But the shadows were growing thick, and the situation was very serious. Mr. Chase was compelled to report that his estimates of revenue must be reduced below the figures which he gave in July by $25,447,334: at the same time the expenditures must be reckoned at an increase of $213,904,427. Predictions as to the speedy close of the war had ceased. Provision must be made, not only for the deficiencies presented, but for the ensuing year, during which the secretary estimated that the expenditures would be $475,331,245.

He proposed to amend the direct tax law, so as to collect under it $20,000,000; to establish a system of internal revenue as he had suggested in July, and to increase some of the customs duties.

From these sources, united with the receipts from the public lands, the revenue would be $95,800,000. With this basis, reliance must be placed on loans for the enormous sum of $654,980,920, and under existing laws he could borrow only $75,449,675.

The sale of public lands had furnished some part of the resources of the nation from an early day. The annual product had not been large as a rule. In 1834 and 1835 the sales had been abnormal, amounting in the latter year to $24,877,179, and only about $10,000,000 less in the preceding year. They were $11,497,049 in 1855, but they had fallen until they were less than $2,000,000 in 1859. It was natural to consider whether any help could be derived from this quarter in the hour of national necessity. A forced sale of lands was impossible to any such extent as to affect the receipts of the Treasury in the ratio of its demands. The pledge of the domain as security for loans was suggested only to be rejected.

As was natural, purchases of the public domain ceased almost entirely while the young men of the country were summoned to the national defense, and the better strength went into the field of battle.

From the public lands therefore the Treasury could hope for little, and very little was in fact received from them during the Rebellion.

Secretary Chase had estimated in July that $3,000,000 might be annually derived from this source; but the receipts from the sales of lands never reached even $1,000,000 a year until two years after the Rebellion had been suppressed. Practically the public lands pa.s.sed out of consideration as a source of revenue. Unfortunately also the attempt to levy a direct tax was received by the people with grave manifestations of disapproval. Its enforcement was likely to prove mischievous. The close of the year 1861 was therefore heavy with discouragement to the government. The military reverses at Bull Run and Ball's Bluff had outweighed in the popular mind the advantages we had gained elsewhere; the surrender of Slidell and Mason, though on every consideration expedient, had wounded the national pride; and now the report of the Secretary of the Treasury tended to damp the ardor of those who had with sanguine temperament looked forward to an easy victory over the Rebellion.

SUSPENSION OF SPECIE PAYMENT.

It was felt by all that the National credit, which had been partially restored under Mr. Chase's administration of the Treasury, could not be maintained except from the pockets of the people, and that every man must expect to contribute of his substance to the support of the government in the great task it had a.s.sumed. Happily all considerate and reflecting men saw that, desperate as the struggle might be, it must be accepted with all its cost and all its woe.

They could at least measure it and therefore could face it. On the side of defeat they could not look. That was a calamity so great as to be immeasurable, and it left to the loyal millions no choice. If the struggle then in progress had been with a foreign power, popular opinion would have overthrown any administration that would not at once make peace. But peace on the basis of a dissevered Union, a disintegrated people, a dishonored nationality, could not be accepted and would not be endured.

The discouragement in financial circles produced by the Treasury report of Mr. Chase, hastened if it did not cause the suspension of specie payment by the banks of New-York City. Many country banks had ceased to pay specie some time before; indeed, many had been only on a nominal basis of coin since the financial crisis of 1857. So long however as the specie standard was upheld by the New-York banks, the business of the country was securely maintained on the basis of coin. It was therefore a matter of serious moment and still more serious portent that the financial pressure became so strong in the last days of the year 1861 as to force the banks of the metropolis to confess that they could no longer maintain a specie standard. It had been many years since the government had paid any thing but coin over its counters, but Treasury notes had just been issued payable on demand, and many millions were already in circulation. They would now be presented for redemption, and if promptly met, the Treasury would be rapidly drained of its specie. There were twenty-five millions less of gold coin in the government vaults than Secretary Chase had expected. This fact of itself enforced a larger issue of demand notes than would otherwise have been called for, and had thus doubly complicated the financial situation. The Treasury had disbursed a large amount of demand notes and received a smaller amount of gold coin than the well considered estimates of the secretary had antic.i.p.ated.

The presumption was in favor of our being much stronger in coin than we were found to be. The discovery of gold in California had resulted in an enormous product,--surpa.s.sing any thing known in the history of mining. But we had been encouraging the importation of goods from Europe which were confessedly somewhat cheaper than our own fabrics, and in amount largely in excess of our export of cotton and cereals. We were therefore constantly paying the difference in coin. The political economists who had been in control of our finances insisted upon treating our gold as an ordinary product, to be exported in the same manner that we exported wheat and pork. The consequence was that during the decade preceding the war our exports of specie and bullion exceeded our imports of the same by the enormous aggregate of four hundred and fifty millions of dollars. For that whole period there had been a steady shipment of our precious metals to Europe at a rate which averaged nearly four millions of dollars per month.

Advocates of protection had found the drain of our specie the proximate cause of the financial panic of 1857. They now believed that the same cause had produced a suspension of coin payment at a much earlier date than the war pressure alone would have brought it about. They did not lose the opportunity of demonstrating that a system of protection which would have manufactured more and imported less, and which would thus have retained many millions of our specie at home, would have enabled us to meet the trials of the war with greater strength and confidence. If the Morrill Tariff had been enacted four years before, it would have been impossible for Secretary Cobb to stab the national credit. He would have been dealing constantly with a surplus instead of a deficit, and could not have put the nation to shame by forcing it to hawk its paper in the money markets at the usurious rate of one per cent. a month.

One of the wisest financiers in the United States has expressed the belief that two hundred millions of coin, which might easily have been saved to the country by a protective tariff between 1850 and 1860, would have kept the National debt a thousand millions below the point which it reached. Of all the arguments with which protectionists have arraigned free-traders, perhaps the most difficult to answer is that which holds them responsible for the weak financial condition of 1860-61 in that they had deliberately driven our specie from the country for the ten preceding years.

CHAPTER XIX.

The Legal-tender Bill.--National Finances at the Opening of the Year 1862.--A Threefold Contest.--The Country thrown upon its own Resources.--A Good Currency demanded.--Government takes Control of the Question.--Authorizes the Issue of $150,000,000 of Legal-tender Notes.--Mr. Spaulding the Author of the Measure.--His Speech.-- Opposed by Mr. Pendleton.--Position of Secretary Chase.--Urges the Measure upon Congress.--Speeches by Thaddeus Stevens, Mr. Vallandigham, Mr. V. B. Horton, Mr. Lovejoy, Mr. Conkling, Mr. Hooper, Mr. Morrill, Mr. Bingham, Mr. Sh.e.l.labarger, Mr. Pike and Others.--Spirited and Able Debate.--Bill pa.s.ses the House.--Its Consideration by the Senate.--Speeches by Mr. Fessenden, Mr. Sherman, Mr. Sumner, Mr.

Bayard, Mr. Collamer and Others.--Bill pa.s.ses the Senate.--Its Weighty Provisions.--Secretary Chase on State Banks.--Policy of the Legal-tender Bill.--Its Effect upon the Business and Prosperity of the Country.--Internal Revenue Act.--Necessity of Large Sums from Taxation.--Public Credit dependent on it.--Const.i.tutional Provisions.--Financial Policy of Alexander Hamilton.--Excises Unpopular.--Whiskey Insurrection.--Resistance by Law.--Supreme Court Decision.--Case of Hylton.--Provisions of New Act.--Searching Character.--Great Revenue desired.--Credit due to Secretary Chase.

At the opening of the year 1862, from causes narrated in the preceding chapter, the government finances were in an embarra.s.sed and critical situation. In Europe the general opinion--founded in many influential quarters on the wish--was that the Union would be dissolved; that with the success of the South, there would be still further division between the East and the West; and that the only compact power would be the Confederacy founded on slavery, with the world's great staples as the basis of its wealth and its a.s.sured development. We had but recently and narrowly escaped war with England on account of the Trent affair, and in the crafty and adventurous Emperor of France we had a secret enemy who saw in our downfall the possible extension of his power and the strengthening of his throne. Confederate bonds were more popular in England that the bonds of the United States. The world's treasures were closed against us. The bankers of Europe, with the Rothschilds in the lead, would not touch our securities. Their united clientage included the investors of Great Britain and the Continent, and a popular loan could not be effected without their aid and co-operation.

We were engaged therefore in a threefold contest,--a military one with the Confederacy, and diplomatic and moral one with the governments of England and France, a financial one with the money power of Europe.

These causes threw us upon our own resources. The problem to be solved was the utilization of our wealth without the aid which comes from the power to borrow foreign money. Congress had obviously failed at the extra session of July to use the taxing power to the extent which financial wisdom demanded, and though it was now willing to correct the error, there was not enough time to wait the slow process of enactment, a.s.sessment, and collection. Our need was instant and pressing. The banks of the country, many of them in reckless, speculative hands, were freed by the suspension of specie payment from their just responsibility, and might flood the country with worthless paper which would entail great distress upon the people. The Treasury notes not being paid in coin on demand, as promised on their face, became discredited to such a degree that the banks of the leading commercial cities would receive them only as a special deposit, and not as money of account. So entirely were these notes distrusted in the opening month of 1862 that in more than one instance State banks exchanged their own bills for them as an act of patriotism, in order that the bounty due to soldiers just recruited might be paid before they left their State rendezvous to join the armies in the field. Troops already in the service had seen more than one pay-day go by without sight of the paymaster, and tens of millions were overdue to them.

Discontent in all the camps was the natural result.

With no power to exchange our bonds for coin except at such rates as would destroy national credit, with only a hundred millions of coin in all our banks when the war began, and a hundred and fifty millions h.o.a.rded among the people, with the lavish products of our mines transferred to Europe to pay for articles which it would have been wiser to manufacture at home, our situation was not merely one of anxiety but of peril. Never in the history of national progress through trials and crises, were wise statesmanship and financial sagacity more imperatively demanded. The Rebels might fight without money, for they had no national credit to protect; but to the Union, bankruptcy meant final and hopeless ruin.

LEGAL-TENDER CURRENCY PROPOSED.

The first thing to be secured was a currency. That was demanded to pay the debt of honor due to the soldiers; to remove stagnation in business; to put the people in heart and hope. It had been demonstrated that Treasury notes, without punctual and regular redemption, would not circulate. When A paid them to B in satisfaction of a debt, B had no a.s.surance that he might in turn cancel an obligation by paying them to C. It would perhaps occur to C, that for a lawful debt he had the right to demand gold or silver; for the law told him in explicit terms that nothing else const.i.tuted a legal-tender. It was obviously impossible to conduct the business of the country and to carry on the war, in coin payments, with the small amount of coin at command. Few would insist upon coin, but as the power to insist upon it was a legal right, it was a continuing menace to the confidence of trade.

In the opinion of the majority, the one imperative duty was that the government should take control of the currency, issue its own paper as a circulating medium, and make it equal and alike to all, by declaring it to be a legal-tender in the payment of debts. It was the most momentous financial step ever taken by Congress,--as it is the one concerning which the most p.r.o.nounced and even exasperating difference of opinion was manifested at the time, has since continued, and will probably never entirely subside so long as the government keeps one legal-tender note in circulation. It was admitted to be a doubtful if not dangerous exercise of power; but the law of necessity overrides all other laws, and a.s.serts its right to govern. All doubts were decided in favor of the nation, in the belief that dangers which were remote and contingent could be more easily dealt with than those which were certain and imminent.

Relief came promptly. On the 22d of January, 1862, Mr. E. G.

Spaulding of New York reported the legal-tender bill to the House.

It had been maturely considered by the Committee of Ways and Means, --a committee made up of very able men. Mr. Spaulding is ent.i.tled to rank as the author of the measure. It is difficult to a.s.sign absolute originality in any case where so many minds are at work in the same field of investigation, and where, with an approximate ident.i.ty of date, there is a general similarity of conclusion.

But the formal proposition and the public advocacy belong to Mr.

Spaulding. He had been all his life engaged in financial affairs, was a banker of recognized ability in the city of Buffalo, and enjoyed a high reputation throughout the State of New York for intelligence and probity. He had not waited for advice or even for consultation, but on the thirtieth day of December, 1861,--the day on which the banks of New York suspended specie payment,--he introduced the original legal-tender bill in the House of Representatives.

The first provision of the bill now reported, was for the issue of $150,000,000 of Treasury notes, differing from those previously authorized by being declared a legal-tender for all obligations, public and private, except duties on imports and interest on the public debt. The notes were also to be exchangeable into six per cent. bonds, redeemable at the pleasure of the United States after five years. In reporting the bill, Mr. Spaulding called it "a war measure, a measure of necessity not of choice, to meet the most pressing demands upon the Treasury, to sustain the army and navy until they can make a vigorous advance upon the traitors and crush out the Rebellion." He argued, "These notes will find their way into all the channels of trade among the people; and as they acc.u.mulate in the hands of capitalists, they will exchange them for the six per cent. twenty years' bonds:" the notes will "be equally as good, and in many cases better, than the present irredeemable circulation issued by the banks." Mr. Spaulding argued that the Const.i.tution justified such legislation in the emergency, and he declared that by this plan "the government will be able to get along with its immediate and pressing necessities without being obliged to force its bonds on the market at ruinous rates of discount: the people under heavy taxation will be shielded against high rates of interest, and capitalists will be afforded fair compensation for the use of their money during the pending struggle for national existence."

Mr. Spaulding admitted that "a suspension of specie payment is greatly to be deplored," but he contended that "it is not a fatal step in an exigency like the present. The British Government and the Bank of England remained under suspension from 1797 to 1821- 22, a period of twenty-five years. During this time England successfully resisted the power of the Emperor Napoleon, and preserved her own imperiled existence. As a measure of necessity, she made the Bank of England notes virtually a legal-tender by suspending the specie restriction. Throughout this period the people of Great Britain advanced in wealth, population, and resources." Mr. Spaulding maintained that "gold is not as valuable as the production of the farmer and the mechanic, for it is not as indispensable as are food and raiment. Our army and navy must have what is far more valuable to them than gold or silver. They must have food, clothing, and the material of war. Treasury notes, issued by the government on the faith of the whole people, will purchase these indispensable articles."

MR. CHASE FAVORS LEGAL-TENDER.

When the bill was taken up for consideration on the 29th of January, the objections which had been raised in the public press were elaborated in the Committee of the Whole. Mr. Pendleton of Ohio was the first in opposition. In beginning a long argument, he insisted that "the feature of this bill which first strikes every thinking man, even in these days of novelties, is the proposition that these notes shall be made a legal-tender in discharge of all pecuniary obligations, as well those which have accrued in virtue of contracts already made as those which are yet to accrue in pursuance of contracts which shall hereafter be made. Do gentlemen appreciate the full import and meaning of that clause? Do they realize the full extent to which it will carry them? Every contract for the purchase of money is in legal contemplation a contract for the payment of gold and silver coin. Every promissory note, every bill of exchange, every lease reserving rent, every loan of money reserving interest, every bond issued by this government, is a contract to which the faith of the obligor is pledged, that the amount, whether rent, interest, or princ.i.p.al, shall be paid in the gold and silver coin of the country." Mr. Pendleton deemed it a very serious matter that "the provisions of this bill contemplate impairing the obligation of every contract of that kind, and disturbing the basis upon which every judgment and decree and verdict have been entered." He concluded by referring to the depreciated paper of the French Revolution, to the long suspension of specie currency in England, and the throes attending return to it in 1822. Quoting Daniel Webster's words that "gold and silver currency is the law of the land at home, the law of the world abroad: there can, in the present condition of the world, be no other currency," Mr. Pendleton made an earnest appeal to the House "to heed this lesson of wisdom."

Repeated declarations were made during the debate that the Secretary of the Treasury had not given his approval of the pending measure.

This impression was seriously impeding the progress of the bill, and, if it had been confirmed, would probably have defeated it.

A belief was prevalent that Mr. Chase would be glad to have the advantage of the measure in the management of the Treasury without a.s.suming the responsibility of its recommendation. But it was soon evident that he could not remain in a pa.s.sive and receptive position without defeating the bill. Its real opponents took advantage of the rumors; and its supporters, annoyed if not angered, by the suggestion of hostility on the part of the Treasury, were determined that Secretary Chase should take open ground. The embarra.s.sment was relieved by a letter from the Secretary to the Committee of Ways and Means, dated Jan. 29, and read in the House on the 4th of February by Mr. Spaulding. The letter had great influence on Congress. Without it, the measure would probably have been defeated.

Mr. Chase, a.s.suming that "the provision making United-States notes a legal-tender has doubtless been well considered by the committee,"

deemed it his duty to say that "in respect to the provision his reflections had conducted him to the same conclusions the committee had reached." He did not wish to conceal that he felt "a great aversion to making any thing but coin a legal-tender in payment of debts." He had been anxious "to avoid the necessity of such legislation." He found it however "impossible, in consequence of the large expenditures entailed by the war and the suspension of the banks, to procure sufficient coin for disburs.e.m.e.nts." He declared therefore that it "had become indispensably necessary that we should resort to the issue of United-States notes. Making them a legal-tender might however still be avoided, if the willingness manifested by the people generally, by railroad companies, and by many of the banking inst.i.tutions, to receive and pay them as money in all transactions were absolutely or practically universal; but unfortunately there are some persons and some inst.i.tutions that refuse to receive and pay them, and their action tends, not merely to the unnecessary depreciation of the notes, but to establish discriminations in business against those, who, in this matter, give a cordial support to the government, and in favor of those who do not. Such discrimination should if possible be prevented; and the provision making the notes a legal-tender, in a great measure at least, prevents it by putting all citizens in this respect on the same level, both of rights and duties." In addition to this official communication, Mr. Spaulding felt justified in reading a personal note from Mr. Chase, in which he said that he "came with reluctance to the conclusion that the legal-tender clause is a necessity," but that he "came to it decidedly and supported it earnestly."

THADDEUS STEVENS IN THE DEBATE.

Thaddeus Stevens threw the whole weight of his influence in favor of the measure. To alternative propositions which had been submitted, he made strenuous objection. Certain bankers of New York had suggested that the immediate wants of the government might be supplied by pledging seven and three-tenths per cent. bonds with a liberal margin, payable in one year, to the banks, which would advance a portion in gold and the rest in currency. Mr. Stevens argued that "the effect of this would be that the government would pay out to its creditors the depreciated notes of non-specie-paying banks. And as there is no possibility that the pledges would be redeemed when due, they would be thrown into the market and sold for whatever the banks might choose to pay for them. The folly of this scheme needs no ill.u.s.tration." Another proposition, pressed very earnestly, was to strike out the legal-tender clause, and make the notes receivable for all taxes and public dues, but not to make any provision for redeeming them in coin on demand. Mr. Stevens did not "believe that such notes would circulate anywhere except at a ruinous discount. Notes not redeemable on demand, and not made a legal-tender, have never been kept at par." Even those who could use them for taxes and duties would, in Mr. Stevens's opinion, "discredit them that they might get them low." He was convinced that "if soldiers, mechanics, contractors, and farmers were compelled to take them from the government, they must submit to a heavy shave before they could use them. The knowledge that they were provided for by taxation, and would surely be paid twenty years hence, would not sustain them."

To two prominent amendments which had been submitted, Mr. Stevens manifested earnest opposition. He said "the one moved by the gentleman from Ohio (Mr. Vallandigham) proposes the same issue of notes, but objects to legal-tender, and does not provide for their redemption in coin. He fears our notes would depreciate. Let him who is sharp enough, instruct the House how notes that every man must take can be less valuable than the same notes that no man need take and few would, since they are irredeemable on demand." As to the const.i.tutionality of the bill, he thought that whoever "admits our power to emit bills of credit, nowhere expressly authorized by the Const.i.tution, is an unreasonable doubter when he denies the power to make them a legal-tender." "The proposition of the gentleman from New York" (Mr. Roscoe Conkling), continued Mr.

Stevens, "authorizes the issuing of seven per cent. bonds, payable in thirty-one years, to be sold ($250,000,000 of it) or exchanged for the currency of the banks of Boston, New York, and Philadelphia.

This suggestion seems to lack every element of wise legislation.

Make a loan payable in irredeemable currency, and pay that in its depreciated condition to our contractors, soldiers, and creditors generally! The banks would issue unlimited amounts of what would become trash, and buy good hard-money bonds of the nation. Was there ever such a temptation to swindle? The gentleman from New York further proposes to issue $200,000,000 United-States notes, redeemable in coin in one year. Does he not know that such notes must be dishonored, and the plighted faith of the government be broken? If we are to use suspended notes to pay our expenses, why not use our own?"

The minority of the Ways and Means Committee, through Mr. V. B.

Horton of Ohio, had submitted a plan, as Mr. Stevens characterized it, "to issue United-States notes, not a legal-tender, bearing an interest of three and sixty-five hundredths per cent., and fundable in seven and three-tenths per cent. bonds, not payable on demand, but at the pleasure of the United States. This gives one and three- tenths per cent. higher interest than our loan, and, not being redeemable on demand, would share the fate of all non specie-paying notes not a legal-tender." Mr. Stevens believed that the government was reduced to a narrow choice. It must either throw bonds at six or seven per cent. on the market within a few months in amount sufficient to raise at least $600,000,000 in money,--$557,000,000 being already appropriated,--or it must issue United-States notes, not redeemable in coin, but fundable in specie-paying bonds at twenty years; such notes either to be made a legal-tender, or to take their chance of circulation by the voluntary act of the people.

The st.u.r.dy chairman of Ways and Means maintained that "the highest rate at which we could sell our bonds would be seventy-five per cent., payable in currency, itself at a discount, entailing a loss which no nation or individual doing a large business could stand for a single year." He contended that "such issue, without being made legal-tender, must immediately depreciate, and would go on from bad to worse. If made a legal-tender, and not issued in excess of the legitimate demand, the notes will remain at par, and pa.s.s in all transactions, great and small, at the full value of their face; we shall have one currency for all sections of the country, and for every cla.s.s of people, the poor as well as the rich."

MR. LOVEJOY AND MR. CONKLING.

Mr. Owen Lovejoy of Illinois on the other hand marked out a very different plan. He advocated as the first step, "adequate taxation, if need be to the extent of $200,000,000." In the next place, he would so legislate as to "compel all banking inst.i.tutions to do business on a specie basis. Every piece of paper that claimed to be money but was not, he would chase back to the man or corporation that forged it, and visit upon the criminal the penalties of the law. He would not allow a bank note to circulate that was not constantly, conveniently, and certainly convertible into specie."

In the third place, he would issue interest-paying bonds of the United States, and "go into the market and borrow money and pay the obligations of the government. This would be honest, business- like, and in the end economical. This could be done. Other channels of investment are blocked up, and capital would seek the bonds as an investment." As contrasted with the measure proposed by the Ways and Means Committee, Mr. Lovejoy intimated that his represented "the health and vigor of the athlete;" the other, "the bloated flesh of the beer-guzzler."

Mr. Roscoe Conkling of New York expressed hearty agreement with Mr. Lovejoy. He agreed "with some other gentleman who said that his bill was a legislative declaration of national bankruptcy."

He agreed "with still another gentleman who said that we were following at an humble and disgraceful distance the Confederate Government, as it is called, which has set up the example of making paper a legal-tender, and punishing with death those who deny the propriety of the proposition." Mr. Conkling declared that "insolvency is ruin and dissolution;" and he believed that "in pa.s.sing this bill, as was said by the gentleman from Ma.s.sachusetts [Mr. Thomas], we are to realize the French proposition about virtue,--that it is the first step that costs. Another and another and another $100,000,000 of this issue will follow. We are plunging into an abyss from which there are to be no resuscitation and no resurrection."

Mr. Conkling thought "it right to learn of an enemy," and already "the _London Times_ hails this $150,000,000 legal-tender bill as the dawn of American bankruptcy, the downfall of American credit."

The public debt by the first of the ensuing July, within less than a year from the first battle of the war, was already estimated at $806,000,000. "Who can credit these figures," said Mr. Conkling, "when he remembers that the world's greatest tragedian closed his b.l.o.o.d.y drama at St. Helena leaving the public debt of France less than seventy million of pounds?" He believed that "all the money needed can be provided by means of unquestionable legality and safety." He believed the subst.i.tute he had offered would effect that result.

Mr. Hooper of Ma.s.sachusetts, a man of large experience in financial and commercial affairs, spoke ably in support of the legal-tender clause. "No one," said he, "supposes for one moment that government notes will be sold for coined money, or that coined money will be borrowed on them. It is fair to suppose that the opponents of the administration well understand that this would be the effect of accepting the amendment to strike out the legal-tender clause from the bill; and that their object, while they talk about coined money to deceive some of our friends, is to oblige the government to give up the sub-treasury, and to use for its payment the depreciated bills of the suspended banks; thereby flooding the whole country with these irredeemable notes, and producing, in time, a state of financial confusion and distress that would ruin any administration.

The proposed issue of government notes guards against this effect of inflating the currency by the provision to convert them into government bonds, the princ.i.p.al and interest of which, as before stated, are payable in specie."

Mr. Morrill of Vermont supported the bill proposed by the minority of the Ways and Means Committee. He described the legal-tender features as "not blessed by one sound precedent, but d.a.m.ned by all." As a war measure he thought "it was not waged against the enemy, but might well make him grin with delight." He would as soon provide "Chinese wooden guns for the army as paper money alone for the Treasury." Mr. Morrill declared that there never was a greater fallacy than to pretend that as "the whole United States are holden for the redemption of these notes, they will, if made a legal-tender, pa.s.s at par." He contended that, as currency, "no more of them can be used than enough to fill the demands of commerce."

He directed attention to the fact that of the Treasury notes already issued, payable in specie on demand, "the government succeeded in circulating but $27,000,000 of the $50,000,000 authorized, and of these the banks had held $7,000,000." The sanguine feeling in regard to the length of the war was disclosed by Mr. Morrill.

Speaking on the 4th of February, 1862, he ridiculed the suggestion that "the war would be prolonged until July 1, 1863." He declared that "we could close the war by the thirtieth day of July next, as well as in thirty years.' This opinion was the one commonly accepted at the time in Congressional circles, though discountenanced by the wisest among those holding important commands in the army.

Mr. Bingham of Ohio spoke earnestly in favor of the bill. He could not "keep silent" when he saw "efforts made to lay the power of the American people to control their currency, a power essential to their interest, at the feet of brokers and of city bankers who have not a t.i.ttle of authority save by the a.s.sent of forbearance of the people to deal in their paper issues as money." Mr. Bingham argued that as there "is not a line or word or syllable in the Const.i.tution which makes any thing a legal-tender,--gold or silver or any thing else,--it follows that Congress, having 'the power to regulate commerce,' may determine what shall be a lawful tender in the discharge of obligations payable in money only." The "limitation of the power to impair the obligation of contracts," as Mr. Bingham pointed out, was "a limitation upon the States only, and did not restrain the action of Congress."

Mr. Sheffield of Rhode Island argued earnestly against the bill, and predicted the same fate for it, if enacted, that overcame a similar attempt in his State during the Revolutionary war "to make paper a legal-tender." The people would not submit to it, and "the courts set it aside as an unlawful exercise of legislative power."

ABLE SPEECH BY MR. PIKE.

Mr. Frederick A. Pike of Maine made one of the clearest and ablest speeches delivered in the House in favor of the bill. He regarded it as an experiment forced upon the country by necessity. "We issue $150,000,000," said Mr. Pike, "on a venture." We measure it "with population and wealth and existing currency. We compare it with the action of the past." The issue of Continental notes had reached $20,000,000 by the month of April, 1777, besides a large amount of currency by the States. "And yet," said Mr. Pike, "no marked signs of depreciation had appeared." The whole property of the country did not at that time in his judgment "exceed five hundred millions." From these facts he deduced our ability to stand the proposed issue of paper. Mr. Pike had little faith in the infallibility of any one's judgment as to the ultimate result of financial experiments. He recalled the circ.u.mstance that Sir Robert Peel's famous bank bill was introduced in Parliament in 1844 with the confident declaration by Her Majesty's Government that "inquiry had been exhausted." But in the "first mercantile pinch"

the measure which was "the embodiment of financial wisdom" did not work favorably, and "the government was compelled to interpose on behalf of the bank and of the business community." "Tax, fight, and emanc.i.p.ate," Mr. Pike declared to be "the Trinity of our situation."