"When the laws undertake to add to these natural and just advantages artificial distinctions; to grant titles, gratuities, and exclusive privileges; to make the rich richer and the potent more powerful, the humble members of society, the farmers, mechanics, and laborers, who have neither the time nor the means to secure like favors to themselves, have a right to complain of the injustice of their Government.- Andrew Jackson.
During the struggle for the repeal of the purchasing clause of the Sherman law, several financial measures were introduced in Congress.
Among these proposed bills was Senate bill 453, to permit national batiks to issue circulating notes up to the par value of the bonds deposited for the security of their circulating notes.
This bill proposed to donate to these banks an additional $25,ooo,ooo of currency.
Senator Cockrell brought forward an amendment, by which the holders of United States bonds Could deposit them with the Secretary of the Treasury, and receive therefore an amount of United States legal tender notes of the same nature as greenbacks, equal to the par value of the bonds so deposited.
This was applying the principle of bond security for th4~se proposed notes.
The national banks immediately opposed this amendment, as they readily perceived that this amount of money would escape their control. There were many
individual holders of these bonds who would have gladly availed themselves of the opportunity to obtain these notes by deposit of bonds therefor.
The banks were powerful enough to defeat this amendment which would have set afloat many millions of legal tender currency.
The national banks and their allies, the stock gamblers, were so elated over their success in securing the repeal of the purchasing clause, that on December 5, 1894, they made an effort to force a bill through the House to permit railway corporations to form pools, or trusts, to maintain high rates of transportation.
This bill was in charge of Mr. Patterson, an advocate of the single gold standard. The measure was so skillfully drawn that it would have placed the entire country at the absolute mercy of the railways.
It was evident that the stock gamblers who attempted to railroad this bill through Congress, were actuated with the sole purpose of enhancing the value of railroad stocks and bonds, and thus dispose of them on a rising market. It was a stock gambling scheme, pure and simple.
Although the iniquity of this bill was thoroughly exposed by those who opposed it, the House passed it by a decisive vote. It failed to go through the Senate. During the great panic which was ravaging the country, more than seven hundred banks had failed with liabilities of $170,000,000. A great many of these failures were national banks, and, in many instances, they were precipitated by the conduct of the officers and directors squandering the money of depositors in speculation.
To remedy this evil, Mr. Cox, of Tennessee, introduced House bill 2,344, which read as follows:
"That no national banking association shall make any loan to its president, its vice-president, its cashier, or any of its clerks, tellers, bookkeepers, agents, servants, or other persons in its employ until the proposition to make such a loan, stating the amount, terms, and security offered therefor, shall have been submitted in writing by the person desiring the same, to a meeting of the board of directors of such banking association; or of the executive committee of such board, if any, and accepted and approved by a majority of those present Constituting a quorum,"
The provisions of this bill would impose a most salutary check upon those officers and directors of national banks who endeavored to use the money of their depositors in stock gambling and grain speculations.
This bill had been before the House for some time, and Mr. Eckels, Comptroller of the Currency, opposed its passage in the following language:
"It would be unwise to forbid an association to loan or to discount for its several directors, as they are usually selected from among the leading men of the various branches of business, for the reason that they possess information of great value in passing upon paper offered by those in some line of trade with themselves. "
This remarkable language of the Comptroller, in a measure, corroborates the statement, that the officers and directors of national banks consisted chiefly of the great speculators, stock gamblers, railway magnates, organizers of trusts, and those who monopolize the various lines of business.
On October 16, 1893, this bill was called up by Mr. Cox, and immediately every national banker in Con-
gress, as well as those stock gambling members, op. posed its passage. Among those who vehemently attacked this measure were Mr. Lockwood, of New York, Mr. Cannon, a banker of Illinois, and Mr. Bingham, of Pennsylvania.
The following debate took place between Mr. Cox and Mr. Bingham:
MR. BINGHAM: Will the gentleman permit an inquiry?
MR. COX: With pleasure.
MR. BINGHAM: What paragraph of this bill includes directors?
MR. COX: I think the original language of the bill included them, but they are now included by amendment.
MR. BINGHAM: Now, I want to put this practical proposition to the gentleman-
MR. COX: That is right. That is the kind of question I like.
MR. BINGHAM: I am a director of a bank-
MR. COX: So was I, until sent here.
MR. BINGHAM: I do not say that I am personally; but I am simply putting my proposition in that way.
MR. COX: Well, I was a director of a bank.
MR. BINGHAM: I am a director of a bank and I am also a stockbroker, doing a large stockbroking business. The market is an active market. At 1 or 2 o'clock in the day my customers come in and buy large amounts of stocks and sell large amounts of stocks. Between 2 and half-past 2 o'clock I have to take the securities that I have bought for my customers on a margin (the universal way of doing such business and go to the banks and borrow $1oo,ooo, $2ooo,ooo, $3oo,ooo often larger amounts, for which I give the best gilt-edged collateral in the market. Now, how am I to do that business if I have to wait for a quorum. Three o'clock comes and if I have not placed my stock and secured my cus-
tomers and covered my margins, what am I to do? I put that to the gentlemen as a business proposition.
MR. DOOLITTLE: Stop stock gambling. [Laughter.]
MR. BINGHAM: Oh, it is not stock gambling. I have described a very ordinary transaction in New York, or Philadelphia, or Chicago, or any of the other large cities where such transactions often cover millions of dollars.
MR. COX: I am aware of that. But what ought that man to do, that broker who wanted the money, and what ought the cashier to do in a good, solvent, well-regulated bank? When the broker comes and makes his application for a loan to meet the transactions of the day, they ought to get the executive board together; and I never saw a bank in my life, even in the rural districts, where you could not get an executive board of two members together.
MR. BINGHAM: You cannot do it in the great cities.
MR. COX: Why not?
MR. BINGHAM: Because the men arc engaged in their regular vocations. A directorship in a bank is not a paying employment.
MR. COX: Is not banking a vocation?
MR. BINGHAM: A director is paid no salary.
MR. COX: He gets his salary in the way of dividends and profits.
MR. BINGHAM: That is the interest upon his money.
MR. COX: Can you tell me of any case where they could not get two members of the board together?
MR. BINGHAM: I say they do not do it.
MR. COX: Oh, I know they do not do it; but could they not do it?
This extract from the Congressional Records bears out the charge, so often made, that the leading stock gamblers are officers and directors of national banks, and that they use their official position, as such officers, to obtain control of the bank funds to gamble in stocks.
Mr. Bingham is an example of that class of men who
represent Eastern constituencies in the halls of Congress.
MR. HALL, of Missouri: I will answer it. For the very reason that it has a tendency to prevent these men from robbing the banks, the very thing the Comptroller of the Currency, not only this one but every other one, has tried to prevent.
MR. LOCKWOOD: Right there I want to correct you. The present Comptroller of the Currency has never sanctioned this bill. On the contrary, my information is that he disapproves of this bill. And I will say further, that he ought not to commend any such bill as this. Now, I beg to complete my statement without being interrupted. I say this further, that by the passage of this bill
MR. COX: Will you yield to me for one moment?
MR. LOCKWOOD: Yes.
MR. COX: I gave you the floor yesterday.
MR. LOCKWOOD: Certainly.
MR. COX: Let me ask you this. You stated that your President and your cashier are members of your Finance Committee, or your Executive Committee: the name is not important.
MR. LOCKWOOD: Yes.
MR. COX: Now, then, the paper is submitted to them, as you stated to the House a moment ago.
MR. LOCKWOOD: Yes.
MR. COX: Do you mean that that paper is discounted without consultation with the directors? Now, tell me what objection there is to that Executive or Financial Committee reporting it back to the board of directors and making a record on their minutes?
MR. LOCKWOOD: My dear sir, what would be the use of, after it had been discounted, their reporting it back, when they will not have a chance, perhaps, to
report it back to the board of directors for one or two months after the money has been borrowed? It would be of no benefit or information to the board of directors. Any member of the board of directors can look at the discount ledgers and see at any time what is going on and what discounts there are recorded in that book.
MR. COX: Do you mean to say that your directors do not meet in less than two or three months?
MR. LOCKWOOD: I state with great frankness that in many of these large banks, the board of directors do not meet more than once a month or two months, and there is no law requiring them to meet at any specific time, except twice each year.
MR. DUNPHY: But they are at the bank every day.
MR. LOCKWOOD: Furthermore, if this bill is passed, it will cause many of the most active, upright, and business-like men of the country to refuse to act either as officers or directors of national banks. All will concede that a national bank, to be successful, must have for its stockholders, directors, and officers, active, wide-awake businessmen. The stockholders select the directors, and the directors in turn select the officers of the bank, the most competent and trustworthy men they can find. All understand full well that the value of their stock and the success of the bank depends upon the confidence of the people in the judgment and wisdom shown in the selection of the officers and directors of the bank.
According to the opinion of Mr. Lockwood, thus publicly expressed in this debate, Comptroller Eckels was on very friendly terms with the national banks, for, assuming the word of this prominent supporter of the administration to be true, the Comptroller was opposed to any restriction that could be thrown in the way of those bank officials who did not hesitate to gamble in stocks and bonds with the money of depositors.
It was, however, the generally expressed opinion of the press, and of many public men, that had Comptroller Eckels exercised as much diligence in keeping the national banks within the letter and spirit of the law, as in attending their banquets, where he showered fulsome eulogies upon the national banking system, it would have conduced much to the public welfare. Following in the footsteps of all his predecessors in that office, Mr. Eckels has graduated from the Comptrollership of the Currency to the head of a great national bank.
Another inference to be drawn from Mr. Lockwood's statements is, that the most upright men in the business communities in which these banks are situated, would not consent to act as directors unless they had free access to the money of depositors. The bill was defeated.
On October 23, 1893, House bill No. 139, known as the Torrey Bill, was brought forward in the House. The purpose of this measure was the creation of a uniform system of bankruptcy throughout the United States.
The passage of this bill would be class legislation of the worst character, as, under its stringent provisions, any merchant who was unable to pay a debt within thirty days after it was due, could be forced into United States courts as a bankrupt. This was the darling scheme of the wholesale associations of the United States, and one at which they had labored unceasingly to force through Congress.
The power which was behind this bill, and which was urging its passage through Congress, was that
gigantic trust-the wholesale dealers' associations of the United States.
The measure failed to pass, notwithstanding the prodigious efforts of the lobbyists to push it through that body.
During the month of February, 1894, a bill was introduced in the House to coin the seigniorage lying in the Treasury. This seigniorage was the gain between the bullion value and that of the coinage value of the silver, purchased under the Sherman law. It passed the House March 1, 1894, by a vote of 168 yeas to 129 nays. It then went to the Senate, where, on March 15th, it passed by a vote of 44 yeas to 31 nays. The bill was disapproved by President Cleveland, and the House failed to pass it over his veto by the necessary two-thirds vote.
During this time, gold coin was offered in exchange for silver dollars, and the action of President Cleveland in vetoing the bill is seemingly unaccountable.
The passage of this measure would have added $55,156,681 to the circulating medium of the country.
In October, 1894, the National Bankers' Association met at Baltimore. During this meeting Hon. J. C. Hendrix, of whom mention has been made in these page, delivered a speech in the course of which he thus sneeringly referred to Congress:
"Men who never had a discount in their lives, and would not be entitled to one; whose highest occupation has been sitting on a barrel at R corner grocery, whittling a piece of wood; others who have followed the plow all day in the hot sun and tried to settle, by the rule of thumb, questions of political economy, over which men of scientific attainments have studied and
grown gray-such men come or send their like to the halls of Congress, and they want to dictate the financial policy of the country. "
This sarcastic allusion to members of Congress was cheered to the echo by the hundreds of national bankers present during its delivery.
This cuckoo national bank member of Congress, who spoke so derisively of his fellow legislators, had been, prior to his election to that body, a citizen of Missouri, and from thence had migrated East. He was appointed postmaster of Brooklyn during the first administration of President Cleveland, and after his term of office had expired, became President of a national bank. He was elected to Congress, where his labors in behalf of banks were indefatigable.
It was during this bankers' convention that Charles C. Homer, President of a national bank of Baltimore, brought forward what is known as the Baltimore plan of banking, a scheme which met the approbation of the associated banks.
This plan proposed that all paper money should be issued through the medium of the national banks, and that the redemption of all such bank notes should be guaranteed by the Government.
In the meantime, the banking monopoly was forming plans to seize upon, and to appropriate to itself, the complete and absolute issue and control of the currency.
These deeply-laid schemes did not coincide in every particular, but they all concurred in the principle that the banks should issue bank notes to circulate as money, and that the Government should burden itself with the responsibility of finally redeeming all such notes eventually in gold.
The banks of issue, however, were to be the sole beneficiaries of each and every system so proposed.
President Cleveland aligned himself in behalf of these demands of the banks.
This man who persistently exhibited the supposed dangers of a fiat money," and who wanted the "best money of the world" as a medium of exchange, was really a fiatist of the most extreme type.
He concentrated all his energies and influence to the end that the banks might grasp the fiat of the nation for their profit.
He was a national bank fiatist.
On December 3, 1894, Congress convened in general session, and President Cleveland transmitted his message to that body.
In the course of this document, he stated that the Secretary of the Treasury had prepared a bill providing for an elastic bank currency.
The President said:
"Questions relating to our banks and currency are closely connected with the subject just referred to, and they also present some unsatisfactory features. Prominent among them are the lack of elasticity in our currency circulation, and its frequent concentration -in financial centers when it is most needed in other parts of the country.
"The absolute divorcement of the Government from the business of banking is the ideal relationship of the Government to the circulation of the currency of the country.
"This condition cannot be immediately reached; but as a step in that direction and as a means of securing a more elastic currency and obviating other objections to the present arrangement of bank circulation, the Secretary of the Treasury presents, in his report, a
scheme modifying present banking laws and providing for the issue of circulating notes by State bank, free from taxation under certain limitations.
"The Secretary explains his plan so plainly, and its advantages are developed by him with such remarkable clearness, that any effort on my part to present argument in its support would be superfluous. I shall therefore content myself with an unqualified endorsement of the Secretary's proposed changes in the law, and a brief and imperfect statement of their prominent features.
"It is proposed to repeal all laws providing for the deposit of United States bonds as security for circulation; to permit national banks to issue circulating notes not exceeding in amount 75 per cent. of their paid-tip and unimpaired capital, provided they deposit with the Government, as a guarantee fund, in United States legal tender notes, including treasury notes of 1890, a sum equal in amount to 30 per cent. of the notes they desire to issue, this deposit to be maintained at all times, but whenever any bank retires any part of its circulation, a proportional part of its guarantee fund shall be returned to it; to permit the Secretary of the Treasury to prepare and keep oil hand ready for issue in case an increase in circulation is desired, blank national bank notes for each bank having circulation, and to repeal the provisions of the present law imposing limitations and restrictions upon banks desiring to reduce or increase their circulation-thus permitting such increase or reduction within tile limit Of 75 per cent. of capital to be quickly made as emergencies arise."
This scheme outlined in the message of President Cleveland was one of the most remarkable plans of banking ever proposed by the wit of man. It aimed to drive out of circulation every greenback and treasury note, and to totally eliminate silver by an abundant supply of bank notes. Under the false and delusive cry
of "The absolute divorcement of the Government from the business of banking, " the President sought to throw the business of government into the hands of the banks.
These recommendations of the President demonstrated that he was as fanatical in his belief in the efficacy of a banking monopoly and aristocracy as John Sherman.
He gave official notice that the demands of the banking interest should be granted if he could be successful in swinging Congress into line with his policy.
In a speech of great ability, Hon. Henry W. Coffeen, of Wyoming, referred to these various schemes of banking as follows. He said:
" PLANS TO AMEND PRESENT SYSTEM.
"One is to give more power to the banks by issuing to them a greater amount of currency without compensation-that is, by issuing to them not only 90 per cent. on their deposits of United States bonds at a charge of 1 per cent per year, but to furnish them 100 per cent. or possibly 114 per cent. while the Government bonds stand at 14 per cent. premium, and release them also from paying even 1 per cent. tax or interest on this currency furnished thus to the banks, and, as in all of these bank plans, it provides for the issuance of more bonds payable in gold.
" OTHER BONDS FOR SECURITY.
"Another is to allow banks to deposit other than United States bonds for security, and yet make the Government liable for ultimate redemption of all the bank notes and issue gold bonds in place of the greenbacks.
" BALTIMORE PLAN.
"Another plan is to allow banks to have a national form of currency printed for them that may be issued and loaned out as notes of the banks based nominally
on bank assets, but the Government to guarantee ultimate redemption. This is the Baltimore or bankers' own plan.
"Another is to practically turn the entire responsibility of supplying currency over to both State and national banks under a sort of supervisory provision upon deposit of a 5 per cent. and 30 per cent. fund in legal tenders; but relieving the Government entirely from all responsibility of final redemption of circulating bank notes.
"Another is to take 50 per cent. of assets of the bank on which to determine amount of note issues allowed to the banks, and an additional amount may be allowed them tinder heavy Government charge or taxation as an emergency currency."
His summary of the results of these various systems that were urged on Congress is a masterpiece. He said:-
" WHAT THESE AND OTHER BANK PLANS INVOLVE.
"2. The banks to secure all the profits on currency.
"3. The banks to be allowed to exercise the principle called elasticity, another name for sudden contraction or expansion, as their own profits may dictate, without public notice and without regard to the rights or needs of the people generally.
"4. The banks to protect one another as note holders (for they are the principal holders of bank notes tinder the deposit system of our country), while depositors are left completely unprotected.
"5. The banks to have to themselves and all creditor classes, all the benefits of a highly appreciated gold standard money, possessing double the purchasing power that money should have in exchange for all, other property, while the burden of maintaining the
gold redemption for a time and the dishonor of an ultimate and certain breakdown will fall on the Government.
"6. The banks to have all and unrestricted opportunity for pooling their interests and to have all limitations that are disagreeable to them removed, under the pretense of removing obstructions to elasticity.
"7. The banks and money dealers to have the most absolute and fully legalized control over the prices and values of all property, all profits, all industries, all equities of contract, and through these channels they will have the most complete control over all political power and governmental administration that the world has ever seen in any age or clime.
"8. If. there is anything else in sight that Congress can give them, they will, as humble conservators of financial integrity and wisdom and as saviors of the country in its time of need, accept that also."
This admirable analysis of the variously proposed schemes of the banks was made by one of the ablest members of Congress.
Mr. Coffeen was not only a practical banker but a very learned student of political economy.
The most important and distinguishing feature between the plans of banking enumerated in his summary and that of the Bank of England is most vital.
In all the plans put forward by the bank monopolists, the Government would be the sole redeemer of the bank notes that would be issued by them.
Under the charter of the Bank of England, the latter was compelled to redeem its own notes in gold. Reaping the profit, it bore the burden of redemption.
The national banking power of the United States, it will be seen, was far more voracious in its greed than that of England.
In pursuance to the recommendation of the President, the currency problem was taken up by the House at once, and on December 10, 1894, the Committee on Banking and Currency began a series of hearings upon this question.
Secretary Carlisle presented his plan to the committee, and he was followed by Comptroller Eckels.
A number of leading bankers also appeared before this committee and gave their views upon this subject.
During the hearings before the committee, Mr. St. John, President of the Mercantile National Bank of New York City, appeared before that body, and the following question was propounded to him by Mr. Cobb:
"Are you opposed to the use of the greenbacks? If so, state why; and if you are not, state why not.
To which question Mr. St. John made the following reply:
"I am opposed to asking any sacrifice of the people at large in order to provide profit to banks. I do not dare ask any such thing. I never did and I never will. I would not so sacrifice the popularity that the national banks of the United States have legitimately earned. The great popularity to which they are entitled is being sacrificed by well-meaning doctrinaires, outsiders, who know little about banking. Think of it, the United States issues $100,000,000 of bonds, on which interest is to be paid for ten years at 5 per cent. per annum. At the same time it is proposed that $346,000,000 greenbacks, a debt which does not bear interest, and therefore is saving (at 5 per cent. per annum) $17,300,000 a year to the people at large, shall be retired. More interest-bearing debt to issue to retire them. And as a feature of the proposal is that bank notes, yielding profit to banks as the first essen-
tial of their existence, shall supersede them! It is preposterous !"
Of all the financiers who appeared before this committee to give their views, Mr. St. John was the sole banker who opposed the retirement of the greenbacks, the issue of bonds, and an enlargement of the powers of the national banks,
By a vote of 9 to 8, the committee adopted the plan of Secretary Carlisle, and decided to report it to the House without any change, with a recommendation that four days be allowed for debate, and then a vote be taken on the bill.
The bill was reported to the House, December 17th, and a spirited debate at once sprung up regarding the merits of the Carlisle plan.
The main features of this plan of banking proposed that national and other banks could issue circulating notes tip to seventy-five per cent. of their paid-up capital. These notes were to be secured by a guarantee fund, consisting of treasury notes, including notes issued under the act of July 14, 1890 equal to thirty per cent. of the circulating notes applied for by the banks. Thus, a bank by depositing $30,000 of greenbacks, or treasury notes, with the Secretary of the Treasury, would receive $100,000 in bank notes--a clear gratuity Of $70,000 of loanable capital.
At this time, there were in circulation greenbacks and treasury notes to the amount of $498,287,283. The treasury notes and greenbacks were locked up in the vaults of the banks, and, therefore, by depositing this currency with the Treasury, as a guaranty fund, the banks would have been entitled to receive $1,660,000,000 which could have been loaned out by them,
netting them an annual income exceeding $I00,000,000. being a profit of twenty per cent. upon the greenbacks and treasury notes so deposited by them.
This plan provided for a safety fund, whose maximum should be five per cent. upon the total amount of national bank notes so outstanding. This safety fund was to be raised by a small semi-annual tax upon the circulating notes of the banks.
The redemption of these notes would rest upon the Treasury of the United States.
One section of bill proposed to repeal section 9 of the act of July 12, 1882, renewing the charters of the national banks, which section prohibited those banks from surrendering more than $3,000,000 Of their circulating notes per month.
This section of the act of 1882, Which took away from the banks the absolute power of suddenly prostrating business by contracting the volume of money, was engrafted on that act by the energy and eloquence of Mr. Carlisle.
It was during the debate on this section of the Crapo resolution that he electrified the House and the country by that marvelous logic, which placed him in the forefront of those who antagonized the national banking power.
He now proposed to reverse his former position, by placing the great power of expanding and contracting the volume of money in the bands of the banks.
Who can tell what influence prompted Secretary Carlisle to burn all the bridges behind him in this remarkable change of front since 1882?
Such was the iniquitous scheme suggested by President Cleveland, put into the form of a bill by Secretary
Carlisle, and coached in the House of Representatives by Mr. Springer, of Illinois.
This measure was shrewdly designed to still the demand for free coinage of silver by the substitution of a bank currency therefor.
The Western and Southern members of Congress immediately perceived the intent and scope of this bill, while the advocates of the national banks asserted that the adoption of the Carlisle bill, or the Baltimore plan, would be the "death knell of silver."
The New York Evening Post, December 19th, said:
"Whatever may be the fate of the Carlisle bill, the movement for currency reform through better banking methods will go on, and it will draw more and more of Mr. Bland's cohorts. Already the newspapers of the mining States have taken the alarm. Some of them say that either the Carlisle bill or the Baltimore plan, if adopted, will be the `death knell of silver.' Yes, gentlemen, the death knell of silver, in the sense that you mean, is already sounded. It was sounded when the attention of the public was drawn to a cheaper and speedier way of supplying the public with the instruments of exchange needed to transact their daily business. "
The opponents of national banks and the single standard of gold knew, as well as the New York Evening Post, that the Carlisle bill was intended to sound the " death knell of silver."
Therefore on December 19th, Mr. Bland proposed to substitute a bill providing for the free coinage of silver.
Those members of Congress, who were urging the passage of the Carlisle bill, saw that there was no possibility of its passage by the House, and, therefore, the
bill was withdrawn and a substitute brought in by Mr. Springer. This proposed substitute more nearly followed the Baltimore plan.
The substitute measure also met the approbation of Mr. Carlisle. The most dangerous feature of this substitute also repealed the ninth section of the joint resolution of 1882, which took away from the national banks the power to contract their circulating notes in any sum exceeding $3,000,000 per month.
" It must be borne in mind, that it was through the powerful logic and eloquence of Mr. Carlisle that the power of suddenly contracting and expanding the national bank currency was taken away from the banks in 1882.
Yet such was the apostasy of this man to his former principles, that he now stood forth boldly and he unreservedly advocated a system that would give banks of issue the unlimited power to contract and expand the volume of money at their own unrestrained will, .and thus place all industry and all property at the complete mercy Of those financiers, who had repeatedly attacked the government credit, brought on every panic, and violated the laws of the country.
Mr. Springer, who had introduced the Carlisle bill, and who also brought in this substitute, had served in the House of Representatives for twenty years, during which time he had signalized his public career as a sturdy and consistent advocate of the free coinage of silver, and had always opposed the aggressions of the national banking monopoly.
We now ascertain that his conversion to the Tory system of finance was as sudden as that of Saul of Tar-
sus when he renounced the Jewish faith to accept the doctrines of Christianity. There the parallel ends.
Mr. Springer became the accredited agent of the administration in its efforts to force this banking bill through Congress.
The Washington Evening Star of January 4, 1895, described his tactics in the following language. It said:-
"His plan of canvass is to have one man of each delegation sound the sentiment of his colleagues. If this canvass is not satisfactory, he will probably still further postpone a caucus, so as to give an opportunity for administration influence to be brought to bear upon those members, who are ascertained to be not set in their purposes as to the measure.
Mr. Springer's efforts to ascertain the views of the House on this bill were anything but encouraging, and hence the administration repeated those tactics which were so influential in securing the repeal of the purchasing clause of the Sherman law.
Again the seductive power of patronage was brought into requisition to such a degree as to anger many of the members of the House.
Moreover, the veto of the seigniorage bill was wonderfully effective in opening the eyes of those Representatives who had voted for the repeal of the purchasing clause, and they saw the pit which the administration had dug for them.
This attempt of the administration to influence the House aroused the latent manhood of its members, and this undemocratic policy of President Cleveland received some well deserved rebukes from those members of the House, who had once been reckoned among the staunchest admirers of the President.
On January 8, 1895, that noble tribune of Democracy, Hon. J. C. Sibley, boldly assailed the coercive measures of the administration for its attempts to push this bill through under whip and spur, and the speaker incidentally exposed the dastardly means by which the repeal of the purchasing clause was secured in August, 1893. Mr. Sibley said:
"Have Americans become so spiritless that they have no rebuke for the imperiousness of a would-be autocrat? No answer to the attempted usurpation of legislative rights? Do men tell me that the power of the administration was not used to force the repeal of the Sherman bill? Why, Mr. Chairman, there are members of this House who told me with their own lips that they were against the repeal of this bill, and four days afterward they came forward and voted for it, and when a few months afterward I asked them why, they told me that their batiks asked it and that they had been promised positions for constituents if they supported the repeal!, Are the offices, are the positions of trust of the country to be bestowed uponthose persons, and those persons only, who support the will of the Chief Magistrate?"
MR. COOMBS: The gentleman from Pennsylvania makes a broad assertion against the administration. Now, is he willing to give the names of any members in relation to that statement?
MR. SIBLEY: I will say to the gentleman from New York that I went two or three days ago and asked a member for the privilege of making the statement to which I have just referred when the matter came up for consideration in the House, and he said, `Mr. Sibley, it would place me in a very bad position with my constituents, and I am unwilling to do it.'
A MEMBER: I should think it would.
MR. COOMBS: I ask you if you think it fair to make so broad a charge against the administration of
helping to bribe a member of the House, without being willing to give the name? In all fairness it is only right, as you have made the statement, to give the name of the party.
MR. SIBLEY: Mr. Chairman, on the question of fairness and honor, I shall leave each man to be the judge for himself. The gentleman from New York must permit me to exercise that privilege. I am attempting to express my own opinion and endeavoring to show the influences which have prompted certain action in this House, and I have no hesitancy in saying that if you take the golden padlock off the lips of the members of this body, two out of three men in this ` House, I believe, would corroborate my statement, at least as to the justice of it-
MR. COOMBS: But the gentleman makes a statement which gives a right to every member on this floor to ask that he Shall name the man.
MR. SIBLEY (continuing): That Executive influence shall not be used. Mr. Chairman, I am going to `talk out' this time. I am not going to be silent any longer. I have had a padlock on my lips as long as I propose to wear it. Why, you remember when old Dionysius-
MR. OUTHWAITE: What was it put the padlock on your lips? [Laughter.]
MR. SIBLEY: Because, sir, I did not want to rebuke an administration that I hoped, before the close of the year 1894, would see the error of its ways and keep with the American people the pledges which had been made by the Democratic party. [Applause.]
MR. OUTHWATTE: But what was it put the padlock on your lips?
MR. SIBLEY: When Dionysius, the tyrant of Syracusc---
Mr. OUTHWAITE: Was it Dionysius that put the padlock on your lips?
MR. SIBLEY: Mr. Chairman, if I had an hour's time with my friend from Ohio I would like to have
it out with him. I want to tell him that I am not talking here for the benefit of men who would rather ride to hell in a handcart than to walk to heaven supported by the staff of honest industry, as it has been said. [Laughter.] I am not talking for the benefit of those people who place more value upon a bobtail flush than they do upon a contrite heart. [Laughter.]
Representative's Coombs and Outhwaite, who had interrupted the speech of Mr. Sibley, were two of the most prominent cuckoos of the House. The last named member was well taken care of by the administration, by receiving an appointment as a member on the Ordinance Board, at a salary of $8,000 per annum.
During the time the Springer bill was up for consideration before the House, an amendment was offered to section 4 in the following language:-
"Section 4. That from and after July 1, 1895, ten per cent. of the cash reserve required by law shall be kept in coin or coin certificates, and not less than one half of such coin or coin certificates shall be in gold coin or gold certificates, and that such cash reserve required by law shall be kept in coin or coin certificates in amounts increased by ten per cent. of the whole cash reserve required to be kept by law, on and after the first day of each quarter of the calendar year, until the whole cash reserve shall be in coin or coin certificates; and not less than one half of such cash reserve shall be it all times in gold coin or gold certificates. "
The object of this amendment to the Springer bill sought to compel the banks to maintain a reserve of gold and silver coin, and thus bear the burden of redemption which had heretofore been borne by the Government. The proposed reserve of gold and silver coin was designed as a substitute to take the place of
the lawful money reserve, required by law to be kept by the banks.
It was from the bank reserves of lawful money that these institutions furnished the greenbacks and treasury notes to raid the gold reserve.
On February 6, 1895, this amendment was sharply attacked by Mr. Hendrix, on the ground that it would create a now demand for gold, and therefore would start a fresh raid upon the Treasury. This statement of Mr. Hendrix was made after Mr. Springer had stated that the national banks, on the 2d of October, 1894, held gold coin to the amount of $175,000,000, and that besides this amount of gold coin, these banks held $185,000,000 in legal tender notes.
From the debate upon this amendment we quote as follows:
MR. HENDRIX: Mr. Chairman, I rise to oppose this amendment, because it is impracticable and unintelligent. It seeks to defeat the very purpose for which this legislation is presented to the House. You propose to attempt to stop the raid upon the Treasury for gold, and you turn around and compel 4,000 national banks of this country to immediately start a fresh raid upon the. Treasury for the purpose of getting gold to comply with this law. Now, the banks are already charged with hoarding too much gold. We are doing our best to try to undo the tendency which is abroad to hoard the precious metal. You pass this clause of the bill and it becomes mandatory where it is now simply a matter of commercial option. You would compel the banks to send to the nine sub-treasuries with their treasury notes, and to the one sub-treasury at San Francisco and the one at New York with their United States legal tender notes to get gold coin.
MR. LIVINGSTON: With all the other paper of larger denominations than $to, why should there be any difficulty?
MR. HENDRIX: But you propose by this bill to retire the other paper money.
MR. LIVINGSTON: Not at all.
MR. HENDRIX: That is the essence of the proposition. Instead of letting the banks hold on to the greenback certificates, which they have now, and keep them in their reserve, you are going to destroy the value of those certificates as reserve money, and compel the banks to substitute for them one of two things, silver or gold. Now, if you were a banker, which would you choose? Every banker in the country, when obliged to make the choice, will choose the one that is the more precious in his opinion.
MR. LIVINGSTON: The gentleman forgets that the same section provides for the national banks issuing nothing less than ten dollar notes.
MR. HENDRIX: That is all right, but national banks cannot keep national bank notes as a reserve. A national bank is not authorized to count national bank notes as reserve. The point is that you destroy the
practicability of making settlements at the clearing houses. A man comes in and wants legal tender, and under this clause you will have to cart him out a lot of silver or gold. Then he has to get a vehicle to take it to the place where he is to pay his legal tender. If you are going to destroy the value of the gold certificates as a reserve and compel the banks to keep gold, you are simply imposing a great burden upon them and upon the public in the transaction of their business. It is impossible to settle the clearing house balances in that way. The clearing house in New York has provided for the difficulty by issuing gold clearing house certificates, based upon coin, placed in the vaults by the Clearing House Committee; but this bill would destroy the use of those certificates as a part of the reserve, and would compel the banks to keep their reserve in the two coins or in the Government certificates therefor. It is simply impracticable to carry out this plan in the ordinary transaction of the banking business. The banks now are showing too great a tendency to hoard up gold, and I do not want to see anything put in this bill that is going to sequestrate gold. I want it made so free that the great deposit in the United States of America of the yellow metal will not be in the banks, but by the reason of the operation of this law, will be transferred to the Treasury of the United States, so that the public statements of the Treasury will give notice to the whole world that we have lots of gold, that we are on a gold basis, and that we are going to remain there. [Applause, ]
MR. WALKER: Mr. Chairman, in the first place, as to the clearing house certificates, they are exactly what the clearing house chooses to make them, as to form and substance.
MR. HENDRIX: Mr. Chairman, I am surprised that a gentleman who has stood upon this floor as the great commercial apostle, should make such a statement.
MR. WALKER: I want to state to the gentleman
that the clearing houses of New York and in other cities, can make the clearing house certificates just what they choose; therefore we need not bother about them. They are not within the law; they are outside of it, and their certificates are entirely within the control of the clearing houses.
" Now the banks have got $175, 000,000 in gold today, and if gold goes to a premium the banks will get the premium on it, and the gentleman from New York knows, and everybody else knows, that that is why they are hoarding the gold. But if we compel them by law to hold the gold as a part of their reserve, we destroy the interest the bad bankers have in putting gold to a premium. Is not that so? [Cries of "Yes, yes," and laughter.]
" You have one silver man here, the gentleman from Montana (Mr. Hartman), offering an amendment to cut out half of the use of silver at the custom house, and you have had another man, an enemy of silver, though he thinks himself its friend, trying to prevent it from being used in denominations above $10. Now, I stand here as a true friend of silver. [Laughter.] The gentleman from New York (Mr. Hendrix) stands here as a banker.
"Mr. Chairman, the bankers, not one of them in the whole country, from Maine to Georgia, from the Atlantic to the Pacific, has offered a single suggestion in a practical bill to relieve the Treasury. They have all been for banks. They meet at Baltimore; they meet at Boston; they pass resolutions adopting proposed amendments to the law to increase their own profits, and they tell us on the floor of this House that it is none of their business what becomes of the 175,000,000 Of gold. They will hold on to it as long as they can, and when it goes to a premium they will get the premium upon it. Now, I want a law to compel them to use that gold to redeem their own notes over their own counter, and thus relieve the United States Treasury, and also
in that way take away any inducement they may have to put gold to a premium."
MR. HENDRIX: Will the gentleman permit an interruption?
MR. WALKER: I will yield for a question.
MR. HENDRIX: If you provide that the note redemption fund at the Treasury Department shall be kept in gold, will not that meet your desire to have the banks redeem their notes in gold?
MR. WALKER: Not at all, or only partially. [Laughter.] How much time have I remaining, Mr. Chairman?
THE CHAIRMAN: The gentleman has one minute.
MR. BRYAN: Mr. Chairman, I ask unanimous consent that the gentleman be allowed to proceed for five minutes longer.
There was no objection.
MR. WALKER: Now, Mr. Chairman, I will ask the gentleman from New York to repeat his question.
MR. HENDRIX: My question is this: Would you not be satisfied with having the note redemption fund which the national banks are obliged to provide, kept in gold at the Treasury, where the banks are required by law to redeem?
MR. WALKER: Do you mean the 5 per cent. redemption fund?
MR. HENDRIX: The 5 per cent. redemption fund.
MR. WALKER: No, sir. I want to say to the gentleman and to the House and to the country that the people of the United States propose to keep all their dollars of equal value. The people of the United States have made a long step in advance in discovering that it is costing them millions upon millions for the United States Government to do this-redeeming of paper money at the United States Treasury, not maintaining the 5 per cent. redemption, but redemption in large blocks. Therefore they are upon the eve of making the banks do it at their own risk and at their own cost and over their own counters, thus
relieving the people of the tax of twenty or thirty million dollars a year which they now pay for this service to banks, and that the banks themselves ought to do.
"Here in this section of this bill is the first step in that direction-nine tenths of I per cent. to be kept in both kinds of coin-four and a half tenths of I per cent. to be kept in gold coin. The banks now hold $175,000,000 in their vaults. When these bankers go to bed at night and say their prayers, they say, `0 Lord, we beseech Thee to keep gold from going to a premium tomorrow. But they know if it does go to a premium they will make 2 or 3 or 4 per cent. profit on the gold in their vaults. When they get up in the morning they say -following the fashion of some prayers which we hear at the Speaker's desk and elsewhere, informing the Lord what has been done-`O Lord, we thank Thee that gold has not gone to a premium,' but it is no more than human for them to remember, as the night before, the profit if it should go to a premium. The question is, shall the bankers of this country protect every dollar of their own paper circulation at their own expense and their own risk and not compel the people to be taxed to do it for them at the United States Treasury?"
MR. COOMBS: Will the gentleman allow me an inquiry?
MR. WALKER: Yes, if it is short.
MR. COOMBS: Does not the gentleman by this provision put it in the power of the banks and make it their duty to hoard gold, thereby holding a larger whip over the community than they otherwise would? I submit that this amendment would force the banks to become hoarders of gold, instead of leaving it in the channels of trade and in the hands of the people.
MR. WALKER: Now, the gentleman is making an argument. If he wishes to do that, let him get his own five minutes. It is' in the channels of trade' when it is in bank reserves, as the gentleman well knows.
"Mr. Chairman, I want to say another thing, which I regret to say. I have the very highest respect for banks and bankers. I remember the record of George Peabody, and of Corcoran of this city, and hundreds of other bankers. Noble men! Many men of this class have been the most generous, noble-hearted, public-spirited men outside of their business there ever have been in this world. But I remember also that never in any country, under any circumstances whatever, did the bankers ever improve the banking and currency laws or the financial conditions of their country except at the point of the financial bayonet, held by the Government of the country in which the banks were located, namely, by the force of law devised in parliament. We have got to adopt that policy in this country.
"Now, I challenge Henry W. Cannon of New York, I challenge Lyman B. Gage of Chicago, I challenge George E. Leighton of St. Louis-three as honorable men as live and as skilled in finance, men who in financial matters stand the peers, if not above, any other three men in this country-to draw a bill that will do what they are saying ought to be done, and lecturing us for not doing. Bankers are condemning members of Congress as clowns and fools because we do not accomplish what they want us to do; yet they themselves could not draw a bill which would do it that would get two votes in five in this House in this generation or the next. I say we ought not to heed here and now the protests of the bankers against their being brought into line with the banks of every first-class nation of the world. " [Applause.]
These extracts, taken from the Congressional Record, exhibit several remarkable facts. They show that the national banks, while demanding that the United States should redeem all its obligations in gold, and issue bonds to maintain a gold reserve for that purpose, were utterly opposed to being compelled to
maintain a gold reserve for the redemption of their notes.
The extreme selfishness of these financial institutions is exposed by Mr. Walker, a stanch friend of the national banking system, wherein he states that the redemption features of the national banking system had cost the people from $20,000,000 to $30,000,000 per annum. He shows that the cost of this system of redemption was thrown on the Government.
On February 7, 1895, Mr. Springer brought up a motion to engross the bill and pass it to a third reading. This was defeated by a vote of 162 nays to 135 yeas. He then moved to reconsider this vote, but, on motion of Mr. Hatch, it was laid upon the table by a vote of 135 yeas to 124 nays.
The defeat of the Springer bill was decisive.
Therefore this measure, which the gold standard fanatics openly boasted would be the "death knell" of silver, fell at the hands of the public executioner.
The grip of this Tory-Republican administration was loosened for all time to come.