Chapter IX · GREAT QUESTIONS AND GREAT ANSWERS.

“Who shall make answer on such themes as these?”

It is now appropriate to consider somewhat in extenso the claims of James A. Garfield to be regarded as a statesman. It must needs be in the life of every public man, more particularly in the life of a Congressman, and more particularly still in the life of him who has risen to the rank of leader of the House, that he speak much on questions of passing interest. Many of the topics which engage his attention flit away with the occasion which gave them birth. They are the issues of the day, creatures of prejudice and partisanship. Hence in the history of the life of a public man, many paragraphs will be found which merely recount the battles fought and victories won in the ordinary contests of the arena.

In the most marked contrast with this, however, is another class of questions which rise to the level of perpetual interest, affecting not only the destinies of the hour, but pregnant with the fate of the future. Not questions of the day are these, passing like a shadow over the landscape of current events; but shining rather like those orbs from whose disks the effulgence is shed which makes shadows possible. Albeit, there are themes of statesmanship vitally affecting the life of the nation; and only he, who in the heated arena of public life shows himself able to grapple with such problems, is worthy of the name of statesman.

Was James A. Garfield a statesman? In considering this question, and finding therefor a fitting answer, it is necessary clearly to understand what are the leading themes of American statesmanship. Perhaps a fair analysis of this great question will show that those topics of public discussion which rise to the dignity of questions of statesmanship will present about four leading heads:

I. Questions affecting the Nationality of the United States.

309II. Questions affecting the Financial and Monetary systems of the United States.

III. Questions affecting the Revenue and Expenditures of the United States.

IV. Questions concerning the General Character and Tendency of American Institutions.

If it be shown that James A. Garfield proved himself able to grasp and discuss any or all of the great questions falling under this comprehensive classification, in such a manner as to throw new light upon them, to fix the status of public opinion regarding them, and to that extent to build more securely than hitherto the substructure of American greatness, then indeed is he worthy of the name of statesman. Let us then, without fear or partiality, apply the crucial test to Garfield’s public life, and see whether indeed he is the peer and fit companion for the great names of our history—for Hamilton, and Adams, and Webster, and Sumner, and Chase.

Before beginning this discussion, however, it will be necessary to remind the reader, that in considering the claims of Garfield to the rank of statesman under the outline presented above, the chronological order of the narrative will be broken up, and such a grouping made of his public speeches and papers as will best illustrate his views and establish his rank among the great men of our country.

First, then, as to questions affecting the Nationality of the United States. What is the record of him whose life is here recounted concerning those great and vital themes upon which rests our perpetuity as a nation? Three utterances, his earliest, his latest, and his most characteristic, must be taken as representatives of the entire class.

On February 1, 1866, being thirty-five years of age, he presented his views on the general question of the restoration of the States lately in rebellion:

THIS IS A NATION.

“The word ‘State’, as it has been used by gentlemen in this discussion, has two meanings, as perfectly distinct as though different words had been used to express them. The confusion arising from applying 310the same word to two different and dissimilar objects, has had very much to do with the diverse conclusions which gentlemen have reached. They have given us the definition of a ‘state’ in the contemplation of public or international law, and have at once applied that definition and the conclusions based upon it, to the States of the American Union and the effects of war upon them. Let us examine the two meanings of the word, and endeavor to keep them distinct in their application to the questions before us.

“Phillimore, the great English publicist, says: ‘For all the purposes of international law, a state (demos, civitas, volk) may be defined to be a people permanently occupying a fixed territory, bound together by common laws, habits, and customs, into one body-politic, exercising through the medium of an organized government, independent sovereignty and control over all persons and things within its boundaries, capable of making war and peace, and of entering into all international relations with the other communities of the globe.’—Phillimore’s International Law, vol. i, sec. 65.

“Substantially the same definition maybe found in Grotius, book one, chapter one, section fourteen; in Burlamaqui, volume two, part one, chapter four, section nine; and in Vattel, book one, chapter one. The primary point of agreement in all these authorities is, that in contemplation of international law a state is absolutely sovereign, acknowledging no superior on earth. In that sense the United States is a state, a sovereign state, just as Great Britain, France, and Russia are states.

“But what is the meaning of the word State as applied to Ohio or Alabama? Is either of them a state in the sense of international law? They lack all the leading requisites of such a state. They are only the geographical subdivisions of a state; and though endowed by the people of the United States with the rights of local self-government, yet in all their external relations their sovereignty is completely destroyed, being merged in the supreme Federal Government.—Halleck’s International Law, sec. 16, page 71.

“Ohio can not make war; can not conclude peace; can not make a treaty with any foreign government, can not even make a compact with her sister States; can not regulate commerce; can not coin money; and has no flag. These indispensable attributes of sovereignty, the State of Ohio does not possess, nor does any other State of the Union. We call them States for want of a better name. We call them States, because the 311original Thirteen had been so designated before the Constitution was formed, but that Constitution destroyed all the sovereignty which those States were ever supposed to possess in reference to external affairs.

“I submit, Mr. Speaker, that the five great publicists—Grotius, Puffendorf, Bynkershoek, Burlamaqui, and Vattel, who have been so often quoted in this debate, and all of whom wrote more than a quarter of a century, and some nearly two centuries before our Constitution was formed, can hardly be quoted as good authorities in regard to the nature and legal relationships of the component States of the American Union.

“Even my colleague from the Columbus District [Mr. Shellabarger], in his very able discussion of this question, spoke as though a State of this Union was the same as a state in the sense of international law, with certain qualities added. I think he must admit that nearly all the leading attributes of such a state are taken from it when it becomes a State of the Union.

“Several gentlemen, during this debate, have quoted the well known doctrine of international law, ‘that war annuls all existing compacts and treaties between belligerents;’ and they have concluded, therefore, that our war has broken the Federal bond and dissolved the Union. This would be true, if the rebel States were states in the sense of international law—if our Government were not a sovereign nation, but only a league between sovereign states. I oppose to this conclusion the unanswerable proposition that this is a nation; that the rebel States are not sovereign states, and therefore their failure to achieve independence was a failure to break the Federal bond—to dissolve the Union....

“In view of the peculiar character of our Government, in what condition did the war leave the rebel States?”

He argued that by the admission of a State to the Union, the laws of the United States were extended to it. A State might violate one of these laws, but could not annul it. Each rebel State exerted every power to break away from these laws, but was unable to destroy or invalidate one of them. Each rebel State let go of the Union, but the Union did not let go of it:

“Let the stars of heaven illustrate our constellation of States. When God launched the planets upon their celestial pathway, He bound them all by the resistless power of attraction to the central sun, around which 312they revolved in their appointed orbits. Each may be swept by storms, may be riven by lightnings, may be rocked by earthquakes, may be devastated by all the terrestrial forces and overwhelmed in ruin, but far away in the everlasting depths the sovereign sun holds the turbulent planet in its place. This earth may be overwhelmed until the high hills are covered by the sea; it may tremble with earthquakes miles below the soil, but it must still revolve in its appointed orbit. So Alabama may overwhelm all her municipal institutions in ruin, but she can not annul the omnipotent decrees of the sovereign people of the Union. She must be held forever in her orbit of obedience and duty.

“Now, let us inquire how the surrender of the military power of the rebellion affected the legal condition of those States. When the rebellion collapsed, and the last armed man of the Confederacy surrendered to our forces, I affirm that there was not in one of those States a single government that we did or could recognize. There was not in one of those States, from governor down to constable, a single man whom we could recognize as authorized to exercise any official function whatever. They had formed governments alien and hostile to the Union. Not only had their officers taken no oaths to support the Constitution of the United States, but they had heaped oath upon oath to destroy it.

“I go further. I hold that there were in those States no constitutions of any binding force and effect; none that we could recognize. A constitution, in this case, can mean nothing less than a constitution of government. A constitution must constitute something, or it is no constitution. When we speak of the constitution of Alabama, we mean the constitution of the government of Alabama. When the rebels surrendered, there remained no constitution in Alabama, because there remained no government. Those States reverted into our hands by victorious war, with every municipal right and every municipal authority utterly and completely swept away.”

After citing from the highest authorities on the laws of war, he sums up the legal status of the rebellious states as follows:

“1. That, by conquest, the United States obtained complete control of the rebel territory.

“2. That every vestige of municipal authority in those States was, by secession, rebellion, and the conquest of the rebellion, utterly destroyed.

313“3. That the state of war did not terminate with the actual cessation of hostilities, but that, under the laws of war, it was the duty of the President, as commander-in-chief, to establish governments over the conquered people of the insurgent States, which governments, no matter what may be their form, are really military governments, deriving their sole power from the President.

“4. That the governments thus established, are valid while the state of war continues and until Congress acts in the case.

“5. That it belongs exclusively to the legislative authority of the Government to determine the political status of the insurgent States, either by adopting the governments the President has established, or by permitting the people to form others, subject to the approval of Congress.

“It was time for Congress to act. That action should recognize, first, the stupendous facts of the war. By the Emancipation Proclamation we not only declared the slaves free, but pledged the faith of the nation to ‘maintain their freedom.’ What is freedom? It is no mere negative; no mere privilege of not being chained, bought and sold, branded or scourged. It is a tangible realization of the truths that ‘all men are created free and equal,’ and that the sanction of just government is the ‘consent of the governed.’

“These truths can never be realized until each man has a right to be heard in all matters concerning himself....

“I remember an incident in the history of the eastern church, as recorded by Gibbon, volume two, chapter twenty-eight, which illustrates the power that slavery has exercised among us. The Christians of that day, under the lead of Theophilus, undertook to destroy the heathen temples. Gibbon says:

“‘Theophilus proceeded to demolish the temple of Serapis without any other difficulties than those which he found in the weight and solidity of the materials, but these obstacles proved so insuperable that he was obliged to leave the foundations and to content himself with reducing the edifice itself to a heap of rubbish, a part of which was soon afterward cleared away to make room for a church, erected in honor of the Christian martyrs.

“‘The colossal statue of Serapis was involved in the ruin of his temple and religion. A great number of plates of different metals, artificially joined together, composed the majestic figure of the deity, who 314touched on either side the walls of the sanctuary. The aspect of Serapis, his sitting posture, and the scepter, which he bore in his left hand, were extremely similar to the ordinary representations of Jupiter. He was distinguished from Jupiter by the basket, or bushel, which was placed on his head, and by the emblematic monster which he held in his right hand, the head and body of a serpent branching into three tails, which were again terminated by the triple heads of a dog, a lion, and a wolf. It was confidently affirmed that if any impious hand should dare to violate the majesty of the god, the heavens and earth would instantly return to the original chaos. An intrepid soldier, animated by zeal, and armed with a weighty battle-ax, ascended the ladder, and even the Christian multitude expected with some anxiety the event of the combat. He aimed a vigorous stroke against the cheek of Serapis; the cheek fell to the ground; the thunder was still silent, and both the heavens and the earth continued to preserve their accustomed order and tranquillity. The victorious soldier repeated his blows, the huge idol was overthrown and broken in pieces, and the limbs of Serapis were ignominiously dragged through the streets of Alexandria. His mangled carcass was burnt in the amphitheater amid the shouts of the populace, and many persons attributed their conversion to this discovery of the impotence of their tutelary deity.’

“So slavery sat in our national Capitol. Its huge bulk filled the temple of our liberty, touching it from side to side. Mr. Lincoln, on the 1st of January, 1863, struck it on the cheek, and the faithless and unbelieving among us expected to see the fabric of our institutions dissolve into chaos because their idol had fallen. He struck it again; Congress and the States repeated the blow, and its unsightly carcass lies rotting in our streets. The sun shines in the heavens brighter than before. Let us remove the carcass and leave not a vestige of the monster. We shall never have done that until we have dared to come up to the spirit of the Pilgrim covenant of 1620, and declare that all men shall be consulted in regard to the disposition of their lives, liberty, and property. The Pilgrim fathers proceeded on the doctrine that every man was supposed to know best what he wanted, and had the right to a voice in the disposition of himself.”

A second fact to be recognized was that 7,000,000 white men were waiting to have their case adjudged and their political status fixed.

315“As to persons we must see to it that hereafter personal liberty and personal rights are placed in the keeping of the nation; that the right to life, liberty, and property are to be guaranteed to citizens in reality, and not left to the caprice of mobs and contingencies of local legislation.... As to States, the burden of proof rests on each one of them, to show whether it is fit to enter the Federal circle in full communion of privileges. Men can not change their hearts—love what they hated, and hate what they loved—upon the issue of a battle; but our duty is to demand that before we admit them they shall give sufficient assurance that, whatever they believe or wish, their action in the future shall be such as loyal men can approve.”

How far does that speech differ from the reconstruction policy actually adopted?

Thirteen years later, on June 27, 1879, the pending bill being one for the appropriations for United States marshals, General Garfield said:

“Mr. Chairman: ‘To this favor’ it has come at last. The great fleet that set out on the 18th of March, with all its freightage and armament, is so shattered that now all the valuables it carried are embarked in this little craft, to meet whatever fate the sea and the storm may offer. This little bill contains the residuum of almost every thing that has been the subject of controversy at the present session. I will not discuss it in detail, but will speak only of its central feature, and especially of the opinions which the discussion of that feature has brought to the surface during the present session. The majority in this Congress have adopted what I consider very extreme and dangerous opinions on certain important constitutional questions. They have not only drifted back to their old attitude on the subject of State Sovereignty, but they have pushed that doctrine much further than most of their predecessors ever went before, except during the period immediately preceding the late war.

“Let me summarize them: First, there are no national elections; second, the United States has no voters; third, the States have the exclusive right to control all elections of members of Congress; fourth, the senators and representatives in Congress are State officers, or, as they have been called during the present session, ‘embassadors’ or ‘agents’ of the State; fifth, the United States has no authority to keep the peace anywhere within a State, and, in fact, has no peace to keep; sixth, the 316United States is not a Nation endowed with sovereign power, but is a confederacy of States; seventh, the States are sovereignties possessing inherent supreme powers; they are older than the Union, and as independent sovereignties the state governments created the Union and determined and limited the powers of the General Government.

“These declarations embody the sum total of the constitutional doctrines which the Democracy has avowed during this extra session of Congress. They form a body of doctrines which I do not hesitate to say are more extreme than was ever before held on this subject, except, perhaps, at the very crisis of secession and rebellion.

“Firmly believing that these doctrines and attempted practice of the present Congress are erroneous and pernicious, I will state briefly the counter-propositions:

“I affirm: first, that the Constitution of the United States was not created by the governments of the States, but was ordained and established by the only sovereign in this country—the common superior of both the States and the Nation—the people themselves; second, that the United States is a Nation, having a government whose powers, as defined and limited by the Constitution, operate upon all the States in their corporate capacity and upon all the people; third, that by its legislative, executive, and judicial authority the Nation is armed with adequate power to enforce all the provisions of the Constitution against all opposition of individuals or of States, at all times and all places within the Union.

“These are broad propositions; and I take the few minutes remaining to defend them. The constitutional history of this country, or, rather, the history of sovereignty and government in this country, is comprised in four sharply defined epochs:

“First. Prior to the 4th day of July, 1776, sovereignty, so far as it can be affirmed of this country, was lodged in the crown of Great Britain. Every member of every colony (the colonists were not citizens, but subjects) drew his legal rights from the crown of Great Britain. ‘Every acre of land in this country was then held mediately or immediately by grants from that crown,’ and ‘all the civil authority then existing or exercised here flowed from the head of the British empire.’

“Second. On the 4th day of July, 1776, the people of these colonies, asserting their natural inherent right as sovereigns, withdrew the sovereignty from the crown of Great Britain, and reserved it to themselves. In so far as they delegated this national authority at all, they delegated 317it to the Continental Congress assembled at Philadelphia. That Congress, by general consent, became the supreme government of this country—executive, judicial, and legislative in one. During the whole of its existence it wielded the supreme power of the new Nation.

“Third. On the 1st day of March, 1781, the same sovereign power, the people, withdrew the authority from the Continental Congress, and lodged it, so far as they lodged it at all, with the Confederation, which, though a league of States, was declared to be a perpetual union.

“Fourth. When at last our fathers found the Confederation too weak and inefficient for the purposes of a great nation, they abolished it, and lodged the national authority, enlarged and strengthened by new powers, in the Constitution of the United States, where, in spite of all assaults, it still remains. All these great acts were done by the only sovereign in this Republic, the people themselves.

“That no one may charge that I pervert history to sustain my own theories, I call attention to the fact that not one of the colonies declared itself free and independent. Neither Virginia nor Massachusetts threw off its allegiance to the British crown as a colony. The great declaration was made not even by all the colonies as colonies, but it was made in the name and by authority of ‘all the good people of the colonies’ as one people.

“Mr. Chairman, the dogma of State Sovereignty, which has re-awakened to such vigorous life in this chamber, has borne such bitter fruits and entailed such suffering upon our people that it deserves more particular notice. It should be noticed that the word ‘sovereignty’ can not be fitly applied to any government in this country. It is not found in our constitution. It is a feudal word, born of the despotism of the Middle Ages, and was unknown even in imperial Rome. A ‘sovereign’ is a person, a prince, who has subjects that owe him allegiance. There is no one paramount sovereign in the United States. There is no person here who holds any title or authority whatever, except the official authority given him by law. Americans are not subjects, but citizens. Our only sovereign is the whole people. To talk about the ‘inherent sovereignty’ of a corporation—an artificial person—is to talk nonsense; and we ought to reform our habit of speech on that subject.

“But what do gentlemen mean when they tell us that a State is sovereign? What does sovereignty mean in its accepted use, but a political corporation having no superior? Is a State of this Union such a 318corporation? Let us test it by a few examples drawn from the Constitution. No State of this Union can make war or conclude a peace. Without the consent of Congress it can not raise or support an army or a navy. It can not make a treaty with a foreign power, nor enter into any agreement or compact with another State. It can not levy imposts or duties on imports nor exports. It can not coin money. It can not regulate commerce. It can not authorize a single ship to go into commission anywhere on the high seas; if it should, that ship would be seized as a pirate or confiscated by the laws of the United States. A State can not emit bills of credit. It can enact no law which makes any thing but gold and silver a legal tender. It has no flag except the flag of the Union. And there are many other subjects on which the States are forbidden by the Constitution to legislative.

“How much inherent sovereignty is left in a corporation which is thus shorn of all these great attributes of sovereignty?

“But this is not all. The Supreme Court of the United States may declare null and void any law or any clause of the constitution of a State which happens to be in conflict with the Constitution and laws of the United States. Again, the States appear as plaintiffs and defendants before the Supreme Court of the United States. They may sue each other; and, until the Eleventh Amendment was adopted, a citizen might sue a State. These ‘sovereigns’ may all be summoned before their common superior to be judged. And yet they are endowed with supreme inherent sovereignty!

“Again, the government of a State may be absolutely abolished by Congress, in case it is not republican in form. And, finally, to cap the climax of this absurd pretension, every right possessed by one of these ‘sovereign’ States, every inherent sovereign right, except the single right to equal representation in the Senate, may be taken away, without its consent, by the vote of two-thirds of Congress and three-fourths of the States. But, in spite of all these disabilities, we hear them paraded as independent, sovereign States, the creators of the Union and the dictators of its powers. How inherently ‘sovereign’ must be that State west of the Mississippi which the Nation bought and paid for with the public money, and permitted to come into the Union a half century after the Constitution was adopted! And yet we are told that the States are inherently sovereign and created the National Government.

“The dogma of State Sovereignty in alliance with chattel slavery made 319its appeal to that court of last resort where the laws are silent, and where kings and nations appear in arms for judgment. In that awful court of war two questions were tried: Shall slavery live? And is a State so sovereign that it may nullify the laws and destroy the Union? These two questions were tried on the thousand battle-fields of the war; and if war ever ‘legislates,’ as a leading Democrat of Ohio once wisely affirmed, then our war legislated finally upon those subjects, and determined, beyond all controversy, that slavery should never again live in this Republic, and that there is not sovereignty enough in any State to authorize its people either to destroy the Union or nullify its laws.”

Ten years ago a biographer who loved Garfield and cared for his fame would have omitted the speech from which we are about to give extracts. It is, however, no secret that, in 1871, General Garfield split with his party upon what was known in contemporary politics as “The Force Bill.” This bill was drawn, under the provisions of the Fourteenth Amendment, to protect the Republicans of the Southern States from outrage and murder. The President had laid before Congress a most terrible state of affairs. The Ku-Klux Klan, that bloody and mysterious organization, which was the terror of loyal men, and the guilty perpetrator of unnumbered crimes, thrust its hideous head into the face of the men who had fought for the Union. Murder, ostracism, incendiarism, bull-dozing, intimidation, ballot-box stuffing, and a thousand other outrages were committed. The best picture of the time is in “The Fool’s Errand.” These things, perhaps, (we do not say so) magnified by fear, hate, and political rancor, were too much for the Republican Congress and the men who had worn the blue under Southern skies. There was terrible bitterness. Revenge darkened the Northern heart. The majority in Congress resolved to clutch the demon’s throat with the iron grip of law. In a former chapter we spoke of the battle as an experience, and how it perpetually reproduced itself in the mind of its participants. The illustration of that is found in the attitude of President Grant and the soldier majority in Congress at the time of which we are writing. The “Force Bill” 320was really a tremendous battery. It was surrounded with sulphurous smoke, and was as grim as death.

But to the rule General Garfield was an exception. At the close of the war, he said, we passed into another political epoch. He believed in the Nation, but the calm balance of his mind refused assent to any extreme measure. There was no wavering on the supremacy of the Nation. But after all this was a Republic, and despotism, the one extreme, was as fatal as disunion, the other. General Garfield opposed the extreme parts of the “Force Bill.” He looked to the future of our country as well as the past. We summarize his elaborate speech:

THE FORCE BILL.

“Mr. Speaker: I am not able to understand the mental organization of the man who can consider this bill, and the subject of which it treats, as free from very great difficulties. He must be a man of very moderate abilities, whose ignorance is bliss, or a man of transcendant genius whom no difficulties can daunt and whose clear vision no cloud obscures.

“The distinguished gentleman [Mr. Shellabarger] who introduced the bill from the committee, very appropriately said that it requires us to enter upon unexplored territory. That territory, Mr. Speaker, is the neutral ground of all political philosophy; the neutral ground for which rival theories have been struggling in all ages. There are two ideas so utterly antagonistic that, when in any nation, either has gained absolute and complete possession of that neutral ground, the ruin of that nation has invariably followed. The one is that despotism which swallows and absorbs all power in a single-central government; the other is that extreme doctrine of local sovereignty which makes nationality impossible, and resolves a general government into anarchy and chaos. It makes but little difference, as to the final result, which of these ideas drives the other from the field; in either case ruin follows.

“The result exhibited by the one was seen in the Amphictyonic and Achæan leagues of ancient Greece, of which Madison, in the twentieth number of the Federalist, says:

“‘The inevitable result of all was imbecility in the government, discord among the provinces, foreign influences and indignities, a precarious existence in peace, and peculiar calamities in war.’

321“This is a fitting description of all nations which have carried the doctrine of local self-government so far as to exclude the doctrine of nationality. They were not nations, but mere leagues, bound together by common consent, ready to fall to pieces at the demand of any refractory member. The opposing idea was never better illustrated than when Louis XIV. entered the French Assembly, booted and spurred, and girded with the sword of ancestral kings, and said to the Deputies of France: ‘The State! I am the State!’

“Between these opposite and extreme theories of government, the people have been tossed from century to century; and it has been only when these ideas have been in reasonable equipoise, when this neutral ground has been held in joint occupancy, and usurped by neither, that popular liberty and national life have been possible. How many striking illustrations of this do we see in the history of France! The deposition of Louis XIV., followed by the Reign of Terror, when liberty had run mad and France was a vast scene of blood and ruin! We see it again in our day. Only a few years ago, the theory of personal government had placed in the hands of Napoleon III., absolute and irresponsible power. The communes of France were crushed, and local liberty existed no longer. Then followed Sedan and the rest. On the first day of last month, when France was trying to rebuild her ruined Government, when the Prussian cannon had scarcely ceased thundering against the walls of Paris, a deputy of France rose in the National Assembly and moved, as the first step toward the safety of his country, that a committee of thirty should be chosen, to be called the Committee of Decentralization. But it was too late to save France from the fearful reaction from despotism. The news comes to us, under the sea, that on Saturday last, the cry was ringing through France: ‘Death to the Priests!’ and ‘Death to the Rich!’ and the swords of the citizens of that new republic are now wet with each other’s blood.

EQUIPOISE OF OUR GOVERNMENT.

“The records of time show no nobler or wiser work done by human hands than that of our fathers when they framed this Republic. Beginning in a wilderness world, they wrought unfettered by precedent, untrammeled by custom, unawed by kings or dynasties. With the history of other nations before them, they surveyed the new field. In the progress of their work they encountered these antagonistic ideas to which I 322have referred. They attempted to trace through that neutral ground the boundary line across which neither force should pass. The result of their labors is our Constitution and frame of government. I never contemplate the result without feeling that there was more than mortal wisdom in the men who produced it. It has seemed to me that they borrowed their thought from Him who constructed the universe and put it in motion. For nothing more aptly describes the character of our Republic than the solar system, launched into space by the hand of the Creator, where the central sun is the great power around which revolve all the planets in their appointed orbits. But while the sun holds in the grasp of its attractive power the whole system, and imparts its light and heat to all, yet each individual planet is under the sway of laws peculiar to itself.

“Under the sway of terrestrial laws, winds blow, waters flow, and all the tenantries of the planet live and move. So, sir, the States move on in their orbits of duty and obedience, bound to the central Government by this Constitution, which is their supreme law, while each State is making laws and regulations of its own, developing its own energies, maintaining its own industries, managing its local affairs in its own way, subject only to the supreme but beneficent control of the Union. When States Rights ran mad, put on the form of secession, and attempted to drag the States out of Union, we saw the grand lessons taught, in all the battles of the late war, that a State could no more be hurled from the Union, without ruin to the Nation, than could a planet be thrown from its orbit without dragging after it, to chaos and ruin, the whole solar universe.

“Sir, the great war for the Union has vindicated the centripetal power of the Nation, and has exploded, forever I trust, the disorganizing theory of State Sovereignty, which slavery attempted to impose upon this country. But we should never forget that there is danger in the opposite direction. The destruction, or serious crippling of the principle of local government, would be as fatal to liberty as secession would have been fatal to the Union.

“The first experiment which our fathers tried in government-making after the War of Independence was a failure, because the central power conferred in the Articles of Confederation was not strong enough. The second, though nobly conceived, became almost a failure, because slavery attempted so to interpret the Constitution as to reduce the nation again 323to a confederacy, a mere league between sovereign States. But we have now vindicated and secured the centripetal power; let us see that the centrifugal force is not destroyed, but that the grand and beautiful equipoise may be maintained.

“It will not be denied that before the adoption of the last three amendments, it was the settled interpretation of the Constitution that the protection of the life and property of private citizens belonged to the State governments entirely.... Now three amendments have been added to the Constitution, and it will not be denied that each of these amendments has changed the relation of Congress to the citizens of the States.”

Garfield spoke with his eye on the future: “This debate will become historic as the earliest legislative interpretation of the Fourteenth Amendment,” he said. He reviewed the debates accompanying the adoption of the Fourteenth Amendment. Two propositions had been before Congress. The essential parts of the one adopted were—

“The Congress shall have power to enforce by appropriate legislation, the following provisions, to wit:

“No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.

“And this is the rejected clause:

“The Congress shall have power to make all laws which may be necessary and proper to secure to the citizens in these several States equal protection in the rights of life, liberty, and property.

“The one exerts its force directly upon the States, laying restriction and limitations upon their power, and enabling Congress to enforce these limitations. The other, the rejected proposition, would have brought the power of Congress to bear directly upon the citizens, and contained a clear grant of power to Congress to legislate directly for the protection of life, liberty, and property within the States. The first limited, but did not oust the jurisdiction of the State over these subjects. The second gave Congress plenary power to cover the whole subject with its jurisdiction, and, as it seems to me, to the exclusion of the State authorities.

324“Mr. Speaker, unless we ignore both the history and the language of these clauses we can not, by any reasonable interpretation, give to the section as it stands in the Constitution, the force and effect of the rejected clause.”

Then followed an exhaustive discussion of the different clauses of the Fourteenth Amendment, after which he passed to the provisions of the pending bill. Southern outrages had been stated by the President to exist. The trouble was not unequal laws, but their maladministration and denial of protection under them. This demanded legislation. But Congress had no power to assume original jurisdiction of the matter. It could only define and declare the offense, and should employ no terms which asserted the power of Congress to take jurisdiction, until such denial of rights was clearly made. Passing then to the extreme and most objectionable parts of the bill he said:

“But, Mr. Speaker, there is one provision in the fourth section which appears to me both unwise and unnecessary. It is proposed not only to authorize the suspension of the privileges of the writ of habeas corpus, but to authorize the declaration of martial law in the disturbed districts.

“I do not deny, but I affirm, the right of Congress to authorize the suspension of the privileges of the writ of habeas corpus whenever, in cases of rebellion or invasion, the public safety may require it. Such action has been, and may again be, necessary to the safety of the Republic; but I call the attention of the House to the fact that never but once in the history of this Government has Congress suspended the great privileges of this writ, and then it was not done until after two years of war had closed all the ordinary tribunals of justice in the rebellious districts, and the great armies of the Union, extending from Maryland to the Mexican line, were engaged in a death-struggle with the armies of the rebellion. It was not until the third day of March, 1863, that the Congress of the United States found the situation so full of peril as to make it their duty to suspend this greatest privilege enjoyed by Anglo-Saxon people. Are we ready to say that an equal peril confronts us to-day?

“My objections to authorizing this suspension implies no distrust of the wisdom or patriotism of the President. I do not believe he would employ this power were we to confer it upon him; and if he did employ it, I do not doubt he would use it with justice and wisdom. But what we do on 325this occasion will be quoted as a precedent hereafter, when other men with other purposes may desire to confer this power on another President for purposes that may not aid in securing public liberty and public peace.

“But this section provides no safeguard for citizens who may be arrested during the suspension of the writ. There is no limit to the time during which men may be held as prisoners. Nothing in the section requires them to be delivered over to the courts. Nothing in it gives them any other protection than the will of the commander who orders their arrest.”

“But, sir, this fourth section goes a hundred bow-shots farther than any similar legislation of Congress during the wildest day of the rebellion. It authorizes the declaration of martial law. We are called upon to provide by law for the suspension of all law! Do gentlemen remember what martial law is? Refer to the digest of opinions of the Judge Advocate-General of the United States, and you will find a terse definition which gleams like a flash of a sword-blade. The Judge Advocate says: ‘Martial law is the will of the general who commands the army.’ And Congress is here asked to declare martial law. Why, sir, it is the pride and boast of England that martial law has not existed in that country since the Petition of Right in the thirty-first year of Charles II. Three years ago the Lord Chief-Justice of England came down from the high court over which he was presiding to review the charge of another judge to the grand jury, and he there announced that the power to declare martial law no longer existed in England. In 1867, the same judge, in the case of the Queen vs Nelson, uttered this sentence:

“‘There is no such law in existence as martial law, and no power in the Crown to proclaim it.’

“In a recent treatise, entitled The Nation, a work of great power and research, the author, Mr. Mulford, says: ‘The declaration of martial law, or the suspension of habeas corpus, is the intermission of the ordinary course of law, and of the tribunals to which an appeal may be made. It places the locality included in its operations no longer under the government of law. It interrupts the process of rights and the procedure of courts and restricts the independence of civil administration. There is substituted for these the intention of the individual. To this there is in the civil order no formal limitation. In its immediate action it allows beyond itself no obligation and acknowledges no responsibility. 326Its command or its decree is the only law; its movement may be secret, and its decisions are opened to the inquiry of no judge and the investigation of no tribunal. There is no positive power which may act, or be called upon to act, to stay its caprice or to check its arbitrary career since judgment and execution are in its own command, and the normal action and administration is suspended and the organized force of the whole is subordinate to it.’

“Sir, this provision means war, or it means nothing; and I ask this House whether we are now ready to take this step? Shall we ‘cry havoc and let slip the dogs of war?’

“I have taken a humble part in one war, and I hope I shall always be ready to do any duty that the necessities of the country may require of me; but I am not willing to talk war or to declare war in advance of the terrible necessity. Are there no measures within our reach which may aid in preventing war? When a savage war lately threatened our Western frontiers we sent our Commissioners of Peace in the hope of avoiding war. Have we done all in our power to avoid that which this section contemplates? I hope the committee will bring a companion measure that looks toward peace and enable us to send the olive branch with the sword.”

This speech marked the separation of General Garfield from the Stalwart wing of the Republican party. It was never forgiven nor forgotten. It showed his balance of mind, his avoidance of extremes. The time when he delivered it was one of extremes. It was an epoch of reaction. It was verging toward the period when Sumner and Adams and Greeley were to forsake the party they had helped to create. It was a time when the fierce passions of war were beginning to find an opponent in the struggling instinct of reunion and peace. It was a time when the great radicals, who had fought slavery to its death, were to swing to the other extreme of loving gush and apologetic forgiveness toward a South which sat crouching in the Temple of Liberty, still maddened with the wild insanity of war. It was a time, on the other hand, when the great war leaders, gorged with the bloody spoils of victory, were to know no forgiveness, no forgetfulness, but to plant the iron heel of despotism upon the prostrate and bleeding foe. In this time of extremes General Garfield took the middle course. He remained a 327true Republican, but he recoiled from brutalism toward the South. Now that the passions of the hour have passed away, we believe that his speech on the enforcement of the Fourteenth Amendment will stand as the wisest utterance of the times. It rises above the level of partisanship to that of statesmanship. In the midst of the tempest of popular excitement over Southern outrages he was calm. As he afterwards said in his nominating speech at Chicago:

“It is not the billows, but the calm level of the sea from which all heights and depths are measured. When the storm has passed and the hour of calm settles on the ocean, when sunlight bathes its smooth surface, then the astronomer and surveyor takes the level from which he measures all terrestrial heights and depths.”

This was the secret of all of Garfield’s views. In spite of political fears and dogmas, in spite of partisan doubts and dismay, he was right. Therefore, in his answers to the great questions affecting the nationality of the United States, James A. Garfield is entitled to the historic rank of statesman.

We will next inquire to what rank Garfield’s utterances on questions affecting the Financial and Monetary systems of the United States belong. It has been noticed that this and the succeeding topic formed General Garfield’s specialty. In the epoch in which he lived they were the paramount themes of politics. He himself called the financial question the modern political Sphinx. For the last eight years, inflation, hard money, greenbacks, etc., had been discussed from every point of the compass, in every key and to every tune. Men thought it was a new thing. Years before the public clamor, General Garfield took his position on the financial question. He foresaw and foretold the experience of the country before the public mind had rolled its heavy eyes toward the subject. It has been claimed that on the financial question Garfield was ten years ahead of his generation; that he was a pioneer and leader in every sense in the advance toward the resumption of specie payments and a stable currency. Not in 1874, when the first great inflation bill ran its rapid career, nor in 1876, 328nor 1878, when the advocates of paper money had organized themselves into a political party, did he come forward with arguments on the currency for the first time. It was in 1866 that he turned the first furrow in Congress. On March 16th of that year, he enunciated, in a short but vigorous speech, the basal principles of finance, which in later efforts he was to elaborate and fortify with every argument or authority which could appeal to the human understanding. From that first position Garfield never receded. Not for a moment did he cease to regard irredeemable and inflated paper currency an unmixed evil, and resumption as the main end of the legislation of the epoch. His speeches on finance cover the entire field, and are very numerous. From two or three we present copious extracts. On May 15, 1868, he delivered a speech which was, and is, a complete manual of the principles of sound financial policy:

“I am aware that financial subjects are dull and uninviting in comparison with those heroic themes which have absorbed the attention of Congress for the last five years. To turn from the consideration of armies and navies, victories and defeats, to the array of figures which exhibits the debt, expenditure, taxation, and industry of the nation, requires no little courage and self-denial; but to these questions we must come, and to their solution Congress, political parties, and all thoughtful citizens must give their best efforts for many years to come.

“In April, 1861, there began in this country an industrial revolution, not yet completed, as gigantic in its proportions, and as far-reaching in its consequences, as the political and military revolution through which we have passed. As the first step to any intelligent discussion of the currency, it is necessary to examine the character and progress of that industrial revolution.

“The year 1860 was one of remarkable prosperity in all branches of business. For seventy years no Federal tax-gatherer had ever been seen among the laboring population of the United States. Our public debt was less than sixty-five million dollars. The annual expenditures of the Government, including interest on the public debt, were less than sixty-four million dollars. The revenues from customs alone amounted to six-sevenths of the expenditures. The value of our agricultural products for 329that year amounted to $1,625,000,000. Our cotton crop alone was two billion one hundred and fifty-five million pounds, and we supplied to the markets of the world seven-eighths of all the cotton consumed. Our merchant marine engaged in foreign trade amounted to two million five hundred and forty-six thousand two hundred and thirty-seven tons, and promised soon to rival the immense carrying trade of England.

“Let us now observe the effect of the war on the various departments of business. From the moment the first hostile gun was fired, the Federal and State governments became gigantic consumers. As far as production was concerned, eleven States were completely separated from the Union. Two million laborers, more than one-third of the adult population of the Northern States, were withdrawn from the ranks of producers, and became only consumers of wealth. The Federal Government became an insatiable devourer. Leaving out of account the vast sums expended by States, counties, cities, towns, and individuals, for the payment of bounties, for the relief of sick and wounded soldiers and their families, and omitting the losses, which can never be estimated, of property destroyed by hostile armies, I shall speak only of expenditures which appear on the books of the Federal Treasury. From the 30th of June, 1861, to the 30th of June, 1865, there were paid out of the Federal Treasury $3,340,996,211, making an aggregate during these four years of more than $836,000,000 per annum.

“From the official records of the Treasury Department it appears that, from the beginning of the American Revolution in 1775 to the beginning of the late rebellion, the total expenditures of the Government for all purposes, including the assumed war debts of the States, amounted to $2,250,000,000. The expenditure of four years of the rebellion were nearly $1,100,000,000 more than all the other Federal expenses since the Declaration of Independence. The debt of England, which had its origin in the revolution of 1688, and was increased by more than one hundred years of war and other political disasters, had reached in 1793 the sum of $1,268,000,000. During the twenty-two years that followed, while England was engaged in a life and death struggle with Napoleon (the greatest war in history save our own), $3,056,000,000 were added to her debt. In our four years of war we spent $300,000,000 more than the amount by which England increased her debt in twenty-two years of war; almost as much as she had increased it in one hundred and twenty-five years of war. Now, the enormous demand which this expenditure 330created for all the products of industry stimulated to an unparalleled degree every department of business. The plow, furnace, mill, loom, railroad, steamboat, telegraph—all were driven to their utmost capacity. Warehouses were emptied; and the great reserves of supply, which all nations in a normal state keep on hand, were exhausted to meet the demands of the great consumer. For many months the Government swallowed three millions per day of the products of industry. Under the pressure of this demand, prices rose rapidly in every department of business. Labor every-where found quick and abundant returns. Old debts were canceled, and great fortunes were made.

“For the transaction of this enormous business an increased amount of currency was needed; but I doubt if any member of this House can be found bold enough to deny that the deluge of Treasury notes poured upon the country during the war was far greater even than the great demands of business. Let it not be forgotten, however, that the chief object of these issues was not to increase the currency of the country. They were authorized with great reluctance, and under the pressure of overwhelming necessity, as a temporary expedient to meet the demands of the Treasury. They were really forced loans in the form of Treasury notes. By the act of July 17, 1861, an issue of demand notes was authorized to the amount of $50,000,000. By the act of August 5, 1861, this amount was increased $50,000,000 more. By the act of February 25, 1862, an additional issue of $150,000,000 was authorized. On the 17th of the same month, an unlimited issue of fractional currency was authorized. On the 17th of January, 1873, an issue of $150,000,000 more was authorized, which was increased $50,000,000 by the act of March 3d of the same year. This act also authorized the issue of one and two years’ Treasury notes, bearing interest at five per cent., to be a legal tender for their face, to the amount of $400,000,000. By the act of June 30, 1864, an issue of six per cent. compound-interest notes, to be a legal tender for their face, was authorized, to the amount of $200,000,000. In addition to this, many other forms of paper obligation were authorized, which, though not a legal tender, performed many of the functions of currency. By the act of March 1, 1862, the issue of an unlimited amount of certificates of indebtedness was authorized, and within ninety days after the passage of the act there had been issued and were outstanding of these certificates more than $156,000,000. Of course these issues were not all outstanding at the same time, but the acts show how great was the necessity for loans during the war.

331“The law which made the vast volume of United States notes a legal tender operated as an act of general bankruptcy. The man who loaned $1,000 in July, 1861, payable in three years, was compelled by this law to accept at maturity, as a full discharge of the debt, an amount of currency equal in value to $350 of the money he loaned. Private indebtedness was every-where canceled. Rising prices increased the profits of business, but this prosperity was caused by the great demand for products, and not by the abundance of paper money. As a means of transacting the vast business of the country, a great volume of currency was indispensable, and its importance can not well be overestimated. But let us not be led into the fatal error of supposing that paper money created the business or produced the wealth. As well might it be alleged that our rivers and canals produce the grain which they float to market. Like currency, the channels of commerce stimulate production, but can not nullify the inexorable law of demand and supply.

“Mr. Chairman, I have endeavored to trace the progress of our industrial revolution in passing from peace to war. In returning from war to peace all the conditions were reversed. At once the Government ceased to be an all-devouring consumer. Nearly two million able-bodied men were discharged from the army and navy and enrolled in the ranks of the producers. The expenditures of the Government, which, for the fiscal year ending June 30, 1865, amounted to $1,290,000,000, were reduced to $520,000,000 in 1866; to $346,000,000 in 1867; and, if the retrenchment measures recommended by the Special Commissioner of the Revenue be adopted, another year will bring them below $300,000,000.

“Thus during the first year after the war the demands of the Federal Government as a consumer decreased sixty per cent.; and in the second year the decrease had reached seventy-four per cent., with a fair prospect of a still further reduction.

“The recoil of this sudden change would have produced great financial disaster in 1866, but for the fact that there was still open to industry the work of replacing the wasted reserves of supply, which, in all countries in a healthy state of business, are estimated to be sufficient for two years. During 1866, the fall in price of all articles of industry amounted to an average of ten per cent. One year ago a table was prepared, at my request, by Mr. Edward Young, in the office of the Special Commissioner of the Revenue, exhibiting a comparison of wholesale prices at New York in December, 1865, and December, 1866. It shows that in ten leading articles of provisions there was an average decline of twenty-two per 332cent., though beef, flour, and other breadstuffs remained nearly stationary. On cotton and woolen goods, boots, shoes, and clothing, the decline was thirty per cent. On the products of manufacture and mining, including coal, cordage, iron, lumber, naval stores, oils, tallow, tin, and wool, the decline was twenty-five per cent. The average decline on all commodities was at least ten per cent. According to the estimates of the Special Commissioner of the Revenue in his last report, the average decline during 1867 has amounted at least to ten per cent. more. During the past two years Congress has provided by law for reducing internal taxation $100,000,000; and the act passed a few weeks ago has reduced the tax on manufactures to the amount of $64,000,000 per annum. The repeal of the cotton tax will make a further reduction of $20,000,000. State and municipal taxation and expenditures have also been greatly reduced. The work of replacing these reserves delayed the shock and distributed its effects, but could not avert the inevitable result. During the past two years, one by one, the various departments of industry produced a supply equal to the demand. Then followed a glutted market, a fall in prices, and a stagnation of business, by which thousands of laborers were thrown out of employment.

“If to this it be added that the famine in Europe and the drought in many of the agricultural States of the Union have kept the price of provisions from falling as other commodities have fallen, we shall have a sufficient explanation of the stagnation of business, and the unusual distress among our people.

“This industrial revolution has been governed by laws beyond the reach of Congress. No legislation could have arrested it at any stage of its progress. The most that could possibly be done by Congress was, to take advantage of the prosperity it occasioned to raise a revenue for the support of the Government, and to mitigate the severity of its subsequent pressure, by reducing the vast machinery of war to the lowest scale possible. Manifestly nothing can be more absurd than to suppose that the abundance of currency produced by the prosperity of 1863, 1864, and 1865, or that the want of it is the cause of our present stagnation.

“In order to reach a satisfactory understanding of the currency question, it is necessary to consider somewhat fully the nature and functions of money or any substitute for it.

“The theory of money which formed the basis of the ‘mercantile system’ of the seventeenth and eighteenth centuries has been rejected by 333all leading financiers and political economists for the last seventy-five years. That theory asserted that money is wealth; that the great object of every nation should be to increase its amount of gold and silver; that this was a direct increase of national wealth.

“It is now held as an indisputable truth that money is an instrument of trade, and performs but two functions. It is a measure of value and a medium of exchange.

“In cases of simple barter, where no money is used, we estimate the relative values of the commodities to be exchanged in dollars and cents, it being our only universal measure of value.

“As a medium of exchange, money is to all business transactions what ships are to the transportation of merchandise. If a hundred vessels of a given tonnage are just sufficient to carry all the commodities between two ports, any increase of the number of vessels will correspondingly decrease the value of each as an instrument of commerce; any decrease below one hundred will correspondingly increase the value of each.

“The functions of money as a medium of exchange, though more complicated in their application, are precisely the same in principle as the functions of the vessels in the case I have supposed.

“If we could ascertain the total value of all the exchanges effected in this country by means of money in any year, and could ascertain how many dollars’ worth of such exchanges can be effected in a year by one dollar in money, we should know how much money the country needed for the business transactions of that year. Any decrease below that amount will correspondingly increase the value of each dollar as an instrument of exchange. Any increase above that amount will correspondingly decrease the value of each dollar. If that amount be doubled, each dollar of the whole mass will perform but half the amount of business it did before; will be worth but half its former value as a medium of exchange.

“Recurring to our illustration: if, instead of sailing vessels, steam vessels were substituted, a much smaller tonnage would be required; so, if it were found that $500,000,000 of paper, each worth seventy cents in gold, were sufficient for the business of the country, it is equally evident that $350,000,000 of gold substituted for the paper would perform precisely the same amount of business.

“It should be remembered, also, that any improvement in the mode of transacting business, by which the actual use of money is in part dispensed 334with, reduces the total amount needed by the country. How much has been accomplished in this direction by recent improvements in banking may be seen in the operations of the clearing-houses in our great cities.

“The records of the New York Clearing House show that from October 11, 1853, the date of its establishment, to October 11, 1867, the exchanges amounted to nearly $180,000,000,000; to effect which, less than $8,000,000,000 of money were used, an average of about four per cent.; that is, exchanges were made to the amount of $100,000,000 by the payment of $4,000,000 of money.

“It is also a settled principle that all deposits in banks, drawn upon by checks and drafts, really serve the purpose of money.

“The amount of currency needed in the country depends, as we have seen, upon the amount of business transacted by means of money. The amount of business, however, is varied by many causes which are irregular and uncertain in their operation. An Indian war, deficient or abundant harvests, an overflow of the cotton lands of the South, a bread famine or war in Europe, and a score of such causes entirely beyond the reach of legislation, may make money deficient this year and abundant next. The needed amount varies also from month to month in the same year. More money is required in the autumn, when the vast products of agriculture are being moved to market, than when the great army of laborers are in winter-quarters, awaiting the seed-time.

“When the money of the country is gold and silver, it adapts itself to the fluctuations of business without the aid of legislation. If, at any time, we have more than is needed, the surplus flows off to other countries through the channels of international commerce. If less, the deficiency is supplied through the same channels. Thus the monetary equilibrium is maintained. So immense is the trade of the world that the golden streams pouring from California and Australia in the specie circulation, are soon absorbed in the great mass and equalized throughout the world, as the waters of all the rivers are spread upon the surface of all the seas.

“Not so, however, with an inconvertible paper currency. Excepting the specie used in the payment of customs and the interest on our public debt, we are cut off from the money currents of the world. Our currency resembles rather the waters of an artificial lake, which lie in stagnation or rise to full banks at the caprice of the gate-keeper.

335“Gold and silver abhor depreciated paper money, and will not keep company with it. If our currency be more abundant than business demands, not a dollar of it can go abroad; if deficient, not a dollar of gold will come in to supply the lack. There is no legislature on earth wise enough to adjust such a currency to the wants of the country.

“Let us examine more minutely the effect of such a currency upon prices. Suppose that the business transactions of the country at the present time require $350,000,000 in gold. It is manifest that if there are just $350,000,000 of legal-tender notes, and no other money in the country, each dollar will perform the full functions of a gold dollar, so far as the work of exchange is concerned. Now, business remaining the same, let $350,000,000 more of the same kind of notes be pressed into circulation. The whole volume, as thus increased, can do no more than all the business. Each dollar will accomplish just half the work that a dollar did before the increase; but as the nominal dollar is fixed by law, the effect is shown in prices being doubled. It requires two of these dollars to make the same purchase that one dollar made before the increase. It would require some time for the business of the country to adjust itself to the new conditions, and great derangement of values would ensue; but the result would at last be reached in all transactions which are controlled by the law of demand and supply.

“No such change of values can occur without cost. Somebody must pay for it. Who pays in this case? We have seen that doubling the currency finally results in reducing the purchasing power of each dollar one-half; hence every man who held a legal-tender note at the time of the increase, and continued to hold it till the full effect of the increase was produced, suffered a loss of fifty per cent. of its value; in other words, he paid a tax to the amount of half of all the currency in his possession. This new issue, therefore, by depreciating the value of all the currency, cost the holders of the old issue $175,000,000; and if the new notes were received at their nominal value at the date of issue, their holders paid a tax of $175,000,000 more. No more unequal or unjust mode of taxation could possibly be devised. It would be tolerated only by being so involved in the transactions of business as to be concealed from observation; but it would be no less real because hidden.

“But some one may say: ‘This depreciation would fall upon capitalists and rich men, who are able to bear it.’

“If this were true, it would be no less unjust. But, unfortunately, 336the capitalists would suffer less than any other class. The new issue would be paid in the first place in large amounts to the creditors of the Government; it would pass from their hands before the depreciation had taken full effect, and, passing down step by step through the ranks of middle-men, the dead weight would fall at last upon the laboring classes in the increased price of all the necessaries of life. It is well known that in a general rise of prices, wages are among the last to rise. This principle was illustrated in the report of the Special Commissioner of the Revenue for the year 1866. It is there shown that from the beginning of the war to the end of 1866, the average price of all commodities had risen ninety per cent. Wages, however, had risen but sixty per cent. A day’s labor would purchase but two-thirds as many of the necessaries of life as it would before. The wrong is, therefore, inflicted on the laborer long before his income can be adjusted to his increased expenses. It was, in view of this truth, that Daniel Webster said, in one of his ablest speeches:

“‘Of all the contrivances for cheating the laboring classes of mankind, none has been more effectual than that which deludes them with paper money. This is the most effectual of inventions to fertilize the rich man’s field by the sweat of the poor man’s brow. Ordinary tyranny, oppression, excessive taxation, these bear lightly on the happiness of the mass of the community, compared with a fraudulent currency and the robberies committed by depreciated paper.’

“The fraud committed and the burdens imposed upon the people, in the case we have supposed, would be less intolerable if all business transactions could be really adjusted to the new conditions; but even this is impossible. All debts would be canceled, all contracts fulfilled by payment in these notes—not at their real value, but for their face. All salaries fixed by law, the pay of every soldier in the army, of every sailor in the navy, and all pensions and bounties, would be reduced to half their former value. In these cases the effect is only injurious. Let it never be forgotten that every depreciation of our currency results in robbing the one hundred and eighty thousand pensioners, maimed heroes, crushed and bereaved widows, and homeless orphans, who sit helpless at our feet. And who would be benefited by this policy? A pretense of apology might be offered for it, if the Government could save what the people lose. But the system lacks the support of even that selfish and immoral consideration. The depreciation caused by the over-issue in the 337case we have supposed, compels the Government to pay just that per cent. more on all the contracts it makes, on all the loans it negotiates, on all the supplies it purchases; and to crown all, it must at last redeem all its legal-tender notes in gold coin, dollar for dollar. The advocates of repudiation have not yet been bold enough to deny this.

“I have thus far considered the influence of a redundant paper currency on the country when its trade and industry are in a healthy and normal state. I now call attention to its effect in producing an unhealthy expansion of business, in stimulating speculation and extravagance, and in laying the sure foundation of commercial revulsion and widespread ruin. This principle is too well understood to require any elaboration here. The history of all modern nations is full of examples. One of the ablest American writers on banks and banking, Mr. Gouge, thus sums up the result of his researches:

“‘The history of all our bank pressures and panics has been the same in 1825, in 1837, and in 1843; and the cause is given in these two simple words—universal expansion.’

“There still remains to be considered the effect of depreciated currency on our trade with other nations. By raising prices at home higher than they are abroad, imports are largely increased beyond the exports; our coin must go abroad; or, what is far worse for us, our bonds, which have also suffered depreciation, and are purchased by foreigners at seventy cents on the dollar. During the whole period of high prices occasioned by the war, gold and bonds have been steadily going abroad, notwithstanding our tariff duties, which average nearly fifty per cent. ad valorem. More than five hundred million dollars of our bonds are now held in Europe, ready to be thrown back upon us when any war or other sufficient disturbance shall occur. No tariff rates short of actual prohibition can prevent this outflow of gold while our currency is thus depreciated. During these years, also, our merchant marine steadily decreased, and our ship-building interests were nearly ruined.

“Our tonnage engaged in foreign trade, which amounted in 1859–’60 to more than two and a-half million tons, had fallen in 1865–’66 to less than one and a-half millions—a decrease of more than fifty per cent.; and prices of labor and material are still too high to enable our shipwrights to compete with foreign builders.

“From the facts already exhibited in reference to our industrial revolution, and from the foregoing analysis of the nature and functions of currency, it is manifest:

338“1. That the remarkable prosperity of all industrial enterprises during the war was not caused by the abundance of currency, but by the unparalleled demand for every product of labor.

“2. That the great depression of business, the stagnation of trade, the ‘hard times’ which have prevailed during the past year, and which still prevail, have not been caused by an insufficient amount of currency, but mainly by the great falling off of the demand for all the products of labor, compared with the increased supply since the return from war to peace.

“I subjoin a table, carefully made up from the official records, showing the amount of paper money in the United States at the beginning of each year from 1834 to 1868 inclusive. The fractions of millions are omitted:

1834 $ 95,000,000

1835 104,000,000

1836 140,000,000

1837 149,000,000

1838 116,000,000

1839 135,000,000

1840 107,000,000

1841 107,000,000

1842 84,000,000

1843 59,000,000

1844 75,000,000

1845 90,000,000

1846 105,000,000

1847 106,000,000

1848 129,000,000

1849 115,000,000

1850 131,000,000

1851 155,000,000

1852 150,000,000

1853 146,000,000

1854 205,000,000

1855 187,000,000

1856 196,000,000

1857 215,000,000

1858 135,000,000

1859 193,000,000

1860 207,000,000

1861 202,000,000

1862 218,000,000

1863 529,000,000

1864 636,000,000

1865 948,000,000

1866 919,000,000

1867 852,000,000

1868 767,000,000

“The table I have submitted shows how perfect an index the currency is of the healthy or unhealthy condition of business, and that every great financial crisis, during the period covered by the table, has been preceded by a great increase, and followed by a great and sudden decrease, in the volume of paper money. The rise and fall of mercury in the barometer is not more surely indicative of an atmospheric storm, than is a sudden increase or decrease of currency indicative of financial disaster. Within the period covered by the table, there were four great financial and commercial crises in this country. They occurred in 1837, 1841, 1854, and 1857. Observe the volume of paper currency for those years: On the first day of January, 1837, the amount had risen to $149,000,000, an increase of nearly fifty per cent. in three years. Before the end of that year, the reckless expansion, speculation, and over-trading which caused the 339increase, had resulted in terrible collapse; and on the first of January, 1838, the volume was reduced to $116,000,000. Wild lands, which speculation had raised to fifteen and twenty dollars per acre, fell to one dollar and a-half and two dollars, accompanied by a corresponding depression in all branches of business. Immediately after the crisis of 1841, the bank circulation decreased twenty-five per cent., and by the end of 1842 was reduced to $58,500,000, a decrease of nearly fifty per cent.

“At the beginning of 1853 the amount was $146,000,000. Speculation and expansion had swelled it to $205,000,000 by the end of that year, and thus introduced the crash of 1854. At the beginning of 1857 the paper money of the country reached its highest point of inflation up to that time. There were nearly $215,000,000, but at the end of that disastrous year the volume had fallen to $135,000,000, a decrease of nearly forty per cent. in less than twelve months. In the great crashes preceding 1837 the same conditions are invariably seen—great expansion, followed by a violent collapse, not only in paper money, but in loans and discounts; and those manifestations have always been accompanied by a corresponding fluctuation in prices.

“In the great crash of 1819, one of the severest this country ever suffered, there was a complete prostration of business. It is recorded in Niles’s Register for 1820 that, in that year, an Ohio miller sold four barrels of flour to raise five dollars, the amount of his subscription to that paper. Wheat was twenty cents per bushel, and corn ten cents. About the same time Mr. Jefferson wrote to Nathaniel Macon:

“‘We have now no standard of value. I am asked eighteen dollars for a yard of broadcloth which, when we had dollars, I used to get for eighteen shillings.’

“But there is one quality of such a currency more remarkable than all others—its strange power to delude men. The spells and enchantments of legendary witchcraft were hardly so wonderful. Most delusions can not be repeated; they lose their power after a full exposure. Not so with irredeemable paper money. From the days of John Law its history has been a repetition of the same story, with only this difference: No nation now resorts to its use except from overwhelming necessity; but whenever any nation is fairly embarked, it floats on the delusive waves, and, like the lotus-eating companions of Ulysses, wishes to return no more.

“Into this very delusion many of our fellow-citizens and many members of this House have fallen.

340“The chief cause of this new-born zeal for paper money is the same as that which led a member of the Continental Congress to exclaim:

“‘Do you think, gentlemen, that I will consent to load my constituents with taxes, when we can send to the printer and get a wagon-load of money, one quire of which will pay for the whole?’

“It is my clear conviction that the most formidable danger with which the country is now threatened is a large increase in the volume of paper money.

“Shall we learn nothing from experience? Shall the warnings of the past be unheeded?”

Here followed a brilliant historical review of the experience of the Colonies, of the Continental Congress, and of England, with paper money.

“From these considerations it appears to me that the first step toward a settlement of our financial and industrial affairs should be to adopt and declare to the country a fixed and definite policy, so that industry and enterprise may be based upon confidence; so that men may know what to expect from the Government; and, above all, that the course of business may be so adjusted that it shall be governed by the laws of trade, and not by the caprice of any man or of any political party in or out of Congress....

“On the 10th of February, I introduced a bill which, if it should become a law, will, I believe, go far toward restoring confidence and giving stability to business, and will lay the foundation on which a general financial policy may be based, whenever opinions are so harmonized as to make a general policy possible.

“As the bill is short, I will quote it entire, and call attention for a few moments to its provisions:

“‘A BILL TO PROVIDE FOR A GRADUAL RETURN TO SPECIE PAYMENTS.

“‘Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled: That on and after the first day of December, 1868, the Secretary of the Treasury be, and he is hereby, authorized and directed to pay gold coin of the United States for any legal-tender notes of the United States, which may be presented at the office of the Assistant Treasurer, at New York, at the rate of one dollar in gold for one dollar and thirty cents in legal-tender notes. On and after the first day of January, 1869, the rate shall be one dollar in gold for one dollar and twenty-nine cents in legal-tender notes; and at the beginning of and 341during each succeeding month, the amount of legal-tender notes required in exchange for one dollar in gold shall be one cent less than the amount required during the preceding month, until the exchange becomes one dollar in gold for one dollar in legal-tender notes; and on and after the first day of June, 1871, the Secretary of the Treasury shall exchange gold for legal-tender notes, dollar for dollar. Provided: That nothing in this act shall be so construed as to authorize the retirement or cancellation of any legal-tender notes of the United States.’

“I do not doubt that, in anticipation of the operation of this measure, should it become a law, gold would be at 130, or lower, by the 1st of December, and that very little would be asked for from the Treasury, in exchange for currency. At the beginning of each succeeding month the exchange between gold and greenbacks would be reduced one cent, and specie payments would be fully resumed in June, 1871. That the country is fully able to resume by that time will hardly be denied.

“With the $100,000,000 of gold now in the Treasury, and the amount received from customs, which averages nearly half a million per day, it is not at all probable that we should need to borrow a dollar in order to carry out the provisions of the law.

“But taking the most unfavorable aspect of the case, and supposing that the Government should find it necessary to authorize a gold loan, the expense would be trifling compared with the resulting benefits to the country. The proposed measure would incidentally bring all the national banks to the aid of the Government in the work of resumption. The banks are required by law to redeem their own notes in greenbacks. They now hold in their vaults, as a reserve required by law, $162,000,000, of which sum $114,000,000 are greenbacks. Being compelled to pay the same price for their own notes as for greenbacks, they would gradually accumulate a specie reserve, and would be compelled to keep abreast with the Government in every step of the progress toward resumption. The necessity of redeeming their own notes would keep their circulation nearer home, and would more equally distribute the currency of the country which now concentrates at the great money centers, and produces scarcity in the rural districts.

“This measure would not at once restore the old national standard of value, but it would give stability to business and confidence to business men every-where. Every man who contracts a debt would know what the value of a dollar would be when the debt became due. The opportunity now afforded to Wall Street gamblers to run up and run down the relative 342price of gold and greenbacks would be removed. The element of chance, which now vitiates our whole industrial system, would, in great part, be eliminated.

“If this measure be adopted it will incidentally settle several of our most troublesome questions. It will end the war between the contractionists and the inflationists—a war which, like that of Marius and Sylla, may almost prove fatal to the interests of the country, whichever side may prevail. The amount of paper money will regulate itself, and may be unlimited, so long as every dollar is convertible into specie at the will of the holder.

“The still more difficult question of paying our five-twenty bonds would be avoided—completely flanked by this measure. The money paid to the wounded soldier, and to the soldier’s widow, would soon be made equal in value to the money paid to all other creditors of the Government.

“It will be observed that the bill does not authorize the cancellation or retirement of any United States notes. It is believed that, for a time at least, the volume of the currency may safely remain as it now is. When the measure has been in force for some time, it will be seen whether the increased use of specie for purposes of circulation will not allow a gradual reduction of the legal-tender notes. This can be safely left to subsequent legislation. It will facilitate the success of this plan if Congress will pass a bill to legalize contracts hereafter made for the payment of coin. If this be done, many business men will conduct their affairs on a specie basis, and thus retain at home much of our gold that now goes abroad.

ENGLISH PRECEDENT.

“I have not been ambitious to add another to the many financial plans proposed to this Congress, much less have I sought to introduce a new and untried scheme. On the contrary, I regard it a strong commendation of this measure, that it is substantially the same as that by which Great Britain resumed specie payments, after a suspension of nearly a quarter of a century.

“The situation of England at that time was strikingly similar to our present situation. She had just emerged from a great war in which her resources had been taxed to the utmost. Business had been expanded, and high prices prevailed. Paper money had been issued in unusual volume, was virtually a legal-tender, and had depreciated to the extent 343of twenty-five per cent. Every financial evil from which we now suffer prevailed there, and was aggravated by having been longer in operation. Plans and theories without end were proposed to meet the many difficulties of the case. For ten years the Bank of England and the majority in Parliament vehemently denied that paper money had depreciated, notwithstanding the unanswerable report of the Bullion Committee of 1810, and the undeniable fact that it took twenty-five per cent. more of notes than of coin to buy an ounce of gold.

“Many insisted that paper was a better standard of value than coin. Some denounced the attempt to return to specie as unwise, others as impossible. William Cobbett, the famous pamphleteer, announced that he would give himself up to be broiled on a gridiron whenever the bank should resume cash payments; and for many years kept the picture of a gridiron at the head of his Political Register, to remind his readers of his prophecy. Every phase of the question was discussed by the best minds of the kingdom, in and out of Parliament, for more than ten years; and in May, 1819, under the lead of Robert Peel, a law was passed fixing the time and mode of resumption.

“It provided that on the 1st of February, 1820, the bank should give, in exchange for its notes, gold bullion in quantities not less than sixty ounces, at the rate of 81s. per ounce; that, from the 1st of October, 1820, the rates should be 79s. 6d.; from the 1st of May, 1822, 79s. 10½d.; and on the 1st of May, 1823, the bank should redeem all its notes in coin, whatever the amount presented. The passage of the act gave once more a fixed and certain value to money; and business so soon adjusted itself to the measure in anticipation, that specie payments were fully resumed on the 1st of May, 1821, two years before the time fixed by the law. Forty-seven years have elapsed since then, and the verdict of history has approved the wisdom of the act, notwithstanding the clamor and outcry which at first assailed it. So plainly does this lesson apply to us, that in the preface to one of the best histories of England, recently published, the author, who is an earnest friend of the United States, says:

“‘It seems to me that no thoughtful citizen of any nation can read the story of the years before and after Peel’s bill of 1819, extending over the crash of 1825–’26, without the strongest desire that such risks and calamities may be avoided in his own country at any sacrifice. There are several countries under the doom of retribution for the license of an inconvertible paper currency, and of these the United States are unhappily 344one. This passage of English history may possibly help to check the levity with which the inevitable ‘crash’ is spoken of by some, who little dream what the horrors and griefs of such a convulsion are. It may do more if it should show any considerable number of observers that the affairs of the economic world are as truly and certainly under the control of natural laws as the world of matter without and that of mind within.’”

This speech is remarkable. It is wonderful. Had that resumption bill become a law, it is possible and probable that the panic of 1873, and the long years of distress might have been, if not avoided, at least greatly shortened and alleviated. The argument never was and never could be improved upon by any one. In the light of history that speech was a prophecy. Congress procrastinated a return to specie payment. Finally the crash came, as he had foretold. Garfield once said, “After the battle of arms comes the battle of history.” In writing a historical estimate of the leaders of the epoch which closed with the consummation of specie payments, the critical historian would rightly claim that this speech of General Garfield, in the spring of 1868, five and a-half years before the panic, must take rank as a triumph of statesmanship above every argument, no matter how able or eloquent, made after the panic. In this speech Garfield showed his conservatism again in favoring the continuation of greenbacks in circulation, the very thing which was done over the bitter opposition of resumptionists seven years before.

In the earlier part of the speech he showed the necessity of an adjustable volume of currency. With specie this was easy. With paper currency the volume could be made adjustable through banks. They were the institutions to ease us through the straits to resumption. Their mission was more fully elaborated in a speech of June 7, 1870. The West and South having an insufficient number of banks, and, consequently, lacking the currency of checks, drafts, etc., were suffering. To meet this, he presented a bill redistributing the banks. His views are what most concern us.

345

CURRENCY AND THE BANKS.

“I wish first to state a few general propositions touching the subjects of trade and its instruments. A few simple principles form the foundation on which rests the whole superstructure of money, currency, and trade. They may be thus briefly stated:

“First. Money, which is a universal measure of value and a medium of exchange, must not be confounded with credit currency in any of its forms. Nothing is really money which does not of itself possess the full amount of the value which it professes on its face to possess. Length can only be measured by a standard which in itself possesses length. Weight can only be measured by a standard, defined and recognized, which in itself possesses weight. So, also, value can only be measured by that which in itself possesses a definite and known value. The precious metals, coined and stamped, form the money of the world, because when thrown into the melting-pot and cast into bars they will sell in the market as metal for the same amount that they will pass for in the market as coined money. The coining and stamping are but a certification by the government of the quantity and fineness of the metal stamped. The coining certifies to the value, but neither creates it nor adds to it.

“Second. Paper currency, when convertible at the will of the holder into coin, though not in itself money, is a title to the amount of money promised on its face; and so long as there is perfect confidence that it is a good title for its whole amount, it can be used as money in the payment of debts. Being lighter and more easily carried, it is for many purposes more convenient than money, and has become an indispensable substitute for money throughout all civilized countries. One quality which it must possess, and without which it loses its title to be called money, is that the promise written on its face must be good and be kept good. The declaration on its face must be the truth, the whole truth, and nothing but the truth. If the promise has no value, the note itself is worthless. If the promise affords any opportunity for doubt, uncertainty, or delay, the note represents a vague uncertainty, and is measured only by remaining faith in the final redemption of the promise.

“Third. Certificates of credit under whatever form, are among the most efficient instruments of trade. The most common form of these certificates is that of a check or draft. The bank is the institution through which the check becomes so powerful an instrument of exchange. The 346check is comparatively a modern invention, whose functions and importance are not yet fully recognized. It may represent a deposit of coin or of paper currency, convertible or inconvertible; or may, as is more frequently the case, represent merely a credit, secured by property in some form, but not by money. The check is not money; yet, for the time being, it performs all the functions of money in the payment of debts. No greater mistake can be made than to suppose that the effective value of currency is not directly increased by the whole amount of checks in circulation.

“I would not for a moment lose sight of the great first necessity of all exchanges, that they be measured by real money, the recognized money of the world; nor of that other necessity next in importance, that bank notes or treasury notes should represent real money; should be of uniform value throughout the country, and should be sufficient in amount to effect all those exchanges in which paper money is actually used. I would keep constantly in view both these important factors. But that is a superficial and incomplete plan of legislation which does not include, in its provisions for the safe and prompt transaction of business, those facilities which modern civilization has devised, and which have so largely superseded the use of both coin and paper money.