"The abandonment of silver will result in the enhancement of the burden of all debts and fixed charges, acting as a drag upon production, and suffocation, strangulation, are words hardly too strong to express the agony of the industrial body when embraced in the fatal coils of a contracting money." - Francis A. Walker.
"Many of our rich men have not been content with equal protection and equal benefits, but have besought as to make them richer by act of Congress. By attempting to gratify their desires we have, in the results of our legislation, arrayed section against section, interest against interest, and man against man in a fearful commotion which threatens to shake the very foundation of our union.
"It is time to pause in our career; to review our principles, and, if possible, to revive that devoted patriotism and spirit of compromise that distinguished the sages of the Revolution and the fathers of our union. If we cannot at once, in justice to interests invested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges; against any prostitution of our Government to the advancement of a few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy." - Andrew Jackson.
In the presidential campaign of 1880, the two great political parties arrayed themselves against each other in this contest with the utmost zeal.
The National Republican Convention met in Chicago
The battle cry of the Republican party in this notable contest was "A solid South against a solid North."
The money power joined in the senseless hue and cry, and by playing upon the smouldering prejudices of the people growing out of the late war, and by seeking to reopen the festering wounds of sectional hate, aimed to control the election and consequently the financial policy of the Government.
Owing to the dissensions of the New York State democracy, which grew out of the gubernatorial election of 1879, and which were not healed, and the lavish use of money, the Republican candidates were successful.
After the 4th of March, 1881 the Republicans had full control of the Government, and there was no obstacle in their way to hinder or obstruct the execution of their policy.
William Windom, of Minnesota, was selected by President Garfield for the post of Secretary of the Treasury.
After the adjournment of Congress in the early part of 1881, Secretary Windom and the bond-holders mutually agreed that the bonds bearing five and six per cent interest then maturing, should be refunded at three and one-half per cent, payable at the option of the Government.
This action of Secretary Windom had no authority in any law then existing, and was an unwarranted assumption of the constitutional power of Congress by an executive officer.
The usurpation of legislative power by the Secretary of the Treasury was tolerated for the reason that it saved the Government a large amount of interest;
nevertheless, Congress, at its next session, sharply criticized Mr. Windom for this exercise of arbitrary power.
The action of the bond-holders in voluntarily accepting a lower rate of interest than their contracts called for excited a great deal of comment at the time.
The supporters of the national banking money power never wearied of pointing at this sacrifice by the national creditors as a remarkable example of patriotism, and asserted that the bond-holders and national banks were not as dangerous to the liberties of the people as their opponents declared them to be.
This apparent sacrifice of millions of interest annually was a rare stroke of policy on the money power. The shrewd men at the head of the national banking system were thoroughly acquainted with those traits of character which distinguished who American people from all others of modern times.
They knew that we, as a people, loot to the events of today and do not worry with apprehensions for the future. Moreover, the country had entered upon a career of prosperity, the tendency of which was to make the people forgetful of the wrongs heaped upon them in the past by the present banking system.
According to the provisions of the national banking law of 1863,the charters of the national banks would expire in 1884, and the time seemed propitious for this money poorer to carry into execution the next step of its policy - which was to obtain the passage of a law through Congress extending the franchises of the national banks.
Therefore, during the time that the fears of the people were temporarily allayed by the voluntary
acts of the bond-holders and banking interests in accepting a lower rate of interest on their bonds, the national banking money power seized this golden opportunity to secure an extension of their system.
Hence, at the next session of Congress, in 1882, Mr. Crapo, of Massachusetts, introduced a joint resolution authorizing national banking associations to extend their corporate existence for the period of twenty years. The speeches made against its passage were very able, notably those of Representatives Carlisle and Culberson.
So powerful was the opposition against an extension of the national banking system that the Democratic minority succeeded in engrafting a section upon the resolution, by which the circulating notes of national banks could not be surrendered to an amount exceeding $3,000,000 per month.
This curtailed the power of the banks to suddenly contract the volume of currency, by surrendering up for cancellation large amounts of their circulating notes, a practice to which they had resorted many times in the past twenty years.
During the debate upon this resolution it was shown by the opponents of the national banking system that the New York Clearing House Association had conspired against the constitutional power of Congress, by refusing to accept silver dollars and silver certificates; that this association of national banks held themselves superior to the law, and arrayed themselves in solid phalanx against the financial interests of the people.
It was further shown that the poorer of the national banks was so great that they had the means to unsettle business throughout the country, and that every panic,
from which the country suffered since the close of the war, was originated by these banks.
By an additional amendment to the resolution it was made compulsory on the part of the clearing house associations to accept silver certificates in settlement of balances.
Again, the privilege of the national banks to institute suits at law in the Federal courts, as courts of original jurisdiction, was taken array, and this means of dragging litigants hundreds of miles from their homes at immense sacrifice of time and money, was denied to these corporations, which heretofore was one of their most tyrannical means of harassing individuals.
Therefore it will be seen that the sturdy opposition of the Democratic minority in the House had succeeded in extracting a few of the sharpest fangs of the greedy national banking money poorer.
As amended, the resolution passed the House and was transmitted to the Senate.
Daring the Senate debate on the joint resolution to renew the charters of the national banks, Senator Voorhees eloquently and truthfully depicted the vast bounties that had been bestowed upon these creatures of the Government.
Ho pointed out the overshadowing influence of the national banking power.
On June 19th, 1882, he said: -
"A brief glance at the conduct of the banks during the last year and a half is all that I can indulge in at this time, but it is sufficient to prove the truth of what I say.
"In the closing days of the last Congress and of the last Administration the banks precipitated an issue upon the people which ought not to be forgotten on an
occasion like this; an issue so full of danger to constitutional liberty that it ought to be faithfully remembered now that they are asking a new and indefinite lease of power.
"It is now twenty years ago that this Government first engaged in building up, fostering, and encouraging the present vast and overshadowing system of national banking.
"No favor ever demanded by the banks has ever been withheld, no privilege denied, until now they constitute the most powerful moneyed corporations on the face of the globe. Congress has heretofore on nearly all occasions abdicated its powers under the Constitution over the finances of the banks, except when called upon to legislate in their favor. They have demand the violation of legislative contracts with the people, and the demand has been granted, whereby their own gains and the people's burdens have been increased a thousand fold beyond right and justice. They have demanded the remission of all taxation on their bonds, and it has been conceded, thus leaving the poor to pay the taxes of the rich. They have been fortified in their strongholds of moneyed caste and privilege by double lines of unjust laws, supplemented with here a redoubt and there a ditch, to guard them from the correcting hand of popular indignation, until now, deeming themselves impregnable, they bully and defy the Government."
this hour, Congress could not with safety or show of success declare war to repel it without first supplicating cowardly and unpatriotic capital, engaged in banking, not to contract the currency, withhold financial aid, and leave the country to starve. In fact, there is no measure of this Government, either in peace or in mar, which is not wholly depending on the pleasure of the banks.
"This Government is at the mercy of its own creatures. It has begotten and pampered a system which is now its master. The people have been betrayed into the clutches of a financial despotism which scorns responsibility and defies lawful restraint."
At the present time the government is a submissive instrument in the hands of this money power.
After a full discussion in the Senate, during which many amendments were added to the resolution, it was returned to the House. The House agreed to the amended bill with the exceptions of a few of the Senate amendments, in which it refused to concur.
The bill then went back to the Senate, which refused to recede from its amendments.
Upon this disagreement, both Houses appointed Committees of Conference, who were to reconcile the differences existing between the two Houses with reference to the resolution as amended.
After these committees had held several meetings an agreement was reached, the resolution was reported back to the Senate and House and the measure was adopted.
This act was approved by the President on the 12th of July, 1882.
Hence, this gigantic moneyed monopoly received a new lease of life for the period of twenty years longer.
From this time on, it was the constant purpose of the
national banks to build up a colossal system of bank credit that would make the entire business interests of the country tributary to its power.
In the congressional election of 1882 the Republicans were overwhelmingly defeated, and the House became Democratic by a large majority.
On February 12, 1884 Senator McPherson, of New Jersey, a millionaire and national banker, introduced a bill to it national banks to increase their circulating notes op to the par value of the bonds deposited by them to secure their circulation.
The Senate the bill, but it was defeated in the House.
In this same month the sub-treasury at New York City, through the Assistant Treasurer, addressed an inquiry to the President of the New York Clearing House as to the effect of the government paying its balances in silver money.
This action of the Sub-Treasurer was clearly for the purple of rendering the agitation against silver, and it had the further intention of giving an excuse to the national bankers to precipitate a panic, and thus lay the foundation for a new demand for more legislation in favor of the banks.
This cowardly act of the sub-treasurer was an implied admission that the Clearing House Association was mote powerful than Congress, and that it was above all law.
On February 18, 1884,a bill for the retirement and re-coinage of the trade dollar was taken up by the House.
At this time the number of trade dollars afloat in the country approximated $36,000,000,and they had no
legal tender debt-paying power whatever. They were mere bullion.
On April 1, 1884, the Committee on Banking and Currency, to whom the bill had been referred, reported it back to the House.
This bill authorized the government to receive these trade dollars for all dues to the United States; they were to be received in exchange for standard silver dollars coined under the Bland-Allison law; after such exchange the trade dollars were to be coined into standard dollars.
Section 4 of the act provided that the trade dollars so exchanged should be coined under the act of February 28, 1878.
On motion of Mr. Bland, section 4 was stridden out, and the bill as thus amended, should it become a law, would add nearly forty million legal tender silver dollars to the volume of money.
In its amended form it passed the House by a vote of 198 yeas to 45 nays, and it was transmitted to the Senate.
In the meantime, after its passage by the House, the New York national banks had taken their cue from the letter addressed to them by the Sub-Treasurer, and at once began a vigorous contraction of the currency by refusing to loan money to the West and South, and calling in outstanding loans.
This action of the New York banks, with the tacit permission of the Treasury Department, brought on the great panic of 1884, in which year alone there were 10,968 business failures, with liabilities aggregating $226,343,427.
interest and commission per day on call. This was usury at the annual rate of eleven hundred per centum!
It is asserted that while the banks refused to loan money, and mere surrendering their circulating notes by depositing United States legal tenders with the Comptroller of the Currency, that the chief stock-holders in these banks were using the deposits of these institutions in making loans at those exhorbitant rates of usury.
It may be inquired by some, why did not the Comptroller of the Currency exerise his lawful powers, and proceed against these banks for these notorious violations of law?
The facts were that every Comptroller of the Currency, since the creation of that office, has been a willing instrument in the hands of the national banks, and the Comptrollers, time and again, authorized these banks to violate the national banking law whenever it was to the financial interests of these corporations.
The open and notorious infractions of law practiced by these banks found ready apologists in Congress, who audaciously asserted that the banks mere the best judges of the policy to be carried out by them, anti that to enforce the law would close these institutions, and deprive the people of the benefits flowing from this beneficient system.
The history of the past thirty years exhibits this remarkable fact, that each and every Comptroller of the Currency, for his slavish subserviency to the national banks, has been rewarded by an election to the presidency of some one of these great financial institutions.
Upon the appearance, in the Senate, of the House
bill, providing for the recoinage of the trade dollars, it was referred to the Finance Committee, who reported a substitute of five sections.
Section z authorized the exchange of trade dollars for standard dollars, the time of exchange to be limited to July 1, 1885.
Section 2 provided that these trade dollars were to be coined as part of the bullion under the Bland-Allison law.
Section 4 provided for a renewal of that farce, an International Monetary Commission.
Section 5 provided that if no treaties could be ratified with foreign nations for free coinage of silver before August 1, 1886, then a suspension of the further coinage of silver dollars by the United States should take place by a repeal of the Bland-Allison law.
No action was seen upon this bill by the Senate, and the efforts of the House to legitimize the trade dollar by making it legal tender, and to increase the volume of silver coin were again thwarted.
In his annual message to Congress, in December, 1884, President Arthur recommended the cessation of the coinage of the silver dollar, and gave as his reasons for such recommendation that nearly 185,000,-000 had been coined, of which only a little over 40,000,000 were in circulation.
We quote his language in full. He says: -
"It appears that annually for the past six years there have been coined in compliance with the requirements of the act of February 28, 1878, more than $27,000,000. The number now outstanding is reported to be nearly $185,000,000, whereof but little more than $40,000,000, or less than twenty-two per cent, are in actual circulation. The mere existence of this fact seems to me to
furnish of itself a cogent argument for the of the statute which has made such a fact possible."
President Arthur sought to convey the impression to Congress that only 40,000,000 silver dollars were in circulation.
At the time he penned this message the records in the Treasury Department shamed that 133,940,121 silver dollars were in active circulation through their paper representative, the silver certificate, and that there were actually but 12,000,000 silver dollars lying idle in the Treasury.
One striking fact which attracts attention is the fo1-lowing: That the leading opponents to the coinage of silver dollars have never yet agreed upon the facts, and the arguments which they advance against the use of silver as money.
In his message of December 1, 1884,President Arthur urged as a weighty reason for the discontinuance of the coinage of silver dollars, that less than twenty-two per cent. of them mere in actual circulation.
In hie report of 1880, in which he advised the cessation of the coinage of the silver dollars, Secretary Sherman gave his reason why silver should not be coined, in which he says that it was not held, or hoarded, or exported, but it was pushed into active circulation.
In this same message President Arthur made the following reference to the trade dollar: -
"While the trade dollars have ceased, for the present at least, to be an element of active disturbance in our currency system, some provision should be made for their surrender to the Government. In view of the circumstances under which they were coined and of the fact that they never had a legal tender quality,
there should be offered for them only a slight advance over their bullion value."
This statement of the President with reference to the legal tender power of the trade dollar is evidence of those inaccuracies that occur many times in the state papers of high officials. The President averred that trade dollars mere never legal tender, while the fact is that by the law of February 12, 1873 they were made legal tender for any one payment not exceeding five dollars.
The 1am which conferred upon them this legal power continued in force until July 22, 1876, when the legal tender quality was taken away.
A further inaccurate statement of the President appears, when he speaks of the amount of standard dollars in circulation, which he places at a little over 40,000,000. While the actual facts were that the volume of silver dollars in circulation was 174,000,000.
Secretary Sherman had urged as an insuperable objection against the further coinage of silver dollars that they were not held, or hoarded, but were kept in active circulation. President Arthur asked the suspension of the Bland-Allison law of 1878 on the ground that they did not circulate actively enough.
This is not the first time that these two distinguished gentlemen disagreed during their public careers, for while Sherman was Secretary of the Treasury, and President Arthur was collector of the Port of New York, they had a notable controversy, with which the public were doubtless familiar.
While President Arthur was requesting Congress to suspend the coinage of the silver dollar, the banks of New York City combined to make a raid on the Treas-
ury by presenting greenbacks for gold. That this was done with the connivance of Secretary of the Treasury, McCulloch, is evident from the acts of that official. He had dispatched a telegram to the Sub-Treasurer, in New York City, stating that the country would be on a silver basis in thirty days.
It was nothing less than a plot formed by the bankers and the Secretary to frighten Congress into repealing the Bland-Allison law of 1878.
In the meantime, the presidential campaign of 1884 had resulted in the election of Grover Cleveland, of New York, over the Republican candidate, James G. Blaine.
Prior to his election to the Presidency, Mr. Cleveland had held the office of Mayor of Buffalo, and was Governor of the State of New York, in which positions he had won much distinction as an honest and capable executive.
Some time previous to his inauguration, the report became current that the President-elect was opposed to the further coinage of silver.
In order to ascertain the views of Mr. Cleveland upon this phase of the financial issue, Congressman A. J. Warner and ninety-four members of the House, on the llth day of February, 1885, joined in a letter to the in-coming President, requesting that he outline his future policy on the silver question, then agitating the country.
On February 24th, eight days before Mr. Cleveland was inaugurated, he gave out an open letter to the press in reply to that of Hon. A. J. Warner.
In the course of that remarkable document occurs the following statement: -
"I hope that you concur with me, and with a great
majority of our fellow citizens, in deeming it most desirable at the present juncture to maintain and continue in use the mass of our gold coin as well as the mass of silver already coined. This is possible by a present suspension of the purchase and coinage of silver. I am not aware that by any other method is it possible. It is of momentous importance to prevent the two metals from parting company; to prevent the increasing displacement of gold by the increasing coinage of silver; to prevent the disuse of gold in the custom houses of the United States in the daily business of the people; to prevent the ultimate expulsion of gold by silver."
To state that the expectations of the Democratic party were rudely shattered by the position assumed by Mr. Cleveland, in his reply to the letter of Mr. Warner, would be putting it very mildly.
The mass of the party expressed great astonishment, not to say indignation, at the bold stand taken by the President-elect, in which he aligned himself with the single gold standard.
In his zeal for the suspension of the coinage of the silver dollar, Mr. Cleveland was led into erroneous statements of facts as to the alleged disuse of gold in the custom houses and in the business of the people.
It is a matter of public record that, in 1880, the imports of gold exceeded the exports thereof by $77,ll9,371; in 1881, the excess of imports of gold over exports were $1,789,174; in 1883, $6,133,261; in 1884 the exports of gold over imports were $18,250,640, 1eaving a great balance of imported gold over exports during those five years of more than $150,000,000.
This great gain of gold took place during the time the Bland-Allison law was in operation.
Upon the appearance of this reply of Mr. Cleveland
to the communication of Hon. A. J. Warner and others, the Wall street clique and their allies seized their opportunity.
They swooped down on Congress and endeavored to force a repeal of the silver law.
The members of the House were besieged by these hordes of coin venders and bullion brokers; the national banking money power threatened to visit another panic upon the people, and predictions mere 'freely made that gold would go to a premium if the silver lair was not repealed.
The Democratic members of Congress were informed by the thousand per cent men of New York City that it was the wish of President-elect Cleveland that the law authorizing the coinage of silver dollars be repealed.
The New York Herald, one of the greatest journals of the East, constantly kept in a prominent place in its columns, the legend, "We are still coining the go and 75 per cent dollars."
Every means and all possible influences were brought to bear upon Congress to force it to repeal the Bland-Allison law, but without avail.
A single attempt was made to carry into effect the wish of the President-elect, but it failed so ignominiously by such a decisive vote that no further effort was made in that Congress. It was as follows: On February 26, 1885, House bill 8256, being the sundry civil appropriation bill, was pending before the House. A clause was tacked to this bill, providing for the suspension of the operations of the law of February 28, 1878,- the Bland-Allison law.
Mr. Randall, an Eastern Democratic member of the
House, moved to suspend the rules and consider said clause.
This motion was disagreed to by a vote of ll8 yeas to 152 nays, and this clause was abandoned and stricken from the bill.
The letter of Mr. Cleveland was regarded by the House as an open and manifest attempt to influence Congas against the continued coinage of silver, and, if such was the intention of the President-elect, he promptly received a well-deserved rebuke for his attempted interference with the legislation of Congress.
One feature of the conduct of Mr. Randall, in his effort to engraft upon an appropriation bill a clause to repeal the Bland-Allison lair, exhibits the avidity of the money power to seize every opportunity, however slight, to gain its ends by legislative sanction, and that is - immediately upon the appearance of the Warner letter, it presumed that the mere ipse dixit of Grover Cleveland would coerce Congress into submission to his views.
The infamous nature of the financial legislation from 1862 to 1875, in so enormously enhancing the value of the public debt, and in enriching the bond-holders at the expense of the productive energy of the country, will be shown by the following figures, taken from a work entitled, "The Philosophy of Price," quoted in the Daily News Almanac and Political Register for 1891.
The time covered by "Philosophy of Price" is July 1, 1866, up to and including 1885. "Philosophy of Price" says: -
"Here is a table showing the debt of the United
States on the 1st of July, 1866 and 1885, including non-interest bearing greenbacks, expressed in dollars, and also in the things working folks have to produce in order to get the dollars with which to pay debts and interest: -
Beef, barrels......... 129,000,000 135,000,000
Corn, bushels....... 2,000,000,000 3,000,000,000
Wheat, bushels.... 800,000,000 1,740,000,000
Oats, bushels....... 3,262,000,000 4,357,000,000
Pork, barrels........ 82,000,000 96,000,000
Coal, tons............ 213,000,000 400,000,000
Cotton, bales....... 12,000,000 34,000,000
Bar iron, tons...... 24,000,000 40,000,000
"Almost every product of labor shows the same result. We paid from 1866 to 1884 the public debt: Interest, $1,870,000,000 and principal about $1,200,000,000; yet we fin that what there is left of it when measured labor, or the product of labor, is fifty per cent greater than the original debt."
This colossal robbery of the nation, and consequently of the people, was planned and matured by the national banking money power. It is true that the idea of this system of banking had its origin in England, and it is also a fact that the scheme of legislating increased value into the bonded debt was suggested by the influential bankers of London.
Each one of the series of enactments which legally confiscated billions of property of the tax-payers, and which handed it over to a few individuals, was placed upon the statute-boots under the false and misleading plea of maintaining the "Credit of the nation untarnished."
That distinguished historian, Prof. J. C. Ridpath, eloquently described the legislative process by which
the value of the public debt was vastly increased. He said: -
"It is the hardship of war that brings debt upon the country which engages in it. In our own case we piled up a debt mountainwise. The prodigious pile reached the clouds. In any old nation there would have remained no hope at all of paying it. It would simply have been laid upon posterity as an everlasting tax. The principal question, however, with Congress and with the people of the United States, was how they should measure and manage this debt. Gold and
silver had disappeared. Paper money prevailed and abounded. The premium on coin arose to almost two hundred per cent. The dollar of the law and the contract became a paper dollar, which, as measured by the standard of gold, was, for a considerable period, worth less than fifty cents.
"But what was the equity of this situation? One class of statesmen, backed up and instigated by the creditor classes, held that the dollar was always the gold and silver dollar. Practically this was not so. Theoretically and even constitutionally it was probably so. For many years together the dollar of the law and the contract was, to all intents and purposes, a dollar of paper. During the same period the modicum of gold and silver remaining in the country - though it was stamped and branded with the names of coins -was really merchandise. At length the bottom was reached - or the top, as the case may be - and the readjustment became necessary.
"Then came on the warfare between the advocates of the so-called 'honest dollar' and the paper dollar with which, and on the basis of which, the business of the country had been so long transacted. The advocates of high payment took the 'honest dollar' as their catch-word, and, to make a long narrative brief, they won with it, and by a series of legislative enactments, entailing the greatest hardships on the producing interests of the country, succeeded in twisting up,
turn by turn, the standard unit in the financial mill, until the so-called resumption of specie payment was anally, after fourteen years from Appomattox, effected.
"Thus the value of the national debt was augmented from year to year as rapidly as it was paid away.. As fast as payment was made the value of the dollar in which it was expressed was increased. To the debtor class all this was the labor of Sysiphus. The toiler laboriously rolled the stone to the top of the hill; but ever, when near the crest, it got away with him and returned with thundering and the roar of bankruptcy to the bottom. To the present day the process has been kept up, and, notwithstanding the multiplied billions upon billions which the American people have paid in principal and interest upon that patriotic we debt, which expressed their devotion and sacrifice, it is the truth of history, that the debt itself, is at the present time, worth virtually as much to the holders as it was when it reached its nominal maximum - in August, 1865."
In his effort to convey an adequate idea of the nature of that legislation, which had plundered the American people of billions of dollars, this renowned scholar and writer had recourse to the sublime imagery of Homer.
Prof. Ridpath demonstrates that the public debt was not decreased at all, although billions had been applied to its payment.
Not only is this true of the public debt, but the same process of depreciating the value of property has likewise enhanced the value of private debts.
The amount of property that has been transferred from debtors to creditors, as a necessary result of the enormous appreciation of money brought about by contraction of its volume, is beyond computation.
In a great speech, Wendell Phillips, illustrates the means by which the money power absorbed the wealth of the country, by juggling with the currency. He said: -
"In other words, it was the currency, which, rightly arranged, opened a nation's well springs, found work for willing hands to do, and filled them with a just return, while honest capital, daily larger and more secure, ministered to a glad prosperity. Or it was currency, wickedly and selfishly juggled, that made merchants bankrupt and starved labor into discontent and slavery, while capital added house to house and field to field, and gathered into its miserly hands all the wealth left in a reined land.
"The first question, therefore, in an industrial nation is, %here ought control of the currency to rest? In whose hands can this almost omnipotent power be trusted? Every writer of political economy, from Aristotle to Adam Smith, allows that a change in the currency alters the price of every ounce and yard of merchandise and every foot of land. Whom can we trust with this despotism? At present the banks and the money kings wield this power. They own the yard-stick, and can make it longer or shorter, as they please.. They own every pound weight, and can mate it heavier or lighter as they choose. This explains the riddle, so mysterious to common people, that those who trade in money always grow rich, even while those who trade in other things go into bankruptcy."
On the 3d of February, 1886, Hon. R. Q. Mills, of Texas, in the heat of righteous indignation eloquently arraigned that unlimited avarice that was continually besieging Congress to enhance the value of bonds and securities at the expense of the producers. He said: -
"But in all the wild, reckless, and remorseless brutalities that have marked the footprints of resistless power there is some extenuating circumstance that
mitigates the severity of the punishment due the crime. Some have been the product of the fierce
passions of war, some have some from the antipathy that separate alien races, some from the superstitions of opposing religions.
"But the crime that is now sought to be perpetrated on more than fifty millions of people comes neither from the camp of a conqueror, the hand of a foreigner, nor the altar of an idolator. But it comes from those in whose veins runs the blood of the common ancestry, who were born under the same skies, speak the same language, reared in the same institutions, and nurtured in the principles of the same religions faith. It comes from the cold, phlegmatic marble heart of avarice,-
avarice that seeks to paralyze labor the burden of debt, and fill the land with destitution and suffering to gratify the lust for gold,- avarice surrounded by every comfort that wealth can command, and rich enough to satisfy every want save that which refuses to be satisfied without the suffocation and strangulation of all the labor of the land. With a forehead that refuses to be ashamed, it demands of Congress an act that will paralyze all the forces of action, shut out labor from all employment, increase the burden of debts and taxation, and send desolation and suffering to all the homes of the poor."
In his first annual message to Congress, December 8, 1885, the President took a decided stand against the continued coinage of silver. In this document he says:
"The necessity of an addition of the silver currency of the nation as is compelled by the silver coinage act is negatived by the fact that up to the present time only about fifty millions of the silver dollars so coined have found their may into circulation, leaving more than one hundred and sixty-five millions in the possession of the Government, the custody of which has entailed considerable expense for the construction of
new vaults for its deposits. Against this latter amount there are outstanding silver certificates amounting to about ninety-three millions of dollars."
Further on in this same message he said: -
"At times during the past six months fifty-eight per cent. of the receipts for duties have been in silver or silver certificates, while the average within that period has been twenty per cent."
A comparison of the statements in his message with the predictions ventured in the Warner letter will be instructive. In the latter he desired "To prevent the disuse of gold in the custom houses of the United States;" in his message of December 8, 1885, he shows that instead of silver displacing gold in the payment of duties, only about twenty per cent of the latter were paid in silver or silver certificates.
Just why the payment of twenty per cent of the duties in silver should arouse the apprehensions of the President is not very apparent.
Furthermore, the very purpose of coining these silver dollars was to enable people to transact business, to pay their debts to each other, and to the Government.
Mr. Cleveland further says: -
"The condition in which our Treasury may be placed by a persistence in our present course, is a matter of concern to every patriotic citizen who does not desire his Government to pay in silver such of its obligations as should be paid in gold."
need of more is at any time apparent their coinage can be renewed."
The President then recommends the suspension of the coinage of silver dollars coined under the law of 1878.
According to the President's theory and reasoning, the most effective means of supplying the volume of money needed by the people would be a suspension of its coinage.
In this message President Cleveland came out squarely in favor of perpetuating the national banking system. In this course he allied himself with the money power, and earned the unenviable distinction of being the first Democratic President that advocated the policy of delegating the power of issuing money to private corporations.
In this course he was sustained by a few Eastern Democratic members of Congress, but he could not lead the great body of the Western and Southern Democracy to accept that Tory-Republican system of finance that had been imported from London in 1863.
During the following year, the use of silver and silver certificates increased from $143,000,000 to $167,000,000, which indicated the great popularity of this form of money with the people.
Notwithstanding these facts, the President in his next annual message, December 6, 1886, said:
"I see no reason to change the views expressed in my last annual message on the subject of compulsory coinage. "
On December 17, 1886, Senate bill No. 199, providing for the redemption of the trade dollars for standard silver dollars, the trade dollars so redeemed to be sent
to the mints for coinage as part of the bullion to bc purchased under the Bland-Allison law of February 28, 1878, passed the Senate.
On February 12, 1887, Senate bill 199 was pending before the House, and it was amended to authorize the receipt of trade dollars for government dues, and in exchange for standard dollars, and for coining the said trade dollars into standard dollars, not as part of the bullion and coinage under the Bland-Allison law.
The bill, as amended, passed by a vote of 174 yeas to 36 nays; both Houses appointed a Committee of Conference, which reported a substitute that axed the period of six months from date of the act for the exchange of trade dollars for standard dollars, or for fractional silver coin. The trade dollars so exchanged were to be recoined and not counted as part of the silver to be purchased under the Bland-Allison law of 1878.
This act became a law without the approval of the President.
Be it said to the eternal honor of the House of Representatives, which was Democratic, the advice and recommendations of the President fell on deaf ears, and this co-ordinate branch of the Government would not be coerced into repealing the Bland-Allison silver law.
In spite of the fears of President Cleveland that gold mould be displaced by the increased coinage of silver, the net gain of gold during his administration was increased many millions.
In the meanwhile the monetary stringency of 1884 continued in all its severity, and even the banks of New York City felt the effects of the panic, which was the direct result of their concerted action.
These great financial institutions of New York City called upon the Government for assistance; whereupon Secretary of the Treasurer Manning, a national banker, came to their relief by depositing with these banks government money to the amount of $63,000,000 without interest for the use of that enormous sum, which had been wrung from the people by a burdensome system of taxation.
Had the farmers of Kansas, or Nebraska, requested the Federal Government to loan them the public funds to assist them in agricultural pursuits, the millionaire beggars and paupers of Wall street would have emitted a loud and prolonged howl that would have been heard to the nethermost parts of the earth.
The people of Kansas and Nebraska would have been assailed by every epithet that could have been coined from the English language.
The national bank monopoly, the gold gamblers, stock speculators, railroad wreckers, the Shylocks, who gladly exacted a thousand per cent usury, with the subsidized press and its satellites, would have denounced the hard working farmer of Kansas or Nebraska as a "long whiskered hay-seed," a "socialist," a "dangerous anarchist," or a "crank."
The Nasts and the Gillams, famed in caricature, would have expended all their genius in holding him up to ridicule.
While it would be dangerous socialism for the Government to assist the farmer during his calamities, it me the highest essence of patriotism to save the panic-breeders of New York City from the consequences of their own traitorous conduct by donating them the use of $63,000,000 in government funds.
In the meantime, notwithstanding the aid received from the Federal Government, the banks of New York City organized a clique with the intention of making a raid upon the gold in the Treasury.
The base ingratitude of the New York banks aroused the ire of Secretary Manning, and he called upon those banks who had organized a corner against the Treasury gold, and informed them of what would follow if they persevered in that course. He said:
"You may precipitate a panic. The Government is strong; the Government can stand a panic, but you will have the panic if you continue to embarrass the Government as you have done."
He continued: -
"Here are twenty million dollars in round silver dollars, not certificates. Give me your gold for it and stop this raid upon the Treasury, or else you shall have the panic."
The heroic treatment of Secretary Manning was a warning to these scoundrels, who would willingly sink the Government if money could be made by the operation.
The stern threats of the Secretary frustrated this attempt to loot the Treasury of its gold, and to coerce Congress into repealing the Bland-Allison silver law.
In his annual message of December, 1887, President Cleveland relegated the financial question to the rear, and pushed the tariff issue to the front.
This document is justly regarded as one of the strongest state papers that ever eminated from the pen of the President.
In this message the President urged the necessity of a complete reformation of the then existing tariff, and he took strong grounds in favor of suppressing the trusts.
Upon the appearance of this message, the leaders of the Republican party charged the President with having committed the Democracy to the policy of British free trade.
Mr. Blaine, who was in Paris at the time when the contents of the message were made public, availed himself of the opportunity to answer the President by a counter blast, in the form of an extended interview held with a representative of the New York Tribune.
Meanwhile, since 1883, the national banks steadily continued their policy of contracting the currency, by substituting government legal tender notes for the United States bonds deposited with the Comptroller of the Currency to secure their circulating notes.
This policy, to a large extent, neutralized the benefits derived from the increased use of silver.
The object of the banks, in thus withdrawing their bonds deposited to secure their circulating notes, me for the avowed purpose of obtaining the great premium which they brought in the market - a premium which ranged as high as twenty-nine per cent on the dollar.
Beside the contraction brought about by the process of depositing legal tender notes to redeem the circulating notes of national banks, the latter form of currency was surrendered by the banks, and the bonds deposited to secure these bank notes were taken up by the depositors and sold for the premium. This worked a double contraction of the currency.
During this time the Government was redeeming its bonds, and this process of redemption was carried on by the payment of a large premium to the bond-holders and national bankers.
In his report for the year 1892, the Comptroller of
the Currency showed the extent to which this system of contraction was carried on from 1883 to 1888 by these fiscal agencies of the Government.
From October 31, 1883, to October 31, 1884, the national banks surrendered their circulating notes to the amount of $24,170,676; from October 31, 1884, to October 31, 1885, the banks surrendered $15,545,461; from October 31, 1885, to October 31, 1886, national bank notes were contracted $56,590,533; from October 31, 1886, to October 31, 1887, the banks surrendered up their notes to the amount of $50,495,589; from October 31, 1887, to October 31, 1888, a further decrease was made by cancelling national bank notes to the amount of $16,84,739.
It will be ascertained that the total voluntary contraction of national bank currency, from 1883 to 1888, reached the great sum of $163,000,000.
Although the Bland-Allison law was in operation, and the Government was throwing vast sums of money into circulation by the redemption of bonds, yet the volume of money in circulation was not increased.
For nearly every dollar emitted by the Treasury Department for the redemption of bonds, the national banks surrendered up almost an equal amount of their circulating notes.
On February 29, 1888, House bill No. 5034 was pending in the House of Representatives
This measure authorized the Secretary of the Treasury to apply the surplus in the Treasury to the purchase or redemption of United States bonds. The bill passed.
The object of this measure aimed at relieving the money market of its stringency by the purchase of
bonds, and the consequent increase of the volume of currency.
On March 26, 1888, House bill 5034 came up in the Senate, and Senator Spooner offered a substitute, declaring section 2 of the sundry civil appropriation law of June 30, 1882, a permanent provision. The substitute was agreed to by the Senate.
Senator Beck offered an amendment, directing the Secretary of the Treasury, on the retirement of national bank circulation, and on failure of other banks to take out an equal amount, then to purchase an equivalent amount of silver bullion in excess of the minimum, required under the law of February 28, 1878, to be coined and used as provided in said act.
The amendment was agreed to by a vote of 32 yeas to 13 nays.
During the debate on the amendment offered by Senator Beck, Senator Plumb made the following remarks: -
"It is estimated that there are in circulation, including that which is locked up in the Treasury and held in the banks as a reserve fund, about $1,600,000,000, of all kinds of currency of the United States, gold and silver, the surplus of gold and silver certificates, greenback notes and national bank notes, all told, and there are more than $60,000,000,000 of property which mast finally be measured by this volume of currency. It has been contracted during the last year morc than live per cent in addition to all that has occurred by reason of abrasion and loss. No man can tell the volume of greenbacks outstanding. Nominally it is $346,000,000 and a fraction, but that volume has been subject to all the accidents which have occurred during the past twenty-five years, whereby money has been consumed, worn out, lost, and it is doubtful if the amount is really over $300,000,000 today.
"But say nothing about that, the retirement of the national banking circulation during the twelve months has been five per cent. of the to amount of the currency outstanding. There has been during that period a phenomenal depreciation of the prices of property. There has been the greatest depreciation of the price of agricultural products the country has ever known."
In speaking of the effects of contraction of the currency in depreciating the value of property, he said: -
"The contraction of the currency by five per cent. of its volume means the depreciation of the property of the country $3,000,000,000. Debts have not only increased, but the means to pay them have diminished in proportion as the currency has been contracted. Events based upon nonlegislation have proved of advantage to 1enders, but disastrous to borrowers."
The bill then went to the House, but as it was near the close of the session, it did not receive any consideration.
Meanwhile the panic of 1884, as it was called - but which really began in 1882- raged throughout the entire administration of President Cleveland.
The aggregate number of failures for the years 1885, 1886, 1887 and 1888 were 51,748, and the liabilities were $756,597,883.
It was during this period of business failures and general depression everywhere, with the consequent sacrifice of property at ruinous prices, that the holders of United States bonds were obtaining a premium for their bonds ranging as high as twenty-seven per cent.
In his annual message of December, 1888, President Cleveland again urged the repeal of the Bland-Allison law. He said: -
"The Secretary recommends the suspension of the
further coinage of silver, and in such recommendation I earnestly concur."
Up to November 30, 1888, 312,570,990 silver dollars had been coined, of which 60,970,990 were in active use, not including silver certificates to the amount of $237,418,346- making a total of $298,389,336 in silver dollars and certificates that were in active circulation.
It will be observed that the many predictions of President Cleveland, as to the capacity of the country to use silver as money, were utterly discredited by these facts.
The determined opposition of the President to the coinage of silver was one of the strange features of an otherwise highly successful administration.
With the exception of his hostile attitude to silver as money, and his advocacy of the perpetuation of the national banking system, Mr. Cleveland gave the people an administration of public affairs that shed honor upon himself, and its efficiency was not surpassed by any in the annals of American history.
During the four years that he directed the public affairs of the nation, the public debt was reduced in the magnificent sum of $341,448,449.
It is true that this vast decrease of the public debt in the short period of four years resulted in an immense profit to the bond-holders and national bankers who surrendered their bonds for payment.
The amount of premium on the bonds so surrendered was $59,000,000, and this measured the profit obtained by the banks and bond-holders in the process of redeeming the debt.
In addition to this vast decrease of the public debt,
a surplus of $83,269,220 was accumulated in the Treasury over and above the gold reserve of $100,000,000.
In addition to this vast sum of money, the result of a frugal and honest administration, a bank security fund of $82,597,250 in legal tenders was accumulated as a trust fund for the redemption of national bank notes.
The total amount of cash in the Treasury on the 4th of March, 1889, when his successor was inaugurated, was $265,846,441.
His administration of other departments of the Government was notably successful.
Tens of millions of acres of the public lands, fenced in by great corporations, were restored to the public domain; and the usurpers driven off by the vigorous policy of the President.
Land grants embracing many millions of acres were forfeited and throw open for settlement.
For the first time since 1861, the Indian Department was honestly manage, and the red man received just and humane treatment at the hands of the United States.
Nevertheless the ultimate baleful results of his influence in favor of the national banks, and a single standard of gold, eventually more than counteracted an honest, economical management of the public affairs of the country.