"Resolved, That Congress has no power to charter a United States bank; that me believe each an institution to be one of deadly hostility to the best interests of the Government, dangerous to our republican institutions and the liberties of the people, and calculated to place the business of the country within the control of a concentrated money power and above the laws and the will of the people."- Democratic Platform, 1840.
"The right of issuing paper money as currency, like that of issuing gold and silver coins, belongs exclusively to the nation, and cannot be claimed by any individuals."- Albert Gallatin.
In the presidential campaign of 1888, General Benjamin Harrison was the successful candidate for the presidency.
The national Republican platform, on which Mr. Harrison stood, vigorously charged the administration of President Cleveland with having attempted to dcmonetize silver.
The active opposition of President Cleveland to the use of silver as money gave some color to this charge. On the 4th of March, 1889, General Harrison was duly inaugurated.
For Secretary of the Treasury he selected the Hon. William Windom, of Minnesota.
In addition to having the Presidency, the Republicans had control of both branches of Congress.
John Sherman occupied his old position of Chairman of the Finance Committee of the Senate.
In his first annual message to Congress, December 3, 1889, President Harrison paid special attention to the coinage of silver under the Bland-Allison law of 1878. He said: -
"The total coinage of silver dollars was, on November 1, 1889, $343,638,001, of which $283,539,521 were in the Treasury vaults and $60,098,480 were in circulation. Of the amount in the vaults $277,319,-944 were represented by outstanding certificates, leaving $6,219,577 not in circulation and not represented by certificate"
In this message, President Harrison gave Congress and the people the clearest and fairest statement with reference to the number and circulation of silver dollars that was yet presented by any President up to his time.
Every one who would avail himself of the facts stated in this document knew, that, of the silver dollars coined under the Bland-Allison law of 1878, all were in active use and circulation except the small sum of $6,219,577.
The facts stated by President Harrison amply proved that the predictions and apprehensions of President Cleveland and others, with reference to the continued coinage of standard silver dollars, were absolutely groundless.
This remarkable absorption of silver in the channels of trade and commerce, evinced the great popularity of this money with the people.
The President further says: -
"The evil anticipations which have accompanied the coinage and use of the silver dollar have not been realized. As a coin it has not had general use, and the public Treasury has been compelled to store it.
But this is manifestly owing to the fact that its paper representative is more convenient. The general acceptance and use of the silver certificate shows that silver has not been otherwise discredited."
It seems from the opinion of President Harrison, as expressed in this message, that the use of the silver certificate in lieu of the coin it represents, was the only evidence by which it was shown that silver was discredited.
If the issuance of silver certificates operates to discredit the silver dollar, then, by a parity of reasoning, the use of gold certificates as a substitute for gold coin discredits gold.
At the time the President stated that silver was discredited by the use of certificates, there were outstanding gold certificates aggregating $165,000,000.
If the holder of silver dollars deposits that coin in the Federal Treasury, and receives therefor silver certificates, and thus discredits the silver dollar, then the owner or holder of gold coin, or bullion, who deposits his coin or bullion in the Treasury, and accepts gold certificates, also discredits gold.
The partial eulogy bestowed by President Harrison upon silver was intended as a reflection upon those public utterances of Mr. Cleveland, in which the latter opposed the use of silver as money.
Farther on in the same message the President said: -
"I think it is dear that if we should make the coinage of silver at its present ratio free, we must expect that the difference in the bullion values of gold and silver dollars will be taken into account in commercial transactions, and I fear the same result would follow any considerable increase of the present rate of coin-
President Barren was an able lawyer, and was trained "To make the worse appear the better reason."
From the tenor of the language of President Harrison first quoted, he delicately ridicules the severe strictures of President Cleveland upon silver as money, and he seeks to cast reproach upon the late administration.
In the language last quoted, the President, with the ability of a skilled special pleader, uses innuendo against free coinage, and he speaks of the difference in the bullion value respectively of gold and silver coin, as a great obstacle in the way of free coinage of the latter metal.
Having thus cunningly stated his objections to the free coinage of silver, he carried his fears from that subject into the system of government purchase of bullion, and its coinage into dollars under the Bland-Allison law, and he suggested that there is peril in the further continuation of the coinage of silver dollars.
At this time, Secretary Windom recommended his plan to Congress, which provided that any owner of silver bullion could deposit it in the Treasury, and receive therefor silver certificates upon the bullion value of the silver so deposited.
When Mr. Windom recommended this plan, the bullion value of the silver dollar was only seventy per cent. of the bullion value of the gold dollar, and the adoption of his plan by Congress would have created two classes of silver money and silver certificates.
The silver certificate issued under the Bland-Allison law would have represented far less bullion value than the certificates issued under his plan. It can be seen that the object of the Windom plan me to disparage
the silver dollars and their paper representatives issued under the Bland-Allison law, and to supply the national banking money power with an opportunity to denounce the standard silver dollar as a "cheap dollar," a "dishonest dollar," a "70-cent dollar."
Then demands would be made upon the Government to protect its credit by redeeming the standard silver dollars in gold.
This would compel the issue of nearly $400,000,000 in interest-bearing bonds to secure gold for redemption purposes; and would have resulted in a contraction of the currency equal to the amount of standard silver dollars coined since February 28, 1878.
The Windom plan was transmitted to Congress, where it was introduced as House bill 5381.
On June 5, 1890, House bill 5381, known as the Windom Silver Bullion Purchase Bill, was pending in the House. Mr. Bland moved to recommit, with instructions to the committee to report back a bill for the free coinage of silver.
The motion was defeated by a vote of 116 yeas to 140 nays.
A substitute offered by Mr. Conger was then passed, and was known as House bill 5381.
On June 17th, House bill 5381 was reported by the Finance Committee of the Senate with sundry amendments; while it was pending, Mr. Plumb, of Kansas, offered an amendment for free and unlimited coinage of silver; which was agreed to by a vote of 43 yeas to 24 nays. The bill as amended into a free coinage measure was then passed by the Senate
On Jane 25th, the Senate bill came up in the House, and, after long wrangling, the Senate free coinage amendment was defeated.
Both Houses appointed a Conference Committee which, after long deliberation, brought in a conference report.
In a speech on this conference report, Hon. R. P. Bland exposed the trickery of the Republican members of that committee in holding secret meetings to prevent the free coinage members from participating in its deliberations. He said: -
"Now, Mr. Speaker, the gentleman from Iowa [Mr. Conger) says this bill is the result of a free and fair conference. I deny it. We had but one meeting in which all the conferees were represented. That was the meeting appointed for last Thursday. We were to have another meeting of the conferees, but before the date of the meeting arrived, I was notified that my presence was no longer needed and that when my services were required, I would be notified. In the meantime, secret meetings or caucuses were held by the Republican members of that conference and this bill was concocted and prepared by them; and I never received a notice to attend another meeting of this conference until this bill was agreed to and the report was ready to be signed; and I was simply asked whether I agreed to it or not."
In the Senate debate on the bill reported by the Conference Committee, Senator Cockrell, of Missouri, pointed out that this measure was designed for the degradation of silver as a money metal, and that the Secretary of the Treasury was invested with such great powers that he could practically demonetize silver by refusing to pay it out for the redemption of the Treasury notes, which, under this act, would be issued to buy the silver bullion out of which silver dollars mere to be coined.
In reply to these remarks of Senator Cockrell, Sen-
the amount of pure silver contained, and the amount of charges or deductions, if any, to be made.
"Section 5. That so much of the act of February 28, 1878, entitled 'An act to authorize the coinage of the standard silver dollar and to restore its legal tender character,' as requires the monthly purchase and coinage of the same into silver dollars of not less than $2,-000,000 nor more than $4,000,000 worth of silver bullion, is hereby repealed.
"Section 6. That upon the passage of this act the balances standing with the Treasurer of the United States to the respective credits of national banks for deposits made to redeem the circulating notes of such banks, and all deposits thereafter received for lite purpose, shall be covered into the Treasury as a miscellaneous receipt, and the Treasurer of the United States shall redeem from the general cash in the Treasury the circulating notes of said banks which may come into his possession subject to redemption; and upon the certificate of the Comptroller of the Currency that such notes have been received by him and that they have been destroyers and that no new notes will be issued in their place, reimbursement of their amount shall be made to the Treasurer, under such regulations as the Secretary of the Treasury may prescribe, from an appropriation hereby created, to be known as the national bank note redemption account; but the provisions of this act shall not apply to the deposits received under section 3 of the act of June 20, 1874 requiring every national bank to keep in lawful money with the Treasurer of the United States a sum equal to five per cent of its circulation, to be held and used for the redemption of its circulating notes; and the balance remaining of the deposits so covered shall, at the close of each month, be reported on the monthly public debt statement as debt of the United States bearing no interest.
"Section 7. That this act shall take effect thirty days from and after its passage."
This silver purchasing law, as it finally passed Con-
gress, was the offspring of the fertile brain of John Sherman, and future events demonstrated that it was so cunningly planned that it terminated in mating silver a credit money.
Senator Sherman, who, as chairman of the Committee on Finance of the United States Senate, succeeded in getting this bill through Congress, afterward publicly stated that this measure was for the express purpose of defeating the free coinage of silver.
On August 30, 1893, Senator Sherman delivered a speech urging a speedy repeal of the lair for the passage of which he had bent all his energies to secure in 1890. He said: -
"Our Democratic friends have denounced this purchasing clause as a iniserable makeshift. It was a makeshift, but I think a good once defeat the free coinage of silver on the ratio of 16 to 1. I believe in this respect it has rendered the country an enormous service."
With unparalleled brazen effrontery, he stated in his Memoirs, lately published, that he would have voted for the repeal of this law within ten days after its passage, after he had by this means defeated the free coinage measure proposed by the Senate.
An examination of the provisions of the act of July 14,1890, in connection with the circumstances attending its passage, will exhibit some remarkable facts.
In substance, the Secretary of the Treasury was authorized to purchase, from time to time, silver bullion to the aggregate amount of 4,500,000 ounces, or as much thereof as would be offered in each month at the market price, not exceeding $1 for each 371.25 grains of pure silver. And in payment of such bullion, Treasury notes of the United States were to be
prepared by the Secretary of the Treasury in denominations of not less than $1 nor more than $1,000. That the Treasury notes so issued should be redeemable on demand, in coin, at the Treasury of the United States, or at the office of any assistant treasurer of the United States, and, when so redeemed, could be reissued.
That no greater or less amount of such notes should be outstanding at any time than the cost of the silver bullion and the standard silver dollars coined therefrom, then held in the Treasury, purchased by such notes. That such Treasury notes should be a legal tender in payment of all debts, public and private, except where otherwise expressly stipulated in the contract. That such notes should be receivable for customs, taxes, and all public dues, and when so received could be reissued. That such notes could be counted a part of its lawful reserve by any National Banking Association. That, upon demand of the holder of any of the Treasury notes so issued, the Secretary of the Treasury should redeem such notes in gold or silver coin, at his discretion. That it was the established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio, or such ratio as may be provided by law.
Section 3 of this act was so cunningly contrived that it operated to hoard up the silver dollars coined under this law.
This section to which we direct the attention of the reader is as followers: -
"That the Secretary of the Treasury shall each month coin 2,000,000 ounces of the silver bullion purchased under the provisions of this act into standard silver dol-
lars until the first day of July, 1891, and after that time he shall coin of the silver bullion purchased under the provisions of this act as much as may be necessary to provide for the redemption of the Treasury notes herein provided for."
The language of this section provided for the redemption of the Treasury notes in silver dollars, when not taken in connection with section 2.
The inference to be drawn from this language which we have quoted is, that for every dollar in Treasury notes emitted for the purchase of silver bullion, a sufficient number of dollars must be coined therefrom to redeem these notes. To maintain an adequate supply of such silver dollars available for the redemption of such notes, they must be kept inviolate in the Treasury for that identical purpose This mould prohibit them from going into circulation. Stored up in the Treasury vaults by a literal interpretation of this language, a large accumulation of these dollars would be inevitable, and would afford a President and Secretary of the Treasury, unfriendly to silver, an opportunity to point to them as evidence that they vere not desired as money for actual circulation. This was actually done by President Cleveland in his message of August 8, 1893, in which he advised the speedy repeal of the purchasing clause of this law. In that document, he pointed out that the silver coin and bullion in the Treasury had increased more than $147,000,000 between the 1st of July, 1890, up to the 15th of July, 1893.
Hence, it will be seen that the silver dollars coined under this law could be hoarded up in the Treasury at the mere will of the Secretary, while, at the same
time, he could use his discretion in redeeming such Treasury notes wholly in gold.
This policy was carried into effect by Secretaries Foster and Carlisle.
Section 3 also provided that any gain or seigniorage, which would be the difference between the coinage value of the silver so purchased and its bullion value, should be paid into the Treasury.
Section 4 provided that so much of the Bland-Allison act of February 28, 1878, in so far as it required the monthly purchase and coinage of silver bullion into silver dollars of not less than $2,000,000 not more than $4,000,000 should be repealed.
Section 6 of this act provided that, upon its passage, the legal tender notes deposited by the national banks for the redemption of the circulating notes of such banks, and all deposits thereafter received for like purpose, should be paid into the Treasury as a miscellaneous receipt, and that national bank notes should bc redeemed out of a fund to be created and known as the national bank note redemption account.
When we construe the propositions embraced in the act of July 14, 1890, we ascertain,-
"First, That the free coinage system, which had existed prior to 1973, was absolutely destroyed by this enactment; and that the purchase of silver bullion by the Government made this metal a mere commodity; while the holder of gold was granted the privilege of taking his bullion to the mints and have it coined into money of unlimited legal tender debt-paying poorer.
"Second, That the purchase of 4,500,000 ounces of silver per month, would not exhaust its annual production, but a large surplus would remain on the market, the presence of which would inevitably result in a depreciation of its bullion value - the value of silver
produced during 1890 was, $70,464,000 and its price per ounce was $1.05."
Therefore, the production of silver for that year was not less than 70,000,000 ounces. The total amount of silver provided for by the Sherman law was 54,000,000 ounces per annum, leaving an annual surplus of 16,-000,000 ounces to act as a depressing clement on the price of silver.
Moreover this surplus would accumulate year by year, gradually but surely lowering the bullion price of silver. In one respect, the policy embodied in the Sherman law was similar to that of the Bland-Allison law in this, that, while these two laws professed to solve the silver question, they aggravated the mischief by affording a greatly limited market for silver, and consequently a restricted demand for it with a resultant fall of price.
The abolition of free coinage of silver, and its purchase and coinage on government account alone, was adopted at the cunning suggestion and at the instigation of John Sherman.
The object of this policy, by which the Government purchased silver and coined it into dollars, was a shrewd scheme to make silver a mere credit money redeemable in gold alone. Should the silver dollars so coined fall in bullion value, a demand would be made upon Congress to maintain the public credit by guaranteeing the bullion parity of the silver dollar with that of gold.
Under the provisions of the Sherman law, the Secretary of the Treasury could go into the open market and bay silver from the lowest competitive bidder, and that process meant a continual fall in its price.
The Government became a "bear" in the silver market.
One feature of the Sherman law that was extremely vicious, was couched in that provision forbidding the Secretary of the Treasury to pay more than one dollar for each 371.25 grains of pure silver. A maximum price was fixed beyond which the Secretary could not go; bet there was no minimum below which he could not buy. This provision was a statutory declaration of hostility toward silver.
The policy of England, in fixing the price of gold to be paid by the Bank of England, established a minimum, below which that bank. could not go on penalty of forfeiture of its charter.
The financial system of the United States, as it was embodied in the so-called Sherman law, aimed at the destruction of the value of silver, of which it was the largest producer in the world; the policy of Great Britain aimed at the enhancement of the value of gold, of which it was the largest holder.
In payment for the silver purchased, the Secretary of the Treasury was authorial to issue Treasury notes, redeemable on demand, in coin, at the Treasury of the United States, or at the office of any assistant treasurer of the United States, and when so redeemed, they could be reissued.
Coin meant gold and silver at the time this law came in force. While the first part of the act declared these notes redeemable in coin, a subsequent clause of the same section provided,-
"That upon demand of the holder of any of the Treasury notes herein provided for, the Secretary of the Treasury shall, under each regulations as he may
prescribe, redeem such notes in gold or silver coin at
his discretion, it being the established policy of the
United States to maintain the two metals on a parity
with each other upon the present legal ratio, or such
ratio as may bc provided by law."
This last clause made the whole section ambiguous.
The first clause declared the Treasury notes redeem-
able in coin; the last clause makes them redeemable
in gold or silver coin.
The reader will notice how cunningly this redemption
clause is worded. The Secretary of the Treasury was
ordered to redeem the Treasury notes in gold or silver
coin, not gold and silver coin.
Hence, the Secretary of the Treasury, in his discre-
tion, could redeem the Treasury notes in either kind
The ablest writers on law have always pointed out
the dangers of leaving the execution of laws subject
to the discretion of those officers whose duty it is to
carry them into effect.
Many of the most valuable rights of man have been
thrown away, by vesting too much authority in the
discretion of those officials whose duty requires them
to properly execute laws.
That is the best law which leaves the least to the
discretion of the authority appointed to execute it.
One other singular provision of this measure reads as
"It being the established policy of the United States
to maintain the two metals on a parity with each other
upon the present legal ratio, or such ratio as may be
provided by law."
This language drew an invidious distinction between
the coin and the metal of which it is composed.
The clause does not say parity of the two coins, but metals. Should this provision be construed against the United States, the Government would become the guarantor of the value of the bullion in the standard silver dollar, should its value be less than that in the gold dollar. Silver would become a mere credit money redeemable in gold.
This parity clause constituted the "endless chain" so graphically described by President Cleveland in his special message to Congress in August, 1893.
Should the Secretary of the Treasury surrender his discretion of redeeming Treasury notes in gold or silver coin, this parity clause would subserve two distinct purposes,-
First, It wou1d convert every Treasury note into a vehicle for transferring the gold in the Treasury to the vaults of the national banks.
Second, This process of redemption in gold would give the national banking money power an opportunity to unsettle business by bringing on a panic, and to demand the withdrawal and destruction of the greenbacks and Treasury notes.
The Treasury notes issued under the law of 1890 were mere promissory notes payable on demand, and had the act which authorized their issue made them redeemable in the silver dollars coined out of the bullion purchased under that law, the national banking money power, and the gold speculators of London and New York City could not have drained the Treasury of its gold reserve.
It is unquestionable, that the so-called Sherman law was ambiguously worded by its authors with the ultimate design of seriously impairing the value of silver.
However, the large amount required under the pro-
vision of that act served to steady its bullion value, reckoning that value from a gold basis.
Morcovcr, the issue of Treasury notes utilized to purchase the required amount of silver added many millions to the volume of money in circulation. Consequently the prices of agricultural products were enhanced, and the power of Russian and Indian competition in the wheat markets of the world was measurably reduced.
In speaking of these facts in his rcport of 1890, Secretary Rusk, of the Department of Agriculture, said: -
"The recent legislation looking to the restoration of the bi-metallic standard of our currency, and the consequent enhancement of the value of silver, has unquestionably had much to do with the advance in the price of cereals. The same cause has advanced the price of wheat in Russia and India, and in the same degree reduced their power of competition. English gold was formerly exchanged for cheap silver, and wheat purchased with the cheaper metal was sold in Great Britain for gold. Much of this advantage is lost by the appreciation of silver in those countries. It is reasonable, therefore, to expect much higher prices for wheat than have been received in recent years."
Despite those ambiguities and inconsistencies that were embraced in the provisions of the so-called Sherman law, and which were craftily designed by its framers to cripple the coinage of silver as a medium of exchange, the addition of the Treasury notes to the circulation had raised prices correspondingly in the United States Secretary Rust admitted the fact.
So marked was this effect, that President Harrison made special reference to the matter in his message in December, 1891.
Hence, the national banks were planning to array their concentrated power against the issuance of the Treasury notes, the control of which had temporarily escaped their grasp.
Soon after the introduction of the Windom Silver Bullion Purchase Bill, the Secretary of the Treasury attended a banquet at Net York City as the guest of the associated bankers. While in the act of delivering an address. Mr. Windom was suddenly prostrated by an attack of apoplexy which proved fatal.
The President chose Hon. Charles Foster, of Ohio, as his successor. The near Secretary of the Treasury was a national banker, and had earned some reputation as an adroit politician.
Prior to the appointment of Mr. Foster as Secretary of the Treasury, United States bonds were rapidly rising in value until they were worth from 25 to 29 per cent above par.
In the meantime, the banks of New York City, Boston, and other financia1 centers of the East, were hoarding up gold, Treasury notes of the issue of 1890, and greenbacks.
The object of this combined action of the Eastern national banks, in thus hoarding up these various kinds of money, was for the purpose of embarrassing the Treasury of the United States. While these banks were engaged in this operation, the bond-holding syndicates of Europe had united to force Austro-Hungary to convert her immense debt of $2,400,000,-000 into gold bonds, which was a part of the scheme to handcuff the whole civilized world to the single standard of gold.
While the syndicates of Europe were engaged in
carrying out their schemes against Austria, the national banking money popover of the East had matured a plan to sell its bonds at a high premium, a process which would have netted them a profit ranging from 25 to 29 cents on the dollar.
The purpose of this combination was two-fold; in the first place, the bankers would gain this great premium by the redemption of their bonds, and this redemption would result in draining the Treasury of its gold; as a next step, a demand mould be made by them for the issue of net bonds to replenish the gold reserve. These bonds would be purchased by the same clique who had sold the former bonds and gained millions by the operation.
During this time, the financiers of Austria had concluded to fund the bonds of that country into gold obligations, a policy to which they were forced by the Rothchilds who had her by the throat.
To effect these funding operations, gold must be secured somewhere to execute the mandates of the money kings of Europe.
The Bank of England held immense reserves of gold; the Bank of France had yet far more; Russia had a vast treasure exceeding $500,000,000.
Notwithstanding these facts the necessary gold could not be drawn from the Rank of England by Austria to effect her funding operations, for, at the first attempt of the latter to obtain gold in London, this great bank would immediately raise its price, a practice to which it had always resorted to prevent the exportation of gold from England.
Neither could it be obtained from the Bank of France, whose charter forbade it to pay out more than
five per cent in gold for export at any one time. The Bank of France was under rigid supervision of the Government, and it was the servant of the French Republic, not its master.
The immense accumulations of gold in Russia were unassailable, as that Empire would not pay out a single ruble in gold.
Hence, the only source of supply of gold, to which resort could be had by Austria, was that stored up in the United States Treasury and in the banks of New York City.
These banks had hoarded up more than $200,000,000 of gold, a fact of which they boasted. They would not pay out a dollar of their immense holdings of this coin, as it would be utilized by them to buy up any bonds that might be issued to maintain that absurd thing known as the "gold reserve."
But one great obstacle lay in the way of withdrawing gold from the Treasury for export, and that was embraced in section e of the Sherman law of July 14, 1890, which provided that the Secretary of the Treasury should redeem the treasury notes of 1890 in gold or silver coin at his discretion.
The option, or right, of this Government to redeem its treasury notes in either gold or silver coin was vested in the discretion of the Secretary of the Treasury.
This discretion, or option, was the sole barrier in the path leading to the Treasury of the United States.
With the object of ascertaining the policy of Secretary Foster, a grand banquet was given at the Delmonico restaurant by the New York bankers, and Mr. Foster was invited to attend as the special guest of the occasion
The Secretary accepted the generous hospitality of these financiers, and again the Mountain journeyed to Mohammed.
After these distinguished patriots had feasted themselves on the costliest viands of the season, and had imbibed large quantities of sparkling champagne, these financiers called upon the honorable Secretary to state his position upon the redemption of the treasury notes and greenbacks. He was also requested to define his actual powers with reference to issuing bonds to maintain the gold reserve
The eminent Secretary, inspired by these representatives of great wealth, gathered around the festal board, and buoyed up by the elevating influence of the champagne furnished by these money kings, then and there declared that he would redeem the Treasury notes and greenbacks in gold, and that he would persevere in that policy. The Secretary said: -
"The Resumption Act confers authority upon the Secretary of the Treasury to issue bonds to any extent that he may be called upon to do, and to increase, maintain, or decrease his gold reserve. The act of July 14, 1890, commands me to preserve the parity of gold and silver. It has always been the custom of this country to pay its obligations in gold, and therefore should there be any trouble about this, and the present hundred millions of gold, or the Reserve Fund, were to be called out or intrenched upon, it would be within the Secretary's power to issue bonds for gold up to five per cent and to replace or increase that Reserve Fund."
Thus, at the banquet table of these Belshazzars of New York City, Secretary Foster transferred the option of the Government to redeem its notes in gold or silver to that horde of money lords, the presidents of the associated national banks of New York City.
These bank presidents at once communicated the decision of Secretary Foster to their allies in Europe, and an understanding was had between the money power of the United States and Europe, that the national banks of Net York City would supply the Treasury notes necessary to deplete the Treasury of its gold.
The interests of the financiers of the East and of Europe were identical, and the offer of the one was accepted by the other.
At the time of this Delmonico banquet, there were eight varieties of money in circulation in the United States, exclusive of subsidiary silver, nickel, and copper coins, via.: -
First, gold coin, with unlimited legal tender for all debts of every kind, public and private.
Second, gold certificates, limited to the amount of gold deposited in the Treasury, not legal tender, but could be counted as part of the national bank reserves, receivable for all public dues, and could be reissued by the Government. They were redeemable in gold coin alone. Gold certificates were the paper representatives of the gold as a more convenient form of that coin; and their denominations ranged from $20 to $10,000.
Third, Si1ver dollars, the coinage of which since 1878 had been limited, of full legal tender for all debts, except where otherwise specified in the contract, receivable for all taxes due the United States and exchangeable for silver certificates.
Fourth, Silver certificates, limited to the amount of silver dollars deposited in the Treasury by their holders, not legal tender, but could be counted as part
of bank reserves, receivable for all dues by the Government, redeemable in silver dollars alone, their denominations ranged from $1 to $1,000.
Fifth, United States notes, known as greenbacks, their volume limited by the law of 1878 to $346,681,-106, unlimited legal tender for all debts, public and private, except duties on imports and interest on the public debt, redeemable in coin in sums of $50 and upwards at the sub-treasuries of New York City and San Francisco. The denominations were identical with those of the silver certificates.
Sixth, Currency certificates, limited by amount of United States notes deposited therefor, not legal tender, could bc counted as part of the national bank reserves, not receivable by the Government for taxes, exchangeable for United States notes, redeemable in that money at the sub-treasury where issued. Their denominations ranged from $5,000 to $10,000.
Seventh, Treasury notes of 1890, issued for the purchase of silver under the Sherman law, unlimited legal tender, unless otherwise specified in the contract, receivable for all dues by the United States, exchangeable for all kinds of money except gold certificates, redeemable in coin in sums of not less than $50 at the United States Treasury and the various sub-treasuries. Their denominations were the same as silver certificates.
Eighth, National bank notes, printed by the Government, and given to national banks, limited to ninety per cent of the United States bonds deposited therefor in the Treasury, legal tender for payment of debts to national banks, for dues to the United States except duties on imports, are legal tender for payments by
the United States, except interest on the public debt and redemption of currency, redeemable in lawful money at the issuing bank and at the Treasury. Their denominations are the same as United States notes with the exception of one and two dollar notes.
Under the redemption features of the national bank law, by which national bank notes were redeemable in greenbacks, these bank notes mere really redeemable in gold. The circulating notes of national banks could be presented to the Treasury Department for redemption in greenbacks, and this latter currency could bc immediately presented for redemption in gold.
Therefore, these bank notes were in reality redeemable in gold at the Treasury of the United States, and this scheme of converting these bank notes into government demand obligations, payable in gold, was systematically worked by the national banks.
Such was the heterogeneous mass of the various kinds of coin and currency afloat in the nation.
To John Sherman, the great necromancer of American finance, belongs the credit of originating this combative and incongruous state of currency. We except the silver dollar.
This system of finance was planned and adopted for the sole benefit of the national banks, as it furnished them with the means of discriminating against the government issues of currency.
In that conglomerate mass of crudities, the machinery necessary to operate the "endless chain" upon the gold reserve can be easily seen when taken in connection with the parity clause of the Sherman law, as construed by such eminent financiers as Charles Poster and Secretary Carlisle.
This explanation of the various kinds of coin and currency is given here to afford the reader a view of the means by which the money power geared up that "endless chain," and converted every greenback, treasury note, and bank note into budgets that were attached to this chain to dip the gold from the Treasury, and pass it to the control of the foreign and domestic gold gamblers.
On his return to Washington, Secretary Poster issued a circular inviting proposals for the purchase of bonds by the Government.
The bankers of New York City at once responded, and in seventy-five days the Secretary purchased bonds, the face value of which was $75,828,200, but for which was paid $86,266,730, a profit to the bankers of $10,438,530 in premiums.
The Secretary also advanced interest to the bond-holders nine months before it was due. The amount of prepaid interest was $12,009,951.
Thc total amount donated to the New York banks by this quondam Secretary of the Treasury in the way of prepaid interest and premium on bonds was $29,000,000.
Gratuity upon gratuity, franchise upon franchise, have been heaped upon the richest men of the nation, the very men who caused panic after panic, and who, before many months would elapse, would exert their immense power to bankrupt tens of thousands of business men, throw out of employment hundreds of thousands of working men, and force the entire nation into a condition of want and misery that was appalling.
At first these money kings fawned at the feet of the Government for special privileges; before long we will
see them turn upon and rend the very hand that conferred these immense pecuniary benefits upon them.
The national banks of New York City, which, from 1885 to 1892, received the tremendous sum of nearly $70,000,000 in premiums on the bonds held by them, prepaid interest to the amount of tens of millions, a gratuitous loan of $65,000,000 of the public funds without interest, now saw themselves in a position in which they determined to measure their strength against that of the Government.
Secretary Foster, who had transferred the purse of the Government into the hands of these money kings, met with what might be termed retribution for his cowardly surrender to the banking power. He became a bankrupt during that great panic of 1893, which was brought on by the concerted action of the very men who dined and wined him at Delmonico's in 1891. In his extremities, he called upon his New York banker friends for aid; they laughed in his face; he was mercilessly driven to the wall. His liabilities exceeded $1,000,000, of which he was scarcely able to pay ten per cent on the dollar.
After the Delmonico episode, the money power matured their plans to raid the gold reserve in the United States Treasury.
The construction of the Sherman law, as publicly announced by Secretary Foster, made this scheme comparatively easy of execution.
The money kings of Europe, and the national banking money power, joined their forces to consummate a common purpose, the former to obtain gold out of the Treasury and sell it at a premium to Austria, the latter to force an issue of bonds and a suspension of silver coinage under the Sherman law.
The way was now clear for this combined money power to execute its purpose. The initial step was now taken.
On the 15th of August, 1892, the firm of Heidelbach, Ickelheimer & Co., Jewish bankers of New York City, agents of a foreign syndicate, presented $1,000,000 in treasury notes at the sub-treasury in that city, and demanded gold for them, and stated that they wanted this gold for shipment abroad.
Without any hesitation, Assistant Treasurer Roberts gave this firm the required gold. On this fact becoming known, a leading journal of New York City interviewed Assistant Treasurer Roberts with reference to this transaction. During the course of the interview, Mr. Roberts was asked what steps had been taken by the administration to obstruct or prevent the exportation of gold. He replied: -
"No steps have been taken by the administration to prevent or obstruct the export of gold. The Government stands ready to meet all its obligations in gold and will pay them in gold."
In this interview, the Assistant Treasurer gave notice that the Treasury stood ready to furnish all the gold required by the gold gamblers and foreign bond syndicates necessary to place Austria upon a gold standard. It would furnish the gold, and the speculators obtaining it would dispose of it at a premium.
Thus the promise which the associated bankers of New York City had extorted from Secretary Foster, in which he declared that he would pay out gold in the redemption of treasury notes and greenbacks, was a part of the concerted scheme to force the repeal of the Sherman law of 1890, and the issue of bonds to obtain gold.
It will be asked, why did those national banks who owed their very existence to the Government, and from whom they received those valuable franchises which earned them billions of dollars, deliberately conspire to embarrass the Treasury of the United States?
First, Because it brought to the aid of these banks the most powerful concentration of capital in the world, whose interests were identical with those of the national banks.
Second, It would drain the Treasury of its gold, and this mould force an issue of long-time interest bearing bonds, which would serve as a basis for the continuance of the national banking system. These banks were accumulating gold to buy those bonds, while they were assisting the foreign gold speculators in their efforts to drain the Treasury.
Third, It afforded the banks the opportunity of demanding the permanent withdrawal from circulation and the consequent destruction of $500,000,000 in treasury notes and greenbacks, this currency to bc supplanted by an equal issue of national bank notes donated outright to those institutions.
Fourth, The national banks could point to the silver dollar as depreciated coin, and demand its redemption in gold to "Maintain the parity of the metals."
Fifth, The whole volume of government legal tender notes, treasury notes, silver dollars, and silver certificates would become mere credit money, and the sole legal tender would be gold alone.
Sixth, It virtually deprived the Federal Government of its constitutional power to fix the value of money, and transferred that highest element of sovereignty to the bullion brokers of the world.
Seventh, It enabled the national banks to obtain a construction of the parity clause of the Sherman 1am, which virtually demonetized silver.
In the meantime, the House of Representatives had passed the iniquitous Force Bill, which went to the Senate.
On January 5, 1891, Mr. Stewart moved to consider Senate bill 4675, replacing the Force Bill. The motion was agreed to by a vote of 34 yeas to 29 nays.
On January 14, 1891, the same Senator moved a free coinage amendment to this bill, which had been laid aside up to that time.
The amendment was agreed to by a vote of 42 yeas to 30 nays.
Mr. Vest then offered a free and unlimited coinage provision as a substitute, and that was agreed to by a vote of 39 yeas to 27 nays.
On January 15, 1891, Senate bill 4675 being the substitute offered by Mr. Vest, came up in the House of Representatives, whereupon it was referred to the Coinage Committee, which, on February 21, 1891, made an adverse report on the measure and no further action was had on the bill.
In a report of the Committee on Coinage on one of these measures, providing for the free coinage of silver, the character of those who appeared before this committee at hearings given by it, and opposed the free coinage of silver, is thus described: -
"Almost every man who appeared in opposition to free coinage was a president or some other executive officer of some bank, some great insurance company or other firm, corporation or association controlling vast aggregations of capital."
With reference to those who mere advocating free coinage the report says: -
"Upon the other hand, it may not be out of place for us to mention the circumstance by way of contrast, that at the conclusion of Mr. Atkinson's statement Mr. Dunning, the duly accredited agent of the Knights of Labor, and various other kindred organizations comprising nearly 4,000,000 voters, stepped forward and laid on the table the petition of these toiling millions, praying for the free coinage of silver.
"In addition to this it is proper for us to call attention to the farther fact that the great organization known as the Farmers' Alliance has adopted a demand for the free coinage of silver as the cardinal feature of its creed."
In his message to Congress, December 3, 1891, President Harrison opposed free coinage, and gave his reasons for it in the following language: -
"I am still of the opinion that free coinage of silver under existing conditions would disastrously effect our business interests at home and abroad."
On July 14, 1892, Senator Sherman introduced a bill to repeal the purchasing clause of the law of July 14, 1890.
In the latter part of 1892 and in the months of January and February, 1893, the foreign gold speculators persevered in draining the Treasury of its gold for shipment abroad. While this process was being carried on, the press of New York City was issuing startling reports of the financial condition of the Treasury. Some of these journals published daily statements of the amount of gold taken out of the country, and demanded that Secretary Poster replenish the gold reserve by an issue of bonds. Mr. Foster meekly obeyed, and on the 23d of February, 1893, he issued
a written order to the Chief of the Bureau of Engraving and Printing, directing him to prepare plates for the printing of bonds.
On hearing of the decision of the Secretary of the Treasury to issue bonds, the bankers of New York City formed a syndicate for the purchase of the proposed issue.
The order to prepare the plates for bonds became known to President Harrison, and it was countermanded by him, and he stated that this was a "debt-paying administration."
So the proposed issue of $100,000,000 of bonds did not materialize at this time. President Harrison graciously intended that the incoming administration of President Cleveland should bear the odium of increasing the national debt in time of peace.
It will be instructive to institute a comparison between the financial condition of the producers of the country with that of the bond-holding class.
In speaking of the enormous mortgage and other indebtedness of the West and South in 1890, Frederic Waite said: -
"Last year, after turning the scale at eight thousand millions, the mortgage indebtedness continued its upward flight, not being contented with an increase of 220 per cent, or nearly four times the increase in the true value of real estate.
"In a word, the total net private indebtedness of the American people equaled, in 1880, but $6,750,-000,000. Last September it amounted to nineteen thousand seven hundred millions, an increase of thirteen thousand millions in the short period of twelve years."
Congressman Walker, of Massachusetts, makes the
total indebtedness of the people of the United States reach the grand aggregate of thirty-two billion dollars.
While the producers were being eaten up by usury, the bond-holders were receiving from twenty-five to twenty-nine per cent. premium on their bonds.
In 1866, the national debt was $2,783,000,000, the gold value of which at that time did not exceed $1,100,000,000o. Up to the early part of 1893, $1,756,000,000 had been paid on the principal; the payments of interest were $2,538,000,000, $58,000,000 were paid in premiums, making a total payment of $4,352,000,000. The amount due in 1893 was $1,027,450,000, and this residue of the debt would purchase more of the products of labor than the original amount. In 1865 the entire debt could have been paid with 1,007,000,000 bushels of wheat at the price it then brought.
After this vast amount of interest, principal and premium was applied on this debt as stated above, it would require 2,054,900,000 bushels to pay the residue of the debt in 1893.
In 1867, 14,184,000o bales of cotton would have paid the total debt.
In 1893 at the price for which cotton sold, it would require 34,251,600 bales of that product to pay the remainder of the debt.
This after $4,352,000,000 were paid thereon.
The profits of the national banking money power, from 1872 to 1891, on its circulating notes donated to it by the Government were, according to the New York World Almanac, $1,081,988,586.
Such were the results of that British scheme of finance which was fastened on the American people.
Those who are wedded to the delusive idea of pro-
tection, as the panacea for the ills now seriously affecting all industries, must bear in mind that this frightful condition of the producer sprung up under the highest tariff laws since 1861.