ADDRESSES, 
 
 SPEECHES, LECTURES, 
 
 AND 
 
 LETTERS 
 
 UPON VARIOUS SUBJECTS. 
 
 By Hugh McCulloch. 
 
 
 Washington, D. C; 
 Wm. H. Lepley, Printer. 
 
 1891. 
 
v^ 
 
 \o 
 
 . « • J . • • • 
 
CONTENTS. 
 
 PrKi^Ace 5 
 
 PAGE 
 
 Address delivered at Fort Wayne, Ind., July 4, 1861 •••..•• 13 
 Address delivered at Fort Wayne, Ind., October 11, 1865. . 37 
 Speech at the annual meeting of the Cobdeu Club, London, 
 
 June 24, 1871 -: • • • • •. ••• 55 
 
 vSpeech delivered at a Thanksgiving banquet given by 
 
 Cyrus W . Field, London, November 28, 1872 bi 
 
 Letters to merchants of Cincinnati w 
 
 Letters written for the Ne^w York Tribime: 
 
 First letter 9^ 
 
 Second letter 94 
 
 Third letter ^°° 
 
 Fourth letter ^°5 
 
 Fifth letter ^°^ 
 
 Sixth letter "3 
 
 Seventh letter 1^7 
 
 Eighth letter ^23 
 
 Ninth letter ^29 
 
 Tenth letter ^3^ 
 
 Eleventh letter ^43 
 
 Twelfth letter ^40 
 
 Thirteenth letter ^54 
 
 Fourteenth letter loj 
 
 Fifteenth letter i^^ 
 
 Sixteenth letter • • • i7» 
 
 Speech at one hundred and ninth anniversary banquet at 
 
 Delmonico's, May 14, 1877 ••• ••• 187 
 
 Address delivered at Woodstock, Conn., July 4, 1878 195 
 
 Lectures delivered at Harvard University, May, 1879: 
 
 First lecture— Money 221 
 
 Second lecture— Bi-metallic Money 239 
 
 Third lecture— The Representatives of Money. 259 
 
 Fourth lecture— The National Banking System 272 
 
 Fifth lecture— National Debts and Foreign and Do- 
 mestic Exchange 289 
 
 Sixth lecture— Taxation 3o» 
 
 Seventh lecture— Capital and Labor 332 
 
 Letter addressed to the Banquet Association, Saratoga 
 
 Springs, August, 1884 • •• 355 
 
 Letter to the Neiv ) 'ork Times, October 19, 1889 3^5 
 
 Letter to the Net,' York Times, January 31, 1890 3^5 
 
 Letter to the \Vashingto7i Post, February 19, 1890 409 
 
 Letter to the Nezv York hidependent 4^7 
 
 Index ^'^^ 
 
PREFACE. 
 
 The Addresses, Speeches, Lectures, etc., etc., which 
 appear in this volume have been selected from many 
 others, and are intended to be preserved in this form 
 for the use of those who, years hence, ma}^ be inter- 
 ested in what is substantially a record of my feelings 
 and views upon important subjects in very interesting 
 periods of our national history. 
 
 The addresses delivered at Fort Wayne, Ind., in 
 1861 and 1865 can hardly fail, at any time, to be inter- 
 esting, as they present the prevailing sentiment of the 
 people of the Northern States at the commencement 
 and the close of the civil war. The letters, which were 
 written in London for the Nnv York Trilnme, were 
 copied by a great many newspapers, and very widely 
 circulated and favorably commented upon in all parts of 
 the country. They were written and the Cambridge 
 lectures were delivered when financial and economic 
 questions were engaging public attention — questions that 
 have lost none of their interest — the definite solution of 
 which seems to be far in the future. 
 
 THE CURRENCY. 
 
 upon the currency question I have spoken at consider- 
 able length, because it was, and still is, a question of 
 supreme importance. A sound circulating medium is 
 the life-blood of commercial nations. In speaking of 
 the currency, I could not fail to express my views upon 
 the legal-tender notes. These notes, when they were 
 
6 
 
 issued, were considered, properly perhaps, a necessity, 
 and the issue of them was advocated solely on that 
 ground. They have been a popular currenc3^ and, if 
 kept within the present limit, they might be beneficial. 
 They are, however, liable to the serious objection of 
 giving to the people false opinions of the character of 
 money, and the more serious objection of being unwar- 
 ranted by the letter, if not by the spirit, of the Consti- 
 tution. The decisions of the Supreme Court upon the 
 legal-tender acts clothes Congress and the Executive 
 with imperial power — the power to issue notes and to 
 make them lawful money and a legal tender, no matter 
 what may be their comparative value with gold. Accord- 
 ing to these decisions, the law-making authority may 
 rightfull}^ do anything which is not actually prohibited by 
 the Constitution, instead of being limited to the exercise 
 of such powers as are expressly granted or fairly infer- 
 able. Before those decisions were pronounced, the 
 popular understanding was that the Constitution gave to 
 Congress and the President all the power that was needed 
 for the accomplishment of the objects for which the 
 Government was created and could be safely exercised. 
 To what dangers the country is exposed from this de- 
 parture from what had been established "landmarks" 
 can be readily comprehended. 
 
 An unanswerable objection to the issue of legal-tender 
 notes is that it makes the Treasury Department a bank 
 of issue, in which every voter is a stockholder and of 
 which the most active politicians are the directors. 
 That its management will continue to be conservative 
 and wise is to be hoped for, rather than expected. One 
 thing is certain, that so long as the decisions referred 
 to are in force there will never be a scarcity of lawful 
 money in the United States. The indications now are 
 that by the payment of the bonds by which they are 
 
secured the national bank-notes will soon be withdrawn 
 from circulation and that the paper circulating medium 
 of the country will consist of legal-tender notes, based 
 upon the credit of the Government, and silver certificates, 
 upon neither, or both, of which a great country should 
 be dependent. Of the two, the latter are the least ob- 
 jectionable. They are bad, because silver does not sus- 
 tain permanent relative value with gold, which is the 
 only true standard of value in trading and commercial 
 nations, and it will continue to be of fluctuating value, un- 
 less the leading nations should agree to make the two 
 metals a joint standard, of which there is little proba- 
 bility. For these reasons silver certificates are unfitted 
 to be the circulating medium of the United States, but 
 they are less objectionable than the legal-tender notes ; 
 there is nothing deceptive about them; they can never 
 be worth less than silver; they teach no false doctrines; 
 they express upon their face just what they are — cer- 
 tificates that the amount which they represent has been 
 deposited for their security and redemption in the Treas- 
 ury of the United States. Very different is the character 
 of the legal-tender notes, which are mischievous in their 
 teachings and dangerous to business enterprise, because 
 the amount that may be put into circulation depends 
 upon the popular feeling that may be brought to bear 
 upon the law-making power, and because they claim to 
 be money, which they are not. They are made money 
 by statute and the decisions of the Supreme Court, but 
 they lack the elements of real money; they can be re- 
 pudiated and rendered valueless by the same power that 
 created them. There is no money but gold and silver 
 which have intrinsic value and have cost in labor what 
 they represent. Government notes are demoralizing and 
 deceptive, because they foster the popular opinion that 
 money can be created by statutes, and that what is 
 
8 
 
 needed to make it plentiful is the free working of the 
 printing presses. 
 
 THE TARIFF. 
 
 M}^ opinions in regard to the tariff have undergone no 
 change since my attention was called to the subject 
 more than half a century ago. Nothing is clearer to 
 my mind than that a tariff for revenue is all that is 
 warranted by the Constitution, and that while in the in- 
 fancy of our manufactures it was proper that revenue 
 duties should be so imposed as to make them incident- 
 ally protective, the time has long since come that im- 
 port duties should be reduced to the lowest point con- 
 sistent with necessar}^ revenue. The United States is 
 now the greatest producing country in the world, and 
 consequently it has the deepest interest in international 
 trade. All restrictions upon free exchanges with other 
 nations are hostile to its general welfare. The tariff is 
 the old apple of discord between different sections and 
 apparently conflicting interests, and it will be as long 
 as its character depends upon committees of Congress, 
 which have neither the time nor the intelligence and 
 freedom from partisan politics to make it what it ought 
 to be — a great national economical question. This work 
 4?jan only be done by a thoroughly equipped commission — 
 a commission consisting of some of the most distinguished 
 practical economists, who have no party or sectional in- 
 terests to serve, whose duty it should be to secure to the 
 Government needful revenue, by duties upon inports, 
 which should not favor one branch of industr^^ at the 
 expense of other branches, and should be as equal in 
 its burdens as taxation can be made. I do not hesitate 
 to say that our protective tariff is not only unnecessaril}- 
 burdensome upon consumers in the United States, but 
 that it is in the interest of Great Britain by giving to 
 her a monopoly of the South American trade, by which 
 she is immensely enriched. 
 
^ 
 
 THE FRANCHISK. 
 I have said something upon the franchise, but not asi 
 much as its importance demands. It is the basis of our 
 republican institutions. If it becomes unsound, the whole 
 superstructure is in danger. That there is danger in 
 this direction is manifest to all observing and intelligent 
 men. We have invited the people of all conditions in 
 foreign lands not only to become citizens of the great 
 republic, but law-makers also. We ha\-e extended the 
 franchise to millions, the larger part of whom have no 
 capacity for its intelligent exercise; who have no knowl- 
 edge of our form of government, and no stake in its 
 preservation; who cannot speak our language; who cast 
 their ballots without knowing for whom or for what they 
 are voting. Among them are anarchists, who are hostile 
 to all governments; whose doctrines are at war with law 
 and order, without which there is no securit}- for prop- 
 erty or life. But this is not all; the franchise has been 
 bestowed upon the recent slaves, very few of whom have 
 an}' qualifications, except what the statute gives, for the 
 exercise of the highest privilege of freemen. If the ob- 
 ject of the framers of the Constitutions, Federal and 
 State, had been to put to the severest test the strength 
 of republican institutions, they could not have done :' 
 more effectually than it has been done b}^ cheapening 
 the franchise. The result of this experiment, for such 
 it is, which is at work in all the States, except Rhode 
 Island, cannot be contemplated by even the most hope- 
 ful without anxious forebodings. 
 
 THK NATIONAL PROGREvSS. 
 
 The present century has witnessed wonderful changes 
 in all civilized countries. These changes have been the 
 most marked in the United States, as might have been 
 expected, from its youth, its necessities, the extent and 
 
10 
 
 variety of its agricultural and mineral resources, and the 
 energy and intelligence of its people. I call to mind very 
 few things that are now so essential for international in- 
 tercourse, material progress, and domestic convenience, 
 that have not been invented and come into use within 
 this period. Steam boilers had been known for centuries, 
 but the first iron railroad sanctioned by the British Par- 
 liament was in 1801. The first vessel propelled by steam 
 w^as in 1 81 4. It is within this period that machinery has 
 been made to do the work of hands in manufacturing, 
 and that the farming implements now in use have been 
 invented. When I went to Indiana in 1833 the sickle 
 was the only instrument in use in cutting grain, the 
 scythe in cutting grass; and yet, notwithstanding the 
 labor-saving inventions — the substitution of machinery 
 for hands — the wages of laborers have been steadily ad- 
 vancing. The economic advances have been continuous, 
 rapid, and beneficial, and the question naturally arises, 
 Has there been corresponding improvement in the con- 
 dition and character of the people, in the public morals, 
 in the tone of what is called society ? These questions 
 must be answered in the negative. And how is it with 
 the great political experiment which is being tried in 
 the United States? The world's history has lead to the 
 conclusion that men are incapable of self-government on 
 a large scale. All the ancient republics and all the mod- 
 ern, except Switzerland, have been substantially failures. 
 Is there good ground for the expectation that in our case 
 history wnll not repeat itself? Are our political leaders 
 more devoted to the public service, less selfish in their 
 aims, than were their predecessors? Is politics more 
 honorable than it used to be ? Are our elections more 
 honorably conducted than they were in the early days 
 of the Republic ? Everybody knows how these questions 
 must be answered. In the contests between the Feder- 
 
11 
 
 alists and Democrats there was as much excitement and 
 more bitterness than are now witnessed in Congressional 
 and Presidential elections, but the contests then were 
 for principles, not for spoils. Men were Federalists be- 
 cause they believed that strong central power was neces- 
 sary for the preservation of law and order, or Democrats 
 because they were opposed to centralization that had in 
 it the savor of anarchy. Then the use of money (the 
 most debasing of all influences) in elections was unknown. 
 Now the free use of it seems to have become a necessity, 
 and it is largely relied upon as a controlling agency in 
 close political contests. Then the native-born Americans 
 controlled the State and city elections. Now the foreign- 
 born, mainh' of the lower classes, man}- of whom are 
 revolutionists, hold the balance of power in all our large 
 cities, and in some States. So great, in the wrong di- 
 rection, have been the changes, that I should despair of 
 the Republic if I had not been an observer of the over- 
 throw of Twxed and his associates in New York, and of 
 the self-preserving power of the Government in the late 
 civil war. I am hopeful that the Republic will not be a 
 failure, notwithstanding the powerful influences which 
 are at work against it, because good seed was sowm here, 
 and I believe that it took too deep root to be eradicated. 
 I believe that there exists, and will continue to exist, a 
 self-preserving power among the intelligent and liberty- 
 loving people that will manifest itself when danger be- 
 comes imminent. 
 
 One thing is as certain as anything in the future can 
 be: if republicanism should be a failure in the United 
 States, the question of the power of the people to estab- 
 lish and sustain a Government "by themselves and for 
 themselves" will be settled adversely and forever. 
 
 HUGH Mcculloch. 
 
 September, 1890. 
 
ADDRESS 
 
 DELIVERED AT 
 
 FORT WAYNE, IND., JULY 4, 1861. 
 
ADDRESS 
 
 DELIVERED AT 
 
 FORT WAYNE, IND., JULY 4, 1861 
 
 Fellow-Citizens: We meet to celebrate the anni- 
 versar}' of our national independence under peculiar 
 circumstances. The present condition of our country is 
 a matter of deep and solemn interest to ever}- citizen of 
 the United States. Our Government is now undergoing 
 a trial to which we had fondly hoped it would never be 
 exposed. That which gives security to life, value and 
 protection to property, is in danger. Questions of 
 momentous interest to all of us are now in process of 
 settlement, not through the instrumentalities provided 
 by the Constitution, but by the terrible arbitrament of 
 the sword. W^e are in the midst of an attempted revo- 
 lution, the result of which may not only seriously affect 
 the vital interests of the people of the United States, 
 but the welfare of the race. 
 
 While, therefore, we cherish a stronger love for the 
 Union than ever, we meet not to-day to glorify it, for it 
 is attacked by formidable forces; not to eulogize our 
 free institutions, for their strength and stability are now 
 being subjected to a severe if not a decisive test. We 
 meet not in that spirit of pride and complacency which 
 has usually characterized our Fourth of July celebra- 
 tions — to boast of our capacity for self-government and 
 of the glory of the great Republic — for madness has 
 seized upon a large portion of our people, which, if not 
 arrested, will demonstrate the idleness of our preten- 
 sions, and lay the noblest fabric of human wisdom and 
 patriotism in ruins. 
 
 On our last national anniversary a goodly number of 
 
16 
 
 the old settlers of this vicinit}- met at Fort Wayne to 
 contrast the past with the present; to congratulate each 
 other that " our lines had fallen in such pleasant places;" 
 that we were in the possession of so rich a political in- 
 heritance, upon the glory of our common country. The 
 occasion was one of more than local interest. In 
 reviewing the history and rapid development of north- 
 ern Indiana, our thoughts naturally recurred to our 
 national growth and prosperity. Our minds ran back 
 over the intervening two hundred and fifty years, since 
 the first permanent settlements were made upon the 
 North American continent, to the establishment of gov- 
 ernments in the forests of New England and Virginia, 
 the slow but steady growth of the colonies, the glories 
 of the Revolution and the birth of our present noble 
 Constitution. Our hearts kindled within us as we dwelt 
 upon the gallantry and indomitable energy of our fore- 
 fathers in the dark days when our independence was 
 achieved, and our admiration was excited as we reflected 
 upon the wisdom that laid the foundations — too deep, as 
 we supposed, to be ever seriously disturbed — of our 
 State and National governments, and we exulted as we 
 traced the onward career of our country in prosperity, 
 population and renown. 
 
 The United States had become almost in infancy the 
 commanding figure in the great picture of nations. 
 Without a competitor in the New World, free from the 
 influences, and fearless of the power of European States, 
 the object of admiration at home, and the hope of free- 
 men everywhere, it held the proudest position ever oc- 
 cupied by any nation in the world's great history. Re- 
 covering from the commercial and financial disasters of 
 1857, we seemed to be starting on a career of unequaled 
 enterprise and prosperity. Ever}^ department of in- 
 dustry was stimulated into activity. Our growing crops 
 had been of wonderful promise, and the harvest was 
 more magnificent even than the promise. Our com- 
 merce was whitening every ocean and sea under heaven. 
 The balance of trade, which for so many years had been 
 in favor of Europe, was turning in our favor and making 
 us the creditor country of the world. Emigrants from 
 the Old W^orld continued to crowd upon our shores, to 
 
17 
 
 join the advancing column of native-born citizens m 
 pushing our frontier settlements to the Pacific Ocean, 
 and the time seemed not far distant when b}^ means of 
 a railroad to that ocean we should stretch out our hands 
 unto Asia, and while we secured the advantages of a 
 direct trade with that populous quarter of the globe, we 
 should revive its decaying energies by an infusion into 
 its system of Americanized Anglo-Saxon forces. 
 
 Since the race was planted in Eden, no nation had 
 ever been so favored and prosperous as ours. Our Gov- 
 ernment was only felt by its benefits, and not, as is the 
 case with most others, by its oppressions and its exac- 
 tions. Just and equal in its laws, all sections were 
 equally prospering under its gentle rule. The North 
 and the South, with different domestic institutions and 
 a consequent dissimilar civilization, seemed onl}^ gen- 
 erous rivals in a common prosperity, and bound as loyal 
 States in a common destiny by the strongest commercial, 
 social, and political ties. We were approaching the 
 period when new agents were to be selected by the peo- 
 ple to administer the Government at Washington, and 
 the canvass then in progress had developed less than 
 usual of party bitterness and strife. Four candidates 
 were in the field for the distinguished position of Presi- 
 dent of the Republic, but the friends of each seemed 
 emulous of the honor of entertaining the strongest love 
 and indicating the heartiest attachment to the Union 
 and the Constitution. 
 
 It was true that the discussions of the slavery question 
 — that old apple of discord — had excited some bad blood 
 between the sections, and that threats were made bj- 
 politicians in the South, that the success of the party 
 now in power would be considered in that quarter a 
 sufficient cause for the dissolution of the Union, but no 
 serious apprehensions were extensively entertained that 
 any State would seriously attempt to put such threats 
 into execution. As the people of the North, with 
 trifling exceptions, cherished no other than the most 
 friendly sentiments for their Southern brethren, waged 
 no war upon their rights under the Constitution, which 
 of itself afforded the most perfect security for those 
 rights, and regarded the Union as being of priceless 
 
18 
 
 value to all sections, they did not and could not believe 
 that any considerable number of citizens of the United 
 States would be desperate enough to undertake to rup- 
 ture the ties that made us a nation. 
 
 One year ago the Union seemed as safe and as per- 
 manent as at any time since the Constitution was adopted. 
 At no former period had its glory been brighter or its 
 prospects as a nation more flattering. B}^ all civilized 
 nations the United States were regarded and recognized 
 as a great and growing power. Our stars and stripes, 
 idolized at home, were honored and respected by those 
 who dreaded the principles they represented, while the 
 oppressed of all lands looked to them as the symbol of 
 liberty and the sign of promise. To claim the protec- 
 tion of that flag was the right of every citizen, native 
 or adopted, wherever he might be, and like the appeal 
 of olden time, " I am a Roman citizen," it was a suffi- 
 cient guarantee of safety. 
 
 But now how different the scene. The same bright 
 sun is over our heads, the same glad earth beneath our 
 feet; our Constitution is unchanged; the elements of 
 national and individual prosperity are as abundant as 
 ever; no alteration affecting injuriously the rights of in- 
 dividuals or of States has been made upon the statute 
 book of the nation; no foreign enemy threatens our 
 domain; no providential calamity has befallen us; and 
 yet we find business at a stand, the prices of our pro- 
 ducts declining, manufacturing suspended, our shipping 
 at the wharves, bankruptcy among our merchants, the 
 prosperity of many of our cities literally dried up, the 
 songs of peace and the hum of industry exchanged for 
 the music of the fife and drum, the country converted 
 into a camp and bristling with arms. Brothers of the 
 same blood, descendants of those who established the 
 unity of the Government, are now arrayed against each 
 others to decide, perhaps, the destiny of the nation at 
 the cannon's mouth. The State that gave birth to Wash- 
 ington has become a battlefield, and the repose of his 
 grave is disturbed by the marching of troops and the 
 battle-cry of opposing hosts. 
 
 Alas for the stability of human institutions, when the 
 beneficent Government of the United States is in danger 
 
19 
 
 from its own people. Alas for the wisdom and patriot- 
 ism of man, when intelligent American citizens can plot 
 and fi'ght to overthrow the fairest, noblest, and most be- 
 nignant political institutions that were ever vouchsafed 
 to the race. 
 
 But, fellow-citizens, the evil is upon us, and we must 
 meet it like men. The Government is attacked by those 
 who have, until recently, controlled its policy, but it 
 must not be overthrown. The property of the nation 
 has been plundered and its glorious flag trailed in the 
 dust by those who have resolved to ruin when they can 
 no longer rule ; but as certainly as the bolt shatters what 
 it strikes, so certainly will the vengeance of awakened 
 and indignant patriotism, North and South, strike to the 
 earth the authors of this unnatural and accursed rebel- 
 lion. 
 
 "The Union, it must and shall be preserved," caught 
 from the lips of Andrew Jackson, is now the rallying cry 
 of millions of freemen; "Liberty and Union now and 
 forever, one and inseparable," the language of the great 
 expounder of the Constitution; " If any man attempts to 
 tear down that flag, shoot him on the spot," the prompt 
 command of the brave and able Dix; "Why do we 
 stand still ? Let the column move on," the dying words 
 of the noble Douglas, now indicate the sentiment and 
 spirit of a united North. 
 
 Thank God that we are at last a united North; that 
 when the Government is in danger, party spirit is hushed 
 and party distinction forgotten; that when the banner 
 of the nation is attempted to be dishonored, the Democ- 
 racy do not stand back because one of their own party 
 is not its chief standard-bearer, but gallantly step for- 
 ward to uphold it. 
 
 All honor to those who, in conquering their prejudices, 
 have put to a practical test their loyalty and patriotism. 
 Everlasting honor to him. the noble Illinoisian, who, 
 while smarting under a defeat, hesitated not for a moment 
 in his support of the administration of the man whose 
 election he had opposed, but who, before the canonad- 
 ing of Sumter had died upon the breeze, pledged him- 
 self, soul and body, to the defense of the nation and its 
 flag. Cut down in the meridian of life, with the most 
 
20 
 
 brilliant prospects before him, mourned b}- a nation, he 
 sleeps the sleep of death, but his words still ring in our 
 ears, " Wh}^ do we hesitate? Let the cohtmn move 011^ 
 Yes, gallant and indomitable spirit, the column will 
 move on. From hill and valley and plain, from city and 
 town and hamlet, the friends of the Union and of the 
 Constitution are hastening to the rescue. 
 
 •' Trumpets are sounding, war steeds are bounding, 
 Treason for many a da^' shall talk of the bloody fray, 
 "When the hosts of the North passed over the border." 
 
 Never has the world beheld such a general, generous 
 uprising of a people in the defense of their Government 
 as we witness to-day. From the Lakes to the Ohio, 
 from the Western deserts to the Atlantic, men are rush- 
 ing to arms, not to subjugate, but to save; not to over- 
 throw the Constitution, but to restore its wonted and 
 healthy action. No conscription is needed, no impress- 
 ments are required. Thousands of willing hearts are 
 waiting only for the welcome words that their services 
 will be accepted. Our gallant Hoosier State furnishes 
 twenty regiments and would furnish forty more if they 
 were needed by the Government. 
 
 The lo3'alty of Indiana in the present emergenc}' is of 
 the most significant character. Indiana is a conserva- 
 tive State. The anti-slavery sentiment has never taken 
 deep root in her soil. From the National Road to the 
 Ohio her trade has been chiefly with the South, and a 
 large portion of the population of this section is made 
 up of immigrants from the Southern States. Their so- 
 cial sympathies and their pecuniary interests bind them 
 to that quarter. There lie the bones of their fathers, 
 and there still live many of their relatives and friends; 
 and 3'et in southern Indiana, where, if an^'where, we 
 should expect lukewarmness toward the Government, if 
 not an active co-operation with the Confederate States, 
 we find the strongest Union sentiments prevailing. The 
 Union, it must not be dismembered; the Constitution, 
 it mu.st not be destroyed; the Mississippi, its mouth must 
 never be owned by a foreign power, is the language of 
 the people of southern Indiana, and they will not 
 change it, whatever it may cost to make good their reso- 
 lution. 
 
21 
 
 The subject of government, fellow-citizens, is one of 
 the most important subjects that have ever engaged the 
 attention of men. It is the first question that presents 
 itself for consideration in the organization of society; 
 it is, in fact, the basis of societ3^ Without a govern- 
 ment there would be no protection for life, no ownership 
 of property, no laws to preserve rights nor punish wrongs; 
 and it is an interesting fact that the nature and character 
 of their government indicate the condition and disposi- 
 tion of a people. If a government be despotic, arbi- 
 trary, and oppressive, the people will generally be found 
 to be slavish, inefficient, and degraded; if it be free 
 and liberal and just, the people will be intelligent, en- 
 terprising, and spirited. This results from the fact that 
 a people will have, with rare exceptions, such kind of 
 government as they are fitted and qualified to sustain. 
 A republican form of government was adopted by the 
 people of the United States, because it was the best form 
 of government and because the circumstances in which 
 they were placed fitted them for that experiment. The 
 Puritans of New England and the Cavaliers of Virginia 
 did not immigrate to America to establish republican 
 institutions. They were loyalists and monarchists, and 
 so were their descendants up to the time of the Revo- 
 lution. The American colonies were loyal to England 
 until after the first battles of the Revolution were fought. 
 They did not secede from England, after the fashion of 
 the Confederate States. They did not, while under al- 
 legiance to Great Britain, plot treason against her Gov- 
 ernment and plunder herproperty. When their just rights 
 had for a long time been denied them, when their peti- 
 tions for redress had been repeatedly rejected, and their 
 messengers had been "spurned with contempt from the 
 foot of the throne," and the blood of their people had 
 been shed at Lexington and Bunker Hill, then, and not 
 till then, did they, through their chosen representatives, 
 proclaim their independence by the immortal document 
 we have just now heard read, and proceed to establish 
 a government for themselves. 
 
 In throwing off their allegiance to the Mother Coun- 
 try and committing themselves to a war with the most 
 powerful nation upon earth, they put their lives and 
 
22 
 
 fortunes, if not their sacred honor, in imminent peril; 
 but they had counted the cost, they defied the danger, 
 and with a bravery and constanc}' that have never been 
 surpassed they fought, under the most discouraging cir- 
 cumstances, the battles of the Revolution until their 
 success was made certain by the decisive triumph at 
 York town. 
 
 Their independence was achieved and in due time 
 acknowledged by Great Britain, but their resources 
 were exhausted by the severe and protracted conflict. 
 They were without a nav^^ or commerce, or manufac- 
 ture; with a heavy debt, an empty treasury, and a cir- 
 culation of Continental notes in the hands of the people 
 and the soldiers that were not worth the paper on which 
 they were printed; and worse than all, the government 
 they had formed was without unity and strength. No 
 sooner was the war ended than jealousies were engen- 
 dered among the colonies. Each of the colonies was a 
 petty sovereign, without any controlling bond of union 
 between them. I apprehend that few people were ever 
 in a less prosperous and hopeful condition than were the 
 American colonies at the close of the Revolutionary 
 war. Washington and his associates soon discovered 
 that the league which they had formed was not the gov- 
 ernment they needed. A central power was necessary, 
 to limit and control the action of the colonies, to coin 
 money, collect duties, regulate commerce, establish 
 courts, and provide armies and a navy for the common 
 defense. They w^anted, in a word, a general govern- 
 ment, whose power in its appropriate sphere should be 
 superior to that of the colonies, and absolute in its char- 
 acter. Out of this want grew our present Constitution, the 
 most perfect charter ever formed by human wisdom and 
 patriotism. Upon its adoption we became a nation, and 
 took our place among the nations of the earth. So wise 
 were its provisions, so clearly did it define the duties 
 and powers of the Government, so absolute were those 
 powers while they infringed not upon the reserved and 
 necessary rights of the States, and so admirably was it 
 adapted to the wants and genius of the people, that the 
 effect of its adoption was almost miraculous. Commerce 
 at once revived, credit was restored, enterprise was 
 
23 
 
 quickened. Then we became the United States of Amer- 
 ica, and from that time onward our march to greatness 
 was with the majestic tread of a giant. From three 
 millions of people, in three-quarters of a century we 
 have increased to thirty millions. From thirteen feeble 
 colonies scattered along the seaboard, we have become 
 a great nation, disdaining all boundaries but the oceans, 
 covering the seas with our ships, supplying distant lands 
 with our agricultural productions and our manufactures, 
 and instructing them in the lessons of liberty by our 
 successful experiment of self-government. 
 
 Just at this period of our history, when the past was 
 a success and the future full of promise, while all sec- 
 tions of our common country were in the highest degree 
 prosperous, and all their rights were secured by the 
 Constitution, politicians at the South, availing them- 
 selves of the success of a party which they considered 
 hostile to slavery or opposed to its extension, and con- 
 fidentlv expecting aid and comfort from the North, 
 undertook to carry out their designs, for a long time 
 entertained, of breaking up the Government by a seces- 
 sion of the Southern States. At the very time when 
 another people (the Italians) w^ere struggling through 
 "blood and slaughter" to bring into a united Govern- 
 ment States that had been long separated, to quiet the 
 rivalries and jealousies and wars that their separation 
 had produced, politicians and traitors deliberately under- 
 took, for reasons that will not bear a moment's scrutiny, 
 to break up this Union and introduce into the United 
 States the revolutions, the insecurity, the anarchy and 
 bloodshed that have marked the history of the Italian 
 States and the Mexican and South American Republics. 
 Of all the doctrines that ever emanated from the 
 prince of evil the doctrine of peaceable secession from 
 the Union of any of the States that compose it is the 
 most dangerous and the most diabolical. Senator John- 
 son, of Tennessee, the fearless champion of the Union, 
 well denominates it " hell found and hell bound." Its 
 pretentions are so monstrous, and its results if carried 
 into practice would be so deplorable and so ruinous, that 
 its paternitv mav with propriety be attributed to the 
 fallen archangel'. Nullification was bad enough, dis- 
 
24 
 
 obedience to a constitutional law of Congress by one of 
 the States of the Union was dangerous enough; but the 
 doctrine that a State, itself "being the judge of the pro- 
 vocation, may peaceably secede from the other States 
 without a change of the Constitution, and even without 
 the consent of its co-partners — if, according to the South- 
 ern notion, our Confederation is nothing but a co-partner- 
 ship — at the same time taking violent possession of the 
 common property that happens to be within its reach, 
 is a sublimity of audacity at which the great nuUifier 
 himself would have stood aghast. 
 
 Fellow-citixens, ours is a Government, a Government 
 of the people, created by the people as a political neces- 
 sity, because the old Confederation lacked the proper 
 and indispensable elements of a government, unity, and 
 strength. The Constitution was adopted to form a more 
 perfect Union. If the Southern doctrine be true, it 
 formed a less perfect one. It is not a league or a co- 
 partnership. There is no Government on earth whose 
 rights, duties, and obligations are so clearly defined as 
 that of the United States. A State can no more with- 
 draw the allegiance of its people from the Government 
 than the Government can fail to perform the duties that 
 devolve upon it by the Constitution. The obligations of 
 the Government are to the people of the country, and 
 their allegiance is primarily due to the Government; 
 and every citizen, no matter what may be the action of 
 his State, who wages war against it, is a traitor, and 
 should receive a traitor's doom. States did not create 
 the Government; so far from it, they were made States 
 by the formation of the Government, and they have no 
 power whatever to annul the allegiance of their citizens 
 to the Government. 
 
 There are two ways b}- which States can withdraw 
 from the Union. One is by a change of the Constitu- 
 tion, according to its own provisions; the other, by suc- 
 cessful revolution. Secession is revolution, and it is 
 idle to call it anything else. It is rebellion against the 
 Government, and if the Government had failed to take 
 the necessary steps to suppress it, it would not have 
 been regarded and recognized as a nation at home or 
 abroad. It does not foUowthat its inability to suppress 
 
25 
 
 the rebellion in the Southern States would be the de- 
 struction of the Government; on the contrary, it may 
 be strengthened in its nationality by an successful 
 effort to subdue it. England did not suffer in its nation- 
 ality by the loss of its American colonies; but if, through 
 fear of insufficiency, she had permitted them peaceably 
 to secede, what would have been her position among 
 other nations, and how many of her other colonies would 
 she have retained ? Austria did not cease to be a nation 
 when the Italian States succeeded, by force of arms, in 
 severing themselves from the empire; but if they had 
 been permitted peaceably to resume their independence, 
 how strong would have been her hold upon Hungary ? 
 This fact will at least be established by the present war. 
 States that attempt to go out of the Union will have to 
 fight their way out. I apprehend that the result of this 
 present secession movement will be such as will satisfy 
 the people of all the States that secession means war, 
 and can only be accomplished by the exercise of power 
 superior to that of the Government. If South Carolina 
 had been given to understand, as .she would have been 
 advised if Andrew Jackson had been President, that she 
 could only leave the Union by a successful trial of arms 
 with the Government, she would have hesitated long be- 
 fore she made the fatal plunge. 
 
 No, fellow- citizens, peaceable secession is an imprac- 
 ticability, a monstrous heresy and delusion. Secession 
 is revolution, and the seceded States are now in open re- 
 volt against the Union. The leaders in this rebellion 
 did not seek by proper means a change of the Constitu- 
 tion by which their property might be made more se- 
 cure, for that property was as secure as constitutions and 
 laws could make it; or by which their rights might be 
 made safe, for no right of theirs had ever been inter- 
 fered with by the Government; or by which they might 
 be separated from the Northern States, for they'did not 
 dare to trust their own people with the decision of this 
 question. They determined to strike a blow at the 
 Union itself, and by precipitating hostilities, by an at^ 
 tack upon the property and forces of the Government, to 
 commit themselves and their associates to such acts of 
 treason as would render a successful revolution an indis^ 
 
26 
 
 pensable necessity. They trusted, doubtless, that the 
 revolution would be a comparatively eas}- and bloodless 
 one, because they regarded the administration as ineffi- 
 cient, and believed if Mr. Buchanan should attempt to 
 do his duty that he would be held in check by their 
 friends in his Cabinet and in Congress and a strong party 
 of sympathizers in the Northern States. Even now, 
 with unparalleled impudence and effrontery, they ask 
 only to be let alone. They say they seek not war, but 
 peace, after they have plundered mints, captured forts, 
 and treated with atrocious barbarity and driven from 
 their property and their homes thousands of Union men, 
 who were charged with no crime but that of loving their 
 countr}^ and honoring its flag, and have marshalled their 
 forces with the avowed purpose of attacking the Federal 
 Capitol. 
 
 I claim to be a conservative man. I have entertained 
 no prejudice against the people of the Southern States, 
 and had no di.sposition to wage war upon or interfere 
 with their domestic institutions. On the contrary, I 
 have ever been disposed to yield something of sentiment 
 and principle for the sake of conciliation, and to give to 
 slavery rights and privileges that the Constitution never 
 contemplated. I feel, therefore, that I can express an 
 impartial judgment upon the political events that have 
 recently transpired, and a^e now transpiring, in the South- 
 ern States, and have no hesitation in saying that the 
 treason of the Southern members of Mr. Buchanan's 
 Cabinet, and most of the Southern Senators and mem- 
 bers of Congress, in deliberately plotting the overthrow 
 of the Government which they were under the most 
 solemn oath to support, was of unparalleled atrocity; 
 and that the attempt of the Confederates to destroy the 
 Union by which the South, in common with the North, 
 had been so greatly prospered, is an act of madness of 
 which history affords no example. 
 
 For their treason no apology can be offered; to justify 
 the revolution they have commenced, they must plead be- 
 fore that great tribunal, the public sentiment of the world. 
 
 Let us look for a moment at their pleas : 
 
 I. They charge that the Government had failed to 
 accomplish the object for which it was created. 
 
27 
 
 What says the preamble of the Constitution? "We, 
 the people" — mark the language— "we, the people of 
 the United States, in order to form a more perfect Union, 
 establish justice, insure domestic tranquility, provide 
 for the common defense, promote the general welfare, 
 and secure the blessings of liberty to ourselves and to 
 our posterity, do ordain and establish this Constitution 
 for the United States of America." 
 
 Now, in which of these particulars has the Government 
 failed of its object? Did it not form a more perfect Union, 
 and if that Union is not perfect to-day, is it not owing to 
 the treason and violence of those who complain of its 
 failure? Has it not insured domestic tranquility, except 
 so far as that tranquility has been disturbed by those who 
 now assail it? Has it not established justice, provided 
 for the public defense, promoted the general welfare, 
 and secured the blessings of liberty to our fathers and 
 to us? In no single particular has it proved a failure. 
 It has, in its practical workings, proved more beneficial 
 than its most friends and advocates ever anticipated. It 
 made and has continued us a nation, honored and re- 
 spected throughout the world, and covered the land with 
 unexampled prosperity. 
 
 2. It is charged that the policy of the Government has 
 been inconsistent with the interests of the South. 
 
 To this it is answered that the South has mainly con- 
 trolled this poUcy; that there is not now, and never has 
 been, upon the statute book of the nation a single law that 
 could have been placed there without the aid of Southern 
 votes; that the first protective tariff bill was introduced by 
 a distinguished Southerner, and passed Congress against 
 the opposition of Northern members, and that no impor- 
 tant legislation has been consummated at Washington 
 without the sanction of the representatives of Southern 
 States. Nay, further, aside from foreign immigration, 
 which naturally avoided the States in which labor is dis- 
 reputable, the Southern States have increased in popu- 
 lation as rapidly as the Northern, while her orators and 
 statesmen have claimed a more rapid development of 
 resources and increase of wealth, together with a higher 
 civilization, than were witnessed in the Northern States. 
 I defy any man to show that the North has been oppres- 
 
28 
 
 siye to the South, checked her expansion, or laid the 
 slightest unequal burdens upon her enterprise or her 
 industry. 
 
 3. The North has become abolitionixed and onlv waited 
 the proper opportunity to overthrow the institution of 
 slavery. 
 
 To this I say, that while the public sentiment of the 
 Northern States has been unfavorable to slavery, there 
 has been no disposition among the people generally to 
 interfere with it in the States, while a large minority 
 have been willing to give to it equal privileges in the 
 Territories. In every contest between the sections upon 
 the subject of slavery the South has been the victor. 
 The history of the admission of Missouri, the compro- 
 mise bills, and the repeal of the Missouri compromise 
 fully establish this fact. The very day on which 
 South Carolina resolved herself out of the Union, the 
 rights of the South were more fully secured by acts of 
 Congress and the decisions of the courts than they had 
 ever been since the Constitution was adopted; and", fur- 
 ther, after the secession movement had commenced and 
 a good portion of the Southern Senators had resigned, 
 Congress, by a two-thirds vote, adopted an amendment 
 to the Constitution declaring that Congress should never 
 interfere with slavery in the States, and that this amend- 
 ment should be irrevocable; and the Dred Scott decision 
 gave to the institution ample protection in the Terri- 
 tories. 
 
 I do not deny that there has been too much acrimony 
 and bitterness in the discussion of the slavery question 
 among a portion of our Northern people, but there has 
 been equal acrimony and bitterness in its discussion 
 among the ultraists of the South. If Northern men' 
 have denounced slavery as a relic of barbarism, a re- 
 proach upon republicanism, aggressive and dangerous, 
 Southern men have claimed for it a divinity of origin, 
 a benevolence and utility which the world at large 
 could not recognize. If Southern institutions have been 
 assailed by the opponents of slavery, Northern labor 
 and Northern institutions have been assailed with equal 
 violence by the advocates of slavery. Ultra men on 
 both sides have been at fault; but these are but an in^ 
 
29 
 
 significant fraction of the people, and it would be la- 
 mentable indeed if the most vital interests of the many 
 should be sacrificed by the fanaticism and violence of 
 the few. 
 
 4. The election of Lincoln, a sectional candidate, was 
 of itself an evidence of the deep-rooted hostility of the 
 North to slavery, and rendered the continuance of the 
 vSouthern States in the I^nion dishonorable and danger- 
 ous to them. 
 
 But the election of Lincoln would not probably have 
 occurred but for the course of the ultraists in breaking 
 up the Charleston convention, and the intelligence of 
 his election was received with rapturous delight by those 
 who pretended to regard it as a calamity. Mr. Douglas 
 gave it as his opinion that the same game would have 
 been played if he had been the successful candidate. 
 
 Lincoln was elected in conformity with the Constitu- 
 tion. It would, at all events, have been prudent, not to 
 say patriotic, on the part of his opponents at the South 
 if they had,* as they pretended to have a reverence for 
 the Constitution and a regard for the Union, to have 
 awaited the developments of his administration, and if 
 any demonstrations were made by him or his party 
 against their interests, to have held them in check by 
 their majority in the Senate and the expressed opinions 
 of the Supreme Court before taking extreme measures 
 to protect those interests against imaginary dangers. 
 This, however, did not suit their designs. They knew 
 that as far as the slavery question was concerned, the 
 administration of Lincoln would closely conform to that 
 of his predecessors and to the letter and spirit of the 
 Constitution, and that this would contradict their pre- 
 dictions and defeat their plans. They knew their friends 
 were in power, and that with Cobb in the Treasury and 
 Floyd and Toucey in the War and Naval Departments, 
 the Treasury could be plundered, the army demoralized, 
 and the navy scattered to the " four winds of heaven." 
 They struck when they did because they thought the 
 power was in their hands and that it was dangerous to 
 delay. 
 
 No, fellow-citizens, these pleas are mere pretexts to 
 justify an unholy and unnatural rebellion. Revolution- 
 
3d 
 
 ists at the South long ago plotted the destruction of the 
 Union. A proud aristocrac}^ regarding labor as a dis- 
 grace and democracy an enemy, they have for years in- 
 dulged the idle dream of a great Southern oligarch}- of 
 which slavery should be the corner-stone, a free trade 
 with Africa, and boundless acquisition of Central Amer- 
 ican and Mexican territory; but, like the Turk awaken- 
 ing from his dream of glory to die beneath the ponder- 
 ous blows of Marco Bozarris, these conspirators and 
 traitors have been awakened from their dreams of ag- 
 grandizement b\- the battle-cry of a united and indignant 
 North rallying to the defense of the Constitution and 
 the Union. 
 
 Fellow-citizens, the issue has been forced upon the 
 country and it must be met with whatever cost of life 
 and treasure it may be attended. We have, each of us, 
 a deep and vital interest in the Government. No wiser, 
 no more beneficent one ever existed; if destroyed, no 
 similar one will succeed it. It has protected our fathers 
 and us, and we are under the highest obligations to 
 transmit it for the protection of our posterity. It cost 
 thousands of precious lives and millions of treasure to 
 establish it, and it is worth a hundred times its cost to 
 preserve it. 
 
 The time for compromises has past. Concessions to 
 traitors in arms will sap the very life-blood of the nation. 
 Not that I am opposed to fair and reasonable compro- 
 mises for the settlement of Constitutional questions, but 
 because this is not the time to make them. While the 
 property of the Union men at the South is being con- 
 fiscated, and its owners have been either slain or driven 
 from their homes; while privateers are being fitted out 
 to prey upon our commerce; while rebel armies are 
 threatening our Capitol, the man who talks of compro- 
 mises, or asks what is to be done with the South if it 
 should be subjugated, or how the Union is to be restored 
 by war, is in danger of letting his fears or S3'mpathies 
 run away with his judgment and his patriotism. 
 
 I do not attempt to estimate the cost of the war. I 
 do not stop to inquire whether the South can be brought 
 back to its allegiance and its dut}'. I know only that if 
 the Government is not now sustained, and this unnatural 
 
81 
 
 rebellion suppressed, that the Union will be severed for- 
 ever, and a legacy of perpetual war bequeathed to our 
 children, even if republicanism is not irretrievably ruined. 
 The war must go on; not to subjugate the South, not 
 to hold it as a conquered province, but to vindicate the 
 majesty of law and maintain the integrity of the Union. 
 That this is almost the universal sentiment of the North 
 is witnessed by the millions of freemen who have al- 
 ready responded, or stand ready to respond, to the call for 
 volunteers. More than a million and a half of the people 
 of the North voted against Lincoln at the late Presidential 
 election and in favor of the different candidates that 
 were supported at the South, and it is one of the cheer- 
 ing signs of the times that very few of this immense 
 number of voters permit their sympathy for the South 
 to cause them to falter in their loyalty to the Govern- 
 ment. None have responded more promptly and heartily 
 to the call of the President than the very men who op- 
 posed his election. They come forward to take up 
 arms; not to wage war upon slavery, nor to subjugate 
 the Southern States, but to sustain the Government in 
 this the time of its trial, to encourage Union men in the 
 South, and to put an end to the doctrine of secession for- 
 ever. 
 
 They march under that good old flag that was never 
 dishonored until treason raised its impious hand against 
 it, and I have unlimited confidence that they will 
 triumph where it floats. There is an inspiration about 
 the stars and stripes, in the history they teach and the 
 principles they illustrate, that will lead our gallant vol- 
 unteers to victory. They are the symbol of liberty and 
 equality, the ever enduring principles of justice and 
 equity. These principles are eternal, and no other flag 
 represents them. It is the flag of the Union, bright 
 with the glories of the past — the reflected glories of the 
 Revolution and the more recent glories of the Republic. 
 It reminds us of our naval victories, of Hull and Perry, 
 and Decatur and other gallant commanders who added 
 to its lustre and vindicated its principles upon the quarter 
 deck. It reminds us also of Plattsburg and New Orleans, 
 of Palo Alto and Buena Yista and Monterey, of Vera Cruz, 
 Cero Gordo and Mexico. It has been trailed in the dust in 
 
32 
 
 Charleston, buried with mock honors in Memphis; but 
 as long as liberty is loved and justice is honored, so long 
 will true men stand b}' its folds and weave its bright 
 recollections about their hearts. It is our country's flag, 
 and we love it as we love that country. Every star is 
 precious to us. not one must be erased. It covers every- 
 thing that is dear to us, our lands, our homes, our wives 
 and our children. Americans in distant lands exult as 
 they see it floating over our ships. Our dying soldiers 
 upon the battle-field fix their last gaze upon it, and are 
 satisfied if they have not dishonored it. It has been 
 borne in war from Montreal to Mexico, and in peace to 
 every quarter of the globe. Millions of the oppressed 
 in other lands have looked up to it with reverence and 
 hope. Millions of freemen in our own land have pledged 
 their strong arms and, if need be, their hearts' blood to 
 defend it. It must continue to be the American flag. 
 Temporarily displaced in a part of the Southern States, 
 true hearts will there again upraise it, nor stay their 
 hands until it floats again over Norfolk, and Richmond, 
 and Charleston and New Oleans. Whenever it shall 
 be permanently dishonored b\^ unhallowed ambition or 
 the defection of freemen, liberty will have perished, and 
 the stars and stripes will be its appropriate winding 
 sheet. 
 
 Fellow-citizens, a Providential hand has led this na- 
 tion through all its trials up to its present greatness. 
 That hand was witnessed in the voyage of the May- 
 flower in her stormy passage; in the preservation of the 
 little band of exiles, the germ of an empire, shelterless 
 against the stormy blast, helpless against a savage foe; 
 in the planting of a somewhat different order of men in 
 Virginia; in the growth and expansion of both their 
 Union as colonies, their successes in the Revolution, 
 and their stronger and closer union under the present 
 national Constitution. It has been witnessed in our 
 wonderful advancement as a nation, the glor}^ of our 
 arms, the prosperity that has filled our cup to overflow- 
 ing. It cannot be that the Providential hand which has 
 led us step by step from so small a beginning to such a 
 height of greatness will now abandon us; that our ex- 
 periment of self-government is to be a failure; that our 
 
33 
 
 Union is to be permanently severed; that our, until re- 
 centl3s United States are to be converted into perma- 
 nently hostile sections, and that the sun of our prosperity 
 is to go down in the blackness of darkness forever. On 
 the contrary, I believe that the manifest designs of Provi- 
 dence in building up this great nation will be carried for- 
 ward, that a true Union sentiment wall ere long reveal 
 itself in the seceding States, and that treason will be 
 crushed out by true men at home or the strong arm of 
 Federal power. 
 
 Our extensive domain, vast as it is, was intended for 
 the home of a single nation. The course of its great 
 rivers, the nature of its various products, the fact that 
 what one section supplies in excess of its wants the other 
 needs, nay, the very antagonism of its different civiliza- 
 tions, create a necessity for the Union. Between the 
 lakes and the gulf, the eastern seaboard and the western 
 frontier, there must be one united government, or jeal- 
 ous, hostile, belligerent States, in which will be repro- 
 duced the terrible scenes of anarchy, war and despotism 
 that for so many centuries in other lands have made 
 humanity weep and justice veil her face. From such a 
 calamity may God preserve this fair land. 
 
 I was gratified to learn on my return to Fort Wayne, 
 a few days ago, that this Fourth of July was to be cele- 
 brated in an old-fashioned way. I had been apprehen- 
 sive that the excitement of war and the clouds that 
 seemed to cover our political future might lead to its 
 neglect. I was pleased to be undeceived. I am more 
 pleased at the spirit and enthusiasm which it has 
 called out. Never was its celebration more appropriate 
 than now. We need its teachings and its inspirations. 
 If any one is despondent of his country, let him go back 
 to 1776 for encouragement and strength. Let him be 
 baptized in the spirit of the founders of the Republic. 
 Clouds and darkness are about us; thicker ones sur- 
 rounded them, but with the eye of patriotic faith they 
 pierced those clouds and caught the beam of that sun of 
 liberty that was soon to pour its meridian blaze upon the 
 land they loved. May we not call up something of their 
 faith, and behind the clouds that now infold us behold 
 a more perfect Union, purified of treason and strength- 
 ened by its perils ? 
 
34 
 
 The descendants of those who fought at Bunker Hill, 
 and Saratoga, and Camden, and Yorktown, who stood 
 sentinel, barefooted, upon the frozen guound at Valley 
 Forge, should never despair of the Republic. The good 
 ship of state has weathered many a storm, and she will 
 survive the present. Her timbers are neither rotten nor 
 worm-eaten. Her commander-in-chief is honest and 
 recognizes no chart but the Constitution. The second in 
 command, the old war chief of the nation, is no other 
 than the hero of Lundy's Lane, the conqueror of Mexico, 
 the man whom Wellington pronounced the greatest cap- 
 tain of the age, who never lost a battle or was forced to 
 retreat. He has nailed his flag to the mast, and it will 
 never be struck to the enemy, foreign or domestic, 
 while there is a " shot in the locker " or a plank that is 
 not riven. Cool in the midst of danger, he represses 
 the unwise ardor of his friends and thwarts the plans of 
 the enemy. Acknowledging allegiance to God and his 
 country alone, his loyalty is a consuming fire to the 
 traitors of his native Virginia. To the stars and stripes 
 he gave his youthful vows. They have been the object 
 of a life-long love; may his sun not go down until they 
 wave again over a preserved Union. 
 
 Fellow-citizens, it is good for us to be here. The Re- 
 public is not a failure; the Fourth of July is not a fail- 
 ure; the prediction of the elder Adams is not falsified. 
 By those who have forgotten its lessons, turned away 
 from its blessed memories, the Fourth of July may be 
 ingored, but to us and to our children it shall ever be a 
 consecrated day. It has been welcomed by us by the 
 roar of the cannon, the beating of the drums, and other 
 demonstrations of rejoicing, and it will ever be so wel- 
 comed as long as civil liberty has a resting-place in the 
 land on which our fathers established it. 
 
 Thunder storms are needed to purify the atmosphere. 
 When they pass over the sun appears again with in- 
 creased splendor. It may be that the thunder cloud of 
 war that now covers our nation was needed to purify 
 our political atmosphere, test the strength of our patriot- 
 ism, cleanse our nation of its corruptions, or to punish us 
 for our arrogance and pride; but as the natural sun 
 ghines bellind the storm clouds and only veils his face 
 
35 
 
 for the benefit of man, may we not trust that behind the 
 clouds that are now gathering about our political horizon 
 the sun of liberty and union is still shining and will ere 
 long appear again more brilliant and beautiful from its 
 temporary obscuration ? 
 
 Nations, like individuals, have their periods of trial; 
 but as he is a coward and craven who quails before the 
 blasts of adversity, so our nation would be cowardly 
 and craven, unworthy its high place among the nations, 
 if it quailed before the blasts that treason has excited. 
 Let the storm blow; let traitors rage, and the despots 
 of Europe " imagine a vain thing," liberty is still with 
 us a living principle; the Union, though assailed, a 
 practical reality; and bound together and cemented as 
 they were by the blood of the Revolution, may we not 
 hope that they are indissoluble and imperishable ? 
 
 Note — This address was delivered when war feeling wa3 
 thoroughly aroused and great indignation was felt against the 
 Southern States. Subsequently I came to regard the war as 
 the necessary result of slavery. The attempted secession of 
 the Southern States was rebellion, not treason. 
 
 March, 1890. 
 
ADDRESS 
 
 DEI.IVERED AT 
 
 FORT WAYNK, IND., OCTOBER 11, 1865. 
 
ADDRESB 
 
 DELIVERED AT 
 
 FORT WAYNE, IND., OCTOBER 11, 1865. 
 
 Accept, Mr. President, and you, gentlemen, my sin- 
 cere thanks for the honor you have done me in inviting 
 me to this entertainment and for the sentiment to which 
 you have responded. From the day I entered Fort 
 Wayne— a stranger in a strange land — I have been 
 treated by its citizens with a kindness and consideration 
 altogether beyond my merits, and for which I shall ever 
 be grateful. 
 
 But no trust that has ever been reposed in me, and no 
 kindness of which I have been the recipient, has touched 
 my heart so sensibly as this demonstration of your re- 
 spect. I lack the language to express to you, Mr. Presi- 
 dent, and to you, gentlemen, my obligations for this evi- 
 dence of your personal regard and this testimonial of 
 your appreciation of the manner in which I am dis- 
 charging the duties of the very important position to 
 which I was last spring unexpectedly called. I can only 
 return to you my sincere thanks and pledge to you my 
 best efforts so to perform my official duties as to reflect 
 no discredit upon my friends in Fort Wayne, whose good 
 opinion I so highly value. Next to my desire to ac- 
 quire and leave behind me a reputation that my chil- 
 dren may not be ashamed of, has been my desire so to 
 perform the duties that may devolve upon me that my 
 friends in Indiana, those with whom I have been con- 
 nected by social and business ties, would have no occa- 
 sion to regret the indorsement they have given me. 
 
 No place will ever be so dear to me as Fort Wayne; 
 no friendships will ever be so strong as those which I 
 have formed here. I am, you knows one of the pioneers 
 
40 * 
 
 df this beautiful city. When I crossed the St. Mary's, 
 swimming my horse by a side of a canoe, on the 23d of 
 June, 1833, Fort Wayne was a hamlet, containing a few 
 hundred souls; an Indian trading post, a mere dot of 
 civilization in the heart of a magnificent wilderness. 
 Under my own eye, as it were, it has become a 
 city of nearly twenty thousand people, a city full of 
 vigor and enterprise, the second city of the State. I am 
 proud of Fort Wayne and of the noble State of Indiana — 
 a State which has been second to no State in the Union 
 in her devotion to the Government and in the gallantry 
 with which her sons have defended it. I am thankful 
 when I crossed the mountains, in common parlance, " to 
 seek my fortune," my feet were directed to Indiana, and 
 especially to this place. Wherever duty may call me 
 hereafter, this will ever be to me my home. Many of 
 my kindred sleep in our beautiful cemeter}-, and there, 
 I trust, will be my resting-place when I am called upon 
 to join the great company of the departed. 
 
 But Fort Wayne has other attractions to me. The 
 friends of my early manhood are here. It is true that 
 thirty years have spared but few of those who took me 
 by the hand and bade me welcome to the new country; 
 but a number remain, and some are present on this oc- 
 casion. I do not know how it may be with others, but 
 for myself I can truly sa}^ that as one after another of 
 that pioneer band passes away, my attachment to those 
 that remain grow\s stronger and stronger; and I am in- 
 clined to the opinion that the attachments and friend- 
 ships which are formed on the frontier, w^here those who 
 are seeking new homes at a distance from their old ones 
 are thrown together in a common societ}^ in which all 
 are equals, and where the circumstances in which they 
 are placed and the very cravings of their natures open 
 their hearts to each other with confidence and trust, are 
 stronger and deeper rooted than those which are formed 
 in older and more populous communities. But whatever 
 may be the cause, the fact exists that Fort Wayne is 
 dearer to me than any other place in the world, and that 
 there are no friends to whom I am so deeply attached as 
 to those whose familiar faces seem cordially to greet me 
 when I return to it. 
 
41 
 
 Mr. President, since I paid m^^ last visit to Fort 
 Wayne, a little less than a year ago, great events have 
 transpired in the United States. The rebellion, although 
 it had received many staggering blows from our gallant 
 soldiers under the distinguished generals whose fame is 
 world-wide, was then still audacious and defiant; and 
 although the result might not have been considered 
 doubtful, the end of the war seemed not unlikely to be 
 far in the future. Eleven months have passed away, 
 and this great civil war has been brought to a glorious 
 conclusion. The stars and stripes are again recognized 
 as the emblem of liberty and union in every part of our 
 national domain, and more than eight hundred thousand 
 loyal men have been mustered out of service and con- 
 verted from gallant soldiers into peaceable, law-abiding 
 and industrious citizens. The question of State sov- 
 ereignty has been settled by an appeal to arms and the 
 sovereignty of the Government under the Constitution 
 established forever. The greatest civil war that has ever 
 been waged upon the face of the earth has been concluded ; 
 the most powerful armies of modern times have been 
 disbanded; and yet civil liberty is as safe and vigorous 
 as it was before the war commenced. During the pro- 
 gress of the rebellion there has been a strain upon re- 
 publican institutions, but they have sustained it without 
 the loss of a particle of their strength. State rights and 
 individual rights may in some instances, perhaps un- 
 necessaril3^ have been invaded; but to-day there is at 
 the North no State right under^the Constitution, and no 
 individual right, which is not as much respected and as 
 well established as when the first gun was fired upon 
 Sumpter. It is this fact which makes our triumph a 
 more sublime and greater triumph than the result of the 
 war itself. 
 
 But this is not all. Just at the moment when the 
 people were rejoicing over the fall of Richmond and the 
 surrender of the Confederate armies, the chief magis- 
 trate of the nation, the most beloved and trusted of 
 men, fell by the hand of an assassin. For a moment 
 the nation was struck dumb by the atrocity of the act 
 and the magnitude of the loss that had been sustained. 
 As the report flashed over the wires that the beloved 
 
42 
 
 chief magistrate of the nation, in the midst of rejoicings 
 over our victories and the prospect of returning peace, 
 had been slain, what heart was there throughout this 
 broad land which was not filled with anguish and appre- 
 hension? What thinking man did not put to himself the 
 question. Can the Republic stand this unexpected cal- 
 amit}^? Can our popular institutions bear this new 
 trial? The anguish remained, and still remains, but the 
 apprehension existed but for a moment. Scarcelj^ had the 
 announcement been made that lyincoln had fallen be- 
 fore it was followed by the report that the Vice-Presi- 
 dent had taken the oath of President, and that the 
 functions of government were being performed as regu- 
 larly and quietly as though nothing had happened. 
 
 And what followed? The body of the beloved Presi- 
 dent was taken from Washington to Illinois, through 
 crowded cities, among a grief-.stricken and deeply-ex- 
 cited people, mourning as no people ever mourned, 
 and moved as no people were ever moved; and 
 yet there was no popular violence, no outbreak of 
 popular passion; borne a thousand miles to its last rest- 
 ing-place, hundreds of thousands doing such honor to 
 the remains as were never paid to those of king or con- 
 queror, and the public peace, notwithstanding intense 
 indignation was mixed with intense sorrow, was in no 
 instance disturbed. Hereafter there will be no skepti- 
 cism among us in regard to the wisdom, the excellence, 
 and the power of republican institutions. There is no 
 country upon earth that could have passed through the 
 trials to which the United States have been subjected 
 during the past four years without being broken into 
 fragments. 
 
 Of Mr. Lincoln this is not a fitting occasion for me to 
 speak freely. This much, however, I may be permitted 
 to say, that the more I saw of him the higher became 
 my admiration of his ability and his character. Before 
 I went to Washington, and for a short period after, I 
 doubted both his nerve and his statesmanship ; but a closer 
 observation relieved me of these doubts, and long before 
 his death I had come to the conclusion that he was a 
 man of will, of energy, of well-balanced mind, and 
 wonderful sagacity. His practice of story-telling when 
 
4^ 
 
 the Government seemed to be in imminent peril and 
 the sublimest events were transpiring surprised, if it did 
 not sometimes disgust, those who did not know him 
 well; but it indicated on his part no want of a proper 
 appreciation of the terrible responsibility which rested 
 upon him as the chief magistrate of a great nation en- 
 gaged in the suppression of a desperate rebellion which 
 threatened its overthrow. Story- telling wnth him was 
 something more than a habit. He was so accustomed 
 to it in social life and in the practice of his profession 
 that it became a part of his nature, and so accurate was 
 his recollection, and so great a fund had he at command, 
 that he had always anecdotes and stories to illustrate 
 his arguments and delight those w^hose tastes were sim- 
 ilar to his own; but those who judged from this trait 
 that he had lacked deep feeling, or sound judgment, or a 
 proper sense of the responsibility of his position, had 
 no just appreciation of his character. He possessed all 
 these qualities in an eminent degree. It was true of 
 him, as it is true of all really noble and good men, that 
 those who knew him best had the highest admiration of 
 him. He was not a man of genius, but he possessed in a 
 large degree what is far more valuable in a public man, 
 excellent common sense. He did not undertake to di- 
 rect public opinion, but no man understood better the 
 leadings of the popular wull or the beatings of the pop- 
 ular heart. He did not seem to gain this knowledge 
 from reading or from observation, for he read very few 
 of our public journals, and was little inclined to call out 
 the opinions of others. He was a representative of the 
 people, and he understood what the people desired 
 rather by a study of himself than of them. Granting 
 that, although constitutionally honest himself, he did 
 not put a very high valuation upon honesty in others, 
 and that he sometimes permitted his partiality for his 
 friends to influence his action in a manner that was 
 hardly consistent with an upright administration of his 
 great office, few men have held high positions whose 
 conduct would so well bear the severest criticism as Mr. 
 Lincoln's; but I shall not undertake his eulogy. The 
 people have already passed judgment in favor of the 
 nobleness and excellence of his character and the wis- 
 
44 
 
 dom of his administration, and the pen of impartial his- 
 tory will confirm the judgment. 
 
 But you will expect, perhaps, that I say something of 
 his (Mr. Lincoln's) successor. In any other place, and 
 under any other circumstances I should not feel 
 at liberty to make any particular allusion to the Presi- 
 dent of the United States, holding, as I do, a seat in his 
 Cabinet. But knowing that many of you, my towns- 
 men and neighbors, have been of the opinion that the 
 settlement of the great questions which would neces- 
 sarily come up for settlement at the close of the war 
 would require on the part of the chief magistrate a pro- 
 founder wisdom and a broader statesmanship than were^ 
 required during its continuance, and that not a few have 
 been deeply anxious lest Mr. Johnson might be unequal 
 to the prodigious work that has been devolved upon 
 him, I feel constrained to say that there is, in my judg- 
 ment, no ground for apprehension on this subject. Try- 
 ing and difficult as is his situation, Mr. Johnson is mas- 
 ter of it. He possesses in an eminent degree the quali- 
 ties that fit him for the Presidency at the present time. 
 A Southern man, thoroughly acquainted with the eifects 
 of slavery upon society, he knows how to deal with 
 Southern men in their present circumstances; ardently 
 attached to Tennessee, the love which he bears to his 
 State is entirely subordinate to that which he bears to 
 the Union; jealous of State rights, he is equally jealous 
 of the rights of the general Government; a radical 
 and uncompromising opponent of nullification, secession, 
 and every form of disloyalty, he is equally opposed to 
 any measures which, in his judgment, are calculated, 
 by depriving the States of their just rights under the 
 Constitution, to convert the Federal Government into a 
 despotism; raised in slave States, and until recently a 
 slaveholder, he has never had any love for slavery, and 
 has always been the antagonist of the aristocracy that 
 was based upon it. By nature and by education he is 
 just the man for the great work of re-establishing the 
 Federal authority over the recently rebellious States; 
 and he has taken hold of this work with a devotion, an 
 energy, and a prudence that promises the best results. 
 , He is a man, also, of excellent judgment and great 
 
45 
 
 singleness of purpose. Honest himself, he expects 
 honesty in others ; although long in public life 
 and a leading politician of his own school, he is in no 
 sense a partisan; unassuming in manners, he is yet 
 self-possessed and dignified; he listens to the advice 
 of those in whose judgment he has confidence, but acts 
 upon his own convictions, and generally according to 
 his first impressions; with great decision of character, 
 he is never hasty in action; stern and unyielding in 
 his adherence to principle and duty, he is a man of 
 kindly and gentle emotions; having by his own in- 
 domitable energy fought his way up from a low to a 
 high estate, he is in hearty sympathy with those who are 
 treading the same upward path; he is, in a word, a clear- 
 headed, upright, energetic, self-relying statesman; a 
 dignified, courteous and kind-hearted gentleman. His 
 administration will be characterized by all the force and 
 energy and independence of Jackson's, with very little 
 of its partisan character. 
 
 Under his direction the great work of re-establishing 
 civil government at the South under the Federal Con- 
 stitution is going rapidly forward — too rapidly, it seems, 
 according to the opinion of many at the North, whose 
 opinions are entitled to great consideration. I know, 
 sir, that many doubt the wisdom of Mr. Johnson's policy; 
 that many are of the opinion that by their ordinance of 
 secession the rebellious States had ceased to be States 
 under the Constitution, and that nothing should be done 
 by the Executive in aid of the restoration of their State 
 governments until Congress had determined pn what 
 terms they should be restored to the Union which they 
 had voluntarily abandoned and attempted to destroy; 
 that as the people of these States had appealed to the 
 sword and had been subjugated by the sword, they 
 should be governed by the sword until the law-making 
 power had disposed of the subject of reconstruction; 
 that no State that had passed ordinances of secession 
 and united with the so-called Confederate Government 
 should ever be admitted again into the Union unless in its 
 preliminary proceedings all men, irrespective of color, 
 should be permitted to vote, nor without provisions in 
 its Constitution for the absolute enfranchisement of the 
 
46 
 
 negro. Some go even further than this and demand the 
 confiscation of the property of all rebels and the applica- 
 tion of the proceeds to the payment of the national debt. 
 
 These are not, I apprehend, the views of a respectable 
 minority. I know they are not the views of a majority 
 of the people of the North. The better opinion is that 
 the States which attempted to secede never ceased to 
 be States in the Union; that all their acts of secession 
 were of no effect; that during the progress of the revolt 
 the exercise of the Federal authority was merely sus- 
 pended, and that there never was a moment when the 
 allegiance of the people of the insurrectionary States 
 was not due to the Government, and when the Govern- 
 ment was not bound to maintain its authority over them 
 and extend protection to those who required it. When 
 the rebellion was overcome, the so-called Confederate 
 Government and all the State governments which had 
 been formed in opposition to the Federal Government 
 ceased to have even a nominal existence, and the peo- 
 ple who had been subject to them were left for the time 
 being without any government whatever. The term of 
 office of the Federal officers had expired or the offices 
 had become vacant by the treason of those who held 
 them. There were no Federal revenue officers, no com- 
 petent Federal judges, and no organized Federal courts. 
 Nor were the people any better off so far as State 
 authority was regarded. When the Confederac}^ col- 
 lapsed all the rebel State governments collapsed with it, 
 so that, with a few exceptions, there were no persons 
 holding civil office at the South by the authority of any 
 legitimate government. 
 
 Now, as government is at all times a necessity among 
 men, and as it was especially so at the South, where 
 violence and lawlessness had full sway, the question to 
 be decided by the President was simply this : Shall the 
 people of the recently rebellious States be held under 
 military rule until Congress shall act upon the question, 
 or shall immediate measures be taken by the Executive 
 to restore to them civil governments? 
 
 After mature consideration the President concluded 
 it to be his duty to adopt the latter course, and I am 
 satisfied that in this conclusion he was right. And here 
 
47 
 
 let me say that in doing so he was carrying out the very 
 policy which had been determined npon by Mr. Lincoln 
 and his Cabinet. 
 
 Military rnle will not be endured by the people of the 
 United States one moment longer than there is an abso- 
 lute necessity for it. Such an army as would have been 
 requisite for the government of the people of the South, 
 as a subjugated people, until Congress might prescribe 
 the terms on which they could be restored to the Union, 
 would have been too severe a strain upon our republican 
 institutions, and too expensive for the present condition 
 of the Treasury. The President has, therefore, gone to 
 work to restore the Union by the use, from the necessity 
 of the case, of a portion of those who have been re- 
 cently in arms to overthrow it. The experiment may 
 be regarded as a dangerous one, but it will be proved, I 
 apprehend, to have been a judicious one. Never were 
 a people so disgusted with the work of their own hands 
 as were the great mass of the people of the South (even 
 before the collapse of the rebellion) with the Govern- 
 ment which was attempted to be set up by the overthrow 
 of the Government of their forefathers; never w^ere a 
 people so completely subjugated as have been the people 
 of the rebel States. I have met a great many of those 
 whom the President is using in his restoration policy, 
 and they have impressed most favorably. I believe them 
 to be honest in taking the amnesty oath, and in their 
 pledges of fidelity to the Constitution and the Union. 
 Slavery has perished — this all acknowledge — and with 
 it has gone down the doctrine of secession. State sov- 
 ereignty has been discussed in Congress, before courts, 
 in the public journals, and among the people, and. at 
 last, " when madness ruled the hour," this vexed ques- 
 tion was submitted to the final arbitrament of the sword. 
 The question, as all admit, has been fairly and definitely 
 decided, and from this decision of the sword there wall 
 be no appeal. It is undoubtedly true that the men of 
 the South feel sore at the result, but they accept the 
 situation, and are preparing for the changes w^hich the 
 war has produced in their domestic institutions with an 
 alacrity and an exhibition of good feeling which has, I 
 confess, surprised, as it has gratified me. 
 
48 
 
 In the work of restoration the President has aimed 
 to do only that which was necessary to be done, exer- 
 cising only that power which could be properly ex- 
 ercised under the Constitution, which guarantees to 
 every State a republican form of government. Regard- 
 ing slavery as having perished in the rebellious States, 
 either by the proclamation of his predecessor or by the 
 result of the war, and determining that no rebel who 
 had not purged himself of his treason should have any 
 part in the restoration of the civil governments which he 
 is aiding to establish, he has not considered it within 
 the scope of his authority to go further and enfranchise 
 the negro. For this he is censured by many true men 
 at the North and a few extreme men at the South, but 
 I have no doubt that he will be sustained by the people, 
 and that the result will vindicate the wisdom of his 
 course. 
 
 But while the President is inclined to treat with kind- 
 ness, and to trust those who, under mistaken notions in 
 regard to the character of the Government, joined in 
 the rebellion, but not until (after a struggle on their 
 part to prevent it) the States to which they be- 
 longed had passed ordinances of secession, and the 
 United States was unable to extend to them that protec- 
 tion to which they were entitled, there is no man who 
 holds in greater abhorrence than he does the crime of 
 treason or the men who deliberately undertook to de- 
 stroy the Union.* 
 
 And now a word in regard to our finances. 
 
 You know that I did not seek, as I did not expect, to 
 be Secretary of the Treasury. To this fact I attribute 
 in a great degree the good feeling and indulgence that 
 have been manifested towards me in the very trying and 
 responsible position I occupy. I accepted the office of 
 Secretary of the Treasury with great distrust of my 
 ability to meet the public expectation, but with a sin- 
 cere desire to so conduct the affairs of this great depart- 
 
 * I retract nothing at this late (iay (1882) of what I said 
 about Mr. Johnson. He made the great mistake of quarreUng 
 with some of the leaders of the Republican partv, without 
 conciliating Democrats. Hence the unsuccessfulness and un. 
 popularity of his administration. 
 
49 
 
 ment as to aid in restoring the credit of the Govern- 
 ment, which had been damaged b}' the greatness of the 
 public debt and the uncertaint}^ in regard to the dura- 
 tion, if not to the result, of the war, and in bringing 
 up the obligations of the Government to the specie 
 standard. 
 
 I am not one of those w^ho seem disposed to repudiate 
 coin as a measure of value, and to make a secured paper 
 currency the standard. On the contrary, I belong to that 
 class of persons who, regarding an exclusive metallic cur- 
 rency as an impracticable thing among an enterprising and 
 commercial people, nevertheless look upon an irredeem- 
 able currency as an evil which circumstances may for a 
 time render a necessity, but which is never to be sus- 
 tained as a policy. By common consent of the nations, 
 gold and silver are the only true measure of value and 
 the necessary regulators of trade. I have myself no 
 more doubt that these metals were prepared by the Al- 
 mighty for this very purpose than I have that iron and 
 coal were prepared for the very purposes in which they 
 are being used. I favor a well-secured, convertible paper 
 currency; no other can to any extent be a proper sub- 
 stitute for coin. Of course it is not expected that there 
 shall be a dollar of coin in reserve for every dollar of 
 paper in circulation; this is not necessary. For all 
 ordinar}^ home transactions a paper currency is sufficient; 
 but there are constantly occurring periods when balances 
 between countries, and in the United States between its 
 different .sections, must be settled by coin. These bal- 
 ances are insignificant in amount in comparison with 
 the transactions out of which they arise, and when a 
 vicious system of credits does not too long postpone 
 settlements, they are arranged without disturbing move- 
 ments of coin. Whenever specie is needed for such a 
 purpose, or for any other purpose, the paper currency 
 of the country should be convertible into it, and a circu- 
 lation which is not so convertible will not be, and ought 
 not to be, long tolerated by the people. The prCvSent in- 
 convertible currency of the United States was a necessity 
 of the war; but now that the war has ceased and the 
 Government ought not to be longer a borrower, this 
 currency should be brought up the specie standard. 
 
50 
 
 and I see no way of doing this at an early day but by 
 withdrawing a portion of it from circulation. 
 
 I have no faith, sir, in a prosperity which is the effect 
 of a depreciated currency; nor can I see any safe path 
 for us to tread but that which leads to specie payment. 
 The extreme high prices which now prevail in the 
 United States are an unerring indication that the busi- 
 ness of the countr}' is in an unhealthy condition. We are 
 measuring values by a false standard. We have a cir- 
 culating medium altogether larger than is needed for 
 legitimate business; the excess is used in speculations. 
 The United vStates are to-day the best market in the 
 world for foreigners to sell in and among the worst to 
 buy in. The consequence is that Europe is selling us 
 more than she buys of us (including our securities, 
 which ought not to go abroad), and there is a debt roll- 
 ing up against us that must be settled, in part at least, 
 with coin. The longer the inflation continues, the more 
 difficult will it be for us to get back to the solid ground 
 of specie payments, to which we must return sooner or 
 later. If Congress shall early in the approaching ses- 
 sion authorize the funding of legal-tenders, and the 
 work of reduction is commenced and carried on reso- 
 lutely, but carefully and prudently, we shall reach it 
 probably without serious embarrassment to legitimate 
 business; if not, we shall have a brief period of hollow 
 and seductive prosperity, resulting in wide-spread bank- 
 ruptcy and disaster. 
 
 There are other objections to the present inflation. 
 It is, I fear, corrupting the public morals. It is con- 
 verting the business of the country into gambling, and 
 seriously diminishing the labor of the country. This is 
 always the effect of excessive circulation. The kind 
 of gambling which it produces is not confined to the 
 stock and produce boards, where the very terms which 
 are used by the operators indicate the nature of the 
 transactions, but it is spreading through our towns and 
 into the rural districts. Men are apparently getting 
 rich, while morality languishes and the productive in- 
 dustry of the country is being diminished. Good morals in 
 business and sober, persevering industry, if not at a dis- 
 count, are considered too old fogyish for the present 
 
51 
 
 times. But I feel that this is not the occasion for croak- 
 ing, and perhaps I ought to apologize for the train of 
 remarks into which I have been led. 
 
 Whatever financial troubles may be before us, Fort 
 Wayne will suffer as little from them as any other city 
 in the country. Good financial seed was sown here at 
 an early day. If property is high, there is no encum- 
 brances upon it. If expensive buildings are being 
 erected, the owners are not indebted for them. Busi- 
 ness is done here on the cash principle. Our merchants 
 generally buy for cash and sell for cash. We shall 
 doubtless wake up some fine morning and find our prop- 
 erty worth apparently a good deal less than at present, 
 but if we have no debts to pay in a dearer currency than 
 that in which they were contracted, we shall have little 
 to fear from any crisis that may occur. 
 
 But, while I feel anxious about the present inflation 
 and its effects upon the business and morals of the 
 country, I am hopeful that, by wise legislation, we shall 
 escape a financial collapse, and I am confident that a 
 grand future is before the United States. I am hopeful 
 that the currency may be brought up to the specie 
 standard without those financial troubles which have in 
 all countries followed protracted and expensive wars. 
 By the experiences of the past four years we are led to 
 the conclusion that our people have a latent power that 
 always manifests itself when required and is equal to 
 any emergency. I have faith, sir, that as we have, to 
 the astonishment of the world, raised immense armies — 
 larger, I apprehend, than any single nation ever brought 
 into the field — and met the enormous expenses of the 
 war without borrowing from other nations, we shall 
 also be able without a financial crisis to fund our sur- 
 plus currency and interest-bearing notes, bring back 
 the business to a specie standard, and place the credit 
 of the country on the most stable and satisfactory basis. 
 If we do this w^e shall accomplish what the soundest 
 thinkers in Europe have considered an impossibility, 
 and what no other people but the free and enterprising 
 people of the United States, occupying the grandest 
 country in the world, could accomplish. 
 
 But should we be disappointed in these hopeful ex- 
 
52 
 
 pectations; should no earh^ check be put upon the issues 
 of paper mone}'; should prices still further advance and 
 speculation be still further stimulated, and the result 
 thereof be extensive bankruptcy, depression, and hard 
 times, the grand destiu}^ of this country and this Gov- 
 ernment will not be affected. 
 
 The United States occupy the best portion of the tem- 
 perate zone of a continent, stretching out their arms to 
 Europe on the one side and to Asia on the other, and 
 producing all articles necessary for the subsistence and 
 comfort of the race. If cotton be king, he is, thank 
 God, enthroned in the United States; if bread be king, 
 where should his capital be but in this great valle}^ of 
 the Mississippi ? This nation has within itself every- 
 thing that is needed to make it the greatest among the 
 family of nations. Coal and iron in juxtaposition and 
 inexeaustible supply; mountains and valleys rich enough 
 in gold and silver to furnish the world, for all time, with 
 what ma}' be needed for circulation and other uses; cop- 
 per and lead and other minerals in no less abundance ; a 
 soil of wonderful fertilit}^; a climate salubrious and di- 
 versified, and, above all, republican institutions, and an 
 energetic and again united people. 
 
 We have, it is true, sir, difficult questions growing out 
 of the war yet to be settled, but I have an abiding con- 
 fidence that they will be settled, as they come up for 
 settlement, in such manner as will strengthen the Union 
 and add to our national renown. The labor question at 
 the South is one of those questions, but if there be no 
 outside interference, it will not, I apprehend, be a very 
 difficult one; on the contrary, it is quite likely to be a 
 self-adjusting one. The planter wants the labor of his 
 former slaves, and the high price which Southern pro- 
 ducts will command for years to come will enable him 
 to pay liberalh^ for it. The colored people will soon 
 learn that freedom from slaver}^ does not mean freedom 
 from work. The interests of the two races will not long 
 be antagonistic. The whites will need the labor of the 
 blacks, and the blacks will need emplo^'ment. There 
 is as much danger to be apprehended from the unwilling- 
 ness of the latter to labor for a support as from an in- 
 disposition on the part of the former to pay fair wages. 
 
53 
 
 Like all other economical questions, it will be settled by 
 the necessities and interests of the parties. 
 
 Fortunately for the solution of this question and the 
 well-being of laboring men generally, capital is not su- 
 preme in the United States. It does not, as in most 
 other countries, hold labor under its control and dole 
 out to it only such remuneration as will make it most 
 productive. Labor is a power in this free country, with 
 its cheap lands, which are within the reach of all in- 
 dustrious men, and dictates terms to capital. There is 
 no part of the world where labor is more needed than 
 in the Southern States, nor where it will soon command 
 better prices. This labor question at the South will, I 
 doubt not, be satisfactorily arranged in due time for the 
 best interests of all concerned. 
 
 But I have trespassed too long upon your time. Ac- 
 cept, again, my thanks for your courtesy, and for the 
 attention you have given to my desultory remarks. 
 
 Note — The predictions in this address of the disasters which 
 would result from continued issues of irredeemable Govern- 
 ment notes, and of the recuperative power of the country, were 
 fully verified by the terrible financial crisis of 1873 and by the 
 prosperity which followed. 
 
SPEECH 
 
 DELIVERED AT THE 
 
 ANNUAL MEETING OF THE COBDEN CLUB, 
 London, Junk 24, 187 1. 
 
Spee:;CH 
 
 DELIVERED AT THE 
 
 ANNUAL MEETING OF THE COBDEN CLUB, 
 London, June 24 1871. 
 
 My Lord, My Lords, and Gentlemen : Until I 
 came to England last autumn, I had lived in a republi- 
 can country, under republican institutions; for a con- 
 siderable period on a frontier, wlie^e every man was a 
 law unto himself, where law-makers, and law-execu- 
 tors — the necessary agents or adjuncts of what is called 
 a "higher civilization" — were practically, if not alto- 
 gether, unknown. For the last seven months I have 
 been living in London, and I had about come to the con- 
 clusion that I had sacrificed very little of personal free- 
 dom in coming to a country under a monarchial form of 
 government — that "I was about as free here as I had 
 been at home. Indeed, I had availed myself of every 
 proper opportunity to say to my friends on the other 
 side of the Atlantic that England was, in fact, a free 
 country [cheers and laughter] ; that it seemed to me 
 that the English people were in the enjoyment of as 
 much liberty as my own countrymen. Being in this 
 happy frame of mind in regard to the Mother Country, 
 you may judge of my surprise and dismay when I re- 
 ceived yesterday morning the following note : 
 
 IvANGHAM, June 2 1 si. 
 DEAR Mr. McCulloch: You will have to respond as an 
 American for the foreigners on the 24th. 
 
 Yours, truly, T. B. PoTTER. 
 
 [Great laughter.] Could anything be more laconic or 
 mandatory ? Not ' ' Will you be so good as to respond ? ' ' 
 
58 
 
 or "You will oblige us by responding; " but " Yoii 
 will have to respond" — not only as an American for 
 Americans, but as an American for foreigners, as if an 
 American in England were a foreigner. [Laughter.] 
 Here, in what I had fondly supposed was a free country, 
 I am called upon in the most arbitrar}- manner to do not 
 only what under any circumstances I might be unwill- 
 ing to do, but what, in the present circumstances, I am 
 quite unprepared to do. [Cries of "No, no."] Bear 
 in mind, also, that this note was not written by the 
 Queen, nor by a prince, nor a lord, but by a member of the 
 House of Commons— the popular branch of the English 
 Government — by the secretary of a club organized in 
 commemoration of a great popular leader. " If such 
 things can be done in the green tree what may not be 
 done in the dry ? " [Laughter.] If such liberties can 
 be taken, or rather, if a man can thus be deprived of 
 his liberty by a Liberal, what, in the name of human 
 rights, may not be apprehended from a Conservative ? 
 [Great laughter.] I am in a strait. It may be dan- 
 gerous for me to disobey absolutel}^ the mandate of one 
 who speaks as if clothed with authority, backed, as to 
 my surprise he is, by the distinguished Lord Acton; 
 and yet I am clear that I ought not to inflict a poor 
 speech upon so agreeable and intelligent an audience. 
 There is one thing, however, I can do, or rather there 
 is one thing I can stop doing — I can stop calling this a 
 free country, and that I am resolved upon. No one 
 shall ever hear me say one word more in praise of En- 
 glish liberty. With this note in ni}- pocket (and I shall 
 carefully preserve it) I shall bear with me the most con- 
 clusive evidence that personal liberty in England is a 
 myth and a delusion. [Great laughter.] 
 
 My lord, your great poet — but why should I call him 
 \'Our great poet, a great poet is the world's propert}^ — 
 our great poet, the world's great poet, has said that 
 " the evil which men do lives after them, while the good 
 is oft interred with their bones." If the immortal 
 dramatist meant by this remark, which he puts into the 
 mouth of Mark Anthony-, that the evil which men do 
 is more lasting than the good, he was undoubtedly mis- 
 taken; if he were not, the world would be retrograd- 
 
6^ 
 
 ing in goodness, which I apprehend is not the fact. 
 Bad as the world may be, full of suffering as it unques- 
 tionably is, it is nevertheless improving. The world to- 
 day is better than it ever was before. There is at the 
 present time more of kindness and fraternity, more of 
 active humanity, more of what may be denominated 
 Christian civilization, than there has been at any period 
 of the world's history. ["Hear, hear."] The good which 
 men do lives after them; like good seed sown upon 
 good ground, it fails not in due time to bring forth its 
 legitimate fruit. Of few men can it be said more truth- 
 fully that the good which they have done lives after 
 them than of Richard Cobden. [Cheers.] His acute 
 intellect, his sound jugment and accurate observation 
 enabled him to discover what was true in the science of 
 political economy, of which he was both student and 
 teacher; and having discovered it, there was no power 
 on earth that could prevent him from advocating it; a lover 
 of peace, he was the earnest, unflinching and, in his own 
 country, the triumphant advocate of the system of free 
 trade, or free exchanges, between nations, which tends 
 to bind them together by the strong ties of mutual in- 
 terests [cheers] ; a sincere lover of his kind, ir- 
 respective of nationalities or conditions, he was ever 
 the champion of human rights in the most comprehen- 
 sive meaning of the term [cheers] ; loving England 
 more than any other country, and the English people 
 more than any other people, as it was proper for him to 
 do, his sympathies for his fellow-men were too broad 
 and too generous to be limited by national boundaries 
 [cheers]; he was, in fact, a citizen of the world, and the 
 world claims a heritage in his fame and in the results 
 of his labors. I am sure I do but express the sentiments 
 of all the foreigners present when I say that they 
 heartily indorse the eloquent eulogium which the noble 
 chairman has pronounced upon his character. [Cheers.] 
 The good which he did lives after him, the first fruits 
 of his labors are now being enjoyed, and I am greatl}' 
 mistaken in my expectations if a richer harvest is not 
 yet to be realized by the nations. ["Hear, hear," and 
 cheers.] 
 
 In regard to the recent treaty which has been made 
 
60 
 
 between Great Britain and the United States, it may be 
 proper for me to say that although I have believed that 
 there was less danger than many had apprehended of 
 war between the two nations; although I have had faith 
 that there was a feeling of friendship at the bottom, 
 which, in spite of our jealousies and controversies, would 
 prevent actual hostilities, I have nevertheless regarded 
 it as very important for the welfare of both nations that 
 all irritating and uncomfortable questions which were 
 preventing good fellowship between them should be set- 
 tled. While there may be — and it would be strange if 
 there were not — some honest differences of opinion on 
 both sides in regard to the merits of this treaty, I am 
 satisfied that among right-feeling men there is a senti- 
 ment of sincere gratification that all causes of difference 
 between nations so closely related to each other are re- 
 moved; and I have no doubt that I am expressing the 
 opinion of an overwhelming majority of my own people 
 as well as the people of Great Britain when I say that 
 the treaty is entirely honorable to both nations, and in 
 the highest degree creditable to the very distinguished 
 gentlemen whose names are connected with it. [Great 
 cheering.] In conclusion, permit me, therefore, to propose 
 the health of the Marquis of Ripon, with the single re- 
 mark that no honor which Her Majesty has conferred 
 or may confer upon him can equal the reputation so fairly 
 won by the obligation under which he has laid the peo- 
 ple of both nations, by his agency in binding them to- 
 gether in amity which can hardly fail to be perpetual. 
 [Great cheering.] 
 
SPEECH 
 
 DELIVERED AT A 
 
 THANKSGIVING BANQUET GIVEN BY CYRUS 
 W. FIELD, AT THE PALACE HOTEL, 
 
 London, November 28, 1872. 
 
SPEECH 
 
 DELIVERED AT A 
 
 THANKvSGIYING BANQUET GIVEN BY CYRUS 
 W. FIELD, AT THE PALACE HOTEL, 
 
 London, Novkmbkr 28, 1872. 
 
 Mr. Field and Gentlemen : In the United States, 
 or at least in New England, when I was a boy, we had 
 but two holidays. The Pilgrim fathers, as we were in 
 the habit of calling them, considered all observances of 
 saints' days and days that savored of Masses as having 
 l)een instituted by the prince of darkness; and as they 
 had the control of such matters, very little was done in 
 the direction of holidays. We had, it is true, a day 
 which was sometimes called a holiday, but which should 
 more properly have been called a holy day, an annual 
 fast day. But as this was a day of long sermons and 
 short commons, its return was never hailed with much 
 satisfaction by that large class in the community who 
 had good appetites and little faith in the mortification of 
 the flesh as a means of propitiating the Deity and se- 
 curing good crops. [Laughter. I We had, therefore, 
 Init two holidays, the Fourth of July and Thanksgiving 
 Day. The Fourth, as you well know, was rather a politi- 
 cal than a social holiday. It was a day on which 
 everybody was expected to be especially patriotic, on 
 which the younger portion of the community were in 
 the habit of burning powder freely, no matter how hot 
 might be the weather, and of singing hosannas to the 
 goddess of liberty, by whose intervention it was sup- 
 posed the American eagle had escaped the clutches of 
 the British lion. [Laughter.] But the day of days, the 
 
64 
 
 day of short sermons and good dinners, the day of 
 family reunions, the day of universal good feeling, the 
 day, I am happy to say, on which every board, however 
 humble it might be, was generously supplied with the 
 good things which the country so abundantly produced, 
 was Thanksgiving Day. It was a day which all. New 
 Englanders especially, remember with the liveliest affec- 
 tion, and we feel greatly indebted to Mr. Field that we 
 are permitted to enjoy it together in this place. This 
 celebration will add a new charm to the day of which 
 we always have the most pleasant recollections. I may 
 say, further, that it is a day in the celebration of which 
 Englishmen can heartily join with Americans, for you 
 recollect that the Thanksgiving Day of the Pilgrims 
 was an English institution. It was ordained by En- 
 glishmen — on American soil, it is true, but by English- 
 men thoroughly loyal to the English throne, and as 
 thoroughly imbued Avith that spirit of civil and religious 
 liberty which, although it has been subject to temporary 
 obscurations, is the very foundation of the ecclesiastical 
 and political institutions of this great country. [Cheers. ] 
 The day is a pleasant one in another respect, and En- 
 glishmen and Americans can join in the celebration, es- 
 pecially at the present time, because there never has 
 been a period when such agencies were at work to es- 
 tablish good relations between the two countries. The 
 influences of a common ancestry, of a common litera- 
 ture, of a common language, and, to a considerable ex- 
 tent, a common law, and a mutually profitable trade, 
 have of late been vastly strengthened by the increased 
 facilities of intercourse and communication. 
 
 It is a trite remark, but a true one, that steam and 
 electricity have annihilated distance. Steamships are 
 bringing every year from the United States to this coun- 
 try thousands of Americans, very few of whom would 
 have thought of crossing the Atlantic had it not been for 
 steamships; most of whom — all of whom, I may say — 
 return with increased respect and increased affection for 
 the Mother Countrv. A large, though smaller, number of 
 English people are constantly visiting the United States, 
 and are as constantly returning with similar sentiments in 
 regard to the great Republic. [Cheers.] Not only so, 
 
65 
 
 but these two nations, so strongly united as they are, 
 and still more strongly united as they are destined to be — 
 these two nations, thanks to our honorable chairman, to 
 whose energy and faith we are, in my judgment, in- 
 debted for the Atlantic cable [cheers], can now, as it 
 were, speak face to face; and I have no question that 
 the eloquent words uttered by the right honorable gen- 
 tleman [Mr. O-ladstone] who has just sat down have ere 
 this been flashed to the United States, and that before 
 the sun hides his face in the Pacific Ocean they will 
 have been read with delight from one end of the country 
 to the other. This is a time also of peculiar interest, 
 because we have at last reached a point at which all 
 differences between the two nations have been definitely 
 and honorably settled. [Cheers.] The right honorable 
 gentleman who has spoken with so much eloquence — I 
 verily believe he could not help being eloquent if he 
 tried — when the Alabama or Washington treat}' was 
 somewhat more unpopular than it now is, certainly more 
 unpopular than it is likely hereafter to be, assumed the 
 full responsibility of it. The right honorable gentleman 
 has acquired a reputation which has placed him in the 
 front rank of the most distinguished of his countrymen; 
 but I incline to the opinion that, brilliant as his career 
 has been, there is no part of it that he will reflect upon 
 with more satisfaction than upon his connection with this 
 treaty. It will be the most lasting and the most honor- 
 able monument to his fame. In regard to the treat}^ it- 
 self I have very little to say. It is well understood; it 
 has been read, at all events, b}- all who care for the re- 
 lations between the two countries; it tells its own story; 
 it is a simple agreement between two great nations to 
 adjust their controversies by arbitration instead of the 
 sword; it settles most important principles of interna- 
 tional law; it defines clearly the duties and responsibil- 
 ities of neutrals. In my judgment, and almost in the 
 language of Mr. Field, it is the greatest achievement of 
 Christian civili/^ation during the present century. [Loud 
 cheers.] 
 
LETXBR 
 
 TO 
 
 MERCHANTS OF CINCINNATI. 
 
♦ LETTER 
 
 TO 
 
 MERCHANTS OF CINCINNATI. 
 
 Plainfield, N. J., August 17, 1874. 
 
 Gentlemen: Your kind letter of the 25th ult. was 
 received at Fort Wayne after I had left. I regret that 
 other engagements prevent me from accepting your flat- 
 tering invitation to meet my fellow-citizens of Cincin- 
 nati, with many of whom I was formerly connected by 
 business and social ties, and to speak to them upon the 
 interesting and what you term "perplexing" subjects 
 of finance and taxation. 
 
 I am in no sense a teacher. M}- opinions upon these 
 subjects are valuable only as the opinions of one who 
 has given to them some thought, and who has been in- 
 fluenced in his conclusions neither by personal nor po- 
 litical (party) considerations. As, however, you desire 
 an expression of them, and as I now find this cannot be 
 given in the manner proposed, I do not hesitate to ex- 
 press them in this manner. 
 
 It will be sufficient for my purpose to consider that 
 you especially refer b}^ "Finance" to the currency and 
 by "Taxation" to the tariflf, although this is but a limited 
 view of the terms. For want of time I shall only be 
 able to express the conclusions I have reached without 
 undertaking to give the facts or the arguments upon 
 which they are based. 
 
 THE CURRENCY. 
 
 My opinions upon the subject of the currency are well 
 known by those who took the trouble to read my Fort 
 Wayne speech and my reports as Secretary of the 
 
'0 
 
 i'reasury from 1865 to 1869. The opinions I then ex- 
 pressed, in language as strong and unequivocal as I 
 could command, have neither been changed nor modi- 
 fied. On the contrary, they have been confirmed and 
 strengthened by further observation and reflection. I 
 thought it to be the duty of Congress, considering the 
 subject in its moral as well as its financial bearings, to 
 adopt decisive and efi^ective measures to bring about 
 specie payments, and that the time for the adoption of 
 these measures was at the close of the war. I did not 
 think that "the way to prepare for specie payments was 
 to resume," but I did think it of vital importance to the 
 best interests of the country that the restoration of the 
 specie standard should be the end and aim of all legis- 
 lation bearing upon the subject of the currency. 
 
 My conviction was clear and decided that this could 
 only be effected within au}^ reasonable time, and before 
 such financial disaster as has recently occurred would 
 overwhelm the country, by retiring so much of the paper 
 currency in circulation as would be necessary to bring 
 up the residue to par. I thought that this could be ac- 
 complished without the occurrence of the apprehended 
 disaster to the business of the country, and without af- 
 fecting in the least the real value of property; that by 
 a curtailment of the amount of inconvertible notes in 
 circulation the purchasing or measuring power of the 
 remainder would be proportionately increased, and that, 
 consequently, the amount of real money in circulation 
 would not be thereby diminished; that measuring prop- 
 erty by a false standard could not add to its value, nor 
 by a true standard reduce it. 
 
 There was, it seemed to me, but one class in the com- 
 munity — the debtor class — who could be benefited by a 
 depreciated currency, and I was anxious that decided 
 action for relieving the country of such a currency should 
 be taken immediately after the close of the war, when 
 individual indebtedness was less than it had been for 
 many years. It seemed to me, also, that the injury to 
 this class of our fellow-citizens, from a reduction and 
 consequent improvement of the currency, would be al- 
 together less than was feared by them; that what honest 
 and energetic debtors needed was not legislation to en- 
 
71 
 
 able them to pay their debts in a depreciated currency, 
 but legislation that would give activity to well-directed, 
 not speculative, enterprise and stability to business; 
 that as, in fact, one debt is in the course of trade usually 
 paid by the creation of another, and the general indebt- 
 edness of the people is not ordinarily from year to year 
 materially reduced , the debtor class itself was in no serious 
 danger of being injured by the elevation of the standard 
 of values, and that if they were to be injured by it, the 
 injury to them would be small in comparison with that 
 which had been inflicted upon creditors by the legal- 
 tender acts, which compelled them to receive in satis- 
 faction of existing contracts a currency of far less value 
 than that which was the only lawful money at the time 
 they w^ere made, and who generally bore their losses 
 without murmuring, as a sacrifice required by the Gov- 
 ernment in its struggles with a gigantic rebellion. 
 
 In language which made up by explicitness what it 
 lacked in strength, I pointed out the danger and the im- 
 moral influences of an inconvertible and depreciated 
 currency. By every argument I could make, and every 
 illustration I could bring to bear upon the subject, I en- 
 deavored to prove, in each of my reports, that a depre- 
 ciated currency was, and never could be anything else, 
 than a positive, unmistakable injury to the people, 
 morally and financially; that in regard to such a currency 
 there could be no " stand still until the country grows 
 up to it" policy; that by wise legislation we should 
 move toward specie payments, or by unwise legislation 
 or by floating without chart or compass we should find 
 ourselves upon financial breakers before we were con- 
 scious of immediate danger. 
 
 In my earliest utterances upon the financial question, 
 in a free talk with my Fort Wayne friends, I remarked 
 that "while I regarded an exclusive metal currency 
 among an enterprising and commercial people as an im- 
 practicable thing, I regarded an irredeemable paper cur- 
 rency as an evil which circumstances for a season 
 might render a necessity, but which should never be 
 sustained as a policy; that the legal-tender notes were 
 issued as a war measure, and that as the war had been 
 brought to a successful termination, measures should be 
 
instituted for retiring them together, or bringing them 
 up to the specie standard; that I had no faith in a pros- 
 perity that was based upon a depreciated paper money, 
 and that I saw no safe path to thread but that which led 
 to specie payments; that the extremely high prices pre- 
 vailing in the United States were an unerring indication 
 that we were measuring property b}^ a false standard; 
 that the United States were becoming the best country 
 in the world for foreigners to sell in and the worst to buy 
 in; that the longer inflation continued the more difficult 
 would it be to get back to the solid ground of specie 
 payments; that if Congress should earl\' in the approach- 
 ing season (1865 and 1866) authorize the funding of the 
 legal-tender notes, and the work of reduction should be 
 commenced and carried on resoluteh^ but carefully and 
 prudently, we should reach the solid ground without 
 serious embarrassment to legitimate business. If not, 
 we shall have a brief period of hollow and seductive 
 prosperity, resulting in widespread bankruptcy and dis- 
 aster." Such were my sentiments then, and such are 
 they now. 
 
 The truth is, gentlemen, and the reiteration of it ought 
 not to be necessary, gold and silver are the only stand- 
 ards of value; and as long as we are a part of the great 
 famih' of nations, and are a commercial people, we can 
 adopt no inferior standard without being greatly the 
 losers by it. 
 
 A sound currency is the very life-blood of a commer- 
 cial people. None but bankrupt nations, with the ex- 
 ception of the United States, keep in circulation an 
 irredeemable paper currency, a currenc}^ which in their 
 cases tends to produce and perpetuate the povert\' it in- 
 dicates. To the United States such a currenc}' is 
 utterly disreputable, since there is not the slightest 
 necessit}' for it. That a nation so rich as ours, so grand 
 in its resources, so vast in its productions, a nation 
 which has challenged the admiration of the civilized 
 world by the rapid reduction of its public debt, com- 
 mencing that reduction at the close of a war the most 
 expensive that has ever been carried on and actually 
 reducing it at the rate of nearly a hundred million of 
 dollars a year, that such a nation should for so long a 
 
n 
 
 period maintain a depreciated circulating medium, made 
 lawful money by statute, is to intelligent foreigners an 
 inexplicable mystery. The specie standard ought to 
 have been restored ere now, and I believe it would have 
 been if that great power in the land, the press, had given 
 to the doctrines enunciated from the Treasury Depart- 
 ment from 1865 to 1869 the hearty indorsement it has 
 given to similar doctrines when proclaimed by the Presi- 
 dent in 1874. 
 
 If the financial trouble that has come upon us, and 
 the consequent prostration of business in nearly all 
 branches of trade, notwithstanding the plentifulness of 
 currency, shall tend to correct the public sentiment in 
 regard to the nature and offices of money, they will not 
 be entirely without compensation. It required the 
 sacrifices of a great war to uproot slavery; perhaps it 
 required the experience of a great financial disaster to 
 teach the people the danger of discarding the true meas- 
 ure of value, and substituting therefor the uncertain, 
 fluctuating standard of irredeemable legal-tender notes. 
 It will be lamentable indeed if. instead of being profited 
 by experience, our financial trouble — the result in a 
 great measure of our financial mistakes — shall cause a 
 still wider departure from the paths of wisdom and safety. 
 
 Real money — and the world always has had and will 
 have plenty of it for legitimate uses — leaves or avoids 
 countries that have an inferior substitute for it. But no 
 matter what other standard may be adopted by law, or 
 how the fact may be attempted to be disguised, the 
 value of all property is still regulated by it. The legal- 
 tender act compels the people of the United States to 
 treat the greenback dollar as if it were a dollar in fact; 
 but except in payment of debts it is not one; it has not 
 the purchasing power of one. Its value has been forty- 
 five cents; it is nov*' ninety. A year hence it may be 
 ninety-five, or it may be — no man can tell what. It 
 is the paper and not the gold dollar that fluctuates, and 
 is, therefore, an uncertain and dangerous standard. Can 
 it, then, be doubted that it is the duty of Congress so to 
 legislate as to make as soon as practicable the paper 
 dollar, of which it authorizes the issue, equal to the 
 gold one? 
 
74 
 
 The question then arises, What legislation is required 
 to effect this most desirable result ? 
 
 Our new Secretary is a gentleman of ability, and he 
 belongs to a State in which good financial seed was 
 sown at an early day, as has been proved by her high 
 financial credit and tlie soundness of her banking insti- 
 tutions. I know not what his views are, but he would 
 not be a true scion of Kentucky stock if he were un- 
 sound upon the financial question. If the management 
 of our finances were in his hands, I for one should be 
 willing to take him upon trust, not doubting that he 
 would pursue the right course to relieve the country 
 from the burden — for such it is — of an irredeemable cur- 
 rency. 
 
 But such is not the fact. His hands are tied. Con- 
 gress is to determine what shall be our financial policy, 
 and this determination may depend upon the result of 
 the approaching elections. 
 
 As parties now stand the financial question cannot be 
 made a strictly party question; nor will it be, as at the 
 latter part of the late session it w^as feared might be the 
 case, a sectional one. It is a question upon which there 
 will be a difference of opinion among men of the same 
 party and the same State. That there should be speedy 
 legislation and a definite policy established everybod}- 
 who is not a gambler in business admits and desires. 
 Nothing but further inflation can be worse than uncer- 
 tainty upon a matter so important to the well-being of 
 the country as the currency. It is for these reasons that 
 I feel at liberty to give my opinion upon the financial 
 legislation that is required. I state my views frankly, 
 not as presenting the only way, but as what seems tome 
 the most certain and direct way of returning to specie 
 payments. If a wiser plan shall be adopted no one will 
 be more pleased than myself. 
 
 First. Congress should fix a period, say the ist of 
 December, 1876 — the time is not material, if it be not 
 remote — after which United States notes should cease 
 to be legal tender. 
 
 Second. The Secretary of the Treasury should be 
 authorized to retire by the use of the surplus revenue 
 and, if this should be insufficient, by the sale of bonds, 
 
75 
 
 at least ;$5o, 000,000 of United States notes per annum 
 until all have been retired, and he should be prohibited 
 from re-issuing the notes thus retired under any pretext 
 or circumstances whatever. 
 
 Third. In lieu of the United States notes retired, an 
 equal amount of bank-notes, if they should be required, 
 should be issued to national banks. 
 
 Fourth. When the specie standard has been re-estab- 
 lished by the repeal of the legal-tender acts, banking 
 should be made free and Congress should cease to inter- 
 fere with the currency, except so far as may be neces- 
 sary to prevent illegal issues and to provide that every 
 dollar in circulation by authority of law shall be secured 
 bevond a contingency, as is now the case, by a deposit 
 of United States bonds in the Treasury. 
 
 It is obvious that as long as the United States notes are 
 a legal tender the specie standard is not likely to be re- 
 stored. These notes should be gradually retired, because 
 until the volume is reduced they will not permanently 
 improve in value, and because until the banks perceive 
 that the reduction is actually taking place they will 
 make no effort to supply themselves with coin for the pro- 
 tection of their own circulation. It is not likely that an 
 issue of bank-notes corresponding to the amount of the 
 United States notes withdrawn will be required, as the 
 value of both kinds of our paper money will be steadily 
 increasing, and specie will be taking the place of paper 
 as a reserve of the banks and ultimately as a circulation 
 among the people. This will be a self-regulating matter. 
 As the United States notes are retired the banks will 
 fortify themselves with coin, so that when the time of 
 coin redemption comes round thev will be prepared to 
 meet the calls which may be made upon them, which 
 will not be large, as the preparation for this state of things 
 will have brought the business of the country into a 
 healthy condition, and there will be little demand for 
 coin for exportation. 
 
 Nor will this withdrawal of United States notes pre- 
 paratory to a return to specie payments, nor the return 
 itself, affect the value of property or disturb business. 
 Some intelligent men, who are anxious to stand again 
 upon solid ground, are apt to speak of the "shrinkage" 
 
16 
 
 which must occur before this can be brought about, not 
 reflecting that the real vahie of propert}^ is not affected 
 by the standard by which it is estimated. Property is 
 not dependent for its vaUie upon a fiction. We speak 
 of the price of gold, of its rise and fall, and some of us 
 seem to think that we are richer as it rises and poorer 
 as it falls; while its real value is permanent except so 
 far as it is affected by the yield of the mines. In spite 
 of the legal- tender acts it is to-day, and it must continue 
 to be, the real measuring standard of property. There 
 is no foundation, therefore, for the apprehension of a 
 shrinkage in the value of property as a consequence of 
 a return to specie payments, nor is there any more foun- 
 dation for the apprehension that such a change in our 
 financial policy will make money scarcer and times 
 harder. As I have alread}^ said, money, whether it be 
 gold or paper, goes where it is wanted. 
 
 The advocates in Congress of inflation or an increase 
 of currency were chiefly from the Western States. How 
 truly they reflected the sentiments of that section I can- 
 not sa}', but I am sure that what is needed in the West 
 is not so much more money as better money, and greater 
 and cheaper means for the transportation of its products 
 to the markets. There is no class of men who are so 
 much injured by irredeemable paper money as the agri- 
 culturists. It is the farmer, especially, who is cheated 
 by fictitious money. It is said, I know, that he pays 
 his taxes with it and for what he needs to purchase, but 
 is it not true also that it increases his taxes and adds 
 largely to the cost of what he buys? 
 
 The cotton, sugar, and rice of the South, and the 
 grain, beef, and pork of the West, are needed at home 
 and by foreign nations, and they will always command 
 money. The people who have them to dispose of must 
 decide what kind of money it shall be — money in the 
 form of broken promises, or gold and silver and con- 
 vertible bank-notes. 
 
 I have been for a long time absent from the countr}-, 
 but I am greatly deceived if the demand at the West 
 for more currency does not come chiefly from those who 
 have little or nothing to sell, and who would be conse- 
 quently injured by a compliance with their demands. 
 
77 
 
 There may be at present depression in the price of ag- 
 ricultural products, but this is not owing to a scarcity 
 of money, but to a falling off in the demand for them. 
 Consumption at home is less and the foreign demand is 
 smaller than they have been. Many of our manufac- 
 tories are idle, and the European markets are disturbed 
 by our financial troubles. It is these causes, which are 
 only temporary, and not scarcity of money, which occa- 
 sion the depression which at present exists. 
 
 There has never been a time when the products of 
 the West (I can speak advisedly of this section) have 
 failed to bring what they were really worth, according 
 to prices at the home and foreign markets, for want of 
 money to pay for them, and there will never be. I 
 know that these products have commanded at various 
 times only extremely low prices, but this was owing to 
 a lack of means of transportation or of a supply superior 
 to the demand. The fact that nine out of ten of those 
 who have been engaged in buying and shipping the 
 products of the West to the seabord, where prices are 
 usually regulated by the European markets, have failed 
 in business, is an evidence that these products have not 
 been sacrificed or sold at home for less than their value 
 b}^ reason of a scarcity of money. 
 
 There need, then, be no apprehension on the part of 
 the farmers of the West that they would be injured, or 
 that there would be a scarcity of money, by reason^ of 
 the withdrawal of the United States notes or a reduction 
 of paper circulation. For every dollar of depreciated 
 currency withdrawn they would have a dollar, in value 
 at least,' of convertible paper or of specie. What is true 
 in regard to farmers is equally true in regard to manu- 
 facturers, merchants, and laborers. 
 
 My own deliberate opinion is that we shall never have 
 really cheap money, as we can never have reliable money 
 until the United States notes are stripped of their false 
 character and retired from circulation and their place is 
 supplied by specie and perfectly secured convertible 
 bank-notes. Specie will cease to flow out of the coun- 
 try as it now does, and will commence flowing in, as 
 soon as we drive out of circulation the notes which have 
 deprived it of its monetary character* 
 
78 
 
 The product of our gold and silver mines leaves us 
 because we have no use for it. As it is not a circulating 
 medium, nor a basis for it. it would be a burden if it re- 
 mained. 
 
 In regard to a substitution of bank-notes for green- 
 backs, I have only to sa}^ that there ought not to be, 
 and there will not long be, two kinds of paper money 
 in circulation. One kind or the other will occupy the 
 field. This I think inevitable. We shall get rid of the 
 United States notes, or there will be an irresistible de- 
 mand for more of them. I advocate the substitution of 
 bank-notes for United States notes, because the latter 
 stand in the way of a return to specie. 
 
 The Government lacks the means and the machinery 
 to keep in circulation a convertible currency of its own. 
 To maintain such a currency the Treasury Department, 
 or a department to be created for this purpose, would 
 necessarily become a bank of issue. Such a bank would 
 be as unsuited to our institutions, as it would be deficient 
 in the power to give flexibility to its issues and secure 
 a just "and equal distribution of them throughout the 
 country. For such an experiment the people are not 
 prepared. As long as we have a legal-tender paper cur- 
 rency we shall have an inconvertible currency. 
 
 I advocate the substitution of bank-notes for United 
 States notes also., because I regard it of exceeding impor- 
 tance that the subject of the currency should be with- 
 drawn from politics. PoUticians are necessarily agita- 
 tors; they cannot be otherwise. They need capital, 
 and agitation is capital. That this capital should not be 
 made by a perpetual interference with what affects every 
 man's interest is an obvious truth. A Government cur- 
 rency, therefore, is not what is needed for a circulating 
 medium. No political party should be intrusted with 
 the power of making money, or what is called mone}^ 
 scarce or plenty at pleasure. 
 
 Uet the United States notes be retired; let the re- 
 straints upon bank circulation be removed; let banking 
 be free and the business of banking be managed by 
 those who embark in it; let the circulation of banks, se- 
 cured by the bonds of the Government, be regulated 
 ])y their ability to redeeni and by the requirements of 
 
79 
 
 the country, and we shall have that freedom from politi- 
 cal interference, and that flexible, 3^et vStable, because 
 convertible, currenc}^ which is needed to stimulate en- 
 terprise and to secure to labor its proper reward. 
 
 The loss that the people would sustain in the matter 
 of interest, by the withdrawal of United States notes, if 
 this loss should not be made up by the taxes assessed 
 upon the banks and the facilities which they render to 
 business, would be small in comparison with what would 
 be gained by the withdrawal of the currency question 
 from the arena of politics. I am no advocate of banks. 
 If they did not exist I might regard the creation of 
 them a question of doubtful expediency, but they are so 
 interwoven with our financial interests that they could 
 not be destroyed without a financial revolution. And it 
 must be borne in mind, in considering our banking sys- 
 tem, that it is a very different one from that which it 
 superceded, inasmuch as it gives to the people a circu- 
 lation of uniform values and unquestionable solvency. 
 It is undoubtedly the best system now in existence, and 
 it should be sustained until a better one is devised or 
 until the country is prepared to do without banks alto- 
 gether. 
 
 In what I have said in regard to the United States 
 notes, I must not be understood as reflecting upon the 
 financial minister who advocated or the Congress who 
 authorized the issue. 
 
 In regard to the wisdom of this measure, there are 
 now, as there were then, differences of opinion; but, ad- 
 mitting that this was not a wise measure, the advocacy of 
 it ought not to detract from the great merit of Mr. Chase, 
 to whose administration of the Treasury the successful 
 termination of the war is very largely to be attributed. 
 If Mr. Chase lacked financial training and experience, 
 he possessed what was better in the trying circumstances 
 in which he was placed — courage, nerve, faith. Great 
 victories in the field are but seldom won by a strict ad- 
 herence to the scientific rules of war; great com- 
 manders are seldom found in distinguished military en- 
 gineers. The same is true in great financial contests, 
 and the contest between the Government and the South- 
 ern States was as much a contest of dollars as of arms, 
 
80 
 
 If the Government had broken down financial!}' the re- 
 bellion would not have been suppressed. That it did 
 not break down was largely owing to the qualifications 
 of Mr. Chase for the position he held. He undoubtedly 
 made mistakes; there is cause for wonder that he did 
 not make more. I do not believe there was another 
 man in the Union who would have made less. 
 
 PKNDLETON'S issue in INDIANA. 
 
 There is another subject to which I should not allude if 
 there was not a ''plank in the platform" adopted by the 
 recent Democratic convention at Indianapolis in favor of 
 the payment of the five-twenty bonds in greenbacks. Al- 
 though it is known that party platforms are usually made 
 to be disregarded and ' 'spit upon, ' ' the expression of such 
 a sentiment by an intelligent and highly respectable body 
 of men, claiming to represent a great political party, 
 whose record upon financial questions has been most 
 creditable, is calculated to mislead well-meaning people, 
 if not to damage the national credit. This subject is 
 rapidly losing its interest in a pecuniary point of view- 
 by the fact that the five-twenties are being rapidly con- 
 verted into five-per-cents., which, in order to prevent 
 any question in regard to the currency in which they 
 are to be paid, are upon their faces made payable in coin. 
 
 Still, presented as it has been for the consideration of 
 the voters of Indiana, it is not without importance. I 
 feel it to be important because it affects the good name 
 of my own State. That such a proposition should be 
 revived by men claiming to represent Democracy, in- 
 dicates a want of political sagacity on their part and an 
 abandonment by them of principles to which the Demo- 
 cratic party, in the palmy days of its greatness and 
 power, conscientiously adhered, and which it must again 
 avow and adhere to if it is to become the party of the 
 future, as it has been of the past. 
 
 If this resolution of the convention truly expresses or 
 reflects the sentiments of the Democrac}- of Indiana, it 
 is hoped that the spirits of Jefferson and Jackson, of 
 Benton and Wright, and the host of other Democratic 
 worthies whose fame is the nation's pride, do not witness 
 the apostasy of those who claim to be their followers. 
 
81 
 
 That the five-twenty bonds should not and cannot be 
 paid in depreciated greenbacks is evident for the fol- 
 lowing reasons: 
 
 First. These bonds are national obligations, intended 
 to be circulated and held in foreign countries as well as 
 in the United States, and all such obligations are always 
 understood to be payable in the currency which alone 
 is recogni/.ed as money by the common consent of the 
 great famih- of nations. 
 
 Second. They cannot be so paid, because it could not 
 be done without increasing the issue of the legal-tender 
 notes beyond $400,000,000, and a large portion of these 
 bonds were issued after the faith of the Government 
 had been pledged by act of Congress that this should 
 be the limit, and because Congress by a special act of 
 1869 declared that these bonds are pa^^able in coin. 
 
 Third. Because it was the express understanding be- 
 tween the Government and the people when these bonds 
 were issued that the principal as well as the interest 
 should be paid in coin. • 
 
 The language of the resolution, " We are in favor of 
 the redemption of the five-twenty bonds in greenbacks, 
 according to the law under which they were issued," if 
 not positively untrue, is calculated to mislead. That these 
 bonds should be paid in greenbacks is not in accordance 
 with the law under which they were issued; the re- 
 verse is the fact. It is true that the law does not ex- 
 pressly state that they are payable in coin, but it is pro- 
 vided that the interest shall be so paid. If it is silent 
 in regard to the principal, it is because no one at that 
 time regarded the United States notes as anything else 
 than a temporary currency, which was to be redeemed 
 or retired by conversion into bonds long before the 
 bonds, by their terms, would be brought under control 
 of the Government. By every member of the House 
 and of the vSenate who participated in the debate when 
 the issue of these bonds was under consideration, and 
 who, in terms, alluded to them, they were spoken of as 
 gold bonds. Who, in fact, ever heard of a national ob- 
 ligation, the interest on which was payable in one kind 
 of currency and the principal in another ? And what would 
 be thought of a people who should take advantage of 
 
82 
 
 the technical construction of their own law and compel 
 the holders of their bonds to take in payment thereof 
 their own dishonored and depreciated paper, notwith- 
 standing their servants in the Treasury Department, 
 their agents who solicited subscriptions, and the public 
 press, with the full knowledge and approval of the law- 
 making power, had represented the principal as well as 
 the interest of the bonds to be payable in coin ? 
 
 To do such an act the people of the United States 
 would reach a depth of degradation and dishonor to 
 which no nation has yet descended. 
 
 The vStatement of the proposition, stripped of all dis- 
 guises, is enough to condemn it in the estimation of hon- 
 orable men. It is not, I am sure, in harmony with the 
 sentiments of a majority of the Democrats of Indiana. 
 As a bid for votes, the resolution of the convention was 
 a blunder, which in politics is worse than a crime. Mor- 
 ally and economically considered, as well as politically, 
 if it was an expression of the intelligent sentiment of 
 its members (which I apprehend it was not), it might 
 justly be pronounced a crime and blunder combined. 
 
 THE TARIFF. 
 
 I have said so much upon the currency question that 
 I have neither time nor space to dwell upon the question 
 of the tariff. Nor is it necessary that I should, as it is 
 a question which is being discussed by those who have 
 given to it much more attention than I have and who 
 understand it better. 
 
 I favor a revenue and not a protective tariff. The 
 present tariff has been highly productive of revenue, 
 and it is, therefore, contended that it is, in fact, a reve- 
 nue tariff, and that inasmuch as a large portion of our 
 revenues are to be derived from custom duties, the dif- 
 ference between a tariff for protection and a tariff for 
 revenue must always be imaginary rather than real. 
 
 Now, while it is true that since 1862 the importations 
 into the United States have been heavy, and the reve- 
 nues from this source have been consequently large, it 
 does not follow that the present tariff is, in the proper 
 meaning of the term, a revenue tariff. 
 
88 
 
 It was intended and framed to protect certain inter- 
 ests in the United States, and it has done and is still 
 doing this, by preventing fair competition between home 
 and foreign manufactures, thereby increasing to con- 
 sumers the cost of many articles of common and indis- 
 pensable use. It is true, also, that this, to some extent, 
 must be the effect of any system of raising revenue by 
 customs duties; and that free trade, desirable as it may 
 be, is not likely to be adopted as long as large revenues 
 are needed for the payment of the public debt and for 
 defraying the expenses of the Government. 
 
 Indirect taxation, especially taxation upon imports, 
 is undoubtedly the most expensive and demoralizing, if 
 not the most unequal, mode of raising revenue that has 
 ever been resorted to; and yet it is the most popular, 
 because it is not inquisitorial. It does not introduce the 
 tax gatherer to the consumer, and it is felt only in the 
 enhanced prices of the articles which are subject to it, 
 the cause of which enhanced prices is not often consid- 
 ered. The policy of raising revenues by taxes upon 
 imports is not to be abandoned, and it will not be possi- 
 ble, even if it were desirable, to frame laws which 
 will yield such revenues as will be required from this 
 source without giving to home industry liberal protec- 
 tion. 
 
 Now, what I think the people should earnestly and 
 persistently contend for is a tariff in which revenue 
 should be the object and not the incident. Let a com- 
 mission fairly representing the different sections of the 
 country be appointed by Congress to prepare a bill the 
 aim of which should be to raise the necessary revenues 
 from the smallest possible number of articles, discarding 
 the policy of protection, and which should be so clear in 
 its provisions and language that common people could 
 understand it. I suggest that such a bill should be pre- 
 pared by a commission, because it seems to me to be 
 the only means b}^ which an intelligible, symmetrical 
 and consistent bill can be procured. 
 
 As long as tariff bills are prepared by committees that 
 do not command the confidence of the House in a suffi- 
 cient degree to insure their passage through that body 
 without important alterations, and such bills are subject 
 
84 
 
 to further alterations by the Senate, and receive their 
 final touches from committees of conference, amid the 
 haste and confusion which distinguish the closing hours 
 of the session, we shall have inconsistent patchwork, 
 difficult to understand and fruitful of fraud and litigation, 
 instead of symmetrical, consistent, and intelligible 
 laws. 
 
 It is true that the work of a commission would be sub- 
 ject to the same ordeal as would the reports of the Ways 
 and Means and Finance Committees; but as the com- 
 mission would be selected for the single purpose of pre- 
 paring a tariff, it would be more likely to fairly represent 
 the different sections of the country than a committee. 
 It would have more time for the preparation of a bill 
 than a committee, and if composed, as it ought to be, of 
 able and upright men — not partisans nor the representa- 
 tives of particular interests — I believe such a commis- 
 sion could prepare a bill that would be carried through 
 both Houses without change. 
 
 It cannot be denied, I apprehend, that by the present 
 tariff both the revenues and the people are badly 
 cheated; that it is in regard to some articles prohibitory; 
 that it increases the cost of many things without yield- 
 ing revenue enough therefrom to cover the expense of 
 collecting it. thereby profiting home manufacturers to 
 the amount of that increased cost, without benefiting 
 the Government; that by the heavy duties upon some 
 kinds of raw material it has rendered unprofitable and 
 gradually destroyed industries that before the war were 
 prosperous and profitable; and, finally, that it is difficult 
 of interpretation, and in some points inconsistent, thus 
 opening the door to fraud, if not inviting it, on the part 
 of importers, and giving opportunity for oppression and 
 dishonest practices to the officers of the customs. 
 
 Whether the protective principle be retained or not, 
 there is no question that the present tariff should be 
 subjected to a thorough revision, and I believe that this 
 will only be done in the manner in which it ought to be 
 done through the agency of a commission. 
 
 The policy of protection should, in my judgment, be 
 abandoned, because it favors by direct legislation par- 
 ticular interests; because it induces the manufacturer 
 
to rely upon the Government, in a contest with foreign 
 competitors, instead of cultivating skill, economy, and 
 a spirit of self-reliance, which are so important for suc- 
 cess in all branches of business; because as we cannot 
 sell liberally unless we buy liberally, it diminishes the 
 foreign demand for our agricultural and other products, 
 and consequenth^ lessens the price of them; because it 
 is inconsistent with the spirit of the age, which demands 
 that all unnecessary obstacles in the way of the freest 
 exchange of products between nations should be re- 
 moved, and because its end, if not its aim, is to enrich 
 the few at the expense of the man}-. 
 
 In its essential character a protective tariff is barbar- 
 ism. Such a tariff may be defended for a time, like our 
 irredeemable currency', on the ground of necessity, but 
 not as a permanent national policy. I am not prepared 
 to sa}^ that there have not been periods in the history of 
 our manufactures when protection was necessary in 
 order that inducements might be offered to capitalists 
 to engage in them and that labor might be properly ed- 
 ucated; but such periods have passed b}'. Our manu- 
 facturing interests, long fostered by the Government, no 
 longer need protection against foreign capital and skill. 
 If they were not able in their infancy to stand alone, 
 they are able now; but even this they will not be re- 
 quired to do, as they will have the advantage over their 
 foreign rivals which duties for revenue and the cost of 
 transportation afford. That this will be sufficient not 
 only to enable them to continue business, if economically 
 conducted, but to make handsome profits, there can be 
 little doubt. If there be any kind of manufacturing in 
 the United States that cannot live with such advantages 
 as a judicious revenue tariff and the cost of transporta- 
 tion from other countries will give to it, it is very clear 
 that it is unfitted to the country or to the habits of the 
 people, and that it ought not to be encouraged. I have 
 so high an opinion of the faculty of my countrymen in 
 the invention and use of machiner}^ that I am satisfied 
 there is no branch of manufactures suited to the coun- 
 try which has prospered under existing laws which 
 would not continue to prosper even under a system of 
 absolute free trade. 
 
86 
 
 It is very certain that under a wise tariff many new 
 industries would come into existence, and others which 
 have died out or are languivShing under existing laws 
 would be restored to life and quickened into prosperous 
 activity. I have time to mention but a single instance. 
 Iron ships can even now be built about as cheaply in 
 the United States as they can be in Europe. With a re- 
 duction of duties upon the materials which are used in 
 their construction, the}^ could be built cheaper. So that 
 the great ship yards for building iron ships, not onh' for 
 the United States, but for other nations, w^ould be found 
 at no distant day on the Delaware instead of the Clyde. 
 
 The State of Pennsylvania — an empire of itself — clings 
 to protection as if her prosperity depended upon it; but 
 she will never know hoW great her resources and power 
 are, nor what her people are capable of accomplishing, 
 until she ceases to look to the Government to protect 
 her industries and learns to rely upon herself. There 
 is no more reason wh}^ she should ask the Government 
 to protect her iron manufacturers against foreign com- 
 petitors than against the competition of Missouri, Vir- 
 ginia, and Tennessee. 
 
 The plea that American labor must be protected against 
 what is called the "pauper labor" of Europe is, if I ma}'^ 
 use the expression, played out. Pauper labor in the fac- 
 tories and furnaces of Europe is a myth. Skilled labor 
 is in as good demand and is as costly, estimating the 
 difference in the cost of living, on the other side of the 
 Atlantic as on this. If it were not so, the difference 
 would be more than equalized by our superior machinery 
 and our superior cleverness in the use of it. We have 
 in the United States the best cotton mills in the world, 
 wnth all the capital that is needed to run them, and we 
 are producing better cotton than can be grown else- 
 where. Is it possible that the cotton spinners of New 
 England need protection against the cotton spinners of 
 Great Britain? 
 
 We have iron literally cropping out of the earth — 
 mountains of it, in fact — of the bestqualit}' , and coal for 
 smelting and manufacturing it in its immediate vicinity. 
 In Great Britain iron is only found hundreds, if not 
 thousands, of feet below the surface, a large portion of 
 
87 
 
 which has to be transported at great expense to the coal 
 districts to be manufactured, and at still greater expense, 
 when manufactured, to the markets of the United States. 
 Do the iron makers of Tennessee, Missouri, and Penn- 
 sylvania need to be protected against competition from 
 that quarter ? 
 
 Coal, the producer of the great motive power of the 
 world; coal, which is found in inexhaustible suppl}^ 
 throughout the countrj-, which is so indispensable in 
 manufacturing, and in the older States is used by almost 
 every famil}' for fuel — should coal be increased in price 
 by a tariff which prevents the introduction of it from 
 the Dominion of Canada ? 
 
 Is it right that every family in the United States should 
 pay an extra price for the salt it uses for the benefit of 
 the few who are manufacturing it, and who can manu- 
 facture it as cheaply as it can be made in any other 
 country ? 
 
 These questions (and the number can be largely in- 
 creased) are not new, but they lose none of their inter- 
 est because they have been frequently asked. The pres- 
 ent is a good time for the people to ponder them. 
 
 No protection laws were ever so ably defended as the 
 Corn Law of England. No interest ever seemed to de- 
 mand protection more than the agricultural interest of 
 that country. It was proved, it was thought, as clearly 
 as figures and arguments could prove anything that 
 free trade in corn would be a death-blow to the owners 
 of landed property. What! abolish the scale and open 
 the English ports to the cheap grain of the continent 
 and the United States ? The very suggestion of such a 
 proposition by English reformers was regarded by land 
 owners as evidence that the world was moving in the 
 wrong direction, and that the crack-brained theorists 
 were controling it. 
 
 Now, what was the effect of the repeal of the English 
 Corn Laws? Low prices for lands ? Neglect in the cultiva- 
 tion of them ? Prostration of agricultural interests ? The 
 reverse were the facts. Land, instead of declining, ad- 
 vanced in value. The cultivation of it was at once im- 
 proved, and the interest which it was feared was to be 
 prostrated by free tiade in breadstuffs speedily became 
 
8S 
 
 vastly more prosperous than ever. The English land- 
 holder who should now advocate the re-enactment of 
 the Corn Laws would be considered a fit subject to be 
 handed over to the surgeon to be operated upon for the 
 * ' simples." The same will be true in regard to the pro- 
 tection laws now in force in the United States. It will, 
 at no distant day, be as difficult to find a protection- 
 ist in this country as it is to find a land-holder in England 
 who would acknowledge that he ever favored the Corn 
 Laws. 
 
 The United States with her rich soil, abounding re- 
 sources, and intelligent people will prosper no matter 
 what laws be upon the statute book. But she will never 
 make the advance which she is capable of making in 
 wealth, in morals and civilization until she has a sound 
 currency and freer trade with foreign nations. 
 
LKTTERS 
 
 WRITTEN FOR 
 
 THE NEW YORK TRIBUNE. 
 
LETTER 
 
 WRITTEN FOR 
 
 THE NEW YORK TRIBUNE. 
 
 First Letter. 
 
 To the Editor of The Tribune : 
 
 Sir : Agreeably to 3'oiir request, I will try to find time 
 to send you an occasional letter upon the general sub- 
 ject of the finances of the United States, with more 
 especial reference to the currency. Some years ago my 
 views were pretty fully presented in my reports to Con- 
 gress. Those which I then advanced have undergone 
 no change ; on the contrary, my convictions of their 
 correctness have been confirmed and strengthened by 
 reflection and observation. I have nothing new to say 
 upon the subject now, but in writing in this way from 
 this side of the Atlantic, as a private citizen, I may. 
 reach many who lack the time or the disposition to look 
 into ofiflcial documents or to read more elaborate articles. 
 In this and the following letter I shall allude to the 
 financial condition of France, as introductory to what I 
 may have to say upon that of the United States. _ It is 
 fortunate that financial questions, or at least the question of 
 the currency , can be discussed without exciting partisan or 
 sectional prejudice. Men may be influenced in their 
 opinions of a tariff, of protection, free trade, and the 
 like by local interests, but there can be no local interests 
 in regard to the currency. A sound and stable circulat- 
 ing medium is the very "life-blood of a commercial 
 nation." The question of the currency is a national 
 question, in which all sections are equally interested, 
 and with which party politics and local jealousies have 
 nothino: to do. 
 
92 
 
 Few countries have ever been in a worse condition 
 than France appeared to be in at the close of her late war 
 with Germany. Her armies had been routed; her Em- 
 peror had become a fugitive; her strongholds, such as 
 Strausbourg and Metz, had been captured; Paris, starved 
 into submission, had been captured. Some of her most 
 fertile and populous districts had been so devastated 
 that agents of contributors in Great Britain and the 
 United States had been sent into them to suppl}^ their 
 unfortunate inhabitants with food and clothing, farming 
 implements, and seeds for the next year's crop; and as 
 if all these misfortunes had not filled her bitter cup, it 
 had been filled to overflowing by a bloody contest — 
 Frenchmen against Frenchmen — for the possession and 
 control of Paris. Her beautiful capital had been again 
 besieged, not by foreigners, but by her own people; the 
 monuments of her glory had been destroyed," not by the 
 Germans, but by those who had shared in the national 
 honor of the achievements which these monuments com- 
 memorated. By this civil war, so unnatural and so de- 
 plorable, the sympathy of other nations excited in her 
 behalf, as defeat followed defeat in her contest with the 
 Germans, had been turned into indifference, if not into 
 disgust, and so helpless had she become that submission 
 to the demands of the conqueror was her only alterna- 
 tive.^ What those demands were the world knows — the 
 cession of two of her beautiful and productive provinces 
 and the pa3mient of a thousand millions of dollars to in- 
 demnify Germany for the expenses of the war. Never 
 before had a great and powerful nation been so speedily 
 and thoroughly mastered; rarely, if ever, had a brave 
 and proud people been compelled to conclude hostilities 
 with so disastrous results. With a Government pro- 
 visional only; with a demoralized people; with an 
 empty treasury, an immense debt to be nearly doubled 
 by the expenditures of a single year (including the in- 
 demnity), this great nation, hitherto one of the most 
 powerful and influential in Europe, seemed to be on the 
 verge of political and financial ruin. 
 
 Such was France as she appeared before the world 
 some four years ago, and what is her condition to-day ? 
 I allude not to her political condition — although in the 
 
93 
 
 organi2;ation of a government on a republican basis she 
 has surprised the world b}- her wisdom and prudence — 
 but what is her financial condition? It is in most re- 
 spects better than that of any nation in the world. Her 
 waste places have been restored; her industries have 
 been stimulated into unprecedented activity; her ex- 
 ports, largely exceeding her imports, have made her a 
 great creditor nation, so that gold has been steadily 
 drawn to her from England, from the United States, and 
 even from Germany, until the Bank of France holds in 
 its strong rooms the enormous sum of three hundred 
 millions of coin and bullion, and its notes, although not 
 absolutely convertible, are only at the tenth of one per 
 cent, discount. If her prostration was astonishing by 
 its suddenness and completeness, her recuperative 
 power seems still more astonishing. It is undeniable 
 that no countr}^ in Europe , has been so prosperous as 
 France has been during the two past years. In no other 
 country has labor been so well rewarded. In none has 
 there been so little monetary or commercial disturbance. 
 It is an anomaly in the financial history of nations that 
 the conquering nation to which an enormous indemnity 
 has been paid, has been from the beginning of the pay- 
 ment of the instalments subject to greater financial 
 disorder and embarrassment than the nation from which 
 the indemnity was exacted. It is true that this in- 
 demnity was paid with borrowed money, but it is also 
 true that the French people were largel}^ the lenders, 
 and that the securities which were subscribed for by 
 the citizens of other States have been steadily going 
 back to France, so that the French debt, the largest in 
 the world (more than twice as large as that of the United 
 vStates), is literally a home debt. Here let me remark 
 that this enormous indemnity of a thousand millions of 
 dollars was paid by France to Germany in less than two 
 years, with scarcely any disturbance to the money mar- 
 kets of other nations, contrary to the prediction of some 
 of the most eminent of European financiers. It did not 
 seem possible that so great a displacement of capital 
 could take place without considerable disturbance of 
 international exchanges. That this transfer was effected 
 within so short a period without producing the antici- 
 
94 
 
 pated trouble is an evidence not only of the wisdom of 
 the French financiers by whom the great feat was 
 accomplished, but also of the prodigious capital 
 now in active employment among commercial nations. 
 If Germany had not at the same time undertaken to 
 substitute a gold circulating medium for silver and 
 paper, the transfer would have been effected without 
 producing a ripple in the current of international ex- 
 changes. Now, the question arises, and it is a question 
 of especial interest to the people of the United States, 
 By what means has France been able to retrieve her 
 credit and recover from her misfortunes ? What is the 
 secret of her recuperative power ? This question will 
 be briefly considered in my next letter. 
 LoxDON, April j, 1875. 
 
 'Second Letter. 
 
 To the Editor of The Tribune : 
 
 Sir : In concluding my former letter I suggested the 
 inquiry. By what means has France been able to recover 
 from the misfortunes of the Franco-German war ? What 
 is the explanation of her recuperative power ? 
 
 In considering this question it must be conceded that 
 France was not at the conclusion of her contest with 
 Germany a poor country; she was only ostensibly so. 
 Notwithstanding the immense drain of men and money 
 to which she has been for centuries subjected by the 
 exhausting wars in which she has been engaged, she 
 has always been the richest of continental nations. It 
 will be recollected that in the old wars between France 
 and England, French gold was frequently more potent 
 than French arms, and that, in many instances, money 
 accomplished what valor and diplomacy had failed to 
 achieve. Within the last thirty or forty years Great 
 Britain, by her extensive commerce, her colonial trade, 
 and her manufactures, may have taken the lead in 
 wealth; but even this is a mooted question. France 
 has been frequently impoverished by war and bad 
 government, but she never could have been considered 
 
95 
 
 bankrupt, except at the time she substituted paper for 
 gold and attempted to make the incontrovertible as- 
 signat the equivalent of coin, an experiment so dis- 
 astrous in its results that it is not likely to be repeated 
 on this side the Atlantic. Many causes may be assigned 
 for the wealth which France has been found to possess 
 in all great emergencies, among which are the follow- 
 ing: 
 
 The French people are an eminently economical and 
 thrifty people. A French family can live, and live well, 
 on less than would be considered sufficient to save from 
 starvation an American family of the same numbers. 
 An intelligent Bostonian, who had spent some years in 
 France, said to me last summer, in speaking of the 
 economical habits and skill in cookery of the French 
 people, that "a French village of a thousand inhabi- 
 tants could be supported luxuriously on the waste of 
 one of our large American hotels." The remark was 
 not far from the truth. If the art of cookery were 
 understood and practiced in the United States as it is in 
 France — if our people knew as well how to make the 
 most of their provisions as the French do — the cost of 
 living, as far as food is regarded, in most of the States 
 would be reduced more than 50 per cent. Domestic 
 economy, as a rule, is neither practiced nor understood 
 by Americans as it is in France. It may not be too 
 much to say that the entire population of France could 
 be supported on food which is literally wasted in the 
 United States. The number of people who live beyond 
 their incomes is less and the number of those whose 
 incomes exceed their expenditures is greater in France 
 in proportion to population than in any other country. 
 
 Then, again, the French are beyond all others^ a 
 hoarding people. There are few artisans in the cities 
 or peasants in the agricultural districts who do not keep 
 a reserve of coin in their own custody. There has 
 always been more gold hoarded in France than in all 
 other European countries combined. It is true that 
 the nation, according to the recognized principles of 
 political economy, has been the loser by having so much 
 money lying idle instead of performing its proper office 
 as a circulating medium, but the common people of 
 
96 
 
 France have a political economy of their own. They 
 hoard their earnings, parting with them only under 
 pressing necessities, or in exchange for their own public 
 securities, in which, and in which only, the masses have 
 confidence, so that there has always been in France an 
 enormous amount of gold and silver which the Govern- 
 ment could reach — in recent years by the offer of at- 
 tractive loans to popular subscriptions; in former years 
 by measures the justice of which it is not now worth 
 while to consider. This habit of hoarding is of course 
 not to be commended, but it is by no means certain that 
 France, in the circumstances in which she has been 
 placed, has not, on the whole, been the gainer by it. 
 
 It is very clear — and the foregoing remarks are to 
 .some extent an explanation of the fact — that France 
 was not so destitute as she appeared to be when Great 
 Britain and the United States so promptly and gener- 
 ousl}^ responded to the call for help which came up from 
 her devastated provinces. Many thousands, if not mil- 
 lions, of francs have gone from these very provinces, 
 since that time, as subscriptions to Government and 
 municipal loans, and if the truth could be revealed it 
 would be discovered that not a few to whom relief was 
 extended kept back a part, at least, of their little re- 
 serves against still more pressing emergencies. But al- 
 though France, at the close of the Franco-German war, 
 was not in the condition she was supposed to be in by 
 those who were unacquainted with the habits and char- 
 acter of her people, her condition was, in fact, a most 
 critical one, and one that required in the management 
 of her finances the greatest prudence and practical skill. 
 Fortunately for the welfare of the nation, the wisdom 
 and skill which the emergency required were not want- 
 ing. So wisely and skilfully have her finances been 
 managed, and so rapidly has the country recovered 
 from its recent prostration, that not only has the indem- 
 nity been paid without disturbing the mone}^ markets of 
 other nations, and the exchanges become so favorable 
 as to supply the Bank of France with the coin necessary 
 to enable it to resume specie payments, which is speed- 
 ily to take place — not only has this been accomplished, 
 but French capitalists, in the absence from the markets 
 
97 
 
 of French securities are seeking for investment the se- 
 curities of other nations. Paris has for some time been 
 a liberal buyer in the London market of foreign bonds, 
 and as order after order is filled, one constantly hears 
 from the dealers the expression of amazement that a 
 country which less than four years ago seemed to be 
 upon the high road to bankruptcy should be exhibiting 
 such practical evidences of wealth. The explanation 
 has partially been given. Let us look a little further: 
 
 1. The French are not only an economical and hoard- 
 ing people, but they are exceptionally industrious. In 
 the manufacturing as well as in the agricultural districts 
 all the members of the families of the industrial classes, 
 young and old, have some emplo3^ment by which money 
 is earned. Their separate earnings may be vSniall, but 
 all contribute something to the common fund, so that 
 the end of the year finds the family reserve larger than 
 it was at the beginning. 
 
 2. They are eminently skilful and tasteful. The raw 
 materials, which are the basis of articles of taste and 
 elegance, acquired in the hands of French artisans 
 greater value than in the hands of the artisans of any 
 other nation. The manufactures of. France are varied 
 and extensive, and being uninterrupted by "strikes," 
 her capacity to produce seems to be almost unlimited. 
 French goods are found among all nations, and there is 
 a constantly increasing demand for them at remunera- 
 tive prices. In everything appertaining to personal 
 adornment France leads the world. The palm may be 
 yielded reluctantly, but all nations do admit the 
 superiority of French taste and of French manufactures 
 in all matters of dress. " I should like to see," says 
 '*H. H." in her charming " Bits of Travel," " I should 
 like to see the woman who could go through Paris with- 
 out buying a new gown." It would be difficult to find 
 a tasteful woman anywhere who does not approve of the 
 latest style from Paris. The tribute which other nations 
 pay to the ingenuity of French artisans in the manu- 
 facture of dress goods and the making up of dresses is 
 exceedingly large. Even in England, so diff"erent in the 
 character of her people, not only has French cookery 
 superseded the English, but French taste in everything 
 
98 
 
 appertaining to wearing apparel is the standard of fash- 
 ion. 
 
 3. F'rance has a fine climate and an excellent soil, and 
 her lands, which have been cultivated for centuries, in- 
 stead of being exhausted by a vicious system of hus- 
 bandry, or yielding less than formerly by unskilful 
 tillage, as is unfortunately the case in many parts of the 
 United States, are now more productive than they ever 
 were before, while the division into small ownerships, 
 the result of the French law of inheritance, increases 
 every year the acreage under cultivation. Notwith- 
 standing her large population to be fed upon what her 
 soil produces — a population of some 35,000,000 upon a 
 territory much smaller than Texas— she is a large ex- 
 porter of various kinds of agricultural products. As a 
 purely agricultural country, she is undoubtedly the first 
 in Europe; in manufactures, second only to Great 
 Britain. 
 
 But notwithstanding the economy, the industry, the 
 skill, the general thrift of her people, and her great 
 agricultural resources, together with the accumulations 
 of former years, France would not have been able to pay 
 the indemnity exacted by Germany and to recover, as 
 she had done, from the disastrous effects of the war had 
 not the management of her finances and revenues been 
 confided to the hands of able, experienced and upright 
 men, and had not her own people and the 'capitalists of 
 other nations relied implicitly upon her good faith. 
 French statesmen have not been notable examples of 
 political wisdom or conservatism, nor have the French 
 people been especially trustworthy on questions of gov- 
 ernment; but no country has been more favored in the 
 possession of really able financiers and political econo- 
 mists. Fortunately, also, for France, agitated and dis- 
 turbed as she has been on political questions, the ques- 
 tions of finance and revenue, upon which the material 
 interests of the nation largely depend, have been ex- 
 cluded from the political arena — will it not be a happy 
 thing for our people when the same can be said of the 
 United States ? — so that the same general financial and 
 economical policy has been pursued for years, notwith- 
 standing the changes that have taken place in her forms 
 
99 
 
 of government. The transition.s from monarch}^ to 
 democracy, from democracy to imperialism, from im- 
 perialism back to monarchy, from monarchy back to 
 imperialism, and from imperialism, to republicanism, 
 have been anomalous and startling ; but during all these 
 political changes the financial and revenue departments 
 of the Government, except for the brief period when all 
 landmarks were swept away, have been administered 
 with singular steadiness and wisdom, and with a single 
 eye to developing the resources of the nation, stimulat- 
 ing production and increasing foreign trade. Generally 
 the revenue laws, although not frequently changed, 
 have kept pace with the progressive spirit of the age, the 
 tendenc}^ of which unquestionably is to give full play to 
 international exchanges. In no previous period of her his- 
 tory have greater ability and firmness been displayed in 
 the management of her finances and the imposition of 
 taxes than during the last four years. The bank-note cir- 
 culation, temporarily increased beyond the convertible 
 point, was to be brought up to the specie standard, both 
 by a reduction of the volume and an increase of coin. 
 The interest on the public debt, vastl}^ augmented as it 
 had been, was to be provided for, and this could only 
 be done by an increase of taxation. In dealing with 
 these questions there has been no resorts to expedients; 
 no shuffling, procrastinating polic}^ has been pursued. 
 What was necessary to be done to accomplish these 
 objects was done well and promptly, and the wisdom of 
 the policy which has been enforced has been vindicated 
 by the results. All this, however, would not have 
 saved France, by relieving her from the German armies, 
 if there had been distrust in regard to her good faith. 
 France, notwithstanding her great resources, was only 
 saved by the confidence which money lenders at home 
 and abroad had in her integrity. Some there may have 
 been who doubted her ability to pay, but nobody dis- 
 trusted her fidelity. In her darkest days there was no 
 apprehension that she w^ould ever repudiate her debts. 
 If such an apprehension had existed, if any member of 
 her Assembly or any person of prominence had ex- 
 pressed a doubt in regard to the maintenance of the 
 national faith, either by failure in the imposition of 
 
100 
 
 taxes or by an issue of paper money based, in the lan- 
 guage of our inflationists, upon the "resources of the 
 nation," and this doubt had obtained any considerable 
 currency, the indemnity would not have been paid to 
 this day. Never before did I understand and appreciate 
 the importance and value of high national honor as I 
 did in witnessing the success of the French indemnity 
 loan. No people understand better than Frenchmen 
 that nothing is more important to a nation than credit, 
 nothing more dangerous than the loss of it. The idea 
 of repudiation has no lodgment in the French mind, and 
 this it was which made the indemnity loans a success, 
 when failure would have been in the last degree dis- 
 astrous. I should be happy if I could say that the same 
 confidence exists in the obligations of the United States. 
 Why it does not I will explain hereafter. The great mis- 
 take which France makes is in not reducing her govern- 
 mental expenses in times of peace. This will be re- 
 ferred to in my next letter. 
 
 London, April lo, 187s - 
 
 Third Lhttkr. 
 
 To the Editor of The Tribune: 
 
 Sir : The traditional policy of our country — if a na- 
 tion that has not completed its hundredth year may be 
 said to have a traditional policy — has been to commence 
 the payment of its debt as soon as the necessity which 
 created it had passed away. The United States was 
 born in debt, but from the organization of the Govern- 
 ment to the present day a national debt has been re- 
 garded by the people as a burden from which they 
 should be relieved as rapidly as was possible. Twice 
 since the colonies became a nation the Government has 
 been virtually free from debt. At one period in its his- 
 tory not only was the national debt entirely extinguished, 
 but there was so large an accumulation in the Treasury, 
 arising almost exclusively from customs duties, that re- 
 lief from the plethora could only be found by a distribu- 
 tion of the surplus revenue among the States. If the 
 
101 
 
 debt incurred in the suppression of the rebellion was 
 created with extraordinary rapidity, its reduction has been 
 still more extraordinary. The debt of the United States 
 on the I St of September, 1865, was $2,757,689,571, as 
 exhibited by the books of the Treasury. This was not, 
 however, the total amount of the debt. There were at 
 that time large unadjusted claims against the War and 
 Navy Departments, chiefly against the former, which 
 were paid by these Departments out of their appropria- 
 tions, and which have never appeared upon the Treas- 
 urer's books as a part of the national debt. 
 
 The actual debt adjusted and not adjusted at the close 
 of the war, or rather at the disbanding of the Federal 
 army, was not less than $3,000,000,000. On the ist of 
 March last it was $2,137,315,989, the reduction in nine- 
 and-a-half years having been $862,684,011, or at the 
 rate of over $90,000,000 per annum. Nothing like this, 
 and nothing at all comparable to it, illustrates the finan- 
 cial history of any other nation. It is true that the ex- 
 ample of the United States is not being generally fol- 
 lowed by other nations, but this should not shake our 
 confidence in the correctness of what I have called our 
 traditional policy. It is more than likely that the reduc- 
 tion of the debt was for some years too rapid, but I am 
 satisfied that no judicious taxation, the object of which 
 is to reduce the public debt, and which does not affect 
 injuriously the industrial interests of the country, will 
 ever be regarded as burdensome by the people of the 
 United States. 
 
 The Secretary of the Treasury, in his report of De- 
 cember, 1865. undoubtedly gave expression to the true 
 sentiment of the people when he said : 
 
 The debt is large, but if kept at home, as it is desirable it 
 should be, with a judicious system of taxation, it need not be 
 oppressive. It is, however, a debt. While it is capital to the 
 holders of the securities, it is still a national debt and an in- 
 cumbrance upon the national estate. Neither its advantages 
 nor its burdens are or can be shared or borne equally by the 
 people. Its influences are anti-republican. It adds to the power 
 of the Executive by increavSing Federal patronage. It must be 
 distasteful to the people, because it fills the country with in- 
 formers and tax gatherers. It is dangerous to the public virtue, 
 because it involves the collection and disbursement of large 
 sums of money and renders rigid national economy almost im- 
 
102 
 
 practicable. It is, in a word, a national burden, and the work 
 of removing it, no matter how desirable it may be for individ- 
 ual investment, should not be postponed. As all true men de- 
 sire to leave to their heirs unincumbered estates, so should it 
 be the ambition of .the people of the United States to relieve 
 their descendants from this national mortgage. We need not 
 be anxious that future generations should share the burdens 
 with us. Wars are not at an end, and posterit}- will have enough 
 to do to take care of the debts of their own creating. 
 
 And when he further said in his report of 1867 : 
 
 Old debts are hard to pay; the longer the}- are continued the 
 more odious do they become. If the present generation should 
 throw the burden of this debt upon the next, it will be quite 
 likely to be handed down from one generation to another, a 
 perpetual, if not a constantly increasing, burden upon the peo- 
 ple. Our country is full of enterprise and resources. With a 
 proper reduction in the expenses of the Government, and with 
 a revenue system adapted to the industry of the country and 
 not oppressing it, the debt may be paid before the expiration 
 of the present century. The wisdom of a policy which shall 
 bring about such a result is vindicated in advance by the his- 
 tory of nations whose people are burdened with inherited 
 debts and with no prospect of relief for themselves or their 
 posterity. 
 
 It is to be hoped that nothing will occur to change 
 the policy of the Government inaugurated at its birth 
 and steadily continued to the present time. Admitting 
 even that it may be neither needful nor desirable that 
 the national debt should be entirely extinguished; that 
 a certain amount of Government securities will always 
 be required to secure the circulation of the national 
 banks for public and private trusts, etc., etc., it will be 
 some years before the debt will be so reduced as to 
 render it necessary to inquire what amount of public 
 securities will be needed for these purposes, and whether 
 or not the point has been reached below which the re- 
 duction should not be carried. 
 
 But while it has always been the policy of the United 
 States to commence the reduction of the public debt as 
 soon as the exigency which brought it into existence 
 had ceased, a different policy has been pursued and still 
 prevails among most other nations. Germany is quite 
 free from debt; Belgium and Holland are rapidly re- 
 ducing their debts, and Great Britain is moving slowly 
 (it is a wonder that so wise a nation should move so 
 
103 
 
 slowly) in the same direction. Other nations, instead of 
 reducing, are increasing their indebtedness, and most of 
 them will doubtless continue to do so as long as they 
 can borrow. Until the system of funding was intro- 
 duced by the Italian States the ability of nations to 
 borrow was limited, and national debts were kept within 
 reasonable bounds. Since the introduction of this sys- 
 tem, which is likely to prove to be highly injurious to 
 the States that borrow, if not to their creditors, national 
 debts have reached an enormous sum — a sum which can 
 hardly be expressed in comprehensible figures. The ag- 
 gregate of these debts, exclusive of those of counties, 
 cities, towns, etc., etc., is upward of twenty thousand mil- 
 lions of dollars, four-fifths of which have been contracted 
 'within the present centur}^ and this amount, vast and al- 
 most inconceivable as it is, is being steadily increased. The 
 apprehension, however, which the contemplation of this 
 aggregate of national indebtedness naturally produces 
 is to some extent allayed by the fact that in some — per- 
 haps in most of the heavily indebted nations — the in- 
 crease of income has kept pace with ^the increase of 
 debt ; in a few instances it has largely exceeded it. 
 Thus the burden of the debt of Great Britain, that is to 
 sa}^ the percentage of charge upon the national income, 
 is less than one-third of what it was sixty years ago, 
 and so rapidly has the income of France increased that, 
 notwithstanding her vastly augmented debt, the annual 
 charge to income is not greater than when her debt was 
 less than one-third of what it is at present. Still the 
 practice of borrowing by nations, especially in times of 
 peace, is a vicious and dangerous one, as there seems 
 to be no reasonable limit to it. So great have been the 
 accumulations of individual wealth within the present 
 century, particularly within the last twenty-five years, 
 and so numerous is the class having money to invest, 
 that there has been a steady and constantl}' increasing 
 demand for desirable securities, and national obligations 
 have been and still are regarded as being of this char- 
 acter. This it is that enables nations to borrow, and 
 from the ability to borrow arises the temptation. It is 
 more convenient for nations to obtain money for the 
 supply of their wants by loans than by taxation, and 
 
104 
 
 wants arise when they can be supplied in this W2.y which 
 otherwise would not exist; so all nations, or nearly all 
 nations, have become borrowers, some for one purpose 
 and some for another; some for war expenses; some 
 for the support of extravagant governments; some for 
 internal improvements, and not a few, it is to be feared, 
 for the payment of the interest on their existing debts — 
 rich nations at low rates, poor nations at high rates, of 
 interest. Borrowing, indeed, seems to be an indication, 
 if it has not become a test, of advancing civilisation. 
 Japan has been twice a borrower in London, and it is 
 understood to be the intention of China to follow the 
 contagious example of her more enterprising neighbor. 
 
 I have heard it intimated that the existence of some 
 States only became known to the majority of English 
 investors b}^ the appearance of their loans on the mar- 
 ket. Very little certainly could have been known of 
 the geography, population, or resources of some of those 
 States, or their credit would hardly have been so good 
 as it has been. Honduras, containing a mixed popula- 
 tion of between 300,000 and 400,000, and Costa Rica 
 less than half that number, with small resources, and 
 those quite undeveloped, have been, to the sorrow of 
 the present holders of their securities, liberal borrowers 
 in London. These may be exceptional cases, but they 
 illustrate what I have said in regard to the facility with 
 which nations have been able to borrow. 
 
 London, April ig, 187s. 
 
 Note. — In speaking of the ignorance that has prevailed 
 among investors in regard to the geography of some of the 
 borrowing States, I am reminded of an anecdote related to me 
 a year or two ago by a friend, who was asked by a woman not 
 destitute of intelligence, who had been informed that he was 
 an American from New York, if he knew her brother (men- 
 tioning his name), who had gone to live in America. My 
 friend replied that he feared he had not the honor of her 
 brother's acquaintance, and inquired the name of the plnce at 
 which the brother was living. She said she had forgotten the 
 name of the place, but she was quite sure that it must be near 
 New York. Then, after reflecting a moment, she exclaimed: 
 "O, now I recollect it. It was Venezuela." One ought not to 
 be surprised at the ignorance of this good woman of the map 
 of the western hemisphere, when he finds in a "geography" 
 which is in common use, or which was in common use four 
 years ago in the London schools, Sitka included among the 
 enumerated half-do^en chief cities in the United States. 
 
105 
 
 Fourth Lkttkr. 
 To the Editor of The Tribune: 
 
 Sir : In a previous letter I spoke of the debt of 
 France as being larger than that of any other nation. 
 It has been stated b}^ high authorit}' that the exact 
 amount of the debt of France is unknown. It is very 
 certain that no intelligible statement has been published 
 giving the precise character and extent of her indebt- 
 edness. It is currentl}' reported that not long ago the 
 French Ministry of Finance remarked that "there was 
 not a single man in France who could tell the exact 
 state of the national debt." Enough is known, how- 
 ever, to justify the statement that it is not only in its 
 charge upon the State by the higher interest it bears, 
 but also in nominal amount, considerably larger than the 
 debt of Great Britain; and it is interesting to notice 
 with what rapidity and under what circumstances it has 
 grown to its present magnitude. Omitting all reference 
 to its increase and fluctuations in earlier years, we find 
 that at the close of the First Empire, as Napoleon made 
 heavy requisitions upon the States which he had van- 
 quished, it amounted only to $350,000,000. While the 
 restored Bourbons were in power it was doubled. Dur- 
 ing the Orleans reign it was considerably increased, and 
 in 1848, at the commencement of the Second Republic, 
 it had risen to $900,000,000. The Republic added $300,- 
 000,000 to it, and the Second Empire some $1,500,000,000 
 more. At the outbreak of the Franco-German war it 
 amounted to $2,700,000,000, and by the expenses of 
 that war and the payment of the indemnity it was raised, 
 including all classes of indebtedness, to an amount more 
 than equal to twice the present debt of the United States. 
 
 It will be noticed that a large part of this increase 
 was during the existence of the Second Empire, when 
 France was engaged in no very expensive wars, and 
 when the country was in a condition of unexampled 
 prosperity. Even in years of profound peace, when the 
 national income was increasing with amazing rapidity, 
 the national debt was increasing with almost equal rapid- 
 ity. Deficits were constantly occurring at times when the 
 Treasury receipts ought to have been largely in excess 
 
lOG 
 
 of the public expenditures. To an American who 
 thoroughU^ approves the American polic}' it seems utterly 
 astounding that France, whose finances in other respects 
 have been managed with singular abilit}', should have 
 permitted her debt to grow as it had grown, when no 
 uncontrollable causes for extraordinary expenses ex- 
 isted, and when the general condition of the country was 
 unusually prosperous. The explanation can only be 
 found in the fact that France when not engaged in war 
 has been, as she is now, preparing for war, and that all 
 her previous existingGovernments, whether monarchical, 
 imperial, or republican, have lacked the nerve to raise 
 by taxation the revenues which have been required to 
 cover necessary and unnecessary expenditures. The 
 present Government has made a good start in the right 
 direction; whether or not it has the stamina to stand 
 up against the unpopularity which high taxes are sure 
 to produce remains to be seen. 
 
 The standing army has been at the bottom of all the 
 financial troubles in France, and it is her standing army 
 and the standing armies of other countries that menace 
 the peace of Europe. It is an absurd supposition that 
 these large and steadily increasing armies are necessary 
 to preserve the peace. Nations are subject to the same 
 influence as are the individuals that compose them. 
 Everybody knows that it is the armed man who is the 
 dangerous and aggressive man, and that in all communi- 
 ties in which arms are carried the law is constantly vio- 
 lated, if, indeed, violence does not become superior to 
 law. It is the increasing armies of the leading military 
 powers of Europe which make the public mind here 
 and elsewhere sensitive and apprehensive. These armies 
 are not created for the preservation of the peace; they 
 are the preparations for w^ar; they mean war, and noth- 
 ing else. Germany, the great military power of Europe, 
 not only maintains a very large and thoroughly drilled 
 regular army, but she has enrolled all her able-bodied 
 men, of all' classes and conditions, in what may be 
 called a well-trained militia. France is attempting the 
 same thing; and is it to be supposed that Germany will 
 wait until France considers herself strong enough to as- 
 sume the offensive before she strikes again at her old 
 
107 
 
 enem}^ ? Is France arming without the intention of at- 
 tempting the recover}' of the provinces vShe has recently 
 lost ? Are Russia and Austria increasing their armies 
 simply to protect their own territories from invasion ? 
 The large and increasing armies of continental nations 
 are not only menacing the peace of Europe, but the}' 
 are oppressing the people with taxes, and checking the 
 growth of nations by withdrawing millions of men from 
 productive industr}-. Were the armies which are now 
 in preparation for war disbanded, there would be no 
 breaches of peace between nations, and there would event- 
 ually be no national debts. A period of peace is es- 
 peciall}^ needed by France, and she would have that 
 peace if she disbanded her army. "The Empire is 
 peace," was the remark of the Third Napoleon. What 
 a blessing it would be to France, and to civilization 
 everywhere, if she would now say, "The Republic is 
 peace," and verify the sa3'ing b}^ following the example 
 set by the United States at the close of the late civil 
 war. If she should do so she would shame every Eu- 
 ropean nation into doing the same. France is a rich 
 country, but there is a limit to her wealth. She has 
 high financial credit, but there must be eventually an 
 end to her ability to borrow. United Germany, unless 
 her strength should be distracted b}' ecclesiastical ques- 
 tions, which is not probable — for when the test is ap- 
 plied it will be found that Catholic Germans are more 
 German than Catholic — United Germany, with her free- 
 dom from debt and her full military chest, her larger 
 population, and the greater submission to discipline of 
 her citizen soldiers, will always be more than a match 
 for France in war. France, indeed, has everything to 
 lose and nothing to gain by another contest with Ger- 
 many. As a military nation she is not equal to Ger- 
 man}^, but she is superior to Germany in the excellence 
 of her soil, the variety of its productions, and in the taste, 
 the skill, and refinement of her people. The aim of 
 France should be to excel all nations in the arts of 
 peace. This she now does to a great extent, and she 
 would do so in a still greater degree if she would forget 
 her triumphs under the great Corsican, and get over the 
 delusion which she indulges that she must become again 
 the great war power of Europe. 
 
108 
 
 An American on this side of the Atlantic finds that 
 there is much to be learned from the older nations, but 
 he sees nothing to lessen his regard for his own coun- 
 try, or to shake his belief that a magnificent future is 
 before it; and there is nothing he refers to with more 
 gratification and pride than the facts that the United 
 States has no standing army and is paying its debt. 
 
 London, April ig, 1875. 
 
 Fifth Lktter. 
 To the Editor of The Trilnine : 
 
 Sir: Absence from London and other engagements 
 have prevented me from continuing for some weeks past 
 my correspondence with the Tribune, In my previous 
 letters I have alluded to such facts in regard to the 
 financial condition of France, the habits and character- 
 istics of her people, the merits and faults of her Gov- 
 ernment, as I have thought might be interesting to your 
 readers, and perhaps worthy of their consideration in 
 the existing circumstances of the United States. In 
 this letter I shall speak of our national credit. 
 
 The credit of the United States, as a nation, ought to 
 be, and but for the facts to which I shall allude would 
 be, equal, if not .superior, to that of any other nation. 
 The United States is not rich in accumulated wealth; 
 no young nation can be. The wealth of the nations of 
 the Old World is the result of long years of industry and 
 economy, stimulated and protected by wise laws and 
 good governments, or of a patient and persistent thrift 
 that has created wealth in spite of unwise laws and bad 
 governments. The United States is not a rich nation, 
 but she possesses the means of becoming so, and she 
 will in time become the richest nation in the world. 
 Many a hard lesson must, however, be learned by the 
 people from experience, the severest and most thorough 
 of all teachers, before this will be accomplished. But 
 although the United States is not rich in accumulated 
 wealth, there are the best of reasons why the national 
 credit should be exceptionall}^ high. I will briefly state 
 
109 
 
 them, and then refer to the causes which have pre- 
 vented it from being so: 
 
 First. The United States is more rapidly increasing 
 in population than any other country, and her inhabi- 
 tants are not excelled, if they are equaled, in energy, 
 inventive talent, intelligence and personal independence. 
 
 Secondly. There is no country possessing a more ex- 
 cellent soil; none so rich in minerals; none that can 
 successfully compete with her in the production of arti- 
 cles of prime necessity. 
 
 Thirdly. Notwithstanding a somewhat free expendi- 
 ture of the public money, the Government of the United 
 States, burdened by no standing army or expensive 
 navy, is, in comparison with that of other great nations, 
 economically administered. 
 
 Fourthly. The traditional policy of steadil}^ reducing 
 the public debt is being persistently adhered to, under 
 circumstances which render this almost exceptional na- 
 tional policy in the highest degree creditable. 
 
 Regarding the United States in these particulars alone, 
 the conclusion would be irresistible that the national 
 credit ought to be of the very highest character. That 
 it is not is attributable mainly to two causes : 
 
 First. To the default of the States. 
 
 Secondly. To the apprehension which exists in the 
 minds of many capitalists and small investors (an appre- 
 hension that will never entirely cease as long as an un- 
 redeemable and depreciated currency is maintained by 
 the Government) that the United States bonds may be 
 called in and paid in legal-tender notes. 
 
 In this letter I shall speak of the defaulting States. 
 It is true that American credit has suffered by the failure 
 of so many of our railroad companies as have within 
 the last two years ''gone by the board," entailing im- 
 mense losses upon the holders of their bonds; but these 
 failures have had altogether less influence in shaking 
 the confidence of men w^ho look beyond the mere ques- 
 tion of pecuniary loss, in American credit and Ameri- 
 can character, than the default of the States. 
 
 The Government of the United States is not only 
 peculiar in its republican and somewhat democratic 
 features, but in the fact that it embraces within itself 
 
110 
 
 States with many of the powers and immunities of sov- 
 ereignty. This feature of our complex system is only 
 imperfectl}^ understood by even intelligent foreigners — 
 it is in fact understood onh^ by the very few who have 
 made the Constitution of the United States a study. To 
 a large majority of investors it is utterly unintelligible. 
 That a State should have the power to contract debts, 
 be able to shield itself against prosecution for the non- 
 fulfilment of its obligations by sovereignt\^ and at the 
 same time be so situated as to avoid the responsibility to 
 which it might be held by the laws of nations if it were 
 independent^ is so novel a feature in a national organiza- 
 tion that it is not strange that it should not be readily 
 comprehended ; nor that repudiation or default by a State 
 should affect injuriously the credit of the nation of which 
 it forms a part. 
 
 " Why should a nation be trustworthy when the vStates 
 that compose it have shown themselves to be untrust- 
 worthy ?' ' ' *What assurances have we that your Federal 
 Government, as you call it, will, under all circumstances, 
 be faithful to its obligations while so many of the States 
 of which it is made up are unfaithful to theirs?" 
 
 Such are the questions which the holders of dishon- 
 ored State obligations are apt to put to Americans when 
 the credit of the Government is being discussed, and 
 they are questions wdiich are not easily answered to the 
 satisfaction, at least, of the questioners. Now, as ver^- 
 few of the holders of these dishonored State obliga- 
 tions are disposed to invest in any kind of American se- 
 curities, and as these holders are numerous and each 
 has some friends whom he influences, it will be readily 
 perceived how much smaller must be the number of 
 purchasers of Government bonds than it would be if all 
 the States had kept faith with their creditors. Omitting 
 all mention of the States which are doing nothing, and 
 which are not proposing to do anj^thing, toward paying 
 their debts, I shall refer to two cases to which my at- 
 tention has been called, in addition to that general dis- 
 credit which attaches to nearly all the States by reason 
 of their paying in currency the interest which ought to 
 be paid in coin. The cases to which I shall especially 
 refer are those of Indiana and Virginia. 
 
Ill 
 
 Since I have been in lyondon I have been frequently 
 and painfully reminded of the fact — a fact that I had 
 almost forgotten — that a considerable amount of the old 
 internal improvement bonds of my own State are still 
 outstanding. It is only a few days since an old gentle- 
 man called upon me with some United States railroad 
 bonds which had matured, and which he desired to have 
 cashed or forwarded for collection. "These," said he, 
 as he handed me the bonds, " when paid, will close my 
 connection with the United States. I have been cheated 
 out of one-half of what one State owes me, and I do not 
 intend to be cheated again in the same quarter." Inquir- 
 ing by what State he had been cheated, my State pride 
 w^as not especially gratified when he answered "by the 
 State of Indiana." He had purchased, some forty years 
 ago, $20,000 of Indiana bonds at par. After waiting for 
 many years (the State having defaulted soon after the 
 bonds were issued), he had received one-half the amount 
 in new bonds, less his proportion of the expenses, to 
 which the bond holders were subjected in their efforts 
 to obtain a satisfactory recognition of their claims, and 
 an interest in the Wabash and Erie Canal for the other 
 half. A new generation has come upon the stage since 
 Indiana compromised with her creditors, and it is likely 
 that a majority of her citizens are quite unconscious of 
 the fact that her credit was ever even impaired; if they 
 are not, it is because the Legislature has been from time 
 to time importuned to take back the canal and return to 
 her creditors the amount which it represented when the 
 compromise was effected. The bond holders or their de- 
 scendants have not, however, forgotten it, and one can- 
 not be long in London without hearing Indiana included 
 among the defaulting States. The facts in regard to the 
 default of the State and her compromise with her credi- 
 tors are not definitely impressed upon my memory, but 
 they were, I think, substantially these: In 1835 and 1836 
 the State, in common with many other States, undertook 
 a vast scheme of internal improvements. Speculation 
 was rife, money was abundant, the credit of the State 
 was good, and she borrowed liberally. Very little pro- 
 gress had, however, been made in the construction of 
 the works, which had begun in all parts of the State, 
 
112 
 
 when the collapse of 1837 occurred, which put a sudden 
 stop to all these enterprises, and also to the payment of 
 the interest on the bonds which had been issued. For 
 a number of years no payment was made to the bond 
 holders. Various expedients were resorted to by the 
 Legislature for the payment of what was called the 
 "floating debt" of the State, but nothing was done to- 
 ward the payment of interest on her bonds. In the 
 meantime the bonds were sadly depreciated, and by 
 many holders they were regarded as being virtually re- 
 pudiated. Gradually the State recovered from her em- 
 barrassments, and some six or seven years after the de- 
 fault occurred, a strong pressure having been made upon 
 the Legislature, a bill w^as passed by which the State 
 agreed to issue new bonds for one-half the old ones, and 
 for the other half, to transfer to trustees for the benefit 
 of the bond holders the Wabash and Erie Canal, to- 
 gether with the lands which had been given by the 
 Government for its construction which had not been 
 sold, and the balance due on the lands wdiich had been 
 disposed of. This transfer of the canal and canal lands 
 was subject to a condition that the canal, then com- 
 pleted from the Ohio line to Lafayette, should be ex- 
 tended to the Ohio river, the cost of which extension 
 exhausted the lands and the cash balance due thereon, 
 leaving to the bond holders the canal alone for one-half 
 the amount due to them. The canal, never, in fact, a 
 valuable property, became subsequently absolutel}' 
 worthless by the construction of the Wabash Valley Rail- 
 road and other roads, which were built by the authority 
 of the State. To this compromise the foreign bond 
 holders may have been parties, but it w^as, they say, a 
 compromise virtually forced upon them by the relations 
 which existed between them and their debtor. The 
 State was sovereign. It could not be sued in the courts. 
 It was protected by the Federal Government from be- 
 ing in any manner held responsible by the nation whose 
 citizens were the holders of its obligations. Her credi- 
 tors must either accept what was tendered or, as it 
 seemed to them, run the risk of losing their entire debt. 
 The proposition was considered a fair one by the State, 
 and it was generally accepted by the bond holders. There 
 
118 
 
 are, however, I understand, some of her bond holders 
 who, being unwilling to avail themselves of the terms 
 of the compromise, have never received anything on 
 their bonds. Many years, as has been said, have 
 elapsed since this compromise took place, and I do not 
 undertake to state the facts in regard to it with pre- 
 cision. It is, indeed, about the only important fact in 
 the history of Indiana which her sons cannot think of, 
 as things have turned out, with satisfaction, and which 
 they would be glad to forget. It is enough to say that 
 a considerable amount of her bonds, for which she re- 
 ceived full consideration, remain unpaid through no 
 fault of their holders. Since she compromised with her 
 creditors she has become prosperous and rich — one of 
 the most prosperous and richest States in the Union. 
 She could take up these obligations without adding per- 
 ceptibly to the burden of her tax-payers. That the 
 property transferred to the bond holders in payment of a 
 part of their debt has become valueless, mainly by the 
 construction of railroads which, built under the author- 
 ity of the State, have added largely to her wealth, can- 
 not be questioned. What ought to be done is very clear 
 to my mind, but I am not in a situation to be an adviser. 
 I am merely explaining why it is that our national credit 
 is not so high as it ought to be. 
 London, June 2, 1873. 
 
 Sixth Letter. 
 To the Editor of The Tribune : 
 
 Sir : Prior to 1861 the credit of no State in the Union 
 was better in England than that of Virginia, and she 
 had availed herself of that credit to a liberal extent 
 for the construction of works which she was unable to 
 construct without borrowing, and which were greatly 
 needed for the development of her almost boundless re- 
 sources. Relations of an especially cordial nature had 
 always existed between the people of England and the 
 people of Virginia. One part of what subsequently be- 
 came the United States had been settled by the Puri- 
 tans, another by the Dutch, another by the Quakers and 
 
114 
 
 Germans; here the Spaniards and there the I^rench had 
 attempted to colonize; Virginia alone was settled by the 
 English, who named the colony in honor of England's 
 maiden Queen. Virginia was especially an English 
 colony, and up to the Revolution it was the " pet col- 
 ony " of the English aristocracy. The Revolution, al- 
 though it severed the political ties, did not sever the 
 social ties that bound her to the Mother Country. The 
 people of Virginia, in their habits and tastes, in their 
 domestic economy, and even in their forms of religious 
 worship, were pre-eminently English; and although 
 none of the colonists were more outspoken and elo- 
 quent in their denunciations of the aggressions of the 
 throne than were her fearless and eloquent sons; al- 
 though no soldiers were braver or more determined and 
 persistent in their resistance to British power than those 
 which she sent to the field with Washington at their 
 head, there has always existed a stronger attachment on 
 the part of the ruling classes in England to Virginia 
 than to any other vState. 
 
 It was doubtless owing to this fact that large amounts 
 of Virginia bonds were purchased by English investors. 
 During the late civil war the payment of interest on her 
 bonds was suspended, and as she was known to have 
 been the great battle-field of the war, and to have been 
 terribly devastated by both the Federal and Confederate 
 armies, the English holders of her bonds waited pa- 
 tiently for a number of years for the resumption of in- 
 terest payments. They knew that she was a great 
 State, lying upon the ocean, penetrated by noble rivers, 
 with a genial climate, and abundant natural resources; 
 but they knew also that her means had been wasted by 
 the protracted war; and relying upon her recuperative 
 power and her faith, they hesitated for a long period to 
 urge the payment of their claims. At length, when for- 
 bearance seemed no longer a duty, co-operating with 
 other creditors, they asked that payment should be no 
 longer delayed, and negotiations were entered into be- 
 tween the representatives of the bond holders and the 
 representatives of the State, which resulted in the pass- 
 age by the General Assembly of what is known as the 
 Funding Act. By this act the officers of the State were 
 
 i 
 
115 
 
 authorized to issue uew bouds, the interest on which 
 should be receivable for taxes for two-thirds of the 
 principal and accrued interest of the old ones, and cer- 
 tificates for the other third. These certificates repre- 
 sented what was regarded by the General Assembly as 
 the part of the State debt which ought in justice to be 
 assumed by West Virginia, which had been carved out 
 of the Old Dominion soon after the commencement of 
 the war, but as the new State had declined to acknowl- 
 edge any obligation to assume the payment of any por- 
 tion of the State debt on the ground that no part of the 
 public works, for the construction of which the debt 
 had been contracted, was included within her bound- 
 aries, these certificates were considered both by Vir- 
 ginia and the creditors who were to receive them in sat- 
 isfaction of one-third part of their claims as being of but 
 little value. 
 
 This compromise, although not regarded with favor 
 by a majority of English creditors, was nevertheless 
 accepted b}- them as a definite settlement of their claims, 
 and one which, under the circumstances, was not dis- 
 creditable to the State. As soon as the provisions of 
 the act and the ways and means of proceeding under it 
 were understood, the work of forwarding their bonds 
 for conversion, although it was attended with consider- 
 able trouble and expense, w^as commenced and continued 
 by the holders until the next session of the General As- 
 sembly, when a considerable amount being in transitu, 
 some two-thirds only of the bonds having been funded, 
 that part of the Funding Act which authorized the issue 
 of bonds, the coupons of which were to be receivable 
 for taxes, was promptly repealed, and funding was vir- 
 tually suspended. At the same time the officers of the 
 State were prohibited from receiving in payment of 
 taxes the coupons which upon their face were expressly 
 made receivable for taxes, nor were they so received 
 until after the courts of the State had decided that they 
 were issued under a contract between the State and the 
 bond holders, which the Legislature had no right to re- 
 scind. The result is that the State has two classes of 
 creditor bond holders instead of one, the larger class 
 holding bonds the coupons of which are receivable for 
 
116 
 
 taxes, but are not cashed at the Treasury; the 
 smaller class holding bonds the coupons of which 
 are not receivable for taxes, and on which nothing 
 is being paid. Of course, all parties are dissatisfied. 
 The State is dissatisfied because a part of her creditors 
 stand on a different footing from the others; the holders 
 of the tax-receivable coupons are dissatisfied because, 
 as the coupons which they hold are only available to 
 tax-payers, they are compelled to part with them at a 
 heavy discount; the holders of the bonds the coupons 
 of which are not receivable for taxes are not only dis- 
 satisfied, but they are indignant at the injustice to which 
 they are being subjected in receiving nothing, while 
 other creditors, more active and vigilant, perhaps, cer- 
 tainly more fortunate than themselves, are being partially 
 paid. Virginia is in many important respects one of 
 the most inviting States in the Union to the better class 
 of English emigrants, but this class will be repelled 
 from her borders so long as she fails to make a satisfac- 
 tory arrangement with her dissatisfied creditors. Look- 
 ing only to the question in a pecuniary point of view, 
 aside entirely from the moral obligations which she is 
 under to her creditors, Virginia is making a capital mis- 
 take in permitting her former good name to be thus tar- 
 nished in the house of her friends. No State is in 
 greater need of emigration and capital, and these will 
 go to her very slowly as long as she can be justly charged 
 with unfaithfulness to her engagements. 
 
 I have spoken of Indiana in my last letter, and of 
 Virginia at this time, because the former is the only one 
 of the Northern States, if I am not misinformed, whose 
 matured obligations have not been redeemed in full, and 
 because the latter is one of the most prominent of the 
 Southern States, and because her dealing with her cred- 
 itors have, as has been stated, created more distrust of 
 American legislation and American credit than the 
 course of any other single State. I say this from no 
 unfriendly feeling toward Virginia, for I have the sin- 
 cerest regard for her. No American ever forgets that 
 to Virginia is the United States indebted for Patrick 
 Henry, for the Randolphs, the Lees, for Jefferson and 
 Madison, and other illustrious names which adorn her 
 
Hi 
 
 history. No reader of that history anywhere forgets 
 that to Virginia is the world indebted for Washington. 
 She is still a great State, with capabilities of becoming 
 again one of the foremost in the Union. The first de- 
 cided step for her to take in this direction is the restora- 
 tion of her credit by an honorable settlement with her 
 creditors. This step, I trust, she will speedily take. 
 
 Here I should be glad to stop, but I regret to be 
 under the necessity of saying that it is not the course 
 which has been pursued by Indiana and Virginia, nor is it 
 the continued default of most of the Southern States, that 
 has excited the gravest apprehensions of the more 
 thoughtful Europeans in regard to American credit. 
 What has wounded that credit the most deeply is the fact 
 that, availing themselves of the provisions of the Legal- 
 Tender Act, all of the indebted States which have paid at 
 all, with the exception of Massachusetts and California, 
 have, since the passage of that act, paid in a depreciated 
 currency the debts which, in common honesty, should 
 only have been paid in coin or its equivalent. This par- 
 tial repudiation by some of the richest States in the 
 Union I shall refer to especially in my next letter. 
 
 Skventh Letter. 
 To the Editor of The Tribune : 
 
 Sir : Nothing in our history, or perhaps in the history 
 of au}^ country, has ever, to so great a degree, surprised 
 the military men and the statesmen of Europe as the 
 manner in which our great army of the United States 
 was disbanded at the close of the late civil war. Noth- 
 ing certainly has to such an extent commanded the 
 admiration of European financiers as the commence- 
 ment and persistent reduction of her national debt. That 
 nearly a million of men, a large part of whom had been 
 long enough in the field to acquire a love of military 
 life, should, when their work had been finished, go back 
 to their homes willingly, peaceably, without a single in- 
 stance of violence or disturbance, to resume their former 
 
lis 
 
 occupations; that a nation impoverished — for I think 
 we have now come to a realizing sense of the fact 
 that two-thirds of the States could not for four years be 
 engaged in subduing and devastating the other third 
 without being impoverished, no matter what stimulus 
 the war might have given to many branches of industry 
 or what apparent prosperity' might have been created b}' 
 a redundant currenc}' — that a nation impoverished by 
 one of the severest, bloodiest, and most expensive con- 
 tests that has ever been waged should almost before 
 the smoke had been lifted from the battle-field begin 
 the payment of her debt, are facts that have commanded 
 the admiration of militarj^ men, statesmen, and finan- 
 ciers throughout Europe. Do not these facts indicate 
 the excellence of republican institutions, and the power, 
 the uprightness, and the practical good sense of a self- 
 governed people? What will the great Republic do 
 with its army now that the rebellion has been subdued? 
 What will a people, every man of whom is a voter, do 
 with their vast debt when the question of taxation for 
 its payment has to be calmly considered ? were questions 
 which one might have heard asked — tauntingh' by our 
 enemies, doubtfully by our friends — in military, politi- 
 cal, and financial European circles in the spring of 1865. 
 One of these questions has been definitely answered ; 
 the other is in a fair way of being so. The army of the 
 United States is now a police force, sufQcient merely 
 for the protection of the frontier settlements against the 
 scattered Indian tribes which still have a precarious ex- 
 istence in theWestern Territories — a police force scarcel}^ 
 more numerous or extensive than that of a single cit}- 
 of L,ondon. The debt — three thousand millions of dol- 
 lars in 1865 — will virtually disappear with the present 
 century. The non-existence of a standing army in the 
 United States makes liberal-minded men everywhere 
 hopeful in regard to the capacity of men for self-gov- 
 ernment, and causes millions in Europe to " look across 
 the sea" for a refuge against subjection to military 
 duty, while the steady reduction of the national debt 
 gives inves'tors confidence in the national integrity. 
 
 The question then arises. How happens it that the 
 national credit is not higher than it is ? Why is it not. 
 
119 
 
 as it ought to be, higher than that of any other nation ? 
 
 I answer, it is mainly because the States have not kept 
 faith with their creditors. The losses which within the 
 last two years have been sustained by European inves- 
 tors through the failure of railroad companies in the 
 United States have been enormous and distressing, but 
 private companies fail on this side of the Atlantic as 
 well as on the other. So far, I do not understand that 
 any of our private companies have attempted to repudi- 
 ate their debts. If they had the disposition to do so, 
 they could not. They can be reached through the 
 courts, and there has been no lack of fidelity on the 
 part of our judges in holding corporations to their engage- 
 ments. It is not corporations, but States, which lie 
 under the stigma of repudiation. The failure of railroad 
 companies is undoubtedl3Mvhat, just now, most severely 
 troubles investors and prevents the success of all loans 
 except those which are offered b}' well known and divi- 
 dend-paying corporations; but such failures create in 
 the minds of far-seeing and thoughtful men no distrust 
 of American credit comparable with that which is 
 created by the bad faith of sovereign States. 
 
 Europeans, especially Englishmen, deal liberally with 
 insolvency. There is no country in the world in which 
 an honest insolvent debtor finds less difficult5Mn "ar- 
 ranging" his debts than in England. His creditors ask 
 only that he shall pay what he can, and this having 
 been done, he can start again, relieved of his burdens. 
 Englishmen are tolerant of insolvency, but there are no 
 words in their language strong enough to express their 
 detestation of repudiation. It is the repudiation, ab- 
 solute or partial, by many of the States which casts a 
 dark shadow over American credit and compels the 
 Government to pay six per cent, interest instead of four 
 on a large portion of its debt. Fortunateh^ the number 
 of those wiio hold bonds of States which have not kept 
 faith with their creditors is not in Europe very large, 
 but it is large enough to diminish seriously the demand 
 for the bonds of the Government. A majority of Euro- 
 pean investors have entire faith in the integrity of the 
 United States as a nation. They know what the Fed- 
 eral Government has done in times past. They know 
 
120 
 
 that in the darkest days of the war, and just at its close, 
 when the debt seemed overwhelming, it paid in coin 
 large amounts of bonds which had matured, although 
 the temptation to extend them was difficult to be re- 
 sisted, and they doubt not that a credit which has been 
 maintained under circumstances the most trying will be 
 maintained to the end. If to the investors who have 
 this faith in the Government could be added those who 
 are suffering by being holders of bonds of States which 
 are wholly or partially in default, and who in conse- 
 quence turn their backs upon everything American, and 
 those who judge the nation by its components, competi- 
 tion among bu3'ers would be largely increased, funding 
 would not languish as it now does, and the burden of 
 the debt, by a reduction of interest, would be speedil}^ 
 diminished. 
 
 That many of the States in their dealings with their 
 creditors have behaved badly is undeniable. Let us 
 look at their action from the European point of view. 
 We are an isolated people. With the exception of 
 Canada, which has little influence over us, we have no 
 neighbors, and consequently we do not feel the influ- 
 ences which nations in close proximity exert upon one 
 another. We have not as fully realised the weight of 
 the obligations that rest upon Americans as citizens of 
 States as we have of those which rest upon them as citi- 
 zens of the great Republic. We have not carefully 
 considered what must be the effect upon the European 
 mind of the failure of States to meet their engagements. 
 
 A State can no more impair by legislation the obligation of 
 its own contract than it can impair the obligation of the con- 
 tract of individuals. We naturally look to the action of a sov- 
 ereign State to be characterized by a more scrupulous regard 
 to justice and a higher morality than belong to the ordinary 
 transactions of individuals. 
 
 Such were the words of Justice McLean, a man alike 
 distinguished for his high sense of honor and his pro- 
 found legal learning, in delivering the opinion of the 
 Supreme Court of the United States in a case which in- 
 volved the authority of a State to annul its contracts — 
 words that ought to be engraved upon the walls of every 
 State-house in the Union. 
 
121 
 
 Now, while a State can no more impair by legislation 
 the obligation of its own contracts than it can impair 
 the obligation of the contract of individuals, it can, it 
 seems, not only impair, but it can violate and virtually 
 annul its contracts by refusing to observe them. For- 
 tunately for Judge McLean, he "went to his reward" 
 without witnessing what has since been done with legal 
 impunity under the form of government which he so 
 greatly admired. A State cannot, under the Constitu- 
 tion of the United States, invalidate its obligations, but 
 it can lessen the value of those obligations or render 
 them a dead letter by simply ignoring them, partially or 
 altogether, and relying upon its sovereignty for its pro- 
 tection against their enforcement, and this is being done 
 by many of the States. They do not undertake, by laws 
 of their own making, to annul their contracts; this they 
 are prohibited from doing by the fundamental law of 
 the Federal Government. They do not, for instance, 
 repudiate their debts by making laws for their abroga- 
 tion, but they render these obligations valueless, wholly 
 or in part, according to their own good pleasure, by de- 
 clining to fulfil them. The State of Virginia having, 
 under an agreement with her creditors, issued new 
 bonds — the coupons of which were to be receivable for 
 taxes — for two-thirds of the amount of the old ones, is 
 compelled to adhere to her agreement and to receive 
 these coupons from her tax-payers, but she can reduce 
 their value by taxing them, and she might render them 
 as worthless as waste paper by simply declining to levy 
 taxes. Now, what confounds foreigners is the fact that 
 while the Supreme Court of the United States must 
 pronounce invalid all acts of States which impair, or 
 rather are intended to impair, the binding obligation of 
 their own contracts, it has no power to compel the per- 
 formance of these contracts; that while no State can 
 make valid laws for the repudiation of its debts, there 
 is no power outside of itself that can enforce an observ- 
 ance of its faith. SoyerKigntiks within a sover- 
 
 EIGNTY ! 
 
 Ought we to be surprised that foreigners are perplexed 
 by this peculiarity of our political fabric, and confounded, 
 if not disgusted, by the contradictions and injustice that 
 
122 
 
 result from it? The sovereignty of the States prevents 
 an enforcement of their obligations, and this it was that 
 made so appropriate and truthful the remark of one of 
 our eminent and high-minded jurists: 
 
 // is expected that the action of a sovereign State will he char- 
 acterized by a more scrupiilons regard to justice and by a higher 
 sense of morality than belongs to the ordinary transactions of in- 
 dividnals. 
 
 The creditors of the States have nothing to rely upon 
 for the fulfilment of their obligations but their integrity 
 and their honor; these, therefore, should be observed 
 with the strictest fidelity — in spirit and letter. Are the}^ 
 so observed, I will not say by the States that are paying 
 nothing — pleading inability to pay by reason of the 
 effects of the war upon their resources as an excuse for 
 not trying to do anything for their creditors — but are 
 they so observed by States that have no such excuse to 
 offer? Let us see. 
 
 Before the passage of the Legal-Tender Acts the States 
 had almost, without exception, been borrowers of money, 
 and for the money they borrowed they issued their bonds 
 payable in dollars. Have a majority of them made good, 
 are they now making good, their agreements ? Has their 
 treatment of their creditors been characterized b}^ a 
 '^scrupulous regard to justice and by a high sense of 
 honor?" Have they kept faith, are they now keeping 
 faith, with their creditors? Have they not, on the con- 
 trary, for years past withheld from them 50, 40, 30 per 
 cent. ? Are they not now withholding nearly 20 per cent, 
 of what is justly their due ? The}^ are paying, it is true, 
 in what Congress has decided to be lawful money; but 
 what, after all, is this money but unfulfilled promises, 
 which are worth just what they sell for in the market 
 and no more. They have been declared to be lawful 
 money, but they certainly are not the kind of money 
 which was borrowed by the States, and which the States 
 agreed to pay in return for the money they borrowed. 
 Are they, in any true meaning of the word, money? Is 
 it not preposterous to call mone}^ promises to pa}^ money, 
 which can only be converted into money by the payment 
 of a heavy discount ? Facts are stubborn things, which 
 cannot be ignored; and the fact cannot be denied that 
 
128 
 
 many of our States are onh^ making partial payment to 
 their creditors. Availing themselves of a law for the 
 existence of which they are in part responsible, every 
 time they have paid the interest on these bonds since 
 the passage of the Legal-Tender Acts they have com- 
 pelled the holders to take, now a half, now a third, and 
 now a fifth less than was called for by their contracts. 
 Suppose there were in existence a great international 
 tribunal established by the nations for the settlement of 
 all questions between nations and of the claims of citi- 
 zens against sovereignties (and such a tribunal would 
 long since have been established if Christianity had 
 done its perfect work), which one of our distinguished 
 lawyers would dare to go before that tribunal with the 
 contention that the anti-war debts of our States could 
 be, I will not say morally, but legally, discharged by 
 the tender of depreciated notes which the Government 
 of which they are a part has seen fit, for purposes of 
 its own, to declare to be lawful money ? If a part of the 
 States are right in paying legal tenders, how has it hap- 
 pened that Massachusetts, more heavily indebted than 
 any of them in proportion to population, has always 
 paid her interest in coin? Are her obligations more sa- 
 cred than theirs ? Massachusetts has done no more than 
 her legal and moral obHgations required of her; but her 
 escutcheon is clear. She never faltered; her name is 
 honored wdierever her name is known, and her people 
 have not only the proud satisfaction of knowing that 
 their State at least has always acted fairly with her 
 creditors, but that she is receiving in her high credit 
 full reward for her fidelity. 
 London, June ig, 1875. 
 
 Eighth Lkttkr. 
 
 To the Editor of Tlie Tribune : 
 
 Sir: No matter what resolutions may be adopted by 
 political conventions for party purposes, it is unques- 
 tionably true that the bonds of the United States, issued 
 during and immediately after the late civil war, most of 
 which are known as five- twenties, were offered and sold 
 
124 
 
 with the express understanding that they were to be 
 paid, principal and interest, in coin. They were sub- 
 scribed for by our citizens and taken from them by 
 foreigners with this understanding. Had it been other- 
 wise, the rebellion would, in all human probability^ 
 have been successful, for it must be borne in mind that 
 the contest between the Government and the Confed- 
 erate States depended in its results as much upon money 
 and credit as upon arms. It may be said without de- 
 tracting from the skill and gallantry of the officers and 
 soldiers of the Union armies who won for themselves 
 and for their Government imperishable renown, that 
 the suppression of the rebellion was attributable no less 
 to the superior financial strength than to the superior 
 numerical strength of the North. If victory, the other 
 things being equal, must side with the heaviest battal- 
 ions, it is mone}^ that keeps these battalions in the field. 
 The remark has been attributed to Napoleon that in 
 wars between nations the nation that can command the 
 last dollar must at last be the victor. 
 
 It ma}^ not be too much to sa}^ that the Union was 
 " saved by faith" — by the confidence which was placed 
 by our own people and by foreigners in the assurances 
 and pledges of the Government speaking through its 
 authorized representatives. Although no foreign loan 
 was directly made, the ability of our citizens to sub- 
 scribe and pay for the bonds which were issued de- 
 pended upon the market which was opened for them in 
 Europe — chiefly in Germany and Holland. The people 
 of the United States owe a debt of gratitude to the Ger- 
 mans and Hollanders for the confidence they had in our 
 securities, while, with rare exceptions, the investors in 
 all the other European markets regarded them with dis- 
 trust. The dealers in United States bonds in New York 
 and other seaboard cities know how important the Ger- 
 man and Holland markets were to us in the days of our 
 greatest financial troubles. The German and Holland 
 purchasers of our bonds saw that they were in the usual 
 form of national obligations — that they were payable in 
 dollars, not like the compound interest on the seventy- 
 three-ten notes in lawful money, but in dollars, and they 
 took it for granted that Secretary Chase, his immediate 
 
125 
 
 successors and their agents spoke by authority when 
 they stated, with the full knowledge of the Executive and 
 the law-making branch of the Government, that by dol- 
 lars was meant not irredeemable promises but gold. In- 
 deed, without such assurances they would not have sup- 
 posed that bonds intended to be sold in other countries 
 as well as in the United States could be payable in any- 
 thing else than coin, the only international currency of 
 the world. 
 
 Fortunately, it was not until the necessity for borrow- 
 ing had ceased that the statutes were examined for the 
 purpose of ascertaining whether or not the Government 
 could violate its faith without violating the law. By this 
 examination it was discovered that the act of March 3, 
 1863, under which $75,000,000 of six per cent, bonds — 
 a part of those known as bonds of 1881 — and the act of 
 March 3, 1864, under which the ten-forty five per cents, 
 were issued, were the only ones which stated expressly 
 that the bonds issued under them should be paid in coin, 
 and that all the other acts under which bonds were is- 
 sued during the war, while they provided that the in- 
 terest should be paid in coin, were silent in regard to 
 the currency in which the principal should be paid. 
 Hence the position was taken by some well-meaning 
 persons, and other not well-meaning persons, that the 
 Government might, under the sweeping provisions of 
 the Legal-Tender Acts, lawfully call in the five-twenty 
 bonds at any time after five years from their date and 
 pay them in legal-tender notes, no matter how depre- 
 ciated these notes might be. Indeed, there are some 
 prominent men among our politicians (fortunately the 
 number is very small and daily becoming less) who are 
 brave enough to assert the moral as well as legal right 
 of Congress to repeal the act of 1869, which pledges 
 the faith of the nation to the payment of all its bonds 
 in coin, to call in the bonds, which by their tenor are 
 subject to be called in, and pay them in legal-tender 
 notes, although such payment might necessitate such 
 further issue of these notes as would make the entire 
 issue well nigh worthless. This would be rKpudiation, 
 and cowardly repudiation at that — repudiation which 
 would not only make the American name a reproach 
 
120 
 
 among the nations, but which would rob the people for 
 the purpose of robbing the bond holders. It has been 
 unfortunate for the credit of the Government, and con- 
 sequently for the interest of the tax-payers in the 
 United States, that this question has ever been raised. 
 It would not, I apprehend, have been raised by any 
 fair-minded person if the facts and circumstances under 
 which the bonds were issued had been carefully ex- 
 amined, for such an examination would have sliown 
 them : 
 
 First. That in the exhaustive discussions in the House 
 and the Senate of the acts authorizing the issue of these 
 bonds they were spoken of by all who participated in 
 the debates as being payable in gold. If anything else 
 had been intended, would Mr. Thaddeus Stevens, the 
 chairman of the Committee of Ways and Means, have 
 uttered the following language? 
 
 A dollar in a miser's safe is a sore disturbance. Where could 
 they invest it? In United States loans at six per cent., redeem- 
 able in gold in twenty years— the best and the most prominent 
 investment that could be desired. But widows and orphans 
 are interested and in tears lest their estates should be badly 
 invested. I pity no one who has money invested in United 
 States bonds payable in gold in twenty years, with interest 
 semi-annually. 
 
 I defy any man to point out a single intimation by any 
 meniber of Congress, while these acts were under consid- 
 eration, or by any journal in wdiich they were discussed, 
 that the bonds to be issued under them were to be paid 
 or might be paid in legal-tender notes. 
 
 Second. Such an examination would have shown that 
 the act of February, 1862, the first of the Legal-Tender 
 Acts, and the most important of the Loan Acts, which 
 authorized the issue of $150,000,000 of legal-tender 
 notes, and also of ^500,000,000 of five-twenty bonds, 
 expressly stated that the purpose for w^hich they w^ere 
 issued was to enable the Secretary of the Treasury tp 
 fund the Treasury notes (already issued) and the float- 
 ing debt of the United States, and that the Secretary 
 " was authorized to dispose of the bonds at the market 
 value thereof for coin or for any Treasury notes issued 
 under any former act of Congress or for the United 
 States notes (greenbacks, as they have been called) 
 
127 
 
 that might be issued under this act." Is it supposable 
 that Congress intended to provide for funding the float- 
 ing debt and Treasury notes in these $500,000,000 of 
 bonds, which at the expiration of five years might be 
 called in and paid in the $150,000,000 of notes which, 
 with the floating debt and Treasury notes, were thus to 
 be funded ? 
 
 Third. vSuch an examination would have shown that 
 the legal-tender notes were regarded as a forced loan- 
 temporary only, and only justified by those who advo- 
 cated their issue as a war measure. The fact that the 
 issue of the legal-tender notes was limited at first to 
 $150,000,000, and subsequently to $400,000,000, and that 
 they were intended to be only a temporary issue, shows 
 why it was that provision was only made for the pay- 
 ment of the interest in coin. There was not, I appre- 
 hend, a single member of Congress who did not expect 
 that, before the expiration of five years from the date 
 of the first five-twenties, the legal-tender notes would 
 be paid or funded. The Secretary of the Treasury in 
 his report of 1867 used the following language: 
 
 It is not said [in the Legal-Tender Acts] that they [the le^al- 
 tender notes] shall not be receivable for the principal of bonds, 
 for the very obvious reason that they were expected to be but 
 a temporary circulation. A provision that these notes— in- 
 tended only to meet a temporary emergency— should not be 
 received for the payment of the principal of bonds which were 
 not redeemable for five years would have been quite likely to 
 have prevented their issue. The public judgment had not then 
 been perverted by an irredeemable currency, and a proposition 
 that indicated a long-continued departure from the specie 
 standard would have found few supporters in Congress or 
 among the people. 
 
 Ko one can, I think, read the debates in Congress 
 upon the Legal-Tender Acts without coming to the con- 
 clusion that If any apprehension had been expressed or 
 felt that these notes would be a circulating medium for 
 five years, the authority to issue them would not have 
 been granted. The Secretary of the Treasury con- 
 cluded his thorough discussion of this question in the 
 report referred to (if his conclusions have been refuted 
 I have never seen the refutation) in the following words, 
 which, I trust, I may be pardoned for quoting. 
 
128 
 
 lu opposition to all sucli expedients for paying, or rather for 
 getting rid of, the public debt is the upright, world-honored, 
 economical policy of paying every obligation of the Govern- 
 ment according to the understanding with which it was cre- 
 ated; the policy of appreciating the paper dollar until it shall 
 represent a dollar in coin; of giving stability to business and 
 assurance to enterprise, and wiping from the country the re- 
 proach that rests upon it by reason of the low price of its se- 
 curities in the great marts of the world. That this is the policy 
 which will be sustained by the people and their representatives 
 the Secretary has the fullest confidence. There may hereafter 
 be nations which, ignoring their honorary obligations, may 
 look only to their own statutes for the measure of their liabili- 
 ties. If there shall be such nations, the Republic of the United 
 States will not be found among them. She has essentially suf- 
 fered by the actual repudiation of some of the States and the 
 virtual repudiation of others; she is still suffering from the 
 same cause, although more than a quarter of a century has 
 elapsed since this stigma was first fixed upon American credit. 
 She is suffering also from the fact that Massachusetts and Cali- 
 fornia alone of all the States have continued to pay the interest 
 on their bonds in coin; but although she has suffered and is 
 still suffering from the bad faith and false economy of some of 
 her members, her own financial honor is unsullied. She has 
 committed the mistake of making her inconvertible promises a 
 legal tender, but she has never taken advantages of her own 
 legislation to lessen in the hands of the holders the value of 
 her securities or violate her engagements by covert repudia- 
 tion. 
 
 In conclusion I would ask, if it was true, as was stated 
 in one of the resolutions of the State Democratic Con- 
 vention of Ohio one year ago, that the five-twenty bonds 
 " were by the letter and spirit of the law, and by the 
 ■general understanding of the community, payable in 
 legal-tender notes," how happened it that by the com- 
 munity these bonds were never considered to be of less 
 value than the six per cent, bonds issued under the act 
 of March 3, 1863, or of comparatively less value than 
 the five per cents, issued under the act of March 3, 
 1864, both of which acts provided that the bonds issued 
 under them should be payable in coin? Is not the fact 
 that the six per cents, of March 3, 1863, have not had 
 a higher reputation than the other bonds of the same 
 class issued under other acts, and that the five per cents, 
 of March 3, 1S64, have never possessed in the market a 
 value corresponding with that of the five-twenties, con- 
 clusive that it was not the understanding of the com- 
 
129 
 
 munity that the last-named bonds were payable in legal- 
 tender notes? Wonld it not have been wiser and more 
 patriotic on the part of that convention if, instead of 
 denouncing Congress for pledging, by the act of March, 
 1869, the faith of the Government to the payment of 
 the five-twenties in coin, it had denounced Congress for 
 not doing so at a much earlier day. according to the 
 recommendation of the Secretary of the Treasury in his 
 report of 1865? And now, is it not the dictate of pa- 
 triotism that all citizens of the United States should do 
 what they can to improve the national credit instead of 
 depreciating it, so that the burden of this national debt 
 may be diminished not only by payments, but by a re- 
 duction of the rate of interest which it bears? 
 
 I have said what I have upon this subject not because 
 there is an^^ danger that the Government will ever vio- 
 late its faith to its creditors, but because such resolutions 
 as were adopted last year by a convention in Indiana, 
 and the unwise utterances of some of our journals, are 
 used by foreigners who are hostile to the United States 
 to depreciate our national credit, thus rendering it more 
 difficult rapidly to fund our six per cent, bonds in bonds 
 bearing a lower rate of interest. A reduction in the 
 rate of interest in the United States is greatly to be de- 
 sired, and a reduction of the rate which the Government 
 is paying would tend directly to bring this about. Hence 
 it is important, as well for the diminution of the burden 
 of the public debt as for the benefit of our people in 
 their private transactions, that the national credit should 
 be placed on the highest possible basis. Can there be 
 any doubt, therefore, as to what should be the position 
 of all good citizens upon a question of so great import- 
 ance ? 
 
 lyONDON, J Illy 12, 187s ■ 
 
 Ninth Letter. 
 To the Editor of The Tribune: 
 
 Sir: My letter upon Indiana, it seems, brought down 
 denunciation and abuse from a number of journals of the 
 State. This does not trouble me in the least: but while 
 
130 
 
 I care nothing for the abuse, the charge of a wilful mis- 
 representation of facts, which I understand has been 
 brought against me, ought not to be permitted to pass 
 without attention. It will be borne in mind that I said 
 expressly that I did not undertake to state the facts with 
 precision, and that I remarked that the compromise, 
 when it was made, was considered a fair one. Since 
 that letter was written I have received a number of com- 
 munications and sundr}^ documents, b}^ which the state- 
 ments I made instead of being disproved are in all im- 
 portant respects confirmed. 
 
 From these communications and documents, and from 
 facts well known to the public, it appears that at the 
 time of the compromise the State was in debt some 
 $12,000,000 on bonds, a small part of which were issued 
 for the construction of the Wabash and Erie Canal, 
 known as ^'Wabash and Erie Canal bonds," the rest for 
 the construction of various works throughout the State, 
 and known as "internal-improvement bonds;" that the 
 State failed to pay the interest on these bonds soon after 
 they were issued, in consequence of which they became 
 greatly depreciated, so depreciated as to have little, if 
 any, value in the markets, some of them having been 
 sold, as I was informed at the time, for less than the 
 amount of the interest which had accrued upon them; 
 that in 1846, some six or seven years after the default 
 occurred, a strong pressure having been brought to bear 
 upon the Legislature, a compromise was effected under 
 the provisions of what is known as the "Butler bill" 
 between the State and a majority of her bond holders 
 represented by Mr. Chas. Butler, by which compro- 
 mise the State agreed to give in exchange for the out- 
 standing bonds "State stock," bearing interest at the 
 rate of five per cent, per annum, for one-half of the prin- 
 cipal of the bonds, and "canal stock," bearing the same 
 rate of interest, for the other half, and for one-half of 
 the accrued interest on the bonds "State stock," bearing 
 two and a half per cent, interest, and for the other half 
 of the accrued interest "canal stock," bearing the same 
 rate of interest, "the canal stock" to be exclusively and 
 only a charge upon the Wabash and Erie Canal, for the 
 extension of which from Lafayette to the Ohio Rive;- 
 
131 
 
 the bond holders, for their better protection, were called 
 upon to contribute liberally. To this compromise there 
 was a condition that the State would make no provision 
 thereafter to pay either principal or interest on any in- 
 ternal-improvement bonds until the holders thereof 
 should have first surrendered their old bonds and received 
 therefor the above-named ''stock," and there was also 
 a provision that nothing should be paid to the holders 
 of the " stock " until bonds to the amount of $4,000,000, 
 exclusive of interest, had been surrendered for cancel- 
 lation, according to the terms of the compromise. It 
 further appears that the canal, chiefly by reason of the 
 competition of railroads which were made alongside or 
 within competing distance of the canal, under an act 
 subsequently passed, which roads have added largely 
 to the wealth and taxable property of the State, has be- 
 come of little if of any value, so that the charge upon it 
 in favor of the holders of the " canal stock " is w^orth- 
 less. It further appears that a small number of the bond 
 holders declined to become parties to the compromise 
 and to surrender their bonds, and that John W. Garrett, 
 (president of the Baltimore and Ohio Railroad), who was 
 a holder of some of the bonds issued for the construc- 
 tion of the canal, instituted a suit against the trustees, 
 who, under the terms of the compromise, had charge of 
 the canal, for the benefit of the holders of the " canal 
 stock," and obtained a decree declaring that these 
 Wabash and Erie Canal bonds were a lien upon the 
 canal prior and paramount to the claim of the trustees; 
 that to prevent a sale of the canal under this decree the 
 Legislature made provision for the payment of the bonds 
 on which the decree had been obtained, and at a special 
 session in 1872, by an act "declaring an emergency," 
 provided for the payment in full, principal and interest, 
 of all the bonds issued prior to 1841, and not surrendered 
 under the Butler bill, whether a lien upon the canal or 
 not. Hence it appears that the holders of the internal- 
 improvement bonds, constituting much the larger part 
 of the State debt, received for half of their claims 
 ''canal vStock " exclusively, a charge upon the canal, 
 which w^as already subject to a lien in favor of the orig- 
 inal canal bonds; that the holders of the last-named 
 
132 
 
 bonds or most of them surrendered their prior lien upon 
 the canal and accepted a joint lien with other bond 
 holders who had no claim upon it, and that the holders 
 of all the old bonds who declined to surrender them have 
 received payment in full, while those who did surrender 
 their bonds have received but fifty cents on the dollar. 
 It will be noticed that no provision was made for the 
 payment of the bonds which had not been surrendered 
 under the Butler bill until the courts had decided that 
 a part of them at least were a lien prior to the "canal 
 stock." Now, I ask whether ni}- previous statement in 
 regard to the compromise of the State with her creditors 
 is liable to the charge of being either false or unfair ? 
 whether what I omitted in that statement was favorable 
 to the State ? And I would further ask whether, in view 
 of all the facts as now stated, it was a creditable thing 
 or a fair thing for the people of Indiana not only to de- 
 cline to do anything themselves for the unfortunate 
 holders of the " canal stock," but to undertake to pre- 
 vent anything from being done for them hereafter by an 
 amendment of the constitution of the State absolutely 
 prohibiting it? 
 
 I regret that I have been called upon to refer a second 
 time to this unfortunate com})romise, for unfortunate I 
 regard it, not only for the creditors, but for the other- 
 wise fair reputation of the State — a reputation which, I 
 apprehend, is as dear to me as it is to those who have 
 avSsailed me. Indiana has scarcely suffered more by fail- 
 ing to pay her debt in full than by the manner in which 
 the complaints of her creditors have been treated by 
 some of her journals. The answer of one of the Indian- 
 apolis editors to an application of a bond holder for the 
 privilege of presenting in the columns of his paper the 
 case of the holders of the " canal stock " is, in the mild- 
 est language in which I can speak of it, a masterpiece 
 of saucy independence. A foreigner who, confiding in 
 the honor of a State, became the purchaser of its securi- 
 ties and had been a loser by the purchase, if his appli- 
 cation for such a privilege had to be denied, had a 
 right to expect that the denial would be couched in 
 courteous language and that he would not be denounced 
 as a "Shylock" for merely asking permission to pre- 
 
183 
 
 sent in the onlj- way that seemed opened to him, for 
 the consideration of the people of the State, what, in his 
 opinion at least, was a meritorious claim. 
 
 An Englishman, writing to me under date of the 21st 
 inst., makes the following statement: 
 
 I am the holder ofW abash and Erie Canal stock, which was 
 forced upon me hy the State under a threat and taken by me 
 at least under protest. I was then a poor workiugman, and I 
 took $6 000, nearly every cent I had in the world. Believing in 
 the future of the Western States, I induced another poor 
 " Britisher " to invest in Indiana, and we have acted together. 
 His case is like my own, except that his was the larger amount. 
 Considering that Indiana is now rich and flourishing, I wonder 
 that nothing is done by her; for a shabby and dishonorable act 
 can never be wiped out by a State with a glorious future. 
 
 I introduce this statement, selected from many others, 
 as an illustration of the fact that my own State has done 
 something to " block the way" of American credit on 
 this side of the Atlantic. 
 
 My Virginia letter was, on the whole, kindly received 
 by the journals of that State. Both letters were dic- 
 tated by no other than the kindest sentiments. I am 
 grateful to Virginia for the honor which she has con- 
 ferred upon the country. I give to her full credit for 
 the efforts which so many of her citizens — true scions 
 of an honorable stock— are making to restore her former 
 reputation. That their efforts have not been successful 
 is attributable to the fact that under the reconstruction 
 acts this class of her citizens have not had the control 
 of her legislation. Governor Kemper is an able and 
 high-toned Virginian. It is true that he carries in his 
 body a Federal bullet, a painful reminder of his mad- 
 ness in endeavoring to overthrow a Government by which 
 Virginia had been greatly benefited and honored, and 
 which she has done so much to establish. He ought to 
 have known, what he has since been among the fore- 
 most to acknowledge, that a Union which was cemented 
 by blood, and in part by the best blood of Virginia, could 
 not be severed. But although, having been educated 
 in a wrong school (the Calhoun school) of politics, he 
 went with his State, and was among the last to sur- 
 render, he will be found among the most earnest and 
 influential workers to restore the relations which existed 
 
184 
 
 between Virginia and the Federal Government before 
 the war; and if the debt of his State is not soon put 
 upon a footing creditable to the State and satisfactory to 
 her creditors the fault will not be his. 
 
 The repudiation of her debt by the State of Minne- 
 sota, to which my attention has been called, has been 
 so thoroughly "ventilated" that I had not thought 
 it necessary to refer to it. It was not onl}^ a crime, but 
 a blunder — an act that admits neither of defense 
 nor palliation. That a State like Minnesota, with 
 a soil so rich and a climate so healthful — a State which 
 lacks only credit and capital to make her at an earl}^ 
 day one of the most populous and wealthy agricultural 
 States in the Union — should for the purpose of ridding 
 herself of the burden of a debt vScarcely exceeding two 
 millions of dollars discredit herself with her sister 
 States and before the world, and thereby prevent the in- 
 flux of the capital she needs, is inexplicable on any other 
 ground than that her people w^ere temporarily demented. 
 The facts, as I understand them, are briefly these: The 
 State, for the purpose of encouraging the construction 
 of railroads through her splendid domain, advanced to 
 various railroad companies her own bonds, issued in 
 conformity with her laws and the provisions of her con- 
 stitution — to the amount of $2,275,000 — taking from 
 these companies as security for her advances their first 
 mortgage bonds and also other obligations to secure the 
 payment of the interest on the State bonds which had 
 been advanced to them. The railroad companies hav- 
 ing failed to pay the interest on the State bonds which 
 they had agreed to pay, the State foreclosed the mort- 
 gages which she held as security for the payment of the 
 bonds she had issued to them, and then delivered the 
 property she had acquired by this foreclosure, for a 
 petty consideration, not to her bond holders, but to new 
 corporations. The validity of the bonds and their 
 binding obligation upon the State has been established 
 by the decisions of the courts. The bond holders had 
 nothing to do with the contracts between the State and 
 the companies to which the bonds were advanced. The 
 bonds were the bonds of the State, and the State was 
 bound legally and morally to pay them, whether the 
 
135 
 
 railroad companies complied witli tlieir engagements or 
 not. Now, she has not only failed to pay the interest on 
 these bonds (the coupons due in June, 1859, only having 
 been paid) , but under the false impression that repudiation 
 which could not be effected by a State law could be 
 effected by a constitutional provision, she has under- 
 taken to prevent her people hereafter from redeeming 
 her credit and doing justice to her creditors by an 
 amendment of the constitution repudiating the bonds, 
 and prohibiting a levy of taxes for the payment of the 
 interest thereon. In view of this action of the Legisla- 
 ture and people of Minnesota, is it to be wondered at 
 that her reputation has been destroyed and that a stain 
 has been cast by her upon American credit generally? 
 The language of our distinguished countryman, Mr. 
 Evarts, who reflects honor upon the American name 
 wherever Americans are known, is no stronger (refer- 
 ring to these bonds) than the case demands: 
 
 The maxim that a State will do justice to its own obliga- 
 tions and will submit to no coercion of courts and process, as 
 a reflection upon its honor, seems to be put to open shame by 
 this great and prosperous State. Confessedly, the only obsta- 
 cle to the collection of these bonds from the State of Minne- 
 sota, whose direct obligations they are, is the privilege it en- 
 joys not to be justifiable in any court. No man acquainted 
 with legal principles, or susceptible to moral impressions, can 
 dwell upon the features of this scandalous history of debt re- 
 pudiated and trust betrayed without indignation. 
 
 The Ohio Democratic State Convention did,^ it seems, 
 adopt a resolution in favor of a continued, if not increased, 
 issue of legal-tender notes. This means, of course, that 
 the Democracy of that great State favor depreciated 
 promises instead of coin as a circulating medium, and 
 are willing to place the monetary power of the country 
 in the hands of Congress. If this resolution does, in 
 fact, express or reflect the sentiments of the staunch old 
 State rights, hard money party, which I honored even 
 when I opposed it, then, indeed, may the "Ethiopian" 
 be expected to "change his skin and the leopard his 
 spots." I am quite sure it does not. The Democratic 
 party has always been opposed to paper money of all 
 kinds, especially to irredeemable notes, and it will con- 
 tinue to be so to the end of the chapter. Her citizens 
 
1R6 
 
 who make a trade of politics ma}^ change, but the masses 
 will adhere to their old faith. Governor Allen, whom I 
 used to admire for his eloquence and have alwa3^s hon- 
 ored for his personal uprightness, in standing upon a 
 soft-money, centralization platform, must feel as Gen- 
 eral McClellan did upon the peace platform of the Chi- 
 cago Convention. I am anxious to hear how the ques- 
 tion of the currency (upon which I may speak in my 
 next letter more directly than I have done) is being 
 treated by such pronounced hard-money men as William 
 Allen, Allen G. Thurman, and Henry B. Paine. 
 
 London, July 24^ 18 
 
 /J 
 
 Tenth Letter. 
 
 To the Editor of The Tribune: 
 
 Sir: Nearly forty years ago Daniel Webster, the 
 greatest constitutional lawyer and one of the greatest, if 
 not the greatest, statesmen that our country has pro- 
 duced, uttered the following memorable language in the 
 United States Senate: 
 
 Most unquestionably there is no legal tender in this country, 
 under the authority of this Government or any other, but gold 
 and silver, either the coinage of our own mints or foreign coins, 
 at rates regulated by Congress. This is a constitutional prin- 
 ciple, perfectly plain and of the very highest importance. The 
 States are expressly prohibited from making anything but gold 
 and silver a legal tender in payment of debts, and although no 
 such express prohibition is applied to Congress, yet as Congress 
 has no power granted to it in this respect but to coin money 
 and to regulate the value of foreign coins, it clearly has no 
 power to substitute paper or anything else for coin as a tender 
 in payment of debts and in discharge of contracts. Congress 
 has exercised this power fully in both its branches. It has 
 coined money and still coins it; it has regulated the value of 
 foreign coins, and still regulates their value. The legal tender, 
 therefore, the constitutional standard of value, is established 
 and cannot be overthrown. To overthrow it would be to shake 
 the whole system. Of all the contrivances for cheating the la- 
 boring classes of mankind none has been more effectual than 
 that which deludes them with paper money. Ordinary tyranny, 
 oppression, excessive taxation — these bear lightly on the hap- 
 piness of the mass of the community compared with a fraudu- 
 lent currency and the robberies committed by depreciated 
 
137 
 
 paper. Our own history has recorded for our instruction enough 
 and more than enough of the demoralizing tendency, the in- 
 justice and the intolerable oppression on the virtuous and well 
 disposed of a degraded paper currency authorized or in any 
 way countenanced by the Government. 
 
 These remarks of the great orator and statesman were 
 unchallenged in the Senate and out of it; nobody then 
 doubted their correctness. It must be borne in mind 
 that Mr. Webster was not a strict constructionist of the 
 Constitution, and yet in this passage he denies the right 
 of Congress to make anything but gold and silver legal 
 tender in payment of debts. It will also be remembered 
 that he favored well regulated and convertible paper 
 money, while he denounced in indignant language an 
 inconvertible and depreciated currency. 
 
 In opposition to this opinion of Mr. Webster, and not- 
 withstanding his warning — a warning justified by the 
 history of other nations as well as our own — Congress, 
 under' the pressure of a great emergency (but as a tem- 
 porary and war measure only), in February, 1862, passed 
 an act authorizing the issue of notes which should be a 
 legal tender in payment of debts, the full mischief of 
 which first step in the wrong direction has not yet, I 
 fear, been realized. Under this and subsequent acts 
 $400,000,000 were issued — nearly the full amount of 
 which is still in circulation— more than thirteen years 
 after the first issue, and more than nine years after the 
 emergency which, and which only, in the opinion of those 
 who advocated the measure, justified it had ceased. 
 
 In a speech at Fort Wayne, in October, 1S65, the Sec- 
 retary of the Treasury foreshadowed his own policy, and 
 what he thought should be and would be the national 
 policy, in the following language: 
 
 I am not of those who seem to be disposed to repudiate coin 
 as a measure of value and to make a secured paper currency 
 the standard. On the contrary, I belong to that class of persons 
 who, regarding an exclusively metallic currency as an imprac- 
 ticable thing among an enterprising and commercial people, 
 nevertheless look upon an irredeemable currency as an evil 
 which circumstances may for a time (seem to) render a neces- 
 sity, but which is never to be sustained as a policy. By common 
 consent of the nation gold and silver are the only true measures 
 of value. I have myself no more doubt that these metals were 
 prepared by the Almighty for this very purpose than I have 
 
138 
 
 that iron and coal were prepared for the purpose for which they 
 are being used. I favor a well secured, convertible paper cur- 
 rency; no other can to any extent be a proper substitute for 
 coin. I have no faith in a prosperity which is the result of a 
 depreciated currency, nor can I see any safe path for us to tread 
 but that which leads to specie payments. The extreme high 
 prices which now prevail in the United States are an unerring 
 indication that the business of the country is in an unhealthy 
 condition. We are measuring values by a false standard. We 
 have a circulating medium altogether larger than is needed for 
 legitimate business; the excess is used in speculations. The 
 United States to-day are the best market in the world to sell 
 in and among the worst to buy in. The consequence is that 
 Europe is selling us more than she buys of us (including our se- 
 curities, which ought not to go abroad), and there is a debt roll- 
 ing up against us which must be settled in part at least with 
 coin. The longer the inflation continues the more difficult it 
 will be for us to get back to the solid ground of specie payments 
 to which we must sooner or later return. If Congress shall 
 early in the approaching session authorize the funding of the 
 legal tenders and the work or reduction is commenced and car- 
 ried on resolutely, but carefully and prudently, we shall reach 
 it probably without serious embarrassment to legitimate busi- 
 ness; otherwise we shall have a brief period of hollow and se- 
 ductive prosperity, resulting in widespread bankruptcy and 
 disaster. 
 
 But while I am anxious about the present inflation and its 
 effect upon the business and morals of the country, I am hopeful 
 that by wise legislation we shall escape a financial collapse. I 
 am hopeful that the currency may be brought up to the specie 
 standard without those financial troubles which have in all 
 other countries followed protracted and expensive wars. By 
 the experience of the last four years we are led to the conclu- 
 sion that our people have a latent power that manifests itself 
 when required, and is equal to any emergency. I have faith 
 that as we have, to the astonishment of the world, raised im- 
 mense armies — larger, I apprehend than any single nation ever 
 brought into the field — and met the enormous expense of the 
 war without borrowing from other nations, we shall also be 
 able, without a financial crisis, to fund our surplus currency 
 and interest-bearing notes, bring back business to a specie 
 standard, and place the credit of the country on the most sound 
 and stable basis. 
 
 This speech, or a least the financial portion of it, was 
 published in most of the newspapers, and was, as far as 
 the Secretary could judge by the comments upon it, 
 favorably received by the press and the people. The 
 views thus foreshadowed were somewhat elaborately 
 presented in his first report to Congress, December, 
 1865. In this report he pointed out as clearly as he was 
 
139 
 
 able the causes of previous financial crisis, the delusive- 
 ness of the apparent prosperity of the country, the in- 
 jurious effect of a depreciated and fluctuating currency 
 upon business, and its demoralizing influences upon the 
 people, the wide departure of the I^egal-Tender Act 
 from that strict construction of the Constitution given to 
 it previous to the war by patriot men of all parties, etc., 
 and he recommended as the proper remedy and the only 
 remedy for the evils and dangers in which the country 
 had been involved the gradual withdrawal of the legal- 
 tender notes and the curtailment of the currency until 
 it should be equal to specie. The views thus presented 
 having been carefully considered, the House of Repre- 
 sentatives, reflecting undoubtedly the existing popular 
 vSentiment, passed, by a vote of 144 to 6, the following 
 resolution : 
 
 Resolved, That this House cordially concurs in the views of 
 the Secretary in relation to the necessity of a contraction of the 
 currency with a view to as early a resumption of specie pay- 
 ments as the business interests of the country will permit, and 
 we pledge co-operative action to this end as speedily as prac- 
 ticable. 
 
 This resolution was followed by the act of April 12, 
 1866, authorizing the Secretary of the Treasury to re- 
 ceive Treasury notes and other obligations of the Gov- 
 ernment, whether bearing interest or not, in exchange 
 for bonds, with a provision that of the United States 
 notes (legal tenders) not more than $10,000,000 should 
 be canceled within six months from the passage of the 
 act, and thereafter not more than $4,000,000 in any one 
 month. This act was a movement by Congress in the 
 right direction; the only objection to it was the pro- 
 vision for a regular monthly withdrawal. Every busi- 
 ness man knows there are seasons of the year in which 
 large curtailments of a redundant currency can be 
 made without disturbing the business of the country, 
 while at other seasons small curtailments may produce 
 injurious effects. I give it as my mature judgment that 
 if the Secretary had been unrestricted in regard to the 
 time and amount of the withdrawal of the legal-tender 
 notes from circulation, and the publication of the monthly 
 reports had been discontinued, a hundred millions of 
 
140 
 
 these notes might have been retired in the course of a 
 3^ear without the people being the wiser for it or busi- 
 ness being deranged b}^ it. A single incident, which 
 was alluded to by Mr. Wells in his very able article 
 which appeared some time since in The Herald, illus- 
 trates the strength of a popular idea, or rather " notion," 
 as it might more properly be called. 
 
 Some time after the curtailment of four millions per 
 month had been in operation one of those periodical but 
 temporar}^ stringencies occurred in Wall street (such as 
 would occur if there were a thousand millions of money 
 in circulation), and this stringency was improperlj^ at- 
 tributed to the action of the Secretary in retiring the 
 legal-tender notes. Mr. Van D3xk, the clear-headed 
 and judicious sub-treasurer at New York, who kept me 
 prompth' advised of everything which was occurring at 
 the commercial center which was likely to affect the in- 
 terests of the Department and who anticipated ever}^ 
 possible danger therefrom, informed me that there were 
 indications of a Wall street panic, and expressed his ap- 
 prehensions that if the next monthly statement showed 
 that the usual curtailment had been made a panic would 
 actually occur. The apprehensions of Mr. Van Dyck 
 were also expressed by other valued and judicious cor- 
 respondents in New York, and although I knew that the 
 disease with which the country was laboring was a ple- 
 thora of paper mone3% and that there was then no real 
 causes for a panic, I thought it wise to give heed to the 
 warnings which I had received. I thereupon sent for 
 General Spinner (who, I am sorry to learn, is not to 
 occup}' through life a position the duties of which he 
 has for so many years discharged with an ability un- 
 surpassed and a diligent fidelit}^ unequaled by any offi- 
 cer ever employed by the Government) and said to 
 him: 
 
 General, our friends in New York advise me that there will 
 be a panic in Wall street if your next statement shows that the 
 usual monthh' curtailment has been made. You have the four 
 millions for cancellation on hand, and have no occasion to use 
 them. The law only authorizes their cancellation; it does not 
 require it. Let them remain where they are, so that your state- 
 ment will show them to be cash on hand and not notes with- 
 drawn from circulation. 
 
141 
 
 This course was pursued, and although the four mil- 
 lions had been actually retired and were not to see day- 
 light again except to be counted and burned, the report 
 at the end of the month indicated that the depleting hand 
 of the Treasury had been stayed. Wall street was at once 
 in good humor again, and the operators for a rise were 
 relieved, as the sensualist is relieved who, oppressed by 
 his late dinner and heavy wines, dreams that he is in 
 trouble and wakes up overjoyed to find that his dream 
 was not a reality. 
 
 I have made the foregoing reference as sailors take an 
 observation after being long in a fog, to show how ret- 
 rograde have been the movements of our finances during 
 the last eight years. First, in obedience to the sense- 
 less outcry against contraction (although the withdrawal 
 of legal tenders had been fully made up by the increased 
 circulation of the national banks), came the repeal of 
 the act authori:cing the withdrawal and cancellation of 
 the legal tenders; then the decision of the Supreme 
 Court (overruling its former decision) that the Legal- 
 Tender Acts were not only constitutional, but that the 
 notes issued under them could be tendered and must be 
 received in satisfaction of contracts made before as well 
 as after the acts were passed. 
 
 Thus the currency question was settled and everybody 
 was happy. The operators in stocks and gold were 
 happy, because no Secretary could lay his ruthless hands 
 upon the currency; the railroad companies were happy, 
 because they could pa}^ in depreciated notes the interest 
 of the bonds (and the principal if they had matured) is- 
 sued before the passage of the Legal-Tender Acts; 
 States were happy, because they could violate the letter 
 and spirit of their obligations, andyet keep within the law; 
 railroads were built or commenced in advance of the need 
 of them, because money could be borrowed and profits 
 could be made in their construction; extravagance, with 
 w^aste, its concomitant, increased, and everything seemed 
 to be ' 'lovely," as lovely as a marriage feast. So strong 
 had become the delusion produced by a redundant and, 
 in the language of Webster, a degraded currency, that 
 one of the most sagacious bankers in New York, who 
 had formerly been one of the most vigorous supporters 
 of contractions, said to me in the autumn of 1870: 
 
142 
 
 Mr. McCulloch, I think we shall have to acknowledge that 
 we were in the wrong in our opposition to the legal-tender 
 notes; the country is prospering in spite of them. We are get- 
 ting on very well, if we have superabundance of currency. 
 
 But, alas! alas! all eartlil}^ bliss is transient, if not il- 
 lusory. The happy days rolled on until the time came, 
 later, I admit, than I had expected; when the inflation 
 bubble could no longer bear the strain upon it, and the 
 country was awakened from its blissful dreams to a real- 
 ii^ation of the fact that what had appeared to be solid 
 was unsubstantial — that the seeming prosperity of the 
 country was delusive. The first impression made upon 
 the public mind by the crisis of September, 1873, was 
 that there was merely a panic in New York, which would 
 be as temporary as that of 1857. This impression was 
 of short duration. A few days were sufficient to show 
 that what was supposed to be onl}' an unreasonable and 
 unreasoning panic was the outbreak of deep-rooted dis- 
 order, to stay which the reissue, as it was called, of 
 $26,000,000 of legal-tender notes was as powerless as 
 bread pills would be to check the progress of cholera or 
 yellow fever. And now while it seems to me as clear 
 as day that our financial troubles are attributed mainl}^, 
 if not exclusively, to a reduntant currency, we find thou- 
 sands of honest-minded people and the intelligent leaders 
 of a great party in one State at least denouncing contrac- 
 tion, when there has been no contraction, as the cause of 
 these troubles, and clamoring for more currency as a 
 cure of a disease which an excess of currency has pro- 
 duced. Whatever may be the operations of such prac- 
 tice upon the human system it is certain that financial 
 disorders are not curable by doses — allopathic or homeo- 
 pathic — of the poison, from the effect of which collapse 
 has resulted. 
 
 In view of what has occurred in our recent financial 
 history is it strange that a calm looker-on should have 
 said to me a few days ago: 
 
 You Americans have seen the beginning of trouble, but not 
 the end. You are passing through one Jordan, but a deeper 
 one has yet to be traversed before you stand upon solid ground 
 again. You are too wise to profit by the experience of other 
 nations. You will hug the delusion that you can make money 
 
143 
 
 by printing presses, that promise-to pay dollars are as good as 
 dollars, until they become as worthless as the assignats of 
 France, and you will close the account by repudiating them. 
 
 Was he right? Most assuredly he was not; and yet 
 I cannot deny that we have given and are still giving 
 him good reasons for his conclusions. 
 
 London, August 2, 187s • 
 
 Blkventh Letter. 
 To the Editor of The Tribuiic : 
 
 Sir: I have been pained by noticing in the London 
 Times a cable despatch annonncing the death of Andrew 
 Johnson. I hope I may be permitted to offer to his 
 memory a brief tribute of respect. I knew Mr. John- 
 son intimately for four years, and had perhaps as much 
 of his confidence as he gave to any member of his Cabi- 
 net. My impression, however, was that his experience 
 as a politician had made him distrtistful, and that he 
 never gave his confidence tmreservedly to any one out- 
 side of his own family. This distrust was one cause of 
 the unpopttlarity, not to say failtire, of his administra- 
 tion. Had he confided in the leaders of the party which 
 brought him into power and gone with them his path 
 would have been a pleasant one, or if, discarding them, 
 he had called to his aid the leaders of the opposition, 
 with whom on most qtiestions he was in sympathy, he 
 would have shared with them the responsibilities of a 
 most difficult position, and received a support which he 
 needed but seemed not to desire. Thus, unconsciously 
 perhaps, distrustftil of his fellow-men, but conscious of 
 the rectittide of his intentions, he attempted the impos- 
 sibility of administering properly the Government in the 
 most trying period of its history without a party to sup- 
 port him. Distrust was one of his faults, and in becom- 
 ing President, not by the choice of the people but by 
 the death of Mr. Lincoln, and regarded on account of his 
 being a Tennesseean (notwithstanding the evidence he 
 had given of his fealty to the Union), with suspicion 
 by many of the extreme men of the North, it was per- 
 
144 
 
 haps his greatest fault. Another fault, and a very dan- 
 gerous one in a Chief Magistrate, was an irre.sistible pro- 
 pensity to make speeches and to indulge in invectives 
 unbecoming his great office, and frequently unjust to 
 those whom he attacked or against whom he undertook 
 to defend himself. He never comprehended the power 
 of silence. Then, too, he was combative. His whole 
 life, from the tailor's bench to the Senate, had been 
 filled with the combats in which he had been engaged, 
 single handed, with a powerful Southern aristocracy, 
 bent upon preventing his political and social advance- 
 ment. This combativeness he carried into the Execu- 
 tive Mansion. It had become a part of his nature, and 
 he could not rid himself of it. He seemed never to be 
 happy unless he had some one to strike at or denounce. 
 Such were his faults, and they were grievous ones in the 
 highest officer of the Government, but great as they 
 were they were counterbalanced by man}- of the noblest 
 qualities. 
 
 He was a man of convictions, and unalterably 
 true to them. Lacking quickness of apprehension, he 
 was slow in reaching conclusions, but when he reached 
 them he adhered to them with unconquerable tenacity. 
 No braver man, morally or physically, ever lived. Sen- 
 sitive to pain, he possessed an indomitable will that led 
 him to endure it without a murmur. During his occu- 
 pancy of the Executive Mansion he was the victim of a 
 most painful disease, and although his agon^^ was at 
 times most excruciating, it was indicated only by a slight 
 contraction of the facial muscles. I said to him one day 
 upon observing this peculiar muscular contraction : ' ' Mr. 
 President, you are not well." " No," replied he; " no, 
 Mr. Secretary. I could not suffer more if an animal 
 were gnawing my vitals," and yet he continued at his 
 work as if in perfect health. He was of the same ma- 
 terial that martyrs are made of, and had he lived in their 
 days and been sentenced to the stake he would have 
 died as they did, without recanting his opinions or giv- 
 ing expression to his agon3^ A bitter enemy, he never 
 struck a foe after he considered him vanquished. In his 
 family relations he was affectionate and indulgent; fond 
 of his children, he w^as as gentle and kind in his treat- 
 
145 
 
 ment of them as a woman. Notwithstanding his distrust 
 of men, he was full of generous emotions. Never ab- 
 sent from his post, he was one of the most indefatigable 
 workers. He was orderly in his habits and tasteful in 
 his dress, and although deprived of the advantages of 
 what is called good society in his early life he had the 
 bearing and address of a gentleman. The White House 
 was never more what the mansion of the President ought 
 to be, than when it was occupied by himself and his 
 modest, unpretending, but really accomplished daugh- 
 ters. Stigmatized by his opponents as an inebriate, he 
 was not intemperate in the use of liquors. For some 
 six weeks after he became President he occupied a room 
 opening into mine in the Treasur}^ Department, where 
 I saw him every hour from nine in the morning until 
 five in the afternoon, and for nearly four years there was 
 not a day, both in seasonable and unseasonable hours, 
 that I did not meet him, and although I frequently saw 
 him under excitement which a stranger might have re- 
 garded as indicating intoxication, I never saw him under 
 the influence of liquor. The reports of his inebriety, 
 which were circulated broadcast over the country and 
 believed perhaps b}' a majority of his countrymen, were 
 audacious calumnies. 
 
 Mr. Johnson was a man of vigorous intellect. What 
 he lacked in culture he made up in robust strength. 
 His annual messages (with the exception of \\vs faux pas 
 in regard to the payment of the Government bonds) 
 and his other messages to Congress are admitted to have 
 been among the ablest of our Executive papers. Of his 
 patriotism — his hearty devotion to the Union — there can 
 be no question. He gave illustrious proof of this in 
 Tennessee, when to be an outspoken Union man was at- 
 tended with danger that few men, however brave, dared 
 to encounter. During the dark days of the war his was 
 about the only cheering voice that came up from the 
 South. I recollect with what enthusiasm he was re- 
 ceived when he came to Indiana to rebuke treason and 
 strengthen the faith of the supporters of the Govern- 
 ment when its existence was in peril. He lived long 
 enough to make friends of thousands of his enemies, and 
 the welcome that he received when returned to the 
 
146 
 
 Senate, of which he had been for man}^ years a conspic- 
 uous member, and before which he had been tried as a 
 criminal, was as creditable to his former opponents as it 
 was honorable to himself. His love of the Union found 
 fitting expression in his dying request— that the flag of 
 the Union should be his winding sheet. Peace to his 
 ashes, and honor to his memory. 
 
 I^ONDON, August 2, 187s. 
 
 Twelfth I^ettkr. 
 
 To the Editor of The Tribune : 
 
 Sir: a few days ago I asked a gentlemen of large 
 experience and careful observation — a friend of the 
 United States when we had few friends among the leading 
 men of England — ''When shall we be able to borrow at 
 four per cent, for the purpose of retiring our six per 
 cent. Government bonds ? " 
 
 "When," replied he, "you get back to specie pay- 
 ments. Everything hinges upon that. I agree with 
 you that the credit of your Government ought to be 
 equal, if not superior, to that of any Government in 
 the world, and it will be when you come to your senses 
 upon the question of the currency. Should the infla- 
 tionists succeed in their eff'orts to increase the circula- 
 tion of irredeemable legal-tender notes, you will not 
 only be unable to place your four per cents, either at 
 home or in Europe, but you will find even the holders 
 of your fives (for which there is now an active demand 
 at a premium) disposed to get rid of them as speedily 
 as possible. If the inflationists get the control of your 
 legislation and renew the old and foolish experiment of 
 making money plentiful by the use of the printing press, 
 the credit of your great country will sink to the level of 
 Egypt or Turkey." 
 
 This opinion, which I have given in very nearly the 
 language of the gentleman who expressed it, is the pre- 
 vailing sentiment on this side of the Atlantic. There 
 is not an intelligent man in all Europe who has given 
 
147 
 
 attention to the subject who does not wonder at the in- 
 fatuation, if it be not something more than infatuation, 
 of the advocates of an irredeemable currency in the 
 United States who does not condemn the irresohition of 
 most of those who claim to be the friends of a sound 
 currenc}'. There is, in fact, more danger to be appre- 
 hended from the timidity of many who are ranked on 
 the side of specie than from the undisguised action of 
 those who favor further issues of Government notes. 
 The latter are in earnest, and their aim is apparent; 
 the former are deceiving themselves with delusive ex- 
 pections. Every reflecting and intelligent man must 
 perceive that a further issue of irredeemable notes 
 means further depreciation of those now in circulation, 
 an increase of financial trouble, and ultimate repudia- 
 tion; but the fatal results of the " let alone " policy are 
 not vSO apparent. An immense majority of our leading 
 politicians of all parties are sound in theory, but they 
 seem to lack nerve. The resolutions which they adopt 
 in their conventions lack the metallic ring of real earn- 
 estness. They favor a return to specie payments, but 
 they do not say how this is to be effected. They de- 
 preciate a continuance of a depreciated currency, but 
 they hesitate to put their hands upon the prime cause 
 of mischief — the legal-tender notes. They seem to be 
 afraid of the bugbear of contraction, as if a return to 
 the true measure of value would effect values. They 
 seem blind to the self-evident proposition that there 
 will be no real contraction if the purchasing power of 
 the currenc}^ is increased proportionately with a reduc- 
 tion of its volume. If the specie standard is to be re- 
 stored, something more is required than the passage of 
 milk and water resolutions and acts of Congress fixing 
 a da}^ on which resumption shall take place. Unless 
 some decided and practical measures are put into actual 
 operation for the restoration of the .specie standard we 
 shall go on as we have been going for some time past, 
 during which every day has made a return to the paths 
 of safety and real prosperity more difficult. Let us look 
 for a moment at the causes of the existing embarrass- 
 ments and prostration in the United States and then con- 
 sider some of the remedies which have been suggested 
 
148 
 
 First, the causes. That there is a great stagnation in 
 all or nearly all branches of enterprise and industr}- in 
 the United States; that our manufactures are sadly de- 
 pressed; that very few of our railroads are yielding fair 
 returns on their actual cost, while a large part of them 
 are unable to pay the interest on their bonds; that our 
 shipping interests have so declined that the United 
 States, which a quarter of a century ago seemed in a 
 fair way to become the first of maritime powers, is now 
 not to be ranked even among second-class nations in the 
 foreign carrying trade; that our counties, cities, and 
 tow^ns are so seriousl}^ in debt that tax-payers are 
 looking to unlawful measures for relief, and that for 
 some years past we, as a people, have been so extrava- 
 gant and wasteful that we have become a by-word 
 throughout Europe, are facts that cannot be denied. 
 Now, while this depression of our manufactures; this 
 improfitableness of our railroads; this decline of our 
 merchant marine ; this frightful accumulation of 
 municipal indebtendess; this extravagance and wavSte- 
 fulness cannot be attributed exclusively to a redun- 
 dant currency, tlic}^ can in a great measure be traced 
 to it. Other causes, it is true, have to some extent 
 assisted in producing the trouble in which we are 
 involved; but, if we had been on a specie basis, this 
 trouble would have been small in comparison with what 
 it is. Had there been no over-emission of paper money, 
 there would have still been depression in trade and 
 manufactures, but we should not have been over- 
 whelmed as we have been with debt and bankruptcy. 
 We should have felt the effect of over-production, as 
 Great Britain is feeling it. Enormous as has been the 
 increase of consumption in civilized nations within the 
 last twenty 3'ears, it has not kept pace with production. 
 The world has of late been pushed on too rapidly. The 
 wonderful inventions in machinery, the revolution 
 effected by steam power, and the reduction of time in 
 international exchanges, have greatly disturbed old 
 economic laws. Production has been immensely stim- 
 ulated by forces which were not understood, or at least 
 were not utilized, until long after the commencement of 
 the present century, the result of which has been over- 
 
149 
 
 production, reaction, depression; and these are felt in 
 the greatest measure in those countries in which these 
 forces hav^e been most actively in use. There arc very 
 few branches of manufacturing in Great Britain — the 
 greatest manufacturing nation in the world — which are 
 now" in a prosperous state, simply because there have 
 been more goods manufactured than there is a present 
 demand for. The same is true in the United States. 
 Why, let me ask, are so many of our iron founderies 
 idle? Why are our w^oolen and cotton mills running on 
 half time? Why are our lumber-yards over-stocked? 
 Why is there so little activity in ship building? Why 
 are our railroads so unprofitable, and why are so many 
 thousands of our laborers out of employment ? Cer- 
 tainly not for the want of money, for money, paper 
 money, was never so abundant or so cheap, and the 
 same would be true of real money if it had not been 
 driven out of circulation by the inferior currency. Ask 
 our iron manufacturers w^hy their founderies and forges 
 are not in full operation; the managers of our woolen 
 and cotton mills, why their works are partially sus- 
 pended; our lumber men, why stocks have accumu- 
 lated on their hands; our shipbuilders, why the}^ are 
 not building more ships; our railroad men, why their 
 roads are not earning more money, and see if the an- 
 swers are not of the same tenor — that manufactures 
 have outstripped demand, that there is more lumber 
 than building, more ships than freight, more railroads 
 than traffic, more laborers than work. I do not believe 
 that one single sensible man among all these classes of 
 producers and dealers can be found who will attribute 
 the existing depression to a scarcity of money. 
 
 If such are the facts, what judgment should be pro- 
 nounced upon those w^ho, through wilful blindness, or 
 for party purposes, or for selfish ends, declaim, before 
 laborers suff"ering from want of employment, against 
 the oppression of capitalists and urge them to demand 
 more currency as an antidote for their misfortune. 
 
 I have said that great depression in trade and manu- 
 factures exist in Great Britain as well as in the United 
 States, but there is a marked contrast in the real con- 
 dition of the two countries. While the existing depres- 
 
150 
 
 sion is felt, and severely, by the manufacturers and 
 dealers in Great Britain, the general state of the coun- 
 try is healthy. Land was never so high or so saleable 
 as now ; the traffic upon English railroads was never so 
 large, and notwithstanding a reduction of taxes, the rev- 
 enues of the Government are steadily increasing; mu- 
 nicipal indebtedness is comparative!}^ unknown; there 
 is no general complaint of taxation, and the spirit of 
 the people is strong and buoyant. There have been 
 heavy failures (none, or very few, however, as far as I 
 can learn, of firms that have not engaged in operations 
 outside their regular business), and fearful losses have 
 been sustained b}^ reason of injudicious investments; 
 but the nation is, as a whole, in a satisfactory financial 
 state. Now, I need not ask if the reverse of this is not 
 true of the United States. The question, then, to be 
 considered is, to what, in addition to over-production, 
 is the prostration of a country so abundant in resources, 
 with a population so intelligent and vigorous as ours, 
 attributable ? Is it not, first, to our civil war ? Sec- 
 ondly, to our redundant and vicious currency? Thirdly, 
 to injudicious taxation? Let us dwell for a moment 
 upon the first two, leaving the third for consideration at 
 some future day. 
 
 First, the war. Everybody knows that wars are ter- 
 ribly destructive of property as well as life, and that 
 civil wars are especially so. The war between the Gov- 
 ernment and the Southern States was one of the most 
 exhausting that has ever been waged. All other civil 
 wars have been child's play in comparison with it. 
 Nothing like it, in fact, has ever occurred. During its 
 existence we failed to comprehend its greatness or its 
 destructiveness. For nearly four years some two mil- 
 lions of men, of the same nation, were engaged in the 
 fiercest and most expensive struggle that the world has 
 ever witnessed — a struggle that was ended with the 
 utter prostration of the vanquished section. During 
 the continuance of this war everything necessary for 
 its prosecution was in demand. The manufacture of 
 war implements, the building of war and transportation 
 ships, the production of food for the support of the 
 armies, necessarily involved an advance in prices, atid 
 
151 
 
 gave a stimulus to iudustry which seemed to the cur- 
 sory observer like national prosperity. Never were wages 
 so high, never were fortunes so suddenly made, never 
 was there such a production of materials that "perish 
 in the using," never were a people so intoxicated by 
 deceptive appearances. That this prosperity was de- 
 lusive is now apparent, but it did not become apparent 
 until after the crisis of 1873, for during the war the 
 Government, to meet its enormous expenditures, not 
 only issued a vast amount of its interest-bearing obliga- 
 tions, but it made forced loans in the form of prom- 
 issory notes, and declared these notes to be lawful 
 mone}^ 
 
 Secondly, a redundant and vicious currency; redun- 
 dant, because when the war terminated there was no 
 legitimate demand for so large a circulating medium; 
 vicious, because it substituted a legal but artificial 
 measure of value for the true measure, thereby violat- 
 ing the higher law which makes gold and silver the 
 standard — a law which has never yet been violated 
 without commercial disturbance, nor, if the violation 
 was long continued, wnthout national disaster. 
 
 That the legal-tender notes and the notes of the 
 national banks made the circulating medium redundant 
 is proved by the artificial prices they created and sus- 
 tained by their great depreciation and by the uses that 
 have been made of them. Their viciousness is made 
 manifest by the facts that they were and are irredeem- 
 able; that they have familiarized the people with dis- 
 honored obligations which they have been and are com- 
 pelled to treat as money; that they were and continue 
 to be constantly fluctuating in value, making business 
 gambling, and business men gamblers. That an irre- 
 deemable currency is a tax upon industry and a fruitful 
 source of demoralization requires no argument to estab- 
 Ush. If the truth could be arrived at it would be dis- 
 covered that depreciated paper money has been a 
 heavier burden upon the industrial and producing 
 classes of the United States than all the taxes, direct 
 and indirect, to which they have been subjected, and 
 that it has done more to debase and corrupt the public 
 sentiment than all other causes combined. The substi- 
 
152 
 
 tution of inconvertible notes for coin is an old game of 
 distressed monarchies. It is no new experiment. It 
 has been frequently resorted to by bankrupt nations, 
 and always with the same disastrous results. It 
 was resorted to by the United States, under the 
 pressure of what seemed to be a great emergency. 
 That it should be adhered to so long after the 
 supposed emergency had ceased and still have intel- 
 ligent and honest advocates, is difficult of explanation, 
 in view of the fact that over-issues of paper money 
 have been the cause of every financial crisis, every 
 deep-rooted financial disorder that has occurred in 
 the United States. Let us glance at our previous ex- 
 perience: 
 
 The bank-note circulation in the United States was 
 increased from $61,000,000 (in round numbers) in 1830 
 to $149,000,000 in 1837; bank deposits from $55,000,000 
 to $127,000,000; loans from $200,000,000 to $500,000,000. 
 Then came the crash which many of us still remember, 
 and by which the country was prostrated for years. 
 
 Again, the bank-note circulation, which in 1843 was 
 $58,000,000, was run up to $214,000,000 in 1857; bank 
 deposits within the same period from $56,000,000 to 
 $230,000,000; loans from $250,000,000 to $680,000,000. 
 Then the second great crisis occurred, which, although 
 sharper, and for the time it lasted more destructive, was 
 of much shorter duration than the former one. In i860 
 the bank-note circulation was $207,000,000; at the pres- 
 ent time the circulation of legal tender and bank notes 
 is and for some years has been upward of $700,000,000, 
 while the deposits and loans of the banks have been in- 
 creased in a still greater ratio. It is asserted, I know, 
 that bank deposits and bank loans and not paper money 
 have been the chief cause of our financial crisis, but 
 an examination of the bank returns will show that bank 
 deposits and bank loans have only about kept pace, as 
 they naturally would, with the paper circulation. And 
 now, with over $700,000,000 of paper mone^' outstand- 
 ing, more than half of which consist of legal tenders, 
 there are thousands of people complaining of a scarcity 
 of currency; some of the leaders of a great party are 
 advocating a larger supply of it. In the early days of 
 
153 
 
 the West calomel was considered by a set of self-styled 
 doctors a specific for all complaints, and when they had 
 brought their patients — some of them naturally strong 
 and vigorous men — to the brink of the grave by liberal 
 prescriptions of this mineral poison, they were quite 
 sure to administer more of it, exclaiming when their pa- 
 tients died, as they generally did under such treatment, 
 "Poor fellows! they have gone, but it would have 
 been all right with them if they had taken more calo- 
 mel." Are not our inflation doctors disciples of the 
 same school ? 
 
 No one, I admit, can say with any precision how much 
 currency is required in a country like ours for legitimate 
 business, but there are always indications of an excess 
 which cannot be mistaken. Between 1830 and 1837 it 
 was indicated by speculation in wild lands and town 
 lots; by large importations, expanded credit, and vision- 
 ary schemes of internal improvements. Between 1843 
 and 1857, by extraordinary activity in trade, the reac- 
 tion from a long period of stagnation, and another un- 
 healthy expansion of the credit syvStem. From 1865 to 
 1873, by a continuance of the high prices which were 
 unavoidable during the war; by extravagant expendi- 
 tures; by gambling of all descriptions; by a mania for 
 sudden enrichment, and by imprudent outlays in rail- 
 roads. There has never been, I again remark, a finan- 
 cial crisis in the United States which cannot be unmis- 
 takably traced to excessive issues of paper money. The 
 existing financial malady is wider spread and deeper 
 rooted than any which has preceded it, because the pro- 
 pelling cause has been greater. It is more difficult to 
 cure, because a large part of the currency is of a differ- 
 ent character from that which has heretofore existed. 
 If it were only bank notes that we had to deal with, the 
 main cause of our trouble would soon be removed, for 
 the people would not long tolerate irredeemable bank 
 note's. Unfortunately, we have a currency issued by 
 the Government which, in opposition to all economic 
 laws, and in disregard of the experience of other nations, 
 has been made lawful money, which has so distorted 
 the public vision and so depraved the public judgment 
 that^ former hard-money men have become its defend- 
 
154 
 
 ers; a ciirrenc}' which has led such men as Governor 
 Allen, of Ohio, to pronounce specie payment an ideal- 
 ity — a "barren ideality." If the Governor will cross 
 the water and observe the working of well-regulated 
 banking systems in Scotland and England, in Germany 
 and other continental nations, he will, I apprehend, 
 modify his opinions. He will find that vSpecie payments 
 are in these countries a fixed fact, and not an ideality, 
 and that his former well-considered opinions were the 
 sound ones. But I am making this letter longer than I 
 intended. There ought not to be much difference in 
 sentiment among fair-minded men in regard to the cause 
 of our embarrassments and prostration. The important 
 question to be settled, and the difficult one, is. What is 
 the remedy for them ? This question I propose to con- 
 sider hereafter. 
 
 London, August 2j^ i^75. 
 
 Thirteenth Letter. 
 
 To the Editor of The Tribune : 
 
 Sir: With the single exception of the United States, 
 there is no country in the world in which the holders of 
 its securities are the objects of contumely and denuncia- 
 tion. The holders of the United States bonds are cor- 
 porations and persons who subscribed for them at par 
 in currency, when the Government was in peril, or who 
 have purchased them since at a premium. Large 
 amounts of them have changed and are daily changing 
 hands at a considerable advance over their face value in 
 gold. Anyone who wants them, and has the money to 
 pay for them, can purchase them in any of the chief 
 markets at home or abroad. 
 
 Our national banks hold them because they are com- 
 pelled to secure by this means their circulating notes; 
 savings banks and other trust companies hold them for 
 the protection of their depositors; other corporations and 
 individuals hold them because they have confidence in 
 the good faith and responsibility of the Government. 
 Under these circumstances, is it not strange that the 
 
155 
 
 bond holders should be denounced as monopolists and 
 extortioners? What would be thought of public speak- 
 ers or journalists in England or France, or Gernian}^ or 
 Italy, or any other country with outstanding obliga- 
 tions who should endeavor to hold up to public scorn and 
 contempt the holders thereof? Would they not be re- 
 garded as public enemies or lunatics, and be treated ac- 
 cordingly? What, then, is the explanation of the de- 
 nunciation of the holders of Government bonds in so 
 many parts of the United States? It is not to be found 
 (except where it is resorted to to set class against class 
 for party purposes) in the fact that during the war there 
 was a body of men, small in numbers (for the great 
 body of the people, Democrats as well as Republicans, 
 were unfaltering in their devotion to the Union), who, 
 not being in sympathy with the Government in its great 
 struggle with a gigantic rebellion, not only declined to 
 be subscribers for the United States bonds, but dis- 
 suaded others from subscribing for them on the ground 
 that the war would be a failure on the part of the Gov- 
 ernment, and that its securities would be worthless, and 
 who now give expression to their spite and disap- 
 pointment by denunciations of those whom they call 
 * 'bloated bond holders." If those who may take the 
 trouble to read this letter will look around them they 
 will find, if I am not greatly mistaken, that not one of 
 those who are now denouncing the bond holders was an 
 earnest supporter of the Government throughout the 
 war. I recollect the time when the subscribers for 
 United States bonds were regarded as patriots, and I 
 happen to know to what class they belonged. With 
 rare exceptions they were not capitalists; for the capital- 
 ists, as a class, permitted prudence to take the lead of 
 patriotism, and hesitated to become the purchasers of 
 w^hat then were regarded doubtful securities. They 
 were not violent partisans, whose opposition to the ad- 
 ministration was stronger than their love for the Union. 
 They were not those who were in sympathy with the 
 South, for Southern sympathizers knew that the pro- 
 ceeds of every bond that was sold went to the support 
 of the Federal soldiers and sailors or were used in other 
 ways for the prosecution of the war. The purchasers 
 
156 
 
 of our bonds were the patriotic men of all parties, 
 chiefly men of moderate means, who were resolved that 
 the Union should be saved, no matter at what cost of 
 money or blood. 
 
 "I have concluded," said an old Pennsylvania farmer 
 to a Government agent, "I have concluded to take a 
 couple more of them United States bonds you are selling. ' ' 
 (He had already purchased five at $i,ooo each.) "My 
 neighbor Jones says that he doesn't believe they will be 
 good for anything, and that he puts his money into land, 
 but I reckon that land wont be worth much if the Union 
 is broken up. Besides," said he with a slight tremu- 
 lousness of voice, "I have two boys with McClellan in 
 the Peninsula, and the soldiers shall not want for money 
 if I can help it, so I will take $2,000 more of the bonds." 
 I trust the old farmer has held on to his bonds and that 
 now he is one of the "coupon clippers" whom General 
 Gary is so roundly abusing in Ohio. There were some 
 of these neighbor Joneses in all the Northern States, and 
 when any of them are now found one will be likely to 
 hear them denouncing the "bloated bond holders." 
 
 It is undoubtedly true that most of those who pur- 
 chased United States bonds when the currency in which 
 they paid for them was worth much less than it is at 
 present have since sold them at a handsome premium, 
 thus realizing unexpected profits on their patriotic in- 
 vestments; but what harm, I would ask, have the pur- 
 chasers at home or abroad done the Government or the 
 tax-payers by becoming owners of them that they should 
 be subject to denunciation and abuse ? But I am taking 
 too much time in alluding to those w^hose political stock 
 in trade largely consists of abuse of "coupon clippers" 
 and "bloated bond holders." 
 
 INFLATION NO REMEDY. 
 
 I intended that this letter should be confined to a con- 
 sideration of the remedy for our existing troubles. I 
 will first speak of the policies which are advocated, and 
 which I am quite sure will not, if adopted, prove to be 
 the remedy required. 
 
157 
 
 First. The remed}- is not to be found in a further 
 issue of irredeemable paper. On this point argument 
 ought not to be needed. There are now outstanding 
 between $700,000,000 and $800,000,000 of legal-tender 
 bank-notes, an amount larger than can be safely or prof- 
 itably used in healthy trade. This is proved by their 
 depreciation and constantly fluctuating value. No mat- 
 ter what estimates may be made of the amount required 
 as a circulating medium in the United States by com- 
 parison with the amount in use in other countries, it is 
 certainly true that not only is there no branch of indus- 
 try in the United States languishing for want of currency, 
 but there is a very large amount of currenc}' vainl}^ 
 seeking investment. The banks in commercial cities 
 are overloaded with it — so overloaded that they are 
 lending " on call " at two per cent., and are glad to take 
 commercial bills running from three to six months (of 
 which a very small amount is being offered) at five per 
 cent, per annum. Failing to find borrowers even at 
 these rates, they are investing largely, but, as they hope, 
 temporaril}^, in securities, nearly one-half the interest on 
 which is absorbed by taxes. This not only indicates 
 great depression in manufacturing and trade, but it es- 
 tablishes the fact that there is more currency outstand- 
 ing than there is legitimate use for. Still, there are 
 men all over the country complaining of the scarcity of 
 currency, and attributing the financial disasters and in- 
 dustrial prostration which unfortunately exist to con- 
 traction. Something less than a year ago there was a 
 convention or small gathering in Philadelphia, com- 
 posed of very respectable but certainly not ver}- fair- 
 minded or practical men, representing especially the 
 iron interest of Pennsylvania; and among the resolutions 
 adopted was one denouncing Secretary McCulloch for 
 contracting the currency, and attributing the depression 
 in the iron trade to the policy he had recommended and 
 endeavored to carry out; and yet these gentlemen could 
 not have been ignorant of the fact that iron of all de- 
 scriptions, especially iron rails, notwithstanding the con- 
 traction of which they complained (which, in fact, ex- 
 isted only in their imaginations), went up enormously 
 in price between 1868 and the spring of 1873. They 
 
158 
 
 must have known that this rapid and reall}^ unhealthy 
 advance in iron was chiefl}' owing to the unprecedented 
 demand on the part of railroads which were being con- 
 structed, and man}^ of which were undertaken, by rea- 
 son of the plentifulness of money, years in advance of 
 the need of them; the failure of which has brought 
 dismay and ruin to thousands of households. Could 
 anything be more absurd than the denunciation of con- 
 traction as the cause of the prostration of the iron inter- 
 est in view of the fact that within a period of less than 
 six years, during which there had been no contraction, 
 the price of railroad iron (other kinds of iron being sub- 
 ject to the same fluctuations) advanced nearly loo per 
 cent., and then receded to a point lower than it had 
 ever before reached ? Can there be any doubt that this 
 advance in iron was owing mainly, as I have said, to 
 the imprudent expansion of our railroad system or that 
 the decline was the result of its collapse ? If the with- 
 drawal of the legal-tender notes was the cause of the 
 present depression, how happened it that this unprece- 
 dented advance in the price of iron occurred after the 
 contraction complained of had taken place ? Does not 
 the history of the iron trade in the United States con- 
 clusively refute the statements and arguments, if argu- 
 ments the}^ can be called, of the inflationists ? I submit 
 that this should be regarded as a test. 
 
 Was there any depression in prices or business which 
 could fairly be attributed to contraction? Was there, 
 in fact, any depression while it was in progress ? On 
 the contrary, did not the prices greatly advance after 
 the withdrawal of the legal tenders had taken place, and 
 did not the collapse occur when the volume of currency 
 was full ? The question of the currency is one of vast 
 importance — of such importance that all ordinary politi- 
 cal questions, in comparison with it, sink into insignifi- 
 cance. It ought to be dealt with fairly, for the welfare 
 of 40,000,000 of people depends upon the proper solu- 
 tion of it. Nothing to my mind is more certain than 
 that our financial embarrassments and industrial pros- 
 tration are chiefly attributable not to a scarcity but to 
 a plethora of paper money, which gave birth to specu- 
 lative enterprise and expanded credits, tempted coun- 
 
159 
 
 ties and cities to run heedlessly into debt, and became 
 the fruitful cause of extravagance and wastefulness 
 among all classes of our people. In the report of the 
 Secretary of the Treasury for 1866 may be found the fol- 
 lowing remarks: 
 
 There being but one universally recognized measure of value, 
 and that being a value in itself, costing what it represents in 
 the labor which is required to obtain it, the nation that adopts, 
 either from choice or temporary necessity, an inferior standard 
 violates the financial law of the world and inevitably suffers for 
 its violation. An irredeemable and consequently depreciated 
 currency drives out of circulation the currency superior to itself, 
 and if made by law a legal tender while its real value is not 
 thereby enhanced, it becomes a false and demoralizing stand- 
 ard, under the influence of which prices advance in a ratio dis- 
 proportioned even to its actual depreciation. Very different 
 from this is that gradual, healthy and general advance of prices 
 which is the effect of the increases of the precious metals. The 
 coin which is obtained in the gold and silver producing dis- 
 tricts, although it first affects prices within such districts, fol- 
 lowing the course of trade, and in obedience to its laws, soon 
 finds its way to other countries, and becomes a part of the com- 
 mon stock of the nations, which, increasing in amount by the 
 regular product of the mines and in activity by the growing de- 
 mands of commerce, advances the price of labor and commodi- 
 ties throughout the commercial world. Thus the products of 
 the American, Australian, and Russian mines tend, first, to ad- 
 vance prices in their respective localities, but the operation of 
 trade soon distributes them, and enterprise everywhere feels 
 and responds to the increase of the universal measure of value. 
 All this is healthful, because slow, permanent, and universal. 
 The coin produced in any country will be retained there no 
 longer than its productions and sales keep the balance of trade 
 in its favor. As soon as it becomes cheaper (if this word can be 
 properly used in regard to the standard of value) in the coun- 
 try in which it is produced than in other accessible countries, 
 or rather when it will purchase more in other countries (adding 
 interest, the cost of transportation, and other necessary ex- 
 penses) than in that in which it is produced, or when it is re- 
 quired to pay balances to other countries, it flows to them by a 
 law as regular and as certain as gravitation. Hence, although 
 the precious metals are produced in considerable quantities in 
 but a few countries, they effect prices in all. Not so with a 
 paper currency, which is local in its use and in its influence. Its 
 advantages when convertible are admitted, for if convertible, 
 although it swells the volume of circulation, it rather increases 
 enterprise than prices. Its convertibility prevents expansion, 
 while its larger volume gives impetus to trade, and creates 
 greater demand for labor. But when a paper currency is an in- 
 convertible currency, and especially when, being so, it is made 
 
160 
 
 by the sovereign power a legal tender, it becomes prolific of 
 mischief. Then specie becomes demonetized and trade is un- 
 certain in its results, because the basis is fluctuating; then prices 
 advance as the volume of currency increases, and require, as 
 they advance, further addition to the circulating medium; then 
 speculation becomes rife, and "the few are enriched at the ex- 
 pense of the many; " then industry declines, and extravagance 
 is wanton; then, with a diminution of products and conse- 
 quently of exports, there is an increase of imports, and higher 
 tariffs are required on account of the general expansion, to 
 which they, in their turn, give new stimulus and support, while 
 the protection intended to be given by them to home industr)^ 
 is in a great measure rendered imperative by the expansion. 
 
 In view of Avhat has happened since then, I ask if 
 these remarks were not timel}^ and true ? 
 
 I submit that with the exception of over-production, 
 to which I referred in ni}' last letter, the existing pros- 
 tration of business and enterprise in the United States, 
 the want of nerve, the lack of recuperative power, 
 which are everywhere noticeable, and which are so un- 
 usual in the American character, are attributable to the 
 excess and uncertain value of our circulating medium, 
 to which no legislation, without a reduction of the vol- 
 ume of it, can give stability; a circulating medium 
 which is not only affected b}' the importation or expor- 
 tation of coin, but which is raised or depressed in price 
 by gambling combinations. Not only can capitalists, 
 by becoming speculators, put up or put down the price 
 of gold, which means advancing or depressing the value 
 of currency (for, after all that may be said, it is gold 
 that regulates the value of the currency), but the prop- 
 erty and business of our great country are to no small 
 extent at their mercy. Is it not this which is destroying 
 confidence, which is the main spring of business vitality ? 
 With what safety can men embark in enterprises that 
 look to the future for results, when they cannot predict 
 with any degree of certainty what will be the value of 
 legal-tender notes one year or two years hence ? How 
 can any man venture to engage in any far reaching 
 businCvSS while the currenc}' upon which his transactions 
 are based is constant!}' changing in value ? Especially 
 how can he risk the future when the currency, now 
 greatly depreciated, ma}^ be still more depreciated by 
 further issues ? It is uncertainty in regard to the future 
 
161 
 
 of the currency that is destroying confidence, and 
 without a restoration of confidence there will be no im- 
 provement in our financial and industrial condition. 
 What healthy and reliable business requires is a stable 
 basis. Let men of capital and enterprise feel that there 
 is to be sta])ility in the legal measure of value. Let 
 it be understood that the higher law which makes gold 
 and silver the only true measure is hereafter to be rec- 
 ognised and obeyed, and the existing lethargy will dis- 
 appear and the country begin rapidly to recover from 
 its prostration. It is very clear, then, that the remedy 
 we are seeking is not to be found in the maintenance of 
 the present volume of irredeemable paper money — most 
 assuredl}^ not in an increase of it. 
 
 Other proposed policies for bettering our condition 
 will be considered in my next. 
 
 London, September /, 1875. 
 
 Fourteenth Letter. 
 
 To the Editor of The Tribune: 
 
 Sir: The remedy for the existing trouble in the 
 United States is not to be found in Mr. Kelly's plan of 
 regulating the currency and restoring prosperity by 
 means of an issue of convertible bonds bearing interest 
 at the rate of 3 65-100 per cent. The idea of a con- 
 vertible bond originated. I think, wdth Mr. Sherman, 
 the difference between his plan and Mr. Kelly's (and 
 it is a very important one) being in the rate of interest 
 which the bonds were to bear. Mr. Sherman proposed 
 an issue of five per cent, convertible bonds, but this 
 proposition was ol3Jected to by the advocates of an ex- 
 clusive paper currency on the ground that it would lead 
 to an early contraction, which would undoubtedly have 
 been the case, and in this consisted its nierit. Five per 
 cent, convertible bonds would have permanently ab- 
 sorbed all the notes not actually required for a healthy 
 circulating medium. They would have accomplished 
 in due time what the provision in the original Tender 
 
162 
 
 Act, making the legal-tender notes issued under it con- 
 vertible into five-twenty bonds, was intended to accom- 
 plish. 
 
 I am under obligations to Mr. vSherman for reminding 
 me of this excellent provision, the repeal of which he 
 so deeply regrets, because it shows conclusively that 
 those who voted for the issue of the first legal-tender 
 notes did so with the intention that they should soon be 
 retired and not become a permanent but should be merely 
 a temporary circulation. If the provision for the con- 
 version of the notes into five-twenty bonds had been 
 merely suspended during the war, instead of being ab- 
 solutely repealed, the legal-tender notes would long 
 since have been out of the way and the specie basis 
 would have been restored. Mr. Kelly's plan is to make 
 the rate of interest of the proposed convertible bonds 
 so low that they will be a temporary investment only, 
 and rarely that, never permanently absorbing the cur- 
 rency. That measure is supported b}^ the pronounced 
 advocates of a continuous issue of legal-tender notes 
 for the purpose of keeping in circulation what experi- 
 ence has proved to be a vicious currency. It has not 
 a single look towards specie payments. The rates of 
 interest are never reduced by a redundant currency; 
 on the contrary, they advance with the advance of 
 everything else which is measured by it. The usual 
 charge for the use of money in all, or nearl}^ all, the 
 States, up to the autumn of 1873, was higher with a 
 volume of currency coming closeh^ up to $800,000,000 
 than it was when the circulation of paper and gold did 
 not exceed $350,000,000. The rates of interest in the 
 United States are not often as low as 3 65-100 per cent., 
 and if this should happen, as it sometimes might, the 
 Government, if the proposed measure should be adopted, 
 would receive on deposit currency which it could not 
 safely use, and pay interest to the depositors for simply 
 being its custodian. It is a measure which might at 
 times reduce the deposits in banks and savings institu- 
 tions, but it would be troublesome and expensive to the 
 Government and add to the burdens of tax-payers. It 
 is a new dodge of the expansionists and should receive 
 no support from those w^ho are earnestly in favor of a 
 sound currencv. 
 
168 
 
 Again, the remedy is not to be found in the "let- 
 alone" policy. The're are a great many well-meaning 
 persons in the United States who admit that there should 
 be no legal tender, but coin, and that the present vol- 
 ume of currency is altogether too large, but they seem 
 to think it prudent to "disturb" things, and that the 
 safer course is to let the currency alone, in the expecta- 
 tion that it will be some day needed. Their policy is to 
 let the volume remain as it is " until the country grows 
 up to it." But do not these persons perceive that an 
 excessive and consequently depreciated currency, sub- 
 ject to constant changes in value, is in itself a very 
 great disturbance; that it is this which prevents invest- 
 ments in useful enterprises, keeps a check upon the 
 regular trade, and fosters a spirit of speculations? The 
 United States is a magnificent country, whose people 
 excel all others in elasticity and vigor, and can stand a 
 large amount of bad legislation. They can live and to 
 some extent be prosperous under laws that contravene 
 the well- settled principles of finance and political econ- 
 omy, but is this a reason why they should not be 
 promptly relieved of unnecessary burdens? A wise 
 physician does not so deal with a patient struggling 
 with a dangerous malady; he does not stop to consider 
 whether a powerful constitution may not be able to bear 
 up under the disease without assistance, but he at once 
 applies the remedies which books and experience have 
 taught him will counteract it and most speedily restore 
 his patient to health. The "let-alone " policy is not a 
 wise one for the people of the United States to pursue 
 in dealing with a vicious currency. 
 
 Nor is the remedy to be found in the destruction of 
 the national banks. 
 
 Opposition to banks has been the old hobby of poli- 
 ticians of the " tear-down " school. "They are soulless 
 corporations ; why should we not strike them ?" " They 
 are hard-hearted monopolists; why should they be per- 
 mitted to exist under republican institutions?" This is 
 their war cry. Now, what are banks? They are sim- 
 ply corporations, created by law, as the medium by 
 which capital can be most conveniently diffused, and be 
 the most effective help to productive industry. Banks 
 
164 
 
 of issue exist in all commercial countries, and when 
 properly managed they have been found to be greatly 
 beneficial. Coin does not exist in sufficient quantities 
 to supply a circulating medium for the large and varied 
 transactions of commercial States, and bank-notes, prop- 
 erly secured, have been found to be a convenient and 
 desirable substitute for it. Had it not been so banks of 
 issue would long since have ceased to exist. The fact 
 that they have existed for so many years in the best 
 governed countries in Europe as well as in the United 
 States is evidence of their utility. I have been in En- 
 gland for a number of 3^ears, and although I have met 
 many who think that this feature or that in the English 
 banking system might be amended, I have yet to meet 
 an anti-banking man. Banks of issue, as I have said, 
 have been found to be of great value in all well-gov- 
 erned countries, but the best illustration of their utility 
 is to be found in Scotland, where there are many banks 
 of issue, some with limited and others with unlimited 
 liability of their stockholders, and where for more than 
 fifty years there has never been a penny lost by their 
 depositors or note holders. 
 
 The Scotch banks have contributed very largely to 
 the prosperity of Scotland in encouraging enterprise and 
 extending trade. There is no country in Europe in 
 which fewer restraints have been imposed upon bank- 
 ing, none in which the banking s^'Stem has had so free 
 pla3s and there is certainl}^ none that has made so rapid 
 progress in development and wealth. The Scotch are 
 proverbial for their thrift and intelligence. If banks of 
 issue had not proved to be advantageous they would 
 not have failed to discover it, and yet one may travel 
 through all Scotland without finding a single person who 
 is hostile to its banks or who does not assert or admit 
 their usefulness. 
 
 The same ma}' be said of the usefulness of most of 
 the old banking institutions in the United States. I can 
 speak with certainty of the States west of the Alle- 
 ghenies, and I speak advisedly when I say that the State 
 banks of Indiana, the banks of Ohio, Kentucky, Louis- 
 iana, etc., contributed very largely to the prosperity 
 not only of the States in which they were established, but 
 
165 
 
 to the prosperity of the entire Valley of the Mississippi. 
 The people of the New England and the other Eastern 
 States can vouch for the utility of their banking institu- 
 tions. Banks of issue are coeval with the Government 
 of the United States. Before the passage of the National 
 Currency Act every State^ with the exception of perhaps 
 two, had established them. At the present time there 
 is not a State nor, if I mistake not, an organised Terri- 
 tory in which national banks have not been organized. 
 The old sj^stem, which was superseded by the present 
 system, was defective in respect to the want of trust- 
 worthy security for the circulating notes in their local 
 character and the absence of uniformity in their ex- 
 changeable value. The national banks, with the excep- 
 tion of a comparativel}^ few new ones, are the old State 
 banks, simply reorganized with the same stockholders 
 and under the same managers, but with a circulation of 
 uniform value throughout the length and breadth of 
 the land — a circulation which is so well secured that if the 
 United States notes were out of the way there would not be. 
 a single dollar of paper money in circulation in the United 
 States not protected by more than the equivalent of a 
 dollar in coin, deposited in the Government Treasury. 
 Deposits in banks are made for the convenience of de- 
 positors, who usually receive a consideration for them. 
 These the Government does not undertake to protect, 
 except so far as the requirements of the law and fre- 
 quent examinations may protect them; but it has under- 
 taken to provide, and it has provided by the national 
 banking system, that all bank-notes in circulation shall 
 be secured to the holders beyond a reasonable, if not 
 possible, contingency. I claim no share in the credit of 
 the paternity of the national banking system. The only 
 lobb^dng that I was ever guilty of — and of that I am 
 heartily ashamed — was in opposition to it. I was then 
 at the head of the bank of the State of Indiana, a large 
 and profitable institution, under the management of 
 tried and able men, which I knew to be sound to the 
 core, and which I foresaw must go into liquidation or 
 surrender its privilege of issuing two dollars for one on 
 its capital, if the new banking system went into opera- 
 tion. The onl}^ credit I claim in regard to the present 
 
166 
 
 system is for the organization of the Bureau, which, I 
 think, my successors have had no reason to complain 
 of, and for my earnest efforts to give to the new system 
 a fair trial. It grew into favor with me day by day, and 
 I have now no hesitation in saying that, for the United 
 States, it is not only vastly superior to the system which 
 it superseded, but that it is the best system which has 
 been or is likely to be devised. 
 
 The nationalbanking system was not the offspring of 
 the State banks. When I went to Washington at the 
 request of Mr. Chase in the spring of 1863 to organize 
 the Bureau it had not a single friend among the banks. 
 The managers of sound and well-conducted banks were 
 opposed to it, because by bringing their banks into it 
 they feared that the profits of their shareholders would 
 be diminished and because they dreaded the constant 
 annoyance to which they feared they would be subjected 
 from' intermeddling politicians and journalists. The 
 managers of the banks of a different character were op- 
 posed to it because it required absolute security to be 
 deposited with the Treasurer for the redemption of the 
 circulating notes. The State banks, in fact, came into 
 the system by compulsion; but there are now, I appre- 
 hend, very few intelligent and upright bankers who do 
 not admit the wisdom of the act and the excellence of 
 the system. Fortunate for the country was it that the 
 Government did not undertake to collect its revenues or 
 pay its soldiers in the notes of suspended State banks, 
 the weakest of which would have maintained the largest 
 circulation. Mr. Chase not only secured by the National 
 Currency Act for the whole people a sound and uniform 
 circulation, but he thus prevented a catastrophe which 
 might have been fatal to the Union, and which certainly 
 would have been calamitous to the country. The national 
 banking system was one of the compensations for the 
 war, and if its distinguished author had rendered no 
 other service to his country, he would, by having de- 
 vised it, have been entitled to the lasting gratitude of 
 his countrymen. It is this system, so beneficial to the 
 whole country, and so indispensible to the newer portion 
 of it, that some politicians are endeavoring to overthrow 
 with the intention of supplying the place of the bank- 
 
167 
 
 notes, which are to be retired by a further issue of legal- 
 tender notes, which further issue would postpone indefi- 
 nitely a return to specie, centralize the entire money 
 power of the nation in the Federal Government, and in- 
 conceivably aggregate the evils which now^ affect us. 
 
 Our banking system is thoroughly interwoven with all 
 our pecuniary interests. It could not be overthrown 
 without the most disastrous consequences. Its destruc- 
 tion would not only put a stop to bank discounts, but it 
 would necessitate the collection of millions upon mil- 
 lions of debts due to the banks. It would create a 
 financial revolution which the country is in no condition 
 to bear. I know it may be contended that the opposi- 
 tion to banks means only opposition to them as banks 
 of issue; that to deprive them of the privilege of issuing 
 notes by no means involves the necessity of their ceas- 
 ing to continue in existence as banks of deposit and dis- 
 count. It may be true that if the banks were compelled 
 to call in their circulation some of them would go on 
 with the business of receiving deposits and discounting 
 bills, but I apprehend that a large majority would go 
 into liquidation. If they did not what would the people 
 gain by the change ? Are the legal-tender notes any 
 safer than bank-notes w^hich are secured by United States 
 bonds with ten per cent, margin and by the capital of 
 the banks and the personal liability of their stockholders ? 
 Would the banks, as banks of deposit and discount, be 
 more liberal in their dealings with their customers or in 
 their rates of interest? Would they be any less liable 
 to the charge of being monopolists and extortioners than 
 they now are ? What the West especially needs is a 
 local circulation. Would it have this local circulation 
 if greenbacks became a substitute for bank-notes? I 
 predict if the experiment is ever tried, that before a year 
 passes there will be in all the Western and Southern 
 States an outcry against the greenback system, and a 
 demand for the restoration of the system which is now 
 so vehemently denounced. The financial history of the 
 United States shows that the people of the United States 
 will have banks and banks of issue. If the national 
 banking system, which affords a circulation of uniform 
 value and unquestionable security, is to be discontinued 
 
168 
 
 another S3^stem must be devised to take its place. What 
 shall it be? Has any substitute for it been proposed ? 
 Would it not be wise and prudent for us to present a 
 better system or to improve the one we have until a bet- 
 ter one is proposed? The present system is, as I have 
 remarked, manifestly superior to the one it superseded. 
 It affords the people the uniform and safe circulation 
 which they had long desired. It is in no proper sense 
 a monopoly. It is in this respect free from the objec- 
 tions which were raised against the old United States 
 Bank. It is substantially a free banking system, emi- 
 nently adapted to our republican institutions. As far as 
 I can judge, it has so far worked well. Let us have a 
 proposition for an improved system before we lay our 
 destructive hands upon it. 
 
 I have in this hasty manner stated my objections to 
 certain remedies which are proposed and advocated for 
 lifting the country out of existing eml)arrassments. I 
 must postpone the consideration of what I consider to be 
 the true remedy for another week. 
 
 lyONDON, September 2, 18 js. 
 
 FiFTKENTH Letter. 
 
 To the Editor of The Tribune: 
 
 ^ Sir: By what means, then, is the country to be re- 
 lieved from the existing embarrassments ? To my mind, 
 the answer is a very simple one — by industry and econ- 
 omy, by earning more and spending less, by the restora- 
 tion of confidence; in a word, by a return to the true 
 measure of value, a departure from which has done 
 more than anything and everything else to land us where 
 we are. Confidence certainly will not be restored nor 
 lousiness rest upon a substantial footing until this is 
 brought about. 
 
 The experiment we have been trying for some years 
 past of sulxstituting inconvertible paper for coin, of en- 
 deavoring by a legislative enactment to give a value to 
 promises which they do not possCvSS, is not an original 
 
169 
 
 one. It lias not even the gold of novelty to recommend 
 it. It has been tried on both sides of the Atlantic, and 
 always with disastrous results. 
 
 Some years ago my excellent friend, Charles Beecher, 
 who was then living with me at Fort Wayne, and who 
 had among his other gifts a talent for invention, dis- 
 covered, as he thought, a new method of propelling 
 steamships. The more he thought and the more he 
 read upon the subject the more confident he became 
 that he had made a discovery which would not only be 
 of great gain to the world, but which would secure to 
 himself fame and fortune. Before applying for a pat- 
 ent, however, he thought he would bring the matter to 
 the attention of some one on whose judgment he could 
 rely. He, therefore, wrote to his brother, Thomas K. 
 Beecher, then living in Cincinnati, and who, had it not 
 heen foreordained that all the Beecher brothers should 
 be ministers of the Gospel, would have undoubtedly be- 
 come one of the greatest mechanics of the age, de- 
 scribed to him his new process of propulsion and re- 
 quested that he should say what he thought about it. 
 Although he afterwards had a good laugh over it, I shall 
 not soon forget the shade of disappointment which 
 passed over Charles' intellectual face when he read his 
 lirother's laconic reply, which was as follows: 
 
 DEAR ChArt^Ey: I have examined your proposed method of 
 propelling steamships. I see but two objections to it. First, 
 is is an old invention; second, it is good for nothing. 
 
 Yours, affectionatel3s Tom. 
 
 If Tom could have gone further and said, " Your pro- 
 cess is not only an old and worthless one, but, instead 
 of driving ships more rapidly through the water, it has, 
 wherever it has been tried, invariably sunk them,'' he 
 would have given substantially such an answer as might 
 now be given to those who think the way to make money 
 plenty is by the free use of the printing press, and that 
 all a Government has to do to create money is to decree 
 that its promises to pay shall be money — the higher law 
 that has been in force since man begun to trade with his 
 fellow to the contrary notwithstanding. 
 
170 
 
 THE TRUE MEASURE OF VAEUE. 
 
 Some time after the close of the late civil war I met 
 a Virginian who contended that the failure of the South 
 to establish its independence was attributable to its 
 financial condition. He related to me an incident which 
 I will repeat, as nearly as I can recollect, in his own 
 language: 
 
 " I knew," said he, " that our Confederate notes which 
 had been made a legal tender were terribl}' depreciated, 
 but a little purchase that I made brought the fact home 
 to me very forcibly. As I was walking along one of the 
 streets of Richmond with some of my friends from the 
 country, a short time before the fall of the city, I ob- 
 served in the shop-window of a shop some fine apples 
 for sale. Thinking that it would be a nice thing to treat 
 each of ni}- friends to an apple, which was then a very 
 rare fruit in Richmond, I stepped into the shop and said 
 to the dealer, ' How much for your apples ? ' ' Three 
 dollars apiece,' was the reply. ' Three dollars apiece ! ' 
 I exclaimed; ' that is an outrageous price for apples.' 
 ' Can't help it,' said the dealer, ' it is as cheap as I can 
 afford to sell them.' There were eight in the party and 
 $24 was rather more than I could conveniently spare at 
 the time, but as I had undertaken to do a clever thing I 
 did not like to back down, so I said to the dealer, ' The 
 price is extravagant, but I will take eight of the apples.' 
 The apples were placed upon the counter, and as I was 
 taking out my wallet to pay for them it occurred to me 
 that I had two half dollars in silver in ni}^ pocket, and 
 that it would look better to pay for the apples wnth them 
 than with the Confederate notes; so, involuntarily 
 almost, I threw both pieces down upon the counter, re- 
 marking, ' Perhaps that will pay for them.' ' Oh, 5^es,' 
 said the dealer, seizing the half dollars, and hastily drop- 
 ping them into his till, ' that will pay for them and leave 
 you some change.' I took the apples and he handed 
 me back the change, and how much do you think the 
 change was? Why, sir, thirty six dollars in Confeder- 
 ate notes. ' Do you think, sir, said he, ' that we could 
 continue the war with a currency like that? ' " 
 
 The real dollar, in this case, showed its purchasing 
 
171 
 
 power over the inconvertible paper dollar, and so it al- 
 ways will; this it did over Continental notes, this over 
 the French assignats, and so it shows its power, to some 
 extent, over our own legal-tender notes. Gravitation is 
 not more certain than is that law which makes gold and 
 silver the measure of value. We may argue against it, 
 we may struggle against it, but it is a law which is as 
 irresistible as fate. The value of irredeemable cur- 
 rency depends not upon the law which authorizes its 
 issue and fixes a legal value upon it, but upon the re- 
 sponsibility of the Government that issues it, the pur- 
 poses for which it can be used, and the amount in 
 circulation. Our legal-tender notes are not greatl}^ 
 depreciated; because the United States are a great 
 nation, rich in undeveloped resources, if not in actually 
 acquired wealth; because these notes are receivable for 
 all public dues, except duties upon imports; but chiefly 
 because the amount of issue is limited. I^et this limita- 
 tion be removed and further issues be authorized, and 
 we shall find that every dollar thus added to the circu- 
 lation will be marked by an equal, if not greater, depre- 
 ciation in the exchangeable value and purchasing power 
 of the outstanding notes. 
 
 Does any man suppose, if the circulation of legal- 
 tender notes were increased, as some are desirous that 
 it should be, to two thousand millions, that there would 
 be any more real money in the country by reason of this 
 increase ? Suppose Congress should change our stand- 
 ard of measure and enact that thirty pounds, instead of 
 sixty pounds, should be a bushel of wheat, would wheat 
 thereby be advanced in value or would the farmer get 
 any more for his crops than he would get under the 
 present measure? Is any man richer by having ^^loo of 
 legal-tender notes in his pocket than he would be if he 
 had $85 in gold ? 
 
 The eagle is worth ten dollars, according to our ex- 
 isting standard. Would it be worth that if fifty per 
 cent., twenty per cent., or ten per cent, were substituted 
 for the same percentage of gold that it contains? The 
 eagle is w^orth what it is because it has 232 grains of 
 pure gold in it, and not because it bears the Govern- 
 ment stamp or impress upon it. When the eagle or the 
 
172 
 
 sovereign or the twenty-franc piece crosses the Atlantic 
 it is assayed, and it is received for just what gold it con- 
 tains, and no more. All the acts of Congress between 
 now and doomsda}' can give to our coin no value which 
 it does not intrinsically possess. The same is true of 
 our Government paper cLlrrenc^^ No act of Congress 
 can give it a value be3-ond its convertible value. It ma}^ 
 be prevented from great depreciation, it may have an 
 artificial value by being received for taxes, etc., and b}^ 
 a limitation of its issue, but, beyond this. Congress is 
 utterly powerless in fixing a value upon it, without pro- 
 viding for its redemption. Gold and silver have been 
 made, b}^ the universal consent of all nations, and not 
 by any act of sovereign power, the standard of value; 
 because they cost in labor all that they represent; be- 
 cause the supply is limited, and because the}' are the 
 most beautiful and, in many respects, the most valuable 
 of metals, possessing a value in themselves independent 
 of the demand for coinage. An ancient potentate at- 
 tempted to get rid of this higher law and to make iron 
 a substitute for gold, but his experiment was not so 
 happy in its results as to be followed by anyone else. 
 Suppose Congress should undertake to substitute nickel 
 for gold and should decree that a piece of nickel of the 
 size of an eagle should be, between man and man and 
 for public dues, receivable as an eagle, would it thereby 
 possess the value of one ? This would be, undoubtedly, 
 an act of folly, but would it be any more unwise than 
 the present legal- tender acts, by w^hich legal-tender notes 
 are attempted to be made a substitute for coin ? In one 
 respect the nickel coin would be preferable to notes, be- 
 cause it would relieve the Government from the charge 
 of dishonesty which now rests upon it — of making its 
 promises a legal tender without redeeming them. One 
 of the severest charges ever brought against dishonest 
 and impecunious monarchs was that of adulterating the 
 coin. This there has never been a people degraded 
 enough long to endure, nor a monarch powerful enough 
 to enforce, and yet are not the free and intelligent 
 people of the United States virtually doing the same 
 thing? We are not, it is true, debasing the coin, but 
 we are substituting for it an inferior legal-tender cur- 
 rency, which substantially amounts to the same thing. 
 
173 
 
 Our people would not sustain Congress for a day if it 
 should attempt to adulterate our gold coinage. It would 
 be worth a voyage across the Atlantic to hear General 
 Butler (of whose ability and eloquence there can be no 
 doubt, whatever may be thought of his financial theo- 
 ries) denounce it, and yet he repudiates coin as a meas- 
 ure of value, and is, as I understand, an advocate of fur- 
 ther issues of legal-tender notes. How did this elastic 
 currenc^^ which was to prevent all panics, answer the 
 purpose in November and December, 1873? When be- 
 fore did it happen that the great banks in New^ York 
 were unable to pay even the smallest checks of their de- 
 positors? There was never before such a "lock-up" 
 under the sun, never such a panic as occurred with out- 
 standing notes to the amount of nearly ^800,000,000, a 
 panic w^hich was not relieved by an issue of $26,000,000 
 of the legal tenders, and which was, in fact, aggravated 
 by an importation of $15,000,000 of coin. Gold and 
 silver coins, instead of being what some of the infla- 
 tionists in Ohio call them — "a relic of barbarism" — are 
 the great financial regulator of commercial nations, in- 
 dicating by their movements unerringly when a nation 
 is going too fast and putting on the check before the 
 movements become dangerous. 
 
 General Butler thinks that a currency which was good 
 enough to pay the soldiers during the war is good enough 
 for civilians; that as legal tenders answered the purpose 
 for which they were issued while hostilities continued 
 they ought to answer the purpose of a circulating me- 
 dium long after the war had been brought to a success- 
 ful close. The soldiers in the War of the Revolution 
 were paid in Continental notes, but in those days of in- 
 tellectual darkness this was not considered a sufficient 
 reason for their being maintained as a permanent circu- 
 lation. The soldiers of the Revolutionar}^ War were 
 paid in Continental notes because the people had noth- 
 ing better to pay them in. Every effort of the colonies 
 and of the Continental Congress failed to give them 
 value after the amount had become excessive. They 
 answered for the time an important purpose, but nothing 
 could prevent their utter depreciation. The Federal 
 Government could not assume the payment of them, and 
 
174 
 
 they became as valuele.ss as the paper upon which they 
 were printed. Our legal-tender notes were issued as a 
 war measure, and if the}^ answered the purpose for 
 which they were issued, does it follow that they should 
 be maintained as a circulating medium? They should 
 be withdrawn, because they keep specie out of circula- 
 tion, and prevent the restoration of a specie standard; 
 because the dut}^ of Congress under the Constitution is 
 to coin money and to regulate the value of foreign coins, 
 not to print notes and force them upon the people at a 
 value they do not possess. The original issue for war 
 purposes was an act of doubtful expediency and still 
 more doubtful authority. It certainly violated a well- 
 settled principle of finance and political econom3^ Is 
 there not a practical question of another kind also in- 
 volved in an authority on the part of Congress to issue 
 notes for a currency? If the amount to be issued should 
 continue to be limited by law what would prevent a 
 party in power from repealing the law, and continuing 
 its power by the use of this tremendous leverage ? Is 
 there ar Democrat in the country who would consent that 
 such a power should be lodged in the hands of a Repub- 
 lican, or a Republican who would be willing to intrust it 
 to a Democrat ? If this, to my mind, very serious objec- 
 tion, and the other objections that have been made to 
 the legal-tender notes, could be overcome it would still 
 be found that they would not meet the wants of a com- 
 mercial and trading people — that they could not be the 
 flexible and yet stable currency which business requires. 
 If we ever entirely emerge from our existing embarrass- 
 ment it will be by returning to first principles, by 
 confining Congress to its legitimate power of coining 
 money, and by leaving the question of the currency to 
 be settled under a sound banking system by the laws of 
 trade. The legal- tender notes should not, in my judg- 
 ment, take the precedence of bank-notes, for the reasons 
 which I have already named, and because they will not 
 afford the country, especially the Western and Southern 
 portions of it, the local circulation they need; because 
 they represent debt and debt only, while bank-notes rep- 
 resent bonds which have been deposited with the Gov- 
 ernment for their redemption — the capital of the banks 
 
175 
 
 and notes and bills under discount; in other words, busi- 
 ness transactions. 
 
 The remedy we seek, then, is to be found — and in my 
 judgment to be found only — in the gradual retirement 
 of the legal-tender notes and in fixing a time after which 
 they shall cease to be a legal tender. Whatever is done 
 should not be done hastily, but the time for tempori/jng 
 has ceased. Action, and decided action, upon a matter 
 of so great importance ought not to be longer postponed. 
 If I were a member of Congress, my first act would be 
 to introduce a bill making the United States notes at 
 once convertible into bonds bearing interest at the rate 
 of four or four and a half per cent, in gold, with a pro- 
 vision that bank-notes to an amount equal to the notes 
 which may thus be retired may be issued if required 
 by the banks and that from and after the first day of 
 January, 1878, the United States notes shall cease to be 
 a legal tender. Should there be at that time, or at any 
 time, an excess of bank-note circulation, the excess 
 would be of short duration. What were not needed for 
 use would be sent home for redemption. If the banks 
 were unable to redeem them they would go into liqui- 
 dation and their notes would be redeemed at the United 
 States Treasury. The passage of such an act would, in 
 my judgment, tend at once to prevent coin from flowing 
 out of the country and to restore confidence in the future. 
 It is disheartening to think that the products of our mines, 
 averaging from $70,000,000 to $100,000,000 per annum, 
 have been going steadily out of the country since 1848, 
 with so little to show for them. Unless steps are taken 
 to prevent it this outflow will still continue. Let it be 
 understood that the specie standard is to be restored 
 within the next two or thee years, and this outflow 
 would cease, or be rapidly diminished, not so much by 
 a diminution of imports as by a restoration of confidence 
 and an increase of enterprise and production, which 
 would so enlarge our exports that coin would not be in 
 much demand for the payment of our foreign debt. 
 The golden opportunity for returning to specie pay- 
 ments was lost at the close of the war, when individual 
 and corporation indebtedness was small in comparison 
 with what it is at present. Nothing can be gained, how- 
 
176 
 
 ever, by further delay in getting again upon the right 
 track. On the contrary, every day's delay renders the 
 return to it more difficult. I know that one difficulty 
 which shows itself is the large amount of our bonds. 
 Federal, State, and corporate, which are held by for- 
 eigners; but Europe is rich. Her capitalists need our 
 solvent securities, and all that is necessary to prevent 
 their being returned when we are not prepared to re- 
 ceive them, is confidence on the part of the holders that 
 the interest will be promptly paid. Nothing will do so 
 much to create this confidence as an honest currency at 
 home. 
 
 A gentleman in New York who is presumably sane, as 
 his friends have not sent him to an asylum, has recently 
 published a pamphlet containing a copy of a letter said 
 to have been written to me in 1865, with comments 
 under date of July last, one of which comments is as 
 follows: " Is it not a historical fact that the Hon. Hugh 
 McCuUoch did of himself knowingly ' do the deed,' and 
 will not the curse of the hundreds of thousands whom 
 his policy of contraction hurled from affluence to poverty 
 enshroud his name with ingominy forever?" If this 
 is not the raving of a madman what is it? I did, of my 
 own accord, without, as is alleged in succeeding com- 
 ments, the advice of my highly valued and very able 
 friend, Mr. Lanier, or of anyone else, ask Congress, in 
 my first report as Secretary of the Treasury, to author- 
 ize me gradually to retire the legal-tender notes until 
 they should become equal in purchasing power to coin; 
 and now after long reflection and careful observation of 
 the effect of such notes upon business and the public 
 morals, my only regret is that Congress prevented me 
 from carrying out the good work so auspiciously com- 
 menced. Had the policy of contraction been sustained 
 the country would, long since, have been on the full tide 
 of prosperity, and the bankruptcy and ruin, which this 
 writer attributes to contraction, would not have, occurred. 
 There has been, in fact, no currency contraction, as the 
 withdrawal of greenbacks, as has been stated, has been 
 more than made up by an increase of bank-notes. The 
 contraction of the greenback circulation in no wise af- 
 fected business; indeed, the public would not have 
 
177 
 
 known that it was in progress but for the monthly state- 
 ment of the Treasury. If I am chargeable with the 
 panic of 1873 and its consequences, ought I not to be 
 credited with something for the good times which were 
 boasted of after the S44,ooo,ooo of greenbacks had been 
 retired ? 
 
 No one can fail to be anxious as to the decision which 
 will be made at the next Presidential election in regard 
 to this most important question. There are many who 
 will regard the election of Governor Allen as a very de- 
 cided indication that the people in the West are in favor 
 of an increase of what is called lawful money, if not of 
 ultimate repudiation; I think otherwise. Thousands 
 of hard-money Democrats will vote for him while they 
 spit upon the currency plank in the platform. A few, 
 perhaps many, like Mr. Groesbeck, will stay at home or 
 vote for his opponent, but the mass will vote the party 
 ticket. His election, if he is elected, may be claimed 
 as a triumph of the inflationists, but it will not be. If 
 it should be, in fact, such a triumph, victory to the party 
 would be worse for it than defeat. No party can turn 
 its back upon its time-honored principles and ignore the 
 teachings of its former great leaders without loss of rep- 
 utation and of strength. The election in Ohio may be 
 significant, but it will not affect the Presidential election 
 of next year. That election will, undoubtedly, be one 
 of the most important ones that has ever occurred, and 
 it is to be hoped that the result will be the election of 
 the man who stands upon the soundest platform. Ralph 
 Waldo Emerson, some years ago, sententiously re- 
 marked that "the Whigs had the best men and the 
 Democrats the best principles. ' ' It will be a happy thing 
 for the United States if not only the party with the best 
 principles, but with the best men, comes into power. 
 That the general sentiment is sound upon the financial 
 question was indicated by the favor with which the veto 
 of the currency bill by President Grant was received by 
 intelligent men of all parties. It is a comfort to know 
 that during his term of office there will be, at least, no 
 further expansion. In the meantime the sober thought 
 of the people will have time to assert itself. 
 
 London, September 11, 187s - 
 
178 
 
 Sixteenth Letter. 
 To tlic Editor of The Tribune : 
 
 Sir: Mr. Phillips' letter to the Legal Tender Club 
 may be fine rhetoric, but it would be difficult to find in 
 the same compass so many transparent fallacies and 
 erroneous statements. It is true that "throughout 
 Christendom" paper is made, to a large extent, a sub- 
 stitute for coin, but it never does its work well except 
 when it is the equivalent to coin. It is only when paper 
 money becomes depreciated and drives specie out of 
 circulation that it becomes mischievous. As long as it 
 has the purchasing power of coin it is a healthful and 
 convenient substitute for it. When it has not this power 
 it fails to perform its proper office. Nor does it, Avhen 
 it is the equivalent to coin, absolutely take its place. 
 It merely shares the field with coin, and by increasing 
 the volume of currency gives stimulus to enterprise, 
 encouragement to industry, and assistance, by facilitat- 
 ing credit, to men of moderate means in competing with 
 capitalists. In Great Britain, in Germany, in France, 
 in Holland, and other prosperous European States, there 
 is more coin in circulation and in the banks than out- 
 standing bank-notes. It is not so in Italy, because there 
 a currency (which, by the wa}-, is not half so depre- 
 ciated as our legal-tender notes) drives specie away, as 
 it does in the United States. But even Italy, notwith- 
 standing the expensiveness of her large standing army, 
 is moving in the right direction, and the indications are 
 that within a brief period she also will have a bank- 
 note currency equal to coin. Mr. Phillips says that 
 political economy "settles few points;" that it is "ex- 
 perience which decides questions, and that business 
 experience has decided that currency in civilized and 
 commercial nations must rest upon credit and consist of 
 paper." With all proper deference to such high author- 
 ity, I venture to assert that the experience of civilized 
 and commercial nations has decided no such thing; 
 that, on the contrary, it has decided that currency 
 should rest upon coin, and that no currency which is 
 not the equivalent of coin, or, in other words, which 
 has not the purchasing power of coin, should be toler^ 
 
179 
 
 ated. For proof of the correctness of this assertion, 
 I point to the present condition of all the leading com- 
 mercial States of Europe. 
 
 Mr. Phillips also contends that specie cannot be a 
 proper basis for currency, because there is not enough 
 of it held by the banks to redeem their circulating 
 notes, and he illustrates this point by comparing John 
 Bull to the six-bottle toper who refrained from drinking 
 the wine he so dearly loved in order that he might en- 
 joy the delightful fragrance of the strawberry at the 
 bottom of the glass. Mr. Phillips has doubtless been a 
 close observer of the habits of topers, and of their 
 power of controlling their appetites, but he certainly 
 presents them in a different light from that in which 
 most men have been in the habit of regarding them. A 
 toper who could sit " a whole evening" with the tempt- 
 ing liquid un tasted before him, in order that he might 
 enjoy the delicious odor, not of the wine, but of the 
 ''small bit of strawberry " which it covered, would be 
 worth going to see. What a subject for a " Hogarth " 
 would such a toper have been ! 
 
 ' ' The vast system of British paper ' ' which Mr. Phillips 
 speaks of is not one-half of the amount of the paper money 
 in circulation in the United States. There is, as I have 
 said, coin enough, and more than enough, in Great 
 Britain to redeem every dollar of paper money there is 
 in circulation within her boundaries. It is not, it is 
 true, all held by the banks, but enough is held by them 
 to enable them to meet promptly all calls that are 
 likely to be made upon them, and bank-notes have every- 
 where in Great Britain the purchasing power of (^oin. 
 To require banks to keep constantly in their vaults 
 specie enough to redeem their notes would defeat the 
 main object for which banks of issue have been created. 
 A large portion of convertible bank-notes in all com- 
 mercial countries is so much needed for actual and daily 
 use that there is never danger of its being presented 
 for redemption. The banks of the United States have 
 undoubtedly held too little specie in proportion to their 
 circulation, but in all the panics that have occurred (and 
 panics will occur in all enterprising and commercial na- 
 tions) it is their depositors and not the note holders that 
 
180 
 
 have compelled them to shut their doors. As I have 
 before said, banks of issue exist in all commercial coun- 
 tries. They have existed in the United States from the 
 foundation of the Government, and they will exist, in 
 some form, to the end of it. Badly as they have been 
 heretofore managed, the country has advanced in wealth 
 and population in a manner of which we may be justly 
 proud. Our national banking system requires w^hat is 
 required by no other banking systems in the world — and 
 in this consists its superiority — that every dollar of bank- 
 notes in circulation shall be secured by more than its 
 equivalent in value. Can there be a better circulating 
 medium than this ? 
 
 THE IvESSOX OF EXPERIENCE. 
 
 Mr. Phillips states that " in building a house we do 
 not put a platform between the house and the founda- 
 tion," neither do we make the foundation the house. 
 Bank-notes which are furnished by the Government to 
 the banks in exchange for United States bonds, which 
 are worth a premium in gold, would seem to rest upon 
 the solid foundation that Mr. Phillips speaks of. The 
 statement that the banks stand between the Govern- 
 ment and the people at a cost of ;^2o, 000,000 a year to 
 the latter is an exaggeration. The interest which the 
 banks receive on the bonds which they are compelled 
 to deposit with the Treasurer is overstated, and no de- 
 duction is made for the taxes to which the banks are 
 subjected; but if the banks were the gainers to the ex- 
 tent named, would that be sufficient reason either for 
 returning to the old State bank system (which banks of 
 the wildcat nature would not object to) or for keeping 
 up direct issues by the Government of a depreciated 
 currency, in comparison with the evils resulting from 
 which, according to high authority, "ordinary tyranny, 
 oppression, and excessive taxation bear lightly ? " Mr. 
 Phillips has not, I apprehend, made finance a special 
 study, but, being thoroughly versed in history, he can 
 doubtless inform those whom he nia}^ address, or the 
 clubs to which he ma}- hereafter write letters, what 
 country has tried the experiment of direct issues of 
 
181 
 
 notes without damaging consequences. The exper*- 
 iment was tried on our side in Continental times, 
 and more recently by the Confederates. France tried 
 it with assignats and mandats — with what success 
 history informs us. Will Mr. Phillips or some brother 
 inflationist name the country in which the experi- 
 ment has worked w^ell? England sees no merit in 
 it; France seems to regard one trial sufficient; United 
 Germany is now revising her financial system, and yet 
 Bismarck, to whom the world attributes great sagacity 
 and abilit}^ with our example before him, does not 
 "take to it." What a short-sighted man he must be to 
 regard banks as a proper intermediary for furnishing a 
 proper circulation to the Germans, thus putting "a 
 platform between the Government and the house" he is 
 erecting. How wilfully blind not to adopt a system 
 which is working so charmingly in the United States. 
 Poor, benighted Bismarck ! Prayers that his eyes may 
 be opened to a saving knowledge of the truth, as con- 
 tained in our Legal-Tender Acts, should go up from 
 every legal-tender club and wigwam throughout the 
 land. 
 
 But does not Mr. Phillips give rather a free rein to his 
 imagination in saying that "England never knew more 
 prosperous years than from 1800 to 1820?" For most 
 of these years England was engaged in an exhausting 
 war, contending against the greatest captain that the 
 world has ever produced, and, at times, against a com- 
 bination of all Continental States which he had either 
 subdued or compelled to assist in his efforts to bring 
 into subjection this little sea-girt island. W^as this the 
 period of England's great prosperity? This certainly 
 will be news to Englishmen. If it was so, how unwise 
 were her statesmen in not liberating Napoleon, and thus 
 enabling him to continue a war which, in connection 
 with an irredeemable currency, had made the nation so 
 prosperous. During that tremendous and protracted 
 struggle certain branches of industry in England did 
 flourish. The demand for ships and war materials did 
 unquestionably stimulate various kinds of manufactur- 
 ing, and give the appearance of prosperity to many 
 parts of the kingdom; but there was never a period in 
 
182 
 
 English history when the English people were so op- 
 pressed by taxation or driven to such straits to keep 
 body and soul together as they were between 1800 and 
 1820. Threatened with invasion, with all Europe at 
 times united against her, rolling up an immense debt, 
 compelled to send her specie abroad for the support of 
 her arm3% and to meet the subsidies which w^ere due to 
 auxiliary troops, it is her glory that she protracted the 
 struggle as she did until the peace of Europe was re- 
 stored, b}^ the complete overthrow of Napoleon on the 
 memorable field of Waterloo. That she was thus ena- 
 bled to contend for so many years wdth the formidable 
 power that was arrayed against her was owing, in addi- 
 tion to her bull-dog persistency and pluck, to tw^o causes — 
 she w^as mistress of the seas, and may be said to have 
 had a monopoly of manufacturing. No interdicts of Na- 
 poleon could prevent her from trading wnth America, or 
 even with the continent, and she had no competitor in 
 the manufacture of goods wdiich other nations stood in 
 need of; but for this she must have succumbed to Napo- 
 leon. England, if not the inventor of the steam engine, 
 was the first nation to put it into practical use. For 
 3^ears she was the only nation that profited b}^ the use 
 of it. It may not be too much to say that England was 
 saved in the Napoleonic war b}' the steam engine, and 
 that to steam power, which has enabled her cheaply to 
 utilize her vast supply of iron and coal, is her great 
 prosperity mainly attributable. England survived the 
 war and came out of it, although greatly impoverished, 
 still strong in comparison with the Continental States; 
 but the assertion that the war period was a period of 
 prosperity is a falsification of history, and absurd upon 
 its face. The period of England's prosperity has been 
 since the effects of the crisis of 1825 were overcome, 
 which crisis occurred long after the specie payments had 
 been resumed. Since that time the imports and exports 
 of the United Kingdom have increased from less than 
 100,000,000 pounds to nearlj^ 700,000,000 pounds ster- 
 ling. Can there be any stronger proof than this of the 
 prosperity of this country after specie payments had 
 been restored ? England reallj' commenced her rapid 
 march of material progress about the year 1830, since 
 
183 
 
 which time her advancement in wealth and power has 
 been without a precedent in the histor}^ of nations. If 
 it be true, as Mr. Phillips states, that the United States 
 ''entered the valle}- of the shadow of death" in 1865, 
 when Mr. McCulloch began contraction, is it not strange 
 that prices should have advanced, and that the country 
 should have been so seemingly prosperous, after we had 
 begun to enter that dark valley ? How any man can at- 
 tribute the crisis of 1873 and the depression since that 
 to the withdrawal of $44,000,000 in 1867, which with- 
 drawal has been more than made up by the increase of 
 bank-note circulation, can only be explained b}^ the fact 
 that to a genuine inflationist facts have no meaning and 
 falsehood seems to be truth. 
 
 NON-EXPORTABI.E MONKY. 
 
 We certainly have a non-exportable currency now, and, 
 therefore, possess what Mr. Care}- favors. If it were in- 
 creased to the amount that many desire, it would cer- 
 tainly be non-exportable, as it would not be worth the 
 cost of transporting it across the ocean or the Canada 
 line. If we are to have a non-exportable coinage under 
 inflation rule, we must be careful not to put a particle of 
 silver or gold in it, otherwise it will certainly leave us. 
 Some years ago Congress, for the purpose of keeping 
 change in the country, alloyed the silver coinage so that 
 a dollar was worth only ninety-three cents, and made it 
 a legal tender for $5. This coinage, of course, remained 
 at home until "the best currency which the world has 
 ever seen" made its appearance, when it also took wings 
 and flew to foreign parts, so that a piece of it would have 
 been a curiosit}-. A non-exportable coinage would, in 
 one respect at least, be a benefit to the country. It 
 would save the expense of keeping up the mints. Our 
 precious metals would leave us, in the form of bullion, 
 which would be less expense to us and more acceptable 
 to foreigners. Even now, as gold and silver are not a 
 currency, but merely a commodity, the maintenance of 
 the mints may be regarded as a useless expense. Mr. 
 Kelley, to be consistent, should, at the next session of 
 Congress, introduce a bill to close the mints, and to pro- 
 
184 
 
 liibit Mr. Bristow from purchasing silver. According to 
 his notions, there is not and ought not to be the slight- 
 est use for mints, and they are a considerable burden 
 upon tax-payers. I respectfully suggest, therefore, 
 that he introduce such a bill and make it a test ques- 
 tion. 
 
 THE DETROIT CONVENTION. 
 
 Upon reading the resolutions adopted by the Detroit 
 Convention, I find that I was mistaken in regard to the 
 proposed issue of the convertible 3.65 bonds. I had 
 supposed that the present volume of legal tenders only 
 was to be maintained by the use of these bonds. The 
 advocates of an exclusive paper currency have greater 
 ambition than I had given them credit for. They cer- 
 tainly do not intend, if we may judge by the resolutions 
 referred to, that any "pent-up Utica shall confine their 
 powers" for doing good. They are not only coura- 
 geous, but they are consistent. If the legal-tender notes 
 are, as has been asserted, the best currenc}^ the world 
 has ever had or can have, wh}' should the issue of them 
 be limited ? Can there be too much of a good thing ? 
 The framers of these resolutions are not onl}- coura- 
 geous and consistent, but they are humorous also. No 
 one but a man of ' ' infinite humor ' ' could have drawn 
 the second and fifth resolutions — the latter favoring an 
 issue of convertible bonds interchangeable with green- 
 backs to an amount equal to the whole Government 
 debt, and the former asserting the obligation of the Gov- 
 ernment to ' ' furnish the people with an absolutely safe 
 and uniform currenc}', adapted in amount to their vary- 
 ing needs, and of a value not materially differing from 
 that of other civilized nations." The convention, how- 
 ever, is certainly chargeable with one important omis- 
 sion — it failed to tell us for what these convertible bonds 
 are to be issued. We have been told, in song at least, 
 that " Uncle Sam is rich enough to give us all a farm." 
 Are we to understand that he is rich enough to give to 
 each of us these obligations, according to our varying 
 necessities ? As the convention probably did not con- 
 sider the 5.20's and 1881's as being a portion of the debt 
 which has been made "especially payable in coin," it 
 
185 
 
 is easy to understand how the 3.65's can be issued to 
 the amount which the}' represent, but as the bonds, 
 which are not upon their face pa}' able in coin, are 
 scarcely equal in amount to one-half of the proposed 
 issue, the convention was certainly guilty of great neg- 
 lect in not informing us for what purpose and by what 
 means the remaining "convertibles" are to find their 
 way into the pockets of the people. The convention, 
 in doing its work thoroughly, ought to have enlightened 
 us on this point. If these convertible bonds are to be 
 given to us gratis, as used to be the saying in the WcvSt, 
 "free, gratis, for nothing," we ought to know it in ad- 
 vance, so that we ma}' not be taken by surprise by the 
 munificence of a generous Government. Perhaps, how- 
 ever, we are not to be surprised exactly in this way, but 
 in another equally delightful. Perhaps we are to be 
 relieved from taxation by the use of these convertible 
 bonds. It may be that the Excise Laws are to be re- 
 pealed and that after the bonds " not especially made 
 payable in coin ' ' are called in and paid off with the 
 "convertibles," the surplus is to be used in defraying 
 the current expenses of the Government. It would be ' 'a 
 sin and a shame' ' not to give us at least free whiske}^ with 
 so much free money as we are to have. Then, too, it is 
 possible that frequent and liberal "eye-openers," as they 
 are called in California, may be needed in order that we 
 may take in the full beauties of the glorious system. With 
 cheap money we ought certainly to have cheap whiskey. 
 
 The proceedings of a mass convention numbering 500 
 souls ought, however, to be treated seriously, and I 
 confess to a feeling of relief upon reading its resolu- 
 tions. They mean nothing if they do not mean bound- 
 less expansion, violation of the national faith, and ulti- 
 mate repudiation. The Prince of Darkness is never 
 dangerous when he appears with the cloven feet and 
 conspicuous tail; it is only when he comes with specious 
 promises and captivating appearance that he leads poor 
 mortals astray. By these resolutions the convention 
 threw off all disguises, and I greatly overestimate the 
 intelligence and the probity of ni}^ countrymen if, by so 
 doing, it has not deprived the inflationists of much of 
 their power for mischief. 
 
 London, September ji , iSjj. 
 
SPEECH 
 
 DELIVERED AT THE 
 
 ONE HUNDRED AND NINTH ANNIVERSARY 
 BANQUET AT DELMONICO'S, 
 
 May 14, 1877. 
 
SPEECH 
 
 DElvIVERKD AT THE 
 
 ONE HUNDRED AND NINTH ANNIVERSARY 
 BANQUET AT DEEMONICO'S, 
 
 May 14, 1877. 
 
 The President. The eighth regular toast is "Re 
 sumption of Specie Payments," a thing long deferred, 
 but earnestly hoped for. This will be responded to by 
 Hon. Hugh McCuUoch, former Secretary of the Treas- 
 ury. 
 
 SPEECH OF MR. m'CUELOCH. 
 
 Mr. President and Genteemen of the Chamber 
 OF Commerce: You have made a mistake, Mr. Presi- 
 dent, in calling upon me to respond to the toast "Re- 
 sumption of Specie Payments." I am not gifted with 
 the "oral," and I long since exhausted m}^ limited re- 
 sources in discussing the currency question. In the few 
 remarks I shall make I can only repeat what I have said 
 in official reports and in letters which have appeared in 
 the newspapers. 
 
 At the close of the late civil war the nation was con- 
 fronted with an immense debt — some four hundred mil- 
 lions of which consisted of circulating notes, possessing, 
 unfortunately, all the legal attributes of money — which 
 was to be dealt with by the Treasury Department under 
 the direction of Congress. It so happened that I was at the 
 time at the head of that department, and it consequently 
 became my duty to make suggestions to Congress as to the 
 course that should be pursued in the treatment of a sub- 
 ject of so transcendent importance. This I did in official 
 
190 
 
 reports and in personal interviews with members, with 
 all the earnestness I felt and the ability I possessed. I 
 was less anxious about the interest-bearing debt than 
 about the currency, but I w^as sometimes appalled by 
 its magnitude. Three thousand millions of dollars 
 against a nation that a few years before was uneasy un- 
 der a debt of a hundred millions was aformidable fact to 
 contemplate. I confess that I was frequently staggered 
 by it. I was apprehensive that the right start might 
 not be made: apprehensive that our people might be 
 disposed to imitate the example of those nations in 
 which national debts are an abiding and constanth^ in- 
 creasing burden; apprehensive that the tax-payers 
 might be unwilling to impose upon themselves the 
 taxes necessary for the payment of the interest upon so 
 enormous a debt, to say nothing about the gradual ex- 
 tinguishment of the principal. These apprehensions 
 w^ere soon dissipated. In the very year in which the 
 war was closed the reduction of the debt was com- 
 menced, and the reduction has been steadily continued, 
 to the amazement of foreign nations and to the honor of 
 the American people. [Applause.] 
 
 There is one fact in regard to the published statements 
 of the public debt to which I may, I trust, be pardoned 
 for referring. If you think it improper for me to do so, 
 please attribute the impropriety to the wine which the 
 gentlemen around me have been drinking. [Laughter.] 
 In none of the Treasury statements which I have seen 
 since the advent of the last administration has any mem- 
 tion been made of the reduction of the debt under the 
 previous one. A person looking at one of these state- 
 ments would suppose that the reduction of the debt was 
 commenced with General Grant's administration, while, 
 in fact, the previous reduction had been upwards of two 
 hundred and fifty millions of dollars, according to the 
 books and published statements of the Treasury, and 
 while also a larger sum even than this was paid by the 
 War and Navy Departments on accounts which had 
 not been so adjusted, as to appear as a part of the public 
 debt on the Treasury books. You, doubtless, recollect 
 the anecdote of the witness who, upon being rebuked 
 by the judge for stating his age to be much less than it 
 
191 
 
 was, excused himself by sa3ang that twenty 3'ears of his 
 life had been spent on the eastern shore of Maryland, 
 which it would be a cruel thing to charge to his ac- 
 count. There were people a few years ago who seemed 
 to think that the four years of Mr. Johnson's adminis- 
 tration ought not to be charged against the life of this 
 great nation, and yet I predict that when the history of 
 that administration shall have been written by an im- 
 partial pen, there will be nothing upon its pages of which 
 the friends or descendants of those who participated in 
 it will be ashamed. [Applause.] I have alluded to 
 this matter merely because injustice has been done to 
 the Government by these partial statements of the re- 
 duction of the public debt. 
 
 While the general management of the debt has been 
 such as to command the approval of the people, there is 
 one great error into which we have fallen. We have been 
 reducing the interest-bearing debt, leaving the legal- 
 tender notes substantially untouched. During the war 
 a ver}^ large amount of money was required for the pay- 
 ment of the soldiers and sailors and other large ex- 
 penses, for which there was no legitimate use after the 
 war was over. Everybody knew, or at least everybody 
 ought to have known, that the country, while engaged 
 in this tremendous contest, was far from being in a 
 prosperous condition. Everybod}^ knew, or ought to 
 have known, that the requirements of trade could not 
 be larger at the close of the war than they were at its 
 commencement; and yet the volume of paper in circu- 
 lation as money was some four times larger in 1865 than 
 it was in 1661. It was very clear to my mind that this 
 surplus currenc\^ must be reduced, or it would inevit- 
 ably produce mischief. Congress, and perhaps a ma- 
 jority of the people, thought otherwise. The process 
 of contraction was stopped before it had been fairly 
 tried — before it had effected in the slightest degree the 
 business of the country; and the result has been mani- 
 fested in the terrible collapse which has taken place 
 everywhere in the value of property, in enterprise, in 
 the enormous municipal and individual indebtedness 
 under which tax-pa3'ers and debtors are groaning, in the 
 demoralization which has been so general, that I might 
 
192 
 
 almo.st vSay that fidelity in public trusts and integrity in 
 the discharge of official duty hav^e been the exception 
 rather than the rule. In my opinion, the legal-tender 
 currency can be justly charged with more of the evil 
 which has befallen the country than anything else that 
 can be named. [Applause.] A redundant currency has 
 been the chief cause of our troubles, and this currency 
 must be reduced to the requirements of legitimate trade, 
 in all its various branches, before prosperity will return 
 or the specie standard will be restored. Humiliating as 
 it may be, we must return to the policy which was 
 abandoned in 1868. There can be no doubt that there 
 is more paper money in the country than there is a 
 proper use for. The banks in this great commercial city 
 find it difficult to use, even at very low rates of interest, 
 the currency with which they are burdened, and some of 
 them find their best customers among that enterprising 
 class who are developing the resources of the country 
 by bulling and bearing stocks. [Laughter.] The vari- 
 ous insurance and trust companies of the Eastern States, 
 finding it impossible to loan their money at satisfactory 
 rates at home, are employing agents to lend it, at high 
 rates, in the Western States. The old rule has been re- 
 versed — lenders are soliciting borrowers instead of bor- 
 rowers soliciting lenders. In a recent visit to the West 
 I learned in all the towns through which I passed that 
 there were agents employed by Eastern companies to 
 lend money on bond and mortgage. In a majority of 
 cases, I apprehend, these loans will be disastrous to the 
 borrowers, and in not a few unprofitable to the lenders. 
 I never hear of persons attempting to obtain very high 
 rates of interest without calling to mind an incident of 
 my early life. I had an old friend in Boston, Mr. Paul 
 Peter Francis DeGrand, whom I esteemed most highly 
 for his extensive commercial knowledge, and regarded, 
 perhaps, with greater interest by the fact that he had 
 fought a duel and carried the evidence of his vindicated 
 honor in a shattered arm. In taking leave of him, as I 
 was about to start for the West, I asked him if he had 
 any advice to give me. "No," said he, "I have no ad- 
 vice to give;" then, after a moment's hesitation, he re- 
 marked: "Yes. my young friend, I have one word of 
 
198 
 
 advice to offer. I have been in that new country myself. 
 When you get into that new country everybody will 
 want to borrow your money. Now, my word of advice 
 is this: If two men come to borrow your money, and one 
 offers you lo per cent, and the other offers you 20 per 
 cent., be sure to lend to the man that offers you 10 per 
 cent." 
 
 Fortunately for the country our President, now pres- 
 ent, is a hard-money man, who won laurels in a severe 
 contest with inflationists in his own State. Fortunately, 
 also, we have a hard-money man at the head of the 
 Treasury Department, who has made finance a study, 
 and who is thoroughly acquainted with the condition of 
 the country. Under their lead I am hopeful that the 
 currency question will be solved and the specie standard 
 restored, to the great relief and advantage of the best in- 
 terests of the country. This can be done within the 
 next two years if their efforts are sustained by Congress 
 and the intelligence of the people. The influence of 
 this chamber of commerce should be exerted in this 
 direction. 
 
 One word more upon a subject to which the distin- 
 guished Secretary of State has alluded. There is a re- 
 striction upon our foreign commerce which ought at 
 once to be removed. Many years ago a law was passed 
 for the encouragement of ship-building, which virtually 
 prevented citizens of the United States from purchasing 
 foreign ships. Some years after, such duties were im- 
 posed upon materials used in the construction of ships as 
 to make ship-building unprofitable. So that it has been 
 almost literally true that American citizens have been 
 prevented, by their own laws, both from buying or 
 building ships. Legislation more unwise can hardly be 
 imagined. [Applause.] 
 
ADDRESS 
 
 DELIVERED AT 
 
 WOODSTOCK, CONNECTICUT, JULY 4, 1878, 
 
ADDRESS 
 
 dewvErrd at 
 WOODSTOCK, CONNECTICUT, JUI^Y 4, 1S78. 
 
 lyADiKS AND Gkntlemkn: The invitation which I 
 received to participate in this celebration was accom- 
 panied by a request that I should say something about 
 finance and business. Recollecting the manner in which 
 this day (which must always be honored by all who rev- 
 erence the character and appreciate the services of those 
 by whom our national independence was achieved) was 
 observed in the New England States in former years — 
 how we used to listen to orations extolling our republi- 
 can institutions, our inheritance of freedom — it seemed 
 something like desecration to devote any part of it to 
 the discussion of subjects so practical and dry as those 
 upon which I was invited to address you. This depart- 
 ure from ancient usages does not, I am sure, indicate 
 an 3^ decline in patriotism, but rather a proper apprecia- 
 tion of our present duties and responsibilities. The 
 events of the last seventeen years — the civil war which 
 dwarfed into insignificance the Revolutionary struggle; 
 the subsequent delirium under the influence of which 
 we looked upon lavish expenditure and wild speculation 
 as indications of real prosperity; the awakening to a 
 realisation of our mistake by the crisis of 1873; the de- 
 pression which followed and which still exists, have 
 abated the exultation with which we were wont to hail 
 the return of our great national holiday without dimin- 
 ishing our respect for it. 
 
 In the invitation which I received there was reference 
 to the sacrifice I should make in leaving my business 
 to come to Woodstock — as if I were to be the loser by 
 
198 
 
 Exchanging the atmosphere of New York for the invig- 
 orating air of the hills of Connecticut; as if one born 
 and bred in New P^ngland, and who, with the exception 
 of three short visits, has been away for nearly half a 
 century, could be making a sacrifice in returning to it 
 and meeting an assembly like this. No New Knglander 
 who is worthy of the name ever ceases to be proud of 
 the land of his birth or strongly attached to it. The 
 forty-five years which I have spent either in the valley 
 of the Mississippi, among a people hardy and enterpris- 
 ing, to whom I am strongly attached; in Washington, 
 which everybody abuses, but which no one who has 
 lived in it leaves without regret; in London, the world's 
 commercial metropolis, the richest and most populous 
 of cities, in which are to be found the most interesting 
 treasures of ancient and modern art, and the clearest 
 proofs of the progress of mankind in civilization and 
 refinement, have in no wise lessened my love for New 
 England nor my pride in being one of its sons. I am 
 glad to be here, and I tender to the gentleman who in- 
 vited me ni}' sincere thanks for the invitation. 
 
 And here let me say, that while New England is a 
 good country to be born in and a delightful country to 
 live in, it is not well for those who make it their home to 
 confine themselves to its l^orders. There is such a thing 
 as too strong local attachment. There is such beauty in 
 the New England landscape, such vitality in the New 
 England air, such culture and refinement in New En- 
 gland society, such comfort, not to say luxury, in New 
 England homes, that the dwellers in this favored land 
 (for it is a favored land in spite of its ungenerous soil, 
 its rigorous winters and March winds) are in danger of 
 being indifferent about other sections and of underesti- 
 mating their influence in giving direction to national 
 affairs. No sensible American fails to be benefited by 
 leaving, for a time at least, his home, no matter how 
 great its advantages and allurements. Frequent visits 
 to other sections of his own country cannot fail to im- 
 prove him. New England in sending out, as she has 
 done, thousands of her sons to possess the fertile fields 
 of the South and West, and to take the lead in trade, in 
 banking, the professions and what not in the commer- 
 
l99 
 
 cial cities which they have done so much to build and 
 to beautify, has made large contributions to the national 
 welfare. New Englanders are found in every city and 
 township in the Union, so that they have earned the 
 title of the " universal Yankee nation; " but, while this 
 is the case, a large part of her population are a stay-at- 
 home people. Half the people of New England have 
 rarely been out of the States in which they were born. 
 Large numbers of her well-to-do and well-educated citi- 
 zens shrink from even the contemplation of a journey to 
 the South or West, and think that they have "done 
 wonders " if they have made an occasional visit to Bos- 
 ton. And permit me to say, with all due respect for 
 their acquirements and ability, that many of the New 
 England representatives in Congress would be wiser and 
 broader men, and more influential in the national coun- 
 cils, if they came more frequently into personal contact 
 with the people of the other States. Books and schools 
 and colleges are not the only educators, nor is learning 
 necessarily intelligence. When I went to the West I 
 met men there whose faces had never been seen in a 
 school-house, so far-seeing, so sagacious and intelligent, 
 so superior in these respects to myself, that I was almost 
 ashamed of what little book learning I had. It is not 
 paradoxical to say that we can learn a good deal from 
 those who know much. less than we do. 
 
 Pardon me for following this line of thought a little 
 further. As I have never before spoken to a New En- 
 gland audience, I may, like the man who thought his 
 prayer should be listened to with favor because he 
 prayed so seldom, draw freely upon your indulgence. 
 There is nothing more instructive to an American than 
 a visit to foreign countries. Conceit is a barrier against 
 knowledge. The less one has of it the more open is he 
 to instruction, and there is nothing which takes conceit 
 out of a man like a residence abroad. They only are 
 wise in their own conceit who know little of others. We 
 live in a country so extensive, so rich in minerals, so 
 varied in productions, so inexhaustible in resources, so 
 abounding in all that is needful for the support of the 
 race; and then, too, we are so inventive, so self-reliant, 
 so enterprising, so free, that a good many of us seem 
 
200 
 
 to be of the opinion that we have nothing to learn from 
 the Old World, little to gain by intercourse with it, and 
 that we should not be greatly the losers if it were sub- 
 merged by the ocean. Nothing can be further from the 
 truth. We are as dependent upon the Old World as the 
 Old World is upon us. We have much to learn from 
 European nations — in art, in politics, in finance, in 
 political economy, and even in agriculture. As an agri- 
 cultural nation we certainly ought to lead all others; 
 and yet in this respect we are excelled by nations that 
 are frequently spoken of as effete. We impoverish by 
 bad husbandry soil which under scientific treatment 
 would year by year be increasing in productiveness. To 
 say nothing of the States that were afflicted with slav- 
 ery, there are States in the valley of the Mississippi, 
 essentially agricultural, in which lands are being so 
 badly treated that the yield per acre is already dimin- 
 ishing. Our lamented friend, Mr. Greeley, who in- 
 structed the readers of the Tribimc by telling them 
 what he knew about farming, would have gained in 
 knowledge by visiting even Italy or Spain. He would 
 have seen there lands responding as kindly and as gen- 
 erously to the labors of the peasants as they did a thou- 
 sand years before the discovery of America. 
 
 Much is to be learned from European nations in all 
 the live subjects of the day. Look for a moment at 
 Great Britain, with which we have more important com- 
 mercial relations and more intimate social relations than 
 with any other country. May we not learn something 
 from her ? Everybody knows that she is the richest of 
 nations; that her colonies encircle the globe; that Vic- 
 toria is the acknowledged queen of an empire, the 
 grandest in the world, altogether more populous and 
 extensive than was the Roman Empire in the days of 
 the Caesars; and yet there is a prevailing sentiment in 
 the United States that Great Britain has seen her best 
 days; that her institutions are repressive and anti- 
 quated; that she lacks the vitality and energy which 
 are so characteristic of the United States. The very 
 reverse of this is the truth. There are about Great 
 Britain no indications of decrepitude. Age has not im- 
 paired her vigor; her monarchy is not the antagonist of 
 
201 
 
 freedom; every 3^ear adds to her population and largely 
 to her wealth. Her Government, although stable in 
 its general character, readily adapts itself to the ad- 
 vancing spirit of the age. Aristocratic in respect to the 
 monarchy and the peerage, she is essentially democratic 
 in respect to the power possessed by that representative 
 of the public sentiment, the House of Commons, to 
 which, in all great contests, the House of Lords is com- 
 pelled to yield. The premier is virtually the head of 
 the Government, and his place depends upon the ac- 
 cordance of his measures with the popular will. In 
 Great Britain no man can be a cabinet minister who is 
 not a member of Parliament, and the appointment of a 
 member of the House of Commons to a seat in the cab- 
 inet involves the necessity of his resigning his member- 
 ship and obtaining the endorsement of his constituents 
 in a new election. Judges are selected from those who 
 are distinguished alike by their standing as lawyers and 
 their stainless reputation for uprightness. Crime is 
 summarily punished and breaches of trust are regarded 
 as among the most heinous of crimes. A change of 
 ministry makes no change in subordinate offices. Fidel- 
 ity and ability are the tenure of office, and long and 
 faithful services are rewarded by pensions. Nor does 
 a change of ministry involve a change in financial or 
 economical policy, which is always intended to be so 
 framed as to depress no useful industry, check no lawful 
 enterprise, build up and sustain no monopoly. If a re- 
 vision is thought to be necessary, the wisest and most 
 practical men of the nation are consulted, and the admin- 
 istration stakes its continuance upon its success in carry- 
 ing through Parliament a proposed reform. No Ameri- 
 can, no matter how strong his republicanism, can be 
 long a resident in Great Britain without perceiving 
 much to admire in the character and working of the 
 British Constitution; much that might be advanta- 
 geously imitated by the people of the United States. Nor 
 can he be long in that country or upon the continent 
 without perceiving that there is no sluggishness in Eu- 
 rope; that there is progress there as well as in the 
 United States, and that his countrymen must make good 
 use of their opportunities if they are not willing to be 
 
202 
 
 distanced in the march of progress and civilization. But 
 I must hasten to the subject upon which I was invited 
 to address you. 
 
 How, then, is the business outlook and what are the 
 obstacles in the wa}^ of rapid and permanent recover}- 
 from the depression which has so long existed ? While 
 it cannot be said that there is any decided improvement 
 in business, there is a better, a more hopeful, feeling 
 among business men and among the people generally 
 than has existed since the autumn of 1873. This of it- 
 self is a healthy indication. There have been within 
 my knowledge several severe financial crises in the 
 United States, but in none of them have I witnessed more 
 despondency and distrust than has been manifested 
 within the last five years. In no previous financial 
 crisis were bankruptcies so numerous, individual losses 
 so large. None has been comparable with it in the dis- 
 honesty which it has developed, the mismanagement and 
 breaches of trust which it has brought to light. Men 
 holding high positions in society and in . the churches 
 have been robbers; corporations supposed to be sound, 
 and which, according to the reports of their managers 
 were sound, have been found to be rotten to the core; 
 merchants and manufacturers have not known whom to 
 trust; investors, small and large, where to look except 
 to governments for solvent securities; laboring men 
 and women, who put their faith in savings institutions, 
 have been in almost numberless instances cheated out 
 of their little surplus earnings — the slow accumulations 
 of years of toil and self-denial — and for a time it seemed 
 that honor and fidelity had departed from among us. 
 For all this there was cause. Wliat was it? Was it not 
 our wide departure from old financial landmarks, our 
 disregard of our own experience and the experience of 
 other nations? I do not underrate the effects of our 
 great civil war, nor the effect of machinery upon labor 
 which is felt throughout the world, and which presents 
 questions more difficult to solve than any economical 
 questions which have engaged the attention of thinkers 
 or statesmen, to which I shall refer further on. I admit 
 it w^as the war which caused the first movement in the 
 wrong direction, but the war is not answerable for what 
 
203 
 
 followed it. The enormous expenditures of the Gov- 
 ernment made money, or what answered the purpose of 
 money, plentiful, and the demand for everything neces- 
 sary to arm, equip, pay, and maintain immense armies — 
 for ships and for war materials — so quickened the pro- 
 ducing energies of the loyal States, that men became in- 
 toxicated with the idea, and acted upon it, that the 
 country was prosperous when it was, in fact, being rap- 
 idly impoverished. All this is admitted, but, according 
 to my understanding, most of the evils and trouble to 
 which I have referred were the natural — I ma}- say the 
 inevitable — result, not of the war, but of financial mis- 
 takes after the war was ended. It was after the war 
 that the flood-gates of speculation were thrown wide 
 open; that what might be called the mania for building 
 railroads manifested itself. It was after the war that 
 municipal indebtedness began to roll up, and became at 
 last so heavy that tax-payers have sought relief from 
 their burdens by attempting to repudiate their obliga- 
 tions; that the private debts were contracted which have 
 since been wiped oft' by bankruptcy. It required no 
 spirit of prophecy to predict substantially in 1865 what 
 took place between that year and 1873. For the prose- 
 cution of the war a very large amount of currency was 
 required, for which there was — there could be — no le- 
 gitimate use after this requirement ceased; and I felt it 
 to be my duty as Secretary of the Treasury to ask Con- 
 gress in my first report for authority to retire so much of 
 it as could be retired without prejudice to industrial in- 
 terests. The authority was given — not exactly in the 
 form that I desired — because I knew, as every business 
 man knows, that there are seasons of the year when full 
 volumes of currency are required, and other seasons 
 when large amounts are idle and reductions can be 
 made without prejudice to anybody, but authority was 
 given to me to withdraw from circulation four millions 
 per month. The power thus given was exercised not 
 to the full extent, but to the extent of withdrawing some 
 $48,000,000 in fourteen months. And I desire to say 
 right here, that no business interest of the United States 
 suffered while this withdrawal was going on; that no- 
 body but the officers of the Treasury would have known 
 
204 
 
 that it was going on had it not been for the publication 
 of the monthl}^ Treasury reports. I will sa}^ more. If the 
 law authorizing the retirement of the United States notes 
 had not been repealed, and the authority granted to the 
 Secretary of the Treasury had been firmly but prudently 
 exercised, the causes which produced the crisis of 1873 
 would not have existed, the countrj^ would have escaped 
 the throes and agonies of the last five years, the specie 
 standard would have been restored, and a greenback 
 party would never have been heard of. 
 
 The withdrawal of the legal-tender notes were advo- 
 cated because, issued for war purposes only, they were 
 not needed after the close of the war, inasmuch as the 
 banking institutions, the capitals and numbers of which 
 were steadih^ increasing, could and would furnish, as 
 they had done before the war, all the currency that 
 would be required in the transaction of legitimate busi- 
 ness. The experience of other nations, as well as our 
 own, had taught that the inevitable tendency of a re- 
 dundant currency was to divert capital from healthful 
 channels into enterprises prejudicial to material inter- 
 ests and good morals; and I affirm that there never 
 have been severe financial troubles in the United States 
 which were not the result of an excess of money of 
 some kind, and the consequent expansion of credit. 
 So well was this understood, even when the wave of 
 speculation was rising, that I did but echo the public 
 sentiment when I said in 1865: 
 
 Labor is the great source of national wealth, and industry 
 invariably declines on an inflated currency. The value of 
 money depends upon the manner in which it is used. If it stim- 
 ulates productive industry, it is a benefit. If, on the other 
 hand, it diminishes industr}^ and to the extent to which it di- 
 minishes it, it is an evil. Even in the form of the precious 
 metals it may not prove to be wealth to a nation. The idea 
 that a country is necessarily rich in proportion to the amount 
 of gold or silver which it possesses is a common and natural 
 but erroneous one, while the opinion that real prosperity is 
 advanced by increase of paper money beyond what is abso- 
 lutely needed as a medium for exchanges of real values is so 
 totally fallacious that few sane men entertain it whose judg- 
 ment is not clouded by the peculiar financial atmosphere which 
 inflation is so apt to produce. * * -^ There are no indica- 
 tions of real and permanent prosperity in our large importa- 
 tions of foreign fabrics, in the heavy operations at our com- 
 
205 
 
 mercial marts, in the splendid fortunes reported to be made by 
 skilful manipulations in tlie gold room or the stock board; no 
 evidences of increasing wealth in the fact that railroads and 
 steamboats are crowded with passengers and hotels with guests, 
 that cities are full to overflowing, and rents and the prices of 
 the necessaries of life, as well as luxuries, are daily advancing. 
 All these things prove rather that a foreign debt is being cre- 
 ated, that the number of non-producers is increasing, and that 
 productive industry is Ijeing diminished. There is no fact more 
 manifest than that the plethora of paper money is not only un- 
 dermining the morals of the people by encouraging waste and 
 extravagance, but is striking at the root of our material pros- 
 perity by diminishing labor. 
 
 The withdrawal of the legal-tender notes was advo- 
 cated because the Legal-Tender Acts were a war meas- 
 ure; because the opinion w^as then universally enter- 
 tained that the Government of the United States was 
 one of limited and defined powers and that the authority 
 to issue notes as money was neither expressly given to 
 Congress by the Constitution nor fairly to be inferred, 
 except as a measure of necessity in a great national 
 emergency; and I hazard the opinion that such will be 
 the decision of the Supreme Court when the qtiestion is 
 fairly presented — a decision which will dispel the mon- 
 strous delusion and heresy that have taken so strong a 
 hold upon so many minds — that all that the Government 
 needs to do to make money plentiful and the country 
 prosperous is to put the printing presses at work upon 
 its promises to pay. 
 
 And now how stands the country to-day upon the 
 currency question? What has Congress done about it? 
 It has passed an act virtually remonetizing silver and 
 demonetizing gold. It has prohibited any further with- 
 drawal of the United States notes. Indeed, the Secre- 
 tary is compelled by law to exercise his wit to keep 
 their full volume in circulation, whether he have need 
 of them or not. Other legislation looking still more 
 strongly toward inflation was only defeated by slight 
 disagreements between the tw^o houses, decisive action 
 being postponed until the next session. 
 
 And how stands the man at the helm of financial ad- 
 ministration, the able, the adroit, the self-poised Secre- 
 tary of the Treasitry ? He advocated the Legal-Tender 
 Acts; but as a war measure only. There was, when 
 
206 
 
 the bills were under consideration, no intimation from 
 him that the notes to be issued under them were to be 
 a permanent currency. If there had been, so sound 
 was the public sentiment at that time upon this all-im- 
 portant question, that the measure would have received 
 but a meager support in either house, and he has since 
 admitted that the repeal of the provision that these 
 notes might be converted into the 5.20 six per cent, 
 bonds at the will of the holder, was one of the greatest 
 and most unfortunate mistakes committed by Congress 
 during the war. He, alas, has become tinctured with 
 the greenback mania. He now favors the continued 
 issue of these notes, limiting the amount to three hun- 
 dred millions. 
 
 The political parties — how stand they ? There can 
 be no mistake as to the financial polic}' of the national 
 or greenback party. The withdrawal of bank-notes 
 and an issue of Government notes, based upon the 
 wealth of the country and equal to the wants of the 
 people, commencing with a thousand or fifteen hundred 
 millions, to be increased with the increase of popula- 
 tion, is. in the opinion of the leaders of this party, to 
 be the panacea for all financial troubles. But how is it 
 with what have been heretofore the two political par- 
 ties, which since the adoption of the Constitution have 
 been contending for the rule of this great countr}- ? Not 
 a single platform in the South or West, except that of 
 the Republican Convention of Michigan, and very few 
 in the Middle and Eastern States have had in them a 
 sound financial plank. All the conventions have been 
 either silent or doubtful or heretical, and mostly hereti- 
 cal, on a question which affects the welfare of every 
 man and woman in the United States. 
 
 It is especially worthy of notice that by none has 
 there been a downright endorsement of the national 
 banking system. Now, what is this system which so 
 many denounce and nobody defends ? It is substantially 
 the old State-bank system, with a circulation perfectly 
 secured and current everywhere, instead of a circulation 
 of limited credit and doubtful solvency. The State 
 banks had nothing to do with the creation of it. It was 
 forced upon them by national necessities. Not a bank 
 
207 
 
 favored the passage of the National-Currency Act. Few, 
 if any, would have accepted it if they had not been 
 forced to accept it by the law which taxed their circulat- 
 ing notes out of existence. A system which compels 
 the banks to secure their circulating notes by United 
 States bonds, with a margin of ten per cent., although 
 the bonds may be worth a premium, is not a profitable 
 system to bank under. The national banks during what 
 was called the flush times, between 1865 and 1873, did 
 as most people did, or thought they were doing — make a 
 .good deal of money upon paper; but the sifting process, 
 which has been for some time and is still going on, re- 
 veals the unpleasant fact that no small portion of their 
 profits was apparent rather than real. I know vSomething 
 of the old State-bank system. I have given some atten- 
 tion to the systems of other countries; and I do not 
 hesitate to sa}^ that our present system, although not a 
 profitable one for the bankers, is the best system for the 
 public which is now in existence. If the bank act is 
 repealed the people and not the bankers will ultimatel}^ 
 be the chief mourners. Banks of issue exist in all com- 
 mercial countries, and they will exist in some form in 
 the United States. Without them enterprise and credit 
 would be deprived of what they need in competing with 
 capital. If the enemies of banks were to undertake to 
 give to capitalists the control of business they could not 
 more surely and effectually accomplish their object than 
 by prohibiting the incorporation of banks of issue. 
 
 The greenback heresy may gain strength, and for a 
 time Government notes may occupy the entire field, but 
 it will be for a time and a short time only. The evil 
 will cure itself, but at an enormous sacrifice. No politi- 
 cal party has ever been wise enough or honest enough 
 to be trusted with the power of supplying the country 
 with money through the agency of the printing press. 
 When such a party does exist, the millennium will have 
 dawned, and there will be no further use of money of 
 any kind. Issues of Government notes are not a nov- 
 elty. This experiment has frequently been resorted to 
 by embarrassed or bankrupt governments, and the re- 
 sult has always been disastrous — disastrous to the gov- 
 ernments and especially to the people. Congress wisely 
 
208 
 
 put a limit upon the issue by the acts which authorized 
 it, but, limited as it was, it was a great misfortune that 
 the exigencies of the country seemed to render such a 
 measure necessary. That necessity passed away with 
 the war. There is now no need of Government notes. 
 Gold and silver and convertible bank-notes are all that 
 is now required to bring back the country to a healthy 
 condition, as far as this can be affected b}' money. 
 There will be no stability in trade, no safe foundation 
 for business men to build upon, until the Government 
 ceases to be a banker — until the public sentiment is in 
 accord with the opinion of Mr. Webster, when he said: 
 
 Most unquestionably there is no leo^al tender in this country, 
 under the authority of this Government or any other, but gold 
 and silver, either the coinage of our own mints or foreign coins 
 at rates regulated by Congress. This is a constitutional prin- 
 ciple, perfectly plain, and of the very highest importance. The 
 States are expressly prohibited from making anything but gold 
 and silver a legal tender in payment of debts, and, although no 
 such express prohibition is applied to Congress, yet, as Con- 
 gress has no power granted to it in this respect but to coin 
 money and to regulate the value of foreign coins, it clearly has 
 no power to substitute paper or anything else for coin as a 
 legal tender in payment of debts and in discharge of contracts. 
 Congress has exercised this power full}' in both its branches. 
 It has coined money, and still coins it; it has regulated the 
 value of foreign coins, and still regulates their value. The 
 legal tender, therefore, the constitutional standard of value, 
 is established, and cannot be overthrown. To overthrow it 
 would shake the whole system. 
 
 The system was shaken by the Legal-Tender Acts. 
 It will not only be shaken, but, if the believers in the 
 greenback theory obtain the control of the Government 
 and the Supreme Court does not come to the rescue, it 
 will be completely overthrown. I sa}^ nothing against 
 the honesty of the advocates of this theory. Many of 
 them I know personally. Their sincerity and integrity 
 I have no right to doubt. It is the theorj^ which they 
 advocate which I denounce; and I denoiuice it because 
 I regard it as being at war with the best interests of the 
 country. If it prevailed, there may be another period of 
 unreal but seductive prosperity; but it will be followed 
 by disasters far more serious than those from which we 
 seem to be recovering, even if the end be not the climax 
 of national dishonor — repudiation. 
 
209 
 
 But, it may be asked, will not danger in this direction 
 be obviated by the resumption of specie payments, 
 which is to take place in January next? Certainly not, 
 because we have no assurance that the Resumption Act 
 will not be repealed at the next session. It undoubt- 
 edly will be, if the November elections indicate that a 
 majority of the people favor continued and further 
 issues of United States notes. And what, after all that 
 has been said about it, will resumption under the Silver 
 Act amount to? Silver dollars, worth nine per cent, 
 less than paper dollars, are now a legal tender. The 
 legal-tender notes, at the option of the Secretary of the 
 Treasury, may be redeemed in either silver or gold. If 
 the demand is light, the redemption will be in gold; if 
 large, in silver. No man can know, when he goes to 
 the Sub-Treasury for coin, which he will receive. The 
 effect of the Silver Act will not be realized until silver 
 bullion is treated by the Government like gold bullion, 
 or until it becomes practically the only standard, as it 
 will be when the balance of trade is against us, instead 
 of being, as it is now, in our favor. Silver is now at 
 par with gold, because no man can obtain the silver dol- 
 lar, worth as bullion but ninety-one cents, without giv- 
 ing the gold dollar for it. All this will be changed when 
 silver dollars can be obtained on a deposit at the mint 
 of silver bullion less the slight charge for mintage, or 
 when the Secretary is compelled to use silver in pay- 
 ment of interest on the public debt or in discharge of 
 other obligations of the Government. Resumption, as 
 long as the Silver Act is in force, will be a sham. 
 
 But would it be so if, as the result of the action of 
 the Silver Commission, the double standard should be 
 adopted by the European nations ? It is difficult to sa}^ 
 what might be effected by a general accord of the na- 
 tions upon this subject. My own opinion is, that the 
 commercial world has outgrown the use of silver as a 
 standard of value and that there will be no such national 
 accord. Great Britain, which has derived immense ad- 
 vantages by having adopted, years ago, the single gold 
 standard: Germany, which at great pecuniary loss and 
 at no little disturlDance to exchanges throughout the 
 world, has demonetized silver; France, which keeps 
 
210 
 
 her silver coin at par with gold by limiting the coinage, 
 so as to make it practically a subsidiary currency, will 
 be parties to no compact making silver a standard of 
 value equally with gold. Great Britain, which is losing 
 heavily in her Indian revenues by the depreciation of 
 silver; Germany, which has still a large amount of sil- 
 ver to dispose of; the Bank of France, which holds 
 nearly a hundred millions of silver coin which it has no 
 use for, and which it could not sell within a twelve- 
 month without incurring a loss of not less than ten or 
 fifteen millions of dollars, would hail wnth satisfaction 
 any action of other nations that would advance even tem- 
 porarily the market price of an article in which they have 
 so large an interest; but that they will reverse their es- 
 tablished policy by adopting the double standard, wdiich 
 has never worked well wherever it has been tried, is 
 what w^e have no right to expect. By adopting the 
 double standard the United States allies itself with 
 China and India and the second and third-rate nations 
 of Europe, instead of the first; and the laws which 
 have heretofore governed international trade will be 
 changed, if the consequences are not injurious to its 
 credit and a drawback upon its prosperity. Although 
 the coinage on a large scale has but recently been com- 
 menced, silver dollars are already a burden and they 
 will be a constantly-increasing burden upon the Treas- 
 ury. There is a higher law in finance as well as in 
 morals. That law demands in all commercial nations 
 gold as a standard, silver as a subsidiary currency. The 
 former for large and international transactions; the lat- 
 ter for what may be called domestic use. For these pur- 
 poses there will be ample demand for both. 
 
 There is another question to which I will briefly al- 
 lude — a question which agitates and troubles other coun- 
 tries as w^ell as our own — the labor question. The busi- 
 ness of the world is being revolutionized; fewer men are 
 needed in its transactions; producers and consumers are 
 nearer to each other; the raw^ material is being manu- 
 factured at home, and machinery is doing the work of 
 hands to a far greater extent than ever before. All this 
 is telling against manual labor. The capacity to pro- 
 duce is now far ahead of the ability to consume. The 
 
211 
 
 consequences are dull trade, idle mills, idle men, rest- 
 lessness, violence. The question, What shall be done 
 with the thousands which this revolution has thrown out 
 of employment ? is one the seriousness of which cannot 
 be overestimated. It stands before us to-day in new po- 
 litical organizations, in communism, in socialism. Noth- 
 ing of this kind had been anticipated in a country where 
 there are no privileged classes, and land is so cheap and 
 homesteads are obtainable on the Government domain 
 without money and without price; but the fact cannot 
 be denied and ought not to be disregarded, that there 
 are immense numbers of men not only in our large cities 
 and manufacturing districts, but in the agricultural 
 States, out of employment. I speak not of those who, 
 too lazy to work and too cautious to rob or steal, regard 
 the accumulations of industry and economy as a wrong 
 to themselves, but of those who are willing to labor and 
 are unwillingly idle. There are, I believe, more men 
 vainly seeking for work in the United States (a large 
 portion of whom were attracted hither from other coun- 
 tries by the high wages which were paid in former years) 
 than in any country in Europe. Especial danger is to 
 be feared from this state of things, because these men 
 are voters and have no little influence in controlling 
 elections. Idleness, especially enforced idleness, brews 
 mischief and is dangerous to the State. Honest employ- 
 ment promotes virtue; idleness vice. Manual labor is 
 reputable, although in no country is it properly respected; 
 laboring men, as a class, are honest men; they may be, 
 they frequently are, led astra_v by those who deceive 
 them, in order that they may use them for purposes of 
 their own, but dishonest they are not, and dangerous 
 they will never become if they are fairly treated, fur- 
 nished with employment, and receive wages sufficient 
 for their own support and the support of their families. 
 There is little danger of communistic violence in the 
 United States. Communism, as taught by its fathers, is 
 opposed to violence. It originated in Europe, It was 
 the manifestation of dissatisfaction with dynastic insti- 
 tutions, with a social order which sustained one class at 
 the expense of another. It aimed at an impossibility — 
 q.t not only equality of rights, but community of propr 
 
212 
 
 erty. It took a light hold in the countries in which it 
 was first taught. There is no soil in which it can take 
 root in the United States. The rightful claims of labor 
 are a different thing altogether. They are neither com- 
 munistic nor socialistic. They are claims for employ- 
 ment, for the right to live, and these are claims which 
 demand the most careful consideration. Why don't 
 these idle people go to work? asks one who knows as 
 little about the condition of the laboring classes in the 
 United States as he does about the condition of the in- 
 habitants of the South Sea Islands. Why don't they go 
 West? asks another, who is as ignorant of the West as 
 he is of what is going on in the moon. It is work that 
 so many idle men — idle not through their own fault, but 
 idle by the substitution of machinery for hands — are beg- 
 ging for, that families are starving for. Steam and ma- 
 chinery are taking the place of hands to nearly the same 
 extent in the agricultural as in the manufacturing dis- 
 tricts. Doctor Gwyn, of California, cultivates his thirty- 
 six thousand acres in wheat almost entirely by ma- 
 chinery. The heading, thrashing, winnowing, bagging, 
 are all done with the use of less hands than were for- 
 merly required in securing the crop of a quarter section. 
 What Doctor Gwyn is doing in California is being done 
 on a smaller scale in all the agricultural States. Ma- 
 chinery cultivates land, as steam drives the locomotive, 
 the ship, or the wheels of a factory. It is not strange, 
 therefore, that the laboring man looks upon labor-sav- 
 ing machinery and implements as his enemies, and it 
 is by no means certain that they are not. Looking at 
 the labor question as humanitarians regard it, it is in- 
 deed questionable if labor-saving machinery is not work- 
 ing against the security of society and the welfare of the 
 race. Political economists do not take this view of it. 
 They care nothing for instrumentalities. They look 
 only to results, and to results in a particular direction — 
 the increase of the national wealth — as if the greatness 
 of a nation consisted in its wealth alone and not in the 
 character and condition of its people. If there is any 
 science in the world that needs to be baptized with the 
 spirit of the Gospel it is political economy. But, how- 
 ever we may philosophize upon thisyiew of the subject, 
 
218 
 
 the march of steam and of invention for the saving of labor 
 and time is onward, and will continue to be onward, no 
 matter what may be the effects on the laboring classes. I 
 know it is denied that machinery is the enemy of man- 
 ual labor. Has not, I may be asked, the introduction of 
 machinery, while it has enormously increased produc- 
 tion, increased also the demands for labor ? Has not 
 this been the case in England, the greatest manufactur- 
 ing country in the world ? When the spinning jenny and 
 other labor-saving machines were first introduced into 
 the manufacturing districts of England, was there not an 
 outcry against them by the spinners and other laborers 
 who supposed their means of living was in danger ? And 
 did they not resort to violence to prevent their use, as 
 the harvesters in some of the Western States are threat- 
 ening to do to prevent the use of agricultural machines ? 
 And was not the result of this introduction immensely 
 beneficial, not only to the mill owners and to the nation, 
 but to the laborers themselves? Were they not better 
 clothed and better fed than ever before ? Did not the 
 use of machinery in England increase the demand for 
 labor and the wages of the laborer? Has not this been 
 the case always and everywhere, and will it not continue 
 to be so ? 
 
 In considering this question we must be careful not 
 only in regard to our facts, but our inferences. When 
 labor-saving machinery was first set in motion in Great 
 Britain she was just starting as a manufacturing nation, 
 but so rapidly did she move in this direction that she 
 soon became the workshop of the world. For thirty 
 years she had a monoply in manufacturing. The raw 
 material from the ends of the earth were sent to her to 
 be made up and returned in the finished fabric. During 
 this period her gains were enormous, and the demands 
 for labor kept pace with the demands for the products 
 of her factories and shops. This is no longer the case. 
 She has now rivals in the United States, on the conti- 
 nent, in her colonies; and the condition of her laboring 
 classes would be deplorable were it not for the stream 
 of emigration constantly flowing out from her into other 
 lands, and the far-sightedness of her Government in 
 aiding the enterprise which pushes her trade and com- 
 
2l4 
 
 riierce into every port of the world which is open to hef 
 ships. 
 
 It is also true that up to a recent period machinery 
 increased rather than diminished the demand for manual 
 labor in the United States. It may be so again; but I 
 do not see what reason there is for expecting it. The 
 number of men who are out of employment may not be 
 increasing; but it is uncomfortably, dangerouslj^ large. 
 Congress has done, perhaps can do, nothing for them. 
 An increase of currency would not help them. Cur- 
 rency is already superabundant. Millions of greenbacks 
 are lying idle in the vaults of the banks for want of 
 borrowers. There is no branch of industry in the 
 United States languishing for want of money. Relief, 
 and this will come slowly, can only come from that 
 power of adjustment which exists in all communities, 
 and from an increase of our foreign trade, which will 
 increase the demands for our products. In the mean- 
 time capitalists must be content with small profits. Re- 
 duction in the expenses of manufactories and railroads 
 must not be made at the expense of their employes 
 only. Stockholders must not expect dividends on capi- 
 tal which exists only on the books of the companies. 
 Those who have money to spend must spend freely; 
 those who have not must be content to live frugally. 
 Laborers must be treated kindly and helped to employ- 
 ment when it can be found. There must be no sympa- 
 thy with the opinion, which is said to have been recently 
 advanced by a distinguished clergyman, that " we should 
 not trouble ourselves when we see men suffering from 
 hunger or in the depths of misery. That starvation is 
 a means of grace." Hunger may be a means of grace 
 by rendering a man willing to exchange this world for a 
 better one. A blessing was pronounced by the Saviour 
 upon those who hunger and thirst after righteousness; 
 but blessed are they who hunger for bread is not among 
 the beatitudes. It must be progressive Christianity which 
 finds a saving unction in starvation. The prescription 
 may be a good one for those who believe that the morti- 
 fication of the flesh is a necessary preparation for the 
 life to come; but it would hardly suit the case of those 
 so little spiritually-minded as laborers are supposed to 
 
51g 
 
 be, and who might like the prescription better if it came 
 from one who had himself tested its virtues. 
 
 I have spoken upon subjects which seemed to be 
 hardly appropriate to the day, because I was invited to 
 speak upon them and because they were uppermost in 
 my mind. I regret my inability to discuss them with 
 more satisfaction to myself and to you. They are not 
 new subjects; but they cannot be stale as long as great 
 interests depend upon their solution. I shall not have 
 spoken in vain if anything I have said will lead to a 
 more careful consideration of them. 
 
 Let it not be supposed that I take a desponding view 
 of the future, or that I am among those who have lost 
 faith in republican institutions. I do not and would not 
 underrate the difficulties we have to contend with nor 
 the dangers that surround us; but I see no reason for 
 despondency. We have made many mistakes; we may 
 make many more and greater ones; but the people of 
 the United States are too intelligent and patriotic to go 
 long astray upon subjects so interesting to them as 
 finance and labor. Experience, a hard but efficient 
 teacher, will put them right, if nothing else will do it. 
 There are some, I know, who favor a stronger Govern- 
 ment than was established by those whose wisdom and 
 patriotism we this day commemorate — some who do not 
 hesitate to say that there can be no safety where all men 
 are voters; but I have never heard the expression of 
 such an opinion from one who did his full dut}^ by tak- 
 ing an active part in politics. If the country is not well 
 governed, it is the fault of those who have the most at 
 stake; if politics is a " dirty business," it is because in- 
 telligence and property are not represented in primary 
 meetings and at the polls; if the machinery which gov- 
 erns is not in the right hands, it is because property 
 holders stand aloof and leave the management to others. 
 *'We live and move and have our being" in a political 
 atmosphere. We cannot escape from it if we would. 
 We are a self-governed, self-governing people. Every 
 man, to the extent of his influence and his vote, is re- 
 sponsible for the laws that are passed by the legislature 
 of his State or by Congress, and for the manner of their 
 administration. He cannot escape that responsibility 
 
216 
 
 t3y declining to participate in nominations or elections. 
 Professional politicians would be unknown in the United 
 States, as the}^ are unknown in England and in France, 
 if those who have the greatest interests to be protected 
 did not fail in the discharge of their political duties. I 
 have no patience with men who speak of our republican- 
 ism as being, in the language of the day, "played out," 
 while they have never lifted a finger to prevent the 
 evils of which they complain. The Constitution of the 
 United States was framed by men pre-eminently wise. 
 The Government based upon it is better adapted to the 
 wants of men and the advancement of a Christian civili- 
 zation than any that has ever been organized. If it fail 
 in the object aimed at by its founders, it will not ])e from 
 defects in itself. If we do our duty, as the}^ did theirs, 
 republicanism will not be a failure. 
 
 We have much to encourage us. Providence, by the 
 bountiful crops of the last 3"ear and the promise of still 
 more bountiful ones, already in part secured, of the pres- 
 ent season, has done much to counteract the effects of 
 our unfortunate financial legislation. There is a bright 
 as well as a dark side to the picture. We present this 
 day to the world the miracle of a nation heavily in- 
 debted to other nations, and yet with foreign exchange 
 in its favor; of a nation in a time of unparalleled busi- 
 ness depression steadil^^ reducing the burden of its debt. 
 We have much to be thankful for, and for nothing more 
 than the fact that, notwithstanding the efforts that are 
 being made in certain quarters — efforts as unwise in 
 polic}' as they are unpatriotic, to perpetuate antagonism 
 between the North and South — the union of the States 
 is secure. The late civil war was peculiar in its charac- 
 ter. It was a war between the civilization of barbarism, 
 if this be not a solecism, and the civilization of freedom; 
 between two antagonistic systems existing under the 
 same Government — a system which degraded labor and 
 a system which honored it; systems so widely different 
 as to lead to different constructions of the Constitution, 
 one section interpreting it as establishing a government 
 of the whole people, the other as establishing a copart- 
 nership of States; s^^stems involving questions which 
 it seemed impossible to settle b}^ discussion and which 
 
217 
 
 were at last put to rest upon the battle-field. The at- 
 tempted secession of the Southern States was an act of 
 stupendous folly, under the circumstances utterly un- 
 justifiable. This much, however, may be said in palli- 
 ation of it. The people of the South never acknowl- 
 edged that unqualified allegiance was due to the Federal 
 Government. They had been taught in their schools, 
 in their colleges, in their churches even, that primary 
 allegiance was due to their respective States. Hence, 
 they believed that secession was not treason. A traitor 
 lives only to be abhorred, audi submit that the appoint- 
 ment of Confederate generals to important Federal 
 offices, the reception given them by the people of the 
 North, irrespective of party; the honors paid in Con- 
 gress to the Vice-President of the Confederacy, which 
 are only illustrations of Northern sentiment, preclude 
 us from denouncing secessionists as traitors. On one 
 point, however, there must be no concession. The col- 
 ored people of the South are citizens of the United States 
 and entitled to all the rights of freemen. Whether their 
 absolute and immediate enfranchisement was wise or 
 not, whether it has so far resulted in their benefit or not, 
 is not the question. They are now voters, and in the 
 use of the ballot they must be as free and unrestrained 
 as are their former masters. My own opinion, however, 
 is that this is a matter which will take care of itself. 
 The true interests of the country demand that there shall 
 be no "solid South," and there will not be when efforts 
 to secure political ascendency by appeals to the animos- 
 ities created by the war prove, as they will soon prove 
 to be, abortive. The time is not far distant when the 
 South will be divided on the questions of the day, and 
 the colored vote will be as humbly solicited by candi- 
 dates for office as what is called the foreign vote is in 
 the North. 
 
 Pardon me for having spoken so long, and permit me 
 to congratulate you upon the fact that I am to be fol- 
 lowed by eloquent speakers, who will discourse to you 
 upon subjects which, if not more important than those 
 to which I have asked your attention, are certainly more 
 pleasing. 
 
LECTURES 
 
 DKI<TVRRED AT 
 
 HARVARD UNIVERSITY, MAY, 1879. 
 
LECTURES 
 
 DElvlVHRED AT 
 
 HARVARD UNIVERSITY, MAY, 1879. 
 
 First Lecture. 
 
 MONEY. 
 
 ''I do not know," said a Western clergyman to me in 
 1 84 1, "I do not know what would become of religion 
 and the churches were it not for hard times. Godliness 
 makes greater conquests and more converts in a year 
 of financial trouble than in twenty years of prosperity. 
 You must have noticed," said he, "that all our great 
 revivals have taken place when a sudden check has been 
 given to money-making, and adversity has come over 
 the land like a flood. Religion would die out in this 
 money-worshiping country of ours were it not for com- 
 mercial crises." The good clergyman was not far from 
 being right in his views of the effect of hard times upon 
 the religious sentiment, nor do such times fail to bring 
 with them some compensation by leading to a better un- 
 derstanding of moral, financial, and economic laws. 
 The ethics of social and official life, economical and 
 financial questions, are receiving from the masses 
 throughout the United States attention which they failed 
 to receive in more prosperous days. The moral atmos- 
 phere is clearing up. The majesty of law is being vin- 
 dicated in the punishment of the violators of trusts. 
 Wealth and position are becoming day by day less and 
 less potent as shields for crime and dishonesty, and 
 there are hopeful indications that the moral sentiment 
 of the nation wnll, ere long, reach so high a plane that 
 men who, while keeping within the letter of the law, 
 
222 
 
 and having a wholesome dread of its penalties, do not 
 hesitate to enrich themselves at the expense of those 
 whose interests it is their duty to protect, will be 
 shunned, if they cannot be punished, as criminals. The 
 observations of a long and varied life have shown me 
 that there are no men more pernicious in their influence, 
 and very few more dangerous to society, than those, 
 some of whom are found in ever}^ community, who 
 gauge their conduct by the statute book; who regard 
 nothing as being wrong which is not a clear violation of 
 the law; who make it a study to ascertain just how far 
 the}' can go in dishonest practices without being in dan- 
 ger of the penitentiary. We sometimes see, strange as 
 it appears, indications of a disposition to make a strict 
 construction of statutes a justification of disregard of 
 honorable obligations, in men holding high political 
 positions, and whose personal integrit}' is not ques- 
 tioned. We had an illustration of this in the treatment, 
 by prominent men of both of our great political parties, 
 of a question which affected the national honor, but 
 which has been practically settled, for the present at 
 least, by the resumption of specie payments. The 
 bonds of the United States issued during the late civil 
 war, when their value depended largely, if not mainly, 
 upon the result of the war, were issued and sold as 
 gold .bonds. As such they were spoken of in the de- 
 bates in Congress. They were so pronounced by the 
 officers of the Government; so advertised by the agents 
 through whom they were offered to the public, with the 
 knowledge and implied approval of Congress. Every- 
 body regarded them as being gold bonds. Without this 
 understanding it is very questionable that they could 
 have been sold. If there had been an intimation, when 
 the Loan Acts were under consideration, that the bonds 
 which were to be issued by their authority might be re- 
 deemed in five years in a currency the value of which 
 could not be foreseen, and which was, in fact, greatly 
 depreciated when they became redeemable, the Union 
 might have perished for the want of the necessary 
 means for the prosecution of the war. It is difficult to 
 conceive how any intelligent, upright man could doubt 
 the obligation of the Government to pay these botjds ii; 
 
223 
 
 gold, and yet, scarcely had the war been concluded and 
 the solvency of the Government become assured, when 
 men occupying high political and social positions be- 
 gan to agitate the question as to the currency in which 
 they might be redeemed, and to contend that payment 
 might be legally made in United States notes, inasmuch 
 as the statute only provided that the interest should be 
 paid in coin, but was silent as to the principal; while it 
 must have been clear to anyone who was conversant 
 with the history of the Legal-Tender Acts that this 
 silence was owing to the fact that provision was made 
 in them (which provision was subsequently and most 
 unfortunately repealed) for the conversion of these notes 
 into bonds, and that nobody then supposed that notes 
 issued under the warpower of the Government would be 
 continued in circulation after the war was ended. Hap- 
 pily an overwhelming majority of the people of the 
 United States were not unwise enough nor dishonorable 
 enough to look to the strict letter of the statute for the 
 measure of their obligations. The honor of the Govern- 
 ment was maintained, and by its maintenance the bur- 
 den of the national debt has been greatly lightened by 
 the reduction of interest, which otherwise would have 
 been impracticable. The student of the political his- 
 torv of the United States will find nothing in it so inde- 
 fensible as the doctrine advocated by men of large in- 
 fluence in giving direction to the public sentiment, that 
 a great nation might, without dishonor, violate its 
 pledges to its creditors, if by so doing the letter of the 
 law was not violated. The old adage, that "honesty is 
 the best policy," was never more clearly vindicated than 
 it has been by the manner in which the public interests 
 have been promoted by the maintenance, by the people, 
 of the honor of the Government, in their treatment of 
 its bonded debt. I have great confidence that other 
 financial questions, and economical questions also, will 
 be settled with equal wisdom and integrity after they 
 have been carefully and calmly considered. The pres- 
 ent is a favorable time for their consideration. A great 
 many false notions are to be corrected, a great many 
 heresies are to be exploded, before perfectly sound 
 ground will be reached; but it will be reached if the 
 
224 
 
 questions to be discussed are discussed fairly and freely, 
 and when it is reached some of the most serious ob- 
 structions to the progress of the country in the paths of 
 honor and prosperity will be removed. It is fortunate, 
 so far as financial questions are concerned, that there is 
 no sectionalism to be contended with. All parts of the 
 country have a deep, if not an equal, interest in their 
 settlement. We are now prepared to take our financial 
 reckoning under circumstances which are not likely to 
 mislead. We are neither exulting in prosperity nor are we 
 prostrated b}^ reverses. The experiences of the last five 
 years have sobered us. We are not as comfortable as 
 we would like to be, but we are not troubled as we have 
 been; the crisis is over; the clouds are passing away; 
 the movement, slow but sure, is now onward. Nothing 
 can prevent the United States from taking the lead of 
 the nations in all that constitutes true national greatness 
 but vital mistakes upon questions which lie at the basis 
 of national prosperity. One of these questions I pro- 
 pose to consider briefly in this lecture — money, its 
 character and offices — what money is, and what are its 
 legitimate uses. It is an old question, and I do not ex- 
 pect to say anything new upon it. It is, however, fun- 
 damental, and one in regard to which there is much di- 
 versity of opinion. In this lecture I shall speak of gold 
 and silver as jointly constituting money; in my next, of 
 the changes which are constantly taking place in their 
 comparative value. 
 
 It is unfortunate, I think, that the usual definition of 
 money has been so liberal. In a dictionary of the high- 
 est authority it is defined as "cash, or current token, or 
 representative of value, as bank-notes exchangeable for 
 coin, notes of hand, accepted bills on mercantile houses, 
 etc., etc." Such a liberal definition has led to much 
 confusion and misconception. The idea that all substi- 
 tutes for money, obligations which require money for 
 their fulfilment, mere evidence of debt, are money, has 
 given rise to many and serious errors in regard to an 
 article about the character of which there should be no 
 misunderstanding. In speaking of mone3% I shall hold 
 to what I consider the true definition, a definition strictly 
 adhered to by the franiers of pur Federal Constitution, 
 
225 
 
 according to which no obligations of an}^ kind can be 
 properly called money. They may, to a certain extent, 
 take the place of it, but they are not money; they are 
 merely evidences of debt in one form or another. Gold 
 and silver coins alone are money; they are money be- 
 cause by common consent of the nations they have been 
 so declared, and from time immemorial have been so 
 used, and because they possess in themselves intrinsic 
 value. They are something more than tools, as they 
 are sometimes called; something more even than a 
 measure of value; they are precious metals, costing 
 what they represent as money in the labor required to 
 obtain them. Coined money, therefore, depends for its 
 value not upon the authority which stamps it, but upon 
 the quantity of pure metal which it contains. Each 
 government exercises the right of coining its own 
 money, but its power in this respect is limited by the 
 law which governs commercial nations to deciding in what 
 form it shall be issued, and giving it a name. No gov- 
 ernment can give to its coins a real value which they 
 do not possess as metals. Attempts have frequently 
 been made by impecunious monarchs to do this, but 
 their success has not been such as to warrant further ex- 
 periments in this direction. Under the Constitution of 
 the United vStates Congress has the power to coin 
 money, but this power must be exercised in subordina- 
 tion to a law superior to the Constitution. If it should, 
 as it has the Constitutional authority to do, cause eagels 
 to be coined containing no more pure gold than is now 
 contained in half- eagles, and should make them by law 
 a legal tender for ten dollars, their real and commercial 
 value would still be but five dollars. By making them 
 a legal tender for ten dollars it would enable debtors in 
 the United vStates to take advantage of their creditors 
 on contracts existing at the time when the law became 
 operative, but not on subsequent ones. The imposition 
 could not be repeated, as all subsequent contracts would 
 be made to conform to the then existing law. There 
 would simply be a new standard, under which the new 
 eagle would have only one-half the purchasing power 
 of the old one. 
 
226 
 
 Congress has also the power, under the Constitution, 
 not only to coin money, but to regulate the value of 
 foreign coins. For many years after the present Gov- 
 ernment was formed certain foreign coins were received 
 in payment of duties and were a legal tender, the value 
 thereof being fixed by Congress, according to the gold 
 or silver which they contained, measured by the United 
 States standard. Such coins are no longer a legal tender, 
 nor receivable by the United States in payments; but 
 in fixing the cost price of articles purchased in foreign 
 countries, which are subject to duties, a value is put 
 upon them according to their mint value. Thus, for 
 instance, in estimating the cost of articles purchased in 
 Great Britain, the pound sterling is estimated at $4.86^?;^. 
 In determining the cost of articles purchased in France 
 the Napoleon, or twenty-franc piece, is estimated at 
 $3.86/0, and this valuation is put upon them because 
 they contain the amount of gold represented by these 
 figures. Foreign coins in the United States are, to a 
 certain extent, a commodity, but they differ materially 
 from other commodities; they have a mintage value and 
 they have also a commercial value as a medium of ex- 
 change. If the exchange is in favor of the countries 
 that issued them, or, in other words, if they have more 
 purchasing power in those countries or in other coun- 
 tries where purchases are being made than they have at 
 the mint, they are exported. If they are worthless, in- 
 cluding the cost of transmission, they go into the cru- 
 cible and are transformed into coins of the United States. 
 Congress can regulate the value of foreign coins in trans- 
 actions in which the Government is a party; beyond this 
 it is powerless. Their value was not diminished by the 
 change of law which prevented their being received in 
 payment of public dues. It would not be materially af- 
 fected if they could not be recoined in the United States. 
 They contain a certain quantity of gold, and they will 
 be worth in the market, no matter how they may be 
 treated by the Government, what the gold in them is 
 worth, less the cost and risk of transporting them to other 
 countries. The same rule holds good in regard to United 
 States coins. They are worth in other countries what 
 the metal in them is worth. If needed for purchases or 
 
227 
 
 payments in the United States, they may fetch slightly 
 more, but their value is substantially fixed by the amount 
 of gold or silver which they contain. A very small por- 
 tion of the coin which is sent from one nation to another 
 is returned unchanged in form to the nation which issued 
 it; nearly all goes to the mint and is recoined. So 
 true is it that coins are worth only what the metal in 
 them is worth, that gold coins and silver coins, when the 
 amount to be handled is considerable, are weighed in- 
 stead of being counted, partly for the saving of labor, 
 but mainly for the ascertainment of their exact value; 
 for, notwithstanding the fact that alloy is used in the 
 coinage of gold and silver in order that the coins, by 
 being hardened, may bear the usage to which they are 
 to be subjected, there is considerable abrasion while 
 they are in use, and they do not, for a great length of 
 time, retain their full weight. It is on this account that 
 nations so frequently recoin their own money, so that 
 none shall be in circulation after its value has been, even 
 in a very slight degree, affected by wear. The British 
 Government is very particular on this point. M}^ im- 
 pression is, that the weight of every sovereign that goes 
 into the Bank of England is tested b}^ a very interesting 
 piece of mechanism, which many of ni}- hearers may 
 have seen at work, which automatically weighs each piece 
 separately and dooms to the melting pot every one whose 
 weight and consequent value has been impaired by 
 abrasion. These simple facts, with which everyone 
 ought to be familiar, should put at rest all questions in 
 regard to the character of money. It is simply gold and 
 silver coin, the value of which depends, not upon the 
 act of the Government that coins it, but upon its intrin- 
 sic value, according to a universal standard, w^hich, ex- 
 cept for local and subsidiary' purposes, cannot be materi- 
 ally changed by any one nation, nor can it be changed 
 by all nations together without great confusion and mis- 
 chief. No substitute for these metals for coinage and a 
 measure of value has been found, and none is likel}' to 
 be discovered. As a measure of value, their utility 
 would not be affected by diminished production, although 
 th^ir purchasing power would be. The purchasing 
 power of gold was diminished by the enormous yield of 
 
228 
 
 Californian and Australian mines, but as this diminution 
 of the purchasing power was universal, no injury resulted 
 from it. Every dollar which is taken from the mines 
 adds its value to the capital of the world: some four 
 thousand millions of dollars have been added to this capi- 
 tal since g,)ld was discovered in California; and. although 
 these dollars have cost in labor all they are worth, the 
 world lias been greatly the gainer by this vast addition 
 to its permanent wealth. 
 
 Gold aid silver have a universal and inlestructible, 
 although not unchanging, value, and represent more than 
 anything else does the accumulated and active capital 
 of the world. They are not among the commodities 
 that perish in the using; they are wealth, in the largest 
 sense of the word. In discussing officially the currency 
 question in 1866, I made the following remarks, which 
 I trust I may be pardoned for repeating: 
 
 An irredeemable, and consequently depreciated, currency, 
 drives out of circulation the currency which is superior to it- 
 helf. By being made a legal tender, while its real value is not 
 thereby enhanced, it becomes a false and demoralizing stand- 
 ard, under the influence of which prices advance in a ratio dis- 
 proportionate even to its actual depreciation. Very different 
 from this is that gradual and general advance of prices which 
 is the effect of the increase of the precious metals. The gold 
 and silver obtained in gold and silver producing districts, 
 although they at first advance the prices within those districts, 
 following tlie course of trade and in obedience to its laws, soon 
 find theiV wav into other countries, and become a part of the 
 common stock of the nations, which increasing in amount by 
 the regular products of the mines and in activity by the grow- 
 ing demands of c<3nimerce, advances the prices of labor and 
 commodities througliout the civilized world. Thus, the pro- 
 ducts of the Anit^ican, Avistralian, and Russian mines tend first 
 to advance prices in tht-ir respective localities, but the opera- 
 tion of trade soon distributes them, and enterprise evervwhere 
 feels and responds to the increase of the universal measure of 
 value. All this is healthful because slow, permanent and uni- 
 versal. 
 
 In considering the fact that prices have not increased 
 correspondingly with the increase of gold and silver 
 within the last thirty years, some very intelligent men 
 have come to the conclusion that these metals are onl}^ 
 theoreticalh^ a measure of value. If they are what is 
 claimed for them, how has it happened, it is asked, that 
 
220 
 
 while their amount in circulation has been nearly 
 doubled within the period named, there has been no 
 corresponding advance in prices? Elaborate tables have 
 been prepared in London, which show that the average 
 prices of twenty-two leading articles in Great Britain 
 were no higher in 1878 than in 1851; that they did ad- 
 vance, by temporary influences, chiefly, I think, by the 
 large exportation of gold from the United States be- 
 tween 1850 and 1864, but gradually fell off again until 
 1878, when they had receded to the starting point. 
 Now, as some three or four thousand millions of dollars 
 had been added to the world's stock of gold and silver, 
 and there had been no permanent advance in prices, 
 with what propriety, it is asked, can thej^ be regarded a 
 measure of value? It is more triumphantly asked if 
 prices are measured by money, and the United States 
 notes and bank-notes have the same influence (as they 
 undoubtedly have) upon local prices as gold and silver, 
 how is the fact to be explained that in the United States 
 property of nearly all kinds is as low, if it is not 
 lower, to-day than it was in i860, when the volume 
 of currency was two-thirds less? Apolitical economist 
 (which I do not claim to be) before answering the ques- 
 tion would say that value and prices are not the same 
 things; that values are the relations which commodities 
 bear to each other, while prices are what the commodi- 
 ties are worth according to an existing standard = While, 
 however, it may be advisable in scientific discussions to 
 draw a line of distinction between them; while it is true 
 that commodities have convertible relations of value, 
 without reference to any standard, and that prices rise 
 and fall, while the standard remains unchanged, values 
 and prices in all business transactions are regarded as 
 having practically the same meaning. What, then, is 
 the explanation of the fact that prices have not perma- 
 nently risen with the increase of the measure of value? 
 Many minor and temporary causes have been at work to 
 prevent this, but two have been especially influential. 
 Within the last thirty years the commerce of the world 
 has been trebled. By this increase of commerce there 
 has been an increased demand for the precious metals, 
 and a diffusion of them among the nations, v/liich has 
 
230 
 
 tended to preserve and equalize to a great degree their 
 purchasing power. At the same time the prices of most 
 articles in use have been prevented from permanent ad- 
 vancement by an increase of production. These two 
 causes, operating in different ways — the diffusion of 
 gold throughout the world by the demands of rapidly 
 growing international trade, and the enormous increase 
 of production resulting from labor-saving machinery — 
 sufficiently explain what has seemed to many to be inex- 
 plicable. Commerce, by diffusing the precious metals, 
 has prevented large reductions in their purchasing 
 power; machinery, by cheapening the cost of manufac- 
 tures, and, to some extent, of agricultural products, has 
 prevented an advance of prices, and thus, interrupted 
 only by temporary causes, a general equilibrium has 
 been maintained. While, however, the general diffu- 
 sion of gold and silver tends to give a steadiness to 
 their measuring power, it has not prevented a diminu- 
 tion of it. Gold and silver have undoubtedly been 
 steadily decreasing in power for years, and this decrease 
 may goon, as heretofore, for years to come; but as this de- 
 crease will be universal, their quality as a measure of 
 value will not be affected. A paper currency, on the 
 other hand, having no general diffusibility, has a ten- 
 dency to advance local prices to a much greater degree 
 than specie. Prices in the United States were greatly 
 advanced by a paper currency during the war and after 
 it, and although there is now more specie and paper 
 money in the Treasury, in the banks, and in circulation 
 than ever before, almost everything the value of which 
 is measured by money is down to anti-war prices. Here 
 we have an instance of a great decline of prices without 
 any diminution of currency, of an increase of the pur- 
 chasing power of money while there is a superabun- 
 dance of it, and the rates of interest are lower than 
 ever before. There is no mystery in this. During the 
 war, and especially for eight years after its termination, 
 prices were speculative. The crisis of 1873 revealed 
 their fictitious character — the real financial condition of 
 the country. The disasters which followed this crisis 
 were the natural consequences of unwise investments 
 and wanton extravagance; the subsequent and long- 
 
231 
 
 continued depression, the inevitable result of the disas- 
 ters. The plentifulness of currency did not prevent a 
 decline in prices. It was powerless against the causes 
 which were working in that direction. There has never 
 been a time since 1873 when an increase of paper money 
 would not have aggravated instead of lessening the evils 
 from which the countr}^ was suifering. Nothing, there- 
 fore, can be more unwise than the effort which is now 
 being made to advance prices, revive industry, and re- 
 store prosperity by an increase of paper money. 
 
 Prices did advance as a consequence of large additions 
 to the circulating medium between 1865 and 1873. They 
 declined rapidly after the crisis. The}^ are not advanc- 
 ing now because supply is equal to demand on present 
 ratios, because business is not speculative, because re- 
 action has not reacted, and because the policy of the 
 Government in regard to the finances and taxation is 
 not such as to inspire confidence. The condition of the 
 country is abnormal, and the fact that the prices of 
 nearl}^ all commodities and of real estate are low, while 
 currency is abundant, does not in any manner affect the 
 general principle that money is a measure of value. 
 
 Gold and silver, in addition to their use as a circulat- 
 ing medium and measure of value, have very great im- 
 portance in another respect; they are the regulators of 
 trade between nations. They are in some respects to 
 trade what the governor is to the steam engine, show- 
 ing to the engineer the amount of pressure there is upon 
 the boiler and when that pressure is becoming danger- 
 ous. Trade is barter, and gold and silver are needed to 
 regulate it; mainly carried on between nations b}^ an 
 exchange of their productions, the movement of the 
 precious metals, unless prevented by temporary or arti- 
 ficial causes, indicates unerringl}^ how that trade is re- 
 sulting and on which side is the debit or the credit 
 balance. 
 
 The amount of gold and silver in use by commercial 
 nations, as currency or as bullion, is insignificant in com- 
 parison with the amount of their foreign exchanges, and 
 no nation can afford to carry on a trade wdiich leaves a 
 continuous balance against it. It is true that the United 
 States do continue to trade with India, and China, and 
 
232 
 
 Brazil, and pay for their purchases chiefly in the pre- 
 cious metals or in exchange on London. This, how- 
 ever, is exceptional, and trade with these nations can 
 be maintained because the amount needed to cover pur- 
 chases is furnished by the sale of our agricultural pro- 
 ductions and our manufactures in Europe. It is not 
 necessar}^ that our trade with any particular nation 
 should be in our favor or not against us, but it is neces- 
 sary^ that the balance of our trade with foreign nations 
 (to be settled by shipments of gold and silver) should 
 not in the aggregate be unfavorable. I shall speak more 
 directly and fully on this point when I come to speak of 
 foreign exchange. 
 
 International trade being an exchange of national pro- 
 ducts, something is needed to indicate, before it leads 
 to embarrassment, how this trade is resulting; gold and 
 silver answer this purpose because the}' are the only 
 articles which have a substantial uniformity of value 
 and are universally desired. The flow of water to a 
 level is not more direct and uniform than is the flow of 
 these metals from the debtor to the creditor nation when 
 there are, as has been said, no temporary or artificial 
 impediments to prevent it. In the absence of such im- 
 pediments, large balances do not exist, and small bal- 
 ances are settled without embarrassment to the debtor 
 nation. Whatever embarrassment arises in international 
 trade is the result of loans or of a vicious system of credits 
 which postpone settlements until they become difficult, 
 and frequentl}' render payment impossible. 
 
 I might here be asked how it happens, if the move- 
 ment of the precious metal is indicative of the course of 
 trade and the current is from debtor to creditor nations, 
 that Great Britain, the great creditor nation of the 
 world, is frequently so large a loser of gold as to create 
 uneasiness and sometimes panics in London. The 
 explanation is very simple. Great Britain is not only a 
 capitalist, but a money lender. Her gains for a long 
 period, especially between 1830 and 1873, were enor- 
 mous. All nations paid tribute to her as the great 
 workshop and common carrier of the world, and nearly 
 all became borrowers of the capital to the creation of 
 which they had contributed. For many years her gains 
 
233 
 
 were estimated at from $750,000,000 to 31,000,000,000 
 per aniiuin. In consequence of her great wealth, money 
 has been more abundant, cheaper, and more easily ob- 
 tained in England than elsewhere, and her loans and 
 discounts have been so liberal as frequently to cause a 
 large outflow of gold. This outflow has, however, been 
 checked and the current turned in her favor b\^ the ac- 
 tion of the Bank of England, which, by raising the rate 
 of interest, has rendered London less attractive to bor- 
 rowers, and by the repayment of temporar}- loans and 
 the returns of a very large and profitable foreign trade. 
 The time required to effect this change has depended 
 upon the extent to which loans had been made, but it 
 has sooner or later been effected, and usuall}- without 
 much financial disturbance. For the payment of the 
 indemnity exacted by her conqueror, France was a large 
 borrower in London on bills of exchange, which were 
 passed over to the German Government, the proceeds 
 of which as they matured — Germany being at that time 
 preparing to adopt the single standard — were drawn in 
 gold, and the drain became so heavy as to compel the 
 bank to advance the rate of interest, step by step, from 
 three per cent, to nine, while the current market rate 
 was even higher. 
 
 The debt relations between the United States and 
 Europe during the last three years have been peculiar. 
 By reason of our diminished importations of foreign 
 goods and our large exports of agricultural products the 
 net balance in our favor, after deducting the cost of 
 freights, the payment of interest on our foreign debt and 
 the expenditures of Americans abroad, has not been less 
 during the period named than $300,000,000. This large 
 balance, according to the ordinary law^s of trade, would 
 have caused a flow of gold from London, the interna- 
 tional clearing house, which would not only have seri- 
 ously embarrassed the Bank of England, but which 
 would have very considerably affected the exchanges 
 of the worl'J, had it not been for the fact that Great 
 Britain and Germany, her debtor, were large holders of 
 United States securities, by the return of which the ex- 
 changes have equalized. This, however, does not in- 
 validate the rule that specie is the regulator of interna- 
 
234 
 
 tional trade. It was fortunate for both nations that 
 Great Britain was the holder or controller of our Gov- 
 ernment bonds and other securities for which there was 
 an active demand in the United States. If this had not 
 been the case Great Britain and the European nations 
 indebted to her would have been compelled either to 
 diminish their purchases of American productions, which 
 would have been injurious to the United States, or to 
 part with large amounts of gold, which would have been 
 embarrassing to them. The liquidation of the balance 
 in our favor was natural and easy; we have been paid 
 for our productions, to a considerable extent, in our own 
 obligations, by which means our foreign indebtedness 
 has been so greatly reduced that it cannot hereafter be 
 troublesome. Our condition is on the whole better than 
 it would have been if gold had come to us instead of 
 our securities, which in foreign hands would be a con- 
 stant drain upon the country in payment of interest and 
 give cause for apprehension that they might be returned 
 when the country was not in a condition to receive them. 
 I may here remark that there is scarcely a surer indica- 
 tion of the poverty or wealth of a nation than the situa- 
 tion of its public debt. Most nations, at some period of 
 their history, are under the necessity of borrowing of 
 other nations, and the bonds which they issue remain 
 in foreign hands until their people are able to bring them 
 home. France, as I have stated, borrowed largely of 
 the capitalists of Great Britain, at the close of the Ger- 
 man war, for the payment of the indemnity; but in the 
 course of two or three years her obligations were pur- 
 chased from foreign hands by the French people, and 
 to-day the national debt of France, large as it is, is a 
 home debt. It has not been extinguished, or even di- 
 minished, by the transfer, but by being held by French- 
 men it is no longer a drain upon her resources. The 
 Government of the United States has made no foreign 
 loan, but during our late civil war, and for some time 
 after its close, large purchases of our bonds were made 
 by foreigners. Three years ago not less, probably, than 
 $500,000,000 of them were held on the other side of the 
 Atlantic; now the amount held by foreigners does not 
 exceed *^2oo, 000,000. Three hundred million dollars 
 
235 
 
 of United States bonds, which three 3'ears ago were 
 the property of Europe, are now owned by the people of 
 the United States, as the French "'rentes" are owned 
 by the people of France. Nearly all nations are in debt, 
 rich nations to their own people, poor ones to foreigners. 
 The debt of the United States has become substantially 
 a home debt; and, what is better, it has been largely 
 reduced. One of the brightest pages of our history is 
 that which shows how the reduction of our great war 
 debt was commenced in less than a year after the war 
 was terminated; how its reduction was continued during 
 a period of great business depression and disaster, and is 
 now $1,000,000,000 less than it was in September, 1865. 
 Notwithstanding the mistakes that have been made, 
 there is no nation which has so creditable a record of 
 the management of its debt. 
 
 Of gold and silver as currency merely it is not neces- 
 sary for me to speak. Their usefulness in this respect 
 is well understood; on this point opinions agree; of their 
 necessity as a basis of bank-note circulation I shall speak 
 in another lecture. As a medium of exchange they are 
 of great utility, but as they share this utilit}' with bank- 
 notes, bills of exchange, and other representatives of 
 value, in fact, with other commodities, I do not dwell 
 upon them. I have attempted to show merely in this 
 lecture — 
 
 Firstly. That nothing but coinage of gold and silver 
 can properly be called money. 
 
 Secondly. That the value of coins depends not upon 
 the authority of the Government that stamps them and 
 gives them a name, but upon the quantit}^ of pure metal 
 which they contain. Thus, the Government of the 
 United States establishes the quantity of gold and silver 
 wdiich shall be contained in a gold and silver dollar. 
 The Government of Great Britain, the French Govern- 
 ment, in fact all governments, adopt the same rule in 
 regulating their coinage; beyond this they cannot go. 
 
 Thirdly. That gold and silver, whether coin or bul- 
 lion, are a measure of value, because the}^ possess value 
 in themselves. There can be no absolute or unchang- 
 ing measure, but gold and silver come nearer to it than 
 an3'thing else, because the supply is limited, and has 
 
^36 
 
 never been found, and probably never will be found, to 
 exceed the healthy demand for them for money and the 
 arts. Although their intrinsic and commercial value, 
 or their purchasing power, may be increased or dimin- 
 ished by such causes as have been named, yet, as their 
 value as metals is substantially uniform throughout the 
 world, the increase or decrease of their purchasing 
 power does not affect them as a measure of value. Uni- 
 formity and universality of value is what is needed in a 
 standard, and this they possess in an eminent degree. 
 
 Fourthly. That they are of great importance in indi- 
 cating the course of international trade, and are an ab- 
 solute necessity in the settlement of national balances. 
 
 When these truths are understood — and they ought 
 to be understood by everybody — the popular delusion 
 that a Government can make money by promising to 
 pay it, and the monstrous absurdity involved in what is 
 called fiat money and a non-exportable currency will 
 have no advocates. 
 
 There is, as I have said, a higher law in finance as 
 well as in morals, opposition to which is powerless; the 
 force of moral law is exhibited as true civilization is ex- 
 tended over the globe; it was especially manifested in 
 the United States in the evils of slavery and the eman- 
 cipation of slaves. Financial law was violated by the 
 Legal-Tender Acts, from the effects of which the coun- 
 try has suffered severely for years, and will continue to 
 suffer until they are repealed or declared to be invalid. 
 It is contended that money is man's device, and that 
 what man devises man can change or discontinue; but 
 the metals of which it consists are not of man's crea- 
 tion. They are limited in production; they are not sub- 
 ject to corrosion; they can be changed from articles of 
 domestic use into money, and from money to such arti- 
 cles again, without diminution of substance or value. A 
 pound of gold or silver, no matter how small the parti- 
 cles of which it is composed, is worth as much as it 
 would be if it were a solid mass; not so with the pre- 
 cious stones, which depend for their value upon their 
 size.^ The Koh-i-noor of the British crown, of almost 
 inestimable value in its present form, would be compar- 
 atively worthless if broken into quarters or even into 
 
237 
 
 halves. Money is man's device, but there is neces- 
 sit\' for it in its present form, and this necessity will 
 continue as long as society exists. Many attempts have 
 been tried to make it out of something else than gold 
 and silver, but all such attempts have been failures, and 
 generally disastrous failures. 
 
 I have thus spoken of gold and silver as possessing in 
 themselves a quality which best fitted them for a uni- 
 versal standard, without which foreign trade would be 
 greatly restricted and domestic trade would be unreli- 
 able. I repeat what I have said, that they alone are 
 money. If this limited definition had Uq^u adhered to, 
 I am quite sure that most of the vagaries and delusions 
 which have been soprevalent, which have troubled, and 
 which still trouble, many of our countrx men. and which 
 it is now so difficult to explode, would never have ex- 
 isted. By the more general definition the masses have 
 been easily persuaded that money could be made by the 
 printing press; that whatever the Government de- 
 clares to be money and receives as such is money. It 
 is in part owing to this that the United States notes, 
 greenbacks, as they are called, have been so deceptive 
 and still are so dangerous. I do not say that the legal- 
 tender quality which was given to them was not neces- 
 sary for the accomplishment of the object for which 
 they were issued, although this is a point upon which 
 doubt may be reasonably entertained, but there can be 
 no question that the law which created, by these notes, 
 a depreciated and variable standard of valiie, was pro- 
 ductive of great mischief and that it will continue tobe 
 mischievous as long as it is in force. It was a violation 
 of a financial and commercial law which is as certain as 
 gravitation, the penalties for the violation of which 
 could not and cannot be escaped. 
 
 Fortunately there is something attractive about gold 
 and silver in their independent and intrinsic value. Cir- 
 culating notes may be more convenient, but they lack 
 the qualities which make gold and silver precious. 
 There is and always must be some uncertainty about 
 them to lessen their attractiveness. If notes are issued 
 by a Government, their value depends not only upon 
 the solvency of the Government, but upon its honor; 
 
238 
 
 issued by a bank, their value rests upon the ability of 
 the bank to redeem them, in the convertible value of 
 the securities pledged for their redemption. 
 
 It is only by the maintenance of this distinction, that 
 the subject of a mixed currency can be properly dis- 
 cussed. Men soon forget their troubles, and it is for- 
 tunate that it is so, but the causes of them should never 
 be forgotten. It is not pleasant for us to think of the 
 disasters which came upon the country from 1873 to 1878, 
 but we should remember that these disasters, if not al- 
 together the result of a new and vicious standard of value 
 established by the Legal-Tender Acts, were greatly in- 
 creased and intensified by it. The legal-tender notes 
 were popular even when they were greatly depreciated, 
 because they advanced prices and gave to the country 
 an appearance of prosperity which was as seductive as 
 it was unreal. They are popular now, because they are 
 redeemable, but their issue was a violation of funda- 
 mental law, and this violation is none the less existent, 
 because they are now convertible into gold. I shall 
 speak more fully upon these notes when I come to speak 
 about the representatives of money. I would here 
 merely note, in conclusion, an interesting fact, which il- 
 lustrates the relations which commercial nations have to 
 each other, and shows how legislation, which seems to 
 be local, becomes extensive in its influences. The very 
 great advance of prices in the United States caused by 
 thelarge issue of Government notes and bank-notes was 
 followed by an advance of prices in the commercial 
 countries of Europe, produced not altogether by the 
 necessary demand in the United States for most articles 
 of consumption during the war, and the unnecessary de- 
 mand for many articles of foreign production after the 
 war was over, but by the exportation of the products of 
 our gold and silver mines, for which there was no use 
 at home except for the payment of duties and the inter- 
 est on the public debt. 
 
 Not less than $300,000,000 of gold and silver went to 
 Europe, chiefly to London, between 1862 and 1877, 
 which would not have gone there if the specie standard 
 had alone existed in the United States. Thus the 
 amount of the precious metals was increased in Europe 
 
239 
 
 by our disuse of them, and as their purchasing power 
 is increased by their scarcity and diminished by their 
 abundance, the United States notes were a disturbing 
 element abroad as well as at home. 
 
 Second Lecture. 
 
 BI-METAELIC MONEY. 
 
 Hitherto I have spoken of coined gold and silver as 
 constituting what might be called a joint standard or 
 measure of value. It w^ill be seen, however, as I pro- 
 ceed, that it is impossible, without the co-operation of 
 foreign nations, for the United States to give to them 
 for any considerable period a proportionate value which 
 would enable them to w^ork harmoniously together. All 
 efforts to accomplish this have been ineffectual. They 
 have had a constant tendency to push each other out of 
 circulation. Circumstances have been constantly oc- 
 curring to make sometimes the one and sometimes the 
 other more valuable abroad than at home, and to cause 
 the exportation of that which at the time possessed the 
 greater commercial value. This variation in the com- 
 parative value of the two metals has, in times past, 
 been mainly caused by the difference in the comparative 
 production of the gold and silver mines. Silver as com- 
 pared with gold w^as cheapened by the large yield of the 
 silver mines of Mexico and South America; gold was 
 cheapened as compared with silver by the enormous 
 production of the gold mines of California and Australia. 
 The present depreciation of silver is attributable partly 
 to increased production, but mainly to a combination of 
 causes to which I shall allude farther on. 
 
 Let us look for a few moments at some of the efforts 
 made by the Government of the United States to give 
 to these metals a comparative equality of value. 
 
 The first coinage act, passed by Congress in 1792, 
 fixed the ratio which silver should bear to gold at fif- 
 teen of the former to one of the latter. In other words, 
 fifteen ounces of pure silver were made equal to an ounce 
 of pure gold, the eagle to contain 247)2 grains of pure 
 
240 
 
 and 270 grains of standard gold; the silver dollar to be 
 of the same value as the Spanish dollar then in circula- 
 tion, and to contain sji^4 grains of pure and 416 grains 
 of standard silver, the standard being the weight of the 
 coin after it had been alloyed. 
 
 The ratio of fifteen to one corresponded at the time with 
 the relative value of the two metals in those countries 
 in which both were in use. It was soon discovered, 
 however, that this ratio was not an equal one, that an 
 ounce of gold was worth more, would purchase more, 
 in those countries with which the United States had 
 commercial intercourse, than fifteen ounces of silver. 
 Hence, according to the invariable law, by the opera- 
 tion of which the inferior currency forces the superior 
 out of circulation, gold was exported and silver remained 
 at home. Under this law there was a steady outflow of 
 gold, until it was interrupted by the act of 1834, which 
 diminished the weight of eagles from 247 ^^ grains pure 
 and 270 grains standard to 232 grains pure and 258 
 standard. 
 
 This change proved to be too radical; silver then be- 
 came comparatively more valuable than gold and an 
 article of export, as gold had been under the act of 
 1792. Having a greater purchasing power in other 
 countries than at home, silver was exported until it be- 
 came so scarce that very little was left for change. B} 
 the act of 1837 the silver dollar was reduced in standard 
 weight from 416 grains to 41252. This reduction in 
 the weight checked, but did not stop, the exportation of 
 silver dollars which continued until 1853, when the 
 coinage of dollars was discontinued, and a decided step 
 taken towards a single standard. By the act of Febru- 
 ary 21, 1853, while the dollar was not demonetized or 
 reduced in weight, half dollars were reduced from 206/4 
 grains to 192, the smaller coins in the same proportion, 
 and their legal tender quality was limited to five dol- 
 lars The silver dollar, the Dollar of the Fathers, as it 
 is called, thus became obsolete; gold became practi- 
 cally the single standard, and silver a subsidiary cur- 
 rency. Previous to the passage of this act the Govern- 
 ment had not been the purchaser of bullion. The busi- 
 ness of the mint had been to receive such bullion or 
 
241 
 
 foreign coin, whether gold or silver, as might be brought 
 to it, and to convert the same into coin of the United 
 States. After the passage of this act, and in conformity 
 with its provisions, the Government purchased all the 
 silver used for coinage, limiting the amount to the re- 
 quirements of the domestic trade; and as there was no 
 demand for this depreciated coin for exportation, it con- 
 tinued to perform the office of a subsidiary currency un- 
 til it was driven out of circulation by the fractional paper 
 currency of the Government. 
 
 By the act of February 12, 1873, the legal tender 
 character of all silver coins was limited to ^5, and the 
 silver dollar, like the fractions thereof, was practically 
 demonetized, so that, had it not been for the United 
 States notes, which were a legal tender for all debts, 
 public or private, except for the payment of duties on 
 imports and the interest on the public debt, there would 
 have been in the United States a single standard only, 
 and that the gold standard. 
 
 By the act of February 28, 1878, silver dollars, the 
 coinage of wdiich had been discontinued after the pass- 
 age of the act of 1853, and which had been deprived of 
 their legal tender quality for any sum over $5 by the act 
 of February 12, 1873, were again made legal tender at 
 their nominal value (their real value at 412^2 grains be- 
 ing ten per cent, less than their nominal value) for all 
 debts, public or private, except ^/here there was a con- 
 tract for the payment of gold. The same act made it 
 the duty of the Secretary of the Treasury to purchase 
 silver at the market price, not less than tw^o million dol- 
 lars' worth and not more than four million dollars' worth 
 per month, and to cause the same to be coined monthly, 
 as fast as purchased, into dollars. Up to the passage of 
 this act it had been the policy of Congress in their efforts 
 to maintain a double standard to make the ratio betw^een 
 gold and silver coins as nearly equal as possible, accord- 
 ing to the commercial value of the two metals. This 
 policy was then reversed and a dollar, worth commer- 
 cially but ninety cents, was made, so far as the law could 
 make it so, the equivalent of a gold dollar. 
 
 Let me recapitulate. The first coinage act, as has 
 been stated, made the ratio of silver to gold as fifteen to 
 
242 
 
 one, that being the ratio in Europe. We have seen that 
 this did not prove to be an equalizing ratio; an ounce of 
 gold proved to be worth more than fifteen ounces of 
 silver in Europe, and the gold coins went where they 
 were more valuable than at home. 
 
 In 1834, to prevent this outflow of gold and to equalize 
 the comparative value of the two coins, the gold standard 
 was degraded between six and seven per cent., the stand- 
 ard weight of the eagle being reduced from 270 grains 
 to 258, no change being made in silver. This reduction 
 in the value of the eagle increased comparatively the 
 value of silver; gold became the inferior currency, and 
 staid at home; silver the superior currency, and went 
 abroad. In 1837 the silver standard was again changed, 
 and the weight of a silver dollar was reduced from 416 
 grains to 41 2)2 • but no change was made in gold. In all 
 the coinage acts up to 1S53 the aim of Congress was to 
 establish a standard for both metals similar to the Eu- 
 ropean standard; to make the relative legal value of 
 gold and silver coins correspond with the commercial 
 value of the metals out of which they were coined. 
 As this aim of Congress had not been accomplished, 
 silver coin was practically demonetized by the act of 
 February 21, 1853, which made it a subsidiary currency 
 by the discontinuance of the coinage of dollars and the 
 degradation of halves and the smaller coins. The act 
 of 1873, of which so much complaint has been made, 
 as an act by which the silver dollar was demonetized, 
 was in fact but the confirmation of the act of 1S53, 
 which put a stop to the coinage of dollars and limited 
 the legal tender quality of half dollars and the fractions 
 thereof to $5. From 1853 to 1873 silver dollars had 
 ceased to be coined; those previously coined continued 
 to be a legal tender, but there were so few of them in 
 existence that the passage of the act putting them on a 
 level with the smaller coins was a matter of no interest 
 to the public. If any wrong was done to silver, it was 
 done by the act of 1853. In the eftort to maintain a 
 double standard previous to the act of 1878, Congress 
 had been careful, as has been stated, to make gold and 
 silver coins correspond in their legal value with their 
 commercial value. By this act a wide departure was 
 
243 
 
 made in the established policy of the Government. The 
 fact that silver was declining in market value, that at 
 the very time when the bill was under consideration, the 
 silver to be contained in the dollar, which was to be re- 
 stored to its former rank, could be purchased for ninety 
 cents, was utterly ignored, and we have to-day, as silver 
 has continued to decline, a silver dollar worth as bullion 
 84.76 cents, but yet possessing in the United States the 
 legal value of the gold dollar. The bill which put no 
 limitation, except the monthly coinage, upon the amount 
 that might be coined, and made the ratio between silver 
 and gold sixteen to one instead of 15^3, which was the 
 ratio in France and other bi-metallic countries, was hast- 
 ily passed under the influence of political pressure. Its 
 passage over the veto of the President, without that 
 consideration which courtesy requires to be given to his 
 messages, was one of the strangest occurrences in the 
 history of Federal legislation. So far the act has done 
 little harm. The condition of the foreign exchanges, 
 the discretion lodged in the hands of the Secretary, 
 the fact that the Government coins only its own silver, 
 have prevented the mischief which was apprehended, 
 and may prevent serious mischief until the act is modi- 
 fied by such a limitation of the coinage as will, with 
 the retirement of the small notes, raise silver to a parity 
 with gold. 
 
 There ought not to be any doubt that this law will be 
 amended before silver drives gold out of circulation, and 
 causes its exportation. The country can neither afford 
 to lose its gold nor to have its metallic standard of value 
 degraded. The careful consideration and definite set- 
 tlement of this great question cannot be long deferred 
 with safety. There should be no uncertainty as to what 
 the standard is to be, a single or double standard; a sin- 
 gle standard of gold or of silver, or a double standard 
 of gold and silver, with equal proportional value, as far 
 as their value can be equali:^ed. This is one of the 
 important questions now before the country. It is a 
 question which troubles other nations as well as our owm. 
 tFpon its wise settlement great interests depend. 
 
 I have already spoken of the changes in the compara- 
 tive legal value of gold and silver since the first coinage 
 
244 
 
 act was passed, in 1792. Let us look at the value of sil- 
 ver as compared with that of gold, taking the price of 
 silver in London, and estimating the weight of a dollar 
 at 412^^ grains, and going back no farther than 1857. 
 Silver at the price of 581^3"';, pence per ounce makes the 
 silver dollar of 412J.2 grains par with gold. 
 
 Average price of sii^ver in i^ondon. 
 
 Year. 
 
 p„_ Making 
 
 Year. 
 
 p_ Making 
 
 1857 
 
 Pence. 
 
 6lf% 
 
 62t^h 
 61H 
 
 mh 
 
 617. 
 
 Cents. 
 104.69 
 103.95 
 105.^2 
 104..58 
 103.10 
 104.16 
 104.06 
 104 06 
 10:3.52 
 103.63 
 103.67 i 
 
 Pence. Cmfs. 
 1868 fiOi 1(1' r.7 
 
 \g^g 
 
 18H9 
 
 WVs 102.47 
 ()()r"g i 102 67 
 60.A 102.59 
 60?B 102 25 
 m\ 100.46 
 58335 98.86 
 56^ 96.43 
 52? 89.23 
 541i| 92.93 
 
 1859 
 
 2860 
 
 1870 
 
 : 1871 
 
 1 1872 
 
 1861 
 
 1873 
 
 18(>3 
 
 
 1874 
 
 1864 
 
 1865 
 
 1866 
 
 1 1875 
 
 1 I87(j 
 
 1877 
 
 1867 
 
 i 
 
 
 
 In 1078 silver still further declined, but I am not pre- 
 pared to give the exact average price. 
 
 It is thus seen that from 1857 to 1873 ^^^^ silver dollar 
 of 41 2 j^^ grains was worth more than the gold dollar; 
 that for six years it exceeded it in value by over four 
 per cent., and that from 1857 it was at no time worth 
 less until 1874. The decline then became rapid, the 
 fall being from 100.46, in 1873, to 89.22, in 1876. In 
 1877 it advanced to 92.93, and fell off in 1878 to about 
 86 cents. At the present time a silver dollar, according 
 to the United States standard weight, is worth, as has 
 been stated, 84.76 cents. 
 
 For seventeen years, during the period referred to, 
 silver was more valuable than gold; for five years, less 
 valuable. Its present depreciation is so great as to cre- 
 ate anxiety not only in those countries in which it is the 
 sole standard, or the standard jointly with gold, but in 
 the two countries in which it has been absolutely de- 
 monetized. The serious financial question, one of the 
 most serious that has ever been forced upon the consid- 
 eration of the nations, is. How shall this decline be ar^ 
 
245 
 
 rested so that silver shall not cease to be money ? It is 
 very obvious that there is not gold enough in the world 
 for circulation, for a basis for circulating notes and for 
 the settlement of international balances, without such an 
 increase in its value as would reduce the price of every- 
 thing measured by it from thirty to forty per cent. , while, 
 at the same time the burden of debt, as three-eighths of 
 the specie of the Western nations is silver, would be in- 
 creased in the same ratio. The universal demonetiza- 
 tion of it may be regarded, therefore, as impracticable. 
 
 It could not be demonetized by other nations, as it has 
 been by Germany, without consequences too serious to 
 be contemplated. If there were no debts to be paid in 
 a currency more valuable than that in use at the time 
 they were contracted, the gold standard might be so ele- 
 vated as to make gold equal to the wants of mankind, 
 without prejudice to anybody or any interest whatever, 
 except so far as it would lessen international trade, 
 which, however, to the people of the United States, is a 
 very important consideration; but, as the world is cov- 
 ered all over with debts, so great an appreciation of the 
 value of gold as that which would result from the gen- 
 eral disuse of silver would be overwhelmingly disas- 
 trous. 
 
 As, therefore, there is not gold enough or likely to be 
 enough for the purposes for which money is used, one 
 of two things must happen, the bi-metallic standard 
 must either be adopted by all nations or some must 
 adopt the single standard of gold and others the single 
 standard of silver, in which event rich nations would 
 have the superior metal for their standard and poor na- 
 tions the inferior metal for theirs. Which, according to 
 any proportionate value heretofore established, will ulti- 
 mately be the superior and which the inferior depends 
 upon circumstances that can not be foreseen. It has 
 been shown that for a long period silver not only held 
 its own with gold, but that it has been more frequently 
 above than below the gold standard. Its present degra- 
 dation is attributable to a combination of causes: 
 
 Firstly, to the unusual production of the silver mines. 
 
 Secondly, to the demonetization of silver by the great 
 German Empire, and the limitation put upon the coin- 
 
246 
 
 sige of it by the Silver Monetar}' Union, established in 
 1866 by France, Belgium, Italy, Switzerland, and Greece, 
 which limitation was at first agreed upon to make the 
 silver currency uniform and to prevent its exportation, 
 and has been continued from year to year for the pur- 
 pose of checking its depreciation.* 
 
 Thirdly, to the duhiess of trade in India and to the 
 large amount payable by India for the disbursements, 
 amounting to some $75,000,000 a 3'ear, of the home gov- 
 ernment, which have checked the flow of silver into 
 that great silver reservoir, whither silver has been stead- 
 ily flowing since commercial intercourse was opened 
 between the Oriential and Western nations. The silver 
 committee of the House of Commons, in 1876, in- speak- 
 ing of the depreciation of silver, said: 
 
 The yearly amount payable by India for the disbursements 
 of the home government has risen since the Indian mutiny from 
 5,000,000 to 15,000,000 pounds sterlini^, a difference of which the 
 magnitude will be appreciated, when it is remembered that 
 it is considerably more than half of the total amount of silver 
 annually produced. 
 
 Fourthly, to the apprehension that other nations may 
 follow the example of Germany and adopt the gold 
 standard. 
 
 All of these causes have been at work in producing 
 the existing degradation of silver, and perhaps the sur- 
 prise ought not to be that silver has been degraded, but 
 that the degradation has not been greater. Some of these 
 causes may be permanent, but it is obvious that most of 
 them will be temporary. It is true that for some years 
 past the yield of the .silver mines has been rapidly gain- 
 ing upon that of the gold mines, and this ma}' continue 
 to be the case for some 3^ears, but there is no certaint}^ 
 of it. It is not likely that there will be gold discoveries 
 equal to those made in California and Australia, but the 
 gold fields of California and Australia have not been 
 exhausted. Hydraulic mining is yet in its infancy, and 
 
 *For an explanation of the objects for w^hich the Latin 
 Union was formed, see a letter in the New York Evening Post 
 of the 29th of November last from George Walker, one of the 
 ablest advocates of bi-metallic money in this countr}^ or any 
 other. 
 
247 
 
 plentiful stores nia}- yet be found as enterprise pushe's 
 its way into regions hitherto but partially explored. Be- 
 sides, the decline in the prices of silver must inevitably 
 tend to check its production. There are many mines 
 which could be profitably worked when silver was worth 
 fifty-nine pence per ounce, as it was in 1873, ^^^ which 
 work must cease if the present low prices continue to 
 prevail. If, however, there be good ground for the ap- 
 prehension that the gold supply is to be steadily dimin- 
 ishing, then, unless the demand for metallic money 
 should decrease also, which is not probable, the imprac- 
 ticability of a general demonetization of silver must be 
 obvious to everybody. 
 
 Although silver has been legally demonetized in Ger- 
 many for several years, the work necessary to establish 
 practically the gold standard is still going on. Germany 
 is still a seller of silver and a purchaser of gold. No 
 one can tell how much of the former she has yet to dis- 
 pose of, but there is a limit to her disturbing power over 
 the money markets of the world. This limit must soon 
 be reached, and when it is reached, one of the most 
 powerful causes of the degradation of silver will disap- 
 pear, for her experiment in the demonetization of silver 
 has been too costly to be imitated voluntarily by other 
 European States. It would not have been attempted 
 when it was, had it not been for the French indemnity 
 which was paid in gold; but with even this aid to the 
 adoption of the single standard, her direct loss in the 
 sale of silver has been very large, while her losses by 
 the disturbances of business and the unsettlement of 
 prices have been still larger. She has paid, she is still 
 paying, dearly for her efforts to place herself alongside 
 of Great Britain, which has been hitherto the only na- 
 tion in the world in which the single gold standard has 
 been maintained. The great German statesman is not 
 apt to make mistakes in matters affecting German inter- 
 ests, but a great mistake was made (and he is regarded 
 as being responsible for it) in the demonetization of sil- 
 ver throughout the empire, composed as it is of States 
 in which silver had been almost the exclusive currency. 
 He apparently overestimated, as most Germans overes- 
 timated, the value of the French indemnity, which, iu 
 
248 
 
 fact, has proved to be the reverse of enrichment to Ger- 
 many. It produced a fanaticism of speculation in many 
 parts of that country, which scarcely had a counterpart 
 in the United States in our period of speculative mania. 
 Germany is undoubtedh' in a worse financial condition 
 than she would have been had no money indemnity been 
 extorted from France. 
 
 It has seemed to many a very extraordinary fact that 
 France, crushed by the Germans, deprived of two of 
 her valuable provinces, forced to pay the enormous sum 
 of a thousand million dollars at the period of her great- 
 est humiliation, was nevertheless in two years after the 
 war was closed much more prosperous than the con- 
 quering nation, the recipient of the indemnity, extended 
 in territor}^ and consolidated into an empire which in 
 military power exceeds anj- other nation in the world. 
 The explanation is not difficult. 
 
 France is a fertile country and varied in its produc- 
 tions, and her lands are divided among 6,000,000 of her 
 people. Three-quarters of her circulating medium are 
 gold and silver, of which she holds a greater amount 
 than any Western nation. Her people are tasteful, in- 
 dustrious, thrifty. Rarely aiming to become suddenly 
 rich, they are not speculative; they are impulsive, but 
 prudent; having full confidence in France, no matter 
 how governed, they hoard their earnings until they can 
 put them into French securities, and consequently they 
 never suffer b}' making deposits in unsafe banks and 
 savings institutions; the result of all which is that 
 France is rich, notwithstanding the drain upon her pop- 
 ulation and resources by the destructive wars in which 
 she has been engaged from the commencement of her 
 history. 
 
 The Germans are also industrious and fairly frugal, 
 but they are less skilful and more speculative than the 
 French, and their agricultural products are less varied 
 and valuable. Germany is a great empire, but com- 
 pared with France or Great Britain or the United States, 
 she is poor, and the radical change in her currency, 
 which was commenced in 1871 and is still going on, has 
 undoubtedly been the cause of great embarrassment to 
 her people. Her experiment in demonetizing silver 
 
249 
 
 was a bold one, bolder than sagacious. Great Britain is 
 able to maintain the single gold standard by her great 
 wealth and her supremacy as a creditor and commercial 
 nation. Germany has no such monetar}- or commercial 
 position, and the difficulties in the way of her accom- 
 plishing what she has undertaken are daily becoming 
 more and more manifest. She endeavors to retain her 
 gold coinage by high rates of interest, in which she is 
 only partially successful, while these high rates of in- 
 terest are oppressing her debtors, diminishing her foreign 
 trade and affecting injuriously her home industries. 
 Great Britain stands alone in a successful effort to de- 
 monetize silver, but even she has not been uniform in 
 her action. 
 
 India has not escaped entirely the trouble occasioned 
 by the efforts of the British Government to change her 
 standard. From time immemorial gold was used to 
 some extent in that populous countr}^ but in 1852 so 
 greatly had gold declined in comparative value with 
 silver and so strong was the apprehension of further 
 decline that the Government refused to receive it at the 
 treasuries, and thus practically demonetized it in India. 
 During the late civil w^ar in the United States the cotton 
 vSpinners of England were compelled to look to India 
 for a large part of their cotton supplies, and as gold, 
 having been demonetized, could not be used there with- 
 out considerable loss, there was a demand on their part 
 for silver, and this demand became at last so great as to 
 appreciate it throughout Europe. More than the w^orld's 
 annual product of silver between 1861 and 1S64 went to 
 India. The demonetization of gold in India had an effect 
 upon European markets and international exchanges, 
 like that produced by the German demonetization of 
 silver. 
 
 The panic — for it was nothing less — created by the 
 w^onderful yield of the gold mines of California and Aus- 
 tralia caused Holland to demonetize gold, and induced 
 Belgium to take preliminary measures for demonetizing 
 it also. The depreciation of silver has recently caused 
 both nations to consider the expediency of the demonet- 
 ization of that metal, but it is quite evident that the ex- 
 ample of Germany in demonetizing silver wnll not be 
 
250 
 
 followed by these or other European States unless they 
 are compelled to follow it, and when she ceases to sell 
 silver one of the chief reasons for the continuance of 
 the agreement between the Latin nations for the limita- 
 tion of silver coinage will cease also. The London 
 Ecojwmist \\\ 1876 expressed the opinion that the Latin 
 Union must either soon coin silver without limit or de- 
 monetize it altogether. There are certainly no present 
 indications that the latter will be attempted. 
 
 Nor is the falling off of the trade between the Oriental 
 and Western nations likely to be permanent; on the con- 
 trary, that trade is quite sure to revive by the influence 
 of returning prosperity to the United States, which is 
 now observable, and by the consequent return of pros- 
 perity to other commercial countries. So closely are 
 nations brought together in these days of steam power 
 and electricity, that no great nation can be in trouble 
 without that trouble being felt by other nations; nor can 
 any nation in the great family of nations be for any con- 
 siderable period alone prosperous. As the terrible dis- 
 tress which came over the United States mainly by the 
 war and over issues of paper money affected injuriously 
 all other nations, so will other nations feel the beneficial 
 influences of a revival here. 
 
 It is a mistaken notion that any country can be per- 
 manently benefited by the disasters of others; on the 
 contrary, there is a community of interests between 
 nations, no matter how widely separated geographically 
 or by diff"erences in their governmental institutions. 
 Notwithstanding the jealousies which exist between 
 them, the political antagonism which separates them, 
 and the ambition which Teads them to struggle for supe- 
 riority, there is, as far as trade is concerned, such an in- 
 ternational brotherhood thai no great financial depres- 
 sion can take place in one countr}- without other coun- 
 tries feeling it to a greater or lesser extent. The disap- 
 pearance of the causes which I have mentioned will 
 undoubtedly not only check the decline of silver, but 
 give to it an upward turn. 
 
 What, then, should be the action of the United States ? 
 Should she continue the double standard without limit- 
 ing the coinage of silver, notwithstanding the adoption 
 
251 
 
 of the single gold standard by German3^ and the lim- 
 ited coinage by the Latin States? This she cannot 
 afford to do. We have seen that there is a tendency 
 to constant fluctuations in the relative value of the 
 two metals; that the cheaper drives the dearer out of 
 circulation. These fluctuations will continue as long 
 as silver is a commodity in Great Britain and Germany 
 and a subsidiary currency in the Latin Union (for such 
 their restriction of its coinage practically makes it); 
 they would disappear to a great extent, if not absolutely, 
 if bi-metallic money should become universal. As the 
 great producing silver country of the world, the United 
 States has a very decided interest in the value of silver, 
 but not to such an extent as to compensate for the 
 losses which must be sustained by a separate effort to 
 appreciate it, by making it, without a limitation of the 
 coinage, a joint standard with gold. We cannot without 
 such limitation, or the co-operation of at least the leading 
 powers in Europe, make the two metals comparatively 
 equal in value. One or the other will go abroad, and 
 that one, for a period, no one can tell how long, will 
 be gold. We should gain nothing, and might lose 
 much, by independent efforts to maintain a full double 
 standard. We should not only run the risk of having 
 no more money, but also the risk of having less in value 
 than we should have if we restricted the coinage of sil- 
 ver. In the proportion which silver is forced into cir- 
 culation will gold go out of circulation. The silver act 
 of 1878 would be a practical demonetisation of gold, but 
 for the very favorable condition of our foreign trade and 
 the fact that the Government coins no silver except 
 what it owns, and leaves a large discretion in the hands 
 of the Secretary of the Treasury. Under the existing 
 policy of the controlling powers of Europe the nations 
 of the world must be divided, as has been said, on this 
 great question into two classes: those which adopt the gold 
 standard with restrictions upon the coinage of silver and 
 those which adhere to the silver standard alone. The 
 United States, as a creditor nation, can choose her own 
 fellowship and position. As to what that choice will be, 
 the respect I have for the sagacity of my own country- 
 men relieves me from doubt. 
 
252 
 
 But under existing circumstances I think it perfect!}^ 
 clear that the United States, while maintaining the 
 double standard, should limit the amount of silver to be 
 put in circulation, so as to prevent it from depreciating; 
 it is also perfect!}^ clear that whatever influence she 
 has should be exerted to make bi-metallic money the 
 universal money. The indications are very decided 
 that all Western nations will be eventually forced to 
 adopt the double standard. As long as they are divided 
 in policy the nations that practically maintain the supe- 
 rior standard will have a decided advantage in commer- 
 cial intercourse over those nations that adhere to the in- 
 ferior one. A nation which is compelled to pay the 
 balances against it in a currency superior in value to its 
 own, cannot fail to be the loser. The international com- 
 merce of the w^orld is rapidly growing. It has been 
 more than doubled within the last twenty years, and, not- 
 withstanding the enormous transactions by bills of ex- 
 change, there must be a steadily increasing demand for 
 money. Can this demand be satisfied by the use of a 
 single metal, or can it be satisfied by the use of gold by 
 one set of nations and the use of silver by another ? 
 This is a question which greatly interests all nations 
 and divides the opinion of statesmen and economists. 
 It is a question the proper decision of which will be 
 aided by discussion, but it will be eventually decided 
 by national necessities. The indications, as I have said, 
 now point to an ultimate decision in favor of bi-metallic 
 money without restrictions upon the coinage of silver; 
 for that decision the United States can afford to wait. 
 But while as a creditor nation she can command the 
 best, she should be ready to join other nations in in- 
 creasing the metallic currenc}^ of the world b}^ giving to 
 silver everywhere the character of money. 
 
 The interests of commerce, the grownng fellowship 
 between nations, the result of increased and increasing 
 facilities of intercommunication, require that all national 
 barriers should be removed. The difference in their 
 respective currencies is one of these barriers. 
 
 If it were proper for me to advise the representatives 
 of the people in Congress, my advice would be that all 
 notes less than five dollars should within one year be 
 
2.03 
 
 withdrawn from circulation, and in two or three years 
 the five-dollar notes also; that the coinage of not only 
 one-dollar gold pieces, but of quarter eagles, should be 
 discontinued, not at the present ratio of gold, but ac- 
 cording to the ratio adopted by other bi-metallic coun- 
 tries, until the country is fully supplied with a local sil- 
 ver currency. There are now in circulation in the 
 United States upwards of two hundred millions of notes 
 of the denomination of five dollars and under. As these 
 were retired, silver coin would from necessity take their 
 place. I would advise that the coinage of silver be con- 
 tinued as long as silver can maintain a parity with gold. 
 Small notes are a great convenience, but the convenience 
 of individuals should be subordinate to the public good. 
 As long as they remain in circulation all efforts to intro- 
 duce silver as a local currency will be abortive. Notes 
 are not money, but promises to pay it — mere evidences 
 of debt. By filling the country with the precious metals 
 not only would the wealth of the country be increased, 
 but the danger of a suspension of specie payment, which 
 is always a shock to credit and a detriment to productive 
 industry, would be lessened, if not absolutely avoided. 
 Nor is there any danger of a superabundance of metallic 
 money. If by the adoption of a double standard and an 
 increase in the productions of the mines there should 
 be an excess, and the rates of interest should be les- 
 sened, lenders would be the losers, but borrowers would 
 be the gainers, and they are not only a majority, but 
 they are the most enterprising and useful men in all 
 communities. There is. however, no danger of such an 
 excess. The need of money increases with the growing 
 demands of commerce, and every dollar which is taken 
 from the mines costs its value in the labor expended in 
 obtaining it. 
 
 I would also advise that the Secretary of State open at 
 once a correspondence with the leading European States, 
 through our representatives in those States, for the pur- 
 pose of effecting, by treaty, a combination for the general 
 use of bi-metallic money, at such a comparative ratio as 
 might be agreed upon. If our distinguished premier, 
 Mr. Bvarts, taking the lead in the negotiation, should 
 succeed in bringing about a settlement of this very im- 
 
254 
 
 portant and troublesome international question, he would 
 acquire a world-wide reputation in comparison with 
 which his triumphs at the bar and in the council cham- 
 ber would be insignificant. 
 
 The alarm over what is called the excessive produc- 
 tion of silver in the United States is groundless. Since 
 1848 the gold product of the countr}- had amounted at 
 the end of last year to $1,462,825,000^ while the silver 
 product had only come up to $379,450,000. 
 
 Mr. Gladstone, in a letter to the Secretary of the 
 Bullion Club of New York, under the date of the 3d 
 of March last, said: " Debts ought to be paid in a 
 not less, valuable medium than that in which they were 
 contracted." This is unquestionably true. Contracts, 
 and especially those for the enforcement of which no 
 legal power exists, as is the case with regard to the debts 
 of sovereign States, should be fulfilled, not only accord- 
 ing to the letter of the law, but according to the under- 
 standing between the contracting parties. The bonds 
 of the United States were sold when gold was practically 
 the standard, and with the understanding between the 
 Government and the purchasers, confirmed since by law, 
 that the}^ would be paid in gold. These bonds could 
 not, therefore, be called in and redeemed in a less val- 
 uable currency than gold without a violation of a con- 
 tract and national dishonor. The same is true in regard 
 to the debt of Great Britain. Although most of it was 
 contracted when the double standard existed, it has, b}^ 
 the adoption of the single standard, been recognised and 
 treated for so many years as a debt payable in gold that 
 the payment of the interest (the payment of the princi- 
 pal is not even contemplated as among possibilities) by 
 the British Government in anything less valuable than 
 gold would put an indellible stain upon her character 
 and be a death blow to her financial prestige. The 
 French debt, on the other hand, was contracted when 
 the double standard existed in France, and, as it still 
 exists there, this debt could be paid either in gold or 
 silver without a violation of contract or national dis- 
 credit. France, however, so preserves the parity of the 
 two metals that, although probably five or six hundred 
 of the thirteen hundred millions of money in her bank 
 
255 
 
 and among the people is silver, no loss is sustained by 
 the payment of the interest upon her debt in gold. Prac- 
 tically, however, the interest upon the British debt is 
 paid in a medium of far less value than that in which 
 the debt was contracted. It is paid in gold, but gold has 
 very much less purchasing power than it had when the 
 debt came into existence. The burden of the British debt 
 has been greatly reduced by the depreciation of gold, 
 resulting from increased production. The gold discov- 
 eries of California and Australia have been a God send 
 to the British Government and the British tax-payers; 
 what they have been to the holders of British securities 
 is a different thing altogether. This diminution of the 
 value of gold has been the result of natural causes, but 
 the effect is the same upon the holders of consols as it 
 would be if the depreciation had been produced by an 
 act of Parliament. 
 
 Mr, Gladstone, however, went on to say that " the 
 double standard is not in strictness any standard at all." 
 This might be true if the word "standard" was used 
 in the same sense in regard to money that it is when 
 used in regard to weights and measures. I wish the 
 distinguished political economist, Mr. Dunbar, would 
 take it upon himself (no one is certainly more compe- 
 tent) to introduce a substitute for the word "standard." 
 which would more properly define its meaning when 
 applied to the precious metals. The yard stick and the 
 pound weight are merely the instruments by which 
 qualities are determined, and they must be maintained 
 with exactness; they have no other use or value. Gold 
 and silver, on the other hand, are valuable in them- 
 selves as well as by being standards. The double stand- 
 ard, or what is the same thing, the alternative standard, 
 is in strictness the money standard in France, in Bel- 
 gium, and now also in Holland. What the interests of 
 commercial nations demand is, that there should be in- 
 ternational accord in regard to their comparative value. 
 Prior to the gold discoveries in California and Australia, 
 the currency of France was almost exclusively silver. 
 As a result of these discoveries, gold declined and 
 silver advanced in comparative value. France, there- 
 fore, sold large amounts of silver at a premium and 
 
256 
 
 bought gold. She could not have done this had it not 
 been for the fact that the large productions of the gold 
 mines of California and Australia created a gold panic 
 which would not have existed had gold been in general 
 use throughout the European nations. Had it been in 
 such use, the gold, which was for a time produced in 
 unusual quantities, would have been quietly absorbed 
 without depreciation or financial disturbance. It was 
 the depreciation of gold that caused Great Britain to 
 demonetize it in India, the result of which was, as has 
 been shown, that during the civil war in the United 
 States, when the British cotton spinners were looking 
 to India for cotton supplies, there was a demand for sil- 
 ver for the purchase of India cotton, which caused not 
 only a great disturbance of the trade of Great Britain, 
 but unnatural changes in the comparative value of the 
 two metals throughout the commercial world. If the 
 policy of Great Britain in regard to the use of gold in 
 India had not been changed; if gold as well as silver 
 could have been used in the purchase of India cotton, 
 British trade would not have suffered and the money 
 markets of Europe would not have been disturbed by 
 the appreciation of silver. 
 
 The production of silver in the United States has been 
 for some years, and is likel}^ to continue to be for some 
 years to come, very large; but the unusual production of 
 silver in the United States would not have depreciated 
 silver to any considerable extent, and would not con- 
 tinue to depreciate it, if German}^ had not demonetized 
 it and were not still a seller. It has not been the pro- 
 duction of our silver mines, but the sales that have been 
 made by Germany, and those which she must continue 
 to make in order to establish the gold standard, the un- 
 known quantity which she has yet to dispose of, that 
 has been and still is so potent in producing the depre- 
 ciation of silver. Great Britain alone, as has been 
 stated, has successfully adopted and maintained the sin- 
 gle gold standard. Germany has adopted it, but her 
 ability to maintain it is still, at least, questionable; nor 
 is it by any means certain that Great Britain has been 
 the gainer by the adoption of the single standard. In 
 order to prevent her gold reserve from going below the 
 
257 
 
 point of safety, the Bank of England has been con- 
 stantly under the necessity of changing her rates of in- 
 terest. There have been years when these changes 
 have been made almost every month, to the prejudice 
 of British interests. There have been times when the 
 arrival of gold shipments from Australia have been 
 looked for with anxiety, when the loss of the gold on a 
 single steamer would have produced a panic in London. 
 The large receipts of gold from the United States in 
 1866 (the Government having sold some thirty millions 
 in a single day), the most of which went to England, 
 saved the bank from suspension. What would have 
 been her condition if gold had come to the United 
 States, instead of bonds, within the last two years, it is 
 not difficult to conceive. 
 
 Against the opinion of Mr. Gladstone, that "in strict- 
 ness the double standard is no standard at all," let me 
 place the opinion of a still wiser statesman. Alexander 
 Hamilton, in his report of 1792, said: "Upon the whole, 
 it seems to me most desirable not to attach the unit ex- 
 clusively to either metal, because this cannot be done 
 effectually without destroying the character of one of 
 them as money, and so reduce it to the character of 
 mere merchandise. To annul the use of either of the 
 metals as money is to abridge the quantity of circulating 
 medium, and is liable to all the objections which arise 
 from the comparison of the benefits of a full with the 
 evils of a scanty circulation." 
 
 One of the most common objections to the double 
 standard is the impossibility of preventing fluctuations 
 in the comparative value of the two metals. It is con- 
 tended that the nation that uses both as a standard in- 
 curs a double risk of losing, at one time by the depre- 
 ciation of gold, at another time by the depreciation of 
 silver; that, as the double standard is only an alternative 
 standard, it must lose gold when gold becomes compara- 
 tively more valuable than silver and lose silver when 
 silver becomes more valuable than gold; that a nation 
 which uses but one standard is subject to but one of 
 these controlling influences instead of two. But are not 
 these fluctuations attributable to the fact that gold and 
 silver are commodities in some nations and money in 
 
258 
 
 others? If both were money, and of the same com- 
 parative value in all nations, would not the fluctuations 
 and the risk be reduced to a minimum? Might they not 
 disappear altogether? If the gold and silver now in 
 use by commercial nations were subject to the same in- 
 fluences, would there not be a greater steadiness in their 
 own value and in the value of all commodities measured 
 by them than is now possible ? 
 
 The certain preventive of fluctuations in the compara- 
 tive value of the two metals will be found in the diffu- 
 sion of both throughout the globe, and this diffusion de- 
 pends upon their becoming a joint standard of value. 
 
 I have thus glanced at a very important and interest- 
 ing subject; a proper discussion of it would far exceed 
 the limits of a lecture. It may be proper for me to say 
 in conclusion that without having given to the subject 
 of bi-metallic money the careful consideration which it 
 merited, I had publicly, in various ways, expressed ^ the 
 opinion that the world had outgrown the need of silver 
 as money; but, as others thought differently, I felt it to 
 be my duty in the preparation of this lecture— a duty 
 which I owe to those who might listen to me and to 
 myself— to consider the subject fairly and to go where 
 my convictions might lead me, regardless of any opin- 
 ions I might have formed and expressed. At the out- 
 set I was met by the fact that the circulation of the Ori- 
 ental nations is almost exclusively silver; that more than 
 one-third of the money of the Western nations is silver 
 also. This fact, together with the probability that such 
 nations as Russia and Italy, in which depreciated paper 
 is chiefly in use, and the South American States, in 
 which metallic money is unknown, would at no distant 
 day adopt a specie standard, led me to revise my opin- 
 ions, the result of which was the conclusion that the uni- 
 versal demonetization of silver would be absolutely im- 
 practicable, and that international trade would be facili- 
 tated and increased, and the progress of civilization 
 would be advanced by the use, by all nations, of bi-me- 
 tallic money. It is not a pleasant thing for me to be 
 compelled to acknowledge thus publicly a change of 
 opinion upon a very important subject, but I console 
 myself with the reflection that there is no merit in mere 
 
259 
 
 consistency; that it is much better to be right than to be 
 consistent. But while I think that bi-metallic money 
 ought to be, and that it will eventually become, the uni- 
 versal money, I regard the act of 1878 as being a grand 
 mistake. Nothing, it seems to me, can be more unwise 
 on the part of those who desire, as I do, that there 
 should be an abundance of real money in the United 
 States, than the effort which they are making to in- 
 crease the supply by a full remonetization of silver with- 
 out regard to the action of other commercial States. To 
 the extent that silver, in a ratio that renders it less val- 
 uable than gold, is forced into circulation, will gold go 
 out of circulation. What we are to gain by substituting 
 silver for gold, the at present inferior for the superior 
 metal, I anl unable to perceive. We have seen that 
 gold and silver will not circulate together unless there 
 is a parit}^ of commercial value betw^een them, and noth- 
 ing is more certain than that this parity, with no restric- 
 tions upon the coinage of silver, cannot be maintained 
 in the United vStates without the co-operation of the 
 leading nations of Europe. 
 
 Our recent silver commission was a failure, because 
 the act of 1878 fixed the relative value of silver to gold 
 at sixteen to one, while the ratio of the Latin Union 
 was i5>^ to one. Having no silver in circulation excejJt 
 as a subsidiary currency, we adopted a standard differ- 
 ing materially from that of the bi-metallic States, which 
 have a circulation of many millions, and then invited 
 them to a conference. The failure of a conference 
 under such circumstances it required no spirit of proph- 
 ecy to predict. 
 
 Third Lkcture. 
 
 THE re;prEvSEntatives of money. 
 
 In my second lecture, I spoke of gold and silver, and 
 especially of their comparative value. The conclusion 
 reached was, that not only are both needed as a circu- 
 lating medium and measure of value, but that all nations, 
 at least aU Western nations, will eventually be com- 
 
260 
 
 pelled to adopt the double standard. The apprehension 
 that the depreciation of silver will increase, or even con- 
 tinue for any considerable time, has, in m}^ judgment, 
 no better foundation than that which existed in 1852 in 
 regard to the depreciation of gold. The difference in 
 the yield of gold and silver mines and other causes have 
 conspired in the past, and may conspire in the future, to 
 give to the two metals, sometimes to the one, sometimes 
 to the other, superior value; but in all probability this 
 superiority will be only temporary; it certainly will be 
 when both are used as money by all the leading com- 
 mercial nations. The wisdom which made both a meas- 
 ure of value and established between them comparative 
 relations is vindicated by their history. While their 
 comparative commercial value has been subject to fluc- 
 tuations and can never be absolutely fixed by human 
 law, a higher law has heretofore prevented, and will con- 
 tinue to prevent, these fluctuations from becoming so 
 great as to offset the advantages derived from the use of 
 both — the law of comparative supply. The relations be- 
 tween them have been practically established by the 
 cost in labor of obtaining them, and this cost, which is 
 always a regulator of supply, is no more likely to be 
 seriously disturbed in the future than it has been in the 
 past. We may, I think, safely discard all apprehension 
 that either will be so cheapened as to render it unfit 
 for the purpose for which it is being used. 
 
 I come now to speak of the representatives of money 
 which have been and are in use in the United States in 
 the form of paper obligations, and I would remark at 
 the outset of this discussion, that while a paper cur- 
 rency may be a beneficial supplement to metallic money, 
 it can never with safety be a substitute for it. Of the 
 great convenience of a paper currency there can be no 
 question. It is less burdensome, less expensive in trans- 
 portation, and to some extent better fitted for domestic 
 transactions than either gold or silver. Nor is it with- 
 out its benefits in encouraging industry, quickening 
 enterprise, and reducing the rate of interest by the ad- 
 dition it makes to the circulating medium; but in order 
 that it may be productive of good rather than of evil, 
 it must be worth what it is intended to represent, and 
 
201 
 
 this it never has been and never will be unless its volume 
 is judiciously restricted. 
 
 It would be interesting and instructive to trace the 
 history of paper currenc}' in other countries, but it will 
 be sufficient for me, perhaps, to refer to it briefly in our 
 own. Massachusetts, as she is quite apt to do in all 
 new enterprises, took the lead in the use of paper cur- 
 rency. In the good old colony time of 1690 she began 
 the issue of Treasury notes, which were made receiv- 
 able for taxes and a legal tender in all domestic trans- 
 actions. There was a seeming necessity for this action 
 on her part, for then no mines had been opened, no dis- 
 coveries of precious metals had been made on this side 
 of the Atlantic, except in Mexico and the South Ameri- 
 can States, which w^ere under the domination of Portu- 
 gal and Spain. Other colonies followed her example 
 and issued notes, some in one form and some in another, 
 and so imprudently that they rapidly depreciated, not- 
 withstanding the laws that made them lawful money and 
 a legal tender. In 1749 Massachusetts discontinued the 
 policy of making money by promising to pay it, but in 
 this instance her example was not followed by her sister 
 colonies which continued to issue depreciated notes un- 
 til they were prevented by an act of Parliament which 
 prohibited all British colonies from issuing bills of credit, 
 and silver became the exclusive currency. 
 
 At the commencement of the Revolutionary War, 
 there being an unusual demand for currency, Massachu- 
 setts again resorted to the printing press, in which she 
 was imitated by the Continental Congress, which ini- 
 tiated its financial work by the issue of two millions of 
 irredeemable notes, which issue w^as followed step by 
 step, the continued depreciation creating a necessity for 
 increased issues until the whole of it, some two hun- 
 dred millions, in addition to the colonial notes — uncer- 
 tain in amount — became absolutely w^orthless. Every- 
 body knows the history of what was called the Conti- 
 nental money — how the notes depreciated after twenty 
 millions had been issued, how every additional issue in- 
 creased the depreciation — until they became a synonym 
 for worthlessness, so that the slang expression "not 
 worth a continental " has been the most significant de- 
 
262 
 
 scription of things absolutely destitute of value. And 
 yet it is hardly fair that reproach should be cast upon 
 Continental notes. Although they became as worthless 
 as waste paper, and by their large volume excited a 
 spirit of speculation, of which that of a recent date was 
 hardly a counterpart, they answered the main purpose 
 for which they were issued. They were serviceable 
 during the greater part of the Revolutionary War. Per- 
 haps it is not too much to say that without them the 
 war could not have been maintained; that to Continental 
 notes are we indebted for our national independence. 
 
 At the close of the war the colonies were in a most 
 wretched condition, without money, without credit, 
 without union. They had achieved their independence, 
 but at the most tremendous sacrifice; they had, in fact, 
 nothing to boast of but their liberation from the mother 
 country. A government was to be formed to bind them 
 together as a nation; credit was to be built up; a reve- 
 nue system was to be established. Fortunately for the 
 world, the men upon whom these great duties rested were 
 equal to the emergency; fortunately, also, when the 
 new government was formed, and a more perfect Union 
 secured, a man appeared (Alexander Hamilton) to take 
 charge of the financial interests of the Government, 
 whose equal as a financial minister has rarely, if ever, 
 been found. Not inferior to Necker in clearness of in- 
 tellect, comprehensiveness of views, and stability of 
 purpose, he was superior to Necker in his knowledge of 
 detail and his power of organization. He'not only de- 
 vised the means for establishing on a firm basis the na- 
 tional credit, and giving new life to industry and well- 
 directed enterprise, but he organized the Treasury De- 
 partment with such perfection of skill that nothing has 
 been required by the enormous increase of its business 
 but the expansion of the system which he put in opera- 
 tion. When I read Mr. Hamilton's reports of 1790 and 
 1 791 upon the public credit, a national bank and manu- 
 factures, I am amazed at the breadth of knowledge dis- 
 played by one whose opportunities for acquiring infor- 
 mation upon these great questions had been so limited; 
 when I look at the admirable machinery of the Treas- 
 ury Department I am almost equally amazed by his skill 
 as an organizer. 
 
263 
 
 Before the close of the war Congress, upon the red- 
 ommendation of Robert Morris, the Continential finan- 
 cier, had authorized the establishment at Philadelphia, 
 under the name of the Bank of North America, a bank^ 
 which went into operation on the ist of January, 1782, 
 with a capital of $400,000, two thirds of which were 
 furnished by the general Government. Such was the 
 commencement of a banking system which has grown 
 to such immense proportions. This bank still exists, 
 and is distinguished alike by its age and its prudent 
 management. Its notes were the first paper promises 
 ever put into circulation this side of the Atlantic that were 
 convertible into coin. At the outset so strong was the 
 prejudice against a paper currency that they were re- 
 garded with distrust, but the prudence with which they 
 were issued and their convertibility into coin soon 
 brought them into favor. Then, as is always the case, 
 very few persons wanted specie w^hen sure of being able 
 to obtain it. The stock of the bank was found to be s-o 
 good an investment that it was soon increased from four 
 hundred thousand dollars to two millions of dollars. 
 Some two years after this bank went into operation the 
 Bank of Massachusetts was organized in Boston, and 
 the Bank of New York in the city of New York. Both 
 of these institutions still exist and have had a prosper- 
 ous and honorable career. These were the only banks 
 of issue when Mr. Hamilton entered upon his duties 
 under the new Constitution as Secretary of the Treasury. 
 In the disordered condition of the national finances the 
 establishment of a national bank was a national neces- 
 sity, and the wisdom of Mr. Hamilton in devising the 
 scheme was proved by its history. It was organized in 
 1 791; as a national institution it superseded the Bank of 
 North America, and by its large capital, ten millions of 
 dollars (at that time a very large sum), and by its ex- 
 cellent management it aided materially in building up 
 the credit of the Government and giving to the business 
 of the country a stable basis. 
 
 It answered admirably the purpose for which it was 
 established, and maintained during its entire existence, 
 which ceased in 181 1, the highest reputation for sol- 
 vency and good management. It was not, however, a 
 
204 
 
 popular institution, and the application for an extension 
 of its charter failed of success by a single vote in the 
 House and the casting vote of the Vice-President in the 
 Senate. Its re-charter was opposed on constitutional 
 grounds, and by the State banks, which had then in- 
 creased in number to eighty-nine, whose issues it had 
 kept in check by the system of redemption which it had 
 enforced. Released from the restraining power of the 
 United States Bank, the State banks increased their cir- 
 culation so recklessly that in less than four years all ex- 
 cept those in New England were forced to suspend specie 
 payments. Their suspension and the consequent de- 
 preciation of their notes produced a derangement of 
 business for which there seemed to be no remedy but 
 the organization of another Government bank, the father 
 of which was Mr. Calhoun, one of the strictest inter- 
 preters of the Constitution in the South. The new bank 
 went into operation in 1816, and although less prudently 
 managed than its predecessor had been, it faithfully 
 performed its duties as fiscal agent of the Government 
 and held the State banks under proper restraint until it 
 incurred the displeasure of President Jackson, then in 
 the enjoyment of unlimited popular favor, who gave to 
 it a death blow by removing from it the Government de- 
 posits and depriving it of its fiscal agency. It contin- 
 ued, however, in existence until 1836, to which year its 
 charter extended; but, being no longer the fiscal agent 
 of the Government, its prestige was lost and its power 
 and influence rapidly declined until the expiration of its 
 charter. Pennsylvania gave it a new charter, but it 
 was a United States bank in name only, and by the un- 
 wise efforts of its managers to restore its former finan- 
 cial ascendency by speculative operations, it came to an 
 inglorious end in the general crash of 1837. 
 
 In looking back to the time when General Jackson com- 
 menced his attack upon the bank by removing from it 
 Government deposits one can hardly fail to be surprised 
 (as these deposits amounted to but ten millions of dol- 
 lars) at the excitement, the derangement of business, 
 and the apprehension which this removal produced. No 
 executive action ever caused a feeling so general and 
 so intense. Indeed, it was not without difficulty that 
 
^6^ 
 
 the President was able to accomplish his purpose. Mr. 
 McLane, the Secretary of the Treasury when the re- 
 moval was determined upon, declined to be the instru- 
 ment for accomplishing it. He was, therefore, requested 
 to resign his place to Mr. Duane, who, being no more 
 subservient than Mr. McLane had been, was compelled 
 to give way to Mr. Tane}', afterwards the Chief Justice 
 of the United States Supreme Court, by whom the order 
 of the President was promptly executed. The speeches 
 that were made in condemnation of this act of the Presi- 
 dent by Senators politically opposed to the administra- 
 tion, severe and earnest as they were, were but an echo 
 of the sentiment of capitalists and business men through- 
 out the country. As the charter had but three years to 
 run, the act of the President was not only of doubtful 
 legality, but of more than doubtful expediency; but the 
 feeling which it produced seems to us now to have been 
 altogether disproportionate to the act. The position of 
 the President had been previously defined in his message 
 of 1829, and established for his veto for the extension of 
 the charter in 1032. The removal of the deposits was 
 not in itself mischievous; it was the veto of the bank 
 bill in 1832, and the use that was made of the deposits 
 after they were withdrawn from the United States Bank, 
 which were instrumental in overwhelming the country 
 with debt and bankruptcy. The veto of the bank bill 
 had settled the fate of the bank; the party hostile to it 
 was in power, and likej^ to continue to be; the States, 
 therefore, undertook to supply its place by institutions 
 of their own. Between the time of the veto of the bank 
 bill and the expiration of the charter of the bank, large 
 numbers of the banks were organised in nearly all the 
 States, some with capital and some without; some under 
 the management of competent and upright men; others 
 under the management of men as destitute of ability as 
 they were of honesty. Banks thus hastily and improp- 
 erly organised would have been pernicious enough if 
 they had been left to get on the best way they could 
 with such resources as they had and such credit as they 
 could command; but, unfortunately, a large number of 
 them were made depositories of the public money with 
 the expectation on the part of the administration, if not 
 
56() 
 
 by a direct understanding with the banks that it should 
 be used in such a manner as would prevent the strin- 
 gency in the money market and the embarrassments to 
 trade which it was predicted would result from its with- 
 drawal from the United States Bank. The volume of 
 expansion had been rapidly swelling from the time of 
 the veto in 1832. The addition of the public money to 
 the means of the " pet banks," as the banks selected to 
 be the Government depositaries were then called, and 
 the liberal use that was made of it, carried the flood 
 still higher, until it culminated in the terrific crisis of 
 
 1837- 
 
 Between the years of 1830 and 1837 the bank-note 
 circulation was increased in round numbers from sixty- 
 one millions to one hundred and forty-five millions; 
 bank deposits from fifty-five millions to one hundred 
 and twenty-seven millions; bank loans from two hun- 
 dred millions to five hundred and twenty-five millions. 
 The expansion thus created by the banks was attended 
 not onl}' by expansion of mercantile credits, which 
 were given wnth great liberality, but it led the States to 
 embark in interprises of internal improvement as wild 
 in conception as they were disastrous in results. As 
 credit was cheap and money was abundant in Europe, 
 States borrowed freely and commenced what were then 
 supposed to be necessary public works with great vigor, 
 but the crisis came, as is always the case, when it was 
 not anticipated. A stop was put to the prosecution of 
 works upon which large expenditures had been made, 
 and many of the States, some of them among the rich- 
 est, no longer able to borrow, defaulted in the paj^ment 
 of interest, and for a number of years the stain of prac- 
 tical repudiation rested upon a considerable part of the 
 Union. Some of the debts contracted for the construc- 
 tion of works which had not been completed and ought 
 never to have been commenced were reduced by com- 
 promise — all were for years a burden upon tax-pa3^ers; 
 large amounts are unpaid to this day. The misfortunes 
 which overwhelmed the countr}^ in 1837 and the long 
 paralysis which followed might be traced to the veto of 
 the bill for the extension of the charter of the United 
 States Bank. It was this veto that brought into exist- 
 
267 
 
 eiice the larger portion of the State banks which went 
 into operation between 1832 and 1837. It was their 
 rapidl}- increasing circulation, their liberality in making 
 loans, and their indulgence to borrowers that rendered 
 possible the mercantile credits, ruinous in many in- 
 stances to both creditors and debtors, which gave to the 
 country an appearance of wealth and progress, and 
 seemed to render necessar}- the public works which were 
 so imprudently undertaken. All this may be said with- 
 out condemning the veto. The United States Bank was 
 of undoubted service to the Government and the people 
 during the period for which it was chartered, but a great 
 financial institution, the fiscal agent of the Government, 
 with power to control the business of a republican 
 country like ours, could not long retain the confidence 
 of the people or fail to be a dangerous engine of political 
 power. 
 
 The winding up of the United States Bank and the 
 proper distrust of the solvency of the State banks ren- 
 dered action for the safe keeping of the public mone3\s 
 on the part of the Government a matter of necessity. 
 This action was taken in the divorce of the Government 
 from all connection with banks by the issue of the 
 famous " SPECIE ciRCUivAR," which prohibited the re- 
 ceiving of bank-notes for the payment of public lands 
 and customs duties. Up to this time the notes of the 
 United States Bank, and the notes of the banks which 
 had been appointed depositories of public moneys, had 
 been received in payment of all Government dues; from 
 that time up to the passage of the Legal-Tender Acts 
 specie alone was recognixed as money by the Govern- 
 ment. The issue of this circular produced an excite- 
 ment throughout the country scarcely less violent than 
 that which was produced by the removal of the deposits 
 from the United States Bank, and yet it was a move- 
 ment by the Government in the right direction. The 
 misfortune was that it was not made sooner. Had 
 the public moneys, when drawn from the United. 
 States Bank, been placed in the Treasury instead of the 
 pet banks, an important stimulus of speculation would 
 have been absent, the advancing tide of expansion would 
 have been checked, and the disasters which came over 
 
'2e>^ 
 
 the countr\' between the memorable years of 1837 and 
 1843 would have been greatly mitigated. The Sub- 
 Treasury Act, requiring the payment of public dues in 
 gold and silver, was not only necessary under the cir- 
 cumstances, but wise in design and salutary in effect. 
 It freed the Government from all connections with 
 banks, it protected the Treasury from loss, and it kept 
 constantly before the people the knowledge that there 
 was a better currency than paper. One cannot tell what 
 would have happened if the distinction between specie 
 and United States notes had not been maintained by 
 that provision in the Legal-Tender Acts which required 
 that customs duties and the interest on the public debt 
 should be paid in coin. 
 
 The crisis of 1837 was followed by six years of severe 
 depression in all branches of trade and enterprise; con- 
 fidence ceased; distrust of everything and everybody 
 took its place; the days of borrowing were ended, and 
 the States interposed appraisement and State laws to 
 render difficult, if not impossible, the collection of debts 
 which had been contracted when credit was cheap and 
 what was called money was abundant. A correct index 
 of the condition of the country at that time is found in 
 the condition of its banking institutions. On the ist 
 day of January, 1837, the bank circulation was $149, 185,- 
 890; on the ist day of January, 1843, it was $58,564,000. 
 During the same period the bank deposits had shrunk 
 from $127,397,000 to $56, 1 68,000; loans from $525,115,000 
 to $254,544,000. Nothing could more clearl}^ indicate 
 the depression which prevailed throughout the country, 
 when its population was steadily increasing, than these 
 figures. For the disasters of 1837, for the bankruptcy 
 which followed, for the poverty and sorrow which came 
 to so many households, there were no natural causes. 
 There was no war, and no civil commotion to interfere 
 with industry, no failure of sunshine or rain; there 
 was simply a violation of financial and economic laws, 
 similar in some respects to that which produced the col- 
 lapse of 1873. 
 
 As an illustration of what was supposed to be an evi- 
 dence of national prosperit}^ but which was onl}- the 
 result of excessive importations, I will mention a fact to 
 
269 
 
 which I have seen no allnsion for years. In 1835 ^"^ 
 1836 the revenues of the Government from duties upon 
 imports were so large that there was a surplus in the 
 Treasury for which the Government had no use. What 
 to do with it was one of the most interesting questions 
 before the country in 1S35. There was no precedent to 
 guide, for never before had a nation been in the awkward 
 position of having moneys in the Treasury, upon which 
 there were no claims and for which the Government had 
 no use. It was finally solved by an act of Congress ap- 
 proved on the 23d of June, 1836, which provided that 
 the money in the Treasury on the ist day of January, 
 1837, reserving the sum of five millions of dollars, should 
 be deposited with the States in proportion to the num- 
 ber of their representatives in the Senate and in the 
 House. By this act $28,101,864.91 of the public niqneys 
 were distributed among the twenty-six States of the 
 Union. The States were obligated by the act to repay 
 in instalments the amount received by them, respec- 
 tively, whenever the same should be required by the 
 Secretary of the Treasury, for the purpose of meeting 
 any wants of the public Treasury. The obligations thus 
 given by the States are on file in the department, and 
 the amount deposited with them is still, I think, included 
 among the Treasury assets. This distribution, however, 
 although in the form of a deposit, was, in fact, a dona- 
 tion; it was so regarded at the time, and has been so re- 
 garded ever since. I am sorry that I am unable to say 
 that the money thus distributed among the States was 
 judiciously used. 
 
 In 1844 the revival of confidence, of industry, and en- 
 terprise became manifest. The lethargy which had so 
 long prevailed was shaken off", and so rapid was the re- 
 covery that the following year was one of the most pros- 
 perous years that I have any recollection of. Every- 
 thing seemed to be going on prosperously until 1857, 
 when a panic occurred which produced another bank 
 suspension, and a sharper and more ruinous revulsion, 
 during the period for which it lasted, than any that has 
 ever occurred in the United States; there were no decided 
 premonitions of its coming; speculation was active in 
 some sections, and the credit S3'stern tgoniuch extended; 
 
270 
 
 all clear-headed and prudent men saw that the wave 
 was rising and that there were dangers ahead, but very 
 few were prepared for the break when it came. The 
 failure of a large bank in Ohio, which, prudentl}^ man- 
 aged at home, was ruined by its trusted agent in New 
 York, sent a thrill of surprise, amazement, and appre- 
 hension throughout the entire Union. Within two 
 weeks nearly all the incorporated banks were compelled 
 to suspend and nine-tenths of the private banks to close 
 their doors. The country was really in a health}^ condi- 
 tion; there was expansion, but not enough to be danger- 
 ous, if prudence and calmness had been in the ascendant; 
 but madness ruled the hour; everybody held on to what 
 money he had; men worth millions could not borrow the 
 few thousands needed to save their paper from protest; 
 the countr}^ reeled like a drunken man, and the very 
 foundations of our monetary system seemed to be break- 
 ing up. It was, however, a panic, and not a crisis; it 
 was sharp, violent, destructive, but it was without rea- 
 sonable cause, and it was, consequentl}', of short dura- 
 tion. In a few months business resumed its ordinar}^ 
 courses, the financial skies became clear, confidence re- 
 turned, the banks were trusted, and the country moved 
 on again prosperous and serene until the outbreak of the 
 rebellion. The year of i860 was a year of great pros- 
 perity, and so sound was the financial condition of the 
 country that no panic occurred to divert attention from 
 the political dangers to which the Government was ex- 
 posed when the great drama was opened in 1861. The 
 banks of New York and Philadelphia and Boston, 
 instead of being run upon by their depositors and note 
 holders, were able to lend to the Government a hun- 
 dred and fifty millions of dollars, and they were onl}^ 
 forced to suspend when the Secretary of the Treasury 
 felt it to be his duty to draw upon them in favor of the 
 Treasurer and Assistant Treasurers, according to the re- 
 quirements of the Sub-Treasury Act. If the Treasurer 
 had been authorized to draw upon the banks as pay- 
 ments were to be made for Government supplies, and 
 his drafts could have gone, in the ordinary way, through 
 the clearing-houses, their suspension would have been 
 deferred; I do not think it could have been prevented. 
 
271 
 
 Whether the war could have been prosecuted upon a 
 specie basis maybe an interesting question for speculation, 
 but it has no special interest at the present time. The 
 suspension of the banks in the cities named was fol- 
 lowed by the suspension of other banks throughout the 
 country, but there was no considerable depreciation of 
 their notes until after the passage of the Legal-Tender 
 Acts. 
 
 No greater responsibility ever rested upon a financial 
 minister than rested upon Mr. Chase while he was Sec- 
 retary of the Treasury. It is true that his responsibility 
 was vShared by Congress, but the weight of responsibility 
 was upon him, inasmuch as every war loan, in character 
 as well as in amount, was authorized in accordance with 
 his recommendations. 
 
 Mr. Chase was not a trained financier. If he had been, 
 he might have shrunk from the responsibilities of his 
 position; he might have hesitated when prompt action 
 was required. Great battles are not often successfully 
 fought according to the established rules of war. As 
 the Austrian generals, who were defeated one after an- 
 other by Napoleon in his first Italian campaign, were 
 astonished at their defeat by one whose mode of fight- 
 ing was a violation of all military science, so finan- 
 ciers at home as well as on the other side of the Atlan- 
 tic were astonished at the measures adopted by our 
 minister of finance to raise the means for the prosecu- 
 tion of the war. It does not become us who are in the 
 enjoyment of the priceless benefits of a preserved Union 
 to criticize these measures. There was but one for 
 which a necessity did not seemingly exist. The Legal- 
 Tender Acts provided that the notes issued under them 
 might be convertible into the bonds for the sale of 
 which they were supposed to be necessary. The repeal 
 of this provision was a great misfortune. But for this 
 the United States notes would have been absorbed 
 immediately after the close of the war and the green- 
 back mania, for such I regard it, still so potent for mis- 
 chief, would not have existed. 
 
 That he did not make other mistakes, others that all 
 would unite in acknowledging and regretting, is ample 
 evidence of his ability. To Mr. Chase, as much as to 
 
272 
 
 the commanders of the Union armies, is the country in- 
 debted for its unity. All honor to him and to them; 
 none the less certainly to the soldiers who fought the 
 Confederacy in its strength than to those who crushed it 
 in its weakness; none the less to the memory of the \^oung 
 men of this University, to whose honor this noble build- 
 ing was erected, and to the young men of all the col- 
 leges who went to the battle-field and gave up their 
 lives for the Union, the preservation of which they saw 
 only with the eye of undoubting faith. 
 
 I have thus dwelt upon the early financial history of 
 the country, because the light reflected from the past is 
 the safest guide for the future. Whatever lessons the 
 past teaches cannot fail to be useful in giving direction 
 to present sentiment. 
 
 I intended to say all I had to say upon the representa- 
 tives of money in a single lecture, but I lacked time for 
 condensation, and I must trespass upon your indulgence 
 in continuing the subject next Tuesday evening, when 
 I hope to be able to present thoughts upon the subject 
 of the currency that may be worthy of consideration. 
 
 Fourth Lkcture. 
 thk national banking syvstf.m. 
 
 My lecture this evening is a continuation of that which 
 I delivered last Friday evening on "Representatives of 
 Money." There are many of these representatives, 
 such as promissory notes, notes of hand, as they are 
 called, checks, etc. The duties and offices of these are 
 well understood, and there is no difference of opinion 
 about their utility, no political contest in regard to them. 
 I shall, therefore, confine my remarks to Government 
 notes and bank-notes. I shall have a good deal to say 
 about bills of exchange, a very important representa- 
 tive of money, next Thursday evening, when I shall 
 speak on "Foreign Exchanges." 
 
 The leading measures of Mr. Chase's administration 
 of the Treasury were the Legal-Tender Acts, the issue 
 of bonds payable at a certain day, but redeemable at an 
 
273 
 
 earlier one at the pleasure of the Government, and the 
 national banking system. Of the Legal-Tender Acts I 
 have alread}^ spoken, and shall speak more freely fur- 
 ther on. The wisdom of the provision that the six per 
 cent, bonds might be redeemed before their maturity is 
 proved by the ease with which they have been con- 
 verted into four per cents., and the burden of the public 
 debt therebv largelv reduced. He was strongly advised 
 to make them thirty years bonds. Fortunately, he was 
 wiser than his advisers. The establishment of the na- 
 tional banking system was, however, the measure which 
 he had most at heart, and upon the success of which he 
 believed the best financial interests of the Government 
 depended. He regarded the Legal-Tender Acts as a 
 war measure. He thought that without a large issue of 
 notes possessing the legal qualities of money, sales of 
 bonds, sufficient to meet the wants of the War and 
 Navy Departments, w^ould be impossible. And he was 
 guilty of no inconsistency when he expressed the opin- 
 ion, as a Justice of the Supreme Court, that these notes 
 were not a legal tender in satisfaction of contracts en- 
 tered into before the Legal-Tender Acts were passed. 
 In one of the last conversations I ever had with him, 
 before he resigned his office as vSecretary of the Treas- 
 ury, he said: " Many things can be properly done under 
 the war power of the Government which would not be 
 tolerated in times of peace. I thought, and still think," 
 said he, "that the Legal-Tender Acts were a neces- 
 sity; I have never been committed to their constitu- 
 tionality." 
 
 When the suspension occurred in 1861 there were 
 some fifteen hundred banks of issue incorporated under 
 State law^s; some solvent and some of doubtful sol- 
 vency; some with a secured circulation, some without any 
 other security than that afforded by capital which had, 
 in some instances, but a normal existence. As all had 
 suspended, there were no means by which discrimina- 
 tion could be made between the notes of sound banks 
 and unsound ones. It was obvious that a very large 
 amount of currency would be required for the payment of 
 soldiers and seamen and the purchase of army and navy 
 supplies, and the question which confronted Mr. Chase, 
 
274 
 
 one of the most difficult which a financial minister was 
 ever called upon to'decide, was, By what means shall 
 this currency be obtained? He knew that if he bor- 
 rowed from the banks he would receive in payment 
 irredeemable notes, a large part of which might prove to 
 be worthless. If he relied upon the Government notes, 
 he would be doing what other nations had done, what, 
 indeed, had been done in Continental times in his own 
 country, without any certainty or different results — de- 
 preciation, bankruptcy, repudiation. After long and 
 anxious consideration, he adopted the principle of the 
 free banking system of New York, but with such se- 
 curity as would make the notes of the banks current 
 throughout the Union, and as safe as the bonds of the 
 Government and the limited liability of the stockholders 
 could make them. In my judgment the national bank- 
 ing system is one of the chief compensations of the war. 
 It has given to the country what it never had before — a 
 bank-note circulation of uniform value and unquestion- 
 able solvency. Those who are much older than most 
 of those whom I address can alone appreciate its value. 
 Nothing could be less fitted for the currency of a great 
 country like ours than the notes of the State banks un- 
 der the old systems. Only a small portion of them were 
 secured, and these, perhaps, not absolutely by deposits 
 of bonds in the State treasuries; none of them had a re- 
 liable credit outside of the States in which the Ijanks 
 which put them in circulation were established. The 
 losses that the people sustained 1:)y broken banks Ijefore 
 the adoption of the present system could be counted by 
 millions. The losses to which the}^ were subjected in 
 traveling from State to State and in making exchanges 
 w^ere also very heavy. The State bank system was a 
 system under which bank-note brokers were enriched 
 and the people defrauded. 
 
 It is to such a system that the country will return if 
 the present system should be destroyed, for I am quite 
 sure that the people will have a paper currency of some 
 kind, and I am equally sure that this currency will not 
 for a long period be furnished by the Government. The 
 contest, however, is between the Government notes and 
 the notes of the banks. Let us glance at the principles 
 
275 
 
 involved in this contest and the interests at stake; let us 
 consider the popular o1)jections to the national banking 
 system, and the real and substantial objections to the 
 substitution of Government notes for bank-notes. 
 
 Firstly. It is contended that the notes of the national 
 banks are costly to the people. 
 
 vSecondly. That the national banks are a monopoly. 
 
 Thirdly.' That they are a great money power, danger- 
 ous to the rights of people. 
 
 Fourthly. That they cannot furnish currency enough 
 for the requirements of trade 
 
 In what sense, then, are the national banks costly ? 
 The banks cannot obtain the notes which they put in 
 circulation without placing bonds in the Treasury with 
 ten percent, margin; in other words, they cannot ob- 
 tain ninety dollars of circulating notes without deposit- 
 ing a hundred dollars of United States bonds in the 
 Treasury at Washington. This is costly to the banks, 
 but not to the public. It is not a voluntary act of the 
 banks, it is what the Government requires, and the in- 
 terests of the people require of them, for the security of 
 their notes. There is not a banker in the United States 
 who, looking at his interests alone, would not be right 
 glad to be freed from this requirement. The bonds 
 which he deposits with the Treasurer are not the prop- 
 erty of the public; the interest they bear is to be paid 
 out of the public revenues whether they are made the 
 basis of circulating notes or not. Who ever heard of 
 complaints against the free banking system of New York 
 or of the West that it was a costly system to the people? 
 The only objection raised against it was that the notes 
 were not perfectly secured by it; nor was the national 
 bank system in any manner the creation of the State 
 banks;' without an exception, the State banks were op- 
 posed to it when I undertook the organization of the 
 National Currency Bureau. They were forced into it by 
 a ten per cent, tax upon their notes, which compelled 
 their withdrawal, and it is one of the interesting facts in 
 our financial history that the withdrawal of these notes, 
 and the substitution of the notes of the national banks, 
 was accomplished without the slightest financial disturb- 
 ance. In less than two years from the passage of the 
 
276 
 
 Bank Act the notes of the State banks were retired, and 
 the people furnished with a paper currenc3^ current 
 throughout the Union, and as solvent as the Govern- 
 ment. The National-Currency Act was the first practi- 
 cal assertion of the authority of the Government to reg- 
 ulate and control the paper currency of the country — 
 the first performance of a duty which it owed to the peo- 
 pte — in compelling the banks to secure beyond question 
 their circulating notes. The national banking system is 
 in no sense a costly one to the people; the people pay 
 nothing for its support. On the contrary, it contributes 
 largely to the public revenues by the taxes imposed upon 
 the banks, taxes which are as unwase as they are unjust, 
 which if continued will force many of them into liquida- 
 tion. The taxes which the national banks pay to the 
 Government, and the interest on the coin reserve which 
 the Government \vould be under the necessity of main- 
 taining if it should undertake to support a convertible 
 circulation of United States notes, would far exceed the 
 interest which the banks receive upon the bonds depos- 
 ited by them in the Treasury. The national banking 
 system, while it furnishes the safest paper currency in 
 the world, is not a profitable system to bankers. It is 
 true that during the period of inflation the banks did, 
 like all other financial institutions, make a good deal of 
 money upon paper, but their profits were to a considera- 
 ble extent illusory. I fear that the small dividends that 
 some of them are now declaring are making inroads, if 
 not upon their capitals at least upon their surplus, which 
 prudence requires them not only to maintain but to in- 
 crease. The only way in which, according to the opin- 
 ion of those who are opposed to the banks, money can 
 be saved in supplying the country with a paper currency 
 is by a repeal of the National-Currency Act and the re- 
 demption of the bonds in the safe keeping of the Treas- 
 ury with United States notes, an experiment which, if 
 ever tried, will prove to be more costly and disastrous 
 than any experiment which has ever been tried. 
 The objection, therefore, to the national banking sys- 
 tem, that it is costly to the people, is utterly without 
 foundation. 
 
277 
 
 Equally unfounded is the objection that it is a mo- 
 nopoly. So far from it, it is eminently free and demo- 
 cratic in character. There is not a feature of monopoly 
 about it. It permits any five people (outside of large 
 cities where successful banking with small capital is im- 
 possible), who can command fifty thousand dollars, to 
 become bankers. It requires only that those who un- 
 dertake to lend money under the sanction of the Gov- 
 ernment shall have the money to lend; that those who 
 exercise the right of issuing obligations as money shall 
 secure them. So far and no further does the national 
 banking system go towards establishing a monopoly. It 
 is, in fact, a great free banking system, eminently popu- 
 lar in its character, open to all citizens of the United 
 States, with all the objections to a Government bank 
 carefully eliminated. It is the extension of the free 
 bank system first established in New York, which was a 
 triumph of popular over what might be called, if I 
 may be permitted to coin a word, monopolistic banking. 
 
 Nor is there any better foundation for the charge that 
 the national banks are a great money power, dangerous 
 to the rights of the people. What power has money in 
 banks which it does not otherwise possess? What right 
 of the people do the banks invade? What interests do 
 they endanger? Money is power always and every- 
 where; it always has been and will always continue to 
 be; no legislation can prevent it. But its political 
 power, far from being increased, is, in fact, lessened 
 when it is invested in bank stocks. The national banks 
 have a large capital, amounting in the aggregate to 
 some four hundred and seventy millions of dollars, 
 and they have the temporary use of six hundred millions 
 of deposits. Their capital is made up of the earnings 
 or the inheritances of a large number of people who 
 prefer investments in bank stocks to other investments. 
 Their deposits are moneys for which their owners have 
 no immediate use, and who place them in the banks for 
 safety or convenience or for the interest which is paid 
 on them. They do control a large amount of money, 
 but for business purposes only. Bankers are not poli- 
 ticians. If anyone is knowm to be dabbling in politics, 
 as it is called, the bank which he manages is regarded 
 
^7cS 
 
 with suspicion and suffers in credit. The managers of 
 banks are generally men of ability, but there are no 
 men in the country who have less political influence. It 
 would not be difficult to find twenty men in Boston who 
 never owned a share of bank stock, who wield more 
 power in elections than all the officers, directors, and 
 employees of all its national banks. Unfortunately, 
 bank managers, like other business men, are too apt to 
 neglect political affairs. Some are so absorbed by offi- 
 cial duties or private enterprises, some so afraid of what 
 they call political dirt, that it is only by strong pressure 
 in an exciting election that they can be induced even to 
 vote. This is a free country, and men can go to the polls 
 or they can stay away, according to their own good 
 pleasure, but if they suppose they are to be freed from 
 politics and politicians by neglecting their own political 
 duties, they are grievously mistaken. The}" have their 
 existence in a political atmosphere from which there is 
 no escape. Ours is a Government of the people, which 
 is in constant peril when those who have the greatest 
 interest in its maintenance manifest no personal concern 
 in the administration of its affairs. "Eternal vigilance 
 is the price of liberty." When this vigilance ceases to 
 be exercised by those who have the most at stake, des- 
 potism will become a necessity. So far are bankers from 
 combining for the purpose of controlling elections, that 
 the}^ generally shrink from the performance of their 
 duty as citizens in the selection of candidates and at the 
 polls. There has never been a combination of the na- 
 tional banks for any political purpose whatever. The}" 
 have not even attempted a combination of their influ- 
 ence to effect a reduction of the grievous taxes which 
 are imposed upon them. The banks are by no means 
 under the control of men of the same party, nor are 
 they in the enjoyment of privileges which they are es- 
 pecially anxious to retain. The State banks were forced 
 into the national banking system, and, if a vote were 
 taken to-day, a majority, regarding their own interests 
 alone, would, as I have said, be in favor of being placed 
 again under the control of the States. The national 
 system of banking was established not for the benefit of 
 the bankers, but for the benefit of the people, and the 
 
279 
 
 people will be blind to their own interests if they per- 
 mit it to be destroyed. That it is not especially attrac- 
 tive is proved by the fact that, although open to all, 
 there are in the United States nearly four thousand State 
 banks and private bankers, with a capital of over two 
 hundred millions of dollars and deposits exceeding four 
 hundred millions, that decline to connect themselves 
 with it. The objection that the system is dangerous to 
 the rights of the people as a great money power is as 
 groundless as the other objections which I have con- 
 sidered. 
 
 Nor is there any ground for apprehension that the na- 
 tional banks will either be unable or unwilling to furnish 
 all the paper money that will be needed for legitimate 
 trade. The cause of apprehension is in the other direc- 
 tion. There is a consistent tendency to excessive is- 
 sues by the banks when currency is on demand. The 
 business depression which has existed within the last 
 five years in the United States was caused, in no small 
 measure, by the large issues of notes by the Govern- 
 ment and the banks. There is not a single branch of 
 industry in this country which is suffering for want of a 
 circulating medium, not one that would be benefited by 
 an increase of it. I will go further, and on this point I 
 can speak advisedly, for I have been for forty years a 
 careful observer of the condition of trade in the United 
 States and of the causes which have produced hard and 
 prosperous times; I will go further and assert that there 
 has been no time when industry has languished, and the 
 production of factories and fields have failed to fetch 
 remunerative prices, by reason of a scarcity of money 
 to pay for them. What is now needed for a general 
 revival of business in not more money, but what has 
 always been needed in times of depression, more work 
 for laborers, more and better markets for our produc- 
 tions. As I remarked in a previous lecture, prices of 
 most of the productions of the country are low, of many 
 articles lower than they were before the war; the prices 
 of some are even below the cost of production, and yet cur- 
 rency w^as never before so cheap or so abundant. An 
 increase of the volume of the circulating medium would 
 aggravate instead of lessening the existing trouble, by 
 
280 
 
 breaking confidence, which is the mainspring of inter- 
 prise. No reasonable objection, therefore, lies against 
 the national banking system on account of its present or 
 prospective inability to supply the country with all the 
 currency required for all legitimate and useful purposes. 
 
 That well-managed banking institutions are conducive 
 to national prosperity is proven by the experience of all 
 great commercial nations. There is not one which has 
 not found them as banks of issue, as well as of deposit 
 and discount, not only a popular convenience, but a 
 great commercial advantage. Whatever losses have 
 been sustained by them were the result either of defects 
 in the laws under which they were organized or of mis- 
 management. As far as depositors can be protected 
 they are protected under the present system, by the 
 requirements that the capital of the banks shall be fully 
 paid up; by the liability of stockholders for an amount 
 equal to their stock in addition to it; by the supervision 
 to which they are subjected l)y competent examiners; 
 by limitations upon their loans, and by the penalties im- 
 posed upon officers and directors for fraudulent misnmn- 
 agement, of which insolvency is prima facie evidence. 
 No such failure as that of the Bank of Glasgow, or ap- 
 proximating it, could have occurred under our national 
 banking system. So far as the note holders are con- 
 cerned, and their interests are a matter of primary im- 
 portance, the protection is absolute. No other banking 
 system in the world aftbrds superior protection to depos- 
 itors; none is equal to it in the security it gives to circu- 
 lating notes. It is this system which gives to the coun- 
 try what has been so long desired — a bank-note circu- 
 lation of uniform value and unquestionable solvency — 
 that is now endangered by a proposition to substitute for 
 the notes of the banks the notes of the Government. 
 Now, let us see what this population involves. 
 
 It involves, among other things, the winding up of a 
 large part of the national banks and the conversion of 
 the rest into State or private banks. If this conversion 
 should be back to State banks there would be a repeti- 
 tion of the evils from which the country suffered disas- 
 trousl}' for so many years, a bank-note circulation of 
 local credit and uncertain value; if into private banks 
 
28l 
 
 there would simply be, instead of banks of issue, an in- 
 crease of offices of discount and deposit, issuing no 
 notes, subject to no supervision, conducted merel}- for 
 private gain. To such an entertainment is the country 
 invited by the opponents of the existing system. It is 
 contended, I know, that the deprivation of the privilege 
 of issuing notes would neither necessitate the winding 
 up of national banks nor their conversion into local or 
 private institutions. Why it would not we are not in- 
 formed. To many of the banks the right to issue notes 
 is of some value, not much, it is true, but still suffi- 
 cient to induce them to remain in the national system. 
 The profits of the banks, whose notes will soon be based 
 upon four per cent, bonds on their circulation, after de- 
 ducting their taxes thereon, will not, as has been shown 
 by the recent exhaustive report of the Comptroller of 
 the Currency, exceed one and a half per cent. ; but these 
 profits, small as they are, are the only compensation 
 which they have for the annoyances to which they are 
 subject as national banks. Deprived of these profits, 
 the majority of them would call in their loans and go 
 into liquidation to the great disturbance of business and 
 the severe prejudice, if not ruin, of their debtors. Those 
 who did not do this would go back to the old system or 
 into private banking. Whenever the national banks are 
 deprived of the power to issue notes the power of the 
 Government over them will cease. The national bank- 
 ing system was established to give to the people a paper 
 circulation upon which they could safely rely and which 
 they could use at par in every part of the Union. When- 
 ever the privilege of issuing notes is withdrawn from 
 the banks the very object for which they were chartered 
 will be terminated. A national banking system without 
 a national bank-note circulation would be an absurdity. 
 The substitution of United States legal-tender notes 
 for the notes of the national banks means also the per- 
 petuation of a local measure of value fluctuating in 
 amount, and, consequenth^ in purchasing power, instead 
 of the long-established constitutional measure. One of 
 the first questions which came up for consideration after 
 the adoption of the Constitution was the authority of 
 Congress to incorporate a bank to be the fiscal agent of 
 
282 
 
 the Government, with the right to issue notes, not as 
 lawful money, but as a circulating medium, to facilitate 
 exchanges and to give life to languishing industry and 
 trade. On this question there was a great difference of 
 opinion, not only in Congress, but in the Cabinet. Jef- 
 ferson and Randolph were opposed to it, Hamilton and 
 Knox in favor of it. Washington agreed with the latter, 
 and gave to the act incorporating the first United States 
 national bank his approval. As far as we can judge 
 from the discussions at the time, a provision in the bank 
 act to make the notes of the bank lawful money would 
 not have had a single supporter in Congress. It re- 
 mained for statesmen of the present day to discover the 
 authority of Congress to give to anything but gold and 
 silver the quality of money. Indeed, not only the au- 
 thority of Congress to incorporate a United States 
 bank, but the authority of the States to create State 
 banks of issue, was for a long time a mooted question. 
 Up to the time of the passage of the Legal-Tender Acts 
 in 1862 there was probably no lawyer in the United 
 States, whose opinion was entitled to the slightest re- 
 spect, who did not agree with Mr. Webster, that as Con- 
 gress had no power granted to it in that respect except 
 to coin money and regulate the value of foreign coins, 
 it clearl}^ had no power to substitute anything else for 
 coin as a tender in the payment of debts and in the dis- 
 charge of contracts. Nor did any advocate of these 
 acts justify his advocacy by the sanction of the Consti- 
 tution. They were advocated and passed as war meas- 
 ures outside, if I may so speak, of the Constitution, and 
 as war measures onh'. 
 
 The substitution of United vStates notes, with the qual- 
 ity of money, for bank-notes is objectionable, therefore, 
 on constitutional grounds. The change which has re- 
 cently taken place in the opinions of distinguished men 
 upon this vital question is remarkable. Many of those 
 who were formerly the strictest of strict construction- 
 ists, who denied the right of Congress to issue notes as 
 lawful money even under the war power of the Govern- 
 ment, when such issues were thought to be necessar}- 
 for the preservation of the Union, are now in the time 
 of peace in favor of increased, if not of unlimited, issues. 
 
283 
 
 Let us look at this question a little more closely. The 
 Constitution is the supreme authority from which Con- 
 gress derives its law-making power. No law is consti- 
 tutional which is not in harmony with it, and while a 
 liberal construction may be necessary to carrj^ out its 
 provisions, a construction which gives to Congress au- 
 thority not warranted by its letter or spirit subverts the 
 basis of constitutional government. The Constitution 
 gives to Congress the power to coin money and to fix a 
 value upon the coins of other nations, to establish mints 
 to convert gold and silver l)ullion and foreign coins into 
 coins of the United States. Authority to issue notes as 
 lawful monej^ is not given to it by the Constitution, nor 
 is such authority needed for the execution of any of its 
 powers. If, by the authority given to Congress to coin 
 money and regulate the value of foreign coins, the right 
 to issue legal-tender notes as a currenc}' can be fairly 
 inferred, I can conceive of no act of despotism which 
 it might not perform under the fundamental law which 
 was framed with a view to define and limit Federal au- 
 thority. 
 
 There are other strong objections to the United States 
 notes as lawful money. They have no intrinsic value; they 
 are not money in any proper meaning of the word; they 
 are made money b}^ acts of Congress, but the}^ are not 
 regarded or treated as such outside of the United States. 
 
 Their value depends upon their being convertibe 
 into coin and their being made receivable for public 
 and private dues. Their legal-tender quality is a viola- 
 tion not only of the Constitution, but of the common law 
 of commercial nations. 
 
 There are also overwhelming objections in another 
 respect to Government notes. There can be no limita- 
 tion, if the authority to issue them is admitted, upon the 
 amount that might be put in circulation. By one Con- 
 gress the limitation might be three hundred millions; by 
 another the limitation might be extended to five hundred 
 millions; by another to a thousand millions, and so on. 
 How could business be conducted with safet}' if the 
 power to increase the lawful measure of value were in- 
 trusted to Congress, no matter what party might be in 
 control of the Government? Would the Democratic 
 
284 
 
 party be willing to intrust such power to Republicans? 
 Would the Republican part}' intrust it to Democrats? 
 Would business men — would the laboring classes — be 
 willing to intrust it to either? No government in the 
 world is wise enough or honest enough to be intrusted 
 with the authority to make money by what is now called 
 its fiat, or by merely promising to pay it. To my mind 
 the objections to continued issues by the Government of 
 legal-tender notes are insuperable. Other nations have 
 resorted to such issues, but only under the pressure of 
 great and immediate necessities. B}- no solvent gov- 
 ernment have such notes been issued for a permanent 
 currency, and never has the great fundamental interna- 
 tional law, which makes gold and silver alone money, 
 been violated by any nation, no matter under what cir- 
 cumstances, without discredit to itself and prejudice to 
 its people. 
 
 The main objection to Government notes would be 
 lessened if they were deprived of their legal-tender 
 quality, but other serious objections would still remain. 
 A paper circulation can only be useful when it is con- 
 nected with business operations. It should never be 
 anything more than a supplement to the precious metals. 
 Always redeemable, its volume should be regulated not 
 by arbitrary authority, but by the requirements of trade. 
 Such a regulation can never exist when the circulation 
 is furnished by the Government. No legislative body, 
 even if no political or other improper influences were 
 brought to bear upon it, could determine the amount of 
 paper currency which the countr}' required. If the 
 present Congress, having no fear of a veto by the Presi- 
 dent, should undertake to determine how much currenc}^ 
 is now needed to supply current wants, is it at all proba- 
 ble that the amount would be reasonably restricted? 
 Current wants, by some members, would be regarded as 
 including only what is needed to facilitate existing trade; 
 but a majority would, I fear, include in current wants 
 the amount needed, in their opinion, to "revive our lan- 
 guishing industries and develop the national resources." 
 A gentleman of large wealth and much general intelli- 
 gence, perfectly sound upon other subjects, but at sea 
 upon the subject of currency, said to me in November 
 
285 
 
 last, that " the financial troubles which had come over 
 the country were the result of contraction " (although 
 the volume of paper money then outstanding was three 
 times larger than at any time before the war), and that 
 " two thousand millions were required for a restoration 
 of former prosperity." Into what overwhelming disas- 
 ter would not the country be plunged if such a man, 
 and he is a representative of his party, had the control 
 of the national finances ? The only way in which cur- 
 rency can be furnished by the Government is by the use 
 of it in redeeming outstanding bonds, or in reducing 
 taxes, or increasing public expenditures. What would 
 the bonds be worth if they were redeemable in a cur- 
 rency the volume of which might be unlimited? What 
 economy would there be in the public expenditures if 
 the printing press could be made to do the work of the 
 tax collector ? Who would be audacious enough to talk 
 about taxes and the necessit}- of maintaining the public 
 credit by a judicious revenue system, if money could be 
 made without any other expense than such as would be 
 required in printing notes ? I venture the prediction, if 
 this power is ever fully exercised, that the halls of Con- 
 gress will be converted into a gambling house, whose 
 operations will cast into the shade those of the stock 
 exchanges of our commercial cities. 
 
 But sui)pose that more prudent counsel should prevail 
 and the volume of currency should be limited to the 
 amount now existing and continue to be convertible into 
 coin, could the Government properly do the w^ork of 
 banking institutions ? Would the Treasurer at Washing- 
 ton and the Assistant Treasurers in our commercial 
 cities be the proper agents for redeeming notes ? It is 
 true that the United States notes are convertible into 
 coin and that the holders can have them redeemed by 
 presenting them at the offices of the Assistant Treasur- 
 ers, but this is because the amount is limited and be- 
 cause there is no demand for coin for exportation. Let 
 the United States notes be substituted for the outstanding 
 notes of the national banks, and increased to seven hun- 
 dred millions (if not to a much larger amount) instead 
 of three hundred millions, then we shall see how this 
 system will work wdien the exchanges even for a short 
 
286 
 
 period are unfavorable. If we are to have a convertible 
 paper currency it will be as it has been in all other 
 countries, through the instrumentality of banks, with 
 limited power of issue, and whose existence is made de- 
 pendent upon their ability to redeem the notes which 
 they put in circulation. It must have been noticed, 
 however, by all who have paid attention to the discus- 
 sions of this subject in Congress or before the people, 
 that a circulation the value of which will depend upon 
 its convertibility is not what is required by the advo- 
 cates of direct issues by the Government. What they 
 contend for is Government notes which will not need 
 convertibility to give them value, notes which shall be 
 themselves raone}', no matter what may be their value 
 in comparison wnth coin. Their real objection to the 
 notes of the banks is that they stand in the way of un- 
 limited issues of United States legal-tender notes. 
 
 It is understood that our able finance minister thinks 
 it would be judicious to keep three hundred millions of 
 the United States notes in permanent circulation. It is 
 reported that he has gone very much further than this; 
 that he has said, "If there should be a contest as to 
 which should furnish the country with circulating notes, 
 the Government or the banks, he should be on the side 
 of the Government," which means that to bank-notes, 
 perfectly secured by the bonds of the Government, and 
 the liability of stockholders, limited in amount by de- 
 posits with the Treasurer, and which are not a legal ten- 
 der, he w^ould prefer the notes of the Government, made 
 lawful money by statute, the amount of which to be put 
 into circulation would be restricted only by the discre- 
 tion of Congress. In taking this position he would dis- 
 regard the experiences of other nations as well as our 
 own, and we would find few supporters among the best 
 thinkers and most intelligent business men of the coun- 
 try. That bank-notes in the United States are now an- 
 swering a legitimate and useful purpose is, I think, un- 
 deniable by those even who prefer to them the notes of 
 the Government. They do not usurp the place of coin; 
 their value depends upon their convertibility and the se- 
 curity lodged with the Treasurer; they find their way 
 Into circulation through business channels; they repre^ 
 
287 
 
 sent business. The banks that issue notes have some- 
 thing to show for them— the obligations of borrowers. 
 Not so with the notes of the Government; they claim to 
 be what they are not; they are made money by statute, 
 but they are merely obligations for the payment of 
 money. ^ By being made a legal tender, they become a 
 false and deceptive measure of value. A legal substi- 
 tute for coin, they drove coin out of circulation for years, 
 and they will always work in this direction. The specie 
 standard will not be permanently restored, the financial 
 question will not be removed from the political arena, 
 nor will the business of the country rest upon a solid 
 basis, until they are deprived of their legal-tender 
 quality by an act of Congress or the decision of the Su- 
 preme Court, and gradually retired from circulation. 
 
 Great consideration should be given to the opinions of 
 the Secretary of the Treasury upon financial questions. 
 Especially should this be the case when he has been 
 identified for years with our financial legislation. In 
 differing with Mr. Sherman, for whose ability I have 
 great respect, and to whom the country is greatly in- 
 debted for his successful administration of the Treasury, 
 I might doubt the correctness of my own conclusions 
 were I not sustained by speeches and reports made by 
 himself when he was in the Senate. 
 
 On the 13th of February, 1862, in an able speech in 
 favor of the first Legal-Tender Act, authorizing the is- 
 sue of one hundred and fifty millions of United States 
 notes, he used the following language: 
 
 The only objection to this issue of paper money is that too 
 much may be issued; there is the only danger in it. I do not 
 believe the issue of one hundred and iifty millions will do any 
 harm, but if you continue to issue other sums you will at once 
 depreciate the credit of these demand notes (meaning the out- 
 standing Treasury notes which were not a tender), and destroy 
 their value. If you confine it to the amount limited by this 
 bill, I believe the effect will be healthy in all of the business re- 
 lations of the countrv. 
 
 This is a mere temporary expedient. It is manifest that we 
 must rely upon some other source of obtaining money. We 
 dare not repeat this experiment a second time. If we do we 
 enter upon the same course that was followed in the French 
 Kevolution, and also by our American ancestors, 
 
288 
 
 On the 17th of December, 1867, in a report upon the 
 public debt, he expressed his own opinion and that of 
 the Finance Committee of the Senate, of which he was 
 chairman, as follows: 
 
 Your committee are of the opinion that the time is not 
 distant when it will become the duty of Congress to repeal so 
 much of the existing laws as makes the United States notes a 
 legal tender in the payment of debts, either public or private. 
 This provision was adopted with extreme reluctance, and under 
 the pressure of overwhelming necessity. The debates in Con- 
 gress at the time this measure was adopted show conclusively 
 that it was universally regarded as a temporary expedient. It 
 is inconsistent with sound financial principles, and was never 
 resorted to since the commencement of the present Govern- 
 ment until February 25, 1862. The evils produced by Conti- 
 nental money were so fresh in the minds of the founders of the 
 Government, that during the financial difficulties which fol- 
 lowed the adoption of the ConstitvUion no one proposed such 
 an expedient. During the War of 1812, when financial enibar 
 rassments had impaired the revenue and destroyed the public 
 credit, a limited tender Treasury note was proposed and w-as 
 promptly rejected. Mr. Dallas, in a communication to the 
 Committee on Ways and Means, declared, "That the extremity 
 of that day cannot be anticipated when any honest or enlight- 
 ened statesman will again venture upon the desperate expe- 
 dient of a tender law. We were driven to that extremity, but 
 should hasten to abandon so desperate a remedy at the earliest 
 day practicable. The moment at which we can restore the 
 notes to a specie standard should be signalized by a return to 
 correct principles, and our United States notes should stand 
 like all other paper mouc}-, receivable only at the pleasure of 
 the creditor. 
 
 In a speech in the Senate upon the currency, January 
 24, 1870, Mr. Sherman said: 
 
 I believe the judgment of the country is gradually settling 
 down to the conviction that a note issued by a government 
 cannot be a proper agency of circulation. Other nations as 
 well as our own have often tried the experiment of maintaining 
 a circulating note issued by the Government, and they have 
 universally found it to fail. It is impossible to give to currency 
 issued by a government the flexibility necessar}* to meet the 
 demand of the exchanges, and therefore experience has shown 
 that a note issued by a government, and maintained upon the 
 guarantee of the government alone, does not form a good cir- 
 culating medium, except during a suspension of specie pay- 
 ments. It must have a flexibility which will enable it to be in- 
 creased in certain periods of the year, and to flow back again 
 into the vaults of the banks at others. I am convinced, although 
 it is unnecessary to disciiss that point here, that in time it will 
 
289 
 
 be wise to retire our United States notes and all forms of Gov- 
 ernment circulation, and depend upon notes issued by private 
 corporations, amply secured ])eyond peradventure, so that in 
 no case can the note holders lose, and to subject the banks to 
 regulations applicable to all parts of the country, making them 
 free, so that the business of banking will be, like the business 
 of manufacturing, blacksmithing, or any other ordinary occu- 
 pation or business of life, governed only by general law. 
 
 These were no hasty titterances. They were care- 
 fully considered opinions expressed at intervals of years; 
 they cover the whole ground of the present controversy. 
 If the minister differs from the vSenator, I must stand with 
 the senator, and so, I hope and believe, will the coun- 
 try. 
 
 Fifth Lecture. 
 
 NATIONAL DEBTS AND FOREIGN AND DOMESTIC EX- 
 CHANGE. 
 
 In my last lecture I spoke of paper obligations as rep- 
 resentatives of coin, and dwelt at some length, perhaps 
 unnecessary length, upon the question of the substitu- 
 tion of national legal-tender notes for the notes of the 
 national banks. I have dwelt upon this question because 
 I regard it as one upon the proper settlement of which 
 the national credit and the welfare of the people largely 
 depend. It is a question in regard to which the country 
 ought not to go wrong, and will not, if it is calmly and 
 carefully considered. Great things have been accom- 
 plished in the United States within the last seventeen 
 years, things that are regarded as marvels by enlight- 
 ened and fair minded observers on the other side of the 
 Atlantic. What military man in Europe supposed that 
 a civil war, waged with such heroism and persistency 
 on both sides, would terminate as ours did; that a million 
 of our men, some of whom were in the service for 
 years, and all long enough to acquire a taste for a sol- 
 dier's life, could be " mustered out " and be sent to their 
 homes without a single instance of violence or popular 
 disturbance ? What financier supposed that a reduction 
 of our public debt would be commenced within six 
 pionths from the end of the war, and be continued 
 
290 
 
 throughout a period of unparalleled financial depression 
 and disaster, until one-third of it had been paid and the 
 burden of the balance had been greatly lightened by re- 
 ductions in the rate of interest which it bears ? Who 
 that was cognizant of the history of similar experiments 
 could have dreamed that the United States notes would 
 go all the way down from one or two per cent, discount 
 in 1862 to sixty per cent, discount in 1864, and be 
 brought up to par in gold in 1878 ? Mistakes have been 
 made and much suffering has been caused by them, but 
 no government has a more creditable financial record 
 than that of the United States. All that is now required, 
 as far as the action of the Government is regarded, is a 
 judicious revenue system and a stable currency to insure 
 to our people greater prosperity than they have hereto- 
 fore enjoyed, greater than has fallen to the lot of the 
 people of any other nation. 
 
 I propose in this lecture to speak upon two subjects, 
 distinct, and yet in some respects involved, viz, national 
 debts and foreign and domestic exchange. 
 
 By national debts is meant debts of governments in 
 their national capacity. These debts, in their present 
 form, are of recent origin. Four-fifths of their present 
 amount have been contracted within the present century. 
 Their aggregate, exclusive of municipal debts, exceeds 
 twenty thousand millions of dollars. All governments 
 have at times, in one form or another, been borrowers. 
 In early times their loans were local,, temporary, and in- 
 considerable in amount. Italy took the lead in shaping 
 the form of existing national debts by funding tem- 
 porary loans in interest-bearing obligations, payable at 
 a distant day. Her example was contageous. Other 
 nations not only followed her lead in funding existing 
 debts, but they became borrowers on similar obligations; 
 and as they increased in population and wealth, lenders 
 became plentiful, and there was a constantly increasing 
 demand for this class of securities. The temptation 
 thus placed before governments to borrow, rather than 
 to supply their wants by taxation became irresistible, 
 and their wants kept pace with their facilities for bor- 
 rowing. To such an extent have the debts of many of 
 the European States been swollen that the payment of 
 
291 
 
 anything more than the interest thereon is regarded as 
 being among the impossibilities. In the budgets of 
 the richest European nations one rarely sees provision 
 for the reduction of their debts. Their finaricial minis- 
 ters are quite content if their estimates show that the 
 interest can be paid, and their current expenses can be 
 kept within current receipts, without an increase of tax- 
 ation. To meet war expenses, or other extraordinary 
 demands upon their treasuries, their only recourse is to 
 borrow. The French rentes and the English consols are 
 not payable at any fixed day; they are what might 
 be called interminable annuities. The interest is only 
 provided for, and the indefinite postponement of the 
 payment of the principal increases instead of lessening 
 their market value. There is a double influence in 
 favor of the non-payment of the principal of the public 
 debts of solvent nations, the indisposition or the ina- 
 bility of the governments to curtail expenses or to in- 
 crease taxes, and the unwillingness of investors, who 
 are usually a very influential class, to have their securi- 
 ties redeemed. Either influence is strong by itself; 
 combined, the}^ are sufficient to secure the perpetuation 
 of most national debts. The United States is the only 
 solvent nation in which these influences are not prevalent 
 and controlling. Nobody expects that the debt of Great 
 Britain or of France will ever be paid or considerably re- 
 duced; the tendency is towards increase rather than 
 diminution. They are to remain never-ending if not 
 steadily increasing national burdens. That they are bur- 
 dens, and heavy burdens, ought not to be questioned, 
 and yet the correctness of this statement is sometimes 
 denied by intelligent persons. There are, it is admitted, 
 alleviations in national debts in national growth, and in 
 the use of national securities, but they are alleviations 
 only. It is admitted that the wealth of the most heavily 
 indebted solvent nations has more than kept pace with 
 their debts. Thus the percentage of debt charge upon 
 the national income in Great Britain and France is less 
 now than it was at the commencement of the present 
 century, when their debts, in comparison w^ith what they 
 are now, were quite insignificant. Rapid as has been 
 the increase of their debts, their increase of wealth has 
 
292 
 
 been still more rapid; but for this increase of wealth the 
 debts could not have been contracted; they would have 
 been insupportable long before they had reached their 
 present magnitude. This increase of wealth with the 
 increase of debt is w^ell illustrated in France. At the 
 close of the First Empire, the assignats having been re- 
 pudiated, and Napoleon having been able to support his 
 armies by levies upon the nations he conquered, the 
 debt of France amounted to only three hundred and 
 fifty millions of dollars. From this small beginning it 
 went on increasing under the Bourbons, the Orleanists, 
 the Republic, the vSecond Empire, until at the close of 
 the late war with Germany, it had been rolled up to not 
 less than thirty-five hundred millions of dollars. Dur- 
 ing this period she had been engaged in wars, costly in 
 money as well as in men, and had been deprived of two 
 of her wealthy provinces, and yet the percentage of the 
 charge of her debt upon her income is less than it was 
 when her debt was not a tenth part of what it now is. 
 Her debt, vast as it is, is the property of her own peo- 
 ple, and, with the exception of Belgium, she is at the 
 present time the most prosperous country in Europe. 
 All this does not, however, invalidate the statement that 
 national debts are national burdens. France as a na- 
 tion is not oppressed by her debt, because it is a home 
 debt, and because her people excel all others in industry 
 and thrift. Still it is a burden upon her resources, and 
 can never be otherwise; she is prosperous in spite of it. 
 Her prosperity would be much greater if she were re- 
 lieved of it. There are also undoubtedly alleviations 
 of the debts of solvent nations in the use which is made 
 of them. They are capital in the hands of those who 
 hold their obligations; hence the influence in favor of 
 their perpetuation. So strong is this influence that the 
 French Government hesitates to reduce the rate of in- 
 terest upon its public debt. 
 
 The opinion that debt in any form could be capital 
 was criticised and ridiculed in his valuable treatise upon 
 Political Economy by Mr. Amasa Walker, a gentleman 
 whom I held in high esteem and to whom I was greatly 
 indebted for the support which he gave me when I held 
 a difficult and trying position, According to Mr. Wal- 
 
298 
 
 ker's definition, " capital is the accumulation of labor." 
 This definition is not quite broad enough, but I admit 
 its general correctness. What a man earns more than 
 he spends is his capital, but does it cease to be capital 
 when he makes a judicious investment of it in public or 
 private securities ? The manufacturer invests his sur- 
 plus earnings in the improvements of his machinery, in 
 additions to his stock, or in enlarging his factory in order 
 that his business may be more profitable; the .farmer 
 uses his surplus gains in adding to his acreage or in the 
 better cultivation of his lands, by which they are made 
 more productive, and thus increases his capital by the 
 judicious use of his gains. Kow, if instead of making such 
 uses of their earnings or gains, as I have indicated, they 
 invest them in notes and mortgages, Government bonds, 
 or other kinds of interest-bearing and solvent securities, 
 do they by so doing sink their capital, or do they 
 merely change the form of it ? The laborer puts a portion 
 of his daily wages in a well- managed savings bank, and 
 thereby becomes, to the extent of his savings, a capital- 
 ist. His means are the accumulation of his labor, the 
 bank is his debtor, the debt due from the bank is his 
 capital. If, instead of so depositing his money, he lends 
 it to his neighbor on reliable security or invests it in 
 Government bonds, does he part thereby with his cap- 
 ital? May he not by doing so be taking the surest 
 means of adding to it ? It is the business of a bank to 
 lend money. Its capital consists of the accumulation of 
 labor, or of labor and capital combined; does it cease to 
 be capital when it is loaned and transferred into the 
 bills and notes of its customers ? It seems to me to be 
 unquestionable that the debt of one man may be the 
 capital of another; that the interest-bearing debt of a 
 solvent State is capital to the holders of the evidences 
 of it. Mr. Walker, in speaking of United States bonds, 
 said that, " they being good securities, the holder can 
 exchange them for cash, and with this can obtain any 
 description of capital he may need; that the bonds are 
 not capital, but only the security upon which capital 
 may be had; that they have no elements of capital about 
 them." I should say, on the contrary, that these bonds 
 cannot only be converted into cash, which is capital, but 
 
2U 
 
 that the}^ were purchased with cash, which was capital, 
 and that the cash did not cease to be capital b^^ being in- 
 vested in them. The bonds of the Government of the 
 United States represent nothing but debt; debt created 
 for the pajmient of soldiers and sailors who were en- 
 gaged in the work of destroying property and life, or 
 for the purchase of war material which perished in the 
 using, and yet these bonds, being the obligations of a 
 solvent nation, are capital to the holders. The three 
 thousand million dollars of debt that existed against the 
 Government at the close of the war represented but a 
 part of its cost. The waste of property and the diver- 
 sion of labor from industrial pursuits amounted, doubt- 
 less, to as much more. In a pecuniary point of view, 
 the United States, to say nothing of the loss of property 
 in the slaves liberated by the emancipation proclama- 
 tion of Mr. Lincoln, and made forever free by the result 
 of the war and the amendments of the Constitution, 
 were at least six thousand millions of dollars poorer than 
 they would have been if there had been no war, and 
 yet, as the solvency of the Government is undoubted, 
 its outstanding bonds, now happily reduced to less than 
 $2,000,000,000, and which, as far as the Government is 
 regarded, represent debt only, are some $2,000,000,000 
 of capital in the hands of those who are so fortunate as 
 to be the owners of them. It is the fact that national 
 debts are capital, and productive capital to those who 
 hold the national securities, which causes them to be re- 
 garded with favor, to be looked upon not as a charge 
 upon the national resources, but as obligations devised 
 especially for the benefit of those who have money to 
 invest and desire to live upon the interest. Many En- 
 glishmen take this view of the British debt; they call it 
 the FUNDS, and seem to look upon it as if it were an evi- 
 dence of their country's wealth. This idea, or senti- 
 ment, or whatever it may be called, is beginning to show 
 itself in the United States, and it will spread and deepen 
 as the Government bonds are more widely and gener- 
 ally distributed; that no other kind of security is regarded 
 with equal favor, is proved by the rapidity with which 
 the four per cents, have been recently taken. Four per 
 cent, is a low rate of interest in the United States — lower. 
 
^95 
 
 probably, than will be the ruling rate in years to come, 
 and yet investors, small and large, savings banks and 
 trustees of estates, have been putting their money into 
 these bonds in preference to investing it in other secu- 
 rities bearing a higher rate of interest. It is not strange, 
 therefore, that many of our own people begin to regard 
 the national debt as being, if not exactly a blessing, at 
 least a convenience. It is, however, a burden, and it 
 will never cease to be until paid. There are ameliora- 
 tions of it, and there are benefits in the use which is 
 made of it, but these only partially offset its evils. The 
 interest upon it is drawn from the people by taxes in the 
 collection of which thousands of men are constantly em- 
 ployed. In a report which I made to Congress in 1S65, 
 when the debt had reached its maximum and the policy 
 of the Government in the treatment of it was to be es- 
 tablished, I used the following language: 
 
 The pubUc debt of the United States represents a portion of 
 the accumulated wealth of the country; while it is a debt of the 
 nation it becomes the capital of the citizen. The debt is large, 
 but if kept at home, as it is desirable it should be, with a judi- 
 cious system of taxation, it need not be oppressive. It is, how- 
 ever, a debt. While it is capital to the holders of the securi- 
 ties, it is still a national debt, an encumbrance upon the na- 
 tional estate. Neither its advantages nor its burdens are, or 
 can be, shared or borne equally by the people. Its influences 
 are anti-republican. It adds to the power of the Executive by 
 increasing federal patronage; it must be distasteful to the peo- 
 ple, because it fills the country with informers and tax gath- 
 erers; it is dangerous to the public virtue, because it involves 
 the collection and disbursement of vast sums of money, and 
 renders rigid national economy impossible; it is, in a word, a 
 national burden, and the work of removing it, no matter how 
 desirable it may be for individual investment, should not long 
 be postponed. 
 
 Since that report was made I have had some opportu- 
 nities for observing the operation of national debts in 
 other countries, and my observations have confirmed 
 the correctness of the opinion which I expressed thir- 
 teen years ago, and which then pervaded the countr3^ 
 Before our civil war it was the boast of the citizens of 
 the United States that they had no national debt hang- 
 ing over them to oppress them with taxes or to annoy 
 them with tax-gatherers. It may be desirable that a 
 
296 
 
 portion of our national debt should remain unpaid. A 
 certain amount of Government bonds ma}^ be required 
 to secure the notes of the national banks and for the pro- 
 tection of legal trusts, but I am sure that the best in- 
 terests of the people, financial and political, will be 
 subserved by a stead}' adherence to the policy, which 
 has been pursued since the war, of gradually reducing 
 the public debt until it has been substantially extin- 
 guished. I mistake the character of the tax-payers of 
 the United States if they would not submit more cheer- 
 fully to taxes levied to gradually reduce the principal 
 of the debt than they would to taxes somewhat lighter, 
 but imposed only for the payment of the interest. I 
 have heard commendations of national debts on the 
 ground of their being conservative in their influence, 
 preventives of revolution. Conservative in this respect 
 they may be, but conservative of despotism rather than 
 liberty. Good governments need no such cementing 
 influence; bad ones are rendered more oppressive by it. 
 A government that needs for its support the consolidat- 
 ing power of public debt is not worth preserving. May 
 we not indulge the hope that the future historian of the 
 United States will be able to say that between 1861 and 
 1865 the Government, in a successful and expensive 
 struggle to preserve its existence and rightful authority, 
 contracted a debt of three thousand millions of dollars, 
 and relieved itself of the burden according to the letter 
 and spirit of its contract before the expiration of the 
 century, and thereby rendered itself exceptional and 
 illustrious among the nations ? 
 
 FOREIGN EXCHANGE. 
 
 By foreign exchange is meant the debts due from the 
 people of one country to the people of another and the 
 instrumentalities in use for transferring and adjusting 
 them. These instrumentalities are bills of exchange 
 which, in the performance of the duties for which they 
 are required, become so interwoven with debts that in 
 treating of foreign exchange it is difficult, if not impos- 
 sible, to separate them. It must be borne in mind, how- 
 ever, that although they become intermingled they are 
 entirely different in character. Foreign debts, which 
 
297 
 
 are not national debts, are debts due from the inhab- 
 itants of one country to the inhabitants of another, and 
 payable where the creditors reside; bills are the agency 
 by which these debts are transferred or offset without 
 transmission of coin from one country to another. The 
 necessity for the use of bills in money and trade trans- 
 actions between different countries becomes apparent 
 by a simple illustration. Let us suppose A B, of Bos- 
 ton, to be a purchaser of goods in Manchester where 
 C D, of Boston, is a seller of cotton. The latter has, as 
 the proceeds of the sale of his cotton, money in the 
 hands of his consignee or banker which he wants to use 
 not in Manchester, but in Boston. The former has 
 money in Boston which he wants to use in Manchester 
 to pay for the goods he has purchased there. Now, un- 
 less some arrangement can be made between them, C 
 D must order his money to be remitted to Boston, and 
 A B must send his to Manchester, both of which remit- 
 tances would be expensive. To obviate this A B goes 
 to C D and hands him the money which C D needs in 
 Boston, and receives from him a bill on Manchester 
 with which he pays for his goods. A single transaction 
 of this kind would be troublesome; numerous transac- 
 tions would be impossible; hence there arises a neces- 
 sity for the services of a banker, whose business it is 
 both to buy and sell bills of exchange, to whom C D 
 can sell his' bill for the proceeds of the sales of his cot- 
 ton, and from whom A B can purchase a bill for the 
 payment of his goods. When the persons who are en- 
 gaged in foreign trade live in different countries the need 
 of the agency of bankers in both countries becomes ap- 
 parent. A inanufacturer in Manchester, who has sold 
 his goods to an importer in New York, needs a banker 
 in Manchester or London who can cash the bills he 
 draws for the price of the goods; so a cotton merchant 
 in New York, who receives an order for cotton from a 
 Manchester manufacturer, needs a banker in New York 
 to whom he can sell the bill which he draws against the 
 cotton. Trade between countries is not only facilitated 
 by bills of exchange, but its existence upon a large 
 scale depends upon them, and with the necessity for 
 bills arises the necessity for bankers in whose integrity 
 
^Q^ 
 
 and solvenc}' entire reliance can be placed. Foreign 
 trade is substantially barter, an exchange of commodi- 
 ties covered by exports and imports. The amount of 
 such exchange is enormous, and they are effected chiefly 
 through the agency of bills; hence the indispensable- 
 ness of this agency. 
 
 If the metallic currency of countries that trade with 
 each other were the same, the exchanges betw^een them 
 w^ould be easy; the par of exchange between them 
 would be the proportion of bullion expressed in their re- 
 spective coins. Although there are in the United States 
 three kinds of legal tender, the exchanges between the 
 United States and Great Britain are regulated b}' the 
 gold standard. The mint value of the sovereign or 
 pound sterling, as I stated in a previous lecture, is 
 ^4.86"'^' in United States gold coin, hence this is theo- 
 retically, but not exactly, the par of exchange between 
 the United States and Great Britain. The variations 
 w^hich we notice in the quotations of sterling exchange 
 indicate the activity or inactivity of the demand result- 
 ing from present causes. When sterling exchange is 
 high, that is, when bankers' sight bills are considerably 
 above the par of $4,861*"'*'', ^ve know that there is more 
 than an ordinary demand on the part of importers and 
 others for money in P^urope. \Yhen such bills are sell- 
 ing at $4.86""^- or below, we know that there is no special 
 demand for them and that the market is dull. So large, 
 however, is the trade of the United States with foreign 
 nations, in which trade the agency of sterling bills is 
 required, that there is not a business day in the year in 
 which there are not large transactions in them. When 
 there is an active demand for sterling bills in New York, 
 we see them quoted at rates considerable above $4.86^"^'^, 
 the mint value of the sovereign, and it may be asked 
 how such rates are maintained. They can onl}- be main- 
 tained up to a certain point, which is called the ship- 
 ping point — the point at w^iich gold can be profitably 
 remitted to London. While the pound sterling is worth 
 at the United States mint |;4.86>'^^^ it costs something to 
 send it, or its equivalent, in gold to London. Freight 
 and insurance are to be considered before it can be de- 
 termined whether gold will bear shipment. Then again, 
 
^99 
 
 gold coins are subject to abrasion. Even the double 
 eagles which, not being much in current use, suffer less 
 in this respect than the smaller coins, and which, except 
 in extraordinary cases, are the only United States coins 
 sent abroad, do not in England come quite up to their 
 value at home. Sterling exchange must therefore ad- 
 vance considerably above $4.86''-'" before coin will be 
 shipped. Double eagles cannot be taken to England at 
 a less cost than from a half to three-fourths of one per 
 cent., and as loag as sterling bills can be obtained at 
 under $4.90 to the pound, gold will not leave the United 
 States. It may be said, therefore, that the variations 
 in the exchanges between nations having the same 
 standard of value are controlled by the cost of transfer- 
 ring standard coin from one nation to another. Thus 
 coin is not only a regulator of trade, but it governs the 
 rate of international exchange. It is trade balances 
 which make coin transfers necessary. If trade between 
 nations were carried on by an equal exchange of com- 
 modities, there would be no balances to be settled in 
 coin, but this is never the case. The accounts of inter- 
 national trade are never even, and when settlements are 
 to be made, and payments cannot be postponed, coin is 
 indispensable for the purpose. 
 
 .Some nations get so deeply in debt that the}^ become 
 unable to pay, and they either become bankrupt, as is 
 the case with Mexico, Turkey, and Egypt; or, having 
 good credit, they adjust the balances against them by 
 sales of their securities, as has been frequently done by 
 Russia. What are called foreign loans, therefore, have 
 much to do with the settlement of balances and the 
 changing of the natural current of exchange. Ex- 
 change is sometimes against a creditor nation and in 
 favor of its debtor. Brazil, for instance, although im- 
 mense in extent and rich in undeveloped resources, is 
 still a poor countr}^ and at times a large borrower. She 
 meets the interest on the money she has borrowed 
 promptly, no matter at what cost. Her credit is there- 
 fore good, and her securities are regarded with favor 
 where they are known and held. She offers, through 
 her London agents, the Messrs. Rothchilds, five mil- 
 lions sterling of her bonds to the public, which are 
 
soo 
 
 readily taken, and thus, although she is in debt to the 
 same public for ten times the amount on loans previousl}' 
 made, but which are not due, she becomes, by being a 
 borrower, a creditor; temporarily, it is true, but still a 
 creditor of the nation she borrows from. The mone}^ 
 she borrows is needed for immediate use in Brazil; the 
 debts she has contracted are payable at a future da}^ 
 
 We have an illustration of the uses to which Govern- 
 ment securities can be put in adjusting balances in our 
 own recent financial history. Between t86i and 1873 
 large amounts of United States Government and cor- 
 poration bonds were sold in Europe. We have no means 
 of knowing the exact amount, but it was probably not 
 less than five or six hundred millions, the proceeds of 
 wdiich sales were used in the purchase of articles needed 
 in the prosecution of the war, in the construction of rail- 
 roads, and for the supply of the wants, real or imaginary, 
 of an extravagant people. These bonds answered the 
 purpose of ordinary exports, and kept exchange on Lon- 
 don down to. and sometimes forced it below, the stand- 
 ard rates. So that while the outflow of specie was gen- 
 erally steady, small amounts were occasionally returned 
 to equalise exchanges. Singularly enough, the same 
 bonds have been made to perform a double purpose. 
 They were exported to pay for European goods. Some 
 of them have come back again to pay for productions of 
 the United States. They equalized exchanges when 
 the balances were against this country. The}' have 
 been doing the same thing when the balances were in 
 its favor. 
 
 Since the laying of the Atlantic cable electricity has 
 come into very important use in the business of foreign 
 exchange. Transactions to the amount of many thou- 
 sands of dollars are daily effected between our Atlantic 
 cities and London, by what are called "cables." Bank- 
 ers on one side of the Atlantic have a key which is onl}^ 
 understood b}^ their correspondents on the other side, 
 and by the use of a half dozen words or less large 
 amounts are transferred from a man in the United States 
 to a man in Europe, or from one in Europe to one in the 
 United States, with as much sureness and safety as if 
 remittances were made in coin b}' steamships or by 
 
301 
 
 bills of exchange. If, therefore, a merchant in Boston 
 desires to make a purchase or pay a debt in London, 
 instead of buying a bill of exchange for this purpose, he 
 can go to a banker and buy a "cable." He has noth- 
 ing to do with making the transfer. He niereh^ says to 
 the banker that he wants a certain sum placed in the 
 hands of a person whose name and address he gives. 
 The banker immediately instructs his correspondent to 
 pay the amount to the person named, and the transaction 
 is at once accomplished. So reliable has this means of 
 transfer become, that payments to be made in the com- 
 mercial cities of Europe, by debtors in the United States, 
 can safely be postponed until the evening before the da}^ 
 they become due. When payments are to be made on 
 this side of the Atlantic so much more rapidly does elec- 
 tricity move than the earth, that a debtor living in Lon- 
 don or Paris may use his money until three o'clock in 
 the afternoon and have the debt which he owes paid in 
 Boston, or New York, or Philadelphia, or Baltimore, or 
 New Orleans, or vSan Francisco, the same day and by the 
 use of the same money. All great commercial cities are 
 now united by cables and land lines of telegraph, so that 
 remittances can be made in this way all over the world. 
 Credits on London can be opened by bankers in the 
 United States, through their London correspondents, to- 
 day, under which goods may be purchased in Yokohoma, 
 Bombay, Calcutta, or Ceylon to-morrow. Electricity 
 has thus become one of the time-saving and interest- 
 saving agencies of the day. To such an extent is the 
 ability to make transfers of money by telegraph relied 
 upon — so important are the transactions dependent upon 
 daily communications — that a break in the Atlantic 
 cables would discredit, if it did not ruin, scores of bank- 
 ing and commercial houses, and send confusion into 
 hundreds of counting rooms. 
 
 While the business of foreign exchange between 
 nations having the same standard of value is simple and 
 easily conducted, it would be complicated and difficult 
 when the transactions are between nations having differ- 
 ent standards, were it not for the relations of these 
 nations to Great Britain. There is no difference, or so 
 slight a difference that it is unimportant, in the price of 
 
302 
 
 gold as bullion, in nations where gold is the standard, or 
 where, if the double standard exists, gold is in use in all 
 international transactions, so that bankers who deal in 
 foreign exchange have a reliable basis upon which they 
 can work in dealings with such nations. But there are 
 other nations in which there is no stable measure of 
 value — in which fluctuations are so sudden that they 
 cannot be foreseen or guarded against. Exchange trans- 
 actions with Oriental nations where silver is the stand- 
 ard, or with Russia or Italy, where paper is chiefly in 
 use, or with Brazil and Buenos Ayres, w^here gold and 
 silver are practically unknown, could only be carried on 
 with considerable risk, were it not for the fact that all 
 these nations are in debt to Great Britain, and that in 
 consequence thereof there is a constant demand in them 
 for sterling bills. Such transactions can, therefore, be 
 carried on with these nations without risk to the bankers 
 who furnish the bills or to those who use them. I^ondon 
 has necessarily become the clearing-house of interna- 
 tional exchanges. There is not a place in the world 
 where foreign trade is carried on, in which bankers' bills 
 on London, or bills drawn under London credits, are not 
 available and in demand. If, therefore, a merchant in 
 the United States desires to purchase silk in China, or 
 coffee in Rio, or guano in Peru, or hides in Buenos 
 Ayres, he does not send money to these countries, but 
 he goes to some banker and obtains from him a letter of 
 credit authorizing him or his agent to draw for the 
 amount named therein on some banking house in Lon- 
 don whose reputation is established in the place where 
 the credit is to be used. The bills drawn under this 
 credit are sold for the currency of the country, and with 
 this currency purchases are made. To obtain such a let- 
 ter of credit the merchant either deposits money with 
 the banker or he gives him satisfactory security that he 
 will put him in funds to cover the bills drawn by the au- 
 thority of the credit, before they are payable, together with 
 the banker's commission, usually about one per cent., 
 which is divided between the banker who issues the credit 
 and the banker who accepts the bill. These credits are of 
 two kinds. They are either what is called clear credits, 
 that is, credits which authorize drafts to be drawn with- 
 
303 
 
 out conditions, or documentary credits, which require 
 that the drafts drawn under them shall be accompanied 
 by bills of lading and policies of insurance covering the 
 property purchased with the proceeds of the drafts, 
 which property the acceptor takes possession of on its 
 arrival, and sells, through a broker, for the account of 
 the drawer. Bills of exchange drawn under such credits, 
 whether clear or documentary, are usually payable sixty 
 or ninety days or four months after sight, it being the 
 desire of those to whom the credits are given that the 
 time may be long enough to allow property to be pur- 
 chased, shipped, and sold before the bills mature; and it 
 so turns out that very large transactions are completed 
 in this way by credit alone, and without any cash ad- 
 vances. The rates of interest are generally very low in 
 London, and there are discount houses there which are 
 always prepared to discount London bankers' accept- 
 ances on the most favorable terms, so that the holders 
 have no difficulty in obtaining the money on them before 
 their maturity. Credit is the life blood of commerce and 
 trade; to none is it more important than to bankers, and 
 by none more judiciously used. To deal advantageously 
 in foreign exchange bankers must have the highest 
 reputation for capital and integrity. With such a repu- 
 tation, their ability to use their credit is practically 
 unlimited. 
 
 Americans who intend to travel in other countries, 
 generally, instead of taking gold with them, provide 
 themselves with what are called "travelers' letters of 
 credit," issued by well-known bankers, authorizing them 
 to draw for the amount named in such letters upon the 
 correspondents of the bankers in London or Paris, 
 usually upon the former, as bills on London are in de- 
 mand everywhere. These letters give the names of the 
 banker's correspondents, not only in all the principal 
 cities of Europe but of Asia also, who will cash the 
 drafts drawn under them at the current rate of ex- 
 change. Provided with such letters, travelers can go 
 where they please, without the risk and trouble of taking 
 coin with them, and without the losses to which they 
 would be subject if they were exposed to the tender 
 mercies of money brokers, in passing from one country 
 
304 
 
 to another. The operations of large dealers in foreign 
 exchange extend throughout the commercial world. 
 Messrs. Kidder, Peabody & Co., or Blake Brothers, of 
 Boston, for instance, are doubtless prepared to furnish 
 drafts on all the principal European and Asiatic cities. 
 They do not keep balances in the hands of all the houses 
 upon which they draw. They cover their drafts either 
 by direct remittances or by authorizing the houses which 
 cash them to cover the amount by drawing on their Lon- 
 don correspondents, and so well is their credit estab- 
 lished that their drafts are as current as the notes of the 
 Bank of England. 
 
 It is interesting to know how debts due one nation are 
 offset by debts which it owes to another. The United 
 States, for instance, buy more of Bra/.il and China than 
 she sells to them, and consequently is their debtor; and 
 yet no coin is sent to Bra'/^il, and while some silver goes 
 to China from San Francisco, the amount is not sufficient 
 to cover the balance in her favor. The balances due 
 these nations are paid not by coin, but by exports to 
 other countries. Thus the United States are indebted to 
 China and Brazil, which are debtors to Great Britain; 
 Great Britain is in debt to the United States, and so by a 
 transfer by means of bills of exchange the debt due to 
 the United States from Great Britain is made to pay the 
 debt of the United States to China and Bra/.il. Thus 
 the cotton and wheat sent from the United States to 
 Europe pay for the coffee which comes from Brazil and 
 the tea and silk that comes from China.'" 
 
 While, however, the indebtedness of one nation to an- 
 other may be affected in the manner I have named with 
 regard to the United States, it will be found to be true, 
 
 *I was happy to learn a day or two ago from Mr. Edward 
 Atkinson, an excellent authority on all such matters, that our 
 exports of cotton goods to China are now nearh- large enough 
 to cover our purchases. 
 
 "When I speak of nations in regard to their trade relations, I 
 do not speak of them in their national character. Nations, as 
 nations, are not engaged in trade, nor are they money lenders. 
 There may have been exceptional cases in which a nation has 
 helped another to borrow by guaranteeing its objections, but I 
 can call to mind no instance in which one independent govern- 
 raeut has been a lender to another, 
 
305 
 
 as a general rule, that the nation that buys more than it 
 sells will be a debtor nation, and the one that sells more 
 than it buys will be a creditor nation, and that the pre- 
 vailing current of exchange or movement of coin will 
 clearly indicate which is creditor and which is debtor. 
 
 There is a good deal of discussion going on upon the 
 subject of international trade, and there are some per- 
 sons, not destitute of intelligence, who contend that not 
 only can no reliable estimates be formed of the financial 
 relations of a country with other countries, by a com- 
 parison of its imports and its exports, but that an excess 
 of imports indicates a healthy and profitable trade. It 
 would be difficult, however, for them to point to any 
 country, except Great Britain, to which the general rule 
 I have named does not apply. Her position is an excep- 
 tional one. For many years the imports of Great Britain 
 have largely exceeded her exports, and during these 
 years she has been gaining steadily, and sometimes rap- 
 idly, in wealth. This apparent anomaly is explained by 
 the fact that she is the creditor nation of the world. 
 For nearly half a century she was the great international 
 workshop. Being the first to utilize steam power, and 
 having an abundance of coal and cheap labor, the raw 
 material was brought from all parts of the world in her 
 own ships, to be manufactured and distributed among the 
 nations. For many years London was the emporium for 
 foreign goods, whither merchants went from all parts of 
 the world to make their purchases, and it has been for a 
 long period, and still is, the world's banking house. It 
 is the interest on the money she has loaned; the freights 
 of her ships; the profits on her exports; the commissions 
 paid to her bankers; the use of her capital in other coun- 
 tries, that have given to Great Britain the ability to im- 
 port more than she exports, and yet continue to be a 
 creditor nation. The excess of her imports represents 
 her income, which she receives in the articles she needs 
 for consumption. There is no other nation in the world, 
 not even France, her rich neighbor (for France holds 
 but small amounts of foreign securities and has little 
 foreign carrying trade), whose imports could continually 
 exceed her exports without impoverishment. Great 
 Britain is now undergoing severe trials. In manufaC' 
 
306 
 
 uring she has strong and active competitors on the con- 
 tinent and in the United States, and consequently she 
 has a very large amount of unproductive capital in mills 
 and factories, for much of which there is no employ- 
 ment, while her efforts to meet this competition success- 
 fully by reduction of wages are in a large measure ren- 
 dered abortive by strikes among her laborers. Her 
 Eastern trade has also, of late years, been unprofitable. 
 She has probably seen her most prosperous days. Still 
 she stands at the head of the nations in wealth and in 
 the extent of her imperial domain. She is surpassed by 
 no nation in enterprise; her government is stable and 
 wisely administered; her colonies encircle the globe; her 
 ships cover the sea; her credit is supreme everywhere. 
 How long she will be able to retain her commercial and 
 financial ascendency, time alone can determine. I see 
 no indications that she is soon to be deprived of it, not- 
 withstanding the present depression of her industries 
 and the adverse balance of her imports over her exports, 
 amounting to sixty millions of pounds in 1877, a balance 
 exceeding the total exports of the United States. Great 
 Britain is an anomaly among the nations; judged by ordi- 
 nary rules, she ought long since to have been bankrupt. 
 The subject of foreign exchange, to which I have thus 
 briefly directed attention, is a large and interesting one, 
 well worth the consideration of political economists, as 
 well as of merchants and bankers, who are personally 
 interested in it. 
 
 DOMESTIC EXCHANGE. 
 
 Domestic exchange was a very interesting subject to 
 bankers and traders twenty years ago. Since then the 
 use for domestic bills has been greatly lessened by im- 
 proved and increased facilities of shipping commodities 
 from one part of the country to another; by the saving 
 of time in their transmission, and a uniform paper cur- 
 rency. Railroads are doing, to a very large extent, what 
 used to be done by vessels and boats. Days only are 
 now required, instead of the weeks formerly consumed, 
 in shipments from the West to the seaboard. Twenty 
 years ago the grain, the flour, the beef and pork pur- 
 chased at Chicago and other Western lake ports during 
 
307 
 
 the winter, remained in store until the opening of the 
 navigation in the spring, and when shipped were from 
 thirty to forty days in reaching the Atlantic ports. Now 
 such articles are largely forwarded in winter, and also in 
 other seasons when navigation is open, by railroads, and 
 by reason of the competition between the trunk lines, at 
 much less expense than was formerly incurred in trans- 
 portation by water. Months in the winter season, and 
 weeks at other times, are thus saved; and sellers and 
 buyers are brought so closel}^ together that the transac- 
 tions betweeh them are, to a great extent, cash trans- 
 actions, in which the agency of bills is not needed. 
 While the business in domestic bills has been lessened in 
 amount by these causes, it has been reduced in profit to 
 bankers by the uniform value of our paper currency. 
 Under the old banking system bankers' bills on New 
 York commanded throughout the West, on a coin basis, 
 a premium of at least one per cent. Except at times 
 when there was an extraordinary demand for currency 
 in the interior, New York exchange was more frequently 
 above one per cent, than below it. I have known as 
 high as five per cent, premium to be paid for bankers' 
 drafts on New York in the notes of nominall}^ vSpecie- 
 paying banks. Now an eighth or a sixteenth is all that 
 can be obtained for them. Under the State bank system 
 there were very few interior banks whose notes were not 
 at a discount not only in New York, but in all the sea- 
 board cities. The country banks of New England kept 
 their notes at par in Boston, and a few of the banks of 
 the State of New York redeemed theirs in the city, but 
 three-quarters of the notes of what were regarded as be- 
 ing solvent banks throughout the Union, were uncurrent 
 in the Eastern cities. Hence there was a constant and 
 large demand for bankers' bills on the part of Western 
 and Southern merchants, who had purchases to make or 
 debts to pay in the Eastern cities, on which bills the 
 bankers made a handsome profit. Such bills now pay 
 the smallest fraction over the cost of forwarding United 
 States notes or national bank notes by express com- 
 panies, which have extended their lines into every part 
 of the country. While the value of property exchanges 
 l^etween the 4iffe^ent sections of the United States has 
 
308 
 
 been rapidly increasing, the use of bills in effecting 
 these exchanges has been rapidly falling off. It is hardly 
 too much to say that the business in domestic bills, once 
 so large and profitable to bankers, has been virtually de- 
 stroyed by railroads, a uniform currency, and express 
 companies. 
 
 Sixth Lkcture. 
 taxation. 
 
 My lecture this evening will be a long one. I wish I 
 could say that it will be interesting, as well as long. 
 Before proceeding with it, I desire to say that in speak- 
 ing, last Tuesday evening, of the great reductions of our 
 foreign debt, I had reference only to our national debt. 
 The amount of Government bonds on the other side of 
 the Atlantic is estimated at two hundred millions of dol- 
 lars. We have no data b}^ which the exact amount can 
 be ascertained, but I am sure that we shall not be wide 
 of the mark if we put it at the figures I have named. 
 Whatever the amount may be, it is not likely to be 
 speedily reduced. The credit of the Government is now 
 so good that our four per cent, bonds are taken at a 
 premium in the very country (Great Britain) in which 
 the six per cents, were regarded with so much distrust 
 that none of them were purchased until long after very 
 liberal purchases had been made by the Germans, the 
 permanency of the Union had become assured, and con- 
 siderable progress had been made in the reduction of the 
 debt. It took the English capitalists much time to real- 
 ize the fact that the rebellion had been crushed, and that 
 the bonds of the United States were really solvent se- 
 curities. Meanwhile they were rapidly appreciating in 
 market value, and when the English capitalists began to 
 invest, they had advanced some twenty per cent, from 
 the lowest point. 
 
 In speaking of our foreign debt I had no reference 
 whatever to the State, municipal or corporation bonds 
 and stocks in foreign hands. The amount of them must 
 be large, and I am glad that a very intelligent young 
 gentleman, connected with this University, is preparing 
 a paper showing, as nearly as it can be ascertained, what 
 
309 
 
 they amount to. Everything that enlightens us in re- 
 gard to our financial relations with foreign countries is 
 valuable. 
 
 One word more. I have been surprised at the apathy 
 which I witness among the intelligent merchants of New 
 York and Boston in regard to the dangers which are yet 
 to be surmounted before really solid ground is reached. 
 They seem to feel, that as the Government notes and 
 bank-notes are now at par with gold there is no reason 
 for apprehension in regard to the future; that a smooth 
 sea is before them. They seem to be unmindful that the 
 favorable condition of our foreign exchanges, without 
 which specie payments would have been impossible, is 
 attributable to our harvests, which for the last three 
 years have been abundant, and to the unusual demand 
 for our agricultural productions in Europe, neither of 
 which advantages can be relied upon as being perma- 
 nent. They seem also unmindful of the fact that, while 
 Great Britain has twice as^ much, and France three times 
 as much specie as paper currency, the United States has 
 some seven hundred millions of Government and bank- 
 notes in circulation, on a basis of less than three hun- 
 dred millions of gold and silver. Nor do they properly 
 appreciate the very important fact that a powerful party 
 is in favor of further, if not unlimited, issues of United 
 States notes, and of the free coinage of silver, without 
 reference to the actions of European states, and that 
 dangerous legislation upon both these subjects by the 
 present Congress may only be prevented by the veto of 
 the President. I am no alarmist. I am not, because I 
 have confidence in the resources of the country and in 
 the good sense of the people. The history of the last 
 eighteen years has shown that there is a latent power in 
 the people of the United States which is equal to the 
 greatest emergencies, but this power to be eff"ective must 
 be active. There are dangers ahead which can only be 
 escaped by the vigilance and earnest efforts of those who 
 have the greatest interests at stake. The new constitu- 
 tion of California shows the drift of sentiment in that 
 State and may indicate danger nearer home. 
 
 I now proceed with my lecture, which will be histori- 
 cal, and preparatory for the one which is to follow. 
 
310 
 
 taxation is a necessit}- of social and political organi- 
 zation; commencing with government in its simplest 
 form, imposed in the simplest manner, it has been 
 changed in character and increased in burden with the 
 increasing demands of the institutions which have de- 
 pended upon it for support. If public affairs had been 
 administered with econoni}^ and wisdom, and there had 
 been no wars, taxation would not have been grevious; 
 the means to pay would have more than kept pace with 
 expenditures. In most countries, however, the burden 
 has been greatly disproportioned to the ability of the 
 people to bear it. In many instances the decline of na- 
 tions has been attributable to opprCvSsive taxes. High 
 taxes retard progress, and even in nations that are gain- 
 ing steadil}^ in wealth and power, the}' weigh heavily 
 upon the majority of tax-payers. 
 
 Of all the causes of national indebtedness, and conse- 
 quently of high taxes, war has been the most potent. 
 The $20,000,000,000 of national debts now outstanding 
 were born of war. 
 
 The foundation of the British debt in its present form 
 was laid in the latter part of the seventeenth century; 
 before that period the English monarchs had borrowed 
 money for the support of royalty and war expenditures, 
 but their loans were temporary and were either paid or 
 repudiated soon after they were contracted. Borrowing 
 was difficult and expensive until the funding system was 
 introduced. It became easy when public securities, the 
 interest upon which was to be paid semi-annually, be- 
 came desirable for investmens. The debt of Great 
 Britain at the commencement of the war of the American 
 Revolution had reached ^136,000,000. In the forty 
 following years more than ^700,000,000 were added to 
 it; and, although since 1830 the debt-paying power of 
 the nation has been enormously increased, the debt has 
 been but slightly reduced; it is still about ^800,000,000, 
 or $4,000,000,000, furnishing in the form in which it 
 exists desirable security to those who have money to in- 
 vest, but remaining, and destined to continue as long as 
 her national existence continues, a fixed charge upon 
 her income, a burden upon her tax-payers, a burden 
 which will be more and more severely felt if she should 
 
311 
 
 become crippled in her industries by foreign competition. 
 We need not, however, look to other nations for an 
 example of the creation of a national debt and an in- 
 crease of taxes. At the commencement of the late civil 
 war the United States had no national debt, or rather 
 none large enough to be mentioned as such. By four 
 years' war, a war necessarily expensive by the forces 
 engaged, and rendered doubly expensive by the use 
 of a depreciated currency, a debt was created sec- 
 ond then only to the debt of Great Britain in amount 
 and more burdensome than hers, by the higher rate of 
 interest which it bore. Fortunate was it foit he people 
 of the United States, unaccustomed to a public debt, 
 that they looked upon it as a burden to be removed and 
 not a blessing to be perpetuated. In 1791 Sir Robert 
 Peel, father of the distinguished Prime Minister, pub- 
 lished a pamphlet in which he undertook to prove that 
 a national debt was a national blessing. I do not know 
 how this doctrine was regarded by the English people, 
 but when the same doctrine was advanced by a promi- 
 nent citizen of the United States in 1865, it was treated 
 with derision. If the sentiment of the country should 
 change with respect to the real character of the public 
 debt, if the tax-payers should cease to regard it as a 
 national burden to be removed by gradual and continu- 
 ous reductions, it will be by the influence of the holders 
 of the Government bonds and a paper currency. Not 
 only was our national debt created by the war, but a vast 
 amount of individual and municipal indebtedness (under 
 which latter head I include the indebtedness of cities,_ 
 towns, counties and townships) was the consequence of 
 it. The ^arge expenditures of the Government in the 
 prosecution of the war, and a redundant paper currency 
 after the war was ended, not only gave an impetus and 
 activity to trade and manufacturing, but brought into 
 existence so many unwise and speculative enterprises 
 and stimulated extravagance to such a degree that 
 municipalities and individuals plunged into debt with a 
 recklessness beyond precedent. A large part of the per- 
 sonal indebtedness has been wiped off by bankruptcy, 
 the rest will be closed in the same way, or paid by the 
 gains which are the certain results of well-directed in- 
 
31 S 
 
 diistr}^ and economy. The municipal debts remain, the 
 payment of the interest upon which is testing both the 
 ability and the honesty of the tax-payers. 
 
 The revenues of the Government are mainly derived 
 from the customs and excise duties. Indirect taxation 
 is the most insidious and consequently the most danger- 
 ous to which the people can be subjected. It is insidious 
 because it is felt only in the increased cost of articles 
 which are consumed ; dangerous because it fails to check 
 expenditures. If the Government were supported and 
 the interest upon the public debt w^ere paid by direct 
 taxation, there would be an economj^ in the use of the 
 public money which would be in marked contrast with 
 the expenditures under the present system. Reform is 
 now in order. Municipal bonds are no longer regarded 
 with favor, tax-payers are much more interested in the 
 subject of taxation than the}' were when the country 
 was apparently prosperous, and we may hope that exces- 
 sive issues of paper money will not long be possible. 
 How to raise money for the support of municipal govern- 
 ments and the payment of the interest on municipal debts 
 is the question of present especial interest. Most of 
 these debts have been contracted within the last ten 
 years. Of the $800,000,000 of existing municipal debts, 
 $600,000,000 have been contracted since 1868, for only a 
 portion of which is there an}- compensation in an increase 
 of debt-paying ability. Some of the debts were created 
 by subscriptions to railroads, which have never been 
 completed, or whose stock and bonds are valueless; some 
 b}^ costh' public buildings; some by so-called improve- 
 ments of streets, now in a worse condition than before 
 money was expended upon them; some by robberies 
 committed by trusted officials. It is no exaggeration to 
 say that one-half of the moneys for which municipalities 
 are now in debt has been wasted or squandered. 
 
 Prior to the war high taxes were unknown. The wis- 
 dom required for raising the largest revenues with the 
 least oppression to industrial pursuits is yet to be ac- 
 quired. In most of the States and cities personal property 
 of every description, tangible and intangible, except 
 Government securities, Government notes and notes of 
 the national banks, is subjected to the same rate of tax- 
 
3l3 
 
 ation as real estate, according to its appraised value. 
 The intention of the tax-levying authorities is to prevent 
 anything from escaping its share of burdens. That most 
 of the personal property does escape is manifest from 
 the returns which are made to the a.sses.sors. In the 
 city of New York, for instance, it is made the duty of 
 every resident citizen to make on or before the first of 
 April a return of his personal property, including all his 
 securities, his deposits in bank, money on hand and the 
 debts due to him less the amount that he owes; substan- 
 tialh' upon everything except stocks on which taxes are 
 paid by the corporation, of whose capital they are a part, 
 and the amount invested in Government obligations. 
 The aggregate amount of the personal property subject 
 to taxation in that city, if a fair return of it were made, 
 would doubtless amount to nearly as much as the ap- 
 praised value of the real estate, and yet the records show 
 that its real estate bears eighty-five per cent, of the tax- 
 ation. I have seen a statement — doubtless a correct 
 one — that in one of the wealthy cities of the State, con- 
 taining between thirty and forty thousand people, sixty- 
 seven persons only had last year any personal property 
 subject to taxation. A large proportion of personal 
 property is intangible and invisible. It escapes taxation 
 because no return of it is made. Ver}^ few persons are 
 perfectly honest in the returns which they make to the 
 assessors. There is not a State or county in the Union 
 where such property is taxed in which that which is 
 intangible does not escape its proper proportion of bur- 
 den. This is true in a much larger degree in cities than 
 in rural districts. In the former the tax-payers have 
 facilities for concealment which are not possessed by tax- 
 payers in the latter. Farmers are not usually the hold- 
 ers of any considerable amount of securities. Their 
 property is chiefly visible, and if any of them do hold 
 taxable securities the fact is usually known in the neigh- 
 borhood and rarely escapes the vigilance of assessors. 
 Then, too, they are more permanent in their residence 
 than people who reside in cities, and they have less in- 
 ducement to conceal their means, inasmuch as having 
 no municipal taxes to pay, the taxation to which they 
 are subjected, compared with that in cities and towns, is 
 small. 
 
B14 
 
 On the other hand, the larger part of the inhabitants 
 of our great cities are not the owners of the buildings 
 which the}' occup}-; the}' frequently change their places 
 of residence; they are not known to their next door 
 neighbors; their means consist largely of intangible 
 property, the existence of which is known only to them- 
 selves. The rate of taxation is high; the inducement to 
 make dishonest returns is strong, and the public senti- 
 ment against this kind of dishonesty is less pronounced 
 in cities than in the countr3^ The high taxes in cities 
 also driv^e thousands of men who do business in them 
 into the neighboring towns where taxes are lower. 
 Large numbers of business men of New York and Boston 
 have their residences in suburban towns. There are 
 undoubtedly other inducements for living where they do, 
 but the avoidance of high taxes is with most of them an 
 important consideration. They make their money in the 
 cities, they enjoy all the advantages in the transaction of 
 business which residents enjoy, but they contribute little 
 or nothing to the support of the State governments or to 
 the payment of the interest on cit}- debts. Hundreds of 
 rich men in Massachusetts (and it is not a pleasant fact 
 to contemplate) are constantl}' on the wing to escape 
 taxation. 
 
 The exemption of the obligations of the Government 
 from taxation is another important fact to be borne in 
 mind in considering the subject of taxes upon personal 
 property. There are not less than $1,600,000,000 now 
 invested in the United States in Government bonds, to 
 say nothing of Government notes and the notes of the 
 national banks, from which no revenue is derived. It 
 is true that this exemption enables the Government to 
 reduce the rate of interest on its bonded debt, and that 
 tax-payers derive indirect advantage from this exemp- 
 tion. But the interest on the public debt is paid b}^ ex- 
 cise and customs duties, which, although they add to 
 the cost of the articles which enter into general con- 
 sumption, are not cared for by the masses. It is direct 
 taxes — taxes which are levied for the support of mu- 
 nicipal Government and the payment of the interest on 
 municipal debt — that tax-paj-ers complain of and seek 
 to avoid. Then, too, the system of taxation differs in 
 
31§ 
 
 different States. In some, for the purpose of encourag- 
 ing home industries, all manufactures are exempt from 
 taxes; in others everything is taxed: the grain which 
 the farmers need for the support of their families; the 
 horses required for the cultivation of their lands; the 
 cows even, upon which many families largely depend 
 for support; the absolute necessaries of life are subject 
 to taxation. 
 
 In many States and cities the income from Govern- 
 ment four per cents., which are exempt from taxation, is 
 equal to the income from six per cents, wdiich are taxa- 
 ble, in some cities it is larger. There is also, in many 
 States and cities, what may be called double taxation. 
 Thus, mortgages upon real estate are taxable, as is also 
 the property that secures them. Depositors are taxed 
 for their deposits in banks, while the banks are taxed 
 on the same deposits; and yet with all the efforts that 
 are made to reach it, probably three-quarters of the 
 personal property in the United States subject to taxa- 
 tion escapes it. 
 
 Taxation of personal property in many cities is so op- 
 pressive to industry, so unequal, so demoralising, that 
 many of our most judicious economists have come to 
 the conclusion that it would be advisable to discon- 
 tinue it and adopt, substantially, the British system. 
 
 In Great Britain capital, except so far as real estate 
 is capital, is not taxed. Manufactures, stocks in trade, 
 ships, in fact all industries, the prosperity of which is 
 national prosperity, are exempt from taxation. 
 
 The question then arises in view of the objections 
 which lie against taxation upon personal property, would 
 it be possible, and if possible, would it be advisable, to 
 relieve this class of property altogether, and look to 
 other sources for the necessary revenues ? And would 
 it be judicious to tax the rentals of real estate, instead 
 of the real estate itself? Could a system, which works 
 well in an old country like Great Britain, where land is 
 a luxury and held chiefly by the wealthy, and where 
 the income from it is reliable and can be estimated with 
 certainty, be safely and with justice introduced into a 
 new country like the United States, where so large a 
 portion of the land is uncultivated and held for the 
 
816 
 
 prospective rise in value, and where few wealthy people 
 have country estates? In Great Britain the income of 
 lands (although the crops vary in amount, as every- 
 where else, as the seasons are favorable or unfavorable, 
 and in value by the ever-controlling law of suppl}^ and 
 demand) can be estimated for a series of years with 
 nearly as much accuracy as the income from consols. 
 In that country money is rarely invested in unimproved 
 lands, with a view to an advance in value by increasing 
 population and improvements around them. In the 
 United States many millions of acres are so held. Some 
 men purchase Western lands and put them under cul- 
 tivation; others purchase lands and permit them to re- 
 main uncultivated, to be enhanced in value by the labor 
 bestowed upon those which are improved. It would 
 certainly be unfair to tax the labor and capital which 
 have made the cultivated lands productive, and relieve 
 from taxes the uncultivated lands which have been in- 
 creased in value by this very capital and labor. 
 
 It is contended, but erroneously, that land has no 
 value in itself, that it is made valuable only by the labor 
 and capital bestowed upon it. It is not true that agri- 
 cultural lands are only valuable by the money laid out 
 upon them. They are made valuable by the growth of 
 the country in which they are located. It is not true 
 in regard to city property. One man buys a lot in the 
 new^er portions of a city, and does not build upon it; 
 the adjoining lots are built upon and the unimproved 
 lot thereby is increased in value. Hundreds of men 
 have been made rich in all our cities by the expendi- 
 tures of others. Exemption of lands and city lots from 
 taxation, because no income is derived from them, 
 would be in fact a contribution from those wdiose capital 
 and labor are building up cities and bringing \v\\d lands 
 under cultivation, to the gains of those who contribute 
 nothing in this direction. It w^ould be giving decided 
 advantages to inactive over-active capital. For these 
 reasons and others which I have not time to enumerate, 
 taxation of rents instead of land itself would be quite 
 unsuitable to the United States. 
 
 Would it, then, be advisable for States and municipali- 
 ties to exempt intangible property and to look for their 
 
317 
 
 necessary revenues to taxes upon land, upon corpora- 
 tions, and to personal property which cannot be con- 
 cealed, taxation upon which would not be a tax upon 
 honest and productive industry ? My own opinion is 
 that it would. 
 
 Taxation upon personal property under prevailing 
 systems is a temptation to concealment, to fraud, to 
 perjury. It is a check upon legitimate enterprise, a 
 burden upon industry. In many States and cities men 
 who make honest returns of their property cannot afford 
 to be holders of their vState and municipal securities in 
 wdiich they would prefer to invest their money, conse- 
 quently such securities are chiefly held by those who 
 do not make honest returns or by non-residents. If 
 these securities were exempt from taxation there would 
 be a home demand for them, and a home influence in 
 the support of State and municipal credit, which does 
 not now exist. If the State and municipal bonds were 
 held in the States and municipalities that issued them, 
 we should hear nothing of repudiation. Every obstacle 
 in the way of their thus being held should be removed. 
 Public debts are always burdensome, but the burdens are 
 greatly relieved when the tax, the imposition of which 
 is rendered necessary by their existence, is returned in 
 the form of dividends or interest to the same commun- 
 ity by which the tax is paid. 
 
 The taxation upon all taxable property in the city of 
 New York is $2.55 per hundred, consequently none of 
 its four per cent, bonds are held by resident citizens. 
 All are held by non-residents, and the city draws no 
 revenue from them. An honest citizen holding such 
 bonds would receive only ii-' per cent., while 2^''" would 
 go into the State or city treasuries. Nothing can be 
 more injudicious than taxes by States and cities upon 
 their own obligations. Not only is little or no revenue 
 derived from them, but a great deal of conservative in- 
 fluence is lost by their being held elsewhere than at 
 home. If the bonds of the large cities of the United 
 States were held by their own citizens, and they would 
 be vSO held if they were exempt from taxes, the rate of 
 interest might be reduced and there would be a perfect 
 assurance that they would never be dishonored. 
 
318 
 
 Taxation in Pennsylvania is not as judicious as it 
 might be, but it is much more equitable and judicious 
 than it is in other States. I quote from a letter latelj^ 
 received from Mr. George W. Childs, the proprietor of 
 the Philadelphia Z^^^^'^^;'/") ^s follows: 
 
 The State [of Pennsylvania] does not tax real estate at all 
 for State purposes, but derives its revenue almost exclusively 
 from taxes on corporation stocks, loans, earnings, gross re- 
 ceipts, mortgages, money at interest, lincenses to taverns, re- 
 tailers, pedlers, and taxes on foreign insurance companies, 
 premiums on charters granted and collateral inheritances, law- 
 deeds and writs, etc. 
 
 The State leaves real estate to the cities and counties to be 
 taxed for local purposes and local revenue. 
 
 In Philadelphia the only personal property taxed for local 
 purposes is comprised in two classes: P'irst, household furni- 
 ture; second, horses, carriages, and cattle. The amount de- 
 rived from these is inconsiderable, the aggregate taxable 
 value of both of them for this year being 17,932,000, as against 
 a real estate valuation for taxation purposes of 1^534,964,864. 
 
 Our system is essentially different from that of New York, 
 and may be summed up in these two brief sentences: The 
 State gets nearly the whole of its tax revenue from taxes on 
 corporations and lets real estate alone. Cities and towns 
 derive the tax revenue from real estate and let personal taxes 
 alone. 
 
 In closing this branch of my subject, which my limits 
 prevent me from discussing at length, I have only to 
 say that from the best information I have been able to 
 obtain there is no State or city in the Union in which tax- 
 ation is so equitable, so wisely distributed, and so cheer- 
 fully borne, as in Pennsylvania and in her great and 
 prosperous city. 
 
 It will be perceived that the revenues of Philadelphia 
 are derived almost exclusively from taxes upon real es- 
 tate, and that the exemption of personal property alto- 
 gether would not affect them to any appreciable extent. 
 The State of Pennsylvania taxes some things that ought 
 to be exempt, but her system is so superior to that of 
 other States, that it might be very advantageously imi- 
 tated. 
 
 I come now to speak for a rew moments upon a sub- 
 ject in regard to which great diversity of opinion has 
 prevailed since the formation of Government — a diver- 
 sity which still e:j;ists, notwithstanding it has been n^ore 
 
319 
 
 fully and ably discussed than any other subject pertain- 
 ing to the public revenues. It has been in times past, 
 in a very large measure, a sectional question; it has 
 created more alienation between Northern and Southern 
 States than any other question except slavery. It gave 
 birth to nullification, the parent of secession. The 
 South, being an agricultural country, producing large 
 quantities of cotton and tobacco for exportation, the 
 value of which depends very much upon foreign mar- 
 kets, has been in favor of free trade or a tariff for reve- 
 nue, while a tariff not only for revenue, but for the en- 
 couragement and protection of home industry, has found 
 its chief support in the North. There has never been, 
 it is true, a solid South or a solid North on this interest- 
 ing question. There have been statesmen of the South 
 who have favored protection, there have been states- 
 men in the North who have opposed it, but the prevail- 
 ing sentiment in the South has been opposed to all 
 duties not levied for revenue only. The prevailing sen- 
 timent in the North has been in favor of protective 
 duties also. This sectional difference of opinion is dis- 
 appearing; the people of the South are no longer ex- 
 clusively an agricultural people; they are becoming to 
 some extent manufacturers. The Southern advocates of 
 free trade are less earnest than they formerly were, 
 while in the Northern States, as their cotton manufac- 
 tures are no longer in dread of foreign competition, the 
 sentiment in favor of protection is becoming day by day 
 less strong and united. This change of opinion in the 
 two sections has not, however, lessened the importance 
 of the tariff question. There never has been a time when, 
 in view of the action present and prospective of foreign 
 nations, and the condition of our foreign trade, this 
 question was of so much practical interest and impor- 
 tance as now. 
 
 Before the war, when the Government was free from 
 debt, there were many opponents of all restrictions upon 
 foreign commerce. To-day, with the necessity pressing 
 upon the Government for large revenues, an advocate of 
 absolutely free trade it would be difficult to find. It is 
 admitted on all sides, even by those who were formerly 
 advocates of free trade, that a large part of the revenues 
 
320 
 
 must come from duties upon foreign goods. The ques- 
 tion, then, upon which opinion is now divided, is the 
 old question — no longer, as heretofore, a sectional one — 
 Shall custom duties be levied for revenue only, or shall 
 they be levied for revenue and also for the protection 
 of the manufacturers of the United States against the 
 manufacturers of Europe? I am not one of those who 
 believe that the general principles of political economy 
 are equally applicable to all nations or to nations in their 
 different stages of growth and development. Political 
 economy is not one of the exact sciences. It is the science 
 of national wealth. But the wealth of each country de- 
 pends upon its own productions and the use that is made 
 of them. If purely an agricultural country, its wealth 
 would be the result of the proper cultivation of its lands 
 and the sale of its products to other nations, or the ex- 
 change of them for articles which it needed and could 
 not produce; if an exclusively manufacturing country, 
 its wealth would depend upon the capital which it could 
 invest and the skill it could educate and employ in con- 
 verting raw materials into articles for use, and the mar- 
 kets it could command for them; if it were a maritime 
 country only, its wealth would depend upon the num- 
 ber of ships it could build and the carrying business it 
 could obtain. There are, however, no such countries, 
 none that are exclusively agricultural or nmnufacturing 
 or maritime. All are, to a greater or less degree, both 
 agricultural and manufacturing countries, and there are 
 very few which have not both seaports and ships. None 
 become wealthy without diversified industry. Nearly 
 three-quarters of the people of France are engaged in 
 agriculture, but the great accumulations of wealth in ' 
 France have not come from her soil, but from the skill, 
 the taste, the industry and economy of her people, for 
 which they are so greatly distinguished. On the other 
 hand, Great Britain is the greatest of manufacturing and 
 maritime nations. Her gains as such have been ex- 
 ceedingly large, but her wealth would have been small, 
 in comparison with what it now is, had not her lands 
 been kept under the highest cultivation. The United 
 States has a larger number of fertile acres than any 
 other country in the world. Her productions are varied 
 
321 
 
 and of indispensable utility. She can produce all articles 
 necessary for the support of man cheaper than they can 
 be produced elsewhere, and yet the United vStates would 
 be to-day a dependency upon the older nations of Eu- 
 rope if her people had been confined exclusively ^ to ag- 
 ricultural pursuits. No country has such superior ad- 
 vantages in agriculture, in manufacture or shipping that 
 it can rely exclusively upon either. All are populous 
 enough, all have advantages enough for the varied in- 
 dustries upon which national prosperity depends. Nor, 
 as I have said, are the same rules equally applicable in 
 all stages of national growth and development. This 
 fact is exhibited in the history of our own country. 
 Fifty years ago the people of the United States found 
 almost exclusive employment in agriculture, in the fish- 
 eries, in ship building and navigation. Now^ the United 
 States is rapidly coming to the front as a manufacturing 
 country. There are few parts of the world in which 
 her manufactures are not known. Her manufacturers 
 are not only able to supply the home demand for goods 
 of nearly all descriptions, but they are able to compete 
 in the sale of such goods with European countries. Not 
 only so, but some of their manufactures are finding 
 their way into these very countries. American cotton 
 goods find purchasers in Manchester, American cutlery 
 in Sheffield, American musical instruments in Italy, 
 American watches in Switzerland. The growth of man- 
 ufactures in the United States within the last half cen- 
 tury is without precedent in the history of nations, and 
 great and rapid as has been this growth, agriculture has 
 kept pace with it. While the United States has thus 
 been gaining as a manufacturing country many millions 
 of acres of land have been put under cultivation. Ag- 
 riculture and manufacture have, in fact, advanced to- 
 gether hand in hand, and now in the hundredth year of 
 her national existence, the United States is taking the 
 lead as an agricultural country, and is second only to 
 Great Britain and France in manufactures. This growth 
 has taken place while it has been disregarding the 
 teachings of political economists that all restrictions 
 upon commerce retard national prosperity. Has the 
 United States suffered thus far by this violation? Would 
 
322 
 
 the cotton mills, which have added so largely to the 
 wealth of New England, have been built; would the 
 iron mines of the Middle States have been opened and 
 profitably worked, as they have been, had there been 
 no protective duties? Would the advancement in the 
 United States in productive power and substantial pros- 
 perity have been so great as it has been if no restriction, 
 no discriminating duties, had been placed upon the im- 
 portation of foreign goods? In my opinion, these ques- 
 tions must be answered in the negative. Great Britain, 
 with her large capital and skilled and cheap labor, would 
 have had the power to prevent the growth of our most 
 important branches of manufactures, and she would not 
 have failed to use it to the fullest extent, if she had been 
 permitted to do so. There have been, undoubtedly, 
 very great offsets to the advantages derived from 
 protective duties, and the United States has been a 
 loser as well as a gainer by them. They have been 
 instrumental in producing investments in some kinds of 
 manufactures that can never be made profitable; large 
 amounts of money have been sunk in cotton and woolen 
 mills and iron foundries unwisely located, and which 
 would not have come into existence but for the high 
 prices which restrictive duties in part created, and 
 which no restrictions could now vitalize. These 
 duties have also tended to prevent that exercise of 
 economy which is indispensable to success in all 
 branches of industry, and to none more than in manu- 
 facturing. Manufacturers have looked too much to the 
 support of the Government against foreign competition 
 and have failed to exercise proper prudence in the man- 
 agement of their business. Then, too, our tariffs have 
 been so injudiciously framed that they have crushed 
 some branches of industry, which would have been 
 profitable without them, and they have largely dimin- 
 ished our foreign trade. Still, if the gains and losses 
 resulting from protective duties could be fairly esti- 
 mated, we should, I think, be forced to the conclusion 
 that the balance is on the side of protection. Protective 
 duties did not originate in the United States. One needs 
 to go no further back than the commencement of the 
 present century to find upon the statute books of Great 
 
323 
 
 Britain prohibitions of trade between her own coun- 
 tries and the most rigid restrictions upon importations 
 of foreign goods. What were known as the Corn I,aws 
 were repealed only a quarter of a century ago, after the 
 severest struggle between the Commons and the landed 
 interests. 
 
 Fifty years ago there were not only heavy duties in 
 Great Britain upon raw silk, but the sale of foreign silk 
 goods was absolutely prohibited. She now imposes cus- 
 toms duties at home for revenue purposes only; but she 
 has not been quite able to enforce her free trade policy 
 in her own colonies. Small restrictive duties exist in 
 India and Australia. Canada has recently adopted ^ a 
 protective tariff which is not only retaliatory and dis- 
 criminating against the United States, but which im- 
 poses high duties upon British fabrics. Nor is it by any 
 means certain that Great Britain will be able to main- 
 tain her free trade policy even at home. There are 
 very strong indications that she cannot or will not un- 
 less there is a modification of the restrictive policy of 
 other nations, and especially that of the United States. 
 No one can be long in England without perceiving evi- 
 dence of a steadily increasing sentiment against what is 
 called one-sided free trade. Great Britain levies no 
 duties for protection, but she derives very large reve- 
 nues from duties on importations, no considerable part 
 of which are derived from tobacco and spirits imported 
 from the United States. 
 
 While, however, I think that it must be admitted that 
 protective duties were needed in the United States for the 
 encouragement and support of manufacturing industry 
 in its growth and development, there ought not to be 
 any question that the need of them no longer exists; 
 that they are becoming serious impediments to national 
 prosperity. The question now to be considered in not 
 whether protective duties have been right or wrong in 
 the past, not whether the United States has been the 
 loser or gainer heretofore by the restrictive policy. 
 On this point opinions widely differ, and there are no 
 means by which it can be decided. One thing is ap- 
 parent — the manufacturing interests of the United 
 States have for some years been greatly depressed, and 
 
324 
 
 they are still depressed. The inquiry, then, should be, 
 How shall this depression be removed ? From whence is 
 relief to come ? In my opinion, it can only be looked for 
 in an increase in our foreign trade, in larger markets 
 for oUc- manufactures. We can now manufacture all 
 articles, in the production of which machinery is made 
 to do largely the work of hands, cheaper than they can 
 be manufactured in Europe, and there is no obstacle 
 in the way of a largely increased trade with foreign 
 nations but our refusal to trade with them on equal 
 terms. 
 
 We have the most friendly relations with the South 
 American States; why is it that our trade with them is 
 so small? Is it not because we put such a tax upon 
 their commodities that we cannot receive them in ex- 
 change for ours ? Great Britain trades largely with 
 them; she has, in fact, a monopoly of the South Ameri- 
 can trade, because she admits to her ports, free from 
 duty, the products which she receives in exchange for 
 her manufactures. We tax almost every important ar- 
 ticle which they produce, and we are, therefore, pre- 
 cluded from participating with Great Britain in a trade 
 by which she has been greatly enriched. Trade being 
 essentially barter, its existence depends upon free ex- 
 changes. The cases in which international trade is car- 
 ried on without such exchanges are exceptional. We 
 tax almost everything that comes to us from Europe, 
 and yet Europe buys largely of us cotton, petroleum, 
 breadstuffs and provisions; but this happens because 
 the existing demand for them cannot be elsewhere sup- 
 plied. And here let me say that we are counting too 
 much upon the European demand for our agricultural pro- 
 ducts. Our exports of grain and provisions for the last 
 three years have been enormous, but such exports can- 
 not be depended upon Our harvests have been abund- 
 ant, so abundant that had there not been a large foreign 
 demand for our agricultural products. Western farmers 
 would have been in desj^air. In this respect Europe 
 has been far less favored, and consequently there has 
 been an unusual demand for what we had to spare. A 
 full crop in Europe and a short one in the United States 
 would be likely to turn the tables against us and put an 
 
825 
 
 end to gold redemptions by the Government and the 
 banks. We nuist bear in mind that the European na- 
 tions that maintain a convertible paper currency have 
 three times as much coin as circulating notes. We have 
 three times as much paper money as coin. Our condition 
 would be critical if the current of exchange should be 
 unfavorable. 
 
 The United States would also buy coffee of Brazil and 
 tea of China and Japan and pay for them in money if 
 there were high duties upon them, because they have 
 become, by general use, articles of necessity. These, 
 however, as I have stated, are exceptional cases; they 
 do not invalidate the general rule that trade is barter 
 and may be destroyed by restrictions upon it. 
 
 Let us go back to South America. Our trade with 
 Brazil is increasing, but the balance against the United 
 States in our trade with this great empire is some thirty 
 millions of dollars annually; last year it was upwards of 
 thirty-four millions. We tax all her most important 
 productions, except coffee. Great Britain does not, and 
 consequently she controls, to a very large extent, the 
 Brazilian trade. And how is it with the South American 
 republics? Their institutions were modeled upon ours; 
 they desire not only that there should be good political 
 relations between them and the United States, but com- 
 mercial relations also. Some of them are very import- 
 ant States; they buy and sell a good deal, but their 
 dealings with the United States, when compared with 
 their dealings with Great Britain, are insignificant. We 
 know very little about the South American republics; 
 we do not regard them as worthy of attention ; we speak 
 of them as being in a chronic state of revolution, quite 
 unworthy of our regard. In this respect we do them 
 great injustice. W^e do not properly estimate the disad- 
 vantages under which they have labored. They were 
 mostly colonized by Spain, and Spanish domination was 
 not calculated to improve their condition. The original 
 inhabitants, although vastly superior in everything but 
 valor to the North American Indians, were quite unfit 
 to be citizens under republican governments. The An- 
 glo-Saxons exterminated the aborigines, the Spaniards 
 intermingled with them, and yet, unfavorable as were the 
 
326 
 
 dircumstances in which they have been placed, these re- 
 publics have made progress; their Governments are be- 
 coming stable; their industry is increasing; we have 
 friendly political relations with them, but very little 
 trade. Their chief trade is with Great Britain, and 
 they are very large consumers of British goods. Look 
 at Peru; why has the United States no trade with this 
 important State? Mr. Christiancy, our recently-ap- 
 pointed minister to Peru, answered the question in a 
 few brief and telling words. To a correspondent of the 
 New York Tribune^, who asked him if he carried to Peru 
 special instructions, he replied: 
 
 No; my instructions so far are general. I shall do what I 
 can to build up our trade with that country, but little can be 
 done without a change in our tariff laws. Peru annually ex- 
 ports now about |i 2,000,000 worth of guano, |8, 000,000 of sugar, 
 |6,ooo,ooo of nitrate of soda, 1:3,500,000 of wool, fc, 500,000 of 
 silver, and other articles, making in all about 1:40,000,000 in ex- 
 ports. Of this amount the United States receives very little 
 and sends little in return. Our tariff laws shut out the light 
 grades of sugar made in Peru, and also the fine grades of al- 
 paca wool which she produces. A small part of the guano trade 
 comes here, but as trade has to be reciprocal, we cannot expect 
 much of an increase in our commerce with Peru until a change 
 is made in our tariff laws. English vessels do most of the 
 carrying trade of that country, and, of course, divert it to 
 England. 
 
 And how is it with Chili, the most prosperous of the 
 South American States? Chili has no manufactures; 
 her chief productions are copper and wool, and she re- 
 ceives in exchange for them very large amounts of 
 goods of the ver}^ kind which the United States can 
 produce cheaper than the}- can be produced in En- 
 gland — such as cottons, hardware, boots and shoes, and 
 agricultural implements. Her trade might be very prof- 
 itable to us, but we do not, to any considerable extent, 
 participate in it. Great Britain sells annually to Chili 
 upwards of 50,000,000 pounds of cotton goods; the 
 United States sells to her less than 5,000,000 pounds, 
 and yet vSome of our cotton mills, until recently, have 
 been idle, or partially so, for the want of markets. We 
 have put a prohibitory duty upon the chief products of 
 Chili, and we cannot, therefore, trade with her. 
 
 So it is with the Argentine Republic. According to a 
 
827 
 
 statement of Mr. David A. Wells— who has rendered in- 
 valuable services to the countr}- by his exposition of the 
 condition of our foreign trade— the importations of this 
 republic in 1874 were as follows: 
 
 From Kiiglaiid, 121,465,000; from France, $19,836,000; from 
 Belgium, 116,777,00(3, and from the United vStates, 13,945,000. In 
 that year she bought of Great Britain more than 40,000,000 
 pounds of cotton goods; of the United States, 155.000 pounds. 
 Great Britain found a market there for |i, 000,000 worth of 
 boots and shoes, against |;io,ooo worth from this country. 
 
 The reason for this enormous difference has been 
 also the fact that the chief products of this republic are 
 prevented from coming to the United States by our 
 tariff. The policy of Great Britain in regard to foreign 
 trade is the reverse of ours. She loads her ships with 
 her manufactures, and exchanges them for the guano, 
 the sugar, the nitrate of soda of Peru, the copper and 
 other articles of Chili, the wool of the Argentine Re- 
 public, the varied products of Brazil; thus securing not 
 only a valuable trade, but freights for her ships. _ It is 
 by her foreign trade, by taking the raw material in ex- 
 change for her manufactures and putting upon it her 
 skilled labor, and sending the finished fabric wherever 
 a market can be found for them, that she maintains her 
 manufacturing and maritime ascendency. 
 
 Now let us look very briefly at our existing tariff. It 
 was a war measure. In i860 the average duty on duti- 
 able goods was nineteen per cent. It is now forty-nine 
 and seventy-five hundredths. By those who framed the 
 present tariff, largely increased revenue was regarded 
 as being absolutely necessary for the support of the 
 Government and protective duties were considered nec- 
 essary to render the United States independent of foreign 
 nations. Both have been accomplished, but at no small 
 cost. The tariff has protected large interests, but at the 
 expense of large interests. It has produced large reve- 
 nues, but the revenues would have been much larger 
 had it not been prohibitory as well as protective. It is 
 only necessary to glance at the duties on a few articles 
 to perceive that the leading features are protective even 
 to the extent of exclusion. The Secretary is troubled 
 by the liberal appropriations of Congress; he sees not 
 
328 
 
 only deficiencies, but an increase of the public debt in 
 prospect; he needs more revenue, but 3^et fails to rec- 
 ommend a modification of the tarifi" which would pro- 
 duce it. I have no time and this is not the place to go 
 into minute details, but I cannot avoid naming a few 
 articles the duty on which prevents revenue and sus- 
 tains monopoly. 
 
 Salt is used by every family in the United States; 
 enormous amounts are used in curing meats and fish; 
 it is produced largely in the United States, and the pro- 
 duction could be increased almost without limit. The 
 duty is 39^ per cent, when imported in bags and 69 per 
 cent, in bulk. Although the people of the United 
 States are subject to a heavy tax upon the salt which 
 they use, the Government derives very little revenue 
 from it. 
 
 Quinine is an article of indispensable utility in a large 
 part of the United States. It is one of the very few 
 specifics known to the medical profession. It is exten- 
 sively used in the army and in the hospitals; a large 
 part of the Mississippi Valley would be uninhabitable 
 without it. Quinine is subject to a duty of twenty per 
 cent., by which duty hundreds of thousands of families 
 are compelled to contribute not to the revenues, but to 
 the gains of the manufacturers. It is estimated that 
 1,200,000 ounces of this invaluable article are annually 
 consumed in the United vStates, the profits on which are 
 not less than fifty cents an ounce in addition to what 
 would be a fair manufacturers' profit. A few ounces, 
 w'hen prices are excessive, do come to the United States, 
 but the duty upon it is substantially prohibitory. In 
 1878 the Government received in duties on imported 
 quinine $10,171.60. The manufacturers realized a profit 
 of not less, probably, than $600,000. Two powerful 
 firms have control of the manufacture, and are made 
 immenseh' rich at the expense of the revenue and con- 
 sumers. It can be made b}^ all chemists, but there is 
 no competition in its manufacture; foreigners are pre- 
 vented from competing by the tariff; home competition 
 is prevented by the monopolists, who have the power 
 and do not hesitate to use it to crush any who dare to 
 interfere with the trade. 
 
829 
 
 Blankets are subject to specific and ad valorem duties. 
 Those that are valued at over forty cents a pound are 
 subject to a specific duty of twenty cents a pound and 
 thirty-five per cent, ad valorem; those valued at over 
 eighty cents a pound are subject to forty cents specific 
 duty and thirty-five per cent, ad valorem. Such blankets 
 as are used by millions of laboring people in the United 
 States cost in England about ^1.75 cents a pair; the 
 duty on a pair of such blankets is ^1.595. Very few 
 blankets are imported; the revenue from these the last 
 year was $2,884, and yet it is estimated that 20,000,000 
 pounds of blankets were sold and used last year in 
 the United States, the profit of which to the manu- 
 facturers, as the effect of tariff, was not less than ^5,000,- 
 000. 
 
 There is a large demand for steel rails, a demand 
 which is steadily increavsing, as, taking into considera- 
 tion the time they will last on railroads whose traffic is 
 heavy, they are cheaper than iron. The price of steel 
 rails m the United States is now about $44 per ton; it 
 has been lower, but it is advancing with the increasing 
 demand. They can be made in England and delivered 
 in New York at $32 per ton; the duty on them is $25 
 per ton, and consequently none are imported. Steel rails 
 can be made as cheaply in the United States as in En- 
 gland, and the home manufacturers have the advantage 
 over the foreign maker in the cost of freight, and yet 
 railroad companies pay $12 a ton more for steel rails 
 than they would pay if there were no tariff. Forty-four 
 dollars a ton seems like a very l-ow j^ice for steel rails, 
 but under the improved processes they are made more 
 cheaply than iron rails were made before the war. The 
 manufacture of steel rails is a very important business 
 in the United States, and should receive the support 
 which a tariff for revenue would give it, and this could 
 not fail to be largely protective. The tariff says that 
 not a ton of steel rails shall be imported into the United 
 States; that the home manufacturers shall have the field 
 free from competition; that not a dollar revenue shall be 
 derived from a very extensive and profitable branch of 
 manufacture. What do the managers of railroads say 
 to this ? We ought to hear from them upon the sub- 
 
330 
 
 ject. We do not. Why? The answer should come from 
 them. 
 
 Copper; the duty on copper is five cents a pound. 
 The price in England is about fourteen cents. The duty 
 is prohibitory; none is imported. It is to some extent 
 exported. Last year 11,299,876 pounds went from the 
 United States to Germany and France. In 1876 the rev- 
 enue collected on imported copper was $264.05; in 1877 
 it was $11.50; in 1878 it was five cents. And yet the 
 duty of five cents a pound still remains. The produc- 
 tion of copper in the United States is about 50,000,000 
 pounds annually, four-fifths of which are consumed in 
 the United States and one-fifth exported. The tariff 
 compels the United States purchasers to pay three or 
 four cents a pound for copper more than they would if 
 it were duty free. A score or two of rich men have the 
 control of the market and keep prices to just the point 
 which will prevent importations. Why should they have 
 it? Why should there be a prohibitory duty upon cop- 
 per? The consumers are injured by it and the Govern- 
 ment is defrauded by it. The gainers are the proprietors 
 of a couple of mines on Lake Superior, who pocket 
 their gains, keep the knowledge of the amount to them- 
 selves, and are quite content with the situation. And 
 well they may be, for their profits are a million of dol- 
 lars larger than they would be if copper were duty free, 
 and half a million larger than they would be if the duty 
 were imposed for revenue only. 
 
 I mention these articles — salt, quinine, blankets, steel 
 rails, and copper-*-not because they are exceptional 
 cases in which monopolists are enriched at the expense 
 of consumers and the Government, but because I lack 
 time to enumerate others, and because- they are suffi- 
 cient to illustrate the character of the tariff. An exami- 
 nation of it would satisfy any unprejudiced man that 
 it is not in the interest of public revenue or of for- 
 eign trade; it is unquestionably prejudicial to both. It 
 is maintained in the interests of capitalists. If it could 
 be taken up by Congress and the duties on each article 
 could be independently considered, it would be made, as 
 it ought to be, simply a revenue tariff. It has not 
 been so considered. The protective interests stand by 
 
831 
 
 each other, the support of one being necessary for the 
 support of another; their strength is in their unity. 
 There is, in fact, a chain of interests, every link of 
 which is important to the maintenance of the protective 
 and prohibitory systems. Members of Congress who 
 represent men engaged in the manufacture of blankets 
 think, I have no doubt, that it is a shame that there 
 should be a prohibitory duty on salt or quinine, but they 
 sustain the duties on them nevertheless. The represen- 
 tatives of other protected interests may be of the opin- 
 ion that the prohibition of the importation of copper is 
 a very large contribution to the wealth of a few persons 
 at the expense of the revenue and of the users, and to 
 the prejudice of foreign trade; but the duty on copper 
 is a link in the chain that binds great interests together, 
 and it therefore cannot be discontinued; and so the 
 tariff remains as it is, depriving the Government of needed 
 revenues and building up monopolies at the expense of 
 consumers, in violation of the spirit of our institutions. 
 Political questions have of late been the engrossing 
 questions; not a single member of the present Congress 
 was elected with special reference to his views upon Fed- 
 eral taxation. There are but few journals in the country 
 in which the subject is discussed. It is not now a question 
 upon which parties divide. Party leaders on both sides 
 ignore it, because they are uncertain whether they would 
 be the gainers or losers by taking a decided stand in 
 regard to it. It cannot, however, be kept long in the 
 background, it must come to the front. As long as high 
 prices were maintained, as long as the people were ex- 
 ulting in apparent prosperity, as long as credit was 
 cheap and borrowing was easy, taxation, direct as well 
 as indirect, was not felt to be burdensome. A great 
 change has taken place within the last five years; prices 
 have greatly declined; with the exception of our man- 
 ufactures of cotton goods, our manufacturing industry 
 is in a depressed condition. Farmers are also complain- 
 ing as well as manufacturers, notwithstanding the large 
 demand for our agricultural products, which has turned 
 the exchanges in our favor. Nearly all of our agricul- 
 tural products are lower than they were before the 
 war, when we had no national debt and municipal 
 
382 
 
 debts were not burdensome. The tax-paj-ers feel espe- 
 cially the burden of direct taxation, and in devising 
 means to reduce it their attention cannot long fail 
 to be directed to the burdens to which they are sub- 
 jected by the tariff, and when it is so directed the pop- 
 ular demand for tariff reform will be irresistible. 
 
 If those who are being enriched by protective duties 
 are wise, they will take the lead in bringing about this 
 much-needed reform. If they do not, they may, at no 
 distant day, be deprived of the advantages which a tariff 
 for revenue would give them. The people are apt to go 
 from one extreme to another, and the danger to be 
 avoided is such an uprooting as will, in sweeping away 
 every vestige of protection, deprive the Government 
 of the income it needs from revenue duties upon foreign 
 goods. 
 
 Seventh Lecture. 
 
 capital and eabor. 
 
 One of the mo.st troublesome questions which demand 
 the attention of statesmen and political economists is 
 the question of the proper relations between capital and 
 lal)or, employers and employees; a question which has 
 always been troublesome, notwithstanding the fact that 
 these relations are close and inseparable. The rewards 
 of labor are dependent on capital; capital would be un- 
 productive without labor. If it is said that labor builds 
 cities, and factories, and ships, constructs railroads, de- 
 velops mines, cultivates lands, it may be said with 
 equal truth that the labor thus employed is supported 
 by capital, that without capital there would have been 
 neither cities nor factories, nor ships, nor railroads, that 
 mines would have been but superficially worked, lands 
 would have been but imperfectly cultivated. While 
 labor is the source of national wealth, it is capital which 
 gives it direction and employment. Labor creates capital , 
 capital supports labor. Laborers are very frequently 
 becoming capitalists. Thus it has always been and al- 
 ways will be. But while capital and labor, the employer 
 
333 
 
 and the employee, are thus dependent upon each other, 
 while they are so inseparably connected, while they are 
 necessarily co-workers, they very rarely work together 
 harmoniously. There seems to be a deep rooted, an 
 abiding hostility of labor against capital. Christianity 
 has not softened it, the general spread of intelligence 
 has stimulated instead of lessening it. The severest 
 struggles between labor and capital are in Christian 
 lands and where civilization has made the greatest ad- 
 vances. Christianity in its principles, whatever hier- 
 archies have made it, is essentially democratic, and so 
 is education. It is not surprising, therefore, that where 
 these influences prevail the more earnest will labor be 
 in the assertion of what it conceives to be its rights. 
 The dissatisfaction of laborers with their condition, the 
 restlessness which is so manifest among them in the 
 most enlightened countries of Europe, as well as in the 
 United States, is an indication of the spread of intelli- 
 gence. I do not, therefore, consider the fact that the 
 contest is the sharpest in countries most advanced in 
 Christian civilization and in education at all discourag- 
 ing; on the contrary, I regard it as a hopeful and 
 healthy indication. I do not think that perfectly just 
 relations can ever be established between capital and 
 labor, that there can ever be a fair division of profits 
 between them, but I do think that the dissatisfaction of 
 laborers and the serious consequences of labor strikes 
 must lead to a more thorough examination of the labor 
 question, and bring about a better understanding be- 
 tween employers and employees than has hitherto ex- 
 isted. Not only so, but I believe this examination will 
 show that many of the obstacles in the way of better 
 relations between them and of advancement of their 
 common interests are artificial, and that they do and 
 must prosper and suffer together. The present depres- 
 sion in Great Britain does not affect the laborers alone. 
 They are undoubtedly the greatest sufferers, because 
 ver}' few of them have accumulated anything in more 
 prosperous times, and when thrown out of employ- 
 ment they have no means of support; but the cap- 
 italists also suffer. While the laborers are complaining 
 of a reduction of wages, many capitalists are consider- 
 
334 
 
 ing whether even with such reduction it would not be 
 better to close their works than go on. 
 
 That there has been for some years and still is v^ery 
 great business depression among all the leading nations, 
 a depression which bears heavily upon capitalists and 
 laborers, is well known. A revival is taking place in 
 the United States, but it has not become decided or 
 general. Six years ago all the nations were appar- 
 ently in a prosperous condition. Trade was active, 
 wages were high, ships were well freighted, and there 
 were good markets for the abounding productions of the 
 world. What has produced the change? Why has so 
 great depression followed a period of unusual activity 
 and material progress? The causes of this depression 
 must lie back of it. They must have been at work 
 silently before there was any manifestation of their ex- 
 istence. Some of them are very readily discovered. 
 UnreasonaVjle as it may seem, steam and electricity, the 
 invention of labor-saving machinery, the very instru- 
 mentalities of material progress, are among the causes 
 of the existing depression. They have created a revo- 
 lution in trade, in commercial intercourse, in business of 
 all descriptions; a revolution which, whatever ma}' be 
 its ultimate result, could not fail to be temporarily 
 prejudicial to many important interests and to diminish 
 the demand for labor and the wages of the laborer. 
 Political revolutions, no matter how necessary they may 
 be, no matter how beneficial they may ultimately prove 
 to be, are a great disturbance while in progress. The 
 same is true in regard to revolutions in trade. That 
 the world is to be benefited by labor-saving machinery, 
 by reduced cost of production, by freer and speedier con- 
 nection between buyers and sellers, between producers 
 and consumers, cannot be doubted; and yet it is obvious 
 that while such really beneficial processes are at work, 
 and before the power of adaptation comes into full exer- 
 cise, there must be derangement of business and dim- 
 inution of employment, producing inevitably suffering 
 among laborers, disappointment and misfortune among 
 business men. The forces which have disturbed the 
 old order of things have been at work for some years. 
 The effect is no\y seen in a decline of prices, in lower 
 
33ij 
 
 wages, reduced demand for labor; all of which are in- 
 dicative of overproduction. It is contended, I know, 
 that there can be no sugli thing as overproduction; that 
 nothing will be produced to be wasted, and that con- 
 sumption and production must go hand in hand. This 
 is undoubtedly true in theory, and in course of time it 
 will become true in fact. Continuous overproduction is 
 impossible; temporary overproduction is not only pos- 
 sible, but there are good evidences of its existence not 
 only in other countries, but in the United States. If 
 there had not been, the great decline in prices which 
 has been ruinous to so mau}^ would not have occurred. 
 Not only has there been overproduction, but the ca- 
 pacity to produce is now greatly in advance of the pres- 
 ent and of any early prospective demand. The cotton 
 and iron and woolen mills of European nations and of 
 the United States, if operated to their full capacity for 
 six months, would supply the demand for their produc- 
 tions for a year. Many mills are idle, more are only 
 partially employed, not because prices are low, but be- 
 cause the demand is insufficient. Production has taken 
 the lead of consumption. Hence the depreciation in 
 many branches of industry and the inability of willing 
 hands to find employment. This depression is aggra- 
 vated by local causes, but it is felt everywhere. I do 
 not know where to look for a country in which it does 
 not exist. All are affected to a greater or less extent 
 by the same influences. Nowhere is capital receiving 
 remunerative returns; nowhere is labor receiving proper 
 compensation. I do not mean, of course, when I say 
 this, that there are no branches of industry which are 
 not profitable, no cases of individual prosperit3^ no lo- 
 cations in which labor is not in demand and wages are 
 high. What I mean is that there is no country whose 
 general trade and industries are in a vigorous and healthy 
 state and where laborers find full and fairly remunerative 
 employment. The revolution to which I have referred 
 is still going on; the process is painful, but the results 
 will be healthful. Let us note some instances of this 
 revolution and the immediate effects thereof: 
 
 Whatever diminishes distances between nations, what- 
 ever helps to bring them into closer communication, 
 
336 
 
 must be eventually beneficial to their people; and yet, 
 for a time, many important interests may be injuriously 
 affected by it. The Suc/C CanaJ, which brings Western 
 Europe some five thousand miles nearer to the Orient 
 than it was before this great work was completed, must 
 be of great advantage to both the Eastern and Western 
 nations, and 3^et the reduction in the number of ships re- 
 quired in the traffic between them, caused by this great 
 diminution of distance, has been a severe blow to ship- 
 owners and to ship-builders, and especially to working 
 men in ship-building districts. 
 
 The electric telegraph is one of the time-saving and 
 interest-saving instruments of the day, and yet a great 
 many people have been injured, and a few ruined, by 
 it. It has introduced radical changes in many branches 
 of trade; it has rendered unnecessary the service of 
 thousands of middle men. 
 
 Machinery, which has so largely taken the place of 
 hands, must, by lessening prices, be of incalculable 
 benefit to mankind, but there can be no question that 
 the effect upon the laboring classes has been exceed- 
 ingly disheartening and injurious. Laboring men look 
 upon labor-saving machines as their enemy, and, for 
 the present, rightfully. 
 
 Iron steamships are, in these hurrying days, greatly 
 superior to wooden sailing vessels. The commerce of 
 the world is quickened and increased by the change 
 which steam and iron have made in ships, and yet the 
 substitution of iron for wood in ship-building and of 
 steam for sails, as propelling power, has deprived thou- 
 sands of mechanics and sea-faring men of needed em- 
 ployment, made solitudes of ship yards, and done much 
 to deprive the United States of the rank which she held 
 thirty years ago as a maritime nation. 
 
 The business of the world is being revolutionised by 
 such agents as I have named, and while these revolu- 
 tions are going on capital and labor both suffer, but labor 
 to the greatest extent. Capital is easily transferred from 
 one branch of lousiness to another, and it can afford for 
 a time to be idle. I^abor, on the other hand, cannot be 
 readily diversified, and stands in absolute need of con- 
 stant employment. We must, I think, admit that the 
 
337 
 
 condition oi' laborers has not been improved by the ma- 
 terial progress of the nations which is so marked a 
 characteristic of the present age. This progress has 
 been chiefly the result of machinery, and it will be 
 noticed that the discontent and suffering of the laboring 
 classes are most manifest in those countries in which 
 machinery has become to the greatest extent a sub- 
 stitute for hands. 
 
 The general disturbance produced by the revolu- 
 tionary forces at work is aggravated in some countries 
 and lessened in others by local causes. It is aggravated 
 in Great Britain by the disproportionate number of men 
 who are dependent on mechanical employment and by 
 her system of land tenure. In previous lectures I have 
 spoken of her manufacturing industries and the causes 
 of their decline. The great body of the real estate of 
 Great Britain is held by a few thousand people. A 
 score or two own the larger part of the acreage of Scot- 
 land; a few hundred the larger part of England. The 
 masses have no interest in the soil, not even as tenants. 
 The lands are generally entailed, the large estates are 
 being increased, and the old systems of tenantry, hav- 
 ing become unprofitable to the proprietors, has been 
 discontinued. Lands in Great Britain are now being 
 chiefly cultivated by a class of men called farmers, who 
 were quite unknown half a century ago, and who, hav- 
 ing the skill and capital necessary to make the business 
 profitable, become the lesees of the proprietors for a 
 term of years on a cash rent. The proprietors, of course, 
 make the best bargains they can with the farmers; the 
 farmer does the same with the laborers; the result of 
 which is that in the country of the greatest wealth and 
 the highest cultivation the agricultural laborers, farm 
 hands, as they are called, are in a most unfortunate con- 
 dition. It would be difficult to find in any part of Eu- 
 rope a peasantry as poorly fed, clothed, and sheltered 
 as the workingmen in most of the countries of England. 
 There is nothing in the condition of the agricultural in- 
 terests of Great Britain to alleviate the trouble she is 
 experiencing in the depression of her manufacturing in- 
 dustries. Indeed, there is as much complaint in her ag- 
 ricultural districts as in her manufacturing. At th^ 
 
338 
 
 prices at which farming lands are held farming cannot 
 be profitable. American grain growers and stock pro- ' 
 ducers are able to undersell the British farmers in their 
 own markets, and there is now an earnest demand on 
 their part for lower rents or for a tariff on provisions 
 and breadstuffs, a demand which landowners and the 
 Government will find it difficult, if not impossible, to 
 resist. 
 
 Across the channel, on the other hand, there are local 
 causes which alleviate the depression resulting from the 
 revolution to which I have referred. The industries of 
 France are more diversified than those of Great Britain 
 and less dependent upon machinery; but a more impor- 
 tant cause is found in the fact that the farm laborers of 
 France are the owners of the land the}' cultivate, and 
 this is one of the open secrets of her prosperity. Prior 
 to the great French Revolution, most of the lands of 
 France were held by the nobility, a nobility as oppres- 
 sive as it was debased. This limited ownership of land 
 and the oppression which grew out of it was one of the 
 causes of a revolution, which, violent and bloody as it 
 was, was only commensurate with the evils of the sys- 
 tem which provoked it. By this revolution the founda- 
 tion of land tenure in France was broken up, first by 
 the confiscation and distribution of large estates, and 
 then by a radical change in the law regulating descents 
 and inheritances. Landowners in France may dispose 
 of their property in their lifetime as the}' may see fit, 
 but upon their death their lands must go to their heirs 
 in equal proportions. As a consequence of this, the 
 lands of France are held in small quantities by a larger 
 number of independent land-holders than can be found 
 in any other country in the world. It is this division of 
 land, the interest in the State thus created, that makes 
 a republican government in France possible. Universal 
 suffrage can only be permanently trusted where prop- 
 erty is widely distributed, where a majority of voters 
 have interests to be protected, and there is nothing so 
 highly prized by the great body of the people nor so 
 conservative in its influence as the ownership of land. 
 The education and experience of the French have not 
 been such as are calculated to fit then; for self-gov^ru- 
 
339 
 
 ment, but the prospects of the republic are encouraging, 
 and that they are so is attributable, in a large degree, 
 to the fact that it has a basis of widely-distributed land 
 ownership to rest upon. It is true that a minority of 
 the French people are landowners, but they are a strong 
 minority, the leaning of whose influence is felt through- 
 out the body politic. Besides there are few Frenchmen 
 who are not the owaiers of property of some kind. 
 France and Switzerland are the only European coun- 
 tries whose Governments could stand the test of really 
 free elections with unlimited suffrage; the only coun- 
 tries in Europe in which republican institutions could 
 be established with any prospects of immediate success. 
 Votes are a conservative power when cast by men who 
 have interests to look after and to protect; in other 
 hands they are dangerous. The Government of Great 
 Britain is a stable Government, but it is stable under 
 the existing system of land monopoly because, although 
 a free Government, it is not a popular Government. 
 The English people are distinguished for their loyalty, 
 loyalty not only to England, but to the throne, no mat- 
 ter what may be the character of the occupant. There 
 is something almost ridiculous in their loyalty which 
 extends not only to the imperial and irresponsible head 
 of the Government, but to the nobility. There is a 
 feeling or sentiment pervading the lower and middle 
 classes that the lords and earls and dukes are of better 
 blood than the common people, that it improves from 
 the knights who stand at the bottom of the aristocratic 
 ladder all the way up to the empress in whose veins it 
 courses in the purest current. The loyalty and the 
 patriotism of the British people are proverbial, but the 
 most liberal government that could now be formed would 
 not dare to recommend universal suffrage. 
 
 I am reminded here that universal suffrage prevails in 
 nearly every State in the Union, and that in those States 
 in which there is a restriction upon it the restriction is 
 so limited that it is practically universal. I am re- 
 minded, also, that the taxes on property in the city of 
 Boston are paid by one-fifth of the population; that four- 
 fifths of the voters pay only a capitum or poll tax, and 
 that this tax is more frequently paid by candidates for 
 
340 
 
 office to secure their votes than by themselves, and that, 
 notwithstanding all this, property is as well protected 
 in the United States as in any other country, and that 
 the city of Boston is one of the best governed cities in 
 the world. It must be admitted that universal suffrage 
 has generally worked well in the United States, but it is 
 by no means certain that it will continue to do so; the 
 time of trial will come, when those w^ho have no pecuni- 
 ary interests at stake shall be a controlling majority in 
 the rural districts, as they are now in the large cities, 
 and when, as may be the case, bad men are the leaders 
 of political parties. I should feel that our republican 
 institutions rested upon a firmer basis than they now 
 rest upon, if our agricultural lands w^ere divided into 
 small holdings. As such a division is likely to be im- 
 practicable, the safety of property and of our republican 
 form of government can only be permanently secured 
 by such a property qualification for voting as will prevent 
 those who have no interest in the vState from controlling 
 its aff"airs. If a necessity should arise for a strong gov- 
 ernment it will be owing to unUmited suffrage. 
 
 Let us now" look at some of the causes which have 
 been and are at w^ork in the United States, and which, 
 in disturbing business, have been and are prejudicial to 
 labor. The most fruitful of these was our late civil war. 
 The costliness of a war, in which a million of men were 
 engaged for a good part of four years — a war which well 
 nigh ruined some of the most productive States of the 
 Union, during which the energies of the people and the 
 w'ealth of the nation were devoted to the procurement 
 of supplies for the army and navy — can hardl}^ be over- 
 estimated. The unremunerative outlays in the prosecu- 
 tion of this great war were sufficient to produce financial 
 embarrassment, which could not have been entirely pre- 
 vented if the most prudent councils had prevailed after 
 the war was over. A great w^ar like ours could not have 
 been terminated, the expenditures of the Government, 
 amounting to more than two millions of dollars per day, 
 could not have been suddenly suspended, without a 
 shock to many branches of industry; but I never doubted 
 that, if the right policy had been pursued at the close of 
 the w^ar, the country would have escaped much of \h.^ 
 
341 
 
 disaster which subsequently overwhelmed it. This is a 
 point, however, which I have no disposition to discuss. 
 There can be no doubt that very much of the depression 
 of business, which has affected capital and labor so seri- 
 ously from the autumn of 1873 to the commencement of 
 1879, from which the country is slowly recovering, may 
 be traced to the war, to injudicious and speculative in- 
 vestments, to reckless borrowing, and extravagant ex- 
 penditures. But other disturbing influences have been 
 and still are at work in the United States which do not 
 exist to any considerable extent in other countries. Let 
 us glance at them. 
 
 Business of all kinds in the United States is running 
 every year into comparatively fewer hands and narrower 
 channels. It is not distributed as it formerly was; 
 there are many cities and towns whose business and 
 population are growing rapidly where business houses 
 are decreasing in number. In the city of New York a 
 dozen firms are doing the business which a few years 
 ago would have been distributed among a hundred; the 
 same is comparatively true in other cities. The con- 
 centrating process is everywhere going on at the ex- 
 pense of the many and the advantage of the few. Day 
 laborers have been severely tried for some years past, 
 many are still suffering for want of employment, but 
 they have not been nor are they now the severest suf- 
 ferers. These are found among those who have been 
 unsuccessful in their enterprises, who have been thrown 
 out of employment by the misfortunes of others, or who 
 have been crowded out of business by competition. 
 
 Then, again, we have in the United States corpora- 
 tions which wield powers quite unknown in any other 
 country, and which in their efforts to make dividends 
 on fictitious capital, reduce the wages of their employees 
 as far as practicable, and, except at competing points, 
 burden production by severe and discriminating rates 
 for transportation. The granger organization, which 
 created so much alarm and which was so severely con- 
 demned by the Eastern press, was a resistance of what 
 farmers considered the imposition of railroads. The 
 granger laws claimed for the State no greater or dif- 
 ferent power than that which is reserved and exercised 
 
3'4'i 
 
 by European Governments. The British Parliament 
 holds the power of regulating the traffic charges of the 
 roads in the United Kingdom, and exercises it when- 
 ever the public interests require it. The grangers 
 should be permitted to explain their own creed, which 
 is that railroads should be authorized to charge such 
 rates for transportation as would give to their stock- 
 holders liberal returns on money invested but that 
 farmers and consumers vShould not be taxed to enable 
 them to declare dividends on stock which is merely a 
 fiction. No such tremendous power was ever concen- 
 trated in a few hands as is concentrated in the hands of 
 the men who control the great railroad lines of the 
 United States. Four gentlemen control the trans- 
 portation business between the seaboard and the West; 
 they put up or put down rates at pleasure. By con- 
 centration they can make dealing in the productions 
 of the country profitable or unprofitable. They wield 
 a power which absolute monarchs would hesitate to ex- 
 ercise. Three of these gentlemen are under the control 
 of directors, who represent a large number of stock- 
 holders, but, as they possess the confidence of both di- 
 rectors and stockholders, they naturally control the af- 
 fairs of thCvSe great corporations and, to a large degree, 
 the businCvSS of the populous and wealthy regions through 
 which the roads are constructed. They are able and 
 upright men, but their aim is to make money, and they 
 would be more than human, they would hardly be faith- 
 ful to their trusts, if in doing so they were not more 
 careful of the interests of their stockholders than of the 
 public interests. One of these gentlemen is quite inde- 
 pendent of both directors and stockholders. Owning a 
 majority of the stock of one of the finest and best con- 
 structed railroads in the world, which runs through the 
 richest and most populous State in the Union, with sub- 
 sidiary lines which penetrate the fertile regions of the 
 West, he holds in his hands a power superior to that of 
 any other private citizens in the world. By combining 
 with the managers of other trunk lines, he shares in the 
 control of the traffic between the great cities of the West 
 and seaboard. For hundreds of miles, having no com- 
 petitor, he is able to establish such rates of transportation 
 
§43 
 
 as will enable him to declare dividends on stock alto- 
 gether disproportionate to the cost of the road. 
 
 We have another and still more startling illustration 
 of legalised monopoly in the Union and Central Pacific 
 railroads. There is an unpleasant atmosphere about the 
 construction of these roads which I am not disposed to 
 disturb. It is sufficient to say that there was no perma- 
 nent investment of money by the stockholders of either. 
 They were not only built by the subsidies of the Gov- 
 ernment and the loans made upon the donated property, 
 but there was an excess of millions which went into the 
 pockets of contractors who were also stockholders and 
 directors. Four men own, subject to the liens upon it, 
 and absolutely control the western division of this great 
 thoroughfare, a thousand miles of railroad, for which 
 they have paid nothing and out of which they have 
 realized millions. Not only are they the owners of the 
 Central Pacific Road, but, by the profits which they have 
 made and are making out of it, and the sale of a small 
 amount of bonds, they are building a Southern Pacific 
 Road, now completed to Arizona, and other lines, by 
 which they are controlling the larger part of traffic of 
 the Pacific Coast. Owning all the approaches, except 
 on the north, to the magnificent bay of San Francisco, 
 they have no fear of competition. Secured in their 
 chartered rights, there can be no interference with their 
 liberal privileges. Unrestrained in their traffic charges, 
 except by their own discretion and regard for their own 
 interest, they control the transportation of the produc- 
 tions and, in no small measure, the labor of a country 
 vast enough and rich enough for an empire. They are 
 highly respectable and honorable gentlemen, but they 
 are clothed with a power which no government should 
 delegate to its citizens. The adoption of the new con- 
 stitution of California, framed in antagonism to capital, is 
 mainly attributable to the opposition of farmers and of 
 the traders in the interior towns to the management of 
 her railroads. There were other influences at work, but 
 it will be noticed in looking over the returns that the 
 heaviest vote in favor of the constitution was in the 
 agricultural districts. It required a great combination 
 of influences, among which opposition to Chinese im- 
 
844 
 
 migration was not the least potent, to sustain such a 
 constitution, and it is ver}- certain that it would not have 
 been approved b}^ the people had it not been for the 
 opposition of the farming interest to railroad monopol}-. 
 This constitution, if ever made effective by legislation, 
 must be injurious to the laboring classes, who vainly ex- 
 pect that their condition will be improved by it; it will 
 also make manifest the necessity of proper governmental 
 control of the railroad companies of the vState. Legal- 
 ized monopolies in the United States are inconsistent 
 with the interests of the people and the spirit of our in- 
 stitutions. Corporations are useful in all countries; they 
 are indispensable in the United States, whose growth 
 has been largely dependent upon them, but the privi- 
 leges which they possess, and which may be needful for 
 the accomplishment of the objects for which they are 
 organized, are subject to abuses. They should never be 
 independent of the government by which their charters 
 are granted. 
 
 There is another influence, and not the least power- 
 ful, in disturbing industry and business in the United 
 States — politics. By politics I do not mean the science 
 of government, nor the contest between parties over any 
 question of governmental policy, but party contests for 
 political supremacy and for the power and emoluments 
 of office. Politics, in this sense of the word, is a great 
 absorbent in the United States; it is dangerous, because 
 it is corrupting. Financial questions, revenue questions, 
 the labor question, are considered not with regard to 
 their bearings upon the public interests, but with regard 
 only to the use that may be made of them in elections. 
 There are hopeful indications that these great questions 
 will not long be kept in the background or made sub- 
 servient to party interests, but this is their unfortunate 
 condition now. A stranger reading the great newspapers 
 of the United States, great by the energy and ability 
 which they display, great by the influence which they 
 wield, a stranger reading these papers would conclude 
 that there were no questions of importance to the 
 country, except purely party questions. Who shall be 
 the next President? Who shall be Senators or Repre- 
 sentatives in Congress? Who shall be Governors? In 
 
UH 
 
 a word, which party shall have the control of the Federal 
 and State governments ? Financial questions and revenue 
 questions have of late engaged public attention, and 
 there have been contests over them in some States, but 
 a fair and free discussion of them has for a long time 
 been prevented by the doubts of political leaders as to 
 the direction which the current might take. As I said 
 in my last lecture, there is not a member of the present 
 Congress who was elected with regard to his views on 
 economic questions. The disturbing power of politics 
 just now prevents also the consideration, upon their 
 merits, of questions involving the rights and interests of 
 the colored people of the South. While there is a strong 
 sympathy felt throughout the North for the colored 
 people of the South, party politics have had a good deal 
 to do in giving it a wrong direction. The social condi- 
 tion of the colored people of the South and their con- 
 dition as laborers is a matter of deep concern, not onlj^ 
 to the South, but to the whole country, and it is exceed- 
 ingly unfortunate that their condition in these respects 
 should be affected by a sectional contest for the control 
 of their votes. It seems to be hardly possible that any 
 sensible man could have supposed that people who all 
 their lives, and their ancestors for many generations, 
 had been subject to the social, mental, and moral deg- 
 radations of absolute servitude, could become, by eman- 
 cipation, independent voters; that the foundation upon 
 which the social and industrial fabric of the South rested 
 could be broken up; that slavery, which was to have 
 been the corner-stone of the Confederacy if its indepen- 
 dence had been achieved, could be brought to a sudden 
 termination without social and political disorder, with- 
 out heartburning and strife. So far ought we to be from 
 being surprised that harmonious relations do not exist 
 between those whose former relations were so different, 
 that our surprise should be that both races are adapting 
 themselves to their changed relations as rapidly as the}^ 
 are. That the colored vote would, to a large extent, be 
 influenced, if not controlled, b}- the superior intelligence 
 and wealth of the whites and that what would be re- 
 garded sectional interference would unifythe white voters 
 is what everybod}^ ought to have anticipated. That this 
 
346 
 
 vote should not be a unit upon questions affecting the 
 general welfare of the countr}^; that there should be no 
 solid South or solid North in opposition to each other 
 upon political issues, and social and economic problems 
 growing out of emancipation, is what the interests of all, 
 and especially those of the colored people, require. That 
 such a condition of things will sooner or later be brought 
 about there can be no question; the retardation of it 
 will be the result of party efforts, for party purposes, to 
 fan the sleeping embers, not yet quite extinguished, of 
 former antagonisms. The solidarity of the South before 
 the war was upon the slave question ; in defense of slaver}^ 
 it was a unit; upon other subjects it was divided, as it 
 will be again when these subjects come to the front. 
 
 The colored people of the South must be protected in 
 the exercise, to the fullest extent, of their political 
 rights; for all else they must depend upon themselves. 
 The emigration from Louisiana and Mississippi, which 
 has attracted so much attention, will, I fear, prove to be 
 imprudent, if not disastrous, to a majority of the emi- 
 grants. These States suffered severely last year from a 
 pestilence; that from which there is the largest exodus 
 is the one in which party contests have been the severest; 
 but it seems to be hardly possible that the condition of 
 the colored people, even in Louisiana, w^here their suf- 
 ferings from the pestilence have been aggravated by 
 party strife, could have been so wretched as to compel 
 them to leave their homes and to become, for a time, 
 dependents upon the charity of the people of other States. 
 If they left because they could not obtain employment 
 where the}- were and expected to improve their condi- 
 tion by emigrating to Kansas, nobody has a right to 
 complain except those, perhaps, who are compelled to 
 contribute to their relief; but if they were forced 
 to leave by reason of oppression, not only should hu- 
 manity, but the assistance of the Government, be in- 
 voked in their behalf. Kansas is not the promised land 
 for the colored people. Their home is the South. They 
 should remain where their services are most needed 
 and are the most likely to be properly remunerative, in 
 a climate the best suited to their constitutions and their 
 enjo3'ment of life. The labor of the colored people has 
 
347 
 
 made the South what it is; thej' are not likely to be the 
 gainers by leaving it. The interests of the two races 
 in the States from which the exodus has been taking 
 place are dependent upon each other. This natural de- 
 pendence, if left to itself, will do more than all outside 
 pressure can affect to secure to the colored people of 
 the South their personal and political rights. I^abor is 
 a power in this country of ours, and nowhere is its 
 power greater than in the Southern States. Some com- 
 pensation for the evils which must result from this exo- 
 dus may be found in the lesson it will teach the planters 
 of their dependence upon the labor they no longer own, 
 but I think Mr. Douglass is right in the view which he 
 takes of this exodus from the South. The colored peo- 
 ple are an eminently social people; they are happier 
 when together than they can be when scattered among 
 the whites. They need companionship, which they can 
 only find among themselves. A few of them have gone 
 to California and are employed there as servants in ho- 
 tels and in private families. A couple of years ago I 
 had a free talk wnth some of them whom I had known 
 seven or eight years before. They w^ere well cared for 
 and well paid, but they were restless and unhappy. 
 The climate of California was agreeable to them, but 
 they wanted to go back to Washington, where they could 
 have a societ}^ of their own. 
 
 The labor of the colored people is indispensable to 
 Southern planters, and there is a power in their votes 
 over Southern politicians which they will soon know 
 how to wield. The time is not far distant when, divided 
 as the South will be upon questions which are not sec- 
 tional, their votes will be as much courted by candi- 
 dates for office as the votes of Irishmen and Germans 
 are by candidates in the North. But whatever views 
 may be taken of the causes which have produced emi- 
 gration of the colored people from their old homes, all 
 must agree that it disturbs industry, and that it must, 
 for a time at least, affect injuriously the labor of the 
 South and the interests of Southern capital. If I had 
 advice to give the Southern colored people, it would be 
 the same that Sumner gave to Stanton in a single word, 
 stick. I w^ould say to them, stick and fight it out on 
 
M^ 
 
 your own line, if it takes not only next summer, but a 
 dozen summers. 
 
 I have thus directed attention to certain general causes 
 which have brought about, or at least have contributed 
 to bring about, the depression which prevails in other 
 countries and to some extent in our own — a depression 
 which affects both labor and capital — and alluded to 
 certain influences adverse to general prosperity, and to 
 labor, which are peculiar to the United States. The 
 question now arises, What, if anything, can be done in 
 our own countr}- to remove the obstructions which lie 
 in the wa}- of returning prosperit}^ ? It is perfectly clear 
 that the interests of capital and labor, employers and 
 employees, are inextricably united. There have been 
 and there always will be conflicts between them, but 
 there is such a union of interests that they must always 
 suffer or prosper together. Both are exacting; both are 
 apt to be arbitrary in their exactions. Capitalists re- 
 duce wages without consulting laborers; laborers strike 
 for higher wages without consulting capitalists. Each 
 is entitled to a proportion of the joint productions, but 
 there can be no umpire to decide what that proportion 
 shall be. The laborer must live; the capitalist must 
 make his business profitable or abandon it. Who shall 
 decide how well the laborer should live and how much 
 he should be able to accumulate for protection against 
 his being a charge upon the State, when incapacitated 
 for work, or the profits which the capitalist should be 
 entitled to on his present business, or what his accumu- 
 lations should be, in order that provision should be made 
 for the contingencies to which all business is subject? 
 These are points which no one can decide. The}' could 
 not be decided if the contestants were upright and im- 
 partial and the decision were left to themselves. Some- 
 thing has been accomplished by arbitration, but it is not 
 often that both agree to arbitrate and upon an arbitrator, 
 and when arbitration is resorted to the decision is rarely 
 satisfactory to both; perhaps, in the majority of cases, 
 it is not satisfactory to either. Fortunately, the power 
 of neither is absolute. Neither can, for any considerable 
 time, be oppressive to the other. When labor is abund- 
 ant the capitalists ma}' unjustly reduce wages; when it 
 
349 
 
 is scarce they may be forced to pay more than they can 
 afford to pay. vSnch advantages on one side or the other 
 are not of frequent occurrence, and when they do occur 
 they are not of long continuance; the law of supply and 
 demand is always at work and it is, perhaps, the only 
 effective regulator of all such competing interests. It 
 is very certain that the agencies which have been re- 
 sorted to, to wrest from capital what labor demanded as 
 its rights, have not been beneficial to the laborer. The 
 trades unions were organized for wise and humane pur- 
 poses, but they have signally failed to accomplish the 
 objects of their formation; in undertaking to regulate 
 wages they have undertaken the impossible; in encour- 
 aging and for a time sustaining strikes they have injured 
 employers and laborers alike; under intelligent and hon- 
 est direction they have been of little service to the work- 
 ing men; under the direction of bad men they have been 
 potent agencies of mischief. 
 
 It is hardly necessary that I should speak of com- 
 munism and socialism, of the influence and power of 
 which some apprehension has been felt. Communism, 
 as taught by its early advocates, is beautiful in theory, 
 but it is impracticable. It implies the existence of 
 qualities in mankind which do not exist. Independence, 
 superiority, power, are what men naturally strive for. 
 There is nothing in human nature upon which commun- 
 ism can rest; it is harmless, because it is both peaceful 
 and unnatural. 
 
 Socialism is of a different character and not easy of 
 definition; it embraces the disaffected of all classes. Its 
 object seems to be to destroy, not to build; not to en- 
 courage industry, but to deprive it of its accumulations. 
 It is a foe to the existing order of things, which it de- 
 nounces as being in the interest of capital and against 
 labor. It would equalize by a disruption of the princi- 
 ples which held society together. It manifested its 
 spirit in the wanton destruction of property at Pitts- 
 burg two years ago. It ceases to be potent as soon as 
 it is unmasked; it can never be formidable under the 
 free institutions of the United States. 
 
 It follows from what I have said that capital and labor, 
 joined together by common interests, must be left to ad- 
 
350 
 
 just their own controversies by themselves; that both 
 are prejudiced by what is prejudicial to either, and 
 that their aim should be to remove all obstructions in 
 the way of their common prosperity. In this and in 
 previous lectures I have referred to the causes of the 
 industrial depression throughout the world and to local 
 causes in the United States. In doing so, I have sug- 
 gested the remedies which have seemed to me to be 
 within our reach. As wdiatever tends to retard pro- 
 gress, to check enterprise, to lessen the rewards of well- 
 directed industry, is hostile both to capital and labor, 
 my object has been in each lecture to direct attention 
 to the impediments in the way of general prosperity. 
 I have referred to some adverse influences which, al- 
 though prejudicial to many important interests, will 
 become eventually beneficial. I have directed atten- 
 tion especially to the causes which produced the de- 
 pression in the United States and to the obstructions to 
 prosperity which still exist, and for the existence and 
 continuance of which the Government is responsible. It 
 is not the duty of a republican government either to reg- 
 ulate business or to find employment for labor, but it is 
 its duty to relieve industry from all unnecessary burdens 
 and to modify or repeal all laws that block the way to 
 more prosperous times. I have already intimated in 
 general terms what I thought should be done by the 
 Government. I must ask indulgence w^hile I briefly and 
 in conclusion recapitulate the measures which I regard 
 as being especially important: 
 
 Firstly. A day should be fixed, sufficiently remote to 
 allow the banks to supply themselves with coin, after 
 which the United States notes should cease to be a legal 
 tender, and provision made for their being withdrawn 
 from circulation as speedily as the condition of the Treas- 
 ury, under an economical administration of the Govern- 
 ment and a judicious revenue system, would permit. 
 My objection to these notes as money was presented at 
 length in my second lecture. I would now only say, in 
 addition to what I have said, that I do not think there is 
 any good reason to apprehend that the passage of such 
 an act would depreciate the notes and inflict loss upon 
 the holders. As they would still be receivable for all 
 
351 
 
 Government dues, except duties upon imports, there 
 would be a sufficient demand for them to prevent depre- 
 ciation; besides, it would be the duty of Congress to 
 prevent their depreciation by making them convertible 
 into four per cent, bonds, if their receivability for Gov- 
 ernment dues should be insufficient. The additional 
 interest which the Government would have to pay by 
 their conversion into interest-bearing bonds is not worth 
 considering, in comparison with the benefits which the 
 country would derive from the withdrawal of a false and 
 unstable measure of value and the disconnection of the 
 Government from the business of banking. It is quite 
 clear, however, that the popular objection to the retire- 
 ment of these notes is not that the bonded debt would 
 be thereby increased, but that the volume of circulation 
 would be reduced. It is contraction which is especially 
 dreaded, and dreaded without cause. There is not the 
 slightest danger of insufficient currency in the United 
 States; the tendency has always been and probably al- 
 ways will be towards an over supply. There has never 
 been a deficiency of paper currency in this country. 
 There has never been contraction which was not the 
 necessary consequence, the natural and inevitable result 
 of expansion. As long as the national banking system 
 exists, and under any banking system that may follow 
 it, there will be no failure in the supply of bank-notes. 
 Not only is there no reason to fear that there would be 
 injurious contraction by the retirement of United States 
 notes, but it is by no means certain that there would be 
 if all the paper money of the country were to be gradu- 
 ally withdrawn. Paper money is a convenient and bene- 
 ficial supplement to coin; it is not a necessity in any 
 rich and prosperous country; it constitutes only a fifth 
 part of the circulating medium of France, whose financial 
 system is, on the whole, the most perfect of any in 
 Europe. While bank-notes are a great convenience and 
 a positive service in all commercial countries, I do not 
 doubt that within a period of ten years gold and silver 
 might take the place of paper in the United States, with- 
 out disturbance of business or reduction of prices. There 
 can hardly be a greater error than the supposition that 
 the interests of the country are dependent upon a paper 
 
352 
 
 currency, or that industry would be revived and the wel- 
 fare of the laboring man promoted by an increase of its 
 volume. The paper circulation is now more than three 
 times greater than it was in i860, and yet that was a very 
 prosperous year compared with 187S. The immense vol- 
 ume of currency in circulation had no power to prevent the 
 crisis of 1873 or the general decline of prices which fol- 
 lowed it. If a bountiful supply of paper currency would 
 make a countr}^ prosperous, the United States would be 
 prosperous indeed. What the country now needs, as 
 far as the financial question is concerned, is confidence 
 in the policy of Congress; confidence that this policy 
 will be the policy which was interrupted by the war, the 
 time-honored policy which recognized nothing but gold 
 and silver as money, and tolerated no currency which 
 was not convertible. 
 
 Secondly. All small notes should be withdrawn from 
 circulation and the coinage of silver continued as long 
 as it can maintain a parity with gold. All efforts to in- 
 crease the circulation of silver without a withdrawal of 
 small notes will be in vain. To what extent silver can 
 be coined without a depreciation of it can be better de- 
 termined hereafter than now. It would not be subject 
 to depreciation, no matter what might be the policy of 
 other nations, as long as it merely took the place of 
 paper and was actually needed in the domestic trade. 
 If the coinage should be continued under existing law 
 and the paper circulation should not be correspondingly 
 reduced it would at no distant day, as it did under the 
 act of 1792, drive gold out of circulation and out of the 
 country. But while I regard it as being a matter of 
 very great importance that such a limitation should be 
 put upon the coinage of silver as would prevent it from 
 banishing gold, the Government should, through its 
 ministers, express to the leading European States its wil- 
 lingness and desire to unite with them in making gold 
 and silver a joint standard of value, with unlimited coin- 
 age of both. 
 
 Thirdly. The national banking system should be sus- 
 tained, not in the interest of the banks, but of the people, 
 as being the best system yet devised for the security of 
 a bank-note circulation. 
 
853 
 
 Fourthly. That the tariff should be thoroughly re- 
 vised, and that all restrictions upon foreign commerce 
 not absolutely necessary for revenue purposes be re- 
 moved, to the end that consumers may not be taxed for 
 the benefit of monopolies, and that our foreign trade 
 may be increased. 
 
 Fifthly. That while corporations should be protected 
 in their corporate rights, they should be subject to the 
 supervision and control of the Government and the States 
 by whose authority they were created, so that the public 
 interests may not be subordinated to their interests. 
 
 Sixthly. The financial and economical questions, the 
 great questions which underlie the prosperity of the 
 country, should be considered with regard to their bear- 
 ing upon the interests of the country, and not upon the 
 interests of a party. It is not expected that politics will 
 ever be so elevated as to become really the science of 
 government, but it would be an immense gain if such 
 questions should be considered and treated as questions, 
 in which the members of all parties are alike interested. 
 That this is not impossible is proven by the fact that 
 although in Great Britain the contests for the control of 
 the government between Liberals and Conservatives are 
 as violent and bitter as in the United States, one hears 
 very little about financial or commercial questions, al- 
 though these are the questions of paramount importance. 
 There are diff"erences of opinion among the voters in re- 
 gard to them, but they are not mixed up with party con- 
 tests; they are considered by the party in power when 
 a change is supposod to be necessary, and the decision 
 which is reached is rarely disturbed by a change of ad- 
 ministration. Industry and enterprise in the United 
 States are greatly embarrassed by the uncertainty which 
 prevails in regard to the action of the Government upon 
 subjects in which all are interested. Business men feel 
 as sailors would feel if, although upon a good ship, but 
 far from land, they had neither chart nor compass to 
 direct them. 
 
 I regret that I have not been able to discuss with more 
 ability than I have done the questions to which I have 
 directed your attention. Something, however, has been 
 gained if I have excited an interest in them which may 
 
354 
 
 have been heretofore dormant. They are all very im- 
 portant questions, the live questions of the day, in which 
 all are interested, whether conscious of it or not; ques- 
 tions in regard to which no uncertain sound should go 
 forth from our educational institutions. At the head of 
 these institutions and under the direction of one who 
 combines what are so rarely found united, extensive 
 learning and great executive ability, soon to become a 
 university in the most compreheUvSive meaning of the 
 word, stands Harvard. Herpositionisa very important 
 and responsible one, and she will be recreant to her 
 history, to all her inspiring traditions, if her influenceis 
 not felt from year to year, with constantly increasing 
 power, throughout the length and breadth of the land, 
 in giving proper direction to the public sentiment upon 
 all questions affecting the honor of the Government and 
 the welfare of the people. 
 
LETTER 
 
 ADDRESSED TO 
 
 THE BANKERS' ASSOCIATION, AT SARATOGA 
 SPRINGS, AUGUST, 1884, 
 
ADDRESSED TO 
 
 THE BANKERS' ASSOCIATION, AT SARATOGA 
 SPRINGS, AUGUST, 1884. 
 
 Mr. President and Gentlemen of the Com'ention t 
 
 Questions of great public interest cannot be too freely 
 discussed, although those who participate in the discus- 
 sion may say nothing new. It is this consideration that 
 induces me to send you this communication. 
 
 The excellence of the national banking system has 
 been proved by a trial of more than twenty years. It 
 has done all that its warmest advocates expected. It 
 has given to the country, what it never had before, and 
 greatly needed, a bank-note circulation perfectly secured 
 and current throughout the Union. It has done more, 
 it has shown that there can be a great national banking 
 system without the centralized power of a national bank, 
 and free from partisan politics. It has not, it is true, in 
 all cases, protected depositors from losses. This has 
 never been done and never can be, under any system of 
 banking; but it is safe to say that the losses of depos- 
 itors by the failure of national banks — enormously as 
 deposits have been increased within the last twenty 
 years — have been much less than they were under the 
 system (if it might be called a system) that preceded it. 
 That it has not been more effective in this direction is 
 attributable to the fact that, while in the management 
 of the Bureau party politics have been ignored , the Comp- 
 troller has, in some instances, been forced to yield his 
 better judgment in the appointment of examiners to the 
 pressure of politicians, who have had friends to be 
 
858 
 
 served or supporters to be rewarded. To be a compe- 
 tent examiner of banks, especialh^ of the large banks in 
 our commercial cities, a man should have qualifications 
 which very few men possess. He should have a thor- 
 ough knowledge of practical banking. He should be a man 
 of strong will and perfect integrity. He should be a hard 
 worker, and so keen and thorough in his investigations 
 as to render imposition difficult, if not impossible. He 
 should be able, as some men are, to tell by the bearing 
 of the officers of a bank, and even its very atmosphere, 
 whether it is faithfully or unfaithfully managed, before 
 he examines it. Having had, in years long passed, a 
 good deal of experience in the examination of banks, I 
 know how difficult of performance the duties of a bank 
 examiner are, and what his qualifications should be. To 
 select examiners of the right kind, no one is so compe- 
 tent as the Comptroller ought to be, and no one has so 
 deep an interest, as far as reputation is concerned, as 
 himself, in the manner in which their duties are per- 
 formed. It is by him that examiners are appointed. 
 They are his agents and he is to some extent responsible 
 for their incompetency or neglect. He should , therefore, 
 be perfectly independent of all outside influences in 
 making appointments. This, I apprehend, has not 
 always been the case, and to this is attributable, to a 
 large extent, the fact that the examinations of the na- 
 tional banks have not been, in all instances, as intelligent 
 and searching as they ought to have been. Still, as I 
 have said, the national banking system has done all and 
 more than its advocates expected. By superseding the 
 State banks, upon which, without it the Government 
 would have been compelled to rely in the late civil war 
 for a bank-note currency, it did much to save the Gov- 
 ernment from bankruptcy, and it has for nearly a quarter 
 of a century furnished the country with bank-notes on 
 which no loss has been or ever can be sustained. I did 
 not, however, commence writing this letter for the pur- 
 pose of eulogizing the national banking system, but of 
 speaking very briefly of the dangers which threaten its 
 perpetuity. Its great value, nay, its very existence, de- 
 pends upon the security of the notes issued by the banks 
 which are organized under it. This security consists of 
 
^51^ 
 
 Government bonds which are deposited with the Treas- 
 urer in Washington. Nothing else will answer the pur- 
 pose. Bank-notes should alwa3^s be redeemable in coin, 
 but they would never be issued if the}' were to be pro- 
 tected b}^ an equal amount of coin in the vaults of the 
 banks. They must, to a large extent, be based upon 
 credit, and there can be no credit reliable enough for 
 the basis of a national paper currency, except the na- 
 tional credit. Nothing, therefore, but the bonds of the 
 Government can perfectl}' secure a national bank circu- 
 lation. Of these bonds the national banks are being 
 rapidly deprived, and will be soon deprived altogether, 
 unless the public revenues are largely reduced. The 
 public sentiment seems to demand an extinguishment of 
 the public debt as soon as the condition of the Treasury 
 will permit it; but so highly is the national banking 
 system approved by the business men of the country, so 
 essential has its maintenance become to our national 
 prosperity, so entwined is it with both public and private 
 interests, that the sentiment in favor of the extinguish- 
 ment of the debt would doubtless be satisfied with a 
 irdnction of it to such an amount as would be 7iecdful to 
 secure a bank-note circulation, were it not for the recent 
 decision of the Supreme Court on the legal-tender ques- 
 tion, which throw^s a dark cloud over the financial out- 
 look. It is not for me to criticise that decision. The 
 justices of that court are among my personal friends. I 
 have the highest respect for their characters and legal 
 acquirements. This much, however, I cannot forbear 
 to sa}^: It is a decision which fails to command the ap- 
 proval of the best legal minds of the country. It clothes 
 Congress wdth hvipekial powder — the power which the 
 framers of the Constitution manifestlj^ intended to with- 
 hold. It announces a new doctrine, that Congress, in- 
 stead of being limited to the exercise of enumerated 
 powers, may do anything and everything which the Con- 
 stitution does not absolutely prohibit. Indeed, if by its 
 authority to coin and borrow mone}^ Congress can author- 
 ize the issue of Government notes as money, it is dif- 
 ficult to see what power does not constitutionally belong 
 to it. Discussion of this question, however, is now of 
 no avail. It is now the law that Congress, in the exer- 
 
H60 
 
 cise of its own discretion, may authorize the issue of 
 legal-tender notes at all times and to any amount. Such 
 is the decision of the Court, from whose decision there 
 is no appeal, and it is not to be diguised that it puts the 
 national banking system in imminet jeopardy. Nothing 
 can save it if the redemption of the Government bonds 
 goes on, and this can only be prevented by a reduction 
 of the Government income to the amount required 
 to cover its ordinar}' expenses, of which reduction there 
 are no present indications. Now, as the country must 
 be supplied with a paper currency of some kind, the 
 question arises, of what shall this currency consist? 
 Certainly not of the notes of State banks, because if 
 such notes could be perfectly secured their credit would 
 be local; they would not be current throughout the 
 Union. But they could not be perfectly secured. A 
 large part of the States have no bonds outstanding to 
 base circulating notes upon. Many that have are in 
 bad credit. None have maintained absolutely good 
 faith with their creditors, except Massachusetts and 
 California. Besides, State credit has been impaired by 
 the late decisions of the Supreme Court in the Virginia 
 and Louisiana cases which place State sovereignty 
 upon a higher plane than even Mr. Calhoun ever con- 
 templated, and enabled the State to violate with impu- 
 nity any and all contracts which they have entered into 
 with their creditors, no matter how carefully prepared 
 or how fair and just may have been their provisions. It 
 is, therefore, quite certain that if and when the notes of 
 the national banks are withdrawn from circulation their 
 place will be filled, not with the notes of State banks, 
 but with United States legal-tender notes. I say legal 
 tender, because this quality will be necessary to give 
 them currency, and because the power of Congress to 
 authorize the issue of such notes is now established. 
 The existing legal-tender notes are popular with the 
 people — so popular that if the notes of the banks should 
 be retired there would be an irresistible demand for 
 further, if not unlimited, issues. The average voters 
 will not be likely to understand, until the experiment 
 has been tried and proved to be disastrous, why their 
 representatives in Congress should not be able to deter- 
 
361 
 
 mine how much currency the business of the country 
 requires. If they should fail in this respect, they would 
 be promptly enlightened by their constituents, to whose 
 demands there would be but small resistance. What 
 these demands are likely to be can be easily foreseen. 
 At a dinner which was given to Bayard Taylor, just be- 
 fore his departure as Minister to Berlin, when severe 
 business depressions which followed the financial crisis 
 of 1873 prevailed throughout the country, I sat beside 
 one of the most respectable and intelligent leaders of 
 the Greenback party, and I was amazed when he as- 
 serted that "this depression was caused hy contraction 
 of the currency, and that nothing could restore former 
 prosperity except an emission of at least tzvo thousand 
 viillions of dollars in United States notes,'' which were 
 then greatly depreciated. It is not difficult to correctly 
 predict what will be the financial condition of the coun- 
 try when the notes of the national banks are withdrawn 
 from circulation, and the existing restriction upon the 
 issue of United States notes is removed. There will be 
 just what I predicted in October, 1865, another "period 
 of hollow and seductive prosperity, to be followed by 
 widespread disaster." Other nations have resorted to 
 the issue of Government notes when bankrupted by war 
 or extravagance. History informs us of the result. 
 Whether the result will be different when the notes are 
 issued by a Government of abounding resources and 
 with a full treasury, will be ascertained when our na- 
 tional banking system shall be numbered among the 
 things that have been. 
 
 There is another question of present and more press- 
 ing interest that will, doubtless, receive the attention of 
 the convention at the present session. 
 
 THE SILVER QUESTION. 
 
 Until 1879, when it became my duty to give the sub- 
 ject a more careful examination than I had done, I was 
 a mono-metallist, since then I have been a bi-metallist, 
 and I have by observation and reflection become stronger 
 and stronger in my new faith. Mr. Hamilton was right 
 when he said in his masterly report in 1792: 
 
^62 
 
 Upon the whole, it seems to me most desirable not to attach 
 the unit to either metal, because this cannot be done without 
 effectually destroying the character of one of them as money, 
 and so reduce it to the character of mere merchandise. To an- 
 nul the use of either of the metals as money is to abridge the 
 quantity of circulating medium, and is liable to all the objec- 
 tions which arise from the comparison of the benefits of a full 
 with the evils of a scanty circulation. 
 
 The world is not, and probably never will be. in a 
 condition to dispense with the use of either gold orsilver 
 as a standard of value and a circulating medium. Both 
 are indispensable, and neither can be reduced in com- 
 parative value by artificial means below the other with- 
 out prejudice to local and international trade, nor with- 
 out increasing the burden of debts by decreasing the 
 amount of metallic money (which is the only real mone}^ 
 of the world) in circulation. As every dollar of gold 
 and silver in existence has cost in labor and machiner}^ 
 more than its standard value, neither can be depreciated 
 except by artificial means. Silver coin is now depreci- 
 ated in comparison with gold, not by natural causes, but 
 b}^ the action of European nations. A few years ago 
 gold, by the large productions of the United States and 
 Australia, was depreciated in comparative value with 
 silver. This being the result of natural causes, the dif- 
 ference in the value of the two metals was of short du- 
 ration. Natural law speedily adjusted the difference which 
 natural causes had produced. The existing depreciation 
 of silver is not the result of the large production of the 
 silver mines, but of the action of German}^ in demone- 
 tizing it and the restriction of its coinage by the I^atin 
 nations. Had not these causes been at work the depre- 
 ciation of silver, which is now disturbing the financial 
 condition of the world, would not have occurred. The 
 Congress of the United States acted wisel}^ in monetiz- 
 ing silver. The only mistake it then made was in not 
 adopting the French standard. 
 
 But, while Congress acted wisely in making silver a 
 standard with gold, it has^acted most unwisely in con- 
 tinuing the coinage of it in the face of the action of Eu- 
 ropean nations. By doing so it is making the United 
 States the "pack horse" of silver, which the action of 
 these nations has depreciated. As soon as it zvas dis- 
 
nm 
 
 co7>ered that Eiu'opc would not join the United States in 
 their effort to restore silver to its former eoniparative value 
 with gold the eoinage of silver should have been stopped, 
 Vt\ continuing to act independently we are playing into 
 the hands of rival powers, we are throwing upon our 
 own country the burden of maintaining to a large extent 
 even the present market value of silver. The longer 
 we continue the free coinage of silver the longer will it 
 be before bi-metalism is adopted b}^ other commercial 
 nations. Although the United States are the largest 
 silver-producing country in the world, and, therefore, 
 have a deep interest in its value, it would be wiser for 
 us to demonetise it than to continue to coin it. I am 
 not sure, contradictory as it may seem, that the most ef- 
 fective way of appreciating silver would not be for the 
 United States to demonetize it. We are, or at least we 
 have the means of being, a creditor nation. We have 
 less silver than the commercial nations on the other side 
 of the Atlantic, and are better able than they to stand 
 the loss which would be incurred by its further deprecia- 
 tion. In the increased scrabble for gold which would 
 follow such action on our part we should not be the chief 
 sufferer. 
 
 There is another consideration in regard to continuing 
 the silver coinage of pressing interest, if not of vital im- 
 portance. By continuing to coin it we are not increasing 
 to any considerable extent the amount of metallic mone)^ 
 in circulation. We are filling the Treasur}^ with dollars 
 for which there is no demand. Instead of increasing 
 the circulating medium, we are doing what must event- 
 ually produce severe contraetion. Unless our polic}' is 
 changed the Government will, ere long, be compelled 
 to pay a part, if not the whole, of the interest on its 
 bonds and of the principal at maturit}^ in silver dollars. 
 When this point is reached gold will no longer be a cir- 
 culating medium in the United States. It will be virtu- 
 alh^ demonetized, and become an article of merchandise. 
 It will be locked up b}^ the banks, hoarded by the people, 
 or sent abroad. This will be contraction of the severest 
 and worst possible nature, the effects of which upon the 
 national credit and upon all our manifold enterprises 
 will be to the last degree damaging. 
 
364 
 
 What, then, can be done by the members of the corl- 
 vention to prevent the evils which threaten the country ? 
 Seeing clearl}^, as the}^ do, the dangers ahead, the}^ can 
 at least do this: they can sound the alarm. I recollect 
 that upon our Western rivers, when a steamboat was 
 about to run upon a dangerous shoal, the cry went out 
 from the pilot to the engineer: " Give her a lick back!'' 
 So, now, from bankers and all men who are not blind or 
 reckless, the cry to the managers of our financial ship 
 should ring out sharp and clear: " GivK her a i,ick 
 back! give her a lick back! " 
 
LETTER 
 
 TO THE 
 
 ^EW YORK TIMES, OCTOBER 19, 1889, 
 
LETTBR 
 
 TO THE 
 
 NEW YORK TIMES, OCTOBER 19, 1889. 
 
 Permit me, Mr. Editor, in reply to questions that fre- 
 quently come to me, to say in your columns a few words 
 at)out the two great parties, which ever since the forma- 
 tion of the Government have been contending for supre- 
 macy, and something more (trite as it may be regarded) 
 upon the subject which more than anything else now 
 divides them. 
 
 Ralph Waldo Emerson remarked some years ago that 
 "the Whigs had the best men, the Democrats the best 
 principles." Since then changes have taken place in 
 both parties upon financial and economic questions. 
 Then the Democrats were in favor of gold and silver 
 (hard money) and specie-paying bank-notes as a cur- 
 rency, while some of the most ultra were opposed to 
 paper money of all kinds. They also were the advocates 
 of a tariff for revenue only. Now a large majority of its 
 members are in favor of direct issues by the Government 
 of greenbacks, as they are called, whether convertible 
 or not, and some of its leading men (a few only, to their 
 credit be it said,) are the advocates of a protective tariff. 
 
 Then the Whigs favored a bank-note currency, the 
 value of wdiich depended upon its relations to specie, 
 and which was not to be tolerated when it ceased to be 
 convertible. Now their descendants, the Republicans, 
 unite with Democrats in favoring Government notes, 
 and have become converts to the doctrine which Mr, 
 Webster pronounced a "dangerous if not fatal delusion," 
 that the Government, in the exercise of its legitimate 
 discretion, cannot only issue its notes for a circulating 
 medium, but can make them lawful money and a legal 
 
368 
 
 tender— a doctrine which, to the utter amazement of 
 most of the best legal minds of the country, has been 
 sustained by the Supreme Court. 
 
 Then the Whigs supported a tariff for revenue, with 
 incidental protection. Now the Republicans are the 
 supporters of a tariff of which protection is the object 
 and revenue the incident. There were, of course, other 
 subjects of public interest -before the country upon which 
 the parties were more or less divided, but currency and 
 taxation were by far the most interesting, except the 
 question of State rights, which was put to rest upon the 
 battle-field. During the civil war the Republican party 
 received large accessions from the Democrats. Since 
 the war the Democratic party has been able to number 
 in its ranks a good mau}^ recent Republicans. The two 
 parties are now, as the}^ have been for most of the time 
 since the Government was established, nearly equal in 
 numerical strength, and neither in its full membership 
 is quite sound according to its old standards. 
 
 The Democratic party, however it may have changed 
 in principles, has clung tenaciously to its time-honored 
 ijame. Its great opponent has not been so fortunate. 
 At the start it was the Federal party, then (some of its 
 unpopular Federal doctrines having been discarded) it 
 became the Whig party, and then the Republican part}', 
 under which name it won its highest renown by the 
 hearty and united support which it gave to the Govern- 
 ment in its desperate struggle for the maintenance of its 
 existence. For a brief intermediate period it was known 
 as the National Republican party. 
 
 Most of the questions other than those that have 
 been named, upon which the parties have heretofore 
 been divided, have either become obsolete or have been 
 consigned to the background. The question upon which 
 the party lines are now most strictly drawn, and upon 
 which the parties have never been in accord, is the 
 tariff. Both are in favor of a tariff, but there are ver}^ 
 important differences between them in regard to its 
 character. There are men in botJi parties zv ho favor free 
 trade, but tJiere is no free-trade party in the United States, 
 nor will there be for years to come, if ever. The journals 
 (and strangely enough some of them claim to be Demo- 
 
8()0 
 
 cratic) in which tariif reform is spoken of and denounced 
 as free trade are under the influence of the protected 
 interests. 
 
 Both parties believe that the Government must, as has 
 always been the case, be mainly supported by duties 
 upon imports, but beyond this they are at variance. 
 The Republican party, according to its generally ap- 
 proved platform, believes that duties should be imposed 
 not only for revenue, but also, and mainly, to protect 
 home manufacturers from foreign competition. The 
 Democratic party, according to its platform, from which 
 there are few dissenters, believe that duties should be 
 imposed for revenue, not for protection; that Congress, 
 under the Constitution, has no authority to impose duties 
 to protect manufacturers in the United States against 
 the manufacturers of other nations; but while it be- 
 lieves that duties should be imposed for revenue and 
 not for protection, it believes also that duties should be 
 imposed mainly upon luxuries and upon such goods as 
 are manufactured in the United States, so that home 
 manufacturers may have the incidental advantage re- 
 sulting therefrom in their competition with foreigners. 
 On this point it now stands where the Whig party stood 
 when Henry Clay was its leader. 
 
 The question, therefore, immediately and prominently 
 before the country is: Shall duties be imposed mainly 
 for protection or mainly for revenue — for protection as 
 the object and revenue the incident, or for revenue as 
 the object and protection the incident? 
 
 There is another question which ought to receive 
 and which, if our republican institutions are to be per- 
 manent, must soon receive the earnest attention of the 
 people, to wit: Shall the offscouring of European na- 
 tions continue to be invited to come and help govern 
 the great republic ? This question is the question of 
 surpassing interest; but, as it is not a question of dol- 
 lars, it will not receive the attention which it deserves 
 and demands until the tariff, the old apple of discord, is 
 disposed of. 
 
 There is another question which I hope will not come 
 to the front— the authority and duty of Congress to reg- 
 ulate Federal elections in the Southern States. I hope 
 
370 
 
 that this question will not be presented for the action of 
 Congress at the next session or an}^ other. If it should 
 be, it would revive sectional animosities, increase race 
 prejudices, and become a party question of far-reaching 
 consequences. Some of the advocates of intervention 
 by the Government in Southern elections might be in- 
 fluenced by patriotic motives, but by the larger number 
 and more active advocates it would be regarded as the 
 means of bringing out and consolidating the colored 
 voters, and giving to them the control in all Federal 
 elections; indifferent if not more than indifferent to the 
 fact that it would be quite impossible to give to them 
 the control in Presidential and Congressional elections 
 without giving to them the control in State elections 
 also. 
 
 If the colored voters should be united, and they should 
 vote as freely as the whites, three of the Southern States 
 would be controlled by them. The white people of the 
 country, and the whole country without respect to party, 
 are not ready to see any of the States under the domi- 
 nation of a race which, for want of intelligence and dis- 
 cipline, if for nothing else, is totally unfitted for the ex- 
 ercise of governing power. They have not forgotten 
 what occurred in South Carolina when, in the process 
 of reconstruction, it was dominated by negroes. The 
 franchise is a very different question for even States to 
 deal with, and it is likely to be as troublesome in some 
 of the Northern States as in the Southern. What is 
 called the foreign vote is even now as threatening to 
 the welfare St. Louis, Cincinnati, and Chicago as the 
 negro vote may become to the welfare of Louisiana, 
 Mississippi, and South Carolina. The Canadian French, 
 whose votes are for sale to the highest bidder, are a 
 dangerous element in New Hampshire, and foreigners 
 of all descriptions are a dangerous element not only in 
 the cities I have named, but in all large manufacturing 
 districts. 
 
 It is perhaps fortunate that laws which could be passed 
 by Congress for the regulation or supervision of elections 
 must be general, and applicable to all States alike. 
 Men at the North, who might favor Congressional inter- 
 vention at the Southj would be little disposed to favor it 
 
371 
 
 in their own vStates. Congress cannot practically deal 
 with the franchise qnestion without being subjected to 
 unhealthy influences. It is a question which should be 
 left to the States. Its phases are different in the differ- 
 ent vStates, and each State should be at liberty, as here- 
 tofore, to manage it without Congressional interference, 
 which would aggravate the danger to which our repub- 
 lican institutions are exposed by w^hat has become prac- 
 tically unlimited suffrage. If the question is left where 
 it belongs it will not be many years before the colored 
 men in all the Southern States will vote as freely as they 
 do now in Virginia, and both of the great parties will be 
 soliciting their divided votes. 
 
 What has been said in regard to the incompetency of 
 the colored people for the government of States is equally 
 true in regard to foreigners. Among the former are 
 many intelligent and competent voters, and the same is 
 true of the latter, but an overwhelming majority of both 
 is not onh' unfit for the proper exercise of governing 
 power, but for the intelligent and independent use of 
 the ballot. The influences which prevent a full vote at 
 the South are certainly no more unjustifiable than is 
 vote buying at the North. Each State will have enough 
 to do in the proper management of its own elections, 
 without attempting through its representatives in Con- 
 gress to regulate the elections in other States. One 
 thing is certain, in no State will life and property be 
 in danger, because there are not voters enough. // is 
 ludiiiiited suffrage, the exeixise of the Jiighest of all political 
 privileges, by those who have no interests at stake, that 
 threatens the well-being, if not the life, of the republie. 
 
 PROTECTION NO IvONGER NEEDED. 
 
 But to return to the tariff, upon which party lines are 
 drawn with more distinctness than ever before. Upon 
 this question my opinion is what it has always been since 
 my attention was first directed to it. Admitting what I 
 am not disposed to deny, that protective duties were 
 once needed to induce capitalists to put their money into 
 manufactories, it is very clear to my mind that, as this 
 object h^s been long since accomplished, the continuance 
 
372 
 
 of such duties is not only unjust to the great body of 
 consumers, but prejudicial to the best interests of the 
 country. The present tariff is substantially the same 
 that was adopted soon after the commencement of the 
 civil war. The Government was then engaged in a life 
 or death struggle for the maintenance of its unity, and 
 large revenues were required, not only for current use, 
 but to strengthen the national credit for borrowing pur- 
 poses, and so large was the demand of the Government 
 for goods of various descriptions that there were very 
 large importations, notwithstanding the high duties to 
 which they were subjected. 
 
 When the war was ended and the Government ceased 
 to be a large bu3^er, the tariff, which was a war measure, 
 should have been carefully revised, in order that it might 
 be accommodated to the changed condition of the country. 
 This was not and has not been done. Some changes 
 have been made. Some articles have been put upon the 
 free list, and upon others the duties have been reduced, 
 but it is substantially the same tariff that was created in 
 1862 — a tariff designed for revenue, but highly protec- 
 tive, and of some articles prohibitory. In examining the 
 bill, the leading features of which have been carefully 
 preserved, one cannot fail to perceive that in its adoption 
 Congress must have been greatly misled. Let us look 
 at some of the articles on which duties were imposed, 
 and to which I referred in one of my Cambridge lectures: 
 
 Salt — Is used by every family in the United States, 
 and immense quantities are used in curing meats and 
 fish. It is produced largely in many States, and the 
 production could be increased to an almost unlimited ex- 
 tent. The duty on salt was, and I think still is, 39^ 
 per cent, when imported in bags, and 69 per cent, when 
 imported in bulk. Very little, of course, is imported, 
 and everyone in this broad country who uses salt is 
 taxed, not for the benefit of the public revenue, but for 
 the enrichment of a few manufacturers or owmers of salt 
 mines. 
 
 Blankets — Valued at over 40 cents a pound up to 
 80 cents were subject to a specific duty of 20 cents a 
 pound and 35 per cent, ad valorem. Such blankets as 
 are used by millions of people in the United States cost 
 
3^3 
 
 in England about >i.75 a pair, the duties on which 
 are nearly $1.50. Can such a dut}^ be rightfully con- 
 tinued ? 
 
 Steel Rails. — The duty on steel rails, which was $25 
 per ton, has been reduced; but no revenue is derived 
 from them, as they can be made as cheaply in the United 
 States as in Europe. 
 
 Scores of articles might be mentioned to show how 
 preposterous the tariff was and is, in some respects, with 
 regard to revenue, and how unjust to the great body of 
 tax-payers, but I will only mention one more. 
 
 Copper. — The duty on copper was, and I suppose still 
 is (I have no copy of the Tariff at hand), five cents a 
 pound, which is prohibitory. None is imported, but 
 considerable quantities are exported. Here is an article 
 which is taxed so heavily that none can be imported, 
 and the excess of production over the very large home 
 demand is sent to foreign markets. The duty on copper 
 has enriched the owners of copper mines, but it has 
 3nelded no revenue to the Government. Its continuance 
 is without a shadow of justification, as it adds largely to 
 the cost of an article in general use, and nobody is bene- 
 fited by it, except the favored few in whose interest it 
 was imposed. 
 
 THE DEFENSE OF THE TARIFF. 
 
 Ever^'one must admit that in respect to such articles 
 as have been named the tariff should be amended, but 
 its supporters contend that in its general scope it is 
 right, and it is defended on such grounds as the follow- 
 ing: 
 
 First. That it has stimulated production, induced the 
 construction of iron mills and cotton and woolen fac- 
 tories, put in motion machiner}^ of all descriptions, and 
 has thus added largely to the national wealth. 
 
 Second. That it has advanced wages and greatly im- 
 proved the condition of the laboring classes. 
 
 Third. That l)y stimulating production it has created 
 home competition, as the result of which the goods 
 wdiich are most generally and extensively in use have 
 been cheapened, to the manifest advantage of the users. 
 
m 
 
 Are these claims in behalf of our protective tariff well 
 founded? Let us see: 
 
 First. It is admitted that the tariff has stimulated pro- 
 duction, the evidence of which is seen in the mills and 
 factories and machine shops which have been constructed 
 all over the country within the last twenty years. But 
 what are the offsets ? By stimulating production it has 
 increased manufacturing power be3^ond the needs of the 
 country. There are few mills or factories in any branch 
 of manufacturing that are worked to their full capacity. 
 On the contrary, it is estimated that if all of them .should 
 be actively employed for six months the}" would be able 
 to supply all demands for a year. // is ucni) well under- 
 stood that the mamifacturing power of tJie country has been 
 so increased by the tariff stimulus that combinations — trusts, 
 as they are called— have been resorted to from necessity to 
 limit its exercise, so that the supply may not exceed the de- 
 mand. This expedient cannot be long continued, and 
 nothing can prevent serious trouble with manufacturers 
 and their employees but wider markets for their produc- 
 tions, and one fails to see how these can be obtained 
 without radical changes in our protective and restrictive 
 policy. 
 
 That the wealth of the country has been very largely 
 increased by our manufactures is obvious. It would be 
 impossible for immense quantities of raw materials to be 
 converted b}' labor and machiner}* into finished goods 
 -without large accessions to the national wealth. Manu- 
 facturing has made some people wealth}-, and their 
 wealth is a part of the national wealth; but it has not 
 been widely diffused; it has been confined to the favored 
 fev/. 
 
 The country has been enriched by its manufactures, 
 but its much greater gains have been the result of the 
 conversion of wild lands into productive farms. It is by 
 agriculture mainly that the nation has been enriched, 
 and the wealth thus gained has not been at the expense 
 of other interests. On the contrary, it has been widely 
 difi'used; all other interCvSts have been very largely de- 
 pendent upon it; and yet this great interest has received 
 no favors from Congress, nor has it had in that body any 
 especial representatives. I ought in saying that agricul- 
 
B75 
 
 ture had received no favors from Congress to except 
 wool growing. The dut}' on wool is continued to satisfy 
 the demands of the wool producers of the West, and if 
 the protective policy is wise these demands are reason- 
 able. This duty, however, stands right in the way of 
 the woolen manufacturers of the East, who cannot make 
 certain classes of goods that are in demand without foreign 
 wool. Here we have, on the one hand, a demand for a 
 tax upon wool on the ground that sheep raising cannot 
 be carried on successfully without it. On the other hand, 
 we have the woolen manufacturers complaining of the 
 duty on the ground that their business is imperiled by 
 it. This antagonism is one of the many illustrations of 
 the impolicy of the protective tariff. 
 
 Second. It is contended that the tariff has advanced 
 wages and been a boon to the laboring classes. From 
 the tone of our protection journals one would suppose 
 that it is the welfare of the laborers in which protection- 
 ists are chiefly interested. Wages are higher in the 
 United States than in Europe, but they are lower now 
 than they have been, and unless immigration is checked 
 they will soon go down to about the average European 
 standard. Were it not that the consequences of con- 
 tinued immigration are likely to be serious, it would be 
 a matter of ridicule that manufacturers who advocate 
 protection for the reason that labor is higher in this 
 country than it is in Europe hail with pleasure, if they 
 do not directly aid, immigration, as the means of re- 
 ducing the cost of it. Wages, as has been said, are 
 higher in the United States than they are in Europe, 
 but so are clothing and many other articles which families 
 of laborers need. I doubt very much that the laborers 
 in United States factories are better off at the end of the 
 year than laborers in British factories, yls long as there 
 is free trade in labor, as long as onr ports are open to all 
 comers, there will be, all things considered, little difference 
 in the price of labor between this country and other coiintiies. 
 
 Third. It is contended that the tariff, by stimulat- 
 ing production, has created home competition, b}^ 
 which goods in common use have been greatly cheap- 
 ened, to the manifest benefit of the users. It is true 
 that such goods are much lower in price than they form- 
 
376 
 
 erly were, but not b}^ reason of home competition. They 
 are lower because by the great improvements in ma- 
 chiner}^ they can be made cheaper. The tariff is en- 
 titled to no credit on this score; on the contrary, by 
 preventing foreign manufacturers from competing with 
 our home manufacturers, it gives to the latter the con- 
 trol of the home markets. It not only prevents free ex- 
 changes between the United States and foreign nations; 
 it enables home manufacturers, b}' combinations, to pre- 
 vent free trade at home. 
 
 OBJECTIONS TO A PROTECTIVE TARIFF. 
 
 In every view which I can take of it our protective 
 tariff is open to insurmountable objections, some of 
 which I will refer to: 
 
 First. It is class legislation, for which there is no war- 
 rant in the Constitution. To protect manufacturers in 
 the United States against foreign competition is not 
 among the powers conferred upon Congress. If what is 
 done indirectly should be attempted directly, what 
 would be the result ? If, for instance, a bill should be 
 introduced in the House to protect the manufacturers 
 of any useful article in the United States against foreign 
 competition, how many members would vote for it ? If 
 such a bill should become a law, what chance would it 
 stand of being sustained by the Supreme Court, liberal 
 as that court is in its views of Congressional power ? 
 Now, if Congress cannot directh^ prohibit the importa- 
 tion of foreign goods, in order to enable United States 
 manufacturers to control the home markets for such 
 goods, what justification is there for the accomplish- 
 ment of the same object by legislation nominally for 
 revenue ? 
 
 Second. It is no longer needed for the purpose for 
 which the protective policy was originally designed. It 
 is certainly not needed to induce capitalists to invest 
 their money in manufacturing, for, as has been said, too 
 much money has already gone in this direction. Nor is 
 it needed to protect home interests against foreign im- 
 portation, for all of the articles most generally in use 
 can be made as cheaply in the United States as in Great 
 
377 
 
 Britain— the country which takes the lead in nearly all 
 branches of the most useful manufacturing. Let us look 
 a little more closely at some of the articles which I have 
 named. 
 
 Iron and coal in Great Btitain are widely separated 
 and are obtained thousands of feet below the surface. 
 In a number of the States the same articles of equally 
 good quality and of inexhaustible supply are found side 
 by side and close to the surface, almost cropping out of 
 it"! Does anyone believe that iron and steel cannot be 
 made as chea'ply in Pittsburg and Cleveland and North- 
 ern Alabama as in Great Britain? For certain uses for- 
 eign iron ore is needed by both countries. Great Britain 
 lets it come to her free from duty. Our Government 
 either prohibits its importation or subjects it to so high 
 duties that it cannot be profitably imported. 
 
 Some of the iron mills in Massachusetts are now se- 
 verely suffering by the high duties on the foreign iron 
 and ores which are needed in especial work. There is 
 to-day the same antagonism of interests between the 
 iron mill owners of Massachusetts and the' iron mill 
 owners of Pennsylvania that there is between the woolen 
 mill owners of New England and the sheep raisers of 
 Ohio. The woolen manufacturers need a reduction of 
 dutv on certain classes of wool— the wool producers are 
 opposed to such a reduction. The iron mill owners of 
 New England are urgent, not only for a reduction of 
 duties upon certain kinds of iron, but upon coal also; 
 Pennsylvania is decidedly against both. How can these 
 antagonisms be healed ? 
 
 Cotton produced in the United States is bought by 
 British manufacturers and made up by them into fabrics 
 of various kinds for sale in all markets from which they 
 are not excluded. Cotton cloths are made chiefly by 
 machinery, in the invention and use of which Americans 
 are unsurpassed — unequaled, it might be said — by any 
 other people. Can the British manufacturer pay the 
 freight both ways and be a dangerous competitor m 
 cotton goods of our own manufacturers in our own 
 markets ? 
 
 Wool is largely produced in the United _ States. The 
 foreign wool that is needed can be obtained in South 
 
378 
 
 America and Spain, the countries from which great 
 Britain obtains her chief supplies. In its manufacture, as 
 is the case with cotton, machinery comes into full play; 
 very little is done by hand. The only ground on which 
 the manufacturers of woolen goods in the United States 
 can rightfully claim Governmental protection is that the 
 foreign wool — the raw material which is needed for cer- 
 tain classes of goods — is subject to high duties. \Yith 
 free wool or low duties thej^ should not fear competition 
 from any quarter. 
 
 There are many other articles in regard to which the 
 same remarks would be true; indeed, it may be truth- 
 fully said that there are no goods in the manufacture of 
 which machinery is largely used which cannot be now 
 made at as little cost in the United States as in any other 
 country, and it will be borne in mind that in our home 
 markets our own manufacturers will always have the ad- 
 vantage over foreign competitors which a tariff for reve- 
 nue will secure to them. As an illustration of what I 
 have said about the abilit}^ of our manufacturers to com- 
 pete with foreigners, I will refer to a single article: 
 
 The duty on quinine was 20 per cent., and as the ma- 
 terial of which it was made was exempt from duty, it 
 could be made as cheaply in the United States as anj^- 
 where else. The duty, therefore, although not very 
 high, was virtually prohibitory, and a single strong and 
 admirably-managed firm in Philadelphia had for many 
 years the monopoly of an immense traffic in an article 
 of almost universal use. When the duty was taken off, 
 in compliance with an irresistible popular demand, it 
 was predicted that the manufacturers in the United States 
 w^ouid be compelled to give wa}^ to foreigners. The pre- 
 diction has not been verified. The same great firm, 
 Messrs. Powers & Weightman, are still carrying on the 
 business, and are making and selling nearly all the qui- 
 nine that is used in the United States. The material of 
 which it is made is more plentiful, and consequently 
 much cheaper, than it formerly was, but the exemption 
 from duty has had a good deal to do with the reduction 
 of the price of quinine from $5 an ounce to eighty 
 cents. 
 
879 
 
 SHUTTING THK WORI^D S MARKETS. 
 
 Third. Our protective tariff is not only class legisla- 
 tion, and no longer needed for legislative purposes, it is 
 gradually shutting up the markets of the world against 
 our agricultural productions. The great interest that 
 underlies all other interests has not only (with a single 
 exception, wool,) received no favors from the Govern- 
 ment, but it has been directly and greatly prejudiced by 
 exclusive legislation in favor of manufacturers. The pro- 
 tective policy has had what might be called "full swing" 
 for a quarter of a century, and yet while the country has 
 been growing with wonderful rapidity in wealth and pop- 
 ulation, there are few farm productions that are selling 
 for enough to cover their cost. For farming lands in the 
 Eastern States there are no purchasers. In the Middle 
 States they are not w^orth more than they readily com- 
 manded twenty years ago, and in the West, in such grand 
 States as Iowa, Kansas, and Nebraska, farm mortgages 
 are increasing with fearful rapidit3\ Were it not for the 
 cotton and wheat and flour and corn and provisions which 
 Pairope (chiefly Great Britain) takes of us, our farming 
 interests would be practically paralyzed. 
 • Farmers have been so drilled in the idea that it is the 
 home market upon which they should rely that they seem 
 to have been unconscious of the fact that the home mar- 
 ket is altogether insufficient for the supply, which is in- 
 creasing more rapidly than the home market demands, 
 and that either increase of demand or diminution of sup- 
 ply has become a necessity. Western farmers are com- 
 plaining of the low prices of what they have to sell, and 
 many of them attribute the depression to a scarcity of 
 currency. If they would cease looking to protectionists 
 for information and would examine the trade relations 
 between their own country and other countries the}^ 
 would discover that it is markets, not currency, that is 
 needed for the improvement of their conditions. The 
 tariff has contributed immensely to the gains of manu- 
 facturers, while for some time past the farmers who have 
 been as well off at the close of the 3'ear as the}^ were at 
 the commencement have been the exceptions. 
 
 Nothing is clearer than the fact that the tariff is hostile 
 
B80 
 
 to our great farming interest, and for the simple reason 
 that it diminishes the demand, or stands in the wa}' of 
 an increase of demand, for our agricultural staples. 
 
 The trade of the Central and South American States 
 is with Europe — chiefly with Great Britain — not with 
 the United States, and only because we have put a pro- 
 tective, if not prohibitory, tax upon many of their im- 
 portant productions. The}^ are our neighbors and friends, 
 and they would be glad to have good trade relations, as 
 well as close political relations, with us. This they can- 
 not have until our tariff is carefully revised and modi- 
 fied. We shall doubtless hear from their representa- 
 tives, at the convention which is soon to be held in 
 Washington, what they think about our tariff. 
 
 // is not too much to say that zvc have no proper andmu- 
 tnally profitable trade relations with these countries. We 
 take from them free from duty such articles as we do not 
 produce and are in need of; they take from us what they 
 can buy cheaper of us than they can buy of other na- 
 tions. We take from them free from duty coffee, india 
 rubber, Peruvian bark, and dye stuffs. We take, also, 
 free from duty, hides, because the home supply is not 
 equal to our wants, but we put a protective, or rather 
 prohibitory, duty upon wool, copper, sugar, and other 
 articles which we produce as well as they do. They take 
 of us flour, some kinds of lumber, and manufactures, 
 but for three-quarters of what we bu}^ them we pay in 
 drafts on England (stewing exchange). There is noth- 
 ing like free exchanges between the United States and 
 the other States on this side of the Atlantic. If the 
 tariff had been designed to restrict reciprocity with them 
 it could hardly have been more effective. Great Britain, 
 wiser than the United States, takes from them what 
 they have to sell and pays for it in her own manufac- 
 tured goods to their mutual advantage. Their markets 
 ought to be open to the productions of our mills and our 
 fields, and the}^ would be if the enlightened policy of 
 Great Britain in her trade relations with other countries 
 should be imitated by our law-making power. 
 
 What is true in regard to our trade relations with the 
 countries I have named is true as to other nations. The 
 United States has reached the point where freer trade 
 
381 
 
 with other nations has become absolutely necessary. 
 The greatest producing country in the zvorld, she has para- 
 mount interests in international trade. With wise legisla- 
 tion she could hold the keys of the loorld's commerce and 
 make the nations her tributaries. Could there be anything 
 more unwise than the legislation which prevents the most 
 productive of nations from sharing in the trade which she 
 ought to control / 
 
 Fourth. The tariff, if it has not been the cause of the 
 decline, I might almost say disappearance, of ourforeign 
 merchant marine, stands in the way of its restoration. 
 No nation has ever been and none ever will be great in 
 all that constitutes superior nationality, without combin- 
 ing with its other powers an effective mercantile marine. 
 Sixty years ago the United States was the second mari- 
 time power in the world. Now vShe is excelled by nations 
 that then had scarcely a merchant ship. Washed by both 
 oceans, Avith the finest harbors in the world, with ship- 
 wrights of unequaled skill, an incipient navy of good 
 promise, she has no standing as a maritime nation. She has, 
 it is true, vessels upon her great lakes. She has vessels 
 engaged in the coastwise trade in which foreigners can- 
 not participate, and one or two lines in the West India 
 and South American trade, and one between California 
 and the East; but in the carrying trade on the Atlantic, 
 between the New World and the Old, she has no share. 
 
 No American who is proud of his countr}' can sup- 
 press feelings of humiliation when he visits the London 
 and Liverpool docks and looks in vain for the stripes and 
 stars. Every inhabitant of the great republic who goes 
 to Europe pays tribute to foreign ship-owners; every 
 pound of freight that crosses the Atlantic adds its mite 
 to their gains. That the carrying trade is profitable is 
 show^n by the fact that new ships are every year added 
 to the established lines. Why, then, it may be asked, 
 have not capitalists in the United States engaged in it? 
 Why have they permitted this immense trade to be mo- 
 nopolized b}^ foreigners? The answer is at hand. When 
 what was left of our foreign shipping — after iron and 
 steel were substituted for wood in the construction of 
 ships — was driven from the ocean by Confederate cruis- 
 ers, the carrying trade went from necessity into foreign 
 
882 
 
 hands. After the war the tariff duties upon the foreign 
 materials which were needed for ships put a check upon 
 ship-building in the United States, and a barbaric law 
 prohibited the registration of foreign-built ships, so that 
 in this great, free country ships could neither be built 
 nor purchased. 
 
 Not only has the carrying trade between the United 
 States and Europe been resigned to foreigners, butnpth- 
 ing has been done for the support of our West Indian 
 and South American lines. The amount allowed to 
 United vStates ships for carrying the mails and bringing 
 home disabled seamen has hardly been sufficient to cover 
 the cost. In the opinion of our law^ makers, there is no 
 interest that ought to receive the fostering care of the 
 Government but the manufacturing interest, and that 
 has been overdone by protection. 
 
 lyooking at the subject as disinterestedly as an Amer- 
 ican citizen can, I see nothing to prevent the conclusion 
 that the present tariff is at w^ar with the best interests of 
 the country. It is continued by being made a party 
 question and the free use of money in elections, but un- 
 less it is true that no republican government can long 
 be honestly and wisely administered, which I do not be- 
 lieve, its days are nearly numbered. The subject is 
 now better understood than it has been. Many manu- 
 facturers are forced to concede that they need wider 
 markets more than protection. Farmers are learning 
 that the home markets, and the foreign markets that are 
 still open to them, are insufficient to secure living prices 
 for their crops. There is, I am sure, no risk in predict- 
 ing that if the present Congress does not revise the tariff 
 and free it from the features that stand in the way of 
 international trade, the power in the next Congress will 
 be in the hands of those who will push the reform of it 
 to an extreme. That it is soon to undergo thorough 
 overhauling is quite certain. Shall the work be done b}^ 
 its friends or its opponents? is a question to be decided 
 by the present Congress. 
 
 [Just as I had finished this letter I found among my 
 papers the following from Andrew Jackson to John M. 
 Davis, written nearly forty-six years ago. I insert it 
 
383 
 
 here, because it presents the views which I have always 
 entertained upon the tariff question, and which are in 
 accord with the views of tariff reformers of the present 
 day:] 
 
 Hermitage, June 2fih, 1S44. 
 
 Dear Sir: I take pleasure in acknowledging the receipt of 
 your letter of the 13th inst., although my health does not en- 
 able me to answer fully your inquiries. 
 
 The slanders to which you allude, of the character of Gov- 
 ernor Polk, will be corrected by the good sense of the people, 
 and recoil upon the reckless individuals that have fabricated 
 them. There never was a purer man than Governor Polk. I 
 have known him from his boyhood. In his private life he has 
 been remarkable for the exercise of those charities which dis- 
 tinguish the amicable, unobtrusive, and useful Christian, per- 
 forming always his duty, and in such a manner as to secure the 
 respect and good will of all his neighbors and acquaintances. 
 The assertion that he has fought a duel, is a gambler, and pro- 
 fane swearer, is a bare-faced falsehood, and would be so pro- 
 nounced by any gentleman acquainted with Governor Polk, 
 whether he be Democrat or Whig in politics. 
 
 Of the views entertained by Governor Polk on the bank and 
 other national questions reference can be had to his speeches 
 in Congress and such authoritative explanations as will be 
 made public in due t me for the information of the people. In 
 relation to the tariff, you wnll find his opinions satisfactory. 
 He is in favor of a tariff for revenue, and within the limits 
 of revenue, making such discrimination in favor of articles of 
 domestic manufacture as will ensure reasonable protection to 
 home industr}'. He goes for protection as the incident of reve- 
 nue, and not for revenue as the incident of protection, and 
 within his principle it is now admitted by the candid of all 
 parties that all the protection necessary to the prosperous and 
 rapid development of our home manufactures can be afforded 
 without injury or oppression to any agricultural or commercial 
 interest. 
 
 Remember me kindly to my namesake and to all the members 
 of your family, and believe me truly, 
 Your servant. 
 
 ANDREW JACKSON. 
 
 John M. Davis, Esq., 
 
 Wilkins Post Office, 
 
LETTER 
 
 TO THE 
 
 NEW YORK TIMES, JANUARY 31, 1890, 
 
LETTKR 
 
 TO THE 
 
 NEW YORK TIMES, JANUARY 31, 1890. 
 
 In the article upon "Free Trade and Protection," by 
 the Right Hon. W. E. Gladstone, in the North American 
 Reviciv for January, and answered in the same number 
 by the Hon. J. G. Blaine, Mr. Gladstone treats the ques- 
 tion of international trade as if it were not only an 
 economic, but also a scientific question, applicable alike 
 to all countries and to all conditions of the same coun- 
 try; to the United vStates and to Great Britain; to the 
 former when she was dependent upon the latter for man- 
 ufactured goods, and now, when she is a leader among 
 the nations, in the extent and variety of her manufac- 
 tures. 
 
 Mr. Blaine, on the contrary, disregards the doctrine 
 of scientific political economy in its bearings upon inter- 
 national trade, or rather, he does not consider political 
 economy as one of the exact sciences, whose doctrines 
 are equally applicable to all countries and to all stages 
 of their development. 
 
 Mr. Gladstone is a believer in free trade — the free 
 trade which, in connection with her manufactures, has 
 made that little kingdom, not a fortieth part as large as 
 the United vStates, the greatest maritime and manufac- 
 turing nation in the world, upon whose colonial domains 
 the sun never sets. 
 
 Mr. Blaine believes that it is to her protective policy 
 that the unparalleled growth and general prosperity of 
 the United States are mainly attributable. 
 
 Mr. Gladstone regards international trade as barter, 
 and believes that such trade, essential as it may be to 
 
388 
 
 national greatness, cannot be healthily carried on unless 
 this is its character. 
 
 Mr. Blaine knows, of course, that trade between na- 
 tions must mainly be carried on by mutual exchanges; 
 that no nation can be long engaged in trade, with ad- 
 verse balances constantly accruing, to be settled with 
 coin, unless coin is one of its chief products; but he be- 
 lieves that such are the circumstances of the United 
 States that she can only be prosperous by ignoring the 
 policy of free exchanges; that nothing could be more 
 injurious to her people than for her to open her ports to 
 the manufactures of other countries free from import 
 duties, or subject only to such duties as might be needed 
 for revenue; that owing to cheaper labor in Europe man- 
 ufacturers in the United States could not, even in their 
 home markets, compete with European manufacturers. 
 
 Mr. Gladstone goes beyond the economic question 
 and speaks of protection as a moral question, and by 
 this presentation of it he has in certain quarters sub- 
 jected himself to ridicule. That there is anything im- 
 moral in a protective tariff has never entered into the 
 conception of protectionists, but to Mr. Gladstone there 
 could be no other conclusion. He regards monopoly as 
 the necessar}^ outgrowth of protection, and consequently 
 at war with freedom; that protective duties lead to 
 wasteful expenditures of the public moneys; that they 
 are burdensome to consumers, and unequal in their bur- 
 dens. If these views are sound, is he not right in de- 
 nouncing a protective tariff as immoral ? 
 
 Mr. Blaine presents no argument against these views 
 upon the moral bearing of the question, because, per- 
 haps, he does not consider it necessary. 
 
 GREAT BRITAIN'vS REVENUE SVSTEM. 
 
 Now, although it may be presumptuous in me to avow 
 it, I am far from being in full s^nnpathy with either of 
 these distinguished statesmen. While I believe that the 
 people of all nations would be better and happier if all 
 obstructions to international trade were removed, and to 
 this extent agree with Mr. Gladstone, I see no grounds 
 for even the hope that this will be done on this side of the 
 
HS9 
 
 millennium. Great progress has been made within the 
 present century in the assimilation of nations, but they 
 are still wide apart in their forms of government, the 
 nature of their productions, their land tenures, and con- 
 sequently in their modes of taxation. So different are 
 they in these respects that a system of revenue which 
 would be well suited to one nation might be quite un- 
 suited to another. Free trade has proved to be wise 
 and wholesome for Great Britain. She is rich and able 
 to support an expensive government by taxes upon land 
 and incomes, but she has been unable to doctrinate her 
 Canadian and Australian colonies with her free-trade 
 policy, nor has it been long since she pushed protection 
 to prohibition. A great many unwise things can be 
 found in the tariff laws of the United States, but noth- 
 ing so uswise as were the corn laws of Great Britain. 
 We sustain protective duties on the ground that they en- 
 courage home production; we do not put heavy duties, 
 if any, upon articles that we cannot produce and which 
 are in common use. Taxes upon tea and coffee were 
 bad enough, but we never had anything upon our tax 
 rolls so bad as the British tax upon breadstuffs, which 
 everybody needed and which could not be produced in 
 sufficient quantity at home. 
 
 No nations so closely resemble each other in the char- 
 acter of their people and the essential nature of their 
 governments as the United States and Great Britain, and 
 yet they differ decidedly in their revenue systems, and 
 they thus differ, because they differ not only in age, 
 but in extent of territory and governmental control. 
 Great Britain has passed the period of rapid growth; 
 her people, although not homogeneous, are so fixed in 
 habits as to be rarely affected by such movements as 
 have frequently disturbed the equilibrium of other na- 
 tions. Parliament is her only law-making power. Her 
 colonies are to some extent self-governing, but England, 
 Scotland, and Ireland are united under one head and 
 subject to one jurisdiction. Neither has control of its 
 local interests — such control as Ireland is now struggling 
 to obtain. Taxes are high in Great Britain; her debt 
 is large and her expenditures, imperial and municipal, 
 are heavy, but in no other country are they so little bur- 
 densome, so little felt by the people generally. 
 
Having substantially adopted the policy of free trade, 
 she looks chiefly to lands and incomes for her revenue, 
 and as the lands are held by comparatively few and the 
 taxes upon them constitute a part of their rentals, they, 
 like the income taxes, fall upon those who are able to 
 pay them. With wisdom worthy of imitation, she im- 
 poses no taxes upon productive industry. That has full 
 play, and, if not aided by the Government, nothing is 
 done to impair or check its freest exercivSe. For Great 
 Britain her revenue system seems to me an exhibition 
 of statesmanship of the highest order. The members 
 of Parliament receive no pay for their services, but her 
 Cabinet Ministers — the advisers of Her Majesty, who 
 are ex-officio members — receive large salaries, as do her 
 judges and other officers. Hers is not a niggardly Gov- 
 ernment, but it is not wasteful. The rich tax-payers 
 have much to say about the public expenditures, and 
 they are careful to see to it that they are neither mis- 
 directed nor extravagant. 
 
 OUR STATE, CITY, AXD COUNTY TAXES. 
 
 This revenue system, admirable as it is for Great 
 Britain, is not suited to the United States. Our Govern- 
 ment, while a government of the people and for the 
 people, and sovereign in the exercise of its constitu- 
 tional powers, is also a government of States. Each 
 State is entitled to two Senators in the Federal Congress 
 and at least to one Representative, and to as many more 
 as it is entitled to by its population; so that the little 
 State of Delaware — and each of the States recently ad- 
 mitted into the Union — with its single member in the 
 House, has the same numerical strength in the Senate 
 that the great State of New York has with its thirty- 
 four members. Each State has also a government of 
 its own — a governor, a legislature, a supreme and 
 other courts, and all officers which are needed to per- 
 form official duties in independent States. Except so 
 far as the powers of their legislatures are limited by the 
 Federal Constitution, they are sovereigns. Each has 
 the power to determine what shall be the qualification 
 of voters and the manner in which elections shall be 
 
391 
 
 held; each has the power to contract debts for internal 
 improvements and for other purposes. 
 
 Each has. of course, power to tax for the support of 
 its State government. By each authority is given to its 
 cities and counties to levy and collect taxes for the pay- 
 ment of their current expenses, and so freeh' is this 
 authority exercised that in some States the State, 
 county, and city taxes amount to nearly tw^o per cent, 
 upon all real and personal property. A large part of the 
 personal property escapes taxation, and the real estate 
 may be undervalued; but taxes are heavy in all the 
 States, in some burdensome. If to the State and county 
 and city taxes the indirect taxes to which consumers are 
 subject by protective duties upon imports w^ere added, 
 it might be said that there is no civilized nation in the 
 world in w^iich the aggregate of taxation is so high as 
 in the United States. It might be said also that there is 
 no other country so able to bear it. 
 
 Now, as States, counties, and cities are supported by 
 direct taxation upon lands and personal property, and 
 these taxes are as heav}' as a large part of the tax-pay- 
 ers are able to bear, the Federal Government must be 
 mainly supported b}^ duties upon imports. Taxes upon 
 incomes have been resorted to and might be again in 
 periods of emergency, but so difficult was it, and w^ould 
 be again, to make such taxes equal, where incomes are 
 so uncertain and are so easily concealed, that it may be 
 regarded as a fixed fact that neither income taxes nor 
 taxes upon the States will be again resorted to by the 
 Federal Government. It therefore follows that upon im- 
 port duties must the chief reliance of the Government 
 for revenue be based. 
 
 WHY FRKE TRADE IS IMPOSSIBI.E. 
 
 Considerable revenue will, as heretofore, be derived, 
 under an internal revenue system, from taxes upon do- 
 mestic manufactures, especially w^iiskey and tobacco, 
 but the main reliance of the Government must, as has 
 always been the case, be upon a tariff, and as the public 
 expenditures are large, and are more likel}^ to be in- 
 creased than diminished, the tariff can never be a low 
 
392 
 
 one. Besides, the people willingly bear taxation upon 
 what they use, while they would rebel against much 
 higher taxes if directly assessed. 
 
 Free trade may be among the things hoped for, but 
 it is one that never will be realized by the people of the 
 United States. Every intelligent man in the United 
 States knows this, and yet there are men in high places, 
 and managers of influential public journals, who speak 
 of those who favor a reform of the tariff as being free 
 traders or tariff smashers. As, therefore, from absolute 
 necessity, there must be a tariff, it is of the last import- 
 ance that it should be so framed as not to be unneces- 
 sarily burdensome upon consumers, nor at war with use- 
 ful branches of domestic industry, nor a bar to free ex- 
 changes with foreign countries. It has been clearl}^ 
 shown by the advocates of tariff reform that the present 
 tariff is not of this character; that it is unnecessarily 
 burdensome to the great body of the people; that it is 
 at war with many branches of domestic industry; that 
 it is a bar to international trade. It was created as a 
 war measure, in a great national emergency, to strengthen 
 the credit of the Government and to secure large revenue. 
 These objects having been accomplished, it should long 
 since have been subject to thorough revision to accom- 
 modate it to the changed condition of the country. 
 
 The question, therefore, which for years has demanded 
 and now imperatively demands the attention of Congress, 
 is not between a tariff and free trade, but whether the 
 tariff should be mainly for protection or mainly for reve- 
 nue; in other words, whether, in the imposition of duties, 
 revenue should be the object and protection the incident, 
 or whether protection should be the object and revenue 
 the incident. As my opinion upon this great point has 
 been fully and frequently expressed, I am not disposed 
 to repeat it. I would onl}- remark in passing, that as 
 large revenues must be derived from duties upon im- 
 ports, it will be very difficult .so to modify the tariff that 
 it will fail to be protective. I proceed, therefore, to ex- 
 amine what Mr. Blaine says about the effects of tariff 
 legislation upon the public welfare. He takes broadl}^ 
 the po.sition that not only has the country been prosper- 
 ous under protective tariffs, but that the reverses to which 
 
393 
 
 it has been subject in its onward and upward career have 
 been, with a single exception, the legitimate conse- 
 quences of an abandonment of the protective policy. 
 To prove the correctness of this statement he refers to 
 the periods in which these reverses occurred. 
 
 THK REVERSES OF 1817 AND A FEW FOEEOWING VEARS. 
 
 Of these reverses I have only to say that if I have 
 read correctly the financial history of that period, these 
 reverses were not the result of the changes of the tariff, 
 but of the tide of speculation which swept over the 
 country near the close of the war and at its termination, 
 diminishing industry and plunging people into debt. 
 These reverses, like those of later days, were inevitable, 
 and they would have been of equal severity if the war 
 tariff had been continued. The seeds of financial trouble 
 had been sowed broadcast before the tariff was touched, 
 and they bore legitimate fruits; they were, in fact, but 
 a repetition of what occurred at the close of the Revo- 
 lutionary war, wdien there was no tariff. 
 
 THE REVERSES OF 1837. 
 
 Of these reverses and all subsequent ones I can speak 
 advisedly, because I held positions of financial respon- 
 sibility and had personal interests at stake. I was in 
 1837, and had been for a considerable time, the manager 
 of the branch at Fort Wayne and a member of the board 
 of control of the State Bank of Indiana. Mr. Blaine's 
 statement "that the years 1834-5-6 were distinguished 
 for all manner of business hazard" but faintly describes 
 them. They were years, especially 1836, of the wildest 
 speculation. In the East it was varied in character, but 
 its dangerous elements were excessive credits, and there 
 were few things that could be bought or sold that were 
 not affected by it. 
 
 In the West it was confined to lands unimproved 
 and town lots, many of which never had any exist- 
 ences, except upon the recorded plats. It was specu- 
 lation similar to that in the timber lands of Maine a 
 few years before. Lands bought of the Government 
 
.^94 
 
 at $1.25 per acre were soon sold on credit at ^4, $5, and 
 in some cases $10. Hundreds of tracts were laid off in 
 tovvn lots where the original forests were still standing. 
 What took place under my own observation seems now 
 to be too absurd to have been real. On the Maumee 
 River, from its mouth on Lake Erie, there was for miles 
 a succession of towns; some of them, like Maumee Cit}', 
 Perrysburg, Manhattan, and Toledo were realities, but 
 most of them existed upon paper only. In the spring of 
 1836 a young man whom I met at Maumee City said to 
 me that he had made a great deal of money in a few 
 months. To my inquiry how he had made it, he replied: 
 "By buying and selling lots. Maumee City," said he, 
 "lies, as you know, at the foot of the Rapids, and is 
 destined to be one of the great cities of the West; prop- 
 erty is rising rapidly in value, and I am buying and 
 selling every da3^" 
 
 "How did you raise the money to commence with?" 
 
 "Oh, very little money is required in this business. 
 
 I pay when I bu}-, and I require when I sell a lot a few 
 
 dollars to bind the bargain, but nearly everything is 
 
 done upon credit." 
 
 On my way from New York to Fort Wayne, in the 
 same year, I stopped over night at a hotel in Toledo. 
 After dinner I noticed that there was a gathering of gentle- 
 men in the parlor, and in the course of the evening I 
 w^as waited upon by one whom I knew and invited to 
 join it. "Our rule," said he, "is to admit no one to 
 these meetings who is not worth $r 00, 000. As you are 
 a banker, you must be worth at least that " This was far 
 from being the fact, but I accepted the invitation. The 
 company consisted of gentlemen, some of whom I knew 
 personally and others by reputation. The}^ were poli- 
 ticians, scholars, writers, and one or two of them were 
 authors of considerable renown, but not one was there 
 whom I recognized as being engaged in regular business 
 pursuits. It was a sort of private exchange, at which 
 the members made themselves rich by buying and sell- 
 ing to each other lands and town lots. There was at times 
 a good deal of excitement, much like that which is wit- 
 nessed in the New York Stock Exchange. When the 
 meeting closed everyone felt that he was richer than 
 
895 
 
 when it opened. In a few brief months there was not 
 one of these hundred-thousand-dollar men who was worth 
 a hundred thousand cents. 
 
 RESULTS OF THF, vSPKCULATlVE MANIA. 
 
 The same speculative mania prevailed, to some extent, 
 all over the country. It originated in unwise extension 
 of the credit system, which was mainly the result of the 
 removal of the Government deposits from the United 
 States Bank and the placing of them in State banks. 
 When the deposits were removed there was among con- 
 servative men great apprehension that the effect would 
 be severe financial trouble. To prevent this, it seemed 
 to be the understanding between the secretary of the 
 Treasury, acting under the direction of the President, 
 and the banks — pet banks as they are called — that as 
 they had been favored by the Government in the use of 
 the public moneys, they should deal liberally with their 
 customers. This they did, and, as their capitals were 
 sufficient to supply the demands of healthy business, the 
 loans of the Government deposits were made to men 
 who were engaged in speculative enterprises. Then, 
 too, many of the States were engaged in works of in- 
 ternal improvement, and were spending large amounts 
 of money which they had obtained by sales of their 
 bonds in Europe. 
 
 In addition to the large volumes of currency thus put 
 into circulation, a bank under the name of the Pennsj^l- 
 vania Bank of the United States was chartered by Penn- 
 sylvania, as the successor of the United States Bank, 
 with the same capital and mostly the same managers, 
 which not only loaned its money in a manner which 
 savored of recklessness, but bought large quantities of 
 cotton on its ow^n account. Never were credits so easil}^ 
 obtained or so unwisely used; never, to the superficial 
 observer, had the country been so prosperous. 
 
 In the meantime, however, industry was declining and 
 all kinds of agricultural productions were commanding 
 exhorbitant prices. Wheat went up from $\ to $2 a 
 bushel, and cotton form 7 to 15 cents a pound. A spec- 
 ulative fever everywhere prev^ailed similar in character, 
 
896 
 
 and as much more disastrous in consequences as it was 
 wider in extent, to the vSouth Sea bubble in England, 
 Conservative men, strangely enough, as well as adven- 
 turers, were its abettors and its victims. Banking insti- 
 tutions, and especially the Government depositories, 
 were in a great measure responsible for it, and not a few 
 were ruined. 
 
 I call to mind one case which interested me greatly. 
 In the spring of 1836 I went to a city in a State adjoin- 
 ing Indiana to make with its leading bank exchanges of 
 New York and New England bank-notes for its notes, 
 which were receivable at the Government land offices. 
 As I knew the president personally, I called upon him 
 at the bank after banking hours. I was kindly received, 
 but I noticed that he was in bad humor, which he did 
 not try to conceal, the cause of which he explained. 
 " I have," said he, " for the first time since I became 
 president of the bank been squarely overruled in a 
 matter of great importance. I do not like," he went 
 on to say, "the business outlook. The people vSeem to 
 me to have gone mad, and, if I am not greatly mis- 
 taken, they will soon find out that the prosperity of the 
 country is unreal. We owe the Government a large 
 amount of money, and as we have enough and some- 
 thing more in the banks of New York to pay it, at the 
 meeting of the board this afternoon I introduced a reso- 
 lution in favor of paying the debt and dissolving our 
 connection with the Government. In offering the reso- 
 lution I explained, as fully as I was able to do, my rea- 
 sons for doing so. I was listened to attentively, but 
 when the vote was taken there was but one vote (my 
 own) in its favor. Not only was the resolution voted 
 down, but I was instructed to use the money to our 
 credit in New York in current business at home. To my 
 directors the idea of giving up the use of a large amount 
 of mone}^ on which we pay nothing, when it might be 
 loaned at high rates of interest, seemed to be absurd. 
 I hope they are right; time will show." Time, and 
 short time at that, did show. In little more than one 
 year this great bank, which up to the time of its con- 
 nection with the Government had been conservatively 
 and profitably managed, was ruinously, hopelessly 
 
397 
 
 broken, and some of the directors who was its borrow- 
 ers went down with it. 
 
 AFTER THE PANIC OF 1837. 
 
 Of the reverses of 1837 I made the following remarks 
 in my report as Secretary of the Treasury in 1865: 
 
 The great expansion of 1835 and 1836, endiugwith the terrible 
 financial collapse of 1837, from the effects of which the countr}- 
 did not rally for years, was the consequence of excessive bank 
 circulation and discounts, and an abuse of the credit system, 
 stimulated in the first place by Government deposits with the 
 State banks, and swelled by currency and credits, until, under 
 the wild spirit of speculation which pervaded the country, labor 
 and production decreased to such an extent that the country 
 which should have been the great food-producing country of 
 the world became an importer of breadstuffs. 
 
 The balance of trade had been for a long time favorable to 
 Europe and against the United States, and also in favor of the 
 commercial cities of the seaboard aud against the interior, but 
 a vicious system of credits prevented the prompt settlement of 
 balances. The importers established large credits abroad, by 
 means of which they were enabled to give favorable terms to 
 the jobbers. The jobbers in turn were thus, and by liberal ac- 
 commodations from the banks, able to give their own time to 
 country merchants, who in turn sold to their customers on in- 
 definite credit. It then seemed to be more reputable to borrow 
 money than to earn it, and pleasanter and apparently more 
 profitable to speculate than to work. And so the people ran 
 headlong into debt, labor decreased, production fell off, and 
 ruin followed. 
 
 This w^as, of course, a panic sharp and terrific, but it 
 was of short duration. It was soon followed by a leth- 
 argy, under which all the springs of enterprise and hope- 
 fulness were dried up. To prevent the sacrifice of prop- 
 ert}' under judicial decrees, stay laws and appraisement 
 laws were enacted b}^ many of the States, which only ag- 
 gravated the trouble. For long, weary 3'ears the leth- 
 argy continued. There was no demand for an3^thing, 
 except the necessaries of life, and all these, except cloth- 
 ing, were sold for scarcely enough, and, in some cases, 
 not enough, to pay the expenses of taking them to 
 market. I witnessed a sale in 1839 to the keeper of a 
 hotel in Indianapolis of oats at 10 cents a bushel and 
 fine chickens at 50 cents a do7,en. The same year I 
 saw thousands of barrels of flour under the sheds of Suy- 
 
398 
 
 dam, Sage & Co., in New York, which they were offer- 
 ing at S3. 50 a barrel. Fat cattle were selling at so low 
 a price — $10 and Si 2 a head — that m}- brother thought 
 that he would pack a few barrels of beef at Fort Wayne 
 for the New York market. He did so, and was drawn 
 upon by his consignees for a part of the expenses of 
 transportation not covered by the sales. From 1837 to 
 1 841 there was nothing to break the stagnation but the 
 political campaign of 1840, in which everybody became 
 enlisted for want of something else to do. In the fall 
 of 1 841 a reaction began to appear. This became de- 
 cided in 1842, before the tariff of that year went into 
 operation, and in 1845 the country, chastened by adver- 
 sity, was in the full tide of healthy and wealth-produc- 
 ing industry and enterprise. This continued until cred- 
 its became again unwisely expanded and speculation 
 became rife. 
 
 THE PANIC OF 1 85 7. 
 
 In 1857 I was the president of the Bank of the State 
 of Indiana, and this is a part of \vhat I said about the 
 financial troubles of that year in the report from which I 
 have quoted: 
 
 The financial crisis of 1857 was the resuU of a similar cause 
 to that of 1837, namely, the unhealthy extension of the various 
 forms of credit. But, as in this case the evil had not been long 
 at work and productive industry had not been seriously dimin- 
 ished, the reaction, though sharp and destructive, was not 
 general, nor were the embarrassments resulting from it pro- 
 tracted. Now, in both instances the expansion occurred while 
 the business of the country was upon a specie basis, but it was 
 only nominally so. A false system of credits had intervened, 
 under which payments were deferred and specie as a measure 
 of value and a regulator of trale was practically ignored. 
 Everything moved smoothly and apparently prosperously as 
 long as credits could be established and continued, but as soon 
 as payments were demanded and specie was in requisition, dis- 
 trust commenced and collapse ensued. In these instances the 
 expansions preceded and contraction followed the suspension, 
 but It will be recollected that while the waves were rising specie 
 ceased to be a regulator by reason of a credit system which 
 prevented the use of it. 
 
 Now, with all due respect to Mr. Blaine, I express the 
 opinion that the apparent prosperity which preceded the 
 
399 
 
 revulsion of 1837 and the real prosperity which preceded 
 the crisis of 1857 were not caused by the tariff, and that 
 the reverses which followed were not attributable to its 
 reduction. If the tariff was in any measure instrumental 
 in producing the changes, it was in stimulating the ex- 
 pansion which terminated in disaster. In 1857 I was a 
 believer in the tariff, and it never entered my head to 
 attribute the financial troubles of that 3'ear to the changes 
 to which it had been subjected. 
 
 THE FINANCIAL TROUBLES OF 1873. 
 
 The most pressing duty which I had to perform when 
 I became Secretary of the Treasury in 1865 was to pro- 
 vide the means to pay the soldiers and to meet other 
 pressing demands upon the Treasury. This was done 
 in the onl}- wa}- it could be done, by the sale of tempo- 
 rary obligations which had proved to be attractive to in- 
 vestors. After this had been accomplished the work of 
 funding these obligations was commenced and carried 
 successfully on until the whole amount — some thirteen 
 hundred millions of dollars — were converted into bonds. 
 While this work was going on I was under constant ap- 
 prehension of a financial crisis before it could be com- 
 pleted. My apprehension was unfounded, but only as 
 to time. The crisis was postponed, and for so long a 
 period that the opinion generally prevailed that the vi- 
 tality and productive power of the country were so great 
 that the most expensive war that had ever been waged 
 could be concluded and great expansion of credit could 
 be checked and abridged without financial disturbances. 
 I have to confess that this was ni}- own opinion, but the 
 same causes which produced the crisis of 1858 were at 
 work, and, as had always been the case, the revulsion 
 came when least expected. 
 
 When I left London in September, 1873, to come to 
 the United States, the financial skies, if not cloudless, 
 were not threatening. The letters which were received 
 by the London firm from its New York partners were 
 encouraging, and I had no reason to expect anything 
 but a pleasant visit to my old home, and a return to 
 London under auspicious circumstances. But on the 
 
400 
 
 arrival of the steamship in the outer harbor I was met 
 by the stunning intelHgence that my American partners 
 and the correspondents of the Fort Wayne banking 
 house in which I was interested had failed; that all the 
 banks except the Chemical Bank, w^hich had weathered 
 all storms, had suspended, and that one of the widest 
 panics which had ev-er occurred was raging throughout 
 the country. The crisis was a terrible one. Although 
 it came unexpectedly, it was only the consummation of 
 influences which had been long at work beneath the 
 financial horizon. In extent, in fierceness, and disaster 
 it resembled the revulsion of 1857. It was not, as Mr. 
 Blaine states, brought about by the losses sustained in 
 the civil war, which had been terminated eight years 
 before, nor by the destructive fires in Chicago and Bos- 
 ton. Great losses may bring about what are called hard 
 times — not panics. It was produced by an expansion of 
 currency and of credits, which fostered speculation, and 
 which rarely fail to terminate in financial trouble. 
 
 THE PRESENT CONDITION OF THE COUNTRY. 
 
 A high tariff has been in force since 1862* and accord- 
 ing to Mr. Blaine the country, and the whole country, 
 under its beneficent influence ought to be highly pros- 
 perous. The circulating medium is abundant. Interest 
 is lower than ever before known. Good railroad and 
 municipal four per cent, bonds command a premium; 
 those of the United States are in demand at 124, and yet 
 wdiat is the condition of that great interest which under- 
 lies all other interests — the agricultural interest ? What 
 are good farming lands worth in Mr. Blaine's own State, 
 in Vermont, in New Hampshire, in all the Eastern 
 States? How do prices of farming lands in the Middle 
 States compare with the selling prices of such lands when 
 the tariff was light in comparison wath what it is at the 
 present time ? If the condition of the farming interest 
 in these States is the result of the increase of cultivated 
 acres in the new States and the lessened rates of trans- 
 portation, how happens it that in all these great grain- 
 producing States the farmers who are as well off at the 
 close of the year as they were at the beginning are the 
 exceptions? 
 
401 
 
 If protection is the beneficent i)olicy that it is repre- 
 sented to l)e by Mr. Blaine, how happens it that even 
 manufacturers are not happy ? How happens it that 
 combinations are formed by them to curtail production 
 and maintain high prices ? Are tJie consiuncrs of iiianu- 
 facturcd goods benefited by legislation that prevents for- 
 eign coinpetition and enables the fu^ored few to regidate 
 prices for their ozun advantage / Is a country really 
 prosperous when cities, which are the consumers of 
 wealth, are rapidly growing and farming lands are de- 
 creasing in value; when rents in cities are enormously 
 high and excellent farms are not attractive to tenants at 
 rentals not equal to six per cent, interest on half their 
 appraised value? 
 
 I asked the keeper of a little shop, about fifteen feet 
 wide and thirty feet deep, on Pennsylvania avenue, in 
 Washington, what rent he was paying. "Three hun- 
 dred dollars a month," he replied; "33,600 a year." 
 Now, I venture to say that there is not a farm in Mary- 
 land or Virginia, no matter what may be its si/.e and the 
 cost of its improvements, that rents for half that sum. 
 Nothing is clearer than that the wealth-producing power 
 of the country is not in a healthy and prosperous condi- 
 tion. 
 
 In all this I unfortunately differ not only with Mr. 
 Blaine, but with Mr. Depew, who is reported as sajdng 
 in a recent interview that the condition of the country is 
 "superb;" that so enormous were the last year's crops 
 that the great East and West railroad lines have more 
 wheat and corn and beef to be taken to the seaboard 
 than they can carry. This may be true. Well- managed 
 roads are doing well, so well that one of the .greatest 
 lines can spare its president from his post of official duty 
 to enlighten the people by his eloquent speeches upon 
 the beauties of protection and other subjects, and at 
 the same time declare liberal dividends. But hozv is it 
 with the fanners, by ivhose productive labor the railroads 
 are supported / A?r they satisfied with the present and 
 hopeful for the future/ If Mr. Depew will extend his 
 tours to Minnesota and Iowa and Kansas and Nebraska 
 he will discover that, although they are the most fertile 
 States in the Union, the condition of their people is far 
 
402 
 
 from being "superb." He will discover, also, in travel- 
 ing over the country, if he keeps his eyes open, that it 
 is the middlenien, the men who handle the agricultuyal 
 prodnetlons, and the railroads that are making money, 
 while the producers are unable to make "both ends 
 meet," no matter how industrious and economical they 
 may be. The keeper of a stall in Washington Market 
 makes more money in buying, cutting up, and selling 
 an ox than the farmer receives for raising it. This may 
 be superb for the stall keeper, but not exactly superb 
 for the farmer, 
 
 A MISTAKEN ARGUMENT. 
 
 A good part of Mr. Blaine's article is taken up in com- 
 paring the growth of the United States under a protec- 
 tive tariff with that of Great Britain under free trade. 
 He says that in twenty years Great Britain added to her 
 wealth $15,000,000,000, while the United States added 
 to hers nearly S33, 000, 000, 000; that the population of 
 Great Britain increased within the same period — a period 
 of her greatest prosperit}- — 6,000,000, while the popu- 
 lation of the United States increased 18,000,000. 'Such 
 statements show that the progress of the United States in 
 wealth and population under a protective tariff far ex- 
 ceeded that of Great Britain under free trade. Does this 
 prove that free trade is not favorable to Great Britain 
 and that protection is the cause of prosperity in the 
 United States ? Great Britain is an old and small coun- 
 try, whose surplus population has been steadily flowing 
 to her colonies and to the United States, and w'hose im- 
 mense wealth is the result of gainful industry. The 
 United States is a country of immense extent, whose 
 wealth has not only been created by her manufactures, 
 but also, and to a much greater extent, by the millions 
 of millions of acres of wild lands which have been con- 
 verted into productive farms and flourishing towns. The 
 United States has not only grown in population by nat- 
 ural increase, but also by the throwing open of her ports 
 and inviting the people of all countries to become citi- 
 zens of the great republic. The real cause for wonder 
 is, not that the United States has becorne so rich and 
 
403 
 
 populous, but that Great Britain has gained so much in 
 the same direction. 
 
 The argument in favor of protective duties, based 
 upon such a comparison, is totally unfounded, and I am 
 surprised that so able a man as»Mr. Blaine should have 
 presented it, nor would he if he had not become so 
 wedded to the policy of protection that he sees no evi- 
 dences of national prosperity that are not based upon it, 
 and foresees no ill that will not be the result of its aban- 
 donment. That the United States has been largely en- 
 riched by her manufacturers is admitted, but has not her 
 enrichment been largely at the expense of the great body 
 of the people? She has rapidly increased in population, 
 but this increase has been largely the result of the de- 
 mands of her manufacturers for cheap labor. Hoiv ex- 
 pensive this cheap labor may prove to be, i?i the character 
 of the laborers, is a question which is yet to be solved. The 
 premonitions that come from our large cities on this 
 head are very far from being comforting. 
 
 If Mr. Blaine had seen the West as I saw it in 1833, 
 when more than three-quarters of such States as Michi- 
 gan, Indiana, Illinois, and Missouri were untouched 
 by the plow, and all beyond was a magnificent but well- 
 nigh trackless wilderness, and should see it as it now is, 
 he would not attribute the growth of the United States 
 to protection, nor would he undertake to sustain his 
 favorite theory by comparing that growth to the slower 
 growth of the United Kingdom. 
 
 No one can tell what would have been the condition 
 of the country if the tariff had been radically changed 
 at the close of the civil war, but this we do know, that 
 its present condition is not healthy. It is the greatest 
 producing country in the world, and therefore needs the 
 widest markets for its productions. With all needed 
 markets open to it, it has no well defined and mutually 
 ])rofitable trade even with South America. Its manu- 
 factures as well as its agricultural productions exceed 
 not only the home demand, but what is left to it of the 
 foreign demand, and as its productions are increasing 
 more rapidly than the demand for them, it is impossible 
 for me to see where relief is to come from except from 
 increase of our foreign trade, which can only be brought 
 about bv a reform of the tariff. 
 
404 
 
 As I have said, we do not know what would have hap- 
 pened if the policy of the Government in regard to im- 
 port duties had been changed twenty years ago, but it is 
 clear to ni}^ mind that if the nation of the greatest produc- 
 ing pcrwer docs not hold i he keys of the ivorld' s conwiercc, 
 if she does not make European nations her commercial 
 tributaries, the fault must be her own. Precious time 
 has been lost and immense sacrifices have been made to 
 build up and sustain one great branch, of national indus- 
 \xy, but such are the resources of the country and the 
 energy of the people that with wiser legislation, which 
 cannot be long delayed, all damages can be repaired and 
 general prosperity secured. This legislation will be 
 found in removing from the tariff everything that stands 
 in the way of international trade and the adoption of 
 the needful means for the restoration of our merchant 
 marine. 
 
 With what Mr. Blaine says about the shipping inter- 
 est of the United States I am in hearty accord. Mr. 
 Blaine says: 
 
 The failure of the United States to encouraj^e and estabhsh 
 commercial lines of American ships is in strange contrast with 
 the zealous efforts made to extend lines of railway inside the 
 country, even to the point of anticipating the real needs of 
 many sections. If all the advances to railway companies, to- 
 gether with the outright gifts by towns, cities, counties, vStates, 
 and nation be added together, the money value could not fall 
 short of a thousand millions of dollars. No effort seems too 
 great for our people when the interior of the country is to be 
 connected with the seaboard; but when the suggestion is made 
 to connect our seaboard with commercial cities of other coun- 
 tries by lines of steamships, the public mind is at once disturbed 
 by the cry of "subsidy." We really feel as much afraid of pro- 
 tection at sea as Mr. Gladstone is of protection on land. The 
 position of the American Congress and the KngHsh Parliament 
 on this subject are precisely reversed. England has never been 
 affrighted by the word subsidy, and, while we have stood still 
 in impotent fear, she has taken possession of the seas by the 
 judicious and even lavish interposition of pecuniary aid. I 
 have already said that the interest on the amount which En- 
 gland has paid for this object since she began it with great 
 energy fifty years ago would give all the stimulus needfed for 
 the rapid expansion of our commerce. Let it be added that if 
 the Government of the United vStates will for twenty years to 
 come give merely the interest upon the interest, at the rate of 
 five per cent., on the amount which has been a free gift to rail- 
 roads, every steamship line needed on the Atlantic, the Pacific, 
 
40;") 
 
 and the Gulf will spring iulo existence within two years from 
 the passage of the act. It is but a few years since Congress 
 twice refused to give even 1125,000 per annum to secure an ad- 
 mirable line of steamers from New York to the four largest 
 ports of Brazil, and the sum of 1 125,000 is but the interest 
 upon the interest at five per cent, of the gross amount freely 
 given to the construction of railroads within the I'nion. Is it 
 any wonder that we have lost all prestige on the sea ? 
 
 THE SHIPPING INTEREST. 
 
 This failure has been the result of a want of compre- 
 hensive statesmanship in Congress. Fifty years ago 
 the United States was second only to Great Britain as a 
 maritime nation; now she is outstripped by nations that 
 were then quite unknown as maritime powers. The 
 deadliest blow to the shipping of the United States was 
 in the substitution of iron for wood in the construction 
 of ships. What was left of her foreign shipping was de- 
 stroyed in the last civil war. Now, as no nation can be 
 really great that is dependent upon other nations for 
 ships to carry on its foreign trade, one would suppose 
 that the restoration of our foreign shipping which had 
 been thus destroyed would long since have received the 
 earnest attention of Congress. But session after session 
 has passed away and nothing has been accomplished in 
 this direction, while the difficulties to be overcome have 
 been steadily increasing. It is true that subsidies were 
 a few years ago granted to American lines which failed 
 to accomplish the expected results, but this should only 
 make it certain that what may be done hereafter shall 
 be done with more circumspection. The United States 
 can certainly do what other nations have successfully 
 accomplished in a matter of great national importance. 
 The indifference with which Western Congressmen 
 and Western journals regard our foreign shipping inter- 
 est may not be surprising, as they are mainly interested 
 in the development of their own section; but it is sur- 
 prising that so little interest in it is felt by representatives 
 from the seaboard States and by the journals which are 
 published in our commercial cities. The New York 
 Evening Post'x^ a journal of large circulation and influence. 
 No man knows better than its leading editor that the 
 carrying trade between this country and Europe is in 
 
406 
 
 the hands of foreigners who are enriched by it. No one 
 knows better than he ought to know that capitahsts in 
 the United States will not put their money into ships to 
 compete with long established and subsidized steamship 
 lines by which that trade is controlled without Govern- 
 ment aid. No man knows better than he ought to know 
 that the restoration of our foreign shipping is a matter 
 of great national concern, and yet in reply to an in- 
 quiry that I made of him he replied that " the restora- 
 tion of our merchant marine is a matter of importance 
 to the country, but only on condition that it pays its own 
 way; that the public might as well be taxed to revive 
 the agricultural interests of Vermont as to restore our 
 merchant marine. Here is an editor of a great news- 
 paper in the great commercial city of the Union who 
 thinks that the Government might as well be taxed to 
 improve the agricultural interests of Vermont as to be 
 taxed to revive our foreign merchant marine, the re- 
 vival of which would add largely to the national wealth, 
 and is essential to the well-being of the country, who 
 thinks tJiat the restoration of our mcrclimU marine is of 
 importance to the country, hut only on the condition that it 
 pays its oivn way, its importance to the country being de- 
 pendent upon its profitableness to those who are directly 
 interested in it. 
 
 Not so have thought the great English statesmen, by 
 whose influence enormous subsidies were granted, and 
 are still continued, to steamship lines between England 
 and the United States. Not so have thought the states- 
 men of other countries through whose influence steam- 
 ship lines have been established. The editor of the Post 
 seems to think that because the Norwegians, who man th eir 
 own ships, and, consequently, run them at little expense, 
 can find profitable employment as ocean tramps, capi- 
 talists in the United States will run a tilt with the Euro- 
 pean steamship lines that now monopolize the carrying 
 trade between the two hemispheres. In the face of ex- 
 isting facts it is strange, indeed, that such an opinion 
 .should be entertained by an intelligent journalist. 
 
 There are very few enlightened men in the United 
 States who have carefully considered the subject who 
 do not consider the restoration of our foreign shipping 
 
a matter of great public importance, and who do not be- 
 lieve (so powerful are the combinations against it) that 
 it will not be restored without Government aid in some 
 form. And there are, I hope, fewer still who regard its 
 restoration as important onl}- to those who niuy be di- 
 rectly interested in it. 
 
 No one, I am sure, with American blood in his veins, 
 can stand by the docks in Liverpool, crowded with the 
 ships of other nations, and without humiliation look in 
 vain for the stripes and stars. 
 
LETTER 
 
 TO THE 
 
 WASHINGTON POST, FEBRUARY 19, 1890. 
 
LETTER 
 
 TO THE 
 
 WASHINGTON POST, FEBRUARY 19, 1890. 
 
 It has become quite in order for a part of the public 
 press in the United States, in the exercise of what is re- 
 garded as its legitimate function, to bestow opprobrious 
 epithets upon those with whom it differs in regard to 
 public measures. Thus many of our leading journals 
 denounce, as free traders and tariff smashers, all those 
 who, in the interests of agriculture and of the great 
 body of consumers, advocate a revision of the tariff. 
 Others denounce, as subsidy seekers, all those who re- 
 gard the restoration of our merchant marine as a matter 
 of such national concern as to make it the dut}^ of Con- 
 gress to do what may be needful in aid of individual en- 
 terprise to effect it. 
 
 The men who think that the protective tariff stands 
 in the way of international trade, which is indispensable 
 to the welfare of agriculture, which imposes burdens 
 upon the many for the benefit of the few, and ought, 
 therefore, to be carefully revised, are denounced as tariff 
 smashers. Those who believe that the United States can 
 never stand in the front rank of nations as long as she is 
 dependent upon other nations for commercial facilities; 
 who think that the people of the United States should 
 at least share in the profits of ocean traffic and of wider 
 markets, are stigmatized as subsidy seekers. It seems 
 to be the opinion of the managers of these journals that 
 no one can advocate any public measure, which for its 
 success may depend upon Government aid, without be- 
 ing influenced by sordid motives, b}- unpatriotic designs 
 upon the National Treasury. I am glad to say that my 
 
412 
 
 observation, during a long and varied life, has led nie 
 to different conclusions. I do not believe that patriot- 
 ism is one of the lost virtues. Venality may abound 
 and corruption may be on the increase, but I believe 
 that a large majority of my intelligent countrymen and 
 of their representatives in public life are patriotic to the 
 core. If this were not my belief, I should "despair of 
 the republic." 
 
 I have, in various ways, said all that I had to say upon 
 the tariff. I desire now to say, through the Post, a few 
 words about our shipping interests. 
 
 Everyone who knows anything of the history of the 
 country knows that the United States, a little more than 
 half a century ago, was second only to Great Britain in 
 traffic upon the seas. The building of ships for Euro- 
 pean trade ceased when iron became the substitute for 
 wood in their construction, and what was left of our 
 foreign merchant marine at the commencement of the 
 civil war was swept away by Confederate cruisers. 
 
 In my report, as vSecretary of the Treasury, in 1866, I 
 said: 
 
 It is a well-established, general fact that the people who build 
 ships navigate them, and that the nation which ceases to build 
 ships ceases, of consequence, to be a commercial and maritime 
 nation. Unless, therefore, the causes which prevent the build- 
 ing of ships in the United States shall cease, the foreign carry- 
 ing trade, even of our own products, must be yielded to other 
 nations. To this humiliation and loss the people of the United 
 States ought not to be subjected. If other branches of industry 
 are to prosper, if agriculture is to be profitable and manufac- 
 tures are to be extended, the commerce of the country must be 
 restored, sustained, and increased. The United States will not 
 be a first-class power among nations, nor will her other indus- 
 trial interests continue long to prosper as they ought, if her 
 commerce shall be permitted to languish. 
 
 This is what I was compelled to say in a recent letter 
 to the New York Times, wdiich shows in a few words 
 the humiliations and loss to which the United vStates has 
 been suVjjected: 
 
 No American who is proud of his country can suppress feel- 
 ings of humiliation when he visits the London and Liverpool 
 docks and looks in vain for the stripes and stars. Every in- 
 habitant of the great republic who goes to Europe pays tribute 
 to foreign ship-owners. Every pound of freight that crosses 
 the Atlantic adds its might to their gains. 
 
413 
 
 Was I right in what 1 said in 1866 ? Am I right now 
 in the opinion that, aside from all questions of personal 
 interests, the greatest producing country in the world 
 ought not to depend upon foreign ships to carry its sur- 
 plus products to foreign markets; that it cannot be so 
 dependent without being a tributary instead of a leader 
 among the nations ^ 
 
 If this opinion is well founded, the restoration of our 
 foreign marine service is a matter not of individual, but 
 of national concern, and the practical question to be con- 
 sidered is, Will this restoration be effected without 
 financial aid from the Government ? Is not this question 
 answered in the negative by the fact that nothing is 
 being done by capitalists in this direction ? Never be- 
 fore has capital been so abundant, never were paying 
 investments so anxiously sought, never was money so 
 cheap, and yet in the ocean traffic between the New 
 World and the Old the United States has. no share. 
 Every year has witnessed the building of new ships for 
 this traffic by European capitalists, while capitalists of 
 the United States have looked on without any disposi- 
 tion to compete with them for its profits. Is it not quite 
 certain that, unless the Government of the United States 
 shall do what has been done by other nations, this traffic 
 will forever remain in foreign hands ? Is there a man 
 with true American blood in his veins wdio is vvilling 
 that this should be the case ? 
 
 It may be contended that the building of ships in the 
 United States has ceased, by reason of import duties 
 upon the foreign materials which are required for this 
 purpose. If these duties had been removed when iron 
 became a substitute for wood in the construction of ships, 
 our shipping interests might not have beeri in their 
 present depressed condition. But the question is not 
 now what might have been its condition in the absence 
 of such duties, but would that condition be improved by 
 their abrogation without aid from the Government? 
 Would the editors of the journals who have large bank 
 balances, and are in the habit of denouncing as subsidy 
 seekers those who think that the foreign shipping interest 
 is of sufficient importance to the country, and to the 
 whole country, to justify Congress in taking steps for its 
 
414 
 
 restoration — would these editors put their money into 
 ships? I trow not. To me it seems as certain as any- 
 thing in the future can be that ships will not be built in 
 the United States for the European trade if the duties 
 on foreign materials, which are needed in ship-building, 
 are removed, unless something is done by the Govern- 
 ment to put United States ships on something like an 
 equality with European ships. Capitalists in the United 
 States wnll never enter into competition for the ocean 
 traffic with foreign capitalists, unless the competition 
 can be a fair one. The risk to be incurred in competing 
 with subsidized lines would be too great to be en- 
 countered. 
 
 What foreign nations have done, what they are now 
 doing to create and sustain business upon the seas, and 
 to find markets for their productions, has been shown 
 by Mr. H. K. Thurber, in the December number of 
 Belford' s Magazine; by Mr. Blaine, in the NortJi Ameri- 
 can; by Henry W. Raymond, Secretary Tracy's confi- 
 dential assistant, and still more fully by Secretary Win- 
 don, in his recent very able report. The enormous sub- 
 sidies which have been granted by these nations to their 
 steamship lines have been granted not only for the 
 profits of ocean traffic, but also for the purpose of find- 
 ing markets for their surplus products. Great Britain, 
 which has done more in subsiding steamship lines than 
 any other nation, has been many times overpaid for her 
 outlays by the markets which have been thus obtained 
 for her manufactured goods. How can new markets be 
 obtained by the United States for her surplus productions 
 as long as she is dependent upon foreign ships for trans- 
 portation ? There can be no reasonable doubt that if 
 the American Congress had been governed by as wise 
 counsels as have governed the British Parliament, the 
 United States would, ere this, have been in the enjoy- 
 ment of a full share of the ocean traffic and of the 
 markets from which they are now practically excluded. 
 So important do I regard, for the prosperity of the 
 country, the restoration of our foreign shipping interests, 
 that if I were a member of Congress, I would vote for 
 any measure which, upon careful consideration, I might 
 consider necessary to revive and sustain it; I should 
 
415 
 
 not be deterred by the outcry against subsidies. So far 
 from it, if I had been among those who had voted for 
 millions upon millions of dollars for the construction of 
 railroads, to bring the productions of the interior to the 
 seaboard, I should be ashamed to face my constituents 
 if I had failed to do what I could towards securing the 
 transportation of the surplus to foreign lands in United 
 States ships. Mr. Blaine, in the article to which I re- 
 ferred, after speaking of the enormous subsidies which 
 have been granted to foreign steamship lines, expresses 
 confidently the opinion that the interest upon the inter- 
 est, at five percent., of what has been given to railroads, 
 would be sufficient to put the United States again in the 
 front rank of maritime nations. If this opinion is cor- 
 rect, who can be doubtful in regard to what should be 
 the action of Congress at the present session upon this 
 great national question ? It is a question that cannot be 
 dwarfed by the outcry against subsidies; nor can the 
 careful consideration of it be deferred, without serious 
 and constantly increasing loss to the country. 
 
LETTER 
 
 To THE 
 
 NEW YORK INDEPENDENT. 
 
LETTER 
 
 To THE 
 
 NEW YORK INDEPENDENT. 
 
 In closing these papers I call to mind nothing that I 
 have written which would be more appropriate than the 
 following letter, which I wrote for the New York Inde- 
 pendent, in April, 1889, upon the character of 
 
 GEORGE WASHINGTON. 
 
 No name is so conspicuous in the world's history as 
 that of George Washington. Of no other man has it 
 been literally true that he was "first in war, first in peace, 
 and first in the hearts of his countrymen." Strong and 
 striking as was this condensed eulogy, it w^as not exagger- 
 atory. Brave without rashness, ambitious without self- 
 ishness, firm without arrogance, self-confident without 
 egotism, religious without bigotry, loved and honored 
 without courting popular favor, quick and clear in con- 
 ception and sound in judgment, he possessed in an emi- 
 nent degree the qualities that fitted him for the duties 
 he was called upon to perform in the field, in the public 
 councils, and in the formation and establishment of a 
 government of which, in many respects, there was no ex- 
 ample. He was one of the few distinguished men whose 
 private as well as public life has borne the strictest scru- 
 tiny, whose military discipline did not disqualify him for 
 the arts of peace; the only man whose name is honored 
 in all civilized countries, and whose renown has increased 
 as years have rolled on. It is not strange, therefore, 
 that many of his countrymen believe that he was espe- 
 cially created for the execution of the purposes of Provi- 
 dence in regard to the great republic. 
 
 When it became manifest that the rights of the colo- 
 nies could not be maintained without war, the eyes of 
 
420 
 
 the people turned to Washington as a leader. He had 
 given evidence of his valor and skill in the Indian wars. 
 He was better known as a soldier throughout the colo- 
 nies than any other man, and his appointment by Con- 
 gress to be the commander-in-chief of the Continental 
 forces was in obedience to the public will. The outlook 
 at the commencement of hostilities was discouraging in 
 the extreme. There was a lack of unity of sentiment 
 among the colonies in regard to the object to be achieved. 
 There was no public Treasury — no central authority. The 
 regiments furnished by the colonies were composed of 
 brave and hardy men, but they were without discipline 
 and their terms of service were too short for the acquire- 
 ment of the habits of regulars; and what was still more 
 unfortunate, their officers were destitute of military 
 training. These serious drawbacks upon the efficiency 
 of the regiments added enormously to the labors and re- 
 sponsibilities of the chief; but they did not discourage 
 him. On the contrary, they developed his own energy 
 and gave to him a deep hold upon the confidence and 
 trust of the people. 
 
 If Washington did not possess the genius of an Alexan- 
 der, Napoleon or even a Wellington, no general ever sur- 
 passed him in the courage, the patience, the endurance, 
 the wisdom which were needed for the accomplishment of 
 grand results, by what seemed to be utterly inadequate 
 means. He was not magnetic. He did not excite the en- 
 thusiasm of the soldiers, but their faith in him and devo- 
 tion to him was of the highest and heartiest character — 
 faith and devotion which were as strong in the severe 
 disasters on Long Island and in the terrible sufferings at 
 Valley Forge as in the consummation of their hopes at 
 Yorktown. The duties of Washington, upon whom the 
 conduct of the war had been devolved as commander- 
 in-chief, were to give direction to the colonial forces in 
 all parts of the extensive field over which hostilities ex- 
 tended; to keep up the spirits of the soldiers, and to pro- 
 long the contest, no matter how disheartening the pros- 
 pect might be, until the independence of the colonies 
 had been achieved. These duties he performed with ex- 
 traordinary ability. Unsupported, and in some instances 
 opposed by Congress, with subordinates jealous of his 
 
421 
 
 fame, if not hostile to him personal!}-, he made such uses 
 of the inferior forces under his general command that the 
 victories of the British gave to them no enduring advan- 
 tages. Under discouragements which would have driven 
 any other general to despair, he maintained his confi- 
 dence in himself and his sublime faith in the justice of 
 the cause which he regarded as being too precious to be 
 lost. But while his duties as commander-in-chief were 
 mainly supervisor}^ and director}-, there were occasions 
 when he exhibited daring, hardihood, and prowess that 
 proved him to be equal to any emergency, able to inspire 
 his troops with his own indomitable will. The most con- 
 spicuous of these was the crossing of the Delaware, a feat 
 that commanded the admiration of the enemy, followed 
 by the battle of Trenton, which in itself and its conse- 
 quences was the most important battle of the war. 
 
 Of the merits of a general, none are such competent 
 judges as the officers and soldiers who have been subject 
 to his command. Of the merits of Washington as com- 
 mander-in-chief, there could be none whose judgment 
 would be entitled to respect equal to that of the officers 
 and soldiers whose devotion to him never faltered 
 through the vicissitudes of the protracted war. In 
 their judgment, from which, at the close of the war, 
 there was no dissent, Washington was entitled to very 
 high rank among the great generals of the world. 
 
 But distinguished as Washington was as a general, he 
 was still more distinguished as a civilian. Scarcely had 
 the independence of the colonies been achieved than he 
 perceived the absolute necessity of their being united 
 under a central government, which, without depriving 
 them of control in all local matters, should have power 
 to levy and collect taxes for its own support and the 
 payment of the public debt; to coin money and fix a 
 value upon foreign coins ;|to regulate domestic and foreign 
 trade; and to transact all business of an international 
 character — a government of limited powers, but absolute 
 in the exercise of its delegated authority. Of the con- 
 vention which was called to form such a government, 
 composed of the ablest men that were ever assembled in 
 council, he was unanimously elected president. In the 
 able debates of the convention he did not often partici- 
 
422 
 
 pate, but no member better understood what was wanted 
 to make the colonies a nation, and to no one are the 
 country and the world so greatl}' indebted as to him for 
 the work w^hich was accomplished — the Constitution of 
 the United States, the noblest product of human wisdom ; 
 and when the Government was to be put in operation 
 there was but one man to whom the people looked to fill 
 the highest place. The latter part of the eighteenth and 
 the early part of the present century were prolific of 
 great men, and this was especially true of the United 
 States. Where and when in the world's history were 
 there such men as Benjamin Franklin, who, commencing 
 life as a humble printer, became renowned throughout 
 the world for his scientific discoveries and practical wis- 
 dom; Alexander Hamilton, whose genius was like in- 
 spiration, whose reports as the first Secretary of the 
 Treasury upon taxation, upon manufactures and the 
 public debt covered his name with immortal honor — re- 
 ports so clear in expression, so sound in doctrine, so 
 honorable in sentiment, so profound in thought that 
 financiers and economists of the present day turn to 
 them for guidance and instruction; John Jay, the 
 learned jurist and skilful diplomatist, of whom Mr. 
 Webster said that "when the ermine of Chief Justice 
 fell upon his shoulders it fell upon nothing less pure than 
 itself; John Marshall, the ablest judge that ever adorned 
 the bench of this country or any other, the great inter- 
 preter of the Constitution and of the principles of the 
 common law — the law of human rights — whose decisions, 
 numerous as they were upon a great variety of subjects, 
 although in some instances undermined, have never been 
 overruled; John Adams, who, while wanting in political 
 sagacity, was second to none in patriotic ardor and men- 
 tal power; Thomas Jefferson, the philosophic statesman 
 and elegant writer, the careful student of the laws of 
 nations, whose democracy, imbued as it was with the 
 spirit of the French school, was needed as an offset to 
 the federalism of some of his associates; James Madison, 
 one of the most accomplished and effective of writers 
 and wisest of thinkers; Charles Cotesworth Pinckney, 
 the brilliant speaker, the able and fearless Minister to 
 France in 1796, who_, when money was demanded of 
 
428 
 
 him by Talleyrand as a condition of peace between 
 France and the United States, met the demand by the 
 exclamation, "Millions for defense, not a cent for trib- 
 ute;" Rufus King, Fisher Ames, Luther Martin, Robert 
 Morris, Charles O. Pickering, Roger Sherman, Oliver 
 KUsworth, Edmund Randolph, William Livingston? Of 
 these and a score of others scarcely less eminent, whose 
 equals as a body may be looked for in vain in the na- 
 tional history, Washington was the acknowledged leader. 
 Inferior in some respects to many of them, there was in 
 him a combination of high qualities that no other man 
 possessed. To be the leader of such men, and to be 
 called upon by general consent to fill the first place 
 in the new Government, was an honor of the very high- 
 est character. Of the manner in which he filled that 
 high place, of the example which he set before his 
 countrymen and the people of other nations, history has 
 spoken in no uncertain terms. Like the monument 
 erected to his honor in the city that bears his name, his 
 character stands out in the world's roll of noble men, no 
 less distinguished by its simplicity than by its majesty 
 and strength. His name, now honored wherever his- 
 tory is known, will continue to be honored as long as 
 unselfish patriotism, lofty endeavor and spotless in- 
 tegrity are honored by mankind. 
 
INDEX. 
 
 Adams, John s 422 
 
 Alabama treaty, greatest achievement of this century 65 
 
 Allen, Governor 136, 154, 177 
 
 American citizens pay tribute to foreign ship-owners 412 
 
 colonies 21, 262 
 
 flag 31 
 
 not seen in English docks 381 
 
 labor does not need protection 86 
 
 resources 86 
 
 Armies of European States 106 
 
 Army of the Revolution 420 
 
 Bank, The Scotch 164 
 
 of North America 263 
 
 United States 263, 267, 395 
 
 Examiners 358 
 
 Pennsylvania U. S., chartered 395 
 
 Banking should be free 78 
 
 The best system now in use 77 
 
 Objections to national system considered 275 
 
 National system should be sustained 352 
 
 system approved by business men 359 
 
 from 1830 to 1837 266 
 
 Bank-notes advocated instead of United States notes. . .75, 77 
 
 Circulation of 152 
 
 Direct issue of, by Colonies and Confederate 
 
 States 181 
 
 Result of withdrawal of national . , 361 
 
 Bankrupt nations 299 
 
 Banks, Congress has authority to incorporate 281 
 
 National 165, 207, 280 
 
 circulation secured only by United States 
 
 bonds 359 
 
 able to furnish all paper money 279 
 
 New York, Boston, and Philadelphia, suspend 270 
 
 not dangerous to people 277 
 
 opposed by politicians of the "tear-down" school. . 163 
 
 Our system of 167, 180, 272, 276, 357 
 
 State 165, 307 
 
 Suspension of 1861 273 
 
 Well-managed, conducive to public prosperity 280 
 
 Beecher's discovery 169 
 
420 
 
 Bi-metallic money 210, 239 
 
 Use of it urged 253 
 
 Hamilton on 362 
 
 standard 245 
 
 Bismarck opposes inflation 181 
 
 Blaine on tariff 387, 401 
 
 shipping interests of the I'nited vStates 404, 415 
 
 Business, how revolutionized , 336 
 
 running into fewer hands 341 
 
 C 
 
 Calhoun, the great nullifier 24 
 
 Calomel, " Too much " 153 
 
 Capital and labor 332, 348 
 
 Capitalists should be content with small profits 214 
 
 Chase, Secretary 27 1 
 
 author of national banking system 166 
 
 instrumental in successful termination of 
 
 war 79 
 
 Childs, George W., on taxation 318 
 
 Christiancy, on South American trade 326 
 
 Civil war. Magnitude of our 150 
 
 Results depended as much on money as armies. 124 
 A contest between the civilization of barbarism 
 
 and the civilization of freedom 216 
 
 Cobden, Richard 59 
 
 Coin, Adulteration of 172 
 
 Congress can not give fictitious value to 172 
 
 has power to make 225 
 
 How weighed in Great Britain 227 
 
 in Kurope 178 
 
 No Government can give fictitious value to 225 
 
 Value depends on quantity of pure metal, etc 235 
 
 When exported 226 
 
 Coinage acts 1792 to 187S 239, 242 
 
 Colored people of the vSouth as voters 217, 345 
 
 citizens 217 
 
 could control three States 370 
 
 labor indispensable 52, 347 
 
 people must be protected in political rights 346 
 
 Sympathy for, wrongly directed by politics . 345 
 
 unfitted for governing 370 
 
 Commerce of the world . . 252 
 
 Communism 211, 349 
 
 Congress has authority to make coin 225 
 
 incorporate banks 281 
 
 Continental money 173 
 
 soldiers 420 
 
 Constitutional convention 421 
 
 Corporations should be controlled by the Government 353 
 
 Cotton, American, bought b}^ Great Britain 377 
 
427 
 
 Currency 69, 82 
 
 Exclusively metal, impracticable 49, 71 
 
 Fluctuation of 160 
 
 House of Representatives favors contraction of. . 139 
 
 Irredeemable, produces and perpetuates poverty 72 
 
 a false standard 228 
 
 Making, should not be entrusted to political 
 
 parties 74, 78 
 
 Paper 49 
 
 advances prices 230 
 
 Increase of paper, unwise ... 231 
 
 Paper, never a deficiency of 351 
 
 Of what should paper, consist 360 
 
 A sound, life-blood of a commercial people 72 
 
 Redundant and vicious 151, 192, 204 
 
 vSniall notes should be withdrawn ." 352 
 
 " Shrinkage " will not affect real values 75 
 
 Secretary- Sherman on paper money 2S7 
 
 bill, Grant's veto of 177 
 
 Defaulting vStates an impediment to national credit 109 
 
 Democratic convention at Indianapolis 80 
 
 party opposed to paper money 135 
 
 record on financial questions 80 
 
 Dependence of old and new worlds. Mutual 200 
 
 Depew on condition of country 401 
 
 Detroit convention 184 
 
 favors boundless expansion 185 
 
 Disturbance, General, due to local causes 337 
 
 Dollars of the fathers 240 
 
 Douglas, Fred., on Southern exodus 347 
 
 vStephen A 19 
 
 Economy 16S 
 
 Elections in the South, Federal interference in, depre- 
 cated 369, 370 
 
 F^lectric telegraph 336 
 
 F^mancipation of slaves 294 
 
 Emerson, Ralph W., on political parties 367 
 
 England, a free country 57 
 
 prosperity .• 181 
 
 threatened with invasion 182 
 
 the first to put steam engine into practical use. . . 182 
 
 saved in Napoleonic w^ar by steam engine 182 
 
 English corn law 87 
 
 Englishmen tolerate insolvency, but not repudiation 119 
 
 "Eternal vigilance the price of liberty "' 278 
 
 F^uropean national debts 102 
 
 Evarts on Minnesota bonds n,K 
 
428 
 
 Exchange, Domestic 306 
 
 Exodus from the South 346 
 
 Expansion of 1835 and 1836 397 
 
 Experience, The lesson of 180, 215, 224 
 
 Export of cotton goods (note) 304 
 
 Extravagance ■ 153 
 
 F 
 
 Farming by machinery 212 
 
 " Financial troubles promote Godliness " 221 
 
 questions should not be party questions 353 
 
 Foreign coin a legal tender 226 
 
 exchange 296 
 
 vote as dangerous as colored vote 370 
 
 Fort Wayne, her future greatness 51 
 
 advantages 52 
 
 Settlement of 40 
 
 ill 1833 40 
 
 Financial standing of 51 
 
 France, a borrower 232 
 
 Condition at close of Franco-Prussian war 92 
 
 Enormous war debt paid in less than two years. . . 93 
 
 Financial prosperity of 93. 99> 248 
 
 Good name of 98, 100 
 
 Immense standing army of. 106 
 
 Industries of 33^ 
 
 Land tenure of 338 
 
 Public debt of 103, 105, 234 
 
 Recuperative power of 94 
 
 should excel in arts of peace, not war 107 
 
 disband her army 107 
 
 Franklin, Benjamin 422 
 
 French people the most thrifty and industrious 95 
 
 the most tasteful in the world. 97 
 
 G 
 
 Garrett, John W., sues Wabash and Erie canal 131 
 
 Germany free from debt 102 
 
 more than a match for France in war 107 
 
 not a wealthy nation 248 
 
 ' ' Give her a lick back " 364 
 
 Gladstone 65 
 
 on debts 254 
 
 tariff 387 
 
 His views on double standard opposed by Ham- 
 ilton 257 
 
 Gold and silver a double standard 242 
 
 decreasing in value 230 
 
 flow from debtor to creditor nation 232 
 
 important in indicating course of trade . 236, 237 
 
 only true measures of value 49, 137, 239 
 
 Preventive in fluctuations in value of 258 
 
42\) 
 
 Gold and silver regulators of trade 231 
 
 the only real money 235 
 
 universal, but not unchanging value 228 
 
 demonetized 205, 249 
 
 Grant's veto of currency bill favorably received .\ 177 
 
 Goods manufactured in United States as cheap as elsewhere 378 
 
 Granger organization 341^ 342 
 
 Great Britain 2oo| 305 
 
 a loser of gold 232 
 
 Capital not taxed in 315 
 
 Debt of 310 
 
 Iron and coal in 377 
 
 Lands in ^37 
 
 Manufactures of 149 
 
 not a popular government 339 
 
 Paper money of, compared with that of 
 
 America 179 
 
 Parliament regulates traffic charges 342 
 
 Greenback party 206 
 
 Groesbeck, Mr 177 
 
 Gwin, Dr 212 
 
 H 
 
 Hamilton, Alexander 257, 262, 263, 361, 422 
 
 Harvard University 354 
 
 Hayes, President, a hard-money man 193 
 
 Heresies to be exploded 223 
 
 Holland demonetized gold • 249 
 
 Honesty is the best policy 223 
 
 Honor paid to ex-Confederates 217 
 
 Hunger for bread not among the beatitudes 214 
 
 Immigration , Foreign 369 
 
 to the West 212 
 
 India suffers from change of money standard 249 
 
 Indiana blocks the way of American credit 133 
 
 State debt 1 1 1 ^ 130 
 
 Inflation, Bismarck opposes 181 
 
 most dangerous to public morals 50, 138 
 
 No remedy ^ . . i^s 
 
 Inventions disturb old economic laws 148 
 
 Iron and coal in Great Britain 377 
 
 mills in Massachusetts 377 
 
 trade ; 158 
 
 Jackson, Andrew i^ 
 
 Letter of, about Governor Polk and the 
 
 tariff 383 
 
 removes deposits from national bank 264 
 
430 
 
 Jay, John 422 
 
 Japan, a borrower in London 104 
 
 Jefferson, Thomas •• 422 
 
 Johnson, Andrew, Administration of 191 
 
 Character of 44, 143 
 
 Mistakes of 48 
 
 Tribute to 13, 23 
 
 K 
 
 Kemper, Governor 133 
 
 Labor, The question of 210 
 
 Causes prejudicial to 340 
 
 degraded by slavery 216 
 
 in America and Europe compared 86, 375 
 
 the United vStates, especially in the Southern 
 
 States 52 
 
 The great source of national wealth 204 
 
 and capital 348 
 
 Laboring classes of Great Britain 213 
 
 Land, how made valuable 316 
 
 Law in finance 236 
 
 when constitutional 283 
 
 Legal-tender acts 117, 123, 125, 238 
 
 Secretar}' of the Treasury on 127, 128 
 
 Decision of the Supreme Court on 359 
 
 Club, Phillips' letter to .* 178 
 
 notes 127, 142, 147, 171 
 
 Danger of Congress issuing, not yet re- 
 alized 137 
 
 Gen. Butler advocates further issue of. . 173 
 
 not to take precedence of bank-notes. . 174 
 
 popular 360 
 
 should be convertible into four per cent. 
 
 bonds 175 
 
 Withdrawal of, recommended.. 139, 174, 205 
 
 Letters of credit 303 
 
 Lincoln, Character and habits of 42 
 
 Death of 41 
 
 Election of 29 
 
 M 
 
 Machinery, Labor-saving 212, 336 
 
 Madison, James 422 
 
 Manufacturers 149 
 
 Wealth of country increased by 374 
 
 Markets, shutting the world's 379 
 
 Marshall, John 422 
 
 Massachusetts iron mills -xn-j 
 
431 
 
 Massachusetts leads in use of paper currency 261 
 
 vState debts paid in coin 123 
 
 McCullougli, vSecretary of the Treasury, asked Congress to 
 
 retain legal-tender notes 176 
 
 denounced i57. ^7^ 
 
 goes to Washington to organize national ban- 
 
 ing system 166 
 
 on depreciated currency 159 
 
 precious metals I59 
 
 public debt 295 
 
 McLean, Justice, on State contracts • 120 
 
 Merchant marine, Decline of i4^S, 412 
 
 necessary to our prosperity 414 
 
 Minnesota repudiation i34 
 
 Money, Definition of 224 
 
 Full volumes required 203 
 
 Lecture on 221 
 
 made by the printing press 237 
 
 plentiful 203 
 
 Napoleon on importance of 124 
 
 necessary to the preservation of the Union 222 
 
 non-exportable ^^3 
 
 remitted by telegraph 301 
 
 The representatives of 259 
 
 Monopolies 342 
 
 Morality gauged by statutes 222 
 
 Municipal bonds 312 
 
 N 
 
 Napoleon on the importance of money in warfare 124 
 
 National debts io3, 235, 289 
 
 New England ^9^ 
 
 North united ^9^ 3i 
 
 O 
 
 Ohio Democratic convention favors issue of legal-tender 
 
 notes 135 
 
 on five-twenty bonds 128 
 
 P 
 
 Panic in Wall street apprehended 140 
 
 1857 ^9^ 
 
 1873 142, 399 
 
 Parties, The two great. 367, 3^8 
 
 favor tariff for revenue 309 
 
 Pauper labor • ^ 
 
 Pendleton's issue in Indiana ;" ■••:■:■ q2 
 
 Pennsylvania, an empire, does not need protection 86 
 
 Personal property 3^3 
 
432 
 
 Phillips' letter to Legal Tender Club 178 
 
 Pinckney, Charles Cotesworth 422 
 
 Politics, a great absorbent 344 
 
 Disturbing power of 345 
 
 Political economy 320 
 
 Press, heaps opprobrium upon opponents 411 
 
 Production exceeds consumption 335 
 
 Professional politicians 216 
 
 Property should be represented at the polls 215 
 
 Prosperity engendered by war, Delusive 151 
 
 Protective tariff injurious and unnecessary 85 
 
 Public debt indicates standing of a nation .' 234 
 
 R 
 
 Railroads— Union Pacific and Central Pacific monopolies. . 343 
 
 Ratio of gold and silver 241, 242 
 
 Reconstruction in the South 45 
 
 Rents in Washington 401 
 
 Repudiation 125 
 
 Reverses of 1817 and 1837 393 
 
 Ripon, Marquis 60 
 
 S 
 
 Scott, Dred, decision 28 
 
 Gen. Wellington's estimate of 34 
 
 Secession is revolution 24, 25 
 
 madness and treason 26 
 
 rebellion, not treason. (Note dated 1890.) 35 
 
 Shakespeare, the world's poet 58 
 
 Shipping interests of United States 405, 413 
 
 Blaine on 404 
 
 Foreign " 413 
 
 vShips. — Iron superior to wooden, etc 336 
 
 Sherman, Secretary of Treasurj^ on paper money 287 
 
 Silver. — Act of 1878 251 
 
 Alarm about excessive production groundless. . . . 254 
 
 Average price in London 244 
 
 Degradation, how caused 245 
 
 will disappear.' 247 
 
 Demonetization by German Empire 245 
 
 Circulation should be limited 252 
 
 Coinage limited 246 
 
 Commission a failure 259 
 
 P^uropean nations wish advance in value 210 
 
 No longer standard of value 209 
 
 vSocialism 349 
 
 South American trade, Christiancy on 326 
 
 is with Europe 380 
 
 Our relations with 324, 380 
 
 Specie circular 267 
 
 payment 49, 70, 77, 146 
 
433 
 
 Specie standard ••147, 238 
 
 Speculation 203 
 
 Speculative mania, Results of 395 
 
 Spinner, Treasurer, instructed to prevent panic 140 
 
 Stagnation of industry 148 
 
 State allegiance 217 
 
 contracts, Opinion of Justice McLean on 120 
 
 debts in United States paid in depreciated cur- 
 rency 117, 132 
 
 sovereignty 41, 47, 360 
 
 States cannot be forced to keep obligations . 121 
 
 Stevens, Thaddeus, on government loans 126 
 
 Suffrage, Universal 339 
 
 Surplus in Treasury 269 
 
 Suez canal 336 
 
 T 
 
 Tariff, a commission should be organized 83 
 
 Blaine on 387, 401 
 
 Discriminating duties advantageous 322 
 
 does not lower prices 376 
 
 for protection, supported by Republicans 368, 369 
 
 revenue, favored by both parties 368 
 
 only, favored by Democrats 369 
 
 supported by Whigs 368 
 
 Gladstone on 387 
 
 Grounds of defence for 373 
 
 hostile to farming interests 3/9 
 
 in Great Britain, for revenue only 323 
 
 on blankets • 329, 372 
 
 copper 330, 373 
 
 quinine 328, 378 
 
 salt. 328, 372 
 
 steel rails 329. 373 
 
 woolen goods, why claimed 378 
 
 hostile to our merchant marine 381 
 
 protection no longer needed 371, 376 
 
 Protective, is barbarism 85 
 
 class legislation 376, 379 
 
 Sectional differences on, disappearing 319 
 
 should be for revenue, not for protection 82 
 
 revised 353 
 
 have been revised at close of war 372 
 
 The North favors, and protective duties 319 
 
 South favors, for revenue only 319 
 
 War 327 
 
 Why free trade is impossible 391 
 
 Taxation, Federal 33i 
 
 Geo. W. Childs on 318 
 
 Intagible property should not be taxed 316 
 
 Indirect, expensive, and demoralizing 83 
 
434 
 
 Taxation in New York 317 
 
 of personal property 315, 317 
 
 State, city, and county 390 
 
 War 310 
 
 Thanksgiving Day, its origin and celebration 64 
 
 Transportation East and West controlled by four men. . . . 342 
 
 Treasury, Secretaries, under Jackson 365 
 
 Trouble, soon forgotten 238 
 
 of one nation felt by others 2^0 
 
 U 
 
 Ultra men on both sides 28 
 
 Union necessary to American colonies 22, 23, 24 
 
 of the States secure 216 
 
 The, preserved by Providence 32 
 
 " saved by faith " 124 
 
 United States as a manufacturing country 321 
 
 army no larger than London police force. ... 1 18 
 
 disbanded at close of war 107, 117 
 
 Bank 263, 267. 395 
 
 credit should be exceptionally high 108 
 
 impaired by default of States. 109, 117, 119 
 
 condition in i860 and 1861 16, 17, 18, 19 
 
 1890 400 
 
 Debts between, and European nations 233 
 
 debt being constantly diminished ... 100, 109, 118 
 
 creditably managed 235 
 
 should be extinguished as soon as prac- 
 ticable 359 
 
 finances in 1865 50 
 
 has no standing army 107, 118 
 
 owes gratitude to Germany and Holland. ... 124 
 
 prosperity depends on commerce 412 
 
 relation to South American countries. . . .324, 380 
 
 unusual powers of corporations 341 
 
 war debt loi, 190 
 
 will be the richest nation on earth 108 
 
 bonds. Acts of Congress i863-'4 made payable 
 
 in coin 125 
 
 exempt from taxation 314 
 
 five-twenties should be paid in coin. . 124 
 
 Holders' of, objects of contumely 154 
 
 regarded as patriots 155 
 
 issued to fund Treasury notes 126 
 
 Income from four per-cent 315 
 
 Mr. Kelly favors low rate of interest 
 
 on 162 
 
 Mr. Sherman proposed issue of con- 
 vertible 161 
 
 Pennsylvania farmer on 156 
 
 should not be paid in greenbacks. .81, 124 
 
4?yl 
 
 United States bonds sold in Europe 300 
 
 Government favorable to Southern interests 27 
 interested in value of silver . . . 251 
 
 not a failure 27, 34 
 
 against Southern interests. 27 
 money, Specie and convertible notes the only 
 
 reliable 49, 70, 77 
 
 notes. Irredeemable, mean depreciation 146 
 
 objected to ... 283 
 
 Republicans and Democrats favor. . . . 367 
 
 should be convertible into bonds 175 
 
 cease to be legal tender . . . .71, 350 
 Webster on 367 
 
 Value, True measure of 49, 137, 170, 239 
 
 Values in Great Britain and United States compared 229 
 
 are not prices 229 
 
 Virginia, the pet colony of England 1 14 
 
 State debt 114, 121 
 
 funding act 1 14 
 
 Kind sentiments of 133 
 
 W 
 
 Wabash and Erie Canal bonds in, 130 
 
 Wages higher in United States than in Europe 375 
 
 will go down unless immigration is checked 375 
 
 Washington approved United States National Bank . . 282 
 
 George, Character of 419, 420, 421, 422, 423 
 
 Battles of 420, 42 1 
 
 Companions of 422, 423 
 
 City 198 
 
 Webster, Daniel, on legal tender 367, 136, 208 
 
 Wells, David A. , on our importations 327 
 
 West — the products always bring their value 77 
 
 Whig party 3^7 
 
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