Year: 1866

SENATOR F. H. SMITH, OF BUTTE.
On the Bill to Repeal the Specific Con-


tract Law.


Delivered In the California Senate. Jan 1ary
a4th. 1866. and Listened to with the
Profoundest Interest.


-ds Reported for the San Francisco imeriean Flag.
| Mr.. PREsIDExr In advocating the pas
sage OF this bill, it were vain for me 10 disguise
| the fears l entertain Of its ultimate fate. /
cannot but recognize the great power arrayed
TO defeat what seems to me 10 be the wish
the demand of the people-thai the Specific
Contract Law be repealed. l spprehend that
| this power may triumph. 1t has resolved to
do SO, no matter at what sacrifice; TO do so,
though the Commonwealth be involved in ruin.
That power is the monopoly of capital that
sits enthroned, like very despot, between the
pillars of the Golden Gate of the Pacific
Whatever may be the 6ual result though the
voice ef the people, demanding to be lifted up
from the desolating wave overwhelming their
! interests, and TO have al equal chance for
prosperity, be again overcome and hushed to
silence, still an as determined as heretofore
| to be heard in their behalf


The Specific Contract Act should no longer
remain upon the Statutes of this State. First,
because it is unconstitutional. That it is iu
direct violation of law of Congress that it
nullifes the authority of the United States /;
and is altogether an act of bad faith on the
part of this State towards the Federal Govern
ment,-no sound legal mind will deny. Upon
this question, the decision of the Supreme
Court of this State stands alone unsuStained-
it meets with no concurrence in the land. Its
opinion is completely over,hrown by the able
decision of the Supreme Court of the State
of Nevada, aud the unsoundness OF It's doctrine
completely established by the unanswerable
opinion of the Supreme Bench of the State
of Michigan. The views l had the honor to
express upon this point, during the last session,
have been strengthened by subsequent examn
aton. do not propose to discuss this branch
Of the subject again.


The Specific Contract Law should be
repealed, in the second place, because, by
virtue of its provisions, it gives the power to
centralized capital 10 work the exclusion Of the
currency Of the. Nation from free and active
circulation among the people, since, by virtue
of its provisions, capital can determine the
character of our circulating medium, and
declare what may, and what shall not be used
by the people in payment of their obligations
1t should be repealed, because it in effect
adopts gold and silver to the complete exclusion
of an equally SAFE more convenient and less
expensive circulating medium-a currency
sanctioned by National authority, bearing
equally its impress of sovereignty, and founded
upon the inexhaustlble wealth and good faith
OF the nation; currency adopted and in use
by the people of every State in the Union
except upon this Pacific coast


1t should be repealed, because, in its opera
ton, it shuts out all competition in the use
Of money; thus strengthening and making
permanent the power of the gold dealer to
determine the rate of interest. aud the character
of securities for loans.


1t should be repealed, because its direct
effect has been to drive away from US, during
the past twelve months, fifty thousand of our
industrial classes. Its con, ,nuance as the law
of the State will not only increase the outgoing
tide, but will prevent the food of immigration
setting toward our shores.


For the development of the great resources
of our State, we require that capital shall
be made accessible to the people; and the
continuance of this law will, in effect, deprive
them of this character of money, and fasten
upon them high and ruinous rates of interest


The present system affords no encouragement
TO home manufactures it does not propose to
give any facilities for that purpose; it is not
within the functions of individual banking to
do so. Individual banking is too selfish, its
interest is too high, its loans too short and its
whole policy and tendencies are opposed to
credit, the very life and soul of enterprise.
The great source of profit to the banker and
importer lies in keeping up and increasing i'm.
portations from our Eastern cities and hence
it does not belong to their system TO encourage
and foster home industry in manufacturing any
OF the necessaries of life, and the motive power
forcing this upon US is the Specific Contract
Act. For this reason, this obnoxious statute
should be repealed.


l have assumed that the Specific Contract
Law prevents the National paper currency
from circulating freely among the people, in
their ordinary transactions of trade aud labor
shall endeavor to prove the proposition. The
capital OF the Pacific slope is lodged in San
Francisco; comparatively. there is little dis
tributed among the people it is concentrated
at the commercial emporium, and her citizen
bankers hold the monopoly. Her importers
and commission merchants also have the com
plete monopoly in the conducting of the trade.
Unlike New York, San Francisco has no
Philadelphia, Baltimore, or Boston. 10 share
with her the trade and commerce of the Pacific;
in word, that city has most absolute mon
opoly of trade and capital, aud can and does
dictate terms upon which either shall be used
and prosecuted; all great loans are made at
that point, and from that city as radiating
center all the commodities of life are distributed
The transactions in trade all obligations
running to the merchants and all contracts
for loans of money, are made directly under the
provisions of the Specific Contract Act; and
in the performance of the engagements SO
entered into, arises the necessity of like
demands at all the minor distributing points,
either as to the use Of capital or the exercise
OF trade The power thus centralized permeates
the entire State its existence and exercise at
the center compel the corresponding action
throughout the whole area of the CIRCLE and
the warrant of authority for the exercise of this
power is the law itself. So long, then. as this
law prevails no other character Of money than
that directed at the center of capital and the
seat of monopoly, cap attain any great degree
of circulation. With this law in operation. all
other legislation looking 10 the introduction
of the paper Of the nation will be wholly mop
erative; this vast monopoly Of wealth and
power, deriving all its vitality from the sole
and exclusive use of the metallic currency.
must be destroyed, or the tributary parts must