MY CONFIDENCE IN THE SUCCESS OF RESUMPTION.
Tendency of Democratic Members of Both Houses to Exaggerate the
Evil Times--Debate Over the Bill to Provide for Issuing Silver Coin
in Place of Fractional Currency--The Coinage Laws of the United
States and Other Countries--Joint Resolution for the Issue of Silver
Coins--The "Trade Dollar" Declared Not to Be a Legal Tender--My
Views on the Free Coinage of Silver--Bill to Provide for the
Completion of the Washington Monument--Resolution Written by Me on
the 100th Anniversary of the Declaration of Independence--Unanimously
Passed in a Day by Both Houses--Completion of the Structure Under
the Act.
It seemed to be the policy of a majority of the Democratic Members
of both the Senate and the House to exaggerate the evils and
discouragements of the times, while in fact the people were rapidly
recovering from the results of the panic of 1873, and all branches
of industry were, to a greater or less extent, starting into life
anew, and to prevent the resumption of specie payments, and, if
possible, to repeal the act providing for such resumption. This
policy undoubtedly checked the process of refunding the public
debt, which progressed slowly, and was confined to an exchange of
bonds bearing five per cent. interest for those bearing six per
cent.
I took a much more hopeful view of the situation, and in the many
speeches I made in that Congress, I stated my confidence, not only
in the process of resumption and refunding, but in the rapid
improvement of all branches of industry as we progressed towards
specie payments. In a speech I made in the Senate on the 6th of
January, 1876, on a bill "to further provide for the redemption of
legal tender United States notes in accordance with existing law,"
I said:
"Sir, we ought to take a hopeful view of things in this centennial
year of our country. Look at the aggregate results. A century
ago we were three million people; now forty million; then we had
a little border on the Atlantic; we are now extended to the Pacific.
See what has been accomplished in a hundred years. During that
time there have been periods of darkness and doubt. Every seven
or ten or twelve years, periodically, there have been times of
financial distress. We have lived through them all. I believe,
and I trust in God, that this very year is the beginning of another
period of prosperity, and that all these dark clouds, which gentlemen
are trying to raise up from the memory of the past two or three
years and from their own clouded imaginations, will entirely
disappear. I believe that even now we are in the sunshine of
increasing prosperity, and that every day and every hour will add
to our wealth and relieve us from our distress.
"Sir, things are not so unhopeful as Senators seem to think. We
have made a promise to be executed three years hence, and every
step of our legislation, if any is had, should look in that direction.
We may not adopt any measure or may not deem that any is necessary;
but, if any be adopted, it ought to look to the execution of that
promise, and we ought to enter on the performance of this duty with
hopeful trust in the continued prosperity of our country. All this
gloom and doubt, all this arraignment of official statements, this
doubt of our sufficient revenues, this doubt of our ability to meet
and advance our destiny, always falls upon my ear with painful
surprise. Senators, the task we have before us may be a difficult
one, as it has always proved to be difficult to resume the specie
standard whenever, for any reason, a nation has fallen from it,
but it is a duty that must be executed, and it ought to be executed
without the spirit of party warfare, without these appeals, directly
or indirectly, to party tactics. The pledges made one year ago,
although not voted for by the Democratic party, are pledges binding
upon their honor and their faith as they are upon mine, and I trust
in God that we shall join together in all the proper steps to carry
out those pledges."
This bill was referred to the committee on finance, but no action
was taken upon it, as the committee preferred to await the action
of the House.
The resumption act provided for the payment and destruction of the
fractional currency then in circulation, to the amount of $40,000,000,
and the substitution of silver coins in all respects, such as were
defined by the coinage act of 1853. This was to be the first step
in preparation for the general resumption of coin payments in
January, 1879. It became necessary to provide for the coinage of
fractional silver coins, and a bill for this purpose, entitled "A
bill to provide for a deficiency in the Printing and Engraving
Bureau, and for the issue of the silver coin of the United States,
in place of the fractional currency," was reported by Mr. Randall,
on the 2nd of March, 1876, from the committee on appropriations of
the House. It was subsequently considered, amended and passed by
the House, after a long debate, participated in by many of the
leading Members. Much to my surprise, Mr. Hewitt and Mr. Ward,
prominent Members from New York, opposed the measure, denounced
the resumption act, and prophesied its failure. Mr. Hewitt, in
support of his position, quoted passages from the reports of Mr.
Bristow, then Secretary of the Treasury, and predicted the utter
failure of resumption, unless the United States notes were entirely
withdrawn. He insisted that if silver coin was issued to replace
fractional currency, the coin would disappear from circulation,
leaving the people without any currency for the smaller necessities
of life. In the progress of the debate, it became manifest that
the larger portion of the Democratic Members would vote against
every measure proposed to aid in the execution of the resumption
act.
The bill passed the House on the 31st of March by the vote of 123
yeas and 100 nays. In the Senate it was referred to the committee
on finance, and reported back with amendments. The third section
of the bill, as it came from the House, provided for the coinage
of the silver dollar, of the weight of 412.8 grains troy, standard
silver, and made that dollar a legal tender at its nominal value,
to an amount not exceeding twenty dollars in any one payment, except
for customs duties and interest on the public debt, and that the
"trade dollar" should not, thereafter, be a legal coin. This
section was stricken out.
In the remarks made by me, upon this bill, on the 10th day of April,
1876 , I gave, in detail, the history of each of the coinage laws
of Great Britain, France, Belgium, Germany, Switzerland and Italy.
I had taken great pains to collect this information and to procure
translations of the laws of the several countries named. The then
recent changes, made by Germany, and their effect upon the coinage
of other nations, were carefully stated. The general conclusion
which I drew from a reference to these statutes of various countries,
were:
"First. It is impossible, in the nature of things, to fix the
precise value of silver and gold. We have tried it three times
and failed.
"Second. Whenever either coin is worth more in the market than
the rate fixed by the law, it flees from the country. That we have
twice proved. That is the admitted economic law. It is the Gresham
law; a law of currency named from the name of its discoverer. He
wrote a book to show that always the poorer currency would drive
out of circulation a superior currency; and his book gave name to
the theory that is called the law of Gresham. It is the universal
law of political economy that, whenever two metals or two moneys
are in circulation, the least valuable will drive out the most
valuable; the latter will be exported.
"The third proposition is that the example of several great European
nations, as well as of the United States, proves that to prevent
the depreciation of silver the tendency of modern nations is to
issue it as a token coinage somewhat less in intrinsic value than
gold, and maintain its value by issuing it only as needed, at par
with the prevailing currency, and to make it a limited legal tender.
I may say that has been acted upon by every great Christian nation.
Russia and Austria have not yet gold coinage at all, but still they
have their values based upon gold.
"Fourth. That the demonetization of silver tends to add to the
value of gold, and that though the relative value ebbs and flows
it is more stable compared to gold than any other metal, grain, or
production. Its limit of variation for a century is between fifteen
to seventeen for one in gold.
"Fifth. That both coins are indispensable, one for small and the
other for large transactions.
"Sixth. That the causes of the decline of silver are temporary.
It is still used by a great majority of mankind as the standard of
value. Its use in France and the United States will, on resumption,
more than counteract its decline in Germany.
"Seventh. The general monetizing of silver now, when it is
unnaturally depreciated, would be to invite to our country, in
exchange for gold or bonds, all the silver of Europe, and at last
it would leave us with a depreciated currency.
"Eighth. The decline of silver enables us now to exchange silver
coin of the old standard for fractional currency, leaving the
exchange optional with the holder, until we have the courage, as
we now have the ability, to redeem it in gold.
"Ninth. More silver can be maintained at par than we have now of
fractional currency.
"Tenth. The redemption of a part of our currency would advance
its purchasing power, while the silver in circulation will counteract
the contraction of the currency."
This bill became a law on the 17th of April, 1876. The second
section provided:
"That the Secretary of the Treasury is hereby directed to issue
silver coins of the United States of the denomination of ten,
twenty, twenty-five and fifty cents of standard value, in redemption
of an equal amount of fractional currency, whether the same be now
in the treasury awaiting redemption, or whenever it may be presented
for redemption; and the Secretary of the Treasury may, under
regulations of the treasury department, provide for such redemption
and issue by substitution, at the regular sub-treasuries and public
depositaries of the United States, until the whole amount of
fractional currency outstanding shall be redeemed. And the fractional
currency redeemed under this act shall be held to be a part of the
sinking fund provided for by existing law, the interest to be
computed thereon as in the case of bonds redeemed under the act
relating to the sinking fund."
A joint resolution for the issue of silver coin was introduced in
the House by Mr. Frost, of Massachusetts, on the 1st of May, 1876.
The object of this resolution was to expedite the issue of minor
coin and the retirement of fractional currency. It was referred
to the committee on finance, reported favorably and passed with
amendments June 21. The House disagreed to the amendments of the
Senate, and a committee of conference was appointed composed of
John Sherman, George S. Boutwell, and Louis V. Bogy, managers on
the part of the Senate, and H. B. Payne, and Samuel J. Randall,
managers on the part of the House. The report of the conferees
was agreed to, and the bill having passed both Houses it was approved
by the President on the 22nd of July. It provided:
"That the Secretary of the Treasury, under such limits and regulations
as will best secure a just and fair distribution of the same through
the country, may issue the silver coin at any time in the treasury
to an amount not exceeding ten million dollars, in exchange for an
equal amount of legal tender notes; and the notes so received in
exchange shall be kept as a special fund, separate and apart from
all other money in the treasury, and be reissued only upon the
retirement and destruction of a like sum of fractional currency
received at the treasury in payment of dues to the United States;
and said fractional currency, when so substituted, shall be destroyed
and held as part of the sinking fund, as provided in the act approved
April seventeen, eighteen hundred and seventy-six."
It also provided: "That the trade dollar shall not hereafter be
a legal tender, and the Secretary of the Treasury is hereby authorized
to limit, from time to time, the coinage thereof to such an amount
as he may deem sufficient to meet the export demand for the same."
It also provided that the amount of subsidiary silver coin authorized
should not exceed $50,000,000. The silver bullion was to be
purchased from time to time at market price by the Secretary of
the Treasury from any money in the treasury not otherwise appropriated,
and any gain or seigniorage arising from the coinage was to be paid
into the treasury.
These provisions in respect to subsidiary coin were in a large
measure executed prior to the 4th of March, 1877, and tended, in
my opinion, to facilitate the progress of the resumption of specie
payments on the 1st of January, 1879. The debate on these measures
occupied a large portion of the time of both Houses of Congress,
and presented in every possible aspect all the financial questions
involved in coinage, resumption and refunding. Anyone desiring a
full knowledge of the view then taken of the act revising the laws
in respect to coins and coinage, approved February 12, 1873, will
find in the debate a full history of that act, given at a time when
it was fresh in the memory of the great body of Senators and
Members.
I supported the coinage of the old silver dollar in a speech in
the Senate made on the 8th of June, 1876, two years before the
appearance of the "Bland bill," or the "Allison bill." Silver
bullion was then declining in market value. The resumption act
provided for the gradual replacement of fractional currency by
silver coins of the character and form provided for by the coinage
act of 1853. When that act passed the old silver dollar was not
coined or in circulation. It was more valuable in the market than
a dollar in gold, and, if coined, would have been exported as
bullion. In the revision of the coinage laws of 1873, it was
dropped from the list of coins, and its further coinage was prohibited
by a clause providing that no coins should be made at the mint
except those provided for in that act. The history of this act
and the reasons for prohibiting the coinage of the old dollar have
been fully stated in a previous chapter of this work. In place of
the old dollar the trade dollar, containing 420 grains of silver,
was provided for. This trade dollar, coined for, and at the expense
of, the owner of the bullion deposited at the mint, was, in the
revision of the laws of the United States, unintentionally made a
legal tender for five dollars, the same as the minor coins issued
by the mint on government account. As silver declined in value,
the trade dollar became less valuable than a dollar in gold, and
the owners of bullion deposited it in the mint, and received in
exchange trade dollars costing less than a dollar in gold, but,
being a legal tender for five dollars, it could be forced upon the
people of California, then upon the gold standard, at a profit to
the owner of the bullion. Mr. Sargent, a Senator from California,
early in the session introduced a bill enlarging the limit of legal
tender of minor coins, and repealing the legal tender quality of
the trade dollar. This bill was referred to the committee on
finance, and was reported with an amendment to strike out all after
the enacting clause, and insert:
"That section 3586 of the Revised Statutes of the United States
be, and hereby is, amended to read as follows:
"The silver coins of the United States, except the trade dollar,
shall be a legal tender at their nominal value for any amount not
exceeding five dollars in any one payment."
This simple bill was made the text of a long debate in the Senate
that continued during the greater part of that session. The
provision that "the trade dollar shall not hereafter be a legal
tender" was transferred to the joint resolution already mentioned
which became a law on the 22nd of July.
In my speech on Mr. Sargent's bill I said:
"This bill proposes to restore the old silver dollar, and with it
and the subsidiary coins of the United States to redeem the United
States notes and fractional currency. The dollar to be restored
is the same dollar that had existed from 1792 to 1873; and the
subsidiary coins to be issued are the same in form and value as
have been issued since 1853. I have already stated in my remarks,
made on the 11th of April last, the history of these silver coins
and the relation of silver and gold to each other, not only in the
United States, but in the countries with which we have the most
extensive commercial relations.
"The two main questions are:
* * * * *
"First. Shall silver coin be exchanged for United States notes as
well as for fractional currency? And,
"Second. Is it wise to recoin the old silver dollar with a view
to exchange it for United States notes?"
In this speech I favored the restoration of the silver dollar of
the precise character and description of the dollar that existed
from 1792 to 1873, but, as the market value of the silver in this
dollar had greatly fallen, I insisted that the dollar should be
coined from bullion purchased by the government at market price,
so that the people of the United States would receive the difference
between the cost of the bullion and the face value of the coin,
the same principle that was adopted in what is known as the Bland-
Allison act of 1878. I did not, however, propose the full legal
tender quality that was given to the dollar by the act when adopted,
but that it should be placed among the other silver coins, and be
a legal tender only for twenty dollars.
The plan proposed by me was to set aside a portion of the surplus
revenue or sinking fund of each year applicable to the payment of
the public debt, for the purchase of silver bullion to be coined
into silver dollars of the old standard. I said:
"The bill reported by the committee on finance thus provides for
an immediate resumption of specie payments in silver coin, and thus
completes the first and most difficult step of the problem. It
neither disturbs nor deranges business, nor stirs up the phantom
of contraction. It is in exact accordance with existing law, and
leaves the silver coin, as now, a subsidiary coin, a legal tender
only for limited amounts.
"The next question presented by this bill is, shall we return to
our silver coinage the old silver dollar. And here I am met by
the objections of the Senator from Vermont, but his objections are
rather to the amendments proposed by the Senator from Missouri,
than to the report of the committee. The committee propose the
silver dollar, not as a legal tender for gold contracts, but only
as a tender for currency contracts not exceeding twenty dollars in
any one payment. I would prefer to leave the silver dollar and
stand upon its intrinsic value as a legal tender the same as the
smaller coin; but there is no injustice in enlarging the limit to
twenty dollars, and but for the reasons I will state hereafter
there is no injustice in making it a legal tender for all currency
contracts. The silver dollar has that intrinsic value which in
all periods of our history has made it a favorite coin, not only
for domestic uses but for exportation. It furnishes silver bullion
in a shape and form more convenient for handling than any other
form of coin.
* * * * *
"When the old silver dollars are issued at par with the United
States notes, a large amount of them will be taken as a reserve by
the people to meet future needs, with or without a legal tender
quality. As their issue is not peremptory, and the aggregate cannot
exceed the surplus revenue or sinking fund, there is no danger of
an overissue, while their existence among the people will be the
best reserve when gold alone becomes the full standard of value.
"Every argument already mentioned in favor of subsidiary silver
coins is equally potent in favor of the silver dollar. It will be
eagerly taken in payment of United States notes. It is purely a
voluntary exchange. It is the cheapest mode in which we can redeem
United States notes. It is specie resumption in the old time-
honored standard of silver dollars of full weight and fineness.
It will accustom our people to distinguish between the real dollar
that pays where it goes and a paper dollar which only promises to
pay. It will prepare the way for full resumption in gold. To the
extent proposed by the committee, and to be used as a purely
voluntary approach to a full specie standard, it is open to no
objection or criticism, and should be assented to by gentlemen who
have differed with each other on the present resumption law or on
the merits and dangers of contraction and expansion."
The vital difference between the free coinage of silver, and the
limited coinage of that metal on government account, is that with
free coinage the standard of value would be the cheaper money.
With silver at its present price in the market the dollar would be
worth but a little over fifty cents. The coinage being free to
the holders of silver bullion no other coins would be made except
the cheaper coins of least purchasing power. On the other hand,
the coinage of silver on government account enables us to maintain
the silver coins at par with gold, without respect to the market
value of the silver bullion. Any nominal profit from this coinage
inures to the benefit of the whole people of the United States and
not merely to the producers of silver bullion. This distinction
has always appeared to me so marked and clear, and the argument so
strong in favor of limiting the coinage of silver to the amount
demanded as a convenience of the people for the smaller transactions
of life, that I cannot sympathize with a policy that aims merely
to secure the cheapest money for the discharge of obligations
contracted upon more valuable money.
Among the measures that became a law at this session was a concurrent
resolution, introduced by me in the Senate on the 5th of July,
1876, to provide for the completion of the Washington monument.
On the morning of the 4th of July, 1876, the 100th anniversary of
American independence, I was making some preparation for the
celebration of that day in the vicinity of Washington. Animated
by the patriotic feeling inspired by the day, and sitting in view
of the unfinished monument of George Washington, I felt that the
time had come when this monument should no longer continue a standing
reproach to a patriotic people. Shortly after the death of
Washington, a resolution providing for the erection of a monument
to his memory, was agreed to by both Houses of Congress. Subsequently,
on January 1, 1801, a bill was passed by the House of Representatives
appropriating $200,000 for this purpose, but, in the political
excitements of that day, the Senate failed to concur. In the
absorbing public questions that ensued, resulting in the War of
1812, the subject was dropped in Congress for the time.
In 1833 the "Washington Monument Society" was formed, with Chief
Justice Marshall as its president. This society proposed to raise
the necessary sum to erect such a monument by voluntary subscriptions
of individuals, and in 1854 it had, by such means, constructed
about one-third of the height of the monument and then suspended
work. Thus it had remained for years for want of means to complete
it, a glaring evidence of failure. The portion of the monument
already reared to the height of 156 feet stood in rude outline, an
abandoned failure in the midst of a reservation partly covered with
water and broken stone. The society was incorporated by Congress
in 1859, but no further progress was made. It was manifest that
the work could not be completed by the existing organization, and
doubts were expressed whether the foundation was sufficient to bear
the superstructure. Under these conditions, on the 100th anniversary
of the declaration of American independence, it occurred to me the
time had arrived when a great country like ours should complete
this unfinished monument to George Washington. Under the inspiration
of this thought I wrote this resolution on the morning of the 4th
of July, and on the next morning offered it for adoption in the
Senate:
"Whereas, It has pleased Almighty God to guide the United States
of America safely through one hundred years of national life, and
to crown our nation with the highest blessing of civil and religious
liberty, Therefore,
"The Senate and House of Representatives in Congress assembled, in
the name of the people of the United States, in reverent thankfulness
acknowledge the fountain and source, the author and giver of all
these blessings, and our dependence upon His providence and will;
and,
"Whereas, We recognize, as our fathers did, that George Washington,
'first in peace, first in war, and first in the hearts of his
countrymen,' was one of the chief instruments of Divine Providence
in securing American independence and in laying broad and deep the
foundations of our liberties in the constitution of the United
States:
"Therefore, as a mark of our sense of the honor due to his name
and to his compatriots and associates, our revolutionary fathers,
"We, the Senate and House of Representatives in Congress assembled,
in the name of the people of the United States at this, the beginning
of the second century of national existence, do assume and direct
the completion of the Washington monument in the city of Washington,
and instruct the committees on appropriations of the respective
Houses to propose suitable provisions of law to carry this resolution
into effect."
In submitting this resolution I said:
"I desire to offer at this time a concurrent resolution I wish to
say before it is read that I believe if it were passed to-day it
would be a matter of profound satisfaction to the great body of
the people of the United States. I ask that it be read."
After the resolution was read, there was a pause, when Mr. Edmunds
said: "Let us consider this resolution. It will be agreed to
unanimously, I am sure."
The resolution was therefore considered and agreed to unanimously.
It was sent to the House of Representatives the next morning, when
Mr. Hopkins, of Pennsylvania, pending a motion to adjourn, asked
unanimous consent to take from the speaker's table the concurrent
resolution in reference to the Washington monument. Upon the
resolution being read, the House seemed to be impressed, as was
the Senate, with the fitness of the time, and the propriety of the
measure proposed, and it was unanimously adopted without debate.
Thus Congress undertook to execute the unfinished work of the
Washington Monument Society. The requisite appropriations were
subsequently made, and the monument, as completed, is now the most
impressive token of the appreciation, by the American people, of
the name and fame of George Washington. It is visited daily by
nearly every American or stranger who enters the city of Washington.
Its dedication will be hereafter mentioned.