIDENT. The amendment is withdrawn. Mr. MILLS. I offer the amendment which I send to the desk, to come in as section 2 of the bill, in place of the amendment with- drawn. Mr. ALLISON. Before the amendment of the Senator from Texas is read I should be glad to know the parliamentary situa- tion of the second section. Mr. GORMAN. It is withdrawn. ]\Ir. ALLISON. The Senator from Maryland withdrew it, but it is in the bill, and I think in some form, by a vote of the Senate or by some direction, it should be disposed of rather than by simi^ly 190i 27 withdrawing it. I am not quite sure that takes it out of the bill. Mr. COCKRELL. I think the committee can withdraw the amendment in that way. Mr. GORMAN. Under the rule we have the right to with- draw it. Mr. ALLISON. If that be true, I have no objection. I merely wish to say that I concur fully in the suggestions made by the Senator from Maryland. When I consented to the insertion of this provision in the appropriation bill I supposed it would meet with general approval in the Senate, but I find that those who are more intimate with the Secretary of the Treasury than I am as to these public questions believe that he does not need it, and I have no doubt he is not in favor of it. I know other Senators on this floor who have various views upon the financial question are also opposed to it. Therefore it is absolutely necessary that the amendment should be withdrawn. I fully concur in the with- drawal. The VICE-PRESIDENT. The amendment is withdrawn. Mr. PALMER. What is withdrawn? Mr. ALLISON. The whole of section 2. The VICE-PRESIDENT. That is correct. mi O THE CURRI SPEECH HON. WALTER GRESHAM, OF TEXAS. HOUSE OF REPRESENTATIVES, Friday, January 4, 1895. "WASHINGTON. 1895. SPEECH OP HON. WALTER GRESHAM The House heing in Committee of the "Whole on the state of the Union, and having- unuor coiisidfratiun the bill (H. R. fiU9) to amend the laws relating to national banking associations, to exempt the notes of State banks from taxa- tion n]ion certain conditions, and for other purposes — Mr. GRESHAM said: Mr. Chairman: In discussing a measure which is to meet the requirements of a great financial emergency like the one now con- fronting our country, we must take into consideration the changes in business methods that have been brought about by imiS'oved banking facilities and the application of electricity and steam to the uses of commerce. We must also consider the fact that the former duties of a bank were principally if not entirely confined to receiving moneys on deposit for safe-keeping and for discount- ing. But now, without the use of banks as mediums of exchange, the trade of our country and the commerce of the world could not be qtiickly and economically handled. The machinery of the banks is as essential to the business wants of the world as the steam en- gine that pulls the cars or the propeller that carries our com- modities on the high seas. Formerly a vessel hunted the world for a market for her cargo, and after many months brought back what she received in exchange therefor. Now, by the use of electricity, her cargo is disposed of before she reaches her destina- tion, its proceeds transmitted by bank exchange, and her return cargo secured and paid for through the same mediums, thus effect- ing a great saving in time and expense both to the shipowner and to the merchant. Formerly remote nations had little commercial intercourse. Now, through the improved methods of modern civ- ilization, the uttermost parts of the earth are commercially nearer to the great ntarkets of the world than many of the States of the Union were to each other fifty years ago. You can now reach almost any quarter of the globe easier and in less time than the products from the frontier of Texas could thirty years ago be transferred to Galveston, its chief commercial city. The result of these changes has demonstrated that a million dol- lars of gold to-day will transact more business in a sliorter time and with less expense than ten times that amount would have done forty years ago. Under our existing banking and monetary system we find the press and the Representatives of one section of the country com- plaining of a redundancy of our currencj' and a plethora of money, while those from other sections are clamoring for and demand- 2 1746 ing more money and greater facilities for securing a circulating medium. Some are willing to take " fiatism " for money. These are the conditions confronting us to-day. How are we to deal with them? Does the pending measure in any way tend to correct the evils? If it does, we should ado^it it; if it does not, we should amend it so that it can be made to accomplish the desired ends. The position taken by the South and West, that more money and better banking facilities are needed, can not be controverted by any man who knows the conditions of those sections of our country. I believe the complaints of a redundancy of currency which come from the East and from the great financial centers of the world, caused, as they say, by the laws, which force nearly $500,000,000 of United States demand notes in circulation, at the expense of the credit of our Government, is also well founded. Can we in any way satisfy these apparently conflicting interests and adopt a plan to meet the needs of all sections? I believe we can, and that the proposed substitute, vnth certain amendments in regard to the sale of bonds as reapeatedly recommended by the President and Secretary of the Treasury, will produce the desired results. The national banking system was devised as a war meas- ure, while the nation was in the throes of a great revolution, and it had for its objects the creation of a market for the bonds of the Grovernment and the retiring of a redundant and rapidly increas- ing national currency, and for these ptirposes it served its part weU. But now, after thirty years, you find the conditions that I have just described — too much money in one section and not enoiigh in another. The present banking laws have evolved in the last thirty years two requisites that are essential to any successful banking system, whether in this or any other country. One is safety and the other uniformity. SAFETY. Does the proposed Carlisle substitute insure safety both as to depositors and as to note holders? 1 think it does. It provides that any banking association desiring to take out circulating notes may do so to an amount not exceeding 75 per cent of its paid-up and unimpaired capital upon depositing with the Treasurer of the United States legal-tender notes as a guaranty fund equal to 30 per cent of the circulating notes it proposes to then take out. As security for these notes we have — First. A deposit of United States legal-tender notes in the Treas- ury of the United States equal in amount to 30 per cent of bank notes in circulation. Second. We have a 5 per cent safety fund derived from a semi- annual tax of one-quarter of 1 per cent upon the circulating notes of all banks that may take out notes under the provisions of this act. This safety fund, if it had been in force since the organizii- tion of the present banking system, and this tax been continu- ously collected, the notes of every failing bank could have been paid and the amount of the safety fund remaining would have been $50,000,000, and this without any increase of the burdens upon the banks under existing laws. Third. We give to the note holder a first lien upon the assets of the bank. The experience of this country and of the balance of the 1746 world demonstrates fhat a bank currency, backed by such secur- ity and protected by snch safeguards as will l)e thrown around it by the law, will be absoluti^ly safe. Mr. COX. Will my friend allow me to call his attention to the fact that additional to this is that liability of the stockholders? Mr. GRESHAM. Yes; that is a part of the assets of the bank, I take it. The proposed plan is modeled after the Canadian sys- tem, but with additional security for the note holder. No holder of a Canadian bank note has ever lost a dollar tliereof by reason of the bank's insolvency; and yet it is secui-ed only by a first lien upon the assets of the ]»ank, including the double liability of its stockholders, and by a safety fund equal in amount to 5 per cent of the notes issued by the banks, paid by the banks to the minis- ter of finance and receiver-general. Mr. DUNN. Will the gentleman allow me to ask him a ques- tion? Mr. GRESHAM. Yes, sir. Mr. DUNN. Do you believe it is constitutional for the Gov- ernment to tax one enterprise for the benefit of another? ]Mr. GRESHAM. I do, if the Government imposes the tax as a condition precedent to the exercise of a franchise. Mr. WARNER. Do I understand the gentleman to suggest that under the present Canadian sj'stem a single dollar has ever been lost to any holder of a circulating note? Mr. GRESHAM. I understand that there has not been a dollar lost. Mr. WARNER. That is the fact. I misunderstood the gentle- man. Mr. GRESHAM. Mr. Chairman, the note holders under the Canadian system, with only a 5 per cent safety fund and a first lien upon the assets of the bank, have never lost anything. There the banks have a riglit to issue, not to the limited amount of 75 per cent of their unimpaired and paid-up capital, but to the par value thereof. We propose to give to the note holder the same se- curities Canada gives, and to cut the right of issue 25 per cent, making the notes to that extent safer than the Canadian system. We also require a deposit of a 30 per cent guaranty fund in addi- tion thereto. Now. if that system is a success, and has furnished an elastic and safe currency that circulates over that entire country, which in its business relations and extent of territory is very much like our own, how it is possible for a currency issued under the proposed system, with the additional securities and safeguards, to be anything else but secure? Let us now compare the security of the currency issued by the Imperial Bank of Germany with that issued under the Carlisle plan; that bank with a capital of 120,000,000 marks, has thei-ight to issue notes to the amount of about 273, #00, 000 marks, more than double its capital stock, but the notes issued, while they must be covered as to one-third by the gold held in its vaults, and the other two-thirds by not exceeding ninety days' bills on German towns, they are not secured by alien on the assets of the bank, nor is there any double liability of the stockholders to secure them. The maximum amount of the notes that may be issued by that bank under certain conditions may be exceeded on payment of a tax of 5 per cent on notes issued in excess thereof. 1745 This 33|^ per cent gold reserve and its bills receivable upon which its notes are issxxed has, as its counterpart under the Carlisle plan, a deposit wnth the United States Treasurer of legal-tender notes equal to 30 per cent of the outstanding notes, a first lien upon all the bank's assets, which includes its bills receivable as well as the double liability of its stockholders, and in addition the 5 per cent safety fund, made up from a tax upon the circulation of all of the banks. In the light of this comparison, who can doubt the abso- lute safety of the notes under the proposed plan? In Sweden, the Enskilda banks, which mainly supply the cur- rency of that coixntry and which have been in successful operation for more than fifty years without a failure, have the right to issue notes upon the assets of the bank, limited only by the amount of securities held by them. These notes are not secured by a first lien upon the assets of the bank. Thus we see that the security provided for the note holder by this bill is largely in excess of that required by three of the most successful banking systems in the world. Let us now examine the condition of the depositor under the proposed system, for it is more essential to a successful banking system that the depositor have confidence in the bank than it is for the bank to have the right to issue currency. Under existing law the note holders have as security a deposit of United States bonds, about 14 per cent in excess of the notes, and as long as this Government is solvent and can sell its bonds at par there can be no better security than that now given to the notes that are issued by the national banks. Will the depositor be as secure under the proposed system as he is now? Under existing laws the bank's available capital is di- minished to the extent of the cost of the bonds it has to deposit to obtain its charter and secure its circulating notes, which is a much larger per cent of its capital than the 80 per cent reqixired to be deposited under the proposed bill. The larger amount of available capital for investment will augment the assets of the bank and thus diminish the chances of failure, but should the bank become insolvent its notes ^vill be paid first out of its immedi- ately available assets, its guaranty fund, and then out of the 5 per cent safety fund which all the testimony shows will be ample, leaving a much larger amount of the assets as secixrity for tlie depositor than he now has, and the safety fund under the i)ro- posed substitute has no lien upon the assets of the bank to repay it. I do not know whether r -s change in the substitute was noticed by the committee or not, Ijut it is quite plain, and I hope it will be retained. The safety fund can not recoup from the assets of the insolvent bank for the loss it may have sustained. Thus deposit- ors who put their money in these banks will have a mucli larger per cent of the assets of the bank as security for their deposits than they have under existing laws. Mr. SIMPSON. Will the gentleman allow me to ask him a question? Mr. GRESHAM. Certainly. Mr. SIMPSON. I would like to ask the gentleman if this bill specifies what the assets of the bank shall be? Mr. GRESHAM. What the assets of the bank shall be? Mr. SIMPSON. Yes, ah: 174J 6 Mr. GRESHAM. No, sir; that is left to the officers of the bank tinder the restrictions now prescribed by law. Mr. SI]MPSON. They might only be a little office furniture, some old ink bottles, and some wild-cat stock. Mr. GRESHAM. The law is not changed in that regard. Whenever yon find a man of brains and ingenuity enough to ac- cumulate §100,000, or plausibility enough to persuade others to put that amount in a bank and let him manage it, you can, as a rule, trust him. Mr. SIMPSON. The experience of the past, under the old bank- ing system, was not as you suggest. They generally found an absence of available assets when they came to collect. * Mr. GRESHAM. We are discussing national banks and not State banks. We will discuss them later on. Mr. SIMPSON. I understood you were discussing State banks. Mr. GRESHAM. No, sir; I am not discussing State banks; I am discussing national banks. Mr. SIMPSON. National-bank currency is secured by the bonds. Mr. GRESHAM. No, sir. The gentleman has evidently not read the bill. Mr. BELL of Texas. I would like to ask my colleague a ques- tion there. Mr. GRESHAM. Certainly. Mr. BELL of Texas. I am sure your understanding is very different from that of many others wath reference to the lien of the safety fund upon the assets of the banks under the proposed bill. I know it is different from that of gentlemen sitting around me. I think it would be well for you to elaborate your idea on that siibject. I think that you are mistaken; but. if you are not, it would be a good idea for you to explain the matter to us. Mr. GRESHAM. In the first place the second section of the bill Mr. BELL of Texas. Let me ask you this: Your idea is that if a bank of $100,000 capital fails, then, under your substitute bill, it has put $32,500 with the Government to seciire the $75,000 notes. The $22,500 is used to redeem the notes to that amount, which leave $52,500 to be redeemed. Now, your idea is that if the safety fund should contribute $30,000 toward the redemption of the $52,500 it would have no lien on the assets of the bank superior to the claim of depositors. Mr. GRESHAM. That is, the immediately available assets. Mr. BELL of Texas. Of course 1 understand you to draw some distinction between the immediately available and other assets. But I assume that the immediately available assets are $22,500, and consequently $o0.000 has to ])e i)aid out of the safety fund. Now, my understanding is that tlie safety fund would become the holder of the notes, and being the holder of the notes would have a lien on the entire assets of the bank, which will be a prior lien to that of the depositors or other creditors. I understand your position to be exactly contrary to that, and therefore I think it would be well for yovi to explain it more in detail. Mr. GRESHAM. I think the Secretary agrees with me. Mr. BELL of Texas. Perhajjs you are correct, but I think your construction is wi'ong, and therefore I wished you to elaborate your views. 174d Mr. GRESHAM. It is true that the second section of the bill declares the notes to be a first lien upon the assets of the associa- tion issuing them, and as between the note holder and the depositor there can be no question of the superior right of the former, but section 5 provides for the accumulation in the United States Treas- ury of a 5 per cent safety fund, collected by a semianniial tax of one-fourth of 1 per cent from all of the banks upon the average amount of their respective circulating notes o^^tstanding. This section then provides that when a national bank becomes insolvent, its guaranty fund of 30 per cent, held on deposit in the Treasury, shall be transferred to the safety fund, and out of the safety fund, augmented by the guaranty fund, the notes of the failing bank shall be paid, and then the immediately available as- sets, which is the cash on hand at the time of the suspension of the bank, shall be used to reimburse the safety fund; and should it be insufficient for that purpose, this section provides how the deficiency shall be made good by requiring a continuation of the tax until the notes are all paid and the amount of the safety fund is again restored to its maximum amount. Where the law declares a particular fund out of which these notes shall be paid, that method would exclude the idea of resorting to any other fund. The bill does not give to the safety fund a lien nor has that fund any superior eqiiity over the depositors in the assests of the bank, and therefore the doctrine of subrogation could not be applied. Mr. Chairman, this bill gives safety both to the note holder and the depositor. The security of the former, all experience demon- strates, is ample, and that of the latter is superior to what he now has. It is absolutely essential that we should have a system in which the people have confidence, We have an illustration of this in India, where it is estimated, by authorities referred to by the Director of the Mint in his report, that since 1835 one-third of all the money in the world has ^ne, and is there being hoarded. A lack of confidence on the part of the people in the safety of the banks of the country is largely the cause of this. Great Britain has endeavored, throtigh the instrumentalities of modern banking institutions, to establish confidence and to bring out from its hid- ings this vast capital that now lies idle, and to use it in the chan- nels of trade, but thus far has been successful only to a limited extent. In Persia, where the people have been accustomed to hoard the precious metals and have been poverty stricken for thousands of years, an imperial bank, modeled after the English system, has been recently established and is inspiring such confidence that the people are depositing with it. The officers of that bank report that they anticipate that within a few years ample money will be collected from the people to handle the commerce of the country without the aid of outside capital. The report of the Secretary of the Treasury shows that the banks of this country are very generally used by the people as depositories. In this way they accumulate the money of the country and use it in the channels of trade, so that a much smaller amount is required to do the business than would be if, from lack of confidence, they did not deposit with the banks. The confi- dence of the people in our banking institutions, which has been the slow growth of years, should not be impaired by any legislar 1746 8 tion enacted by Concrress. We of the Southwest require a miich largei' amount of circulatinf? medium in proportion to the volume of our business tlian the people of the East; we do not have banks every 5 or 10 miles. The country is sparsely settled by an agri- cultural people who do not have adequate banking facilities and can not use checks as freely as they are used in the more thickly settled parts of our country. The result is that they are c( )iupolled to keep in circiilation a much larger amount of currency in i)ro- portion to the volume of business than is necessary in the East. Again, we have a large number of laVjorers who do not under- stand the use of bank checks, and consequently we are c-ompelled to furnish them with the actual money. For this reason, also, it is essential that we should have a larger volume of currency. Now, let us see what would be the effect on my State of this i)roposed change — and I think the gentleman from Kansas and the gentleman from Colorado and the gentleman from Nebraska wall find their people benefited in the same proportion by this bill as we will 'l)e. We have a little less than $2.1. 000, 000 invested in national banks under the provisions of this bill: we can on that capital increase our currency over fifteen and a quarter million dollars, which, experience has demonstrated and the testimony of experts sliows will be just as safe as the money that we now have. With the ability of our banks to put this additional amount of currency into the channels of trade when needed, without having to bor- row it at a high rate of interest, they will become more inde- pendent, confidence will be restored, business revived, and pros- perity assured. Jlr. PENCE. Do you mean that much increase in your na- tional-bank currency? Mr. GRESHAM. Yes. I mean that much increase of bank currency. We now have very little bank currency in proportion to our banking capital. It is too expensive. When a national bank wants to get permission to do business it deposits the least amount of bonds authorized by law and consequently can take out but a small amount of currency. Mr. Chairman, I represent, in part, upon the floor of this House a country that is rapidly growing, and is bemg settled by a young, vigorous, energetic, industrious, and thrifty people, who have little else for their capital than brawn, sinew, and integrity, and must rely upon foreign capital for aid. The present sj^stem keeps too much money locked up and lying idle. We must remember that every expense put upon the bank- ing institutions of the country has to be borne ultimately by the people. We in the West and South who are clamoring for more money want every facility possible to induce capital to come among us. Notwithstanding the relief this bill would afford, we still will have to go into the markets of the world as borrowers. We have to convince those who have the money, and from whose coffers we wish to draw more capital to help us develop our coun- try, that we can and will meet our obligations in accordance with the terms of our contracts. This confidence we can never gain by advocating "fiat money" or legalizing any system of cun'ency that is not immediately convertible and at all times redeemable on demand in the legal-tender money of the Government. This re- 1746 9 demption of the bank notes is amply provided for by the fourth section of the bill under consideration. Mr. HALL of Minnesota. You are referring now entirely to national banks. Mr. GRESHAM. Yes, sir; I am not discussing anything but national banks. UNIFORMITY. The peojile of this country have become used to a uniform na- tional-bank currency, and would not, in my opinion, be willing to part with it. They do not have to examine it when they go from one part of the country to another. They want something that will circulate everywhere, just as the gold dollar does: money that they do not have to examine and find out first where it was issued and then inquire whether the bank which issiied it is sol- vent or not. A uniform currency is essential, and in this partic- ular the national-bank system has been a great success, and 1 hold that wherever experience has demonstrated a plan to be a success it is the part of statesmanship to avail ourselves of it and not to discard it for something that is at least less certain. The pending measure does not change existing laws in regard to uniformity of bank currency. But, having said this much, it is all that I can say in behalf of the present banking system. Let us now examine the imperfections of the present system and the remedies proposed by the pending measure. TOO EXPENSIVE. First. The present banking system is too expensive. To illus- trate: Parties desiring to go into a banking business ^vith a capi- tal of $100,000 are required under existing laws to deposit with the Government $35,000 in United States bonds before they can obtain a license to commence business. They are compelled to go into the market and buy these bonds, for which they have to pay. say, a premium of 14 per cent. This would make the $25,000 in bonds cost them $28,500, which, deducted from the original capital of $100,000, leaves cash on hand $71 ,500. The $25,000 in bonds are de- posited with the Government and the Comptroller issues to the bank notes thereon to the amount of 90 per cent of the face value of the bonds, which is $22,500. and then deducts from tliat amount 5 per cent for the redemption fund, which would equal in this case $1,125, so that the amount of notes received from the Government would be $21,375, for which the bank has paid in cash $28,500. The $21,375 in notes received, added to the $71,500 of the original capital, would enable the bank to open its doors and commence business on just $92,875. Under the proposed plan, parties desiring to establish a bank with a like amount of capital ($100,000) can take $22,500 thereof in greenbacks or Treasury notes, and deposit the same with the Treasurer and receive back from the Government not to exceed $75,000 in bank notes. This $75,000, added to the $77,500 of its capital stock remaining after deducting the $22,500 of legal ten- der and Treasury notes paid into the Treasury as a gviaranty fund, makes $152,500 as the amoimt of cash on hand that the bank would have when it commences business, as against $92,875 under exist- ing laws; in one case their working capital is diminished $7,125, and in the other it is increased $52,500. As I have already dem- 1746 10 onstratecl, this additional currency would be as safe as that in use under any banking system in the world. ELASTICITY. Elasticity in the volume of currency is provided for by this bill. Under present conditions the greater the demand for an in- creased supply of currency the more difi&cult it is to obtain. Suppose a bank wants currency — it is demanded by its customers and the business necessities of the country — and it goes to the Treasury to get it. Why, it takes more money to pay for the bonds to be deposited in the Treasury to enable it to secure cur- rency than such currency received by the bank would amount to. The result is, if it has to buy the bonds it will not do so, and therefore can not get any increase of currency. It may possibly be asked why it is that the banks which have bonds already on deposit do not draw out currency to the extent of the amount authorized by the law. The answer is simply l)ecause the banks that have not taken out the circulation to which they are entitled do not need it. They can not keep it at interest and the expense is too great to keep it in their vaults. Their money is now lying idle and they do not want more currency. But you do not find that condition in my country. Every dollar that the banks are entitled by law to take out on the bonds they have deposited in the Treasury is in circulation. Mr. WALKER. And they could circulate thousands more. Mr. GrRE.SHAM. Yes, we could; and if you will give us a good banking system we will do it. Mr. Chairman, I say our bank currency is not elastic because it can not be increased when an emergency arises or when the wants of trade demand it. This bill seeks to remedy this e%al. It pro- vides for an increase in the vohime of currency when the business wants of the country demand it without the expense and delaj' incident to obtaining it under existing laws. The advantages of an elastic system of currency has been demon- strated in Canada and Germany, where there has never been a financial panic or a currency stringency since the establishment of their respective banking systems. The Bank of England, with- out such a provision in its charter, has on three occasions since 1844, to avoid closing its doors, been comi)elled to issue its notes without authority of law. The i)ower conferred by the French Government upon the Bank of France, immediately after the Franco-Prussian war, to increase its note issue enabled it to assist the Frencli people in meeting promptly the German indemnity and to siipply an adeqviate and safe currency for the demands of trade. Thus the experience of the banking systems of the greatest commercial nations in the world demonstrates the importance of elasticity in any system of currency. We must act upon this bill if we expect this Congress to give the people any relief from tlie evils of the present national-bank system. Let us perfect it by amendments and tlien pass it. The question of elasticity in the currency \vill not avail, in my opinion, verj^ much in my country, because the demand for capital is so gi'eat that most of our banks will use their 75 per cent at once. But the people in the East will not do this. They will not take 1746 11 out the full amount of currency to which they are entitled until they can use it profitably, which, from the statements made by the representatives of Eastern banks before the Committee on Banking and CuiTency, they could not now do. Should a stringency arise, even though our banks may not have authority to issue any more notes under the provision of this law, if the banks in the East can iise it profitably they will take it out and put it in ctrculation. In this way we can increase the volume of currency just so long as the wants of trade demand it. As soon as money can not find profitable investments and begins to accumulate and lie idle in the banks — which I hope it will not do in my country for a long time to come — so that it can not be used in the channels of commerce to advantage, it will go back to the bank that issued it for redemption and be retired; when it is needed it will be reissued and go into circulation again, just as is done in Canada. This bill provides for an elastic currency to the extent of nearly 61 per cent of the national-bank capital of this country. If this does not furnish a sufficient volume of safe currency — a currency redeemable in legal-tender money on demand — I ask how and when it is possible for us to get the relief the people are asking? Mr. PENCE. Will the gentleman allow me to ask him a ques- tion? Mr. GRESHAM. Certainly. Mr. PENCE. Is it not your opinion that under this bill, either the original Carlisle bill or the substitute proposed by the gentle- man from Illinois [Mr. Springer] , parties will take out State- bank charters? Mr. GRESHAM. I am not talking about State-bank charters at all. I have not come to that. Mr. PENCE. I know that. I have been waiting for the gen- tleman to get to the question of State banks. Mr. GRESHAM. Wait until I get through discussing national banks. Mr. PENCE. Is it not your opinion that under the original bill, or the substitute, parties will take out State-bank charters rather than national-bank charters? Mr. GRESHAM. No, sir; in m}' judgment they will not. Mr. HENDERSON of Illinois. I hope not. Mr. GRESHAM. I said our present banking system did not have elasticity and have tried to demonstrate it. COMPULSORY RESERVE. Now, in regard to a compulsory reserve. I listened to-day with interest to the remarks of the gentleman from New York [Mr. Hendrix] , in which he advocated retaining the provisions of the law requiring the banks in certain cities to keep a reserve of 35 per cent of their deposits and those of other sections 15 per cent. The operation of this law results in a profit to the banks in the reserve cities at the expense of the banks in other sections of the coimtry. At the very time the banks want to iise this fund for the relief of their customers they are prohibited from doing so. Under the provisions of this bill compulsory reserves are elimi- nated from the law, but it is not supposed that the banks will not keep reserves, for experience shows that every well -managed bank 1746 12 in this country, though there is noconipulsory law npon the sub- ject, keeps an average reserve larger than the amount re per cent of their circulating notes on a plan simi- lar to that now in force with regard to our iiresent national- bank circulation. 13. Place the taxes collected on such circiilation in the United States Treas- urv to the credit of a special redemption fund; provide that this fund shall belong to the United States, but nermit it to be used to redeem the notes of banks that fail to keep their redempti(m funds good, and provide that the Treasury Depai-tment shall collect from the banks in default the amount of the notes so redeemed. ASSUMPTIONS ON WHICH THIS PAPER IS BASED. Before proceeding to the consideration of the advantages of the plan out- lined above, and without attempting to discuss the question of bimetallism, it may for the purposes of this paper be assumed that, considering the vast products of our silver mines, considering that we are a debtor nation likely to be called upon at times to purchase vast (juantities of our securities now held abroad, and considering that we are a large nation, occupying a vast ter- ritory and having legitimate use for an enormous amount of currency, it is not best for us to depend upon gold alone as the basis of our circulation; and, on the other hand, it may in like maimer be assumed that for the present at least the free coinage of "silver is not consist fut with practical bimetallism, but must result in silver monometallism and is therefore to be avoided. OUR PRESENT GOVERN.MENT ISSUES. Let us take a brief glance at our currency as it is. The public has long been aware that our present monetary system, if system it may be called, is full of incongruities. Originating in a great national emergency, it has been modified from time to time, as other emergencies have arisen, so that in- stead of manifesting a harmonioiisly developed plan it is seen to be the out- growth of varying circumstances and of conflicting motives and theories. In conseciuence it comprises features that are almost contradictory in their character. This lack of uniformity has in the past been made the subject of frequent adverse comment, and is to-day the just cause of serious fore- bodmg. Of the currency that is issued by the nation one part represents a vast store of silver coin, another part a large amount of silver bullion, and still another portion is covered in part by a reserve of gold— a reserve, however, with practically no adecpiate provision for its maintenance. Under such cir- cumstances, and with unprecedented fluctuations in the ratios subsisting between the values of the precious metals which cover the different cla-sses ■ of currency, it would have been marvelous if some doiibts had not arisen as to the character of the medium in which redemptions would finally be made; and, however reassuring the repeal of the Sherman law may have been, the uncertainty resulting from the lack of uniformity still remains to vex and disturb our commerce. FLEXIBILITY. It is hardly necessary to make any comment at the present time as to the neces.sity for a certain degree of flexibility in our currency. The panic of 18it:j. with the urgent need for currency that then existed and the devices that were resorted to for the purpose of providing substitutes, is still fresh in our minds. There are. it is true, those who imagine that the volume of currency should bear some arbitrary ratio to the ])opnlation: but, in fact, the volume of currency needed in any community, in addition to that part of it which is used as a store of value, must be proportionate to the volume and character 1901 of those transactions which require currency for their consummation rather than to the number of inhabitants in the community. As these transactions vary, and as greatej- or less use is made of money as a store of value, the amount of currency needed varies. A familiar illustra- tion of the variation in tlie amount of currency needed is afforded by the de- mand for currency for moving crops. This demand, however, is generally local and can generally be supplied by moving currency from one locality to another. But the increased demand for currency is not always local. In times of financial distress following periods of inflation, when credits have become uncertain and checks and drafts fail to dischai-ge their ordinary func- tions in making exchanges, and when a large ]iart of the community sees fit to make an unusually large use of money as a store of value, not only is there a smaller amount of curi'ency than usual available for the work of effecting exchanges, but the work to be done by this decreased amount is largely in- creased. At such times there is a legitimate use for a much more abundant supply of good money. And when, during sixch a period, any considerable part of our circulating medium is used in the settlement of foreign balances, the need of additional currency becomes imperative. When, however, the crisis is past — when values have declined and transactions are fewer in number and less in amount — when domestic exchanges are reduced in volume, when foi-eigu ex- changes are again in our favor, when money is no longer hoarded and checks and drafts resume their wonted functions in effecting exchanges, then the former sujiply of currency is not only adequate, but often temporai'ily exces- sive. The wants of the community in such cases are thei'ef ore met by a tem- porary addition to the currency. How to provide this temporary addition without permanent inflation is one of the proVilems of a flexible circulation. We must here note the sharp distinction that exists between those local stringencies which are a result of insufficient capital or unwise speculation, and which occur when the national supply of money is abundant, and those stringencies which clearly indicate that the people's stock of money is either temporarily or permanently insufficient. It is clearly the duty of the Gov- ernment to enact such measures as are calculated to result, either directly or indirectly, in supplying the nation with an abundant stock of money, but it can not guarantee that every individual or every locality shall at all "times be able to control such portion of this supply as may seem desiraljle. If every locality and evei-y bank that finds its stock of cash inadequate while the nation at large has curi'ency in abundance should be permitted to sup- ply its wants by a further issue of bank notes, there might be some force to arguments in favor of granting a similar privilege to evei'y individual who is in embarrassed circumstances, or who is attempting more than his capital warrants, and the Poijulist subti'easury plan might not be unworthy of seri- ous consideration. DIFFICULTIES IN THE WAY OF PROCURING A FLEXIBLE CURRENCY THROUGH THE TREASURY. As to the currency issued directly by the nation it must be noted that the Treasury Depai-tment has been restricted to very few means for either plac- ing money in circulation or. withdrawing it from circulation. It is true that at times the Treasury has given some relief to the money market by the pur- chase of bonds, by anticipating payments of interest, or by placing funds in the depositai-y banks, but as a rule its ability to add to or draw from the gen- eral circulation has depended vipon its revenues and disbursements, means which generally are beyond control and are rarelj' availaljle at a time when the wants of the public in this regard are the keenest, and which at times tend to aggravate rather than to mitigate the disorders of the money mai'ket. The system of short-time bonds, bearing a low rate of interest and ex- changeable for Treasury notes, which is suggested in this paper, would doubtless go far toward rendering the national issues more flexible; but there is no absolute certainty that such bonds, if issued, would, in times of panic, be found in sufHcient amounts in the hands of those who would ex- change them for Treasui-y notes, and who would use the currency received for them in meeting the wants of the people. It would seem, therefore, that we can not depend entirely upon the Treasury for a flexilile currency, and must look to some other agency for it. The only agency that suggests itself is the banking system of the country. PRESENT NATIONAL BANK CURRENCY NOT SATISFACTORY. But the national-banii currency as it now exists is, in respect to flexibility, anything but satisfactory, and, in fact, it fails to give full satisfaction from any point of view, except that of safety. Designed originally to furnish a market for the nation's bonds, and at that time affoi'diiig the banks oppor- tunities for making a profit from their circulation, the national banking law resulted in furnishing the people with a large amount of safe paper money, and in instituting and perpetuating to the present date a system of commercial 1905 6 banks that have become noted for their success and safety. But it has long been apparent that the national banking system, so far as the circulation is concerned, has ceased to be of advantat,'e either to the Qovernnifnt. the peo- ple, or tlie banks. That it is a source of profit to the United St:it«'s, as com- pared with the issues of United States notes, is a proposition that it would be very hard to maintain: that it is not a source of satisfactory profit to a large majority of the banks is evident from the fact that so many have failed to issue tlie maximum amount of currency allowed by law; that it has failed to furnish the people witli an abundance of currency when most needed is evi- dent frf)m the very moderate increase in national bank circulation that oc- curred during the panic of lt<9:{. While the opponents of the national banking system have criticised it for the alleged reason that it giive to the banks, almost gratuitously, an extremely valuable franchise out ot v.'liich they were enabled to make large ])rofits,the national banker of late years has looked in vain for such profits, and has begun to open his eyes to the fact tliat the franchise virtually belongs, not to the organizers of a bank, but to the holders of United States bonds who. in an ordinary money market, can often make a careful computation of all the profits likely to accrue from the issue of bank notes, and then collect from the would-be national banker a premium on the bonds that very nearly ab- sorbs such profits. As a consequence many national banks have been in the habit of buying the miiiimura amount of bonds that the law requires them to hold, issuing a proporticjnately small amount of circulation notes, and when an urgent de- mand has arisen for more circulation it has been found that the difficulties and delays that stood in the way of ac(iuiring the necessary amount of bonds and getting the desired circulation have been such as to prevent the timely issue of an adequate amount of notes. That from April to Sei)tem1)er. 1893, a period which embraced weeks, even months, of tlu; most acute financial stress and panic, we were enabled by means of the national-bank note to in- crease our total i)aper currency but a little over 3 per cent; and that during that period the banks in our large cities were obliged to resort to the clumsy, inadequate, and somewhat questionable, though under the circum- stances no doubt justifiable device of the issue of clearing-house certificates, is ample evidence of the inefficiency of tlie national banking system as a means of providing the people with currency when needed. RECENT PLANS FOR AMENDING THE NATIONAL BANKING LAWS. These considerations have led to a very general desire for improvement in our monetary system, and of late many plans have been suggested for the amendment of the national banking laws. In this connection iiiuch confusion has arisen in j'opular discussions, through co7ifounding difl^erent kinds of paper money. We have had incnnvertibh^ paper money, like the greenbacks before resitmption. and like the Ijills of solvent lanks during s\-.spen.sious of specie payments. We now have convertible legal-tender CToyerninent issues ^ that perform all the functions of mr>ney throughout the nation and that it is hoped will always continue to l)e, as now, instantaneously convertible intO' the equivalent of the money of other nations. We have also the national-bank notes, so thoroughly secured that they en- joy full credit everywhere and circulate as freely as the national i.ssues. Then there are the cmergen(;y currencies like that of Germany, intended for temporary use when the ordinary stock of money seems insufficient. Most of the issues ju.st mentioned maybe assumed to be intendeil to supply the general demand for a circulating medium, or at least they perform that function so thoroughly that that may be assumed to be the chief object of their existence. Besides this, however, there is what may be termed local currency — currency is.sued chiefly for the purpose of supplying local wants, caused by lack of sufficient local capital. The fallacy of many current argti- ments will be found to ctjii.sist in making deductions from jiremises that may be true as to one class and applying the conclusions to another cla->-i. And here it may be remarked that the evils resulting from the rej) -al of the 10 per cent tax and the revival of a State-bank curreiiry tliat. wliile disered- ited away from nome, would supply local wants, might jjossibly bo less than those resulting from an attempt to lower the standard for the currency of the entire nation, in order to make it possible for localities to supply defi- ciencies in capital by currency i.s.sues. Without att -milting to make a thorough analysis of all recent plans, it may be noted that their prominent features have generally been the abolition of the Govei-nment issues eitiier wliolly or in part, and increased issues of national- bank notes. It has been proposeil to protect these bank issues either by the guaranty of the tiovernment, V)y a safety fund accumulated by tax on circu- &,tion. by the guaranty ank"s collectively, by the deposit of greenbacks, or by the deposit of a new United States bond bearing a low rate of intprcst. It has also been suggested that in a'ldition to the curreney ordinarily is.sued the banks at large should be authoi-ized to issue an emergency currency, sub- 1905 ject to a sufficiently liigh rate of taxation to insiire its withdrawal after the emergency which had called it forth had ceased to exist. There are many objections to all these plfais. In the first place, it does not seem as if the people of the United States would for a moment approve any plan*that contemplated the guaranty by the Federal Government of the lia- bilities of any private corporation unless, as is the case with the present national-bank notes, the Government held unquestioned security. In the next place, a full guaranty by the banks collectively, of the liabilities of the individual banks, no matter how well guarded, would have a tendency to drive strong banks out of the system; and this tendency would increase in times of panic when larger supplies of good ouiTeucy are most needed, for the reason that doubts as to general solvency are then the greatest. If the guaranty were anything less than full and complete there would always re- main an undesirable element of uncei-tainty as to the solvency of the indi- vidual banks and consequently as to the value of the curi'ency. It is useless to say that the experierice of the last thirty years shows that a certain light tax on the total circulation would iirovide a fund sufficient to guarantee the notes of all failed banks. The privilege of issuing notes under some of the proposed systems, when compared with the like privilege under the old system, would be so much more attractive, especially to the weaker banks, both as to profits and as to opportunities for expansion and for relief from the consequences of injudicious banking, that statistics gathered under the old system would be practically worthless for purposes of comparison. Our experience with our present banking system ought to show the futility of depending for our circulating medium upon issues secured by any specific class of securities. There is no certainty that the proposed bonds would be sufficient in amount for the purpose, or, even if sufficient at the present time, that the supply could be maintained in sufficient abundance for future wants, or, even if always maintained in sufficient abundance, that they would always be available when needed. If bonds were issued at a price that would attract investoi's, regardless of the currency franchise attached to them, holders of such bonds would be enabled, as now, to charge prospective bankers such a premium as to absorb the profits on currency and thus tend to prevent its issue. If tliey drew interest at a rate that made them remunerative only when the currency franchise attached to thein was taken into consideration, it would be difficult to find a market for them outside of those who wanted them for banking purposes. In any event the banks would always labor under the difficulties that attend the procuring of the bonds just at the time they are needed, and if intended as a basis for an emergency currency there would be little inducement for banks to issue such currency, for the reason that they would, as now, have to advance the money to buy the bonds before they could get the currency', and, although by so doing they added to the total stock of money, they would do so at considerable inconvenience and with little or no direct advantage. All these plans contemplate the wide diffusion of the right to issue cur- rency. We must not overlook the fact that a strong tendency against such diffusion exists in other countries, and the further fact that there are good reasons for this tendency. If the object of diffusing the right to issue cur- rency is, as alleged, to enable banks to supply the ]3eople with necessary currency according to the legitimate demands of trade, then it may be noted that many of the plans that have recently been suggested are more likely to accomplish other purposes than this. The issue ol currency under rea- sonable guarantees for its safety, but without the pledge of some specific se- curity, accomplishes two objects. In the fir.st ijlace, it mobilizes, extends, and strengthens the use of the issuing bank's credit. In the next place, it adds to the people's stock of money. Now, it is reasonable to suppose, where the currency franchise is widely diffused, that each bank will use the right to issue currency as prompted by its opportunities or necessities, and in order to defend such diftusion it is necessary to assume that these neces- sities and oppdl'tunities will be coincident with the actual need for an in- crease in the circulating medium. It is contended that such an assumption is not justifiable, but that the right would often be used to foster unhealthy local speculations or to ward off the logical consequences of injudicious banking, even when the nation's supply of currency was redundant. Centralization ot the currency franchise, on the contrary, when honest and capable men control it, not only does not prevent a prompt i-esponso to the nation's wants, but increases the probability that is.sues will Ih'. made solely in response to actual need of increa.sed circulation. The greater publicity attending its use when centralized, the superior skill of those likely to be charged with its exercise, and the increased opportunities they will have for a commanding view of the whole field of national commerce, all tend strongly to prevent its use except in strict accordance with the public good. Another objection to most of the recent plans lies in the fact that no pro- visions are made for the separation of the currency reserves from the de- 1905 8 posit reserves, so that when large demands for redemption spring up, deposit reserves are likely to be depleted, resulting in serious embarrassment to commeroial interests. But the chief (;l)jection to all of these plans lies in the fact that they con- template the abolition of the Government is.sues. REASONS FOR PEKPETITATINO THE TREASURY NOTE. The greenback is to-day being tested under circumstances more tryingthan any that have attended it since the resumption of specie payments. The.se circumstances, however, are largdv the rcsultof injudicious legislation. The endless chain of redemptions wliicli now draws the gold from the Treasury is not a necessary conconiitaut of Govi-riiment issues, but is only an unfor- tunate phenomenon attending the present conjuncture of a temporarily re- dundant currency, a heterogeneous and inade(inate reserve, and a deficient revenue. In spite, however, of the present unsatisfactory condition of the Government issues, and in spite of the difficulties that attend any attempt to place them on a more rational basis, it must not be forgotten that their good (pialities and the esteem in which they are held by the people are such as to make any attempt to abolish them or to put any other cui'rency in their place not only unwise but, it is to be hoi)ed, impossible of attainment. Based upou the faith of a nation of unbounded resources and accepted as the safest possible currency for all domestic transactions, if they were uni- fied and if ample provisions were made for the redemption in a stable me- dium of that .small part of the currency which is at times needed for the set- tlement of foreign balances, and if, besides, some reasonable degree of flexi- bility could be given them, they would form an ideal currency, with the exception that the transactions of the Treasury do not come in such close touch with the people as to make its is.sues always responsive to their need. In great emergencies almost every nation has been compelled to resort to large issues of paper money — issue's either made directly by the nation it- self or indirectly through some large banking institution bearing intimate relations to the Government. As the policy of this country is averse to a large Government bank it will readily be seen of what vast advantage it may be to the nation in some great emergency if it has a sound and well-defined policy in regard to its issues of paper currency. It is worth while, then, to make every effort to perfect and perpetuate these issues, and even if they can not be made to meet every want, we should hesitate to indorse any plan, no matter what its apparent merits, that contemplates their abolition. MONETARY SYSTEMS OF OTHER COUNTRIES. The problem of furnishing an emergency currency seems to be subject to special difficulties in this country, for the reason that conditions vary to such an extent that the experience of foreign nations does not always furnish us a precedent that we can safely follow. In Canada a few large banks, with many branches, transact the business of the country, and the responsibility for the jjroper use of the powers intrusted to them rests in comparatively tew hands. Becau.se, under these conditions, a certain system is successful, it does not follow that it would meet with like success in this country, with its thousands of small banks, among which the personal responsibility for the proper use of the power to issue currency would be divided to such an extent that it would practically disappear. And the same distinction may be made with still greater force when we consider the possible adai)tal)ility of systems in which there is still greater centralization of the currency fran- chise, as in England, Germany, and France. Arguments based on tlie systems employed there are evidently inapplicable here. But not only are we unable to solve the j)roblem by incorporating into our system of small independent local banks those features which are attended with success when the currency franchise is monopolized by a large Govern- ment bank, or is distributed among a comparativi'ly small number of large banks with numerous branches, but we ari> pi-aiti' ally unable to reorganize our banking system so as to make either the largi- Government bank or sy.s- tems of lai'ge Iji-anch banks a part of it. It would take vigorous and persistent effort to domesticate the branch banking system in the United States, and a large Government bank is equally out of the question. Occupying commanding positions in the world of commerce, managed by men of large experience and acknowledged integrity and ability, standing in direct contact with the business interests of the people, and posses.sing almost a monopoly of the currency franchise, the great Government lianks of Euroiie are enabled to discharge the responsible duty of regulating the currency supply with far greater precision than is possible where the cur- rency franchise is widely diffused. And they do more than this. As custo- dians of the Government deposits they prevent the derangements of the money market which result from the lockmg up of currency when revenues are in excess of disbursements, and they are able to render temporary aid to the Government when revenues are deficient. But the traditions of this 1905 9 nation are in favor oi an moependent Treasury, and decidedly opposed to a colossal bank, posscssini;- a monopoly of the currency franchise and receiv- ing and disbursins: th(> (Tovernment revenues. And this sentiment is doubt- less salutary. As a I'esult of existing laws and customs there is already great centralization of power in the hands of the few, and the people may well hesitate to delegate to gigantic corporations those powers which can be safely exercised by the nation. THE PROPOSED PLAN FOR EMERGENCY CURRENCY AND ITS ADVANTAGES. If, then, we conclude that the responsibility of inflating or contracting the currency can not safely be divided among thousands of small banks; if the sentiment of the people forbids the creation of another United States Bank; if the Treasury can not always supply our demands when they become urgent; if, as is the fact, our distance from and our relations to the nations of Eui-ope make it at times both difficult and costly to have our wantj^ supplied Ijy them, to what source can we look when the demand for additional currency becomes imperative? We find our question practically answered by the action of the New York clearing house in issuing its certificates. The legality of the clearing-hoiise certificate, it is true, has been called in question, but if it is a good thing let it be legalized. It was faulty in that it formed a currency that could not be put into general circulation and that was inferior in other respects to that in general use, but had the law per- mitted it a better currency might have lieen issued; one that would have been far more effective in accomjili.shing the task that the clearing-house cer- tificate was intended to perform. But with all its faults and inconveniences it served a good purpose, and the banks of New York are entitled to the thanks of the nation for their courage and skill in employing it. The plan suggested above in regard to an emergency currency, it will be seen, is practically the clearing-house certificate in the form of bank notes, with provisions for turning into the Federal Government, in the form of taxes, the profits to be derived from its use— its retirement, when not needed, being provided for by means of taxation.* It is believed that such currency would be safe beyond que.stion. It would, indeed, be a grave and unusual financial disaster that caused all the banks.in any locality to become insolvent, and it is not to be supposed that a majority of the banks of any one city would be willing to ieopardize their own inter- ests by lending the currency to competing banks on anything but good secur- ity; besides, it is hardly to be imagined, in case of general insolvency, that the total assets could fail to pay the note holders if they were preferred cred- itors, especially if the maximTim amount of currency was limited to a fixed percentage of the total capital and surplus. It is not thought that any system of currency or banking can save the com- munity from the penalty of excessive speculation; but it is believed that timely issues of currency will mitigate the hardships that liquidation neces- sarily brings with it; and it is thought that, if such a system as is outlined in this paper had been in existence prior to isys many of the most distressing features of the panic of that year would have been avoided. If the consoli- dated banks of New York, of (Jhicago, of St. Louis, and of other large cities had h)een empowered to issue currency, based on the value of their combined assets, there is little doubt but that such currency would have been issued in abundance and would have passed into general circulation and that the action of the banks issuing it would have met with the grateful approval of the nation; and the mere fact that the banks of the larger cities were empowered to issue sitch currency would have rendered it possible for them, without any sacrifice of prudence, to have adopted a much less rigorous policy than they were forced to adopt. At the same time necessary liquidation would have been no less complete, since the tax on the currency would have compelled its retirement and thus would have brought about liquidation. The currency would have been used, not to promote speculation or to sustain unsound in- terBsts, but to ameliorate the harsher features of the panic by making liquida- tion more gradual, though none the less certain and effective. SILVER. It is not intended to discuss the question of bimetallism, but the silver question can not be overlooked in this connection. Whether the present low * Mr. D. G. Ambler, president of the National Bank of the State of Flor- ida, Jacksonville, Fla. , in a paper published in t he proceedings of the nineteenth annual convention of the American Bankers' Assoriatioii. .outlined a plan for the use of clearing house certificates as a <-iii-ulating medium similar to that advocated in this paper. Not long ago Mr. Henry \V. Yates, president of the Nebraska National Bank of Omaha, Nebr.. drafted a bill to enable clearing houses to become the agencies through which emergency issues of Treasury notes could be placed in circulation. This bill was introduced in the United States Senate by Senator Manderson. 1905 10 price of silver is due to the deliberate action of certain countries, or to nat- iiral I'auses, or in part to both, and to what extent the depression in the price of silver could bo relieved by free coiniiLce in the United States, are all (lues- tions of inij)ortance, but, as hasalrt'iidy lu-cu said, it is assumed for the pur- poses of this paper that tree coiiiui^'c of silver in the United States at the present iinie must result in silver luoiiometallisiii. There is but little pros- pect that there will be an opportunity for testing the theory of the more conservativ(> bimetallists, who hold that a given ratio can be maintained by internatioiuil agreement. The history of hundreds of years has shown divergencies from the various ratios U.xed by law— sometimes in favor of one metal and sometimes in favor of the other, and the doubt may well arise whether such divergencies can be avoided; but the most important fact and one that we dare not ignore is, that to-day we are contiMiitcd l)y an enormous discrepancy between the com- mercial ratft) and that whit'h appears on our statute books— a variance so great as to make prudent men hesitate to attempt to close the gap by the mere flat of law. But because the cr)untry is not prepared to attempt the exiieriment of free coinage, it doe.j not follow that we ought to fly at once to a monetary system in which bank notes and gold are the only currency and thereby force ourselves either to trade with a narrower supply of the pre- cious liietals as the basis of our dealings or to sacrifice our securities and commodities in order to obtain a larger supply of gold. To do so, in the opinion of the writer, would be to increase the probability of widespread bankruptcies and panic-;, and to cause a further decline in general prices, deprecating still further the Treasury's silver and doing great injustice to our silver interests. Certainly, if use can beiuadf ot silver m the Treasury as the basis of our circulating medium without threatening its stability, we ought to so use it, rather than by its issue incur at once the loss resulting from its depreciation and the risks attendant upon contraction, or U])on trading on too narrow a mai'gin ol' the precious metals. But besides utilizing silver largely for the Treasury note reserve, the plan suggested in this paper contemplates the free use of the silver dollar or its rejjresenta- tives— the one and two dollar silver certificates for all the smaller transac- tions of every day life, giving them a monopoly of the paper curreiu-y of these denominations. The five-dollar note, for the purpose of outlining this plan, is classed with the larger notes that would form in amount by far the greater part of our paper currency. If the five-dollar notes were placed in the same category with the ones and twos a larger use for silver would be provided. Much might be said in favor of such classification. PROPOSED GOVERNMENT ISSUES AND RESERVE. The new Treasury notes, as has been remarked, would form the grreat body of our ordinary paper currency. They would be supplemented on the one hand by the small silver certificates and on the other by an emergency cur- rency to be issued by the .joint action of the banks in the larger cities as occa- sion required. The reserve contemplated is already in the Treasury, with the exception of a moderate amount of gold. It is contended that the largo silver reserves now in the Treasury may, by means of the plan indicated, be utilized so as to assist, to a very large e.xtent, in supporting and maintaining a stable and uniform currency. The optic m that the Treasury would possess of paying in silver at its market value, it is thought, would be of great value in the occasional emergencies when it becomes necessary to consider the de- sirability of its use, and its mere existence might, on occasion, prevent attempts to make raids on the Treasury's gold; and when the Treasury was actually compelled to avail itself of this oijtion, no violence would be done to the stability (jf the value of the currency or of the vast volume of securities payable in currency. CURRENCY BONDS. While Government issues can never have that degree of flexibility which can be obtained in a great Government bank, without making a revolution in the functions of the Treasurv that would doul)tle.ss be productive of more harm than good, yet a certain degree of tle.\il)ility maybe attained by redeem- ing these issues in bonds and in turn retleeming these bcmds m currency. It is true that this idea, which is not a recent one, has been a favorite with the fiat-money men. It is to be noted, however, that there is a vast difference between those plans of the advocatesof flat money which would pivjvide bonds as the sole means for redemption and a plan wlii with the increased demand that may be reasonably anticii)ated as the passing years add to our poinilation, to our wealth, and to the v^olume of our trade. As to the first of these objections attention may once more be called totheprob- 1905 12 able iinwisdom of sulKlividiiijjr tho power to inflate or contract the currency to such an extent as to place it where tho thouf^ht of general responsibility to the pnhlic for its use vanishes, and tho mere (lucstion of profit and loss is likflv to ln'come i)ai-ani()unt in drcidin>i the times uiul aiiioiuits (if such issues. Besides tliis consideration, it must 1k' remeniliered that inrreney can be moved cheaply and readily fr.im jilac(^ tojjlace witliinthis country, and with an adequate currency lei;itimate local wants can generally be sui)plied from the nearest money centers at a very small ex])ense. As to tlie second ob.ii'ction. it may be said that as the demand increases we may reasonably expect a i)roportionate in<'rease in our stock of lcoM and silver coin, and if such additions were not sufticient to sup])ly th<' demand tliat fact would jirobably be indicated by a resort to the issue of tiniergoncy currency. If for a series of vears no use was made of such currency, it would b" rea- sonable to infer tliat our circuhiting medium was ample lor our wants. If, however, we were olilitred to resort to its issue on frecjuent occasions, it would not be difficult to asciTtain the causes tliat led to its us(», and if it were found that our <-ircidating medium was actually insuffi<'ieiit in volume, it would be neither dillicult r.or unwise to meet the want by a furtlier issue of Trea.sury notes, ]iri)\ided tliey were issued in pursuance of a safe, well-planned, and thiiroULchl.v undi>rstocid i^olicy. Objections will be made to the retention of the greenback issues on account of the grave com])lications in which they have been involved of late, but it must be remembered that since resnniijtion no serious attempts have been made to place them on a moi"e rati(jual Ijasis, ))ut that all legislation in regard to them has been of a character to bring about the very difficulties wnich now attend them, and that the resulting defects are now unjustly charged to them as inh(»rent. Of course, doctrinaires of the "laissez f aire" and the State rights schools will raise the question of the proper functions of the C-rovernment and will claim that the issue of currency is not a proi)er function of the Federal Gov- ernment, nor indeed of any (Government. The question of constitutionality has fortunately been decided, bxit as to rither objections of this character it may be said that a common-sense view of the question would be that we can safely let the Governjneiit do whatever it can do better than we. as individ- uals, can do. and that we'must jirefer to have it relegate to individuals or as- sociations of individuals that which they can do b{>tter than the (rovernment. This will leave tho greenback question to be decided on its merits. As far as Government issues can be made superior to bank issuesletushave the green- back, and beyond that point let us have a good liank currem-y. It is tlio ob- ject of this paper to try to show that the greenback, as far as thi> gi-eat bulk of our paper money is concerned, may be freeil from most of its defects, and may be made more serviceable to the people than any bank currency that has yet been suggested. • CONCLUSION. The plan outlined above may be and doiibtless is defective in some of its details, and it is possible that further and fullei- consideration may bring to light serious obstacles to its adoption. Everything connected with the ques- tion of a circulating medium seems to be fraught with ditficalty, and the dif- ficulties at tending tlie solution of the question under tlie anomalous conditions now existingin this country are greater than ordinary. But however defec- tive the details may bo, it is the writer's firm conviction that issues of Gov- ernment paper moiioy must and by rights ought to <'cintinue, that itis essen- tial to the welfare of the people of the United States that these issues should be unified, and that some permanent, harmonious, and wolhdevelopod policy should be adojjted for their constant j)rotection by uioans of an adequate re- serve, and for the redemjitioii. in a stable medium, of such parts of these issues as may be needed for the settlement of foreign balances, and that such issues should be supplemented by an emergency currency to be issued under Government supervision by the joint action of the banks in the larger money centers. C. F. BENTLEY, Grand Island, Nebr. Our Papor Ciirroucy. Since the presentation of the so-<-alled " Baltimore plan " for a national cur- rency, and the countenance it received from the President and Secretary Carlisle, the country has been surfeiti'd with currency discussion and Con- fre.ss overwhelmed with currency plans, every one of which, it is believed y its projector, will relieve in its'oiieration the existing financial difficulty and prove more beneficial for the interests of the general public than the system we now possess. Notwithstanding the fa(;t that the present .system has been in operation for more than a quarter of a century, and covers decades which it is conceded are femai'kable for extraordinary national growth and prosperity, the writers and financiers whose plans and jjapers 1903 13 have secured the most prominence join in the demand for the retirement of the Govei-nment legal-tender notes as a condition precedent for successful financial reform. It is claimed that the Government must go ,iut of the banking business, accepting as granted that the supplying of a nation's currency is a preroga- tive of ban!:ing and not — as it is — one of the highest functions of government. It only becomes a banking privilege when it is conferred by Q-overnment and is only then exei-cisod by banks in a representative capacity. It is also claimed that our present i>aper money lacks the one essential ele- ment of elasticity, which is undoubtedly true, but the elasticity which is needed and is lacking is very different from that suggested and provided in most of these currency plans. Two clearly distinct and opposite modes of treatment are suggested in the formation of a new currency to remove the defects existing in the present system. THE EXPANSION SCHOOL. One class, which may be called the expansion school, favors the adoption of a scheme in which the notes shall be issued by banks upon the security of their own means, limited in volume only by the amount of capital that may be shown and the amount of such notes which may be floated upon a con- fiding public. It should be evident to everyone that this would provide elasticity in one direction only, which would continue until the inevitable crisis was reached, which would burst the bubble and destroy the system. THE CONTRACTION SCHOOL. Another class, which may be called the contraction school, and in which it must be admitted is included some of the most eminent financiers of the country, favors the retirement of all Government notes by funding them into long-time interest-bearing bonds, and this it is believed can be accomplished by means of a popular subscription. Slight consideration seems to be given to the immense contraction of capital this plan would occasion if successful, and the severe drain it would necessarily cause upon the deposits of all classes of banks, but especially savings banks. It is asserted that this admitted con- traction will be offset by the increased issue of national-bank notes, based upon the security of these bonds; and the national-currency law is to be amended so as to permit of a larger ratio of circulation upon the bonds deposited. It is by no means certain that there would follow a largely increased issue of bank-note circulation. With the withdrawal of the legal-tender notes and the relieving of the Government from the responsibility of maintaining re- demption a new and unaccustomed obligation would devolve upon the banks, that of redeeming their circualtion in gold. Cautious and perhaps overcon- servative institutions may conclude that the risk would be greater than the possible profits to be derived, and decline to take out circulation, just as many banks now issue no circulation, although the liability for redemption is reduced to a minimum. Granting, however, that these notes may be sup- plied in volume equal to the Government notes withdrawn, what public in- terest would be served by the substitution? The notes would still have for their security only the public credit represented in the bonds, and to the ordinary mind no good and valid reason would exist for the transferring of this note-issiiing privilege to private corporations, with its resulting profits at the public expense, in face of the fact that it has heretofore been exercised directly by the Government at a trivial expense for the benefit of the people, and may continue to be so exercised. WEAKNESS OF PRESENT SYSTEM. The foundation for the proposed changes exists in the fact that experience has demonstrated the inadequacy of our paper-money system to meet cer- tain infrequently occurring financial conditions. This weakness is inherent with all paper-money systems that have heretofore existed. The world has not produced a more successful system than our own, in which the currency is based entirely upon public credit and maintained in a volume which over- shadows in its magnitude all other successful paper-money systems. The large experience we have gained as a nation during the years of paper infla- tion should enable us to discern what is required to improve or remove de- fects, and the correction should be applied to the existings^stem, rather than at the first manifestation of these defects that we should proceed to destroy the entire financial fabric and substitute for it some new and untried methods. The quality of elasticity when ajiplied to money should have but one sig- nification. A rubber ball is elastic, but it can not exceed in expansion the limits of its circumference, although it may be contracted at will. Gold is the most elastic of all currencies, and yet its aggregate volume can only be ex- panded in the comparatively small amount annually produced, which is largely set by what may be lost and destroyed or used in the arts and sciences. In no manner can its value be increased or diminished by a business demand In this respect it is inflexible, and it is this quality which constitutes it the unl- 1905 14 versal stamlard by which all othor thiims arc valuod and exchanged. It holds the I'litire world in its sway, and. roiK.iisive to the great law of supply and demand, it expands andcontra<'tsin vohuni'in every market, moving toward that in whieli it is most needed and away from that in which its use for the time receives insurtieient compiMisation. Every species of money is subjeet to the same general law, but the local environment of any i)aper money siiitplies a limit to its utility when it is in excess of legitimare ilemanil. When this occurs, ex])ortation naturally fol- lows, but the entire drain must be sustained alone by that portion of the cir- culation which is gold, and this (li'ain will continue until the business situa- tion chiuiges. or the total volume of currency, including both gold andi)aper, is contracted to the reciuirements of the demand for it. Our currency sys- tem is now being subjected to the severest tost of this character it has c^ver sustained. Money finds no adeiinat(> compensation for its use, and gold is exported in such vulunie that it causes appreheiision as to our ability under existing laws to maintain th<' world's standard of value, which has prevailed •with us since resuui])tion in IST'J. It is not necessary to surmise and discuss here the cause for this unfortu- nate business situation. The danger which threatens our monetary standard, and the continual discussion in favor of silver remoneti/.ation ar(( undoubt- edly largely responsible for the business depression. Init if our currency laws permitted of some reasonable contraction of our paper money when circu- lated in excess of the demand for it the situation would lie relieved of its most dangerous features. There is no occasion for the feai- that the volume of currency may in ordinary times he insullicient for the work it has to perform. Emergencies' will occur when this may seem to be the case, but temporary expedents can be depended upon to meet all such sudden demands, and the worlds supply of gold will soon restore tne normal .situation. A much greater danger is ])resented from a redundancy, because in that case the entire system of prevailing values may be disastrously affected, not only by the loss of capital which is evidenced iii the exportation of gold, but also by the loss of confidence in the money left should redemption cease or its discontinuance be threatened. In my judgment a few simiUe enactments will so improve our currency as to qualify it to perform the tuncrtions of the best pai)er-money system that can be devised, and tiiereby meet the demands of the present and any of similar character that may hereafter occur. When this redundancy occurs the Gcjvcrnment should increase the interest rate for money Ijy placing any required amount of its circulation upon an interest basis, and thereby for the time retire it from circulation. The Bank of England, which represents the British Government, accomplishes the same desired results by a similar action, except that its different circum- stances require it to adopt the opposite course of charging and receiving the increased interest instead of paying it. The views I have here endeavored to express can be practicallv applied in the legislation that I would suggest, and which, it will ne noticed, also con- tains some desired modifications in minor details, which require no special reference to recommend them. Congress should enact as follows: 1. All Government demand notes hereafter issued to he of the same general form and character (say coin notes of 1S!«J) and no denomination to be issued of less than $10. 3. Provide for a gold reserve fund for the payment of demand notes and the maintaining of the parity of our coins to be. say, 20 per cent of the de- mand notes outstanding. (This corresponds clost>ly with the amount of the present reserve, based tipon Sonii.iXKi.iHK) of circulation. ) .'?. Provide that the total issue of demand notes shall at no time exceed $5iK),()(K».00(J (about the present aggregate), except for the following inirposes: (a I Hedemptiou of national-bank notes outstanding (should tlieir retire- m.eiit be decided upon ). (0} For use in emerjjencies as hereinafter provided. 4. Provide for the issue from time to time of interest-bearing Treasury notes, legal tender for their face and payable say in three years after date and at the pleasure of the Government after one year, with annual coupons attached. These notes to be issm^d only in payment of gold for th(! maintain- ing of the reserve required, and the demand notes redeemed to be retired in an amount equal to the interest notes issued, and not reissued except in pay- ment or redemption of interest notes. 5. Provide for the issue of 5-:J0 or 10-40 bonds, to be sold only for the pur- chase of gold for the reserve, should the Government be unable to obtain gold by the sale of interest notes. 6. Should it be decided to retire the national currency, authorize the re- demption of the bonds held by the banks at their present worth, figured at an equitable rate of interest, payment to be made in demand notes. 7. Authorize the issue oi demand notes in emergencies, to be used in the purchase of interest-bearing clearing-house certificates, issued by associa- 190.5 15 tions in central reserve cities, as proposed in Senate bill 484, introduced by Senator Manderson at the called session of 1893. 8. Provide that the Treasury shall pay the expense of transmission for re- demption upon all mutilated and unlit notes for circulation, so that not only a sound but a clean currency may be guaranteed. With the exception of the suggested retirement of national-bank notes, no radical proposition is conveyed m these suggestions, and the entire plan is in harmony with the existing currency system. SILVER. It will be noticed that nothing is said concerning silver. It may be assumed that the legal-tender portion of the scheme being adjusted, the existing vol- ume of silver dollars and certificates can be easily maintained at par in the future as they have been dui'ingthe past, the law requiring parity to be main- tained remaining unrepealed. The i-equirement of a lai-ge gold reserve and the maintaining in circulation of a large volume of gold is directly in the in- terest of silver. What we gain and hold of gold is lost to the balance of the world, and the loss will eventually so affect foreign sentiment that the use of silver will be increased, its price will be raised, and eventiially we may hope a return will be made throughout the world to the old bimetallic system, either at the old ratio or some ratio at which both coining and commercial parities of the metals may be maintained. The use of silver will be increased by the provision limiting notes to denominations of $10 and upwards. The same provision may also be extended to embrace the silver certificates. NATIONAL-BANK NOTES. It may be said concerning national-bank notes that they have at no time fulfilled the funations of a bank currency, as understood and practiced else- where. Redemption, except in the case of mutilated notes, has carried with it so slight an obligation that it can scarcely be considered a liability. These notes constitute simply one form of Government currency, no better and no worse than similar currency issued direct from the Treasury, and were origi- nally authorized for the sole purpose of giving additional value to Govern- ment bonds, which at that period needed every aid that coiild be devised. That use having long since terminated, no good reason remains for their con- tinued existence. Should it be decided to retire them, this need not in any manner affect the continued existence of our excellent national-banking sys- tem, which requires no circulation privilege to sustain its popularity. The equitable method suggested for dealing with the banks for their bonds would induce them to retire their circulation in their own interest, and no actual loss to the Government would result from the adjustment. HENRY W. YATES, Omaha, Nebr. Dear Sir: In order to prescribe remedies intelligently for the disturbances to our system of banking and currency and the loss of gold, it is well to un- derstand the causes of the disturbances. The country had very little diffi- culty with this subject until the people, becoming dissatisfied with a manage- ment of national affairs that took the reins of Government when it was neces- sary to pay 13 per cent interest on borrowed money, and so conducted busi- ness that it could be borrowed at 2i per cent, and during the same period paid off one and a half billion dollars of the national debt, mcreased the per capita circulation of money from $13.85 to §34.44 and added over $500,(K)0.000 of silver to our stock of money, and exercised their right to change the manage- ment. Since the new management was installed, the expenditures of the Govern- ment have exceeded its income some $125,000,000, thus compelling the use of the surplus and the borrowing of money by the sale of bonds to pay the help and other expenses, the same as an individual would be compelled to do, con- ducting business at a loss. Then the demonstrated incapacity of the new management to do business, with the immatured ideas of some of the hired men in Congress, who, judg- ing from their actions, think the Almighty made some mistakes which they would correct by amending or changing natural laws, and arguments along this line have caused a fear in the minds of holders of securities at home and abroad that they may be paid in depreciated dollars, and naturally forced them to realize without delay in order to bo sure of receiving as good dollars as they parted with. This is another disturbing factor. Another thing. The people of the United States pay for travel, freights, interest, and profits, in foreign lands and to foreigners, at a conservative estimate, $350,000,000 annually, which amount exceeded the balance of trade in our favor for 1894 $96,000,000, that had to be paid in gold, and is a further cause of trouble. These are the conditions that must be met. The deficit in the national Treasury is the chief cause of the disturbance, and is increasing the national 1905 16 debt, and no theory or argiinient will disprove or change that fact. Without regard to previous coiulit ion of servitude in ]iartisaii ])olitics, the experience of the past two years has ad to secure the full benefit of this awakening, the recovery nught be hastened if the jn-e.sent management would ]ironii)tly provide suflicient income to meet e:^enses. I'ntil this is accomi>lished, money must be borrowed to meet them. There is absolutely no other way if we > (nitinue business. This deficit has developed a seeming defect iu our financial system. But is the defect in thi> system? If thi.' (•J'*vernment continues in the general bank- ing busiuessandkeejison going in the hole eight million or thereabouts, every month.no syhtiunof banking ever invented could meet the case so long as the deficit stares us in the face. The CJ^overnment or an individual, as a banker having outstanding paper, demand or othi-rwise. must meet it on presentation or bo discredited, and when business is at a standstill and distrust abroad in the land, the creditors are apt ft) want their money, and as a general proposition they are in some- what of a hurry for it. An individual running behind $8,000,000 or $8,000 a month would be in trouble, and his only recourse after exchanging his surplus would be to bor- row money, which he may be able to do until such time as his income catches up to his expenditures. IJut su])]iosi' the creditors of the individual, also in- terested in other directions, should learn through some of the hired men that the individual was considering the advisability of departing from his former conservative methods in business and was disposed to resort to sharp or dis- honest practices, the situation would be greatly aggravated, and if persisted in might result in disaster. Is not this about the position the Government is in at the present time? The fact that the Government is rich and able to pay its debts is not satisfying to the financial world, if we propose to juggle things. It is generally conceded that we have too many kinds of money issued under various laws and that our banking and currency laws should be re- visi-d, and some think that the Government should go out of the general banking business. This, however, is not a good time for such revision. Too much grief at any one time is discouraging and disheartening. When the time comes for action on this sub.i(>ct I can give vou the names of individuals who will tell you just what should be done. 1 am not quite so clear, but there are a few general ])roi)ositions that may be stated. First. The people want all of the dollars of equal value in circulation that it is possible to secure. Second. The dollars of whatever character in circulation in the hands of the common people must have behind them an [absolute guaranty ithat they are equal in value to every other dollar to-day and will continue to be any- where in the United States next week or next year. Third. The largest use of silver consistent with safety should be incorpo- rated into the revision of the system. Fourth. Gold is now the measure of value, and it should so remain, unless it is desired to contract the money of the country, an amount equal to the gold money in the country. A free coinage of silver would bring about that result. The fundamental law of coinage is thus stated in a pamphlet published in IGDC: " When two sorts of coin are current in the same nation of like value by denomination, but not intrinsically (i. e., in market value), that which has the least value will be current aiid the other as much as possible will be hoarded or melted down or exported." This is just as natural as that water will run down hill. The >)est way to formulate these propositions into law must be solved by our representatives in Congress. Very truly, yours, L. D. RICHARDS, Fh-emont, Nebr. Hon. E. J. Hainer, Washington, D. C. 1905 :^3 or \^^^ ^'^ UNIVERSITY OF CALIFORNIA AT LOS ANGELES THE UNIVERSITY LIBRARY This book is DUE on the last date stamped below JAN 2 1964 fptf"^ OCT 20 1969 ^W^felAfl^^ DEC 21 .^ A.M P.M DEC 1^ 3b5 iO JUN2 41974 JUN24I974 71 «|QI1Q|1 H12I 11213 ^41 5-n, 10 ^ ffc-o t6-t«?r 4 ^tci4,3g5j^ LD-uRi jUN 7 196"5 ^tC I ijcj _ 00 22PNI ^^x:t: ' V ; I I ?■ ! ,^ JUN 2 1965 AM PM U^JlVEKsiTY OF CALIFORNIA AT LOS ANGELES UBRARY UC SOUTHERN REGIONAL LIBRARY FACILITY AA 001 114 227