The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1891-09-27


too, at time when the credit of the gov
eminent was at its very lowest ebb, and
when members of congress had to receive
their pay in treasury notes, as the treasury
was substantially bankrupt. From that
time to this | have been identified to
greater or less degree with our financial
legislation. could only answer you now
by reference to the history of the coun-
try. When ! was transferred to the
Senate in 1861 / was placed on
the committee of finance, of
which Mr.. Fessenden was chairman.
He was q man of marked ability,
perhaps as intellectually able as any man
in the Senate then or for many years be-
fore. He was sharp, incisive, not always
pleasant in his manners. but his ability as
DICTATOR gave him commanding influence.
He was extremely conservative IN his
yeiws, and was very slow IN yielding TO
the necessities of the time for new kinds
of money and new sources OF revenue, and
therefore threw upon me great deal OF
responsibility which he more properly
SHOULD have assumed. Then came up the
question of the demand notes issued as
temporary experiment, followed soon
after by the controlling ques-
ton of legal tender paper money
to be issued directly by the
treasury of the United States. He believed
that this was unconstitutional, but he felt
voting against it, he would not take the
responsibility of defeating the measure. I
had no doubt of the constitutional power
of the United States to issue such notes
under the general powers conferred by the
constitution, and took the lead in favor of
issuing such notes. This met with very
decided opposition from such experienced
senator's as Judge Collamer, of Vermont,
but was finally carried by the necessity
for the immediate use of some form of
money"
HOW OUR NATIONAL BANKING SYSTEM WAS
MADE.
''At that time the channels of circula-
ton were filled with notes of state banks,
which, by the sub-treasury law, could not
be received by the United States. and gold
and silver had disappeared soon after the
opening of the war, and the notes of the
banks varied in value in different states,
so that practically there was in existence
no considerable amount of money, and the
state bank notes were a threat and him
drance to the United States notes about to
issue. This condition induced Secretary
Chase to propose a national banking sys-
tenn founded mainly upon the banking
law of New York. My experience
oughly committed me against all
forms of paper money issued by
local banks. After a careful study of the
question, | took up the bill TO organize
national banks. made certain important
notifications to IL, introduced IL in the
Senate, and, after long debate, finally
carried it by bare majority, most of the
Eastern senators being opposed to the
scheme. think it was the study of this
financial problem and the necessity of
taking the lead in this measure, that, more
than anything else, fixed my mind upon
financial questions, and made me respons-
ible, more or less, for the financial legisla-
ton since the beginning of the war;
''In rev ewing these measures during the
war, 1t will be noticed that the House and
the Senate were almost always opposed to
each other upon the principles of the loan
and currency bills. The loan bills sent to
the Senate by the House generally provided
for long bonds, and contemplated large
issue of United States notes with no pro-
vision to maintain them from deprecia-
ton and with no right to redeem the bonds
until their maturity. The Senate from
the beginning took the position that the
issue of notes should be carefully limited,
that the right to redeem the bonds in
short period should be carefully reserved
with view to return to specie payments
as soon as practicable after the war closed.
1t was the Senate that inserted the pro-
visions for the payment of the customs
dues in coin and the payment of the inter-
est on the bonds in coin, and the provis-
ions allowing the tive-twenty bonds to be
redeemed in i've years, the ten-forty bonds
in ten years and the great mass of $40
treasury notes in three years. These
provisions, so vital, as has been shown. to
the credit q the government were reluct-
antly yielded to by the House, but were ten
aciously insisted upon by the Senate and
agreed to. No candid person can now
doubt, looking back upon these conditions,
but that the Senate was right, and that
but for these provisions United States
notes would have been more and more de-
preciated, and a restoration to the normal
condition, that of the specie standard,
would have been difficult If not impossible.
doubt whether wiser policy in respect
to our debt and currency under the enor-
nous strain of war, demanding sums SO
vast, could have been devised.
SAT the close of the war, under the adj
ministration of Secretary McCulloch. in
April, 1866, a radical difference sprang up
both in the Senate and in the House as to
the best process of funding the various
forms of indebtedness of the United States.
found myself at variance with Mr.. Nc
Culloch. Secretary Fessenden and a ma
jority of the Republican senators. The
law of 1866 that l opposed inetfectively
provided for the conversion OF the out
standing Indebtedness, including the $40
treasury notes, into the 6 per cent. bonds
OF the United States"
THE STORY OF RESUMPTION.
81 believed then, and I believe now,"
Senator Sherman continued, that under
the great imitation of our currency the
whole debt could have been refunded into
or per cent. bond, reserving the right
of payment within brief period. l also
believed, and still believe, that the five
twenty bonds, by fair construction of the
laws, were payable in the kind and class of
United States notes issued under the law
providing for the issue of both these bonds
and notes. As legal question this seemed
to me clear and uncontrovertible. AS
moral question, it could be urged with
great force that it was the duty of the
United States first of all to make its notes,
or promises to pay money, equivalent to
coin before availing itself of the right to
pay off the bonds with United States notes.
|, therefore, was not in favor of assert
ing the right to pay oil the
bonds with the notes until the
notes themselves were convertible at the
will of the holder into coin of standard
value. If the purpose TO resume specie
payments within a reasonable period had
been declared by law, and due prepara-
tons made tor it, it would have advanced
the United States notes rapidly To par and
they then would have been willingly re-
ceived in the payment of bonds. and the
whole mass of indebtedness would have
been converted al 4 lower rate OF interest.
In other words, if the same measure had
been adopted in 1885 for the resumption of
specie payments that was adopted in 1875,
q vast sum would have been saved TO the
people in the payment OF interest, the
credit of the government would have been