Year: 1868

March 7, 1868,


The House having under consideration, al
in Committee of the Whole, the President
annual message, Mr.. Lynch said:


Mr. Speaker, the present condition Of oul
| national finances largely absorbs public at
| tenlion. Various and very import mt ques
lions relating thereto are aaitated in The
country and in Congress.


The present situation is admitted on al
hands to be unsettled and unsatisfactory
All desire and expect change, and in The
main 1t is agreed that the change tn be made
should be change from an irIedeemabe pa
per currency to one redeemable in gold and
silver; that we should re establish for our cur
rency the recognized standard of value oi
other nations by resumption of specie pay
ments.


In the interest of this change / propose
now 10 speak, and shall endeayor to show
that something, that much, may at once be
commenced and carried out to bring about
the desired result.


do not propose at this time to discuss the
question as to whether our tive-twe4ty bonds
are payable in currency or coin; for this ques
tion regard as OF really no practical impor-
tance, say, lOr our currency is TO be made
redeemable in coin, is to be redeemable IN
gold and silver according to the national
promise borne upon its notes, and currency
redeemahle in gold is the equivalent of gold
-as good as gold itself.


Nor is our financial condition to be improy-
ed by attempting at this time to fund in new
form our public debt: tor we cannot adyan-
taseously fund our debt until our credit is
improved. Our credit is now in the markets
oil the world at thirty per cent. discount; our
best bonds are worth, where they sell tor gold
only about seventy tents On the dollar. Be-
fore we attempt r Tew loan. for the purpose
oil retiring the old one, we must first of all
bring the value OF our currency wi i,h fixes the
value OF our bonds, to par with gold aud
silver.


believe cur present financial condition
may be Immediately improved, and shall at
tempt to show how it may be dona In or
der, however to do this the more successfully
1t is necessary that / call the attention
Of the House 10 the means by which
the present situation WAS reached. A review
OF the financial policy adopted at the close OF
the war, and continued nearly to the present
time, may make plain and lead us 10 avoid
in the new policy about to be adopted, the
mistakes and errors ct the old, which trust
has been at lei 9Th finally discarded.


Mr.. Speaker, on posting the books at the
close OF the rebellion tie nation found itself a
debtor to the amount of about thee thou
sand million dollars, Tut with unlimited re-
sources, while its creditors were willing TO ac-
cept the lowest rate OF interest for the longest
term OF payment.


Tie withdrawal of million of men from
the pursuits OF labor, and the demand for
material to sustain them and to supply the
destructive consu 'ptiOn OF war, had stiinula-
ted every branch OF productive industry and
qnickened all the currents of trade. Accu-
mulated stocks of merchandise had lseess
greatly reduced; prices were conseqrf{ ~
high and labor in active demand; in facS,
more fully employed and better renumerated
than ever before in the history of the country.
The disbursements OF the government had
reached every conner of the land, and repen-
ished the pockets OF the humble OF its citi-
zens. The people had become more fee fiom
debt than ever before. They also had for
the first time sound national currency: not
a mere representative of the indebtedness OF
the people to each other, but The evidetce OF
an actual loan by the people to the govern
ment, and although not Immediately redeem
able in gold amply secuted by the mdorsment
OF the nations faith. With the return or
peace, confidence in the future was restored.
The great army of consumers and DESTROY ers
were rapidly changed into an army of produc-
ers; the price OF gold went steadly down
Eom one hundred and eighty TO twenty-five
per cent. premium ard the laws of trade were
fast settling the business OF the country on a
solid foundation.


But, Sir, Notwithstanding this prosperous
condition OF the country, it was contented by
many financial writers that our apparent
prosperity was an illusion-our suppos ed
wealth sham; that the legal tender currency
OF the government, which had hitherto an
swered all the purposes of money, which had
carried us through the war, and operated so
wonderfully in developing our resources and
stimulating the industry OF the country,
would become worthless ii it remained In
circulation; consequently, it must be retired


nd bonds bearing interest must be subs IT,
tuted in its stead. This currency would, it
not retired, we were gravely told, become as
worthless as the continental money of the
American Revolution, or the assignats OF
France. But, how the government, unable
to pay notes bearing no interest, would be
better able to pay them changed into notes
bearing interest think the advocates OF
this policy never condescended to explain.
1t was further contended that il was neces-
sary to check business by withdrawing
the meaps necessary to its prosecution; to
| reduce the price of merchandise by reducing
the cost OF labor essential to its production
all this in order that speculation and the f.
nancial revulsions, which naturally follow in
the wake OF specuia ion, might be prevented.
In other words, it was de4med necessary that
the busicess OF the country should be placed
under the guardianship OF the government
| to prevent its selfdestruction.


The present Secretary of the Treasure first
| publicly toreshado we'd the financial policy OF
| his administration in his celebrated Fort
| Wayne speech in October, 1865. The prin-
| cipal feature in this policy was the contrac-
| ton OF the currency, for the avowed double
purpose OF returning TO specie payments and
| exercising such control over the business OF
the country as to prevent financial collapse
| The adoption OF this policy was urged in the
| first annual report OF the Secretary OF the
Treasury, submitted to the Thirty-Ninth
Congress on its assembling in December
| 1865. In that report, speaking of the acts
authorizing the issue of United States notes
| (greenbacks) the Secretary says:


But these acts should be regarded as onl,
| temporary, and the work OF retiring the notei
issued under them should be commenced with
4 out delay, and carefully and persistently con
tinued until all are retired.


Speaking of the condition of the country
he says:


If the business of the couatry rested upor
a stab e'basis, or if credits could be kept from
being still further increased, there would b.
| less occasion for soictuae ON this subject Blu
such is not the fact Business is not in
healthy condition; it is speculative, feverish
uncertain. Every day that contraction is de
| terred increases the difficulty of preventing


financial collapse. Prices and credits will no
remain as they are. he tide will either re
| cede or advance; and 1t will not recede with
| without the exercise of the controlling powe
| of Congress.


And then recommends:


1. That Congress declare that the compound
| interest notes shall cease to be legal tende
from the day of their maturity.


2. That the Secretary be authoriz ed, in hi
discretion, to sell bonds of the United States


bearing interest at a rate not ekceeclng si


per cent, and redeemable and payable at slc


periods as may be conducive to the interest
of the country, for the purpose of retiring no
on compound-i interest notes, but the Unite


1t will be observed that the policy here an


nounced had not tor its object the funding {


the public debt nor the providing of ways an


means for the support OF the Government


The avowed object in adopting this polio


was to regulate and control the business {


the country by discretionary power to b


exercised by the Secretary of the Treasur,


At any other time in our history previou


to the rebellion the bare proposition to plac


the whole business interests OF the countT


under the supreme control of an officer of th


Government. by granting him unrestricte


power over the currency, and thus enablin


him to affect at will all values, the price ,


merchandise and of labor, the value OF stocl


and OF debts, would have startled and alarm


ed the country, and would scarcely have r.


ceived the support OF a single vote in Co,


gress. But, sir, so accustomed had we b


come to the exercise OF large discretiopa,


powers by the government during the W;


that we had come to accept unquestioned an
policy it might adopt Strange as it NAV no
in sUh of