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 THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 LOS ANGELES
 
 TlIK 
 
 Restoration of the Currency. 
 
 El I 
 
 I 
 
 i I 
 
 V>Y .1 AMES S. PIKE, 
 
 LATE M1M8TER TO THE HAGUE. 
 
 REPUBLISHED FROM THE NEW YORK TRIBUNE. 
 
 t 1 
 
 New Youk: 
 
 SUN .lOH PKINTINU- HOUSE, PRL\TIN<i -TTOUSE SQUARE 
 
 1868. 
 
 I
 
 \ 
 
 I
 
 THK 
 
 Restoration of the Currency. 
 
 BY JAMES S. PIKE, 
 
 LATB MINISTER TO THE HAOCE. 
 
 REPUBLISHED FROM THE NEW YORK TRIBUNE. 
 
 Nkw York : 
 SUN JOB PRTNTING-HOUSE PRINTING-HOUSE SQUARE 
 
 1868.
 
 HO, 
 
 'Zf 
 
 1^ 
 
 ^ 
 
 THE RESTORATION OF THE CURRENCY. 
 
 CHAPTER I. 
 
 FIRST DUTY OF GOVERNMENT. FULL SUPPLY OF THE PRECIOUS 
 
 METALS, 
 
 It helony-s to Governmeut to establish fixed and invariable 
 standards of weight, measure, and value, and we may add, to 
 enact general provisions of law for the generous development 
 and adequate protection of its industry. After this, it should 
 take its hand entirely off business affairs. When the community 
 recpiires agencies of one sort and another to facilitate their 
 transactions, whether they be manufacturing, transportation, 
 trading, or banking companies, there should be no limitation 
 nor hindrance to the accomplishment of their desire, except the 
 limitations of general laws to secure the public against fraud and 
 im])osition. The measure of its wants should be left to itself. 
 The country really needs nothing now so much as for the (iov- 
 enmient to jset out of the mischievous and anomalous attitude in 
 money affairs into which it was involuntary ])lunged 1)V the 
 slave-holdei-s* Rebellion. It intruded itself into the markets, 
 and became a huge and universal ]»in-chaser. It came upon 
 every pul)lic exchange, and went into every private circle, and 
 became a universal borrower, it made itself the issuer of every 
 form of ohligation that anybody would take. All of which con- 
 duct was unavoidable, but e(pially unnatural and dejdorable. 
 The result has been, first, great i>ros])erity to the trading and 
 producing world; and second, great and corres])onding suffering 
 and disaster, in the prbsence of which, still growing, still acumu- 
 lating, we now stand. The end will be reached when this un- 
 natural state of thiny-s is brouy-ht to a final termination, and not 
 
 1 C67339
 
 till then. And it is everybodys interest that it should be termi- 
 nated as soon as possible. 
 
 Now the Government has long been out of the field as a 
 gigantic purchaser, leaving trade to its natural supports, namely, 
 the wants of regular consumei-s. Its next palpable duty is to 
 fund its obligations and provide for the interest thereon, and 
 above all, to take up, get out of sight, the notes with which it has 
 flooded the country during its great necessities, to the violent 
 and illegal exclusion of the universal standard of value. The 
 only really vital and enduring interest which Congress and the 
 business community have in this process, consists in their 
 wishing it godspeed, and aiding it all that lies in their power. 
 But behold what they do. They clamorously urge that the 
 Government shall not pay its notes, nor withdraw them from 
 private hands even to the extent it has the desire and the means 
 wherewith to retire them ! Can anything be more preposterous 
 than this, in view of the palpable causes of our depressed finan- 
 cial condition? Because all healthy industry, and all legitimate 
 trade needs nothing, and can bear nothing but a fixed standard 
 of value, or its paper representative, always convertible into the 
 standard itself, or what is the same thing, products measured by 
 the standard price. 
 
 Happily, there can be no longer any pretense that we cannot 
 realize this result after our great expenditures, since the world is 
 at this hour full of the precious metals. The banks of all specie- 
 paying countries are stuflfed with them. There was never such 
 hoards accumulated before since banks existed, and the channels 
 of trade and circulation, are filled with them in every country 
 but this. In addition to this, the golden stream of our own 
 products is pouring its flood over the mountains, and over the 
 Isthmus at the rate of a hundred millions a year. ITow lamen- 
 table, how childish, how imbecile in us, wit];i all our boasted 
 riches, and enterprise, and pluck, under such circumstances of 
 aflauence of the precious metals, to stand timid and api)rehensive 
 before the bold speculators and monopolizers, greedy, unscrupu- 
 lous, bankrupt, who cry out for a continuance of the existing 
 system of national impoverishment and disgrace.
 
 CHAPTER II. 
 
 CONDITION OF THE PAPER CIRCULATION. ERRORS OF THE INFLA- 
 TIONISTS. CAUSE OF THE PRESENT DEPRESSION OF TRADE. 
 
 What Cono:ressional discussion seems sorely to need, is that 
 somebody should uncover the foundations of <Mir subject, and 
 plant a few corner-stones on which an intellifrible review of 
 the whole question can be reared. The iirst requisite in a 
 good physician is the skill to make a good diagnosis. He 
 must fii-st be able to tell what ails his patient before he can begin 
 to cure him. Congress in legislating anew on the financial ques- 
 tion, should begin by exijoundiiig the situation, and then we can 
 all be the better judges of its intelligence, and the wisdom of its 
 proposed measures. 
 
 We have had a great war. The Government has been an 
 enormous purchaser and consumer, and has tilled the channels of 
 trade with its promises to pay. Many have been paid. Many 
 remain outstanding. Its demand notes used as money during 
 and since the war, have swollen the circulation immensely. The 
 Secretary of the Treasury, under Congressional guidance, has 
 been slowly paying these notes, retiring them with a view to the 
 ultimate resumption of specie payments. He wishes to be 
 allowed to go on with the process, which Congress sanctioned 
 in the outset with remarkable unanimity. 
 
 The process is most natural and inevitable, if we are ever to 
 return to specie. But it turns out, as everybody of any thought 
 knew it must turn out, that the process of contraction is not so 
 easy nor so profitable as the process of inflation. And, although 
 the contraction has not proceeded so far as to reduce the premium 
 on specie, gold being worth as nmch in ]»ai»er as it was a year 
 ago. yet a great outcry is raised that the business of the country 
 is being ruined by the process. The evidence of this being fomid 
 in falling markets and general stagnation. 
 
 In this consists the'fnudanu'ntal error of the inflationists, in 
 which it is easy to see Mr. iShernian j)articipates, from a remark 
 he casuallv let fall durino; a late discussion, when asked when he
 
 
 
 proposed to resume contraction, he replied : " As soon as the busi- 
 ness of the country revives and becomes prosperous." 
 
 Xow, the real truth is, that the existine; financial situation, the 
 pressure and distress in certain tradin<r and producing circles, is 
 not to l)c attributed to the contraction of the currency but to 
 totally ditferent causes. First to be mentioned is superabundant 
 production and relaxed consumption ; second is the natural re- 
 action from extravagant to moderate prices, which always follows 
 a period of high commercial and speculative excitement ; a re- 
 action growing out of the nature of things, and which often takes 
 place without any reference to the volume of money in circula- 
 tion. It being merely a contest between buyer and seller, in 
 which the buyer always wins in the long run, because of his in- 
 ability long to pay extravagant rates. A third and connnanding 
 reason is the distrust of capital which always withdraws on de- 
 clining markets ; and when affairs are agitated and unsettled, 
 waits for them to get into a natural condition. 
 
 The business of the coimtry languishes for want of con- 
 sumers. Capitalists and prudent men everywhere, seeing the 
 reaction from the high excitements of the war, and the unnatural 
 condition of the currency, are waiting for things to touch bottom, 
 knowing that there is, and can be nothing solid till we reach 
 specie ])ayments. The naked truth is, that we have reached the 
 settling time of a long career of the speculators, the middlemen, 
 the operators in every walk, and even of the great producing 
 establishments, and the Government itself. And this settlement 
 is not to be avoided. AfYer every storm comes a calm ; after 
 every excitement a relapse. The history of the whole trading 
 world is tilled with just such examples. Inflation is followed by 
 collapse ; high prices by low ; great profits by great losses ; un- 
 natural excitement by corresponding depression ; extravagance 
 by economies. But, above all, the gigantic evils of an irredeem- 
 able paper currency were never overcome or escaped from but by 
 severe sacrifices. 
 
 Such being the condition of things, what signifies it that we 
 arrest contraction, or even renewedly inflate the currency 'i The 
 channels of circulation are over full now. No sui)ply of paper 
 money can create one single consumer, and it is consumers, that 
 are wanted to make trade active and business prosperous. It is
 
 allejied on tlie floor of Congress, that there is great distress among 
 workingnien ; only low wages and scarcity of work. What sui- 
 cidal folly to inflate or continue inflation, and thus enhance the 
 prices of living to them, when no issue of paper money can give 
 them a day's work. We are just entering upon a new phase of 
 our paper money experience. We are now to see the joint oper- 
 ation of the oppression and robbery of the laboring classes by 
 means of an inflated currency. 
 
 CHAPTER III. 
 
 DISASTROUS EFFECTS OF AN INFLATED CURRENCY ON THE 
 LABORING CLASSES. 
 
 It has long been a current maxim that no scheme was ever 
 invented so etfectual for the impoverishment of the laboring 
 man ; to make, in a word, the rich richer, and the poor poorer, 
 as the circulation of irredeemable paper money. This is easily 
 explained. An inflated currency, in the tirst instance, enhances 
 the prices of all commodities, not always or necessarily affecting 
 the wages of labor. The laborer, under a depreciated currency 
 pays more for his living and gets no more for his work. If it be 
 said that this is not our experience, we may acknowledge the 
 fact without controverting the argument, since our condition 
 was exceptional during the war, when the demand for men for 
 consumption was as great as for everything else. But this con- 
 dition being terminated, the demand for labor falls to its natural 
 level. And we now see that the price of labor has fallen ma- 
 terially, and the demand is unequal to its employment, while 
 the price of living is in no way lessened ; or at best, not lessened 
 in any corresponding degree to the falling off in the demand for, 
 and in the wages of labor. This is the simple matter of fact, 
 which has found full expression on the floor of Congress. 
 
 Now what is the philosophy of it i The excessive supply of 
 the circulating medium stimulates all sorts of speculation, and 
 at the same time enables speculators, and operators, and cajtitalists 
 to monopolize and hold for enhanced prices all articles of prime
 
 8 
 
 necessity, such as breadstuifs and provisions of all sorts. This is 
 the state of thino-s to-day. The West is the great producer and 
 factor of these products. Every article of food is now almost, or 
 quite as high as during the war, enjoying famine prices, and this, 
 owing to a considerable extent, to the gigantic speculations in 
 those commodities, through the intervention of a swollen paper 
 currency. Yet the same West is discontented, and clamors for 
 more paper money for speculation, and to enable them to realize 
 yet higher prices. This may do for Senators Sherman and 
 Morton, but it is grinding the laboring consumer between the 
 upper and nether millstone. 
 
 If it be asked why the rule of increased prices under an in- 
 flated currency does not apply to labor as well as to other things, 
 the answer is plain. Labor cannot hoard itself in warehouses and 
 granaries. It is compelled to sell itself day by day. It is pre- 
 eminently a perishable article. Its whole daily aggregate value 
 is sunk and lost every day it is unemployed. And as it cannot be 
 capitalized, so to speak, and held in mass (cooperative industry not 
 having yet reached this point), it is in constant and unnatural 
 competition with itself. And herein consists the essential differ- 
 ence in this respect between labor and commodities, which can be, 
 and are seized and held for high prices by capitalists and specu- 
 lators, and which a plethora of the circulating medium is the 
 great agent in accom}>lishing. 
 
 The reduction of the currency under the contraction policy, 
 acting with other potent causes,' such as over-production and the 
 natural collapse of undue ex])ansion, has already reduced prices 
 very materially in many important branches of trade. It has 
 brought down the prices of many imported and domestic fabrics 
 within tlie reach of thousands of poor consumers. This fall of 
 prices has been of inestimalde benefit to the country. But the 
 policy of Messrs. Sherman, Morton and Company, tend directly 
 to a rise of prices again in the articles which have given way in 
 price, and thus will operate as a. new burden upon the masses 
 of consumers. At the same time it will tend to advance the 
 already exorl^itant rates oi' living, and furnish no demand for 
 labor, and no increase in its price. 
 
 The great fact projecting itself as plain as noon-day, is, that 
 we are in a transitional, state which paralyzes enterprise and
 
 9 
 
 affrights capital, and that tlius no tinkering of tlie currency can 
 stimulate trade or production, and so relieve the condition of 
 tliinirs. so fur as lalxir is concerned. (Jcntlcnicii may as well 
 understand then, that they thus may fail to get as many votes as 
 they will lose by their intlati(»n policy, and find when it is ton late, 
 that ])olitics and tinance had better lie ke])t se])arate. 
 
 ClIAPTEK lY. 
 
 LIKELIHOOD OF FUKTHEK INFLATION. CAUSES OF SCARCITY OF 
 
 MONEY IN THE SOUTH. 
 
 The fact that the Senate has, by eight majority, refused 
 to commit itself against issuing additional currency, coupled with 
 Senator Henderson's fervent declaration that lie desired an 
 increase, and Senator Morton's well-understood concurrence in 
 these \news, is evidence of the underset of the currents in the 
 Senate toward more irredeemable pa])er. 
 
 The reason this error is likely to be connuitted is ])lain. The 
 men who favor it, and those who are toying with it, unwilling 
 to say yes or no, fatally mistake the character of our financial 
 disorders, believing and asserting them to arise from a deficiency 
 of the circulating medium. If this be true, the circulation 
 ought to be increased; and if it l)e not true, why the precipitate 
 legislation of Congress to stop its further diminution at all 
 hazards, and without reference to the ability of the Government 
 to take u]) its ol»ligations at a moderate rate, or to future 
 changing eireuiiistances ^ Relief is exi)ected from arresting 
 contraction. More relief would then certainly follow from a 
 "judicious''' addition to the circulation. Is'nt this the logic of 
 the case? Mr. Sherman said in <lebate, that he did'nt e.xpect the 
 country to resume ccmtractioii ; in other words, again move 
 towards s])ecie })ayments, " until tin- prosperity of the country 
 revived T' Showing that he looks for " revived pi-osperity" under 
 the present, and if necessary, a still more intlated state of the 
 currency. This statement of itself discloses the unsoundness of 
 Mr. Sherman's fundamental ideas on the whole subject, and
 
 10 
 
 shows that, whetlier he admits it or not, he is at bottom an 
 inflationist. What etlect }>ul)lic opinion, or public discussion may 
 have on Mr. Sherman's action^ is another thing. He is a gentle- 
 man of sharp instincts and amiable intentions — too amiable we 
 fear sometimes. 
 
 In the main, therefore, the debates and votes of the Senate 
 lead to the conclusion tliat the finances of the country are in the 
 hands of the inflationists, and that instead of money affairs 
 being on the path of improvement as they have been for a year 
 past, we are likely to get further into the mire of dishonored 
 obligations, of disgraced national reputation, and increased 
 robberv of the earninp-s of labor. 
 
 When it shall be seen, as it will be seen, that forbidding the 
 Government to pay even that portion of its debts that it shall 
 from time to time feel able to pay, (for that is all there is in the 
 act of retiring greenbacks,) will not be of the slightest moment 
 in revi\ang trade and industry, that it will do nothing toward 
 em})loying labor or enhancing its wages, that it will not relieve 
 our manufacturing industry of the burdens from which it suffers, 
 that it will not create one domestic consumer the more, and has 
 the inevitable consequence of destroying all foreign consumption 
 of our fabrics, what shall we see ? Why, that the Hendersons 
 and the Mortons, and probably by that time the Shermans, too, 
 will try to improve upon their present policy by giving relief in 
 the shape of more greenbacks. If they continue to insist, as 
 unquestionably they will continue to insist, that the great want 
 of the country is an enlarged paper circulating medium, why 
 should tliey not { 
 
 The real foundation of all this complaint about the scarcity of 
 money in certain (piarters, is to be found in the condition of the 
 people. There is depression everywhere, and throughout the 
 South there is exhaustion and ruin. It wouljl not add to the 
 riches, nor make money any plentier in the Southern country if 
 a bank of a million of dollars cai)ital were to be planted in every 
 town <jf 10,000 inhabitants therein. The difliculty is want of 
 solvent borrowers, or, in other words, of men who can respond 
 promptly to their engagements at maturity. These are what 
 make banks, and sustain banks, and where they are not, banks 
 cannot exist. We dare confidently afiirm, that the whole South
 
 11 
 
 and South- West could to-day be tilled to overflowing with nionev, 
 without a ijreeidjac'k or a bank, if it only had the wherewith to 
 exchanj^e for money. If it was full of c(jtt(»n and corn, and 
 sugar, the factors of every nation, and of all })arts of this nation, 
 are already on the spot to oflf'er full e(juivalents in gold or silver, 
 or greenbacks, for every dollar's woi'tli. It is not greenbacks 
 that are wantini;. It is not monev that is wantinir. It is the 
 connnodities with which to exchange for money, or the credit 
 which, to some extent, stands in their stead. Money goes over 
 the world everywhere where there is anything to ])ay for it. In 
 the jn-ofusion of the precious metals of our days, banks are not 
 essential, paper nu>ney is not essential, and least of all is the 
 wretched expedient of irredeemable (xovernment notes, which 
 legitimate commerce scorns and stamps with discredit ; needed 
 to fill the channels of circulation. So plain are these propositions 
 that the bare statement of them is sutficient to confute and 
 condemn the statesmanship of every man who holds that a nation 
 is enriched, or a ))eo])le raised from poverty to affluence, or its 
 trade revived, or its labor employed, or its productions increased, 
 simply by the expedient of issuing Government jjromises to pav, 
 or bank notes. 
 
 These are but the tokens of trade and exchanii'e, the airencies 
 of distribution, and as there is in the existing volume of our 
 irredeemable pajier money, more circulation than the country 
 ever used on a specie basis, by far, it is fair to say that there is 
 more afloat now than is necessary for every part of the countrv 
 at this moment, and therefore the suggestion of such a method 
 of relief as a remedy for existing evils in the South and elsewhere, 
 is made in total ignorance of the cause of our disordei's, and 
 instead of making thiuoS better, would only make them worse. 
 
 CHAPTER V. 
 
 RESUMPTION OF SPECIE PAYMENT TUK ONLY CUKE OF OUR DISOK- 
 
 DER8. SCHEMES OF ALL SORTS. SIMPLICITY OF 
 
 THE TRUE METHOD. 
 
 Resumption will rare our tinancial dis»»rders, and nothing 
 else will. So long as our linances remain blocked as now,
 
 12 
 
 moving in no direction, we are like a ship at sea in a calm, with 
 the sails idly tla])])ing against the mast. Everybody waits for a 
 wind from some quarter. We are the dead dog on the river, car- 
 ried down on the ebb and back on the flood-tide daily. And so 
 we shall be till a i'v&^h, healtliy current sets in, and sweeps far to 
 sea all the stagnant rubbish that now chokes the channels. 
 
 We have arrested contraction, and now we wait. Wait for 
 what ^ AYait for revived trade, for renewed demand for labor, 
 for fresh consumers, for new enterprises. Who is going to take 
 the initiative in the hoped-for revival 'i Nobody. There is not 
 one branch of business that can be entered upon in the present 
 state of things, involving anything more than a hand-to-mouth 
 operation, which must not encounter a risk of a change in the 
 condition of money affairs sufficient to deter every solvent, pru- 
 dent man from embarking therein. Nobody knows, nor can guess 
 what is before us. So long as we were moving steadily, though 
 it might be slowly, toward resumption, there was at least some 
 encouragement to trade and enterprise, a feeling that we were 
 approaching a solid foundation, from which national and individ- 
 ual prosperity would soon begin to rise again. We were sub- 
 mitting to a healing process, which, if a little painful, at least 
 promised a cure, Now we have thrown away our splints and 
 our remedies, and stopped even trying to get better. The quacks 
 surround the patient. One set has a grand plan of pitching all 
 the bants overboard and substituting greenbacks for their bills, 
 and so save interest and taxation. Another advocates sending 
 abroad and buying $250,000,000 in coin, and paying $350,000,000 
 in bonds therefor, to bring home and spread over the country like 
 60 much top-dressing to sprout our moss-grown fields of paper 
 money. Another proposes to issue $200,000,000 more of paper 
 money to give the necessary flllip to declining trade, and refill 
 cliannels of circulation which Mr. McCuUoch has so mercilessly 
 drained dry. Yet another clamorous crowd insists upon issuing 
 greenbacks enough to pay off the bondholders, and in this way 
 honorably discharge our debt, Micawber like, to the last dollar. 
 Another persistently favors an endless chain running through 
 the Treasury, carrying paper fabrications in and out, operating a 
 perpetual conversion of Treasury Bonds into greenbacks, and 
 greenbacks into Treasury Bonds, at the desire of the holders, and
 
 13 
 
 offers it as a panacea for all our ills. Then, again, it is proposed 
 that the Finance Committees of Congress shall take charge of the 
 whole business of emitting ])aper money, as they aim to do now, 
 and decide when the country w:iiit> iiioi-c and when it wants less, 
 and so regulate thesu]))»ly. 
 
 This is but the briefest outline sketch of the more approved 
 schemes now on foot to restore our tiuances — not broached, be it 
 remembered, by unauthoritative or unintelligent persons, Imt by 
 Senators and Rei)resentatives in their seats — men who are as- 
 sumed to represent the wisdom and not the folly of the nation. 
 
 Is not a glance at this recital enough to show that any course 
 which, at one swing of the scythe, cuts down this whole crop of 
 follies and crudities, and restores the natural condition of the 
 country, and removes the whole sul)ject from the vexatious criti- 
 cisms and damaging action of Congress, must be meritorious? 
 
 Unlike these theory-mongers, we plead for no ingenious or 
 untried scheme of iinance, no wire-drawn system of outs and ins, 
 of weights and balances, of exchangeability and convertibility, 
 or patent method of paying debts and saving taxes ; but, simply 
 and plaiidy, urge that Congress shall let the money question aJone, 
 after repealing the exceptional legislation of the war, and remit 
 the entire subject to the regulation of the natural laws of trade, 
 where it belongs. Let us have, first, a repeal of the Legal Ten- 
 der act — ;just as guarded and judicious in" its form as you please ; 
 then remove your obstructive legislation, which now prevents 
 the Treasury from paying its obligations when it has the means 
 to do so ; allow Mr. McCuUoch to })ay his debts when he can, 
 and don't forbid him on the ground that he is ruining the coun- 
 try. Let Congress warn its pai^er-mills that they will 1»e ex- 
 pected to do like honest people, and pay the debts they contract 
 to pay at the time they contract to pay them. What an abom- 
 inable imposition is it upon common sense to be told that the 
 bank ownei*s must not be asked to pay their debts, in other 
 words, to redeem their notes, because it would thereby injui-e the 
 puV>lic! And what a shocking fatuity is it that regards the Na- 
 tional obligations in the same light! Does not every one see 
 and know that for every dolhii- a dcbtoi- i>ay>, whether he l)e 
 Government or bank, the creditor must receive a dollar^ AVhy 
 then fear the operation ?
 
 14 
 
 Thus simple is the true plan for the restoration of our 
 finances. Getting back to a solid bottom on which to plant our 
 future prosperity, consists in nothing but the process of paying 
 debts. Paying debts resumes specie payments, without any 
 planning or scheming, or kite-flying of any sort. It is the 
 home-spun solution of all our difficulties. And why shouldn't 
 people pay their debts just as fast as they are able? Why 
 shouldn't the banks be made to pay, and why shouldn't Govern- 
 nu^nt be allowed to pay its suspended cuiTent obligations, 
 which encumber the channels of circulation to the exclusion of 
 a sound currency ; a currency which, if allowed, would speedily 
 flow in to fill their place ? The banks are rioting in their gains, 
 having made money for years as banks never made money be- 
 fore. We have only to note the dividend notices in the public 
 journals to know this. The Government can retire so many of 
 its demand-notes as to raise the value of the residue to specie 
 after a comparatively brief period. And with the demand ob- 
 ligations of these two great debtor interests (each powerful and 
 full of resources), elevated to their legitimate exchangeable value, 
 every theoretic scheme, every fanciful ])lan of the speculators, and 
 inflaters, and gamblers, will disappear like the evanescent shapes 
 of a dissolving view. Then the country will awake to a new 
 solvency and a solid prosperity, under the stimulus of a flood of 
 the precious metals whicli will be passed into the channels of 
 circulation, to which it has long been a stranger, and to which it 
 will be forever a stranger till that day comes. 
 
 CHAPTER VI. 
 
 ABILITY OF THP: GOVERNMENT AND THK BANKS TO RESUME. 
 
 Can the great debtor-interest in this country, namely, the 
 banks and Government, pay enough of their indebtedness to 
 bring about resumption? It is the mass of supei-fluous unpaid 
 obligations afloat that kee])s us in a state of suspension. If the 
 banks would redeem their bills, and the Government would pay 
 its greenbacks when presented, this would be resumption. But
 
 15 
 
 the banks need not redeem all their hills, nor the Government 
 pay all its p;reenhacks to effect this object. It is only needed 
 that these two ^reat debtor-interests should pay oflf so many of 
 these two classes of oblii^ations as are not wanted in circulation. 
 Resumption will not require them to ])ay any more. 
 
 Let us see if we cannot in some measure demonsti'ate to the 
 more reasonable of our apprehensive friends that the country is 
 able to retire its paper money so far as to resume specie payment 
 without an undue strain on its resources. 
 
 That portion of the circulation issued by the Government has 
 already been brought down by Mr. McCuUoch within manageable 
 compass, as we see by examining the following table. 
 
 On the 1st of January, 1868, the Government had in circula- 
 tion, in round numbers : 
 
 Greenbacks $356,ftno,OOn 
 
 Fractional Currency 31,0(10.000 
 
 Interest-bearing Legal Tenders 72,000,000 
 
 Total $459,000,000 
 
 These items have been reduced since the close of the war from 
 an aggregate of $709,000,000. This has been done without 
 making money scarce, without advancing the rate of interest, 
 without reducing the loans of the banks, and without lowering 
 the price of coin, thus clearly indicating that the small proportion- 
 ate reduction yet to be made in order to realize specie payments 
 may be accomplished with comparative ease. And if the ideas 
 of those who hold that our circulation is not redundant are 
 correct, without any disturbance whatever. That, in fact, 
 resumption from this point would result rather in an increase 
 than a diminution of the circulating medium. A consideration 
 by no means to be overlooked. 
 
 If we turn to the banks we shall tiiul that on tlie 1st of Jan- 
 uary, 18f)8, they had bills in circulation — three hundred and 
 three millions, in round numbers, showing the aggregate of paper 
 circulation, which the Government and the banks have jointly 
 to protect in the event of resumption to be as follows : 
 
 Bank Circulation $303,000,000 
 
 Greenback Circulation 3r)G.000.O00 
 
 Fractional Circulation 31 .000,000 
 
 Interest-bearing Legal Tenders 72.0IH),(IOO 
 
 Total $762,000,000
 
 16 
 
 Now, let us look at the resources of the Government and the 
 banks, which can be applied to the retirement of such portion of 
 the foregoing aggregate as ex})erience shall hereafter show is not 
 required on the basis of resumption. 
 
 Let u§ first take the Government, as being the largest, and by 
 far the most impoi-tant debtor, and the one which, in fact, must 
 shoulder the main portion of the load of resumption. 
 
 AVe bei2:in l^v assumino- that Mr. McCulloch must be allowed 
 to pay the interest-bearing legal tenders ($72,000,000) either by 
 money in hand, or by conversion into the pennanent loan. This 
 is what he is desirous of doing, and what he was doing, when 
 Congress forbid the process. During the last ten months of 1867, 
 he retired over $70,000,000 of these obligations without lowering 
 the value of coin, and without reducing the bank loans a dollar, 
 thus demonstrating the ease with which it was done. It is a fair 
 presumption he can retire the balance with as little difiiculty. 
 
 Taking for granted that the Government is not to be run for 
 specie on its ten cent and twenty-five cent notes, and that their 
 final redemption is to be a slow process, we set aside this branch 
 of its obligations as requiring no especial protection. What the 
 Government must provide for, and be prepared to redeem as fast 
 as presented, is its $356,000,000 of greenbacks ; and when it de- 
 monstrates to all the world its ability to do this, resumption will 
 have become an accomplished fact. 
 
 At this point, it seems to become necessary to enter upon the 
 much mooted point of how much circulation the business of the 
 country now requires, in order to decide how much the Govern- 
 ment would be likely to have to redeem of tliis existing stock of 
 $356,000,000 notes now outstanding. But we do not propose to 
 enter upon this debatable ground. We only aim to show that 
 whether the sum be more or less, the Government can maintain, 
 without difficulty, an impregnable front against both the natural 
 and unnatural demand of trade and speculation. 
 
 Of this $356,000,000, near one-third of it (say $100,000,000) is 
 held by the banks as a reserve for the redemption of their own 
 notes. This reserve, we may conclude, would only gradually 
 disappear in the event of resumption, and would be long in de- 
 clining to $50,000,000. 
 
 At least another $100,000,000, we think none can doubt,
 
 IT 
 
 would be iiiiiiHivalily fi.\c<l in Uii>iii('>> cIihiiik'Is, for a loufi; period 
 to come. Tliis would reduce the really mobile mass of fjreen- 
 baeks to $200,000,000, more or less, which if i-cpresented by 
 available resources in the Treasury to that amount, could not 
 fail to trive the Government the control of the situation. 
 
 The Governiiu'iit would thou be enabled to declare its readi- 
 ness to. resume sj)ecie ])ayments tlie nu>ment it had funded its 
 remaiinui; interest -bearinp; leijal tenders, and converted its T-So's 
 into the permanent loan, now so nearly accomplished. 
 
 This, we may easily perceive, is to impose a comjiaratively 
 liirht task on the (rovernraent. It has onlv to increase its 
 reserves to S20<),(>00,(i00, and fund the remainino; $70,000,000 
 interest-bearino; legal tendei-s. Of this $200,000,000, it has lono- 
 lield in its vaults about $100,000,000 of coin, saying nothing of 
 its currency balance, of which we will make no account. 
 
 This is but a trivial sum, surely, for the Government to raise 
 for this all-important object. It shows how near we are to the 
 point of issue from all our dithculties, if we would but seize the 
 advantages the situation affords. This $100,000,000 which our 
 circumstances recpiire — and, if the views of many others are cor- 
 rect, much more than we shall need — can be most easily obtained 
 bv establishing a fonMgn credit to that amount, a foreign balance 
 beinu; just as effect ual for resumittion as an importation of coin, 
 and, having, besides, this great advantage over an importation <»f 
 specie, that just so much of it can be used as is wanted, and no 
 more. We thus incur no unnecessaiy cost, and introduce no 
 new disturbing element in our finances. 
 
 The ability of the Government then to resume would appear 
 to admit of no doubt whatever. The precise period when it may 
 exercise that ability depends on itself. To get ready, it has only 
 to fund its 7-30's and retire its interestd)earing legal tendei-s. 
 Tliis mav be done in a short or long ]H'riod, just according to its 
 own o])tion. Ihit while its regular .^-'iO loan is worth from 5 to 
 1(> per cent, aboxc pai', there is no room for tpiestiijuing the tact 
 that it can. at pleasure, exchange demand notes, or greenbacks, 
 into that loan, to whatever extent it chooses, and whenever it 
 chooses. 
 
 Now, let us tui-n to the banks, ami see what i> in their power 
 
 to follow the Government. 
 2
 
 18 
 
 They have a circulation of $300,000,000 in round numbers. 
 They hokl $100,000,000 active lejjal tender, $50,000,000 of in- 
 terest-bearino- legal tenders, and $10,000,000 of specie. As- 
 suming they can carry $200,000,000 of circulation on a l^asis of 
 $40,000,000 or $50,000,000 of coin, or its equivalent, which they did 
 before the Avar, they would not find it necessary even to strengthen 
 their existing reserve to protect their present circulation. 
 
 But suppose our presumptions too liberal, and that the joint 
 paper circulation of the banks and the Government could not be 
 maintained, each with an excess over its reserve of $150,000,000, 
 as we have calculated, what are the resources of each for a still 
 further reduction ? The Government still has its power of fund- 
 ing, which it may exercise almost at its pleasure. But how with 
 the banks ? Can they hereafter strengthen themselves to the ne- 
 cessarv deo-ree without sucli a contraction of their loans as to 
 bring distress and bankruptcy to their debtors? It is at this 
 point that we come to a most encouraging view of the financial 
 situation. An abstract of the last annual returns of the banks 
 (January, 18B8) shows the following results : Capital, $420,000,000 ; 
 loans, $1,055,000,000. Four-tenths of this aggregate were, how- 
 ever, in Government securities, and but six-tenths loaned to in- 
 dividuals. Thus : Loans to individuals, $035,000,000 ; U. S. 
 securities, $420,000,000. Total, $1,055,000,000. 
 
 These figures disclose the important fiict that, if the banks 
 find it necessary to curtail their loans in order to resume, they 
 need not make the curtailment from the mercantile. community. 
 They can realize from their Government securities. These are, 
 in effect, cash funds, on which they can raise money from private 
 capitalists, and which they can remit for sale, or to obtain a 
 credit abroad. This is a resource which our banks have never, 
 on any previous occasion of pressure, enjoyed, and it is a circum- 
 stance which modifies the situation entirely. The fact may very 
 properly relieve any apprehension that the individual interests 
 of bank-debtors must be sacrificed to resumption. It also does 
 away with the old idea that the ability of our banks to resume, 
 after a protracted suspension, depends on full crops, and a foreign 
 demand therefor. This was formerly true, when we produced no- 
 thing but provisions and cotton that could be remitted to li(pndate 
 balances, and secure a return of specie. But now, we are pro-
 
 19 
 
 ducers of coin, and flic t'al>iicaiiN i>t' a mass of national oblifj^a- 
 tionB, wliieli coniniaiKl coin in all tic Iuiro])ean mai-kets. The 
 com I lined strength of these two resources supersedes the necessity 
 whicli formerly o])presse<l us, and is am])le for our emer<i;eiieies. 
 
 It' it he ol>jectcd tliat all |ilaii> nt' ronnijitioii involve further 
 contraction of the paper cii'cidatii»n, \vc i'e])lv tliat this ohjection 
 loses its force, in view of the following con.-iderations : In the 
 first ])lace, resuni]ition will be followed by the instant lil)eration 
 <»f all the hoarded coin in the country, wliich tlie Controller of 
 the Treasury estimates at over S8()0,(»(M»,()0(», and which will im- 
 mediately seek the channels of circulation. Secondly, with re- 
 sumption, will come the removal of the restriction iiix.n our 
 hankiuiT svsteni, which limits the banks to a circulation of 
 $80(),0()0,0(H). When the banks agree to redeem their notes in 
 coin, there will be no ol)jectioii to tlieir indefinite multiplication 
 under our existing system. 
 
 It will ])e observed that the progrannne here put forth only 
 pre-supposes a preliminary redemption of $70,000,000 of the ex- 
 isting $760,000,000 of bank and legal tender-issues in order to 
 reach resumi)tion. We think the figures given will satisfy any 
 oiu' who examines the subject that ^ve do not miscalculate the 
 result. If the banks, as vet, ha\e not been ol)liged to curtail 
 their acconnnodations to their customers, but, on the contrary, 
 have been able to increase their loans while we have been ap- 
 ]>roaching resumi)tion, where is the foundation of the ai)prelien- 
 sion that we shall cut ofi' the ordinary resources of business men 
 bv this process? Look at the tacts. The liaid< loans to indi- 
 viduals were, in April, 1866, $545,000,000; in October, 1867, 
 $680,000,000; in Janmiry, 1868, $685,000,oOo. During the 
 whole of "Mr. McCulloch's operations, we think so unjustly 
 asjiersed, the resources of the borrowing connnunity have not 
 oidv been curtaile(l. l)ut they haxc been enlarged. The banks 
 are to-dav loaning more than ever before, and the rate of inter- 
 est is below the average. 
 
 Let us recapitulate this ex])osition in figures: 
 
 The Bank ciiculiition is !j;:500,n00.000 
 
 (ireonl.aoks :r)(i,()0().00(1 
 
 Fractional :il,(l(IO.tKM) 
 
 Intert'st-bcarinor L,.jr,il Tenders Ti.OOO.OOO 
 
 Total $:5!).000,0(K)
 
 20 
 
 The resources for redemption of tins sum of $759,000,000, 
 
 now in hand, are as follows : 
 
 The Government holds — 
 
 In Specie $100,000,000 
 
 In Currency 80,000,000— $130,000,000 
 
 The Banks hold- 
 In Specie $18,000,000 
 
 Currency Ki.OOO.OOO 
 
 Legal Tenders 180,000,000— $314,000,000 
 
 Total $344,000,000 
 
 Suppose, now, the Government opens a foreign credit of 
 $100,000,000, and is allowed to fund its $72,000,000 of interest- 
 bearing legal tenders? We should then reduce the foregoing 
 paper issues to $677,000,000, and it would raise the reserve to 
 $444,000,000. 
 
 Can anybody, even the most cautious, doubt the strength of 
 this position, or doubt the ability of the Government to assume 
 it, and to give the country resumption, and with it stability and 
 the basis of a solid prosperity, by the month of January, 1869 ? 
 
 The banks and the country have been girding up their strength, 
 and consolidating their resources for more than a year, in view 
 of Mr. McCulloch's policy of resumption. We show that the 
 position of both the Government and the banks at tliis moment 
 is strong, and that they have the means to move directly forward 
 to this consummation. To falter at this point is to throw away 
 all we have gained, and launch the country on a more uncertain 
 future than ever, again to struggle, and to suffer in renewed 
 efforts to restore its lost prosperity. 
 
 CHAPTER YTT. 
 
 THE NEW FUNDING BILL OF MR. SHERMAN. — ITS REFUNDATORY 
 
 FEATURES CONDEMNED. 
 
 The objections to Mr. Sherman's New Funding Bill are 
 radical ; and they blow upon it from exactly opposite points of 
 the compass. They come on one side from those who would not 
 have even a breath of suspicion stain the national credit, and on
 
 21 
 
 the other from those who will he contented ^ith no Ijill tliat 
 does not meet the demand for municipal taxation upon tlie 
 honds. 
 
 The hill, as it stands, nominally proposes that the holders of 
 the 5-20s shall exchange tlu-iii, at their option, for the new 10-40 
 five per cents., dollar for dollar. But it does not say what is 
 uudei-stood by the advocates of the measure. That is, if the 
 holders of the 5-20 honds decline the exchange, they are to be 
 paid otf in greenbacks. Without this meaning attaches, the bill 
 really has no signiticance whatever. For what is the use of en- 
 acting that the hoklers of 5-20 six per cent, bonds, worth in the 
 market llO to 112, may, " at their option," exchange them for 
 10-40 five per cent, bonds, worth 1(»2 to 104. Of course, the 
 holders will do no such thing voluntarily. The plan of the 
 funding scheme, therefore, is to threaten the bondholder with pay 
 in greenbacks, y;entlv in terms, l)ut none the less reallv hi fact, 
 in order to induce them " at their option," to exchange their 6 
 per cents, for 5 per cents. ^ ow, to this suggestion of partial re- 
 pudiation, those who entertain a just sense of financial integrity 
 will not hearken for a moment : and there are such even in Con- 
 gress. They are fortified by yet another class, who are wise 
 enough to know that honesty is the best policy, who believe that 
 the cheapest and easiest way to carry our debt, is to raise no 
 question about paying either principal or interest, but to go right 
 oil in the straight, narrow path, and discharge every obligation, 
 actual and ini])lied, according to the highest tests of mercantile 
 honor. Those who entertain these views will oi)})Ose Mr. Sher- 
 man's i)ill. and every other l)ill which looks to varying one iota 
 from the s})irit of the contract under which the bonds were issued. 
 
 But we are constrained to confess that the greatest strength 
 of opposition which Mr. Sherman's bill is likely to encounter, will 
 be from the class which it is iVametl to conciliate. It will be 
 most strongly resisted by those who hold that, instead of its re])U- 
 diating too much, it repudiates too little. The great crowd want 
 to get at the bonds to tax them, as all other property is taxecl in 
 this country — 2, 8, or 4 per cent. Others desire to force the in- 
 terest down to •">.} or 4 per cent., and yet others are anxious to pay 
 them otf in a fresh issue of jiaper money. 
 
 In undertaking to navigate his bill past these variously be-
 
 22 
 
 setting ol>stvuctions, Mr. Shcriuan has a task which will try all 
 his skill, his patience, and his good nature. And we do not see 
 how he is to succeed. And if he succeeds we cannot see that he 
 settles the great agitating and disturbing element upon which the 
 national bonds are to be more and more, every year, tossed about ; 
 and this is the question of municipal taxation. Let Mr, Sher- 
 man pass his bill, and establish the rate of Government interest 
 at 5 per cent., and the same jealousy, the same hostility toward 
 imtaxed bondholders, will still exist in every city and village of 
 the country. And it is an uneasiness which will not be cured 
 while the loan endures. 
 
 What good sense demands is, that all the questions arising 
 out of this whole business should be finally settled; We want a 
 policy which shall meet this demand. We hold that the existing 
 situation of the national loan is just as good as it need be for 
 this purpose. The 5-20s are rapidly maturing. What we have 
 need to do is to pay them off just as fast as we can negotiate new 
 loans, subject to the same taxation as all other personal property. 
 But in order to do this to the best advantage as to rate, and to 
 dispose of every question in regard to what our bonds ought to 
 be paid in, as well as all others, we must first resume specie pay- 
 ments. Our way then will be perfectly clear. All our tricks 
 and contrivances will avail us nothing in escaping from the de- 
 mand which this one great over-shadowing necessity imposes. 
 It is plain sailing toward this end. The sea may be rough and 
 the winds strong, but the waters are deep and broad, and, once 
 round the Cape, we shall aiichor and rest securely in our great 
 financial Pacific. Everything short of this is but a makeshift to 
 avoid the inevitable. It is running from one shallow to ground 
 on another ; it is to dodge from one obstacle to be confronted by 
 a series in endless succession. It is said there is no royal road to 
 learning ; there is certainly none to paying debts. It is an 
 earnest, serious, self-denying task ; and it is a task which every 
 man, even short as human life is, finds his account in cheerfully 
 embracing when the necessity is upon him. How much more 
 important than a nation — whose hold on existence is thr<jugh 
 the ages, whose financial honor is a necessity of its growth and 
 power ; nay, whose very existence may in some unexpected 
 emergency depend upon it — should preserve that honor unspotted
 
 23 
 
 and untarnished ! Let the nation, then, rise to a full conception 
 of the demand now made uj)on its financial integrity, its as yet 
 unstained honor, and declare that it will make the small sacrifice 
 requisite to restore its credit and position to a level \\ itli the 
 other great nations of the world. Let us not stand dawdling 
 over this miserable business of shaving our own notes, and striv- 
 ing to skin the holders by exciting their distrust and apprehen- 
 sion. It is a mean business, a dirty business, unworthy the 
 spokesmen of a great nation, and it will be destitute of reward, 
 for it will be a losiuii business. 
 
 CHAPTER YIII. 
 
 GREENBACKS VERSUS BANK NOTES. THE PLAN OF SUBSTITUTION 
 
 WILL NOT WORK. REASONS WHY. 
 
 The practical sense of commercial and financial circles all 
 over the world, through many centuries, has decided that banks 
 are essential to the public convenience, and are even a public 
 necessity. But banks must be invested with the ])ower of issuing 
 their own notes, in order to keep them in profitable operation. 
 It is not likely that this long established conviction is going to 
 suddeidy give place to anybody's crude or ingenious theory of a 
 better plan to secure similar results. And thus the long 
 threatened scheme of substituting greenbacks for the existing 
 bank note circulation which still agitates Congress, and was the 
 theme of an elaborate argument of Gen. Butler at the opening 
 of the session, must fall to the o-round. 
 
 The scheme is broached as though it would be about as easy 
 to overset 1,600 l)anks doing business all over the country, with 
 their endless and intricate business ramifications, as it would to 
 slide so many bricks out of the tail of a cart. A pure bullion ist, 
 if such is to be found, need not object to such a policy if it 
 were capable of accomplishment (except for its folly) with the 
 system of mutual exchangeability established as proposed, to 
 wit : the greenback to be always redeemable at the Treasury in 
 coin-bearing bonds, and, vice vefsa, the greenback always obtain-
 
 24: 
 
 able for the same bonds. It is tlie pleasing- conception of tlie 
 advocates of the plan that this exchangeability feature would 
 always relieve the circulation of any [)lethora which might at 
 any time exist ; and, what is of even greater consequence, would 
 always secure the country against the scarcity of the circulating 
 medium. The first part of the conception might be realized. It 
 woidd be in the natural course of tilings to run home a redundant 
 circidation, and receive specie-earning bonds in lieu of it. But 
 the redundancy having disappeared by this process, and the cur- 
 rency, it might be, made scarce in this way, it could never be 
 rendered what would be called plentiful again, by a process 
 which looks entirely to the exchange of invested capital, like that 
 of Government Securities, drawing six per cent, interest, or even 
 five per cent, in specie, for money. For this reason : the moment 
 the value of our consolidated debt rose to par, in coin, which 
 M^ould be very soon after our credit is fully reestablished, our 
 circulation would be on a specie basis ; and when our bonds 
 became thus valuable, there would be no more object in exchang- 
 ing them for greenbacks than for coin. The circulation would 
 conform itself to that state of things, and so become as infiexible 
 as a coin circulation itself. When the rate of interest fell below 
 the rate borne by the bonds, as it sometimes would, we should 
 then experience even a worse state of things than though we had 
 a specie circulation only. For the greenbacks would be returned 
 to the Treasury till they became scarcer than coin. The upshot 
 would be that we should thus find ourselves supporting an arti- 
 fical paper currency bearing a premium in specie. Of course it 
 would then, during this period of appreciation, no longer be used 
 as a circulating medium, and hard money would take its place. 
 Is it worth while to institute a paper money machinery that would 
 produce so absurd a result as tliis? But thus it is, and necessarily 
 must be, with all schemes to sup])ort the uniform standard of 
 value established throughout the commercial world, with a view 
 to found a better system. We may invent, and devise, and try 
 to circumvent the natural laws on this subject to the end of 
 time, and we shall end just wliere we began. There can be but 
 one universal standard of value, and the attempt to substitute 
 anything else for it will inevitably fail ; legislate how you will, 
 contrive how you will, this standard thrusts itself among all your
 
 25 
 
 contrivances, in season ;iii<l out of season; and, wlietlier you will 
 or no, re<i'ulat('s and nieasiires evui'v coiiinici-cial and financial 
 transaction. In spite of cvcrv cflort, in defiance of every law to 
 prevent it, thei-e will he lor every coninio(lity of trade, and to 
 every tinancial en>;a<2;enient, an actual, positive, and irresistible 
 specie value. Pile legislative enactnieiits mountain liiiili. sayinir 
 there shall not he, and it w ill he all the same. 
 
 We wish to make one other ohservation on this Congressional 
 })roject to dis})ense with the hanks and substitute the notes of the 
 Government for hank hills. 
 
 The men who want to borrow money are never the men who 
 have their ])ockets tilled with United States bonds. The nioiiey- 
 boi'rowers are the merchants, the manufacturers, the producers, 
 whose capital is invested in tlu'ir business. The only securities 
 which they have to offer are their own notes, the notes of their 
 debtors, their domestic or foreign exchange. These may be all 
 of the very first class, such as any bank or bankei' would be glad 
 to get ; but they would be no better than so much waste jjaper 
 when offered to the Treasury. Even a rich mairs notes might 
 jjo to protest everv dav in the vear, if he had no resource hut the 
 Treasury, operating on the basis of this exchangeability feature. 
 
 It is strano-e that these iniienious theorists overlook such 
 palpable considerations as these. 
 
 What trade and commerce need are agencies which w ill take 
 the notes of men of business, and y;ive monev for them. That is 
 the comnioditv thev have to offer in exchan<>'e for monev; they 
 have nothing else. How idle to say to them, hiing along Gov- 
 ernment bonds and we will furnish vou all the monev vou retiuire. 
 The merchant might just as well be asked to furnish Itullion (tr 
 gold coin as security for the money he Mants to lH)rrtiw. The 
 security demanded is what he does not deal in. The re(piire- 
 nient is ecpiivalent to insisting that a man shall be a capitalist 
 before he becomes a merchant. 
 
 With the banks deniolislu'(l, the moiiey-hoi'rower would find 
 himself without any more ability to borrow than if wi- had only 
 a currency of ii'old and silver. The fn'eenback. under anv svstem 
 of redemj>tion, would become just as uiu'lastic as coin. 
 
 It is the one irreat and useful funetitui of the hank, that it 
 plants itself in e\-ery little mart <>f tratle, and offers its money to
 
 26 
 
 everybody who lias a y;o^)d note or draft to sell. And as these 
 notes and drafts are daily maturing, it can every day take new 
 ones. In this way the money-circulation of the country furnished 
 l>y the 1 tanks is elastic and llexiblo, and responds exactly to the 
 wants of business when it is in a natural and healthy state. The 
 Treasury note can never act as a substitute for the bank-bill, in 
 ordinary times, unless the Treasury turns banker, and sells its 
 greenbacks for the same kind of securities that the bank takes 
 for its bank notes. Nobody will pretend that this would be 
 either wise or proper, or profitable. And thus we see how in- 
 adecpiate for the needs of a great trading community is the pro- 
 })osed machinery of a greenback circulation, as a substitute for 
 that of the banks, with its ever-varying quantity and perpetually- 
 renewed supply, through the natural operation of daily business 
 transactions. 
 
 CHAPTER IX. 
 
 PRESENT DEPRESSION EST TRADE NOT TO BE CURED BY LEGISLATION. 
 SELF-LIMITED CHARACTER OF ALL LEGISLATIVE PANACEAS. 
 
 We have already ex])ressed the sentiment that the existing 
 depression in trading and industrial circles has little or nothing 
 to do with the state of the circulating medium. There is more 
 i>t it afloat than is usual in ordinary times by a great deal, the 
 aggregate being over $750,000,000. There is money enough to 
 be had on good security in all the great centers, and whatever 
 may Ije alleged to the contrary, it is substantially true that when 
 money is plenty at the centers it is plenty at the extremities on 
 all adetjuate securities. Six per cent. Government obligations 
 are everywhere 10 per cent, above par. And where money can- 
 not be had it is because the security is unsatisfactory. 
 
 The present depressed state of trade and industry requires 
 something very different from an increase of paper money, or, 
 indeed, any acts of legislation, to relieve it. 
 
 Of course, so far as legislation has imposed burdens on trade
 
 27 
 
 and industrv by taxation, legislation is ahic to relieve them ])y 
 taking it oti'. So, too, in certain national conditions, legislation 
 can revive and stimulate industry, and give a great iillip to trade 
 and enterprise. But these conditions are excei)tional and canncjt 
 be created at will. They are evoUi-d slowly, only by time and 
 circumstance. This is a consideiatidii (piite too generally over- 
 looked. The idea that because legislation can sometimes take 
 the initiative in ])romoting industrial prosi)erity, it can always 
 do so, is a grave error. Legislation is not a constant force which 
 can always be used in this direction. It has its times and seasons 
 when it can act efficiently. But this power is limited to peculiar 
 and exceptional emergencies and conditions. It may be said to 
 be a regulator and stimulant, rather than a constant motive 
 power. It exhausts itself, too, by its own action. This law 
 of limitation shonld never be overlooked when Icirif^lative action 
 is suggested as a relief to a depressed or exhausted condition. A 
 nation may enact a high pn^tective taritf at an oj)])ortune period. 
 This act may ditiuse sudden and great prosperity. Such an ex- 
 j)erience has occurred more than once in our own history. But 
 this very stimulus may temporarily lead to over action. Dull- 
 ness of trade, stagnation of business, depression of prices, low 
 wages, and deficient employment may ensue. All these may be 
 the contingent, incidental, tem})orary evils of a mainly beneficent 
 act of legislation. But they are not to be cured by more legisla- 
 tion of the same sort. Their cure nmst l>e left to other agencies 
 — to time, to rest from undue exertion, to the gradual absorption 
 by consumption of surplus goods which a too ardent competition 
 has produced. In a word, the trade and industry of nations must 
 ill the main rectif'v their uniuitural oscillations throuii-h the in- 
 fiuence of natural causes. They are for the most part beyond 
 the reach of legislative i)anaceas. Especially is this the case 
 when legislation itself has caused or aggravated those excesses. 
 When })rt)duction, from the encouragement of the State, has be- 
 come plethoric in any depai'tment, the only possible relief must 
 come from ctmsumption. (Tovciiinicnt mav wisely adjust its 
 measures so as to create and nuiiutain a just and useful ecpiili- 
 Itriuni between the two classes t»f ])roducer> and t-onsumers, but 
 the inevituhlt' disorders which ai'JM' tVoin the varicil complica- 
 tions which belong to tlu' [troduction and consumption of a
 
 28 
 
 diversified industry, and which inhere in tliese relations, are not 
 just subjects of legislative interference, for such action would be 
 fruitless. 
 
 Trade and l)usiness in all active communities have their ebbs 
 and fiows like the tide. After rising unusually high, they recede 
 unusually low. There is no form of legislation that is competent 
 to deal with these excesses. They are quite outside of its do- 
 main ; beyond the reach of its iniiuence. The great and com- 
 mon mistake of people is the belief that they are capable of 
 rectification by legislative action. People will believe that when 
 a nation's aifairs are out of joint, its legislators should be com- 
 ])etent to srt th(mi right. But the industrial body, like the 
 natural body, is atfiicted by disorders which are known to the 
 doctors as "self-limited," and which are best cured by letting 
 them alone. They atfiict while they last, but they defy the skill 
 of the physician, who merely watches while they exhaust them- 
 selves. 
 
 Now, let it be borne in mind, that never in the whole past 
 history of this nation has its ti-ade, its industry, its finances, been 
 in such an artificial condition as now. They have become so in 
 consequence of a great and destructive war, and the legislation 
 resulting therefrom. We will assume that that legislation was 
 necessary. But if good came of it in the first instance, evil has 
 followed. The circumstances which demanded, or, at least, ex- 
 cused this legislation, no longer exist. 
 
 Now we are confronted with the question whether or no we 
 are in that peculiar and exceptional condition, brought about by 
 time and circumstance, which can be improved by legislative ac- 
 tion ? Or whetlier we are not, on the contrary, in a state where 
 legislation has exhausted itself; and where our remedy is to be 
 found only in the operation of natural causes ; through the lapse 
 of time, of ])atient industry, of economy, and the self-adjustment 
 of the relati(Mis of production and consumption so long disturbed 
 by the violent agitations of war. 
 
 We entertain no doul)t on the subject. We hold that it is 
 plain to be seen of all men that our present unnatural condition 
 is the result of exceptional events, aggravated by legislative ac- 
 tion, Le<2:islation overthrew our lonfi:-established standard of 
 value by creating a paper legal tender. Legislation filled the
 
 29 
 
 country with irredeomahle paper money. These two BtiniuLints 
 have done tlieir work. They have done all of fiood tliat could 
 be done in this direction. We iimst now escajtc tVoiii the exist- 
 infj evils which have followed l»y imdoino- ratlici- tliaii I>v doiiiir. 
 War demanded agencies which peace does not r('(|iiire. 1'lie 
 Government needed helps then which it docs n(»t need now. Its 
 efforts should thus consist in dis])ensin<; with the machinery then 
 set in motion. They are, first, the leo:al tender act, and, second, 
 the irredeemal)le paper money. Just to that extent it can dis- 
 pense with these agencies; just to that extent it is in duty l»ouiid 
 to dispense with them. And in this matter it should consult its 
 own power and its own convenience. It created tliciii for its 
 own benefit ; it is its clear right to abolish them when it requires 
 them no longer. And we may add, the trading and producing 
 classes have no right to demand the prolonged use of these 
 means for their profit and convenience ; especially when the de- 
 mand is made, as we lia\e heretofore ^hown, at the exjoense of 
 the consumer and of the labor of the country, even if their use 
 coul(J be continued without danger. 
 
 It is thus we come to the conclusion tliat the condition of the 
 country cannot be improved by furtlici- artifices of legislation. 
 We hold them to be exhausted for good in that particular respect 
 wherein we need relief. We must now fall back on the recuper- 
 ative powers of the nation — on the solid wealth, on the industry, 
 on the enterprise and resolution of the country. These are suf- 
 ficient for our wants. Notwithstanding all the complaints that 
 are heard, our actual industrial condition is better than that of 
 any other nation. A large proportion of our business interests 
 are soimd and strong. The great leading articles of agricultural 
 production, which represent such vast interests, bear high prices. 
 The avenues of transportation, our canals and railroads, another 
 immense interest, are all most ])rofitablv eno:;ao;e(l. Manv 
 branches of manufacture are still employed at remunerative 
 rates. Others are reviving from their depression. And if some 
 branches are, or have been losing, it must be remembered they 
 are the particular ones which made so iinu-h money durin^i; the 
 war — the obvious cause of their present situation being a natural, 
 and we may even say healthy, reaction from a former state of 
 unnatural activity and profit. It is the recession, merely, of an
 
 30 
 
 unusually hio-h tide in their affairs. It is in the natural order 
 that trade is sometimes dull, money sometimes scarce, production 
 sometimes unremunerative, labor sometimes partially employed 
 and poorly paid. Tt is so now all over the world. It will be so 
 at intervals while civilization endures. There are seasons of 
 health, and of disease and suffering ; seasons of rest, as seasons 
 of activity. This is the law of the commercial world. It is the 
 law of all nature as well. We can no more cure this condition 
 l)v legislation than we can turn day into night, or control sun- 
 shine and storm l)y legislation. 
 
 It is in the light of these considerations that we must labor 
 to restore the losses of the war, and to reform our condition, and 
 to cure the disorders and depressions which affect the general 
 prosperity, and mark the present transitional period. 
 
 CHAPTER X. 
 
 VIEWS OF A MEMBER OF THE FINANCE COMMITTEE OF THE SENATE 
 FROM MISSOURI. RIGHTS OF THE PUBLIC CREDITOR. MR. HEN- 
 DERSON A SYMPTON OF THE NATIONAL CONDITION. THE FUTURE 
 
 OF OUR NATIONAL SECURITIES. 
 
 It would be a hopeless task to undertake to confute the 
 numberless empirical schemes of members of Congress on the 
 question of finance. But the view> of the sever;d members of 
 the two committees of the Senate and House who have charge 
 of such suV)jects, when elaborately set forth, seem to exact notice. 
 
 Mr. Henderson, of Missouri, a member of the Finance Com- 
 mittee of the Senate, lately expounded himself at length. 
 Whatever claims the Senator may have to many excellent 
 qualities — claims we shall 7iot questi<m — great gifts as a financier 
 we cannot concede to him. In the first place, his fundamental 
 conceptions of the nature of the pecuniary obligations of a 
 government, as explained hy himself in the following extract 
 from his recent speech, show him to he a man in whom a high 
 sense of financial and mercantile lumor is totally wanting. He
 
 31 
 
 substantially fleclares that a promise to pay means nothinji: at all. 
 Hear him : 
 
 " Is it not more reasonable to infer tliat the public creditor, piirehaBinsr a 
 Government l)ond, takes it subject to the exercise by Congress of all its consti- 
 tutional powers? It is surely lejritimate for Congress, after it contracts a debt, 
 to coin money and put it in circulation. It is e(|ually clear that Conprress may 
 repulate, and then-fore, chanjre its value. The coinage of jrold may be double 
 or tiuadrui)le in amount, or the use of ffold as a medium of exchan<re >nai/ hf 
 ahnndoned altogether and something eUe adopted. * * * When no sjn-cific 
 agreement is made, I insist that both debtor and creditor are sui)posed to con- 
 tract subject to all the continrrencies of future letrislation. That lejrislation 
 may be such as to make the debt more or less valual)le at the time of its 
 payment. This fact is underst(jod by both parties when the contract is made, 
 and enters into and forms a part of it." 
 
 We contend tliat a man who can talk in this way in regard to 
 the character and value of the deliberate enuagements of a great 
 government, or a small, is utterly disqualified from sitting in 
 judgment upon the morality or honesty of financial transactions. 
 There is not a heresy or a dishonesty that ever was advocated 
 or practiced upon a pul>lic creditor that is not supported in the 
 doctrines of this extraordinary extract. It is an open and 
 unlimited claim to the right to cheat the public creditor out of his 
 whole debt, if the debtor chooses to do it. More than that, the 
 preposterous idea is here expressed that the lender understands it, 
 is one of the conditions of a public loan tliat the borrower is at 
 liberty thus to cheat him. The Government inav clip its coin, 
 may debase its currency, may make an unlimited issue of irredeem- 
 able paper and declare it legal tender, and pay off its delits therein. 
 Mr, Henderson substantially asserts, in the above quotation, that 
 all this is understood by all parties in every public loan. 
 
 He might with equal reason deny the sanity of mankind, and 
 assume that capitalists are so eager to get rid of their property 
 as to seek opportunities to commit it to the flames. He does, in 
 fact, assume that every man who has money to lend dotes on 
 repudiation ; that he longs for an opportunity to find a borrower, 
 who is so situated that he is at lil)erty to deny i)ayment of what 
 he borrows. 
 
 If Mr. Henderson's doctrine be correct, such are the views of 
 every man who buys a Government bon<l. He sinqdy loves to 
 be ciiined. Tnless this is the case of the money-lender, why on 
 earth should he consent to flimr his hard-earned dollai*s into the
 
 32 
 
 lap of a Government which is at liberty any time to turn round 
 and say it won't ]>ay at all, or will only pay in worthless promi- 
 ses? But, as an actual fact, are not all money-lenders tempted 
 on all sides with the best of securities, and their private indebt- 
 edness additionally secured by the most unbending legal enact- 
 ments { Why, on earth, then, should a lender accept the obliga- 
 tions of a l)orrower who is at liberty to convert them into smoke, 
 when he can obtain securities as incond)ustible as bricks and 
 mortar, or roads of iron ? 
 
 Mr. Henderson may possibly reply, that what he said was in- 
 tended to be qualified by the remark that a "specific agreement" 
 might, or could, change the conditions of a loan. Such a reply 
 does not hcl]) him. In the first place, the first part of his state- 
 ment is wholly unqualified. But let that pass. We assert, the 
 proposition that every (#rovernment loan is a "specific agree- 
 ment " to pay a certain number of " dollars," which dollar is a 
 defined thing, i)recedent to the contracts, and that what the 
 " dollar " is when the loan is made is the dollar that must be 
 paid. We deny entirely that there is any understood right, 
 reservation, privilege, or understanding, of any kind or descrip- 
 tion, ex])ressed or implied, under which Government may change 
 or vary its terms, or even the understanding on which the holders 
 took it, to the amount of one hair's breadth. If Government 
 even stands by silently, and sees its loans disposed of by agents 
 on terms, and with representations which it knows to be un- 
 founded, and does not intend to fulfil, it is morally guilty of ob- 
 taining money under false pretenses, and of intentional fraud 
 upon the purchaser. But it is more especially and unqualifiedly 
 guilty, if it presumes u])on its sovereignty or its legislative })ower 
 to deprive its creditor of one iota of the exact sum it borrowed, 
 or of any infinitessimal fraction of the rate of interest it agreed 
 to pay, until the loan is wholly re-indmrsed. Government has 
 not, in morals, or according to the most ordinary tests of mercan- 
 tile integrity, the shadow of a right to abridge, in the least de- 
 gree, the sum which the ])ul)lic creditor, in becoming a party to 
 a national loan, contracted to receive. 
 
 A man who does not see all this with an eye of fire, has no 
 claim to discuss the nature (»r treatment of pecuniary obligations, 
 whether of an individual or of a Government. Between a solvent
 
 33 
 
 debtor and his creditor there is no middle ground. The contract 
 settles everythino;. There is nothing to l?e left to compromise. 
 Nothing can be pleaded in behall' of a debtor but actual inability. 
 Inconvenience or loss is nothing. Where the ability exists the 
 pay must come. Solvency, character, mercantile honor, finan- 
 cial integrity, knows no other law. This Government must pay 
 or swindle, or acknowledge itself bankrupt. It has got to take 
 one of these three attitudes l)efore the world. It cannot escape. 
 The inexorable pen of history, the fixed judgment of mankind, 
 await its action. But Avhile, as we have said. Government has 
 no 7'ight to clip its coin, to debase its coinage, to adulterate its 
 ])aper circulating-medium, it, nevertheless, has i\\Q power to do it. 
 If it chooses to play the villain, it may cheat its creditors, it may 
 swindle its bondholders, it may repudiate its contracts, but, in so 
 doing, it incurs the villain's reputation and his fate. It may say 
 it will i)ay three-quarters, half, one-quarter, or nothing, of all it 
 owes ; but the simple fact that it is to-day discussing, in Con- 
 gress and out, which it will do, is a costly discredit, and a ruin- 
 ing reproach to the nation. To debate the question of national 
 honesty is the most expensive luxury in which Congress can in- 
 dulge. But our circumstances and our habits, perhaps, render 
 it unavoidable, and we must suffer the consequences of our in- 
 dulgence. 
 
 The practical issue of all this is the main thing which interests 
 everybody. But who shall forecast it ? In our financial morals 
 we are in the gristle. 
 
 We are not yet hardened up into any fixed shape. There are 
 cores and centei-s of soundness, but huge fringes and suburbs, 
 and some deep caverns of rottenness. Who knows how we are 
 coming out ? Who knows whether we shall ripen into a comely 
 and high-toned manhood, worthy the great military reputation 
 the nation has achieved ? While the credit of Massachusetts 
 glitters like a diamond (alas ! that she stands alone), great, rich 
 Pennsvlvania once deliberatelv damned hei-self bv reiiudiation, 
 and, like the fabled inhabitants of hell, encountered by Sweden- 
 borg, forgets or does not know it to-day. 
 
 Our future thus defies prognostication. The keenest pecuniary 
 scent is at fault. All that we know certain is that gold is at 
 140, and tends upward, and that our six per cent, coin-bearing 
 3
 
 34 
 
 bonds are sold in Enrope at 75 cents on the dollar, with money 
 plentiful there at three and four per cent. These features of the 
 market indicate a distrust and apprehension of our future on 
 both sides of the Atlantic. Judging; from the specimens of 
 -financial views we have been commenting on, and those we have 
 seen expressed, from time to time, by other representatives of 
 that Great Valley which claims empire over these States, we 
 should say that that distrust and apprehension were not ill- 
 founded. 
 
 We regard Mr. Henderson rather in the light of a symptom of 
 the national condition. Nevertheless, he is the spokesman of 
 multitudes, even more financially oozy than himself. He is a 
 sort of barometer of geographical opinions. His is the prairie 
 standard of national credit, probably in its highest form. The 
 national standard must range somewhere between his, or a yet 
 lower level, and the standard of perfect justice. Such, at least, 
 is a fair inference. As we come East from the Great Yalley 
 toward the AUeghanies, we reach Ohio, and here we have a yet 
 milder symptom of national unsoundness in Mr. Sherman. The 
 standard has risen. We pass on, and reach the great commercial 
 cities of the seaboard, and here we find an elevated financial 
 morality. The standard rises to its highest point. We conclude 
 the national credit is to be graded according to this recognition 
 of elevations — this moral survey of the heights and depths of the 
 national perceptions of honesty. As we have said, the Wall- 
 street view and the European view of the situation gives a net 
 elevation of 75 — 100 being the standard of absolute integrity. 
 We accept it as a fair average. Should the Republicans prevail 
 in the coming Presidential election, tlie figure is too low — we 
 hope much too low. Should the Kebels and their Northern 
 allies succeed, the figure is too high. Indeed, in that event, the 
 situation would be vibratory and panicky in the extreme, and 
 we might look for a reyjetition of the fluctuations and losses, the 
 deep shadows and dismal prognostications of the war. The 
 Kebels, who would be brought into power by such an anomalous 
 and untoward event, we may be sure, would cheapen the debt, 
 damage the credit, and enlarge the ol>ligations of the nation to a 
 formidable and, perhaps, ruinous extent.
 
 35 
 
 CHAPTER XI. 
 
 CURSE OF A DKPRKCIATED CURRENCY. HOW IT OPERATES TO ROB 
 
 ALL CLASSES. POLITICAL AND SOCIAL DANGERS OF INFLATION. 
 
 There are some popular ideas afloat, favorinti; the policy of a 
 depreciated currencv, which are injuriously fallacious, and need 
 exposure. One is that taxes are more easily paid under such a 
 system. Another is that the producer jiets higher i)rices, and so 
 makes more money. Let us look for a iiioiiient at these points. 
 
 Taxes are paid from two sources ; the earnings of labor and 
 the earnings of cai)ital. We have hitherto given the reasons 
 \\li\ labor is not so well paid under a system of paper money as 
 in a currency of coin. We have shown that wages do not 
 keep pace with the enhancement of the cost of living, and that 
 the interests of labor are not thei-efore favored by a system of 
 paper money, but are seriously injured thereby. We have 
 seen that its earnings are less and its expenditures more; 
 that the imposition of taxes thus weighs heaviest upon the 
 laboring class, at those periods when the currency is inflated, 
 they having at such times more to pay and less to pay with. 
 
 How it is with cai)ital, which represents the savings of in- 
 dustry and the accumulations of good fortune, there is no room 
 for doubt. There is no pretense anywhere that the property 
 holder, who has earned or inherited wealth, and lives on its in- 
 come, does not sutt'er from inflation, lie pays more for the cost 
 of living, more for taxes, while his income remains the same. It 
 is so with all who live by salaries. Great injustice is done to, 
 and great surt'ering is often experienced by, these two classes, 
 from a depreciation of the currency. They reap no advantage 
 from, but are merely innocent victims of, the inflation policy. 
 Their voice of complaint is seldom heard' for, though numerous 
 in the airirreirate, thev belonir naturallv and bv position to the 
 (piii't classes of the coiuiiiunity. They sufler greatly, but they, 
 for the most part, sufler in silence. The rush of enterju-ise in 
 this country does not sympathizi' with them. 
 
 Tlow is it with small capitalists of a diflerent class ^ Take 
 the great pi'oducing, agricultural interests of the West. These
 
 36 
 
 numerous Western farmers of moderate means are supposed, of 
 all others, to be benefitted by a redundant paper circulation. It 
 increases the prices of their corn, their wheat, their cattle, their 
 hogs, and their surplus generally. But, if the farmer gets more 
 for that portion of his crop that he sells, he pays more for every- 
 thing he buys. He i)ays more for his groceries, his clothing, his iron, 
 his leather, his tools, and his labor. So that his gains, at best, 
 are at last only on the final balance saved after the year's ac- 
 counts are settled. That surplus, be it more or less, is in paper 
 money, which he must reduce one-third or one-half in amount, 
 as the case may be, to get it into solid money. And in this way 
 it comes to the same thing, or more often to a worse thing in the 
 end, than if his dealings had all been in real instead of fictitious 
 
 money. 
 
 But his paper dollar will pay taxes as well as the gold dollar. 
 So it will. But the tax is enough, and more than enough, greater 
 to offset the advantage. Taxes are imposed to defray expenses, 
 and expenses are increased in proportion to inflation always, and 
 generally in a greater degree ; for public charges of all kinds, 
 prices of all kinds, are not only calculated upon the relative value 
 of the paper issues to coin at the moment, but upon the contin- 
 gences of fluctuation which becomes an important element in 
 fixing values. The tax-payer in the end foots all these charges. 
 He first pays the actual money cost, then he pays the difference 
 between that and the sum it represents in paper money, and then 
 he pays for the risk involved of a further inflation, and o-f specu- 
 lative values incident thereto. But even this is not all. When- 
 ever people are spending money (and it is especially so with 
 public expenditures) in a debased circulating medium, there is 
 never that care or economy as when tlicy are si)ending hard 
 money. Silver and gold are never squandered as are paper 
 promises to pay, which are irredeemable, and are constantly fluc- 
 tuating in value. And thus expenditures, especially i)ublic, in- 
 crease just in proportion to the debasement of the currency in 
 wdiich they are defrayed, and not relatively only, but actually 
 as measured by the specie standard ; and thus are taxes multi- 
 plied and increased. It is only by following out these details of 
 the subject that we are able to appreciate how it is that a depre- 
 ciated currency is a robber of the earnings of labor, whether
 
 37 
 
 capitalized or otlierwise, at every step and in every relation. But 
 patient reflection shows that, view the sul)ject in what li<;ht you 
 will, a debased circulatino; medium is of itself, aside from the 
 moral del)aucliery engendered by its examjde, a serious and ever- 
 acting mischiff, (himaging to the interests of the great body of 
 the peo})le in every walk and i)\ii-suit of life. 
 
 But there are those who reap great ]»r(>tit from an inflated 
 currency. These an> the large capitalists and operatoi-s, the 
 speculators, the middlemen ; the gamblers of the Exchange, in 
 stocks, in ffold, in all the necessaries of life. They are the vul- 
 ture who prey on an innocent jiublic. They buy up and hoard 
 every commodity ot trade in order to advance prices. The 
 greater the supj)ly of paper money the greater their ability to 
 do so. There is no machinery so effectual as this to rob the 
 earnings of labor. The banker is allowed to issue his promises 
 to pay, which he never redeems ; or if he redeems them, it is in 
 other promises no more valuable than his own. Thus he is sel- 
 dom called upon even to take the trouble to make the exchange. 
 He receives at the rate of 15, 20, and 25 per cent, per annum 
 from his " operating" borrower, for the use of his capital, and 
 tlirough him it is extorted in the last analysis, as we have here- 
 tofore shown, from the earnings of labor and the heli)less con- 
 sumer. So, too, the middleman, one of the worst of the para- 
 sites of the commercial world. lie stands wherever he can, 
 resolutely between the producer and consumer, and lives by rob- 
 bing botii. Producing nothing, earning nothing, he simply sucks 
 the blood of those who earn and those who consume. He flour- 
 ishes most where a depreciated currency causes an artificial rise in 
 prices and fluctuation in values. He was hatched in swarms by 
 the war, and, in diminished mnnbei-s, still atflicts the connnunity. 
 All his efforts are aided by a debauched currency, lie pleads 
 the recollection of past extortion with the exhausted buyer, and 
 deludes the inexperienced seller with representations of a con- 
 tracting currency and falling prices, cheating both in turn. 
 
 And thus, pursue the subject how we will, it turns out that 
 inflation is oidy another term for the rol)bing of honest in- 
 dustry, and that its palpable and certain eftects are to make the 
 rich richer, and the ]ioor jioorer. 
 
 A natural state of things has no such features, or, if it has,
 
 38 
 
 they are only exceptional and occasional. It is the violent fluc- 
 tuations, M'hicli are the necessary consequences of an inflated 
 currency, tliat causes the mischief. Witliout these, trade is com- 
 paratively steady, and prices comparatively reguUir. Where it is 
 otherwise, it results from natural causes over which no control 
 can he exercised — such as had seasons and deficient supplies, or, 
 on the other hand, overproduction and glutted markets. In such 
 a state of refi;ular trade, the numerous intermediates that infest 
 markets during the periods of inflation, cannot thrive. All 
 healthy traffic consists in bringing the jjroducer and consumer 
 into immediate contact. But where prices vary and rise as they 
 do when an over-abundant currency exists to stimulate specu- 
 lation, it often ha})pens that half a dozen intermediates stand 
 between the producer and consumer, each one exacting his profit 
 — often an inordinate and extortionate profit. And thus the in- 
 nocent consumer becomes mercilessly fleeced. The experience of 
 the "War has illustrated and over illustrated this fact, till there is 
 none left to doubt it. The knowledge already takes form and 
 begins to enforce itself in practical remedies. The tribe of mid- 
 dlemen have carried their exactions upon the busy and innocent 
 consumer to such a pitch that at length he turns in self-defense 
 upon his oppressor. Stores are being established upon the plan 
 of buying directly from the producer and selling directly to the 
 consumer, without the costly machinery of intermediates. They 
 have even commenced in the City of New York, where buyers 
 have for long years considered themselves the natural prey of the 
 sellers, and where the resistance of a congvuner to being plun- 
 dered is regarded as incorrigible contumacy. 
 
 We see in this fresh enunciation of the cooperative principle 
 a vital protest against the malign influences of inflation. It is a 
 hopeful sign, for it betokens an awakening which must lead 
 ultimately to pregnant reflections and conclusions upon the un- 
 derlying cause of the oppressions practiced upon the consumer. 
 The resistance to extortionate and ruinous profits we may hope 
 will end in equally effectual resistance to the scandalous and 
 oppressive cause of high prices. 
 
 We warn the demagogues of inflation that they are playing 
 with a two-edged sword in dabbling with their greenback theo- 
 ries. The great class of consumers, with diminished earnings, is
 
 30 
 
 coiiiiii^ to the siirtaee, with interests to he considered, jmd votes 
 to he given. Their tirst want and nio.si eager demand will lie tor 
 tood and clothing at cheap rates. Thev will not he satistied hv 
 a ])a|)er money system which raises prices, fosters sjieculation, 
 and itrings anew into a hot-hed existence a swarm of greedy in- 
 termediates to fatten npon their necessities. Let it he rehiem- 
 hered that if it he easy and ]>leasant to make pa])er money jilenty, 
 it is e(jually easy to spread dissatisfaction and distress by the en- 
 hanced prices that are sure to follow. The country could endure 
 such exactions during a period ^t" war, when every man was a 
 direct or indirect recipient of (Tovernmeut pro tits, or Government 
 bounties and pay; but in time of peace it could not be endured. 
 The results would be untold sutferings, accompanied by agita- 
 tions that would revolutionize parties, convulse society, and end 
 in irre]>arable ]KX'uniary disasters. Pa])er uioney not bottomed 
 on coin never did stand, and never will stand. It will find its 
 end in one of tw<> wavs. A rii^id i)iil)lic virtue will cause it to 
 disa])pear through a steady enforcement of its payment. An 
 opposite temper will result iu expansion, and one expansion will 
 beget another, and this is the broad, open highway to a final ex- 
 plosion and general bankruptcy. 
 
 We are not at all disposed to play the part of a prophet of 
 evil, and ])redict that this generation is going to laiui in such 
 a Dismal Swamp as this; but the idea that the greenbacks 
 should not be paid, and woi-se still, that the volume of them may 
 even be safely increased, goes exactly in that direction ; and until 
 it is indefinitely abandoned by all sides, constitutes our most iin- 
 niiuent peril. 
 
 CHAPTER Xll. 
 
 DRIFTING AWAY FROM RESUMPTION. DANGERS OF WHOLESALE 
 
 REDUCTION OF TAXATION. 
 
 Unless Congress shall exhibit nioiv intelligence and more 
 moral courage than they have thus far shown evidence of j>os-
 
 40 
 
 sessing on the financial question, we stand a fair chance of getting 
 quite out sight of land within the next twelve months. 
 
 We have been, and in fact are now, pretty near to resump- 
 tion ; and if our legislators were resolute and intelligent to grasp 
 the situation as they might grasp it, we would be out of our 
 difficulties in six months. But they are letting slip their golden 
 opportunity, and by so doing they are allowing things to run into 
 a condition from which we can see no reasonable prospect of ex- 
 trication within any definite period. 
 
 At this moment we are flush. The Treasury has had a large 
 income and shows good balances. If it could be allowed to 
 retain both, and be permitted to fund about one hundred millions 
 of its interest bearing and plain legal tenders, it could, by the 
 aid of a sufficient foreign credit (not difficult to secure) maintain 
 its hold and control the situation, till it carried the country 
 triumphantly through resumption. But unless it can maintain 
 its reserves, it is going to lose its power to do any such thing. 
 The specie in the Treasury is the only basis the country has for 
 resumption. The banks won't keep any, while they can pay in 
 legal tenders. They have got no coin ; and they will not buy 
 it while they can bank at the expense of the Government, so 
 innocently paying them three per cent, interest on a large portion 
 of their reserves. 
 
 Now see what Cono-ress is doing. It is slicing down the 
 revenues in all directions. It has gone so far already as to 
 establish a x)ositive prospective deficit, on the most liberal estimate 
 of receipts. Just so far as these estimates fail, just so much more 
 will be the deficit. The most experienced calculators believe we 
 shall fall short of the revenue to meet our expenditures in the 
 next fiscal year by forty or fifty millions. Where is this going 
 to leave us a year from the present Spring ? Why, with one-half 
 our present specie reserve dissipated, and with no diminution 
 whatever of our volume of paper money — indeed we shall be 
 lucky if it is not increased. If this prospect be realized, and there 
 seems to be no doubt it will be, is it not plain that our ability to 
 resume specie payments will gradually decline from this hour, 
 and not be anything like as great a year hence as it is now? 
 Are we not, then, drifting straight out to sea, with a prospect of 
 being entirely out of sight of land within one or two years ? If
 
 41 
 
 Congress will not even consent to liold on to its ])resent position 
 of strenirth, l)nt deliheratelv ivliiKiiiishes its resources and posi- 
 tion beciuiso it is more agreeable not to pav tlian it is to pay, 
 does anvhody sui>])ose that a year hence, in tlie Innry of a short 
 session, and the agitation of an inconiitig Administration, it is 
 going to become snddenly virtu. ms and undertake to dam the 
 currents it has knowingly set in in. .tion '. ^'c-, it will <lo it jnst 
 80 surely as the P^thiopian will change his skin or tlie leopard his 
 spots. The fact is palpable that the action of Congress now is 
 shaping results for the next two years, and when we shall have 
 run astern a hundred millions, as we now seem likely to do 
 within that ])eriod, what then will be the state of the Treasury 
 balances, and what will be the i>ros]>ect of resumption? There 
 will be just as much i)ai»er money afloat then as there is now, or 
 more, and not an available si>ecie dollar in the Treasury to redeem 
 it with. In fact, by that time it is not at all unlikely we shall 
 be buyers of coin to pay our interest. 
 
 This, we say, is the present prospect, taking the recent action 
 of Congress in cutting off the resources of the. Treasury as the 
 basis of ojunion. We do not think there is any statemanshi]) in 
 the doctrine of Senator Conkling, that he is willing to face a deficit 
 in order to stop lavish api^ropriations. If we were on a hard bottom 
 this doctrine could be better tolerated — though, with a heavy 
 national debt on our shoulders, it is only too ]»robable that 
 actino; on it under any circumstances would create a greater evil 
 than it would remedy. But, in view of its direct and pernicious 
 influence on resumption, it is at this moment a most damaging 
 rule of action. 
 
 Every dollar that we take out of the Treasury defers resumption. 
 Everv tax we remove by which we dei)lete it ])uts oft' the day 
 of sju'cie payments. Instead of this penny-wise and ])ound- 
 foolish policy of sacrificing our revenues till we are sure not to 
 have enough left to defray even the ex]ienses of the Government, 
 we ought to husband them faithfully and ai»ply them energeti- 
 callv to extiuLruish those current obligations of the (-rovernnuMit, 
 which arc ])rolonging tlu> ]HM-iod of its insolvency and its disgrace, 
 hinderinu" the revival of trade and ])rosperity, and postponing 
 the approach of that period and those conditions u])on which 
 alone can be built any solid anticipations of either health or 
 regularity in our finances.
 
 42 
 
 But wlio proposes anything of the sort in Congress? The 
 friends of sound finance are a majority nowhere, not even in the 
 Committees. The Democrats lack principle, and the Republicans 
 lack ]duck, and so the demoralization is general. Every weak 
 l)ody voted to change the policy of specie payments to one of 
 indefinite suspension. AVhy ? Chiefly because we are going to 
 have a Presidential election. We admit, as cheerfully as any- 
 body can, that every thing depends on carrying that election. 
 If the Rebels and their Northern allies get possession of the 
 Government, we know what that means. It is a road which 
 leads into a quagmire. Anything is to be preferred to that. 
 But we do not believe the Republicans gain anything by a 
 proposition to take a longer road, landing at last in the same 
 slough. We see neither sense nor good policy in trading away 
 tlie strong position of the Treasury for the vaguest sort of politi- 
 cal advantao-es. There will be other elections to come after 1868 
 The responsibilities of sound legislation cannot be shirked. If 
 Congress now adopts a policy for a temporary purpose which will 
 not stand the test of time and experience — which we know this 
 rash proceeding of inviting a large deficit will not — it will incur, 
 rather than escape, the most damaging political responsibilities. 
 Before the Republicans in Congress finally abandon the only means 
 and agencies they have for the control of the question of resump- 
 tion, we beg to suggest that they should inquire into the manner 
 in which they propose to treat the financial question in case they 
 are, by the coming elections, left in control of the Government? 
 We should suppose they must see by tin's time, that the very first 
 step toward escaping from the einbarras^^ment with which the 
 whole sultject is environed is resumption. It is the only method 
 for abating the burden of the loan, and for settling the vexed 
 and threatening (piestion of taxation. Under such circumstances 
 can a greater folly be perpetrated than to lose control of this 
 result for years to come ?
 
 43 
 
 ClIAPTKli XIII. 
 
 ii(»w 'lo i:i:siMi:. — sisiMiT.iciiv <»i' 'iiik it. an. — <i!5.(i:("ii<»\s. 
 
 CoNGKKss constantly hetoj^s itst'lt" over tlic ('((iisHU'i-atiDn of 
 iiK'tliods of resuiiiptioii. Evurylxxly ha- his jihiiis. Somk- want t<i 
 resume at once, some want ti» ilctcr ri'snni))tion one year, some 
 two, some five, some ten. Everybody bnt the immediate 
 resumption nirii (ahis! who arc they?) has a patent piece 
 of nnichinery hy whicli the ohject can l)e effected so as not 
 disturb anybody. Each man l)riniis out liispet plan and exjdains 
 its parts, every other man disbelieves in it, exposes its defects, 
 or slioM's wherein it will not work, and thus, one after anotber, 
 all these patent iin entions i>;et set back upon the shelf. 
 
 If our dealers in financial to})ics in Congress, would lay aside 
 their desire for complex contrivances to accomplish simple ends, 
 and would try simple methods, and follow plain ways instead, we 
 are sure they would find fewer ol)stacles in their path. If. 
 besides, they would not seek to postpone tlicir action to a more 
 convenient season, when evervbodv should be readv ; 
 
 "That g&y to-morrow of the inind, 
 whicb never comes," 
 
 « 
 
 ])Ut would merely inrpiire what can he done to-day, and 
 determine to do that, thev would find all difficulties ici'adually 
 disa])peai\ 
 
 The resumption of specie ])ayments is the most simple and 
 homely of problems, ft consists of nothiiii;- in the wctrld but 
 payinii; debts. Suspension and intfation results from nothing 
 but this, that somebody owes nioi-c than they pay. It is a con- 
 dition generally brought abniit by the few, not by tlie many. 
 The great mass suffer and the few only profit. 
 
 The way to remeily the ditficulty is simply to insist upon 
 those paying who can pay. If it i> the banks who owe, we have 
 only to say to them, von nin>t disdiarire vnur in(le])tedness. The 
 world holds your j)romises to pay, to which yoii give no attention. 
 Pay them, or at least so many of them as })eople want you to 
 pay. A is in no want ; B is not. They are contented to hold and 
 use your promises. Ihit C is differently situated ; he owes debts
 
 44 
 
 which vour notes will not discharge, and he needs pay for such of 
 them as he liolds. 
 
 Unlock your reserves, wliich as banks and l)ankers you are 
 supposed to have, and discharge your ohligations. Is not this a 
 reasonable demand ? There is no machinery required for this 
 ojieration. No automatic, rotary, patent instrumentality required 
 to engineer the payment of a l)ank note over a counter. Yet, so 
 far as the banks are concerned, this sim])le operation of discharg- 
 ino- a debt due, is all there is of the too much exaggerated effort 
 of resuming specie payments. 
 
 Nobody can deny the justice of such a requisition upon the 
 banks. Banks are supposed to be, and they generally are, the 
 most solid and solvent of all debtors. They hold the money 
 deposits of everybody in tlie country who has money. They 
 were established to pay. They are able to pay. They are 
 expected to pay. They ought to pay. The demand that they do 
 pay is the most proper and the most reasonable of all demands. 
 What is more than all, they will pay when payment is insisted on. 
 
 We pass from the banks to enquire wdio else owes more than 
 they pay, and tlius stand in the way of specie payments, and 
 that restoration of the equilibrium of our money system, which 
 can alone put us on a par with other nations? The answer is — 
 the Government itself. Just here we approach the practical 
 ])oint to which the efforts of our legislators should be directed. 
 What can they do towards enabling the Government to pay its 
 demand and overdue obligations now in the; hands of those who 
 want them paid ? Is there any plain, homely, everyday thing 
 they can do, each one and all of them, towards this simple but 
 vital result? Well, there is. What is it? Why, just this: Allow 
 the head of the financial department of the Government, known 
 as the Secretary of the Treasury, to pay these obligations/w-s?! as 
 fast as he is able to pay them . 
 
 Is'nt that a simple process ? And one, too, in wliicli every man 
 in Congress, high or low, has a voice and a vote ? This is the 
 one nearest duty to be done. It does not require any planning, 
 nor scheming, nor any Butlerian, automatic, rotary patent system 
 for its performance ; and yet it is the one which, if faithfully 
 and discreetly performed, overcomes every obstacle, and leads 
 directly to a resumption of specie payments with the greatest
 
 45 
 
 possible rai)i(lity, ( wliatever tluit may be ;) and yet, witliout undue 
 celerity, and witliout aiTivin<::at tliat result one day too soon for tlie 
 interest or al)ilitv of the country. For assuniin<r, as we contend, 
 all sound financieriuL!: must assunic, that it is the first and most 
 necessary duty of the (Government to brin^- our cireulating medium 
 to a specie basis, and to sb(»ulderthe whole national debt manfully ; 
 this payino; of debts will in no way abridge the ability of the 
 country to diseliaro-e its o])ligations to its creditors. ( )n the 
 contrary, it will, by invi<;oratin«; credit, and assurinji; stability to 
 industrial operations, ^'ive a fresh imi-iilse to the <irowth and 
 ]>ros])erity of the country, and renewed strength and vitality to 
 its finances. 
 
 This simple i»rocess of paying debts just as fast as the debtor, 
 Avhetlier bank or Government, is capable of discharging them, 
 is the true, and cert;nn, and we must add, the only process by 
 wbich the country can extricate itself from its present condition. 
 
 Pay we nnist, in the end, uidess we intend to repudiate. And 
 if we are in earnest to recover a solyent position, we must act 
 so as to strengthen our credit. Thi> i> the speediest and cheapest 
 method. To be sure, we can go mumping along on crutches, as 
 we are now doing, but every day of our feebleness and waverino' 
 adds to the distrust of our recovery. An invalid \\\u> does not 
 improve must be considered to be getting worse. If we really 
 mean to i)ay, the sotmer we say st>, in no uncertain tones, and set 
 about it in eai-nest, the easier wc shall find it to preserve our 
 credit, and the nioi-e speedily we shall revive our trade and 
 industry. 
 
 Tricks and contrivances, and schemes of postponement, and 
 above all, ])ro]»ositions to increase our j>aper money issues, in 
 view of the plain duty and necessity of our case as we have now 
 set it forth, it \\\u>\ be admitted will avail absoluti'K nothinir. 
 Unless we intend to escape from oiii- >itnatioii bv n«)t iiaviiiir at 
 all, Ave contend that the more steadily and resolutely wi' pm-sue 
 tlie paying judicy the better for the country, and the sooner we 
 shall be out on safe and solid ground, and the sooner will the 
 general ])rosj)erity revive. 
 
 We have, in a former chai>tcr, shown what we believe the 
 Government can do. and what the banks can do, in the wav of 
 resumption. But this is neither here nor then'. We nuiy have
 
 46 
 
 over-rated or under-estimated their ability. What we contend 
 for now, is that true policy dictates both shall be required to do 
 their best. And that Congress, instead of restraining the Secre- 
 tary of the Treasury from discharging such obstructive liabilities in 
 the way of resumption, as he has the ability to discharge, shall 
 remove all restrictions upon him which now forbid such action ; 
 and in this way allow the Government to approach the payment of 
 its current obligations just so fast as it shall tind itself able to do so. 
 
 The stereotyped objection to this simple and natural, and 
 ultimately inevitable course, we perfectly understand. It is, that 
 when the Government withdraws its demand notes, the country 
 will be without sulticient currency to do its business. To this 
 tliere are two answers. In the first place, it is no part of the 
 duty of the Treasury of any government to issue currency for 
 the public use. And no solvent government does it. And no 
 respectable theory of government can admit the propriety of a 
 demand for such a currency for a moment. The issuing of it, 
 at any time, is simply one of the make-shifts of insolvency. In 
 the second place, the apprehension of a scarcity of money is 
 without foundation. As we have often repeated, the world is 
 plethoric of the precious metals ; and this nation is one of the 
 great producers of coin. Then we have a banking system capa- 
 ble of indefinite expansion, and of furnishing all the paper 
 money the business of the country requires or can possibly main- 
 tain. And there is no reasonable objection to its extension on 
 the simple condition that the banks shall pay their debts, like 
 everybody else, when called upon. 
 
 These two sources of supply will give us all the money we need. 
 They will prevent any jjossible dearth arising from the with- 
 drawal of greenbacks. Our difficulty is that we have been 
 running so long sustained by this wretched go-cart of Treasury 
 money, furnished by the Government, that the country fears to 
 trust itself to its own legs. It has gone on crutches so long, that 
 though really hale and hearty, and indignant at all imputations 
 of weakness, it yet hesitates to throw them aside. 
 
 The country is i-eally in a comparatively sound condition, only 
 that it distrusts itself, or we should say its legislators distrust it. 
 If Congress would only discard its unmanly timidity, and cease 
 to place an absurd reliance on a disgraceful paper system, it 
 would soon find the country cured of all its financial ills.
 
 47 
 
 CnAPTKIi XIV. 
 
 ON THE CHARACTKR l)V THE PIBLIC DEBT. 
 
 What is ;i piihlie louii f A jtiihlic lo;iii is n creation of tlie 
 law. Tilt' law j^ivcs it sliajx-s dimension, suhstance, value, char- 
 acter. It makes it ])ro|)erty; just a-s much property as a shi]), a 
 house, or a railrna<l. It is made a perfect and detined whole when 
 It is created. It is like a dollar from the mint, and like it, is a 
 speeitic and absolute quantity. When it is issued it comes into 
 existence subject to the precise rights, privileges and burdens, 
 of all other kind of [iroperty, except it be otherwise exempted. 
 Government has no more claim or right to take hold upon it and 
 subject it to exactions of any sort whatever, than it has to seize 
 upon any other species of property and subject it to special impo- 
 sitions. Government <loes have a right to levy upon property to 
 any needful and i)roper extent. It may imj)ose taxes, it may 
 make exactions. It may compel [)roi>erty to yield of its income, 
 or of its substance. But it has no right to impose unequal 
 burdens. All property must share alike and in proptjrtion to 
 its value. It may not seize upon a shi]» or a railroad, and coui- 
 ])el it to yield n|i one-tifth or one-tenth of its earnings to the 
 Treasury, while it imposes no such demand upon warehouses or 
 on money at interest. It may not seize uj)on the coupons 
 attached to its own loans and exact a share thereof, without being 
 guilty of ecpial injustice. 
 
 Again, a ])ui)lic loan is a public contract between the State 
 and its creditor. And a contract is an instrument which cannot 
 be changed except by the jjarties to it. 80 sacred are the obliga- 
 tions imj)Osed by a ci>ntract, that they were deemed worthy of 
 protection in our fumlamental law at the foundation of the (iov- 
 ernment. It is an express stipulation of the Federal Constitu- 
 tion that the validitv of ci>ntracts shall not be imi)aired bv le<ris- 
 1 at ion. 
 
 The public loan therefore is an absoluti', well detined entitv, 
 in respect to its character as property, of as absolute substance 
 and proportions as a church, a theatre, or a bank. And gov- 
 ernment has no more ri«j,ht ()Ver one than it has (»\i'r tlii' other.
 
 48 
 
 It parted witli every right over a public loan, that it does not 
 hold equally against all property, when it fixed its terms, and 
 receiving its agreed value, passed it over to the public creditor. 
 Up to that period it could prescribe terms and conditions. After 
 that period it has nothing left to it but to comply exactly and 
 absolutely, with those terms and conditions. The idea has l)een 
 advanced, (and it is the foundation stone of all the pro])ositions 
 to impose a special tax on the government bonds, or to diminish 
 the established rate of interest,) that when a State makes a con- 
 tract it may change that contract in any particular, except in 
 those in which it has stipulated it would not change it. It seems 
 incredible, but it is nevertheless true, that grave arguments for 
 taxing the 5-20 bonds have been made in Congress, based upon 
 thi> construction of the Government's right as a party to a con- 
 tract. 
 
 Under such a construction, an instrument of this sort ceases to 
 have any significance whatever. For example, the Government 
 agrees to pay me one hundred dollars in twenty years, and 
 during that period to pay me six dollars a year. For this agree- 
 ment on its part I loan it one hundred dollars of my money. 
 The contract is simple and direct. It constitutes, if made between 
 individuals, an absolute and unchangeable bargain except by con- 
 sent of both parties. But the claim in (piestion applies to this 
 contr;act, and it is held that inasmuch as Government nowhere 
 says in such a contract that it will not tax the bond, that this is a 
 reserved right it may exercise to any extent it pleases. In other 
 words it may tax the bond out of existence. It thus becomes in 
 effect a claim to annul the agreement and extinguish its value. 
 Xow this is the most transpai-ent legal cliicanery. For what is a 
 contract^ It is an affirmative proposition. It proposes to do 
 certain things. And every just construction, and we suppose 
 every construction ever put upon one since contracts were in- 
 vented, excludes every interpretation which negatives its terms. 
 In otlier words, a contract is an engagement to be fulfilled accord- 
 ing to its precise stipulations. In its nature and essence it pre- 
 cludes all imjtlications inconsistent with these stipulations. 
 
 In the light of this exposition of the essential nature of a pub- 
 lic loan, we contend that Bills, like Mr. Sherman's and Mr. Hen- 
 derson's, to lower the existing rate of interest on the national se-
 
 49 
 
 curities, and ]»roi)Ositi()nrt made in tlie House to exact a sjieeial 
 deduction in the shape of a tax tliereon, are alike inai)proi)riate 
 and discreditable. We contend that the Goveranient has not the 
 shadow ot a ri^ht to do either. So long as the national faith is 
 maintained they will not do either. Thej cannot tax, and they 
 cannot abate the existing rate «)f interest, without violating a 
 specitic contract, without seizing private property and sacrificing 
 it to public uses without com])ensation. Upon the su])])<isition 
 that we are not to abandon the line of integrity in treating the 
 public creditors, these lulls and propositions must then fail ; and 
 the sooner they are hustled out and committed to the waste 
 basket, the better for the country, and the better for their ad- 
 vocates. 
 
 In aiming to secure two desirable objects, namely, the reduc- 
 tion of the rate of interest on the bonds, and the quieting of the 
 agitation on the (piestion of municipal taxation, they ]>roceed 
 upon impracticable lines of approach. The fact is, we cannot 
 honorably secure either of these objects but in one way. That 
 way is to pay otf the existing loan, and to issue another, and 
 make it subject to municipal taxation. This is the simple, and 
 natural, and only (piieting process. Happily, the existing loan is 
 in that form which enables the Trea^^ury to do this without viola- 
 tino- anybodv's riy;hts. The 5-20s are due, or coming due di- 
 rectly. But the question arises, in what shall the 5-20s be paid ? 
 There is just one way to solve that question, and only one. Tuat 
 is, by equalizing ihe value of the greenback with coin. "We must 
 put our finances on a specie bfisis. Until we can summon resolu- 
 tion to do this, we shall continue to be environed with embarrass- 
 ments and impediments, and be entangled at every step, and 
 frustrated in every endeavor to relieve the country from the two 
 ao-itatinf questions of rates of interest and method of taxation on 
 our bonds, to which we have referred. But with resumption, 
 we ]>ut an end, at once and forever, to all these difficulties. 
 Until we do this they will be a never-ending and invincible 
 perplexity.
 
 50 
 
 CHAPTER XY. 
 
 INVIOLABILITY OF THE PUBLIC FAITH. FATAL CONSEQUENCES OF 
 
 REPUDIATION. 
 
 Having shown that Government, in creating a loan, creates a 
 piece of property with all the rights of other property, and that 
 it, at the same time, enters into a specific contract with its credi- 
 tors, which it has not the slightest right to vary without their 
 consent, we proceed a step further. 
 
 Government, in negociating a loan, does more than create 
 property, or enter into an ordinary contract. It offers an obli- 
 gation, and guarantees its performance, under the most sacred 
 sanction known to mankind. As the debt it incurs is not recover- 
 able by law, and cannot be enforced by any of the processes which 
 run against property or individual debtors, Government, in 
 lieu of this security to the holder of the loan, pledges the national 
 faith and honor for its payment. It creates what is understood 
 in all mercantile and financial circles as the highest species of 
 obligation known in human transactions. This is the debt of 
 honor. In all cases of ordinary bankruptcy, the debtor holds 
 himself bound to pay this class of debts, whatever becomes of the 
 general creditor. The debt for which a man pledges his general 
 property may be but partly paid, for the property may prove in 
 the end insufficient. But the debt which stands alone on the 
 personal honor of the debtor, such, for example, as where the 
 creditor is an endorser, is considered a debt to be paid at all 
 hazards, and at all costs and sacrifices. A bankrupt debtor may 
 escai)e all other obligations under plea of poverty, but these he 
 can never escape without incurring a weight of odium fatal to 
 his character. 
 
 Of the same nature, only of so much higlier character, as 
 Government is higher than the individual, are all Government 
 obligations. The Government debt is the honorary debt for bor- 
 rowed money. In the shape of obligation then, there is not, and 
 cannot be, any higher or more solemn form of indebtedness that 
 the Government promises to pay. No nation can repudiate this 
 obligation, without setting an example fatal to the public morals,
 
 51 
 
 and covering itself with dis<^race. Witli wliat face can a govern- 
 ment nuike or execute laws to enforce })rivate contracts, wliile 
 itself sets the exanijjle of tlie repudiation of public obligations? 
 The repudiator is an enemy to law and order. Jle sets himself 
 against society and g(jvernment ; for he inculcates the morals of 
 the highwayman, and substantially proposes that the connnunity 
 shall practice the highwayman's vocation. Thus he practically 
 advocates the dissolution of the social compact and of the political 
 fabric. And yet, the rank fecundity of our violently agitated 
 political times produces the rei)udiator, open and avowed, as 
 well as the covert and disguised specimens. Our words, tliere- 
 fore, on this point are not wasted, supei-Huous as they should 
 seem. 
 
 Again, no nation can atibrd to sacrifice its public credit, for 
 no nation is truly indei)endent, unless it has the }>ower to assert 
 its rights, avenge its wrongs, and defend itself against <dl comers. 
 It must have the ability to make war, and, in our modern times, 
 to nnake war on a large scale. If England claims to imprison 
 our fellow citizens, on the ground that they are enemies in dis- 
 guise, as witness the innocent sufferings of our unol)trusive and 
 inoffensive Fenian brothers ; or if she claims to build ships, and 
 arm and man them, to plunder our shipping, as witness the 
 Alabama and her Confederate ships, we must show oui"«elves 
 able to repress and i)unisli such injuries, or sul)ject oui"selves to 
 wrongs and humiliation, even greater than these. If we }>ropose 
 to assert the rights of our French and German naturalized 
 citizens against the oppressive military regulations of those two 
 great ])Owers, we must be able to punish, as well as to complain 
 and threaten. But in order to deal successfully with either France 
 or Great Britain, or any other great European power, we must pos- 
 sess the means to create ijreat armaments, and caiTV on hostilities 
 on a gigantic scale. If another great rebellion should arise within 
 these States, or war should be waged upon us from our frontiers, 
 or upon our long and exposed line of sea coast, what would save 
 us from dismemberment and overthrow, but the ability to raise 
 great armies, and create a great navy, wherewith to vancpiish 
 our enemies? What would have ])ecome of us during our late 
 struggle, if the means had not been forthcoming to suppress the 
 rebellion i In that event there would to-day be no great Ameri-
 
 52 
 
 can Republic. Money is the sinews of war. Men cannot be- 
 paid, ships built, supplies furnished, armies moved, a navy equip- 
 ped, a nation set in motion, without money, and without a vast 
 supply of money. The huge and rapid movements of military 
 operations in our days cannot be carried on without Public 
 Credit. The nation that goes into war must simultaneously go 
 into debt. But, what if tlie Public Credit is destroyed ? What 
 then comes of the national ability to make war, even in self- 
 defence ? The nation that is unable to borrow, is unable to 
 make war, and the nation that is unable to make war, is a nation 
 undone. 
 
 Such is the dilemma into which we, or any other nation, 
 would be plunged by the destruction of the Public Credit. In 
 that event, we should become the helpless prey of any great 
 foreign power that chose to assail us. The nation would speedily 
 dissolve, and fall to pieces of its own weight. Taxation might 
 keep us above water while the sea was smooth, and peace reigned, 
 but with the first strain, with the first storm, with the first ex- 
 ternal war, or the first great internal convulsion, we should be 
 helpless for self-preservation, and to bottom we should go, where 
 any people and every people deserve to go, who could display 
 such dishonesty, and such imbecility, as a deliberate destruction 
 of the Public Credit would imply. 
 
 It seems sufficient to present, even thus briefly and imper- 
 fectly, the consequences of such an insensate proceeding, to 
 deter even the most ignorant and unprincipled from advocating 
 a policy in our finances that looks to such a result.
 
 AA 000 590 45
 
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 525 
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