And again, when in 1870 Congress was about to provide for a refunding of
the public debt, these clamorous creditors, not satisfied with having
got the bonds at rates much below their face value, and not satisfied
with the pledge to pay in coin--a pledge made long after the contract
was made and the debt incurred--insisted that not only should the new
bonds be payable in coin, but in order to guard against any possible
interpretation which might work to their detriment they did what has
rarely been done in the history of monetary legislation, insisted that
even the very _standard_ of that coin should be fixed and nominated in
the bond. They were willing to take no chances. They were not willing to
place confidence in the sense of equity and fair dealing of the people
of the United States. They held before Congress the covert threat that
if the new issue of bonds did not provide for payment in "coin," instead
of "lawful money," and did not prescribe the precise standard of coin in
which they were to be payable, it would be difficult if not impossible
to place the bonds on the market.
So, by the refunding act of July 14, 1870, Congress provided for the
payment in "coin of the present standard value," that is to say, in
either gold dollars of 25.8 grains of gold, nine-tenths fine, or in
silver dollars of 412-1/2 grains of silver, nine-tenths fine, at the
option of the United States. But even this extreme advantage to the
creditors over payment in "lawful money" of the United States, in which
the bonds were bought, and in which they were legally payable, was
insufficient. All but the most ingenious would imagine that having thus
provided for payment in coin then bearing a considerable premium over
the current money of the Republic, and having the very standard of that
coin fixed in the act, the highest point of vantage had been reached.
One device, however, and only one, remained by which the money of the
payment could be still further increased in value, and this device did
not escape the watchful eye or cunning hand of the public creditors.
They clearly saw that if by legislative enactment they could secure the
rejection of one of the money-metals they would succeed in enormously
increasing the value of the metal retained. This they accomplished by
the demonetization of silver, and thus by striking down one-half the
automatic money of the world and devolving the money function
exclusively on the other half, added thousands of millions of dollars to
the burden of the debt.