I say, sir, this would be national dishonor. It would destroy the confidence with which the public creditor rests upon the promises contained in your bonds. It would greatly tend to arrest the process by which the interest on your bonds is reduced. It would accustom our people to the subst.i.tution of a temporary wave of popular opinion for its written contract or promise. It would weaken in the public mind that keen sense of honor and pride which has always distinguished the English-speaking nations in dealing with public obligations.

"An old writer thus describes 'public credit:'

'Credit is a consequence, not a cause; the effect of a substance, not a substance; it is the sunshine, not the sun; the quickening _something_, call it what you will, that gives life to trade, gives being to the branches and moisture to the root; it is the oil of the wheel, the marrow in the bones, the blood in the veins, and the spirits in the heart of all the negoce, trade, cash, and commerce in the world.'

'It is produced, and grows insensibly from fair and upright dealing, punctual compliance, honorable performance of contracts and covenants; in short, it is the offspring of universal probity.

'It is apparent even by its nature; it is no way dependent upon persons, parliament, or any particular men or set of men, as such, in the world, but upon their conduct and just behavior. Credit never was chained to men's names, but to their actions; not to families, clans, or collections of men; no, not to nations. It is the honor, the justice, the fair dealing, and the equal conduct of men, bodies of men, nations, and people, that raise the thing called credit among them. Wheresoever this is found, credit will live and thrive, grow and increase; where this is wanting, let all the power and wit of man join together, they can neither give her being nor preserve her life.

'Arts have been tried on various occasions in the world to raise credit; art has been found able with more ease to destroy credit than to raise it. The force of art, a.s.sisted by the punctual, fair, and just dealing abovesaid, may have done much to form a credit upon the face of things, but we find still the honor would have done it without the art, but never the art without the honor.

Nor will money itself, which, Solomon says, answers all things, purchase this thing called credit or restore it when lost. . . .

'Our credit in this case is a public thing. It is rightly called by some of our writers _national credit_. The word denominates its original. It is produced by the nation's probity, the honor and exact performing national engagements.'

"And, sir, pa.s.sing from considerations of public honor, there are many reasons of _public policy_ which forbid the repeal of the act of 1875. That act was generally regarded as the settlement of a financial policy by which at least the party in power is bound, and upon the faith of which business men have conducted their affairs and made their contracts. Debts have been contracted and paid with the expectation that at the time fixed the gold standard would measure all obligations, and a repeal of the act would now reopen all the wild and dangerous speculation schemes that feed and fatter upon depreciated paper money. The influence that secures this repeal will not stop here. If we can recall our promise to pay our notes outstanding why should we not issue more? If we can disregard our promise to pay them, why shall we regard our promise not to issue more than $400,000,000, as stipulated for by the act of 1864? If we can reopen the question of the payment of our notes, why may we not reopen the question as to the payment of our bonds?

Is the act of 1869 any more sacred than the act of 1875? And if we can reopen these questions, why not reopen the laws requiring the payment of either interest or princ.i.p.al of the public debt?

They rest upon acts of Congress which we have the power to repeal.

If the public honor cannot protect our promise to the note holder, how shall it protect our promise to the bondholder? Already do we see advocated in high places, by numerous and formidable organizations, all forms of repudiation, which, if adopted, would reduce our nation to the credit of a robber chief--worse than the credit of an Algerine pirate, who at least would not plunder his own countrymen. And if the public creditor had no safety, what chance would the national banks--creations of our own and subject to our will--have in Congress? It has already been proposed to confiscate their bonds, premium and all, as a mode of paying their notes with greenbacks.

What expedient so easy if we would make money cheap and abundant?

Or, if so extreme a measure could be arrested, what is to prevent the permanent dethronement of gold as a measure of value, and the subst.i.tution of an interconvertible currency bond, bearing three and sixty-five hundredths per cent. interest, as a standard of value; and when it become too expensive to print the notes to pay the interest, reduce the rate. Why not? Why pay three and sixty- five hundredths per cent., when it is easier to print three? It is but an act of Congress. And when the process of repudiation goes so far that your notes will not buy bread, why then declare against all interest, and then, after pa.s.sing through the valley of humiliation, return again to barter, and honor, and gold again.

"Sir, if you once commence this downward course of repudiation then there is but one ending. You may, like Mirabeau and the Girondists, seek to stem the torrent, but you will be swept away by the spirit you have evoked and the instrument you have created. You complain now of a want of confidence which makes men h.o.a.rd their money.

Will you, then, destroy all confidence? No, sir, no; the way to _restore_ confidence is to _inspire_ it by fulfilling your obligations.

You cannot make men lend you; you cannot make men sell you anything --either bread, or meat, or wool, or iron, or anything that is or that can be created--except for that which they choose to take.

You may depreciate the money which you offer, but it will only take more of it to buy what you want. It is true that the creditor may, by your laws, be compelled to take your money however much you depreciate it, but he cannot buy back that which he sold, or its equivalent in other necessaries of life, and thus he is cheated of part of what he sold. During the war, when money was depreciating, many a simple man gladly counted his gains as he sold his goods or crops at advancing prices, but he found out his mistake when, with his swollen pile, he tried to replace his stock in trade or laid in his supplies. Sir, this policy exhausts itself in cheating the man who buys or sells or loans on credit, who produces something to sell on credit; whether that something be food or clothing; whether it be a necessity or a luxury of life. Productive labor, honest toil, whether of the farmer or the artisan, is deeply interested in credit. It is credit that gives life and compet.i.tion to trade; and credit is destroyed by every scheme that impairs, delays, or even clouds an obligation.

"Again, sir, an irredeemable and fluctuating currency always raises the rate of interest on money, while a stable currency or an improving currency always reduces the rate of interest. This is easily shown by statistics, but the reason is so obvious that proof is not needed. If a man lends his money he wants it back again with its increase; but if the money, when it is to be paid back, is like to be worth less than when he thinks of loaning it, he will not loan it except at such rates as will cover the risk of depreciation. He will prefer to buy land or something of stable value. If money is at the gold standard, or is advancing toward that standard, he will loan it readily at a moderate interest, for he knows he will receive back money of at least equal value to that he loaned. Again, sir, with a depreciated currency great domestic productions are cut off from the foreign market; for it is impossible that with such a currency we can compete on equal terms with rival nations, whose industry rests upon a specie standard. As we approach such a standard, we are now able, as to a few articles, to compete with foreign industry; but it is only as to articles in the manufacture of which we have peculiar advantages. Let us rest our industries on that standard, and soon we could compete in the markets of the world in all the articles produced from iron, wood, leather, and cotton, the raw basis of which are our national productions. And it must be remembered that all the countries with which we compete are specie-paying countries.

"A country that does not rest her industry upon specie is necessarily excluded from the great manufacturing industries of modern civilization, and is self-condemned to produce only the raw basis for advanced industry. Cheap food, climate, soil, or natural advantages, such as cheap land, vast plains for pasture, or rich mines, may give to a country wealth and prosperity in spite of the evils of depreciated paper money; but when we come in compet.i.tion with the world in the advanced grades of production which give employment to the skilled mechanic, we must rest such industry upon the gold basis, or we enter the lists like a knight with his armor unbound.

"Again, sir, a depreciated and fluctuating currency is a premium and bounty to the broker and money changer. Under his manipulation our paper standard of value goes up and down, and he gambles and speculates, with all the advantages in his favor. Good people look on and think that it is gold that is going up and down; that their money is a dollar still, and trade and traffic in that belief.

But the shrewd speculator calculates daily the depreciation of our note, the shortening of the yard stick, the shrinkage of the acre, the lessening of the ton, and thus it is that he daily adds to his gains from the indifference or delusion of our people.

"Sir, it is an old story, often repeated in our day, and most eloquently epitomized by Daniel Webster in the often-quoted pa.s.sage of his speech, in which he said:

'A disordered currency is one of the greatest of political evils.

It undermines the virtues necessary for the support of the social system and encourages propensities destructive of its happiness.

It wars against industry, frugality, and economy; and it fosters the evil spirit of extravagance and speculation. Of all contrivances for cheating the laboring cla.s.ses of mankind, none has been more effectual than that which deluded them with paper money. Ordinary tyranny, oppression, excessive taxation, these bear lightly upon the happiness of the ma.s.s of the community, compared with the fraudulent currencies and the robberies committed by depreciated paper. Our own history has recorded for our instruction enough, and more than enough, of the demoralizing tendency, the injustice, and the intolerable oppression of the virtuous and well-disposed, of a degraded paper currency authorized by law or in any way countenanced by government.'

"Sir, we must meet this question of specie payments, not only because the public honor is pledged to do so, but also for the lesser reason that it is our interest to do so. The only questions we should permit ourselves to discuss are the means and measures of doing so.

"And now, sir, let us examine the reasons that have been given for the repeal of the resumption act by those who, though favoring resumption, yet think the act should be repealed for one or other of the following reasons:

"First. That it is not advisable to fix a day for resumption.

"Second. Or at least until the balance of trade is in our favor.

"Third. That it produces a contraction of the currency.

"Fourth. That it injuriously adds to the burden of existing debts.

"Let us glance at these objections.

"First. As to fixing a day for resumption.

"If it was possible to agree upon measures that would secure resumption without fixing a time, I agree it would not be indispensable, though not unadvisable, to fix a time; but such agreement is utterly impossible. Of the mult.i.tude of schemes that have been presented to me by intelligent men trying to solve this problem, many could have been selected that in my opinion would be practicable; but of all of them not one ever has or is likely to secure the a.s.sent of a majority of a body so numerous as Congress. One difficulty we have encountered is that the Democratic party, though in the minority, has never presented in any form, through any leading member, a plan for resumption, but with widely differing opinions has joined in opposing any and every measure from the other side.

I understand from the papers that our Democratic friends, through a caucus, and through a caucus committee of which my colleague is chairman, have been laboring to agree upon a plan for specie payments. After his frequent speeches to us about secret conclaves, about shams and deceptions, and such like polite and friendly comments upon the work of the Republican party, I might greet my colleague with such happy phrases about _his_ caucus; but I will not, but, on the contrary, I commend his labors, and sincerely hope that he and his political friends may agree upon some plan to reach a specie standard, and not one to avoid to, to prevent it, to defer it. Under color of intending to prepare for it, I hope they will not make their measure the pretext for repealing the law as it stands, which fixes a day for resumption and will secure the end we both aim at.

"I frankly state for the Republican party that, while we could agree to fixing the time for specie payments and upon conferring the ample and sufficient powers upon the Secretary of the Treasury contained in the law, we could not agree in prescribing the precise mode in which the process should be executed. Nor, in my opinion, was it at all essential that we should. Much must be left to the discretion of the officer charged with the execution of such a law.

The powers conferred, as I shall show hereafter, are ample; and the discretion given will be executed under the eye of Congress.

"And, sir, there is a strong force in the fact that in every example we have of the successful resumption of specie payments, in this and other countries, a fixed day has been named by legislative authority, and the details and power of execution have been left to executive authority. Thus, in Great Britain, the act of parliament of July 2, 1819, fixed the time for full resumption at the 1st day of May, 1823, and for a graduated resumption in gold at intermediate dates; and for fractional sums under forty shillings to be paid in silver coin; and the governor and directors of the Bank of England were charged with its execution, and authorized at their discretion to resume payment in full on the 1st day of May, 1822. France is now successfully pa.s.sing through the same process of resumption, the time being fixed (two years ago) for January 1, 1878, and now practically attained.

"In our own country many of the states have presented similar laws in case of suspended bank payments, and in some cases the suspended banks have, by a.s.sociated action, fixed a time for general resumption, and each bank adopted its own expedient for it. Sir, the light of experience is the lamp of wisdom. I can recall no case of successful resumption where a fixed future time has not been presented beforehand, either by law or agreement; while the historical examples of repudiation of currency have come by the drifting process, by a gradual decline of value, by increased issues, and a refusal to provide measures of redemption, until the whole ma.s.s disappeared, dishonored and repudiated.

"This concurrence in the mode of resumption by so many governments was the strongest possible instruction to Congress when fixing a plan of resumption for the United States, and should satisfy reasonable men of its wisdom.

"Besides, it would seem to be but fair that everyone should have plain notice of so important a fact. If the measures only were presented and no time fixed it would be a matter of speculation, and the discretionary powers of the Secretary of the Treasury could be exercised with a view to hasten or postpone the time to the injury of individuals.

"As to the date selected, I can only repeat it was placed as remote as any one suggested; far more so than is necessary to secure the object, and so that the fluctuations of value will scarcely exceed in four years what they have frequently been in a single year. It allows ample time to arrange all the relations of debtor and creditor, and to enable Congress to provide any additional measure in aid of redemption, or, if events make it expedient, to postpone the time."

CHAPTER XXVII.

MY CONFIDENCE IN THE SUCCESS OF RESUMPTION.

Tendency of Democratic Members of Both Houses to Exaggerate the Evil Times--Debate Over the Bill to Provide for Issuing Silver Coin in Place of Fractional Currency--The Coinage Laws of the United States and Other Countries--Joint Resolution for the Issue of Silver Coins--The "Trade Dollar" Declared Not to Be a Legal Tender--My Views on the Free Coinage of Silver--Bill to Provide for the Completion of the Washington Monument--Resolution Written by Me on the 100th Anniversary of the Declaration of Independence--Unanimously Pa.s.sed in a Day by Both Houses--Completion of the Structure Under the Act.

It seemed to be the policy of a majority of the Democratic Members of both the Senate and the House to exaggerate the evils and discouragements of the times, while in fact the people were rapidly recovering from the results of the panic of 1873, and all branches of industry were, to a greater or less extent, starting into life anew, and to prevent the resumption of specie payments, and, if possible, to repeal the act providing for such resumption. This policy undoubtedly checked the process of refunding the public debt, which progressed slowly, and was confined to an exchange of bonds bearing five per cent. interest for those bearing six per cent.

I took a much more hopeful view of the situation, and in the many speeches I made in that Congress, I stated my confidence, not only in the process of resumption and refunding, but in the rapid improvement of all branches of industry as we progressed towards specie payments. In a speech I made in the Senate on the 6th of January, 1876, on a bill "to further provide for the redemption of legal tender United States notes in accordance with existing law,"

I said:

"Sir, we ought to take a hopeful view of things in this centennial year of our country. Look at the aggregate results. A century ago we were three million people; now forty million; then we had a little border on the Atlantic; we are now extended to the Pacific.

See what has been accomplished in a hundred years. During that time there have been periods of darkness and doubt. Every seven or ten or twelve years, periodically, there have been times of financial distress. We have lived through them all. I believe, and I trust in G.o.d, that this very year is the beginning of another period of prosperity, and that all these dark clouds, which gentlemen are trying to raise up from the memory of the past two or three years and from their own clouded imaginations, will entirely disappear. I believe that even now we are in the sunshine of increasing prosperity, and that every day and every hour will add to our wealth and relieve us from our distress.

"Sir, things are not so unhopeful as Senators seem to think. We have made a promise to be executed three years hence, and every step of our legislation, if any is had, should look in that direction.

We may not adopt any measure or may not deem that any is necessary; but, if any be adopted, it ought to look to the execution of that promise, and we ought to enter on the performance of this duty with hopeful trust in the continued prosperity of our country. All this gloom and doubt, all this arraignment of official statements, this doubt of our sufficient revenues, this doubt of our ability to meet and advance our destiny, always falls upon my ear with painful surprise. Senators, the task we have before us may be a difficult one, as it has always proved to be difficult to resume the specie standard whenever, for any reason, a nation has fallen from it, but it is a duty that must be executed, and it ought to be executed without the spirit of party warfare, without these appeals, directly or indirectly, to party tactics. The pledges made one year ago, although not voted for by the Democratic party, are pledges binding upon their honor and their faith as they are upon mine, and I trust in G.o.d that we shall join together in all the proper steps to carry out those pledges."

This bill was referred to the committee on finance, but no action was taken upon it, as the committee preferred to await the action of the House.

The resumption act provided for the payment and destruction of the fractional currency then in circulation, to the amount of $40,000,000, and the subst.i.tution of silver coins in all respects, such as were defined by the coinage act of 1853. This was to be the first step in preparation for the general resumption of coin payments in January, 1879. It became necessary to provide for the coinage of fractional silver coins, and a bill for this purpose, ent.i.tled "A bill to provide for a deficiency in the Printing and Engraving Bureau, and for the issue of the silver coin of the United States, in place of the fractional currency," was reported by Mr. Randall, on the 2nd of March, 1876, from the committee on appropriations of the House. It was subsequently considered, amended and pa.s.sed by the House, after a long debate, partic.i.p.ated in by many of the leading Members. Much to my surprise, Mr. Hewitt and Mr. Ward, prominent Members from New York, opposed the measure, denounced the resumption act, and prophesied its failure. Mr. Hewitt, in support of his position, quoted pa.s.sages from the reports of Mr.

Bristow, then Secretary of the Treasury, and predicted the utter failure of resumption, unless the United States notes were entirely withdrawn. He insisted that if silver coin was issued to replace fractional currency, the coin would disappear from circulation, leaving the people without any currency for the smaller necessities of life. In the progress of the debate, it became manifest that the larger portion of the Democratic Members would vote against every measure proposed to aid in the execution of the resumption act.

The bill pa.s.sed the House on the 31st of March by the vote of 123 yeas and 100 nays. In the Senate it was referred to the committee on finance, and reported back with amendments. The third section of the bill, as it came from the House, provided for the coinage of the silver dollar, of the weight of 412.8 grains troy, standard silver, and made that dollar a legal tender at its nominal value, to an amount not exceeding twenty dollars in any one payment, except for customs duties and interest on the public debt, and that the "trade dollar" should not, thereafter, be a legal coin. This section was stricken out.

In the remarks made by me, upon this bill, on the 10th day of April, 1876 , I gave, in detail, the history of each of the coinage laws of Great Britain, France, Belgium, Germany, Switzerland and Italy.

I had taken great pains to collect this information and to procure translations of the laws of the several countries named. The then recent changes, made by Germany, and their effect upon the coinage of other nations, were carefully stated. The general conclusion which I drew from a reference to these statutes of various countries, were:

"First. It is impossible, in the nature of things, to fix the precise value of silver and gold. We have tried it three times and failed.

"Second. Whenever either coin is worth more in the market than the rate fixed by the law, it flees from the country. That we have twice proved. That is the admitted economic law. It is the Gresham law; a law of currency named from the name of its discoverer. He wrote a book to show that always the poorer currency would drive out of circulation a superior currency; and his book gave name to the theory that is called the law of Gresham. It is the universal law of political economy that, whenever two metals or two moneys are in circulation, the least valuable will drive out the most valuable; the latter will be exported.

"The third proposition is that the example of several great European nations, as well as of the United States, proves that to prevent the depreciation of silver the tendency of modern nations is to issue it as a token coinage somewhat less in intrinsic value than gold, and maintain its value by issuing it only as needed, at par with the prevailing currency, and to make it a limited legal tender.