THE FUNDING BILL. SPEECH OF OHIO, DELIVERED IN THE SENATE OF THE UNITED STATES FEBRUARY 27,. 1868. WASHINGTON: F. & J. RIVES & GEO. A. BAILEY, IMPORTERS AND PRINTERS OP THE DERATES OP CONGRESS. 1868. * THE FUNDING BILL. The Senate having under consideration the bill y the Committee on Finance is in exact accordance with the course that has been pursued in England six or seven times, and once in our own country. In England, prior to 1715, the rate of interest was six per cent., which was reduced by an act of Parliament to five per cent., and without negotiation. In 1725, after the explosion of the South Sea bub¬ ble, the rate of interest on the mass of the public debt was reduced from five per cent, to four per cent. This was done mainly by nego¬ tiation through the great corporations of Lon¬ don, the Bank of England, the South Sea Company, and one of the India companies. They reduced the interest by issuing four per cent, annuities in payment of five per cents.* paying off what were called the dissentients. In the middle of the eighteenth century the rate of interest all over Europe became lower than ever was known before. It fell to three per cent. In 1787 it ivas proposed in England to reduce the interest on the public debt from four to three percent. This passed the House of Commons two readings and was lost on the third. In 1742 a similar attempt was made to reduce the rate of interest, and in 1749, under the administra¬ tion of Mr. Pelham, it was carried into execu¬ tion, and we have in Hansard’s Debates, and also in the biography of Mr. Pelham, an exact account of this transaction. Mr. Pelham was warned before he made this proposition of the effect upon himself, but he persisted in it and finally carried it through, after quite an ex¬ tended argument. His proposition, in short* w T as that any holder of any security bearing four per cent, interest might, within a given time, present it; not for redemption, but ta receive in exchange a security bearing three and a half per cent, interest for four or five years, and after that bearing three per cent.. interest. Nothing was said about redemption ; but it was understood, no doubt, that in case holders did not accept it their securities would be redeemed. The result was an angry debate, in which it was alleged that this was a violation of the public faith. I read a note in Hansard’s Debates, taken from Tindal. Tindal says: “ This was generally looked upon to be a very bold measure in the minister, and some of his best friends, even the day before the vote passed in the House of Commons, endeavored to persuade him against it. But he appeared determined, and in a few weeks they approved of his steadiness as much as before they blamed his obstinacy.” I read from Mr. Pelham’s biography what is there said on the subject: “ Duly impressed with the importance of his finan¬ cial plan, Mr. Pelham suffered no avoidable delay to- intervene before he submitted it to the House. By this promptitude he manifested the decision of a great minister, for the proposal was at first so un¬ popular or so little understood that even on the very day before the resolutions were brought forward some of his friends endeavored to dissuade him from his purpose; but their remonstrances wereineffectual. He persevered in his determination, and the event fully justified his expectations. On the 28th of No¬ vember a motion was made for a committee of the whole House, to take that part of his majesty’s speech into consideration which related to the national debt. The expediency of reducing the interest had been so clearly demonstrated by Mr. Pelham, that his plan was unanimously approved.” The great corporations which had aided in the former reduction in the interest of the public debt combined against it, and for two years defeated it. The House of Commons was firm and threatened to repeal some of their privi¬ leges, and finally compelled them to acquiesce. There is a still more interesting case, and one 11 more applicable to our present condition, which occurred in England in 1822. During the wars which probably tested the power of England more than any event in her history—her wars with Napoleon—she was compelled to resort to great sacrifices. She issued all manner of securi¬ ties ; she sold her bonds at one time at fifty or sixty cents on the dollar; she issued five per cents., four per cents., and three per cents., and all other forms of security. After the war was over, before the resumption of specie pay¬ ments, Mr. Vansittart, then Chancellor of the Exchequer, proposed to fund the public debt by a proposition very similar in language to the one submitted now b}^ the Committee on Finance. The great mass of their floating debt consisted of five per cent, exchequer bills—navy bills, as they were commonly called—which were very much such bills as our five-twenty bonds. They bore five per cent, interest. Mr. Vansittart introduced his bill on the 25th of February, 1822; and we have the whole debate in Hansard. His proposition is in substance like our own. It simply declared that the holders of those five per cent, bills might present them at such a time for exchange for a four per cent, annuity. If they did not present their securities their assent was im¬ plied. There was some opposition to the measure. It was alleged to be a violation of the public faith ; it was before specie payments were resumed in England, when all payments were made in Bank of England notes. It was finally carried, after debate, and acquiesced in. There is also one case in our own history, and that is the funding system adopted by Alexan¬ der Hamilton. The Constitution of the Uni¬ ted States declared that the public debt of the United States should be inviolate, and the new Government assumed the debt of the old confederacy ; but, as a matter of course, it was in a condition of great uncertainty ; the interest had been unpaid for a long time, and there were disputes as to the amount. Alexander Hamilton, as first Secretary of the Treasury, proposed a plan of funding and grouping to¬ gether all this mass of indebtedness. His report on the public credit was regarded by his friends, and has been regarded by the whole world, as a remarkable production; and yet, what was Alexander Hamilton’s funding plan? He proposed first, to ascertain the amount of the national debt, which was finally computed to be and was settled at $54,000,000, foreign and domestic. Did he propose to pay that off in precise conformity with the terms on which the debt was contracted? Not at all; betook that and he also ascertained the amount of the State debts? Nearly all the States were over¬ whelmed with debts that grew out of the revo¬ lutionary war, and they were ascertained and apportioned ; the general aggregate of all was $74,000,000. How was this funded ? By offer¬ ing the fundholders six per cent, bonds for two thirds of their debt, and the other third was paid by three per cent, bonds, some of it by four per cent, bonds, some of it by public lands, and some of* it by annuities. The plan of Al¬ exander Hamilton embraced various forms of loan, all of which was submitted to the volun¬ tary will of the fundholders. Some of them refused to agree. What did he do then? He only paid them in accordance with the stipula¬ tions made as to the rest of the loans. I will read a short paragraph or two from this docu¬ ment of Mr. Hamilton to show how he regarded the public debt: “ The interesting problem now occurs: is it in the power of the United States, consistently with those prudential considerations which ought not to be overlooked, to make a provision equal to the purpose of funding the whole debt, at the rates of interest which it now bears, in addition to the sum which will be necessary for the current service of the Govern¬ ment? “The Secretary will not say that such a provision would exceed the abilities of the country; but he is clearly of opinion that to make it would require the extension of taxation to a degree and to objects which the true interests of the public creditors for¬ bids. It is therefore to be hoped, and even to be expected, that they will cheerfully concur in such modifications of their claims, on fair and equitable principles, as will facilitate to the Government an arrangement substantial, durable, and satisfactory to the community. The importance of the last char¬ acteristic will strike every discerning mind. No plan, however flattering in appearance, to which it did not belong, could be truly entitled to confidence.” Mr. FESSENDEN. What provision did be make for those who did not agree to the offer? Mr. SHERMAN. He merely provided for four per cent, interest to be paid to them, two per cent, less than they were entitled to under the law creating the debt. After speaking of those who might refuse the offer he proceeds to say: “Hence, whatever surplus of revenue might re¬ main, after satisfying the interest of the new loans, and the demand for the current service, ought to be divided among those creditors (if any) who may not think lit to subscribe to them. But, for this purpose, under the circumstance of depending propositions, a temporary appropriation will be most advisable, and the sum must be limited to four per cent,, as the rev¬ enues will only be calculated to produce in that pro¬ portion to the entire debt. “ The Secretary confides for the success of the prop¬ ositions to be made on the goodness of the reason upon which they rest; on the fairness of the equiva¬ lent to be offered in each case; on the discernment of the creditors of their true interest; and on their disposition to facilitate the arrangement of the Gov¬ ernment, and to render them satisfactory to the community.” Isay the plan now proposed by the Committee on Finance is in accordance with precedent, holds out no threats, deals with all alike, holders of five-twenty bonds, greenbacks, and all. It gives them a proposition to fund their debt at their own option by the 1st of Novem¬ ber next, or if they will not choose to do it, then, as a matter of course, the question is to- be decided at the next session of Congress,, what provision ought to be made, whether oi not Congress will redeem the five-twenty bonds in the currency in which they were contracted or postpone its redemption, paying the interest at six per cent, in gold, until we can rede'em the principal in gold. Whatever view Senators may take of this, they cannot avoid m’aking some provision by some loan less onerous than five- twenties for funding the greenbacks and for funding the floatingdebt of the United States: and into that loan, whatever it may be, the whole debt may eventually float. 12 TERMS OF THE NEW LOAN. Now, Mr. President, the question is whether the terms of the proposed loan arc reasonable and fair, such as we ought to propose to our own citizens, and such as our constituents may reasonably hope to fulfill, such as are equitable and fair as between creditor and tax-payer. The first question that arises is the exemption from State taxation. No Government that I have been able to find ever allowed its bonds or securities to be taxed. The United States never did. In the absence of stipulations to the contrary the courts have always held that no State or subordinate au¬ thority could tax the national securities. It has been so held by every judge who ever sat upon the supreme bench, because it has hap¬ pened that cases of the kind were brought be¬ fore the courts from time to time from the earliest foundation of the Government until the last case in 2 Black, in 18G2, and it has been uniformly held that there is no power in the States to tax Government bonds. It may, it is true, be made a part of the loan that the Stales shall have a power to tax them, but who would buy such bonds? I never would vote for such a provision. I never would allow a subordinate authority to thus control the pub¬ lic credit of the United States or have a voice in the matter. The effect in time of war would be disastrous. Such a power would prevent the citizens of a State where the power -was exercised from loaningmoney upon Government securities. I take it, therefore, as an axiom, that in no event shall we allow subordinate authorities to tax the national securities. I need not refer to the authorities on this sub¬ ject. I have done that before, and I suppose that Senators are familiar with them. 'Ihere are ’ht least five or six dilferent decisions of the Supreme Court to this effect. The next provision is the exemption from any discriminating property tax. Men who do not understand the question have proposed to tax Government securities specially, like a special tax on manufactures; and the proposi¬ tion has been, perhaps, broached in Congress to tax Government securities one or two percent, in lieu of all other taxes. Such a provision would be a clear and palptfble violation of the Constitution and of the law. It would be worse than repudiation; it would be the meanest kind of repudiation. Why? Because it would be a special discriminating tax on property. A tax on manulactures is a tax on consumption. The manufacturer may add that tax to the cost of the article, and the consumer who finally uses the article pays the tax. That is the principle upon which it rests. A special tax on property is a diminution of the property. It cannot be collected from any one else or shared with any one. It is a direct tax—as much so as if levied on farms—and being a direct tax is unconstitutional, unless apportioned among the States according to population. One of the earliest cases which came before the Supreme Court was the well-known case involving a tax on carriages. There the court held that it was the use of the carriage which was taxed, and that was a proper tax, because it was a tax on the use of a luxury. It was the enjoyment or use of the carriage that was taxed, not the property in the carriage. No special tax can be levied on property. If this principle once prevailed, that we might select any kind of property and levy a discriminating tax on that property, the time might come when shipping might be selected as the subject of a special tax; when property in lands, plainly against the intention of the Constitution, might be selected for the levying of a discriminating tax. We propose, therefore, to avoid all controversy, to put a stipulation in the new loan law exempt¬ ing these bonds from all discriminating taxation by Congress, but leaving them subject to the same income tax that other income is subject to. AS TO THE RATE OF INTEREST There is some difference of opinion'; and you will hear more of it from my friend from Missouri [Mr. Henderson] as to the rate of interest of the new bonds. The Committee on Finance took great care in deciding this ques¬ tion. We believed that five per cent, was as low a rate as we could now hope to negotiate a loan. It is the lowest rate of interest ever provided for in any loan act of the United States, except in the funding scheme of Alex¬ ander Hamilton, already referred to, where a certain portion of the debt was funded at three per cent. 1 have looked with care into recent foreign loans, and I find that no Government in Europe has recently sold its bonds at a less rate of interest than five per cent. When the nominal rate was lower they were sold at a dis¬ count. The English loans, during the Napo¬ leonic war, yielded the lender a rate of inter¬ est averaging over five per cent. I have on that subject a number of authorities, and I will refer to one or two of them. in the compendium of finance which I have before me there is a statement of the amount of the various loans negotiated by the English Government during the second French revolu- ( tionary war. The whole amount of loans ne¬ gotiated was £420,905,400 sterling, or over two thousand million dollars. The amount actual^ received from those loans by the Government was £266,800,000 sterling, or at the rate of about sixty per cent. The securities were mainly three per cents, though large sums bore four and five per cent., so that the rate of in¬ terest actually paid was over five per cent. In 1815, after Bonaparte had left the island of Elba, when it became necessary for the English Government to negotiate a large loan, they sold £66,000,000 of three and four percent, consols for £36,000,000 sterling, or about fifty-six cents on the dollar. So it is in France. We have all heard about the popular loan in France during the Crimean war, and it was regarded as a remarkable suc¬ cess in its time. It was undoubtedly very popular in France. The first loan, on the 14th of March, 1854, was for 250,000,000 francs. It was sold at the rate of 100 francs of three per cents, for sixty-five francs and twenty-five | centimes, and at the rate of 100 francs at four 1 and a half por cent, for ninety-two francs and 13 fifty centimes, making really a little over five per cent. The ordinary legal rate of interest in most of the States is seven per cent., and the actual rate among merchants often amounts to ten per cent. We have by the discrimination made in favor of these bonds reduced the rate to five per cent., and it seems to me that is as low as it is possible to negotiate this loan. As a mat¬ ter of course, if 1 believed it was in the power of the Government without adopting measures injurious to the public interest to negotiate a bond at a less rate of interest, I would gladly do it; but after full examination of this ques¬ tion the Committee on Finance came to the conclusion that five per cent, was as low a rate of interest as the loan could be negotiated. There are various reasons why the rate of interest all over the world is now higher than it was one hundred years ago. The artificial wants of society have been very much increased. We have railroads and steamboats and tele¬ graphs, vast avenues and sources and demands for wealth and capital that one hundred years ago Benjamin Franklin and Doctor Johnson never thoughtof. The railroads in this country at this time are worth more than all the country was wortli at the time of the revolutionary war. All these new elements of social progress make demands for money, and therefore raise the rate of interest. There is another remarkable fact which causes a general advance of the rate of interest all over the world in this as com¬ pared with the last century, and that, is the vast addition made to the coinage of the world. The discovery of gold and silver has caused an advance in the rate of interest. Why? Because every man who loans money now, especially on long time, knows that he will be paid off at the end of the period in a commodity with less productive, purchasable power than he loans. The actual depreciation in gold and silver coin for a number of years has been a little over one per cent, per annum, so that if a man now lei ids $1,000, pay able in gold twenty years hence, he will get back his $1,000 at the end of twenty years with one fifth of its purchasable power shorn off by the additions in the meantime to the value of the gold and silver of the world. The truth is now that while real estate is advancing money is depreciating. All pro¬ duction s are advancing, while the relative power of gold and silver coin to other commodities is diminishing. A productive four per cent, investment in real estate is a more profitable investment than six per cent, in the best bonds in the world. Why? Because those bonds in the future will be paid off in gold and silver coin when it has less purchasable power than it has now, while the lands, by the gradual increase of the country, are increasing in value. The one diminishes at the rate of one percent, per annum, according to the best statisticians, and the other increases in this country at the rate of one and a half per cent, per annum. Mr. STEWART. Allow me to suggest that that depends on the continued production of gold. Mr. SHERMAN. If California and N'evada give out there is plenty of gold in other por¬ tions of the world. There is no danger of any diminution of the quantity. I say, Mr. President, we cannot negotiate a bond bearing a less rate of interest than five per cent, except first by increasing and depre¬ ciating the greenbacks, and that certainly we ought to oppose to the utmost; or second, by the English plan of selling the loan below par, to which our people are not accustomed, and to which they would not submit. That resort would increase nominally the public debt. Even if the rate of interest should be more favorable, the popular judgment would condemn it, be¬ cause they look upon a debt as a temporary thing to be paid off in full, and not, as in England, a permanent thing, the principal of which is never to be paid, and the interest only to be provided for. There is this great difference between our system and the English system. In England they sell their credit below par. They fix the rate of interest and they sell securities in open market at what they will bring. In this coun¬ try we fix the price of our bonds at par and ask money lenders at what rate of interest will you loan us money. That is thediffercnce. Why is it so? Because in England they do not an¬ ticipate the payment of the principal. There is another way in which 1 suppose we might negotiate a bond at a low rate of inter¬ est ; and that is, by postponing the payment of the principal to an indefinite ppriod. That, however, is against the American notions of finance. Our people have always looked upon a debt as a burden to be paid off as rapidly as possible, and public opinion and good policy would not tolerate the making of a very long loan, and I for one would not, under any cir¬ cumstances, vote for one which it would not be within the power of the Government to redeem within twenty years. 'The public is already familiar with the ten- forty five per cent. loan. They know what it is. It is known in every cabin in all this land. A bond at four per cent, or any other less rate of interest would be looked upon as confisca¬ tion; you could not negotiate it; five per cent, is now about par, and we can sell a five per cent, bond without increasing the greenbacks a single dollar. I do not desire to see the green¬ backs increased beyond their present amount. There is no necessity for it. We can reduce the rate of interest from six to five per cent, without increasing the volume of greenbacks, and we can thus save to the people of this country $17,000,000 in gold per annum with¬ out deranging the currency, without disorder¬ ing the money market, without depreciating our credit. I do not desire to force upon the market a loan bearing a lower rate interest, ! which will either require more greenbacks to float it, or require us to sell it below par, or require us to prolong the time of payments. We can negotiate a five per cent, loan now in the present, state of the money market, disor¬ dered as it is by political complications, and 1 desire to secure that, maintaining, however, the right within a reasonable time, say ten 14 years, to make a further reduction to four per cent., if we can, after that to three per cent.'or whatever public credit will allow; but the attempts now to reduce the rate of interest to four per cent, would be regarded in this coun¬ try and abroad as a species of confiscation. THE PAYMENT OF THE PRINCIPAL. The section of this bill in regard to the pay¬ ment of the principal of the debt only estab¬ lishes the general idea that the debt itself shall be paid in a period of time. The Committee on Finance, after much reflection, agreed to fix the amount which should be annually appli¬ cable to the payment of the principal and interest of the debt at $185,000,000. The amount of the interest nowis $129,500,000, so that we appropriate about five and a half mil¬ lions to the'payment of the principal; but, as a matter of course, this sum being applied annually, while both the principal and the in¬ terest of the debt is being reduced, partly by funding, partly by payment, partly by the operation of this law, the interest will grad¬ ually be decreased, and the amount applicable to the principal will thus annually increase. If all our debt is funded into a five per cent, loan except the long bonds of 1881, and the amount should be $2,200,000,000, leaving out¬ standing the present amount of greenbacks and no more, the interest on the debt would cease to be a burden, and the difference be¬ tween the amount appropriated and the amount required to .pay the interest would gradually pay off the principal of the debt. 1 have a table, prepared at the Treasury 7 Department, showing the precise operation of tiffs plan, by which it will appear that it would pay off the debt by 1909. CONVERSION OF UNITED STATES NOTES. Mr. President, I desire now to make a few observations in regard to the sections of the bill relating to the United States notes; and these I consider as vitally important. We pro¬ pose to restore to the United States note the right to be funded at the pleasure of the holder into the new bonds whenever he desires. There is more ground of discontent and more real discontent among the people of this coun¬ try because ofthe discrimination made between the bondholder and the holder of the green¬ back than from any other cause. You com¬ pel every citizen of this country to take the greenback as money, willing or unwilling. It is the measure ofthe value of his labor; and yet it has no purchasable power except the hope that in some future time the United States will redeem it. It may be forced upon another man in payment of a debt; it may be applied to pay taxes ; but it cannot be converted into income except at a discount. A man cannot take United States notes pay¬ able on demand to any broker and receive in exchange any form of security issued by the United States. There is a wide discrimination made between the bondholder and the note¬ holder, which gives rise to popular clamor and is the cause of a great deal of just complaint. In 18G3 we were compelled for wise purposes to take away the right of the holder of the green¬ back to fund it, because we wished then to force our loans upon the market; and while that right was outstanding we could not do it. Now that the war is over, that the whole pro¬ cess of funding is intended to be voluntary at the discretion of the noteholder, we ought promptly to restore this right to allow the note to be converted at any time into some kind of bond; and we propose also to allow the bond to be converted into notes keeping within the limit of notes fixed by law. Then there is no discrimination ; the bondholder and the note¬ holder are both public creditors ; both depend upon the public faith. The noteholder may go to the Treasury of the United States and demand his bond ; the bondholder may go also and demand his note. They are put on a basis of equality 7 . This destroys all speculation in Government securities. Both will then stand on the same footing, and both will be of equal value. The noteholder may at his option draw interest in gold by converting it into bonds, and the popular cry of demagogues that we have provided gold for the bondholder and notes for the people will be silent. And, sir, there is now no reason why the note issued to the laboring man should now be less valuable than any other form of Gov¬ ernment security. It makes one of those salient points before a popular audience just and cor¬ rect, which is the cause of complaint, and will be until it is removed. An important effect of this provision will be to furnish money to re¬ deem the bonds or any other securities that offer, and without resorting to a sale of bonds. I do not propose, nor do the committee con¬ template, the issue of any new greenbacks. We suppose that the process of funding these notes, they pouring into the Treasury, will furnish ample means to redeem all the out¬ standing bonds and securities as they become redeemable. I have no doubt the same pro¬ cess will go on here that occurred in Europe— a very small amount of money will pay a large amount of bonds. The mass of the bonds will be exchanged without money. The transac¬ tions paid by money compared with the trans¬ actions paid by checks and other forms of paper are as one to a thousand. The daily 7 balances in the exchanges in the New York clearing-house amount to many millions, and yet the amount of currency to pay these bal¬ ances is often less than one per cent, of their nominal amount. Other reasons may be given for the new feature of this bill giving the holder of these bonds the right to convert them into notes. This is indispensably necessary to guard against sudden contraction and panic. There are times when the notes will float into bonds so rapidly as to contract the currency, and thus derange business and prevent the movement of crops. This privilege will give flexibility and movement to the currency of the country. Every exchange will be a benefit to the Government. If the holder of & Gov¬ ernment security bearing interest surrenders it to the Treasury for a note without interest the United States saves the interest. If, on the contrary, the notes are funded for a bond 15 the notes may be used in the redemption of other bonds bearing a higher rate of interest. If the money-market becomes stringent, if currency becomes scarce, the holder may be willing to surrender his bond bearing five per cent, interest in gold in order to get currency with which to pay his debts, and why not give him that privilege? It is a benefit to the United States, and it is the only mode by which, during the suspension of specie payments, we may make a flexible currency. And, sir, this loan will be the great saving fund of the people of the United States. Every man having money for a time idle will float it into these ten-forty bonds, and while we have the money we shall pay off bonds bearing a higher rate of interest. When he desires it again,he can come back and get the bond, and so this operation maybe carried on with perfect safety. Now the deposits in the saving banks amount to over five hundred million dollars. Why should not this money be deposited in the Treasury? Why should not these little streams of the savings of the laboring man help to float the public credit ? The Government of the United States ought not to feel too high to acknowledge the services of such a fund. They will be useful. They will enable the depositor to get the full value of his money. Now he deposits in savings banks, where he gets four or five per cent, interest in paper money. Under this provision he may put his money in these bonds, and the money thus deposited will enable the Government to pay off bonds bearing a higher rate of interest. In every view we could take of this proposition, after the most ample consideration, we thought it was a wise provision, and would work well. The trouble and cost of printing these bonds and exchanging them one for another, being carried on at the Treasury Department or at the depositories, or other proper places of ex¬ change, will be done without cost except that of printing. It is purely voluntary, and will be adapted to the wants of trade. It will tend to give increased value to the United States notes; and my firm conviction is that under this process both notes and bonds will grad¬ ually rise, step by step, until they reach the standard of gold, and then this whole process ceases according to the provisions of the bill. I look upon this provision as the most rapid way to specie payment. The only other section of the bill to which I have not alluded is that which legalizes con¬ tracts in gold. That is right in itself. I always supposed that the legal-tender act was not in¬ tended to affect the right of the people to nego¬ tiate, buy, and sell gold, if they chose. Some of the courts, however, have decided otherwise. Whatever the law may be, there is no objec¬ tion to unlocking the hoards of gold, and allowing the people to deal in it as they choose. It makes another addition to the currency, and will gradually make our people become accus¬ tomed to dealings and transactions in gold and will tend in the right direction. Where one man lends gold to another man, it is equitable that he should have gold back in payment, and it is very inequitable for the debtor in such a case to refuse to pay it, and make a fraud of the law. I think it will be beneficial to insert this provision, because dealing in gold will have a tendency toward specie payments. I have thus, Mr. President, presented the leading provisions of this bill. I appreciate the difficulties of the subject and the personal responsibility I assume in advocating a meas¬ ure that may fail of its purpose. It is far easier to sit quiet, to propose nothing, and criticise the measures of others; but such I do not un¬ derstand to be the duty of your Committee on Finance. We are actuated by the earnest de¬ sire to reduce the burdens of the people with¬ out injury to the public credit or injustice to the public creditor, by a firm conviction that the offer here made to the bondholder is fair, equitable, and honorable, and that its accept¬ ance would not only save an annual expendi¬ ture of $17,000,000 in gold, but would settle, upon a proper basis, all uncertainty as to the mode of payment of the public debt, and still leave open, after a reasonable time, a further reduction of interest, if practicable. Further than this the committee does not go. It does not provide for a rejection of this offer ; but I repeat, that if this offer is rejected I will not hesitate to vote to redeem maturing bonds in the currency in existence when they were issued and with which they were purchased, carefully complying, however, with all the pro¬ visions of law as to the mode of payment and as totheamountofcurrencyoutstanding. Thiscon- clusion I have arrived at against the earnest argu¬ ments of personal and political friends and against my own personal and pecuniary interests. But, sir, I saw two years ago—and we all see clearly now—that the existing relation between the public creditor and the tax-payer, by which the former enjoys all the blessings of a Gov¬ ernment without cost, receives without dimi¬ nution a higher rate of interest than your courts would enforce between citizens, and may de¬ mand payment of the principal in gold for paper lent, while your courts refuse to enforce a special contract for the return of gold for gold. Such a system cannot endure in a Government not entirely despotic without creating discon¬ tent that may endanger the fair and equitable performance of the public engagements. You cannot disguise your knowledge of this grow¬ ing discontent. The unavoidable effect of ap¬ proaching specie payments in reducing prices and shrinking values will increase this discon¬ tent. In that painful process the people will see that the untaxed productive annuities of the bondholder alone will be increased in value, while all other forms of property will be reduced in value. It is not the interest, nor do I think it will be the desire, of the public cred¬ itor to invite this discontent. The same mo¬ tive that induced him to trust the Government in its hour of peril will induce him to accept equity from those who are willing to do equity. And, sir, his patriotism will not be lessened when he reflects that while his money aided in j the good cause it has been the most profitable j investment of capital he could have made. 16 Senators often tell us that we must not be influenced by public discontent or clamor. 1 agree with this when the discontent is not founded upon substantial equity, but when it is founded upon equity it will make itself felt through you or over you. And Senators must remember that this is a Government of the people, for the people, and by the people. It is not, like the Government of Great Britain, a despotic oligarchy, where the rights of property override the rights of persons ; where the laws are made to add to the accumulations of the rich, though hundreds of thousands may thereby be pinched with poverty. That is the land of entails, where the offices of the church are bought and sold as property, and where all that is good in life—office, honor, property—is confined to less than one tenth of the popu¬ lation—where the laws are studiously framed to exclude the poor from all political rights. We borrow from these people of kindred blood many of the best guards of liberty, but we must take care not to ingraft on our republican system the leading feature of their present Gov¬ ernment, the supremacy of property over labor. Their wealth consists of vast accumulations of property produced by ages of labor. A generation adds but little to this aggregate of wealth; therefore their laws protect property at the sacrifice of labor. Here all the acquisi¬ tions of the past, all the accumulations to this hour, are only equal to the accumulations that will be made by labor during thenextten years. Our wealth is in the energy and sinews of thirty million 1‘reepeople—all equal—each workingfor himself, with no privileged hand to press him down in the race of life. It is this that has made our history like the tales of Arabian fiction. Our railroads alone, built since we were all young, j are worth $1,600,000,000, ormorethan theprop- erty of the United States when she took her place among the nations of the earth. The property of the State of Ohio is now worth more in gold than that of all the colonies when they proclaimed independence, and yet Ohio was then a pathless wilderness where no white man dwelt. The entire debt of the Revolution, which Alexander Hamilton approached with terror, which our ancestors debuted over for years, upon which parties were formed and dissolved, was $75,740,111 30, including over seventeen million dollars of State debts assumed ; and yet now we appropriate one half of that sum for pensions, and will this year reduce our current expenses more than that sum. All this vast progress is the result of labor. To encourage, maintain, and reward labor must be the prin¬ cipal object of our legislation. Capital can take care of itself. It has many advantages in competition with labor. It may be idle—labor cannot be. It does not grow hungry; it does not become cold or sick, while the hand of labor must be supported by food and clothing, and awaits sickness and death. Capital is only j useful to the country as it gives employment | to labor, as a means to further development, while all labor tends to create new wealth. When capital is invested in Government bonds it is useful, so far as further development is concerned, only in supplying the wants of the owner. When employed in most ut.her pur¬ suits it adds to the national wealth. Certainly it is not the public interest to make this invest¬ ment so profitable and attractive as to draw into it the capital of the country or to make it so permanent as to become a privileged aris¬ tocracy. No privilege should he granted to the bondholder that is not granted to the note¬ holder. Both are public securities, and both, and equally, can appeal to the public faith. No privilege should be given to the bond¬ holder unless it is compensated for by some advantage reserved by the Government, and the whole public debt should be made to assume such form that it may be a part of the circu¬ lating capital of the country bearing as low a rate of interest as practicable, and only with such exemptions as will maintain it at par with gold. Whether this bill will promote these objects it is for the Senate to say. I confi¬ dently believe it will. I do not appeal to any party for the support of this measure, for it affects all alike. All must contribute to the pifblic taxes, and all will share in the benefits of any relief. But while we trust our political adversaries may supporfthis as a measure of relief to our constituents, yet the fate of the bill must rest mainly upon the Republican party. It is my pride and hope that this powerful political or¬ ganization, having conducted the country with safety and honor through the most memorable scenes of our history, may, still retaining the confidence of the people, gradually guide them back into the channels of peace, reduce their burdens, relieve them from oppressive taxes, and start again in productive labor the millions now waiting to develop the greatest country God ever gave to man. Now distrust seizes upon every one. Wild schemes have been proposed, which drive cap¬ ital from its moorings. Taxes are bearing heavily upon unprofitable industry, and com¬ plaints are made of the burden and distribution of these taxes. Sectional divisions arealread}’ showing their hydra heads, and disputes as to the terms of public engagements cast doubts upon the public faith. It is in such a time that Con¬ gress is able to perform its highest duty—that of an arbi, rator. Upon questions involving the public debt it is the only arbitrator, it cannot shrink from this duty. I trust, sir, before this session closes, that Congress will provide for the redemption of our maturing bonds, thussaving ultimately $17,000,000 a year; that it will adopt such measures as will gradually make the dollar in greenback in the hands of the laboring man equal to a dollar in gold ; that it will throw off the great mass of our internal taxes, and reduce our ordinary expenses to the lowest practicable I limit. These measures adopted, we may safely leave to our constituents the renewal of trade, the restoration of confidence, and the develop¬ ment of industry.