"According to my viewers of the subject, the conspiracy which seems to have been formed here and in Europe, to destroy by legislation and otherwise, from three-sevenths to one-half, of the metallic money of the world, is the most gigantic crime of this or any other age." - John G. Carlisle, in 1878.
"It is the monometallists who are the authors of the depreciation which they point to as a proof of the unworthiness of the metal they cry down. They resemble the people who, having tied the logs of a horse, call out for him to be killed because he does not gallop." - Henri Cernushi.
In the preceding chapter, the writer faithfully endeavored to give a true history of the legislation culmination in the act of February 12, 1873, which struck down the standard silver dollar as the unit of account.
Step by step, the money power successfully attained its great end in the halls of Congress, and, with the downfall of silver, nothing apparently stood in its way for the complete control of the currency of the nation, and consequently an oppressive mastery over all other property.
The financial legislation, up to this period, was dictated by the national banks and their firm allies, the money lenders of London.
Congress merely registered the demands of this money power upon the statute books as the law of the land.
Since April 1, 1873, we have ascertained that a single standard of gold was fastened upon the nation by the combined influence of England and her ally - the national banking system.
The passage of the so-called specie resumption act of 1875 planted this country upon a gold standard, and practically gave the banks a monopoly of the currency.
This was the policy planned and matured by the money power to place the vast business interests of the nation upon a bank credit basis as the sole method of carrying on all trade and commerce.
The way was apparently clear to substitute a national bank credit currency in lieu of legal tender silver and greenbacks, force al1 business to bc tributary to the banks, and to perpetuate a huge national debt.
This system of finance was the exact counterpart of that of England - in fact, it was borrowed from that country.
That the scheme of finance embodied in the national banking act was imported from England by John Sherman - the author of the original bill providing for its creation - is indisputable.
In one of his reports as Secretary of the Treasury, Mr. Sherman refers to this fact and says: "Both England and the United States have settled upon a bank currency secured by government bonds."
This language of Mr. Sherman, in thus speaking of England and the United States, signifies a unity of purpose to fasten on this country the British system.
To illustrate the immense power of the Bank of England over the people of Great Britain, we quote from a report made by the Chamber of Commerce of the city of Manchester, England, in 1859, which says: -
"Although it scarcely comes within the scope of their present object, the board will add a reflection upon the subject of the undue privileges assumed by the Bank of England. That such a power over the property and even over the lives of the people of this country can be allowed to exist is one of the phenomena of our civilization. That their directors, twenty-six in number, can in secret session, without the consent of their constituents, decide the value of all property, is to be regarded as one of the greatest crimes against modern civilization."
In the face of this indictment against the Bank of England, Mr. Sherman appropriated its plan as the model of his scheme - the national banking act of February 25, 1863.
After the demonetization of silver in 1873, the most disastrous panic ever known in history up to that time, swept over this country, tens of thousands of failures occurred, entailing losses of hundreds of millions of dollars of capital.
The extent of the loss wrought by that great crash cannot be described by the language of man. Resource must be had to figures to convey an adequate idea of the magnitude of the disaster flowing from this wide spread ruin and wreckage of values.
In 1873, the number of failures was 5,183, with liabilities of $228,500,000 1n 1874,the failures were 5,830, and the liabilities, $155,239,000; in 1875 the failures were 7,740, and liabilities of $201,000,000;in 1876, the number of failures was 9,092 with a loss of $191,000,-000; in 1877, the failures were 8,872 and liabilities were $190,669,000; in 1878, the failures reached 10,478 with the vast aggregate of $234,383,000 in liabilities - a total of failures numbering 45,195, with liabilities of $1,ll0,-
906,000 - exceeding the enormous war indemnity paid by France to Germany.
Exclusive of this immense loss to business, the amount of suffering borne by the people will never be known to the historian.
Hundreds of thousands of skilled and unskilled workmen were thrown out of employment, although the crops were abundant, and the number of consumers was larger than ever before known.
Then, for the first time in the history of the United States, appeared that phenomenon - the American tramp - whose appearance and permanency, as an established institution in civil society, is a problem that must be solved some time in the near future.
Then occurred an universal reduction of wages in all the leading industries throughout the United States, and in many eases skilled workmen received a wage of less than one dollar per day. Hundreds of thousands of American citizens, the flower of the industrial class, struck against these starvation wages, and these strikes spread all over the United States, resulting in tumults, riots,- and bloodshed, assuming the proportions of a civil war.
The United States troops were called out to put down the workingmen at the point of the bayonet, and their just grievances were quenched by the regular army.
It was during this period that a celebrated divine, in a sermon delivered from his pulpit, said: -
"Is not a dollar a day enough to buy bread? Water costs nothing! And a man who cannot live on bread is not fit to live. A family may live, laugh, love, and be happy, that eats bread in the morning with good
water, and good water and bread at noon, and water and bread at night."
This humane discourse was uttered by a minister of the gospel who received the princely salary of $25,000 per annum.
Jay Gould, the great railroad wrecker, said: "We shall shortly find ourselves living under a monarchy. I would give a million dollars to see Grant in the white house."
The New York Times, a republican journal, said: -
"There seems to be but one remedy, and it must come - a change of ownership of the soil and the creation of a class of land-owners on the one hand and of tenant farmers on the other - something similar to what long existed in the older countries of Europe."
Hon. J. C. Burrows, a republican member of Congress from Michigan, gave utterance to the following language in a speech delivered by him on the question of finance: -
"To-day, the best that could happen to the financial interests and the business interests would be for Congress to pass a law, at its very next session, to punish with death any member of Congress that would make a speech on finance for the next twenty years. What we want is to be let alone, and we are on the high road to prosperity."
Rev. Joseph Cook, of Boston, a divine and public lecturer, used this remarkable language in a speech delivered by him: -
"The strongest of this generation wants a dictator. I say come on with your schemes of confiscation and forced loans, and graded income taxes, and irredeemable currency, under universal suffrage, and if you are sufficiently frank in proclaiming the doctrines of your ringleaders, then, under military necessity, and even here in the United States, we must get rid of universal
suffrage, and we shall. Rather than allow these things we will have one of the fiercest of civil wars."
The Nevada Chronicle, the organ of the millionaire Senator Sharon, editorially said: -
"We need a stronger government. The health of the country demands it. Without capital and capitalists our government would not be worth a fig. The capital of the country demands protection; its rights are as sacred as the rights of the paupers who are continually prating of the encroachments of capital and against centralization. We have tried Grant, and we know him to be a man for the place above all others. He has nerve. As President he would be commander-in-chief of the army and navy, and when the communistic tramps of the country raise mobs to tear up railroad tracks, and to sack cities on the sham cry of `bread or blood,' he would not hesitate to turn loose upon them canister and grape. The health of the country has to bear the burden of government and it should contro1 it. The people are becoming educated up to this theory rapidly, and the sooner the theory is recognized in the constitution and laws, the better it will be for the people. Without blood, and rivers of it, there will be no political change of administration. The moneyed interests, for self-preservation, must sustain the republican party. The railroads, the banks, and the manufacturers, the heavy importers, and all classes of business in which millions are invested, will sustain the supremacy of the republican party.
"To avert fearful bloodshed, a strong central government should be established as soon as possible."
These are but a few of the many expressions of the sentiments entertained by a corrupt and subsidized press, clerical hypocrites, and gigantic knaves.
United States Senator Sharon was one of the most notorious corruptionists and libertines that ever disgraced the name of man. Statesmen and financiers of
the stamp of Gould and Sharon are libels on the human race, and their influence was a standing menace against the liberties of the people.
This panic hung over the people like a pall for seven long years. The extent of the suffering throughout the duration of this panic is eloquently expressed by Colonel Ingersoll, who said: -
"No man can imagine, all the languages of the' world can not express what the people of the United States suffered from 1873 to 1879. Men who considered themselves millionaires found that they were beggars; men living in palaces, supposing they had enough to give sunshine to the winter of their age, supposing that they had enough to have all they loved in affluence and comfort, suddenly found that they were mendicants with bonds, stocks, mortgages, all turned to ashes in their hands. The chimneys grew cold, the fires in furnaces went out, the poor families were turned adrift, and the highways of the United States mere crowded with tramps."
Of course the wise men of that day, in their conceit, discovered a reason for the panic of
1873. In their learned dissertations on the origin of this financial breakdown, they asserted that over production was the moving cause that so fearfully multiplied failures, threw workmen out of employment, and made hundreds of thousands of men, women, and children feel the pangs of hunger and starvation.
The reasoning of these financial wiseacres took the form of the following syllogism: Panics, want and starvation are results of the production of large quantities of wheat, corn, and other date the American people produced immense crops of farm products; therefore, these immense crops were the
cause of panics, bankruptcies, loss of employment, hunger, and starvation. Such was the theory gravely announced by so-called learned professors of political economy.
This doctrine was taken up and echoed in the halls of Congress by alleged statesmen, reiterated in the press, and formed the burden of the stump speeches of designing politicians who sought political preferment. This absurd, sophistical argument had some weight-with the unthinking. Ordinarily, instances of such suffering that were prevalent during the panic of 1873, usually proceeded from failures of crops.
It is a historical fact that a1l great panics that had occurred in the United States up to this time, were during periods when nature exerted herself to the utmost to make bounteous provision for the wants of man.
The scarcity of money, the want and suffering became so great that, in 1876, the Chamber of Commerce of New York City adopted a resolution urging the immediate repeal of the specie Resumption Act of January 24, 1875.
It was on this occasion that John Sherman met with this body, and gave utterance to the statement quoted in the preceding chapter that, "The United States as usual was influenced by Great Britain in making gold coin the standard. This suits England but it does not suit us."
One great cause of the panic originating in 1873, was the natural result of that financial policy, which had persisted in a long continued contraction of the currency, a policy initiated by Hon. Hugh McCulloch, who had been appointed Secretary of the Treasury in 1865.
Upon his appointment as the head of the Treasury Department, he at once took measures, in pursuance of the various acts of Congress, to fund the currency of the nation into interest-bearing bonds, and to create a permanent public debt.
Under the act of April 12, 1866, the Secretary of the Treasury was authorized to exchange interest-bearing bonds for the notes circulating as money, whether said notes were interest-bearing or otherwise.
Secretary McCulloch, a national banker by profession, proceeded to carry out this policy of a merciless contraction of the currency to the full extent of his power.
At the time he began this policy of funding the currency into long time interest-bearing bonds, the entire volume of the various notes performing the functions of money amounted to the sum of $1,983,000,000, exclusive of gold and silver coin. This volume of currency consisted of greenbacks, temporary loan certificates, one and two-year treasury notes, certificates of indebtedness, postal currency, compound interest treasury notes, fractional currency, 7-30 notes of August and September, 1864, 7-30 notes of 1864-65, state bank circulation, and national bank notes.
The two classes of 7-30 treasury notes alone amounted to $845,553,000
It has been denied that these treasury notes circulated as money, but General Logan and numerous other public men of that day, declared that these notes formed a very material part of the volume of currency.
With this large volume of circulation the national banking money power saw that it was impossible to obtain control of the currency of the nation.
Money being plentiful, business was transacted on a cash basis, and, therefore, the people were not compelled to borrow the circulating notes of the national banks at a high rate of interest, and thus be placed in the power of these banks.
These conditions were so apparent, that, in his rcport as Secretary of the Treasury for the year 1865, Mr. McCulloch said:
"The country as a wholc, notwithstanding the ravages of war and the draught upon labor, is by its greatly developed resources, far in advance of what it was in 1857. The people are now comparatively free from debt."
Hence it was the policy of the national banking money power, by this funding of the ready cash of the country into bonds, and substituting the national bank circulation for the currency issued by the government, to control the business of the nation, and ultimately the votes of the people who were obligated to the banks as borrowers.
The national banks desired that all business should be done upon credit; that this credit should be given to them by the government in the form of national bank notes, the latter form of currency to be loaned by the banks to the business interest of the country.
Secretary McCulloch carried out this policy so energetically, and contracted the volume of legal tender currency so rapidly, that strong protests went up from the people, and, on the 3d of February, 1868, Congress forbade the further destruction of the legal tenders, which had been reduced to $346,000,000. The total contraction of all forms of notes circulating as money, reached the enormous sum of $1,ooo,ooo,ooo, during the administration of Mr. McCulloch. We include in
these last figures, all government obligations utilized as money by the people, whether legal tender or othcrwise.
In a speech delivered in the Senate in 1874, General Logan stated that the contraction of the volume of money up to that time was more than one billion dollars
It was this murderous policy of contraction, initiated by Secretary McCulloch and followed by his successors, that eventually led to the panic of 1873, from which dates a universal stagnation of business lasting seven long years.
During this panic, the democracy was successful in the elections of 1874 and for the first time since 1860, the Lower House was controlled by the party of Jefferson and Jackson.
It was then ascertained that silver had been demonetized by the act of February 12, 1873, and the House at once endeavored to enact measures to undo the wrong.
During the Forty-fourth Congress, which came into existence March 4,1875, and continued in power unti1 the 4th of March, 1877,the President was republican. In the Senate there were 46 republicans, 29 democrats, and one vacancy. The House of Representatives was composed of 186 democrats and 107 republicans.
This Congress convened on the 6th of December, 1875.
On March 27, 1876, the Committee on Appropriations brought forward House bill 2,450, which appropriated money for a deficiency for the Bureau of engraving and printing, and section a provided for the issue of subsidiary silver.
Mr. Reagan, of Texas, offered an amendment making the trade dollar legal tender for any amount not exceeding fifty dollars, and the silver coins less than one dollar for any amount not exceeding twenty-five dollars. This was agreed to. Yeas 124- 99 democrats, 22 republicans, 1 independent; nays 94 - 28 democrats, 65 republicans, 1 independent. As amended the bill passed. Yeas 122 -50 democrats, 70 republicans, and 2 independents; nays 100 - 80 democrats, 18 republicans, and 2 independents.
The bill was transmitted to the Senate, and it was referred to the Finance Committee, of which Mr. Sherman was chairman.
On April 10, 1876, Mr. Sherman, from the Finance Committee, reported the bill with amendments; one amending section 3 so as to authorize the coinage of a silver dollar of 412.8 grains - a legal tender not exceeding twenty dollars in any one payment except for customs, dues, and interests on public debt, and stopped the coinage of trade dollars, Another - a new section 4 - authorized the exchange of silver dollars for an equal amount of United States notes to be retired, canceled, and not reissued; and also for coining silver bullion at its market value. The amended bill thus reported by Senator Sherman, authorized the coinage of a silver dollar of 412.8 grains, which, whilc it would increase its legal tender debt-paying power from five dollars to treaty dollars, could not be received for custom dues, and could not be utilized for the payment of interest on the public debt.
These silver dollars werc to be exchanged for an equal amount of United States notes, which were thus to be permanently retired from circulation.
The propositions of the amended bill, as reported by Senator Sherman, should it become a law, would not increase the volume of money a single dollar, for the reason that the silver dollar would be solely used to retire an equal amount of legal tender currency.
The most vicious part of the amended bill was that which limited the legal tender debt-paying power of the silver dollar to twenty dollars; the legal tender currency, for which the silver dollars were to be substituted, was an unlimited legal tender, except for duties on imports and interest on the public debt.
Therefore, the adoption of this measure would be the substitution of a limited legal tender silver dollar for a full legal tender currency, leaving gold the sole unlimited legal tender for the payment of all debts, public and private, including duties on imports and interest on the public debt.
The amended bill was discussed in the Senate, and, on motion of Mr. Sherman, sections 3 and 4 of the amended bill were stricken out, and that motion carried out of the bill the House amendment offered by Mr. Reagan which proposed to make trade dollars legal tender to the amount of fifty dollars, which, by the act of February 12, 1873, were limited to five dollars for any one payment.
By this parliamentary device with the House bill, Mr. Sherman succeeded in killing that measure, the passage of which would have conferred an enlarged debt-paying power on the trade dollar.
On June 10, 1876, Mr. S. S. Cox, from the Committee on Banking and Currency, reported a joint resolution to issue the silver coins in the Treasury to an amount not exceeding $10,000,000 in exchange for an equal
amount of legal tender notes, to be kept as a special fund, to be reissued only upon the retirement of fractional currency; which was passed without a division.
June 21, 1876, in the Senate, the House joint resolution was amended by adding a section prohibiting the coinage of the trade dollar except for export trade; thus striking down the trade dollar, the only dollar authorized by the coinage law of 1873.
Again, the fine Italian hand of the money power was visible in the Senate amendment to this joint resolution.
On June 10, 1876, Mr. Cox, from the Committee on Banking and Currency, reported a resolution in three sections, providing for an increased coinage of silver. It was passed without division, and was transmitted to the Senate.
In the Senate June 27, 1876, the bill was considered on the report of the Finance Committee to strike out all after the enacting clause and insert four new sections. This was a substitute proposed by the Senate Committee on Finance, headed by the distinguished senior Senator from Ohio.
Section 1 provided for the coinage of silver dollars of 412.8 grains, to be legal tender for sums not exceeding twenty dollars.
Section 2 provided for exchanging such dollars and minor coins for legal tenders to be canceled and not reissued or replaced.
Section 3 provided for purchasing silver bullion at market rates for such coinage, to be made without loss in coinage and issue.
Section 4, prohibiting legal tender of the trade dollar and limiting its coinage to export demand. This was before the law of July 22, 1876, had been enacted.
Again the scheme to substitute a limited legal tender silver dollar for United States notes and treasury notes was brought forward in these amendments.
The continued efforts of the Senate to retire permanently the government legal tender notes were a part of the plan of the national banking money power to force the business of the country to be transacted by a credit money.
This bill also aimed at the coinage of silver on government account alone, hence, should the silver so coined out of the bullion purchased by the government decline in bullion value as compared with gold, the national banking money power would demand that the silver dollar be redeemed in gold. It furthermore took away all legal tender debt-paying power of the trade dollar, and limited its coinage to export demand.
On June 28, 1876, Senator Bogy moved to amend section x of the Senate bill by striking out the words "Hot exceeding twenty dollars," the effect of which would be to make the silver dollar a full legal tender for the payment of all debts. The amendment was agreed to by a vote of 18 to 14.
On June 29, 1876, the bill as amended was recommitted to the Finance Committee, where it slept the sleep that knows no waking.
On July 19, 1876, in the House of Representatives, Mr. Bland, from the Committee on Mines and Mining, reported resolution 3,635, authorizing the free coinage of gold and silver. This resolution was carried over to the next session of Congress, and, on December 13, 1876, Mr. Bland offered a substitute for the resolution of July 19, 1876, which provided for the free and unlimited coinage of the silver dollar of 412 1/2 grains, with full legal tender power.
This substitute, which restored silver to the position it occupied prior to 1873, was passed by a vote of 168 yeas to 53 nays. It was sent to the republican Senate, referred to the Finance Committee where it was smothered by John Sherman.
On August 15, 1876, a joint resolution was adopted by Congress which provided for the creation of s Monetary Commission, "To consist of three Senators, to be appointed by the Senate, three members of the House of Representatives, to be appointed by the Speaker, and experts not exceeding three in number, to be selected by and associated with them." Congress instructed the commission to make an examination into the money question, and to give its opinion as to "The best means for providing for facilitating the resumption of specie payments."
On March 2, 1877, the commission made its report, or more strictly speaking, several reports. The majority report signed by five of its members, gave a history of the bi-metallic laws in force previous to 1873, together with their effects on the value of commodities, trade, and commerce, and, as its conclusion, advocated an immediate return to the bi-metallic standard of sixteen to one.
In speaking of the effect of the volume of money on values, and the baleful influences of falling prices on society, the majority report says: -
"At the Christian era the metallic money of the Roman empire amounted to $1,800,000,000. By the end of the fifteenth century it had shrunk to less than $200,000,000. During this period a most extraordinary and baleful change toot place in the condition of the world. Population dwindled, and commerce, arts, wealth, and freedom all disappeared. The people were
reduced by poverty and misery to the most degraded conditions of serfdom and slavery. The disintegration of society was almost complete. The conditions of life were so hard that individual selfishness was the only thing consistent with the instinct of self-preservation. All public spirit, all generous emotions, all the noble aspirations of man shriveled and disappeared as the volume of money shrunk and as prices fell.
"History records no such disastrous transition as that from the Roman empire to the dark ages. Various explanations have been given of this entire breaking down of the framework of society, but it was certainly coincident with the shrinkage in the volume of money, which was also without historical parallel The crumbling of institutions kept even step and pace with the shrinkage in the stock of money and the falling of prices. All other attendant circumstances than these last have occurred in other historical periods unaccompanied and unfollowed by any such mighty disasters. It is a suggestive coincidence that the first glimmer of light only came with the invention of bills of exchange and paper substitutes, through which the scanty stock of the precious metals was increased in efficiency. But not less than the energizing influence of Potosi and Fll the argosies of treasure from the net world were needed to arouse the old world from its comatose sleep, to quicken the torpid limbs of industry, and to plume the leaden wings of commerce.
"It needed the heroic treatment of rising prices to enable society to reunite its shattered links, to shake off the shackels of feudalism, to relight and uplift the almost extinguished torch of civilization. That the disasters of the dark ages were caused by decreasing money and falling prices, and that the recovery therefrom and the comparative prosperity which followed the discovery of America were due to an increasing supply of the precious metals and rising prices, will not seem surprising or unreasonable when the noble functions of money are considered. Money is the
great instrument of association, the very fiber of social organism, the vitalizing force of industry, the protoplasm of civilization, and as essential to its existence as oxygen is to animal life. Without money civilization could not have had a beginning; with a diminishing supply it must ]anguish, and, unless relieved, finally perish."
The report sets out the reason why silver was demonetized in 1873. It says: -
"Manifestly the real reason for the demonetization of silver was the apprehension of the creditor classes (money lending classes) that the combined production of the two metals would raise prices and cheapen money unless one of them was shorn of the money function. In Europe this reason was distinctly
This conclusion has been abundantly verified, inasmuch as every attempt made by Congress for the restoration of silver as legal tender money has been denounced as a scheme to rob the public creditors - a charge which has been reiterated thousands of times in the press, in the halls of Congress and elsewhere.
Professor Bowen, of Massachusetts, and Representative Gibson handed in a minority report, in which it was stated that every attempt made previous to 1873 to establish a double standard "has been a total failure."
Senator Boutwell, in his minority report as a member of the commission, stated his conclusions in effect as follows; he said: -
"A successful use of gold and silver simultaneously in any country can be effected only by their consolidation upon an agreed ratio of value, or by the concurrence of the commercial nations of the world."
He, therefore, advocated a postponement of the free coinage of silver by the United States, "Until the
effort to secure the cooperation of other nations has been faithfully tried."
On the 4th of March, 1877,Rutherford B. Hayes was inaugurated President of the United States. He was the beneficiary of that fraud - the Returning Board of Louisiana. In the formation of his cabinet he selected John Sherman for the responsible post of Secretary Of the Treasury.
During the time he was at the head of that greet department, the national banking money power became more imperious in its demands upon the government. The United States Treasury was made wholly subservient to the clearing house of New York City.
The immense resources of the Treasury were practically placed at the disposal of the banks, which fact became so notorious, that United States Senator James B. Beck and other members of Congress denounced Secretary Sherman for bestowing such munificent favors upon a fear great banks.
During the session of the Forty-fifth Congress, which came into power March 4, 1877, and which was in control until March 4, 1879 the President was republican; the House was democratic by a vote of 156 to 136; the Senate consisted of 39 republicans, 36 democrats and 1 independent.
In the first or called session of the Forty-fifth Congress, November 5, 1877, Mr. Bland, of Missouri, introduced a bill in the House of Representatives entitled, "An act to authorize the free coinage of the standard silver dollar and to restore its legal tender character."
The text of the bill was as follows: -
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress
assembled, That there shall be coined at the several mints of the United States, silver dollars of the weight of 412 1/2grains troy of standard silver, as provided in the act of January 18, 1837, on which shall be the devices and superscriptions provided by said act; which coins, together with all silver dollars heretofore coined by the United States of like weight and fineness, and shall be a legal tender, at their nominal value, for all debts and dues, public and private, except where otherwise provided by contract; and any owner of silver bullion may deposit the same at any United States coinage mint or assay office, to be coined into such dollars, for his benefit, upon the same teens and conditions as gold bullion is deposited for coinage under existing laws.
"Section 2. All acts and parts of acts inconsistent with the provisions of this act are hereby repealed."
The rules were suspended by a vote of 164 yeas to 34 nays, and the bill was passed and transmitted to the Senate.
On November 21, 1877, Mr. Allison, from the Finance Committee, reported the bill to the Senate with amendments to strike out the clause beginning "And any owner of silver bullion," and to insert in lieu thereof a purchasing clause, and to add section a for an international monetary conference.
From 1862 up to 1875, the legislation of Congress tended wholly for the benefit of the East. Almost every lair was enacted with the view of giving the New England states, New York, and Pennsylvania a great preponderance over the rest of the nation; exorbitant tariffs were levied on imported goods for the benefit of Eastern manufacturers, the burdens of which fell upon the consumer; foreign contract labor laws were adopted to afford these highly-protected manufacturers an abundant supply of cheap labor as a means for
crushing the various labor organizations; out of the billions of money appropriated by Congress during that period, by far the greater portion was expended in those few states lying along the Atlantic; Eastern corporations received subsidies of public money to the amount of millions; the great railway corporations, burdened with liabilities far exceeding their assets, robbed the west and south of hundreds of millions of dollars by the imposition of heavy transportation charges, and these railways were owned by Eastern capitalist; while the rich silver mines of the West mere practically rendered valueless by the demonetization of silver.
During the debate in the Senate on this silver bill, Hon. John J. Ingalls, a republican Senator from Kansas, in a speech delivered on the 14th of February, 1877,used the following strong language: -
"If by any process all business were compelled to be transacted on a coin basis, and actual specie payments should be enforced, the whole civilized world would be bankrupt before sunset. There is not coin enough in existence to meet in specie the one-thousandth part of the commercial obligations of mankind. Specie payments, as an actual fact, will never be resumed, neither in gold nor silver in January, 1879, nor at any other date, here nor elsewhere. The pretense that they will be is either dishonest or delusive."
The Senator in the same speech points to the fact that the Eastern section of the country had subordinated all Federal legislation to their demands, he thus arraigns the greed of the East: -
"The Senator from Wisconsin was right. It is not the east against the west.
"It is the east against the west and south combined. It is the corn and wheat and beef and cotton of the country against its bonds and its gold; its productive
industry against its accumulations. It is the men who own the public debt against those who are to pay it, if it is to be paid at all. If the bonds of this government are ever paid, they will be paid by the labor of the country, and not by its capital. They ate exempt from taxation and bear none of the burdens of society.
"The alliance between the west and the south upon all matters affecting their material welfare hereafter is inevitable. Their interests are mutual and identical. With the removal of the causes of political dissension that have so long separated them, they must coalesce, and united they will be invincible. The valleys of the Mississippi and Missouri, with their tributaries, form an empire that most have a homogeneous population and a common destiny from the Yellowstone to the Gulf.
"These great communities have been alienated by factions that have estranged them only to prey upon them and to maintain political supremacy by their separation. Unfriendly legislation has imposed intolerable burdens upon their energies; invidious discriminations have been made against their products; unjust tariffs have repressed their industries. While vast appropriations have been made to protect the harbors of the Atlantic, and to erect beacons upon every headland to warn the mariner with silent admonition from the "merchant-marring rocks," the Mississippi was left choked with its drifting sands till the daring genius of Eads undertook the gigantic labor of compelling the great stream to dredge its own channel to the sea. The opening of this avenue of commerce marks the epoch of the emancipation of the west and south from their bondage to the capital of the east. In asking the passage of this bill they are asking less than they will ever ask again. When I reflect upon the burdens they have borne, the wrongs they have suffered, I am astonished at their' moderation."
The charges made by Mr. Ingalls against the cupidity of the East were true, and at the same time it was
a bitter condemnation of the record of the republican party.
During the same speech on this bill, the brilliant Kansan had recourse to metaphor to upbraid those who advocated a single standard of gold, and at the same time he paid a glowing tribute to the monetary properties of the silver dollar as the money of the people
He said: -
"No enduring fabric of national prosperity can be builded on gold. Go1d is the money of monarchs; kings covet it, the exchanges of nations are effected by it. Its tendency is to accumulate in vast masses in the commercial centers, and to move from kingdom to kingdom in such volumes as to unsettle values and disturb the finances of the world. It is the instrument of gamblers and speculators, and the idol of the miser and the thief. Being the object of so much adoration, it becomes haughty and sensitive and shrinks at the approach of danger, and whenever it is mast needed it always disappears. At the slightest alarm it begins to loot for a refuge. It flies from the nation at war to the nation at peace. War makes it a fugitive.
"No people in a great emergency ever found a faithful ally in gold. It is the most cowardly and treacherous of all metals. It makes no treaty that it docs not break. It has no friend whom it does not sooner or later betray. Armies and navies are not maintained by gold. In times of panic and calamity, ship t and disaster, it becomes the chief agent and minister of ruin. No nation every fought a great war by the aid of gold. On the contrary, in the crisis of greater peril it becomes an enemy more potent than the foe in the field; but when the battle is won and peace has been secured, gold reap and claims the fruits of victory. In our own civil war it is doubtful if the gold of
New York and London did not work us greater injury than the powder and lead and iron of the rebels. It was the most invincible enemy of the public credit. Gold paid no soldier nor sailor. It refused the national obligation. It was worth most when our fortunes were lowest. Every defeat gave it increased value. It was in open alliance with our enemies the world over, and all its energies were evoked for our destruction. But as usual when danger has been averted and the victory secured, gold swaggers to the front and asserts the supremacy. But silver is the money of the people. It is the money of cages and retail. Its tendency is toward diffusion and dissemination. It enters into the minute concerns of traffic, and is exchanged day by day for daily bread. It penetrates the remotest channels of commerce, and its abundance, balk, and small subdivisions prevents its deportation in sufficient amount to disturb or unsettle values. If it retires at the approach of danger, or from the presence of an inferior currency, it still remains at home ready to respond to the first summons for its return."
The characteristics which he attributes to gold in this beautiful figure of speech, were those which belonged to its owners, and thus he scathingly denounced the greed of the gold gamblers and bullion brokers of the East, who, during the war, rejoiced at every reverse of the northern armies, for, with the sinking of the fortunes of the Union cause, the more valuable became gold proportionately.
The silver bill as amended by the Senate was returned to the House for concurrence and passage. The manner in which the House bill was mutilated by the Senate aroused the anger of the House, and a fierce debate arose between the friends of silver and its opponents. Some of those who most strongly opposed the bill as a concession to the West and South
were men who men notorious for the scandals that blackened their reputations as public men. Those members of Congress, who opposed the remonetization of silver in any form whatever, had, in their past careers, shown a remarkable inclination for Credit Mobilier stock, and other corrupt deals which had so deeply disgraced preceding Congresses.
Yet these Credit Mobilicr statesmen were the ones who prated the loudest for the "public credit," "the public faith," and "honest money." It was Satan preaching against sin.
Among other powerful advocates of the coinage of silver me John G. Carlisle, who was recognized on the floor of the House as its ablest logician. Mr. Carlisle charged that the demonetization of silver was brought about by a conspiracy of the money power.
He said: -
"I know that the world's stock of precious metals is none too large, and I see no reason to apprehend that it wil1 ever be so. Mankind will be fortunate indeed if the annual production of gold and silver coin shall keep pace with the annual increase of population, commerce, and industry. According to my views of the subject, the conspiracy which seems to have been formed here and in Europe to destroy by legislation and otherwise from three-sevenths to one-half of the metallic money of the world is the most gigantic crime of this or any other age. Thc consummation of such a scheme would ultimately entail more misery upon the human race than all the wars, pestilences, and famines that ever occurred in the history of the world.
"The absolute and instantaneous destruction of half the entire movable property of the world, including houses, ships, railroads and other appliances for carrying on commerce, while it would be felt more sensibly at the moment, would not produce anything like a pro-
longed distress and disorganization of society that must inevitably result from the permanent annihilation of one-half the metallic money of the world."
This terrific arraignmcnt of the money power was followed by an appeal to the House, in which he advised the blocking of the wheels of government by a refusal to appropriate money for its support should the President veto the bill. He said: -
" The struggle now going on cannot cease, and ought not to cease, until all the industrial interests of the country are fully
and finally emancipated from the heartless domination of syndicates, stock exchanges, and other great combinations of money grabbers in this country and in Europe. Let us, if we can do no better, pass bill after bill, embodying in each some subtantia1 provision for relief, and send them to the executive for his approval. If he witholds his signature, and we are unable to secure the necessary vote, here or elsewhere, to enact them into laws notwithstanding his veto, let us, as a last resort, suspend the rules and put them into the general appropriation bills, with the distinct understanding that if the people can get no relief the government can get no money."
After a long debate the House anally acquiesced in the senate amendments. It was the bill as amended by the Senate or nothing, for at that tinge the upper house was the stronghold of the money grabbers, syndicates, and combinations of capital, chose greed was so severely denounced in the powerful speech of Mr. Carlisle.
The bill as amended by the Senate finally passed both houses, and was presented to President Hayes, who returned it to the House with his veto and a message stating his reasons for refusing to sign the measure.
In his veto message, the President states that one of the reasons why the bill does not meet hie approval arose from the fact that the proposed dollar would be worth but ninety or ninety-two cents, as compared with the standard gold dollar.
It will be remembered that the sole reason advanced by John Sherman, at this time Secretary of the Treasury, for the demonetization of the silver dollar in 1868 and subsequent years, was, that the silver dollar was more valuable than the gold dollar.
President Hayes, and presumably his Secretary of the Treasury, urged as a reason for the veto of this bill providing for the coinage of silver, that it was worth less than the gold dollar.
The President says: -
"The right to pay duties in certificates for silver deposits will, when they are issued is sufficient amount to circulate, put an end to the receipt of revenues in gold, and thus compel the payment of silver for both the principal and interest on the public debt."
The future receipts of revenues have shown that this prophecy of President Hayes fell to the ground. After the passage of this bill over his veto, the volume of gold in circulation and in the banks increased in the course of a few years to many millions of dollars.
The President further says: -
"The standard of value should not be changed without the consent of both parties to the contract. National promises should be kept with unflinching fidelity. There is no power to compel a nation to pay its just debts. Its credit depends on its honor. The nation owes what it has led or allowed its creditors to expect. I cannot approve a bill which, in my judgment, authorizes the violation of sacred obligations The obligation of public faith transcends all questions
of profit or public advantage. Its unquestionable maintenance is the dictate as well of the highest expediency as of the most necessary duty, and should ever be carefully guarded by the executive, by congress, and by the people."
This plea for the poor bond holder, that noble patriot who originally bought bonds as low as thirty-five cents on the dollar, bearing gold interest the equivalent in currency to eighteen per cent., payable a year in advance, and used by him as loaded dice to gamble on the public credit, was the dear object of the President's solicitude.
The bond holders who secured the passage of the Credit Strengthening Act of March 18, 1869 an act which enhanced the value of his bonds enormously, had become sacred in the eyes of the weak Hayes.
The veto message of the President angered Congress, and, on the same day, it rode rough shod over his veto by more than the necessary two-thirds vote, and the bill became a lair on the 28th day of February, 1878.
To enable the reader to fully understand the coinage law of 1878, we incorporate the text of the act in full.
It is as follows; viz.: -
"An act to authorize the coinage of the standard silver dollar, and to restore its legal tender character.
"Be it enacted, etc, That there shall be coined, at the several mints of the United States, silver dollars of the weight of 412 1/2 grains troy of standard silver, as provided in the act of January 18, 1837, on which shall be the devices and superscriptions provided by said act; which coins, together with all silver dollars heretofore coined by the United States, of like weight and fineness, shall be a legal tender, at their nominal value, for all debts and dues, public and private, except where otherwise expressly stipulated in the con-
tract. And the secretary of the treasury is authorized and directed to purchase, from time to time, silver bullion at the market price thereof, not less than $2,000,000 worth per month nor more than $4,000,000 worth per month, and cause the same to be coined monthly, as fast as so purchased, into such dollars; and a sum sufficient to carry out the foregoing provision of this act is hereby appropriated out of any money in the treasury not otherwise appropriated. And any gain or seigniorage arising from this coinage shall bc accounted for and paint into the treasury, as provided under existing laws relative to the subsidiary coinage: Provided, That the amount of money at any one time invested in such silver billion, exclusive of such resulting coin, shall not exceed $5,000,000; And provided further, That nothing in this act shall be construed to authorize the payment in silver of certificates of deposit issued under the provisions of section 254 of the Revised Statutes.
"Section 2. That immediately after the passage of this act the President shall invite the governments of the countries comprising the Latin union, so called, and of such other European nations as he may deem advisable, to join the United States in a conference to adopt a common ratio between gold and silver, for the purpose of establishing, internationally, the use of bi-metallic money and securing fixity of relative value between those metals, such conference to be held at such place, in Europe or the United States, at such time within six months, as may be mutually agreed upon by the executives of the governments joining in the same, whenever the governments so invited, or any three of them, shall have signified their willingness to unite in the same.
"The President shall, by and with the advice and consent of the senate, appoint three commissioners, who shall attend such conference on behalf of the United States, and shall report the doings thereof to the President, who shall transmit the same to congress
"Said commissioners shall each receive the sum of $2,5000 and their reasonable expenses, to bc approved by the secretary of state, and the amount necessary to pay such compensation and expenses is hereby appropriated out of any money in the treasury not otherwise appropriated.
"Section 3. That any holder of the coin authorized by this act may deposit the same with the treasurer or any assistant treasurer of the United States, in sums not less than ten dollars, and receive therefor certificates Of not less than ten dollars each, corresponding with the denominations of the United States notes. The coin deposited for or representing the certificates shall be retained in the treasury for the payment of the same on demand. Said certificate shall be receivable for customs, taxes, and all public dues, and, when en received, may be reissued.
"Section 4. All acts and parts of acts inconsistent with the provisions of this act are hereby repealed."
A comparison drawn between the provisions of the original bill introduced by Mr. Bland and passed by the House, and those of the act of February 28th, will be instructive.
The House bill was a free coinage measure, and it placed silver as a money metal on the same footing as gold. It proposed to restore silver to the same position which it held, in law, prior to its demonetization in 1873.
Free coinage of gold created an unlimited demand for it as money. Under free coinage, the owner of gold bullion had the right of entry to any mint of the United States, he could have his bullion transformed into gold coin without charge, and returned to him as full legal tender money. Therefore, the law which conferred the right of free coinage upon the owner of gold bullion created an unlimited demand
of the use of that precious metal as money; the Government had never restricted the amount of gold coinage.
Free and unlimited coinage of silver likewise would have created a demand for it as money as extensive as its production.
In all ages, the chief use of the precious metals arose from their utility as a medium of exchange - money.
The demand for the use of those metals has always exceeded their supply.
By the Bland-Allison lair, the coinage of silver dollars was limited, and that coinage was on Government account alone.
At the time of the passage of the Bland-Allison law, the production of silver from the mines of the United States amounted to more than $45,000,000for that year.
Since the demonetization of silver in 1873, its total production in the United States amounted to $210,000,000.
This law provided for the purchase of not less than $2,000,000 of silver nor more than $4,000,000 per month.
The hellion so bought by the Government was to bc coined into dollars as fast as purchased, and the gain or seigniorage arising from this coinage was to be paid into the Treasury.
It will be seen that the Secretary of the Treasury was not legally compelled to purchase more silver per month than the minimum amount ($2,000,000).
A purchase of the minimum amount of silver wou1d afford a market for only one-half of the yearly production, and this mould result in an accumulation of a
large surplus for which there would be no demand. This surplus would fix the price of every ounce of silver mined in the United States, causing a fall in its bullion value.
This result would afford an opportunity for the national banking money power to point to the silver dollar as a "dishonest dollar," a "90-cent dollar."
Mr. Sherman held the Treasury portfolio, and it was averred that he would use all the influence of his once to discredit the new coinage. He was known to be an unrelenting enemy of the free coinage of silver, and his subsequent speeches and writings gave abundant proofs of that fact.
It was further provided in that act, that the amount of money at any one time invested in such silver bullion, exclusive of such resulting coin, should not exceed $5,000,000.
By this restriction the Secretary of the Treasury could limit the annual purchase of silver to $29,000,000. He was not compelled to purchase silver exceeding $2,000,000 per month, or $24,000,000 per annum, and this policy which was carried out by the Secretary, made the Government a "bear" in the silver market.
This law gave rise to a net form of contracts based upon the legal tender clause which contained the following language, "Except where otherwise expressly stipulated in the contract."
This exception was the most absurd provision ever embodied in a monetary law. It declared the silver dollar to be legal tender, yet it conferred upon money lenders the power to demonetize it by private contract. It made the merc will of an individual superior to the collective will of the nation. It placed the greed of
the shylock above the power of the constitution. Every usurer was permitted to constitute himself a Congress and a President to demonetize silver at will. While the powerful Government of the United States was compelled to receive these silver dollars far debts and demands due it, the holders of mortgages could exact gold obligations. It transferred to the hands of the national banking money poorer the right to loan Government credit in the form of bank notes, costing it one cent on the dollar, at a high rate of interest, exact a note payable in gold, with the "vested privilege" of making war against the currency of the United States.
It built up a powerful privileged class, whose interests would be antagonistic to any future legislation of Congress, having for its object an enlarged use of silver as money,
In his uncontradicted evidence before the British gold and silver commission, on June 24, 1887, J. Barr Robertson stated that "The French law makes it criminal to act on the basis of premium on money or discount on moncy. It always did so."
The policy of France, which has the most scientific system of money in the world, makes it a crime for any one of its citizens to attempt to demonetize its money by private contract.
In that nation, the sovereign power of the State over the legal value of money cannot be impaired by the greed of money changers, bullion dealers, and bankers. After the enactment of this law a net system of written contracts providing for the payment of money came into vogue, denominated "gold contracts," all of which contained a stipulation that the obligation
should be payable in "Gold coin of the present weight and fineness or its equivalent."
Railroad bonds and mortgages containing gold clauses, aggregating many hundreds of millions of dollars, were fastened upon this species of property, and real estate mortgages and promissory notes amounting to immense sums mere made payable in gold coin.
This plan of the money-lending class actually made an enormous indebtedness payable in gold, a coin constantly appreciating in value, and it practically made the single standard of gold the financial policy of the country.
Not a single United States bond expressed an agree-meat to pay in gold, and yet the Government turned the great majority of its citizens over to the tender mercies of the money-lenders of the East and Great Britain, by authorizing them to exact gold payments.
The legality of contracting against any part of the legal tender money of the nation is extremely doubtful; and it scorns that, on the plainest principles of justice, and on the highest grounds of public policy, a contract in which it is sought to demonetize legal tcndcr money is utterly void, and is therefore unconstitutional.
Section a of the Bland-Allison Act authorized the President to invite the countries of Europe to join the United States in a conference to secure the adoption of a common ratio between gold and silver, and for the purpose of establishing an international bi-metallic money, and securing fixity of relative value between these metals.
The President was authorized to appoint three Commissioners to represent the United States at such
conference, if any should bc held. The Commissioners mere to report the doings of the conference and he was to transmit the same to Congress.
This section marked the beginning of those successive pilgrimages of so-called international monetary commissions, who, as the representatives of the United States, humiliated the American people by begging the aid of European monarchies to assist in the establishment of a financia1 system for this republic.
Section 3 provided for the issue of silver certificates to any person who deposited with the Treasurer or any Assistant Treasurer of the United States silver dollars in sums of not less than ten dollars.
The coin deposited for these certificates was to be retained in the treasury for the payment of the said certificates on demand. These certificates were receivable for customs, taxes and all public dues, and when so received could be reissued.
The object of this section in providing for the issuance of silver certificates was to obviate objections against the use of silver because of its weight. The certificate was a credit money based on the silver dollars so deposited, which latter constituted a trust fund as a means for redeeming the certificates.
To Senator Booth, of California, belongs the honor of suggesting the provisions of section 3 of this law.
Section 4 repealed all former laws inconsistent with the act.
When this bill was up for consideration before Congress, the national banking money power and its subsidized press continually prophesied that if the silver bill should become a law, the gold of the nation would take flight to Europe, leaving this country upon a
silver basic. The leading national bank presidents of New York City were especially active in denouncing the bill, and numerous predictions were made by them that it would be impossible to resume specie payment if it became a law.
George S. Coe, President of the American Exchange National Bank of New York City, publicly stated that he would give $50,000 to be at the head of the line of those who would present themselves at the sub-treasury on the 1st day of January, 1879, to offer greenbacks for gold, should President Hayes not veto the bill.
So far as is known, Mr. Coe still retains his $50,000, which he publicly stated that he would offer for the privilege of having the first opportunity to present greenbacks for redemption in gold, and for the plain reason that greenbacks were at par with gold - that yellow divinity of the money changers - before the 1st day of January, 1879, approached.
One of the reasons urged against the passage of the Bland-Allison law, as stated heretofore, was that it would endanger the resumption of specie payments, and that it would result in placing the country on a silver basis.
On the 19th of March, 1878, three weeks after the law was in force, Senators Morill, Dares, Ferry, Jones, Allison, Kernan, Wallace, Bayard, and Voorhees, composing the Finance Committee of the Senate, had a conference with Secretary Sherman to obtain his views upon the effect of the new silver coinage law upon resumption.
Daring this conference the following statements were made by the Secretary to the committee in answer to the inquiries of its members: -
Chairman: What effect has the silver bill had, or is likely to have upon resumption?
"Secretary Sherman: I do not want to tread on delicate ground in answering that question, Mr. Chairman. I shall have to confess that I have been mistaken myself. Noir, as to the silver bill, I have matched its operations very closely. I think the silver bill has had some adverse effects, and it has had some favorable effects, on the question of resumption. Perhaps the best way for me to proceed would be to state the adverse effects first It has undoubtedly stopped refunding operations. Since the agitation of the silver question, I have not been able largely to sell bonds, although I have made every effort to do so.
"Now, another adverse effect the silver bill has had is to stop the accumulation of coin. Since the 1st of January we have accumulated no coin, except for coin certificates, and except the balance of revenue over expenditure. The revenues in coin being more than enough to pay the interest of the debt and coin liabilities, we accumulate some coin.
"Another effect that the silver bill has had is to cause the return of our bonds from Europe. Although the movement of our bonds in this direction has been pretty steady for more than a year, yet it is latterly largely increased, how much I am not prepared to say.
"On the other hand, I will give the favorable effects. In the first place, the silver bill satisfied a strong public demand for bi-metallic money, and that demand is, no doubt, largely sectional. No doubt there is a difference of opinion between the West and South and the East on-this subject, but the desire for remonetization of silver was almost universal. In a government like ours it is always good to obey the popular current, and that has been done, I think, by the passage of the silver bill. Resumption can be maintained more easily upon a double standard than upon a single standard the bulky character of silver would prevent payments in it, while gold, being more portable, would be more
freely demanded, and I think resumption can bc maintained with a less amount of silver than of gold alone.
"Senator Bayard: You are speaking of resumption upon the basis of silver, or of silver and gold?"
"Senator Sherman: Yes, sir; I think it can be maintained better upon a bi-metallic, or alternative standard, than upon a single one, and with less accumulation of gold. In this way remonetization of silver would rather aid resumption. The bonds that have been returned from Europe have been readily absorbed - remarkably so. The recent returns in Net York show the amount of bonds absorbed in this country is at least a million and a quarter a day. We have sold scarcely any from the Treasury since that time. This shows the confidence of the people in our securities, and their rapid absorption will tend to check the European scare.
"Senator Voorhees: That shows, Mr. Secretary, that this cry of alarm in New York was unfounded. Then, this capital seeks our bonds when this bi-metallic basis is declared?"
Secretary Sherman: Yes; many circumstances favor this. The demand for bonds extends to the West and to the banks.
"Senator Jones: Then, in its effect upon the return of the vast amount of bonds you refer to, would there not be an element of strength added in favor of resumption, in that the interest on these bonds returned mould not be a constant drain upon the country?
"Secretary Sherman: Undoubtedly.
"Senator Jones: Would the fact that they come back enable us to maintain resumption much easier?
"Secretary Sherman: Undoubtedly.
"Senator Bayard: You speak of resumption upon a bi-metallic basis being easier. Do you mate that proposition irrespective of the readjustment of the relative values of the two metals as we have declared them?
"Secretary Sherman: I think so. Our mere right to pay in silver would deter a great many people from presenting notes for redemption who would readily do so if they could get the lighter and more portable coin in exchange Besides, gold coin can be exported, while silver coin could not be exported, because its market value is less than its coin value."
Senator Bayard: I understand that it works practically very well. So long as the silver is less in value than the paper you will have no trouble in redeeming your paper. When a paper dollar is worth ninety-eight cents nobody's going to take it to the Treasury and get ninety-two cents in silver; but what are on to do as your silver coin is minted' By the 1st of July next or the 1st of January next you have eighteen or twenty millions of silver dollars which are in circulation and payable for duties, and how long do you suppose this short supply of silver and your control of it by your coinage will keep it equivalent to gold - when one is worth ten cents less than the other?
"Secretary Sherman: Just so long as it can be used for anything that gold is used for. It will be worth in this country the par of gold until it becomes so abundant and bulky that people will become tired of carrying it about; bat in our country that can be avoided by depositing it for coin-certificates."
Such was the testimony given by Secretary Sherman in reply to the questions propounded to him by these distinguished men, and it demonstrated the real reason why a single standard of gold was preferred by the national banking money power. Gold, from its portability, could be more easily exported than silver, and large quantities of the former metal could be readily shifted back and forth between New York City and London as a means to create temporary panics, and thus afford the gold gamblers and stock, speculators opportunities to depress or raise the price of
bonds, stocks, and securities whenever it subserved their interests.
In 1878, after the passage of the Bland-Allison law, Secretary Sherman authorized the sub-treasury at New York City to become a member of the Clearing House Association, whose membership consisted of sixty-six national banks of that city.
This association was the most powerful financial body in the United States, and it was the head and front of the money power.
This act of Secretary Sherman was an exceedingly shrewd move on his part to add an official sanction to the war that was to be waged against the use of silver and silver certificates by the Clearing House Association.
To afford a consecutive statement of the various financial measures of Congress, we must retrace our steps to the 16th day of January, 1878.
At and prior to this time a controversy arose as to whether United States bonds were payable in gold solely.
To set this question at rest forever, Senator Matthews, of Ohio, submitted a concurrent resolution in the Senate, declaring that all United States bonds issued under the Refunding Act of July 14, 1870, and the Resumption Act of January 14, 1875, could be paid at the option of the government in standard silver dollars of 412 1/2grains without violation of the public faith.
All proposed amendments were voted down, and the resolution was agreed to by a vote of 43 yeas to 22 nays.
On January 29, 1879, the House agreed to the resolu-
tion in the form in which it came from the Senate by a vote of 189 yeas to 79 nays.
Divested of its preamble which merely recited the facts in controversy, the resolution is as follows: -
"Resolved by the Senate (the House of Representatives concurring therein), That all the bonds of the United States issued under the said acts of Congress herein before recited are payable, principal and interest, at the option of the government of the United States, in silver dollars of the coinage of the United States, containing 412 1/2grains each of standard silver; and that to restore to its coinage such silver coins as a legal tender in payment of said bonds, principal and interest, is not in violation of the public faith nor in derogation of the rights of the public creditor."
It is in force to this day as declaratory of the financial policy of the United States.
On December 9, 1878, Mr. Fort moved that the House suspend the rules and pass a resolution, declaring any discrimination against standard silver dollars by National Banking Associations a defiance of law, and instructing the Committee on Banking and Currency to report a bill for withdrawing their circulation.
The resolution received a majority, but not the necessary two-thirds vote, and it failed to pass.
The republican members of the House voted almost solidly against the resolution.
This resolution was brought forward in the House as a warning to the Clearing House Association of New York City, composed largely of national banks, for its refusal to accept silver dollars and silver certificates in settlement of balance due from the various banks.
Although the Bland-Allison law was in effect but a few months, the traitorous national banking money
power at once begun a war upon the lawful money of the United States, and this was done with the open consent of the Secretary of the Treasury, who had made the sub-treasury at New York City a member of the Clearing House Association as an aid to the consummation of its schemes.
This action of the national banks in thus deliberately conspiring to nullify a law of the United States, gave origin to a warm debate in Congress, during which Secretary Sherman was severely criticized for giving official sanction to the acts of the associated banks.
During the session of the Fifty-first Congress, at which time Mr. Sherman was a member of the Senate, Senator Morgan, of Alabama, in a debate upon the money question, recalled this fact and asserted that the former had, while Secretary of the Treasury, been cognizant of the designs of the clearing house banks to refuse silver in payment of balances, and that those banks were emboldened to pursue that course by the acquiescence of the Secretary.
He proceeded to quote from a statement made by Mr. Weston, Secretary of the Monetary Commission of 1886, in which the latter said:
"On the 8th inst. [November, 1878,] a committee of these banks [New York Clearing House Association] had a conference at Washington with the Secretary of Treasury [Mr. Sherman], at which were present the Attorney-General and some minor officials.
"The result was a plan submitted by the banks on the 12th inst., and agreed to, only one bank representative (Mr. Colgate) objecting. The leading features of it, are first, that the banks will reject silver deposits, except as re-payable in kind; second, that silver shall not be allured as clearing house money except
for small fractional earns not exceeding $10; and third, that in respect to all payments by government drafts on the New York banks or on the United States assistant treasurer at New York, they shall be cleared at the clearing house in New York, at which a desk is to be assigned to a representative of the United States Treasury. At the bank meeting on the 12th Mr. Colgate objected to the plan, that it could only mean `To fly in the face of Congress and to declare the silver dollar that has been declared a legal tender to be worthless."
In spite of the immense power of the banks, aided by the official power of Secretary Sherman, to discredit the legal tender silver dollars and silver certificates, Congress, at its very next session, after this exposure of the conduct of the Clearing House Association and that of Secretary Sherman, passed a law requiring that no national bank should become a member of any clearing house, or exercise any privilege therein to any kind whatever, unless it agreed to accept silver on deposits and receive silver certificates as money through which the balances might be settled.
Although the organized banks still continued their aggressions upon the rights of the people, and although they exerted their utmost power to degrade the silver dollar and its representative, this money became so popular with the people that they exchanged gold coin for silver certificates at the Treasury of the United States.
This exchange of gold coin for silver began in November, 1880, and continued until the Treasury made a gain in gold aggregating $78,000,000.Thus the absurd predictions set forth in the veto message of President Hayes, and echoed by the senseless clamors
of the national banks, were answered by the common sense and patriotism of the people of the United States.
In 1878, the year that the Bland-Allison bill became a law, the number of failures were 10,478, with liabilities of $284,383,000; in the following year of 1879 the list of failures were only 6,658, with liabilities of $98,149,000- a remarkable decrease.
According to the provisions of the Resumption Act of 1875, greenbacks were redeemable in specie on and after the 1st day of January, 1879. Prior to this time greenbacks and United States notes were on a parity with gold, and hence on May 31, 18788, Congress enacted a law forbidding the further destruction of these legal tenders, and the Secretary of the Treasury was authorized to re-issue them for the payment of demands against the United States. Senator Thurman introduced this bill in the Senate, and against the combined opposition of the national banks, secured its passage through Congress, thus preserving this currency to that amount.
In the meantime, however, prior to January 1, 1879, Secretary Sherman issued a circular to the collectors of the various ports throughout the United States, directing them to receive United States notes and Treasury notes in payment of duties on imported goods.
The act of July ll, 1862, which provided for the issue of Treasury notes, prohibited the Secretary of the Treasury from receiving them for duties on imports.
Nevertheless Secretary Sherman, by a mere executive order, nullified this part of that act by ordering the collectors of custom duties to receive them. This order made the Treasury notes, in this respect, the equal of gold.
The object of the Secretary in adopting this policy
excited considerable discussion in Congress, but the order was acquiesced in by the people, for the reason that the discrimination so long exerted against the greenback was withdrawn. The government honored its own currency by receiving it for taxes-the best form of redemption ever adopted by a nation.