Year: 1867

at great length. In favor of paper re.
demption, reference is made to the pro.
visions of the legal tender law and the
action OF the States in redesming in
paper their own bonds, previously pay
able in coin. 1t is further 81 own that
the Secretary of the Treasury gave no
official pledge that the loan should be
paid in coin; that his utterances after
the lean was taken, cannot be regarded
as part Of the contract, and that the
promise of the Government agent to
pay in gold, was merely based upon the
hope that when the debt matured,
greenbacks would be at par with gold,
and rot npon any legal or binding
authority, and that his expectations
could not set aside the law. Further:


When general rule is laid down,
and An exception is made, it implies
that there are no other exceptions.
Duties on imported goods and interest
on the public debt are excepted from
the legal tender clause. This implies t hat
the principal of the debt is not except
ed. The construction drawn from the
payment of previous loans in gold is
answered by the fact that the act under
which this loan was issued expressly
declares that a note shall be lawful
money as well as gold, and shall be re-
ceivable in payment of the public debt.
The argument that construction was
put upon the law by the agents of the
United States is answered by the fact
that this was not a mutual construc-
tion, recognized by both parties as q
part OF the contract, but was rather an
opinion, based upon supposition of a
state of facts which, when the five years
expired, did not actually exist.


On the other hand, it is argued that
the theory of paper redemption will de-
stroy public credit by suggesting repu-
diation, especially as the people both
here and abroad supposed the debt
would be paid in coin; that a further
issue of legal tenders for redemption
purposes would depreciate that curreD-
cy, and amount to partial reputation;
that such issue is forbidden by the act
of June 30th, 1864, which provides that
"the total amount of United States
notes, issued, or to be issued, shall never
exceed S400, 900, 900, and such addition
al snni, not exceeding $4,000, 900, as
may be temporarily required for the re-
demption of the temporary loau."


"This stipulation" says the report,
lis part of the terms upon which the
40 loan was issued, and is as binding
upon the United States as any other
part of the contract. 1t received the
unanimous vote of Congress so far as the
journals show, and was plainly demand
ed by public policy ut the time, and
was pledge of public faith. Shall
this he violated under the pretense of
diminishing the public burdensi Every
Increase OF legal tenders imp2irs the
value of our public securities. If we
may violate this, we may violate any
other part of the contract.


Your Committee therefore dismiss as
inconsistent with the public faith any
scheme of paying the public debt with
legal tenders by increasing this volume
beyond the sum of S40O,000,000. The
surplus revenue can rapidly be applied
to the payment Ofthe 5-2Os, as Is now
daily done, by the purchase of our secu-
rites in the open market. Your Com
mittee are sa tisfied that the fund, with
the aid of such loan rs is provided in
the bill herewith submitted, will redeem
the 5-20 loans as they become redeem
able, with large saving to the public
Treasury, and in strict accordance with
the public engagements"


Upon the question of taxing the
bonds, the Committee hold that sit
would not be wise in loan law to
waive the constitutional right of eX-
emption of Government securities from
State taxes. But that all property pro-
tected by State or local laws should bear
its share of taxation is so plainly the
demand of justice and public policy
that your Committee deem 1T wise to re-
serve in lieu of local taxes a specific
rate on the entire public loan hereafter
negotiated, and to distribute this
among the States according to their
population"


While protesting to oppose contrac-
tion, the report argues in favor OF max
lag legal tenders convertible into inter
est bearing bonds, the interest of which
is provided for by the annexed bill.
Such conversion is the worst possible
contraction. The greenbacks being
convertible, will disappear from circu-
lation lust as did the demand notes,
and the only remaining currency VIII
he that of the National Banks.


After advising that the Secretary OF
the Treasury be released from his
power to contract the currency" the
report concludes by recommending re-
duction of the number of articles now
subject to Federal taxation.


The following bill, for funding the
National debt, snd for the conversion OF
the United States notes, was reported
by Senator SHERMAN, of the Finance
Committee


SECTION /. That the Secretary of the
Treasury is hereby authorized to issue
registered or coupon bonds in such form
and of such denominations as he may
prescribe, payable, principal and inter
est, in coin, and bearing interest at the
rate of six per centum per annum, pay
able semi-annually, such bonds to be
payable in forty years from date, and to
be redeemable in coin, at the pleasure
o. the United States after ten years from
date; to be issued to an amount suf-
ficient to cover all outstanding or exist
ing obligations, and to be disposed of in
such manner and on such terms not less
than par as the Secretary of the Treasu-
ry NAV deem most conducive to the in
terests of the Government, and the said
bonds and proceeds thereof shall be ex-
clusively used in taking up the existing
securities of the United States; prorided,
that the expense of preparing, issuing
and disposing of such bends shall not
exceed one per cenrum of the amount
disposed of.


SECTION 2. That the bonds issued
under the first section of this act, shall