Volume 16 — FINANCIAL RECONSTRUCTION THROUGH PUBLIC FAITH AND SPECIE PAYMENTS.

Speech in the Senate, on the Bill to Fund the National Debt, July 11, 1868.

We denounce all forms of Repudiation as a national crime [prolonged cheers]; and the national honor requires the payment of the public indebtedness, in the utmost good faith, to all creditors, at home and abroad, not only according to the letter, but to the spirit of the laws under which it was contracted. [Applause.]—Chicago Platform, May, 1868.

Fundamentum est autem justitiæ fides, id est, dictorum conventorumque constantia et veritas.—Cicero, De Officiis, Lib. I. Cap. 7.

SPEECH.

The Senate having under consideration the Bill for funding the National Debt and for the Conversion of the Notes of the United States, Mr. Sumner said:—

MR. PRESIDENT,—After a tempest sweeping sea and land, strewing the coast with wrecks, and tumbling houses to the ground, Nature must become propitious before the energy of man can repair the various losses. Time must intervene. At last ships are launched again, and houses are built, in larger numbers and fairer forms than before. A tempest has swept over us, scourging in every direction; and now that its violence has ceased, we are occupied in the work of restoration. Nature is already propitious, and time, too, is silently preparing the way, while the national energies are applied to the work.

To know what to do, we must comprehend the actual condition of things, and how it was brought about. All this is easy to see, if we will only look.

It is a mistake of too constant occurrence to treat the financial question by itself, without considering its dependence upon the abnormal condition through which the country has passed. The financial question, in all its branches, depends upon the political, and cannot be separated. I might use stronger language. It is a part of the political question; and now that Reconstruction seems about to be accomplished, it is that enduring part which still remains.

Our present responsibilities, whether political or financial, have a common origin in that vast Rebellion, when the people of eleven States, maddened by Slavery, rose against the Nation. As the Rebellion was without example in its declared object, so it was without example in the extent and intensity of its operations. It sought nothing less than the dismemberment of our Nation and the establishment of a new power with Slavery as its quickening principle. The desperate means enlisted by such a cause could be encountered only by the most strenuous exertions in the name of Country and of Human Rights. Here was Slavery, barbarous, brutal, vindictive, warring for recognition. The tempest or tornado can typify only feebly the ravage that ensued. There were days of darkness and despair, when the national existence was in peril. Rebel armies menaced the Capitol, and Slavery seemed about to vindicate its wicked supremacy.

Looking at the scene in its political aspects, we behold one class of disorders, and looking at it in its financial aspects, we behold still another,—both together constituting a fearful sum-total, where financial disorder mingles with political. Turn, first, to the political, and you will see States, one after another, renouncing their relations with the Nation, and constituting a new government, under the name of Confederacy, with a new Constitution, making Slavery its corner-stone,—all of which they sought to maintain by arms, while, in aggravation of these perils, Foreign Powers gave ominous signs of speedy recognition and support. Look next to the financial side, and you will see business in some places entirely prostrate, in others suddenly assuming new forms; immense interests destroyed; property annihilated; the whole people turned from the thoughts of peace to the thoughts of war; vast armies set on foot, in which the youthful and strong were changed from producers to destroyers, while life itself was consumed; an unprecedented taxation, commensurate with the unprecedented exigency; and all this followed by the common incidents of war in other countries and times,—first, the creation of a national debt, and, secondly, the substitution of inconvertible paper as a currency. In this catalogue of calamities, political and financial, who shall say which was the worst? Certainly it is difficult to distinguish between them. One grew out of the other, so that they belong together and constitute one group, all derived ultimately from the Rebellion, and directly depending upon it. So long as Slavery continued in arms, each and all waxed in vastness; and now, so long as any of these remain, they testify to this same unnatural crime. The tax-gatherer, taking so much from honest industry, was born of the Rebellion. Inconvertible paper, deranging the business of the country at home and abroad, had the same monstrous birth. Our enormous taxation is only a prolongation of the Rebellion. Every greenback is red with the blood of fellow-citizens.

To repair these calamities, political and financial, the first stage was the overthrow of the Rebellion in the field, thus enabling the Nation to reduce its armaments, to arrest its accumulating debt, and to cease anxiety on account of foreign intervention so constantly menaced. Thus relieved, we were brought to a resting-place, and the Nation found itself in condition to begin the work of restoration.

Foremost came the suppression of Slavery, in which the Rebellion had its origin. Common prudence, to say nothing of common humanity, required this consummation, without which there would have been a short-lived truce only. So great a change necessarily involved other changes, while there was the ever-present duty to obtain from the defeated Rebels, if not indemnity for the past, at least security for the future. It was impossible to stop with the suppression of Slavery. That whole barbarous code of wrong and outrage, whose first article was the denial of all rights to an oppressed race, was grossly inconsistent with the new order of things. It was necessary that it should yield to the Equal Rights of All, promised by the Declaration of Independence. The citizen, lifted from Slavery, must be secured in all his rights, civil and political. Loyal governments, republican in form, must be substituted for Rebel governments. All this being done, the States, thus transformed, will assume once more their ancient relations to the Nation. This is the work of Political Reconstruction, constituting the new stage after the overthrow of the Rebellion.

Meanwhile there has been an effort and a longing for Financial Reconstruction also,—sometimes without sufficiently reflecting that there can be small chance for any success in this direction until after Political Reconstruction. Here also we must follow Nature, and restore by removing the disturbing cause. This is the natural process. Vain all attempt to reconstruct the national finances while the Rebellion was still in arms. This must be obvious to all. Vain also while Slavery still domineered. Vain also while Equal Rights are without a sure defence against the oppressor. Vain also while the Nation still palpitates with its efforts to obtain security for the future. Vain also until the States are all once more harmonious in their native spheres, like the planets, receiving and dispensing light.

Nothing is more sensitive than Credit, which is the essential element of financial restoration. A breath will make it flutter. How can you expect to restore the national credit, now unnaturally sensitive, while the Nation is still uneasy from those Rebel pretensions which have cost so much? Security is the first condition of Financial Reconstruction; and I am at a loss to find any road to it, except through Political Reconstruction. All this seems so plain that I ought to apologize for dwelling on it. And yet there are many, who, while professing a desire for an improvement in our financial condition, perversely turn their backs upon the only means by which this can be accomplished. Never was there equal folly. Language cannot picture it. Every denial of Equal Rights, every impediment to a just reconstruction in conformity with the Declaration of Independence, every pretension of a “white man’s government” in horrid mockery of self-evident truths declared by our fathers, and of that brotherhood of mankind declared by the Sermon on Mars Hill, is a bar to that Financial Reconstruction without which the Rebellion still lingers among us. So long as a dollar of irredeemable paper is forced upon the country, the Rebellion still lives, in its spurious progeny.

Party organization and Presidential antagonism have thus far stood in the way, while at each stage individual perverseness has played its part. The President has set himself obstinately against Political Reconstruction; so also has the Democratic Party; others have followed, according to the prejudices of their nature; and so the national finances have suffered. Not the least of the offences of Andrew Johnson is the adverse influence he has exerted on this question. All that he has done from the beginning has tended to protract the Rebellion and to extend the disorder of our finances. And yet there are many not indifferent to the latter who have looked with indifference upon his criminal conduct. So far as their personal interests depended on an improved condition of the finances, they have already suffered; but it is hard that the country should suffer also. Andrew Johnson has postponed specie payments, and his supporters of all degrees must share the responsibility.

Such is my confidence in the resources of our country, in the industry of its people, and in the grandeur of its destinies, that I cannot doubt the transcendent future. Alas that it should be interrupted by unwise counsels, even for a day! Financial Reconstruction is postponed only. It must come at last. Here I have no panacea that is not as simple as Nature. I know of no device or trick or medicine by which this cure can be accomplished. It will come with the general health of the body politic. It will come with the renovated life of the Nation, when it is once more complete in form, when every part is in sympathy with the whole, and the Rebellion, with all its offspring, is trampled out forever. In such a condition of affairs, inconvertible paper would be an impossibility, as much as a bill of sale for a human being.

Meanwhile there are certain practical points which must not be forgotten. Foremost among these I put the absolute dependence of the national finances upon the faithful performance of all our obligations to the national freedmen. Pardoned Rebels will never look with complacency upon the national debt, or the interest which testifies semiannually to its magnitude. Their political colleagues at the North will be apt to sympathize with them. Should the scales at any time hang doubtful, it is to others that we must turn to adjust the balance. Therefore, for the sake of the national finances, I insist that the national freedmen shall be secured and maintained in Equal Rights, so that local prejudices and party cries shall be unavailing against them. You who have at heart the national credit, on which so much depends, must never fail to cherish the national freedmen, treating their enemies as if they were your enemies. Every blow at them will rebound upon yourselves.

In dealing with the financial question, there are two other points of ever-present importance: first, the necessity of diminishing, so far as practicable, the heavy burden of taxation so oppressive to the people; and, secondly, the necessity of substituting specie for inconvertible paper. Here are two objects, which, when accomplished, will add infinitely to the wealth and happiness of the country, besides being the assurance that the Nation has at last reached that condition of repose so much longed for.

Before considering these two points in detail, I venture to remark that there is one condition, preliminary in character and equally essential to both, through which taxation will be lightened and specie payments will be hastened. I refer to the Public Faith, which must be sacredly preserved above all question or suspicion. The word of our Nation must be as good as its bond; and nobody must attempt to take a tittle from either. Nothing short of universal wreck can justify any such bankruptcy. Let the Public Faith be preserved, and all that you now seek will be easy.

A virtuous king of early Rome dedicated a temple on the Capitol Hill itself to a divinity under the name of Publica Fides, who was represented with a wreath of laurel about her head, carrying ears of corn and a basket of fruit,—typical of honor and abundance sure to follow in her footprints. In the same spirit another temple was dedicated to the god Terminus, who presided over boundaries. The stones set up to mark the limits of estates were sacred, and on these very stones there were religious offerings to the god. The heathen maledictions upon the violator were echoed also by the Hebrews, when they said: “Cursed be he that removeth his neighbor’s landmark: and all the people shall say, Amen.”[235] In those early Roman and Hebrew days there was no national debt divided into bonds; there was nothing but land. But a national bond is as well defined as a piece of land. Here, then, is a place for the god Terminus. Every obligation is like a landmark, not to be removed without curses. Here, also, is a place for that other divinity, Publica Fides, with laurelled head, and hands filled with corn and fruit.

Public Faith may be seen in the evil which springs from its loss and in the good which overflows from its preservation. It is like honor: and yet, once lost, more than dishonor is the consequence; once assured, more than honor is the reward. It is a possession surpassing all others in value. The gold and silver in your Treasury may be counted; it stands recorded, dollar for dollar, in the national ledger; but the sums which the unsuspected credit of a magnanimous nation can command are beyond the record of any ledger. Public Faith is more than mines of silver or gold. Only from Arabian story can a fit illustration be found, as when, after all human effort had failed, the Genius of the Lamp reared the costly palace and stored it with beauty. Public Faith is in itself a treasury, a tariff, and an internal revenue, all in one. These you may lose; but if the other is preserved, it will be only for a day. The Treasury will be replenished, the tariff will be renewed, the internal revenue will be restored. With Public Faith as an unfailing law, the Nation, like Pactolus, will sweep over golden sands; or, like Midas, it will change into gold whatever it touches. Keep, then, the Public Faith as the “open sesame” to all that you can desire; keep it as you would keep the philosopher’s stone of fable, having which, you have all.

And yet, in the face of this plain commandment, on which hangs so much of all that is most prized in national existence, we are called to break faith. It is proposed to tax the national bonds, in violation of the original bargain on which the money was lent. Sometimes the tax is to be by the Nation, and sometimes by the States. The power to do this wrong you may possess, but the right never. Do what you will, there is one thing you cannot do: you cannot make wrong right. It is in vain that you undertake to set aside the perpetual obligation which you have assumed. Against every such pretension, whether by speech or vote, there is this living duty, which will survive Congress and politician alike. Puny as the hand of a child is the effort to undo this original bargain. The Nation has promised six per cent. interest, payable semiannually in coin, nor more nor less, without any abatement; and then, having bound itself, it proceeds to guard against the States by declaring specifically that the bonds shall be “exempt from taxation by or under State authority.” Such is the bargain. There it is; and it must continue unchanged, except by the consent of the parties, until the laws of the universe tumble into chaos.

The rogue in Shakespeare exclaims, “What a fool Honesty is! and Trust, his sworn brother, a very simple gentleman!” In equal levity it is said, “Tax the bonds,” although, by the original bargain on which the money was obtained, amid the trials of war for the safety of the Nation, it was expressly stipulated that these bonds should not be taxed. Nevertheless, tax the bonds! Of course, by taxing the bonds the bargain is brutally broken,—and this, too, after the Nation has used the money. Such a transaction in common life, except where bankruptcy had supervened, would be intolerable. A proud Nation, justly sensitive to national honor, as the great Republic through whose example liberal institutions are commended to mankind, cannot do this thing.

The proposition to tax the bonds, in open violation of the original bargain, is similar in spirit to that other enterprise, which, under various discordant ensigns, proposes to pay the national bonds with inconvertible paper. Here at once, and on the threshold, Public Faith interposes a summary protest. On such a question debate even is dangerous; the man who doubts is lost. The money was borrowed and lent on the undoubting faith that it was to be paid in coin. Nothing to the contrary was suggested, imagined, or dreamed, at the time. Behind all forms of language, and even all omissions, this obligation stands forth, in the nature of the case, explained and confirmed by the history of our national loans, and by the official acts of successive Secretaries of the Treasury interpreting the obligations of the Nation.

So much stress is laid upon the language of the five-twenties that I cannot let it pass. The terms employed were precisely those in previous bonds of the United States where the principal was paid in coin, some of which are still outstanding. Had there been any doubt about the meaning, it was fixed by the general understanding, and by special declarations of responsible persons speaking for the Nation. On 26th May, 1863, Mr. Harrington, the Assistant Secretary of the Treasury, in an official letter, says: “These bonds will, therefore, be paid in gold.” On 15th February, 1864, Mr. Field, also Assistant Secretary of the Treasury, writes: “I am directed by the Secretary to say that it is the purpose of the Government to pay said bonds, like other bonds of the United States, in coin, at maturity.” On 18th May, 1864, Mr. Chase, at the time Secretary of the Treasury, wrote: “These bonds, according to the usage of the Government, are payable in coin.” Mr. Fessenden, while Secretary of the Treasury, in his annual report to Congress, expressed the same conclusion; and his successor, Mr. McCulloch, in a letter of 15th November, 1866, says: “I regard, as did also my predecessors, all bonds of the United States as payable in coin.” There are also numerous advertisements from the Treasury, and from its business agents, all in the same sense.

Here is a succession of authorities, embracing high functionaries of the United States, all concurring in affixing upon these bonds the obligation to pay in coin. As testimony to the meaning of the bonds, it is important; but considering that all these persons represented the National Treasury, and that they were the agents of the Nation for the sale of these very bonds, their representations are more than testimony. Until their authority is disowned by Congress, and their representations discarded, it is difficult to see why their language must not be treated as part of the contract, at least in all sales subsequent to its publication. It must not be forgotten that these original sales were mainly to bankers and brokers, and in large amounts, for the purpose of resale to small purchasers seeking investments. It was in reply to parties interested in these resales that the letters of Assistant Secretary Field and Mr. Chase were written, pledging the Nation to payment in coin. At the date of these important letters Congress was in session, and, although the opportunity was constant, there was no protest against the meaning thus authoritatively affixed to these obligations. The bonds were in the market, advertised and sold daily, with a value established by the representations of these national agents; and Congress did not interfere to set aside these representations. By subsequent Acts similar loans were authorized, and nobody protested. There was the supplementary clause of 3d March, 1864, for the issue of eleven millions of these bonds, to cover an excess subscribed above the amount authorized by the original Act. This was debated in the Senate on the 1st of March; but you will search the “Globe” in vain for any protest. Then came other Acts, at different dates, by which the loan was further enlarged to its present extent, and all the time these representations were uncontradicted. Against them there was no Act of Congress, no protest, nothing. If this is not “acquiescence,” then I am at a loss to know how acquiescence can be shown. Therefore do I insist that these representations are a part of the contract by which the Nation is bound.

It is said that in the five-twenty bonds there are words promising interest in coin, but nothing with regard to the principal. Forgetting the contemporary understanding and the official interpretation, and assuming that at maturity the bond is no better than a greenback, it becomes important to know the character of this obligation. On its face a greenback is a promise to pay a certain number of dollars. It is paper, and it promises to pay “dollars.” Here is an example, which I take from my pocket: “The United States promise to pay to the bearer five dollars”—not five dollars in paper, or in some other substituted promise, but “five dollars,” which can mean nothing else than the coin known over the world with the stamp of Spain, Mexico, and the United States, being a fixed value, which passes current in every zone and at the antipodes. The “dollar” is an established measure of value, like the five-franc piece of France, or the pound sterling of England. As well say, that, on a promise to pay so many francs in France, or so many pounds sterling in England, you could honestly acquit yourself by handing over a scrap of printed paper, inconvertible in value. This could not be done. The promise in our greenbacks carries with it an ultimate obligation to pay the silver dollar whose chink is so familiar in the commerce of the world. The convertibility of the greenback is for the present suspended; but when paid, it must be in coin. To pay with another promise is to renew, and not to discharge the debt. But the obligation in our bonds is to pay “dollars” also, whenever the bonds are paid; it may be after five years, or, in the discretion of the Nation, not till twenty years, but, when paid, it must be in “dollars.” Such is the stipulation; nor could the addition of “coin” or “gold” essentially change this obligation. It is contrary to reason that a bond should be paid in an inferior obligation. It is dishonest to force inconvertible paper without interest in payment of an interest-bearing obligation. The statement of the case is enough. Such an attempt disturbs the reason and shocks the moral sense.

Between the bond and the greenback there is an obvious distinction, doubly attested by the Act of Congress creating them both,—for they were created together. This distinction appears, first, in the title of the Act, and, secondly, in its provisions. According to its title, it is “An Act to authorize the issue of United States notes, and for the redemption or funding thereof, and for funding the floating debt of the United States.”[236] In brief, greenbacks were made a legal tender, and authority was given to fund them in these bonds. This appears in the very title of the Act. Now the object of funding is to bring what is uncertain and floating into a permanent form; and accordingly greenbacks were funded and placed on interest. The bonds were a substitute for the greenbacks; but the new theory makes the greenbacks a substitute for the bonds. To carry forward still further the policy of the Act, it was provided that the greenbacks might be exchanged at once for bonds; and then, by the Act of 11th July, 1862,[237] it was further provided that these very greenbacks “may be paid in coin,” at the direction of the Secretary, instead of being received in exchange for certificates of deposit, which were convertible into bonds,—thus treating the bonds as the equivalent of coin. The subsequent repeal of these provisions does not alter their testimony to the character of these bonds. Thus, at every turn, we are brought to the same conclusion. The dishonor of these obligations, whatever form it may assume, and whatever pretext it may adopt, is nothing but Repudiation.

The word Repudiation, now so generally used to denote the refusal to pay national obligations, has been known in this sense only recently. In the early dictionaries of our language it had no such signification. According to Dr. Johnson, it meant simply “divorce,” “rejection,” as when a man put away his wife. It began to be known in its present sense when Mississippi, the State of Jefferson Davis, dishonored her bonds. From that time the word has been too familiar in our public discussions. It was not unnatural that a State mad with Slavery should dishonor its bonds. Rejecting all obligations of humanity and justice, it easily rejected the obligations of Public Faith. Slavery was in itself a perpetual repudiation, and slave-masters were unblushing repudiators. Such an example is not fit for our Nation at this great period of its history.

It is one of the calamities of war, that, while it compels the employment of large means, it blunts the moral sense, and breeds too frequently an insensibility to the obligations incurred. A national debt shares for the time the exceptional character of war itself. Contracted hastily, it is little regarded except as a burden. At last, when business is restored and all things assume their natural proportions, it is recognized in its true character. The country accommodates itself to the pressure. This time is now at hand among us, if not arrested by disturbing influences. Unhappily, the demands of Public Faith are met by higgling and chaffering, and we are gravely reminded that the “bloated bond-holders” now expect more than they gave,—forgetting that they gave in the darkness of the war, at the appeal of the Nation, and to keep those armies in the field through which its existence was preserved,—forgetting also that among these bond-holders, now so foully stigmatized, were the poor, as well as the rich, all giving according to their means. It was not in the ordinary spirit of money-lending that those contributions were made. Love of country entered into them, and made them more than money. If the interest was considerable, it was only in proportion to the risk. Every loan at that time was a contract of bottomry on the Nation,—like money lent to a ship in a strange port, and conditioned on its arrival safe at home,—so that it failed entirely, if Slavery, by the aid of Foreign Powers, established its supremacy. God be praised, the enemy has been overcome! It remains now that we should overcome that other enemy, which, hardly less malignant than war itself, would despoil the Nation of its good name and take from it all the might of honesty. And here to every citizen, and especially to every legislator, I would address those incomparable words of Milton in his sonnet to Fairfax:—

The proposition to pay bonds in greenbacks becomes futile and fatuous, when it is considered that such an operation would be nothing more than the substitution of greenbacks for bonds, and not a payment of anything. The form of the debt would be changed, but the debt would remain. Of the twenty-five hundred millions which we now owe, whether in greenbacks or bonds, every dollar must be paid, sooner or later, or be ignobly repudiated. By paying the interest of the bonds in coin, instead of greenbacks, the annual increase of the debt to this extent is prevented. But the principal remains to be paid. If this be attempted in greenbacks, it will be by an issue far beyond all the demands of the currency. There will be a deluge of greenbacks. The country must suffer inconceivably under such a dispensation. The interest on the bonds may be stopped by the substitution, but the currency will be depreciated infinitely beyond any such dishonest saving. The country will be bankrupt. Inconvertible paper will overspread the land, to the exclusion of coin or any chance of coin for some time to come. Farewell then to specie payments! Greenbacks will be everywhere. The multitudinous rats that swam the Rhine and devoured Bishop Hatto in his tower were not more destructive. The cloud of locusts described by Milton as “warping on the eastern wind” and “darkening all the land of Nile,” were not more pestilential.

I am now brought to the practical question, to which I have already alluded: How the public burdens shall be lightened. Of course, in this work, the Public Faith, if kept sacred, will be a constant and omnipresent agency, powerful in itself, and powerful also in its reinforcement of all other agencies.

It will not seem trivial, if I insist on systematic economy in the administration of the Government. All needless expenditure must be lopped off. Our swollen appropriations must be compressed. Extravagance and recklessness, so natural during a period of war, must give way to moderation and thrift. All this without any denial of what is just or beneficent. The rule should be economy without niggardliness. Always there must be a good reason for whatever we spend. Every dollar, as it leaves the National Treasury, must be able to exhibit its passport. Doubtless the army and navy can be further reduced without detriment to the public service. Beyond this great saving there should be a constant watchfulness against those schemes of public plunder, great and small, from which the Nation has latterly suffered so much. All these things are so plain as to be little more than truisms.

Another help will be found in the simplification of our system of taxation, so that it shall be less complex and shall apply to fewer objects. In Europe taxation has become a science, according to which the largest possible amounts are obtained at the smallest possible inconvenience. Instead of sweeping through all the highways and byways of life, leaving no single thing unvisited, the English system has a narrow range and visits a few select articles only. I see no reason why we should not profit by this example, much to the convenience of the Government and of the citizen. The tax-gatherer will never be a very welcome guest, but he may be less of an intruder than now. A proper tax on two articles, whiskey and tobacco, with proper securities for its collection, would go far to support the Government.

Still another agency will be found in some proper scheme for a diminution of the interest on our national debt, so far as this can be done without a violation of Public Faith; and this brings me to the very bill now before the Senate.

All are anxious to relieve the country from recurring liabilities, which come round like the seasons. How can this be done best? First, by the strict performance of all existing engagements, so that the Public Faith shall be our inseparable ally; and, secondly, by funding the existing debt in such ways as to provide a reduced rate of interest. A longer term would justify a smaller interest. There may be differences as to the form of the substitute, but it would seem as if something of this kind must be done.

Immediately after the close of the war, as the smoke of battle was disappearing, but before the national ledger was sufficiently examined to justify a comparison between liabilities and resources, there was a generous inclination to proceed at once to the payment of the national debt. Volunteers came forward with their contributions for this purpose, in the hope that the generation which suppressed the Rebellion might have the added glory of removing this great burden. This ardor was momentary. It was soon seen that the task was too extensive, and that it justly belonged to another generation, with aggrandized population and resources, in presence of which the existing debt, large to us, would be small. Here the census has its instructive lesson. According to the rate of increase in past years, our population will advance in the following proportion:—

In 1870,42,323,341

In 1880,56,967,216

In 1890,76,677,872

In 1900,103,208,415

In 1910,138,918,526

The resources of the country, already so vast, will swell in still larger proportions. Population increasing beyond example, improved systems of communication expanding in every direction, and the mechanical arts with their infinite activities old and new,—all these must carry the Nation forward beyond any present calculation, so that the imagination tires in the effort to grasp the mighty result. Therefore to the future we may tranquilly leave the final settlement of the national debt, meanwhile discharging our own incidental duty, so that the Public Faith shall be preserved.

Here is a notable difference between the United States and other countries, where population and resources have arrived at such a point that future advance is very gradual. With us each decade is a leap forward; with them it marks a gradation sometimes scarcely appreciable. This difference must not be forgotten in the estimate of our capacity to deal with a debt larger than that of any European power except England. But we must confess our humiliation, as we find that our debt, with its large interest in coin, secured by mortgage on the immeasurable future of the Nation, is less regarded abroad than the English debt, with its smaller interest and its more limited security. Our sixes will command only seventy-four per cent. in the market of London, while the three per cent. consols of England are freely bought at ninety-four per cent. One of our bonds brings twenty per cent. less than an English bond, although the interest on it is one hundred per cent. more. I know no substantial reason for this enormous difference, except in the superior credit established by England. With the national credit above suspicion, our debt must stand as well, and, as our multiplying resources become known, even better still. Thus constantly are we brought to the same lesson of Public Faith.

In spite of the general discredit of our national stocks abroad, Massachusetts fives payable in 1894 sell at the nominal price of 84, with the pound sterling at $4.44, equal to 91½ in our gold, with the pound sterling at $4.83. There can be no other reason for this higher price than the superior credit enjoyed by Massachusetts; and thus again is Public Faith exalted. Why should not the Nation, with its infinite resources, surpass Massachusetts?

The bill before us proposes a new issue of bonds, redeemable in coin after twenty, thirty, and forty years, with interest at five per cent., four and one half per cent., and four per cent., in coin, exempt from State or municipal taxation, and also from national taxation, except the general tax on income,—these bonds to be used exclusively for the conversion of an equal amount of the interest-bearing debt of the United States, except the existing five per cent. bonds and the three per cent. certificates. These proposed bonds have the advantage of being explicit in their terms. The obligations of the Government are fixed clearly and unchangeably beyond the assaults of politicians.

A glance at the national debt will show the operation of this measure. The sum-total on the 1st of February, 1868, according to the statement from the Treasury, was $2,514,315,373, being, in round numbers, twenty-five hundred millions. Out of this may be deducted legal-tender and fractional notes, as currency, amounting to $388,405,565, and several other smaller items. The following amounts represent the portions of debt provided for by this bill:—

Six per cent., due 1881,$ 283,676,600

Six per cent., five-twenties,1,398,488,850

Seven and three tenths Treasury notes, convertible into five-twenty bonds at maturity,214,953,850

$1,897,119,300

This considerable sum may be funded under the proposed bill.

If this large portion of the national debt, with its six per cent. interest in coin, can be funded at a less interest, there will be a corresponding relief to the country. But there is one way only in which this can be successfully accomplished. It is by making the Public Faith so manifest that the holders will be induced to come into the change for the sake of the longer term. All that is done by them must be voluntary. Every holder must be free to choose. He may prefer his short bond at six per cent., or a long bond at five per cent., or a longer at four and one half per cent., or a still longer at four per cent. This is his affair. There must be no compulsion. Any menace of compulsion will defeat the transaction. It will be nothing less than Repudiation, with a certain loss of credit, which no saving of interest can repay. You must continue to borrow on a large scale; but who will lend to the repudiator, unless at a destructive discount? Any reduction of interest without the consent of the holders will reduce your capacity to borrow. A forced reduction of interest will be like a forced loan. While seeming to save interest, you will lose capital. Do not be deceived. Any compulsory conversion is only another form of Repudiation. It is tantamount to this declared crime. It is the same misdeed, taking still another shape,—as Proteus was the same heathen god in all his various transformations. It is Repudiation under an alias.

Happily the bill before us is free from any such damning imputation. The new bonds are authorized; but the holders of existing obligations are left free to exercise their judgment in making the change. I am assured by those who, from practical acquaintance with business, ought to know, that these bonds will be rapidly taken for the five-twenties.

The same bill, in its second section, sets apart $135,000,000 annually to the payment of the interest and the reduction of the principal of the national debt; and this is to be in lieu of a sinking fund. This is an additional security. It is another assurance of our determination to deal honestly.

The third section of the same bill is newer in its provisions, and, perhaps, more open to doubt. But, though uncertain with regard to it in the beginning, I have found that it commended itself on careful examination. On its face it provides for a system of conversion and reconversion. The holder of lawful money to the amount of $1,000, or any multiple of $1,000, may convert the same into the funded debt for an equal amount; and any holder of the funded debt may receive for the same at the Treasury lawful money, unless the notes then outstanding shall be equal to $400,000,000. If bonds in the funded debt shall be worth more than greenbacks, the latter would be converted into bonds according to the ordinary laws of trade. The latest relation of these two is as follows: $100 greenbacks equal seventy-one dollars gold; $100 five per cent. equal seventy-six dollars gold. If the greenbacks are convertible into the five per cent., they will, of course, be converted while the above relation continues. This must be so long as the national credit is maintained abroad and the demand for our securities continues there. By this process our greenbacks will be gradually absorbed, and those that are not absorbed will be lifted in value. It would seem as if bonds and greenbacks must both gain from this business, and with them the country must gain also. Here would be a new step to specie payments.

The bill closes with a provision authorizing contracts in coin, instead of greenbacks, according to the agreement of parties. This authority is in harmony with the other provisions of the bill, and is still another step toward specie payments.

I am now brought to the last branch of this discussion, in which all the others are absorbed: I mean the necessity of specie payments, or, in other words, the necessity of coin in the place of inconvertible paper. Other things are means to this end: this is the end itself. Until this is accomplished, Financial Reconstruction exists in aspiration only, and not in reality.

The suspension of specie payments was originally a war measure, like the suspension of the Habeas Corpus. It was so declared by myself at the time it was authorized. Pardon me, if I quote my own words in the debate on the bill:—

“It is a discretion kindred to that under which the Habeas Corpus is suspended, so that citizens are arrested without the forms of law,—kindred to that under which an extensive territory is declared to be in a condition of insurrection, so that all business with its inhabitants is suspended,—kindred to that, which unquestionably exists, to obtain soldiers, if necessary, by draft or conscription instead of the free offering of volunteers,—kindred to that under which private property is taken for public uses,—and kindred, also, to that undoubted discretion which sanctions the completest exercise of the transcendent right of self-defence.”[238]

As a war measure, it should cease with the war, or so soon thereafter as practicable. It should not be continued a day beyond positive exigency. While the war lasted, it was a necessity, as the war itself. Its continuance now prolongs into peace this belligerent agency, and projects its disturbing influence into the most distant places. Like war, whose greatest engine it was, it is the cause of incalculable evil. Like war, it troubles the entire Nation, deranges business, and demoralizes the people. As I hate war, so do I hate all its incidents, and long to see them disappear. Already in these remarks I have pictured the financial anarchy of our country, the natural reflection of the political; but the strongest illustration is in a disordered currency, which is present to everybody with a dollar in his pocket.

The derangement of business may be seen at home and abroad. It is not merely derangement; it is dislocation. Everything is out of joint. Business has its disease also, showing itself in opposite conditions: shrunk at times, as with paralysis; swollen at times to unhealthy proportions, as with elephantiasis. The first condition of business is stability, which is only another form of security; but this is impossible, when nobody can tell from day to day the value of the currency. It may change in a night. The reasonable contract of to-day may become onerous beyond calculation to-morrow. There is no fixed standard. The seller is afraid to sell, the buyer afraid to buy. Nobody can sell or buy a farm, nobody can build or mortgage a house, except at an unnatural hazard. Salaries and all fixed incomes suffer. The pay of every soldier in the army, every sailor in the navy, every office-holder from the President to the humblest postmaster, is brought under this tyrannical influence. Harder still, innocent pensioners, wards of the Nation, must bear the same doom. Maimed soldiers, bereaved widows, helpless orphans, whose cup is already full, are compelled to see their scanty dole shrink before their sight till it seems ready to vanish in smoke.

A greenback is a piece of paper with a promise on its face and green on its back, declared to be money by Act of Congress, but which the Government refuses to pay. It is “failed paper” of the Government. The mischief of such a currency is everywhere, enveloping the whole country and penetrating all its parts. It covers all and enters all. It is a discredit to the national name, from which the Nation suffers in whole and in detail. It weakens the Nation and hampers the citizen. There is no national enterprise which it does not impede. The Pacific Railroad feels it. There is not a manufacture or business which does not feel it also. There is not a town, or village, or distant place, which it does not visit.

A practical instance will show one way in which individuals suffer on an extensive scale, being generally those who are least able. I follow an ingenious merchant, Mr. Atkinson, of Boston, whose figures sustain his conclusion, when I insist that our present currency, from its unstable character, operates as an extra tax of more than one hundred millions annually on the labor and business of the country; and this vast sum is taken from the pockets of the people, not for the support of the Government, but to swell the unreported fund out of which the excesses of the present day are maintained. There are few business men who would not put the annual loss in their affairs, from the fluctuation in the currency, somewhere from one to five per cent. One per cent. is the lowest. Mr. Hazard, of Rhode Island, puts it at two per cent. Now the aggregate sales in the fiscal year ending June, 1867, were over eleven thousand millions ($11,000,000,000) in currency, excluding sales of stocks or bonds. One per cent. on this prodigious amount represents a tax of one hundred and ten millions, paid annually by consumers, according to their consumption, and not in any degree according to their ability. This is one instance only of the damages annually paid on account of our currency. If we estimate the annual tax at more than one per cent., the sum-total will be proportionally larger. Even at the smallest rate, it is many millions more than all the annual expenses of our Government immediately preceding the Rebellion.

Fluctuations in the measure of value are as inconvenient and fatal as fluctuations in the measures of length and bulk. A dollar which has to-day one value and to-morrow another is no better than a yard which has to-day one length and another to-morrow, or a bushel which has to-day one capacity and another to-morrow. It is as uncertain as “Equity” measured by the varying foot of successive chancellors, sometimes long and sometimes short, according to the pleasant illustration of Selden in his “Table-Talk.” Such fluctuations are more than a match for any prudence. Business is turned into a guess, or a game of hazard, where the prevailing anarchy is overruled by accident:—

In such a condition of things the gamblers have the advantage. The stock exchange becomes little better than a faro bank. By such scenes the country is demoralized. The temptation of excessive gains leads from the beaten path of business. Speculation without money takes the place of honest industry, extending from the stock exchange everywhere. The failed paper of the Government teaches the lesson of bankruptcy. The Government refuses to take up its notes, and others do likewise. These things cannot be without a shock to public morals. Honesty ceases to be even a policy. Broken contracts prepare the way for crime, which comes to complete the picture.

Our foreign commerce is not less disturbed; for here we are brought within the sphere of other laws than our own. Gold is the standard of business throughout the civilized world. Until it becomes again the standard among us, we are not, according to the familiar phrase of President Lincoln, in “practical relation” with the civilized world. We are States out of the great Union. Our currency has the stamp of legality at home, but it is worthless abroad. In all foreign transactions we are driven to purchase gold at a premium, or to adopt a system of barter which belongs to the earlier stages of commerce. Corn, wheat, and cotton are exchanged for the products we desire, and this traffic is the coarse substitute for that refined and plastic system of exchanges which adapts itself so easily to all the demands of business. Commerce with foreign powers is prosecuted at an incalculable disadvantage. Our shipping, which in times past has been the pride of the Nation, whitening every sea with its sails, is reduced in number and value. Driven from the ocean by pirate flags during the Rebellion, it cannot struggle back to its ancient supremacy until the accustomed laws of trade once more resume their rule.

There are few who will deny the transcendent evil which I have set forth. There are few who will advocate inconvertible paper as currency. How shall the remedy be applied? On this question, so interesting to the business and good name of the country, there are theories without number,—some so ingenious as to be artificial rather than natural. What is natural is simple; and I am persuaded that our remedy must be of this character.

The legal-tender note, which we wish to expel from our currency, has two different characters: first, as mere currency, for use in the transactions of business; and, secondly, as real value, from the assurance that ultimately it will be paid in coin, according to its promise. These two different characters may be sententiously expressed as availability and convertibility. The notes are now available without being convertible. Our desire is to make them convertible,—in other words, the equivalent of coin in value, dollar for dollar. On the 1st of June last past these notes were $388,675,802 in amount.

Discarding theories, however ingenious, and following Nature, I call attention to a few practical points, before reverting to those cardinal principles applicable to this subject, from which there can be no appeal.

First. The present proposition for funding is an excellent measure for this purpose, being at once simple and practical: not that it contains any direct promise for the redemption of our currency, but because it places the national debt on a permanent footing at a smaller interest than is now paid. By this change three things essential to financial reconstruction are promoted: economy, stability, and national credit. With these once established, specie payments cannot be long postponed.

Secondly. Another measure of immediate value is the legalization of contracts in coin, so that henceforth all agreements made in coin may be legally enforced in coin or its equivalent. This would establish specie payments wherever parties desired, and to this extent begin the much-desired change. Contracts in coin would increase and multiply, until the exception became the rule. There would for a time be two currencies; but the better must gradually prevail. The essential equity of the new system would be apparent, while there would be a charm in once more looking upon familiar faces long hidden from sight, as the hoarded coin came forth. Nor can any possible injury ensue. The legalization is applicable only to future contracts, as the parties mutually agree. Every citizen in this respect would be a law to himself. If he chose in his own business to resume specie payments, he could do so. There would be a voluntary resumption by the people, one by one. But this influence could not be confined to the immediate parties. Beyond the contagion of its example, there would be a positive necessity on the part of the banks that they should adapt themselves to the exigency by the substitution of proper commercial equivalents; and thus again we take another step in specie payments.

Thirdly. Another measure of practical value is the contraction of the existing currency, so as to bring it on a par with coin, dollar for dollar. Before alluding to any of the expedients to accomplish this precious object, it is important to arrive at some idea of the amount of currency of all kinds required for the business of the country. To do this, we may look at the currency before the Rebellion, when business was in its normal condition. I shall not occupy space with tables, although they are now before me, but content myself with results. From the official report of the Treasury it appears that on the 1st of January, 1860, the whole active circulation of the country, including bank circulation, bank deposits available as currency, specie in bank, specie in Treasury, estimated specie in circulation, and deducting reserves, amounted to $542,097,264. It may be assumed that this sum-total was the amount of currency required at the time. From the same official tables it appears that on the 1st of October, 1867, the whole active circulation of the country, beginning with greenbacks and fractional currency, and including all the items in the other account, amounted to $1,245,138,193. Thus from 1860, when the currency was normal, to 1867, some time after the suspension of specie payments, there was an increase of one hundred and thirty per cent. Omitting bank deposits for both years, the increase was one hundred and forty-six per cent. Making due allowance for the increase of population, business, and Government transactions, there remains a considerable portion of this advance which must be attributed to the abnormal condition of the currency. I follow various estimates in putting this at sixty or seventy per cent., representing the difference of prices at the two different periods, and the corresponding excess of currency above the requirements of the country. Therefore, for the reduction of prices, there must be a reduction of the currency; and this must be to the amount of $300,000,000. So it seems, unless these figures err.

Against the movement for contraction, which is commended by its simplicity and its tendency to a normal condition of things, we have two adverse policies,—one, the stand-still policy, and the other, worse yet, the policy of inflation. By the first the currency is left in statu quo,—stationary,—subject to the influence of other conditions, which may operate to reduce it. Better stand still than move in a wrong direction. By the latter the currency is enlarged at the expense of the people,—being at once a tax and a derangement of values. You pamper the morbid appetite for paper money, and play the discarded part of John Law. You blow up a bladder, without thinking that it is nothing but a bladder, ready to burst. As the volume of currency is increased, the purchasing power of each dollar is reduced in proportion. As you add to the currency, you take from the dollar. You do little more than mark your goods at higher prices, and imagine that they have increased in value. Already the price is too high. Do not make it higher. Already the currency is corrupted. Do not corrupt it more. The cream has been reduced to skimmed milk. Do not let it be reduced to chalk and water. Let there be national cream for all the people.

Obviously any contraction of the currency must be conducted with caution, so as to interfere as little as possible with existing interests. It should be understood in advance, so that business may adapt itself to the change. Once understood, it must be pursued wisely to the end. I call attention to a few of the expedients by which this contraction may be made.

1. Any holder may have liberty to fund his greenbacks in bonds, as he may desire; so that, as coin increases, they will be merged in the funded debt, and the currency be reduced in corresponding proportion.

2. Greenbacks, when received at the Treasury, may be cancelled, or they may be redeemed directly, so far as the coin on hand will permit.

3. Greenbacks may be converted into compound-interest notes, to be funded in monthly instalments, running over a term of years, thus reaching specie payments within a brief period.

4. Another expedient, more active still, is the application of the coin on hand to the payment of greenbacks at a given rate,—say $6,000,000 a month,—selecting for payment those holders who present the largest amount of five-twenties for conversion into the long bonds at a low rate of interest, or shall pay the highest premium on such bonds.

I mention these as expedients, having the authority of financial names, calculated to operate in the same direction, without violent change or spasmodic action. Under their mild and beneficent influence the currency would be gradually reduced, so that the final step, when taken, would be hardly felt. With so great an object in view, I do not doubt its accomplishment at an early day, if the Nation only wills it. “Where there is a will, there is a way”; and never was this proverb truer than on this occasion. To my mind it is clear, that, when the Nation wills a currency in coin, then must this victory over the Rebellion be won,—provided always that there is no failure in those other things on which I have also dwelt as the conditions precedent of this final victory.

How vain it is to expect Financial Reconstruction until Political Reconstruction has been completed I have already shown. How vain to expect specie payments until the Nation has once more gained its natural vigor, and it has become one in reality as in name! Let this be, and the Nation will be like a strong man, in the full enjoyment of all his forces, coping with the trials of life.

There must also be peace within our borders, so that there shall be no discord between President and Congress. Therefore, so long as Andrew Johnson is President, the return to specie payments is impossible. So long as a great party, called Democratic, better now called Rebel, wars on that Political Reconstruction which Congress has organized, there can be no specie payments. So long as any President, or any political party, denies the Equal Rights of the freedman, it is vain to expect specie payments. Whoso would have equity must do equity; and now, if you would have specie payments, you must do this great equity. The rest will follow. When General Grant said, “Let us have peace,” he said also, “Let us have specie payments.” Among all the blessed gifts of peace there is none more certain.

Nor must it be forgotten that there can be no departure in any way from the requirements of Public Faith. This is a perpetual obligation, complete in all respects, and just as applicable to the freedman as to the bond-holder. Repudiation in all its forms, direct or indirect, whether of the freedman or the bond-holder, must be repudiated. The freedman and bond-holder are under the same safeguard, and there is the same certain disaster from any repudiation of either. Unless the Public Faith is preserved inviolate, you cannot fund your debt at a smaller interest, you cannot convert your greenbacks, you cannot comply with the essential terms of Reconstruction. Amid all surrounding abundance you are poor and powerless, for you are dishonored. Do not say, as an apology, that all should have the same currency. True as this may be, it is a cheat, when used to cover dishonor. The currency of all should be coin, and you should lift all the national creditors to this solid platform rather than drag a single citizen down. A just Equality is sought by levelling up instead of levelling down. In this way the national credit will be maintained, so that it will be a source of wealth, prosperity, and renown.

Pardon me, if now, by way of recapitulation, I call your attention to three things in which all others centre. The first is the Public Faith. The second is the Public Faith. The third is the Public Faith. Let these be sacredly preserved, and there is nothing of power or fame which can be wanting. All things will pay tribute to you, even from the uttermost parts of the sea. All the sheaves will stand about, as in the dream of Joseph, and make obeisance to your sheaf. Good people, especially all concerned in business, whether commerce, banking, or labor, our own compatriots or the people of other lands, will honor and uphold the nation which, against all temptation, keeps its word.